As filed with the Securities
and Exchange Commission on
December 15, 2000
Registration No.
811-10219
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
INITIAL REGISTRATION STATEMENT
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-5 OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(Exact Name of Registrant)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
1150 SOUTH OLIVE STREET
LOS ANGELES, CA 90015
(Address of Principal Executive Office)
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Name and Address of Agent for Service: Copies to:
-------------------------------------- ----------
James W. Dederer, Esq. Frederick R. Bellamy, Esq.
Executive Vice President, General Counsel Sutherland, Asbill & Brennan LLP
and Corporate Secretary 1275 Pennsylvania Avenue, N. W.
Transamerica Occidental Life Insurance Company Washington, D.C. 20004
1150 South Olive Street
Los Angeles, CA 90015
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It is proposed that this filing will become effective:
_____immediately upon filing pursuant to paragraph (b)
_____On (________)pursuant to paragraph (b)
_____60 days after filing pursuant to paragraph (a)(1)
_____On (date) pursuant to paragraph (a)(1)
_____On (date) pursuant to paragraph (a)(2) of Rule 485
Title of securities being registered:
Flexible Premium Variable Life Insurance Policy
Approximate date of proposed public offering: As soon as practicable after
the effective date of the Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such dates as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2. The prospectus consists of
____ pages. The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representations Pursuant to Section 26(e) of the Investment Company Act of 1940
The signatures.
Written consents of the following persons:
1. Ernst & Young LLP
2. Actuarial Opinion
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The following exhibits:
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1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1) Certified copy of Resolutions of the Board of Directors of the Company of
December 6, 1996 establishing the Transamerica Occidental Life Separate Account
VUL-4. 1/
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between Transamerica Securities
Sales Corporation and Transamerica Occidental Life Insurance
Company. 1/
(b) Form of Sales Agreement between Transamerica Life Companies,
Transamerica Securities Sales Corporation and Broker-Dealers 1/
(4) Not Applicable.
(5) Forms of Policy and Policy riders. 1/
(6) Organizational documents of the Company, as amended. 1/
(7) Not Applicable.
(8) Form of Participation Agreement between: Transamerica Occidental Life Insurance Company and:
(a) re The Alger American Fund 1/
(b) re Alliance Variable Products Series Fund, Inc. 1/
(c) re Dreyfus Variable Investment Fund 1/
(d) re Janus Aspen Series 1/
(e) re MFS Variable Insurance Trust 1/
(f) re Morgan Stanley Universal Funds, Inc. 1/
(g) re OCC Accumulation Trust 1/
(h) re Transamerica Variable Insurance Fund, Inc. 1/
(i) re PIMCO Variable Insurance Trust 1/
(9) Administrative Agreements.
(10) Form of Application. 1/
(11) Issuance, Transfer and Redemption Procedures Memorandum. 1/
(12) Financial Data Schedule.
2. Form of Policy and Policy riders are included in Exhibit 1 above.
3. Opinion of Counsel. 1/
4. Not Applicable.
5. Not Applicable.
6. Actuarial Consent 1/
7. Consent of Independent Accountants
8. Powers of Attorney 1/
1/ Filed herewith.
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PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING
Article V, Section I, of Transamerica's Bylaws provides: Each person who was or
is a party or is threatened to be made a party to or is involved, even as a
witness, in any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereafter a
"Proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another foreign or domestic corporation
partnership, joint venture, trust, or other enterprise, or was a director,
officer, employee, or agent of a foreign or domestic corporation that was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. (It is the Corporation's
intent that these bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the corporation's Articles of Incorporation.)
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The directors and officers of Transamerica Occidental Life Insurance Company are
covered under a Directors and Officers liability program which includes direct
coverage to directors and officers (Coverage A) and corporate reimbursement
(Coverage B) to reimburse the Company for indemnification of its directors and
officers. Such directors and officers are indemnified for loss arising from any
covered claim by reason of any Wrongful Act in their capacities as directors or
officers. In general, the term "loss" means any amount which the insureds are
legally obligated to pay for a claim for Wrongful Acts. In general, the term
"Wrongful Acts" means any breach of duty, neglect, error, misstatement,
misleading statement or omission caused, committed or attempted by a director or
officer while acting individually or collectively in their capacity as such,
claimed against them solely by reason of their being directors and officers. The
limit of liability under the program is $95,000,000 for Coverage A and
$80,000,000 for Coverage B for the period 11/15/98 to 11/15/2000. Coverage B is
subject to a self insured retention of $15,000,000. The primary policy under the
program is with CNA Lloyds, Gulf, Chubb and Travelers.
REPRESENTATIONS PURSUANT TO SECTION 26(E) OF THE INVESTMENT COMPANY ACT OF 1940
Transamerica hereby represents that the fees and charges deducted under the
Policy, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by Transamerica.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Transamerica Occidental Life Separate Account VUL-5, has duly caused
this registration statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Los Angeles, and the State of California, on this 15th day of
December, 2000.
Transamerica Occidental Life Separate Account VUL-5
(Registrant)
(SEAL)
Attest:/s/Gina Grusman By:/s/ David M. Goldstein
(Title) SEC Filing Coordinator (Name) David M. Goldstein
(Title) Vice President
Transamerica Occidental Life Insurance Company
Pursuant to the requirements of the Securities Act of 1933, Transamerica
Occidental Life Insurance Company has duly caused this registration statement to
be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Los Angeles and the
State of California, on the 15th day of December, 2000.
Transamerica Occidental Life Insurance Company
(SEAL)
Attest:/s/Gina Grusman By:/s/ David M. Goldstein
(Title) SEC Filing Coordinator (Name) David M. Goldstein
(Title) Vice President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the date(s) set forth below.
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Signatures Titles Date
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Ron F. Wagley* ___________________________ December 15, 2000
President and Director
Patrick S. Baird* ___________________________ December 15, 2000
Director
Brenda K. Clancy* ___________________________ December 15, 2000
Director and Senior Vice President
James W. Dederer* ___________________________ December 15, 2000
Director, General Counsel and Secretary
George A. Foegele* __________________________ December 15, 2000
Director
Douglas C. Kolsrud* __________________________ December 15, 2000
Director and Senior Vice President
Richard N. Latzer* __________________________ December 15, 2000
Director and Investment Officer
Karen O. MacDonald* _________________________ December 15, 2000
Director and Acting Chief Financial Officer
Gary U. Rolle'* _________________________ December 15, 2000
Director and Investment Officer
Paul E. Rutledge III* _________________________ December 15, 2000
Director and President - Reinsurance Division
Craig D. Vermie* _________________________ December 15, 2000
Director, Vice President and Counsel
_____________________________________ On December 15, 2000 as Attorney-in-Fact pursuant to
*By: David M. Goldstein powers of attorney filed herewith.
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<PAGE>
PROSPECTUS FOR
TRANSULTRAR
VARIABLE UNIVERSAL LIFE INSURANCE
A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
OFFERING 19 SUB-ACCOUNTS UNDER SEPARATE ACCOUNT VUL-5
IN ADDITION TO A FIXED ACCOUNT
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PLEASE NOTE THAT THE POLICIES AND THE PORTFOLIOS PORTFOLIOS ASSOCIATED WITH SUB-ACCOUNTS
---------------------------------------
ARE NOT GUARANTEED TO ACHIEVE THEIR GOALS AND ALGER AMERICAN INCOME & GROWTH
ARE SUBJECT TO RISKS, INCLUDING POSSIBLE LOSS OF ALLIANCE VP GROWTH AND INCOME - CLASS B
AMOUNT INVESTED. PLEASE READ THIS PROSPECTUS ALLIANCE VP PREMIER GROWTH - CLASS B
CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT DREYFUS VIF APPRECIATION
SHOULD BE READ WITH THE CURRENT PROSPECTUS FOR DREYFUS VIF SMALL CAP
THE PORTFOLIOS. JANUS ASPEN SERIES BALANCED - SERVICE SHARES
JANUS ASPEN SERIES WORLDWIDE GROWTH - SERVICE SHARES
NEITHER THE SEC NOR THE STATE SECURITIES COMMISSIONS MFS(R)EMERGING GROWTH SERIES
HAVE APPROVED THIS INVESTMENT OFFERING OR DETERMINED MFS(R)GROWTH WITH INCOME SERIES
THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY MFS(R)RESEARCH SERIES
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. MS UIF EMERGING MARKETS EQUITY
MS UIF FIXED INCOME
The Securities and Exchange Commission maintains a web MS UIF HIGH YIELD
site (http://www.sec.gov) that contains MS UIF INTERNATIONAL MAGNUM
OCC ACCUMULATION TRUST MANAGED
material incorporated by reference and other OCC ACCUMULATION TRUST SMALL CAP
information regarding registrants that file PIMCO VIT STOCKSPLUS GROWTH & INCOME
electronically with the Commission. TRANSAMERICA VIF GROWTH
TRANSAMERICA VIF MONEY MARKET
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Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
http://www.transamerica.com
DRAFT 6 - 12/15/00
May 1, 2001
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TABLE OF CONTENTS
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DEFINITIONS............................................................................................... 4
SUMMARY 6
TABLES OF FEES AND EXPENSES............................................................................... 7
TABLE OF SEPARATE ACCOUNT INVESTMENT OPTIONS AND INVESTMENT ADVISERS...................................... 12
DESCRIPTION OF TRANSAMERICA, THE SEPARATE
ACCOUNT AND THE PORTFOLIOS............................................................................... 13
Transamerica Occidental Life Insurance Company................................................... 13
Insurance Marketplace Standards Association...................................................... 13
The Separate Account............................................................................. 13
The Portfolios................................................................................... 13
Portfolios Not Publicly Available................................................................ 16
CHARGES AND DEDUCTIONS.................................................................................... 16
Administrative Charge............................................................................ 16
Surrender Penalty................................................................................ 17
Allocation Change Charge......................................................................... 17
Transfer Fee..................................................................................... 17
Additional Illustrations......................................................................... 17
Accelerated Death Benefit Rider.................................................................. 17
Mortality and Expense Risk Charge................................................................ 17
Monthly Deductions............................................................................... 18
Reinstatement Interest Charges................................................................... 19
Portfolio Expenses............................................................................... 19
Possible Tax Charge.............................................................................. 19
THE POLICY................................................................................................ 19
Owner............................................................................................ 19
Beneficiary...................................................................................... 20
Application for a Policy......................................................................... 20
Minimum Initial Face Amount...................................................................... 21
Effective Date of Coverage....................................................................... 21
Policy Date...................................................................................... 21
Backdating a Policy.............................................................................. 22
Reallocation Date................................................................................ 22
Free Look Period................................................................................. 22
Transfers........................................................................................ 22
Other Restrictions on Transfers.................................................................. 23
Dollar Cost Averaging or DCA..................................................................... 23
Automatic Account Rebalancing or AAR............................................................. 24
Telephone Access Privilege....................................................................... 25
Guaranteed Exchange Option.......................................................................
DEATH BENEFIT............................................................................................. 29
Proof of Death................................................................................... 30
Death Benefit Options............................................................................ 30
Transfers After Insured's Death.................................................................. 31
Settlement Provisions............................................................................ 31
Option to Change the Face Amount................................................................. 32
PREMIUMS 32
Required Premiums................................................................................
Layer Allocation.................................................................................
Premium Qualification Credit..................................................................... 33
Premium Limitation............................................................................... 33
Continuation of Insurance........................................................................ 34
ALLOCATION OF NET PREMIUMS................................................................................ 34
Initial Premium.................................................................................. 34
Subsequent Premiums.............................................................................. 35
Crediting of Net Premiums Before Reallocation Date............................................... 35
UNIT AND UNIT VALUES...................................................................................... 35
Valuation of Units............................................................................... 35
Unit Values...................................................................................... 35
ACCUMULATION VALUE........................................................................................ 36
Determination of Accumulation Value.............................................................. 36
Sub-Accounts..................................................................................... 36
Fixed Account.................................................................................... 36
Loan Account..................................................................................... 36
Partial Surrenders............................................................................... 36
Surrender Penalty Free Withdrawals............................................................... 37
NONFORFEITURE OPTION - FULL SURRENDER..................................................................... 38
POLICY LOANS.............................................................................................. 38
Loan Repayment................................................................................... 38
Effect of Policy Loans........................................................................... 39
GRACE PERIOD.............................................................................................. 39
REINSTATEMENT............................................................................................. 40
OTHER BENEFITS............................................................................................ 41
Automatic Premium Loan Endorsement...............................................................
Endorsement to Modify Grace Period............................................................... 43
Accelerated Death Benefit Option Endorsement..................................................... 44
Full Death Benefit Rider......................................................................... 47
Guaranteed Insurability Rider....................................................................
Accident Indemnity Rider.........................................................................
Waiver Provision Rider...........................................................................
Insurance on Children Rider......................................................................
Extra Surrender Penalty Free Withdrawal Endorsement..............................................
Option for Additional Insurance Endorsement......................................................
OTHER POLICY PROVISIONS................................................................................... 48
Incontestability of the Policy................................................................... 48
Suicide.......................................................................................... 48
Delay of Payments................................................................................ 48
FEDERAL TAX CONSIDERATIONS................................................................................ 48
Transamerica Occidental Life Insurance Company and
The Separate Account.......................................................................... 48
Taxation of the Policies......................................................................... 49
Withholding...................................................................................... 49
Policy Loans..................................................................................... 49
Interest Disallowance............................................................................ 49
Modified Endowment Contracts..................................................................... 50
Distributions Under Modified Endowment Contracts................................................. 50
Special Rules for Pension Plans
VOTING RIGHTS.............................................................................................
REPORTS 50
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY................................................... 51
PERFORMANCE INFORMATION................................................................................... 52
DISTRIBUTION.............................................................................................. 55
LEGAL PROCEEDINGS......................................................................................... 55
ADDITION, DELETION OR SUBSTITUTION OF PORTFOLIOS..........................................................
INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS............................................................. 55
FURTHER INFORMATION....................................................................................... 56
APPENDIX A - THE FIXED ACCOUNT............................................................................ 57
APPENDIX B - SETTLEMENT OPTIONS........................................................................... 59
APPENDIX C - ILLUSTRATIONS OF DEATH BENEFIT,
ACCUMULATION VALUES AND ACCUMULATED PAYMENTS..................................................... 60
APPENDIX D - DEATH BENEFIT FACTORS
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DEFINITIONS
ACCUMULATION VALUE of the policy is the sum of the accumulation value of the
base policy and the accumulation value of each layer.
ADMINISTRATIVE OFFICE is our office at 1100 Walnut Street, 28th Floor, Kansas
City, Missouri 64106-2152.
o Our mailing address for all written requests and other correspondence is:
Transamerica Occidental Life Insurance Company
Administrative Office
Box 417002
Kansas City, Missouri 64141-7002
o Our address for express delivery is:
Transamerica Occidental Life Insurance Company
Attention: VUL Administration - K26
1100 Walnut Street
Kansas City, Missouri 64016-2152
o Our customer service telephone number is:
(866) TIIG-VUL
or
(866) 844-4885
AGE is the insured's age on his or her nearest birthday.
BASE POLICY is the policy excluding any layers and any riders.
BENEFICIARY is the person you designate to receive the policy death benefit.
CASH VALUE of the base policy or a layer is its accumulation value, MINUS any
surrender penalty that would be assessed on a full surrender. The policy's cash
value is the policy's accumulation value LESS the surrender penalties that would
be assessed on a full surrender of the policy.
DATE OF ISSUE is the date used to measure the period of time during which the
Incontestability and the Suicide exclusion provisions are in effect.
DEATH BENEFIT is the amount payable to the beneficiary when the insured dies.
DEATH BENEFIT FACTORS for your policy are determined by usand are shown in
APPENDIX D - Death Benefit Factors.
DELIVERY REQUIREMENT is any requirement that must be completed before the policy
can become effective and before the policy may be delivered to you. Examples
include any application amendment or additional evidence of insurability that we
require. Except as otherwise provided in the conditional receipt, the policy
will not become effective until after all delivery requirements are satisfied.
DESIGNATED INDIVIDUAL is the person upon whose life expectancy a settlement
option may be based and upon whose life continued payments under a settlement
option may depend.
FIXED ACCOUNt is one of the investment options under the policy. The fixed
account is a part of our general account. The net premiums you allocate to the
fixed account and the portion of the accumulation value in the fixed account
will earn interest at fixed interest rates declared by us from time to time. The
total accumulation value in the fixed account is equal to the accumulation value
in the fixed account for the base policy and the accumulation value in the fixed
account for all layers.
FREE LOOK PERIOD is the initial period of time after you first receive the
policy during which you have the right to examine and return the policy for a
refund.
GENERAL ACCOUNT represents all our assets other than those held in separate
accounts.
GROSS PREMIUM is 100% of any premium.
INTERNAL REVENUE CODE (IRC OR CODE) is the Internal Revenue Code of 1986, as
amended, and its rules and regulations.
INVESTMENT OPTION is the fixed account or any sub-account of the separate
account.
LAPSE is the termination of the policy at the end of the grace period.
LAYER is coverage provided by an increase in the face amount of the policy.
LAYER DATE is the effective date of a layer. It is used to determine layer
anniversaries and layer years.
LAYER YEAR is a twelve month period beginning on the layer date, and each twelve
month period thereafter.
LOAN ACCOUNT is part of the fixed account. The loan account includes outstanding
loans. The loan account for the policy is equal to the sum of the loan account
for the base policy and the loan account for each layer. The loan account is not
an investment option.
MAXIMUM LOAN AMOUNT is the largest amount you may borrow under the policy. There
is a maximum loan amount for the base policy and for each layer.
MONTHLY DEDUCTION is an amount we deduct from the accumulation value of the
policy or of each layer, respectively, on the policy date and on each monthly
policy date thereafter.
MONTHLY POLICY DATE is the date monthly deductions are taken. The first monthly
policy date is the policy date. The monthly policy date occurs each month after
the policy date on the same day of the month as the policy date.
NET AMOUNT AT RISK thefor the base policy or a layer is the difference between
its death benefit and its accumulation value.
NET ASSET VALUE is the per share value of a portfolio as calculated by the
portfolio and reported to us.
NET CASH VALUE of the policy is the cash value of the policy, MINUS any
outstanding loans. The net cash value of the policy or a layer is its cash value
less any outstanding loans.
NET LOAN AMOUNT is a policy loan, MINUS any loan interest due.
NET PREMIUM is any gross premium MINUS an administrative charge.
OWNER is the person or persons entitled to the rights under the policy while the
insured is alive.
PAYEE is the person who has the right to receive payments under a settlement
option. If you surrender the policy, you are the payee under any settlement
option you elect. After the insured's death, the beneficiary is the payee under
the settlement option you elect.
POLICY ANNIVERSARY is an annual anniversary of the policy date.
POLICY DATE is the effective date of the policy. It is used to determine policy
anniversaries and policy years.
POLICY LOAN is indebtedness to us for a loan secured by the policy. PORTFOLIO is
a mutual fund investment or other investment pool held in a sub-account.
PRO-RATA ALLOCATION is a proportionate allocation among the investment options.
For the base policy, a pro-rata allocation is equal to the portion of the
accumulation value in the base policy in an investment option, divided by the
total accumulation value of the base policy, excluding the portion of the
accumulation value in the loan account. For a layer, a pro-rata allocation is
equal to the portion of the accumulation value in the layer in an investment
option divided by the total accumulation value for the layer, excluding the
portion of the accumulation value in the loan account. Any fees, charges,
reductions or deductions from the accumulation value will be allocated on a
pro-rata basis, unless you choose the investment options to which you want to
allocate these amounts according to the procedures we establish.
REALLOCATION DATE is the date that net premiums initially allocated to the money
market sub-account, PLUS any earnings on those net premiums, are transferred to
one or more other sub-accounts of the separate account according to the
allocations then in effect.
REINSTATE means to restore coverage after the policy has lapsed, subject to
certain requirements.
REQUIRED PREMIUM is the minimum amount of premium you must pay each year for the
base policy or a layer during its required premium period. The base policy and
each layer have separate required premium amounts. You may pay all or any part
of this premium in advance.
REQUIRED PREMIUM PERIOD is the total number of consecutive years that any
required premium must be paid. This period begins on the policy date for the
base policy and on the layer date for a layer. The required premium period is 10
years for issue ages 16-80 and 5 years for issue ages 81-89.
RIDER is an attachment to the policy that provides an additional benefit.
SEPARATE ACCOUNT is Transamerica Occidental Life Separate Account VUL-5 of
Transamerica Occidental Life Insurance Company, one of our separate investment
accounts. It consists of the sub-accounts under the policy.
SUB-ACCOUNT is an investment option under the policy. It is a subdivision of the
separate account which holds shares of a specific portfolio. The portion of the
accumulation value in any sub-account may increase or decrease depending on the
investment performance of the underlying portfolio.
TELEPHONE ACCESS PRIVILEGE is an option to transfer amounts between or among
investment options, change your premium allocation or request a loan by
telephone, within limits. The telephone access privilege will apply, unless you
advise us in writing that you do not want this option. Unless you elect not to
have the option available, you or your registered representative may exercise
this option. We reserve the right to discontinue this option at any time.
UNIT is a measure of interest in a sub-account.
UNIT VALUE is the value of a unit on a given valuation date.
VALUATION DATE is any day that the stock market (New York Stock Exchange) is
open for business. A valuation date ends when the stock market closes for the
day, generally at 4 pm Eastern Time.
VALUATION PERIOD is the period between the closeend ofbusiness one valuation
date and the closeend ofbusiness the next valuation date.
WE, OUR, US, COMPANY and TRANSAMERICA refer to Transamerica Occidental Life
Insurance Company.
WRITTEN REQUEST is a signed request in a form satisfactory to us that is
received at our Administrative Office.
YOU and YOUR means the owner of the policy.
SUMMARY
GENERAL
TransUltraR VUL is a variable universal life insurance policy issued by
Transamerica Occidental Life Insurance Company. The following summary is
intended to provide a general description of the most important features of the
policy. The remainder of the prospectus and the policy provide further detail.
The policy's provisions may vary in some states.
We will pay a death benefit to the beneficiary if the insured dies while the
policy is in force.
While the policy is in force, you may request partial surrenders, policy loans
and a full surrender, subject to applicable provisions and limitations. Subject
to our approval, you may increase the face amount of insurance by adding one or
more layers of additional coverage. You may also add to your coverage by
electing optional rider benefits available.
DURING THE REQUIRED PREMIUM PERIOD, YOU MUST PAY THE REQUIRED PREMIUMS TO KEEP
THE POLICY IN FORCE. FOR ISSUE AGES UNDER AGE 81, THIS PERIOD IS 10 YEARS. FOR
ISSUE AGES 81 THROUGH 89, THIS PERIOD IS 5 YEARS. Within limits, you may pay all
or any part of the required premiums in advance. You may pay more than the
required premiums, subject to the Premium Limitations. If you do not pay the
required premiums for the base policy and any layers, your policy will enter the
grace period and may lapse.
At the end of each year during the required premium period, we will determine
whether you have paid the required premiums. This amount must equal or exceed
the cumulative required premiums for each year during the required premium
perperiodiod or the policy will enter the grace period and could lapse. If you
have paid the required premiums, we will add a premium qualification credit to
your policy on theon policy anniversary. If you do not pay the required premiums
by the end of the grace period, the policy will lapse and insurance coverage
will terminate.
You may also request an increase in the face amount of the policy, called a
layer. You must also pay a required premium for each layer during the required
premium period for that layer. At the end of each year during the layer's
required premium period, we will determine whether you have paid the required
premiums for that layer. This amount must equal or exceed the cumulative
required premiums for the layer. If you have paid the required premiums, we will
add a premium qualification credit to your policy on the layer anniversary. If
the amount you have paid does not equal or exceed the cumulative required
premiums for the layer, we will calculate the cumulative total of all gross
premiums paid for the base policy and any other layers, less any partial
surrenders and surrender penalty free withdrawals, then compare the total to the
corresponding required premiums. If there is not enough extra premium to make up
the difference, the policy will enter the grace period and could lapse.
If you do not pay any required premium during the grace period, the policy will
lapse and insurance coverage will terminate.
PAYING THE REQUIRED PREMIUMS DURING THE REQUIRED PREMIUM PERIOD DOES NOT
GUARANTEE THE POLICY WILL NOT LAPSE. EVEN IF YOU PAY THE REQUIRED PREMIUMS
DURING THE REQUIRED PREMIUM PERIOD, THE POLICY CAN STILL LAPSE IF THE
ACCUMULATION VALUE, LESS ANY
OUTSTANDING LOAN, IS NOT ENOUGH TO PAY THE MONTHLY DEDUCTIONS DUE.
After the required premium period, we will continue to send you a reminder of
your planned periodic premiums. Premiums may be paid until the policy
anniversary nearest the 100th birthday of the insured. Paying premiums does NOT
guarantee that your policy will not lapse (except as provided under the optional
Endorsement to Modify Grace Period). Making additional payments after the end of
the required premium period may be necessary to keep your policy from entering
the grace period and subsequently lapsing. Premium payments may be subject to
certain maximum limitations.
You may add the optional Endorsement to Modify Grace Period to your policy. If
you pay the specified premiums, this rider will, within limits, prevent your
policy from entering the grace period, during the time the Endorsement is in
effect, if the monthly deductions due are greater than the accumulation value.
There are certain risks associated with purchasing a variable universal life
insurance policy. There is no guarantee that the investment objectives of the
portfolios will be achieved. The accumulation value may be less than the
aggregate premiums paid for the policy. BEFORE INVESTING, CAREFULLY READ THIS
PROSPECTUS AND THE PROSPECTUSES OF THE PORTFOLIOS THAT ACCOMPANY THIS
PROSPECTUS.
Because of the substantial nature of the surrender penalties, the policy is not
suitable for short-term investment purposes. Also, prospective purchasers should
note that it may not be advisable to purchase a policy as a replacement for
existing insurance.
80
The death benefit is generally excludible from the gross income of the
beneficiary although the death benefit may be subject to federal and state
estate taxes. Under current law, you will generally not be taxed on partial or
full surrenders until the cumulative surrender amount exceeds total premium
paid. Amounts received on full or partial surrenders in excess of total premiums
paid are treated as ordinary income. However, during the first 15 policy years,
distributions from the policy that are required under Section 7702 of the
Internal Revenue Code because of a reduction in policy benefits may be taxable
as ordinary income without regard to the amount of prior partial surrenders or
total premium paid. Further, if your policy is a modified endowment contract ("a
MEC"), you will pay income taxes on partial and full surrenders, loans or
assignments of the policy to the extent of any gains in the policy on an "income
out first" basis and without regard to prior partial surrenders or total premium
paid. Also, a 10% penalty tax may apply. A policy can become a MEC if premium
paid into the policy within the first seven policy years or at certain other
times exceeds limits established by the Internal Revenue Code. For more
information, see Federal Tax Considerations. As with any tax matter, you should
consult with your own qualified tax advisor to apply the law to your particular
circumstances.
Unit values may decline, and policy performance may be worse than illustrated. A
significant decline in unit values may cause the policy to lapse in a short
period of time unless additional premiums are paid or loan repayment, if
applicable, are made.
If the policy terminates while a loan is outstanding, you will realize taxable
income to the extent the loan balance (including accrued interest) exceeds your
basis in the policy. Due to the possible volatility in the investment
performance of the underlying portfolios, the policy could terminate (giving
rise to tax consequences) at an unexpected time.
<PAGE>
<TABLE>
<CAPTION>
TABLES OF FEES AND EXPENSES
The following table describes the fees and expenses you will pay when
purchasing, owning and surrendering the policy.
TRANSACTION FEES
-------------------------------- ------------------------------ ------------------------------ ------------------------
WHEN CHARGE IS AMOUNT POLICIES FROM WHICH
TYPE OF FEE DEDUCTED DEDUCTED CHARGE IS DEDUCTED
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
<S> <C> <C> <C>
Administrative Charge Each premium payment. 7% of premium All
(6.5% of premium, if face
amount is between $5,000,000
and $10,000,000, 6.25% if
face amount is $10,000,000
or greater)
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
Surrender Penalty Upon full surrender, partial The full surrender penalty Policies surrendered
surrenders and decreases in is the surrender penalty during first 10 policy
face amount, during policy factor times each $1,000 of or layer years.
and layer years 1-10, but no base policy face amount or Policies on which
later than the policy of layer face amount, partial surrenders in
anniversary nearest the respectively. The surrender excess of surrender
insured's 100th birthday. penalty factor varies by the penalty free
age of the policy and of withdrawal amounts are
each layer, respectively, taken. Policies on
and the insured's: which face amount
decreases are taken
o age at issue, during the first 10
o age on layer date, policy or layer years.
if any,
o sex, Each layer has its own
o smoker or nonsmoker surrender penalty
status, and factors and surrender
o risk class. penalty period. The
surrender penalty
The surrender
penalty for
factors for a
layer partial
surrenders and
vary by the
criteria
decreases in
face amount is
shown as they
apply to a
proportionate
share of the the
layer. full
surrender
penalty for the
policy or
layers,
respectively.
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
Partial Surrender Transaction On partial surrenders taken $25 All policies from
Fee after the end of the which a partial
surrender penalty period for surrender in excess of
the base policy or a layer. the amount eligible
for surrender penalty
free withdrawal is
taken.
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
Allocation Change Charge On each change of allocation $25. Currently waived. All policies on which
of new premiums. a change in allocation
of premium occurs.
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
Transfer Fee On each transfer after 18 in $25 from transfer amount. All policies on which
a policy year. more than 18 transfers
occur during a policy
year.
-------------------------------- ------------------------------ ------------------------------ ------------------------
TRANSACTION FEES (CONTINUED)
-------------------------------- ------------------------------ ------------------------------ ------------------------
WHEN CHARGE IS AMOUNT POLICIES FROM WHICH
TYPE OF FEE DEDUCTED DEDUCTED CHARGE IS DEDUCTED
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
Additional Illustrations At time of request for each $25 All policies on which
illustration of values the excess
requested in excess of one illustration is
illustration in a policy requested in a policy
year. year.
-------------------------------- ------------------------------ ------------------------------ ------------------------
-------------------------------- ------------------------------ ------------------------------ ------------------------
Riders and Other Benefits
o Accelerated Death At time of payment to you. $250 for each payment made All, if rider elected
Benefit Rider under the option. and option is
exercised.
-------------------------------- ------------------------------ ------------------------------ ------------------------
<PAGE>
The following table describes the charges you will pay periodically during the
time that you own the policy (not including portfolio expenses):
CHARGES OTHER THAN PORTFOLIO EXPENSES
-------------------------------- ---------------------------- ------------------------------ ------------------------
WHEN CHARGE IS AMOUNT POLICIES FROM WHICH
TYPE OF FEE DEDUCTED DEDUCTED CHARGE IS DEDUCTED
-------------------------------- ---------------------------- ------------------------------ ------------------------
-------------------------------- ---------------------------- ------------------------------ ------------------------
Mortality and Expense Risk Daily deduction reflected 0.25% annualized on net All with accumulation
Charge in sub-account unit value assets in each sub-account. value in one or more
calculation. Charges taken at a daily sub-accounts. The
rate of 0.000685787%, for charge is assessed
the number of days in the against the
valuation period, of net sub-account and is
assets in each sub-account. reflected in the unit
value calculation for
each sub-account.
-------------------------------- ---------------------------- ------------------------------ ------------------------
Monthly Deduction Beginning with the policy Varies as described below. All, until the policy
date and each monthly Sum of these four charges: anniversary nearest
policy date thereafter the insured's 100th
until the policy o Monthly Deduction birthday.
anniversary nearest the Rate times each $1,000
insured's 100th birthday. of net amount at risk
on the base policy and
Monthly Deduction Rate
times each $1,000 of
net amount at risk on
each layer; plus
o Monthly deduction
for riders; plus
o Policy fee; plus
o Monthly
Expense
Charge Per
Thousand on
the base
policy and
Monthly
Expense
Charge Per
Thousand on
each layer.
o Monthly Deduction The monthly deduction rate All.
Rate, times each $1,000 times each $1,000 of the net
of the net amount at risk amount at risk on the The monthly deduction
on the base policy and monthly policy date. The rate and the net
Monthly Deduction Rate, rate will depend on the face amount at risk are
times each $1,000 of the amount and accumulation calculated separately
net amount at risk on value of the base policy and for the base policy
each layer, respectively each layer, respectively; and for each layer,
the number of years that the respectively. The rate
policy and each layer, for the base policy
respectively; has been in and for each layer,
force and the insured's: respectively, varies
by the criteria noted
o age at issue, as applied to the base
o age on layer date, policy or, as
if any, applicable, to each
o sex, layer. The smoker or
nonsmoker status and
-------------------------------- ---------------------------- ------------------------------ ------------------------
CHARGES OTHER THAN PORTFOLIO EXPENSES (CONTINUED)
-------------------------------- ---------------------------- ------------------------------ ------------------------
WHEN CHARGE IS AMOUNT POLICIES FROM WHICH
TYPE OF FEE DEDUCTED DEDUCTED CHARGE IS DEDUCTED
-------------------------------- ---------------------------- ------------------------------ ------------------------
Monthly Deduction
(continued)
-------------------------------- ---------------------------- ------------------------------ ------------------------
o Monthly Deduction o smoker or nonsmoker the risk class,
Rate (continued) status, and including extra
o risk class, ratings, may differ
adjusted as applicable among the base policy
for extra ratings. and each layer,
respectively.
Different rates
may apply to the
base policy and to
each layer,
respectively.
We may charge
rates that are
less than the
maximum.
-------------------------------- ---------------------------- ------------------------------ ------------------------
o Monthly Deduction for
Riders
>> Full Death Benefit Part of monthly deduction $0.10 times each $1,000 of All policies on which
Rider from base policy net amount at risk on base the rider is in force
accumulation value during policy and on each payer, during policy years
policy years when the respectively. when the insured is
insured is between between attained ages
attained ages 90 and 99. 90 and 99.
>> Insurance on Children Part of monthly deduction A monthly rate of $0.45 per All policies on which
Rider from base policy during $1,000 of term insurance the rider is in force.
policy years when rider is coverage for the number of Rider terminates at
in effect. thousands of coverage the earlier of the
elected. insured's 65th
birthday or the
child's 25th birthday.
>> Guaranteed Part of monthly deduction A rate per $1,000 of All policies
on which Insurability Rider from base policy during optional insurance
available the rider is in force.
policy years when rider is under the rider. Rates vary Rider terminates on
in effect. by issue age for the base the policy anniversary
policy (age on layer date nearest the insured's
for a layer). If an option 40th birthday, or
is exercised, the charges earlier, as provided
for the additional coverage in the rider.
are reflected separately for
the coverage.
-------------------------------- ---------------------------- ------------------------------ ------------------------
CHARGES OTHER THAN PORTFOLIO EXPENSES (CONTINUED)
-------------------------------- ---------------------------- ------------------------------ ------------------------
WHEN CHARGE IS AMOUNT POLICIES FROM WHICH
TYPE OF FEE DEDUCTED DEDUCTED CHARGE IS DEDUCTED
-------------------------------- ---------------------------- ------------------------------ ------------------------
Monthly Deduction
(continued)
o Monthly Deduction for
Riders (continued)
>> Waiver Provision Rider Part of monthly deduction A rate per $1,000 of net All policies on which
from base policy during amount at risk on the base the rider is in force.
policy years when rider is policy and on each layer, Rider terminates on
in effect. respectively. the policy anniversary
nearest the insured's
The rate varies by the 60th birthday, or
insured's: earlier as provided in
the rider.
o attained age;
o sex; and
o smoker or nonsmoker
classification.
>> Accident Indemnity Part of monthly deduction A rate per $1,000 of All policies on which
Rider from base policy during coverage under the rider. the rider is in force.
policy years when rider is The rate varies by issue age Rider terminates on
in effect. (or, for a layer, by age on the policy anniversary
the layer date). nearest the insured's
70th birthday, or
earlier as provided in
the rider.
o Policy Fee Monthly fee is deducted $6.00 per month currently. All
from base policy
accumulation value. $6.00 per month maximum
during required premium
period.
$10.00 per month maximum
after required premium
period.
-------------------------------- ---------------------------- ------------------------------ ------------------------
CHARGES OTHER THAN PORTFOLIO EXPENSES (CONTINUED)
-------------------------------- ---------------------------- ------------------------------ ------------------------
WHEN CHARGE IS AMOUNT POLICIES FROM WHICH
TYPE OF FEE DEDUCTED DEDUCTED CHARGE IS DEDUCTED
-------------------------------- ---------------------------- ------------------------------ ------------------------
Monthly Deduction
(continued)
o Monthly Expense Monthly deduction from the The charge will depend on All
Charge Per Thousand accumulation value of the the face amount of the base
base policy or each layer, policy and each layer, Separate charges are
Charge is per $1,000 of respectively. respectively, and the calculated for the
face amount of base insured's: base policy and each
policy and per $1,000 of layer, respectively.
face amount of each layer. o age at issue; The charge for each is
o age of base policy determined based on
or layer; the criteria noted, as
o sex, applied to the base
o smoker or nonsmoker policy and each layer,
status, and respectively. The age
o class of risk. at issue for a layer
is based on the
Different Monthly Expense insured's age on the
Charge Per Thousand rates layer date. The smoker
may apply to the base policy or nonsmoker status
and to each layer, and the class of risk.
respectively. May differ among the
base policy and each
layer, respectively.
-------------------------------- ---------------------------- ------------------------------ ------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO EXPENSES
(as a percentage of assets after fee waiver and/or expense reimbursement)(1)
TOTAL
PORTFOLIO
MANAGEMENT OTHER RULE ANNUAL
PORTFOLIO FEES EXPENSES 12B-1 FEES EXPENSES
--------- ---- -------- ---------- --------
<S> <C> <C> <C>
Alger American Income & Growth 0.625% 0.075% - 0.70%
Alliance VP Growth & Income - Class B 0.63% 0.09% 0.25% 0.97%
Alliance VP Premier Growth - Class B 1.00% 0.04% 0.25% 1.29%
Dreyfus VIF Appreciation 0.75% 0.03% - 0.78%
Dreyfus VIF Small Cap 0.75% 0.03% - 0.78%
Janus Aspen Series Balanced - Service Shares(2) 0.65% 0.02% 0.25% 0.92%
Janus Aspen Series Worldwide Growth - Service Shares(2) 0.65% 0.05% 0.25% 0.95%
MFS(R)Emerging Growth Series 0.75% 0.09% - 0.84%
MFS(R)Growth with Income Series 0.75% 0.13% - 0.88%
MFS(R)Research Series 0.75% 0.11% - 0.86%
MS UIF Emerging Markets Equity(3) 0.42% 1.37% - 1.79%
MS UIF Fixed Income(3) 0.14% 0.56% - 0.70%
MS UIF High Yield(3) 0.19% 0.61% - 0.80%
MS UIF International Magnum(3) 0.29% 0.87% - 1.16%
OCC Accumulation Trust Managed(3)(4) 0.77% 0.06% - 0.83%
OCC Accumulation Trust Small Cap(4) 0.80% 0.09% - 0.89%
PIMCO VIT StocksPLUS Growth & Income(5) 0.40% 0.25% - 0.65%
Transamerica VIF Growth 0.70% 0.15% - 0.85%
Transamerica VIF Money Market 0.00% 0.60% - 0.60%
</TABLE>
We may receive payment from some or all of the portfolios or their advisers in
varying amounts that may be based on the amount of assets allocated to the
portfolios. The payments are for administrative or distribution services.
The fee table information relating to the underlying portfolios was provided to
us by the portfolios or their investment advisers, as we have not and cannot
independently verify either the accuracy or completeness of such information.
Therefore, we disclaim any and all liability for such information. Actual future
expenses of the portfolios may be greater or less than those shown in the Table.
These expenses are for the year ended December 31, 1999.
Notes to Fee Table:
(1) From time to time, the portfolio's investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in the
Portfolio Expenses table are the expenses paid for 1999. The expenses shown
in the table reflect a portfolio's adviser's waivers of fees or
reimbursement of expenses, if applicable. It is anticipated that such
waivers or reimbursements will continue for calendar year 2000. Without
such waivers or reimbursements, the annual expenses for 1999 for certain
portfolios would have been, as a percentage of assets, as follows:
<TABLE>
<CAPTION>
TOTAL PORTFOLIO
MANAGEMENT FEES OTHER ANNUAL
PORTFOLIO EXPENSES EXPENSES
--------- -------- --------
<S> <C> <C> <C>
MS UIF Emerging Markets Equity 1.25% 1.37% 2.62%
MS UIF Fixed Income 0.40% 0.56% 0.96%
MS UIF High Yield 0.50% 0.61% 1.11%
MS UIF International Magnum 0.80% 0.87% 1.67%
Transamerica VIF Growth 0.75% 0.15% 0.90%
Transamerica VIF Money Market 0.35% 1.04% 1.39%
</TABLE>
(2) Expenses are based on estimated expenses the service shares expect to incur
in the initial fiscal year.
(3) The management fee of certain of the portfolios includes breakpoints at
designated asset levels. Further information on these breakpoints is
provided in the prospectuses for the portfolios.
(4) The Adviser is contractually obligated to waive that portion of the
advisory fee and to assume any necessary expense to limit total operating
expenses of the portfolio to 1.00% of average net assets (net of expenses
offset) on an annual basis.
(5) PIMCO has contractually agreed to reduce total annual portfolio operating
expenses to the extent these expenses would exceed 0.65% of average daily
assets due to the payment of organizational expenses and Trustees' fees.
Without such reductions, total operating expenses for the fiscal year ended
December 31, 1999 were 0.65%. Under the Expense Limitation Agreement, PIMCO
may recoup these waivers and reimbursements in future periods, not
exceeding three years, provided total expenses, including such recoupment,
do not exceed the annual expense limit. Fees expressed are restated as of
April 1, 2000.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF SEPARATE ACCOUNT INVESTMENT OPTIONS AND
INVESTMENT ADVISERS
INVESTMENT ADVISER TRUST/FUND PORTFOLIOS
<S> <C> <C>
Fred Alger Management, Inc. The Alger American Fund o Income & Growth Portfolio
Alliance Capital Management, Alliance Variable Products o Growth and Income Portfolio
L.P. Series Fund, Inc. -
Class B
o Premier Growth Portfolio -
Class B
The Dreyfus Corporation Dreyfus Variable Investment o Appreciation Portfolio
Fund o Small Cap Portfolio
Janus Capital Corporation Janus Aspen Series o Balanced Portfolio -
Service Shares
o Worldwide Growth Portfolio
-
Service Shares
MFS Investment Management(R) MFS(R)Variable Insurance o Emerging Growth Series
TrustSM o Growth with Income Series
o Research Series
Morgan Stanley Asset Management The Morgan Stanley Universal o Emerging Markets Equity
Institutional Funds, Inc. Portfolio
o International Magnum
Portfolio
Miller Anderson & Sherrerd, LLP The Morgan Stanley Universal o Fixed Income Portfolio
Institutional Funds, Inc. o High Yield Portfolio
OpCap Advisors OCC Accumulation Trust o Managed Portfolio
o Small Cap Portfolio
Pacific Investment Management PIMCO Variable Insurance o StocksPLUS Growth and
Company ("PIMCO") Trust Income Portfolio
Transamerica Investment Transamerica Variable o Growth Portfolio
Management, LLC Insurance Fund, Inc. o Money Market Portfolio
</TABLE>
<PAGE>
DESCRIPTION OF TRANSAMERICA,
THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY
Transamerica Occidental Life Insurance Company, or Transamerica, is a stock life
insurance company incorporated under the laws of the State of California on June
30, 1906. Transamerica is principally engaged in the sale of life insurance and
annuity policies. The home office of Transamerica is at 1150 South Olive Street,
Los Angeles, California 90015.
Transamerica Corporation, a subsidiary of AEGON N.V., indirectly owns
Transamerica Occidental Life Insurance Company.
INSURANCE MARKETPLACE STANDARDS
ASSOCIATION
In recent years, the insurance industry has recognized the need to develop
specific principles and practices to help maintain the highest standards of
marketplace behavior and enhance credibility with consumers. As a result, the
industry established the Insurance Marketplace Standards Association, or IMSA.
As an IMSA member, we agree to follow a set of standards in our advertising,
sales and service for individual life insurance and annuity products. The IMSA
logo, which you will see on our advertising and promotional materials,
demonstrates that we take our commitment to ethical conduct seriously.
THE SEPARATE ACCOUNT
Transamerica Occidental Life Separate Account VUL-5, designated as the separate
account, was established by us as a separate account under the laws of the State
of California, pursuant to resolutions adopted by our Board of Directors on June
11, 1996.
The separate account is registered with the Securities Exchange Commission, or
SEC, under the Investment Company Act of 1940, or 1940 Act, as a unit investment
trust. It meets the definition of a separate account under the federal
securities laws. However, the Commission does not supervise the management of
the investment practices or policies of the separate account.
You may allocate any portion of your net premiums to the separate account. The
portion of the accumulation value in the separate account will be based on the
values of the sub-accounts to which your net premiums are allocated.
The assets of the separate account are our property, but they are segregated
from our other assets. Income, if any, together with gains and losses, realized
or unrealized, from assets in the separate account will be credited to or
charged against the amounts allocated to the separate account without regard to
our other income, gains or losses. Assets equal to the liabilities of the
separate account will not be charged with liabilities arising out of any other
business we may conduct. If the assets in the separate account exceed the
liabilities arising under the policies supported by the separate account, the
excess may be used to cover our other liabilities. Any amount we allocate to the
separate account for state or federal income taxes may be deducted from the
separate account.
The separate account currently has nineteen sub-accounts available for
investment, each of which invests solely in a specific corresponding mutual fund
portfolio. Changes to the sub-accounts may be made at our discretion. All
sub-accounts may not be available in all jurisdictions.
THE PORTFOLIOS
The sub-accounts invest in a variety of portfolios.
The portfolios are open-end management investment companies, or portfolios or
series of, open-end management companies registered with the SEC under the 1940
Act and are usually referred to as mutual funds. This SEC registration does not
involve SEC supervision of the investments or investment policies of the
portfolios.
BEFORE INVESTING, CAREFULLY READ THE PROSPECTUSES OF THE PORTFOLIOS THAT
ACCOMPANY THIS PROSPECTUS. THE PORTFOLIOS' PROSPECTUSES CONTAIN MORE DETAILED
INFORMATION ON THE PORTFOLIO'S INVESTMENT OBJECTIVES, RESTRICTIONS, RISKS,
EXPENSES AND ADVISERS. Statements of Additional Information for the portfolios
are available on request. There is no guarantee that the investment objectives
of the portfolios will be achieved. The accumulation value may be less than the
aggregate premiums made to the policy.
The portfolios are described below.
THE INCOME & GROWTH PORTFOLIO OF THE ALGER AMERICAN FUND seeks current income
with long-term capital appreciation by investing in dividend-paying equity
securities that also offer opportunities for capital appreciation.
GROWTH AND INCOME PORTFOLIO - CLASS B OF THE ALLIANCE VARIABLE PRODUCTS SERIES
FUND, INC. seeks reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-paying common stocks of
good quality.
PREMIER GROWTH PORTFOLIO - CLASS B OF THE ALLIANCE VARIABLE PRODUCTS SERIES
FUND, INC. seeks growth of capital by pursuing aggressive investment policies.
THE APPRECIATION PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT FUND seeks
long-term capital growth consistent with preservation of capital, and current
income as a secondary goal, by investing in common stocks focusing on "blue
chip" companies with total market values of more than $5 billion at the time of
purchase.
THE SMALL CAP PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT FUND seeks to
maximize capital appreciation by generally investing at least 65% of its assets
in common stock of U.S. and foreign companies. The portfolio focuses on
small-cap companies with total market values of less than $1.5 billion.
THE BALANCED PORTFOLIO - SERVICE SHARES OF THE JANUS ASPEN SERIES seeks
long-term growth consistent with preservation of capital and balanced by current
income by investing in equity and fixed-income securities selected primarily for
their income potential.
THE WORLDWIDE GROWTH PORTFOLIO - SERVICE SHARES OF THE JANUS ASPEN SERIES seeks
long-term growth of capital by investing in common stocks of foreign and
domestic companies. The portfolio has the flexibility to invest on a world-wide
basis in companies and other organizations of any size, regardless of the
country of organization or place of principal business activity.
THE EMERGING GROWTH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks long-term
growth of capital by investing in common stocks of companies that are early in
their life cycles that MFS believes have the potential to become major
enterprises.
THE GROWTH WITH INCOME SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks current
income with long-term capital growth by investing in equity securities of
companies that are believed to have long-term potential for growth and income.
THE RESEARCH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks long-term growth
of capital and future income by investing in equity securities of companies
believed to possess better-than-average prospects for long-term growth.
THE EMERGING MARKETS EQUITY PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL
INSTITUTIONAL FUNDS, INC. seeks long-term capital appreciation by investing
primarily in emerging market countries. The Adviser seeks to maximize returns by
investing in markets with improving fundamentals, attractive valuations, and low
investor recognition, and by selecting securities that demonstrate attractive
growth, reasonable valuations, and attractive fundamentals.
THE FIXED INCOME PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS,
INC. seeks above-average income and total return by investing in obligations of
the U.S. government and its agencies, corporate bonds, mortgage-backed
securities, foreign bonds, and other fixed income securities and derivatives.
THE HIGH YIELD PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS,
INC. seeks above-average income and total return by investing in high yield
securities, including corporate bonds and other fixed income securities and
derivatives.
THE INTERNATIONAL MAGNUM PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL
FUNDS, INC. seeks long-term capital appreciation by investing in developed
market stocks, including equity securities of non-U.S. issuers comprising the
Morgan Stanley Capital International EAFE Index (which includes Australia,
Japan, New Zealand, most Western European nations, and certain developed Asian
countries, such as Hong Kong and Singapore).
THE MANAGED PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks growth of capital over
time by investing primarily in common stocks, bonds and cash equivalents.
THE SMALL CAP PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks capital appreciation
by investing primarily in equity securities of companies with a market
capitalization under $2 billion.
THE STOCKSPLUS GROWTH AND INCOME PORTFOLIO OF THE PIMCO VARIABLE INSURANCE TRUST
seeks to outperform the stock market as measured by the S&P 500 Index by
investing in S&P 500 derivatives in addition to or in place of S&P 500 stocks in
an attempt to equal or exceed the performance of the S&P 500.
THE GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC. seeks
long-term capital growth by investing in listed and unlisted common stocks of
companies with superior growth potential.
THE MONEY MARKET PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
seeks to maximize current income, liquidity and preservation of capital by
investing in short-term money market instruments.
PORTFOLIOS NOT PUBLICLY AVAILABLE
Shares of the portfolios are not offered to the public but solely to the
insurance company separate accounts and other qualified purchasers as limited by
federal tax laws. These portfolios are not the same as mutual funds with very
similar names that are sold directly to the public. The performance of such
publicly available funds, which may have different assets and expenses, should
not be considered as an indication of the performance of the portfolios. The
assets of each portfolio are held separate from the assets of the other
portfolios. Each portfolio operates as a separate investment vehicle. The income
or losses of one portfolio have no effect on the investment performance of
another portfolio. The sub-accounts reinvest dividends and/or capital gains
distributions received from a portfolio in more shares of that portfolio.
CHARGES AND DEDUCTIONS
The following charges will apply to your policy under the circumstances
described. Some of these charges apply throughout the policy's duration. Other
charges apply only if you choose certain options under the policy. The charges
are for the services and benefits provided, costs and expenses incurred and
risks assumed by us under or in connection with the policies. Services and
benefits provided by us include:
o the death benefits, cash and loan benefits provided by the policy;
o investment options, including net premium allocations;
o administration of various elective options under the policy; and
o the distribution of various reports to policy owners.
Costs and expenses incurred by us include:
o those associated with underwriting applications and riders;
o various overhead and other expenses associated with providing the
services and benefits related to the policy;
o sales and marketing expenses; and
o other costs of doing business, such as federal, state and local taxes,
premium taxes and other taxes and fees.
Risks assumed by us include the risks that insureds may live for a shorter
period of time than estimated resulting in the payment of greater death benefits
than expected, and that the costs of providing the services and benefits under
the policies will exceed the charges deducted.
ADMINISTRATIVE CHARGE
Each time you make a premium payment to us, we impose a charge equal to 7% of
the premium payment for policies with a face amount under $5,000,000, 6.5% for
face amounts between $5,000,000 and $9,999,999, and 6.25% for face amounts of
$10,000,000 and over. The administrative charge is designed to help offset our
state and local premium taxes, federal income tax treatment of deferred
acquisition costs, as well as a portion of the distribution costs associated
with the policies.
SURRENDER PENALTY
During the first 10 policy years, and the first 10 layer years for each layer,
or until the policy anniversary nearest age 100, whichever is earlier, we will
assess a surrender penaltyo on any surrender amount that
exceeds the amount eligible for a surrender penalty free withdrawal and/or
a decrease in face amount. Separate surrender penalty factors and surrender
penalty periods apply to the base policy and to each layer. The minimum
surrender penalty is $25.
A layer year is a twelve month period beginning on the effective date of a
layer, and each twelve month period thereafter.
After the 10th policy year or, as applicable, layer year, we assess a $25 charge
for partial surrenders in excess of the amount that would be eligible for
surrender penalty free withdrawal during the surrender penalty period.
We deduct the surrender penalty from the base policy or layer accumulation
value.
The surrender penalty is a factor times each $1,000 of the face amount of the
base policy or layer. The surrender penalty factor for a policy depends on:
o the face amount of the base policy;
o the face amount of each layer, if any;
the insured's age at issue, sex, smoker or non-smoker status, and underwriting
risk classification as determined separately for the base policy and each
layer, respectively; and
o how many years the policy and each layer, if any, have been in force.
The surrender penalty factors are shown in the policy data pages for the policy.
The surrender penalty is intended to help us recover a portion of our first year
acquisition expenses and sales
expenses, including commissions.
ALLOCATION CHANGE CHARGE
We reserve the right to impose a charge of up to $25 for each change you make in
premium allocations for new net premiums. We will deduct such charge from the
accumulation value of the base policy on a pro rata basis. Currently, we do not
currently impose this charge.
The charge is designed to recover the administrative expenses associated with
processing changes in allocation elections.
TRANSFER FEE
We will not charge you for the first 18 transfers you make during a policy year.
If you make more than 18 transfers during a policy year, we will charge you up
to $25 for each additional transfer.
This fee is designed to cover our administrative expenses associated with
processing more transfers than our other fees and charges for administrative
expenses are designed to offset.
ADDITIONAL ILLUSTRATIONS
Upon written request at any time, we will send you an illustration of your
policy's benefits and values. There is no charge for the first illustration in
each policy year. We reserve the right to charge up to $25 for each additional
illustration you request in a policy year. We will deduct any such fee from the
accumulation value of the base policy on a pro-rata basis.
This charge is designed to recover the administrative expenses associated with
providing such additional illustrations.
ACCELERATED DEATH BENEFIT RIDER
If the Accelerated Death Benefit Rider is in effect on your policy and you
receive an Accelerated Death Benefit payment, we will deduct an administrative
fee of $250 from each payment you receive.
The administrative fee is designed to help us recover the expenses associated
with gathering, reviewing, and evaluating the information necessary to approve
your request, as well as the expenses associated with processing the payment.
MORTALITY AND EXPENSE RISK CHARGE
We impose a daily charge at an effective annual rate of 0.25% of the average
daily net asset value of each sub-account. The charge is reflected in the
calculation of the daily unit value. This charge compensates us for assuming
mortality and expense risks. We may realize a profit from this charge.
The mortality risk we assume is that insureds may live for a shorter time than
anticipated. If this happens, we will pay more net death benefits than
anticipated. The expense risk we assume is that the expenses incurred in issuing
and administering the policies will exceed those compensated by the
administration charges in the policies.
MONTHLY DEDUCTIONS
Beginning on the policy date and on each subsequent monthly policy date, we will
determine the monthly deduction for that policy month. The monthly deduction is
the sum of the monthly deduction for the base policy and the monthly deduction
for each layer. The monthly deduction will continue to the policy anniversary
nearest the insured's 100th birthday.
The monthly deduction for the base policy is equal to the sum of four charges:
o the monthly deduction rate for the base policy, times .001, times the
difference between the death benefit and the accumulation value of the base
policy on the applicable monthly policy date; PLUS
o the monthly deduction for any riders; PLUS
o the policy fee; PLUS
o the monthly expense charge per thousand for the base policy, times .001,
times the face amount of the base policy.
The monthly deduction for each layer is equal to:
o the monthly deduction rate for the layer, times .001, times the difference
between the death benefit and the accumulation value of the layer on the
monthly layer date; PLUS
o the monthly expense charge per thousand for the layer, times .001, times the
face amount of the layer.
On each monthly policy date, we will take the monthly deduction for that policy
month. If the monthly policy date is not a valuation date, we will take the
monthly deduction on the next valuation date. The monthly deduction for the base
policy and for each layer is taken from the applicable accumulation value. If
the monthly deduction amount for a layer exceeds the layer's accumulation value
minus any outstanding loan, the excess portion of the monthly deduction for the
layer will be taken first from the next most recently added layers, in order,
and, then from the base policy. The amount of the monthly deduction taken from
the accumulation value of the base policy and then from any layers will be
deducted from your investment options within the base policy or layer on a
pro-rata basis.
This deduction is a charge we assess for various expenses related to the
issuance of a policy, the cost of life insurance, the cost of any optional
benefits and administrative expenses. We may realize a profit from the monthly
deductions.
MONTHLY DEDUCTION RATES. This is the rate used to calculate a portion of the
monthly deduction on the base policy and on each layer, respectively.
The monthly deduction rates may differ for the base policy and for each layer.
The monthly deduction rates will depend on:
o the total of the face amount of the base policy and of all layers;
the insured's sex;
the insured's smoker or nonsmoker status as determined by us for the base policy
and, separately, for each layer, respectively;
the insured's class of risk, including any extra ratings as determined by us
for the base policy and, separately, for each layer, respectively;
o the number of years that the policy and each layer, respectively, have been in
force; and
the insured's age at issue or on each layer date, respectively.
The maximum monthly deduction rates are based on the 1980 Commissioners Standard
Ordinary table for sex distinct, smoker distinct, age nearest birthday rates,
adjusted for extra ratings.
A table of guaranteed maximum monthly deduction rates for the policy is shown in
the policy data pages. We may use rates lower than these guaranteed maximum
monthly deduction rates. We will never use higher rates.
Any change in the monthly deduction rates will be prospective and will be
subject to our expectations as to future cost factors. Such cost factors may
include, but are not limited to, mortality, expenses, interest, persistency, and
any applicable federal, state and local taxes.
The monthly deduction rates in effect for the base policy and for each layer,
respectively, at the time they are issued, are guaranteed not to be increased
during the applicable required premium period.
MONTHLY DEDUCTION FOR RIDERS. Additional benefits are available by riders to
your policy. The fees for these optional riders pay for the cost of these
additional benefits. The monthly deduction for riders is deducted from the
accumulation value as part of the monthly deduction for the base policy.
o Accident Indemnity Rider - The charge for this rider is part of the monthly
deduction during the policy years during which the rider is in effect. The
rider terminates on the policy anniversary nearest the insured's 70th
birthday, if not terminated sooner. The monthly deduction rate for the
rider varies by issue age (age on the layer date for each layer,
respectively). The charge is equal to the monthly rate for the rider times
the number of thousands of coverage amount under the rider.
o Full Death Benefit Rider - The fee for this rider is part of the monthly
deduction during the policy years when the insured is between the attained
ages of 90 and 99. The monthly rate for the rider is equal to $0.10 per
$1,000 of net amount at risk on the base policy and on each layer,
respectively.
Guaranteed Insurability Rider - The charge for this rider is part of the monthly
deduction during the o policy years during which the rider is in effect.
The rider will terminate on the policy anniversary nearest the insured's
40th birthday, if it has not been terminated sooner. The monthly deduction
rate varies based on the issue age and, in California, by the sex of the
insured. The monthly rate is applied to the number of thousands of
insurance which may be elected under the rider.
o Insurance on Children Rider -The charge for this rider is part of the
monthly deduction during the policy years during which the rider is in
effect. The rider will terminate on the policy anniversary nearest the
insured's 65th birthday, if not terminated sooner. The monthly deduction
rate for the rider is equal to $0.45 for each unit of coverage (one unit is
$1,000) elected.
o Waiver Provision Rider - The charge for this rider is part of the monthly
deduction during the policy years during which the rider is in effect. The
rider will terminate on the policy anniversary nearest the insured's 60th
birthday, if not terminated sooner. The charge is equal to the monthly
deduction rate times the number of thousands of net amount at risk on the
base policy and on each layer, respectively. The rate varies by the
insured's attained age, sex, and smoker or nonsmoker classification on the
base policy.
POLICY FEE - On each monthly policy date, we deduct a policy fee as a part of
the monthly deduction for the base policy. Currently, this monthly fee is $6. We
reserve the right to change this fee, but we guarantee it will never be more
than $6 during the required premium period of the base policy or $10 thereafter.
There are no policy fees for layers.
MONTHLY EXPENSE CHARGE PER THOUSAND. The monthly expense charge per thousand
varies by policy. The charge for a policy is based on:
o the face amount of the base policy;
o the face amount of each layer, respectively, if any;
o the age of the policy or layer, if any;
the insured's sex;
the insured's smoker or nonsmoker status as determined by us for the base policy
and, separately, for each layer, respectively;
the insured's class of risk as determined by us for the base policy and,
separately, for each layer, respectively; and
the insured's age at issue (or age on layer date, for each layer, respectively).
The monthly expense charge per thousand may differ for the base policy and for
each layer.
REINSTATEMENT INTEREST CHARGES
If your policy lapses and you subsequently reinstate it, you will incur interest
charges if:
o you had an outstanding loan when the policy lapsed;
o you must pay us an amount necessary as a required premium per year;
and/or
o you must pay us the net cash value we paid to you at the time the
policy lapsed.
The interest rate for an outstanding loan is at an effective annual rate of
6.25% (5.88% in advance) for the period from the date the policy lapsed to the
date the loan is repaid or reinstated under the REINSTATEMENT provisions. The
interest rate for the required premium per year and for the net cash value paid
back to us is at an effective annual rate of 6%.
These interest charges are designed to help us recover the expenses we incur to
underwrite and process the reinstatement request, as well as to help offset the
reduction in surrender penalty factors from the date the policy lapsed to the
date of reinstatement.
PORTFOLIO EXPENSES
The value of the units of the sub-accounts will reflect the management fee and
other expenses of the portfolios in which the sub-accounts invest. The
management fees and other expenses of the portfolios are listed above under the
Table of Portfolio Expenses. The prospectuses and statements of additional
Information of the portfolios contain more information concerning the fees and
expenses.
POSSIBLE TAX CHARGE
No charges are currently made against the sub-accounts for federal or state
income taxes. Should income taxes be imposed, we reserve the right to deduct a
charge for such taxes from your policy. We may reflect the amount of such taxes
in the calculation of the unit values.
THE POLICY
Depending on the state of issue, your policy may be an individual policy or a
certificate issued under a group policy. The policy is subject to the insurance
laws and regulations of each state or jurisdiction in which it is available for
distribution. There may be differences between the policy issued and the general
policy description contained in this prospectus because of requirements of the
state where your policy is issued. Some of the state specific differences are
included in the prospectus, but this prospectus does NOT include references to
all state specific differences. All state specific policy features will be
described in your policy.
OWNER
The insured is the owner unless another owner has been named in the application
or in a supplemental agreement filed with us in accordance with the policy. As
owner, you are entitled to exercise all rights granted under the policy while
the insured is alive. If the owner is an individual other than the insured, and
dies before the insured, the rights of the owner belong to the executor or
administrator of the owner's estate, unless the policy provides otherwise. If
the owner is a partnership, the rights belong to the partnership as it exists
when a right is exercised.
If ownership of the policy is shared by more than one person, all such persons
must sign each written request to exercise any right under the policy. The
telephone access privilege may be exercised by any one person who shares
ownership, or by your registered representative.
You may change the owner while the insured is alive by notifying us in a form
and manner acceptable to us. The change will not be effective until we record it
at our Administrative Office. The written consent of any irrevocable beneficiary
will be required.
You may assign a policy as collateral or make an absolute assignment. All policy
rights will be transferred as to the assignee's interest. The consent of the
assignee may be required to make changes in premium allocations, make transfers
or to exercise other rights under the policy. We are not bound by an assignment
or release thereof, unless it is in writing and recorded at our Administrative
Office. When recorded, the assignment will take effect as of the date the
written request was signed. Any rights the assignment creates will be subject to
any payments we made or actions we took before the assignment was recorded. We
are not responsible for the adequacy of any assignment. However, if you file an
assignment with us and we record it at our administrative office, your rights
and those of any revocable beneficiary will be subject to it. The written
consent of any irrevocable beneficiaries will be required.
BENEFICIARY
If the insured dies while the policy is in force, we will pay the death benefit
to the beneficiary. You select the beneficiary on the application and may change
the beneficiary at a later date. If the beneficiary is a partnership, we will
pay the death benefit to the partnership as it exists on the date the insured
dies.
To the extent allowed by law, no death benefit will be subject to the claims of
the beneficiary's creditors or to any legal process against the beneficiary.
If any beneficiary dies before the insured, that beneficiary's interest in the
death benefit will end. If any beneficiary dies at the same time as the insured,
or within 30 days after the insured, that beneficiary's interest in the death
benefit will end if no benefits have been paid to that beneficiary. If the
interests of all designated beneficiaries have ended when the insured dies, we
will pay the death benefit to you, as owner. If you are not living at that time,
we will pay the death benefit to your estate.
You may change the beneficiary while the insured is alive by sending us written
notice. The change will not be effective until we record it at our
Administrative Office. Even if the insured is not living when we record the
change, the change will take effect as of the date it was signed. However, any
benefits we pay before we record the change will not be subject to the change.
An irrevocable beneficiary may not be changed without the written consent of
that beneficiary.
APPLICATION FOR A POLICY
We offer policies to proposed insureds who are between ages 16 and 89. After
receiving a completed application, we will begin underwriting to decide the
insurability of the proposed insured. We may require medical examinations and
other information before deciding insurability. We issue a policy only after
underwriting has been completed. We may reject an application that does not meet
our underwriting standards.
If we approve the application, we will place the insured into one of four
underwriting classes:
o Preferred nonsmoker
o Preferred smoker
o Standard nonsmoker
o Standard smoker
Additional adjustments for extra ratings due to increased mortality risk may
apply to persons classified into the standard underwriting classes.
If a face increase is requested on the policy, the face increase will also be
subject to our underwriting requirements and review. No face increase amount
will be effective until we have completed our underwriting review and have
approved the face increase amount. We will assign the insured to one of the four
underwriting classes for the face increase amount approved. Additional
adjustments for extra ratings may apply for an insured placed into one of the
standard underwriting classes for the face increase amount approved.
An insured may be classified into different underwriting classes and be assigned
different extra ratings on the base policy and on each layer, respectively.
The underwriting class assigned to the insured affects the monthly deductions
for the policy. The monthly deductions and surrender charges for a policy are
based on the insured's underwriting class, among other factors. Generally, our
rates are lowest for preferred nonsmokers.
We also charge lower rates for policies with higher face amounts of base policy
coverage. We offer the following bands for face amounts of base policy coverage:
o $25,000 - $49,999
o $50,000 - $99,999
o $100,000 - $249,999
o $250,000 - $499,999
o $500,000 - $999,999
o $1,000,000 - $2,999,999
o $3,000,000 - $4,999,999
o $5,000,000 - $9,999,999
o $10,000,000 and above
The monthly deduction rates we use decrease at each band, except that at the
$5,000,000 band, we reduce the administrative charge from 7% to 6.5%. For the
$10,000,000 band, we reduce the administrative charge from 6.5% to 6.25%.
The band for a policy is generally determined based on the total face amount for
the base policy plus all layers on the policy. Changes in band due to face
amount increase or decreases will be applied prospectively for monthly
deductions which become due on or after the effective date of the face amount
increase or decrease.
If two or more TransUltra VUL policies are owned by the same owner and provide
coverage on the same insured, we may determine the band for each policy based on
the total coverage on all the policies at issue. We do not adjust the monthly
deduction rates on such policies for face amount increases or decreases in the
future.
You may make a payment at the time of application, under certain circumstances,
subject to our rules. Under our underwriting rules, you may make a payment at
the time of application if you are requesting a face amount of base policy
coverage which is no more than $1,000,000. We may refuse to accept initial
payments with the application for other situations.
If you make an initial payment in the amount of at least one monthly premium, or
10% of an annual premium, we will issue a conditional receipt which may provide
fixed conditional insurance, but not until after all its conditions are met.
Included in these conditions are:
o the completion of both parts of the application;
o the completion of all underwriting requirements; and
o the proposed insured must be insurable under our rules for insurance under
the policy, in the amount, and in the underwriting class applied for in the
application.
After all conditions are met, the amount of fixed conditional insurance provided
by the conditional receipt will be the amount applied for, up to a maximum of
$250,000 for persons age 16 to 65 and insurable in a standard underwriting
class, and up to $100,000 for all other ages and underwriting classes.
You do not need to pay an initial payment at the time of application. If we
approve the application, you will need to pay us the minimum initial premium for
the policy before any coverage under the policy will be in effect.
MINIMUM INITIAL FACE AMOUNT
We will generally issue a policy only if it has a face amount of at least
$25,000.
EFFECTIVE DATE OF COVERAGE
Except as otherwise provided under the terms of the conditional receipt, no
insurance coverage is provided under the policy until after we approved the
application and:
o the minimum initial premium is paid to us; and
o the policy is delivered to you while:
the insured is alive and in good health, and
b) the statements and answers in the application continue to be true and
complete.
POLICY DATE
The policy date is the date from which insurance coverage is provided under the
policy, subject to the conditions noted above. We take monthly deductions from
the policy for the period starting with the policy date.
Generally, except when you request and we approve backdating a policy, the
policy date will be:
o two calendar days after we approve the application if you submitted the
initial premium with the application and the policy is issued without delivery
requirements; or
o the date you accept the policy and pay us the initial premium, if you did
not submit the initial premium with the application and/or we issued the
policy subject to satisfactory completion of delivery requirements.
In the latter situation, when we receive the initial premium and any delivery
requirements, we will amend the policy date as originally issued. The amended
policy date will be the date on which the policy was delivered to you and you
had completed any delivery requirements and/or paid over to our agent the
required initial premiums. We will not amend the date forward beyond that date
which would cause the insured to be a year older for purposes of determining
monthly deductions.
BACKDATING A POLICY
If you request, we may backdate a policy by assigning a policy date earlier than
the date the application is signed. However, in no event will a policy be
backdated earlier than the earliest date allowed by state law or by our
underwriting rules. Your request must be in writing and, if we approve the
request, will amend your application.
If you add a layer to the policy, you may also request us to backdate the layer
by assigning a layer date earlier than the date the request is approved.
Monthly deductions are based in part on the age of the insured at issue or on
the layer date, if applicable. Generally, monthly deductions are less at a
younger age. We will deduct monthly deductions for the period that the policy or
layer is backdated. This means that, while the monthly deduction may be lower
than what would have applied had we not backdated the policy or layer, you will
be paying for insurance during a period when the policy or layer was not in
force.
REALLOCATION DATE
When we approve and issue a policy, we establish a reallocation date for that
policy. Currently, the reallocation date is 25 calendar days from the date we
approve the policy for issue.
Before the reallocation date, any portion of net premiums you wish to allocate
to the sub-accounts will be allocated initially to the money market sub-account.
Any portion of the net premiums you elected to allocate to the fixed account
will be allocated directly to the fixed account. On the reallocation date, the
value of those net premiums initially allocated to the money market sub-account
will be reallocated to the sub-account options you elected on your application
or subsequent premium allocation election.
Net premiums credited to your policy on or after the reallocation date will be
allocated to the fixed account and to your elected sub-account options directly,
based on your most recent premium allocation election.
FREE LOOK PERIOD
The policy provides for a free look period. You have the right to examine and
cancel your policy by returning it to us or to one of our representatives within
10 days after you receive the policy, or a longer period as required by state
law for replacement policies or for other reasons.
If you exercise the free look option, we will void the policy and refund:
o the difference between any premiums paid, including fees or other charges, and
the amounts allocated to the separate account; PLUS
o the value of the amounts in the separate account on the date we receive the
returned policy at our administrative office; PLUS
o any fees or other charges imposed on amounts in the separate account.
If your policy provides for a full refund as required by state law, your refund
will be the total premiums paid to the policy. We may delay a refund of any
payment made by check until the check has cleared your bank.
TRANSFERS
After the end of the free-look period and after the reallocation date, you may
transfer amounts between or among the investment options available. Your request
must be in a form and manner acceptable to us. You may also exercise your
telephone access privilege. Each transfer will be subject to our transfer rules
in effect at the time the transfer is made. We may set rules specifying, among
other things:
o the minimum and maximum amounts you may transfer; and
o how frequently you may make transfers.
Different rules may apply to different investment options.
Except with our consent, transfers from the fixed account will be limited as
follows:
o at least 90 days must elapse between transfers from the fixed account;
and
o the maximum amount which may be transferred is the greater of 25% of the
portion of the accumulation value in the fixed account or the amount of the
last transfer from the fixed account.
These limitations do not apply to transfers from the loan account due to loan
repayments. The portion of the accumulation value in the fixed account excludes
the amounts, if any, in the loan account.
We will make the transfer on the day we receive your transfer request in good
order. If the day we receive your transfer request is not a valuation date, we
will make the transfer on the next following valuation date.
Amounts may not be transferred between the base policy and/or layers.
You will not be charged for the first 18 transfers you make during a policy
year. If you make more than 18 transfers during a policy year, we will charge up
to $25 for each additional transfer. Any transfer fee will be deducted from the
amount that you are transferring. The transfer fee will be allocated between or
among the investment options from which the amount is being transferred in
proportion of A divided by B, where:
A is the amount transferred from an investment option; and
B is the total amount transferred from all investment options.
The following transactions do not count toward the first 18 transfers during a
policy year and will not be charged a transfer fee:
o Transfers made on the reallocation date from the money market sub-account to
other sub-accounts.
o Transfers to or from the loan account.
o Transfers under the dollar cost averaging or automatic account rebalancing
options.
o Transfers we may make after we receive notice of the insured's death.
o Transfers due to material changes in the separate account or one or more of
the portfolios in which a sub-account invests.
You may apply for automatic transfers under either the dollar cost averaging, or
DCA, option or the automatic account rebalancing, or AAR, option by submitting
your written request to our Administrative Office. You may cancel your election
of an option by written request or by exercising your telephone access privilege
at any time with regard to future transfers.
OTHER RESTRICTIONS ON TRANSFERS
We reserve the right, without prior notice, to modify, restrict, suspend or
eliminate the transfer privileges, including the telephone access privilege, at
any time and for any reason. For example, restrictions may be necessary to
protect owners from adverse impacts on portfolio management of large and/or
numerous transfers by market timers or others. We have determined that the
movement of significant amounts from one sub-account to another may prevent the
underlying portfolio from taking advantage of investment opportunities. This is
likely to arise when the volume of transfers is high, since each portfolio must
maintain a significant cash position in order to handle redemptions. Such
movement may also cause a substantial increase in portfolio transaction costs
which must be indirectly borne by owners. Therefore, we reserve the right to
require that all transfer requests be made by you and not by a third party
holding a power of attorney. We may also require that each transfer you request
be made by a separate communication to us. We also reserve the right to require
that each transfer request be submitted in writing and be manually signed by
you. We may choose not to allow telephone or facsimile transfer requests.
DOLLAR COST AVERAGING OR DCA
This option allows you to systematically transfer a set dollar amount from the
money market sub-account on a monthly, quarterly, or semi-annual basis to one or
more other sub-accounts. The DCA option is designed to reduce the risk of your
purchasing units only when the price of the units is high, but you should
carefully consider your financial ability to continue the option over a long
enough period of time to purchase units when their value is low as well as when
it is high. The DCA option does not assure a profit or protect against a loss.
The DCA option will terminate automatically when the value of your money market
sub-account is zero.
There is no additional charge for electing the DCA option. Transfers to the
fixed account are not permitted under the DCA option. We reserve the right to
terminate the DCA option at any time and for any reason.
All DCA transfers are subject to the following requirements:
o You must specify the sub-accounts to which you want to transfer amounts
from the money market sub-account, the set dollar amount you want to
transfer from the money market sub-account, the frequency of the scheduled
transfers and the date you want the transfers to begin.
o The date that you want the transfer to begin may not be:
a) before the end of the free-look period or the reallocation date; or b) less
than one month after the date the initial premium was allocated to your
policy.
o You must have at least $1,000 in the money market sub-account:
a) when you elect this option; and
b) on the date of the first transfer.
o The minimum automatic transfer amount from the money market sub-account is
$100.
You may choose any date for your initial DCA transfer, subject to the following
limitations:
o The date you choose may not be:
a) a monthly policy date; or
b) the same date as the date you choose for automatic account rebalancing
transfers, if you choose that option.
We reserve the right to limit further the allowable dates on which DCA
transfers may take place.
o The first DCA transfer will be on the date you select if that date is a
valuation date. Subsequent DCA transfers will occur at the frequency and on
the date you select. If the date you select is not a valuation date, DCA
transfers will occur on the next following valuation date. If, however, the
value in the money market sub-account is less than the scheduled amount on
a scheduled date, no DCA transfer will occur on that scheduled date. If the
value in the money market sub-account subsequently increases to an amount
at least equal to the scheduled amount, then a DCA transfer will resume on
the next scheduled date.
The DCA option will automatically terminate on the earliest of:
o the date the money-market sub-account does not have any accumulation
value remaining;
o the date we receive notice of the insured's death;
o the date the policy lapses;
o the date the policy is surrendered or terminated; or
o the date you request. Your request must be made in writing or by
exercising your telephone access privilege.
We will not process any DCA transfers after the date we receive your DCA
termination request. You may submit a new request to recommence DCA transfers.
However, we may set minimum time periods after the termination date of the
previous option election before we allow the new election to become effective.
AUTOMATIC ACCOUNT REBALANCING OR AAR
Once your net premiums and requested transfers have been allocated among your
investment option choices, the performance of each investment option may cause
your allocation to shift such that the relative value of one or more investment
options is no longer consistent with your overall objectives. Under the AAR
option, the balances in your selected investment options can be restored to the
allocation percentages you elect on your written request by transferring values
among the investment options. These balances will be restored separately on the
base policy and on each layer.
There is no additional charge for electing the AAR option. We reserve the right
to terminate the AAR option at any time and for any reason.
All AAR transfers are subject to the following requirements:
o You must specify the percentages by investment option of the accumulation
value (excluding amounts in the loan account) you want to maintain in the
selected investment options, the frequency of the scheduled transfers and
the date you want the transfers to begin. The percentages must be whole
numbers and must equal 100%.
o The date that you want the transfers to start may not be:
a) before the end of the free-look period or the reallocation date; or
b) less than three months after the date the initial premium was allocated
to the policy.
o The minimum automatic transfer amount is $100.
o We reserve the right to discontinue this option at any time.
You may choose any date for your initial AAR transfer, subject to the following
limitations:
o The date you choose may not be:
a) a monthly policy date; or
b) the same date as the date you choose for DCA transfers, if you choose
that option.
We reserve the right to limit further the allowable dates on which AAR
transfers may take place.
o The first AAR transfer will be on the date you select if that date is a
valuation date. Subsequent AAR transfers will occur at the frequency and on
the date you selected. If the date you select is not a valuation date, the
first AAR transfer will occur on the next following valuation date.
The AAR option will automatically terminate on the earliest of:
o the date we receive notice of the insured's death;
o the date the policy lapses;
o the date the policy is surrendered or terminated; or
o the date you request. Your request must be made in writing or by
exercising your telephone access privilege.
We will not process any AAR transfers after the date we receive your AAR
termination request. You may submit a new request to recommence AAR transfers.
However, we may set minimum time periods after the termination date of the
previous option election before we allow the new election to become effective.
TELEPHONE ACCESS PRIVILEGE
This option allows you or your registered representative, within limits, to:
o transfer amounts between or among investment options,
o change your premium allocations, and
o request a loan, up to limits established by us,
by telephone. THE TELEPHONE ACCESS PRIVILEGE WILL AUTOMATICALLY APPLY UNLESS YOU
INFORM US, IN WRITING, THAT YOU DO NOT WANT THIS OPTION.
Partial surrenders and full surrenders are not permitted under this option.
We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. If more than one person is the owner, the telephone
access privilege may be exercised by any one person who is an owner. We will not
be liable for any losses due to unauthorized or fraudulent instructions. The
procedures we will follow for telephone instructions may include requiring some
form of personal identification before acting on such instructions, providing
written confirmation of the transaction, and/or tape recording the instructions
given by telephone. YOU, AS THE OWNER, BEAR THE RISK FOR RESULTS OF ALL
TRANSACTIONS INITIATED THROUGH THE TELEPHONE ACCESS PRIVILEGE.
GUARANTEED EXCHANGE OPTION
Under the Guaranteed Exchange Option, you have a right to exchange your current
policy for a fixed policy offered by us. Under this option, you would terminate
your coverage under the current policy in exchange for equal coverage under a
fixed policy not offering sub-accounts. You may exercise this option at any time
before the 20th policy anniversary or the policy anniversary nearest age 95,
whichever comes first, if all of the following conditions are met:
the insured is living;
o the current policy does not have any outstanding loans; and
monthly deductions are not being waived under a Waiver Provision Rider.
The accumulation value on the date the current policy is exchanged will be
transferred to the new policy. If the current policy includes one or more
layers, and the new policy allows for layers, the accumulation value in each
layer and in the base policy will be transferred accordingly to layers and the
base policy on the new policy.
EFFECTIVE DATE. The effective date of the new policy will be the date the
current policy is exchanged. The policy date of the new policy will be the same
as the policy date of the current TransUltra VUL policy. If the new policy
allows for layers, the layer date for each layer on the new policy will be the
same as the layer date for the equivalent layer in the current policy. We may
limit the effective date to the policy anniversary following the date we receive
all requirements in good order. Before the date of the exchange, you will
continue to have all rights under the current policy, including the right to
allocate net premiums to the sub-accounts and to transfer amounts among
investment options. If you wish to transfer accumulation values to the fixed
account of your policy until the date of the exchange, you must provide us with
transfer instructions to that effect.
APPLICATION. We must receive all of the following in order to process the
exchange:
o A policy change application indicating your request to exercise this option
and your request to surrender the current policy.
o The release of any lien against or assignment of the current policy.
o The current policy.
o Payment of any amount due for the exchange, if applicable.
We will consider the application for the current policy together with the policy
change application to be the application for the new policy.
NEW POLICY. The exchange must be to an adjustable life insurance policy that
would have been available from us at the time you applied for the current
policy. The new policy will be based on the sex, age, class of risk and smoking
status of the insured as of the policy date of the current policy. If the
current policy includes one or more layers, and the new policy allows for
layers, the sex, age, class of risk and smoking status of the insured under a
layer will apply to the equivalent layer on the new policy. The premiums for the
new policy will be based on our published rates in effect on the date you
request the exchange. If the Accelerated Death Benefit Option Endorsement is
part of the current policy, it will automatically become a part of the new
policy. Any other riders that form a part of the current policy, and any new
riders requested, will become a part of the new policy only if we agree to
provide them on the date of the exchange. The new policy will take effect
immediately upon termination of the current policy. Under no circumstances will
we pay a death benefit under both the current policy and the new policy.
ASSIGNMENT. If there is an assignment on the current policy and you want to
carry over that assignment to the new policy, you must execute a new assignment.
EXCHANGE ADJUSTMENTS. The minimum initial premium for the new policy will be
equal to:
o the cumulative total of the required annual premiums applicable for
the number of years that the current policy was in force; MINUS
o the total accumulation value transferred to the new policy.
If the current policy includes one or more layers and the new policy allows for
layers, then the minimum initial premium for the new policy will be equal to:
o the cumulative total of the required annual premiums applicable to the new
policy for the number of years that the current policy was in force minus
the total accumulation value transferred to the new policy from the current
policy's base policy; PLUS
o the cumulative total of the required annual premiums applicable to each
layer on the new policy for the number of years that the applicable layer
on the current policy was in force minus the total accumulation value
transferred to each layer on the new policy from the applicable layer on
the current policy.
The minimum initial premium will be applied to the new policy as a gross
premium, subject to any administrative or other charges.
SURRENDER PENALTY PERIOD. The period for which the current policy was in effect
before the date of the exchange will be used to reduce the surrender penalty
period under the new policy. If the current policy has one or more layers and
the new policy allows for layers, then the period for which the policy was in
effect before the date of the exchange will be determined for the base policy
and for each layer separately.
EVIDENCE OF INSURABILITY. When you exercise this option, we will not require
evidence of insurability from the insured.
SUICIDE AND INCONTESTABILITY. The period for which the current policy was in
effect before the date of exchange will be used to reduce the time period for
any suicide and incontestability provision under the new policy. If the current
policy has one or more layers and the new policy allows for layers, then the
period for which the policy was in effect before the date of the exchange will
be determined for the base policy and for each layer, separately.
OWNERSHIP. The owner of the new policy will be the same as the owner of the
current policy. If you do not want the owner of the current policy to be the
owner of the new policy, you must indicate this on the application for the new
policy and complete a transfer of ownership form. We may also require that the
owner of the new policy provide us with evidence of insurable interest in the
life of the insured. A change in ownership may have tax consequences.
BENEFICIARY. The beneficiary of the new policy will be the same as the
beneficiary of the current policy. If you do not want the beneficiary of the
current policy to be the beneficiary of the new policy, you must indicate this
in the policy change form and complete a change of beneficiary form. We may also
require that the new beneficiary provide us with evidence of insurable interest
in the life of the insured.
TERMINATION. This Guaranteed Exchange Option terminates on the earliest:
o the 20th policy anniversary;
o the policy anniversary nearest age 95;o
o the date the current policy is surrendered or terminated; or
o the date the current policy lapses under the GRACE PERIOD provision.
MISSTATEMENT OF AGE OR SEX. If a misstatement of the insured's age or sex is
found before this option is exercised and the current policy's death benefit is
changed as a result, the face amount of the new policy will be based on the
adjusted face amount of the current policy.
If a misstatement of the insured's age or sex is found after this option is
exercised, the death benefit amount under the new policy will be subject to the
Misstatement of Age or Sex provision of the new policy.
POLICY CHANGES. If the face amount of the current policy is changed for any
reason, we will proportionately change the benefit amount of the option.
DEATH BENEFIT
If the policy is in force on the date the insured dies, we will pay the death
benefit to the named beneficiary. The death benefit before the policy
anniversary nearest age 100 will be based on the option you choose. If you do
not choose a death benefit option, the Option 1 death benefit option will
automatically be in effect. We will reduce any death benefit payable by any
existing policy loans and by the portion of any grace period premium payment
necessary to provide insurance to the date of the insured's death. The amount of
the death benefit may also be affected by other provisions such as Misstatement
of Age or Sex and Partial Surrenders.
The policy is intended to qualify under Code Section 7702 as a life insurance
contract for federal tax purposes. The death benefit is intended to qualify for
the federal income tax exclusion. The provisions of the policy and any attached
endorsement or rider will be interpreted to ensure such qualification,
regardless of any language to the contrary.
To the extent the death benefit is increased to maintain qualification as a life
insurance policy, we will make appropriate adjustments to any monthly deductions
or supplemental benefits (retroactively and prospectively), that are consistent
with such an increase. We may deduct retroactive adjustments from the
accumulation value or from any death benefits payable. Prospective adjustments
will be reflected in the monthly deduction.
PROOF OF DEATH
We will pay any death benefit payable because of the death of the insured when
we receive due proof of the death of the insured while the policy is in force.
When the insured dies, proof of death must be sent to our Administrative Office.
We must be notified of the death within a reasonable time, and in no event later
than one year after the date of death. We will send the appropriate forms to the
beneficiary upon request.
DEATH BENEFIT OPTIONS
There are three death benefit options available under the policy before the
policy anniversary nearest age 100. You choose the desired option in the
application. The same death benefit option will apply to the base policy and to
each layer, respectively. If you do not choose a death benefit option on the
application, Option 1 will automatically take effect.
You may change the death benefit option once per policy year after the first
policy year by written request. Changes in the death benefit option:
o will be effective on the policy anniversary following the date we
approve the change;
o may not increase the net amount at risk, unless we approve the
increase based on the insured's evidence of insurability provided to
us;
o will incur applicable surrender penalties if the change in option
results in a decrease in the face amount; and
o may result in changes in the monthly deductions, including the monthly
deduction rates.
Before the policy anniversary nearest age 100, the death benefit will be as
follows:
For Option 1 (the level option), the death benefit is the GREATEST of:
a) the total of the face amount of the base policy and each layer on the date of
the insured's death;
b) the death benefit factor multiplied by the policy's accumulation value on the
date of the insured's death; or
c) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
For Option 2 (the plus option), the death benefit is the GREATEST of:
a) the total of the face amount of the base policy and each layer on the date
of the insured's death, plus the policy's accumulation value on the date of
the insured's death;
b) the death benefit factor multiplied by the policy's accumulation value on the
date of the insured's death; or
c) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
For Option 3 (the plus premium option), the death benefit is the GREATEST of:
a) the total of the face amount of the base policy and each layer on the date
of the insured's death, plus the excess, if any, of all gross premiums paid
over the sum of any partial surrenders, proportionate surrender penalties,
surrender penalty free withdrawals and/or premium refunds on the date of
the insured's death;
b) the death benefit factor multiplied by the policy's accumulation value on the
date of the insured's death; or
c) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
Beginning with the policy anniversary nearest age 100, the death benefit will be
the greater of:
a) the death benefit factor multiplied by the policy's accumulation value as of
the date of the insured's death; or
b) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
If the Full Death Benefit Rider is in force on the policy anniversary nearest
age 100, however, the death benefit beginning on that date will be the benefit
as provided under the rider.
The applicable death benefit factors will be based on the insured's age as of
the last policy anniversary and on the number of full policy years that have
lapsed since the date of issue.
We will reduce the death benefit by any outstanding loans and by the portion of
any grace period premium payment necessary to provide insurance to the date of
the insured's death.
The death benefit options permit you to tailor your policy to your needs.
Option 1 may be the preferable option for you if:
o you want a specified death benefit amount (the face amount of the base
policy and any layers), and
o you want to minimize your monthly deduction costs.
Under Option 1, the accumulation value generally reduces the net amount at risk.
Since monthly deductions for the cost of insurance are based on net amount at
risk, Option 1 results in smaller monthly deductions for the same face amount of
base policy coverage and any layers for the same insured compared to Options 2
and 3.
Option 2 may be the preferable option for you if:
o you want a death benefit which may increase over time; and
o you want the beneficiary to benefit from the potential investment growth of
the policy as well as to receive the face amount of the policy and any
layers.
Under Option 2, your death benefit is generally the sum of the face amount of
the base policy coverage, and of any layers, and the accumulation value. To the
extent the accumulation value increases, your death benefit will also increase.
Since the net amount at risk generally remains the face amount of the base
coverage and of any layers, however, the monthly deductions for the cost of
insurance will generally be higher than they would be for the same insured under
either Option 1 or Option 3.
Option 3 may be the preferable option for you if:
o you want a death benefit which may increase over time; and
o you want the death benefit to return the premium outlay as well as the
face amount.
Under Option 3, your death benefit will increase based on your cumulative
premiums paid, reduced by any amounts you withdraw. These increases are not
subject to investment return fluctuations. The monthly deductions you pay for
the cost of insurance for the base policy and any for layers may be higher or
lower than those you would be charged under Option 2, depending on whether the
accumulation value is more or less than the cumulative net premiums paid.
TRANSFERS AFTER INSURED'S DEATH
After we receive notice of the insured's death, we may:
o transfer any portion of the accumulation value in any sub-account to
our general account; and
o not allow any portion of the accumulation value to be transferred into
or to remain in any sub-account.
SETTLEMENT PROVISIONS
The net death benefit payable may be paid in a single sum or under one or more
of the payment options we are currently offering. Payment options are paid from
our general account and are not based on the investment experience of the
separate account. These payment options also are available if the policy is
surrendered. We will pay the death benefit or surrender proceeds, as applicable,
in a single sum, unless we receive an election to receive the applicable
benefits under a settlement option. See APPENDIX B - SETTLEMENT OPTIONS.
OPTION TO CHANGE THE FACE AMOUNT
INCREASING THE FACE AMOUNT. Effective on any policy anniversary, you may request
an increase in the face amount of the policy. The policy must be in force on the
layer date, and the insured must be alive and no older than age 80. The
following conditions apply:
o You must make a written request to us.
o The amount of the increase in face amount must be at least $25,000.
o You must submit evidence of insurability satisfactory to us.
o The amount of the increase will be contestable and subject to the suicide
limitation for two years after the effective date of the increase.
o The death benefit option for the layer must be the same as the base policy.
o If the base policy has a Waiver Provision, the layer must also have a
Waiver Provision, subject to our underwriting rules.
The increase in coverage will be issued as a separate layer on the policy. It
will have a required premium per year beginning on the layer date. It will also
have its own surrender penalty period for 10 years, beginning on the layer date.
The monthly deductions for that layer will be based on:
o the face amount and accumulation value of the layer;
o the insured's sex;
o the insured's smoker or nonsmoker status;
o the insured's class of risk as of the layer date (including any
adjustments for extra ratings); and
o the insured's age as of the layer date.
After the increase, the monthly deduction rates for the base policy and for the
layer will be based on the new total face amount of the policy.
DECREASING THE FACE AMOUNT. You may request a decrease in the face amount of the
policy if all of the following conditions are met:
o You must make a written request to us.
o On the request date, the policy must be in force and the insured must be
alive.
o The decrease of the face amount may only be effective as of a policy
anniversary.
o The amount of the reduction in face amount must be at least $25,000.
o The new face amount may not be less than our published minimum face amount.
The decrease of the face amount may cause a change in the monthly deduction
charged.
The decrease will be allocated first to the most recent layer, if any. To the
extent the decrease exceeds the face amount of the most recent layer, the
additional amount of the decrease will be allocated to the next most recent
layers in order, and then to the base policy.
A surrender penalty will result from the decrease in face amount to the extent
the decrease is allocated to the base policy during the 10 year surrender
penalty period for the base policy or is allocated to a layer during the 10 year
surrender penalty period for the layer. If the surrender penalty period is still
in effect, the surrender penalty period for the base policy and all layers ends
immediately before the policy anniversary nearest age 100. We will allocate the
surrender penalty among the base policy and any layers based on the face amount
of the decrease allocated to the base policy or the layer. If the surrender
penalty for a layer exceeds the accumulation value minus any outstanding loan
for the layer, the excess surrender penalty amount will be allocated to the next
most recently added layers, in order, and then to the base policy. After we have
allocated the surrender penalty among the base policy and any layers, we will
deduct the surrender penalty from your investment options on a pro-rata basis on
the date the decrease in face amount is effective. If that date is not a
valuation date, we will deduct the surrender penalty amounts on the next
valuation date.
The surrender penalty for the base policy or a layer is equal to A times B
divided by C, where:
A is the full surrender penalty for the current policy or layer year;
B is the amount of the decrease allocated to the base policy or layer; and
C is the face amount of the base policy or layer before the decrease.
If a decrease in face amount reduces a layer's face amount to zero but the
layer's accumulation value exceeds zero, the remaining accumulation value in the
layer will be transferred to the base policy accumulation value. The amounts in
each investment option will be transferred directly to the same investment
options in the base policy.
After the decrease, the monthly deduction rates and any future surrender
penalties will be based on the new face amount of the policy.
If the face amount is decreased during any required premium period, we will
recalculate the required premium per year for the remainder of the required
premium period based on the new face amount.
PREMIUMS
Premiums are payable to Transamerica Occidental Life Insurance Company. Premium
payments may be made by mail to our Administrative Office or through our
authorized representative.
When you apply for a policy, you must elect a required premium for the base
policy. Your agent will tell you the minimum and maximum amounts that you may
elect based on your proposed policy. As described below, the cumulative required
premium for the base policy and any layers must be paid during any applicable
required premium period or the policy will enter the grace period and may lapse.
This period is 10 years for issue ages through age 80, and 5 years for issue
ages 81 through 89. There will be a new required premium period based on age on
the layer date if you add a new layer.
PAYING THE REQUIRED PREMIUMS DURING THE REQUIRED PREMIUM PERIOD DOES NOT
GUARANTEE THE POLICY WILL NOT LAPSE. EVEN IF YOU PAY THE REQUIRED PREMIUMS
DURING THE REQUIRED PREMIUM PERIOD, THE POLICY CAN STILL LAPSE IF THE
ACCUMULATION VALUE, LESS ANY OUTSTANDING LOAN, IS NOT ENOUGH TO PAY THE MONTHLY
DEDUCTIONS DUE. If the Endorsement to Modify Grace Period is in effect on your
policy, however, the policy will not enter the grace period due the monthly
deduction exceeding the available accumulation value, subject to the provisions
of that endorsement.
We will accept any premium amount you send us while the policy is in force,
subject to the Premium Limitation provision and the following conditions:
o The policy will not become effective until you pay the minimum initial
premium shown on the policy's data page.
o You may pay premiums at any time before the policy anniversary nearest age
100. Each premium must be at least $25 and may not exceed the limits
described in the Premium Limitation section below.
REQUIRED PREMIUMS
By the end of each policy or layer year during any applicable required premium
period, the total gross premiums paid for the policy, less the amount of any
premium refunds, partial surrenders and surrender penalty free withdrawals, must
equal or exceed the cumulative required premiums for the base policy and all
layers, or this policy will enter the grace period and may lapse. On any
applicable policy or layer anniversary, the cumulative required premiums for the
base policy or any layer, respectively, is equal to (a) times (b), adjusted for
any decreases in face amount, where:
(a) is the required premium for the base policy or layer; and
(b) is the number of full years that have elapsed in the required premium
period for the base policy or layer.
You may pay all or part of the required premiums at any time before they are
due.
LAYER ALLOCATION
Net premiums will be allocated among the base policy and any layers as follows:
o The net premium will first be applied to any required premiums not yet paid
that are due before the end of the current policy or layer year. Amounts so
applied will be allocated in proportion to such required premiums not yet
paid for the base policy and each layer.
o Any remaining net premium will next be applied to any required premiums not
yet paid for future policy and layer years. Amounts so applied will be
allocated in proportion to the amounts required to meet the future premium
requirements for the base policy and each layer.
o The remainder, if any, will be allocated in proportion to the most recently
applicable required premium for the base policy and each layer.
After the end of the required premium period, premium payments are flexible as
to amount and frequency within limits, and no premiums may be paid into the
policy after the policy anniversary nearest age 100.
After the required premium period, we will continue to provide you with a
schedule of premium payments. Paying these premiums does NOT guarantee that your
policy will not lapse (except as provided under the Endorsement to Modify Grace
Period). If you stop paying premiums after the required premium period for the
base policy or for any layer, your coverage will continue until the accumulation
value less any outstanding loan is insufficient to pay the monthly deduction
due. At that time, your policy will enter the grace period (subject to the
provisions of the Endorsement to Modify Grace period if that endorsement is in
effect on your policy). At the policy anniversary nearest age 100, premium
billing will stop and no further premium payments will be accepted.
PREMIUM QUALIFICATION CREDIT
At the end of each year during the required premium period of the base policy,
if you have paid the cumulative required premiums for the base policy as
described in the Required Premiums provision, we will add a premium
qualification credit to the accumulation value of the base policy. For the base
policy, the amount of the credit will be a specific percentage of the required
premium per year for the base policy during the required premium period. The
premium qualification credit is equal to 2% of the required premium. After the
required premium period for the base policy, no additional premium qualification
credits will be added to your accumulation value.
At the end of each layer year during the required premium period of each layer,
if you have paid the cumulative required premiums for the layer as described in
the Required Premiums provision, we will add a premium qualification credit to
the accumulation value of that layer. For a layer, the amount of the credit will
be 2% of the required premium for the layer. After the required premium period
for each layer, no additional premium qualification credits will be added to
your accumulation value.
We will not credit the premium qualification credit if the amount of premium
required is not received by the end of the applicable policy or layer year.
The premium qualification credit will be allocated among your investment options
according to the most recent premium allocation election we have received from
you. We will allocate the premium qualification credit on the policy or layer
anniversary if that day is a valuation date. If the policy or layer anniversary
is not a valuation date, we will allocate the premium qualification credit on
the next valuation date.
PREMIUM LIMITATION
We reserve the right to refund any unscheduled premium during any policy year if
the total premium paid:
o increases the difference between the death benefit and the
accumulation value; and
o is more than 1% of the policy's face amount and more than three times the
total of the monthly deductions for the previous policy year.
We also reserve the right to refund any unscheduled premiums that exceed $25,000
in any 12-month period. We will not refund any amount if doing so would cause
the policy to enter the grace period before the next policy anniversary. The
amount refundable will not exceed the net cash value of the policy.
If we believe any portion of a premium payment will cause a policy to become a
Modified Endowment Contract, or MEC, under the tax laws, we will not accept that
portion of the premium payment and will immediately notify you. We will refund
the excess portion when the premium payment check has had time to clear the
banking system (but in no case more than two weeks after receipt), except in the
following circumstances:
o The premium payment would no longer cause the policy to become a MEC
as of the date the refund is to be made; or
o We receive a signed acknowledgment from you before the refund date
instructing us to process the premium notwithstanding the tax issues
involved.
In the above cases, we will treat the excess premium as having been received on
the date the excess premium would no longer create a MEC or the date we receive
the signed acknowledgment. We will then process it accordingly. You may submit a
written authorization to us with the premium instructing us to apply the premium
to the policy even though applying that premium would cause the policy to become
a MEC. In that event, we will treat such authorization as the signed
acknowledgement noted above and will credit the net premium to the policy
according to our regular premium allocation rules.
CONTINUATION OF INSURANCE
If you stop paying premiums, we will continue your policy at the face amount
then in effect and with any additional benefits provided by rider, subject to
the grace period and any premium requirements that may be in effect.
ALLOCATION OF NET PREMIUMS
In the application for your policy, you elect the initial allocation of the net
premiums among the investment options. You may allocate net premiums to one or
more investment options. Allocation percentages must be in whole numbers (for
example, 33 1/3% may not be chosen) and the combined percentages must total
100%. In the future, we may limit the number of sub-accounts you may invest in.
Currently, you may allocate your net premiums among any or all the sub-accounts
and the fixed account. The allocation percentages you elect will apply to all
premiums we receive unless you change your premium allocation instructions to
us.
You may change your premium allocation instructions at any time by sending us a
written request or by exercising your telephone access privilege. Any premium
allocation change will apply to all premiums we receive on or after the
effective date of change. We reserve the right to charge a fee up to $25 for
each premium allocation change, but we do not currently charge for allocation
change requests. We will deduct any such fee from the accumulation value of the
base policy on a pro-rata basis.
Your premium allocation election applies to all net premiums credited to your
policy. Separate elections for each layer and the base policy are not permitted.
The accumulation value in each sub-account will vary with the investment
experience of the portfolio in which the sub-account invests. You bear this
investment risk. Investment performance may also affect the death benefit. You
should review your allocations of premiums and accumulation value as market
conditions and your financial planning needs change.
INITIAL PREMIUM
The initial net premium will be credited to your policy no later than the second
valuation date following the latest of:
o the date we approve the issuance of the policy;
o the policy date;
o the date we receive the minimum initial premium; or
o the date we approve the final delivery requirement returned to us, if
the policy was issued with delivery requirements.
Delivery requirements are any requirement that must be completed before the
policy can become effective and before the policy may be delivered to you.
Examples include any application amendment or additional evidence of
insurability that we require. Except as otherwise provided in the conditional
receipt, the policy will not become effective until after all delivery
requirements are satisfied.
SUBSEQUENT PREMIUMS
After the reallocation date, we will allocate net premiums on the day we receive
them. If the date we receive a premium is not a valuation date, we will allocate
the net premium on the next valuation date.
CREDITING OF NET PREMIUMS BEFORE
REALLOCATION DATE
If any net premium is credited before the reallocation date, any amounts you
elected to allocate to the separate account will be initially allocated solely
to the money market sub-account. On the reallocation date, we will reallocate
the portion of the accumulation value in the money market sub-account among the
sub-accounts that you elected. If the reallocation date is not a valuation date,
we will make the reallocation on the next valuation date.
We will allocate any net premium credited to the policy on or after the
reallocation date directly to the investment options you elected.
UNITS AND UNIT VALUES
VALUATION OF UNITS
We will allocate net premiums, transfers and any applicable premium
qualification credits to the sub-accounts you have elected. All net premiums
will be allocated according to the ALLOCATION OF NET PREMIUMS section.
Your policy will be credited with a number of units in a sub-account is equal to
the amounts allocated to that sub-account divided by the value of the applicable
unit. The value of the applicable unit will be determined on the day the amount
is allocated. If day we allocate the amount is not a valuation date, the value
of the applicable unit will be determined on the next valuation date.
The number of units in a sub-account will remain fixed, unless:
a) increased by a net premium, premium qualification credit or a transfer
allocated to the sub-account;
b) reduced because of a partial surrender, surrender penalty free withdrawal,
surrender penalty, monthly deduction, policy loan, or other charges or fees
allocated to the sub-account, or because of a transfer from the
sub-account; or
c) changed by a subsequent split of a unit value.
Any transaction described in b) above will result in the cancellation of a
number of units that are equal in value to the amount of the transaction.
On each valuation date, we will value the assets of each sub-account and
determine the value of each unit.
UNIT VALUES
The unit values for all sub-accounts except the money market sub-account were
initially set at $10.00. The unit value for the money market sub-account was
initially set at $1.00. The unit value for a sub-account on any subsequent
valuation date is equal to:
{(A x B) minus C}
D
where
A is the number of shares of the underlying portfolio held by the sub-account at
the end of the valuation date.
B is the net asset value (NAV) per share of the underlying portfolio as of
the end of the valuation date, plus the per share amount of any capital
gains or dividends declared on that valuation date.
C is a charge for each day in the valuation period equal to the net assets of
the sub-account multiplied by the daily mortality and expense risk factor.
D is the number of units outstanding as of the end of the prior valuation date.
The unit value may increase or decrease from one valuation date to the next. You
bear this investment risk. We reserve the right to change the method we use to
determine the unit value, subject to any required regulatory approvals.
If we are required to pay federal taxes on the separate account, we reserve the
right to deduct a charge for such taxes. We may reflect the amounts of such
charges in calculation of the unit values.
ACCUMULATION VALUE
DETERMINATION OF ACCUMULATION VALUE
The base policy and each layer have separate accumulation values, a portion of
which may be available to you by taking a loan, a surrender penalty free
withdrawal or partial surrender, or upon surrendering the policy. The
accumulation value may affect the amount of the death benefit.
The accumulation value of the base policy at the time the initial premium is
accepted is equal to:
the initial net premium; MINUS
the monthly deduction(s) that start on the policy date.
The accumulation value of the base policy or a layer on any specified date after
the initial premium is allocated to the policy is equal to the sum of:
o the accumulation values in the separate account; PLUS
o the accumulation values in the fixed account, including the loan account,
for the base policy or layer on that date.
SUB-ACCOUNTS
The portion of your accumulation value in sub-accounts to which you have
allocated your net premiums or transferred amounts is equal to the value of the
units in the sub-accounts credited to your policy times the number of such
units.
FIXED ACCOUNT
Amounts in the fixed account do not vary with the investment performance of any
sub-account. Instead, these amounts are credited with interest at a rate
determined by us. For a detailed description of the fixed account, see APPENDIX
A - The Fixed Account.
LOAN ACCOUNT
Amounts borrowed from the policy are transferred to the loan account. Amounts in
the loan account do not vary with the investment performance of any sub-account.
Instead, these amounts are part of the fixed account but credited with separate
interest rates. The loan account is excluded from the value of the policy used
to determine pro-rata allocations.
PARTIAL SURRENDERS
At any time after the end of the free-look period, you may surrender a portion
of the policy's value by sending us a written request. We will deduct the
surrender amount and any surrender penalty from your investment options on the
day we receive your surrender request in good order. If that day is not a
valuation date, we will deduct the surrender amount and any surrender penalty
from your investment options on the next valuation date.
In any policy year, the maximum amount that you may receive by partial surrender
is:
o the accumulation value of the policy; MINUS
o any existing policy loans; MINUS
o the sum of three monthly deductions; and MINUS
o the greater of $25 or the surrender penalty that would apply for a
full surrender of the policy.
We will calculate the maximum partial surrender amount for the base policy and
each layer in a similar manner.
If you request an amount larger than the maximum described above, we will treat
it as a request for a full surrender.
We will allocate the partial surrender among the base policy and any layers
based on the proportion that the maximum partial surrender amount for each bears
to the total maximum of the partial surrender amounts available for the base
policy and all layers. The amounts so allocated will be deducted from the
accumulation value of the base policy or layer.
During the first 10 policy or layer years, or until the policy anniversary
nearest age 100, whichever is earlier, we will assess a surrender penalty on any
partial surrender amount that exceeds the amount eligible for the surrender
penalty free withdrawal described below. This excess will be attributed first to
the most recent layer, if any. To the extent the excess is greater than the face
amount of the most recent layer, the remainder will be attributed to the next
most recent layers in order, and then to the base policy.
For each layer where the amount attributed equals the face amount, the surrender
penalty will be equal to A times B divided by C, below. For the base policy or
layer to which any lesser amount is attributed, the surrender penalty will be
equal to A times B divided by D below, but not more than A times B divided by C.
For purposes of these calculations:
A is the amount of the excess attributed to the base policy or layer;
B is the surrender penalty factor for the current policy or layer year, as
applicable;
C is 1000; and
D is 1000 minus the surrender penalty factor for the current policy or layer
year, as applicable.
The surrender penalty factors vary by policy year and layer year and are shown
in the policy data pages. However, if the sum of the surrender penalties for the
base policy and any layers is less than $25, the surrender penalty will be $25.
After all surrender penalty periods have expired, we will assess a $25
transaction fee on any surrender amount that exceeds the amount eligible for a
surrender penalty free withdrawal.
The surrender penalty will be deducted from the accumulation value of the newest
layer. If the accumulation value of that layer is insufficient, the remainder
will be deducted successively from the next most recent layer(s), and then from
the base policy. After we have allocated the surrender amount and surrender
penalty among the base policy and any layers, we will deduct the allocated
amounts from your investment options on a pro-rata basis. We may permit you to
specify the investment options from which the partial surrender and surrender
penalties, if any, are to be deducted. Such specifications must be in a form and
manner acceptable to us. IF YOUR POLICY HAS ONE OR MORE LAYERS ON IT, YOU WILL
NOT BE PERMITTED TO SPECIFY THE INVESTMENT OPTIONS FROM WHICH THE PARTIAL
SURRENDER AND PENALTIES, IF ANY, ARE TO BE DEDUCTED.
If you choose Death Benefit Option 1, we will also reduce the policy's face
amount by:
o the surrender amount that exceeds the surrender penalty free withdrawal
amount; PLUS
o any applicable surrender penalty.
If you choose Death Benefit Option 3, we will also reduce from the policy's face
amount by:
o the surrender amount that exceeds the greater of:
a) the amount eligible for a surrender penalty free withdrawal; or
b) the cumulative gross premiums paid minus the sum of all previous
surrenders and premium refunds; PLUS
o any applicable surrender penalty on the amount that exceeds the amount
eligible for a surrender penalty free withdrawal.
If the amount of the reduction exceeds the face amount of the most recent layer,
the excess amount will reduce the face amount of the next most recently added
layers, in order, and then the face amount of the base policy.
If the new face amount would be less than our minimum allowed, then we will not
allow the partial surrender.
SURRENDER PENALTY FREE WITHDRAWALS
After the first policy year, a portion of any partial surrender amount you
request over $100 is available without surrender charges and without reductions
in face amount. The amount available is:
o 10% of the accumulation value, MINUS
100% of the sum of all surrender penalty free withdrawals since the last policy
anniversary.
This amount may not exceed the maximum amount available as a partial surrender.
There may be important tax consequences of making a partial surrender of the
policy. Consult with a tax adviser regarding these tax consequences.
NONFORFEITURE OPTION - FULL
SURRENDER
You may surrender the policy at any time for its net cash value. The surrender
penalty for a full surrender of the policy is equal to the surrender penalty, if
any, for the base policy, plus the surrender penalty, if any, for each layer.
We will process the surrender on the day we receive your written request in good
order. If that date is not a valuation date, then the request will be effective
on the next following valuation date.
There may be important tax consequences of taking a full surrender of the
policy. Consult with a tax adviser regarding these tax consequences.
POLICY LOANS
You may borrow any portion of the net cash value of the policy. We will process
a loan on the day we receive your loan request in good order. If that day is not
a valuation date, we will process the loan on the next valuation date.
We will require the written consent of any irrevocable beneficiaries.
The following terms and conditions apply to policy loans:
o The maximum loan amount for the policy is equal to the policy's accumulation
value MINUS the total of:
a) any outstanding loan(s) on the policy; PLUS
b) interest on the amount of the loan to the end of the policy year; PLUS
c) the surrender charges that would be assessed on a full surrender of the
policy or, if greater, the amount of two monthly deductions for the
base policy and for all layers.
We will calculate the maximum loan amount for the base policy and each
layer in a similar manner.
o Interest on loans is due in advance each year on the policy anniversary.
The annual effective loan interest rate is 6.25% (5.88% in advance) during
the first ten policy years and 4.25% (4.07% in advance) thereafter. We may
charge lower rates than these rates. We will never charge higher interest
rates. Currently, we charge 6.00% (5.66% in advance) during the first ten
policy years and 4.00% (3.84% in advance) thereafter. If you do not pay
interest when it is due, we will add the amount of the interest to the
loan.
We will allocate the net loan amount to the base policy and any layers in the
same proportion the maximum loan amount for each bears to the total of the
maximum loan amounts for the base policy and all layers. We will then deduct the
allocated amount from the base policy's or layer's investment options on a
pro-rata basis, unless you specify, in a form and manner acceptable to us, the
investment options to which you want to allocate the net loan amount. We will
transfer the net loan amount to the loan account.
If there are no layers on your policy, we will allow you to specify the
investment options from which the loan should be deducted. Loan interest is
always deducted pro-rata. If there are any layers on your policy, all loans will
be allocated pro-rata, as described above.
If the insured dies, we will deduct the outstanding loan from the death benefit
before we pay the death benefit to the beneficiary.
We will credit interest to the loan account at a rate equal to 4%.
LOAN REPAYMENT
You may repay any part of an outstanding loan at any time while the insured is
living. We will allocate the loan repayment on the day we receive it. If that
day is not a valuation date, we will allocate it on the next valuation date.
If you want to make a loan repayment, you must tell us that the payment you send
us is for that purpose. Unless your payment is clearly marked as a loan
repayment, we will assume it is a premium payment if it is received before the
policy anniversary nearest age 100. When we receive a loan repayment, we will
apply it to the outstanding loan. The loan repayment will be allocated first to
the most recent portion of the outstanding loan, and then to the next most
recent portions in order. For each such portion of the loan being repaid, the
loan repayment is first allocated to the portion of that loan amount in the base
policy, and then successively to any layers in the order of their layer dates.
After we have allocated the loan repayment among the base policy and any layers,
we will allocate those amounts to your investment options according to the
allocation percentages provided in the most recent premium allocation election
we have received from you.
Your policy will not automatically lapse if you do not repay a loan. However, it
will enter the grace period if the accumulation value less any outstanding loans
is not large enough to cover the monthly deduction due and any loan interest due
that is not paid in cash.
You may pay loan interest due in cash. We will treat the payment as a loan
repayment if you clearly identify the payment as a loan repayment or a payment
of loan interest due. Loan interest for each year is added to your loan. We will
deduct the loan interest from your investment options on a pro-rata basis, and
then transfer the loan interest to the loan account. The loan interest deduction
and transfer will be effective on the policy anniversary. If the policy
anniversary is not a valuation date, the loan interest deduction and transfer
will be effective on the next valuation date. Any loan interest paid in cash
will be applied to the loans in the order in which they were made.
EFFECT OF POLICY LOANS
Policy loans will affect the accumulation value and net cash value, and may
permanently affect the death benefit. The effect could be favorable or
unfavorable, depending on whether the investment performance of the underlying
portfolios in which the sub-accounts are invested is less than or greater than
the interest credited to the portion of the policy in the fixed account that
secures the loan.
We will deduct any outstanding policy loan from the proceeds payable when the
insured dies or from a full surrender.
The policy will enter the grace period and may lapse at the end of that period
if the monthly deductions due on any monthly policy date exceed the accumulation
value of the policy minus any outstanding loan. As a result, increases in the
outstanding loan and/or decreases in the accumulation value may make it more
likely that your policy will lapse. Assuming you do not make loan repayments,
the outstanding loan will increase if you receive additional loan amounts from
your policy. The outstanding loan amount will also increase if you do not pay
loan interest due in cash. Your accumulation value, net of outstanding loans,
will decrease if you take additional loans from your policy or you take partial
surrenders from your policy or, in certain situations, you decrease the face
amount of your policy. The accumulation value in a sub-account on the policy may
decline based on the investment performance of the underlying portfolio.
In the event the policy lapses or is otherwise terminated while a policy loan is
outstanding, the policy loan will be treated as cash received from the policy
for income tax purposes. Any cash received, that is, the outstanding policy loan
plus any other accumulation value less surrender penalties in excess of the
policy's tax basis, should be taxable as ordinary income.
For a discussion of the federal tax considerations of policy loans, see FEDERAL
TAX CONSIDERATIONS - Policy Loans.
GRACE PERIOD
During any required premium period, a grace period is a period of 61 days
starting on:
o a policy or layer anniversary on which the cumulative required premiums for
the base policy or layer, respectively, have not been paid; or
o a monthly policy date when the policy's accumulation value minus any
existing loan is less than the total monthly deduction due.
DURING THE REQUIRED PREMIUM PERIOD FOR THE BASE POLICY OR A LAYER, FAILURE TO
PAY SUFFICIENT PREMIUM TO MEET THE CUMULATIVE REQUIRED PREMIUM AMOUNTS WILL
CAUSE YOUR POLICY TO ENTER THE GRACE PERIOD, EVEN IF THE ACCUMULATION VALUE IS
GREATER THAN THE MONTHLY DEDUCTIONS DUE.
After all required premium periods and before the policy anniversary nearest age
100, a grace period is a period of 61 days beginning on a monthly policy date
when the policy's accumulation value minus any existing loan is less than the
total monthly deduction due.
After the policy anniversary nearest age 100, a grace period is a period of 61
days starting on a policy anniversary on which any loan interest due has not
been paid in cash, and the policy's accumulation value minus any existing loan
is less than the loan interest due.
If the policy enters the grace period, we will let you know by sending a notice
to your last known address. The notice will state the amount you must pay to
keep the base policy and any layers in force. You must pay this amount before
the grace period ends. If you do not pay enough, the policy will lapse at the
end of the 61 days. If there is any net cash value remaining at the end of the
grace period, we will apply it to the nonforfeiture option.
During the grace period, we will not charge interest on the amount due. If the
insured dies during the grace period and before you pay the amount due, we will
subtract from the death benefit the amount required to provide insurance to the
date the insured died.
REINSTATEMENT
If the policy lapses, it may be reinstated provided it was not surrendered. To
reinstate the policy, you must meet the following conditions:
o You must request reinstatement in writing within three years after the date
of lapse and before the policy anniversary nearest age 100.
The insured must submit evidence of insurability satisfactory to us.
o If any loans existed when the policy lapsed, you must repay or reinstate
such loans, with interest. Interest will be compounded annually from the
date of lapse. Interest will be at the loan reinstatement interest rate of
6.25% (5.88% in advance). Any loan interest due after the effective date of
reinstatement will be at the effective annual rate for the policy year
during which the interest is due.
o The reinstated policy will be subject to the minimum premium requirement
during the required premium period. Any increase in the face amount of the
base policy will also be subject to the minimum premium requirement during
the layer's required premium period. The required premium period will be
calculated from the original policy date or the original layer date. It
does not start over.
If the policy lapsed during any required premium period, you must pay a
premium large enough to meet the minimum premium requirement at the time of
reinstatement, with interest. Interest will be compounded annually at the
reinstatement interest rate of 6%. If the policy lapsed after any required
premium period, you must pay a premium large enough to cover two monthly
deductions due when the policy lapsed and three monthly deductions due when
the policy is reinstated. The amount equivalent to two monthly deductions
due when the policy lapsed will be used to reimburse us for the insurance
provided during the grace period.
You must repay any net cash value given to you at the time of lapse, with
interest. Interest will be compounded annually at the reinstatement
interest rate of 6.25% (5.88% in advance).
Any applicable surrender penalties in effect for the reinstated policy or layer
will be calculated from the original policy date and layer dates, as
applicable.
The effective date of a reinstatement will be the date we approve your request.
We will resume taking monthly deductions for the policy as of the nearest
monthly policy date. If a person other than the insured is covered by any
attached rider, that person's coverage will be reinstated under the
reinstatement terms of such rider.
The accumulation value of the reinstated policy will be:
o any surrender penalty assessed at the time of lapse; PLUS
o any net cash value we paid to you at the time of lapse; PLUS
o any loan repaid or reinstated; PLUS
o any net premium you pay at reinstatement; MINUS
o any monthly deductions due at the time of lapse.
We will allocate any loan repaid and any net premium you pay at reinstatement
according to the most recent premium allocation election we have received from
you. We will restore any surrender penalty assessed at the time of lapse. We
will allocate any restored surrender penalty and any net cash value you repay at
reinstatement between the base policy and any layers in the same proportion as
these amounts were deducted at the time of lapse. We will then allocate the base
and layer amounts among your investment options in the same proportion as these
amounts were deducted at the time of lapse.
We will allocate the amount you pay within one valuation date after the later
of:
o the valuation date that we approve the reinstatement; or
o the valuation date that we receive the required premium and other
payments.
OTHER BENEFITS
Other benefits are available under the policy by riders or endorsements attached
to the policy. Any costs of these riders become part of the monthly deductions,
unless we specify otherwise. All riders and endorsements may not be available in
all jurisdictions, and the names of the riders and endorsements may vary by
jurisdiction.
AUTOMATIC PREMIUM LOAN ENDORSEMENT
You may elect on your application to add the Automatic Premium Loan (APL)
Endorsement to your policy. There are no additional premiums or charges if you
elect this endorsement.
We may also permit you to add the endorsement at a later date. If the
endorsement is in effect on your policy, then, if any portion of the required
premium remains unpaid at the end of the grace period, we will make an automatic
premium loan to pay the required premium. The policy must have enough net cash
value to pay both the required premium due and the interest due on the automatic
premium loan. If the policy does not have enough net cash value to pay both the
required premium due and the interest due on the automatic premium loan, the
policy will lapse, subject to the NONFORFEITURE - FULL SURRENDER provisions.
We will deduct the automatic premium loan, including the loan interest due in
advance, from your investment options on a pro-rata basis. We will then transfer
the automatic premium loan and applicable interest to the loan account. We will
credit the net loan amount under the APL provisions as a premium payment on the
same date that we take the loan. We will allocate the net premium amount under
the APL provisions according to your current premium allocation elections. The
automatic premium loan and applicable interest will be effective on the last day
of the grace period. If that day is not a valuation date, the automatic premium
loan, with applicable interest, will be effective on the next valuation date.
The automatic premium loan will be subject to all other provisions and
limitations that apply to policy loans.
The Automatic Premium Loan Endorsement is only effective during the required
premium period. The Endorsement will terminate after the end of the required
premium period. If you request and we approve a face increase amount for the
policy, the endorsement will be effective during the required premium period for
the layer.
ENDORSEMENT TO MODIFY GRACE PERIOD
This endorsement allows your policy to remain in force even though the
accumulation value is not sufficient to cover the monthly deductions due,
subject to the terms of the endorsement.
This endorsement will be added to your policy at the time of issue if the death
benefit option selected is Option 1 (level death benefit option). If the death
benefit Option 1 is changed at a later date to another death benefit option, the
endorsement will terminate.
While there is no direct charge or additional monthly deduction for the
endorsement, the Select Monthly Premiums must be paid to maintain the benefits
of the endorsement, subject to all other terms of the endorsement.
For purposes of the endorsement, the following definitions will apply:
NET DEPOSITS mean the total premiums paid, less the sum of any premium refunds,
partial surrenders, and surrender penalty free withdrawals, since the policy
date. In calculating the net deposits, premium paid in a policy year before the
policy year in which the select monthly premium is due will reflect a time value
of money at 4 % per year.
SELECT MONTHLY PREMIUM is the amount you must pay each month during the select
period to maintain the endorsement. This amount is shown in the policy data
page. Select Monthly Premiums may be paid cumulatively in advance.
During the select period, the policy will not enter its grace period due to lack
of accumulation value if:
o there is no outstanding loan;
o the select monthly premium requirement has been met. The select monthly
premium requirement will be met if, at the start of each policy month, the
net deposits equal or exceed the cumulative select monthly premiums due
since the policy date; and
Death Benefit Option 1 is, and has always been in effect.
If all three of the above requirements are met, the grace period will be
modified so that the base policy, the endorsement and, if applicable, any layers
will remain in force. If the grace period is modified, all other riders, except
for the Full Death Benefit Rider and the Waiver Provision Rider, will be
terminated. Any conversion privilege included in the terminated riders must be
exercised at that time or they will be forfeited.
THE ENDORSEMENT DOES NOT PREVENT THE POLICY FROM ENTERING THE GRACE PERIOD
DURING THE REQUIRED PREMIUM PERIOD DUE TO FAILURE TO MEET THE REQUIRED PREMIUM
PAYMENT AMOUNTS.
You may choose a select period of either 10 years or 20 years (or, until the
policy anniversary nearest the insured's 100th birthday, if less than 20 years).
Unless requested otherwise, the 10 year select period option will be added to
your policy, subject to the conditions noted.
After the policy is issued, the select period chosen may not be changed.
The select monthly premium will vary by policy and will be specified on the
policy data pages. The select monthly premium for the 10 year select period will
generally be less than the select monthly premium on that same policy for the 20
year select period.
If you add a layer to your policy during the select period, and the endorsement
is in effect on the policy, then the endorsement will also apply to the layer.
The select monthly premium will be increased prospectively from the layer date
to reflect the effect of the endorsement on the layer. The select period,
however, will not be extended. The select period is measured solely from the
policy date.
If you add a layer to your policy, but the endorsement is NOT in effect when you
add the layer, you may not add the endorsement to the policy or to the layer.
We will continue to deduct the monthly deductions from the accumulation value as
they come due. We will offset the amount of the monthly deductions in excess of
the accumulation value when there is sufficient accumulation value, and we may
offset the amount of monthly deductions in excess of accumulation value against
any new net premiums paid before the allocation of such net premiums among your
elected investment options.
WAIVER PROVISION. If the policy contains the Waiver Provision Rider and a
disability claim is approved while this endorsement is in effect, the select
monthly premium will be waived. The select monthly premium will be waived for
the same length of time that the policy is on waiver. Any waiver of a select
monthly premium is subject to the terms of the endorsement. The select period
will not be extended.
AUTOMATIC TERMINATION. The endorsement will automatically terminate when the
first of the following events occurs:
o the select monthly premium requirement is not met;
o the select period ends;
o you change the death benefit option from Option 1 to anothero. option;
or
o the policy terminates for any reason.
REINSTATEMENT. If the endorsement terminates solely due to the select monthly
premium requirement not being met, you may reinstate the endorsement within 30
days of the termination date.
To reinstate the endorsement, you must, within 30 days from the termination
date:
o request reinstatement in writing; and
o pay us the necessary premium to reinstate the endorsement.
The necessary premium to reinstate the endorsement is equal to:
o the difference between the cumulative select monthly premiums due and
the net deposits as of the termination date; PLUS
o two select monthly premiums or, if less, the select monthly premiums
due to the end of the select period.
Reinstatement of the endorsement will be subject to all other provisions of the
endorsement.
It is our current practice to determine whether the select monthly premium
requirement has been met only at the end of a policy year. We may resume monthly
checking of the requirement at any time, without advance notice.
ACCELERATED DEATH BENEFIT OPTION
ENDORSEMENT
This endorsement will be added to your policy at issue so long as the
endorsement is approved in the state in which you apply for the policy. There is
no monthly deduction or other charge for the endorsement unless you take an
accelerated death benefit payment. Exercising the option and receiving an
accelerated death benefit will permanently affect the remaining death benefit
under the policy and will also result in a reduction of the policy's
accumulation value.
An accelerated death benefit is only payable upon submission of satisfactory
evidence that the insured has a terminal illness qualifying for the benefit.
Other conditions apply which determine whether an accelerated death benefit is
payable.
NOTE. Any amount payable under this option is intended to qualify for federal
income tax exclusion to the maximum extent possible. To that end, the provisions
of the endorsement and the policy are to be interpreted to ensure or maintain
such tax qualification, notwithstanding any other provisions to the contrary. We
reserve the right to amend the endorsement and the policy to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification, or to conform the endorsement and the policy to any applicable
changes in the tax qualification requirements. You will be sent a copy of such
notice. Benefits paid under this rider may be taxable. Benefits under some
business related policies may be taxable. As with all tax matters, you should
consult a tax adviser to assess the impact of this benefit on you and the
policy.
AMOUNT OF BENEFIT. While the policy is in force and upon your request, we will
pay an accelerated death benefit to you, subject to the conditions and
limitations in the endorsement. You may request an accelerated death benefit in
any amount, subject to a minimum amount of $10,000 and a maximum amount equal to
the lesser of:
o $250,000; or
o 75% of the combined policy basic death benefit for all policies insuring
the insured that were issued by us as of the first accelerated death
benefit payment.
The maximum amount applies cumulatively to all policies issued by us.
If the first accelerated death benefit payment is less than the maximum, then no
more than the remaining balance of the maximum can be paid out on a later date
as an accelerated death benefit.
If there is an outstanding loan, the accelerated death benefit payment may be
reduced to repay a proportionate portion of the policy loan. At the time we pay
the accelerated death benefit, if the policy is in the grace period, we will
deduct any unpaid premium in accordance with the grace period provisions.
We will deduct a $250 administrative fee from each accelerated death benefit
payment.
EXERCISING THE OPTION. We must receive your written request at our Home Office
or at our Administrative Office within 30 days after the certification of
diagnosis of terminal illness, or as soon thereafter as reasonably possible. The
request should include the insured's name and the policy number and must be
signed and dated by you, the owner. If the policy has an irrevocable
beneficiary, that person(s) must also sign the request. If the policy is
assigned, we must receive a completed and signed release of assignment. If the
policy was issued in a community property state, we may require your spouse to
sign the request.
We must also receive written proof of the terminal illness before we make a
payment under this option. This proof must consist of a physician's certificate
acceptable to us, and indicate that the insured has a medical condition
resulting from bodily injury or disease, or both, and:
o which has been diagnosed by the physician after the issue date of the
policy;
o for which the diagnosis is supported by clinical, radiological,
laboratory or other evidence of the medical condition which is
satisfactory to us;
o which is not curable by any means available to the medical profession;
and
o which the physician certifies is expected to result in the insured's
death within 12 months of diagnosis.
We may request additional medical information from the physician submitting the
certification or any physician we consider qualified. The physician providing
the certification must be:
o an individual other than you, the insured or member of either your or
the insured's immediate family, and
o who is a doctor of medicine or osteopathy,
o licensed in the jurisdiction in which the advice is given or diagnosis
is made, and
o who is acting within the scope of his or her license.
LIMITATIONS. The following limitations apply to this option:
o The availability of this option is subject to the terms of the policy,
including the Incontestability and Suicide provisions.
o No benefit will be paid if terminal illness is the result of intentionally
self-inflicted injury(ies) at any time.
o At each request to exercise this option, there must be at least two years
remaining from the effective date to the expiration date or maturity date,
if any, of each portion of the basic death benefit.
o You may not exercise this option:
a) if required by law to use the Accelerated Death Benefit to meet the claims of
creditors, whether in bankruptcy or otherwise; or
b) if required by a government agency to use the Accelerated Death Benefit
in order to apply for, or obtain or otherwise keep a government benefit
or entitlement.
o This option is not available if the maximum Accelerated Death Benefit has been
paid.
o The face amount of the policy must be at least $50,000 at the time of
the first written request.
EFFECT OF BENEFIT PAYMENT ON POLICY. After an Accelerated Death Benefit is paid,
the policy and any riders and benefits will remain in effect, subject to the
following adjustments.
The basic death benefit after payment of an Accelerated Death Benefit will equal
the amount of the basic policy death benefit before the payment of the
Accelerated Death Benefit, minus the result of multiplying (a) by (b), where:
a) is the Accelerated Death Benefit; and
b) is 1 (one) plus an interest rate that is the greater of:
1) the current yield of 90 day treasury bills; or
2) the policy loan effective interest rate.
The adjustment to the policy will be proportional to the amount of the
Accelerated Death Benefit. The basic death benefit and, if applicable, the
policy's face amount, accumulation value, cash value, policy loan, and required
premium will be adjusted as of the effective date of this option. The
adjustments to the basic death benefit will be made in the following order:
policy layers, if any, beginning with the most recently added layer; and
o remaining portions of the basic death benefit.
New policy charges and premiums will be based on the rates in effect for the
resulting face amount.
PHYSICAL EXAMINATION. While a claim is pending, we reserve the right to obtain a
additional medical opinions and to have the insured examined at our expense by a
physician of our choice.
PAYMENT OF CLAIMS. We will pay the Accelerated Death Benefit in a lump sum to
you. If the insured dies before payment is made, we will pay the entire death
benefit of the policy to the beneficiary.
LEGAL ACTIONS. No legal action may be brought to recover the payment requested
under this option within 60 days after written proof of the insured's terminal
illness has been given to us. No such action may be brought after 3 years from
the time we receive written proof of the insured's terminal illness.
FULL DEATH BENEFIT RIDER
This rider may only be added to the policy at the time the policy is issued. You
must request this rider at the time of application. Adding this rider may
increase your required premium during the required premium period. It will also
affect your monthly deduction, as described below.
If you elect this rider and the rider is still in force, then, beginning with
the policy anniversary nearest the 100th birthday of the insured, the death
benefit will be the death benefit as defined and determined on the day before
the policy anniversary nearest age 100. The death benefit will be subject to
adjustments after age 100 for misstatement of age or sex.
MONTHLY DEDUCTION. We will take the monthly deduction for this rider starting on
the policy anniversary nearest age 90. We will continue to take the monthly
deduction for this rider until the policy anniversary nearest age 100.
TERMINATION. The rider will terminate on the earliest of:
o the date the insured dies;
o the date the policy lapses;
o the date the policy is continued under a nonforfeiture option, if
applicable;
o the date we receive your written request to terminate the rider;
o the date we receive your written request to surrender or terminate the
policy.
GUARANTEED INSURABILITY RIDER
This rider is only available if you request it at the time of application for
the policy, and we approved your request. The rider is available to insureds
between the ages of 16 and 33 on the policy date who meet our underwriting
requirements for this rider. Adding this rider to your policy will increase the
minimum required premium for the policy. Monthly deductions will be increased to
reflect the rider.
If this rider is in force on your policy, you may apply for additional insurance
on the insured on each option date, subject to the following provisions.
OPTION DATES. The policy anniversary nearest the date the insured reaches each
age of 25, 28, 31, 34, 37 and 40 after the effective date of the rider will be a
regular option date. The maximum number of such option dates will be the number
of such anniversaries remaining on the effective date of the rider.
Alternate option dates will be:
o the date the insured is granted a baccalaureate or higher degree from a
college or university fully accredited by the accrediting committee of the
Regional Association for Schools and Colleges in which such college or
university is located.
o the date of the insured's marriage.
o the date of the birth of a child of the insured; or
o the date of the final order of adoption of a child by the insured.
If additional insurance is issued on an alternate option date, then such
alternate option date will replace one of the regular option dates so that the
number of option dates on which additional insurance is available does not
exceed the maximum number of option dates. We will only allow one alternate
option date with respect to multiple births or adoptions at the same time.
DEFERMENT OF THE OPTION DATES. If any option date occurs while the insured is on
active duty in the military, naval or air forces of any country, international
organization or combination of countries or in any civilian noncombatant unit
serving with such forces, such option date will be deferred to any date you
select within one year after termination of active duty. A deferred option,
however, will not be available beyond the policy anniversary nearest the
insured's age 40, or after the rider has terminated.
APPLICATION FOR ADDITIONAL INSURANCE. The insured must be living when you make
your written application for the additional insurance. We must receive your
written application and initial premium within 31 days, before or after, a
regular option date, or within 3 months after an alternate option date. Any
additional insurance will become effective on the option date only if the
insured is living on that date and only if all of the conditions of the rider
are met.
The additional insurance applied for may be any plan of level premium, level
face amount whole life or endowment insurance we are offering on the option
date, subject to the minimum face amount allowed by us for the plan selected. At
least one plan will be available for issue of the maximum amount per option
shown in the policy data pages. Any amount not purchased on an option date
cannot be used to increase the amount available on a subsequent option date. The
new policy issued will not include an option for additional insurance.
Additional insurance applied for may also be any plan of flexible premium life
insurance ("universal life insurance") which we are offering on the option date,
subject to the minimum face amount allowed by us for the plan selected. You may
request that this additional insurance applied for be issued as a face amount
increase, or layer, on the policy, subject to our face amount increase rules but
not subject to the requirement to provide satisfactory evidence of insurability.
WAIVER OF PREMIUM. If the policy includes the Waiver Provision Rider and if the
premium rate for the new policy is not greater than that for our
non-participating whole life plans with premiums payable to at least age 95, a
similar waiver benefit may be included in the new policy. The premium for such
benefit will be at our published rate for the plan selected. We will use the
insured's age on the date the additional insurance is issued to determine this
rate. The waiver benefit will be issued at the class of risk of the current
policy.
If you elect to exercise your right to additional insurance under this rider by
adding a layer to your policy, the Waiver Provision Rider will apply to the
layer coverage if the Waiver Provision Rider is in effect on the base policy.
PREMIUM RATES. The premium for the new policy will be at our published rate at
the time the additional insurance is issued. We will use the insured's age on
the date the new policy is issued to determine this rate. The new policy will be
issued at the class of risk for the current policy.
AUTOMATIC TERMINATION. The rider will automatically terminate:
o if any premium remains unpaid after the end of the grace period,
unless premiums are being paid under the automatic loan provision; or
o when the policy is surrendered; or
o if the policy terminates; or
o on the policy anniversary nearest insured's age 40, or when the maximum
number of options have been exercised, whichever is sooner.
INCONTESTABILITY. In applying the Incontestability provision to the rider, the
date of issue will be measured from the date we sign the rider.
CONTINUATION. The rider may be continued on a new policy other than the one
issued under the rider, subject to the following rules:
o The "maximum amount per option" must be less than or equal to the amount for
the rider.
o No additional option dates will become available because of the change in
insurance.
o The rates will be determined according to the original issue age for the
policy.
CANCELLATION. You may cancel the rider on any premium due date by sending us
your written request.
ACCIDENT INDEMNITY RIDER
This rider is available only if you apply for it and we approve the rider. The
rider is available to insureds who meet our underwriting requirements for this
rider and are between the ages of 16 and 65 on the policy date. Adding the rider
will increase the minimum required premium per year on the policy. Monthly
deductions will be increased to reflect the rider.
If the rider is in effect on the date the insured dies as a result of accidental
bodily injury, we will pay an accidental death benefit.
For purposes of these provisions, "accidental bodily injury" means injury which
results, directly and independently of all other causes, from an accident that
occurs while the rider is in force, and which results in the insured's death
within 90 days from the date of the accident. We will have the right to examine
the body of the insured and to request an autopsy, unless prohibited by law.
AMOUNT PAYABLE. The amount of the accidental death benefit will be shown in the
policy data pages. However, if an accidental death benefit becomes payable for
accidental bodily injury sustained in an accident which occurs while the insured
is a fare-paying passenger in an aircraft, bus, train or other means of public
conveyance while it is being operated by a licensed common carrier for passenger
service, then the accidental death benefit will be twice the amount shown in the
policy data pages.
EXCLUSIONS FROM COVERAGE. No amount will payable under the rider if the
insured's death results directly or indirectly from:
o suicide or any attempted suicide, while sane or insane;
o any poison or gas voluntarily or involuntarily, accidentally or
otherwise taken, administered, absorbed, or inhaled;
o any bacterial infections except when caused by accidental bodily injury;
o bodily or mental infirmity;
o disease of any kind;
o the commission of, or attempt to commit, an assault or felony;
o service, travel or flight in any kind of aircraft except as a passenger;
o participation in insurrection; or
o war, declared or undeclared, or any act of war.
CONTESTABILITY. The rider will be contestable as long as it is in force.
AUTOMATIC TERMINATION. The rider will automatically terminate:
o if any premium for the rider remains unpaid after the end of the grace
period;
o if the policy is surrendered;
o when the policy terminates or matures; or
o at the policy anniversary nearest the insured's age 70.
CANCELLATION. You may cancel the rider on any monthly policy date by sending us
your written request.
WAIVER PROVISION RIDER
This rider is available only if you apply for it and we approve the rider. The
rider is available to insureds who meet our underwriting requirements for this
rider and are between the ages of 16 and 55 on the policy date. Adding the rider
will increase the minimum required premium per year on the policy. Monthly
deductions will be increased to reflect the rider.
We will waive each monthly deduction due immediately on or after age 16 of the
insured during the insured's total disability, subject to the following
provisions.
A disability will be total when the insured becomes so disabled by injury or
disease which first manifests itself after the effective date of the rider date
of the rider, as to be unable to perform substantially all of the material
duties of any gainful work for which the insured is, or becomes, fitted by
reason of education, training or experience. If the occupation of the insured
is, or becomes, that of a student, then "any gainful work" will include going to
school. The total loss of sight of both eyes, or the use of both hands or both
feet, or of one hand and one foot will be presumed total disability while such
total loss continues. The beginning of such disability will be the beginning of
the disability which totally disables the insured for not less than six months.
In no event will such disability be considered to have begun more than one year
before the date due proof of such disability is received by us.
WAIVER BENEFIT. While monthly deductions are being waived under this rider,
premium payments are not required.
Any monthly deduction eligible for waiver under this rider that is taken before
we approve the claim will be credited to the accumulation value of the policy.
This credit will be treated as a new net premium. We will credit the
accumulation value as of the date of notice of claim or the date at the end of
the first six months of such disability, whichever is later. If that date is not
a valuation date, we will credit the accumulation value on the next valuation
date. We will allocate the new net premium among your investment options
according to the allocation percentages provided in the most recent premium
allocation election we have received from you.
NOTICE AND PROOF OF DISABILITY. You must give us written notice of the insured's
disability at our administrative office while the insured is living and while
such disability continues. Failure to give such notice will not invalidate any
claim if such notice was given as soon as was reasonably possible. Due proof of
such disability must be given to us at our administrative office. Although we
may have accepted proof of disability as satisfactory, the insured must at any
time, when we request it, furnish due proof of the continuance of such
disability. At our option, such proof may include an examination of the insured
by a medical examiner chosen by us. We will not require such proof more than
once each year after such disability has continued for two full years.
AGE LIMITATIONS. No waiver will be allowed under the rider during any period of
disability before the insured's 16th birthday. If such disability continues
beyond the 16th birthday, we will waive each such deduction due after that
birthday and during such disability. No waiver will be allowed under the rider
if such disability begins after the policy anniversary nearest age 60 of the
insured.
EXCLUSIONS. We will not pay any benefit under the rider if the insured's total
disability results directly or indirectly from:
o intentionally self-inflicted injury;
o participation in an insurrection; or
o war, declared or undeclared, or any act of war.
RECOVERY FROM DISABILITY. These benefits will end:
o if the insured fails to give us any due proof, or refuses to submit a
requested medical examination; or
o if the insured is no longer totally disabled.
AUTOMATIC TERMINATION. The rider will automatically terminate:
o If the policy is surrendered;
o If the policy lapses.
o At the policy anniversary nearest age 60 of the insured, subject to any
claims under the rider.
CANCELLATION. You may request to cancel the rider on any monthly policy date.
INSURANCE ON CHILDREN RIDER
This rider is available only if you apply for it and we approve the rider. The
rider is available to insureds who meet our underwriting requirements for the
rider and are between the ages of 16 and 55 on the policy date. A child may only
be covered under the rider if the child meets our underwriting requirements.
Adding the rider will increase the minimum required premium per year on the
policy. Monthly deductions will be increased to reflect the rider.
If a covered child dies before becoming 25 years old and before the policy
anniversary nearest age 65 of the insured, we will pay the amount of insurance
shown for this rider on the policy data pages, subject to the following
provisions.
For purposes of this benefit, "child" means:
o any child approved by us for the rider who was born to the insured, or is a
stepchild or legally adopted child of the insured, and who is at least 15
days old or becomes 15 days old, and who is not yet 19 years old on the
date of the application; and
o any child born to the insured, or stepchild or legally adopted by the
insured, after the date of application for the rider, who is at least 15
days old or becomes 15 days old, and who is not yet 19 years of age.
PAYMENT OF PROCEEDS. Any proceeds payable under the rider because of the death
of a child will be paid to the insured when we receive due proof of the death.
However, upon your request, any proceeds will be paid to a beneficiary other
than the insured, but only if:
o the beneficiary change is made according to the terms of the policy;
and
o the beneficiary change specifically states that it is applicable to
insurance provided on a child under the rider.
PAID-UP TERM LIFE INSURANCE. If the insured dies while the rider is in force,
the rider automatically will be changed to non-participating paid-up term life
insurance under a policy form then written by us. A policy on each child will
provide the amount of insurance of the rider to that child's 25th birthday. The
child will be the owner of each such policy.
If the insurance on a child becomes paid-up under the provisions of the rider,
we will furnish the cash values of the paid-up insurance to you upon request.
CONVERSION. Insurance under this rider, may be converted to any plan of level
premium whole life or endowment insurance then offered by us as follows:
o Insurance on a child may be converted, without providing evidence of
insurability, to a new policy for up to five times the amount of insurance
provided on that child under this rider or $50,000, whichever is less, on
the following dates:
a) the child's 25th birthday or the policy anniversary nearest age 65 of
the insured, whichever comes first; or
b) within 90 days after the child marries or receives a baccalaureate
degree or higher degree from a fully accredited college or university
before the child's 25th birthday and before the policy anniversary
nearest age 65 of the insured.
o Insurance on a child may be converted at any other time before the child's
25th birthday and before the policy anniversary nearest age 65 of the
insured. The face amount of the new policy may not be greater than the
amount of insurance provided on that child under the rider.
o Written request for conversion and payment of the required premium must be
made to us before, or within 31 days after, the date allowed for
conversion. The terminating insurance will not be in force during the 31
day period following the date allowed for conversion.
o The face amount of each new policy may not be less than our published
minimum for the plan selected. At least one plan will be available for
conversion of $1,000 of insurance.
o Each new policy will be effective on the date of conversion. The child will
be the owner of the new policy.
o The premium for each new policy will be based on our published rates for
the plan selected at the time of conversion. We will use the age of the
child insured on the date of conversion to determine this rate.
o The date of issue of all new policies issued under the Conversion Provision
will be the date of issue of this rider. The Incontestability and Suicide
periods in the new policies will continue from such dates of issue and will
not start anew in the policies. However, if there is an increase in the
face amount over the amount of the rider, the increase will be subject to
new incontestability and suicide periods.
AUTOMATIC TERMINATION. The rider will automatically terminate:
o if any premium remains unpaid after the grace period;
o when the policy is surrendered;
o if the policy terminates;
o on the policy anniversary nearest age 65 of the insured; or
o at the insured's death, subject to the provisions for paid-up term life
insurance.
Insurance on a child will automatically terminate on such child's 25th birthday
or when all or part of such insurance is converted.
REINSTATEMENT. Subject to the Reinstatement provision, this rider may be
reinstated only as to each child who provides proof of insurability satisfactory
to us.
INCONTESTABILITY. In applying the Incontestability provision to the rider, the
date of issue will be measured from the date we sign the rider.
SUICIDE. In applying the Suicide provision to the rider, the date of issue will
be measured from the date we sign the rider. If the insured dies by suicide and
our liability is limited to the amount of the premiums paid, no insurance will
be provided under the paid-up term life insurance provision of the rider.
Instead, insurance on each child may be converted to any plan of whole life or
endowment insurance we are then offering. Such conversion will be subject to the
conversions provisions of the rider. The suicide provision will not apply to
death of a child by suicide.
CANCELLATION. You may, by written request to us, cancel the rider on any monthly
policy date.
EXTRA SURRENDER PENALTY FREE WITHDRAWAL
ENDORSEMENT
This endorsement will be added to your policy at issue so long as it is approved
in the state in which you apply for the policy. There is no monthly deduction or
other charge for the endorsement and it will not increase the required premium.
If this endorsement is in effect on your policy, you may make an extra surrender
penalty free withdrawal in addition to the surrender penalty free withdrawal
after the first policy year subject to the following provisions.
For purposes of this benefit, the following definitions apply:
EXTRA WITHDRAWAL means extra surrender penalty free withdrawal.
WITHDRAWAL means surrender penalty free withdrawal.
You may request an extra withdrawal in addition to a withdrawal without
incurring a surrender penalty if we receive written proof that the insured
requires medical care for one of the following conditions:
o heart attack;
o stroke;
o cancer (malignant tumor);
o renal failure; or
o major organ transplant.
This proof must consist of a doctor's certification acceptable to us. We may
request additional medical information from the doctor submitting the
certification or any doctor we deem qualified. While a request is pending, we
reserve the right to obtain a second medical opinion. We also reserve the right
to have the insured examined at our expense.
The maximum amount eligible for an extra withdrawal is as follows:
o 10% of the policy's current accumulation value as of the request date;
less
o the sum of all extra withdrawals since the last policy anniversary.
The minimum amount of an extra withdrawal is $100.
The total amount available from all withdrawals, extra withdrawals and partial
surrenders will not exceed:
o the current accumulation value as of the request date; LESS
o any outstanding policy loans; LESS
o the sum of three monthly deductions; and LESS
o the greater of $25 or the full surrender penalty.
During any required premium period, the total amount available from all
withdrawals, extra withdrawals and partial surrenders also may not exceed:
o the sum of all gross premiums paid; LESS
o the sum of all required premiums since the policy date.
We will process an extra withdrawal for the eligible amount. The remainder, if
any, of the amount you request will be processed first as a withdrawal, to the
extent available. Then, any excess over that amount will be processed as a
partial surrender.
If you request both a withdrawal and an extra withdrawal at the same time, the
extra withdrawal will be processed first. Then, the withdrawal will be processed
based on the remaining accumulation value.
We will deduct the amount withdrawn from the policy's accumulation value in the
same manner as we deduct surrender penalty free withdrawals.
There may be important tax consequences of making taking an extra surrender
penalty free withdrawal under this endorsement. Consult a tax adviser regarding
this endorsement.
OPTION FOR ADDITIONAL INSURANCE
ENDORSEMENT
This endorsement will be added to your policy if the insured is between the ages
of 16 and 65 on the policy date and meets our underwriting requirements for this
endorsement. There are no charges for the endorsement and adding the endorsement
will not increase your required premium or your monthly deductions.
If this endorsement is in effect on your policy, you may request us to issue
additional insurance if all of the following conditions are met:
o The option date must be the first, second and/or third policy anniversary.
o You must make a written request to exercise this option within 31 days before
or after the chosen option date.
o The policy must be in force and the insured must be living on the chosen
option date.
o The minimum initial premium for the additional insurance must be paid.
o If the monthly deductions for the policy are being waived under a
disability benefit on an option date, this option will not be available.
o The maximum amount of insurance available under the endorsement will be the
lesser of:
a. the original face amount; or
b. $100,000.
o If the insured is between the ages of 51 and 65 when the policy is issued,
we will forward an application and authorization to you. The insured must
sign the authorization and provide answers, satisfactory to us, to the
following questions:
a) Is the insured now so disabled by sickness or injury as to be unable to
perform any of the duties of his or her normal job?
b) Within the past five years, has the insured had high blood pressure, heart
disease, diabetes or cancer?
GENERAL PROVISIONS. The new policy will be dated and effective on the chosen
option date.
1. Subject to item 3 below, any part of the maximum amount of insurance under
this endorsement will be available for issue on any of the option dates,
but the total amount issued on all such dates may not exceed the maximum
amount under the endorsement.
2. We will issue you a new policy of the same type as the policy for the
additional insurance amount. You may request that the additional insurance
be issued instead as a layer on the existing policy. The monthly deduction
for the new policy or layer will be at our then current rate for such
insurance at the time this option is exercised. The new policy or layer
will be issued at the class of risk of the policy at the insured's attained
age.
3. The face amount of the new policy may not be less than our published
minimum for the insurance. The new policy will not contain this endorsement.
4. The incontestability period in the new policy will continue from the date
the policy was issued and will not start over. This means that the new
policy will be contestable for one year if this option is exercised on the
first policy anniversary, but will not be contestable if this option is
exercised on the 2nd and/or 3rd policy anniversary. The suicide period in
the new policy, however, will start over on the chosen option date.
However, if the insured is between the ages of 51 and 65 when the policy is
issued, the incontestability and suicide periods in the new policy will
start over on the chosen option date.
5. Unless you request otherwise, any waiver provision rider on the policy will
also be included on the new policy, as long as the insured is not over age
55 when this option is exercised. Any other riders on the policy will not
automatically be on the new policy, but they will be added to the new
policy, provided the insured gives us evidence of insurability satisfactory
to us.
OTHER POLICY PROVISIONS
THE FOLLOWING POLICY PROVISIONS MAY VARY BY STATE.
INCONTESTABILITY OF THE POLICY
Except for fraud or nonpayment of premiums, the policy will be incontestable as
to the base policy after it has been in force during the insured's lifetime for
two years from the date of issue. This provision does not apply to any rider or
endorsement providing benefits specifically for disability or death by accident.
When a layer is added to the policy, this incontestability provision will start
anew with respect to that layer, beginning on the layer date.
If the base policy is rescinded for any contestable reason (e.g. material
misrepresentation), we will be liable only for the amount of premiums, less any
partial surrenders, surrender penalty free withdrawals, loans and loan interest
due, allocated to the base policy. The base policy will be rescinded as of the
policy date. If a layer is rescinded for any contestable reason, we will be
liable only for the amount of premiums, less any partial surrenders, surrender
penalty free withdrawals, loans and loan interest due, allocated to the layer.
The layer will be rescinded as of the layer date.
SUICIDE
If the insured dies by suicide, while sane or insane, within two years from the
date of issue, we will be liable only for the amount of premiums paid, less any
partial surrenders, surrender penalty free withdrawals, loans and loan interest
due. The policy will be rescinded as of the policy date.
When a layer is added to the policy, this suicide provision will start anew with
respect to that layer, beginning on the layer date.
DELAY OF PAYMENTS
We may postpone any transaction involving the separate account during any period
when:
o trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission, or the New York Stock Exchange is
closed for days other than weekends or holidays;
o the Securities and Exchange Commission has allowed or ordered the suspension
described above; or
o the Securities and Exchange Commission has determined that an emergency
exists such that disposal of mutual fund securities or valuation of assets
is not reasonably practical.
Transactions involving the separate account include the following, to the extent
the amounts of the transactions come from the portion of the accumulation value
in the separate account:
o transfers between or among sub-accounts;
o transfers to or from the separate account;
o policy loans;
o exchange of the policy under the Guaranteed Exchange Option;
o partial or full surrenders; and
o death benefits payments.
We may delay paying you any portion of a partial or full surrender that comes
from the accumulation value in the fixed account for up to six months after we
receive your written request for the surrender.
We may delay making a loan to you to the extent that the loan is deducted from
the portion of the accumulation value in the fixed account for up to six months
after we receive your written request for the loan. We will not delay any loan
made to pay premiums due on the policy.
We may delay any payment until all premium checks have cleared.
FEDERAL TAX CONSIDERATIONS
The following is a summary of federal tax considerations for U.S. persons based
on our understanding of the present federal income tax laws as they are
currently interpreted. Legislation may be proposed which, if passed, could
adversely and possibly retroactively affect the taxation of the policies. This
summary is not exhaustive, does not purport to cover all situations, and is not
intended as tax advice. We do not address tax provisions that may apply if the
policy owner is a corporation. You should consult a qualified tax adviser to
apply the law to your circumstances.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE SEPARATE ACCOUNT
Transamerica is taxed as a life insurance company under Subchapter L of the
Code. We do not currently charge for any income tax on the earnings or realized
capital gains in the Separate Account. A charge may apply in the future for any
federal income taxes we incur. The charge may become necessary, for example, if
there is a change in our tax status. Any charge would be designed to cover the
federal income taxes on the investment results of the separate account.
Under current laws, we may incur state and local taxes besides premium taxes.
These taxes are not currently significant. If there is a material change in
these taxes affecting the separate account, we may charge for such taxes.
TAXATION OF THE POLICIES
We believe that the policies described in this prospectus are life insurance
contracts under Code Section 7702. Section 7702 affects the taxation of life
insurance contracts and places limits on the relationship of the accumulation
value to the death benefit. As life insurance contracts, the death benefits of
the policies are generally excludable from the gross income of the
beneficiaries. In the absence of any guidance from the Internal Revenue Service
(IRS) on the issue, we believe that providing an amount at risk after age 99 in
the manner provided at age 99 should be sufficient to maintain the excludability
of the death benefit after age 99. However, this lack of specific IRS guidance
makes the tax treatment of the death benefit after age 99 uncertain. Also, any
increase in accumulation value should not be taxable until received by you or
your designee, unless the policy is a modified endowment contract.
Federal tax law requires that the investment of each sub-account funding the
policies is adequately diversified according to Treasury regulations. We believe
that the portfolios currently meet the Treasury's diversification requirements.
We will monitor continued compliance with these requirements.
The Treasury Department has announced that previous regulations on
diversification do not provide guidance concerning the extent to which policy
owners may direct their investment assets to divisions of a separate investment
account without being treated as the owner of such assets who is taxed directly
on the income from such assets. Regulations may provide such guidance in the
future. The policies or our administrative rules may be modified as necessary to
prevent a policy owner from being treated as the owner of any assets of the
separate account who is taxed directly on their income.
A surrender, partial withdrawal, surrender penalty free withdrawal,
distribution, change in the death benefit option, change in the face amount,
lapse with policy loan outstanding, or assignment of the policy may have tax
consequences. Within the first fifteen policy years, a distribution of cash
required under Code Section 7702 because of a reduction of benefits under the
policy may be taxable to the policy owner as ordinary income. Federal, state and
local income, estate, inheritance, and other tax consequences of ownership or
receipt of policy proceeds depend on the circumstances of each insured, policy
owner or beneficiary.
WITHHOLDING
If all or part of a distribution from the policy is includible in gross income,
the Code requires us to withhold federal income tax unless the policy owner
elects, in writing, not to have tax withholding apply. The federal income tax
withholding rate is generally 10% of the taxable amount of the distribution.
Withholding applies only if the taxable amount of all distributions are at least
$200 during a taxable year. Some states also require withholding for state
income taxes.
If payments are delivered to foreign countries, however, the tax withholding
rate will generally be 10% unless you certify to us that you are not a U.S.
person residing abroad or a "tax avoidance expatriate" as defined in Code
Section 877. Such certification may result in withholding of federal income
taxes at a different rate.
Taxable payments or distributions to non-resident aliens under the policy are
generally subject to tax withholding at a 30% rate unless the rate is reduced or
eliminated by an international tax treaty with the United States. The payment of
death benefits is generally non-taxable and not subject to withholding.
POLICY LOANS
We believe that loans received under the policy will be treated as an
indebtedness of the policy owner for federal income tax purposes. Under current
law, these loans will not constitute income for the policy owner while the
policy is in force, but see Modified Endowment Contracts.
INTEREST DISALLOWANCE
Interest on policy loans is generally nondeductible. You should consult your tax
adviser on how the rules governing the non-deductibility of interest would apply
in your individual situation.
MODIFIED ENDOWMENT CONTRACTS
Special rules described below apply to the tax treatment of loans and other
distributions under any life insurance contract that is classified as a modified
endowment contract, or MEC. A MEC is a life insurance contract that either fails
the 7-pay test or is received in exchange for a MEC. In general, a policy will
fail this 7-pay test o if at any time during the first seven policy
o.......years or during any subsequent 7-year test
period resulting from a material change in the policy the cumulative
premiums paid for the policy, less any non-taxable withdrawals, exceed the sum
of the net level premiums which would have been paid up to such time if the
policy had provided for paid-up future benefits after the payment of 7 level
annual premiums. If to comply with this 7-pay test limit any premium amount is
refunded with applicable interest no later than 60 days after the end of the
policy year in which it is received, such refunded amount, excluding interest,
will reduce the cumulative amount of premiums that is compared against such
7-pay test limit.
If there is any reduction in the policy's benefits during a 7-pay test period,
the 7-pay test limit will be recalculated and the policy will be retested
retroactively from the start of such period by taking into account such reduced
benefit level from such starting date. Generally, any material change in the
policy may be treated as producing a new contract for 7-pay test purposes,
requiring the start of a new 7-pay test period as of the date of such change.
DISTRIBUTIONS UNDER MODIFIED ENDOWMENT
CONTRACTS
The amount of partial surrenders, whether or not subject to surrender penalties,
loans, and other distributions made before the insured's death under a MEC, or
the assignment or pledge of any portion of the value of a MEC, are considered
distributions from a MEC. Distributions are includible in gross income to the
extent of any income in the contract on an income-out-first basis. A
distribution is treated as allocable first to the income in the contract and
then to a tax-free recovery of the policy's investment in the contract, or tax
basis. If the policy is part of a collateral assignment split dollar
arrangement, increases in cash value may be distributions and taxable.
Generally, a policy's tax basis is equal to its total premiums less amounts
recovered tax-free. To the extent that the policy's cash value (ignoring
surrender penalties except upon a full surrender) exceeds its tax basis, such
excess constitutes its income in the contract. However, where more than one MEC
has been issued to the same policyholder by the same insurer, or an affiliate,
during a calendar year, all such MEC's are aggregated for purposes of
determining the amount of a distribution from any such MEC that is includible in
gross income.
In addition, any distribution from a MEC which is includible in gross income is
subject to a 10% penalty tax on premature distributions, unless the taxpayer has
attained age 59 1/2 or is disabled or the payment is part of a series of
substantially equal periodic payments for a qualifying lifetime period.
Under Code Section 7702A(d) the MEC distribution rules apply not only to:
o all distributions made during the policy year in which the policy fails the
7-pay test, and during subsequent years; but also to
o any distributions made in anticipation of such failure, which is deemed to
include any distributions made during the two years prior to such failure.
The Treasury Department has not yet issued regulations or other guidance
indicating what other distributions can be treated as made in anticipation of
such a failure or how (that is, as of what date) income in the contract should
be determined for purposes of any distribution that is deemed to be made in
anticipation of a failure.
SPECIAL RULES FOR PENSION PLANS
If the policy is purchased in connection with a section 401(a) qualified pension
or profit sharing plan, a section 401(k) plan, a section 457 plan or in
connection with a tax-sheltered annuity described in Code Section 403(b),
federal and state income and estate tax consequences could differ from those
stated in this prospectus. The purchase may also affect the qualified status of
the plan. You should consult a qualified tax advisor in connection with such
purchase.
Policies owned under these types of plans may be subject to the Employee
Retirement Income Security Act of 1974, or ERISA, which may impose additional
requirements on the purchase of policies by such plans. You should consult a
qualified advisor regarding ERISA.
VOTING RIGHTS
Transamerica is the legal owner of all portfolio shares held in each
sub-account. As the owner, we have the right to vote at a portfolio's
shareholder meetings. However, to the extent required by federal securities laws
and regulations, we will vote portfolio shares that each sub-account holds
according to instructions received from policy owners with accumulation values
in the sub-account. If any federal securities laws or regulations, or their
interpretation, change to permit us to vote shares in our own right, we reserve
the right to do so, whether or not the shares are related to the policies.
Currently, we provide each policy owner with amounts allocated to a sub-account
with proxy materials and voting instructions applicable to the corresponding
portfolio. We will vote shares held in each sub-account for which no timely
instructions are received in proportion to all instructions received for the
sub-account. We will also vote in the same proportion our shares held in the
separate account that do not relate to the policies.
We will compute the number of votes that a policy owner may instruct on the
record date established for the portfolio. This number is equal to A divided B,
where:
A is each policy owner's value in the sub-account; and
B is the net asset value of one share in the portfolio in which the assets of
the sub-account are invested.
We may disregard voting instructions policy owners initiate in favor of any
change in the investment policies or in any investment adviser or principal
underwriter. Our disapproval of any change must be reasonable. Our disapproval
of a change in investment policies or investment adviser must be based on a good
faith determination that the change would be contrary to state law or otherwise
is improper under the objective and purposes of the portfolios. If we do
disregard voting instructions, we will include a summary of and reasons for that
action in the next report to policy owners.
REPORTS
We maintain the records for the separate account.
We will send you a statement at least once a year, without charge, showing the
face amount, accumulation value, net cash value, loans, partial surrenders,
surrender penalty free withdrawals, premium qualification credits, premiums paid
and charges as of the statement date. The statement will also include summary
information about the portions of your accumulation value in the fixed account,
the sub-accounts and the loan account. We may include additional information.
Upon written request at any time, we will send you an illustration of your
policy's benefits and values. There will be no charge for the first illustration
in each policy year. We reserve the right to charge a fee up to $25 for any
illustration after the first in any policy year.
<PAGE>
<PAGE>
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Patrick S. Baird***** Director of TOLIC since 1999. Director, Senior Vice
President and Chief Operating Officer of PFL Life Insurance Company since 1996.
Executive Vice President and Chief Operating Officer of AEGON USA since 1995.
Chief Financial Officer of AEGON USA from 1992 to 1995. President and Chief Tax
Officer of AEGON USA from 1984 to 1995.
Brenda K. Clancy***** Director of TOLIC since 1999. Senior Vice President,
Corporate, of PFL Life Insurance Company since 1991. Treasurer and Chief
Financial Officer of PFL Life Insurance Company since 1996.
James W. Dederer, CLU* Director, Executive Vice President, General Counsel and
Corporate Secretary of TOLIC since 1988.
George A. Foegele**** Director and Senior Vice President; President and Chief
Executive Officer of Transamerica Life Insurance Company of Canada.
Douglas C. Kolsrud***** Director of TOLIC since 1999. Director, Senior Vice
President, Chief Investment Officer and Corporate Actuary, Investment Division,
of PFL Life Insurance Company.
Richard N. Latzer*** Director, Senior Vice President and Chief Investment
Officer of Transamerica Corporation since 1989. Director, President and Chief
Executive Officer of Transamerica Investment Services, Inc. since 1988.
Karen O. MacDonald* Director, Executive Vice President and Chief Operating
Officer since 1999. Senior Vice President and Corporate Actuary from 1992 to
1995.
Gary U. Rolle* Director, Executive Vice President and Chief Investment Officer
of Transamerica Investment Services, Inc. since 1981.
Paul E. Rutledge III** Director and President, Reinsurance Division since 1998.
President, Life Insurance Company of Virginia, 1991-1997.
Craig D. Vermie***** Director of TOLIC since 1999. Director, Vice President and
General Counsel, Corporate, of PFL Life Insurance Company since 1990.
Ron F. Wagley, CLU* President and Director since 1999. Chief Agency Officer of
TOLIC since 1993. Vice President of TOLIC from 1989 to 1993.
*The business address is 1150 South Olive Street, Los Angeles, California 90015.
**The business address is 401 North Tryon Street, Charlotte, North Carolina
28202.
***The business address is 600 Montgomery Street, San Francisco, California
94111.
****The business address is 300 Consilium Place, Scarborough, Ontario, Canada
M1H3G2.
*****The business address is 4333 Edgewood Road, N.W., Cedar Rapids, Iowa 52449.
Transamerica is insured under a broad manuscript fidelity bond program with
coverage limits of $80,000,000. The lead underwriter is Capital CNA.
PERFORMANCE INFORMATION
We may advertise total return and average annual total return performance
information based on the periods that the portfolios have been in existence. The
results for any period prior to the policies being offered will be calculated as
if the policies had been offered during that period of time, with all charges
assumed to be those applicable to the sub-accounts and the portfolios.
The average total returns shown will reflect sub-account performance, and will
include deductions for expenses of the portfolios and for the mortality and
expense risk charge of the separate account. The performance numbers will
generally NOT include any of the charges, fees or deductions associated with the
policies. Specifically, they will not include the applicable administrative
charge of up to 7% of premium; the monthly deductions; any other fees or
charges, nor the surrender charges for surrenders during the first 10 policy
years or the first 10 layer years. If these charges, fees and deductions were
taken into consideration, the performance would have been substantially less. We
may advertise other performance calculations.
We will provide prospective owners with customized illustrations showing how
charges, fees, deductions, premiums and other policy activity could affect death
benefits.
We may compare performance information for a sub-account in reports and
promotional literature to:
o Standard & Poor's 500 Stock Index, or S&P 500;
o Dow Jones Industrial Average, or DJIA;
o Shearson Lehman Aggregate Bond Index;
o other unmanaged indices of unmanaged securities widely regarded by investors
as representative of the securities markets;
o other groups of variable life separate accounts or other investment
products tracked by Lipper Analytical Services;
o other services, companies, publications, or persons such as Morningstar, Inc.,
who rank the investment products on performance or other criteria; and
o the Consumer Price Index.
Unmanaged indices may assume the reinvestment of dividends but generally do not
reflect deductions for insurance and administration charges, separate account
charges and portfolio management costs and expenses. Performance information for
any sub-account reflects only the performance of a hypothetical investment in
the sub-account during a period. It is not representative of what may be
achieved in the future. However, performance information may be helpful in light
of market conditions during a period and in considering a portfolio's success in
meeting its investment objectives.
In advertising, sales literature, publications or other materials, we may give
information on various topics of interest to policy owners and prospective
policy owners. These topics may include:
o the relationship between sectors of the economy and the economy as a whole
and its effect on various securities markets, investment strategies and
techniques, such as value investing, market timing, dollar cost averaging,
asset allocation and automatic account rebalancing;
o the advantages and disadvantages of investing in tax-deferred and taxable
investments;
o customer profiles and hypothetical payment and investment scenarios;
o financial management and tax and retirement planning; and
o investment alternatives to certificates of deposit and other financial
instruments, including comparisons between the policies and the
characteristics of, and market for, the financial instruments.
In the table below, One-Year Total Return refers to the total of the income
generated by a sub-account, based on certain charges and assumptions as
described in the table, for the one-year period ended December 31, 1999. Average
Annual Total Return is based on the same charges and assumptions, but reflects
the hypothetical annually compounded return that would have produced the same
cumulative return if the sub-account's performance had been constant over the
entire period. Because average annual total returns tend to smooth out
variations in annual performance return, they are not the same as actual
year-by-year results.
<PAGE>
86SUB-ACCOUNT PERFORMANCE
EXCLUDING MONTHLY DEDUCTIONS, ADMINISTRATIVE CHARGES AND SURRENDER CHARGES
The following performance information is based on the periods that the
portfolios have been in existence. The performance information is net of total
portfolio expenses and all sub-account charges. THE DATA DOES NOT REFLECT
ADMINISTRATIVE CHARGES DEDUCTED FROM PREMIUMS, MONTHLY DEDUCTIONS UNDER THE
POLICIES OR SURRENDER CHARGES. IF THESE CHARGES AND DEDUCTIONS WERE INCLUDED,
THE FIGURES BELOW WOULD BE SIGNIFICANTLY LOWER. Returns are for the period
ending December 31, 1999.
<TABLE>
<CAPTION>
10 Year or Life
of the Portfolio
(if Less than 10 Number
5 Year Years Since of
Average Inception) Years Since
Portfolio 1 Year Annual Average Annual Inception
Sub-Account Inception Total Total Total Return (if Less
Investing in the Date Return Return than 10
Corresponding Portfolio Years)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American Income & Growth 11/15/88 42.09% 32.64% 18.63% N/A
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Alliance VP Growth and Income - Class B 6/1/99 N/A N/A 1.68%* 0.58
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth - Class B 7/14/99 N/A N/A 12.97%* 0.45
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 4/5/93 11.18% 25.19% 19.73% 6.74
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 8/31/90 22.84% 15.64% 35.30% 9.33
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced - Service Shares 12/31/99 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth - Service Shares 12/31/99 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MFS(R)Emerging Growth Series 7/24/95 76.27% N/A 36.04% 4.44
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth With Income Series 10/9/95 6.43/% N/A 20.79% 4.23
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MFS(R)Research Series 7/26/95 23.74% N/A 22.52% 4.43
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity 10/1/96 95.19% N/A 12.02% 3.25
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income 1/2/97 -1.87% N/A 5.02% 2.99
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MS UIF High Yield 1/2/97 6.84% N/A 8.15% 2.99
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MS UIF International Magnum 1/2/97 24.88% N/A 13.28% 2.99
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Managed(1) 8/1/88 4.73% 19.41% 16.31% N/A
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small Cap(2) 8/1/88 -2.08% 8.08% 10.84% N/A
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income 1/2/98 19.55% N/A 24.56% 1.99
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth(3) 2/26/69 37.44% 41.15% 26.49% N/A
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market 1/2/98 4.36% N/A 4.53% 1.99
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Not Annualized
(1) On September 16th, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust,
the Old Trust was effectively divided into two investment funds - the Old
Trust and the present OCC Accumulation Trust, the Present Trust at which
time the Present Trust commenced operations. The total net assets of the
managed portfolio immediately after the transaction were $682,601,380 in
the Old Trust and $51,345,102 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the managed portfolio of
the Present Trust reflect the performance of the managed portfolio of the
Old Trust.
(2) On September 16th, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust,
the Old Trust was effectively divided into two investment funds - the Old
Trust and the present OCC Accumulation Trust, the Present Trust at which
time the Present Trust commenced operations. The total net assets of the
Small Cap Portfolio immediately after the transaction were $139,812,573 in
the Old Trust and $8,129,274 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the Small Cap Portfolio of
the Present Trust reflect the performance of the Small Cap Portfolio of the
Old Trust.
(3) The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable
annuities, through a reorganization on November 1, 1996. Accordingly, the
performance data for the Transamerica VIF Growth Portfolio includes
performance of its predecessor.
Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio in which a
sub-account invests and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
DISTRIBUTION
Transamerica Securities Sales Corporation, or TSSC, acts as the principal
underwriter and general distributor of the policy. TSSC is registered with the
SEC as a broker-dealer and is a member of the National Association of Securities
Dealers, or NASD. TSSC was organized on February 26, 1986, under the laws of the
state of Maryland. Broker-dealers sell the policies through their registered
representatives who are appointed by us.
We pay to broker-dealers who sell the policy commissions based on a commission
schedule which provides for commissions of up to 90% of premium payments in the
first year made up to a level we set; 4.5% of the excess over that for premiums
paid in the first year; and 4.5% of premiums paid after the first policy year.
We may also provide additional compensation through bonuses.
To the extent permitted by NASD rules, promotional incentives or payments may
also be provided to broker-dealers based on sales volumes, the assumption of
wholesaling functions or other sales-related criteria. Other payments may be
made for other services that do not directly involve the sale of the policies.
These services may include the recruitment and training of personnel, production
of promotional literature, and similar services.
We intend to recoup commissions and other sales expenses primarily, but not
exclusively, through:
o the administrative charge;
o the surrender penalty; and
o investment earnings on amounts allocated under policies to the fixed
account.
Commissions paid on the policy, including other incentives or payments, are not
charged to the policy owners or the separate account.
LEGAL PROCEEDINGS
There are no pending legal proceedings involving the separate account or its
assets. Transamerica is not involved in any litigation that is materially
important to its total assets.
ADDITION, DELETION OR SUBSTITUTION OF
PORTFOLIOS
We do not control the portfolios. For this reason, we cannot guarantee that any
of the sub-accounts offered under the policy or any of the portfolios will
always be available to you for investment purposes. We reserve the right to make
changes in the separate account and in its investments.
We reserve the right to eliminate the shares of any portfolio held by a
sub-account. We may also substitute shares of another portfolio or of another
investment company for the shares of any portfolio. We would do this if the
shares of the portfolio are no longer available for investment or if, in our
judgment, investment in any portfolio would be inappropriate in view of the
purposes of the separate account. To the extent required by the 1940 Act, if we
substitute shares in a sub-account to which you have amounts allocated, we will
provide you with advance notice and seek advance permission from the Commission.
This does not prevent the separate account from purchasing other securities for
other series or classes of policies. Nor does it prevent the separate account
from effecting an exchange between series or classes of variable policies on the
basis of requests made by owners.
We reserve the right to create new sub-accounts for the policies when, in our
sole discretion, marketing, tax, investment or other conditions warrant that we
do. Any new sub-accounts will be made available to existing owners on a basis to
be determined by us. Each additional sub-account will purchase shares in a
mutual fund portfolio or other investment vehicle. We may also eliminate one or
more sub-accounts if, in our sole discretion, marketing, tax, investment or
other conditions warrant that we do.
In the event of any substitution or change, we may make the changes in the
policy that we deem necessary or appropriate to reflect substitutions or
changes. Furthermore, if we believe it to be in the best interest of persons
having voting rights under the policies, the separate account may be operated as
a management company under the 1940 Act or any other form permitted by law. It
may also be deregistered under such Act in the event that registration is no
longer required. Finally, it may also be combined with one or more other
separate accounts.
INDEPENDENT AUDITORS AND FINANCIAL
STATEMENTS
The statutory-basis financial statements of Transamerica as of December 31, 1999
and 1998, and for each of the three years in the periods ended December 31,
1999, appearing in this prospectus have been audited by Ernst & Young LLP,
Independent Auditors, as set forth in their attached report. Transamerica
Separate Account VUL-5 had not commenced operations as of December 31, 1999,
and, therefore, no financial statements are included for the separate account.
The financial statements audited by Ernst & Young LLP have been included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
Statutory-basis financial statements for Transamerica are included in this
prospectus, starting on the next page. The statutory-basis financial statements
of Transamerica should be considered only as bearing on our ability to meet our
obligations under the policy. They should not be considered as bearing on the
investment performance of the assets held in the separate account.
FURTHER INFORMATION
We have filed a 1933 Act registration statement for this offering with the SEC.
Under SEC rules and regulations, we have omitted from this prospectus parts of
the registration statement and amendments. Statements contained in this
prospectus are summaries of the policy and other legal documents. The complete
documents and omitted information may be obtained from the SEC's principal
office in Washington, D.C., on payment of the SEC's prescribed fees.
<PAGE>
APPENDIX A
<PAGE>
THE FIXED ACCOUNT
This prospectus is generally intended to serve as a disclosure document only
for the policy and the separate account. For complete details regarding the
fixed account, see the policy itself.
THE FIXED ACCOUNT IS PART OF OUR GENERAL ACCOUNT. BECAUSE OF EXEMPTIVE AND
EXCLUSIONARY PROVISIONS, INTERESTS IN THE GENERAL ACCOUNT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), NOR IS THE GENERAL
ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT.
ACCORDINGLY, NEITHER THE GENERAL ACCOUNT NOR ANY INTERESTS THEREIN ARE GENERALLY
SUBJECT TO THE PROVISIONS OF THE 1933 ACT OR THE 1940 ACT, AND WE HAVE BEEN
ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURES IN THIS PROSPECTUS WHICH RELATE TO THE FIXED ACCOUNT.
GENERAL DESCRIPTION
Allocations to the fixed account become part of our general account assets and
are used to support all of our obligations, including insurance and annuity
obligations.
You may allocate any portion of your net premiums to the fixed account. The
fixed account is a part of our general account. The general account consists of
all assets that we own, except those in the separate account and other separate
accounts we may have. Except as limited by law, we have sole control over
investment of the assets in our general account. Although you do not share
directly in the investment experience of our general account, you may allocate
net premiums to the fixed account and transfer funds between the separate
account and the fixed account, within limits.
FIXED ACCOUNT ACCUMULATION VALUE
For the base policy and each layer, the accumulation value in the fixed account
(including the loan account) on a specified date after the date the initial net
premium was allocated to the policy, is equal to:
o the accumulation value on the last monthly policy date, plus accrued
interest from the last monthly policy date to the specified date; plus
o any premium qualification credit amount deposited to it on the last monthly
policy date, plus accrued interest on that amount; plus
o all net premiums paid into it less any premium refunds since the last
monthly policy date, plus accrued interest from the date each net premium
was allocated to it; plus
o any amounts transferred from the separate account, plus accrued interest on
those amounts since the date of the transfer; minus
o the monthly deduction charged against it on the last monthly policy date, plus
accrued interest on that amount; minus
o any partial surrenders and surrender penalty free withdrawals charged
against it, including pro-rata surrender penalties, since the last monthly
policy date, plus accrued interest on that amount from each partial
surrender date and/or surrender penalty free withdrawal date to the
specified date; minus
o any amounts transferred from the fixed account to the separate account,
plus accrued interest on those amounts since the date of the transfer; and
minus
o any transfer fees or other charges allocated to the fixed account, plus
accrued interest on those amounts since the date they were deducted.
FIXED ACCOUNT INTEREST RATES
The net premium you allocate to the fixed account will accrue interest from the
valuation date on which we allocate it to the fixed account. Interest is
credited monthly on each monthly policy date. The guaranteed minimum interest
rate for the fixed account for all policy years is 4% per year. We may declare
an interest rate that is higher than the guaranteed minimum interest rate at any
time before the policy anniversary nearest age 100. YOU BEAR THE RISK THAT WE
WILL NOT DECLARE AN INTEREST HIGHER THAN 4% PER YEAR. We will never declare an
interest rate is that is lower than the guaranteed minimum interest rate. We may
change the declared interest rate at any time without notice. Beginning on the
policy anniversary nearest age 100, the accumulation value in the fixed account
will accrue interest at the guaranteed minimum interest rate. TRANSFERS FROM THE
FIXED ACCOUNT
Except with our consent, transfers from the fixed account will be limited as
follows:
o at least 90 days must elapse between transfers from the fixed account; and
o the maximum amount which may be transferred is the greater of 25% of the
portion of the accumulation value in the fixed account or the amount of the
last transfer from the fixed account.
These limitations do not apply to transfers in connection with automatic account
rebalancing or from the loan account due to loan repayments. The portion of the
accumulation value in the fixed account excludes the amounts, if any, in the
loan account.
We will make the transfer on the day we receive your transfer request in good
order. If the day we receive your transfer request is not a valuation date, we
will make the transfer on the next following valuation date.
<PAGE>
APPENDIX B
SETTLEMENT OPTIONS
BENEFIT PAYMENT OPTIONS
When the insured dies while the policy is in force, we will pay the death
benefit in a lump sum unless you or the beneficiary choose a settlement option.
You may choose a settlement option while the insured is living. You may also
choose one of these options as a method of receiving any surrender proceeds that
are available under the policy. The beneficiary may choose a benefit option
after the insured has died. The beneficiary's right to choose will be subject to
any benefit payment option restrictions in effect at the insured's death.
Settlement options are obligations of and are paid from our general account and
are not based on the investment experience of the separate account.
When we receive a satisfactory written request, we will pay the benefit
according to one of these options:
OPTION A: INSTALLMENTS FOR A GUARANTEED PERIOD. We will pay equal installments
for a guaranteed period of from one to thirty years. Each installment will
consist of part benefit and part interest. We will pay the installments monthly,
quarterly, semi-annually or annually, as requested.
OPTION B: INSTALLMENTS FOR LIFE WITH A GUARANTEED PERIOD. We will pay equal
monthly installments as long as the designated individual is living, but we will
not make payments for less than the guaranteed period the payee chooses. The
guaranteed period may be either 10 years or 20 years. We will pay the
installments monthly.
OPTION C: BENEFIT DEPOSITED WITH INTEREST. We will hold the benefit on deposit.
It will earn interest at the annual interest rate we are paying as of the date
of the insured's death or the date you surrender the policy. We will not pay
less than 2 1/2% annual interest. We will pay the earned interest monthly,
quarterly, semi-annually or annually, as requested. The payee may withdraw part
or all of the benefit and earned interest at any time.
OPTION D: INSTALLMENTS OF A SELECTED AMOUNT. We will pay installments of a
selected amount until we have paid the entire benefit and accumulated interest.
OPTION E: ANNUITY. We will use the benefit as a single payment to buy an
annuity. The annuity may be payable based on the life of one or two designated
individuals. It may be payable for life with or without a guaranteed period, as
requested. The annuity payment will not be less than payments available under
our then current annuity contracts.
GENERAL
The payee may arrange any other method of benefit payment as long as we agree to
it. There must be at least $10,000 available for any option and the amount of
each installment must be at least $100. If the benefit amount is not enough to
meet these requirements, we will pay the benefit in a lump sum.
Installments that depend on the designated individual's age are based on his or
her age nearest birthday on the date of the insured's death or the date you
surrender the policy. If the death benefit is payable, the settlement option
will start on the date of the insured's death. If you surrender the policy, the
settlement option will start on the date we receive your written surrender
request.
We will pay the first installment under any option on the date the option
starts. Any unpaid balance we hold under Options A, B or D will earn interest at
the rate we are paying at the time of settlement. We will not pay less than 3%
annual interest.
If the payee does not live to receive all guaranteed payments under Options A, B
or D or any amount deposited under Option C, plus any accumulated interest, we
will pay the remaining benefit as scheduled to the payee's estate. If the payee
does not live to receive all guaranteed payments under Option E, we will pay the
remaining benefit as scheduled to the payee's estate. The payee may name and
change a successor payee for any amount we would otherwise pay the payee's
estate.
<PAGE>
APPENDIX C
ILLUSTRATIONS OF
DEATH BENEFIT, ACCUMULATION VALUES
AND ACCUMULATED PREMIUMS
<PAGE>
The following tables illustrate the way in which a policy's death benefit and
accumulation value could vary over an extended period.
ASSUMPTIONS
The tables illustrate a policy issued to a male, age 45, under a preferred
underwriting class and qualifying for the non-smoker rates. One set of tables
illustrates the Option 1 (level) Death Benefit Option; another set illustrates
the Option 2 (plus) Death Benefit Option; and the last set illustrates the
Option 3 (plus premium) Death Benefit Option. In each case, one table
illustrates the guaranteed monthly deduction rates and the other table
illustrates the current cost of insurance rates as presently in effect.
The tables assume that no layers have been added to the policy; that no policy
loan has been made; that you have not requested a decrease in the face amount;
that no partial surrenders have been made; and that no transfers above 18 have
been made in any policy year (so that no related transaction or transfer charges
have been incurred). The tables assume that no riders are in effect on the
policy.
The tables assume that a $4,500 premium is paid at the beginning of each policy
year and that all premiums are allocated to and remain in the separate account
for the entire period shown. The tables are based on hypothetical gross
investment rates of return for the portfolios (i.e., investment income and
capital gains and losses, realized or unrealized) equivalent to constant gross
(after tax) annual rates of 0%, 6%, and 12%. The tables also shown the amount
that would accumulate if premiums accumulated at 5% interest.
The accumulation values and death benefits would be different from those shown
if the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above or below such averages for individual
policy years. The values also would be different depending on the allocation of
the policy's total accumulation value among the sub-accounts if the actual rates
of return averaged 0%, 6, or 12%, but the rates of each portfolio varied above
and below such averages.
DEDUCTIONS FOR CHARGES
The amounts shown for the death proceeds and accumulation values take into
account:
1. an administrative charge deducted from each premium; and
2. the monthly deductions.
The administrative charge is 7% of each premium payment.
The amounts shown for the death proceeds and the accumulation values also take
into account the daily charge against the sub-accounts for mortality and expense
risks equivalent to 0.25% on an annual basis.
EXPENSES OF THE PORTFOLIOS
The amounts shown in the tables also take into account the portfolio management
fees and operating expenses, which are assumed to be at an annual rate of 0.91%
of the average daily net assets of the portfolios. The rate of 0.91% is the
simple average of the total portfolio annual expenses for all of the portfolios
as shown in the Portfolio Expenses table in the prospectus and takes into
account expense reimbursement arrangements. The fees and expenses of each
portfolio vary, and, in 1999, ranged from an annual rate of 0.60% to an annual
rate of 1.79% of average daily net assets. Some of these expenses reflect
expense waivers or reimbursements by the portfolios' advisers as discussed in
Note (1) to the Portfolio Expenses table. Without these expense waivers or
reimbursements, if applicable, the expenses for those portfolios would be higher
and the simple average would have been at the annual rate of 1.05% of average
daily net assets. As discussed in Note (1) to the Portfolio Expenses Table, such
waivers or reimbursements are expected to continue for 2001. The fees and
expenses associated with the policy may be more or less than 0.91% in the
aggregate, depending upon how you make allocations of the accumulation value
among the sub-accounts. For more information on portfolio expenses, see the
Portfolio Expenses Table in this prospectus and the prospectuses for the
portfolios.
NET ANNUAL RATES OF INVESTMENT
Taking into account the separate account mortality and expense risk charge of
0.25%, and the assumed 0.91% charge for portfolio management fees and operating
expenses, the gross annual rates of investment return of 0%, 6% and 12%
correspond to net annual rates of -1.16%, 4.84% AND 10.84%, respectively.
Upon request, we will provide a comparable illustration based upon the proposed
insured's age and underwriting classification, the premium amount and the
allowable requested face amount.
<PAGE>
63
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VUL-5
VARIABLE UNIVERSAL LIFE POLICY
Male, Non-Tobacco User, Age 45
Face Amount: $500,000
Death Benefit: Option 1
BASED ON CURRENT MONTHLY DEDUCTIONS (WITHOUT RIDERS) AND ADMINISTRATIVE CHARGE,
AND PORTFOLIO EXPENSES AND MORTALITY & EXPENSE RISK CHARGE
----------- ----------- ------------------------------------- ------------------------------------- -------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
Interest
Policy At 5% Per Net Cash Accumulation Death Net Cash Accumulation Death Net Cash Accumulation Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,725 $0 $3,119 $500,000 $0 $3,337 $500,000 $0 $3,556 $500,000
2 $9,686 $0 $6,204 $500,000 $0 $6,841 $500,000 $0 $7,505 $500,000
3 $14,896 $0 $9,168 $500,000 $0 $10,426 $500,000 $0 $11,792 $500,000
4 $20,365 $0 $12,008 $500,000 $0 $14,094 $500,000 $1,651 $16,451 $500,000
5 $26,109 $2,465 $14,765 $500,000 $5,589 $17,889 $500,000 $9,265 $21,565 $500,000
6 $32,139 $7,557 $17,407 $500,000 $11,934 $21,784 $500,000 $17,300 $27,150 $500,000
7 $38,471 $12,550 $19,950 $500,000 $18,400 $25,800 $500,000 $25,874 $33,274 $500,000
8 $45,120 $17,464 $22,364 $500,000 $25,010 $29,910 $500,000 $35,065 $39,965 $500,000
9 $52,101 $22,219 $24,669 $500,000 $31,692 $34,142 $500,000 $44,858 $47,308 $500,000
10 $59,431 $26,797 $26,797 $500,000 $38,430 $38,430 $500,000 $55,306 $55,306 $500,000
11 $67,127 $28,989 $28,989 $500,000 $43,028 $43,028 $500,000 $64,296 $64,296 $500,000
12 $75,208 $30,858 $30,858 $500,000 $47,553 $47,553 $500,000 $73,978 $73,978 $500,000
13 $83,694 $32,511 $32,511 $500,000 $52,115 $52,115 $500,000 $84,552 $84,552 $500,000
14 $92,604 $33,911 $33,911 $500,000 $56,677 $56,677 $500,000 $96,090 $96,090 $500,000
15 $101,959 $35,144 $35,144 $500,000 $61,327 $61,327 $500,000 $108,788 $108,788 $500,000
16 $111,782 $36,216 $36,216 $500,000 $66,076 $66,076 $500,000 $122,792 $122,792 $500,000
17 $122,096 $37,092 $37,092 $500,000 $70,897 $70,897 $500,000 $138,228 $138,228 $500,000
18 $132,926 $37,811 $37,811 $500,000 $75,834 $75,834 $500,000 $155,303 $155,303 $500,000
19 $144,297 $38,339 $38,339 $500,000 $80,861 $80,861 $500,000 $174,188 $174,188 $500,000
20 $156,237 $38,657 $38,657 $500,000 $85,972 $85,972 $500,000 $195,095 $195,095 $500,000
---------- --------------- ----------
Age 60 $101,959 $35,144 $35,144 $500,000 $61,327 $61,327 $500,000 $108,788 $108,788 $500,000
Age 65 $156,237 $38,657 $38,657 $500,000 $85,972 $85,972 $500,000 $195,095 $195,095 $500,000
Age 70 $225,511 $35,467 $35,467 $500,000 $111,542 $111,542 $500,000 $339,019 $339,019 $484,797
Age 75 $313,924 $17,588 $17,588 $500,000 $131,714 $131,714 $500,000 $572,500 $572,500 $801,500
----------------- ---------- --------------- ---------- ---------- --------------- ---------- ---------- --------------- ----------
(1) Assumes a $4,500 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid with a different frequency or in
different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause the policy to lapse because of insufficient accumulation value or net
cash value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates of return for the
portfolios. These hypothetical investment rates of return may not be achieved
for any one year or sustained over any period. The death benefit, accumulation
value, and net cash value for a policy would be different from those shown if
actual gross rates of return averaged 0%, 6%, or 12 % over a period of years but
fluctuated above or below those averages for individual policy years. They would
also be different if any partial surrenders or policy loans were made.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VUL-5
VARIABLE UNIVERSAL LIFE POLICY
Male, Non-Tobacco User, Age 45
Face Amount: $500,000
Death Benefit: Option 1
BASED ON GUARANTEED MONTHLY DEDUCTIONS (WITHOUT RIDERS) AND ADMINISTRATIVE CHARGE,
AND PORTFOLIO EXPENSES AND MORTALITY & EXPENSE RISK CHARGE
--- ----------- ------------------------------------- ------------------------------------- -------------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
Interest
Policy At 5% Per Net Cash Accumulation Death Net Cash Accumulation Death Net Cash Accumulation Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $4,725 $0 $3,119 $500,000 $0 $3,337 $500,000 $0 $3,556 $500,000
2 $9,686 $0 $6,204 $500,000 $0 $6,841 $500,000 $0 $7,505 $500,000
3 $14,896 $0 $9,168 $500,000 $0 $10,426 $500,000 $0 $11,792 $500,000
4 $20,365 $0 $12,008 $500,000 $0 $14,094 $500,000 $1,651 $16,451 $500,000
5 $26,109 $2,465 $14,765 $500,000 $5,589 $17,889 $500,000 $9,265 $21,565 $500,000
6 $32,139 $7,557 $17,407 $500,000 $11,934 $21,784 $500,000 $17,300 $27,150 $500,000
7 $38,471 $12,550 $19,950 $500,000 $18,400 $25,800 $500,000 $25,874 $33,274 $500,000
8 $45,120 $17,464 $22,364 $500,000 $25,010 $29,910 $500,000 $35,065 $39,965 $500,000
9 $52,101 $22,219 $24,669 $500,000 $31,692 $34,142 $500,000 $44,858 $47,308 $500,000
10 $59,431 $26,797 $26,797 $500,000 $38,430 $38,430 $500,000 $55,306 $55,306 $500,000
11 $67,127 $26,246 $26,246 $500,000 $40,263 $40,263 $500,000 $61,548 $61,548 $500,000
12 $75,208 $25,227 $25,227 $500,000 $41,725 $41,725 $500,000 $68,048 $68,048 $500,000
13 $83,694 $23,805 $23,805 $500,000 $42,867 $42,867 $500,000 $74,925 $74,925 $500,000
14 $92,604 $21,945 $21,945 $500,000 $43,641 $43,641 $500,000 $82,205 $82,205 $500,000
15 $101,959 $19,588 $19,588 $500,000 $43,968 $43,968 $500,000 $89,900 $89,900 $500,000
16 $111,782 $16,670 $16,670 $500,000 $43,768 $43,768 $500,000 $98,024 $98,024 $500,000
17 $122,096 $13,123 $13,123 $500,000 $42,947 $42,947 $500,000 $106,595 $106,595 $500,000
18 $132,926 $8,848 $8,848 $500,000 $41,377 $41,377 $500,000 $115,619 $115,619 $500,000
19 $144,297 $3,725 $3,725 $500,000 $38,907 $38,907 $500,000 $125,096 $125,096 $500,000
20 $156,237 $0 $0 $500,000 $35,363 $35,363 $500,000 $135,032 $135,032 $500,000
Age 60 $101,959 $19,588 $19,588 $500,000 $43,968 $43,968 $500,000 $89,900 $89,900 $500,000
-----------------------------------------------------------------------------------------------------------------
Age 65 $156,237 $0 $0 $500,000 $35,363 $35,363 $500,000 $135,032 $135,032 $500,000
-----------------------------------------------------------------------------------------------------------------------------
Age 70 $225,511 $0 $0 $0 $0 $0 $0 $193,111 $193,111 $500,000
------------------------------------------------------------------------------------------------------------------------
Age 75 $313,924 $0 $0 $0 $0 $0 $0 $271,913 $271,913 $500,000
---------------- ---------- --------------- ---------- ---------- --------------- ---------- ---------- --------------- ----------
<PAGE>
(1) Assumes a $4,500 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid with a different frequency or in
different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause the policy to lapse because of insufficient accumulation value or net
cash value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates of return for the
portfolios. These hypothetical investment rates of return may not be achieved
for any one year or sustained over any period. The death benefit, accumulation
value, and net cash value for a policy would be different from those shown if
actual gross rates of return averaged 0%, 6%, or 12 % over a period of years but
fluctuated above or below those averages for individual policy years. They would
also be different if any partial surrenders or policy loans were made.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VUL-5
VARIABLE UNIVERSAL LIFE POLICY
Male, Non-Tobacco User, Age 45
Face Amount: $500,000
Death Benefit: Option 2
BASED ON CURRENT MONTHLY DEDUCTIONS (WITHOUT RIDERS) AND ADMINISTRATIVE CHARGE,
AND PORTFOLIO EXPENSES AND MORTALITY & EXPENSE RISK CHARGE
----------- ----------- --------------------------------------------------------------------- -------------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
Interest
Policy At 5% Per Net Cash Accumulation Death Net Cash Accumulation Death Net Cash Accumulation Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $4,725 $0 $3,117 $503,117 $0 $3,335 $503,335 $0 $3,553 $503,553
2 $9,686 $0 $6,197 $506,197 $0 $6,833 $506,833 $0 $7,497 $507,497
3 $14,896 $0 $9,152 $509,152 $0 $10,409 $510,409 $0 $11,772 $511,772
4 $20,365 $0 $11,979 $511,979 $0 $14,059 $514,059 $1,610 $16,410 $516,410
5 $26,109 $2,418 $14,718 $514,718 $5,530 $17,830 $517,830 $9,193 $21,493 $521,493
6 $32,139 $7,486 $17,336 $517,336 $11,842 $21,692 $521,692 $17,182 $27,032 $527,032
7 $38,471 $12,449 $19,849 $519,849 $18,263 $25,663 $525,663 $25,692 $33,092 $533,092
8 $45,120 $17,323 $22,223 $522,223 $24,814 $29,714 $529,714 $34,792 $39,692 $539,692
9 $52,101 $22,031 $24,481 $524,481 $31,418 $33,868 $533,868 $44,463 $46,913 $546,913
10 $59,431 $26,548 $26,548 $526,548 $38,054 $38,054 $538,054 $54,742 $54,742 $554,742
11 $67,127 $28,662 $28,662 $528,662 $42,516 $42,516 $542,516 $63,495 $63,495 $563,495
12 $75,208 $30,435 $30,435 $530,435 $46,864 $46,864 $546,864 $72,854 $72,854 $572,854
13 $83,694 $31,973 $31,973 $531,973 $51,201 $51,201 $551,201 $82,999 $82,999 $582,999
14 $92,604 $33,235 $33,235 $533,235 $55,482 $55,482 $555,482 $93,970 $93,970 $593,970
15 $101,959 $34,313 $34,313 $534,313 $59,795 $59,795 $559,795 $105,950 $105,950 $605,950
16 $111,782 $35,215 $35,215 $535,215 $64,148 $64,148 $564,148 $119,054 $119,054 $619,054
17 $122,096 $35,903 $35,903 $535,903 $68,501 $68,501 $568,501 $133,362 $133,362 $633,362
18 $132,926 $36,419 $36,419 $536,419 $72,896 $72,896 $572,896 $149,046 $149,046 $649,046
19 $144,297 $36,725 $36,725 $536,725 $77,293 $77,293 $577,293 $166,214 $166,214 $666,214
20 $156,237 $36,803 $36,803 $536,803 $81,671 $81,671 $581,671 $185,005 $185,005 $685,005
Age 60 $101,959 $34,313 $34,313 $534,313 $59,795 $59,795 $559,795 $105,950 $105,950 $605,950
Age 65 $156,237 $36,803 $36,803 $536,803 $81,671 $81,671 $581,671 $185,005 $185,005 $685,005
Age 70 $225,511 $32,073 $32,073 $532,073 $101,292 $101,292 $601,292 $308,028 $308,028 $808,028
Age 75 $313,924 $12,270 $12,270 $512,270 $108,427 $108,427 $608,427 $493,406 $493,406 $993,406
------ ----------- ---------- --------------- ---------- ---------- --------------- ---------- ---------- --------------- ----------
(1) Assumes a $4,500 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause the policy to lapse because of insufficient accumulation value or
net cash value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates of return for the
portfolios. These hypothetical investment rates of return may not be achieved
for any one year or sustained over any period. The death benefit, accumulation
value, and net cash value for a policy would be different from those shown if
actual gross rates of return averaged 0%, 6%, or 12 % over a period of years but
fluctuated above or below those averages for individual policy years. They would
also be different if any partial surrenders or policy loans were made.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VUL-5
VARIABLE UNIVERSAL LIFE POLICY
Male, Non-Tobacco User, Age 45
Face Amount: $500,000
Death Benefit: Option 2
BASED ON GUARANTEED MONTHLY DEDUCTIONS (WITHOUT RIDERS) AND ADMINISTRATIVE CHARGE,
AND PORTFOLIO EXPENSES AND MORTALITY & EXPENSE RISK CHARGE
----- ----------- ------------------------------------- ------------------------------------- -------------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
Interest
Policy At 5% Per Net Cash Accumulation Death Net Cash Accumulation Death Net Cash Accumulation Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $4,725 $0 $3,117 $503,117 $0 $3,335 $503,335 $0 $3,553 $503,553
2 $9,686 $0 $6,197 $506,197 $0 $6,833 $506,833 $0 $7,497 $507,497
3 $14,896 $0 $9,152 $509,152 $0 $10,409 $510,409 $0 $11,772 $511,772
4 $20,365 $0 $11,979 $511,979 $0 $14,059 $514,059 $1,610 $16,410 $516,410
5 $26,109 $2,418 $14,718 $514,718 $5,530 $17,830 $517,830 $9,193 $21,493 $521,493
6 $32,139 $7,486 $17,336 $517,336 $11,842 $21,692 $521,692 $17,182 $27,032 $527,032
7 $38,471 $12,449 $19,849 $519,849 $18,263 $25,663 $525,663 $25,692 $33,092 $533,092
8 $45,120 $17,323 $22,223 $522,223 $24,814 $29,714 $529,714 $34,792 $39,692 $539,692
9 $52,101 $22,031 $24,481 $524,481 $31,418 $33,868 $533,868 $44,463 $46,913 $546,913
10 $59,431 $26,548 $26,548 $526,548 $38,054 $38,054 $538,054 $54,742 $54,742 $554,742
11 $67,127 $25,776 $25,776 $525,776 $39,536 $39,536 $539,536 $60,422 $60,422 $560,422
12 $75,208 $24,522 $24,522 $524,522 $40,580 $40,580 $540,580 $66,191 $66,191 $566,191
13 $83,694 $22,855 $22,855 $522,855 $41,233 $41,233 $541,233 $72,129 $72,129 $572,129
14 $92,604 $20,745 $20,745 $520,745 $41,440 $41,440 $541,440 $78,220 $78,220 $578,220
15 $101,959 $18,138 $18,138 $518,138 $41,119 $41,119 $541,119 $84,415 $84,415 $584,415
16 $111,782 $14,980 $14,980 $514,980 $40,182 $40,182 $540,182 $90,664 $90,664 $590,664
17 $122,096 $11,213 $11,213 $511,213 $38,533 $38,533 $538,533 $96,902 $96,902 $596,902
18 $132,926 $6,754 $6,754 $506,754 $36,045 $36,045 $536,045 $103,033 $103,033 $603,033
19 $144,297 $1,507 $1,507 $501,507 $32,569 $32,569 $532,569 $108,935 $108,935 $608,935
20 $156,237 $0 $0 $0 $27,946 $27,946 $527,946 $114,467 $114,467 $614,467
Age 60 $101,959 $18,138 $18,138 $518,138 $41,119 $41,119 $541,119 $84,415 $84,415 $584,415
Age 65 $156,237 $0 $0 $0 $27,946 $27,946 $527,946 $114,467 $114,467 $614,467
Age 70 $225,511 $0 $0 $0 $0 $0 $0 $131,154 $131,154 $631,154
Age 75 $313,924 $0 $0 $0 $0 $0 $0 $103,776 $103,776 $603,776
----------------- ---------- --------------- ---------- ---------- --------------- ---------- ---------- --------------- ----------
(1)
<PAGE>
(1) Assumes a $4,500 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid with a different frequency or in
different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause the policy to lapse because of insufficient accumulation value or net
cash value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates of return for the
portfolios. These hypothetical investment rates of return may not be achieved
for any one year or sustained over any period. The death benefit, accumulation
value, and net cash value for a policy would be different from those shown if
actual gross rates of return averaged 0%, 6%, or 12 % over a period of years but
fluctuated above or below those averages for individual policy years. They would
also be different if any partial surrenders or policy loans were made.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VUL-5
VARIABLE UNIVERSAL LIFE POLICY
Male, Non-Tobacco User, Age 45
Face Amount: $500,000
Death Benefit: Option 3
BASED ON CURRENT MONTHLY DEDUCTIONS (WITHOUT RIDERS) AND ADMINISTRATIVE CHARGE,
AND PORTFOLIO EXPENSES AND MORTALITY & EXPENSE RISK CHARGE
----------- ----------- ------------------------------------- ------------------------------- -------------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
Interest
Policy At 5% Per Net Cash Accumulation Death Net Cash Accumulation Death Net Cash Accumulation Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $4,725 $0 $3,116 $504,500 $0 $3,334 $504,500 $0 $3,553 $504,500
2 $9,686 $0 $6,195 $509,000 $0 $6,831 $509,000 $0 $7,495 $509,000
3 $14,896 $0 $9,147 $513,500 $0 $10,404 $513,500 $0 $11,769 $513,500
4 $20,365 $0 $11,968 $518,000 $0 $14,051 $518,000 $1,604 $16,404 $518,000
5 $26,109 $2,399 $14,699 $522,500 $5,516 $17,816 $522,500 $9,185 $21,485 $522,500
6 $32,139 $7,455 $17,305 $527,000 $11,819 $21,669 $527,000 $17,172 $27,022 $527,000
7 $38,471 $12,402 $19,802 $531,500 $18,230 $25,630 $531,500 $25,681 $33,081 $531,500
8 $45,120 $17,254 $22,154 $536,000 $24,768 $29,668 $536,000 $34,785 $39,685 $536,000
9 $52,101 $21,934 $24,384 $540,500 $31,357 $33,807 $540,500 $44,464 $46,914 $540,500
10 $59,431 $26,414 $26,414 $545,000 $37,974 $37,974 $545,000 $54,761 $54,761 $545,000
11 $67,127 $28,476 $28,476 $549,500 $42,412 $42,412 $549,500 $63,549 $63,549 $549,500
12 $75,208 $30,181 $30,181 $554,000 $46,731 $46,731 $554,000 $72,967 $72,967 $554,000
13 $83,694 $31,631 $31,631 $558,500 $51,035 $51,035 $558,500 $83,206 $83,206 $558,500
14 $92,604 $32,781 $32,781 $563,000 $55,274 $55,274 $563,000 $94,318 $94,318 $563,000
15 $101,959 $33,723 $33,723 $567,500 $59,541 $59,541 $567,500 $106,498 $106,498 $567,500
16 $111,782 $34,462 $34,462 $572,000 $63,841 $63,841 $572,000 $119,877 $119,877 $572,000
17 $122,096 $34,955 $34,955 $576,500 $68,135 $68,135 $576,500 $134,560 $134,560 $576,500
18 $132,926 $35,243 $35,243 $581,000 $72,463 $72,463 $581,000 $150,742 $150,742 $581,000
19 $144,297 $35,280 $35,280 $585,500 $76,786 $76,786 $585,500 $168,565 $168,565 $585,500
20 $156,237 $35,043 $35,043 $590,000 $81,081 $81,081 $590,000 $188,214 $188,214 $590,000
Age 60 $101,959 $33,723 $33,723 $567,500 $59,541 $59,541 $567,500 $106,498 $106,498 $567,500
Age 65 $156,237 $35,043 $35,043 $590,000 $81,081 $81,081 $590,000 $188,214 $188,214 $590,000
Age 70 $225,511 $27,523 $27,523 $612,500 $100,054 $100,054 $612,500 $321,379 $321,379 $612,500
Age 75 $313,924 $81 $81 $635,000 $105,197 $105,197 $635,000 $541,138 $541,138 $757,594
----------------- ---------- --------------- ---------- ---------- --------------- ---------- ---------- --------------- ----------
(1)
<PAGE>
(1) Assumes a $4,500 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause the policy to lapse because of insufficient accumulation value or
net cash value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates of return for the
portfolios. These hypothetical investment rates of return may not be achieved
for any one year or sustained over any period. The death benefit, accumulation
value, and net cash value for a policy would be different from those shown if
actual gross rates of return averaged 0%, 6%, or 12 % over a period of years but
fluctuated above or below those averages for individual policy years. They would
also be different if any partial surrenders or policy loans were made.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VUL-5
VARIABLE UNIVERSAL LIFE POLICY
Male, Non-Tobacco User, Age 45
Face Amount: $500,000
Death Benefit: Option 3
BASED ON GUARANTEED MONTHLY DEDUCTIONS (WITHOUT RIDERS) AND ADMINISTRATIVE CHARGE,
AND PORTFOLIO EXPENSES AND MORTALITY & EXPENSE RISK CHARGE
----------- ----------- ------------------------------------- ------------------------------------- -------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
Interest
Policy At 5% Per Net Cash Accumulation Death Net Cash Accumulation Death Net Cash Accumulation Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $4,725 $0 $3,116 $504,500 $0 $3,334 $504,500 $0 $3,553 $504,500
2 $9,686 $0 $6,195 $509,000 $0 $6,831 $509,000 $0 $7,495 $509,000
3 $14,896 $0 $9,147 $513,500 $0 $10,404 $513,500 $0 $11,769 $513,500
4 $20,365 $0 $11,968 $518,000 $0 $14,051 $518,000 $1,604 $16,404 $518,000
5 $26,109 $2,399 $14,699 $522,500 $5,516 $17,816 $522,500 $9,185 $21,485 $522,500
6 $32,139 $7,455 $17,305 $527,000 $11,819 $21,669 $527,000 $17,172 $27,022 $527,000
7 $38,471 $12,402 $19,802 $531,500 $18,230 $25,630 $531,500 $25,681 $33,081 $531,500
8 $45,120 $17,254 $22,154 $536,000 $24,768 $29,668 $536,000 $34,785 $39,685 $536,000
9 $52,101 $21,934 $24,384 $540,500 $31,357 $33,807 $540,500 $44,464 $46,914 $540,500
10 $59,431 $26,414 $26,414 $545,000 $37,974 $37,974 $545,000 $54,761 $54,761 $545,000
11 $67,127 $25,478 $25,478 $549,500 $39,384 $39,384 $549,500 $60,528 $60,528 $549,500
12 $75,208 $23,997 $23,997 $554,000 $40,315 $40,315 $554,000 $66,413 $66,413 $554,000
13 $83,694 $22,023 $22,023 $558,500 $40,802 $40,802 $558,500 $72,505 $72,505 $558,500
14 $92,604 $19,510 $19,510 $563,000 $40,776 $40,776 $563,000 $78,798 $78,798 $563,000
15 $101,959 $16,380 $16,380 $567,500 $40,132 $40,132 $567,500 $85,256 $85,256 $567,500
16 $111,782 $12,550 $12,550 $572,000 $38,756 $38,756 $572,000 $91,843 $91,843 $572,000
17 $122,096 $7,927 $7,927 $576,500 $36,517 $36,517 $576,500 $98,512 $98,512 $576,500
18 $132,926 $2,382 $2,382 $581,000 $33,240 $33,240 $581,000 $105,190 $105,190 $581,000
19 $144,297 $0 $0 $0 $28,716 $28,716 $585,500 $111,777 $111,777 $585,500
20 $156,237 $0 $0 $0 $22,702 $22,702 $590,000 $118,159 $118,159 $590,000
Age 60 $101,959 $16,380 $16,380 $567,500 $40,132 $40,132 $567,500 $85,256 $85,256 $567,500
Age 65 $156,237 $0 $0 $0 $22,702 $22,702 $590,000 $118,159 $118,159 $590,000
Age 70 $225,511 $0 $0 $0 $0 $0 $0 $142,395 $142,395 $612,500
Age 75 $313,924 $0 $0 $0 $0 $0 $0 $127,295 $127,295 $635,000
------ ----------- ---------- --------------- ---------- ---------- --------------- ---------- ---------- --------------- ----------
</TABLE>
(1) Assumes a $4,500 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid with a different frequency or in
different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause the policy to lapse because of insufficient accumulation value or net
cash value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates of return for the
portfolios. These hypothetical investment rates of return may not be achieved
for any one year or sustained over any period. The death benefit, accumulation
value, and net cash value for a policy would be different from those shown if
actual gross rates of return averaged 0%, 6%, or 12 % over a period of years but
fluctuated above or below those averages for individual policy years. They would
also be different if any partial surrenders or policy loans were made.
<PAGE>
<TABLE>
<CAPTION>
APPENDIX D
DEATH BENEFIT FACTORS
Applies during required premium period.
ATTAINED MALE MALE FEMALE FEMALE ATTAINED MALE MALE FEMALE FEMALE
AGE NON-SMOKER SMOKER NON-SMOKER SMOKER AGE NON-SMOKER SMOKER NON-SMOKER SMOKER
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 8.52 6.80 9.70 8.45 58 2.32 2.07 2.57 2.38
17 8.25 6.59 9.39 8.17 59 2.27 2.03 2.50 2.32
18 7.99 6.38 9.09 7.91 60 2.22 2.00 2.44 2.26
19 7.74 6.19 8.79 7.65 61 2.17 1.96 2.37 2.21
20 7.50 6.01 8.51 7.41 62 2.12 1.92 2.31 2.15
21 7.27 5.84 8.23 7.18 63 2.07 1.89 2.26 2.11
22 7.04 5.66 7.97 6.95 64 2.03 1.85 2.20 2.06
23 6.81 5.49 7.71 6.73 65 1.99 1.82 2.15 2.02
24 6.59 5.33 7.45 6.51 66 1.95 1.79 2.10 1.98
25 6.38 5.16 7.21 6.30 67 1.92 1.76 2.06 1.94
26 6.18 5.01 6.97 6.09 68 1.89 1.74 2.01 1.90
27 5.98 4.86 6.74 5.90 69 1.86 1.71 1.97 1.85
28 5.78 4.70 6.52 5.71 70 1.83 1.69 1.93 1.82
29 5.59 4.56 6.30 5.53 71 1.80 1.67 1.89 1.79
30 5.41 4.41 6.10 5.35 72 1.77 1.64 1.86 1.75
31 5.23 4.28 5.90 5.18 73 1.74 1.61 1.82 1.72
32 5.06 4.15 5.71 5.02 74 1.71 1.58 1.79 1.68
33 4.90 4.02 5.52 4.87 75 1.68 1.55 1.76 1.65
34 4.74 3.90 5.35 4.72 76 1.66 1.53 1.73 1.62
35 4.58 3.78 5.17 4.57 77 1.63 1.50 1.70 1.59
36 4.44 3.67 5.01 4.43 78 1.61 1.47 1.68 1.57
37 4.29 3.56 4.85 4.30 79 1.59 1.45 1.65 1.54
38 4.15 3.45 4.69 4.17 80 1.57 1.43 1.63 1.51
39 4.02 3.35 4.55 4.04 81 1.51 1.39 1.57 1.47
40 3.89 3.26 4.40 3.92 82 1.47 1.35 1.52 1.42
41 3.77 3.16 4.26 3.81 83 1.42 1.33 1.47 1.38
42 3.65 3.07 4.13 3.70 84 1.38 1.31 1.42 1.36
43 3.54 2.99 4.00 3.59 85 1.35 1.29 1.39 1.34
44 3.43 2.90 3.88 3.48 86 1.34 1.27 1.36 1.31
45 3.32 2.82 3.76 3.38 87 1.32 1.25 1.34 1.29
46 3.22 2.75 3.64 3.28 88 1.30 1.23 1.32 1.26
47 3.13 2.68 3.53 3.19 89 1.28 1.21 1.29 1.23
48 3.04 2.61 3.43 3.10 90 1.24 1.19 1.25 1.20
49 2.95 2.54 3.33 3.02 91 1.21 1.17 1.21 1.18
50 2.86 2.48 3.23 2.94 92 1.18 1.15 1.18 1.15
51 2.78 2.42 3.13 2.86 93 1.14 1.13 1.15 1.13
52 2.71 2.36 3.04 2.78 94 1.11 1.11 1.12 1.12
53 2.63 2.31 2.96 2.71 95 1.10 1.10 1.10 1.10
54 2.57 2.26 2.87 2.63 96 1.09 1.09 1.09 1.09
55 2.50 2.21 2.79 2.56 97 1.07 1.07 1.07 1.07
56 2.44 2.16 2.71 2.50 98 1.06 1.06 1.06 1.06
57 2.38 2.12 2.64 2.44
<PAGE>
DEATH BENEFIT FACTORS
Applies after required premium period
ATTAINED MALE MALE FEMALE FEMALE ATTAINED MALE MALE FEMALE FEMALE
AGE NON-SMOKER SMOKER NON-SMOKER SMOKER AGE NON-SMOKER SMOKER NON-SMOKER SMOKER
26 5.91 4.82 6.64 5.84 64 1.79 1.61 1.99 1.87
27 5.72 4.67 6.43 5.65 65 1.74 1.58 1.93 1.83
28 5.54 4.52 6.22 5.47 66 1.70 1.55 1.88 1.78
29 5.36 4.38 6.01 5.29 67 1.66 1.52 1.83 1.74
30 5.18 4.24 5.81 5.12 68 1.62 1.49 1.78 1.70
31 5.01 4.10 5.62 4.95 69 1.58 1.47 1.74 1.66
32 4.85 3.97 5.44 4.79 70 1.55 1.44 1.69 1.62
33 4.69 3.84 5.26 4.63 71 1.52 1.42 1.65 1.59
34 4.53 3.71 5.08 4.48 72 1.48 1.40 1.61 1.55
35 4.38 3.59 4.91 4.34 73 1.45 1.37 1.57 1.52
36 4.24 3.48 4.75 4.20 74 1.43 1.35 1.53 1.49
37 4.10 3.37 4.59 4.06 75 1.40 1.33 1.50 1.46
38 3.96 3.26 4.44 3.93 76 1.38 1.32 1.47 1.43
39 3.83 3.16 4.30 3.81 77 1.35 1.30 1.43 1.40
40 3.70 3.06 4.16 3.69 78 1.33 1.28 1.41 1.38
41 3.58 2.96 4.02 3.57 79 1.31 1.27 1.38 1.35
42 3.47 2.87 3.89 3.46 80 1.29 1.26 1.35 1.33
43 3.35 2.79 3.77 3.36 81 1.27 1.24 1.33 1.31
44 3.24 2.70 3.65 3.26 82 1.26 1.23 1.30 1.29
45 3.14 2.62 3.53 3.16 83 1.24 1.22 1.28 1.27
46 3.04 2.55 3.42 3.07 84 1.23 1.21 1.26 1.25
47 2.94 2.47 3.32 2.98 85 1.21 1.20 1.24 1.23
48 2.85 2.40 3.21 2.89 86 1.20 1.19 1.23 1.22
49 2.76 2.34 3.11 2.81 87 1.19 1.18 1.21 1.20
50 2.68 2.27 3.02 2.73 88 1.18 1.17 1.19 1.19
51 2.59 2.21 2.92 2.66 89 1.17 1.16 1.18 1.18
52 2.51 2.15 2.84 2.58 90 1.16 1.15 1.17 1.17
53 2.44 2.09 2.75 2.51 91 1.15 1.14 1.15 1.15
54 2.36 2.04 2.67 2.44 92 1.14 1.13 1.14 1.14
55 2.29 1.99 2.59 2.38 93 1.12 1.12 1.13 1.13
56 2.23 1.94 2.51 2.31 94 1.11 1.11 1.12 1.12
57 2.16 1.89 2.44 2.25 95 1.10 1.10 1.10 1.10
58 2.10 1.85 2.37 2.19 96 1.09 1.09 1.09 1.09
59 2.04 1.80 2.30 2.14 97 1.07 1.07 1.07 1.07
60 1.99 1.76 2.23 2.08 98 1.06 1.06 1.06 1.06
61 1.93 1.72 2.17 2.03 99 1.04 1.04 1.04 1.04
62 1.88 1.68 2.10 1.97 100 1.04 1.04 1.04 1.04
63 1.83 1.65 2.04 1.92
For all attained ages after those shown, the death benefit factor is 1.04.
</TABLE>
<PAGE>
Exhibit List
1. (1) Certified Copy of Resolution of Board of Directors
(3) (a) Form of Distribution Agreement
(b) Form of Sales Agreement
(5) Forms of Contract and Riders
(6) Organizational documents
(8) Form of Participation Agreements
(10) Form of Application
(11) Procedures Memorandum
2. Form of Policy and Policy Riders.
3. Opinion of Counsel
6. Actuarial Consent
8. Powers of Attorney
<PAGE>
