<PAGE> 1
As filed with the Securities and Exchange Commission on
29 April 1997
Registration No. 2-39272
811-2162
Securities and Exchange Commission
Washington, DC 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 42 [ X ]
Registration Statement Under the [ X ]
Investment Company Act of 1940
Amendment No. 13
General American Separate Account Two
(Exact Name of Registrant)
General American Life Insurance Company
(Name of Depositor)
700 Market Street
St. Louis, MO 63101
(Address of Depositor's Principal Executive office)
Depositor's Telephone Number: (314) 231-1700
Matthew P. McCauley, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, MO 63101
(Name and address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill, and Brennan
1275 Pennsylvania Ave., N.W.
Washington, DC 20004-2404
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It is proposed that this filing will become effective (check appropriate
space)
[ ] immediately upon filing pursuant to paragraph (b)
[ X ] 1 May 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph a(2) of Rule 485 under the Securities
Act of 1933
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933. The Registrant filed the 24f-2 Notice for the
fiscal year ended 31 December 1996 on 28 February 1997.
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<PAGE> 3
Cross Reference Sheet
Pursuant to Rules 481, and 495, '33 Act
Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of Registration
Statement of Information Required by Form N-4
******************************
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C>
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Questions and
Answers About
the Contract
4. Condensed Financial Information Financial Statements
5. General Description of
(a) Depositor General American
Life Insurance
Company
(b) Registrant General American
Separate Account Two
(c) Portfolio Company General American
Capital Company
(d) Fund Prospectus General American
Capital Company
(e) Voting Rights Voting Rights
(f) Administrators Contract Owner
Inquiries
6. Deductions and Expenses Charges and
Deductions
(a) General Other Charges; Taxes
(b) Sales Load % Surrender Charges
(c) Special Purchase Plan N/A
(d) Commissions Distributor of the
Contracts
(e) Expenses - Registrant Taxes
(f) Fund Expenses Capital Company
Expenses
(g) Organizational Expenses N/A
7. Contracts
(a) Persons with Rights The Contracts;
Distributions Under
the Contracts;
Voting Rights
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(b) (i) Allocation of
Purchase Payments Allocation of
Purchase Payments
(ii) Transfers Transfers
(iii) Exchanges N/A
(c) Changes Additions, Deletions
or Substitutions of
Investments
(d) Inquiries Contract Owner
Inquiries
8. Annuity Period Annuity Income
Options
9. Death Benefit Death of Annuitant
Prior to Annuity
Date
10. Purchases and Contract Value
(a) Purchases Contract Application
and Purchase
Payments;
Accumulated Value
(b) Valuation Accumulated Value
(c) Daily Calculation Accumulated Value
(d) Underwriter Distributor of the
Contracts
11. Redemptions
(a) - By Owners Surrenders and
Partial Withdrawals
- By Annuitant Annuity Income
Options
(b) Texas Optional
Retirement Program N/A
(c) Check Delay Surrenders and
Partial Withdrawals
(d) Lapse Can the Contract be
Returned After One
is Delivered?; The
Contract
12. Taxes Federal Tax Matters
13. Legal Proceedings Part B: Legal
Proceedings
14. Table of Contents for the
Statement of Additional
Information Statement of
Additional
Information
iv
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<CAPTION>
PART B
Statement of Additional
Item of Form N-4 Information Caption
<S> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History Part A: General
American Life
Insurance Company
and Separate Account
Two
18. Services
(a) Fees and Expenses of
Registrant N/A
(b) Management Contracts N/A
(c) Custodian N/A
Independent Public
Accountant Financial Statements
(d) Assets of Registrant Safekeeping of
Account Assets
(e) Affiliated Persons N/A
(f) Principal Underwriter Distribution of the
Contract
19. Purchase of Securities Distribution of
Being Offered the Contract
20. Underwriters Distribution of the
Contract
21. Money Market Yield Money Market Yield
Calculation
22. Annuity Payments Computation of
Variable Annuity
Income Payments
23. Financial Statements Financial Statements
</TABLE>
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GENERAL AMERICAN SEPARATE ACCOUNT TWO
PROSPECTUS
FOR THE
GROUP AND INDIVIDUAL VARIABLE ANNUITY CONTRACTS
OFFERED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
(A MISSOURI COMPANY)
700 MARKET STREET
ST. LOUIS, MISSOURI 63101
1-800-449-6447
==============================================================================
This Prospectus describes the variable portion of certain group and
individual variable annuity contracts offered by General American Life
Insurance Company ("General American"). These contracts, collectively
referred to as the "Contract" or the "Contracts" in this Prospectus, are
designed to aid individuals in long-term financial planning and provide for
the accumulation of capital on a tax-deferred basis for retirement or other
long-term purposes. The Contracts may be purchased with a monthly payment of
$25 ($300 per year).
Prior to the Annuity Date, the Contract Owner ("participant" in group
contracts) may direct that Purchase Payments accumulate on a completely
variable basis, a completely fixed basis, or a combination variable and fixed
basis. The Contract Owner has significant flexibility in determining the
frequency and amount of each Purchase Payment. The Contract Owner may elect
to receive Annuity Payments on a variable basis or fixed basis. The Contract
Owner also has significant flexibility in determining the Annuity Date on
which Annuity Payments are scheduled to commence. Surrenders or partial
withdrawals may be made at any time before the Annuity Date, although in
certain circumstances they are subject to a withdrawal or surrender charge
and tax penalty. Any amount surrendered or withdrawn may be paid in a lump
sum or, after the Contract Owner's election, all or part may be paid out
under an Annuity Income Option. The Contracts provide the flexibility
necessary to permit a Contract Owner to devise an annuity that best fits his
or her needs.
Purchase Payments may be allocated all or in part to one or more of the
Divisions of General American Separate Account Two ("the Separate Account")
or to General American's General Account. Assets of each Division are
invested in corresponding Funds offered by General American Capital Company,
and Variable Insurance Products Fund. A full description of the Funds,
including the investment policies, restrictions, risks, and charges is
contained in the accompanying Prospectuses of the respective Funds. For a
brief discussion of General American's General Account, see "The General
Account" section.
The Contract's Accumulated Value will vary in accordance with the investment
performance of the Divisions selected by the Contract Owner. Therefore, the
Contract Owner bears the entire investment risk under this Contract for any
amounts allocated to the Separate Account.
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the
Contracts and the Separate Account is available free by writing General
American at the address above or by calling (800) 449-6447. The Statement of
Additional Information, which has the same date as this Prospectus, has been
filed with the Securities and Exchange Commission and is incorporated here by
reference. The table of contents of the Statement of Additional Information
is included at the end of this Prospectus.
THIS PROSPECTUS MUST BE ACCOMPANIED BY CURRENT PROSPECTUSES FOR
GENERAL AMERICAN CAPITAL COMPANY AND VARIABLE INSURANCE PRODUCTS FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
THE CONTRACT IS NOT AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
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<TABLE>
=========================================================================================
TABLE OF CONTENTS
=========================================================================================
<S> <C>
DEFINITIONS 4
QUESTIONS AND ANSWERS ABOUT THE CONTRACTS 5
TABLES 7
TABLE 1 SEPARATE ACCOUNT TWO FEES AND EXPENSES 7
TABLE 2 HISTORICAL TABLE OF UNITS AND UNIT VALUES FOR QUALIFIED PLANS 9
TABLE 3 HISTORICAL TABLE OF UNITS AND UNIT VALUES FOR NONQUALIFIED PLANS 10
TABLE 4 TABLE OF UNITS AND UNIT VALUES 10
FINANCIAL STATEMENTS 12
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SEPARATE ACCOUNT TWO 12
GENERAL AMERICAN 12
THE SEPARATE ACCOUNT 13
GENERAL AMERICAN CAPITAL COMPANY 13
VARIABLE INSURANCE PRODUCTS FUND 14
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS 15
THE CONTRACTS 15
CONTRACT APPLICATION AND PURCHASE PAYMENTS 16
ALLOCATION OF PURCHASE PAYMENTS 16
ACCUMULATED VALUE 16
NET INVESTMENT FACTOR 17
TRANSFERS 17
CONTRACT OWNER INQUIRIES 18
CHARGES AND DEDUCTIONS 18
SURRENDER CHARGES (CONTINGENT DEFERRED SALES CHARGE) 18
MORTALITY AND EXPENSE RISK CHARGE 19
PREMIUM TAX 19
FEDERAL INCOME TAX 20
EXPENSES - CAPITAL COMPANY AND VARIABLE INSURANCE PRODUCTS FUND 20
DISTRIBUTIONS UNDER THE CONTRACTS 21
SURRENDERS AND PARTIAL WITHDRAWALS 21
TERMINATION BENEFITS 21
ANNUITY DATE 22
DEATH OF ANNUITANT PRIOR TO ANNUITY DATE 22
ANNUITY INCOME OPTIONS 22
(a) Election of Annuity Income Options 22
(b) The Options Available 22
(c) Value of Variable Annuity Payments 23
DEFERMENT OF PAYMENT 23
THE BENEFICIARY 23
DEATH BENEFITS 24
ASSIGNMENTS AND TRANSFERS 24
FEDERAL TAX MATTERS 25
INTRODUCTION 25
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TAXATION OF GENERAL AMERICAN 25
TAX STATUS OF THE CONTRACTS 25
(a) Diversification 25
(b) Investor Control 25
(c) Required Distributions 26
TAXATION OF ANNUITIES 26
(a) In General 26
(b) Withdrawals and Surrenders 27
(c) Annuity Payments 27
(d) Penalty Tax 27
(e) Taxation of Death Benefit Proceeds 27
(f) Transfers, Assignments or Exchanges of the Contract 27
(g) Multiple Contracts 28
(h) Withholding 28
(i) Possible Changes in Taxation 28
(j) Other Tax Consequences 28
(k) Qualified Contracts 28
INDIVIDUAL RETIREMENT ANNUITIES AND ACCOUNTS 29
CODE SECTION 403(B) PLANS 29
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS 29
DEFERRED COMPENSATION PLANS 29
RESTRICTIONS UNDER QUALIFIED CONTRACTS 29
DISTRIBUTOR OF THE CONTRACTS 30
VOTING RIGHTS 30
THE GENERAL ACCOUNT 31
GENERAL ACCOUNT ACCUMULATIONS 31
SURRENDER CHARGES 31
TRANSFERS TO THE SEPARATE ACCOUNT 31
GENERAL MATTERS 31
STATEMENT OF ADDITIONAL INFORMATION 32
</TABLE>
3
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==============================================================================
DEFINITIONS
==============================================================================
Accumulated Value -- The value of all amounts accumulated under the Contract
prior to the Annuity Date.
Annuitant -- The person or persons whose life is used to determine the
duration of any Annuity Payments and, subject to the provision dealing with
Joint Annuitants, upon whose death, prior to the Annuity Date, benefits under
the Contract are paid.
Annuity Date -- The date on which Annuity Payments begin.
Annuity Income Option -- One of several ways in which Annuity Payments may be
made.
Annuity Payment -- One of a series of payments made under an Annuity Income
Option.
Annuity Unit -- An accounting unit of measure used to calculate Variable
Annuity Payments.
Beneficiary -- The person or legal entity that may receive benefits due upon
the Annuitant's death are paid.
Business Day -- A day when both General American and the New York Stock
Exchange are open for business. The following days are not Business Days for
General American: New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Friday after Thanksgiving, and Christmas Day.
Capital Company -- General American Capital Company, an open-end,
diversified, management investment company which is advised by Conning Asset
Management Company (formerly General American Investment Management Company)
and in which the Separate Account invests.
Code -- The Internal Revenue Code of 1986, as amended.
Contract -- The document for each Contract Owner which evidences the coverage
of the Contract Owner. The Contract, its riders, endorsements, and
amendments, if any, and the Contract Application, a copy of which is attached
to and made a part hereof, are the entire Contract.
Contract Anniversary -- Any anniversary of the Contract Date.
Contract Date -- The date of issue of the Contract.
Contract Year -- A period of 12 months starting with the Contract Date or any
Contract Anniversary.
Contract Owner (or "owner" or "you") -- With respect to individual Contracts,
the person or persons designated as the Contract Owners in the Contract
application, or as subsequently changed by the designated Contract Owner.
With respect to group Contracts, an individual participant under the
Contract.
Division -- A division of Separate Account Two. Each Division invests
exclusively in the shares of a corresponding Fund of either General American
Capital Company or Variable Insurance Products Fund.
Fund (or "Funds") -- A separate investment portfolio of either General
American Capital Company or Variable Insurance Products Fund.
General Account -- All assets owned by General American other than those in
separate accounts.
General American ("We, Us, Our") -- General American Life Insurance Company,
a Missouri company.
Home Office -- The service office of General American Life Insurance Company,
the mailing address of which is P.O. Box 14490, St. Louis, Missouri 63178.
Initial Purchase Payment -- The first payment which the Contract Owner makes.
This payment can be periodic or a single payment provided the minimum amounts
specified in the Contract are satisfied.
Nonqualified Contracts -- Contracts that do not receive favorable treatment
under Sections 401, 403, 408, or 457 of the Code. Earnings on these
contracts currently receive special Federal income tax treatment.
Payee -- The Contract Owner, Annuitant, Beneficiary, or any other person,
estate, or legal entity to whom benefits are to be paid.
Proof of Death -- (a) a certified death certificate, (b) a certified decree
of a court of competent jurisdiction as to the finding of death; (c) a
written statement by a medical doctor who attended the deceased; or (d) any
other proof satisfactory to General American.
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<PAGE> 10
Purchase Payment -- Any premium paid by the Contract Owner.
Qualified Contracts -- Contracts purchased in connection with a retirement
plan that receives favorable tax treatment under section 401, 403, 408, or
457 of the Code.
Right to Examine Period -- The period during which the Contract can be
cancelled and treated as void from the Contract Date.
Separate Account -- Refers to the General American Separate Account Two which
is a separate investment account of General American consisting of assets set
aside by General American, the investment performance of which is kept
separate from that of the general assets of General American.
Valuation Period -- A period between two successive Business Days commencing
at the close of business of the first Business Day and ending at the close of
business of the following Business Day.
Written Notice (or Written Request) --- A notice or request in writing by the
Contract Owner to General American. It is how the Contract Owner lets
General American know of any requests or changes to make to the Contract.
Such a request must be in a format and content acceptable to General
American.
==============================================================================
QUESTIONS AND ANSWERS ABOUT THE CONTRACTS
==============================================================================
NOTE: The following section contains brief questions and answers about the
Contracts. Reference should be made to the body of this Prospectus for more
detailed information. With respect to Qualified Contracts, it should be
noted that the requirements of a particular retirement plan, an endorsement
to the Contract, or limitations or penalties imposed by the Code may impose
limits or restrictions on premiums, surrenders, distributions, or benefits,
or on other provisions of the Contracts, and this Prospectus does not
describe any such limitations or restrictions. (See "Federal Tax Matters").
"You" or "your" refer to the Contract Owner; "we", "us", or "our" refer to
General American Life Insurance Company.
1. WHAT IS THE PURPOSE OF THE CONTRACTS?
The Contracts allow you to accumulate funds on a tax-deferred basis and to
receive Annuity Payments when desired, based on the investment experience of
the assets underlying the Contracts. The Contracts are designed for use in
connection with nonqualified and the following qualified retirement plans:
(1) pension and profit sharing plans established by self-employed individuals
for themselves and their employees (HR-10 [Keogh] Plans), (2) Individual
Retirement Account (IRA) Plans under Section 408 of the Code, and (3) annuity
purchase arrangements which are adopted for employees by public school
systems and by organizations that are tax-exempt under Section 501(c)(3) of
the Code.
A Contract may be purchased with the proceeds from such plans or from sources
which do not qualify for special tax treatment. The nature of the source of
the funds affects the way annuity investments are taxed but not the operation
of the Contracts. (See "Federal Tax Matters")
The Contract Owner can allocate Purchase Payments to one or more Divisions of
the General American Life Insurance Company Separate Account Two (the
"Separate Account"), each of which will invest in shares of a corresponding
Fund of General American Capital Company ("Capital Company") or Variable
Insurance Products Fund ("VIP"). Because Annuity Payments and Accumulated
Values depend on the investment experience of the selected Divisions, the
Contract Owner bears the entire investment risk under these Contracts for
amounts allocated to the Separate Account. Purchase Payments may also be
allocated, in whole or in part, to the General Account.
2. WHAT IS AN ANNUITY AND WHY MAY BENEFITS VARY?
An annuity provides for a series of Annuity Payments beginning on the Annuity
Date. The Contract Owner may select from a number of Annuity Income Options,
including Annuity Payments for the life of an Annuitant (or an Annuitant and
another person, the "Joint Annuitant") with or without a guaranteed number of
Annuity Payments, or for a designated period. Annuity Payments which are
guaranteed throughout the payment period are referred to in this Prospectus
as "Guaranteed Annuity Payments." Annuity Payments which vary in accordance
with the investment experience of the Division selected by the Contract Owner
are referred to in this Prospectus as "Variable Annuity Payments."
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<PAGE> 11
3. WHAT TYPES OF INVESTMENTS UNDERLIE THE SEPARATE ACCOUNT?
Currently, the Separate Account consists of eight divisions, each of which
invests in shares of a corresponding Fund of Capital Company or VIP. Capital
Company is an open-end, diversified, management company advised by Conning
Asset Management Company (formerly General American Investment Management
Company). Capital Company currently offers purchaser of these Contracts five
of its seven established separate Funds: the S & P 500 Index Fund; the Money
Market Fund; the Bond Index Fund; the Managed Equity Fund; and the Asset
Allocation Fund.
VIP is an open-end, diversified, management investment company. Fidelity
Management & Research Company is the manager of several funds. The three VIP
portfolios currently available are VIP: Equity-Income Portfolio, VIP:
Growth Portfolio, and VIP: Overseas Portfolio.
The assets of each Fund are held separately from the other Funds and each has
distinct investment objectives and policies which are described in the
accompanying Prospectuses of either Capital Company or VIP. (See "General
American Capital Company" and "Variable Insurance Products Fund")
4. HOW DO I PURCHASE A CONTRACT?
A Contract may be purchased with a planned monthly payment of at least $25.
Subsequent Purchase Payments generally may be made at any time prior to the
Annuity Date as long as the Annuitant is living. You may establish a
schedule of planned Purchase Payments and we will send reminder notices at
the scheduled intervals. The failure to make a planned Purchase Payment will
not itself cause the Contract to lapse. The minimum Purchase Payment
permitted is $25, and the total of all Purchase Payments made in one year for
the same Contract may not exceed twice the annual equivalent of the Initial
Purchase Payment. (See "Contract Application and Purchase Payments")
5. HOW DO I ALLOCATE PURCHASE PAYMENTS?
Purchase Payments may be allocated among one or more of the Divisions of the
Separate Account or to the General Account in accordance with the allocation
percentages selected by you in your Contract application. All allocations
must be in whole percents, involve amounts of at least $25, and total 100%.
Allocations for Additional Purchase Payments may be changed by sending
Written Notice to us. (See "Allocation of Purchase Payments")
Purchase Payments or portions of Purchase Payments allocated to the General
Account will accrue interest at a rate of at least 4% compounded annually
independent of the actual investment experience of the General Account. (See
"The General Account")
6. CAN I TRANSFER AMOUNTS AMONG THE DIVISIONS?
Transfers among the Divisions or to the General Account can be made at any
time. Transfers from the General Account to the Separate Account are subject
to certain limitations. (See "Transfers")
7. CAN I GET TO MY MONEY IF I NEED IT?
All or part of the Accumulated Value of the Contract may be withdrawn before
the earlier of the Annuitant's death or the Annuity Date. However, amounts
surrendered may be subject to a surrender charge depending on how long the
withdrawn Purchase Payments have been invested in the Contract. WE GUARANTEE
THAT THE AGGREGATE SURRENDER CHARGES WILL NEVER EXCEED 9% OF THE PURCHASE
PAYMENTS. (See "Surrenders and Partial Withdrawals" and "Surrender Charges")
In addition, certain surrenders may be subject to a penalty tax. (See
"Surrenders and Partial Withdrawals" and "Federal Tax Matters")
8. WHAT ARE THE CHARGES AND DEDUCTIONS UNDER THE CONTRACTS?
We deduct a daily charge equal to a percentage of the value of the net assets
in the Separate Account for the mortality and expense risks assumed by us and
for the cost of administering these Contracts. The effective annual rate of
this charge is 1.00% (estimated at .80% for mortality risk and .20% for
expense risk).
In order to permit investment of the entire Purchase Payment, we currently do
not deduct sales charges at the time of investment. However, a surrender
charge, as described in question #7 above, is imposed on certain full or
partial surrenders of the Contracts to cover certain expenses relating to the
sale of the Contracts, including commissions to registered representatives
and other promotional expenses. (See "Surrender Charges")
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9. WHAT ANNUITY INCOME OPTIONS ARE AVAILABLE UNDER THE CONTRACTS?
The Contract Owner may receive Annuity Payments on a variable basis or a
fixed basis. The Contract Owner also has flexibility in choosing the Annuity
Date.
Seven Annuity Income Options are included in the Contract: (l) life annuity;
(2) life annuity, with 60, l20, 180, or 240 monthly installments guaranteed;
(3) unit refund life annuity; (4) joint and last survivor income for life;
(5) income for a fixed period which may be from 3 to 30 years; (6) income of
a fixed amount, not less than $75 per annum per $1,000 of the original amount
due; and (7) interest income (available only to Nonqualified contracts). (See
"Annuity Income Options")
10. CAN A CONTRACT BE RETURNED AFTER ONE IS DELIVERED?
The Contracts contain a provision for a Right to Examine Period which permits
a Contract Owner to cancel the Contract by returning it to us at our Home
Office, or to the agent through whom it was purchased, within 20 days of
receipt of the Contract. The Contract Owner will then receive from us the
Purchase Payments made on the Contract. In some states, applicable law
requires that the refund equal the Accumulated Value in any Separate Account
and any Purchase Payments allocated to the Fixed Account.
11. WHO DO I CALL IF I HAVE QUESTIONS ABOUT MY ANNUITY?
Any questions about procedures or your Contract will be answered by our
Variable Annuity Administration Department, P.0. Box 14490, St. Louis,
Missouri 63178-4490, (800) 449-6447. All inquiries should include the
Contract number and the Annuitant's name. In addition, confirmations will be
mailed to the Contract Owner for any cash transactions that take place, and
quarterly reports will be sent showing the Accumulated Value in each
Division, the Accumulated Value in the General Account, and any Purchase
Payments, charges, transfers, or surrenders during the time period covered.
==============================================================================
TABLES
==============================================================================
The tables which follow reflect certain historical information for the
Separate Account throughout the periods indicated. The investment policies,
objectives and restrictions applicable to the Separate Account prior to its
reorganization into a unit investment trust on February 23, 1988 are
virtually identical to those of the Managed Equity Fund of Capital Company.
Accordingly this historical information is substantially identical to the
results which would have occurred if the Separate Account had invested its
net assets in the Managed Equity Fund of Capital Company from its inception.
<TABLE>
TABLE 1
-------
SEPARATE ACCOUNT TWO FEES AND EXPENSES
FOR GENERAL AMERICAN CAPITAL COMPANY AND
VARIABLE INSURANCE PRODUCTS FUND
<CAPTION>
SURRENDER CHARGES (EXPRESSED AS A PERCENTAGE OF AMOUNT WITHDRAWN):
<S> <C> <C>
First year 9.00%
Second year 8.00%
Third year 7.00%
Fourth year 6.00% The surrender charge is levied only when sums are
Fifth year 5.00% withdrawn from any Division of Separate Account Two
Sixth year 4.00% or the General Account. The first 10% of the account
Seventh year 3.00% value withdrawn in any Contract year will not
Eighth year 2.00% have a surrender charge applied to it.
Ninth year 1.00%
</TABLE>
SEPARATE ACCOUNT ANNUAL FEES (ALL DIVISIONS)
Mortality and expense risk: 1.00%
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<TABLE>
GENERAL AMERICAN CAPITAL COMPANY ANNUAL FUND OPERATING EXPENSES (expressed as
a percentage of average net assets):
<CAPTION>
INVESTMENT ADMINISTRATION TOTAL FUND
FUND ADVISORY FEES FEES OPERATING EXPENSES
- ---- ------------- -------------- ------------------
<S> <C> <C> <C>
S & P 500 Index Fund 0.250% 0.050% 0.300%
Money Market Fund 0.125% 0.080% 0.205%
Bond Index Fund 0.250% 0.050% 0.300%
Managed Equity Fund <F*> 0.400% 0.100% 0.500%
Asset Allocation Fund 0.500% 0.100% 0.600%
<F*> Investment advisory fees applicable to the Managed Equity Fund decline
ratably on the average daily net assets in excess of $10 million (see the
General American Capital Company Prospectus).
</TABLE>
<TABLE>
EXAMPLES
If you surrendered your Contract after the end of the specified time period,
you would pay the following aggregate expenses on a $1,000 investment,
assuming 5% annual return:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
S & P 500 Index Fund $ 97.24 $111.46 $125.25 $156.77
Money Market Fund 96.35 108.70 120.45 146.03
Bond Index Fund 97.24 111.46 125.25 156.77
Managed Equity Fund 99.10 117.26 135.29 179.05
Asset Allocation Fund 100.03 120.14 140.27 190.01
</TABLE>
<TABLE>
If you do not surrender your Contract after the end of the specified time
period, you would pay the following aggregate expenses on the same
investment:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
S & P 500 Index Fund $13.24 $41.21 $71.29 $156.77
Money Market Fund 12.28 38.25 66.23 146.03
Bond Index Fund 13.24 41.21 71.29 156.77
Managed Equity Fund 15.26 47.41 81.84 179.05
Asset Allocation Fund 16.27 50.49 87.08 190.01
</TABLE>
<TABLE>
If you annuitize after the end of the specified time period, you would pay
the following aggregate expenses on the same investment:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
S & P 500 Index Fund $ 97.24 $111.46 $71.29 $156.77
Money Market Fund 96.35 108.70 66.23 146.03
Bond Index Fund 97.24 111.46 71.29 156.77
Managed Equity Fund 99.10 117.26 81.84 179.05
Asset Allocation Fund 100.03 120.14 87.08 190.01
</TABLE>
<TABLE>
VARIABLE INSURANCE PRODUCTS FUND ANNUAL EXPENSES:
<CAPTION>
MANAGEMENT OTHER TOTAL
FUND FEE EXPENSES ANNUAL EXPENSES
- ---- --- -------- ---------------
<S> <C> <C> <C>
VIP: Equity-Income Portfolio 0.51% 0.07% 0.58%
VIP: Growth Portfolio 0.61% 0.08% 0.69%
VIP: Overseas Portfolio 0.76% 0.17% 0.93%
</TABLE>
The above fees reflect charges incurred by these portfolios in 1996. Fees
assessed against the portfolios are based on the monthly average net assets
of all the mutual funds advised by Fidelity Management & Research Company
("FMR") and may fluctuate from year to year (See the Variable Insurance
Products Funds' Prospectus).
8
<PAGE> 14
EXAMPLES
<TABLE>
If you surrendered your Contract after the end of the specified time period,
you would pay the following aggregate expenses on a $1,000 investment,
assuming 5% annual return:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
VIP: Equity-Income Portfolio $ 99.84 119.57 139.28 187.83
VIP: Growth Portfolio 100.86 122.73 144.73 199.78
VIP: Overseas Portfolio 119.57 139.28 158.88 225.37
</TABLE>
<TABLE>
If you do not surrender your Contract after the end of the specified time
period, you would pay the following aggregate expenses on the same
investment:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
VIP: Equity-Income Portfolio $ 16.07 49.88 86.04 187.83
VIP: Growth Portfolio 17.18 53.26 91.78 199.78
VIP: Overseas Portfolio 19.60 60.61 104.18 225.37
</TABLE>
<TABLE>
If you annuitize after the end of the specified time period, you would pay
the following aggregate expenses on the same investment:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
VIP: Equity-Income Portfolio $ 99.84 119.57 86.04 187.83
VIP: Growth Portfolio 100.86 122.73 91.78 199.78
VIP: Overseas Portfolio 119.57 139.28 104.18 225.37
</TABLE>
The purpose of the table above is to help you understand the costs and
expenses that a variable annuity contract owner will bear directly or
indirectly. The examples above are not a representation of actual, past or
future expenses, and actual expenses may be higher or lower than those shown.
Note that the expense amounts in the examples are aggregate amounts for the
total number of years indicated. Neither the table nor the examples reflect
any premium taxes that may be applicable to a Contract; such taxes currently
range from 0% to 3.5%. The above table and examples reflect only the charges
for contracts currently offered by this Prospectus and not other contracts
that may be mentioned in the discussion of Prior Contracts. For further
details, see Charges and Deductions.
The initial value of an accumulation unit in the Separate Account was set at
$10.00 as of May 28, 1971. Tables 2 and 3 show accumulation unit values and
the numbers of units outstanding for the period from January 1, 1980 through
February 23, 1988. During that time, the Separate Account invested solely
and directly in common stocks. On February 23, 1988, the net assets of the
Separate Account were exchanged for shares in the Managed Equity Fund of
General American Capital Company, and the investment advisory fee for these
assets was increased from .25% to a sliding scale with a maximum of .50%, as
an annual percentage of net assets (see the General American Capital Company
Prospectus). There can be no assurance that the investment experience of the
Managed Equity Fund in the future will be comparable to past experience.
<TABLE>
TABLE 2
-------
HISTORICAL TABLE OF UNITS AND UNIT VALUES FOR QUALIFIED PLANS
FOR SEPARATE ACCOUNT 2
<CAPTION>
1980 1981 1982 1983 1984 1985 1986 1987 1988
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value:
Beginning of period $ 8.23 $ 9.94 $ 9.92 $12.09 $13.25 $13.15 $16.68 $19.73 $20.03
------ ------ ------ ------ ------ ------ ------ ------ ------
End of period $ 9.94 $ 9.92 $12.09 $13.25 $13.15 $16.68 $19.73 $20.03 $21.30<F*>
====== ====== ====== ====== ====== ====== ====== ====== ======
Number of units
outstanding at end of
period (in thousands) 175 169 138 162 162 148 170 255 263<F*>
</TABLE>
9
<PAGE> 15
<TABLE>
TABLE 3
-------
HISTORICAL TABLE OF UNITS AND UNIT VALUES FOR NONQUALIFIED PLANS
FOR SEPARATE ACCOUNT 2
<CAPTION>
1980 1981 1982 1983 1984 1985 1986 1987 1988
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value:
Beginning of period $ 9.30 $10.73 $10.91 $12.63 $13.77 $14.30 $18.16 $21.47 $21.80
------ ------ ------ ------ ------ ------ ------ ------ ------
End of period $10.73 $10.91 $12.63 $13.77 $14.30 $18.16 $21.47 $21.80 $23.18<F*>
====== ====== ====== ====== ====== ====== ====== ====== ======
Number of units
outstanding at end of
period (in thousands) 27 49 50 52 50 48 49 49 28<F*>
<FN>
<F*> Unit values and units outstanding represent the values and number of units
at the date of reorganization, February 23, 1988.
</TABLE>
<TABLE>
TABLE 4
-------
TABLE OF UNITS AND UNIT VALUES
FOR SEPARATE ACCOUNT 2
Table 4 shows unit values and the number of units of the Separate Account
invested in the Funds of General American Capital Company and Variable
Insurance Products Fund. There can be no assurance that the investment
experience of these Funds in the future will be comparable to past
experience.
<CAPTION>
ACCUMULATION QUALIFIED PLAN NONQUALIFIED PLAN
UNIT VALUE ACCUMULATION UNITS OUTSTANDING UNITS OUTSTANDING
BEGINNING UNIT VALUE END OF PERIOD END OF PERIOD
OF PERIOD<F*> END OF PERIOD (IN THOUSANDS) (IN THOUSANDS)
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
S & P 500 INDEX FUND DIVISION <F**>
1996 27.27 33.17 808 325
1995 20.12 27.27 657 297
1994 20.09 20.12 636 265
1993 18.48 20.09 599 241
1992 17.37 18.48 366 152
1991 13.47 17.37 236 109
1990 14.15 13.47 133 67
1989 11.01 14.15 97 23
1988 10.00 11.01 36 7
MONEY MARKET FUND DIVISION
1996 14.50 15.14 117 62
1995 13.82 14.50 106 57
1994 13.39 13.82 93 58
1993 13.12 13.39 115 73
1992 12.78 13.12 181 85
1991 12.16 12.78 179 101
1990 11.33 12.16 188 79
1989 10.44 11.33 28 15
1988 10.00 10.44 6 5
10
<PAGE> 16
<CAPTION>
ACCUMULATION QUALIFIED PLAN NONQUALIFIED PLAN
UNIT VALUE ACCUMULATION UNITS OUTSTANDING UNITS OUTSTANDING
BEGINNING UNIT VALUE END OF PERIOD END OF PERIOD
OF PERIOD<F*> END OF PERIOD (IN THOUSANDS) (IN THOUSANDS)
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
BOND INDEX FUND DIVISION <F***>
1996 17.66 18.01 163 70
1995 14.99 17.66 146 85
1994 15.78 14.99 146 58
1993 14.43 15.78 161 61
1992 13.68 14.43 116 48
1991 12.12 13.68 50 67
1990 11.22 12.12 33 58
1989 10.27 11.22 22 17
1988 10.00 10.27 5 2
MANAGED EQUITY FUND DIVISION
QUALIFIED
1996 49.83 59.73 153 N/A
1995 37.68 49.83 164 N/A
1994 39.42 37.68 188 N/A
1993 36.54 39.42 210 N/A
1992 34.56 36.54 217 N/A
1991 27.62 34.56 216 N/A
1990 28.73 27.62 192 N/A
1989 22.11 28.73 194 N/A
1988 21.30 22.11 207 N/A
MANAGED EQUITY FUND DIVISION
NONQUALIFIED
1996 54.22 64.99 N/A 2
1995 41.00 54.22 N/A 17
1994 42.90 41.00 N/A 20
1993 39.76 42.90 N/A 24
1992 37.61 39.76 N/A 25
1991 30.05 37.61 N/A 25
1990 31.27 30.05 N/A 25
1989 24.06 31.27 N/A 25
1988 23.18 24.06 N/A 26
MANAGED EQUITY FUND DIVISION
88 SERIES
1996 25.84 30.94 240 58
1995 19.56 25.84 215 75
1994 20.48 19.56 204 68
1993 19.00 20.48 197 56
1992 17.99 19.00 158 40
1991 14.39 17.99 101 27
1990 14.99 14.39 56 20
1989 11.54 14.99 21 7
1988 10.83 11.54 6 0
ASSET ALLOCATION FUND DIVISION
1996 21.08 24.14 375 178
1995 16.52 21.08 317 168
1994 17.37 16.52 320 180
1993 16.01 17.37 332 166
1992 15.16 16.01 223 119
1991 12.78 15.16 140 66
1990 12.60 12.78 94 35
1989 10.61 12.60 33 16
1988 10.00 10.61 9 4
11
<PAGE> 17
<CAPTION>
ACCUMULATION QUALIFIED PLAN NONQUALIFIED PLAN
UNIT VALUE ACCUMULATION UNITS OUTSTANDING UNITS OUTSTANDING
BEGINNING UNIT VALUE END OF PERIOD END OF PERIOD
OF PERIOD<F*> END OF PERIOD (IN THOUSANDS) (IN THOUSANDS)
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
VIP: EQUITY-INCOME PORTFOLIO DIVISION
1996 14.12 15.98 767 317
1995 10.55 14.12 552 207
1994 10.00 10.55 315 82
VIP: GROWTH PORTFOLIO DIVISION
1996 13.27 15.07 974 362
1995 9.90 13.27 646 261
1994 10.00 9.90 356 116
VIP: OVERSEAS PORTFOLIO DIVISION
1996 10.80 12.11 346 107
1995 9.95 10.80 266 77
1994 10.00 9.95 240 52
<FN>
<F*> At the date of first deposits into Separate Account on May 16,
1988, except for the Managed Equity Fund Division, which began
on February 24, 1988; the VIP: Equity-Income Portfolio Division
and the VIP: Growth Portfolio Division which began on January
6, 1994; and the VIP: Overseas Portfolio Division which began
on January 11, 1994.
<F**> The name of the S & P 500 Index Fund was changed from "Equity Index
Fund" effective May 1, 1994.
<F***> The name of the Bond Index Fund was changed from "Intermediate
Bond Fund" effective October 1, 1992. The name change reflects
a change in investment policies and objectives of the Fund.
</TABLE>
==============================================================================
FINANCIAL STATEMENTS
==============================================================================
The consolidated financial statements for General American (as well as the
auditors' report thereon) are in the Statement of Additional Information.
Financial statements for the Separate Account are also in the Statement of
Additional Information.
==============================================================================
GENERAL AMERICAN LIFE INSURANCE COMPANY AND
SEPARATE ACCOUNT TWO
==============================================================================
GENERAL AMERICAN
General American Life Insurance Company ("General American") is a stock
insurance company wholly-owned by GenAmerica Corporation. GenAmerica
Corporation is wholly-owned by General American Mutual Holding Company, a
mutual holding company organized under Missouri law. General American was
chartered in 1933 and since then has continuously engaged in the business of
life insurance, annuities, and accident and health insurance. General
American's National Headquarters (Home Office) is located at 700 Market
Street, St. Louis. Missouri 63101. The telephone number is 314-231-1700. It
is licensed to do business in 49 states of the U.S., the District of
Columbia, Puerto Rico, and is registered in Canada and licensed in the
Provinces of Alberta, British Columbia, Manitoba, New Brunswick,
Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec, and
Saskatchewan.
General American conducts a conventional life insurance business. Assets
derived from such business should be considered by purchasers of variable
annuity contracts only as bearing upon the ability of General American to
meet its obligations under the variable annuity contracts and should not be
considered as bearing on the investment performance of the Separate Account.
12
<PAGE> 18
SEPARATE ACCOUNT TWO
The Separate Account was established on October 22, 1970, pursuant to
authorization by the Board of Directors of General American. Although it is
an integral part of General American and not a separate corporation, the
Separate Account is registered as a unit investment trust with the Securities
and Exchange Commission under the Investment Company Act of 1940 (the "1940
Act"). Such registration does not involve supervision of the management or
investment practices or policies of the Separate Account or of General
American by the Securities and Exchange Commission.
Payments are received into the Separate Account from individual and group
variable annuity contracts entitled to tax benefits under Sections 401,
403(b), and 408 of the Code and also from individual variable annuity
contracts not entitled to any special tax benefits. Such payments are pooled
together and invested separately from the General Account of General American
(the general assets of the insurance company other than separate account
assets). The persons participating in the variable portion of these
Contracts look to the investment experience of the assets in the Separate
Account.
Under Missouri law and the Investment Company Act of 1940, the net assets of
the Separate Account are held for the exclusive benefit of the Contract
Owners and the persons entitled to installments that reflect the investment
results of the Separate Account. The net assets of the Separate Account with
respect to the Contracts issued in connection therewith are not chargeable
with liabilities due to any other business General American conducts.
On February 23, 1988, pursuant to the vote of Contract Owners, the Separate
Account was changed from a management investment company with a single equity
investment portfolio, to a unit investment trust with various Divisions. As
a unit investment trust, the Separate Account no longer has a Management
Committee. Additional Divisions may be established at the discretion of
General American.
==============================================================================
GENERAL AMERICAN CAPITAL COMPANY
==============================================================================
General American Capital Company ("Capital Company") is an open-end,
diversified, management investment company that was organized as a Maryland
corporation on November 5, 1985, and commenced operations on October 1, 1987.
Conning Asset Management Company ("Investment Adviser") is the adviser to
Capital Company. On August 1, 1996, General American Investment Management
Company changed its name to Conning Asset Management Company. Investment
Adviser provides investment advisory services to Capital Company in
accordance with the policies, programs, and guidelines established by the
Board of Directors of Capital Company. Each Fund pays Investment Adviser a
monthly fee for managing its investments and business affairs.
Capital Company currently operates eight separate investment Funds, but only
the five listed below are available as Separate Account Two Division choices:
the S & P 500 Index Fund; the Money Market Fund; the Bond Index Fund; the
Managed Equity Fund; and the Asset Allocation Fund. Five of the eight
Divisions of the Separate Account invest in Funds of Capital Company. The
assets of each Fund are separate from the others and each Fund has separate
investment objectives and policies. As a result, each Fund operates as a
separate investment portfolio and the investment performance of one Fund has
no effect on the investment performance of any other Fund.
The names and investment objectives of the Funds are as follows:
S & P 500 Index Fund: The investment objective of this Fund is to provide
investment results that parallel the price and yield performance of publicly
traded common stocks in the aggregate. The Fund uses the Standard and Poor's
500 Stock Price Index<F*> as its standard for performance comparison. The Fund
attempts to duplicate the performance of the index and includes dividend
income as the other component of the Fund's total return.
[FN]
<F*> The term Standard and Poor's 500 Stock Price Index is a registered
trademark of the Standard and Poor's Corporation.
Money Market Fund: The investment objective of this Fund is the highest level
of current income that is consistent with the preservation of capital and
maintenance of liquidity. This Fund invests primarily in high-quality,
short-term money market instruments.
13
<PAGE> 19
Bond Index Fund: The investment objective of this Fund is to provide a rate
of return that reflects the performance of the publicly traded bond market as
a whole. The Fund uses the Lehman Brothers Government/Corporate Bond Index
as its standard for performance comparison.
Managed Equity Fund: The investment objective of this Fund is long-term
growth of capital, obtained by investing primarily in common stocks.
Securing moderate current income is a secondary objective.
Asset Allocation Fund: The investment objective of this Fund is a high rate
of long-term total return composed of capital growth and income payments.
Preservation of capital is the secondary objective and chief limit on
investment risk. The Fund will invest only in those types of securities that
are suitable investments for the other Capital Company Funds. The Asset
Allocation Fund may invest solely in common stocks, bonds, money market
instruments, or in combinations consistent with guidelines established from
time to time by Capital Company's Board of Directors.
THERE IS NO ASSURANCE THAT ANY OF THESE FUNDS WILL ATTAIN ITS STATED
OBJECTIVE, OR THAT ATTAINMENT CAN BE SUSTAINED.
Additional information concerning the investment objectives and policies of
the Funds and the investment advisory services and charges can be found in
the current Prospectus for Capital Company, which is attached to this
Prospectus. Capital Company's Prospectus should be read carefully before any
decision is made concerning the allocation of Purchase Payments to a Division
that corresponds to a particular Fund.
Capital Company is registered with the SEC as an open-end, diversified,
management investment company. Registration with the SEC does not involve
supervision of the management or investment practices or policies of Capital
Company by the SEC. Shares of Capital Company will be sold to separate
accounts of General American other than the Separate Account, including those
which receive and invest premiums under variable life insurance policies
issued by General American. It is conceivable that in the future it may be
disadvantageous for both variable annuity separate accounts and variable life
insurance separate accounts to invest simultaneously in Capital Company,
although currently neither General American nor Capital Company foresees any
such disadvantages to owners of either variable annuity contracts or variable
life insurance policies. Capital Company's Board of Directors intends to
monitor events in order to identify any material conflicts between such
owners and to determine what action, if any, should be taken in response
thereto. See the Prospectus for General American Capital Company for more
details.
==============================================================================
VARIABLE INSURANCE PRODUCTS FUND
==============================================================================
Variable Insurance Products Fund ("VIP") is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. It currently has five separate investment portfolios, but
only the three listed below are currently available as Separate Account Two
Division choices. VIP shares are purchased by many different insurance
companies to fund benefits under variable insurance and annuity policies.
Fidelity Management & Research Company ("FMR") of Boston, Massachusetts, is
the Manager of the Portfolios.
The names and investment objectives and policies of each VIP fund available
through the Separate Account are summarized below:
VIP: Equity-Income Portfolio: The investment objective of this Fund is to
seek reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, FMR will also consider the
potential for capital appreciation. The Fund's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the Standard &
Poor's 500 Composite Stock Price Index.
VIP: Growth Portfolio: The investment objective of this Fund is to seek
capital appreciation. It normally does so through purchases of common
stocks, although its investments are not restricted to any one type of
security. Capital appreciation may also be found in other types of
securities, including bonds and preferred stocks.
VIP: Overseas Portfolio: The investment objective of this Fund is to seek
long-term growth of capital primarily through investments in foreign
securities. The VIP: Overseas Portfolio provides a means to diversify a
Fund by participating in companies and economies outside of the United
States.
THERE IS NO ASSURANCE THAT ANY OF THESE FUNDS WILL ATTAIN ITS STATED
OBJECTIVE, OR THAT ATTAINMENT CAN BE SUSTAINED.
14
<PAGE> 20
It is conceivable that in the future it may be disadvantageous for Funds to
offer shares to separate accounts of various insurance companies to serve as
the investment medium for their respective variable products. The Board of
Trustees of FMR, the respective advisors of each Fund, and the Company and
any other insurance companies participating in VIP are required to monitor
events to identify any material irreconcilable conflicts that may possibly
arise, and to determine what action, if any, should be taken in response to
those events or conflicts. A more detailed description of the VIP Funds,
including the investment policies, restrictions, risks, and charges of each,
is in the Prospectus for Variable Insurance Products Fund, which must
accompany or precede this Prospectus and which should be read carefully.
==============================================================================
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
==============================================================================
General American reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held
by the Separate Account or that the Separate Account may purchase. General
American reserves the right to eliminate the shares of any of the Funds of
Capital Company or VIP and to substitute shares of another Fund of Capital
Company, or VIP, or of another registered open-end, diversified, management
investment company. Such a change might occur if the shares of a Fund are no
longer available for investment, or if in its judgment further investment in
any Fund becomes inappropriate in view of the purposes of the Separate
Account. General American will not replace any shares attributable to a
Contract Owner's interest in a Division of the Separate Account without
notice to the Contract Owner and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained in this
Prospectus shall prevent the Separate Account from purchasing other
securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests
made by Contract Owners.
General American also reserves the right to establish additional Divisions of
the Separate Account, each of which would invest in a new Fund of Capital
Company, or in shares of another investment company, with a specified
investment objective. New Divisions may be established when, in the sole
discretion of General American, marketing needs or investment conditions
warrant, and any new Division will be made available to existing Contract
Owners on a basis to be determined by General American. To the extent
approved by the SEC, General American may also eliminate or combine one or
more Divisions, substitute one Division for another Division, or transfer
assets between Divisions if, in its sole discretion, marketing, tax, or
investment conditions warrant.
In the event of a substitution or change, General American may make such
changes it considers necessary in the Contracts by appropriate endorsement.
General American will notify all Contract Owners of any such changes.
If deemed by General American to be in the best interests of persons having
voting rights under the Contracts, and to the extent any necessary SEC
approvals or Contract Owner votes are obtained, the Separate Account may be:
(a) operated as a management company under the 1940 Act; (b) deregistered
under that Act in the event such registration is no longer required; or (c)
combined with other separate accounts of General American. To the extent
permitted by applicable law, General American may also transfer the assets of
the Separate Account associated with the Contracts to another separate
account.
==============================================================================
THE CONTRACTS
==============================================================================
The Contracts consist of a group variable annuity contract for use in Tax
Sheltered Annuity (Section 403[b] annuity) Plans, and individual variable
annuity contracts for use in HR-10 (Keogh) Plans, Individual Retirement
Account (IRA) Plans, Simplified Employee Pension Plans, and nonqualified
retirement plans. The group Contract is a master group contract issued to
either an employer or trust and covers all participants, each of whom
receives a certificate which summarizes the provisions of the master group
Contract and evidences participation in the plan adopted by the particular
employer or trust. Individual Contracts are complete within themselves and
are issued to self-employed individuals and their employees (HR-10 Plans), to
individuals purchasing an IRA Plan or Simplified Employee Pension Plan, and
to individuals as annuity contracts that are not entitled to any special tax
benefits. The rights and benefits of the Contracts are described below and
in the Contracts; however, General American reserves the right to make any
modification to conform the Contracts to, or to give the Contract Owner the
benefit of, any Federal or state statute or any rule or regulation of the
United States Treasury Department.
The Contracts contain a provision which permits the Contract Owner to cancel
the Contract during the Right to Examine Period by returning the Contract to
General American's Home Office, or to the agent through whom it was
purchased. This
15
<PAGE> 21
Right to Examine Period extends for the 20 days after the Contract Owner
receives the Contract. Upon cancellation, the Contract is treated as void
from the Contract Date and the Contract Owner will receive the Purchase
Payments made on the Contract. In some states, applicable law requires that
the refund equal the Accumulated Value in any Separate Account and any
Purchase Payments allocated to the Fixed Account.
CONTRACT APPLICATION AND PURCHASE PAYMENTS
Individuals wishing to purchase a Contract must complete an application and
provide an Initial Purchase Payment. If the application can be accepted in
the form received, the Initial Purchase Payment will be credited within two
Business Days after receipt of the application. Acceptance is subject to
General American's rules, and General American reserves the right to reject
any application or Initial Purchase Payment. In addition, the Annuitant's
age on the Contract Date can not be greater than insurance age 79 (actual
attained age 79 1/2).
General American may retain the Initial Purchase Payment for up to five
Business Days while attempting to complete an application that is not in good
order (missing information, etc.). If the application cannot be made in good
order within five Business Days, the Initial Purchase Payment will be
returned immediately unless the prospective Contract Owner consents in
writing to General American's retaining the Initial Purchase Payment until
the application is in good order.
All Purchase Payments received at the Home Office before the close of the New
York Stock Exchange (3:00 p.m. St. Louis time) on any business day, will be
considered received on that business day.
The Initial Purchase Payment for a Contract must be a planned monthly payment
of at least $25. Purchase Payments after the first may be made at any time
prior to the Annuity Date as long as the Annuitant is living.
Purchase Payments after the first must be paid to General American at its
Home Office. A Contract Owner may establish a schedule of planned Purchase
Payments for which he or she will be billed by General American at regular
intervals. Failure to pay planned Purchase Payments, however, will not
itself cause the Contract to lapse.
A Contract Owner may make unscheduled Purchase Payments at any time in any
amount, or skip planned Purchase Payments, subject to the minimum and maximum
Purchase Payment limitations described below. A Contract Owner may elect to
make Purchase Payments by means of a pre-authorized check ("PAC") procedure.
Under a PAC procedure, amounts will be deducted each month from the Contract
Owner's checking account and applied as a Purchase Payment under a Contract.
The minimum Purchase Payment permitted is $25. The maximum Purchase Payment
is the annual equivalent of twice the Initial Purchase Payment. For example,
if you established a Planned Purchase Payment of $50.00 per month, the total
of all Purchase Payments in any Contract Year could not exceed $1200. Any
Purchase Payments in excess of this amount will be accepted only after notice
to and written consent from General American.
Additional Purchase Payments on Qualified Contracts are limited to proceeds
from certain qualified plans. Additional Purchase Payments are credited to
the Contract and increase the amount of the Accumulated Value as of the next
close of business (on a Business Day) following receipt of the payment to
General American at its Home Office.
ALLOCATION OF PURCHASE PAYMENTS
The Contract Owner specifies in the Contract application how Purchase
Payments will be allocated. The Contract Owner may allocate each Purchase
Payment to one or more of the Divisions and the General Account as long as
such portions are in whole number percentages, total 100%, and involve
amounts of at least $25. The Contract Owner may choose to allocate nothing
to a particular Division or the General Account. The Contract Owner may
change the allocation instructions for future additional Purchase Payments by
sending a Written Notice.
The Purchase Payment will then be allocated among the Divisions and General
Account in accordance with the Contract Owner's instructions.
ACCUMULATED VALUE
The Accumulated Value will be determined on a daily basis. On the investment
start date (the date the Initial Purchase Payment is applied to the General
Account and/or the Divisions of the Separate Account, which is the date the
Initial Purchase Payment is received at General American's Home Office), the
Accumulated Value in a Division will equal the portion of any Purchase
Payment allocated to the Division.
16
<PAGE> 22
Thereafter, on each Business Day, the Accumulated Value in a Division of the
Separate Account will equal:
(i) The Accumulated Value in the Division on the preceding Business Day,
multiplied by the Division Net Investment Factor (defined below)
for the current Valuation Period; plus
(ii) Any Purchase Payments received during the current Valuation Period
which are allocated to the Division; plus
(iii) Any amounts transferred to the Division from the General Account or
from another Division during the current Valuation Period; minus
(iv) That portion transferred from the Division to the General Account, or
another Division during the current Valuation Period (including
any transfer charges); minus
(v) Any partial withdrawals from the Division during the current Valuation
Period; minus
(vi) Any withdrawal or surrender charges incurred during the current
Valuation Period in connection with a partial withdrawal.
NET INVESTMENT FACTOR
The Net Investment Factor measures the investment performance of a Division
during a Valuation Period. The Net Investment Factor for each Division for a
Valuation Period is calculated as follows:
(i) The value of the assets at the end of the preceding Valuation Period;
plus
(ii) The investment income and capital gains-realized or unrealized-credited
to the assets in the Valuation Period for which the Net Investment
Factor is being determined; minus
(iii) The capital losses, realized or unrealized, charged against those
assets during the Valuation Period; minus
(iv) Any amount charged against each Division for taxes, or any amount set
aside during the Valuation Period as a reserve for taxes
attributable to the operation or maintenance of each Division;
minus
(v) A charge not to exceed 0.002740% of the assets for each day in the
Valuation Period. This corresponds to 1% per year for mortality
and expense risk; divided by
(vi) The value of the assets at the end of the preceding Valuation Period.
The Accumulated Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of the selected Funds
of Capital Company or Variable Insurance Products Fund as well as the daily
deduction of charges.
For Contracts issued prior to the reorganization of the Separate Account into
a unit investment trust, a daily adjustment to values held in the Division of
the Separate Account that invests in the Managed Equity Fund will be made to
offset fully the effect of any and all additional expenses (other than
advisory expenses for the Managed Equity Fund) of a type or in an amount
which would not have been borne by the Separate Account prior to the
reorganization.
TRANSFERS
You may transfer amounts as follows:
1) Between the General Account and one or more of the Divisions of the
Separate Account; or
2) Among the Divisions of the Separate Account.
These transfers will be subject to the following rules:
1) We must receive a Written Request for transfer.
2) Transfers from or among the Divisions of the Separate Account may be made
at any time and must be at least $100.00 or the entire amount of a
Division, if smaller.
3) Transfers from the General Account to the Separate Account may be made
once each year on the Contract's anniversary date and must be at least
$100.00 but no more than 25% of the amount in the General Account prior to
the transfer.
We may revoke or modify the transfer privilege at any time, including the
minimum amount for a transfer and the transfer charge, if any.
CONTRACT OWNER INQUIRIES
General American performs all administrative functions in connection with the
Contracts such as underwriting, record keeping, Contract Owner service, and
reporting. Contract Owner inquiries should be addressed to General
American's Variable Annuity Administration Department, P.0. Box 14490, St.
Louis, Missouri 63178-4490, or made by calling (800) 449-6447. All inquiries
should include the Contract number and the name of the Contract Owner and/or
the Annuitant.
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==============================================================================
CHARGES AND DEDUCTIONS
==============================================================================
No deductions are made from the Initial Purchase Payment unless a state
premium tax is due. (See "Taxes") Therefore, the full amount of the Initial
Purchase Payment less any applicable state tax is invested in one or more of
the Divisions of the Separate Account and/or the General Account to increase
the potential for investment gain.
SURRENDER CHARGES (CONTINGENT DEFERRED SALES CHARGE)
In May of 1982, or shortly thereafter depending on date of approval from
state regulatory authorities, General American began offering Contracts which
imposed surrender charges (sometimes referred to as a contingent deferred
sales charge). Prior to that time, Contracts offered by General American
imposed sales charges on Purchase Payments. For the older Contracts sold
prior to May of 1982, a sales charge equal to 4.75% on all Purchase Payments
is imposed to cover sales and distribution expenses. An administrative
charge of $10 per year is also imposed during the accumulation period, and a
$5 charge is imposed whenever funds are transferred between the General
Account and Separate Account.
For the newer Contracts, since no deduction for a sales charge is made from
Purchase Payments, a surrender charge is imposed on certain surrenders and
withdrawals to cover certain expenses relating to the sale of the Contracts,
including commissions to registered representatives and other promotional
expenses.
Upon surrender of the Contract or partial withdrawal of funds on deposit,
General American will apply surrender charge. The surrender charge
percentage is based on the age of the Contract as shown in the following
schedule:
<TABLE>
<CAPTION>
SURRENDER CHARGE
CONTRACT YEAR PERCENTAGE
------------- ----------
<S> <C>
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9 1%
</TABLE>
For partial withdrawals, the surrender charge is calculated by multiplying
the surrender charge percentage by the actual amount disbursed to the
Contract Owner. The total amount deducted from the Accumulated Value of the
Contract is the sum of the surrender charge and the disbursed amount. If the
sum of the disbursed amount and the surrender charge exceed the Accumulated
Value of the Contract, the withdrawal will be considered a full surrender.
Upon full surrender, the surrender charge is calculated by multiplying the
surrender charge percentage by the Contract's Accumulated Value. The
difference between the Accumulated Value and the surrender charge is
disbursed to the Contract Owner.
The surrender charge will never exceed 9% of total net Purchase Payments.
There will be no surrender charge after the ninth Contract Year. In
addition, surrender charges are not applied in the event of death,
disability, or annuitization after five Contract years. If a Contract Owner
is within the nine year surrender charge period (the first nine Contract
Years), an amount may be withdrawn up to 10% of the account value (determined
as of the date we receive the withdrawal request) per Contract year without
incurring a surrender charge. Any percentages of account value previously
withdrawn during a Contract Year are subtracted from 10% in calculating the
remaining percentage of account value that is available for withdrawal during
the same Contract Year.
The age of the Contract, rather than the length of time a certain sum has
been in the General Account or Separate Account, determines the amount of the
surrender charge in cases of withdrawal, so no attempt is made to identify
which dollars are being withdrawn.
The surrender charge may not initially be adequate to recover all
distribution costs. Any shortfall will be borne by General American from its
general assets, including profits derived from the Separate Account mortality
and expense risk, if any.
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<PAGE> 24
General American offers to its officers and full time employees, (including
employees of its subsidiary companies), individual variable annuity contracts
available with a surrender charge of six percent the first Contract Year
declining by one percent per year until it disappears.
The surrender charge will be allocated pro rata among the Divisions and the
General Account, based on the values held in the Divisions and the General
Account prior to the withdrawal. In the case of a surrender, the surrender
charge is deducted from the amount paid to the Contract Owner.
Reduction of Surrender Charge for Group or Sponsored Arrangements. Contracts
may be sold to members of a class of associated individuals or to a trustee,
an employer, or some other entity representing such a class. The Company may
waive or reduce the surrender charge on such policies in recognition of the
fact that sales efforts and administrative costs are generally lower for such
groups and sales compensation may be adjusted. The amount of any reduction
will depend upon factors such as: the expected number of participants and
the amount of premium payments anticipated; the nature of the group or
association; the expected persistency and the possibility of favorable
mortality; and the amount and timing of the payment and any selling costs.
General American will determine the amount of reduction which is appropriate
and may change the surrender charge attributable to future premiums if it
does so on a basis which is uniform with respect to all similar Contract
Owners. The Company may also modify the criteria for qualification for sales
charge reductions as experience is gained, subject to the limit that such
reductions will not be unfavorably discriminatory against the interest of any
Contract Owner.
MORTALITY AND EXPENSE RISK CHARGE
During both the accumulation period and the annuity period, charges to cover
mortality and expense risk are made each business day as a percentage of the
Accumulated Value of the Contract. The charge for mortality and expense risk
is 1% annually (estimated at .8% for mortality risk and .2% for expense
risk).
The mortality risk assumed by General American is that Annuitants may live
longer than the time estimated when the risk in the Contract is established.
General American agrees to continue to pay annuity installments, determined
in accordance with the annuity tables and other provisions contained in the
Contract, and in accordance with the option selected (See "Annuity Income
Options"), to each Annuitant regardless of how long he lives and regardless
of how long all Annuitants as a group live.
The expense risk assumed by General American is that if the charge for
mortality and expenses is not sufficient to cover administrative expenses,
the deficiency will be met from General American's General Account.
Further, General American can modify a group Contract prospectively, with
respect to future participants, after the Contract has been in force for at
least three years. No modifications can affect the Annuitants in any manner
without an Annuitant's written consent, unless such modification is deemed
necessary to give the Contract Owner or Annuitants the benefit of Federal or
state statutes or Treasury Department rules or regulations.
In addition, General American assures that the Separate Account will not be
charged with any further expenses other than taxes applicable to the Separate
Account. There are currently no taxes assessed against the Separate Account
with respect to funds held under Qualified and Nonqualified Contracts (See
"Federal Tax Matters").
PREMIUM TAX
Under the laws of certain jurisdictions, taxes are charged on so-called
"annuity considerations." In the case of applicable Contracts, "annuity
considerations" could include either the Purchase Payment or the Accumulated
Value of such contracts. Such taxes range from 0% to 3.50%. The list of
jurisdictions imposing premium tax follows:
19
<PAGE> 25
<TABLE>
STATE ANNUITY PREMIUM TAX RATES
<CAPTION>
STATE QUALIFIED CONTRACTS NONQUALIFIED CONTRACTS
----- ------------------- ----------------------
<S> <C> <C>
California .50% 2.35%
District of Columbia 2.25% 2.25%
Kansas 0% 2.00%
Kentucky 2.00% 2.00%
Maine 0% 2.00%
Nevada 0% 3.50%
Puerto Rico 1.00% 1.00%
South Dakota 0% 1.25%
West Virginia 1.00% 1.00%
Wyoming 0% l.00%
</TABLE>
Note: The above premium tax rates are in effect as of January 1, 1997.
States not listed above currently have no premium tax on the purchase of
group and individual variable annuity contracts for use with Tax Sheltered
Annuity (Section 403 [b] annuity) Plans, H.R. 10 (Keogh) Plans, or Individual
Retirement Account (IRA) Plans. However, premium tax statutes are subject to
amendment by legislative act and to judicial and administrative
interpretations, both of which may affect the above list of states levying
such taxes and the applicable tax rates. Particularly because a portion of
the premium tax charge may be made at the time Annuity Payments commence, the
above list of tax rates may not be those in effect at the time the premium
tax charge is made.
Laws relating to premium taxes and the interpretations of such laws are
subject to changes that may affect the deductions, if any, made under
Contracts for such taxes. Some jurisdictions permit payment of premium tax
on the Accumulated Value that is applied to provide an Annuity. In those
places, General American does not make any separate deductions for premium
tax from Purchase Payments, as it is permitted to do under the Contracts, but
defers any separate deductions for such taxes until the Accumulated Value is
applied to provide Annuity Payments. (Although General American may be
required in some of these jurisdictions to pay premium tax currently on
surrender charges, it presently intends to pay the taxes out of the
deductions and charges made against all Contracts.) General American plans,
where permissible, to defer any separate deductions for premium tax until the
Accumulated Value is applied to provide Annuity Payments, at which time the
amount of any applicable premium tax will be measured by the Accumulated
Value. However, in many jurisdictions the premium tax are applied to Purchase
Payments, and in those cases the deductions for such taxes will be made when
the payments are received. Thus, General American reserves the right to make
a separate deduction from each Purchase Payment, or from the Accumulated
Value, depending on which method or combination of methods results in the
appropriate deduction for applicable premium tax.
FEDERAL INCOME TAX
General American does not expect to incur any Federal income tax liability
attributable to investment income or capital gains retained as part of the
reserves under the Contracts. (See "Federal Tax Matters") Based upon these
expectations, no charge is being made currently to the Separate Account for
corporate Federal income taxes which may be attributable to the Separate
Account.
General American will periodically review the question of a charge to the
Separate Account for corporate Federal income taxes related to the Separate
Account. Such a charge may be made in future years for any Federal income
taxes incurred by General American. This might become necessary if the tax
treatment of General American is ultimately determined to be other than what
General American currently believes it to be, if there are changes made in
the Federal income tax treatment of annuities at the corporate level, or if
there is a change in General American's tax status. In the event that
General American should incur Federal income taxes attributable to investment
income or capital gains retained as part of the reserves under the Contracts,
the Unit Values of the Divisions would be correspondingly adjusted by any
provision or charge for such taxes.
EXPENSES - CAPITAL COMPANY AND VARIABLE INSURANCE PRODUCTS FUND
The value of the assets in the Separate Account will reflect the value of the
applicable Capital Company or VIP Fund shares and, therefore, the fees and
expenses paid by them. A complete description of the expenses and deductions
from the Funds is in the applicable Capital Company or VIP Fund prospectus.
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<PAGE> 26
==============================================================================
DISTRIBUTIONS UNDER THE CONTRACTS
==============================================================================
SURRENDERS AND PARTIAL WITHDRAWALS
The Contract Owner may surrender the Contract or make a partial withdrawal to
receive all or part of the Accumulated Value, at any time before the Annuity
Date and while the Annuitant is living, by sending a Written Request. The
amount available for surrender or partial withdrawal is the Accumulated Value
at the time of the Valuation Period during which the Written Request is
received, less any surrender or withdrawal charges. In the event of a
partial withdrawal, the amount of any withdrawal charge will be deducted from
the remaining Accumulated Value and not from the amount withdrawn. The
amount payable upon surrender or withdrawal may be paid in a lump sum to the
Contract Owner, or, if elected, all or any part may be paid out under an
Annuity Income Option. (See "Annuity Income Options")
The minimum amount that can be withdrawn is $100. In the absence of specific
direction from the Contract Owner, amounts will be withdrawn from the
Divisions and the General Account on a pro rata basis.
A partial withdrawal results in cancellation of an appropriate number of
accumulation units; a surrender requires surrender of the Contract and
cancellation of all accumulation units. Any surrender or withdrawal within
the first nine Contract Years will result in the application of a surrender
charge except that the Contract Owner may withdraw up to 10% of the
Accumulated Value without the application of the surrender charge (See
"Charges and Deductions").
The amount payable on surrender or withdrawal will ordinarily be paid within
seven days after receipt by General American at its Home Office of the
Written Request on a duly executed form which may be obtained from the Home
Office or by a letter signed by the Annuitant (or the Contract Owner if other
than Annuitant) exactly as his or her name appears on the Contract, stating
his or her address, the Contract number and the amount of the payment
requested. The letter must be signed by any person whose consent is required
by reason of any special endorsement. If the Contract Owner's address of
record has been changed within the preceding thirty days, all signatures on
the letter must be guaranteed by a bank or trust company or by a member firm
of a national securities exchange. Payment may be postponed and the right of
redemption suspended as described under "Deferment of Payment".
If, at the time the Contract Owner makes a surrender or withdrawal request,
he or she has not provided General American with a written election not to
have Federal income taxes withheld, General American must by law withhold
such taxes from the taxable portion of any surrender or withdrawal.
Moreover, the Code provides that a 10% penalty tax may be imposed on certain
early surrenders or withdrawals. (See "Federal Tax Matters-Taxation of the
Contracts")
Since the Contract Owner assumes the investment risk with respect to amounts
allocated to the Separate Account and because certain surrenders and
withdrawals are subject to a surrender or withdrawal charge, the total amount
paid under surrender of the Contract (taking into account any prior
withdrawals) may be more or less than the total Purchase Payments made.
TERMINATION BENEFITS
Participants under a Tax Sheltered Variable Annuity Contract have certain
rights if they terminate their participation prior to the Annuity Date. Upon
termination of participation prior to the Annuity Date, the participant may
elect with respect to the Accumulation Value in his or her individual
account:
(a) to have the Accumulated Value applied to provide Annuity Payments under
one of the annuity income options described below, or
(b) to leave the Accumulated Value in the Contract, in which case the
number of accumulation units in his or her Individual Account will
remain fixed, but the value thereof will vary as described in the
Section "Accumulated Value", or
(c) to receive the Accumulated Value on the basis of the accumulation unit
value next determined after the Written Request for surrender is
received by General American at its Home Office; or
(d) to convert to an Individual Variable Annuity Contract, if appropriate
individual Contracts are issued by General American on the
effective date of termination, on the basis set forth by General
American at the time of such conversion.
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<PAGE> 27
ANNUITY DATE
The Contract Owner should specify an Annuity Date in the application. The
Annuity Date is the date that Annuity Payments are scheduled to commence
under the Contract, unless the Contract has been surrendered or an amount has
been paid as proceeds to the designated Beneficiary prior to that date.
The Contract Owner may advance or defer the Annuity Date. An Annuity Date
may be changed only by Written Request during the Annuitant's lifetime, and
such a request must be made at least 30 days before the then-scheduled
Annuity Date. The Annuity Date and Annuity Income Options available for
Qualified Contracts may also be controlled by endorsements, the Plan, or
applicable law.
DEATH OF ANNUITANT PRIOR TO ANNUITY DATE
If the Annuitant dies prior to the Annuity Date, the Accumulated Value of the
Contract or individual account will be paid to the Beneficiary. The
Accumulated Value will be the value next determined following receipt by
General American of due Proof of Death of the Annuitant as well as proof that
the Annuitant died prior to the Annuity Date. The Beneficiary may receive
the amount payable in a lump sum cash benefit or under one of the Annuity
Income Options.
ANNUITY INCOME OPTIONS
(a) Election of Annuity Income Options
The Annuity Income Options, with the exception of Option 7, may be selected
on either a variable annuity or a guaranteed annuity basis, or a combination
of the two. In the absence of an election to the contrary, the variable
Accumulated Value will be applied to provide variable annuity installments
and the guaranteed Accumulated Value will be applied to provide guaranteed
annuity installments.
The minimum amount which may be applied under an option is $5,000 and the
minimum annuity installment is $50 (or any lower amount required by state
law). If the Accumulated Value is less than $5,000 when the Annuity Date
arrives, General American will make a lump sum payment of such amount to the
Contract Owner. If at any time installments are, or become less than $50,
General American has the right to change the frequency of payments to
intervals that will result in installments of at least $50.
(b) The Options Available
OPTION 1 - Life Annuity - An Annuity payable monthly during the lifetime of
the Payee, ceasing with the last payment due prior to the death of the Payee.
However, since there is no provision for a minimum number of payments or for
payments to a survivor, IT WOULD BE POSSIBLE UNDER THIS FORM OF SETTLEMENT
FOR THE ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED PRIOR TO THE
DUE DATE OF THE SECOND PAYMENT, TWO IF HE OR SHE DIED PRIOR TO THE DUE DATE
OF THE THIRD PAYMENT, ETC.
OPTION 2 - Life Annuity with 60, 120, l80, or 240 Monthly Payments Guaranteed
- - An Annuity payable monthly during the lifetime of the Payee, including the
risk that if, at the death of the Payee, payments have been made for less
than 60 months, 120 months, 180 months, or 240 months, as elected, payments
shall be continued to the Beneficiary during the remainder of the elected
period. A Beneficiary entitled to receive payments may elect that the
present value of the current dollar amount of the remaining assured number of
annuity payments, commuted on the basis of 4% interest compounded annually,
be paid in a lump sum.
OPTION 3 - Unit Refund Life Annuity - An Annuity payable monthly during the
lifetime of the Payee ceasing with the last payment due prior to the death of
the Payee, provided that, at the death of the Payee, the Beneficiary will
receive an additional payment of the then dollar value of the number of
Annuity Units equal to the excess, if any of (a) over (b) where (a) is the
total amount applied under the option divided by the annuity unit value at
the Annuity Date and (b) is the number of Annuity Units represented by each
payment multiplied by the number of payments made.
For example, if $19,952.07 were applied under this option for a male at age
65 on the Annuity Date, the annuity unit value in the appropriate Division on
such date was $12.071, the number of Annuity Units represented by each
payment was ten, thirteen Annuity payments were paid prior to the date of
death, and the value of an Annuity Unit on the date of death was $12.818, the
amount paid to the Beneficiary would be $19,520.44.
OPTION 4 - Joint and Survivor Income for Life - An Annuity payable monthly
during the joint lifetime of the Payee and a secondary Payee, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
due prior to the
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<PAGE> 28
death of the survivor. Since there is no provision for a minimum number of
payments, it would be possible under this form of settlement for the
Annuitants to receive only one payment if both died prior to the due date of
the second payment, two if both died prior to the due date of the third
payment, etc.
OPTION 5 - Income for a Fixed Period - The amount due may be paid in annual,
semiannual, quarterly, or monthly payments over a specified number of years,
not less than three nor more than 30. When a variable annuity basis is
selected, a mortality and expense risk charge continues to be assessed, even
though General American incurs no mortality risk under this option. The
person considering this option should consult his tax adviser about the
possibility that such selection might be held to be "constructive receipt" of
the entire Accumulated Value and result in adverse tax treatment.
OPTION 6 - Income of a Fixed Amount - The amount due may be paid in equal
annual, semiannual, quarterly, or monthly payments of a designated dollar
amount (not less than $75 per annum per $1,000 of the original amount due)
until the remaining balance is less than the amount of one payment. To
determine the remaining balance at the end of any Business Day, such balance
at the end of the previous Business Day is decreased by the amount of any
payment paid since the last Business Day and the result multiplied by the net
investment factor for each Division involved for the current Business Day.
If the remaining balance at any time is less than the amount of one payment,
such balance will be paid and will be the final payment under the option.
When a variable annuity basis is selected, a mortality and expense risk
charge continues to be assessed, even though General American incurs no
mortality risk under this option. The person considering this option should
consult his tax adviser about the possibility that such selection might be
held to be "constructive receipt" of the entire Accumulated Value and result
in adverse tax treatment.
OPTION 7 - Interest Income (available only to Nonqualified Annuities) - The
amount due may be left on deposit with General American in its General
Account and a sum will be paid annually, semiannually, quarterly, or monthly,
as selected, which shall not be less than 4% per annum for the period
multiplied by the amount remaining on deposit.
(c) Value of Variable Annuity Payments
The value of Variable Annuity Payments will reflect the investment experience
of the chosen Division. The annuity tables that are contained in the
Contract, and are used to calculate the value of Variable Annuity Payments,
are based on an assumed interest rate of 4%. If the actual net investment
experience exactly equals the assumed interest rate, then the Variable
Annuity Payments will remain the same (equal to the first Annuity Payment).
However, if actual investment experience exceeds the assumed interest rate,
the Variable Annuity Payments will increase; conversely, they will decrease
if the actual experience is lower.
The value of all payments (both guaranteed and variable) will be greater for
shorter guaranteed periods than for longer guaranteed periods, and greater
for life annuities than for joint and survivor annuities, because they are
expected to be made for a shorter period.
The method of computation of Variable Annuity Payments is described in more
detail in the Statement of Additional Information.
DEFERMENT OF PAYMENT
Payment of any cash withdrawal or lump sum death benefit due from the
Separate Account will occur within seven days from the date the election
becomes effective, except that General American may be permitted to defer
such payment if: (l) the New York Stock Exchange is closed for other than
usual weekends or holidays, or trading on the Exchange is otherwise
restricted; or (2) an emergency exists as defined by the Securities and
Exchange Commission or the Commission requires that trading be restricted; or
(3) the Securities and Exchange Commission permits a delay for the protection
of Contract Owners.
THE BENEFICIARY
The Beneficiary is the person or persons who will receive any proceeds
payable in the event of the death of the Annuitant, in accordance with this
provision. The original Beneficiary is shown in the application. Subject to
any assignment of a Contract, the Beneficiary designation may be changed
during the lifetime of the Annuitant by filing a proper Written Request
acceptable to General American at its Home Office. If the joint and survivor
option is selected, the Annuitant may not change the designation of a joint
Annuitant after payments begin. General American reserves the right to
require the Contract for endorsement. A change of Beneficiary designation
will not become effective unless accepted in writing by General American at
its Home Office, at which time it will be effective as of the date of the
request, but without prejudice to General American on account of any benefit
paid before receipt of such request at its Home Office. A Beneficiary who
becomes entitled to receive
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<PAGE> 29
benefits under this Contract may also designate, in the same manner, a
Beneficiary to receive any benefits which may become payable under this
Contract by reason of death. If a Beneficiary has not been designated by a
Payee or if a Beneficiary designated by a Payee is not living on the date a
lump sum death benefit is payable, or on the date any payments are to be
continued, as a result of the death of such Payee, the Company will pay the
lump sum death benefit for the commuted value of the payments to the former
Payee's spouse. If the spouse is not living at the death of the Payee, then
payments will be made equally to the Payee's children who survive the Payee.
If the children are not surviving, then payments will be made to either the
surviving father or mother or to both equally if both survive. If none of the
above survive the Payee, then payments will be made to his or her executors or
administrators.
DEATH BENEFITS
When General American receives due proof of the death of the Annuitant that
occurs before the Annuity Date, it will pay to the Beneficiary the
Accumulated Value of the Contract. If the Contract Owner dies before the
retirement date, this Contract will no longer be in force. General American
will pay the Contract Owner's interest in the Contract to the Beneficiary in
a lump sum upon receiving proof of the Contract Owner's death.
This payment must be made within five (5) years after the date of the death
of the Annuitant.
If, however, the Contract Owner or the Beneficiary make a written choice of
one of the two options described below, and if the Contract Owner's choice is
clear to General American, the company will treat the proceeds as the
Contract Owner or the Beneficiary have chosen. The two options are:
(i) Leave the proceeds of the Contract with General American as provided
under Option 6 of the Annuity Provisions Section of this Contract. Any
amount remaining unpaid under Option 6 will, however, be paid in a lump sum
to the Beneficiary before the end of the fifth year after the Contract
Owner's death.
(ii) Buy an immediate annuity for the Beneficiary, who will be the owner and
Annuitant. Payments under the Annuity, or under any other method of payment
General American makes available, must be for the life of the Beneficiary, or
for a number of years that is not more than the life expectancy of the
Beneficiary at the time of the Contract Owner's death (as determined for
Federal tax purposes), and must begin within one year after the Contract
Owner's death.
However, if the Contract Owner dies before the Annuity Date and the Contract
Owner's spouse is the Beneficiary, no proceeds will be paid to him or her.
Instead, this Contract may continue with the Contract Owner's surviving
spouse as the new owner.
If the Contract Owner dies and no Beneficiary survives him or her before the
Annuity Date, payment of the proceeds will be made in a lump sum to the
Contract Owner's estate.
ASSIGNMENTS AND TRANSFERS
With respect to individual Nonqualified Contracts, an assignment or transfer
of the Contract or of any interest in it will not bind General American
unless (1) it is made as a written instrument, (2) the original instrument or
a certified copy is filed at our Home Office, and (3) we send the Contract
Owner a receipt. General American is not responsible for the validity of the
assignment. If a claim is based on an assignment or transfer, proof of
interest of the claimant may be required. A valid assignment will take
precedence over any claim of a Beneficiary.
With respect to all other Contracts, the Contract Owner may not transfer,
sell, assign, discount or pledge a Contract for a loan or a security for the
performance of an obligation or any other purpose, to any person other than
to us at our Home Office.
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==============================================================================
FEDERAL TAX MATTERS
==============================================================================
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.
INTRODUCTION
The following discussion is a general description of the Federal income tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may
receive a distribution under the Contract. Any person concerned about these
tax implications should consult a competent tax adviser before initiating any
transaction. The discussion is based upon General American's understanding
of the present Federal income tax laws as they are currently interpreted by
the Internal Revenue Service. No representation is made as to the likelihood
of the continuation of the present Federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has
been made to consider any applicable state or other tax laws.
The Contract may be purchased on a nonqualified basis ("Nonqualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). Qualified Contracts are
intended to be purchased in connection with plans entitled to special income
tax treatment under Sections 401, 408, and 457 of the Code or as tax
sheltered annuities under Section 403(b) of the Code. The ultimate effect of
Federal income taxes on the amounts held under a contract, on Annuity
Payments, and on the economic benefit to the Contract Owner, the Annuitant,
or the Beneficiary depends on the type of retirement plan and on the tax and
employment status of the individual concerned. In addition, certain
requirements must be satisfied in purchasing a Qualified Contract and
receiving distributions from a Qualified Contract in order to continue
receiving favorable tax treatment. Therefore, a purchaser of a Qualified
Contract should seek competent legal and tax advice regarding the suitability
of the Contract for his or her situation, the applicable requirements and the
tax treatment of the rights and benefits of a Contract. The following
discussion assumes that Qualified Contract is purchased with proceeds from
and/or contributions under retirement plans that qualify for the intended
special Federal income tax treatment.
TAXATION OF GENERAL AMERICAN
General American is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the operations of the Separate Account form
a part of General American, the Separate Account will not be taxed separately
as a "regulated investment company" under Subchapter M of the Code.
Investment income and realized capital gains are automatically applied to
increase reserves under the Contract. Under existing Federal income tax law,
General American believes that the investment income and realized net capital
gains of the Separate Account will not be taxed to the extent that such
income and gains are applied to increase the reserves under the Contract.
Accordingly, General American does not anticipate that it will incur any
Federal income tax liability attributable to the Separate Account and,
therefore, General American does not intend to make provisions for any such
taxes. However, if changes in the Federal tax laws or interpretations
thereof result in General American being taxed on income or gains
attributable to the Separate Account, then General American may impose a
charge against the Separate Account (with respect to some or all Contracts)
in order to set aside amounts to pay such taxes.
TAX STATUS OF THE CONTRACTS
(a) Diversification.
Section 817(h) of the Code requires that with respect to Nonqualified
Contracts, the investments of the Divisions be "adequately diversified" in
accordance with Treasury Department regulations in order for the Contracts to
qualify as annuity contracts under Federal tax law. General American intends
for the Separate Account, through the Funds, to comply with the
diversification requirements prescribed by the Treasury Department in Treas.
Reg. Sec. 1.817-5.
(b) Investor Control.
The Treasury Department has from time to time suggested that under some
circumstances the owner of a variable contract will be deemed to be in
control over the investments of a separate account supporting the contract,
which may cause the owner, rather than the insurance company, to be treated
as the owner of the assets in the separate account. If a
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<PAGE> 31
contract owner is considered the owner of the assets of a separate account,
income and gains from that account would be included in the owner's gross
income. The Treasury Department also has stated on past occasions that it
will issue regulations or rulings addressing this issue.
The ownership rights under the Contract are different in certain respects
from those described by the IRS in rulings in which it was determined that
Contract Owners were not owners of separate account assets. For example, a
Contract owner has the choice of more Divisions and narrower investment
strategies in which to allocate net purchase Payments and Accumulation Value,
and may be able to transfer among Divisions more frequently than in such
rulings. These differences could result in a Contract Owner being treated as
the owner of the assets of the Separate Account. In addition, General
American does not know what standards will be set forth, if any, in the
additional regulations or rulings which the Treasury Department has stated it
expects to issue. General American therefore reserves the right to modify
the Contract as necessary to attempt to prevent a Contract Owner from being
considered the owner of a pro rata share of the assets of the Separate
Account.
(c) Required Distributions.
In order to be treated as an annuity contract for federal income tax
purposes, Section 72(s) of the Code requires any Nonqualified Contract to
provide that (a) if any Contract Owner dies on or after the Annuity Date but
prior to the time the entire interest in the Contract has been distributed,
the remaining portion of such interest will be distributed at least as
rapidly as under the method of distribution being used as of the date of that
Contract Owner's death; and (b) if any Contract Owner dies prior to the
Annuity Date, the entire interest in the Contract will be distributed within
five years after the date of that Contract Owner's death. These requirements
will be considered satisfied as to any portion of the Contract Owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or
over a period not extending beyond the life expectancy of that beneficiary,
provided that such distributions begin within one year of that Contract
Owner's death. The Contract Owner's "designated beneficiary" is the person or
entity designated by such Owner as a Beneficiary and to whom ownership of the
Contract passes by reason of death. If the Contract Owner's "designated
beneficiary" is the surviving spouse of the Contract Owner, the Contract may
be continued with the surviving spouse as the new Owner.
The Nonqualified Contracts contain provisions which are intended to comply
with the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. General American
intends to review such provisions and modify them if necessary to assure that
they comply with the requirements of Code Section 72(s) when clarified by
regulation or otherwise. There are other rules that apply to Qualified
Contracts.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for Federal income tax purposes.
TAXATION OF ANNUITIES
(a) In General.
Section 72 of the Code governs taxation of annuities in general. General
American believes that a Contract Owner who is a natural person generally is
not taxed on increases in the value of a Contract until distribution occurs
by withdrawing all or part of the account value (e.g., partial withdrawals,
surrenders or Annuity Payments under the Annuity Income Option elected). For
this purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the account value (and in the case of a Qualified Contract, any
portion of an interest in the qualified plan) generally will be treated as a
distribution. The taxable portion of a distribution (in the form of a single
sum payment or an annuity) is taxable as ordinary income.
Any Contract Owner who is not a natural person generally must include in
income any increase in the excess of the Contract's account value over the
"investment in the Contract" (discussed below) during the taxable year.
There are some exceptions to this rule and a prospective Contract Owner that
is not a natural person may wish to discuss these with a competent tax
adviser.
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The following discussion generally applies to a Contract owned by a natural
person.
(b) Withdrawals and Surrenders.
In the case of a withdrawal under a Qualified Contract, a ratable portion of
the amount received is taxable, generally based on the ratio of the
"investment in the Contract" to the individual's total accrued benefit or the
balance under the retirement plan. The "investment in the Contract"
generally equals the amount of any premium payments paid by or on behalf of
any individual with after-tax dollars. For a Contract issued in connection
with qualified plans, the "investment in the Contract" can be zero. Special
tax rules may be available for certain distributions from a Qualified
Contract.
With respect to Nonqualified Contracts, partial withdrawals - including any
withdrawals under the systematic withdrawal plan - are generally treated as
taxable income to the extent that the account value immediately before the
withdrawal exceeds the "investment in the Contract" at that time. Full
surrenders are treated as taxable income to the extent that the amount
received exceeds the "investment in the Contract".
(c) Annuity Payments.
Although the tax consequences may vary depending on the Annuity Payment
elected under the Contract, in general, only the portion of the Annuity
Payment that represents the amount by which the Accumulated Value exceeds the
"investment in the Contract" will be taxed; after the investment in the
Contract is recovered, the full amount of any additional Annuity Payments is
taxable. Special rules may apply to Qualified Contracts.
For variable Annuity Payments, the taxable portion is generally determined by
an equation that establishes a specific dollar amount of each payment that is
not taxed. The dollar amount is determined by dividing the "investment in
the Contract" by the total number of expected periodic payments. However,
the entire distribution will be taxable once the recipient has recovered the
dollar amount of his or her "investment in the Contract".
For fixed Annuity Payments, in general, there is no tax on the portion of
each payment which represents the same ratio that the "investment in the
Contract" bears to the total expected value of the Annuity Payments for the
term of the payments; however, the remainder of each Annuity Payment is
taxable. In all cases, after the "investment in the Contract" is recovered,
the full amount of any additional Annuity Payment is taxable.
(d) Penalty Tax.
In the case of a distribution pursuant to a Nonqualified Contract, there may
be imposed a Federal penalty tax equal to 10% of the amount treated as
taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the Contract Owner
attains age 59 1/2; (2) made as a result of death or disability of the
Contract Owner; (3) received in substantially equal periodic payments as a
life annuity or a joint and survivor annuity for the lives or life
expectancies of the Contract Owner and a "designated beneficiary;" (4) from a
qualified plan; (5) allocable to investment in the Contract before August 14,
1982; (6) under a qualified funding asset (as defined in Code Section
130(d)); or (7) under an immediate annuity (as defined in Code Section
(u)(4)). Other tax penalties may apply to certain distributions under a
Qualified Contract, including a penalty similar to the penalty for
distributions from Nonqualified Contracts described above.
(e) Taxation of Death Benefit Proceeds.
Amounts may be distributed from a Contract because of the death of a Contract
Owner or an Annuitant. Generally, such amounts are includable in the income
of the recipient as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a full surrender of the Contract, as described
above, or (2) if distributed under an annuity option, they are taxed in the
same manner as annuity payments, as described above. For these purposes, the
investment in the contract is not affected by the owner's or annuitant's
death. That is, the investment in the contract remains the amount of any
purchase payments paid which were not excluded from gross income.
(f) Transfers, Assignments or Exchanges of the Contract.
In general, a transfer of ownership of a Contract, the collateral assignment
of a Contract, the designation of an Annuitant or Beneficiary who is not also
the Contract Owner, or the exchange of a Contract may result in certain tax
consequences to the Contract Owner. For example, when a Contract is assigned
as collateral for a loan, the entire excess of the Contract's account value
over the investment in the contract becomes taxable as ordinary income, and, if
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<PAGE> 33
the Contract Owner is under the age of 59 1/2, a penalty tax equal to 10%
of the taxable amount may also be imposed. Increases in the value of a
Contract that has been assigned will continue to be taxable annually to the
Contract Owner until the assignment is released.
Any Contract Owner contemplating any such transfer, assignment, designation,
or exchange should contact a competent tax adviser for advice with respect to
the potential tax effects of such a transaction.
(g) Multiple Contracts.
All Nonqualified Annuity contracts that are issued by General American (or
its affiliates) to the same Contract Owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includable in gross income under Section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent
the avoidance of Section 72(e) through the serial purchase of annuity
contracts or otherwise.
(h) Withholding.
Pension and annuity distributions generally are subject to withholding from
the recipient's Federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients,
however, generally are provided the opportunity to elect not to have tax
withheld from distributions. Different rules may apply to United States
citizens or expatriates living abroad and, effective January 1, 1993, to
certain distributions under Qualified Contracts. In addition, some states
have enacted legislation requiring withholding.
(i) Possible Changes in Taxation.
In past years, legislation has been proposed that would have adversely
modified the Federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of nonqualified annuities that
did not have "substantial life contingencies" by taxing income as it is
credited to the annuity. Although as of the date of this Prospectus Congress
is not considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as the IRS regulations, revenue rulings,
judicial decisions, etc.). Moreover, it is also possible that any change
could be effective prior to the date of any such change.
(j) Other Tax Consequences.
As noted above, the foregoing discussion of the Federal income tax
consequences under the Contract is not exhaustive and special rules are
provided with respect to other tax situations not discussed in the
Prospectus. Further, the Federal income tax consequences discussed here
reflect General American's understanding of current law and the law may
change. Federal estate and state and local estate, inheritance, and other
tax consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Contract Owner or recipient of
the distribution. A competent tax adviser should be consulted for further
information.
(k) Qualified Contracts.
The Qualified Contract is designed for use with several types of retirement
plans. The tax rules applicable to participants and beneficiaries in
retirement plans vary according to the type of plan and the terms and
conditions of the plan. Special favorable tax treatment may be available for
certain types of contributions and distributions. Adverse tax consequences
may result from contributions in excess of specified limits; distributions
prior to age 59 1/2 (subject to certain exceptions); distributions that do
not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances.
We make no attempt to provide more than general information about use of the
Contracts with the various types of retirement plans. Owners and
participants under retirement plans, as well as Annuitants and Beneficiaries,
are cautioned that the rights of any person to any benefits under Qualified
Contracts may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract issued in connection
with such a plan. Some retirement plans are subject to distribution and
other requirements that are not incorporated in the administration of the
Contracts. Contract Owners are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts satisfy applicable law. Purchasers of Contracts for use with any
retirement plan should consult a competent legal counsel and tax adviser
regarding the suitability of the Contract.
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INDIVIDUAL RETIREMENT ANNUITIES AND ACCOUNTS
The Contract is designed for use with individual retirement annuities and
individual retirement accounts. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program know as an
individual retirement annuity or individual retirement account (each
hereinafter referred to as "IRA"). Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. The sale of a Contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of the
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other applicable agencies. Such
purchasers will have the right to revoke the purchase within seven days of
the earlier of the establishment of the IRA or the purchase. If a Qualified
Contract is issued in connection with an employer's Simplified Employee
Pension ("SEP") or Simple Retirement Account ("SIMPLE") plan, Contract
Owners, Annuitants and Beneficiaries are cautioned that the rights of any
person to any benefits under employer plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract. A Qualified Contract will be amended as necessary to conform
to the requirements of the Code.
CODE SECTION 403(b) PLANS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees
are excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social
Security) taxes.
Code Section 403(b) (11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3)
earnings in such years on amounts held as of the last year beginning before
January 1, 1989. Distribution of those amounts may only occur upon death of
the employee, attainment of age 59 1/2, separation from service, disability,
or financial hardship. Income attributable to elective contributions may not
be distributed in the case of hardship. Distributions prior to age 59 1/2
due to separation from service or financial hardship are subject to the
nondeductible 10% penalty tax for premature distributions, in addition to
income tax.
The Investment Company Act of 1940 has distribution requirements which differ
from the requirements of Code Section 403(b) set forth above. However, these
Contracts are being offered in reliance upon, and in compliance with, the
provisions of no-action letter number IP-6-88 issued by the Securities and
Exchange Commission to the American Council of Life Insurance. The no-action
letter allows the Separate Account to apply the restrictions created by Code
Section 403(b)(11) as long as specified steps, such as this disclosure, are
taken to ensure Contract Owners are aware of the Code restrictions. General
American believes it is in compliance with the provisions of the no-action
letter.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of
retirement plans for employees, and permit self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the plans. Adverse tax consequences to the plan, to the participant or
to both may result if this Contract is assigned or transferred to any
individual as a means to provide benefit payments.
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These
plans may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax exempt organizations. With respect to
non-governmental Section 457 plans, all investments are owned by the
sponsoring employer and are subject to the claims of the general creditors of
the employer. Distributions are taxable in full. Depending on the terms of
the particular plan, the employer may be entitled to draw on deferred amounts
for purposes unrelated to its Section 457 plan obligations. These plans are
subject to various restrictions on contributions and distributions.
RESTRICTIONS UNDER QUALIFIED CONTRACTS
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified Contracts or under the
terms of the plans in respect of which Qualified Contracts are issued.
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==============================================================================
DISTRIBUTOR OF THE CONTRACTS
==============================================================================
Walnut Street Securities, Inc. ("Walnut Street"), Suite 300, 670 Mason Ridge
Center Drive, St. Louis, Missouri 63141 is the principal underwriter and the
distributor of the Contracts. Walnut Street is a wholly owned subsidiary of
General American. Walnut Street has entered into contracts with various
broker-dealers and registered representatives affiliated with Walnut Street
to aid in the distribution of the Contracts. Commissions paid to dealer(s)
in varying amounts are not expected to exceed 3.75% of Purchase Payments for
such Contracts, under normal circumstances. For distribution of the
Contracts, General American paid commissions of $1,086,240.57 to Walnut
Street in 1996.
==============================================================================
VOTING RIGHTS
==============================================================================
To the extent required by law, the General American Capital Company Fund or
the Variable Insurance Products Fund shares held in the Divisions of the
Separate Account will be voted by General American at shareholder meetings of
such Funds in accordance with instructions received from persons having
voting interests in the corresponding Divisions of the Separate Account. The
Contract Owner holds a voting interest in each Division to which the
Accumulated Value is allocated or Annuity Payments are generated. If,
however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, and, as a result, General
American determines that it is allowed to vote the Fund shares in its own
right, General American may elect to do so.
The number of votes which are available to a Contract Owner will be
calculated separately for each Division of the Separate Account. That number
will be determined by applying his or her percentage interest, if any, in a
particular Division to the total number of votes attributable to the
Division.
The number of votes is equal to the number of dollars: (a) during the
accumulation period, in the Accumulated Value attributable to a Division
divided by the net asset value of a share of the corresponding Fund; and (b)
during the annuity period, in the reserve credited to the Annuity Units held
in the Division(s) under the variable annuity settlement option in effect
divided by the net asset value of a share of the corresponding Fund.
Generally, during the annuity period the number of votes applicable to the
Annuitant will decrease.
At most Fund shareholder meetings, votes may be cast in person or by proxy
and fractional votes will be counted.
The number of votes of a Division which are available will be determined as
of the date established by the corresponding Fund for determining
shareholders eligible to vote at the meeting. Voting instructions will be
solicited by written communication from us prior to such meeting in
accordance with procedures established.
Fund shares as to which no timely instructions are received or shares held by
General American as to which Contract Owners have no beneficial interest will
be voted in proportion to the voting instructions which are received with
respect to all Contracts participating in that Fund. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis to
reduce the votes eligible to be cast.
Each person having a voting interest in a Division will receive proxy
material, reports, and other materials relating to the appropriate Fund.
To the extent that General American, as shareholder of the Funds, is entitled
to vote any Fund's interest in the Trust, it will do so on the same basis as
described above.
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==============================================================================
THE GENERAL ACCOUNT
==============================================================================
Contributions and transfers to the General Account under the Contracts become
part of the assets of General American which support annuity and insurance
obligations. The General Account includes all of General American's assets,
except those assets segregated in separate accounts. General American has
sole discretion to invest the assets of the General Account, subject to
applicable law. BECAUSE OF EXEMPTIVE RULES AND EXCLUSIONARY PROVISIONS IN
THE LAW, INTERESTS IN THE GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, NOR IS THE GENERAL ACCOUNT REGISTERED AS AN
INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE GENERAL
ACCOUNT NOR ANY INTERESTS THEREIN ARE SUBJECT TO THE PROVISIONS OF THESE
STATUTES AND, THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE GENERAL ACCOUNT.
DISCLOSURES ABOUT THE GENERAL ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY
APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY
AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
GENERAL ACCOUNT ACCUMULATIONS
General American guarantees that it will credit interest at an effective
annual rate of at least 4% to Purchase Payments or portions of Purchase
Payments allocated or transferred to the General Account under the Contracts.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest to the General Account, or to amounts allocated or transferred to
the General Account. Subject to any applicable surrender charges, General
American guarantees that the Accumulated Value held in the General Account
will equal all amounts allocated or transferred to the General Account, plus
any interest credited thereto, less any amounts surrendered or transferred
from the General Account. Any interest held in the General Account does not
entitle a Contract Owner to share in the investment experience of the General
Account.
SURRENDER CHARGES
Surrender charges may be applied to withdrawals from the General Account.
(See "Surrender Charges")
TRANSFERS TO THE SEPARATE ACCOUNT
Transfers from the General Account to the Divisions of the Separate Account
may be made only to the extent allowed by General American. (See "Transfers")
GENERAL MATTERS
General American may delay the payment of a surrender or partial withdrawal
from the General Account for up to six months from receipt of Written
Request. If payment is delayed, the amount due will continue to be credited
with the rate of interest then credited to the General Account until the
payment is made.
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==============================================================================
STATEMENT OF ADDITIONAL INFORMATION
==============================================================================
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus, The following
is the Table of Contents for that Statement:
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
THE CONTRACTS S-3
Computation of Variable Annuity Income Payments S-3
Joint Annuitant S-5
IRS Required Distribution S-5
MONEY MARKET YIELD CALCULATION S-5
GENERAL MATTERS S-6
Participating S-6
Incorrect Age or Sex S-7
Annuity Data S-7
Quarterly Reports S-7
Incontestability S-7
Ownership S-7
Reinstatement S-8
DISTRIBUTION OF THE CONTRACT S-8
SAFEKEEPING OF ACCOUNT ASSETS S-8
STATE REGULATION S-8
RECORDS AND REPORTS S-9
LEGAL PROCEEDINGS S-9
OTHER INFORMATION S-9
FINANCIAL STATEMENTS S-9
</TABLE>
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PART B Registration No. 2-39272
811-2162
GENERAL AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
GROUP AND INDIVIDUAL VARIABLE ANNUITY CONTRACT
Offered by
General American Life Insurance Company
(A Missouri Insurance Company)
700 Market Street
St. Louis, MO 63101
***********************
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the group and individual variable annuity
contracts ("Contracts" or "Contract" as syntax requires) offered by
General American Life Insurance Company. You may obtain a copy of the
current Prospectus by calling 800-449-6447 or writing to: Variable Annuity
Administration Department, P.O. Box 14490, St. Louis, MO 63178-4490. Terms
defined in the current Prospectus for the Contract are used in the same way
in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS.
Dated: May 1, 1997
S-1
<PAGE> 39
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
THE CONTRACTS S-3
Computation of Variable Annuity Income Payments S-3
Joint Annuitant S-5
IRS Required Distribution S-5
MONEY MARKET YIELD CALCULATION S-5
GENERAL MATTERS S-6
Participating S-6
Incorrect Age or Sex S-7
Annuity Data S-7
Quarterly Reports S-7
Incontestability S-7
Ownership S-7
Reinstatement S-8
DISTRIBUTION OF THE CONTRACT S-8
SAFEKEEPING OF ACCOUNT ASSETS S-8
STATE REGULATION S-8
RECORDS AND REPORTS S-9
LEGAL PROCEEDINGS S-9
OTHER INFORMATION S-9
FINANCIAL STATEMENTS S-9
</TABLE>
S-2
<PAGE> 40
THE CONTRACTS
The following provides additional information about the Contracts which
supplements the description in the Prospectus and may be of interest to the
Contract Owners.
Computation of Variable Annuity Income Payments
(a) Computation of the Value of an Annuity Unit
The table of contractual guaranteed annuity rates is based on an assumed
interest rate. The assumed interest rate is 4% for all contracts issued on
or after 1 May 1982; 3.5% for tax-qualified contracts issued prior to 1 May
1982; and 3% for non-tax-qualified contracts issued prior to 1 May 1982.
As a starting point, the value of a Separate Account Two annuity unit was
established at $10.00 as of the end of the business day on 4 January 1971.
For contracts issued prior to 1 May 1982, the value of the annuity unit at
the end of any subsequent business day is determined by multiplying such
value for the preceding business day by the product of (a) the daily
reduction factor (described below) once for each calendar day expiring
between the end of the sixth preceding business day and the end of the fifth
preceding business day and (b) the net investment factor for the fifth
business day preceding such business day.
The daily reduction factors referred to above are .99989256 for all contracts
issued on or after 1 May 1982; .99990575 for tax-qualified contracts issued
prior to 1 May 1982; and .99991902 for non-tax-qualified contracts issued
before 1 May 1982.
These daily reduction factors are necessary to neutralize the assumed net
investment rate built into the annuity tables. Calculations are performed as
of the fifth preceding business day to permit calculation of amounts and the
mailing of checks in advance of their due date.
This may be illustrated by the following hypothetical example. Assuming that
the net investment factor for the fifth preceding business day was
1.00176027, and assuming that the annuity unit value for the preceding
business day was $10.20, then the annuity unit for the current business day
is $10.22, determined as follows:
1.00176027 $10.200000
X .99989256 X 1.00165264
1.00165264 $10.216857
S-3
<PAGE> 41
(b) Determination of the Amount of the First Annuity
Installment
When annuity installments begin, the accumulated value of the Contract is
established. This is the sum of the products of the values of an
accumulation unit in each Division on the fifth business day preceding the
annuity commencement date and the number of accumulation units credited to
the Contract as of the annuity commencement date.
The Contract contains tables indicating the dollar amount of the first
annuity installment under each form of variable annuity for each $1,000 of
value of the Contract. The amount of the first annuity installment depends
on the option chosen and the sex (if applicable) and age of the annuitant.
The first annuity installment is determined by multiplying the benefit per
$1,000 of value shown in the tables in the contract by the number of
thousands of dollars of accumulated value of the contract (individual
account).
If a greater first installment would result, General American will compute
the first installment on the same mortality basis as is used in determining
such installments under individual variable annuity contracts then being
issued for a similar class of annuitants.
(c) Determination of the Fluctuating Values of the Annuity
Installments
The dollar amount of the first annuity installment, determined as described
above, is translated into annuity units by dividing that dollar amount by the
value of an annuity unit on the due date of the first annuity installment.
The number of annuity units remains fixed and the amount of each subsequent
annuity installment is determined by multiplying this fixed number of annuity
units by the value of an annuity unit on the date the installment is due.
If in any month after the first the application of the above net investment
factors produces a net investment increment exactly equivalent to the assumed
annualized rate of 4%, then the payment in that month will not change. Since
it is unlikely that it will be exactly equivalent, installments will vary up
or down depending upon whether such investment increment is greater or less
than the assumed annualized rate of 4%. A higher assumption would mean a
higher initial annuity payment but a more slowly rising series of
S-4
<PAGE> 42
subsequent annuity payments (or a more rapidly falling series of subsequent
annuity payments if the value of an annuity unit is decreasing). A lower
assumption would have the opposite effect.
Joint Annuitant
The Contract Owner may, by Written Request at least 30 days prior to the
Annuity Date, name a Joint Annuitant. An Annuitant or Joint Annuitant may
not be replaced.
The Annuity Date shall be specified in the application. If the Annuitant or
Joint Annuitant dies after the Annuity Date, the survivor shall be the sole
Annuitant. Another Joint Annuitant may not be designated. Payment to a
Beneficiary shall not be made until the death of the surviving Annuitant.
IRS Required Distributions
If any Contract Owner dies before the entire interest in the Contract is
distributed, the value of the Contract must be distributed to the designated
Beneficiary as described in this section so that the Contracts qualify as
annuities under the Internal Revenue Code.
If the death occurs on or after the Annuity Date, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of death. If the death occurs before
the Annuity date, the entire interest in the Contract will be distributed
within five years after date of death or be used to purchase an immediate
annuity under which payments will begin within one year of the Contract
Owner's death and will be made for the life of the "Owner's Designated
Beneficiary" or for a period not extending beyond the life expectancy of
that beneficiary.
If any portion of the deceased Contract Owner's interest is payable to (or
for the benefit of) the surviving spouse of the Contract Owner, the Contract
may be continued with the surviving spouse as the New Contract Owner.
MONEY MARKET YIELD CALCULATION
In accordance with regulations adopted by the Securities and Exchange
Commission, General American is required to disclose the current annualized
yield for the Division investing in the Money Market Fund of Capital Company
(the "Money Market Division") for a seven-day period in a manner which does
not take into consideration any realized or unrealized gains or losses on
shares of the Money Market
S-5
<PAGE> 43
Fund or on its portfolio securities. This current annualized yield is
computed by determining the net change (exclusive of realized gains and
losses on the sale of securities and unrealized appreciation and
depreciation) in the value of a hypothetical account having a balance of one
unit of the Money Market Division at the beginning of such seven-day period,
dividing such net change in account value by the value of the account at the
beginning of the period to determine the base period return and annualizing
this quotient on a 365-day basis. The net change in account value reflects
the deductions for administrative expenses of services and the mortality and
expense risk charge and income and expenses accrued during the period.
Because of these deductions, the yield for the Money Market Division of the
Separate Account will be lower than the yield for the Money Market Fund of
Capital Company.
The Securities and Exchange Commission also permits General American to
disclose the effective yield of the Money Market Division for the same
seven-day period, determined on a compounded basis. The effective yield is
calculated by compounding the unannualized base period return by adding one
to the base period return, raising the sum to a power equal to 365 divided by
seven, and subtracting one from the result.
The yield on amounts held in the Money Market Division normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates
of return. The Money Market Division's actual yield is affected by changes
in interest rates on money market securities, average portfolio maturity of
the Money Market Fund, the types and quality of portfolio securities held by
the Money Market Fund, and its operating expenses.
GENERAL MATTERS
Participating
The Contracts share in General American's divisible surplus while they are in
force prior to the annuity commencement date. Each year General American
will determine the share of divisible surplus, if any, accruing to the
Contracts. Investment results are credited directly through the changes in
the value of the accumulation units and annuity units. Also, most mortality
and expense savings are credited directly through decreases in the
appropriate charges. Therefore, the Company expects little or no divisible
surplus to be credited to a contract. If any divisible surplus is credited
to a contract, the Contract Owner may
S-6
<PAGE> 44
choose to take the distribution in cash, reduce the stipulated payment, or
leave the distribution with General American to accumulate with interest.
Incorrect Age or Sex
If the age at issue or sex of the Annuitant as shown in the Contract is
incorrect, any benefit payable under a supplemental agreement will be such as
the premiums paid would have purchased at the correct age at issue and sex.
After General American begins paying monthly income installments, appropriate
adjustment will be made in any remaining installments.
Annuity Data
General American will not be liable for obligations which depend on receiving
information from a Payee until such information is received in a form
satisfactory to General American.
Quarterly Reports
Quarterly, General American will give the Contract Owner a report of the
current Accumulated Value allocated to each Division; the current Accumulated
Value allocated to the General Account; and any Purchase Payments, charges,
transfers, or surrenders during that period. This report will also give the
Contract Owner any other information required by law or regulation. The
Contract Owner may ask for a report like this at any time. The quarterly
reports will be distributed without charge. General American reserves the
right to charge a fee for additional reports.
Incontestability
General American cannot contest this Contract, except for nonpayment of
stipulated payments or premiums, after it has been in force during the
lifetime of the Annuitant for a period of two years from the date of issue.
This provision will not apply to any supplemental agreement relating to total
and permanent disability benefits.
Ownership
The Owner of the Contract on the Contract Date is the Annuitant, unless
otherwise specified in the application. The Owner may specify a new Owner by
Written Notice at any time thereafter. During the Annuitant's lifetime all
rights and privileges under this Contract may be exercised solely by the
Owner.
S-7
<PAGE> 45
Reinstatement
A Contract may be reinstated if a stipulated payment is in default and if the
Accumulated Value has not been applied under the surrender provision.
Reinstatement may be made during the lifetime of the Annuitant but before the
Annuity Date by the payment of one stipulated payment. Benefits provided by
any supplemental agreement attached to this Contract may be reinstated by
providing evidence of insurability satisfactory to General American. The
reinstatement provisions incorporated in such supplemental agreement must be
complied with.
DISTRIBUTION OF THE CONTRACT
Walnut Street Securities, Inc. ("Walnut Street"), the principal underwriter
of the Contracts, is registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as a broker-dealer and is a member
of the National Association of Securities Dealers, Inc.
The Contracts are offered to the public through individuals licensed under
the federal securities laws and state insurance laws who have entered into
agreements with Walnut Street. The offering of the Contracts is continuous
and Walnut Street does not anticipate discontinuing the offering of the
Contracts. However, Walnut Street does reserve the right to discontinue the
offering of the Contracts.
SAFEKEEPING OF ACCOUNT ASSETS
Title to assets of the Separate Account is held by General American. The
assets are kept physically segregated and held separate and apart from
General American's general account assets. Records are maintained of all
purchases and redemptions of eligible Fund shares held by each of the
Divisions of the Separate Account.
STATE REGULATION
General American is a life insurance company organized under the laws of
Missouri, and is subject to regulation by the Missouri Division of Insurance.
An annual statement is filed with the Missouri Commissioner of Insurance on
or before March 1 of each year covering the operations and reporting on the
financial condition of General American as of December 31 of the preceding
calendar year. Periodically, the Missouri Commissioner of Insurance examines
the financial condition of General American, including the liabilities and
reserves of the Separate Account.
S-8
<PAGE> 46
In addition, General American is subject to the insurance laws and
regulations of all the states where it is licensed to operate. The
availability of certain contract rights and provisions depends on state
approval and filing and review processes. Where required by state law or
regulation, the Contracts will be modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Separate Account will be maintained
by General American. As presently required by the Investment Company Act of
1940 and regulations promulgated thereunder, General American will mail to
all Contract Owners at their last known address of record, at least
semi-annually, reports containing such information as may be required under
that Act or by any other applicable law or regulation.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. General American is
not involved in any litigation that is of material importance in relation to
its total assets or that relates to the Separate Account.
OTHER INFORMATION
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts discussed in this Statement of Additional Information. Not all of
the information set forth in the Registration Statement, amendments, and
exhibits thereto has been included in this Statement of Additional
Information. Statements contained in this Statement of Additional
Information concerning the content of the Contracts and other legal
instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments filed
with the Securities and Exchange Commission.
FINANCIAL STATEMENTS
S-9
<PAGE> 47
The audited financial statements of General American and the Separate Account
have been included in this Prospectus in reliance on the reports of KPMG Peat
Marwick LLP, independent certified public accountants, and on the authority of
said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1996, financial
statements, of General American, refers to the Adoption of Statement of
Financial Accounting Standards No. 120, Accounting and Reporting by
Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts.
S-10
<PAGE> 48
- ----------------------------------------------------------------------
....................................................................
GENERAL AMERICAN SEPARATE ACCOUNT TWO
ANNUAL REPORT
....................................................................
DECEMBER 31, 1996
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
- ----------------------------------------------------------------------
<PAGE> 49
Independent Auditors' Report
----------------------------
The Board of Directors and Contractholders
General American Life Insurance Company:
We have audited the statements of assets and liabilities,
including the schedule of investments, of the S & P 500
Index, Money Market, Bond Index, Managed Equity, Asset
Allocation, Equity-Income, Growth, and Overseas Fund
Divisions of General American Separate Account Two as of
December 31, 1996, and the related statements of operations
for the year then ended, the statements of changes in net
assets for each of the years in the two year period ended
December 31, 1996 and the financial highlights for each of
the periods presented. These financial statements and
financial highlights are the responsibility of the Separate
Account's management. Our responsibility is to express an
opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights information are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Investments owned as of December 31, 1996 were
verified by audit of the statements of assets and
liabilities of the underlying portfolios of General American
Capital Company and confirmation by correspondence with
respect to the Variable Insurance Products Fund sponsored by
Fidelity Investments. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of the S & P 500 Index,
Money Market, Bond Index, Managed Equity, Asset Allocation,
Equity-Income, Growth, and Overseas Fund Divisions of
General American Separate Account Two as of December 31,
1996, and the results of their operations for the year then
ended, and changes in their net assets for each of the years
in the two year period ended December 31, 1996, and
financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
February 14, 1997
<PAGE> 50
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American Capital Company,
at market value (see Schedule of Investments) $37,623,934 $2,712,399 $4,191,933 $18,464,706 $13,399,141
Receivable from General American Life Insurance Company 0 0 14,324 0 0
----------- ---------- ---------- ----------- -----------
Total assets 37,623,934 2,712,399 4,206,257 18,464,706 13,399,141
----------- ---------- ---------- ----------- -----------
Liabilities:
Payable to General American Life
Insurance Company 52,654 1,940 0 16,016 29,213
----------- ---------- ---------- ----------- -----------
Total net assets $37,571,280 $2,710,459 $4,206,257 $18,448,690 $13,369,928
=========== ========== ========== =========== ===========
Net assets represented by:
Tax sheltered annuities in accumulation period 26,798,358 1,778,365 2,936,749 16,505,975 9,064,391
Individually purchased annuities in accumulation period 10,772,922 932,094 1,269,508 1,902,568 4,305,537
Variable annuities in payment period 0 0 0 40,147 0
----------- ---------- ---------- ----------- -----------
Total net assets $37,571,280 $2,710,459 $4,206,257 $18,448,690 $13,369,928
=========== ========== ========== =========== ===========
Tax sheltered units held - 88 Series 807,807 117,446 163,024 239,914 375,468
Individually purchased units held - 88 Series 324,738 61,557 70,473 57,599 178,346
Tax sheltered units held - 82 Series -- -- -- 152,770 --
Individually purchased units held - 82 Series -- -- -- 1,858 --
Tax sheltered accumulation unit value - 88 Series $ 33.17 $ 15.14 $ 18.01 $ 30.94 $ 24.14
Individually purchased accumulation unit value - 88 Series 33.17 15.14 18.01 30.94 24.14
Tax sheltered accumulation unit value - 82 Series -- -- -- 59.73 --
Individually purchased accumulation unit value - 82 Series -- -- -- 64.99 --
Cost of investments $27,657,542 $2,773,464 $4,372,216 $17,339,265 $12,381,040
=========== ========== ========== =========== ===========
See accompanying notes to financial statements.
<PAGE> 51
<CAPTION>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
STATEMENTS OF ASSETS AND LIABILITIES (continued)
DECEMBER 31, 1996
EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- -------------
<S> <C> <C> <C>
Assets:
Investments in Fidelity Variable Insurance Products
Fund, at market value (see Schedule of Investments) $17,276,490 $20,187,291 $5,486,131
Receivable from General American Life Insurance Company 32,734 0 4,927
----------- ----------- ----------
Total assets 17,309,224 20,187,291 5,491,058
----------- ----------- ----------
Liabilities:
Payable to General American Life
Insurance Company 0 66,554 0
----------- ----------- ----------
Total net assets $17,309,224 $20,120,737 $5,491,058
=========== =========== ==========
Net assets represented by:
Tax sheltered annuities in accumulation period 12,249,373 14,671,392 4,194,628
Individually purchased annuities in accumulation period 5,059,851 5,449,345 1,296,430
Variable annuities in payment period 0 0 0
----------- ----------- ----------
Total net assets $17,309,224 $20,120,737 $5,491,058
=========== =========== ==========
Tax sheltered units held - 88 Series 766,602 973,680 346,441
Individually purchased units held - 88 Series 316,661 361,651 107,074
Tax sheltered units held - 82 Series -- -- --
Individually purchased units held - 82 Series -- -- --
Tax sheltered accumulation unit value - 88 Series $ 15.98 $ 15.07 $ 12.11
Individually purchased accumulation unit value - 88 Series 15.98 15.07 12.11
Tax sheltered accumulation unit value - 82 Series -- -- --
Individually purchased accumulation unit value - 82 Series -- -- --
Cost of investments $14,501,056 $17,266,290 $4,824,829
=========== =========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 52
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income<F*> $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charge (321,470) (28,783) (41,660) (168,639) (118,459)
------------ ---------- ---------- ------------ ------------
Net investment expense (321,470) (28,783) (41,660) (168,639) (118,459)
------------ ---------- ---------- ------------ ------------
Net realized gain on investments:
Realized gain from distributions 1,127,958 119,896 307,282 1,937,203 920,965
Realized gain (loss) on sales 1,578,755 29,114 (17,263) 599,764 189,726
------------ ---------- ---------- ------------ ------------
Net realized gain on investments 2,706,713 149,010 290,019 2,536,967 1,110,691
------------ ---------- ---------- ------------ ------------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of year 6,038,370 (66,191) (16,070) 324,550 394,603
Unrealized gain (loss) on investments, end of year 9,966,392 (61,065) (180,283) 1,125,441 1,018,101
------------ ---------- ---------- ------------ ------------
Net unrealized gain (loss) on investments 3,928,022 5,126 (164,213) 800,891 623,498
------------ ---------- ---------- ------------ ------------
Net gain on investments 6,634,735 154,136 125,806 3,337,858 1,734,189
------------ ---------- ---------- ------------ ------------
Net increase in net assets resulting
from operations $ 6,313,265 $ 125,353 $ 84,146 $ 3,169,219 $ 1,615,730
============ ========== ========== ============ ============
<FN>
<F*>See Note 2C
See accompanying notes to financial statements.
<PAGE> 53
<CAPTION>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
STATEMENTS OF OPERATIONS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1996
EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividend income<F*> $ 16,847 $ 34,575 $ 44,123
Expenses:
Mortality and expense charge (140,215) (166,668) (47,456)
------------ ------------ ------------
Net investment expense (123,368) (132,093) (3,333)
------------ ------------ ------------
Net realized gain on investments:
Realized gain from distributions 482,956 873,010 48,535
Realized gain on sales 379,512 425,154 52,458
------------ ------------ ------------
Net realized gain on investments 862,468 1,298,164 100,993
------------ ------------ ------------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of year 1,755,643 2,095,919 220,826
Unrealized gain on investments, end of year 2,775,434 2,921,001 661,302
------------ ------------ ------------
Net unrealized gain on investments 1,019,791 825,082 440,476
------------ ------------ ------------
Net gain on investments 1,882,259 2,123,246 541,469
------------ ------------ ------------
Net increase in net assets resulting
from operations $ 1,758,891 $ 1,991,153 $ 538,136
============ ============ ============
<FN>
<F*>See Note 2C
See accompanying notes to financial statements.
</TABLE>
<PAGE> 54
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
S & P 500 MONEY BOND
INDEX MARKET INDEX
FUND DIVISION FUND DIVISION FUND DIVISION
------------------------ ----------------------- ----------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (321,470) $ (220,101) $ (28,783) $ (22,896) $ (41,660) $ (35,027)
Net realized gain on investments 2,706,713 1,235,497 149,010 189,243 290,019 191,600
Net unrealized gain (loss) on investments 3,928,022 5,568,790 5,126 (56,719) (164,213) 414,318
------------ ------------ ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 6,313,265 6,584,186 125,353 109,628 84,146 570,891
Net deposits into (withdrawals from)
Separate Account 5,241,770 1,302,367 222,631 169,484 52,563 453,985
------------ ------------ ----------- ----------- ----------- -----------
Increase in net assets 11,555,035 7,886,553 347,984 279,112 136,709 1,024,876
Net assets, beginning of year 26,016,245 18,129,692 2,362,475 2,083,363 4,069,548 3,044,672
Net assets, end of year $37,571,280 $26,016,245 $2,710,459 $2,362,475 $4,206,257 $4,069,548
============ ============ =========== =========== =========== ===========
MANAGED ASSET
EQUITY ALLOCATION
FUND DIVISION FUND DIVISION
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Operations:
Net investment expense $ (168,639) $ (136,599) $ (118,459) $ (90,276)
Net realized gain (loss) on investments 2,536,967 2,072,763 1,110,691 837,791
Net unrealized gain (loss) on investments 800,891 2,150,093 623,498 1,428,910
------------ ------------ ------------ ------------
Net Increase in net assets
resulting from operations 3,169,219 4,086,257 1,615,730 2,176,425
Net deposits into (withdrawals from)
Separate Account (1,345,142) (726,729) 1,536,787 (214,397)
------------ ------------ ------------ ------------
Increase in net assets 1,824,077 3,359,528 3,152,517 1,962,028
Net assets, beginning of year 16,624,613 13,265,085 10,217,411 8,255,383
Net assets, end of year $18,448,690 $16,624,613 $13,369,928 $10,217,411
============ ============ ============ ============
See accompanying notes to financial statements.
<PAGE> 55
<CAPTION>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
STATEMENTS OF CHANGES IN NET ASSETS (continued)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION
------------------------- ------------------------ -----------------------
1996 1995 1996 1995 1996 1995
----------- ------------ ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (123,368) $ 107,200 $ (132,093) $ (53,382) $ (3,333) $ (21,339)
Net realized gain (loss) on investments 862,468 301,454 1,298,164 91,695 100,993 17,528
Net unrealized gain (loss) on investments 1,019,791 1,677,722 825,082 1,951,948 440,476 290,245
------------ ------------ ------------ ------------ ----------- -----------
Increase in net assets
resulting from operations 1,758,891 2,086,376 1,991,153 1,990,261 538,136 286,434
Net deposits into Separate Account 4,820,832 4,455,975 6,088,025 5,381,006 1,249,521 510,609
------------ ------------ ------------ ------------ ----------- -----------
Increase in net assets 6,579,723 6,542,351 8,079,178 7,371,267 1,787,657 797,043
Net assets, beginning of year 10,729,501 4,187,150 12,041,559 4,670,292 3,703,401 2,906,358
Net assets, end of year $17,309,224 $10,729,501 $20,120,737 $12,041,559 $5,491,058 $3,703,401
============ ============ ============ ============ =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 56
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1 - Organization
General American Life Insurance Company (General American)
markets life insurance and health and pension arrangements
to the public. General American Separate Account Two (the
Separate Account) is a part of General American and is
available to tax qualified and non-tax qualified retirement
plans for investment purposes in variable annuity contracts.
The Separate Account was reorganized as a unit investment
trust, registered under the Investment Company Act of 1940,
pursuant to a plan of reorganization approved by its
contractholders on February 23, 1988. To provide Separate
Account contractholders the opportunity to invest in a more
diversified mutual fund portfolio, four additional fund
divisions were also established on this date. Existing
contractholders' units in the Separate Account remained
unchanged after the reorganization.
Each Fund Division invests exclusively in shares of a single
fund of either General American Capital Company (the Capital
Company) or Variable Insurance Products Fund, which are open-
end diversified management investment companies. The funds
of the General American Capital Company, sponsored by
General American, are the S & P 500 Index Fund, Money Market
Fund, Bond Index Fund, Managed Equity Fund, and Asset
Allocation Fund Divisions. The name of the Bond Index Fund
was changed from the Intermediate Bond Fund effective
October 1, 1992. The name change reflected a change in
investment policies and objectives of the Fund. The name of
the S & P 500 Index Fund was changed from the Equity Index
Fund effective May 1, 1994. The funds of the Variable
Insurance Products Fund, sponsored by Fidelity Investments,
are the Equity-Income, Growth, and the Overseas Fund
Divisions. Contractholders have the option of directing
their deposits into one or all of these Funds as well as
into the general account of General American. The unit
values for the Separate Account 88 Series for the above
divisions began at $10.00 on May 16, 1988 (date of first
deposits into these fund divisions), except for the Managed
Equity Fund Division, which began at $10.00 on February 23,
1988; the Equity-Income and Growth Fund Divisions which
began at $10.00 on January 6, 1994; and the Overseas Fund
Division which began at $10.00 on January 11, 1994.
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting
policies followed by the Separate Account in the preparation
of its financial statements. The policies are in conformity
with generally accepted accounting principles.
<PAGE> 57
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
A. Investments
The Separate Account's investments in the eight Funds are
valued daily based on the net asset values of the
respective Fund shares held as reported to General
American by General American Capital Company and Variable
Insurance Products. The specific identification method
is used in determining the cost of shares sold on
withdrawals by the Separate Account. Share transactions
are recorded on the trade date, which is the same as the
settlement date.
B. Federal Income Taxes
Under current Federal income tax law, the investment
income and capital gains from sales of investments of the
Separate Account are not taxable. Therefore, no Federal
income tax expense has been provided.
C. Distribution of Income and Realized Capital Gains
General American Capital Company follows the federal
income tax practice known as consent dividending, whereby
substantially all of its net investment income and
realized gains are deemed to be passed through to the
Separate Account. As a result, General American Capital
Company does not pay any dividends or capital gain
distributions. During December of each year, accumulated
investment income and capital gains of the underlying
Capital Company Fund are allocated to the Separate
Account by increasing the cost basis and recognizing a
capital gain in the Separate Account. This adjustment
has no impact on the net assets of the Separate Account.
The Variable Insurance Products Funds intends to pay out
all of its net investment income and net realized capital
gains for each year. Dividends from the funds are
distributed at least annually on a per share basis and
are recorded on the ex dividend date. Normally, net
realized capital gains, if any, are distributed each year
for each fund. Such income and capital gain
distributions are automatically reinvested in additional
shares of the funds.
<PAGE> 58
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
D. Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported
amounts of increase and decrease in net assets from
operations during the period. Actual results could
differ from those estimates.
Note 3 - Policy Charges
General American assumes the mortality and expense risks and
provides certain administrative services related to
operating the Separate Account, for which the Separate
Account is charged a daily rate of .002740% of net assets
of each Fund Division of the Separate Account, which equals
an annual rate of 1% for those net assets. For contracts
issued prior to the date of reorganization and invested in
the Managed Equity Fund, daily adjustments to values in the
Separate Account are made to offset fully the effect of a
.10% administrative fee charged to the Managed Equity Fund
by General American. Since the Separate Account invests in
shares of the Capital Company, as opposed to direct
investments in publicly traded common stocks, the Separate
Account is not charged an investment advisory fee.
Under Separate Account contractual arrangements, General
American is entitled to collect payment for sale charges and
annuity taxes. Variable annuity contracts written prior to
May 1, 1982 have a front-end sales charge of 4.75% applied
to each contribution. Contracts written after April 30,
1982 are subject to a contingent deferred sales charge upon
surrender of the contract or partial withdrawal of funds on
deposit. The sales charge is 9% during the first contract
year, decreasing by 1% per year thereafter; the contingent
deferred sales charge is waived in the event of death,
disability or annuitization after the fifth contract year.
The amount of sales charges, transfer charges, surrender
charges and premium taxes for 1996 and 1995 are disclosed in
Note 6.
<PAGE> 59
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 4 - Purchases and Sales of Capital Company Shares
During the year ended December 31, 1996, purchases including
net realized gain and income from distribution and proceeds
from sales of General American Capital Company shares were
as follows:
<TABLE>
<CAPTION>
S & P 500 Money Managed Asset
Index Market Bond Index Equity Allocation
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Purchases $10,349,151 $ 4,423,662 $ 1,487,077 $ 3,847,693 $ 3,791,621
=========== =========== =========== =========== ===========
Sales $ 4,257,226 $ 4,071,648 $ 1,158,132 $ 3,421,749 $ 1,408,188
=========== =========== =========== =========== ===========
</TABLE>
During the year ended December 31, 1996, purchases
(including dividend reinvestment) and proceeds from sales of
Variable Insurance Products Fund shares were as follows:
<TABLE>
<CAPTION>
Equity-
Income Growth Overseas
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
Purchases $ 6,693,638 $ 8,415,615 $ 1,838,764
=========== =========== ===========
Sales $ 1,488,461 $ 1,459,157 $ 544,742
=========== =========== ===========
</TABLE>
<PAGE> 60
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
Note 5 - Accumulation Unit Activity
The following is a summary of the accumulation unit activity for the year
ended December 31, 1996 and 1995 (in thousands):
<CAPTION>
S & P 500 INDEX MONEY MARKET BOND INDEX MANAGED EQUITY ASSET ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- --------------------------- ---------------
88 Series Other
Tax sheltered annuities: 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net deposits 243 117 197 93 57 32 62 41 11 7 96 59
Net withdrawals (92) (96) (186) (80) (40) (32) (37) (30) (22) (31) (38) (62)
Outstanding units, beginning of year 657 636 106 93 146 146 215 204 164 188 317 320
--- --- --- -- --- --- --- --- --- --- --- ---
Outstanding units, end of year 808 657 117 106 163 146 240 215 153 164 375 317
=== === === === === === === === === === === ===
Individually purchased annuities:
Net deposits 108 57 65 53 16 34 12 19 0 2 50 15
Net withdrawals (80) (25) (60) (54) (31) (7) (29) (12) (15) (5) (40) (27)
Outstanding units, beginning of year 297 265 57 58 85 58 75 68 17 20 168 180
--- --- -- -- -- -- -- -- -- -- --- ---
Outstanding units, end of year 325 297 62 57 70 85 58 75 2 17 178 168
=== === == == == == == == == == === ===
<PAGE> 61
<CAPTION>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 5 - Accumulation Unit Activity (continued)
The following is a summary of the accumulation unit activity for the year
ended December 31, 1996 and 1995 (in thousands):
EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION
------------------ ------------------ ------------------
Tax sheltered annuities: 1996 1995 1996 1995 1996 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net deposits 308 274 424 326 139 84
Net withdrawals (93) (37) (96) (36) (59) (58)
Outstanding units, beginning of year 552 315 646 356 266 240
--- --- --- --- --- ---
Outstanding units, end of year 767 552 974 646 346 266
=== === === === === ===
Individually purchased annuities:
Net deposits 169 136 190 173 44 46
Net withdrawals (59) (11) (89) (28) (14) (21)
Outstanding units, beginning of year 207 82 261 116 77 52
--- -- --- --- -- --
Outstanding units, end of year 317 207 362 261 107 77
=== === === === === ==
</TABLE>
<PAGE> 62
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 6 - Summary of Gross and Net Deposits into Separate Account
Deposits into the Separate Account are used to purchase shares in the Capital
Company or Fidelity's Variable Insurance Products Funds. Net deposits
represent the amounts available for investment in such shares after the
deduction of sales charges, premium taxes, transfer charges, and surrender
charges.
<CAPTION>
S & P 500 INDEX MONEY MARKET BOND INDEX
FUND DIVISION FUND DIVISION FUND DIVISION
------------------------ ------------------------ -----------------------
Tax sheltered annuities: 1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 4,801,588 $1,936,671 $1,573,029 $ 936,472 $ 644,473 $ 322,756
Transfers between fund divisions
and General American 1,297,472 (506,278) (977,208) (351,328) (123,200) (182,288)
Surrenders and withdrawals (1,612,048) (847,512) (442,144) (399,992) (212,773) (139,647)
------------ ----------- ----------- ---------- ---------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 4,487,012 582,881 153,677 185,152 308,500 821
Deductions:
Sales charges and premium taxes 220 42 25 35 0 0
Transfer charges 0 0 0 0 0 0
Surrender charges 15,859 15,376 2,116 1,994 4,533 1,789
------------ ----------- ----------- ---------- ---------- ----------
16,079 15,418 2,141 2,029 4,533 1,789
Total deposits into (withdrawals from)
Seperate Account $ 4,470,933 $ 567,463 $ 151,536 $ 183,123 $ 303,967 $ (968)
============ =========== =========== ========== ========== ==========
<CAPTION>
S & P 500 INDEX MONEY MARKET BOND INDEX
FUND DIVISION FUND DIVISION FUND DIVISION
------------------------ ------------------------ -----------------------
Individually purchased annuities: 1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 2,175,114 $ 943,540 $ 218,102 $ 649,767 $ 217,664 $ 222,046
Transfers between fund divisions
and General American 624,117 61,700 287,057 (658,693) (129,113) 281,773
Surrenders and withdrawals (2,023,782) (263,284) (432,702) (3,946) (337,899) (47,619)
------------ ----------- ----------- ---------- ---------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 775,449 741,956 72,457 (12,872) (249,348) 456,200
Deductions:
Sales charges and premium taxes 107 498 0 578 26 123
Transfer charges 0 0 0 0 0 0
Surrender charges 4,505 6,554 1,362 189 2,030 1,124
------------ ----------- ----------- ---------- ---------- ----------
4,612 7,052 1,362 767 2,056 1,247
Total deposits into (withdrawals from)
Seperate Account $ 770,837 $ 734,904 $ 71,095 $ (13,639) $(251,404) $ 454,953
============ =========== =========== ========== ========== ==========
<CAPTION>
MANAGED EQUITY ASSET ALLOCATION
FUND DIVISION FUND DIVISION
---------------------------------------------------- -----------------------
88 Series Other
Tax sheltered annuities: 1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,279,028 $ 785,374 $ 353,664 $ 169,261 $1,660,566 $ 937,459
Transfers between fund divisions
and General American (39,630) (220,967) 33,983 (108,544) 163,028 (556,127)
Surrenders and withdrawals (524,564) (293,856) (996,893) (1,056,414) (502,107) (371,984)
----------- ---------- ---------- ------------ ----------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 714,834 270,551 (609,246) (995,697) 1,321,487 9,348
Deductions:
Sales charges and premium taxes 32 0 457 415 38 190
Transfer charges 0 0 0 0 0 0
Surrender charges 5,803 1,520 519 8,990 8,924 8,385
----------- ---------- ---------- ------------ ----------- ----------
5,835 1,520 976 9,405 8,962 8,575
Total deposits into (withdrawals from)
Seperate Account $ 708,999 $ 269,031 $(610,222) $(1,005,102) $1,312,525 $ 773
=========== ========== ========== ============ =========== ==========
<CAPTION>
MANAGED EQUITY ASSET ALLOCATION
FUND DIVISION FUND DIVISION
---------------------------------------------------- -----------------------
88 Series Other
Individually purchased annuities: 1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 236,060 $ 217,821 $ 10,784 $ 13,955 $ 771,054 $ 255,198
Transfers between fund divisions
and General American (127,389) 10,366 2,476 (147,835) 101,742 (395,823)
Surrenders and withdrawals (635,428) (65,017) (926,791) (18,167) (647,356) (71,018)
----------- ---------- ---------- ------------ ----------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions (526,757) 163,170 (913,531) (152,047) 225,440 (211,643)
Deductions:
Sales charges and premium taxes 108 0 6 246 15 213
Transfer charges 0 0 0 15 0 0
Surrender charges 3,517 0 0 1,520 1,163 3,314
----------- ---------- ---------- ------------ ----------- ----------
3,625 0 6 1,781 1,178 3,527
Total deposits into (withdrawals from)
Seperate Account $ (530,382) $ 163,170 $(913,537) $ (153,828) $ 224,262 $(215,170)
=========== ========== ========== ============ =========== ==========
<PAGE> 63
<CAPTION>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION
------------------------- ------------------------- -----------------------
Tax sheltered annuities: 1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $2,826,679 $1,797,268 $4,167,351 $1,922,233 $ 899,345 $ 528,589
Transfers between fund divisions
and General American 889,311 1,421,286 1,299,236 1,851,078 263,567 (197,929)
Surrenders and withdrawals (526,930) (291,800) (802,978) (187,549) (239,737) (81,204)
----------- ----------- ----------- ----------- ---------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 3,189,060 2,926,754 4,663,609 3,585,762 923,175 249,456
Deductions:
Sales charges and premium taxes 73 70 154 84 37 15
Transfer charges 0 0 0 0 0 0
Surrender charges 11,385 3,695 13,731 3,758 4,239 1,716
----------- ----------- ----------- ----------- ---------- ----------
11,458 3,765 13,885 3,842 4,276 1,731
Total deposits into
Seperate Account $3,177,602 $2,922,989 $4,649,724 $3,581,920 $ 918,899 $ 247,725
=========== =========== =========== =========== ========== ==========
EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION
------------------------- ------------------------- -----------------------
Individually purchased annuities: 1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,660,280 $ 913,195 $1,675,877 $1,140,731 $ 316,565 $ 180,449
Transfers between fund divisions
and General American 68,897 668,950 (33,352) 797,821 69,225 250,118
Surrenders and withdrawals (83,837) (47,017) (201,305) (138,019) (54,297) (165,926)
----------- ----------- ----------- ----------- ---------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 1,645,340 1,535,128 1,441,220 1,800,533 331,493 264,641
Deductions:
Sales charges and premium taxes 0 197 0 141 0 62
Transfer charges 0 0 0 0 0 0
Surrender charges 2,110 1,945 2,919 1,306 871 1,695
----------- ----------- ----------- ----------- ---------- ----------
2,110 2,142 2,919 1,447 871 1,757
Total deposits into
Seperate Account $1,643,230 $1,532,986 $1,438,301 $1,799,086 $ 330,622 $ 262,884
=========== =========== =========== =========== ========== ==========
</TABLE>
<PAGE> 64
<TABLE>
General American Separate Account Two
Financial Highlights Information
December 31, 1996
<CAPTION>
Tax Qualified Plan Non-Tax Qualified Plan
Units outstanding, Units outstanding,
Accumulation unit value: Accumulation unit value: end of period end of period
Beginning of period<F*> End of period (in thousands) (in thousands)
------------------------- ------------------------ ------------------ ----------------------
<S> <C> <C> <C> <C>
S & P 500 Index Fund Division <F**>
1996 27.27 33.17 808 325
1995 20.12 27.27 657 297
1994 20.09 20.12 636 265
1993 18.48 20.09 599 241
1992 17.37 18.48 366 152
1991 13.47 17.37 236 109
1990 14.15 13.47 133 67
1989 11.01 14.15 97 23
1988 10.00 11.01 36 7
Money Market Fund Division
1996 14.50 15.14 117 62
1995 13.82 14.50 106 57
1994 13.39 13.82 93 58
1993 13.12 13.39 115 73
1992 12.78 13.12 181 85
1991 12.16 12.78 179 101
1990 11.33 12.16 188 79
1989 10.44 11.33 28 15
1988 10.00 10.44 6 5
Bond Index Fund Division <F***>
1996 17.66 18.01 163 70
1995 14.99 17.66 146 85
1994 15.78 14.99 146 58
1993 14.43 15.78 161 61
1992 13.68 14.43 116 48
1991 12.12 13.68 50 67
1990 11.22 12.12 33 58
1989 10.27 11.22 22 17
1988 10.00 10.27 5 2
Managed Equity Fund Division
Tax Qualified
1996 49.83 59.73 153 N/A
1995 37.68 49.83 164 N/A
1994 39.42 37.68 188 N/A
1993 36.54 39.42 210 N/A
1992 34.56 36.54 217 N/A
1991 27.62 34.56 216 N/A
1990 28.73 27.62 192 N/A
1989 22.11 28.73 194 N/A
1988 21.30 22.11 207 N/A
Non-Tax Qualified
1996 54.22 64.99 N/A 2
1995 41.00 54.22 N/A 17
1994 42.90 41.00 N/A 20
1993 39.76 42.90 N/A 24
1992 37.61 39.76 N/A 25
1991 30.05 37.61 N/A 25
1990 31.27 30.05 N/A 25
1989 24.06 31.27 N/A 25
1988 23.18 24.06 N/A 26
88 Series
1996 25.84 30.94 240 58
1995 19.56 25.84 215 75
1994 20.48 19.56 204 68
1993 19.00 20.48 197 56
1992 17.99 19.00 158 40
1991 14.39 17.99 101 27
1990 14.99 14.39 56 20
1989 11.54 14.99 21 7
1988 10.83 11.54 6 0
Asset Allocation Fund Division
1996 21.08 24.14 375 178
1995 16.52 21.08 317 168
1994 17.37 16.52 320 180
1993 16.01 17.37 332 166
1992 15.16 16.01 223 119
1991 12.78 15.16 140 66
1990 12.60 12.78 94 35
1989 10.61 12.60 33 16
1988 10.00 10.61 9 4
Equity-Income Fund Division
1996 14.12 15.98 767 317
1995 10.55 14.12 552 207
1994 10.00 10.55 315 82
Growth Fund Division
1996 13.27 15.07 974 362
1995 9.90 13.27 646 261
1994 10.00 9.90 356 116
Overseas Fund Division
1996 10.80 12.11 346 107
1995 9.95 10.80 266 77
1994 10.00 9.95 240 52
<FN>
<F*> At the date of first deposits into Separate Account on May 16, 1988,
except for the Managed Equity Fund, which began on February 24, 1988;
the Equity Fund and the Growth Fund which began on January 6, 1994; and
the Overseas Fund which began on January 11, 1994.
<F**> The name of the S&P 500 Index Fund was changed from the Equity Fund
effective May 1, 1994.
<F***> The name of the Bond Index Fund was changed from the Intermediate Bond
Fund effective October 1,1992. The name change reflects a change in
investment policies and objectives of the Fund.
See accompanying independent auditors report.
</TABLE>
<PAGE> 65
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<CAPTION>
No. of Shares Market Value
--------------- --------------
<S> <C> <C>
S&P 500 Index Fund
General American Capital Company <F*> 1,268,281 $ 37,623,934
Money Market Fund
General American Capital Company <F*> 157,305 $ 2,712,399
Bond Index Fund
General American Capital Company <F*> 197,612 $ 4,191,933
Managed Equity Fund
General American Capital Company <F*> 729,650 $ 18,464,706
Asset Allocation Fund
General American Capital Company <F*> 499,332 $ 13,399,141
Equity-Income Fund
Variable Insurance Products Fund 821,516 $ 17,276,490
Growth Fund
Variable Insurance Products Fund 648,275 $ 20,187,291
Overseas Fund
Variable Insurance Products Fund 291,196 $ 5,486,131
<FN>
<F*> These funds use consent dividending. See Note 2C.
See accompanying independent auditors report.
</TABLE>
<PAGE> 66
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington, D.C.
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
If distributed to prospective investors, this report must be
preceded or accompanied by a current prospectus.
The prospectus is incomplete without reference to the
financial data contained in the annual report.
<PAGE> 67
Independent Auditors' Report
The Board of Directors and Policyholders
General American Life Insurance Company:
We have audited the accompanying consolidated balance sheets of General
American Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations, policyholders'
surplus, and cash flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of General American Life Insurance Company and subsidiaries as of December
31, 1996 and 1995, and the results of their consolidated operations and their
consolidated cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 120,
Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating Contracts in
1996.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
March 5, 1997
[PHOTO]
[PHOTO]
<PAGE> 68
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
As of December 31
Assets 1996 1995
- --------------------------------------------------
<S> <C> <C>
Fixed maturities:
Available-for-sale, at fair value $ 6,758,309 5,621,482
Mortgage loans, net 2,273,627 1,709,115
Real estate, net 203,767 210,170
Equity securities, at fair value 20,905 17,087
Policy loans 1,917,861 1,707,237
Short-term investments 55,594 36,141
Other invested assets 183,612 150,885
------------ ----------
Total investments 11,413,675 9,452,117
Cash and cash equivalents 142,724 144,897
Accrued investment income 148,419 132,144
Reinsurance recoverables 3,515,640 3,104,931
Deferred policy acquisition costs 652,251 526,939
Other assets 406,943 383,975
Separate account assets 2,833,258 2,182,101
------------ ----------
Total assets $ 19,112,910 15,927,104
============ ==========
Liabilities and Policyholders' Surplus
- -------------------------------------------------
Policy and contract liabilities:
Future policy benefits $ 4,238,033 3,907,522
Policyholder account balances:
Universal life 1,419,184 1,198,298
Annuities 4,300,070 4,314,642
Pension funds 3,306,351 1,798,514
Policy and contract claims 352,433 337,781
Dividends payable to policyholders 103,019 90,323
------------ ----------
Total policy and contract liabilities 13,719,090 11,647,080
Amounts payable to reinsurers 393,657 149,735
Notes payable 295,614 208,118
Other liabilities and accrued expenses 670,109 581,416
Deferred tax liability 43,277 50,391
Separate account liabilities 2,810,907 2,168,933
------------ ----------
Total liabilities 17,932,654 14,805,673
Minority interests 182,469 164,348
Policyholders' surplus:
Unassigned funds 983,222 893,887
Foreign currency translation adjustments (35,802) (34,259)
Unrealized gain on investments, net of taxes 50,367 97,455
------------ ----------
Total policyholders' surplus 997,787 957,083
------------ ----------
Total liabilities and policyholders' surplus $ 19,112,910 15,927,104
============ ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 69
Consolidated Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
Years ended December 31
Revenues 1996 1995 1994
- -------------------------------------------------
<S> <C> <C> <C>
Insurance premiums and other considerations $ 1,623,228 1,498,013 1,597,814
Net investment income 790,897 669,443 551,471
Ceded commissions 27,538 14,908 31,208
Other income 274,277 176,662 150,305
Net realized investment gains (losses) 24,531 280,756 (50,066)
------------ --------- ---------
Total revenues 2,740,471 2,639,782 2,280,732
Benefits and Expenses
- -------------------------------------------------
Policy benefits 934,369 831,811 955,683
Interest credited to policyholder account balances 301,678 227,512 167,625
------------ --------- ---------
Total policyholder benefits 1,236,047 1,059,323 1,123,308
Dividends to policyholders 171,904 264,658 141,546
Policy acquisition costs 143,094 138,811 105,288
Other insurance and operating expenses 1,026,412 790,266 808,317
------------ --------- ---------
Total benefits and expenses 2,577,457 2,253,058 2,178,459
------------ --------- ---------
Income before provision for income taxes
and minority interest 163,014 386,724 102,273
------------ --------- ---------
Provision for income taxes:
Current 45,902 115,769 61,508
Deferred 13,992 29,411 (8,839)
------------ --------- ---------
Total provision for income taxes 59,894 145,180 52,669
------------ --------- ---------
Income before minority interest 103,120 241,544 49,604
Minority interest in earnings of consolidated
subsidiaries (19,888) (17,512) (21,732)
------------ --------- ---------
Net income $ 83,232 224,032 27,872
============ ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 70
Consolidated Statements of Policyholders' Surplus
(in thousands)
<TABLE>
<CAPTION>
Years ended December 31
Foreign Unrealized
currency gain (loss) on Total
Unassigned translation investments, policyholders'
funds adjustments net of taxes surplus
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ 641,315 (36,219) (356) 604,740
Implementation of SFAS No. 115 79,152 79,152
Net income 27,872 27,872
Foreign currency translation adjustments (3,948) (3,948)
Change in unrealized gain (loss) on
investments, net of tax (144,205) (144,205)
Other, net (2,468) (2,468)
----------------------------------------------------------------
Balance at December 31, 1994 666,719 (40,167) (65,409) 561,143
Net income 224,032 224,032
Foreign currency translation adjustments 5,908 5,908
Change in unrealized gain (loss) on
investments, net of tax 162,864 162,864
Other, net 3,136 3,136
---------------------------------------------------------------
Balance at December 31, 1995 893,887 (34,259) 97,455 957,083
Net income 83,232 83,232
Foreign currency translation adjustments (1,543) (1,543)
Change in unrealized gain (loss) on
investments, net on tax (47,088) (47,088)
Other, net 6,103 6,103
---------------------------------------------------------------
Balance at December 31, 1996 $ 983,222 (35,802) 50,367 997,787
===============================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 71
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Years ended December 31
Cash flows from operating activities 1996 1995 1994
- -------------------------------------------------
<S> <C> <C> <C>
Net income $ 83,232 224,032 27,872
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Change in:
Accrued investment income (16,275) (22,202) (25,489)
Reinsurance recoverables (410,709) 262,054 (92,099)
Deferred policy acquisition costs (87,249) (23,141) (47,268)
Other assets (16,248) (67,650) 8,401
Future policy benefits 330,511 399,261 466,069
Policy and contract claims 14,652 74,173 54,108
Other liabilities and accrued expenses 315,667 184,756 (222,015)
Deferred income taxes 14,505 29,411 (8,839)
Policyholder considerations (144,748) (140,475) (113,557)
Interest credited to policyholder account balances 301,678 227,512 167,625
Amortization and depreciation 28,375 19,196 19,116
Net realized investment (gains) losses (24,531) (280,756) 50,066
Other, net (14,554) 2,488 12,527
----------- ----------- -----------
Net cash provided by operating activities 374,306 888,659 296,517
----------- ----------- -----------
Cash flows from investing activities
- -------------------------------------------------
Proceeds from investments sold or redeemed:
Fixed maturities available-for-sale 1,822,169 1,482,122 816,952
Mortgage loans 182,650 206,520 135,503
Equity securities 13,427 468,143 38,868
Short-term and other invested assets 84,748 414,102 59,429
Cost of investments purchased in:
Fixed maturities available-for-sale (3,428,943) (3,010,016) (1,245,700)
Fixed maturities held-to-maturity - (3,068) (45,263)
Equity securities (39,553) (89,062) (16,822)
Short-term and other invested assets (97,426) (16,471) (17,316)
Mortgage loan originations (593,438) (431,043) (309,433)
Maturity of fixed maturities held-to-maturity - 6,365 9,002
Maturity of fixed maturities available-for-sale 225,087 75,518 62,716
Increase in policy loans, net (210,624) (211,526) (168,547)
Investments in subsidiaries (4,807) (126,363) -
----------- ----------- -----------
Net cash used in investing activities (2,046,710) (1,234,779) (680,611)
----------- ----------- -----------
Cash flows from financing activities
- -------------------------------------------------
Net deposits 1,558,153 259,695 445,279
Issuance of debt 106,903 100,219 107,000
Repayment of debt (19,497) (4,800) (37,285)
Dividends (1,832) (4,376) (4,124)
Other, net 26,770 17,498 21,563
----------- ----------- -----------
Net cash provided by financing activities 1,670,497 368,236 532,433
----------- ----------- -----------
Effect of exchange rate changes (266) 5,908 (7,922)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (2,173) 28,024 140,417
Cash and cash equivalents at beginning of year 144,897 116,873 (23,544)
----------- ----------- -----------
Cash and cash equivalents at end of year $ 142,724 144,897 116,873
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 72
Notes to Consolidated Financial Statements
(1) Basis of Presentation and Summary of Significant Accounting Policies
General American Life Insurance Company (General American or the Company) is
a mutual life insurance company originally incorporated as a stock life
insurance company under the laws of Missouri in 1933, which began operations
as a mutual company in 1936. The consolidated financial statements include
the assets, liabilities, and results of operations of General American and
its wholly owned subsidiaries, General American Holding Company, a
non-insurance holding company; Cova Corporation, an insurance holding
company; Paragon Life Insurance Company; Security Equity Life Insurance
Company; General Life Insurance Company of America; General Life Insurance
Company and its 63 percent owned subsidiary, Reinsurance Group of America,
Incorporated (RGA), an insurance holding company. All significant intercompany
balances and transactions have been eliminated.
The Company's principal lines of business, conducted through General American
or one of its subsidiaries, are: Individual Life Insurance, Annuities, Group
Life and Health Insurance, Asset Management, and Reinsurance. General
American distributes its products and services primarily through a nationwide
network of general agencies, independent brokers, and group sales and claims
offices. General American (including its subsidiaries) is licensed to do
business in all fifty states, twelve Canadian provinces, Puerto Rico, and the
District of Columbia. Through its subsidiaries, the Company has operations
in Europe, Pacific Rim countries, and Latin America.
In January 1996, General American and Security Mutual Life Insurance Company
(a New York mutual company) entered into a strategic alliance agreement to
market life insurance products more efficiently and to achieve long-term
growth objectives. The agreement includes sharing expertise such as
consulting services, technology sharing, and investment advisory services.
The accompanying consolidated financial statements are prepared on the basis
of generally accepted accounting principles (GAAP). The preparation of
financial statements requires the use of estimates by management which affect
the amounts reflected in the financial statements. Actual results could
differ from those estimates. Accounts that the Company deems to be sensitive
to changes in estimates include future policy benefits and policy and
contract claims, deferred acquisition costs, as well as certain investments.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises. This
interpretation requires mutual life insurance enterprises which have
traditionally issued statutory based financial statements that have been
reported to be in conformity with GAAP, to apply all authoritative accounting
pronouncements in preparing those statements, effective for periods beginning
after December 31, 1994. In January 1995, the FASB issued Statement of
Financial Accounting Standards No. 120 (SFAS 120), Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain
Long Duration Participating Contracts, and the American Institute of
Certified Public Accountants (AICPA) issued Statement of Position 95-1 (SOP
95-1), Accounting for Certain Insurance Activities of Mutual Life
Enterprises, which together define the GAAP model for mutual life insurance
enterprises. These pronouncements define the enterprises and method of
accounting for certain participating life insurance contracts of mutual and
stock life insurance companies that meet the criteria defined in SOP 95-1.
SFAS 120 also deferred implementation of Interpretation No. 40 to be
concurrent with implementation of SFAS 120. SFAS 120 and SOP 95-1 are
effective for financial statements issued for fiscal years beginning after
December 15, 1995. The effect of initially applying this new accounting
model has been reported retroactively through restatement of all periods
presented. The cumulative effect was recorded effective January 1, 1993.
The significant accounting policies of the Company are as follows:
Recognition of Policy Revenue and Related Expenses
For traditional life policies, including participating businesses, premiums
are recognized when due, less allowances for estimated uncollectible
balances. For limited payment contracts, net premiums are recorded as
revenue, and the difference between the gross premium and the net premium is
deferred and recognized in income in a constant relationship to insurance in
force over the estimated policy life.
For universal life and annuity products, contract charges for mortality,
surrender, and expense, other than front-end expense charges, are reported as
income when charged to policyholders' accounts. Expenses consist primarily
of benefit payments in excess of policyholder account values and interest
credited to policyholder accounts. Profits are recognized over the life of
the universal life type contracts through amortization of deferred policy
acquisition costs in relation to the present value of estimated gross profits
from mortality, interest, surrender, and expense charges.
Invested Assets
Fixed Maturity and Equity Securities: Investment securities are accounted for
in accordance with SFAS 115, Accounting for Certain Investments in Debt and
Equity Securities. SFAS 115 requires debt and equity securities to be
classified into categories of available-for-sale, trading securities, or
held-to-maturity depending on an entity's ability and positive intent to hold
a security to maturity. Fixed maturities held-to-maturity, including
mortgage-backed and asset-backed securities, are reported at amortized cost
and are classified as such based on the Company's ability and positive intent
to hold such securities to maturity. Fixed maturities available-for-sale are
reported at fair value and are so classified based on the possibility that
such securities could be sold prior to maturity if that action enables the
Company to execute its investment philosophy and appropriately match
investment results to operating and liquidity needs. Effective December 31,
1995, the Company reclassified the entire portfolio of fixed maturities
held-to-maturity to available-for-sale in accordance with the FASB's Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities, which was issued during November 1995. This
reclassification gives the Company an added measure of flexibility in
managing credit quality in coordination with appropriate asset/liability
matching. Equity securities are carried at fair value.
Realized gains or losses on the sale of securities are determined on the
basis of specific identification and include the impact of any related
amortization of premiums or accretion of discounts which is generally
computed consistent with the interest method. Unrealized gains and losses
are recorded, net of related income tax effects, in a separate component of
policyholders' surplus.
<PAGE> 73
Mortgage Loans: Mortgage loans on real estate are stated at an unpaid
principal balance, net of unamortized discounts and valuation allowances.
The valuation allowances on mortgage loans are based on losses expected by
management to be realized on transfers of mortgage loans to real estate, on
the disposition or settlement of mortgage loans and on mortgage loans which
management believes will not be collectible in full. It is the Company's
policy to discontinue the accrual of interest on mortgage loans which are
more than 90 days delinquent. Interest received on nonaccrual mortgage loans
is generally reported as interest income.
Policy Loans, Real Estate and Other Invested Assets: Policy loans are carried
at an unpaid principal balance and are generally secured. Investment real
estate which the Company has the intent to hold for the production of income
is carried at depreciated cost plus capital additions, net of writedowns for
other than temporary declines in fair value and net of encumbrances.
Properties held for sale (primarily acquired through foreclosure) are carried
at the lower of depreciated cost (fair value at foreclosure plus capital
additions less accumulated depreciation and encumbrances) or fair value less
estimated selling costs. Adjustments to carrying value of properties held
for sale are recorded in a valuation reserve when the fair value less
estimated selling costs is below depreciated cost. The accumulated
depreciation and encumbrances on real estate amounted to $53.0 million and
$55.2 million at December 31, 1996 and 1995, respectively. Direct valuation
allowances amounted to $15.7 million and $25.4 million at December 31, 1996
and 1995, respectively. Other invested assets are recorded at amortized cost
less allowances for other than temporary declines in value.
Short-term Investments: Short-term investments, consisting primarily of money
market instruments and other debt issues purchased with a maturity of less
than a year, are carried at amortized cost, which approximates fair value.
Invested Asset Impairment and Valuation Allowances: Invested assets are
considered impaired when General American determines that collection of all
amounts due under the contractual terms is doubtful. General American
adjusts invested assets to their estimated net realizable value at the point
at which it determines an impairment is other than temporary. In addition,
General American has established valuation allowances for mortgage loans and
other invested assets. Valuation allowances for other than temporary
impairments in value are netted against the asset categories to which they
apply. Additions to valuation allowances are included in net investment
income.
Cash and Cash Equivalents: For purposes of reporting cash flows, cash and
cash equivalents represent cash, demand deposits and highly liquid short-term
investments, which include U.S. Treasury bills, commercial paper, and
repurchase agreements with original or remaining maturities of 90 days or
less when purchased.
Investment Income
Bond premium and discounts are amortized into income using the scientific
yield method over the term of the security. Amortization of the premium or
discount on mortgage-backed securities is recognized using a scientific yield
method which considers the estimated timing and amount of prepayments of
underlying mortgage loans. Actual prepayment experience is periodically
reviewed and effective yields are recalculated when differences arise between
the prepayments originally anticipated and the actual prepayments received
and currently anticipated. When such differences occur, the net investment
in the mortgage-backed security is adjusted to the amount that would have
existed had the new effective yield been applied since the acquisition of the
security with a corresponding charge or credit to interest income (the
"retrospective method").
Policy and Contract Liabilities
For traditional life insurance policies, future policy benefits and dividend
liabilities are computed using a net level premium method with actuarial
assumptions as to mortality, persistency, and interest established at policy
issue. Assumptions established at policy issue as to mortality and
persistency are based on industry standards and General American's historical
experience which, together with interest and expense assumptions, provide a
margin for adverse deviation. Interest rate assumptions generally range from
2.5 percent to 11.0 percent. When the liabilities for future policy benefits
plus the present value of expected future gross premiums are insufficient to
provide for expected policy benefits and expenses, unrecoverable deferred
policy acquisition costs are written off and thereafter a premium deficiency
reserve is established through a charge to earnings.
For participating policies, future policy benefits are computed using a net
level premium method based on the guaranteed cash value basis for mortality
and interest. Mortality rates are similar to those used for statutory
valuation purposes. Interest rates generally range from 2.5 percent to 6.0
percent. Dividend liabilities are established by taking the pro rata portion
of the following policy year dividend earned but unpaid. When the liabilities
less unamortized acquisition expenses are insufficient to provide for future
policy benefits and expenses under best estimate assumptions, the
unrecoverable deferred policy acquisition costs are written off and, if
necessary, an additional reserve established.
Policyholder account balances for universal life and annuity policies are
equal to the policyholder account value before deduction of any surrender
charges. The policyholder account value represents an accumulation of gross
premium payments plus credited interest less expense and mortality charges
and withdrawals. These expense charges are recognized in income as earned.
Weighted average interest crediting rates were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Universal life 6.00-7.56 % 6.00-7.87 % 6.00-7.36 %
Annuities 5.70-6.00 % 5.69-6.29 % 5.87 %
</TABLE>
Accident and health benefits for active lives are calculated using the net
level premium method and assumptions as to future morbidity, withdrawals, and
interest which provide a margin for adverse deviation. Benefit liabilities
for disabled lives are calculated using the present value of benefits method
and experience assumptions for claim termination, expense, and interest which
also provide a margin for adverse deviation.
Policy and Contract Claims
General American establishes a liability for unpaid claims based on estimates
of the ultimate cost of claims incurred, which is comprised of aggregate case
basis estimates, average claim costs for reported claims, and estimates of
unreported losses based on past experience. Policy and contract claims
include a provision for both life and accident and health claims. Management
believes the liabilities for unpaid claims are adequate to cover the ultimate
liability; however, due to the underlying risks and the high degree of
uncertainty associated with the determination of the liability for unpaid
claims, the amounts which will ultimately be paid to settle these liabilities
cannot be determined precisely and may vary from the estimated amount
included in the consolidated balance sheets.
<PAGE> 74
Deferred Policy Acquisition Costs
The costs of acquiring new business, which vary with and are primarily
related to the production of new business, have been deferred to the extent
that such costs are deemed recoverable from future estimated gross profits of
the underlying business. Such costs include commissions, premium taxes, as
well as certain other costs of policy issuance and underwriting.
For limited payment and other nonparticipating traditional life insurance
policies, the deferred policy acquisition costs are amortized in proportion
to the ratio of the expected annual premium revenue to the expected total
premium revenue. Expected future premium revenue is estimated with the same
assumptions used for computing liabilities for future policy benefits for
these policies.
For participating life insurance, universal life, and annuity type contracts,
the deferred policy acquisition costs are amortized over a period of not more
than thirty years in relation to the present value of estimated gross margins
arising from estimates of mortality, interest, expense, and surrender
experience.
The average rates of assumed interest used in estimated gross margins were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Participating life 8.70 % 7.81 % 6.80 %
Universal life 6.00-8.20 % 6.00-7.56 % 7.45-7.75 %
Annuities 7.83 % 8.04 % 7.31 %
</TABLE>
The estimates of expected gross margins are evaluated regularly and are
revised if actual experience or other evidence indicates that revision is
appropriate. Upon revision, total amortization recorded to date is adjusted
by a charge or credit to current earnings. Under SFAS 115, deferred policy
acquisition costs are adjusted for the impact on estimated gross margins of
net unrealized gains and losses on securities.
Reinsurance
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between
$.1 million and $2.5 million depending on the entity writing the policy.
Reinsurance activities are accounted for consistent with terms of the risk
transfer reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premiums. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as assets
for these items, and commissions and expense allowances received in
connection with reinsurance ceded have been accounted for in income as
earned. Reinsurance does not relieve the Company from its primary
responsibility to meet claim obligations. The Company evaluates the
financial conditions of its reinsurers annually.
Federal Income Taxes
General American and certain of its U.S. subsidiaries file a consolidated
federal income tax return. In order to consolidate, General American must
possess both 80 percent of the total voting power and 80 percent of the value
of the stock of the subsidiary. Further, even if it meets the 80 percent
test, any acquired life insurance company is not included in the consolidated
return until the acquired company has been a member of the group for five
years. Prior to satisfying the five-year requirement, the subsidiary files a
separate federal return. RGA Barbados also files a U.S. tax return. The
Company's Canadian, Argentine, Australian, Chilean, Mexican, and Spanish
subsidiaries are taxed under applicable local statutes.
The Company uses the asset and liability method to record deferred income
taxes. Accordingly, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, using enacted tax rates.
Separate Account Business
The assets and liabilities of the separate accounts represent segregated
funds administered and invested by the Company for purposes of funding
variable life insurance and annuity contracts for the exclusive benefit of
the contract holders. The Company charges the separate accounts for risks it
assumes in issuing a contract and retains varying amounts of withdrawal
charges to cover expenses in the event of early withdrawals by contract
holders. The assets and liabilities of the separate account are carried at
fair value. The Company's participation in the separate accounts (seed
money) is carried at its fair value in the separate account, and amounted to
$22.3 million and $13.2 million at December 31, 1996, and 1995, respectively.
Fair Value of Financial Instruments
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Although fair value estimates are calculated using
assumptions that management believes are appropriate, changes in assumptions
could significantly affect the estimates and such estimates should be used
with care. The following assumptions were used to estimate the fair value of
each class of financial instrument for which it was practicable to estimate
fair value:
Investment securities: Fixed maturities are valued using quoted market
prices, if available. For securities not actively traded, fair values are
estimated using values obtained from independent pricing services or, in the
case of private placements, are estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit quality,
and maturity of investments. Prepayments are assumed to occur at the same
rate as in previous periods when interest rates were at levels similar to
current levels. The fair values of equity securities are based on quoted
market prices.
Mortgage loans: The fair values of mortgage loans are estimated using
discounted cash flow analyses and using interest rates currently being
offered for similar loans to borrowers with similar credit ratings. Loans
with similar characteristics are aggregated for purposes of the calculations.
Real estate: The fair value of real estate is based on market values for
comparable local real estate.
Policy loans: The fair value of policy loans approximates the carrying value.
The majority of these loans are indexed, with yield tied to a stated return.
Policyholder account balances on investment type contracts: Fair values for
the Company's liabilities under investment-type contracts are estimated using
discounted cash flow calculations based on interest rates currently being
offered for similar contracts with maturities consistent with those remaining
for the contracts being valued.
Separate account assets and liabilities: The separate account assets and
liabilities are carried at fair value as determined by the market value of
the underlying segregated investments.
Short-term investments and cash and cash equivalents: The carrying amount is
considered a reasonable estimate of fair value.
<PAGE> 75
Notes payable: The fair value of notes payable is estimated using discounted
cash flow calculations based on interest rates currently being offered for
similar instruments.
(2) Acquisitions and Divestitures
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now
known as Cova Corporation (Cova). At acquisition, Cova had total assets of
approximately $635.6 million. The purchase price of approximately $107.7
million was funded from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation and Subsidiaries (Conning), an investment management
firm, whereby the Company acquired Conning and subsequently contributed
Conning and General American Investment Management Company, a wholly owned
subsidiary, to form Conning Asset Management Company (CAM). At acquisition,
Conning had total assets of approximately $16.0 million. The purchase price
consisted of approximately $13.0 million in cash (from the Company's
operations) and 3.2 million shares of CAM convertible redeemable preferred
stock, with fair value of approximately $17.0 million.
These transactions were accounted for using the purchase method of
accounting. The results of operations of the acquired entities are included
in the consolidated financial statements subsequent to the respective
acquisition dates. The excess of cost over fair value of net assets acquired
amounted to approximately $56.6 million and $23.1 million for Cova and
Conning, respectively, and is being amortized over approximately 20 years.
On January 3, 1995, the Company sold its 72 percent ownership in GenCare
Health Systems, Inc. to United HealthCare Corporation. Proceeds received net
of expenses were $365.0 million and the net realized gain on sale was $170.2
million.
(3) Investments
Fixed maturities and equity securities
The amortized cost and estimated fair value of fixed maturity and equity
securities at December 31, 1996 and 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
1996
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 28,980 368 (151) 29,197
Government agency obligations 343,945 41,324 (970) 384,299
Corporate securities 4,071,775 158,361 (39,623) 4,190,513
Mortgage-backed securities 1,949,717 18,927 (14,386) 1,954,258
Asset-backed securities 198,934 1,599 (491) 200,042
-----------------------------------------------------------
Total fixed maturities
available-for-sale $ 6,593,351 220,579 (55,621) 6,758,309
===========================================================
Equity securities $ 21,460 1,137 (1,692) 20,905
===========================================================
<CAPTION>
1996
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 37,216 1,089 (12) 38,293
Government agency obligations 444,936 39,406 (1,151) 483,191
Corporate securities 3,500,376 252,109 (18,477) 3,734,008
Mortgage-backed securities 1,213,081 34,343 (2,071) 1,245,353
Asset-backed securities 118,004 2,660 (27) 120,637
-----------------------------------------------------------
Total fixed maturities
available-for-sale $ 5,313,613 329,607 (21,738) 5,621,482
===========================================================
Equity securities $ 14,239 5,190 (2,342) 17,087
===========================================================
</TABLE>
General American manages its credit risk associated with fixed maturities by
diversifying its portfolio. At December 31, 1996, General American held no
corporate debt securities or foreign government debt securities of a single
issuer which had a carrying value in excess of 10 percent of policyholders'
surplus.
The carrying value of the Company's investments in principal-only securities
and interest-only securities totaled approximately $7.4 million and $14.9
million or approximately .05 percent and .1 percent of total invested assets
at December 31, 1996 and 1995, respectively.
The amortized cost and estimated fair value of fixed maturities at December
31, 1996, by contractual maturity, are shown below (in thousands). Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
<S> <C> <C>
Due in one year or less $ 67,398 68,130
Due after one year through five years 937,312 953,122
Due after five years through ten years 1,664,499 1,683,183
Due after ten years through twenty years 1,974,425 2,099,616
Mortgage-backed securities 1,949,717 1,954,258
----------------------------
Total $ 6,593,351 6,758,309
============================
</TABLE>
The sources of net investment income follow (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Fixed maturities $ 471,038 373,564 299,096
Mortgage loans 171,781 143,047 139,392
Real estate 39,062 37,108 41,498
Equity securities 755 622 544
Policy loans 133,511 127,920 104,437
Short-term investments 13,979 26,920 10,059
Other 9,705 (369) 1,019
----------------------------------------
Investment revenue 839,831 708,812 596,045
Investment expenses (48,934) (39,369) (44,574)
----------------------------------------
Net investment income $ 790,897 669,443 551,471
========================================
</TABLE>
<PAGE> 76
Net realized gains (losses) from sales of investments consist of the
following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S>
Fixed maturities: <C> <C> <C>
Realized gains $ 27,928 30,139 14,304
Realized losses (10,398) (9,000) (29,761)
Equity securities:
Realized gains 6,146 306,142 5,649
Realized losses (288) (5,259) (2,282)
Other investments, net 1,143 (41,266) (37,976)
-----------------------------------------
Net realized investment gains (losses) $ 24,531 280,756 (50,066)
=========================================
</TABLE>
A summary of the components of the net unrealized appreciation (depreciation)
on invested assets carried at fair value is as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995
<S>
Unrealized appreciation (depreciation): <C> <C>
Fixed maturities available-for-sale $ 164,957 308,203
Equity securities and short-term investments 605 (8)
Deferred policy acquisition costs (70,038) (130,091)
Effect on present value of future profits 1,986 (7,021)
Deferred income taxes (36,705) (61,414)
Minority interest, net of taxes (10,438) (12,214)
----------------------------
Net unrealized appreciation $ 50,367 97,455
============================
</TABLE>
The Company has securities on deposit with various state insurance
departments and regulatory authorities with an amortized cost of
approximately $278.6 million and $202.2 million at December 31, 1996, and
1995, respectively.
Mortgage loans
The Company originates mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light
industrial facilities. Loan to value ratios at the time of loan approval are
80 percent or less. The Company monitors creditworthiness of the borrowers
by using controls that include credit approvals, limits, and other monitoring
mechanisms. The Company minimizes risk through geographic and property type
diversification. The Company's mortgage loans were distributed as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Arizona $ 185,575 8.0 % $ 113,555 6.5 %
California 378,376 16.4 281,191 16.1
Colorado 226,531 9.8 212,295 12.1
Florida 193,570 8.4 189,967 10.8
Georgia 141,442 6.1 58,448 3.3
Illinois 183,883 8.0 162,072 9.3
Maryland 99,944 4.3 85,057 4.9
Missouri 102,111 4.4 85,669 4.9
Texas 225,697 9.8 156,528 8.9
Virginia 92,663 4.0 82,705 4.7
Other 481,546 20.8 323,448 18.5
------------------------------------------------------
Subtotal 2,311,338 100.0 % 1,750,935 100.0 %
Valuation reserve (37,711) (41,820)
------------------------------------------------------
Total $ 2,273,627 $ 1,709,115
======================================================
<CAPTION>
1996 1995
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Property Type
Apartment $ 131,352 5.7 % $ 96,209 5.5 %
Retail 966,298 41.8 681,740 38.9
Office building 641,204 27.7 487,763 27.9
Industrial 479,755 20.8 416,354 23.8
Other commercial 92,729 4.0 68,869 3.9
------------------------------------------------------
Subtotal 2,311,338 100.0 % 1,750,935 100.0 %
Valuation reserve (37,711) (41,820)
------------------------------------------------------
Total $ 2,273,627 $ 1,709,115
======================================================
</TABLE>
SFAS 114, Accounting by Creditors for Impairment of a Loan, which was amended
by SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures, requires that an impaired loan be measured at
the present value of expected future cash flows or, alternatively, the
observable market price or the fair value of the collateral. General
American adopted these standards as of January 1, 1995, with no material
impact.
Mortgage loans which have been non-income producing for the preceding twelve
months were $5.1 million and $25.8 million at December 31, 1996 and 1995,
respectively. At December 31, 1996 and 1995, the recorded investment in
mortgage loans that were considered impaired under SFAS 114 was $86.5 million
and $129.3 million, respectively, with related allowances for credit losses
of $8.0 million and $16.9 million, respectively. The average recorded
investment in impaired loans during 1996 and 1995 was $107.9 million and
$174.9 million, respectively. For the years ended December 31, 1996 and
1995, the Company recognized $6.6 million and $11.9 million, respectively, of
interest income on those impaired loans, which included $6.7 million and
$12.0 million, respectively, of interest income recognized using the cash
basis method of income recognition.
The Company has outstanding mortgage loan commitments as of December 31, 1996
totalling $227.0 million. During 1995, the Company entered into an agreement
whereby approximately $109.8 million of mortgage loans were sold by the
Company for securitization and resale by a financial institution as mortgage
pass-through certificates. In conjunction with this transaction, the Company
entered into futures positions to hedge against interest rate risk. The sale
of these mortgage loans resulted in a net loss of approximately $.4 million.
In addition, the close-out of the futures positions related to this
transaction resulted in a net loss of approximately $6.4 million.
Derivatives
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company is
sensitive to interest rate changes, as its liabilities may reprice or mature
before interest-earning assets. The Company manages interest rate risk on
certain contracts, primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with counterparties to
exchange, at specified intervals, the payments between floating and
fixed-rate interest amounts calculated by reference to notional amounts. Net
interest payments are recognized within net investment income in the
consolidated statements of operations.
At December 31, 1996, the Company has eight outstanding interest rate swap
agreements which expire at various dates through 2026. Under four of the
agreements, the Company receives a fixed rate ranging from 5.8 percent to 6.9
percent on $15.4 million and pays a floating rate based on the London
Interbank Offered Rate (LIBOR).
<PAGE> 77
Under the remaining four agreements, the Company receives a floating rate
based on LIBOR on $25.0 million and pays a fixed rate ranging from 6.5 percent
to 8.3 percent. The estimated fair value of the agreements was a net loss of
approximately $2.0 million, which is not recognized in the accompanying
consolidated balance sheet. At December 31, 1995 the Company's exposure to
derivative financial instruments was not material.
The Company is exposed to credit related risk in the event of nonperformance
by counterparties to financial instruments but does not expect any
counterparties to fail to meet their obligations. Where appropriate, master
netting agreements are arranged and collateral is obtained in the form of
rights to securities to lower the Company's exposure to credit risk. It is
the Company's policy to deal only with highly rated companies.
(4) Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1996 and 1995. SFAS
107, Disclosures about the Fair Value of Financial Instruments, defines fair
value of a financial instrument as the amount at which the instrument could
be exchanged in a current transaction between willing parties (in thousands):
<TABLE>
<CAPTION>
1996 1995
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S>
Assets: <C> <C> <C> <C>
Fixed maturities $ 6,758,309 6,758,309 5,621,482 5,621,482
Mortgage loans 2,273,627 2,354,072 1,709,115 1,825,000
Real estate 203,767 254,387 210,170 259,664
Equity securities 20,905 20,905 17,087 17,087
Policy loans 1,917,861 1,917,861 1,707,237 1,707,237
Short-term investments 55,594 55,594 36,141 36,141
Other invested assets 183,612 183,628 150,885 150,885
Separate account assets 2,833,258 2,833,258 2,182,101 2,182,101
Liabilities:
Policyholder account
balances relating to
investment contracts 5,920,651 5,829,603 5,212,444 5,138,433
Notes payable 295,614 293,913 208,118 215,969
Separate account liabilities 2,810,907 2,810,907 2,168,933 2,168,933
</TABLE>
(5) Reinsurance
The Company is a major reinsurer to the life and health industry. The effect
of reinsurance on premiums and other considerations is as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Direct $ 1,097,340 1,069,248 1,245,112
Assumed 827,171 700,152 615,870
Ceded (301,283) (271,387) (263,168)
------------------------------------
Net insurance premiums and
other considerations $ 1,623,228 1,498,013 1,597,814
====================================
</TABLE>
Reinsurance assumed represents approximately $160.0 billion, $157.9 billion,
and $160.0 billion, of insurance in force at December 31, 1996, 1995, and
1994, respectively. The amount of ceded insurance in force, including
retrocession, was $53.2 billion, $48.7 billion, and $46.3 billion, for 1996,
1995, and 1994, respectively.
On July 1, 1995 RGA entered into reinsurance agreements with another company,
wherein RGA assumed virtually all of the life, health, and annuity financial
reinsurance inforce retained by the other company at that time. RGA
simultaneously entered into reinsurance agreements wherein RGA retroceded to
various retrocessionaires all of the financial reinsurance assumed under the
above clients, while retaining a net risk charge margin.
(6) Federal Income Taxes
Income tax expense (benefit) attributable to income from continuing
operations consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current income tax expense $ 45,902 115,769 61,508
Deferred income tax expense (benefit) 13,992 29,411 (8,839)
---------------------------------
Provision for income taxes $ 59,894 145,180 52,669
=================================
</TABLE>
Income tax expense attributable to income from operations differed from the
amounts computed by applying the U.S. federal income tax rate of 35 percent
to pre-tax income as a result of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Computed "expected" tax expense $ 57,055 135,353 35,796
Increase (decrease) in income tax
resulting from:
Surplus tax on mutual life
insurance companies 4,777 - 15,674
Foreign tax rate in excess of
U.S. tax rate 941 763 683
Tax preferred investment income (7,318) (5,784) (2,660)
State tax net of federal benefit 971 292 296
GAAP/tax basis difference on GenCare - 15,710 -
Goodwill amortization 895 567 609
Difference in book vs. tax basis in
domestic subsidiaries 2,230 1,547 -
Other, net 343 (3,268) 2,271
---------------------------------
Provision for income taxes $ 59,894 145,180 52,669
=================================
</TABLE>
Total income taxes were allocated as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Provision for income taxes from
continuing operations $ 59,894 145,180 52,669
Income tax from policyholders' surplus:
Unrealized holding gain or loss on debt
and equity securities recognized for
financial reporting purposes (24,612) 99,871 (38,420)
Other (1,023) - -
---------------------------------
Total income tax $ 34,259 245,051 14,249
=================================
</TABLE>
<PAGE> 78
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1996 and 1995
are presented below (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets:
Reserve for future policy benefits $ 138,848 130,043
Deferred acquisition costs capitalized for tax 95,332 88,099
Difference in basis of post retirement benefits 13,993 -
Net operating loss 22,789 11,578
Other, net 106,263 192,305
----------------------
Gross deferred tax assets 377,225 422,025
Less valuation allowance 1,299 778
----------------------
Total deferred tax asset after valuation allowance 375,926 421,247
======================
Deferred tax liabilities:
Unrealized gain on investments 63,204 109,720
Deferred acquisition costs capitalized
for financial reporting 246,858 187,709
Difference in the tax basis of cash
and invested assets 19,222 20,609
Other, net 89,919 153,600
----------------------
Total deferred tax liabilities 419,203 471,638
----------------------
Net deferred liability $ 43,277 50,391
======================
</TABLE>
The Company has not recognized a deferred tax liability for the undistributed
earnings of its wholly owned domestic and foreign subsidiaries because the
Company currently does not expect those unremitted earnings to become taxable
to the Company in the foreseeable future. This is because the unremitted
earnings will not be repatriated in the foreseeable future, or because those
unremitted earnings that may be repatriated will not be taxable through the
application of tax planning strategies that management would utilize.
As of December 31, 1996, the Company has provided for a 100 percent valuation
allowance against the deferred tax asset related to the net operating losses
of RGA's Australian, Argentine, and UK subsidiaries, Genelco's Spanish and
Mexican subsidiaries, and International Underwriting Services. As of December
31, 1995, the Company has provided a 100 percent valuation allowance against
the deferred tax asset related to International Underwriting Services' net
operating loss and to Genelco's Mexican and Spanish net operating losses.
International Underwriting Services' losses are not shown as deferred tax
benefits because this subsidiary has had no prior earnings history.
At December 31, 1996, the Company had capital loss carryforwards of $0.9
million. During 1996, 1995, and 1994 the Company paid income taxes totaling
approximately $20.7 million, $121.7 million, and $34.4 million, respectively.
At December 31, 1996, the Company's subsidiaries had recognized deferred tax
assets associated with net operating loss carryforwards of approximately
$61.4 million. The net operating loss and capital losses are expected to be
utilized during the period allowed for carryforwards.
(7) Deferred Policy Acquisition Costs
A summary of the policy acquisition costs deferred and amortized is as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $ 526,939 664,452 587,546
Policy acquisition costs deferred 206,790 163,218 150,406
Policy acquisition costs amortized (182,038) (176,216) (138,813)
Interest credited 38,944 37,405 33,525
Deferred policy acquisition costs relating
to change in unrealized (gain) loss on
investments available for sale 61,616 (161,920) 31,788
-----------------------------------
Balance at end of year $ 652,251 526,939 664,452
===================================
</TABLE>
(8) Associate Benefit Plans and Postretirement Benefits
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several non-qualified, defined benefit, and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Service cost $ 5,421 4,074 4,661
Interest 8,047 7,160 6,306
Return on plan assets (14,207) (27,984) 3,161
Amortization and deferral 4,646 19,841 (13,305)
Other 192 - -
----------------------------------
Pension costs $ 4,099 3,091 823
==================================
</TABLE>
<PAGE> 79
The following table presents the plans' funded status and amount recognized
in the Company's consolidated balance sheets at December 31, 1996 and 1995
based on the actuarial valuations as of December 31, 1996 and 1995 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
Qualified Other Qualified Other
Plans Plans Plans Plans
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$74,223 and $18,560 for 1996 and
$66,060 and $15,479 for 1995 $ 76,928 26,897 68,411 25,366
--------- -------- ------- --------
Projected benefit obligation for service
rendered to date 92,825 29,726 82,663 27,874
Plan assets at fair value, primarily
listed stocks and bonds 128,545 118,056
Plan assets in excess (less than)
projected benefit obligations 35,720 (29,726) 35,393 (27,874)
Unrecognized net transition
obligation at December 31 2,701 2,538
-------- --------
Pension cost funded in advance $ 35,720 35,393
========= =======
Accrued pension liability (27,025) (25,336)
======== ========
</TABLE>
Assumptions used for the December 31, 1996 and 1995 projected benefit
obligation included a 7.25 percent current discount rate, a 4.50 percent
increase rate for future compensation levels, and a 9.25 percent projected
return on plan assets.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service.
Contributions to the plan are determined annually by the Board of Directors
and are based upon salaries of eligible associates. Full vesting occurs
after five years of continuous service. The Company's contribution to the
plan was $8.8 million, $9.2 million, and $1.6 million for 1996, 1995, and
1994, respectively.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees
may become eligible for these benefits if they reach retirement age while
working for the Company. Alternatively, retirees may elect certain prepaid
health care benefit plans.
The Company uses the accrual method to account for the costs of its retiree
benefit plans and amortizes its transition obligation for retirees and fully
eligible or vested employees over 20 years. The unamortized transition
obligation was $17.8 million and $19.0 million at December 31, 1996 and 1995,
respectively. Net postretirement benefit costs for the years ended December
31, 1996, 1995, and 1994 were $5.8, million, $5.4 million, and $5.0 million,
respectively, and include the expected cost of such benefits for newly
eligible or vested employees, interest cost, gains and losses arising from
difference between actuarial assumptions and actual experience, and
amortization of the transition obligation.
Assumptions used were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Discount rate in determining benefit obligations 7.25 % 8.25 %
Healthcare cost trend
First year:
Indemnity plan 9.0 10.0
HMO plan 8.0 9.0
Dental plan 9.0 10.0
Ultimate 5.25 6.00
</TABLE>
The health care cost trend rate assumption has a significant effect on the
amount reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1996 by $5.4
million or 12.9 percent. The aggregate of the service cost and interest cost
components of net periodic postretirement benefit cost for 1996 would
increase by $.7 million or 16 percent.
(9) Notes Payable
On January 14, 1994, the Company issued surplus notes with a face amount of
$107.0 million bearing a 7.625 percent interest rate due in 2024. The notes
pay interest on January 15 and July 15 of each year. The notes are not
subject to redemption prior to maturity. Payment of principal and interest
on the notes may be made only with the approval of the Missouri Director of
Insurance.
In December 1996 the Company obtained a note payable for $80.5 million with a
financial institution. The note is secured by bonds with a carrying value of
$91.6 million. This note bears a fixed interest rate at 5.55 percent and
matures on March 27, 1997.
On March 19, 1996, RGA issued 7.25 percent senior notes with a face value of
$100.0 million in accordance with Rule 144A of the Securities Act of 1933, as
amended. The net proceeds from the offering were approximately $98.9
million, and interest is payable semiannually on April 1 and October 1, with
the principal amount due April 1, 2006. The ability of RGA to make debt
principal and interest payments as well as make dividend payments to
shareholders is ultimately dependent on the earnings and surplus of its
subsidiaries and the investment earnings on the undeployed debt proceeds.
The transfer of funds from the insurance subsidiaries to Reinsurance Group of
America, Incorporated is subject to applicable insurance laws and
regulations.
On January 8, 1996, RGA Australian Holdings PTY, Limited, a wholly owned
subsidiary of RGA, established a $15.9 million unsecured, three month,
revolving line of credit. The debt is guaranteed by RGA and is utilized to
provide operating capital to RGA Australia. The current outstanding balance
is $7.6 million, representing drawdowns of $5.6 million in January 1996 and
$2.0 million in July 1996. Principal repayments are due in April 1997 and
are expected to be renewed under the terms of the line of credit. Interest
is paid every three months at a current rate between 7.03 percent and 7.08
percent.
Interest paid on debt during 1996, 1995, and 1994 amounted to $19.9 million,
$9.0 million, and $3.9 million, respectively.
<PAGE> 80
(10) Regulatory Matters
The Company is subject to financial statement filing requirements of the
State of Missouri Department of Insurance, in its state of domicile, as well
as the states in which it transacts business. Such financial statements,
generally referred to as statutory financial statements, are prepared on a
basis of accounting which varies in some respects from GAAP. Statutory
accounting practices include: (1) charging of policy acquisition costs to
income as incurred; (2) establishment of a liability for future policy
benefits computed using required valuation standards; (3) nonprovision of
deferred federal income taxes resulting from temporary differences between
financial reporting and tax bases of assets and liabilities; (4) recognition
of statutory liabilities for asset impairments and yield stabilization on
fixed maturity dispositions prior to maturity with asset valuation reserves
based on a statutorily determined formulas; and (5) valuation of investments
in bonds at amortized cost.
Combined net income and policyholders' surplus, for the years ended and at
December 31, 1996, 1995, and 1994, of the Company, as determined in
accordance with statutory accounting practices, are as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net income (loss) $ 18,464 236,962 (13,875)
Policyholders' surplus $ 636,260 589,783 496,333
</TABLE>
Under the NAIC solvency monitoring program known as Risk-Based Capital (RBC),
General American and its insurance subsidiaries are required to measure its
solvency against certain parameters. As of December 31, 1996, General
American and its subsidiaries exceeded the established minimums in the RBC
program. In addition, General American and its subsidiaries exceeded the
minimum statutory capital and surplus requirements of their respective states
of domicile.
The Company's insurance subsidiaries are subject to limitations on the
payment of dividends to the Company. Generally, dividends during any year
may not be paid without prior regulatory approval, in excess of the lessor of
(and with respect to life and health subsidiaries in Missouri, in excess of
the greater of): (a) 10 percent of the insurance subsidiaries' statutory
surplus as of the preceding December 31 or (b) the insurance subsidiaries'
statutory gain from operations for the preceding year.
(11) Lease Commitments
The Company has entered into operating leases for office space and other
assets, principally office furniture and equipment. Future minimum lease
obligations under noncancelable leases are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Year ended December 31:
1997 $ 15,180
1998 13,348
1999 11,869
2000 8,489
2001 6,454
2002 2,622
</TABLE>
Operating lease expense totaled $17.0 million, $11.6 million, and $10.4
million in 1996, 1995, and 1994, respectively.
(12) Participating Policies and Dividends
to Policyholders
Over 33.9 percent and 33.2 percent of General American's business in force
relates to participating policies as of December 31, 1996 and 1995,
respectively. These participating policies allow the policyholders to
receive dividends based on actual interest, mortality, and expense experience
for the related policies. These dividends are distributed to the
policyholders through an annual dividend, using current dividend scales which
are approved by the Board of Directors.
(13) Contingent Liabilities
From time to time, the Company is subject to insurance-related litigation in
the normal course of business. Management does not believe that the Company
is party to any such pending litigation which would have a material adverse
effect on its financial statements or future operations.
(14) Subsequent Events
In January 1997, pursuant to Missouri's Mutual Holding Company Statute and
with the approval of its policyholders, General American initiated steps to
reorganize and form a mutual holding company structure by (i) forming a
mutual insurance holding company under the insurance laws of the State of
Missouri, to be named General American Mutual Holding Company (MHC), (ii)
forming an intermediate stock holding company under the general corporate
laws of the State of Missouri, to be named GenAmerica Corporation
(GenAmerica), and (iii) amending and restating the Charter and Articles of
Incorporation of General American to authorize the issuance of capital stock
and the continuance of its corporate existence as a stock life insurance
company under the same name.
All of the shares of the reorganized General American will be, as part of the
reorganization, issued to MHC and, shortly after the reorganization, MHC will
transfer all such shares to GenAmerica in exchange for all of the shares of
GenAmerica. As a result, reorganized General American will be a wholly owned
direct subsidiary of GenAmerica which, in turn, will be a wholly owned direct
subsidiary of MHC. MHC will at all times, in accordance with the plan of
reorganization and as required by the Missouri Mutual Holding Company
Statute, directly or indirectly control the reorganized General American
through the ownership of at least a majority of the voting shares of the
capital stock of reorganized General American or GenAmerica.
<PAGE> 81
PART C
OTHER INFORMATION
Item 24. Financial statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1) Resolutions of the Board of Directors of General
American Life Insurance Company ("General American")
authorizing establishment of the Separate Account<F1>
(2) Not Applicable
(3) (a) Form of Distribution Agreement<F4>
(b) Form of Selling Agreement<F2>
(4) (a) Form of tax sheltered group variable
annuity contact (No. V82-300)<F12>
(b) Form of tax sheltered individual
variable annuity certificate (No. V82-301)<F3>
(c) Form of variable annuity (tax
qualified)(No. V82-400)<F12>
(d) Form of individual variable annuity
(non-tax qualified)(No. 10013)<F12>
(e) Form of individual variable annuity (tax
qualified)(No. 10014)<F12>
(f) Form of tax sheltered group variable
annuity contract (No. 10015)<F12>
(g) Form of tax sheltered group variable
annuity certificate (No. 10016)<F12>
(h) Endorsement related to the reorganization of
Separate Account<F11>
(i) Form of endorsement relating to
requirements of Section 408(b) (IRA's)
Internal Revenue Code IRC (No. 1096900)<F11>
(j) Form of endorsement allowing other Fund
sponsors (No. 1098900)<F11>
(k) Form of endorsement relating tax
sheltered annuities, Section 403(b) IRC (No. 1098600)
(l) Form of endorsement relating to tax
sheltered annuities with employer
contribution (No. 1098800)<F11>
(m) Form of endorsement relating to the
Unemployment Compensation Amendments
(No. 1 E6)<F11>
(5) Form of application<F7><F11>
(6) (a) Certificate of Incorporation of General
American<F1>
(b) By-laws of General American<F12>
C-1
<PAGE> 82
(7) Not applicable
(8) Not applicable
(9) Opinion and Consent of Counsel<F6>
(10) Consent of Independent Accountants with financial
statements
(11) No financial statements are omitted from item 23
(12) Not applicable
(13) Not applicable
(14) Copies of manually signed powers of attorney for General American Life
Insurance Company directors August A. Busch, III, William E.
Cornelius, John C. Danforth<F10>, Bernard A. Edison, Richard A. Liddy,
William E. Maritz, Craig D. Schnuck<F9>, William P. Stiritz, Andrew C.
Taylor<F8>, H. Edwin Trusheim, Robert L. Virgil, Jr., Virginia V.
Weldon, and Ted C. Wetterau<F4>.
[FN]
- ----------------
<F1> Incorporated by reference to initial registration
statement, File No. 2-39272
<F2> Incorporated by reference to Pre-Effective Amendment
No. 1 to registration statement of General American
Separate Account Eleven, File No. 33-10146
<F3> Incorporated by reference to initial registration
statement of the Separate Account and General American
Capital Company, File No. 33-15347
<F4> Incorporated by reference to Post-Effective Amendments
No. 29 and 34 to this Registration Statement
<F5> Incorporated by reference to Pre-Effective Amendment
No. 2 to this Registration Statement
<F6> Incorporated by reference to Post-Effective Amendment
No. 31 to this Registration Statement
<F7> Incorporated by reference to Post-Effective Amendment
No. 33 to this Registration Statement
<F8> Incorporated by reference to Post-Effective Amendment
No. 37 to this Registration Statement
<F9> Incorporated by reference to Post-Effective Amendment
No. 39 to this Registration Statement
<F10> Incorporated by reference to Post-Effective Amendment
No. 40 to this Registration Statement
<F11> Incorporated by reference to Post-Effective Amendment
No. 41 to this Registration Statement
<F12> Filed herewith
C-1a
<PAGE> 83
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Officer's Name and Principal Positions and Offices
Business Address<F*> with Depositor
<S> <C>
Robert J. Banstetter, Sr. Vice President, General
700 Market Street Counsel & Secretary, Feb.
St. Louis, MO 63101 1991 to present. Vice President
and General Counsel, Jan. 1983 -
Feb. 1991.
John W. Barber Vice President and Controller, Dec.
1984 to present.
E. Thomas Hughes Corporate Actuary and
700 Market Street Treasurer, Oct. 1994 to
St. Louis, MO 63101 present. Formerly Executive Vice
President - Group Pensions, March
1990 - Oct. 1994.
Richard A. Liddy Chairman, President, and
700 Market Street Chief Executive Officer,
St. Louis, MO 63101 Jan. 1995 to present. Formerly,
President and Chief Executive
Officer, May 1992 - Jan.
1995. President and Chief
Operating Officer, May 1988 -
May 1992.
Leonard M. Rubenstein Chairman and Chief Executive
700 Market Street Officer, Conning Corporation,
St. Louis, MO 63101 January 1997 to present. Formerly
Executive Vice President - Investments,
Oct. 1994 to January 1997, and
Executive Vice President - Investments
& Treasurer, Securities, Feb. 1991 -
Dec. 1994.
Warren J. Winer Executive Vice President-Group Life
& Health, Aug. 1995 to
present. Formerly Managing
Director for William M.
Mercer, Inc. July 1993 to
Aug. 1995 and President
and Chief Operating Officer,
W.F. Corroon, 1986 - July
1993.
Bernard H. Wolzenski Executive Vice President-
Individual, Oct. 1991 to
present. Formerly Vice
President, Individual Life
Products, May 1986 - Oct.
1991.
C-2
<PAGE> 84
<CAPTION>
Officer's Name and Principal Positions and Offices
Business Address<F*> with Depositor
<S> <C>
A. Greig Woodring President and Chief
660 Mason Ridge Center Drive Executive Officer,
St. Louis, MO 63141 Reinsurance Group of America, Dec.
1992 to present. Executive
Vice President Reinsurance,
Mar. 1990 to Dec. 1992.
<FN>
Richard A. Liddy, listed as a Principal Officer, is also a Director of the
Company.
- --------------
<F*> The principal business address of each person listed is General
American Life Insurance Company, 13045 Tesson Ferry Road, St. Louis, MO
63128, unless otherwise indicated.
</TABLE>
C-3
<PAGE> 85
<TABLE>
<CAPTION>
Positions and Offices
Directors with Depositor
<S> <C>
August A. Busch III Director
Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Director
Union Electric Company
1901 Chouteau Street
St. Louis, MO 63103
John C. Danforth Director
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Director
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
William E. Maritz Director
Maritz, Inc.
1375 North Highway Drive
Fenton, Missouri 63099
Craig D. Schnuck Director
Schnuck Markets, Inc.
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Director
Ralston Purina Company
Checkerboard Square
St. Louis, Missouri 63164
Andrew C. Taylor Director
Enterprise Rent-A-Car
600 Corporate Park Drive
St. Louis, Missouri 63105
C-4
<PAGE> 86
</TABLE>
<TABLE>
<CAPTION>
Positions and Offices
Directors with Depositor
<S> <C>
H. Edwin Trusheim Director
General American Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
Robert L. Virgil Director
Edward Jones and Company
12555 Manchester Road
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Director
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Ted C. Wetterau Director
Wetterau Associates
7000 Bonhomme, Suite 750
St. Louis, Missouri 63105
</TABLE>
Item 26. Persons Controlled by or Under Common Control With the Depositor
or Registrant
The Depositor, General American Life Insurance Company ("General
American"), controls the companies named on the following pages:
General American Life Insurance Company: a life insurance company selling
life and health insurance and pensions. Principal place of business: St.
Louis, Missouri.
Cova Corporation: wholly-owned subsidiary formed to own the Xerox Life
companies. Principal place of business: St. Louis, Missouri.
Cova Financial Services Life Insurance Company: wholly-owned by
Cova Corporation, engaged in the business of selling annuities
and life insurance. Principal place of business: Oakbrook,
Illinois.
C-5
<PAGE> 87
First Cova Life Insurance Company: wholly-owned by Cova
Financial Services Life Insurance Company, engaged in the sale
of life insurance in New York. Principal place of business:
New York, New York.
Cova Financial Life Insurance Company: wholly-owned by Cova
Financial Services Life Insurance Company, engaged in the sale
of life insurance and annuities. Principal place of business:
Oakbrook, Illinois.
Cova Life Management Company: wholly-owned by Cova Corporation.
Employer of the individuals operating the Cova companies.
Principal place of business: Oakbrook, Illinois.
Cova Investment Advisory Corporation: wholly-owned by Cova Life
Management Company. Intended to provide investment advice to
Cova Life insureds and annuity owners. Principal place of
business: Oakbrook, Illinois.
Cova Investment Allocation Corporation:
wholly-owned by Cova Life Management Company. Intended to
provide advice on allocation of premiums to Cova Life insureds
and annuity owners. Principal place of business: Oakbrook,
Illinois.
Cova Life Sales Company: wholly-owned by Cova Life Management
Company. Broker-dealer established to supervise sales of Cova
Life contracts. Principal place of business: Oakbrook,
Illinois
General Life Insurance Company of America: wholly-owned subsidiary, domiciled
in Illinois, engaged in the business of selling life insurance and annuities.
Principal place of business: Edwardsville, Illinois.
General Life Insurance Company (fka National American Life Insurance Company of
Texas): wholly-owned subsidiary, domiciled in Texas, engaged in the business of
selling life insurance and annuities. Principal place of business:
Edwardsville, Illinois.
C-6
<PAGE> 88
Paragon Life Insurance Company: wholly-owned
subsidiary engaged in employer sponsored sales of life
insurance. Principal place of business: St. Louis,
Missouri.
Equity Intermediary Company: wholly-owned subsidiary
holding company formed to own stock in subsidiaries.
Principal place of business: St. Louis, Missouri.
Reinsurance Group of America, Incorporated:
subsidiary, of which approximately 64% is owned by
Equity Intermediary and the balance by the public.
Principal place of business: St. Louis, Missouri.
RGA Sudamerica S.A.: Chilean subsidiary, of
which all but one share is owned by RGA and
one share is owned by RGA Reinsurance Company
(fka Saint Louis Reinsurance Company),
existing to hold Chilean reinsurance
operations. Principal place of business:
Santiago, Chile.
BHIF America Sequros de Vida S.A.:
Chilean subsidiary, of which 50% is
owned by RGA Sudamerica S.A. and 50% is
owned by Chilean interests, engaged in
business as a life/annuity insurer.
Principal place of business: Santiago,
Chile
RGA Reinsurance Company Chile S.A.:
100% owned by RGA, engaged in business
of reinsuring life and annuity business
of BHIF America. Principal place of
business: Santiago, Chile.
Manantial Sequros de Vida S.A.: Argentinean
subsidiary 100% owned by RGA, engaged in
business as a life, annuity, disability and
survivorship insurer. Principal place of
business: Buenos Aires, Argentina.
RGA Reinsurance Company (formerly Saint Louis
Reinsurance Company): subsidiary of
Reinsurance Group of America engaged in the
reinsurance business. Principal place of
business: St. Louis, Missouri.
C-7
<PAGE> 89
Fairfield Management Group, Inc. (fka
Great Rivers Holding Company): 51%
owned subsidiary of RGA Reinsurance
Company (fka Saint Louis Reinsurance
Company) and 49% is owned by management.
Principal place of business: St. Louis,
Missouri.
Reinsurance Partners, Inc. (fka
Adrian Baker Reinsurance
Intermediaries, Inc.): wholly-
owned subsidiary of Fairfield
Management Group, Inc., engaged in
business as a reinsurance brokerage
company. Principal place of
business: St. Louis, Missouri.
Great Rivers Reinsurance
Management, Inc.: wholly-owned
subsidiary of Fairfield Management
Group, Inc., acting as a
reinsurance manager. Principal
place of business: St. Louis,
Missouri.
RGA (U.K.) Underwriting Agency
Limited: 80% owned by Fairfield
Management Group, Inc. Principal
place of business: London,
England.
RGA Reinsurance Company (Barbados) Ltd.:
subsidiary of Reinsurance Group of America,
Incorporated formed to engage in the exempt
insurance business. Principal place of
business: Barbados, West Indies.
RGA/Swiss Financial Group, L.L.C.: 40%
owned subsidiary formed to market and
manage financial reinsurance business to
be assumed by RGA Reinsurance Company.
Principal place of business: St. Louis,
Missouri.
C-8
<PAGE> 90
G.A. Canadian Holdings, Ltd.: a New
Brunswick corporation wholly-owned by
Reinsurance Group of America, existing to
hold Canadian reinsurance operations.
Principal place of business: Montreal,
Canada.
RGA Canada Management Company, Ltd.: a
New Brunswick corporation wholly-owned
by G.A. Canadian Holdings, existing to
accommodate Canadian investors.
Principal place of business: Montreal,
Canada.
RGA Life Reinsurance Company of
Canada: wholly-owned by RGA Canada
Management Company, Ltd. Principal
place of business: Montreal,
Canada.
RGA Holdings Limited: holding company formed in
the United Kingdom to own two operating companies:
RGA Managing Agency Limited and RGA Capital
Limited. Principal place of business: London,
England.
RGA Managing Agency Limited: company has
applied to Lloyd's of London for registration
as a managing agent or underwriter. Principal
place of business: London, England.
RGA Capital Limited: company has applied to
Lloyd's of London for admission as the sole
corporate member of a new Lloyd's syndicate
which will underwrite accident and health
business. Principal place of business:
London, England.
RGA Reinsurance Company (Bermuda) Ltd.:
subsidiary formed to reinsure the foreign
(international) and domestic (U.S.) business of
affiliated and non-affiliated companies.
Principal place of business: Bermuda (Hamilton).
RGA Australian Holdings Pty Limited: holding
company formed to own RGA Reinsurance Company of
Australia Limited. Principal place of business:
Sydney, Australia.
C-9
<PAGE> 91
RGA Reinsurance Company of Australia Limited:
formed to reinsure the life, health and
accident business of non-affiliated
Australian insurance companies. Principal
place of business: Sydney, Australia.
Security Equity Life Insurance Company: wholly-owned
subsidiary, domiciled in New York, engaged in the
business of selling life insurance and annuities.
Principal place of business: Principal place of
business: Armonk, New York.
General American Holding Company: wholly-owned
subsidiary owning non-insurance subsidiaries. Principal
place of business: St. Louis, Missouri.
Conning Corporation: wholly-owned, second-tier
subsidiary formed to own Conning, Inc. Principal
place of business: St. Louis, Missouri.
Conning, Inc.: a holding company organized
under Delaware law. Principal place of
business: Hartford, Connecticut.
Conning & Company: a Connecticut
corporation engaged in providing asset
management and investment advisory
services as well as insurance research
services. Principal place of business:
Hartford, Connecticut
Conning Asset Management Company:
a Missouri corporation engaged in
providing investment advice.
Principal place of business: St.
Louis, Missouri.
Consultec, Inc.: wholly-owned, second-tier
subsidiary engaged in providing data processing
services for government entities. Principal place
of business: Atlanta, Georgia.
Genelco Incorporated: wholly-owned, second-tier
subsidiary engaged in the sale of computer
software and in providing third party
administrative services. Principal place of
business: St. Louis, Missouri.
C-10
<PAGE> 92
International Underwriting Services,
Incorporated: 88.3% owned by Genelco.
Provides third party underwriting services to
insurance companies. Principal place of
business: Barrington, Illinois.
Genelco de Mexico: 99% owned by Genelco
Incorporated, engaged in licensing of Genelco
software products in Latin America.
Principal place of business: Mexico City,
Mexico.
Genelco Software, S.A.: 99% owned by Genelco
Incorporated, engaged in licensing of Genelco
software products in Spain. Principal place
of business: Madrid, Spain.
Red Oak Realty Company: wholly-owned, second-tier
subsidiary formed for the purpose of investing in
and operating real estate. Principal place of
business: St. Louis, Missouri.
GenMark Incorporated: wholly-owned, second-tier
subsidiary company acting as distribution company.
Principal place of business: St. Louis, Missouri.
Walnut Street Securities, Inc.: wholly-
owned, third-tier subsidiary engaged in the
process of selling variable life insurance
and variable annuities and other securities.
Principal place of business: St. Louis,
Missouri.
Walnut Street Advisers, Inc.: wholly-
owned subsidiary of Walnut Street
Securities engaged in the business of
giving investment advice. Principal
place of business: St. Louis, Missouri.
WSS Insurance Agencies (Massachusetts,
Ohio, Texas), Inc.: formed to act as
insurance agencies.
C-11
<PAGE> 93
Stan Mintz Associates, Inc.: wholly-owned
subsidiary purchased to maintain a
significant marketing presence in the
Madison, Wisconsin area upon the retirement
of General Agent Stan Mintz. Principal place
of business: Madison, Wisconsin.
White Oak Royalty Company: wholly-owned, second-
tier subsidiary formed to own mineral interests.
Principal place of business: St. Louis, Missouri.
Mutual funds associated with General American Life Insurance
Company:
General American Capital Company
The Walnut Street Funds, Inc.
C-12
<PAGE> 94
Item 27. Number of Contract Owners
As of 31 March 1997 there were:
Title of Class Number of Owners of Record
Qualified 7,013
Non-Qualified 1,281
Item 28. Indemnification
Section 351.355 of the Missouri General and Business
Corporation Law, in brief, allows a corporation to indemnify
any person who is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation,
against expenses, including attorneys' fees, judgments,
fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action if
he acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the
corporation. Where any person was or is a party or is
threatened to be made a party in an action or suit by or in
the right of the corporation to procure a judgment in its
favor, indemnification may not be paid where such person
shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the
corporation, unless a court determines that the person is
fairly and reasonably entitled to indemnity. A corporation
has the power to give any further indemnity, to any person
who is or was a director, officer, employee or agent,
provided for in the articles of incorporation or as
authorized by any by-law which has been adopted by vote of
the shareholders, provided that no such indemnity shall
indemnify any person's conduct which was finally adjudged to
have been knowingly fraudulent, deliberately dishonest, or
willful misconduct.
In accordance with Missouri law, General Americans Board of
Directors, at its meeting on 19 November 1987 and the
policyholders of General American at the annual meeting held
on 26 January 1988 adopted the following resolutions:
"BE IT RESOLVED THAT
C-13
<PAGE> 95
1. The company shall indemnify any person who is or
was a director, officer, or employee of the company, or is
or was serving at the request of the company as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually
and reasonably incurred by him or her in connection with any
civil, criminal, administrative or investigative action,
proceeding or claim (including an action by or in the right
of the company) by reason of the fact that he or she was
serving in such capacity if he or she acted in good faith
and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the company; provided
that such person's conduct is not finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful
misconduct.
2. The indemnification provided herein shall not be
deemed exclusive of any other rights to which a director,
officer, or employee may be entitled under any agreement,
vote of policyholders or disinterested directors, or
otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to
be a director, officer, or employee and shall inure to the
benefit of the heirs, executors and administrators of such a
person."
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.
C-14
<PAGE> 96
Item 29. Principal Underwriters
(a) Walnut Street Securities, Inc., serves as the
principal underwriter for the variable annuity contracts
funded by Separate Account Two. Walnut Street Securities
also serves as the principal underwriter for variable life
insurance policies funded by Separate Account Eleven of
General American.
(b) Directors and Officers
<TABLE>
<CAPTION>
Name and Principal Business Positions and Offices
Address<F*> with Underwriter
Officers
<S> <C>
Richard J. Miller President, Chief
Executive Officer
Nancy L. Gucwa Chief Operating Officer
Milton F. Svetanics, Jr. Vice President,
Secretary, and General
Counsel
Don P. Wuller Senior Vice President,
Administration
Steven D. Anderson Vice President & Chief
Financial Officer
Stephen E. Abbey Vice President,
Compliance
E. Thomas Hughes, Jr. Treasurer
Directors
Dona L. Barber Director
Nancy L. Gucwa Director
Matthew P. McCauley Director
Richard J. Miller Director
Michael N. Nicholson Director
Milton F. Svetanics, Jr. Director
Bernard H. Wolzenski Director
<FN>
<F*> Messrs. Hughes, McCauley, and Svetanics are at 700 Market
Street, St. Louis, Missouri 63101. Mr. Wolzenski is at
13045 Tesson Ferry Road, St. Louis, Missouri 63128. Messrs.
Abbey, Anderson, Miller, T.C. Nicholson, Nicholson, Wuller
and Ms. Gucwa are at 670 Mason Ridge Center Drive, St.
Louis, Missouri 63141.
</TABLE>
(c) Principal Underwriter
Walnut Street Securities
1996 Brokerage Commission 1996 Compensation
$1,086,240.57 $1,086,240.57
C-15
<PAGE> 97
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by
Section 31(a) of the 1940 Act and the rules under it are
maintained by General American at its administrative
offices, 13045 Tesson Ferry Road, St. Louis, Missouri 63128.
Item 31. Management Services
All management contracts are discussed in Part A or Part B.
Item 32. Undertakings and Representations
(a) Registrant undertakes that it will file post-effective
amendments to this registration statement as frequently as
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for so long as payments under the variable annuity contracts
may be accepted.
(b) Registrant undertakes to include, as part of the
application to purchase a contract offered by the
prospectus, a space that an applicant can check to request a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this Form promptly upon written
or oral request to General American at the address or phone
number listed in the prospectus.
(d) Registrant represents that it is relying upon a "no-
action" letter (No. P-6-88) issued to the American Council
of Life Insurance concerning the conflict between the
redeemability requirements of sections 22(e), 27(c)(1), and
27(d) of the Investment Company Act of 1940 and the limits
on the redeemability of variable annuities imposed by
section 403(b)(11) of the Internal Revenue Code. Registrant
has included disclosure concerning the 403(b)(11)
restrictions in its prospectus and sales literature, and
established a procedure whereby each plan participant will
sign a statement acknowledging these restrictions before the
contract is issued. Sales representatives have been
instructed to bring the restrictions to the attention of
potential plan participants.
(e) General American, of which Registrant forms a part,
hereby represents that the fees and charges deducted under
the terms of the Contracts are, in the aggregate, reasonable
in relationship to the services rendered, the expenses
expected, and the risks assumed by General American.
C-16
<PAGE> 98
SIGNATURES
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, General American
Separate Account Two certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness
of the Registration Statement and has duly caused this
amended Registration Statement to be signed on its behalf in
the City of St. Louis, State of Missouri, on the 11th day of
April, 1997.
GENERAL AMERICAN SEPARATE
ACCOUNT TWO (REGISTRANT)
(Seal) By: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for
Registrant and as
Depositor)
Attest: By:
---------------------- -----------------------
Robert J. Banstetter, Sr. Richard A. Liddy
Secretary Chairman, President, and
Chief Executive Officer
General American Life
Insurance Company
C-17
<PAGE> 99
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, this amended Registration Statement has
been signed below by the following persons in their
capacities with General American Life Insurance Company and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
- ----------------------
Richard A. Liddy Chairman, President, and 4/11/97
Chief Executive Officer
(Principal Executive Officer)
- ----------------------
John W. Barber Vice President and Controller 4/11/97
(Principal Accounting Officer and
Principal Financial Officer)
<F*>
August A. Busch, III Director
<F*>
William E. Cornelius Director
<F*>
John C. Danforth Director
<F*>
Bernard A. Edison Director
- ----------------------
Richard A. Liddy Director 4/11/97
<F*>
William E. Maritz Director
<F*>
Craig D. Schnuck Director
<F*>
William P. Stiritz Director
C-18
<PAGE> 100
<CAPTION>
Signature Title Date
<S> <C> <C>
<F*>
Andrew C. Taylor Director
<F*>
H. Edwin Trusheim Director
<F*>
Robert L. Virgil, Jr. Director
<F*>
Virginia V. Weldon Director
<F*>
Ted C. Wetterau Director
<F*>By 4/4/97
---------------------
Matthew P. McCauley
<FN>
<F*> Original powers of attorney authorizing Matthew P.
McCauley to sign the registration statement and amendments
thereto on behalf of the Directors of General American Life
Insurance Company have been filed previously.
</TABLE>
C-19
<PAGE> 101
The Board of Directors
General American Life Insurance Company
We consent to the use of our reports included herein on
General American Life Insurance Company and on General
American Separate Account Two and to the reference of our
firm under the heading "Financial Statements" in the
Registration Statement and Prospectus for General American
Separate Account Two. Our report on the consolidated financial statements
of General American Life Insurance Company and subsidiaries refers to the
adoption of Statement of Financial Accounting Standards
No. 120, Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts in 1996.
KPMG Peat Marwick LLP
St. Louis, Missouri
29 April 1997
C-20
<PAGE> 1
GENERAL AMERICAN
LIFE INSURANCE COMPANY
ST. LOUIS, MISSOURI 63166
In consideration of the Contract
Owner's application and the
contributions to be made by the
Contract Owner as provided herein,
the Company agrees to pay benefits,
to the extent required by this
contract, to those individuals
entitled to such benefits.
The provisions on the following
pages are a part of this contract.
-----------------------------
PRESIDENT
-----------------------------
SECRETARY
TAX SHELTERED GROUP VARIABLE
ANNUITY CONTRACT
Funds in Separate Account
and General Account
Individual Allocation
Annual Dividend
ALL INSTALLMENTS AND VALUES PROVIDED
BY THIS CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR
AMOUNTS.
V82-300
V82-300 Page 1
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section
<S> <C>
1 Definitions
2 Contributions, Charges, and
Withdrawals
3 Valuation
4 Annuity Provisions
5 Death Benefits
6 Termination Benefits
7 General Provisions
</TABLE>
V82-300 Page 2
<PAGE> 3
CONTRACT SPECIFICATIONS
CONTRACT OWNER:
CONTRACT NO.:
CONTRACT DATE:
EXECUTION DATE:
EXECUTED AT:
DELIVERED IN:
V82-300 Page 3
<PAGE> 4
SECTION 1. DEFINITIONS
1.01 ACCUMULATION UNIT. This is an accounting method we use to
determine the value of your contract prior to the annuity
commencement date. This unit will be valued on each business
day as of the time of the closing of the New York Stock
Exchange.
1.02 ANNUITANT. A participant who is receiving annuity
installments under this contract.
1.03 ANNUITY. This is a series of installments provided under this
contract for a participant by application of the dollar value
of accumulation units in his individual account.
1.04 ANNUITY COMMENCEMENT DATE. This is the date upon which
annuity installments begin, as elected by the participant.
1.05 ANNUITY UNIT. An accounting method used to determine the
amounts payable to an annuitant on and after the annuity
commencement date. This unit will be valued on each business
day as of the time of the closing of the New York Stock
Exchange.
1.06 BUSINESS DAY. This is a day on which both we and the New York
Stock Exchange are open for business. Each business day ends
at the time of the New York Stock Exchange closes.
1.07 CONTRACT ANNIVERSARY. An anniversary of the contract date.
1.08 CONTRACT YEAR. Any period of one year commencing with the
contract date or with any contract anniversary.
1.09 GENERAL ACCOUNT. An account which consists of all assets of
the Company other than those in the Separate Account or any
other segregated investment account.
1.10 INDIVIDUAL ACCOUNT. The sum of the accumulation units
credited to a participant.
1.11 PARTICIPANT. An employee for whom an application has been
submitted and for whom a contribution has been made.
1.12 PARTICIPANT'S ANNIVERSARY. An anniversary of the date on
which a participant's individual account is established in
accordance with the terms of this contract.
1.13 SEPARATE ACCOUNT. A segregated investment account entitled
Separate Account No. 2 established by us in accordance with
Missouri law.
1.14 WE, US, AND OUR. The General American Life Insurance Company.
YOU, YOUR. The owner of this contract. The owner is as shown
in the application unless later changed as provided in this
contract.
SECTION 2. CONTRIBUTIONS, CHARGES, AND WITHDRAWALS
2.01 PAYMENT OF CONTRIBUTIONS
All contributions shall be paid by you directly to us at our
Home Office in St. Louis, Missouri.
2.02 APPLICATION OF CONTRIBUTIONS
We shall first deduct from any contribution for a Participant
the premium for any optional benefits provided by a
supplemental agreement. Deductions for any applicable premium
taxes on the remaining contribution shall then be made by us
from each contribution received. The balance of each
contribution remaining after these deductions is the net
contribution. We shall apply such net contribution to provide
for General Account or Separate Account accumulation units or
both as elected by you. The number of General Account or
Separate Account accumulation units credited to the
V82-300 Page 4
<PAGE> 5
Participant's Individual Account shall be determined by
dividing the applicable portion of the net contribution by the
appropriate accumulation unit value next determined after such
contribution is received by us at the Home Office. The number
of accumulation units so provided shall not be changed by any
subsequent change in the accumulation unit value.
2.03 CONTINGENT DEFERRED SALES CHARGE
We shall not deduct a sales charge for any contribution for a
participant when received. During the first nine years of the
participant's individual account, we shall deduct a withdrawal
or surrender charge that will never exceed the lesser of 9
percent of the total net contributions or an amount calculated
according to the following schedule:
<TABLE>
<CAPTION>
Participant's Withdrawal/
Individual Account Surrender
Contract Year Charge
<S> <C>
1 9%
2 8
3 7
4 6
5 5
6 4
7 3
8 2
9 1
</TABLE>
Beginning with the participant's tenth year of participation
we will not deduct a withdrawal or surrender charge. We will
not deduct a withdrawal or surrender charge if the participant
dies or becomes totally disabled. Also, we will not deduct a
withdrawal or surrender charge if the accumulated value is
annuitized after the fifth year of participation.
This charge shall be made by canceling a number of accumulation
units equal to the charge divided by the respective accumulation
unit value next determined after the fifth year of participation.
This charge will be made by canceling a number of accumulation
units equal to the charge divided by the respective accumulation
unit value next determined after the beginning of the date of
withdrawal or surrender.
2.04 PARTIAL WITHDRAWAL
You may, at the direction of the participant, withdraw
accumulation units from any participant's individual account
upon satisfactory written request received by us at our Home
Office prior to the annuity commencement date. No such
withdrawal shall be less than $100.00. Unless otherwise
specified in the request, the withdrawal shall be made based
on the current allocation of the contributions to the General
Account and the Separate Account. The units will be withdrawn
at the unit value next determined after written request is
received by us at our Home Office or after the beginning of
the date of withdrawal specified, whichever is later.
SECTION 3. VALUATION
3.01 NET INVESTMENT FACTOR
The net investment factor for any Business Day is 1.0 plus a
rate of investment income that we will declare in advance. We
guarantee that the rate will be no less than 4 percent per
year compounded annually.
The Separate Account net investment factor for any business
day is (a) dividend by (b) where
(a) is
(1) the value of the assets in the Separate Account at
the end of the previous business day for contracts
receiving the same or similar tax treatment as this
contract, plus
(2) the investment income and the capital gains,
realized or unrealized, credited to such
V82-300 Page 5
<PAGE> 6
assets since the end of the previous business day,
minus
(3) the capital losses, realized or unrealized, charged
against such assets in such period, minus
(4) any amount charged against the Separate Account in
such a period for taxes or as a reserve for taxes
attributable to the maintenance or operation of the
Separate Account for contracts receiving the same
or similar tax treatment as this contract, minus
(5) a charge for investment management services and
mortality and expense rate guarantees to be
determined by us but not to exceed .003445 percent
of such assets for each calendar day since the end
of the previous business day.
(b) is the value of the assets in the Separate Account at the
end of the previous business day for contracts receiving
the same or similar tax treatment as this contract.
3.02 ACCUMULATION UNIT VALUE
The value of a Separate Account No. 2 accumulation unit is
established at 10.00 dollars as of the end of the Business Day
on January 4, 1971, and the value of a General Account
accumulation unit is established at 10.00 dollars as of the
end of the business day on April 1, 1982. The value of the
respective accumulation unit is determined at the end of any
later Business Day. The value is determined by multiplying
the accumulation unit value for the end of the immediately
preceding Business Day by the net investment factor for such
later Business Day.
3.03 ANNUITY UNIT VALUE
The value of a Separate Account No. 2 Annuity Unit is
established at 10.00 dollars as of the end of the business day
on January 4, 1971, and the value of a General Account Annuity
Unit is established at 10.00 dollars at the end of the
business day on April 1, 1982. The value of the respective
annuity unit is determined at the end of any later business
day. The value is determined by multiplying such value for
the end of the preceding business day by the product of (a)
.99989256 once for each calendar day between the end of the
sixth preceding business day and the end of the fifth
preceding such business day.
3.04 VALUATION OF ASSETS
Assets in the Separate Accounts shall be valued at the end of
each business day at their fair market value or, where there
is no readily available market, at their fair value as
determined by us, in accordance with recognized accounting
procedures. Direct expenses involved in the purchase or sale
of assets for the Separate Accounts, including, but not
limited to, brokerage commission, exchange fees, taxes, and
postage, shall be included in such valuation.
SECTION 4. ANNUITY PROVISIONS
4.01 NOTICE TO EFFECT AN ANNUITY
You shall notify us at least 30 days in advance to effect an
annuity for a participant on his annuity commencement date.
4.02 ELECTION OF OPTIONAL ANNUITIES
You may specify the annuity option under which installments
are to be made to an annuitant provided such notification is
received by us at least 30 days prior to the annuity
commencement date. In the absence of such an election, the
retirement annuity will be a life annuity with 120
installments guaranteed.
V82-300 Page 6
<PAGE> 7
If option 2 or 5 is elected, installments may not be
guaranteed for a period longer than the life expectancy of the
annuitant.
4.03 ANNUITY OPTIONS
(See Annuity Option Tables at the end of this section.) At
the maturity of this policy, the proceeds may be placed under
any of the following options:
OPTION 1.
LIFE ANNUITY. We will pay a monthly income during a person's
lifetime. The income will cease with the last installment
preceding the death of that person.
OPTION 2.
LIFE ANNUITY WITH 60, 120, 180 OR 240 MONTHLY INSTALLMENTS
GUARANTEED. We will pay a monthly income during a person's
lifetime with the guarantee that if, at death of the person,
installments have been made for less than 60 months, 120
months, 180 months, or 240 months, as elected, installments
shall be continued to the Beneficiary during the remainder of
the elected period.
OPTION 3.
UNIT REFUND LIFE ANNUITY. We will pay a monthly income during
a person's lifetime that will cease with the last installment
due prior to the death of that person, with the guarantee
that, at the death of the payee, the Beneficiary will receive
an additional payment of the dollar value of the number of
annuity units equal to the excess, if any, of (a) over (b)
where (a) is the total applied under the option divided by the
annuity unit value at the annuity commencement date and (b) is
the number of annuity units represented by each installment
multiplied by the number of installments made. Such dollar
value shall be determined by multiplying the above number of
annuity units by the annuity unit value on the Business Day
coincident with or next following the date on which written
notice of death is received by us at our Home Office.
OPTION 4.
JOINT AND SURVIVOR INCOME FOR LIFE. We will pay monthly
installments jointly to two payees if both are living when the
installments become payable. The annuitant will be designated
as primary payee. Full installments will continue so long as
the primary payee is living. If the primary payee dies after
installments begin, full installments or installments of 1/2
or 2/3, (whichever you elected when applying for this option)
will continue to the other payee during his or her lifetime.
OPTION 5.
INCOME FOR A FIXED PERIOD. We will pay the proceeds in equal
installments over a period of from 3 to 30 years. The amount
of each installment will be based upon the period and the
frequency of the installments selected from Option 5 Table.
OPTION 6.
INCOME OF A FIXED AMOUNT. We will pay the proceeds in equal
installments in the amount and at the intervals agreed upon
until the proceeds applied under this option, with interest
credited at the current annual rate, are exhausted. The final
installment will be for the then remaining balance only.
OPTION 7.
INTEREST INCOME. We will hold the proceeds on deposit and pay
or credit interest at the current annual rate. Payment of
interest will be at such times and for such periods as are
agreeable to you and us.
4.04 DATE OF PAYMENT
The first payment under Option 7 will be made at the end of
the period selected, measured from the date on which written
notice of death is received by us at the Home Office. The
first payment under any other option shall be made on the
annuity commencement date or upon the date of surrender or as
of the date on which written notice of death is received by us
at the Home Office, as applicable.
V82-300 Page 7
<PAGE> 8
4.05 ALLOCATION OF ANNUITY
When you elect one of the first five annuity options, you may
further elect to have the annuity purchased in the form of the
variable annuity, guaranteed annuity, or a combination of
both. If you elect option 6, you may specify whether the net
investment factor for Separate Account No. 2 or the General
Account is to apply, or whether the amount due shall be split
between the two accounts. If no election is made to the
contrary on these options, that portion of accumulated value
in the Separate Account shall be applied to provide a variable
annuity and that portion in the General Account shall be
applied to provide a guaranteed annuity. If you elect option
7, we will consider this an election to place the entire
accumulated value in the General Account.
4.06 MINIMUM AMOUNTS
The minimum amount to be placed under an option is $5,000, and
the minimum amount of any payment is $50 per month, unless
these minimums are waived or changed by us.
4.07 GUARANTEED ANNUITY OPTION INTEREST RATE
We use a guaranteed effective annual rate of 4% in computing
payments under all options.
4.08 FIRST PAYMENT
We will make the first payment as of the option effective
date.
4.09 PAYEE
A person who receives benefits under an option is a payee. A
payee must be a natural person receiving benefits in his or
her own right, or be a legal guardian. With our consent, the
payee may be a trustee, assignee, corporation, or partnership.
4.10 CONTINGENT PAYEE
The payee may name contingent payees, subject to any
restrictions under an annuity option chosen during the
annuitant's lifetime, under the following conditions:
(1) If you are the payee; or
(2) If, at any time after the annuitant's death and
during the option period, no previously named
contingent payee is living.
Designations made by the payee under these provisions may be
changed by the payee. Such changes must be made by written
request satisfactory to us. Changes will only take effect
when we accept them in writing at our Home Office. At that
time, the contingent interest of any other person is
terminated as of the date of the payee signed the request,
whether or not the payee is living when we receive the
request.
4.11 LIFE INCOME OPTIONS
Life Income Options are based on the payee's sex and age
nearest birthday on the annuity option effective date. We
have the right to require satisfactory proof of age and sex.
If age or sex has been incorrectly stated, the proper
adjustments in payments will be made. We may also require
proof that the payee is living on any payment due date.
V82-300 Page 8
<PAGE> 9
<TABLE>
ANNUITY OPTION TABLES
For Each $1,000
<CAPTION>
Option 1 Option 2 Option 3 Option 5
-----------------------------------------------------------------------------------------------
60 120 180 240
Age of Payee Life Months Months Months Months Unit Income for a
Male Female Annuity Guar. Guar. Guar. Guar. Refund Fixed Period
-----------------------------------------------------------------------------------------------
Years Monthly
Certain Installments
------- ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 50 $ 4.70 $ 4.69 $4.66 $4.60 $4.53 $4.50
46 51 4.77 4.76 4.72 4.66 4.57 4.55
47 52 4.84 4.83 4.79 4.72 4.62 4.60
48 53 4.92 4.91 4.86 4.78 4.67 4.65 3 $29.39
49 54 5.00 4.98 4.93 4.84 4.73 4.71 4 22.47
50 55 5.09 5.07 5.01 4.91 4.78 4.77 5 18.32
51 56 5.17 5.15 5.08 4.98 4.84 4.83 6 15.56
52 57 5.27 5.24 5.17 5.05 4.89 4.89 7 13.59
53 58 5.36 5.33 5.25 5.12 4.95 4.96 8 12.11
54 59 5.46 5.43 5.34 5.19 5.01 5.03 9 10.97
55 60 5.57 5.54 5.43 5.27 5.06 5.10 10 10.06
56 61 5.68 5.64 5.53 5.35 5.12 5.18 11 9.31
57 62 5.80 5.76 5.63 5.43 5.18 5.26 12 8.69
58 63 5.93 5.88 5.73 5.51 5.24 5.34 13 8.17
59 64 6.06 6.00 5.84 5.60 5.30 5.43 14 7.72
60 65 6.20 6.14 5.96 5.69 5.36 5.52 15 7.34
61 66 6.35 6.28 6.08 5.78 5.42 5.62 16 7.00
62 67 6.51 6.43 6.21 5.87 5.48 5.72 17 6.70
63 68 6.69 6.59 6.34 5.97 5.53 5.82 18 6.44
64 69 6.87 6.77 6.48 6.06 5.58 5.93 19 6.21
65 70 7.07 6.95 6.62 6.16 5.64 6.05 20 6.00
66 71 7.28 7.14 6.77 6.25 5.69 6.17 21 5.81
67 72 7.51 7.35 6.93 6.35 5.73 6.30 22 5.64
68 73 7.75 7.57 7.09 6.44 5.77 6.43 23 5.49
69 74 8.01 7.81 7.26 6.54 5.81 6.57 24 5.35
70 75 8.30 8.05 7.43 6.63 5.85 6.71 25 5.22
71 76 8.60 8.32 7.60 6.72 5.88 6.85 26 5.10
72 77 8.93 8.60 7.78 6.80 5.91 7.02 27 4.99
73 78 9.28 8.90 7.96 6.88 5.93 7.17 28 4.89
74 79 9.67 9.21 8.14 6.95 5.95 7.34 29 4.80
75 80 10.08 9.55 8.32 7.02 5.96 7.51 30 4.72
76 81 10.53 9.90 8.50 7.08 5.98 7.70
77 82 11.02 10.27 8.67 7.13 5.98 7.87
78 83 11.54 10.66 8.84 7.18 5.99 8.06
79 84 12.11 11.06 9.01 7.22 5.99 8.25
80 85 and 12.73 11.48 9.16 7.25 6.00 8.46
81 over 13.41 11.92 9.31 7.27 6.00 8.65
82 14.14 12.38 9.44 7.29 6.00 8.83
83 14.95 12.85 7.31 7.31 6.00 9.02
84 15.84 13.33 9.67 7.32 6.00 9.19
85 and 16.82 13.83 9.76 7.32 6.00 9.39
over
</TABLE>
V82-300 Page 8a
<PAGE> 10
<TABLE>
ANNUITY OPTION TABLES (Cont'd)
For Each $1,000
- -------------------------------------------------------------------------------------------------------------
Option 4-MONTHLY INSTALLMENTS JOINT AND EQUAL TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Secondary Payee
Primary
Payee
- -------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- -------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.27 $4.30 $4.34 $4.37 $4.40 $4.43 $4.46 $4.49 $4.51 $4.53 $4.55
51 56 4.28 4.32 4.36 4.39 4.43 4.46 4.49 4.52 4.55 4.57 4.59
52 57 4.29 4.33 4.37 4.41 4.45 4.49 4.52 4.55 4.58 4.61 4.64
53 58 4.30 4.34 4.38 4.43 4.47 4.51 4.55 4.58 4.62 4.65 4.68
54 59 4.30 4.35 4.39 4.44 4.49 4.53 4.57 4.61 4.65 4.69 4.72
55 60 4.31 4.36 4.40 4.45 4.50 4.55 4.59 4.64 4.68 4.72 4.76
56 61 4.31 4.36 4.41 4.46 4.51 4.56 4.61 4.66 4.71 4.75 4.79
57 62 4.32 4.37 4.42 4.47 4.53 4.58 4.63 4.68 4.73 4.78 4.83
58 63 4.32 4.37 4.43 4.48 4.54 4.59 4.65 4.70 4.76 4.81 4.86
59 64 4.33 4.38 4.43 4.49 4.55 4.60 4.66 4.72 4.78 4.83 4.89
60 65 4.33 4.38 4.44 4.50 4.56 4.62 4.68 4.74 4.80 4.86 4.92
61 66 4.33 4.39 4.45 4.51 4.57 4.63 4.69 4.75 4.81 4.88 4.94
62 67 4.34 4.40 4.45 4.51 4.57 4.64 4.70 4.77 4.83 4.90 4.96
63 68 4.34 4.40 4.46 4.52 4.58 4.65 4.71 4.78 4.85 4.92 4.98
64 69 4.35 4.41 4.47 4.53 4.59 4.66 4.72 4.79 4.86 4.93 5.00
65 70 4.35 4.41 4.47 4.53 4.60 4.67 4.73 4.80 4.88 4.95 5.02
66 71 4.36 4.42 4.48 4.54 4.61 4.67 4.74 4.81 4.89 4.96 5.04
67 72 4.37 4.42 4.49 4.55 4.62 4.68 4.75 4.83 4.90 4.98 5.06
68 73 4.37 4.43 4.49 4.56 4.62 4.69 4.76 4.84 4.91 4.99 5.07
69 74 4.38 4.44 4.50 4.56 4.63 4.70 4.77 4.85 4.92 5.00 5.09
70 75 4.38 4.44 4.51 4.57 4.64 4.71 4.78 4.86 4.93 5.02 5.10
71 76 4.39 4.45 4.51 4.58 4.65 4.72 4.79 4.87 4.94 5.03 5.11
72 77 4.39 4.45 4.52 4.58 4.65 4.72 4.80 4.87 4.95 5.04 5.12
73 78 4.40 4.46 4.52 4.59 4.66 4.73 4.81 4.88 4.96 5.05 5.14
74 79 4.41 4.47 4.53 4.60 4.67 4.74 4.81 4.89 4.97 5.06 5.15
75 80 4.41 4.47 4.54 4.60 4.67 4.75 4.82 4.90 4.98 5.07 5.16
- ------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Secondary Payee
Primary
Payee
- ---------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ---------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.56 $4.58 $4.59 $4.60 $4.62 $4.63 $4.64 $4.65 $4.66 $4.67
51 56 4.61 4.63 4.65 4.66 4.68 4.69 4.70 4.71 4.72 4.73
52 57 4.66 4.68 4.70 4.72 4.74 4.75 4.77 4.78 4.79 4.80
53 58 4.71 4.73 4.76 4.78 4.80 4.81 4.83 4.85 4.86 4.88
54 59 4.75 4.78 4.81 4.83 4.86 4.88 4.90 4.92 4.93 4.95
55 60 4.79 4.83 4.86 4.89 4.92 4.94 4.96 4.98 5.00 5.02
56 61 4.84 4.87 4.91 4.94 4.97 5.00 5.03 5.05 5.08 5.10
57 62 4.87 4.92 4.96 5.00 5.03 5.06 5.10 5.12 5.15 5.18
58 63 4.91 4.96 5.00 5.05 5.09 5.12 5.16 5.19 5.22 5.25
59 64 4.94 5.00 5.05 5.09 5.14 5.18 5.22 5.26 5.30 5.33
60 65 4.97 5.03 5.09 5.14 5.19 5.24 5.29 5.33 5.37 5.41
61 66 5.00 5.06 5.12 5.18 5.24 5.29 5.35 5.40 5.44 5.49
62 67 5.03 5.10 5.16 5.22 5.29 5.35 5.40 5.46 5.51 5.56
63 68 5.05 5.12 5.19 5.26 5.33 5.40 5.46 5.52 5.58 5.64
64 69 5.08 5.15 5.22 5.30 5.37 5.44 5.51 5.58 5.65 5.71
65 70 5.10 5.18 5.25 5.33 5.41 5.49 5.56 5.64 5.71 5.78
66 71 5.12 5.20 5.28 5.36 5.45 5.53 5.61 5.69 5.77 5.85
67 72 5.14 5.22 5.31 5.39 5.48 5.57 5.66 5.74 5.83 5.92
68 73 5.16 5.24 5.33 5.42 5.51 5.60 5.70 5.79 5.89 5.98
69 74 5.17 5.26 5.35 5.44 5.54 5.64 5.73 5.83 5.94 6.04
70 75 5.19 5.28 5.37 5.47 5.56 5.67 5.77 5.87 5.98 6.09
71 76 5.20 5.29 5.39 5.49 5.59 5.69 5.80 5.91 6.03 6.14
72 77 5.21 5.31 5.40 5.51 5.61 5.72 5.83 5.95 6.07 6.19
73 78 5.23 5.32 5.42 5.52 5.63 5.74 5.86 5.98 6.10 6.23
74 79 5.24 5.34 5.44 5.54 5.65 5.77 5.88 6.01 6.14 6.27
75 80 5.25 5.35 5.45 5.56 5.67 5.79 5.91 6.04 6.17 6.31
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------
Option 4-MONTHLY INSTALLMENTS-JOINT AND EQUAL TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Secondary Payee
Primary
Payee
- -------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- -------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.64 $4.66 $4.68 $4.70 $4.72 $4.74 $4.75 $4.77 $4.78 $4.79 $4.80
51 56 4.68 4.71 4.73 4.75 4.77 4.79 4.81 4.83 4.84 4.85 4.87
52 57 4.73 4.75 4.78 4.80 4.82 4.84 4.87 4.88 4.90 4.92 4.93
53 58 4.77 4.80 4.82 4.85 4.87 4.90 4.92 4.94 4.96 4.98 5.00
54 59 4.81 4.84 4.87 4.90 4.91 4.95 4.98 5.00 5.02 5.05 5.07
55 60 4.86 4.89 4.92 4.95 4.98 5.01 5.04 5.06 5.09 5.11 5.13
56 61 4.90 4.94 4.97 5.00 5.03 5.06 5.09 5.12 5.15 5.18 5.20
57 62 4.95 498 5.02 5.05 5.09 5.12 5.15 5.18 5.21 5.24 5.27
58 63 5.00 5.03 5.07 5.11 5.14 5.18 5.21 5.14 5.28 5.31 5.34
59 64 5.05 5.09 5.12 5.16 5.20 523 5.27 5.31 5.34 5.38 5.41
60 65 5.10 5.14 5.18 5.21 5.25 5.29 5.33 5.37 5.41 5.45 5.48
61 66 5.15 5.19 5.23 5.27 5.31 5.35 5.40 5.44 5.48 5.52 5.56
62 67 5.21 5.25 5.29 5.33 5.37 5.42 5.46 5.50 5.55 5.59 5.63
63 68 5.27 5.31 5.35 5.39 5.44 5.48 5.53 5.57 5.62 5.67 5.71
64 69 5.33 5.37 5.41 5.46 5.50 5.55 5.60 5.65 5.69 5.74 5.79
65 70 5.39 5.43 5.48 5.52 5.57 5.62 5.67 5.72 5.77 5.82 5.87
66 71 5.45 5.50 5.55 5.59 5.64 5.69 5.74 5.80 5.85 5.90 5.96
67 72 5.52 557 5.62 5.67 5.72 5.77 5.82 5.87 5.93 5.99 6.04
68 73 5.59 5.64 5.69 5.74 5.79 5.85 5.90 5.96 6.01 6.07 6.13
69 74 5.66 5.71 5.76 5.82 5.87 5.92 5.98 6.04 6.10 6.16 6.22
70 75 5.74 5.79 5.84 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.32
71 76 5.81 5.86 5.92 5.97 6.03 6.09 6.15 6.22 6.28 6.35 6.41
72 77 5.89 5.94 6.00 6.06 6.12 6.18 6.24 6.31 6.37 6.44 6.51
73 78 5.97 6.03 6.08 6.14 6.20 6.27 6.33 6.40 6.47 6.54 6.61
74 79 6.05 6.11 6.17 6.23 6.29 6.36 6.43 6.50 6.57 6.64 6.72
75 80 6.14 6.20 6.26 6.32 6.39 6.45 6.52 6.60 6.67 6.75 6.82
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Secondary Payee
Primary
Payee
- ---------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ---------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.81 $4.82 $4.83 $4.83 $4.84 $4.85 $4.85 54.86 $4.86 $4.87
51 56 4.88 4.89 4.90 4.90 4.91 4.92 4.93 4.93 4.94 4.94
52 57 4.95 4.96 4.97 4.98 4.99 5.00 5.00 5.01 5.02 5.02
53 58 5.01 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5.10 5.11
54 59 5.08 5.10 5.12 5.13 5.14 5.15 5.17 5.18 5.18 5.19
55 60 5.15 5.17 5.19 5.21 5.22 5.24 5.25 5.26 5.27 5.28
56 61 5.23 5.25 5.27 5.29 5.31 5.32 5.34 5.35 5.36 5.38
57 62 5.30 5.32 5.35 5.37 5.39 5.41 5.43 5.44 5.46 5.47
58 63 5.17 5.40 5.43 5.45 5.48 5.50 5.52 5.54 5.55 5.57
59 64 5.45 5.48 5.51 5.54 5.56 5.59 5.61 5.63 5.65 5.67
60 65 5.52 5.56 5.59 5.62 5.65 5.68 5.71 5.73 5.76 5.78
61 66 5.60 5.64 5.67 5.71 5.74 5.78 5.81 5.84 5.86 5.89
62 67 5.68 5.72 5.76 5.80 5.84 5.87 5.91 5.94 5.97 6.00
63 68 5.76 5.80 5.85 5.89 5.93 5.97 6.01 6.05 6.08 6.12
64 69 5.84 5.89 5.94 5.98 6.03 6.07 6.12 6.16 6.20 6.24
65 70 5.92 5.98 6.03 6.08 6.13 6.18 6.23 6.27 6.32 6.36
66 71 6.01 6.07 6.12 6.18 5.23 6.28 6.34 6.39 6.44 6.49
67 72 6.10 6.16 6.22 6.28 6.33 6.39 6.45 6.51 6.56 6.62
68 73 6.19 6.25 6.32 6.38 6.44 6.50 6.57 6.63 6.69 6.75
69 74 6.29 6.35 6.42 6.48 6.55 6.62 6.68 6.75 6.82 6.89
70 75 6.38 6.45 6.52 6.59 6.66 6.73 6.81 6.88 6.95 7.02
71 76 6.48 6.55 6.63 6.70 6.77 6.85 6.93 7.01 7.09 7.17
72 77 6.58 6.66 6.73 6.81 6.89 6.97 7.05 7.14 7.22 7.31
73 78 6.69 6.77 6.85 6.93 7.01 7.10 7.18 7.27 7.36 7.46
74 79 6.80 6.88 6.96 7.04 7.13 7.22 7.32 7.41 7.51 7.61
75 80 6.91 6.99 7.08 7.17 7.26 7.35 7.45 7.55 7.65 7.76
- ---------------------------------------------------------------------------------------------------
</TABLE>
V82-300 Page 8b
<PAGE> 11
<TABLE>
ANNUITY OPTION TABLES (Cont'd)
For Each $1,000
- -------------------------------------------------------------------------------------------------------------
Option 4-MONTHLY INSTALLMENTS-JOINT AND TWO THIRDS TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Secondary Payee
Primary
Payee
- -------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- -------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.51 $4.54 $4.56 $4.59 $4.61 $4.63 $4.65 $4.67 $4.69 $4.70 $4.71
51 56 4.54 4.57 4.60 4.63 4.65 4.68 4.70 4.72 4.74 4.76 4.77
52 57 4.57 4.60 4.63 4.66 4.69 4.72 4.74 4.77 4.79 4.81 4.83
53 58 4.60 4.63 4.67 4.70 4.73 4.76 4.79 4.82 4.84 4.87 4.89
54 59 4.63 4.67 4.70 4.74 4.77 4.80 4.83 4.86 4.89 4.92 4.94
55 60 4.66 4.70 4.74 4.77 4.81 4.84 4.88 4.91 4.94 4.97 5.00
56 61 4.69 4.73 4.77 4.81 4.85 4.88 4.92 4.96 4.99 5.03 5.06
57 62 4.72 4.76 4.80 4.84 4.88 4.93 4.97 5.00 5.04 5.08 5.11
58 63 4.75 4.79 4.84 4.88 4.92 4.97 5.01 5.05 5.09 5.13 5.17
59 64 4.78 4.83 4.87 4.92 4.96 5.01 5.05 5.10 5.14 5.18 5.23
60 65 4.81 4.86 4.91 4.95 5.00 5.05 5.09 5.14 5.19 5.23 5.28
61 66 4.85 4.89 4.94 4.99 5.04 5.09 5.14 5.19 5.24 5.29 5.34
62 67 4.88 4.93 4.98 5.03 5.08 5.13 5.18 5.23 5.29 5.34 5.39
63 68 4.92 4.97 5.02 5.07 5.12 5.17 5.23 5.28 5.34 5.39 5.45
64 69 4.96 5.00 5.06 5.11 5.16 5.22 5.27 5.33 5.39 5.44 5.50
65 70 4.99 5.04 5.10 5.15 5.20 5.26 5.32 5.38 5.44 5.50 5.56
66 71 5.03 5.08 5.14 5.19 5.25 5.31 5.37 5.43 5.49 5.55 5.62
67 72 5.07 5.13 5.18 5.24 5.29 5.35 5.42 5.48 5.54 5.61 5.67
68 73 5.11 5.17 5.22 5.28 5.34 5.40 5.47 5.53 5.60 5.66 5.73
69 74 5.16 5.21 5.27 5.33 5.39 5.45 5.52 5.58 5.65 5.72 5.79
70 75 5.20 5.26 5.31 5.37 5.44 5.50 5.57 5.64 5.71 5.78 5.85
71 76 5.24 5.30 5.36 5.42 5.49 5.55 5.62 5.69 5.76 5.84 5.91
72 77 5.29 5.35 5.41 5.47 5.54 5.60 5.67 5.74 5.82 5.89 5.97
73 78 5.34 5.40 5.46 5.52 5.59 5.66 5.73 5.80 5.88 5.95 6.03
74 79 5.38 5.44 5.51 5.57 5.64 5.71 5.78 5.86 5.93 6.01 6.10
75 80 5.43 5.49 5.56 5.62 5.69 5.76 5.84 5.91 5.99 6.08 6.16
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Secondary Payee
Primary
Payee
- ---------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ---------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.73 $4.74 $4.75 $4.75 $4.76 $4.77 $4.78 $4.78 $4.79 $4.80
51 56 4.79 4.80 4.81 4.82 4.83 4.84 4.85 4.86 4.86 4.87
52 57 4.85 4.86 4.88 4.89 4.90 4.91 4.92 4.93 4.94 4.95
53 58 4.91 4.93 4.94 4.96 4.97 4.98 5.00 5.01 5.02 5.03
54 59 4.97 4.99 5.01 5.03 5.04 5.06 5.07 5.09 5.10 5.11
55 60 5.03 5.05 5.08 5.10 5.12 5.13 5.15 5.17 5.18 5.19
56 61 5.09 5.12 5.14 5.17 5.19 5.21 5.23 5.25 5.26 5.28
57 62 5.15 5.18 5.21 5.24 5.26 5.29 5.31 5.33 5.35 5.37
58 63 5.21 5.24 5.28 5.31 5.34 5.37 5.39 5.42 5.44 5.46
59 64 5.27 5.31 5.34 5.38 5.41 5.45 5.48 5.50 5.53 5.55
60 65 5.33 5.37 5.41 5.45 5.49 5.53 5.56 5.59 5.62 5.65
61 66 5.38 5.43 5.48 5.52 5.56 5.61 5.64 5.68 5.72 5.75
62 67 5.44 5.49 5.54 5.59 5.64 5.69 5.73 5.77 5.81 5.85
63 68 5.50 5.56 5.61 5.66 5.72 5.77 5.82 5.86 5.91 5.95
64 69 5.56 5.62 5.68 5.74 5.79 5.85 5.90 5.95 6.00 6.05
65 70 5.62 5.68 5.74 5.81 5.87 5.93 5.99 6.05 6.10 6.16
66 71 5.68 5.75 5.81 5.88 5.94 6.01 6.07 6.14 6.20 6.26
67 72 5.74 5.81 5.88 5.95 6.02 6.09 6.16 6.23 6.30 6.37
68 73 5.80 5.87 5.95 6.02 6.10 6.17 6.25 6.32 6.40 6.47
69 74 5.86 5.94 6.02 6.09 6.17 6.25 6.33 6.42 6.50 6.58
70 75 5.93 6.01 6.08 6.17 6.25 6.33 6.42 6.51 6.60 6.68
71 76 5.99 6.07 6.15 6.24 6.33 6.42 6.51 6.60 6.69 6.79
72 77 6.05 6.14 6.22 6.31 6.40 6.50 6.59 6.69 6.79 6.89
73 78 6.12 6.20 6.29 6.39 6.48 6.58 6.68 6.78 6.89 7.00
74 79 6.18 6.27 6.36 6.46 6.56 6.66 6.77 6.88 6.99 7.10
75 80 6.25 6.34 6.44 6.53 6.64 6.74 6.85 6.97 7.09 7.21
- ---------------------------------------------------------------------------------------------------
</TABLE>
V82-300 Page 8c
<PAGE> 12
4.12 DEATH OF PAYEE
If a payee dies, any installments still payable under a
specified certain period will be paid as they become due to
the surviving or next succeeding payee. If no designated
payee survives, the commuted value of any unpaid
installments will be paid in one sum to the estate of the
last payee to die.
4.13 RIGHTS UNDER ANNUITY OPTIONS
No payee has the right to make any change in the provisions
of the agreement or to receive the benefits in any manner
other than that stated in the agreement, unless such right
was reserved in the agreement. We will not make any
payments in advance, nor commute installments under any life
income option.
4.14 BASIS OF COMMUTATION
Commutation of installments for other than life income
options will be at the effective annual rate of 4%
compounded annually.
4.15 EXTENDED PROVISIONS
Provisions for settlement of benefits different from those
stated in this policy may only be made upon written
agreement with us.
4.16 COMPANY LIABILITY
We will be fully discharged by any payment we make before a
written request for an election, change or revocation was
made and is received in our Home Office.
SECTION 5. DEATH BENEFITS
5.01 DEATH BENEFITS
In the event of the death of the participant before the
annuity commencement date, the beneficiary of the
participant will receive the accumulated value of the
participant's individual account.
The accumulated value of a participant's individual account,
shall, for the purposes of this provision, be that value as
determined after written notice of death is received by us
at our Home Office. The death benefits may be taken in one
sum or under any of the annuity options available in our
Individual Variable Annuity Contract then being issued, if
any.
SECTION 6. TERMINATION BENEFITS
6.01 TERMINATION BENEFITS
Upon termination of participation prior to the annuity
commencement date, the participant may elect with respect to
the accumulation units in his individual account:
(a) to have the accumulated value applied to provide
annuity payments under one of the options described in
section 4; or
(b) to leave the accumulated value in the contract, in
which case the number of accumulation units in his
individual account will remain fixed, but the value
thereof will vary as described in section 3; or
(c) to receive the accumulated value on the basis of the
accumulation unit value next determined after the
written request for surrender is received by us at our
Home Office; or
(d) to convert to an Individual Variable Annuity Contract,
if appropriate individual contracts are issued by us on
the effective date of termination, on the basis set
forth by us at the time of such conversion.
SECTION 7. GENERAL PROVISIONS
7.01 CERTIFICATES
We shall issue to you for delivery to each participant an
individual certificate setting forth in substance the
benefits to which each participant is entitled under this
contract. The word "certificate" as used herein shall
include certificate riders and certificate supplements, if
any.
We will provide to you and the participants such information
and reports as the laws and regulations of the appropriate
jurisdiction shall require.
V82-300 Page 9
<PAGE> 13
7.02 GENERAL PROVISIONS GOVERNING ANNUITY PAYMENTS
Whenever any payment hereunder shall be contingent upon the
survival of some person, evidence of such person's survival
must be furnished to us either by personal endorsement by
such persons of the check drawn for such payment or by other
evidence satisfactory to us.
7.03 FACILITY OF PAYMENT
If any payee under this contract is a minor or is, in our
judgment, otherwise legally incapable of personally
receiving and giving a valid receipt for any payment due him
under this contract, we may, unless and until claim shall
have been made by a duly appointed guardian or committee of
such payee, make such payment, or any part of it, to any
person or institution then in our judgment contributing
toward, or providing for, the care and maintenance of such
person. Such payment shall completely discharge our
liability with respect to the amount so paid.
7.04 SPENDTHRIFT CLAUSE
The benefits under this contract shall not be assigned,
transferred, commuted, anticipated or encumbered and, to the
extent permitted by law, shall be exempt from attachment and
otherwise free from the claim of creditors.
7.05 PERSONAL DATA
You shall furnish any information or evidence which we may
reasonably require in order to administer this contract. If
you cannot furnish any required item of information, we may
request that any other person concerned furnish such
information. We shall not be liable for the fulfillment of
any obligations in any way dependent on such information
until we receive such information in a form satisfactory to us.
Information furnished to us may be corrected for
demonstrated errors therein unless we have already acted to
our prejudice by relying on such information. Any records
prepared by us from information furnished as described above
shall constitute prima facie evidence as to the truth of the
information so recorded.
7.06 MISSTATEMENT OF ESSENTIAL FACTS
If the date of birth or sex of any person on whose life any
payment hereunder is based has been misstated, any amount
payable under this contract with respect to such person
shall be such as the value of the Participant's Individual
Account would have purchased based on the correct date of
birth and sex. If annuity installments are being made with
respect to such person, underpayments made by us will be
added to and overpayments will be charged against annuity
installments becoming due thereafter.
7.07 MODIFICATION OF THIS CONTRACT
This contract along with any attached riders may be modified
at any time, subject to the laws of the jurisdiction in
which it is delivered, by written agreement between you and
us. No such modification shall adversely affect
accumulation units or annuity units credited to Participants
or Annuitants prior to the effective date of such
modification unless it is deemed advisable to make such
change of retroactive effect in order to meet the
requirement of any law or regulation issued by any
governmental agency or unless all affected Participants
consent thereto.
We may not make any unilateral change in this contract prior
to the third Contract Anniversary, except as required in
order to make this contract conform with any law or
regulation issued by any governmental agency. On the third
Contract Anniversary or any later Contract Anniversary we
may change this contract in any respect provided that (a)
any such modification will not affect in any way the amount
or terms of any annuity purchased prior to the effective
date of such modification, and (b) such modification shall
not change (i) the amount of deductions from withdrawals,
(ii) any factor used in determining accumulation or annuity
unit values, or (iii)
V82-300 Page 10
<PAGE> 14
any factor used to determine the amount of any annuity
installment as they apply to accumulation unit purchases by
contributions in any year not in excess of twice the first annual
contribution for Participants who were in the plan prior to the
effective date of such change. We shall give you a written
notice of any such modification at least 90 days prior to the
effective date thereof.
Any portion of an increase in the annual contribution which
causes the annual contribution to exceed twice the first
annual contribution will be subject to the contract
provisions effective at the time of the increase. These
provisions will remain applicable so long as the annual
contribution is continued at that level.
7.08 CONTRACT
This contract along with any attached rider(s) and your
application, a copy of which is attached and made a part
thereof, constitute the entire contract.
No change or modification of this contract and its rider(s)
or waiver of its conditions can be made or will be valid
unless made in writing and signed by our President, a Vice
President or Secretary. No assignment of this contract by
you shall be binding upon us unless in writing and until
filed at our Home Office. We assume no responsibility for
the validity of any assignment.
We reserve the right to terminate this contract if the Plan
ceases to be qualified under the Internal Revenue Code or
any other law.
7.09 BENEFICIARY
A Participant may designate a beneficiary to receive any
death benefit that may become payable at or after his death
as a result of the operation of the plan, and may change
such designation from time to time except in regard to a
contingent Annuitant after the Participant begins receiving
installments while the Joint and Last Survivor Life Annuity
option is in effect. Any designation or change shall be
made by written notice in a form satisfactory to us and
filed at our Home Office, and when it is received, the
designation or change shall relate back and take effect as
of the date it was signed, whether or not the Participant is
living at the time of the receipt of such written notice. A
beneficiary who becomes entitled to receive benefits under
the plan may also designate in the same manner, a beneficiary to
receive any death benefit that may become payable under the plan
at or after his death.
If no beneficiary has been designated by a payee described
above, or if no designated beneficiary is living on the date
a lump sum death benefit is payable or on the date any
installment payments are to be continued, we will pay the
lump sum death benefit or the commuted value of the
installment payments, whichever is applicable, to the person
or persons specified in the Plan. If the Plan does not
specify the person or persons to whom payment is to be made,
then we shall make payment to the former payee's spouse, if
living at the death of the payee; if not then living,
equally to the payee's children who survive him; if none are
surviving, to either the surviving father or mother of such
payee, or to both equally if both survive; if none of the
above survive the payee, to his executors or administrators.
7.10 RELATION OF THIS CONTRACT TO SEPARATE ACCOUNTS
We shall have exclusive and absolute ownership and control
of the assets of both our General Account and our Separate
Accounts. Our method of determination of the value of an
accumulation unit (or an annuity unit) will be conclusive
upon you, any Participant, and any beneficiary.
The variable annuity benefits of this contract are funded
solely from the assets of the Separate Accounts of which it
is an obligation and except to the extent of such limited
expense and mortality guarantees, shall have no claim
against any of our other assets.
The assets allocated to the Separate Accounts may be
invested in any class of
V82-300 Page 11
<PAGE> 15
investments which we are permitted to make in accordance with the
laws of Missouri, as amended from time to time, and in accordance
with the resolution adopted by our Board of Directors applicable
to such Accounts. The investment or reinvestment of such assets
shall be determined by us at our sole discretion. The
investment income and gains or losses from the assets in the
Separate Accounts shall be credited or charged against the
Separate Accounts without regard to our other investment
income or gains or losses.
The portion of the assets of the Separate Accounts equal to
the reserves and other contract liabilities with respect to
the Separate Accounts shall not be chargeable with
liabilities arising out of any other business that we may
conduct.
7.11 ANNUAL DIVIDENDS
Your Contract shares in our divisible surplus while it is in
force prior to the annuity commencement date. Each year we
will determine the share of divisible surplus, if any,
accruing to your contract. Investment results are credited
directly through the changes in the value of the
accumulation units and annuity units. Also, most mortality
and expense savings are credited directly through decreases
in the appropriate charges. Therefore, the Company expects
little or no divisible surplus to be credited to your
Contract.
7.12 DEFERMENT
Any payment from the General Account upon partial withdrawal
or termination of a Participant may be deferred by us for a
period not exceeding six months after receipt of application, or
the maximum period permitted by law if less than six months.
7.13 LIMITATION ON BENEFITS
Annuity installments to any Annuitant may be decreased if
required by the Plan. The commuted value of such decrease
shall be distributed as you direct.
7.14 VOTING RIGHTS
Our annual meeting for the election of directors and the
transaction of other business is held each year at our Home
Office in St. Louis, Missouri, at 9:00 a.m. on the fourth
Tuesday in January. We are a mutual company owned by
Policyholders and contractholders and, as such, you are
entitled to vote at such elections and participate in such
meetings in accordance with our Charter and By-laws.
V82-300 Page 12
<PAGE> 1
We will pay to the annuitant the first annuity payment under the
annuity option shown in the Contract Schedule if the annuitant is
living on the annuity commencement date. Payments thereafter
will be paid in accordance with the provisions of the annuity
option.
RIGHT TO EXAMINE AND RETURN CONTRACT WITHIN 20 DAYS
You may return this policy within 20 days after receiving it. It
may be delivered or mailed to us or the agent through whom it was
purchased. The policy shall then be deemed void from the start and
any premium paid will be returned.
INDIVIDUAL VARIABLE ANNUITY
(TAX QUALIFIED)
Funds in Separate Accounts
and General Account
Annual Division
All installments and values provided by this contract, when based
on investment experience of a separate account, are variable and
are not guaranteed as to fixed dollar amounts.
V82-400
<PAGE> 2
<TABLE>
ALPHABETICAL GUIDE TO YOUR CONTRACT
<CAPTION>
Page
<S> <C>
Accumulation Provisions. . . . . . . . . . . . . . . . . . . .6
Annuity Option Tables. . . . . . . . . . . . . . . . . . . . .10
Annuity Provisions . . . . . . . . . . . . . . . . . . . . . .9
Benefits on Lapse or Surrender . . . . . . . . . . . . . . . .7
Contract Specifications. . . . . . . . . . . . . . . . . . . .3
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .4
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . .5
Dividend Options . . . . . . . . . . . . . . . . . . . . . . .5
Endorsements . . . . . . . . . . . . . . . . . . . . . . . . .3a
Grace Period . . . . . . . . . . . . . . . . . . . . . . . . .5
Notice of Annual Meeting . . . . . . . . . . . . . . . . . . .4
Persons with an Interest in the Contract . . . . . . . . . . .14
Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . .5
Stipulated Payments. . . . . . . . . . . . . . . . . . . . . .5
Table of General Account Guaranteed Accumulation Values. . . .8
The Contract . . . . . . . . . . . . . . . . . . . . . . . . .14
Valuation Provisions . . . . . . . . . . . . . . . . . . . . .5
</TABLE>
<PAGE> 3
CONTRACT SPECIFICATIONS
CONTRACT NUMBER
ANNUITANT
AGE AT ISSUE
SEX
DATE OF ISSUE
MATURITY DATE
ANNUITY OPTION
BENEFITS (As specified in
FORM Contract and in any ANNUAL PAYMENT
NUMBERS Supplemental Agreement) COST PERIOD
- ------- ----------------------- ---- ------
Total Initial Annual
Cost
Total initial amount payable at
- --------- intervals:
THE DUE DATES OF PAYMENTS AFTER THE Variable Annuity
FIRST ARE MEASURED FROM THE DATE OF Stipulated Payment:
ISSUE AND ARE AT THE INTERVALS SPECI- Accumulation Allocation:
FLED ABOVE UNLESS SUCH INTERVAL IS
CHANGED.
THE AMOUNT PAYABLE ON THE DUE
DATES MAY CHANGE IF ANY OF THE
BENEFITS ARE CHANGED IN ACCORDANCE
WITH THE PROVISIONS OF THE CONTRACT
OR ANY SUPPLEMENTAL AGREEMENT OR Supplemental Agreement
IF ANY OF THE BENEFITS HAS AN ANNUAL Premiums:
COST INDICATED ABOVE "AS COMPUTED
EACH YEAR."
WHEN THE PREMIUM FOR ANY SUPPLE
MENTAL AGREEMENT IS NO LONGER PAY
ABLE, THE TOTAL COST WILL BE REDUCED
ACCORDINGLY.
V82-400 Page 3
<PAGE> 4
ENDORSEMENTS
Page 3a
<PAGE> 5
DEFINITIONS IN THIS POLICY
WE, US AND OUR - the General American Life Insurance Company.
YOU, YOUR - the owner of this contract. The owner is as shown in
the application unless later changed as provided in this contract.
The owner may be someone other than the annuitant.
AGE - age means the annuitant's age nearest birthday.
BENEFICIARY - the person named in the application or by later
designation to receive the proceeds in the event of the Annuitant's
death.
PROCEEDS - the amount we are obligated to pay under the terms of
this contract, when it is surrendered, matures or when the
Annuitant dies. This amount will be reduced by any partial
withdrawals.
SEPARATE ACCOUNTS - a segregated investment account named Separate
Account No. 2, and any such other Separate Account that we may
establish from time to time and which can be used in this contract,
that we established in accordance with Missouri law.
The assets allocated to the Separate Account may be invested in any
class of investments which we are permitted to make in accordance
with the laws of Missouri, as amended from time to time, and in
accordance with the resolutions adopted by the Management
Committees of the day and month Separate Accounts. The investment
or reinvestment of such assets shall be determined by us at our
sole discretion. The investment income or gains or losses from the
assets in the Separate Accounts shall be credited or charged
against the Separate Accounts without regard to our other
investment income or gains or losses. The portion of the assets of
the Separate Accounts equal to the reserves and other contract
liabilities with respect to the Separate Accounts shall not be
chargeable with liabilities arising out of any other business which
we may conduct. We reserve the right to transfer in cash amounts
which are in excess of such reserves and contract liabilities from
the Separate Accounts into the General Account.
Assets of the Separate Accounts attributable to this contract shall
be subject to a daily charge as provided in subparagraph (a)(5) of
the net investment factor provision of this contract. We guarantee
such charge for Separate Account No. 2 shall not exceed the
equivalent of a rate 1.25% a year, consisting of not more than .25%
for investment management and not more than 1% for our mortality
and expense guarantees.
GENERAL ACCOUNT - an account which consists of all of our assets
other than those in the Separate Account or any other segregated
investment account.
ACCUMULATED VALUE - this is the value, prior to maturity, of all
purchase payments plus all interest credits less the total of any
amounts withdrawn and withdrawal charges, which have been assessed.
NET ACCUMULATED VALUE - this is the accumulated value reduced by
any applicable withdrawal charges.
ACCUMULATION UNIT - this is an accounting method that we use to
determine the value of your contract prior to the annuity
commencement date.
ANNUITY UNIT - this is an accounting method that we use to
determine the amount payable under this contract on and after the
annuity commencement date.
CONTRACT ANNIVERSARY - the same day and month as the date of issue
for each succeeding year that this contract remains in force.
BUSINESS DAY - this is a day on which both we and the New York
Stock Exchange are open for business.
WRITTEN REQUEST - this must be supplied in writing form
satisfactory to us, signed by you and filed in our Home Office in
St. Louis, Missouri.
NOTICE OF ANNUAL MEETING
Our Annual Meeting for the election of Directors and the
transaction of other business is held each year at our Home
Office in St. Louis, Missouri. The meeting is at 9:00 am. on the
fourth Tuesday in January. We are a mutual company owned by our
contractholders and policyholders. Each contractholder is
entitled to vote at such elections and to participate in such
meetings.
V82-400 Page 4
<PAGE> 6
STIPULATED PAYMENTS
Each stipulated payment is payable on or before the due date at the
Home Office of the Company in St. Louis, Missouri. The due dates
of the stipulated payments are shown on the Contract Schedule. You
may change the frequency at which stipulated payments are to be
made on any Contract Anniversary. The change of frequency is
subject to our approval by giving written notice to us at the Home
Office in St. Louis, Missouri.
Your first stipulated payment is shown on the Contract Schedule.
You may increase subsequent stipulated payments on any due date up
to an amount which has an annual equivalent of twice the annual
equivalent of the initial stipulated payment. Payments in excess
of those just described will be accepted only with our consent.
You may decrease stipulated payments on any due date. The minimum
amount of stipulated payments is $25.00. When we receive a
stipulated payment that is different from the previous payment, we
will consider this a notice of change of the stipulated payment.
GRACE PERIOD
Your stipulated payment is in default if you do not pay it on or
before its due date. We will allow a Grace Period of 31 days after
the premium due date for payment of each stipulated payment except
the first. Each stipulated payment that we receive during the
Grace Period will be allocated under the Contract in accordance
with the accumulation provisions.
REINSTATEMENT
Your contract may be reinstated if a stipulated payment is in
default and if the accumulated value has not been applied under the
surrender provision. Reinstatement may be made during the lifetime
of the Annuitant but before the annuity commencement date by the
payment of one stipulated payment. You may reinstate benefits
provided by any supplemental agreement attached to this contract by
providing evidence of insurability satisfactory to the Company.
You must comply with the reinstatement provisions incorporated in
such supplemental agreement.
DIVIDENDS
ANNUAL DIVIDENDS - Your contract shares in our divisible surplus
while it is in force prior to the annuity commencement date. Each
year we will determine the shares of divisible surplus, if any,
accruing to your contract. Investment results are credited
directly through the changes in the value of the accumulation units
and annuity units. Also, most mortality and expense savings are
credited directly through decreases in the appropriate charges.
Therefore, the Company expects little or no divisible surplus to be
credited to your Contract.
DIVIDEND OPTIONS
You may choose one of the following options:
OPTION 1. Cash. Paid in cash.
OPTION 2. Reduce stipulated payment. Used to pay part or all of
the stipulated payment on your contract.
OPTION 3. Deposits. Left with the Company to accumulate at
interest. The interest rate will be determined by us from time to
time. This rate will never be less than 3.4 percent per year,
compounded annually.
You may choose a dividend option within 31 days after a dividend is
credited. If you do not, we will credit the dividend under Option
3 until such time as you request a different option.
You may withdraw in cash the entire dividend deposit, or any part
of it, if you provide a proper written request. The premium for
any supplemental agreement may not be paid from any dividend
deposits remaining with the company. When your Contract matures,
dividend deposits will be payable as part of the Contract proceeds.
VALUATION PROVISIONS
NET INVESTMENT FACTOR. The General Account net investment factor
for any Business Day is 1.0 plus a rate of investment income that
we will declare in advance. We guarantee that the rate will be no
less than 4 percent per year compounded annually.
Page 5
<PAGE> 7
The Separate Account net investment factor for any business day is
(a) dividend by (b) where
(a) is
(1) the value of the assets in the Separate Account at the
end of the previous business day for contracts receiving
the same or similar tax treatment as this contract, plus
(2) the investment income and the capital gains, realized or
unrealized, credited to such assets since the end of the
previous business day, minus
(3) the capital losses, realized or unrealized charged
against such assets in such period, minus
(4) any amount charged against the Separate Account in such
a period for taxes or as a reserve for taxes attributable
to the maintenance or operation of the Separate Account
for contracts receiving the same or similar tax treatment
as this contract, minus
(5) a charge for investment management services and mortality
and expense rate guarantees to be determined by us but
not to exceed .003445 percent of such assets for each
calendar day since the end of the previous business day.
(b) is the value of the assets in the Separate Account at the end
of the previous business day for contracts receiving the same
or similar tax treatment as this contract.
ACCUMULATION UNIT VALUE. The value of a Separate Account No. 2
accumulation unit is established at 10.00 dollars as of the end of
the Business Day on January 4, 1971, and the value of a General
Account accumulation unit is established at 10.00 dollars as of the
end of the business day on April 1, 1982. The value of the
respective accumulation unit is determined at the end of any later
Business Day. The value is determined by multiplying the
accumulation unit value for the end of the immediately preceding
Business Day by the net investment factor for such later Business
Day.
ANNUITY UNIT VALUE. The value of a Separate Account No. 2 Annuity
Unit is established at 10.00 dollars as of the end of the business
day on January 4, 1971, and the value of a General Account Annuity
Unit is established at 10.00 dollars at the end of the business day
on April 1, 1982. The value of the respective annuity unit is
determined at the end of any later business day. The value is
determined by multiplying such value for the end of the preceding
business day by the product of (a) .99989256 once for each calendar
year between the end of the sixth preceding business day and the
end of the fifth preceding business day and (b) the next investment
factor for the fifth business day preceding such business day.
VALUATION OF ASSETS. Assets in the Separate Accounts shall be
valued at the end of each business day at their fair market value
or, where there is no readily available market, at their fair value
as determined by us, in accordance with recognized accounting
procedures. Direct expenses involved in the purchase or sale of
assets for the Separate Accounts, including, but not limited to,
brokerage commission, exchange fees, taxes, and postage, shall be
included in such valuation.
ACCUMULATION PROVISIONS
ALLOCATION OF STIPULATED PAYMENTS. The stipulated payments will be
allocated between the Separate Accounts and the General Account in
the proportion shown on the contract schedule or as you may change
at a later date. You may elect an allocation to the Separate
Accounts between zero percent and 100 percent in multiples of one
percent with the balance being allocated to the General Account,
provided that the amount allocated to any account must be at least
25.00 dollars. Such allocation may be changed by written notice
submitted to us with the stipulated payment.
NET STIPULATED PAYMENT. We will deduct from any payment the
premium for any benefits provided by a supplemental agreement. The
remainder will be the stipulated payment. We may deduct applicable
premium taxes or we may defer deduction of the premium taxes until
the annuity commencement date, if permitted by state law. The
remaining balance is the net stipulated payment.
V82-400 Page 6
<PAGE> 8
The number of accumulation units that we will credit to each
account is determined by dividing the portion of the net stipulated
payment for that account by the Accumulation Unit value for that
account at the end of the Business Day coincident with or next
following the day on which the stipulated payment is received by us
at the Home Office. The number of Accumulation Units so determined
will not be affected by any subsequent changes in the values of the
Accumulation Units. The Accumulation Unit value of the General
Account will increase at a rate not less than the guaranteed rate
and the Accumulation Unit value of the Separate Account may
increase or decrease from day to day.
PARTIAL WITHDRAWAL. At any time while the annuitant is living and
prior to the maturity date, you may withdraw a portion of the
Accumulated Value of this Contract from either of the Separate
Accounts or the General Account by giving us a written request.
However, the amount may not be less than $ 100.00. Unless you tell
us otherwise in the request, the withdrawal will be made based on
the current allocation of contributions to the General Account and
the Separate Accounts. The amount of the withdrawal will be
deducted from the Accumulated Value of either account as of the
date of withdrawal and a withdrawal charge will be deducted from
your accumulated value. (See Contingent Deferred Sales Charge
below.)
BENEFITS ON LAPSE OR SURRENDER
NON-FORFEITURE OPTION. You may elect either of the following non-
forfeiture options by writing to us at our Home Office prior to the
death of the Annuitant and prior to the annuity commencement date.
If you do not elect a nonforfeiture option within 31 days after the
date of default in stipulated payments, we will continue this
contract under the paid-up Annuity Option from the date of default.
CASH SURRENDER. You may, while the Annuitant is alive and prior to
the maturity date, surrender this contract for its Net Accumulated
Value. During the first nine Contract years, we will deduct a
surrender charge from the accumulated value of the Contract as of
the date of surrender. (See Deferred Contingent Sales Charge.)
PAID-UP ANNUITY. You may continue this Contract so that at the
annuity commencement date benefits as provided by the then existing
accumulated units may be received. The death benefit prior to the
annuity commencement date is as stated above under the section
titled Death Benefit.
CONTINGENT DEFERRED SALES CHARGE. During the first nine years of
this contract we will deduct a withdrawal or surrender charge that
will never exceed the lesser of 9% of total net contributions or an
amount calculated according to the following schedule:
<TABLE>
<CAPTION>
Withdrawal/
Contract Year Surrender Charge
- ------------- ----------------
<S> <C>
1 9%
2 8
3 7
4 6
5 5
6 4
7 3
8 2
9 1
</TABLE>
After the 9th contract year we will not deduct a withdrawal or
surrender charge. We will not deduct a withdrawal or surrender
charge if the annuitant dies or becomes totally disabled. Also, we
will not deduct a withdrawal or surrender charge if the accumulated
value is annuitized after the fifth contract year.
Page 7
<PAGE> 9
TABLE OF GENERAL ACCOUNT GUARANTEED ACCUMULATION VALUES
(NOTE: This Table is not Applicable to any Accumulations
---- in a Separate Account)
The following table shows the Guaranteed Accumulation value and the
Guaranteed Surrender Value in the General Account portion of your
contract with an annual stipulated payment of $1,000.00. This
table assumes that (1) all of the annual stipulated payment is
allocated to the General Account, (2) you will pay all annual
stipulated payments, when due, on the policy issue date or any
anniversary thereof, (3) the cost of any supplemental agreement or
premium tax is not included in the $1,000.00 figure, and (4) you
make no withdrawals from the General Account portion of the
contract.
<TABLE>
<CAPTION>
Annual Guaranteed Guaranteed
Contract Stipulated Accumulated Value Surrender Value
Year Payment At End of Year<F*> At End of Year
-------- ---------- ------------------ ---------------
<S> <C> <C> <C>
1 $1,000.00 $ 1,040.00 $ 946.40
2 1,000.00 2,121.60 1,951.87
3 1,000.00 3,246.46 3,019.21
4 1,000.00 4,416.32 4,151.34
5 1,000.00 5,632.98 5,351.33
6 1,000.00 6,898.29 6,622.36
7 1,000.00 8,214.23 7,967.80
8 1,000.00 9,582.80 9,391.14
9 1,000.00 11,006.11 10,896.05
10 1,000.00 12,486.35 12,486.35
11 1,000.00 14,025.81 14,025.81
12 1,000.00 15,626.84 15,626.84
13 1,000.00 17,291.91 17,291.91
14 1,000.00 19,023.59 19,023.59
15 1,000.00 20,824.53 20,824.53
16 1,000.00 22,697.51 22,697.51
17 1,000.00 24,645.41 24,645.41
18 1,000.00 26,671.23 26,671.23
19 1,000.00 28,778.08 28,778.08
20 1,000.00 30,969.20 30,969.20
30 1,000.00 58,328.34 58,328.34
40 1,000.00 98,826.54 98,826.54
<FN>
<F*>The Guaranteed Accumulation Value in the General Account is the accumulated
value of the net stipulated payments at the guaranteed 4 percent interest
rate.
</TABLE>
Each Contractowner will be sent an annual statement of the number of
accumulation units granted to him as of the end of the preceding contract
year and of the value of an accumulation unit at that time.
V82-400 Page 8
<PAGE> 10
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE. The annuity commencement date is shown on the
Contract Schedule, unless this date has been changed by you. Any change must
be made in writing to us at our Home Office at least 30 days before the
earlier of the then effective and the newly designated annuity commencement
date.
ELECTION OF OPTION. The Annuity Option is shown on the Contract Schedule,
unless you have changed it. Any change in option must be made in writing to
us at the Home Office at least 30 days before the date such election is to
become effective. Option 7 is not available to the Annuitant, but only to a
Beneficiary.
You, or if you have not done so, the Beneficiary after the death of the
Annuitant, may elect instead of payment in one sum, that any amount due by us
under this Contract to the Beneficiary be applied under any of the options
described below. If an election is not made within one year after the death
of the Annuitant by written notice to us at our Home Office, such payment
will be made in one sum.
If Option 2 or 5 is elected, installments may not be guaranteed for a period
longer than the life expectancy of the Annuitant.
ANNUITY OPTIONS. (See Annuity Option Tables at the end of this section.) At
the maturity of this policy, the proceeds may be placed under any of the
following options:
OPTION 1.
LIFE ANNUITY. We will pay a monthly income during a persons lifetime,
which will cease with the last installment preceding the death of that
person.
OPTION 2.
LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY INSTALLMENTS GUARANTEED.
We will pay a monthly income during a persons lifetime with the guarantee
that if, at death of the person, installments have been made for less than
60 months, 120 months, 180 month, or 240 months, as elected, installments
shall be continued to the Beneficiary during the remainder of the elected
period.
OPTION 3.
UNIT REFUND LIFE ANNUITY. We will pay a monthly income during a persons
lifetime that will cease with the last installment due prior to the death
of that person, with the guarantee that, at the death of the payee the
Beneficiary will receive an additional payment of the dollar value of the
number of annuity units equal to the excess, if any, of (a) over (b) where
(a) is the total applied under the option divided by the annuity unit
value at the annuity commencement date and (b) is the number of annuity
units represented by each installment multiplied by the number of
installments made. Such dollar value shall be determined by multiplying
the above number of annuity units by the annuity unit value on the
Business Day coincident with or next following the date on which written
notice of death is received by us at our Home Office.
OPTION 4.
JOINT AND SURVIVOR INCOME FOR LIFE. We will pay monthly installments
jointly to two payees if both are living when the installments become
payable. The annuitant will be designated as primary payee. Full
installments will continue so long as the primary payee is living. If the
primary payee dies after installments begin, full installments or
installments of 1/2 or 2/3, (whichever you elected when applying for this
option) will continue to the other payee during his or her lifetime.
OPTION 5.
INCOME FOR A FIXED PERIOD. We will pay the proceeds in equal installments
over a period of from 3 to 30 years. The amount of each installments will
be based upon the period and the frequency of the installments selected
from Option 5 Table.
OPTION 6.
Income of a Fixed Amount. We will pay the proceeds in equal installments
in the amount and at the intervals agreed upon until the proceeds applied
under this option, with interest credited at the current annual rate,
Page 9
<PAGE> 11
are exhausted. The final installment will be for the then remaining
balance only.
OPTION 7.
INTEREST INCOME. We will hold the proceeds on deposit and pay or credit
interest at the current annual rate. Payment of interest will be at such
times and for such periods as are agreeable to you and us.
DATE OF PAYMENT. The first payment under Option 7 will be made at the end of
the period selected, measured from the date on which written notice of death
is received by us at the Home Office. The first payment under any other
option shall be made on the annuity commencement date or upon the date of
surrender or as of the date on which written notice of death is received by
us at the Home Office, as applicable.
ALLOCATION OF ANNUITY. When you elect one of the first five annuity options,
you may further elect to have the annuity purchased in the form of the
variable annuity, guaranteed annuity, or a combination of both. If you elect
option 6, you may specify whether the net investment factor for Separate
Account No. 2 or the General Account is to apply, or whether the amount due
shall be split between the two accounts. If no election is made to the
contrary on these options, that portion of accumulated value in the Separate
Account shall be applied to provide a variable annuity and that portion in
the General Account shall be applied to provide a guaranteed annuity. If you
elect option 7, we will consider this an election to place the entire
accumulated value in the General Account.
MINIMUM AMOUNTS. The minimum amount for each payee that can be placed under
an option and the minimum amount of any payments under an option will be
based on our rules at the time the option is to become effective.
The minimum amount to be placed under an option is $5,000, and the minimum
amount of any payment is $50 per month, unless these amounts are waived by
us.
GUARANTEED ANNUITY OPTION INTEREST RATE. We use a guaranteed effective
annual rate of 4% in computing payments under all options.
FIRST PAYMENT. We will make the first payment as of the option effective
date.
PAYEE. A person who receives benefits under an option is a payee. Except
for a legal guardian, a payee must be a natural person receiving benefits in
his or her own right. With our consent, the payee may be a trustee,
assignee, corporation, or partnership.
CONTINGENT PAYEE. The payee may name contingent payees, subject to any
restrictions under an annuity option chosen during the annuitant's lifetime,
under the following conditions:
(1) If you are the payee; or
(2) If at any time after the annuitant's death and during the option
period, no previously named contingent payee is living.
Designations made by the payee under these provisions may be changed by the
payee. Such changes must be made by written request satisfactory to us.
Changes will only take effect when we accept them in writing at our Home
Office. At that time, the contingent interest of any other person is
terminated as of the date the payee signed the request, whether or not the
payee is living when we receive the request.
LIFE INCOME OPTIONS. Life Income Options are based on the payee's sex and
age nearest birthday on the annuity option effective date. We have the right
to require satisfactory proof of age and sex. If age or sex has been
incorrectly stated, the proper adjustments in payments will be made. We may
also require proof that the payee is living on any payment due date.
DEATH OF PAYEE. If a payee dies, any installments still payable under a
specified certain period will be paid as they become due to the surviving or
next succeeding payee. If no designated payee survives, the commuted value
of any unpaid installments will be paid in one sum to the estate of the last
payee to die.
RIGHTS UNDER ANNUITY OPTIONS. No payee has the right to make any change in
the provisions of the agreement or to receive the benefits in any manner
other than that stated in the agreement, unless such right was reserved in
the agreement. We will not make any payments in advance, nor commute
installments under any life income option.
V82-400 Page 10
<PAGE> 12
<TABLE>
ANNUlTY OPTION TABLES
For Each $1,000
<CAPTION>
Option 1 Option 2 Option 3 Option 5
-----------------------------------------------------------------------------------------------
60 120 180 240
Age of Payee Life Months Months Months Months Unit Income for a
Male Female Annuity Guar. Guar. Guar. Guar. Refund Fixed Period
-----------------------------------------------------------------------------------------------
Years Monthly
Certain Installments
------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 50 $ 4.70 $ 4.69 $4.66 $4.60 $ 4.53 $4.50
46 51 4.77 4.76 4.72 4.66 4.57 4.55
47 52 4.84 4.83 4.79 4.72 4.62 4.60
48 53 4.92 4.91 4.86 4.78 4.67 4.65 3 $29.39
49 54 5.00 4.98 4.93 4.84 4.73 4.71 4 22.47
50 55 5.09 5.07 5.01 4.91 4.78 4.77 5 18.32
51 56 5.17 5.15 5.08 4.98 4.84 4.83 6 15.56
52 57 5.27 5.24 5.17 5.05 4.89 4.89 7 13.59
53 58 5.36 5.33 5.25 5.12 4.95 4.96 8 12.11
54 59 5.46 5.43 5.34 5.19 5.01 5.03 9 10.97
55 60 5.57 5.54 5.43 5.27 5.06 5.10 10 10.06
56 61 5.68 5.64 5.53 5.35 5.12 5.18 11 9.31
57 62 5.80 5.76 5.63 5.43 5.18 5.26 12 8.69
58 63 5.93 5.88 5.73 5.51 5.24 5.34 13 8.17
59 64 6.06 6.00 5.84 5.60 5.30 5.43 14 7.72
60 65 6.20 6.14 5.96 5.69 5.36 5.52 15 7.34
61 66 6.35 6.28 6.08 5.78 5.42 5.62 16 7.00
62 67 6.51 6.43 6.21 5.87 5.48 5.72 17 6.70
63 68 6.69 6.59 6.34 5.97 5.53 5.82 18 6.44
64 69 6.87 6.77 6.48 6.06 5.58 5.93 19 6.21
65 70 7.07 6.95 6.62 6.16 5.64 6.05 20 6.00
66 71 7.28 7.14 6.77 6.25 5.69 6.17 21 5.81
67 72 7.51 7.35 6.93 6.35 5.73 6.30 22 5.64
68 73 7.75 7.57 7.09 6.44 5.77 6.43 23 5.49
69 74 8.01 7.81 7.26 6.54 5.81 6.57 24 5.35
70 75 8.30 8.05 7.43 6.63 5.85 6.71 25 5.22
71 76 8.60 8.32 7.60 6.72 5.88 6.85 26 5.10
72 77 8.93 8.60 7.78 6.80 5.91 7.02 27 4.99
73 78 9.28 8.90 7.96 6.88 5.93 7.17 28 4.89
74 79 9.67 9.21 8.14 6.95 5.95 7.34 29 4.80
75 80 10.08 9.55 8.32 7.02 5.96 7.51 30 4.72
76 81 10.53 9.90 8.50 7.08 5.98 7.70 --------------------
77 82 11.02 10.27 8.67 7.13 5.98 7.87
78 83 11.54 10.66 8.84 7.18 5.99 8.06
79 84 12.11 11.06 9.01 7.22 5.99 8.25
80 85 and 12.73 11.48 9.16 7.25 6.00 8.46
81 over 13.41 11.92 9.31 7.27 6.00 8.65
82 14.14 12.38 9.44 7.29 6.00 8.83
83 14.95 12.85 7.31 7.31 6.00 9.02
84 15.84 13.33 9.67 7.32 6.00 9.19
85 and 16.82 13.83 9.76 7.32 6.00 9.39
over
---------------------------------------------------------------------------
</TABLE>
Page 11
<PAGE> 13
<TABLE>
ANNUITY OPTION TABLES (Contd)
For Each $1,000
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Option 4--MONTHLY INSTALLMENTS JOINT AND EQUAL TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
Age of Primary
Payee Age of Secondary Payee
- -------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.27 $4.30 $4.34 $4.37 $4.40 $4.43 $4.46 $4.49 $4.51 $4.53 $4.55
51 56 4.28 4.32 4.36 4.39 4.43 4.46 4.49 4.52 4.55 4.57 4.59
52 57 4.29 4.33 4.37 4.41 4.45 4.49 4.52 4.55 4.58 4.61 4.64
53 58 4.30 4.34 4.38 4.43 4.47 4.51 4.55 4.58 4.62 4.65 4.68
54 59 4.30 4.15 4.39 4.44 4.49 4.53 4.57 4.61 4.65 4.69 4.72
55 60 4.31 4 36 4.40 4.45 4.50 4.55 4.59 4.64 4.68 4.72 4.76
56 61 4.31 4 36 4.41 4.46 4.51 4.56 4.61 4.66 4.71 4.75 4.79
57 62 4.32 4.37 4.42 4.47 4.53 4.58 4.63 4.68 4.73 4.78 4.83
58 63 4.32 4.37 4.43 4.48 4.54 4.59 4.65 4.70 4.76 4.81 4.86
59 64 4.33 4.38 4.43 4.49 4.55 4.60 4.66 4.72 4.78 4.83 4.89
60 65 4.33 4.38 4.44 4.50 4.56 4.62 4.68 4.74 4.80 4.86 4.92
61 66 4.33 4.39 4.45 4.51 4.57 4.63 4.69 4.75 4.81 4.88 4.94
62 67 4.34 4.40 4.45 4.51 4.57 4.64 4.70 477 4.83 4.90 4.96
63 68 4.34 4.40 4.46 4.52 4.58 4.65 4.71 4.78 4.85 4.92 4.98
64 69 4.35 4.41 4.47 4.53 4.59 4.66 4.72 4.79 4.86 4.93 5.00
65 70 4 35 4.41 4.47 4.53 4.60 4.67 4.73 4.80 4.88 4.95 5.02
66 71 4.36 4.42 4.48 4.54 4.61 4.67 4.74 4.81 4.89 4.96 5.04
67 72 4.37 4.42 4.49 4.55 4.62 4.68 4.75 4.83 4.90 4.98 5.06
68 73 4.37 4.43 4.49 4.56 4.62 4.69 4.76 4.84 4.91 4.99 5.07
69 74 4.38 4.44 4.50 4.56 4.63 4.70 4.77 4.85 4.92 5.00 5.09
70 75 4.38 4.44 4.51 4.57 4.64 4.71 4.78 4.86 4.93 5.02 5.10
71 76 4.39 4.45 4.51 4.58 4.65 4.72 4.79 4.87 4.94 5.03 5.11
72 77 4.39 4.45 4.52 4.58 4.65 4.72 4.80 4.87 4.95 5.04 5.12
73 78 4.40 4.46 4.52 4.59 4.66 4.73 4.81 4.88 4.96 5.05 5.14
74 79 4.41 4.47 4.53 4.60 4.67 4.74 4.81 4.89 4.97 5.06 5.15
75 80 4.41 4.47 4.54 4.60 4.67 4.75 4.82 4.90 4.98 5.07 5.16
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUITY OPTION TABLES (Contd)
For Each $1,000
- -------------------------------------------------------------------------------------------------------------
Option 4--MONTHLY INSTALLMENTS JOINT AND EQUAL TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
Age of Primary
Payee Age of Secondary Payee
- -------------------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- -------------------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.56 $4.58 $4.59 $4.60 $4.62 $4.63 $4.64 $4.65 $4.66 $4.67
51 56 4.61 4.63 4.65 4.66 4.68 4.69 4.70 4.71 4.72 4.73
52 57 4.66 4.68 4.70 4.72 4.74 4.75 4.77 4.78 4.79 4.80
53 58 4.71 4.73 4.76 4.78 4.80 4.81 4.83 4.85 4.86 4.88
54 59 4.75 4.78 4.81 4.83 4.86 4.88 4.90 4.92 4.93 4.95
55 60 4.79 4.83 4.86 4.89 4.92 4.94 4.96 4.98 5.00 5.02
56 61 4.84 4.87 4.91 4.94 4.97 5.00 5.03 5.05 5.08 5.10
57 62 4.87 4.92 4.96 5.00 5.03 5.06 5.10 5.12 5.15 5.18
58 63 4.91 4.96 5.00 5.05 5.09 5.12 5.16 5.19 5.22 5.25
59 64 4.94 5.00 5.05 5.09 5.14 5.18 5.22 5.26 5.30 5.33
60 65 4.97 5.03 5.09 5.14 5.19 5.24 5.29 5.33 5.37 5.41
61 66 5.00 5.06 5.12 5.18 5.24 5.29 5.35 5.40 5.44 5.49
62 67 5.03 5.10 5.16 5.22 5.29 5.35 5.40 5.46 5.51 5.56
63 68 5.05 5.12 5.19 5.26 5.33 5.40 5.46 5.52 5.58 5.64
64 69 5.08 5.15 5.22 5.30 5.37 5.44 5.51 5.58 5.65 5.71
65 70 5.10 5.18 5.25 5.33 5.41 5.49 5.56 5.64 5.71 5.78
66 71 5.12 5.20 5.28 5.36 5.45 5.53 5.61 5.69 5.77 5.85
67 72 5.14 5.22 5.31 5.39 5.48 5.57 5.66 5.74 5.83 5.92
68 73 5.16 5.24 5.33 5.42 5.51 5.60 5.70 5.79 5.89 5.98
69 74 5.17 5.26 5.35 5.44 5.54 5.64 5.73 5.83 5.94 6.04
70 75 5.19 5.28 5.37 5.47 5.56 5.67 5.77 5.87 5.98 6.09
71 76 5.20 5.29 5.39 5.49 5.59 5.69 5.80 5.91 6.03 6.14
72 77 5.21 5.31 5.40 5.51 5.61 5.72 5.83 5.95 6.07 6.19
73 78 5.23 5.32 5.42 5.52 5.63 5.74 5.86 5.98 6.10 6.23
74 79 5.24 5.34 5.44 5.54 5.65 5.77 5.88 6.01 6.14 6.27
75 80 5.25 5.35 5.45 5.56 5.67 5.79 5.91 6.04 6.17 6.31
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
ANNUITY OPTION TABLES (Contd)
For Each $1,000
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Option 4--MONTHLY INSTALLMENTS--JOINT AND ONE-HALF TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
Age of Primary
Payee Age of Secondary Payee
- -------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.64 $4.66 $4.68 $4 70 $4.72 $4.74 $4.75 $4.77 $4.78 $4.79 $4.80
51 56 4.68 4.71 4.71 4.75 4.77 4.79 4.81 4.83 4.84 4.85 4.87
52 57 4.73 4.75 4.78 4.80 4.82 4.84 4.87 4.88 4.90 4.92 4.93
53 58 4.77 4.80 4.82 4.85 4.87 4.90 4.92 4.94 4.96 4.98 5.00
54 59 4.81 4.84 4.87 4.90 4.93 4.95 4.98 5.00 5.02 5.05 5.07
55 60 4.86 4.89 4.92 4.95 4.98 5.01 5.04 5.06 5.09 5.11 5.13
56 61 4.90 4.94 4.97 5.00 5.01 5.06 5.09 5.12 5.15 5.18 5.20
57 62 4.95 4.98 5.02 5.05 5.09 5.12 5.15 5.18 5.21 5.24 5.27
58 63 5.00 5.03 5.07 5.11 5.14 5.18 5.21 5.24 5.28 5.31 5.34
59 64 5.05 5.09 5.12 5.16 5.20 5.23 5.27 5.31 5.34 5.38 5.41
60 65 5.10 5.14 5.18 5.21 5.25 5.29 5.33 5.37 5.41 5.45 5.48
61 66 5.15 5.19 5.23 5.27 5.31 5.35 5.40 5.44 5.48 5.52 5.56
62 67 5.21 5.25 5.29 5.33 5.37 5.42 5.46 5.50 5.55 5.59 5.63
63 68 5.27 5.31 5.35 5.39 5.44 5.48 5.53 5.57 5.62 5.67 5.71
64 69 5.33 5.37 5.41 5.46 5.50 5.55 5.60 5.65 5.69 5.74 5.79
65 70 5.39 5.43 5.48 5.52 5.57 5.62 5.67 5.72 5.77 5.82 5.87
66 71 5.45 5.50 5.55 5.59 5.64 5.69 5.74 5.80 5.85 5.90 5.96
67 72 5.52 5.57 5.62 5.67 5.72 5.77 5.82 5.87 5.93 5.99 6.04
68 73 5.59 5.64 5.69 5.74 5.79 5.85 5.90 5.96 6.01 6.07 6.13
69 74 5.66 5.71 5.76 5.82 5.87 5.92 5.98 6.04 6.10 6.16 6.22
70 75 5.74 5.79 5.84 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.32
71 76 5.81 5.86 5.92 5.97 6.03 6.09 6.15 6.22 6.28 6.35 6.41
72 77 5.09 5.94 6.00 6.06 6.12 6.18 6.24 6.31 6.37 6.44 6.51
73 78 5.97 6.03 6.08 6.14 6.20 6.27 6.33 6.40 6.47 6.54 6.61
74 79 6.05 6 11 6.17 6.23 6.29 6.36 6.43 6.50 6.57 6.64 6.72
75 80 6.14 6.20 6.26 6.32 6.39 6.45 6.52 6.60 6.67 6.75 6.82
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUITY OPTION TABLES (Contd)
For Each $1,000
- -------------------------------------------------------------------------------------------------------------
Option 4--MONTHLY INSTALLMENTS--JOINT AND ONE-HALF TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
Age of Primary
Payee Age of Secondary Payee
- -------------------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- -------------------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.81 $4.82 $4.83 $4.83 $4.84 $4.85 $4.85 $4.86 $4.86 $4.87
51 56 4.88 4.89 4.90 4.90 4.91 4.92 4.93 4.93 4.94 4.94
52 57 4.95 4.96 4.97 4.98 4.99 5.00 5.00 5.01 5.02 5.02
53 58 5.01 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5 10 5.11
54 59 5.08 5.10 5.12 5.13 5.14 5.15 5.17 5.18 5.18 5.19
55 60 5.15 5.17 5.19 5.21 5.22 5.24 5.25 5.26 5.27 5.28
56 61 5.23 5.25 5.27 5.29 5.31 5.32 5.34 5.35 5.16 5.38
57 62 5.30 5.32 5.35 5.37 5.39 5.41 5.43 5.44 5.46 5.47
58 63 5.37 5.40 5.43 5.45 5.48 5.50 5.52 5.54 5.55 5.57
59 64 5.45 5.48 5.51 5.54 5.56 5.59 5.61 5.63 5.65 5.67
60 65 5.52 5.56 5.59 5.62 5.65 5.68 5.71 5.73 5.76 5.78
61 66 5.60 5.64 5.67 5.71 5.74 5.78 5.81 5.84 5.86 5.89
62 67 5.68 5.72 5.76 5.80 5.84 5.87 5.91 5.94 5.97 6.00
63 68 5.76 5.80 5.85 5.89 5.93 5.97 6.01 6.05 6.08 6.12
64 69 5.84 5.89 5.94 5.98 6.03 6.07 6.12 6.16 6.20 6.24
65 70 5.92 5.98 6.03 6.08 6.13 6.18 6.23 6.27 6.32 6.36
66 71 6.01 6.07 6.12 6.18 6.23 6.28 6.34 6.39 6.44 6.49
67 72 6.10 o.16 6.22 6.28 6.33 6.39 6.45 6.51 6.56 6.62
68 73 6.19 6.25 6.32 6.38 6.44 6.50 6.57 6.63 6.69 6.75
69 74 6.29 6.15 6.42 6.48 6.55 6.62 6.68 6.75 6.82 6.89
70 75 6.38 6.45 6.52 6.59 6.66 6.73 6.81 6.88 6.95 7.02
71 76 6.48 6.55 6.63 6.70 6.77 6.85 6.93 7.01 7.09 7.17
72 77 6.58 6.66 6.73 6.81 6.89 6.97 7.05 7.14 7.22 7.31
73 78 6.69 6.77 6.85 6.93 7.01 7.10 7.18 7.27 7.36 7.46
74 79 6.80 6.88 6.96 7.04 7.13 7.22 7.32 7.41 7.51 7.61
75 80 6.91 6.99 7.08 7.17 7.26 7.35 7.45 7.55 7.65 7.76
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 12
<PAGE> 14
<TABLE>
ANNUITY OPTION TABLES (Contd)
For Each $1,000
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Option 4--MONTHLY INSTALLMENTS--JOINT AND TWO THIRDS TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
Age of Primary
Payee Age of Secondary Payee
- -------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.51 $4.54 $4.56 $4.59 $4.61 $4.63 $4.65 $4.67 $4.69 $4.70 $4.71
51 56 4.54 4.57 4.60 4.63 4.65 4.68 4.70 4.72 4.74 4.76 4.77
52 57 4.57 4.60 4.63 4.66 4.69 4.72 4.74 4.77 4.79 4.81 4.83
53 58 4.60 4.63 4.67 4.70 4.73 4.76 4.79 4.82 4.84 4.87 4.89
54 59 4.63 4.67 4.70 4.74 4.77 4.80 4.83 4.86 4.89 4.92 4.94
55 60 4.66 4.70 4.74 4.77 4.81 4.84 4.88 4.91 4.94 4.97 5.00
56 61 4.69 4.73 4.77 4.81 4.85 4.88 4.92 4.96 4.99 5.03 5.06
57 62 4.72 4.76 4.80 4.84 4.88 4.93 4.97 5.00 5.04 5.08 5.11
58 63 4.75 4.79 4.84 4.88 4.92 4.97 5.01 5.05 5.09 5.13 5.17
59 64 4.78 4.83 4.87 4.92 4.96 5.01 5.05 5.10 5.14 5.18 5.23
60 65 4.81 4.86 4.91 4.95 5.00 5.05 5.09 5.14 5.19 5.23 5.28
61 66 4.85 4.89 4.94 4.99 5.04 5.09 5.14 5.19 5.24 5.29 5.34
62 67 4.88 4.93 4.98 5.03 5.08 5.13 5.18 5.23 5.29 5.34 5.39
63 68 4.92 4.97 5.02 5.07 5.12 5.17 5.23 5.28 5.34 5.39 5.45
64 69 4.96 5.00 5.06 5.11 5.16 5.22 5.27 5.33 5.39 5.44 5.50
65 70 4.99 5.04 5.10 5.15 5.20 5.26 5.32 5.38 5.44 5.50 5.56
66 71 5.03 5.08 5.14 5.19 5.25 5.31 5.37 5.43 5.49 5.55 5.62
67 72 5.07 5.13 5.18 5.24 5.29 5.35 5.42 5.48 5.54 5.61 5.67
68 73 5.11 5.17 5.22 5.28 5.34 5.40 5.47 5.53 5.60 5.66 5.73
69 74 5.16 5.21 5.27 5.33 5.39 5.45 5.52 5.58 5.65 5.72 5.79
70 75 5.20 5.26 5.31 5.37 5.44 5.50 5.57 5.64 5.71 5.78 5.85
71 76 5.24 5.30 5.36 5.42 5.49 5.55 5.62 5.69 5.76 5.84 5.91
72 77 5.29 5.35 5.41 5.47 5.54 5.60 5.67 5.74 5.82 5.89 5.97
73 78 5.34 5.40 5.46 5.52 5.59 5.66 5.73 5.80 5.88 5.95 6.03
74 79 5.38 5.44 5.51 5.57 5.64 5.71 5.78 5.86 5.93 6.01 6.10
75 80 5.43 5.49 5.56 5.62 5.69 5.76 5.84 5.91 5.99 6.086 6.16
.16
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUITY OPTION TABLES (Contd)
For Each $1,000
- -------------------------------------------------------------------------------------------------------------
Option 4--MONTHLY INSTALLMENTS--JOINT AND TWO THIRDS TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------------
Age of Primary
Payee Age of Secondary Payee
- -------------------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- -------------------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.73 $4.74 $4.75 $4.75 $4.76 $4.77 $4.78 $4.78 $4.79 $4.80
51 56 4.79 4.80 4.81 4.82 4.83 4.84 4.85 4.86 4.86 4.87
52 57 4.85 4.86 4.88 4.89 4.90 4.91 4.92 4.93 4.94 4.95
53 58 4.91 4.93 4.94 4.96 4.97 4.98 5.00 5.01 5.02 5.03
54 59 4.97 4.99 5.01 5.03 5.04 5.06 5.07 5.09 5.10 5.11
55 60 5.03 5.05 5.08 5.10 5.12 5.13 5.15 5.17 5.18 5.19
56 61 5.09 5.12 5.14 5.17 5.19 5.21 5.23 5.25 5.26 5.28
57 62 5.15 5.18 5.21 5.24 5.26 5.29 5.31 5.33 5.35 5.37
58 63 5.21 5.24 5.28 5.31 5.34 5.37 5.39 5.42 5.44 5.46
59 64 5.27 5.31 5 34 5.38 5.41 5.45 5.48 5.50 5.53 5.55
60 65 5.33 5.37 5.41 5.45 5.49 5.53 5.56 5.59 5.62 5.65
61 66 5.38 5.43 5.48 5.52 5.56 5.61 5.64 5.68 5.72 5.75
62 67 5.44 5.49 5.54 5.59 5.64 5.69 5.73 5.77 5.81 5.85
63 68 5.50 5.56 5.61 5.66 5.72 5.77 5.82 5.86 5.91 5.95
64 69 5.56 5.62 5.68 5.74 5.79 5.85 5.90 5.95 6.00 6.05
65 70 5.62 5.68 5.74 5.81 5.87 5.93 5.99 6.05 6.10 6.16
66 71 5.68 5.75 5.81 5.88 5.94 6.01 6.07 6.14 6.20 6.26
67 72 5.74 5.81 5.88 5.95 6.02 6.09 6.16 6.23 6.30 6.37
68 73 5.80 5.87 5.95 6.02 6.10 6.17 6.25 6.32 6.40 6.47
69 74 5.86 5.94 6.02 6.09 6.17 6.25 6.33 6.42 6.50 6.58
70 75 5.93 6.01 6.08 6.17 6.25 6.33 6.42 6.51 6.60 6.68
71 76 5.99 6.07 6.15 6.24 6.33 6.42 6.51 6.60 6.69 6.79
72 77 6.05 6.14 6.22 6.31 6.40 6.50 6.59 6.69 6.79 6.89
73 78 6.12 6.20 6.29 6.39 6.48 6.58 6.68 6.78 6.89 7.00
74 79 6.18 6.27 6.36 6.46 6.56 6.66 6.77 6.88 6.99 7.10
75 80 6.25 6.34 6.44 6.53 6.64 6.74 6.85 6.97 7.09 7.21
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 13
<PAGE> 15
BASIS OF COMMUTATION. Commutation of installments for other than life income
options will be at the effective annual rate of 4% compounded annually.
EXTENDED PROVISIONS. Provisions for settlement of benefits different from
those stated in this policy may only be made upon written agreement with us.
COMPANY LIABILITY. We will be fully discharged by any payment we make
before a written request for an election, change, or revocation was made and
is received in our Home Office.
PERSONS WITH AN INTEREST IN THE CONTRACT
OWNERSHIP. The original owner of this contract is shown in the application.
At any time when ownership is to be determined, any person(s) whose rights of
ownership are then contingent upon the occurrence of a future event shall not
possess the rights of ownership. The owner(s) while possessing ownership
shall have the exclusive power to exercise all rights, enjoy all privileges,
and receive all benefits which are available under the contract. Subject to
the Assignments and Transfers provisions of this contract, and to our
requirements, ownership may be transferred or changed, in which event
ownership shall be governed by the terms of the contract as modified by
subsequent changes and transfers.
THE BENEFICIARY. The beneficiary is the person or persons who will receive
any proceeds payable in the event of the death of the annuitant, in
accordance with this provision. The original beneficiary is shown in the
application. Subject to any assignment of a contract, the beneficiary
designation may be changed during the lifetime of the annuitant by filing a
proper written request acceptable to us at our home office. If the joint and
last survivor option is selected, the annuitant may not change the
designation of a joint annuitant after installments begin. We reserve the
right to require the contract for endorsement. A change of beneficiary
designation will not become effective unless writing by us at our Home Office
at which time it will be effective as of the date of the request, but without
prejudice to the company on account of any benefit paid before receipt of
such request at our home office. A beneficiary who becomes entitled to
receive benefits under this contract may also designate, in the same manner,
a beneficiary to receive any benefits which may become payable under this
contract by request at our home office. A beneficiary who becomes entitled
to receive benefits under this contract may also designate, in the same
manner, a beneficiary to receive any benefits which may become payable under
this contract by reason of death. If a beneficiary has not been designated
by a payee or if a beneficiary designated by a payee is not living on the
date of lump sum death benefit is payable, or on the date any installment
payments are to be continued, as a result of the death of such payee, the
company will pay the lump sum death benefit for the commuted value of the
installment payments to the former payee's spouse. If the spouse is not
living at the death of the payee, then payments will be made equally to the
payee's children who survive him. If the children are not surviving, then
payments will be made to either the surviving father or mother or to both
equally if both survive. If none of the above survive the payee, then
payments will be made to his executors or administrators.
ASSIGNMENTS AND TRANSFERS. You may not transfer, sell, assign, discount, or
pledge this policy for a loan or as security for the performance of an
obligation or any other purpose, to any person other than to us at our Home
Office.
THE CONTRACT
What Constitutes the Contract. This contract and the application, a copy of
which is attached to and made a part of the contract, are the entire
contract. This contract will be subject to all of the provisions of the
Investment Company Act of 1940 at all times during which the General American
Separate Account No. 2 is registered under such act as an investment company.
STATEMENTS AND APPLICATION. All statements made by the annuitant on his
behalf, or by the applicant, will be deemed representations and not
warranties, except in the case of fraud. Misstatements will not be used to
void the policy or deny a claim unless made in the application.
MODIFICATION OR WAIVER OF PROVISIONS. No condition or provision of the
contract can be waived or modified except by a written instrument signed by
the president, a vice president, the secretary, an assistant secretary, or
the actuary of the company. No other agent has authority to
V82-400 Page 14
<PAGE> 16
alter or modify any terms, conditions, or agreements of this contract, or to
waive any of its provisions.
INCONTESTABILITY. We cannot contest this policy, except for nonpayment of
stipulated payments or premiums, after it has been in force during the
lifetime of the annuitant for a period of two years from the date of issue.
This provision will not apply to any rider relating to total and permanent
disability benefits.
INCORRECT AGE OR SEX. If the age at issue or sex of the annuitant as shown
on the contract schedule is incorrect, any benefit payable under a
supplemental agreement will be such as the premiums paid would have purchased
at the correct age of issue and sex. After we begin paying monthly income
installments appropriate adjustment will be made in any remaining
installments.
ADMISSION OF AGE. If we receive satisfactory proof of age, we will admit the
age of the annuitant. In that event we will issue a certificate evidencing
such admission.
RELIANCE ON AFFIDAVIT OR OTHER DOCUMENTS. In determining any facts relating
to the making of any payments under this contract, we in our discretion, may
in good faith rely solely upon proof of affidavit or other written statements
or documents.
DATES AND AGE AT ISSUE DEFINED. The date of issue is the date as to which
the age at issue was determined and from which stipulated payment and premium
due dates, contract months, contract years, and contract anniversaries are
determined. Each contract begins on the same day and each calendar month as
that specified in the date of issue, but if there is no same day then on the
last day of such calendar month. Contract years begin on the date of issue
and on anniversaries of that date. The age at issue is the age nearest
birthday of the annuitant on the date of issue, based on calendar months.
CLAIMS OF CREDITORS. To the extent permitted by law, neither the contract
nor any payment under it will be subject to the claim of creditors or to any
legal process.
DELAY OF PAYMENT. We may delay paying the amount of any withdrawal or any
surrender benefit from the General Account for up to six months after a
request is received by us.
CONFORMITY WITH STATUTES. If any provision in this contract is in conflict
with the laws of the state which govern this contract, the provision will be
deemed to be amended to conform with such laws.
ADJUSTMENT OF MONTHLY INCOME. If there are any proceeds due on any maturity
date under an assignment, the proceeds shall be paid in one lump sum at that
time. Such payment shall not affect the time or manner that any other
proceeds are payable under the terms of this contract.
RELATIONSHIP OF THIS CONTRACT TO COMPANY ACCOUNTS. We shall have exclusive
and absolute ownership and control of the assets of our General Account. The
method of determination by us of the value of an accumulation unit or an
annuity unit will be conclusive upon you and any beneficiary.
CONTRACTOWNER REPORTS. We will provide confirmation notices and other
reports to you as required by federal and state regulations. We will send
you a financial statement of the Separate Accounts at least semiannually and
a statement of the contract value at least annually.
Page 15
<PAGE> 1
* * DATA PAGE * *
CONTRACT NUMBER
ANNUITANT
RIGHT TO EXAMINE AND RETURN CONTRACT WITHIN 20 DAYS
You may return this contract within 20 days after receiving it. It may be
delivered or mailed to us or the agent through whom it was purchased. The
contract shall then be deemed void from the start. Any premium paid will
be returned.
INDIVIDUAL VARIABLE ANNUITY (NON-TAX QUALIFIED)
Funds in one or more Divisions of Separate Account No. 2 and General
Account.
All installments and values provided by this contract, when based on the
investment experience of one or more Divisions of Separate Account No. 2,
are variable and are not guaranteed as to fixed dollar amounts.
This contract is a legal contract between
the contract owner and General American.
PLEASE READ YOUR CONTRACT CAREFULLY.
GENERAL AMERICAN LIFE INSURANCE CO.
A Mutual Company
P.O. BOX 14490
ST. LOUIS, MISSOURI 63178
1-80O-449-6447
10013 0.01
<PAGE> 2
<TABLE>
ALPHABETIC GUIDE TO YOUR CONTRACT
<CAPTION>
Page Page
<S> <S>
4.03 Addition, Deletion, or Substitution 1.02 Endorsements
of Investments 0.02 Notice of Annual Meeting
4.02 Accumulation Provision 6.01 Persons with an Interest in the
7.02 Annuity Option Table Contract
5.01 Annuity Provisions 3.02 Reinstatement
4.03 Benefits on Lapse or Surrender 3.02 Stipulated Payments
1.01 Contract Specifications 7.01 Table of Guaranteed Accumulation
6.01 Death Benefit (Non-Forfeiture) Values
3.01 Definitions 6.02 The Contract
3.03 Dividends 4.02 Transfers
3.03 Dividend Options 4.01 Valuation Provisions
</TABLE>
Supplemental Agreements, Modifications and Amendments, if any, and a copy
of the Application are found following the final section.
NOTICE OF ANNUAL MEETING
Our annual meeting for the election of directors and the transaction of other
business is held each year at our Home Office in St. Louis, Missouri. The
meeting is at 9:00 a.m. on the fourth Tuesday in January. We are a mutual
company owned by our policyowners. Each policyowner is entitled to vote at
such elections and to participate in such meetings.
10013 0.02
<PAGE> 3
CONTRACT SPECIFICATIONS
CONTRACT NUMBER
ANNUITANT
AGE AT ISSUE
SEX
DATE OF ISSUE
MATURITY DATE
GENERAL ACCOUNT MAXIMUM WITHDRAWAL PERCENTAGE LIMIT 25%
BENEFITS (As specified in
FORM contract and in any ANNUAL PAYMENT
NUMBERS Supplemental Agreement) COST PERIOD
- ------- ----------------------- ---- ------
Total Initial Annual Cost
Total initial amount payable at ---------- intervals:
THE DUE DATES OF PAYMENTS AFTER THE FIRST ARE MEASURED FROM THE DATE OF ISSUE
AND ARE AT THE INTERVALS SPECIFIED ABOVE UNLESS SUCH INTERVAL IS CHANGED.
THE AMOUNT PAYABLE ON THE DUE DATES MAY CHANGE IF ANY OF THE BENEFITS ARE
CHANGED IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT OR ANY SUPPLEMENTAL
AGREEMENT OR IF ANY OF THE BENEFITS HAS AN ANNUAL COST INDICATED ABOVE AS
COMPUTED EACH YEAR.
WHEN THE PREMIUM FOR ANY SUPPLEMENTAL AGREEMENT IS NO LONGER PAYABLE, THE
TOTAL ANNUAL COST WILL BE REDUCED ACCORDINGLY.
Variable Annuity Stipulated Payment:
Accumulation Allocation:
Supplemental Agreement Premiums:
1.01
<PAGE> 4
ENDORSEMENTS
1.02
<PAGE> 5
1. DEFINITIONS IN THIS CONTRACT
WE, US AND OUR General American Life Insurance Company.
YOU, YOUR The owner of this contract. The owner is as shown in the
application unless later changed as provided in this
contract. The owner may be someone other than the
Annuitant.
AGE Age means the Annuitant's age at his or her nearest
birthday.
ANNUITANT The individual who will receive benefits from the
contract when an annuity installment is elected.
BENEFICIARY The person named in the application or by later
designation to receive the proceeds in the event of the
Annuitant's death.
PROCEEDS The amount we are obligated to pay under the terms of
this contract, when it is surrendered, matures or when
the Annuitant dies. This amount will be reduced by any
partial withdrawals.
SEPARATE ACCOUNT Separate Account No. 2, a segregated investment account
created by us to receive premiums for this contract.
Separate Account No. 2 has several Divisions, which
correspond to various funds offered by General American
Capital Company. Each fund consists of a specialized
investment portfolio, and all are described in the
prospectus for General American Capital Company.
The assets of Separate Account No. 2 are held
separately from the assets held in the General
Account. Separate Account assets will consist
solely of shares in the funds of General American
Capital Company. Income, gains, and losses ---
whether or not realized --- from these shares will
be credited to or charged against the account
without regard to our other income, gains or
losses.
Assets held by Separate Account No. 2 will not be
charged with liabilities that arise from any other
business we may conduct. We have the right to
transfer to our General Account any assets of
Separate Account No. 2 which are in excess of the
reserves and other contract liabilities of Separate
Account No. 2.
Separate Account No. 2 is registered with the
Securities and Exchange Commission as a unit
investment trust under the Investment Company Act
of 1940. Separate Account No. 2 is also subject to
the laws of the State of Missouri, which regulate
the operations of insurance companies incorporated
in Missouri.
GENERAL ACCOUNT An account which consists of all of our assets other than
those in Separate Account No. 2 are any other segregated
investment account.
ACCUMULATED This is the value, prior to maturity, of all purchase
VALUE payments plus all interest credits or all gains and
losses, less the total of any amounts withdrawn and
withdrawal charges which have been assessed.
GENERAL AMERICAN A company we control which is registered with the Securities
CAPITAL COMPANY and Exchange Commission of the U.S. Government as an
investment management company.
FUND One of the investment portfolios of General American
Capital Company.
NET ACCUMULATED This is the accumulated value reduced by any applicable
VALUE withdrawal charges.
VALUATION A valuation period for the Assets in Divisions of Separate
OF ASSETS Account No. 2 is the period between successive Business
Days. It begins at the close of business each Business
Day and ends at the close of business of the next
succeeding Business Day.
3.01
<PAGE> 6
ACCUMULATION This is an accounting device that we use to determine the
UNIT value of your contract prior to the annuity commencement
date.
ANNUITY UNIT This is an accounting device that we use to determine the
amount payable under this contract on and after the
annuity commencement date.
CONTRACT The same day and month as the date of issue for each
ANNIVERSARY succeeding year that this contract remains in force.
BUSINESS DAY This is a day on which both we and the New York Stock
Exchange are open for business.
WRITTEN REQUEST This must be supplied in written form satisfactory to us,
signed by you, and filed in our Home Office in St. Louis,
Missouri.
2. STIPULATED PAYMENTS
Each stipulated payment is payable at the Home Office of
the company in St. Louis, Missouri. The due dates of the
stipulated payments are shown on the Policy
Specifications page. You may change the frequency at
which stipulated payments are to be made at any time.
Your first stipulated payment is shown on the Policy
Specifications page. You may increase or decrease
subsequent stipulated payments at any time. The minimum
amount of stipulated payments is $25.00 per month.
3. REINSTATEMENT
You may reinstate benefits provided by any supplemental
agreement attached to this contract by providing evidence
of insurability satisfactory to the Company. You must
comply with the reinstatement provisions incorporated in
such supplemental agreement.
4. DIVIDENDS
ANNUAL DIVIDENDS Your contract shares in our divisible surplus while it is
in force prior to the annuity commencement date. Each
year we will determine the share of divisible surplus, if
any, accruing to your contract. Investment results are
credited directly through the changes in the value of the
accumulation units and annuity units. Also, most
mortality and expense savings are credited directly
through decreases in the appropriate charges. Therefore,
the Company expects little or no divisible surplus to be
credited to your contract.
DIVIDEND You may choose one of the following options:
OPTIONS
OPTION 1. CASH. Paid in cash.
OPTION 2. REDUCE STIPULATED PAYMENT. Used to pay part
or all of the stipulated payment on your
contract.
OPTION 3. DEPOSITS. Left with the company to accumulate
at interest. The interest rate will be determined
by us from time to time. This rate will never be
less than 4.0 percent per year, compounded
annually.
You may choose a dividend option within 31 days after a
dividend is credited. If you do not, we will credit the
dividend under Option 3 until such time as you request a
different option.
You may withdraw in cash the entire dividend deposit, or
any part of it, if you provide a proper written request.
The premium for any supplemental agreement may not be
paid from any dividend deposits remaining with the
company. When your contract matures, dividend deposits
will be payable as part of the contract proceeds.
3.02
<PAGE> 7
5. VALUATION PROVISIONS
NET INVESTMENT The General Account net investment factor for any Business
FACTOR Day is 1.0 plus a rate of investment income that we will
declare in advance. We guarantee that the rate will be no less
than 4 percent per year compounded annually.
The Separate Account will have a net investment factor for
any Business Day which is the aggregate of the Net
Investment Factor of its various Divisions. A Division's
Net Investment Factor measures the investment performance
of such Division during a valuation period. The Net
Investment Factor for each Division for a valuation period
is calculated as follows:
The value of the assets at the end of the preceding
valuation period; plus
The investment income and capital gains --- realized or
unrealized --- credited to the assets in the valuation
period for which the net investment factor is being
determined; minus
The capital losses, realized or unrealized, charged
against those assets during the valuation period; minus
any amount charged against each Division for taxes, or
any amount we set aside during the valuation period as a
reserve for taxes attributable to the operation or
maintenance of each Division; minus
A charge not to exceed (.002753)% of the assets for each
day in the valuation period. This corresponds to 1.00%
per year for mortality and expense risks; divided by
The value of the assets at the end of the preceding
valuation period.
ACCUMULATION The initial value of each Division of Separate Account No.
UNIT VALUE 2's accumulation unit was established at $10.00 as of the end
of the Business Day on October 1, 1987. This value may
increase or decrease from day to day based on investment
results. The value of a General Account accumulation unit
was established at $10.00 as of the end of the Business Day
on April 1, 1982. The value of the respective accumulation
unit is determined at the end of any later Business Day.
The value is determined by multiplying the accumulation unit
value for the end of the immediately preceding Business Day
by the net investment factor for such later Business Day.
ANNUITY UNIT The initial value of an Annuity Unit in a Division of
VALUE Separate Account No. 2 was established at $10.00 as of the end
of the Business Day on October 1, 1987. This value may
increase or decrease from day to day based on investment
results. The value of a General Account Annuity Unit was
established at $10.00 at the end of the Business Day on April
1, 1982. The value of the respective annuity unit is
determined at the end of any later Business Day.
The value is determined by multiplying such value for the
end of the preceding Business Day by the product of (a)
.99989256 once for each calendar day between the end of the
sixth preceding Business Day and the end of the fifth
preceding Business Day and (b) the net investment factor for
the fifth Business Day preceding such Business Day.
VALUATION Assets in a Division of Separate Account No. 2 shall be
OF ASSETS valued at the end of each Business Day at their fair market
value or, where there is no readily available market, at their
fair value as determined by us, in accordance with recognized
accounting procedures. Direct expenses involved in the
purchase or sale of assets for a Division of Separate Account
No. 2, including, but not limited to, brokerage commission,
exchange fees, taxes, and postage, shall be included in such
valuation.
4.01
<PAGE> 8
6. ACCUMULATION PROVISIONS
ALLOCATION OF The stipulated payments will be allocated between any or all
STIPULATED of the Divisions of Separate Account No. 2 and the General
PAYMENTS Account in the proportion shown on the Policy Specifications page
or as you may choose at a later date. You may elect an allocation
to a Division of Separate Account No. 2 between zero percent
and 100 percent in multiples of one percent with the balance
being allocated to the General Account, provided that the
amount allocated to any Division of Separate Account No. 2
must be at least $25.00. Such allocation may be changed by
written notice submitted to us with the stipulated payment.
NET STIPULATED We will deduct from any payment the premium for any benefits
PAYMENT provided by a supplemental agreement. The remainder will be the
stipulated payment. We may deduct applicable premium taxes or we
may defer deduction of the premium taxes until the annuity
commencement date, if permitted by state law. The remaining
balance is the net stipulated payment.
ACCUMULATION The number of Accumulation Units that we will credit to each
UNITS account is determined by dividing the portion of the net
stipulated payment for that account by the Accumulation Unit
value for that account at the end of the Business Day coincident
with or next following the day on which the stipulated payment is
received by us at the Home Office. The number of Accumulation
Units so determined will not be affected by any subsequent
changes in the values of the Accumulation Units. The Accumulation
Unit value of the General Account will increase at a rate not
less than the guaranteed rate, and the Accumulation Unit value of
the Division of Separate Account No. 2 may increase or decrease
from day to day based on investment results.
PARTIAL At any time while the Annuitant is living and prior to the
WITHDRAWAL maturity date, you may make a partial withdrawal of a portion of
the Accumulated Value of this contract from one or more of the
Divisions of Separate Account No. 2 or the General Account by
giving us a written request. However, the amount may not be less
than $100.00. Unless you tell us otherwise in the request, the
withdrawal will be made based on the current allocation of
contributions to the General Account and the Divisions of
Separate Account No. 2. The amount of the withdrawal will be
deducted from the Accumulated Value of the General Account and
Divisions of Separate Account No. 2 as of the date of withdrawal
and a withdrawal charge will be deducted from your Accumulated
Value. (See Contingent Deferred Sales Charge in Benefits on
Lapse or Surrender, Section 9.
7. TRANSFERS
You may transfer amounts as follows:
Between the General Account and one or more of the
Divisions of Separate Account No. 2; or
Among the Divisions of Separate Account No. 2.
These transfers will be subject to the following rules:
We must receive a written request for transfer.
Transfers from or among the Divisions of Separate Account
No. 2 may be made at any time and must be at least $100.00
or the entire amount of a Division, if smaller.
Transfers from the General Account to Separate Account No.
2 may be made once each year on the contract's anniversary
date and must be at least $100.00. The maximum allowable
shall be a percentage, as set forth on the Contract
Specifications page, of the contract accumulated value on
the prior contract anniversary.
4.02
<PAGE> 9
We may revoke or modify the transfer privilege at any time,
including the minimum amount for a transfer and the transfer
charge, if any.
8. ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, as far as the law allows, to make
additions to, deletions from, or substitutions for the shares
of a Fund that are held by Separate Account No. 2 or that
Separate Account No. 2 may purchase. We reserve the right to
eliminate the shares of any of the Funds of General American
Capital Company and to substitute shares of another Fund of
General American Capital Company or of another registered
open-end investment company, if the shares or Funds are no
longer available for investment or if in our judgment, further
investment in any Fund should become inappropriate in view of
the purpose of the contract. We will not substitute any shares
attributable to the owner's interest in a Division of Separate
Account No. 2 without at least 30 days notice to the owner and
prior approval of the Securities and Exchange Commission, to
the extent required by the Investment Company Act of 1940.
This will not prevent Separate Account No. 2 from purchasing
other securities for other series or classes of contracts, or
from permitting conversion between series or classes of
contracts on the basis of requests made by owners.
We reserve the right to establish additional Divisions of
Separate Account No. 2, each of which would invest in a new
Fund of General American Capital Company or in shares of
another open-end investment company and to make such Divisions
available to whatever class or series of contracts as we
choose. We also reserve the right to eliminate or combine
existing Divisions of Separate Account No. 2 or to transfer
assets between Divisions.
If we consider it to be in the best interest of persons having
voting privileges under the contracts, Separate Account No. 2
may be operated as a management company under the Investment
Company Act of 1940. It may be deregistered under that Act in
the event registration is no longer required. It may be
combined with other separate accounts, or its assets may be
transferred to other separate accounts.
9. BENEFITS ON LAPSE OR SURRENDER
NON-FORFEITURE You may elect either of the following non-forfeiture options
OPTION by writing to us at our Home Office prior to the death of the
Annuitant and prior to the annuity commencement date. If you do
not elect a nonforfeiture option within 31 days after the date of
default in stipulated payments, we shall continue this contract
under the Paid-up Annuity provision from the date of default.
CASH SURRENDER You may, while the Annuitant is alive and prior to the
maturity date, surrender this contract for its Net Accumulated
Value. During the first nine contract years, we shall deduct
a surrender charge from the accumulated value of the contract
as of the date of surrender. (See Contingent Deferred Sales
Charge.) We may defer payment of the Net Accumulated Value for
a period of six months.
PAID-UP You may continue this contract so that at the annuity
ANNUITY commencement date benefits as provided by the then existing
accumulation units may be received. The death benefit prior to
the annuity commencement date is as stated under the section
titled Death Benefit.
4.03
<PAGE> 10
CONTINGENT Upon surrender of the contract or partial withdrawal of funds
DEFERRED SALES on deposit, General American will apply a contingent deferred
CHARGE sales charge. Charges for partial withdrawal will be deducted
from the individual's account value remaining after the
distribution of the partial withdrawal (i.e., the total amount
deducted from the individual's account value will be a
combination of the amount paid to the individual plus the
charge). In the case of a full surrender, the surrender charge
is deducted from the amount paid to the Contract Owner. The
contingent deferred sales charge will never be more than the
lesser of 9% of total net contributions to the contract or the
percentage of the amount received by the Contract Owner or
participant shown in the following schedule:
<TABLE>
<CAPTION>
Surrender/Withdrawal
Contract Year Charges
<S> <C>
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9 1%
</TABLE>
There will be no contingent deferred sales charge after the
ninth contract year. In addition, contingent deferred sales
charges are not applied in the event of death or disability,
while this contract is in force, or annuitization after five
contract years. If you are within the nine year deferred sales
charge period (the first nine contract years), you may
withdraw up to 10% of the account value per year without
incurring a contingent deferred sales charge.
The contingent deferred sales charge will be allocated pro
rata among the Divisions of Separate Account No. 2 and the
General Account based on the values held in the Divisions of
Separate Account No. 2 and the General Account prior to the
surrender.
4.04
<PAGE> 11
10. ANNUITY PROVISIONS
ANNUITY The annuity commencement date is shown on the Policy
COMMENCEMENT Specifications page, unless this date has been changed by you.
DATE Any change must be made in writing to us at our Home Office at
least 30 days before the earlier of the then effective and the
newly designated annuity commencement date.
ELECTION OF The Annuity Option is shown on the Policy Specifications page,
OPTION unless you have changed it. Any change in option must be made
in writing to us at the Home Office at least 30 days before the
date such election is to become effective.
You, or if you have not done so, the Beneficiary after the
death of the Annuitant, may elect instead of payment in one
sum, that any amount due by us under this contract to the
Beneficiary be applied under any of the options described
below. If an election is not made within one year after the
death of the Annuitant by written notice to us at our Home
Office, such payment will be made in one sum.
If Option 2 or 5 is elected, installments may not be
guaranteed for a period longer than the life expectancy of the
Annuitant.
ANNUITY OPTIONS (See Annuity Option Tables at the end of this contract.) At
the maturity of this contract, the proceeds may be placed
under any of the following options:
OPTION 1. LIFE ANNUITY. We will pay a monthly income during a
person's lifetime, which will cease with the last
installment preceding the death of that person.
OPTION 2. LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY
INSTALLMENTS GUARANTEED. We will pay a monthly
income during a person's lifetime with the
guarantee that if, at death of the person,
installments have been made for less than 60
months, 120 months, 180 month, or 240 months, as
elected, installments will be continued to the
Beneficiary during the remainder of the elected
period.
OPTION 3. UNIT REFUND LIFE ANNUITY. We will pay a monthly
income during a person's lifetime that will cease
with the last installment due prior to the death of
that person, with the guarantee: that, at the death
of the pay:, the Beneficiary will receive an
additional payment of the dollar value of the
number of annuity units equal to the excess, if
any, of (a) over (b) where (a) is the total applied
under the option divided by the annuity unit value
at the annuity commencement date and (b) is the
number of annuity units represented by each
installment multiplied by the number of
installments made. Such dollar value will be
determined by multiplying the above number of
annuity units by the annuity unit value on the
Business Day coincident with or next following the
date on which written notice of death is received
by us at our Home Office.
OPTION 4. JOINT AND SURVIVOR INCOME FOR LIFE. We will pay
monthly installments jointly to two payees if both
are living when the installments become payable.
The Annuitant will be designated as primary pay:.
Full installments will continue so long as the
primary pay: is living. If the primary payee dies
after installments begin, full installments or
installments of 1/2 or 2/3, (whichever you elected
when applying for this option) will continue to the
other pay: during his or her lifetime.
OPTION 5. INCOME FOR A FIXED PERIOD. We will pay the proceeds
in equal installments over a period of from 3 to 3O
years. The amount of each installment will be based
upon the period and the frequency of the
installments selected from Option 5 Table.
OPTION 6. INCOME OF A FIXED AMOUNT. We will pay the proceeds
in equal installments in the amount and at the
intervals agreed upon until the proceeds applied
under this option, with interest credited at the
current annual rate, are exhausted. The final
installment will be for the then remaining balance
only. At any time the then current pay: may
withdraw the remaining balance in a single sum.
5.01
<PAGE> 12
OPTION 7. INTEREST INCOME. We will hold the proceeds on
deposit and pay or credit interest at the
current annual rate. Payment of interest will
be at such times and for such periods as are
agreeable to you and us.
DATE OF The first payment under Option 7 will be made at the end of
PAYMENT the period selected. The first payment under any other option
shall be made on the annuity commencement date or upon the
date of surrender or as of the date on which written notice of
death is received by us at the Home Office, as applicable.
ALLOCATION When you elect one of the first five annuity options, you may
OF ANNUITY further elect to have the annuity purchased in the form of the
variable annuity, guaranteed annuity, or a combination of
both.
If you elect Option 6 you may specify whether the net
investment factor for one or more Divisions of Separate
Account No. 2 or the General Account is to apply, or
whether the amount due shall be split among the various
Divisions of Separate Account No. 2 and the General
Account. If no election is made to the contrary on
these options, that portion of accumulated value in the
Division of Separate Account No. 2 will be applied to
provide a variable annuity and that portion in the
General Account will be applied to provide a guaranteed
annuity.
If you elect Option 7, we shall consider this an
election to place the entire accumulated value in the
General Account.
We guarantee that the dollar amounts of variable
annuity benefits will not be adversely affected by our
actual expense and mortality results.
MINIMUM The minimum amount for each payee that can be placed
AMOUNTS under an option and the minimum amount of any payments under
an option will be based on our rules at the time the option is
to become effective.
The minimum amount to be placed under an option is
$5,000, and the minimum amount of any payment is $50
per month, unless these amounts are waived by us.
GUARANTEED We use a guaranteed effective annual rate of 4% in
ANNUITY OPTION computing payments under all options.
INTEREST RATE We shall make the first payment as of the option effective
FIRST PAYMENT date.
PAYEE A person who receives benefits under an option is a
payee. Except for a legal guardian, a payee must be a
natural person receiving benefits in his or her own
right. With our consent, the payee may be a trustee,
assignee, corporation, or partnership. If a payee dies
on or after the annuity commencement date, any unpaid
policy proceeds must be paid under the method of
payment being used as of the date of his or her death.
CONTINGENT PAYEE The payee may name contingent payees, subject to any
restrictions under an annuity option chosen during
the Annuitant's lifetime, under the following
conditions:
(1) If you are the payee; or
(2) If at any time after the Annuitant's death and
during the option period no previously named
contingent payee is living.
The named Contingent Payee will be disregarded if
making that person or entity the Contingent Payee would
prevent treatment of this contract as an annuity for
federal income tax purposes.
Designations made by the payee under these provisions
may be changed by the payee. Such changes must be made
by written request satisfactory to us. Changes will
only take effect when we accept them in writing at our
Home Office. At that time, the contingent interest of
any other person is terminated as of the date the payee
signed the request, whether or not the payee is living
when we receive the request.
5.02
<PAGE> 13
LIFE INCOME Life Income Options are based on the payee's sex and
OPTIONS age nearest birthday on the annuity annuity option effective
date. We have the right to require satisfactory proof of age
and sex. If age or sex has been incorrectly stated, the proper
adjustments in payments will be made. We may also require
proof that the payee is living on any payment due date.
DEATH OF If a payee dies, any installments still payable under
PAYEE a specified certain period will be paid as they become due to
the surviving or next succeeding payee. If no designated payee
survives, the commuted value of any unpaid installments will
be paid in one sum to the estate of the last payee to die.
RIGHTS UNDER No payee has the right to make any change in the
ANNUITY OPTIONS provisions of the agreement or to receive the benefits in any
manner other than that stated in the agreement, unless such
right was reserved in the agreement. We shall not make any
payments in advance, nor commute installments under any life
income option.
BASIS OF Commutation of installments for other than life income
COMMUTATION options will be at the effective annual rate of 4% compounded
annually.
EXTENDED Provisions for settlement of benefits different from
PROVISIONS those stated in this contract may only be made upon written
agreement with us.
COMPANY We shall be fully discharged by any payment we make
LIABILITY before a written request for an election, change, or
revocation was made and is received in our Home Office.
5.03
<PAGE> 14
11. PERSONS WITH AN INTEREST IN THE CONTRACT
OWNERSHIP The original owner of this contract is shown in the
application. At any time when ownership is to be
determined, any person(s) whose rights of ownership are
then contingent upon the occurrence of a future event
shall not possess the rights of ownership. The owner(s)
while possessing ownership shall have the exclusive
power to exercise all rights, enjoy all privileges, and
receive all benefits which are available under the
contract. Subject to the Assignments and Transfers
provisions of this contract, and to our requirements,
ownership may be transferred or changed, in which event
ownership shall be governed by the terms of the
contract as modified by subsequent changes and
transfers.
THE BENEFICIARY The Beneficiary is the person or persons who will
receive any proceeds payable in the event of the death
of the Annuitant, in accordance with this provision.
The original Beneficiary is shown in the application.
Subject to any assignment of a contract, the
Beneficiary designation may be changed during the
lifetime of the Annuitant by filing a proper written
request acceptable to us at our Home Office. If the
joint and survivor option is selected, the Annuitant
may not change the designation of a joint Annuitant
after installments begin. We reserve the right to
require the contract for endorsement. A change of
Beneficiary designation will not become effective
unless accepted in writing by us at our Home Office at
which time it will be effective as of the date of the
request, but without prejudice to the company on
account of any benefit paid before receipt of such
request at our Home Office. A Beneficiary who becomes
entitled to receive benefits under this contract may
also designate, in the same manner, a Beneficiary to
receive any benefits which may become payable under
this contract by reason of death. If a Beneficiary has
not been designated by a payee or if a Beneficiary
designated by a payee is not living on the date a lump
sum death benefit is payable, or on the date any
installment payments are to be continued, as a result
of the death of such payee, the company will pay the
lump sum death benefit for the commuted value of the
installment payments to the former payee's spouse. If
the spouse is not living at the death of the payee,
then payments will be made equally to the payee's
children who survive him. If the children are not
surviving, then payments will be made to either the
surviving father or mother or to both equally if both
survive. If none of the above survive the payee, then
payments will be made to his executors or
administrators.
12. DEATH BENEFIT
When we receive due proof of the death of the Annuitant
that occurs before the annuity commencement date, we
will pay to the Beneficiary the accumulated value of
the contract. The Accumulated Value includes interest
from the date of death to the date of settlement at an
annual rate determined by us, but not less than that
required by law. If you die before the retirement date,
this policy will no longer be in force. We will pay
your interest in the contract to the Beneficiary in a
lump sum upon receiving proof of your death.
This payment must be made within five (5) years after
the date of your death.
If, however, you or the Beneficiary make a written
choice of one of the two options described below, and
if your choice is clear to us, we will treat the
proceeds as you or the Beneficiary have chosen. The two
options are:
(i) Leave the proceeds of the contract with us as
provided under Options 6 or 7 of the Annuity
Provisions Section of this contract. Any amount
remaining unpaid under Options 6 and 7 will,
however, be paid in a lump sum to the Beneficiary
before the end of the fifth year after your death.
(ii) Buy an immediate annuity for the Beneficiary,
who will be the owner and Annuitant. Payments
under the annuity, or under any other method of
payment we make available, must be for the life of
the Beneficiary, or for a number of years that is
not more than the life expectancy of the
Beneficiary at the time of your death (as
determined for federal tax purposes), and must
begin within one year after your death.
However, if you die before the annuity commencement
date and your spouse is the Beneficiary, no proceeds
will be paid to him or her, instead, this contract
continues with your surviving spouse as the new owner.
6.01
<PAGE> 15
If no Beneficiary survives you and you die before the
annuity commencement date, payment of the proceeds will
be made in a lump sum to your estate.
ASSIGNMENTS We will not be bound by an assignment or transfer of
AND TRANSFERS the contract or of any interest in
it unless:
1. It is made as a written instrument.
2. You file the original instrument or a certified
copy with us at our Home Office.
3. We send you a receipt. We are not responsible for
the validity of any transfer or assignment.
If a claim is based on an assignment or a transfer, we
may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a
Beneficiary.
13. THE CONTRACT
WHAT CONSTITUTES This contract and the application, a copy of which is attached
THE CONTRACT to and made a part of the the contract, are the entire
contract. This contract will be subject to all of the
provisions of the Investment Company Act of 1940 at all times
during which General American Separate Account No. 2 is
registered under such act as a unit investment trust.
STATEMENTS IN All statements made by the Annuitant on his behalf, or by
APPLICATION the applicant, will be deemed representations and not
warranties, except in the case of fraud. Misstatements will
not be used to void the contract or deny a claim unless made
in the application.
MODIFICATION OR No condition or provision of the contract can be waived or
WAIVER OF modified except by a written instrument signed by the
PROVISIONS president, a vice president, the secretary, or an assistant
secretary. No other agent has authority to alter or
modify any terms, conditions, or agreements of this
contract, or to waive any of its provisions.
INCONTESTABILITY We cannot contest this contract, except for
nonpayment of stipulated payments or premiums, after it
has been in force for a period of two years from the date
of issue. This provision will not apply to any
supplemental agreement relating to total and permanent
disability benefits.
INCORRECT AGE If the age at issue or sex of the Annuitant as shown on the
OR SEX contract schedule is incorrect, any benefit payable under a
supplemental agreement will be such as the premiums paid would
have purchased at the correct age at issue and sex. After we
begin paying monthly income installments appropriate
adjustment will be made in any remaining installments.
Any underpayment(s) as a result of a misstatement will be paid
in one lump sum to the annuitant. Any overpayment(s) as a
result of a misstatement will be deducted from the current or
succeeding payment(s) due under the contract.
ADMISSION If we receive satisfactory proof of age, we shall admit the
OF AGE age of the Annuitant. In that event we shall issue a
certificate evidencing such admission.
RELIANCE ON In determining any facts relating to the making of any
AFFIDAVIT OR payments under this contract, we in our discretion, may in
OTHER DOCUMENTS good faith rely solely upon proof of affidavit or other
written statements or documents.
6.02
<PAGE> 16
DATES AND AGE The date of issue is the date as to which the age at
AT ISSUE DEFINED issue was determined and from which stipulated payment
and premium due dates, contract months, contract years,
and contract anniversaries are determined. Each contract
begins on the same day and each calendar month as that
specified in the date of issue, but if there is no
same day then on the last day of such calendar
month. Contract years begin on the date of issue
and on anniversaries of that date. The age at
issue is the age nearest birthday of the annuitant
on the date of issue, based on calendar months.
CLAIMS OF To the extent permitted by law, neither the contract nor
CREDITORS any payment under it will be subject to the claim of
creditors or to any legal process.
DELAY OF We may delay paying the amount of any withdrawal or any
PAYMENT surrender benefit from the General Account for up to six
months after a request is received by us.
CONFORMITY If any provision in this contract is in conflict with the
WITH STATUTES laws of the state which govern this contract, the
provision will be deemed to be amended to conform with
such laws.
ADJUSTMENT OF If there are any proceeds due on any maturity date under
MONTHLY INCOME an assignment, the proceeds shall be paid in one lump sum
at that time. Such payment shall not affect the time or
manner that any other proceeds are payable under the
terms of this contract.
RELATIONSHIP OF We shall have exclusive and absolute ownership and
THIS CONTRACT control of the assets of our General Account. The method
TO COMPANY of determination by us of the value of an accumulation
unit or an Annuity Unit will be conclusive upon you and
any Beneficiary. Accounts
CONTRACTOWNER We shall provide confirmation notices and other reports
REPORTS to you as required by federal and state regulations. We
shall send you a financial statement of Separate Account
No. 2 at least semiannually and a statement of the
contract value at least annually.
6.03
<PAGE> 17
TABLE OF GENERAL ACCOUNT GUARANTEED ACCUMULATION VALUES
(NOTE: THIS TABLE IS NOT APPLICABLE TO ANY ACCUMULATIONS
IN A DIVISION OF SEPARATE ACCOUNT 2)
THE FOLLOWING TABLE SHOWS THE GUARANTEED ACCUMULATION VALUE AND THE
GUARANTEED SURRENDER VALUE IN THE GENERAL ACCOUNT PORTION OF YOUR CONTRACT
WITH AN ANNUAL STIPULATED PAYMENT OF $1,000.00. THE VALUES SHOWN DO NOT
REFLECT ANY PAYMENT OF ANNUAL DIVIDENDS. THIS TABLE ASSUMES THAT (1) ALL OF
THE ANNUAL STIPULATED PAYMENT IS ALLOCATED TO THE GENERAL ACCOUNT, (2) YOU
WILL PAY ALL ANNUAL STIPULATED PAYMENTS, WHEN DUE, ON THE POLICY ISSUE DATE
OR ANY ANNIVERSARY THEREOF, (3) THE COST OF ANY SUPPLEMENTAL AGREEMENT OR
PREMIUM TAX IS NOT INCLUDED IN THE $1,000.00 FIGURE, AND (4) YOU MAKE NO
WITHDRAWALS FROM THE GENERAL ACCOUNT PORTION OF THE CONTRACT.
<TABLE>
<CAPTION>
GUARANTEED
GUARANTEED GUARANTEED EFFECTIVE
ACCUMULATED CONTINGENT SURRENDER RATE OF
VALUE DEFERRED VALUE RETURN
CONTRACT STIPULATED AT END SALES AT END AFTER ALL
YEAR PAYMENT OF YEAR<F*> CHARGE OF YEAR CHARGES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $1,000.00 $ 1,040.00 $ 84.24 $ 955.76 -4.42%
2 1,000.00 2,121.60 152.76 1,968.84 -1.04%
3 1,000.00 3,246.46 204.53 3,041.94 0.70%
4 1,000.00 4,416.32 238.48 4,177.84 1.75%
5 1,000.00 5,632.98 253.48 5,379.49 2.45%
- ----------------------------------------------------------------------------------------------------------------------
6 1,000.00 6,898.29 248.34 6,649.96 2.95%
7 1,000.00 8,214.23 221.78 7,992.44 3.32%
8 1,000.00 9,582.80 172.49 9,410.30 3.60%
9 1,000.00 11,006.11 99.05 10,907.05 3.82%
10 1,000.00 12,486.35 0.00 12,486.35 4.00%
- ----------------------------------------------------------------------------------------------------------------------
11 1,000.00 14,025.81 0.00 14,025.81 4.00%
12 1,000.00 15,626.84 0.00 15,626.84 4.00%
13 1,000.00 17,291.91 0.00 17,291.91 4.00%
14 1,000.00 19,023.59 0.00 19,023.59 4.00%
15 1,000.00 20,824.53 0.00 20,824.53 4.00%
- ----------------------------------------------------------------------------------------------------------------------
16 1,000.00 22,697.51 0.00 22,697.51 4.00%
17 1,000.00 24,645.41 0.00 24,645.41 4.00%
18 1,000.00 26,671.23 0.00 26,671.23 4.00%
19 1,000.00 28,778.08 0.00 28,778.08 4.00%
20 1,000.00 30,969.20 0.00 30,969.20 4.00%
- ----------------------------------------------------------------------------------------------------------------------
30 1,000.00 58,328.34 0.00 58,328.34 4.00%
- ----------------------------------------------------------------------------------------------------------------------
40 1,000.00 98,826.54 0.00 98,826.54 4.00%
- ----------------------------------------------------------------------------------------------------------------------
<FN>
<F*>THE GUARANTEED ACCUMULATION VALUE IN THE GENERAL ACCOUNT IS THE ACCUMULATED
VALUE OF THE NET STIPULATED PAYMENTS AT THE GUARANTEED 4 PERCENT INTEREST
RATE.
</TABLE>
EACH CONTRACTOWNER WILL BE SENT AN ANNUAL STATEMENT OF THE NUMBER OF
ACCUMULATION UNITS GRANTED TO HIM AS OF THE END OF THE PRECEDING CONTRACT
YEAR AND OF THE VALUE OF AN ACCUMULATION UNIT AT THAT TIME.
THE ANNUAL STATEMENT WILL PROVIDE ALL OF THE INFORMATION REQUIRED BY ANY
APPLICABLE LAW OF THE STATE THAT GOVERNS YOUR POLICY.
THE MORTALITY TABLE USED IN COMPUTING ANNUITY OPTIONS UNDER THIS CONTRACT IS
1983 INDIVIDUAL ANNUITY MORTALITY TABLE.
7.01
<PAGE> 18
<TABLE>
ANNUITY OPTION TABLES
FOR EACH $1,000
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
OPTION 1 OPTION 2 OPTION 3 OPTION 5
- ----------------------------------------------------------------------------------------------------------------------------
AGE OF PAYEE
LIFE 60 MONTHS 120 MONTHS 180 MONTHS 240 MONTHS UNIT INCOME FOR A
ANNUITY GUARANTY GUARANTY GUARANTY GUARANTY REFUND FIXED PERIOD
MALE FEMALE
- ----------------------------------------------------------------------------------------------------------------------------
YEARS MONTHLY
CERTAIN INSTALLMENTS
-------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 50 $ 4.53 $ 4.52 $4.50 $4.46 $4.40 $4.38
46 51 4.59 4.58 4.55 4.51 4.45 4.43
47 52 4.65 4.64 4.61 4.56 4.50 4.48
48 53 4.72 4.71 4.67 4.62 4.55 4.53 3 $29.39
49 54 4.79 4.77 4.74 4.68 4.60 4.59 4 22.47
- ----------------------------------------------------------------------------------------------------------------------------
50 55 4.86 4.85 4.81 4.74 4.65 4.64 5 18.32
51 56 4.94 4.92 4.88 4.80 4.71 4.70 6 15.56
52 57 5.02 5.00 4.95 4.87 4.76 4.76 7 13.59
53 58 5.10 5.08 5.03 4.94 4.82 4.83 8 12.11
54 59 5.19 5.17 5.11 5.01 4.88 4.90 9 10.97
- ----------------------------------------------------------------------------------------------------------------------------
55 60 5.29 5.26 5.20 5.09 4.94 4.97 10 10.06
56 61 5.39 5.36 5.29 5.17 5.00 5.04 11 9.31
57 62 5.49 5.47 5.38 5.25 5.06 5.12 12 8.69
58 63 5.61 5.58 5.48 5.33 5.12 5.21 13 8.17
59 64 5.73 5.70 5.59 5.42 5.18 5.29 14 7.72
- ----------------------------------------------------------------------------------------------------------------------------
60 65 5.86 5.82 5.70 5.51 5.24 5.39 15 7.34
61 66 6.00 5.96 5.82 5.60 5.31 5.48 16 7.00
62 67 6.15 6.10 5.95 5.69 5.37 5.58 17 6.70
63 68 6.32 6.26 6.08 5.79 5.43 5.69 18 6.44
64 69 6.49 6.42 6.21 5.89 5.48 5.80 19 6.21
- ----------------------------------------------------------------------------------------------------------------------------
65 70 6.68 6.60 6.35 5.98 5.54 5.92 20 6.00
66 71 6.88 6.78 6.50 6.08 5.59 6.04 21 5.81
67 72 7.09 6.98 6.65 6.18 5.64 6.17 22 5.64
68 73 7.31 7.18 6.81 6.28 5.69 6.30 23 5.49
69 74 7.56 7.40 6.97 6.37 5.73 6.44 24 5.35
- ----------------------------------------------------------------------------------------------------------------------------
70 75 7.82 7.64 7.14 6.47 5.77 6.59 25 5.22
71 76 8.09 7.88 7.31 6.55 5.81 6.74 26 5.10
72 77 8.39 8.14 7.48 6.64 5.84 6.91 27 4.99
73 78 8.71 8.41 7.65 6.72 5.87 7.07 28 4.89
74 79 9.05 8.70 7.83 6.80 5.89 7.25 29 4.80
- ----------------------------------------------------------------------------------------------------------------------------
75 80 9.41 9.00 8.00 6.87 5.91 7.44 30 4.72
76 81 9.81 9.32 8.17 6.93 5.93 7.63
77 82 10.23 9.65 8.34 6.99 5.95 7.83
78 83 10.68 9.99 8.50 7.05 5.96 8.05
79 84 11.16 10.35 8.66 7.10 5.97 8.28
- ----------------------------------------------------------------------------------------------------------------------------
80 85 & 11.68 10.72 8.81 7.14 5.98 8.49
81 OVER 12.23 11.09 8.95 7.18 5.99 8.74
82 12.81 11.47 9.09 7.21 5.99 9.00
83 13.44 11.86 9.21 7.23 5.99 9.29
84 14.09 12.25 9.32 7.26 6.00 9.51
- ----------------------------------------------------------------------------------------------------------------------------
85 & 14.79 12.64 9.43 7.28 6.00 9.80
OVER OVER
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
7.02
<PAGE> 19
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND EQUAL TO SECONDARY PAYEE
- --------------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND EQUAL TO SECONDARY PAYEE
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF AGE OF SECONDARY PAYEE
PRIMARY
PAYEE
- --------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- --------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.19 $4.22 $4.24 $4.27 $4.30 $4.32 $4.35 $4.37 $4.40 $4.43 $4.45
51 56 4.21 4.23 4.26 4.29 4.32 4.35 4.38 4.40 4.43 4.46 4.48
52 57 4.22 4.25 4.28 4.31 4.34 4.37 4.40 4.43 4.46 4.49 4.52
53 58 4.24 4.27 4.30 4.33 4.37 4.40 4.43 4.46 4.49 4.52 4.55
54 59 4.25 4.29 4.32 4.35 4.39 4.42 4.46 4.49 4.52 4.56 4.59
- --------------------------------------------------------------------------------------------------------------
55 60 4.27 4.30 4.34 4.37 4.41 4.45 4.48 4.52 4.55 4.59 4.62
56 61 4.28 4.32 4.36 4.39 4.43 4.47 4.51 4.54 4.58 4.62 4.66
57 62 4.30 4.33 4.37 4.41 4.45 4.49 4.53 4.57 4.61 4.65 4.69
58 63 4.31 4.35 4.39 4.43 4.47 4.51 4.55 4.60 4.64 4.68 4.73
59 64 4.32 4.36 4.40 4.45 4.49 4.53 4.58 4.62 4.67 4.71 4.76
- --------------------------------------------------------------------------------------------------------------
60 65 4.34 4.38 4.42 4.46 4.51 4.55 4.60 4.65 4.69 4.74 4.79
61 66 4.35 4.39 4.43 4.48 4.53 4.57 4.62 4.67 4.72 4.77 4.82
62 67 4.36 4.40 4.45 4.49 4.54 4.59 4.64 4.69 4.75 4.80 4.85
63 68 4.37 4.41 4.46 4.51 4.56 4.61 4.66 4.71 4.77 4.83 4.88
64 69 4.38 4.42 4.47 4.52 4.57 4.63 4.68 4.74 4.79 4.85 4.91
- --------------------------------------------------------------------------------------------------------------
65 70 4.39 4.43 4.48 4.53 4.59 4.64 4.70 4.76 4.81 4.88 4.94
66 71 4.40 4.44 4.49 4.55 4.60 4.66 4.71 4.77 4.84 4.90 4.96
67 72 4.40 4.45 4.50 4.56 4.61 4.67 4.73 4.79 4.86 4.92 4.99
68 73 4.41 4.46 4.51 4.57 4.63 4.68 4.75 4.81 4.87 4.94 5.01
69 74 4.42 4.47 4.52 4.58 4.64 4.70 4.76 4.82 4.89 4.96 5.03
- --------------------------------------------------------------------------------------------------------------
70 75 4.43 4.48 4.53 4.59 4.65 4.71 4.77 4.84 4.91 4.98 5.06
71 76 4.43 4.48 4.54 4.60 4.66 4.72 4.78 4.85 4.92 5.00 5.08
72 77 4.44 4.49 4.55 4.60 4.67 4.73 4.80 4.87 4.94 5.01 5.09
73 78 4.44 4.50 4.55 4.61 4.67 4.74 4.81 4.88 4.95 5.03 5.11
74 79 4.45 4.50 4.56 4.62 4.68 4.75 4.82 4.89 4.96 5.04 5.13
- --------------------------------------------------------------------------------------------------------------
75 90 4.45 4.51 4.56 4.63 4.69 4.76 4.83 4.90 4.98 5.06 5.14
- --------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF AGE OF SECONDARY PAYEE
PRIMARY
PAYEE
- -----------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- -----------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- -----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.47 $4.50 $4.52 $4.54 $4.56 $4.58 $4.60 $4.62 $4.64 $4.65
51 56 4.51 4.54 4.56 4.58 4.61 4.63 4.65 4.67 4.69 4.71
52 57 4.55 4.57 4.60 4.63 4.65 4.68 4.70 4.72 4.74 4.76
53 58 4.58 4.61 4.64 4.67 4.70 4.73 4.75 4.78 4.80 4.82
54 59 4.62 4.65 4.69 4.72 4.75 4.78 4.80 4.83 4.86 4.88
- -----------------------------------------------------------------------------------------------------
55 60 4.66 4.69 4.73 4.76 4.79 4.83 4.86 4.89 4.91 4.94
56 61 4.70 4.73 4.77 4.81 4.84 4.88 4.91 4.94 4.97 5.00
57 62 4.73 4.77 4.81 4.85 4.89 4.93 4.96 5.00 5.03 5.07
58 63 4.77 4.81 4.85 4.90 4.94 4.98 5.02 5.06 5.10 5.13
59 64 4.80 4.85 4.90 4.94 4.99 5.03 5.07 5.12 5.16 5.20
- -----------------------------------------------------------------------------------------------------
60 65 4.84 4.89 4.94 4.99 5.03 5.08 5.13 5.18 5.22 5.27
61 66 4.87 4.93 4.98 5.03 5.08 5.13 5.19 5.24 5.28 5.33
62 67 4.91 4.96 5.02 5.07 5.13 5.19 5.24 5.30 5.35 5.40
63 68 4.94 5.00 5.06 5.12 5.18 5.24 5.30 5.35 5.41 5.47
64 69 4.97 5.03 5.10 5.16 5.22 5.29 5.35 5.41 5.48 5.54
- -----------------------------------------------------------------------------------------------------
65 70 5.00 5.07 5.13 5.20 5.27 5.34 5.40 5.47 5.54 5.61
66 71 5.03 5.10 5.17 5.24 5.31 5.38 5.46 5.53 5.80 5.68
67 72 5.06 5.13 5.20 5.28 5.35 5.43 5.51 5.59 5.86 5.74
68 73 5.09 5.16 5.24 5.31 5.39 5.48 5.56 5.64 5.73 5.81
69 74 5.11 5.19 5.27 5.35 5.43 5.52 5.61 5.69 5.78 5.87
- -----------------------------------------------------------------------------------------------------
70 75 5.13 5.21 5.30 5.38 5.47 5.56 5.65 5.75 5.84 5.94
71 76 5.16 5.24 5.33 5.41 5.51 5.60 5.70 5.79 5.90 6.00
72 77 5.18 5.26 5.35 5.44 5.54 5.64 5.74 5.84 5.95 6.06
73 78 5.20 5.28 5.38 5.47 5.57 5.67 5.78 5.89 6.00 6.11
74 79 5.21 5.31 5.40 5.50 5.60 5.71 5.82 5.93 6.05 6.17
- -----------------------------------------------------------------------------------------------------
75 90 5.23 5.32 5.42 5.52 5.63 5.74 5.85 5.97 6.09 6.22
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND ONE-HALF TO SECONDARY PAYEE
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF AGE OF SECONDARY PAYEE
PRIMARY
PAYEE
- --------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- --------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.50 $4.51 $4.53 $4.55 $4.56 $4.58 $4.59 $4.60 $4.62 $4.63 $4.65
51 56 4.54 4.56 4.57 4.59 4.61 4.62 4.64 4.65 4.67 4.68 4.70
52 57 4.59 4.60 4.62 4.64 4.66 4.67 4.69 4.71 4.72 4.74 4.75
53 58 4.63 4.65 4.67 4.69 4.70 4.72 4.74 4.76 4.78 4.80 4.81
54 59 4.68 4.70 4.72 4.74 4.76 4.78 4.80 4.81 4.83 4.85 4.87
- --------------------------------------------------------------------------------------------------------------
55 60 4.72 4.74 4.77 4.79 4.81 4.83 4.85 4.87 4.89 4.91 4.93
56 61 4.77 4.79 4.82 4.84 4.86 4.88 4.91 4.93 4.95 4.97 5.00
57 62 4.82 4.85 4.87 4.89 4.92 4.94 4.97 4.99 5.01 5.04 5.06
58 63 4.87 4.90 4.92 4.95 4.98 5.00 5.03 5.05 5.08 5.10 5.13
59 64 4.93 4.95 4.98 5.01 5.03 5.06 5.09 5.12 5.14 5.17 5.20
- --------------------------------------------------------------------------------------------------------------
60 65 4.98 5.01 5.04 5.07 5.10 5.13 5.15 5.18 5.21 5.24 5.27
51 66 5.04 5.07 5.10 5.13 5.16 5.19 5.22 5.25 5.29 5.32 5.35
62 67 5.10 5.13 5.16 5.19 5.23 5.26 5.29 5.33 5.36 5.39 5.43
63 68 5.17 5.20 5.23 5.26 5.30 5.33 5.36 5.40 5.44 5.47 5.51
64 69 5.23 5.26 5.30 5.33 5.37 5.40 5.44 5.48 5.51 5.55 5.59
- --------------------------------------------------------------------------------------------------------------
65 70 5.30 5.33 5.36 5.40 5.44 5.48 5.51 5.55 5.59 5.64 5.68
66 71 5.36 5.40 5.44 5.47 5.51 5.55 5.59 5.64 5.68 5.72 5.77
67 72 5.43 5.47 5.51 5.55 5.59 5.63 5.67 5.72 5.76 5.81 5.86
68 73 5.50 5.54 5.58 5.62 5.67 5.71 5.76 5.80 5.85 5.90 5.95
69 74 5.58 5.62 5.66 5.70 5.75 5.79 5.84 5.89 5.94 5.99 6.04
- --------------------------------------------------------------------------------------------------------------
70 75 5.65 5.69 5.74 5.78 5.83 5.88 5.93 5.98 6.03 6.08 6.14
71 76 5.73 5.77 5.82 5.86 5.91 5.96 6.01 6.07 6.12 6.18 6.24
72 77 5.80 5.85 5.90 5.95 6.00 6.05 6.10 6.16 6.22 6.28 6.34
73 78 5.88 5.93 5.98 6.03 6.08 6.14 6.19 6.25 6.31 6.38 6.44
74 79 5.96 6.01 6.06 6.12 6.17 6.23 6.29 6.35 6.41 6.48 6.55
- --------------------------------------------------------------------------------------------------------------
75 80 6.05 6.10 6.15 6.20 6.26 6.32 6.38 6.44 6.51 6.58 6.65
- --------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF AGE OF SECONDARY PAYEE
PRIMARY
PAYEE
- -----------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- -----------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- -----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.66 $4.67 $4.68 $4.69 $4.71 $4.72 $4.73 $4.74 $4.75 $4.75
51 56 4.71 4.73 4.74 4.75 4.77 4.78 4.79 4.80 4.81 4.82
52 57 4.77 4.79 4.80 4.81 4.83 4.84 4.85 4.86 4.88 4.89
53 58 4.83 4.85 4.86 4.88 4.89 4.91 4.92 4.93 4.95 4.96
54 59 4.89 4.91 4.93 4.94 4.96 4.97 4.99 5.00 5.02 5.03
- -----------------------------------------------------------------------------------------------------
55 60 4.95 4.97 4.99 5.01 5.03 5.04 5.06 5.08 5.09 5.11
56 61 5.02 5.04 5.06 5.08 5.10 5.12 5.14 5.15 5.17 5.19
57 62 5.09 5.11 5.13 5.15 5.17 5.20 5.22 5.24 5.25 5.27
58 63 5.16 5.18 5.20 5.23 5.25 5.28 5.30 5.32 5.34 5.36
59 64 5.23 5.25 5.28 5.31 5.33 5.36 5.38 5.41 5.43 5.45
- -----------------------------------------------------------------------------------------------------
60 65 5.30 5.33 5.36 5.39 5.42 5.44 5.47 5.50 5.52 5.55
51 66 5.38 5.41 5.44 5.47 5.51 5.54 5.56 5.59 5.62 5.65
62 67 5.46 5.50 5.53 5.56 5.60 5.63 5.66 5.69 5.72 5.75
63 68 5.54 5.58 5.62 5.65 5.69 5.73 5.76 5.80 5.83 5.86
64 69 5.63 5.67 5.71 5.75 5.79 5.83 5.87 5.90 5.94 5.98
- -----------------------------------------------------------------------------------------------------
65 70 5.72 5.76 5.80 5.85 5.89 5.93 5.97 6.01 6.06 6.10
66 71 5.81 5.86 5.90 5.95 5.99 6.04 6.08 6.13 6.17 6.22
67 72 5.90 5.95 6.00 6.05 6.10 6.15 6.20 6.25 6.30 6.35
68 73 6.00 6.05 6.10 6.16 6.21 6.26 6.32 6.37 6.42 6.48
69 74 6.10 6.15 6.21 6.26 6.32 6.38 6.44 6.49 6.55 6.61
- -----------------------------------------------------------------------------------------------------
70 75 6.20 6.26 6.31 6.38 6.44 6.50 6.56 6.62 6.69 6.75
71 76 6.30 6.36 6.42 6.49 6.55 6.62 6.69 6.75 6.82 6.89
72 77 6.40 6.47 6.54 6.60 6.67 6.74 6.82 6.89 6.96 7.04
73 78 6.51 6.58 6.65 6.72 6.79 6.87 6.95 7.03 7.10 7.18
74 79 6.62 6.69 6.76 6.84 6.92 7.00 7.08 7.17 7.25 7.34
- -----------------------------------------------------------------------------------------------------
75 80 6.73 6.80 6.88 6.96 7.04 7.13 7.22 7.31 7.40 7.49
- -----------------------------------------------------------------------------------------------------
</TABLE>
7.03
<PAGE> 20
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- --------------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND TWO-THIRDS TO SECONDARY PAYEE
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF AGE OF SECONDARY PAYEE
PRIMARY
PAYEE
- --------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- --------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.39 $4.41 $4.43 $4.45 $4.47 $4.49 $4.51 $4.53 $4.54 $4.56 $4.58
51 56 4.42 4.44 4.47 4.49 4.51 4.53 4.55 4.57 4.59 4.61 4.63
52 57 4.46 4.48 4.50 4.52 4.55 4.57 4.59 4.61 4.63 4.65 4.67
53 58 4.49 4.52 4.54 4.56 4.59 4.61 4.63 4.66 4.68 4.70 4.72
54 59 4.53 4.55 4.58 4.60 4.63 4.65 4.68 4.70 4.73 4.75 4.77
- --------------------------------------------------------------------------------------------------------------
55 60 4.56 4.59 4.61 4.64 4.67 4.69 4.72 4.75 4.77 4.80 4.83
56 61 4.60 4.62 4.65 4.68 4.71 4.74 4.77 4.79 4.82 4.85 4.88
57 62 4.63 4.66 4.69 4.72 4.75 4.78 4.81 4.84 4.87 4.90 4.93
58 63 4.67 4.70 4.73 4.76 4.79 4.83 4.86 4.89 4.92 4.96 4.99
59 64 4.71 4.74 4.77 4.81 4.84 4.87 4.91 4.94 4.98 5.01 5.04
- --------------------------------------------------------------------------------------------------------------
60 65 4.75 4.78 4.81 4.85 4.88 4.92 4.96 4.99 5.03 5.07 5.10
61 66 4.79 4.82 4.86 4.89 4.93 4.97 5.01 5.04 5.08 5.12 5.16
62 67 4.83 4.86 4.90 4.94 4.98 5.02 5.06 5.10 5.14 5.18 5.22
63 68 4.87 4.91 4.94 4.98 5.02 5.07 5.11 5.15 5.19 5.24 5.28
64 69 4.91 4.95 4.99 5.03 5.07 5.12 5.16 5.20 5.25 5.30 5.34
- --------------------------------------------------------------------------------------------------------------
65 70 4.95 4.99 5.03 5.08 5.12 5.17 5.21 5.26 5.31 5.36 5.41
66 71 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.42 5.47
67 72 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.43 5.48 5.54
68 73 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.43 5.48 5.54 5.60
69 74 5.13 5.17 5.22 5.27 5.32 5.37 5.43 5.49 5.54 5.60 5.67
- --------------------------------------------------------------------------------------------------------------
70 75 5.17 5.22 5.27 5.32 5.37 5.43 5.48 5.54 5.60 5.67 5.73
71 76 5.22 5.27 5.32 5.37 5.42 5.48 5.54 5.60 5.66 5.73 5.80
72 77 5.26 5.31 5.37 5.42 5.48 5.53 5.60 5.66 5.72 5.79 5.86
73 78 5.31 5.36 5.41 5.47 5.53 5.59 5.65 5.72 5.78 5.85 5.93
74 79 5.36 5.41 5.46 5.52 5.58 5.64 5.71 5.77 5.84 5.92 5.99
- --------------------------------------------------------------------------------------------------------------
75 80 5.40 5.45 5.51 5.57 5.63 5.69 5.76 5.83 5.90 5.98 6.06
- --------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF AGE OF SECONDARY PAYEE
PRIMARY
PAYEE
- ----------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.60 $4.61 $4.63 $4.64 $4.66 $4.67 $4.68 $4.70 $4.71 $4.72
51 56 4.64 4.66 4.68 4.70 4.71 4.73 4.74 4.76 4.77 4.78
52 57 4.69 4.71 4.73 4.75 4.77 4.78 4.80 4.82 4.83 4.85
53 58 4.74 4.77 4.79 4.81 4.83 4.84 4.86 4.88 4.90 4.91
54 59 4.80 4.82 4.84 4.86 4.89 4.91 4.93 4.94 4.96 4.98
- ----------------------------------------------------------------------------------------------------
55 60 4.85 4.88 4.90 4.92 4.95 4.97 4.99 5.01 5.03 5.05
56 61 4.91 4.93 4.96 4.99 5.01 5.04 5.06 5.08 5.10 5.13
57 62 4.96 4.99 5.02 5.05 5.08 5.10 5.13 5.15 5.18 5.20
58 63 5.02 5.05 5.08 5.11 5.14 5.17 5.20 5.23 5.26 5.28
59 64 5.08 5.11 5.15 5.18 5.21 5.24 5.28 5.31 5.34 5.36
- ----------------------------------------------------------------------------------------------------
60 65 5.14 5.18 5.21 5.25 5.28 5.32 5.35 5.39 5.42 5.45
61 66 5.20 5.24 5.28 5.32 5.36 5.39 5.43 5.47 5.50 5.54
62 67 5.26 5.31 5.35 5.39 5.43 5.47 5.51 5.55 5.59 5.63
63 68 5.33 5.37 5.42 5.46 5.51 5.55 5.60 5.64 5.68 5.73
64 69 5.39 5.44 5.49 5.54 5.59 5.64 5.68 5.73 5.78 5.82
- ----------------------------------------------------------------------------------------------------
65 70 5.46 5.51 5.56 5.61 5.67 5.72 5.77 5.82 5.87 5.92
66 71 5.52 5.58 5.64 5.69 5.75 5.80 5.86 5.92 5.97 6.03
67 72 5.59 5.65 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13
68 73 5.66 5.72 5.78 5.85 5.91 5.98 6.04 6.11 6.17 6.24
69 74 5.73 5.79 5.86 5.93 5.99 6.06 6.13 6.20 6.27 6.35
- ----------------------------------------------------------------------------------------------------
70 75 5.80 5.86 5.93 6.01 6.08 6.15 6.23 6.30 6.38 6.45
71 76 5.87 5.94 6.01 6.09 6.16 6.24 6.32 6.40 6.48 6.57
72 77 5.93 6.01 6.09 6.17 6.25 6.33 6.41 6.50 6.59 6.68
73 78 6.00 6.08 6.16 6.25 6.33 6.42 6.51 6.60 6.69 6.79
74 79 6.07 6.15 6.24 6.33 6.42 6.51 6.60 6.70 6.80 6.90
- ----------------------------------------------------------------------------------------------------
75 80 6.14 6.23 6.31 6.41 6.50 6.60 6.70 6.80 6.91 7.01
- ----------------------------------------------------------------------------------------------------
</TABLE>
7.04
<PAGE> 1
** DATA PAGE ** CONTRACT NUMBER
ANNUITANT
RIGHT TO EXAMINE AND
RETURN CONTRACT
WITHIN 20 DAYS
You may return this contract within 20 days
after receiving it. It may be delivered or
mailed to us or the agent through whom it
was purchased. The contract shall then be
deemed void from the start. Any premium
paid will be returned.
INDIVIDUAL VARIABLE
ANNUITY
(TAX QUALIFIED)
Funds in one or more Divisions of Separate
Account No. 2 and General Account.
All installments and values provided by
this contract, when based on investment
experience of one or more Division of
Separate Account No. 2, are variable and are
not guaranteed as to fixed dollar amounts.
This contract is a legal contract between the
Group Contract owner and General American.
PLEASE READ YOUR CONTRACT CAREFULLY.
ISSUED BY: GENERAL AMERICAN LIFE INSURANCE CO.
A Mutual Company
P.O. BOX 14490
ST. LOUIS, MISSOURI 63178
10014 0.01
<PAGE> 2
<TABLE>
ALPHABETIC GUIDE TO YOUR CONTRACT
<CAPTION>
Page Page
<S> <S>
4.03 Addition, Deletion, or Substitution 1.02 Endorsements
of Investments 0.02 Notice of Annual Meeting
4.02 Accumulation Provision 6.01 Persons with an Interest in the
7.02 Annuity Option Table Contract
5.01 Annuity Provisions 3.02 Reinstatement
4.03 Benefits on Lapse or Surrender 3.02 Stipulated Payments
1.01 Contract Specifications 7.01 Table of Guaranteed Accumulation
6.01 Death Benefit (Non-Forfeiture) Values
3.01 Definitions 6.02 The Contract
3.03 Dividends 4.02 Transfers
3.03 Dividend Options 4.01 Valuation Provisions
</TABLE>
Supplemental Agreements, Modifications and Amendments, if any, and a copy of
the Application are found following the final section.
NOTICE OF ANNUAL MEETING
Our annual meeting for the election of directors and the transaction of other
business is held each year at our Home Office in St. Louis, Missouri. The
meeting is at 9:00 a.m. on the fourth Tuesday in January. We are a mutual
company owned by our policyowners. Each policyowner is entitled to vote at
such elections and to participate in such meetings.
0.02
<PAGE> 3
CONTRACT SPECIFICATIONS
CONTRACT NUMBER
ANNUITANT
AGE AT ISSUE
SEX
DATE OF ISSUE
MATURITY DATE
GENERAL ACCOUNT MAXIMUM WITHDRAWAL PERCENTAGE LIMIT 25%
<TABLE>
<CAPTION>
BENEFITS (As specified in
FORM contract and in any ANNUAL PAYMENT
NUMBERS Supplemental Agreement) COST PERIOD
------- ----------------------- ---- ------
<S> <C>
Total Initial Annual Cost
</TABLE>
Total initial amount payable at -------- intervals:
THE DUE DATES OF PAYMENTS AFTER THE FIRST ARE MEASURED FROM THE DATE OF ISSUE
AND ARE AT THE INTERVALS SPECIFIED ABOVE UNLESS SUCH INTERVAL IS CHANGED.
THE AMOUNT PAYABLE ON THE DUE DATES MAY CHANGE IF ANY OF THE BENEFITS ARE
CHANGED IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT OR ANY SUPPLEMENTAL
AGREEMENT OR IF ANY OF THE BENEFITS HAS AN ANNUAL COST INDICATED ABOVE AS
COMPUTED EACH YEAR. --
- -------------
WHEN THE PREMIUM FOR ANY SUPPLEMENTAL AGREEMENT IS NO LONGER PAYABLE. THE
TOTAL ANNUAL COST WILL BE REDUCED ACCORDINGLY.
Variable Annuity Stipulated Payment:
Accumulation Allocation:
Supplemental Agreement Premiums:
1.01
<PAGE> 4
1. DEFINITIONS IN THIS CONTRACT
WE, US AND OUR General American Life Insurance Company.
YOU, YOUR The owner of this contract. The owner is as shown in
the application unless later changed as provided in
this contract. The owner may be someone other than
the Annuitant.
AGE Age means the Annuitant's age at his or her nearest
birthday.
ANNUITANT The individual who will receive benefits from the
contract when an annuity installment is elected.
BENEFICIARY The person named in the application or by later
designation to receive the proceeds in the event of
the Annuitant's death.
PROCEEDS The amount we are obligated to pay under the terms of
this contract, when it is surrendered, matures or
when the Annuitant dies. This amount will be reduced
by any partial withdrawals.
SEPARATE ACCOUNT Separate Account No. 2, a segregated investment
account created by us to receive premiums for this
contract. Separate Account No. 2 has several
Divisions, which correspond to various funds offered
by General American Capital Company. Each fund
consists of a specialized investment portfolio, and
all are described in the prospectus for General
American Capital Company.
The assets of Separate Account No. 2 are held
separately from the assets held in the General
Account. Separate Account assets will consist
solely of shares in the funds of General
American Capital Company. Income, gains, and
losses whether or not realized --- from these
shares will be credited to or charged against
the account without regard to our other income,
gains, or losses.
Assets held by Separate Account No. 2 will not
be charged with liabilities that arise from any
other business we may conduct. We have the
right to transfer to our General Account any
assets of Separate Account No. 2 which are in
excess of the reserves and other contract
liabilities of Separate Account No. 2.
Separate Account No. 2 is registered with the
Securities and Exchange Commission as a unit
investment trust under the Investment Company
Act of 1940. Separate Account No. 2 is also
subject to the laws of the State of Missouri,
which regulate the operations of insurance
companies incorporated in Missouri.
GENERAL ACCOUNT An account which consists of all of our assets other
than those in Separate Account No. 2 or any other
segregated investment account.
ACCUMULATED This is the value, prior to maturity, of all purchase
VALUE payments plus all interest credits or all gains and
losses, less the total of any amounts withdrawn and
withdrawal charges which have been assessed.
GENERAL AMERICAN A company we control which is registered with the
CAPITAL COMPANY Securities and Exchange Commission of the U.S.
Government as an investment management company.
FUND One of the investment portfolios of General American
Capital Company.
NET ACCUMULATED This is the accumulated value reduced by any
VALUE applicable withdrawal charges.
VALUATION A valuation period for the Assets in Divisions of
OF ASSETS Separate Account No. 2 is the
3.01
<PAGE> 5
period between successive Business Days. It begins at
the close of business each Business Day and ends at the
close of business of the next succeeding Business Day.
ACCUMULATION This is an accounting device that we use to determine
UNIT the value of your contract prior to the annuity
commencement date.
ANNUITY UNIT This is an accounting device that we use to determine
the amount payable under this contract on and after
the annuity commencement date.
CONTRACT The same day and month as the date of issue for each
ANNIVERSARY succeeding year that this contract remains in force.
BUSINESS DAY This is a day on which both we and the New York Stock
Exchange are open for business.
WRITTEN REQUEST This must be supplied in written form satisfactory to
us, signed by you, and filed in our Home Office in
St. Louis, Missouri.
2. STIPULATED PAYMENTS
Each stipulated payment is payable at the Home Office
of the company in St. Louis, Missouri. The due dates
of the stipulated payments are shown on the Policy
Specifications page. You may change the frequency at
which stipulated payments are to be made at any time.
Your first stipulated payment is shown on the Policy
Specifications page. You may increase or decrease
subsequent stipulated payments at any time. The
minimum amount of stipulated payments is $25.00 per
month.
3. REINSTATEMENT
You may reinstate benefits provided by any
supplemental agreement attached to this contract by
providing evidence of insurability satisfactory to
the Company. You must comply with the reinstatement
provisions incorporated in such supplemental
agreement.
4. DIVIDENDS
ANNUAL DIVIDENDS Your contract shares in our divisible surplus while it
is in force prior to the annuity commencement date. Each
year we will determine the share of divisible surplus,
if any, accruing to your contract. Investment results
are credited directly through the changes in the value
of the accumulation units and annuity units. Also, most
mortality and expense savings are credited directly
through decreases in the appropriate charges. Therefore,
the Company expects little or no divisible surplus to be
credited to your contract.
DIVIDEND You may choose one of the following options:
OPTIONS
OPTION 1. CASH. Paid in cash.
OPTION 2. REDUCE STIPULATED PAYMENT. Used to pay part
or all of the stipulated payment on your
contract.
OPTION 3. DEPOSITS. Left with the company to
accumulate at interest. The interest rate
will be determined by us from time to time.
This rate will never be less than 4.0
percent per year, compounded annually.
You may choose a dividend option within 31 days after a
dividend is credited. If you do not, we will credit the
dividend under Option 3 until such time as you request a
different option.
You may withdraw in cash the entire dividend deposit, or
any part of it, if you provide a proper written request.
The premium for any supplemental agreement may not be
paid from any dividend deposits remaining with the
company. When your contract matures, dividend
deposits will be payable as part of the contract
proceeds.
3.02
<PAGE> 6
5. VALUATION PROVISIONS
NET INVESTMENT The General Account net investment factor for any
FACTOR Business Day is 1.0 plus a rate of investment income
that we will declare in advance. We guarantee that the
rate will be no less than 4 percent per year compounded
annually.
The Separate Account will have a net investment factor
for any Business Day which is the aggregate of the Net
Investment Factor of its various Divisions. A Division's
Net Investment Factor measures the investment
performance of such Division during a valuation period.
The Net Investment Factor for each Division for a
valuation period is calculated as follows:
The value of the assets at the end of the
preceding valuation period; plus
The investment income and capital gains ---
realized or unrealized credited to the
assets in the valuation period for which the
net investment factor is being determined;
minus
The capital losses, realized or unrealized,
charged against those assets during the
valuation period; minus
Any amount charged against each Division for
taxes, or any amount we at aside during the
valuation period as a reserve for taxes
attributable to the operation or maintenance
of each Division; minus
A charge not to exceed (.002753) 96 of the
assets for each day in the valuation period.
This corresponds to 1.00% per year for
mortality and expense risks; divided by
The value of the assets at the end of the
preceding valuation period.
ACCUMULATION The initial value of each Division of Separate Account
UNIT VALUE No. 2's accumulation unit was established at $10.00 as
of the end of the Business Day on October 1, 1987. This
value may increase or decrease from day to day based on
investment results. The value of a General Account
accumulation unit was established at $10.00 as of the
end of the Business Day on April 1, 1982. The value
of the respective accumulation unit is determined at
the end of any later Business Day. The value is
determined by multiplying the accumulation unit value
for the end of the immediately preceding Business Day
by the net investment factor for such later Business
Day.
ANNUITY UNIT The initial value of an Annuity Unit in a Division of
VALUE Separate Account No. 2 was established at $10.00 as of
the end of the Business Day on October 1, 1987. This
value may increase or decrease from day to day based on
investment results. The value of a General Account
Annuity Unit was established at $10.00 at the end of
the Business Day on April 1, 1982. The value of the
respective annuity unit is determined at the end of
any later Business Day.
The value is determined by multiplying such value for
the end of the preceding Business Day by the product
of (a) .99989256 once for each calendar day between
the end of the sixth preceding Business Day and the
end of the fifth preceding Business Day and (b) the
net investment factor for the fifth Business Day
preceding such Business Day.
VALUATION Assets in a Division of Separate Account No. 2 shall
OF ASSETS be valued at the end of each Business Day at their fair
market value or, where there is no readily available
market, at their fair value as determined by us, in
accordance with recognized accounting procedures. Direct
expenses involved in the purchase or sale of assets
for a Division of Separate Account No. 2, including,
but not limited to, brokerage commission, exchange
fees, taxes, and postage, shall be included in such
valuation.
4.01
<PAGE> 7
6. ACCUMULATION PROVISIONS
ALLOCATION OF The stipulated payments will be allocated between any or
STIPULATED all of the Divisions of Separate Account No. 2 and the
PAYMENTS General Account in the proportion shown on the Policy
Specifications page or as you may choose at a later
date. You may elect an allocation to a Division of
Separate Account No. 2 between zero percent and 100
percent in multiples of one percent with the balance
being allocated to the General Account, provided that
the amount allocated to any Division of Separate Account
No. 2 must be at least $25.00. Such allocation may be
changed by written notice submitted to us with the
stipulated payment.
NET STIPULATED We will deduct from any payment the premium for any
PAYMENT benefits provided by a supplemental agreement. The
remainder will be the stipulated payment. We may
deduct applicable premium taxes or we may defer
deduction of the premium taxes until the annuity
commencement date, if permitted by state law. The
remaining balance is the net stipulated payment.
ACCUMULATION The number of Accumulation Units that we will credit to
UNITS each account is determined by dividing the portion of
the net stipulated payment for that account by the
Accumulation Unit value for that account at the end
of the Business Day coincident with or next following
the day on which the stipulated payment is received
by us at the Home Office. The number of Accumulation
Units so determined will not be affected by any
subsequent changes in the values of the Accumulation
Units. The Accumulation Unit value of the General
Account will increase at a rate not less than the
guaranteed rate, and the Accumulation Unit value of
the Division of Separate Account No. 2 may increase
or decrease from day to day based on investment
results.
PARTIAL At any time while the Annuitant is living and prior to
WITHDRAWAL the maturity date, you may make a partial withdrawal of
a portion of the Accumulated Value of this contract from
one or more of the Divisions of Separate Account No. 2
or the General Account by giving us a written request.
However, the amount may not be less than $100.00. Unless
you tell us otherwise in the request, the withdrawal
will be made based on the current allocation of
contributions to the General Account and the Divisions
of Separate Account No. 2. The amount of the withdrawal
will be deducted from the Accumulated Value of the
General Account and Divisions of Separate Account No. 2
as of the date of withdrawal and a withdrawal charge
will be deducted from your Accumulated Value. (See
Contingent Deferred Sales Charge in Benefits on Lapse or
Surrender, Section 9.
7. TRANSFERS
You may transfer amounts as follows:
Between the General Account and one or more of the
Divisions of Separate Account No. 2; or
Among the Divisions of Separate Account No. 2.
These transfers will be subject to the following rules:
We must receive a written request for transfer.
Transfers from or among the Divisions of Separate
Account No. 2 may be made at any time and must be
at least $100.00 or the entire amount of a
Division, if smaller. Transfers from the General
Account to Separate Account No. 2 may be made once
each year on the contract's anniversary date and
must be at least $100.00. The maximum allowable
shall be a percentage, as set forth on the
Contract Specifications page, of the contract
accumulated value on the prior contract
anniversary.
We may revoke or modify the transfer privilege at any
time, including the minimum amount for a transfer and
the transfer charge, if any.
4.02
<PAGE> 8
8. ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, as far as the law allows, to make
additions to, deletions from, or substitutions for the
shares of a Fund that are held by Separate Account No. 2
or that Separate Account No. 2 may purchase. We reserve
the right to eliminate the shares of any of the Funds of
General American Capital Company and to substitute
shares of another Fund of General American Capital
Company or of another registered open-end investment
company, if the shares or Funds are no longer available
for investment or if in our judgement, further
investment in any Fund should become inappropriate in
view of the purpose of the contract. We will not
substitute any shares attributable to the owner's
interest in a Division of Separate Account No. 2 without
at least 30 days notice to the owner and prior approval
of the Securities and Exchange Commission, to the
extent required by the Investment Company Act of 1940.
This will not prevent Separate Account No. 2 from
purchasing other securities for other series or classes
of contracts, or from permitting conversion between
series or classes of contracts on the basis of requests
made by owners.
We reserve the right to establish additional Divisions
of Separate Account No. 2, each of which would invest in
a new Fund of General American Capital Company or in
shares of another open-end investment company and to
make such Divisions available to whatever class or
series of contracts as we choose. We also reserve the
right to eliminate or combine existing Divisions of
Separate Account No. 2 or to transfer assets between
Divisions.
If we consider it to be in the best interest of
persons having voting privileges under the contracts,
Separate Account No. 2 may be operated as a management
company under the Investment Company Act of 1940. It
may be deregistered under that Act in the event
registration is no longer required. It may be combined
with other separate accounts, or its assets may be
transferred to other separate accounts.
9. BENEFITS ON LAPSE OR SURRENDER
NON-FORFEITURE You may elect either of the following non-forfeiture
OPTION options by writing to us at our Home Office prior to the
death of the Annuitant and prior to the annuity
commencement date. If you do not elect a nonforfeiture
option within 31 days after the date of default in
stipulated payments, we shall continue this contract
under the Paid-up Annuity provision from the date of
default.
CASH SURRENDER You may, while the Annuitant is alive and prior to the
maturity date, surrender this contract for its Net
Accumulated Value. During the first nine contract years,
we shall deduct a surrender charge from the accumulated
value of the contract as of the date of surrender. (See
Contingent Deferred Sales Charge.) We may defer payment
of the Net Accumulated Value for a period of six months.
PAID-UP You may continue this contract so that at the annuity
ANNUITY commencement date benefits as provided by the then
existing accumulation units may be received. The death
benefit prior to the annuity commencement date is as
stated under the section titled Death Benefit.
4.03
<PAGE> 9
CONTINGENT Upon surrender of the contract or partial withdrawal of
DEFERRED SALES funds on deposit, General American will apply a
CHARGE contingent deferred sales charge. Charges for partial
withdrawal will be deducted from the individual's
account value remaining after the distribution of the
partial withdrawal (i.e., the total amount deducted from
the individual's account value will be a combination of
the amount paid to the individual plus the charge).
In the case of a full surrender, the surrender charge is
deducted from the amount paid to the Contract Owner. The
contingent deferred sales charge will never be more than
the lesser of 9% of total net contributions to the
contract or the percentage of the amount received by the
Contract Owner or participant shown in the following
schedule:
<TABLE>
<CAPTION>
Surrender/Withdrawal
Contract Year Charges
<S> <C>
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9 1%
</TABLE>
There will be no contingent deferred sales charge
after the ninth contract year. In addition,
contingent deferred sales charges are not applied in
the event of death or disability, while this contract
is in force, or annuitization after five contract
years. If you are within the nine year deferred sales
charge period (the first nine contract years), you
may withdraw up to 10% of the account value per year
without incurring a contingent deferred sales charge.
The contingent deferred sales charge will be
allocated pro rata among the Divisions of Separate
Account No. 2 and the General Account based on the
values held in the Divisions of Separate Account No.
2 and the General Account prior to the surrender.
4.04
<PAGE> 10
10. ANNUITY PROVISIONS
ANNUITY The annuity commencement date is shown on the Policy
COMMENCEMENT Specifications page, unless this date has been changed
DATE by you. Any change must be made in writing to us at our
Home Office at least 30 days before the earlier of the
then effective and the newly designated annuity
commencement date.
ELECTION OF The Annuity Option is shown on the Policy Specifications
OPTION page, unless you have changed it. Any change in option
must be made in writing to us at the Home Office at
least 30 days before the date such election is to become
effective.
You, or if you have not done so, the Beneficiary
after the death of the Annuitant, may elect instead
of payment in one sum, that any amount due by us
under this contract to the Beneficiary be applied
under any of the options described below. If an
election is not made within one year after the death
of the Annuitant by written notice to us at our Home
Office, such payment will be made in one sum.
If Option 2 or 5 is elected, installments may not be
guaranteed for a period longer than the life
expectancy of the Annuitant.
ANNUITY OPTIONS (See Annuity Option Tables at the end of this contract.)
At the maturity of this contract, the proceeds may be
placed under any of the following options:
OPTION 1. LIFE ANNUITY. We will pay a monthly income
during a person's lifetime, which will cease
with the last installment preceding the
death of that person.
OPTION 2. LIFE ANNUITY WITH 60, 120, 180, OR 240
MONTHLY INSTALLMENTS GUARANTEED. We will pay
a monthly income during a person's lifetime
with the guarantee that if, at death of the
person, installments have been made for
less than 60 months, 120 months, 180 month,
or 240 months, as elected, installments will
be continued to the Beneficiary during the
remainder of the elected period.
OPTION 3. UNIT REFUND LIFE ANNUITY. We will pay a
monthly income during a person's lifetime
that will cease with the last installment
due prior to the death of that person,
with the guarantee: that, at the death of
the pay:, the Beneficiary will receive an
additional payment of the dollar value of
the number of annuity units equal to the
excess, if any, of (a) over (b) where (a)
is the total applied under the option
divided by the annuity unit value at the
annuity commencement date and (b) is the
number of annuity units represented by each
installment multiplied by the number of
installments made. Such dollar value will be
determined by multiplying the above number
of annuity units by the annuity unit value
on the Business Day coincident with or next
following the date on which written notice
of death is received by us at our Home
Office.
OPTION 4. JOINT AND SURVIVOR INCOME FOR LIFE. We will
pay monthly installments jointly to two
payees if both are living when the
installments become payable. The Annuitant
will be designated as primary pay:. Full
installments will continue so long as the
primary pay: is living. If the primary payee
dies after installments begin, full
installments or installments of 1/2 or 2/3,
(whichever you elected when applying for
this option) will continue to the other pay:
during his or her lifetime.
OPTION 5. INCOME FOR A FIXED PERIOD. We will pay the
proceeds in equal installments over a period
of from 3 to 3O years. The amount of each
installment will be based upon the period
and the frequency of the installments
selected from Option 5 Table.
OPTION 6. INCOME OF A FIXED AMOUNT. We will pay the
proceeds in equal installments in the amount
and at the intervals agreed upon until the
proceeds applied under this option, with
interest credited at the current annual
rate, are exhausted. The final installment
5.01
<PAGE> 11
will be for the then remaining balance only.
At any time the then current pay: may
withdraw the remaining balance in a single
sum.
DATE OF The first payment under any option shall be made on the
PAYMENT annuity commencement date or upon the date of surrender
or as of the date on which written notice of death is
received by us at the Home Office, as applicable.
ALLOCATION When you elect one of the first five options, you may
OF ANNUITY further elect to have the annuity purchased in the
form of the variable annuity, guaranteed
annuity, or a combination of both.
If you elect Option 6 you may specify whether the net
investment factor for one or more Divisions of Separate
Account No. 2 or the General Account is to apply, or
whether the amount due shall be split among the various
Divisions of Separate Account No. 2 and the General
Account. If no election is made to the contrary on
these options, that portion of accumulated value in the
Division of Separate Account No. 2 will be applied to
provide a variable annuity and that portion in the
General Account will be applied to provide a guaranteed
annuity.
We guarantee that the dollar amounts of variable annuity
benefits will not be adversely affected by our actual
expense and mortality results.
MINIMUM The minimum amount for each payee that can be placed
AMOUNTS under an option and the minimum amount of any payments
under an option will be based on our rules at the
time the option is to become effective.
The minimum amount to be placed under an option is
$5,000, and the minimum amount of any payment is $50 per
month, unless these amounts are waived by us.
GUARANTEED We use a guaranteed effective annual rate of 4% in
ANNUITY OPTION computing payments under all options.
INTEREST RATE
FIRST PAYMENT We shall make the first payment as of the option
effective date.
PAYEE A person who receives benefits under an option is a
payee. Except for a legal guardian, a payee must be a
natural person receiving benefits in his or her own
right. With our consent, the payee may be a trustee,
assignee, corporation, or partnership. If a payee dies
on or after the annuity commencement date, any unpaid
policy proceeds must be paid under the method of
payment being used as of the date of his or her
death.
CONTINGENT PAYEE The payee may name contingent payees, subject to any
restrictions under an annuity option chosen during the
Annuitant's lifetime, under the following conditions:
(1) If you are the payee; or
(2) If at any time after the Annuitant's death and
during the option period no previously named
contingent payee is living.
The named Contingent Payee will be disregarded if
making that person or entity the Contingent Payee
would prevent treatment of this contract as an
annuity for federal income tax purposes.
Designations made by the payee under these provisions
may be changed by the payee. Such changes must be
made by written request satisfactory to us. Changes
will only take effect when we accept them in writing
at our Home Office. At that time, the contingent
interest of any other person is terminated as of the
date the payee signed the request, whether or not the
payee is living when we receive the request.
5.02
<PAGE> 12
LIFE INCOME Life Income Options are based on the payee's sex and age
OPTIONS nearest birthday on the annuity option effective date.
We have the right to require satisfactory proof of age
and sex. If age or sex has been incorrectly stated, the
proper adjustments in payments will be made. We may also
require proof that the payee is living on any payment
due date.
DEATH OF If a payee dies, any installments still payable under a
PAYEE specified certain period will be paid as they become due
to the surviving or next succeeding payee. If no
designated payee survives, the commuted value of any
unpaid installments will be paid in one sum to the
estate of the last payee to die.
RIGHTS UNDER No payee has the right to make any change in the
ANNUITY OPTIONS provisions of the agreement or to receive the benefits
in any manner other than that stated in the agreement,
unless such right was reserved in the agreement. We
shall not make any payments in advance, nor commute
installments under any life income option.
BASIS OF Commutation of installments for other than life income
COMMUTATION options will be at the effective annual rate of 4%
compounded annually.
EXTENDED Provisions for settlement of benefits different from
PROVISIONS those stated in this contract may only be made upon
written agreement with us.
COMPANY We shall be fully discharged by any payment we make
LIABILITY before a written request for an election, change, or
revocation was made and is received in our Home
Office.
5.03
<PAGE> 13
11. PERSONS WITH AN INTEREST IN THE CONTRACT
OWNERSHIP The original owner of this contract is
shown in the application. At any time when
ownership is to be determined, any person(s)
whose rights of ownership are then contingent
upon the occurrence of a future event shall
not possess the rights of ownership. The
owner(s) while possessing ownership shall have
the exclusive power to exercise all rights,
enjoy all privileges, and receive all benefits
which are available under the contract.
Subject to the provisions of this contract,
and to our requirements, ownership may be
transferred or changed, in which event
ownership shall be governed by the terms of
the contract as modified by subsequent changes
and transfers.
THE BENEFICIARY The Beneficiary is the person or persons who will
receive any proceeds payable in the event of the death
of the Annuitant, in accordance with this provision. The
original Beneficiary is shown in the application.
Subject to any assignment of a contract, the
Beneficiary designation may be changed during
the lifetime of the Annuitant by filing a
proper written request acceptable to us at our
Home Office. If the joint and survivor option
is selected, the Annuitant may not change the
designation of a joint Annuitant after
installments begin. We reserve the right to
require the contract for endorsement. A change
of Beneficiary designation will not become
effective unless accepted in writing by us at
our Home Office at which time it will be
effective as of the date of the request, but
without prejudice to the company on account of
any benefit paid before receipt of such request
at our Home Office. A Beneficiary who becomes
entitled to receive benefits under this
contract may also designate, in the same
manner, a Beneficiary to receive any benefits
which may become payable under this contract by
reason of death. If a Beneficiary has not been
designated by a payee or if a Beneficiary
designated by a payee is not living on the date
a lump sum death benefit is payable, or on the
date any installment payments are to be
continued, as a result of the death of such
payee, the company will pay the lump sum death
benefit for the commuted value of the
installment payments to the former payee's
spouse. If the spouse is not living at the
death of the payee, then payments will be made
equally to the payee's children who survive
him. If the children are not surviving, then
payments will be made to either the surviving
father or mother or to both equally if both
survive. If none of the above survive the
payee, then payments will be made to his
executors or administrators.
12. DEATH BENEFIT
When we receive due proof of the death of the
Annuitant that occurs before the annuity commencement
date, we will pay to the Beneficiary the accumulated
value of the contract. The Accumulated Value includes
interest from the date of death to the date of
settlement at an annual rate determined by us, but
not less than that required by law. If you die before
the retirement date, this policy will no longer be in
force. We will pay your interest in the contract to
the Beneficiary in a lump sum upon receiving proof of
your death.
This payment must be made within five (5) years after
the date of your death. If, however, you or the
Beneficiary make a written choice of one of the two
options described below, and if your choice is clear to
us, we will treat the proceeds as you or the Beneficiary
have chosen. The two options are:
(i) Leave the proceeds of the contract with us as
provided under Option 6 of the Annuity
Provisions Section of this contract. Any amount
remaining unpaid under Option 6 will, however,
be paid in a lump sum to the Beneficiary before
the end of the fifth year after your death.
(ii) Buy an immediate annuity for the
Beneficiary, who will be the owner and
Annuitant. Payments under the annuity, or
under any other method of payment we make
available, must be for the life of the
Beneficiary, or for a number of years that is
not more than the life expectancy of the
Beneficiary at the time of your death (as
determined for federal tax purposes), and must
begin within one year after your death.
6.01
<PAGE> 14
However, if you die before the annuity commencement
date and your spouse is the Beneficiary, no proceeds
will be paid to him or her, instead, this contract
continues with your surviving spouse as the new
owner.
If no Beneficiary survives you and you die before the
annuity commencement date, payment of the proceeds
will be made in a lump sum to your estate.
Assignments and Transfers - You may not transfer,
sell, assign, discount, or pledge this policy for a
loan or as security for the performance of an
obligation or any other purpose, to any person other
than to us at our Home Office.
13. THE CONTRACT
WHAT CONSTITUTES This contract and the application, a copy of which is
THE CONTRACT attached to and made a part of the contract, are the
entire contract. This contract will be subject to all of
the provisions of the Investment Company Act of 1940 at
all times during which General American Separate Account
No. 2 is registered under such act as a unit investment
trust.
STATEMENTS IN All statements made by the Annuitant on his behalf, or
APPLICATION by the applicant, will be deemed representations and not
warranties, except in the case of fraud. Misstatements
will not be used to void the contract or deny a claim
unless made in the application.
MODIFICATION No condition or provision of the contract can be waived
OR WAIVER OF or modified except by a written instrument signed by the
PROVISIONS president, a vice president, the secretary, or an
assistant secretary. No other agent has authority to
alter or modify any terms, conditions, or agreements of
this contract, or to waive any of its provisions.
INCONTESTABILITY We cannot contest this contract, except for nonpayment
of stipulated payments or premiums, after it has been in
force for a period of two years from the date of issue.
This provision will not apply to any supplemental
agreement relating to total and permanent disability
benefits.
INCORRECT If the age at issue or sex of the Annuitant as shown on
AGE OR SEX the contract schedule is incorrect, any benefit payable
under a supplemental agreement will be such as the
premiums paid would have purchased at the correct age at
issue and sex. After we begin paying monthly income
installments appropriate adjustment will be made in any
remaining installments.
Any underpayment(s) as a result of a misstatement will
be paid in one lump sum to the annuitant. Any
overpayment(s) as a result of a misstatement will be
deducted from the current or succeeding payment(s) due
under the contract.
ADMISSION If we receive satisfactory proof of age, we shall admit
OF AGE the age of the Annuitant. In that event we shall issue a
certificate evidencing such admission.
RELIANCE ON In determining any facts relating to the making of any
AFFIDAVIT OR payments under this contract, we in our discretion, may
OTHER DOCUMENTS in good faith rely solely upon proof of affidavit or
other written statements or documents.
6.02
<PAGE> 15
DATES AND The date of issue is the date as to which the age at
AGE AT issue was determined and from which stipulated payment
ISSUE DEFINED and premium due dates, contract months, contract years,
and contract anniversaries are determined. Each contract
begins on the same day and each calendar month as that
specified in the date of issue, but if there is no same
day then on the last day of such calendar month.
Contract years begin on the date of issue and on
anniversaries of that date. The age at issue is the age
nearest birthday of the Annuitant on the date of issue,
based on calendar months.
CLAIMS OF To the extent permitted by law, neither the contract nor
CREDITORS any payment under it will be subject to the claim of
creditors or to any legal process.
DELAY OF PAYMENT We may delay paying the amount of any withdrawal or any
surrender benefit from the General Account for up to six
months after a request is received by us.
CONFORMITY If any provision in this contract is in conflict with
WITH STATUTES the laws of the state which govern this contract, the
provision will be deemed to be amended to conform with
such laws.
ADJUSTMENT If there are any proceeds due on any maturity date under
OF MONTHLY an assignment, the proceeds shall be paid in one
INCOME lump sum at that time. Such payment shall not affect
the time or manner that any other proceeds are payable
under the terms of this contract.
RELATIONSHIP OF We shall have exclusive and absolute ownership and
THIS CONTRACT control of the assets of our General Account. The method
TO COMPANY of determination by us of the value of an accumulation
ACCOUNTS unit or an Annuity Unit will be conclusive upon you and
any Beneficiary.
CONTRACTOWNER We shall provide confirmation notices and other reports
REPORTS to you as required by federal and state regulations.
We shall send you a financial statement of Separate
Account No. 2 at least semiannually and a statement
of the contract value at least annually.
6.03
<PAGE> 16
TABLE OF GENERAL ACCOUNT GUARANTEED ACCUMULATION VALUES
(NOTE: THIS TABLE IS NOT APPLICABLE TO ANY ACCUMULATIONS
IN A DIVISION OF SEPARATE ACCOUNT 2)
THE FOLLOWING TABLE SHOWS THE GUARANTEED ACCUMULATION VALUE AND THE GUARANTEE
SURRENDER VALUE IN THE GENERAL ACCOUNT `PORTION OF YOUR CONTRACT WITH AN
ANNUAL STIPULATED PAYMENT OF $1,000.00. THE VALUES SHOWN DO NOT REFLECT ANY
PAYMENT OF ANNUAL DIVIDENDS. THIS TABLE ASSUMES THAT (1) ALL OF THE ANNUAL
STIPULATED PAYMENT IS ALLOCATED TO THE GENERAL ACCOUNT. (2) YOU WILL PAY ALL
ANNUAL STIPULATED PAYMENTS THEN DUE ON THE POLICY ISSUE DATE OR ANY
ANNIVERSARY THEREOF. (3) THE COST OF ANY SUPPLEMENTAL AGREEMENT OR PREMIUM
TAX IS NOT INCLUDED IN THE $1,000.00 FIGURE AND (4) YOU MAKE NO WITHDRAWALS
FROM THE GENERAL ACCOUNT PORTION OF THE CONTRACT.
<TABLE>
<CAPTION>
GUARANTEED
GUARANTEED GUARANTEED EFFECTIVE
ACCUMULATED CONTINGENT SURRENDER RATE OF
VALUE DEFERRED VALUE RETURN
CONTRACT STIPULATED AT END SALES AT END AFTER ALL
YEAR PAYMENT OF YEAR AGE OF YEAR CHARGES
- ------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 $1,000.00 $ 1,040.00 $ 84.24 $ 955.76 -4.42%
2 1,000.00 2,121.60 152.76 1,968.84 -1.04%
3 1,000.00 3,246.46 204.53 3,041.94 0.70%
4 1,000.00 4,416.32 238.48 4,177.84 1.75%
5 1,000.00 5,632.98 253.48 5,379.49 2.45%
- ------------------------------------------------------------------------------------------------------
6 1,000.00 6,898.29 248.34 6,649.96 2.95%
7 1,000.00 8,214.23 221.78 7,992.44 3.32%
8 1,000.00 9,582.80 172.49 9,410.30 3.60%
9 1,000.00 11,006.11 99.05 10,907.05 3.82%
10 1,000.00 12,486.35 0.00 12,486.35 4.00%
- ------------------------------------------------------------------------------------------------------
11 1,000.00 14,025.81 0.00 14,025.81 4.00%
12 1,000.00 15,626.84 0.00 15,626.84 4.00%
13 1,000.00 17,291.91 0.00 17,291.91 4.00%
14 1,000.00 19,023.59 0.00 19,023.59 4.00%
15 1,000.00 20,824.53 0.00 20,824.53 4.00%
- ------------------------------------------------------------------------------------------------------
16 1,000.00 22,697.51 0.00 22,697.51 4.00%
17 1,000.00 24,645.41 0.00 24,645.41 4.00%
18 1,000.00 26,671.23 0.00 26,671.23 4.00%
19 1,000.00 28,778.08 0.00 28,778.08 4.00%
20 1,000.00 30,969.20 0.00 30,969.20 4.00%
- ------------------------------------------------------------------------------------------------------
30 1,000.00 58,328.34 0.00 58,328.34 4.00%
- ------------------------------------------------------------------------------------------------------
40 1,000.00 98,826.54 0.00 98,826.54 4.00%
- ------------------------------------------------------------------------------------------------------
<FN>
<F*>THE GUARANTEED ACCUMULATION VALUE IN THE GENERAL ACCOUNT IS THE ACCUMULATED
VALUE OF THE NET STIPULATED PAYMENTS AT THE GUARANTEED 4 PERCENT INTEREST RATE
</TABLE>
EACH CONTRACTOWNER WILL BE SENT AN ANNUAL STATEMENT OF THE NUMBER OF
ACCUMULATION UNITS GRANTED TO HIM AS OF THE END OF THE PRECEDING CONTRACT
YEAR AND OF THE VALUE OF AN ACCUMULATION UNIT AT THAT TIME.
THE ANNUAL STATEMENT WILL PROVIDE ALL OF THE INFORMATION REQUIRED BY ANY
APPLICABLE LAW OF THE STATE THAT GOVERNS YOUR POLICY.
THE MORTALITY TABLE USED IN COMPUTING ANNUITY OPTIONS UNDER THIS CONTRACT IS
1983 INDIVIDUAL ANNUITY MORTALITY TABLE.
7.01
<PAGE> 17
<TABLE>
ANNUITY OPTION TABLES
FOR EACH $1,000
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
OPTION 1 OPTION 2 OPTION 3 OPTION 5
- --------------------------------------------------------------------------------------------------------------------------
AGE OF PAYEE LIFE 60 MONTHS 120 MONTHS 180 MONTHS 240 MONTHS UNIT INCOME FOR A
MALE FEMALE ANNUITY GUARANTY GUARANTY GUARANTY GUARANTY REFUND FIXED PERIOD
- --------------------------------------------------------------------------------------------------------------------------
YEARS MONTHLY
CERTAIN INSTALLMENTS
----------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 50 $ 4.53 $ 4.52 $4.50 $4.40 $4.40 $4.38
46 51 4.59 4.58 4.55 4.51 4.45 4.43
47 52 4.65 4.64 4.61 4.56 4.50 4.48
48 53 4.72 4.71 4.67 4.62 4.55 4.53 3 $29.39
49 54 4.79 4.77 4.74 4.68 4.60 4.59 4 22.47
- --------------------------------------------------------------------------------------------------------------------------
50 55 4.86 4.85 4.81 4.74 4.65 4.64 5 18.32
51 56 4.94 4.92 4.88 4.80 4.71 4.70 6 15.56
52 57 5.02 5.00 4.95 4.87 4.76 4.76 7 13.59
53 58 5.10 5.08 5.03 4.94 4.82 4.83 8 12.11
54 59 5.19 5.12 5.11 5.01 4.88 4.90 9 10.97
- --------------------------------------------------------------------------------------------------------------------------
55 60 5.29 5.26 5.20 5.09 4.94 4.97 10 10.06
56 61 5.39 5.36 5.29 5.17 5.00 5.04 11 9.31
57 62 5.49 5.47 5.38 5.25 5.06 5.12 12 8.69
58 63 5.61 5.58 5.48 5.33 5.12 5.21 13 8.17
59 64 5.73 5.70 5.59 5.42 5.18 5.29 14 7.72
- --------------------------------------------------------------------------------------------------------------------------
60 65 5.86 5.82 5.70 5.51 5.24 5.39 15 7.34
61 66 6.00 5.96 5.82 5.60 5.31 5.48 16 7.00
62 67 6.15 6.10 5.95 5.69 5.37 5.58 17 6.70
63 68 6.32 6.26 6.08 5.75 5.43 5.69 18 6.44
64 69 6.49 6.42 6.21 5.59 5.48 5.90 19 6.21
- --------------------------------------------------------------------------------------------------------------------------
65 70 6.68 6.60 6.35 5.98 5.54 5.92 20 6.00
66 71 6.88 6.78 6.50 6.08 6.59 6.04 21 5.81
67 72 7.09 6.98 6.65 5.18 5.64 6.17 22 5.64
68 73 7.31 7.18 6.81 6.28 5.69 6.30 23 5.49
69 74 7.56 7.40 6.97 6.37 5.73 6.44 24 5.35
- --------------------------------------------------------------------------------------------------------------------------
70 75 7.82 7.64 7.14 6.47 5.77 6.59 25 5.22
71 76 8.09 7.88 7.31 6.55 5.81 5.74 26 5.10
72 77 8.39 8.14 7.48 6.64 5.84 6.91 27 4.99
73 78 8.71 8.41 7.65 6.72 5.87 7.07 28 4.89
74 79 9.05 8.70 7.83 6.90 5.89 7.25 29 4.80
- --------------------------------------------------------------------------------------------------------------------------
75 80 9.41 9.00 8.00 6.87 5.91 7.44 30 4.72
76 81 9.81 9.32 8.17 6.93 5.93 7.63
77 82 10.23 9.65 8.34 6.99 5.95 7.83
78 83 10.68 9.99 8.50 7.05 5.96 8.05
79 84 11.16 10.35 8.66 7.10 5.97 8.28
- --------------------------------------------------------------------------------------------------------------------------
80 85 & 11.68 10.72 8.81 7.14 5.98 8.49
81 OVER 12.23 11.09 8.95 7.18 5.99 8.74
82 12.91 11.47 9.09 7.21 5.99 9.00
83 13.44 11.86 9.21 7.23 5.99 9.29
84 14.09 12.25 9.32 7.26 6.00 9.51
- --------------------------------------------------------------------------------------------------------------------------
85 & 14.79 12.64 9.43 7.28 6.00 9.80
OVER
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
7.02
<PAGE> 18
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- ------------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND EQUAL TO SECONDARY PAYEE
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- ------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.15 $4.22 $4.24 $4.27 $4.30 $4.32 $4.35 $4.37 $4.40 $4.43 $4.45
51 56 4.21 4.23 4.26 4.29 4.32 4.35 4.38 4.40 4.43 4.46 4.48
52 57 4.22 4.25 4.28 4.31 4.34 4.37 4.40 4.43 4.46 4.49 4.52
53 58 4.24 4.27 4.30 4.33 4.37 4.40 4.43 4.46 4.49 4.52 4.55
54 59 4.25 4.29 4.32 4.35 4.39 4.42 4.46 4.49 4.52 4.56 4.59
- ------------------------------------------------------------------------------------------------------------
55 60 4.27 4.30 4.34 4.37 4.41 4.45 4.48 4.52 4.55 4.59 4.62
56 61 4.28 4.32 4.36 4.39 4.43 4.47 4.51 4.54 4.58 4.62 4.66
57 62 4.30 4.33 4.37 4.41 4.45 4.49 4.53 4.57 4.61 4.65 4.69
58 63 4.31 4.35 4.39 4.43 4.47 4.51 4.55 4.60 4.64 4.68 4.73
59 64 4.32 4.36 4.40 4.45 4.49 4.53 4.58 4.62 4.67 4.71 4.76
- ------------------------------------------------------------------------------------------------------------
60 65 4.34 4.38 4.42 4.46 4.51 4.55 4.60 4.65 4.69 4.74 4.79
61 66 4.35 4.39 4.43 4.48 4.53 4.57 4.62 4.67 4.72 4.77 4.82
62 57 4.36 4.40 4.45 4.48 4.54 4.59 4.64 4.69 4.75 4.80 4.85
63 58 4.37 4.41 4.46 4.51 4.56 4.61 4.66 4.71 4.77 4.83 4.88
64 59 4.38 4.42 4.47 4.52 4.57 4.63 4.68 4.74 4.79 4.85 4.91
- ------------------------------------------------------------------------------------------------------------
65 70 4.39 4.43 4.48 4.53 4.55 4.64 4.70 4.76 4.81 4.88 4.94
66 71 4.40 4.44 4.49 4.55 4.60 4.66 4.71 4.77 4.84 4.90 4.96
67 72 4.40 4.45 4.50 4.56 4.61 4.67 4.73 4.79 4.86 4.92 4.99
68 73 4.41 4.46 4.51 4.57 4.63 4.68 4.75 4.81 4.87 4.94 5.01
69 74 4.42 4.47 4.52 4.58 4.64 4.70 4.76 4.82 4.89 4.96 5.03
- ------------------------------------------------------------------------------------------------------------
70 75 4.43 4.48 4.53 4.59 4.65 4.71 4.77 4.84 4.91 4.98 5.06
71 76 4.43 4.48 4.54 4.60 4.66 4.72 4.78 4.85 4.92 5.00 5.08
72 77 4.44 4.49 4.55 4.60 4.67 4.73 4.80 4.87 4.94 5.01 5.09
73 78 4.44 4.50 4.55 4.61 4.67 4.74 4.81 4.88 4.95 5.03 5.11
74 79 4.45 4.50 4.56 4.62 4.68 4.75 4.82 4.89 4.96 5.04 5.13
- ------------------------------------------------------------------------------------------------------------
75 80 4.45 4.51 4.56 4.63 4.69 4.76 4.83 4.90 4.98 5.06 5.14
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.47 $4.50 $4.52 $4.54 $4.56 $4.58 $4.60 $4.62 $4.64 $4.65
51 56 4.51 4.54 4.56 4.58 4.61 4.63 4.65 4.67 4.69 4.71
52 57 4.55 4.57 4.60 4.63 4.65 4.68 4.70 4.72 4.74 4.76
53 58 4.58 4.61 4.64 4.67 4.70 4.73 4.75 4.78 4.80 4.82
54 59 4.62 4.65 4.69 4.72 4.75 4.78 4.80 4.83 4.86 4.88
- ----------------------------------------------------------------------------------------------------
55 60 4.66 4.69 4.73 4.76 4.78 4.83 4.86 4.89 4.91 4.94
56 61 4.70 4.73 4.77 4.81 4.84 4.88 4.91 4.94 4.97 5.00
57 62 4.73 4.77 4.81 4.85 4.89 4.93 4.96 5.00 5.03 5.07
58 63 4.77 4.81 4.85 4.90 4.94 4.98 5.02 5.06 5.10 5.13
59 64 4.80 4.85 4.90 4.94 4.99 5.03 5.07 5.12 5.16 5.20
- ----------------------------------------------------------------------------------------------------
60 65 4.84 4.89 4.94 4.99 5.03 5.08 5.13 5.18 5.22 5.27
61 66 4.87 4.93 4.98 5.03 5.08 5.13 5.19 5.24 5.28 5.33
62 57 4.91 4.96 5.02 5.07 5.13 5.19 5.24 5.30 5.35 5.40
63 58 4.94 5.00 5.06 5.12 5.18 5.24 5.30 5.35 5.41 5.47
64 59 4.97 5.03 5.10 5.16 5.22 5.29 5.35 5.41 5.48 5.54
- ----------------------------------------------------------------------------------------------------
65 70 5.00 5.07 5.13 5.20 5.27 5.34 5.40 5.47 5.54 5.61
66 71 5.03 5.10 5.17 5.24 5.31 5.38 5.46 5.53 5.60 5.68
67 72 5.06 5.13 5.20 5.28 5.35 5.43 5.51 5.59 5.66 5.74
68 73 5.09 5.16 5.24 5.31 5.39 5.48 5.56 5.64 5.73 5.81
69 74 5.11 5.19 5.27 5.35 5.43 5.52 5.61 5.69 5.78 5.97
- ----------------------------------------------------------------------------------------------------
70 75 5.13 5.21 5.30 5.38 5.47 5.56 5.65 5.75 5.84 5.94
71 76 5.16 5.24 5.33 5.41 5.51 5.60 5.70 5.79 5.90 6.00
72 77 5.18 5.26 5.35 5.44 5.54 5.64 5.74 5.84 5.95 6.06
73 78 5.20 5.28 5.38 5.47 5.57 5.67 5.78 5.89 6.00 6.11
74 79 5.21 5.31 5.40 5.50 5.60 5.71 5.82 5.93 6.05 6.17
- ----------------------------------------------------------------------------------------------------
75 80 5.23 5.32 5.42 5.52 5.63 5.74 5.85 5.97 6.09 6.22
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND EQUAL TO SECONDARY PAYEE
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- ------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.50 $4.51 $4.53 $4.55 $4.56 $4.58 $4.59 $4.60 $4.62 $4.63 $4.65
51 56 4.54 4.56 4.57 4.59 4.61 4.62 4.64 4.65 4.67 4.68 4.70
52 57 4.59 4.60 4.62 4.64 4.66 4.67 4.69 4.71 4.72 4.74 4.75
53 58 4.63 4.65 4.67 4.69 4.70 4.72 4.74 4.76 4.78 4.80 4.81
54 59 4.68 4.70 4.72 4.74 4.76 4.78 4.80 4.81 4.83 4.85 4.87
- ------------------------------------------------------------------------------------------------------------
55 60 4.72 4.74 4.77 4.79 4.81 4.83 4.85 4.87 4.89 4.91 4.93
56 61 4.77 4.79 4.82 4.84 4.86 4.88 4.91 4.93 4.95 4.97 5.00
57 62 4.82 4.85 4.87 4.89 4.92 4.94 4.97 4.99 5.01 5.04 5.06
58 63 4.87 4.90 4.92 4.94 4.98 5.00 5.03 5.05 5.08 5.10 5.13
59 64 4.93 4.95 4.98 5.01 5.03 5.06 5.09 5.12 5.14 5.17 5.20
- ------------------------------------------------------------------------------------------------------------
60 65 4.98 5.01 5.04 5.07 5.10 5.13 5.15 5.18 5.21 5.24 5.27
61 66 5.04 5.07 5.10 5.13 5.16 5.19 5.22 5.25 5.29 5.32 5.35
62 57 5.10 5.13 5.16 5.19 5.23 5.26 5.29 5.33 5.36 5.39 5.43
63 58 5.17 5.20 5.23 5.25 5.30 5.33 5.36 5.40 5.44 5.47 5.51
64 59 5.23 5.26 5.30 5.33 5.37 5.40 5.44 5.48 5.51 5.55 5.59
- ------------------------------------------------------------------------------------------------------------
65 70 5.30 5.33 5.36 5.40 5.44 5.48 5.51 5.55 5.59 5.64 5.68
66 71 5.36 5.40 5.44 5.47 5.51 5.55 5.59 5.64 5.68 5.72 5.77
67 72 5.43 5.47 5.51 5.55 5.59 5.63 5.67 5.72 5.76 5.81 5.86
68 73 5.50 5.54 5.58 5.62 5.67 5.71 5.76 5.80 5.85 5.90 5.95
69 74 5.58 5.62 5.66 5.70 5.75 5.79 5.84 5.89 5.94 5.98 6.04
- ------------------------------------------------------------------------------------------------------------
70 75 5.65 5.69 5.74 5.78 5.83 5.88 5.93 5.98 6.03 6.08 6.15
71 76 5.73 5.77 5.82 5.86 5.91 5.96 6.01 6.07 6.12 6.18 6.24
72 77 5.80 5.85 5.90 5.95 6.00 6.05 6.10 6.16 6.22 6.28 6.34
73 78 5.88 5.93 5.98 6.03 6.08 6.14 6.19 6.25 6.31 6.38 6.44
74 79 5.96 6.01 6.06 6.12 6.17 6.23 6.29 6.35 6.41 6.48 6.55
- ------------------------------------------------------------------------------------------------------------
75 80 6.05 6.10 6.15 6.20 6.26 6.32 6.38 6.44 6.51 6.58 6.65
- ------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ---------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ---------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.67 $4.68 $4.69 $4.70 $4.71 $4.72 $4.73 $4.74 $4.75 $4.75
51 56 4.71 4.73 4.74 4.75 4.75 4.77 4.78 4.79 4.80 4.81
52 57 4.77 4.79 4.80 4.81 4.83 4.84 4.85 4.86 4.88 4.89
53 58 4.83 4.85 4.86 4.88 4.89 4.91 4.92 4.93 4.95 4.96
54 59 4.89 4.91 4.93 4.94 4.96 4.97 4.99 5.00 5.02 5.03
- ---------------------------------------------------------------------------------------------------
55 60 4.95 4.97 4.99 5.01 5.03 5.04 5.06 5.08 5.09 5.11
56 61 5.02 5.04 5.06 5.08 5.10 5.12 5.14 5.15 5.17 5.19
57 62 5.09 5.11 5.13 5.15 5.17 5.20 5.22 5.24 5.25 5.27
58 63 5.16 5.18 5.20 5.23 5.25 5.28 5.30 5.32 5.34 5.36
59 64 5.23 5.25 5.28 5.31 5.33 5.36 5.38 5.41 5.43 5.45
- ---------------------------------------------------------------------------------------------------
60 65 5.30 5.33 5.36 5.39 5.42 5.44 5.47 5.50 5.52 5.55
61 66 5.38 5.41 5.44 5.47 5.51 5.54 5.56 5.59 5.62 5.65
62 57 5.46 5.50 5.53 5.56 5.60 5.63 5.66 5.69 5.72 5.75
63 58 5.54 5.58 5.62 5.65 5.69 5.73 5.76 5.80 5.83 5.86
64 59 5.63 5.67 5.71 5.75 5.79 5.83 5.87 5.90 5.94 5.98
- ---------------------------------------------------------------------------------------------------
65 70 5.72 5.76 5.80 5.85 5.89 5.93 5.97 6.01 6.06 6.10
66 71 5.81 5.86 5.90 5.95 5.99 6.04 6.08 6.13 6.17 6.22
67 72 5.90 5.95 6.00 6.05 6.10 6.15 6.20 6.25 6.30 6.35
68 73 6.00 6.05 6.10 6.16 6.21 6.26 6.32 6.37 6.42 6.48
69 74 6.10 6.15 6.21 6.26 6.32 6.38 6.44 6.49 6.55 6.61
- ---------------------------------------------------------------------------------------------------
70 75 6.20 6.26 6.31 6.38 6.44 6.50 6.56 6.62 6.69 6.75
71 76 6.30 6.36 6.42 6.49 6.55 6.62 6.69 6.75 6.82 6.89
72 77 6.40 6.47 6.54 6.60 6.67 6.74 6.82 6.89 6.96 7.04
73 78 6.51 6.58 6.65 6.72 6.79 6.87 6.95 7.03 7.10 7.18
74 79 6.62 6.69 6.76 6.84 6.92 7.00 7.08 7.17 7.25 7.34
- ---------------------------------------------------------------------------------------------------
75 80 6.73 6.80 6.88 6.96 7.04 7.13 7.22 7.31 7.40 7.49
- ---------------------------------------------------------------------------------------------------
</TABLE>
7.03
<PAGE> 19
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- ------------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND TWO-THIRDS TO SECONDARY PAYEE
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ------------------------------------------------------------------------------------------------------------
MALE 45 46 47 48 49 50 51 52 53 54 55
- ------------------------------------------------------------------------------------------------------------
FEMALE 50 51 52 53 54 55 56 57 58 59 60
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.39 $4.41 $4.43 $4.45 $4.47 $4.49 $4.51 $4.53 $4.54 $4.56 $4.58
51 56 4.42 4.44 4.47 4.49 4.51 4.53 4.55 4.57 4.59 4.61 4.63
52 57 4.46 4.48 4.50 4.52 4.55 4.57 4.59 4.61 4.63 4.65 4.67
53 58 4.49 4.52 4.54 4.56 4.59 4.61 4.63 4.66 4.68 4.70 4.72
54 59 4.53 4.55 4.58 4.60 4.63 4.65 4.68 4.70 4.73 4.75 4.77
- ------------------------------------------------------------------------------------------------------------
55 60 4.56 4.59 4.61 4.64 4.67 4.69 4.72 4.75 4.77 4.80 4.83
56 61 4.60 4.62 4.65 4.68 4.71 4.74 4.77 4.79 4.82 4.85 4.88
57 62 4.63 4.66 4.69 4.72 4.75 4.78 4.81 4.84 4.87 4.90 4.93
58 63 4.67 4.70 4.73 4.76 4.79 4.83 4.86 4.89 4.92 4.96 4.99
59 64 4.71 4.74 4.77 4.81 4.84 4.87 4.91 4.94 4.98 5.01 5.04
- ------------------------------------------------------------------------------------------------------------
60 65 4.75 4.78 4.81 4.85 4.88 4.92 4.96 4.99 5.03 5.07 5.10
61 66 4.79 4.82 4.86 4.89 4.93 4.97 5.01 5.043 5.08 5.12 5.16
62 57 4.83 4.86 4.90 4.94 4.98 5.02 5.06 5.10 5.14 5.18 5.22
63 58 4.87 4.91 4.94 4.98 5.02 5.07 5.11 5.15 5.19 5.24 5.28
64 59 4.91 4.95 4.99 5.03 5.07 5.12 5.16 5.20 5.25 5.30 5.34
- ------------------------------------------------------------------------------------------------------------
65 70 4.95 4.99 5.03 5.08 5.12 5.17 5.21 5.26 5.31 5.36 5.41
66 71 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.42 5.47
67 72 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.43 5.48 5.54
68 73 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.43 5.48 5.54 5.60
69 74 5.13 5.17 5.22 5.27 5.32 5.37 5.43 5.49 5.54 5.60 5.67
- ------------------------------------------------------------------------------------------------------------
70 75 5.17 5.22 5.27 5.32 5.37 5.43 5.48 5.54 5.60 5.67 5.73
71 76 5.22 5.27 5.32 5.37 5.42 5.48 5.54 5.60 5.66 5.73 5.80
72 77 5.26 5.31 5.37 5.42 5.48 5.53 5.60 5.66 5.72 5.79 5.86
73 78 5.31 5.36 5.41 5.47 5.53 5.59 5.65 5.72 5.78 5.85 5.93
74 79 5.36 5.41 5.47 5.52 5.58 5.64 5.71 5.77 5.84 5.92 5.99
- ------------------------------------------------------------------------------------------------------------
75 80 5.40 5.45 5.51 5.57 5.63 5.69 5.76 5.83 5.90 5.96 6.06
- ------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ---------------------------------------------------------------------------------------------------
MALE 56 57 58 59 60 61 62 63 64 65
- ---------------------------------------------------------------------------------------------------
FEMALE 61 62 63 64 65 66 67 68 69 70
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.60 $4.61 $4.63 $4.64 $4.66 $4.67 $4.68 $4.70 $4.71 $4.72
51 56 4.64 4.66 4.68 4.70 4.71 4.73 4.74 4.76 4.77 4.78
52 57 4.69 4.71 4.73 4.75 4.77 4.78 4.80 4.82 4.83 4.85
53 58 4.74 4.77 4.79 4.81 4.83 4.84 4.86 4.88 4.90 4.91
54 59 4.80 4.82 4.84 4.86 4.89 4.91 4.93 4.94 4.96 4.95
- ---------------------------------------------------------------------------------------------------
55 60 4.85 4.88 4.90 4.92 4.95 4.97 4.99 5.01 5.03 5.05
56 61 4.91 4.93 4.96 4.99 5.01 5.04 5.06 5.08 5.10 5.13
57 62 4.96 4.99 5.02 5.05 5.08 5.10 5.13 5.15 5.18 5.20
58 63 5.02 5.05 5.08 5.11 5.14 5.17 5.20 5.23 5.26 5.28
59 64 5.08 5.11 5.15 5.18 5.21 5.24 5.28 5.31 5.34 5.35
- ---------------------------------------------------------------------------------------------------
60 65 5.14 5.18 5.21 5.25 5.28 5.32 5.35 5.38 5.42 5.45
61 66 5.20 5.24 5.28 5.32 5.36 5.38 5.43 5.47 5.50 5.54
62 57 5.26 5.31 5.35 5.39 5.43 5.47 5.51 5.55 5.59 5.63
63 58 5.33 5.37 5.42 5.46 5.51 5.55 5.60 5.64 5.68 5.73
64 59 5.39 5.44 5.49 5.54 5.59 5.64 5.68 5.73 5.79 5.92
- ---------------------------------------------------------------------------------------------------
65 70 5.46 5.51 5.56 5.61 5.67 5.732 5.77 5.82 5.87 5.92
66 71 5.52 5.58 5.64 5.69 5.75 5.80 5.86 5.92 5.97 6.03
67 72 5.59 5.65 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13
68 73 5.66 5.72 5.78 5.85 5.91 5.98 6.04 6.11 6.17 6.24
69 74 5.73 5.79 5.86 5.93 5.99 6.06 6.13 6.20 6.27 6.35
- ---------------------------------------------------------------------------------------------------
70 75 5.80 5.86 5.93 6.01 6.08 6.15 6.23 6.30 6.38 6.45
71 76 5.87 5.94 6.01 6.09 6.16 6.24 6.32 6.40 6.48 6.57
72 77 5.93 6.01 6.09 6.17 6.25 6.33 6.41 6.50 6.59 6.68
73 78 6.00 6.08 6.16 6.25 6.33 6.42 6.51 6.60 6.69 6.79
74 79 6.07 6.15 6.24 6.33 6.42 6.51 6.60 6.70 6.80 6.90
- ---------------------------------------------------------------------------------------------------
75 80 6.14 6.23 6.31 6.41 6.50 6.60 6.70 6.80 6.91 7.01
- ---------------------------------------------------------------------------------------------------
</TABLE>
7.04
<PAGE> 1
** DATA PAGE ** CONTRACT NUMBER
ANNUlTANT
RIGHT TO EXAMINE AND
RETURN CONTRACT
WITHIN 20 DAYS
You may return this contract
within 20 days after receiving
it. It may be delivered or
mailed to us or the agent
through whom it was purchased.
The contract shall then be
deemed void from the start.
Any premium paid will be
returned.
TAX SHELTERED GROUP
VARIABLE ANNUITY
Funds in one or more Divisions
of Separate Account No. 2 and
General Account. Individual
Allocation.
All installments and values
provided by this contract,
when based on investment
experience of one or more
Divisions of Separate Account
No. 2, are variable and are
not guaranteed as to fixed
dollar amounts.
This contract is a legal contract between the
Group Contract Owner and General American.
PLEASE READ YOUR CONTRACT CAREFULLY.
ISSUED BY: GENERAL AMERICAN LIFE INSURANCE CO.
A Mutual Company
P.O. BOX 14490
ST. LOUIS, MISSOURI 63178
10015 0.01
(7/87)
<PAGE> 2
<TABLE>
ALPHABETIC GUIDE TO YOUR CONTRACT
<CAPTION>
Page Page
<S> <C>
4.02 Addition, Deletion, or Substitution 6.01 Death Benefits
of Investments 3.01 Definitions
5.01 Annuity Provisions 6.02 General Provisions
6.03 Beneficiary 6.01 Termination Benefits
4.01 Contributions, Charges, and 4.02 Transfers
Withdrawals 4.02 Valuation
</TABLE>
Supplemental Agreements, Modifications and Amendments, if any, and a copy
of the Application are found following the final section.
0.02
<PAGE> 3
CONTRACT SPECIFICATIONS
CONTRACT OWNER:
CONTRACT NO.:
CONTRACT DATE:
EXECUTION DATE:
EXECUTED AT:
DELIVERED IN:
GENERAL ACCOUNT MAXIMUM WITHDRAWAL PERCENTAGE LIMIT: 25%
1.01
<PAGE> 4
ENDORSEMENTS
1.02
<PAGE> 5
1. DEFINITIONS
ACCUMULATION UNIT This is an accounting method we use to determine the
value of your contract prior to the Annuity Commencement
Date. This unit will be valued on each Business Day as of
the time of the closing of the New York Stock Exchange.
ANNUITANT A participant who is receiving annuity installments
under this contract.
ANNUITY This is a series of installments provided under this
contract for a Participant by application of the dollar
value of accumulation units in his individual account.
ANNUITY This is the date upon which annuity installments begin,
COMMENCEMENT as elected by the participant.
DATE
ANNUITY UNIT An accounting method used to determine the amounts
payable to an Annuitant on and after the Annuity
Commencement Date. This unit will be valued on each
Business Day as of the time of the closing of the New
York Stock Exchange.
BUSINESS DAY This is a day on which both we and the New York Stock
Exchange are open for business. Each Business Day ends
at the time the New York Stock Exchange closes.
CONTRACT An anniversary of the contract date.
ANNIVERSARY
CONTRACT YEAR Any period of one year commencing with the contract
date or with any contract anniversary.
FUND One of the installment portfolios of General American
Capital Company.
GENERAL ACCOUNT An account which consists of all assets of the company
other than those in Separate Account No. 2 or any other
segregated investment account.
GENERAL AMERICAN A company we control which is registered with the
CAPITAL COMPANY Securities and Exchange Commission of the U.S. government
as an investment management company.
INDIVIDUAL The sum of the Accumulation Units credited to a
ACCOUNT participant.
PARTICIPANT An employee for whom an application has been submitted
and for whom a contribution has been made.
PARTICIPANT'S An anniversary of the date on which a Participant's
ANNIVERSARY Individual Account is established in accordance with the
terms of this contract.
PLAN An arrangement whereby individual certificates are
issued to certain 501 (c)3 organizations and school
districts.
SEPARATE Separate investment account organized as a unit investment
ACCOUNT NO. 2 trust established by us in accordance with Missouri law.
WE, US, AND OUR General American Life Insurance Company.
YOU, YOUR The owner of this contract. The owner is as shown in
the application unless later changed as provided in
this contract.
VALUATION A valuation period for the Assets in Divisions of Separate
OF ASSETS Account No. 2 is the period between successive Business
Days. It begins at the close of business each Business
Day and ends at the close of business of the next
succeeding Business Day.
3.01
<PAGE> 6
2. CONTRIBUTIONS, CHARGES, AND WITHDRAWALS
PAYMENT OF All contributions shall be paid by you directly to us at
CONTRIBUTIONS our Home Office in St. Louis, Missouri.
APPLICATION OF We shall first deduct from any contribution for a
CONTRIBUTIONS Participant the premium for any optional benefits provided
by a supplemental agreement. Deductions for any applicable
premium taxes on the remaining contribution shall then be
made by us from each contribution received. The balance of
each contribution remaining after these deductions is the
net contribution. We shall apply such net contribution to
provide for Accumulation Units in the General Account or
one or more Divisions of Separate Account No. 2 or both as
elected by you. The number of General Account or Divisions
of Separate Account No. 2 Accumulation Units credited to
the Participant's Individual Account shall be determined by
dividing the applicable portion of the net contribution by
the appropriate Accumulation Unit value next determined
after such contribution is received by us at the Home
Office. The number of Accumulation Units so provided shall
not be changed by any subsequent change in the Accumulation
Unit value.
CONTINGENT Upon surrender of the contract or partial withdrawal of
DEFERRED funds on deposit, General American will apply a contingent
SALES CHARGE deferred charge. Charges for partial withdrawal will be
deducted from the individual's account value remaining
after the distribution of the partial withdrawal (i.e., the
total amount deducted from the individual's account value
will be a combination of the amount paid to the individual
plus the charge). In the case of a full surrender the
surrender charge is deducted from the amount paid to the
Contract Owner. The contingent deferred sales charge will
never be more than the lesser of 9% of total net
contributions to the contract or the percentage of the
amount received by the Contract Owner or participant shown
in the following schedule:
<TABLE>
<CAPTION>
Participant's
Individual Account Surrender/Withdrawal
Contract Year Charges
<C> <C>
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9 1%
</TABLE>
There will be no contingent deferred sales charge after the
ninth contract year. In addition, contingent deferred sales
charges are not applied in the event of death, or
disability, while this contract is in force, or
annuitization after five contract years. If you are within
the nine year deferred sales charge period (the first nine
contract years), you may withdraw up to 10% of the account
value per year without incurring a contingent deferred
sales charge.
The contingent deferred sales charge will be allocated pro
rata among the Divisions of Separate Account No. 2 and the
General Account based on the values held in the Divisions
of Separate Account No. 2 and the General Account prior to
the surrender.
PARTIAL WITHDRAWAL You may, at the direction of the Participant, make a
partial withdrawal from any Participant's Individual
Account upon satisfactory written request received by us at
our Home Office prior to the Annuity Commencement Date. No
such withdrawal shall be less than $100.00. Unless
otherwise specified in the request, the withdrawal shall be
made based on the current allocation of the contributions
to the General Account and one or more of the Divisions of
Separate Account No. 2. The units will be withdrawn at the
unit value next determined after
4.01
<PAGE> 7
written request is received by us at our Home Office or
after the beginning of the date of withdrawal specified,
whichever is later. (See Contingent Deferred Sales Charge
above.)
CASH SURRENDER You may, at the direction of the Participant, surrender
this contract for its Net Accumulated Value. During the
first nine contract years, we shall deduct a surrender
charge from the accumulated value of the contract as of the
date of surrender. (See Contingent Deferred Sales Charge.)
We may defer payment of the Net Accumulated Value for a
period of six months.
TRANSFERS A Participant may transfer amounts as follows:
Between the General Account and one or more of the
Divisions of Separate Account No. 2; or
Among the Divisions of Separate Account No. 2.
These transfers will be subject to the following rules:
We must receive a written request for transfer.
Transfers from or among the Divisions of Separate
Account No. 2 may be made at anytime and must be at
least $100.00 or the entire amount of a Division, if
smaller.
Transfers from the General Account to the Divisions of
Separate Account No. 2 may be made once each year on the
contract's anniversary date and must be at least $100.00.
The maximum allowable shall be a percentage, as set
forth on the Contract Specifications page, of the
contract accumulated value on the prior contract
anniversary.
We may revoke or modify the transfer privilege at any
time, including the minimum amount for a transfer and
the transfer charge, if any.
3. ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, as far as law allows, to make
additions to, deletions from, or substitutions for the
shares of a Fund that are held by Separate Account No. 2 or
that Separate Account No. 2 may purchase. We reserve the
right to eliminate the shares of any of the Fund of General
American Capital Company and to substitute shares of
another Fund of General American Capital Company or of
another registered open-end investment company, if the
shares or Funds are no longer available for investment or
if in our judgement, further investment in any Fund should
become inappropriate in view of the purpose of the
contract. We will not substitute any shares attributable to
the owner's interest in a Division of Separate Account No.
2 without at least 30 days notice to the owner and prior
approval of the Securities and Exchange Commission, to the
extent required by the Investment Company Act of 1940. This
will not prevent Separate Account No. 2 from purchasing
other securities for other series or classes of contracts,
or from permitting conversion between series or classes of
contracts on the basis of requests made by owners.
We reserve the right to establish additional Divisions of
Separate Account No. 2, each of which would invest in a new
Fund of General American Capital Company or in shares of
another open-end investment company and to make such
Divisions available to whatever class or series of
contracts we choose. We also reserve the right to eliminate
or combine existing Divisions of Separate Account No. 2 or
to transfer assets between Divisions.
If we consider it to be in the best interest of persons
having voting privileges under the contracts, Separate
Account No. 2 may be operated as a management company under
the Investment Company Act of 1940. It may be deregistered
under that Act in the event registration is no longer
required. It may be combined with other separate accounts;
or its assets may be transferred to other separate
accounts.
4. VALUATION PROVISION
NET INVESTMENT The General Account Net Investment Factor for any Business
FACTOR Day is 1.0 plus a rate of investment income that we will
declare in advance. We guarantee that the rate will be no
less than 4 percent per year compounded annually.
4.02
<PAGE> 8
The Separate Account will have a Net Investment Factor for
any Business Day which is the aggregate of the Net
Investment Factor of its various Divisions.
A Division's Net Investment Factor measures the investment
performance of such Division during a valuation period. The
Net Investment Factor for each Division for a valuation
period is calculated as follows:
The value of the assets at the end of the preceding
valuation period; plus
The investment income and capital gains realized or
unrealized --- credited to the assets in the valuation
period for which the net investment factor is being
determined; minus
The capital losses, realized or unrealized, charged
against those assets during the valuation period; minus
Any amount charged against each Division for taxes, or
any amount we set aside during the valuation period as a
reserve for taxes attributable to the operation or
maintenance of each Division; minus A charge not to
exceed (.002753)96 of the assets for each day in the
valuation period. This corresponds to 1.00% per year for
mortality and expense risks; divided by
The value of the assets at the end of the preceding
valuation period.
ACCUMULATION The initial value of each Division of a Separate Account
UNIT VALUE No. 2 Accumulation Unit was established at $10.00 as of the
end of the Business Day on October 1, 1987, and the value of
a General Account Accumulation Unit was established at
$10.00 as of the end of the Business Day on April 1, 1982.
The value of the respective Accumulation Unit is determined
at the end of any later Business Day. The value is
determined by multiplying the Accumulation Unit value for
the end of the immediately preceding Business Day by the Net
Investment Factor for such later Business Day.
ANNUITY UNIT The initial value of each Division of Separate Account No.
VALUE 2's Annuity Unit was established at $10.00 as of the end of
the Business Day on October 1, 1987, and the value of a
General Account Annuity Unit was established at $10.00 at
the end of the Business Day on April 1, 1982. This value may
increase or decrease from day to day based on investment
results. The value of the respective Annuity Unit is
determined at the end of any later Business Day. The value
is determined by multiplying such value for the end of the
preceding Business Day by the product of (a) .99989256 once
for each calendar day between the end of the sixth preceding
Business Day and the end of the fifth preceding Business
Day and (b) the net investment factor for the fifth
Business Day preceding such Business Day.
VALUATION Assets in a Division of Separate Account No. 2 shall be
OF ASSETS valued at the end of each Business Day at their fair market
value or, where there is no readily available market, at
their fair value as determined by us, in accordance with
recognized accounting procedures. Direct expenses involved
in the purchase or sale of assets for a Division of Separate
Account No. 2, including, but not limited to, brokerage
commission, exchange fees, taxes, and postage, shall be
included in such valuation.
4.03
<PAGE> 9
5. ANNUITY PROVISIONS
NOTICE TO You shall notify us at least 3O days in advance to effect
EFFECT AN an Annuity for a Participant on his Annuity Commencement
ANNUITY Date.
ELECTION OF You may specify the Annuity option under which installments
OPTIONAL are to be made to an Annuitant provided such notification is
ANNUITIES received by us at least 30 days prior to the Annuity
Commencement Date. In the absence of such an election, the
retirement Annuity will be a life Annuity with 120
installments guaranteed.
If option 2 or 5 is elected, installments may not be
guaranteed for a period longer than the life expectancy of
the Annuitant.
ANNUITY OPTIONS (See Annuity Option Tables at the end of this contract.) At
the maturity of this contract, the proceeds may be placed
under any of the following options:
OPTION 1. LIFE ANNUITY. We will pay a monthly income
during a Participant's lifetime. The income
will cease with the last installment preceding
the death of that Participant.
OPTION 2. LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY
INSTALLMENTS GUARANTEED. We will pay a monthly
income during a Participant's lifetime with the
guarantee that if, at death of the Participant,
installments have been made for less than 60
months, 120 months, 180 months, or 240 months,
as elected, installments will be continued to
the Beneficiary during the remainder of the
elected period.
OPTION 3. UNIT REFUND LIFE ANNUITY. We will pay a
monthly income during a Participant's lifetime
that will cease with the last installment due
prior to the death of that Participant, with
the guarantee that, at the death of the payee,
the Beneficiary will receive an additional
payment of the dollar value of the number of
Annuity Units equal to the excess, if any, of
(a) over (b) where (a) is the total applied
under the option divided by the Annuity Unit
value at the Annuity Commencement Date
and (b) is the number of Annuity Units
represented by each installment multiplied by
the number of installments made. Such dollar
value will be determined by multiplying the
above number of Annuity Units by the Annuity
Unit value on the Business Day coincident with
or next following the date on which written
notice of death is received by us at our Home
Office.
OPTION 4. JOINT AND SURVIVOR INCOME FOR LIFE. We will
pay monthly installments jointly to two payees
if both are living when the installments become
payable. The Annuitant will be designated as
primary payee. Full installments will continue
so long as the primary payee is living. If the
primary payee dies after installments begin,
full installments or installments of 1/2 or
2/3, (whichever you elected when applying for
this option) will continue to the other payee
during his or her lifetime.
OPTION 5. INCOME FOR A FIXED PERIOD. We will pay the
proceeds in equal installments over a period
of from 3 to 30 years. The amount of each
installment will be based upon the period and
the frequency of the installments selected from
Option 5 Table.
OPTION 6. INCOME OF A FIXED AMOUNT. We will pay the
proceeds in equal installments in the amount
and at the intervals agreed upon until the
proceeds applied under this option, with
interest credited at the current annual rate,
are exhausted. The final installment will be
for the then remaining balance only. At anytime
the then current payee may withdraw the
remaining balance in a single payment.
5.01
<PAGE> 10
DATE OF PAYMENT The first payment under any option shall be made on the
Annuity Commencement Date or upon the date of surrender or
as of the date on which written notice of death is received
by us at the Home Office, as applicable.
ALLOCATION When you elect one of the first five annuity options, you
may further elect to have the of Annuity annuity purchased
in the form of the variable annuity, guaranteed annuity, or
a combination of both. If you elect option 6 you may
specify whether the Net Investment Factor for one or more
of the Divisions of Separate Account No. 2 or the General
Account is to apply, or whether the amount due shall be
split among the various Divisions of Separate Account No.
2 and the General Account.
If no election is made to the contrary on these options,
that portion of accumulated value in Separate Account No.
2 will be applied to provide a variable annuity and that
portion in the General Account will be applied to provide
a guaranteed annuity.
We guarantee that the dollar amounts of variable annuity
benefits will not be adversely affected by our actual
expense and mortality results.
MINIMUM AMOUNTS The minimum amount to be placed under an option is $5,000,
and the minimum amount of any payment is $50 per month,
unless these minimums are waived or changed by us.
GUARANTEED We use a guaranteed effective annual rate of 496 in
ANNUITY OPTION computing payments under all options.
INTEREST RATE
FIRST PAYMENT We shall make the first payment as of the option effective
date.
PAYEE A Participant who receives benefits under an option is a
payee. A payee must be a natural person receiving benefits
in his or her own right, or be a legal guardian. With our
consent, the payee may be a trustee, assignee, corporation,
or partnership.
If a payee dies on or after the Annuity Commencement Date,
any unpaid contract proceeds must be paid under the method
of payment being used as of the date of his or her death.
CONTINGENT PAYEE The payee may name contingent payees, subject to any
restrictions under an annuity option chosen during the
Annuitant's lifetime, under the following conditions:
(1) If you are the payee; or
(2) If, at any time after the Annuitant's death and
during the option period, no previously named
contingent payee is living.
The named Contingent Payee will be disregarded if making
that person or entity the Contingent Payee would prevent
treatment of this contract as an annuity for federal income
tax purposes.
Designations made by the payee under these provisions may
be changed by the payee. Such changes must be made by
written request satisfactory to us. Changes will only take
effect when we accept them in writing at our Home Office.
At that time, the contingent interest of any other person
is terminated as of the date the payee signed the request,
whether or not the payee is living when we receive the
request.
5.02
<PAGE> 11
LIFE INCOME Life Income Options are based on the payee's age nearest
OPTIONS birthday on the annuity option effective date. We have the
right to require satisfactory proof of age. If age has been
incorrectly stated, the proper adjustments in payments will
be made. We may also require proof that the payee is living
on any payment due date.
DEATH OF PAYEE If a payee dies, any installments still payable under a
specified certain period will be paid as they become due to
the surviving or next succeeding payee. If no designated
payee survives, the commuted value of any unpaid
installments will be paid in one sum to the estate of the
last payee to die.
<PAGE> 12
RIGHTS UNDER No payee has the right to make any change in the provisions
ANNUITY OPTIONS of the agreement or to receive the benefits in any manner
other than that stated in the agreement, unless such right
was reserved in the agreement. We will not make any
payments in advance, nor commute installments under any
life income option.
BASIS OF Commutation of installments for other than life income
COMMUTATION options will be at the effective annual rate of 496
compounded annually.
EXTENDED Provisions for settlement of benefits different from those
PROVISIONS stated in this contract may only be made upon written
agreement with us.
COMPANY LIABILITY We shall be fully discharged by any payment we make
before a written request for an election, change, or
revocation was made and is received in our Home Office.
5.03
<PAGE> 13
6. DEATH BENEFITS
DEATH BENEFITS When we receive due proof of the death of the Annuitant
that occurs before the Annuity Commencement Date, we will
pay to the Beneficiary the accumulated value of the
contract. This payment includes interest from the date of
death to the date of settlement at an annual rate
determined by us, but not less than that required by law.
If the Participant dies before the Annuity Commencement
Date, this contract will no longer be in force. We will pay
the Participant's interest in the contract to the
Beneficiary in a lump sum upon receiving proof of the
Participant's death.
This payment must be made within five (5) years after the
date of the Participant's death.
If, however, the Participant or the Beneficiary make a
written choice of one of the two options described below,
and if the Participant's choice is clear to us, we will
treat the proceeds as the Participant or the Beneficiary
have chosen. The two options are:
(i) Leave the proceeds of the contract with us as
provided under Option 6 of the Annuity Provisions
Section of this contract. Any amount remaining
unpaid under Option 6 will, however, be paid in a
lump sum to the Beneficiary before the end of the
fifth year after the Participant's death.
(ii) Buy an immediate annuity for the Beneficiary, who
will be the owner and Annuitant. Payments under the
Annuity, or under any other method of payment we
make available, must be for the life of the
Beneficiary, or for a number of years that is not
more than the life expectancy of the Beneficiary at
the time of the Participant's death (as determined
for federal tax purposes), and must begin within
one year after the Participant's death.
However, if the Participant dies before the Annuity
Commencement Date and the Participant's spouse is the
Beneficiary, no proceeds will be paid to him or her,
instead, this contract continues with the Participant's
surviving spouse as the new owner.
If no Beneficiary survives the Participant and the
Participant dies before the Annuity Commencement Date,
payment of the proceeds will be made in a lump sum to the
Participant's estate.
The accumulated value of a Participant's Individual
Account, shall, for the purposes of this provision, be that
value as determined after written notice of death is
received by us at our Home Office.
7. TERMINATION BENEFITS
TERMINATION Upon termination of participation prior to the Annuity
BENEFITS Commencement Date, the Participant may elect with respect to
the Accumulation Units in his Individual Account:
(a) to have the accumulated value applied to provide
Annuity payments under one of the options described
in section 5; or
(b) to leave the accumulated value in the contract, in
which case the number of Accumulation Units in his
Individual Account will remain fixed, but the value
thereof will vary as described in section 4; or
(c) to receive the accumulated value on the basis of
the Accumulation Unit value next determined after
the written request for surrender is received by us
at our Home Office; or
(d) to convert to an Individual Variable Annuity
Contract, if appropriate individual contracts are
issued by us on the effective date of termination,
on the basis set forth by us at the
6.01
<PAGE> 14
time of such conversion.
8. GENERAL PROVISIONS
CERTIFICATES We shall issue to you for delivery to each Participant
an individual certificate setting forth in substance
the benefits to which each Participant is entitled
under this contract. The word "certificate" as used
herein shall include certificate riders and
certificate supplements, if any.
We will provide to you and the Participants such
information and reports as the laws and regulations of
the appropriate jurisdiction shall require.
GENERAL PROVISIONS Whenever any payment hereunder shall be contingent
GOVERNING ANNUITY upon the survival of some person, evidence of such person's
PAYMENTS survival must be furnished to us either by personal
endorsement by such person of the check drawn for such
payment or by other evidence satisfactory to us.
FACILITY OF If any payee under this contract is a minor or is, in
PAYMENT our judgment, otherwise legally incapable of personally
receiving and giving a valid receipt for any payment due
him under this contract, we may, unless and until claim
shall have been made by a duly appointed guardian or
committee of such payee, make such payment, or any part of
it, to any person or institution then in our judgment
contributing toward, or providing for, the care and
maintenance of such person. Such payment shall
completely discharge our liability with respect to the
amount so paid.
SPENDTHRIFT CLAUSE The benefits under this contract shall not be assigned,
transferred, commuted, anticipated or encumbered
and, to the extent permitted by law, shall be
exempt from attachment and otherwise free from the
claim of creditors.
PERSONAL DATA You shall furnish any information or evidence which we
may reasonably require in order to administer this
contract. If you cannot furnish any required item of
information, we may request that any other person
concerned furnish such information. We shall not be
liable for the fulfillment of any obligations in any
way dependent on such information until we receive such
information in a form satisfactory to us.
Information furnished to us may be corrected for
demonstrated errors therein unless we have already
acted to our prejudice by relying on such information.
Any records prepared by us from information furnished
as described above shall constitute prima facie
evidence as to the truth of the information so
recorded.
MISSTATEMENT OF If the date of birth of any person on whose life any
ESSENTIAL FACTS payment hereunder is based has been misstated, any amount
payable under this contract with respect to such person
shall be such as the value of the Participant's Individual
Account would have purchased based on the correct date of
birth. Any underpayment(s) as a result of a misstatement
will be paid in one lump sum to the annuitant. Any
overpayment(s) as a result of a misstatement will be
deducted from the current or succeeding payment(s) due
under the contract.
MODIFICATION OF This contract along with any attached riders may be
THIS CONTRACT modified at any time, subject to the laws of the
jurisdiction in which it is delivered, by written agreement
between you and us. No such modification shall adversely
affect Accumulation Units or annuity units credited to
Participants or Annuitants prior to the effective date of
such modification unless it is deemed advisable to make such
change of retroactive effect in order to meet the
requirement of any law or regulation issued by any
governmental agency or unless all affected Participants
consent thereto.
6.02
<PAGE> 15
We may not make any unilateral change in this contract
prior to the third Contract Anniversary, except as
required in order to make this contract conform with
any law or regulation issued by any governmental
agency. On the third Contract Anniversary or any later
Contract Anniversary we may change this contract in any
respect provided that (a) any such modification will
not affect in any way the amount or terms of any
Annuity purchased prior to the effective date of such
modification, and (b) any such modification shall
not change (i) the amount of deductions from
withdrawals, (ii) any factor used in determining
Accumulation or Annuity Unit values, or (iii) any
factor used to determine the amount of any Annuity
installment as it applies to Accumulation Unit
purchases by contributions in any year not in excess of
twice the first annual contribution for Participants
who were in the plan prior to the effective date of
such change. We shall give you a written notice of any
such modification at least 90 days prior to the
effective date thereof.
Any portion of an increase in the annual contribution
which causes the annual contribution to exceed twice
the first annual contribution will be subject to the
contract provisions effective at the time of the
increase. These provisions will remain applicable so
long as the annual contribution is continued at that
level.
CONTRACT This contract along with any attached rider(s) and your
application, a copy of which is attached and made a
part thereof, constitute the entire contract.
No change or modification of this contract and its
rider(s) or waiver of its conditions, can be made or
will be valid unless made in writing and signed by our
President, a Vice President or Secretary.
We reserve the right to terminate this contract if the
plan ceases to be qualified under the Internal Revenue
Code or any other law.
BENEFICIARY A Participant may designate a Beneficiary to receive
any death benefit that may become payable at or after
his death as a result of the operation of the plan, and
may change such designation from time to time except in
regard to a contingent Annuitant after the Participant
begins receiving installments while the Joint and
Survivor Income For Life annuity option is in effect.
Any designation or change shall be made by written
notice in a form satisfactory to us and filed at our
Home Office, and when it is received, the designation
or change shall relate back and take effect as of the
date it was signed, whether or not the Participant is
living at the time of the receipt of such written
notice. A Beneficiary who becomes entitled to receive
benefits under the plan may also designate in the same
manner, a Beneficiary to receive any death benefit that
may become payable under the plan at or after his
death.
RELATION OF We shall have exclusive and absolute ownership and
THIS CONTRACT control of the assets of both our General Account and our
TO DIVISIONS Divisions of Separate Account No. 2. Our method of
OF SEPARATE determination of the value of an Accumulation Unit (or an
ACCOUNT NO. 2 Annuity Unit) will be conclusive upon you, any Participant,
and any Beneficiary.
The variable annuity benefits of this contract are
funded solely from the assets of the Divisions of
Separate Account No. 2 of which it is an obligation and
except to the extent of such limited expense and
mortality guarantees, shall have no claim against any
of our other assets.
The assets allocated to the Divisions of Separate
Account No. 2 may be invested in any class of
investments which we are permitted to make in
accordance with the laws of Missouri, as amended from
time to time, and in accordance with the resolution
adopted by our Board of Directors applicable to such
Divisions. The investment or reinvestment of such
assets shall be determined by us at our sole
discretion. The investment income and gains or losses
from the assets in the Divisions of Separate Account
No. 2 shall be credited or charged against the
various Divisions without regard to our other investment
income or gains or losses.
6.03
<PAGE> 16
The portion of the assets of the Divisions of Separate
Account No. 2 equal to the reserves and other contract
liabilities with respect to the Divisions of Separate
Account No. 2 shall not be chargeable with liabilities
arising out of any other business that we may conduct.
ANNUAL DIVIDENDS Your contract shares in our divisible surplus while it is
in force prior to the Annuity Commencement Date. Each
year we will determine the share of divisible surplus, if
any, accruing to your contract. Investment results are
credited directly through the changes in the value of the
Accumulation Units and Annuity Units. Also, most
mortality and expense savings are credited directly
through decreases in the appropriate charges. Therefore,
the company expects little or no divisible surplus to be
credited to your contract.
DEFERMENT Any payment from the General Account upon partial
withdrawal or termination of a Participant may be
deferred by us for a period not exceeding six months
after receipt of application, or the maximum period
permitted by law if less than six months.
LIMITATION ON Annuity installments to any Annuitant may be decreased if
BENEFITS required by the plan. The commuted value of such decrease
shall be distributed as you direct.
6.04
<PAGE> 17
<TABLE>
ANNUITY OPTION TABLES
FOR EACH $1,000
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
OPTION 1 OPTION 2 OPTION 3 OPTION 5
- -----------------------------------------------------------------------------------------------------------------------------
AGE OF LIFE 60 MONTHS 120 MONTHS 180 MONTHS 240 MONTHS UNIT INCOME FOR A
PAYEE ANNUITY GUARANTY GUARANTY GUARANTY GUARANTY REFUND FIXED PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
YEARS MONTHLY
CERTAIN INSTALLMENTS
-------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $ 4.27 $ 4.26 $4.25 $4.23 $4.20 $4.17
46 4.31 4.31 4.30 4.27 4.24 4.21
47 4.36 4.36 4.34 4.31 4.27 4.25
48 4.42 4.41 4.39 4.36 4.32 4.29 3 $29.39
49 4.47 4.46 4.44 4.41 4.36 4.34 4 22.47
- -----------------------------------------------------------------------------------------------------------------------------
50 4.53 4.52 4.50 4.46 4.40 4.38 5 18.32
51 4.59 4.58 4.55 4.51 4.45 4.43 6 15.56
52 4.65 4.64 4.61 4.56 4.50 4.48 7 13.59
53 4.72 4.71 4.67 4.62 4.55 4.53 8 12.11
54 4.79 4.77 4.74 4.68 4.60 4.59 9 10.97
- -----------------------------------------------------------------------------------------------------------------------------
55 4.86 4.85 4.81 4.74 4.65 4.64 10 10.06
56 4.94 4.92 4.88 4.80 4.71 4.70 11 9.31
57 5.02 5.00 4.95 4.87 4.76 4.76 12 8.69
58 5.10 5.08 5.03 4.94 4.82 4.83 13 8.17
59 5.19 5.17 5.11 5.01 4.88 4.90 14 7.72
- -----------------------------------------------------------------------------------------------------------------------------
60 5.29 5.26 5.20 5.09 4.94 4.97 15 7.34
61 5.39 5.36 5.29 5.17 5.00 5.04 16 7.00
62 5.49 5.47 5.38 5.25 5.06 5.12 17 6.70
63 5.61 5.58 5.48 5.33 5.12 5.21 18 6.44
64 5.73 5.70 5.59 5.42 5.18 5.29 19 6.21
- -----------------------------------------------------------------------------------------------------------------------------
65 5.86 5.82 5.70 5.51 5.24 5.39 20 6.00
66 6.00 5.96 5.82 5.60 5.31 5.48 21 5.81
67 6.15 6.10 5.95 5.69 5.37 5.58 22 5.64
68 6.32 6.26 6.08 5.79 5.43 5.69 23 5.49
69 6.49 6.42 6.21 5.89 5.48 5.80 24 5.35
- -----------------------------------------------------------------------------------------------------------------------------
70 6.68 6.60 6.35 5.98 5.54 5.92 25 5.22
71 6.88 6.78 6.50 6.08 5.59 6.04 26 5.10
72 7.09 6.98 6.65 6.18 5.64 6.17 27 4.99
73 7.31 7.18 6.81 6.28 5.69 6.30 28 4.89
74 7.56 7.40 6.97 6.37 5.73 6.44 29 4.80
- -----------------------------------------------------------------------------------------------------------------------------
75 7.82 7.64 7.14 6.47 5.77 6.59 30 4.72
76 8.09 7.88 7.31 6.55 5.81 6.74
77 8.39 8.14 7.48 6.64 5.84 6.91
78 8.71 8.41 7.65 6.72 5.87 7.07
79 9.05 8.70 7.83 6.80 5.89 7.25
- -----------------------------------------------------------------------------------------------------------------------------
80 9.41 9.00 8.00 6.87 5.91 7.44
81 9.81 9.32 8.17 6.93 5.93 7.63
82 10.23 9.65 8.34 6.99 5.95 7.83
83 10.68 9.99 8.50 7.05 5.96 8.05
84 11.16 10.35 8.66 7.10 5.97 8.28
- -----------------------------------------------------------------------------------------------------------------------------
85 & 11.68 10.72 8.81 7.14 5.98 8.49
OVER
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The mortality table used in computing annuity options under this contract is
the 1983 Individual Annuity Mortality Table.
7.01
<PAGE> 18
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- -------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOlNT AND EQUAL TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- -------------------------------------------------------------------------------------------------------
45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $3.99 $4.01 $4.03 $4.05 $4.08 $4.10 $4.12 $4.14 $4.15 $4.17 $4.19
51 4.01 4.03 4.05 4.07 4.09 4.11 4.14 4.16 4.18 4.20 4.22
52 4.02 4.04 4.07 4.09 4.11 4.13 4.16 4.18 4.20 4.22 4.24
53 4.03 4.06 4.08 4.10 4.13 4.15 4.18 4.20 4.22 4.25 4.27
54 4.04 4.07 4.09 4.12 4.15 4.17 4.20 4.22 4.25 4.27 4.30
- -------------------------------------------------------------------------------------------------------
55 4.06 4.08 4.11 4.13 4.16 4.19 4.22 4.24 4.27 4.30 4.32
56 4.07 4.09 4.12 4.15 4.18 4.21 4.23 4.26 4.29 4.32 4.35
57 4.08 4.11 4.13 4.16 4.19 4.22 4.25 4.28 4.31 4.34 4.37
58 4.09 4.12 4.15 4.18 4.21 4.24 4.27 4.30 4.33 4.37 4.40
59 4.10 4.13 4.16 4.19 4.22 4.25 4.29 4.32 4.35 4.39 4.42
- -------------------------------------------------------------------------------------------------------
60 4.11 4.14 4.17 4.20 4.24 4.27 4.30 4.34 4.37 4.41 4.45
61 4.11 4.15 4.18 4.21 4.25 4.28 4.32 4.36 4.39 4.43 4.47
62 4.12 4.16 4.19 4.23 4.26 4.30 4.33 4.37 4.41 4.45 4.49
63 4.13 4.16 4.20 4.24 4.27 4.31 4.35 4.39 4.43 4.47 4.51
64 4.14 4.17 4.21 4.25 4.28 4.32 4.36 4.40 4.45 4.49 4.53
- -------------------------------------------------------------------------------------------------------
65 4.15 4.18 4.22 4.26 4.30 4.34 4.38 4.42 4.46 4.51 4.55
66 4.15 4.19 4.23 4.27 4.31 4.35 4.39 4.43 4.48 4.53 4.57
67 4.16 4.20 4.23 4.27 4.32 4.36 4.40 4.45 4.49 4.54 4.59
68 4.16 4.20 4.24 4.28 4.32 4.37 4.41 4.46 4.51 4.56 4.61
69 4.17 4.21 4.25 4.29 4.33 4.38 4.42 4.47 4.52 4.57 4.63
- -------------------------------------------------------------------------------------------------------
70 4.18 4.21 4.26 4.30 4.34 4.39 4.43 4.48 4.53 4.59 4.64
71 4.18 4.22 4.26 4.30 4.35 4.40 4.44 4.49 4.55 4.60 4.66
72 4.19 4.23 4.27 4.31 4.36 4.40 4.45 4.50 4.56 4.61 4.67
73 4.19 4.23 4.27 4.32 4.36 4.41 4.46 4.51 4.57 4.63 4.68
74 4.19 4.24 4.28 4.32 4.37 4.42 4.47 4.52 4.58 4.64 4.70
- -------------------------------------------------------------------------------------------------------
75 4.20 4.24 4.28 4.33 4.38 4.43 4.48 4.53 4.59 4.65 4.71
- -------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------
56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.21 $4.23 $4.24 $4.26 $4.20 $4.29 $4.31 $4.32 $4.34 $4.35
51 4.24 4.26 4.20 4.29 4.31 4.33 4.34 4.36 4.38 4.39
52 4.27 4.29 4.31 4.33 4.35 4.36 4.38 4.40 4.42 4.43
53 4.29 4.32 4.34 4.36 4.38 4.40 4.42 4.44 4.46 4.47
54 4.32 4.35 4.37 4.39 4.41 4.44 4.46 4.48 4.50 4.52
- ----------------------------------------------------------------------------------------------
55 4.35 4.37 4.40 4.43 4.45 4.47 4.50 4.52 4.54 4.56
56 4.38 4.40 4.43 4.46 4.48 4.51 4.54 4.56 4.58 4.61
57 4.40 4.43 4.46 4.49 4.52 4.55 4.57 4.60 4.63 4.65
58 4.43 4.46 4.49 4.52 4.55 4.58 4.61 4.64 4.67 4.70
59 4.46 4.49 4.52 4.56 4.59 4.62 4.65 4.69 4.72 4.75
- ----------------------------------------------------------------------------------------------
60 4.48 4.52 4.55 4.59 4.62 4.66 4.69 4.73 4.76 4.79
61 4.51 4.54 4.58 4.62 4.66 4.70 4.73 4.77 4.81 4.84
62 4.53 4.57 4.61 4.65 4.69 4.73 4.77 4.81 4.85 4.89
63 4.55 4.60 4.64 4.68 4.73 4.77 4.81 4.85 4.90 4.94
64 4.58 4.62 4.67 4.71 4.76 4.80 4.85 4.90 4.94 4.99
- ----------------------------------------------------------------------------------------------
65 4.60 4.65 4.69 4.74 4.79 4.84 4.89 4.94 4.99 5.03
66 4.62 4.67 4.72 4.77 4.82 4.87 4.93 4.98 5.03 5.08
67 4.64 4.69 4.75 4.80 4.85 4.91 4.96 5.02 5.07 5.13
68 4.66 4.71 4.77 4.83 4.88 4.94 5.00 5.06 5.12 5.18
69 4.68 4.74 4.79 4.85 4.91 4.97 5.03 5.10 5.16 5.22
- ----------------------------------------------------------------------------------------------
70 4.70 4.76 4.81 4.88 4.94 5.00 5.07 5.13 5.20 5.27
71 4.71 4.77 4.84 4.90 4.96 5.03 5.10 5.17 5.24 5.31
72 4.73 4.79 4.86 4.92 4.99 5.06 5.13 5.20 5.28 5.35
73 4.75 4.81 4.87 4.94 5.01 5.09 5.16 5.24 5.31 5.39
74 4.76 4.82 4.89 4.96 5.03 5.11 5.19 5.27 5.35 5.43
- ----------------------------------------------------------------------------------------------
75 4.77 4.84 4.91 4.98 5.06 5.13 5.21 5.30 5.38 5.47
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND ONE-HALF TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- -------------------------------------------------------------------------------------------------------
45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.24 $4.26 $4.27 $4.28 $4.29 $4.30 $4.31 $4.32 $4.33 $4.34 $4.35
51 4.28 4.29 4.30 4.31 4.33 4.34 4.35 4.36 4.37 4.38 4.40
52 4.31 4.33 4.34 4.35 4.36 4.38 4.39 4.40 4.41 4.43 4.44
53 4.35 4.36 4.38 4.39 4.40 4.42 4.43 4.44 4.46 4.47 4.48
54 4.38 4.40 4.41 4.43 4.44 4.46 4.47 4.49 4.50 4.51 4.53
- -------------------------------------------------------------------------------------------------------
55 4.42 4.44 4.45 4.47 4.48 4.50 4.51 4.53 4.55 4.56 4.58
56 4.46 4.48 4.49 4.51 4.52 4.54 4.56 4.57 4.59 4.61 4.62
57 4.50 4.52 4.53 4.55 4.57 4.59 4.60 4.62 4.64 4.66 4.67
58 4.54 4.56 4.57 4.59 4.61 4.63 4.65 4.67 4.69 4.70 4.72
59 4.58 4.60 4.62 4.64 4.66 4.68 4.70 4.72 4.74 4.76 4.78
- -------------------------------------------------------------------------------------------------------
60 4.62 4.64 4.66 4.68 4.70 4.72 4.74 4.77 4.79 4.81 4.83
61 4.67 4.69 4.71 4.73 4.75 4.77 4.79 4.82 4.84 4.86 4.88
62 4.71 4.73 4.75 4.78 4.80 4.82 4.85 4.87 4.89 4.92 4.94
63 4.76 4.78 4.80 4.83 4.85 4.87 4.90 4.92 4.95 4.98 5.00
64 4.81 4.83 4.85 4.88 4.90 4.93 4.95 4.98 5.01 5.03 5.06
- -------------------------------------------------------------------------------------------------------
65 4.86 4.88 4.91 4.93 4.96 4.98 5.01 5.04 5.07 5.10 5.13
66 4.91 4.93 4.96 4.99 5.01 5.04 5.07 5.10 5.13 5.16 5.19
67 4.96 4.99 5.02 5.05 5.07 5.10 5.13 5.16 5.19 5.23 5.26
68 5.02 5.05 5.08 5.10 5.13 5.17 5.20 5.23 5.26 5.30 5.33
69 5.08 5.11 5.14 5.17 5.20 5.23 5.26 5.30 5.33 5.37 5.40
- -------------------------------------------------------------------------------------------------------
70 5.14 5.17 5.20 5.23 5.26 5.30 5.33 5.36 5.40 5.44 5.48
71 5.20 5.23 5.26 5.29 5.33 5.36 5.40 5.44 5.47 5.51 5.55
72 5.26 5.29 5.33 5.36 5.40 5.43 5.47 5.51 5.55 5.59 5.63
73 5.33 5.36 5.39 5.43 5.47 5.50 5.54 5.58 5.62 5.67 5.71
74 5.39 5.43 5.46 5.50 5.54 5.58 5.62 5.66 5.70 5.75 5.79
- -------------------------------------------------------------------------------------------------------
75 5.46 5.50 5.53 5.57 5.61 5.65 5.69 5.74 5.78 5.83 5.88
- -------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------
56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.36 $4.37 $4.38 $4.39 $4.40 $4.41 $4.42 $4.42 $4.43 $4.44
51 4.41 4.42 4.43 4.44 4.45 4.45 4.46 4.47 4.48 4.49
52 4.45 4.46 4.47 4.48 4.49 4.50 4.51 4.52 4.53 4.54
53 4.50 4.51 4.52 4.53 4.54 4.55 4.56 4.57 4.58 4.59
54 4.54 4.56 4.57 4.58 4.59 4.61 4.62 4.63 4.64 4.65
- ----------------------------------------------------------------------------------------------
55 4.59 4.60 4.62 4.63 4.65 4.66 4.67 4.68 4.69 4.71
56 4.64 4.65 4.67 4.68 4.70 4.71 4.73 4.74 4.75 4.77
57 4.69 4.71 4.72 4.74 4.75 4.77 4.79 4.80 4.81 4.83
58 4.74 4.76 4.78 4.80 4.81 4.83 4.85 4.86 4.88 4.89
59 4.80 4.81 4.83 4.85 4.87 4.89 4.91 4.93 4.94 4.96
- ----------------------------------------------------------------------------------------------
60 4.85 4.87 4.89 4.91 4.93 4.95 4.97 4.99 5.01 5.03
61 4.91 4.93 4.95 4.97 5.00 5.02 5.04 5.06 5.08 5.10
62 4.97 4.99 5.01 5.04 5.06 5.09 5.11 5.13 5.15 5.17
63 5.03 5.05 5.08 5.10 5.13 5.16 5.18 5.20 5.23 5.25
64 5.09 5.12 5.14 5.17 5.20 5.23 5.25 5.28 5.31 5.33
- ----------------------------------------------------------------------------------------------
65 5.15 5.18 5.21 5.24 5.27 5.30 5.33 5.36 5.39 5.42
66 5.22 5.25 5.29 5.32 5.35 5.38 5.41 5.44 5.47 5.51
67 5.29 5.33 5.36 5.39 5.43 5.46 5.50 5.53 5.56 5.60
68 5.36 5.40 5.44 5.47 5.51 5.54 5.58 5.62 5.65 5.69
69 5.44 5.48 5.51 5.55 5.59 5.63 5.67 5.71 5.75 5.79
- ----------------------------------------------------------------------------------------------
70 5.51 5.55 5.59 5.64 5.68 5.72 5.76 5.80 5.85 5.89
71 5.59 5.64 5.68 5.72 5.77 5.81 5.86 5.90 5.95 5.99
72 5.67 5.72 5.76 5.81 5.86 5.90 5.95 6.00 6.05 6.10
73 5.76 5.80 5.85 5.90 5.95 6.00 6.05 6.10 6.16 6.21
74 5.84 5.89 5.94 5.99 6.04 6.10 6.15 6.21 6.26 6.32
- ----------------------------------------------------------------------------------------------
75 5.93 5.98 6.03 6.08 6.14 6.20 6.26 6.31 6.38 6.44
- ----------------------------------------------------------------------------------------------
</TABLE>
7.02
<PAGE> 19
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- -------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOlNT AND TWO-THIRDS TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- -------------------------------------------------------------------------------------------------------
45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.16 $4.17 $4.19 $4.20 $4.22 $4.23 $4.24 $4.26 $4.27 $4.29 $4.30
51 4.18 4.20 4.21 4.23 4.25 4.26 4.20 4.29 4.31 4.32 4.33
52 4.21 4.23 4.24 4.26 4.28 4.29 4.31 4.33 4.34 4.36 4.37
53 4.24 4.25 4.27 4.29 4.31 4.33 4.34 4.36 4.38 4.39 4.41
54 4.26 4.28 4.30 4.32 4.34 4.36 4.38 4.39 4.41 4.43 4.45
- -------------------------------------------------------------------------------------------------------
55 4.29 4.31 4.33 4.35 4.37 4.39 4.41 4.43 4.45 4.47 4.49
56 4.32 4.34 4.36 4.38 4.40 4.42 4.44 4.47 4.49 4.51 4.63
57 4.35 4.37 4.39 4.41 4.44 4.46 4.48 4.50 4.52 4.55 4.57
58 4.38 4.40 4.42 4.44 4.47 4.49 4.52 4.54 4.56 4.59 4.61
59 4.41 4.43 4.45 4.48 4.50 4.53 4.55 4.58 4.60 4.63 4.65
- -------------------------------------------------------------------------------------------------------
60 4.44 4.46 4.48 4.51 4.54 4.56 4.59 4.61 4.64 4.67 4.69
61 4.47 4.49 4.52 4.54 4.57 4.60 4.62 4.65 4.68 4.71 4.74
62 4.50 4.52 4.55 4.58 4.61 4.63 4.66 4.69 4.72 4.75 4.78
63 4.53 4.56 4.58 4.61 4.64 4.67 4.70 4.73 4.76 4.79 4.83
64 4.56 4.59 4.62 4.65 4.68 4.71 4.74 4.77 4.81 4.84 4.87
- -------------------------------------------------------------------------------------------------------
65 4.59 4.62 4.65 4.68 4.72 4.75 4.78 4.81 4.85 4.88 4.92
66 4.63 4.66 4.69 4.72 4.75 4.79 4.82 4.86 4.89 4.93 4.97
67 4.66 4.69 4.73 4.76 4.79 4.83 4.86 4.90 4.94 4.98 5.02
68 4.70 4.73 4.76 4.80 4.83 4.87 4.91 4.94 4.98 5.02 5.07
69 4.73 4.77 4.80 4.84 4.87 4.91 4.95 4.99 5.03 5.07 5.12
- -------------------------------------------------------------------------------------------------------
70 4.77 4.81 4.84 4.88 4.91 4.95 4.99 5.03 5.08 5.12 5.17
71 4.81 4.84 4.88 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22
72 4.85 4.88 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27
73 4.89 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32
74 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37
- -------------------------------------------------------------------------------------------------------
75 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.43
- -------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------
56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.31 $4.32 $4.34 $4.35 $4.36 $4.37 $4.38 $4.39 $4.40 $4.41
51 4.35 4.36 4.3a 4.39 4.40 4.41 4.42 4.43 4.44 4.45
52 4.39 4.40 4.42 4.43 4.44 4.46 4.47 4.48 4.49 4.50
53 4.43 4.44 4.46 4.47 4.49 4.50 4.51 4.53 4.54 4.55
54 4.47 4.48 4.50 4.52 4.53 4.55 4.56 4.58 4.59 4.60
- ----------------------------------------------------------------------------------------------
55 4.51 4.53 4.54 4.56 4.58 4.60 4.61 4.63 4.64 4.66
56 4.55 4.57 4.59 4.61 4.63 4.64 4.66 4.68 4.70 4.71
57 4.59 4.61 4.63 4.65 4.67 4.69 4.71 4.73 4.75 4.77
58 4.63 4.66 4.68 4.70 4.72 4.74 4.77 4.79 4.81 4.83
59 4.68 4.70 4.73 4.75 4.77 4.80 4.82 4.84 4.86 4.89
- ----------------------------------------------------------------------------------------------
60 4.72 4.75 4.77 4.80 4.83 4.85 4.88 4.90 4.92 4.95
61 4.77 4.79 4.82 4.85 4.88 4.91 4.93 4.96 4.99 5.01
62 4.81 4.84 4.87 4.90 4.93 4.96 4.99 5.02 5.05 5.08
63 4.86 4.89 4.92 4.96 4.99 5.02 5.05 5.08 5.11 5.14
64 4.91 4.94 4.98 5.01 5.04 5.08 5.11 5.15 5.18 5.21
- ----------------------------------------------------------------------------------------------
65 4.96 4.99 5.03 5.07 5.10 5.14 5.18 5.21 5.25 5.28
66 5.01 5.04 5.08 5.12 5.16 5.20 5.24 5.28 5.32 5.36
67 5.06 5.10 5.14 5.18 5.22 5.26 5.31 5.35 5.39 5.43
68 5.11 5.15 5.19 5.24 5.28 5.33 5.37 5.42 5.46 5.51
69 5.16 5.20 5.25 5.30 5.34 5.39 5.44 5.49 5.54 5.59
- ----------------------------------------------------------------------------------------------
70 5.21 5.26 5.31 5.36 5.41 5.46 5.51 5.56 5.61 5.67
71 5.27 5.32 5.37 5.42 5.47 5.52 5.58 5.64 5.69 5.75
72 5.32 5.37 5.43 5.48 5.54 5.59 5.65 5.71 5.77 5.83
73 5.37 5.43 5.48 5.54 5.60 5.66 5.72 5.78 5.85 5.91
74 5.43 5.49 5.54 5.60 5.67 5.73 5.79 5.86 5.93 5.99
- ----------------------------------------------------------------------------------------------
75 5.48 5.54 5.60 5.67 5.73 5.80 5.86 5.93 6.01 6.08
- ----------------------------------------------------------------------------------------------
</TABLE>
7.03
<PAGE> 1
** DATA PAGE ** CONTRACT NUMBER
ANNUITANT
RIGHT TO EXAMINE AND
RETURN CERTIFICATE
WITHIN 20 DAYS
You may return this certificate within
20 days after receiving it. It may
be delivered or mailed to us or the
agent through whom it was purchased.
The certificate shall then be deemed
void from the start. Any premium paid
will be returned.
TAX SHELTERED GROUP
VARIABLE ANNUITY
CERTIFICATE
Funds in one or more Divisions of
Separate Account No. 2 and General
Account.
All installments and values provided
by this certificate, when based on
investment experience of one or more
Divisions of Separate Account No. 2,
are variable and we not guaranteed
as to fixed dollar amounts.
ISSUED BY: GENERAL AMERICAN LIFE INSURANCE CO.
A Mutual Company
P.O. BOX 14490
ST. LOUIS, MISSOURI 63178
10016 0.01
(7/87)
<PAGE> 2
ALPHABETIC GUIDE TO YOUR CONTRACT
<TABLE>
<CAPTION>
Page Page
<S> <S>
4.03 Addition, Deletion, or 1.01 Certificate Specifications
Substitution of Investments 6.01 Death Benefit
4.01 Accumulation Provision 3.01 Definitions
5.03 Annuity Option Tables 1.02 Endorsements
5.01 Annuity Provisions
</TABLE>
Supplemental Agreements, Modifications and Amendments, if any, and a copy
of the Application are found following the final section.
NOTICE OF ANNUAL MEETING
Our annual meeting for the election of directors and the transaction of
other business is held each year at our Home Office in St. Louis, Missouri.
The meeting is at 9:00 a.m. on the fourth Tuesday in January. We are a
mutual company owned by our policyowners. Each policyowner is entitled to
vote at such elections and to participate in such meetings.
0.02
<PAGE> 3
CONTRACT SPECIFICATIONS
CONTRACT NO.:
CONTRACT OWNER:
PARTICIPANT'S NAME:
PARTICIPANT'S EFFECTIVE DATE:
ANNUITY COMMENCEMENT DATE:
AGE AT ISSUE:
CERTIFICATE NO.:
GENERAL ACCOUNT MAXIMUM WITHDRAWAL PERCENTAGE LIMIT: 25%
An Annuity based on the value of your accumulation on the date installments
commenced will be paid to you communicant on the Annuity Commencement Date
provided you remain a Participant until that date.
1.01
<PAGE> 4
ENDORSEMENTS
1.02
<PAGE> 5
1. DEFINITIONS
ACCUMULATION UNIT This is an accounting method we use to determine
the value of your contract prior to the Annuity
Commencement Date. This unit will be valued on
each Business Day as of the time of the closing of
the New York Stock Exchange.
ANNUITANT A Participant who is receiving annuity
installments under this contract.
ANNUITY This is a series of installments provided under
this contract for a Participant by application of
the dollar value of Accumulation Units in his
individual account.
ANNUITY This is the date upon which annuity installments
COMMENCEMENT begin, as elected by the Participant.
DATE
ANNUITY UNIT An accounting method used to determine the amount
payable to an Annuitant on and after the Annuity
Commencement Date. This unit will be valued on
each Business Day as of the time of the closing of
the New York Stock Exchange.
BUSINESS DAY This is a day on which both we and the New York
Stock Exchange are open for business. Each
Business Day ends at the time the New York Stock
Exchange closes.
CONTRACT OWNER Is shown on the Certificate Specifications page.
FUND One of the installment portfolios of General
American Capital Company.
GENERAL ACCOUNT An account which consists of all assets of the
company other than those in the Divisions of
Separate Account No. 2 or any other segregated
investment account.
GENERAL AMERICAN A company we control which is registered with the
CAPITAL COMPANY Securities and Exchange Commission of the U.S.
government as an investment management company.
PARTICIPANT The person shown on the Certificate Specifications
page.
PLAN An arrangement whereby individual certificates are
issued to certain 501 (c)3 organizations and
school districts.
SEPARATE ACCOUNT A unit investment trust entitled Separate Account
No. 2 established by us in accordance with
Missouri law.
WE, US, AND OUR General American Life Insurance Company.
YOU, YOUR The owner of this certificate.
VALUATION A valuation period for the Assets in Divisions of
OF ASSETS Separate Account No. 2 is the period between
successive Business Days. It begins at the close of
business each Business Day and ends at the close of
business of the next succeeding Business Day.
3.01
<PAGE> 6
2. ACCUMULATION PROVISIONS
NET STIPULATED We will first deduct from any payment the premium
PAYMENTS for any benefits provided by a supplemental
agreement and the remainder shall be the net
stipulated payment.
ALLOCATION OF The net stipulated payment will be allocated among
STIPULATED the various Divisions of Separate Account No. 2 and
PAYMENTS the General Account in the proportion elected by
the Contract Owner. The Separate Account No. 2 is a
separate investment account created by us to
receive premiums for this certificate. Separate
Account No. 2 has several Divisions, which
correspond to various Funds offered by General
American Capital Company. Each Fund represents a
different investment portfolio, and is described
in the prospectus for General American Capital
Company; the General Account consists of all of
our assets other than those in Separate Account
No. 2 or any other segregated investment account.
The Participant may elect an allocation to any of
the Divisions of Separate Account No. 2 of between
0 percent and 100 percent of each payment in
multiples of 1 percent. The balance will be
allocated to the General Account, provided that
the amount allocated to any Fund or the General
Account must be at least $25.00. The allocation
percentage may be changed with respect to future
stipulated payments by written notice submitted to
the Home Office with the proposed payment. The
minimum stipulated payment to a participant's
account is $25.00.
ACCUMULATION The number of Accumulation Units credited to each
UNITS Division of Separate Account No. 2 is determined by
dividing the portion of the net stipulated payment
for that Division of Separate Account No. 2 by the
Accumulation Unit value for that Division of
Separate Account No. 2 next determined after
receipt of the payment at our Home Office. The
number of Accumulation Units so determined will not
be affected by any subsequent changes in the values
of the Accumulation Units. In the General Account
the Accumulation Unit value will increase at a rate
not less than the guaranteed rate, and in the
Division of Separate Account No. 2 the
accumulation unit values may increase or decrease
from day to day.
The initial value of each Division in Separate
Account No. 2's Accumulation Unit was established
at $10.00 as of the end of the Business Day on
October 1,1987. This value may increase or
decrease from day to day based on investment
results. The value of a General Account
Accumulation Unit was established at $10.00 as of
the end of the Business Day on April 1, 1982. The
value of the respective Accumulation Unit is
determined at the end of any later Business Day.
The value is determined by multiplying the
Accumulation Unit value for the end of the
immediately preceding Business Day by the Net
Investment Factor for such later Business Day.
NET INVESTMENT The General Account Net Investment Factor for any
FACTOR Business Day is 1.00% plus a rate of investment
income declared in advance by the Board of
Directors, but such rate is guaranteed to be not
less than the equivalent of 4 percent per annum
compounded annually.
For all of the Division of Separate Account No. 2,
the Net Investment Factor is calculated each
Business Day and reflects the change in value of
the assets in each Division of Separate Account
No. 2 since the previous Business Day, minus a
charge for taxes, investment management services,
and mortality and expense rate guarantees.
VALUATION OF Assets in all of the Divisions of Separate Account
ASSETS No. 2 will be valued at the end of each Business
Day at their fair market value or, where there is
no readily available market, at their fair value as
determined by us. Direct expenses involved in the
purchase or sale of assets for a Division of
Separate Account No. 2 will be included in such
valuation.
4.01
<PAGE> 7
PARTIAL WITHDRAWAL Subject to the provisions of the plan, the
Contract Owner may make a partial withdrawal of
the accumulation from any of the Divisions of
Separate Account No. 2 or the General Account upon
our receipt of a satisfactory written request at
our Home Office prior to the Annuity Commencement
Date and prior to your death. Unless you tell us
otherwise in the request, the withdrawal will be
made based on the current allocation of
contributions to the General Account and the
Division of Separate Account No. 2. The amount of
the withdrawal will be deducted from the
accumulated value of the Fund or the General
Account as of the date of withdrawal and a
withdrawal charge may be deducted from your
accumulated value. (See Contingent Deferred Sale
Charge below.)
CASH SURRENDER Subject to the provisions of the plan, the
Contract Owner may surrender this contract for its
Net Accumulated Value. During the first nine
contract years, we shall deduct a surrender charge
from the accumulated value of the contract as of
the date of surrender. (See Contingent Deferred
Sales Charge.) We may defer payment of the Net
Accumulated Value for a period of six months.
CONTINGENT Upon surrender of the contract or partial
DEFERRED withdrawal of funds on deposit, General
SALES CHARGE American will apply a contingent deferred sales
charge. Charges for partial withdrawal will be
deducted from the individual's account value
remaining after the distribution of the partial
withdrawal (i.e., the total amount deducted from
the individual's account value will be a
combination of the amount paid to the individual
plus the charge). In the case of a full
surrender, the surrender charge is deducted from
the amount paid to the Contract Owner. The
contingent deferred sales charge will never be
more than the lesser of 9% of total net
contributions to the contract or the percentage of
the amount received by the Contract Owner or
participant shown in the following schedule:
<TABLE>
<CAPTION>
Participant's
Individual Account Surrender/Withdrawal
Contract Year Charges
<C> <C>
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9 1%
</TABLE>
There will be no contingent deferred sales charge
after the ninth contract year. In addition,
contingent deferred sales charges are not applied in
the event of death, or disability, while this
contract is in force, or annuitization after five
contract years. If you are within the nine year
deferred sales charge period (the first nine contract
years), you may withdraw up to 10% of the account
value per year without incurring a contingent
deferred sales charge.
The contingent deferred sales charge will be allocated
pro rata among the Divisions of Separate Account No. 2
and the General Account based on the values held in
the Divisions of Separate Account No. 2 and the
General Account prior to surrender.
3. TRANSFERS
You may transfer amounts as follows:
Between the General Account and one or more of the
Divisions of Separate Account No. 2; or
Among the Divisions of Separate Account No. 2.
4.02
<PAGE> 8
These transfers will be subject to the following
rules:
We must receive a written request for transfer.
Transfers from or among the Divisions of Separate
Account No. 2 may be made at anytime and must be at
least $100.00 or the entire amount of a Division,
if smaller.
Transfers from the General Account to Separate
Account No. 2 may be made once each year on the
contract's anniversary date and must be at least
$100.00. The maximum allowable shall be a
percentage, as set forth on the Certificate
Specifications page, of the contract accumulated
value on the prior contract anniversary.
We may revoke or modify the transfer privilege at any
time, including the minimum amount for a transfer and
the transfer charge, if any.
4. ADDITION, DELETION, OR SUBSTITUTION OF
INVESTMENTS
We reserve the right, as far as the law allows, to make
additions to, deletions from, or substitutions for the
shares of a Fund that are held by Separate Account
No. 2 or that Separate Account No. 2 may purchase. We
reserve the right to eliminate the shares of any of
the Funds of General American Capital Company and to
substitute shares of another Fund of General American
Capital Company or of another registered open-end
investment company, if the shares or Funds are no
longer available for investment or if in our
judgement, further investment in any Fund should
become inappropriate in view of the purpose of the
contract. We will not substitute any shares
attributable to the owner's interest in a Division of
Separate Account No. 2 without at least 30 days
notice to the owner and prior approval of the
Securities and Exchange Commission, to the extent
required by the Investment Company Act of 1940. This
will not prevent Separate Account No. 2 from
purchasing other securities for other series or
classes of contracts, or from permitting conversion
between series or classes of contracts on the basis
of requests made by owners.
We reserve the right to establish additional Divisions
of Separate Account No. 2, each of which would invest
in a new Fund of General American Capital Company or
in shares of another open-end investment company and
to make such Divisions available to whatever class or
series of contracts we choose. We also reserve the
right to eliminate or combine existing Divisions of
Separate Account No. 2 or to transfer assets between
Divisions.
If we consider it to be in the best interest of the
Participants having voting privileges under the
certificate, Separate Account No. 2 may be operated as
a management company under the Investment Company Act
of 1940. It may be deregistered under that Act in the
event registration is no longer required. It may be
combined with other separate accounts, or its assets
may be transferred to other separate accounts.
4.03
<PAGE> 9
5. ANNUITY PROVISIONS
ANNUITY OPTIONS (See Annuity Option Tables at the end of this
certificate.) At the maturity of this certificate, the
proceeds may be placed under any of the following
options:
OPTION 1. LIFE ANNUITY. We will pay a monthly
income during a Participant's lifetime.
The income will cease with the last
installment preceding the death of the
Participant.
OPTION 2. LIFE ANNUITY WITH 60, 120, 180, OR 240
MONTHLY INSTALLMENTS GUARANTEED. We will
pay a monthly income during a
Participant's lifetime with the
guarantee that if, at death of the
Participant, installments have been made
for less than 60 months, 120 months, 180
months, or 240 months, as elected,
installments will be continued to the
beneficiary during the remainder of the
elected period.
OPTION 3. UNIT REFUND LIFE ANNUITY. We will pay a
monthly income during a Participant's
lifetime that will cease with the last
installment due prior to the death of
that Participant, with the guarantee
that, at the death of the payee, the
beneficiary will receive an additional
payment of the dollar value of the
number of Annuity Units equal to the
excess, if any, of (a) over (b) where (a)
is the total applied under the option
divided by the Annuity Unit value at the
Annuity Commencement Date and (b) is the
number of Annuity Units represented by
each installment multiplied by the
number of installments made. Such dollar
value will be determined by multiplying
the above number of Annuity Units by the
Annuity Unit value on the Business Day
coincident with or next following the
date on which written notice of death is
received by us at our Home Office.
OPTION 4. JOINT AND SURVIVOR INCOME FOR LIFE. We
will pay monthly installments jointly to
two payees if both are living when the
installments become payable. The
Annuitant will be designated as primary
payee. Full installments will continue
so long as the primary payee is living.
If the primary payee dies after
installments begin, full installments or
installments of 1/2 or 2/3, (whichever
you elected when applying for this
option) will continue to the other payee
during his or her lifetime.
OPTION 5. INCOME FOR A FIXED PERIOD. We will pay
the proceeds in equal installments over
a period of from 3 to 30 years. The
amount of each installment will be based
upon the period and the frequency of the
installments selected from Option 5
Table.
OPTION 6. INCOME OF A FIXED AMOUNT. We will pay the
proceeds in equal installments in the
amount and at the intervals agreed upon
until the proceeds applied under this
option, with interest credited at the
current annual rate, are exhausted. The
final installment will be for the then
remaining balance only. At anytime the
current payee may withdraw the remaining
balance in a single payment.
ALLOCATION OF At the time election of one of the annuity options is
ANNUITY made, the Participant electing the option may further
elect to have the Annuity purchased in the form of a
Variable Annuity, a Guaranteed Annuity, or a
combination of both. If no election is made to the
contrary on these options, that portion of the
accumulated value in the Divisions of Separate
Account No. 2 will be applied to provide a Variable
Annuity account and that portion in the General
Account will be applied to provide a Guaranteed
Annuity.
We guarantee that the dollar amounts of variable
annuity benefits will not be adversely affected by
our actual expense and mortality results.
5.01
<PAGE> 10
ANNUITY UNIT The value of an Annuity Unit in a Division of Separate
VALUE Account No. 2 Annuity Unit was established at $10.00
as of the end of the Business Day on October 1,1987.
This value may increase or decrease from day to day
based on investment results. The value of a General
Account Annuity Unit was established at $10.00 as of
the end of the Business Day on April 1,1982. The
value of the respective Annuity in each account at
the end of any subsequent Business Day is determined
by multiplying such value for the end of the
immediately preceding Business Day by the product of
(a) a daily discount factor to neutralize the assumed
interest rate of 4%, and (b) the net investment
factor for the account for the fifth Business Day
preceding such Business Day.
DETERMINATION The tables at the end of this certificate show the
OF FIRST dollar amount of the first monthly Annuity
PAYMENT installment for each $1,000 applied after deduction
of any premium taxes not previously deducted. Values
for ages not shown will be furnished by us upon
request. The Accumulation Units applied to effect an
Annuity for you will be at the Accumulation Unit
value as of the fifth Business Day immediately
preceding the date Annuity installments commence.
Under these Annuity options, the amount of each
payment will depend upon the sex and age of you and
your joint Annuitant, if any.
If it would produce a greater first monthly
installment, we will compute the first installment on
the same mortality basis as is used in determining
such installments under individual variable annuity
contracts being issued for a similar class of
Annuitants when the Annuity installments commence.
FREQUENCY OF Annuity installments under this certificate will be
INSTALLMENTS made monthly, except that if at any time the
installments are or become less than $50.00 each we
will have the right to change the frequency of
payment to intervals which will result in
installments of at least $50.00.
5.02
<PAGE> 11
6. GENERAL PROVISIONS
BENEFICIARY You may designate a beneficiary to receive any death
benefit that may become payable upon your death and
may change such designation except in regard to a
contingent annuitant after you have begun to receive
annuity installments under the Joint and Survivor
Income for Life annuity option.
The named contingent payee will be disregarded if
making that person or entity the contingent payee
would prevent treatment of this certificate as an
Annuity for federal income tax purposes. Termination
Upon termination of participation prior to the
Annuity Commencement Date, you may Benefits elect
with respect to your accumulation to:
(a) have the accumulated value applied to provide
Annuity installments under one of the Annuity
options;
(b) leave the accumulated value in the contract to
provide annuity installments at a later date;
(c) receive a cash payment equal to the accumulated
value;
(d) continue participation under an individual
variable annuity contract, if available on the
basis set forth by us at that time.
MISSTATEMENT OF AGE If the date of birth of you or your beneficiary, if
applicable, has been misstated, the amount of your
Annuity income will be adjusted to the amount which
would have been purchased based on the correct date of
birth. Any underpayment(s) as a result of a
misstatement will be paid in one lump sum to the
annuitant. Any overpayment(s) as a result of a
misstatement will be deducted from the current or
succeeding payment(s) due under the contract.
DEFERMENT Any payment from the General Account upon partial
withdrawal or termination of a Participant may be
deferred by us for a period not exceeding six months
after receipt of application, or the maximum period
permitted by law if less than six months.
7. DEATH BENEFIT
If a payee dies on or after the retirement date, any
unpaid certificate proceeds must be paid under the
method of payment being used as of the date of his or
her death.
If you die before the Annuity Commencement Date, this
certificate will no longer be in force. We will pay
your interest in the certificate to the beneficiary in
a lump sum upon receiving proof of your death. This
payment includes interest from the date of death to
the date of settlement at an annual rate determined
by us, but not less than that required by law.
This payment must be made within five (5) years after
the date of your death.
If, however, you or the beneficiary make a written
choice of one of the two options described below,
and if your choice is clear to us, we will treat
the proceeds as you or the beneficiary have
chosen. The two options are:
(i) Leave the proceeds of the certificate with us as
provided under Option 6 of the Annuity Provisions
section of this certificate. Any amount remaining
unpaid under Option 6 will, however, be paid in a
lump sum to the beneficiary before the end of the
fifth year after your death.
(ii) Buy an immediate Annuity for the beneficiary, who
will be the owner and Annuitant. Payments under
the Annuity, or under any other method of payment
we make available, must be for the life of the
beneficiary, or for a number of years that is not
more than the life expectancy of the beneficiary
at the time of your death (as determined for
federal tax purposes), and must begin within one
year after your death.
However, if you die before the Annuity Commencement
Date and your spouse is the beneficiary, no proceeds
will be paid to him or her, instead, this certificate
continues with your surviving spouse as the new owner.
If no beneficiary survives you and you die before the
Annuity Commencement Date, payment of the proceeds
will be made in a lump sum to your estate.
6.01
<PAGE> 12
<TABLE>
ANNUITY OPTION TABLES
FOR EACH $1,000
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
OPTION 1 OPTION 2 OPTION 3 OPTION 5
- -----------------------------------------------------------------------------------------------------------------------------
AGE OF LIFE 60 MONTHS 120 MONTHS 180 MONTHS 240 MONTHS UNIT INCOME FOR A
PAYEE ANNUITY GUARANTY GUARANTY GUARANTY GUARANTY REFUND FIXED PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
YEARS MONTHLY
CERTAIN INSTALLMENTS
-------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $ 4.27 $ 4.26 $4.25 $4.23 $4.20 $4.17
46 4.31 4.31 4.30 4.27 4.24 4.21
47 4.36 4.36 4.34 4.31 4.27 4.25
48 4.42 4.41 4.39 4.36 4.32 4.29 3 $29.39
49 4.47 4.46 4.44 4.41 4.36 4.34 4 22.47
- -----------------------------------------------------------------------------------------------------------------------------
50 4.53 4.52 4.50 4.46 4.40 4.38 5 18.32
51 4.59 4.58 4.55 4.51 4.45 4.43 6 15.56
52 4.65 4.64 4.61 4.56 4.50 4.48 7 13.59
53 4.72 4.71 4.67 4.62 4.55 4.53 8 12.11
54 4.79 4.77 4.74 4.68 4.60 4.59 9 10.97
- -----------------------------------------------------------------------------------------------------------------------------
55 4.86 4.85 4.81 4.74 4.65 4.64 10 10.06
56 4.94 4.92 4.88 4.80 4.71 4.70 11 9.31
57 5.02 5.00 4.95 4.87 4.76 4.76 12 8.69
58 5.10 5.08 5.03 4.94 4.82 4.83 13 8.17
59 5.19 5.17 5.11 5.01 4.88 4.90 14 7.72
- -----------------------------------------------------------------------------------------------------------------------------
60 5.29 5.26 5.20 5.09 4.94 4.97 15 7.34
61 5.39 5.36 5.29 5.17 5.00 5.04 16 7.00
62 5.49 5.47 5.38 5.25 5.06 5.12 17 6.70
63 5.61 5.58 5.48 5.33 5.12 5.21 18 6.44
64 5.73 5.70 5.59 5.42 5.18 5.29 19 6.21
- -----------------------------------------------------------------------------------------------------------------------------
65 5.86 5.82 5.70 5.51 5.24 5.39 20 6.00
66 6.00 5.96 5.82 5.60 5.31 5.48 21 5.81
67 6.15 6.10 5.95 5.69 5.37 5.58 22 5.64
68 6.32 6.26 6.08 5.79 5.43 5.69 23 5.49
69 6.49 6.42 6.21 5.89 5.48 5.80 24 5.35
- -----------------------------------------------------------------------------------------------------------------------------
70 6.68 6.60 6.35 5.98 5.54 5.92 25 5.22
71 6.88 6.78 6.50 6.08 5.59 6.04 26 5.10
72 7.09 6.98 6.65 6.18 5.64 6.17 27 4.99
73 7.31 7.18 6.81 6.28 5.69 6.30 28 4.89
74 7.56 7.40 6.97 6.37 5.73 6.44 29 4.80
- -----------------------------------------------------------------------------------------------------------------------------
75 7.82 7.64 7.14 6.47 5.77 6.59 30 4.72
76 8.09 7.88 7.31 6.55 5.81 6.74
77 8.39 8.14 7.48 6.64 5.84 6.91
78 8.71 8.41 7.65 6.72 5.87 7.07
79 9.05 8.70 7.83 6.80 5.89 7.25
- -----------------------------------------------------------------------------------------------------------------------------
80 9.41 9.00 8.00 6.87 5.91 7.44
81 9.81 9.32 8.17 6.93 5.93 7.63
82 10.23 9.65 8.34 6.99 5.95 7.83
83 10.68 9.99 8.50 7.05 5.96 8.05
84 11.16 10.35 8.66 7.10 5.97 8.28
- -----------------------------------------------------------------------------------------------------------------------------
85 & 11.68 10.72 8.81 7.14 5.98 8.49
OVER
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The mortality table used in computing annuity options under this contract is
the 1983 Individual Annuity Mortality Table.
7.01
<PAGE> 13
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- -------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOlNT AND EQUAL TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- -------------------------------------------------------------------------------------------------------
45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $3.99 $4.01 $4.03 $4.05 $4.08 $4.10 $4.12 $4.14 $4.15 $4.17 $4.19
51 4.01 4.03 4.05 4.07 4.09 4.11 4.14 4.16 4.18 4.20 4.22
52 4.02 4.04 4.07 4.09 4.11 4.13 4.16 4.18 4.20 4.22 4.24
53 4.03 4.06 4.08 4.10 4.13 4.15 4.18 4.20 4.22 4.25 4.27
54 4.04 4.07 4.09 4.12 4.15 4.17 4.20 4.22 4.25 4.27 4.30
- -------------------------------------------------------------------------------------------------------
55 4.06 4.08 4.11 4.13 4.16 4.19 4.22 4.24 4.27 4.30 4.32
56 4.07 4.09 4.12 4.15 4.18 4.21 4.23 4.26 4.29 4.32 4.35
57 4.08 4.11 4.13 4.16 4.19 4.22 4.25 4.28 4.31 4.34 4.37
58 4.09 4.12 4.15 4.18 4.21 4.24 4.27 4.30 4.33 4.37 4.40
59 4.10 4.13 4.16 4.19 4.22 4.25 4.29 4.32 4.35 4.39 4.42
- -------------------------------------------------------------------------------------------------------
60 4.11 4.14 4.17 4.20 4.24 4.27 4.30 4.34 4.37 4.41 4.45
61 4.11 4.15 4.18 4.21 4.25 4.28 4.32 4.36 4.39 4.43 4.47
62 4.12 4.16 4.19 4.23 4.26 4.30 4.33 4.37 4.41 4.45 4.49
63 4.13 4.16 4.20 4.24 4.27 4.31 4.35 4.39 4.43 4.47 4.51
64 4.14 4.17 4.21 4.25 4.28 4.32 4.36 4.40 4.45 4.49 4.53
- -------------------------------------------------------------------------------------------------------
65 4.15 4.18 4.22 4.26 4.30 4.34 4.38 4.42 4.46 4.51 4.55
66 4.15 4.19 4.23 4.27 4.31 4.35 4.39 4.43 4.48 4.53 4.57
67 4.16 4.20 4.23 4.27 4.32 4.36 4.40 4.45 4.49 4.54 4.59
68 4.16 4.20 4.24 4.28 4.32 4.37 4.41 4.46 4.51 4.56 4.61
69 4.17 4.21 4.25 4.29 4.33 4.38 4.42 4.47 4.52 4.57 4.63
- -------------------------------------------------------------------------------------------------------
70 4.18 4.21 4.26 4.30 4.34 4.39 4.43 4.48 4.53 4.59 4.64
71 4.18 4.22 4.26 4.30 4.35 4.40 4.44 4.49 4.55 4.60 4.66
72 4.19 4.23 4.27 4.31 4.36 4.40 4.45 4.50 4.56 4.61 4.67
73 4.19 4.23 4.27 4.32 4.36 4.41 4.46 4.51 4.57 4.63 4.68
74 4.19 4.24 4.28 4.32 4.37 4.42 4.47 4.52 4.58 4.64 4.70
- -------------------------------------------------------------------------------------------------------
75 4.20 4.24 4.28 4.33 4.38 4.43 4.48 4.53 4.59 4.65 4.71
- -------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------
56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.21 $4.23 $4.24 $4.26 $4.20 $4.29 $4.31 $4.32 $4.34 $4.35
51 4.24 4.26 4.20 4.29 4.31 4.33 4.34 4.36 4.38 4.39
52 4.27 4.29 4.31 4.33 4.35 4.36 4.38 4.40 4.42 4.43
53 4.29 4.32 4.34 4.36 4.38 4.40 4.42 4.44 4.46 4.47
54 4.32 4.35 4.37 4.39 4.41 4.44 4.46 4.48 4.50 4.52
- ----------------------------------------------------------------------------------------------
55 4.35 4.37 4.40 4.43 4.45 4.47 4.50 4.52 4.54 4.56
56 4.38 4.40 4.43 4.46 4.48 4.51 4.54 4.56 4.58 4.61
57 4.40 4.43 4.46 4.49 4.52 4.55 4.57 4.60 4.63 4.65
58 4.43 4.46 4.49 4.52 4.55 4.58 4.61 4.64 4.67 4.70
59 4.46 4.49 4.52 4.56 4.59 4.62 4.65 4.69 4.72 4.75
- ----------------------------------------------------------------------------------------------
60 4.48 4.52 4.55 4.59 4.62 4.66 4.69 4.73 4.76 4.79
61 4.51 4.54 4.58 4.62 4.66 4.70 4.73 4.77 4.81 4.84
62 4.53 4.57 4.61 4.65 4.69 4.73 4.77 4.81 4.85 4.89
63 4.55 4.60 4.64 4.68 4.73 4.77 4.81 4.85 4.90 4.94
64 4.58 4.62 4.67 4.71 4.76 4.80 4.85 4.90 4.94 4.99
- ----------------------------------------------------------------------------------------------
65 4.60 4.65 4.69 4.74 4.79 4.84 4.89 4.94 4.99 5.03
66 4.62 4.67 4.72 4.77 4.82 4.87 4.93 4.98 5.03 5.08
67 4.64 4.69 4.75 4.80 4.85 4.91 4.96 5.02 5.07 5.13
68 4.66 4.71 4.77 4.83 4.88 4.94 5.00 5.06 5.12 5.18
69 4.68 4.74 4.79 4.85 4.91 4.97 5.03 5.10 5.16 5.22
- ----------------------------------------------------------------------------------------------
70 4.70 4.76 4.81 4.88 4.94 5.00 5.07 5.13 5.20 5.27
71 4.71 4.77 4.84 4.90 4.96 5.03 5.10 5.17 5.24 5.31
72 4.73 4.79 4.86 4.92 4.99 5.06 5.13 5.20 5.28 5.35
73 4.75 4.81 4.87 4.94 5.01 5.09 5.16 5.24 5.31 5.39
74 4.76 4.82 4.89 4.96 5.03 5.11 5.19 5.27 5.35 5.43
- ----------------------------------------------------------------------------------------------
75 4.77 4.84 4.91 4.98 5.06 5.13 5.21 5.30 5.38 5.47
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOINT AND ONE-HALF TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- -------------------------------------------------------------------------------------------------------
45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.24 $4.26 $4.27 $4.28 $4.29 $4.30 $4.31 $4.32 $4.33 $4.34 $4.35
51 4.28 4.29 4.30 4.31 4.33 4.34 4.35 4.36 4.37 4.38 4.40
52 4.31 4.33 4.34 4.35 4.36 4.38 4.39 4.40 4.41 4.43 4.44
53 4.35 4.36 4.38 4.39 4.40 4.42 4.43 4.44 4.46 4.47 4.48
54 4.38 4.40 4.41 4.43 4.44 4.46 4.47 4.49 4.50 4.51 4.53
- -------------------------------------------------------------------------------------------------------
55 4.42 4.44 4.45 4.47 4.48 4.50 4.51 4.53 4.55 4.56 4.58
56 4.46 4.48 4.49 4.51 4.52 4.54 4.56 4.57 4.59 4.61 4.62
57 4.50 4.52 4.53 4.55 4.57 4.59 4.60 4.62 4.64 4.66 4.67
58 4.54 4.56 4.57 4.59 4.61 4.63 4.65 4.67 4.69 4.70 4.72
59 4.58 4.60 4.62 4.64 4.66 4.68 4.70 4.72 4.74 4.76 4.78
- -------------------------------------------------------------------------------------------------------
60 4.62 4.64 4.66 4.68 4.70 4.72 4.74 4.77 4.79 4.81 4.83
61 4.67 4.69 4.71 4.73 4.75 4.77 4.79 4.82 4.84 4.86 4.88
62 4.71 4.73 4.75 4.78 4.80 4.82 4.85 4.87 4.89 4.92 4.94
63 4.76 4.78 4.80 4.83 4.85 4.87 4.90 4.92 4.95 4.98 5.00
64 4.81 4.83 4.85 4.88 4.90 4.93 4.95 4.98 5.01 5.03 5.06
- -------------------------------------------------------------------------------------------------------
65 4.86 4.88 4.91 4.93 4.96 4.98 5.01 5.04 5.07 5.10 5.13
66 4.91 4.93 4.96 4.99 5.01 5.04 5.07 5.10 5.13 5.16 5.19
67 4.96 4.99 5.02 5.05 5.07 5.10 5.13 5.16 5.19 5.23 5.26
68 5.02 5.05 5.08 5.10 5.13 5.17 5.20 5.23 5.26 5.30 5.33
69 5.08 5.11 5.14 5.17 5.20 5.23 5.26 5.30 5.33 5.37 5.40
- -------------------------------------------------------------------------------------------------------
70 5.14 5.17 5.20 5.23 5.26 5.30 5.33 5.36 5.40 5.44 5.48
71 5.20 5.23 5.26 5.29 5.33 5.36 5.40 5.44 5.47 5.51 5.55
72 5.26 5.29 5.33 5.36 5.40 5.43 5.47 5.51 5.55 5.59 5.63
73 5.33 5.36 5.39 5.43 5.47 5.50 5.54 5.58 5.62 5.67 5.71
74 5.39 5.43 5.46 5.50 5.54 5.58 5.62 5.66 5.70 5.75 5.79
- -------------------------------------------------------------------------------------------------------
75 5.46 5.50 5.53 5.57 5.61 5.65 5.69 5.74 5.78 5.83 5.88
- -------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------
56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.36 $4.37 $4.38 $4.39 $4.40 $4.41 $4.42 $4.42 $4.43 $4.44
51 4.41 4.42 4.43 4.44 4.45 4.45 4.46 4.47 4.48 4.49
52 4.45 4.46 4.47 4.48 4.49 4.50 4.51 4.52 4.53 4.54
53 4.50 4.51 4.52 4.53 4.54 4.55 4.56 4.57 4.58 4.59
54 4.54 4.56 4.57 4.58 4.59 4.61 4.62 4.63 4.64 4.65
- ----------------------------------------------------------------------------------------------
55 4.59 4.60 4.62 4.63 4.65 4.66 4.67 4.68 4.69 4.71
56 4.64 4.65 4.67 4.68 4.70 4.71 4.73 4.74 4.75 4.77
57 4.69 4.71 4.72 4.74 4.75 4.77 4.79 4.80 4.81 4.83
58 4.74 4.76 4.78 4.80 4.81 4.83 4.85 4.86 4.88 4.89
59 4.80 4.81 4.83 4.85 4.87 4.89 4.91 4.93 4.94 4.96
- ----------------------------------------------------------------------------------------------
60 4.85 4.87 4.89 4.91 4.93 4.95 4.97 4.99 5.01 5.03
61 4.91 4.93 4.95 4.97 5.00 5.02 5.04 5.06 5.08 5.10
62 4.97 4.99 5.01 5.04 5.06 5.09 5.11 5.13 5.15 5.17
63 5.03 5.05 5.08 5.10 5.13 5.16 5.18 5.20 5.23 5.25
64 5.09 5.12 5.14 5.17 5.20 5.23 5.25 5.28 5.31 5.33
- ----------------------------------------------------------------------------------------------
65 5.15 5.18 5.21 5.24 5.27 5.30 5.33 5.36 5.39 5.42
66 5.22 5.25 5.29 5.32 5.35 5.38 5.41 5.44 5.47 5.51
67 5.29 5.33 5.36 5.39 5.43 5.46 5.50 5.53 5.56 5.60
68 5.36 5.40 5.44 5.47 5.51 5.54 5.58 5.62 5.65 5.69
69 5.44 5.48 5.51 5.55 5.59 5.63 5.67 5.71 5.75 5.79
- ----------------------------------------------------------------------------------------------
70 5.51 5.55 5.59 5.64 5.68 5.72 5.76 5.80 5.85 5.89
71 5.59 5.64 5.68 5.72 5.77 5.81 5.86 5.90 5.95 5.99
72 5.67 5.72 5.76 5.81 5.86 5.90 5.95 6.00 6.05 6.10
73 5.76 5.80 5.85 5.90 5.95 6.00 6.05 6.10 6.16 6.21
74 5.84 5.89 5.94 5.99 6.04 6.10 6.15 6.21 6.26 6.32
- ----------------------------------------------------------------------------------------------
75 5.93 5.98 6.03 6.08 6.14 6.20 6.26 6.31 6.38 6.44
- ----------------------------------------------------------------------------------------------
</TABLE>
7.02
<PAGE> 14
<TABLE>
ANNUITY OPTION TABLES (CONTD)
FOR EACH $1,000
- -------------------------------------------------------------------------------------------------------
OPTION 4-MONTHLY INSTALLMENTS-JOlNT AND TWO-THIRDS TO SECONDARY PAYEE
- -------------------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- -------------------------------------------------------------------------------------------------------
45 46 47 48 49 50 51 52 53 54 55
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.16 $4.17 $4.19 $4.20 $4.22 $4.23 $4.24 $4.26 $4.27 $4.29 $4.30
51 4.18 4.20 4.21 4.23 4.25 4.26 4.20 4.29 4.31 4.32 4.33
52 4.21 4.23 4.24 4.26 4.28 4.29 4.31 4.33 4.34 4.36 4.37
53 4.24 4.25 4.27 4.29 4.31 4.33 4.34 4.36 4.38 4.39 4.41
54 4.26 4.28 4.30 4.32 4.34 4.36 4.38 4.39 4.41 4.43 4.45
- -------------------------------------------------------------------------------------------------------
55 4.29 4.31 4.33 4.35 4.37 4.39 4.41 4.43 4.45 4.47 4.49
56 4.32 4.34 4.36 4.38 4.40 4.42 4.44 4.47 4.49 4.51 4.63
57 4.35 4.37 4.39 4.41 4.44 4.46 4.48 4.50 4.52 4.55 4.57
58 4.38 4.40 4.42 4.44 4.47 4.49 4.52 4.54 4.56 4.59 4.61
59 4.41 4.43 4.45 4.48 4.50 4.53 4.55 4.58 4.60 4.63 4.65
- -------------------------------------------------------------------------------------------------------
60 4.44 4.46 4.48 4.51 4.54 4.56 4.59 4.61 4.64 4.67 4.69
61 4.47 4.49 4.52 4.54 4.57 4.60 4.62 4.65 4.68 4.71 4.74
62 4.50 4.52 4.55 4.58 4.61 4.63 4.66 4.69 4.72 4.75 4.78
63 4.53 4.56 4.58 4.61 4.64 4.67 4.70 4.73 4.76 4.79 4.83
64 4.56 4.59 4.62 4.65 4.68 4.71 4.74 4.77 4.81 4.84 4.87
- -------------------------------------------------------------------------------------------------------
65 4.59 4.62 4.65 4.68 4.72 4.75 4.78 4.81 4.85 4.88 4.92
66 4.63 4.66 4.69 4.72 4.75 4.79 4.82 4.86 4.89 4.93 4.97
67 4.66 4.69 4.73 4.76 4.79 4.83 4.86 4.90 4.94 4.98 5.02
68 4.70 4.73 4.76 4.80 4.83 4.87 4.91 4.94 4.98 5.02 5.07
69 4.73 4.77 4.80 4.84 4.87 4.91 4.95 4.99 5.03 5.07 5.12
- -------------------------------------------------------------------------------------------------------
70 4.77 4.81 4.84 4.88 4.91 4.95 4.99 5.03 5.08 5.12 5.17
71 4.81 4.84 4.88 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22
72 4.85 4.88 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27
73 4.89 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32
74 4.92 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37
- -------------------------------------------------------------------------------------------------------
75 4.96 5.00 5.04 5.08 5.13 5.17 5.22 5.27 5.32 5.37 5.43
- -------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
AGE OF
PRIMARY AGE OF SECONDARY PAYEE
PAYEE
- ----------------------------------------------------------------------------------------------
56 57 58 59 60 61 62 63 64 65
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.31 $4.32 $4.34 $4.35 $4.36 $4.37 $4.38 $4.39 $4.40 $4.41
51 4.35 4.36 4.3a 4.39 4.40 4.41 4.42 4.43 4.44 4.45
52 4.39 4.40 4.42 4.43 4.44 4.46 4.47 4.48 4.49 4.50
53 4.43 4.44 4.46 4.47 4.49 4.50 4.51 4.53 4.54 4.55
54 4.47 4.48 4.50 4.52 4.53 4.55 4.56 4.58 4.59 4.60
- ----------------------------------------------------------------------------------------------
55 4.51 4.53 4.54 4.56 4.58 4.60 4.61 4.63 4.64 4.66
56 4.55 4.57 4.59 4.61 4.63 4.64 4.66 4.68 4.70 4.71
57 4.59 4.61 4.63 4.65 4.67 4.69 4.71 4.73 4.75 4.77
58 4.63 4.66 4.68 4.70 4.72 4.74 4.77 4.79 4.81 4.83
59 4.68 4.70 4.73 4.75 4.77 4.80 4.82 4.84 4.86 4.89
- ----------------------------------------------------------------------------------------------
60 4.72 4.75 4.77 4.80 4.83 4.85 4.88 4.90 4.92 4.95
61 4.77 4.79 4.82 4.85 4.88 4.91 4.93 4.96 4.99 5.01
62 4.81 4.84 4.87 4.90 4.93 4.96 4.99 5.02 5.05 5.08
63 4.86 4.89 4.92 4.96 4.99 5.02 5.05 5.08 5.11 5.14
64 4.91 4.94 4.98 5.01 5.04 5.08 5.11 5.15 5.18 5.21
- ----------------------------------------------------------------------------------------------
65 4.96 4.99 5.03 5.07 5.10 5.14 5.18 5.21 5.25 5.28
66 5.01 5.04 5.08 5.12 5.16 5.20 5.24 5.28 5.32 5.36
67 5.06 5.10 5.14 5.18 5.22 5.26 5.31 5.35 5.39 5.43
68 5.11 5.15 5.19 5.24 5.28 5.33 5.37 5.42 5.46 5.51
69 5.16 5.20 5.25 5.30 5.34 5.39 5.44 5.49 5.54 5.59
- ----------------------------------------------------------------------------------------------
70 5.21 5.26 5.31 5.36 5.41 5.46 5.51 5.56 5.61 5.67
71 5.27 5.32 5.37 5.42 5.47 5.52 5.58 5.64 5.69 5.75
72 5.32 5.37 5.43 5.48 5.54 5.59 5.65 5.71 5.77 5.83
73 5.37 5.43 5.48 5.54 5.60 5.66 5.72 5.78 5.85 5.91
74 5.43 5.49 5.54 5.60 5.67 5.73 5.79 5.86 5.93 5.99
- ----------------------------------------------------------------------------------------------
75 5.48 5.54 5.60 5.67 5.73 5.80 5.86 5.93 6.01 6.08
- ----------------------------------------------------------------------------------------------
</TABLE>
7.03
<PAGE> 1
Exhibit 6(b)
AMENDED AND RESTATED CHARTER and ARTICLES OF INCORPORATION
of GENERAL AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
The name of the Company shall continue to be General
American Life Insurance Company.
ARTICLE II
The principal office of the Company shall continue to be
located at 700 Market Street in the City of St. Louis, in the
State of Missouri.
ARTICLE III
The Company is incorporated for the purpose of making
insurance upon the lives of individuals and every assurance
pertaining thereto or connected therewith, to grant, purchase
and dispose of annuities and endowments of every kind and
description whatsoever, to provide an indemnity against death
and for weekly or other periodic indemnity for disability
occasioned by accident or sickness to the person of the
assured and to have all the further rights, powers and
privileges granted or permitted life insurance companies
organized under the provisions of Chapter 376 R.S.Mo., and all
Acts amendatory thereof or additional thereto.
ARTICLE IV
The Company was originally organized as a domestic stock
and mutual life insurance Company in 1933 and, in a process
initiated in 1936, converted to a mutual Company with no
capital stock. Pursuant to a Plan of Reorganization (the
"Plan") adopted by the Company as of 26 September 1996, and
in accordance with Senate Bill No. 759 as enacted by the 1996
Session of the 88th General Assembly of the State of Missouri
(Section 376.1300 et seq. R.S.Mo.)(the "MHC Statute"), the
Company converted to a stock form life insurance Company,
without members, and each member of the Company immediately
prior to the consummation of the reorganization described in
the Plan became, automatically by operation of law, a member
of General American Mutual Holding Company in accordance with
the provisions of the Articles of Incorporation and By-laws
of General American Mutual Holding Company and the MHC
Statute.
<PAGE> 2
The aggregate number of shares of stock that the Company
shall be authorized to issue shall be thirty thousand (30,000)
shares of common stock, with par value of one dollar ($1.00)
per share.
No holder of stock of the Company shall be entitled as
a matter of right to subscribe for or purchase any part of any
new or additional issue of stock, or securities convertible
into stock, of any class whatsoever, whether now or hereafter
authorized, and all such additional shares of stock or other
securities convertible into stock may be issued and disposed
of by the Board of Directors to such person or persons and on
such terms and for such consideration (so far as may be
permitted by law) as the Board of Directors, in its absolute
discretion, may deem advisable.
The Company shall be a continuation of the original
corporation of the same name whose first Certificate of
Authority to transact a life insurance business was granted
by the Superintendent of the Insurance Department on the 5th
day of September, 1933.
ARTICLE V
The corporate powers of the Company shall be vested in
a Board of Directors and shall be exercised by the Board and
by such officers, agents, employees and committees, including
an Advisory Committee, as the Board may, in its discretion,
from time to time appoint and empower. The Board shall have
the power from time to time to make, amend or repeal such By-
laws, rules and regulations for the transaction of the
business of the Company as the Board may deem expedient and
as are not inconsistent with this Amended and Restated Charter
and Articles of Incorporation or the constitution or other
laws of the State of Missouri. The Company shall have
perpetual succession for a term of nine hundred ninety-nine
(999) years.
ARTICLE VI
The Board of Directors shall consist of not less than
nine (9) and not more than fifteen (15) persons elected as
hereinafter provided. At least one Director shall be a
citizen and resident of the state of Missouri, and a majority
of the Directors shall be policyholders of the Company.
Meetings of the Board of Directors shall be held at such time
and place and upon such notice as shall be pre-
<PAGE> 3
scribed by the By-laws of the Company. Vacancies in the Board
of Directors may be filled by the shareholders at any regular
meeting or at any special meeting called for that purpose, or
by vote of a majority of Directors present at any regular or
special meeting. Vacancies occasioned by death, resignation
or disqualification when filled shall be filled for the
unexpired term for which such Director was elected. Any
Director elected by the Board to fill a vacancy shall have the
same qualifications required of the Director whose place he or
she takes. A majority of the members of the Board of
Directors, or such greater number thereof as may from time to
time be provided for in the By-laws of the Company, shall
constitute a quorum for the transaction of business, but a
smaller number may meet and adjourn from time to time until a
quorum is present.
ARTICLE VII
The incumbent members of the Board of Directors shall
continue to be Directors of the Company until their respective
terms have expired or until their successors are duly elected
and qualified. New Directors will be elected by class so as
to equalize as nearly as possible the number in each class of
Directors. There shall continue to be three classes of
Directors, each class serving for a three year term expiring
one year after expiration of the term of the immediately
preceding class (effective at the annual meeting of the
Company for the year in which the term expires), so that the
term of one class will expire each year. Each Director shall
serve during the term for which he or she was elected or until
a successor is duly elected and qualified and nothing in this
Amended and Restated Charter and Articles of Incorporation
shall be interpreted to prevent a Director whose term is
expiring from being eligible for re-election.
ARTICLE VIII
The annual meeting of the Company shall be held at the
office of the Company in the City of St. Louis, State of
Missouri, on the fourth Thursday in April in each year or at
such other place as may be selected by the Board of Directors
and shall be held at such time as shall be selected by the
Board of Directors or as provided in the By-laws of the
Company. Special meetings of the Company shall be called at
any time by the vote of a majority of the entire number of the
members of the Board of Directors, or upon the written request
of five percent of those share-
<PAGE> 4
holders of the Company eligible to vote at such meeting, which
request shall specify the matters proposed to be acted upon.
Notice of any annual or special meeting shall be given in the
manner provided in the By-laws.
Each outstanding share of stock shall be entitled to one
vote upon each matter submitted to a vote at any annual or
special meeting of the Company. On all propositions which
shall be submitted for decision at any annual or special
meeting of the Company, such matter shall be decided by the
vote of the majority of the shares voting at such meeting.
ARTICLE IX
The policyholders of the Company shall benefit in the
earnings and profits of the Company in such manner as shall
be determined from time to time by the Board of Directors
under the laws of the State of Missouri, and particularly
Section 376.360 R.S.Mo. and all Acts amendatory thereof. Any
allocation of earnings and profits as made by the Board of
Directors pursuant to the provisions of this Article shall be
binding and conclusive upon every person who is entitled to
share in its profits or earnings.
ARTICLE X
This Amended and Restated Charter and Articles of
Incorporation may be amended at any annual or special meeting
of the Company by the majority vote of the shareholders voting
at such meeting; provided that if it is proposed to amend the
same at any special meeting a copy of the proposed amendment
and a copy of the notice of the meeting of the shareholders of
the Company called for that purpose shall be mailed at least
ten (10) days before such meeting to each shareholder as the
shareholder's address appears upon the books of the Company.
If it be proposed to amend Articles IV, V, IX and X of
this Amended and Restated Charter and Articles of
Incorporation at any meeting, annual or otherwise, then the
notice and a copy of the proposed amendment, provided in the
preceding paragraph, shall be mailed at least thirty (30) days
before such meeting and a true and correct list of the
shareholders of the Company, together with the address of each
as shown on the books and records of the Company, shall be
filed with the Director of the Department of Insurance of the
State of Missouri at least twenty (20) days before such
meeting.
<PAGE> 5
ARTICLE XI
Whenever in this Amended and Restated Charter and
Articles of Incorporation notice is required or permitted to
be given by mail, the affidavit of the person who mailed such
notice, filed with the Secretary of the Company, shall
constitute conclusive evidence that such notice has been given
and mailed.
ARTICLE XII: INDEMNIFICATION
The Company shall indemnify each of its directors,
officers, employees, and agents to the full extent specified
by Section 351.355 R.S.Mo., as amended from time to time (the
"Indemnification Statute"), and, in addition, shall indemnify
each of them against all expenses (including, without
limitation, attorneys' fees, judgments, fines, taxes, and
amounts paid in settlement) actually and reasonably incurred
by him or her in connection with any claim (including, without
limitation, any threatened, pending, or completed action,
suit, or proceeding whether civil, criminal, administrative,
or investigative and whether or not by or in the right of any
corporation) by reason of the fact that he or she is or was
serving the Company or at the request of the Company in any of
the capacities referred to in the Indemnification Statute or
arising out of his or her status in any such capacity,
provided that the Company shall not indemnify any person from
or on account of such person's conduct which was finally
adjudged to have been knowingly fraudulent, deliberately
dishonest or willful misconduct.
The Company is authorized to give or supplement any of
the aforesaid indemnifications by By-law, agreement, or
otherwise and support them by insurance to the extent it deems
appropriate. Amounts to be paid under this Article XII shall
be disbursed at such times and upon such procedures as the
Company shall determine. All such indemnification shall
continue as to any person who has ceased to serve in any of
the aforesaid capacities and shall inure to the benefit of the
heirs, devisees, and personal representatives of such person.
Indemnification given under this Article XII shall survive
elimination or modification of this Article XII with respect
to any such expenses incurred in connection with claims
arising out of acts or omissions occurring prior to such
elimination or modification and persons to whom such
indemnification is given shall be entitled to rely on such
indemnification as a contract with the Company.
