AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 1999
REGISTRATION NO. 333-50055
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT
NO. 1
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PROTECTIVE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
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TENNESSEE 63-0169720 6355
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(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification Number) Classification Code)
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2801 Highway 280 South
Birmingham, Alabama 35223
(205) 879-9230
(Address, including zip code, and telephone number, including area code,
of principal executive office)
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Carolyn King
Senior Vice President, Investment Products Division
Protective Life Insurance Company
P. O. Box 2606
Birmingham, Alabama 35202
(205) 879-9230
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
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Stephen E. Roth, Esq. Steve M. Callaway, Esq.
Sutherland, Asbill & Brennan LLP Protective Life Insurance Company
1275 Pennsylvania Avenue, N.W. P. O. Box 2606
Washington, D.C. 20004-2404 Birmingham, Alabama 35202
</TABLE>
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If any of the securities that have been registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. [X]
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
contained herein also relates to Registration Statement Nos. 33-31940,
33-39345, 33-57052 and 333-02249.
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PROTECTIVE LIFE INSURANCE COMPANY
Cross Reference Sheet Pursuant to
Regulation S-K, Item 501(b)
FORM S-1 ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
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1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus .................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus ........................................... Summary; Table of Contents
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges ............................ Outside Front Cover Page; Summary
4. Use of Proceeds ......................................... Investments by Protective
5. Determination of Offering Price ......................... Not Applicable
6. Dilution ................................................ Not Applicable
7. Selling Security Holders ................................ Not Applicable
8. Plan of Distribution .................................... Distribution of the Contracts
9. Description of Securities to be Registered .............. Summary; Description of Contract; Appendix A;
Appendix B
10. Interests of Named Experts and Counsel .................. Not Applicable
11. Information with Respect to the Registrant .............. Protective Life Insurance Company; Executive Officers
and Directors; Executive Compensation; Financial
Statements; Legal Proceedings
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities .......... Undertakings
</TABLE>
<PAGE>
[PROSAVER Platinum Logo]
A MODIFIED GUARANTEED ANNUITY ISSUED BY
PROTECTIVE LIFE INSURANCE
COMPANY
2801 HIGHWAY 280 SOUTH
BIRMINGHAM, ALABAMA 35223
TELEPHONE: 1-800-866-3555
This Prospectus describes the ProSaver Platinum Contract, a group and
individual modified guaranteed annuity contract. This Contract is designed for
investors who desire to accumulate capital on a tax deferred basis for
retirement or other long term investment purposes. It may be purchased on a
non-qualified basis or for use with certain qualified retirement plans.
An Annuity Deposit of at least $10,000 is required to purchase a Contract.
Any subsequent Deposit you want to add to your Contract must also be at least
$10,000.
You may allocate each Annuity Deposit to one or more investment period,
called Guaranteed Periods, from those we offer at the time you make the
deposit. Each allocation to a Guaranteed Period must be at least $10,000. The
amounts you allocate will earn interest for the selected period at the interest
rate we offer at the time of your deposit.
If you surrender your Contract, or any portion of it, before the end of a
Guaranteed Period, we may assess a surrender charge on the amount you
surrender. We may also apply a Market Value Adjustment to the amount you
surrender, which could increase or decrease the value of your Contract. Under
certain conditions, you may withdraw earned interest without a surrender charge
or Market Value Adjustment. Withdrawals of interest will be subject to income
tax and may be subject to a 10% IRS penalty tax if taken before age 59 1/2.
On the Annuity Commencement Date, we will apply your Net Account Value to
the annuity option you have selected, or you may take that amount in one lump
sum payment. The annuity payment options are (1) payments for a fixed period
from five to thirty years, (2) life income with payments guaranteed for ten or
twenty years, or (3) payments of a fixed amount until the amount we hold is
exhausted.
PLEASE READ THIS PROSPECTUS CAREFULLY. INVESTORS SHOULD KEEP A COPY FOR
FUTURE REFERENCE.
THE PROSAVER PLATINUM CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED
BY, ANY BANK OR FINANCIAL INSTITUTION. IT IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IT IS SUBJECT TO
INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF INVESTMENT PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999.
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TABLE OF CONTENTS
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PAGE
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SUMMARY ................................................ 3
DESCRIPTION OF THE CONTRACT ............................ 6
The Contract ........................................ 6
Parties to the Contract ............................. 6
Issuing a Contract .................................. 7
Right to Cancel ..................................... 7
Annuity Deposits .................................... 7
Guaranteed Periods and Sub-Accounts ................. 8
Initial Guaranteed Period ........................ 8
Subsequent Guaranteed Periods .................... 8
Surrenders at the End of a Guaranteed Period...... 8
Selecting a Subsequent Guaranteed Period ......... 8
Automatic Subsequent Guaranteed Periods .......... 8
Guaranteed Interest Rates in Subsequent
Guaranteed Periods ............................. 8
Guaranteed Interest Rates ........................... 8
Compounding of Interest .......................... 9
Interest Withdrawals ................................ 9
Account Values ...................................... 10
SURRENDERS ............................................. 10
Surrenders .......................................... 10
Surrenders and Partial Surrenders ................ 10
Taxes May Apply .................................. 10
Delay of Payments ................................ 10
Surrender Value ..................................... 11
Surrender Charges ................................... 11
The Market Value Adjustment ......................... 11
Premium Taxes ....................................... 13
DEATH BENEFIT .......................................... 13
Death of an Annuitant ............................... 13
Death of an Owner ................................... 13
Determining the Death Benefit .................... 14
Paying the Death Benefit ......................... 14
ANNUITY BENEFITS ....................................... 14
Annuity Commencement Date ........................... 14
Annuity Options ..................................... 15
Annuity Payments .................................... 15
Death of an Owner or Annuitant After the
Annuity Commencement Date ........................ 15
INVESTMENTS BY PROTECTIVE .............................. 16
OTHER CONTRACT PROVISIONS .............................. 17
Non-Participating ................................... 17
Notice .............................................. 17
Reports ............................................. 17
Transactions and Modifications of the Contract ...... 17
Assignment of a Contract ............................ 17
Facility of Payment ................................. 17
Protection of Proceeds .............................. 17
Error in Age or Gender .............................. 17
DISTRIBUTION OF THE CONTRACTS .......................... 18
FEDERAL TAX MATTERS .................................... 18
Introduction ........................................ 18
The Company's Tax Status ............................ 18
Taxation of Annuities in General .................... 18
Tax Deferral During Accumulation Period .......... 18
Taxation of Interest Withdrawals and Partial
and Full Surrenders ............................ 19
Taxation of Annuity Payments ..................... 19
Taxation of Death Benefit Proceeds ............... 20
Penalty Tax on Premature Distributions ........... 20
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Aggregation of Contracts ......................... 20
Loss of Interest Deduction Where Contracts Are
Held by or for the Benefit of Certain
Non-natural Persons .............................. 20
Qualified Retirement Plans .......................... 21
In General ....................................... 21
Direct Rollover Rules ............................ 23
Federal Income Tax Withholding ...................... 23
PROTECTIVE LIFE INSURANCE COMPANY ...................... 24
Business ............................................ 24
Selected Financial Data ............................. 24
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ........................... 24
Results of Operations ............................ 24
Premiums and Policy Fees ....................... 24
Net Investment Income .......................... 24
Realized Investment Gains (Losses) ............. 24
Other Income ................................... 24
Income Before Income Tax ....................... 24
Income Tax Expense ............................. 24
Net Income ..................................... 24
Known Trends and
Uncertainties ............................... 24
Recently Issued Accounting
Standards ...................................... 24
Liquidity and Capital Resources ................. 24
Impact of Inflation ............................. 24
Insurance in Force .................................. 24
Underwriting ........................................ 24
Investments ......................................... 24
Indemnity Reinsurance ............................... 24
Policy Liabilities and Accruals ..................... 24
Federal Income Tax Consequences ..................... 24
Competition ......................................... 24
Regulation .......................................... 24
Recent Developments ................................. 24
Employees ........................................... 24
Properties .......................................... 24
DIRECTORS AND EXECUTIVE OFFICERS ....................... 25
EXECUTIVE COMPENSATION ................................. 25
SUMMARY COMPENSATION TABLE ............................. 25
AGGREGATED FY-END OPTION/SAR
VALUES .............................................. 25
PENSION PLAN ........................................... 25
EMPLOYMENT CONTINUATION
AGREEMENTS .......................................... 25
Compensation Committee Interlocks and Insider
Participation .................................... 25
Management Ownership of PLC Stock ................... 25
CERTAIN TRANSACTIONS ................................... 25
LEGAL PROCEEDINGS ...................................... 25
EXPERTS ................................................ 25
LEGAL MATTERS .......................................... 25
REGISTRATION STATEMENT ................................. 25
APPENDIX A: MATTERS RELATING TO
CONTRACTS OFFERED IN CERTAIN
STATES AFTER SEPTEMBER 10, 1991 AND
PRIOR TO MAY 1, 1996 ................................ A-1
APPENDIX B: MATTERS RELATING TO
CONTRACTS OFFERED IN CERTAIN
STATES PRIOR TO SEPTEMBER 10, 1991 .................. B-1
FINANCIAL STATEMENTS ................................... F-1
</TABLE>
NO ONE IS AUTHORIZED TO MAKE ANY STATEMENT THAT CONTRADICTS THIS
PROSPECTUS. YOU MUST NOT RELY UPON ANY SUCH STATEMENT. THIS PROSPECTUS IS NOT
AN OFFER TO INQUIRE ABOUT, OR PURCHASE THE SECURITIES DESCRIBED IN ANY
JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
2
<PAGE>
SUMMARY
WHAT IS THE PROSAVER PLATINUM The ProSaver Platinum Contract is a
CONTRACT? modified guaranteed annuity contract
issued by Protective Life. (See "The
Contract," page 6.)
HOW IS A CONTRACT ISSUED? We will issue the Contract when we
receive and accept your complete
application information and an initial
Annuity Deposit. (See "Issuing a
Contract," page 7.)
WHAT IS AN ANNUITY DEPOSIT? The Annuity Deposit is the premium
payment you send us to purchase or add to
a Contract. You may send us more than one
Annuity Deposit provided each Annuity
Deposit is at least $10,000. We may
refuse to accept an Annuity Deposit and
we may limit the total Annuity Deposits
we will accept. As a general rule, we do
not issue additional contracts when
subsequent Annuity Deposits are
submitted. (See "Annuity Deposits," page
7.)
CAN I CANCEL MY CONTRACT? You may cancel your Contract by returning
it to us with a written cancellation
request within twenty days after you
receive it. When we receive your returned
Contract and cancellation request, we
will treat the Contract as if it had
never been issued and we will refund your
Annuity Deposit. (See "Right to Cancel,"
page 7.)
HOW DO MY ANNUITY DEPOSITS EARN You allocate each Annuity Deposit
INTEREST? (less applicable premium taxes) to one or
more Guaranteed Periods. Each allocation
to a Guaranteed Period must be at least
$10,000. We establish a Sub-Account for
each Guaranteed Period you select. The
Sub-Account will earn interest at the
Guaranteed Interest Rate for the entire
Guaranteed Period. (See "Guaranteed
Periods and Sub-Accounts," page 8.)
WHAT HAPPENS AT THE END OF A At the end of any Guaranteed
GUARANTEED PERIOD? Period, a subsequent Guaranteed Period
will begin. Unless you instruct us
otherwise, the subsequent Guaranteed
Period will generally be the same
duration as the expiring Guaranteed
Period. If we are not offering a
Guaranteed Period of the same duration,
the subsequent Guaranteed Period will be
the longest one available that is shorter
than the expiring Guaranteed Period. The
subsequent Guaranteed Period may not,
however, extend past the Annuity
Commencement Date. We will pay interest
on your Sub-Account value in the
subsequent Guaranteed Period at our
declared Guaranteed Interest Rate
applicable to that subsequent Guaranteed
Period on the day subsequent Guaranteed
Period begins. (See "Guaranteed Periods
and Sub-Accounts," page 8.)
CAN I TAKE MONEY OUT OF THE CONTRACT? You may request in writing a full or
partial surrender which will be subject
to certain restrictions. The surrender is
subject to a surrender charge and we will
apply a Market Value Adjustment.
Surrenders from a Sub-Account at the end
of its Guaranteed Period will not incur
the surrender charge or the Market Value
Adjustment. Also, once each contract year
you may instruct us
3
<PAGE>
to pay you some or all of the interest
credited to the contract during the prior
contract year. We will not charge a
surrender charge nor apply the Market
Value Adjustment to these interest
withdrawals. Any surrender, including an
interest withdrawal, may have federal
(and state) income tax consequences. In
addition, withdrawals and surrenders from
contracts issued pursuant to Internal
Revenue section 403(b) may not be allowed
in certain circumstances. (See "Interest
Withdrawals," page 9, and "Surrenders,"
page 10.)
HOW IS THE SURRENDER CHARGE The surrender charge applies during the
CALCULATED? first seven years of each Guaranteed
Period. If the Guaranteed Period is seven
years or less, a surrender charge will
apply for the entire Guaranteed Period.
The surrender charge is a percentage of
the amount surrendered, less any amount
available as an interest withdrawal. The
maximum surrender charge percentage is
6%. (See "Surrender Charges," page 11.)
WHAT IS A MARKET VALUE ADJUSTMENT? The Market Value Adjustment is an amount
we deduct from or add to Sub-Account
value when you request a surrender before
the end of the Sub-Account's Guaranteed
Period. The Market Value Adjustment
formula in the Contract reflects the
relationship between the Treasury Rate
associated with the Sub-Account from
which the surrender is taken, and the
current Treasury Rate for a Sub-Account
with the same Guaranteed Period. The
Treasury Rate is derived from a published
index that measures fluctuations in
interest rates. (See "Market Value
Adjustment," page 11.)
DOES THE CONTRACT PROVIDE A DEATH If you die before the Annuity
BENEFIT? Commencement Date, we will pay a death
benefit, less any applicable premium tax,
to your beneficiary. Generally, the death
benefit will be the greater of the
Account Value or the Net Account Value as
of the date we receive the paperwork
necessary to process the death claim but
there are other requirements and
conditions. The Internal Revenue Service
imposes restrictions on distribution of
the death benefit. Only one death benefit
is payable under this Contract, even if
the Contract is made to continue beyond
the Owner's death. (See "Death Benefit,"
page 13.)
WHAT ANNUITY BENEFIT DOES THE On the Annuity Commencement
CONTRACT PROVIDE? Date we will pay the Net Account value in
a lump sum or apply that amount to the
annuity option you select. Annuity
options can provide periodic payments
based on the life of one or two
Annuitants, for a fixed amount of time,
or both. As a general rule, the Annuity
Commencement Date cannot extend beyond an
Annuitant's 85th birthday. (See "Annuity
Benefits," page 14.)
4
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WHEN ARE PREMIUM TAXES DEDUCTED? If your Contract is subject to a premium
tax, we will deduct them, according to
applicable law, from the Annuity Deposits
when we receive them, upon a full or
partial surrender, from the Net Account
Value when we apply it to an annuity
option, or from the Death Benefit before
we pay it. (See "Premium Taxes," page
13.)
IS THE CONTRACT AVAILABLE FOR The Contract may be issued for use with
QUALIFIED RETIREMENT PLANS? retirement plans receiving special
federal income tax treatment under
Sections 401, 403, 408, or 408A of the
Internal Revenue Code such as pension and
profit sharing plans (including H.R. 10
plans), individual retirement accounts,
and individual retirement annuities.
Contracts issued for use with these
qualified retirement plans are referred
to as Qualified Contracts and these types
of plans are referred to as Qualified
Plans. (See "Federal Tax Matters," page
18.)
5
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DESCRIPTION OF THE CONTRACT
CONTRACTS SOLD BEFORE MAY 1, 1996 VARY SIGNIFICANTLY FROM THOSE DESCRIBED
BELOW. THOSE CONTRACTS PROVIDE DIFFERENT RIGHTS AND BENEFITS, AND THE SURRENDER
CHARGE AND MARKET VALUE ADJUSTMENT MAY BE CALCULATED DIFFERENTLY. APPENDIX A
DESCRIBES CONTRACTS OFFERED FROM SEPTEMBER 10, 1991 THROUGH APRIL 30, 1996.
CONTRACTS OFFERED BEFORE SEPTEMBER 10, 1991 ARE DESCRIBED IN APPENDIX B. YOU
MAY ALWAYS CONTACT US IF YOU HAVE QUESTIONS ABOUT YOUR CONTRACT.
THE CONTRACT
The ProSaver Platinum Contract is a modified guaranteed annuity contract
issued by Protective Life Insurance Company. Generally, this prospectus
describes certificates issued under an allocated group modified guaranteed
annuity contract issued by Protective Life to the Protective Financial
Insurance Trust. AmSouth Bank, N.A. of Birmingham, Alabama is the Contract
Holder and Trustee. Eligible Owners include account holders of broker-dealers
that have entered into a distribution agreement to offer the Contract. Eligible
Owners also include employers and other entities and organized groups
acceptable to us. The certificate we issue to an Owner summarizes the
provisions of the group modified guaranteed annuity contract. THE PROVISIONS OF
THE GROUP MODIFIED GUARANTEED ANNUITY CONTRACT CONTROL WHETHER OR NOT THEY ARE
INCLUDED IN THE CERTIFICATE. WE WILL PROVIDE A COPY OF THE GROUP MODIFIED
GUARANTEED ANNUITY CONTRACT TO AN OWNER UPON REQUEST.
In states where we do not issue a group contract, we will issue an
individual modified guaranteed annuity contract directly to the Owner. In this
prospectus, we will refer to all these as a "Contract" and use the term "Owner"
to describe the owners of group Contract certificates as well as the owners of
individual Contracts. (See "Parties to the Contract," page 6.)
Contracts are either Qualified or Non-Qualified. Qualified Contracts are
used to fund pension and retirement programs that receive favorable tax
treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code.
These include H.R. 10 (Keogh) Plans, Individual Retirement Accounts or
Annuities (IRAs), Tax-Sheltered Annuity Programs or Annuities (TSAs), or
corporate pension and profit sharing plans. Non-Qualified Contracts may also
enjoy tax favored status. (See, "Federal Tax Matters," page 18.)
PARTIES TO THE CONTRACT
COMPANY: Protective Life Insurance Company, also referred to as
"Protective," "we," "us" and "our."
OWNER: The person or persons who own a group Contract certificate
(sometimes called "Participants" in our contract language and literature) or
who own an individual Contract. An Owner is entitled to exercise all rights and
privileges provided in the Contract, without the consent of a group Contract
holder. Individuals as well as non-natural persons, such as corporations or
trusts, may own a Contract; two persons may own a Contract together. In this
prospectus, we may refer to Owners as "you" or "your." If an Annuitant is still
alive, the Owner may transfer a Contract to a new Owner by making a written
request to our administrative office.
BENEFICIARY: The person or persons who may receive the benefits of a
Contract upon the death of an Owner. We will treat the surviving Owner of a
jointly owned Contract as the primary Beneficiary. If there is no surviving
Owner, the primary Beneficiary is the person or persons so designated by the
Owner and named in our records. The contingent Beneficiary is the person or
persons designated by the Owner and named in our records to be Beneficiary if
no primary Beneficiary is living. In the case of some Qualified Contracts,
Treasury Department Regulations may restrict who may be designated as a
Beneficiary,
If no Beneficiary designation is in effect or if no Beneficiary is living
at the time of an Owner's death, the Beneficiary will be the estate of the
deceased Owner. If an Owner dies on or after the Annuity Commencement Date, the
Beneficiary will become the new Owner.
Unless designated irrevocably, the Owner may change the Beneficiary by
written notice prior to any Owner's death. If a Beneficiary is designated
irrevocably, that Beneficiary's written consent is required before the Owner
can change the Beneficiary designation or exercise certain other rights. Your
request will be effective on the day you sign it. We will not be liable for any
payments made to a former Beneficiary, however, unless we have first notified
you that we have received your written request and all necessary written
consents at our Administrative Office.
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ANNUITANT: The person on whose life annuity income payments may be based.
The Owner is the Annuitant unless the Owner designates another person as the
Annuitant. By selecting the annuity option of your choice, you may elect to
provide annuity payments based on the life of one or two Annuitants, for a
fixed time, or both. We will use the Annuitant's age at the time you select an
annuity option to determine the amounts of these payments. (See "Annuity
Payments," page 15.)
The Owner may change the Annuitant by written notice prior to the Annuity
Commencement Date. An Owner cannot use a Guaranteed Period or an Annuity
Commencement Date that extends past an Annuitant's 85th birthday without our
approval. If changing Annuitants, the Owner cannot select an Annuitant whose
85th birthday comes before the end of any Guaranteed Period or the Annuity
Commencement Date without our approval. If any Owner is not a natural person
and changes the Annuitant, the change will be treated as the death of the Owner
and the Death Benefit will be paid to the Beneficiary. (See "Death Benefit,"
page 13.)
PAYEE: The person or persons who, generally at the designation of the
Owner, receive annuity income payments under the Contract.
ISSUING A CONTRACT
You purchase a Contract by completing an application and making an Annuity
Deposit of at least $10,000. After we issue a Contract, you may make additional
Annuity Deposits of at least $10,000 each. Regardless of how many Annuity
Deposits you make, we will generally only issue one Contract. We have the right
to decline any application or any Annuity Deposit. When we sell Contracts to
retirement plans or in connection with retirement plans, those retirement plans
may or may not qualify for special tax treatment under the Internal Revenue
Code.
If we do not receive all of the necessary application information at our
Administrative Office when we receive your Annuity Deposit, we will hold your
Annuity Deposit while we attempt to complete the application. If the necessary
application information is not complete after a reasonable time, we will inform
you of the reason for the delay and we will return your Annuity Deposit unless
you specifically consent to our holding it until the application is complete.
Once we have all of your necessary application information, we will allocate
your Annuity Deposit to the appropriate Guaranteed Periods.
The date we apply your initial Annuity Deposit to the appropriate
Guaranteed Periods is the Effective Date for the Contract. You will begin to
earn interest under the Contract as of this date. The Contract Year is based on
the anniversary of your Effective Date.
RIGHT TO CANCEL
You may cancel your Contract by returning it to us with a written
cancellation request within twenty days after you receive it. You must return
the Contract and cancellation request to our Administrative Office or to the
sales representative who sold it to you. If you return the Contract by mail,
the effective date of the return will be the postmark date on your properly
addressed and postage paid envelope. Upon receiving your returned Contract and
cancellation request, we will treat the Contract as if it had never been issued
and we will refund your Annuity Deposit.
ANNUITY DEPOSITS
The Annuity Deposit is the premium payment you send us to purchase or add
to a Contract. We will only accept Annuity Deposits made prior to the
Annuitant's 85th birthday and we have the right not to accept any Annuity
Deposit if we so choose. The minimum Annuity Deposit is $10,000. We also have
the right to limit the total Annuity Deposits we accept without prior approval.
Currently, this amount is $1,000,000. You can make an Annuity Deposit in the
form a check made out to Protective Life Insurance Company or by any other
method we deem acceptable.
You allocate Annuity Deposits, less any applicable premium tax, to one or
more of the Guaranteed Periods available when you make the Annuity Deposit. You
must allocate at least $10,000 to each Guaranteed Period you choose and you may
not select a Guaranteed Period that extends beyond the Annuity Commencement
Date.
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GUARANTEED PERIODS AND SUB-ACCOUNTS
A Guaranteed Period is the number of years we will credit the Guaranteed
Interest Rate to the Sub-Account. Currently, we offer a variety of Guaranteed
Periods up to 10 years, though all Guaranteed Periods may not be available in
all states.
INITIAL GUARANTEED PERIOD
We will establish a Sub-Account for each Guaranteed Period to which you
allocate an Annuity Deposit. Each Sub-Account earns interest at the Guaranteed
Interest Rate in effect for that Guaranteed Period from the date the Annuity
Deposit is credited to the Sub-Account through the end of the Guaranteed Period
or until the Sub-Account is surrendered, if earlier. The value of the Contract
at any time, sometimes referred to as the Account Value, is the total of the
Sub-Account Values under the Contract.
SUBSEQUENT GUARANTEED PERIODS
At the end of a Guaranteed Period, you may select from the following
options:
1. Surrender your ending Sub-Account value without a surrender charge or
Market Value Adjustment;
2. Instruct us to apply the ending Sub-Account value to one or more
subsequent Guaranteed Periods that you select from the Guaranteed Periods
we are then offering; or
3. Do nothing and allow a subsequent Guaranteed Period automatically to
begin.
SURRENDERS AT THE END OF A GUARANTEED PERIOD
To surrender your ending Sub-Account value, you must request the surrender
in writing no later than 10 days after the end of the expiring Guaranteed
Period. If you surrender your ending Sub-Account value under a Non-Qualified
Contract, any surrendered amount may be subject to income taxes, and a 10% IRS
penalty tax may apply if you are not yet 59 1/2 years old.
SELECTING A SUBSEQUENT GUARANTEED PERIOD
To apply the ending Sub-Account value to one or more subsequent Guaranteed
Periods, you must give us written instructions as to the Guaranteed Periods
that you select no later than 10 days after the end of the expiring Guaranteed
Period. You may select a subsequent Guaranteed Period only from the Guaranteed
Periods we are offering at the time you make your selection. Any subsequent
Guaranteed Period may not extend past the Annuity Commencement Date for your
Contract. At least $10,000 must be allocated to any subsequent Guaranteed
Period.
AUTOMATIC SUBSEQUENT GUARANTEED PERIODS
If you do not instruct us otherwise under the first or second options
described above, a subsequent Guaranteed Period automatically begins when the
prior Guaranteed Period ends. Your ending Sub-Account value becomes the
beginning Sub-Account value for the subsequent Guaranteed Period. The
subsequent Guaranteed Period is the longest Guaranteed Period we offer that is
not longer than the Guaranteed Period that just ended, and does not extend past
the Annuity Commencement Date. You must allocate at least $10,000 to any
subsequent Guaranteed Period.
GUARANTEED INTEREST RATES IN SUBSEQUENT GUARANTEED PERIODS
Your beginning Sub-Account value for any subsequent Guaranteed Period
earns interest at the rate we have declared that is in effect for the
subsequent Guaranteed Period(s) on the date your subsequent Guaranteed
Period(s) begins. Our Guaranteed Interest Rates for subsequent Guaranteed
Periods may differ from our Guaranteed Interest Rates for initial Guaranteed
Periods.
GUARANTEED INTEREST RATES
From time to time and at our sole discretion we set Guaranteed Interest
Rates for each available Guaranteed Period. In determining these Guaranteed
Interest Rates we consider the interest rates available on the types of
instruments in which the Company intends to invest the proceeds attributable to
the Contracts. (See
8
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"Investments by Protective," page 16). In addition, we may also consider
various other factors in determining Guaranteed Interest Rates, including
regulatory and tax requirements; sales commissions and administrative expenses
the Company incurs; general economic trends; and competitive factors.
PROTECTIVE LIFE INSURANCE COMPANY MAKES THE FINAL DETERMINATION AS TO
GUARANTEED INTEREST RATES IT DECLARES. WE CANNOT PREDICT NOR DO WE GUARANTEE
WHAT FUTURE INTEREST RATES WE WILL DECLARE.
Annuity Deposits of $100,000 or more are currently credited with an
interest rate in excess of that credited to an Annuity Deposit of less than
$100,000. In addition, as long as your Account Value exceeds $100,000, all
additional Annuity Deposits and renewals will be credited with the increased
interest rate at our discretion. A Guaranteed Interest Rate credited to a
Sub-Account will reflect the daily compounding of interest and never change
prior to the end of the Guaranteed Period.
COMPOUNDING OF INTEREST
A Sub-Account will earn interest at the appropriate Guaranteed Interest
Rate which will be the effective interest rate for each year of the Guaranteed
Period. Interest compounds daily in the Sub-Account for the duration of the
Guaranteed Period. Below is an illustration of how interest is credited during
each year of a five-year Guaranteed Period. For the purposes of this example,
we have made assumptions as indicated.
PLEASE NOTE THAT THE FOLLOWING EXAMPLE ASSUMES NO SURRENDERS OR
WITHDRAWALS OF ANY AMOUNT AND NO PREMIUM TAXES DUE ON ISSUANCE. A MARKET VALUE
ADJUSTMENT AND SURRENDER CHARGE MAY APPLY TO ANY FULL OR PARTIAL SURRENDER YOU
MAKE PRIOR TO THE END OF A GUARANTEED PERIOD (SEE "SURRENDERS," PAGE 10). THE
HYPOTHETICAL INTEREST RATES ARE FOR PURPOSES OF ILLUSTRATION ONLY AND WE DO NOT
INTEND THEM AS A PREDICTION OF ANY FUTURE INTEREST RATES WE MAY DECLARE UNDER
THE CONTRACT. THE ACTUAL INTEREST RATES WE DECLARE FOR ANY GUARANTEED PERIOD
MAY BE MORE OR LESS THAN WHAT WE HAVE USED IN THIS ILLUSTRATION.
EXAMPLE OF COMPOUNDING AT THE GUARANTEED INTEREST RATE
<TABLE>
<S> <C>
Deposit: $100,000
Guaranteed Period: 5 Years
Guaranteed Interest Rate: 5.0%
</TABLE>
<TABLE>
<CAPTION>
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Beginning of Year 1 Account Value: $ 100,000.00
x (1 + Guaranteed Interest Rate): 1.05
= End or Year 1 Account Value: $ 105,000.00
Beginning of Year 2 Account Value: $ 105,000.00
x (1 + Guaranteed Interest Rate): 1.05
= End of Year 2 Account Value: $ 110,250.00
Beginning of Year 3 Account Value: $ 110,250.00
x (1 + Guaranteed Interest Rate): 1.05
= End of Year 3 Account Value: $ 115,762.50
Beginning of Year 4 Account Value: $ 115,762.50
x (1 + Guaranteed Interest Rate): 1.05
= End of Year 4 Account Value: $ 121,550.62
Beginning of Year 5 Account Value: $ 121,550.62
x (1 + Guaranteed Interest Rate): 1.05
= End of Year 5 Account Value: $ 127,628.16
Total Interest Credited in Guaranteed Period: $127,628.16 - $100,000 = $27,628.16
Account Value at End of Guaranteed Period: $100,000 + $27,628.16 = $127,628.16
</TABLE>
INTEREST WITHDRAWALS
Once each Contract year, you may instruct us to send you all or a portion
of the interest credited to your Sub-Accounts during the prior Contract year.
Your instructions must be in writing. Currently, for most Guaranteed Periods,
you may establish automatic interest withdrawals that are paid to you monthly,
quarterly, semi-annually or annually. Interest withdrawals remove money from
your Sub-Account that would otherwise have
9
<PAGE>
been compounding even more interest on a daily basis. Because of this
interruption of interest compounding, the more interest you withdraw, the less
interest your Sub-Account will generate over time. Larger withdrawals reduce
the compounding of interest more than smaller withdrawals; frequent withdrawals
hinder the compounding process more than infrequent withdrawals; and earlier
withdrawals reduce your interest more than later withdrawals would. We reserve
the right to limit interest withdrawals to one per Contract year upon notice to
you.
We will not impose a surrender charge or Market Value Adjustment on
interest withdrawals but interest withdrawals may be subject to federal and
state income tax. In addition, interest withdrawals from Contracts issued as
Tax-Sheltered Annuities are prohibited in certain circumstances. (See Federal
Tax Matters, page 18.)
ACCOUNT VALUES
The value of a Sub-Account at any time is equal to the amounts that were
allocated to that Sub-Account, plus any interest credited to it, minus any
interest withdrawals and surrenders (including any surrender charges, Market
Value Adjustment and premium taxes). The sum of the Sub-Account values in your
Contract is called the Account Value and represents the total value of your
Contract.
The Net Sub-Account Value is equal to the Sub-Account value modified by
any Market Value Adjustment, minus surrender charges, and premium taxes that
would apply in the case of a full surrender of the Sub-Account. The Net Account
Value, which is the sum of all the Net Sub-Account values under your Contract,
is the amount you would be entitled to receive if you made a full surrender of
your Contract. For this reason, the Net Account Value is sometimes called the
"Surrender Value" of a Contract.
SURRENDERS
SURRENDERS
SURRENDERS AND PARTIAL SURRENDERS
You may surrender your entire Contract at any time. You may surrender part
of the Contract if the value of each remaining Sub-Account is at least $10,000
after the surrender.
Your surrender request must be in writing and, if you request a partial
surrender, you must specify the Sub-Accounts from which the partial surrender
will be taken. If you have more than one Sub-Account with the same Guaranteed
Period, you must take the partial surrender from the Sub-Account with the
shortest time remaining until maturity.
Partial and full surrenders from Contracts issued as Tax-Sheltered
Annuities are prohibited in certain circumstances. (See "Federal Tax Matters,"
page 18.)
TAXES MAY APPLY
Amounts surrendered may be subject to federal and state income taxes. THE
TAXABLE AMOUNT OF A SURRENDER MAY, UNDER CERTAIN CIRCUMSTANCES, BE SUBJECT TO A
10% FEDERAL TAX PENALTY. In the case of Qualified Contracts, federal tax law
imposes restrictions on the form and manner in which benefits may be paid. For
example, surrenders from Qualified Contracts may require your spouse's consent
even if your spouse is not an Owner. (See "Federal Tax Matters," page 18.)
Premium taxes may also apply. (See "Premium Taxes," page 13.) You should
consult your tax advisor about the effect a surrender from the Contract may
have on your taxes.
DELAY OF PAYMENTS
We may delay payment of a surrender for up to six months from the date we
receive your written request, or for the period permitted by state insurance
law, if less.
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<PAGE>
SURRENDER VALUE
The surrender value is the amount available to you upon a surrender or
partial surrender. The surrender value is calculated as of the date we receive
your surrender request using the following formula:
Surrender Value = A - S - M - P, where
A = the amount of the surrender or partial surrender you request;
S = the amount of the surrender charge;
M = the amount of the Market Value Adjustment;
P = the amount of any applicable premium tax.
SURRENDER CHARGES
Surrenders and partial surrenders may be subject to a surrender charge.
Generally, we will assess a surrender charge if you take a surrender during the
first seven years of any Guaranteed Period. We calculate the surrender charge
separately for each Sub-Account. We determine the amount of the surrender
charge for a Sub-Account as follows: first, we subtract any amount available as
an interest withdrawal from the surrender amount you request; then we multiply
the result by the appropriate surrender charge percentage from the table below.
The surrender charge percentage is determined based on the age of the
Sub-Account from which the surrender is taken.
<TABLE>
<CAPTION>
NUMBER OF COMPLETED YEARS SURRENDER CHARGE
IN A GUARANTEED PERIOD PERCENTAGE
- --------------------------- -----------------
<S> <C>
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
7+ 0%
</TABLE>
We will include the surrender charge in the amount we deduct from the
Sub-Account to satisfy your surrender request. The total surrender charge for
your surrender is the sum of the surrender charges for the Sub-Accounts from
which you make your surrender.
We do not apply the surrender charge after the first seven years of any
Guaranteed Period or from any amount available as an interest withdrawal. Also,
we do not apply a surrender charge to surrenders you request at the end of a
Sub-Account's Guaranteed Period if we receive your written surrender request no
later than 10 days after the end of the Guaranteed Period.
THE MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment if you request a full or partial
surrender before the end of a Sub-Account's Guaranteed Period. The Market Value
Adjustment reflects the relationship between market interest rates available
when a Sub-Account was established and the interest rates available at the time
of the surrender from that Sub-Account, as measured by an independent index
called the Treasury Rate. The Treasury Rate is the annual effective interest
rate credited to certain United States Treasury instruments and it is published
by a nationally recognized service. On the fifteenth day and the last day of
each month we will identify a Treasury Rate for each Guaranteed Period. We will
be consistent in the method we use to identify the Treasury Rate and the
determination is binding upon any Owner, Annuitant and Beneficiary.
The Market Value Adjustment formula contains a 0.25% set percentage factor
that compensates the company for certain expenses and losses that we may incur,
either directly or indirectly, as a result of the surrender. Another factor in
the formula decreases the effect of the Market Value Adjustment as the
Sub-Account matures.
Like the Surrender Charge, the Market Value Adjustment is calculated
separately for each Sub-Account. We determine the amount of the Market Value
Adjustment for each Sub-Account by subtracting any amount
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<PAGE>
available as an interest withdrawal from the surrender amount requested, and
then multiplying the result by the Market Value Adjustment percentage derived
from the formula below:
Market Value Adjustment Percentage = (C - I + 0.25%) x (N/12), where
C = the current Treasury Rate established for the same term as the
Guaranteed Period from which the surrender is taken;
I = the initial Treasury Rate for the Guaranteed Period from which
the surrender is taken;
N = the number of months remaining in the Guaranteed Period from
which the surrender is taken.
We will include the Market Value Adjustment in the amount we deduct from
the Sub-Account to satisfy your surrender request. The total Market Value
Adjustment for your surrender is the sum of the Market Value Adjustments to the
Sub-Accounts from which the surrender is taken.
The Market Value Adjustment may increase or decrease the Surrender Value.
If the applicable Treasury Rate at the time of the surrender is more than 0.25%
lower than the Treasury Rate associated with the Sub-Account, the Market Value
Adjustment will increase the Surrender Value. Otherwise, the Market Value
Adjustment will decrease the Surrender Value.
We do not apply the Market Value Adjustment to an interest withdrawal.
When calculating the Market Value Adjustment, we consider any amount available
as an interest withdrawal to be surrendered before amounts to which the Market
Value Adjustment applies. If we receive your written surrender request no later
than 10 days after the end of the Guaranteed Period, we also do not apply the
Market Value Adjustment to surrenders requested at the end of a Sub-Account's
Guaranteed Period.
PLEASE NOTE THAT THE FOLLOWING EXAMPLE ASSUMES NO INTEREST WITHDRAWALS, NO
PREMIUM TAXES DUE ON ISSUANCE, AND NO SURRENDERS OTHER THAN THOSE SHOWN IN THE
EXAMPLE. THE HYPOTHETICAL INTEREST RATES ARE FOR PURPOSES OF ILLUSTRATION ONLY
AND WE DO NOT INTEND THEM AS A PREDICTION OF ANY FUTURE INTEREST RATES WE MAY
DECLARE UNDER THE CONTRACT. THE ACTUAL INTEREST RATES WE DECLARE FOR ANY
GUARANTEED PERIOD MAY BE MORE OR LESS THAN WHAT WE HAVE USED IN THIS
ILLUSTRATION.
MARKET VALUE ADJUSTMENT AND SURRENDER CHARGE EXAMPLES
FULL SURRENDER AFTER COMPLETION OF YEAR 3
<TABLE>
<CAPTION>
INITIAL GUARANTEED PERIOD (YEARS): 3 5 7 TOTAL
- ------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Initially -
Annuity Deposit: $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 30,000.00
Guaranteed Interest Rate: 4.75% 5.00% 5.25%
Year 1 -
Beginning of Year Account Value: $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 30,000.00
x (1 + Guaranteed Interest Rate): 1.048 1.050 1.053
= End of Year Account Value: $ 10,475.00 $ 10,500.00 $ 10,525.00 $ 31,500.00
- Beginning of Year Account Value: $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 30,000.00
= Interest Earned during Year: $ 475.00 $ 500.00 $ 525.00 $ 1,500.00
Year 2 -
Beginning of Year Account Value: $ 10,475.00 $ 10,500.00 $ 10,525.00 $ 31,500.00
x (1 + Guaranteed Interest Rate): 1.048 1.050 1.053
= End of Year Account Value: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
- Beginning of Year Account Value: $ 10,475.00 $ 10,500.00 $ 10,525.00 $ 31,500.00
= Interest Earned during Year: $ 497.56 $ 525.00 $ 552.56 $ 1,575.12
Year 3 -
Beginning of Year Account Value: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
x (1 + Guaranteed Interest Rate): 1.048 1.050 1.053
= End of Year Account Value: $ 11,493.76 $ 11,576.25 $ 11,659.13 $ 34,729.14
- Beginning of Year Account Value: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
= Interest Earned during Year: $ 521.20 $ 551.25 $ 581.57 $ 1,654.02
After Completion of Year 3 -
Account Value: $ 11,493.76 $ 11,576.25 $ 11,659.13 $ 34,729.14
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
INITIAL GUARANTEED PERIOD (YEARS): 3 5 7 TOTAL
- -------------------------------------------------- ---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
- Prior Year's Interest: $ 521.20 $ 551.25 $ 581.57 $ 1,654.02
= Amount Subject to Surrender Charge and Market
Value Adjustment: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
Surrender Charge Percentage: 0.00% 3.00% 5.00%
x Subjected Amount: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
= Surrender Charge: $ 0.00 $ 330.75 $ 553.88 $ 884.63
Number of Months Remaining in the Guaranteed
Period: 0 24 48
EXAMPLE #1 - INCREASING INTEREST RATE ENVIRONMENT
Current Guaranteed Interest Rate: 5.75% 6.25% 6.75%
- Initial Guaranteed Interest Rate: 5.00% 5.50% 6.00%
+ 0.25%: 0.25% 0.25% 0.25%
x Number Months Remaining / 12: 0.00 2.00 4.00
= Market Value Adjustment Percentage: 0.00% 2.00% 4.00%
x Subjected Amount: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
= Market Value Adjustment: $ 0.00 $ 220.50 $ 443.10 $ 663.60
Account Value: $ 11,493.76 $ 11,576.25 $ 11,659.13 $ 34,729.14
- Surrender Charge: $ 0.00 $ 330.75 $ 553.88 $ 884.63
- Market Value Adjustment: $ 0.00 $ 220.50 $ 443.10 $ 663.60
= Net Account Value: $ 11,493.76 $ 11,025.00 $ 10,662.15 $ 33,180.91
EXAMPLE #2 - DECREASING INTEREST RATE ENVIRONMENT
Current Guarantee Interest Rate: 4.25% 4.75% 5.25%
- Initial Guaranteed Interest Rate: 5.00% 5.50% 6.00%
+ 0.25%: 0.25% 0.25% 0.25%
x Number Months Remaining / 12: 0.00 2.00 4.00
= Market Value Adjustment Percentage: 0.00% - 1.00% - 2.00%
x Subjected Amount: $ 10,972.56 $ 11,025.00 $ 11,077.56 $ 33,075.13
= Market Value Adjustment: $ 0.00 $ (110.25) $ (221.55) $ (331.80)
Account Value: $ 11,493.76 $ 11,576.25 $ 11,659.13 $ 34,729.14
- Surrender Charge: $ 0.00 $ 330.75 $ 553.88 $ 884.63
- Market Value Adjustment: $ 0.00 $ (110.25) $ (221.55) $ (331.80)
= Net Account Value: $ 11,493.76 $ 11,355.75 $ 11,326.81 $ 34,176.32
</TABLE>
PREMIUM TAXES
Premium taxes (including related retaliatory taxes and fees, if any) will
be deducted when applicable. If your Contract is subject to a premium tax, we
will deduct it according to applicable law from either your Annuity Deposits
when received, upon a full or partial surrender, from the amount applied to an
annuity option, or from the Death Benefit. The current rate of premium taxes
ranges up to 3.50%.
DEATH BENEFIT
DEATH OF AN ANNUITANT
If an Annuitant who is not an Owner dies before the Annuity Commencement
Date, the first Owner named on the application will become the new Annuitant
unless the Owner had designated otherwise. IF CHANGING ANNUITANTS, THE OWNER
CANNOT, WITHOUT OUR PRIOR APPROVAL, SELECT AN ANNUITANT WHOSE 85TH BIRTHDAY
COMES BEFORE THE END OF THE GUARANTEED PERIOD OR THE ANNUITY COMMENCEMENT DATE.
If any Owner is not a natural person the death of the Annuitant or a change in
the Annuitant will be treated as the death of an Owner.
DEATH OF AN OWNER
If any Owner dies while the Contract is in force prior to the Annuity
Commencement Date, we will pay a Death Benefit to the Beneficiary. If there are
joint Owner's to a Contract and one dies prior to the Annuity Commencement
Date, the surviving Owner will be treated as the Beneficiary; if none of the
joint Owners survives prior to the Annuity Commencement Date, we will pay the
Death Benefit to the Beneficiary named by the Owner. If there is no Beneficiary
living or named, we will pay the Death Benefit to the estate of the deceased
Owner.
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<PAGE>
DETERMINING THE DEATH BENEFIT
We will determine the Death Benefit as of the date we receive due proof of
an Owner's death. If we receive a claim for the Death Benefit in good order and
within 12 months of the date of the Owner's death, the Death Benefit will be
the greater of the Net Account Value or the Account Value less applicable
premium taxes. If we receive the claim for the Death Benefit 12 months or more
after the date of death, the Death Benefit will be the Net Account Value. If
any Owner is not a natural person, upon the change of the Annuitant the Death
Benefit will be the Net Account Value.
PAYING THE DEATH BENEFIT
Only one Death Benefit is payable under a Contract, even though the
Contract may, under some circumstances, continue beyond the time of an Owner's
death.
The Death Benefit may be taken in one lump sum immediately, in which event
the Contract will terminate. If the Death Benefit is not taken immediately as a
lump sum, the entire interest in the Contract must be distributed under one of
the following options:
(1) the entire interest must be distributed over the life of the
Beneficiary, or over a period not extending beyond the life
expectancy of the Beneficiary, with distributions beginning within
one year of the Owner's death; or
(2) the entire interest must be distributed within five years of the
Owner's death.
If the Beneficiary is the deceased Owner's spouse, the surviving spouse
may choose, in lieu of taking the Death Benefit, to continue the Contract and
become the new Owner. The surviving spouse may then select a new Beneficiary.
Upon the surviving spouse's death, the Death Benefit will become payable to the
new Beneficiary and must then be distributed to the new Beneficiary under
option 1 or 2, described above.
If there is more than one Beneficiary, these provisions apply to each
Beneficiary individually.
The Death Benefit provisions of this Contract shall be interpreted to
comply with the requirements of ss.72(s) of the Internal Revenue Code. We
reserve the right to endorse this Contract, as necessary, to conform to
regulatory requirements. We will send you a copy of any endorsement containing
such Contract modifications.
ANNUITY BENEFITS
ANNUITY COMMENCEMENT DATE
You may select an Annuity Commencement Date when you purchase a Contract.
The Annuity Commencement Date may not be earlier than the end of any Guaranteed
Period nor later than the Annuitant's 85th birthday. If you do not select one,
the Annuity Commencement Date will be the end of the Contract year immediately
before the Annuitant's 85th birthday.
You may change the Annuity Commencement Date, subject to some general
restrictions:
o You must request the change in writing.
o We must receive the written request at least 30 days before the new
Annuity Commencement Date you requested.
o The new Annuity Commencement Date may not come before the end of any
existing Guaranteed Period.
o Unless we agree prior to the change, the new Annuity Commencement Date
may not be later than the Annuitant's 85th birthday.
Once our Administrative Office notifies you that we have received and
approved your written request for changing the Annuity Commencement Date, the
change will be made effective as of the date you signed the request.
14
<PAGE>
Annuity Commencement Dates which occur after the Annuitant's 85th birthday
may have adverse income tax consequences so you should consult your tax advisor
before requesting an Annuity Commencement Date at these advanced ages. You may
be required to begin distributions from Qualified Contracts before the Annuity
Commencement Date. (See "Federal Tax Matters," page 18.)
ANNUITY OPTIONS
On the Annuity Commencement Date we will apply part or all of the Net
Account Value to the annuity option you have selected. If you have not selected
an annuity option, we will apply your Net Account Value to Option 2 -- Life
Income with Payments for a 10-year Guaranteed Period. You may select from the
following annuity options. For qualified Contracts, additional annuity options
may apply with certain restrictions.
o OPTION 1 -- PAYMENT FOR A FIXED PERIOD.
We will make equal monthly payments for any period not less than five
years nor more than 30 years. The amount of each payment depends upon the
total amount applied, the period selected and the monthly payment rates we
are using when the annuity payments are determined.
o OPTION 2 -- LIFE INCOME WITH PAYMENTS FOR A GUARANTEED PERIOD.
We will make equal monthly payments based on the life of the named
Annuitant or Annuitants. Payments will continue for the lifetime of the
Annuitant or Annuitants with payments guaranteed for either 10 or 20
years. Payments stop at the end of the selected guaranteed period or when
the Annuitant dies, whichever is later.
o OPTION 3 -- PAYMENTS FOR A FIXED AMOUNT.
We will make equal monthly payments for a fixed amount. The amount of
each payment may not be less than $10 for each $1,000 of Net Account Value
applied to the annuity option. Each month we will credit interest on the
unpaid balance and add that interest to it. We will set the interest rate
in our sole discretion, but it will not be less than an annual effective
rate of 4%. Payments will continue until the amount we hold runs out. The
last payment will be for the balance only.
Other annuity options may be available on your Annuity Commencement Date.
ANNUITY PAYMENTS
We calculate the amount of each annuity payment using the Annuity Tables
published in the Contract. Those tables are based on the 1983 Individual
Annuitant Mortality Table A projected four years with interest credited at 4%
per annum. One year will be deducted from the attained age of the Annuitant for
every three completed years beyond the year 1987. If, at the time you select an
annuity option, we offer options or rates more favorable that those guaranteed,
the higher benefits will apply.
We will make the first annuity payment one month after the Annuity
Commencement Date. We will make subsequent payments according to the payment
mode you select. We reserve the right to pay the Net Account Value in a lump
sum if it is less than $5,000, and to change the frequency of your annuity
payments if at any time the annuity payment is less than our current minimum
payment amount.
As a condition for making the first annuity payment, we may require proof
of the Annuitant's age and gender. As a condition for continuing to make
annuity payments that are based on the life of an Annuitant, we may also
require proof at any time that an Annuitant is still living. You cannot
surrender this Contract after annuity payments begin.
DEATH OF THE OWNER OR ANNUITANT AFTER THE ANNUITY COMMENCEMENT DATE
If any Owner or Annuitant dies on or after the Annuity Commencement Date
and before all the annuity payments have been made, we will distribute any
remaining payments at least as rapidly as under the annuity option in effect on
the date of death. After the death of an Annuitant, we will make any remaining
payments to the Beneficiary unless you specified otherwise before the Annuitant
died.
15
<PAGE>
INVESTMENTS BY PROTECTIVE
Protective's investment philosophy is to maintain a portfolio that is
matched to its liabilities with respect to yield, risk, and cash flow
characteristics. The types of assets in which Protective may invest are
governed by state laws which prescribe qualified investment assets. Within the
parameters of these laws, Protective invests its assets giving consideration to
such factors as liquidity needs, investment quality, investment return,
matching of assets and liabilities, and the composition of the investment
portfolio by asset type and credit exposure. Because liquidity is important,
Protective continually balances maturity against yield and quality
considerations in selecting new investments.
In establishing Guaranteed Interest Rates, Protective intends to take into
account the yields available on the instruments in which it intends to invest
the proceeds from the Contracts. (See "Guaranteed Interest Rates," on page 8.)
Protective's investment strategy with respect to the proceeds attributable to
the Contracts will be to primarily invest in investment-grade debt instruments
having durations tending to match the applicable Guaranteed Periods. It is
anticipated that some portion of the portfolio will be invested in mortgages.
Protective may also invest in lower than investment-grade issues, depending
upon relative spreads in the capital markets.
Investment-grade debt instruments in which Protective intends to invest
the proceeds from the Contracts include:
Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the United
States Government.
Mortgage-backed and corporate debt securities which have an investment
grade, at the time of purchase, within the four highest-grades assigned by
Moody's Investors Service, Inc. (Aaa, Aa, A, Baa), Standard & Poor's
Corporation ("S&P") (AAA, AA, A, or BBB) or any other nationally recognized
rating service. Protective considers bonds rated Baa or higher by Moody's
or BBB or higher by S&P to be investment grade. At December 31, 1997, 96.9%
of bonds in which Protective invests were considered investment grade;
32.6% of these bonds were rated Baa or BBB.
Mortgage-backed securities are based upon residential mortgages which have
been pooled into securities. Mortgage-backed securities may have greater cash
flow volatility as a result of the pass-through of prepayments of principal on
the underlying loans. Prepayments of principal on the underlying residential
loans can be expected to accelerate with decreases in interest rates and
diminish with increases in interest rates.
Debt obligations which have a Moody's or Standard & Poor's rating below
investment-grade may comprise a portion of the portfolio. Risks associated with
investments in less than investment-grade debt obligations may be significantly
higher than risks associated with investments in debt securities rated
investment-grade. Risk of loss upon default by the borrower is significantly
greater with respect to such debt obligations than with other debt securities
because these obligations may be unsecured or subordinated to other creditors.
Additionally, there is often a thinly traded market for such securities and
current market quotations are frequently not available for some of these
securities. Issuers of less than investment-grade debt obligations usually have
higher levels of indebtedness and are more sensitive to adverse economic
conditions, such as recession or increasing interest rates, than
investment-grade issuers. Protective carefully selects, and closely monitors,
such investments. Fixed maturity securities rated BBB may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity of the issuer to make principal and
interest payments than is the case with higher rated fixed maturity securities.
Protective's primary mortgage lending emphasis for the past twenty years
has been on strip shopping centers located in smaller towns and anchored by one
or more strong regional or national retail stores. The anchor tenants enter
into long-term noncancelable leases with Protective's borrowers. The centers
provide the basic necessities of life such as food, pharmaceuticals, and
clothing, and are relatively insensitive to changes in economic conditions.
Protective also makes loans on credit-oriented commercial properties. In the
twenty years that Protective has implemented its mortgage loan strategy, it has
had no significant loss of principal on mortgages it has originated. Protective
carefully selects, and closely monitors, such investments.
The federal government or its instrumentalities does not guarantee the
Contracts. Protective backs the guarantees associated with the Contracts.
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<PAGE>
While the foregoing generally describes our investment strategy with
respect to the proceeds attributable to the Contracts, we are not obligated to
invest the proceeds attributable to the Contracts according to any particular
strategy, except as may be required by the insurance laws of Tennessee and
other states.
OTHER CONTRACT PROVISIONS
NON-PARTICIPATING
The Contract does not share in our surplus or profits and does not pay
dividends.
NOTICE
All instructions and requests to change or assign a Contract must be in a
written form acceptable to us and signed by the Owner. The instruction, change
or assignment will relate back to and take effect on the date it was signed,
but we will not be responsible for following any instruction or making any
change or assignment before we receive it and acknowledge it through our
Administrative Office. Send correspondence to: Investment Products Services, P.
O. Box 10648, Birmingham, Alabama 35202-0648.
REPORTS
At least once each year, we will send you a report showing the current
Account Value, Sub-Account values, interest credited and any other information
required by law.
TRANSACTIONS AND MODIFICATION OF THE CONTRACT
Currently, you must make any request for a change or transaction under
your Contract in writing and on a form acceptable to Protective Life. Changes
and transactions under your Contract include actions such as making additional
Annuity Deposits, requesting surrenders or interest withdrawals, changing the
Annuity Commencement Date; annuity option; or Annuitant, or making a death
benefit claim. No one is authorized to modify or waive any term or provision of
the Contract unless we agree and unless it is signed by our President,
Vice-President or Secretary. We reserve the right to change or modify the
provisions of the Contract to conform to any applicable laws, rules or
regulations issued by a government agency, or to assure the Contract continues
to qualify as an annuity under the Internal Revenue Code. We will send you a
copy of any endorsement that modifies your Contract and will obtain all
necessary approvals including, where required, that of the Owner.
ASSIGNMENT OF A CONTRACT
You have the right to assign a Contract if it is permitted by applicable
law. Generally, you do not have the right to assign a qualified Contract. We do
not assume responsibility for any assignment. Any claim made under an
assignment is subject to proof of the nature and extent of the assignee's
interest before we make a payment. Assignments have federal income tax
consequences. An assignment may result in the Owner recognizing taxable income.
(See, "Federal Tax Matters," page 18.)
FACILITY OF PAYMENT
If the Annuitant or Beneficiary is incapable of giving a valid receipt for
any payment, we may make payment to whomever has assumed his or her care and
principal support. Any such payment shall fully discharge us to the extent of
that payment.
PROTECTION OF PROCEEDS
To the extent permitted by law, no benefits payable under a Contract will
be subject to the claims of creditors of any payee.
ERROR IN AGE OR GENDER
When a Contract benefit depends upon any person's age or gender, we may
require proof of such. We may suspend the benefit until we receive that proof.
When we receive satisfactory proof, we will make any
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payments that were due during the period of suspension. Where the use of unisex
mortality rates is required, we will not determine or adjust benefits based on
gender.
If, after we receive proof of age and gender (where applicable), we
determine that the information you furnished to us was not correct, we will
adjust the benefits under your Contract to that which would have been due based
upon the correct information. If we underpaid a benefit because of the error,
we will make up the underpayment in a lump sum. If the error resulted in an
overpayment, we will deduct the amount of the overpayment from any current or
future payment due under the Contract. We will deduct up to the full amount of
any current or future payment until the overpayment has been fully repaid.
Underpayments and overpayments will bear interest at an annual effective rate
of 3%.
DISTRIBUTION OF THE CONTRACTS
Investment Distributors, Inc., ("IDI") is the principal underwriter for
the Contracts and has agreed to use its best efforts to distribute them. IDI is
registered with the Securities and Exchange Commission as a broker-dealer under
the Securities Exchange Act of 1934. It is a member of the National Association
of Securities Dealers ("NASD"). IDI is a wholly owned subsidiary of Protective
Life Corporation, which is the parent corporation of Protective Life Insurance
Company.
IDI enters into distribution agreements with other broker-dealers
registered under the Securities Exchange Act of 1934. These broker-dealers
offer the Contracts to individuals and groups who have established accounts
with them. IDI may also offer the Contracts to members of certain other
eligible groups or other eligible individuals.
Unless forbidden by law, we pay a commission on each Annuity Deposit and
on the Sub-Account Value transferred to a subsequent Guaranteed Period. The
maximum commission we will pay is 7%.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion of the federal income tax treatment of the
Contracts is not exhaustive, does not purport to cover all situations, and is
not intended as tax advice. The federal income tax treatment of the Contracts
is unclear in certain circumstances, and a qualified tax adviser should always
be consulted with regard to the application of law to individual circumstances.
This discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, and interpretations existing on the date of this
Prospectus. These authorities, however, are subject to change by Congress, the
Treasury Department, and judicial decisions.
This discussion does not address state or local tax consequences
associated with the purchase of the Contracts. In addition, THE COMPANY MAKES
NO GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL -- OF ANY
CONTRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.
THE COMPANY'S TAX STATUS
The Company is taxed as a life insurance company under Subchapter L of the
Code. The assets underlying the Contracts will be owned by the Company, and the
income derived from such assets will be includible in the Company's income for
federal income tax purposes.
TAXATION OF ANNUITIES IN GENERAL
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code (and except as described below), the
Contracts should be treated as annuities and any increase in a Participant's
Account Value is generally not taxable to the Participant or Annuitant until
received, either in the form of Annuity payments as contemplated by the
Contracts, or in some other form of distribution.
As a general rule, Contracts held by "non-natural persons" such as a
corporation, trust or other similar entity, as opposed to a natural person, are
not treated as annuities for federal tax purposes. The income on
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such Contracts (as defined in the tax law) is taxed as ordinary income that is
received or accrued by the Participant during the taxable year. There are
several exceptions to this general rule for Contracts held by non-natural
persons. First, Contracts will generally be treated as held by a natural person
if the nominal owner is a trust or other entity which holds the Contract as an
agent for a natural person. Thus, if a group Contract is held by a trust or
other entity as an agent for Certificate owners who are individuals, those
individuals should be treated as owning an annuity for federal income tax
purposes. However, this special exception will not apply in the case of any
employer who is the nominal owner of a Contract under a non-qualified deferred
compensation arrangement for its employees.
In addition, exceptions to the general rule for non-natural Contract
owners will apply with respect to (1) Contracts acquired by an estate of a
decedent by reason of the death of the decedent, (2) Contracts issued in
connection with certain Qualified Plans, (3) Contracts purchased by employers
upon the termination of certain Qualified Plans, (4) certain Contracts used in
connection with structured settlement agreements, and (5) Contracts purchased
with a single premium when the annuity starting date is no later than a year
from purchase of the Contract and substantially equal periodic payments are
made, not less frequently than annually, during the annuity period.
If the Contract's Annuity Commencement Date occurs (or is scheduled to
occur) at a time when the Annuitant has reached an advanced age, E.G., past age
85, it is possible that the Contract would not be treated as an annuity for
federal income tax purposes. In that event, the Participant would be taxable
currently on the annual increase in the Account Value.
The remainder of this discussion assumes that the Contract will constitute
an annuity for federal tax purposes.
TAXATION OF INTEREST WITHDRAWALS AND PARTIAL AND FULL SURRENDERS
In the case of an interest withdrawal or partial surrender, amounts
received generally are includible in income to the extent the Participant's
Account Value before the withdrawal or partial surrender exceeds his or her
"investment in the contract." In the case of a full surrender, amounts received
are includible in income to the extent they exceed the "investment in the
contract." For these purposes the investment in the contract at any time equals
the premiums paid under the Contract (to the extent such premium payments were
neither deductible when made nor excludable from income as, for example, in the
case of certain contributions to Qualified Contracts) less any amounts
previously received from the Contract which were not included in income.
Other than in the case of Qualified Contracts (which generally cannot be
assigned or pledged), any assignment or pledge (or agreement to assign or
pledge) any portion of the Account Value is treated as a withdrawal of such
amount or portion. The investment in the contract is increased by the amount
includible as income with respect to such assignment or pledge, though it is
not affected by any other aspect of the assignment or pledge (including its
release). If a Participant transfers a Contract without adequate consideration
to a person other than the Participant's spouse (or to a former spouse incident
to divorce), the Participant will be taxed on the difference between his or her
Account Value and the investment in the contract at the time of transfer. In
such case, the transferee's investment in the contract will be increased to
reflect the increase in the transferor's income.
There is some uncertainty regarding the treatment of the Market Value
Adjustment for purposes of determining the amount includible in income as a
result of any interest withdrawal, partial surrender, or transfer without
adequate consideration. Congress has given the Internal Revenue Service ("IRS")
regulatory authority to address this uncertainty. However, as of the date of
this Prospectus, the IRS has not issued any regulations addressing these
determinations.
TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each Annuity payment taxable as ordinary income
is equal to the excess of the payment over the exclusion amount. The exclusion
amount is the amount determined by multiplying (1) the payment by (2) the ratio
of the investment in the contract, adjusted for any period certain or refund
feature, to the total expected value of Annuity payments for the term of the
Contract (determined under Treasury Department regulations).
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Once the total amount of the investment in the contract is excluded using
this ratio, Annuity payments will be fully taxable. If Annuity payments cease
because of the death of the Annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount generally will
be allowed as a deduction to the Annuitant in his last taxable year.
There may be special income tax issues present in situations where the
Participant and the Annuitant are not the same person and are not married to
one another. A tax advisor should be consulted in these situations.
TAXATION OF DEATH BENEFIT PROCEEDS
Prior to the Annuity Commencement Date, amounts may be distributed from a
Contract because of the death of a Participant or, in certain circumstances,
the death of the Annuitant. Such Death Benefit proceeds are includible in
income as follows: (1) if distributed in a lump sum, they are taxed in the same
manner as a full surrender, as described above, or (2) if distributed under an
Annuity option, they are taxed in the same manner as Annuity payments, as
described above. After the Annuity Commencement Date, where a guaranteed period
exists under an Annuity option and the Annuitant dies before the end of that
period, payments made to the Beneficiary for the remainder of that period are
includible in income as follows: (1) if received in a lump sum, they are
includible in income to the extent that they exceed the unrecovered investment
in the Contract at that time, or (2) if distributed in accordance with the
existing Annuity option selected, they are fully excludable from income until
the remaining investment in the Contract is deemed to be recovered, and all
Annuity payments thereafter are fully includible in income.
Proceeds payable on death may be subject to federal income tax withholding
requirements. (See "Federal Income Tax Withholding, page 23.) In addition, in
the case of such proceeds from certain Qualified Contracts, mandatory
withholding requirements may apply, unless a "direct rollover" of such proceeds
is made. (See "Direct Rollover Rules, page 23.)
PENALTY TAX ON PREMATURE DISTRIBUTIONS
Where a Contract has not been issued in connection with a Qualified Plan,
there generally is a 10% penalty tax on the taxable amount of any payment from
the Contract unless the payment is: (a) received on or after the Participant
reaches age 59 1/2; (b) attributable to the Participant becoming disabled (as
defined in the tax law); (c) made on or after the death of the Owner or, if a
Owner is not an individual, on or after the death of the primary annuitant (as
defined in the tax law); (d) made as a series of substantially equal periodic
payments (not less frequently than annually) for the life (or life expectancy)
of the Owner or the joint lives (or joint life expectancies) of the Owner and a
designated beneficiary (as defined in the tax law); or (e) made under a
Contract purchased with a single premium when the Annuity Commencement Date is
no later than a year from purchase of the Contract and substantially equal
periodic payments are made, not less frequently than annually, during the
Annuity period. (Similar rules, described below, generally apply in the case of
Qualified Contracts.)
AGGREGATION OF CONTRACTS
In certain circumstances, the IRS may determine the amount of an Annuity
payment or a withdrawal or surrender from a Contract that is includible in
income by combining some or all of the annuity contracts owned by an individual
which are not issued in connection with a Qualified Plan. For example, if a
person purchases a Contract offered by this Prospectus and also purchases at
approximately the same time an immediate annuity, the IRS may treat the two
contracts as one contract. In addition, if a person purchases two or more
deferred annuity contracts from the same insurance company (or its affiliates)
during any calendar year, all such contracts will be treated as one contract
for purposes of determining whether any payment not received as an annuity
(including interest withdrawals and surrenders prior to the Annuity
Commencement Date) is includible in income. The effects of such aggregation are
not clear; however, it could affect the time when income is taxable and the
amount which might be subject to the 10% penalty tax described above.
LOSS OF INTEREST DEDUCTION WHERE CONTRACTS ARE HELD BY OR FOR THE BENEFIT OF
CERTAIN NON-NATURAL PERSONS
In the case of Contracts issued after June 8, 1997 to a non-natural
taxpayer (such as a corporation or a trust), or held for the benefit of such an
entity, a portion of otherwise deductible interest may no longer be
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deductible by the entity, regardless of whether the interest relates to debt
used to purchase or carry the Contract. However, this interest deduction
disallowance does not affect Contracts where the income on such Contracts is
treated as ordinary income that is received or accrued by the Participant
during the taxable year. Entities that are considering purchasing the Contract,
or entities that will be beneficiaries under a Contract, should consult a tax
advisor.
QUALIFIED RETIREMENT PLANS
IN GENERAL
The Contracts are also designed for use in connection with certain types
of retirement plans which receive favorable treatment under the Code. Those who
are considering the purchase of a Contract for use in connection with a
Qualified Plan should consider, in evaluating the suitability of the Contract,
that the Contract requires an Annuity Deposit of at least $10,000. Numerous
special tax rules apply to participants in Qualified Plans and to Contracts
used in connection with Qualified Plans. Therefore, no attempt is made in this
prospectus to provide more than general information about the use of the
Contracts with the various types of Qualified Plans.
The tax rules applicable to Qualified Plans vary according to the type of
plan and the terms and conditions of the plan itself. For example, both the
amount of the contribution that may be made, and the tax deduction or exclusion
that the Participant may claim for such contribution, are limited under
Qualified Plans and vary with the type of plan. Also, in the case of interest
withdrawals, full and partial surrenders, and Annuity payments under Qualified
Contracts, there may be no "investment in the contract" and the total amount
received may be taxable.
If a Contract is issued in connection with a Qualified Plan, the Owner and
the Annuitant must be the same person. Additionally, for Contracts issued in
connection with Qualified Plans subject to the Employee Retirement Income
Security Act, the spouse or ex-spouse of the Owner will have rights in the
Contract. In such a case, the Owner may need the consent of the spouse or
ex-spouse to change annuity options, elect an interest withdrawal, or make a
partial or full surrender of the Contract.
In addition, special rules apply to the time at which distributions must
commence and the form in which the distributions must be paid. For example, the
length of any Guarantee Period may be limited in some circumstances to satisfy
certain minimum distribution requirements under the Code. Furthermore, failure
to comply with minimum distribution requirements applicable to Qualified Plans
will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the Qualified Plan. In the case of Individual
Retirement Accounts or Annuities ("IRAs"), distributions of minimum amounts (as
specified in the tax law) must generally commence by April 1 of the calendar
year following the calendar year in which the Participant attains age 70 1/2.
In the case of certain other Qualified Plans, distributions of such minimum
amounts generally must commence by the later of this date or April 1 of the
calendar year following the calendar year in which the employee retires.
There is also a 10% penalty tax on the taxable amount of any payment from
certain Qualified Contracts. There are exceptions to this penalty tax which
vary depending on the type of Qualified Plan. In the case of an IRA, exceptions
provide that the penalty tax does not apply to a payment (a) received on or
after the Participant reaches age 59 1/2, (b) received on or after the
Participant's death or because of the Participant's disability (as defined in
the tax law), or (c) made as a series of substantially equal periodic payments
(not less frequently than annually) for the life (or life expectancy) of the
Participant or for the joint lives (or joint life expectancies) of the
Participant and the Participant's designated Beneficiary (as defined in the tax
law). These exceptions, as well as certain others not described herein,
generally apply to taxable distributions from other Qualified Plans (although,
in the case of plans qualified under sections 401 and 403, exception "c" above
for substantially equal periodic payments applies only if the Participant has
separated from service). In addition, the penalty tax does not apply to certain
distributions from IRAs taken after December 31, 1997 which are used for
qualified first time home purchases or for higher education expenses. Special
conditions must be met for these two exceptions to the penalty tax. Those
wishing to take a distribution from an IRA for these purposes should consult
their tax advisor.
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When issued in connection with a Qualified Plan, a Contract will be
amended as generally necessary to conform to the requirements of the plan.
However, Participants, Annuitants, and Beneficiaries are cautioned that the
rights of any person to any benefits under Qualified Plans may be subject to
the terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contract. In addition, the Company shall not be bound by
terms and conditions of Qualified Plans to the extent such terms and conditions
contradict the Contract, unless the Company consents.
Following are brief descriptions of various types of Qualified Plans in
connection with which Protective will generally issue a Contract.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or "IRA." IRAs are subject to limits on the
amounts that may be contributed, the persons who may be eligible and on the
time when distributions may commence. Also, subject to the direct rollover and
mandatory withholding requirements (discussed below), distributions from
certain Qualified Plans may be "rolled over" on a tax-deferred basis into an
IRA. The Contract may not, however, be used in connection with an "Education
IRA" under Section 530 of the Code, a "Simplified Employee Pension" under
Section 408(k) of the Code, or as a "SIMPLE IRA" under Section 408(p) of the
Code.
ROTH IRAS. Section 408A of the Internal Revenue Code permits eligible
individuals to contribute to a type of IRA known as a "Roth IRA." Roth IRAs are
generally subject to the same rules as non-Roth IRAs, but differ in several
respects. Among the differences is that, although contributions to a Roth IRA
are not deductible, "qualified distributions" from a Roth IRA will be
excludable from income.
A qualified distributions is a distribution that satisfies two
requirements:
o First, the distribution must be made in a taxable year that is at least
five years after the first taxable year for which a contribution was made
to any Roth IRA established for the Owner.
o Second, the distribution must be either:
1) made after the Owner reaches age 59 1/2;
2) made after the Owner's death;
3) attributable to the Owner being disabled; or
4) a qualified first-time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Internal Revenue Code.
In addition, distributions from Roth IRAs need not commence when the Owner
reaches age 70 1/2. A Roth IRA may accept a "qualified rollover contribution"
from a non-Roth IRA, but a Roth IRA may not accept rollover contributions from
other Qualified Plans. The state tax treatment of a Roth IRA may differ from
federal income tax treatment of a Roth IRA.
CORPORATE AND SELF-EMPLOYED ("H.R. 10" AND "KEOGH") PENSION AND
PROFIT-SHARING PLANS. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
Contract in order to provide benefits under the plans. Employers intending to
use the Contract in connection with such plans should seek competent advice.
TAX-SHELTERED ANNUITIES. Section 403(b) of the Code permits public school
employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as
"tax-sheltered annuities." Purchasers of the Contracts for such purposes should
seek competent advice as to eligibility, limitations on permissible amounts of
purchase payments and other tax consequences associated with the Contracts.
Section 403(b) Policies contain restrictions on withdrawals of (i)
contributions made pursuant to a salary reduction agreement in years beginning
after December 31, 1988, (ii) earnings on those contributions, and (iii)
earnings after December 31, 1988 on amounts attributable to salary reduction
contributions held as of December 31, 1988. These amounts can be paid only if
the employee has reached age
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59 1/2, separated from service, died, become disabled, or in the case of
hardship. Amounts permitted to be distributed in the event of hardship are
limited to actual contributions; earnings thereon can not be distributed on
account of hardship. (These limitations on withdrawals do not apply to the
extent the Company is directed to transfer some or all of the Account Value to
the issuer of another tax-sheltered annuity or into a Section 403(b)(7)
custodial account.)
DIRECT ROLLOVER RULES
In the case of Contracts used in connection with a pension,
profit-sharing, or annuity plan qualified under Sections 401(a) or 403(a) of
the Code, or in the case of a Section 403(b) Tax-Sheltered annuity, any
"eligible rollover distribution" from the Contract will be subject to direct
rollover and mandatory withholding requirements. An eligible rollover
distribution generally is any taxable distribution from a qualified pension
plan under Section 401(a) of the Code, qualified annuity plan under Section
403(a) of the Code, or Section 403(b) Tax-Sheltered annuity or custodial
account, excluding certain amounts (such as minimum distributions required
under Section 401(a)(9) of the Code, distributions which are part of a "series
of substantially equal periodic payments" made for life or a specified period
of 10 years or more, or hardship distributions as defined in the tax law).
Under these requirements, withholding at a rate of 20 percent will be
imposed on any eligible rollover distribution. In addition, the participant in
these qualified retirement plans cannot elect out of withholding with respect
to an eligible rollover distribution. However, this 20 percent withholding will
not apply if, instead of receiving the eligible rollover distribution, the
participant elects to have amounts directly transferred to certain Qualified
Plans (such as to an Individual Retirement Annuity). Prior to receiving an
eligible rollover distribution, you will receive a notice (from the plan
administrator or the Company) explaining generally the direct rollover and
mandatory withholding requirements and how to avoid the 20% withholding by
electing a direct transfer.
FEDERAL INCOME TAX WITHHOLDING
The Company will withhold and remit to the U.S. government a part of the
taxable portion of each distribution made under a Contract unless the
distributee notifies the Company at or before the time of the distribution that
he or she elects not to have any amounts withheld. In certain circumstances,
Protective may be required to withhold tax. The withholding rates applicable to
the taxable portion of periodic Annuity payments (other than the eligible
rollover distributions) are the same as the withholding rates generally
applicable to payments of wages. The withholding rate applicable to the taxable
portion of non-periodic payments (including withdrawals prior to the Annuity
Commencement Date and conversions of, or rollovers from, non-Roth IRAs to Roth
IRAs) is 10%. Regardless of whether you elect not to have federal income tax
withheld, you are still liable for payment of federal income tax on the taxable
portion of the payment. As described above, the withholding rate applicable to
eligible rollover distributions is 20%.
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PROTECTIVE LIFE INSURANCE COMPANY
[TO BE FILED BY AMENDMENT]
BUSINESS
LIFE INSURANCE
ACQUISITIONS DIVISION
INDIVIDUAL LIFE DIVISION
WEST COAST DIVISION
SPECIALTY INSURANCE PRODUCTS
DENTAL AND CONSUMER BENEFITS DIVISION
FINANCIAL INSTITUTIONS DIVISION
RETIREMENT SAVINGS AND INVESTMENT PRODUCTS
GUARANTEED INVESTMENT CONTRACTS DIVISION
INVESTMENT PRODUCTS DIVISION
CORPORATE AND OTHER
SELECTED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
PREMIUMS AND POLICY FEES
NET INVESTMENT INCOME
REALIZED INVESTMENT GAINS (LOSSES)
OTHER INCOME
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE
NET INCOME
KNOWN TRENDS AND UNCERTAINTIES
RECENTLY ISSUED ACCOUNTING STANDARDS
LIQUIDITY AND CAPITAL RESOURCES
IMPACT OF INFLATION
INSURANCE IN FORCE
UNDERWRITING
INVESTMENTS
INDEMNITY REINSURANCE
POLICY LIABILITIES AND ACCRUALS
FEDERAL INCOME TAX CONSEQUENCES
COMPETITION
REGULATION
RECENT DEVELOPMENTS
EMPLOYEES
PROPERTIES
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DIRECTORS AND EXECUTIVE OFFICERS
[TO BE FILED BY AMENDMENT]
EXECUTIVE COMPENSATION
[TO BE FILED BY AMENDMENT]
SUMMARY COMPENSATION TABLE
[TO BE FILED BY AMENDMENT]
AGGREGATED FY-END OPTION/SAR VALUES
[TO BE FILED BY AMENDMENT]
PENSION PLAN
PENSION PLAN TABLE
[TO BE FILED BY AMENDMENT]
EMPLOYMENT CONTINUATION AGREEMENTS
[TO BE FILED BY AMENDMENT]
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
MANAGEMENT OWNERSHIP OF PLC STOCK
CERTAIN TRANSACTIONS
[TO BE FILED BY AMENDMENT]
LEGAL PROCEEDINGS
[TO BE FILED BY AMENDMENT]
EXPERTS
[TO BE FILED BY AMENDMENT]
LEGAL MATTERS
[TO BE FILED BY AMENDMENT]
REGISTRATION STATEMENT
[TO BE FILED BY AMENDMENT]
25
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APPENDIX A
MATTERS RELATING TO CONTRACTS
OFFERED IN CERTAIN STATES AFTER SEPTEMBER 10, 1991
AND PRIOR TO MAY 1, 1996
THE FOLLOWING SECTIONS DESCRIBE CONTRACTS OFFERED AFTER SEPTEMBER 10, 1991
AND BEFORE MAY 1, 1996. THE FOLLOWING DESCRIPTIONS OF CERTAIN PROVISIONS SHOULD
BE SUBSTITUTED IN THEIR ENTIRETY FOR THE RELATED TERMS AND DESCRIPTIONS FOUND
ELSEWHERE IN THIS PROSPECTUS. THE PAGE REFERENCES LISTED BELOW INDICATE WHERE
IN THE PROSPECTUS THE SUBSTITUTED DESCRIPTIONS CAN BE FOUND. REFER TO YOUR
CONTRACT FOR COMPLETE DETAILS OF THESE PROVISIONS.
SUMMARY (PAGE 4)
The paragraphs in the Summary describing the guaranteed Death Benefit,
Market Value Adjustment, and Surrender Charge should be revised as follows:
HOW IS THE SURRENDER CHARGE The surrender charge applies during the
CALCULATED? first seven years of each Guaranteed
Period. If the Guaranteed Period is seven
years or less, a surrender charge will
apply for the entire Guaranteed Period.
The surrender charge is equal to six
months of interest on the amount you
withdraw from a Sub-Account. The total
surrender charges for a Guaranteed Period
will never exceed six months' interest on
the amount of the Annuity Deposit or Sub-
Account value you allocated to the
Guaranteed Period. (See "Surrender
Charges," page 11.)
WHAT IS A MARKET VALUE ADJUSTMENT? The Market Value Adjustment is the amount
we deduct from or add to the Sub-Account
value when you request a surrender before
the end of the Sub-Account's Guaranteed
Period. The Market Value Adjustment
reflects the relationship between 1) the
Guaranteed Interest Rate that we are
currently offering for a Guaranteed
Period equal to the time remaining in
your Guaranteed Period at the time you
request a full or partial surrender, and
2) the Guaranteed Interest Rate being
applied to the Sub-Account from which you
are requesting a full or partial
surrender. (See "Market Value
Adjustment," page 11.)
DOES THE CONTRACT PROVIDE A DEATH If any Owner dies while the Contract
BENEFIT? is in force and before the Annuity
Commencement Date, we will pay a
guaranteed Death Benefit, less any
applicable premium tax, to any surviving
Owner.
If there is no surviving Owner, we will
pay the guaranteed Death Benefit to the
Beneficiary that the Owner has named. The
Beneficiary will have 60 days from the
date of death to exercise this right to
the guaranteed Death Benefit. If the
Beneficiary has not exercised this right
within 60 days, we will treat any
payments as a surrender request subject
to the surrender charge and Market Value
Adjustment.
The guaranteed Death Benefit will be
equal to the Account Value of your
Contract. If applicable, we will total
the Death Benefits for all of your
Guaranteed Periods to determine the
amount of your guaranteed Death Benefit.
(See "Death Benefit," page 13.)
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PARTIES TO THE CONTRACT (PAGE 6)
BENEFICIARY: The person named under the Contract to receive the Death
Benefit upon the Death of any Owner is the primary Beneficiary. If an Owner
dies, the surviving Owner, if any, will always be the primary Beneficiary,
regardless of whom the Contract may designate. A contingent Beneficiary is the
person named in the Contract to receive the Death Benefit if the primary
Beneficiary is not living at the time of the Owner's death.
If no Beneficiary designation is in effect or if no Beneficiary is living
at the time of an Owner's death, the Beneficiary will be the estate of the
deceased Owner.
Unless designated irrevocably, you may change Beneficiaries at any time by
sending a written request to our Administrative Office. If you have designated
a Beneficiary irrevocably, that Beneficiary's written consent is necessary
before you can change the Beneficiary or exercise certain other rights.
ISSUING A CONTRACT (PAGE 7, FIRST PARAGRAPH)
You purchase a Contract by completing an application and making an Annuity
Deposit of at least $5,000. After we issue the Contract, you may make
additional Annuity Deposits of at least $5,000. We must pre-approve any Annuity
Deposits of less than $5,000. You cannot make additional Annuity Deposits in
the states of California, Minnesota, South Carolina or Michigan. Regardless of
how many Annuity Deposits you make, we will issue only one Contract. We have
the right to decline any Annuity Deposit or any application. When we sell
Contracts to retirement plans or in connection with retirement plans, those
retirement plans may or may not qualify for special tax treatment under the
Internal Revenue Code.
GUARANTEED PERIOD AND SUB-ACCOUNTS
SELECTING A SUBSEQUENT GUARANTEE PERIOD (PAGE 8)
To apply the ending Sub-Account value to one or more subsequent Guaranteed
Periods that you select, you must give us written instructions to this effect
no later than 10 days after the end of the expiring Guaranteed Period. You may
select a subsequent Guaranteed Period only from Guaranteed Periods we are
offering at the time you make your selection. Any subsequent Guaranteed Period
may not extend past the Annuity Commencement Date for your Contract. At least
$5,000 must be allocated to any subsequent Guaranteed Period.
AUTOMATIC SUBSEQUENT GUARANTEED PERIODS (PAGE 8)
If you do not instruct us otherwise under the first or second options
described above, a subsequent Guaranteed Period will automatically begin when
the prior Guaranteed Period ends. Your ending Sub-Account value will become the
beginning Sub-Account value for the subsequent Guaranteed Period. The
Subsequent Guaranteed Period will be the longest Guaranteed Period we offer
that is not longer than the Guaranteed Period that just ended, and does not
extend past the Annuity Commencement Date. You must allocate at least $5,000 to
any subsequent Guaranteed Period.
SURRENDERS
SURRENDERS AND PARTIAL SURRENDERS (PAGE 10, FIRST PARAGRAPH)
You may surrender your entire Contract at any time. You may surrender part
of the Contract if the value of each remaining Sub-Account is at least $5,000
after the surrender.
SURRENDER CHARGES (PAGE 11)
Surrenders and partial surrenders may be subject to a surrender charge.
Generally, we assess a surrender charge if you take a surrender during the
first seven years of any Guarantee Period. The surrender charge is equal to six
months of interest on the amount you surrender from a Sub-Account. The total
surrender charges for a Guaranteed Period will never exceed six months'
interest on the amount of the Annuity Deposit or Sub-Account value you
allocated to the Guaranteed Period. We will compute this interest at the same
rate we are crediting the Sub-Account from which you make a surrender. We will
deduct the surrender charge from the amount you have chosen to surrender.
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We do not apply the surrender charge after the first seven years of a
Guaranteed Period or from any amount available as an interest withdrawal. Also,
we do not apply a surrender charge to surrenders you request at the end of a
Guaranteed Period provided that we receive your written request, in a form we
deem acceptable, within twenty days prior to the end of the Guaranteed Period.
If we receive your request for a surrender prior to the end of a
Guaranteed Period, we will calculate the surrender value, as of the date of the
surrender, as follows:
[(A x B) - SC] where:
A = the Sub-Account value of the Sub-Account from which you request a
surrender
B = the Market Value Adjustment
SC = the surrender charge plus any premium taxes, if applicable
On the date we receive your request, we will inform you of the amounts
available for you to surrender. Any surrender may be subject to federal and
state income tax and, in some cases, premium taxes.
Because a Guaranteed Period cannot extend past the Annuity Commencement
Date, we will not deduct a surrender charge or Market Value Adjustment if you
use your Net Account value to purchase an Annuity on the Annuity Commencement
Date.
WAIVER OF SURRENDER CHARGES (PAGE 11)
We will waive any applicable surrender charge if you meet any of the
following conditions after the first year of the Contract:
1) You enter, for a period of at least 90 days, a facility that is licensed
by the state and qualifies as a skilled nursing home facility under
Medicare or Medicaid.
2) A physician who is not related to you or the Annuitant diagnoses you as
having a terminal illness as the term is defined in your Contract. You
must submit to us written proof of this illness that we deem satisfactory
and we reserve the right to require an examination by a physician of our
choice to confirm your terminal illness.
If we waive your surrender charge, we will still impose a Market Value
Adjustment where applicable. Our waiver of surrender charges is not available
in all states due to applicable insurance laws.
MARKET VALUE ADJUSTMENT (PAGE 11)
We will apply a Market Value Adjustment if your request a surrender before
the end of a Sub-Account's Guaranteed Period. The Market Value Adjustment may
increase or decrease the amount you receive from a surrender. Like the
surrender charge, we calculate the Market Value Adjustment separately for each
Sub-Account. The Market Value Adjustment is applied to the surrendered
Sub-Account value, less any amount available as an interest withdrawal from
interest earned during the prior Contract year, before we deduct any surrender
charge. We will include the Market Value Adjustment in the amount we deduct
from your Sub-Account to satisfy your surrender request. The formula we use to
determine the Market Value Adjustment is:
(1+g / 1+c) x (N/12) where:
g = The Guaranteed Interest Rate in effect for the current Guaranteed
Period expressed as a decimal (e.g., 1% = .01).
C = The current Guaranteed Interest Rate we offer for a Guaranteed Period
that has a duration equal to the number of months left before the end of
the Guaranteed Period from which you are making the surrender.
N = The number of months remaining in your Guaranteed Period as of the
date you request a surrender.
The Market Value Adjustment reflects the relationship between 1) the
current Guaranteed Interest Rate we offer for a Guaranteed Period equal in
duration to the amount of time left in the surrendered Guaranteed Period, and
2) the Guaranteed Interest Rate we are applying to the Guaranteed Period from
which you are making a surrender.
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Generally, if your Guaranteed Interest Rate is lower than the one we offer
for Guaranteed Period equal to the time remaining in your Guaranteed Period,
the Market Value Adjustment may produce a surrender value that is less than the
sum of the portion of your Annuity Deposit being surrendered plus the interest
it has earned. Similarly, if your Guaranteed Interest Rate is higher than the
applicable current Guaranteed Interest Rate, the Market Value Adjustment may
increase your surrender value beyond the sum of the portion of your Annuity
Deposit being surrendered plus the interest it has earned.
Because we base current Guaranteed Interest Rates in part upon the
investment yields that are available to us, the effect of the Market Value
Adjustment will be related to those yields. Therefore, if these yields increase
from the time, you purchase your Contract, it is possible that the Market Value
Adjustment, coupled with the surrender charge and any premium tax, could
produce a full surrender value for your Contract that is less than the total of
your Annuity Deposits.
DETERMINING THE DEATH BENEFIT (PAGE 14)
We will calculate the guaranteed Death Benefit as of the date of an
Owner's death. The guaranteed Death Benefit will be equal to the Account Value
less applicable premium taxes.
ANNUITY OPTIONS (PAGE 15)
On the Annuity Commencement Date we will apply part or all of the Net
Account Value to the annuity option you have selected. If you have not selected
an annuity option, we will apply your Net Account Value to Option 2 - Life
Income with Payments for a 10-Year Guaranteed Period. You may select from the
following annuity options. For Qualified Contracts, annuity options may apply
with certain restrictions.
o OPTION 1 - PAYMENT FOR A FIXED PERIOD
We will make equal monthly payments for any period not less than five
years and not more than 30 years. The amount of each payment depends upon
the total amount applied, the period selected and the monthly payment
rates we are using when the annuity payments are determined.
o OPTION 2 - LIFE INCOME WITH PAYMENTS FOR A GUARANTEED PERIOD
We will make equal monthly payments based on the life of the named
Annuitant or Annuitants. Payments will continue for the lifetime of the
Annuitant or Annuitants with payments guaranteed for either 10 or 20
years. Payments will stop at the end of the selected guaranteed period or
when the Annuitant dies, whichever is later.
o OPTION 3 - PAYMENTS FOR A FIXED AMOUNT
We will make equal monthly payments for a fixed amount. The amount of
each payment may not be less than $10 for each $1,000 of Net Account Value
applied to the annuity option. Each month we will credit interest on the
unpaid balance and add that interest to it. We will set the interest rate
in our sole discretion, but it will not be less than an annual effective
interest rate of 4%. Payments will continue until the amount we hold runs
out. The last payment will be for the balance only.
o OPTION 4 - PURCHASE OF OTHER ANNUITIES
The total amount you apply is used to purchase any kind of annuity we
issue on the date this option is selected.
The dollar amount of monthly payments for every $1,000 you apply to each
available annuity option is calculated in accordance with annuity tables set
forth in the Contract. We base these tables on the 1983 Individual Annuity
Mortality Table A projected four years with interest at 4% per year.
TAXATION OF ANNUITIES IN GENERAL
LOSS OF INTEREST DEDUCTION WHERE CONTRACTS ARE HELD FOR THE BENEFIT OF CERTAIN
NON-NATURAL PERSONS (PAGE 20)
In order to that they may be treated as annuity contracts for federal tax
purposes, section 72(s) of the Internal Revenue Code requires that Contracts
held by persons other than individuals (other than Contracts issued in
connection with certain qualified plans) contain certain provisions relating to
distributions upon the death of an Annuitant. Certain Contracts do not contain
these provisions. The income under such Contracts is taxable as it accrues. We
issue Form 1099s with respect to such Contracts.
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APPENDIX B
MATTERS RELATING TO CONTRACTS
OFFERED IN CERTAIN STATES
PRIOR TO SEPTEMBER 10, 1991
THE FOLLOWING SECTIONS DESCRIBE CONTRACTS WITH A CERTIFICATE DATE PRIOR TO
SEPTEMBER 10, 1991, AND CERTAIN CONTRACTS WITH A CERTIFICATE DATE AFTER THAT
DATE. THE CONTRACTS CONTAIN PROVISIONS THAT DIFFER FROM THOSE DESCRIBED IN THIS
PROSPECTUS. IN PARTICULAR, SURRENDER CHARGE, DEATH BENEFIT, AND CERTAIN ANNUITY
BENEFIT PROVISIONS MAY BE DIFFERENT. REFER TO YOUR CONTRACT FOR COMPLETE
DETAILS OF THESE PROVISIONS. THE FOLLOWING DESCRIPTIONS OF CERTAIN PROVISIONS
SHOULD BE SUBSTITUTED IN THEIR ENTIRETY FOR THE RELATED TERMS AND DESCRIPTIONS
FOUND ELSEWHERE IN THIS PROSPECTUS. THE PAGE REFERENCES LISTED BELOW INDICATE
WHERE IN THE PROSPECTUS THE SUBSTITUTED DESCRIPTIONS CAN BE FOUND.
SUMMARY (PAGE 4)
The paragraphs in the Summary describing the guaranteed Death Benefit,
Market Value Adjustment, and Surrender Charge should be revised as follows:
HOW IS THE SURRENDER CHARGE The surrender charge applies during the
CALCULATED? first seven years of each Guaranteed
Period. If the Guaranteed Period is seven
years or less, a surrender charge will
apply for the entire Guaranteed Period.
The surrender charge is equal to six
months of interest on the amount you
withdraw from a Sub-Account. The total
surrender charges for a Guaranteed Period
will never exceed six months' interest on
the amount of the Annuity Deposit or Sub-
Account value you allocated to the
Guaranteed Period. (See "Surrender
Charge," page 11.)
WHAT IS A MARKET VALUE ADJUSTMENT? The Market Value Adjustment is the amount
we deduct from or add to the Sub-Account
value when you request a surrender before
the end of the Sub-Account's Guaranteed
Period. The Market Value Adjustment
reflects the relationship between 1) the
Guaranteed Interest Rate that we are
currently offering for a Guaranteed
Period equal to the time remaining in
your Guaranteed Period at the time you
request a full or partial surrender, and
2) the Guaranteed Interest Rate being
applied to the Sub-Account from which you
are requesting a full or partial
surrender. (See, "Market Value
Adjustment," page 11.)
DOES THE CONTRACT PROVIDE A DEATH If any Owner dies while the Contract
BENEFIT? is in force and before the Annuity
Commencement Date, we will pay a
guaranteed Death Benefit, less any
applicable premium tax, to any surviving
Owner.
If there is no surviving Owner, we will
pay the guaranteed Death Benefit to the
Beneficiary as determined under the
provisions of the Contract. If the named
Beneficiary under the Contract is the
spouse of the Owner and the Annuitant is
living, the spouse may elect, in lieu of
a Death Benefit, to become the Owner and
continue the Contract.
The guaranteed Death Benefit will be
equal to the Account Value of your
Contract. If applicable, we will total
the Death Benefits for all of your
Guaranteed Periods to determine the
amount of your guaranteed Death Benefit.
(See "Death Benefit," page 13.)
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PARTIES TO THE CONTRACT (PAGE 6)
BENEFICIARY: The person named under the Contract to receive the Death
Benefit upon the Death of any Owner or Annuitant, as applicable, is the primary
Beneficiary. If an Owner dies, the surviving Owner, if any, will always be the
primary Beneficiary, regardless of whom the Contract may designate. A
contingent Beneficiary is the person named in the Contract to receive the Death
Benefit if the primary Beneficiary is not living at the time of the Owner's
death.
If no Beneficiary designation is in effect or if no Beneficiary is living
at the time of an Owner's death, the Beneficiary will be the estate of the
deceased Owner.
Unless designated irrevocably, you may change Beneficiaries at any time by
sending a written request to our Administrative Office. If you have designated
a Beneficiary irrevocably, that Beneficiary's written consent is necessary
before you can change the Beneficiary or exercise certain other rights.
ISSUING A CONTRACT (PAGE 7, FIRST PARAGRAPH)
You purchase a Contract by completing an application and making an Annuity
Deposit of at least $5,000. After we issue the Contract, you may make
additional Annuity Deposits of at least $5,000. We must pre-approve any Annuity
Deposits of less than $5,000. Regardless of how many Annuity Deposits you make,
we will issue only one Contract. We have the right to decline any Annuity
Deposit or any application. When we sell Contracts to retirement plans or in
connection with retirement plans, those retirement plans may or may not qualify
for special tax treatment under the Internal Revenue Code.
GUARANTEED PERIODS AND SUB-ACCOUNTS
SELECTING A SUBSEQUENT GUARANTEE PERIOD (PAGE 8)
To apply the ending Sub-Account value to one or more subsequent Guaranteed
Periods that you select, you must give us written instructions to this effect
no later than 10 days after the end of the expiring Guaranteed Period. You may
select a subsequent Guaranteed Period only from Guaranteed Periods we are
offering at the time you make your selection. Any subsequent Guaranteed Period
may not extend past the Annuity Commencement Date for your Contract. At least
$5,000 must be allocated to any subsequent Guaranteed Period.
AUTOMATIC SUBSEQUENT GUARANTEED PERIODS (PAGE 8)
If you do not instruct us otherwise under the first or second options
described above, a subsequent Guaranteed Period will automatically begin when
the prior Guaranteed Period ends. Your ending Sub-Account value will become the
beginning Sub-Account value for the subsequent Guaranteed Period. The
Subsequent Guaranteed Period will be the longest Guaranteed Period we offer
that is not longer than the Guaranteed Period that just ended, and does not
extend past the Annuity Commencement Date. You must allocate at least $5,000 to
any subsequent Guaranteed Period.
SURRENDERS
SURRENDERS AND PARTIAL SURRENDERS (PAGE 10, FIRST PARAGRAPH)
You may surrender your entire Contract at any time. You may surrender part
of the Contract if the value of each remaining Sub-Account is at least $5,000
after the surrender.
SURRENDER CHARGES (PAGE 11)
Surrenders and partial surrenders may be subject to a surrender charge.
Generally, we assess a surrender charge if you take a surrender during the
first seven years of any Guarantee Period. The surrender charge is equal to six
months of interest on the amount you surrender from a Sub-Account. The total
surrender charges for a Guaranteed Period will never exceed six months'
interest on the amount of the Annuity Deposit or Sub-Account value you
allocated to the Guaranteed Period. We will compute this interest at the same
rate we are crediting the Sub-Account from which you make a surrender. We will
deduct the surrender charge from the amount you have chosen to surrender.
We do not apply the surrender charge after the first seven years of a
Guaranteed Period or from any amount available as an interest withdrawal. Also,
we do not apply a surrender charge to surrenders you
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request at the end of a Guaranteed Period provided that we receive your written
request, in a form we deem acceptable, within twenty days prior to the end of
the Guaranteed Period.
If we receive your request for a surrender prior to the end of a
Guaranteed Period, we will calculate the surrender value, as of the date of the
surrender, as follows:
[(A x B) - SC] where:
A = the Sub-Account value of the Sub-Account from which you request a
surrender
B = the Market Value Adjustment
SC = the surrender charge plus any premium taxes, if applicable
On the date we receive your request, we will inform you of the amounts
available for you to surrender. Any surrender may be subject to federal and
state income tax and, in some cases, premium taxes.
Because a Guaranteed Period cannot extend past the Annuity Commencement
Date, we will not deduct a surrender charge or Market Value Adjustment if you
use your Net Account value to purchase an Annuity on the Annuity Commencement
Date.
WAIVER OF SURRENDER CHARGES (PAGE 11)
We will waive any applicable surrender charge if you meet any of the
following conditions after the first year of the Contract:
3) You enter, for a period of at least 90 days, a facility that is licensed
by the state and qualifies as a skilled nursing home facility under
Medicare or Medicaid.
4) A physician who is not related to you or the Annuitant diagnoses you as
having a terminal illness as the term is defined in your Contract. You
must submit to us written proof of this illness that we deem satisfactory
and we reserve the right to require an examination by a physician of our
choice to confirm your terminal illness.
If we waive your surrender charge, we will still impose a Market Value
Adjustment where applicable. Our waiver of surrender charges is not available
in all states due to applicable insurance laws.
MARKET VALUE ADJUSTMENT (PAGE 11)
We will apply a Market Value Adjustment if your request a surrender before
the end of a Sub-Account's Guaranteed Period. The Market Value Adjustment may
increase or decrease the amount you receive from a surrender. Like the
surrender charge, we calculate the Market Value Adjustment separately for each
Sub-Account. The Market Value Adjustment is applied to the surrendered
Sub-Account value, less any amount available as an interest withdrawal from
interest earned during the prior Contract year, before we deduct any surrender
charge. We will include the Market Value Adjustment in the amount we deduct
from your Sub-Account to satisfy your surrender request. The formula we use to
determine the Market Value Adjustment is:
(1+g / 1+c) x (N/12) where:
g = The Guaranteed Interest Rate in effect for the current Guaranteed
Period expressed as a decimal (e.g., 1% = .01).
C = The current Guaranteed Interest Rate we offer for a Guaranteed Period
that has a duration equal to the number of months left before the end of the
Guaranteed Period from which you are making the surrender.
N = The number of months remaining in your Guaranteed Period as of the
date you request a surrender.
The Market Value Adjustment reflects the relationship between 1) the
current Guaranteed Interest Rate we offer for a Guaranteed Period equal in
duration to the amount of time left in the surrendered Guaranteed Period, and
2) the Guaranteed Interest Rate we are applying to the Guaranteed Period from
which you are making a surrender.
Generally, if your Guaranteed Interest Rate is lower than the one we offer
for Guaranteed Period equal to the time remaining in your Guaranteed Period,
the Market Value Adjustment may produce a surrender value
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that is less than the sum of the portion of your Annuity Deposit being
surrendered plus the interest it has earned. Similarly, if your Guaranteed
Interest Rate is higher than the applicable current Guaranteed Interest Rate,
the Market Value Adjustment may increase your surrender value beyond the sum of
the portion of your Annuity Deposit being surrendered plus the interest it has
earned.
Because we base current Guaranteed Interest Rates in part upon the
investment yields that are available to us, the effect of the Market Value
Adjustment will be related to those yields. Therefore, if these yields increase
from the time, you purchase your Contract, it is possible that the Market Value
Adjustment, coupled with the surrender charge and any premium tax, could
produce a full surrender value for your Contract that is less than the total of
your Annuity Deposits.
DEATH OF AN ANNUITANT (PAGE 13)
If an Annuitant dies while the Contract is in force, either before or
after the Annuity Commencement Date, the Beneficiary will be the person
designated as such under the Contract. If you have not designated a Beneficiary
or the Beneficiary is no longer living, the surviving Owner will be the
Beneficiary. If neither the Owner nor the Beneficiary have survived the
Annuitant, the Beneficiary will be the Annuitant's estate. YOU CANNOT CHANGE
ANNUITANTS UNDER THIS CONTRACT.
DEATH OF AN OWNER (PAGE 13)
Upon the death of a joint Owner prior to the Annuity Commencement Date,
the surviving Owner will become the Beneficiary. If the sole Owner of a
Contract dies while the Contract is in force and before the Annuity
Commencement Date, the Beneficiary will be the person designated as such under
the Contract. If the Beneficiary is the spouse of the deceased Owner and the
Annuitant is still living, the spouse may elect to become the Owner in lieu of
receiving a guaranteed Death Benefit. If you have not designated a Beneficiary
or the Beneficiary is no longer living, the estate of the Owner will be the
Beneficiary.
DETERMINING THE DEATH BENEFIT (PAGE 14)
If an Annuitant or Owner dies before the Annuity Commencement Date, we
will pay a guaranteed Death Benefit to the Beneficiary. We will calculate the
guaranteed Death Benefit as of the date of an Annuitant's or Owner's death. We
will calculate the guaranteed Death Benefit as follows:
5) If the deceased had not yet reached age 85, the guaranteed Death Benefit
will be the greater of:
o the Net Account Value, or
o the original Annuity Deposit, less interest withdrawals and surrenders
(including surrender charges, Market Value Adjustments, and premium
taxes), credited with interest at 5% compounded annually.
6) If the deceased reached age 85, the guaranteed Death Benefit will be
equal to the total of the Sub-Account values multiplied by their
respective Market Value Adjustments.
PAYING THE DEATH BENEFIT (PAGE 14)
We will only pay one guaranteed Death Benefit under a Contract, even
though the Contract may, under some circumstances, continue after an Owner or
Annuitant's death. We will calculate the guaranteed Death Benefit as of the
date of the death that triggers its payment.
We will pay the guaranteed Death Benefit in a lump sum, in which event the
Contract will terminate, or under any of the annuity options available under
the Contract provided that:
o in the event of the Owner's death, any chosen annuity option must provide
that the guaranteed Death Benefit will be distributed within five years of
the date of the Owner's death; or
o if the chosen annuity option provides for the guaranteed Death Benefit to
be paid over a period that does not extend beyond the Beneficiary's life
or life expectancy, the distribution must commence within one year of the
Owner's death.
In addition to these options, if the Beneficiary is the spouse of the
deceased Owner and the Annuitant is living, the spouse may elect to become the
Owner in lieu of receiving a guaranteed Death Benefit.
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ANNUITY COMMENCEMENT DATE (PAGE 14)
You may select an Annuity Commencement Date when you purchase a Contract.
The Annuity Commencement Date may not be earlier than the end of a Guaranteed
Period nor later than the end of the Contract year immediately before the
Annuitant's 85th birthday. Our Administrative Office must approve any request
for an extension of the Annuity Commencement Date beyond this maximum.
You may change the Annuity Commencement Date subject to the following
restrictions:
o You must request the change in writing.
o We must receive your written request at least 30 days before the new
Annuity Commencement Date you have requested.
o The new Annuity Commencement Date may not come before the end of any
existing Guaranteed Period.
o Unless we agree prior to the change, the new Annuity Commencement Date
may not be later than the Annuitant's 85th birthday.
Annuity Commencement Dates which occur after the Annuitant's 85th birthday
may have adverse tax consequences so you should consult your tax advisor before
requesting an Annuity Commencement Date at these advanced ages. You may be
required to begin distributions from Qualified Contracts before the Annuity
Commencement Date. (See "Federal Tax Matters," page 18.)
Once our Administrative Office notifies you that we have received and
approved your written request for changing the Annuity Commencement Date, the
change will be made effective as of the date you signed the request.
ANNUITY OPTIONS (PAGE 15)
On the Annuity Commencement Date we will apply part or all of the Net
Account Value to the annuity option you have selected. If you have not selected
an annuity option, we will apply your Net Account Value to Option 2 - Life
Income with Payments for a 10-Year Guaranteed Period. You may select from the
following annuity options. For Qualified Contracts, annuity options may apply
with certain restrictions.
o OPTION 1 - PAYMENT FOR A FIXED PERIOD
We will make equal monthly payments for any period not less than five
years and not more than 30 years. The amount of each payment depends upon
the total amount applied, the period selected and the monthly payment
rates we are using when the annuity payments are determined.
o OPTION 2 - LIFE INCOME WITH PAYMENTS FOR A GUARANTEED PERIOD
We will make equal monthly payments based on the life of the named
Annuitant. Payments will continue for the lifetime of the Annuitant with
payments guaranteed for either 10 or 20 years. Payments will stop at the
end of the selected guaranteed period or when the Annuitant dies,
whichever is later.
o OPTION 3 - PAYMENTS FOR A FIXED AMOUNT
We will make equal monthly payments for a fixed amount. The amount of
each payment may not be less than $10 for each $1,000 of Net Account Value
applied to the annuity option. Each month we will credit interest on the
unpaid balance and add that interest to it. We will set the interest rate
in our sole discretion, but it will not be less than an annual effective
interest rate of 4%. Payments will continue until the amount we hold runs
out. The last payment will be for the balance only.
o OPTION 4 - PURCHASE OF OTHER ANNUITIES
The total amount you apply is used to purchase any kind of annuity we
issue on the date this option is selected.
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The dollar amount of monthly payments for every $1,000 you apply to each
available annuity option is calculated in accordance with annuity tables set
forth in the Contract. We base these tables on the 1983 Individual Annuity
Mortality Table A projected four years with interest at 4% per year.
TAXATION OF ANNUITIES IN GENERAL
LOSS OF INTEREST DEDUCTION WHERE CONTRACTS ARE HELD FOR THE BENEFIT OF CERTAIN
NON-NATURAL PERSONS (PAGE 20)
In order to that they may be treated as annuity contracts for federal tax
purposes, section 72(s) of the Internal Revenue Code requires that Contracts
held by persons other than individuals (other than Contracts issued in
connection with certain qualified plans) contain certain provisions relating to
distributions upon the death of an Annuitant. Certain Contracts do not contain
these provisions. The income under such Contracts is taxable as it accrues. We
issue Form 1099s with respect to such Contracts.
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INDEX TO FINANCIAL STATEMENTS
(TO BE FILED BY AMENDMENT)
<TABLE>
<S> <C>
Report of Independent Accountants ........................................................ F-2
Consolidated Statements of Income for the years ended December 31, 1998, 1997, and 1996 .. F-3
Consolidated Balance Sheets as of December 31, 1998 and 1997 ............................. F-4
Consolidated Statements of Stockholder's Equity for the years ended December 31, 1998,
1997, and 1996 ........................................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997,
and 1996 ............................................................................... F-6
Notes to Consolidated Financial Statements ............................................... F-7
Financial Statement Schedules:
Schedule III -- Supplementary Insurance Information ................................... S-1
Schedule IV -- Reinsurance ............................................................ S-2
</TABLE>
All other schedules to the consolidated financial statements required by
Article 7 of Regulation S-X are not required under the related instructions or
are inapplicable and therefore have been omitted.
F-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
The expenses of the issuance and distribution of the Contracts, other than
any underwriting discounts and commissions, are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fees ......... $ 73,750.00
Printing and engraving ....................................... 108,000.00
Accounting fees and expenses ................................. 20,000.00
Legal fees and expenses ...................................... 20,000.00
Miscellaneous ................................................ 0
------------
TOTAL EXPENSES ............................................. $ 221,750.00
============
</TABLE>
- ----------
* Estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 6.5 of Article VI of the Certificate of Incorporation of PLC
provides, in substance, that any of PLC's directors and officers and certain
directors and officers of Protective, who is a party or is threatened to be
made a party to any action, suit or proceeding, other than an action by or in
the right of PLC, by reason of the fact that he is or was an officer or
director, shall be indemnified by PLC against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of PLC and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. If
the action or suit is or was by or in the right of PLC to procure a judgment in
its favor, such person shall be indemnified by PLC against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to PLC unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper. To the extent that any officer or
director has been successful on the merits or otherwise in defense of any such
action, suit or proceeding, or in defense of any issue or matter therein, he
shall be indemnified by PLC against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith without the
necessity of any action being taken by PLC other than the determination, in
good faith, that such defense has been successful. In all other cases, unless
ordered by a court, indemnification shall be made by PLC only as authorized in
the specific case upon a determination that indemnification of the officer or
director is proper in the circumstances because he has met the applicable
standard of conduct. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (c) by the
holders of a majority of the shares of capital stock of PLC entitled to vote
thereon. By means of a by-law, Protective offers its directors and certain
executive officers similar indemnification.
In addition, the executive officers and directors are insured by PLC's
Directors' and Officers' Liability Insurance Policy including Company
Reimbursement and are indemnified by a written contract with PLC which
supplements such coverage.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ----------------------- ------------------------------------------------------- -----------------
<S> <C> <C> <C> <C>
* 1(a) -- Underwriting Agreement
***** 1(b) -- Form of Distribution Agreement
**** 2 -- Stock Purchase Agreement
* 3(a) -- Articles of Incorporation
* 3(b) -- By-laws
** 4(a) -- Group Modified Guaranteed Annuity Contract
*** 4(b) -- Individual Certificate
** 4(h) -- Tax-Sheltered Annuity Endorsement
** 4(i) -- Qualified Retirement Plan Endorsement
** 4(j) -- Individual Retirement Annuity Endorsement
** 4(l) -- Section 457 Deferred Compensation Plan Endorsement
* 4(m) -- Qualified Plan Endorsement
** 4(n) -- Application for Individual Certificate
** 4(o) -- Adoption Agreement for Participation in Group Modified
Guaranteed Annuity
*** 4(p) -- Individual Modified Guaranteed Annuity Contract
** 4(q) -- Application for Individual Modified Guaranteed Annuity
Contract
** 4(r) -- Tax-Sheltered Annuity Endorsement
** 4(s) -- Individual Retirement Annuity Endorsement
** 4(t) -- Section 457 Deferred Compensation Plan Endorsement
** 4(v) -- Qualified Retirement Plan Endorsement
**** 4(w) -- Endorsement -- Group Policy
**** 4(x) -- Endorsement -- Certificate
**** 4(y) -- Endorsement -- Individual Contract
**** 4(z) -- Endorsement (Annuity Deposits) -- Group Policy
**** 4(aa) -- Endorsement (Annuity Deposits) -- Certificate
**** 4(bb) -- Endorsement (Annuity Deposits) -- Individual Contract
** 4(cc) -- Endorsement -- Individual
** 4(dd) -- Endorsement -- Group Contract/Certificate
***** 4(ee) -- Endorsement (96) -- Individual
***** 4(ff) -- Endorsement (96) -- Group Contract
***** 4(gg) -- Endorsement (96) -- Group Certificate
***** 4(hh) -- Individual Modified Guaranteed Annuity Contract (96)
****** 4(ii) -- Settlement Endorsement
* 5 -- Opinion re legality
* 10(a) -- Bond Purchase Agreement
* 10(b) -- Escrow Agreement
+ 24(a) -- Consent of Coopers & Lybrand L.L.P.
+ 24(b) -- Consent of Sutherland, Asbill & Brennan, L.L.P.
25 -- Power of Attorney
</TABLE>
- ----------
* Previously filed in Form S-1 Registration Statement, Registration No.
33-31940.
** Previously filed in Amendment No. 1 to Form S-1 Registration Statement,
Registration No. 33-31940.
*** Previously filed in Amendment No. 2 to Form S-1 Registration
Statement, Registration No. 33-31940.
**** Previously filed in Amendment No. 2 to Form S-1 Registration
Statement, Registration No. 33-57052.
***** Previously filed in Form S-1 Registration Statement, Registration No.
333-02249.
****** Previously filed in Form S-1 Registration Statement, Registration No.
333-50055.
+ To be filed by amendment.
II-2
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL
STATEMENTS
SCHEDULES FILED WITH THIS AMENDMENT
- -------------- ---------------------------------------------------------------
<S> <C> <C>
Schedule III -- Supplementary Insurance Information (to be filed by amendment)
Schedule IV -- Reinsurance (to be filed by amendment)
</TABLE>
Schedules other than those referred to above are not required or are
inapplicable and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement,
including (but not limited to) any addition or deletion of a managing
underwriter;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(B) Insofar as indemnification for liabilities 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, officers 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Birmingham, State of Alabama on February 12, 1999.
PROTECTIVE LIFE INSURANCE COMPANY
By: /S/ JOHN D. JOHNS
----------------------------------
John D. Johns
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form S-1 has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------------------------------- --------------------------------------- ------------------
<S> <C> <C> <C>
(i) Principal Executive Officer
/S/ DRAYTON NABERS, JR. Chairman of the Board February 12, 1999
-------------------------------
Drayton Nabers, Jr.
(ii) Principal Financial Officer
/S/ JOHN D. JOHNS President and Chief Financial Officer February 12, 1999
-------------------------------
John D. Johns
(iii) Principal Accounting Officer
/S/ JERRY W. DEFOOR Vice President and Controller, and February 12, 1999
------------------------------- Chief Accounting Officer
Jerry W. DeFoor
(iv) Board of Directors:
/S/ DRAYTON NABERS, JR. Director February 12, 1999
-------------------------------
Drayton Nabers, Jr.
/S/ JOHN D. JOHNS Director February 12, 1999
-------------------------------
John D. Johns
/S/ R. STEPHEN BRIGGS Director February 12, 1999
-------------------------------
R. Stephen Briggs
/S/ JIM E. MASSENGALE Director February 12, 1999
-------------------------------
Jim E. Massengale
/S/ WAYNE E. STUENKEL Director February 12, 1999
-------------------------------
Wayne E. Stuenkel
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ ---------- ------------------
<S> <C> <C>
* Director February 12, 1999
- -------------------------------
A. S. Williams III
* Director February 12, 1999
- -------------------------------
Deborah J. Long
* Director February 12, 1999
- -------------------------------
Carolyn King
* Director February 12, 1999
- -------------------------------
Richard J. Bielen
* Director February 12, 1999
- -------------------------------
Danny L. Bentley
*By: /S/ STEVE M. CALLAWAY February 12, 1999
---------------------------
Steve M. Callaway
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN SEQUENTIAL
NUMBERING SYSTEM
NUMBER DESCRIPTION WHERE EXHIBIT LOCATED
- ------------ ----------------------------------------------------------------- ----------------------
<S> <C> <C> <C>
1(a) -- Underwriting Agreement *
1(b) -- Form of Distribution Agreement *****
2 -- Stock Purchase Agreement ****
3(a) -- Articles of Incorporation *
3(b) -- By-laws *
4(a) -- Group Modified Guaranteed Annuity Contract **
4(b) -- Individual Certificate ***
4(h) -- Tax-Sheltered Annuity Endorsement **
4(i) -- Qualified Retirement Plan Endorsement **
4(j) -- Individual Retirement Annuity Endorsement **
4(l) -- Section 457 Deferred Compensation Plan Endorsement **
4(m) -- Qualified Plan Endorsement *
4(n) -- Application for Individual Certificate **
4(o) -- Adoption Agreement for Participation in Group Modified **
Guaranteed Annuity
4(p) -- Individual Modified Guaranteed Annuity Contract ***
4(q) -- Application for Individual Modified Guaranteed Annuity Contract **
4(r) -- Tax-Sheltered Annuity Endorsement **
4(s) -- Individual Retirement Annuity Endorsement **
4(t) -- Section 457 Deferred Compensation Plan Endorsement **
4(v) -- Qualified Retirement Plan Endorsement **
4(w) -- Endorsement -- Group Policy ****
4(x) -- Endorsement -- Certificate ****
4(y) -- Endorsement -- Individual Contract ****
4(z) -- Endorsement (Annuity Deposits) -- Group Policy ****
4(aa) -- Endorsement (Annuity Deposits) -- Certificate ****
4(bb) -- Endorsement (Annuity Deposits) -- Individual Contract ****
4(cc) -- Endorsement -- Individual **
4(dd) -- Endorsement -- Group Contract/Certificate **
4(ee) -- Endorsement (96) -- Individual *****
4(ff) -- Endorsement (96) -- Group Contract *****
4(gg) -- Endorsement (96) -- Group Certificate *****
4(hh) -- Individual Modified Guaranteed Annuity Contract (96) *****
4(ii) -- Settlement Endorsement ******
5 -- Opinion re legality *
10(a) -- Bond Purchase Agreement *
10(b) -- Escrow Agreement *
24(a) -- Consent of Coopers & Lybrand L.L.P. +
24(b) -- Consent of Sutherland, Asbill & Brennan, L.L.P. +
25 -- Power of Attorney
</TABLE>
- ----------
* Previously filed in Form S-1 Registration Statement, Registration No.
33-31940.
** Previously filed in Amendment No. 1 to Form S-1 Registration Statement,
Registration No. 33-31940.
*** Previously filed in Amendment No. 2 to Form S-1 Registration
Statement, Registration No. 33-31940.
**** Previously filed in Amendment No. 2 to Form S-1 Registration
Statement, Registration No. 33-57052.
***** Previously filed in Form S-1 Registration Statement, Registration No.
333-02249.
***** Previously filed in Amendment No. 1 to Registration Statement,
Registration No. 333-02249.
****** Previously filed in Form S-1 Registration Statement, Registration No.
333-50055.
+ To be filed by amendment.
EXHIBIT 25
DIRECTORS'
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Directors of
Protective Life Insurance Company, a Tennessee corporation, ("Company") by his
execution hereof or upon an identical counterpart hereof, does hereby
constitute and appoint John D. Johns, Steve M. Callaway or Jerry W. DeFoor, and
each or any of them, his true and lawful attorney-in-fact and agent, for him
and in his name, place and stead, to execute and sign all post-effective
amendments to the Registration Statements on Form S-1 to be filed by the
Company with respect to insurance products with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Exchange Act of 1933
and the Investment Company Act of 1940 and, further, to file same, with all
exhibits and schedules thereof and all other documents in connection therewith,
with the Securities and Exchange Commission and with such state securities as
may be appropriate granting unto sold attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes of the undersigned might or could do in person, hereby
ratifying and confirming all the acts of said attorney-in-fact and agent or any
of them which they may lawfully do in the premises or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand and
seal this 12th day of February, 1999.
WITNESS TO ALL SIGNATURES:
/s/ DEBORAH J. LONG
- ---------------------------------------------------------------------
Deborah J. Long
/s/ DRAYTON NABERS, JR.
- ---------------------------------------------------------------------
Drayton Nabers, Jr.
/s/ JOHN D. JOHNS
- ---------------------------------------------------------------------
John D. Johns
/s/ R. STEPHEN BRIGGS
- ---------------------------------------------------------------------
R. Stephen Briggs
/s/ STEVEN A. SCHULTZ
- ---------------------------------------------------------------------
Steven A. Schultz
/s/ A. S. WILLIAMS, III
- ---------------------------------------------------------------------
A. S. Williams, III
/s/ DANNY L. BENTLEY
- ---------------------------------------------------------------------
Danny L. Bentley
/s/ RICHARD J. BIELEN
- ---------------------------------------------------------------------
Richard J. Bielen
/s/ CAROLYN KING
- ---------------------------------------------------------------------
Carolyn King
/s/ JIM E. MASSENGALE
- ---------------------------------------------------------------------
Jim E. Massengale
/s/ WAYNE E. STUENKEL
- ---------------------------------------------------------------------
Wayne E. Stuenkel
<PAGE>
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