Incentive Life Plus(TM) (94-300)
Champion 2000(TM)(90-400) Issued by
Incentive Life 2000(TM)(90-300) EQUITABLE VARIABLE
Survivorship 2000(TM)(92-500) LIFE INSURANCE COMPANY
Incentive Life(TM)(85-300 & 88-300)
SP-Flex(TM)(87-500)
The Champion(TM)(85-11)
SP-1(TM)(85-09)
Basic Policy(TM)(85-01)
Expanded Policy(TM)(85-02)
PROSPECTUS SUPPLEMENT DATED FEBRUARY 28, 1996
This supplement updates the Prospectus you received for your variable life
insurance policy, as previously supplemented. Please read this supplement
carefully. This supplement should be attached to your Prospectus and you should
retain both for future reference. Terms used in this supplement have the same
meaning as in the Prospectus.
TELEPHONE TRANSFERS. Effective immediately, we are extending the deadline for
making telephone transfers to 4:00 p.m. Eastern Time. All other conditions for
making telephone transfers remain unchanged.
VM-516
- - --------------------------------------------------------------------------------
This Supplement Should be Retained for Future Reference.
Copyright 1996
Equitable Variable Life Insurance Company
All rights reserved.
37431
<PAGE>
VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT I
PROSPECTUS SUPPLEMENT DATED MAY 1, 1995
The Champion(TM) Basic Policy
SP-1(TM) Expanded Policy
Issued By
EQUITABLE VARIABLE
LIFE INSURANCE COMPANY
Principal Office Located at:
787 Seventh Avenue
New York, NY 10019
VM 502
- - --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST
PROSPECTUS DATED MAY 1, 1995
HRT 103 (5/95)
- - --------------------------------------------------------------------------------
<PAGE>
VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT I
THE CHAMPION(TM) (85-11)
SP1(TM) (85-09) ISSUED BY
BASIC POLICY (85-01) EQUITABLE VARIABLE
EXPANDED POLICY (85-02) LIFE INSURANCE COMPANY
PROSPECTUS SUPPLEMENT DATED MAY 1, 1995
INTRODUCTION. This Supplement updates certain information contained in the
prospectus for:
o THE CHAMPION dated September 30, 1987 and December 18, 1986, as
previously supplemented;
o SP-1 dated September 30, 1987, April 30, 1986 and January 1, 1984, as
previously supplemented; and
o BASIC AND EXPANDED dated April 30, 1986 and March 26, 1985, as
previously supplemented.
Please read this Supplement carefully. You should attach this Supplement to your
prospectus and any supplements thereto (which are listed in Appendix A) and
retain them for future reference. Equitable Variable Life Insurance Company
(Equitable Variable) will send you an additional copy of any prospectus or
supplement, without charge, on written request.
These policies are no longer offered for sale.
HUDSON RIVER TRUST INVESTMENT POLICIES. Net premiums under your policy can be
allocated to the investment funds of our Separate Account I. From now on, we
will refer to the Guaranteed Interest Division as the Guaranteed Interest
Account and to divisions of Separate Account I as "Funds." The funds of Separate
Account I in turn invest those net premiums in corresponding portfolios of The
Hudson River Trust, a mutual fund. Each portfolio has a different investment
objective which it tries to achieve by following separate investment policies.
The objectives and policies of each portfolio will affect its return and its
risks. There is no guarantee that these objectives will be achieved. The
policies and objectives of the Trust's portfolios are as follows:
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
--------- ----------------- ---------
<S> <C> <C>
MONEY MARKET............... Primarily high quality short-term money High level of current income while
instruments. preserving assets and maintaining
liquidity.
INTERMEDIATE............... Primarily debt securities issued or High current income consistent with
GOVERNMENT guaranteed by the U.S. Government, its relative stability of principal.
SECURITIES agencies and instrumentalities. Each
investment will have a final maturity of not
more than 10 years or a duration not
exceeding that of a 10-year Treasury note.
HIGH YIELD................. Primarily a diverisified mix of high yield, High return by maximizing current income
fixed-income securities involving greater and, to the extent consistent with that
volatility of price and risk of principal and objective, capital appreciation.
income than high quality fixed-income
securities. The medium and lower quality
debt securities in which the Portfolio may
invest are known as "junk bonds."
BALANCED................... Primarily common stocks, publicly-traded debt High return through a combination of current
securities and high quality money market income and capital appreciation.
instruments. The portfolio is generally
expected to hold 50% of its assets in equity
securities and 50% in fixed income
securities.
COMMON STOCK............... Primarily common stock and other equity-type Long-term growth of capital and increasing
instruments. income.
AGGRESSIVE STOCK........... Primarily common stocks and other equity-type Long-term growth of capital.
securities issued by medium and other smaller
sized companies with strong growth potential.
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- - --------------------------------------------------------------------------------
THIS SUPPLEMENT SHOULD BE RETAINED FOR FURTHER REFERENCES.
THE CURRENT HUDSON RIVER TRUST PROSPECTUS IS ATTACHED.
VM 502
Copyright 1995 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
EQUITABLE VARIABLE. The information under the heading EQUITABLE VARIABLE is
updated as follows: Equitable Variable was organized in 1972 in New York State
as a stock life insurance company. We are licensed to do business in all 50
states, Puerto Rico, the Virgin Islands and the District of Columbia. At
December 31, 1994, we had approximately $125.8 billion face amount of variable
life insurance in force.
EQUITABLE. The information under the heading OUR PARENT, EQUITABLE is updated as
follows: Equitable is a wholly-owned subsidiary of The Equitable Companies
Incorporated (the Holding Company). The largest stockholder of the Holding
Company is AXA, a French insurance holding company. AXA beneficially owns 60.5%
of the outstanding shares of common stock of the Holding Company plus
convertible preferred stock. Under its investment arrangements with Equitable
and the Holding Company, AXA is able to exercise significant influence over the
operations and capital structure of the Holding Company, Equitable and their
subsidiaries. AXA is the principal holding company for most of the companies in
one of the largest insurance groups in Europe. The majority of AXA's stock is
controlled by a group of five French mutual insurance companies. Equitable, the
Holding Company and their subsidiaries managed approximately $174.5 billion in
assets as of December 31, 1994.
THE TRUST'S INVESTMENT ADVISER. The information about Alliance Capital
Management L.P., the Trust's investment adviser, is updated as follows: As of
December 31, 1994, Alliance was managing approximately $121.3 billion in assets.
Alliance, a publicly traded limited partnership, is indirectly majority-owned by
Equitable.
For your convenience, we are restating that the advisory fee, payable by the
Trust to Alliance, is based on the following annual percentages of the value of
each portfolio's daily average net assets:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
DAILY AVERAGE NET ASSETS
----------------------------------------------
FIRST NEXT OVER
<S> <C> <C> <C>
PORTFOLIO $350 MILLION $400 MILLION $750 MILLION
--------- ------------ ------------ ------------
Common Stock, Money Market and Balanced...................................... .400% .375% .350%
Aggressive Stock and Intermediate Government Securities...................... .500% .475% .450%
High Yield................................................................... .550% .525% .500%
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TAX CHANGES. The United States Congress may in the future enact legislation that
could change the tax treatment of life insurance policies. In addition, the
Treasury Department may amend existing regulations, issue new regulations, or
adopt new interpretations of existing laws. There is no way of predicting
whether, when or in what form any such change would be adopted. Any such change
could have retroactive effect regardless of the date of enactment. State tax
laws or, if you are not a United States resident, foreign tax laws, may affect
the tax consequences to you, the insured person or your beneficiary. These laws
may change from time to time without notice.
The discussion of the tax effects on policy proceeds contained in your
prospectus or supplements is based on our current understanding of Federal
income tax laws as currently interpreted as they apply to U.S. resident
individual taxpayers. This discussion should not be considered tax advice. We
suggest you consult your legal or tax adviser.
DISTRIBUTION. Equico Securities Inc. ("Equico"), a wholly-owned subsidiary of
Equitable, is the principal underwriter of the Trust under a Distribution
Agreement. Equico is also the distributor of our variable life insurance
policies and Equitable's variable annuity contracts under a Distribution and
Servicing Agreement. Equico is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. Equico's principal business address is 1755
Broadway, New York, NY 10019. Equico is paid a fee for its services as
distributor of our policies. For 1994, Equico was paid a fee of $216,920 for its
services under the Distribution and Servicing Agreement.
The amounts paid and accrued to Equitable by us under our sales and services
agreements with Equitable totalled approximately $380.5 million in 1994, $355.7
million in 1993 and $374.9 million in 1992.
MANAGEMENT. A list of our directors and principal officers and a brief statement
of their business experience for the past five years is contained in Appendix B.
LONG-TERM MARKET TRENDS. Appendix C to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
FINANCIAL STATEMENTS. The financial statements of Separate Account I and
Equitable Variable included in this supplement have been audited for the years
ended December 31, 1994 and 1993, by Price Waterhouse LLP, and for the year
ended December 31, 1992 by Deloitte & Touche LLP as stated in their respective
reports. The financial statements of Separate Account I and Equitable Variable
for the years ended December 31, 1994 and 1993 included in this supplement have
been so included in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of such firm as experts in accounting and
auditing. The financial statements of Separate Account I and Equitable Variable
for the year ended December 31, 1992 included in this supplement have been so
included in reliance on the report of Deloitte & Touche LLP, independent
accountants, given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of Equitable Variable included in this supplement
should be considered only as bearing upon the ability of Equitable Variable to
meet its obligations under the policies. They should not be considered as
bearing upon the investment experience of the investment divisions of the
Separate Account.
2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT HIGH
MARKET SECURITIES YIELD
DIVISION DIVISION DIVISION
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments in shares of The Hudson River Trust -- at market values
(Notes 2 and 8)
Cost:$ 69,269,423 ...................................................... $70,189,853
2,451,550 ...................................................... $2,184,204
8,045,517 ...................................................... $8,143,577
29,329,580 ......................................................
281,149,385 ......................................................
12,901,353 ......................................................
Receivable (payable) for sales (purchases) of shares of The Hudson River
Trust .................................................................. 51,723 7,004 5,000
----------- ---------- ----------
Total Assets ........................................................... 70,241,576 2,191,208 8,148,577
----------- ---------- ----------
LIABILITIES
Payable (receivable) for policy related transactions ................... 964,878 (19,042) 96,869
Amount retained by Equitable Variable in Separate Account I (Note 5) ... 522,772 96,005 488,048
----------- ---------- ----------
Total Liabilities ...................................................... 1,487,650 76,963 584,917
----------- ---------- ----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS ................................ $68,753,926 $2,114,245 $7,563,660
=========== ========== ==========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMMON AGGRESSIVE
BALANCED STOCK STOCK
DIVISION DIVISION DIVISION
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Investments in shares of The Hudson River Trust -- at market values
(Notes 2 and 8)
Cost:$ 69,269,423 ......................................................
2,451,550 ......................................................
8,045,517 ......................................................
29,329,580 ...................................................... $31,410,549
281,149,385 ...................................................... $373,842,534
12,901,353 ...................................................... $19,003,786
Receivable (payable) for sales (purchases) of shares of The Hudson River
Trust .................................................................. 59,082 218,331 (1,914)
----------- ------------ -----------
Total Assets ........................................................... 31,469,631 374,060,865 19,001,872
----------- ------------ -----------
LIABILITIES
Payable (receivable) for policy related transactions ................... 601,442 5,657,259 358,613
Amount retained by Equitable Variable in Separate Account I (Note 5) ... 463,127 5,816,609 481,781
----------- ------------ -----------
Total Liabilities ...................................................... 1,064,569 11,473,868 840,394
----------- ------------ -----------
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS ................................ $30,405,062 $362,586,997 $18,161,478
=========== ============ ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-1
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
MONEY MARKET DIVISION SECURITIES DIVISION
-------------------------------------- ----------------------------------
1994 1993 1992 1994 1993 1992
---------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust ... $2,684,291 $2,083,651 $3,073,048 $ 199,648 $ 115,827 $ 56,454
Expenses (Note 3):
Mortality and expense risk charges ...... 355,911 373,075 421,081 11,365 8,896 4,527
---------- ---------- ---------- --------- --------- --------
NET INVESTMENT INCOME ....................... 2,328,380 1,710,576 2,651,967 188,283 106,931 51,927
---------- ---------- ---------- --------- --------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Realized gain (loss) on investments ..... 52,117 65,261 98,987 (146,201) (3,141) (7,571)
Realized gain distribution from
The Hudson River Trust ................ -- -- -- -- 157,383 20,391
---------- ---------- ---------- --------- --------- --------
NET REALIZED GAIN (LOSS) .................... 52,117 65,261 98,987 (146,201) 154,242 12,820
Unrealized appreciation (depreciation)
on investments:
Beginning of period ..................... 844,597 812,147 1,005,923 (100,844) 8,264 34,329
End of period ........................... 920,431 844,597 812,147 (267,346) (100,844) 8,264
---------- ---------- ---------- --------- --------- --------
Change in unrealized appreciation
(depreciation) during the period ........ 75,834 32,450 (193,776) (166,502) (109,108) (26,065)
---------- ---------- ---------- --------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ............................ 127,951 97,711 (94,789) (312,703) 45,134 (13,245)
---------- ---------- ---------- --------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................. $2,456,331 $1,808,287 $2,557,178 $(124,420) $ 152,065 $ 38,682
========== ========== ========== ========= ========= ========
<FN>
See Notes to Financial Statements.
*For the period January 1, 1994 through February 22, 1994 (date of
substitution).
</FN>
</TABLE>
SHORT-TERM WORLD
INCOME DIVISION
--------------------------------
1994* 1993 1992
-------- -------- --------
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust ... $ 5,674 $ 37,011 $ 57,292
Expenses (Note 3):
Mortality and expense risk charges ...... 278 3,051 4,024
-------- -------- --------
NET INVESTMENT INCOME ....................... 5,396 33,960 53,268
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Realized gain (loss) on investments ..... (23,065) (43,998) (15,459)
Realized gain distribution from
The Hudson River Trust ................ -- -- --
-------- -------- --------
NET REALIZED GAIN (LOSS) .................... (23,065) (43,998) (15,459)
Unrealized appreciation (depreciation)
on investments:
Beginning of period ..................... (20,198) (63,029) (208)
End of period ........................... -- (20,198) (63,029)
-------- -------- --------
Change in unrealized appreciation
(depreciation) during the period ........ 20,198 42,831 (62,821)
-------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ............................ (2,867) (1,167) (78,280)
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................. $ 2,529 $ 32,793 $(25,012)
======== ======== ========
See Notes to Financial Statements.
*For the period January 1, 1994 through February 22, 1994 (date of
substitution).
FSA-2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
HIGH YIELD DIVISION BALANCED DIVISION
-------------------------------------- -------------------------------------------
1994 1993 1992 1994 1993 1992
----------- ---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust $ 806,574 $ 763,325 $656,489 $ 1,006,200 $ 963,517 $ 1,001,677
Expenses (Note 3):
Mortality and expense risk charges .. 41,676 40,466 34,806 164,873 162,512 156,856
----------- ---------- -------- ----------- ----------- -----------
NET INVESTMENT INCOME ................... 764,898 722,859 621,683 841,327 801,005 844,821
----------- ---------- -------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Realized gain (loss) on investments ... (94,683) 11,131 6,838 (379,076) (6,104) (233,210)
Realized gain distribution from
The Hudson River Trust .............. -- 170,999 -- -- 1,948,704 2,071,864
----------- ---------- -------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS) ................ (94,683) 182,130 6,838 (379,076) 1,942,600 1,838,654
Unrealized appreciation (depreciation)
on investments:
Beginning of period ................. 1,064,280 338,796 208,453 5,526,191 4,624,699 8,457,284
End of period ....................... 98,061 1,064,280 338,796 2,080,968 5,526,191 4,624,699
----------- ---------- -------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period .... (966,219) 725,484 130,343 (3,445,223) 901,492 (3,832,585)
----------- ---------- -------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ........................ (1,060,902) 907,614 137,181 (3,824,299) 2,844,092 (1,993,931)
----------- ---------- -------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............. $ (296,004) $1,630,473 $758,864 $(2,982,972) $ 3,645,097 $(1,149,110)
=========== ========== ======== =========== =========== ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
COMMON STOCK DIVISION
-----------------------------------------------
1994 1993 1992
------------- ------------ -------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust $ 5,727,748 $ 5,678,972 $ 6,172,162
Expenses (Note 3):
Mortality and expense risk charges .. 1,942,844 1,844,849 1,717,128
------------- ------------ -------------
NET INVESTMENT INCOME ................... 3,784,904 3,834,123 4,455,034
------------- ------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ... (328,604) 2,630,537 4,545,601
Realized gain distribution from
The Hudson River Trust .............. 20,219,440 47,068,505 21,124,192
------------- ------------ -------------
NET REALIZED GAIN (LOSS) ................ 19,890,836 49,699,042 25,669,793
Unrealized appreciation (depreciation)
on investments:
Beginning of period ................. 126,545,990 98,769,799 119,060,836
End of period ....................... 92,693,149 126,545,990 98,769,799
------------- ------------ -------------
Change in unrealized appreciation
(depreciation) during the period .... (33,852,841) 27,776,191 (20,291,037)
------------- ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ........................ (13,962,005) 77,475,233 5,378,756
------------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............. $ (10,177,101) $ 81,309,356 $ 9,833,790
============= ============ =============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE STOCK DIVISION
-------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust $ 22,268 $ 45,872 $ 90,928
Expenses (Note 3):
Mortality and expense risk charges .. 89,577 82,479 76,983
----------- ----------- -----------
NET INVESTMENT INCOME ................... (67,309) (36,607) 13,945
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ... (226,938) (57,409) (389,555)
Realized gain distribution from
The Hudson River Trust .............. -- 1,550,537 1,317,972
----------- ----------- -----------
NET REALIZED GAIN (LOSS) ................ (226,938) 1,493,128 928,417
Unrealized appreciation (depreciation)
on investments:
Beginning of period ................. 6,618,938 5,529,963 7,235,631
End of period ....................... 6,102,433 6,618,938 5,529,963
----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period .... (516,505) 1,088,975 (1,705,668)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ........................ (743,443) 2,582,103 (777,251)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............. $ (810,752) $ 2,545,496 $ (763,306)
=========== =========== ===========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-4
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
MONEY MARKET DIVISION SECURITIES DIVISION
---------------------------------------------- -------------------------------------------
1994 1993 1992 1994 1993 1992
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income .......... $ 2,328,380 $ 1,710,576 $ 2,651,967 $ 188,283 $ 106,931 $ 51,927
Net realized gain (loss) ....... 52,117 65,261 98,987 (146,201) 154,242 12,820
Change in unrealized
appreciation (depreciation)
on investments ............... 75,834 32,450 (193,776) (166,502) (109,108) (26,065)
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) from
operations ................... 2,456,331 1,808,287 2,557,178 (124,420) 152,065 38,682
------------ ------------ ------------ ----------- ----------- -----------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) .......... 6,128,438 7,171,866 8,040,071 130,572 114,331 52,915
Benefits and other policy
related transactions
(Note 5) ..................... (8,940,995) (10,608,028) (14,722,243) (402,355) (135,104) (44,199)
Net transfers among
divisions .................... (1,904,223) (3,931,738) (4,620,648) 606,857 557,742 355,809
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) from
policy related transactions .. (4,716,780) (7,367,900) (11,302,820) 335,074 536,969 364,525
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT I
(Note 5) ....................... (22,105) (424) (1,374,991) 4,561 (986) 2,133
------------ ------------ ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN NET
ASSETS ......................... (2,282,554) (5,560,037) (10,120,633) 215,215 688,048 405,340
NET ASSETS, BEGINNING OF PERIOD .. 71,036,480 76,596,517 86,717,150 1,899,030 1,210,982 805,642
------------ ------------ ------------ ----------- ----------- -----------
NET ASSETS, END OF PERIOD ........ $ 68,753,926 $ 71,036,480 $ 76,596,517 $ 2,114,245 $ 1,899,030 $ 1,210,982
============ ============ ============ =========== =========== ===========
<FN>
See Notes to Financial Statements.
*For the period January 1, 1994 through February 22, 1994 (date of
substitution).
</FN>
</TABLE>
SHORT-TERM WORLD
INCOME DIVISION
-------------------------------------
1994* 1993 1992
--------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ......... $ 5,396 $ 33,960 $ 53,268
Net realized gain (loss) ...... (23,065) (43,998) (15,459)
Change in unrealized
appreciation (depreciation)
on investments .............. 20,198 42,831 (62,821)
--------- --------- ---------
Net increase (decrease) from
operations .................. 2,529 32,793 (25,012)
--------- --------- ---------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ......... 3,958 26,692 23,577
Benefits and other policy
related transactions
(Note 5) .................... (34,830) (62,904) (189,364)
Net transfers among
divisions ................... (400,052) (348,977) 185,078
--------- --------- ---------
Net increase (decrease) from
policy related transactions . (430,924) (385,189) 19,291
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT I
(Note 5) ...................... 1,779 (5,773) (10,692)
--------- --------- ---------
INCREASE (DECREASE) IN NET
ASSETS ........................ (426,616) (358,169) (16,413)
NET ASSETS, BEGINNING OF PERIOD . 426,616 784,785 801,198
--------- --------- ---------
NET ASSETS, END OF PERIOD ....... -- $ 426,616 $ 784,785
========= ========= =========
See Notes to Financial Statements.
*For the period January 1, 1994 through February 22, 1994 (date of
substitution).
FSA-5
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
HIGH YIELD DIVISION BALANCED DIVISION
----------------------------------------- --------------------------------------------
1994 1993 1992 1994 1993 1992
----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............. $ 764,898 $ 722,859 $ 621,683 $ 841,327 $ 801,005 $ 844,821
Net realized gain (loss) .......... (94,683) 182,130 6,838 (379,076) 1,942,600 1,838,654
Change in unrealized appreciation
(depreciation) on investments ... (966,219) 725,484 130,343 (3,445,223) 901,492 (3,832,585)
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease) from
operations ...................... (296,004) 1,630,473 758,864 (2,982,972) 3,645,097 (1,149,110)
----------- ----------- ----------- ------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) ............. 852,874 862,281 911,930 3,487,888 3,674,964 3,945,858
Benefits and other policy related
transactions (Note 5) ........... (1,525,854) (1,494,464) (1,520,205) (3,823,829) (4,982,073) (5,701,869)
Net transfers among divisions ..... (38,627) 626,135 684,771 (3,406) 1,192,337 1,505,831
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease) from policy
related transactions ............ (711,607) (6,048) 76,496 (339,347) (114,772) (250,180)
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT I (Note 5) .... 14,805 (5,206) (89,860) 42,214 (13,867) (353,921)
----------- ----------- ----------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ... (992,806) 1,619,219 745,500 (3,280,105) 3,516,458 (1,753,211)
NET ASSETS, BEGINNING OF PERIOD ..... 8,556,466 6,937,247 6,191,747 33,685,167 30,168,709 31,921,920
----------- ----------- ----------- ------------ ------------ ------------
NET ASSETS, END OF PERIOD ........... $ 7,563,660 $ 8,556,466 $ 6,937,247 $ 30,405,062 $ 33,685,167 $ 30,168,709
=========== =========== =========== ============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-6
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
COMMON STOCK DIVISION
-------------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income .............. $ 3,784,904 $ 3,834,123 $ 4,455,034
Net realized gain (loss) ........... 19,890,836 49,699,042 25,669,793
Change in unrealized appreciation
(depreciation) on investments .... (33,852,841) 27,776,191 (20,291,037)
------------- ------------- -------------
Net increase (decrease) from
operations ....................... (10,177,101) 81,309,356 9,833,790
------------- ------------- -------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) .............. 24,056,215 25,806,986 28,764,769
Benefits and other policy related
transactions (Note 5) ............ (44,688,333) (46,157,443) (49,574,439)
Net transfers among divisions ...... 459,966 1,338,478 (141,244)
------------- ------------- -------------
Net increase (decrease) from
policy related transactions ...... (20,172,152) (19,011,979) (20,950,914)
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT I (Note 5) ..... 149,257 (1,173,722) (6,045,498)
------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS .... (30,199,996) 61,123,655 (17,162,622)
NET ASSETS, BEGINNING OF PERIOD ...... 392,786,993 331,663,338 348,825,960
------------- ------------- -------------
NET ASSETS, END OF PERIOD ............ $ 362,586,997 $ 392,786,993 $ 331,663,338
============= ============= =============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE STOCK DIVISION
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income .............. $ (67,309) $ (36,607) $ 13,945
Net realized gain (loss) ........... (226,938) 1,493,128 928,417
Change in unrealized appreciation
(depreciation) on investments .... (516,505) 1,088,975 (1,705,668)
------------ ------------ ------------
Net increase (decrease) from
operations ....................... (810,752) 2,545,496 (763,306)
------------ ------------ ------------
FROM POLICY RELATED TRANSACTIONS:
Net premiums (Note 4) .............. 1,480,535 1,490,827 1,471,074
Benefits and other policy related
transactions (Note 5) ............ (1,982,576) (1,737,214) (2,945,113)
Net transfers among divisions ...... 1,279,484 565,989 2,030,403
------------ ------------ ------------
Net increase (decrease) from
policy related transactions ...... 777,443 319,602 556,364
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT I (Note 5) ..... 20,425 (5,961) (17,695)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS .... (12,884) 2,859,137 (224,637)
NET ASSETS, BEGINNING OF PERIOD ...... 18,174,362 15,315,225 15,539,862
------------ ------------ ------------
NET ASSETS, END OF PERIOD ............ $ 18,161,478 $ 18,174,362 $ 15,315,225
============ ============ ============
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
FSA-7
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
1. Equitable Variable Life Insurance Company (Equitable Variable), a
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States (Equitable), established Separate Account I (Account) under New York
insurance law to support the operations of Equitable Variable's scheduled and
single premium variable life insurance policies (Policies). The Account is a
unit investment trust registered with the Securities and Exchange Commission
under the Investment Company Act of 1940. The Account consists of six
investment divisions: the Money Market Division, the Intermediate Government
Securities Division, the High Yield Division, the Balanced Division, the
Common Stock Division and the Aggressive Stock Division. The assets in each
Division are invested in shares of a designated portfolio (Portfolio) of a
mutual fund, The Hudson River Trust (the Trust). Each Portfolio has separate
investment objectives.
The assets of the Account are the property of Equitable Variable. However,
the portion of the Account's assets equal to the reserves and other policy
liabilities with respect to the Account will not be chargeable with
liabilities arising out of any other business Equitable Variable may conduct.
The net assets may not be less than the amount required under New York
insurance law to provide for death benefits (without regard to the minimum
death benefit guarantee) and other policy benefits. Additional assets are
held in Equitable Variable's General Account to cover the contingency that
the guaranteed minimum death benefit might exceed the death benefit which
would have been payable in the absence of such guarantee.
2. The significant accounting policies of the Account are as follows:
Investments made in shares of the Trust are valued at the net asset value per
share of the respective Portfolios. The net asset value is determined by the
Trust using the market or fair value of the underlying assets of the
Portfolios.
Investment transactions are recorded on the trade date. Realized gains and
losses include gains and losses on redemptions of the Trust's shares
(determined on the identified cost basis) and Trust distributions
representing the net realized gains on Trust investment transactions.
The operations of the Account are included in the consolidated Federal income
tax return of Equitable. Under the provisions of the Policies, Equitable
Variable has the right to charge the Account for Federal income tax
attributable to the Account. No charge is currently being made against the
Account for such tax since, under current tax law, Equitable Variable pays no
tax on investment income and capital gains reflected in variable life
insurance policy reserves. However, Equitable Variable retains the right to
charge for any Federal income tax incurred which is attributable to the
Account if the law is changed. Charges for state and local taxes, if any,
attributable to the Account may also be made.
Dividends are recorded as income at the end of each quarter on the
ex-dividend date. Capital gains are distributed by the Trust at the end of
each year.
3. Under the policies, Equitable Variable assumes mortality and expense risks
and, to cover these risks, deducts a charge from the assets of the Account at
an annual rate of 0.50% of net assets attributable to policyowners.
4. Equitable Variable makes certain deductions from net premiums before amounts
are allocated to the Account. The deductions are for (1) premiums for
optional benefits, (2) additional premiums for extra mortality risks, (3)
administrative expenses, (4) state premium taxes, and (5) except as to single
premium policies, a risk charge for the guaranteed minimum death benefit.
5. The amount retained by Equitable Variable in the Account arises principally
from (1) mortality and other gains and losses resulting from the Account's
operations, (2) contributions from Equitable Variable, and (3) that portion,
determined ratably, of the Account's investment results applicable to those
assets in the Account in excess of the net assets for the Policies. Amounts
retained by Equitable Variable are not subject to charges for mortality and
expense risks.
Amounts retained by Equitable Variable in the Account may be transferred at
any time by Equitable Variable to its General Account.
FSA-8
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table shows the surplus contributions (withdrawals) by
investment division:
INVESTMENT DIVISION 1994 1993
------------------- ---- ----
Common Stock -- --
Money Market -- $ 585,000
Balanced -- 375,000
Aggressive Stock -- 460,000
High Yield -- 475,000
Short-Term World Income $(119,356) --
Intermediate Government Securities -- 90,000
--------- ----------
$(119,356) $1,985,000
========= ==========
There were net withdrawals of $34,130,000 by Equitable Variable in 1992.
Equitable Variable credits the values of the Policies participating in the
Account to compensate policyowners for their share of the Trust expenses in
excess of (1) fees for advisory services at an annual rate equivalent to
0.25% of the average daily value of the aggregate net assets of the
Portfolios, and (2) the Trust income taxes, if any.
6. Equitable Variable has entered into a Distribution and Servicing Agreement
with Equitable and Equico Securities Inc., (Equico), whereby registered
representatives of Equico, authorized as variable life insurance agents under
applicable state insurance laws, sell the Policies. The registered
representatives are compensated on a commission basis by Equitable.
Equitable Variable also has entered into an agreement with Equitable under
which Equitable performs the administrative services related to the Policies,
including underwriting and issuance, billings and collections, and
policyowner services. There is no charge to the Account related to this
agreement.
7. On February 22, 1994, Equitable Variable, the Account and the Trust
substituted shares of the Trust's Intermediate Government Securities
Portfolio for shares of the Trust's Short-Term World Income Portfolio. The
amount transferred to Intermediate Government Securities Portfolio was
$390,705. The 1994 Short-Term World Income Division statement of operations
and statement of changes in net assets relate to the period from January 1,
1994 to February 22, 1994 (date of substitution). The Short-Term World Income
Division is not available for future investments.
8. The tables on the following page show the gross and net investment returns
with respect to the Divisions for the periods shown. The net return for each
Division is based upon net assets for a policy which commences with the
beginning date of such period and is not based on the average net assets in
the Division during such period. Gross return is equal to the total return
earned by the underlying Trust investment.
FSA-9
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
RATES OF RETURN:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
MONEY MARKET -----------------------------------------------------------------------------------------------
DIVISION(A)(C) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- - -------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.02 % 3.16 % 3.75 % 6.38 % 8.44 % 9.44 % 7.56 % 6.85 % 6.86 % 8.56 %
Net return................ 3.68 % 2.62 % 3.23 % 5.85 % 7.90 % 8.85 % 7.02 % 6.32 % 6.31 % 7.96 %
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE YEARS ENDED DECEMBER 31,
GOVERNMENT ------------------------- APRIL 1(B) TO
SECURITIES DIVISION 1994 1993 1992 DECEMBER 31, 1991
- - ------------------- ---- ---- ---- -----------------
<S> <C> <C> <C> <C>
Gross return.............. (4.37)% 10.87 % 5.88 % 12.51 %
Net return................ (4.54)% 10.29 % 5.35 % 12.09 %
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM YEARS ENDED DECEMBER 31,
WORLD INCOME ------------------------------ APRIL 1(B) TO
DIVISION 1994 1993 1992 DECEMBER 31, 1991
- - -------- ---- ---- ---- -----------------
<S> <C> <C> <C> <C>
Gross return.............. -- 5.56 % (2.46)% 3.63 %
Net return................ -- 5.00 % (2.95)% 3.24 %
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
HIGH YIELD DIVISION 1994 1993 1992 1991 1990 1989 1988 1987
- - ------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.79)% 23.60 % 12.69 % 24.91 % (0.75)% 5.52 % 10.55 % 5.30 %
Net return................ (2.94)% 22.99 % 12.13 % 24.29 % (1.25)% 4.99 % 9.73 % 4.77 %
</TABLE>
<TABLE>
<CAPTION>
BALANCED DIVISION
- - -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (8.02)% 12.44 % (2.68)% 41.52 % 0.43 % 26.08 % 13.84 % (0.65)%
Net return................ (8.35)% 11.91 % (3.17)% 40.81 % (0.07)% 25.45 % 12.99 % (1.15)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
COMMON STOCK ------------------------------------------------------------------------------------------------
DIVISION(A)(C) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- - -------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.14)% 24.99 % 3.36 % 38.10 % (7.95)% 25.82 % 22.69 % 7.71 % 17.59 % 33.83 %
Net return................ (2.50)% 24.36 % 2.84 % 37.41 % (8.41)% 25.19 % 22.08 % 7.17 % 17.00 % 33.09 %
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
AGGRESSIVE ----------------------------------------------------------------------------
STOCK DIVISION 1994 1993 1992 1991 1990 1989 1988 1987
- - -------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (3.81)% 17.05 % (2.91)% 87.41 % 8.49 % 43.93 % 1.78 % 7.69 %
Net return................ (4.07)% 16.45 % (3.40)% 86.47 % 7.95 % 43.21 % 1.02 % 7.15 %
</TABLE>
[EDGARIZER'S COMMENT: THE FOLLOWING FOOTNOTES APPLY TO ALL THE TABLES ABOVE.]
(a) The net returns for periods prior to March 22, 1985 are those of the
respective Separate Accounts I and II reorganized on that date into a unit
investment trust. The reorganization was accounted for under the continuing
entity basis of accounting.
(b) Date as of which net premiums under the Policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
(c) Subsequent to March 22, 1985, the date the Account commenced investing in
the Trust, the advisory fees have been deducted prior to calculating the
gross return.
FSA-10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Equitable Variable Life Insurance Company
and Policyowners of Separate Account I
of Equitable Variable Life Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of Money Market Division,
Intermediate Government Securities Division, High Yield Division, Balanced
Division, Common Stock Division and Aggressive Stock Division, separate
investment divisions of Equitable Variable Life Insurance Company (the
"Company") Separate Account I at December 31, 1994 and the results of each of
their operations and the changes in each of their net assets for each of the two
years in the period then ended (for Short-Term World Income Division for the
period January 1, 1994 through February 22, 1994 (date of substitution) and the
year ended December 31, 1993), in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of shares in The Hudson River Trust at December 31, 1994 with the
transfer agent, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, NY
February 8, 1995
FSA-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Equitable Variable Life Insurance Company:
We have audited the statements of operations and changes in net assets for the
year ended December 31, 1992 of the Money Market, Intermediate Government
Securities, Short-Term World Income, High Yield, Balanced, Common Stock, and
Aggressive Stock Divisions of Separate Account I of Equitable Variable Life
Insurance Company. These financial statements are the responsibility of
Equitable Variable Life Insurance Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and changes in net assets of the Divisions
of Separate Account I of Equitable Variable Life Insurance Company for the year
ended December 31, 1992 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, NY
February 16, 1993
FSA-12
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost ...................................... $ 2,008.5 $ 2,229.9
Available for sale, at estimated fair value .............................. 2,138.8 2,402.3
Policy loans ............................................................... 1,185.2 1,087.3
Mortgage loans on real estate .............................................. 888.5 1,059.5
Equity real estate ......................................................... 641.0 613.6
Other equity investments ................................................... 239.1 307.3
Other invested assets ...................................................... 107.8 87.6
--------- ---------
Total investments ........................................................ 7,208.9 7,787.5
Cash and cash equivalents ..................................................... 182.3 98.0
Deferred policy acquisition costs ............................................. 2,077.1 1,946.7
Other assets .................................................................. 240.7 214.0
Separate Accounts assets ...................................................... 3,345.3 3,048.7
--------- ---------
TOTAL ASSETS .................................................................. $13,054.3 $13,094.9
========= =========
LIABILITIES
Policyholders' account balances ............................................... $ 7,340.0 $ 7,614.7
Future policy benefits and other policyholders' liabilities ................... 509.4 475.2
Other liabilities ............................................................. 441.1 540.7
Separate Accounts liabilities ................................................. 3,314.9 3,011.6
--------- ---------
Total liabilities ........................................................ 11,605.4 11,642.2
--------- ---------
Commitments and contingencies (Notes 7, 9, 10 and 11)
SHAREHOLDER'S EQUITY
Common stock, par value $1 per share;
5.0 million shares authorized, 1.5 million shares issued and outstanding.... 1.5 1.5
Capital in excess of par value ................................................ 1,355.7 1,305.7
Retained earnings ............................................................. 165.5 129.5
Net unrealized investment (losses) gains ...................................... (72.6) 22.3
Minimum pension liability ..................................................... (1.2) (6.3)
--------- ---------
Total shareholder's equity ............................................... 1,448.9 1,452.7
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY .................................... $13,054.3 $13,094.9
========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-1
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee income ........ $ 552.6 $ 485.2 $ 425.0
Premiums ............................................................ 40.1 46.9 50.8
Net investment income ............................................... 526.8 557.6 574.5
Investment (losses) gains, net ...................................... (4.6) 1.5 (54.0)
Other income ........................................................ 2.9 3.0 5.5
-------- -------- --------
Total revenues .................................................... 1,117.8 1,094.2 1,001.8
-------- -------- --------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances ................ 389.3 439.2 510.6
Policyholders' benefits ............................................. 242.3 251.0 247.5
Other operating costs and expenses .................................. 413.8 356.7 306.5
-------- -------- --------
Total benefits and other deductions ............................ 1,045.4 1,046.9 1,064.6
-------- -------- --------
Earnings (loss) before Federal income taxes and cumulative
effect of accounting changes ........................................ 72.4 47.3 (62.8)
Federal income tax expense (benefit) ................................... 25.0 20.5 (21.6)
-------- -------- --------
Earnings (loss) before cumulative effect of accounting changes ......... 47.4 26.8 (41.2)
Cumulative effect of accounting changes, net of Federal income taxes.... (11.4) -- (22.4)
-------- -------- --------
Net Earnings (Loss) .................................................... $ 36.0 $ 26.8 $ (63.6)
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
COMMON STOCK, AT PAR VALUE:
Beginning and end of year ...................... $ 1.5 $ 1.5 $ 1.5
-------- -------- --------
CAPITAL IN EXCESS OF PAR VALUE:
Balance, beginning of year ..................... 1,305.7 1,055.7 955.7
Additional capital in excess of par value ...... 50.0 250.0 100.0
-------- -------- --------
Balance, end of year ........................... 1,355.7 1,305.7 1,055.7
-------- -------- --------
RETAINED EARNINGS:
Balance, beginning of year ..................... 129.5 102.7 166.3
Net earnings (loss) ............................ 36.0 26.8 (63.6)
-------- -------- --------
Balance, end of year ........................... 165.5 129.5 102.7
-------- -------- --------
NET UNREALIZED INVESTMENT (LOSSES) GAINS:
Balance, beginning of year ..................... 22.3 11.1 7.7
Change in unrealized investment (losses) gains.. (94.9) 11.2 3.4
-------- -------- --------
Balance, end of year ........................... (72.6) 22.3 11.1
-------- -------- --------
MINIMUM PENSION LIABILITY:
Balance, beginning of year ..................... (6.3) --
Change in minimum pension liability ............ 5.1 (6.3)
-------- --------
Balance, end of year ........................... (1.2) (6.3)
-------- --------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR ........... $1,448.9 $1,452.7 $1,171.0
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
NET EARNINGS (LOSS) .................................................... $ 36.0 $ 26.8 $ (63.6)
ADJUSTMENTS TO RECONCILE NET EARNINGS (LOSS) TO NET CASH (USED) PROVIDED
BY OPERATING ACTIVITIES:
Investment losses (gains), net ...................................... 4.6 (1.5) 54.0
General Account policy charges ...................................... (572.8) (496.7) (412.3)
Interest credited to policyholders' account balances ................ 389.3 439.2 510.6
Other, net .......................................................... (17.2) 117.2 (95.1)
--------- --------- ---------
Net cash (used) provided by operating activities ....................... (160.1) 85.0 (6.4)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities and repayments ........................................... 511.8 1,165.8 717.7
Sales ............................................................... 2,119.0 2,844.2 1,533.5
Return of capital from joint ventures and limited partnerships ...... 14.2 56.3 68.3
Purchases ........................................................... (2,251.7) (4,414.0) (2,584.0)
Other, net .......................................................... (102.2) (98.8) (103.5)
--------- --------- ---------
Net cash provided (used) by investing activities ....................... 291.1 (446.5) (368.0)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits .......................................................... 602.8 612.9 611.3
Withdrawals ....................................................... (697.7) (506.2) (544.4)
Capital contribution from Equitable Life ............................ 50.0 250.0 100.0
Other, net .......................................................... (1.8) 2.0 --
--------- --------- ---------
Net cash (used) provided by financing activities ....................... (46.7) 358.7 166.9
--------- --------- ---------
Change in cash and cash equivalents .................................... 84.3 (2.8) (207.5)
Cash and cash equivalents, beginning of year ........................... 98.0 100.8 308.3
--------- --------- ---------
Cash and Cash Equivalents, End of Year ................................. $ 182.3 $ 98.0 $ 100.8
========= ========= =========
Supplemental cash flow information:
Interest Paid ....................................................... $ 5.7 $ 2.1
========= =========
Income Taxes Refunded ............................................... $ 8.4 $ .3 $ 8.5
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-4
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Equitable Variable Life Insurance Company ("Equitable Variable Life") was
incorporated on September 11, 1972 as a wholly owned subsidiary of The
Equitable Life Assurance Society of the United States ("Equitable Life").
Equitable Variable Life's operations consist principally of the sale of
interest-sensitive life insurance and annuity products.
In accordance with Equitable Life's plan of demutualization, Equitable Life
converted to a stock life insurance company on July 22, 1992 and became a
wholly owned subsidiary of The Equitable Companies Incorporated (the
"Holding Company").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation--The accompanying
consolidated financial statements include the accounts of Equitable Variable
Life and its non-insurance subsidiaries (collectively "EVLICO"). After July
22, 1992, EVLICO commenced to prepare its general purpose consolidated
financial statements in conformity with generally accepted accounting
principles ("GAAP") for stock life insurance companies. Such principles have
been applied retroactively in the preparation of these consolidated
financial statements for all periods prior to conversion. All significant
intercompany transactions and balances have been eliminated in
consolidation.
Certain reclassifications have been made in the amounts presented for prior
periods to conform these periods with the 1994 presentation.
Accounting Changes--In the fourth quarter of 1994 (effective as of January
1, 1994), EVLICO adopted Statement of Financial Accounting Standards
("SFAS") No. 112, "Employers' Accounting for Postemployment Benefits," which
requires employers to recognize the obligation to provide postemployment
benefits. Implementation of this statement resulted in a charge for the
cumulative effect of accounting change of $11.4 million, net of a Federal
income tax benefit of $6.2 million. The current year impact from the
implementation of this statement had no material effect on the 1994
consolidated statement of earnings.
In the first quarter of 1993, EVLICO adopted SFAS No. 113, "Accounting and
Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,"
which establishes the conditions for reinsurance accounting. With the
adoption of this statement, certain reinsurance contracts were reclassified
in 1993 and are presented on a gross basis. Implementation of this statement
had no material effect on EVLICO's consolidated financial statements.
At December 31, 1993, EVLICO adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expands the use of fair
value accounting for those securities that a company does not have positive
intent and ability to hold to maturity. Implementation of this statement
increased consolidated shareholder's equity by $7.2 million, net of deferred
policy acquisition costs and deferred Federal income tax.
In the fourth quarter of 1992 (effective as of January 1, 1992), EVLICO
adopted SFAS No. 109, "Accounting for Income Taxes" and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
cumulative effect of accounting changes of $22.4 million is comprised of a
credit of $65.0 million related to the income tax statement and a charge of
$87.4 million, net of a Federal income tax benefit of $45.0 million, related
to the postretirement benefit statement.
In 1992, effective in the fourth quarter, EVLICO changed its method of
accounting for foreclosed assets to comply with AICPA Statement of Position
No. 92-3, "Accounting for Foreclosed Assets." This change resulted in a
charge of $16.1 million which is reflected in investment (losses) gains,
net.
New Accounting Pronouncements--In the first quarter of 1995, EVLICO intends
to adopt SFAS No. 114, "Accounting by Creditors for Impairment of a Loan."
This statement applies to all creditors and addresses the accounting for
impairment of a loan by specifying how allowances for credit losses should
be determined. The statement also applies to all loans that are restructured
in a troubled debt restructuring involving a modification of terms. It
requires that impaired loans that are within the scope of this statement be
measured based on the present value of expected future cash flows discounted
at the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if the
loan is collateral dependent. EVLICO is currently providing for impairment
of loans through an allowance for possible losses, and the implementation of
this statement is not expected to have a significant effect on the level of
this allowance. As a result, there should be no material effect on EVLICO's
consolidated statements of earnings or shareholder's equity upon adoption.
Valuation of Investments--Fixed maturities which EVLICO has both the ability
and the intent to hold to maturity are stated principally at amortized cost.
For publicly traded fixed maturities and for directly negotiated fixed
maturities, the amortized cost is adjusted for impairments in value deemed
to be other than temporary. Fixed maturities which have been identified as
available for sale are reported at estimated fair value.
F-5
<PAGE>
Mortgage loans on real estate are stated at unpaid principal balances, net
of unamortized discounts and valuation allowances. The valuation allowances
are based on losses expected by management to be realized on transfers of
mortgage loans to real estate (upon foreclosure or in-substance
foreclosure), on the disposition or settlement of mortgage loans and on
mortgage loans which management believes may not be collectible in full. In
establishing valuation allowances, management considers, among other things,
the estimated fair value of the underlying collateral.
Policy loans are stated at unpaid principal balances.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired in
satisfaction of debt is valued at estimated fair value. Valuation allowances
on real estate held for the production of income are computed using the
forecasted cash flows of the respective properties discounted at a rate
equal to EVLICO's cost of funds; valuation allowances on real estate
available for sale are computed using the lower of estimated current fair
value or depreciated cost, net of disposition cost.
Partnerships and joint venture interests in which EVLICO does not have
control and a majority economic interest are reported on the equity basis of
accounting and are included with either equity real estate or other equity
investments, as appropriate.
Equity securities, comprised of common and non-redeemable preferred stocks,
are carried at estimated fair value and are included in other equity
investments.
Short-term investments are stated at amortized cost which approximates fair
value and are included with other invested assets.
Cash and cash equivalents include cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.
All securities are recorded in the consolidated financial statements on a
trade date basis.
Investment Results and Unrealized Investment Gains (Losses)--Realized
investment gains and losses are determined by specific identification and
are presented as a component of revenue. Valuation allowances are netted
against the asset categories to which they apply and changes in the
valuation allowances are included in investment gains or losses.
Unrealized investment gains and losses on fixed maturities available for
sale and equity securities are accounted for as a separate component of
shareholder's equity, net of related deferred Federal income taxes and
deferred policy acquisition costs related to universal life and
investment-type products.
Recognition of Insurance Income and Related Expenses--Premiums from
universal life and investment-type contracts are reported as deposits to
policyholders' account balances. Revenues from these contracts consist of
amounts assessed during the period against policy holders' account balances
for mortality charges, policy administration charges and surrender charges.
Policy benefits and claims that are charged to expense include benefit
claims incurred in the period in excess of related policyholders' account
balances.
Premiums from life and annuity policies with life contingencies are
recognized generally as income when due. Benefits and expenses are matched
with such income so as to result in the recognition of profits over the life
of the contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
Deferred Policy Acquisition Costs--The costs of acquiring new business,
principally commissions, underwriting, agency and policy issue expenses, all
of which vary with and are primarily related to the production of new
business, are deferred. Deferred policy acquisition costs are subject to
recoverability testing at the time of policy issue and loss recognition
testing at the end of each accounting period.
For universal life products and investment-type products, deferred policy
acquisition costs are amortized over the expected average life of the
contracts (periods ranging from 15 to 35 years and 5 to 17 years,
respectively) as a constant percentage of estimated gross profits arising
principally from investment results, mortality and expense margins and
surrender charges based on historical and anticipated future experience,
updated at the end of each accounting period. The effects of revisions to
experience on previous amortization of deferred policy acquisition costs are
reflected in earnings and change in unrealized investment gains (losses) in
the period estimated gross profits are revised.
Amortization charged to income amounted to $200.2 million, $135.5 million
and $61.8 million for the years ended December 31, 1994, 1993 and 1992,
respectively.
Policyholders' Account Balances and Future Policy Benefits--EVLICO's
insurance contracts are primarily universal life and investment-type
contracts. Policyholders' account balances are equal to the policy account
values. The policy account values represent an accumulation of gross premium
payments plus credited interest less expense and mortality charges and
withdrawals.
The future policy benefit liabilities for the remainder of EVLICO's
insurance contracts, consisting primarily of supplementary contracts with
life contingencies and various policy riders, are computed by various
valuation methods based on assumed interest rates and mortality and
morbidity assumptions reflecting EVLICO's experience and industry standards.
F-6
<PAGE>
Federal Income Taxes--EVLICO is included in a consolidated Federal income
tax return with Equitable Life and its other eligible subsidiaries. In
accordance with an agreement between EVLICO and Equitable Life, the amount
of current income taxes as determined on a separate return basis will be
paid to, or received from, Equitable Life. Benefits for losses, which are
paid to EVLICO to the extent they are utilized by Equitable Life, may not
have been received in the absence of such agreement. Effective January 1,
1992, deferred income tax assets and liabilities are recognized based on the
difference between financial statement carrying amounts and income tax bases
of assets and liabilities using the enacted income tax rates and laws.
Separate Accounts--Separate Accounts are established in conformity with the
New York State Insurance Law and are generally not chargeable with
liabilities that arise from any other business of EVLICO. Separate Accounts
assets are subject to General Account claims only to the extent the value of
such assets exceeds the Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts, representing net deposits
and accumulated net investment earnings less fees, held primarily for the
benefit of contractholders, are shown as separate captions in the
consolidated balance sheets. Assets held in the Separate Accounts are
carried at quoted market values or, where quoted values are not available,
at estimated fair values as determined by management.
The investment results of Separate Accounts are reflected directly in
Separate Accounts liabilities. For the years ended December 31, 1994, 1993
and 1992, investment results of Separate Accounts were $135.9 million,
$344.1 million and $52.1 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate Accounts
liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges of the Separate Accounts are included
in revenues.
F-7
<PAGE>
3. INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
-------- ------- ------ ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
December 31, 1994
-----------------
Fixed Maturities:
Held to Maturity:
Corporate ................................................. $1,812.4 $ 11.9 $ 93.1 $1,731.2
U.S. Treasury securities and U.S. government
and agency securities ................................... 180.4 -- 21.7 158.7
States and political subdivisions ......................... 14.4 -- .9 13.5
Foreign governments ....................................... 1.3 .1 -- 1.4
-------- ------ ------ --------
Total Held to Maturity ...................................... $2,008.5 $ 12.0 $115.7 $1,904.8
======== ====== ====== ========
Available for Sale:
Corporate ................................................. $1,622.3 $ 5.1 $112.6 $1,514.8
Mortgage-backed ........................................... 221.9 .5 16.4 206.0
U.S. Treasury securities and U.S. government and
agency securities ....................................... 365.4 1.4 20.7 346.1
States and political subdivisions ......................... 4.8 -- .6 4.2
Foreign governments ....................................... 14.8 .2 -- 15.0
Redeemable preferred stock ................................ 58.0 .1 5.4 52.7
-------- ------ ------ --------
Total Available for Sale .................................... $2,287.2 $ 7.3 $155.7 $2,138.8
======== ====== ====== ========
Equity Securities:
Common stock ................................................ $ 42.0 $ 10.1 $ 9.4 $ 42.7
======== ====== ====== ========
December 31, 1993
-----------------
Fixed Maturities:
Held to Maturity:
Corporate ................................................. $2,056.2 $108.4 $ 8.5 $2,156.1
Mortgage-backed ........................................... 55.3 2.1 -- 57.4
U.S. Treasury securities and U.S. government and
agency securities ....................................... 22.4 1.5 -- 23.9
States and political subdivisions ......................... 85.7 3.3 .1 88.9
Foreign governments ....................................... 10.3 1.2 -- 11.5
-------- ------ ------ --------
Total Held to Maturity ...................................... $2,229.9 $116.5 $ 8.6 $2,337.8
======== ====== ====== ========
Available for Sale:
Corporate ................................................. $1,673.1 $ 55.7 $ 7.5 $1,721.3
Mortgage-backed ........................................... 444.5 14.1 .6 458.0
U.S. Treasury securities and U.S. government and
securities agency ....................................... 73.4 1.8 .3 74.9
States and political subdivisions ......................... 119.7 4.5 .3 123.9
Foreign governments ....................................... 19.6 1.5 .1 21.0
Redeemable preferred stock ................................ 5.2 -- 2.0 3.2
-------- ------ ------ --------
Total Available for Sale .................................... $2,335.5 $ 77.6 $ 10.8 $2,402.3
======== ====== ====== ========
Equity Securities:
Common stock .............................................. $ 40.6 $ 25.9 $ .2 $ 66.3
Non-redeemable preferred stock ............................ .4 .1 .2 .3
-------- ------ ------ --------
Total Equity Securities ........................................ $ 41.0 $ 26.0 $ .4 $ 66.6
======== ====== ====== ========
</TABLE>
For publicly traded fixed maturities and equity securities, estimated fair
value is determined using quoted market prices. For fixed maturities without
a readily ascertainable market value, EVLICO has determined an estimated
fair value using a discounted cash flow approach, including provisions for
credit risk, generally based upon the assumption that such securities will
be held to maturity. Estimated fair value for equity securities,
substantially all of which do not have a readily ascertainable market value,
has been determined by EVLICO. Such estimated fair values do not necessarily
represent the values for which these securities could have been sold at the
dates of the consolidated balance sheets. At December 31, 1994 and 1993,
respectively, securities without a readily ascertainable market value having
an amortized cost of $1,529.5 million and $1,738.7 million, respectively,
had estimated fair values of $1,469.5 million and $1,835.8 million,
respectively.
F-8
<PAGE>
The contractual maturity of bonds at December 31, 1994 are shown below:
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
------------------------ ------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Due in one year or less ........ $ 74.9 $ 75.3 $ 136.2 $ 137.3
Due in years two through five... 756.5 739.0 593.3 579.7
Due in years six through ten.... 795.9 743.9 798.8 724.5
Due after ten years ............ 381.2 346.6 479.0 438.6
Mortgage-backed securities ..... -- -- 221.9 206.0
-------- -------- -------- --------
Total .......................... $2,008.5 $1,904.8 $2,229.2 $2,086.1
======== ======== ======== ========
</TABLE>
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or pre-payment penalties.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------ ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year ........................ $ 87.3 $ 147.2 $100.7
Additions charged to income ........................ 12.7 44.4 75.0
Deductions for writedowns and asset dispositions.... (31.5) (104.3) (28.5)
------ ------- ------
Balances, End of Year .............................. $ 68.5 $ 87.3 $147.2
====== ======= ======
Balances, end of year comprise:
Mortgage loans on real estate ................... $ 24.0 $ 46.7 $ 60.2
Equity real estate .............................. 44.5 40.6 25.1
Fixed maturities ................................ -- -- 61.9
------ ------- ------
Total .............................................. $ 68.5 $ 87.3 $147.2
====== ======= ======
</TABLE>
Deductions for writedowns and asset dispositions for 1993 include a $20.2
million writedown of fixed maturity investments at December 31, 1993 as a
result of adopting a new accounting statement for the valuation of these
investments that requires specific writedowns instead of valuation
allowances.
At December 31, 1994, the carrying values of investments held for the
production of income which were non-income producing for the twelve months
preceding the consolidated balance sheet date were $12.4 million of fixed
maturities and $5.4 million of mortgage loans on real estate.
EVLICO's fixed maturity investment portfolio includes corporate high yield
securities consisting of public high yield bonds, redeemable preferred
stocks and directly negotiated debt in leveraged buyout transactions. EVLICO
seeks to minimize the higher than normal credit risks associated with such
securities by monitoring the total investments in any single issuer or total
investment in a particular industry group. Certain of these corporate high
yield securities are classified as other than investment grade by the
various rating agencies, i.e., a rating below Baa or an NAIC (National
Association of Insurance Commissioners) designation of 3 (medium grade), 4
or 5 (below investment grade) or 6 (in or near default). At December 31,
1994, approximately 10.6% of the $4,127.1 million aggregate amortized cost
of bonds held by EVLICO were considered to be other than investment grade.
During 1993, EVLICO sold $250.0 million of primarily privately placed below
investment grade fixed maturities to EQ Asset Trust 1993, (the "Trust"), a
limited purpose business trust, wholly owned by the Holding Company.
In addition to its holding of corporate high yield securities, EVLICO is an
equity investor in limited partnership interests which invest primarily in
securities considered to be other than investment grade.
EVLICO has restructured or modified the terms of certain fixed maturity
investments. The fixed maturity portfolio, based on amortized cost, includes
$13.3 million and $23.1 million at December 31, 1994 and 1993, respectively,
of such restructured securities. These amounts include fixed maturities
which are in default as to principal and/or interest payments, are to be
restructured pursuant to commenced negotiations or where the borrowers went
into bankruptcy subsequent to acquisition (collectively, "problem fixed
maturities") of $5.6 million and $12.4 million at December 31, 1994 and
1993, respectively. Gross interest income that would have been recorded in
accordance with the original terms of restructured fixed maturities amounted
to $1.1 million, $2.2 million and $13.7 million in 1994, 1993 and 1992,
respectively. Gross interest income on these fixed maturities included in
net investment income aggregated $1.0 million, $1.5 million and $11.3
million in 1994, 1993 and 1992, respectively.
F-9
<PAGE>
At December 31, 1994 and 1993, mortgage loans on real estate with scheduled
payments 60 days (90 days for agricultural mortgages) or more past due or in
foreclosure (collectively, "problem mortgage loans on real estate") had an
amortized cost of $35.2 million (3.9% of total mortgage loans on real
estate) and $108.6 million (9.8% of total mortgage loans on real estate),
respectively.
The payment terms of mortgage loans on real estate may from time to time be
restructured or modified. The investment in restructured mortgage loans on
real estate, based on amortized cost, amounted to $130.8 million and $147.9
million at December 31, 1994 and 1993, respectively. These amounts include
$0.0 million and $19.8 million of problem mortgage loans on real estate at
December 31, 1994 and 1993, respectively. Gross interest income on
restructured mortgage loans on real estate that would have been recorded in
accordance with the original terms of such loans amounted to $12.3 million,
$13.9 million and $14.1 million in 1994, 1993 and 1992, respectively. Gross
interest income on these loans included in net investment income aggregated
$11.4 million, $11.5 million and $12.3 million in 1994, 1993 and 1992,
respectively.
EVLICO's investment in equity real estate is through direct ownership and
through investments in real estate joint ventures. At December 31, 1994 and
1993, the carrying value of equity real estate available for sale amounted
to $138.4 million and $92.2 million, respectively. At December 31, 1994 and
1993, EVLICO owned $230.5 million and $190.9 million, respectively, of real
estate acquired in satisfaction of debt.
Depreciation on real estate is computed using the straight-line method over
the estimated useful lives of the properties, which generally range from 40
to 50 years. Accumulated depreciation on real estate was $51.1 million and
$39.1 million at December 31, 1994 and 1993, respectively. Depreciation
expense on real estate totaled $12.7 million, $11.6 million and $5.9 million
for the years ended December 31, 1994, 1993 and 1992, respectively.
4. JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint ventures (12
and 14 individual ventures as of December 31, 1994 and 1993, respectively)
and of other limited partnership interests accounted for under the equity
method, in which EVLICO has an investment of $10.0 million or greater and an
equity interest of 10% or greater is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1993
-------- --------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost ................................. $1,047.0 $1,034.6
Investments in securities, generally at estimated fair value .................... 3,061.2 3,623.6
Cash and cash equivalents ....................................................... 46.4 98.1
Other assets .................................................................... 261.9 486.4
-------- --------
Total assets .................................................................... 4,416.5 5,242.7
-------- --------
Funds borrowed -- third party ................................................... 1,233.6 1,254.6
Other liabilities ............................................................... 611.0 674.8
-------- --------
Total liabilities ............................................................... 1,844.6 1,929.4
-------- --------
Partners' Capital ............................................................... $2,571.9 $3,313.3
======== ========
Equity in partners' capital included above ...................................... $ 327.3 $ 375.4
Equity in limited partnership interests not included above ...................... 50.4 57.6
Excess of equity in partners' capital over investment cost and equity earnings... 3.7 --
Negative equity in certain joint ventures presented as other liabilities ........ -- .8
-------- --------
Carrying Value .................................................................. $ 381.4 $ 433.8
======== ========
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures ...................................... $ 180.1 $ 136.6 $ 183.1
Revenues of other limited partnership interests ............................. 102.5 318.9 150.3
Interest expense -- third party ............................................. (88.1) (79.7) (12.1)
Other expenses .............................................................. (172.4) (132.7) (156.1)
------- ------- -------
Net Earnings ................................................................ $ 22.1 $ 243.1 $ 165.2
======= ======= =======
Equity in net earnings included above ....................................... $ 11.7 $ 34.0 $ 26.1
Equity in net earnings of limited partnership interests not included above... 6.3 12.0 15.8
Excess of earnings in joint ventures over equity ownership percentage and
amortization of differences in bases ..................................... (1.1) (.1) (.1)
------- ------- -------
Total Equity in Net Earnings ................................................ $ 16.9 $ 45.9 $ 41.8
======= ======= =======
</TABLE>
F-10
<PAGE>
5. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities ..................... $331.4 $319.9 $310.1
Mortgage loans on real estate ........ 86.7 105.7 132.5
Equity real estate ................... 67.0 69.8 23.0
Policy loans ......................... 79.5 76.1 70.9
Other equity investments ............. 13.4 38.5 32.8
Other investment income .............. 24.5 17.0 36.9
------ ------ ------
Gross investment income .............. 602.5 627.0 606.2
Investment expenses .................. 75.7 69.4 31.7
------ ------ ------
Net Investment Income ................ $526.8 $557.6 $574.5
====== ====== ======
</TABLE>
Investment (losses) gains, net, including changes in valuation allowances,
are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities ..................... $ (6.8) $ 45.1 $ 2.6
Mortgage loans on real estate ........ (13.3) (32.0) (38.8)
Equity real estate ................... (5.3) (13.4) (21.0)
Other equity investments ............. 20.8 1.8 3.2
------ ------ ------
Investment (Losses) Gains, Net ....... $ (4.6) $ 1.5 $(54.0)
====== ====== ======
</TABLE>
Gross gains of $42.6 million, $66.2 million and $34.3 million and gross
losses of $41.2 million, $66.5 million and $31.3 million were realized on
sales of investments in fixed maturities for the years ended December 31,
1994, 1993 and 1992, respectively. In addition, writedowns of fixed
maturities amounted to $8.2 million, $1.4 million and $5.6 million for the
years ended December 31, 1994, 1993 and 1992, respectively.
For the year ended December 31, 1994, proceeds received on sales of fixed
maturities classified as available for sale amounted to $2,065.1 million.
Gross gains of $21.2 million and gross losses of $28.1 million were realized
on these sales. The increase in unrealized investment losses related to
fixed maturities classified as available for sale for the year ended
December 31, 1994 amounted to $215.2 million.
During the year ended December 31, 1994, one security classified as held to
maturity was sold and two securities so classified were transferred to the
available for sale portfolio. These actions were taken as a result of a
significant deterioration in creditworthiness. The amortized cost of the
security sold was $9.9 million with a related investment gain of $.4 million
recognized; the aggregate amortized cost of the securities transferred was
$13.2 million with gross unrealized investment losses of $4.0 million
charged to consolidated shareholder's equity.
F-11
<PAGE>
The unrealized investment (losses) gains, included in the consolidated
balance sheets as a component of equity, and the changes for the
corresponding years are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
------- ------ -----
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year ........................................ $ 22.3 $ 11.1 $ 7.7
Changes in unrealized investment (losses) gains ................... (241.8) 3.4 5.1
Effect of adopting SFAS No. 115 ................................... -- 72.2 --
Changes in unrealized investment (gains) losses attributable to:
Deferred policy acquisition costs .............................. 95.8 (58.2) --
Deferred Federal income taxes .................................. 51.1 (6.2) (1.7)
------- ------ -----
Balance, End of Year .............................................. $ (72.6) $ 22.3 $11.1
======= ====== =====
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities ............................................. $(148.4) $ 66.8 $(3.5)
Other equity investments ..................................... .7 25.6 20.3
Other ........................................................ (1.7) -- --
------- ------ -----
Total .......................................................... (149.4) 92.4 16.8
Amounts of unrealized investment (gains) losses attributable to:
Deferred policy acquisition costs ............................ 37.6 (58.2) --
Deferred Federal income taxes ................................ 39.2 (11.9) (5.7)
------- ------ -----
Total ............................................................. $ (72.6) $ 22.3 $11.1
======= ====== =====
</TABLE>
6. FEDERAL INCOME TAXES
A summary of the Federal income tax expense (benefit) in the consolidated
statements of earnings is shown below:
1994 1993 1992
------ ------ ------
(IN MILLIONS)
Federal income tax expense (benefit):
Current .......................... $ (1.4) $ (3.4) $(11.3)
Deferred ......................... 26.4 23.9 (10.3)
------ ------ ------
Total ............................... $(25.0) $(20.5) $(21.6)
====== ====== ======
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings (loss)
from operations before Federal income taxes by the expected Federal income
tax rate (35% for 1994 and 1993 and 34% for 1992).
The sources of the difference and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- ------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense (benefit).... $25.3 $16.6 $(21.4)
Tax rate adjustment ............................. -- 4.0 --
Other ........................................... (.3) (.1) (.2)
----- ----- ------
Federal Income Tax Expense (Benefit) ............ $25.0 $20.5 $(21.6)
===== ===== ======
</TABLE>
The components of the net deferred income tax liability are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------- ---------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------ ----------- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Deferred policy acquisition costs, reserves and reinsurance................ $ -- $250.6 $ -- $262.0
Investments................................................................ 38.4 -- 13.4 --
Compensation and related benefits.......................................... 52.2 -- 48.8 --
Other...................................................................... 25.6 -- 37.3 --
------ ------ ----- ------
Total...................................................................... $116.2 $250.6 $99.5 $262.0
====== ====== ===== ======
</TABLE>
F-12
<PAGE>
The deferred Federal income tax expense (benefit) impacting operations
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The sources of these temporary
differences and the tax effects of each are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------ ----- ------
(IN MILLIONS)
<S> <C> <C> <C>
Deferred policy acquisition costs, reserves and reinsurance.... $(11.4) $(6.8) $ 1.8
Investments ................................................... 26.1 11.4 (18.6)
Compensation and related benefits ............................. (2.8) 1.9 --
Other ......................................................... 14.5 17.4 6.5
------ ----- ------
Deferred Federal Income Tax Expense (Benefit) ................. $ 26.4 $23.9 $(10.3)
====== ===== ======
</TABLE>
At December 31, 1994, EVLICO had net operating loss carryforwards for tax
purposes approximating $62.7 million which expire in 2002 through 2007.
These loss carryforwards are available to offset future tax payments to
Equitable Life under the tax sharing agreement.
7. REINSURANCE AGREEMENTS
EVLICO cedes reinsurance to other insurance companies. EVLICO evaluates the
financial condition of its reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies. The effect of reinsurance is
summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993
----- -----
(IN MILLIONS)
<S> <C> <C>
Direct premiums ...................................................... $40.2 $47.0
Reinsurance ceded .................................................... (.1) (.1)
----- -----
Premiums ............................................................. $40.1 $46.9
===== =====
Universal Life and Investment-type Product Policy Fee Income Ceded.... $24.9 $26.0
===== =====
Policyholders' Benefits Ceded ........................................ $ 8.3 $14.5
===== =====
</TABLE>
EVLICO reinsures mortality risks in excess of $5.0 million on any single
life. EVLICO also reinsures the entire risk on certain substandard
underwriting risks as well as in certain other cases.
8. RELATED PARTY TRANSACTIONS
Under a cost sharing agreement, EVLICO reimburses Equitable Life for its use
of Equitable Life's personnel, property and facilities in carrying out
certain of its operations. Reimbursement for intercompany services is based
on the allocated cost of the services provided. The incurred balances of
these intercompany transactions, which are included in other operating costs
and expenses are as follows:
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
Personnel and facilities .......... $257.9 $252.7 $273.7
Agent commissions and fees ........ 122.6 103.0 101.2
These cost allocations include various employee related obligations for
pensions and postretirement benefits. At December 31, 1994, EVLICO recorded
as a reduction of shareholder's equity its allocated portion of an
additional minimum pension liability of $1.2 million, net of related Federal
income taxes, representing the excess of the accumulated benefit obligation
over the fair value of plan assets and accrued pension liability.
During 1994, 1993 and 1992, Equitable Life restructured certain operations
in connection with cost reduction programs. EVLICO recorded provisions of
$6.9 million, $17.3 million and $9.5 million in 1994, 1993 and 1992,
respectively, relating primarily to allocated lease obligations (net of
sub-lease rentals) and severance liabilities.
EVLICO incurred investment advisory and asset management fee expenses of
$19.2 million, $16.0 million and $15.6 million during 1994, 1993 and 1992,
respectively.
EVLICO and Equitable Life have an agreement whereby certain Equitable Life
policyholders may purchase EVLICO's policies without presenting evidence of
insurability. Under the agreement, Equitable Life pays EVLICO a conversion
charge for the extra mortality risk associated with issuing these policies.
EVLICO received payments of $3.2 million, $3.1 million and $3.9 million in
1994, 1993 and 1992, respectively, which were reported as other income.
F-13
<PAGE>
On August 31, 1993, EVLICO sold $250.0 million of primarily privately placed
below investment grade fixed maturities to the Trust. EVLICO realized a $1.1
million gain, net of related deferred policy acquisition costs and deferred
Federal income taxes. In conjunction with this transaction, EVLICO received
$75.4 million of Class B notes issued by the Trust. These notes have
interest rates ranging from 6.85% to 9.45%. The Class B notes are classified
as other invested assets on the consolidated balance sheets.
Net amounts payable to Equitable Life were $226.7 million and $195.4 million
at December 31, 1994 and 1993, respectively.
9. DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives--EVLICO primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce EVLICO's exposure to interest rate fluctuations.
Accounting for interest swap transactions is on an accrual basis. Gains and
losses related to hedge transactions are amortized as yield adjustments for
the remaining life of the underlying hedged item. Income and expense
resulting from derivative activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at December
31, 1994 was $704.7 million. The average unexpired terms at December 31,
1994 is 3.0 years. At December 31, 1994, the cost of terminating outstanding
matched swaps in a loss position was $34.2 million and the unrealized gain
on outstanding matched swaps in a gain position was $4.9 million. EVLICO has
no intention of terminating these contracts prior to maturity.
Fair Value of Financial Instruments--EVLICO defines fair value as the quoted
market prices for those instruments that are actively traded in financial
markets. In cases where quoted market prices are not available, fair values
are estimated using present value or other valuation techniques. The fair
value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, including
estimates of timing, amount of expected future cash flows and the credit
standing of counterparties. Such estimates do not reflect any premium or
discount that could result from offering for sale at one time EVLICO's
entire holdings of a particular financial instrument, nor do they consider
the tax impact of the realization of unrealized gains or losses. In many
cases, the fair value estimates cannot be substantiated by comparison to
independent markets, nor can the disclosed value be realized in immediate
settlement of the instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts. Fair
market value of off-balance-sheet financial instruments of EVLICO was not
material at December 31, 1994 and 1993.
Fair value for mortgage loans on real estate is estimated by discounting
future contractual cash flows using interest rates at which loans with
similar characteristics and credit quality would be made. Fair values for
foreclosed mortgage loans and problem mortgage loans are limited to the
estimated fair value of the underlying collateral if lower.
The estimated fair values for single premium deferred annuities ("SPDA") are
estimated using projected cash flows discounted at current offering rates.
The estimated fair values for supplementary contracts not involving life
contingencies ("SCNILC") and annuities certain are derived using discounted
cash flows based upon the estimated current offering rate.
The following table discloses carrying value and estimated fair value for
financial instruments not otherwise disclosed in Note 3:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------
1994 1993
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
-------- -------- -------- --------
(IN MILLIONS)
Consolidated Financial Instruments:
----------------------------------
<S> <C> <C> <C> <C>
Mortgage loans on real estate ...... $ 888.5 $ 865.3 $1,059.5 $1,101.7
Other joint ventures ............... 196.4 196.4 240.7 240.7
Policy loans ....................... 1,185.2 1,138.7 1,087.3 1,155.3
Policyholders' account balances:
SPDA ............................ 1,744.3 1,732.7 2,129.5 2,143.0
Annuity certain and SCNILC ...... 159.0 151.3 157.4 160.6
</TABLE>
10. COMMITMENTS AND CONTINGENT LIABILITIES
EVLICO is the obligor under certain structured settlement agreements which
it has entered into with unaffiliated insurance companies and beneficiaries.
To satisfy its obligations under these agreements, EVLICO has purchased
single premium annuities from Equitable Life and directed Equitable Life to
make payments directly to the beneficiaries. A contingent liability exists
with respect to these agreements should Equitable Life be unable to meet its
obligations. Management believes the need to satisfy such obligations is
remote.
EVLICO had outstanding commitments of $1.3 million at December 31, 1994
under existing loan or loan commitment agreements.
F-14
<PAGE>
11. LITIGATION
EVLICO is a defendant in connection with various legal actions and
proceedings of a character normally incident to its business. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such litigation cannot be
predicted with certainty, management believes, after consultation with
counsel responsible for such litigation, that the resolution of these
actions and proceedings will not result in losses that would have a material
effect on the consolidated financial statements.
12. STATUTORY FINANCIAL INFORMATION
EVLICO is restricted as to the amounts it may pay as dividends to Equitable
Life. Under the New York Insurance Law, the New York Superintendent has
broad discretion to determine whether the financial condition of a stock
life insurance company would support the payment of dividends to its
shareholders. The New York Insurance Department has established informal
guidelines for the Superintendent's determinations which focus upon, among
other things, the overall financial condition and profitability of the
insurer under statutory accounting practices. For the years ended December
31, 1994, 1993 and 1992, statutory earnings (loss) totaled $27.3 million,
$(88.4) million and $(32.7) million, respectively. No amounts are expected
to be available for dividends from EVLICO to Equitable Life in 1995.
At December 31, 1994, EVLICO, in accordance with various government and
state regulations, had $3.4 million of securities deposited with such
government or state agencies.
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles EVLICO's net change in
statutory surplus and capital stock and statutory surplus and capital stock
determined in accordance with accounting practices prescribed by the New
York Insurance Department with net earnings (loss) and shareholder's equity
on a GAAP basis.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock ............................. $ 64.8 $ 184.4 $ 39.7
Change in asset valuation reserves ............................................ 18.5 26.0 10.6
-------- -------- --------
Net change in statutory surplus, capital stock and asset valuation reserves.... 83.3 210.4 50.3
Adjustments:
Future policy benefits and policyholders' account balances ................. (13.5) (22.5) (46.2)
Initial fee liability ...................................................... (20.3) (11.6) (13.3)
Deferred policy acquisition costs .......................................... 34.7 62.2 131.5
Deferred Federal income taxes .............................................. (20.2) (23.9) 120.3
Valuation of investments ................................................... 27.4 33.8 (27.8)
Limited risk reinsurance ................................................... .1 (5.4) (41.7)
Contribution from Equitable Life ........................................... (50.0) (250.0) (100.0)
Other, net ................................................................. (5.5) 33.8 (136.7)
-------- -------- --------
Net Earnings (Loss) ........................................................... $ 36.0 $ 26.8 $ (63.6)
======== ======== ========
Statutory surplus and capital stock ........................................... $ 777.6 $ 712.7 $ 528.3
Asset valuation reserves ...................................................... 88.3 69.8 43.8
-------- -------- --------
Statutory surplus, capital stock and asset valuation reserves ................. 865.9 782.5 572.1
Adjustments:
Future policy benefits and policyholders' account balances ................. (354.5) (341.1) (318.6)
Initial fee liability ...................................................... (200.5) (180.3) (168.7)
Deferred policy acquisition costs .......................................... 2,077.1 1,946.7 1,942.7
Deferred Federal income taxes .............................................. (134.4) (159.5) (136.0)
Valuation of investments ................................................... (156.5) 57.4 (105.3)
Limited risk reinsurance ................................................... (378.6) (378.7) (373.3)
Post retirement and other pension liabilities .............................. (105.8) (122.7) (132.4)
Other, net ................................................................. (163.8) (151.6) (109.5)
-------- -------- --------
Shareholder's Equity .......................................................... $1,448.9 $1,452.7 $1,171.0
======== ======== ========
</TABLE>
13. SUPPLEMENTAL CASH FLOW INFORMATION
For the years ended December 31, 1994, 1993 and 1992, respectively, real
estate of $59.0 million, $92.1 million and $17.5 million was acquired in
satisfaction of debt.
F-15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Equitable Variable Life Insurance
Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of Equitable
Variable Life Insurance Company and its subsidiaries ("EVLICO") at December 31,
1994 and 1993, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
These financial statements are the responsibility of EVLICO's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial statements, EVLICO changed
its methods of accounting for postemployment benefits in 1994 and for investment
securities and for reinsurance in 1993.
PRICE WATERHOUSE LLP
New York, New York
February 8, 1995
F-16
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Equitable Variable Life Insurance Company:
We have audited the consolidated statements of earnings, shareholder's equity
and cash flows of Equitable Variable Life Insurance Company ("EVLICO") for the
year ended December 31, 1992. These consolidated financial statements are the
responsibility of EVLICO's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated results of operations and consolidated cash
flows of Equitable Variable Life Insurance Company for the year ended December
31, 1992 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in 1992 EVLICO
changed its method of accounting for foreclosed assets, income taxes and
postretirement benefits other than pensions.
DELOITTE & TOUCHE LLP
New York, New York
February 16, 1993
F-17
<PAGE>
APPENDIX A
POLICY PROSPECTUSES AND PROSPECTUS SUPPLEMENTS
THE CHAMPION
o Prospectus dated September 30, 1987, as supplemented May 1, 1989,
February 27, 1991, May 1, 1992, May 1, 1993, February 28, 1994 and May
1, 1994.
o Prospectus dated December 18, 1986, as supplemented February 28, 1987,
September 30, 1987, May 1, 1989, February 27, 1991, May 1, 1992, May 1,
1993, February 28, 1994 and May 1, 1994.
BASIC AND EXPANDED
o Prospectus dated April 30, 1986, as supplemented December 18, 1986,
February 28, 1987, September 30, 1987, May 1, 1989, February 27, 1991,
May 1, 1993, February 28, 1994 and May 1, 1994.
o Prospectus dated March 26, 1985, as supplemented March 26, 1985, April
30, 1986, December 18, 1986, February 28, 1987, September 30, 1987, May
1, 1989, February 27, 1991, May 1, 1993, February 28, 1994 and May 1,
1994.
SP-1
o Prospectus dated September 30, 1987, as supplemented May 1, 1989,
February 27, 1991, May 1, 1993 and February 28, 1994.
o Prospectus dated April 30, 1986, as supplemented December 18, 1986,
February 28, 1987, September 30, 1987, May 1, 1989, February 27, 1991,
May 1, 1993, February 28, 1994 and May 1, 1994.
o Prospectus dated March 26, 1985, as supplemented March 26, 1985,
December 18, 1986, February 28, 1987, September 30, 1987, May 1, 1989,
February 27, 1991, May 1, 1993, February 28, 1994 and May 1, 1994.
A-1
<PAGE>
APPENDIX B
MANAGEMENT
Here is a list of our directors and principal officers and a brief statement of
their business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ----------------------- --------------------------
DIRECTORS
<S> <C>
Michel Beaulieu...................... Director of Equitable Variable since February 1992. Senior Vice President, Equitable,
since September 1991; prior thereto, Chief Life Actuary AXA group 1989 to 1991; Managing
Director Blondeau & CIE (France) 1986 to 1989. Director, Equity & Law (London).
William T. McCaffrey................. Director of Equitable Variable since February 1987. Executive Vice President, Equitable,
since February 1986 and Chief Administrative Officer since February 1988; prior thereto,
various other Equitable positions. Director, Equitable Foundation since September 1986.
Christophe Dupont-Madinier........... Director of Equitable Variable since February 1993. Senior Vice President, AXA (Paris,
France), since 1988. Director, Donaldson, Lufkin & Jenrette, Inc.; Alliance Capital
Management Corporation, Equitable Real Estate Investment Management, Inc.
Jose S. Suquet....................... Director of Equitable Variable since January 1995. Executive Vice President and Chief
Agency Officer, Equitable, since August 1994; prior thereto, Agency Manager, Equitable,
since February 1985.
Laurent Clamagirand.................. Director of Equitable Variable since February 1995; Director of Financial Reporting,
Equitable, since November 1994; prior thereto, International Controller, AXA, January
1990 to October 1994; Director, Equitable of Colorado, since March 1995
OFFICERS -- DIRECTORS
James M. Benson...................... President, Equitable Variable since December, 1993; Vice Chairman of the Board, Equitable
Variable July 1993 to December 1993. President and Chief Operating Officer, Equitable,
February 1994 to present; Senior Executive Vice President, April 1993 to February 1994.
Prior thereto, President, Management Compensation Group, 1983 to February 1993. Director,
Alliance Capital, October 1993 to present.
Harvey Blitz......................... Vice President, Equitable Variable since April 1995; Director of Equitable Variable since
October 1992. Senior Vice President, Equitable since September 1987. Senior Vice
President, The Equitable Companies Incorporated, since July 1992. Director, Equico
Securities, Inc., since September 1992; Equitable of Colorado, since September 1992;
Equisource and its subsidiaries since October 1992
Gordon Dinsmore...................... Senior Vice President, Equitable Variable, since February 1991. Senior Vice President,
Equitable since September 1989; prior thereto, various other Equitable positions.
Director and Senior Vice President, March 1991 to present, Equitable of Colorado;
Director, FHJV Holdings, Inc., December 1990 to present; Director, Equitable
Distributors, Inc., August 1993 to present, and Director Equitable Foundation, May 1991
to present
Jerry de St Paer..................... Senior Investment Officer, Equitable Variable since April 1995; Director of Equitable
Variable since April 1992. Executive Vice President & Chief Financial Officer, Equitable,
since April 1992; prior thereto, Executive Vice President since December 1990; Senior
Vice President & Treasurer June 1990 to December 1990; Senior Vice President, Equitable
Investment Corporation January 1987 to January 1991; Executive Vice President & Chief
Financial Officer, The Equitable Companies Incorporated since May 1992; Director,
Economic Services Corporation & various Equitable subsidiaries.
James S. Kalmer...................... Senior Vice President, Equitable Variable, since February 1991. Vice President since
December 1987. Senior Vice President, Equitable, since September 1989, prior thereto,
Vice President. Director, Equisource and its subsidiaries since March 1991; and Equitable
Underwriting and Sales Agency (Bahamas) Limited since March 1994
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ----------------------- -------------------------
OFFICERS--DIRECTORS (Continued)
<S> <C>
Joseph J. Melone.................... Chairman of the Board and Chief Executive Officer, Equitable Variable, since November
1990; Chairman of the Board and Chief Executive Officer, Equitable, February 1994 to
present; President and Chief Executive Officer, September 1992 to February 1994; President
and Chief Operating Officer from November 1990 to September 1992. President and Chief
Operating Officer of The Equitable Companies Incorporated since July 1992. Prior thereto,
President, The Prudential Insurance Company of America, since December 1984. Director,
Equity & Law (United Kingdom) and various other Equitable subsidiaries.
Brian O'Neil........................ Senior Vice President and Chief Investment Officer, Equitable Variable, since October
1992. Executive Vice President & Chief Investment Officer, Equitable, since April 1992;
prior thereto; Senior Vice President since February 1989; Vice President from July 1988 to
February 1989. Senior Vice President, Equitable Capital Management Corporation, from
November 1987 to March 1989. Director, Equitable Real Estate Investment Management, Inc.
since May 1992; Alliance since October 1993; Equitable Foundation since May 1991.
Samuel B. Shlesinger................ Senior Vice President, Equitable Variable, since February 1988. Senior Vice President and
Actuary, Equitable; prior thereto, Vice President and Actuary. Director, Chairman and CEO,
Equitable of Colorado.
Dennis D. Witte..................... Senior Vice President, Equitable Variable, since February 1991; Senior Vice President,
Equitable, since July 1990; prior thereto, various other Equitable positions.
OFFICERS
J. Thomas Liddle, Jr. .............. Senior Vice President and Chief Financial Officer, Equitable Variable, since February
1986. Senior Vice President, Equitable since April 1991; prior thereto, Vice President and
Actuary, Equitable.
Franklin Kennedy, III............... Vice President, Equitable Variable, since August 1981. Senior Vice President, Alliance
1345 Avenue of the Americas Capital Management Corporation, July 1993 to present; Senior Vice President, Equitable
New York, New York 10105 Capital Management Corporation, March 1987 to July 1993. Vice President, The Hudson River
Trust. Managing Director and Chief Investment Officer, Equitable Investment Management
Corporation, from November 1983 to January 1987.
William A. Narducci................. Vice President and Chief Claims Officer, Equitable Variable since February 1989. Vice
200 Plaza Drive President, Equitable since February 1988; prior thereto, Assistant Vice President.
Secaucus, New Jersey 07096
John P. Natoli...................... Vice President and Chief Underwriting Officer, Equitable Variable, since February 1988.
Vice President, Equitable.
Molly K. Heines..................... Secretary, Equitable Variable, since February 1991; Vice President and Secretary,
Equitable, since July 1990; prior thereto, Vice President & Counsel.
Kevin R. Byrne...................... Treasurer, Equitable Variable, since September 1990; Vice President and Treasurer,
Equitable since September 1993; prior thereto, Vice President from March 1989 to September
1993. Vice President and Treasurer, The Equitable Companies Incorporated, September 1993
to present; Frontier Trust since August 1990; Equisource and its subsidiaries October 1990
to present.
Stephen Hogan....................... Vice President and Controller, Equitable Variable, February 1994 to present. Vice
President, Equitable, January 1994 to present; prior thereto, Controller, John Hancock
subsidiaries, from 1987 to December 1993.
</TABLE>
B-2
<PAGE>
APPENDIX C
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance or ranking of the Separate
Account Funds and Trust portfolios with (1) that of other insurance company
separate accounts or mutual funds included in the rankings prepared by Lipper
Analytical Services, Inc., Morningstar, Inc. or similar investment services that
monitor the performance of insurance company separate accounts or mutual funds,
(2) other appropriate indices of investment securities and averages for peer
universes of funds, or (3) data developed by us derived from such indices or
averages. Advertisements or other communications furnished to present or
prospective policyowners may also include evaluations of a Separate Account Fund
or Trust portfolio by financial publications that are nationally recognized such
as Barron's, Morningstar's Variable Annuities / Life, Business Week, Forbes,
Fortune, Institutional Investor, Money, Kiplinger's Personal Finance, Financial
Planning, Investment Adviser, Investment Management Weekly, Money Management
Letter, Investment Dealers Digest, National Underwriter, Pension & Investments,
USA Today, Investor's Daily, The New York Times, The Wall Street Journal, the
Los Angeles Times and the Chicago Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity / Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund.
The Morningstar Report consists of nearly 700 variable life and annuity funds,
all of which report their data net of investment management fees, direct
operating expenses and separate account level charges.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the Funds of the Separate Account or the Trust
portfolios, may help to provide a perspective on the potential returns of
different asset classes over different periods of time. By combining this
information with your knowledge of your own financial needs, you may be able to
better determine how you wish to allocate your variable life insurance premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Fund of the Separate Account may, therefore,
be a desirable selection for policyowners who are willing to accept such risks.
Policyowners who have a need to limit short-term risk, may find it preferable to
allocate a smaller percentage of their net premiums to those funds that invest
primarily in common stock. Any investment in securities, whether equity or debt,
involves varying degrees of potential risk, in addition to offering varying
degrees of potential reward.
The chart on page A-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1925 and December 31, 1994 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trust and do not constitute a representation that the performance of the
Separate Account Funds or the Trust portfolios will correspond to rates of
return such as those illustrated in the chart. For a comparative illustration of
performance results of The Hudson River Trust, see page A-1 of the Trust's
prospectus.
C-1
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RATES OF RETURN
LONG-TERM LONG-TERM INTERMEDIATE- CONSUMER
COMMON GOVERNMENT CORPORATE TERM TREASURY PRICE
STOCKS BONDS BONDS BONDS BILLS INDEX
------ ----- ----- ----- ----- -----
FOR THE
FOLLOWING
PERIOD ENDING
12/31/94:
- - ---------
<S> <C> <C> <C> <C> <C> <C>
1 year.................... 1.31 - 7.77 - 5.76 - 5.14 3.90 2.78
3 year.................... 6.26 5.62 5.28 4.19 3.43 2.81
5 year.................... 8.69 8.34 8.36 7.46 4.73 3.51
10 year.................... 14.40 11.86 11.57 9.40 5.76 3.59
20 year.................... 14.58 9.42 10.00 9.25 7.29 5.45
30 year.................... 9.95 6.96 7.31 7.84 6.66 5.36
40 year.................... 10.66 5.62 6.14 6.58 5.63 4.40
50 year.................... 11.92 4.99 5.34 5.59 4.69 4.35
60 year.................... 11.48 4.81 5.21 5.19 3.92 4.10
Since 1926................. 10.19 4.83 5.41 5.09 3.69 3.13
Inflation Adjusted
Since 1926................. 6.85 1.65 2.22 1.91 0.55 --
- - ---------------------------------
</TABLE>
*Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1995
YEARBOOK(TM), Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500) -- Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-term Government Bonds -- Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty year maturity and a
reasonably current coupon.
Long-term Corporate Bonds -- For the period 1969-1994, represented by the
Salomon Brothers Long-Term, High-Grade Corporate Bond Index; for the period
1946-1968, the Salomon Brothers' Index was backdated using Salomon Brothers'
monthly yield data and a methodology similar to that used by Salomon for
1969-1994; for the period 1926-1945, the Standard and Poor's monthly
High-Grade Corporate Composite yield data were used, assuming a percent coupon
and a twenty year maturity.
Intermediate-term Government Bonds -- Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five year
maturity.
U.S. Treasury Bills -- Measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the bill having the
shortest maturity not less than one month.
Inflation -- Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
C-2
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
VM 502
HRT 103 (5/95)
- - --------------------------------------------------------------------------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 148
BROOKLYN, N.Y.
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
Mailing Address:
2 Penn Plaza
New York, New York 10121
ADDRESS CORRECTION REQUESTED
RETURN POSTAGE GUARANTEED
<PAGE>
VARIABLE LIFE INSURANCE POLICY
[THE CHAMPION LOGO]
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO]
VM 372 PROSPECTUS DATED SEPTEMBER 30, 1987
- - --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST
PRINCIPAL OFFICE LOCATED AT:
787 SEVENTH AVENUE
NEW YORK, N.Y. 10019
HRT 102 PROSPECTUS DATED SEPTEMBER 30, 1987
<PAGE>
[THE CHAMPION LOGO]
A VARIABLE LIFE INSURANCE POLICY
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE LOGO]
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
NEW YORK, N.Y.
PROSPECTUS DATED SEPTEMBER 30, 1987
- - --------------------------------------------------------------------------------
In this prospectus, "Equitable Variable", "we", "our", and "us" mean Equitable
Variable Life Insurance Company. We are a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States, a New York mutual life
insurance company (Equitable).
"You" and "your" mean the policyowner. We refer to the person who is covered by
the policy as the "insured", because the policyowner may be someone other than
the insured.
- - --------------------------------------------------------------------------------
The Champion(TM) (Policy Form No. 85-11) is a scheduled premium variable whole
life insurance policy with a level face amount. The Death Benefit, Account Value
and Cash Surrender Value of a policy may vary based on the investment experience
of the assets supporting the policy; however, a policy's Death Benefit will
never be less than its face amount.
You direct the allocation of your premiums, net of certain deductions, among one
or more of the investment divisions of Equitable Variable's Separate Account I.
The assets in each division are invested in corresponding portfolios of The
Hudson River Trust. The Trust is the successor to The Hudson River Fund, Inc.
pursuant to an Agreement and Plan of Reorganization dated September 30, 1987.
The prospectus for the Trust, attached to this prospectus, describes the
investment objectives, policies and risks of each of the Trust's Portfolios.
Currently, High Yield, Aggressive Stock, Common Stock, Balanced and Money Market
Portfolios are available under the Champion.
This is a permanent life insurance policy which provides insurance coverage and
requires periodic premium payments over time. When purchasing this policy, you
should consider your ability to pay these premiums on a periodic schedule.
During the policy's early years, if you fail to pay premiums or surrender your
policy you will incur a significant surrender charge.
A policy is serviced through the regional Life Insurance Center listed on page 3
of the policy when issued. Equitable Variable's Home Office is 787 Seventh
Avenue, New York, N.Y. 10019, telephone (212) 714-5289.
You have the right to examine this policy and return it to us for a refund.
Read this prospectus carefully and keep it for future reference. This prospectus
is not valid unless attached to a current prospectus for The Hudson River Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Replacing existing insurance with the policy described in this prospectus may
not be to your advantage. We recommend that you consult with your Equitable
agent or financial adviser to determine if replacement would be to your
advantage.
- - --------------------------------------------------------------------------------
M-372
Copyright 1987 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
- - --------------------------------------------------------------------------------
PAGE
- - --------------------------------------------------------------------------------
PART 1 -- SUMMARY 1
- - --------------------------------------------------------------------------------
FEATURES OF THE CHAMPION 1
-------------------------------------------------------------------------
USING YOUR ACCOUNT VALUE 1
-------------------------------------------------------------------------
INVESTMENT CHOICES OF THE CHAMPION 2
-------------------------------------------------------------------------
DEDUCTIONS AND CHARGES 2
-------------------------------------------------------------------------
ADDITIONAL INFORMATION 3
-------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION 4
-------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATIONS 5
- - --------------------------------------------------------------------------------
PART 2 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND THE TRUST 6
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE 6
-------------------------------------------------------------------------
EQUITABLE 6
-------------------------------------------------------------------------
Equitable's Investment In Equitable Variable 6
----------------------------------------------------------------------
Donaldson, Lufkin & Jenrette, Inc. 6
-------------------------------------------------------------------------
INVESTMENT CHOICES 6
-------------------------------------------------------------------------
THE SEPARATE ACCOUNT AND ITS DIVISIONS 6
-------------------------------------------------------------------------
A Unit Investment Trust 6
----------------------------------------------------------------------
The Investment Divisions Of The Separate Account 6
----------------------------------------------------------------------
Other Policies Use The Separate Account 7
----------------------------------------------------------------------
We Own The Assets Of The Separate Account 7
-------------------------------------------------------------------------
THE TRUST 7
-------------------------------------------------------------------------
PREDECESSORS OF THE TRUST 7
-------------------------------------------------------------------------
INVESTMENT OBJECTIVES OF THE PORTFOLIOS 8
-------------------------------------------------------------------------
THE TRUST'S INVESTMENT ADVISER 8
- - --------------------------------------------------------------------------------
PART 3 -- DETAILED INFORMATION ABOUT THE CHAMPION 9
- - --------------------------------------------------------------------------------
PREMIUMS 9
- - --------------------------------------------------------------------------------
You Direct The Investment Of Your Premiums 9
----------------------------------------------------------------------
Premium Reductions For Non-Smokers 9
----------------------------------------------------------------------
Illustration Of Premium Rates 9
-------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS 10
-------------------------------------------------------------------------
Annual Administrative Charge 10
----------------------------------------------------------------------
Additional First Year Administrative Charge 10
----------------------------------------------------------------------
Risk Charge 10
----------------------------------------------------------------------
Front-End Sales Load 10
----------------------------------------------------------------------
State Premium Tax Charge 10
----------------------------------------------------------------------
Example of Deductions From Premiums 11
-------------------------------------------------------------------------
SURRENDER CHARGE 11
-------------------------------------------------------------------------
CHARGES AGAINST THE SEPARATE ACCOUNT 12
-------------------------------------------------------------------------
Cost of Insurance 12
----------------------------------------------------------------------
Charges For Mortality And Expense Risks 12
----------------------------------------------------------------------
Expenses Of The Trust 12
-------------------------------------------------------------------------
DEATH BENEFITS 12
-------------------------------------------------------------------------
VARIABLE ADJUSTMENT AMOUNT 13
-------------------------------------------------------------------------
The Variable Adjustment Amount Is Cumulative 14
----------------------------------------------------------------------
Net Return 14
----------------------------------------------------------------------
How The Death Benefit Varies 14
-------------------------------------------------------------------------
ACCOUNT VALUES AND CASH SURRENDER VALUES 15
-------------------------------------------------------------------------
How We Determine Account Value 15
----------------------------------------------------------------------
How We Determine Cash Surrender Value 15
-------------------------------------------------------------------------
POLICY LOANS 15
-------------------------------------------------------------------------
How To Request A Loan 16
----------------------------------------------------------------------
Repayment 16
----------------------------------------------------------------------
Policy Loan Interest 16
----------------------------------------------------------------------
The Effect Of A Policy Loan 16
----------------------------------------------------------------------
Additional Information About Adjustable Rates 17
-------------------------------------------------------------------------
OTHER POLICY TRANSACTIONS 17
-------------------------------------------------------------------------
Returning The Policy For Cash 17
----------------------------------------------------------------------
Transfers Among Investment Choices 18
----------------------------------------------------------------------
When A Division Becomes Inactive 18
-------------------------------------------------------------------------
YOUR RIGHT TO EXAMINE THE POLICY 18
-------------------------------------------------------------------------
YOUR RIGHT TO EXCHANGE THE POLICY 18
-------------------------------------------------------------------------
YOUR POLICY CAN LAPSE 19
-------------------------------------------------------------------------
OPTIONS ON LAPSE 19
-------------------------------------------------------------------------
Payment Of Cash Option 19
----------------------------------------------------------------------
Continued Insurance Option 19
----------------------------------------------------------------------
Reinstatement Option 20
-------------------------------------------------------------------------
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES 20
-------------------------------------------------------------------------
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY 21
-------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE CHAMPION 21
-------------------------------------------------------------------------
When We Pay Proceeds 21
----------------------------------------------------------------------
Your Payment Options 21
----------------------------------------------------------------------
Additional Benefits You May Get By Rider 22
----------------------------------------------------------------------
Beneficiary 23
----------------------------------------------------------------------
Assignment 23
----------------------------------------------------------------------
Premium Payments By Salary Allotment 23
----------------------------------------------------------------------
Employee Benefit Plans 23
----------------------------------------------------------------------
You Will Receive Periodic Reports 23
----------------------------------------------------------------------
Dividends 23
- - --------------------------------------------------------------------------------
PART 4 -- ADDITIONAL INFORMATION 24
- - --------------------------------------------------------------------------------
TAX EFFECTS 24
-------------------------------------------------------------------------
Policy Proceeds 24
----------------------------------------------------------------------
Pension And Profit Sharing Plans 24
----------------------------------------------------------------------
Our Income Taxes 25
----------------------------------------------------------------------
Tax Reform 25
----------------------------------------------------------------------
Income Tax Withholding 25
-------------------------------------------------------------------------
YOUR VOTING PRIVILEGES 25
-------------------------------------------------------------------------
General 25
----------------------------------------------------------------------
Voting Privileges Of Others 26
----------------------------------------------------------------------
Determining Your Vote 26
----------------------------------------------------------------------
Law Changes May Affect Your Voting Privileges 27
-------------------------------------------------------------------------
OUR RIGHTS 27
-------------------------------------------------------------------------
Substitution of Trust Shares 27
-------------------------------------------------------------------------
SALES AND OTHER AGREEMENTS 27
-------------------------------------------------------------------------
Sales By Agents Of Equitable 27
----------------------------------------------------------------------
Commission Schedule 28
----------------------------------------------------------------------
Sales By Brokers 28
----------------------------------------------------------------------
Applications 28
----------------------------------------------------------------------
Joint Services Agreement 28
-------------------------------------------------------------------------
REGULATION 28
-------------------------------------------------------------------------
LEGAL PROCEEDINGS 28
-------------------------------------------------------------------------
LEGAL MATTERS 28
-------------------------------------------------------------------------
FINANCIAL AND ACTUARIAL EXPERTS 29
-------------------------------------------------------------------------
ADDITIONAL INFORMATION 29
-------------------------------------------------------------------------
MANAGEMENT 29
- - --------------------------------------------------------------------------------
PART 5 -- ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES, AND ACCUMULATED PREMIUMS 32
- - --------------------------------------------------------------------------------
PART 6 -- FINANCIAL STATEMENTS 39
- - --------------------------------------------------------------------------------
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
A POLICY'S BENEFICIARY. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR TO
OR COMPARABLE TO A MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
- - --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFERING OF THE CHAMPION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS OR ANY SUPPLEMENT HERETO OR IN ANY SUPPLEMENTAL
SALES MATERIAL AUTHORIZED BY EQUITABLE VARIABLE.
- - --------------------------------------------------------------------------------
i
<PAGE>
- - --------------------------------------------------------------------------------
PART 1 -- SUMMARY
- - --------------------------------------------------------------------------------
The summary contained in this Part 1 is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere in this
prospectus. Unless indicated otherwise, this prospectus assumes that all
premiums are paid on time and there is no outstanding policy loan. The
description of The Champion in this prospectus is subject to the terms of the
policy you buy and any supplement or endorsement to it. You may review a copy of
our policy and any supplement or endorsement to it on request.
- - --------------------------------------------------------------------------------
FEATURES OF
THE CHAMPION
PREMIUMS. This policy requires premium payments on a regular basis (monthly,
quarterly, semi-annually or annually) for life. We guarantee that a premium will
not increase once it has been determined. The size of an annual premium depends
on the initial face amount and the insured's risk class, age and sex. The
initial face amount must be at least $50,000. Failure to pay premiums will
result in the lapse of your policy. See "Surrender Charge" in Part 3.
For non-smokers who meet our requirements we reduce our premiums by
approximately 7% for policies with face amounts under $200,000 and approximately
9% for larger policies.
DEATH BENEFIT. The Death Benefit under the policy may increase or decrease if
the investment experience of the division or divisions of the Separate Account
into which you choose to put your net annual premiums varies from the assumed
investment return of 4-1/2%. The Death Benefit is adjusted annually on each
policy anniversary. However, if the Account Value at the date of death,
considered as a single premium, can buy more Death Benefit, then the Death
Benefit will be this higher amount. The guaranteed minimum Death Benefit is the
face amount of the policy regardless of the investment experience of the
divisions of the Separate Account. See "Death Benefits" in Part 3.
ACCOUNT VALUE. We put your annual premiums, net of certain deductions, in one or
more of the investment divisions of Equitable Variable's Separate Account I (the
Separate Account). You decide whether your policy's net annual premium will be
put entirely in one division or whether you want a percentage in two or more
divisions.
The Account Value of a policy may vary daily to reflect the investment
experience of the divisions of the Separate Account in which you have value. The
Account Value is the tabular Account Value specified in the policy (based on a
constant net investment return of 4-1/2% a year), adjusted for investment
experience. Unlike the Death Benefit, which has a guaranteed minimum, we do not
guarantee a minimum Account Value. You will bear the entire market risk for
Account Value. You may request that all or part of your Account Value be
transferred among the divisions of the Separate Account. See "Other Policy
Transactions -- Transfers Among Investment Choices" in Part 3.
- - --------------------------------------------------------------------------------
USING YOUR
ACCOUNT VALUE
POLICY LOANS. You may borrow up to 90% of your policy's loan value during the
first ten years and 100% thereafter. The loan value is based on your adjusted
Cash Surrender Value. The Cash Surrender Value is the difference between the
Account Value and the surrender charge which applies during the first ten policy
years. Loans are available at a fixed interest rate of 5-1/2% or at an
adjustable rate. The portion of your Cash Surrender Value equal to the amount
you borrow is transferred out of the Separate Account and, therefore, is not
affected by investment experience. You will, however, earn interest on amounts
set aside to secure your loan. For a loan at a fixed interest rate of 5-1/2%, we
will credit the assumed interest rate of 4-1/2%. For a loan at an adjustable
rate, we will credit the adjustable loan interest rate less 0.75% (and less any
charge for taxes) on the borrowed amounts. See "Policy Loans" in Part 3.
SURRENDERING YOUR POLICY FOR CASH. If you surrender your policy for cash, we
will pay you the Cash Surrender Value less any outstanding loan and loan
interest due. Subject to certain conditions, you may split your policy into two
policies and return one for cash. See "Other Policy Transactions -- Returning
The Policy For Cash" in Part 3.
TRANSFERS AMONG INVESTMENT CHOICES. You may transfer your Account Value among
the divisions of the Separate Account up to four times in a policy year. See
"Other Policy Transactions -- Transfers Among Investment Choices" in Part 3.
- - --------------------------------------------------------------------------------
1
<PAGE>
- - --------------------------------------------------------------------------------
INVESTMENT CHOICES
OF THE CHAMPION
THE TRUST. Each division of the Separate Account invests in a corresponding
portfolio (Portfolio) of The Hudson River Trust (the Trust), a "series" type
mutual fund. Each Portfolio has different investment objectives. Currently, the
following Portfolios are available for investment by the corresponding divisions
of the Separate Account:
o High Yield
o Aggressive Stock
o Common Stock
o Balanced
o Money Market
INVESTMENT ADVISERS. Equitable Capital Management Corporation (Equitable
Capital) is the investment adviser of the Trust. Equitable Capital is registered
with the Securities and Exchange Commission (SEC) as an investment adviser under
the Investment Advisers Act of 1940. The maximum effective annual rate at which
the Trust pays advisory fees is 0.55% of the average daily value of a
Portfolio's aggregate net assets. HOWEVER, WE CREDIT THE CHAMPION POLICIES SO
THAT THE TRUST'S ADVISORY FEES DO NOT EXCEED A 0.25% EFFECTIVE ANNUAL RATE.
For a full description of the Trust, see the attached Trust prospectus and the
Trust's Statement of Additional Information referred to therein.
- - --------------------------------------------------------------------------------
DEDUCTIONS AND
CHARGES
DEDUCTIONS FROM PREMIUMS. Your net annual premium is put into the Separate
Account each year. Deductions are made from your payments for any optional
insurance benefits, a front-end sales load at a maximum of 5% per year, state
premium taxes, annual administrative expenses and a risk charge for the
guaranteed minimum Death Benefit. In the first policy year we also deduct a
fixed charge for expenses incurred in issuing the policy. See "Deductions From
Premiums" in Part 3.
Commissions and other sales expenses in any year are paid by Equitable Variable.
They do not represent a charge against your premiums. During the early policy
years, these sales expenses will be considerably higher than the sales charges
that will be collected for those years. See "Sales And Other Agreements" in Part
4.
CHARGES AGAINST THE SEPARATE ACCOUNT. The amount in the divisions of the
Separate Account credited to your policy is decreased by the cost of your
insurance protection. Also, the investment experience of the Separate Account
reflects a daily charge we make at an effective annual rate of 0.50% of the
value of the policy assets of the Separate Account for certain mortality and
expense risks. In addition, we reserve the right to make a charge in the future
for taxes or provisions made for taxes. Any charges against the divisions will
have an impact on whether the divisions earn more than the assumed rate of
4-1/2% and whether your policy's Death Benefit increases above the guaranteed
minimum. See "Charges Against The Separate Account" in Part 3.
EXPENSES OF THE TRUST. Shares of the Trust are purchased and redeemed at their
net asset value which reflects management fees and other expenses already
deducted from the assets of the Trust. The Trust does not impose a sales charge.
See "The Trust" in Part 2.
SURRENDER CHARGE. If you surrender your policy or allow it to lapse before its
tenth anniversary you will incur a surrender charge. The charge is a maximum of
22-1/2% of the premiums paid if the surrender is during the first policy year.
Thereafter the percentage of total premiums declines until it reaches zero at
the end of the tenth policy year. See "Surrender Charge" and "Your Policy Can
Lapse" in Part 3.
- - --------------------------------------------------------------------------------
2
<PAGE>
- - --------------------------------------------------------------------------------
ADDITIONAL
INFORMATION
YOUR RIGHT TO EXAMINE THE POLICY. You have a limited right to return your policy
for cancellation and a full refund of premiums paid. Your request must be
postmarked by the latest of
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Also, within 24 months of a policy's issue date, you may exchange it for a fixed
whole life policy issued by us on the life of the insured without submitting
proof of insurability.
INCOME TAXES. Generally, the Death Benefit paid to the beneficiary of this
policy is not subject to Federal income tax. In addition, under current Federal
tax law, you do not have to pay income tax on any increase in your Account Value
unless the policy is surrendered or allowed to lapse. See "Tax Effects" in Part
4.
YOUR POLICY CAN LAPSE. This policy will remain in force for the life of the
insured person unless you fail to pay premiums or unless the unpaid portion of
any policy loan plus unpaid loan interest exceeds the Cash Surrender Value of
your policy. See "Your Policy Can Lapse" in Part 3.
- - --------------------------------------------------------------------------------
3
<PAGE>
- - --------------------------------------------------------------------------------
CONDENSED
FINANCIAL
INFORMATION
The effective annual net rates of return for the Common Stock Division from the
date on which premiums were first allocated to its predecessor, January 13,
1976, to December 31, 1986 was 14.36%. For the same period ended December 31,
1986, the average annual increase for the Standard and Poor's 500 Stock Index
with dividends reinvested was 14.06%. (Standard and Poor's is an unmanaged index
of groups of common stocks.)
The effective annual net rates of return for the Money Market Division from the
date on which premiums were first allocated to its predecessor, August 21, 1981,
to December 31, 1986 was 9.60%.
The tables below show the actual net returns of the Common Stock and Money
Market Divisions of the Separate Account, as if the Reorganization discussed
under "Predecessors Of The Trust" in Part 2 had always been in effect. The
tables show the actual net returns of the predecessors of the Common Stock and
Money Market Divisions operating as management investment companies prior to the
Reorganization. The same results would have been achieved if the Separate
Account had operated as a unit investment trust investing in the Trust for all
the periods shown with the operations of the Trust having been as currently
reported in the Trust's separate Prospectus and Statement of Additional
Information. The tables break the net return into its component parts. The
tables reflect mortality and expense risk charges but do not reflect cost of
insurance charges. See "Charges Against the Separate Account."
When you examine the tables, remember that the percentages apply to a policy
with its policy year starting on the first day of the periods shown and apply to
a policy that would have been in force throughout the periods shown. Because
they are determined each December 31, the percentages do not reflect the average
net assets in the Common Stock and Money Market Divisions during those periods.
To get a more complete picture of the Separate Account and its divisions, refer
to the financial statements and related notes in the Statement of Additional
Information for the Trust.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DIVISION January 13,
Year Ended December 31, 1976 to
---------------------------------------------------------------------------------------------- December 31,
1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976(a)(b)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 1.55 % 2.92 % 3.22 % 2.65 % 4.64 % 4.02 % 4.35 % 3.91 % 4.06 % 3.49 % 2.63 %
Net realized and
unrealized gain
(loss) on
investments 16.04 % 30.91 % (4.68)% 24.06 % 13.58 % (9.40)% 46.48 % 26.56 % 4.72 % (12.26)% 7.00 %
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Gross Return 17.59 % 33.83 % (1.46)% 26.71 % 18.22 % (5.38)% 50.83 % 30.47 % 8.78 % (8.77)% 9.63 %
Expense charges(c) (.59)% (.74)% (.74)% (.94)% (.95)% (.70)% (1.13)% (.98)% (.81)% (.69)% (.77)%
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Net Return 17.00 % 33.09 % (2.20)% 25.77 % 17.27 % (6.08)% 49.70 % 29.49 % 7.97 % (9.46)% 8.86 %
===== ===== ==== ===== ===== ==== ===== ===== ==== ===== ====
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET DIVISION Year Ended December 31, August 21, 1981
------------------------------------------ to December 31,
1986 1985(d) 1984 1983 1982 1981(a)(b)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 6.83 % 8.65 % 11.00 % 9.56 % 13.53% 5.46 %
Net realized and unrealized gain (loss) on investments 0.03 % (.09)% .42 % (.06)% .03% .06 %
---- ---- ----- ---- ----- ----
Gross Return 6.86 % 8.56 % 11.42 % 9.50 % 13.56% 5.52 %
Expense charges(c) (.55)% (.60)% (.84)% (.83)% (.84)% (.35)%
---- ---- ----- ---- ----- ----
Net Return 6.31 % 7.96 % 10.58 % 8.67 % 12.72% 5.17 %
==== ==== ===== ==== ===== ====
- - --------------------------------------------------------------------------------
<FN>
S(a) Date as of which net premiums under variable life policies were first
allocated to the predecessor of the division.
(b) The gross return and the net return for the periods indicated are not annual
rates of return.
(c) Subsequent to March 22, 1985, the advisory service fees have been deducted
in arriving at income rather than as an expense charge.
(d) Net return for 1985 has been adjusted to reflect a recalculation of the net
return of the division.
</FN>
</TABLE>
- - --------------------------------------------------------------------------------
4
<PAGE>
- - --------------------------------------------------------------------------------
HYPOTHETICAL
ILLUSTRATIONS
The following illustrations are based on the assumptions that since January 1,
1976 The Champion policy had been available and the Separate Account and the
Trust had been operating in the same manner as they now operate.
Each of these examples of past investment performance is for a specific age,
sex, risk class, premium amount and policy anniversary. The benefits illustrated
under this policy are calculated on the policy anniversary and do not represent
the average net investment performance of our pre-Reorganization Separate
Accounts during the policy year. The guaranteed minimum Death Benefit is the
face amount of the policy and does not vary based on investment performance. The
difference between the Account Value and the Cash Surrender Value is the
surrender charge. These examples assume that net premiums and related Account
Values and Cash Surrender Values are 100% in the respective divisions of the
Separate Account for the entire period illustrated. PAST INVESTMENT RESULTS
SHOULD NOT BE DEEMED A REPRESENTATION OF FUTURE INVESTMENT EXPERIENCE OF THE
DIVISIONS OF THE SEPARATE ACCOUNT OR INVESTMENT PERFORMANCE OF THE TRUST.
For illustrations based on various constant hypothetical annual investment
returns, see "Illustrations Of Death Benefits, Account Values And Cash Surrender
Values, And Accumulated Premiums" in Part 5.
COMMON STOCK DIVISION. The following example shows how the net return of the
Common Stock Division would have affected the Death Benefits, Account Values and
Cash Surrender Values of an annual premium policy dated January 1, 1976. Assume
a premium of $500 and that the insured was a 25 year old male on January 1,
1976.
THE CHAMPION
- - --------------------------------------------------------------------------------
VARIABLE WHOLE LIFE INSURANCE POLICY
($53,427 Face Amount Standard Risk)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary Account Surrender Death Minimum
on January 1 of Value Value Benefit Death Benefit
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1977 $ 184 $ 81 $53,496 $53,427
1978 448 310 53,427 53,427
1979 859 686 53,427 53,427
1980 1,510 1,307 54,732 53,427
1981 2,881 2,651 60,033 53,427
1982 3,006 2,758 58,209 53,427
1983 3,817 3,560 59,947 53,427
1984 5,316 5,095 64,871 53,427
1985 5,465 5,341 62,905 53,427
1986 7,783 7,783 70,973 53,427
1987 9,625 9,625 76,259 53,427
- - -------------------------------------------------------------------------------------------------
</TABLE>
This example reflects net investment income credited at the assumed rate of
4-1/2% from January 1, 1976 to January 12, 1976, and an actual rate of return
for the Common Stock Division assuming the investment performance of the Trust's
Common Stock Portfolio was the same as that of our pre-Reorganization Separate
Account I starting January 13, 1976.
MONEY MARKET DIVISION. The following example shows how the net return of the
Money Market Division would have affected the Death Benefits, Account Values and
Cash Surrender Values of an annual premium policy dated January 1, 1982. Assume
a premium of $500 and that the insured was a 25 year old male on January 1,
1982.
THE CHAMPION
- - --------------------------------------------------------------------------------
VARIABLE WHOLE LIFE INSURANCE POLICY
($53,427 Face Amount Standard Risk)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary Account Surrender Death Minimum
on January 1 of Value Value Benefit Death Benefit
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1983 $ 195 $ 91 $53,562 $53,427
1984 573 436 53,721 53,427
1985 1,004 831 54,076 53,427
1986 1,444 1,242 54,357 53,427
1987 1,890 1,660 54,548 53,427
- - -------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
PART 2 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE
AND THE TRUST
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE
Equitable Variable, a wholly-owned subsidiary of Equitable, was organized in
1972 in New York State as a stock life insurance company. We are licensed to do
business in all 50 states, Puerto Rico, the Virgin Islands and the District of
Columbia.
We sell both traditional and innovative forms of life insurance designed to give
policyowners maximum choice and flexibility. In 1976 we began selling variable
life insurance policies with death benefits that varied with the experience of
each policy's investment account. In 1983 we began selling variable life
insurance policies which could be purchased with a single premium payment. In
1986, we began selling an individual flexible premium variable life policy
designed to provide insurance coverage with flexibility in death benefits and
premium payments. We also sell single premium annuity contracts, fixed life
insurance, term life insurance and universal life insurance.
At the end of 1986, we had approximately $9.7 billion face amount of variable
life insurance in force and $47.1 billion face amount of fixed life insurance in
force. We also had $1.9 billion of fixed annuity payment obligations.
Our financial statements and those of the Separate Account are in Part 6.
- - --------------------------------------------------------------------------------
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, New York 10019.
Equitable has been in business since 1859. Its total assets make it the third
largest life insurance company in the United States. On December 31, 1986, these
assets were approximately $55 billion. Equitable is also one of the largest
managers of pension fund assets in the United States. On December 31, 1986,
Equitable and its subsidiaries were managing pension fund assets of $66.2
billion and total assets of $102.7 billion. These assets include amounts in our
General Account, Equitable's General Account and separate accounts, and other
accounts managed by Equitable and Equitable Capital.
On December 31, 1986, Equitable Capital was managing approximately $30 billion
in assets. Equitable Capital acts as an investment adviser to various separate
accounts and general accounts of Equitable and other affiliated insurance
companies. Equitable Capital also provides management and consulting services to
mutual funds, endowment funds, insurance companies, foreign entities, and
non-tax-qualified corporate funds, pension and profit-sharing plans, foundations
and tax-exempt organizations.
EQUITABLE'S INVESTMENT IN EQUITABLE VARIABLE. Between the time Equitable
Variable was organized and December 31, 1986, Equitable invested over $570
million in us. We have used the money to help meet operational costs and policy
reserve requirements. Equitable will probably invest more money in us in the
future, although it has no legal obligation to do so. Equitable's assets do not
back the benefits that we pay under our policies.
DONALDSON, LUFKIN & JENRETTE, INC. Donaldson, Lufkin & Jenrette, Inc. (DLJ) is a
wholly-owned subsidiary of Equitable. DLJ and its subsidiaries offer investment
banking and securities services, market independently originated research to
institutions and supply correspondent services, including order execution,
securities clearance and other centralized financial services, to approximately
300 independent regional securities firms and 100 banks. To the extent permitted
by law, we and our separate accounts, Equitable and its separate accounts, and
companies affiliated with us, including the Trust, may engage in securities or
other transactions with DLJ and its subsidiaries, including buying shares of
affiliated investment companies.
- - --------------------------------------------------------------------------------
INVESTMENT
CHOICES
After making certain deductions from premiums, we put your net annual premiums
in one or more of the divisions of the Separate Account. You decide how your
policy's net annual premiums will be allocated. See "Premiums -- You Direct The
Investment Of Your Premiums" in Part 3. The Separate Account also invests income
or capital gains dividends received from the Fund in shares of the Fund.
- - --------------------------------------------------------------------------------
THE SEPARATE
ACCOUNT AND ITS
DIVISIONS
A UNIT INVESTMENT TRUST. The Separate Account is registered as a unit investment
trust with the SEC under the Investment Company Act of 1940. This registration
does not involve any supervision by the SEC of the management or investment
policy of the Separate Account. A unit investment trust is a type of investment
company.
THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT. The Separate Account has five
investment divisions, each of which invests in shares of a corresponding
Portfolio of the Trust. Currently, the Separate Account consists of High Yield,
Aggressive Stock, Common Stock, Balanced and Money Market Divisions.
- - --------------------------------------------------------------------------------
6
<PAGE>
- - --------------------------------------------------------------------------------
THE SEPARATE
ACCOUNT AND ITS
DIVISIONS
(continued)
OTHER POLICIES USE THE SEPARATE ACCOUNT. Owners of policies other than The
Champion who have our variable life policies on a single premium basis, as well
as on a periodic premium basis, also have monies placed in the Separate Account.
We may also permit charges owed to us to stay in the Separate Account. Thus, we
may also participate proportionately in the Separate Account. These accumulated
amounts belong to us and we may transfer them from the Separate Account to our
General Account.
WE OWN THE ASSETS OF THE SEPARATE ACCOUNT. Under New York law, we own the assets
of the Separate Account and use them to support your policy and other variable
life policies. The portion of the Separate Account's assets supporting these
policies may not be used to satisfy liabilities arising out of any other
business of ours. Under certain unlikely circumstances, one division of the
Separate Account may be liable for claims relating to the operations of another
division.
- - --------------------------------------------------------------------------------
THE TRUST
The Trust is an open-end diversified management investment company, more
commonly called a mutual fund. As a "series" type of mutual fund, it issues
several different "series" of stock, each of which relates to a different Trust
Portfolio. The Trust does not impose a sales charge or "load" for buying and
selling its shares. The Trust's shares are bought and sold by the Separate
Account at net asset value. The Trust's custodian is The Chase Manhattan Bank,
N.A.
The Trust sells its shares to separate accounts of insurance companies, both
affiliated and not affiliated with Equitable. We currently do not foresee any
disadvantages to our policyowners arising out of this. However, if we ever
believe that any of the Trust's Portfolios is so large as materially to impair
the investment performance of a Portfolio or the Trust, we will examine other
investment options.
More detailed information about the Trust, its investment policies, risks,
expenses and all other aspects of its operations, appears in its prospectus,
which is attached to this prospectus, and in its Statement of Additional
Information referred to therein.
- - --------------------------------------------------------------------------------
PREDECESSORS OF
THE TRUST
Pursuant to a Plan of Reorganization (Reorganization) approved at a meeting of
our policyowners held on February 14, 1985, effective as of March 22, 1985, we
restructured our Separate Accounts I and II into one separate account in unit
investment trust form. To accomplish this restructuring, we converted our then
existing Separate Account I, a Common Stock Account, and Separate Account II, a
Money Market Account, into our continuing Separate Account I with two investment
divisions: the Common Stock Division and the Money Market Division.
Our pre-Reorganization Separate Account I was established on June 28, 1973 and
our pre-Reorganization Separate Account II was established on December 12, 1980.
Both pre-Reorganization Separate Accounts were established under the insurance
law of New York State as separate investment accounts.
On March 22, 1985, all of the assets and related liabilities of our former
Separate Accounts I and II were transferred to the Common Stock and Money Market
Portfolios of The Hudson River Fund, Inc., respectively, in exchange for shares
in the Portfolios, and we ceased to be an investment adviser of our continuing
Separate Account. The Separate Account no longer requires an investment adviser.
The Reorganization did not change the policy values of then outstanding
policies.
On September 30, 1987, pursuant to an Agreement and Plan of Reorganization
approved by policyowners, The Hudson River Fund, Inc., a Maryland corporation,
was reorganized as a Massachusetts business trust and its name was changed to
The Hudson River Trust. Refer to the prospectus for the Trust for further
information.
- - --------------------------------------------------------------------------------
7
<PAGE>
- - --------------------------------------------------------------------------------
INVESTMENT
OBJECTIVES OF THE
PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve by
following separate investment policies. The objectives and policies of each
Portfolio will affect its return and its risks. Remember that the investment
experience of the divisions of the Separate Account depends on the performance
of the corresponding Portfolios. The policies and objectives of the Portfolios
corresponding to the divisions available for investment under The Champion are
as follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Investment Policy Objective
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
High Yield Primarily a diversified mix of high yield, High return by maximizing current income and, to
fixed income securities involving greater the extent consistent with that objective, capital
volatility of price and risk of principal and appreciation
income than high quality fixed income securities
Aggressive Stock Primarily common stocks and other Long-term growth of capital
equity-type securities issued by medium and
smaller sized companies with strong growth
potential
Common Stock Primarily common stock and other equity-type Long-term growth of capital and increasing income
instruments
Balanced Common stocks, publicly-traded debt securities High return through a combination of current
and high quality money market instruments income and capital appreciation
Money Market Primarily high quality short-term money market High level of current income while preserving
instruments assets and maintaining liquidity
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is no guarantee that these objectives will be achieved.
- - --------------------------------------------------------------------------------
THE TRUST'S
INVESTMENT ADVISER
The Trust is advised by Equitable Capital, a wholly-owned subsidiary of
Equitable. Equitable Capital is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940. Equitable Capital's address is 1285
Avenue of the Americas, New York, New York 10019.
We credit the divisions of the Separate Account daily to offset investment
advisory fees of the Trust which exceed a 0.25% effective annual rate and all
other Trust expenses except (a) all brokers' commissions, transfer taxes and
other fees and expenses for services relating to purchases and sales of
Portfolio investments and (b) any Trust income tax liabilities. Equitable
capital provides services pursuant to an investment advisory agreement for a fee
based on the following maximum effective annual percentages of the average daily
value of the aggregate net assets of each of the Portfolios. These annual
percentages for the Portfolios corresponding to the divisions available for
investment under The Champion are: 0.40% for the Common Stock, Balanced and
Money Market Portfolios, 0.50% for the Aggressive Stock Portfolio and 0.55% for
the High Yield Portfolio.
- - --------------------------------------------------------------------------------
8
<PAGE>
PART 3 -- DETAILED INFORMATION ABOUT THE CHAMPION
- - --------------------------------------------------------------------------------
PREMIUMS
The size and frequency of your premium payments depend on the initial face
amount, the mode of payment selected, and your risk class, age and sex. We will
charge an additional premium if an extra mortality risk is involved or if you
want certain optional insurance benefits. In general, premium rates for females
will be lower than those for males. In Montana there will be no distinctions
based on sex. The minimum face amount of a policy you may apply for is $50,000.
The policy may be issued to age 75. Before issuing any policy, we require
satisfactory evidence of insurability. If we do not issue a policy, we will
refund any premium that has been paid. (Equitable guarantees the refund.)
Your premium is due on or before the due date shown in the policy and may be
paid annually, semiannually, quarterly or monthly. Monthly payments may be made
through a direct automatic payment plan arranged with your bank. You may request
a change in the frequency of your premium payment by writing to your regional
Life Insurance Center. Regardless of the frequency of your premium payment, your
net annual premium is put into the Separate Account on your policy anniversary.
Premiums are payable over time for the insured's lifetime. However, we guarantee
that your premium will not increase once it has been determined. Premiums are
not affected by the investment experience of the Separate Account. If you fail
to pay your premiums your policy will lapse. See "Your Policy Can Lapse".
YOU DIRECT THE INVESTMENT OF YOUR PREMIUMS. You direct how your net annual
premiums will be applied to the divisions of the Separate Account. You can put
your whole net annual premiums in one or more divisions of the Separate Account.
Percentages cannot be fractions and must add up to 100.
You make your initial decision on the application for your policy. You may write
to your regional Life Insurance Center at any time requesting to change your
decision. Regardless of when you make your request, changes go into effect only
on the next policy anniversary because we allocate net annual premiums to the
Separate Account only on policy anniversaries. It may not always be possible to
make a change that is received less than seven days before a policy
anniversary. In this case, the change will not go into effect until the policy
anniversary following the entire next policy year.
PREMIUM REDUCTIONS FOR NON-SMOKERS. We offer premium reductions that vary with
age, sex and face amount if the insured is a standard risk and meets additional
requirements as to smoking habits. The reduction will be approximately 7% for
policies with face amounts under $200,000 and approximately 9% for larger
policies. Non-smoker rates are available for ages 20 and over.
ILLUSTRATION OF PREMIUM RATES. The following table shows premium rates for each
$1,000 of face amount for a $50,000 policy, which is the minimum, and for a
$200,000 policy, which is the amount where our rates per $1,000 go down.
- - --------------------------------------------------------------------------------
ILLUSTRATIVE TABLE OF ANNUAL PREMIUM
FOR EACH $1,000 FACE AMOUNT
- - --------------------------------------------------------------------------------
Male $50,000 FACE AMOUNT $200,000 FACE AMOUNT
Issue ---------------------------- ----------------------------
Age Standard Risk Non-Smoker Standard Risk Non-Smoker
- - --------------------------------------------------------------------------------
10 $ 5.73 n.a. $ 5.00 n.a.
25 9.41 $ 8.80 8.68 $ 7.92
40 17.63 16.43 16.88 15.38
- - --------------------------------------------------------------------------------
9
<PAGE>
PREMIUMS
(continued)
Premiums for semi-annual, quarterly and monthly periods will be higher per year
than the annual premium. This is due to a charge for loss of interest and added
billing and collection costs. The following table compares annual and monthly
premiums for standard risks:
- - --------------------------------------------------------------------------------
COMPARATIVE TABLE OF ANNUAL AND MONTHLY PREMIUMS
FOR EACH $1,000 FACE AMOUNT
- - --------------------------------------------------------------------------------
Male
Issue % Excess Of Total
Age Initial Monthly Premiums
(Standard Face Annual Monthly For Policy Year Over
Risk) Amount Basis Basis Annual Premiums
- - --------------------------------------------------------------------------------
10 $ 50,000 $ 5.73 $ .52 8.9%
200,000 5.00 .44 5.6
25 50,000 9.41 .84 7.1
200,000 8.68 .76 5.1
40 50,000 17.63 1.55 5.5
200,000 16.88 1.46 3.8
- - --------------------------------------------------------------------------------
DEDUCTIONS FROM
PREMIUMS
ANNUAL ADMINISTRATIVE CHARGE. We charge $40 in each policy year for
administrative expenses. The charge is designed to cover the continuing costs of
maintaining your policy, such as premium billing and collection, claim
processing, policy transactions, recordkeeping, communicating with policyowners,
and other expenses and overhead.
ADDITIONAL FIRST YEAR ADMINISTRATIVE CHARGE. In the first policy year we make a
one-time administrative charge of $3.00 for each $1,000 of initial face amount
of a policy with a face amount under $200,000. This charge is $.50 for each
$1,000 of initial face amount for larger policies. This first year
administrative charge is applied to the cost of processing applications,
conducting medical examinations, establishing policy records, and determining
insurability and assigning the insured to a risk class.
RISK CHARGE. We charge 2% of the basic annual premium to provide for the
possibility that an insured will die at a time when, based on the investment
experience of the Separate Account, the Death Benefit that would ordinarily be
paid is less than the guaranteed minimum Death Benefit of the policy. The basic
annual premium is the total annual premium for a standard mortality risk policy
minus the $40 annual administrative charge and minus the premiums for any
optional insurance benefits you take.
FRONT-END SALES LOAD. We make a charge that can be considered a "sales load".
Our front-end sales load will not be more than 5% of the basic annual premium
for each year. Commissions and other sales expenses in any year are paid by
Equitable Variable. They do not represent a charge against premiums. During the
early policy years, these sales expenses are considerably higher than the
front-end sales load charged against the premium for that year. See "Sales And
Other Agreements" in Part 4. We expect to recover our total sales expenses over
the lifetimes of the insureds partly from the front-end sales load and partly
from the surrender charge. To the extent sales expenses are not covered by such
sources, we will cover them from other funds.
STATE PREMIUM TAX CHARGE. We deduct 2% of the annual premium for the risk class
of the insured to cover state premium taxes payable by us. These taxes vary from
state to state and the 2% rate is an average.
- - --------------------------------------------------------------------------------
10
<PAGE>
- - --------------------------------------------------------------------------------
DEDUCTIONS FROM
PREMIUMS
(continued)
EXAMPLE OF DEDUCTIONS FROM PREMIUMS. The following example (using the policies
shown in "Illustrations Of Death Benefits, Account Values And Cash Surrender
Values, And Accumulated Premiums" in Part 5) shows what amount of net annual
premium would be put into the Separate Account at the start of each policy year.
The net annual premium is the basic annual premium less the additional first
year administrative charge, risk charge, front-end sales load and state premium
tax charge.
- - --------------------------------------------------------------------------------
ILLUSTRATIVE TABLE OF DEDUCTIONS FROM PREMIUMS
- - --------------------------------------------------------------------------------
Male Male Male
Beginning of Issue Age 10 Issue Age 25 Issue Age 40
Policy Year Standard Risk Standard Risk Standard Risk
- - --------------------------------------------------------------------------------
$300 Annual $500 Annual $1,000 Annual
Premium Premium Premium
------- ------- -------
POLICIES UNDER $200,000
(Initial Face Amount) ($52,739) ($53,427) ($57,041)
1st Year 78.58 258.59 702.75
2nd Year and later 236.80 418.87 873.87
$1,000 Annual $2,000 Annual $4,000 Annual
Premium Premium Premium
------- ------- -------
POLICIES $200,000 AND OVER
(Initial Face Amount) ($200,000) ($231,133) ($237,411)
1st Year 774.00 1,668.78 3,485.19
2nd Year and later 874.00 1,784.35 3,603.90
- - --------------------------------------------------------------------------------
SURRENDER CHARGE
There is a difference between the Account Value and the Cash Surrender Value of
our policy in the first ten policy years. This difference is a surrender charge,
a contingent deferred sales load against your Account Value. It is designed to
recover expenses of distributing policies which are terminated in their early
years.
The surrender charge does not affect Account Value transfers among divisions of
the Separate Account, Separate Account investment experience, Death Benefits or
the 24-month exchange right to fixed life insurance.
The surrender charge is a maximum of 22-1/2% of the basic annual premiums (as
defined in "Deductions From Premiums -- Risk Charge") paid if the policy lapses
or is surrendered during the first policy year. Thereafter, the surrender charge
is a percentage of all basic annual premiums paid. This percentage declines
until it reaches zero at the end of the tenth policy year. The following table
shows the maximum surrender charge assuming the surrender occurs at the end of a
policy year.
- - --------------------------------------------------------------------------------
TABLE OF SURRENDER CHARGES
- - --------------------------------------------------------------------------------
End of Maximum End of Maximum
Policy Year Surrender Charge Policy Year Surrender Charge
- - --------------------------------------------------------------------------------
1 22-1/2% 6 9%
2 15 7 8
3 12-1/2 8 6
4 11 9 3
5 10 10 0
- - --------------------------------------------------------------------------------
If you surrender your policy or allow it to lapse in the first ten years and
receive its net Cash Surrender Value, you will incur the surrender charge.
Options available on lapse of a policy, whether taken as cash or placed on an
insurance option on lapse, are also based on its net Cash Surrender Value.
Since the loan of value of the policy is based on the amount of Cash Surrender
Value rather than on the Account Value, the surrender charge has the effect of
reducing the amount available for a policyowner to borrow under a policy.
- - --------------------------------------------------------------------------------
11
<PAGE>
- - --------------------------------------------------------------------------------
CHARGES AGAINST
THE SEPARATE
ACCOUNT
We support the operations of a policy by putting the net annual premium (see
"Deductions From Premiums") into the division or divisions of the Separate
Account which the policyowner chooses. We do this when the policy is issued and,
after that, at the beginning of each policy year. Even though the gross premium
will be higher for an insured who is a high risk than the gross premium for an
insured who is a standard risk, any Account Value that may build up on a policy
covering a high risk insured will be the same as the Account Value that would
build up on a policy covering a standard risk insured of the same age and sex,
for the same amount, and having the same date of issue and allocation to the
divisions of the Separate Account. This is also true for an insured who is a
non-smoker, even though the gross premium for a non-smoker insured will be lower
than the gross premium for an insured who is a standard risk but not a
non-smoker.
The policy is designed so that the net annual premium put in the divisions of
the Separate Account does not vary with the risk class of the insured.
Therefore, we charge a higher gross premium for an insured who is a high risk to
cover the extra risk of mortality. We charge a lower gross premium for
non-smokers because of the expected lower mortality.
COST OF INSURANCE. Once the net annual premium is placed into the divisions of
the Separate Account we charge for the cost of insurance based on the sex and
attained age for the amount at risk without regard to differences in risk class.
The amount at risk on policy anniversaries is the Death Benefit payable less the
amounts in the divisions of the Separate Account in which a policy participates
(adjusted for any loans). The cost of insurance is based on the 1980
Commissioner's Standard Ordinary Mortality Table, and generally increases with
attained age. The cost of insurance differs in each year because, based on this
mortality table, the probability of death generally increases with attained age
and the amount at risk is different year by year. The dollar amount of the cost
of insurance also depends on investment experience of the divisions of the
Separate Account in which a policy participates. The cost of insurance for
females will generally be less than that for males. In Montana, there will be no
distinctions based on sex.
The amount in the divisions of the Separate Account in which your policy
participates is further decreased (after the cost of your insurance protection)
by the following charges.
CHARGES FOR MORTALITY AND EXPENSE RISKS. We charge the Separate Account for the
mortality and expense risks we assume. The mortality risk we assume is that
insureds may live for shorter periods of time than we estimated. If this occurs,
we have to pay a greater amount of Death Benefits than we expected in relation
to the premiums we received. The expense risk we assume is that our costs of
issuing and administering policies may be more than we estimated.
The charge is made daily at an effective annual rate of 0.50% of the value of
the assets of each division of the Separate Account that are attributable to
variable life policies. The money we collect from this charge may exceed the
amount needed to cover benefits and expenses and would be our gain.
EXPENSES OF THE TRUST. The Separate Account purchases shares of the Trust at
their net value which reflects the management fees and other expenses deducted
from the assets of the Trust. The Trust does not impose a sales charge. See "The
Trust" in Part 2.
- - --------------------------------------------------------------------------------
DEATH BENEFITS
We pay a Death Benefit (net of indebtedness) to the beneficiary of this policy
when the insured dies. All or part of the Death Benefit can be paid in cash or
applied under one or more of our payment options described under "Additional
Information About The Champion -- Your Payment Options".
The Death Benefit will at least equal the face amount of the policy. Whether the
Death Benefit is higher than this guaranteed minimum depends on the investment
experience of the divisions of the Separate Account in which a policy
participates. See "Illustrations Of Death Benefits, Account Values And Cash
Surrender Values, And Accumulated Premiums" in Part 5.
- - --------------------------------------------------------------------------------
12
<PAGE>
- - --------------------------------------------------------------------------------
DEATH BENEFITS
(continued)
The Death Benefit will be the greater of (i) the guaranteed minimum Death
Benefit, plus the sum (if positive) of the variable adjustment amounts
(determined annually) in the divisions of the Separate Account in which you have
Account Value, or (ii) the insurance coverage that can be purchased by the
Account Value at the date of death.
The percentage change in the Death Benefit for any year is not the same as the
net return for the preceding year and it is not necessarily related to current
or future rates of inflation. In any year that the sum of the variable
adjustment amounts increases (and is positive), the Death Benefit will increase.
If the sum of the variable adjustment amounts is negative, investment experience
cannot increase the Death Benefit above the guaranteed minimum until it has
increased the variable adjustment amount of at least one division of the
Separate Account so that the sum is positive. In any year that the sum of the
variable adjustment amounts for the divisions decreases, the Death Benefit will
decrease, unless it is already at the guaranteed minimum. See "Variable
Adjustment Amount".
There is no guarantee that the investment experience of a division of the
Separate Account, which will reflect the investment performance of the
corresponding Portfolio of the Fund, will be sufficient to result in an increase
in Death Benefits. However, the historical pattern of stock market investment
performance has been one of long-range growth, and money market investments in
recent years have returned more than 4-1/2%.
The amount of Death Benefit actually paid to the insured's beneficiary will be
adjusted as of the date of the insured's death to reflect:
o any policy loans together with accrued interest;
o part of any unpaid premium due if the insured dies during the grace period;
o any premium paid for a period beyond the policy month in which the insured
dies; and
o any insurance added to the policy by a rider.
In addition, we may challenge the validity of the policy based on material
misstatement in the application or if the insured commits suicide within two
years after the policy's date of issue. See "Limits On Our Right To Challenge
The Policy".
If you have submitted an application and paid the first premium, we may, subject
to certain conditions, provide a limited amount of temporary insurance on the
person proposed to be insured. You may review a copy of our Temporary Insurance
Agreement on request. Except as stated in the Temporary Insurance Agreement, no
insurance will take effect: (a) until a policy is delivered and the full first
premium for it is paid while the person proposed to be insured is living; (b)
before the register date; and (c) unless the information in the application
continues to be true and complete, without material change, as of the time the
premium is paid.
- - --------------------------------------------------------------------------------
VARIABLE
ADJUSTMENT
AMOUNT
The variable adjustment amount for each division of the Separate Account is the
amount of the Death Benefit that results from all past investment experience of
that division. In the first policy year, the variable adjustment amount in each
division of the Separate Account is zero. After that, the variable adjustment
amount is the amount of insurance purchased by the difference between the actual
rate of return and 4-1/2%. Therefore, a division's variable adjustment amount
will not change in any year that the division's gross return minus the charges
to that division results in a net return of 4-1/2%. If the net return is more
than 4-1/2%, the variable adjustment amount will increase. The variable
adjustment amount will increase because additional amounts of paid-up life
insurance are purchased. If the net return is less than 4-1/2%, it will
decrease. The variable adjustment amount will decrease because these additional
amounts of paid-up life insurance are lost. The rates at which these additional
amounts of paid-up life insurance are purchased or lost are based on sex and
attained age and are guaranteed. These rates are specified in your policy when
issued and generally increase with the attained age of the insured. The rates
for females are generally lower than those for males; however, there will be no
distinctions based on sex in Montana.
- - --------------------------------------------------------------------------------
13
<PAGE>
- - --------------------------------------------------------------------------------
VARIABLE
ADJUSTMENT
AMOUNT
(continued)
The variable adjustment amount for each division of the Separate Account is set
on each policy anniversary. Once set, it remains the same for the following
policy year. If it is set above the guaranteed minimum, we will be responsible
for keeping it at that level until the next policy anniversary. You will bear
the risk that it could drop on the next policy anniversary (but not below the
guaranteed minimum).
THE VARIABLE ADJUSTMENT AMOUNT IS CUMULATIVE. Increases and decreases in the
variable adjustment amount are carried into each succeeding year. The variable
adjustment amount for a division of the Separate Account can be positive or
negative. If it is positive, good investment experience will produce a larger
variable adjustment amount. If it is negative, good investment experience must
first offset the current negative variable adjustment amount before there can be
a positive amount.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
variable whole life policy with a $500 annual premium (standard rates). Assume a
hypothetical gross annual investment return of 0% for the first 9 policy years.
This results in a negative variable adjustment amount. A net return of
approximately 31.3% in the 10th policy year would affect the cumulative negative
variable adjustment amount so that it would equal zero. Any net return above
that would produce a positive variable adjustment amount. On the other hand, the
negative variable adjustment amount may be offset over a number of years. Thus,
if the gross return in the 10th policy year was 8% (net return of 7.19%), a net
return of 7.19% in each of the seven following policy years would be required to
produce a positive variable adjustment amount by the 18th policy year.
For a given net return, the greater the Account Value is in a division of the
Separate Account, the greater the effect of investment experience on the
variable adjustment amount. Therefore, in later policy years, when your total
Account Value may be greater, investment experience may have a greater effect on
the Death Benefit.
NET RETURN. The Death Benefit based on the net return of a division of the
Separate Account is set on each policy anniversary. The net return depends on
the division's investment experience from the first day of that policy year to
the first day of the next policy year. It takes into account investment income,
capital gains and capital losses (whether realized or unrealized) with respect
to Trust shares owned by the division of the Separate Account and gains
resulting from the reimbursement by us to the division of amounts corresponding
to certain Trust expenses. The charges against the division are then deducted to
determine the net return. The net return on a date during a policy year depends
on the investment experience of the division from the first day of that policy
year to that date and can effect Account Values, Cash Surrender Values and Death
Benefits.
The net return of each division of the Separate Account is determined at the end
of each business day. Generally, a business day is any day that we are open and
the New York Stock Exchange is open. However, we are closed on Martin Luther
King Day and the Friday after Thanksgiving Day.
The assets of each division of the Separate Account are valued by multiplying
the number of Trust shares in each Division by the net asset value of such
shares and is adjusted by the charge for mortality and expense risks. See the
financial statements for the Separate Account in this prospectus.
The net return for a policy year is not the same as for a calendar year unless
the policy anniversary is January 1.
A statement of the method we use to calculate net return is an exhibit to the
Registration Statement we filed with the SEC. It will be furnished on request.
HOW THE DEATH BENEFIT VARIES. The following example shows how the Death Benefit
varies from the guaranteed minimum as a result of investment experience. Assume
that the insured was a 25 year old male when the policy was issued, that he has
a variable whole life policy
- - --------------------------------------------------------------------------------
14
<PAGE>
- - --------------------------------------------------------------------------------
VARIABLE
ADJUSTMENT
AMOUNT
(continued)
with a $500 annual premium (standard rates) and that the gross annual return for
each of the first six policy years was 8% for each division or their combination
(which is equal to a net return of 7.19%). Use the amounts from the
"Illustrations Of Death Benefits, Account Values And Cash Surrender Values, And
Accumulated Premiums" in Part 5.
- - --------------------------------------------------------------------------------
Variable
Guaranteed Adjustment Death
Minimum + Amount = Benefit
- - --------------------------------------------------------------------------------
End of policy year 5 $53,427 $ 775 $54,202
Increase -- 322 322(0.6%)
- - --------------------------------------------------------------------------------
End of policy year 6 $53,427 $ 1,097 $54,524
- - --------------------------------------------------------------------------------
If the gross annual return in the sixth policy year had been 0% (equal to a net
return of -.75%), the Death Benefit would have been $53,373 (a 1.2% decrease).
This reflects a decrease in the variable adjustment amount of $629.
- - --------------------------------------------------------------------------------
ACCOUNT VALUES
AND CASH
SURRENDER VALUES
HOW WE DETERMINE ACCOUNT VALUE. Your Account Value is the sum on any date of
your Account Values in each division of the Separate Account in which your
policy participates. There is no guaranteed minimum Account Value. If no premium
is due and unpaid, your Account Value in a division equals the tabular Account
Value (stated in the policy as of the end of each policy year) multiplied by the
allocation percentage in effect, increased or decreased by the aggregate net
single premium specified in the policy for the variable adjustment amount for
that division.
The tabular Account Value is what the Account Value for the policy would be if
all of the divisions of the Separate Account in which you had funds had a
constant net investment return of 4-1/2% a year. The premium allocation
percentage is the percentage of your current net annual premium allocated to
each of the divisions. The net single premium is the one-time net cost at your
sex and attained age to purchase one dollar of Death Benefit, as specified in
your policy.
Adjustments during a year reflect a division's investment experience, the cost
of insurance, premium payments, any indebtedness and any Account Value
transfers. The Account Values for substandard risk policies and non-smoker
policies are the same as for comparable standard risk policies.
HOW WE DETERMINE CASH SURRENDER VALUE. Your policy's Cash Surrender Value will
vary daily with investment experience. There is no guaranteed minimum Cash
Surrender Value. Cash Surrender Value is the same as Account Value except in the
first ten years of the policy. During the first ten policy years the Cash
Surrender Value on any date will equal the tabular cash value (which is stated
in your policy) increased or decreased by the net single premium for the
variable adjustment amount for that division of the Separate Account. After the
tenth policy year, the Cash Surrender Value will equal the Account Value. The
difference between the Cash Surrender Value and the Account Value is a surrender
charge. See "Surrender Charge".
- - --------------------------------------------------------------------------------
POLICY LOANS
You may borrow money, using only your policy as security, up to the loan value
of your policy. The loan value is a percentage of your Cash Surrender Value on
the next premium due date with two adjustments. The first adjustment assumes
that the net investment return is exactly 4-1/2% a year from the date of the
loan to the next premium due date. The second adjustment is a discount at 5-1/2%
a year from that due date back to the loan date.
The maximum percentage of your adjusted Cash Surrender Value that you may borrow
is 90% during the first ten policy years. It is 100% after the tenth policy
year. If the policy has lapsed and is continued under either the fixed or
variable reduced paid-up option on lapse, you may borrow up to 100% of the
adjusted cash value.
If you borrow your policy's entire loan value, you increase your risk of having
your policy end. This might happen if the combination of policy loan interest
(as it builds up), the cost of
- - --------------------------------------------------------------------------------
15
<PAGE>
POLICY LOANS
(continued)
insurance, asset charges against the Separate Account, and investment experience
of the divisions of the Separate Account where you have Cash Surrender Value
uses up the remaining value. See "Your Policy Can Lapse".
Unless it is being used to pay premiums, we will not grant a loan that is not at
least $100 more than any outstanding loan with accrued interest. The amount of
your premium will not be affected by the fact you have a loan or by how you
repay the loan. If a loan is made after the due date of a premium, that premium
will be subtracted from the loan proceeds. If you request a loan in order to pay
a premium, we will charge loan interest from the date we make the loan even if
it is before the premium due date.
HOW TO REQUEST A LOAN. You may request a loan by contacting our regional Life
Insurance Center. We allocate a loan based on the net Cash Surrender Value in
each division of the Separate Account on the date the loan is made. We
reallocate loans if you transfer Account Value. Whenever the loan with accrued
interest from one division equals or exceeds the Account Value in that division,
that division will become inactive for your policy. We will transfer the total
Account Value and loan allocation to the other divisions. See "Other Policy
Transactions -- When A Division Becomes Inactive".
REPAYMENT. You may repay all or part of any outstanding loan with accrued
interest at any time while the policy is in effect and the insured is alive.
Your repayment, whether full or partial, will be allocated among the divisions
of the Separate Account in proportion to the loan allocation to each division at
the time of repayment. The amount of any outstanding loan with accrued interest
will be deducted from the Death Benefit or Cash Surrender Value proceeds.
POLICY LOAN INTEREST. You decide whether interest on your policy loan will be
charged at a fixed rate of 5-1/2% or an adjustable loan interest rate. The
adjustable rate is determined as of the beginning of each policy year, and will
apply to any new or outstanding loan during that year. The adjustable rate will
be the greater of (i) 5-1/2%, or (ii) the Monthly Average Corporate yield shown
in the Corporate Bond Yield Averages published by Moody's Investors Services,
Inc., for the month ending two months before the beginning of the policy year.
However, if you have elected an adjustable loan interest rate, it will be the
same for a policy year after the first as it was for the immediately preceding
policy year if the formula above would produce a change of less than 1/2 of 1%
from the rate applicable to your policy for the preceding year.
Interest is charged daily and is payable by the policyowner on each anniversary.
However, if it is not paid, it will be compounded on the policy anniversary
because it will be added to the loan principal. As to the deductibility of loan
interest, see "Tax Effects -- Policy Proceeds" in Part 4.
THE EFFECT OF A POLICY LOAN. A loan against your policy will have a permanent
effect on your Death Benefit, Account Value and Cash Surrender Value under this
policy, even if the loan is repaid. When you take out a loan, we transfer part
of the Cash Surrender Value equal to the amount of the loan from the divisions
of the Separate Account in which your policy participates to our General
Account. This amount is set aside as security for your loan. In addition, unpaid
interest on the policy loan will be transferred to our General Account from time
to time. The amount taken out of the divisions of the Separate Account will
neither be affected by the divisions' investment experience nor be subject to
the charges described in "Charges Against The Separate Account", while the loan
is outstanding. However, you will earn a return on this amount.
If you have chosen the fixed interest rate alternative, we will credit your
policy with a 4-1/2% annual return on any amount transferred to our General
Account as a result of your policy loan. This can protect Cash Surrender Value
and Death Benefits from decreasing if investment experience is below 4-1/2%. It
will also prevent them from increasing if investment experience is above 4-1/2%.
If you have chosen an adjustable loan interest rate, we will credit your policy
with a rate of return which is 0.75% below the interest rate that is charged as
a result of your policy loan,
- - --------------------------------------------------------------------------------
16
<PAGE>
POLICY LOANS
(continued)
minus any charges for taxes or amounts set aside as a provision for taxes. (We
are not making charges for taxes or provisions for taxes now but we may make
such charges in the future. See "Tax Effects -- Our Income Taxes" in Part 4.)
For example, if the adjustable loan interest rate were 10%, the credit rate
would be 9.25%. If the adjustable loan interest rate were below 5-1/2%, the
actual interest rate would be 5-1/2% and the credit rate would be 4.75%. Any
amounts credited over 4-1/2% will increase your policy's Death Benefit, Account
Value and Cash Surrender Value. If you elect the adjustable loan interest rate,
you will bear the additional risk connected with changes in the annual credit
rate. If the adjustable loan interest rate less 0.75% (and less any charge for
taxes or provision for taxes) is greater than the net return for that year of
the divisions of the Separate Account in which you have Account Value, then the
Death Benefit and Cash Surrender Value for that year will be greater than if no
loan were made. The reverse would also be true.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
variable whole life insurance policy with a $500 annual premium (standard
rates). Use the illustration in Part 5, and assume an 8% gross annual investment
return for each Division or their combination (which is a net return of 7.19%).
Assume that at the beginning of the 10th policy year the Adjustable Loan
Interest Rate is 9.79% (the actual rate for June, 1986). If you take a loan for
$3,000 at the beginning of the 10th policy year, it will affect the Death
Benefit, Account Value and Cash Surrender Value (before subtracting the amount
of the loan with loan interest) in the 10th policy year as follows:
- - --------------------------------------------------------------------------------
With Loan With Loan
Without Loan (Fixed Rate) (Applicable Rate)
- - --------------------------------------------------------------------------------
Death Benefit $56,372 $55,999 $56,628
Account Value 4,615 4,534 4,670
Cash Surrender Value 4,615 4,534 4,670
- - --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT ADJUSTABLE RATES. We will notify you of the initial
interest rate at the time a loan is made under the adjustable loan interest rate
election. Initial loan interest rates are also available on request. We will
also notify you in advance of each policy anniversary of the interest rate for
the following policy year.
You may cancel your election of the adjustable loan interest rate in writing at
any time, but the request will not take effect until the next policy
anniversary. When the cancellation takes effect, the loan rate will revert to
the fixed rate of 5-1/2%. Election or re-election of the adjustable loan
interest rate may be made in writing at any time but will not take effect until
the next policy anniversary even if no loan is outstanding.
Not all states have laws permitting adjustable policy loan interest rates. Some
states permit adjustable rates but set maximums. Some states do not permit
cancellation of an adjustable loan interest rate provision, and there are other
variations from state to state. For details about the policy loan interest rate
laws in your state, contact your agent or your regional Life Insurance Center.
- - --------------------------------------------------------------------------------
OTHER POLICY
TRANSACTIONS
RETURNING THE POLICY FOR CASH. During the insured's lifetime, and subject to our
rules, your policy can be returned for payment of the Cash Surrender Value net
of any indebtedness. The amount payable will be based on the net Cash Surrender
Value next computed after we receive your signed request for payment of the Cash
Surrender Value at your regional Life Insurance Center, accompanied by your
policy. The insurance coverage will end on the date you send us the policy and
your request.
As an alternative to surrendering your policy, you may request to split your
policy into two policies. You may then return one policy for cash and continue
the other based on the new initial face amount.
If you split a policy, each policy we continue must have a face amount of at
least $50,000. The premium for the policy that continues will be based on the
new initial face amount but the same age, sex and risk class as the original
policy.
These are our current procedures, which may change.
- - --------------------------------------------------------------------------------
17
<PAGE>
- - --------------------------------------------------------------------------------
OTHER POLICY
TRANSACTIONS
(continued)
TRANSFERS AMONG INVESTMENT CHOICES. You may transfer Account Value among the
divisions by contacting our regional Life Insurance Center. You may transfer all
or part of your Account Value among the divisions of the Separate Account up to
four times in a policy year. A transfer will go into effect on the day we
receive your request. When Account Value is transferred a portion of the net
annual premium is transferred as well. We reallocate loans if you transfer
Account Value.
WHEN A DIVISION BECOMES INACTIVE. If you have a policy loan allocated to a
division of the Separate Account and your Account Value plus remaining net
annual premium less your loan (including accrued loan interest) in that division
reaches zero, that division will become inactive for your policy. We will
reallocate the loan to the other divisions of the Separate Account based on the
proportions that your unloaned amounts in each of the other divisions bears to
the unloaned amount of your total Account Value. A division will also become
inactive for your policy if you transfer its entire Account Value to the other
divisions. We will notify you when a division becomes inactive.
If a division of the Separate Account becomes inactive, the future variable
adjustment amount, Account Value and net return will be affected. We will assume
that you do not want to put any part of future net annual premiums into the
inactive division. You can request us to put any part of a future net annual
premium into the inactive division effective on the next policy anniversary
after your request is received. You may also transfer Account Value into an
inactive division from the other divisions.
- - --------------------------------------------------------------------------------
YOUR RIGHT TO
EXAMINE THE
POLICY
You have a right to examine the policy. If for any reason you are not satisfied
with it, you may cancel it by returning the policy to your regional Life
Insurance Center with a written request for cancellation. We will give you a
full refund (guaranteed by Equitable) of the premiums paid if your request and
policy are postmarked by the latest of the following:
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Insurance coverage ends when you send your request.
- - --------------------------------------------------------------------------------
YOUR RIGHT TO
EXCHANGE THE
POLICY
You may exchange The Champion policy for a fixed whole life insurance policy on
the life of the insured. The new policy will be our Life Account(TM) policy on a
level premium whole life plan with premiums payable for life. You have this
right for 24 months from the date your policy is issued, but only if no premium
remains due and unpaid. The exchange will be effective when we receive your
request, accompanied by your policy and an application for the fixed policy.
We will not require evidence of the insured's insurability before an exchange.
The new policy's face amount will be the same as the initial face amount of The
Champion policy. It will also have the same register date, date of issue and
risk class. The premium for the new policy will be that in effect on the
register date for the same sex, age and risk class.
There will be a cash adjustment on exchange. The adjustment will reflect the
difference in premiums between the two policies. Since the exchange is based on
premiums, the surrender charge will have no effect. There will also be an
adjustment for the difference in the rates of return credited to the two
policies because the Life Account policy has declared rates of return. We will
refund or bill you for any amount due. We have filed a description of the method
we use to calculate the adjustment with the appropriate state insurance
officials.
Any policy loan with accrued interest must be repaid before the exchange. The
exchange is also subject to limits described in the policy.
- - --------------------------------------------------------------------------------
18
<PAGE>
- - --------------------------------------------------------------------------------
YOUR POLICY
CAN LAPSE
Your policy can lapse if you fail to pay premiums or if the unpaid portion of
any amount you have borrowed under your policy plus any unpaid loan interest
exceeds the Cash Surrender Value of your policy. If your policy lapses within
the first ten policy years you will incur a surrender charge. See "Surrender
Charge".
We allow a grace period of 31 days to pay each premium after the first one.
Insurance will continue during the grace period, but we will deduct one month's
premium from the Death Benefit if the insured dies during the grace period. If a
premium has not been paid by the end of the 31-day grace period, the policy will
lapse as of the date the premium was due. When a policy lapses, any riders will
end. All insurance may end unless the policy's net Cash Surrender Value is used
under a continued insurance option on lapse.
Whenever the unpaid portion of any amount you have borrowed under your policy
plus unpaid loan interest exceeds the Cash Surrender Value of your policy, we
will send a notice to you and to anyone to whom you told us you assigned the
policy. The policy will end 31 days after we send the notice unless you make a
repayment during the 31-day period that is large enough to reduce your
outstanding loan with accrued interest to below the total Cash Surrender Value
of your policy.
- - --------------------------------------------------------------------------------
OPTIONS ON
LAPSE
If a policy lapses because a premium remains due and unpaid beyond its 31-day
grace period, you may use one of the following options. A key element in these
options is your policy's net Cash Surrender Value on any day for a period of up
to three months after the unpaid premium was due. If you elect the reduced
paid-up variable insurance option, the Cash Surrender Value used is on the date
of lapse. Net Cash Surrender Value is Cash Surrender Value minus any policy
loans with accrued interest on the date an option is used. If your policy has no
net Cash Surrender Value, you cannot use the options.
PAYMENT OF CASH OPTION. You can withdraw the net Cash Surrender Value and
receive payment in cash.
CONTINUED INSURANCE OPTION. Within three months from the date a policy lapses
(which is the date the unpaid premium was due), you can use its net Cash
Surrender Value to obtain one of two types of fixed life insurance plans. These
are fixed reduced paid-up insurance or extended term insurance. If it is at
least $5,000, you may also use your policy's net Cash Surrender Value to obtain
a variable life insurance plan. This plan is variable reduced paid-up insurance.
You will not have to pay any additional premium on any option because you are,
in effect, using the net Cash Surrender Value of your variable life policy to
buy continued life coverage.
If we do not receive a written request to use the fixed or variable reduced
paid-up insurance option within three months after lapse, extended term
insurance will automatically go into effect. The extended term insurance option
may not be available under your policy if the insured's risk class is not at
least standard. If so, that fact will be stated on page 3 of the policy and
fixed reduced paid-up insurance will apply instead. If the insured dies after
the grace period but within three months of the date of lapse, the fixed
continued insurance option that would provide the greater benefit will
automatically apply, regardless of any restriction stated on page 3 of the
policy.
Here are details on the three types of plans offered under our continued
insurance option.
o REDUCED PAID-UP VARIABLE INSURANCE. You may use the net Cash Surrender Value
to buy reduced paid-up variable whole life insurance. The net Cash Surrender
Value available to purchase this option must be at least $5,000. The net Cash
Surrender Value determines the face amount that can be purchased at the
insured's age at the time of purchase.
Reduced paid-up variable insurance has cash value. The cash value and death
benefit will go up or down depending on the investment experience of the
divisions of the Separate Account where you have cash value. The death benefit
under this option has no guaranteed minimum. You may use the net cash value
during the insured's lifetime for a loan or for cash payment. You may transfer
cash value among the divisions up to four times in one year.
- - --------------------------------------------------------------------------------
19
<PAGE>
- - --------------------------------------------------------------------------------
OPTIONS ON
LAPSE
(continued)
EXAMPLE: You are a 30 year old male. Your variable life policy was issued when
you were 25 and you have paid five $2,000 annual premiums. Use the illustration
in Part 5, and assume a 4% gross annual investment return for each division of
the Separate Account or their combination. At the end of the fifth policy year,
your net Cash Surrender Value could buy reduced paid-up variable whole life
insurance with an initial face amount of $36,318. After the fifth policy year,
the face amount will continue to vary depending on the investment experience of
the divisions in which the cash value is invested. There is no guaranteed
minimum Death Benefit or Cash Value.
o REDUCED PAID-UP FIXED INSURANCE. You may use the net Cash Surrender Value to
buy reduced paid-up fixed whole life insurance. The net Cash Surrender Value
determines the face amount that can be purchased at the insured's age at the
time of purchase. Paid-up insurance has cash value. You may use the net cash
value during the insured's lifetime for a loan or for cash payment.
EXAMPLE: You are a 30 year old male. Your variable life policy was issued when
you were 25 and you have paid five $500 annual premiums. Use the illustration in
Part 5, and assume a 4% gross annual investment return for each division of the
Separate Account or their combination. At the end of the fifth policy year, your
net Cash Surrender Value could buy reduced paid-up fixed whole life insurance
with a face amount of $7,705 for life.
o EXTENDED TERM INSURANCE. If the insured's risk class is at least standard, you
may use the net Cash Surrender Value to buy extended term insurance. The face
amount will equal the Death Benefit under your variable life policy on the
date of lapse minus any unpaid loan with accrued interest. The net Cash
Surrender Value determines how long coverage will last at the insured's then
attained age. It will last at least 90 days if the premium has been paid on
the variable life policy for three months before lapse and there is no policy
loan. Extended term coverage has cash value, but it cannot be used for a loan.
EXAMPLE: Assume the same facts as in the previous example. At the end of the
fifth policy year, your net Cash Surrender Value could buy fixed extended term
insurance with a face amount of $53,427 for a term of 11 years and 125 days.
REINSTATEMENT OPTION. You may request that we reinstate the policy during the
insured's lifetime. You must make this request within five years after lapse. We
will not reinstate the policy if it has been returned for its net Cash Surrender
Value.
Before we will reinstate, we must receive evidence satisfactory to us of the
insured's insurability. We must also receive the larger of all due and unpaid
premiums with interest at 6% a year; or an amount equal to:
o the Cash Surrender Value just after reinstatement, MINUS
o the cash value of the option just before reinstatement, and further MINUS
o any policy loan with accrued interest at the annual loan interest rate
compounded daily to the date of reinstatement, TIMES
o 110%.
If we do reinstate, the policy will have the same variable adjustment amount and
premium allocation between the divisions of the Separate Account as if there had
been no lapse.
If a policy has enough Cash Surrender Value at the time it lapses, it might be
possible to reinstate it by requesting a policy loan for that purpose.
- - --------------------------------------------------------------------------------
POLICY PERIODS,
ANNIVERSARIES,
DATES AND AGES
Policy years and policy anniversaries are measured from the register date shown
on page 3 of the policy when issued.
The register date is the day the net annual premiums you allocate to the
divisions of the Separate Account first become subject to charges and begin to
vary with the investment experience of the divisions. As to when insurance
coverage under a policy starts, see "Death Benefits". The time between
submission of an application and the register date will vary, depending on the
underwriting and other requirements for issuing a particular policy. The
register date will be the application date if the full first premium is paid
with the application and no medical evidence is required. Otherwise the register
date will normally be the date we receive the latest of the application, the
full first premium and any required medical evidence.
The issue date, shown on page 3 of the policy when issued, is the date your
policy is actually issued. Both the contestibility and suicide exclusion periods
are measured from the issue date. See "Limits On Our Right To Challenge The
Policy".
- - --------------------------------------------------------------------------------
20
<PAGE>
- - --------------------------------------------------------------------------------
LIMITS ON OUR
RIGHT TO
CHALLENGE
THE POLICY
We can challenge the validity of your insurance policy based on material
misstatements in the application. However, we cannot challenge the validity of
the policy after it has been in effect during the insured's lifetime for two
years from the date of issue or reinstatement (unless another date is required
by law). We can challenge at any time any rider that provides benefits in the
event of total disability. If death occurs within the time we can challenge
validity, our payment will generally be delayed while we determine whether to
make such a challenge.
If the insured's age or sex is misstated in the policy application, the Death
Benefit will be what the premium paid would have purchased based on the
insured's true age and sex.
If the insured commits suicide within two years from the date the policy was
issued or reinstated (or less where required by law), the Death Benefit will be
limited to the sum of all premiums paid minus outstanding policy loans with loan
interest.
- - --------------------------------------------------------------------------------
ADDITIONAL
INFORMATION ABOUT
THE CHAMPION
WHEN WE PAY PROCEEDS. Payment of the Death Benefit, Cash Surrender Value (net of
indebtedness) or loan proceeds will be made within seven days after we receive
the required form or request (and other documents that may be required for
payment of the Death Benefit) at your regional Life Insurance Center. The Death
Benefit is determined as of the date of death and will not be affected by the
subsequent investment experience of the divisions of the Separate Account. We
pay interest from the date of death to the date of payment at an annual rate
greater than or equal to the rate we are paying under the deposit option
described in "Payment Options" below. If an Equitable agent is assisting the
beneficiary in preparing the documents required for payment of the Death
Benefit, we will send the check to the agent within seven days after we receive
all required documents. The agent will then deliver the check to the
beneficiary. But we can delay payment if:
o we contest the policy;
o it is not reasonably practicable to determine the amount because the New York
Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
o the SEC, by order, permits us to delay to protect our policyowners.
If your policy is being continued as fixed reduced paid-up or extended term
insurance, we can delay payment of a loan or cash value for up to six months.
We will pay at least 3% interest a year if we delay paying the Cash Surrender
Value or loan proceeds more than 30 days.
YOUR PAYMENT OPTIONS. The Death Benefit or the Cash Surrender Value may be paid
(net of indebtedness) in one sum or you may choose another form of payment for
all or part of the money. Payments under these options are not affected by the
investment experience of any investment division of the Separate Account.
Instead, interest accrues pursuant to the options chosen. If you do not arrange
for a specific form of payment before the insured dies, the beneficiary will
have this choice. However, if you do make an arrangement with us for how the
money will be paid, the beneficiary cannot change the choice after the insured
dies. Payment options will also be subject to our rules at the time of
selection. Currently, these alternate payment options are only available if the
proceeds applied are $2500 or more and if any periodic payment will be at least
$25.
You have the following payment options:
o DEPOSIT OPTION: The money will stay on deposit with us for a period agreed
upon. You will receive interest on the money at a declared interest rate.
o INSTALLMENT PAYMENT OPTIONS: There are two ways that we pay installments:
FIXED PERIOD: We will pay the amount applied in equal installments plus
applicable interest, for a specific number of years (not more than 30).
FIXED AMOUNT: We will pay the sum in installments in an amount agreed upon.
We will pay the installments until we pay the original amount, together with
any interest earned.
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21
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ADDITIONAL
INFORMATION ABOUT
THE CHAMPION
(continued)
o MONTHLY LIFE INCOME OPTION: We will pay the money as monthly income for life.
You may choose any one of three ways to receive the income: We will guarantee
payments for at least 10 years (called "10 Years Certain"); at least 20 years
(called "20 Years Certain"); or until the payments we make equal the original
sum (called "Refund Certain").
o OTHER: You may ask us to apply the money under any option that we make
available at the time the Death Benefit or Cash Surrender Value is paid.
We guarantee interest under the Deposit Option at the rate of 3% a year, and
under either Installment Option at 3-1/2% a year. We may also credit interest
under the Deposit Option and under either Installment Option at a rate that is
above the guaranteed rate.
The beneficiary or any other person who is entitled to receive payment may name
a successor to receive any amount that we would otherwise pay to that person's
estate if that person died. The person who is entitled to receive payment may
change the successor at any time.
We must approve any arrangements that involve more than one of the payment
options, or a payee who is not a natural person (for example, a corporation), or
a payee who is a fiduciary. Also, the details of all arrangements will be
subject to our rules at the time the arrangements take effect. This includes
rules on the minimum amount we will pay under an option, minimum amounts for
installment payments, withdrawal or commutation rights (your rights to receive
payments over time, for which we may offer a lump sum payment), the naming of
people who are entitled to receive payment and their successors, and the ways of
proving age and survival.
You will make a choice of payment option (or any later changes) and your choice
will take effect in the same way as it would if you were changing a beneficiary.
(See "Beneficiary" below). Any amounts that we pay under the payment options
will not be subject to the claims of creditors or to legal process, to the
extent that the law provides.
ADDITIONAL BENEFITS YOU MAY GET BY RIDER. Your policy can include additional
benefits that we approve based on our standards for issuing insurance and
classifying risks. An additional benefit requires an additional premium. An
additional benefit is provided by a rider that is subject to the terms of the
policy. The following riders are available.
o WAIVER OF PREMIUM RIDER. With this rider, we will waive the premium if the
insured person becomes totally disabled and the disability continues for six
months. The disability must start before the policy anniversary nearest the
insured's 60th birthday. If disability starts after that, we will waive the
premium only up to the policy anniversary nearest the insured's 65th birthday.
o ACCIDENTAL DEATH BENEFIT RIDER. With this rider, we will pay a benefit if the
insured dies from an accidental bodily injury before the policy anniversary
nearest his or her 70th birthday.
o OPTION TO PURCHASE ADDITIONAL INSURANCE RIDER. With this rider, you have the
right to buy additional insurance on the life of the insured at certain future
dates. We will not require evidence of the insured's insurability when you use
your right to buy additional insurance.
o SUPPLEMENTAL PROTECTIVE BENEFIT RIDER. With this rider, we will waive the
premium if the insured is a child under age 15 on the date of issue and:
the person who applied for the policy dies; or
the person who applied for the policy is totally disabled for at least six
months before the policy anniversary nearest his or her 60th birthday.
We will waive the premium only while the disability continues. In any case, we
will not waive the premium that is due after the policy anniversary nearest the
insured's 25th birthday.
o TERM INSURANCE RIDER. Several types of riders are available that provide for
term insurance on the life of the insured or an additional insured.
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22
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ADDITIONAL
INFORMATION ABOUT
THE CHAMPION
(continued)
BENEFICIARY. You name your beneficiary when you apply for your policy. You may
change the beneficiary during the insured's lifetime by writing to your regional
Life Insurance Center. If no beneficiary is living when the insured dies, the
Death Benefit will be paid in equal shares to the insured's surviving children.
If there is no surviving child, the Death Benefit will be paid to the insured's
estate.
ASSIGNMENT. You may assign the policy as collateral for a loan or other
obligation. We are not responsible for any payment we make or action we take
before we receive a copy of the assignment at your regional Life Insurance
Center.
PREMIUM PAYMENTS BY SALARY ALLOTMENT. If your employer permits you to pay
insurance premiums by deduction from your salary, and you choose to do so, we
may offer you temporary fixed insurance in the amount applied for (subject to a
maximum of $250,000). This insurance will be without charge (except that a
premium will be deducted from any fixed death benefit). Once we receive the
first payment from your employer, the fixed insurance will be discontinued and
The Champion policy will begin.
EMPLOYEE BENEFIT PLANS. Employers and employee organizations should consider, in
consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of The Champion in connection with an employment-related
insurance or benefit plan. The United States Supreme Court held, in a 1983
decision, that, under Title VII, optional annuity benefits under a deferred
compensation plan could not vary on the basis of sex.
YOU WILL RECEIVE PERIODIC REPORTS. As a policyowner, you will receive an annual
statement about your policy giving you the status as of the first day of the
current policy year of:
o the way the net annual premium is divided among the divisions of the Separate
Account;
o the Death Benefit;
o the Account Value and Cash Surrender Value; and
o your outstanding policy loans.
Notice will also be sent to your for policy issuance, transfers of funds among
divisions of the Separate Account and certain other policy transactions.
We will not send you an annual statement for any year your policy is in effect
under extended term insurance or reduced paid-up fixed insurance.
You will receive a billing notice each year showing accrued interest for the
past policy year if you have a policy loan outstanding.
We will also send you semiannual and annual reports with financial information
on the Separate Account and the Trust (including a list of the investments held
by each Portfolio in which the divisions of the Separate Account invest) as
required by the 1940 Act.
DIVIDENDS. No dividends will be paid on The Champion policy.
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23
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PART 4 -- ADDITIONAL INFORMATION
- - --------------------------------------------------------------------------------
TAX EFFECTS
POLICY PROCEEDS. The Tax Reform Act of 1984 (1984 Act) includes a definition of
life insurance for tax purposes. Generally, The Champion policy meets this
definition of life insurance and receives the same Federal income tax treatment
as fixed benefit life insurance. Thus:
o Death Benefits under The Champion policy will generally be excludable from the
gross income of the beneficiary under Section 101(a)(1) of the Internal
Revenue Code (Code) and
o the policyowner will not generally be considered to have received any
increases in the Account Value due to interest or investment experience before
a surrender or lapse of the policy.
In general, if you surrender your policy or allow it to lapse, you will not be
taxed on the amount you receive, except for the portion that, together with any
unpaid loan and loan interest, exceeds the premiums you have paid.
A split of the policy into two policies followed by a return of one for cash, or
an exchange referred to under "Your Right To Exchange The Policy" in Part 3, may
result in taxable income to the policyowner depending on the circumstances. We
suggest you consult your tax adviser.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life insurance
policies in order for such policies to be treated as life insurance. On
September 15, 1986, Treasury issued temporary regulations regarding the
diversification requirements. Failure to meet these diversification requirements
would disqualify The Champion as a variable life insurance policy under Section
7702 of the Code. If this were to occur, you would be taxed on the amount your
Account Value exceeds the premiums you have paid. We believe that the
investments underlying The Champion are in compliance with the requirements. We
do not anticipate any problems with the investments continuing to meet the
requirements.
You will not be taxed on amounts transferred among investment choices within
your Policy Account. We also believe that loans received under the policies will
be treated as indebtedness of the policyowner, and that no part of any loan
under a policy will constitute income to the owner. Generally, a portion of the
interest on loans under life insurance policies (other than single premium
policies) is deductible subject to certain limitations. For future years, most
policy loan interest will no longer be deductible. See "Tax Reform" below.
Death Benefits under The Champion policy will generally be includable in the
estate of the insured for purposes of Federal estate tax. Federal estate tax is
integrated with Federal gift tax under a unified gift rate schedule. Federal
estate tax is imposed on distributions at graduated rates from 37% to 55% (with
the maximum rate applying to distributions in excess of $3,000,000). In general,
estates not in excess of $600,000 are exempt from Federal estate tax. In
addition, an unlimited marital deduction applies for Federal estate tax
purposes.
The individual situation of each policyowner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes.
Again, we suggest you consult your tax adviser.
See the prospectus for the Trust for a discussion of the Trust's tax aspects,
including the diversification requirements.
PENSION AND PROFIT-SHARING PLANS. If policies are purchased by a trust which
forms part of a pension or profit sharing plan qualified under Section 401(a) of
the Code for the benefit of participants covered under the plan, the Federal
income tax treatment of such policies will be somewhat different from that
described above. We suggest you consult your legal or tax adviser.
If purchased as part of a pension or profit-sharing plan, the current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and is required to be included annually in the plan participant's gross income.
This cost (generally referred to as the "P.S. 58" cost) is reported to the
participant annually as an addition to wages and salaries on the Form W-2
furnished by the employer who is maintaining the plan.
Second, if the plan participant dies while covered by the plan and the policy
proceeds are paid to the participant's beneficiary, then the excess of the Death
Benefits over the Account Value will not be subject to Federal income tax.
However, the Account Value will be taxable to the extent it exceeds the sum of
$5,000 plus the participant's cost basis in the policy. The participant's cost
basis will include the costs of insurance previously reported on the
participant's Form W-2. Special rules may apply if the participant had borrowed
from his policy or was an owner-employee under the plan.
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24
<PAGE>
- - --------------------------------------------------------------------------------
There are limits on the amount of life insurance that may be purchased on behalf
of a participant in a pension or profit-sharing plan. Complex rules, in addition
to those discussed above, apply whenever life insurance is purchased by a tax
qualified plan. We suggest you consult your legal or tax adviser prior to
purchase of this policy by a pension or profit-sharing plan.
- - --------------------------------------------------------------------------------
TAX EFFECTS
(continued)
OUR INCOME TAXES. Under the life insurance company tax provisions of the Code,
as amended by the 1984 Act, variable life insurance is treated in a manner
consistent with fixed life insurance. The operations of the Separate Account are
included in the Federal income tax return of Equitable Variable. Under current
tax law, Equitable Variable pays no tax on investment income and capital gains
reflected in variable life insurance policy reserves. Consequently, no charge is
currently being made to the divisions of the Separate Account for our Federal
income taxes. We reserve the right, however, to make such a charge in the
future, if the law changes and we incur Federal income tax which is attributable
to the Separate Account. If such a charge is made, it would be set aside as a
provision for taxes which we would keep in the affected Division rather than in
our general account. We anticipate that our variable life policyowners will
benefit from any investment earnings that are not needed to maintain this
provision.
We may have to pay state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not substantial. If they increase,
however, charges may be made for such taxes when they are attributable to the
Separate Account.
TAX REFORM. Under the Tax Reform Act of 1986, the deduction for policy loan
interest is being phased out over a five year period (35% of such interest would
not be deductible in 1987, 60% in 1988, 80% in 1989, 90% in 1990 and 100% in
1991). Interest on loans taken under policies purchased or carried as part of a
trade or business is subject to special rules.
INCOME TAX WITHHOLDING. Federal tax law requires us to withhold income tax from
any portion of your surrender proceeds that is subject to tax, unless you
request us not to withhold.
If you surrender your policy and do not advise us in writing that you do not
want us to withhold Federal income tax before the date payment must be made, we
are required by law to withhold tax from the surrender payment.
If you elect not to have tax withheld from the surrender payment, or if the
mount of Federal income tax withheld is insufficient, you may be responsible for
payment of tax. You may incur penalties under the tax rules if your withholding
and estimated tax payments are not sufficient. You may wish to consult you tax
adviser.
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YOUR VOTING
PRIVILEGES
GENERAL. As we have already said, all assets held in the divisions of the
Separate Account are invested in shares of the corresponding Portfolios of the
Trust. We are the legal owners of those shares and as such have the right to
vote upon certain matters at any meeting of the Trust's shareholders that may be
held. Among other things, we may vote on any matters described in the Trust's
prospectus or Statement of Additional Information that require a shareholder
vote or requiring a vote by shareholders under the Investment Company Act of
1940.
However, in accordance with our view of current Federal securities law
requirements, we will offer you the opportunity to instruct us as to how Trust
shares allocable to your policy and held by us in the Separate Account will be
voted on these matters. We will vote the shares of the Trust at meetings of
shareholders of the Trust in accordance with your instructions. Thus, you will
have the right to have a voice in the affairs of the Trust. Trust shares held in
each division of the Separate Account for which no timely instructions from
policyowners are received will be voted by us in the same proportion as shares
in that division for which instructions are received. We will also vote any
Trust shares that we are entitled to vote directly due to amounts we have
accumulated in the Separate Account in the same proportions that all
policyowners vote, including those who participate in other Separate Accounts.
See "Your Voting Privileges -- Voting Privileges of Others".
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25
<PAGE>
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YOUR VOTING
PRIVILEGES
(continued)
Each policy having a voting interest will be sent proxy material and a form for
giving voting instructions. If required by state insurance officials, we may
disregard voting instructions if those instructions would require shares to be
voted so as to cause a change in the investment objectives or policies of one or
more of the Trust's Portfolios, or to approve or disapprove an investment policy
or investment adviser of one or more of the Trust's Portfolios. In addition, we
may disregard voting instructions in favor of changes initiated by a policyowner
or the Trust's Board of Trustees in the investment policy or the investment
adviser of a Portfolio, provided that our disapproval of the change is
reasonable and is based on a good faith determination that the change would be
contrary to state law, the proposed advisory fee would be higher than we are
permitted to pay by the terms of our variable life policies, or the charge would
lead to an adverse effect on our general account because it would result in
unsound or overly speculative investments. We will advise policyowners if we do
disregard voting instructions, and give our reasons for such actions in the next
semiannual report we send to policyowners.
All Trust shares of whatever class are entitled to one vote, and the votes of
all classes are cast on an aggregate basis, except on matters where the
interests of the Portfolios differ. In such a case, the voting is on a
Portfolio-by-Portfolio basis. Approval or disapproval by the shareholders in one
Portfolio on such a matter would not generally be a prerequisite of approval or
disapproval by shareholders in another Portfolio; and shareholders in a
Portfolio not affected by a matter generally would not be entitled to vote on
that matter. Examples of matters which would require a Portfolio-by-Portfolio
vote are changes in the fundamental investment policy or restrictions of a
particular Portfolio and approval of the investment advisory agreement.
VOTING PRIVILEGES OF OTHERS. Currently, we control the Trust. Trust shares are
held by other separate accounts of ours and by separate accounts of insurance
companies affiliated or unaffiliated with us. Shares held by these separate
accounts will probably be voted according to the instructions of the owners of
insurance policies and contracts issued by those insurance companies. While this
will dilute the effect of the voting instructions of owners of The Champion, we
currently do not foresee any disadvantages to our policyowners arising out of
this. The Trust's Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts that possibly may arise and to
determine what action, if any, should be taken in response. If we believe that
the Trust's response to any of those events insufficiently protects our
policyowners, we will see to it that appropriate action is taken to protect our
policyowners.
DETERMINING YOUR VOTE. If all your Account Value is in one division of the
Separate Account, you can only participate in the voting of the shares in the
Portfolio that corresponds to that division. If your Account Value is divided
among the divisions, you are entitled to participate in the voting of the shares
of each of the Portfolios which correspond to those divisions.
The number of Trust shares held in each division of the Separate Account
attributable to your policy for purposes of your voting privilege will be
determined by dividing your policy's Account Value (less any policy
indebtedness) allocable to that division by the net asset value of one share of
the corresponding Portfolio as of the record date for the Trust's shareholder
meeting. The record date for this purpose will not be more than 90 days before
the meeting of the Trust. Fractional shares are counted.
EXAMPLE: Your policy has an Account Value of $3,000, 50% of which is
attributable to the Common Stock Division and 50% of which is attributable to
the Money Market Division. Assuming the net asset value of one share in each
Trust Portfolio is $100, you would have the privilege of voting 30 shares. You
will have the privilege of instructing us regarding 15 votes in each of these
divisions.
EXAMPLE (ASSUMING AN OUTSTANDING LOAN): Assuming the same facts as in the
preceding example and also that you have a $1,000 loan (including interest)
equally allocated between the Common Stock and Money Market Divisions, you would
be entitled to 10 votes in each of these Divisions, or an aggregate of 10 fewer
votes.
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26
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YOUR VOTING
PRIVILEGES
(continued)
LAW CHANGES MAY AFFECT YOUR VOTING PRIVILEGES. The Separate Account is required
by Federal securities laws or regulations as currently interpreted to have
policyowners instruct us as to the Trust's voting rights. However, if amendments
to or interpretations of those laws or regulations change what must be voted on,
or restrict the matters for which policyowners are given the opportunity to
provide voting instructions, we will in turn change what is submitted to
policyowners.
- - --------------------------------------------------------------------------------
OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will always attempt to comply
with applicable laws before we take any of these actions. If necessary, we will
seek approval by policyowners.
Specifically, we reserve the right to:
o add divisions to or remove divisions from the Separate Account;
o combine any two or more divisions within the Separate Account;
o transfer assets of the variable life policy offered by this prospectus, as
well as the assets of our other variable life policies, from one division to
another (if we do, we will withdraw proportional amounts of each investment in
the division, but we will also make whatever adjustments are needed to avoid
odd lots and fractions);
o operate the Separate Account as a management investment company under the 1940
Act, or in any other form the law allows (if we do, we may invest the assets
in any legal investments and we or one of our affiliates, such as Equitable
Capital, will serve as investment adviser and charge the Separate Account an
advisory fee);
o end the registration of the Separate Account under the 1940 Act;
o operate the Separate Account under the general supervision of a committee made
up of individuals all of whom may be, under the 1940 Act, interested persons
of us or of Equitable or discharge such committee.
SUBSTITUTION OF TRUST SHARES. Although we believe it to be highly unlikely, it
is possible that, in our judgment, one or more of the Portfolios of the Trust
may become unsuitable for investment by the Separate Account because, for
example, of a change in investment policy, or a change in the tax laws, or
because the shares are no longer available for investment. For those or other
reasons, we may seek to substitute the shares of another Portfolio or of an
entirely different mutual fund. Before we can do this, we would obtain the
approval of the SEC, and possibly one or more state insurance departments, to
the extent legally required.
- - --------------------------------------------------------------------------------
SALES AND OTHER
AGREEMENTS
Equitable Variable and Integrity Life Insurance Company, a wholly-owned
subsidiary of Equitable, are the principal underwriters for the Trust pursuant
to a Distribution Agreement. Under the Distribution Agreement, we have entered
into a Sales Agreement with Equitable by which Equitable will distribute our
policies.
Both Equitable Variable and Equitable are registered with the SEC as
broker-dealers under the Securities Exchange Act of 1934 and we are each a
member of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies funded through our Separate Account I and
our other policies funded through our Separate Account FP, which is also a
registered investment company. (Equitable may also be deemed a principal
underwriter for our policies.)
SALES BY AGENTS OF EQUITABLE. We sell The Champion policy through agents who are
licensed by state insurance officials to sell our variable life policies. These
agents are also registered representatives of Equitable.
Under the Sales Agreement, agents receive commissions from Equitable for selling
our policies. We reimburse Equitable for these commissions. We also reimburse
Equitable for other expenses incurred in marketing and selling our policies.
These expenses include agency and district managers' compensation, agents'
training allowance, deferred compensation, insurance benefits of agents and
agency and district managers, and agency clerical and advertising expenses.
- - --------------------------------------------------------------------------------
27
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SALES AND OTHER
AGREEMENTS
(continued)
COMMISSION SCHEDULE. Agents receive the equivalent of up to 50% of the premium
payable in the first policy year. In the second policy year, agents receive up
to 10% of the premium paid for that year. In the third, fourth and fifth policy
years, agents receive up to 8% of the premium paid in each year. In the sixth
through tenth policy years, agents receive up to 5% of the premium paid in each
year. After that, agents receive up to 2% of the premium paid in each year.
Agents with less than three full years of service with Equitable may be paid
differently.
Agents who meet certain production and persistency standards in selling our
policies and Equitable policies will be eligible for added compensation. Agents
who meet certain lifetime production standards will be eligible to receive
increased fees for servicing our policies. Agents also are eligible for added
compensation for servicing our policies when there is no assigned soliciting
agent.
SALES BY BROKERS. We also sell The Champion policy through independent brokers
who are licensed by state insurance officials to sell our variable life
policies. They will also be registered representatives either of Equitable or of
another company registered with the SEC as a broker-dealer under the Securities
Exchange Act of 1934. The commissions for independent brokers will be no more
than those for agents. Commissions will be paid through the registered
broker-dealer.
APPLICATIONS. When an application for The Champion policy is completed, it is
submitted to us. Based on the information in the application and our standards
for issuing insurance and classifying risks, a policy may be issued. If a policy
is not issued, we will refund any premium that has been paid. (Equitable
guarantees the refund.)
JOINT SERVICES AGREEMENT. In addition to acting as distributor for The Champion
policy, Equitable performs certain other sales and administrative duties for us.
Equitable does this pursuant to a written agreement. The agreement is
automatically renewed each year, unless either party terminates.
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life policies. The amounts paid or accrued to Equitable by
us under sales and joint services agreements totalled approximately $249.4
million in 1986, $225.7 million in 1985 and $164.8 million in 1984.
- - --------------------------------------------------------------------------------
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to insurance laws and regulations in every jurisdiction
where we sell our policies. We submit annual reports on our operations and
finances to insurance officials in these jurisdictions. The officials are
responsible for reviewing our reports to be sure we are financially sound and
that we are complying with applicable laws and regulations.
The Champion has been approved in each of the 50 states, Puerto Rico and the
Virgin Islands.
We are also subject to various Federal securities laws and regulations.
- - --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
- - --------------------------------------------------------------------------------
LEGAL MATTERS
The legal validity of the policies described in this prospectus has been passed
on by Herbert P. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C. law firm of Freedman, Levy, Kroll & Simonds has advised
Equitable Variable with respect to certain matters relating to Federal
securities laws.
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28
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FINANCIAL AND
ACTUARIAL EXPERTS
The financial statements of the Separate Account and of Equitable Variable in
this prospectus have been examined by the accounting firm of Deloitte Haskins &
Sells, our independent auditors, to the extent stated in their opinions, and
their opinions on them are part of this prospectus. We have relied on the
opinions of Deloitte Haskins & Sells given upon their authority as experts in
accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is Vice President and Actuary of Equitable Variable and a
Vice President and Actuary of Equitable. His opinion on actuarial matters is
filed as an exhibit to the Registration Statement we filed with the SEC.
- - --------------------------------------------------------------------------------
ADDITIONAL
INFORMATION
We have filed with the SEC a Registration Statement relating to the Separate
Account and the variable life policy described in this prospectus. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain copies of that document from the SEC's main office
in Washington, D.C. You will have to pay a fee for the material.
- - --------------------------------------------------------------------------------
MANAGEMENT
Here is a list of our directors and officers and a brief statement of their
business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Harry Douglas Garber...................... Vice Chairman of the Board, Equitable, since February 1984; prior thereto, Executive
Vice President and Chief Financial Officer. Director, Equitable Investment Corporation
(EIC) and Genesco, Inc. Former Chairman and Chief Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. ................ Executive Vice President and Chief Financial Officer, Equitable, since December 1984;
prior thereto, Partner, Peat, Marwick, Mitchell & Co.
Richard Hampton Jenrette.................. Vice Chairman, Chief Investment Officer and Director, Equitable. Chairman, Donaldson,
Lufkin and Jenrette, Inc., since February 1985; prior thereto, Chairman and Chief
Executive Officer. Director, Equitable Capital Management Corporation (Equitable
Capital) and various other Equitable subsidiaries.
William Thomas McCaffrey.................. Executive Vice President, Equitable, since March 1986; prior thereto, various other
Equitable positions.
Francis Helmut Schott..................... Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. .................... Senior Executive Vice President, Director and Chief Operating Officer, Equitable, since
July 1986; prior thereto, Executive Vice President, Director and Chief Investment
Officer. Chairman, EIC since July 1986; prior thereto, President and Chief Executive
Officer. Director, Equitable Capital and various other Equitable subsidiaries.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Peter Rawlinson Wilde..................... Executive Vice President, Equitable, since July 1984. Director, Integrity Life
Insurance Company (Integrity) and National Integrity Life Insurance Company (National
Integrity). Chairman and Chief Executive Officer, Equitable Variable, from November
1984 to December 1986. Chief Financial Officer, CIGNA Corporation, from April 1983 to
June 1984; prior thereto, Senior Vice President.
Brian Fredrick Wruble..................... Chairman, President and Chief Executive Officer, Equitable Capital. Executive Vice
President, Equitable, since September 1984; prior thereto, various other Equitable
positions.
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
OFFICER -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Wayne Barth........................ Chairman and Chief Executive Officer, Equitable Variable, since December 1986;
President and Chief Operating Officer, from December 1985 to December 1986. Executive
Vice President, Equitable, since June 1985; Senior Vice President since September 1984;
prior thereto, Vice President since April 1984.
Thomas Michael Kirwan..................... President and Chief Operating Officer, Equitable Variable, since December 1986.
Executive Vice President and Chief Financial Officer, EIC, since March 1985; prior
thereto, President, Columbia Group -- CBS, Inc. Director, Equitable Capital and various
other Equitable subidiaries.
Robert Seymour Jones...................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice President,
Equitable, since June 1985; prior thereto, Vice President.
Michael Searle Martin..................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice President,
Equitable, since June 1985; prior thereto, Vice President.
Stanley Julian Rispler.................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice President,
Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger................... Senior Vice President and Actuary, Equitable Variable, since February 1986. Senior Vice
President and Actuary, Equitable; prior thereto Vice President and Actuary.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
James Thomas Liddle, Jr. ................. Senior Vice President and Chief Financial Officer, Equitable Variable, since February
1986. Vice President and Actuary, Equitable.
Richard Marshall Stenson.................. Senior Vice President, Equitable Variable, since December 1981. Senior Vice President,
Equitable, since October 1984; prior thereto, Vice President and Actuary, Integrity.
William Arnold Canfield................... Vice President and Chief Underwriting Officer, Equitable Variable. Vice President,
2 Penn Plaza Equitable.
New York, New York 10121
Franklin Kennedy, III..................... Vice President, Equitable Variable, since August 1981. Senior Vice President, Equitable
1221 Avenue of the Americas Capital since January 1987. Managing Director and Chief Investment Officer, Equitable
New York, New York 10020 Investment Management Corporation, from November 1983 to January 1987. Vice President,
Equitable.
Donald Anthony King....................... Vice President, Equitable Variable, since February 1986. Vice President, Integrity,
1285 Avenue of the Americas since April 1984. Vice President, Equitable, since January 1976. Executive Vice
New York, New York 10020 President, Equitable Capital.
Joseph Oswell North, Jr. ................. Vice President and Actuary, Equitable Variable, since February 1984. Vice President and
2 Penn Plaza Actuary, Equitable, since October 1984; prior thereto, Assistant Vice President and
New York, New York 10121 Actuary, since April 1982.
Stephen Anthony Scarpati.................. Vice President and Controller, Equitable Variable, since June 1986. Vice President,
2 Penn Plaza Equitable, since December 1985. Vice President and Controller, EIC, from November 1984
New York, New York 10121 to December 1985; prior thereto, Division Controller, Colgate-Palmolive Company.
Larry Kenneth Mills....................... Treasurer, Equitable Variable, Integrity and National Integrity, since February 1986.
Vice President and Treasurer, Equitable, since March 1986; prior thereto, Vice
President.
Theodore Edward Plucinski, M.D. .......... Chief Medical Director, Equitable Variable, Integrity and National Integrity. Chief
2 Penn Plaza Medical Director, Equitable since September 1985; prior thereto, Chief Medical
New York, New York 10121 Director, MONY.
Kevin Brian Keefe......................... Secretary, Equitable Variable, Integrity, National Integrity and The Hudson River
Trust, Vice President and Assistant Secretary, Equitable, since June 1986; prior
thereto, Assistant Vice President and Assistant Secretary.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
- - --------------------------------------------------------------------------------
PART 5 -- ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER
VALUES, AND ACCUMULATED PREMIUMS
To help you get a picture of how the key financial elements of our policy work,
we have prepared a series of tables.
The tables show how Death Benefits, Account Values and Cash Surrender Values of
policies with premiums of $300, $500, $1,000 (for policies with face amounts
under $200,000) and $1,000, $2,000, and $4,000 (for policies with face amounts
at least $200,000) could vary over an extended period of time if the divisions
of the Separate account had CONSTANT hypothetical gross annual investment
returns of 0%, 4%, 8% or 12% over the years covered by each table. The Death
Benefits, Account Values and Cash Surrender Values would differ from those shown
in the tables if the annual investment returns did not remain absolutely
constant. Thus, the figures would be different if the return AVERAGED 0%, 4%, 8%
or 12% over a period of years but went above or below those figures in
individual policy years. The Death Benefits, Account Values and Cash Surrender
Values would also differ, depending on the investment allocations made to the
divisions, if the actual rates of investment return averaged 0%, 4%, 8% or 12%,
but went above or below those figures for individual divisions. The tables are
for standard policies. The difference between the Account Value and the Cash
Surrender Value in the first ten years is the surrender charge.
The Account Values and Cash Surrender Values in the tables are related to the
annual premiums shown in "Premiums -- Illustration of Premium Rates" in Part 3.
The amounts of Death Benefits, Account Values and Cash Surrender Values shown in
the tables for the end of each policy year take into account a daily charge
against each division of the Separate Account that is equivalent to an annual
charge of 0.75% at the beginning of each year. This charge is the 0.50% charge
against the Separate Account for mortality and expense risks and a 0.25% charge
for investment advisory services. The effect of these adjustments is that on a
0% actual rate of return the net rate of return would be -0.75%, on 4% it would
be 3.22%, on 8% it would be 7.19% and on 12% it would be 11.16%.
The hypothetical returns shown in the tables do not reflect any charges for
Trust expenses in addition to the 0.25% investment advisory fee charge, because
the divisions of the Separate Account will generally be reimbursed for such
expenses. See "The Trust's Investment Adviser" in Part 2.
The tables reflect the fact that we do not currently charge the divisions of the
Separate Account for Federal income tax. However, if we do make such a charge in
the future, it would take a higher rate of return to produce after-tax returns
of 0%, 4%, 8% or 12% than it does now.
The second and third columns of each table show what would happen if an amount
equal to the total premium were invested to earn interest, after taxes, of 4% or
5% compounded annually. These tables show that if a policy is returned in its
very early years for payment of its Cash Surrender Value, the Cash Surrender
Value will be low in comparison to the premium accumulated with interest. This
means that the cost of owning your policy for a relatively short time will be
high.
If you request, we will furnish you with a comparable illustration based on the
proposed insured's sex and age and an initial face amount or premium amount of
your choice. A specific illustration will assume that the insured is a standard
risk and that the premium will be paid on an annual basis. In addition, if you
do purchase a policy, we will deliver a specific illustration that reflects how
the premium will actually be paid and to what risk class the insured has been
assigned.
We have also prepared special illustrations showing the effects of policy loans
on a planned basis. These are available on request.
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF ILLUSTRATIONS
Page
----
$ 300 annual premium Male Age 10 33
$ 500 annual premium Male Age 25 34
$1,000 annual premium Male Age 40 35
$1,000 annual premium Male Age 10 36
$2,000 annual premium Male Age 25 37
$4,000 annual premium Male Age 40 38
The first three illustrations show values based on policies with face amounts
under $200,000 and the second three for policies with face amounts at least
$200,000.
- - --------------------------------------------------------------------------------
32
<PAGE>
THE CHAMPION
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $52,739
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 10 ANNUAL PREMIUM $300(2)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $52,739 $52,739 $ 52,761 $ 52,793
2 636 646 52,739 52,739 52,838 52,985
3 974 993 52,739 52,739 52,968 53,319
4 1,325 1,358 52,739 52,739 53,152 53,796
5 1,690 1,741 52,739 52,739 53,387 54,420
6 2,070 2,143 52,739 52,739 53,673 55,193
7 2,464 2,565 52,739 52,739 54,006 56,118
8 2,875 3,008 52,739 52,739 54,388 57,199
9 3,302 3,473 52,739 52,739 54,816 58,441
10 3,746 3,962 52,739 52,739 55,291 59,849
11 4,208 4,475 52,739 52,739 55,811 61,431
12 4,688 5,014 52,739 52,739 56,377 63,197
13 5,188 5,580 52,739 52,739 56,991 65,155
14 5,707 6,174 52,739 52,739 57,651 67,316
15 6,247 6,797 52,739 52,739 58,360 69,694
16 6,809 7,452 52,739 52,739 59,117 72,298
17 7,394 8,140 52,739 52,739 59,924 75,144
18 8,001 8,862 52,739 52,739 60,782 78,245
19 8,633 9,620 52,739 52,739 61,690 81,617
20 9,291 10,416 52,739 52,739 62,651 85,275
55 (Age 65) 59,642 85,905 52,739 52,739 135,015 640,103
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- - ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- - ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 38 $ 41 $ 44 $ 47 $ 0 $ 0 $ 2 $ 5
232 246 261 275 153 168 183 197
419 453 487 523 322 355 390 426
599 659 723 792 485 545 609 677
769 864 967 1,081 639 734 837 950
929 1,066 1,219 1,392 789 926 1,079 1,252
1,080 1,266 1,480 1,728 935 1,120 1,335 1,583
1,223 1,464 1,751 2,091 1,098 1,339 1,626 1,966
1,360 1,663 2,035 2,488 1,289 1,593 1,965 2,418
1,494 1,866 2,335 2,922 1,494 1,866 2,335 2,922
1,625 2,074 2,654 3,401 1,625 2,074 2,654 3,401
1,757 2,289 2,995 3,931 1,757 2,289 2,995 3,931
1,891 2,513 3,361 4,518 1,891 2,513 3,361 4,518
2,028 2,747 3,755 5,172 2,028 2,747 3,755 5,172
2,165 2,990 4,178 5,896 2,165 2,990 4,178 5,896
2,307 3,245 4,635 6,702 2,307 3,245 4,635 6,702
2,450 3,510 5,126 7,597 2,450 3,510 5,126 7,597
2,596 3,787 5,653 8,591 2,596 3,787 5,653 8,591
2,742 4,074 6,217 9,692 2,742 4,074 6,217 9,692
2,889 4,371 6,822 10,912 2,889 4,371 6,822 10,912
5,619 17,920 74,624 362,630 5,619 17,920 74,624 362,630
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $77 quarterly or $27 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
33
<PAGE>
THE CHAMPION
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $53,427
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 25 ANNUAL PREMIUM $500(2)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $53,427 $53,427 $53,471 $53,537
2 1,061 1,076 53,427 53,427 53,570 53,787
3 1,623 1,655 53,427 53,427 53,725 54,184
4 2,208 2,263 53,427 53,427 53,936 54,734
5 2,816 2,901 53,427 53,427 54,202 55,444
6 3,449 3,571 53,427 53,427 54,524 56,322
7 4,107 4,275 53,427 53,427 54,902 57,374
8 4,791 5,013 53,427 53,427 55,337 58,608
9 5,503 5,789 53,427 53,427 55,826 60,031
10 6,243 6,603 53,427 53,427 56,372 61,653
11 7,013 7,459 53,427 53,427 56,974 63,481
12 7,813 8,356 53,427 53,427 57,631 65,526
13 8,646 9,299 53,427 53,427 58,344 67,797
14 9,512 10,289 53,427 53,427 59,112 70,307
15 10,412 11,329 53,427 53,427 59,936 73,066
16 11,349 12,420 53,427 53,427 60,815 76,087
17 12,323 13,566 53,427 53,427 61,750 79,384
18 13,336 14,770 53,427 53,427 62,741 82,971
19 14,389 16,033 53,427 53,427 63,788 86,864
20 15,485 17,360 53,427 53,427 64,890 91,079
40 (Age 65) 49,413 63,420 53,427 53,427 99,610 283,063
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- - ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- - ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 160 $ 170 $ 180 $ 190 $ 56 $ 66 $ 76 $ 87
481 514 549 583 343 376 411 446
801 871 945 1,022 628 698 772 849
1,121 1,241 1,370 1,510 918 1,039 1,168 1,307
1,439 1,623 1,827 2,052 1,209 1,393 1,596 1,821
1,755 2,017 2,315 2,652 1,507 1,769 2,067 2,404
2,068 2,422 2,836 3,317 1,810 2,165 2,578 3,059
2,377 2,839 3,392 4,052 2,156 2,618 3,171 3,831
2,682 3,266 3,984 4,863 2,558 3,142 3,860 4,740
2,982 3,704 4,615 5,760 2,982 3,704 4,615 5,760
3,277 4,151 5,284 6,748 3,277 4,151 5,284 6,748
3,566 4,609 5,995 7,838 3,566 4,609 5,995 7,838
3,848 5,075 6,749 9,038 3,848 5,075 6,749 9,038
4,124 5,549 7,548 10,358 4,124 5,549 7,548 10,358
4,392 6,031 8,394 11,811 4,392 6,031 8,394 11,811
4,651 6,520 9,288 13,405 4,651 6,520 9,288 13,405
4,902 7,016 10,233 15,158 4,902 7,016 10,233 15,158
5,144 7,517 11,231 17,083 5,144 7,517 11,231 17,083
5,378 8,025 12,286 19,196 5,378 8,025 12,286 19,196
5,603 8,539 13,399 21,516 5,603 8,539 13,399 21,516
8,079 19,251 52,618 157,225 8,079 19,251 52,618 157,225
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $129 quarterly or $44 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
34
<PAGE>
THE CHAMPION
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $57,041
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 40 ANNUAL PREMIUM $1,000(2)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $57,041 $57,041 $57,111 $ 57,214
2 2,122 2,153 57,041 57,041 57,250 57,566
3 3,246 3,310 57,041 57,041 57,459 58,103
4 4,416 4,526 57,041 57,041 57,735 58,828
5 5,633 5,802 57,041 57,041 58,078 59,747
6 6,898 7,142 57,041 57,041 58,486 60,866
7 8,214 8,549 57,041 57,041 58,961 62,194
8 9,583 10,027 57,041 57,041 59,500 63,737
9 11,006 11,578 57,041 57,041 60,104 65,505
10 12,486 13,207 57,041 57,041 60,772 67,506
11 14,026 14,917 57,041 57,041 61,503 69,752
12 15,627 16,713 57,041 57,041 62,299 72,253
13 17,292 18,599 57,041 57,041 63,158 75,021
14 19,024 20,579 57,041 57,041 64,080 78,070
15 20,825 22,658 57,041 57,041 65,066 81,414
16 22,697 24,840 57,041 57,041 66,115 85,066
17 24,645 27,132 57,041 57,041 67,227 89,045
18 26,671 29,539 57,041 57,041 68,402 93,366
19 28,778 32,066 57,041 57,041 69,641 98,048
20 30,969 34,719 57,041 57,041 70,944 103,113
25 (Age 65) 43,312 50,114 57,041 57,041 78,433 134,982
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- - ------------------------------------------------------ -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- - ------ ------- ------- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 521 $ 549 $ 577 $ 605 $ 305 $ 333 $ 361 $ 389
1,196 1,280 1,366 1,455 908 992 1,078 1,167
1,854 2,022 2,199 2,386 1,494 1,662 1,839 2,026
2,493 2,773 3,076 3,403 2,070 2,350 2,653 2,980
3,115 3,535 4,001 4,518 2,634 3,055 3,521 4,038
3,717 4,305 4,975 5,738 3,198 3,786 4,457 5,220
4,303 5,085 6,002 7,075 3,765 4,548 5,465 6,538
4,870 5,875 7,084 8,538 4,409 5,414 6,623 8,077
5,419 6,674 8,225 10,140 5,160 6,415 7,966 9,881
5,951 7,481 9,426 11,894 5,951 7,481 9,426 11,894
6,464 8,297 10,690 13,814 6,464 8,297 10,690 13,814
6,958 9,119 12,019 15,912 6,958 9,119 12,019 15,912
7,430 9,944 13,413 18,204 7,430 9,944 13,413 18,204
7,880 10,772 14,874 20,704 7,880 10,772 14,874 20,704
8,305 11,598 16,402 23,429 8,305 11,598 16,402 23,429
8,706 12,424 18,000 26,398 8,706 12,424 18,000 26,398
9,084 13,247 19,671 29,633 9,084 13,247 19,671 29,633
9,440 14,069 21,419 33,157 9,440 14,069 21,419 33,157
9,773 14,889 23,247 36,997 9,773 14,889 23,247 36,997
10,087 15,708 25,159 41,182 10,087 15,708 25,159 41,182
11,304 19,694 36,009 68,254 11,304 19,694 36,009 68,254
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$509 semi-annually, $257 quarterly or $87 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
35
<PAGE>
THE CHAMPION
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $200,000
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 10 ANNUAL PREMIUM $1,000(2)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $200,000 $200,000 $200,218 $ 200,542
2 2,122 2,153 200,000 200,000 200,642 201,612
3 3,246 3,310 200,000 200,000 201,268 203,226
4 4,416 4,526 200,000 200,000 202,094 205,398
5 5,633 5,802 200,000 200,000 203,114 208,138
6 6,898 7,142 200,000 200,000 204,324 211,458
7 8,214 8,549 200,000 200,000 205,718 215,368
8 9,583 10,027 200,000 200,000 207,292 219,888
9 11,006 11,578 200,000 200,000 209,042 225,034
10 12,486 13,207 200,000 200,000 210,966 230,830
11 14,026 14,917 200,000 200,000 213,066 237,310
12 15,627 16,713 200,000 200,000 215,340 244,506
13 17,292 18,599 200,000 200,000 217,792 252,456
14 19,024 20,579 200,000 200,000 220,422 261,204
15 20,825 22,658 200,000 200,000 223,236 270,796
16 22,697 24,840 200,000 200,000 226,234 281,280
17 24,645 27,132 200,000 200,000 229,420 292,710
18 26,671 29,539 200,000 200,000 232,798 305,142
19 28,778 32,066 200,000 200,000 236,370 318,636
20 30,969 34,719 200,000 200,000 240,140 333,254
55 (Age 65) 198,805 286,348 200,000 200,000 520,190 2,527,266
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- - --------------------------------------------------------- ---------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- - ------ ------- -------- ---------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 620 $ 650 $ 680 $ 712 $ 404 $ 434 $ 464 $ 496
1,328 1,418 1,512 1,608 1,040 1,130 1,224 1,320
2,016 2,196 2,386 2,586 1,656 1,836 2,026 2,226
2,668 2,968 3,292 3,642 2,246 2,546 2,870 3,220
3,288 3,736 4,232 4,784 2,808 3,256 3,752 4,304
3,872 4,494 5,202 6,012 3,354 3,976 4,684 5,494
4,420 5,244 6,208 7,340 3,882 4,706 5,670 6,802
4,938 5,986 7,250 8,776 4,478 5,526 6,790 8,316
5,434 6,734 8,346 10,342 5,174 6,474 8,086 10,082
5,920 7,496 9,504 12,064 5,920 7,496 9,504 12,064
6,400 8,272 10,732 13,956 6,400 8,272 10,732 13,956
6,880 9,078 12,046 16,050 6,880 9,078 12,046 16,050
7,366 9,918 13,456 18,372 7,366 9,918 13,456 18,372
7,862 10,792 14,974 20,950 7,862 10,792 14,974 20,950
8,364 11,704 16,606 23,812 8,364 11,704 16,606 23,812
8,880 12,662 18,364 26,998 8,880 12,662 18,364 26,998
9,404 13,658 20,254 30,532 9,404 13,658 20,254 30,532
9,936 14,696 22,284 34,456 9,936 14,696 22,284 34,456
10,468 15,772 24,458 38,804 10,468 15,772 24,458 38,804
11,004 16,886 26,784 43,618 11,004 16,886 26,784 43,618
20,922 67,682 287,900 1,432,354 20,922 67,682 287,900 1,432,354
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$509 semi-annually, $257 quarterly or $87 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
36
<PAGE>
THE CHAMPION
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $231,133
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 25 ANNUAL PREMIUM $2,000(2)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 2,080 $ 2,100 $231,133 $231,133 $231,419 $ 231,842
2 4,243 4,305 231,133 231,133 231,941 233,164
3 6,493 6,620 231,133 231,133 232,702 235,129
4 8,833 9,051 231,133 231,133 233,703 237,764
5 11,266 11,604 231,133 231,133 234,944 241,099
6 13,797 14,284 231,133 231,133 236,425 245,165
7 16,428 17,098 231,133 231,133 238,150 249,993
8 19,166 20,053 231,133 231,133 240,114 255,616
9 22,012 23,156 231,133 231,133 242,319 262,072
10 24,973 26,414 231,133 231,133 244,765 269,394
11 28,052 29,834 231,133 231,133 247,450 277,627
12 31,254 33,426 231,133 231,133 250,377 286,810
13 34,584 37,197 231,133 231,133 253,543 296,989
14 38,047 41,157 231,133 231,133 256,950 308,213
15 41,649 45,315 231,133 231,133 260,595 320,535
16 45,395 49,681 231,133 231,133 264,480 334,007
17 49,291 54,265 231,133 231,133 268,606 348,694
18 53,342 59,078 231,133 231,133 272,972 364,656
19 57,556 64,132 231,133 231,133 277,581 381,965
20 61,938 69,439 231,133 231,133 282,432 400,694
40 (Age 65) 197,653 253,680 231,133 231,133 434,432 1,250,452
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- - ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- - ------ ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,238 $ 1,305 $ 1,370 $ 1,437 $ 797 $ 864 $ 929 $ 996
2,595 2,782 2,976 3,175 2,008 2,195 2,389 2,588
3,952 4,317 4,703 5,112 3,217 3,582 3,968 4,377
5,304 5,905 6,559 7,266 4,442 5,043 5,697 6,404
6,649 7,546 8,547 9,661 5,669 6,566 7,567 8,681
7,985 9,240 10,673 12,312 6,927 8,182 9,615 11,253
9,305 10,978 12,941 15,245 8,207 9,880 11,843 14,147
10,613 12,767 15,365 18,492 9,672 11,827 14,425 17,552
11,903 14,602 17,945 22,075 11,374 14,073 17,415 21,546
13,174 16,484 20,691 26,037 13,174 16,484 20,691 26,037
14,422 18,407 23,607 30,400 14,422 18,407 23,607 30,400
15,645 20,372 26,707 35,213 15,645 20,372 26,707 35,213
16,842 22,373 29,994 40,512 16,842 22,373 29,994 40,512
18,007 24,412 33,477 46,344 18,007 24,412 33,477 46,344
19,140 26,480 37,159 52,753 19,140 26,480 37,159 52,753
20,238 28,581 41,058 59,803 20,238 28,581 41,058 59,803
21,296 30,708 45,172 67,541 21,296 30,708 45,172 67,541
22,320 32,864 49,524 76,045 22,320 32,864 49,524 76,045
23,307 35,044 54,117 85,378 23,307 35,044 54,117 85,378
24,257 37,251 58,968 95,624 24,257 37,251 58,968 95,624
34,646 83,235 229,933 695,234 34,646 83,235 229,933 695,234
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$1,019 semi-annually, $515 quarterly or $173 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
37
<PAGE>
THE CHAMPION
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
VARIABLE WHOLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $237,411
(GUARANTEED MINIMUM DEATH BENEFIT) MALE AGE 40 ANNUAL PREMIUM $4,000(2)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
DEATH BENEFIT(1)
PREMIUMS(2) ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- ------------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 4,160 $ 4,200 $237,411 $237,411 $237,757 $238,272
2 8,486 8,610 237,411 237,411 238,393 239,882
3 12,986 13,241 237,411 237,411 239,315 242,258
4 17,665 18,103 237,411 237,411 240,516 245,423
5 22,532 23,208 237,411 237,411 241,995 249,400
6 27,593 28,568 237,411 237,411 243,747 254,217
7 32,857 34,196 237,411 237,411 245,772 259,903
8 38,331 40,106 237,411 237,411 248,066 266,491
9 44,024 46,312 237,411 237,411 250,627 274,019
10 49,945 52,827 237,411 237,411 253,455 282,526
11 56,103 59,669 237,411 237,411 256,548 292,055
12 62,507 66,852 237,411 237,411 259,905 302,656
13 69,168 74,395 237,411 237,411 263,526 314,379
14 76,094 82,314 237,411 237,411 267,410 327,278
15 83,298 90,630 237,411 237,411 271,557 341,413
16 90,790 99,361 237,411 237,411 275,968 356,847
17 98,582 108,530 237,411 237,411 280,643 373,646
18 106,685 118,156 237,411 237,411 285,581 391,884
19 115,112 128,264 237,411 237,411 290,783 411,639
20 123,877 138,877 237,411 237,411 296,250 432,997
25 (Age 65) 173,247 200,454 237,411 237,411 327,643 567,305
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(1) CASH SURRENDER VALUE(1)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
- - ------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
- - ------ ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,727 $ 2,865 $ 3,003 $ 3,143 $ 1,837 $ 1,975 $ 2,112 $ 2,253
5,500 5,894 6,298 6,713 4,313 4,707 5,111 5,526
8,202 8,964 9,771 10,624 6,716 7,478 8,285 9,137
10,830 12,079 13,435 14,904 9,088 10,336 11,692 13,162
13,382 15,232 17,295 19,588 11,402 13,252 15,315 17,608
15,856 18,420 21,357 24,714 13,717 16,281 19,218 22,575
18,259 21,651 25,642 30,331 16,041 19,434 23,425 28,114
20,590 24,921 30,160 36,480 18,688 23,019 28,259 34,578
22,846 28,230 34,918 43,215 21,777 27,162 33,850 42,147
25,030 31,575 39,932 50,589 25,030 31,575 39,932 50,589
27,133 34,951 45,207 58,654 27,133 34,951 45,207 58,654
29,161 38,353 50,753 67,476 29,161 38,353 50,753 67,476
31,098 41,772 56,572 77,111 31,098 41,772 56,572 77,111
32,943 45,198 62,671 87,621 32,943 45,198 62,671 87,621
34,685 48,619 69,048 99,076 34,685 48,619 69,048 99,076
36,333 52,040 75,724 111,561 36,333 52,040 75,724 111,561
37,878 55,449 82,697 125,160 37,878 55,449 82,697 125,160
39,336 58,854 89,995 139,979 39,336 58,854 89,995 139,979
40,701 62,249 97,623 156,126 40,701 62,249 97,623 156,126
41,986 65,639 105,607 173,720 41,986 65,639 105,607 173,720
46,957 82,139 150,910 287,568 46,957 82,139 150,910 287,568
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE
ILLUSTRATION TABLE ABOVE:]
<FN>
(1) Assumes no policy loan has been made.
(2) If premiums are paid more frequently than annually the payments would be
$2,036 semi-annually, $1,027 quarterly or $345 monthly. The Death Benefits,
Account Values and Cash Surrender Values shown would not be affected by the
more frequent premium payments, nor would such amounts be affected by the
insured's risk classification.
</FN>
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
38
<PAGE>
[EDGARIZER'S NOTE:]
[THE CHAMPION PROSPECTUS ENDS HERE; THE SP-1 PROSPECTUS FOLLOWS]
<PAGE>
- - --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
LEVEL FACE AMOUNT
[SP-1 LOGO]
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO - 1987 VERSION]
- - --------------------------------------------------------------------------------
VM 371 Prospectus Dated September 30, 1987
- - --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST
PRINCIPAL OFFICE LOCATED AT:
787 Seventh Avenue, New York, New York 10019
- - --------------------------------------------------------------------------------
HRT 102 PROSPECTUS DATED SEPTEMBER 30, 1987
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
LEVEL FACE AMOUNT
[VARIABLE LIFE INSURANCE LOGO]
[SP LOGO]
- - --------------------------------------------------------------------------------
PROSPECTUS DATED
SEPTEMBER 30, 1987
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO - 1987 VERSION]
- - --------------------------------------------------------------------------------
This prospectus describes a variable life insurance policy being offered by
Equitable Variable. Your net premium is invested among one or more of the
Divisions of Equitable Variable's Separate Account I.
Each policy owner decides in which Divisions the premium for his or her policy
will be put, after certain deductions have been made.
The Separate Account has the following Divisions:
o Aggressive Stock
o High Yield
o Common Stock
o Balanced
o Money Market
The assets in each Division are invested in shares of corresponding Portfolios
of The Hudson River Trust. The Trust is the successor to The Hudson River Fund,
Inc. pursuant to an Agreement and Plan of Reorganization dated September 30,
1987.
The prospectus for the Trust, which is attached to this prospectus, describes
the investment objectives and policies of each of the Trust Portfolios, as well
as the risks relating to investments in the Trust.
The Death Benefit, Account Value, and Cash Surrender Value of a policy will vary
up or down depending on investment experience of the Divisions, which in turn
depends on the investment performance of the corresponding Portfolios. While
there is no guaranteed minimum Account Value or Cash Surrender Value for a
policy, Equitable Variable guarantees that a policy's Death Benefit will never
be less than its face amount as long as there is no outstanding policy loan.
A policy is serviced through a regional Life Insurance Center. This is the
Administrative Office shown on page 3 of a policy when it is issued. Equitable
Variable's Home Office is 787 Seventh Avenue, New York, New York. Telephone
(212) 714-4643.
REPLACING EXISTING INSURANCE WITH THE POLICY DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE POLICY BEING OFFERED AND KEEP IT
FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS
FOR THE HUDSON RIVER TRUST.
- - --------------------------------------------------------------------------------
VM-371
Copyright 1987 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
- - --------------------------------------------------------------------------------
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
A POLICY'S BENEFICIARY.
WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR TO OR COMPARABLE TO A
MUTUAL FUND.
Because we want you to have as much information as possible about our variable
life policy before you buy one, we urge you to examine this prospectus
carefully, and we also urge you to read the attached Trust prospectus. Unless
otherwise stated, this prospectus assumes that there is no outstanding policy
loan.
The first Part of this prospectus contains a summary that will introduce us and
our variable life policy to you. You will find more detailed information in Part
2 and financial statements in Part 3.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
PART 1 -- SUMMARY
- - --------------------------------------------------------------------------------
THE ISSUING COMPANY
We are Equitable Variable Life Insurance Company (Equitable Variable) a New York
stock life insurance company.
- - --------------------------------------------------------------------------------
OUR PARENT, EQUITABLE
We are a wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States (Equitable), a New York mutual life insurance company.
- - --------------------------------------------------------------------------------
THE POLICY
By this prospectus we are offering a single premium variable life insurance
policy with a level face amount. This is SP-1(TM), Policy Number 85-09.
We also offer, through separate prospectuses, three periodic premium variable
life policies and a flexible premium variable life policy. The net premiums for
SP-1 are invested in our Separate Account I (Separate Account), which in turn
buys shares in The Hudson River Trust (Trust).
- - --------------------------------------------------------------------------------
WHY VARIABLE LIFE VARIES
This variable life policy is first and foremost a whole life insurance policy
with Death Benefits, Account Values, Cash Surrender Values and loan privileges
traditionally associated with whole life insurance. It is called "variable"
because, unlike the fixed death benefits of an ordinary single premium whole
life policy, the Death Benefits, Account Values and Cash Surrender Values may
increase or decrease. They do so because your net premium is put into one or
more of the Divisions of our Separate Account. The assets in each Division buy
shares in a corresponding Trust Portfolio. The Separate Account's investment
experience will vary over the years reflecting the investment performance of the
Trust's Portfolios in which it invests.
When the Separate Account's net investment return is greater than the assumed
investment return of 4%, additional amounts of paid-up life insurance are
purchased. This results in additional Death Benefit, Account Value and Cash
Surrender Value. If the Separate Account's net investment return is less than
the assumed investment return, this additional paid-up life insurance may be
lost, resulting in smaller Account Value, Cash Surrender Value and Death
Benefit, but the Death Benefit will never be less than the guaranteed minimum.
- - --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT, ITS
INVESTMENTS AND ITS INVESTMENT
EXPERIENCE
Our Separate Account is registered with the Securities and Exchange Commission
(SEC) under the Investment Company Act of 1940 (1940 Act) as a unit investment
trust, which is a type of investment company. For state law purposes the
Separate Account is treated as part of us.
After making certain deductions from premiums, we put the net premium in one or
more of the Divisions of the Separate Account. You decide in which Divisions
your policy's net premium will be put. The Separate Account has the following
Divisions:
o Aggressive Stock
o High Yield
o Common Stock
o Balanced
o Money Market
Each Division invests in shares of a corresponding investment portfolio
(Portfolio) of the Trust. Each Portfolio has a different investment policy.
Throughout this prospectus we will discuss the investment experience of the
Separate Account and the Divisions. On these occasions you should keep in mind
that THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT AND THE DIVISIONS DEPENDS
ON THE INVESTMENT PERFORMANCE OF THE TRUST AND THE CORRESPONDING PORTFOLIOS.
- - --------------------------------------------------------------------------------
2
<PAGE>
- - --------------------------------------------------------------------------------
THE TRUST
The Hudson River Trust is a "series" type of mutual fund registered with the SEC
under the 1940 Act as an open-end diversified management investment company. In
addition to the Portfolios available for investment by Divisions of the Separate
Account, the Trust has a Global Portfolio which currently is not available. The
Trust does not impose a sales charge.
The Trust serves as an investment medium for variable life policies issued by
us, and by insurers affiliated or unaffiliated with Equitable. We are currently
in control of the Trust; however, purchasers of each of these contracts will
also have voting privileges in the Trust. See YOUR VOTING PRIVILEGES.
For a full description of the Trust, including the investment policies and
objectives of the Portfolios, see its prospectus which is attached to this
prospectus and its Statement of Additional Information referred to therein.
- - --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT ADVISER
The Trust is advised by Equitable Capital Management Corporation (Equitable
Capital), a wholly-owned subsidiary of Equitable. Equitable Capital is
registered with the SEC as an investment adviser under the Investment Advisers
Act of 1940. The Trust pays advisory fees to Equitable Capital based on maximum
annual rates of between 0.40% and 0.55% of the average daily value of the
aggregate net assets of each Portfolio. However, we credit the values of our
SP-1 policies to offset completely the effect on such values of the portion of
the Trust's advisory fees which exceeds a 0.25% annual rate.
- - --------------------------------------------------------------------------------
DEATH BENEFITS
The Death Benefit under the policy can go up or down depending on the investment
experience of the Division or Divisions into which you choose to put your net
premium. The guaranteed minimum Death Benefit is the face amount of the policy
regardless of the investment experience of the Divisions. The Death Benefit is
the guaranteed minimum Death Benefit, plus the sum (if positive) of the variable
adjustment amounts (determined annually) in the Divisions in which you have
Account Value.
However, if the Account Value at the date of death, considered as a single
premium, can buy more Death Benefit, then the Death Benefit will be this higher
amount.
See THE VARIABLE ADJUSTMENT AMOUNT, THE GUARANTEED MINIMUM DEATH BENEFIT, and
DEATH BENEFIT BASED ON ACCOUNT VALUE in Part 2.
- - --------------------------------------------------------------------------------
ACCOUNT VALUE
Our policy is a whole life policy and it will have both an Account Value and a
Cash Surrender Value. The Account Value of a policy may increase or decrease
daily to reflect the investment experience of the Divisions in which your policy
participates. The Account Value is your net single premium, minus the cost of
insurance and the Separate Account asset charges, plus or minus investment
experience. Unlike the Death Benefit, which has a guaranteed minimum, we do not
guarantee a minimum amount of Account Value. You will bear the entire market
risk for Account Value.
You can request that all or part of your Account Value be transferred between
the Divisions. See YOU CAN TRANSFER ACCOUNT VALUE BETWEEN DIVISIONS in Part 2.
- - --------------------------------------------------------------------------------
3
<PAGE>
- - --------------------------------------------------------------------------------
CASH SURRENDER VALUE
Our policy also has a Cash Surrender Value. The Cash Surrender Value will be
less than the Account Value during the first ten policy years, and will equal
the Account Value thereafter. The difference between the Cash Surrender Value
and the Account Value is considered a contingent deferred sales load. Any
contingent deferred sales load will not be more than 9% of your single premium.
The Cash Surrender Value is not guaranteed.
See CONTINGENT DEFERRED SALES LOAD in Part 2.
- - --------------------------------------------------------------------------------
COMMISSIONS
The agent or broker who sells you one of our single premium policies will
receive a commission for the sale equivalent to a maximum of 3% of the single
premium that is payable. (You do not pay any sales charge for shares of the
Trust purchased by the Separate Account). The agent or broker will not receive
commissions in later policy years.
- - --------------------------------------------------------------------------------
CHARGES AGAINST PREMIUM
Your total premium after deduction for state premium taxes and a $200
administrative expense charge is put into our Separate Account. The
administrative charge is used to pay administrative expenses.
- - --------------------------------------------------------------------------------
CHARGES AGAINST THE
SEPARATE ACCOUNT
The amount in the Divisions credited to your policy is decreased by the cost of
your insurance protection. Also, the investment experience of the Separate
Account reflects a daily charge we make at an effective annual rate of 0.50% of
the value of the assets of the Separate Account for certain mortality and
expense risks.
Any charges against the Divisions will have an impact on whether the Divisions
earn more than the assumed rate of 4% and whether your policy's Death Benefit
increases above the guaranteed minimum.
For more information on the cost of insurance, see HOW WE SUPPORT THE OPERATIONS
OF A POLICY in Part 2.
- - --------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES LOAD
We charge a contingent deferred sales load if you surrender your policy before
its 10th anniversary. The charge will be a percentage of the Account Value which
will vary by issue age and sex. The rate will never be more than 9% of the
Account Value and will diminish to zero over the first 10 policy years. In any
event the rate will never be more than 9% of your single premium.
This charge affects your Cash Surrender Value and the amount available for
policy loans. It does not affect Account Value transfers, Separate Account
investment experience or Death Benefits.
See CONTINGENT DEFERRED SALES LOAD in Part 2.
- - --------------------------------------------------------------------------------
POLICY LOANS
As a policy owner, you may borrow up to 90% of your policy's Cash Surrender
Value at 5% interest but borrowed amounts are transferred out of the Divisions
and, therefore, not affected by investment experience. We will credit the
assumed interest rate of 4% on the borrowed amounts.
See TAKING A POLICY LOAN in Part 2.
- - --------------------------------------------------------------------------------
4
<PAGE>
- - --------------------------------------------------------------------------------
PREMIUM
You may choose to purchase a policy based on a single premium or an initial face
amount. The size of the initial face amount depends on the single premium, and
the insured's age and sex. The minimum premium for this policy is $2,500.
- - --------------------------------------------------------------------------------
CANCELLATION AND
EXCHANGE RIGHTS
You have a limited right to return your policy for cancellation and a full
refund of premium paid. Your request must be postmarked by the latest of
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Also, within 24 months of a policy's issue date, it may be exchanged for a fixed
single premium whole life insurance policy on the life of the insured without
submitting proof of insurability.
- - --------------------------------------------------------------------------------
INCOME TAXES
Any Death Benefit paid under our policy will be fully excludable from the gross
income of the beneficiary for Federal income tax purposes.
We may, in the future, charge the Divisions for any of our income taxes
attributable to the Separate Account.
See THE IMPACT OF TAXES in Part 2.
- - --------------------------------------------------------------------------------
MORE INFORMATION
For further information, including illustrations of how the investment
experience of the Separate Account Divisions and the investment performance of
the Trust could cause Death Benefits, Account Values and Cash Surrender Values
to vary, please see Part 2 of this prospectus and the Trust's current
prospectus. Our financial statements are in Part 3 of this prospectus. The
Trust's prospectus contains Condensed Financial Information for the Trust and
its Statement of Additional Information contains its financial statements.
- - --------------------------------------------------------------------------------
CONDENSED FINANCIAL
INFORMATION
SEPARATE ACCOUNT I
The tables below show the actual net returns of the Common Stock and Money
Market Divisions of our Separate Account as if the Reorganization discussed
under GENERAL INFORMATION -- PREDECESSORS OF THE TRUST in Part 2 had always been
in effect. The tables show the actual net returns of the predecessors of the
Common Stocks and Money Market Divisions operating as management investment
companies prior to the Reorganization. The same results would have been achieved
if the Separate Account had operated as a unit investment trust investing in The
Hudson River Trust, for all the periods shown, the operations of the Trust
having been as currently reported in the Trust's separate Prospectus and
Statement of Additional Information. The net returns for each Division for the
periods shown assume the Common Stock Division and the Money Market Division
would have received initial policy premium allocations on January 13, 1976 and
August 21, 1981, respectively, the dates on which the predecessors of these
Divisions first received premium allocations under variable life policies. The
tables break the net return into its component parts.
When you examine the tables, remember that the percentages apply to a policy
with its policy year starting on the first day of the periods shown and apply to
a policy that would have been in force throughout the periods shown. Because
they are determined each December 31, the percentages do not reflect the average
net assets in the Divisions during those periods. To get a more complete picture
of the Separate Account and its Divisions you may want to refer to the financial
statements and related notes in the Statement of Additional Information for The
Hudson River Trust.
- - --------------------------------------------------------------------------------
5
<PAGE>
- - --------------------------------------------------------------------------------
COMMON STOCK DIVISION
<TABLE>
<CAPTION>
January 13,
Year Ended December 31, 1976 to
----------------------------------------------------------------------------------------------- December 31,
1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976(a)(b)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 1.55 % 2.92 % 3.22 % 2.65 % 4.64 % 4.02 % 4.35 % 3.91 % 4.06 % 3.49 % 2.63 %
Net realized
and
unrealized
gain (loss)
on invest-
ments 16.04 % 30.91 % (4.68)% 24.06 % 13.58 % (9.40)% 46.48 % 26.56 % 4.72 % (12.26)% 7.00 %
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Gross
Return 17.59 % 33.83 % (1.46)% 26.71 % 18.22 % (5.38)% 50.83 % 30.47 % 8.78 % (8.77)% 9.63 %
Expense
charges(c) (.59)% (.74)% (.74)% (.94)% (.95)% (.70)% (1.13)% (.98)% (.81)% (.69)% (.77)%
----- ----- ---- ----- ----- ---- ----- ----- ---- ----- ----
Net Return 17.00 % 33.09 % (2.20)% 25.77 % 17.27 % (6.08)% 49.70 % 29.49 % 7.97 % (9.46)% 8.86 %
===== ===== ==== ===== ===== ==== ===== ===== ==== ===== ====
- - --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to
the predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not
annual rates of return.
(c) Subsequent to March 22, 1985, the advisory service fees have been deducted
in arriving at income rather than as an expense charge.
</FN>
</TABLE>
The effective annual net rate of return for the Common Stock Division from
January 13, 1976 to December 31, 1986 was 14.36%. For the same period ended
December 31, 1986, the average annual increase for the Standard and Poor's 500
Stock Index with dividends reinvested was 14.06%. (Standard and Poor's is an
unmanaged index of groups of common stocks.)
- - --------------------------------------------------------------------------------
MONEY MARKET DIVISION
<TABLE>
<CAPTION>
Year Ended December 31, August 21, 1981
------------------------------------------------------ to December 31,
1986 1985(d) 1984 1983 1982 1981(a)(b)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income(c) 6.83 % 8.65 % 11.00 % 9.56 % 13.53 % 5.46 %
Net realized and unrealized gain
(loss) on investments 0.03 % (.09)% .42 % (.06)% .03 % .06 %
---- ---- ----- ---- ----- ----
Gross Return 6.86 % 8.56 % 11.42 % 9.50 % 13.56 % 5.52 %
Expense charges(c) (.55)% (.60)% (.84)% (.83)% (.84)% (.35)%
---- ---- ----- ---- ----- ----
Net Return 6.31 % 7.96 % 10.58 % 8.67 % 12.72 % 5.17 %
==== ==== ===== ==== ===== ====
- - --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to
the predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not
annual rates of return.
(c) Subsequent to March 22, 1985, the advisory service fees have been deducted
in arriving at income rather than as an expense charge.
(d) Net return for 1985 has been adjusted to reflect a recalculation of the net
return of the Division.
</FN>
</TABLE>
- - --------------------------------------------------------------------------------
6
<PAGE>
- - --------------------------------------------------------------------------------
HYPOTHETICAL
ILLUSTRATIONS
The following illustrations are based on the assumption that the Separate
Account and the Trust had been operating since January 1, 1976 in the same
manner as they operate as a result of the implementation of the Reorganization
described under GENERAL INFORMATION -- PREDECESSORS OF THE TRUST in Part 2. For
illustrations based on various constant hypothetical annual investment returns,
see ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES,
AND ACCUMULATED PREMIUM in Part 2.
- - --------------------------------------------------------------------------------
ILLUSTRATION OF VARIATIONS OF THE
DEATH BENEFIT, THE ACCOUNT VALUE
AND THE CASH SURRENDER VALUE IN
RELATION TO INVESTMENT EXPERIENCE
OF THE COMMON STOCK DIVISION
The following example shows how the net return of the Common Stock Division
would have affected the Death Benefits, Account Values and Cash Surrender Values
of a single premium policy dated January 1, 1976. Assume a single premium of
$25,000 and that the insured was a 40 year old male on January 1, 1976.
- - --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
($81,932 Face Amount)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary on Surrender Minimum
January 1 in Year: Value Account Value Death Benefit Death Benefit
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1977* $24,171 $26,224 $ 85,615 $81,932
1978 21,713 23,353 81,932 81,932
1979 23,835 25,410 81,932 81,932
1980 29,920 31,618 93,868 81,932
1981 46,298 48,487 139,540 81,932
1982 43,575 45,227 126,201 81,932
1983 49,898 51,320 138,888 81,932
1984 63,970 65,188 171,147 81,932
1985 62,235 62,829 160,066 81,932
1986 83,742 83,742 207,077 81,932
1987 98,819 98,819 237,244 81,932
- - ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Reflects net investment income credited at the assumed rate of 4% from January
1, 1976 to January 12, 1976, and an actual rate of return for the Common Stock
Division assuming the investment performance of the Trust's Common Stock
Portfolio was the same as our pre-Reorganization Separate Account I starting
January 13, 1976. Net annual premiums under variable life policies were first
put into our pre-Reorganization Separate Account I on January 13, 1976.
</FN>
</TABLE>
Remember, this example of past investment performance is for a specific age,
sex, premium amount and policy anniversary. Also, the policy described in this
prospectus was not available in 1976. The benefits illustrated under this policy
are calculated on the policy anniversary and do not represent the average net
investment performance of our pre-Reorganization Separate Account I during the
policy year. Past investment performance should not be deemed a representation
of future investment experience of the Division or investment performance of the
Trust.
The difference between the Account Value and the Cash Surrender Value is the
contingent deferred sales load.
This example assumes that the net single premium and related Account Values and
Cash Surrender Values are 100% in the Common Stock Division for the entire
period.
- - --------------------------------------------------------------------------------
7
<PAGE>
- - --------------------------------------------------------------------------------
ILLUSTRATION OF VARIATIONS OF THE
DEATH BENEFIT, THE ACCOUNT VALUE
AND THE CASH SURRENDER VALUE IN
RELATION TO INVESTMENT EXPERIENCE
OF THE MONEY MARKET DIVISION
The following example shows how the net return of the Money Market Division
would have affected the Death Benefits, Account Values and Cash Surrender Values
of a single premium policy dated January 1, 1982. Assume a single premium of
$25,000 and that the insured was a 40 year old male on January 1, 1982.
- - --------------------------------------------------------------------------------
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
($81,932 Face Amount)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash Guaranteed
Policy Anniversary on Surrender Minimum
January 1 in Year: Value Account Value Death Benefit Death Benefit
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1983 $25,074 $27,204 $ 88,814 $81,932
1984 27,305 29,366 92,864 81,932
1985 30,227 32,225 98,726 81,932
1986 32,674 34,527 102,505 81,932
1987 34,784 36,429 104,839 81,932
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This example reflects Money Market Division investment experience assuming the
investment performance of the Trust's Money Market Portfolio was the same as our
pre-Reorganization Separate Account II starting January 1, 1982. Net premiums
under variable life policies were first put into our pre-Reorganization Separate
Account II on August 21, 1981.
Remember, this example of past investment performance is for a specific age,
sex, premium amount and policy anniversary. Also, the policy described in this
prospectus was not available in 1982. The benefits illustrated under this policy
are calculated on the policy anniversary and do not represent the average net
investment performance of our pre-Reorganization Separate Account II during the
policy year. Past investment performance should not be deemed a representation
of future investment experience of the Division or future investment performance
of the Trust.
The difference between the Account Value and the Cash Surrender Value is the
contingent deferred sales load.
This example assumes that the net premium and related Account Values and Cash
Surrender Values are 100% in the Money Market Division for the entire period.
- - --------------------------------------------------------------------------------
8
<PAGE>
- - --------------------------------------------------------------------------------
PART 2 -- DETAILED INFORMATION
- - --------------------------------------------------------------------------------
GENERAL INFORMATION
ABOUT US
We are Equitable Variable. We were organized in 1972 in New York State as a
stock life insurance company and are authorized to sell life insurance and
annuities there. We also are authorized to sell life insurance and annuities in
other jurisdictions. In January of 1976 we began selling periodic premium
variable life policies, and two years later, in January of 1978, we began
selling fixed annuity contracts.
In 1983 we began selling a form of fixed life insurance policy, the Equitable
Life Account. In 1983 we also began selling single premium variable life
policies. In 1986 we began selling an individual flexible premium variable life
policy designed to provide insurance coverage with flexibility in death benefits
and premium payments. We also sell two types of term insurance policies, fixed
single premium life insurance policies and universal life insurance policies. At
the end of 1986 we had approximately $9.7 billion face amount of variable life
insurance in force and $47.1 billion of fixed life insurance in force (and about
$1.9 billion of fixed annuity payment obligations).
Policy owners who have our variable life policies on a single premium basis, as
well as on a periodic premium basis, have monies placed in our Separate Account.
Our financial statements including those of our continuing Separate Account are
in Part 3.
- - --------------------------------------------------------------------------------
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, N.Y. 10019.
Equitable has been in business since 1859. Equitable's total assets make it the
third largest life insurance company in the United States. At December 31, 1986
these assets were approximately $55 billion. Equitable is also one of the
largest managers of retirement fund assets. At December 31, 1986, Equitable and
its subsidiaries were managing pension fund assets of $66.2 billion and total
assets of $102.7 billion. These assets include amounts in our General Account,
Equitable's General Account and separate accounts, and other accounts managed by
Equitable and Equitable Capital.
On December 31, 1986, Equitable Capital was managing approximately $30 billion
in assets. Equitable Capital acts as an investment adviser to various separate
accounts and general accounts of Equitable and other affiliated insurance
companies. Equitable Capital also provides management and consulting services to
mutual funds, endowment funds, insurance companies, foreign entities, and
non-tax-qualified corporate funds, pension and profit-sharing plans, foundations
and tax-exempt organizations.
Between the time we were organized and the end of December 1986, Equitable
invested over $570 million in us. This money has been used to help us meet
operational costs and policy reserve requirements.
Equitable probably will invest more money in us in the future although it has no
legal obligation to do so. Its assets do not back benefits that may be paid
under the policy discussed in this prospectus.
In December, 1984, Equitable acquired Donaldson, Lufkin & Jenrette, Inc. (DLJ).
A DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation, is one of
the nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated research to institutions. Through the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation, DLJ supplies correspondent services,
including order execution, securities clearance and other centralized financial
services, to approximately 300 independent regional securities firms and 100
banks. To the extent permitted by law, Equitable, Equitable Variable and their
separate accounts and affiliated companies, several of which are registered
investment companies (including the Trust), may engage in securities and other
transactions with the various entities mentioned in the preceding paragraph or
may invest in shares of investment companies with which those entities have
affiliations.
- - --------------------------------------------------------------------------------
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to insurance laws and regulations in every jurisdiction
where we sell our policies. We submit annual reports on our operations and
finances to insurance officials in these jurisdictions. The officials are
responsible for reviewing our reports to be sure we are financially sound and
that we are complying with applicable laws and regulations.
- - --------------------------------------------------------------------------------
9
<PAGE>
- - --------------------------------------------------------------------------------
Our single premium variable life policy has been approved in 50 states and the
Virgin Islands.
We are also subject to various Federal securities laws and regulations.
- - --------------------------------------------------------------------------------
THE TRUST
The Hudson River Trust currently issues six series or classes of shares, each of
which represents an interest in one of the Trust's Portfolios. Shares of the
Aggressive Stock, High Yield, Common Stock, Balanced and Money Market Portfolios
are purchased and redeemed by the corresponding Separate Account Division. The
Global Portfolio is not available for investment under SP-1. The Trust sells and
redeems its shares at net asset value. It does not impose a sales charge.
The Trust serves as an investment medium for variable life policies issued by us
and by insurers affiliated or unaffiliated with Equitable. We currently do not
foresee any disadvantages to our policy owners arising out of this. However, the
Trust's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that possibly may arise and to determine what
action, if any, should be taken in response. If we believe that the Trust's
response to any of those events insufficiently protects our policy owners, we
will see to it that appropriate action is taken to protect our policy owners.
Also, if we ever believe that any of the Trust's Portfolios is so large as to
materially impair the investment performance of a Portfolio or the Trust, we
will examine other investment options.
The Trust's shares will be sold only to separate accounts of insurance
companies. Since we are the only insurance company now investing in the Trust,
we are currently in control of the Trust. We owned approximately $475 million
worth of the Trust's shares as of December 31, 1986, and will continue to
control the Trust at least until other insurance companies, selling significant
amounts of variable insurance products, have made substantial investments in
Trust shares.
The Trust's address is 787 Seventh Avenue, New York, New York 10019. The
custodian of the securities and other assets of the Trust is The Chase Manhattan
Bank, N.A.
The Trust, its investment objectives and policies, its risks, expenses,
organization and other aspects of its operations are described in more detail in
its prospectus, which is attached to this prospectus, and in a Statement of
Additional Information which may be obtained free of charge by written request
to the Trust at 787 Seventh Avenue, New York, New York 10019. Please carefully
read the Trust's prospectus.
- - --------------------------------------------------------------------------------
PREDECESSORS OF THE TRUST
Pursuant to a Plan of Reorganization (Reorganization) approved at a meeting of
our policy owners held on February 14, 1985, effective as of March 22, 1985, we
restructured our Separate Accounts I and II into one separate account in unit
investment trust form. To accomplish this restructuring, we converted our then
existing Separate Account I, a Common Stock Account, and Separate Account II, a
Money Market Account, into our continuing Separate Account I with two investment
divisions: the Common Stock Division and the Money Market Division. On March 22,
1985, all of the assets and related liabilities of our former Separate Accounts
I and II were transferred to the Common Stock and Money Market Portfolios of The
Hudson River Fund, Inc. respectively, in exchange for shares in the Portfolios,
and we ceased to be an investment adviser of our continuing Separate Account.
The Reorganization did not change the policy values of then outstanding
policies.
On September 30, 1987, pursuant to an Agreement and Plan of Reorganization
approved by policyowners, The Hudson River Fund, Inc., a Maryland corporation,
was reorganized as a Massachusetts business trust and its name was changed to
The Hudson River Trust. Refer to the Prospectus for the Trust for further
information.
- - --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES OF
THE PORTFOLIOS
Each Portfolio of the Trust has a different investment objective which it tries
to achieve by following separate investment policies. The objectives and
policies of each Portfolio will affect its return and its risks. The policies
and objectives of the Portfolios available for investment under SP-1 are as
follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Investment Policy Objective
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HIGH YIELD Primarily a diversified mix of high yield, High return by maximizing current income
fixed income securities involving greater and, to the extent consistent with that
volatility of price and risk of principal objective, capital appreciation
and income than high quality fixed income
securities
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Investment Policy Objective
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AGGRESSIVE STOCK Primarily common stocks and other equity-type Long-term growth of capital
securities issued by medium and smaller sized
companies with strong growth potential
COMMON STOCK Primarily common stock and other equity-type Long-term growth of capital and increasing
instruments income
BALANCED Common stocks, publicly-traded debt High return through a combination of
securities and high quality money market current income and capital appreciation
instruments
MONEY MARKET Primarily high quality short-term money High level of current income while
market instruments preserving assets and maintaining liquidity
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is no guarantee that these objectives will be achieved.
- - --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT
ADVISER
The Trust is advised by Equitable Capital, a wholly-owned subsidiary of
Equitable. Equitable Capital is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940. Equitable Capital's address is 1285
Avenue of the Americas, New York, New York 10019.
We make a daily credit to the values of the divisions of the Separate Account to
offset completely the effect on such values of the portion of the Trust's
investment advisory fees which exceed a 0.25% effective annual rate and all
other Trust expenses except (a) all brokers' commissions, transfer taxes and
other fees and expenses for services relating to purchases and sales of
Portfolio investments and (b) any Trust income tax liabilities. Equitable
Capital provides services pursuant to an investment advisory agreement for a fee
based on the following maximum effective annual percentages of the average daily
value of the aggregate net assets of each of the Portfolios. These annual
percentages for the Portfolios corresponding to the Divisions available for
investment under SP-1 are: 0.40% for the Common Stock, Balanced and Money Market
Portfolios, 0.50% for the Aggressive Stock Portfolio and 0.55% for the High
Yield Portfolio.
- - --------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUM
The amount of premium for a standard mortality risk policy put into the Separate
Account's Divisions is the total single premium minus a $200 administrative
charge and a charge for state premium taxes. This is the net single premium that
is then put into the Separate Account. We do this as of the date of your
application if the application and the premium are received at our Regional
Service Center within 10 days after you sign the application. If the application
and the premium are received more than 10 days from the date you sign the
application, the net single premium will be put into the Separate Account when
received.
A summary of the charges against the single premium follows.
- - --------------------------------------------------------------------------------
ADMINISTRATIVE EXPENSE CHARGE
We charge $200 for administrative expenses. These include:
o processing applications;
o establishing policy records;
o conducting medical examinations;
o determining insurability;
o processing claims, paying Cash Surrender Values, and making policy changes;
o record keeping;
o communicating with policy owners; and
o other expenses and overhead.
- - --------------------------------------------------------------------------------
11
<PAGE>
- - --------------------------------------------------------------------------------
STATE PREMIUM TAX CHARGE
We deduct an amount from your single premium to cover state and local premium
taxes payable by us. These taxes vary from state to state and also vary in some
areas by municipalities and counties. Taxes currently range up to 4%.
- - --------------------------------------------------------------------------------
EXAMPLE OF DEDUCTIONS FROM
PREMIUM
The following (using the policies shown in the ILLUSTRATIONS OF DEATH BENEFITS,
ACCOUNT VALUES AND CASH SURRENDER VALUES, AND ACCUMULATED PREMIUM) shows what
amount of net single premium would be put into the Separate Account at the start
of the first policy year. A policy's actual Account Value and Cash Surrender
Value are related to the policy's net single premium.
- - --------------------------------------------------------------------------------
NET SINGLE PREMIUMS
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
State Male or Female Male or Female Male or Female Male or Female
Premium Issue Age 5 Issue Age 25 Issue Age 40 Issue Age 55
Tax ($10,000 Premium) ($20,000 Premium) ($25,000 Premium) ($50,000 Premium)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0% $9,800 $19,800 $24,800 $49,800
1% 9,700 19,600 24,550 49,300
2% 9,600 19,400 24,300 48,800
3% 9,500 19,200 24,050 48,300
4% 9,400 19,000 23,800 47,800
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is no sales load deducted from the single premium. There will never be a
sales load deducted unless you surrender your policy for its Cash Surrender
Value in the first 10 policy years or exchange your policy for a fixed life
policy. See CONTINGENT DEFERRED SALES LOAD.
To the extent sales expenses are not covered by the sales loads, we will recover
them from funds other than premium deductions.
- - --------------------------------------------------------------------------------
CONTINGENT DEFERRED
SALES LOAD
There is a difference between the Account Value and the Cash Surrender Value of
our policy in the first ten policy years. This difference is a contingent
deferred sales load against your Account Value decreasing from between 8% and 9%
in the first policy year to zero in the 10th policy year. The initial percentage
depends on the insured's age and sex. The percentage decreases evenly over the
first 10 policy years. This charge is designed to recover expenses of
distributing policies which are terminated by surrender in their early years. It
will never be greater than 9% of your single premium.
We charge the contingent deferred sales load if you surrender your policy in the
first ten years and receive its net Cash Surrender Value.
Since the loan value of the policy is based on the amount of Cash Surrender
Value rather than on the Account Value, the contingent deferred sales load has
the effect of reducing the amount available for a policy owner to borrow under a
policy.
The contingent deferred sales load is not imposed on Account Value transfers
between Divisions, Separate Account investment experience, Death Benefits or
exchanges to fixed benefit policies.
- - --------------------------------------------------------------------------------
OUR SEPARATE ACCOUNT
AND ITS DIVISIONS
Our Separate Account is registered with the SEC as a unit investment trust,
which is a type of investment company. This does not involve any supervision by
the SEC of the management or investment policy or practices of the Separate
Account. For state law purposes the Separate Account is treated as a part of us.
After making certain deductions from premiums, we put your net premium in one or
more Divisions of our Separate Account. You decide in which Divisions your
policy's net premium will be put. (Also, you have certain voting privileges with
respect to the Trust shares held in the Divisions. See YOUR VOTING PRIVILEGES.)
Each Division invests in shares of a corresponding investment Portfolio of the
Trust. The Separate Account also invests income or capital gains dividends
received from the Trust in shares of the Trust.
- - --------------------------------------------------------------------------------
12
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- - --------------------------------------------------------------------------------
The Separate Account purchases and redeems shares of the Trust at their net
asset value per share. The Separate Account's assets are allocated among the
Divisions in accordance with the allocations of the net premium invested in the
Separate Account and the earnings on those assets. Also, liabilities of the
Separate Account will be allocated to the Division to which they relate. Accrued
liabilities that are not allocable to one Division will be allocated to the
Divisions in proportion to their relative net assets. In the unlikely event that
any Division incurred liabilities in excess of its assets, the other Divisions
could be liable for such excess.
Each Portfolio has a different investment policy (see THE TRUST). You should
keep in mind that the investment experience of the Separate Account and the
Divisions depends on the investment performance of the Trust and the
corresponding Portfolios. Also, values of SP-1 policies are increased to
compensate policy owners for their share of Trust expenses in excess of the sum
of (1) expenses for brokers' commissions, transfer taxes and other fees relating
to purchases and sale of Portfolio investments, (2) fees for advisory services
at an annual rate equivalent to 0.25% of the average daily value of the
aggregate net assets of the Portfolios and (3) Trust income taxes, if any.
The Common Stock Division of our Separate Account superseded our
pre-Reorganization Separate Account I, which was established on June 28, 1973.
The Money Market Division of our Separate Account superseded our
pre-Reorganization Separate Account II, which was established on December 12,
1980. Both pre-Reorganization Separate Accounts were established under the
insurance law of New York State as separate investment accounts. Assets that
were used to provide money to pay benefits under our variable life policies were
allocated to the pre-Reorganization Separate Accounts from time to time. As a
result of the Reorganization, those assets and additional assets to be received
from premiums under in-force policies and future policies, will be allocated to
the Separate Account Divisions from time to time and used to provide money to
pay benefits under our variable life policies.
Any increase or decrease in a policy's Death Benefit, Account Value or Cash
Surrender Value will reflect the investment experience of the Division where you
have Account Value, which in turn will depend upon the investment performance of
the corresponding Portfolio of the Trust. (It will not be affected by the
experience of the other Divisions unless you have Account Value in other
Separate Account Divisions.)
- - --------------------------------------------------------------------------------
HOW WE SUPPORT THE OPERATIONS
OF A POLICY
We support the operations of a policy by putting the net single premium (which
is the single premium less the charges described under DEDUCTIONS FROM PREMIUM)
into the Separate Account Division or Divisions as the policy owner chooses. We
do this when the policy is issued.
Once the net single premium is placed into the Divisions we charge for the cost
of insurance based on the attained sex and age for the amount at risk. The
amount at risk on policy anniversaries is the Death Benefit payable less the
Account Value in the Divisions (adjusted for any loans). The cost of insurance
deducted from the amount in the Divisions is based on the 1980 Commissioners'
Standard Ordinary Mortality Table, and generally increases with attained age.
The cost of insurance differs in each year because, based on this mortality
table, the probability of death generally increases with attained age and the
amount at risk is different year by year. The dollar amount of the cost of
insurance also depends on investment experience of the Divisions in which a
policy participates.
- - --------------------------------------------------------------------------------
SEPARATE ACCOUNT ASSETS ARE OUR
PROPERTY
The assets of the Separate Account are our property. However, New York Insurance
Law provides that the portion of Separate Account's assets that relates to
variable life policies may not be used to satisfy any obligations that may arise
out of any other business we conduct, although under certain circumstances one
Division could be liable for claims arising out of the other Divisions'
operations.
- - --------------------------------------------------------------------------------
13
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- - --------------------------------------------------------------------------------
We permit money from charges owed to us to stay in the Divisions and accumulate.
These accumulated amounts are in excess of each Division's net assets attributed
to variable life policies. These amounts belong to us.
There probably will be more assets in the Separate Account than those that apply
to our variable life policies. We expect to transfer part or all of the excess
to our General Account. These transfers will be in cash, but before we make them
we will consider whether the transfer could have any adverse effect on the
Separate Account. In 1986 we made no such transfer to our General Account.
- - --------------------------------------------------------------------------------
CHARGES AGAINST THE
SEPARATE ACCOUNT
The amount in the Separate Account Divisions in which your policy participates
is further decreased (after the following charges) by the cost of your insurance
protection. See HOW WE SUPPORT THE OPERATIONS OF A POLICY.
- - --------------------------------------------------------------------------------
CHARGES FOR MORTALITY AND
EXPENSE RISKS
We charge the Separate Account for the mortality and expense risks we assume.
The charge is made daily at an effective annual rate of 0.50% of the value of
each Division's assets that are attributable to variable life policies.
The mortality risk we assume is that insureds may live for shorter periods of
time than we estimated. If this occurs, we have to pay a greater amount of death
benefits than we expected in relation to the premiums we received.
The expense risk we assume is that our costs of issuing and administering
policies may be more than we estimated.
The money we collect from this charge may exceed the amount needed to cover
benefits and expenses and would be our gain.
- - --------------------------------------------------------------------------------
OTHER CHARGES
The Separate Account purchases shares of the Trust at their net asset value. The
net asset value of those shares reflects management fees and other expenses
already deducted from the assets of the Trust that are briefly described under
THE TRUST. More detailed information about the Trust is in its prospectus and
its Statement of Additional Information.
- - --------------------------------------------------------------------------------
YOUR VOTING
PRIVILEGES
GENERAL
As we have already said, all assets held in the Divisions are invested in shares
of the corresponding Portfolios of the Trust. We are the legal owners of those
shares and as such have the right to vote upon certain matters at any meeting of
the Trust's shareholders that may be held. Among other things, we may vote on
any matters described in the Trust's prospectus or Statement of Additional
Information or requiring a vote by shareholders under the 1940 Act.
However, in accordance with our view of current Federal securities law
requirements, we will offer you the opportunity to instruct us as to how Trust
shares allocable to your policy and held by us in the Separate Account will be
voted on these matters. We will vote the shares of the Trust at meetings of
shareholders of the Trust in accordance with your instructions. Thus, you will
have the right to have a voice in the affairs of the Trust. Trust shares held in
each Division of the Separate Account for which no timely instructions from
policy owners are received will be voted by us in the same proportion as shares
in that Division for which instructions are received. We will also vote any
Trust shares that we are entitled to vote directly due to amounts we have
accumulated in the Separate Account in the same proportions that all policy
owners vote, including those who participate in other separate accounts. See
YOUR VOTING PRIVILEGES -- VOTING INSTRUCTIONS OF OTHER SEPARATE ACCOUNT
PARTICIPANTS.
Each policy having a voting interest will be sent proxy material and a form for
giving voting instructions. If required by state insurance officials, we may
disregard voting instructions if those instructions would require shares to be
voted so as to cause a change in the investment objectives or policies of one or
more of the Trust's Portfolios, or to approve or disapprove an investment policy
or investment adviser of one or more of the Trust's Portfolios. In addition, we
may disregard voting instructions in favor of changes initiated by a policy
owner or the Trust's Board of
- - --------------------------------------------------------------------------------
14
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- - --------------------------------------------------------------------------------
Trustees in the investment policy or the investment adviser of a Portfolio,
provided that our disapproval of the change is reasonable and is based on a good
faith determination that the change would be contrary to state law, the proposed
advisory fee would be higher than we are permitted to pay by the terms of our
variable life policies, or the charge would lead to an adverse effect on our
general account because it would result in unsound or overly speculative
investments. We will advise policy owners if we do disregard voting
instructions, and give our reasons for such actions in the next semiannual
report we send to policy owners.
All Trust shares of whatever class are entitled to one vote, and the votes of
all classes are cast on an aggregate basis, except on matters where the
interests of the Portfolios differ. In such a case, the voting is on a
Portfolio-by-Portfolio basis. Approval or disapproval by the shareholders in one
Portfolio on such a matter would not generally be a prerequisite of approval or
disapproval by shareholders in another Portfolio; and shareholders in a
Portfolio not affected by a matter generally would not be entitled to vote on
that matter. Examples of matters which would require a Portfolio-by-Portfolio
vote are changes in the fundamental investment policy or restrictions of a
particular Portfolio and approval of the investment advisory agreement.
- - --------------------------------------------------------------------------------
VOTING INSTRUCTIONS OF OTHER
SEPARATE ACCOUNT PARTICIPANTS
Net premiums for our individual flexible premium variable life policy and
premiums from our variable life insurance policy with additional premium option
are invested in our Separate Account FP, which, in turn, invests in the Trust.
In addition, Trust shares are held by other separate accounts established by us
and other insurance companies affiliated and unaffiliated with us. We expect
that those shares will be voted through those separate accounts in accordance
with instructions of their participants. This will dilute the effect of the
voting instructions of policy owners whose net premiums are invested in the
Separate Account.
- - --------------------------------------------------------------------------------
DETERMINING THE TRUST PORTFOLIO
FOR WHICH YOU CAN GIVE VOTING
INSTRUCTIONS
If all your Account Value is in one Division, you can participate in the voting
only for the shares in the Trust Portfolio that corresponds to that Division. If
your Account Value is divided among the Divisions, you are entitled to
participate in the voting of the shares of the Trust Portfolios that correspond
to each Division in which you have Account value.
The number of Trust shares held in each Division attributable to your policy for
purposes of your voting privilege will be determined by dividing your policy's
Account Value (less any policy indebtedness) allocable to that Division by the
net asset value of one share of the corresponding Trust Portfolio as of the
record date for the Trust's shareholder meeting. The record date for this
purpose will not be more than 90 days before the meeting of the Trust.
Fractional shares are counted.
EXAMPLE: Your policy has an Account Value of $3,000, 50% of which is
attributable to the Common Stock Division and 50% of which is attributable to
the Money Market Division. Assuming the net asset value of one share in each
Trust Portfolio is $100, you would have the privilege of voting 30 shares. You
will have the privilege of instructing us regarding 15 votes in each Division.
EXAMPLE (ASSUMING AN OUTSTANDING LOAN): Your policy has an Account Value of
$3,000, which entitles you to 30 votes. If you have a $1,000 loan (including
interest due) equally allocated between each Division, you would be entitled to
10 votes in each Division, or an aggregate of 10 fewer votes.
- - --------------------------------------------------------------------------------
LAW CHANGES MAY AFFECT
YOUR VOTING PRIVILEGES
Our Separate Account is required by Federal securities laws or regulations as
currently interpreted to have policy owners instruct us as to the Trust's voting
rights. However, if amendments to or interpretations of those laws or
regulations change what must be voted on, or restrict the matters for which
policy owners are given the opportunity to provide voting instructions, we will
in turn change what is submitted to policy owners.
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15
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OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will always attempt to comply
with applicable laws before we take any of these actions. If necessary, we will
seek approval by policy owners.
Specifically we reserve the right to:
o add Divisions to or remove Divisions from the Separate Account;
o combine any two or more Divisions within the Separate Account;
o transfer assets of the variable life policy offered by this prospectus, as
well as the assets of our other variable life policies, from one Division to
another (if we do, we will withdraw proportional amounts of each investment
in the Division, but we will also make whatever adjustments are needed to
avoid odd lots and fractions);
o operate the Separate Account as a management investment company under the
1940 Act, or in any other form the law allows (if we do, we may invest the
assets in any legal investments and we or one of our affiliates, such as
Equitable Capital, will serve as investment adviser);
o end the registration of the Separate Account under the 1940 Act; or
o operate the Separate Account under the general supervision of a Committee
made up of individuals all of whom may be, under the 1940 Act, interested
persons of us or of Equitable or discharge such Committee.
- - --------------------------------------------------------------------------------
SUBSTITUTION OF TRUST SHARES
Although we believe it to be highly unlikely, it is possible that, in our
judgment, one or more of the Portfolios of the Trust may become unsuitable for
investment by the Separate Account because, for example, of a change in the
investment policy, or a change in the tax laws, or because the shares are no
longer available for investment. For those or other reasons, we may seek to
substitute the shares of another Portfolio or of an entirely different mutual
fund. Before we can do this, we would obtain the approval of the SEC, and
possibly one or more state insurance departments, to the extent legally
required.
- - --------------------------------------------------------------------------------
DEATH BENEFITS UNDER
OUR POLICIES
The Death Benefit is the amount payable to the named beneficiary when the
insured dies. All or part of the Death Benefit can be paid in cash or applied
under one or more of our payment options described under PAYMENT OPTIONS.
The Death Benefit will at least equal the guaranteed minimum of insurance.
Whether the Death Benefit is higher than the guaranteed minimum depends on the
investment experience of the Divisions in which a policy participates. See the
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES, AND
ACCUMULATED PREMIUM.
The Death Benefit is the higher of the guaranteed minimum Death Benefit, plus
the sum (if positive) of the variable adjustment amounts (determined annually)
in the Divisions in which you have Account Value, or the insurance coverage that
can be purchased by the Account Value at the date of death.
The amount of Death Benefit actually paid to the insured's beneficiary will be
adjusted as of the date of the insured's death to reflect:
o any policy loans together with accrued interest;
o the insured's suicide within 2 years after the policy's date of issue. See
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY; and
o any material misstatement in the application for insurance, including a
misstatement of the insured's age or sex. See LIMITS ON OUR RIGHT TO
CHALLENGE THE POLICY.
Interest will be paid from the date of death to the date the Death Benefit is
paid at the annual rate that we are paying under the deposit option described in
PAYMENT OPTIONS.
If you sign an application and send us money, and if the person proposed to be
insured dies between the application date and the date we act on the
application, we have a special rule. Should we decide the proposed insured was
insurable and accept the application, we will pay the initial face amount to the
proposed beneficiary.
- - --------------------------------------------------------------------------------
THE GUARANTEED MINIMUM DEATH
BENEFIT
The guaranteed minimum Death Benefit equals a policy's initial face amount
regardless of the investment experience of the Divisions in which a policy
participates.
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16
<PAGE>
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THE VARIABLE ADJUSTMENT AMOUNT
The variable adjustment amount for each Division is the amount of the Death
Benefit that results from all past investment experience of that Division. In
the first policy year, the variable adjustment amount in each Division is zero.
After that, the variable adjustment amount is the amount of insurance purchased
by the difference between the actual rate of return and 4%. Therefore, a
Division's variable adjustment amount will not change in any year that the
Division's gross return minus the charges to the Division results in a net
return of 4%. If the net return is more than 4%, that variable adjustment amount
will increase. The variable adjustment amount will increase because additional
amounts of paid-up life insurance are purchased. If the net return is less than
4%, it will decrease. The variable adjustment amount will decrease because these
additional amounts of paid-up life insurance are lost. The rates at which these
additional amounts of paid-up life insurance are purchased or lost are based on
sex and attained age and are guaranteed.
The percentage change in the Death Benefit for any year is not the same as the
net return for the preceding year and it is not necessarily related to current
or future rates of inflation. The Death Benefit is equal to the guaranteed
minimum Death Benefit plus the sum (if positive) of the variable adjustment
amounts for each Division in which you have funds. However, even if the sum of
the variable adjustment amounts is negative, the Death Benefit will never be
less than the guaranteed minimum.
In any year that the sum of the variable adjustment amounts increases (and is
positive), the Death Benefit will increase. If the sum of the variable
adjustment amounts is negative, investment experience can not increase the Death
Benefit above the guaranteed minimum until it has increased the variable
adjustment amount of at least one Division so that the sum is positive. In any
year that the sum of the variable adjustment amounts for the Divisions in which
the policy participates decreases, the Death Benefit will decrease, unless it is
already at the guaranteed minimum.
The variable adjustment amount for each Division is set on each policy
anniversary. Once set, it remains the same for the following policy year. If it
is set above the guaranteed minimum, we will be responsible for keeping it at
that level until the next policy anniversary. You will bear the risk that it
could drop on the next policy anniversary (but not below the guaranteed
minimum). In addition, if the Account Value at the date of death, considered as
a single premium, can buy more Death Benefit than what was calculated at the
beginning of the policy year, this increased Death Benefit will be paid.
There is no guarantee that a Division's investment experience, which will
reflect the investment performance of the corresponding Portfolio of the Trust,
will be sufficient to result in an increase in Death Benefits. However, the
historical pattern of stock performance has been one of long-range growth, and
money market investments in recent years have returned more than 4%.
THE VARIABLE ADJUSTMENT AMOUNT IS CUMULATIVE. Increases and decreases in the
variable adjustment amount are carried into each succeeding year. The variable
adjustment amount for a Division can be positive or negative. If it is positive,
good investment experience will produce a larger variable adjustment amount. If
it is negative, good investment experience must first offset the current
negative variable adjustment amount before there can be a positive amount.
EXAMPLE: You were a 40 year old male when your policy was issued. Assume a
hypothetical gross annual investment return of 0% for the first 4 policy years.
This results in a negative variable adjustment amount. A net return of
approximately 25.4% in the 5th policy year would offset the cumulative negative
variable adjustment amount so that it would equal zero. Any net return above
that would produce a positive variable adjustment amount. On the other hand, the
negative variable adjustment amount may be offset over a number of years. Thus,
if the gross return in the 5th policy year were 8%, (equivalent to 7.19% net), a
gross return of 8% in each of the 6 following policy years would be required to
produce a positive variable adjustment amount by the 12th policy year.
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17
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For a given net return, the greater the Account Value in a Division, the greater
the effect of investment experience on the variable adjustment amount.
Therefore, in later policy years, when your total Account Value may be greater,
investment experience may have a greater effect on the Death Benefit.
- - --------------------------------------------------------------------------------
THE DEATH BENEFIT
BASED ON ACCOUNT
VALUE
If the Account Value increases at an annual rate of more than 4% between the
beginning of the policy year and the date of death, the Death Benefit will be
greater than the amount determined at the beginning of the policy year. This is
because we see how much insurance the Account Value would buy if it were
considered as a single premium.
- - --------------------------------------------------------------------------------
NET RETURN
The Death Benefit based on a Division's net return is set on each policy
anniversary. The net return depends on the investment experience of the Division
from the first day of that policy year to the first day of the next policy year.
It takes into account investment income, capital gains and capital losses
(whether realized or unrealized), with respect to Trust shares owned by the
Division and gains resulting from the reimbursement by us to the Division of
amounts corresponding to certain Trust expenses. The charges against the
Division are then deducted to determine the net return. The net return on a date
during a policy year depends on the investment experience of the Division from
the first day of that policy year to that date and can affect Account Values,
Cash Surrender Values and Death Benefits.
The net return of each Division is determined at the close of trading on each
day in which the degree of trading in the corresponding Portfolio of the Trust
might materially affect the net return of that Division. We call this a
"business day". Normally this would be each day that the New York Stock Exchange
is open. However, because we are closed on Martin Luther King Day and the Friday
after Thanksgiving Day, no determination will be made on those days.
The assets of each Division are valued by multiplying the number of Trust shares
in each Division by the net asset value of such shares and is adjusted by the
charge for mortality and expense risks. See the financial statements for the
Separate Account in this prospectus.
The net return for a policy year is not the same as for a calendar year unless
the policy anniversary is January 1.
A statement of the method we use to calculate net return is an exhibit to the
Registration Statement we filed with the SEC. It will be furnished on request.
- - --------------------------------------------------------------------------------
HOW THE DEATH BENEFIT VARIES
FROM THE GUARANTEED MINIMUM
The following example shows how the Death Benefit varies from the guaranteed
minimum as a result of investment experience. Assume that the insured was a 40
year old male when the policy was issued, and the hypothetical gross annual
return for each of the first 6 policy years was 8% for each Division or their
combination (which is equal to a net return of 7.19%). Use the amounts from the
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES, AND
ACCUMULATED PREMIUM.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Variable
Guaranteed Adjustment Death
Minimum + Amount = Benefit
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
End of policy year 5 $81,932 $13,468 $95,400
Increase -- 2,951 2,951 (3.1% increase)
- - ------------------------------------------------------------------------------------------------------------------------------------
End of policy year 6 $81,932 $16,419 $98,351
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
If the gross annual return was 0% (equal to a net return of -.75%), the Death
Benefit at the end of policy year 6 would have been $91,006 (a 4.6% decrease).
This reflects a decrease in the variable adjustment amount of $4,394.
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18
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ACCOUNT VALUES, CASH
SURRENDER VALUES AND
LOAN PRIVILEGES UNDER
OUR POLICIES
HOW WE DETERMINE ACCOUNT VALUE
When your policy is issued, your total Account Value is your total single
premium net of deductions. See DEDUCTIONS FROM PREMIUM. On dates other than at
issue, the total Account Value is the sum of the funds allocated to each
Division. The funds in each Division, on any date other than a policy
anniversary, are the sum of (1) the portion of the tabular Account Value for
that date attributable to that Division, (2) the aggregate net single premium on
that date for the variable adjustment amount, (3) adjustments to reflect
investment experience of the Division from the last policy anniversary to that
date and (4) adjustments to reflect charges to the Separate Account, cost of
insurance charges and transfers to and from that Division from the last policy
anniversary to that date. The tabular Account Value is what the Account Value
for the policy would be if each Division in which you had funds had a constant
net investment return of 4% a year. On each policy anniversary, the policy's net
investment return in excess of 4% per year is used as a net single premium to
purchase additional paid up variable life insurance (see THE VARIABLE ADJUSTMENT
AMOUNT and NET RETURN). The net single premium is the one time net cost for your
sex and attained age to purchase one dollar of Death Benefit, as specified in
your policy. On each policy anniversary, the process begins again.
- - --------------------------------------------------------------------------------
HOW WE DETERMINE CASH
SURRENDER VALUE
Account Value minus any contingent deferred sales load equals Cash Surrender
Value. The policy's Cash Surrender Value will vary daily with investment
experience. Cash Surrender Value is the same as Account Value except in the
first ten years of the policy. During the first ten policy years the Cash
Surrender Value on any date will equal the product of the Account Value on that
date and the tabular cash value (which is stated in your policy) divided by the
tabular Account Value for that date. After the tenth policy year, the Cash
Surrender Value will equal the Account Value. The difference between the Cash
Surrender Value and the Account Value is a contingent deferred sales load.
See CONTINGENT DEFERRED SALES LOAD.
- - --------------------------------------------------------------------------------
THERE IS NO GUARANTEED MINIMUM
ACCOUNT VALUE OR CASH SURRENDER
VALUE
Daily increases or decreases in Account Value or Cash Surrender Value depend on
the investment experience of the Divisions. There is no guaranteed minimum
Account Value or Cash Surrender Value.
- - --------------------------------------------------------------------------------
RETURNING THE POLICY FOR CASH
During the insured's lifetime, and subject to our rules, your policy can be
returned for payment of the Cash Surrender Value net of any indebtedness. The
amount payable will be based on the net Cash Surrender Value next computed after
we receive your signed request for payment of the Cash Surrender Value at your
Regional Service Center, accompanied by your policy. The insurance coverage will
end on the date you send us the policy and your request.
SPLITTING THE POLICY. You can request to split your policy into two policies. In
addition, you may return one for cash. Any policy that continues will be based
on the new initial face amount.
If you split a policy, each continued policy must have a face amount that is at
least equal to what the face amount of the $2,500 premium policy would be at the
time of the split. This face amount will also be based on the same age and sex
as the original policy.
These are our current procedures, which may change.
- - --------------------------------------------------------------------------------
19
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INCOME TAX WITHHOLDING
Federal tax law requires us to withhold income tax from any portion of your
surrender proceeds that is subject to tax, unless you request us not to
withhold.
If you surrender your policy and do not advise us in writing that you do not
want us to withhold Federal income tax before the date payment must be made, we
are required by law to withhold tax from the surrender payment.
If you elect not to have tax withheld from the surrender payment, or if the
amount of Federal income tax withheld is insufficient, you may be responsible
for payment of tax. You may incur penalties under the estimated tax rules if
your withholding and estimated tax payments are not sufficient. You may wish to
consult your tax adviser.
- - --------------------------------------------------------------------------------
YOU CAN TRANSFER ACCOUNT VALUE
AMONG DIVISIONS
You may transfer Account Value among the Divisions by contacting our regional
Life Insurance Center. You can request to transfer part or all of your Account
Value among the Divisions. You may do this up to four times in a policy year. A
transfer will go into effect on the day we receive your request. We reallocate
loans if you transfer Account Value.
- - --------------------------------------------------------------------------------
WHEN A DIVISION
BECOMES INACTIVE
If you have a policy loan allocated to a Division and your Account Value less
your loan (including accrued loan interest) in that Division reaches zero, that
Division will become inactive for your policy. We will reallocate the loan to
the other Divisions based on the proportion that your Account Value in each
Division has to your total Account Value. A Division will also become inactive
for your policy if you transfer its entire Account Value to the other Divisions.
We will notify you when a Division becomes inactive.
If a Division becomes inactive, the future variable adjustment amount, Account
Value and net return will be affected. You may transfer Account Value into an
inactive Division from the other Divisions. See YOU CAN TRANSFER ACCOUNT VALUE
AMONG DIVISIONS.
- - --------------------------------------------------------------------------------
TAKING A POLICY LOAN
You may borrow up to 90% of your policy's Cash Surrender Value (net of previous
loans) using the policy as security. We will not grant a loan that is not at
least $100 more than any outstanding loan with accrued interest.
Borrowing money against your policy will have a permanent effect on your
policy's Account Value and Cash Surrender Value, and the amount by which the
Death Benefit may increase above the guaranteed minimum. This effect remains
even though the loan is repaid in whole or in part.
Whenever the loan with accrued interest from one Division equals or exceeds the
Account Value in that Division, that Division will become inactive for your
policy. We will transfer the total Account Value and loan allocation to the
other Divisions. See WHEN A DIVISION BECOMES INACTIVE.
IF LOANS EXCEED THE CASH SURRENDER VALUE OF YOUR POLICY. Whenever the loan with
accrued interest exceeds the Cash Surrender Value of your policy, we will send a
notice to you and to anyone to whom you told us you assigned the policy. The
policy will end 31 days after we send the notice unless you make a repayment
during the 31-day period that is large enough to reduce your outstanding loan
with accrued interest to below the total Cash Surrender Value of your policy.
If you borrow the maximum of 90% of your policy's Cash Surrender Value, you
increase your risk of having your policy end. This might happen if the
combination of policy loan interest as it builds up, the cost of insurance,
asset charges against the Separate Account, and investment experience of the
Divisions where you have Cash Surrender Value uses up the remaining 10%.
- - --------------------------------------------------------------------------------
20
<PAGE>
- - --------------------------------------------------------------------------------
INTEREST. Interest on loans is 5% a year. Interest is charged daily and is
payable by the policy owner on each anniversary. However, if it is not paid, it
will be compounded on the policy anniversary because it will be added to the
loan principal. This unpaid interest is transferred out of each Division where
you have your loan into our general account. This interest is not deductible for
Federal income tax purposes.
REPAYMENT. You can repay all or part of any outstanding loan with accrued
interest at any time while the policy is in effect and the insured is alive.
Your repayment, whether full or partial, will be allocated to the Divisions in
proportion to the loan allocation to each Division at the time of repayment.
The amount of any outstanding loan with accrued interest will be deducted from
the Death Benefit or Cash Surrender Value proceeds.
WHAT DIVISION WE CHARGE LOANS AGAINST. We allocate a loan based on the net Cash
Surrender Value in each Division on the date the loan is made. We reallocate
loans if you transfer Account Value.
THE PERMANENT EFFECT OF A LOAN. When you take out a loan, we transfer part of
the Cash Surrender Value equal to the amount of the loan from the Divisions to
our general account. In addition, unpaid interest on the policy loan will be
transferred to our general account from time to time. The amount taken out of
the Divisions will not be affected by the Divisions' investment experience while
the loan is outstanding. Since the amount is not in the Divisions, it cannot
contribute to any possible increase in your policy's Death Benefit, Account
Value or Cash Surrender Value.
We will credit your policy with a 4% annual return on any amount transferred to
our general account as a result of your policy loan. This can protect Cash
Surrender Value and Death Benefits from decreasing if investment experience is
below 4%. It will also prevent them from increasing if investment experience is
above 4%.
EXAMPLE: You were a 40 year old male when your policy was issued, and you have a
Single Premium Variable Life Insurance policy. Use the illustration on page 25
and assume an 8% hypothetical gross annual investment return for each Division
or their combination (which is a net return of 7.19%). If you take a loan for
$22,000 at the end of the 9th policy year, it will affect the Death Benefit,
Account Value, and Cash Surrender Value (before subtracting the amount of the
loan with loan interest) in the 10th policy year as follows:
- - --------------------------------------------------------------------------------
Without Loan With Loan
- - --------------------------------------------------------------------------------
Death Benefit $111,106 $109,370
Account Value 44,931 44,229
Cash Surrender Value 44,931 44,229
- - --------------------------------------------------------------------------------
The difference results from the transfer of the portion of the Cash Surrender
Value equal to the loan from the Division to the general account. The return on
the amount transferred is reduced to 4% a year, rather than the Division's net
return of 7.19%.
See DEATH BENEFITS UNDER OUR POLICIES for adjustments that are made as of the
date of the insured's death.
- - --------------------------------------------------------------------------------
21
<PAGE>
- - --------------------------------------------------------------------------------
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES, AND
ACCUMULATED PREMIUM
To help you get a picture of how the key financial elements of our policy work,
we have prepared a series of tables.
The tables show how Death Benefits, Account Values and Cash Surrender Values of
policies with single premiums of $10,000, $20,000, $25,000 and $50,000 could
vary over an extended period of time if the Divisions had CONSTANT hypothetical
gross annual investment returns of 0%, 4%, 8%, and 12% over the years covered by
each table. The Death Benefits, Account Values and Cash Surrender Values would
differ from those shown in the tables if the annual investment returns did not
remain absolutely constant. Thus, the figures would be different if the return
AVERAGED 0%, 4%, 8%, or 12% over a period of years but went above or below
those figures in individual policy years. The Death Benefits, Account Values and
Cash Surrender Values would also differ, depending on the investment allocations
made to the Divisions, if the actual investment experience averaged 0%, 4%, 8%,
or 12%, but went above or below those figures for individual Divisions. The
difference between the Account Value and the Cash Surrender Value in the first
ten years is the contingent deferred sales load.
The amounts of Death Benefits, Account Values and Cash Surrender Values shown in
the tables for the end of each policy year take into account a daily charge
against each Division that is equivalent to an annual charge of 0.75% at the
beginning of each year. This charge is the 0.50% charge against the Separate
Account for mortality and expense risks and the effect on each Division's
investment experience of the charge to the Trust assets for investment advisory
services (equivalent to an annual rate of 0.25% of the aggregate average daily
net assets of the Portfolios). The effect of these adjustments is that on a 0%
actual rate of return the return would be -0.75%, on 4% it would be 3.22%, on 8%
it would be 7.19% and on 12% it would be 11.16%.
The hypothetical returns shown in the tables do not reflect any charges for
Trust expenses in addition to the 0.25% investment advisory fee charge, because
the Divisions in general will be reimbursed for their share of such expenses, as
previously discussed under THE SEPARATE ACCOUNT, ITS INVESTMENTS AND ITS
INVESTMENT EXPERIENCE and THE TRUST.
The tables reflect the fact that we do not currently charge the Divisions for
Federal income tax. However, if we do make such a charge in the future, it would
take a higher rate of return to produce after-tax returns of 0%, 4%, 8%, and 12%
than it does now.
The second and third columns of each table show what would happen if an amount
equal to the total premium were invested to earn interest, after taxes, of 4% or
5% compounded annually. These tables show that if a policy is returned in its
very early years for payment of its Cash Surrender Value, the Cash Surrender
Value will be low in comparison to the premium accumulated with interest. This
means that the cost of owning your policy for a relatively short time will be
high.
If you request, we will furnish you with a comparable illustration based on the
proposed insured's sex, age and an initial face amount or premium amount of your
choice. In addition, if you do purchase a policy, we will deliver a specific
illustration that reflects your actual premium paid.
We have also prepared special illustrations showing the effects of policy loans
on a planned basis. These are available on request.
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF ILLUSTRATIONS
Page
----
$10,000 Single premium Male Age 5 23
$20,000 Single premium Male Age 25 24
$25,000 Single premium Male Age 40 25
$50,000 Single premium Male Age 55 26
$10,000 Single premium Female Age 5 27
$20,000 Single premium Female Age 25 28
$25,000 Single premium Female Age 40 29
$50,000 Single premium Female Age 55 30
- - --------------------------------------------------------------------------------
22
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $98,654 MALE AGE 5 SINGLE PREMIUM $10,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 10,400 $ 10,500 $98,654 $98,654 $101,705 $ 105,501
2 10,816 11,025 98,654 98,654 104,848 112,820
3 11,249 11,576 98,654 98,654 108,087 120,642
4 11,699 12,155 98,654 98,654 111,423 128,999
5 12,167 12,763 98,654 98,654 114,861 137,934
6 12,653 13,401 98,654 98,654 118,404 147,482
7 13,159 14,071 98,654 98,654 122,056 157,694
8 13,686 14,775 98,654 98,654 125,823 168,616
9 14,233 15,513 98,654 98,654 129,708 180,303
10 14,802 16,289 98,654 98,654 133,716 192,810
11 15,395 17,103 98,654 98,654 137,853 206,196
12 16,010 17,959 98,654 98,654 142,120 220,524
13 16,651 18,856 98,654 98,654 146,523 235,857
14 17,317 19,799 98,654 98,654 151,063 252,260
15 18,009 20,789 98,654 98,654 155,745 269,806
16 18,730 21,829 98,654 98,654 160,570 288,570
17 19,479 22,920 98,654 98,654 165,544 308,634
18 20,258 24,066 98,654 98,654 170,669 330,082
19 21,068 25,270 98,654 98,654 175,951 353,011
20 21,911 26,533 98,654 98,654 181,394 377,520
60 (Age 65) 105,196 186,792 98,654 98,654 614,156 5,545,865
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------ ------- -------- ---------- ------ ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$9,447 $ 9,827 $ 10,208 $ 10,590 $8,691 $ 9,041 $ 9,392 $ 9,743
9,302 10,067 10,863 11,689 8,634 9,344 10,083 10,849
9,165 10,320 11,567 12,910 8,585 9,666 10,834 12,093
9,038 10,585 12,324 14,268 8,544 10,007 11,650 13,487
8,915 10,862 13,135 15,773 8,505 10,363 12,533 15,049
8,797 11,149 14,004 17,444 8,471 10,737 13,486 16,797
8,680 11,443 14,930 19,288 8,436 11,123 14,511 18,748
8,561 11,740 15,909 21,321 8,400 11,519 15,611 20,920
8,436 12,037 16,943 23,552 8,356 11,923 16,783 23,329
8,308 12,331 18,030 25,998 8,308 12,331 18,030 25,998
8,173 12,620 19,169 28,673 8,173 12,620 19,169 28,673
8,034 12,907 20,366 31,600 8,034 12,907 20,366 31,600
7,892 13,191 21,622 34,805 7,892 13,191 21,622 34,805
7,751 13,478 22,950 38,326 7,751 13,478 22,950 38,326
7,611 13,770 24,358 42,198 7,611 13,770 24,358 42,198
7,474 14,070 25,856 46,468 7,474 14,070 25,856 46,468
7,342 14,380 27,453 51,183 7,342 14,380 27,453 51,183
7,216 14,704 29,162 56,401 7,216 14,704 29,162 56,401
7,096 15,042 30,990 62,175 7,096 15,042 30,990 62,175
6,981 15,396 32,950 68,576 6,981 15,396 32,950 68,576
3,509 37,715 370,342 3,344,211 3,509 37,715 370,342 3,344,211
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
23
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $106,799 MALE AGE 25 SINGLE PREMIUM $20,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $20,800 $ 21,000 $106,799 $106,799 $110,101 $ 114,209
2 21,632 22,050 106,799 106,799 113,503 122,131
3 22,497 23,153 106,799 106,799 117,010 130,598
4 23,397 24,310 106,799 106,799 120,623 139,649
5 24,333 25,526 106,799 106,799 124,347 149,326
6 25,306 26,802 106,799 106,799 128,185 159,671
7 26,319 28,142 106,799 106,799 132,141 170,733
8 27,371 29,549 106,799 106,799 136,218 182,560
9 28,466 31,027 106,799 106,799 140,422 195,206
10 29,605 32,578 106,799 106,799 144,756 208,727
11 30,789 34,207 106,799 106,799 149,223 223,187
12 32,021 35,917 106,799 106,799 153,830 238,649
13 33,301 37,713 106,799 106,799 158,578 255,185
14 34,634 39,599 106,799 106,799 163,475 272,870
15 36,019 41,579 106,799 106,799 168,523 291,784
16 37,460 43,658 106,799 106,799 173,728 312,014
17 38,958 45,840 106,799 106,799 179,096 333,653
18 40,516 48,132 106,799 106,799 184,631 356,799
19 42,137 50,539 106,799 106,799 190,339 381,557
20 43,822 53,066 106,799 106,799 196,225 408,040
40 (Age 65) 96,020 140,800 106,799 106,799 361,588 1,568,889
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
--------------------------------------------------------- ---------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$19,096 $19,866 $ 20,637 $ 21,407 $17,579 $18,288 $ 18,996 $ 19,705
18,808 20,355 21,964 23,633 17,465 18,902 20,396 21,947
18,530 20,863 23,384 26,099 17,363 19,549 21,910 24,455
18,263 21,390 24,903 28,832 17,268 20,225 23,547 27,260
18,005 21,936 26,527 31,857 17,180 20,932 25,313 30,398
17,753 22,500 28,263 35,206 17,096 21,669 27,218 33,904
17,506 23,081 30,115 38,910 17,017 22,436 29,273 37,822
17,264 23,679 32,090 43,007 16,940 23,234 31,486 42,198
17,026 24,292 34,195 47,536 16,864 24,061 33,871 47,085
16,792 24,922 36,439 52,542 16,792 24,922 36,439 52,542
16,558 25,565 38,826 58,070 16,558 25,565 38,826 58,070
16,327 26,223 41,367 64,177 16,327 26,223 41,367 64,177
16,096 26,895 44,068 70,915 16,096 26,895 44,068 70,915
15,866 27,577 46,937 78,346 15,866 27,577 46,937 78,346
15,636 28,271 49,981 86,540 15,636 28,271 49,981 86,540
15,405 28,976 53,213 95,570 15,405 28,976 53,213 95,570
15,172 29,690 56,635 105,511 15,172 29,690 56,635 105,511
14,940 30,415 60,265 116,463 14,940 30,415 60,265 116,463
14,707 31,147 64,112 128,519 14,707 31,147 64,112 128,519
14,473 31,890 68,184 141,786 14,473 31,890 68,184 141,786
9,750 47,521 218,040 946,055 9,750 47,521 218,040 946,055
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
24
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $81,932 MALE AGE 40 SINGLE PREMIUM $25,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- --------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $26,000 $26,250 $81,932 $81,932 $ 84,462 $ 87,612
2 27,040 27,563 81,932 81,932 87,072 93,688
3 28,122 28,941 81,932 81,932 89,763 100,187
4 29,246 30,388 81,932 81,932 92,538 107,139
5 30,416 31,907 81,932 81,932 95,400 114,575
6 31,633 33,502 81,932 81,932 98,351 122,530
7 32,898 35,178 81,932 81,932 101,394 131,039
8 34,214 36,936 81,932 81,932 104,532 140,142
9 35,583 38,783 81,932 81,932 107,769 149,879
10 37,006 40,722 81,932 81,932 111,106 160,296
11 38,486 42,758 81,932 81,932 114,547 171,440
12 40,026 44,896 81,932 81,932 118,096 183,362
13 41,627 47,141 81,932 81,932 121,757 196,118
14 43,292 49,498 81,932 81,932 125,532 209,767
15 45,024 51,973 81,932 81,932 129,427 224,373
16 46,825 54,572 81,932 81,932 133,444 240,002
17 48,697 57,300 81,932 81,932 137,587 256,729
18 50,645 60,165 81,932 81,932 141,861 274,628
19 52,671 63,174 81,932 81,932 146,269 293,783
20 54,778 66,332 81,932 81,932 150,817 314,282
25 (Age 65) 66,646 84,659 81,932 81,932 175,799 440,537
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
------------------------------------------------------------ ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$23,941 $24,906 $ 25,870 $ 26,836 $22,066 $22,956 $ 23,845 $ 24,734
23,580 25,519 27,534 29,627 21,925 23,727 25,602 27,547
23,219 26,142 29,299 32,702 21,779 24,520 27,483 30,674
22,857 26,772 31,170 36,087 21,630 25,335 29,497 34,150
22,494 27,410 33,149 39,812 21,478 26,172 31,652 38,014
22,130 28,055 35,246 43,911 21,322 27,031 33,959 42,307
21,767 28,708 37,466 48,420 21,164 27,912 36,427 47,078
21,403 29,368 39,815 53,378 21,004 28,819 39,070 52,380
21,040 30,036 42,301 58,830 20,842 29,752 41,901 58,274
20,678 30,711 44,931 64,823 20,678 30,711 44,931 64,823
20,316 31,393 47,712 71,410 20,316 31,393 47,712 71,410
19,953 32,078 50,649 78,639 19,953 32,078 50,649 78,639
19,589 32,767 53,747 86,572 19,589 32,767 53,747 86,572
19,224 33,456 57,012 95,268 19,224 33,456 57,012 95,268
18,856 34,144 60,447 104,791 18,856 34,144 60,447 104,791
18,487 34,830 64,062 115,217 18,487 34,830 64,062 115,217
18,115 35,514 67,863 126,629 18,115 35,514 67,863 126,629
17,744 36,195 71,860 139,113 17,744 36,195 71,860 139,113
17,373 36,875 76,063 152,773 17,373 36,875 76,063 152,773
17,003 37,554 80,481 167,713 17,003 37,554 80,481 167,713
15,154 40,845 106,009 265,648 15,154 40,845 106,009 265,648
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
25
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $104,488 MALE AGE 55 SINGLE PREMIUM $50,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------------- -------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 52,000 $ 52,500 $104,488 $104,488 $107,731 $111,766
2 54,080 55,125 104,488 104,488 111,075 119,556
3 56,243 57,881 104,488 104,488 114,526 127,892
4 58,493 60,775 104,488 104,488 118,085 136,812
5 60,833 63,814 104,488 104,488 121,755 146,358
6 63,266 67,005 104,488 104,488 125,542 156,575
7 65,797 70,355 104,488 104,488 129,448 167,509
8 68,428 73,873 104,488 104,488 133,478 179,213
9 71,166 77,566 104,488 104,488 137,635 191,742
10 74,012 81,445 104,488 104,488 141,925 205,154
11 76,973 85,517 104,488 104,488 146,351 219,513
12 80,052 89,793 104,488 104,488 150,917 234,886
13 83,254 94,282 104,488 104,488 155,628 251,344
14 86,584 98,997 104,488 104,488 160,489 268,965
15 90,047 103,946 104,488 104,488 165,504 287,831
16 93,649 109,144 104,488 104,488 170,679 308,029
17 97,395 114,601 104,488 104,488 176,018 329,657
18 101,291 120,331 104,488 104,488 181,529 352,820
19 105,342 126,348 104,488 104,488 187,216 377,630
20 109,556 132,665 104,488 104,488 193,086 404,206
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$47,844 $49,781 $ 51,718 $ 53,655 $44,341 $46,136 $ 47,932 $ 49,727
46,883 50,758 54,787 58,969 43,790 47,410 51,174 55,080
45,921 51,732 58,012 64,783 43,232 48,703 54,617 60,991
44,961 52,703 61,406 71,144 42,670 50,019 58,278 67,521
44,003 53,673 64,973 78,102 42,103 51,356 62,169 74,731
43,045 54,637 68,720 85,707 41,533 52,718 66,305 82,697
42,089 55,593 72,651 94,013 40,960 54,100 70,700 91,488
41,134 56,538 76,771 103,076 40,383 55,506 75,368 101,193
40,177 57,467 81,079 112,953 39,802 56,931 80,323 111,899
39,218 58,377 85,581 123,710 39,218 58,377 85,581 123,710
38,258 59,266 90,282 135,415 38,258 59,266 90,282 135,415
37,298 60,132 95,186 148,148 37,298 60,132 95,186 148,148
36,343 60,981 100,307 161,999 36,343 60,981 100,307 161,999
35,393 61,808 105,651 177,063 35,393 61,808 105,651 177,063
34,451 62,617 111,229 193,439 34,451 62,617 111,229 193,439
33,516 63,403 117,041 211,227 33,516 63,403 117,041 211,227
32,586 64,160 123,087 230,526 32,586 64,160 123,087 230,526
31,659 64,883 129,361 251,427 31,659 64,883 129,361 251,427
30,735 65,563 135,852 274,023 30,735 65,563 135,852 274,023
29,809 66,193 142,551 298,417 29,809 66,193 142,551 298,417
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
26
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $118,930 FEMALE AGE 5 SINGLE PREMIUM $10,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ---------------------------- ----------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 10,400 $ 10,500 $118,930 $118,930 $122,609 $ 127,188
2 10,816 11,025 118,930 118,930 126,401 136,014
3 11,249 11,576 118,930 118,930 130,308 145,450
4 11,699 12,155 118,930 118,930 134,333 155,535
5 12,167 12,763 118,930 118,930 138,482 166,316
6 12,653 13,401 118,930 118,930 142,757 177,839
7 13,159 14,071 118,930 118,930 147,163 190,160
8 13,686 14,775 118,930 118,930 151,707 203,335
9 14,233 15,513 118,930 118,930 156,389 217,423
10 14,802 16,289 118,930 118,930 161,217 232,491
11 15,395 17,103 118,930 118,930 166,196 248,605
12 16,010 17,959 118,930 118,930 171,328 265,837
13 16,651 18,856 118,930 118,930 176,620 284,267
14 17,317 19,799 118,930 118,930 182,075 303,974
15 18,009 20,789 118,930 118,930 187,698 325,047
16 18,730 21,829 118,930 118,930 193,495 347,578
17 19,479 22,920 118,930 118,930 199,470 371,670
18 20,258 24,066 118,930 118,930 205,629 397,428
19 21,068 25,270 118,930 118,930 211,978 424,969
20 21,911 26,533 118,930 118,930 218,521 454,413
60 (Age 65) 105,196 186,792 118,930 118,930 738,965 6,658,114
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------ ------- -------- ---------- ------ ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$9,444 $ 9,824 $ 10,206 $ 10,587 $8,690 $ 9,041 $ 9,391 $ 9,742
9,295 10,061 10,857 11,682 8,629 9,340 10,079 10,845
9,152 10,306 11,551 12,894 8,574 9,654 10,822 12,079
9,017 10,562 12,298 14,239 8,524 9,985 11,626 13,461
8,886 10,828 13,096 15,728 8,478 10,331 12,494 15,006
8,761 11,105 13,951 17,380 8,436 10,694 13,434 16,737
8,639 11,391 14,863 19,206 8,396 11,072 14,447 18,668
8,517 11,683 15,835 21,224 8,357 11,463 15,538 20,825
8,397 11,984 16,871 23,455 8,317 11,869 16,709 23,231
8,277 12,287 17,969 25,913 8,277 12,287 17,969 25,913
8,158 12,599 19,137 28,626 8,158 12,599 19,137 28,626
8,040 12,916 20,379 31,621 8,040 12,916 20,379 31,621
7,921 13,239 21,697 34,922 7,921 13,239 21,697 34,922
7,806 13,571 23,103 38,571 7,806 13,571 23,103 38,571
7,692 13,911 24,599 42,600 7,692 13,911 24,599 42,600
7,580 14,262 26,195 47,054 7,580 14,262 26,195 47,054
7,471 14,621 27,896 51,978 7,471 14,621 27,896 51,978
7,364 14,992 29,711 57,424 7,364 14,992 29,711 57,424
7,259 15,374 31,648 63,447 7,259 15,374 31,648 63,447
7,157 15,767 33,715 70,111 7,157 15,767 33,715 70,111
3,749 40,206 393,875 3,548,841 3,749 40,206 393,875 3,548,841
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
27
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $125,738 FEMALE AGE 25 SINGLE PREMIUM $20,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY -------------------------- ----------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $20,800 $21,000 $125,738 $125,738 $129,619 $ 134,449
2 21,632 22,050 125,738 125,738 133,620 143,763
3 22,497 23,153 125,738 125,738 137,743 153,722
4 23,397 24,310 125,738 125,738 141,994 164,369
5 24,333 25,526 125,738 125,738 146,376 175,754
6 25,306 26,802 125,738 125,738 150,893 187,926
7 26,319 28,142 125,738 125,738 155,549 200,943
8 27,371 29,549 125,738 125,738 160,348 214,858
9 28,466 31,027 125,738 125,738 165,296 229,738
10 29,605 32,578 125,738 125,738 170,396 245,649
11 30,789 34,207 125,738 125,738 175,654 262,661
12 32,021 35,917 125,738 125,738 181,075 280,854
13 33,301 37,713 125,738 125,738 186,664 300,312
14 34,634 39,599 125,738 125,738 192,426 321,121
15 36,019 41,579 125,738 125,738 198,369 343,377
16 37,460 43,658 125,738 125,738 204,496 367,185
17 38,958 45,840 125,738 125,738 210,814 392,650
18 40,516 48,132 125,738 125,738 217,330 419,889
19 42,137 50,539 125,738 125,738 224,050 449,025
20 43,822 53,066 125,738 125,738 230,978 480,190
40 (Age 65) 96,020 140,800 125,738 125,738 425,204 1,842,347
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-------------------------------------------------------- -------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$19,128 $19,899 $ 20,668 $ 21,439 $17,600 $18,308 $ 19,017 $ 19,725
18,863 20,412 22,023 23,695 17,512 18,951 20,446 21,999
18,602 20,941 23,468 26,191 17,427 19,617 21,985 24,535
18,347 21,484 25,009 28,949 17,345 20,311 23,643 27,369
18,096 22,044 26,653 32,002 17,266 21,032 25,430 30,534
17,849 22,619 28,405 35,377 17,188 21,781 27,354 34,067
17,605 23,207 30,272 39,107 17,111 22,557 29,425 38,011
17,365 23,813 32,265 43,233 17,038 23,364 31,657 42,418
17,130 24,435 34,389 47,796 16,968 24,204 34,063 47,344
16,897 25,073 36,652 52,838 16,897 25,073 36,652 52,838
16,667 25,727 39,064 58,412 16,667 25,727 39,064 58,412
16,437 26,396 41,629 64,568 16,437 26,396 41,629 64,568
16,208 27,075 44,352 71,357 16,208 27,075 44,352 71,357
15,980 27,767 47,248 78,847 15,980 27,767 47,248 78,847
15,748 28,469 50,317 87,101 15,748 28,469 50,317 87,101
15,517 29,180 53,571 96,192 15,517 29,180 53,571 96,192
15,283 29,899 57,019 106,200 15,283 29,899 57,019 106,200
15,049 30,628 60,672 117,220 15,049 30,628 60,672 117,220
14,814 31,365 64,542 129,350 14,814 31,365 64,542 129,350
14,579 32,113 68,644 142,707 14,579 32,113 68,644 142,707
10,167 49,469 226,637 981,989 10,167 49,469 226,637 981,989
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
28
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $95,798 FEMALE AGE 40 SINGLE PREMIUM $25,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY --------------------------- ----------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $26,000 $26,250 $95,798 $95,798 $ 98,757 $102,439
2 27,040 27,563 95,798 95,798 101,808 109,544
3 28,122 28,941 95,798 95,798 104,955 117,143
4 29,246 30,388 95,798 95,798 108,200 125,272
5 30,416 31,907 95,798 95,798 111,546 133,966
6 31,633 33,502 95,798 95,798 114,995 143,266
7 32,898 35,178 95,798 95,798 118,552 153,213
8 34,214 36,936 95,798 95,798 122,221 163,852
9 35,583 38,783 95,798 95,798 126,003 175,233
10 37,006 40,722 95,798 95,798 129,903 187,406
11 38,486 42,758 95,798 95,798 133,924 200,428
12 40,026 44,896 95,798 95,798 138,071 214,357
13 41,627 47,141 95,798 95,798 142,348 229,258
14 43,292 49,498 95,798 95,798 146,757 245,199
15 45,024 51,973 95,798 95,798 151,305 262,252
16 46,825 54,572 95,798 95,798 155,994 280,496
17 48,697 57,300 95,798 95,798 160,830 300,012
18 50,645 60,165 95,798 95,798 165,816 320,888
19 52,671 63,174 95,798 95,798 170,957 343,218
20 54,778 66,332 95,798 95,798 176,257 367,101
25 (Age 65) 66,646 84,659 95,798 95,798 205,345 513,986
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------------- ----------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$23,941 $24,906 $ 25,871 $ 26,835 $22,060 $22,949 $ 23,838 $ 24,726
23,581 25,520 27,536 29,628 21,919 23,722 25,595 27,540
23,219 26,142 29,300 32,702 21,773 24,514 27,475 30,666
22,856 26,771 31,168 36,087 21,626 25,330 29,491 34,144
22,494 27,410 33,150 39,813 21,475 26,168 31,647 38,008
22,134 28,059 35,250 43,916 21,322 27,031 33,959 42,308
21,774 28,718 37,478 48,435 21,169 27,920 36,436 47,090
21,418 29,387 39,840 53,411 21,017 28,837 39,093 52,410
21,062 30,067 42,341 58,885 20,862 29,782 41,941 58,328
20,709 30,756 44,994 64,911 20,709 30,756 44,994 64,911
20,357 31,454 47,801 71,539 20,357 31,454 47,801 71,539
20,007 32,162 50,775 78,830 20,007 32,162 50,775 78,830
19,657 32,877 53,921 86,843 19,657 32,877 53,921 86,843
19,310 33,601 57,246 95,647 19,310 33,601 57,246 95,647
18,962 34,331 60,764 105,320 18,962 34,331 60,764 105,320
18,617 35,068 64,481 115,946 18,617 35,068 64,481 115,946
18,275 35,816 68,417 127,624 18,275 35,816 68,417 127,624
17,937 36,576 72,584 140,465 17,937 36,576 72,584 140,465
17,604 37,350 77,002 154,592 17,604 37,350 77,002 154,592
17,278 38,141 81,689 170,141 17,278 38,141 81,689 170,141
15,686 42,225 109,451 273,960 15,686 42,225 109,451 273,960
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
29
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
INITIAL FACE AMOUNT $121,514 FEMALE AGE 55 SINGLE PREMIUM $50,000(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLE APPEARED IN A LANDSCAPED FORMAT IN THE PRINTED PROSPECTUS
AND HAD TO BE BROKEN INTO TWO TABLES TO FIT THE EDGAR FORMAT:]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT(2)
PREMIUM ACCUMULATED ASSUMING HYPOTHETICAL GROSS
END OF AT INTEREST PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ---------------------------- -------------------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 52,000 $ 52,500 $121,514 $121,514 $125,279 $129,967
2 54,080 55,125 121,514 121,514 129,163 139,010
3 56,243 57,881 121,514 121,514 133,167 148,683
4 58,493 60,775 121,514 121,514 137,296 159,030
5 60,833 63,814 121,514 121,514 141,552 170,096
6 63,266 67,005 121,514 121,514 145,941 181,934
7 65,797 70,355 121,514 121,514 150,467 194,597
8 68,428 73,873 121,514 121,514 155,134 208,144
9 71,166 77,566 121,514 121,514 159,948 222,641
10 74,012 81,445 121,514 121,514 164,915 238,155
11 76,973 85,517 121,514 121,514 170,038 254,758
12 80,052 89,793 121,514 121,514 175,321 272,526
13 83,254 94,282 121,514 121,514 180,771 291,541
14 86,584 98,997 121,514 121,514 186,391 311,887
15 90,047 103,946 121,514 121,514 192,187 333,658
16 93,649 109,144 121,514 121,514 198,166 356,954
17 97,395 114,601 121,514 121,514 204,333 381,886
18 101,291 120,331 121,514 121,514 210,695 408,575
19 105,342 126,348 121,514 121,514 217,260 437,149
20 109,556 132,665 121,514 121,514 224,035 467,746
</TABLE>
[THE LEFT HALF OF THE ILLUSTRATION TABLE (ABOVE) AND THE RIGHT HALF (BELOW)
APPEARED SIDE-BY-SIDE IN THE PRINTED PROSPECTUS:]
<TABLE>
<CAPTION>
ACCOUNT VALUE(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-------------------------------------------------------- --------------------------------------------------------
0% 4% 8% 12% 0% 4% 8% 12%
------- ------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$47,910 $49,848 $ 51,785 $ 53,723 $44,282 $46,072 $ 47,863 $ 49,654
47,030 50,911 54,946 59,134 43,822 47,439 51,198 55,102
46,160 51,990 58,292 65,084 43,371 48,849 54,770 61,151
45,305 53,091 61,840 71,630 42,928 50,305 58,596 67,872
44,465 54,215 65,605 78,834 42,494 51,812 62,696 75,338
43,638 55,359 69,593 86,757 42,070 53,368 67,092 83,639
42,821 56,519 73,816 95,465 41,650 54,974 71,796 92,853
42,006 57,688 78,273 105,019 41,228 56,620 76,823 103,075
41,189 58,857 82,967 115,486 40,801 58,303 82,185 114,399
40,368 60,021 87,902 126,939 40,368 60,021 87,902 126,939
39,543 61,176 93,084 139,462 39,543 61,176 93,084 139,462
38,718 62,329 98,532 153,162 38,718 62,329 98,532 153,162
37,895 63,477 104,261 168,149 37,895 63,477 104,261 168,149
37,081 64,634 110,300 184,565 37,081 64,634 110,300 184,565
36,276 65,797 116,663 202,540 36,276 65,797 116,663 202,540
35,479 66,965 123,364 222,215 35,479 66,965 123,364 222,215
34,686 68,125 130,401 243,712 34,686 68,125 130,401 243,712
33,891 69,270 137,770 267,159 33,891 69,270 137,770 267,159
33,090 70,382 145,452 292,662 33,090 70,382 145,452 292,662
32,280 71,453 153,439 320,354 32,280 71,453 153,439 320,354
[THE FOOTNOTES BELOW APPLY TO BOTH THE LEFT AND RIGHT HALVES OF THE ILLUSTRATION
TABLE ABOVE:]
<FN>
(1) Assumes a 2% premium tax.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED 0%, 4%, 8% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT, ACCOUNT VALUE
AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF
THE ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%,
8% OR 12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
30
<PAGE>
- - --------------------------------------------------------------------------------
YOU WILL RECEIVE
PERIODIC REPORTS
As a policy owner, you will receive an annual statement about your policy giving
you the status as of the first day of the current policy year of:
o the Death Benefit;
o the Account Value and Cash Surrender Value; and
o your outstanding loans.
Notice will also be sent to you for policy issuance, transfers of funds between
Divisions and certain other policy transactions.
You will receive a billing notice each year showing accrued interest for the
past policy year if you have a policy loan outstanding.
We will also send you semiannual reports with financial information on the
Separate Account and the Trust (including a list of the investments held by each
Portfolio in which the Divisions invest) as required by the 1940 Act.
- - --------------------------------------------------------------------------------
THE IMPACT OF TAXES
POLICY PROCEEDS
The Tax Reform Act of 1984 (1984 Act) includes a definition of life insurance
for tax purposes. Our variable life policy meets the statutory definition of
life insurance and hence will receive the same Federal income tax treatment as
fixed benefit life insurance. Thus, (a) the Death Benefit under our policy will
be excludable from the gross income of the beneficiary under Section 101(a)(1)
of the Internal Revenue Code (Code) and (b) the policy owner will not be deemed
to be in constructive receipt of the Cash Surrender Value under the policy until
the policy is actually surrendered. Only then would the owner be taxed on any
increase in Cash Surrender Value due to investment experience.
In general, if you return your policy for its Cash Surrender Value, you will not
be taxed on the amount you receive, except for the portion which exceeds the
premium you have paid.
A split of the policy into two policies followed by a return of one for cash, or
an exchange referred to under CANCELLATION AND EXCHANGE RIGHTS, may result in
taxable income to the policy owner depending on the circumstances. We suggest
you consult your tax adviser.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life policies in
order for such policies to be treated as life insurance. On September 15, 1986,
Treasury issued temporary regulations regarding the diversification
requirements. Failure to meet the diversification requirements would disqualify
SP-1 as a variable life insurance policy under Section 7702 of the Code. If this
were to occur, you would be taxed on the amount in your Policy Account that
exceeds the premiums you have paid. We believe that the investments underlying
SP-1 are in compliance with the requirements. We do not anticipate any problems
with the investments continuing to meet the requirements.
We also believe that loans received under the policies will be treated as
indebtedness of an owner, and that no part of any loan under a policy will
constitute income to the owner. (However, interest on policy loans is not
deductible.)
The individual situation of each policy owner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes.
See the Prospectus for the Trust for a discussion of the Trust's tax aspects,
including the diversification requirements.
- - --------------------------------------------------------------------------------
OUR INCOME TAXES
Under the life insurance company tax provisions of the Code, as amended by the
1984 Act, variable life insurance is treated in a manner consistent with fixed
life insurance. The operations of the Separate Account are included in the
Federal income tax return of Equitable Variable. Under current tax law,
Equitable Variable pays no tax on investment income and capital gains reflected
in variable life insurance policy reserves. Consequently, no charge is currently
being made to either Division of the Separate Account for our Federal income
taxes. We reserve the right, however, to make such a charge in the future, if
the law changes and we incur Federal income tax
- - --------------------------------------------------------------------------------
31
<PAGE>
- - --------------------------------------------------------------------------------
which is attributable to the Separate Account. If such a charge is made, it
would be set aside as a provision for taxes which we would keep in the affected
Division rather than in our general account. We anticipate that our variable
life policy owners will benefit from any investment earnings that are not needed
to maintain this provision. We may have to pay state and local taxes (in
addition to premium taxes) in several states. At present, these taxes are not
substantial. If they increase, however, charges may be made for such taxes when
they are attributable to the Separate Account.
- - --------------------------------------------------------------------------------
GENERAL PROVISIONS OF
OUR POLICY
This section of the prospectus describes the general provisions of our policy
and is subject to the terms of the policy you buy. You may review a copy of our
policy upon request.
The minimum single premium for this policy is $2,500. The policy may be issued
to age 75. The policy is issued only on a standard risk basis. Before issuing
any policy, we require satisfactory evidence of insurability.
You will handle all business connected with your policy at your regional Life
Insurance Center shown on page 3 of your policy.
- - --------------------------------------------------------------------------------
PREMIUM
Your premium is a single premium payment that must accompany your signed
application for the policy.
YOU CAN CHOOSE THE DIVISION OR DIVISIONS WHERE YOUR NET SINGLE PREMIUM WILL BE
PUT. You can decide how your net single premium will be applied to the
Divisions. You can put the whole net single premium in one Division or a
percentage in more than one Division. Percentages cannot be fractions and must
add up to 100.
You will make your decision on the application for your policy.
HOW WE USE THE PREMIUM. The single premium is used to cover expenses and to pay
Death Benefits.
We make no charge to cover the possibility that, at an insured's death, the
guaranteed minimum will be more than what would have been payable, based on the
investment experience of the Divisions, if there were no guaranteed minimum
Death Benefit. If the net premium exceeds what is needed to meet Death Benefits
over the years, the excess contributes to our profits.
CHANGES IN PREMIUM RATES. Congress and the legislatures of various states have
from time to time considered legislation that would require premium rates to be
the same for males and females of the same age and risk class.
ILLUSTRATION OF PREMIUM RATES. Premiums are based on actuarial estimates of
Death Benefits, Account Values, Cash Surrender Value benefits, expenses,
investment experience, and amounts contributed to our surplus.
The following table shows premium rates for certain face amounts. The rates per
$1,000 differ for different face amounts only because of our $200 administrative
fee, which is constant.
- - --------------------------------------------------------------------------------
PREMIUMS PER $1,000 INITIAL FACE AMOUNT*
Age at $10,000 Initial $25,000 Initial $50,000 Initial
Issue Face Amount Face Amount Face Amount
- - --------------------------------------------------------------------------------
Age 5
Male $119.70 $107.46 $103.38
Female 102.78 90.53 86.45
Age 25
Male 205.77 193.52 189.44
Female 177.85 165.60 161.52
Age 40
Male 323.05 310.81 306.72
Female 279.24 267.00 262.92
Age 55
Male 496.98 484.73 480.65
Female 430.20 417.96 413.88
- - --------------------------------------------------------------------------------
*Assuming a 2% state premium tax.
- - --------------------------------------------------------------------------------
32
<PAGE>
- - --------------------------------------------------------------------------------
CANCELLATION RIGHT
You have a limited right to return your policy to your regional Life Insurance
Center with a written request for cancellation. We will give you a full refund
(guaranteed by Equitable) of the single premium paid if your request and policy
are postmarked by the latest of the following:
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
- - --------------------------------------------------------------------------------
EXCHANGING OUR POLICY FOR FIXED
WHOLE LIFE INSURANCE
You may exchange your single premium variable life policy for a fixed whole life
single premium policy on the life of the insured (benefits will be as described
in the single premium fixed life policy). The fixed policy will be issued by
Equitable. You have this right for 24 months from the date your policy is
issued. The exchange will be effective when we receive your request, accompanied
by your policy and an application for the fixed policy.
We will not require evidence of the insured's insurability before an exchange.
The new policy's face amount will be the same as the initial face amount of the
variable life policy. It will also have the same register date and date of
issue. The new policy will be based on premiums for the same sex and age.
Any policy loan with accrued interest must be repaid before the exchange. The
exchange is also subject to limits described in the policy.
CASH ADJUSTMENT ON EXCHANGE. There will be a cash adjustment on exchange. The
adjustment will reflect the difference in premiums between the two policies. The
cash adjustment will also reflect the market performance of the variable life
policy.
The difference in premium will be payable by the owner. This amount, however,
will be adjusted. It will be decreased by the excess, if any, of the total Cash
Surrender Value over the tabular Cash Surrender Value of the policy or will be
increased by the excess, if any, of the tabular Cash Surrender Value over the
total Cash Surrender Value of the policy. We have filed a description of the
method we use to calculate the adjustment with the appropriate state insurance
officials.
You may choose, instead, Equitable Variable's single premium fixed life policy,
SP Plus. If you choose SP Plus, we will advise you of the cash adjustment and
how it is calculated.
- - --------------------------------------------------------------------------------
PAYMENT OPTIONS
The Death Benefit proceeds or Cash Surrender Value proceeds (net of loans) of
the policy offered by this prospectus can be paid in a lump sum. Or you may
choose to apply all or part of the proceeds under one of our payment options. A
combination of options can be used if we agree. Proceeds applied under an option
will no longer be affected by investment experience.
For an option to be used, the proceeds to be applied must be at least $2,500. If
no option is chosen at the insured's death, the beneficiary can choose an
option. The following options are available, subject to limits described in the
policy.
DEPOSIT OPTION. Proceeds are left on deposit with us. We will pay interest on
the proceeds of at least 3% a year, or we may set and pay a higher rate.
INSTALLMENT OPTION FOR A FIXED PERIOD. Proceeds are paid in installments for up
to 30 years, with interest of at least 3-1/2% a year.
INSTALLMENT OPTION OF A FIXED AMOUNT. Proceeds are paid in installments with
interest of at least 3-1/2% a year until the proceeds are used up.
LIFE INCOME OPTION WITH A PERIOD CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or the end of a
chosen period of 10 or 20 years.
LIFE INCOME OPTION WITH A REFUND CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or until they
are used up.
- - --------------------------------------------------------------------------------
33
<PAGE>
- - --------------------------------------------------------------------------------
BENEFICIARY
You name your beneficiary when you apply for your policy. You may change the
beneficiary during the insured's lifetime by writing to your regional Life
Insurance Center. If no beneficiary is living when the insured dies, the Death
Benefit will be paid in equal shares to the insured's surviving children. If
there is no surviving child, the Death Benefit will be paid to the insured's
estate.
- - --------------------------------------------------------------------------------
ASSIGNMENT
You may assign the policy as collateral for a loan or other obligation. We are
not responsible for any payment we make or action we take before we receive a
copy of the assignment at your regional Life Insurance Center.
- - --------------------------------------------------------------------------------
CREDITORS' CLAIMS
Proceeds are paid free from the claims of creditors to the extent allowed by
law.
- - --------------------------------------------------------------------------------
LIMITS ON OUR RIGHT TO CHALLENGE
THE POLICY
We cannot challenge the validity of the policy after it has been in effect
during the insured's lifetime for 2 years from the date of issue (unless another
date is required by law). If a death claim is made within the time we can
challenge validity, our payment will generally be delayed while we determine
whether to make such a challenge.
MISSTATEMENT OF AGE OR SEX. If the insured's age or sex is misstated in the
policy application, the Death Benefit will be what the premium paid would have
purchased based on the insured's true age and sex.
SUICIDE. If the insured commits suicide within 2 years from the date the policy
was issued (or less where required by law), the Death Benefit will be limited to
the sum of the premium paid minus outstanding policy loans with interest.
- - --------------------------------------------------------------------------------
DIVIDENDS
No dividends will be paid on the policy described in this prospectus.
- - --------------------------------------------------------------------------------
WHEN WE PAY PROCEEDS
Payment of the Death Benefit, Cash Surrender Value (net of loans) or loan
proceeds will be made within 7 days after we receive the required form or
request (and other documents that may be required for payment of the Death
Benefit) at your regional Life Insurance Center. If an Equitable agent is
assisting the beneficiary in preparing the documents required for payment of the
Death Benefit, we will send the check to the agent within 7 days after we
receive all required documents. The agent will then deliver the check to the
beneficiary. But we can delay payment if:
o payment is contested;
o it is not reasonably practicable to determine the amount because the New York
Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
o the SEC, by order, permits us to delay in order to protect our policy owners.
We will pay at least 3% interest a year if we delay paying the Cash Surrender
Value or loan proceeds more than 30 days.
- - --------------------------------------------------------------------------------
SALES AND OTHER
AGREEMENTS
Equitable Variable and Integrity Life Insurance Company, a wholly-owned
subsidiary of Equitable, are the principal underwriters for the Trust pursuant
to a Distribution Agreement. Under the Distribution Agreement, we have entered
into a Sales Agreement with Equitable by which Equitable will distribute our
policies.
Both Equitable Variable and Equitable are registered with the SEC as
broker-dealers under the Securities and Exchange Act of 1934, and we are each a
member of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies funded through our Separate Account I and
our other policies funded through our Separate Account FP, which is also a
registered investment company. (Equitable may also be deemed a principal
underwriter for our policies.)
- - --------------------------------------------------------------------------------
SALES BY AGENTS OF EQUITABLE
We sell our policies through agents who are licensed by state insurance
officials to sell our variable life insurance. These agents are also registered
representatives of Equitable.
Under the Sales Agreement, agents receive commissions from Equitable for selling
our policies. We reimburse Equitable for these commissions. We also reimburse
Equitable for other expenses incurred in marketing and selling our policies.
These expenses include agency and district managers' compensation, agents'
training allowance, deferred compensation, insurance benefits of agents and
agency and district managers, and agency clerical and advertising expenses.
- - --------------------------------------------------------------------------------
34
<PAGE>
- - --------------------------------------------------------------------------------
COMMISSION SCHEDULE. Agents may receive the equivalent of up to a maximum of 3%
of the premium.
Agents with less than 3 full years of service with Equitable may be paid
differently.
Agents who meet certain production and persistency standards in selling our
policies and Equitable policies will be eligible for added compensation. Agents
who meet certain lifetime production standards will be eligible to receive
increased fees for servicing our policies. Agents also are eligible for added
compensation for servicing our policies when there is no assigned soliciting
agent.
- - --------------------------------------------------------------------------------
SALES BY BROKERS
We also sell our policies through independent brokers who are licensed by state
insurance officials to sell our variable life insurance. They will also be
registered representatives either of Equitable or of another company registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934. The
commissions for independent brokers will be no more than those for agents.
Commissions will be paid through the registered broker-dealer.
- - --------------------------------------------------------------------------------
APPLICATIONS
When an application for one of our policies is completed, it is submitted to us.
Based on the information in the application and our standards for issuing
insurance and classifying risks, a policy may be issued. If a policy is not
issued, we will refund any premium that has been paid. (Equitable guarantees the
refund.)
- - --------------------------------------------------------------------------------
JOINT SERVICES AGREEMENT
In addition to acting as distributor for our policies, Equitable performs
certain other sales and administrative duties for us. Equitable does this
pursuant to a written agreement. The agreement is automatically renewed each
year, unless either party terminates.
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life policies.
- - --------------------------------------------------------------------------------
AMOUNTS PAID UNDER SALES AND
JOINT SERVICES AGREEMENTS
The amounts paid or accrued to Equitable by us under sales and the joint
services agreements totalled approximately $249.4 million in 1986, $225.7
million in 1985 and $164.8 million in 1984.
- - --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
- - --------------------------------------------------------------------------------
LEGAL MATTERS
The legal validity of the policy described in this prospectus has been passed on
by Herbert P. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C. law firm of Freedman, Levy, Kroll & Simonds has advised
Equitable Variable with respect to certain matters relating to Federal
securities laws.
- - --------------------------------------------------------------------------------
FINANCIAL AND ACTUARIAL
EXPERTS
The financial statements of the Separate Account and of Equitable Variable in
this prospectus have been examined by the accounting firm of Deloitte Haskins &
Sells, our independent auditors, to the extent stated in their opinions, and
their opinions on them are part of this prospectus. We have relied on the
opinions of Deloitte Haskins & Sells given upon their authority as experts in
accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is Vice President and Actuary of Equitable Variable and an
Assistant Vice President and Actuary of Equitable. His opinion on actuarial
matters is filed as an exhibit to the Registration Statement we filed with the
SEC.
- - --------------------------------------------------------------------------------
35
<PAGE>
- - --------------------------------------------------------------------------------
WHERE YOU CAN GET
ADDITIONAL
INFORMATION
We have filed with the SEC a Registration Statement relating to the Separate
Account and the variable life policy described in this prospectus. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain copies of that document from the SEC's main office
in Washington, D.C. You will have to pay a fee for the material.
- - --------------------------------------------------------------------------------
MANAGEMENT
Here is a list of our directors and officers and a brief statement of their
business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Harry Douglas Garber................................ Vice Chairman of the Board, Equitable, since February 1984; prior thereto,
Executive Vice President and Chief Financial Officer. Director, Equitable
Investment Corporation (EIC) and Genesco, Inc. Former Chairman and Chief
Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. .......................... Executive Vice President and Chief Financial Officer, Equitable, since
December 1984; prior thereto, Partner, Peat, Marwick, Mitchell & Co.
Richard Hampton Jenrette............................ Vice Chairman, Chief Investment Officer and Director, Equitable. Chairman,
Donaldson, Lufkin and Jenrette, Inc., since February 1985; prior thereto,
Chairman and Chief Executive Officer. Director, Equitable Capital
Management Corporation (Equitable Capital) and various other Equitable
subsidiaries.
William Thomas McCaffrey............................ Executive Vice President, Equitable, since March 1986; prior thereto,
various other Equitable positions.
Francis Helmut Schott............................... Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. .............................. Senior Executive Vice President, Director and Chief Operating Officer,
Equitable, since July 1986; prior thereto, Executive Vice President,
Director and Chief Investment Officer. Chairman, EIC since July 1986; prior
thereto, President and Chief Executive Officer. Director, Equitable
Capital and various other Equitable subsidiaries.
Peter Rawlinson Wilde............................... Executive Vice President, Equitable, since July 1984. Director, Integrity
Life Insurance Company (Integrity) and National Integrity Life Insurance
Company (National Integrity). Chairman and Chief Executive Officer,
Equitable Variable, from November 1984 to December 1986. Chief Financial
Officer, CIGNA Corporation, from April 1983 to June 1984; prior thereto,
Senior Vice President.
Brian Fredrick Wruble............................... Chairman, President and Chief Executive Officer, Equitable Capital.
Executive Vice President, Equitable, since September 1984; prior thereto,
various other Equitable positions.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
OFFICER -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Wayne Barth.................................. Chairman and Chief Executive Officer, Equitable Variable, since December
1986; President and Chief Operating Officer, from December 1985 to December
1986. Executive Vice President, Equitable, since June 1985; Senior Vice
President since September 1984; prior thereto, Vice President since April
1984.
Thomas Michael Kirwan............................... President and Chief Operating Officer, Equitable Variable, since December
1986. Executive Vice President and Chief Financial Officer, EIC, since
March 1985; prior thereto, President, Columbia Group -- CBS, Inc. Director,
Equitable Capital and various other Equitable subsidiaries.
Robert Seymour Jones................................ Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
Michael Searle Martin............................... Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
Stanley Julian Rispler.............................. Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger............................. Senior Vice President and Actuary, Equitable Variable, since February 1986.
Senior Vice President and Actuary, Equitable; prior thereto, Vice President
and Actuary.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
James Thomas Liddle, Jr. ........................... Senior Vice President and Chief Financial Officer, Equitable Variable,
since February 1986. Vice President and Actuary, Equitable.
Richard Marshall Stenson............................ Senior Vice President, Equitable Variable, since December 1981. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President and
Actuary. Actuary, Integrity.
William Arnold Canfield............................. Vice President and Chief Underwriting Officer, Equitable Variable. Vice
2 Penn Plaza President, Equitable.
New York, New York 10121
Franklin Kennedy, III............................... Vice President, Equitable Variable, since August 1981. Senior Vice
1221 Avenue of the Americas President, Equitable Capital since January 1987. Managing Director and
New York, New York 10020 Chief Investment Officer, Equitable Investment Management Corporation, from
November 1983 to January 1987. Vice President, Equitable.
Donald Anthony King................................. Vice President, Equitable Variable, since February 1986. Vice President,
1285 Avenue of the Americas Integrity, since April 1984. Vice President, Equitable, since January 1976.
New York, New York 10020 Executive Vice President, Equitable Capital.
Joseph Oswell North, Jr. ........................... Vice President and Actuary, Equitable Variable, since February 1984. Vice
2 Penn Plaza President and Actuary, Equitable, since October 1984; prior thereto,
New York, New York 10121 Assistant Vice President and Actuary, since April 1982.
Stephen Anthony Scarpati............................ Vice President and Controller, Equitable Variable, since June 1986. Vice
2 Penn Plaza President, Equitable, since December 1985. Vice President and Controller,
New York, New York 10121 EIC, from November 1984 to December 1985; prior thereto, Division
Controller, Colgate-Palmolive Company.
Larry Kenneth Mills................................. Treasurer, Equitable Variable, Integrity and National Integrity, since
February 1986. Vice President and Treasurer, Equitable, since March 1986;
prior thereto, Vice President.
Theodore Edward Plucinski, M.D. .................... Chief Medical Director, Equitable Variable, Integrity and National
2 Penn Plaza Integrity. Chief Medical Director, Equitable, since September 1985; prior
New York, New York 10121 thereto, Chief Medical Director, MONY.
Kevin Brian Keefe................................... Secretary, Equitable Variable, Integrity, National Integrity and The Hudson
River Trust, Vice President and Assistant Secretary, Equitable, since June
1986; prior thereto, Assistant Vice President and Assistant Secretary.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
[THE EQUITABLE FINANCIAL COMPANIES LOGO -- 1986 VERSION]
- - --------------------------------------------------------------------------------
Catalogue No. 121503
<PAGE>
[EDGARIZER'S NOTE:]
[THE SP-1 PROSPECTUS ENDS HERE; THE BASIC & EXPANDED PROSPECTUS FOLLOWS]
<PAGE>
- - --------------------------------------------------------------------------------
[VLI LOGO]
- - --------------------------------------------------------------------------------
LEVEL FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Basic Policy)
INCREASING FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Expanded Policy)
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
- - --------------------------------------------------------------------------------
VM 346 PROSPECTUS DATED APRIL 30, 1986
- - --------------------------------------------------------------------------------
THE HUDSON RIVER FUND, INC.
PRINCIPAL OFFICE LOCATED AT:
787 Seventh Avenue, New York, New York 10019
- - --------------------------------------------------------------------------------
VM 348 SUPPLEMENT DATED MAY 1, 1986 TO
VM 342 PROSPECTUS DATED APRIL 17, 1986
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
[VLI LOGO]
- - --------------------------------------------------------------------------------
LEVEL FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Basic Policy)
INCREASING FACE AMOUNT VARIABLE LIFE INSURANCE POLICY
(Expanded Policy)
- - --------------------------------------------------------------------------------
ISSUED BY
[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
This prospectus describes two variable life insurance policies being offered by
Equitable Variable. The Basic policy is available only for face amounts under
$50,000. Your net annual premiums are invested in the Common Stock Division and
the Money Market Division of Equitable Variable's Separate Account I.
Each policy owner decides whether the premiums for his or her policy will be put
into the Common Stock Division of the Money Market Division, or both, after
certain deductions have been made. The assets in each Division are invested in
shares of corresponding Portfolios of The Hudson River Fund, Inc.
The prospectus for the Fund, which is attached to this prospectus, describes the
investment objectives and policies of each of the Fund Portfolios as well as the
risks relating to investment in the Fund.
The investment policy of the Fund's Common Stock Portfolio is to purchase
primarily common stock and other equity-type instruments with the objective of
long-term growth of its capital and increasing income. The investment policy of
the Fund's Money Market Portfolio is to purchase primarily high quality
short-term money market instruments with the objective of obtaining a high level
of current income while preserving its assets and maintaining liquidity. There
is no guaranty that the objectives will be achieved.
The death benefit and cash value of a policy will vary up or down depending on
investment experience of the Divisions, which in turn depends on the investment
performance of the corresponding Portfolios. While there is no guaranteed
minimum cash value for a policy, Equitable Variable guarantees that a policy's
death benefit will never be less than its face amount as long as premiums are
paid on time and there is no outstanding policy loan.
A policy is serviced through a regional Life Insurance Center. This is the
Administrative Office shown on page 3 of a policy when it is issued. Equitable
Variable's Home Office is 787 Seventh Avenue, New York, New York. Telephone
(212) 714-5288.
REPLACING EXISTING INSURANCE WITH A POLICY DESCRIBED IN THIS PROSPECTUS MAY NOT
BE TO YOUR ADVANTAGE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE POLICIES BEING OFFERED AND KEEP
IT FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ATTACHED TO THE CURRENT
PROSPECTUS FOR THE HUDSON RIVER FUND, INC.
PROSPECTUS DATED APRIL 30, 1986
- - --------------------------------------------------------------------------------
VM-346
Copyright 1986 Equitable Variable Life Insurance Company. All rights reserved.
<PAGE>
- - --------------------------------------------------------------------------------
THE PURPOSES OF THE POLICIES WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION
FOR A POLICY'S BENEFICIARY.
WE DO NOT CLAIM THAT THE POLICIES ARE IN ANY WAY SIMILAR TO OR COMPARABLE TO A
MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
Because we want you to have as much information as possible about our variable
life policies before you buy one, we urge you to examine this prospectus
carefully, and we also urge you to read the attached Fund prospectus. This
prospectus assumes that all premiums are paid on time and there is no
outstanding policy loan.
The first Part of this prospectus contains a summary that will introduce us and
our variable life policies to you. You will find more detailed information in
Part 2 and financial statements in Part 3.
- - --------------------------------------------------------------------------------
PART 1 -- SUMMARY
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
THE ISSUING COMPANY
We are Equitable Variable Life Insurance Company (Equitable Variable), a New
York stock life insurance company.
- - --------------------------------------------------------------------------------
OUR PARENT, EQUITABLE
We are a wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States (Equitable), a New York mutual life insurance company.
- - --------------------------------------------------------------------------------
THE POLICIES
By this prospectus we are offering two types of variable life insurance
policies:
o Level Face Amount Policy (Basic Policy, Policy Number 85-01)
o Increasing Face Amount Policy (Expanded Policy, Policy Number 85-02).
The Basic policy is available only for face amounts between $25,000 and $49,999.
We also offer, through separate prospectuses, a single premium variable life
policy, a periodic premium variable life policy and a flexible premium variable
life policy. The net premiums for the Basic Policy and the Expanded Policy are
invested in our Separate Account I (Separate Account) which in turn buys shares
in The Hudson River Fund, Inc. (Fund).
- - --------------------------------------------------------------------------------
WHY VARIABLE LIFE VARIES
Our variable life policies are, first and foremost, whole life insurance
policies with death benefits, cash values, loan privileges, level premiums, and
other features traditionally associated with whole life insurance. They are
called "variable" because, unlike the fixed death benefits of an ordinary whole
life policy, the death benefits and cash values of our policies may increase or
decrease. They do so because your net annual premiums are put into our Separate
Account's Common Stock Division or Money Market Division. The assets of each
Division buy shares in the Fund's corresponding Common Stock Portfolio or Money
Market Portfolio. The Separate Account's investment experience will vary over
the years reflecting the investment performance of the Fund's Portfolios in
which it invests.
When the Separate Account's net investment return is greater than the assumed
investment return of 4%, additional amounts of paid-up life insurance are
purchased. This results in additional death benefit and cash value. If the
Separate Account's net investment return is less than the assumed investment
return, this additional paid-up life insurance may be lost, resulting in smaller
cash value and death benefit, but the death benefit will never be less than the
guaranteed minimum.
- - --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT, ITS
INVESTMENTS AND ITS
INVESTMENT EXPERIENCE
Our Separate Account is registered with the Securities and Exchange Commission
(SEC) under the Investment Company Act of 1940 (1940 Act) as a unit investment
trust, which is a type of investment company. For state law purposes the
Separate Account is treated as a part of us.
After making certain deductions from premiums, we put the net annual premiums in
either the Common Stock Division or the Money Market Division (Division) of the
Separate Account. You decide whether your policy's net annual premium will be
put entirely in one Division or whether you want a percentage in each Division.
Each Division invests in shares of a corresponding investment portfolio of the
Fund: the Common Stock Portfolio and the Money Market Portfolio (Portfolio).
Each Portfolio has a different investment policy. Throughout this prospectus we
will discuss the investment experience of the Separate Account and the
Divisions. You should keep in mind that THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT AND THE DIVISIONS DEPENDS ON THE INVESTMENT PERFORMANCE OF THE
FUND AND THE CORRESPONDING PORTFOLIOS.
- - --------------------------------------------------------------------------------
2
<PAGE>
- - --------------------------------------------------------------------------------
THE FUND
The Hudson River Fund, Inc. is a "series" type of mutual fund registered with
the SEC under the 1940 Act as an open-end diversified management investment
company. In addition to the Common Stock Portfolio and the Money Market
Portfolio referred to above, the Fund has a Balanced Portfolio and an Aggressive
Stock Portfolio which currently are not available for investment by the Separate
Account. The Fund does not impose a sales charge.
It is anticipated that, subject to obtaining additional necessary governmental
exemptions and approvals, if any, the Fund may serve as an investment medium
for, among others, variable annuity contracts issued by Equitable, variable life
policies and variable annuity contracts issued by Integrity Life Insurance
Company (Integrity, a wholly-owned subsidiary of Equitable), new series of
variable life policies issued by us, and variable life policies and variable
annuity contracts issued by insurers affiliated or unaffiliated with Equitable.
We are currently in control of the Fund; however, purchasers of each of these
contracts will also have voting privileges in the Fund. See YOUR VOTING
PRIVILEGES.
The Fund's address is 787 Seventh Avenue, New York, New York 10019. The Fund's
custodian is The Chase Manhattan Bank, N.A.
- - --------------------------------------------------------------------------------
FUND PORTFOLIO INVESTMENT
POLICIES AND OBJECTIVES
The investment policy of the Common Stock Portfolio is to purchase primarily
common stock and other equity-type instruments to achieve long-term growth of
its capital and increasing income. The investment policy of the Money Market
Portfolio is to purchase primarily high quality short-term money market
instruments to obtain a high level of current income while preserving its assets
and maintaining liquidity.
- - --------------------------------------------------------------------------------
THE FUND'S INVESTMENT
ADVISERS
The Fund is advised by Equitable Investment Management Corporation (EIMC), which
is a subsidiary of Equitable, and by Integrity. They are registered with the SEC
as investment advisers under the Investment Advisers Act of 1940. The Fund pays
advisory fees to EIMC and Integrity based on maximum annual rates of 0.40% of
the average daily value of the aggregate net assets of the Common Stock, Money
Market and Balanced Portfolios and 0.50% of the average daily value of the
aggregate net assets of the Aggressive Stock Portfolio. However, we credit the
values of our Basic and Expanded policies to offset completely the effect on
such values of the portion of the Fund's advisory fees which exceeds a 0.25%
annual rate.
- - --------------------------------------------------------------------------------
DEATH BENEFITS
The death benefit under a policy can go up or down depending on the investment
experience of the Division or Divisions into which you choose to put your net
premiums. The guaranteed minimum Death Benefit is the face amount of the policy
regardless of the investment experience of the Divisions. In the first policy
year, the death benefit equals the initial face amount. In each later policy
year, the death benefit equals the guaranteed minimum death benefit, plus the
sum (if positive) of the variable adjustment amounts in the Divisions in which
you have cash value.
See THE VARIABLE ADJUSTMENT AMOUNT and THE GUARANTEED MINIMUM DEATH BENEFIT in
Part 2.
- - --------------------------------------------------------------------------------
CASH VALUE
Our policies are whole life policies and they can have a cash value. The cash
value of a policy may increase or decrease daily to reflect the investment
experience of the Divisions in which your policy participates. Unlike the death
benefits, which have a guaranteed minimum, we do not guarantee a minimum amount
of cash value. You will bear the entire market risk for cash value.
You can request that all or part of your cash value be transferred between the
Divisions. See YOU CAN TRANSFER CASH VALUE BETWEEN DIVISIONS in Part 2.
- - --------------------------------------------------------------------------------
COMMISSIONS
The agent or broker who sells you one of our policies will receive a commission
for the first policy year equivalent to a maximum of 50% of the first year
premium that is payable. Commissions and fees the agent or broker will receive
in later policy years are described under SALES AND OTHER AGREEMENTS in Part 2.
The commissions and fees are paid by Equitable Variable and do not equal the
charges for sales load discussed in this prospectus. See DEDUCTIONS FROM
PREMIUMS in Part 2.
- - --------------------------------------------------------------------------------
CHARGES AGAINST PREMIUMS
Your net annual premium is put into our Separate Account each year. This is your
total premium after deductions for any optional insurance benefits, the sales
load, state premium taxes, annual administrative expenses and a risk charge for
the guaranteed minimum death benefit. The charge for sales load is used to pay
agent or broker commissions and other sales expenses for the policy. (You do not
pay any sales charge for shares of the Fund purchased by the Separate Account.)
In the first policy year we also deduct a fixed charge for expenses incurred in
issuing the policy.
See DEDUCTIONS FROM PREMIUMS in Part 2.
- - --------------------------------------------------------------------------------
3
<PAGE>
- - --------------------------------------------------------------------------------
CHARGES AGAINST THE
SEPARATE ACCOUNT
The amount in the Divisions credited to your policy is decreased by the cost of
your insurance protection. Also, the investment experience of the Separate
Account reflects a daily charge we make at an effective annual rate of 0.50% of
the value of the assets of the Separate Account for certain mortality and
expense risks.
Any charges against the Divisions will have an impact on whether the Divisions
earn more than the assumed rate of 4% and whether your policy's death benefit
increases above the guaranteed minimum.
For more information on the cost of insurance, see HOW WE SUPPORT THE OPERATIONS
OF A POLICY in Part 2.
- - --------------------------------------------------------------------------------
POLICY LOANS
As a policy owner, you may borrow up to 90% of your policy's cash value at 5%
interest but borrowed amounts are transferred out of the Divisions and,
therefore, are not affected by the investment experience. You may choose an
adjustable loan interest rate, and if you do, we will credit the adjustable loan
interest rate less 0.75% (and less any charge for taxes) on the borrowed
amounts. For a loan at 5% interest, we will credit the assumed interest rate of
4% to the borrowed amounts.
See TAKING A POLICY LOAN in Part 2.
- - --------------------------------------------------------------------------------
PREMIUMS
The size of an annual premium depends on which policy you choose, the initial
face amount (which must be at least $25,000) and the insured's risk class, age
and sex. We guarantee that a premium will remain the same once it has been
determined.
- - --------------------------------------------------------------------------------
CANCELLATION AND
EXCHANGE RIGHTS
You have a limited right to return your policy for cancellation and a full
refund of premiums paid. Your request must be postmarked by the latest of
o 10 days after you receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
Also, within 18 months of a policy's issue date, it may be exchanged for a fixed
whole life insurance policy on the life of the insured without submitting proof
of insurability.
- - --------------------------------------------------------------------------------
INCOME TAXES
Any death benefit paid under our policies is fully excludable from the gross
income of the beneficiary for Federal income tax purposes. This may differ for
policies owned by pension or profit sharing plans.
We may, in the future, charge the Divisions for any portion of our income taxes
attributable to the Separate Account.
See THE IMPACT OF TAXES in Part 2.
- - --------------------------------------------------------------------------------
MORE INFORMATION
For further information, including illustrations of how the investment
experience of the Separate Account Divisions and the investment performance of
the Fund could cause death benefits and cash values to vary, please see Part 2
of this prospectus and the Fund's current prospectus. Our financial statements
are in Part 3 of this prospectus. The Fund's prospectus contains Condensed
Financial Information for the Fund and its Statement of Additional Information
contains its financial statements.
- - --------------------------------------------------------------------------------
4
<PAGE>
- - --------------------------------------------------------------------------------
CONDENSED
FINANCIAL
INFORMATION
SEPARATE ACCOUNT I
The tables below show the actual net returns of the Divisions of our Separate
Account as if the Reorganization discussed under GENERAL INFORMATION -- ABOUT US
- - -- REORGANIZATION had always been in effect. The tables show the actual net
returns of the predecessor Separate Accounts I and II operating as management
investment companies prior to the Reorganization. The same results would have
been achieved if the continuing Separate Account had operated as a unit
investment trust investing in The Hudson River Fund, Inc., for all the periods
shown, the operations of the Fund having been as currently reported in the
Fund's separate Prospectus and Statement of Additional Information. The net
returns for each Division for the periods shown assume the Common Stock Division
and the Money Market Division would have received initial policy premium
allocations on January 13, 1976 and August 21, 1981, respectively, the dates on
which our former Separate Accounts I and II first received premium allocations
under variable life policies. The tables break the net return into its component
parts.
When you examine the tables, remember that the percentages apply to a policy
with its policy year starting on the first day of the periods shown and apply to
a policy that would have been in force throughout the periods shown. Because
they are determined each December 31, the percentages do not reflect the average
net assets in the Divisions during those periods. The auditing firm of Deloitte
Haskins & Sells, our independent auditors, has examined the tables (for its
opinion, see the Separate Account financial statements in part 3 of this
prospectus). To get a more complete picture of the Separate account and its
Divisions you may want to refer to the financial statements and related notes in
the Statement of Additional Information for The Hudson River Fund, Inc.
- - --------------------------------------------------------------------------------
COMMON STOCK DIVISION
<TABLE>
<CAPTION>
January 13,
Year Ended December 31, 1976 to
--------------------------------------------------------------------------------------- December 31,
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976(a)(b)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET RETURN:
Income 2.95 % 3.22 % 2.65 % 4.64 % 4.02 % 4.35 % 3.91 % 4.06 % 3.49 % 2.63 %
Net realized and
unrealized gain
(loss) on
investments 31.14 % (4.68)% 24.06 % 13.58 % (9.40)% 46.48 % 26.56 % 4.72 % (12.26)% 7.00 %
----- ----- ----- ----- ----- ----- ----- ---- ----- ----
Gross Return 34.09 % (1.46)% 26.71 % 18.22 % (5.38)% 50.83 % 30.47 % 8.78 % (8.77)% 9.63 %
Expense charges (1.00)% (.74)% (.94)% (.95)% (.70)% (1.13)% (.98)% (.81)% (.69)% (.77)%
----- ----- ----- ----- ----- ----- ----- ---- ----- ----
Net Return 33.09 % (2.20)% 25.77 % 17.27 % (6.08)% 49.70 % 29.49 % 7.97 % (9.46)% 8.86 %
===== ===== ===== ===== ===== ===== ===== ==== ===== ====
- - --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to the
predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not annual
rates of return, and they are not necessarily indicative of those returns
which would have been realized for a full year.
</FN>
</TABLE>
The effective annual rate of return for the Common Stock Division from January
13, 1976 to December 31, 1985 was 14.09%. For the same period ended December 31,
1985, the average annual increase for the Standard and Poor's 500 Stock Index
with dividends reinvested was 13.63%. (Standard and Poor's is an unmanaged index
of groups of common stocks.)
- - --------------------------------------------------------------------------------
MONEY MARKET DIVISION
<TABLE>
<CAPTION>
August 21,
Year Ended December 31, 1981 to
------------------------------------------------- December 31,
1985 1984 1983 1982 1981(a)(b)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET RETURN:
Income 9.36 % 11.00 % 9.56 % 13.53 % 5.46 %
Net realized and unrealized gain
(loss) on investments (.09)% .42 % (.06)% .03 % .06 %
---- ----- ---- ----- ----
Gross Return 9.27 % 11.42 % 9.50 % 13.56 % 5.52 %
Expense charges (.81)% (.84)% (.83)% (.84)% (.35)%
---- ----- ---- ----- ----
Net Return 8.46 % 10.58 % 8.67 % 12.72 % 5.17 %
==== ===== ==== ===== ====
- - --------------------------------------------------------------------------------
<FN>
(a) Date as of which net premiums under the policies were first allocated to the
predecessor of the Division.
(b) The gross return and the net return for the periods indicated are not annual
rates of return, and they are not necessarily indicative of those returns
which would have been realized for a full year.
- - --------------------------------------------------------------------------------
</FN>
</TABLE>
5
<PAGE>
- - --------------------------------------------------------------------------------
HYPOTHETICAL
ILLUSTRATIONS
The following illustrations are based on the assumption that the Separate
Account and the Fund had been operating since January 1, 1976 in the same manner
as they operate as a result of the implementation of the Reorganization
described under GENERAL INFORMATION -- ABOUT US -- REORGANIZATION in Part 2. For
illustrations based on various constant hypothetical annual investment returns,
see ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, AND ACCUMULATED PREMIUMS in
Part 2.
- - --------------------------------------------------------------------------------
ILLUSTRATIONS OF VARIATIONS
OF THE DEATH BENEFIT AND
THE CASH VALUE IN
RELATION TO ACTUAL
INVESTMENT EXPERIENCE OF
THE COMMON STOCK DIVISION
The following example shows how the net return of the Common Stock Division
would have affected the death benefits and cash values of two policies dated
January 1, 1976. Assume an annual premium of $500 and that the insured was a 25
year old male and a standard risk on January 1, 1976.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------
BASIC POLICY EXPANDED POLICY
($40,034 Face Amount) ($29,541 Initial Face Amount)
- - -------------------------------------------------------------------------------------------------------------------------
Cash Death Guaranteed Cash Death Guaranteed
Policy Anniversary In: Value Benefit Minimum Value Benefit Minimum
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1977* $ 96 $40,071 $40,034 $ 174 $30,476 $30,427
1978 359 40,034 40,034 443 31,343 31,343
1979 744 40,034 40,034 848 32,288 32,288
1980 1,343 41,017 40,034 1,482 34,323 33,263
1981 2,636 44,863 40,034 2,865 39,448 34,238
1982 2,787 43,595 40,034 3,015 39,119 35,272
1983 3,578 44,949 40,034 3,850 41,633 36,335
1984 5,022 48,724 40,034 5,378 46,757 37,428
1985 5,195 47,338 40,034 5,547 46,403 38,551
1986 7,433 53,596 40,034 7,908 54,206 39,703
- - -------------------------------------------------------------------------------------------------------------------------
<FN>
*Reflects net investment income credited at the assumed rate of 4% from January
1, 1976 to January 12, 1976, and the actual rate of return for the Common Stock
Division assuming the investment performance of the Fund's Common Stock
Portfolio was the same as our pre-Reorganization Separate Account I starting
January 13, 1976. Net annual premiums were first put into our
pre-Reorganization Separate Account I on January 13, 1976.
</FN>
</TABLE>
Remember, this example of past investment performance is for a specific age,
sex, risk class, premium amount and policy anniversary. Also, the policy series
described in this prospectus was not available in 1976. The benefits illustrated
under these policies are calculated on the policy anniversary and do not
represent the average net investment performance of our pre-Reorganization
Separate Account I during the policy year. Past investment performance should
not be deemed a representation of future investment experience of the Division
or investment performance of the Fund.
This example assumes that net annual premiums and related cash values are 100%
in the Common Stock Division for the entire period.
- - --------------------------------------------------------------------------------
ILLUSTRATION OF VARIATIONS
OF THE DEATH BENEFIT AND
THE CASH VALUE IN
RELATION TO ACTUAL
INVESTMENT EXPERIENCE OF
THE MONEY MARKET DIVISION
The following example shows how the net return of the Money Market Division
would have affected the death benefits and cash values of two policies dated
January 1, 1982. Assume an annual premium of $500 and that the insured was a 25
year old male and a standard risk on January 1, 1982.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------
BASIC POLICY EXPANDED POLICY
($40,034 Face Amount) ($29,541 Initial Face Amount)
- - -------------------------------------------------------------------------------------------------------------------------
Cash Death Guaranteed Cash Death Guaranteed
Policy Anniversary In: Value Benefit Minimum Value Benefit Minimum
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1983 $ 102 $40,103 $40,034 $ 182 $30,519 $30,427
1984 458 40,214 40,034 558 31,563 31,343
1985 860 40,471 40,034 982 32,793 32,288
1986 1,277 40,721 40,034 1,419 34,041 33,263
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
This example reflects Money Market Division investment experience assuming the
investment performance of the Fund's Money Market Portfolio was the same as our
pre-Reorganization Separate Account II starting January 1, 1982. Net annual
premiums under variable life policies were first put into our pre-Reorganization
Separate Account II on August 21, 1981.
Remember, this example of past investment performance is for a specific age,
sex, risk class, premium amount and policy anniversary. The benefits illustrated
under the Basic and Expanded policies are calculated on the policy anniversary
and do not represent the average net investment performance of our
pre-Reorganization Separate Account II during the policy year. Past investment
performance should not be deemed a representation of future investment
experience of the Division or future investment performance of the Fund.
This example assumes that net annual premiums and related cash values are 100%
in the Money Market Division for the entire period.
- - --------------------------------------------------------------------------------
6
<PAGE>
- - --------------------------------------------------------------------------------
PART 2 -- DETAILED INFORMATION
- - --------------------------------------------------------------------------------
GENERAL
INFORMATION
ABOUT US
We are Equitable Variable. We were organized in 1972 in New York State as a
stock life insurance company and are authorized to sell life insurance and
annuities there. We also are authorized to sell life insurance and annuities in
other jurisdictions. In January of 1976 we began selling periodic premium
variable life policies, and two years later, in January of 1978, we began
selling fixed annuity contracts.
In 1983 we began selling a form of fixed life insurance policy, the Equitable
Life Account. In 1983 we also began selling single premium variable life
policies. In 1986 we began selling an individual flexible premium variable life
policy designed to provide insurance coverage with flexibility in death benefits
and premium payments. We also sell two types of term insurance policies, fixed
single premium life insurance policies and universal life insurance policies. At
the end of 1985 we had approximately $6.9 billion face amount of variable life
insurance in force and $38 billion of fixed life insurance in force (and about
$1.6 billion of fixed annuity payment obligations).
REORGANIZATION. Pursuant to a Plan of Reorganization (Reorganization) approved
at a meeting of our policy owners held on February 14, 1985, effective as of
March 22, 1985, we restructured our Separate Accounts I and II into one separate
account in unit investment trust form. To accomplish this restructuring, we
converted our then existing Separate Account I, a Common Stock Account and
Separate Account II, a Money Market Account, into our continuing Separate
Account I with two investment divisions: the Common Stock Division and the Money
Market Division. On March 22, 1985, all of the assets and related liabilities of
our former Separate Accounts I and II were transferred to the Common Stock and
Money Market Portfolios of the Fund, respectively, in exchange for shares in the
Portfolios, and we ceased to be an investment adviser of our continuing Separate
Account. EIMC, which served with us as an investment adviser of our former
Separate Accounts I and II, continues as an investment adviser to the Fund. At
the Reorganization, Integrity began to serve, together with EIMC, as an
investment adviser to the Fund. The Separate Account no longer requires an
investment adviser. The Reorganization did not change the policy values of then
outstanding policies or policies.
Policy owners who have our variable life policies on a single premium basis, as
well as on a periodic premium basis, have monies placed in our Separate Account.
Our financial statement including those of our continuing Separate Account are
in Part 3.
- - --------------------------------------------------------------------------------
EQUITABLE
Equitable is a New York mutual life insurance company that has its home office
at 787 Seventh Avenue, New York, N.Y. 10019.
Equitable has been in business since 1859. Equitable's total assets make it the
third largest life insurance company in the United States. At December 31, 1985
these assets were over $51 billion. Equitable is also one of the largest
managers of retirement fund assets. At December 31, 1985, Equitable and its
subsidiaries, such as Alliance Capital Management Corporation, were managing
pension fund assets of over $54 billion and total assets of over $91 billion. At
December 31, 1985, Equitable, together with EIMC, was responsible for stock
portfolios of over $5 billion and debt portfolios of about $23 billion. These
portfolios include amounts in our General Account, Equitable's General Account
and separate accounts, and other accounts managed by Equitable and EIMC.
Between the time we were organized and the end of December 1985, Equitable
invested over $334 million in us. This money has been used to help us meet
operational costs and policy reserve requirements.
Equitable probably will invest more money in us in the future although it has no
legal obligation to do so. Its assets do not back benefits that may be paid
under the policy discussed in this prospectus.
In December, 1984, Equitable acquired Donaldson, Lufkin & Jenrette, Inc. (DLJ).
A DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation, is one of
the nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated research to institutions. Through the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation, DLJ supplies correspondent services,
including order execution, securities clearance and other centralized financial
services, to approximately 300 independent regional securities firms and 100
banks.
- - --------------------------------------------------------------------------------
7
<PAGE>
- - --------------------------------------------------------------------------------
To the extent permitted by law, Equitable Variable and their separate accounts
and affiliated companies, several of which are registered investment companies
(including the Fund), may engage in securities and other transactions with the
various entities mentioned in the preceding paragraph or may invest in shares of
investment companies with which those entities have affiliations.
- - --------------------------------------------------------------------------------
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to insurance laws and regulations in ever jurisdiction
where we sell our policies. We submit annual reports on our operations and
finances to insurance officials in these jurisdictions. The officials are
responsible for reviewing our reports to be sure we are financially sound and
that we are complying with applicable laws and regulations.
Our Basic and Expanded variable life policies have been approved in 49 states
and the Virgin Islands.
We are also subject to various Federal securities laws and regulations.
- - --------------------------------------------------------------------------------
THE FUND
The Hudson River Fund, Inc. currently issues four series of classes of shares,
each of which represents an interest in one of the Fund's Portfolios. Shares of
the Common Stock and Money Market Portfolios are purchased and redeemed by the
corresponding Separate Account Division. The Fund sells and redeems its shares
at net asset value. It does not impose a sales charge.
It is anticipated that, subject to obtaining additional necessary governmental
exemptions and approvals, if any, the Fund may serve as an investment medium
for, among others, variable annuity contracts issued by Equitable, variable life
policies and variable annuity contracts issued by Integrity, new series of
variable life policies issued by us, and variable life insurance policies and
variable annuity contracts issued by insurers affiliated or unaffiliated with
Equitable. Letters of intent have been signed with two such unaffiliated
insurers and preliminary discussions are now going on with several additional
unaffiliated insurers. We currently do not foresee any disadvantages to our
policy owners arising out of this. However, the Fund's Board of Directors
intends to monitor events in order to identify any material irreconcilable
conflicts that possibly may arise and to determine what action, if any, should
be taken in response. If we believe that the Fund's response to any of those
events insufficiently protects our policy owners, we will see to it that
appropriate action is taken to protect our policy owners. Also, if we ever
believe that any of the Fund's Portfolios is so large as to materially impair
the investment performance of a Portfolio or the Fund, we will examine other
investment options.
The Fund's shares will be sold only to separate accounts of insurance companies.
Since we are the only insurance company now investing in the Fund, we are
currently in control of the Fund. We owned approximately $331 million worth of
the Fund's shares as of December 31, 1985, and we will continue to control the
Fund at least until other insurance companies, selling significant amounts of
variable insurance products, have made substantial investments in Fund shares.
The Fund's address is 787 Seventh Avenue, New York, New York 10019. The
custodian of the securities and other assets of the Fund is The Chase Manhattan
Bank, N.A.
The Fund, its investment objectives and policies, its risks, expenses,
organization and other aspects of its operations are described in more detail in
its prospectus, which is attached to this prospectus, and in a Statement of
Additional Information which may be obtained free of charge by written request
to the Fund at 787 Seventh Avenue, New York, New York 10019. Please carefully
read the Fund's prospectus.
- - --------------------------------------------------------------------------------
THE FUND'S INVESTMENT
ADVISERS
The Fund is advised by EIMC and Integrity. They are registered with the SEC as
investment advisers under the Investment Advisers Act of 1940. EIMC's address is
1221 Avenue of the Americas, New York, New York 10020 and Integrity's address is
787 Seventh Avenue, New York, New York 10019.
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8
<PAGE>
- - --------------------------------------------------------------------------------
Services are provided pursuant to an investment advisory agreement among the
Fund, EIMC and Integrity for a fee equivalent to maximum annual rates of 0.40%
of the average daily value of the aggregate net assets of the Common Stock,
Money Market and Balanced Portfolios (0.25% to EIMC and 0.15% to Integrity) and
0.50% of the average daily value of the Aggressive Stock Portfolio's aggregate
net assets (0.35% to EIMC and 0.15% to Integrity). We make a daily credit to the
values of our Basic and Expanded policies to offset completely the effect on
such values of the portion of the Fund's investment advisory fee which exceeds a
0.25% annual rate and all other Fund expenses except (a) all brokers'
commissions, transfer taxes and other fees and expenses for services relating to
purchases and sales of Portfolio investments and (b) any Fund income tax
liabilities.
- - --------------------------------------------------------------------------------
DEDUCTIONS FROM
PREMIUMS
The amount of premium put into the Separate Account's Divisions is based on what
is called the basic annual premium. This is the total annual premium for a
standard mortality risk policy minus a $30 annual administrative charge and
minus the premiums for any optional insurance benefits you take. After we figure
the basic annual premium, we deduct certain charges and put the rest (the net
annual premium) into the Separate Account's Divisions.
A summary of charges against premiums follows. We guarantee that premiums will
not increase.
- - --------------------------------------------------------------------------------
ANNUAL ADMINISTRATIVE
CHARGE
We charge $30 in each policy year for administrative expenses. These include:
o premium billing and collection;
o processing claims, paying cash values, and making policy changes;
o record keeping;
o communicating with policy owners; and
o other expenses and overhead.
- - --------------------------------------------------------------------------------
ADDITIONAL FIRST YEAR
ADMINISTRATIVE CHARGE
In the first policy year we make a one-time administrative charge of $5 for each
$1,000 of initial face amount of a policy. This charge is applied to the cost
of:
o processing applications;
o conducting medical examinations;
o establishing policy records; and
o determining insurability and assigning the insured to a risk class.
- - --------------------------------------------------------------------------------
SALES LOAD
We make a charge that can be considered a "sales load". The amount of the sales
load in a policy year is not necessarily related to our actual sales expenses
for that year. We expect to recover our total sales expenses over the lifetimes
of the insureds.
Our sales load charge will not be more than:
o 20% of the basic annual premium for the first policy year;
o 14.5% of the basic annual premium for the 2nd through 4th policy years; and
o 7.25% of the basic annual premium for all policy years after the 4th.
To the extent sales expenses are not covered by the sales load, we will cover
them from funds other than premium deductions.
- - --------------------------------------------------------------------------------
RISK CHARGE
We charge 1.2% of the basic annual premium to provide for the possibility that
an insured will die at a time when, based on the investment experience of the
Separate Account, the death benefit that would ordinarily be paid is less than
the guaranteed minimum death benefit of the policy.
- - --------------------------------------------------------------------------------
STATE PREMIUM TAX CHARGE
We deduct 2% of the basic annual premium to cover state premium taxes. These
taxes vary from state to state and the 2% rate is an average.
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9
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EXAMPLE OF DEDUCTIONS
FROM PREMIUMS
The following example (using the policies shown in the ILLUSTRATION OF DEATH
BENEFITS, CASH VALUES, AND ACCUMULATED PREMIUMS) shows what amount of net annual
premium would be put into the Separate Account at the start of each policy year.
A policy's actual cash value is related to the policy's net annual premium. The
differences between net annual premiums for males and females are due to two
factors: the higher face amounts for females cause higher first year
administrative charges and our pricing policies lead to other variations. These
variations sometimes lead to lower sales loads.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------
Issue Age 10 Issue Age 25 Issue Age 40
$300 Annual $500 Annual $1,000 Annual
Beginning of Premium for Premium for Premium for
Policy Year Standard Risk Standard Risk Standard Risk
- - ------------------------------------------------------------------------------------------------------
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
Basic Policy
(Initial Face Amount) ($37,605) ($42,654) ($40,034) ($45,898) ($49,238) ($57,396)
1st 57.91 60.57 160.94 131.73 498.78 458.02
2nd through 4th 238.79 238.01 392.73 405.74 900.56 873.57
5th through 40th 242.18 241.85 421.16 421.34 928.63 912.60
Expanded Policy
(Initial Face Amount) ($29,316) ($33,708) ($29,541) ($34,382) ($34,754) ($40,756)
1st 60.98 45.51 213.58 189.44 571.36 541.65
2nd through 4th 233.94 240.34 386.99 387.14 900.48 873.40
5th and later 241.86 242.02 421.25 421.52 928.63 912.93
- - ------------------------------------------------------------------------------------------------------
</TABLE>
- - --------------------------------------------------------------------------------
OUR SEPARATE
ACCOUNT AND ITS
DIVISIONS
Our Separate Account is registered with the SEC as a unit investment trust,
which is a type of investment company. This does not involve any supervision by
the SEC of the management or investment policy or practices of the Separate
Account. For state law purposes the Separate Account is treated as a part of us.
After making certain deductions from premiums, we put your net annual premiums
in the Common Stock Division or the Money Market Division of our Separate
Account. You decide whether your policy's net annual premium will be put
entirely in one Division or whether you want a percentage in each Division.
(Also, you have certain voting privileges with respect to the Fund shares held
in the Divisions. See YOUR VOTING PRIVILEGES.) Each Division invests in shares
of a corresponding investment Portfolio of the Fund. The Separate Account also
invests income or capital gains dividends received from the Fund in shares of
the Fund.
The Separate Account purchases and redeems shares of the Fund at their net asset
value per share. The Separate Account's assets are allocated between the
Divisions in accordance with the allocations of the net annual premiums invested
in the Separate Account and the earnings on those assets. Also, liabilities of
the Separate Account will be allocated to the Division to which they relate.
Accrued liabilities that are not allocable to one Division will be allocated to
both Divisions in proportion to their relative net assets. In the unlikely event
that any Division incurred liabilities in excess of its assets, the other
Division could be liable for such excess.
Each Portfolio has a different investment policy (see THE FUND). You should keep
in mind that the investment experience of the Separate Account and the Divisions
depends on the investment performance of the Fund and the corresponding
Portfolios. Also, values of Basic and Expanded policies are increased to
compensate policy owners for their share of Fund expenses in excess of the sum
of (1) expenses for brokers' commissions, transfer taxes and other fees relating
to purchases and sale of Portfolio investments, (2) fees for advisory services
at an annual rate equivalent to 0.25% of the average daily value of the
aggregate net assets of the Portfolios and (3) Fund income taxes, if any.
The Common Stock Division of our Separate Account superseded our
pre-Reorganization Separate Account I, which was established on June 28, 1973.
The Money Market Division of our Separate Account superseded our
pre-Reorganization Separate Account II, which was
- - --------------------------------------------------------------------------------
10
<PAGE>
- - --------------------------------------------------------------------------------
established on December 12, 1980. Both pre-Reorganization Separate Accounts were
established under the insurance law of New York State as separate investment
accounts. Assets that were used to provide money to pay benefits under our
variable life policies were allocated to the pre-Reorganization Separate
Accounts from time to time. As a result of the Reorganization those assets, and
additional assets to be received from premiums under in-force policies and
future policies, will be allocated to the Separate Account Divisions from time
to time and used to provide money to pay benefits under our variable life
policies.
Any increase or decrease in a policy's death benefit or cash value will reflect
the investment experience of the Division where you have cash value, which in
turn will depend upon the investment performance of the corresponding Portfolio
of the Fund. (It will not be affected by the experience of the other Division
unless you have cash value in both Separate Account Divisions.)
- - --------------------------------------------------------------------------------
HOW WE SUPPORT THE
OPERATIONS OF A POLICY
We support the operations of a policy by putting the net annual premium (which
is the annual premium less the charges described under DEDUCTIONS FROM PREMIUMS)
into the appropriate Separate Account Division or Divisions as the policy owner
chooses. We do this when the policy is issued and, after that, at the beginning
of each policy year during the premium payment period. Even though the gross
premium will be higher for an insured who is a high risk than the gross premium
for an insured who is a standard risk, any cash value that may build up on a
policy covering a high risk insured will be the same as the cash value that
would build up on a policy covering a standard risk insured of the same age and
sex, for the same amount and plan of insurance, and having the same date of
issue and allocation to the Divisions. This is also true for an insured who is a
non-smoker, even though the gross premium for a non-smoker insured will be lower
than for an insured who is a standard risk.
The policy is designed so that the net annual premium put in the Divisions does
not vary with the risk class of the insured. Therefore, we charge a higher gross
premium for an insured who is a high risk to cover the extra risk of mortality.
We charge a lower gross premium for certain non-smokers because of the expected
lower mortality.
The amount at risk on policy anniversaries is the death benefit payable less the
amounts in the Divisions in which a policy participates (adjusted for any
loans). Once the net annual premium is placed into the Divisions, we charge for
the cost of insurance based on the attained age for the amount at risk without
regard to differences in risk class. The cost of insurance is based on the 1958
Commissioners' Standard Ordinary Mortality Table, and generally increases with
attained age. The cost of insurance differs in each year because, based on this
mortality table, the probability of death generally increases with attained age
and the amount at risk is different year by year. The dollar amount of the cost
of insurance also depends on investment experience of the Divisions in which a
policy participates.
Your net annual premium will be put into the Divisions only once each year,
regardless of whether you pay your premium monthly, quarterly, semiannually, or
annually.
- - --------------------------------------------------------------------------------
SEPARATE ACCOUNT ASSETS
ARE OUR PROPERTY
The assets of the Separate Account are our property. However, New York Insurance
Law provides that the portion of Separate Account's assets that relates to
variable life policies may not be used to satisfy any obligations that may arise
out of any other business we conduct, although under certain circumstances one
Division could perhaps be liable for claims arising out of the other Division's
operations.
We permit money from charges owed to us to stay in the Divisions and accumulate.
These accumulated amounts are in excess of each Division's net assets attributed
to variable life policies. These amounts belong to us.
There probably will be more assets in the Separate Account than those that apply
to our variable life policies. We expect to transfer part or all of the excess
to our General Account. These transfers will be in cash, but before we make them
we will consider whether the transfer could have any adverse effect on our
Separate Account. In 1985 we made no such transfer to our General Account.
- - --------------------------------------------------------------------------------
11
<PAGE>
- - --------------------------------------------------------------------------------
CHARGES AGAINST
THE SEPARATE
ACCOUNT
The amount in the Separate Account Divisions in which your policy participates
is further decreased (after the following charges) by the cost of your insurance
protection. See HOW WE SUPPORT THE OPERATIONS OF A POLICY.
- - --------------------------------------------------------------------------------
CHARGES FOR MORTALITY AND
EXPENSE RISKS
We charge the Separate Account for the mortality and expense risk we assume. The
charge is made daily at an effective annual rate of 0.50% of the value of each
Division's assets that are attributable to variable life policies.
The mortality risk we assume is that insureds may live for shorter periods of
time than we estimated. If this occurs, we have to pay a greater amount of death
benefits than we expected in relation to the premiums we received.
The expense risk we assume is that our costs of issuing and administering
policies may be more than we estimated.
The money we collect from this charge may exceed the amount needed to cover
benefits and expenses and would be our gain.
- - --------------------------------------------------------------------------------
OTHER CHARGES
The Separate Account purchases shares of the Fund at their net asset value. The
net asset value of those shares reflects management fees and other expenses
already deducted from the assets of the Fund that are briefly described under
THE FUND. More detailed information about the Fund is in its prospectus and in
its Statement of Additional Information.
- - --------------------------------------------------------------------------------
YOUR VOTING
PRIVILEGES
GENERAL
As we have already said, all assets held in the Divisions are invested in shares
of the corresponding Portfolios of the Fund. We are the legal owners of those
shares and as such have the right to vote upon certain matters that are required
by the 1940 Act to be approved or ratified by the shareholders of a mutual fund
and to vote upon any other matters that may be voted upon at a shareholder's
meeting. Among other things, we may vote on:
o the election of the Fund's Board of Directors;
o the ratification of the selection of the Fund's independent auditors; and
o matters spelled out in the Fund's prospectus or Statement of Additional
Information that require a shareholder vote.
However, in accordance with our view of current Federal securities law
requirements, we will offer you the opportunity to instruct us as to how Fund
shares allocable to your policy and held by us in the Separate Account will be
voted on these matters. We will vote the shares of the Fund at regular and
special meetings of shareholders of the Fund in accordance with your
instructions. Thus, you will have the right to have a voice in the affairs of
the Fund. Fund shares held in each Division of the Separate Account which are
not allocable to policies or for which no timely instructions from policy owners
are received will be voted by us in the same proportion as shares in that
Division for which instructions are received.
Each policy having a voting interest will be sent proxy material and a form for
giving voting instructions. If required by state insurance officials, we may
disregard voting instructions if those instructions would require shares to be
voted so as to cause a change in the investment objectives or policies of one or
more of the Fund's Portfolios, or to approve or disapprove an investment policy
or investment adviser of one or more of the Fund's Portfolios. In addition, we
may disregard voting instructions in favor of changes initiated by a policy
owner or the Fund's Board of Directors in the investment policy or the
investment adviser of a Portfolio, provided that our disapproval of the change
is reasonable and is based on a good faith determination that the change would
be contrary to state law, the proposed advisory fee would be higher than we are
permitted to pay by the terms of our variable life policies, or the charge would
lead to an adverse effect on our general account because it would result in
unsound or overly speculative investments. We will advise policy owners if we do
disregard voting instructions, and give our reasons for such actions in the next
semiannual report we send to policy owners.
- - --------------------------------------------------------------------------------
12
<PAGE>
- - --------------------------------------------------------------------------------
All Fund shares of whatever class are entitled to one vote, and the votes of all
classes are cast on an aggregate basis, except on matters where the interests of
the Portfolios differ. In such case, the voting is on a Portfolio-by-Portfolio
basis. Approval or disapproval by the shareholders in one Portfolio on such a
matter would not generally be a prerequisite of approval or disapproval by
shareholders in another Portfolio; and shareholders in a Portfolio not affected
by a matter generally would not be entitled to vote on that matter. Examples of
matters which would require a Portfolio-by-Portfolio vote are changes in the
fundamental investment policy or restrictions of a particular Portfolio and
approval of the investment advisory agreement.
- - --------------------------------------------------------------------------------
VOTING INSTRUCTIONS OF
OTHER SEPARATE ACCOUNT
PARTICIPANTS
Net premiums for our individual flexible premium variable life policy are
invested in our Separate Account FP, which, in turn, invests in the Fund. In
addition, we anticipate that Fund shares will be held by other separate accounts
established by us or other insurance companies affiliated or unaffiliated with
us. We expect that those shares will be voted through those separate accounts in
accordance with instructions of their participants. This will dilute the effect
of voting instructions of policy owners whose net premiums are invested in the
Separate Account.
- - --------------------------------------------------------------------------------
DETERMINING THE FUND
PORTFOLIO FOR WHICH YOU
CAN GIVE VOTING
INSTRUCTIONS
If all your cash value is in one Division, you can participate in the voting
only for the shares in the Fund Portfolio that corresponds to that Division. If
your cash value is divided between the Divisions, you are entitled to
participate in the voting of the shares of the Fund that correspond to each of
the Fund Portfolios.
The number of Fund shares held in each Division attributable to your policy for
purposes of your voting privilege will be determined by dividing your policy's
cash value (less any policy indebtedness) allocable to that Division by the net
asset value of one share of the corresponding Fund Portfolio as of the record
date for the Fund's shareholder meeting. The record date for this purpose will
not be more than 90 days before the meeting of the Fund. Fractional shares are
counted.
EXAMPLE: Your policy has a cash value of $3,000, 50% of which is attributable to
the Common Stock Division and 50% of which is attributable to the Money Market
Division. Assuming the net asset value of one share in each Fund Portfolio is
$100, you would have the privilege of voting 30 shares. You will have the
privilege of instructing us regarding 15 votes in each Division.
EXAMPLE (ASSUMING AN OUTSTANDING LOAN): Your policy has a cash value of $3,000,
which entitles you to 30 votes. If you have a $1,000 loan (including interest)
equally allocated between each Division, you would be entitled to 10 votes in
each Division, or an aggregate 10 fewer votes.
- - --------------------------------------------------------------------------------
LAW CHANGES MAY AFFECT
YOUR VOTING PRIVILEGES
Our Separate Account is required by Federal securities laws or regulations as
currently interpreted to have policy owners instruct us as to the Fund's voting
rights. However, if amendments to or interpretations of those laws or
regulations change what must be voted on or restrict the matters for which
policy owners are given the opportunity to provide voting instructions, we will
in turn change what is submitted to policy owners.
- - --------------------------------------------------------------------------------
13
<PAGE>
- - --------------------------------------------------------------------------------
OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will always attempt to comply
with applicable laws before we take any of these actions. If necessary, we will
seek approval by policy owners.
Specifically, we reserve the right to:
o add Divisions to or remove Divisions from the Separate Account;
o combine any two or more Divisions within the Separate Account;
o transfer assets of the two types of variable life policies offered by this
prospectus, as well as the assets of our other variable life policies, from
one Division to another (if we do, we will withdraw proportional amounts of
each investment to the Division, but we will also make whatever adjustments
are needed to avoid odd lots and fractions);
o operate the Separate Account as a management investment company under the
1940 Act, or in any other form the law allows (if we do, we may invest the
assets in any legal investments and we or one of our affiliates, such as
EIMC, will serve as investment adviser);
o end the registration of the Separate Account under the 1940 Act; or
o operate the Separate Account under the general supervision of a committee
made up of individuals all of whom may be, under the 1940 Act, interested
persons of us or of Equitable or discharge such Committee.
- - --------------------------------------------------------------------------------
SUBSTITUTION OF
FUND SHARES
Although we believe it to be highly unlikely, it is possible that, in our
judgment, one or more of the Portfolios of the Fund may become unsuitable for
investment by the Separate Account because, for example, of a change in the
investment policy, or a change in the tax laws, or because the shares are no
longer available for investment. For those or other reasons, we may seek to
substitute the shares of another Portfolio or of an entirely different mutual
fund. Before we can do this, we would obtain the approval of the SEC, and
possibly one or more state insurance departments, to the extent legally
required.
- - --------------------------------------------------------------------------------
14
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- - --------------------------------------------------------------------------------
DEATH BENEFITS
UNDER OUR POLICIES
The death benefit is the amount payable to the named beneficiary when the
insured dies. All or part of the benefit can be paid in cash or applied under
one or more of our payment options described under PAYMENT OPTIONS.
The death benefit will at least equal the guaranteed minimum of insurance for
the policy year in which the insured dies. Whether the death benefit is higher
than the guaranteed minimum depends on the investment experience of the
Divisions in which you have cash value. See ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES, AND ACCUMULATED PREMIUMS.
The death benefit is the guaranteed minimum death benefit, plus the sum (if
positive) of the variable adjustment amounts (determined annually) in the
Divisions in which you have cash value.
The amount of death benefit actually paid to the insured's beneficiary will be
adjusted as of the date of the insured's death to reflect:
o any policy loans together with accrued interest;
o part of any unpaid premium due if the insured dies during the grace period;
o any premium paid for a period beyond the policy month in which the insured
dies;
o any insurance added to the policy by a rider;
o the insured's suicide within 2 years after the policy's date of issue. See
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY; and
o any material misstatement in the application for insurance, including a
misstatement of the insured's age or sex. See LIMITS ON OUR RIGHT TO
CHALLENGE THE POLICY.
Interest will be paid from the date of death to the date the death benefit is
paid at least at the annual rate that we are paying under the deposit option
described in PAYMENT OPTIONS.
If you sign an application and send us money, and if the person proposed to be
insured dies between the application date and the date we act on the
application, we have a special rule. Should we decide the proposed insured was
insurable and accept the application, we will pay the initial face amount to the
proposed beneficiary.
- - --------------------------------------------------------------------------------
THE GUARANTEED MINIMUM
DEATH BENEFIT
The guaranteed minimum death benefit equals a policy's face amount for the
policy year in which the insured dies, regardless of the investment experience
of the Divisions in which a policy participates.
BASIC POLICY. The guaranteed minimum death benefit of a Basic Policy is equal to
its face amount and remains level as long as the policy is in force.
EXPANDED POLICY. The guaranteed minimum death benefit of an Expanded Policy is
equal to its face amount for the policy year in which the insured dies. The
policy's face amount in the first policy year is its initial face amount.
On each policy anniversary the face amount will increase by 3% over the prior
year's face amount until the 14th policy anniversary, when the face amount is
set at 150% of the initial face amount. Thereafter, the face amount always
remains at that level.
In the table below, we show the face amount for each $1,000 of initial face
amount in an Expanded Policy.
- - --------------------------------------------------------------------------------
On Policy Face Amount On Policy Face Amount
Anniversary Increases To Anniversary Increases To
- - --------------------------------------------------------------------------------
1 $1,030 8 $1,267
2 1,061 9 1,305
3 1,093 10 1,344
4 1,126 11 1,384
5 1,159 12 1,426
6 1,194 13 1,469
7 1,230 14 and beyond 1,500
- - --------------------------------------------------------------------------------
15
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THE VARIABLE ADJUSTMENT
AMOUNT
The variable adjustment amount for each Division is the amount of the death
benefit that results from all past investment experience of that Division. In
the first policy year, the variable adjustment amount in each Division is zero.
After that, the variable adjustment amount is the amount of insurance purchased
by the difference between the actual rate of return and 4%. Therefore, a
Division's variable adjustment amount will not change in any year that the
Division's gross return minus the charges to that Division results in a net
return of 4%. If the net return is more than 4%, the variable adjustment amount
will increase. The variable adjustment amount will increase because additional
amounts of paid-up life insurance are purchased. If the net return is less than
4%, it will decrease. The variable adjustment amount will decrease because these
additional amounts of paid-up life insurance are lost. The rates at which these
additional amounts of paid-up life insurance are purchased or lost are based on
sex and attained age and are guaranteed.
The percentage change in the death benefit for any year is not the same as the
net return for the preceding year and it is not necessarily related to current
or future rates of inflation.
The death benefit is equal to the guaranteed minimum death benefit plus the sum
(if positive) of the variable adjustment amounts for both Divisions. However,
even if the sum of the variable adjustment amounts is negative, the death
benefit in the year the insured dies will never be less than the guaranteed
minimum.
In any year that the sum of the variable adjustment amounts increases (and is
positive), the death benefit will increase. If the sum of the variable
adjustment amounts is negative, investment experience can not increase the death
benefit above the guaranteed minimum until it has increased the variable
adjustment amount of at least one Division so that the sum is positive. In any
year that the sum of the variable adjustment amounts for the Divisions
decreases, the death benefit may decrease, unless it is already at the
guaranteed minimum.
The variable adjustment amount for each Division is set on each policy
anniversary. Once set, it remains the same for the following policy year. If it
is set above the guaranteed minimum, we will be responsible for keeping it at
that level until the next policy anniversary. You will bear the risk that it
could drop on the next policy anniversary (but not below the guaranteed
minimum).
There is no guarantee that a Division's investment experience, which will
reflect the investment performance of the corresponding Portfolio of the Fund,
will be sufficient to result in an increase in death benefits. However, the
historical pattern of stock market investment performance has been one of
long-range growth, and money market investments in recent years have returned
over 4%.
THE VARIABLE ADJUSTMENT IS CUMULATIVE. Increases and decreases in the variable
adjustment amount are carried into each succeeding year. The variable adjustment
amount for a Division can be positive or negative. If it is positive, good
investment experience will produce a larger variable adjustment amount. If it is
negative, good investment experience must first offset the current negative
variable adjustment amount before there can be a positive amount.
For a given net return, the greater the cash value in a Division, the greater
the effect of investment experience will be on the variable adjustment amount.
Therefore, in later policy years, when your total cash value is likely to be
greater, investment experience may have a greater effect on the death benefit.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
Basic Policy. Assume a hypothetical gross annual investment return of 0% for the
first 9 policy years. This results in a negative variable adjustment amount. A
net return of approximately 26.6% in the 10th policy year would offset the
cumulative negative variable adjustment
- - --------------------------------------------------------------------------------
16
<PAGE>
- - --------------------------------------------------------------------------------
amount so that it would equal zero. Any net return above that would produce a
positive variable adjustment amount. On the other hand, the negative variable
adjustment amount may be offset over a number of years. Thus, if the gross
return in the 10th policy year was 8% (net return of 7.19%), a net return of
7.19% in each of the 5 following policy years would be required to produce a
positive variable adjustment amount by the 16th policy year.
- - --------------------------------------------------------------------------------
NET RETURN
The death benefit based on a Division's net return is set on each policy
anniversary. The net return depends on a Division's investment experience from
the first day of that policy year to the first day of the next policy year. It
takes into account investment income, capital gains and capital losses (whether
realized or unrealized) with respect to Fund shares owned by the Division and
gains resulting from the reimbursement by us to the Division of amounts
corresponding to certain Fund expenses. The charges against the Division are
then deducted to determine the net return. the net return on a date during a
policy year depends on the investment experience of the Division from the first
day of that policy year to that date and can affect cash values but not death
benefits.
The net return of each Division is determined at the close of business on each
day in which the degree of trading in the corresponding Portfolio of the Fund
might materially affect the net return of the Division. We call this a "business
day". Normally this would be each day that the New York Stock Exchange is open.
However, because we are closed on Martin Luther King Day and the Friday after
Thanksgiving Day, no determinations will be made on those days.
The assets of each Division are valued by multiplying the number of Fund shares
in each Division by the net asset value of such shares and is adjusted by the
charge for mortality and expense risks. See the financial statements for the
Separate Account in this prospectus.
The net return for a policy year is not the same as for a calendar year unless
the policy anniversary is January 1.
A statement of the method we use to calculate net return is an exhibit to the
Registration Statement we filed with the SEC. It will be furnished on request.
- - --------------------------------------------------------------------------------
HOW THE DEATH BENEFIT
VARIES FROM THE
GUARANTEED MINIMUM
The following example shows how the death benefit varies from the guaranteed
minimum as a result of investment experience. Assume that the insured was a 25
year old male when the policy was issued, and the hypothetical gross annual
return is 8% for each Division or their combination (which is equal to a net
return of 7.19%). Use the amounts from the ILLUSTRATION OF DEATH BENEFITS, CASH
VALUES, AND ACCUMULATED PREMIUMS.
- - --------------------------------------------------------------------------------
Variable
Guaranteed Adjustment Death
Minimum + Amount = Benefit
- - --------------------------------------------------------------------------------
BASIC POLICY
End of policy year 5 $40,034 $621 $40,655
Increase -- 280 280 (0.7% increase)
- - --------------------------------------------------------------------------------
End of policy year 6 $40,034 $901 $40,935
- - --------------------------------------------------------------------------------
EXPANDED POLICY
End of policy year 5 $34,238 $688 $34,926
Increase 1,033 302 1,335 (3.8% increase)
- - --------------------------------------------------------------------------------
End of policy year 6 $35,271 $990 $36,261
- - --------------------------------------------------------------------------------
If the gross annual return was 0% (equal to a net return of -.75%), the death
benefit at the end of policy year 6 would have been:
o $40,238 (a 1.0% decrease) for the Basic Policy. This reflects a decrease in
the variable adjustment amount of $417.
o $35,511 (a 1.7% increase) for the Expanded Policy. This reflects a decrease
in the variable adjustment amount of $449.
- - --------------------------------------------------------------------------------
17
<PAGE>
- - --------------------------------------------------------------------------------
CASH VALUE AND
LOAN PRIVILEGES
UNDER OUR POLICIES
HOW WE DETERMINE CASH
VALUE
The cash value is the sum, on any date, of the cash values in each Division of
the Separate Account in which your policy participates. If no premium is due and
unpaid, the cash value of the Division equals the tabular cash value at the end
of each year as stated in the policy multiplied by the annual premium allocation
percentage selected by the policy owner for that Division in effect on the last
anniversary, increased or decreased by the aggregate net single premium
specified in the policy for the variable adjustment amount for that Division.
The tabular cash value is what the cash value for the policy would be if all the
Divisions in which you had funds had a constant net investment return of 4% a
year. The premium allocation percentage is the percentage of your current net
annual premium allocated to each of the Divisions. The net single premium is the
one-time cost at your attained age to purchase one dollar of death benefit, as
specified in your policy.
Adjustments during a year reflect a Division's investment experience, the cost
of insurance, premium payments, any indebtedness and any cash value transfers.
The cash values for substandard risk policies and non-smoker policies are the
same as for comparable standard risk policies. See THE VARIABLE ADJUSTMENT
AMOUNT and NET RETURN.
- - --------------------------------------------------------------------------------
THERE IS NO GUARANTEED
MINIMUM CASH VALUE
Daily increases or decreases in cash value depend on the investment experience
of the Divisions. It is unlikely that there will be a cash value during the
early part of the first policy year because of the first year administrative
charges. There is no guaranteed minimum cash value.
- - --------------------------------------------------------------------------------
RETURNING THE POLICY FOR
CASH
During the insured's lifetime, and subject to our rules, your policy can be
returned for payment of the cash value net of any indebtedness. The amount
payable will be based on the net cash value next computed after we receive your
signed request for payment of the cash value at your Regional Service Center,
accompanied by your policy. The insurance coverage will end on the date you send
us the policy and your request.
SPLITTING THE POLICY. You can request to split your policy into two policies. In
addition, you may return one for cash. Any policy that continues will be based
on the new initial face amount. The premium for the policy that continues will
be based on the new initial face amount but the same age, sex and risk class as
the original policy.
If you split a Basic Policy, the policy we continue must have a face amount of
at least $25,000.
If you split an Expanded Policy, the policy we continue must have a face amount
that at least equals what an Expanded Policy with an initial face amount of
$25,000 with its automatic 3% a year increases would have reached in the policy
year during which you split your policy.
These are our current procedures, which may change.
- - --------------------------------------------------------------------------------
INCOME TAX WITHHOLDING
Federal tax law requires us to withhold income tax from any portion of your
surrender proceeds that is subject to tax, unless you request us not to
withhold.
If you surrender your policy and do not advise us in writing that you do not
want us to withhold Federal income tax before the date payment must be made, we
are required by law to withhold tax from the surrender payment.
If you elect not to have tax withheld from the surrender payment, or if the
amount of Federal income tax withheld is insufficient, you may be responsible
for payment of estimated tax. You may incur penalties under the estimated tax
rules if your withholding and estimated tax payments are not sufficient. You may
wish to consult your tax adviser.
- - --------------------------------------------------------------------------------
18
<PAGE>
- - --------------------------------------------------------------------------------
YOU CAN TRANSFER CASH
VALUE BETWEEN DIVISIONS
You can request to transfer part or all of your cash value between the
Divisions. You may do this up to twice in a policy year. A transfer will go into
effect on the day we receive your signed request at your regional Life Insurance
Center. Your request should show the policy number an amount (either in dollars
or as a percentage) you want to transfer. When cash value is transferred a
portion of the net annual premium is transferred as well. We reallocate loans if
you transfer cash value.
- - --------------------------------------------------------------------------------
WHEN A DIVISION
BECOMES INACTIVE
If you have a policy loan allocated to a Division and your cash value plus
remaining net annual premium less your loan (including accrued loan interest) in
that Division reaches zero, that Division will become inactive for your policy.
We will reallocate the loan to the other Division. A Division will also become
inactive for your policy if you transfer its entire cash value to the other
Division.
We will notify you when a Division becomes inactive.
If a Division becomes inactive, the future variable adjustment amount, cash
value and net return will be affected. We will assume that you do not want to
put any part of future net annual premiums into the inactive Division. You can
request us to put any part of a future net annual premium into the inactive
Division effective on the next policy anniversary after your request is
received. You may also transfer cash value into an inactive Division from the
other Division. See YOU CAN TRANSFER CASH VALUE BETWEEN DIVISIONS.
- - --------------------------------------------------------------------------------
TAKING A POLICY LOAN
For policy loans, we offer both a fixed and an adjustable interest rate
provision. This section will first discuss loans with fixed interest rates and
will then discuss the special features of the adjustable loan interest rate, if
it is elected.
Borrowing money against your policy will have a permanent effect on your
policy's cash value and the amount by which the death benefit may increase above
the guaranteed minimum. The effect remains even though the loan is repaid in
whole or in part.
You may borrow up to 90% of your policy's cash value using the policy as
security. Unless it is being used to pay premiums, we will not grant a loan that
is not at least $100 more than any outstanding loan with accrued interest. The
amount of your premium will not be affected by the fact you have a loan or by
how you repay the loan. If a loan is made after the due date of a premium, that
premium will be subtracted from the loan proceeds. If you request a loan in
order to pay a premium, we will charge loan interest from the date we make the
loan even if it is before the premium due date.
Whenever the loan with accrued interest from one Division equals or exceeds the
cash value in that Division, that Division will become inactive for your policy.
We will transfer the total cash value and loan allocation to the other Division.
See WHEN A DIVISION BECOMES INACTIVE.
IF LOANS EXCEED THE CASH VALUE OF YOUR POLICY. Whenever the loan with accrued
interest exceeds the total cash value of your policy, we will send a notice to
you and to anyone to whom you told us you assigned the policy. The policy will
end 31 days after we send the notice unless you make a repayment during the 31
day period that is large enough to reduce your outstanding loan with accrued
interest to below the total cash value of your policy. See OPTIONS ON LAPSE.
If you borrow the maximum of 90% of your policy's cash value, you increase your
risk of having your policy end. This might happen if the combination of policy
loan interest (as it builds up), the cost of insurance, asset charges against
the Separate Account and investment experience in the Divisions where you have
cash value uses up the remaining 10%.
INTEREST. Except as discussed under ADJUSTABLE LOAN INTEREST RATE, interest on
loans is 5% a year. Interest is charged daily and is payable by the policy owner
on each anniversary. However, if it is not paid, it will be compounded on the
policy anniversary because it will be added to the loan principal. This unpaid
interest is transferred out of each Division where you have your loan into our
general account. You should rely on your tax adviser as to whether this interest
is deductible.
REPAYMENT. You can repay all or part of any outstanding loan with accrued
interest at any time while the policy is in effect and the insured is alive. You
repayment, whether full or partial, will be reallocated to the Divisions in
proportion to the loan allocation to each Division at the time of repayment.
- - --------------------------------------------------------------------------------
19
<PAGE>
- - --------------------------------------------------------------------------------
The amount of any outstanding loan with accrued interest will be deducted from
the death benefit or cash value proceeds.
WHICH DIVISION WE CHARGE LOANS AGAINST. We allocate a loan based on the net cash
value in each Division on the date the loan is made. We reallocate loans if you
transfer cash value.
THE PERMANENT EFFECT OF A FIXED INTEREST RATE LOAN. When you take out a loan, we
transfer part of the cash value equal to the amount of the loan from the
Divisions to our general account. In addition, unpaid interest on the policy
loan will be transferred to our general account from time to time. The amount
taken out of the Divisions will not be affected by the Divisions' investment
experience while the loan is outstanding. Since the amount is not in the
Divisions, it cannot contribute to any possible increase in your policy's death
benefit or cash value.
We will credit your policy with a 4% annual return on any amount transferred to
our general account as a result of your policy loan. This can protect cash value
from decreasing if investment experience is below 4%. It will also prevent cash
value from increasing if investment experience is above 4%.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
Basic Policy with standard rates. Use the illustration on page 25, and assume an
8% hypothetical gross annual investment return for each Division of their
combination (which is a net return of 7.19%). If you take a loan for $3,000 at
the end of the 9th policy year, it will affect the death benefit and cash value
(before subtracting the amount of the loan with loan interest) in the 10th
policy year as follows:
- - --------------------------------------------------------------------------------
Without Loan With Loan
- - --------------------------------------------------------------------------------
Death Benefit $42,603 $42,250
Cash Value 4,456 4,360
- - --------------------------------------------------------------------------------
The difference results from the transfer of the portion of the cash value equal
to the loan from the Division to the general account. The return on the amount
transferred is reduced to 4% a year, rather than the Division's net return of
7.19%.
See DEATH BENEFITS UNDER OUR POLICIES for adjustments that are made as of the
date of the insured's death.
ADJUSTABLE LOAN INTEREST RATE. As an alternative to the fixed loan interest rate
of 5%, you may elect (in writing) the Adjustable Loan Interest Rate. Under this
alternative, a rate will be determined as of the beginning of each policy year
and it will apply to any new or outstanding loan under your policy during that
policy year. The annual interest rate for a policy year will be the greater of
5% or the Monthly Average Corporates yield shown in Moody's Corporate Bond Yield
Averages published by Moody's Investors Service, Inc., for the month ending two
months before the beginning of the policy year.
However, if you have elected an Adjustable Loan Interest Rate, it will be the
same for a policy year after the first as it was for the immediately preceding
policy year if the formula above would produce a change of less than 1/2 of 1%
from the rate applicable to your policy for the preceding year.
NOTIFICATION OF ADJUSTABLE LOAN INTEREST RATE. We will notify you of the initial
interest rate at the time a loan is made under the Adjustable Loan Interest Rate
election. Initial loan interest rates are also available on request. We will
also notify you in advance of each policy anniversary of the interest rate for
the following policy year.
CANCELLATION OF ADJUSTABLE LOAN INTEREST RATE ELECTION. You may cancel your
election of the Adjustable Loan Interest Rate in writing at any time, but the
request will not take effect until the next policy anniversary. When the
cancellation takes effect, the loan rate will revert to the fixed rate of 5%.
Election or re-election of the Adjustable Loan Interest Rate may be made in
writing at any time but will not take effect until the next policy anniversary
even if no loan is outstanding.
- - --------------------------------------------------------------------------------
20
<PAGE>
STATE VARIATIONS. Not all states have laws permitting adjustable policy loan
interest rates. Some states permit adjustable rates but set maximums. Some
states do not permit cancellation of an adjustable loan interest rate provision,
and there are other variations from state to state. For details about the policy
loan interest rate laws in your state, contact your agent or your regional Life
Insurance Center.
AMOUNTS CREDITED ON BORROWED FUNDS. When you take out a loan, we transfer part
of the cash value equal to the amount of the loan from the Divisions in which
your policy participates to our general account. In addition, unpaid interest on
the policy loan will be transferred to our general account from time to time.
The amount taken out of the Divisions will not be affected by the investment
experience of the Divisions while the loan is outstanding. Since the amounts is
not in the Divisions, it contributes to possible increases in your policy's
death benefit or cash value only if you have elected the Adjustable Loan
Interest Rate.
If you have chosen an Adjustable Loan Interest Rate, we will credit your policy
with a rate of return which is 0.75% below the interest rate that is charged as
a result of your policy loan, minus any charges for taxes or amounts set aside
as a provision for taxes. We are not making charges for taxes or provisions for
taxes now but we may make such charges in the future. See OUR INCOME TAXES. For
example, if the Adjustable Loan Interest Rate were 10%, the credit rate would be
9.25%. If the Adjustable Loan Interest Rate were below 5%, the actual interest
rate would be 5% and the credit rate would be 4.25%. Any amounts credited over
4% will increase your policy's death benefit and cash value. If you elect the
Adjustable Loan Interest Rate, you will bear the additional investment risk
connected with changes in the annual credit rate because they affect the death
benefit and cash value under your policy.
THE PERMANENT EFFECT OF AN ADJUSTABLE INTEREST RATE LOAN. If the current policy
year's Adjustable Loan Interest Rate less 0.75% (and less any charge for taxes
or provision for taxes) is greater than the net return for that year of the
Divisions in which you have funds, then the death benefit and cash value for
that year will be greater than if no loan were made. The reverse would also be
true.
EXAMPLE: You were a 25 year old male when your policy was issued, and you have a
Basic Policy with standard rates. Use the illustration on page 25, and assume an
8% hypothetical gross annual investment return for each Division of their
combination (which is a net return of 7.19%). If you take a loan for $3,000 at
the beginning of the 10th policy year and you have elected the Adjustable Loan
Interest Rate with an assumed hypothetical loan interest rate of 12.88% (the
actual rate for February, 1985) in the 10th policy year, it will affect the
death benefit and cash value (before subtracting the amount of the loan with
loan interest) in the 10th policy year as follows:
- - --------------------------------------------------------------------------------
Without Loan With Loan
- - --------------------------------------------------------------------------------
Death Benefit $42,603 $43,150
Cash Value 4,456 4,604
- - --------------------------------------------------------------------------------
See the example under THE PERMANENT EFFECT OF A FIXED INTEREST RATE LOAN for a
loan with the fixed interest rate of 5%.
WHENEVER THIS PROSPECTUS DISCUSSES INCREASES AND DECREASES IN THE DEATH BENEFIT
AND CASH VALUES UNDER OUR VARIABLE LIFE POLICIES, YOU SHOULD CONSIDER THE IMPACT
OF HAVING ELECTED AN ADJUSTABLE LOAN INTEREST RATE.
21
<PAGE>
- - --------------------------------------------------------------------------------
ILLUSTRATIONS OF
DEATH BENEFITS,
CASH VALUES, AND
ACCUMULATED
PREMIUMS
To help you get a picture of how the key financial elements of our policies
work, we have prepared a series of tables.
The tables show how death benefits and cash value of policies with annual
premiums of $300, $500, and $1,000 could vary over an extended period of time if
the Divisions had CONSTANT hypothetical gross annual investment returns of 0%,
4%, 8% and 12% over the years covered by each table. The death benefits and cash
values would differ from those shown in the tables if the annual investment
returns did not remain absolutely constant. Thus, the figures would be different
if the return AVERAGED 0%, 4%, 8% and 12% over a period of years but went above
or below those figures in individual policy years. The death benefits and cash
values would also differ, depending on the investment allocations made to the
Divisions, if the actual rates of investment return averaged 0%, 4%, 8% and 12%,
but went above or below those figures for individual Divisions. The tables are
for standard risk policies.
The cash values in the tables are related to the annual premiums shown on page
38. The amounts of death benefits and cash values shown in the tables for the
end of each policy year take into account a daily charge against each Division
that is equivalent to an annual charge of 0.75% at the beginning of each year.
This charge is the 0.50% charge against the Separate Account for mortality and
expense risks and the effect on each Division's investment experience of the
charge to the Fund assets for investment advisory services (equivalent to an
annual rate of 0.25% of the aggregate average daily net assets of the
Portfolios). The effect of these adjustments is that on a 0% actual rate of
return the net rate of return would be -0.75%, on 4% it would be 3.22%, on 8% it
would be 7.19% and on 12% it would be 11.16%.
The hypothetical returns shown in the tables do not reflect any charges for Fund
expenses in addition to an investment advisory fee charge of 0.25%, because the
Divisions in general will be reimbursed for their share of such expenses, as
previously discussed under THE SEPARATE ACCOUNT, ITS INVESTMENTS AND ITS
INVESTMENT EXPERIENCE and THE FUND.
The tables reflect the fact that we do not currently charge the Divisions for
Federal income tax. However, if we do make such a charge in the future, it would
take a higher rate of return to produce after-tax returns of 0%, 4%, 8% and 12%
than it does now.
The second and third columns of each table show what would happen if an amount
equal to the total annual premiums for the premium payment period were invested
to earn interest, after taxes, of 4% or 5% compounded annually. These tables
show that if a policy is returned in its early years for payment of its cash
value, the cash value will be low in comparison to premiums accumulated with
interest. This means that the cost of carrying insurance for a relatively short
time will be high.
The Basic Policy has a level guaranteed minimum death benefit. The Expanded
Policy has a guaranteed death benefit which increases by 3% per year regardless
of investment experience until it reaches 150% of the original face amount in
the fifteenth year.
If you request, we will furnish you with a comparable illustration based on the
proposed insured's sex and age and an initial face amount or premium amount of
your choice. A specific illustration will assume that the insured is a standard
risk and that the premium will be paid on an annual basis. In addition, if you
do purchase a policy, we will deliver a specific illustration that reflects how
the premium will actually be paid and to what risk class the insured has been
assigned.
We have also prepared special illustrations showing the effects of policy loans
on a planned basis and showing various insurance plans suitable for special
purposes. These are available on request.
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF ILLUSTRATIONS
- - --------------------------------------------------------------------------------
Basic policy Expanded policy
Page Page
---------------------------------------
$ 300 annual premium Male Age 10 23 24
$ 500 annual premium Male Age 25 25 26
$1,000 annual premium Male Age 40 27 28
$ 300 annual premium Female Age 10 29 30
$ 500 annual premium Female Age 25 31 32
$1,000 annual premium Female Age 40 33 34
- - --------------------------------------------------------------------------------
22
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$37,605 FACE AMOUNT MALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $37,605 $37,605 $ 37,619 $ 37,637
2 636 646 37,605 37,605 37,680 37,775
3 974 993 37,605 37,605 37,788 38,025
4 1,325 1,358 37,605 37,605 37,944 38,391
5 1,690 1,741 37,605 37,605 38,149 38,881
6 2,069 2,143 37,605 37,605 38,402 39,500
7 2,464 2,565 37,605 37,605 38,704 40,254
8 2,875 3,008 37,605 37,605 39,055 41,149
9 3,302 3,473 37,605 37,605 39,455 42,193
10 3,746 3,962 37,605 37,605 39,905 43,394
15 6,247 6,797 37,605 37,605 42,921 52,064
20 9,291 10,416 37,605 37,605 47,286 66,260
25 12,993 15,034 37,605 37,605 53,123 87,932
30 17,498 20,928 37,605 37,605 60,578 119,837
55 (Age 65) 53,393 79,106 37,605 37,605 128,494 637,584
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 7 $ 10 $ 12 $ 14
197 209 221 234
385 414 445 477
569 624 683 746
753 842 939 1,045
934 1,065 1,211 1,375
1,112 1,292 1,500 1,738
1,286 1,525 1,806 2,138
1,457 1,762 2,131 2,578
1,627 2,006 2,478 3,065
2,456 3,338 4,595 6,390
3,270 4,896 7,548 11,915
4,066 6,706 11,647 21,071
4,828 8,779 17,285 36,150
4,419 17,723 80,874 401,295
(1) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
23
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$29,316 FACE AMOUNT MALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $30,195 $30,195 $ 30,210 $ 30,229
2 636 646 31,104 31,104 31,183 31,283
3 974 993 32,042 32,042 32,234 32,482
4 1,325 1,358 33,009 33,009 33,363 33,829
5 1,690 1,741 33,977 33,977 34,543 35,304
6 2,069 2,143 35,003 35,003 35,381 36,971
7 2,464 2,565 36,058 36,058 37,198 38,807
8 2,875 3,008 37,143 37,143 38,646 40,817
9 3,302 3,473 38,257 38,257 40,172 43,008
10 3,746 3,962 39,400 39,400 41,779 45,388
15 6,247 6,797 43,974 43,974 49,430 58,830
20 9,291 10,416 43,974 43,974 53,823 73,195
25 12,993 15,034 43,974 43,974 59,641 94,983
30 17,498 20,928 43,974 43,974 67,022 126,924
55 (Age 65) 59,642 85,905 43,974 43,974 134,792 645,712
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 26 $ 28 $ 31 $ 33
220 233 246 259
411 442 474 508
598 656 717 782
788 881 982 1,092
974 1,110 1,262 1,431
1,156 1,342 1,557 1,804
1,332 1,578 1,870 2,213
1,504 1,818 2,201 2,663
1,671 2,063 2,551 3,158
2,459 3,362 4,652 6,497
3,208 4,852 7,550 12,009
3,933 6,575 11,561 21,129
4,604 8,523 17,050 36,119
5,878 19,389 82,508 404,081
(1) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
24
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$40,034 FACE AMOUNT MALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $40,034 $40,034 $40,059 $ 40,090
2 1,061 1,076 40,034 40,034 40,133 40,259
3 1,623 1,655 40,034 40,034 40,256 40,544
4 2,208 2,263 40,034 40,034 40,429 40,952
5 2,816 2,901 40,034 40,034 40,655 41,496
6 3,449 3,571 40,034 40,034 40,935 42,183
7 4,107 4,275 40,034 40,034 41,270 43,021
8 4,791 5,013 40,034 40,034 41,659 44,016
9 5,503 5,789 40,034 40,034 42,103 45,177
10 6,243 6,603 40,034 40,034 42,603 46,513
15 10,412 11,329 40,034 40,034 45,957 56,162
20 15,484 17,360 40,034 40,034 50,786 71,906
25 21,656 25,057 40,034 40,034 57,191 95,840
30 29,164 34,880 40,034 40,034 65,321 131,001
40 (Age 65) 49,413 63,419 40,034 40,034 87,684 254,387
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 80 $ 86 $ 93 $ 99
389 415 441 467
696 753 813 875
1,001 1,102 1,211 1,328
1,330 1,491 1,667 1,861
1,656 1,890 2,154 2,451
1,979 2,301 2,674 3,104
2,299 2,725 3,230 3,828
2,615 3,160 3,823 4,628
2,929 3,608 4,456 5,514
4,424 6,016 8,286 11,535
5,748 8,659 13,420 21,282
6,884 11,510 20,219 36,906
7,825 14,525 29,093 61,649
9,395 21,081 55,188 160,111
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
25
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$29,541 FACE AMOUNT MALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $30,427 $30,427 $30,460 $ 30,502
2 1,061 1,076 31,343 31,343 31,461 31,612
3 1,623 1,655 32,288 32,288 32,543 32,874
4 2,208 2,263 33,263 33,263 33,706 34,294
5 2,816 2,901 34,238 34,238 34,926 35,859
6 3,449 3,571 35,271 35,271 36,261 37,634
7 4,107 4,275 36,335 36,335 37,682 39,596
8 4,791 5,013 37,428 37,428 39,190 41,754
9 5,503 5,789 38,551 38,551 40,785 44,114
10 6,243 6,603 39,703 39,703 42,467 46,686
15 10,412 11,329 44,311 44,311 50,595 61,470
20 15,484 17,360 44,311 44,311 55,595 77,894
25 21,656 25,057 44,311 44,311 62,157 102,683
30 29,164 34,880 44,311 44,311 70,410 138,898
55 (Age 65) 49,413 63,419 44,311 44,311 92,742 264,957
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 153 $ 161 $ 170 $ 179
476 506 537 568
794 859 928 999
1,108 1,222 1,344 1,475
1,451 1,629 1,824 2,039
1,790 2,046 2,335 2,661
2,123 2,473 2,879 3,349
2,451 2,911 3,458 4,108
2,774 3,359 4,074 4,947
3,091 3,818 4,730 5,872
4,553 6,234 8,641 12,103
5,794 8,824 13,818 22,118
6,802 11,562 20,614 38,111
7,540 14,356 29,378 63,326
8,140 19,699 54,314 162,706
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
26
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$49,238 FACE AMOUNT MALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $49,238 $49,238 $49,286 $ 49,346
2 2,122 2,153 49,238 49,238 49,404 49,617
3 3,246 3,310 49,238 49,238 49,593 50,053
4 4,416 4,526 49,238 49,238 49,850 50,662
5 5,633 5,802 49,238 49,238 50,177 51,454
6 6,898 7,142 49,238 49,238 50,576 52,438
7 8,214 8,549 49,238 49,238 51,046 53,621
8 9,583 10,027 49,238 49,238 51,586 55,012
9 11,006 11,578 49,238 49,238 52,196 56,620
10 12,486 13,207 49,238 49,238 52,878 58,457
15 20,824 22,657 49,238 49,238 57,353 71,501
20 30,969 34,719 49,238 49,238 63,660 92,439
25 (Age 65) 43,312 50,113 49,238 49,238 71,913 124,015
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------- ------- ------- --------
$ 321 $ 340 $ 360 $ 380
1,022 1,091 1,161 1,233
1,705 1,852 2,005 2,167
2,370 2,623 2,897 3,190
3,045 3,435 3,867 4,342
3,700 4,257 4,888 5,603
4,335 5,089 5,966 6,984
4,950 5,930 7,100 8,496
5,543 6,778 8,292 10,148
6,115 7,633 9,546 11,955
8,627 11,972 16,809 23,822
10,551 16,333 25,967 42,151
11,884 20,574 37,322 70,115
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
27
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$34,754 FACE AMOUNT MALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $35,796 $35,796 $35,852 $35,921
2 2,122 2,153 36,873 36,873 37,060 37,297
3 3,246 3,310 37,986 37,986 38,379 38,889
4 4,416 4,526 39,133 39,133 39,806 40,700
5 5,633 5,802 40,280 40,280 41,310 42,710
6 6,898 7,142 41,496 41,496 42,959 44,996
7 8,214 8,549 42,747 42,747 44,720 47,532
8 9,583 10,027 44,033 44,033 46,591 50,327
9 11,006 11,578 45,353 45,353 48,573 53,392
10 12,486 13,207 46,709 46,709 50,666 56,737
15 20,824 22,657 52,131 52,131 60,904 76,223
20 30,969 34,719 52,131 52,131 67,604 98,584
25 (Age 65) 43,312 50,113 52,131 52,131 76,279 132,073
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------- ------- ------- --------
$ 450 $ 473 $ 495 $ 518
1,203 1,280 1,359 1,439
1,939 2,101 2,271 2,450
2,655 2,934 3,235 3,557
3,381 3,808 4,281 4,802
4,085 4,693 5,384 6,165
4,767 5,589 6,545 7,657
5,425 6,491 7,766 9,288
6,057 7,399 9,047 11,068
6,662 8,310 10,390 13,011
9,182 12,789 18,017 25,611
10,955 17,126 27,458 44,880
12,067 21,243 39,069 74,185
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
28
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$42,654 FACE AMOUNT FEMALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $42,654 $42,654 $ 42,671 $ 42,692
2 636 646 42,654 42,654 42,741 42,851
3 974 993 42,654 42,654 42,864 43,135
4 1,325 1,358 42,654 42,654 43,040 43,550
5 1,690 1,741 42,654 42,654 43,272 44,105
6 2,069 2,143 42,654 42,654 43,559 44,806
7 2,464 2,565 42,654 42,654 43,901 45,660
8 2,875 3,008 42,654 42,654 44,299 46,676
9 3,302 3,473 42,654 42,654 44,754 47,862
10 3,746 3,962 42,654 42,654 45,266 49,226
15 6,247 6,797 42,654 42,654 48,695 59,082
20 9,291 10,416 42,654 42,654 53,646 75,193
25 12,993 15,034 42,654 42,654 60,256 99,768
30 17,498 20,928 42,654 42,654 68,700 135,933
55 (Age 65) 53,393 79,106 42,654 42,654 145,533 721,273
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 12 $ 15 $ 17 $ 20
200 212 225 238
386 416 447 479
569 624 684 747
754 843 940 1,046
937 1,067 1,214 1,378
1,117 1,298 1,506 1,745
1,295 1,534 1,817 2,150
1,471 1,776 2,147 2,596
1,642 2,023 2,497 3,087
2,459 3,345 4,607 6,410
3,248 4,871 7,522 11,888
4,032 6,657 11,580 20,973
4,804 8,734 17,206 36,011
4,601 18,399 83,802 415,330
(1) If premiums are paid more frequently than annually the payments would be
$153 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
29
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$33,708 FACE AMOUNT FEMALE ISSUE AGE 10
(GUARANTEED MINIMUM DEATH BENEFIT) $300 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 312 $ 315 $34,719 $34,719 $ 34,732 $ 34,748
2 636 646 35,764 35,764 35,846 35,948
3 974 993 36,842 36,842 37,049 37,315
4 1,325 1,358 37,955 37,955 38,343 38,852
5 1,690 1,741 39,067 39,067 39,693 40,534
6 2,069 2,143 40,247 40,247 41,167 42,433
7 2,464 2,565 41,460 41,460 42,732 44,524
8 2,875 3,008 42,708 42,708 44,389 46,813
9 3,302 3,473 43,988 43,988 46,136 49,309
10 3,746 3,962 45,303 45,303 47,974 52,019
15 6,247 6,797 50,562 50,562 56,715 67,297
20 9,291 10,416 50,562 50,562 61,670 83,499
25 12,993 15,034 50,562 50,562 68,220 108,044
30 17,498 20,928 50,562 50,562 76,529 144,011
55 (Age 65) 59,641 85,903 50,562 50,562 152,983 727,459
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 7 $ 9 $ 11 $ 13
206 218 229 242
402 431 462 494
594 650 709 773
785 875 974 1,081
972 1,105 1,255 1,421
1,156 1,341 1,553 1,796
1,336 1,581 1,869 2,209
1,511 1,824 2,203 2,661
1,681 2,070 2,555 3,158
2,452 3,353 4,639 6,475
3,168 4,801 7,478 11,901
3,873 6,487 11,422 20,890
4,555 8,432 16,873 35,747
6,259 20,283 85,423 416,224
(1) If premiums are paid more frequently than annually the payments would be
$157 semi-annually, $78 quarterly or $27 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
30
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$37,605 FACE AMOUNT FEMALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $45,898 $45,898 $45,921 $ 45,950
2 1,061 1,076 45,898 45,898 46,000 46,131
3 1,623 1,655 45,898 45,898 46,136 46,445
4 2,208 2,263 45,898 45,898 46,329 46,899
5 2,816 2,901 45,898 45,898 46,582 47,507
6 3,449 3,571 45,898 45,898 46,895 48,274
7 4,107 4,275 45,898 45,898 47,270 49,210
8 4,791 5,013 45,898 45,898 47,706 50,323
9 5,503 5,789 45,898 45,898 48,204 51,623
10 6,243 6,603 45,898 45,898 48,765 53,119
15 10,412 11,329 45,898 45,898 52,537 63,952
20 15,484 17,360 45,898 45,898 57,993 81,687
25 21,656 25,057 45,898 45,898 65,259 108,718
30 29,164 34,880 45,898 45,898 74,502 148,463
40 (Age 65) 49,413 63,419 45,898 45,898 99,952 287,894
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 42 $ 48 $ 53 $ 58
358 381 405 429
671 725 781 840
981 1,079 1,185 1,297
1,305 1,461 1,633 1,820
1,627 1,855 2,112 2,400
1,946 2,261 2,625 3,044
2,262 2,679 3,173 3,757
2,576 3,110 3,759 4,547
2,887 3,554 4,385 5,421
4,403 5,974 8,210 11,402
5,811 8,711 13,441 21,228
7,053 11,713 20,450 37,125
8,125 14,958 29,733 62,589
9,916 22,140 57,555 165,778
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
31
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$45,898 FACE AMOUNT FEMALE ISSUE AGE 25
(GUARANTEED MINIMUM DEATH BENEFIT) $500 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- -----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 520 $ 525 $35,413 $35,413 $ 35,447 $ 35,489
2 1,061 1,076 36,479 36,479 36,604 36,762
3 1,623 1,655 37,579 37,579 37,852 38,206
4 2,208 2,263 38,714 38,714 39,192 39,827
5 2,816 2,901 39,848 39,848 40,595 41,609
6 3,449 3,571 41,052 41,052 42,131 43,628
7 4,107 4,275 42,289 42,289 43,764 45,857
8 4,791 5,013 43,561 43,561 45,495 48,305
9 5,503 5,789 44,868 44,868 47,326 50,982
10 6,243 6,603 46,209 46,209 49,254 53,896
15 10,412 11,329 51,573 51,573 58,538 70,567
20 15,484 17,360 51,573 51,573 64,137 88,895
25 21,656 25,057 51,573 51,573 71,522 116,639
30 29,164 34,880 51,573 51,573 80,839 157,228
40 (Age 65) 49,413 63,419 51,573 51,573 106,116 298,586
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 124 $ 131 $ 139 $ 146
440 468 497 526
752 814 878 945
1,060 1,168 1,284 1,409
1,398 1,568 1,754 1,960
1,731 1,977 2,255 2,568
2,060 2,398 2,789 3,240
2,384 2,829 3,357 3,983
2,703 3,270 3,961 4,803
3,016 3,721 4,604 5,707
4,494 6,134 8,479 11,843
5,819 8,810 13,721 21,857
6,938 11,693 20,689 38,000
7,817 14,717 29,821 63,756
8,728 20,769 56,456 167,286
(1) If premiums are paid more frequently than annually the payments would be
$255 semi-annually, $130 quarterly or $44 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
32
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
BASIC POLICY
$57,396 FACE AMOUNT FEMALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $57,396 $57,396 $57,446 % 57,509
2 2,122 2,153 57,396 57,396 57,576 57,805
3 3,246 3,310 57,396 57,396 57,784 58,289
4 4,416 4,526 57,396 57,396 58,070 58,968
5 5,633 5,802 57,396 57,396 58,439 59,857
6 6,898 7,142 57,396 57,396 58,889 60,964
7 8,214 8,549 57,396 57,396 59,420 62,301
8 9,583 10,027 57,396 57,396 60,032 63,875
9 11,006 11,578 57,396 57,396 60,726 65,699
10 12,486 13,207 57,396 57,396 61,502 67,785
15 20,824 22,657 57,396 57,396 66,616 82,643
20 30,969 34,719 57,396 57,396 73,853 106,568
25 (Age 65) 43,312 50,113 57,396 57,396 83,351 142,705
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - -----------------------------------------------------
0% 4% 8% 12%
- - ------ ------- ------- --------
$ 305 $ 323 $ 341 $ 359
1,007 1,073 1,140 1,208
1,696 1,837 1,986 2,142
2,368 2,615 2,881 3,167
3,063 3,446 3,869 4,335
3,739 4,290 4,913 5,617
4,399 5,147 6,016 7,025
5,040 6,017 7,182 8,569
5,663 6,900 8,413 10,264
6,268 7,794 9,713 12,123
8,991 12,409 17,337 24,457
11,173 17,172 27,123 43,770
12,814 21,970 39,517 73,695
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
33
<PAGE>
- - --------------------------------------------------------------------------------
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
EXPANDED POLICY
$40,756 FACE AMOUNT FEMALE ISSUE AGE 40
(GUARANTEED MINIMUM DEATH BENEFIT) $1,000 ANNUAL PREMIUM FOR STANDARD RISK(1)
- - --------------------------------------------------------------------------------
[THE FOLLOWING TABLES APPEARED AS ONE LANDSCAPED TABLE IN THE PRINTED
PROSPECTUS, BUT HAD TO BE SPLIT INTO TWO TABLES TO ACCOMMODATE THE EDGAR FORMAT.
THE FOOTNOTES WHICH FOLLOW THE TABLES BELOW APPLY TO BOTH TABLES ON THIS PAGE.]
<TABLE>
<CAPTION>
PREMIUMS(1) DEATH BENEFIT(2)(3)
ACCUMULATED AT INTEREST ASSUMING HYPOTHETICAL GROSS
END OF PER ANNUM OF ANNUAL INVESTMENT RETURN OF
POLICY ----------------------- ----------------------------------------------------
YEAR 4% 5% 0% 4% 8% 12%
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,050 $41,978 $41,978 $42,038 $ 42,112
2 2,122 2,153 43,242 43,242 43,445 43,704
3 3,246 3,310 44,546 44,546 44,977 45,537
4 4,416 4,526 45,891 45,891 46,633 47,619
5 5,633 5,802 47,236 47,376 48,376 49,926
6 6,898 7,142 48,662 48,662 50,287 52,547
7 8,214 8,549 50,129 50,129 52,325 55,453
8 9,583 10,027 51,637 51,637 54,491 58,653
9 11,006 11,578 53,186 53,186 56,783 62,160
10 12,486 13,207 54,776 54,776 59,202 65,985
15 20,824 22,657 61,134 61,134 70,999 88,188
20 30,969 34,719 61,134 61,134 78,599 113,460
25 (Age 65) 43,312 50,113 61,134 61,134 88,471 151,369
</TABLE>
CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
- - ------------------------------------------------------
0% 4% 8% 12%
- - ------- ------- ------- --------
$ 431 $ 453 $ 474 $ 496
1,177 1,251 1,327 1,404
1,908 2,065 2,230 2,402
2,622 2,894 3,186 3,500
3,358 3,776 4,239 4,748
4,074 4,672 5,350 6,117
4,771 5,581 6,524 7,618
5,447 6,502 7,762 9,265
6,099 7,432 9,066 11,068
6,729 8,370 10,438 13,041
9,436 13,082 18,352 25,989
11,458 17,786 28,342 46,082
12,855 22,410 40,881 77,099
(1) If premiums are paid more frequently than annually the payments would be
$510 semi-annually, $258 quarterly or $87 monthly. The death benefits and
cash values shown would not be affected by the more frequent premium
payments, nor would such amounts be affected by the Insured's risk
classification.
(2) Assumes no policy loan has been made.
(3) The amounts shown for the death benefit at the end of the first through
fourteenth Policy years take into account the annual increase in the face
amount (guaranteed minimum death benefit) in such years. The increases in
the death benefit in the 0% and 4% columns for the end of the first through
fourteenth Policy years result only from such increases in the guaranteed
minimum death benefit and are unrelated to the hypothetical gross annual
investment returns.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD
ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE
TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT AND THE DIFFERENT RATES OF
RETURN OF THE FUND PORTFOLIOS, IF THE ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 4%, 8% OR 12%, BUT VARIED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
34
<PAGE>
- - --------------------------------------------------------------------------------
YOU WILL RECEIVE
PERIODIC REPORTS
As a policy owner, you will receive an annual statement about your policy giving
you the status as of the first day of the current policy year of:
o the way the net annual premium is divided between the Divisions;
o the death benefit;
o the cash value; and
o your outstanding policy loans.
Notice will also be sent to you for policy issuance, transfers of funds between
Division and certain other policy transactions.
We will not send you an annual statement for any year your policy is in effect
under an option on lapse.
You will also receive a billing notice each year showing accrued interest for
the past policy year if you have a policy loan outstanding.
We will also send you semiannual reports with financial information on the
Separate Account and the Fund (including a list of the investments held by each
Portfolio of the Fund in which the Divisions invest) as required by the 1940
Act.
- - --------------------------------------------------------------------------------
THE IMPACT OF
TAXES
POLICY PROCEEDS
The Tax Reform Act of 1984 (1984 Act) includes a definition of life insurance
for tax purposes. Our variable life policies meet the statutory definition of
life insurance and hence will receive the same Federal income tax treatment as
fixed benefit life insurance. Thus, (a) the death benefit under our policies
will be excludable from the gross income of the beneficiary under Section
101(a)(1) of the Internal Revenue Code (Code) and (b) the policy owner will not
be deemed to be in constructive receipt of the cash value under the policy until
the policy is actually surrendered. Only then would the owner be taxed on any
increase in cash value due to investment experience.
In general if you return your policy for its cash value, you will not be taxed
on the amount you receive, except for the portion which exceeds the premiums you
have paid.
A split of the policy into two policies followed by a return of one for cash, or
an exchange referred to under CANCELLATION AND EXCHANGE RIGHTS, may result in
taxable income to the policy owner depending on the circumstances. We suggest
you consult your tax adviser.
The 1984 Act also gives the Secretary of the Treasury authority to set standards
for diversification of the investments underlying variable life policies in
order for such policies to be treated as life insurance. Based on a Temporary
Regulation, we believe that we will have 90 days following publication in the
Federal Register of the regulations prescribing diversification standards to
comply with those standards. We do not anticipate any problem in complying with
the regulatory standards within the 90-day period.
We also believe that loans received under the policies will be treated as
indebtedness of an owner, and that no part of any loan under a policy will
constitute income to the owner.
The individual situation of each policy owner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate tax as well as state and local estate, inheritance and other taxes.
See the prospectus of the Fund for discussion of the Fund's tax aspects.
- - --------------------------------------------------------------------------------
PENSION AND PROFIT
SHARING PLANS
If our policies are purchased by a trust which forms part of a pension or profit
sharing plan qualified under Section 401(a) of the Code for the benefit of
participants covered under the plan, the Federal income tax treatment with
respect to our policies will be somewhat different from that described above. We
suggest you consult your tax adviser.
- - --------------------------------------------------------------------------------
35
<PAGE>
- - --------------------------------------------------------------------------------
The first difference is that the current value of the "at risk" portion of our
policies, that is, the amount by which the current death benefit exceeds the
cash value, is treated as a "current fringe benefit" and is required to be
included annually in the plan participant's gross income. This value, commonly
referred to as the "P.S. 58 cost", is computed by using tables published by the
Internal Revenue Service and is reported to the participant annually as an
addition to wages and salaries on the Form W-2 annually furnished by the
employer who is maintaining the plan.
Second, if the plan participant dies while covered by the plan and the policy
proceeds are paid to the participant's beneficiary, then a portion of the
proceeds of our policies may be includable in the gross income of the
beneficiary. The 1984 Act repeals the $100,000 exclusion for death benefits
payable under qualified plans effective for deaths after December 31, 1984.
- - --------------------------------------------------------------------------------
OUR INCOME TAXES
Under the life insurance company tax provisions of the Code, as amended by the
1984 Act, variable life insurance is treated in a manner consistent with fixed
life insurance. The operations of the Separate Account are included in the
Federal income tax return of Equitable Variable. Under current tax law,
Equitable Variable pays no tax on investment income and capital gains reflected
in variable life insurance policy reserves. Consequently, no charge is currently
being made to either Division of the Separate Account for our Federal income
taxes. We reserve the right, however, to make such a charge in the future, if
the law changes and we incur Federal income tax which is attributable to the
Separate Account. If such a charge is made, it would be set aside as a provision
for taxes which we would keep in the affected Division rather than in our
general account. We anticipate that our variable life policy owners will benefit
from any investment earnings that are not needed to maintain this provision.
We may have to pay state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not substantial. If they increase,
however, charges may be made for such taxes when they are attributable to the
Separate Account.
- - --------------------------------------------------------------------------------
TAX REFORM
The President of the United States recently submitted a comprehensive set of tax
reform proposals to Congress. These proposals were substantially modified by the
House of Representatives which adopted a comprehensive tax reform bill. The
Senate is also considering comprehensive tax reform. The House bill would not
affect the taxes paid by life insurance companies such as Equitable Variable as
they relate to our Separate Account and would not alter the favorable tax
treatment of life insurance policies described in this prospectus. The ultimate
nature and the prospects for enactment of proposals for tax reform and their
precise effect are uncertain at this time.
- - --------------------------------------------------------------------------------
GENERAL PROVISIONS
OF OUR POLICIES
This section of the prospectus describes the general provisions of our policies
and is subject to the terms of the policy you buy. You can review copies of our
Basic and Expanded Policies upon request.
The minimum face amount of a policy you may apply for is $25,000. The Basic
Policy may be issued to age 75 and the Expanded Policy to age 65. Before issuing
any policy, we require satisfactory evidence of insurability.
You will pay your premium and handle all other business connected with your
policy at your regional Life Insurance Center shown on page 3 of your policy.
- - --------------------------------------------------------------------------------
PREMIUMS
Your premium is due on or before the due date shown in the policy and may be
paid annually, semiannually, quarterly or monthly. Monthly payments can be made
through a direct automatic payment plan arranged with your bank. You can request
a change in the frequency of the premium payment by writing to your regional
Life Insurance Center.
Premiums for the Basic Policy are payable for 40 years (but never beyond an
insured's attained age of 95). Premiums for the Expanded Policy are payable for
the insured's lifetime. The length of time during which your premium must be
paid is called the premium payment period.
Premiums are not affected by the investment experience of the Separate Account,
or, in the case of our Expanded Policy, by increases in the policy's face
amount. We guarantee that your premium will not go up during your premium
payment period.
- - --------------------------------------------------------------------------------
36
<PAGE>
- - --------------------------------------------------------------------------------
Because the Basic Policy does not provide for an increasing guaranteed minimum,
the premium for it is lower than for the Expanded Policy, which does have this
feature.
We offer reduced premiums if the insured is a standard risk and meets additional
requirements as to smoking habits. The reduction is greater for face amounts of
at least $100,000. Non-smoker rates are available for ages 20 and over.
We will charge an additional premium if an extra mortality risk is involved or
if you want certain optional insurance benefits.
YOU CAN CHOOSE THE DIVISION OR DIVISIONS WHERE YOUR NET ANNUAL PREMIUM WILL BE
PUT. You can decide how your net annual premium will be applied to the
Divisions. You can put the whole net annual premium in either Division, or you
can put a percentage in each Division. Percentages cannot be fractions and must
add up to 100.
You make your initial decision on the application for your policy. You can write
to your regional Life Insurance Center at any time requesting to change your
decision. Regardless of when you make your request, changes go into effect only
on the next policy anniversary because we allocate net annual premiums to the
Separate Account only on policy anniversaries. It may not always be possible to
make a change that is received less than 7 days before a policy anniversary. In
this case, the change will not go into effect until the policy anniversary
following the entire next policy year.
HOW WE USE PREMIUMS. Premiums are used to cover expenses and to pay death
benefits. The amount of your annual premium does not change during the premium
payment period.
The way we use the premium does change. This is because, in early policy years,
policy expenses are greater and the risk of paying death benefits is less than
in later policy years. The risk of paying death benefits increases as the
insured gets older, while expenses decrease. Part of the net annual premium put
into the Separate Account in early policy years is used to pay death benefits in
those years, while the balance is used as a reserve to pay death benefits in
later policy years. The net annual premium in early policy years is more than
what is needed to meet death benefits. The net annual premium in later policy
years is less than what is needed to meet death benefits. If the net annual
premiums exceed what is needed to meet death benefits over the years, the excess
contributes to our profits.
Part of our premiums are retained in our general account as a reserve to cover
the possibility that, at an insured's death, the guaranteed minimum will be more
than what would have been payable, based on the investment experience of the
Separate Account, if there were no guaranteed minimum death benefit.
PREMIUM PAYMENTS BY SALARY ALLOTMENT. If you work for an employer which permits
you to pay insurance premiums by deduction from your salary, we may offer you
and your fellow employees fixed insurance in the amount of the face amount for
the variable insurance you apply for (with a maximum of $250,000). This
insurance would be without charge (except that a premium will be deducted from
any fixed death benefit), and would be in effect until we receive the first
payment from your employer. At that time, your policy will begin its
participation in our Separate Account.
CHANGES IN PREMIUM RATES. Congress and the legislatures of various states have
from time to time considered legislation that would require premium rates to be
the same for males and females of the same age and risk class. In addition,
employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase
of the Basic Policy or the Expanded Policy in connection with an
employment-related insurance or benefit plan. The United States Supreme Court
held, in a 1983 decision, that, under Title VII, optional annuity benefits under
a deferred compensation plan could not vary on the basis of sex.
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37
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ILLUSTRATION OF PREMIUM RATES. Premiums are based on actuarial estimates of
death benefits, cash value benefits, lapses, expenses, investment experience and
amount contributed to our surplus.
The following tables show premium rates for each $1,000 of face amount for
$25,000 policies, which is the minimum, and for a $100,000 Expanded policy,
which is the amount where our rates per $1,000 go down (except for smokers).
- - --------------------------------------------------------------------------------
$25,000 FACE AMOUNT BASIC POLICY
Annual Premium for each $1,000 Face Amount
MALE FEMALE
Age At ----------------------------- -----------------------------
Issue Standard Risk Non-Smoker Standard Risk Non-Smoker
- - --------------------------------------------------------------------------------
10 $ 8.38 n.a. $ 7.53 n.a.
25 12.94 $12.60 11.44 $11.24
40 20.90 19.88 18.10 17.49
- - --------------------------------------------------------------------------------
$25,000 INITIAL FACE AMOUNT EXPANDED POLICY
Annual Premium for each $1,000 Initial Face Amount
MALE FEMALE
Age At ----------------------------- -----------------------------
Issue Standard Risk Non-Smoker Standard Risk Non-Smoker
- - --------------------------------------------------------------------------------
10 $10.41 n.a. $ 9.21 n.a.
25 17.11 $16.77 14.87 $14.67
40 29.11 28.09 25.00 24.39
- - --------------------------------------------------------------------------------
$100,000 INITIAL FACE AMOUNT EXPANDED POLICY
Annual Premium for each $1,000 Initial Face Amount
MALE FEMALE
Age At ----------------------------- -----------------------------
Issue Standard Risk Non-Smoker Standard Risk Non-Smoker
- - --------------------------------------------------------------------------------
10 $ 9.33 n.a. $ 8.15 n.a.
25 16.21 $15.30 13.97 $13.27
40 28.21 26.26 24.10 22.68
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38
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Premiums for semiannual, quarterly, and monthly periods will be higher per year
than the annual premium. This is due to a charge for loss of interest and added
billing and collection costs. The following tables compare annual and monthly
premiums for standard risks:
- - --------------------------------------------------------------------------------
PREMIUMS FOR EACH $1,000 FACE AMOUNT
<TABLE>
<CAPTION>
% Excess of Total
Monthly Premiums
for Policy Year
Over
Initial Annual Basis Monthly Basis Annual Premiums
Age at Face ------------------ ----------------- ----------------
Issue Amount Male Female Male Female Male Female
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BASIC POLICY
10 $ 25,000 $ 8.38 $ 7.53 $ .78 $ .70 11.7% 11.6%
25 25,000 12.94 11.44 1.17 1.04 8.5 9.1
40 25,000 20.90 18.10 1.85 1.61 6.2 6.7
EXPANDED POLICY
10 $ 25,000 $10.41 $ 9.21 $ .95 $ .85 9.5% 10.7%
100,000 9.51 8.31 .83 .73 4.7 5.4
25 25,000 17.11 14.87 1.53 1.34 7.3 8.1
100,000 16.21 13.97 1.41 1.22 4.4 4.8
40 25,000 29.11 25.00 2.56 2.21 5.5 6.1
100,000 28.21 24.10 2.44 2.09 3.8 4.1
- - ------------------------------------------------------------------------------------------------------
</TABLE>
GRACE PERIOD. We allow a grace period of 31 days to pay each premium after the
first one. Insurance will continue during the grace period, but we will deduct
one month's premium from the death benefit if the insured dies during the grace
period.
LAPSE. If a premium has not been paid by the end of the 31-day grace period, the
policy will lapse as of the date the premium was due. When a policy lapses, any
riders will end. All insurance may end unless the policy's net cash value is
used under a continued insurance option on lapse. See OPTIONS ON LAPSE.
- - --------------------------------------------------------------------------------
OPTIONS ON LAPSE
If a policy lapses because a premium remains due and unpaid beyond its 31-day
grace period, you may use one of the following options. A key element in these
options is your policy's net cash value on any day for a period of up to 3
months after the unpaid premium was due. Net cash value is cash value minus any
policy loans with accrued interest on the date an option is used. If your policy
has no net cash value, you cannot use the options.
PAYMENT OF NET CASH VALUE OPTION. You can withdraw the net cash value and
receive payment in cash.
CONTINUED INSURANCE OPTION. Within 3 months from the date a policy lapses (which
is the date the unpaid premium was due), you can use its net cash value to
obtain one of two types of fixed life insurance plans. These are reduced paid-up
insurance or extended term insurance. You will not have to pay any additional
premium on either type because you are, in effect, using the net cash value of
your variable life policy to buy continued life coverage.
If we do not receive a written request to use the continued insurance option
with 3 months after lapse, extended term insurance will automatically go into
effect. The extended term insurance option may not be available under your
policy if the insured's risk class is not at least standard. If so, that fact
will be stated on page 3 of the policy and reduced paid-up insurance will apply
instead. If the insured dies after the grace period but within 3 months of the
date of lapse, the continued insurance option that would provide the greater
benefit will automatically apply, regardless of any restriction stated on page 3
of the policy.
- - --------------------------------------------------------------------------------
39
<PAGE>
- - --------------------------------------------------------------------------------
Here are details on the two types of plans offered under our continued insurance
option.
o REDUCED PAID-UP FIXED INSURANCE. You can use the net cash value to buy
reduced paid-up fixed whole life insurance. The net cash value determines the
face amount that can be purchased at the insured's age at the time of
purchase. Paid-up insurance has cash value. You can use the net cash value
during the insured's lifetime for a loan or for cash payment.
EXAMPLE: You are a 30 year old male insured. Your variable life policy was
issued when you were 25. Use the illustrations on page 25, and assume a 4%
hypothetical gross annual investment return for each Division or their
combination. At the end of the 5th policy year, depending on whether you had
a Basic or an Expanded Policy, its net cash value could buy reduced paid-up
fixed whole life insurance with a face amount as follows:
- - --------------------------------------------------------------------------------
Face Amount Term
- - --------------------------------------------------------------------------------
Basic Policy $6,477 Life
Expanded Policy $7,076 Life
- - --------------------------------------------------------------------------------
o EXTENDED TERM INSURANCE. If the insured's risk class is at least standard,
you can use the net cash value to buy extended term insurance. The face
amount will equal the death benefit under your variable life policy on the
date of lapse minus any unpaid loan with accrued interest. The net cash value
determines how long coverage will last at the insured's then attained age. It
will last at least 90 days if the premium has been paid on the variable life
policy for 3 months before lapse and there is no policy loan. Extended term
coverage has cash value, but it cannot be used for a loan.
EXAMPLE: You are a 30 year old male insured. Your variable life policy was
issued when you were 25. Use the illustrations on page 25, and assume a 4%
hypothetical gross annual investment return for each Division or their
combination. At the end of the 5th policy year, depending on whether you had
a Basic or Expanded Policy, its net cash value could buy extended term
insurance as follows:
- - --------------------------------------------------------------------------------
Face Amount Term
- - --------------------------------------------------------------------------------
Basic Policy $40,034 13 Years
Expanded Policy $34,238 16 Years
- - --------------------------------------------------------------------------------
REINSTATEMENT OPTION. You can request that we reinstate the policy during the
insured's lifetime. You must make this request within 5 years after lapse. We
will not reinstate the policy if it has been returned for net cash value.
Before we will reinstate, we must receive evidence satisfactory to us of the
insured's insurability. We must also receive the larger of:
o all due and unpaid premiums with interest at 6% a year; or
o an amount equal to:
the cash value just after reinstatement, MINUS
the cash value just before reinstatement, and further MINUS
any policy loan with accrued interest at 5% a year compounded daily to the
date of reinstatement, TIMES
110%.
If we do reinstate, the policy will have the same variable adjustment amount and
premium allocation between the Divisions as if there had been no lapse.
If a policy has enough cash value at the time it lapses, it might be possible to
reinstate it by requesting a policy loan for that purpose.
- - --------------------------------------------------------------------------------
40
<PAGE>
- - --------------------------------------------------------------------------------
CANCELLATION RIGHT
You have a limited right to return your policy to your regional Life Insurance
Center with a written request for cancellation. We will give you a full refund
(guaranteed by Equitable) of premiums paid if your request and policy are
postmarked by the latest of the following:
o 10 days after your receive your policy; or
o 10 days after we mail a written Notice of Withdrawal Right; or
o 45 days after Part 1 of the policy application was signed.
- - --------------------------------------------------------------------------------
EXCHANGING OUR POLICIES
FOR FIXED WHOLE LIFE
INSURANCE
You may exchange your variable life policy for a fixed whole life policy on the
life of the insured (benefits will be as described in the fixed life policy).
You have this right for 18 months from the date your policy is issued, but only
if no premium remains due and unpaid. The fixed policy may be issued by
Equitable. The exchange will be effective when we receive your request,
accompanied by your policy and an application for the fixed policy.
We will not require evidence of the insured's insurability before an exchange.
The new policy's face amount will be the same as the initial face amount of the
variable life policy. It will also have the same register date, date of issue
and risk class. The premium for the new policy will be that in effect on the
register date for the same sex, age and risk class.
Any policy loan with accrued interest must be repaid before the exchange. The
exchange is also subject to limits described in the policy.
CASH ADJUSTMENT ON EXCHANGE. There will be a cash adjustment on exchange. The
adjustment will reflect the difference in premiums between the two policies.
There will also be an adjustment for the difference in cash values between the
two policies. If the new policy's cash value is more than the cash value of the
policy that is turned in, you pay the difference. If it is less, the difference
is paid to you. The adjustment will also reflect the effect of the investment
performance on cash value. We have filed a description of the method we use to
calculate the adjustment with the appropriate state insurance officials.
- - --------------------------------------------------------------------------------
PAYMENT OPTIONS
The death benefit proceeds or net cash value proceeds of the policies offered by
this prospectus can be paid in a lump sum. Or you can choose to apply all or
part of the proceeds under one of our payment options. A combination of options
can be used if we agree. Proceeds applied under an option will no longer be
affected by investment experience.
For an option to be used, the proceeds to be applied must be at least $2,500. If
no option is chosen at the insured's death, the beneficiary can choose an
option. The following options are available, subject to limits described in the
policy.
DEPOSIT OPTION. Proceeds are left on deposit with us. We will pay interest on
the proceeds of at least 3% a year, or we may set and pay a higher rate.
INSTALLMENT OPTION FOR A FIXED PERIOD. Proceeds are paid in installment for up
to 30 years, with interest of at least 3-1/2% a year.
INSTALLMENT OPTION OF A FIXED AMOUNT. Proceeds are paid in installments with
interest of at least 3-1/2% a year until the proceeds are used up.
LIFE INCOME OPTION WITH A PERIOD CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or the end of a
chosen period of 10 or 20 years.
LIFE INCOME OPTION WITH A REFUND CERTAIN. Proceeds are paid in monthly
installments for the longer of the life of the person being paid or until they
are used up.
- - --------------------------------------------------------------------------------
41
<PAGE>
- - --------------------------------------------------------------------------------
ADDITIONAL BENEFITS YOU
CAN GET BY RIDER
Your policy can include additional benefits that we approve based on our
standards for issuing insurance and classifying risks. An additional benefit
requires an additional premium. An additional benefit is provided by a rider
that is subject to the terms of the policy. The following riders are available.
WAIVER OF PREMIUM RIDER. With this rider, we will waive the premium if the
insured becomes totally disabled and the disability continues for 6 months. The
disability must start before the policy anniversary nearest the insured's 60th
birthday. If disability starts after that, we will waive the premium only up to
the policy anniversary nearest the insured's 65th birthday.
ACCIDENTAL DEATH BENEFIT RIDER. With this rider, we will pay a benefit if the
insured dies from an accidental bodily injury before the policy anniversary
nearest his or her 70th birthday.
OPTION TO PURCHASE ADDITIONAL INSURANCE RIDER. With this rider, you have the
right to buy additional insurance on the life of the insured at certain future
dates. We will not require evidence of the insured's insurability when you use
your right to buy additional insurance.
SUPPLEMENTAL PROTECTIVE BENEFIT RIDER. With this rider, we will waive the
premium if the insured is a child under age 15 on the date of issue and:
o the person who applied for the policy dies; or
o the person who applied for the policy is totally disabled for at least 6
months before the policy anniversary nearest his or her 60th birthday. We
will only waive the premium while the disability continues.
In any case, we will not waive the premium that is due after the policy
anniversary nearest the insured's 25th birthday.
TERM INSURANCE RIDER. Several types of riders are available that provide for
term insurance on the life of the insured or an additional insured.
- - --------------------------------------------------------------------------------
BENEFICIARY
You name your beneficiary when you apply for your policy. You can change the
beneficiary during the insured's lifetime by writing to your regional Life
Insurance Center. If no beneficiary is living when the insured dies, the death
benefit will be paid in equal shares to the insured's surviving children. If
there is no surviving child, the death benefit will be paid to the insured's
estate.
- - --------------------------------------------------------------------------------
ASSIGNMENT
You can assign the policy as collateral for a loan or other obligation. We are
not responsible for any payment we make or action we take before we receive a
copy of the assignment at your regional Life Insurance Center.
- - --------------------------------------------------------------------------------
CREDITORS' CLAIMS
Proceeds are paid free from the claims of creditors to the extent allowed by
law.
- - --------------------------------------------------------------------------------
LIMITS ON OUR RIGHT TO
CHALLENGE THE POLICY
We cannot challenge the validity of the policy after it has been in effect
during the insured's lifetime for 2 years from the date of issue or
reinstatement (unless another date is required by law). But we can challenge at
any time any rider that provides benefits in the event of total disability. If a
death claim is made within the time we can challenge validity, our payment will
generally be delayed while we determine whether to make such a challenge.
MISSTATEMENT OF AGE OR SEX. If the insured's age or sex is misstated in the
policy application, the death benefit will be what the premium paid would have
purchased based on the insured's true age and sex.
SUICIDE. If the insured commits suicide within 2 years from the date the policy
was issued or reinstated (or less where required by law), the death benefit will
be limited to the sum of all premiums paid minus outstanding policy loans with
interest.
- - --------------------------------------------------------------------------------
42
<PAGE>
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DIVIDENDS
No dividends will be paid on the policies described in this prospectus.
- - --------------------------------------------------------------------------------
WHEN WE PAY PROCEEDS
Payment of the death benefit, net cash value, or loan proceeds will be made
within 7 days after we receive the required form or request (and other documents
that may be required for payment of the death benefit) at your regional Life
Insurance Center. If an Equitable agent is assisting the beneficiary in
preparing the documents required for payment of the death benefit, we will send
the check to the agent within 7 days after we receive all required documents.
The agent will then deliver the check to the beneficiary. But we can delay
payment if:
o payment is contested;
o it is not reasonably practicable to determine the amount because the New York
Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
o the SEC, by order, permits us to delay to protect our policy owners.
If your policy is being continued as reduced paid-up or extended term insurance,
we can delay payment of a loan or cash value for up to 6 months.
We will pay at least 3% interest a year if we delay paying the cash value or
loan proceeds more than 30 days.
- - --------------------------------------------------------------------------------
SALES AND OTHER
AGREEMENTS
Equitable Variable and Integrity are the principal underwriters for the Fund
pursuant to a Distribution Agreement. Under the Distribution Agreement, we have
entered into a Sales Agreement with Equitable by which Equitable will distribute
our policies.
Equitable Variable, Integrity and Equitable are registered with the SEC as
broker-dealers under the Securities Exchange Act of 1934 and each of us is a
member of the National Association of Securities Dealers, Inc. We are also the
principal underwriter for our policies. (Equitable may also be deemed a
principal underwriter for our policies.)
- - --------------------------------------------------------------------------------
SALES BY AGENTS OF
EQUITABLE
We sell our policies through agents who are licensed by state insurance
officials to sell our variable life policies. These agents are also registered
representatives of Equitable.
Under the Sales Agreement, agents receive commissions from Equitable for selling
our policies. We reimburse Equitable for these commissions. We also reimburse
Equitable for other expenses incurred in marketing and selling our policies.
These expenses include agency and district managers' compensation, agents'
training allowance, deferred compensation, insurance benefits of agents and
agency and district managers, and agency clerical and advertising expenses.
COMMISSION SCHEDULE. Agents receive the equivalent of up to 50% of the premium
payable in the first policy year. In the second policy year, agents receive up
to 10% of the premium paid for that year. In the third, fourth and fifth policy
years, agents receive up to 8% of the premium paid in each year. In the sixth
through tenth policy years, agents receive up to 5% of the premium paid in each
year. After that, agents receive up to 2% of the premium paid in each year.
Agents will less than 3 full years of service with Equitable may be paid
differently.
Agents who meet certain production and persistency standards in selling
Equitable Variable and Equitable policies will be eligible for added
compensation. Agents who meet certain lifetime production standards will be
eligible to receive increased fees for servicing our policies. Agents also are
eligible for added compensation for servicing our policies when there is no
assigned soliciting agent.
- - --------------------------------------------------------------------------------
43
<PAGE>
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SALES BY BROKERS
We also sell our policies through independent brokers who are licensed by state
insurance officials to sell our variable life policies. They will also be
registered representatives either of Equitable or of another company registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934. The
commissions for independent brokers will be no more than those for agents.
Commissions will be paid through the registered broker-dealer.
- - --------------------------------------------------------------------------------
APPLICATIONS
When an application for one of our policies is completed, it is submitted to us.
Based on the information in the application and our standards for issuing
insurance and classifying risks, a policy may be issued. If a policy is not
issued, we will refund any premium that has been paid. (Equitable guarantees the
refund.)
- - --------------------------------------------------------------------------------
JOINT SERVICES AGREEMENT
In addition to acting as distributor for our policies, Equitable performs
certain other sales and administrative duties for us. Equitable does this
pursuant to a written agreement. The agreement is automatically renewed each
year, unless either party terminates and have been superseded by the sales
agreement referred to above.
Under this agreement, we pay Equitable for salary costs and other services and
an amount for indirect costs incurred through our use of Equitable personnel and
facilities. We also reimburse Equitable for sales expenses related to business
other than variable life policies.
- - --------------------------------------------------------------------------------
AMOUNTS PAID UNDER SALES
AND JOINT SERVICES
AGREEMENTS
The aggregate amounts paid or accrued to Equitable by us under sales and joint
services agreements totalled approximately $225,277,000 in 1985, $164,754,000 in
1984 and $93,361,000 in 1983.
- - --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
- - --------------------------------------------------------------------------------
LEGAL MATTERS
The legal validity of the policies described in this prospectus has been passed
on by Herbert L. Shyer, who is Executive Vice President and General Counsel of
Equitable.
The Washington, D.C. law firm of Freedman, Levy, Kroll & Simonds has served as
special counsel on matters relating to Federal securities laws.
- - --------------------------------------------------------------------------------
FINANCIAL AND
ACTUARIAL EXPERTS
The financial statements of the Separate Account and of Equitable Variable in
this prospectus have been examined by the accounting firm of Deloitte Haskins &
Sells, our independent auditors, to the extent stated in its opinions, and its
opinions on them are part of this prospectus. We have relied on the fact that
Deloitte Haskins & Sells is expert in accounting and auditing.
Actuarial matters in this prospectus have been examined by Joseph O. North, Jr.,
F.S.A., M.A.A.A., who is Vice President and Actuary of Equitable Variable and an
Assistant Vice President and Actuary of Equitable. His opinion on actuarial
matters is filed as an exhibit to the Registration Statement we filed with the
SEC.
- - --------------------------------------------------------------------------------
44
<PAGE>
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MANAGEMENT
Here is a list of our directors and officers and their business experience for
the past five years. Unless otherwise noted, the following persons have been
involved in the management of Equitable and its subsidiaries in various
positions for the last five years. Unless otherwise noted, their address is 787
Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard Lee Anderson Executive Vice President -- Operations and Director, Melville Corp. since
3000 Westchester Avenue January 1983; prior thereto, President F.W. Woolworth Co. Director,
Harrison, New York 10528 Equitable.
Ruth Smolensky Block Executive Vice President and Chief Insurance Officer, Equitable, since
February 1985; prior thereto, Executive Vice President. Chairman and Chief
Executive Officer, Equitable Variable, until November 1984. Director,
Integrity Life Insurance Company, National Integrity Life Insurance
Company, Tandem Financial Group, Inc., Equitable Investment Management
Corporation, Equitable Tax-Free Account, Inc., Equitable Money Market
Account, Inc., Equitable Real Estate Group, Inc., Donaldson, Lufkin &
Jenrette, Inc., Avon Products, Inc., Economics Laboratory, Inc. Trustee,
The Life Underwriters Training Council.
Joseph Lewis Dionne President and Chief Executive Officer McGraw-Hill, Inc. since June 1983;
1221 Avenue of the Americas prior thereto, President and Chief Operating Officer. Director, Equitable
New York, New York 10020 and Equitable Investment Corporation.
Raymond Bernard Dolan Executive Vice President, Equitable, since February 1985; prior thereto,
Executive Vice President and Chief Agency Officer. Chairman, The Equitable
of Delaware, Inc. Director, Equico Securities, Inc., Donaldson, Lufkin &
Jenrette, Inc., Equitable Capital Management Corporation, Equitable Life
Leasing Corporation and Equitable/Omnilease, Inc.
Harry Douglas Garber Vice Chairman of the Board, Equitable, since February 1984; prior thereto,
Executive Vice President and Chief Financial Officer. Director, Equitable
Investment Corporation and Genesco, Inc. Former Chairman and Chief
Executive Officer, Equitable Variable.
Glenn Howard Gettier, Jr. Executive Vice President and Chief Financial Officer, Equitable, since
December 1984; prior thereto, Partner, Peat, Marwick, Mitchell & Co.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Donald Richardson Kurtz Chairman and Chief Executive Officer, Equitable Investment Management
1221 Avenue of the Americas Corporation, since November 1983. Executive Vice President, Equitable.
New York, New York 10020 Director, Calvin Bullock, Ltd., Integrity Life Insurance Company, National
Integrity Life Insurance Company and Equitable Real Estate Group, Inc.
Member, Advisory Board of the Investment Management Institute, the Board of
Overseers of Bowdoin College and the Board of Trustees of Investor
Responsibility Research Center, Inc.
Donald James Mooney Executive Vice President, Equitable, since October 1984; prior thereto,
Senior Vice President. President, Equitable Variable, until November 1984.
Director, Integrity Life Insurance Company, The Equitable of Delaware,
Inc., Equico Securities, Inc., and The Equitable of Colorado, Inc.
Francis Helmut Schott Senior Vice President and Chief Economist, Equitable.
Leo Martin Walsh, Jr. Executive Vice President, Director and Chief Investment Officer, Equitable,
since June 1983; prior thereto, Executive Vice President. Director since
March 1983 and President and Chief Executive Officer since March 1984,
Equitable Investment Corporation; prior thereto, Executive Vice President
and Chief Operating Officer. Chairman, Calvin Bullock, Ltd., Equitable
Casualty Insurance Company, Equitable General Insurance Company of
Oklahoma, Equitable Money Market Account, Inc., Equitable Tax-Free Account,
Inc., Equitable Life Leasing Corporation, and Equitable Relocation
Management Corporation. Director, Equitable Mortgage Resources, Inc.,
Equitable Real Estate Investment Management, Inc., Equitable Agri-Business,
Inc., mutual funds to which Calvin Bullock, Ltd. is investment adviser,
ELAFUND, INC., Tandem Financial Group, Inc., Equitable Investment
Management Corporation, Equitable Capital Management Corporation, Alliance
Capital Management Corporation and Donaldson, Lufkin & Jenrette, Inc.
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS -- DIRECTORS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert Wayne Barth President and Chief Operating Officer, Equitable Variable, since December
1985. Executive Vice President, Equitable, since June 1985; Senior Vice
President since September 1984; prior thereto, Vice President since April
1984. Director, The Equitable of Colorado, Inc. Director, President and
Chief Executive Officer, The Equitable of Delaware, Inc.
Peter Rawlinson Wilde Chairman and Chief Executive Officer, Equitable Variable, since November
1984. Chairman and Chief Executive Officer, The Equitable of Delaware, Inc.
Executive Vice President, Equitable, since July 1984; Chief Financial
Officer, CIGNA Corporation, from April 1983 to June 1984; prior thereto,
Senior Vice President. Director, Integrity Life Insurance Company, National
Integrity Life Insurance Company and Tandem Financial Group, Inc.
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</TABLE>
<TABLE>
<CAPTION>
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OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
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<S> <C>
Robert Seymour Jones Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since June 1985; prior thereto, Vice President.
James Thomas Liddle, Jr. Senior Vice President and Chief Financial Officer, Equitable Variable,
2 Penn Plaza since February 1986. Vice President and Actuary, The Equitable of Colorado,
New York, New York 10121 since February 1984. Vice President and Actuary, Equitable.
Michael Searle Martin Senior Vice President, Equitable Variable, since February 1986. Director,
The Equitable of Colorado and The Equitable of Delaware. Senior Vice
President, Equitable, since June 1985; Vice President, from June 1982 to
June 1985; prior thereto, Agency Manager.
Stanley Julian Rispler Senior Vice President, Equitable Variable, since February 1986. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President.
Samuel Barry Shlesinger Senior Vice President, Equitable Variable, since February 1986; President
and Chief Executive Officer, The Equitable of Colorado, since September
1985. Vice President and Actuary, Equitable.
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</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
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OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
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<S> <C>
Richard Marshall Stenson Senior Vice President, Equitable Variable, since December 1981. Senior Vice
President, Equitable, since October 1984; prior thereto, Vice President and
Actuary. Actuary, Integrity Life Insurance Company. Director, The Equitable
of Colorado, Inc.
Michael Guy Carew Vice President, Equitable Variable, since February 1986. Vice President,
Equitable, since February 1985. Prior thereto, Chief Financial Officer and
Treasurer, City Trust Bancorp, Inc.
Richard Henry Fitzpatrick Vice President, Equitable Variable, since February 1986. Vice President,
Equitable.
Diane Marie Giachino Vice President, Equitable Variable, since February 1986. Vice President,
Equitable, since October 1985; Assistant Vice President, from March 1983 to
October 1985; prior thereto, various managerial positions.
Catherine Theresa Henry Vice President, Equitable Variable, since February 1986. Vice President,
Equitable, since October, 1983; prior thereto, Assistant Vice President.
David Joseph Hughes Vice President, Equitable Variable, since February 1986; Vice President and
2 Penn Plaza Chief of Staff, The Equitable of Colorado. Vice President, Equitable, since
New York, New York 10121 October 1985; Assistant Vice President from August 1982 to October 1985;
prior thereto, Manager.
Franklin Kennedy, III Vice President, Equitable Variable, since August 1981; Managing Director
1221 Avenue of the Americas and Chief Investment Officer, Equitable Investment Management Corporation,
New York, New York 10020 since November 1983. Vice President, Equitable.
John Alfred Kern Vice President, Equitable Variable, since February 1986. Vice President,
2 Penn Plaza Equitable.
New York, New York 10121
Donald Anthony King Vice President, Equitable Variable, since February 1986; Vice President,
1285 Avenue of the Americas Integrity Life Insurance Company, since April 1984; Vice President,
New York, New York 10020 Equitable, since January 1976. Executive Vice President, Equitable Capital
Management Corporation.
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</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
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OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
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<S> <C>
Joseph Oswell North, Jr. Vice President and Actuary, Equitable Variable, since February 1984. Vice
2 Penn Plaza President and Actuary, Equitable, since October 1984; prior thereto,
New York, New York 10121 Assistant Vice President and Actuary, Equitable, since April 1982; prior
thereto, Associate Actuary, John Hancock Mutual Life Insurance Company.
Geoffrey Hall Radbill Vice President, Equitable Variable, since February 1986. Vice President,
135 West 50th Street Equitable, since February 1983; prior thereto, Assistant Vice President.
New York, New York 10020
Thomas Willard Shade, Jr. Vice President, Equitable Variable, since February 1986. Vice President,
2 Penn Plaza Equitable, since October 1985; Assistant Vice President from March 1983 to
New York, New York 10121 October 1985; prior thereto, various managerial positions.
Alan Romney Thomander Vice President and Controller, Equitable Variable, since February 1983;
2 Penn Plaza prior thereto, Vice President
New York, New York 10121 -- Controller's Operations. Vice President, Equitable, from May 1982 until
February 1983; prior thereto, Assistant Vice President. Controller,
Integrity Life Insurance Company.
Larry Kenneth Mills Treasurer, Equitable Variable, Integrity Life Insurance Company and
National Integrity Life Insurance Company, since February 1986. Vice
President and Treasurer, Equitable and Equico Securities, Inc., since March
1986; prior thereto, Vice President, Equitable. Treasurer, Equitable Real
Estate Group, Inc. Vice President, Treasurer and Director, Equitable Realty
Assets Corp.
Theodore Edward Plucinski, M.D. Chief Medical Director, Equitable Variable, since February 1986; Integrity
2 Penn Plaza Life Insurance Company and National Integrity Life Insurance Company since
New York, New York 10121 November 1985, and Equitable since September 1985. Prior thereto, Chief
Medical Director, MONY.
Kevin Brian Keefe Secretary, Equitable Variable, Assistant Vice President and Assistant
Secretary, Equitable, since August 1983; prior thereto, Assistant
Secretary. Secretary, Integrity Life Insurance Company, National Integrity
Life Insurance Company, Tandem Financial Group, Inc., The Hudson River
Fund, Inc., The Equitable of Delaware, Inc., and The Equitable of Colorado,
Inc. Assistant Secretary, Equitable Life Leasing Corporation and Equico
Securities.
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</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
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OFFICERS
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
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<S> <C>
Vincent Walter Jiminez Assistant Vice President, Equitable Variable, since June 1985; prior
2 Penn Plaza thereto, Vice President, Equitable Real Estate Investment Management Inc.
New York, New York 10121 Assistant Vice President, Equitable, since June 1984; prior thereto,
various managerial positions with Equitable. Director, Equico Capital
Corporation.
Norman Russell Meise Assistant Vice President, Equitable Variable, since February 1983; prior
2 Penn Plaza thereto, Assistant Vice President and Controller and Assistant Vice
New York, New York 10121 President, Equitable.
Robert Floyd Wiseman Assistant Vice President, Equitable Variable, since February 1986.
2 Penn Plaza Assistant Vice President, Equitable.
New York, New York 10121
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</TABLE>
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WHERE YOU CAN GET
ADDITIONAL
INFORMATION
We have filed with the SEC a Registration Statement relating to the Separate
Account and the variable life policies described in this prospectus. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain copies of that document from the SEC's main office
in Washington, D.C. You will have to pay a fee for the material.
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50
<PAGE>
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PART 3 -- FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
SEPARATE ACCOUNT 1
INDEX PAGE
- - --------------------------------------------------------------------------------
Statements of Assets and Liabilities, December 31, 1985 52
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Statement of Operations for the Year Ended December 31, 1985 52
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Statements of Changes in Net Assets for the Years Ended
December 31, 1985 and 1984 53
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Notes to Financial Statements 54
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Opinion of Independent Auditors 55
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EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
INDEX PAGE
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Balance Sheets, December 31, 1985 and 1984 56
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Summaries of Operations and Capital and Surplus Funds for the Years
Ended December 31, 1985 and 1984 57
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Statements of Changes in Financial Position for the Years Ended
December 31, 1985 and 1984 58
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Notes to Financial Statements 59
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Opinion of Independent Auditors 62
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The financial statements of Equitable Variable herein should be considered only
as bearing upon the ability of Equitable Variable to meet its obligations under
the policies.
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51
<PAGE>
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[VARIABLE LIFE INSURANCE LOGO]
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[EQUITABLE VARIABLE LIFE INSURANCE COMPANY LOGO -- 1986 VERSION]
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Catalogue No. 11776
