January 23, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Maxim Series Account
Registration of New Contract
Form N-4
Ladies and Gentlemen:
Please find enclosed via EDGAR transmission a Registration Statement on Form N-4
filed on behalf of Maxim Series Account of Great-West Life & Annuity Insurance
Company. The filing is made to register a new contract under Maxim Series
Account.
Any questions with respect to this filing should be directed to the undersigned
at (303) 689-3817 or Mr. Chris Menconi at (202) 965-8129.
Sincerely,
Beverly A. Byrne
Assistant Vice President
and Associate Counsel
<PAGE>
s filed with the Securities and Exchange Commission on January 26, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(X)
PRE-EFFECTIVE AMENDMENT NO. ( )
-----
POST-EFFECTIVE AMENDMENT NO. ( )
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
(X)
Amendment No.
( )
(Check appropriate box or boxes)
MAXIM SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
President and Chief Executive Officer
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
Approximate Date of Proposed Public Offering:
Upon the effective date of this Registration Statement
It is proposed that this filing will become effective on .
Title of Securities Being Registered:
Flexible Premium Deferred Annuity Contracts.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
<PAGE>
MAXIM SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
FORM N-4 ITEM PROSPECTUS CAPTION
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1. Cover Page.......................... Cover Page
2. Definitions......................... Definitions
3. Synopsis............................ Variable Annuity
Fee Table; Key
Features of the Annuity
4. Condensed Financial Information..... Not Applicable
5. General Description of Registrant,
Depositor and Portfolio Companies............... Great-West Life & Annuity
Insurance Company and the Series
Account; The Eligible Funds;
Voting Rights
6. Deductions and Expenses............ Charges and Deductions; Appendix
A; Distribution of the Contracts
7. General Description of Variable
Annuity Contracts........ Key Features of the
Annuity; The Elgible
Funds; Application and
Contributions; Transfers; Death
Benefit; Payment Options; Rights
Reserved by the Company;
Statement of Additional Information
8. Annuity Period...................... Payment Options
9. Death Benefit....................... Death Benefit
10. Purchases and Contract Value........ Application and contributions;
Annuity Account Value
11. Redemptions......................... Cash Withdrawals; Payment
Options; Key Features of the
Annuity
12. Taxes............................... Federal Tax Matters
13. Legal Proceedings................... Legal Proceedings
14. Table of Contents of Statement
of Additional Information....................... Available Information
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
15. Cover Page.......................... Cover Page
16. Table of Contents................... Table of Contents
17. General Information and
History........................... General Information; Great-West
Life & Annuity Insurance Company
and Maxim Series Account
18. Services............................ Services
19. Purchase of Securities
Being Offered..................... Not Applicable
20. Underwriters........................ Services - Principal Underwriter
21. Calculation of
Performance Data.................. Calculation of Performance
Data
22. Annuity Payments.................... Calculation of Annuity Payments
23. Financial Statements................ Financial Statements
</TABLE>
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
SUBJECT TO COMPLETION
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NORT MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO SUCH TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THE VARIABLE ANNUITY
A FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
Distributed by
BenefitsCorp Equities, Inc.
---------------------------------------------
Issued by
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
This prospectus describes interests under a flexible premium deferred annuity
contract, The Variable Annuity (the "Contract"). The Contract is
issued as individual contracts by Great-West Life & Annuity Insurance Company
(the "Company").
Your investment in the Contract may be allocated among 25 Investment Divisions
of the Maxim Series Account ("Series Account"). The Investment Divisions invest
in various underlying funds (open-end investment companies) offered by Maxim
Series Fund, Inc.
The minimum initial investment is $5,000 or $1,000 if made under an Automatic
Contribution Plan ("ACP"). The minimum subsequent Contribution is $500 (or $100
per month if made under an ACP).
There are no sales charges, redemption, surrender or withdrawal charges. The
Contract provides a Free Look Period of 10 days from your receipt of the
Contract (or longer, if required by state law), during which time you may cancel
your investment in the Contract. During the Free Look Period, all Contributions
allocated to an Investment Division will be allocated first to the Money Market
Investment Division and will remain there until the next Transaction Date
following the end of the Free Look Period.
Your Annuity Account Value will increase or decrease based on the investment
performance of the options you select. You bear the entire investment risk under
the Contract prior to the annuity commencement date for all amounts in your
Variable Sub-Accounts. While there is a guaranteed death benefit, there is no
guaranteed or minimum Annuity Account Value on amounts allocated to Investment
Divisions. Therefore, the Annuity Account Value you receive could be less than
the total amount of your Contributions.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR
TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFERS CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
Prospectus Dated , 1998
The Contracts are not deposits of, or guaranteed or endorsed by any bank, nor
are the Contracts federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency. The
Contracts involve certain investment risks, including possible loss of
principal.
About This Prospectus: This Prospectus concisely presents important information
you should have before investing in the Contract. Please read it carefully and
retain it for future reference. You can find more detailed information
pertaining to the Contract in the Statement of Additional Information dated ,
1998 (as may be amended from time to time), and filed with the Securities and
Exchange Commission. The Statement of Additional Information is incorporated by
reference into this Prospectus, and may be obtained without charge by contacting
the Annuity Service Center at 800-xxx-xxxx P.O. Box 1700, Denver, Colorado
80201.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Page
DEFINITIONS..................................................................................3
KEY FEATURES OF THE ANNUITY................................................................. 5
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND THE SERIES ACCOUNT ..........................................................10
THE ELIGIBLE FUNDS..........................................................................10
APPLICATIONS AND CONTRIBUTIONS..............................................................14
ANNUITY ACCOUNT VALUE.......................................................................15
TRANSFERS...................................................................................16
CASH WITHDRAWALS............................................................................18
TELEPHONE TRANSACTIONS......................................................................18
DEATH BENEFIT...............................................................................19
CHARGES AND DEDUCTIONS......................................................................21
PAYMENT OPTIONS.............................................................................23
FEDERAL TAX MATTERS ........................................................................26
ASSIGNMENTS OR PLEDGES......................................................................28
PERFORMANCE DATA ...........................................................................28
DISTRIBUTION OF THE CONTRACTS...............................................................30
VOTING RIGHTS.............................................................................. 31
RIGHTS RESERVED BY THE COMPANY..............................................................31
LEGAL PROCEEDINGS ..........................................................................32
LEGAL MATTERS...............................................................................32
AVAILABLE INFORMATION.......................................................................32
</TABLE>
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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
--------------------------------------------------------------------------
The Contract is not available in all states.
<PAGE>
--------------------------------------------------------------------------
DEFINITIONS
--------------------------------------------------------------------------
Accumulation Period - The period between the Effective Date and the Payment
Commencement Date.
Annuitant - The person named in the application upon whose life the payment of
an annuity is based and who will receive annuity payments. If a Contingent
Annuitant is named, then the Annuitant will be considered the Primary Annuitant.
While the Annuitant is living and at least 30 days prior to the annuity
commencement date, the Owner may, by Request, change the Annuitant.
Annuity Account - An account established by the Company in the name of the Owner
that reflects all account activity under this Contract.
Annuity Account Value - The sum of the Variable Sub-Accounts credited to the
Owner under the Annuity Account; less Transfers, partial withdrawals, amounts
applied to an annuity option, periodic withdrawals, charges deducted under the
Contract and, less Premium Tax, if any.
Annuity Payment Period - The period beginning on the annuity commencement date
and continuing until all annuity payments have been made under the Contract.
Annuity Service Center - P.O. Box 1700, Denver, Colorado 80201, telephone
800-xxx-xxxx.
Annuity Unit - An accounting measure used to determine the dollar value of any
variable annuity payment after the first annuity payment is made.
Automatic Contribution Plan ("ACP") - A plan which allows for automatic periodic
Contributions. The Contribution amount will be withdrawn from a designated
pre-authorized account and automatically credited to the Annuity Account.
Beneficiary - The person(s) designated by the Owner, in the application, or as
subsequently changed by the Owner by Request, to receive any death benefit which
may become payable under the terms of the Contract. If the surviving spouse of
an Owner is the surviving Joint Owner, the surviving spouse will become the
Beneficiary upon such Owner's death and may elect to take the death benefit, if
any, or elect to continue the Contract in force.
Company - Great-West Life & Annuity Insurance Company, the issuer of this
annuity, located at 8515 East Orchard Road, Englewood, Colorado 80111.
Contingent Annuitant - The person named in the application, unless later changed
by the Owner by Request while the Annuitant is alive and before annuity payments
have commenced, who becomes the Annuitant when the Primary Annuitant dies. No
new Contingent Annuitant may be designated after the death of the Primary
Annuitant.
Contributions - Purchase amounts received under the Contract and allocated to
the Variable Sub-Account(s) prior to any Premium Tax or other deductions.
Effective Date - The date on which the first Contribution is credited to the
Annuity Account.
Eligible Fund - A registered management investment company, or portfolio
thereof, in which the assets of the Series Account may be invested.
Investment Division - A division of the Series Account containing the shares of
an Eligible Fund. There is an Investment Division for each Eligible Fund.
Non-Qualified Annuity Contract - An annuity contract which is not intended to be
part of a qualified retirement plan and is not intended to satisfy the
requirements of Section 408 of the Internal Revenue Code of 1986, as amended.
Owner (Joint Owner) or You - The person(s), while the Annuitant is living, named
in the Contract Data Page who is entitled to exercise all rights and privileges
under the Contract. Joint Owners must be husband and wife as of the date the
Contract is issued. The Annuitant will be the Owner unless otherwise indicated
in the application. Any reference to Owner in the singular tense shall include
the plural, and vice versa, as applicable.
Payment Commencement Date - The date on which annuity payments or periodic
withdrawals commence under a payment option. The Payment Commencement Date must
be at least one year after the Effective Date of the Contract. If a Payment
Commencement Date is not shown on the Contract Data Page, annuity payments will
commence on the first day of the month of the Annuitant's 91st birthday. The
Payment Commencement Date may be changed by the Owner within 60 days prior to
commencement of annuity payments or it may be changed by the Beneficiary upon
the death of the Owner.
Premium Tax - The amount of tax, if any, charged by a state or other
governmental authority.
Request - Any written, telephoned, or computerized instruction in a form
satisfactory to the Company and received at the Annuity Service Center (or other
annuity service center subsequently named) from the Owner or the Owner's
designee (as specified in a form acceptable to the Company) or the Beneficiary
(as applicable) as required by any provision of the Contract or as required by
the Company. All Requests are subject to any action taken or payment made by the
Company before it was processed.
Series Account - The segregated account established by the Company under
Colorado law and registered as a unit investment trust under the Investment
Company Act of 1940, as amended.
Surrender Value - The Annuity Account Value on the effective date of the
surrender, less Premium Tax, if any.
Transaction Date - The date on which any Contribution or Request from the Owner
will be processed by the Company at the Annuity Service Center. Contributions
and Requests received after 4:00 p.m. EST/EDT will be deemed to have been
received on the next business day. Requests will be processed and the Annuity
Account Value will be determined on each day that the New York Stock Exchange is
open for trading.
Transfer - The moving of money from and among the Investment Division(s).
Variable Sub-Accounts - The sub-division(s) of the Owner's Annuity Account
containing the value credited to the Owner under the Annuity Account from an
Investment Division.
We, our, us, or GWL&A: Great-West Life & Annuity Insurance Company.
<PAGE>
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KEY FEATURES OF THE ANNUITY
----------------------------------------------------------------------------
The Contract currently allows you to invest in your choice of 25 different
Investment Divisions that invest in Portfolios of Maxim Series Fund, Inc. Your
Annuity Account Value allocated to an Investment Division will vary with the
investment performance of the Investment Division you select. You bear the
entire investment risk for all amounts invested in the Investment Division(s).
Your Annuity Account Value could be less than the total amount of your
Contributions.
Who should invest. The Contract is designed for investors who are seeking
long-term tax deferred asset accumulation with a wide range of investment
options. The Contract can be used for retirement or other long-term investment
purposes. The deferral of income taxes is particularly attractive to investors
in high federal and state tax brackets who have already fully taken advantage of
their ability to make IRA contributions or "pre-tax" contributions to their
employer sponsored retirement or savings plans.
A Wide Range of Variable Investment Choices. The Contract gives you an
opportunity to select among 25 different Investment Divisions. Each Investment
Division invests in shares of an Eligible Fund.
The distinct investment objectives and policies for each Eligible Fund are more
fully described in their individual fund prospectuses which are available from
the Annuity Service Center, P.O. Box 1700, Denver, Colorado 80201, or via
telephone at 800-xxx-xxxx.
How to Invest. You must complete a Contract application form in order to invest
in the Contract and you must pay by check. The minimum initial investment is
$5,000. Subsequent investments must be at least $500. The minimum initial
investment may be reduced to $1,000 should the Owner agree to make additional
$100 per month minimum recurring deposits through an ACP.
Free Look Period. The Contract provides for a Free Look Period which allows you
to cancel your investment generally within 10 days of your receipt of the
Contract. You can cancel the Contract during the Free Look Period by delivering
or mailing the Contract to the Annuity Service Center. The cancellation is not
effective unless we receive a notice which is postmarked before the end of the
Free Look Period. If the Contract is returned, the Contract will be void from
the start and the greater of: (a) Contributions received less surrenders,
withdrawals and distributions, or (b) the Annuity Account Value less surrenders,
withdrawals and distributions, will be refunded. These procedures may vary where
required by state law. (See "Application and Contributions.")
Allocation of the Initial Investment. The initial Contribution allocated to
an Investment Division will be allocated to the Money Market Portfolio until
the next Transaction Date following the end of the Free Look Period. At that
time, the Annuity Account Value will be allocated to the Investment Divisions
in accordance with your instructions. (See "Annuity Account Value.")
Charges and Deductions Under the Contract. The Contract is a "no load" variable
annuity and, as such, imposes no sales charges, redemption or withdrawal
charges.
For Contracts having an Annuity Account Value of less than $50,000, a Contract
Maintenance Charge of no more than $30 will be deducted annually from your
Annuity Account Value. There will be a transfer fee of $10 for each Transfer in
excess of twelve Transfers per calendar year. (See "Charges and Deductions," for
more information.) GWL&A also deducts from the net asset value of the Series
Account an amount, computed daily, equal to and annual rate of 0.55% for
mortality and expense risk guarantees plus 0.10% for administrative expenses.
(See "Charges and Deductions" for more information.)
Depending on your state of residence, we may deduct a charge for Premium Tax
from purchase payments or amounts withdrawn or at the Payment Commencement Date.
(See "Charges and Deductions," for more information.)
Transfers. You may transfer your Annuity Account Value among the Investment
Divisions as often as you like with no immediate tax consequences. You may
make a Transfer Request to the Annuity Service Center. A transfer fee may apply.
See "Charges and Deductions.")
Full and Partial Withdrawals. You may withdraw all or part of your Annuity
Account Value before the earlier of the annuity commencement date you selected
or the Annuitant's or Owner's death. Withdrawals may be taxable and if made
prior to age 59 1/2 may be subject to a 10% penalty tax. The minimum partial
withdrawal is $500. There is no limit on the number of withdrawals made. The
Company may delay payment of withdrawals from your Variable Sub-Accounts by up
to 7 days. (See "Cash Withdrawals.")
Annuity Options. Beginning on the first day of the month immediately following
the annuity commencement date you select, you may elect to receive annuity
payments on a variable basis. (The default date is the first day of the month
that the Annuitant attains age 91.) A wide range of annuity options are
available to provide flexibility in choosing an annuity payment schedule that
meets your particular needs. These annuity options include alternatives designed
to provide payments for life, with or without a guaranteed minimum number of
payments. (See "Payment Options.")
Death Benefit. The amount of the death benefit, if payable before annuity
payments commence, will be the greater of (a) the Annuity Account Value as of
the date a Request for payment is received, less Premium Tax, if any; or (b) the
sum of Contributions paid, less partial withdrawals and Periodic Withdrawals,
less charges deducted under the Contract, if any, less Premium Tax, if any.
(See "Death Benefit.")
Customer Service. Professional representatives are available toll-free to assist
you. If you have any questions about your Contract, please telephone the Annuity
Service Center (800-xxx-xxxx) or write to the Annuity Service Center at P.O. Box
1700, Denver, Colorado 80201. All inquiries should include the Contract number
and the Owner's name. As a Contract Owner you will receive periodic statements
confirming any transactions relating to your Contract, as well as a quarterly
statement and an annual report.
<PAGE>
VARIABLE ANNUITY FEE TABLE
The purpose of this table and the examples that follow is to assist you
in understanding the various costs and expenses that you will bear directly or
indirectly when investing in the Contract. The table and examples reflect
expenses related to the Investment Divisions as well as of the Eligible Funds.
The table assumes that the entire Annuity Account Value is allocated to one or
more Investment Divisions. The information set forth should be considered
together with the narrative provided under the heading "Charges and Deductions,"
and with the Funds' prospectuses. In addition to the expenses listed below,
Premium Tax may be applicable.
Contract Owner Transaction Expenses1
Sales Load None
Surrender Fee None
Transfer Fee (First 12 Per Year)2 None
Annual Contract Maintenance Charge3 $30.00
Investment Division Annual Expenses
(as a percentage of average account value)
Administrative Expense Charge 0.10%
Other Fees and Expenses 0.00%
Mortality and Expense Risk Charge 0.55%
-----
Total Investment Division Annual Expenses 0.65%
<PAGE>
Eligible Fund Annual Expenses (1)
(as a percentage of Eligible Fund net assets, after expenses reimbursements and
fee waivers)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Portfolio Management Other 12b-1 Total Eligible
Fees Expenses Fees Fund Expenses
Maxim Money Market Portfolio .46% 0% 0% .46%
Maxim Bond Portfolio .60% 0% 0% .60%
Maxim Investment Grade Corporate Bond .60% 0% 0% .60%
Portfolio
Maxim Short-Term-Maturity Bond Portfolio .60% 0% 0% .60%
Maxim U.S. Government Securities .60% 0% 0% .60%
Portfolio
Maxim U.S. Government Mortgage .60% 0% 0% .60%
Securities Portfolio
Maxim Corporate Bond Portfolio .90% 0% 0% .90%
Maxim Stock Index Portfolio .60% 0% 0% .60%
Maxim Small-Cap Index Portfolio .60% 0% 0% .60%
Maxim Growth Index Portfolio .60% 0% 0% .60%
Maxim Value Index Portfolio .60% 0% 0% .60%
Maxim MidCap Portfolio .95% .15% 0% 1.15%
Maxim T. Rowe Price Equity/Income .80% .15% 0% .95%
Portfolio
Maxim MidCap Growth Portfolio 1.00% .05% 0% 1.05%
Maxim Small-Cap Value Portfolio 1.00% .35% 0% 1.35%
Maxim INVESCO ADR Portfolio 1.00% .30% 0% 1.30%
Maxim INVESCO Small-Cap Growth Portfolio .95% .15% 0% 1.10%
Maxim INVESCO Balanced Portfolio 1.00% 0% 0% 1.00%
Maxim Foreign Equity Portfolio 1.00% .50% 0% 1.50%
Maxim Blue Chip Portfolio 1.00% .15% 0% 1.15%
Maxim Aggressive Profile Portfolio+ .25% 0% 0% .25%
Maxim Moderately Aggressive Profile .25% 0% 0% .25%
Portfolio+
Maxim Moderate Profile Portfolio+ .25% 0% 0% .25%
Maxim Moderately Conservative Profile .25% 0% 0% .25%
Portfolio+
Maxim Conservative Profile Portfolio+ .25% 0% 0% .25%
</TABLE>
+ Each Profile Portfolio invests in shares of other Maxim Portfolios
("Underlying Portfolios"). Therefore, each Profile Portfolio will, in addition
to its own expenses such as management fees, bear its pro rata share of the fees
and expenses incurred by the Underlying Portfolios and the investment return of
each Profile Portfolio will be net of the Underlying Portfolios expenses.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Minimum Total Maxim Series Maximum Total Maxim Series
Fund Annual Expenses* Fund Annual Expenses**
Aggressive Profile 1.05% 1.51%
Moderately Aggressive Profile 1.01% 1.44%
Moderate Profile 0.97% 1.35%
Moderately Conservative Profile 0.96% 1.26%
Conservative Profile 0.85% 1.11%
</TABLE>
* The Minimum Fees are determined by assuming the allocation of each Profile
Portfolio's assets to those for the Underlying Portfolios (please see the Maxim
Series Fund prospectus for the Profile Portfolios for further information on the
Profile Portfolios) with the lowest Total Annual Expenses.
** The Maximum Fees are determined by assuming the allocation of each Profile
Portfolio's assets to those for the Underlying Portfolios (please see the Maxim
Series Fund prospectus for the Profile Portfolios for further information on the
Profile Portfolios) with the highest Total Annual Expenses.
(1) The figures given above reflect the amounts deducted after expense offset
arrangements, if any, from the Eligible Funds during 1997. The investment
adviser to Maxim Series Fund, Inc., in its sole discretion, has waived all or
part of its fees and/or voluntarily assumed certain expenses for the Portfolios
listed below. For a more complete description of the Eligible Funds' fees and
expenses, see the Maxim Series Fund, Inc. prospectus. As of the date of this
Prospectus, certain fees are being waived or expenses are being assumed, in each
case on a voluntary basis. Without such waivers or reimbursements, the total
Eligible Fund annual expenses that would have been incurred for the last
completed fiscal year would be: % for Maxim T. Rowe Price Equity/Income
Portfolio; % for Maxim MidCap Growth Portfolio; % for Maxim Small-Cap Value
Portfolio; % for Maxim INVESCO ADR Portfolio; % for Maxim INVESCO Small-Cap
Growth Portfolio; % for Maxim Foreign Equity Portfolio; and, % for Maxim Blue
Chip Portfolio.
<PAGE>
Examples
If you retain, annuitize, or surrender the Contract at the end of the applicable
time period, you would pay the following fees and expenses on a $1,000
investment, assuming a 5% annual return on assets and an assessment of the
mortality and expense risk charge and administrative expense charge under any
contract:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Divisions 1 Year 3 Years
Maxim Money Market Portfolio $12.83 $41.93
Maxim Bond Portfolio $14.29 $46.41
Maxim Investment Grade Corporate Bond $14.29 $46.41
Portfolio
Maxim Short-Term-Maturity Bond Portfolio $14.29 $46.41
Maxim U.S. Government Securities $14.29 $46.41
Portfolio
Maxim U.S. Government Mortgage $14.29 $46.41
Securities Portfolio
Maxim Corporate Bond Portfolio $17.39 $56.56
Maxim Stock Index Portfolio $14.29 $46.41
Maxim Small-Cap Index Portfolio $14.29 $46.41
Maxim Growth Index Portfolio $14.29 $46.41
Maxim Value Index Portfolio $14.29 $46.41
Maxim MidCap Portfolio $19.45 $63.15
Maxim T. Rowe Price Equity/Income $17.90 $58.21
Portfolio
Maxim MidCap Growth Portfolio $18.94 $61.51
Maxim Small-Cap Value Portfolio $22.02 $71.33
Maxim INVESCO ADR Portfolio $21.51 $69.69
Maxim INVESCO Small-Cap Growth Portfolio $19.45 $63.15
Maxim INVESCO Balanced Portfolio $18.42 $59.86
Maxim Foreign Equity Portfolio $23.56 $76.20
Maxim Blue Chip Portfolio $19.94 $64.79
Maxim Aggressive Profile Portfolio* $21.92 $71.00
Maxim Moderately Aggressive Profile $21.10 $68.39
Portfolio*
Maxim Moderate Profile Portfolio* $20.27 $65.77
Maxim Moderately Conservative Profile $19.76 $64.13
Portfolio*
Maxim Conservative Profile Portfolio* $18.21 $59.20
</TABLE>
*The Examples of expenses for the Profile Portfolios are calculated using the
midpoint of the minimum and maximum fees set forth under Eligible Fund Annual
Expenses.
These examples should not be considered representations of past or future
expenses. Actual expenses paid may be greater or less than those shown, subject
to the guarantees in the Contract.
The purpose of the table shown above is to assist the Contract Owner in
understanding the various costs and expenses that a Contract Owner will bear
directly or indirectly. For more information pertaining to these costs and
expenses, see "Charges and Deductions."
These examples assume that no premium taxes have been assessed (although premium
taxes may be
applicable - see "Premium Tax").
<PAGE>
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GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND THE SERIES ACCOUNT
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Great-West Life & Annuity Insurance Company ("GWL&A")
The Company is a stock life insurance company originally organized under
the laws of the state of Kansas as the National Interment Association. Its name
was changed to Ranger National Life Insurance Company in 1963 and to
Insuramerica Corporation prior to changing to its current name in 1982. In
September of 1990, GWL&A redomesticated and is now organized under the laws of
the state of Colorado.
GWL&A is authorized to engage in the sale of life insurance, accident
and health insurance and annuities. It is qualified to do business in the
District of Columbia, Puerto Rico and 49 states in the United States.
GWL&A is a wholly-owned subsidiary of The Great-West Life Assurance
Company ("Great-West Life"). Great-West Life is a subsidiary of Great-West
Lifeco Inc., a holding company. Great-West Lifeco Inc. is in turn a subsidiary
of Power Financial Corporation, a financial services company. Power Corporation
of Canada, a holding and management company, has voting control of Power
Financial Corporation. Mr.Paul Desmarais, through a group of private holding
companies, which he controls, has voting control of Power Corporation of
Canada.
The Series Account
The Maxim Series Account ("Series Account") was originally established
by GWL&A under Kansas law on June 24, 1981. The Series Account now exists
pursuant to Colorado law as a result of the redomestication of GWL&A. The Series
Account is registered with the Securities and Exchange Commission ("Commission")
under the Investment Company Act of 1940, as amended ("1940 Act"), as a unit
investment trust. The Series Account meets the definition of a "separate
account" under the federal securities laws. However, such registration does not
involve supervision of the management of the Series Account or the Company by
the Commission.
The Company does not guarantee the investment performance of the Series
Account. Annuity Account Value and the amount of variable annuity payments
depend on the investment performance of the Eligible Funds. Thus, the Contract
Owner bears the full investment risk for all Contributions allocated to the
Series Account.
The Series Account is administered and accounted for as part of the
general business of the Company; but the income, capital gains, or capital
losses of each Investment Division are credited to or charged against the assets
held in that Investment Division in accordance with the terms of the Contract,
without regard to other income, capital gains or capital losses of any other
Investment Division or arising out of any other business the Company may
conduct. Under Colorado law, the assets of the Series Account are not chargeable
with liabilities arising out of any other business the Company may conduct.
Nevertheless, all obligations arising under the Contracts are generally
corporate obligations of the Company.
The Series Account currently has 25 Investment Divisions available for
allocation of Contributions. If, in the future, the Company determines that
marketing needs and investment conditions warrant, it may establish additional
Investment Divisions which will be made available to Owners to the extent and on
a basis to be determined by the Company, (See "Addition, Deletion, or
Substitution," for more information). Each Investment Division invests in shares
of an Eligible Fund, each having a specific investment objective.
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THE ELIGIBLE FUNDS
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The Eligible Funds described below are offered exclusively for use as
funding vehicles for insurance products and, consequently, are not publicly
available mutual funds. Each Eligible Fund has separate investment objectives
and policies. As a result, each Eligible Fund operates as a separate investment
portfolio and the investment performance of one Eligible Fund has no effect on
the investment performance of any other Eligible Fund.
See the Eligible Funds' prospectuses for more information.
o the Maxim Money Market Portfolio seeks preservation of capital, liquidity and
the highest possible current income consistent with the foregoing objectives
through investments in short-term money market securities. Shares of the Maxim
Money Market Portfolio are neither insured nor guaranteed by the U.S.
Government. Further, there is no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share.
o the Maxim Bond Portfolio seeks to achieve maximum total return consistent with
the preservation of capital, through investment in an actively managed portfolio
of debt securities.
o the Maxim Stock Index Portfolio seeks to provide investment results, before
fees, that correspond to the total return of the S&P 500 Index and the S&P
Mid-Cap Index, weighted according to their respective pro-rata shares of the
market. Standard & Poor's Corporation is not a sponsor of, or in any other way
affiliated with the Portfolio or the Fund.
o the Maxim U.S. Government Securities Portfolio seeks the highest level of
return consistent with preservation of capital and substantial credit protection
and seeks to achieve this objective by investing in mortgage-related securities
issued or guaranteed by an agency or instrumentality of the U.S. Government,
other U.S. agency and instrumentality obligations, and in U.S. Treasury
obligations.
o the Maxim Small-Cap Index Portfolio seeks to provide investment results,
before fees, that correspond to the total return of the Standard & Poor's
Small-Cap 600 Index.4
o the Maxim MidCap Portfolio seeks to provide long-term growth of capital
through investment of at least 65% of the Portfolio's assets in medium sized
companies.
o the Maxim Corporate Bond Portfolio seeks high total investment return by
investing primarily in debt securities (including convertibles), although up to
20% of its assets, at the time of acquisition, may be invested in preferred
stocks.
o the Maxim Small-Cap Value Portfolio seeks to achieve long-term capital
appreciation by investing primarily in common stocks, although the Portfolio may
also invest in other securities, including restricted and preferred stocks. The
Portfolio focuses on issuers generally ranging in market capitalization from $50
million to $1.5 billion.
o the Maxim INVESCO Small-Cap Growth Portfolio seeks to achieve long-term
capital growth by investing its assets principally in a diversified group of
equity securities of emerging growth companies with market capitalization of $1
billion or less at the time of initial purchase.
o the Maxim INVESCO ADR Portfolio seeks to achieve a high total return on
investment through capital appreciation and current income, while reducing risk
through diversification by investing substantially all its assets in foreign
securities that are issued in the form of American Depositary Receipts ("ADRs")
or foreign stocks that are registered with the Securities and Exchange
Commission and traded in the U.S.
o the Maxim INVESCO Balanced Portfolio seeks to achieve a high total return on
investment through capital appreciation and current income. The Portfolio
invests in a combination of common stocks (normally 50% to 70% of total assets)
and fixed income securities (normally 25% or more).
o the Maxim T. Rowe Price Equity/Income Portfolio seeks to provide substantial
dividend income and also capital appreciation by investing primarily in
dividend-paying common stocks of established companies.
o the Maxim Value Index Portfolio seeks to provide investment results, before
fees, that correspond to the total return of the Russell 1000 Value Index. The
Russell 1000 Value Index was developed by the Frank Russell Company to track
stock market performance of stocks from the Russell 1000 Index exhibiting
certain characteristics suggesting value potential. The Frank Russell Company is
not a sponsor of, or in any other way affiliated with the Portfolio or the Fund.
o the Maxim Growth Index Portfolio seeks to provide investment results, before
fees, that correspond to the total return of the Russell 1000 Growth Index. The
Russell 1000 Growth Index was developed by the Frank Russell Company to track
stock market performance of stocks from the Russell 1000 Index exhibiting
certain characteristics suggesting growth potential. The Frank Russell Company
is not a sponsor of, or in any other way affiliated with the Portfolio or the
Fund.
o the Maxim Blue Chip Portfolio seeks long-term growth of capital and income by
investing primarily in common stocks of large, well-established, stable and
mature companies, commonly known as "Blue Chip" companies.
o the Maxim MidCap Growth Portfolio seeks long-term appreciation by investing
primarily in common stocks of medium-sized (mid-cap) growth companies. The
Portfolio will normally invest at least 65% of its assets in a diversified
portfolio of mid-cap companies whose earnings are expected to grow at a faster
rate than the average company.
o the Investment Grade Corporate Bond Portfolio, which seeks the highest
possible current income within the confines of the primary goal of insuring the
protection of capital by investing primarily in investment grade corporate debt
securities and in debt securities issued by the U.S. Government and its
agencies.
o the U.S. Government Mortgage Securities Portfolio, which seeks the highest
level of return consistent with preservation of capital and substantial credit
protection and seeks to achieve this objective by investing in mortgage-related
securities issued or guaranteed by an agency or instrumentality of the U.S.
Government, other U.S. agency and instrumentality obligations, and in U.S.
Treasury obligations.
o the Short-Term Maturity Bond Portfolio, which seeks preservation of capital,
liquidity and maximum total return through investment in an actively managed
portfolio of debt securities.
o the Foreign Equity Portfolio, which seeks total return from long-term growth
of capital and dividend income and seeks to achieve its investment objective by
investing its assets primarily in international equity securities which are
predominately common stocks and may also include any types of equity securities.
o the Maxim Aggressive Profile Portfolio seeks to achieve a high total return on
investment through long-term capital appreciation by investing in other Maxim
Portfolios. It is designed for an investor who is willing to take on a greater
degree of risk now for the chance of better returns later and places a higher
priority on investment growth than on safety. This investor typically is
comfortable riding out the ups and downs of the markets. This Portfolio would
not be appropriate for an investor with a short investment horizon.
o the Maxim Moderately Aggressive Profile Portfolio seeks to achieve a high
total return on investment through long-term capital appreciation by investing
in other Maxim Portfolios. It is designed for an investor who is willing to take
on a slightly greater degree of risk now for the chance of better returns later
and places a high priority on investment growth but also seeks some safety. This
investor typically is comfortable riding out the ups and downs of the markets
but is not comfortable with the volatility that would be associated with the
Maxim Aggressive Profile Portfolio. This Portfolio would not be appropriate for
an investor with a short investment horizon.
o the Maxim Moderate Profile Portfolio seeks to achieve a high total return on
investment through long-term capital appreciation by investing in other Maxim
Portfolios. This investor likes the potential for higher returns but seeks more
safety than an aggressive or moderately aggressive investor.
o the Maxim Moderately Conservative Profile Portfolio seeks to achieve the
highest possible total return consistent with reasonable risk through a
combination of income and capital appreciation by investing in other Maxim
Portfolios. This Portfolio is designed for an investor who places a priority on
investment safety but is willing to take some risk for a potential higher return
on investment. This investor may be approaching retirement or simply prefers to
take less risk than other investors.
o the Maxim Conservative Profile Portfolio seeks to achieve total return
consistent with preservation of capital primarily through fixed income
investments by investing in other Maxim Portfolios. This Portfolio is designed
for an investors whose highest priority is safety for which the investor is
willing to accept lower potential return on investment. This investor may be
approaching retirement or simply prefers to take less risk than other investors.
The investment adviser of Maxim Series Fund, Inc. is GW Capital Management,
LLC. The Maxim MidCap Portfolio is managed on a sub-advisory basis by Janus
Capital Corporation of Denver, Colorado. The Maxim T. Rowe Price Equity/Income
and Maxim MidCap Growth Portfolios are managed on a sub-advisory basis by T.
Rowe Price Associates, Inc. of Baltimore, Maryland. The Maxim Corporate
Bond and Foreign Equity Portfolios are managed on a sub-advisory basis by
Loomis, Sayles & Company, LP of Boston, Massachusetts. The Small-Cap Value
Portfolio is managed on a sub-advisory basis by Ariel Capital Management, Inc.
of Chicago, Illinois. The Maxim INVESCO ADR, Maxim INVESCO Small-Cap Growth
and Maxim INVESCO Balanced Portfolios are managed on a sub-advisory basis by
INVESCO Trust Company of Denver, Colorado. The Maxim Blue Chip Portfolio is
managed on a sub-advisory basis by Founders Asset Management, Inc. of Denver,
Colorado.
***
Meeting investment objectives depends on various factors, including, but
not limited to, how well the Eligible Fund managers anticipate changing economic
and market conditions. THERE IS NO ASSURANCE THAT ANY OF THESE ELIGIBLE FUNDS
WILL ACHIEVE THEIR STATED OBJECTIVES.
Each Eligible Fund is registered with the Commission as an open-end
management investment company or portfolio thereof. The Commission does not
supervise the management or the investment practices and policies of any of the
Eligible Funds.
Since some of the Eligible Funds are available to registered separate
accounts of other insurance companies offering variable annuity and variable
life products, there is a possibility that a material conflict may arise between
the interests of the Series Account and one or more other separate accounts
investing in the Eligible Funds. In the event of a material conflict, the
affected insurance companies are required to take any necessary steps to resolve
the matter, including stopping their separate accounts from investing in the
Eligible Funds. See the Eligible Funds' prospectuses for more details.
Additional information concerning the investment objectives and policies
of all of the Eligible Funds and the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the Eligible Funds, which can be obtained by calling the Annuity Service Center
at 800-xxx-xxxx, or by writing to Annuity Service Center, P.O. Box 1700, Denver,
Colorado 80201. The Eligible Funds' prospectuses should be read carefully before
any decision is made concerning the allocation of Contributions to, or Transfers
among, the Investment Divisions.
<PAGE>
Addition, Deletion, or Substitution
GWL&A reserves the right to eliminate the shares of any Eligible Fund
held by an Investment Division and to substitute shares of another Eligible Fund
or of another investment company, for the shares of any Eligible Fund, if the
shares of the Eligible Fund are no longer available for investment or if, in
GWL&A's judgment, investment in any Eligible Fund would be inappropriate in view
of the purposes of the Series Account. To the extent required by the 1940 Act, a
substitution of shares attributable to the Owner's interest in an Investment
Division will not be made without prior notice to the Owners and the prior
approval of the Commission. Nothing contained herein shall prevent the Series
Account from purchasing other securities for other series or classes of variable
annuity policies, or from effecting an exchange between series or classes of
variable policies on the basis of Requests made by you.
New Investment Divisions may be established when, in our discretion,
marketing, tax, investment or other conditions so warrant. Any new Investment
Divisions will be made available to Owners on a basis to be determined by us.
Each additional Investment Division will purchase shares in a Eligible Fund or
in another mutual fund or investment vehicle. We may also eliminate one or more
Investment Divisions if, in our sole discretion, marketing, tax, investment or
other conditions so warrant. In the event any Investment Division is eliminated,
we will notify the Owners and request a re-allocation of the amounts invested in
the eliminated Investment Division.
In the event of any such substitution or change, we may make such
changes to your Contract as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the Contracts, the Series Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
Such changes will be made in compliance with applicable law.
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APPLICATION AND CONTRIBUTIONS
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Contributions
All Contributions may be paid at the Annuity Service Center by a check
payable to GWL&A.
The initial Contribution for the Contract must be at least $5,000.
Subsequent Contributions must be at least $500. This minimum initial investment
may be reduced to $1,000, but only if you participate in an Automatic
Contribution Plan and contribute at least $100 per month through a recurring
deposit. A confirmation will be issued to you upon the acceptance of each
Contribution.
Your Contract will be issued and your Contribution generally will be
accepted and credited within two business days after receipt of an acceptable
application and receipt of the initial Contribution at the Annuity Service
Center. All Contributions should be paid to the Annuity Service Center by check
(payable to GWL&A). Acceptance is subject to there being sufficient information
in a form acceptable to us and we reserve the right to reject any application or
Contribution.
The Annuity Service Center will process your application and
Contributions. If your application is complete, then the Contribution will
generally be credited within two business days following receipt of the
application. If your application is incomplete, the Annuity Service Center will
contact you for the additional information.
If your Contribution is by check, and the application is complete, GWL&A
will use its best efforts to credit the Contribution on the day of receipt, but
in all such cases it will be credited to your Contract within two business days
of receipt. If your application is incomplete, the Annuity Service Center will
contact you by telephone to obtain the required information. If your application
remains incomplete for five business days, we will return to you both the check
and the application unless you consent to our retaining the initial Contribution
and crediting it as soon as the requirements are fulfilled.
A Contract may be returned within ten days after receipt, or longer
where required by law ("Free Look Period"). During the Free Look Period, all
contributions will be processed as follows:
(1) Amounts the Owner has directed to be allocated to one or more of
the Investment Divisions will first be allocated to the Money
Market Investment Division until the next Transaction Date
following the end of the Free Look Period. On that date, the
Annuity Account Value held in the Money Market Investment
Division will be allocated to the Investment Divisions selected
by the Owner.
(2) During the Free Look Period, you may change the allocation
percentages among the Investment Divisions and/or your selection
of Investment Divisions to which Contributions will be allocated
after the Free Look Period.
(3) If the Contract is returned, the contract will be void from the
start and the greater of: (a) Contributions received less
surrenders, withdrawals and distributions or (b) the Annuity
Account Value less surrenders, withdrawals and distributions,
will be refunded. Exercising the return privilege requires the
return of the Contract to the Company or to the Annuity Service
Center.
Additional Contributions may be made at any time prior to the Payment
Commencement Date, as long as the Annuitant is living. Additional Contributions
must be at least $500 or $100 per month if under an ACP. Additional
contributions will be credited within two days following receipt. Total
Contributions may exceed $1,000,000 with our prior approval.
The Company reserves the right to modify the limitations set forth in
this section.
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ANNUITY ACCOUNT VALUE
----------------------------------------------------------------------------
Before the annuity commencement date, the Annuity Account Value is the
total dollar amount of all Accumulation Units under each of your Variable
Sub-Accounts. Initially, the value of each Accumulation Unit was set at $10.00.
Each Variable Sub-Account's value prior to the Payment Commencement Date is
equal to: (a) net Contributions allocated to the corresponding Investment
Division; plus or minus (b) any increase or decrease in the value of the assets
of the Variable Sub-Account due to investment results; less (c) the daily
Mortality and Expense Risk Charge; less (d) the daily Administrative Expense
Charge; less (e) reductions for the Contract Maintenance Charge deducted on the
last business day of each Contract Year; less (f) any applicable Transfer Fees;
and less (g) any withdrawals or Transfers from the Variable Sub-Account.
A Valuation Period is the period between successive Valuation Dates. It
begins at the close of the New York Stock Exchange (generally 4:00 p.m. ET) on
each Valuation Date and ends at the close of the New York Stock Exchange on the
next succeeding Valuation Date. A Valuation Date is each day that the New York
Stock Exchange is open for regular business. The value of an Investment
Division's assets is determined at the end of each Valuation Date. To determine
the value of an asset on a day that is not a Valuation Date, the value of that
asset as of the end of the previous Valuation Date will be used.
The Annuity Account Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of the selected
Investment Division(s) as well as the deductions for charges.
Contributions which you allocate to an Investment Division are used to
purchase Variable Accumulation Units in the Investment Division(s) you select.
The number of Accumulation Units to be credited will be determined by dividing
the portion of each Contribution allocated to the Investment Division by the
value of an Accumulation Unit determined at the end of the Valuation Period
during which the Contribution was received. In the case of the initial
Contribution, Accumulation Units for that payment will be credited to the
Annuity Account Value held in the Money Market Investment Division until the end
of the Free Look Period (see "Application and Contributions," for more
information). In the case of any subsequent Contribution, Accumulation Units for
that payment will be credited at the end of the Valuation Period during which we
receive the Contribution. The value of an Accumulation Unit for each Investment
Division for a Valuation Period is established at the end of each Valuation
Period and is calculated by multiplying the value of that unit at the end of the
prior Valuation Period by the Investment Division's Net Investment Factor for
the Valuation Period.
The Net Investment Factor is determined by dividing (a) by (b), then
subtracting (c) where.
(a) is the net result of:
The net asset value per share of the Eligible Fund shares held in
the Investment Division as of the end of the Valuation Period; plus
or minus
The per-share amount of any dividend or capital gain distributions
made by the underlying fund on shares held in the Investment Division
if the "ex-dividend" date occurs in the Valuation Period; plus or
minus
A per share charge or credit for any taxes incurred by or provided
for in the Investment Division which is determined by GWL&A to have
resulted from the investment operations of the Investment Division;
and
(b) is the net result of:
The net asset value per share of the underlying fund shares held in
the Investment Division as of the end of the last prior Valuation
Period; and
(c) is:
The daily Mortality and Expense Risk Charge times the number of
calendar days in the current Valuation period; plus
The daily Administrative Expense Charge times the number of calendar
days in the current Valuation Period.
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TRANSFERS
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In General
Prior to the Payment Commencement Date you may Transfer all or part of
your Annuity Account Value among and among the Investment Divisions by telephone
or by sending a Request to the Annuity Service Center. The Request must specify
the amounts being Transferred, the Investment Division(s) from which the
Transfer is to be made, and the Investment Division(s) that will receive the
Transfer.
Currently, there is no limit on the number of Transfers you can make
among the Investment Divisions during any calendar year. There is no charge for
the first twelve Transfers each calendar year, but there will be a charge of $10
for each additional Transfer in each calendar year. We reserve the right to
limit the number of Transfers you make. The charge will be deducted from the
amount transferred. All Transfers made on a single Transaction Date will be
aggregated to count as only one Transfer toward the twelve free Transfers;
however, if a one time rebalancing Transfer also occurs on the Transaction Date,
it will be counted as a separate and additional Transfer.
A Transfer generally will be effective on the date the Request
for Transfer is received by the Annuity Service Center if received before 4:00
p.m. Eastern Time. Under current law, there will not be any tax liability to you
if you make a Transfer.
Transfers involving the Investment Divisions will result in the purchase
and/or cancellation of Accumulation Units having a total value equal to the
dollar amount being Transferred to or from a particular Investment Division. The
purchase and/or cancellation of such units generally shall be made using the
Annuity Account Value as of the end of the Valuation Date on which the Transfer
is effective.
Possible Restrictions
We reserve the right without prior notice to modify, restrict, suspend
or eliminate the Transfer privileges (including telephone Transfers) at any
time. For example, restrictions may be necessary to protect Owners from adverse
impacts on portfolio management of large and/or numerous Transfers by market
timers or others. We have determined that the movement of significant amounts
from one Investment Division to another may prevent the underlying Eligible Fund
from taking advantage of investment opportunities because the Eligible Fund must
maintain a significant cash position in order to handle redemptions. Such
movement may also cause a substantial increase in Eligible Fund transaction
costs which must be indirectly borne by Owners. Therefore, we reserve the right
to require that all Transfer Requests be made by the Owner and not by an Owner's
designee and to require that each Transfer Request be made by a separate
communication to us. We also reserve the right to request that each Transfer
Request be submitted in writing and be manually signed by the Owner; facsimile
Transfer Requests may not be allowed. Transfers among the Investment Divisions
may also be subject to such terms and conditions as may be imposed by the
Eligible Funds.
Custom Transfer: Dollar Cost Averaging (Automatic Transfers)
The Owner may Request to automatically Transfer at regular intervals,
predetermined amounts from one Investment Division selected from among those
being allowed under this option (which may be modified by the Company from time
to time) to any of the other Investment Divisions. The intervals between
Transfers may be monthly, quarterly, semi-annually or annually. The Transfer
will be initiated on the Transaction Date one frequency period following the
date of the Request. Transfers will continue on that same day each interval
unless terminated by you or for other reasons as set forth in the Contract. If
there are insufficient funds in the applicable Variable Sub-Account on the date
of Transfer, no Transfer will be made; however, Dollar Cost Averaging will
resume once there are sufficient funds in the applicable Variable Sub-Account.
Dollar Cost Averaging will terminate automatically upon the annuity commencement
date. Amounts transferred through Dollar Cost Averaging are not counted against
the twelve free Transfers allowed in a calendar year.
Automatic Transfers must meet the following conditions:
1. The minimum amount that can be Transferred out of the selected
Investment Division is $100 per month.
2. The Owner must specify dollar amount to be Transferred, designate the
Investment Division(s) to which the Transfer will be made and the percent to be
allocated to such Investment Division(s). The Accumulation Unit values will be
determined on the Transfer Date.
Dollar Cost Averaging may be used to purchase Accumulation Units of the
Investment Divisions over a period of time. The Owner, by Request, may cease
Dollar Cost Averaging at any time. Participation in Dollar Cost Averaging does
not, however, assure a greater profit, nor will it prevent or necessarily
alleviate losses in a declining market. The Company reserves the right to
modify, suspend or terminate Dollar Cost Averaging at any time.
Custom Transfer: Rebalancer Option
The Owner may Request to automatically Transfer among the Investment
Divisions on a periodic basis by electing the Rebalancer Option. This option
automatically reallocates the Annuity Account Value to maintain a particular
allocation among Investment Divisions selected by the Owner. The amount
allocated to each Investment Division will increase or decrease at different
rates depending on the investment experience of the Investment Division.
The Owner may Request that the rebalancing occur one time only, in which
case the Transfer will take place on the Transaction Date of the Request. This
Transfer will count as one Transfer towards the twelve free Transfers allowed in
a calendar year. (See "Transfer Fee," for more information.)
Rebalancing may also be set up on a quarterly, semiannual or annual
basis, in which case the first Transfer will be initiated on the Transaction
Date one frequency period following the date of the Request. On the Transaction
Date for the specified Request, assets will be automatically reallocated to the
selected Investment Divisions. Rebalancing will continue on the same Transaction
Date for subsequent periods. In order to participate in the Rebalancer Option,
the entire Annuity Account Value must be included. Transfers set up with these
frequencies will not count against the twelve free Transfers allowed in a
calendar year.
The Owner must specify the percentage of Annuity Account Value to be
allocated to each Investment Division and the frequency of rebalancing. The
Owner, by Request, may modify the allocations or cease the Rebalancer Option at
any time. The Rebalancer Option will terminate automatically upon the Payment
Commencement Date. Participation in the Rebalancer Option and Dollar Cost
Averaging at the same time is not allowed. Participation in the Rebalancer
Option does not assure a greater profit, nor will it prevent or necessarily
alleviate losses in a declining market. The Company reserves the right to
modify, suspend, or terminate the Rebalancer Option at any time.
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CASH WITHDRAWALS
----------------------------------------------------------------------------
Withdrawals
You (the Owner) may withdraw from the Contract all or part of your
Annuity Account Value at any time during the life of the Annuitant and prior to
the date annuity payments commence by Request at the Annuity Service Center
subject to the rules below. Federal or state laws, rules or regulations may
apply. The amount payable to you if you surrender your Contract is your Annuity
Account Value, on the effective date of the surrender, and less any applicable
Premium Tax. No withdrawals may be made after the date annuity payments
commence. A Request for a partial withdrawal will result in a reduction in your
Annuity Account Value equal to the sum of the dollar amount withdrawn.
The minimum partial withdrawal is $500. Partial withdrawals are
unlimited; however, you must specify the Investment Division(s) from which the
withdrawal is to be made. After any partial withdrawal, if the remaining Annuity
Account Value is less than $2,000, then a full surrender may be required.
The following terms apply:
(a) No partial withdrawals are permitted after the date annuity payments
commence.
(b) A partial withdrawal will be effective upon the Transaction Date.
Withdrawals may be taxable (this includes Periodic Withdrawals,
discussed below). Moreover, the Internal Revenue Code (the "Code") provides that
a 10% penalty tax may be imposed on the taxable portions of certain early
withdrawals. The Code generally requires us to withhold federal income tax from
withdrawals. However, generally you will be entitled to elect, in writing, not
to have tax withholding apply unless withholding is mandatory for your Contract.
Withholding applies to the portion of the withdrawal which is included in your
income and subject to federal income tax. The tax withholding rate is 10% of the
taxable amount of the withdrawal. Withholding applies only if the taxable amount
of the withdrawal is at least $200. Some states also require withholding for
state income taxes.
(See "Federal Tax Matters," for more information.)
Withdrawal Requests must be in writing to ensure that your instructions
regarding withholding are followed. If an adequate election is not made, the
Request will be denied and no withdrawal or partial withdrawal will be
processed.
After a withdrawal of all of your total Annuity Account Value, or at any
time that your Annuity Account Value is zero, all your rights under the Contract
will terminate.
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TELEPHONE TRANSACTIONS
----------------------------------------------------------------------------
We will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and if we follow such procedures we will
not be liable for any losses due to unauthorized or fraudulent instructions.
However, we may be liable for such losses if we do not follow those reasonable
procedures. The procedures we will follow for telephone transactions may include
requiring some form of personal identification prior to acting on instructions
received by telephone, providing written confirmation of the transaction, and/or
tape recording the instructions given by telephone.
We reserve the right to suspend telephone transaction privileges at any
time, for some or all Contracts, and for any reason. Withdrawals are not
permitted by telephone.
<PAGE>
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DEATH BENEFIT
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Payment of Death Benefit
Before the date annuity payments commence, the death benefit, if any,
will be equal to the greater of: (a) the Annuity Account Value as of the date
the Request for payment is received, less Premium Tax, if any, or (b) the sum of
Contributions paid, less partial withdrawals and/or Periodic Withdrawals, less
Premium Tax, if any. The death benefit will become payable following the
Company's receipt of a Request from the Beneficiary. When an Owner or the
Annuitant dies before the annuity commencement date and a death benefit is
payable to a Beneficiary, the death benefit proceeds will remain invested in
accordance with the allocation instructions given by the Owner(s) until new
allocation instructions are Requested by the Beneficiary or until the death
benefit is actually paid to the Beneficiary. The death benefit will be
determined as of the date payments commence; however, on the date a payment
option is processed, amounts in the Variable Sub-Account will be Transferred to
the Money Market Investment Division unless the Beneficiary otherwise elects by
Request. Subject to the distribution rules set forth below, payment of the death
benefit may be Requested to be made as follows:
1. Payment in a single sum; or
2. Payment under any of the variable annuity options provided
under this Contract.
In any event, no payment of benefits provided under the Contract will be
allowed that does not satisfy the requirements of Section 72(s) of the Code and
any other applicable federal or state laws, rules or regulations.
Distribution Rules
1. Death of Annuitant
Upon the death of the Annuitant while the Owner is living, and before
the annuity commencement date, the Company will pay the death benefit to the
Beneficiary unless there is a Contingent Annuitant.
If a Contingent Annuitant was named by the Owner(s) prior to the
Annuitant's death, and the Annuitant dies before the annuity commencement date
while the Owner and Contingent Annuitant are living, no death benefit will be
payable by reason of the Annuitant's death and the Contingent Annuitant will
become the Annuitant.
If the Annuitant dies after the date annuity payments commence and
before the entire interest has been distributed, any benefit payable must be
distributed to the Beneficiary in accordance with and at least as rapidly as
under the payment option applicable to the Annuitant on the Annuitant's date of
death.
If a corporation or other non-individual is an Owner, or if the deceased
Annuitant is an Owner, the death of the Annuitant will be treated as the death
of an Owner and the Contract will be subject to the "Death of Owner" provisions
described below.
2. Death of Owner
If the Owner is not the Annuitant:
(1) If there is a Joint Owner who is the surviving spouse of the
deceased Owner, the Joint Owner will become the Owner and Beneficiary
and may elect to take the death benefit or elect to continue the
Contract in force.
(2) In all other cases, the Company will pay the death benefit to the
Beneficiary even if a Joint Owner (who was not the Owner's spouse on the
date of the Owner's death), the Annuitant and/or the Contingent
Annuitant are alive at the time of the Owner's death, unless the sole
Beneficiary is the deceased Owner's surviving spouse and the Beneficiary
elects to become the Owner and Annuitant and to continue the Contract in
force.
If the Owner is not the Annuitant, and the Owner dies after annuity
payments commence and before the entire interest has been distributed while the
Annuitant is living, any benefit payable will continue to be distributed to the
Annuitant at least as rapidly as under the payment option applicable on the
Owner's death. All rights granted the Owner under the Contract will pass to any
surviving Joint Owner and, if none, to the Annuitant.
If the Owner is the Annuitant (Owner/Annuitant):
(1) If there is a Joint Owner who is the surviving spouse of the
deceased Owner and a Contingent Annuitant, the Joint Owner will become
the Owner and the Beneficiary, the Contingent Annuitant will become the
Annuitant, and the Contract will continue in force.
(2) If there is a Joint Owner who is the surviving spouse of the
deceased Owner but no Contingent Annuitant, the Joint Owner will become
the Owner, Annuitant and Beneficiary and may elect to take the death
benefit or continue the Contract in force.
(3) In all other cases, the Company will pay the death benefit to the
Beneficiary, even if a Joint Owner (who was not the Owner's spouse on
the date of the Owner's death), Annuitant and/or Contingent Annuitant
are alive at the time of the Owner's death, unless the sole Beneficiary
is the deceased Owner's surviving spouse and the Beneficiary Requests to
become the Owner and Annuitant and to continue the Contract in force.
Any death benefit payable to the Beneficiary upon an Owner's death will
be distributed as follows:
(1) If the Owner's surviving spouse is the person entitled to receive
benefits upon the Owner's death, the surviving spouse will be treated as
the Owner and will be allowed to take the death benefit or continue the
Contract in force; or
(2) If the Beneficiary is a non-spouse individual, she/he may elect, not
later than one year after the Owner's date of death, to receive the
death benefit in either a single sum or payment under any of the
variable annuity options available under the Contract, provided that (a)
such annuity is distributed in substantially equal installments over the
life or life expectancy of the Beneficiary or over a period not
extending beyond the life expectancy of the Beneficiary; and (b) such
distributions begin not later than one year after the Owner's date of
death. If no election is received by the Company from a non-spouse
Beneficiary such that substantially equal installments have begun not
later than one year after the Owner's date of death, then the entire
amount must be distributed within five years of the Owner's date of
death. The death benefit will be determined as of the date the payments
commence; or
(3) If a corporation or other non-individual entity is entitled to
receive benefits upon the Owner's death, the death benefit must be
completely distributed within five years of the Owner's date of death.
Beneficiary
You may select one or more Beneficiaries. If more than one Beneficiary
is selected, unless you indicate otherwise, they will share equally in any death
benefit payable. You may change the Beneficiary any time before the Annuitant's
death.
You may, while the Annuitant is living, change the Beneficiary by
Request. A change of Beneficiary will take effect as of the date the Request is
processed by the Annuity Service Center, unless a certain date is specified by
the Owner. If the Owner dies before the Request was processed, the change will
take effect as of the date the Request was made, unless the Company has already
made a payment or otherwise taken action on a designation or change before
receipt or processing of such Request. A beneficiary designated irrevocably may
not be changed without the written consent of that Beneficiary, except as
allowed by law.
The interest of any Beneficiary who dies before the Owner or the
Annuitant will terminate at the death of the Beneficiary. The interest of any
Beneficiary who dies at the time of, or within 30 days after, the death of an
Owner or the Annuitant will also terminate if no benefits have been paid to such
Beneficiary, unless the Owner otherwise indicates by Request. The benefits will
then be paid as though the Beneficiary had died before the deceased Owner or
Annuitant. If no Beneficiary survives the Owner or Annuitant, as applicable, the
Company will pay the death benefit proceeds to the Owner's estate.
If the surviving spouse of an Owner is the surviving Joint Owner, the
surviving spouse will become the Beneficiary upon such Owner's death and may
elect to take the death benefit or may elect to continue the Contract in force.
If there is no surviving Joint Owner, and no named Beneficiary is alive at the
time at the time of an Owner's death, any benefits payable will be paid to the
Owner's estate.
Contingent Annuitant
While the Annuitant is living, the Owner(s) may, by Request, designate
or change a Contingent Annuitant from time to time. A change of Contingent
Annuitant will take effect as of the date the Request is processed at the
Annuity Service Center, unless a certain date is specified by the Owner(s).
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CHARGES AND DEDUCTIONS
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No deductions are made from Contributions except for any applicable
Premium Tax. Therefore, the full amount of the Contributions (less any
applicable Premium Tax) are invested in the Contract.
As more fully described below, charges under the Contract are assessed
only as deductions for Premium Tax, if applicable, for certain Transfers, as a
Contract Maintenance Charge, as an Administrative Expense Charge and as charges
against the assets in the Owner's Variable Sub-Account(s) for our assumption of
mortality and expense risks.
Mortality and Expense Risk Charge
We deduct a Mortality and Expense Risk Charge from your Variable
Sub-Account(s) at the end of each Valuation Period to compensate us for bearing
certain mortality and expense risks under the Contract. This is a daily charge
equal to an effective annual rate of 0.55% of the value of the net assets in
your Variable Sub-Account(s). The approximate portion of this charge
attributable to mortality risks is 0.14%; the approximate portion of this charge
estimated to be attributable to expense risk is 0.41%. We guarantee that this
charge will never increase.
The Mortality and Expense Risk Charge is reflected in the unit values
for each of your Variable Sub-Accounts. Thus, this charge will continue to be
applicable should you choose a variable annuity payment option or the periodic
withdrawal option.
Annuity Account Values and annuity payments are not affected by changes
in actual mortality experience incurred by us. The mortality risks assumed by us
arise from our contractual obligations to make annuity payments determined in
accordance with the annuity tables and other provisions contained in the
Contract. Thus you are assured that neither the Annuitant's longevity nor an
unanticipated improvement in general life expectancy will adversely affect the
annuity payments under the Contract.
We bear substantial risk in connection with the death benefit before the
annuity commencement date, since we will pay a death benefit equal to the
greater of: (1) the Annuity Account Value as of the later of the date of death
or the date the Request for payment is received, less Premium Tax, if any; or,
(2) the sum of the Contributions paid, less partial withdrawals and/or Periodic
Withdrawals, less any charges under Contract less Premium Tax, if any (i.e., we
bear the risk of unfavorable experience in your Variable Sub-Accounts).
The expense risk assumed is the risk that our actual expenses in
administering the Contracts and the Series Account will be greater than
anticipated, or exceed the amount recovered through the Contract Maintenance
Charge plus the amount, if any, recovered through Transfer Fees.
If the Mortality and Expense Risk Charge is insufficient to cover actual
costs and risks assumed, the loss will fall on us. Conversely, if this charge is
more than sufficient, any excess will be profit to us. Currently, we expect a
profit from this charge. Our expenses for distributing the Contracts will be
borne by our general assets, including any profits from this charge.
<PAGE>
Administrative Expense Charge
The Administrative Expense Charge compensates us for some of the costs
incurred in administering the Contract and the Variable Account. This is a daily
charge equal to an effective annual rate of 0.10% of the value of the net assets
in your Variable Sub-Account(s).
Contract Maintenance Charge
We currently deduct an annual Contract Maintenance Charge of not more
than $30 from the Annuity Account Value only on each Contract anniversary date.
This charge partially covers our costs for administering the Contracts and the
Series Account. Once you have selected a payment option, this charge will cease
to apply other than for the Periodic Withdrawal Option. The Contract Maintenance
Charge is deducted from your Annuity Account Value allocated to the Money Market
Investment Division. If you do not have sufficient Annuity Account Value
allocated to the Money Market Investment Division to cover the Contract
Maintenance Charge, then the charge or any portion thereof will be deducted on a
pro rata basis from all your Variable Sub-Accounts with current value. The
Contract Maintenance Charge is currently waived for Contracts with an Annuity
Account Value of at least $50,000. If your Annuity Account Value falls below
$50,000 due to a withdrawal, the Contract Maintenance Charge will be reinstated
until such time as your Annuity Account Value is equal to or greater than
$50,000. This charge may also be waived for Contracts issued under certain
sponsored arrangements. We do not expect a profit from amounts received from the
Contract Maintenance Charge.
Premium Tax
We may be required to pay state premium taxes or retaliatory taxes
currently ranging from 0% to 3.5% in connection with Contributions or values
under the Contracts. Depending upon applicable state law, we will deduct charges
for the premium taxes we incur with respect to a particular Contract from the
Contributions, from amounts withdrawn, or from amounts applied on the Payment
Commencement Date. In some states, charges for both direct premium taxes and
retaliatory premium taxes may be imposed at the same or different times with
respect to the same Contribution, depending on applicable state law.
Transfer Fee
There will be a $10 charge for each Transfer in excess of twelve
Transfers in any calendar year. We do not expect a profit from the Transfer fee
for excess Transfers.
Other Taxes
Under present laws, we will incur state or local taxes (in addition to
the Premium Tax described above) in several states. No charges are currently
made for taxes other than Premium Tax. However, we reserve the right to deduct
charges in the future for federal, state, and local taxes or the economic burden
resulting from the application of any tax laws that we determine to be
attributable to the Contracts.
Expenses of the Eligible Funds
The value of the assets in the Investment Divisions reflect the value of
Eligible Fund shares and therefore the fees and expenses paid by each Eligible
Fund. A complete description of the fees, expenses, and deductions from the
Eligible Funds are found in the Eligible Funds' prospectuses. (See "The Eligible
Funds.") Current prospectuses for the Funds can be obtained by calling the
Annuity Service Center at 800-xxx-xxxx, or by writing to the Annuity Service
Center, P.O. Box 1700, Denver, Colorado 80201.
<PAGE>
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PAYMENT OPTIONS
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Periodic Withdrawal Option
The Owner may Request that all or part of the Annuity Account Value be
applied to a Periodic Withdrawal Option. The amount applied to a Periodic
Withdrawal is the Annuity Account Value, less Premium Tax, if any.
In Requesting Periodic Withdrawals, the Owner must elect:
- The withdrawalfrequency of either 12-,6-,3-, or 1-month intervals;
- A withdrawal amount; a minimum of $100 is required;
- The calendar day of the month on which withdrawals will be made;
- One withdrawal option; and
- The allocation of withdrawals from the Owner's Variable Sub-
Account(s) as follows:
1) Prorate the amount to be paid across all Variable Sub-
Accounts in proportion to the assets in each sub-account;
or
2) Select the Variable Sub-Account(s) from which withdrawals
will be made. Once the Variable Sub-Accounts have been
depleted, the Company will automatically prorate the
remaining withdrawals against all remaining available
Variable Sub-Accounts unless the Owner Requests the
selection of another Variable Sub-Account.
The Owner may elect to change the withdrawal option and/or the frequency
once each calendar year.
While Periodic Withdrawals are being received:
1. the Owner may continue to exercise all contractual rights that are
available
prior to electing an annuity option, except that no Contributions
may be made;
2. the Owner may keep the same investment options as were in force
before periodic withdrawals began; and
3 charges and fees under the Contract continue to apply.
Periodic Withdrawals will cease on the earlier of the date:
1. the amount elected to be paid under the option selected has been
reduced to zero;
2. the Annuity Account Value is zero;
3. the Owner Requests that withdrawals stop; or
4. an Owner or the Annuitant dies.
The Owner must elect one of the following five (5) withdrawal options:
1. Income for a Specified Period for at least thirty-six (36) months -
The Owner elects the duration over which withdrawals will be made. The
amount paid will vary based on the duration; or
2. Income of a Specified Amount for at least thirty-six (36) months -
The Owner elects the dollar amount of the withdrawals. Based on the
amount elected, the duration may vary; or
3. Any Other Form for a period of at least thirty-six (36) months - Any
other form of Periodic Withdrawal which is acceptable to the Company.
If Periodic Withdrawals cease, the Owner may resume making
Contributions. The Owner may elect to restart a Periodic Withdrawal program;
however, the Company may limit the number of times the Owner may restart a
Periodic Withdrawal program.
Periodic withdrawals may be taxable and subject to withholding and, for
withdrawals made prior to age 59 1/2, may be subject to a 10% federal tax
penalty. A competent tax adviser should be consulted before a Periodic
Withdrawal Option is requested. (See "Federal Tax Matters," for more
information.)
Annuity Date
The date annuity payments commence may be chosen when the Contract is
purchased or at a later date. This date must be at least one year after the
initial Contribution. In the absence of an earlier election, the annuity date is
the first day of the month of the Annuitant's 91st birthday.
If an option has not been elected within 30 days of the annuity
commencement date, the Annuity Account Value held in the Variable Sub-Account(s)
will be applied under Variable Annuity Payment Option 1, discussed below, to
provide payments for life with a guaranteed period of 20 years.
Annuity Options
An annuity option may be selected by the Owner when the Contract is
purchased, or at a later date. This selection may be changed, by Request, at any
time up to 30 days before the annuity date. In the absence of an election,
payments will automatically commence on the annuity date as described above. The
amount to be applied is the Annuity Account Value on the annuity date. The
minimum amount that may be withdrawn from the Annuity Account Value to purchase
an annuity payment option is $2,000. If the amount is less than $2,000, the
Company may pay the amount in a single sum subject to the Contract provisions
applicable to a partial withdrawal. Payments may be elected to be received
monthly, quarterly, semi-annually or annually. Payments to be made under the
annuity payment option selected must be at least $50. The Company reserves the
right to make payments using the most frequent payment interval which produces a
payment of not less than $50. The maximum amount that may be applied under any
payment option is $1,000,000, unless prior approval is obtained from the
Company.
A single sum payment may be elected. If it is, then the amount to be
paid is the Surrender Value. If the Owner elects a variable annuity with funds
from the Owner's Variable Sub-Accounts, then the amount to be applied is the
Annuity Account Value held in the Variable Sub-Account(s), as of the annuity
commencement date, less any applicable Premium Tax.
Variable Annuity Payment Options
Option 1: Variable Life Annuity with Guarantee Period
This option provides for payments during a designated period and
thereafter throughout the life time of the Annuitant. The designated period may
be 5, 10, 15 or 20 years. Upon death of the Annuitant, for each remaining
designated period, the amounts payable under this payment option will be paid to
the Beneficiary.
Option 2: Variable Life Annuity
This annuity is payable during the lifetime of the Annuitant. The
annuity terminates with the last payment due prior to the death of the
Annuitant. Since no minimum number of payments is guaranteed, this option may
offer the maximum level of monthly payments of the annuity options. It is
possible that only one payment may be made if the Annuitant died before the date
on which the second payment was due. Upon the death of the Annuitant, all
payments cease and no amounts are payable to the Beneficiary.
Variable annuity payment options are subject to the following
provisions:
Amount of First Payment
The first payment under a variable annuity payment option will be based
on the value of the amounts held in each Variable Sub-Account on the 5th
Valuation Date preceding the annuity commencement date. It will be determined by
applying the appropriate rate to the amount applied under the payment option.
<PAGE>
Annuity Units
The number of Annuity Units paid to the Annuitant for each Variable
Sub-Account is determined by dividing the amount of the first monthly payment by
its Accumulation Unit Value on the 5th Valuation Date preceding the date the
first payment is due. The number of Annuity Units used to calculate each payment
for a Variable Sub-Account remains fixed during the Annuity Payment Period.
Amount of Payments after the First
Payments after the first will vary depending upon the investment
experience of the Investment Divisions. The subsequent amount paid from each
sub-account is determined by multiplying (a) by (b) where (a) is the number of
sub-account Annuity Units to be paid and (b) is the sub-account Annuity Unit
value on the 5th Valuation Date preceding the date the annuity payment is due.
The total amount of each variable annuity payment will be the sum of the
variable annuity payments for each Variable Sub-Account. The Company guarantees
that the dollar amount of each payment after the first will not be affected by
variations in expenses or mortality experience.
Transfers After the Annuity Commencement Date
Once annuity payments have begun, Transfers may continue to be made
among Investment Divisions. Transfers after the annuity commencement date will
be made by converting the number of Annuity Units being Transferred to the
number of Accumulation Units of the Variable Sub-Account to which the Transfer
is made. The result will be that the next annuity payment, if it were made at
that time, would be the same amount that it would have been without the
Transfer. Thereafter, annuity payments will reflect changes in the value of the
new Annuity Units.
***
For annuity options involving life income, the actual age and/or sex of
the Annuitant will affect the amount of each payment. We reserve the right to
ask for satisfactory proof of the Annuitant's age. We may delay annuity payments
until satisfactory proof is received. Since payments to older Annuitants are
expected to be fewer in number, the amount of each annuity payment under a
selected annuity form will be greater for older Annuitants than for younger
Annuitants.
If the age of the Annuitant has been misstated, the payments established
will be made on the basis of the correct age. If payments were too large because
of misstatement, the difference with interest may be deducted by the Company
from the next payment or payments. If payments were too small, the difference
with interest may be added by the Company to the next payment. This interest is
at an annual effective rate which will not be less than the minimum interest
rate allowed by law.
Once payments start under the annuity form selected by the Owner: (a) no
changes can be made in the annuity form, (b) no additional Contributions will be
accepted under the Contract, and (c) no further withdrawals, other than
withdrawals made to provide annuity benefits, will be allowed.
***
A portion or the entire amount of the annuity payments may be taxable as
ordinary income. If, at the time the annuity payments begin, we have not
received a proper written election not to have federal income taxes withheld, we
must by law withhold such taxes from the taxable portion of such annuity
payments and remit that amount to the federal government (an election not to
have taxes withheld is not permitted for certain Qualified Contracts). State
income tax withholding may also apply. (See "Federal Tax-Matters," below.)
<PAGE>
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FEDERAL TAX MATTERS
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Introduction
The following discussion is a general description of federal income tax
considerations relating to the Contracts and is not intended as tax advice.
Further, this discussion is based on the assumption that the Contract qualifies
as an annuity contract for federal income tax purposes. This discussion is not
intended to address the tax consequences resulting from all of the situations in
which a person may be entitled to or may receive a distribution under the
Contract. Any person concerned about these tax implications should consult a
competent tax adviser before initiating any transaction. This discussion is
based upon our understanding of the present federal income tax laws as they are
currently interpreted by the Internal Revenue Service. No representation is made
as to the likelihood of the continuation of the present federal income tax laws
or of the current interpretation by the Internal Revenue Service. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis
("Non-Qualified Contract") only. The ultimate effect of federal income taxes on
the amounts held under a Contract, on annuity payments, and on the economic
benefit to you, the Annuitant, or the Beneficiary may depend on the type of
Contract, and on the tax status of the individual concerned.
Tax Status
The Company is taxed as a life insurance company under Part I of
Subchapter L of the Code.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general. An
Owner who is a natural person generally is not taxed on increases (if any) in
the value of an Annuity Account Value until distribution occurs by withdrawing
all or part of the Annuity Account Value (e.g., withdrawals or annuity payments
under the annuity form elected). However, under certain circumstances, the Owner
may be subject to taxation currently. In addition, an assignment, pledge, or
agreement to assign or pledge any portion of the Annuity Account Value generally
will be treated as a distribution. The taxable portion of a distribution (in the
form of a single sum payment or an annuity) is taxable as ordinary income.
The Owner of any annuity contract who is not a natural person (e.g. a
corporation) generally must include in income any increase in the excess of the
Annuity Account Value over the "investment in the contract" (discussed below)
during each taxable year. The rule does not apply where the non-natural person
is the nominal owner of a Contract and the beneficial owner is a natural person.
The rule also does not apply in the following circumstances: (1) where the
annuity Contract is acquired by the estate of a decedent, (2) where the Contract
is a qualified funding asset for a structured settlement, and (3) where the
Contract is purchased on behalf of an employee upon termination of a qualified
plan. A prospective Owner that is not a natural person may wish to discuss these
matters with a competent tax adviser.
The following discussion generally applies to a Contract owned by a
natural person.
Withdrawals
With respect to Non-Qualified Contracts, partial withdrawals, including
Periodic Withdrawals, are generally treated as taxable income to the extent that
the Annuity Account Value immediately before the withdrawal exceeds the
"investment in the contract" at that time. Full surrenders are treated as
taxable income to the extent that the amount received exceeds the "investment in
the contract." The taxable portion of any annuity payment is taxed at ordinary
income tax rates.
<PAGE>
Annuity Payments
Although the tax consequences may vary depending on the annuity form
elected under the Contract, in general, only the portion of the annuity payment
that represents the amount by which the Annuity Account Value exceeds the
"investment in the contract" will be taxed; after the investment in the contract
is recovered, the full amount of any additional annuity payments is taxable.
Once the investment in the Contract has been fully recovered, the full amount of
any additional annuity payments is taxable. If the annuity payments cease as a
result of an Annuitant's death before full recovery of the "investment in the
contract," you should consult a competent tax adviser regarding the
deductibility of the unrecovered amount.
Penalty Tax
In the case of a distribution pursuant to a Non-Qualified Contract,
there may be imposed a federal income tax penalty equal to 10% of the amount
treated as taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the recipient of payments
under the Contract attains age 59 1/2; (2) made as a result of death or
disability of the recipient of payments under the Contract; or (3) received in
substantially equal periodic payments as a life annuity or a joint and survivor
annuity for the lives or life expectancies of the Owner and a "designated
beneficiary." For more details regarding these exemptions or penalties consult a
competent tax adviser.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Contract because of the death of an
Owner or the Annuitant. Generally such amounts are includible in the income of
the recipient as follows: (1) if distributed in a lump sum, they are taxed in
the same manner as a full surrender, as described above, or (2) if distributed
under an annuity form, they are taxed in the same manner as annuity payments, as
described above.
Distribution-at-Death Rules
In order to be treated as an annuity contract, the terms of the Contract
must provide the following two distribution rules: (A) if any Contract Owner
dies on or after the date annuity payments commence, and before the entire
interest in the Contract has been distributed, the remainder of his interest
will not be distributed under a slower distribution schedule than that provided
for in the method in effect on the Contract Owner's death; and (B) if any
Contract Owner dies before the date annuity payments commence, his entire
interest must generally be distributed within five years after the date of death
provided that if such interest is payable to a designated Beneficiary, then such
interest may be made over the life of that designated Beneficiary or over a
period not extending beyond the life expectancy of that Beneficiary, so long as
payments commence within one year after the Contract Owner's death. If the sole
designated Beneficiary is the spouse of the Contract Owner, the Contract may be
continued in the name of the spouse as Contract Owner. The designated
Beneficiary is the natural person designated by the terms of the Contract or by
the Contract Owner as the individual to whom ownership of the contract passes by
reason of the Contract Owner's death. If the Contract Owner is not an
individual, then for purposes of the distribution at death rules, the Primary
Annuitant is considered the Contract Owner. In addition, when the Contract Owner
is not an individual, a change in the Primary Annuitant is treated as the death
of the Contract Owner.
Transfers, Assignments, or Exchanges
A Transfer of ownership of a Contract, the designation of an Annuitant,
Payee or other Beneficiary who is not also the Owner, or the exchange of a
Contract may result in adverse tax consequences to the Owner that are not
discussed herein. An Owner contemplating any such designation, transfer,
assignment, or exchange of a Contract should contact a competent tax adviser
with respect to the potential tax effects of such a transaction.
Multiple Contracts
All deferred, non-qualified annuity contracts that are issued by the
Company (or our affiliates) to the same Owner during any calendar year will be
treated as one annuity contract for purposes of determining the amount
includible in gross income under section 72(e) of the Code. Amounts received
under any such Contract may be taxable (and may be subject to the 10% Penalty
Tax) to the extent of the combined income in all such Contracts. In addition,
the Treasury Department has specific authority to issue regulations that prevent
the avoidance of section 72(e) through the serial purchase of annuity contracts
or otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
separate deferred annuity contracts as a single annuity contract under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws.
Withholding
Annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. There is always the possibility that the tax treatment of
annuities could change by legislation or other means (such as IRS regulations,
revenue rulings, judicial decisions, etc.). Moreover, it is also possible that
any change could be retroactive (that is, effective prior to the date of the
change).
Section 1035 Exchanges
Code Section 1035 provides that no gain or loss shall be recognized on
the exchange of one annuity contract for another. A replacement contract
obtained in a tax-free exchange of contracts succeeds to the status of the
original contract. Special rules apply to Contracts issued prior to August 14,
1982. Prospective Owners wishing to take advantage of a Section 1035 exchange
should consult their tax adviser.
Seek Tax Advice
The foregoing discussion of the federal income tax consequences is only
a brief summary and is not intended as tax advice. Further, the federal income
tax consequences discussed herein reflect our understanding of current law and
the law may change. Federal estate tax consequences and state and local estate,
inheritance, and other tax consequences of ownership or receipt of distributions
under a Contract depend on the individual circumstances of each Owner or
recipient of the distribution. A COMPETENT TAX ADVISER SHOULD BE CONSULTED FOR
FURTHER INFORMATION.
----------------------------------------------------------------------------
ASSIGNMENTS OR PLEDGES
----------------------------------------------------------------------------
Generally, rights in the Contract may be assigned or pledged for loans
at any time during the life of the Annuitant.
If a Contract is assigned, the interest of the assignee has priority
over the interest of the Owner and the interest of the Beneficiary. Any amount
payable to the assignee will be paid in a single sum.
A copy of any assignment must be submitted to the Company at the Annuity
Service Center. Any assignment is subject to any action taken or payment made by
the Company before the assignment was processed. The Company is not responsible
for the validity or sufficiency of any assignment.
If any portion of the Annuity Account Value is assigned or pledged for a
loan, it may be treated as a distribution. A competent tax adviser should be
consulted for further information.
----------------------------------------------------------------------------
PERFORMANCE DATA
----------------------------------------------------------------------------
From time to time, we may advertise yields and average annual total
returns for the Investment Divisions. In addition, we may advertise the
effective yield of the Money Market Investment Division. These figures will be
based on historical information and are not intended to indicate future
performance.
The yield of the Money Market Investment Division refers to the
annualized income generated by an investment in that Investment Division over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in that Investment Division is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of an Investment Division (other than the Money Market
Investment Division) refers to the annualized income generated by an investment
in that Investment Division over a specified thirty-day period. The yield is
calculated by assuming that the income generated by the investment during that
thirty-day period is generated each thirty-day period over a twelve-month period
and is shown as a percentage of the investment.
The yield calculations do not reflect the effect of any Premium Tax that
may be applicable to a particular Contract. To the extent that premium taxes are
applicable to a particular Contract, the yield of that Contract will be reduced.
For a description of the methods used to determine yield and total returns, see
the Statement of Additional Information.
Investment Division Effective Yield
Maxim Money Market 4.60%
The average annual total return of an Investment Division refers to
return quotations assuming an investment has been held in the Investment
Division for various periods of time including, but not limited to, a period
measured from the date the Investment Division commenced operations. When an
Investment Division has been in operation for 1, 5, and 10 years, respectively,
the average annual total return for these periods will be provided. The average
annual total return quotations will represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment (excluding Premium Tax) as of the last day
of each of the periods for which total return quotations are provided. For
additional information regarding yields and total returns calculated using the
standard formats briefly described herein, please refer to the Statement of
Additional Information.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Since Inception Date
Investment Division One Year Five Years Ten Years Inception of Underlying
- ------------------- -------- ---------- --------- --------- -------------
Fund
Maxim Bond 6.24% 5.07% 5.94% 9/36% July 1, 1982
Maxim Investment Grade Corporate
Bond 6.03% 4.98% N/A 5.64% December 1, 1992
Maxim Short-Term-Maturity Bond 5.33% N/A N/A 4.93% July 31, 1995
Maxim U.S. Government Securities
7.68% 5.42% 6.63% 8.14% April 4, 1985
Maxim U.S. Government
Mortgage Securities 7.81% 5.66% N/A 6.43% December 1, 1992
Maxim Corporate Bond 11.84% N/A N/A 15.00% November 1, 1994
Maxim Stock Index 31.18% 17.67% 13.41% 13.98% July 1, 1982
Maxim Small-Cap Index 20.07% N/A N/A 12.98% December 1, 1993
Maxim Growth Index 28.26% N/A N/A 20.28% December 1, 1993
Maxim Value Index 33.05% N/A N/A 20.17% December 1, 1993
Maxim MidCap 12.09% N/A N/A 12.94% December 31, 1993
Maxim T. Rowe Price Equity/Income
27.84% N/A N/A 23.99% November 1, 1994
Maxim MidCap Growth N/A N/A N/A 21.75% July 1, 1997
Maxim Small-Cap Value 26.92% N/A N/A 13.96% December 1, 1993
Maxim INVESCO ADR 11.22% N/A N/A 13.96% November 1, 1994
Maxim INVESCO Small-Cap Growth
17.79% N/A N/A 23.49% November 1, 1994
Maxim INVESCO Balanced 25.13% N/A N/A 25.80% October 1, 1996
Maxim Foreign Equity -6.41% N/A N/A -0.33% November 1, 1994
Maxim Blue Chip N/A N/A N/A 5.56% July 1, 1997
Maxim Aggressive Profile N/A N/A N/A 7.32% September 8, 1997
Maxim Moderately
Aggressive Profile N/A N/A N/A 6.83% September 8, 1997
Maxim Moderate Profile N/A N/A N/A 5.85% September 8, 1997
Maxim Moderately
Conservative Profile N/A N/A N/A 7.93% September 8, 1997
Maxim Conservative Profile N/A N/A N/A 11.48% September 8, 1997
</TABLE>
The Contracts have been offered to the public only since , 1998.
However, total return data may be advertised for as long a period of time as the
Series Account has been active. The results for any period prior to the
contracts being offered would be calculated as if the Contracts had been offered
during that period (which they were not), deducting all recurring charges
including the annual contract maintenance charge of not more than $30, the daily
mortality and expense risk charge of 0.55% and the daily administrative expense
charge of 0.10%.
Performance information for any Investment Division reflects only the
performance of a hypothetical Contract under which Annuity Account Value is
allocated to an Investment Division during a particular time period on which the
calculations are based. Performance information should be considered in light of
the investment objectives and policies and characteristics of the Eligible Funds
in which the Investment Division invests, and the market conditions during the
given time period, and should not be considered as a representation of what may
be achieved in the future.
Reports and promotional literature may also contain other information
including (1) the ranking of any Investment Division derived from rankings of
variable annuity separate accounts or their investment products tracked by
Lipper Analytical Services, Inc., VARDS, Morningstar, Value Line, IBC/Donoghue's
Money Fund Report, Financial Planning Magazine, Money Magazine, Bank Rate
Monitor, Standard & Poor's Indices, Dow Jones Industrial Average, and other
rating services, companies, publications, or other persons who rank separate
accounts or other investment products on overall performance or other criteria,
and (2) the effect of tax-deferred compounding on investment returns, or returns
in general, which may be illustrated by graphs, charts, or otherwise, and which
may include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a currently taxable basis.
Other ranking services and indices may be used.
We may from time to time also disclose cumulative (non-annualized) total
returns for the Investment Divisions. We may from time to time also disclose
yield and standard total returns for any or all Investment Divisions.
We may also advertise performance figures for the Investment Divisions
based on the performance of an Eligible Fund prior to the time the Series
Account commenced operations.
For additional information regarding the calculation of other
performance data, please refer to the Statement of Additional Information.
---------------------------------------------------------------------------
DISTRIBUTION OF THE CONTRACTS
----------------------------------------------------------------------------
BenefitsCorp Equities, Inc. ("BCE") is the principal underwriter and
distributor of the Contracts. BCE is registered with the Securities and Exchange
Commission as a broker/dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Its principal offices are located at
8515 East Orchard, Englewood, Colorado 80111. BCE is an indirect wholly owned
subsidiary of GWL&A.
----------------------------------------------------------------------------
VOTING RIGHTS
----------------------------------------------------------------------------
To the extent required by applicable law, all Eligible Fund shares held
in the Series Account will be voted by the Company at regular and special
shareholder meetings of the respective Eligible Funds in accordance with
instructions received from persons having voting interests in the corresponding
Investment Division. If, however, the 1940 Act or any regulation thereunder
should be amended, or if the present interpretation thereof should change, or if
we determine that we are allowed to vote all Eligible Funds shares in our own
right, we may elect to do so.
Before the annuity commencement date, you the Owner, have the voting
interest. The number of votes which are available to you will be calculated
separately for each of your Variable Sub-Accounts. That number will be
determined by applying your percentage interest, if any, in a particular
Investment Division to the total number of votes attributable to that Investment
Division. You hold a voting interest in each Investment Division to which your
Annuity Account Value is allocated. If you select a variable annuity option, the
votes attributable to a Contract will decrease as annuity payments are made.
The number of votes of an Eligible Fund will be determined as of the
date coincident with the date established by that Eligible Fund for determining
shareholders eligible to vote at the meeting of the Eligible Funds. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the respective Eligible Funds.
Shares as to which no timely instructions are received and shares held
by us as to which Owners have no beneficial interest will be voted in proportion
to the voting instructions which are received with respect to all Contracts
participating in the Investment Division. Voting instructions to abstain on any
item to be voted upon will be applied on a pro rata basis to reduce the votes
eligible to be cast.
Each person or entity having a voting interest in a Investment Division
will receive proxy material, reports and other material relating to the
appropriate Eligible Fund.
It should be noted that generally the Eligible Funds are not required
to, and do not intend to, hold annual or other regular meetings of shareholders.
Contract Owners have no voting rights in the Company.
----------------------------------------------------------------------------
RIGHTS RESERVED BY THE COMPANY
----------------------------------------------------------------------------
The Company reserves the right to make certain changes if, in its
judgment, they would best serve the interests of Owners and Annuitants or would
be appropriate in carrying out the purposes of the Contracts. Any changes will
be made only to the extent and in the manner permitted by applicable laws. Also,
when required by law, the Company will obtain your approval of the changes and
approval from any appropriate regulatory authority. Such approval may not be
required in all cases, however. Examples of the changes the Company may make
include:
- To operate the Series Account in any form permitted under the
Investment Company Act of 1940 or in any other form permitted by law.
- To transfer any assets in any Investment Division to another
Investment Division, or to one or more separate accounts; or to add,
combine or remove Investment Divisions of the Series Account.
- To substitute, for the Eligible Fund shares in any Investment
Division, the shares of another Eligible Fund or shares of another
investment company or any other investment permitted by law.
- To make any changes required by the Internal Revenue Code or by any
other applicable law in order to continue treatment of the Contract as
an annuity.
- To change the time or time of day at which a Valuation Date is deemed
to have ended.
- To make any other necessary technical changes in the Contract in order
to conform with any action the above provisions permit the Company to
take, including to change the way the Company assesses charges, but
without increasing as to any then outstanding Contract the aggregate
amount of the types of charges which the Company has guaranteed.
----------------------------------------------------------------------------
LEGAL PROCEEDINGS
----------------------------------------------------------------------------
There are at present no material legal proceedings to which the Series
Account is a party or to which the assets of the Series Account are subject. The
Company is not currently a party to, and its property is not currently subject
to, any material legal proceedings. The lawsuits to which the Company is a party
are, in the opinion of management, in the ordinary course of business, and are
not expected to have a material adverse effect on the financial results,
conditions or prospects of the Company.
----------------------------------------------------------------------------
LEGAL MATTERS
----------------------------------------------------------------------------
Advice regarding certain legal matters concerning the federal securities
laws applicable to the issue and sale of the Contract has been provided by
Jorden Burt Berenson & Johnson LLP. The organization of the Company, the
Company's authority to issue the Contract, and the validity of the form of the
Contract have been passed upon by Ruth B. Lurie, Vice President, Counsel and
Associate Secretary of the Company.
----------------------------------------------------------------------------
AVAILABLE INFORMATION
----------------------------------------------------------------------------
We have filed a registration statement ("Registration Statement") with
the Commission under the 1933 Act relating to the Contracts offered by this
Prospectus. This Prospectus has been filed as a part of the Registration
Statement and does not contain all of the information set forth in the
Registration Statement and exhibits thereto. Reference is hereby made to the
Registration Statement and exhibits for further information relating to us and
the Contracts. Statements contained in this Prospectus, as to the content of the
Contracts and other legal instruments, are summaries. For a complete statement
of the terms thereof, reference is made to the instruments as filed as exhibits
to the Registration Statement. The Registration Statement and its exhibits may
be inspected and copied at the offices of the Commission located at 450 Fifth
Street, N.W., Washington, D.C.
The Statement of Additional Information contains more specific
information relating to the Series Account and GWL&A. The Table of Contents of
the Statement of Additional Information is set forth below:
1. General Information
2. Great-West Life & Annuity Insurance Company and Maxim Series
Account
3. Calculation of Annuity Payments
4. Postponement of Payments
5. Services
6. Withholding
7. Calculation of Performance Data
8. Financial Statements
The Statement of Additional Information is incorporated in this
prospectus in its entirety.
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
SUBJECT TO COMPLETION
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NORT MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO SUCH TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONTSITUTE A
PROSPECTUS.
MAXIM SERIES ACCOUNT
Contracts Under
Flexible Premium Deferred
Variable Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 468-8661 (Outside Colorado)
(800) 547-4957 (Colorado)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus and should
be read in conjunction with the Prospectus, dated , 1998, which is available
without charge by contacting the Annuity Service Center, P.O. Box 1700, Denver
Colorado 80201 or at 1-800-xxx-xxxx.
, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Page
GENERAL INFORMATION........................................................................B-3
GREAT-WEST LIFE & ANNUITY
AND THE MAXIM SERIES ACCOUNT.............................................................B-3
CALCULATION OF ANNUITY PAYMENTS............................................................B-3
POSTPONEMENT OF PAYMENTS...................................................................B-4
SERVICES...................................................................................B-4
- Safekeeping of Series Account Assets.............................................B-4
- Experts..........................................................................B-4
- Principal Underwriter............................................................B-4
WITHHOLDING................................................................................B-5
CALCULATION OF PERFORMANCE DATA............................................................B-5
FINANCIAL STATEMENTS.......................................................................B-7
</TABLE>
<PAGE>
GENERAL INFORMATION
In order to supplement the description in the Prospectus, the following provides
additional information about the Contracts and other matters which may be of
interest to you. Terms used in this Statement of Additional Information have the
same meanings as are defined in the Prospectus under the heading "Definitions."
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND THE MAXIM SERIES ACCOUNT
Great-West Life & Annuity Insurance Company (the "Company"), the issuer of the
Contract, is a Colorado corporation qualified to sell life insurance and annuity
contracts in Puerto Rico, the District of Columbia and all states except New
York. The Company is a wholly-owned subsidiary of The Great-West Life Assurance
Company, a stock life insurance company incorporated under the laws of Canada.
The Great-West Life Assurance Company is in turn owned 86.4% by Great-West
Lifeco Inc., a holding company. Great-West Lifeco Inc. is owned 68.1% by Power
Financial Corporation of Canada, a financial services company. Power Corporation
of Canada, a holding and management company, has voting control of Power
Financial Corporation of Canada. Mr. Paul Desmarais, through a group of private
holding companies, which he controls, has voting control of Power Corporation of
Canada.
The assets allocated to the Series Account are the exclusive property of
the Company. Registration of the Series Account under the Investment Company Act
of 1940 does not involve supervision of the management or investment practices
or policies of the Series Account or of the Company by the Securities and
Exchange Commission. The Company may accumulate in the Series Account proceeds
from charges under the Contracts and other amounts in excess of the Series
Account assets representing reserves and liabilities under the Contract and
other variable annuity contracts issued by the Company. The Company may from
time to time transfer to its general account any of such excess amounts. Under
certain remote circumstances, the assets of one Investment Division may not be
insulated from liability associated with another Investment Division
Best's Insurance Reports has assigned the Company its highest financial
strength and operating performance rating of A++. Duff & Phelps Corporation has
assigned the Company their highest claims paying ability rating of AAA. Standard
& Poor's Corporation has assigned the Company its second highest rating of AA+
for claims paying ability. Moody's Investors Service has assigned the Company an
insurance and financial strength rating of Aa2.
CALCULATION OF ANNUITY PAYMENTS
The Company converts the Accumulation Units for each of the
Owner's Variable Sub-Accounts into Annuity Units for each Variable Sub-Account
at their values determined as of the end of the Valuation Period which contains
the Payment Commencement Date. The number of Annuity Units paid for each
Variable Sub-Account is determined by dividing the amount of the first monthly
payment by the sub-account's Annuity Unit Value on the fifth Valuation Date
preceding the date the first payment is due. The number of Annuity Units used to
calculate each payment for a Variable Sub-Account remains fixed during the
annuity payment period.
The first payment under a variable annuity payment option will be
based on the value of each Variable Sub-Account on the fifth Valuation Date
preceding the Payment Commencement Date. It will be determined by applying the
appropriate rate to the amount applied under the Payment Option. Payments after
the first will vary depending upon the investment experience of the Variable
Sub-Accounts. The subsequent amount paid from each sub-account is determined by
multiplying (a) by (b) where (a) is the number of sub-account Annuity Units to
be paid and (b) is the sub-account Annuity Unit value on the fifth Valuation
Date preceding the date the annuity payment is due. The total amount of each
Variable Annuity Payment will be the sum of the Variable Annuity Payments for
each Variable Sub-Account.
POSTPONEMENT OF PAYMENTS
With respect to amounts allocated to the Series Account, payment
of any amount due upon a total or partial surrender, death or under an annuity
option will ordinarily be made within seven days after all documents required
for such payment are received by the Annuity Service Center. However, the
determination, application or payment of any death benefit, Transfer, full
surrender, partial withdrawal or annuity payment may be deferred to the extent
dependent on Accumulation or Annuity Unit Values, for any period during which
the New York Stock Exchange is closed (other than customary weekend and holiday
closings) or trading on the New York Stock Exchange is restricted as determined
by the Securities and Exchange Commission, for any period during which any
emergency exists as a result of which it is not reasonably practicable for the
Company to determine the investment experience, of such Accumulation or Annuity
Units or for such other periods as the Securities and Exchange Commission may by
order permit for the protection of investors.
SERVICES
A. Safekeeping of Series Account Assets
The assets of Maxim Series Account (the "Series Account") are
held by Great-West Life & Annuity Insurance Company ("GWL&A"). The assets of the
Series Account are kept physically segregated and held separate and apart from
the general account of GWL&A. GWL&A maintains records of all purchases and
redemptions of shares of the underlying funds. Additional protection for the
assets of the Series Account is afforded by blanket fidelity bonds issued to The
Great-West Life Assurance Company in the amount of $30 million (Canadian), which
covers all officers and employees of GWL&A.
B. Experts
The accounting firm of Deloitte & Touche LLP performs certain
accounting and auditing services for GWL&A and the Series Account. The principal
business address of Deloitte & Touche LLP is 555 Seventeenth Street, Suite 3600,
Denver, Colorado 80202.
The consolidated financial statements of GWL&A at December 31,
1997, 1996 and 1995 for each of the three years in the period ended December 31,
1997, and the statement of assets and liabilities of Maxim Series Account as of
December 31, 1997, and the related statement of operations and statement of
changes in net assets for the period then ended included in the prospectus have
been audited by Deloitte & Touche LLP, independent auditors, as set forth in
their report appearing therein and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
C. Principal Underwriter
The offering of the Contracts is made on a continuous basis by
BenefitsCorp Equities, Inc. ("BCE"). BCE is a Delaware corporation and is a
member of the National Association of Securities Dealers ("NASD"). The Company
does not anticipate discontinuing the offering of the Contract, although it
reserves the right to do so. The Contract generally will be issued for
Annuitants from birth to age ninety.
WITHHOLDING
Annuity payments and other amounts received under the Contract
are subject to income tax withholding unless the recipient elects not to have
taxes withheld. The amounts withheld will vary among recipients depending on the
tax status of the individual and the type of payments from which taxes are
withheld.
Notwithstanding the recipient's election, withholding may be
required with respect to certain payments to be delivered outside the United
States and, with respect to certain distributions from certain types of
qualified retirement plans, unless the proceeds are transferred directly to
another qualified retirement plan. Moreover, special "backup withholding" rules
may require the Company to disregard the recipient's election if the recipient
fails to supply the Company with a "TIN" or taxpayer identification number
(social security number for individuals), or if the Internal Revenue Service
notifies the Company that the TIN provided by the recipient is incorrect.
CALCULATION OF PERFORMANCE DATA
A. Yield and Effective Yield Quotations for the Money Market Investment Division
The yield quotation for the Money Market Investment Division will be for
the seven-day period and is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one Accumulation Unit in the Money Market Investment Division at the
beginning of the period, subtracting a hypothetical charge reflecting deductions
from Participant accounts, and dividing the difference by the value of the
account at the beginning of the base period to obtain the base period return,
and then multiplying the base period return by (365/7) with the resulting yield
figure carried to the nearest hundredth of one percent.
The effective yield quotation for the Money Market Investment Division
will be for the seven-day period and is carried to the nearest hundredth of one
percent, computed by determining the net change, exclusive of capital changes,
in the value of a hypothetical pre-existing account having a balance of one
Accumulation Unit in the Money Market Investment Division at the beginning of
the period, subtracting a hypothetical charge reflecting deductions from
Participant accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN +1)365/7]-1.
For purposes of the yield and effective yield computations, the
hypothetical charge reflects all deductions that are charged to all Participant
accounts in proportion to the length of the base period, and for any fees that
vary with the size of the account, the account size is assumed to be the Money
Market Investment Division's mean account size. The specific percentage
applicable to a particular withdrawal would depend on a number of factors
including the length of time the Contract Owner has participated under the
Contracts. (See "Charges and Deductions" in the Prospectus.) No deductions or
sales loads are assessed upon annuitization under the Contracts. Realized gains
and losses from the sale of securities and unrealized appreciation and
depreciation of the Money Market Investment Division and the Fund are excluded
from the calculation of yield.
B. Total Return and Yield Quotations for All Investment Divisions
(Other than Money Market)
The total return quotations for all Investment Divisions, other than the
Money Market, will be average annual total return quotations for the one-year
period. The quotations are computed by finding the average annual compounded
rates of return over the relevant periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
particular period at the end of the
particular period
For purposes of the total return quotations for these Investment Divisions, the
calculations take into effect all fees that are charged to the Contract Value ,
and for any fees that vary with the size of the account, the account size is
assumed to be the respective Investment Divisions' mean account size. The
calculations also assume a complete redemption as of the end of the particular
period.
The yield quotations for these Investment Divisions set forth in the
Prospectus are based on the thirty-day period ended on December 31, 1997, and
are computed by dividing the net investment income per Accumulation Unit earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
YIELD = 2[((a-b)cd +1)6 -1]
Where: a = net investment income earned during the period by the
corresponding portfolio of the Fund attributable to shares
owned by the Investment Division.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Accumulation Units
outstanding during the period.
d = the maximum offering price per Accumulation Unit on
the last day of the period.
For purposes of the yield quotations for these Investment Divisions, the
calculations take into effect all fees that are charged to the Contract Value,
and for any fees that vary with the size of the account, the account size is
assumed to be the respective Investment Divisions' mean account size.
FINANCIAL STATEMENTS
The financial statements of GWL&A as contained herein should be
considered only as bearing upon GWL&A's ability to meet its obligations under
the Contracts, and they should not be considered as bearing on the investment
performance of the Series Account. The interest of Contract Owners under the
Contracts are affected solely by the investment results of the Series Account.
<PAGE>
MAXIM SERIES ACCOUNT
Financial Statements
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Financial Statements
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements for Great-West Life & Annuity Insurance Company
and for Maxim Series Account for the years ended December 31, 1997, 1996 and
1995 to be filed by amendment.
(b) Exhibits
(1) Certified copy of resolution of Board of Directors or
Depositor establishing Registrant is incorporated by reference to
Registrant's Registration Statement.
(2) Not applicable.
(3)Copy of distribution contract between Depositor and Principal
Underwriter and Distribution Agreement to be filed by
amendment.
(4) Copy of the form of the variable annuity contract to be filed
by amendment.
(5)Copy of the form of application to be used with the variable
annuity contract provided pursuant to (4) to be filed by
amendment.
(6)Copy of Articles of Incorporation and Bylaws of Depositor are
incorporated by reference to Amendment No. 2 to the
Registration Statement filed by Depositor on Form N-4 on
October 29, 1996, Registration No. 333-01153.
(7) Not applicable.
(8) Copies of participation agreements with underlying funds to
be filed by amendment.
(9)Opinion of counsel and consent of Ruth B. Lurie, Vice
President, Counsel and Associate Secretary is attached as
Exhibit 9.
(10)(a)Written Consent of Jorden Burt Berenson & Johnson LLP is
attached as Exhibit 10a.
(b) Written Consent of Deloitte & Touche LLP to be filed by
amendment.
(c) Written Consent of Ruth B. Lurie is attached as Exhibit 10c.
(11) Not Applicable.
(12) Not Applicable.
(13) Schedule for computation of each performance quotation
provided in response to Item 21 is attached as Exhibit 13.
<PAGE>
Item 25. Directors and Officers of the Depositor
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Position and Offices
Name Principal Business Address with Depositor
James Balog 2205 North Southwinds Boulevard Director
Vero Beach, Florida 32963
James W. Burns, O.C. (4) Director
Orest T. Dackow (3) Director
Andre Desmarais (4) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 574 Spoonbill Drive Director
Sarasota, Florida 34236
Robert Gratton (5) Chairman
N. Berne Hart 2552 East Alameda Avenue, #99 Director
Denver, Colorado 80209
Kevin P. Kavanagh (1) Director
William Mackness 61 Waterloo Street Director
Winnipeg, Manitoba R3N 0S3
William T. McCallum (3) Director, President and
Chief Executive Officer
Jerry E.A. Nickerson H.B. Nickerson & Sons Limited Director
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C., Q.C. (4) Director
Michel Plessis-Belair, F.C.A. (4) Director
Brian E. Walsh Veritas Capital Management, LLC Director
115 East Putnam Avenue
Greenwich, Connecticut 06830
John A. Brown (3) Senior Vice-President, Sales,
Financial Services
Mitchell Graye (3) Senior Vice-President, Chief
Financial Officer
John T. Hughes (3) Senior Vice-President, Chief
Investment Officer
D. Craig Lennox (3) Senior Vice-President,
General Counsel and Secretary
Dennis Low (3) Executive Vice-President,
Financial Services
Alan D. MacLennan (2) Executive Vice-President,
Employee Benefits
Steven H. Miller (2) Senior Vice President,
Employee Benefits, Sales
James D. Motz (2) Executive Vice-President,
Employee Benefits
Martin L. Rosenbaum (2) Senior Vice-President,
Employee Benefits Operations
Douglas L. Wooden (3) Senior Vice-President,
Financial Services
- --------------------------------------
</TABLE>
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada R3C 3A5.
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
<PAGE>
Item 26. Persons controlled by or under common control with the Depositor
or Registrant
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Power Corporation of Canada
100% - Marquette Communications Corporation 100% - 171263 Canada Inc.
68.1% - Power Financial Corporation
86.5% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% First Great-West Life & Annuity Insurance
Company
100% - GW Capital Management, LLC
100% - Orchard Capital Management, LLC
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - One Health Plan of Colorado, Inc.
100% - One Health Plan of Georgia, Inc.
100% - One Health Plan of North Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One Health Plan of Ohio, Inc.
100% - One Health Plan of Oregon, Inc.
100% - One Health Plan of Tennessee, Inc.
100% - One Health Plan of Florida, Inc.
100% - One Health Plan of Massachusetts, Inc.
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
94% - Maxim Series Fund, Inc.
100% - Greenwood Property Corporation
100% - GWL Properties Inc.
100% - Great-West Realty Investments, Inc.
50% - Westkin Properties Ltd.
100% - Confed Admin Services, Inc.
</TABLE>
Item 27. Number of Contract Owners
As of , 1998, there were Contract Owners.
Item 28. Indemnification
Provisions exist under the Colorado Business Corporation Act and
the Bylaws of GWL&A whereby GWL&A may indemnify a director, officer, or
controlling person of GWL&A against liabilities arising under the Securities Act
of 1933. The following excerpts contain the substance of these provisions:
<PAGE>
Colorado Business Corporation Act
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of the corporation by reason of a merger, consolidation,
or other transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation,
is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, fiduciary or agent of another
domestic or foreign corporation or other person or employee benefit
plan. A director is considered to be serving an employee benefit plan
at the corporation's request if his or her duties to the corporation
also impose duties on or otherwise involve services by, the director
to the plan or to participants in or beneficiaries of the plan.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including an
excise tax assessed with respect to an employee benefit plan, or
reasonable expenses.
(5) "Official capacity" means, when used with respect to a director,
the office of director in the corporation and, when used with respect
to a person other than a director as contemplated in Section
7-109-107, means the office in the corporation held by the officer or
the employment, fiduciary, or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the corporation. "Official
capacity" does not include service for any other domestic or foreign
corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to the proceeding
because the person is or was a director against liability incurred in
any proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity with
the corporation, that his or her conduct was in the
corporation's best interests; or
(II) In all other cases, that his or her conduct was at
least not opposed to the corporation's best interests;
and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for
a purpose the director reasonably believed to be in the interests of
the participants in or beneficiaries of the plan is conduct that
satisfies the requirements of subparagraph (II) of paragraph (b) of
subsection (1) of this section. A director's conduct with respect to
an employee benefit plan for a purpose that the director did not
reasonably believe to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to satisfy the
requirements of subparagraph (a) of subsection (1) of this section.
(3) The termination of any proceeding by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its equivalent,
is not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in his official capacity, in which proceeding
the director was adjudged liable on the basis that he or she
derived an improper personal benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of a corporation is limited to
reasonable expenses incurred in connection with the proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by the articles of incorporation, a corporation
shall be required to indemnify a person who is or was a director of
the corporation and who was wholly successful, on the merits or
otherwise, in defense of any proceeding to which he was a party,
against reasonable expenses incurred by him in connection with the
proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of
the final disposition of the proceeding if:
(a) The director furnishes the corporation a written
affirmation of his good-faith belief that he has met the
standard of conduct described in Section 7-109-102;
(b) The director furnishes the corporation a written
undertaking, executed personally or on the director's behalf,
to repay the advance if it is ultimately determined that he or
she did not meet such standard of conduct; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification
under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of
this section shall be an unlimited general obligation of the
director, but need not be secured and may be accepted without
reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this section
shall be made in the manner specified in Section 7-109-106.
Section 7-109-105. Court-Ordered Indemnification of Directors.
(1) Unless otherwise provided in the articles of incorporation, a
director who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the
court, after giving any notice the court considers necessary, may
order indemnification in the following manner:
(a) If it determines the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred
to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not the director met the
standard of conduct set forth in section 7-109-102 (1) or was
adjudged liable in the circumstances described in Section
7-109-102 (4), the court may order such indemnification as the
court deems proper; except that the indemnification with
respect to any proceeding in which liability shall have been
adjudged in the circumstances described Section 7-109-102 (4)
is limited to reasonable expenses incurred in connection with
the proceeding and reasonable expenses incurred to obtain
court-ordered indemnification.
Section 7-109-106. Determination and Authorization of Indemnification of
Directors.
(1) A corporation may not indemnify a director under Section
7-109-102 unless authorized in the specific case after a
determination has been made that indemnification of the director is
permissible in the circumstances because he has met the standard of
conduct set forth in Section 7-109-102. A corporation shall not
advance expenses to a director under Section 7-109-104 unless
authorized in the specific case after the written affirmation and
undertaking required by Section 7-109-104(1)(a) and (1)(b) are
received and the determination required by Section 7-109-104(1)(c)
has been made.
(2) The determinations required to be made under subsection (1) of
this section shall be made:
(a) By the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and only
those directors not parties to the proceeding shall be counted
in satisfying the quorum.
(b) If a quorum cannot be obtained, by a majority vote of a
committee of the board of directors designated by the board of
directors, which committee shall consist of two or more
directors not parties to the proceeding; except that directors
who are parties to the proceeding may participate in the
designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a)
of subsection (2) of this section, and the committee cannot be
established under paragraph (b) of subsection (2) of this section, or
even if a quorum is obtained or a committee designated, if a majority
of the directors constituting such quorum or such committee so
directs, the determination required to be made by subsection (1) of
this section shall be made:
(a) By independent legal counsel selected by a vote of the
board of directors or the committee in the manner specified in
paragraph (a) or (b) of subsection (2) of this section or, if
a quorum of the full board cannot be obtained and a committee
cannot be established, by independent legal counsel selected
by a majority vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible; except that, if
the determination that indemnification is permissible is made by
independent legal counsel, authorization of indemnification and
advance of expenses shall be made by the body that selected such
counsel.
Section 7-109-107. Indemnification of Officers, Employees, Fiduciaries, and
Agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under
section 7-109-103, and is entitled to apply for court-ordered
indemnification under section 7-109-105, in each case to the
same extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to
the same extent as a director; and
(c) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director
to a greater extent, if not inconsistent with public policy,
and if provided for by its bylaws, general or specific action
of its board of directors or shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance on behalf of
a person who is or was a director, officer, employee, fiduciary, or
agent of the corporation and who, while a director, officer,
employee, fiduciary, or agent of the corporation, is or was serving
at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary, or agent of any other domestic or
foreign corporation or other person or of an employee benefit plan
against any liability asserted against or incurred by the person in
that capacity or arising out of his or her status as a director,
officer, employee, fiduciary, or agent whether or not the corporation
would have the power to indemnify the person against such liability
under the Section 7-109-102, 7-109-103 or 7-109-107. Any such
insurance may be procured from any insurance company designated by
the board of directors, whether such insurance company is formed
under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the
corporation has an equity or any other interest through stock
ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of Directors.
(1) A provision concerning a corporation's indemnification of, or
advance of expenses to, directors that is contained in its articles
of incorporation or bylaws, in a resolution of its shareholders or
board of directors, or in a contract, except for an insurance policy
or otherwise, is valid only to the extent the provision is not
inconsistent with Sections 7-109-101 to 7-109-108. If the articles of
incorporation limit indemnification or advance of expenses,
indemnification or advance of expenses are valid only to the extent
not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a time
when he or she has not been made a named defendant or respondent in
the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of Director.
If a corporation indemnifies or advances expenses to a
director under this article in connection with a proceeding by or in
the right of the corporation, the corporation shall give written
notice of the indemnification or advance to the shareholders with or
before the notice of the next shareholders' meeting. If the next
shareholder action is taken without a meeting at the instigation of
the board of directors, such notice shall be given to the
shareholders at or before the time the first shareholder signs a
writing consenting to such action.
Bylaws of GWL&A
Article II, Section 11. Indemnification of Directors.
The Company may, by resolution of the Board of Directors,
indemnify and save harmless out of the funds of the Company to the
extent permitted by applicable law, any director, officer, or
employee of the Company or any member or officer of any committee,
and his heirs, executors and administrators, from and against all
claims, liabilities, costs, charges and expenses whatsoever that any
such director, officer, employee or any such member or officer
sustains or incurs in or about any action, suit, or proceeding that
is brought, commenced, or prosecuted against him for or in respect of
any act, deed, matter or thing whatsoever made, done, or permitted by
him in or about the execution of his duties of his office or
employment with the Company, in or about the execution of his duties
as a director or officer of another company which he so serves at the
request and on behalf of the Company, or in or about the execution of
his duties as a member or officer of any such Committee, and all
other claims, liabilities, costs, charges and expenses that he
sustains or incurs, in or about or in relation to any such duties or
the affairs of the Company, the affairs of such Committee, except
such claims, liabilities, costs, charges or expenses as are
occasioned by his own wilful neglect or default. The Company may, by
resolution of the Board of Directors, indemnify and save harmless out
of the funds of the Company to the extent permitted by applicable
law, any director, officer, or employee of any subsidiary corporation
of the Company on the same basis, and within the same constraints as,
described in the preceding sentence.
Item 29. Principal Underwriter
(a) BenefitsCorp Equities, Inc. ("BCE")is the distributor of
securities of the Registrant.
(b) Directors and Officers of BCE:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Position and Offices
Name Principal Business Address with Underwriter
Charles P. Nelson (1) Director and President
John A. Brown (1) Director
Dennis Low (1) Director
Gregory E. Seller 18101 Von Karman Ave., Suite 1460 Director and Vice-President,
Irvine, CA 92612 Major Accounts
Robert K. Shaw (1) Director
Douglas L. Wooden (1) Director
Jack Baker (1) Vice President, Licensing and
Contracts
Glen R. Derback (1) Treasurer
Beverly A. Byrne (1) Secretary and Compliance Officer
</TABLE>
(1) 8515 East Orchard Road, Englewood, CO 80111
(c) Commissions and other compensation received by Principal
Underwriter during registrant's last fiscal year:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
BCE -0- -0- -0- -0-
</TABLE>
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained by the registrant through GWL&A, 8515 E.
Orchard Road, Englewood, Colorado 80111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to
ensure that the audited financial statements in the
Registration Statement are never more than 16 months old for
so long as payments under the variable annuity contracts may
be accepted.
(b) Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a postcard or similar written
communication affixed to or included in the Prospectus that
the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this form promptly upon written or oral
request.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
the registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final
adjudication of such issue.
(e)GWL&A represents that the fees and charges deducted under the
Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses to be incurred, and the risks
assumed by GWL&A.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-4 to be signed on its behalf, in the City of Englewood,
State of Colorado, on this 22ND day of January 1998.
MAXIM SERIES ACCOUNT
(Registrant)
By: /s/ W.T. McCallum
William T. McCallum, President
and Chief Executive Officer of
Great-West Life & Annuity
Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ W.T. McCallum
William T. McCallum, President
and Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities with Great-West Life
& Annuity Insurance Company and on the dates indicated:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Signature and Title Date
/s/ Robert Gratton* 1/22 , 1998
Director and Chairman of the
Board (Robert Gratton)
/s/ W.T. McCallum 1/22 , 1998
Director, President and Chief Executive
Officer (William T. McCallum)
/s/ M.T.G. Graye 1/22 , 1998
Senior Vice President, Chief
Financial Officer
(Mitchell T.G. Graye)
/s/ James Balog* 1/22 , 1998
Director, (James Balog)
/s/ James W. Burns* 1/22 , 1998
Director, (James W. Burns)
/s/ Orest T. Dackow 1/22 , 1998
Director (Orest T. Dackow)
/s/ Andre Desmarais* 1/22 , 1998
Director (Andre Desmarais)
/s/ Paul Desmarais, Jr.* 1/22 , 1998
Director (Paul Desmarais, Jr.)
, 1998
Director (Robert G. Graham)
/s/ N. Berne Hart* 1/22 , 1998
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh* 1/22 , 1998
Director (Kevin P. Kavanagh)
/s/ William Mackness* 1/22 , 1998
Director (William Mackness)
/s/ Jerry E.A. Nickerson* 1/22 , 1998
Director (Jerry E.A. Nickerson)
/s/ P. Michael Pitfield* 1/22 , 1998
Director (P. Michael Pitfield)
/s/ Michel Plessis-Belair 1/22 , 1998
Director (Michel Plessis-Belair)
/s/ Brian E. Walsh* 1/22 , 1998
Director (Brian E. Walsh)
*By: /s/ D.C. Lennox 1/22 , 1998
D. C. Lennox
Attorney-in-fact pursuant to Powers of Attorney filed with this
Registration Statement.
</TABLE>
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, J. Balog, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of January 1998.
/s/ James Balog
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Donald W. Genson
Name: Donald W. Genson
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, J.W. Burns, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of January , 1998.
/s/ J.W. Burns
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Louise Auriol
Name: Louise Auriol
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, O.T. Dackow, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of January , 1998.
/s/ O.T. Dackow
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Joan Preyer
Name: Joan Preyer
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, A. Desmarais, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of January , 1998.
/s/ A. Desmarais
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Lise Gagnon
Name: Lise Gagon
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, P. Desmarais, Jr., a Member of the Board
of Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of January , 1998.
/s/ P. Desmarais, Jr.
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Lucie Filteau
Name: Lucie Filteau
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, R. Gratton, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of January , 1998.
/s/ R. Gratton
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Nicole Barolet
Name: Nicole Barolet
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, N.B. Hart, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of January , 1998.
/s/ N.B. Hart
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Wilma J. Hart
Name: Wilma J. Hart
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, K.P. Kavanagh, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of January , 1998.
/s/ K.P. Kavanagh
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Els Kavanagh
Name:
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, William Mackness, a Member of the Board
of Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of January , 1998.
/s/ William Mackness
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ D. Mackness
Name: D. Mackness
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, J.E.A. Nickerson, a Member of the Board
of Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of January , 1998.
/s/ J.E. A. Nickerson
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ M. Lynne Reid
Name: M. Lynne Reid
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, P.M. Pitfield, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of January , 1998.
/s/ P.M. Pitfield
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Diane Meilleur
Name: Diane Meilleur
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, M. Plessis-Belair, a Member of the Board
of Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of January , 1998.
/s/ M. Plessis-Belair
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Danielle Durocher
Name: Danielle Durocher
<PAGE>
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, B.E. Walsh, a Member of the Board of
Directors of Great-West Life & Annuity Insurance Company, a Colorado
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to do, individually and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and all instruments which
either said attorney and agent may deem necessary or desirable to enable
Great-West Life & Annuity Insurance Company and Maxim Series Account, a separate
and distinct account of Great-West Life & Annuity Insurance Company governed
under the provisions of the Colorado Insurance Code, to comply with the
Securities Act of 1933 and the Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and Exchange Commission ("SEC")
thereunder, including specifically, but without limiting the generality of the
foregoing, power and authority to sign my name, in my capacity as a Member of
the Board of Directors of Great-West Life & Annuity Insurance Company, to the
SEC Form N-4 filings of Great-West Life & Annuity Insurance Company and Maxim
Series Account, and any and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of January , 1998.
/s/ B.E. Walsh
Member, Board of Directors
Great-West Life & Annuity Insurance Company
Witness:
/s/ Margaret Coaty
Name: Margaret Coaty
<PAGE>
EXHIBIT 9
Opinion of Counsel
<PAGE>
January 22, 1998
Securities and Exchange Commission
450 Fifth St., N.W.
Washington, D.C. 20549
Re: Opinion of Counsel
Ladies and Gentlemen:
This letter is furnished as the requisite opinion of counsel described in Form
N-4, Part C, Item 24(9). Great-West Life & Annuity Insurance Company (the
"Company") as depositor, has registered an indefinite amount of securities under
the Securities Act of 1933, as amended, as provided in Rule 24f-2 of the
Investment Company Act of 1940.
I am the Vice President, Counsel and Associate Secretary of the Company. In so
acting, I have made such examination of the law, records and documents as in my
judgment are necessary or appropriate to enable me to render the opinion
expressed below. For purposes of such examination, I have assumed the
genuineness of all signatures and the conformity to the original of all copies.
I am a member of the Colorado Bar and do not purport to be an expert on the laws
of any other state. My opinion herein as to any other law is based upon a
limited inquiry thereof which I have deemed appropriate under the circumstances.
Based on the foregoing, I am of the opinion that the securities, assuming that
they will be issued and sold in accordance with the provisions of the
registration statement, to which the Form N-4 registration statement is
applicable and with which this opinion accompanies, will be legally issued,
fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to the registration
statement.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel
and Associate Secretary
<PAGE>
EXHIBIT 10(a)
Consent of Jorden Burt Berenson & Johnson LLP
<PAGE>
JORDEN BURT BENERSON & JOHNSON LLP
SUITE 400 EAST
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
January 22, 1998
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We hereby consent to the reference to our name under "Legal Matters" in
the Prospectus contained in the Registration Statement filed on the date hereof
by Great-West Life & Annuity Insurance Company and Maxim Series Account with the
Securities and Exchange commission under the Securities Act of 1933.
Very truly yours,
/s/ Jorden Burt Berenson & Johnson LLP
JORDEN BURT BERENSON & JOHNSON LLP
<PAGE>
EXHIBIT 10(c)
Consent of Ruth B. Lurie
<PAGE>
January 22, 1998
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Re: Maxim Series Account
Ladies and Gentlemen:
I hereby consent to the use of my name under the caption "Legal Opinions" in the
Prospectus for Maxim Series Account contained in the Registration Statement Form
N-4 filed by Great-West Life & Annuity Insurance Company and Maxim Series
Account with the Securities and Exchange Commission under the Securities Act of
1933, the Investment Company Act of 1940 and the amendments thereto.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel
and Associate Secretary
<PAGE>
EXHIBIT 13
Computation of Performance Quotations
<PAGE>
YIELD AND EFFECTIVE YIELD CALCULATIONS
Money Market Investment Division
Yield for the Money Market Investment Division is calculated on a seven day
period.
The current yield formula = base period return x (365/7).
The effective yield formula = [(1 + base period return) 365/7] - 1.
Base period return is calculated as follows:
Ending account value
- Beginning account value
- Expenses accrued for the period
Net change in account value
Net change in account value/Beginning account value = base period return
Following is an example of these calculations:
a = Value of one accumulation unit at beginning of period = 16.23525 b = Value
of one accumulation unit at end of period = 16.24946 c = Annual maintenance
charges accrued in period = $3.91 d = Average number of units outstanding in
period = 1000.00 e = Base period return
Yield = (b-a-c/d)
a
= 16.24946/unit - 16.23525/unit - ($3.91/1000.00 units)
16.23525/unit
= 0.000635
f = annualized yield
e x (365/7) = 3.31%
g = effective yield
{[1 + e] 365/7} - 1 = 3.36%
<PAGE>
Other Investment Divisions
The yield calculation for all other investment divisions is based on a 30-day
period.
FORMULA: Yield = 2 [(a - b) / (cd) +1] 6 - 1
Where: a = net investment income earned during the period
attributable to the Investment Divisions
b = expenses accrued for the period (net of reimbursements)
c = average daily number of accumulation units outstanding
during the period
d = maximum offering price per accumulation unit on the last
day of the period
Following is an example of this yield calculation:
a = $6,000
b = $2,000
c = 50,000.00
d = $13.00
Yield = 2[(6,000 - 2,000 +1) 6 - 1]
50,000.00 x $13.00
= 7.50%
<PAGE>
TOTAL RETURN CALCULATION
FORMULA: P (1 + T) to the power of N = ERV
Where:
T = Average annual total return
N = The number of years including portions of years where
applicable for which the performance is being measured
ERV = Ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the applicable period
P = A hypothetical $1,000 initial payment made at the
inception of the Investment Division
(Assumed expenses = 0.85% mortality and expense risk charge and $30 contract
maintenance charge)
The above formula can be restate to solve for T as follows:
T = [(ERV/P) to the power of 1/N] - 1
Following are examples of this calculation on a 1 year, 5 year10 year and since
inception basis:
1 year total return:
ERV = 1,344.50
N = 1.00
P = 1,000.00 Therefore, 1 year total return is 34.45 %.
5 year total return:
ERV = 1,792.44
N = 5.00
P = 1,000.00 Therefore, 5 year total return is 12.38 %.
10 year total return:
ERV = 2,857.38
N = 10.00
P = 1,000.00 Therefore, 10 year total return is 11.07%.
Since inception total return:
ERV = 4,595.67
N = 13.50
P = 1,000.00
Therefore, since inception total return is 11.96 %.
1 The Contract Owner Transaction Expenses apply to each Contract, regardless
of how the Annuity Account Value is allocated.
2 There is a $10 fee for each transfer in excess of twelve in any calendar
year.
3 The Contract Maintenance Charge is a maximum of $30 and is currently
waived for Contracts with an Annuity Account Value of at least $50,000. If your
Annuity Account Value falls below $50,000 due to a withdrawal, the Contract
Maintenance Charge will be reinstated until such time as your Annuity Account
Value is equal to or greater than $50,000. This charge may also be waived for
Contracts issued under certain sponsored arrangements.
4 Standard & Poor's Small-Cap 600 Stock Index is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by Maxim Series Fund, Inc. and
Great-west Life & Annuity Insurance Company. The Portfolio is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of using this index.
