File No. 2-75185
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File No. 811-3341
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 20 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 [X]
RELIASTAR SELECT VARIABLE ACCOUNT
(formerly NWNL Select Variable Account)
(Exact Name of Registrant as Specified in its Charter)
RELIASTAR LIFE INSURANCE COMPANY
(formerly Northwestern National Life Insurance Company)
(Name of Depositor)
20 Washington Avenue South, Minneapolis, Minnesota 55401
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (612) 342-7346
Jeffrey A. Proulx, Esq.
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
(Name and Address of Agent of Service)
Approximate date of proposed Public Offering:
As soon as practicable after the Registration Statement
becomes effective.
It is proposed that this filing will become effective
(check appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 30, 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuantto paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has chosen to register an indefinite amount of securities in
accordance with Rule 24f-2. The Rule 24f-2 Notice for Registrant's most recent
fiscal year was filed on or about February 20, 1997.
================================================================================
RELIASTAR SELECT VARIABLE ACCOUNT
Cross Reference Sheet Pursuant to Rule 495(a)
FORM N-4
ITEM NUMBER PART A HEADING IN PROSPECTUS
- ----------- ----------------------------
1. Cover Page
2. Definitions
3. Summary
4. Condensed Financial Information
5. The Company; The Variable Account; Investment of the
Variable Account
6. Charges Made by the Company
7. The Contracts
8. Annuity Provisions
9. The Contracts
10. The Contracts
11. The Contracts
12. Federal Tax Status
13. Legal Proceedings
14. Statement of Additional Information Table of Contents
PART B HEADING IN STATEMENT OF ADDITIONAL INFORMATION
15. Cover Page
16. Table of Contents
17. Introduction
18. Administration of the Contracts
19. Distribution of the Contracts
20. Distribution of the Contracts
21. Calculation of Yield and Return
22. Annuity Provisions (In Prospectus)
23. Financial Statements
PART C HEADINGS
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Not Applicable
32. Undertakings
Select*Annunity II
April 30, 1997
Individual Deferred
Variable/Fixed
Annunity Contracts
[GRAPHIC OMITTED]
RELIASTAR LIFE INSURANCE COMPANY
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
RELIASTAR SELECT VARIABLE ACCOUNT
AND
RELIASTAR LIFE INSURANCE COMPANY
The Individual Deferred Variable/Fixed Annuity Contracts described in this
Prospectus are flexible purchase payment contracts. The Contracts are sold to or
in connection with retirement plans which may or may not qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax Status"
on page 21.) Annuity payments under the Contracts are deferred until a selected
later date.
Purchase payments may be allocated to one or more of the available
Sub-Accounts of ReliaStar Select Variable Account (the "Variable Account"), a
separate account of ReliaStar Life Insurance Company (the "Company"), and/or to
the Fixed Account (which is the general account of the Company).
Purchase payments allocated to one or more of the available Sub-Accounts of
the Variable Account, as selected by the Contract Owner, will be invested in
shares at net asset value of one or more of a group of investment funds (the
"Investment Funds"). The Investment Funds are currently the Variable Insurance
Products Fund ("VIP"), which has five portfolios, and the Variable Insurance
Products Fund II ("VIP II"), which has made available three portfolios managed
by Fidelity Management & Research Company of Boston, Massachusetts, and Putnam
Variable Trust, which has made available four portfolios managed by Putnam
Investment Management, Inc. ("Putnam Management") of Boston, Massachusetts. Each
Investment Fund pays its investment adviser certain fees charged against the
assets of the Investment Fund. The Variable Account Contract Value and the
amount of variable annuity payments will vary, primarily based on the investment
performance of the Investment Funds whose shares are held in the Sub-Accounts
selected. (For more information about the Investment Funds, see "Investments of
the Variable Account" on page 11.)
The Variable Account Contract Value is subject to daily charges consisting
of a mortality risk premium equal to 0.9% annually and an expense risk charge
equal to 0.4% annually. There is also an annual administrative charge of $30,
and there may be a surrender charge (contingent deferred sales charge) of 5%
which will, with certain exceptions, apply to whole or partial surrenders made
within five years of the last purchase payment. (For more information about
charges see "Charges Made By the Company" on page 13.)
Additional information about the Contracts, the Company and the Variable
Account, contained in a Statement of Additional Information dated April 30,
1997, has been filed with the Securities and Exchange Commission and is
available upon request without charge by writing to Washington Square
Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota 55401, by
calling 1-800-621-3750, or by accessing the SEC's internet web site
(http://www.sec.gov). The Statement of Additional Information relating to the
Contracts having the same date as this Prospectus is incorporated by reference
in this Prospectus. The Table of Contents for the Statement of Additional
Information may be found on page 27 of this Prospectus.
Information about the Fixed Account may be found in Appendix A, on page
A-1.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING
FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER
OR SOLICITATION WOULD BE UNLAWFUL.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACTS THAT A
PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE RETAINED FOR
FUTURE REFERENCE. IT IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES
OF THE INVESTMENT FUNDS.
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 THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE INVESTMENT FUNDS AND INTERESTS IN THE CONTRACTS ARE NOT DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, A BANK, AND THE SHARES AND
INTERESTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE DATE OF THIS PROSPECTUS IS APRIL 30, 1997.
TABLE OF CONTENTS
Definitions ..........................................3
Summary of Contract Expenses..........................4
Summary...............................................7
Condensed Financial Information.......................8
Performance Information...............................9
The Company..........................................10
The Variable Account.................................10
Investments of the Variable Account..................11
Charges Made by the Company..........................13
Surrender Charge (Contingent
Deferred Sales Charge)...........................13
Administrative Charge..............................14
Mortality Risk Premium.............................14
Expense Risk Charge................................14
Premium Taxes......................................14
Expenses of the Investment Funds...................14
Administration of the Contracts......................15
The Contracts........................................15
Allocation of Purchase Payments....................15
Sub-Account Accumulation Unit Value................15
Net Investment Factor..............................16
Death Benefit Before the
Annuity Commencement Date.........................16
Death Benefit After the
Annuity Commencement Date.........................17
Surrender (Redemption).............................17
Transfers..........................................17
Assignments........................................18
Contract Owner and Beneficiaries...................18
Contract Inquiries.................................19
Annuity Provisions...................................19
Annuity Commencement Date..........................19
Annuity Form Selection Change......................19
Annuity Forms......................................19
Automatic Annuity Form.............................20
Frequency and Amount of Annuity Payments...........20
Annuity Payments...................................20
Sub-Account Annuity Unit Value.....................20
Assumed Investment Rate.........................21
Federal Tax Status...................................21
Introduction.......................................21
Tax Status of the Contract.........................21
Taxation of Annuities..............................22
Transfers, Assignments or Exchanges of a Contract..24
Withholding........................................24
Multiple Contracts.................................24
Taxation of Qualified Plans........................24
Possible Charge for the Company's Taxes............25
Other Tax Consequences.............................25
Voting of Fund Shares................................25
Distribution of the Contracts........................26
Revocation ..........................................26
Reports to Owners....................................26
Legal Proceedings....................................26
Financial Statements and Experts.....................26
Further Information..................................26
Statement of Additional Information/Table of
Contents...........................................27
Appendix .............................................A-1
Fund Prospectuses
Fidelity's Variable Insurance Products Fund (VIP):
Money Market Portfolio.........................VIP-1
High Income Portfolio..........................VIP-1
Equity-Income Portfolio........................VIP-1
Growth Portfolio...............................VIP-1
Overseas Portfolio.............................VIP-1
Fidelity's Variable Insurance Products Fund II (VIP II):
Asset Manager Portfolio........................VIPII-1
Investment Grade Bond Portfolio................VIPII-1
Index 500 Portfolio............................VIPII-1
Putnam Variable Trust
Putnam VT Diversified Income Fund..............PVT-1
Putnam VT Growth and Income Fund...............PVT-1
Putnam VT Utilities Growth and Income Fund.....PVT-1
Putnam VT Voyager Fund.........................PVT-1
DEFINITIONS
ANNUITANT - The person who is named by the Owner to receive annuity payments.
ANNUITY COMMENCEMENT DATE (COMMENCEMENT DATE) - The date on which the annuity
payments are to start, which must be the first day of a month. The date
will be the first day of the month following the Annuitant's 75th birthday
unless an earlier or later date has been selected by the Owner and, if the
date is later, it has been agreed to by the Company. If the Annuity
Commencement Date selected by the Owner does not occur on a Valuation Date,
at least 60 days after the date on which the Contract was issued, the
Company reserves the right to adjust the Commencement Date to the first
Valuation Date after the Commencement Date selected by the Owner and which
is at least 60 days after the Contract issue date.
BENEFICIARY - The person who is named by the Owner to receive the Contract Value
upon the death of the Owner or Annuitant prior to the Annuity Commencement
Date or to receive the balance of the annuity payments if the Annuitant
does not live to receive all payments due.
CODE - The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY - Occurs yearly on the same day and month the Contract was
issued.
CONTRACT OWNER (OWNER) - The person who controls all the rights under the
Contract until the earlier of the Annuity Commencement Date or the date of
death of the annuitant.
CONTRACT VALUE - The sum of (a) the Variable Account Contract Value, which is
the value of the Sub-Account Accumulation Units under the Contract and (b)
the Fixed Account Contract Value, which is the sum of purchase payments
allocated to the Fixed Account under the Contract, plus credited interest,
minus surrenders, surrender charges, and any annual administrative charges
applicable to the Fixed Account, and minus any transfers to the Variable
Account.
CONTRACT YEAR - The twelve-month period starting on a Contract Anniversary.
FIXED ACCOUNT - The Fixed Account is the general account of the Company, which
consists of all assets of the Company other than those allocated to a
separate account of the Company.
FIXED ANNUITY - An annuity with payments which do not vary as to dollar amount.
INVESTMENT FUNDS - Any open-end management investment company (or portfolio
thereof) or unit investment trust (or series thereof) in which a
Sub-Account invests as described herein.
PUTNAM VARIABLE TRUST
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund
QUALIFIED PLAN - A retirement plan under Sections 401, 403, 404 or 408 or
similar provisions of the federal Internal Revenue Code.
SUB-ACCOUNT - That portion of the Variable Account which invests in shares of a
specific Mutual Fund.
SUB-ACCOUNT ACCUMULATION UNIT - A unit of measure, similar to a share of stock,
used to determine the Variable Account Contract Value before annuity
payments start.
SUCCESSOR BENEFICIARY - The person named to become the Beneficiary if the
Beneficiary is not alive.
VALUATION DATE - Each day that the New York Stock Exchange is open for business,
except for a day that a Sub-Account's corresponding Fund does not value its
shares. The New York Stock Exchange is currently closed on weekends and on
the following holidays: New Year's Day; President's Day; Good Friday;
Memorial Day; July Fourth; Labor Day; Thanksgiving Day; and Christmas Day.
VALUATION PERIOD - The time interval between a Valuation Date and the next
Valuation Date.
VARIABLE ACCOUNT - A separate account of the Company consisting of assets set
aside by the Company, the investment performance of which is kept separate
from that of the general assets of the Company.
VARIABLE ANNUITY - A series of periodic payments to the Annuitant which will
vary in amount, primarily based on the investment results of the Variable
Account Sub-Accounts under the Contract.
VARIABLE ANNUITY UNIT - A unit of measure used in the calculation of the second
and each subsequent variable annuity payment from the Variable Account.
VIP - Variable Insurance Products Fund Money Market Portfolio High Income
Portfolio Equity-Income Portfolio Growth Portfolio Overseas Portfolio
VIP II - Variable Insurance Products Fund II
Asset Manager Portfolio
Investment Grade Bond Portfolio
Index 500 Portfolio
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases..........................................None
Deferred Sales Charge(a)...................................................5.00%
(as a percentage of purchase payments paid in last 5 years)
Surrender Fees.............................................................None
Exchange Fee...............................................................None
ANNUAL CONTRACT
Fee...............................................................$30
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk
Fees..............................................................1.30%
Account Fees and
Expenses..........................................................None
Total Separate Account Annual
Expenses..........................................................1.30%
ANNUAL INVESTMENT FUND EXPENSES
(as a percentage of portfolio company average net assets)
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---- -------- --------
<S> <C> <C> <C>
VIP Money Market Portfolio.............................................. 0.21% 0.09% 0.30%
VIP High Income Portfolio............................................... 0.59% 0.12% 0.71%
VIP Equity-Income Portfolio(b).......................................... 0.51% 0.07% 0.58%
VIP Growth Portfolio(b)................................................. 0.61% 0.08% 0.69%
VIP Overseas Portfolio(b)............................................... 0.76% 0.07% 0.93%
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---- -------- --------
VIP II Asset Manager Portfolio(b)....................................... 0.64% 0.10% 0.74%
VIP II Investment Grade Bond Portfolio.................................. 0.45% 0.13% 0.58%
VIP II Index 500 Portfolio(c)........................................... 0.13% 0.15% 0.28%
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---- -------- --------
Putnam VT Diversified Income Fund....................................... 0.70% 0.13% 0.83%
Putnam VT Growth and Income Fund........................................ 0.49% 0.05% 0.54%
Putnam VT Utilities Growth and Income Fund(d)........................... 0.69% 0.09% 0.78%
Putnam VT Voyager Fund.................................................. 0.57% 0.06% 0.63%
</TABLE>
The fee and expense information regarding the Investment Funds was provided
by the Investment Funds. The Variable Insurance Products Fund, the Variable
Insurance Products Fund II, and Putnam Variable Trust are not affiliated with
the Company.
EXAMPLES
If you surrender your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
VIP Money Market Portfolio....................................................... $62 $ 99 $ 93 $203
VIP High Income Portfolio........................................................ 67 112 114 246
VIP Equity-Income Portfolio...................................................... 65 108 108 233
VIP Growth Portfolio............................................................. 66 111 113 244
VIP Overseas Portfolio........................................................... 69 118 125 269
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
VIP II Asset Manager Portfolio................................................... $67 $113 $116 $249
VIP II Investment Grade Bond Portfolio........................................... 65 108 108 233
VIP II Index 500 Portfolio....................................................... 62 99 92 201
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Putnam VT Diversified Income Fund................................................ $68 $115 $120 $258
Putnam VT Growth and Income Fund................................................. 65 106 106 228
Putnam VT Utilities Growth and Income Fund....................................... 67 114 118 253
Putnam VT Voyager Fund........................................................... 66 109 110 238
</TABLE>
If you annuitize at the end of the applicable time period or if you do not
surrender your contract, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
VIP Money Market Portfolio....................................................... $17 $54 $ 93 $203
VIP High Income Portfolio........................................................ 22 67 114 246
VIP Equity-Income Portfolio...................................................... 20 63 108 233
VIP Growth Portfolio............................................................. 21 66 113 244
VIP Overseas Portfolio........................................................... 24 73 125 269
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
VIP II Asset Manager Portfolio................................................... $22 $68 $116 $249
VIP II Investment Grade Bond Portfolio........................................... 20 63 108 233
VIP II Index 500 Portfolio....................................................... 17 54 92 201
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Putnam VT Diversified Income Fund................................................ $23 $70 $120 $258
Putnam VT Growth and Income Fund................................................. 20 61 106 228
Putnam VT Utilities Growth and Income Fund....................................... 22 69 118 253
Putnam VT Voyager Fund........................................................... 21 64 110 238
</TABLE>
(a) The Deferred Sales Charge may be less than 5%, since under certain
situations amounts may be surrendered or withdrawn free of any surrender
charge. For more information on the Deferred Sales Charge, see page 13,
"Surrender Charge (Contingent Deferred Sales Charge)."
(b) A portion of the brokerage commissions that certain Funds pay was used to
reduce these Funds' expenses. In addition, certain Funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, the total operating
expenses presented in the table would have been .56% for Equity Income
Portfolio, .67% for Growth Portfolio, .92% for Overseas Portfolio, and .85%
for Asset Manager.
(c) The expenses listed in the table for the Index 500 Portfolio are net of
voluntary expense reimbursements, which are not required to be continued
indefinitely. The total expenses of the Index 500 Portfolio before
reimbursement would be .43%.
(d) On July 11, 1996, shareholders approved an increase in the fees payable to
Putnam Investment Management, Inc. ("Putnam Management"), under the
Management Contract for Putnam VT Utilities Growth and Income Fund. The
management fees and total expenses shown in the table have been restated to
reflect the increase. Actual management fees and total expenses were 0.64%
and 0.73%, respectively.
THE EXAMPLES SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN. THE 5% ANNUAL RETURN ASSUMED IS HYPOTHETICAL AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED RATE.
The purpose of this table is to assist the Contract Owner in understanding
the various costs and expenses that a Contract Owner will bear either directly
or indirectly. The table reflects the expenses of the Variable Account as well
as those of the Investment Funds. The $30 Annual Contract Charge is reflected as
an annual percentage charge in this table based on the average net assets in the
Variable Account and Fixed Account during the preceding year, which translates
to a charge equal to an annual rate of 0.119% of the Variable and Fixed Account
values.
In addition to the costs and expenses shown in this table, state premium
taxes may also be applicable. For more information on state premium taxes, see
page 14, "Premium Taxes".
SUMMARY
The Contracts are individual deferred variable/fixed annuity contracts
issued by the Variable Account and the Company. (See "The Company" and "The
Variable Account" on page 10.) They are sold to or in connection with retirement
plans which may or may not qualify for special federal tax treatment under the
Internal Revenue Code. (See "Federal Tax Status" on page 21.) Annuity payments
under the Contracts are deferred until a later date.
Purchase payments may be allocated to one or more Sub-Accounts of the
Variable Account and/or to the Fixed Account. Purchase payments allocated to one
or more Sub-Accounts of the Variable Account will be invested in shares at net
asset value of one or more of the Investment Funds. The Variable Account
Contract Value and the amount of variable annuity payments will vary, primarily
based on the investment performance of the Investment Funds whose shares are
held in the Sub-Accounts selected. (See "Investments of the Variable Account" on
page 11.)
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, if all or any part of the Contract Value is surrendered
within five years from the date of the last purchase payment, the Company will,
with certain exceptions, deduct a surrender charge (which may be deemed a
contingent deferred sales charge). (See "Surrender Charge (Contingent Deferred
Sales Charge)" on page 13.)
In addition, on each Contract Anniversary and on the surrender of the
Contract for full value if it is not surrendered on a Contract Anniversary, the
Company will deduct from the Contract Value an administrative charge of $30.
During the annuity period the annual administrative charge will be deducted
proportionately from each monthly annuity payment. The administrative charge is
to reimburse the Company for administrative expenses relating to the issue and
maintenance of the Contracts. (See "Administrative Charge" on page 14.)
The Company also deducts a Mortality Risk Premium and an Expense Risk
Charge, equal to an annual rate of 1.3% of the daily net asset value of the
Sub-Accounts of the Variable Account, for mortality and expense risks assumed by
the Company. (See "Mortality Risk Premium" and "Expense Risk Charge" on page
14.)
The initial purchase payment must be $2,500 or more. However, if the
Contract is being purchased by or in connection with a Qualified Plan, the
minimum amount of purchase payments the Company will accept during the first
Contract Year will be $600, with no individual payment to be less than $50. The
Company may choose not to accept any subsequent purchase payment if it is less
than $50 or if the purchase payment together with the Contract Value at the next
Valuation Date exceeds $250,000.
If the Contract Value at the Annuity Commencement Date is less than $2,500,
the Contract Value may be distributed in a single sum payment in lieu of annuity
payments. If any annuity payment would be less than $50, the Company shall have
the right to change the frequency of payments to such intervals as will result
in payments of at least $50 each. (See "Frequency and Amount of Annuity
Payments" on page 20.)
Premium taxes payable to any governmental entity will be charged against
the Contracts. (See "Premium Taxes" on page 14.)
The Contract Owner may request early withdrawal of all or part of the
Contract Value before the Annuity Commencement Date. (See "Surrender
(Redemption)" on page 17.) A penalty tax may be assessed pursuant to Section
72(q) of the Internal Revenue Code upon withdrawal of amounts accumulated under
a Contract. (See "Taxation of Annuities" on page 22.)
The Contract Owner may return the Contract within ten days after it was
delivered to the Owner, and the full amount of the purchase payments received
will be refunded. (See "Revocation" on page 26.)
CONDENSED FINANCIAL INFORMATION
The following table shows, for each Sub-Account of the Variable Account,
the value of a Sub-Account Accumulation Unit as they are invested in portfolios
at the dates shown, and the total number of Sub-Account Accumulation Units
outstanding at the end of each period:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
SUB-ACCOUNT INVESTING IN 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
FIDELITY'S VIP:
(all portfolios from May 1,
1988):
Money Market Portfolio
<S> <C> <C> <C> <C> <C>
Beginning of period............. $14.0932 $13.4845 $13.1036 $12.8597 $12.5397
End of period................... $14.6622 $14.0932 $13.4845 $13.1036 $12.8597
Units outstanding at end of
period...................... 551,623 605,511 755,428 827,229 987,748
High Income Portfolio
Beginning of period............. $21.1332 $17.7525 $18.2678 $15.3580 $12.6454
End of period................... $23.7835 $21.1332 $17.7525 $18.2678 $15.3580
Units outstanding at end of
period...................... 733,939 760,359 778,501 798,986 441,253
Equity-Income Portfolio
Beginning of period............. $25.8348 $19.3743 $18.3330 $15.7132 $13.6101
End of period................... $29.1386 $25.8348 $19.3743 $18.3330 $15.7132
Units outstanding at end of
period...................... 2,419,226 2,562,446 2,548,087 2,319,004 1,655,722
Growth Portfolio
Beginning of period............. $28.1402 $21.0608 $21.3412 $18.1132 $16.7875
End of period................... $13.8559 $28.1402 $21.0608 $21.3412 $18.1132
Units outstanding at end of
period...................... 2,402,422 2,477,276 2,337,733 2,019,876 1,448,782
Overseas Portfolio
Beginning of period............. $17.0360 $15.7366 $15.6727 $11.5705 $13.1298
End of period................... $19.0354 $17.0360 $15.7366 $15.6727 $11.5705
Units outstanding at end of
period...................... 1,039,149 1,055,251 1,176,636 819,348 456,484
FIDELITY'S VIP II:
Asset Manager Portfolio
(from May 1, 1991):
Beginning of period............. $15.1807 $13.1500 $14.1866 $11.8736 $10.7527
End of period................... $17.1701 $15.1807 $13.1500 $14.1866 $11.8736
Units outstanding at end of
period...................... 2,062,691 2,327,409 2,293,509 1,727,141 522,702
Investment Grade Bond Portfolio
(from May 1, 1991):
Beginning of period............. $13.9972 $12.0868 $12.7234 $11.6171 $11.0360
End of period................... $14.2542 $13.9972 $12.0868 $12.7234 $11.6171
Units outstanding at end of
period...................... 519,771 616,360 687,602 729,335 352,116
Index 500 Portfolio
(from May 3, 1993):
Beginning of period............. $14.3550 $10.6006 $10.6290 $10.0000 _
End of period................... $17.4006 $14.3550 $10.6006 $10.6290 _
Units outstanding at end of
period...................... 351,023 261,975 174,454 102,493 _
PUTNAM'S:
(all portfolios from May 2,
1994):
Putnam VT Diversified Income Fund
Beginning of period............. $11.5741 $9.8430 $10.0000 _ _
End of Period................... $12.4289 $11.5741 $9.8430 _ _
Units outstanding at end of
period...................... 52,723 57,511 16,459 _ _
Putnam VT Growth and Income Fund
Beginning of period............. $13.6691 $10.1294 $10.0000 _ _
End of Period................... $16,4471 $13.6691 $10.1294 _ _
Units outstanding at end of
period...................... 278,066 140,310 34,789 _ _
Putnam VT Utilities Growth and Income
Fund
Beginning of period............. $12.5909 $9.7315 $10.0000 _ _
End of Period................... $14,3893 $12.5909 $9.7315 _ _
Units outstanding at end of
period...................... 59,940 56,662 11,486 _ _
Putnam VT Voyager Fund
Beginning of period............. $14.5313 $10.4653 $10.0000 _ _
End of Period................... $16.2011 $14.5313 $10.4653 _ _
Units outstanding at end of
period...................... 551,786 280,197 84,232 _ _
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
SUB-ACCOUNT INVESTING IN 1991 1990 1989 1988 1987
---- ---- ---- ---- ----
FIDELITY'S VIP:
(all portfolios from May 1,
1988):
Money Market Portfolio
<S> <C> <C> <C> <C> <C>
Beginning of period............. $11.9736 $11.2268 $10.4179 $10.0000 _
End of period................... $12.5397 $11.9736 $11.2268 $10.4179 _
Units outstanding at end of
period...................... 1,129,026 1,120,621 370,316 38,447 _
High Income Portfolio
Beginning of period............. $9.4711 $9.8322 $10.4064 $10.0000 _
End of period................... $12.6454 $9.4711 $9.8322 $10.4064 _
Units outstanding at end of
period...................... 273,750 224,342 157,944 67,794 _
Equity-Income Portfolio
Beginning of period............. $10.4896 $12.5467 $10.8324 $10.0000 _
End of period................... $13.6101 $10.4896 $12.5467 $10.8324 _
Units outstanding at end of
period...................... 1,303,735 1,242,548 934,804 288,561 _
Growth Portfolio
Beginning of period............. $11.6882 $13.4173 $10.3448 $10.0000 _
End of period................... $16.7875 $11.6882 $13.4173 $10.3448 _
Units outstanding at end of
period...................... 980,079 719,979 296,757 148,480 _
Overseas Portfolio
Beginning of period............. $12.2980 $12.6820 $10.1743 $10.0000 _
End of period................... $13.1298 $12.2980 $12.6820 $10.1743 _
Units outstanding at end of
period...................... 364,272 333,194 64,228 15,105 _
FIDELITY'S VIP II:
Asset Manager Portfolio
(from May 1, 1991)
Beginning of period............. $10.0000 _ _ _ _
End of period................... $10.7527 _ _ _ _
Units outstanding at end of
period...................... 118,419 _ _ _ _
Investment Grade Bond Portfolio
(from May 1, 1991):
Beginning of period............. $10.0000 _ _ _ _
End of period................... $11.0360 _ _ _ _
Units outstanding at end of
period...................... 79,859 _ _ _ _
Index 500 Portfolio
(from May 3, 1993):
Beginning of period............. _ _ _ _ _
End of period................... _ _ _ _ _
Units outstanding at end of
period...................... _ _ _ _ _
PUTNAM'S:
(all portfolios from May 2,
1994):
Putnam VT Diversified Income Fund
Beginning of period............. _ _ _ _ _
End of Period................... _ _ _ _ _
Units outstanding at end of
period...................... _ _ _ _ _
Putnam VT Growth and Income Fund
Beginning of period............. _ _ _ _ _
End of Period................... _ _ _ _ _
Units outstanding at end of
period...................... _ _ _ _ _
Putnam VT Utilities Growth and Income
Fund
Beginning of period............. _ _ _ _ _
End of Period................... _ _ _ _ _
Units outstanding at end of
period...................... _ _ _ _ _
Putnam VT Voyager Fund
Beginning of period............. _ _ _ _ _
End of Period................... _ _ _ _ _
Units outstanding at end of
period...................... _ _ _ _ _
</TABLE>
PERFORMANCE INFORMATION
From time to time, the Company may advertise or include in sales literature
yields, effective yields, and total returns for the available Sub-Accounts.
THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT INDICATE OR PROJECT
FUTURE PERFORMANCE. Each Sub-Account may, from time to time, advertise or
include in sales literature performance relative to certain performance rankings
and indices compiled by independent organizations. More detailed information as
to the calculation of performance information, as well as comparisons with
unmanaged market indices, appears in the Statement of Additional Information.
Effective yields and total returns for the Sub-Accounts are based on the
investment performance of the corresponding portfolios of the Investment Funds.
The performance in part reflects the Investment Funds' expenses. See the
Prospectuses for the Investment Funds.
The yield of the Sub-Account investing in the VIP Money Market Portfolio
refers to the annualized income generated by an investment in the Sub-Account
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 the Sub-Account 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 a Sub-Account (except the Money Market Sub-Account investing
in the VIP Money Market Portfolio) refers to the annualized income generated by
an investment in the Sub-Account over a specified 30-day or one-month period.
The yield is calculated by assuming that the income generated by the investment
during that 30-day or one-month period is generated each period over a 12-month
period and is shown as a percentage of the investment.
The total return of a Sub-Account refers to return quotations assuming an
investment under a Contract has been held in the Sub-Account for various periods
of time including, but not limited to, a period measured from the date the
Sub-Account commenced operations. When a Sub-Account has been in operation for
one, five, and ten years, respectively, the total return for these periods will
be provided. For periods prior to the date the Sub-Account commenced operations,
performance information for Contracts funded by the Sub-Accounts will be
calculated based on the performance of the Investment Funds' portfolio's and the
assumption that the Sub-Accounts were in existence for the same periods as those
indicated for the Investment Funds' portfolios, with the level of Contract
charges that were in effect at the inception of the Sub-Accounts for the
Contracts.
The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of each of the periods for which total return quotations are provided. Average
annual total return information shows the average percentage change in the value
of an investment in the Sub-Account from the beginning date of the measuring
period to the end of that period. This version of average annual total return
reflects all historical investment results, less all charges and deductions
applied against the Sub-Account (including any surrender charge that would apply
if an Owner terminated the Contract at the end of each period indicated, but
excluding any deductions for premium taxes.)
Average total return information may be presented and computed on the same
basis as described above, except deductions will not include the surrender
charge. In addition, the Company may from time to time disclose average annual
total return in non-standard formats and cumulative total return for Contracts
funded by the Sub-Accounts.
The Company may, from time to time, also disclose yield and total returns
for the portfolios of the Investment Funds, including such disclosure for
periods prior to the dates the Sub-Accounts commenced operations.
For additional information regarding the calculation of other performance
data, please refer to the Statement of Additional Information.
In advertising and sales literature, the performance of each Sub-Account
may be compared to the performance of other variable annuity issuers in general
or to the performance of particular types of variable annuities investing in
mutual funds, or investment series of mutual funds with investment objectives
similar to each of the Sub-Accounts. Lipper Analytical Services, Inc. ("Lipper")
and the Variable Annuity Research Data Service ("VARDS") are independent
services which monitor and rank the performance of variable annuity issuers in
each of the major categories of investment objectives on an industry-wide basis.
Lipper's rankings include variable life insurance issuers as well as
variable annuity issuers. VARDS rankings compare only variable annuity issuers.
The performance analyses prepared by Lipper and VARDS each rank such issuers on
the basis of total return, assuming reinvestment of distributions, but do not
take sales charges, redemption fees, or certain expense deductions at the
separate account level into consideration. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking provides data as to which funds provide the
highest total return within various categories of funds defined by the degree of
risk inherent in their investment objectives.
Advertising and sales literature may also compare the performance of each
Sub-Account to the Standard & Poor's Composite Index of 500 Stocks, a widely
used measure of stock performance. This unmanaged index assumes the reinvestment
of dividends but does not reflect any "deduction" for the expense of operating
or managing an investment portfolio. Other independent ranking services and
indices may also be used as a source of performance comparison.
The Company may also report other information including the effect of
tax-deferred compounding on a Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from Sub-Account investments are reinvested and can lead
to substantial long-term accumulation of assets, provided that the underlying
portfolio's investment experience is positive.
THE COMPANY
The Company, organized in 1885, is a stock life insurance company
incorporated under the laws of the State of Minnesota. Effective January 3,
1989, the Company converted from a stock and mutual life insurance company to a
stock life insurance company and, through a merger became a direct, wholly-owned
subsidiary of ReliaStar Financial Corp., a holding company incorporated under
the laws of the State of Delaware. The Company offers individual life insurance
and annuities, employee benefits, and retirement contracts. The Company is
admitted to do business in the District of Columbia and all states except New
York. Its home office is at 20 Washington Avenue South, Minneapolis, Minnesota
55401 (telephone 612/372-5507).
The Contracts described in this Prospectus are nonparticipating. The
capital and surplus of the Company should be considered as bearing only upon the
ability of the Company to meet its obligations under the Contracts.
THE VARIABLE ACCOUNT
The Variable Account is a Separate Account of the Company established by
the Board of Directors of the Company on November 12, 1981, pursuant to the laws
of the State of Minnesota. The Company has caused the Variable Account to be
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. Such registration does not
involve supervision by such Commission of the management or investment policies
or practices of the Variable Account, the Company or the Funds.
The assets of the Variable Account are owned by the Company, and the
Company is not a trustee with respect to such assets. However, the Minnesota
laws under which the Variable Account was established provide that the Variable
Account shall not be chargeable with liabilities arising out of any other
business the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. The Contract Value and the amount of
annuity payments will vary, primarily based on the investment performance of the
Funds whose shares are held in the Variable Account Sub-Accounts selected by the
Owner.
Purchase payments allocated to the Variable Account under a Contract are
invested in one or more Sub-Accounts of the Variable Account. These Sub-Accounts
are divided into Sub-Accounts for Contracts issued to or in connection with
Qualified Plans and Sub-Accounts for all other Contracts. Each Sub-Account is
invested in shares of one of the Investment Funds on the list of Investment
Funds provided by the Company. The purchase payments under a Contract are
allocated to the Sub-Account or Sub-Accounts selected by the Owner, and the
future Variable Account Contract Value depends primarily on the investment
performance of the Investment Funds whose shares are held in the Sub-Accounts
selected.
Shares of the Funds are also available to separate accounts for other types
of variable contracts. Although we do not foresee that this will cause any
disadvantages to Owners, for a brief explanation of the conflicts that may be
involved in such situations, refer to the section entitled "FMR and Its
Affiliates" contained in the VIP and VIP II Prospectuses, and the section
entitled "Sales and Redemptions" contained in the Putnam Variable Trust
Prospectus.
The Company or its affiliates may receive compensation from an affiliate or
affiliates of certain of the Funds based upon an annual percentage of the
average net assets held in that Fund by the Company and certain of the Company's
insurance company affiliates. These amounts are intended to compensate the
Company or the Company's affiliates for administrative, record keeping,
distribution, and other services provided by such parties to the Funds and/or
the Funds' affiliates. Payment of such amounts by an affiliate or affiliates of
the Funds do not increase the fees paid by the Funds or their shareholders.
INVESTMENTS OF THE VARIABLE ACCOUNT
When a Contract is applied for, the Owner may elect to have purchase
payments allocated to one or more Sub-Accounts each of which invests in shares
of one of the Investment Funds on the list provided by the Company. The
Sub-Accounts invest in shares of the Investment Funds at their net asset value,
subject to any minimum purchase requirements that may be imposed by the
Investment Funds. The Owner may change a purchase payment allocation for future
purchase payments and may at any time transfer all or part of any existing
values in a Sub-Account to another Sub-Account that invests in shares of another
Investment Fund on the list, subject to any terms and conditions the Investment
Funds may impose on transfers from one Investment Fund to another in addition to
transfer requirements under the Contract.
Fidelity Management & Research Company is the investment adviser for the
five portfolios of VIP and the three portfolios of VIP II, and Putnam Management
is the investment adviser for the four portfolios of Putnam Variable Trust. The
investment advisers are paid fees for their services by the Investment Funds
they manage. The Investment Funds currently offered are described below. A brief
summary of investment objectives is contained in the description of each
Investment Fund. More detailed information may be found in the current
prospectus for each Investment Fund offered, which Investment Fund prospectuses
are combined with this Prospectus and should be read in conjunction herewith.
VARIABLE INSURANCE PRODUCTS FUND (VIP)
VIP is a mutual fund trust currently including five investment portfolios,
each with a different investment objective.
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The portfolio
will invest only in high-quality U.S. dollar denominated money market
instruments of domestic and foreign issuers. An investment in the portfolio is
not insured or guaranteed by the U.S. Government, and there can be no assurance
that the portfolio will maintain a stable asset value per share of $1.00.
HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in lower-rated, fixed-income securities (sometimes referred
to as "junk bonds"), while also considering growth of capital. Lower-rated,
fixed-income securities are considered speculative and involve greater risk of
default than higher-rated, fixed-income securities and are more sensitive to the
issuer's capacity to pay. Consult the VIP prospectus for further information on
the risks associated with the portfolio's investment in lower-rated, fixed
income securities.
EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities the portfolio
will also consider the potential for capital appreciation. The portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks.
GROWTH PORTFOLIO seeks to achieve capital appreciation. The Portfolio
normally purchases common stocks, although its investments are not restricted to
any one type of security. Capital appreciation may also be found in other types
of securities, including bonds and preferred stocks.
OVERSEAS PORTFOLIO seeks long term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
VIP II is a mutual fund trust currently including five investment
portfolios, each with a different investment objective. The following three
portfolios are available within this Contract.
ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term, fixed-income instruments.
INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as
is consistent with the preservation of capital by investing in a broad range of
investment-grade, fixed-income securities.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to
the total return (i.e., the combination of capital changes and income) of common
stocks publicly traded in the United States. In seeking this objective, the
portfolio attempts to duplicate the composition and total return of the Standard
& Poor's Composite Index of 500 Stocks while keeping transaction costs and other
expenses low. The portfolio is designed as a long-term investment option.
PUTNAM VARIABLE TRUST
Putnam Variable Trust is a mutual fund currently offering sixteen
investment funds, each with a different investment objective. Four of these
portfolios are currently available under this Contract.
PUTNAM VT DIVERSIFIED INCOME FUND seeks high current income consistent with
capital preservation by investing in the following three sectors of fixed income
securities markets: a U.S. Government Sector, a High-Yield Sector (which invests
primarily in securities that are commonly known as "junk bonds") and an
international sector. Consult the Putnam Variable Trust Prospectus for further
information on the risks associated with this Fund's investments in high-yield,
higher-risk fixed income securities.
PUTNAM VT GROWTH AND INCOME FUND seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND seeks capital growth and current
income by concentrating its investments in debt and equity securities issued by
companies in the public utilities industries.
PUTNAM VT VOYAGER FUND seeks capital appreciation primarily from a
portfolio of common stocks of companies that Putnam Management believes have
potential for capital appreciation that is significantly greater than that of
market averages.
In the future, additional Investment Funds may be added to the list of
Investment Funds in which the assets of the Variable Account may be invested.
REINVESTMENT
The Investment Funds described above have as a policy the distribution of
income dividend and capital gains. However, under the Contracts described in
this Prospectus there is an automatic reinvestment of such distributions.
SUBSTITUTION OF INVESTMENT FUND SHARES
There are currently twelve Sub-Accounts whose Funds are available for
investment under the Variable Accounts. We reserve the right to establish
additional Sub-Accounts of the Variable Accounts, each of which could invest in
a new fund with a specified investment objective. You are only permitted,
however, to participate in a total of seventeen investment options over the
lifetime of your Contract. You would not have to choose your investment options
in advance, but upon participation in the seventeenth Fund since the issue of
the Contract you would only be able to transfer within the seventeen Funds
already utilized and which are still available.
For example, assume that you select seven investment options. Later, you
transfer out of all of your seven initial selections and choose ten different
Sub-Accounts, none of which are the same as your original seven selections. You
have now used your maximum selection of seventeen Sub-Accounts. You may still
allocate purchase payments or transfer Contract Values among any of the
seventeen Sub-Accounts you have previously selected. However, you may not
allocate funds to the remaining Sub-Accounts at any time. An Owner may transfer
partial or complete Contract Values to the Fixed Account from the Variable
Account at any time.
If the shares of any of the Investment Funds should no longer be available
for investment by a Sub-Account or if in the judgment of the Company's
management investment in such Investment Fund shares has become inappropriate in
view of the purposes of the Contract, the Company may substitute shares of
another Investment Fund for Investment Fund shares already purchased. No
substitution of shares in any Sub-Account may take place without a prior
favorable vote of a majority of the votes entitled to be cast by persons having
a voting interest in the Investment Fund shares allocated to such Sub-Account
and prior approval of the Securities and Exchange Commission.
If a purchase payment for a selected Sub-Account is unable to be invested
because shares of the applicable Investment Fund are no longer available for
investment or if in the judgment of the Company's management further investment
in such Investment Fund shares would be inappropriate in view of the purposes of
the Contract, the Owner will be so notified and may direct investment of the
purchase payment in a different Sub-Account, which investment will be made on
the next Valuation Date after such direction is received by the Company. Until
receipt of such direction, the purchase payment will be invested in shares of
the VIP Money Market Portfolio.
CHARGES MADE BY THE COMPANY
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, the surrender charge described below (which may be deemed a
contingent deferred sales charge), when it is applicable, is intended to
reimburse the Company for expenses relating to the sale of the Contracts,
including commissions to sales personnel, costs of sales material and other
promotional activities and sales administration costs. Commissions and other
distribution compensation to be paid on the sale of the Contracts will not be
more than 7.00% of the purchase payments.
If part or all of a Contract's value is surrendered, surrender charges may
be made by the Company. For purposes of the following surrender charge
description, "New Purchase Payments" are those Contract purchase payments
received by the Company during the Contract Year in which the surrender occurs
or in the four immediately preceding Contract Years; "Old Purchase Payments" are
those Contract purchase payments not defined as New Purchase Payments; and
"Contract Earnings" at any Valuation Date is the Contract Value less the sum of
New Purchase Payments and Old Purchase Payments.
For purposes of determining surrender charges, surrenders shall first be
taken from Old Purchase Payments until they are exhausted, then from New
Purchase Payments until they are exhausted, and thereafter from Contract
Earnings.
The following amounts ("Free Surrenders") are not subject to a surrender
charge during any Contract Year: (a) any Old Purchase Payments not already
surrendered; (b) 10% of all New Purchase Payments that have been received by the
Company (however, this does not apply to surrenders made during the first
Contract Year); and (c) any Contract Earnings being surrendered.
Partial surrenders may be made in an amount not greater than the sum of the
following: (a) amounts eligible for a Free Surrender (including Contract
Earnings); and (b) 95% of New Purchase Payments not eligible for a Free
Surrender. In the event of a partial surrender, the amount of the partial
surrender subject to a surrender charge will be determined by dividing the
amount being surrendered which is not eligible for a Free Surrender by 0.95. The
surrender charge to be assessed by the Company in the event of a partial
surrender will be equal to 5% of the amount of the partial surrender subject to
a surrender charge determined as described in the preceding sentence.
In the event of a total surrender of a Contract for its full value, the
surrender charge to be assessed by the Company will be equal to 5% of the amount
being surrendered which is not eligible for a Free Surrender.
If the surrender charge is less than the Contract Value that remains
immediately after surrender, it will be deducted proportionately from the
Sub-Accounts that make up such Contract Value. If the surrender charge is more
than such remaining Contract Value, the portion of the surrender charge that can
be deducted from such remaining Contract Value will be so deducted and the
balance will be deducted from the surrender payment. In computing surrenders,
any portion of a surrender charge that is deducted from the remaining Contract
Value will be deemed a part of the surrender.
ADMINISTRATIVE CHARGE
Each year on the Contract Anniversary, the Company deducts from the
Contract Value an annual administrative charge of $30 In any Contract Year when
a Contract is surrendered for its full value on other than the Contract
Anniversary, the administrative charge will be deducted at the time of such
surrender. During the annuity period the annual administrative charge will be
divided by the number of payments to be made in a twelve-month period and the
resulting amount will be deducted from each payment.
MORTALITY RISK PREMIUM
The variable annuity payments made to Annuitants will vary in accordance
with the investment performance of the Sub-Accounts selected by the Owner.
However, they will not be affected by the mortality experience (death rate) of
persons receiving annuity payments from the Variable Account. The Company
assumes this "mortality risk" and has guaranteed the annuity rates incorporated
in the Contract, which cannot be changed.
To compensate the Company for assuming this mortality risk and the
mortality risk that Beneficiaries of Annuitants dying before the Annuity
Commencement Date may receive amounts in excess of the then current Contract
Value (see "Death Benefit Before the Annuity Commencement Date" on page 15), the
Company deducts a Mortality Risk Premium from the Variable Account Contract
Value. The deduction is made daily in an amount that is equal to an annual rate
of 0.9% of the daily Contract Values under the Variable Account. The Company may
not change the rate charged for the Mortality Risk Premium under any Contract.
EXPENSE RISK CHARGE
The Company will not increase charges for administrative expenses
regardless of its actual expenses. To compensate the Company for assuming this
expense risk, the Company deducts an Expense Risk Charge from Variable Account
Contract Value. The deduction is made daily in an amount that is equal to an
annual rate of 0.4% of the daily Variable Account Contract Values. The Company
may not change the rate of the Expense Risk Charge under any Contract.
PREMIUM TAXES
Various states and other governmental entities levy a premium tax,
currently ranging up to 3.50%, on annuity contracts issued by insurance
companies. If the Owner of the Contract lives in a governmental jurisdiction
that levies such a tax, the Company will deduct the amount of the tax either
from purchase payments as they are received or from the Contract Value applied
to an Annuity Form at the Annuity Commencement Date as required by applicable
law.
The current range of premium tax rates is a guide only and should not be
relied on to determine actual premium taxes on any purchase payment or Contract
because the taxes are subject to change from time to time by legislative and
other governmental action. The timing of tax levies also varies from one taxing
authority to another. Consequently, in many cases the purchaser of a Contract
will not be able to accurately determine the premium tax applicable to the
Contract by reference to the range of tax rates described above.
EXPENSES OF THE INVESTMENT FUNDS
There are deductions from and expenses paid out of the assets of the
Investment Funds that are described in the accompanying prospectuses for the
Funds.
ADMINISTRATION OF THE CONTRACTS
The Company has entered into a contract with Continuum Administrative
Services Corporation (formerly known as Vantage Computer Systems, Inc.), Kansas
City, Missouri ("CASC") under which CASC has agreed to perform certain
administrative functions relating to the Contracts and the Variable Account.
These functions include, among other things, maintaining the books and records
of the Variable Account and the Sub-Accounts, and maintaining records of the
name, address, taxpayer identification number, Contract number, type of Contract
issued to each Owner, Contract Value and other pertinent information necessary
to the administration and operation of the Contracts.
THE CONTRACTS
The Contracts described in this Prospectus are designed for retirement
plans which may or may not be Qualified Plans. Usually a single purchase payment
will be made for a deferred annuity, although subsequent purchase payments are
allowed under the Contract. The minimum amount the Company will accept as an
initial purchase payment is $2,500. However, if the Contract is purchased by or
in connection with a Qualified Plan, the minimum amount of purchase payments the
Company will accept during the first Contract Year will be $600, with no
individual payment to be less than $50. The Company may choose not to accept any
subsequent purchase payment if it is less than $50 or if the purchase payment
together with the Contract Value at the next Valuation Date exceeds $250,000
(any such purchase payment not accepted by the Company will be refunded).
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments may be allocated to the Fixed Account (see Appendix A)
and/or to Sub-Accounts of the Variable Account selected by the Owner.
Purchase payments will be allocated to the appropriate Sub- Accounts not
later than two business days after receipt, if the application and all
information necessary for processing the Contract are complete. The Company may
retain purchase payments for up to five business days while attempting to
complete an incomplete application. If the application cannot be made complete
within this period, the applicant will be informed of the reasons for the delay
and the purchase payment will be returned immediately unless the applicant
consents to retention of the payment by the Company until the application is
made complete. Thereafter the payment must be allocated within two business
days. For any subsequent purchase payments, the payments will be credited at the
Sub-Account Accumulation Unit Value next determined after receipt of the
purchase payment.
Upon allocation to Sub-Accounts of the Variable Account, a purchase payment
is converted into Accumulation Units of the Sub- Account. The amount of the
purchase payment allocated to a particular Sub-Account is divided by the value
of an Accumulation Unit for the Sub-Account to determine the number of
Accumulation Units of the Sub-Account to be held in the Variable Account with
respect to the Contract. The net investment results of each Sub- Account vary
primarily with the investment performance of the Investment Fund whose shares
are held in the Sub-Account.
In the event any Investment Fund in the future imposes a minimum purchase
requirement that is in excess of the aggregate of all purchase payments received
on any given day that are to be applied to the purchase of shares of such
Investment Fund, such purchase payments will be refunded.
SUB-ACCOUNT ACCUMULATION UNIT VALUE
Each Sub-Account Accumulation Unit was initially valued at $10 when the
first Investment Fund shares were purchased. Thereafter the value of each
Sub-Account Accumulation Unit will vary up or down according to a Net Investment
Factor, which is primarily based on the investment performance of the applicable
Investment Fund. Investment Fund shares in the Sub-Accounts will be valued at
their net asset value.
Dividend and capital gain distributions from an Investment Fund will be
automatically reinvested in additional shares of such Investment Fund and
allocated to the appropriate Sub-Account. The number of Sub- Account
Accumulation Units does not increase because of the additional shares, but the
Accumulation Unit value may increase.
NET INVESTMENT FACTOR
The Net Investment Factor is an index number which is primarily based on
the investment performance during a Valuation Period of the Fund whose shares
are held in the particular Sub-Account. If the Net Investment Factor is greater
than one, the value of a Sub-Account Accumulation Unit has increased. If the Net
Investment Factor is less than one, the value of a Sub-Account Accumulation Unit
has decreased. The Net Investment Factor is determined by dividing (1) by (2)
then subtracting (3) from the result, where:
(1) is the net result of:
(a) the net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the current Valuation
Period, plus
(b) the per share amount of any dividend or capital gain
distributions made on the Fund shares held in the Sub-Account
during the current Valuation Period, plus or minus
(c) a per share charge or credit for any taxes provided for which the
Company determines to have resulted from the investment
operations of the Sub-Account and to be applicable to the
Contract;
(2) is the net result of:
(a) the net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the last prior Valuation
Period, plus or minus
(b) a per share charge or credit for any taxes reserved for during
the last prior Valuation Period which the Company determines to
have resulted from the investment operations of the Sub-Account
and to be applicable to the Contract; and
(3) is a factor representing the Mortality Risk Premium and Expense Risk
Charge deducted from the Sub-Account, which factor is equal, on an
annual basis, to 1.3% of the daily net asset value of the Sub-Account.
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
If the Owner or primary Annuitant dies before the Annuity Commencement
Date, the Beneficiary will be entitled to receive the Contract Value as of the
Valuation Date next after the Company receives (a) proof of the Owner's or
primary Annuitant's death and (b) a written request from the Beneficiary for
either a single sum payment or an Annuity form. For this purpose the Contract
Value will be:
(1) if any Owner or primary Annuitant dies on or before the first day of
the month following the Annuitant's 75th birthday, the greater of (i)
the Contract Value at such Valuation Date, or (ii) the sum of the
purchase payments received by the Company under the Contract to such
Valuation Date, less any surrender payments previously made by the
Company; or
(2) if any Owner or primary Annuitant dies after the first day of the
month following the Annuitant's 75th birthday, the Contract Value at
such Valuation Date.
If a single sum is requested, it will be paid within seven days after such
Valuation Date. If an Annuity Form is requested, it may be any Annuity Form the
Owner could have selected before the Annuity Commencement Date, provided (a) the
payment schedule of the Annuity Form does not exceed the life expectancy of the
Beneficiary, (b) payment begins within 12 months from the date of the Owner's or
Annuitant's death, and (c) the Annuity Form is selected within eleven months of
the date of such death. An alternative selection is to commence payment as in
(b) above and have payments completed within 5 years. An Annuity Form selection
must be in writing and received by the Company within 90 days after such
Valuation Date, otherwise the Contract Value as of such Valuation Date will be
paid in a single sum to the Beneficiary and the Contract will be canceled.
If the only Beneficiary is the Owner's surviving spouse, such spouse may
continue the Contract as the Owner, and then (1) select a single sum payment, or
(2) select any Annuity Form which does not exceed such spouse's life expectancy.
If the Beneficiary elects to receive annuity payments under an Annuity
Form, the amount and duration of payments may vary depending on the Annuity Form
selected and whether fixed and/or variable annuity payments are requested. (See
"Annuity Provisions" beginning on page 19.)
DEATH BENEFIT AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, the death
benefit shall be as stated in the Annuity Form in effect.
SURRENDER (REDEMPTION)
If a written request therefor from the Owner is received by the Company
before the Annuity Commencement Date, all or part of the Contract Value will be
paid to the Owner after deducting any applicable surrender charge and taxes.
(See "Surrender Charge (Contingent Deferred Sales Charge)" on page 13.) In
addition, if a total surrender occurs other than on a Contract Anniversary the
annual administrative charge will be deducted from the Contract Value before the
surrender payment is made. Surrenders must be consented to by each collateral
assignee and if in excess of $50,000 must be signature guaranteed by a member
firm of the New York, American, Boston, Midwest, Philadelphia, or Pacific Stock
Exchange, or by a commercial bank (not a savings bank) which is a member of the
Federal Deposit Insurance Corporation, or, in certain cases, by a member firm of
the National Association of Securities Dealers, Inc. that has entered into an
appropriate agreement with the Company.
The Company may require that the Contract be returned before a surrender
takes place. A surrender will take place on the next Valuation Date after the
requirements for surrender are completed and payment will be made within seven
days after such Valuation Date. If a surrender is partial and unless the Owner
requests the surrender to be made from the Fixed Account or particular Sub-
Accounts, the surrender payments will be taken proportionately from the Fixed
Account and all Sub-Accounts on a basis that reflects their proportionate
percentage of the Contract Value.
The Company may cancel the Contract on any Contract Anniversary, or if such
Contract Anniversary is not a Valuation Date on the next Valuation Date
thereafter, by paying to the Owner the Contract Value as of such Valuation Date
if such Contract Value after all charges is less than $1,000.
If this Contract is purchased as a "tax-sheltered annuity" under Section
403(b) of the Internal Revenue Code (the "Code"), it is subject to certain
restrictions on redemption imposed by Section 403(b)(11) of the Code (See
"Tax-Sheltered Annuities" on page 25). These restrictions on redemption are
imposed by the Variable Account and the Company in full compliance with and in
reliance upon the terms and conditions of a no-action letter issued by the
Office of Insurance Products and Legal Compliance of the Securities and Exchange
Commission to the American Council of Life Insurance (publicly available
November 28, 1988).
For tax purposes, surrender payments shall be deemed to be from earnings
and then gains until cumulative surrender payments equal all accumulated
earnings and gains, and thereafter from purchase payments received by the
Company. Consideration should be given to the tax implications of a surrender
prior to making a surrender request, including a surrender in connection with a
Qualified Plan.
TRANSFERS
Prior to the Annuity Commencement Date the Owner may request a transfer in
writing (or by telephone or facsimile if a telephone/fax authorization form has
been completed and is in effect), subject to any conditions the Investment Funds
whose shares are involved may impose, of all or part of a Sub-Account's value to
other Sub-Accounts or to the Fixed Account. The transfer will be made by the
Company on the first Valuation Date after the request for such a transfer is
received by the Company (provided that under certain circumstances large
transfers may be delayed until proceeds from related Investment Fund share
redemptions are received, which may be for up to seven days). There is no charge
for such a transfer, other than those that may be made by the Investment Funds.
To accomplish the transfer, the Variable Account will surrender Accumulation
Units in the particular Sub-Accounts and reinvest that value in Accumulation
Units of other particular Sub-Accounts appropriate for the Contract as directed
in the request. After the Annuity Commencement Date, the Annuitant may request
transfer of Annuity Unit values in the same manner and subject to the same
requirements as for an Owner-transfer of Sub-Account Accumulation Unit values.
Transfers may also be requested from the Fixed Account to the Variable
Account, provided, however, that (a) transfers may only be made during the
period starting 30 days before and ending 30 days after the Contract
Anniversary, and only one transfer may be made during each such period, (b) no
more than 50% of the Fixed Account Contract Value may be the subject of any such
transfer (unless the balance, after such transfer, would be less than $1,000, in
which case the full Fixed Account Contract Value may be transferred), and (c)
such transfer must involve at least $500 (or the total Fixed Account Contract
Value, if less).
If the Owner elects to complete the telephone/fax transfer form, the Owner
in so doing agrees that the Company and its Contract Administrator will not be
liable for any loss, liability, cost or expense when the Company, and/or the
Contract Administrator act in accordance with the telephone transfer
instructions which are received and, if by telephone, are recorded on voice
recording equipment. If a telephone transfer, processed after the Owner has
completed the telephone/fax transfer form, is later determined not to have been
made by the Owner or was made without the Owner's authorization, and a loss
results from such unauthorized transfer, the Owner bears the risk of this loss.
Any requests made via facsimile transmission are considered telephone requests
and are governed by the conditions in the telephone/fax transfer form you sign.
Any fax request should include your name, daytime telephone number, Contract
number, and the names of the Sub-Accounts and applicable allocation percentage
from which and to which money will be transferred. The Company will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. In the event the Company does not employ such procedures, the Company
may be liable for any losses due to unauthorized or fraudulent instructions.
Such procedures may include, among others, requiring forms of personal
identification prior to acting upon telephone instructions, providing written
confirmation of such instructions and/or tape recording telephone instructions.
ASSIGNMENTS
If the Contract is issued pursuant to or in connection with a Qualified
Plan, it may not be sold, transferred, pledged or assigned to any person or
entity other than the Company. In other circumstances, a transfer or assignment
of the Contract is permitted but may not be made after the Annuity Commencement
Date. Before the Annuity Commencement Date the Owner may assign or transfer all
rights under the Contract by giving the Company the original or a certified copy
of the assignment or transfer. The Company shall not be bound by any assignment
or transfer until it is actually received by the Company and shall not be
responsible for the validity of any assignment or transfer. Any payments made or
actions taken by the Company before the Company actually receives any assignment
or transfer shall not be affected by the assignment or transfer.
CONTRACT OWNER AND BENEFICIARIES
Unless someone else is named as the Owner in the application for the
Contract, the applicant is the Owner of the Contract and before the Annuity
Commencement Date may exercise all of the Owner's rights under the Contract.
The Owner may name a Beneficiary and a Successor Beneficiary. In the event
the Owner or Annuitant dies before the Annuity Commencement Date, the
Beneficiary shall receive the Contract Value according to the death benefit
provisions of the Contract. In the event the Owner or Annuitant dies on or after
the Annuity Commencement Date, the Beneficiary shall receive payments according
to the Annuity Form in effect. If the Beneficiary is not living on the date
payment is due or if no Beneficiary has been named, the last to survive of the
Owner and Annuitant will receive the Contract Value. If none of the Owner, the
Annuitant or the Beneficiary is living at the time the payment is due, the
Contract Value will be paid to the estate of the last to survive of the Owner,
the Annuitant and the Beneficiary.
A person named as an Annuitant, a Beneficiary or a Successor Beneficiary
shall not be entitled to exercise any rights relating to the Contract or to
receive any payments or settlements under the Contract or any Annuity Form,
unless such person is living on the earlier of (a) the day due proof of death of
the Owner, the Annuitant or the Beneficiary, whichever is applicable, is
received by the Company or (b) the tenth day after the death of the Owner, the
Annuitant or the Beneficiary, whichever is applicable.
Unless different arrangements have been made with the Company by the Owner,
if more than one Beneficiary is entitled to payments from the Company the
payments shall be in equal shares.
Before the Annuity Commencement Date and while the named Annuitant is
living, the Owner may change the Annuitant, the Beneficiary or the Successor
Beneficiary by giving the Company written notice of the change, but the change
shall not be effective until actually received by the Company. Upon receipt by
the Company of a notice of change, it will be effective as of the date it was
signed but shall not affect any payments made or actions taken by the Company
before the Company received the notice, and the Company shall not be responsible
for the validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to the Annuity
Service Center, P.O. Box 13208, Kansas City, Missouri 64199-3208.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
The Owner selects the Annuity Commencement Date, which must be the first
day of a month, when making application for the Contract. The date will be the
first day of the month following the Annuitant's 75th birthday unless an earlier
or later date has been selected by the Owner and, if the date is later, it has
been agreed to by the Company. The Owner may change an Annuity Commencement Date
selection by written notice received by the Company at least 30 days before both
the Annuity Commencement Date currently in effect and the New Annuity
Commencement Date. The new date selected must satisfy the requirements for an
Annuity Commencement Date. If the Annuity Commencement Date selected by the
Owner does not occur on a Valuation Date, at least 60 days after the date on
which the Contract was issued, the Company reserves the right to adjust the
Annuity Commencement Date to the first Valuation Date after the Annuity
Commencement Date selected by the Owner and which is at least 60 days after the
Contract issue date.
ANNUITY FORM SELECTION - CHANGE
The Owner may select an Annuity Form with payments starting at the Annuity
Commencement Date when making application for the Contract. The Owner may also
change a choice of Annuity Form by written notice received by the Company before
the Annuity Commencement Date.
ANNUITY FORMS
Any one of the following Annuity Forms may be selected (all provide for
variable payments):
LIFE ANNUITY - An annuity payable on the first day of each month during the
Annuitant's life, starting with the first payment due according to the Contract.
Payments cease with the payment made on the first day of the month in which the
Annuitant's death occurs. IT WOULD BE POSSIBLE UNDER THIS ANNUITY FORM FOR THE
ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT, ONLY TWO PAYMENTS IF HE OR SHE DIED AFTER THE THIRD ANNUITY
PAYMENT, ETC.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (120 MONTHS) OR 20 YEARS
(240 MONTHS) - An annuity payable on the first day of each month during the
Annuitant's life, starting with the first payment due according to the Contract.
If the Annuitant receives all of the guaranteed payments, payments will continue
thereafter but cease with the payment made on the first day of the month in
which the Annuitant's death occurs. If all of the guaranteed payments have not
been made before the Annuitant's death, the unpaid installments of the
guaranteed payments will be continued to the Beneficiary.
JOINT AND FULL SURVIVOR ANNUITY - An annuity payable on the first day of
each month during the Annuitant's life and the life of a named person (the
"Joint Annuitant"), starting with the first payment due according to the
Contract. Payments will continue while either the Annuitant or the Joint
Annuitant is living and cease with the payment made on the first day of the
month in which the death of the Annuitant or the Joint Annuitant, whichever
lives longer, occurs. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER
THIS ANNUITY FORM. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVOR OF THE
ANNUITANT AND THE JOINT ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
The Company also has other annuity forms available and information about
them can be obtained by writing to the Company.
AUTOMATIC ANNUITY FORM
If no valid selection of an Annuity Form has been made by the Annuity
Commencement Date, the Life Annuity with Payments Guaranteed for 10 years (120
Months) shall be automatically effective.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments, unless the Annuitant
and the Company agree to a different payment schedule. However, if the Contract
Value at the Annuity Commencement Date is less than $2,500, the Company may pay
the Contract Value in a single sum and the Contract will be canceled. Also if a
monthly payment would be or become less than $50, the Company may change the
frequency of payments to intervals that will result in payments of at least $50
each.
ANNUITY PAYMENTS
The amount of the first fixed annuity payment is determined by applying the
Contract Value to be used for a fixed annuity at the Annuity Commencement Date
to the annuity table in the Contract for the fixed Annuity Form selected. The
table shows the amount of the initial annuity payment for each $1,000 applied
and all subsequent payments shall be equal to this amount. The amount of the
first variable annuity payment is determined by applying the Contract Value to
be used for a variable annuity at the Annuity Commencement Date to the annuity
table in the Contract for the Annuity Form selected. The table shows the amount
of the initial annuity payment for each $1,000 applied.
Subsequent variable annuity payments vary in amount in accordance with the
investment performance of the applicable Sub-Account. Assuming annuity payments
are based on the unit values of a single Sub-Account, the dollar amount of the
first annuity payment, determined as set forth above, is divided by the
Sub-Account Annuity Unit Value as of the Annuity Commencement Date to establish
the number of Variable Annuity Units representing each annuity payment. This
number of Variable Annuity Units remains fixed during the annuity payment
period. The dollar amount of the second and subsequent payments is not
predetermined and may change from month to month. The dollar amount of the
second and each subsequent payment is determined by multiplying the fixed number
of Variable Annuity Units by the Sub-Account Annuity Unit Value for the
Valuation Period with respect to which the payment is due. If the monthly
payment is based upon the Annuity Unit Values of more than one Sub-Account, the
foregoing procedure is repeated for each applicable Sub- Account and the sum of
the payments based on each Sub-Account is the amount of the monthly annuity
payment. The appropriate portion of the annual administrative charge is then
deducted from each monthly annuity payment.
A proportionate amount of the administrative charge will be deducted from
each annuity payment.
The annuity tables in the Contracts are based on the 1971 Individual
Annuity Mortality Table (set back two years).
The Company guarantees that the dollar amount of each variable annuity
payment after the first payment will not be affected by variations in expenses
or in mortality experience from the mortality assumptions used to determine the
first payment.
SUB-ACCOUNT ANNUITY UNIT VALUE
A Sub-Account's Variable Annuity Units will initially be valued at $10 each
at the time Accumulation Units with respect to the Sub-Account are first
converted into Variable Annuity Units. The Sub-Account Annuity Unit Value for
any subsequent Valuation Period is determined by multiplying the Sub-Account
Annuity Unit Value for the immediately preceding Valuation Period by the Net
Investment Factor for the Sub-Account for the Valuation Period for which the
Sub-Account Annuity Unit Value is being calculated, and multiplying the result
by an interest factor to neutralize the assumed investment rate of 4% per annum
built into the annuity tables contained in the Contracts. (See "Net Investment
Factor" on page 16.)
ASSUMED INVESTMENT RATE
A 4% assumed investment rate is built into the annuity tables contained in
the Contracts. A higher assumption would mean a higher initial payment but more
slowly rising and more rapidly falling subsequent payments. A lower assumption
would have the opposite effect. If the actual net investment rate were at the
annual rate of 4%, the annuity payments would be level.
FEDERAL TAX STATUS
INTRODUCTION
THIS DISCUSSION IS GENERAL AND NOT INTENDED AS TAX ADVICE. The 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. The Contracts are designed for use by individuals in
connection with retirement plans which may or may not be Qualified Plans under
the provisions of the Internal Revenue Code (the "Code"). The ultimate effect of
federal income taxes on the Contract Value, on annuity payments and on the
economic benefit to the Owner, the Annuitant or the Beneficiary depends upon the
type of retirement plan for which the Contract is purchased, and upon the tax
and employment status of the individual concerned. No attempt is made to
consider any applicable state or other tax laws. The discussion is based on the
Company's understanding of Federal Income Tax Laws as currently interpreted. No
representation is made regarding the likelihood of the continuation of the
present Federal Income Tax Laws or the current interpretation by the Internal
Revenue Service ("IRS").
The Contract may be purchased on a non-qualified basis ("Non- Qualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). The Qualified Contract is
designed for use by individuals whose premium payments are comprised solely of
proceeds from and/or contributions under retirement plans which are intended to
qualify as plans entitled to special income tax treatment under Sections 401(a),
403(b), or 408 of the Code. The ultimate effect of Federal income taxes on the
amounts held under a Contract, or annuity payments, and on the economic benefit
to the Owner, the Annuitant, or the Beneficiary depends on the type of
retirement plan, on the tax and employment status of the individual concerned,
and on the Company's tax status. In addition, certain requirements must be
satisfied in purchasing a Qualified Contract with proceeds from a tax-qualified
plan and receiving distributions from a Qualified Contract in order to continue
receiving favorable tax treatment. Therefore, purchasers of Qualified Contracts
should seek competent legal and tax advice regarding the suitability of a
Contract for their situation, the applicable requirements, and the tax treatment
of the rights and benefits of a Contract. The following discussion assumes that
Qualified Contracts are purchased with proceeds from and/or contributions under
retirement plans that qualify for the intended special Federal income tax
treatment.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code provides that separate account investments
underlying a contract must be "adequately diversified" in accordance with
Treasury regulations in order for the contract to qualify as an annuity contract
under Section 72 of the Code. The Variable Account, through each of the
Investment Funds, intends to comply with the diversification requirements
prescribed in regulations under Section 817(h) of the Code, which affect how the
assets in the various Sub-Accounts may be invested. Although the Company does
not have control over the Investment Funds in which the Variable Account
invests, the Company expects that each Investment Fund in which the Variable
Account owns shares will meet the diversification requirements and that the
Contract will be treated as an annuity contract under the Code.
The Treasury has also announced that the diversification regulations do not
provide guidance concerning the extent to which Owners may direct their
investments to particular Sub- Accounts of a variable account or how
concentrated the investments of the Investment Funds underlying a variable
account may be. It is possible that if additional guidance in this regard is
issued, the Contract may need to be modified to comply with such additional
guidance. For these reasons, the Company reserves the right to modify the
Contract as necessary to attempt to prevent the Owner from being considered the
owner of the assets of the Investment Funds or otherwise to qualify the contract
for favorable tax treatment.
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for Federal income tax
purposes, Section 72(s) of the Code also requires any Non- Qualified Contract to
provide that: (a) if any Owner dies on or after the Annuity Commencement Date
but prior to the time the entire interest in the Contract has been distributed,
the remaining portion of such interest will be distributed at least as rapidly
as under the method of distribution being used as of the date of that Owner's
death; and (b) if any Owner dies prior to the Annuity Commencement Date, the
entire interest in the Contract will be distributed within five years after the
date of the Owner's death. These requirements will be considered satisfied as to
any portion of the Owner's interest which is payable to or for the benefit of a
"designated Beneficiary" and which is distributed over the life of such
Beneficiary or over a period not extending beyond the life expectancy of that
Beneficiary, provided that such distributions begin within one year of that
Owner's death. The Owner's "designated Beneficiary" is the person designated by
such owner as a Beneficiary and to whom ownership of the Contract passes by
reason of death and must be a natural person. However, if the owner's
"designated Beneficiary" is the surviving spouse of the Owner, the Contract may
be continued with the surviving spouse as the new Owner. If the Owner is not an
individual, any change in the primary Annuitant is treated as a change of Owner
for tax purposes.
The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code Section 72(s) when clarified by regulation or
otherwise. Other rules may apply to Qualified Contracts.
TAXATION OF ANNUITIES
IN GENERAL
Section 72 of the Code governs taxation of annuities in general. The
Company believes that an Owner who is a natural person generally is not taxed on
increases in the value of a Contract until distribution occurs by withdrawing
all or part of the Contract Value (e.g., partial withdrawals and complete
surrenders) or as annuity payments under the Annuity Form selected. For this
purpose, the assignment, pledge, or agreement to assign or pledge any portion of
the Contract Value (and in the case of a Qualified Contract, any portion of an
interest in the qualified plan) generally will be treated as a distribution. The
taxable portion of a distribution (in the form of a single sum payment or
annuity) is taxable as ordinary income.
The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the net surrender value
over the "investment in the contract" during the taxable year. The Company
restricts ownership of Non- Qualified Contracts to no more than two natural
persons.
The following discussion generally applies to Contracts owned by natural
persons.
SURRENDERS
In the case of a surrender from a Qualified Contract, under Section 72(e)
of the Code a ratable portion of the amount received is taxable, generally based
on the ratio of the "investment in the contract" to the participant's total
accrued benefit or balance under the retirement plan. The "investment in the
contract" generally equals the portion, if any, of any premium payments paid by
or on behalf of any individual under a Contract which was not excluded from the
individual's gross income. For Contracts issued in connection with qualified
plans, the "investment in the contract" can be zero. Special tax rules may be
available for certain distributions from Qualified Contracts.
In the case of a surrender (including Systematic Withdrawals) from a
Non-Qualified Contract before the Annuity Commencement Date, under Code Section
72(e) amounts received are generally first treated as taxable income to the
extent that the Contract Value immediately before surrender exceeds the
"investment in the contract" at that time. Any additional amount surrendered is
not taxable.
In the case of a full surrender under a Qualified or Non-Qualified
Contract, the amount received generally will be taxable only to the extent it
exceeds the "investment in the contract."
A Federal penalty tax may apply to certain surrenders from Qualified and
Non-Qualified Contracts. (See "Penalty Tax on Certain Distributions" on page
23.)
ANNUITY PAYMENTS
Although tax consequences may vary depending on the Annuity Form selected
under the Contract, in general, only the portion of the Annuity Payment that
represents the amount by which the Contract 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. For variable annuity
payments, the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed. The
dollar amount is determined by dividing the investment in the contract by the
total number of expected periodic payments. However, the entire distribution
will be taxable once the recipient has recovered the dollar amount of his or her
investment in the contract. For fixed annuity payments, in general, there is no
tax on the portion of each payment which represents the same ratio that the
investment in the contract bears to the total expected value of the annuity
payments for the term of the payments; however, the remainder of each annuity
payment is taxable until the recovery of the investment in the Contract, and
thereafter the full amount or each annuity payment is taxable.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an Owner
or an Annuitant. Generally, such amounts are includible in the income of the
recipient as follows: (i) if distributed in a lump sum, they are taxed in the
same manner as a full surrender of the contract; or (ii) if distributed under a
payment option, they are taxed in the same way as annuity payments.
PENALTY TAX ON CERTAIN DISTRIBUTIONS
In the case of a distribution pursuant to a Non-Qualified Contract, a
Federal penalty equal to 10% of the amount treated as taxable income may be
imposed. In general, however, there is no penalty on distributions:
1. made on or after the taxpayer reaches age 591/2;
2. made on or after the death of the holder (a holder is considered an
Owner) (or if the holder is not an individual, the death of the
primary annuitant);
3. attributable to the taxpayer's becoming disabled;
4. a part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her designated beneficiary;
5. made under an annuity contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase
of the annuity and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period; and
6. made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified
Contract, as well as to certain contributions to, loans from, and other
circumstances, applicable to the Qualified Plan of which the Qualified Contract
is part.
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. Although as of the date of this prospectus Congress is not
considering any legislation regarding the taxation of annuities, there is always
the possibility that 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).
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership or assignment 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 certain tax consequences to the Owner that are not
discussed herein. An Owner contemplating any such transfer, assignment, or
exchange of a Contract should contact a competent tax adviser with respect to
the potential tax effects of such a transaction.
WITHHOLDING
Pension and annuity distribution 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. Effective January 1, 1993, distributions from certain qualified
plans are generally subject to mandatory withholding. Withholding for Contracts
issued to retirement plans established under Section 401 of the Code is the
responsibility of the plan trustee.
MULTIPLE CONTRACTS
Section 72(e)(11) of the Code treats all non-qualified deferred annuity
contracts entered into after October 21, 1988 that are issued by the Company (or
its affiliates) to the same Owner during any calendar year as one annuity
contract for purposes of determining the amount includible in gross income under
Code Section 72(e). The effects of this rule are not yet clear; however, it
could affect the time when income is taxable and the amount that might be
subject to the 10% penalty tax described above. 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. There may also be other situations in which the Treasury may conclude
that it would be appropriate to aggregate two or more annuity contracts
purchased by the same Owner. Accordingly, an Owner should consult a competent
tax adviser before purchasing more than one annuity contract.
TAXATION OF QUALIFIED PLANS
The Contracts are designed for use with several types of qualified plans.
The tax rules applicable to participants in these qualified plans vary according
to the type of plan and the terms and conditions of the plan itself. Special
favorable tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 591/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Therefore, no attempt is
made to provide more than general information about the use of the Contracts
with the various types of qualified retirement plans. Contract Owners, the
Annuitants, and Beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract, but the Company shall not be bound by the terms and conditions of
such plans to the extent such terms contradict the Contract, unless the Company
consents. Brief descriptions follow of the various types of qualified retirement
plans in connection with a Contract. The Company will amend the Contract as
necessary to conform it to the requirements of such plan.
PENSION AND PROFIT SHARING PLANS
Section 401(a) of the Code permits employers and self-employed persons to
establish various types of retirement plans for employees. Such retirement plans
may permit the purchaser of the Contract to provide benefits under the plans.
Persons intending to use the Contract with such plans should seek competent
advice.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity" or
"IRA". These IRAs are subject to limits on the amount that may be contributed,
the persons who may be eligible, and on the time when distributions may
commence. Also, distributions from certain other types of qualified retirement
plans may be "rolled over" on a tax- deferred basis into an IRA. Sales of the
Contract for use with IRAs may be subject to special requirements of the IRS.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section 501(c)(3)
organizations and public schools to exclude from their gross income the premiums
paid, within certain limits, on a Contract that will provide an annuity for the
employee's retirement. Code section 403(b)(11) restricts the distribution under
Code section 403(b) annuity contracts of: (1) elective contributions made in
years beginning after December 31, 1988; (2) earnings on those contributions;
and (3) earnings in such years on amounts held as of the last year beginning
before January 1, 1989. Distribution of those amounts may only occur upon death
of the employee, attainment of age 591/2, separation from service, disability,
or financial hardship. In addition, income attributable to elective
contributions may not be distributed in the case of hardship.
POSSIBLE CHARGE FOR THE COMPANY'S TAXES
At the present time, the Company makes no charge to the Sub- Accounts for
any Federal, state, or local taxes that the Company incurs which may be
attributable to such Sub-Accounts or to the Contracts. The Company, however,
reserves the right in the future to make a charge for any such tax laws that it
determines to be properly attributable to the Sub-Accounts of the Contracts.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are not exhaustive, and special rules are provided with
respect to other tax situations not discussed in this Prospectus. Further, the
Federal income tax consequences discussed herein reflect the Company's
understanding of current law and the law may change. Federal estate and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under 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.
VOTING OF FUND SHARES
As long as the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 and the assets of the Variable Account
are allocated to Sub-Accounts that are invested in Investment Fund shares, the
Investment Fund shares held in the Sub-Accounts will be voted by the Company in
accordance with instructions received from the person having voting interests
under the Contracts as described below. If the Company determines pursuant to
applicable law or regulation that Investment Fund shares held in the
Sub-Accounts and attributable to the Contracts need not be voted pursuant to
instructions received from persons otherwise having the voting interests, then
the Company may vote such Investment Fund shares held in the Sub-Accounts in its
own right.
Before the Annuity Commencement Date, the Owner shall have the voting
interest with respect to the Investment Fund shares attributable to the
Contract.
On and after the Annuity Commencement Date, the person then entitled to
receive annuity payments shall have the voting interest with respect to the
Investment Fund shares. Such voting interest will generally decrease during the
annuity payout period.
Any Investment Fund shares held in the Variable Account for which we do not
receive timely voting instructions, or which are not attributable to Contract
Owners, will be voted by us in proportion to the instructions received from all
Contract Owners having a voting interest in the Investment Fund. Any Investment
Fund shares held by us or any of our affiliates in general accounts will, for
voting purposes, be allocated to all separate accounts having voting interests
in the Investment Fund in proportion to each account's voting interest in the
respective Investment Fund and will be voted in the same manner as are the
respective account's vote.
All Investment Fund proxy material will be sent to persons having voting
interests together with appropriate forms which may be used to give voting
instructions. Persons entitled to voting interests and the number of votes which
they may cast shall be determined as of a record date, to be selected by the
Company, not more than 90 days before the meeting of the applicable Investment
Fund.
Persons having voting interests under the Contracts as described above will
not, as a result thereof, have voting interests with respect to meetings of the
stockholders of the Company.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the General Distributor, Washington Square
Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota 55401,
which is controlled by the Company. Commissions and other distribution
compensation will be paid by the Company and will not be more than 7.00% of the
purchase payments.
REVOCATION
The Contract Owner may revoke the contract at any time between the date of
Application and the date 10 days after receipt of the Contract and receive a
refund of the Contract Value unless otherwise required by state and/or federal
law. All Individual Retirement Annuity refunds will be return of purchase
payments. In order to revoke the Contract, it must be mailed or delivered to the
Company's Contract Administrator at the mailing address shown on the back cover
page of this Prospectus or the agent through whom it was purchased. Mailing or
delivery must occur on or before 10 days after receipt of the Contract for
revocation to be effective. In order to revoke the Contract, if it has not been
received, written notice must be mailed or delivered to the Company's Contract
Administrator at the mailing address shown on the back cover page of this
Prospectus.
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by the Company.
REPORTS TO OWNERS
The Company will mail to the Contract Owner, at the last known address of
record at the home office of the Company, at least annually after the first
Contract Year, a report containing such information as may be required by any
applicable law or regulation and a statement showing the Contract Value.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party.
The Company is a defendant in various lawsuits in connection with the normal
conduct of its operations. In the opinion of management, the ultimate resolution
of such litigation will not result in any significant liability to the Company.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of ReliaStar Select Variable Account as of
December 31, 1996 and for each of the three years in the period then ended and
the annual financial statements of ReliaStar Life Insurance Company, which are
incorporated by reference in the Statement of Additional Information, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated herein by reference and have been so incorporated
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the Securities and Exchange Commission, with respect to the contracts
described herein. The Prospectus does not contain all of the information set
forth in the Registration Statement and exhibits thereto, to which reference is
hereby made for further information concerning the Variable Account, the Company
and the Contracts. The information so omitted may be obtained from the
Commission's principal office in Washington, D.C., upon payment of the fee
prescribed by the Commission, or examined there without charge. Statements
contained in this Prospectus as to the provisions of the Contracts and other
legal documents are summaries, and reference is made to the documents as filed
with the Commission for a complete statement of the provisions thereof.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Introduction......................................................... S-2
Administration of the Contracts...................................... S-2
Custody of Assets.................................................... S-3
Independent Auditors................................................. S-3
Distribution of the Contracts........................................ S-3
Calculation of Yield and Return...................................... S-3
Financial Statements................................................. S-11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If you would like to receive a copy of the ReliaStar Select Variable Account
Statement of Additional Information, please call 1-800-621-3750 or return this
request to:
WASHINGTON SQUARE SECURITIES, INC.
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MN 55401
Your name_______________________________________________________________________
Address_________________________________________________________________________
City___________________________ State____________________________ Zip___________
Please send me a copy of the ReliaStar Select Variable Account Statement of
Additional Information.
================================================================================
APPENDIX A
THE FIXED ACCOUNT
CONTRIBUTIONS UNDER THE FIXED PORTION OF THE CONTRACT AND TRANSFERS TO THE
FIXED PORTION BECOME PART OF THE GENERAL ACCOUNT OF THE COMPANY (THE "FIXED
ACCOUNT"), WHICH SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. BECAUSE OF
EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED ACCOUNT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") NOR IS THE FIXED
ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTEREST
THEREIN ARE GENERALLY SUBJECT TO THE PROVISIONS OF THE 1933 OR 1940 ACTS AND THE
COMPANY HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS WHICH RELATE TO
THE FIXED PORTION OF THE CONTRACT. DISCLOSURES REGARDING THE FIXED PORTION OF
THE ANNUITY CONTRACT AND THE FIXED ACCOUNT, HOWEVER, MAY BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE
ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
The Fixed Account is made up of all the general assets of the Company other
than those allocated to any separate account. Purchase payments will be
allocated to the Fixed Account as elected by the Owner at the time of purchase
or as subsequently changed. The Company will invest the assets of the Fixed
Account in those assets chosen by the company and allowed by applicable law.
Investment income from such Fixed Account assets will be allocated between the
Company and the contracts participating in the Fixed Account, in accordance with
the terms of such contracts.
Fixed annuity payments made to Annuitants under the Contract will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. The Company assumes this "mortality risk"
by virtue of annuity rates incorporated in the Contract which cannot be changed.
In addition, the Company guarantees that it will not increase charges for
maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The Company expects to derive a profit from this
compensation. The amount of such investment income allocated to the Contracts
will vary from year to year at the sole discretion of the Company. However, the
Company guarantees that it will credit interest at a rate of not less than 4%
per year, compounded annually, to amounts allocated to the Fixed Account under
the Contract. The Company may credit interest at a rate in excess of 4% per
year; however, the Company is not obligated to credit any interest in excess of
4% per year. There is no specific formula for the determination of excess
interest credits. Such credits, if any, will be determined by the Company based
on information as to expected investment yields. Some of the factors that the
Company may consider in determining whether to credit interest to amounts
allocated to the Fixed Account and the amount thereof, are general economic
trends, rates of return currently available and anticipated on the Company's
investments, regulatory and tax requirements and competitive factors. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES
THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 4% FOR ANY GIVEN YEAR.
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in the Company's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
policyholders and Contract Owners and to its stockholders.
Excess interest, if any, will be credited on the Fixed Account Contract
Value. The Company guarantees that, at any time, the Fixed Account Contract
Value will not be less than the amount of purchase payments and transfers
allocated to the Fixed Account, plus interest at the rate of 4% per year,
compounded annually, plus any additional interest which the Company may, in its
discretion, credit to the Fixed Account, less the sum of all annual
administrative or surrender charges levied, any applicable premium taxes, and
less any amounts surrendered or transferred from the Fixed Account. If the Owner
surrenders the Contract, the amount available from the Fixed Account will be
reduced by any applicable surrender charge and annual administration charge.
(See "Charges Made by the Company" on page 13.)
RELIASTAR
[GRAPHIC OMITTED]
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, MN 55401
SELECT*ANNUNITY II PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION
----------
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
RELIASTAR SELECT VARIABLE ACCOUNT
(FORMERLY NWNL SELECT VARIABLE ACCOUNT)
AND
RELIASTAR LIFE INSURANCE COMPANY
(FORMERLY NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY)
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus, dated April 30, 1997 (the "Prospectus")
relating to the Individual Deferred Variable/Fixed Annuity Contracts issued by
ReliaStar Select Variable Account (the "Variable Account") and ReliaStar Life
Insurance Company (the "Company"). Much of the information contained in this
Statement of Additional Information expands upon subjects discussed in the
Prospectus. A copy of the Prospectus may be obtained from Washington Square
Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota 55401.
Capitalized terms used in this Statement of Additional Information that are
not otherwise defined herein shall have the meanings given to them in the
Prospectus.
-------------
TABLE OF CONTENTS
PAGE
Introduction............................................................... S-2
Administration of the Contracts............................................ S-2
Custody of Assets.......................................................... S-3
Independent Auditors....................................................... S-3
Distribution of the Contracts.............................................. S-3
Calculation of Yield and Return............................................ S-3
Financial Statements....................................................... S-11
---------
The date of this Statement of Additional Information is April 30, 1997.
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in the
Prospectus are flexible purchase payment contracts. The Contracts are sold to or
in connection with retirement plans which may or may not qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax Status"
on page 21 of the Prospectus.) Annuity payments under the Contracts are deferred
until a selected later date.
Purchase payments may be allocated to one or more Sub-Accounts of the
Variable Account, a separate account of the Company, and/or to the Fixed Account
(which is the general account of the Company).
Purchase payments allocated to one or more Sub-Accounts of the Variable
Account, as selected by the Contract Owner, will be invested in shares at net
asset value of one or more of a group of investment funds (the "Investment
Funds"). The Investment Funds are currently the Variable Insurance Products Fund
which has five portfolios and the Variable Insurance Products Fund II which has
made available three portfolios managed by Fidelity Management & Research
Company of Boston, Massachusetts, and Putnam Variable Trust which has made
available four portfolios managed by Putnam Investment Management, Inc. of
Boston, Massachusetts. Each Investment Fund pays its investment adviser certain
fees charged against the assets of the Investment Fund. The Variable Account
Contract Value and the amount of variable annuity payments will vary, primarily
based on the investment performance of the Investment Funds whose shares are
held in the Sub-Accounts selected. (For more information about the Investment
Funds, see "Investments of the Variable Account" on page 11 of the Prospectus.)
Purchase payments allocated to the Fixed Account, which is the general
account of the Company, will be credited with interest at a rate not less than
4% per year. Interest credited in excess of 4%, if any, will be determined at
the sole discretion of the Company. That part of the Contract relating to the
Fixed Account is not registered under the Securities Act of 1933 and the Fixed
Account is not subject to the restrictions of the Investment Company Act of
1940. (See Appendix A to the Prospectus.)
ADMINISTRATION OF THE CONTRACTS
The Company has entered into a contract with Continuum Administrative
Services Corporation (formerly known as Vantage Computer Systems, Inc.), Kansas
City, Missouri ("CASC") under which CASC has agreed to perform certain
administrative functions relating to the Contracts and the Variable Account.
These functions include, among other things, maintaining the books and records
of the Variable Account and the Sub-Accounts, and maintaining records of the
name, address, taxpayer identification number, Contract number, type of Contract
issued to each Owner, Contract Value and other pertinent information necessary
to the administration and operation of the Contracts. For the years ended
December 31, 1994, 1995, and 1996, the Company paid fees to CASC under the
contract in the amounts of $706,115, $543,048 and $822,639, respectively.
CUSTODY OF ASSETS
The Company, whose address appears on the cover of the Prospectus,
maintains custody of the assets of the Variable Account.
INDEPENDENT AUDITORS
The financial statements of ReliaStar Select Variable Account and ReliaStar
Life Insurance Company, which are incorporated by reference in the Statement of
Additional Information, have been audited by Deloitte & Touche LLP, 120 South
6th Street, Minneapolis, Minnesota 55402, independent auditors, as stated in
their reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the General Distributor, Washington Square
Securities, Inc., which is a direct, wholly-owned subsidiary of ReliaStar
Financial Corp. and is an affiliate of the Company. For the years ended December
31, 1994, 1995, and 1996 the General Distributor was paid fees by the Company
with respect to distribution of the Contracts aggregating $544,927, $988,000 and
$60,836, respectively.
The offering of the Contracts is continuous.
There are no special purchase plans or exchange privileges not described in
the Prospectus (see "The Contracts - Transfers" at page 17 of the Prospectus).
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, if part or all of a Contract's value is surrendered,
surrender charges (which may be deemed to be contingent deferred sales charges)
may be made by the Company. The method used to determine the amount of such
charge is described in the Prospectus under the heading "Charges Made By The
Company - Surrender Charge (Contingent Deferred Sales Charge)" on page 13. There
is no difference in the amount of this charge or any of the other charges
described in the Prospectus as between Contracts purchased by members of the
public as individuals or groups, and Contracts purchased by any class of
individuals, such as officers, directors or employees of the Company or of
Washington Square Securities, Inc.
CALCULATION OF YIELD AND RETURN
Current Yield and Effective Yield:
Current yield and effective yield will be calculated only for the VIP Money
Market Portfolio Sub-Account.
The current yield is based on a seven-day period (the "base period") and is
calculated by determining the "net change in value" on a hypothetical account
having a balance of one Accumulation Unit at the beginning of the period,
dividing the net change in account value by the value of the account at the
beginning of the base period to obtain the base period return, and multiplying
the base period return by 365/7 with the resulting yield figure carried to the
nearest hundredth of one percent. The effective yield is computed in a similar
manner, except that the base period return is compounded 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:
365/7
EFFECTIVE YIELD = [(Base Period Return + 1) ] - 1
Net changes in value of a hypothetical account will include net investment
income of the account (accrued daily dividends as declared by the VIP Money
Market Portfolio, less daily expense and contract charges to the account) for
the period, but will not include realized or unrealized gains or losses on its
underlying fund shares.
The VIP Money Market Portfolio Sub-Account's yield and effective yield will
vary in response to any fluctuations in interest rates and expenses of the
Sub-Account.
The yield and effective yield of the Sub-Account for the seven day period
ending December 31, 1996 were as follows:
Yield: 3.84%
Effective Yield: 3.92%
Standardized Yield:
A standardized yield computation may be used for bond Sub-Accounts. The
yield quotation will be based on a recent 30 day (or one month) period, and is
computed by dividing the net investment income per Accumulation Unit earned
during the period by the maximum offering price on the last day of the period
according to the following formula:
6
YIELD = 2[( a - b + 1) - 1]
------
cd
Where:
a = net investment earned during the period by the Fund or Portfolio
attributable to shares owned by the Sub-Account.
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.
Yield on each Sub-Account is earned from dividends declared and paid by the
underlying Fund or Portfolio, which are automatically reinvested in Fund or
Portfolio shares.
AVERAGE ANNUAL TOTAL RETURNS. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time.
Average annual total returns represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Contract to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month-end practicable, considering the type
and media of the communication and will be stated in the communication.
Average annual total returns will be calculated using Sub-Account unit
values which the Company calculates on each Valuation Date based on the
performance of the Sub-Account's underlying Portfolio, the deductions for the
Mortality and Expense Risk Premiums, the Administration Charge, and the Annual
Contract Charge. The calculation assumes that the Annual Contract Charge is $30
per year per Contract deducted at the end of each Contract Year. For purposes of
calculating average annual total return, an average per dollar Annual Contract
Charge attributable to the hypothetical account for the period is used. The
calculation also assumes surrender of the Contract at the end of the period for
the return quotation. Total returns will therefore reflect a deduction of the
Surrender Charge for any period less than six years. The total return will then
be calculated according to the following formula:
1/N
TR = ((ERV/P) ) - 1
Where:
TR = The average annual total return net of Sub-Account recurring
charges.
ERV = the ending redeemable value (net of any applicable surrender charge)
of the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
For the period from
For the 1-year For the 5-year For the 10-year date of inception of
period ended period ended period ended Sub-Account to
Sub-Account 12/31/96 12/31/96 12/31/96 12/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
VIP High Income Portfolio 7.92% 13.38% N/A 10.41%
(Sub-Account Inception: 05/01/88)
VIP Equity-Income Portfolio 8.17% 16.35% N/A 13.04%
(Sub-Account Inception: 05/01/88)
VIP Growth Portfolio 8.59% 13.57% N/A 14.21%
(Sub-Account Inception: 05/01/88)
VIP Overseas Portfolio 7.12% 7.60% N/A 7.61%
(Sub-Account Inception: 05/01/88)
VIP II Asset Manager Portfolio 8.49% 9.71% N/A 9.89%
(Sub-Account Inception: 05/01/91)
VIP II Investment Grade Bond Portfolio -2.78% 5.14% N/A 6.34%
(Sub-Account Inception: 05/01/91)
VIP II Index 500 Portfolio 16.60% N/A N/A 15.37%
(Sub-Account Inception: 05/03/93)
Putnam VT Diversified Income Fund 2.77% N/A N/A 6.87%
(Sub-Account Inception: 05/02/94)
Putnam VT Growth and Income Fund 15.70% N/A N/A 19.13%
(Sub-Account Inception: 05/02/94)
Putnam VT Utilities Growth and Income 9.66% N/A N/A 13.13%
Fund
(Sub-Account Inception: 05/02/94)
Putnam VT Voyager Fund 6.87% N/A N/A 18.44%
(Sub-Account Inception: 05/02/94)
</TABLE>
From time to time, sales literature or advertisements may quote average
annual total returns for periods prior to the date the Sub-Accounts commenced
operations. Such performance information for the Sub-Accounts will be calculated
based on the performance of the Portfolios and the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Portfolios, with the level of Contract charges currently in effect.
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
For the period from
For the 1-year For the 5-year For the 10-year date of inception of
period ended period ended period ended Fund Portfolio to
Sub-Account 12/31/96 12/31/96 12/31/96 12/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
VIP High Income Portfolio 7.92% 13.38% 9.58% 10.47%
(Portfolio Inception: 09/19/85)
VIP Equity-Income Portfolio 8.17% 16.35% 12.18% 11.87%
(Portfolio Inception: 10/09/86)
VIP Growth Portfolio 8.59% 13.57% 13.58% 13.25%
(Portfolio Inception: 10/09/86)
VIP Overseas Portfolio 7.12% 7.60% N/A 6.39%
(Portfolio Inception: 01/28/87)
VIP II Asset Manager Portfolio 8.49% 9.71% N/A 10.15%
(Portfolio Inception: 09/06/89)
VIP II Investment Grade Bond Portfolio -2.78% 5.14% N/A 6.70%
(Portfolio Inception: 12/05/88)
VIP II Index 500 Portfolio 16.60% N/A N/A 14.83%
(Portfolio Inception: 08/27/92)
Putnam VT Diversified Income Fund 2.77% N/A N/A 4.80%
(Portfolio Inception: 09/15/93)
Putnam VT Growth and Income Fund 15.70% 14.36% N/A 14.24%
(Portfolio Inception: 02/01/88)
Putnam VT Utilities Growth and Income 9.66% N/A N/A 10.00%
Fund
(Portfolio Inception: 05/01/92)
Putnam VT Voyager Fund 6.87% 14.43% N/A 15.57%
(Portfolio Inception: 02/01/88)
</TABLE>
The Company may also disclose average annual total returns for the
Investment Fund's Portfolios, including such disclosure for periods prior to the
date the Variable Account commenced operations.
Such average annual total return information for the Portfolios of the
Investment Funds is as follows:
<TABLE>
<CAPTION>
For the period from
For the 1-year For the 5-year For the 10-year date of inception of
period ended period ended period ended Fund Portfolio to
Sub-Account 12/31/96 12/31/96 12/31/96 12/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
VIP High Income Portfolio 14.03% 14.96% 11.12% 12.01%
(Portfolio Inception: 09/19/85)
VIP Equity-Income Portfolio 14.28% 17.98% 13.74% 13.44%
(Portfolio Inception: 10/09/86)
VIP Growth Portfolio 14.71% 15.16% 15.15% 14.83%
(Portfolio Inception: 10/09/86)
VIP Overseas Portfolio 13.22% 9.13% N/A 7.91%
(Portfolio Inception: 01/28/87)
VIP II Asset Manager Portfolio 14.60% 11.26% N/A 11.70%
(Portfolio Inception: 09/06/89)
VIP II Investment Grade Bond Portfolio 3.19% 6.64% N/A 8.20%
(Portfolio Inception: 12/05/88)
VIP II Index 500 Portfolio 22.82% N/A N/A 17.11%
(Portfolio Inception: 08/27/92)
Putnam VT Diversified Income Fund 8.81% N/A N/A 7.53%
(Portfolio Inception: 09/15/93)
Putnam VT Growth and Income Fund 21.92% 15.97% N/A 15.88%
(Portfolio Inception: 02/01/88)
Putnam VT Utilities Growth and Income 15.80% N/A N/A 12.24%
Fund
(Portfolio Inception: 05/01/92)
Putnam VT Voyager Fund 12.97% 16.03% N/A 17.23%
(Portfolio Inception: 02/01/88)
</TABLE>
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements
may quote average annual total returns for the Sub-Accounts that do not reflect
the Surrender Charge. Such performance information may quote average annual
total returns for periods during which the Sub-Accounts were operating and for
periods prior to the date the Sub-Accounts commenced operations. These returns
are calculated in exactly the same way as average annual total returns described
above, except that the ending redeemable value of the hypothetical account for
the period is replaced with an ending value for the period that does not take
into account any charges on amounts surrendered or withdrawn. Such information
is as follows:
RETURNS SINCE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
For the period from
For the 1-year For the 5-year For the 10-year date of inception of
period ended period ended period ended Sub-Account to
Sub-Account 12/31/96 12/31/96 12/31/96 12/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
VIP High Income Portfolio 12.42% 13.38% N/A 10.41%
(Sub-Account Inception: 05/01/88)
VIP Equity-Income Portfolio 12.67% 16.35% N/A 13.04%
(Sub-Account Inception: 05/01/88)
VIP Growth Portfolio 13.09% 13.57% N/A 14.21%
(Sub-Account Inception: 05/01/88)
VIP Overseas Portfolio 11.62% 7.60% N/A 7.61%
(Sub-Account Inception: 05/01/88)
VIP II Asset Manager Portfolio 12.99% 9.71% N/A 9.89%
(Sub-Account Inception: 05/01/91)
VIP II Investment Grade Bond Portfolio 1.72% 5.14% N/A 6.34%
(Sub-Account Inception: 05/01/91)
VIP II Index 500 Portfolio 21.10% N/A N/A 16.20%
(Sub-Account Inception: 05/03/93)
Putnam VT Diversified Income Fund 7.27% N/A N/A 8.36%
(Sub-Account Inception: 05/02/94)
Putnam VT Growth and Income Fund 20.20% N/A N/A 20.38%
(Sub-Account Inception: 05/02/94)
Putnam VT Utilities Growth and Income 14.16% N/A N/A 14.49%
Fund
(Sub-Account Inception: 05/02/94)
Putnam VT Voyager Fund 11.37% N/A N/A 19.70%
(Sub-Account Inception: 05/02/94)
</TABLE>
<TABLE>
<CAPTION>
RETURNS INCLUDING PERIOD PRIOR TO DATE SUB-ACCOUNTS COMMENCED OPERATIONS
For the period from
For the 1-year For the 5-year For the 10-year date of inception of
period ended period ended period ended Fund Portfolio to
Sub-Account 12/31/96 12/31/96 12/31/96 12/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
VIP High Income Portfolio 12.42% 13.38% 9.58% 10.47%
(Portfolio Inception: 09/19/85)
VIP Equity-Income Portfolio 12.67% 16.35% 12.18% 11.87%
(Portfolio Inception: 10/09/86)
VIP Growth Portfolio 13.09% 13.57% 13.58% 13.25%
(Portfolio Inception: 10/09/86)
VIP Overseas Portfolio 11.62% 7.60% N/A 6.39%
(Portfolio Inception: 01/28/87)
VIP II Asset Manager Portfolio 12.99% 9.71% N/A 10.15%
(Portfolio Inception: 09/06/89)
VIP II Investment Grade Bond Portfolio 1.72% 5.14% N/A 6.70%
(Portfolio Inception: 12/05/88)
VIP II Index 500 Portfolio 21.10% N/A N/A 15.47%
(Portfolio Inception: 08/27/92)
Putnam VT Diversified Income Fund 7.27% N/A N/A 6.01%
(Portfolio Inception: 09/15/93)
Putnam VT Growth and Income Fund 20.20% 14.36% N/A 14.24%
(Portfolio Inception: 02/01/88)
Putnam VT Utilities Growth and Income 14.16% N/A N/A 10.67%
Fund
(Portfolio Inception: 05/01/92)
Putnam VT Voyager Fund 11.37% 14.43% N/A 15.57%
(Portfolio Inception: 02/01/88)
</TABLE>
The Company may disclose Cumulative Total Returns in conjunction with the
standard formats described above. The Cumulative Total Returns will be
calculated using the following formula.
CTR = ERV/P - 1
Where:
CTR = The Cumulative Total Return net of Sub-Account recurring charges for
the period.
ERV = the ending redeemable value of the hypothetical investment at the
end of the period.
P = a hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL ADMINISTRATIVE CHARGE ON PERFORMANCE DATA. The
Contract provides for a $30 Annual Administrative Charge to be deducted annually
at the end of each Contract Year, from the Sub-Accounts and the Fixed Account
based on the proportion that the value of each such account bears to the total
Contract Value. For purposes of reflecting the Annual Administrative Charge in
yield and total return quotations, the annual charge is converted into an annual
charge per $1,000 invested based on the Annual Contract Charges collected from
the average total assets of the Variable Account and Fixed Account during the
calendar year ending December 31, 1996.
FINANCIAL STATEMENTS
This Statement of Additional Information incorporates by reference
Financial Statements for the Variable Account as of December 31, 1996 and for
each of the three years in the period then ended. Deloitte & Touche LLP serves
as independent auditors for the Variable Account. Although the financial
statements are audited, the period they cover is not necessarily indicative of
the longer term performance of the assets held in the Variable Account.
The Company's statements of financial condition as of December 31, 1996 and
1995, and the related statements of operations, shareholder's equity and cash
flows for the years ended December 31, 1996 and 1995 which are incorporated by
reference in this Statement of Additional Information, should be considered only
as bearing on the Company's ability to meet its obligations under the Contracts.
They should not be considered as bearing on the investment performance of the
assets held in the Variable Account.
RELIASTAR SELECT VARIABLE ACCOUNT
Independent Auditors' Report*
Statement of Assets and Liabilities*
Statement of Operations and Changes in Contract Owners' Equity*
Notes to Financial Statements*
December 31, 1996
* Incorporated by reference to the Registrant's 1996 Annual Report to
Contract Holders filed on February 20, 1997.
RELIASTAR LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF RELIASTAR FINANCIAL CORP.)
Independent Auditors' Report*
Consolidated Balance Sheets**
Consolidated Statements of Income**
Consolidated Statements of Shareholder's Equity**
Consolidated Statements of Cash Flows**
Notes to Consolidated Financial Statements**
December 31, 1996
** Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Pre-effective Amendment No. 1 to the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-18517,
filed March 31, 1997.
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Part A: None
Part B: RELIASTAR SELECT VARIABLE ACCOUNT+
------------------------------------------
Independent Auditors' Report
Statement of Assets and Liabilities,
December 31, 1996
Combined Statements of Operations and Changes
in Contract Owners' Equity, Years Ended
December 31, 1996, 1995, and 1994
Notes to Financial Statements
RELIASTAR LIFE INSURANCE COMPANY++
----------------------------------
Independent Auditors' Report
Consolidated Balance Sheets, December 31,
1996 and 1995
Consolidated Statements of Operations,
Years Ended December 31, 1996 and 1995
Consolidated Statements of Shareholders'
Equity, Years Ended December 31, 1996 and 1995
Consolidated Statements of Cash Flows,
Years Ended December 31, 1996 and 1995
Notes to Consolidated Financial Statements
(b) Exhibits:
1. Resolution of the Board of Directors of ReliaStar Life Insurance
Company ("Depositor") authorizing the establishment of ReliaStar
Select Variable Account ("Registrant").*
Resolution of the Board of Directors of Depositor changing the name of
Registrant to ReliaStar Select Variable Account, effective August 1,
1996.
2. Not Applicable.
3. (a) Form of General Distributor Agreement between Depositor and
Washington Square Securities, Inc. ("WSSI").*
(b) Forms of agreements between Depositor and broker-dealers with
respect to the sale of Contracts.*
4. Form of Contract.*
5. Contract Application Form.*
6. (a) Amended Articles of Incorporation of Depositor.**
(b) Amended Bylaws of Depositor.**
7. Not Applicable.
8. (a) Agreement with State Street Bank and Trust Company.*
(b) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and Amendment
Nos. 1-8.**
(c) Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation and
Amendment Nos. 1-7.**
(d) Form of Service Agreement and Service Contract with Fidelity
Investments Institutional Operations Company, Inc. dated January
1, 1997.
(e) Participation Agreement with Putnam Variable Trust and Putnam
Mutual Funds Corp. and Amendment Nos. 1-2.**
(f) Agreement with Continuum Administrative Services Corporation
(formerly known as Vantage Computer Systems, Inc.) and Amendment
Nos. 1-6.*
9. Consent and Opinion of Jeffrey A. Proulx as to the legality of the
securities being registered.
10. Independent Auditors' Consent of Deloitte & Touche LLP.
11. Not Applicable.
12. Not Applicable.
13. Schedules for Computation of Performance Quotations.
14. Financial Data Schedule, filed hererto electronically as Exhibit 27
pursuant to Rule 401 of Regulation S-T.
15. Powers of Attorney.**
+ Incorporated by reference to Registrant's 1996 Annual Report to Contract
Holders on Form N-30D filed on February 20, 1997.
++ Incorporated by Reference to the financial statements contained in the
Prospectus filed as part of Pre-Effective Amendment No. 1 of the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-18517,
filed on March 31, 1997.
* Incorporated by reference to Post-effective Amendment No. 19 to the
Registrant's Form N-4 Registration Statement, Select*Annunity II, File No.
2-75185, filed on April 16, 1996.
** Incorporated by reference to the Form S-6 Registration Statement of
Select*Life Variable Account, File No. 333-18517, filed December 23, 1996.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DEPOSITOR
---- ------------------------------------
<S> <C>
John G. Turner Director, Chairman and Chief Executive Officer
John H. Flittie Director, Vice Chairman, President and Chief Operating Officer
Susan M. Bergen Secretary
R. Michael Conley Director and Senior Vice President - ReliaStar Employee Benefits
Richard R. Crowl Director, Senior Vice President and General Counsel
Wayne R. Huneke Director, Senior Vice President, Chief Financial Officer and Treasurer
William R. Merriam Director, Senior Vice President - ReliaStar Reinsurance Group
Robert C. Salipante Director and Senior Vice President - Personal Financial Operations
Donald L. Swanson Director and Senior Vice President - ReliaStar Retirement Plans
Steven W. Wishart Director and Senior Vice President and Chief Investment Officer
Kenneth U. Kuk Director and Senior Vice President - ReliaStar Asset Division and
Strategic Marketing
</TABLE>
The principal business address of each of the foregoing executive officers
is 20 Washington Avenue South, Minneapolis, Minnesota 55401.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Registrant is a separate account of Depositor, established by the Board of
Directors of Depositor in 1981 pursuant to the laws of the State of Minnesota.
Depositor is a direct, wholly-owned subsidiary of ReliaStar Financial Corp., a
Delaware Corporation.
A chart identifying the subsidiaries of ReliaStar Financial Corp. and their
relationship to one another is incorporated by reference to Item 26 of
Post-Effective Amendment No. 11 to the Form N-4 Registration Statement of
ReliaStar Bankers Security Variable Annuity Funds M, P and Q, File No. 33-11489,
filed February 28, 1997.
The financial statements of each subsidiary of Depositor, other than those
of the mutual funds, are consolidated with those of Depositor. The financial
statements of the mutual funds are separately filed with the Securities and
Exchange Commission.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1997 there were 11,127 owners of contracts issued by
Registrant, 8,493 of which were owned by Qualified Plans as defined in the
Prospectus.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Section 5.01 of Depositor's Bylaws, filed as an
Exhibit to this Registration Statement. The Bylaws of Depositor mandate
indemnification by Depositor of its directors, officers and certain others,
including directors, officers, employees and agents of Management, under certain
conditions. Section 4.01 of the Bylaws of Management mandates indemnification by
Management of its directors and officers under certain conditions. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of Depositor or
Management, pursuant to the foregoing provisions or otherwise, Depositor and
Management have 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 Depositor of expenses
incurred or paid by a director or officer or controlling person of Depositor or
Management in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person of Depositor or
Management in connection with the securities being registered, Depositor or
Management, as the case may be, 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 of whether or not such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
An insurance company blanket bond is maintained providing $25,000,000
coverage for Depositor and Management, subject to a $500,000 deductible.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) WSSI is the principal underwriter of the Contracts. WSSI also acts as
the principal underwriter of other variable annuity contracts issued by
Depositor through the ReliaStar Select Variable Account; flexible premium
variable life insurance contracts issued by Depositor through Select*Life
Variable Account, a separate account of Depositor registered as a unit
investment trust under the Investment Company Act of 1940; variable annuity
contracts issued by Northern Life Insurance Company ("Northern"), a subsidiary
of Depositor, through Separate Account One, a separate account of Northern
registered as a unit investment trust under the Investment Company Act of 1940;
and variable annuity contracts issued by ReliaStar Bankers Security Life
Insurance Company, an indirect subsidiary of Depositor, through Separate
Accounts M, P and Q, separate accounts of depositor registered as unit
investment trusts under the Investment Company Act of 1940. WSSI also
distributes, but is not the principal underwriter of, variable annuity contracts
issued by Depositor through the ReliaStar Variable Account and the Northstar
Variable Account, each of which is a separate account of Depositor and is
registered as a unit investment trust under the Investment Company Act of 1940.
(b) The directors and officers of WSSI are as follows:
NAME POSITIONS AND OFFICES WITH WSSI
---- -------------------------------
John H. Flittie Director and Chairman
Roger W. Arnold Director
Michael J. Dubes Director
Robert C. Salipante Director
Steven W. Wishart Director
James R. Gelder President
Michael R. Fanning Executive Vice President and Chief Marketing Officer
Jeffrey A. Montgomery Executive Vice President and Chief Operating Officer
Robert B. Saginaw Vice President
Susan M. Bergen Secretary
David Braun Assistant Vice President
David P. Wilken Treasurer
Julie A. Cooney Assistant Treasurer
Daniel S. Kuntz Assistant Treasurer
David Cox Assistant Secretary
Allen L. Kidd Assistant Secretary
Loralee A. Renelt Assistant Secretary
The principal business address of each of the foregoing executive officers
is 20 Washington Avenue South, Minneapolis, Minnesota 55401, except for the
following individuals, whose principal business addresses are listed after their
respective names: Julie Cooney, 80 Tuscany Way, Danville, California 94506;
Michael J. Dubes, 1110 3rd Avenue, Seattle, Washington 98101; Allen L. Kidd, 222
North Arch Road, Richmond, Virginia 23236.
(c) For the years ended December 31, 1996, WSSI received $60,836 in fees
in connection with distribution of the Contracts.
ITEMS 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of Registrant are located at the offices of
Depositor at 20 Washington Avenue South, Minneapolis, Minnesota 55401 and at the
offices of Continuum Administrative Services Corporation (formerly known as
Vantage Computer Systems, Inc.), 301 West 11th Street, Kansas City, Missouri
64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Registrant will file a post-effective amendment to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in this Registration Statement are never more than 16 months old for
so long as payments under the Contracts may be accepted.
Registrant will 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.
Registrant will deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly upon
written or oral request.
The Company and the Variable Account rely on a no-action letter issued by
the Division of Investment Management to the American Council of Life Insurance
on November 28, 1988 and represent that the conditions enumerated therein have
been or will be compiled with.
The fees and charges deducted under the Contract in the aggregate are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by ReliaStar Life Insurance Company.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant certifies that it meets all of the requirements of
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has caused this Amendment to the
Registration Statement to be signed on its behalf, in the City of Minneapolis
and State of Minnesota, on this Seventh day of April, 1997.
RELIASTAR SELECT VARIABLE ACCOUNT
(Registrant)
By RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By/s/John G. Turner
------------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Depositor has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of Minneapolis and State of Minnesota, on this
Seventh day of April, 1997.
By RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By/s/John G. Turner
------------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed on this Seventh day of April, 1997 by the following
directors and officers of Depositor in the capacities indicated:
/s/John G. Turner, Chairman and Chief Executive Officer
--------------
John G. Turner
/s/Wayne R. Huneke, Senior Vice President, Chief Financial Officer and Treasurer
-------------- (Principal Accounting Officer)
Wayne R. Hunke
/s/Chris D. Schreier, Second Vice President and Controller
-----------------
Chris D. Schreier
R. Michael Conley Kennneth U. Kuk Donald L. Swanson
Richard R. Crowl William R. Merriam John G. Turner
John H. Flittie Robert C. Salipante Steven W. Wishart
Wayne R. Huneke
* A majority of the Board of Directors
* Jeffrey A. Proulx, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named directors of ReliaStar Life
Insurance Company pursuant to powers of attorney duly executed by such
persons.
/s/Jeffrey A. Proulx
-----------------
Jeffrey A. Proulx, Attorney-In-Fact
EXHIBIT INDEX
(b) Exhibits:
1. Resolution of the Board of Directors of Depositor changing the name of
Registrant to ReliaStar Select Variable Account.
8.(d)Form of Service Agreement and Service Contract with Fidelity
Investments Institutional Operations Company, Inc. dated January 1,
1997.
9. Consent and Opinion of Jeffrey A. Proulx as to the legality of the
securities being registered.
10. Independent Auditors' Consent of Deloitte & Touche LLP.
13. Schedules for Computation of Performance Quotations.
14. Financial Data Schedule, filed hereto as Exhibit 27 pursuant to Rule
401 of Regulation S-T.
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
BOARD RESOLUTIONS
WHEREAS, Effective August 1, 1996 the name of Northwestern National Life
Insurance Company (the "Corporation") will be changed to ReliaStar Life
Insurance Company;
WHEREAS, The Corporation has determined that it is in its best interest to
change the names of its separate accounts in accordance with the Corporation's
new name;
NOW, THEREFORE, BE IT RESOLVED, That the names of the Corporation's
separate accounts be changed as follows, effective August 1, 1996:
NAME PRIOR TO AUGUST 1, 1996 NAME EFFECTIVE AUGUST 1, 1996
- ---------------------------- -----------------------------
MFS/NWNL Variable Account MFS/ReliaStar Variable Account
NWNL Select Variable Account ReliaStar Select Variable Account
Northstar/NWNL Variable Account Northstar Variable Account
NWNL Variable Annuity Account B ReliaStar Variable Annuity Account B
FURTHER RESOLVED, That the officers of the Corporation are hereby
authorized to execute or cause to be executed all such documents, and to take
all such other actions as such officers may deem necessary, to give effect to
the foregoing
SERVICE CONTRACT
WITH RESPECT TO SHARES OF:
( ) Variable Insurance Products Fund - High Income Portfolio
( ) Variable Insurance Products Fund - Equity-Income Portfolio
( ) Variable Insurance Products Fund - Growth Portfolio
( ) Variable Insurance Products Fund - Overseas Portfolio
( ) Variable Insurance Products Fund II - Investment Grade Bond Portfolio
( ) Variable Insurance Products Fund II - Asset Manager Portfolio
( ) Variable Insurance Products Fund II - Contrafund Portfolio
( ) Variable Insurance Products Fund II - Asset Manager: Growth Portfolio
( ) Variable Insurance Products Fund III - Growth Opportunities Portfolio
( ) Variable Insurance Products Fund III - Balanced Portfolio
( ) Variable Insurance Products Fund III - Growth & Income Portfolio
To Fidelity Distributors Corporation:
We desire to enter into a Contract with you for activities in connection with
the distribution of shares and the servicing of shareholders of the Fund noted
above (the "Fund") of which you are the principal underwriter as defined in the
Investment Company Act of 1940 (the "Act") and for which you are the agent for
the continuous distribution of shares.
THE TERMS AND CONDITIONS OF THIS CONTRACT ARE AS FOLLOWS:
1. We shall provide distribution and certain shareholder services for our
clients who own Fund shares ("clients"), which services may include, without
limitations: sale of shares of the Fund; answering client inquiries regarding
the Fund; assistance to clients in changing dividend options, account
designations and addresses; performance of subaccounting; processing purchase
and redemption transactions, including automatic investment and redemption of
client account cash balances; providing periodic statements showing a client's
account balance and the integration of such statements with other transactions;
arranging for bank wires; and providing such other information and services as
you reasonably may request.
2. We shall provide such office space and equipment, telephone facilities and
personnel (which may be all or any part of the space, equipment and facilities
currently used in our business, or all or any personnel employed by us) as is
necessary or beneficial for providing information and services to shareholders
of the Fund, and to assist you in servicing accounts of clients.
3. We agree to indemnify and hold you, the Fund, and the Fund's adviser and
transfer agent harmless from any and all direct or indirect liabilities or
losses resulting from requests, directions, actions or inactions, of or by us or
our officers, employees or agents regarding the purchase, redemption, transfer
or registration of shares for our clients. Such indemnification shall survive
the termination of this Contract.
Neither we nor any of our officers, employees or agents are authorized to make
any representation concerning Fund shares except those contained in the then
current Fund Prospectus, copies of which will be supplied by you to us; and we
shall have no authority to act as agent for the Fund or for you.
4. In consideration of the services and facilities described herein, we shall be
entitled to receive, and you shall cause to be paid to us by yourself or by
Fidelity Management & Research Company, investment adviser of the Fund, such
fees as are set forth in the accompanying "Fee Schedule for Qualified
Recipients." We understand that the payment of such fees has been authorized
pursuant to a Service Plan approved by the Board of Trustees of the Fund, and
those Trustees who are not "interested persons" of the Fund (as defined in the
Act) and who have no direct or indirect financial interest in the operation of
the Service Plan or in any agreements related to the Service Plan (hereinafter
referred to as "Qualified Trustees"), and shareholders of the Fund, that such
fees will be paid out of the fees paid to the Fund's investment adviser, said
adviser's past profits or any other source available to said adviser; that the
cost of the Fund for such fees shall not exceed the amount of the advisory and
service fee; and that such fees are subject to change during the term of this
Contract and shall be paid only so long as this Contract is in effect.
5. We agree to conduct our activities in accordance with any applicable federal
or state laws, including securities laws and any obligation thereunder to
disclose to our clients the receipt of fees in connection with their investment
in the Fund.
6. You reserve the right, at your discretion and without notice, to suspend the
sale of shares or withdraw the sale of shares of the Fund.
7. This Contract shall continue in force for one year from the effective date
(see below), and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically subject to termination
without penalty at any time if a majority of the Fund's Qualified Trustees vote
to terminate or not to continue the Service Plan. This Contract is also
terminable without penalty at any time the Service Plan is terminated by vote of
a majority of the Fund's outstanding voting securities upon 60 days' written
notice thereof to us. This Contract may also be terminated by us, for any
reason, upon 15 days' written notice to you. Notwithstanding anything contained
herein, in the event that the Service Plan shall terminate or we shall fail to
perform the distribution and shareholder servicing functions contemplated by
this Contract, such determination to be made in good faith by the Fund or you,
this Contract is terminable effective upon receipt of notice thereof by us. This
Contract will also terminate automatically in the event of its assignment (as
defined in the Act).
8. All communications to you shall be sent to you at your offices, 82 Devonshire
Street, Boston, MA 02109. Any notice to us shall be duly given if mailed or
telegraphed to us at the address shown in this Contract.
9. This Contract shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
Very truly yours,
________________________________________________________________________________
Name of Qualified Recipient (Please Print or Type)
________________________________________________________________________________
Street City State Zip Code
By:_____________________________________________________________________________
Authorized Signature
Date:________________________
NOTE: Please return two signed copies of this Service Contract to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy will be
returned to you/
FOR INTERNAL USE ONLY:
EFFECTIVE DATE: JANUARY 1, 1997
SERVICE AGREEMENT
This Agreement is entered into and effective as of the 1st day of January,
1997, by and between FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
("FIIOC") and RELIASTAR LIFE INSURANCE COMPANY, ("Company").
WHEREAS, FIIOC provides transfer agency and other services to Fidelity's
Variable Insurance Products Fund, Variable Insurance Products Fund II and
Variable Insurance Products Fund III (collectively "Funds"); and
WHEREAS, the services provided by FIIOC on behalf of the Funds include
responding to inquires about the Funds, including the provision of information
about the Funds' investment objectives, investment policies, portfolio holdings,
etc.; and
WHEREAS, Company, ReliaStar Bankers Security Life Insurance Company and
Northern Life Insurance Company (together "Affiliates") hold shares of the Funds
in order to fund certain variable annuity contracts, group annuity contracts,
and/or variable life insurance policies, the beneficial interests in which are
held by individuals, plan trustees, or others who look to Affiliates to provide
information about the Funds similar to the information provided by FIIOC; and
WHEREAS, Affiliates and one or more of the Funds have entered into one or
more Participation Agreements, under which Affiliates agree not to provide
information about the Funds except for information provided by the Funds or
their designees; and
WHEREAS, FIIOC desires that Company shall cause Affiliates to be able to
respond to inquiries about the Funds from individual variable annuity owners,
participants in group annuity contracts issued by Affiliates and owners and
participant under variable life insurance polices issued by Affiliates, and
prospective customers for any of the above; and
WHEREAS, FIIOC and Company recognize that Affiliates' efforts in responding
to customer inquiries will reduce the burden that such inquires would place on
FIIOC should such inquiries be directed to FIIOC; and
WHEREAS, FIIOC and Company have previously entered into a similar agreement
and are desirous of replacing said agreement with a new agreement.
NOW, THEREFORE, the parties do agree as follows:
1. INFORMATION TO BE PROVIDED TO AFFILIATES. FIIOC agrees to provide to
Affiliates, on a periodic basis, directly or through a designee, information
about the Funds' investment objectives, investment policies, portfolio holdings,
performance, etc. The content and format of such information shall be as FIIOC,
in its sole discretion, shall choose. FIIOC may change the format and/or content
of such informational reports, and the frequency with which such information is
provided. For purposes of Section 4.2 of each of Affiliates' Participation
Agreement(s) with the Funds, FIIOC represents that it is the designee of the
Funds, and Affiliates may therefore use the information provided by FIIOC
without seeking additional permission from the Funds.
2. USE OF INFORMATION BY AFFILIATES. Affiliates may use the information
provided by FIIOC in communications to individuals, plan trustees, or others who
have legal title or beneficial interest in the annuity or life insurance
products issued by Affiliates, and to prospective purchasers of such products or
beneficial interests thereunder. If such information is contained as part of
larger pieces of sales literature, advertising, etc., such pieces shall be
furnished for review to the Funds in accordance with the terms of Affiliates'
Participation Agreements with the Funds. Nothing herein shall give Affiliates
the right to expand upon, reformat or otherwise alter the information provided
by FIIOC. Affiliates acknowledge that the information, provided them by FIIOC
may need to be supplemented with additional qualifying information, regulatory
disclaimers, or other information before it may be conveyed to persons outside
Affiliates.
3. COMPENSATION TO COMPANY. In recognition of the fact that Company will
cause Affiliates to respond to inquiries that otherwise would be handled by
FIIOC, FIIOC agrees to pay the Affiliates, in proportion to their Fund holdings,
a quarterly fee computed as follows:
At the close of each calendar quarter, FIIOC will determine the Average
Daily Assets held in the Funds by Affiliates. Average Daily Assets shall be the
sum of the daily assets for each calendar day in the quarter divided by the
number of calendar days in the quarter. The Average Daily Assets shall be
multiplied by 0.0004 (4 basis points) and that sum shall be divided by four. The
resulting number shall be the quarterly fee for that quarter, which shall be
paid to Company during the following month.
Should any Participation Agreement(s) between an Affiliate and any Fund(s)
be terminated effective before the last day of a quarter, Company shall be
entitled to a fee for that portion of the quarter during which the Participation
Agreement was still in effect, unless such termination is due to misconduct on
the part of the Affiliate. For such a stub quarter, Average Daily Assets shall
be the sum of the daily assets for each calendar day in the quarter through and
including the date of termination of the Participation Agreement(s), divided by
the number of calendar days in that quarter for which the Participation
Agreement was in effect. Such Average Daily Assets shall be multiplied by 0.0004
(4 basis points) and that number shall be multiplied by the number of days in
such quarter that the Participation Agreement was in effect, then divided by
three hundred sixty-five. The resulting number shall be the quarterly fee for
the stub quarter, which shall be paid to Company during the following month.
Notwithstanding the foregoing, compensation for each calendar quarter will
not exceed one million dollars ($1,000,000).
4. TERMINATION. This Agreement may be terminated by Company at any time
upon written notice to FIIOC. FIIOC may terminate this Agreement at any time
upon ninety (90) days' written notice to Company. FIIOC may terminate this
Agreement immediately upon written notice to Company (1) if required by any
applicable law or regulation, (2) if so required by action of the Fund(s) Board
of Trustees, (3) if Company engages in any material breach of this Agreement or
(4) if an Affiliate engages in any conduct which would constitute a material
breach of this Agreement were the Affiliate a party to the Agreement. This
Agreement shall terminate immediately and automatically with respect to an
Affiliate upon the termination of that Affiliate's Participation Agreement(s)
with the Funds, and in such event no notice need be given hereunder.
5. INDEMNIFICATION. Company agrees to indemnify and hold harmless FIIOC for
any misuse by any Affiliate, their agents and/or brokers, and any persons
controlling Company, under common control with Company, or controlled by
Company, of the information provided by FIIOC under this Agreement.
6. APPLICABLE LAW. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
7. ASSIGNMENT. This Agreement may not be assigned, except that it shall be
assigned automatically to any successor to FIIOC as the Funds' transfer agent,
and any such successor shall be bound by the terms of this Agreement.
8. TERMINATION OF EARLIER AGREEMENT. Company and FIIOC agree that the
previous Service Agreement between the parties, dated November 1, 1995, be, and
it hereby is, terminated as of the date of this Agreement.
IN WITNESS WHEREOF, the parties have set their hands as of the date first
written above.
FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
By: ___________________________
Thomas J. Fryer
Vice President
RELIASTAR LIFE INSURANCE COMPANY
By: ___________________________
Name: ___________________________
Title: ___________________________
FEE SCHEDULE FOR QUALIFIED RECIPIENTS OF
Variable Insurance Products Fund - High Income Portfolio
Variable Insurance Products Fund - Equity-Income Portfolio
Variable Insurance Products Fund - Growth Portfolio
Variable Insurance Products Fund - Overseas Portfolio
Variable Insurance Products Fund II - Investment Grade Bond Portfolio
Variable Insurance Products Fund II - Asset Manager Portfolio
Variable Insurance Products Fund II - Contrafund Portfolio
Variable Insurance Products Fund II - Asset Manager: Growth Portfolio
Variable Insurance Products Fund III - Growth Opportunities Portfolio
Variable Insurance Products Fund III - Balanced Portfolio
Variable Insurance Products Fund III - Growth & Income Portfolio
(1) Those who have signed the Service Agreement, who meet the requirements
of paragraph (4) below, and who render distribution, administrative support and
recordkeeping services as described therein, will hereafter be referred to as
"Qualified Recipients."
(2) Qualified Recipients who perform distribution services for their
clients including, without limitations, sale of Portfolio shares, answering
routine client inquiries about the Portfolio(s), completing Portfolio
applications for the client, and producing Portfolio sales brochures or other
marketing materials, will earn a quarterly fee at an annualized rate of 0.06%
(six basis points) of the average aggregate net assets of their clients invested
in the Portfolios.
(3) The fees paid to each Qualified Recipient will be calculated and paid
quarterly. Checks will be mailed to each Qualified Recipient by the 30th of the
following month.
(4) In order to be assured of receiving payment under this Agreement for a
given calendar quarter, a Qualified Recipient must have insurance company
clients with a minimum of $100 million of average net assets in the aggregate in
the mutual fund portfolios shown below. For any calendar quarter during which
assets in these portfolios are in the aggregate less than $100 million, the
amount of qualifying assets may be considered to be zero for the purpose of
computing the payments due.
Variable Insurance Products Fund - Equity-Income Portfolio
Variable Insurance Products Fund - Growth Portfolio
Variable Insurance Products Fund - Overseas Portfolio
Variable Insurance Products Fund II - Asset Manager Portfolio
Variable Insurance Products Fund II - Contrafund Portfolio
Variable Insurance Products Fund II - Asset Manager: Growth Portfolio
Variable Insurance Products Fund III - Growth Opportunities Portfolio
Variable Insurance Products Fund III - Balanced Portfolio
Variable Insurance Products Fund III - Growth & Income Portfolio
April 7, 1997
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
Madam/Sir:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of individual variable annuity contracts (the "Contracts") and
interests in ReliaStar Select Variable Account (the "Separate Account"), I have
examined documents relating to the establishment of the Separate Account by the
Board of Directors of ReliaStar Life Insurance Company (the "Company") as a
separate account for assets applicable to variable annuity contracts, pursuant
to Minnesota Statutes Sections 61A.13 to 61A.21, as amended, and the
Registration Statement, on Form N-4, as amended by Post-Effective Amendment No.
20 thereto, File No. 2-75185 (the "Registration Statement"), and I have examined
such other documents and have reviewed such matters of law as I deemed necessary
for this opinion, and I advise you that in my opinion:
1. The Separate Account is a separate account of the Company duly created
and validly existing pursuant to the laws of the State of Minnesota.
2. The contracts, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon compliance with
applicable local law, will be legal and binding obligations of the Company in
accordance with their respective terms.
3. The portion of the assets held in the Separate Account equal to reserves
and other contract liabilities with respect to the Separate Account are not
chargeable with liabilities arising out of any other business the Company may
conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Opinions" in the
Prospectus constituting a part of the Registration Statement and to the
references to me wherever appearing therein.
Very truly yours,
Jeffrey A. Proulx
Associate Counsel
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Contract Holders
ReliaStar Select Variable Account
We consent to the incorporation by reference in this Post-Effective Amendment
No. 20 to Registration Statement on Form N-4 (File No. 2-75185) of ReliaStar
Select Variable Account filed under the Securities Act of 1933 and the
Investment Company Act of 1940, respectively, of our report dated February 7,
1997 on the audit of the financial statements of ReliaStar Select Variable
Account as of December 31, 1996 and for each of the three years in the period
then ended, and our report dated January 31, 1997 except for Note 14 as to which
the date is February 23, 1997, on the audit of the consolidated financial
statements of ReliaStar Life Insurance Company and subsidiaries as of and for
the years ended December 31, 1996 and 1995, and to the reference to us under the
heading "Financial Statements and Experts" appearing in the Prospectus and under
the headings "Independent Auditors" and "Financial Statements" appearing in the
Statement of Additional Information, all of which are part of such Registration
Statement.
Minneapolis, Minnesota
April 2, 1997
<TABLE>
<CAPTION>
SELECT ANNUITY II
FIDELITY HIGH INCOME
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C> <C>
05/01/88 $1,000.00 $10.000000 100.000
05/01/89 $10.404402 100.000 $1,040.44 $1,039.25 99.886
05/01/90 $9.353284 99.886 $934.26 $933.07 99.758
05/01/91 $10.912902 99.758 $1,088.65 $1,087.46 99.649
05/01/92 $14.317550 99.649 $1,426.73 $1,425.54 99.566
05/01/93 $16.474868 99.566 $1,640.34 $1,639.15 99.494
05/01/94 $17.956297 99.494 $1,786.54 $1,785.35 99.428
05/01/95 $19.264868 99.428 $1,915.46 $1,914.27 99.366
05/01/96 $22.152387 99.366 $2,201.19 $2,200.00 99.312
12/31/96 $23.783452 99.312 $2,361.99 $2,360.80 99.262
Cash Surrender Value $2,360.80
Total Return Incep to Date 136.08%
Average Annual Return 10.41%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/91 $1,000.00 $12.645390 79.080
12/31/92 $15.358081 79.080 $1,214.52 $1,213.33 79.003
12/31/93 $18.267803 79.003 $1,443.21 $1,442.02 78.938
12/31/94 $17.752537 78.938 $1,401.34 $1,400.15 78.871
12/31/95 $21.133192 78.871 $1,666.79 $1,665.60 78.814
12/31/96 $23.783452 78.814 $1,874.47 $1,873.28 78.764
Cash Surrender Value $1,873.28
Total Return Five Years 87.33%
Average Annual Return 13.38%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $21.133192 47.319
12/31/96 $23.783452 47.319 $1,125.41 $1,124.22 47.269
Contract Value Surrender Value
Ending Value $ 1,124.22 $1,079.22
Total Return One Year 12.42% 7.92%
Average Annual Return 12.42% 7.92%
FIDELITY ASSET MANAGER
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/91 $1,000.00 $10.000000 100.000
05/01/92 $11.187626 100.000 $1,118.76 $1,117.57 99.894
05/01/93 $12.574592 99.894 $1,256.12 $1,254.93 99.799
05/01/94 $13.456643 99.799 $1,342.96 $1,341.77 99.711
05/01/95 $13.615616 99.711 $1,357.62 $1,356.43 99.623
05/01/96 $15.714509 99.623 $1,565.53 $1,564.34 99.547
12/31/96 $17.170144 99.547 $1,709.24 1,708.05 99.478
Contract Value
Ending Value $1,708.05
Total Return Incep to Date 70.81%
Average Annual Return 9.89%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/91 $1,000.00 $10.752734 93.000
12/31/92 $11.878632 93.000 $1,104.71 $1,103.52 92.899
12/31/93 $12.775106 92.899 $1,186.80 $1,185.61 92.806
12/31/94 $13.150044 92.806 $1,220.41 $1,219.22 92.716
12/31/95 $15.180714 92.716 $1,407.49 $1,406.30 92.637
12/31/96 $17.170144 92.637 $1,590.60 $1,589.41 92.568
Cash Surrender Value $1,589.41
Total Return Five Years 58.94%
Average Annual Return 9.71%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $15.180714 65.873
12/31/96 $17.170144 65.873 $1,131.05 $1,129.86 65.804
Contract Value Surrender Value
Ending Value $1,129.86 $1,084.86
Total Return One Year 12.99% 8.49%
Average Annual Return 12.99% 8.49%
FIDELITY INDEX
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/03/93 $1,000.00 $10.000000 100.000
05/03/94 $10.353938 100.000 $1,035.39 $1,034.20 99.885
05/03/95 $12.055704 99.885 $1,204.18 $1,202.99 99.786
05/03/96 $14.999780 99.786 $1,496.77 $1,495.58 99.707
12/31/96 $17.400610 99.707 $1,734.96 $1,733.77 99.639
Contract Value Surrender Value
Ending Value $1,733.77 $1,688.77
Total Return Incep to Date 73.38% 68.88%
Average Annual Return 16.20% 15.37%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $14.354982 69.662
12/31/96 $17.400610 69.662 $1,212.17 $1,210.98 69.594
Contract Value Surrender Value
Ending Value $1,210.98 $1,165.98
Total Return One Year 21.10% 16.60%
Average Annual Return 21.10% 16.60%
FIDELITY EQUITY INCOME
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/88 $1,000.00 $10.000000 100.000
05/01/89 $12.078601 100.000 $1,207.86 $1,206.67 99.901
05/01/90 $11.361462 99.901 $1,135.03 $1,133.84 99.797
05/01/91 $12.208203 99.797 $1,218.34 $1,217.15 99.699
05/01/92 $14.421709 99.699 $1,437.83 $1,436.64 99.617
05/01/93 $16.916194 99.617 $1,685.14 $1,683.95 99.546
05/01/94 $18.514489 99.546 $1,843.05 $1,841.86 99.482
05/01/95 $21.679328 99.482 $2,156.71 $2,155.52 99.427
05/01/96 $27.241681 99.427 $2,708.57 $2,707.38 99.384
12/31/96 $29.138557 99.384 $2,895.89 $2,894.70 99.343
Cash Surrender Value $2,894.70
Total Return Incep to Date 189.47%
Average Annual Return 13.04%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/91 $1,000.00 $13.610141 73.475
12/31/92 $15.713240 73.475 $1,154.52 $1,153.33 73.399
12/31/93 $18.333006 73.399 $1,345.62 $1,344.43 73.334
12/31/94 $19.374325 73.334 $1,420.80 $1,419.61 73.273
12/31/95 $25.834771 73.273 $1,892.98 $1,891.79 73.226
12/31/96 $29.138557 73.226 $2,133.71 $2,132.52 73.186
Cash Surrender Value $2,132.52
Total Return Five Years 113.25%
Average Annual Return 16.35%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $25.834771 38.708
12/31/96 $29.138557 38.708 $1,127.88 $1,126.69 38.667
Contract Value Surrender Value
Ending Value $1,126.69 $1,081.69
Total Return One Year 12.67% 8.17%
Average Annual Return 12.67% 8.17%
FIDELITY INVESTMENT GRADE
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/91 $1,000.00 $10.000000 100.000
05/01/92 $11.017934 100.000 $1,101.79 $1,100.60 99.892
05/01/93 $12.167380 99.892 $1,215.42 $1,214.23 99.794
05/01/94 $12.169458 99.794 $1,214.44 $1,213.25 99.696
05/01/95 $12.682113 99.696 $1,264.36 $1,263.17 99.603
05/01/96 $13.580406 99.603 $1,352.64 $1,351.45 99.515
12/31/96 $14.254215 99.515 $1,418.51 $1,417.32 99.431
Contract Value
Ending Value $1,417.32
Total Return Incep to Date 41.73%
Average Annual Return 6.34%
Yea end Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/91 $1,000.00 $11.035955 90.613
12/31/92 $11.617133 90.613 $1,052.66 $1,051.47 90.510
12/31/93 $12.723420 90.510 $1,151.60 $1,150.41 90.417
12/31/94 $12.086843 90.417 $1,092.86 $1,091.67 90.318
12/31/95 $13.997190 90.318 $1,264.21 $1,263.02 90.233
12/31/96 $14.254215 90.233 $1,286.21 $1,285.02 90.150
Cash Surrender Value $1,285.02
Total Return Five Years 28.50%
Average Annual Return 5.14%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $13.997190 71.443
12/31/96 $14.254215 71.443 $1,018.36 $1,017.17 71.359
Contract Value Surrender Value
Ending Value $1,017.17 $972.17
Total Return One Year 1.72% -2.78%
Average Annual Return 1.72% -2.78%
FIDELITY GROWTH
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/88 $1,000.00 $10.000000 100.000
05/01/89 $11.688496 100.000 $1,168.85 $1,167.66 99.898
05/01/90 $12.530589 99.898 $1,251.78 $1,250.59 99.803
05/01/91 $13.796565 99.803 $1,376.94 $1,375.75 99.717
05/01/92 $16.302472 99.717 $1,625.63 $1,624.44 99.644
05/01/93 $18.719326 99.644 $1,865.27 $1,864.08 99.580
05/01/94 $20.861349 99.580 $2,077.38 $2,076.19 99.523
05/01/95 $22.775885 99.523 $2,266.73 $2,265.54 99.471
05/01/96 $30.762972 99.471 $3,060.03 $3,058.84 99.432
12/31/96 $31.855909 99.432 $3,167.51 $3,166.32 99.395
Cash Surrender Value $3,166.32
Total Return Incep to Date 216.63%
Average Annual Return 14.21%
Yea end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/91 $1,000.00 $16.787539 59.568
12/31/92 $18.113264 59.568 $1,078.97 $1,077.78 59.502
12/31/93 $21.341200 59.502 $1,269.85 $1,268.66 59.447
12/31/94 $21.060831 59.447 $1,251.99 $1,250.80 59.390
12/31/95 $28.140162 59.390 $1,671.25 $1,670.06 59.348
12/31/96 $31.855909 59.348 $1,890.58 $1,889.39 59.310
Cash Surrender Value $1,889.39
Total Return Five Years 88.94%
Average Annual Return 13.57%
Yea end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $28.140162 35.536
12/31/96 $31.855909 35.536 $1,132.04 $1,130.85 35.499
Contract Value Surrender Value
Ending Value $1,130.85 $1,085.85
Total Return One Year 13.09% 8.59%
Average Annual Return 13.09% 8.59%
FIDELITY OVERSEAS
Yearend Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/88 $1,000.00 $10.000000 100.000
05/01/89 $10.843678 100.000 $1,084.37 $1,083.18 99.890
05/01/90 $12.685866 99.890 $1,267.19 $1,266.00 99.796
05/01/91 $12.739445 99.796 $1,271.35 $1,270.16 99.703
05/01/92 $13.513125 99.703 $1,347.30 $1,346.11 99.615
05/01/93 $13.786940 99.615 $1,373.39 $1,372.20 99.529
05/01/94 $16.490896 99.529 $1,641.32 $1,640.13 99.457
05/01/95 $15.984847 99.457 $1,589.80 $1,588.61 99.382
05/01/96 $17.999654 99.382 $1,788.84 $1,787.65 99.316
12/31/96 $19.035391 99.316 $1,890.52 $1,889.33 99.253
Cash Surrender Value $1,889.33
Total Return Incep to Date 88.93%
Average Annual Return 7.61%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/91 $1,000.00 $13.129750 76.163
12/31/92 $11.570592 76.163 $881.25 $880.06 76.060
12/31/93 $15.672706 76.060 $1,192.07 $1,190.88 75.984
12/31/94 $15.736612 75.984 $1,195.73 $1,194.54 75.909
12/31/95 $17.036049 75.909 $1,293.18 $1,291.99 75.839
12/31/96 $19.035391 75.839 $1,443.62 $1,442.43 75.776
Cash Surrender Value $1,442.43
Total Return Five Years 44.24%
Average Annual Return 7.60%
Yea end Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $17.036049 58.699
12/31/96 $19.035391 58.699 $1,117.36 $1,116.17 58.637
Contract Value Surrender Value
Ending Value $1,116.17 $1,071.17
Total Return One Year 11.62% 7.12%
Average Annual Return 11.62% 7.12%
PCM DIVERSIFIED INCOME FUND
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
05/02/94 $1,000.00 $10.000000 100.000
05/02/95 $10.531194 100.000 $1,053.12 $1,051.93 99.887
05/02/96 $11.525142 99.887 $1,151.21 $1,150.02 99.784
12/31/96 $12.428937 99.784 $1,240.21 $1,239.02 99.688
Contract Value Surrender Value
Ending Value $1,239.02 $1,194.02
Total Return Incep to Date 23.90% 19.40%
Average Annual Return 8.36% 6.87%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $11.574062 86.400
12/31/96 $12.428937 86.400 $1,073.86 $1,072.67 86.304
Contract Value Surrender Value
Ending Value $1,072.67 $1,027.67
Total Return One Year 7.27% 2.77%
Average Annual Return 7.27% 2.77%
PCM GROWTH AND INCOME
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/02/94 $1,000.00 $10.000000 100.000
05/02/95 $11.398498 100.000 $1,139.85 $1,138.66 99.896
05/02/96 $14.462853 99.896 $1,444.78 $1,443.59 99.813
12/31/96 $16.447109 99.813 $1,641.64 $1,640.45 99.741
Contract Value Surrender Value
Ending Value $1,640.45 $1,595.45
Total Return Incep to Date 64.05% 59.55%
Average Annual Return 20.38% 19.13%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $13.669050 73.158
12/31/96 $16.447109 73.158 $1,203.24 $1,202.05 73.086
Contract Value Surrender Value
Ending Value $1,202.05 $1,157.05
Total Return One Year 20.20% 15.70%
Average Annual Return 20.20% 15.70%
PCM UTILITIES GROWTH AND INCOME
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/02/94 $1,000.00 $10.000000 100.000
05/02/95 $10.490760 100.000 $1,049.08 $1,047.89 99.887
05/02/96 $12.612349 99.887 $1,259.80 $1,258.61 99.792
12/31/96 $14.389342 99.792 $1,435.94 $1,434.75 99.710
Contract Value Surrender Value
Ending Value $1,434.75 $1,389.75
Total Return Incep to Date 43.48% 38.98%
Average Annual Return 14.49% 13.13%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $12.590873 79.423
12/31/96 $14.389342 79.423 $1,142.84 $1,141.65 79.340
Contract Value Surrender Value
Ending Value $1,141.65 $1,096.65
Total Return One Year 14.16% 9.66%
Average Annual Return 14.16% 9.66%
PCM VOYAGER
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/02/94 $1,000.00 $10.000000 100.000
05/02/95 $11.307525 100.000 $1,130.75 $1,129.56 99.895
05/02/96 $15.905648 99.895 $1,588.89 $1,587.70 99.820
12/31/96 $16.201091 99.820 $1,617.19 $1,616.00 99.746
Contract Value Surrender Value
Ending Value $1,616.00 $1,571.00
Total Return Incep to Date 61.60% 57.10%
Average Annual Return 19.70% 18.44%
Year end Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $14.531254 68.817
12/31/96 $16.201091 68.817 $1,114.91 $1,113.72 68.744
Contract Value Surrender Value
Ending Value $1,113.72 $1,068.72
Total Return One Year 11.37% 6.87%
Average Annual Return 11.37% 6.87%
</TABLE>
<TABLE>
<CAPTION>
Current & Effective Yield (net of all contract fees) December, 1996
Unit Value Unit Value Net 7 Day Current Effective
Fund 12/24/96 12/31/96 Change Return Yield Yield
<S> <C> <C> <C> <C> <C> <C>
FMM $14.651118 $14.662248 $0.010796 0.0737% 3.84% 3.92%
</TABLE>
Note: Net Change = 12/31 Unit Value - 12/24 Unit Value - Hypothetical Weekly
Fee
Current Yield = 7 Day Return x 365/7
Effective Yield = [ (7 Day Return + 1) ^ (365/7) ] - 1
Calculation of Average Weekly Contract Fee per Money Market Unit December, 1996
Annual Fee Stated as Unit Value
as Percent of a Weekly 12/24/96 Hypothetical
Avg Invested $ Fee (Invested $) Weekly Fee
0.119% 0.0023% $14.651118 $0.000334
DESCRIPTION OF RETURNS BASED ON UNDERLYING FUND PERFORMANCE
The company may at times quote average annual returns for periods prior to the
Sub-Accounts commenced operations. Such performance information for the
Sub-Accouns will be calculated based on the performance of the Portfolios and
the assumption that the Sub-Accounts were in existence for the same periods as
those indicated for the portfolios, with the level of Contract charges currently
in effect. The following provides the details in providing such returns.
AVERAGE ANNUAL TOTAL RETURNS
The company may at times quote average annual returns that reflect net recurring
charges and any applicable surrender charges. The following is the formula used
to provide such returns.
TR = ((1 + TRsa - SC) ^ (1/N)) - 1
Where:
TR = The average annual total return of the Sub-Account net of recurring
charges and any applicable surrender charge for the period.
TRf = Total return of the fund for the period, provided by the investment
company.
TRsa = Total return of the fund for the period, provided by the investment
company, adjusted for the annual contract charge (AP) and separate
acccount annual expenses (AE) or the following formula:
((1 + TRf) * (((1 - AE) * (1 - AP)) ^ N)) - 1.
SC = Applicable surrender charge at the end of period.
AP = Annual Contract Charge as an equivalent annual percent charge (AP) based
on the average net assets in the Variable Account and Fixed Account
during the preceeding year. (ie Select Annuity II would be .119%)
AE = Total Seperate Account Annual Expenses consisting of the mortality and
expense risk premium and the administration charge. (ie Select Annuity
II would be 1.30%)
N = The number of years (N) in the period.
OTHER AVERAGE ANNUAL RETURNS
In addition, the company may at times quote average annual returns that do not
reflect the Surrender Charge. These are calculated in exactly the same way as
the average anual total returns described above, except that the surrender
charge is ignored as the following formula demonstrates.
TR = ((1 + TRsa) ^ (1/N)) - 1
Where:
TR = The average annual total return of the Sub-Account net of recurring
charges for the period.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1996, ANNUAL REPORT -
FORM N-SAR FOR THE YEAR ENDED DECEMBER 31, 1996, AND ANNUAL NOTICE OF SECURITIES
SOLD PURSUANT TO RULE 24f-2 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH DOCUMENTS
</LEGEND>
<CIK> 0000356778
<NAME> ReliaStar Select Variable Account
<SERIES>
<NUMBER> 1
<NAME> Select*Annunity II
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 477,706
<INVESTMENTS-AT-VALUE> 558,869
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 558,869
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 621
<TOTAL-LIABILITIES> 621
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 477,706
<SHARES-COMMON-STOCK> 32,298,081
<SHARES-COMMON-PRIOR> 22,791,039
<ACCUMULATED-NII-CURRENT> 15,974
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27,098
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 81,163
<NET-ASSETS> 558,869
<DIVIDEND-INCOME> 7,818
<INTEREST-INCOME> 0
<OTHER-INCOME> 15,324
<EXPENSES-NET> 7,168
<NET-INVESTMENT-INCOME> 15,974
<REALIZED-GAINS-CURRENT> 15,202
<APPREC-INCREASE-CURRENT> 20,697
<NET-CHANGE-FROM-OPS> 51,873
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,404,875
<NUMBER-OF-SHARES-REDEEMED> 1,897,833
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 180,804
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
