File No. 33-69892
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File No. 811-3341
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
-----------------
Post-Effective Amendment No. 6 [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
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RELIASTAR SELECT VARIABLE ACCOUNT
(Exact Name of Registrant as Specified in its Charter)
RELIASTAR 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
Robert B. Saginaw
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
[ ] on pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[X] on April 10, 1998 pursuant to paragraph (a) 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.
Title of securities being registered: Variable annuity contracts issued by a
registered separate account.
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<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
Cross Reference Sheet Pursuant to Rule 495(a)
Form N-4
Item Number Part A Heading in Prospectus
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1. Cover Page; Profile
2. Definitions
3. Summary of Contract Expenses
4. Statement of Additional Information; Condensed Financial
Information
5. ReliaStar Life; The Variable Account; Investment of the
Variable Account
6. Charges Made by ReliaStar Life
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
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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
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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
<PAGE>
May 1, 1998
[LOGO] RELIASTAR
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
THE RELIASTAR SELECT VARIABLE ACCOUNT OF
RELIASTAR LIFE INSURANCE COMPANY
PROFILE OF OUR INDIVIDUAL FIXED AND VARIABLE ANNUITY CONTRACT
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT FEATURES OF THE CONTRACT
THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING IT. THE CONTRACT IS MORE
FULLY DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE READ
THE PROSPECTUS CAREFULLY.
1. THE ANNUITY CONTRACT The fixed and variable annuity contract we are offering
is a contract between you, the owner, and us, ReliaStar Life Insurance Company
(ReliaStar Life). It provides a means for selecting one or more investing funds
on a tax-deferred basis. The Contract is intended for retirement savings or
other long-term investment purposes and provides for a death benefit and
guaranteed income options.
The Contract offers up to 33 investment options from which you can
choose up to 17 over the lifetime of the Contract. The returns on these
investment options are not guaranteed and possibly you can lose money.
The contract also offers a fixed account. This fixed account has an
interest rate that is set once each year. While your money is in the fixed
account, the interest you earn and your principal is guaranteed by ReliaStar
Life.
You can transfer between accounts without tax implications. Currently
there is no charge for transfers.
The Contract has two phases: the accumulation phase and the income or
payout phase. During the accumulation phase, earnings accumulate on a
tax-deferred basis and are not taxed as income until you make a withdrawal. The
amounts accumulated during the accumulation phase will determine the amounts of
annuity payments. The income phase occurs when you begin receiving regular
payments from your contract.
These investments:
* ARE NOT BANK DEPOSITS OR GUARANTEED BY A BANK
* ARE NOT INSURED OR GUARANTEED BY THE FDIC, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY
* ARE AFFECTED BY MARKET FLUCTUATIONS AND SO INVOLVE INVESTMENT
RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL
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 PROFILE OR ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
2. INVESTMENT OPTIONS You can put your money in up to seventeen (17) of these
thirty-three (33) investment portfolios which are described in the prospectuses
for the portfolios. You do not have to choose your investment options in
advance, but upon participation in the seventeenth Fund you would only be able
to transfer within the seventeen Funds already utilized.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
The Alger American Fund: Fidelity's Variable Insurance Neuberger&Berman Advisers OCC Accumulation Trust:
- ------------------------ ----------------------------- ------------------------- -----------------------
Growth Portfolio Products Fund II (VIP II): Management Trust: Equity Portfolio
MidCap Growth Portfolio -------------------------- ----------------- Global Equity Portfolio
Small Capitalization Portfolio Asset Manager Portfolio Limited Maturity Bond Portfolio Managed Portfolio
Contrafund Portfolio Partners Portfolio Small Cap Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
Fidelity's Variable Insurance Janus Aspen Series: Northstar Variable Trust: Putnam Variable Trust:
- ----------------------------- ------------------- ------------------------- ----------------------
Products Fund (VIP): Aggressive Growth Portfolio Northstar Growth Portfolio Putnam VT Asia Pacific
- -------------------- Growth Portfolio Northstar High Yield Bond Portfolio Growth Fund
Equity-Income Portfolio International Growth Portfolio Northstar Income and Growth Portfolio Putnam VT Diversified
Growth Portfolio Worldwide Growth Portfolio Northstar International Value Portfolio Income Fund
High Income Portfolio Northstar Multi-Sector Bond Portfolio Putnam VT Growth and
Money Market Portfolio Income Fund
Overseas Portfolio Putnam VT New Opportunities
Fund
Putnam VT Utilities Growth
and Income Fund
Putnam VT Voyager Fund
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
portfolios.
3. ANNUITY PAYMENTS (THE INCOME PHASE) If you want to receive regular income
from your annuity, you can choose one of three options: (1) monthly payments for
your life (assuming you are the annuitant); (2) monthly payments for your life,
but with payments continuing to the beneficiary for 10 or 20 years (as you
select) if you die before the end of the selected period; and (3) monthly
payments for your life and for the life of another person (usually your spouse)
selected by you. Once you begin receiving regular payments, you cannot change
your payment plan.
During the income phase, you have the same investment choices you had
during the accumulation phase. You can choose to have payments come from the
fixed account, the investment portfolios or both. If you choose to have any part
of your payments come from the investment portfolios, the dollar amount of your
payments may go up or down.
4. PURCHASE The minimum amount ReliaStar Life will accept as an initial purchase
payment is $5,000 for Non-Qualified Contracts and $2,000 for Qualified
Contracts. ReliaStar Life may choose not to accept any subsequent purchase
payment for a Non-Qualified Contract if it is less than $500 and for a Qualified
Contract if it is less than $200. ReliaStar Life may choose not to accept any
subsequent purchase payments if the additional payments, when added to the
Contract Value at the next Valuation Date, would exceed $1,000,000.
5. EXPENSES The Contract has insurance features and investment features, and
there are costs related to each.
Each year ReliaStar Life deducts a $30 contract maintenance charge from
your Contract. We also deduct for insurance and administrative charges which
annually total 1.40% of the average daily value of your Contract allocated to
the investment portfolios.
There are also investment fund annual expenses which range from ___% to
___% of the average daily value of the investment portfolio depending upon the
investment portfolio which you select.
<PAGE>
If you take your money out, we may assess a withdrawal charge. This
charge is equal to a maximum of 6% in years 1 and 2 and reduces to 0 after year
6. When you begin receiving regular income payments from your annuity, we may
assess a state premium tax charge which ranges from 0-3.5% depending upon the
state.
6. PERFORMANCE The value of the Contract will vary up or down depending upon the
investment performance of the investment fund you choose. The following chart
shows total returns through December 31, 1997, for each investment fund for the
time periods shown. These numbers reflect the insurance charges, the contract
maintenance charge, the investment expenses and all other expenses of the
investment fund. These numbers do not reflect any withdrawal charges and if
applied these charges would reduce such performance. Past performance is not a
guarantee of future results.
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year
------ ------ -------
<S> <C> <C> <C>
THE ALGER AMERICAN FUND
Growth Portfolio ----- ----- n/a
MidCap Growth Portfolio ----- n/a n/a
Small Capitalization Portfolio ----- ----- n/a
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP)
VIP Equity-Income Portfolio ----- ----- -----
VIP Growth Portfolio ----- ----- -----
VIP High Income Portfolio ----- ----- -----
VIP Money Market Portfolio ----- ----- -----
VIP Overseas Portfolio ----- ----- -----
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
VIP II Asset Manager Portfolio ----- ----- n/a
VIP II Contrafund Portfolio ----- n/a n/a
VIP II Index 500 Portfolio ----- ----- n/a
VIP II Investment Grade Bond Portfolio ----- ----- n/a
JANUS ASPEN SERIES
Aggressive Growth Portfolio ----- n/a n/a
Growth Portfolio ----- n/a n/a
International Growth Portfolio ----- n/a n/a
Worldwide Growth Portfolio ----- n/a n/a
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio ----- ----- -----
Partners Portfolio ----- n/a n/a
NORTHSTAR VARIABLE TRUST
Northstar Growth Portfolio ----- n/a n/a
Northstar High Yield Bond Portfolio ----- n/a n/a
Northstar Income and Growth Portfolio ----- n/a n/a
Northstar International Value Portfolio n/a n/a n/a
Northstar Multi-Sector Bond Portfolio ----- n/a n/a
OCC ACCUMULATION TRUST
Equity Portfolio ----- ----- n/a
Global Equity Portfolio ----- n/a n/a
Managed Portfolio ----- ----- n/a
Small Cap Portfolio ----- ----- n/a
PUTNAM VARIABLE TRUST
Putnam VT Asia Pacific Growth Fund ----- n/a n/a
Putnam VT Diversified Income Fund ----- n/a n/a
Putnam VT Growth and Income Fund ----- ----- n/a
Putnam VT New Opportunities Fund ----- n/a n/a
Putnam VT Utilities Growth and Income Fund ----- ----- n/a
Putnam VT Voyager Fund ----- ----- n/a
</TABLE>
Performance for several of the portfolios includes hypothetical performance for
periods before the portfolio was available as an investment option. Contract
charges are applied to actual
<PAGE>
portfolio net asset values to determine the performance the portfolio would have
achieved in the Contract.
Investment in the money market fund option is neither insured nor guaranteed by
the U.S. government and there can be no assurance that it will be able to
maintain a stable net asset value of $1 per share.
Performances of certain of the portfolios reflect a voluntary expense
limitation, as described in the prospectus. In the absence of this voluntary
limitation the total return would have been lower.
7. TAXES Your earnings are not taxed until you take them out. If you withdraw
money earnings may come out first and will be taxed as income. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
tax penalty on the earnings. Annuitization payments during the income phase are
considered partly a return of your original investment. That part of each
payment is not taxable as income.
8. ACCESS TO YOUR MONEY You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10% of your total
purchase payments each year without charge from us. Withdrawals in excess of
that will be charged a maximum of 6% in years 1 and 2 which reduces to 0 after
year 6. After we have a payment for 6 years, there is no charge for withdrawals.
You may also have to pay income tax and a tax penalty on any money you take out.
Each purchase payment you add to your Contract has its own 6 year withdrawal
charge period.
9. DEATH BENEFIT If you die before moving to the income phase, the person you
have chosen as your beneficiary will receive a death benefit. This death benefit
will be the greater of three amounts: 1) the money you've put in less any money
you've taken out, or 2) the current value of your Contract, or 3) the value of
your Contract at the most recent specified anniversary plus any money you've
added since that anniversary minus any money you've taken out since that
anniversary. If you die after age 85, your beneficiary would receive the
Contract Value.
10. OTHER INFORMATION
FREE LOOK. If you cancel the Contract within 10 days after receiving it (or
whatever period is required in your state), we will return the Contract Value
without assessing a withdrawal charge. You will receive whatever your Contract
is worth on the day we receive your request. This may be more or less than your
original payment.
NO PROBATE. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
WHO SHOULD PURCHASE THE CONTRACT? This Contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state tax brackets. You should not buy this Contract if you are
looking for a short-term investment or if you cannot take the risk of getting
back less money than you put in.
<PAGE>
ADDITIONAL FEATURES. This Contract has additional Features you might be
interested in. These include:
* You can arrange to have money automatically sent to you each month
while your Contract is still in the accumulation phase. Of course,
you'll have to pay taxes on money you receive. We call this feature
the Systematic Withdrawal Program.
* You can arrange to have a regular amount of money automatically
invested in investment portfolios each month, theoretically giving you
a lower average cost per unit over time then a single one time
purchase. We call this feature Dollar Cost Averaging.
* ReliaStar Life will automatically readjust the money in your Contract
between investment portfolios periodically to keep the blend you
select. We call this feature Portfolio Rebalancing.
These features are not available in all states and may not be suitable for your
particular situation.
11. INQUIRIES If you need more information, please contact us at:
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 54401
1-800-621-3750
or the distributor of the Contracts, our affiliated Company,
Washington Square Securities, Inc.
20 Washington Avenue South
Minneapolis, Minnesota 55401
1-800-621-3750
<PAGE>
PROSPECTUS
[LOGO] RELIASTAR
20 Washington Avenue South
Minneapolis, Minnesota 55401
1-800-621-3750
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
THE RELIASTAR SELECT VARIABLE ACCOUNT OF
RELIASTAR LIFE INSURANCE COMPANY
This Prospectus offers flexible purchase Individual Deferred
Variable/Fixed Annuity Contracts. The Contracts are sold both as non-qualified
contracts and in connection with retirement plans which may qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax
Status".) Annuity payouts from the Contracts are deferred until a selected later
date.
You can allocate purchase payments to one or more Sub-Accounts of
ReliaStar Select Variable Account (the "Variable Account"), a separate account
of ReliaStar Life Insurance Company ("ReliaStar Life"), to be invested at net
asset value in shares of one or more of a group of investment funds (the
"Investment Funds"). The currently available Investment Funds are listed in the
Profile, which accompanies this Prospectus. The Variable Account, your account
value and the amount of any variable annuity payments that you receive will
vary, primarily based on the investment performance of the Investment Funds you
select. (For more information about investing in the Investment Funds, see
"Investments of the Variable Account".) You can also allocate payments to the
Fixed Account (which is the general account of ReliaStar Life). The Fixed
Account is not available to Contract Owners in the States of Maryland, Oregon,
South Carolina and Washington.
Additional information about the Contracts, ReliaStar Life and the
Variable Account, contained in a Statement of Additional Information dated May
1, 1998, has been filed with the Securities and Exchange Commission. The
Statement of Additional Information is available by accessing the SEC's internet
web site (http: // www.sec.gov) or upon request without charge by writing to
Washington Square Securities, Inc., 20 Washington Avenue South, Minneapolis,
Minnesota 55401 or by calling 1-800-621-3750. The Statement of Additional
Information is incorporated by reference in this Prospectus and its Table of
Contents can be found on page __ of this Prospectus.
THIS PROSPECTUS AND THE ATTACHED PROFILE SET FORTH CONCISELY THE
INFORMATION ABOUT THE CONTRACT THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE
INVESTING AND SHOULD BE RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE INVESTMENT
FUNDS OFFERED BY THE ALGER AMERICAN FUND, FIDELITY'S VARIABLE INSURANCE PRODUCTS
FUND, FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II, JANUS ASPEN SERIES,
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST, THE NORTHSTAR VARIABLE TRUST, THE
OCC ACCUMULATION TRUST AND PUTNAM VARIABLE TRUST, AND IS VALID ONLY WHEN
ACCOMPANIED BY THESE PROSPECTUSES.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Definitions.................................................. 2 Frequency and Amount of Annuity Payments................ 22
Summary of Contract Expenses................................. 4 Annuity Payments........................................ 23
ReliaStar Life............................................... 10 Sub-Account Annuity Unit Value.......................... 23
The Variable Account......................................... 10 Assumed Investment Rate................................. 23
Investments of the Variable Account.......................... 10 Federal Tax Status......................................... 23
Charges Made by ReliaStar Life............................... 13 Introduction............................................ 23
Surrender Charge (Contingent Deferred Sales Charge)...... 13 Tax Status of the Contract.............................. 24
Annual Contract Charge................................... 14 Taxation of Annuities................................... 25
Mortality Risk Premium................................... 14 Transfers, Assignments or Exchanges of a Contract 26
Expense Risk Premium..................................... 15 Withholding............................................. 27
Administration Charge.................................... 15 Multiple Contracts...................................... 27
Premium and Other Taxes.................................. 15 Taxation of Qualified Plans............................. 27
Reduction or Waiver of Charges........................... 15 Possible Charge for ReliaStar Life's Taxes.............. 28
Expenses of the Investment Funds......................... 15 Other Tax Consequences.................................. 28
Administration of the Contracts.............................. 15 Voting of Fund Shares...................................... 28
The Contracts................................................ 16 Distribution of the Contracts.............................. 29
Allocation of Purchase Payments.......................... 16 Revocation................................................. 29
Sub-Account Accumulation Unit Value...................... 16 Reports to Owners.......................................... 29
Net Investment Factor.................................... 17 Legal Proceedings.......................................... 29
Death Benefit Before the Annuity Commencement Date....... 17 Financial Statements and Experts........................... 29
Death Benefit After the Annuity Commencement Date........ 18 Further Information........................................ 30
Surrender (Redemption)................................... 18 Statement of Additional Information Table of Contents 31
Systematic Withdrawals................................... 18 Appendix................................................... A-1
Transfers................................................ 19 Performance Information
Portfolio Rebalancing Service............................ 20
Assignments.............................................. 20 Investment Fund Prospectuses
Contract Owner and Beneficiaries......................... 20 ("Select*Product Investment Options")
Contract Inquiries....................................... 21 The Alger American Fund
Annuity Provisions........................................... 21 Fidelity's Variable Insurance Products Fund (VIP)
Annuity Commencement Date................................ 21 Fidelity's Variable Insurance Products Fund II (VIP II)
Partial Annuitizations................................... 21 Janus Aspen Series
Annuity Form Selection................................... 22 Neuberger&Berman Advisers Management Trust
Annuity Forms............................................ 22 Northstar Variable Trust
OCC Accumulation Trust
Putnam Variable Trust
</TABLE>
DEFINITIONS
THE ALGER AMERICAN FUND - A Growth Portfolio; A MidCap Growth Portfolio; A Small
Capitalization Portfolio.
ANNUITANT - The person who is named by the Owner whose life determines the
annuity benefits payable.
ANNUITY COMMENCEMENT DATE (COMMENCEMENT DATE) - The date on which the annuity
payments begin, 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 ReliaStar Life. 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, ReliaStar Life reserves the right to adjust the
Commencement Date to the first Valuation Date after the Commencement
Date selected by the Owner that is at least 60 days after the Contract
issue date.
<PAGE>
BENEFICIARY - The person who is named to receive the Contract Value upon the
death of the Owner before the Annuity Commencement Date or to receive
the balance of the annuity payments, if any, under the Annuity Form in
effect at the Annuitant's death.
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 and privileges
under the Contract. The Annuitant owns the Contract unless another
Owner is named as provided for in the Contract. The Contract may be
owned by one, but no more than two, natural persons only, except when
it is held under a retirement plan or program described in Section
401(a), 403(a), 403(b), 408 or 408(a) of the Code.
CONTRACT VALUE - The sum of (a) the Variable Account Contract Value, which is
the value of the Sub-Account Accumulation Units under the Contract plus
(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 previously
applied, and any annual administrative charges applicable to the Fixed
Account, and minus any transfers to the Variable Account.
CONTRACT YEAR - Each twelve-month period starting with the date the Contract was
issued and each Contract Anniversary after that.
DEATH BENEFIT - The amount payable upon the death of a Contract Owner before the
Annuity Commencement Date. (See "Death Benefit Before the Annuity
Commencement Date".)
DEATH BENEFIT VALUATION DATE - The Death Benefit Valuation Date is the Valuation
Date next following the date ReliaStar Life receives proof of death and
a written request from the Beneficiary for a single sum payment or an
Annuity Form permitted by Section 72(s) of the Code.
FIXED ACCOUNT - The Fixed Account is the general account of ReliaStar Life,
which consists of all assets of ReliaStar Life other than those
allocated to separate accounts of ReliaStar Life.
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.
JANUS ASPEN SERIES - Aggressive Growth Portfolio; Growth Portfolio;
International Growth Portfolio; Worldwide Growth Portfolio.
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST - Limited Maturity Bond Portfolio;
Partners Portfolio.
NORTHSTAR VARIABLE TRUST (NORTHSTAR) - Northstar Growth Portfolio; Northstar
High Yield Bond Portfolio; Northstar Income and Growth Portfolio;
Northstar International Value Portfolio; Northstar Multi-Sector Bond
Portfolio.
OCC ACCUMULATION TRUST - Equity Portfolio; Global Equity Portfolio; Managed
Portfolio; Small Cap Portfolio.
PUTNAM VARIABLE TRUST - Putnam VT Asia Pacific Growth Fund; Putnam VT
Diversified Income Fund; Putnam VT Growth and Income Fund; Putnam VT
New Opportunities Fund; Putnam VT Utilities Growth and Income Fund;
Putnam VT Voyager Fund.
QUALIFIED PLAN - A retirement plan under Sections 401, 403, 408 or 408A or
similar provisions of the Code.
<PAGE>
SPECIFIED CONTRACT ANNIVERSARY - Each consecutive six year anniversary date
measured from the date the Contract was issued. The Specified Contract
Anniversary is used to determine the Death Benefit payable if the
Contract Owner dies before the Annuity Commencement Date. (See "Death
Benefit Before the Annuity Commencement Date".)
SUB-ACCOUNT - That portion of the Variable Account which invests in shares of a
specific Investment Fund.
SUB-ACCOUNT ACCUMULATION UNIT - A unit of measure 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 on which 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; Martin
Luther King Day; President's Day; Good Friday; Fourth of July; 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 ReliaStar Life consisting of assets set
aside by ReliaStar Life, the investment performance of which is kept
separate from that of the general assets of ReliaStar Life.
VARIABLE ANNUITY - A series of periodic payments to the Contract Payee which
will vary in amount, primarily based on the investment results of the
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. FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND - Equity-Income Portfolio;
Growth Portfolio; High Income Portfolio; Money Market Portfolio;
Overseas Portfolio
VIP II. FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II - Asset Manager
Portfolio; Contrafund Portfolio; Index 500 Portfolio; Investment Grade
Bond Portfolio
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases...........................................None
Surrender Charge (as a percentage of amounts surrendered attributable to
purchase payments made in the last six Contract Years) (a)
CONTRACT YEAR OF SURRENDER MINUS CONTRACT SURRENDER CHARGE AS A PERCENTAGE OF
YEAR OF PURCHASE PAYMENT EACH PURCHASE PAYMENT
------------------------ ---------------------
0-1 6%
2-3 5
4-5 4
6 and later 0
Transfer Charge(b)..........................................................None
ANNUAL CONTRACT CHARGE.......................................................$30
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Premiums........................................1.25%
Other Account Fees and Expenses (See "Administration Charge").............. .15%
Total Variable Account Annual Expenses.....................................1.40%
<PAGE>
ANNUAL INVESTMENT FUND EXPENSES AFTER REIMBURSEMENTS:
(as a percentage of Investment Fund average net assets)
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---- -------- --------
<S> <C> <C> <C>
THE ALGER AMERICAN FUND [T o B e U p d a t e d]
Growth Portfolio(c) % % %
MidCap Growth Portfolio(c) % % %
Small Capitalization Portfolio(c) % % %
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP):
Equity-Income Portfolio(c)(d) % % %
Growth Portfolio(c)(d) % % %
High Income Portfolio(c) % % %
Money Market Portfolio % % %
Overseas Portfolio(c)(d) % % %
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
Asset Manager Portfolio(c)(d) % % %
Contrafund Portfolio(c)(d) % % %
Index 500 Portfolio(c)(e) % % %
Investment Grade Bond Portfolio(c) % % %
JANUS ASPEN SERIES:
Aggressive Growth Portfolio(c)(f) % % %
Growth Portfolio(c)(f) % % %
International Growth Portfolio(c)(f) % % %
Worldwide Growth Portfolio(c)(f) % % %
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio(c) % % %
Partners Portfolio(c) % % %
NORTHSTAR VARIABLE TRUST:
Northstar Growth Portfolio(g) 0.75% 0.05% 0.80%
Northstar High Yield Bond Portfolio(g) 0.75% 0.05% 0.80%
Northstar Income and Growth Portfolio(g) 0.75% 0.05% 0.80%
Northstar International Value Portfolio(g) 0.75% 0.05% 0.80%
Northstar Multi-Sector Bond Portfolio(g) 0.75% 0.05% 0.80%
OCC ACCUMULATION TRUST:
Equity Portfolio(c)(h) % % %
Global Equity Portfolio(c)(h) % % %
Managed Portfolio(c)(h) % % %
Small Cap Portfolio(c)(h) % % %
PUTNAM VARIABLE TRUST:
Putnam VT Asia Pacific Growth Fund % % %
Putnam VT Diversified Income Fund % % %
Putnam VT Growth and Income Fund % % %
Putnam VT New Opportunities Fund % % %
Putnam VT Utilities Growth and Income Fund % % %
Putnam VT Voyager Fund % % %
</TABLE>
The fee and expense information regarding the Investment Funds was
provided by the Funds.
Except for the Northstar Variable Trust, neither the Investment Funds
nor their Advisers are affiliated with ReliaStar Life.
<PAGE>
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>
[T o B e U p d a t e d]
THE ALGER AMERICAN FUND: $ $ $ $
Growth Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP):
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
JANUS ASPEN SERIES:
Aggressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio
Partners Portfolio
NORTHSTAR VARIABLE TRUST:
Northstar Growth Portfolio 77 117 159 263
Northstar High Yield Bond Portfolio 77 117 159 263
Northstar Income and Growth Portfolio 77 117 159 263
Northstar International Value Portfolio 77 117 159 263
Northstar Multi-Sector Bond Portfolio 77 117 159 263
OCC ACCUMULATION TRUST:
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
PUTNAM VARIABLE TRUST:
Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT New Opportunities Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund
</TABLE>
<PAGE>
If you annuitize 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>
[T o B e U p d a t e d]
THE ALGER AMERICAN FUND: $ $ $ $
Growth Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP):
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
JANUS ASPEN SERIES:
Aggressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio
Partners Portfolio
NORTHSTAR VARIABLE TRUST:
Northstar Growth Portfolio 77 72 123 263
Northstar High Yield Bond Portfolio 77 72 123 263
Northstar Income and Growth Portfolio 77 72 123 263
Northstar International Value Portfolio 77 72 123 263
Northstar Multi-Sector Bond Portfolio 77 72 123 263
OCC ACCUMULATION TRUST:
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
PUTNAM VARIABLE TRUST:
Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT New Opportunities Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund
</TABLE>
*If the Contract's Annuity Commencement Date occurs during the first two
Contract Years following the date the Contract was issued a Surrender Charge is
deducted and the expenses shown in year 1 reflect this deduction.
<PAGE>
If you do not surrender or annuitize 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>
[T o B e U p d a t e d]
THE ALGER AMERICAN FUND: $ $ $ $
Growth Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP):
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
JANUS ASPEN SERIES:
Aggressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio
Partners Portfolio
NORTHSTAR VARIABLE TRUST:
Northstar Growth Portfolio 23 72 123 263
Northstar High Yield Bond Portfolio 23 72 123 263
Northstar Income and Growth Portfolio 23 72 123 263
Northstar International Value Portfolio 23 72 123 263
Northstar Multi-Sector Bond Portfolio 23 72 123 263
OCC ACCUMULATION TRUST:
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
PUTNAM VARIABLE TRUST:
Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT New Opportunities Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund
</TABLE>
(a) In certain situations amounts can be surrendered without any surrender
charge. For more information on the Surrender Charge, see, "Surrender
Charge (Contingent Deferred Sales Charge)". ReliaStar Life reserves the
right to charge a partial surrender processing fee not to exceed the
lesser of 2% of the partial surrender amount or $25. For more
information on the processing fee, see "Surrender (Redemption)".
(b) ReliaStar Life currently does not impose a charge on transfers between
the Sub-Accounts or to the Fixed Account, although it reserves the
right to impose a charge not to exceed $25 per transfer.
<PAGE>
(c) ReliaStar Life 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 ReliaStar
Life and certain of ReliaStar Life's insurance company affiliates.
These amounts are intended to compensate ReliaStar Life or ReliaStar
Life's affiliates for administrative, record keeping, distribution in
some cases, and other services provided by such parties to the Funds
and/or the Funds' affiliates. Currently, ReliaStar Life has service
arrangements with Fred Alger Management, Inc., Fidelity Management &
Research Company, Janus Capital, Neuberger&Berman Management, and OpCap
Advisors. Payments of such amounts by an affiliate or affiliates of the
Funds do not increase the fees paid by the Funds or their shareholders.
(d) A portion of the brokerage commissions that certain funds pay was used
to reduce fund 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 __% for
Equity-Income Portfolio, __% for Growth Portfolio, __% for Overseas
Portfolio, __% for Asset Manager Portfolio, and __% for Contrafund
Portfolio.
(e) FMR agreed to reimburse a portion of Index 500 Portfolio's expenses
during the period. Without this reimbursement, the funds' management
fee, other expenses and total expenses would have been __%, __, and
__%, respectively. Expense reimbursements are voluntary. There is no
assurance of ongoing reimbursement.
(f) The fees and expenses of Janus Aspen Series are based on gross expenses
before expense offset arrangements for the fiscal year ended December
31, 1997. The information for each Portfolio is net of fee waivers or
reductions from Janus Capital. Fee reductions for the Aggressive
Growth, Growth, International Growth, and Worldwide Growth Portfolios
reduce the management fee to the level of the corresponding Janus
retail fund. Other waivers, if applicable are first applied against the
management fee and then against other expenses. Without such waivers or
reductions, the Management fee, Other Expenses and Total Operating
Expenses would have been: ___%, ___% and ___% for the Aggressive Growth
Portfolio; ___%, ___%, and ___% for the Growth Portfolio; ___%, ___%
and ___% for the International Growth Portfolio; and, ___%, ___%, and
___% for the Worldwide Growth Portfolio. Janus Capital may modify or
terminate the waivers or reductions at any time upon at least 90 days'
notice to the Trustees of Janus Aspen Series.
(g) The investment adviser to the Northstar Variable Trust has agreed to
reimburse the five Northstar Portfolios for any expenses in excess of
0.80% of each Portfolio's average daily net assets. In the absence of
the investment adviser's expense reimbursements, the actual expenses
that would have been paid by each Portfolio during its fiscal year
ended December 31, 1997 would have been: Northstar Growth Portfolio:
___%; Northstar High Yield Bond Portfolio: ___%; Northstar Income and
Growth Portfolio: ___%; Northstar Multi-Sector Bond Portfolio: ___%.
The Northstar International Value Portfolio commenced operations on
August 8, 1997. On an annualized basis, absent expense reimbursement,
the actual expenses for this Portfolio are estimated to be ___%.
Expense reimbursements are voluntary. There is no assurance of ongoing
reimbursement.
(h) The annual other expenses of OCC Accumulation Trust Portfolios are
shown gross of certain expense offsets afforded the portfolios which
effectively lowered overall custody expenses. The expenses of the
portfolios have been contractually limited by OpCap Advisors so that
their respective annualized operating expenses (net of any expense
offsets) do not exceed 1.25% of their respective average daily net
assets. Furthermore, through December 31, 1997, the annualized
operating expenses of the Equity, Managed, and Small Cap Portfolios
have been voluntarily limited by OpCap Advisors so that annualized
operating expenses (net of any expense offsets) of these Portfolios do
not exceed 1.00% of their respective average daily net assets. Without
such contractual and voluntary expense limitations and without giving
effect to any expense offsets, the Management Fees, Other Expenses and
Total Investment Fund Expenses incurred for the fiscal year ended
December 31, 1997 would have been __%, __% and __% respectively, for
the Equity Portfolio; __%, __% and __% respectively, for the Global
Equity Portfolio; __%, __% and __% respectively, for the Managed
Portfolio; and __%, __% and __% respectively, for the Small Cap
Portfolio. Expense reimbursements are voluntary. There is no assurance
of ongoing reimbursement.
<PAGE>
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 you in understanding the various
costs and expenses that a you 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 anticipated average net assets in the Variable
Account and Fixed Account, which translates to a charge equal to an annual rate
of 0.090% of the Variable Account 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, "Premium and Other Taxes".
RELIASTAR LIFE
ReliaStar Life, organized in 1885, is a Minnesota stock life insurance
company. ReliaStar Life is a direct, wholly-owned subsidiary of ReliaStar
Financial Corp., a publicly traded Delaware holding company, whose shares are
listed on the New York Stock Exchange. ReliaStar Life offers individual life
insurance and annuities, employee benefits, and retirement contracts. ReliaStar
Life 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 ReliaStar Life should be considered as bearing only upon
the ability of ReliaStar Life to meet its obligations under the Contracts.
THE VARIABLE ACCOUNT
The Variable Account is a separate account of ReliaStar Life
established by the Board of Directors of ReliaStar Life on November 12, 1981,
pursuant to the laws of the State of Minnesota. The Variable Account is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940, as amended ("1940 Act"). Such
registration does not involve supervision by the Commission of the management or
investment policies or practices of the Variable Account, ReliaStar Life or the
Portfolios. ReliaStar Life has complete ownership and control of the assets in
the Variable Account, but these assets are held separately from ReliaStar Life's
other assets and are not part of ReliaStar Life's General Account.
The portion of the assets of the Variable Account equal to the reserves
and other contract liabilities of the Variable Account will not be charged with
liabilities incurred in any other business that ReliaStar Life may conduct.
ReliaStar Life has the right to transfer to its General Account any assets of
the Variable Account which are in excess of such reserves and other liabilities.
The income gains, and losses of the Variable Account will be credited to or
charged against the Variable Account in accordance with the contracts supported
by the Variable Account, without regard to the other income, gains or losses of
ReliaStar Life.
Purchase payments allocated to the Variable Account under a Contract
are invested in one or more Sub-Accounts of the Variable Account, as selected by
you, the Owner. 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.
INVESTMENTS OF THE VARIABLE ACCOUNT
When you apply for a Contract, you can allocate purchase payments to
one or more of the Sub-Accounts. There are currently thirty-three Sub-Accounts.
Each Sub-Account invests in shares of one of the Investment Funds at its net
asset value. As Owner, you can change a purchase payment allocation for future
purchase payments and can transfer all or part of the values in a Sub-Account to
another Sub-Account. However, you are only permitted to participate in a maximum
of seventeen Sub-Accounts over the lifetime of your Contract. Upon participation
in the seventeenth Sub-Account since the issue of the Contract you would only be
able to transfer within the seventeen Sub-Accounts 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
<PAGE>
initial selections and choose ten different options, none of which are the same
as your original seven selections. You have now used your maximum selection of
seventeen Sub-Accounts. You can still allocate purchase payments or transfers
among any of the seventeen Sub-Accounts you have previously selected. However,
you cannot allocate funds to the remaining Sub-Accounts. An Owner may make
partial or complete transfers to the Fixed Account from the Variable Account at
any time.
The following are the investment advisers for the Investment Funds. The
advisers are paid fees for their services by the Funds they manage. Fred Alger
Management, Inc. is the investment adviser for the three portfolios of The Alger
American Fund; Fidelity Management & Research Company ("FMR") is the investment
adviser for the nine portfolios of Fidelity's Variable Insurance Products Funds
I and II (VIP and VIP II); Janus Capital Corporation ("Janus Capital") is the
investment adviser for the four portfolios of Janus Aspen Series;
Neuberger&Berman Management is the investment adviser for the two portfolios of
the Advisers Management Trust; Northstar Investment Management Corporation is
the investment adviser for the five funds of the Northstar Variable Trust; OpCap
Advisors is the investment adviser for the four portfolios of the OCC
Accumulation Trust; and Putnam Investment Management, Inc. ("Putnam Management")
is the investment adviser for the six portfolios of Putnam Variable Trust.
The Investment Funds currently offered, and the investment objective of
each, are named below. More detailed information about the Investment Funds can
be found in the current prospectus and Statement of Additional Information for
each Investment Fund. These prospectuses accompany this Prospectus in a book
entitled "Select*Product Investment Options." The Investment Fund prospectuses
should be read carefully before any allocation to, or transfers among, the
Sub-Accounts.
INVESTMENT FUNDS OBJECTIVE
- ---------------- ---------
[To Be Supplied]
The Alger American Fund:
Growth Portfolio
MidCap Growth Portfolio
Small Capitalization
Fidelity's Variable Insurance Products Fund (VIP):
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
Fidelity's Variable Insurance Products Fund II (VIP II):
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
Janus Aspen Series:
Aggressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
Neuberger&Berman Advisers Management Trust ("AMT"):
Limited Maturity Bond Portfolio
Partners Portfolio
<PAGE>
Northstar Variable Trust (Northstar):
Northstar Growth Portfolio
Northstar High Yield Bond Portfolio
Northstar Income and Growth Portfolio
Northstar International Value Portfolio
Northstar Multi-Sector Bond Portfolio
OCC Accumulation Trust:
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
Putnam Variable Trust:
Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT New Opportunities Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
INVESTMENT FUNDS WILL BE ACHIEVED.
ReliaStar Life reserves the right, subject to compliance with the law,
to offer additional Investment Funds.
The Investment Funds are available to registered separate accounts of
ReliaStar Life and to insurance companies other than ReliaStar Life, offering
variable annuity contracts and variable life insurance policies. ReliaStar Life
currently does not foresee any disadvantages to Owners resulting from the
Investment Funds selling shares to fund products other than the Contracts.
However, there is a possibility that a material conflict may arise between
Owners whose Contract Values are allocated to the Variable Account and the
owners of variable life insurance policies and variable annuity contracts issued
by ReliaStar Life or by such other companies whose assets are allocated to one
or more other separate accounts investing in any one of the Investment Funds. In
the event of a material conflict, ReliaStar Life will take any necessary steps,
including removing the Variable Account from that Investment Fund, to resolve
the matter. The Board of Directors or Trustees of each Investment Fund will
monitor events in order to identify any material conflicts that possibly may
arise and determine what action, if any, should be taken in response to those
events or conflicts. See each individual Investment Fund prospectus for more
information.
REINVESTMENT
The Investment Funds described above have as a policy the distribution
of income, dividends and capital gains. However, under the Contracts there is an
automatic reinvestment of such distributions.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENT FUND SHARES
ReliaStar Life reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Variable Account or that the Variable Account may purchase. If the shares of
a portfolio of an Investment Fund are no longer available for investment or if
in ReliaStar Life's judgment further investment in any portfolio of an
Investment Fund should become inappropriate in view of the purposes of the
Variable Account, ReliaStar Life may redeem the shares of that portfolio and
substitute shares of another registered open-end management investment company.
ReliaStar Life will not substitute any shares attributable to a Contract's
interest in a Sub-Account of the Variable Account without notice and prior
approval of the SEC and state insurance authorities, as required by law.
<PAGE>
ReliaStar Life also reserves the right to establish additional
Sub-Accounts of the Variable Account, each of which would invest in shares
corresponding to a new investment company portfolio or delete Sub-Accounts
pursuant to the process described in this section. Subject to applicable law and
any required SEC approval, ReliaStar Life may, in its sole discretion, establish
new Sub-Accounts or eliminate one or more Sub-Accounts if marketing needs, tax
considerations or investment conditions warrant. Any new Sub-Accounts may be
made available to existing Contract Owners on a basis to be determined by
ReliaStar Life.
If any of these substitutions or changes are made, ReliaStar Life may,
by appropriate endorsement, change the Contract to reflect the substitution or
change. If ReliaStar Life deems it to be in the best interest of Contract Owners
and Annuitants, and subject to any approvals that may be required under
applicable law, the Variable Account may be operated as a management investment
company under the 1940 Act, it may be deregistered under the Act if registration
is no longer required, or it may be combined with other separate accounts of
ReliaStar Life.
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 ReliaStar Life's management
further investment in such Investment Fund shares would be inappropriate in view
of the purposes of the Contract, the portion of the purchase payment designated
to be invested in such Investment Fund will be returned to the Owner. The Owner
may then direct investment of such purchase payment to a different Sub-Account.
CHARGES MADE BY RELIASTAR
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from purchase payments.
However, a surrender charge (which may be deemed a contingent deferred sales
charge) may be assessed, This charge, is intended to reimburse ReliaStar Life
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.
If part or all of a Contract's value is surrendered, or, except for
contracts issued in the State of Washington, if the Contract's Annuity
Commencement Date occurs within the first two years after the Contract is
issued, surrender charges may be made by ReliaStar Life.
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. "New Purchase Payments" are those Contract purchase payments received
by ReliaStar Life during the Contract Year in which the surrender occurs or in
the five 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.
Surrenders taken from 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 ReliaStar Life (with the exception of Systematic Withdrawals,
this does not apply to surrenders made during the first Contract Year nor to any
surrenders after the first surrender made in each Contract Year thereafter); and
(c) any Contract Earnings being surrendered.
TOTAL SURRENDERS - The surrender charge for a total surrender is
determined by multiplying the amount of each New Purchase Payment surrendered,
that is not eligible for a free surrender, by the applicable surrender charge
percentage as set forth in the following table:
<PAGE>
SURRENDER CHARGE PERCENTAGE TABLE
---------------------------------
CONTRACT YEAR OF SURRENDER SURRENDER CHARGE AS A
MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
---------------- ----------------
0-1 6%
2-3 5
4-5 4
6 and later 0
PARTIAL SURRENDERS - The amount of the partial surrender subject to a
surrender charge is determined by dividing (a) the portion of each New Purchase
Payment to be surrendered which is not eligible for a Free Surrender by (b) one
minus the applicable surrender charge percentage from the Surrender Charge
Percentage Table set forth above. The resulting amount for each New Purchase
Payment to be surrendered is then multiplied by the applicable surrender charge
percentage from the Surrender Charge Percentage Table shown above to arrive at
the amount of surrender charge to be assessed.
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.
ANNUAL CONTRACT CHARGE
Each year on the Contract Anniversary, ReliaStar Life deducts an Annual
Contract Charge of $30 from the Contract Value to reimburse it for
administrative expenses relating to the Contract, the Variable Account and the
Sub-Accounts. ReliaStar Life will not increase the Annual Contract Charge.
During the accumulation phase of the Contract, ReliaStar Life reserves the right
to waive the Annual Contract Charge for new business where the cumulative
purchase payments, less any cumulative partial surrenders and less cumulative
partial annuitizations, exceed $50,000. ReliaStar Life reserves the right to
reinstate the Charge on Contracts previously qualifying for the waiver. In any
Contract Year when a Contract is surrendered for its full value on other than
the Contract Anniversary, the Annual Contract Charge will be deducted at the
time of such surrender. During the annuity period if both a fixed annuity
payment and a variable annuity payment are selected, then an Annual Contract
Charge will be separately assessed against each payment type. The charges will
be deducted in equal installments from each such payment made during a
twelve-month period. If only a fixed annuity payment or a variable annuity
payment is selected, then only one Annual Contract Charge will be assessed and
deducted in equal installments. We will not waive the Charge from annuity
payments once the income phase has begun.
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. ReliaStar
Life assumes this "mortality risk" and has guaranteed the annuity rates
incorporated in the Contract, which cannot be changed.
To compensate ReliaStar Life 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"), ReliaStar Life
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 0.85% of
the daily Contract Values under the Variable Account. ReliaStar Life may not
change the rate charged for the Mortality Risk Premium under any Contract.
<PAGE>
EXPENSE RISK PREMIUM
ReliaStar Life will not increase charges for administrative expenses
regardless of its actual expenses. To compensate ReliaStar Life for assuming
this expense risk, ReliaStar Life deducts an Expense Risk Premium from the
Variable Account Contract Value. The deduction is made daily in an amount that
is equal to an annual rate of 0.40% of the daily Variable Account Contract
Values. ReliaStar Life may not change the rate of the Expense Risk Premium under
any Contract.
ADMINISTRATION CHARGE
ReliaStar Life deducts a daily Administration Charge from the Variable
Account Contract Value in an amount equal to an annual rate of 0.15% of the
daily Contract Values under the Variable Account. This charge is deducted to
reimburse ReliaStar Life for the cost of providing administrative services under
the Contracts and the Variable Account. ReliaStar Life may not change the rate
of the Administration Charge under any Contract.
PREMIUM AND OTHER TAXES
Various states and other governmental entities levy a premium tax,
currently ranging up to 3.5%, on annuity contracts issued by insurance
companies. If the Owner of the Contract lives in a governmental jurisdiction
that levies such a tax, ReliaStar Life will pay the taxes when due and reserves
the right to deduct the amount of the tax either from purchase payments as they
are received or from the Contract Value at the Annuity Commencement Date
(immediately before the Contract Value is applied to an Annuity Form) as
permitted or required by applicable law.
Premium tax rates 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. ReliaStar Life reserves the right to deduct charges
for any other tax or economic burden resulting from the application of the tax
laws that it determines to be applicable to the Contract.
REDUCTION OR WAIVER OF CHARGES
Any of the charges under the Contract, as well as the minimum purchase
payment requirements set forth in this Prospectus, may be reduced due to special
circumstances that result in lower sales, administrative or mortality expenses.
For example, special circumstances may exist in connection with group or
sponsored arrangements, sales to ReliaStar Life's policy and Contract Owners or
those of affiliated insurance companies, or sales to employees or clients of
ReliaStar Life's affiliates. The amount of any reductions will reflect the
reduced sales effort and administrative costs resulting from, or the different
mortality experience expected as a result of, the special circumstances.
Reductions will not be unfairly discriminatory against any person, including the
affected policy or Contract owners and owners of all other contracts funded by
the Variable Account. Under certain circumstances as defined in the Contract,
after the first Contract Year ReliaStar Life will permit the Contract Owner to
access his or her money in the Contract by a full or partial surrender without a
surrender charge if (1) the Contract Owner becomes terminally ill; (2) if the
Contract Owner becomes confined to a skilled nursing facility or hospital; (3)
if and so long as the Contract Owner is disabled. Also, if the Contract Owner is
unemployed for at least 90 consecutive days the Owner can take up to 50% of the
Contract Value of the Contract without incurring a surrender charge. These
options may not be available in all states.
EXPENSES OF THE INVESTMENT FUNDS
There are fees deducted 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
ReliaStar Life assumes the responsibilities of performing 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
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number, type of Contract issued to each Owner, Contract Value and other
pertinent information necessary to the administration and operation of the
Contracts. These administrative functions are located at: the Variable Annuity
Administration Center, P.O. Box 59218, Minneapolis, Minnesota 55459-0218;
Telephone 1-800-621-3750.
THE CONTRACTS
The Contracts are designed for sale as non-qualified contracts and also
for retirement plans which may be Qualified Plans. A single purchase payment can
be made for a deferred annuity, or subsequent purchase payments can be made up
to the maximum level of funding set forth below. The minimum amount ReliaStar
Life will accept as an initial purchase payment is $5,000 for Non-Qualified
Contracts and $2,000 for Qualified Contracts. ReliaStar Life may choose not to
accept any subsequent purchase payment for a Non-Qualified Contract if it is
less than $500 and for a Qualified Contract if it is less than $200. ReliaStar
Life may also choose not to accept any subsequent purchase payment if the
purchase payment together with the Contract Value at the next Valuation Date
exceeds $1,000,000. Any purchase payment not accepted by ReliaStar Life will be
refunded. ReliaStar Life reserves the right to accept smaller or larger initial
and subsequent purchase payments in connection with special circumstances, such
as sales through group or sponsored arrangements.
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments can be allocated by the Owner to the available
Sub-Accounts of the Variable Account selected and/or to the Fixed Account. (See
Appendix A). The Fixed Account is not available to Contract Owners in the States
of Maryland, Oregon, South Carolina and Washington. Any purchase payment or
portion thereof for which no allocation election is made will be returned to the
Owner.
The initial purchase payment will be allocated not later than two
business days after receipt, if the application and all information necessary
for processing the Contract are complete. ReliaStar Life 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. Once the completed application is received, 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.
An Investment Fund may impose a minimum purchase requirement. If that
minimum purchase requirement exceeds the aggregate of all purchase payments
received by ReliaStar Life, less any redemption of Investment Fund shares
resulting from transfers or surrenders, on any given day that are to be applied
to a Sub-Account for 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.
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NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges
under the Contract and the investment performance during a Valuation Period of
the Investment 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 Investment 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 Investment 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 reserved
for which ReliaStar Life 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 Investment 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
ReliaStar Life 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, the
Expense Risk Premium and the Administration Charge deducted
from the Sub-Account which factor is equal, on an annual
basis, to 1.40% of the daily net asset value of the
Sub-Account.
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
If the Owner, including any joint Owner, dies before the Annuity
Commencement Date, the Beneficiary will be entitled to receive the Death
Benefit. For this purpose the Death Benefit will be:
(1) if any Owner (including the Annuitant) dies on or before the
first day of the month following the Owner's 85th birthday,
the greater of (i) the Contract Value on the Death Benefit
Valuation Date, or (ii) the sum of the purchase payments
received by ReliaStar Life under the Contract to the Death
Benefit Valuation Date, less any surrender payments previously
made by ReliaStar Life; or (iii) the Contract Value on the
Specified Contract Anniversary (immediately preceding the
Owner's death), plus any Purchase Payments and less any
surrender payments since that anniversary;
(2) if any Owner (including the Annuitant) dies after the first
day of the month following the Owner's 85th birthday, the
Contract Value on the Death Benefit Valuation Date.
If a single sum is requested, it will be paid within seven days after
the Death Benefit Valuation Date. If an Annuity Form is requested, it may be any
Annuity Form permitted by Section 72(s) of the Code and which ReliaStar Life is
willing to issue. An Annuity Form selection must be in writing and must be
received by ReliaStar Life within 60 days after the date of the Owner's death,
otherwise the Death Benefit as of the Death Benefit Valuation Date will be paid
in a single sum to the Beneficiary and the Contract will be canceled.
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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.")
DEATH BENEFIT AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, the Death
Benefit, if any, shall be as stated in the Annuity Form in effect.
SURRENDER (REDEMPTION)
If a written request is received by ReliaStar Life from the Owner
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)".) Partial surrenders
must be at least $500. No partial surrender can cause the Contract Value to fall
below $1,000. If a total surrender occurs other than on a Contract Anniversary
the Annual Contract Charge will be deducted from the Contract Value before the
surrender payment is made.
Surrenders must be consented to by each collateral assignee. ReliaStar
Life reserves the right to require that surrenders in excess of $50,000 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 ReliaStar
Life.
ReliaStar Life 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. Unless the Owner requests a partial
surrender to be made from the Fixed Account or particular Sub-Accounts, a
partial surrender will be taken proportionately from the Fixed Account and all
Sub-Accounts on a basis that reflects their proportionate percentage of the
Contract Value.
ReliaStar Life reserves the right to limit the number of partial
surrenders, and to assess a processing fee not to exceed the lesser of 2% of the
partial surrender amount or $25. No processing fee will be charged in connection
with total surrenders.
If the Contract Value after all charges is less than $1,000, ReliaStar
Life can 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 the 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".)
Surrender payments may be taxable and in addition may be subject to a
10% tax penalty if before age 59 1/2. Consideration should be given to the tax
implications of a surrender before making a surrender request, including a
surrender in connection with a Qualified Plan.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals, which are a specialized form of Partial
Surrenders (See "Surrender (Redemption)."), are offered for Qualified Plan
Contracts only and not for Non-Qualified Contracts. The Owner may elect to take
Systematic Withdrawals from Sub-Accounts by surrendering a specified dollar
amount or percentage of cumulative purchase payments on a monthly, quarterly,
semi-annual or annual basis. Systematic Withdrawals can be taken from Variable
Account Contract
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Value and/or Fixed Account Contract Value, but are limited annually to 10% of
total cumulative purchase payments made under the Contract. A Surrender Charge
will be imposed on the amount of any Systematic Withdrawal, which is not a Free
Surrender. (See "Surrender Charge (Contingent Deferred Sales Charge).")
Systematic Withdrawals can be discontinued by the Owner at any time by notifying
ReliaStar Life in writing.
ReliaStar Life reserves the right to modify or discontinue offering
Systematic Withdrawals, however, any such modification or discontinuation will
not affect any Systematic Withdrawal programs already commenced. While ReliaStar
Life does not currently charge a processing fee for Partial Surrenders under
this program, it reserves the right to charge a processing fee not to exceed the
lesser of 2% of the Systematic Withdrawal payment or $25.
Systematic Withdrawals may be subject to tax, including a penalty tax,
and you should consult with your tax advisor before requesting any Systematic
Withdrawal. (See "Taxation of Annuities".)
Contract Owners interested in participating in the Systematic
Withdrawal program can obtain a separate application form and full information
about the program and its restrictions from their registered representative.
TRANSFERS
Before the Annuity Commencement Date, the Owner can transfer amounts
between Sub-Accounts or from the Sub-Accounts to the Fixed Account. Subject to
certain restrictions, amounts can also be transferred from the Fixed Account to
the Sub-Accounts. Currently, there are three methods by which transfers may be
made: in writing, by telephone or fax and by Dollar Cost Averaging.
WRITTEN TRANSFERS - Before the Annuity Commencement Date the Owner may
request a transfer in writing, subject to any conditions or charges 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 on the first Valuation Date after the request for such a transfer
is received by ReliaStar Life. Currently, there is no charge for such a
transfer, other than those that may be made by the Funds. ReliaStar Life
reserves the right, however, to charge a transfer fee not to exceed $25 per
transfer and to limit the number of transfers made by the Owner. After the
Annuity Commencement Date, an Annuitant who has selected Variable Annuity
Payments can 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. However, no transfers can be made to the Fixed Account
after the Annuity Commencement Date.
Before the Annuity Commencement Date, transfers may also be made from
the Fixed Account to the Variable Account, provided, 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). No transfers may be made from the Fixed Account after
Annuity Commencement Date.
The conditions applicable to Written Transfers also apply to
Telephone/Fax Transfers, Dollar Cost Averaging Transfers, and Portfolio
Rebalancing.
TELEPHONE/FAX INSTRUCTIONS - An Owner is allowed to enter the following
types of instructions either by telephone or by fax if to complete a
telephone/fax instruction authorization form: (1) transfers between funds, (2)
surrenders, (3) changes of allocations among fund options, (4) change of source
funds for systematic withdrawals, (5) change of source funds for variable
annuitization payouts
If you complete the telephone/fax form, you thereby agree that ReliaStar Life
will not be liable for any loss, liability, cost or expense when it acts in
accordance with the telephone/fax instructions received. If a telephone/fax
transaction, is later determined not to have been made by you or was made
without your authorization, and a loss results, you bear the risk of this loss.
Any fax requests are considered telephone requests and are bound by the
conditions in the telephone/fax authorization form. Any fax request should
include your name, daytime telephone number, Contract number and the
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names of the Sub-Accounts from which and to which money will be transferred or
withdrawn and the allocation percentage. ReliaStar Life will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
In the event ReliaStar Life does not employ such procedures, it 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.
DOLLAR COST AVERAGING TRANSFERS - You can direct ReliaStar Life to
automatically transfer a fixed dollar amount or a specified percentage of
Sub-Account Value to any one or more other Sub-Accounts or to the Fixed Account.
No transfers from the Fixed Account are permitted under this service. Transfers
may be made on a monthly, quarterly, semi-annual or annual basis. This service
is intended to allow you to utilize "Dollar Cost Averaging," a long-term
investment method which provides for regular, level investments over time.
ReliaStar Life makes no guarantees that Dollar Cost Averaging will result in a
profit or protect against loss. You can discontinue Dollar Cost Averaging at any
time by notifying ReliaStar Life in writing. Contract Owners interested in
Dollar Cost Averaging can obtain an application form and full information
concerning this service and its restrictions from their registered
representatives.
ReliaStar Life reserves the right to modify or discontinue offering
Dollar Cost Averaging. Any such modification or discontinuation would not affect
Dollar Cost Averaging transfer programs already commenced. Although ReliaStar
Life currently charges no fees for transfers made under the Dollar Cost
Averaging program, it reserves the right to charge a processing fee for Dollar
Cost Averaging transfers not to exceed $25 per transfer.
PORTFOLIO REBALANCING SERVICE
You may request this service if your Contract Value, is at least
$25,000. If you request this service, you direct us to automatically make
periodic transfers to maintain your specified percentage allocation among
Sub-Accounts of the Variable Account. You may also have your allocation of
future premium payments changed to be equal to this specified percentage
allocation. Transfers made under this service may be made on a quarterly,
semi-annual, or annual basis. This service is intended to maintain the
allocation you have selected consistent with your personal objectives. This
service can be discontinued if your Contract falls below $10,000.
You can discontinue Portfolio Rebalancing at any time by notifying
ReliaStar Life in writing. Contract Owners interested in Portfolio Rebalancing
can obtain an application form and full information concerning this service and
its restrictions from their registered representatives. ReliaStar Life reserves
the right to modify or discontinue offering Portfolio Rebalancing. Although
ReliaStar Life currently charges no fees for transfers made under the Portfolio
Rebalancing program, it reserves the right to charge a processing fee for
Portfolio Rebalancing transfers not to exceed $25 per transfer.
ASSIGNMENTS
If the Contract is issued pursuant to or in connection with a Qualified
Plan, it cannot be sold, transferred, pledged or assigned to any person or
entity other than ReliaStar Life. In other circumstances, an assignment of the
Contract is permitted, but only before the Annuity Commencement Date, by giving
ReliaStar Life the original or a certified copy of the assignment. ReliaStar
Life shall not be bound by any assignment until it is actually received by
ReliaStar Life and shall not be responsible for the validity of any assignment.
Any payments made or actions taken by ReliaStar Life before ReliaStar Life
actually receives any assignment shall not be affected by the assignment.
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. No
more than two (2) natural persons may be named as Owner.
The Owner may name a Beneficiary and a Successor Beneficiary. In the
event an Owner dies before the Annuity Commencement Date, the Beneficiary shall
receive a Death Benefit as provided in the Contract. In the event an Owner dies
on or after the Annuity Commencement Date, the Beneficiary, if the Annuity Form
in effect at the Owner's death so
<PAGE>
provides, may continue receiving payments, be paid a lump sum, or be paid
nothing. If the Beneficiary or Successor Beneficiary is not living on the date
payment is due or if no Beneficiary or Successor Beneficiary has been named, the
Owner's estate will receive the applicable proceeds.
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 ReliaStar Life 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 ReliaStar Life by the
Owner, if more than one Beneficiary is entitled to payments from ReliaStar Life
the payments shall be in equal shares.
Before the Annuity Commencement Date, the Owner may change the
Annuitant, the Beneficiary or the Successor Beneficiary by giving ReliaStar Life
written notice of the change, but the change shall not be effective until
actually received by ReliaStar Life. Upon receipt by ReliaStar Life 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 ReliaStar Life before ReliaStar
Life received the notice, and ReliaStar Life shall not be responsible for the
validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to the ReliaStar
Life Insurance Company, Variable Annuity Administration Center, Route 4300, P.O.
Box 59218, Minneapolis, Minnesota 55459-0218, or by calling 1-800-621-3750.
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 ReliaStar Life. The Owner may change an Annuity
Commencement Date selection by written notice received by ReliaStar Life 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, ReliaStar Life reserves the right to
adjust the Annuity Commencement Date to the first Valuation Date after the
Annuity Commencement Date selected by the Owner which is at least 60 days after
the Contract issue date. If the Annuity Commencement Date occurs before the
second Contract Anniversary, ReliaStar Life will deduct Surrender Charges. (See
"Surrender Charge (Contingent Deferred Sales Charge)".)
PARTIAL ANNUITIZATIONS
At any time prior to the Annuity Commencement Date, and during the
lifetime of the Annuitant, the Owner may choose a Partial Annuity Commencement
Date, and may specify a portion of the Contract Value to provide a Fixed Annuity
or a Variable Annuity according to the terms of the Contract that are applicable
to an Annuity Commencement Date.
At the Annuity Commencement Date, or at a Partial Annuity Commencement
Date, the Owner may ask us, in writing, to apply the Contract Value, or the
specified portion of the Contract Value, to more than one annuity.
Each annuity must comply with the minimum limitations on annuities as
defined in the Contract.
The amount applied at a Partial Annuity Commencement Date must be at
least $5,000. The amount applied at a Partial Annuity Commencement Date may not
be more than the maximum which would be available for a partial surrender.
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The amount applied will be taken proportionately from the Fixed Account, and
each Sub-Account of the Variable Account unless the Owner specifies the accounts
from which the amount is to be taken.
We reserve the right to impose a charge of up to $25 for each Partial
Annuity Commencement Date, and to limit the number of Partial Annuity
Commencement Dates. (For potential tax consequences of electing one or more
partial annuities see "Annuity Payments" under "Federal Tax Status").
ANNUITY FORM SELECTION
The Owner may select a Variable Annuity Form, a Fixed Annuity Form, or
both, with payments starting at the Annuity Commencement Date when making
application for the Contract. Thereafter, the Owner may change the Annuity
Form(s) by written notice received by ReliaStar Life before the Annuity
Commencement Date. If no election has been made before the Annuity Commencement
Date, ReliaStar Life will apply the Fixed Account Contract Value to provide a
Fixed Annuity and the Variable Account Contract Value to provide a Variable
Annuity, both in the form of a Life Annuity with Payments Guaranteed for 10
years (120 months), which shall be automatically effective.
ANNUITY FORMS
Variable Annuity Payments and Fixed Annuity Payments are available in
any of the following Annuity Forms:
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 BEFORE 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.
ReliaStar Life also has other annuity forms available and information
about them can be obtained by writing to ReliaStar Life.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments, unless the
Annuitant and ReliaStar Life agree to a different payment schedule. However, if
the Contract Value at the Annuity Commencement Date is less than $5,000,
ReliaStar Life 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,
ReliaStar Life may change the frequency of payments to intervals that will
result in payments of at least $50 each. The minimum frequency and amount of
annuity payments or the minimum Contract Value required for annuity payments may
vary by state.
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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.
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 Annual Contract Charge is deducted in equal installments from each
annuity payment. When a fixed annuity payment is made in conjunction with a
variable annuity payment, an Annual Contract Charge is assessed against each
type of payment and is deducted in equal installments from each annuity payment.
Premium taxes payable to any governmental entity will be charged against the
Contracts. (See "Premium and Other Taxes".)
The annuity tables in the Contracts are based on the 1983 Individual
Annuity Mortality Table (set back three years).
ReliaStar Life guarantees that the dollar amount of each variable
annuity payment after the first payment will not be affected by variations in
expenses (including those related to the Variable Account) 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".)
ASSUMED INVESTMENT RATE
A 4% assumed investment rate is built into the annuity tables contained
in the Contracts. If the actual net investment rate on the assets of the
Variable Account is the same as the assumed investment rate of 4% per year,
variable annuity payments will remain level. If the actual net investment rate
exceeds the assumed investment rate, variable annuity payments will increase and
conversely, if it is less than the assumed investment rate the payments will
decrease.
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
<PAGE>
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 ReliaStar Life'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), 408, or 408A 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 ReliaStar Life'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 ReliaStar Life does
not have control over the Investment Funds in which the Variable Account
invests, ReliaStar Life 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.
The number of underlying investment options available under a variable product
may also be relevant in determining whether the product qualifies for the
desired tax treatment. It is possible that if additional rules, regulations or
guidance in this regard are issued, the Contract may need to be modified to
comply with such additional rules or guidance. For these reasons, ReliaStar Life
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
<PAGE>
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. ReliaStar Life
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.
ReliaStar Life 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 surrenders 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. ReliaStar Life
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 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
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. (See "Penalty
Tax on Certain Distributions".)
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. 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 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
<PAGE>
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. The receipt of a distribution resulting from a
partial annuitization may be interpreted by the Internal Revenue Service as a
partial surrender. If the IRS were to interpret partial annuitizations as such,
amounts received would generally be first treated as taxable income to the
extent that the Contract Value exceeds the "investment in the contract".
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 59 1/2;
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. Seriously, 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.
<PAGE>
WITHHOLDING
Pension and annuity distributions generally are subject to withholding
for the recipient's Federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. 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 non-qualified deferred annuity
contracts issued by ReliaStar Life (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 of the plan itself. Favorable tax
treatment may be available for certain types of contributions and distributions.
Adverse tax consequences can result from contributions in excess of specified
limits; distributions prior to age 59 1/2 (subject to certain exceptions);
distributions that do not conform to specified commencement and minimum
distribution rules; aggregate distributions in excess of a specified annual
amount; and in other specified circumstances. Therefore, no attempt is made to
provide more than general information about the use of the Contracts with the
various types of Qualified Plans. Contract Owners, the Annuitants, and
Beneficiaries are cautioned that the rights of any person to any benefits under
these Qualified Plans will be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Contracts issued in
connection with the plans. ReliaStar Life is not bound by the terms and
conditions of such plans to the extent such terms contradict the Contract,
unless ReliaStar Life consents. Brief descriptions follow of the various types
of Qualified Plans in connection with a Contract.
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 and 408A of the Code permits eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" or "IRA". All IRAs are subject to limits on the amount that
may be contributed, the persons who are eligible, and on the time when
distributions may commence. Section 408 governs "traditional" IRAs. Subject to
certain income limits, contributions to a traditional IRA may be tax deductible.
Distributions from a traditional IRA, if attributable to deductible
contributions, are generally subject to income tax. Distributions from certain
other types of qualified retirement plans may be "rolled over" on a tax-deferred
basis into a traditional IRA.
Section 408A of the Code permits individuals to contribute to a special
type of IRA called a Roth IRA. The IRA must be designated as a "Roth IRA" at the
time it is established, in accordance with IRS rules. Contributions to a Roth
IRA are not deductible. If certain conditions are met, qualified distributions
from a Roth IRA are tax free. Subject to special limitations, a distribution
from a traditional IRA or another Roth IRA may be rolled over to a Roth IRA.
<PAGE>
Sales of a Contract for use with traditional or Roth IRAs may be
subject to special requirements of the IRS. The IRS has not reviewed the
contract for qualification as an IRA, and has not addressed in a ruling of
general applicability whether a death benefit provision such as the provision in
the Contract comports with IRS qualification requirements.
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 elective
contributions and earnings on those contributions; and Distribution may only
occur upon death of the employee, attainment of age 59 1/2, 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 RELIASTAR'S TAXES
At the present time, ReliaStar Life makes no charge to the Sub-Accounts
for any Federal, state, or local taxes that ReliaStar Life incurs which may be
attributable to such Sub-Accounts or to the Contracts. ReliaStar Life, 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 or 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 ReliaStar
Life'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
ReliaStar Life in accordance with instructions received from the person having
voting interests under the Contracts as described below. If ReliaStar Life
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 ReliaStar Life 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
<PAGE>
cast shall be determined as of a record date, to be selected by ReliaStar Life,
not more than 90 days before the meeting of the applicable 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 ReliaStar Life.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts can 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 an affiliate of ReliaStar Life. Commissions and other distribution
compensation will be paid by ReliaStar Life. Generally such payments will not
exceed 7.5% of the purchase payments. In some cases a trail commission based on
the Contract Value may also be paid.
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
ReliaStar Life's Contract Administrator at the mailing address shown below 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 written notice must be mailed or delivered to:
ReliaStar Life Insurance Company
c/o Variable Annuity Administration Center
Route 4300
P.O. Box 59218
Minneapolis, MN 55429-0218
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 ReliaStar
Life.
REPORTS TO OWNERS
ReliaStar Life will mail to the Contract Owner, at the last known
address of record at the home office of ReliaStar Life, 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. ReliaStar Life 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
ReliaStar Life.
FINANCIAL STATEMENTS AND EXPERTS
The annual financial statements of ReliaStar Select Variable Account as
of December 31, 1997 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 by reference and have been so incorporated by
reference in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
<PAGE>
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, ReliaStar
Life 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.
INFORMATION ABOUT THE FIXED ACCOUNT CAN BE FOUND IN APPENDIX A, ON PAGE
A-1.
<PAGE>
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-14
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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:
RELIASTAR LIFE INSURANCE COMPANY
VARIABLE ANNUITY ADMINISTRATION CENTER
ROUTE 4300
P.O. BOX 59218
MINNEAPOLIS, MN 55429-0218
Your name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
-------------------------- ---------------- -------------
Please send me a copy of the ReliaStar Select Variable Account Statement of
Additional Information.
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING
INVESTMENT 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.
<PAGE>
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 RELIASTAR LIFE (THE
"FIXED ACCOUNT"), WHICH SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. 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 ACT AND RELIASTAR LIFE 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 of the general assets of ReliaStar
Life 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. ReliaStar Life will invest the assets of
the Fixed Account in those assets chosen by ReliaStar Life and allowed by
applicable law.
ReliaStar Life guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contract. ReliaStar Life may credit interest at a rate in
excess of 3% per year; however, ReliaStar Life is not obligated to do so. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF RELIASTAR LIFE. THE OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT
EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
PERFORMANCE INFORMATION
From time to time, ReliaStar Life 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. ReliaStar Life 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. 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.
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' portfolios 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. 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.
Yields, 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.
ReliaStar Life 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.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
----------
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
RELIASTAR SELECT VARIABLE ACCOUNT
AND
RELIASTAR LIFE INSURANCE COMPANY
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus, dated May 1, 1998 (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 ("ReliaStar Life"). 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-14
---------
The date of this Statement of Additional Information is May 1, 1998.
<PAGE>
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in
the Prospectus are flexible purchase payment contracts. The Contracts are sold
both as non-qualified contracts and or in connection with retirement plans which
may qualify for special federal tax treatment under the Internal Revenue Code.
(See "Federal Tax Status" on page ___ of the Prospectus.) Annuity payouts 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 the Variable Account, a separate account of ReliaStar Life,
and/or to the Fixed Account (which is the general account of ReliaStar Life).
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").
ADMINISTRATION OF THE CONTRACTS
ReliaStar Life performs certain administrative functions
("Administrative Functions") relating to the Contracts and the Variable Account
in Minneapolis, Minnesota. 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. ReliaStar Life receives no payment for performing any of the
Administrative Functions. Prior to July 14, 1997, Continuum Administrative
Services Corporation, Kansas City, Missouri ("CASC"), performed, by agreement,
many of the Administrative Functions. For the years ended December 31, 1995,
1996 and 1997 ReliaStar Life paid fees to CASC under the agreement in the
amounts of $218,214, $638,881 and $________ respectively, in connection with
administration of the Contracts.
CUSTODY OF ASSETS
ReliaStar Life maintains custody of the assets of the Variable Account.
INDEPENDENT AUDITORS
The annual financial statements of ReliaStar Select Variable Account
and ReliaStar Life Insurance Company, which are incorporated by reference in
this Statement of Additional Information, have been audited by Deloitte & Touche
LLP, 400 One Financial Plaza, 120 South 6th Street, Minneapolis, Minnesota
55402, independent auditors, as stated in their reports which are incorporated
by reference herein, and have been so incorporated by reference in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
DISTRIBUTION OF THE CONTRACTS
The Contracts are 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 ReliaStar Life. The Contracts will be
sold by licensed insurance agents in those states where the Contracts can 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.
For the years ended December 31, 1995, 1996 and 1997 the General
Distributor was paid fees by ReliaStar Life with respect to distribution of the
Contracts aggregating $397,000, $666,703 and $________ respectively.
<PAGE>
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 ReliaStar Life. The method used to determine the amount of such
charge is described in the Prospectus under the heading "Charges Made By
ReliaStar Life - Surrender Charge (Contingent Deferred Sales Charge)."
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: 3.79%
Effective Yield: 3.86%
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:
YIELD = 2[(a - b + 1)6 - 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).
<PAGE>
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 ReliaStar Life 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:
TR = ((ERV/P) 1/N) - 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.
<PAGE>
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
For the 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Sub-Account to
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Fidelity's VIP Equity-Income Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP Growth Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP High Income Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP Overseas Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP II Asset Manager Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP II Contrafund Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 5/1/95)
Fidelity's VIP II Index 500 Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP II Investment Grade Bond Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Northstar Growth Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/3/95)
Northstar Income and Growth Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/3/95)
Northstar Multi-Sector Bond Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/3/95)
Putnam VT Asia Pacific Growth Fund ----% N/A N/A ---- %
(Sub-Account Inception: 5/1/95)
Putnam VT Diversified Income Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Putnam VT Growth and Income Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund ----% N/A N/A ----%
(Sub-Account Inception: 5/1/95)
Putnam VT Utilities Growth and Income Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Putnam VT Voyager Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
</TABLE>
<PAGE>
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 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Fund Portfolio
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio ----% ----% N/A ----%
(Portfolio Inception: 1/9/89)
Alger American MidCap Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio ----% ----% N/A ----%
(Portfolio Inception: 9/21/88)
Fidelity's VIP Equity-Income Portfolio ----% ----% ----% ----%
(Portfolio Inception: 10/9/86)
Fidelity's VIP Growth Portfolio ----% ----% ----% ----%
(Portfolio Inception: 10/9/86)
Fidelity's VIP High Income Portfolio ----% ----% ----% ----%
(Portfolio Inception: 9/19/85)
Fidelity's VIP Overseas Portfolio ----% ----% N/A ----%
(Portfolio Inception: 1/28/87)
Fidelity's VIP II Asset Manager Portfolio ----% ----% N/A ----%
(Portfolio Inception: 9/6/89)
Fidelity's VIP II Contrafund Portfolio ----% N/A N/A ----%
(Portfolio Inception: 1/3/95)
Fidelity's VIP II Index 500 Portfolio ----% N/A N/A ----%
(Portfolio Inception: 8/27/92)
Fidelity's VIP II Investment Grade Bond Portfolio ----% ----% N/A ----%
(Portfolio Inception: 12/5/88)
Janus Aggressive Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
<PAGE>
For the 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Fund Portfolio
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
Neuberger&Berman AMT Limited Maturity Bond Portfolio ----% ----% ----% ----%
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio ----% N/A N/A ----%
(Portfolio Inception: 3/22/94)
Northstar Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar High Yield Bond Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar Income and Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar International Value Portfolio N/A N/A N/A N/A
(Portfolio Inception: 8/8/97)
Northstar Multi-Sector Bond Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio ----% N/A N/A ----%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
Putnam VT Asia Pacific Growth Fund ----% N/A N/A ----%
(Portfolio Inception: 5/1/95)
Putnam VT Diversified Income Fund ----% N/A N/A ----%
(Portfolio Inception: 9/15/93)
Putnam VT Growth and Income Fund ----% ----% N/A ----%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund ----% N/A N/A ----%
(Portfolio Inception: 5/2/94)
Putnam VT Utilities Growth and Income Fund ----% N/A N/A ----%
(Portfolio Inception: 5/1/92)
Putnam VT Voyager Fund ----% ----% N/A ----%
(Portfolio Inception: 2/1/88)
</TABLE>
<PAGE>
ReliaStar Life may also disclose average annual total returns for the
Investment Fund's Portfolios since their inception, 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 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Fund Portfolio
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio ----% ----% N/A ----%
(Portfolio Inception: 1/9/89)
Alger American MidCap Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio ----% ----% N/A ----%
(Portfolio Inception: 9/21/88)
Fidelity's VIP Equity-Income Portfolio ----% ----% ----% ----%
(Portfolio Inception: 10/9/86)
Fidelity's VIP Growth Portfolio ----% ----% ----% ----%
(Portfolio Inception: 10/9/86)
Fidelity's VIP High Income Portfolio ----% ----% ----% ----%
(Portfolio Inception: 9/19/85)
Fidelity's VIP Overseas Portfolio ----% ----% N/A ----%
(Portfolio Inception: 1/28/87)
Fidelity's VIP II Asset Manager Portfolio ----% ----% N/A ----%
(Portfolio Inception: 9/6/89)
Fidelity's VIP II Investment Grade Bond Portfolio ----% ----% N/A ----%
(Portfolio Inception: 12/5/88)
Fidelity's VIP II Index 500 Portfolio ----% N/A N/A ----%
(Portfolio Inception: 8/27/92)
Fidelity's VIP II Contrafund Portfolio ----% N/A N/A ----%
(Portfolio Inception: 1/3/95)
Janus Aggressive Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited Maturity Bond Portfolio ----% ----% ----% ----%
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio ----% N/A N/A ----%
(Portfolio Inception: 3/22/94)
<PAGE>
For the 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Fund Portfolio
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
Northstar Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar High Yield Bond Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar Income and Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar International Value Portfolio N/A N/A N/A N/A
(Portfolio Inception: 8/8/97)
Northstar Multi-Sector Bond Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio ----% N/A N/A ----%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
Putnam VT Asia Pacific Growth Fund ----% N/A N/A ----%
(Portfolio Inception: 5/1/95)
Putnam VT Diversified Income Fund ----% N/A N/A ----%
(Portfolio Inception: 9/15/93)
Putnam VT Growth and Income Fund ----% ----% N/A ----%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund ----% N/A N/A ----%
(Portfolio Inception: 5/2/94)
Putnam VT Utilities Growth and Income Fund ----% N/A N/A ----%
(Portfolio Inception: 5/1/92)
Putnam VT Voyager Fund ----% ----% N/A ----%
(Portfolio Inception: 2/1/88)
</TABLE>
<PAGE>
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 Date Sub-Accounts Commenced Operations
<TABLE>
<CAPTION>
For the 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Sub-Account to
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Fidelity's VIP Equity-Income Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP Growth Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP High Income Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP Overseas Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP II Asset Manager Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP II Contrafund Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 5/1/95)
Fidelity's VIP II Index 500 Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Fidelity's VIP II Investment Grade Bond Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Northstar Growth Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/3/95)
Northstar Income and Growth Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/3/95)
Northstar Multi-Sector Bond Portfolio ----% N/A N/A ----%
(Sub-Account Inception: 1/3/95)
Putnam VT Asia Pacific Growth Fund ----% N/A N/A ----%
(Sub-Account Inception: 5/1/95)
Putnam VT Diversified Income Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Putnam VT Growth and Income Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund ----% N/A N/A ----%
(Sub-Account Inception: 5/1/95)
Putnam VT Utilities Growth and Income Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
Putnam VT Voyager Fund ----% N/A N/A ----%
(Sub-Account Inception: 1/6/94)
</TABLE>
<PAGE>
Returns Including Period Prior to Date Sub-Accounts Commenced Operations
<TABLE>
<CAPTION>
For the 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Fund Portfolio
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio ----% ----% N/A ----%
(Portfolio Inception: 1/9/89)
Alger American MidCap Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio ----% ----% N/A ----%
(Portfolio Inception: 9/21/88)
Fidelity's VIP Equity-Income Portfolio ----% ----% ----% ----%
(Portfolio Inception: 10/9/86)
Fidelity's VIP Growth Portfolio ----% ----% ----% ----%
(Portfolio Inception: 10/9/86)
Fidelity's VIP High Income Portfolio ----% ----% ----% ----%
(Portfolio Inception: 9/19/85)
Fidelity's VIP Overseas Portfolio ----% ----% N/A ----%
(Portfolio Inception: 1/28/87)
Fidelity's VIP II Asset Manager Portfolio ----% ----% N/A ----%
(Portfolio Inception: 9/6/89)
Fidelity's VIP II Contrafund Portfolio ----% N/A N/A ----%
(Portfolio Inception: 1/3/95)
Fidelity's VIP II Index 500 Portfolio ----% N/A N/A ----%
(Portfolio Inception: 8/27/92)
Fidelity's VIP II Investment Grade Bond Portfolio ----% ----% N/A ----%
(Portfolio Inception: 12/5/88)
Janus Aggressive Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited Maturity Bond Portfolio ----% ----% ----% ----%
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio ----% N/A N/A ----%
(Portfolio Inception: 3/22/94)
<PAGE>
For the 1-year For the 5-year For the 10-year For the period from date of
period ended period ended period ended Inception of Fund Portfolio
Sub-Account 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- -------- -------- -------- --------
Northstar Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar High Yield Bond Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar Income and Growth Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
Northstar International Value Portfolio N/A N/A N/A N/A
(Portfolio Inception: 8/8/97)
Northstar Multi-Sector Bond Portfolio ----% N/A N/A ----%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio ----% N/A N/A ----%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio* ----% ----% N/A ----%
(Portfolio Inception: 8/1/88)
Putnam VT Asia Pacific Growth Fund ----% N/A N/A ----%
(Portfolio Inception: 5/1/95)
Putnam VT Diversified Income Fund ----% N/A N/A ----%
(Portfolio Inception: 9/15/93)
Putnam VT Growth and Income Fund ----% ----% N/A ----%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund ----% N/A N/A ----%
(Portfolio Inception: 5/2/94)
Putnam VT Utilities Growth and Income Fund ----% N/A N/A ----%
(Portfolio Inception: 5/1/92)
Putnam VT Voyager Fund ----% ----% N/A ----%
(Portfolio Inception: 2/1/88)
</TABLE>
* On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust') was effectively divided into two investment
funds, the Old Trust and the present OCC Accumulation Trust (the "Trust") at
which time the Trust commenced operations. The total net assets for the Equity,
Managed, and Small Cap Portfolios immediately after the transaction were
$86,789,755, $682,601,380, and $139,812,573, respectively, with respect to the
Old Trust and for the Equity, Managed, and Small Cap Portfolios, $3,764,598,
$51,345,102, and $8,129,274, respectively with respect to the Trust. For the
period prior to September 14, 1994,
<PAGE>
the performance figures for each of the Equity, Managed, and Small Cap
Portfolios reflect the performance of the corresponding Portfolios of the Old
Trust.
The Investment Funds have provided the total return information for the
Portfolios, including the Portfolio total return information used to calculate
the total returns of the Sub-Accounts for periods prior to the inception of the
Sub-Accounts. The Alger American Fund, Fidelity's Variable Insurance Products
Fund, Fidelity's Variable Insurance Products Fund II, Janus Aspen Series,
Neuberger&Berman Advisers Management Trust, OCC Accumulation Trust, and Putnam
Variable Trust are not affiliated with ReliaStar Life.
ReliaStar Life 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 CONTRACT CHARGE ON PERFORMANCE DATA. The Contract
provides for a $30 Annual Contract 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 Contract 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.
COMPARATIVE ADVERTISING. 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.
<PAGE>
FINANCIAL STATEMENTS
This Statement of Additional Information includes audited Financial
Statements for the Variable Account as of December 31, 1997 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.
ReliaStar Life's statements of financial condition as of December 31,
1997 and 1996, and the related statements of operations, shareholder's equity
and cash flows for the years ended December 31, 1997 and 1996 which are
incorporated by reference in this Statement of Additional Information, should be
considered only as bearing on ReliaStar Life'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.
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
[To be Supplied]
<PAGE>
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, 1997
** Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Post-effective Amendment No. __ to the Form ___
Registration Statement of ________, File No.___________ , filed __________.
<PAGE>
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>
SUB-ACCOUNT INVESTING IN YEAR ENDED DECEMBER 31
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
THE ALGER AMERICAN FUND:
GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
MIDCAP GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
SMALL CAPITALIZATION PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP):
EQUITY-INCOME PORTFOLIO
(Since January 6, 1994)
Beginning of period $14.0081 $10.5139
End of period $15.7861 $14.0081
Units outstanding at end of period 3,108,409 1,874,623
GROWTH PORTFOLIO
(Since January 6, 1994)
Beginning of period $13.1611 $9.8584
End of period $14.8863 $13.1611
Units outstanding at end of period 2,484,915 1,527,407
HIGH INCOME PORTFOLIO
(Since January 6, 1994)
Beginning of period $11.4563 $9.6317
End of period $12.8821 $11.4563
Units outstanding at end of period 1,104,232 608,287
MONEY MARKET PORTFOLIO
(Since January 6, 1994)
Beginning of period $10.7316 $10.2767
End of period $11.1555 $10.7316
Units outstanding at end of period 1,558,218 1,002,405
OVERSEAS PORTFOLIO
(Since January 6, 1994)
Beginning of period $10.7569 $9.9447
End of period $12.0091 $10.7569
Units outstanding at end of period 1,096,743 765,862
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
ASSET MANAGER PORTFOLIO
(Since January 6, 1994)
Beginning of period $10.6096 $9.1981
End of period $11.9898 $10.6096
Units outstanding at end of period 1,562,912 1,333,252
<PAGE>
SUB-ACCOUNT INVESTING IN YEAR ENDED DECEMBER 31
1997 1996 1995
---- ---- ----
CONTRAFUND PORTFOLIO
(Since May 1, 1995)
Beginning of period $12.1031 $10.0000
End of period $14.4777 $12.1031
Units outstanding at end of period 1,419,399 440,844
INDEX 500 PORTFOLIO
(Since January 6, 1994)
Beginning of period $13.4594 $9.9476
End of period $16.3012 $13.4594
Units outstanding at end of period 1,010,296 314,004
INVESTMENT GRADE BOND PORTFOLIO
(Since January 6, 1994)
Beginning of period $10.9662 $9.4774
End of period $11.1581 $10.9662
Units outstanding at end of period 709,332 668,429
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
INTERNATIONAL GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
WORLDWIDE GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
LIMITED MATURITY BOND PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
PARTNERS PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
NORTHSTAR VARIABLE TRUST :
NORTHSTAR GROWTH PORTFOLIO
(Since January 3, 1995)
Beginning of period $12.3714 $10.0000
End of period $15.0172 $12.3714
Units outstanding at end of period 376,557 16,298
<PAGE>
SUB-ACCOUNT INVESTING IN YEAR ENDED DECEMBER 31
1997 1996 1995
---- ---- ----
NORTHSTAR HIGH YIELD BOND PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
NORTHSTAR INCOME AND GROWTH PORTFOLIO
(Since January 3, 1995):
Beginning of period $12.0224 $10.0000
End of period $13.4910 $12.0224
Units outstanding at end of period 143,393 38,118
NORTHSTAR INTERNATIONAL VALUE PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
(Since January 3, 1995)
Beginning of period $11.3881 $10.0000
End of period $12.7208 $11.3881
Units outstanding at end of period 152,651 21,964
OCC ACCUMULATION TRUST:
EQUITY PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
GLOBAL EQUITY PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
MANAGED PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
SMALL CAP PORTFOLIO
(Since August 8, 1997)
Beginning of period --- ---
End of period --- ---
Units outstanding at end of period --- ---
PUTNAM VARIABLE TRUST:
PUTNAM VT ASIA PACIFIC GROWTH FUND
(Since May 1, 1995)
Beginning of period $10.1361 $10.0000
End of period $10.9048 $10.1361
Units outstanding at end of period 281,445 77,407
PUTNAM VT DIVERSIFIED INCOME FUND
(Since January 6, 1994)
Beginning of period $11.0666 $9.4193
End of period $11.8740 $11.0666
Units outstanding at end of period 685,507 574,909
<PAGE>
SUB-ACCOUNT INVESTING IN YEAR ENDED DECEMBER 31
1997 1996 1995
---- ---- ----
PUTNAM VT GROWTH AND INCOME FUND
(Since January 6, 1994)
Beginning of period $13.3162 $9.8762
End of period $16.0091 $13.3162
Units outstanding at end of period 1,639,863 719,095
PUTNAM VT NEW OPPORTUNITIES FUND
(Since May 1, 1995)
Beginning of period $13.3506 $10.0000
End of period $14.5039 $13.3506
Units outstanding at end of period 1,312,658 279,170
PUTNAM VT UTILITIES GROWTH AND INCOME FUND
(Since January 6, 1994)
Beginning of period $12.0072 $9.2881
End of period $13.7107 $12.0072
Units outstanding at end of period 384,868 237,434
PUTNAM VT VOYAGER FUND
(Since January 6, 1994)
Beginning of period $13.9272 $10.0386
End of period $15.5144 $13.9272
Units outstanding at end of period 2,244,324 1,090,262
</TABLE>
<PAGE>
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, 1997
Combined Statements of Operations and Changes
in Contract Owners' Equity, Years Ended
December 31, 1997, 1996 and 1995
Notes to Financial Statements
ReliaStar Life Insurance Company*
---------------------------------
Independent Auditors' Report
Consolidated Balance Sheets
December 31, 1997 and 1996
Consolidated Statements of Operations,
Years Ended December 31, 1997 and 1996
Consolidated Statements of Shareholders'
Equity, Years Ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows,
Years Ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
(b) Exhibits:
1. Resolution of the Board of Directors of ReliaStar Life Insurance
Company ("Depositor") authorizing the establishment of NWNL
Select Variable Account ("Registrant").+
Resolution of the Board of Directors of Depositor changing the
name of Registrant to ReliaStar Select Variable Account. +++
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. (a) Form of Contract. +
(b) Form of Roth IRA Rider. +++++
(c) Form of Waiver of Contingent Deferred Surrender Charge
Rider. +++++
(d) Form of Partial Waiver of Contingent Deferred Surrender
Charge Rider. +++++
(e) Form of Waiver of Annual Contract Charge Rider. +++++
(f) Form of Partial Annuitization Rider. +++++
(g) Form of Death Benefit Adjustment Rider. +++++
<PAGE>
5. (a) Contract Application Form. +
(b) Supplemental Application. +++++
6. (a) Amended Articles of Incorporation of Depositor. ++
(b) Amended Bylaws of Depositor. ++
7. Not Applicable.
8. (a) Participation Agreement with Fidelity's Variable
Insurance Products Fund and Fidelity Distributors
Corporation and Amendments Nos. 1-8.++
(b) Participation Agreement with Fidelity's Variable
Insurance Products Fund II and Fidelity Distributors
Corporation and Amendments Nos. 1-7.++
(c) Form of Service Agreement and Contract between ReliaStar
Life Insurance Company, WSSI, and Fidelity Investments
Institutional Operations Company and Fidelity
Distributors Corporation dated January 1, 1997.+++
(d) Participation Agreement with Putnam Capital Manager
Trust and Putnam Mutual Funds Corp. and Amendments Nos.
1-2.++
(e) Form of Service Agreement by and between ReliaStar Life
Insurance Company and Janus Capital Corporation.++++
(f) Form of Service Agreement by and between ReliaStar Life
Insurance Company and Fred Alger Management, Inc.++++
(g) Form of Service Agreement by and between ReliaStar Life
Insurance Company and OpCap Advisors.++++
(h) Form of Service Agreement by and between ReliaStar Life
Insurance Company and NBMI, Neuberger&Berman Advisers
Management, Inc., and Advisers Managers Trust.++++
(i) Form of Participation Agreement by and between ReliaStar
Life Insurance Company and Neuberger&Berman Advisers
Management, Inc., and Advisers Management Trust and
NBMI.++++
(j) Form of Participation Agreement by and between ReliaStar
Life Insurance Company and Janus Aspen Series.++++
(k) Form of Participation Agreement by and between ReliaStar
Life Insurance Company and Fred Alger Management,
Inc.++++
(l) Form of Participation Agreement by and between ReliaStar
Life Insurance Company and OpCap Advisors.++++
9. Consent and Opinion of Robert B. Saginaw as to the legality of
the securities being registered.
[To be filed by Rule 485(b) post-effective amendment.]
10. Independent Auditors' Consent of Deloitte & Touche LLP.
[To be filed by Rule 485(b) post-effective amendment.]
<PAGE>
11. Not Applicable.
12. Not Applicable.
13. Schedules for Computation of Performance Quotations.+++
14. Financial Data Schedule, filed hereto electronically as Exhibit
27 pursuant to Rule 401 of Regulation S-T.+++
15. Powers of Attorney. ++
* Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Post-effective Amendment No. __ of the Form
S-6 Registration Statement of Select*Life Variable Account, File No.
333-18517, filed _______, 1998.
+ Incorporated by reference to Post-effective Amendment No. 3 to the
Registrant's Form N-4 Registration Statement File No. 33-69892, filed
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.
+++ Incorporated by reference to Registrant's Form ______ File No.
_________, filed ___________.
++++ Incorporated by reference to Post-effective Amendment No. _____ to
_________.
+++++ To be filed by Amendment.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<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
Michael J. Dubes Director
Wayne R. Huneke Director, Senior Vice President, Chief Financial Officer, and Treasurer
Ronald D. Jarvis Director
William R. Merriam Director and Senior Vice President - ReliaStar Reinsurance Group
James R. Miller Director and Chief Financial Officer
Robert C. Salipante Director and Senior Vice President - Personal Financial Operations
Donald L. Swanson Director and Senior Vice President - ReliaStar Retirement Plans
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.
<PAGE>
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. __ to the Form ___ Registration Statement of _____,
File No. , filed , 1998.
The financial statements of the Depositor and each subsidiary of
Depositor are consolidated with those of ReliaStar Financial. The financial
statements of the mutual funds controlled by ReliaStar Financial are separately
filed with the Securities and Exchange Commission.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of __________, 1998, there were _______ owners of the Contracts,
_________ of which were owners of qualified Contracts.
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 and life contracts issued by ReliaStar Bankers Security
Life Insurance Company, ("RBSL") an indirect subsidiary of Depositor, through
Separate Accounts M, P, Q, and , separate accounts of RBSL registered as unit
investment trusts under the Investment Company Act of
<PAGE>
1940. WSSI also distributes, but is not the principal underwriter of, variable
annuity contracts issued by Depositor through the Northstar Variable Account,
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
Anne W. Dowdle Director
Michael J. Dubes Director
James R. Gelder Director
Wayne R. Huneke Director
Robert C. Salipante Director
Jeffrey A. Montgomery President and Chief Operating Officer
Susan M. Bergen Secretary
Margaret B. Wall Treasurer and Chief Financial Officer
David R. Braun Assistant Vice President
Karin Callanan Assistant Vice President
Timothy J. Lyle Assistant Vice President and Chief Compliance
Officer
Loralee A. Renelt Assistant Secretary
Allen L. Kidd 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: Michael J. Dubes, 1110 3rd Avenue, Seattle, Washington
98101; James R. Gelder, 20 Security Drive, Avon, Connecticut 06001, Allen L.
Kidd, 222 North Arch Road, Richmond, Virginia 23236.
(c) For the year ended December 31, 1997, WSSI received
$_________in fees in connection with distribution of the
Contracts.
ITEM 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.
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.
<PAGE>
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 Depositor and the Registrant 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 Depositor represents that 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.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant 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
26th day of January, 1998.
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
26th day of January, 1998.
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 26th day of January, 1998 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/ James R. Miller Chief Financial Officer
- ----------------------------------
James R. Miller
/s/ Chris D. Schreier Second Vice President and Controller
- ----------------------------------
Chris D. Schreier
R. Michael Conley* John H. Flittie* Kenneth U. Kuk* Robert C. Salipante*
Richard R. Crowl* Wayne R. Huneke* William R. Merriam* Donald L. Swanson*
Michael J. Dubes Ronald P. Jarvis James R. Miller John G. Turner*
*A majority of the Board of Directors
*Robert B. Saginaw, 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/ Robert B. Saginaw
---------------------------------------
Robert B. Saginaw, Attorney-In-Fact
