As filed with the Securities and Exchange Commission on December 31, 1996.
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
RELIASTAR BANKERS SECURITY VARIABLE LIFE SEPARATE ACCOUNT I
(Exact Name of Registrant)
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road
Woodbury, New York 11797
(Name and Address of principal executive office of depositor)
---------------------------------
Richard R. Crowl
Senior Vice President, General Counsel
ReliaStar Bankers Security Life Insurance Company
20 Washington Avenue South
Minneapolis, MN 55440
Copy to:
Robert B. Saginaw
Counsel
ReliaStar Bankers Security Life Insurance Company
20 Washington Avenue South
Minneapolis, MN 55440
Approximate date of proposed public offering:
As soon as practicable after the effective date of the Registration Statement.
Flexible Premium Variable Life Insurance Policies -- Registration of an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
---------------------------------
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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RELIASTAR BANKERS SECURITY VARIABLE LIFE SEPARATE ACCOUNT I
CROSS REFERENCE SHEET
(Reconciliation and Tie Sheet)
<TABLE>
<CAPTION>
ITEM NUMBER OF FORM
N-8B-2 HEADING IN THE PROSPECTUS
<S> <C> <C>
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 ReliaStar Bankers Security Life Insurance Company
and the Variable Account
6 The Variable Account
7 Not Applicable
8 Not Applicable
9 Not Applicable
10 Summary; Death Benefit; Payment and Allocation
of Premiums; Death Benefit Guarantee;
Accumulation Value; Policy Lapse and
Reinstatement; Surrender Benefits; Investments
of the Variable Account; Transfers; Policy
Loans; Free Look and Conversion Rights;
Voting Rights; General Provisions; Appendix A;
Appendix B
11 Deductions and Charges; Investments of the
Variable Account
12 Investments of the Variable Account
13 Deductions and Charges
14 The Policies; General Definitions; Distribution of
the Policies
15 Payment and Allocation of Premiums; Investments of
the Variable Account
16 Payment and Allocation of Premiums; Surrender
Benefits; Investments of the Variable Account
17 Surrender Benefits; Policy Loans; Free Look and
Conversion Rights; General Provisions
18 The Variable Account; Investments of the Variable
Account; Payment and Allocation of Premiums
<PAGE>
<CAPTION>
ITEM NUMBER OF FORM
N-8B-2 HEADING IN THE PROSPECTUS
19 Voting Rights; General Provisions
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Bonding Arrangements
24 Definitions; General Provisions
25 ReliaStar Bankers Security Life Insurance Company
26 Not Applicable
27 ReliaStar Bankers Security Life Insurance Company;
Other Contracts Issued by Us
28 Management
29 ReliaStar Bankers Security Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Applicable
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of the Policies
42 Not Applicable
43 Not Applicable
44 Investments of the Variable Account; Payment and
Allocation of Premiums; Deductions and Charges
45 Not Applicable
46 Investments of the Variable Account; Deductions
and Charges
<PAGE>
<CAPTION>
ITEM NUMBER OF FORM
N-8B-2 HEADING IN THE PROSPECTUS
47 Investments of the Variable Account
48 ReliaStar Bankers Security Life Insurance Company;
State Regulation
49 Not Applicable
50 The Variable Account
51 Cover Page; The Policies; Death Benefit; Payment
and Allocation of Premiums; Deductions and
Charges; Policy Lapse and Reinstatement; General
Provisions; Free Look and Conversion Rights
52 Investments of the Variable Account
53 Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
</TABLE>
<PAGE>
1000 Woodbury Road
Woodbury, New York 11797
--------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
ISSUED BY
RELIASTAR BANKERS SECURITY VARIABLE LIFE SEPARATE ACCOUNT I
OF
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
This Prospectus describes a flexible premium variable life insurance policy
(the "Policy") offered by ReliaStar Bankers Security Life Insurance Company
("we", "us", "our", or "the Company"). This Policy is designed to provide
lifetime insurance protection, provided the Policy's Cash Surrender Value (that
is, the amount that would be paid to you upon surrender of the Policy) is
sufficient to pay certain monthly charges imposed under the Policy (including
the cost of insurance and certain administrative charges). It also is designed
to provide maximum flexibility in connection with premium payments and death
benefits by giving the Policy owner ("you", "your") the opportunity to allocate
net premiums among investment alternatives with different investment objectives.
A Policy owner may, subject to certain restrictions, including limitations on
premium payments, vary the frequency and amount of premium payments and increase
or decrease the level of death benefits payable under the Policy. This
flexibility allows a Policy owner to provide for changing insurance needs under
a single insurance contract.
The Policy provides for a death benefit payable at the Insured's death. As
long as the Policy remains in force, the death benefit up to age 95 will never
be less than the current Face Amount. After Age 95, the death benefit will equal
the Accumulation Value. The minimum Face Amount of the Policy is currently
$25,000. The Face Amount may be increased, subject to certain limitations,
provided that the increase is not less than $5,000. Generally, the Policy will
remain in force as long as the Policy's Cash Surrender Value (that is, the
amount that would be paid to you upon surrender of the Policy) is sufficient to
pay certain monthly charges imposed in connection with the Policy (including the
cost of insurance and certain administrative charges). In addition, the Policy
will remain in force until the Insured reaches Age 65 (or five Policy Years, if
longer), without regard to the Cash Surrender Value, if on each Monthly
Anniversary the total premiums paid on the Policy, less any partial withdrawals
and Policy loans, equals or exceeds the total required Minimum Monthly Premium
payments specified in your Policy (which is a feature of the Policy called the
"Death Benefit Guarantee").
Net premiums paid under the Policy are allocated, according to your
instructions, either to the ReliaStar Bankers Security Variable Life Separate
Account I (the "Variable Account"), which is one of our separate accounts or,
with the exception of policies issued in New Jersey, to our General Account (the
"Fixed Account"). Any amounts allocated to the Variable Account will be
allocated to one or more Sub-Accounts of the Variable Account. The assets of
each Sub-Account will be invested solely in the shares of one of the five
portfolios of the Variable Insurance Products Fund, in one of the four
portfolios of the Variable Insurance Products Fund II, in one of the two funds
available through the Northstar Variable Trust or in one of the six funds
available through Putnam Variable Trust (the "Funds"). The accompanying
prospectus for each of the Funds describes the investment objectives and
attendant risks of each of the Funds and portfolios.
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE. A
CURRENT PROSPECTUS FOR EACH OF THE FUNDS MUST ACCOMPANY THIS PROSPECTUS AND
SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS DECEMBER _____, 1996.
46263
<PAGE>
If net premiums are allocated to the Variable Account, the amount of the
Policy's death benefit may, and the Policy's Accumulation Value (that is, the
total amount that a Policy provides for investment at any time) will, reflect
the investment performance of the Sub-Accounts of the Variable Account that you
select. You bear the entire investment risk for any amounts allocated to the
Variable Account; no minimum Accumulation Value in the Variable Account is
guaranteed. Regardless of how net premiums are allocated, the Policy's death
benefit may, and the Policy's Accumulation Value will, also depend upon the
frequency and amount of premiums paid, any partial withdrawals, loans, and the
charges and deductions assessed in connection with the Policy.
The Policy provides for two types of "free look" periods, one after the
issuance of the Policy and the other after any requested increase in the Face
Amount. See "Free Look and Conversion Rights -- Free Look Rights."
THE CHARGES IMPOSED UPON EARLY SURRENDER OR LAPSE WILL BE SIGNIFICANT. FOR
EXAMPLE, IF YOU MAKE PREMIUM PAYMENTS NO GREATER THAN THE MINIMUM MONTHLY
PREMIUM PAYMENTS SPECIFIED IN YOUR POLICY, YOU CAN EXPECT THAT DURING AT LEAST
THE EARLY POLICY YEARS, ALL OR SUBSTANTIALLY ALL OF YOUR PREMIUM PAYMENTS WILL
BE REQUIRED TO PAY THE SURRENDER CHARGE AND OTHER CHARGES ASSOCIATED WITH THE
POLICY. AS A RESULT, YOU SHOULD PURCHASE A POLICY ONLY IF YOU HAVE THE FINANCIAL
CAPABILITY TO KEEP IT IN FORCE FOR A SUBSTANTIAL PERIOD. ALSO, CHARGES IMPOSED
UPON SURRENDER OR THE LAPSE OF THE POLICY WILL USUALLY EXCEED THE ACCUMULATION
VALUE OF THE POLICY DURING THE EARLY POLICY YEARS, WHICH MEANS THAT PAYMENTS
SUFFICIENT TO MAINTAIN THE DEATH BENEFIT GUARANTEE WILL BE REQUIRED TO AVOID
LAPSE DURING THIS PERIOD OF TIME. THESE SAME CONSIDERATIONS APPLY AFTER A
REQUESTED INCREASE IN FACE AMOUNT, WHICH CREATES THE POSSIBILITY OF ADDITIONAL
CHARGES UPON SURRENDER OR LAPSE OF THE POLICY. SEE "PAYMENT AND ALLOCATION OF
PREMIUMS - AMOUNT AND TIMING OF PREMIUMS", "DEATH BENEFIT GUARANTEE", AND
"DEDUCTIONS AND CHARGES - SURRENDER CHARGE."
REPLACING EXISTING INSURANCE WITH A POLICY DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE. IN ADDITION, IT MAY NOT BE TO YOUR ADVANTAGE TO
PURCHASE THIS POLICY TO OBTAIN ADDITIONAL INSURANCE PROTECTION IF YOU ALREADY
OWN ANOTHER FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING OR SOLICITATION IN ANY
JURISDICTION IN WHICH SUCH OFFERING OR SOLICITATION MAY NOT LAWFULLY BE MADE. NO
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS ENTIRE PROSPECTUS SHOULD BE READ TO COMPLETELY UNDERSTAND THE POLICY
BEING OFFERED.
THE PRIMARY PURPOSE OF THE POLICY IS TO PROVIDE INSURANCE PROTECTION FOR
THE BENEFICIARY NAMED IN THE POLICY. NO CLAIM IS MADE THAT THE POLICY IS IN ANY
WAY SIMILAR OR COMPARABLE TO A SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DEFINITIONS........................................................................................................................7
PART 1. SUMMARY
How does the Policy compare to traditional life insurance?...............................................................11
What is the Death Benefit?...............................................................................................11
What flexibility do you have to adjust the amount of the Death Benefit?..................................................12
What is the Death Benefit Guarantee?.....................................................................................12
If the Death Benefit Guarantee is not in effect, what will cause the Policy to lapse?....................................12
What is the Fixed Account?...............................................................................................12
What is the Variable Account?............................................................................................12
What are the minimum and maximum premium payments allowed?...............................................................12
How are premiums allocated to the investment options?....................................................................13
Who are the investment advisers of the Funds?............................................................................13
What charges do we make against each premium payment?....................................................................13
What charges do we make against the Accumulation Value?..................................................................13
What charges do we make upon lapse or total surrender of the Policy?.....................................................14
What is the value of the Policy if you surrender it?.....................................................................14
Can you make partial withdrawals?........................................................................................14
What are the free look and conversion rights?............................................................................14
Can you transfer between the Sub-Accounts and/or the Fixed Account?......................................................14
Can you borrow against the value of the Policy?..........................................................................15
Are Death Benefit proceeds taxable income to the beneficiary?............................................................15
Are Accumulation Value increases included in your taxable income?........................................................15
Will exercising certain Policy rights have tax consequences?.............................................................15
Who sells the Policies?..................................................................................................15
PART 2. DETAILED INFORMATION
ReliaStar Bankers Security Life Insurance Company........................................................................15
The Variable Account.....................................................................................................16
Performance Information..................................................................................................16
The Policies.............................................................................................................17
Death Benefit............................................................................................................17
Death Benefit Options...........................................................................................18
Which Death Benefit Option to Choose............................................................................20
Requested Changes in Face Amount................................................................................20
Insurance Protection............................................................................................21
Change in Death Benefit Option..................................................................................22
Accelerated Benefit.............................................................................................23
Payment and Allocation of Premiums.......................................................................................23
Issuing the Policy..............................................................................................23
Allocation of Premiums..........................................................................................25
Amount and Timing of Premiums...................................................................................25
Planned Periodic Premiums.......................................................................................26
Unscheduled Additional Premiums.................................................................................26
Paying Premiums by Mail.........................................................................................26
Death Benefit Guarantee..................................................................................................26
Accumulation Value.......................................................................................................27
Deductions and Charges...................................................................................................28
Premium Expense Charge..........................................................................................28
4
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Monthly Deduction...............................................................................................28
Surrender Charge................................................................................................29
Charges Against the Variable Account............................................................................31
Partial Withdrawal and Transfer Charges.........................................................................32
Reduction of Charges............................................................................................32
Policy Lapse and Reinstatement...........................................................................................32
Surrender Benefits.......................................................................................................33
Total Surrender.................................................................................................33
Partial Withdrawal..............................................................................................33
Transfers................................................................................................................34
Policy Loans.............................................................................................................36
Free Look and Conversion Rights..........................................................................................38
Free Look Rights................................................................................................38
Conversion Rights...............................................................................................39
Investments of the Variable Account......................................................................................40
Fidelity's Variable Insurance Products Fund (VIPF):.............................................................40
Fidelity's Variable Insurance Products Fund II (VIPF II):.......................................................41
Northstar Variable Trust (Northstar):...........................................................................41
Putnam Variable Trust (Putnam VT):..............................................................................42
Addition, Deletion, or Substitution of Investments..............................................................42
Voting Rights............................................................................................................43
General Provisions.......................................................................................................43
Benefits at Age 95..............................................................................................43
Ownership.......................................................................................................43
Proceeds........................................................................................................44
Beneficiary.....................................................................................................44
Postponement of Payments........................................................................................44
Settlement Options..............................................................................................45
Incontestability................................................................................................46
Misstatement of Age and Sex.....................................................................................46
Suicide.........................................................................................................46
Termination.....................................................................................................46
Amendment.......................................................................................................46
Reports.........................................................................................................47
Dividends.......................................................................................................47
Collateral Assignment...........................................................................................47
Optional Insurance Benefits.....................................................................................47
Federal Tax Matters......................................................................................................48
Policy Proceeds.................................................................................................48
Taxation of Distributions.......................................................................................48
Taxation of Policies Held by Pension, Certain Deferred Compensation Plans
and Other Arrangements........................................................................................49
Taxation of ReliaStar Bankers Security Life Insurance Company...................................................50
Other Considerations............................................................................................50
Legal Developments Regarding Employment -- Related Benefit Plans.........................................................50
Distribution of the Policies.............................................................................................50
Management...............................................................................................................51
Directors.......................................................................................................51
Executive Officers..............................................................................................52
State Regulation.........................................................................................................53
Legal Proceedings........................................................................................................53
Bonding Arrangements.....................................................................................................53
Legal Matters............................................................................................................53
5
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Experts ................................................................................................................53
Registration Statement Contains Further Information......................................................................53
Financial Statements.....................................................................................................54
Appendix A - The Fixed Account..........................................................................................A-1
Appendix B - Calculation of Accumulation Value..........................................................................B-1
Appendix C - Illustration of Accumulation Values, Surrender Charges,
Cash Surrender Values and Death Benefits.......................................................................C-1
Appendix D - Maximum Surrender Charge Per $1,000 of Face Amount.........................................................D-1
Appendix E - Surrender Charge Whole Life Premium Per $1,000 of Face Amount..............................................E-1
Fund Prospectuses
Fidelity's Variable Insurance Products Fund (VIPF):
Money Market Portfolio..............................................................................VIP-1
High Income Portfolio...............................................................................VIP-1
Equity-Income Portfolio.............................................................................VIP-1
Growth Portfolio....................................................................................VIP-1
Overseas Portfolio..................................................................................VIP-1
Fidelity's Variable Insurance Products Fund II (VIPF II):
Investment Grade Bond Portfolio...................................................................VIPII-1
Asset Manager Portfolio...........................................................................VIPII-1
Index 500 Portfolio...............................................................................VIPII-1
Contrafund Portfolio..............................................................................VIPII-1
Northstar Variable Trust (Northstar):
Northstar Income and Growth Fund..............................................................Northstar-1
Northstar Multi-Sector Bond Fund..............................................................Northstar-1
Putnam Variable Trust (Putnam VT):
Putnam VT Diversified Income Fund...................................................................PVT-1
Putnam VT Growth and Income Fund....................................................................PVT-1
Putnam VT Utilities Growth and Income Fund..........................................................PVT-1
Putnam VT Voyager Fund..............................................................................PVT-1
Putnam VT Asia Pacific Growth Fund..................................................................PVT-1
Putnam VT New Opportunities Fund....................................................................PVT-1
</TABLE>
6
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DEFINITIONS
ACCUMULATION VALUE. The total value attributable to a specific Policy, which
equals the sum of the Variable Accumulation Value (the total of the values
in each Sub-Account of the Variable Account) and the Fixed Accumulation
Value (the value in the Fixed Account). See "Accumulation Value" at page 27
and Appendix B.
AGE. The Insured's age at the last birthday determined as of the beginning of
each Policy Year.
CASH SURRENDER VALUE. The Accumulation Value less any Surrender Charge, Loan
Amount and unpaid Monthly Deductions.
CASH VALUE. The Accumulation Value less any Surrender Charge.
CODE. Internal Revenue Code of 1986, as amended.
DEATH BENEFIT. The amount determined under the applicable Death Benefit Option
(the Level Amount Option or the Variable Amount Option). The proceeds
payable to the beneficiary of the Policy upon the death of the Insured
under either Death Benefit Option will be reduced by any Loan Amount and
any unpaid Monthly Deductions. See "Death Benefit" at page 17.
DEATH BENEFIT GUARANTEE. A feature of the Policy guaranteeing that the Policy
will not lapse before the Insured reaches Age 65 (or five Policy Years, if
longer) if, on each Monthly Anniversary, the total premiums paid on the
Policy, less any partial withdrawals and any Loan Amount, equals or exceeds
the total required Minimum Monthly Premium payments specified in your
Policy, including the Minimum Monthly Premium for the current Monthly
Anniversary. See "Death Benefit Guarantee" at page 26.
DEATH BENEFIT OPTION. Either of two death benefit options available under the
Policy (the Level Amount Option and the Variable Amount Option). See "Death
Benefit --Death Benefit Options" at page 18.
FACE AMOUNT. The minimum Death Benefit under the Policy to Age 95 as long as the
Policy remains in force. See "Death Benefit" at page 17.
FIXED ACCOUNT. The assets of ReliaStar Bankers Security Life Insurance Company
other than those allocated to the Variable Account or any other separate
account. See Appendix A.
FIXED ACCUMULATION VALUE. The value attributable to a specific Policy to the
extent such amount is attributable to the Fixed Account (our General
Account). Unlike the Variable Accumulation Value, the Fixed Accumulation
Value will not reflect the investment performance of the Funds. See
"Accumulation Value" at page 27 and Appendix B.
FUNDS. Any open-end management investment company (or portfolio thereof) or unit
investment trust (or series thereof) in which a Sub-Account invests as
described herein. See "Investments of the Variable Account" at page 40.
INSURED. The person upon whose life the Policy is issued.
ISSUE DATE. The date insurance coverage under a Policy begins.
LEVEL AMOUNT OPTION. One of two Death Benefit Options available under the
Policy. Under this option, the Death Benefit is the greater of the current
Face Amount or the corridor percentage of Accumulation Value on the
7
<PAGE>
Valuation Date on or next following the date of the Insured's death. See
"Death Benefit--Death Benefit Options" at page 18.
LOAN AMOUNT. The sum of all unpaid Policy loans including unpaid interest due
thereon. See "Policy Loans" at page 36.
MINIMUM FACE AMOUNT. The minimum Face Amount shown in the Policy (currently
$25,000).
MINIMUM MONTHLY PREMIUM. A monthly premium amount specified in the Policy and
determined by us at issuance of the Policy. The initial Minimum Monthly
Premium will depend upon the Insured's sex, Age at issue, Rate Class,
optional insurance benefits added by rider, and the Initial Face Amount. A
requested increase or decrease in the Face Amount, a change in the Death
Benefit Option, or the addition or termination of a Policy rider may change
the Minimum Monthly Premium. The Minimum Monthly Premium determines the
payments required to maintain the Death Benefit Guarantee. See "Death
Benefit Guarantee" at page 26.
MONTHLY ANNIVERSARY. The same date in each succeeding month as the Policy Date.
Whenever the Monthly Anniversary falls on a date other than a Valuation
Date, the Monthly Anniversary will be considered to be the next Valuation
Date. The first Monthly Anniversary is on the Policy Date.
MONTHLY DEDUCTION. A monthly charge deducted from the Accumulation Value of the
Policy. This charge includes the cost of insurance, the Monthly
Administrative Charge, the Monthly Mortality and Expense Risk Charge, and
any charges for optional insurance benefits. See "Deductions and Charges -
Monthly Deduction" at page 28.
MONTHLY ADMINISTRATIVE CHARGE. A monthly charge to reimburse us for expenses
incurred in administering the Policy. This charge is part of the Monthly
Deduction. The amount of this charge is currently $7.50 per month and is
guaranteed not to exceed $10.00 per month. See "Deductions and
Charges--Monthly Deduction" at page 28.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE. A monthly charge to compensate us for
certain mortality and expense risks we assume under the Policy. The
Mortality and Expense Risk Charge will be an annual rate of .9 of 1% (.90%)
of the Variable Accumulation Value of the Policy during the first 10 Policy
Years. During each Policy Year thereafter, it is anticipated that the
charge will be an annual rate of .45 of 1% (.45%) but in no event will it
exceed .9 of 1% (.90%) for the duration of the Policy. See "Deductions and
Charges - Monthly Mortality and Expense Risk Charge" at page 29.
NET PREMIUM. The gross premium less a Premium Expense Charge deducted from each
premium.
NORTHSTAR. Northstar Variable Trust
Northstar Income and Growth Fund
Northstar Multi-Sector Bond Fund
PLANNED PERIODIC PREMIUM. The scheduled premium selected by you of a level
amount at a fixed interval. The initial Planned Periodic Premium you select
will be shown in the Policy. See "Payment and Allocation of Premiums --
Planned Periodic Premiums" at page 25.
POLICY, POLICIES. The flexible premium variable life insurance Policy offered by
us and described in this Prospectus.
POLICY ANNIVERSARY. The same date in each succeeding year as the Policy Date.
Whenever the Policy Anniversary falls on a date other than a Valuation
Date, the Policy Anniversary will be considered to be the next Valuation
Date.
POLICY DATE. The Policy Date is used in determining Policy Years, Policy Months,
Monthly Anniversaries, and Policy Anniversaries. The Policy Date will be
shown in the Policy.
8
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POLICY MONTH. A month beginning on the Monthly Anniversary.
POLICY YEAR. A year beginning on the Policy Anniversary.
PREMIUM EXPENSE CHARGE. An amount deducted from each premium payment. The
Premium Expense Charge is currently 5.00% of each premium payment. We may
in the future also make an additional charge of up to $2.00 per premium
payment to reimburse us for the cost of collecting and processing premiums.
See "Deductions and Charges --Premium Expense Charge" at page 28.
PREMIUM RELATED SURRENDER CHARGE REDUCTION. A reduction to the Surrender Charge
when total premiums paid are less than the Surrender Charge Whole Life
Premium. See "Deductions and Charges--Surrender Charge" at page 29.
PUTNAM VT. Putnam Variable Trust
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund
Putnam VT Asia Pacific Growth Fund
Putnam VT New Opportunities Fund
RATE CLASS. A group of Insureds we determine based on our expectation that they
will have similar mortality experience.
SEC. Securities and Exchange Commission.
SIGNATURE GUARANTEE. A guarantee of your signature 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 us.
SUB-ACCOUNT. A sub-division of the Variable Account. Each Sub-Account invests
exclusively in the shares of a specified Fund.
SURRENDER CHARGE. A charge imposed upon total surrender or lapse of the Policy
during the first 15 Policy Years and the first 15 years following any
requested increase in Face Amount. See "Deductions and Charges --Surrender
Charge" at page 29.
SURRENDER CHARGE WHOLE LIFE PREMIUM. An amount used in calculating the Premium
Related Surrender Charge Reduction The Surrender Charge Whole Life Premium
will equal the amount obtained by dividing the Face Amount or the amount of
a requested increase, as the case may be, by $1,000, and multiplying the
result by the applicable factor from Appendix E. See "Deductions and
Charges--Surrender Charge" at page 29.
UNIT VALUE. The unit measure by which the value of the Policy's interest in each
Sub-Account is determined. See Appendix B.
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; Presidents' Day;
Good Friday; Memorial Day; July Fourth; Labor Day; Veterans Day;
Thanksgiving Day; and Christmas Day. See Appendix B.
9
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VALUATION PERIOD. The period between two successive Valuation Dates, commencing
at the close of business of a Valuation Date and ending at the close of
business of the next Valuation Date. See Appendix B.
VARIABLE ACCOUNT. ReliaStar Bankers Security Variable Life Separate Account I, a
separate investment account established by us to receive and invest Net
Premiums paid under the Policy. See "The Variable Account" at page 16.
VARIABLE ACCUMULATION VALUE. The value attributable to a specific Policy to the
extent such amount is attributable to the Variable Account. See
"Accumulation Value" at page 27 and Appendix B.
VARIABLE AMOUNT OPTION. One of two Death Benefit Options available under the
Policy. Under this option, the Death Benefit is the greater of the Face
Amount plus the Accumulation Value of the Policy, or the Accumulation Value
multiplied by the corridor percentage on the Valuation Date on or next
following the date of the Insured's death. See "Death Benefit --Death
Benefit Options" at page 18.
VIPF. Variable Insurance Products Fund
Money Market Portfolio
High Income Portfolio
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
VIPF II. Variable Insurance Products Fund II
Investment Grade Bond Portfolio
Asset Manager Portfolio
Index 500 Portfolio
Contrafund Portfolio
WE, US, OUR. ReliaStar Bankers Security Life Insurance Company.
YOU, YOUR. The Policy owner as designated in the application for the Policy or
as subsequently changed. If a Policy has been absolutely assigned, the
assignee is the Policy owner. A collateral assignee is not the Policy
owner.
10
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PART 1. SUMMARY
This is a brief summary of the Policy's features. More detailed information
follows later in this Prospectus.
HOW DOES THE POLICY COMPARE TO TRADITIONAL LIFE INSURANCE?
Like traditional life insurance:
o The Policy provides a guaranteed minimum amount of life insurance
coverage.
o As long as you meet the requirements for the Death Benefit Guarantee,
your Policy will remain in force until the Insured reaches Age 65 (or
five Policy Years, if longer).
o You can surrender the Policy while the Insured is living and receive
its Cash Surrender Value.
o The Policy has a loan value.
o The Fixed Accumulation Value is guaranteed.
Unlike traditional life insurance:
o You choose where the Net Premiums for the Policy are invested.
o You may transfer existing values among the investment options.
o The Variable Accumulation Value may increase or decrease based on the
investment performance of the Funds you select.
o You choose between two Death Benefit Options.
o You choose the amount and frequency of your premium payments.
o After the second Policy Year, you can increase or decrease the Face
Amount.
WHAT IS THE DEATH BENEFIT?
You choose one of two Death Benefit Options -- the Level Amount Option or
the Variable Amount Option. The Death Benefit under the Level Amount Option is
the greater of the Face Amount or the corridor percentage multiplied by the
Accumulation Value on the Valuation Date on or next following the date of the
Insured's death. The Death Benefit under the Variable Amount Option is equal to
the greater of the Face Amount plus the Accumulation Value, or the corridor
percentage multiplied by the Accumulation Value on the Valuation Date on or next
following the date of the Insured's death. See "Death Benefit."
The proceeds payable upon the death of the Insured under either Death
Benefit Option will be reduced by any Loan Amount and any unpaid Monthly
Deductions.
The Death Benefit will never be less than the Face Amount as long as the
Policy is in force and there is no Loan Amount or unpaid Monthly Deductions,
except after Age 95 when the Death Benefit equals the Accumulation Value.
Under certain circumstances a part of the Death Benefit may be paid to you
when the Insured has been diagnosed as having a terminal illness. See
"Accelerated Benefit."
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WHAT FLEXIBILITY DO YOU HAVE TO ADJUST THE AMOUNT OF THE DEATH BENEFIT?
After the second Policy Year, you have flexibility to adjust the Death
Benefit by increasing or decreasing the Face Amount. You cannot decrease the
Face Amount below the Minimum Face Amount shown in the Policy. Any increase in
the Face Amount must be at least $5,000 and may require additional evidence of
insurability satisfactory to us and will result in additional charges. See
"Death Benefit --Requested Changes in Face Amount."
Generally, you may also change the Death Benefit Option at any time after
the second Policy Year. See "Death Benefit -- Change in Death Benefit Option."
For a discussion of available techniques to adjust the amount of insurance
protection to satisfy changing insurance needs, see "Death Benefit --Insurance
Protection."
WHAT IS THE DEATH BENEFIT GUARANTEE?
Until the Insured reaches Age 65 (or five Policy Years, if longer), if you
meet the requirements for the Death Benefit Guarantee we will not lapse your
Policy, even if the Cash Surrender Value is not sufficient to cover the Monthly
Deduction that is due. See "Death Benefit Guarantee."
IF THE DEATH BENEFIT GUARANTEE IS NOT IN EFFECT, WHAT WILL CAUSE THE POLICY TO
LAPSE?
The Policy will only lapse if the Cash Surrender Value is less than the
Monthly Deduction due and if a grace period of 61 days expires without a
sufficient payment. The Policy thus differs in two important respects from
traditional life insurance. First, the failure to pay a Planned Periodic Premium
will not automatically cause the Policy to lapse. Second, even if Planned
Periodic Premiums have been paid, the Policy may lapse. See "Policy Lapse and
Reinstatement --Lapse."
WHAT IS THE FIXED ACCOUNT?
The Fixed Account consists of all of our assets other than those in our
separate accounts (including the Variable Account). We credit interest of at
least 4% per year on any amounts you have in the Fixed Account. From time to
time we may guarantee interest in excess of 4%. Interests in the Fixed Account
have not been registered under the Securities Act of 1933 nor is the Fixed
Account subject to the restrictions of the Investment Company Act of 1940. See
Appendix A, "The Fixed Account."
WHAT IS THE VARIABLE ACCOUNT?
The ReliaStar Bankers Security Variable Life Separate Account I is one of
our separate accounts. Only premiums from our variable life insurance policies
are invested in the Variable Account. See "The Variable Account."
The Variable Account is divided into Sub-Accounts. Premiums allocated to
each Sub-Account are invested in shares, at net asset value, of the Fund
corresponding to that Sub-Account. The Variable Accumulation Value of the Policy
will vary with, among other things, the investment performance of the Funds to
which Policy premiums are allocated and the charges deducted from the Variable
Accumulation Value. See "Accumulation Value."
WHAT ARE THE MINIMUM AND MAXIMUM PREMIUM PAYMENTS ALLOWED?
With certain restrictions, you can choose when you pay premiums and how
much each payment will be. In most cases, however, payment of cumulative
premiums sufficient to maintain the Death Benefit Guarantee will be required to
keep the Policy in force during at least the first several Policy Years. See
"Death Benefit Guarantee." We may choose not to accept a payment of less than
$25.00. We do, however, reserve the right to limit the amount of any payment and
certain maximum limits apply. We will return to you any premium paid to the
extent that total premiums
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<PAGE>
paid, both scheduled and unscheduled, would exceed the current maximum premium
payments allowed for life insurance under Federal tax law. See "Payment and
Allocation of Premiums -- Amount and Timing of Premiums."
HOW ARE PREMIUMS ALLOCATED TO THE INVESTMENT OPTIONS?
You choose the premium allocation on the application. You can allocate
premiums to the Fixed Account and/or one or more Sub-Accounts of the Variable
Account. If you do not indicate your premium allocation on the application, your
premiums will be allocated to the Money Market Portfolio. The Fixed Account is
not available to allocate premiums under policies issued in New Jersey. The
initial allocation remains in effect for any future premium payments until you
change it. See "Payment and Allocation of Premiums -- Allocation of Premiums."
WHO ARE THE INVESTMENT ADVISERS OF THE FUNDS?
Fidelity Management & Research Company is the investment adviser of VIPF's
five portfolios and of VIPF II's four portfolios.
Northstar Investment Management Corporation, an affiliate of ours, is the
investment adviser of Northstar's two funds.
Putnam Investment Management, Inc. ("Putnam Management") is the investment
adviser of Putnam Variable Trust's six funds.
For the expenses of each Fund see "Deductions and Charges - Charges Against
the Variable Account."
WHAT CHARGES DO WE MAKE AGAINST EACH PREMIUM PAYMENT?
We deduct an amount (the Premium Expense Charge) from each premium and
credit the remaining premium (the Net Premium) to the Fixed Account or to the
Variable Account in accordance with your instructions. The Premium Expense
Charge is 5.00% of each premium payment. Although we do not currently do so, we
may choose to make an additional charge of up to $2.00 per premium payment as
part of the Premium Expense Charge. See "Deductions and Charges - Premium
Expense Charge."
WHAT CHARGES DO WE MAKE AGAINST THE ACCUMULATION VALUE?
The Accumulation Value of the Policy is subject to several charges --the
Monthly Deduction and transfer and partial withdrawal charges.
The Monthly Deduction will be deducted monthly from both the Fixed
Accumulation Value and the Variable Accumulation Value and includes the cost of
insurance, the Monthly Administrative Charge, the Monthly Mortality and Expense
Risk Charge, and charges for optional insurance benefits (other than any Waiver
of Monthly Deduction rider). The cost of insurance will be determined by
multiplying the applicable cost of insurance rate(s) by the net amount at risk.
The Monthly Administrative Charge is currently $7.50 per month and is guaranteed
not to exceed $10.00 per month. The Monthly Mortality and Expense Risk Charge
will be equal to one-twelfth of .9 of 1% (.90%) of the Variable Accumulation
Value (that is, the total value attributable to a specific Policy in the
Sub-Accounts of the Variable Account) of the Policy during the first 10 Policy
Years. Beginning on Policy Year 11 and each year thereafter, it is currently
anticipated that this monthly charge will be one-twelfth of .45 of 1% (.45%) but
in no event will it exceed .9 of 1% (.90%) for the duration of the Policy. The
charges for optional insurance benefits will vary depending upon the benefit(s)
selected. See "Deductions and Charges --Monthly Deduction."
There is currently no charge imposed for each transfer but we presently
charge $10.00 for each partial withdrawal. The charge for transfers and partial
withdrawals is guaranteed not to exceed $25.00 per transfer or partial
withdrawal. See "Deductions and Charges --Partial Withdrawal and Transfer
Charges."
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WHAT CHARGES DO WE MAKE UPON LAPSE OR TOTAL SURRENDER OF THE POLICY?
During the first 15 years the Policy is in force and the first 15 years
following a requested increase in the Face Amount, there is a charge if the
Policy lapses or you surrender the Policy (the Surrender Charge). See
"Deductions and Charges --Surrender Charge" and Appendixes D and E.
The maximum Surrender Charge on the Initial Face Amount and on any
requested increases in Face Amount will be determined on the Policy Date and on
the effective date of any such requested increase, as the case may be. This
maximum charge then remains level during the first five years in the relevant
15-year period, and then reduces in equal monthly increments until it becomes
zero at the end of 15 years. Thus, if the Policy remains in force during the
entire relevant 15-year period, you do not pay this charge.
The Surrender Charge on the Initial Face Amount will depend upon the
Initial Face Amount, the Insured's Age on the Policy Date, the Insured's sex,
and the Insured's Rate Class. The Surrender Charge on any requested increase in
Face Amount will depend upon the Face Amount of the increase, the Insured's Age
on the effective date of the increase, the Insured's sex, and the Insured's Rate
Class on the effective date of the increase.
The Surrender Charge imposed upon early surrender or lapse will be
significant. As a result, you should purchase a Policy only if you have the
financial capability to keep it in force for a substantial period of time.
WHAT IS THE VALUE OF THE POLICY IF YOU SURRENDER IT?
In general, the Cash Surrender Value is the amount you would receive if you
surrender the Policy. To determine the Cash Surrender Value, your Accumulation
Value is reduced by the Surrender Charge, if any, and any Loan Amount and unpaid
Monthly Deductions.
CAN YOU MAKE PARTIAL WITHDRAWALS?
Yes, you can withdraw part of your Cash Surrender Value. Each partial
withdrawal must be at least $500. You will not incur a Surrender Charge, but
partial withdrawals are subject to a processing charge. We currently make a
$10.00 charge for each partial withdrawal. The charge is guaranteed not to
exceed $25.00 per partial withdrawal. Only one partial withdrawal is allowed in
any Policy Year. See "Surrender Benefits --Partial Withdrawal."
WHAT ARE THE FREE LOOK AND CONVERSION RIGHTS?
You have a limited free look period during which you have a right to return
the Policy and receive a refund of all premiums paid. See "Free Look and
Conversion Rights -- Free Look Rights." The Policy must be returned to us by
midnight of the 20th day after you receive it.
Also, the Policy may in effect be converted in whole or in part to a "fixed
benefit" policy (providing benefits that do not vary with the investment
performance of the Variable Account) at any time during the first two Policy
Years by transferring all or part of the Accumulation Value of the Policy from
the Variable Account to the Fixed Account. For policies issued in Connecticut
and New Jersey, the conversion right may be exercised by transferring to a
different permanent fixed benefit life insurance policy offered by us in those
states. See "Free Look and Conversion Rights --Conversion Rights."
Similar free look and conversion rights will be available for requested
increases in the Face Amount. See "Free Look and Conversion Rights."
CAN YOU TRANSFER BETWEEN THE SUB-ACCOUNTS AND/OR THE FIXED ACCOUNT?
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<PAGE>
Subject to certain restrictions, you can transfer all or part of your
Accumulation Value between the investment options of the Policy. We currently
allow up to twelve transfers per year. Transfers from the Fixed Account are
subject to certain additional restrictions. We reserve the right to limit you to
four transfers per year and to make a charge for each transfer. (Transfers to or
from the Fixed Account are not available for policies issued in New Jersey.) We
currently make no charge for each transfer. This charge is guaranteed not to
exceed $25.00 per transfer. To the extent, however, that you request a transfer
from the Variable Account to the Fixed Account in connection with exercising
your conversion rights under the Policy, the limit on the number of transfers
and the charge will not apply. See "Free Look and Conversion Rights--Conversion
Rights" and "Transfers."
CAN YOU BORROW AGAINST THE VALUE OF THE POLICY?
At any time after the first Policy Year, you can borrow the Cash Value of
the Policy less any existing Loan Amount. Each loan must be at least $500.
Interest is payable in advance for each Policy Year and accrues daily at an
effective annual rate that will not exceed 6.00% (which is 5.66% when payable in
advance). After the tenth Policy Year, we will charge interest at an annual rate
of 4.00% (which is 3.85% when payable in advance) on the portion of your Loan
Amount that is not in excess of (a) the Accumulation Value, less (b) the total
of all premiums paid net of all partial withdrawals. See "Policy Loans."
ARE DEATH BENEFIT PROCEEDS TAXABLE INCOME TO THE BENEFICIARY?
Under current Federal tax law, as long as the Policy qualifies as life
insurance the Death Benefit under the Policy will be subject to the same Federal
income tax treatment as proceeds of traditional life insurance. Therefore, the
Death Benefit should not be taxable income to the beneficiary. See "Federal Tax
Matters --Policy Proceeds."
ARE ACCUMULATION VALUE INCREASES INCLUDED IN YOUR TAXABLE INCOME?
Under current Federal tax law, as long as the Policy qualifies as life
insurance, Accumulation Value increases will also be subject to the same Federal
income tax treatment as traditional life insurance cash values. Therefore, any
increases should accumulate on a tax deferred basis. See "Federal Tax Matters
- --Policy Proceeds."
WILL EXERCISING CERTAIN POLICY RIGHTS HAVE TAX CONSEQUENCES?
A change of owners, a partial withdrawal, a total surrender, or a Policy
loan may have tax consequences depending on the particular circumstances. See
"Federal Tax Matters --Policy Proceeds."
WHO SELLS THE POLICIES?
The Policies are sold by licensed insurance agents who are also registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 and who are members of the National Association of Securities Dealers,
Inc. Washington Square Securities, Inc., an affiliate of ours, is the Principal
Underwriter of the Policies. See "Distribution of the Policies."
PART 2. DETAILED INFORMATION
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
We are a stock life insurance company incorporated under the laws of the
State of New York in 1917 under the name The Morris Plan Insurance Society. In
1946 we adopted the name Bankers Security Life Insurance Society, and in 1996 we
adopted our present name. We are authorized to transact business in all states,
the District of Columbia, and the Dominican Republic. We were the first company
to write credit life insurance and until 1950 our business was confined to
credit life insurance on a group and individual basis initiated in connection
with loans made by banks and other lenders. In 1950 we began writing ordinary
life insurance. In 1962 we acquired, through merger, Postal Life Insurance
Company, a New York chartered stock life insurance company. In 1971 we acquired,
through merger,
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Congressional Life Insurance Company, a New York chartered stock life insurance
company. In 1996 we acquired, through merger, The North Atlantic Life Insurance
Company of America, also a New York chartered stock life insurance company.
Our principal office is located at 1000 Woodbury Road, Suite 102, P.O. Box
9004, Woodbury, New York 11797.
On December 20, 1979, we became a wholly-owned subsidiary of United
Services Life Insurance Company ("United Services") which became an indirect,
wholly owned subsidiary of ReliaStar Financial Corp. ("ReliaStar"), formerly The
NWNL Companies, Inc., when ReliaStar acquired USLICO Corporation on January 20,
1995. ReliaStar is a holding company whose subsidiaries specialize in life
insurance and related financial services businesses.
THE VARIABLE ACCOUNT
The Variable Account is a Separate Account of ours, established by the
Board of Directors on March 23, 1982 pursuant to the laws of the State of New
York. The Variable Account will receive and invest the Net Premiums paid and
allocated to it under this Policy. In addition, the Variable Account currently
receives and invests net premiums for another class of scheduled premium
variable life insurance policy and may do so for additional classes in the
future. The Variable Account meets the definition of a "separate account" under
the federal securities laws and has been registered with the SEC as a unit
investment trust under the Investment Company Act of 1940. The registration does
not involve supervision by the SEC of the management or investment policies or
practices of the Variable Account, us, or the Funds.
We own the assets of the Variable Account. However, the New York laws under
which the Variable Account was established provide that the Variable Account
cannot be charged with liabilities arising out of any other business we may
conduct. We are required to maintain assets which are at least equal to the
reserves and other liabilities of the Variable Account. We may transfer assets
which exceed these reserves and liabilities to our general account (the Fixed
Account).
For a description of the Fixed Account, see Appendix A to this Prospectus.
PERFORMANCE INFORMATION
Performance information for the Sub-Accounts of the Variable Account and
the Funds available for investment by the Variable Account may appear in
advertisements, sales literature, or reports to Policy owners or prospective
purchasers. Performance information for the Sub-Accounts will reflect deductions
of Fund expenses and be adjusted to reflect the Mortality and Expense Risk
Charge, but will not reflect deductions for the cost of insurance or the
Surrender Charge. Quotations of performance information for the Funds will be
accompanied by performance information for the Sub- Accounts. Performance
information for the Funds will take into account all fees and charges at the
Fund level, but will not reflect any deductions from the Variable Account.
Performance information reflects only the performance of a hypothetical
investment during a particular time period in which the calculations are based.
Performance information showing total returns and average annual total returns
may be provided for periods prior to the date a Sub-Account commenced operation.
Such performance information will be calculated based on the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Funds, with the level of charges at the Variable Account level that were in
effect at the inception of the Sub-Accounts. Performance information should be
considered in light of the investment objectives and policies, characteristics
and quality of the portfolio of the Fund in which the Sub-Account invests, and
the market conditions during the given period of time, and should not be
considered as a representation of what may be achieved in the future.
We may also provide individualized hypothetical illustrations of Policy
Accumulation Value, Cash Surrender Value and Death Benefit based on historical
investment returns of the Funds. These illustrations will reflect deductions for
Fund expenses and Policy and Variable Account charges, including the Monthly
Deduction, Premium Expense
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Charge and the Surrender Charge. These hypothetical illustrations will be based
on the actual historical experience of the Funds as if the Sub-Accounts had been
in existence and a Policy issued for the same periods as those indicated for the
Funds.
Performance of the Sub-Accounts and/or the Funds as reported from time to
time in advertisements and sales literature may be compared to other variable
life insurance issuers in general or to the performance of particular types of
variable life insurance policies investing in mutual funds, or investment series
of mutual funds with investment objectives similar to each of the Sub-Accounts,
whose performance is reported by Lipper Analytical Services, Inc. ("Lipper") and
Morningstar, Inc. ("Morningstar") or reported by other series, companies,
individuals or other industry or financial publications of general interest,
such as FORBES, MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S,
KIPLINGER'S PERSONAL FINANCE, and FORTUNE. Lipper and Morningstar are
independent services which monitor and rank the performances of variable life
insurance issuers in each of the major categories of investment objectives on an
industry-wide basis.
Lipper's and Morningstar's rankings include variable annuity issuers as
well as variable life insurance issuers. The performance analysis prepared by
Lipper and Morningstar ranks such issuers on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges, redemption fees
or certain expense deductions at the separate account level into consideration.
We may also compare the performance of each Sub-Account in advertising and
sales literature to the Standard & Poor's Index of 500 common stocks and the Dow
Jones Industrials, which are widely used measures of stock market performance.
We may also compare the performance of each Sub-Account to other widely
recognized indices. Unmanaged indices may assume the reinvestment of dividends,
but typically do not reflect any "deduction" for the expense of operating or
managing an investment portfolio.
THE POLICIES
The Policies are flexible premium variable life insurance contracts with
death benefits, cash values, and other features of traditional life insurance
contracts. They are "flexible premium" because premiums do not have to be paid
according to a fixed schedule. They are "variable" because, to the extent
Accumulation Value is attributable to the Variable Account, Accumulation Values
and, under certain circumstances, the Death Benefit will increase and decrease
based on the investment performance of the Funds in which the Sub-Accounts to
which you allocate your premium payments invest.
DEATH BENEFIT
Like traditional life insurance, we pay a death benefit if the Insured dies
while the Policy is in force. The proceeds payable upon the death of the Insured
will be the Death Benefit (see "Death Benefit Options" below) reduced by any
Loan Amount and unpaid Monthly Deductions. All or part of the proceeds may be
paid in cash to your beneficiaries or under one or more of the settlement
options we offer. See "General Provisions --Settlement Options."
The Policy provides two Death Benefit Options: the Level Amount Option and
the Variable Amount Option. You choose the Death Benefit Option on the
application for the Policy. Subject to certain limitations, you can change the
Death Benefit Option after issuance of the Policy. See "Death Benefit --Change
in Death Benefit Option."
The Death Benefit may vary with the Policy's Accumulation Value. Under the
Level Amount Option, the Death Benefit will only vary with the Accumulation
Value whenever the Accumulation Value multiplied by the corridor percentage (see
"Death Benefit Options --Level Amount Option") exceeds the Face Amount of the
Policy. The Death Benefit under the Variable Amount Option will always vary with
the Accumulation Value because the Death Benefit equals the Face Amount plus the
Accumulation Value, or the corridor percentage of the Accumulation Value. Under
either Death Benefit Option, however, the Death Benefit will never be less than
the current Face Amount of the Policy and will be payable only as long as the
Policy remains in force, except after Age 95 when the Death Benefit equals the
Accumulation Value.
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In addition to affecting the amount of the Death Benefit as described
above, the Accumulation Value generally determines how long the Policy remains
in force. See "Policy Lapse and Reinstatement." This means that, to the extent
Accumulation Value is attributable to the Variable Account, the investment
performance of the Variable Account (and the underlying Funds) may affect the
duration of the Policy by affecting the amount of Accumulation Value. You bear
the investment risk with respect to any amounts allocated to the Variable
Account. If, however, the Death Benefit Guarantee is in effect (see "Death
Benefit Guarantee"), the Policy will stay in force until the Insured reaches Age
65 (or five Policy Years, if longer) without regard to the investment
performance under the Policy.
Appendix C illustrates Accumulation Values, Surrender Charges, Cash
Surrender Values, and Death Benefits assuming different levels of premium
payments and investment returns for selected Ages and Face Amounts.
DEATH BENEFIT OPTIONS
The Level Amount Option and the Variable Amount Option are described below.
LEVEL AMOUNT OPTION. The Death Benefit is the greater of the current Face
Amount of the Policy or the corridor percentage multiplied by the Accumulation
Value on the Valuation Date on or next following the date of the Insured's
death. The corridor percentage is 250% for an Insured Age 40 or below, and the
percentage declines with increasing Ages as shown below in the Corridor
Percentage Table. Accordingly, under the Level Amount Option the Death Benefit
will remain level unless the corridor percentage of Accumulation Value exceeds
the current Face Amount, in which case the amount of the Death Benefit will vary
as the Accumulation Value varies.
ILLUSTRATION OF LEVEL AMOUNT OPTION. For purposes of this illustration,
assume that the Insured is under Age 40, and that there is no Loan Amount. Under
the Level Amount Option, a Policy with a $100,000 Face Amount will generally
have a $100,000 Death Benefit. However, because the Death Benefit must be equal
to or be greater than 250% of the Accumulation Value, any time the Accumulation
Value of the Policy exceeds $40,000, the Death Benefit will exceed the $100,000
Face Amount. Each additional dollar added to the Accumulation Value above
$40,000 will increase the Death Benefit by $2.50. Thus, if the Accumulation
Value exceeds $40,000 and increases by $100 because of investment performance or
premium payments, the Death Benefit will increase by $250. A Policy owner with
an Accumulation Value of $50,000 will be entitled to a Death Benefit of $125,000
($50,000 X 250%); an Accumulation Value of $75,000 will yield a Death Benefit of
$187,500 ($75,000 X 250%); and an Accumulation Value of $100,000 will yield a
Death Benefit of $250,000 ($100,000 X 250%).
Similarly, as long as the Accumulation Value exceeds $40,000, each dollar
taken out of the Accumulation Value will reduce the Death Benefit by $2.50. If,
for example, the Accumulation Value is reduced from $75,000 to $70,000 because
of partial withdrawals, charges, or negative investment performance, the Death
Benefit will be reduced from $187,500 to $175,000. If at any time, however, the
Accumulation Value multiplied by the corridor percentage is less than the Face
Amount, the Death Benefit will equal the current Face Amount of the Policy.
The corridor percentage becomes lower as the Insured's Age increases. If
the current Age of the Insured in the illustration above were, for example, 50
(rather than under Age 40), the corridor percentage would be 185%. The Death
Benefit would not exceed the $100,000 Face Amount unless the Accumulation Value
exceeded approximately $54,055 (rather than $40,000), and each $1 then added to
or taken from the Accumulation Value would change the Death Benefit by $1.85
(rather than $2.50).
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CORRIDOR PERCENTAGE TABLE
INSURED'S AGE ON CORRIDOR PERCENTAGE
PREVIOUS POLICY ANNIVERSARY OF ACCUMULATION VALUE
--------------------------- ---------------------
40 or younger 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95 100
VARIABLE AMOUNT OPTION. The Death Benefit is equal to the greater of the
current Face Amount plus the Accumulation Value of the Policy, or the corridor
percentage multiplied by the Accumulation Value on the Valuation Date on or next
following the date of the Insured's death. The corridor percentage is 250% for
an Insured Age 40 or below, and the percentage declines with increasing Ages as
shown in the Corridor Percentage Table above.
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Accordingly, under the Variable Amount Option the amount of the Death Benefit
will always vary as the Accumulation Value varies.
ILLUSTRATION OF VARIABLE AMOUNT OPTION. For purposes of this illustration,
assume that the Insured is under Age 40 and that there is no Loan Amount. Under
the Variable Amount Option, a Policy with a Face Amount of $100,000 will
generally pay a Death Benefit of $100,000 plus the Accumulation Value. Thus, for
example, a Policy with an Accumulation Value of $20,000 will have a Death
Benefit of $120,000 ($100,000 + $20,000); an Accumulation Value of $40,000 will
yield a Death Benefit of $140,000 ($100,000 + $40,000). The Death Benefit,
however, must be at least 250% of the Accumulation Value. As a result, if the
Accumulation Value of the Policy exceeds approximately $66,667, the Death
Benefit will be greater than the Face Amount plus the Accumulation Value. Each
additional dollar of the Accumulation Value above $66,667 will increase the
Death Benefit by $2.50. Thus, if the Accumulation Value exceeds $66,667 and
increases by $100 because of investment performance or premium payments, the
Death Benefit will increase by $250. A Policy owner with an Accumulation Value
of $75,000 will be entitled to a Death Benefit of $187,500 ($75,000 X 250%); an
Accumulation Value of $100,000 will yield a Death Benefit of $250,000 ($100,000
X 250%); and an Accumulation Value of $125,000 will yield a Death Benefit of
$312,500 ($125,000 X 250%).
Similarly, any time the Accumulation Value exceeds $66,667, each dollar
taken out of the Accumulation Value will reduce the Death Benefit by $2.50. If,
for example, the Accumulation Value is reduced from $75,000 to $70,000 because
of partial withdrawals, charges, or negative investment performance, the Death
Benefit will be reduced from $187,500 to $175,000. If at any time, however, the
Accumulation Value multiplied by the corridor percentage is less than the Face
Amount plus the Accumulation Value, then the Death Benefit will be the current
Face Amount plus the Accumulation Value of the Policy, except after Age 95 when
the Death Benefit equals the Accumulation Value.
The corridor percentage becomes lower as the Insured's Age increases. If
the current Age of the Insured in the illustration above were, for example, 50
(rather than under 40), the corridor percentage would be 185%. The amount of the
Death Benefit would be the sum of the Accumulation Value plus $100,000 unless
the Accumulation Value exceeded approximately $117,647 (rather than $66,667),
and each $1 then added to or taken from the Accumulation Value would change the
Death Benefit by $1.85 (rather than $2.50).
WHICH DEATH BENEFIT OPTION TO CHOOSE
If you prefer to have premium payments and favorable investment performance
reflected partly in the form of an increasing Death Benefit, you should choose
the Variable Amount Option. If you are satisfied with the amount of your
existing insurance coverage and prefer to have premium payments and favorable
investment performance reflected to the maximum extent in the Accumulation
Value, you should choose the Level Amount Option.
REQUESTED CHANGES IN FACE AMOUNT
Subject to certain limitations, you may request an increase or decrease in
the Face Amount. No increase or decrease in the Face Amount will be permitted
during the first two Policy Years.
INCREASES. For an increase in the Face Amount, a written request must be
submitted to us. We may also require additional evidence of insurability
satisfactory to us. The effective date of the increase will be the Monthly
Anniversary on or next following our approval of the increase. The increase may
not be less than $5,000 and no increase will be permitted after the Insured
reaches Age 75. You may not request an increase in the Face Amount more
frequently than once every two years. We will deduct any charges associated with
the increase (the increases in the cost of insurance and the Surrender Charge
upon lapse or total surrender -- see "Effect of Requested Changes in Face
Amount" below) from the Accumulation Value, whether or not you pay an additional
premium in connection with the increase. You will be entitled to limited free
look and conversion rights with respect to requested increases in Face Amount.
See "Free Look and Conversion Rights."
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DECREASES. For a decrease in the Face Amount, a written request must also
be submitted to us. Any decrease in the Face Amount will be effective on the
Monthly Anniversary on or next following our receipt of a written request. You
cannot request a decrease in the Face Amount more frequently than once every six
months. The Face Amount remaining in force after any requested decrease may not
be less than the Minimum Face Amount shown in the Policy. Under our current
policies, the Minimum Face Amount is $25,000, but we reserve the right to
establish a different Minimum Face Amount in the future. If, following a
decrease in Face Amount, the Policy would no longer qualify as life insurance
under Federal tax law (see "Federal Tax Matters -- Policy Proceeds"), the
decrease will be limited to the extent necessary to meet these requirements.
For purposes of determining the cost of insurance, decreases in the Face
Amount will be applied to reduce the current Face Amount in the following order:
(a) The Face Amount provided by the most recent increase;
(b) The next most recent increases successively; and
(c) The Face Amount when the Policy was issued.
By reducing the current Face Amount in this manner, the Rate Class
applicable to the most recent increase in Face Amount will be eliminated first,
then the Rate Class applicable to the next most recent increase, and so on, for
the purposes of calculating the cost of insurance. This assumption will affect
the cost of insurance under the Policy only if different Rate Classes have been
applied to the current Face Amount. A Rate Class is a group of Insureds we
determine based upon our expectation that they will have similar mortality
experience. We currently place Insureds into standard Rate Classes or into
substandard Rate Classes that involve a higher mortality risk (for example, a
200% Rate Class or a 300% Rate Class). In an otherwise identical Policy, an
Insured in the standard Rate Class will have a lower cost of insurance than an
Insured in a substandard Rate Class with higher mortality risks. See "Deductions
and Charges -- Monthly Deduction."
For example, assume that the Initial Face Amount was $50,000 with a
standard Rate Class, and that successive increases of $25,000 (at a Rate Class
of 200%) and $50,000 (at a Rate Class of 300%) were added. If a decrease of
$50,000 or less is requested, the amount of insurance at a 300% Rate Class will
be reduced first. If a decrease of more than $50,000 is requested, the amount at
a 300% Rate Class will be eliminated, and the excess over $50,000 will next
reduce the amount of insurance at a 200% Rate Class.
EFFECT OF REQUESTED CHANGES IN FACE AMOUNT. An increase or decrease in Face
Amount will affect the Monthly Deduction because the cost of insurance depends
upon the Face Amount. The charge for certain optional insurance benefits may
also be affected. See "Deductions and Charges -- Monthly Deduction." An increase
in the Face Amount will increase the Surrender Charge, but a decrease in the
Face Amount will not reduce the Surrender Charge. The Surrender Charge is,
however, imposed only upon lapse or total surrender of the Policy and not upon a
requested decrease in Face Amount. See "Deductions and Charges -- Surrender
Charge."
An increase in the Face Amount will increase the Minimum Monthly Premium as
of the effective date of the increase. Therefore, additional premium payments
may be required to maintain the Death Benefit Guarantee. A decrease in the Face
Amount will reduce the Minimum Monthly Premium as of the effective date of the
decrease. See "Death Benefit Guarantee."
The additional Surrender Charge on a requested increase in the Face Amount
will reduce the Cash Surrender Value (which is the Accumulation Value less any
Surrender Charge, Loan Amount and unpaid Monthly Deductions). If the resulting
Cash Surrender Value is not sufficient to cover the Monthly Deduction, the
Policy may lapse unless the Death Benefit Guarantee is in effect. See "Policy
Lapse and Reinstatement -- Lapse" and "Death Benefit Guarantee."
INSURANCE PROTECTION
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You may increase or decrease the pure insurance protection provided by the
Policy (that is, the difference between the Death Benefit and the Accumulation
Value) in one of several ways as insurance needs change. These ways include
increasing or decreasing the Face Amount of insurance, changing the level of
premium payments, and, to a lesser extent, making a partial withdrawal under the
Policy. Although the consequences of each of these methods will depend upon the
individual circumstances, they may be generally summarized as follows:
(a) A decrease in the Face Amount will, subject to the corridor percentage
limitations (see "Death Benefit -- Death Benefit Options"), decrease
the pure insurance protection without reducing the Accumulation Value.
If the Face Amount is decreased, the Policy charges generally will
decrease as well. (Note that the Surrender Charge will NOT be reduced.
See "Deductions and Charges -- Surrender Charge.")
(b) An increase in the Face Amount (which is generally subject to
underwriting approval -- see "Death Benefit -- Requested Changes in
Face Amount") will likely increase the amount of pure insurance
protection, depending on the amount of Accumulation Value and the
resultant corridor percentage limitation. If the insurance protection
is increased, the Policy charges generally will increase as well.
(c) A partial withdrawal will reduce the Death Benefit. See "Surrender
Benefits -- Partial Withdrawal." However, it has a limited effect on
the amount of pure insurance protection and charges under the Policy,
because the decrease in the Death Benefit is usually equal to the
amount of Accumulation Value withdrawn. The primary use of a partial
withdrawal is to withdraw Accumulation Value. Furthermore, it results
in a reduced amount of Accumulation Value and increases the possibility
that the Policy will lapse.
(d) Under the Level Amount Option, until the corridor percentage of
Accumulation Value exceeds the Face Amount, (i) an increased level of
premium payments will reduce the amount of pure insurance protection,
and (ii) a reduced level of premium payments will increase the amount
of pure insurance protection.
(e) Under the Variable Amount Option, until the corridor percentage of
Accumulation Value exceeds the Face Amount plus the Accumulation Value,
the level of premium payments will not affect the amount of pure
insurance protection. (However, both the Accumulation Value and the
Death Benefit will be increased if premium payments are increased, and
reduced if premium payments are reduced.)
(f) Under either Death Benefit Option, if the Death Benefit is the corridor
percentage of Accumulation Value, then (i) an increased level of
premium payments will increase the amount of pure insurance protection
(subject to underwriting approval -- see "Payment and Allocation of
Premiums -- Amount and Timing of Premiums"), and (ii) a reduced level
of premium payments will reduce the pure insurance protection.
THE TECHNIQUES DESCRIBED IN THIS SECTION FOR CHANGING THE
AMOUNT OF PURE INSURANCE PROTECTION UNDER THE POLICY (FOR
EXAMPLE, CHANGING THE FACE AMOUNT, MAKING A PARTIAL
WITHDRAWAL, AND CHANGING THE AMOUNT OF PREMIUM PAYMENTS) MUST
BE CONSIDERED TOGETHER WITH THE OTHER RESTRICTIONS AND
CONSIDERATIONS DESCRIBED ELSEWHERE IN THIS PROSPECTUS.
CHANGE IN DEATH BENEFIT OPTION
After the first two Policy Years and at least two years after any increase
in Face Amount, you may change the Death Benefit Option once each Policy Year.
The change is effective on the Monthly Anniversary on or next following the date
we receive your request. You must submit a written request to change the Death
Benefit Option. A change in the Death Benefit Option will also change the Face
Amount. If the Death Benefit Option is changed from the Level Amount Option to
the Variable Amount Option, the Face Amount will be decreased by an amount equal
to the Accumulation Value on the effective date of the change. You cannot change
from the Level Amount Option to the Variable Amount Option if the resulting Face
Amount would fall below the Minimum Face Amount (currently $25,000).
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If the Death Benefit Option is changed from the Variable Amount Option to
the Level Amount Option, the Face Amount will be increased by an amount equal to
the Policy's Accumulation Value on the effective date of the change.
An increase or decrease in Face Amount resulting from a change in the Death
Benefit Option will affect the future Monthly Deductions because the cost of
insurance depends upon the Face Amount. The charge for certain optional
insurance benefits may also be affected. See "Deductions and Charges -- Monthly
Deduction." The Surrender Charge, however, will not be affected by an increase
or decrease in Face Amount resulting from a change in Death Benefit Option.
Changes in the Death Benefit Option do not require additional evidence of
insurability.
ACCELERATED BENEFIT
Under certain circumstances, the Accelerated Benefit allows a Policy owner
to accelerate benefits from the Policy that would be otherwise payable upon the
death of the Insured. The benefit may vary state-by-state and your registered
representative should be consulted as to whether and to what extent the rider is
available in a particular state and on any particular Policy.
Generally, we will provide an Accelerated Benefit if the Insured has a
terminal illness that will result in the death of the Insured within 12 months,
as certified by a physician.
The Accelerated Benefit will not be more than 50% of the amount that would
be payable at the death of the Insured. The Accelerated Benefit will first be
used to pay off any outstanding Policy loans and interest due. The remainder of
the Accelerated Benefit will be in a lump sum to the Policy owner. Limitations,
as described in the Accelerated Benefit Rider, may apply.
A lien will be established against the Policy for the amount of the
Accelerated Benefit plus the administrative charge, plus interest on the lien.
Any proceeds from the Policy will be first used to repay this lien. The Policy
owner's access to the Cash Value will be reduced by the amount of the lien. The
proceeds payable to the beneficiary will be reduced by the amount of the lien.
The administrative charge will not exceed $300 and will be assessed at the
time the benefit is accelerated.
The premium payable on the Policy will not be affected by the Accelerated
Benefit.
Receipt of a benefit under the Accelerated Benefit Rider may give rise to
Federal or State income tax. A competent tax adviser should be consulted for
further information.
The above information is not intended to be a complete summary of the
Rider. All of the terms and provisions of the Accelerated Benefit are set forth
in the Rider and should be referred to in order to fully ascertain its benefits
and limitations.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUING THE POLICY
To apply for a Policy, an individual must complete an application and
personally deliver it to our licensed agent. The minimum Face Amount is
currently $25,000, but we reserve the right to specify a different minimum Face
Amount in the future for issuing a new Policy. We will generally only issue a
Policy to an applicant Age 75 or less who supplies evidence of insurability
satisfactory to us. Acceptance is subject to our underwriting rules and we
reserve the right to reject an application for any reason permitted by law.
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SPONSORED MARKET PLANS. Policies may be purchased under sponsored
arrangements where permitted by state law. A "sponsored arrangement" includes an
arrangement where an employer permits group solicitation of its employees or an
association permits group solicitations of its members for the purchase of
Policies on an individual basis.
All participants in sponsored arrangements are individually underwritten.
Persons purchasing under a sponsored arrangement may apply for simplified
underwriting. If simplified underwriting is granted, the cost of insurance may
increase as a result of higher than anticipated mortality experience. However,
any such increase will not cause the cost of insurance charge to exceed the
guaranteed rates set forth in the Policy.
COVERAGE. Coverage under a Policy begins on the later of the Issue Date or
the date we receive at least the minimum initial premium (see immediately
following section). In general, if the applicant pays at least the minimum
initial premium with the application, the Issue Date will be the later of the
date of the application or the date of any medical examination required by our
underwriting procedures. However, if underwriting approval has not occurred
within 45 days after we receive the application or if you authorize premiums to
be paid by bank account monthly deduction, the Issue Date will be the date of
underwriting approval.
If you authorize premiums to be paid by government allotment, the Issue
Date generally will be, subject to our underwriting approval, the first day of
the month in which we receive the first Minimum Monthly Premium through
government allotment, whether or not a Minimum Monthly Premium is collected with
the application. If a Minimum Monthly Premium is collected with the application,
it will be allocated to the Sub-Accounts of the Variable Account and the Fixed
Account on the Valuation Date next following the Issue Date.
MINIMUM INITIAL PREMIUM. The minimum initial premium is three Minimum
Monthly Premiums. See "Death Benefit Guarantee." If, however, you authorize
premiums to be paid by bank account monthly deduction or government allotment,
we will accept one Minimum Monthly Premium together with the required
authorization forms. The Minimum Monthly Premium is specified in the Policy and
determines the payments required to maintain the Death Benefit Guarantee.
CREDITING NET PREMIUMS. We will credit Net Premiums to the Sub-Accounts of
the Variable Account and to the Fixed Account (except for policies issued in New
Jersey) on the basis of the applicant's allocation on the latest of the
following dates:
o The Valuation Date following the date of underwriting approval.
o The Valuation Date on or next following the Policy Date.
o The Valuation Date on or next following the date we have received at
least the required minimum initial premium payment.
o In the case of Policies issued under government allotment programs,
the Valuation Date next following the Issue Date.
Until the date on which Net Premiums are credited as described above,
premium payments will be held in our General Account. No interest will be earned
on these premium payments during this period of time.
REFUNDING PREMIUM. We will return all premiums paid without interest if any
of the following occur:
o We send notice to the applicant that the insurance is declined.
o The applicant refuses an offer for an alternative policy.
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o The applicant does not supply required medical exams or tests within
30 days of the date of the application.
o The applicant returns the Policy under the limited free look right.
See "Free Look and Conversion Rights -- Free Look Rights."
ALLOCATION OF PREMIUMS
You choose the initial allocation of your Net Premiums (your gross premiums
less the Premium Expense Charge) to the Fixed Account and the Sub-Accounts of
the Variable Account on the application for the Policy. (The Fixed Account is
not available for Net Premium allocation under policies issued in New Jersey.)
If you do not indicate the initial allocation of your Net Premium on the
application for the Policy, your Net Premium will be allocated to the Money
Market Portfolio. You may change the allocation at any time by notifying us in
writing. Changes will not be effective until the date we receive your request
and will only affect premiums we receive on or after that date. The premium
allocation may be 100% to the Fixed Account or the Sub-Accounts or divided among
the Fixed Account and the Sub-Accounts in whole percentage points totaling 100%.
We reserve the right to adjust any allocation to eliminate fractional
percentages. Changing the Net Premium allocation will not affect the allocation
of existing Accumulation Value.
AMOUNT AND TIMING OF PREMIUMS
The amount and frequency of premium payments will affect the Accumulation
Value, the Cash Surrender Value, and how long the Policy will remain in force
(including affecting whether the Death Benefit Guarantee is in effect -- see
"Death Benefit Guarantee"). After the initial premium, you may determine the
amount and timing of subsequent premium payments within the following
restrictions:
o IN MOST CASES, PAYMENT OF CUMULATIVE PREMIUMS SUFFICIENT TO MAINTAIN
THE DEATH BENEFIT GUARANTEE WILL BE REQUIRED TO KEEP THE POLICY IN
FORCE DURING AT LEAST THE FIRST SEVERAL POLICY YEARS. SEE "DEATH
BENEFIT GUARANTEE."
o We may choose not to accept any premium less than $25.00.
o We reserve the right to limit the amount of any premium payment. In
general, during the first Policy Year we will not accept total premium
payments in excess of $250,000 on the life of any Insured, whether
such payments are received on a Policy or on any other insurance
policy issued by us or our affiliates. Also, we will not accept any
premium payment in excess of $50,000 on any Policy after the first
Policy Year. At our discretion, however, we may waive any of these
premium limitations.
o We may require additional evidence of insurability satisfactory to us
if any premium would increase the difference between the Death Benefit
and the Accumulation Value (that is, the net amount at risk). A
premium payment would increase the net amount at risk if at the time
of payment the Death Benefit would be based upon the applicable
percentage of Accumulation Value. See "Death Benefit -- Death Benefit
Options."
o In no event may the total of all premiums paid, both scheduled and
unscheduled, exceed the current maximum premium payments allowed for
life insurance under Section 7702 of the Federal Internal Revenue
Code. If at any time a premium is paid which would result in total
premiums exceeding the current maximum premiums allowed, we will only
accept that portion of the premium which would make total premiums
equal the maximum. Any part of the premium in excess of that amount
will be returned, and no further premiums will be accepted until
allowed by the current maximum premium limitations.
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o If you contemplate a large premium payment under this Policy, and you
wish to avoid Modified Endowment Contract classification, you may
contact us in writing before making the payment and we will tell you
the maximum amount which can be paid into the Policy. See "Federal Tax
Matters -- Policy Proceeds."
PLANNED PERIODIC PREMIUMS
You may choose a Planned Periodic Premium schedule which indicates a
preference as to future amounts and frequency of payment. The Planned Periodic
Premiums may be paid annually, semi-annually, quarterly or, if you choose, you
can pay the Planned Periodic Premiums by bank account monthly deduction or
government allotment.
The amount and frequency of your initial Planned Periodic Premium will be
shown in the Policy. You may change the Planned Periodic Premium at any time by
written request. We may limit the amount of any increase.
As mentioned above, the amount and frequency of premium payments will
affect Accumulation Value, Cash Surrender Value, and how long the Policy will
remain in force. Failure to make any Planned Periodic Premium payment will not,
however, necessarily result in lapse of the Policy. On the other hand, making
Planned Periodic Premium payments will not guarantee that the Policy remains in
force. See "Death Benefit Guarantee" and "Policy Lapse and Reinstatement."
UNSCHEDULED ADDITIONAL PREMIUMS
Premiums, other than Planned Periodic Premiums, may be paid at any time
while the Policy is in force. We may limit the number and amount of these
additional payments.
PAYING PREMIUMS BY MAIL
Planned Periodic Premiums and Unscheduled Additional Premiums may be paid
to the Company by mailing them to:
ReliaStar Bankers Security Life Insurance Company
P.O. Box 802511
Chicago, Illinois 60680-2511
DEATH BENEFIT GUARANTEE
If you meet the requirements described below, we guarantee that we will not
lapse the Policy even if the Cash Surrender Value is not sufficient to cover the
Monthly Deduction that is due. This feature of the Policy is called the "Death
Benefit Guarantee." The Death Benefit Guarantee expires at the Insured's Age 65
(or five Policy Years, if longer).
In general, the two most significant benefits from the Death Benefit
Guarantee are as follows. First, during the early Policy Years, the Cash
Surrender Value will generally not be sufficient to cover the Monthly Deduction,
so that the Death Benefit Guarantee will be necessary to avoid lapse of the
Policy. See "Policy Lapse and Reinstatement." This occurs because the Surrender
Charge usually exceeds the Accumulation Value in these years. In this regard,
you should consider that if you request an increase in Face Amount, an
additional Surrender Charge would apply for the fifteen years following the
increase, which could create a similar possibility of lapse as exists during the
early Policy Years. Second, to the extent the Cash Surrender Value declines due
to poor investment performance, or due to an additional Surrender Charge after a
requested increase, the Cash Surrender Value may not be sufficient even in later
Policy Years to cover the Monthly Deduction, so that the Death Benefit Guarantee
may also be necessary in later Policy Years to avoid lapse of the Policy. THUS,
EVEN THOUGH THE POLICY PERMITS PREMIUM PAYMENTS THAT ARE LESS THAN THE MINIMUM
MONTHLY PREMIUMS, YOU MAY LOSE THE
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SIGNIFICANT PROTECTION PROVIDED BY THE DEATH BENEFIT GUARANTEE BY PAYING LESS
THAN THE MINIMUM MONTHLY PREMIUMS.
REQUIREMENTS
The Death Benefit Guarantee will be in effect if the sum of all premiums
paid minus any partial withdrawals and any loans are equal to or greater than
the sum of the Minimum Monthly Premiums since the Policy Date, including the
Minimum Monthly Premium for the current Monthly Anniversary.
The requirements for the Death Benefit Guarantee must be satisfied as of
each Monthly Anniversary, even though you do not have to pay premiums monthly.
EXAMPLE: The Policy Date is January 1, 1997. The Minimum Monthly Premium is
$100 per month. No Policy loans or partial withdrawals are taken and no Face
Amount changes have occurred.
Case 1. You pay $100 each month. The Death Benefit Guarantee is
maintained.
Case 2. You pay $1,000 on January 1, 1997. The $1,000 maintains the Death
Benefit Guarantee without your paying any additional premiums for
the next 10 months (through October 31, 1997). However, you must
pay at least $100 by November 1, 1997 to maintain the Death
Benefit Guarantee through November 30, 1997.
The amount of the initial Minimum Monthly Premium will be determined by us
at issuance of the Policy and will be shown in the Policy. The initial Minimum
Monthly Premium will depend upon the Insured's sex, Age at issue, Rate Class,
optional insurance benefits added by rider, and the Initial Face Amount.
The following Policy changes may change the Minimum Monthly Premium:
o A requested increase or decrease in the Face Amount. See "Death
Benefit -- Requested Changes in Face Amount."
o A change in the Death Benefit Option. See "Death Benefit -- Change in
Death Benefit Option."
o The addition or termination of a Policy rider. See "General Provisions
-- Optional Insurance Benefits."
We will notify you in writing of any changes in the Minimum Monthly
Premium.
If, as of any Monthly Anniversary, you have not made sufficient premium
payments to maintain the Death Benefit Guarantee, we will send you notice of the
premium payment required to maintain it. If we do not receive the required
premium payment within 61 days from the date of our notice, the Death Benefit
Guarantee will terminate. THE DEATH BENEFIT GUARANTEE CANNOT BE REINSTATED.
Even if the Death Benefit Guarantee terminates, the Policy will not
necessarily lapse. For a discussion of the circumstances under which the Policy
may lapse, see "Policy Lapse and Reinstatement."
ACCUMULATION VALUE
The Accumulation Value of the Policy (that is, the total value attributable
to a specific Policy in the Variable Account and the Fixed Account) is equal to
the sum of the Variable Accumulation Value (the amount attributable to the
Variable Account) plus the Fixed Accumulation Value (the amount attributable to
the Fixed Account). The Accumulation Value should be distinguished from the Cash
Surrender Value that would actually be paid to you upon total surrender of the
Policy, which is the Accumulation Value less any Surrender Charge, Loan Amount
and unpaid Monthly Deductions. See "Surrender Benefits -- Total Surrender." The
Accumulation Value should also be
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distinguished from the Cash Value, which determines the amount available for
Policy loans, and is the Accumulation Value less any Surrender Charge. See
"Policy Loans."
The Variable Accumulation Value will increase or decrease to reflect the
investment performance of the Funds in which Sub-Accounts of the Variable
Account have been invested. The Variable Accumulation Value will also be
increased by (a) any Net Premiums credited to the Variable Account and (b) any
transfers from the Fixed Account. The Variable Accumulation Value will also be
reduced by (a) the Monthly Deduction attributable to the Variable Account, (b)
partial withdrawals from the Variable Account, (c) any transfer and partial
withdrawal charges attributable to the Variable Account, and (d) any amounts
transferred from the Variable Account to the Fixed Account (including amounts
transferred from the Variable Account to the Fixed Account as security for
Policy loans -- see "Policy Loans"). The Variable Accumulation Value will
generally vary daily.
The Fixed Accumulation Value will be increased by (a) any Net Premiums
credited to it in the Fixed Account, (b) any interest credited to it in the
Fixed Account (determined at our discretion, but guaranteed not to be less than
4%), and (c) any amounts transferred from the Variable Account to it in the
Fixed Account (including amounts transferred to the Fixed Account as security
for Policy loans -- see "Policy Loans"). The Fixed Accumulation Value will be
reduced by (a) the Monthly Deduction attributable to it in the Fixed Account,
(b) partial withdrawals from it in the Fixed Account, (c) any transfer and
partial withdrawal charges attributable to the Fixed Account, and (d) any
amounts transferred from the Fixed Account to the Variable Account.
For a detailed discussion of the calculation of Accumulation Value, see
Appendix B. An illustration of various Accumulation Values, Surrender Charges,
Cash Surrender Values, and Death Benefits, assuming different levels of premium
payments and various investment returns for selected Ages and Face Amounts, is
shown in Appendix C.
DEDUCTIONS AND CHARGES
Charges will be deducted in connection with the Policy to compensate us for
(a) providing the insurance benefits of the Policy (including any riders), (b)
administering the Policy, (c) assuming certain risks in connection with the
Policy, and (d) incurring expenses in distributing the Policy.
Some of these charges are deducted from each premium payment. Certain other
charges are deducted monthly from both the Fixed Account and the Variable
Account, or from the Variable Account only. A charge is also made for each
partial withdrawal and a charge may be made for each transfer.
PREMIUM EXPENSE CHARGE
We deduct a Premium Expense Charge, which is 5% of each premium payment. We
may in the future deduct a premium processing charge from each premium payment
although we currently do not make this charge. The total of these charges is
called the Premium Expense Charge. The amount remaining after we have deducted
the Premium Expense Charge is called the Net Premium. The Net Premium is then
credited to the Fixed Account and the Sub-Accounts of the Variable Account
according to your allocation.
PREMIUM PROCESSING CHARGE. We may make a charge of up to $2.00 per premium
payment to reimburse us for the cost of collecting and processing premiums,
although we currently make no such charge. If a premium processing charge is
made, it will be deducted from premium payments before the percentage deductions
for sales charge and premium taxes.
MONTHLY DEDUCTION
We deduct the charges described below from the Accumulation Value of the
Policy on a monthly basis. The total of these charges is called the Monthly
Deduction.
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The Monthly Deduction will be deducted on each Monthly Anniversary from the
Fixed Account and the Sub-Accounts of the Variable Account on a proportionate
basis depending on their relative Accumulation Values at that time. For purposes
of determining these proportions, the Fixed Accumulation Value is reduced by the
Loan Amount. Because the cost of insurance portion of the Monthly Deduction can
vary from month to month, the Monthly Deduction itself will vary in amount from
month to month.
If the Cash Surrender Value is not sufficient to cover the Monthly
Deduction on a Monthly Anniversary and the Death Benefit Guarantee is not in
effect, the Policy may lapse. See "Death Benefit Guarantee" and "Policy Lapse
and Reinstatement."
COST OF INSURANCE. We will determine the monthly cost of insurance by
multiplying the applicable cost of insurance rate or rates by the net amount at
risk under the Policy. The net amount at risk under the Policy for a Policy
Month is (a) the Death Benefit at the beginning of the Policy Month divided by
1.004074 (which reduces the net amount at risk, solely for purposes of computing
the cost of insurance, by taking into account assumed monthly earnings at an
annual rate of 5%), less (b) the Accumulation Value immediately before the
Monthly Deduction, minus the cost of any rider benefits other than any Waiver of
Monthly Deduction rider, for the month. As a result, the net amount at risk may
be affected by changes in the Accumulation Value or in the Death Benefit.
The Rate Class of an Insured may affect the cost of insurance. A Rate Class
is a group of Insureds we determine based upon our expectation that they will
have similar mortality experience. We currently place Insureds into standard
Rate Classes or into substandard Rate Classes that involve a higher mortality
risk. In an otherwise identical Policy, an Insured in a standard Rate Class will
have a lower cost of insurance than an Insured in a Rate Class with higher
mortality risks.
If there is an increase in the Face Amount and the Rate Class applicable to
the increase is different from that for the Initial Face Amount or any prior
requested increases in Face Amount, the net amount at risk will be calculated
separately for each Rate Class. For purposes of determining the net amount at
risk for each Rate Class, the Accumulation Value will first be assumed to be
part of the Initial Face Amount. If the Accumulation Value is greater than the
Initial Face Amount, it will then be assumed to be part of each increase in
order, starting with the first increase.
Cost of insurance rates will be based on the sex, Issue Age, Policy Year
and Rate Class(es) of the Insured. The actual monthly cost of insurance rates
will reflect our expectations as to future experience. They will not, however,
be greater than the guaranteed cost of insurance rates shown in the Policy,
which are based on the Commissioner's 1980 Standard Ordinary Mortality Tables
for smokers or nonsmokers, respectively.
MONTHLY ADMINISTRATIVE CHARGE. Each month we deduct an administrative
charge of $7.50 which is guaranteed not to exceed $10.00 each month.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE. Each month during the first 10
Policy Years we will deduct a charge at an annual rate of .9 of 1% (.90%) of the
Variable Accumulation Value of the Policy. Each month thereafter, it is
currently anticipated that we will deduct this charge at an annual rate of .45
of 1% (.45%) of the Variable Accumulation Value but in no event will it exceed
.9 of 1% (.90%) for the duration of the Policy. We may realize a profit from
this charge.
The mortality risk assumed is that Insureds may live for a shorter period
of time than we estimated and that, as a result, we would have to pay a greater
amount in Death Benefits than we collect in premium payments. The expense risk
assumed is that expenses incurred in issuing and administering the Policy will
be greater than we estimated.
OPTIONAL INSURANCE BENEFIT CHARGES. Each month we deduct charges for any
optional insurance benefits added to the Policy by rider. See "General
Provisions -- Optional Insurance Benefits."
SURRENDER CHARGE
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During the first 15 years the Policy is in force and the first 15 years
following a requested increase in the Face Amount, there is a Surrender Charge
if you surrender the Policy or the Policy lapses. The maximum Surrender Charge
for the Initial Face Amount or any requested increase in Face Amount will be
determined on the Policy Date or on the effective date of any requested increase
respectively. The Surrender Charge remains level for the first five years in the
relevant 15 year period, and then reduces in equal monthly increments until it
becomes zero at the end of 15 years. Thus if the Policy remains in force during
the entire relevant 15-year period, you do not pay the Surrender Charge. The
Surrender Charge will vary depending on the Age of the Insured, the sex of the
Insured, and the Rate Class of the Insured (on the Policy Date or on the
effective date of an increase in Face Amount).
The Surrender Charge for the Initial Face Amount or any requested increase
in Face Amount is determined by multiplying (i) the applicable Surrender Charge
per $1,000 Face Amount from Appendix D by (ii) the Initial Face Amount or the
Face Amount of the increase, as applicable, and by (iii) the applicable
percentage from the Surrender Charge Percentage Table below, and then dividing
this amount by 1000. Then the Surrender Charge is reduced by the Premium Related
Surrender Charge Reduction.
The Premium Related Surrender Charge Reduction will apply only to the
Surrender Charge for the Initial Face Amount when the cumulative premiums are
less than the Surrender Charge Whole Life Premium. The Premium Related Surrender
Charge Reduction will be zero when the cumulative premiums equal or exceed the
Surrender Charge Whole Life Premium. The Premium Related Surrender Charge
Reduction also will be zero for any requested increase in Face Amount. The
Premium Related Surrender Charge Reduction for the Initial Face Amount is
calculated by multiplying 70% by the excess of (i) the Surrender Charge Whole
Life Premium over (ii) the cumulative premiums. The Surrender Charge Whole Life
premium is calculated by multiplying (i) the applicable Surrender Charge Whole
Life premium per $1000 of Face Amount from Appendix E by (ii) the Initial Face
Amount, and then dividing by 1000.
EXAMPLE. The following example illustrates how the Surrender Charge is
determined. Assume that a male nonsmoker, Age 35 buys a Policy with an initial
Face Amount of $100,000 and he surrenders the Policy during the third Policy
Year at which time he has paid cumulative premiums of $2,000.
Based on these assumptions the Surrender Charge will be the result of
multiplying (i) $16.20 (from Appendix D for a male nonsmoker Age 35) by (ii)
$100,000 (the Initial Face Amount) and by (iii) 100% (the applicable percentage
from the Surrender Charge Percentage Table), and then dividing by 1000, which
results in a Surrender Charge of $1,620 ($16.20 x $100,000 x 100% / 1000).
The Surrender Charge Whole Life Premium is determined by multiplying (i)
$11.64 (from Appendix E for a male nonsmoker Age 35) by (ii) $100,000 (the
Initial Face Amount), and then dividing by 1000, which results in a Surrender
Charge Whole Life Premium of $1,164 ($11.64 x $100,000 / 1000). The Surrender
Charge Whole Life Premium of $1,164 is less than the cumulative premium of
$2,000, so the Premium Related Surrender Charge Reduction is zero.
The additional Surrender Charge for requested increases in Face Amount will
be calculated in the same manner as illustrated in the example above.
SURRENDER CHARGE PERCENTAGE TABLE
THE FOLLOWING PERCENTAGE OF THE
THE LAST MONTH OF POLICY YEAR:* SURRENDER CHARGE WILL BE PAYABLE:**
------------------------------- -----------------------------------
1 through 5 100%
6 90%
7 80%
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8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 and later 0%
* For requested increases, years are measured from the date of the increase.
** The percentages reduce equally for each Policy Month during the years
shown. For example, during the seventh Policy Year, the percentage
reduces equally each month from 90% at the end of the sixth Policy Year
to 80% at the end of the seventh Policy Year.
CHARGES AGAINST THE VARIABLE ACCOUNT
Certain charges will be deducted as a percentage of the value of the net
assets of the Variable Account to compensate us for certain risks assumed in
connection with the Policy. These charges will not be deducted from assets in
the Fixed Account.
TAXES. Currently no charge is made to the Variable Account for Federal
income taxes that may be attributable to the Variable Account. We may, however,
make such a charge in the future. Charges for other taxes, if any, attributable
to the Variable Account may also be made.
INVESTMENT ADVISORY FEE AND OTHER FUND EXPENSES. Because the Variable
Account purchases shares of the Funds, the net asset value of the investments of
the Variable Account will reflect the investment advisory fees and other
expenses incurred by the Funds. Set forth below is information provided by each
Fund on its total 1995 annual expenses as a percentage of the Fund's average
next assets. For more information concerning these expenses, see the
prospectuses for the Funds that accompany this Prospectus.
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
<S> <C> <C> <C>
VIPF Money Market Portfolio...................................0.24% 0.09% 0.33%
VIPF High Income Portfolio (a)................................0.11% 0.80% 0.71%
VIPF Equity-Income Portfolio..................................0.51% 0.10% 0.61%
VIPF Growth Portfolio.........................................0.61% 0.09% 0.70%
VIPF Overseas Portfolio.......................................0.76% 0.15% 0.91%
VIPF II Asset Manager Portfolio (a)...........................0.71% 0.08% 0.79%
VIPF II Investment Grade Bond Portfolio.......................0.45% 0.14% 0.59%
VIPF II Index 500 Portfolio (b)...............................0.28% 0.00% 0.28%
VIPF II Contrafund Portfolio (a)..............................0.61% 0.11% 0.72%
Northstar Income and Growth Fund (c)..........................0.75% 0.05% 0.80%
Northstar Multi-Sector Bond Fund (c)..........................0.75% 0.05% 0.80%
Putnam VT Diversified Income Fund.............................0.70% 0.15% 0.85%
Putnam VT Growth and Income Fund..............................0.52% 0.05% 0.57%
Putnam VT Utilities Growth and Income Fund (d)................0.70% 0.08% 0.78%
Putnam VT Voyager Fund........................................0.62% 0.06% 0.68%
Putnam VT Asia Pacific Growth Fund (e)........................0.33% 0.89% 1.22%
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<PAGE>
<CAPTION>
Putnam VT New Opportunities Fund..............................0.70% 0.14% 0.84%
</TABLE>
(a) During 1995, a portion of the brokerage commissions paid by the High
Income Portfolio, Asset Manager Portfolio and Contrafund Portfolio was
used to reduce each respective portfolio's expenses. Without the
reduction, total expenses would have been 0.71%, 0.81% and 0.73%,
respectively, for each portfolio. For more information on the
portfolios' Management Fees and Expenses, see the prospectus for the
Fund.
(b) During 1995, the investment adviser to the Index 500 Portfolio
reimbursed a portion of the portfolio's expenses. Without the
reimbursement, total expenses would have been 0.47%. For more
information on the portfolio's Management Fees and Expenses, see the
prospectus for the Fund.
(c) The investment adviser to the Northstar Variable Trust has agreed to
reimburse the two Northstar Funds for any expenses in excess of 0.80%
of each Fund'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 Fund during its fiscal year ended December
31, 1995 would have been: Income and Growth Fund--1.74% and
Multi-Sector Bond Fund--2.06%.
(d) On July 11, 1996, shareholders of Putnam VT Utilities Growth and Income
Fund approved an increase in the fees payable to Putnam Investment
Management Inc. under the management contract. The total expenses shown
in the table have been restated to reflect the increase. Actual total
expenses were 0.68%.
(e) The annualized total expenses shown above for Putnam VT Asia Pacific
Growth Fund reflect an expense limitation in effect for the period. In
the absence of the expense limitation, annualized total expenses would
have been 1.70%.
PARTIAL WITHDRAWAL AND TRANSFER CHARGES
We currently make no charge for transfers and a $10.00 charge for each
partial withdrawal. These charges are guaranteed not to exceed $25.00 per
transfer or partial withdrawal for the duration of the Policy. The transfer
charge will not be imposed on transfers that occur as a result of Policy loans
or the exercise of conversion rights.
REDUCTION OF CHARGES
Any of the charges under the Policy, as well as the minimum Face Amount set
forth in this Prospectus, may be reduced because of 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 our policyholders or those of affiliated insurance
companies, or sales to employees or clients of members of our affiliated group
of insurance companies. 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
owners and owners of all other policies funded by the Variable Account.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike traditional life insurance policies, the failure to make a
Planned Periodic Premium will not by itself cause the Policy to lapse. If the
Death Benefit Guarantee is not in effect, the Policy will lapse if, as of any
Monthly Anniversary, the Cash Surrender Value is less than the Monthly Deduction
due, and a grace period of 61 days expires without a sufficient premium payment.
A sufficient premium payment is any premium payment such that the Net Premium is
larger than the sum of 1 + 2 where 1 is the amount by which the Accumulation
Value is less than the Surrender Charge as of the beginning of the grace period
and 2 is the sum of past due Monthly Deductions.
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<PAGE>
During the early Policy Years, the Cash Surrender Value will generally not
be sufficient to cover the Monthly Deduction, so that premium payments
sufficient to maintain the Death Benefit Guarantee will be required to avoid
lapse. See "Death Benefit Guarantee."
The Policy does not lapse, and the insurance coverage continues, until the
expiration of a 61-day grace period which begins on the date we send you written
notice indicating that the Cash Surrender Value is less than the Monthly
Deduction due. Our written notice to you will indicate the amount of the payment
required to avoid lapse. Failure to make a sufficient premium payment within the
grace period will result in lapse of the Policy without value.
If the Insured dies during the grace period, the proceeds payable will
equal the amount of the Death Benefit on the Valuation Date on or next following
the date of the Insured's death, reduced by any Loan Amount and any unpaid
Monthly Deductions.
If the Death Benefit Guarantee is in effect, we will not lapse the Policy.
See "Death Benefit Guarantee."
REINSTATEMENT. Reinstatement means putting a lapsed Policy back in force.
You may reinstate a lapsed Policy by written request any time within five years
after it has lapsed if it has not been surrendered for its Cash Surrender Value.
To reinstate the Policy and any riders you must submit evidence of
insurability satisfactory to us and you must pay a premium large enough such
that the Net Premium is as large as the sum of the Surrender Charge after
reinstatement, plus the Monthly Deductions for the date of reinstatement and the
following Monthly Anniversary.
The Death Benefit Guarantee cannot be reinstated. See "Death Benefit
Guarantee."
SURRENDER BENEFITS
Subject to certain limitations, you may make a total surrender of the
Policy or a partial withdrawal of the Policy's Cash Surrender Value by sending
us a written request. The amount available for a total surrender or partial
withdrawal will be determined at the end of the Valuation Period during which
your written request is received. Any amounts payable from the Variable Account
upon total surrender or partial withdrawal will generally be paid within seven
days of receipt of your written request. Postponement of payments may, however,
occur in certain circumstances. See "General Provisions -- Postponement of
Payments."
TOTAL SURRENDER
By making a written request, you may surrender the Policy at any time for
its Cash Surrender Value. The Cash Surrender Value is the Accumulation Value of
the Policy reduced by any Surrender Charge, Loan Amount and unpaid Monthly
Deductions. If the Cash Surrender Value at the time of a surrender exceeds
$25,000, the written request must include a Signature Guarantee. An illustration
of Accumulation Values, Surrender Charges, Cash Surrender Values, and Death
Benefits assuming different levels of premium payments and investment returns
for selected Ages and Face Amounts, is shown in Appendix C.
PARTIAL WITHDRAWAL
After the first Policy Year, you may also withdraw part of the Policy's
Cash Surrender Value by sending us a written request. If the amount being
withdrawn exceeds $25,000, the written request must include a Signature
Guarantee. Only one partial withdrawal is allowed in any Policy Year. We
currently make a $10.00 charge for each partial withdrawal. This charge is
guaranteed not to exceed $25.00 for each partial withdrawal. See "Deductions and
Charges -- Partial Withdrawal and Transfer Charges." The amount of any partial
withdrawal must be at least $500 and, during the first 15 Policy Years, may not
be more than 20% of the Cash Surrender Value on the date we receive your written
request.
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<PAGE>
Unless you specify a different allocation, we make partial withdrawals from
the Fixed Account and the Sub-Accounts of the Variable Account on a
proportionate basis based upon the Accumulation Value. These proportions will be
determined at the end of the Valuation Period during which your written request
is received. For purposes of determining these proportions, any outstanding Loan
Amount is first subtracted from the Fixed Accumulation Value.
EFFECT OF PARTIAL WITHDRAWALS. The Accumulation Value will be reduced by
the amount of any partial withdrawal. The Death Benefit will also be reduced by
the amount of the withdrawal, or, if the Death Benefit is based on the corridor
percentage of Accumulation Value (see "Death Benefit -- Death Benefit Options"),
by an amount equal to the corridor percentage times the amount of the partial
withdrawal.
If the Level Amount Option is in effect, the Face Amount will be reduced by
the amount of the partial withdrawal. When increases in the Face Amount have
occurred previously, we reduce the current Face Amount by the amount of the
partial withdrawal in the following order:
(a) The Face Amount provided by the most recent increase;
(b) The next most recent increases successively; and
(c) The Face Amount when the policy was issued.
(This assumption also applies to requested decreases in Face Amount -- see
"Death Benefit -- Requested Changes in Face Amount.") Thus, partial withdrawals
may affect the way in which the cost of insurance is calculated and the amount
of pure insurance protection under the Policy. See "Death Benefit -- Requested
Changes in Face Amount", "Deductions and Charges -- Monthly Deduction" and
"Death Benefit -- Insurance Protection."
We do not allow a partial withdrawal if the Face Amount after a partial
withdrawal would be less than the Minimum Face Amount (currently $25,000).
If the Variable Amount Option is in effect, a partial withdrawal does not
affect the Face Amount.
A partial withdrawal may also cause the termination of the Death Benefit
Guarantee because the amount of the partial withdrawal is deducted from the
total premiums paid in calculating whether sufficient premiums have been paid in
order to maintain the Death Benefit Guarantee.
Like partial withdrawals, Policy loans are a means of withdrawing funds
from the Policy. See "Policy Loans." A partial withdrawal or a Policy loan may
have tax consequences depending on the circumstances of such withdrawal or loan.
See "Federal Tax Matters -- Policy Proceeds."
TRANSFERS
You may transfer all or part of the Variable Accumulation Value between the
Sub-Accounts or to the Fixed Account subject to any conditions the Funds whose
shares are involved may impose. (Transfers to or from the Fixed Account are not
available for Policies issued in New Jersey.) Transfer requests must be in
writing unless you have completed a telephone transfer authorization form. You
may also direct us to automatically make periodic transfers under the Dollar
Cost Averaging or Portfolio Rebalancing services as described below.
To transfer all or part of the Variable Accumulation Value from a
Sub-Account, Accumulation Units are redeemed and their values are reinvested in
other Sub-Accounts, or the Fixed Account, as directed in your request. We will
effect transfers, and determine all values in connection with transfers, at the
end of the Valuation Period during which we receive your request, except as
otherwise specified for the Dollar Cost Averaging or Portfolio Rebalancing
services. With respect to future Net Premium payments, however, your current
premium allocation will remain in effect unless (i) you have requested the
Portfolio Rebalancing service, or (ii) you are transferring all of the Variable
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<PAGE>
Accumulation Value from the Variable Account to the Fixed Account in exercise of
conversion rights. See "Free Look and Conversion Rights -- Conversion Rights."
Transfers from the Fixed Account to the Variable Account are subject to the
following additional restrictions: (i) your transfer request must be postmarked
no more than 30 days before or after the Policy Anniversary in any year, and
only one transfer is permitted during this period, (ii) the Fixed Accumulation
Value after the transfer must be at least equal to the Loan Amount, (iii) no
more than 50% of the Fixed Accumulation Value, less any Loan Amount, may be
transferred unless the balance, after the transfer, would be less than $1,000,
in which event the full Fixed Accumulation Value, less any Loan Amount, may be
transferred, and (iv) you must transfer at least the lesser of $500 or the total
Fixed Accumulation Value, less any Loan Amount. See Appendix A. Some of these
restrictions may be waived for transfers due to the Portfolio Rebalancing
service.
TELEPHONE TRANSFER REQUESTS. You may request a transfer by telephone on any
Valuation Date after you complete a telephone transfer authorization form. If
you elect to complete the authorization form, you agree that we will not be
liable for any loss, liability, cost or expense when we act in accordance with
the telephone transfer instructions that are received and recorded on voice
recording equipment. If a telephone transfer request is later determined not to
have been made by you or was made without your authorization, and loss results
from such unauthorized transfer, you bear the risk of this loss. We will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. In the event we do not employ such procedures, we 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 SERVICE. You may request this service if your Face
Amount is at least $100,000 and your Accumulation Value, less any Loan Amount,
is at least $5,000. If you request this service, you direct us to automatically
make specific periodic transfers of a fixed dollar amount from any of the
Sub-Accounts to one or more of the Sub-Accounts or to the Fixed Account. No
transfers from the Fixed Account are permitted under this service. Transfers of
this type may be made on a monthly, quarterly, semi-annual, or annual basis.
This service is intended to allow you to use "Dollar Cost Averaging", a long
term investment method which provides for regular investments over time. We make
no guarantees that Dollar Cost Averaging will result in a profit or protect
against loss. You may discontinue this service at any time by notifying us in
writing.
If you are interested in the Dollar Cost Averaging service you may obtain a
separate application form and full information concerning this service and its
restrictions from us or our registered representative.
If you are using the Dollar Cost Averaging service, this service will be
discontinued immediately (i) on receipt of any request to begin a Portfolio
Rebalancing service, (ii) if the Policy is in the grace period on any date when
Dollar Cost Averaging transfers are scheduled, or (iii) if the specified
transfer amount from any Sub-Account is more than the Accumulation Value in that
Sub-Account.
We reserve the right to discontinue, modify, or suspend this service. Any
such modification or discontinuation would not affect any Dollar Cost Averaging
service requests already commenced.
PORTFOLIO REBALANCING SERVICE. You may request this service if your Face
Amount is at least $200,000 and your Accumulation Value, less any Loan Amount,
is at least $10,000. If you request this service, you direct us to automatically
make periodic transfers to maintain your specified percentage allocation of
Accumulation Value, less any Loan Amount, among the Sub-Accounts of the Variable
Account and the Fixed Account; your allocation of future Net Premium payments
will also be 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.
The Accumulation Value in each Sub-Account of the Variable Account and the
Fixed Account will grow or decline at different rates over time. Portfolio
Rebalancing will periodically transfer Accumulation Values from those
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<PAGE>
accounts that have increased in value to those accounts that have increased at a
slower rate or declined in value. If all accounts decline in value, it will
transfer Accumulation Values from those that have decreased less in value to
those that have decreased more in value. We make no guarantees that Portfolio
Rebalancing will result in a profit or protect against loss. You may discontinue
this service at any time by notifying us in writing.
If you are interested in the Portfolio Rebalancing service you may obtain a
separate application form and full information concerning this service and its
restrictions from us or our registered representative.
If you are using the Portfolio Rebalancing service, this service will be
discontinued immediately (i) on receipt of any request to change the allocation
of premiums to the Fixed Account and Sub-Account of the Variable Account, (ii)
on receipt of any request to begin a Dollar Cost Averaging service, (iii) upon
receipt of any request to transfer Accumulation Value among the Fixed Account or
Sub-Accounts, or (iv) if the policy is in the grace period or the Accumulation
Value, less any Loan Amount, is less than $7,500 on any Valuation Date when
Portfolio Rebalancing transfers are scheduled.
We reserve the right to discontinue, modify, or suspend this service. Any
such modification or discontinuation could affect Portfolio Rebalancing services
currently in effect, but only after 30 days notice to affected Policy owners.
TRANSFER LIMITS. We currently allow twelve transfers in a Policy Year,
although we reserve the right to limit you to no more than four transfers per
Policy Year. All transfers that are effective on the same Valuation Date will be
treated as one transfer transaction. Transfers made due to the Dollar Cost
Averaging or Portfolio Rebalancing services do not currently count toward the
limit on number of transfers.
TRANSFER CHARGES. While there is currently no charge imposed on a
transfer we reserve the right to make a charge not to exceed $25.00 per transfer
for the duration of the Policy. See "Deductions and Charges -- Partial
Withdrawal and Transfer Charges." In no event, however, will any charge be
imposed in connection with the exercise of a conversion right or transfers
occurring as the result of Policy Loans. All transfers are also subject to any
charges and conditions imposed by the Fund whose shares are involved. All
transfers that are effective on the same Valuation Date will be treated as one
transfer transaction.
POLICY LOANS
GENERAL. As long as the Policy remains in effect, you may borrow money from
us at any time after the first Policy Year using the Policy as security for the
loan. You may not borrow at any time more than the Loan Value of the Policy,
which is equal to the Cash Value less the existing Loan Amount. Each Policy loan
must be at least $500.
Loan requests may be made in writing or by telephoning us on any Valuation
Date. Any loan request in excess of $25,000 will require a Signature Guarantee
and telephone loan requests cannot exceed $10,000. No election form is currently
required to make telephone loan requests. We will employ reasonable procedures
to confirm that loan requests made by telephone are genuine. In the event we do
not employ such procedures, we 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 confirmations of such instructions and/or tape recording
telephone instructions.
Policy loans have priority over the claims of any assignee or other person.
A Policy loan may be repaid in whole or in part at any time while the Insured is
living.
The loan proceeds will normally be paid to you within seven days after we
receive your request. Payment of loan proceeds to you may be postponed under
certain circumstances. See "General Provisions -- Postponement of Payments."
Payments made by you generally will be treated as premium payments, rather
than Policy loan repayments, unless you indicate that the payment should be
treated otherwise or unless we decide, at our discretion, to apply the
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<PAGE>
payment as a Policy loan repayment. As a result, unless you indicate that a
payment is a loan repayment, all payments you make to the Policy will generally
be subject to the Premium Expense Charge. See "Deductions and Charges -- Premium
Expense Charge."
The total of your outstanding Policy loans including unpaid interest due
thereon is called the "Loan Amount."
IMMEDIATE EFFECT OF POLICY LOANS. When we make a Policy loan, an amount
equal to the Policy loan (which includes interest payable in advance) will be
segregated within the Accumulation Value of your Policy and held in the Fixed
Account as security for the loan (this includes loans taken on policies issued
in New Jersey). As described below, you will pay interest to us on the Policy
loan, but we will also credit interest to you on the amount held in the Fixed
Account as security for the loan. The amount segregated in the Fixed Account as
security for the Policy loan will be included as part of the Fixed Accumulation
Value under the Policy, but will (as described below) be credited with interest
on a basis different from other amounts in the Fixed Account.
Unless you specify differently, amounts held as security for the Policy
loan will come proportionately from the Fixed Accumulation Value and the
Variable Accumulation Value (with the proportions being determined as described
below). Assets equal to the portion of the Policy loan coming from the Variable
Accumulation Value will be transferred from the Sub-Accounts of the Variable
Account to the Fixed Account, THEREBY REDUCING THE ACCUMULATION VALUE HELD IN
THE SUB-ACCOUNTS. These transfers are not treated as transfers for the purposes
of the transfer charge or the limit on the number of transfers.
ILLUSTRATION OF DETERMINATION OF PROPORTIONS. The segregated amount that
will be security for a Policy loan will come from the Fixed Accumulation Value
and the Variable Accumulation Value in the same proportion that the sum of (a)
the Policy's Fixed Accumulation Value, less any existing Loan Amount, and (b)
the Policy's Variable Accumulation Value, bear to the Policy's total
Accumulation Value less any existing Loan Amount (determined, in each case, at
the end of the Valuation Period during which your request is received).
This can be illustrated as follows. Assume that the Fixed Accumulation
Value is $5,000 and the Variable Accumulation Value is $6,000, with Sub-Account
XXX = $2,000, and Sub-Account YYY = $4,000. Assume that the existing Loan Amount
is $1,000, and the new Policy loan request is $5,000. For purposes of
determining the proportions, we first subtract the existing Loan Amount from the
Fixed Accumulation Value, and then we add the Variable Accumulation Value, which
in our example would be ($5,000 - $1,000) + $6,000 = $10,000. The proportionate
percentages of the Policy loan coming from the Fixed Accumulation Value and the
Variable Accumulation Value are then determined as a percentage of this total,
which would be $4,000/$10,000 = 40% from the Fixed Accumulation Value, and
$6,000/$10,000 = 60% from the Variable Accumulation Value. The percentage
deducted from the Variable Accumulation Value would be distributed as follows:
$2,000/$10,000 = 20% from Sub-Account XXX; and $4,000/$10,000 = 40% from
Sub-Account YYY. The actual amounts coming from the various Accounts in
connection with the new $5,000 Policy loan would be 40% X $5,000 = $2,000 from
the Fixed Account; 20% X $5,000 = $1,000 from Sub-Account XXX; and 40% X $5,000
= $2,000 from Sub-Account YYY.
EFFECT ON INVESTMENT PERFORMANCE. Amounts coming from the Variable Account
as security for Policy loans will no longer participate in the investment
performance of the Variable Account. All amounts held in the Fixed Account as
security for Policy loans (that is, the Loan Amount) will only be credited with
interest at an effective annual rate currently equal to 4.00%. NO ADDITIONAL
INTEREST WILL BE CREDITED TO THESE AMOUNTS. On the Policy Anniversary, any
interest credited on these amounts will be credited to the Fixed Account and the
Variable Account according to the premium allocation then in effect. See
"Payment and Allocation of Premiums -- Allocation of Premiums."
Although Policy loans may be repaid in whole or in part at any time before
the Insured's Age 95, Policy loans will permanently affect the Policy's
potential Accumulation Value. As a result, to the extent that the Death Benefit
depends upon the Accumulation Value (see "Death Benefit -- Death Benefit
Options"), Policy loans will also affect the Death Benefit under the Policy.
This effect could be favorable or unfavorable depending on whether the
investment performance of the assets allocated to the Sub-Account(s) is less
than or greater than the interest being credited on the
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assets transferred to the Fixed Account while the loan is outstanding. Compared
to a Policy under which no loan is made, values under the Policy will be lower
when such interest credited is less than the investment performance of assets
held in the Sub-Account(s).
EFFECT ON POLICY COVERAGE. If, on any Monthly Anniversary, the Loan Amount
is greater than the Accumulation Value less the then applicable Surrender
Charge, we will notify you. If we do not receive sufficient payment within 61
days from the date we send notice to you, the Policy will lapse and terminate
without value. Our written notice to you will indicate the amount of the payment
required to avoid lapse. The Policy may, however, later be reinstated. See
"Policy Lapse and Reinstatement."
A Policy loan may also cause termination of the Death Benefit Guarantee,
because the Loan Amount is deducted from the total premiums paid in calculating
whether sufficient premiums have been paid in order to maintain the Death
Benefit Guarantee. See "Death Benefit Guarantee."
Proceeds payable upon the death of the Insured will be reduced by any Loan
Amount.
INTEREST. The interest rate charged on Policy loans will be an annual rate
of 5.66%, payable in advance. After the tenth Policy Year, we will charge
interest at an annual rate of 3.85%, payable in advance, on that portion of your
Loan Amount that is not in excess of (a) the Accumulation Value, less (b) the
total of all premiums paid and all partial withdrawals. Any excess of this
amount will be charged interest at the annual rate of 5.66%.
Interest is payable in advance (for the rest of the Policy Year) at the
time any Policy loan is made and at the beginning of each Policy Year thereafter
(for that entire Policy Year). If interest is not paid when due, it will be
deducted from the Cash Surrender Value as an additional Policy loan (see
"Immediate Effect of Policy Loans" above) and will be added to the existing Loan
Amount.
Because we charge interest in advance, any interest that we have not earned
will be refunded to you upon lapse or surrender of the Policy or repayment of
the Policy Loan.
REPAYMENT OF LOAN AMOUNT. The Loan Amount may be repaid any time while the
Insured is living. See "General Provisions -- Benefits at Age 95." If not
repaid, the Loan Amount will be deducted by us from any amount payable under the
Policy. As described above, unless you provide us with notice to the contrary,
any payments on the Policy will generally be treated as premium payments, which
are subject to the Premium Expense Charge, rather than repayments on the Loan
Amount. Any repayments on the Loan Amount will result in amounts being
reallocated from the Fixed Account and to the Sub-Accounts of the Variable
Account according to your current premium allocation.
TAX CONSIDERATIONS. A Policy loan may have tax consequences depending on
the circumstances of the loan. See "Federal Tax Matters -- Policy Proceeds."
FREE LOOK AND CONVERSION RIGHTS
FREE LOOK RIGHTS
The Policy provides for two types of return or "free look" periods, one
after application for and issuance of the Policy and the other after any
requested increase in Face Amount.
AT INITIAL ISSUE. The Policy provides for an initial free look period
during which you have a right to return the Policy for cancellation and receive
a refund of all premiums paid. You must return the Policy to us or your agent
and ask us to cancel the Policy by midnight of the 20th day after receiving it.
FOLLOWING A REQUESTED INCREASE IN FACE AMOUNT. Any requested increase in
Face Amount is also subject to a free look period during which you have a right
to cancel the increase and receive a refund. You must notify us or your agent
and ask us to cancel the increase by midnight of the 20th day after receiving a
new Policy Data Page.
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Upon requesting cancellation of the increase, you will receive a refund, if
you so request, or otherwise a restoration to the Policy's Accumulation Value
(allocated among the Fixed Account and the Sub-Accounts of the Variable Account
as if it were a Net Premium payment), in an amount equal to all Monthly
Deductions attributable to the increase in Face Amount, including rider costs
arising from the increase. This refund or credit will be made within seven days
after we receive the request for cancellation on the appropriate form. In
addition, the Surrender Charge will be adjusted so that it will be as though no
such increase in Face Amount had occurred. Premiums paid after an increase in
Face Amount will not be refunded following cancellation of the increase. If you
request an increase in Face Amount you should take this into account in deciding
whether to make any premium payments during the free look period for the
increase.
CONVERSION RIGHTS
During the first two Policy Years and the first two years following a
requested increase in Face Amount, we provide you with an option to convert the
Policy or any requested increase in Face Amount to a life insurance policy under
which the benefits do not vary with the investment experience of the Variable
Account. For policies issued in all states, except Connecticut and New Jersey,
this option is made available by permitting you to transfer all or a part of
your Variable Accumulation Value to the Fixed Account. For policies issued in
Connecticut and New Jersey, you may exchange this Policy for a different
permanent fixed benefit life insurance policy that is offered by us in those
states. The two conversion right options are discussed below.
GENERAL OPTION. In all states except Connecticut and New Jersey, you may
exercise your conversion right by transferring all or any part of your Variable
Accumulation Value to the Fixed Account. If, at any time during the first two
Policy Years or the first two years following a requested increase in Face
Amount, you request transfer from the Variable Account to the Fixed Account and
indicate that you are making the transfer in exercise of your conversion right,
the transfer will not be subject to the transfer charge and will not count
against the limit on the number of transfers. At the time of such transfer,
there is no effect on the Policy's Death Benefit. Face Amount, net amount at
risk, Rate Class(es) or Issue Age -- only the method of funding the Accumulation
Value under the Policy will be affected. See "Death Benefit", "Accumulation
Value" and Appendix A, "The Fixed Account."
If you transfer all of the Variable Accumulation Value from the Variable
Account to the Fixed Account and indicate that you are making this transfer in
exercise of your Conversion Right, we will automatically credit all future
premium payments on the policy to the Fixed Account unless you request a
different allocation.
CONNECTICUT AND NEW JERSEY. During the first two policy years and during
the first 24 months following a requested increase in Face Amount, you may
convert the Policy or the Face Amount increase to any fixed benefit whole life
insurance policy offered by us. No evidence of insurability will be required for
the conversion. In order to convert to a new policy, we must receive a written
conversion request; if the entire Policy is being converted, the Policy must be
surrendered to us; the conversion must be made while the Policy is in force; and
any outstanding Loan Amount must be repaid.
The new policy will have the same Issue Age and premium class as the
Policy. If the entire Policy is being converted, the effective date of the
conversion will be the date on which we receive both your written conversion
request and the Policy. If you are converting a Face Amount increase, the
effective date of the conversion will be the date on which we receive your
written conversion request.
On the effective date of the conversion, the new policy will have, at your
option, either:
(a) A death benefit which is equal to the Death Benefit of the
Policy on the effective date of the conversion, or in the case
of a Face Amount increase, a death benefit equal to the
increase in Face Amount; or
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(b) A net amount at risk which equals the Death Benefit of the
Policy on the effective date of the conversion, less the
Accumulation Value on that date, or in the case of a Face
Amount increase, a net amount at risk which equals the Face
Amount increase on the effective date of conversion less the
Accumulation Value on that date which is considered to be part
of the Face Amount increase.
The conversion will be subject to an equitable adjustment in payments and
Policy values to reflect variances, if any, in the payments and Policy values
under the Policy and the new policy. An additional premium payment may be
required. The new Policy's provisions and charges will be the same as those that
would have been in effect had the new Policy been issued on the Policy Date.
INVESTMENTS OF THE VARIABLE ACCOUNT
There are currently seventeen investment alternatives available under the
Variable Account. Fidelity Management & Research Company is the investment
adviser for the five portfolios of VIPF and the four portfolios of VIPF II.
Northstar Investment Management Corporation is the investment adviser of the two
Northstar Funds. Putnam Management is the investment adviser for the six funds
of Putnam Variable Trust. We reserve the right to establish additional
Sub-Accounts of the Variable Account, each of which could invest in a new Fund
with a specified investment objective.
The Funds currently offered are described below. A brief summary of
investment objectives is contained in the description of each Fund. In addition,
you should read the prospectuses of the Funds, which are combined with this
prospectus, for more detailed information and particularly, a more thorough
explanation of investment objectives, because several of the Funds and
portfolios may have objectives that are quite similar. There is no assurance
that any Fund will achieve its investment objective(s). There is a possibility
that one Fund might become liable for any misstatement, inaccuracy or incomplete
disclosure in another Fund's prospectus.
The Fund shares may be available to fund benefits under both variable
annuity and variable life contracts and policies. This could, in the future,
result in an irreconcilable conflict between the interests of the holders of the
different types of variable contracts. The Funds have advised us that they will
monitor for such conflicts and will promptly provide us with information
regarding any such conflicts should they arise or become imminent and we will
promptly advise the Funds if we become aware of any such conflicts. If any such
material irreconcilable conflict arises we will arrange to eliminate and remedy
such conflict up to and including establishing a new management investment
company and segregating the assets underlying the variable policies and
contracts at no cost to the holders of the policies and contracts. For a brief
explanation of the conflicts that may be involved in such situations, refer to
the section entitled "FMR and Its Affiliates" in the VIPF and VIPF II
Prospectuses and the section entitled "Sales and Redemptions" in the PVT
Prospectus.
The Funds described below distribute dividends and capital gains. However,
distributions are automatically reinvested in additional Fund shares, at net
asset value. The Sub-Account receives the distributions which are then reflected
in the Unit Value of that Sub-Account. See "Accumulation Value."
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIPF)
VIPF is a mutual fund currently offering five investment portfolios, each
with a different investment objective.
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The portfolio
will invest only in high-quality U.S. dollar denominated money market
instruments of domestic and foreign issuers. An investment in the portfolio is
not insured or guaranteed by the U.S. Government, and there can be no assurance
that the Portfolio will maintain a stable net asset value per share of $1.00.
HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated fixed-income securities
(sometimes referred to as "junk bonds"), while also considering growth of
capital. Lower-rated fixed-income securities are considered speculative and
involve greater risk of default than higher-rated
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fixed-income securities and are more sensitive to the issuer's capacity to pay.
Consult the VIPF Prospectus for further information on the risks associated with
the portfolio's investment in lower-rated fixed-income securities.
EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities the portfolio
will also consider the potential for capital appreciation. The portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks.
GROWTH PORTFOLIO seeks to achieve capital appreciation. The portfolio
normally purchases common stocks, although its investments are not restricted to
any one type of security. Capital appreciation may also be found in other types
of securities, including bonds and preferred stocks.
OVERSEAS PORTFOLIO seeks long term growth of capital primarily through
investments in foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIPF II)
VIPF II is a mutual fund currently offering five investment portfolios,
each with a different investment objective. Presently, the following four
portfolios are available under this Policy.
ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term fixed-income instruments.
INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as
is consistent with the preservation of capital by investing in a broad range of
investment-grade fixed-income securities.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to
the total return (i.e., the combination of capital changes and income) of common
stocks publicly traded in the United States. In seeking this objective, the
portfolio attempts to duplicate the composition and total return of the Standard
& Poor's Composite Index of 500 Stocks while keeping transaction costs and other
expenses low. The portfolio is designed as a long-term investment option.
CONTRAFUND PORTFOLIO seeks capital appreciation by investing in companies
believed to be undervalued due to an overly pessimistic appraisal by the public.
The portfolio invests primarily in common stock and securities convertible into
common stock, but it has the flexibility to invest in any type of security that
may produce capital appreciation.
NORTHSTAR VARIABLE TRUST (NORTHSTAR)
Northstar is a diversified management investment company currently offering
four investment funds, each with a different investment objective. The following
two Northstar Funds are available under this Policy.
NORTHSTAR INCOME AND GROWTH FUND is a diversified portfolio with an
investment objective of seeking current income balanced with the objective of
achieving capital appreciation. This Fund will seek to achieve its objective
through investments in common and preferred stocks, convertible securities,
investment grade corporate debt securities and government securities, selected
for their prospects of producing income and capital appreciation.
NORTHSTAR MULTI-SECTOR BOND FUND is a diversified portfolio with an
investment objective of maximizing current income. This Fund will seek to
achieve its objective by investment in the following sectors of the fixed income
securities markets: (a) securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies, authorities or instrumentalities;
(b) investment grade corporate debt securities; (c) investment grade or
comparable quality debt securities issued by foreign corporate issuers, and
securities issued by foreign governments and their
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political subdivisions, limited to 35% of assets determined at the time of
investment; and (d) high yield _ high risk fixed income securities of U.S. and
foreign issuers, limited to 50% of assets determined at the time of investment.
PUTNAM VARIABLE TRUST (PUTNAM VT)
Putnam Variable Trust is a mutual fund currently offering eleven investment
funds, each with a different investment objective. Presently, only the following
six funds are available under this Policy.
PUTNAM VT DIVERSIFIED INCOME FUND seeks high current income consistent with
capital preservation through U.S. government securities, high-yield higher risk
fixed income securities (commonly known as "junk bonds") and international fixed
income securities. Consult the Putnam Variable Trust Prospectus for further
information on the risks associated with this Fund's investments in high-yield
higher-risk fixed income securities.
PUTNAM VT GROWTH AND INCOME FUND seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND seeks capital growth and current
income by concentrating its investments in debt and equity securities issued by
companies in the public utilities industries.
PUTNAM VT VOYAGER FUND seeks capital appreciation primarily from a
portfolio of common stocks which are believed to have potential for capital
appreciation which is significantly greater than that of market averages.
PUTNAM VT ASIA PACIFIC GROWTH FUND seeks capital appreciation by investing
primarily in securities of companies located in Asia and in the Pacific Basin.
The Fund's investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks.
PUTNAM VT NEW OPPORTUNITIES FUND seeks long-term capital appreciation by
investing principally in common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term growth
potential.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares that are held by
the Variable Account or that the Variable Account may purchase. We reserve the
right to eliminate the shares of any of the Funds and to substitute shares of
another Fund or of another open-end, registered investment company, if the
shares of a Fund are no longer available for investment, or if in our judgment
further investment in any Fund should become inappropriate in view of the
purposes of the Variable Account. We will not substitute any shares attributable
to your interest in a Sub-Account of the Variable Account without notice and
prior approval of the SEC, to the extent required by the Investment Company Act
of 1940 or other applicable law. Nothing contained herein shall prevent the
Variable Account from purchasing other securities of other Funds or classes of
policies, or from permitting a conversion between Funds or classes of policies
on the basis of requests made by Policy owners.
We also reserve the right to establish additional Sub-Accounts of the
Variable Account, each of which would invest in a new Fund, or in shares of
another investment company, with a specified investment objective. New Sub-
Accounts may be established when, in our sole discretion, marketing needs or
investment conditions warrant, and any new Sub-Accounts will be made available
to existing Policy owners on a basis to be determined by us. We may also
eliminate one or more Sub-Accounts if, in our sole discretion, marketing, tax,
or investment conditions warrant.
In the event of any such substitution or change, we may make such changes
in this and other policies as may be necessary or appropriate to reflect such
substitution or change. If all or a portion of your investments are allocated to
any of the current funds that are being substituted for on the date such
substitution is announced, you may surrender
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the portion of the Accumulation Value funded by such Fund(s) without payment of
the associated Surrender Charge. You may transfer the portion of the
Accumulation Value affected without payment of a Transfer Charge. If deemed by
us to be in the best interests of persons having voting rights under the
Policies, the Variable Account may be operated as a management company under the
Investment Company Act of 1940, it may be deregistered under that Act in the
event such registration is no longer required, or it may be combined with our
other separate accounts.
VOTING RIGHTS
You have the right to instruct us how to vote the Fund shares attributable
to the Policy at regular meetings and special meetings of the Funds. We will
vote the Fund shares held in Sub-Accounts according to the instructions
received, as long as:
o The Variable Account is registered as a unit investment trust under
the Investment Company Act of 1940; and
o The assets of the Variable Account are invested in Fund shares.
If we determine that, because of applicable law or regulation, we do not
have to vote according to the voting instructions received, we will vote the
Fund shares at our discretion.
All persons entitled to voting rights and the number of votes they may cast
are determined as of a record date, selected by us, not more than 90 days before
the meeting of the Fund. All Fund proxy materials and appropriate forms used to
give voting instructions will be sent to persons having voting interests.
Any Fund shares held in the Variable Account for which we do not receive
timely voting instructions, or which are not attributable to Policy owners, will
be voted by us in proportion to the instructions received from all Policy owners
having a voting interest in the Fund. Any 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 Fund in proportion to each
account's voting interest in the respective Fund, and will be voted in the same
manner as are the respective account's votes.
Owning the Policy does not give you the right to vote at meetings of our
stockholders.
DISREGARD OF VOTING INSTRUCTIONS. We may, when required by state insurance
regulatory authorities, disregard voting instructions if the instructions
require that the shares be voted so as to cause a change in the
subclassification or investment objective of any Fund or to approve or
disapprove an investment advisory contract for any Fund. In addition, we may
disregard voting instructions in favor of changes initiated by a Policy owner in
the investment policy or the investment adviser of any Fund if we reasonably
disapprove of such changes. A change would be disapproved only if the proposed
change is contrary to state law or prohibited by state regulatory authorities or
we determine that the change would have an adverse effect on the Variable
Account in that the proposed investment policy for a Fund may result in
speculative or unsound investments. In the event we do disregard voting
instructions, a summary of that action and the reasons for such action will be
included in the next annual report to owners.
GENERAL PROVISIONS
BENEFITS AT AGE 95
If the Insured is living at Age 95, the Death Benefit will be equal to the
Accumulation Value and the cost of insurance will be zero.
OWNERSHIP
While the Insured is alive, subject to the Policy's provisions you may:
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o Change the amount and frequency of premium payments.
o Change the allocation of premiums.
o Change the Death Benefit Option.
o Change the Face Amount.
o Make transfers between accounts.
o Surrender the Policy for cash.
o Make a partial withdrawal for cash.
o Receive a cash loan.
o Assign the Policy as collateral.
o Change the beneficiary.
o Transfer ownership of the Policy.
o Enjoy any other rights the Policy allows.
PROCEEDS
At the Insured's death, the proceeds payable include the Death Benefit then
in force:
o Plus any additional amounts provided by rider on the life of the
Insured;
o Plus any Policy loan interest that we have collected but not earned;
o Minus any Loan Amount; and
o Minus any unpaid Monthly Deductions.
BENEFICIARY
You may name one or more beneficiaries on the application when you apply
for the Policy. You may later change beneficiaries by written request. If no
beneficiary is surviving when the Insured dies, the Death Benefit will be paid
to you, if surviving, or otherwise to your estate.
POSTPONEMENT OF PAYMENTS
Payments from the Variable Account for Death Benefits, cash surrender,
partial withdrawal, or loans will generally be made within seven days after we
receive all the documents required for the payments.
We may, however, delay making a payment when we are not able to determine
the Variable Accumulation Value because (i) the New York Stock Exchange is
closed, other than customary weekend or holiday closings, or trading on the New
York Stock Exchange is restricted by the SEC, (ii) the SEC by order permits
postponement for the protection of Policyholders, or (iii) an emergency exists,
as determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Variable
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Account's net assets. Transfers and allocation to and against any Sub-Account of
the Variable Account may also be postponed under these circumstances.
Any of the payments described above which are made from the Fixed Account
may be delayed up to six months from the date we receive the documents required.
We will pay interest at an effective annual rate of 3.50% from the date of the
request to the date of payment if we delay payment more than 30 days. No
additional interest will be credited to any delayed payments. The time a payment
from the Fixed Account may be delayed and the rate of interest paid on such
amounts may vary among states.
SETTLEMENT OPTIONS
Settlement Options are ways you can choose to have the Policy's proceeds
paid. These options apply to proceeds paid:
o At the Insured's death.
o On total surrender of the Policy.
The proceeds are paid to one or more payees. The proceeds may be paid in a
lump sum or may be applied to one of the following Settlement Options. A
combination of options may be used. At least $2,500 must be applied to any
option for each payee under that option. Under an installment Option, each
payment must be at least $25.00. We may adjust the interval between payments to
make each payment at least $25.00.
Proceeds applied to any Option no longer earn interest at the rate applied
to the Fixed Account or participate in the investment performance of the Funds.
Option 1 -- Proceeds are left with us to earn interest. Withdrawals
and any changes are subject to our approval.
Option 2 -- Proceeds and interest are paid in equal installments of a
specified amount until the proceeds and interest are all paid.
Option 3 -- Proceeds and interest are paid in equal installments for a
specified period until the proceeds and interest are all paid.
Option 4 -- The proceeds provide an annuity payment with a specified
number of months "certain." The payments are continued for the life of
the primary payee. If the primary payee dies before the certain period
is over, the remaining payments are paid to a contingent payee.
Option 5 -- The proceeds provide a life income for two payees. When one
payee dies, the surviving payee receives two-thirds of the amount of
the joint monthly payment for life.
Option 6 -- The proceeds are used to provide an annuity based on the
rates in effect when the proceeds are applied. We do not apply this
Option if a similar option would be more favorable to the payee at that
time.
INTEREST ON SETTLEMENT OPTIONS. We base the interest rate for proceeds
applied under Options 1 and 2 on the interest rate we declare on funds that we
consider to be in the same classification based on the Option, restrictions on
withdrawal, and other factors. The interest rate will never be less than an
effective annual rate of 3.50%.
In determining amounts to be paid under Options 3 and 4, we assume interest
at an effective annual rate of 3.50%. Also, for Option 3 and "certain" periods
under Option 4, we credit any excess interest we may declare on funds that we
consider to be in the same classification based on the Option, restrictions on
withdrawal, and other factors.
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INCONTESTABILITY
After the Policy has been in force during the Insured's lifetime for two
years from the Policy's Issue Date, we cannot claim the Policy is void or refuse
to pay any proceeds unless the Policy has lapsed.
If you make a Face Amount increase or a premium payment which requires
proof of insurability, the corresponding Death Benefit increase has its own
two-year contestable period measured from the date of the increase.
If the Policy is reinstated, the contestable period is measured from the
date of reinstatement with respect to statements made on the application for
reinstatement.
MISSTATEMENT OF AGE AND SEX
If the Insured's Age or sex or both are misstated (except where unisex
rates apply), the Death Benefit will be the amount that the most recent cost of
insurance would purchase using the current cost of insurance rate for the
correct Age and sex.
SUICIDE
If the Insured commits suicide, whether sane or insane, within two years of
the Policy's Issue Date, we do not pay the Death Benefit. Instead, we refund all
premiums paid for the Policy and any attached riders, minus any Loan Amounts and
partial withdrawals.
If you make a Face Amount increase or a premium payment which requires
proof of insurability, the corresponding Death Benefit increase has its own
two-year suicide limitation for the proceeds associated with that increase. If
the Insured commits suicide, whether sane or insane, within two years of the
effective date of the increase, we pay the Death Benefit prior to the increase
and refund the cost of insurance for that increase.
TERMINATION
The Policy terminates when any of the following occurs:
o The Policy lapses. See "Policy Lapse and Reinstatement."
o The Insured dies.
o The Policy is surrendered for its Cash Surrender Value.
o The Policy is amended according to the amendment provision described
below and you do not accept the amendment.
AMENDMENT
We reserve the right to amend the Policy in order to include any future
changes relating to the following:
o Any SEC rulings and regulations.
o The Policy's qualification for treatment as a life insurance policy
under the following: - The Internal Revenue Code of 1986, as amended.
- Internal Revenue Service rulings and regulations. - Any requirements
imposed by the Internal Revenue Service.
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REPORTS
ANNUAL STATEMENT. We will send you an Annual Statement once each year free
of charge, showing the Face Amount, Death Benefit, Accumulation Value, Cash
Surrender Value, Loan Amount, premiums paid, Planned Periodic Premiums, interest
credits, partial withdrawals, transfers, and charges since the last statement.
Additional statements are available upon request. We may make a charge not
to exceed $50.00 for each additional Annual Statement you request.
PROJECTION REPORT. Upon request, we will provide you a report projecting
future results based on the Death Benefit Option you specify, the Planned
Periodic Premiums you specify, the Accumulation Value of your Policy at the end
of the prior Policy Year, and any other assumptions specified by you or us
(subject to any SEC limitations). We may make a charge not to exceed $50.00 for
each Projection Report you request.
DIVIDENDS
The Policy does not entitle you to participate in our surplus. We do not
pay you dividends under the Policy.
The Sub-Account receives any dividends paid by the related Fund. Any such
dividend is credited to you through the calculation of the Sub-Account's daily
Unit Value.
COLLATERAL ASSIGNMENT
You may assign the benefits of the Policy as collateral for a debt. This
limits your rights to the Cash Surrender Value and the beneficiary's rights to
the proceeds. An assignment is not binding on us until we receive written
notice.
OPTIONAL INSURANCE BENEFITS
The Policy can include additional benefits, in the form of riders to the
Policy, if our requirements for issuing such benefits are met. We currently
offer the following benefit riders:
ACCELERATED BENEFIT RIDER. Under certain circumstances a part of the Death
Benefit may be paid to you when the Insured has been diagnosed as having a
terminal illness. This Rider may not be available in all states. Ask your
registered representative about the availability of this Rider in your state.
See "Accelerated Benefit Rider."
ACCIDENTAL DEATH BENEFIT RIDER. Provides an additional benefit if the
Insured dies from an accidental injury.
ADDITIONAL INSURED RIDER. Provides a 10 year, guaranteed level premium and
level term coverage for the Insured, the Insured's spouse, or a child of the
Insured.
WAIVER OF MONTHLY DEDUCTION RIDER. The Monthly Deduction for the Policy is
waived while the Insured is totally disabled under the terms of the rider.
CHILDREN'S INSURANCE RIDER. Provides up to $10,000 of term life insurance
on the life of each of the Insured's children.
COST OF LIVING INCREASE RIDER. Provides optional increases in Face Amount
on the life of the Insured every two years based on the cost of living without
evidence of insurability.
WAIVER OF SPECIFIED PREMIUM RIDER. Contributes a specified amount of
premium to the Policy each month while the Insured is totally disabled under the
terms of the rider. This rider may not be available in all states. Ask your
registered representative about the availability of this rider in your state.
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FEDERAL TAX MATTERS
The following discussion is not intended to be a complete description of
the tax status of the Policies. Rather, it provides information about how we
believe the tax laws apply in the most commonly occurring circumstances. The tax
treatment of certain aspects of the Policies, such as surrenders and partial
withdrawals, is uncertain or may be changed by regulations adopted in the
future. For these reasons, Policy owners are advised to consult with their own
tax advisers with regard to the tax implications of the Policies.
POLICY PROCEEDS
GENERAL. The Policy should qualify as a life insurance contract as long as
it satisfies certain definitional tests under Section 7702 and 817(d) of the
Internal Revenue Code (the "Code") and as long as the underlying investments for
the Contract satisfy diversification requirements under section 817(h) of the
Code (see "Diversification Requirements"). Section 7702 of the Code provides
that the Policy will so qualify if it satisfies a cash value accumulation test
or a guideline premium requirement and falls within a cash value corridor. The
qualification of the Policy under Section 7702 depends in part upon the Death
Benefit payable under the Policy at any time. To the extent a change in the
Policy, such as a decrease in Face Amount or a change in Death Benefit Option,
would cause the Policy not to qualify, we will not make the change. Also, if at
any time a premium is paid which would result in total premiums exceeding the
current maximum premiums allowed, we will only accept that portion of the
premium which would make total premiums equal the maximum. See "Payment and
Allocation of Premiums -- Amount and Timing of Premiums."
MODIFIED ENDOWMENT CONTRACTS. In 1988 Congress created a new classification
of life insurance policies known as "Modified Endowment Contracts." Policy
loans, partial surrenders and partial withdrawals of cash from a policy which is
classified as a Modified Endowment Contract are taxable as ordinary income to
the Policy owner. Additionally, taxable distributions, if made before the Policy
owner is 591/2, are subject to a Federal income tax penalty of 10%.
Modified Endowment Contract classification may be avoided by limiting the
amount of premiums paid under the Policy. If you contemplate a large premium
payment under this Policy, and you wish to avoid Modified Endowment Contract
classification, you may contact us in writing before making the payment and we
will tell you the maximum amount which can be paid into the Policy.
DIVERSIFICATION REQUIREMENTS. Flexible premium variable life insurance
policies such as these Policies will be treated as life insurance contracts
under the Code as long as the separate accounts funding them are "adequately
diversified" under section 817(h) of the Code and regulations issued by the
Treasury Department. If the Variable Account is determined to be not adequately
diversified, Policy owners in the Variable Account will be treated as the owners
of the underlying assets and thus currently taxable on earnings and gains. The
investment adviser of the respective mutual fund investment options has
responsibility for maintaining the investment diversification required under the
Code.
DEATH BENEFITS. The Death Benefit proceeds payable under either the Level
Amount Option or the Variable Amount Option will be excludable from the gross
income of the beneficiary under Section 101(a) of the Code.
TAXATION OF DISTRIBUTIONS
SURRENDERS AND PARTIAL WITHDRAWALS. A surrender or lapse of the Policy may
have tax consequences. Upon surrender, the owner will not be taxed on the Cash
Surrender Value except for the amount, if any, that exceeds the gross premiums
paid less the untaxed portion of any prior withdrawals. The amount of any Policy
loan will, upon surrender or lapse, be added to the Cash Surrender Value and
treated, for this purpose, as if it had been received. The treatment of a
preferred loan is unclear; such a loan may be considered a withdrawal instead of
an indebtedness of the
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Policy owner. A loss incurred upon surrender is generally not deductible. The
tax consequences of a surrender may differ if the proceeds are received under
any income payment settlement option.
A complete surrender of the Policy will, and a partial withdrawal may,
under Section 72(e)(5) of the Code, be included in your gross income to the
extent that the distribution exceeds your investment in the Policy. Withdrawals
or partial surrenders generally are not taxable unless the total of such
withdrawals exceeds total premiums paid to the date of withdrawal less the
untaxed portion of any prior withdrawals. During the first 15 policy years,
however, an additional amount may be taxable if the partial surrender results in
or is necessitated by a reduction in benefits. A qualified tax adviser should be
consulted regarding the tax consequences of any surrender or partial withdrawal
during the first 15 policy years.
The increase in Accumulation Value of the Policy will not be included in
gross income unless and until there is a total surrender or partial withdrawal
under the Policy. A complete surrender of the Policy will, and a partial
withdrawal may, under Section 72(e)(5) of the Code, be included in your gross
income to the extent the distribution exceeds your investment in the Policy.
The Unemployment Compensation Amendments of 1992 require us to withhold
Federal income tax at the rate of 20% on most distributions from qualified
plans, unless the distribution is an "eligible rollover distribution" as defined
by the Unemployment Compensation Act of 1992 and the Policy owner files a
written request with us for a direct rollover to an individual retirement
account as described in 408(b) of the Code, or as applicable, to another
qualified plan or a Section 403(b) arrangement that accepts rollovers.
POLICY LOANS. Under Section 72(e)(5) of the Code, loans received under the
Policy will be generally recognized as loans for tax purposes and will not be
considered to be distributions subject to tax. Pursuant to Section 163 of the
Code, interest paid to us with respect to the loan may or may not be deductible,
depending upon a number of factors. If the Policy is a Modified Endowment
Contract, a Policy loan or assignment of any portion of the Accumulation Value
will be taxable in an amount equal to the lesser of the amount of the
loan/assignment or the excess of Accumulation Value over the Owner's investment
in the Policy. Due to the complexity of these factors, a Policy owner should
consult a competent tax adviser as to the deductibility of interest paid on any
Policy loans.
OTHER TAXES. Federal estate taxes and state and local estate, inheritance
and other taxes may become due depending on applicable law and your
circumstances or the circumstances of the Policy beneficiary if you or the
Insured dies. Any person concerned about the estate implications of the Policy
should consult a competent tax adviser.
TAXATION OF POLICIES HELD BY PENSION, CERTAIN DEFERRED COMPENSATION PLANS AND
OTHER ARRANGEMENTS
PENSION AND PROFIT-SHARING PLANS. If a Policy is purchased by a trust which
forms part of a pension or profit-sharing plan qualified under Section 401(a) of
the Code for the benefit of participants covered under the plan, the Federal
income tax treatment of such Policies will be somewhat different from that
described above. A competent tax adviser should be consulted on these matters.
DEFERRED COMPENSATION PLANS FOR PUBLIC EMPLOYEES AND EMPLOYEES OF TAX
EXEMPT ORGANIZATIONS. Section 457 of the Code permits state and local government
employers and tax exempt employers to establish deferred compensation plans for
eligible employees and independent contractors. Eligible plans limit the amount
of compensation which may be deferred. Distribution from eligible plans may
occur only upon the death of the employee, attainment of age 701/2, separation
from service or in the event of an unforseeable emergency. Amounts deferred may
be transferred directly to another eligible deferred compensation plan. The
employer will be the Owner and Beneficiary of all policies issued to an eligible
plan. Policies are subject to the claims of the employer's general creditors.
Death Benefit proceeds payable to the employer, some or all of which are
subsequently paid by the employer to the employee's beneficiary under the plan
will not be excludable from gross income under Section 101(a) or Section 101(b)
of the Code and will be taxable as ordinary income. An employee has no present
legal right or vested interest in such policies; an employee is entitled to
distributions only in accordance with eligible plan provisions.
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OTHER ARRANGEMENTS. In addition, the Policy may be used in various arrangements,
including nonqualified deferred compensation or salary continuance plans, split
dollar insurance plans, executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary depending on the particular
facts and circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Policy in any arrangement the value of which depends
in part on its tax consequences, you should be sure to consult a qualified tax
advisor regarding the tax attributes of the particular arrangements.
TAXATION OF RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
We do not initially expect to incur any income tax burden upon the earnings
or the realized capital gains attributable to the Variable Account. Based on
this expectation, no charge is being made currently to the Variable Account for
Federal income taxes which may be attributable to the Account. If, however, we
determine that we may incur such tax burden, we may assess a charge for such
burden from the Variable Account.
We may also incur state and local taxes, in addition to premium taxes, in
several states. At present these taxes are not significant. If there is a
material change in state or local tax laws, charges for such taxes, if any,
attributable to the Variable Account, may be made.
OTHER CONSIDERATIONS
The foregoing discussion is general and is not intended as tax advice. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based on our understanding of the present Federal
income tax laws as they are currently interpreted by the IRS. No representation
is made as to the likelihood of continuation of these current laws and
interpretations. It should be further understood that the foregoing discussion
is not exhaustive and that special rules not described in this Prospectus may be
applicable in certain situations. Moreover, no attempt has been made to consider
any applicable state or other tax laws.
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
The Policy is based on actuarial tables which distinguish between men and
women and therefore provide different benefits to men and women of the same Age.
Employers and employee organizations should consider, in consultation with legal
counsel, the impact of the Supreme Court decision of July 6, 1983 in ARIZONA
GOVERNING COMMITTEE V. NORRIS. That decision stated that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964, vary between men and women on
the basis of sex. Employers and employee organizations should also consider, in
consultation with legal counsel, the impact of Title VII generally, and
comparable state laws that may be applicable, on any employment-related
insurance or benefit plan for which a Policy may be purchased.
Because of the NORRIS decision, the charges under the Policy that vary
depending on sex may in some cases not vary on the basis of the Insured's sex.
Unisex rates to be provided by us will apply, if requested on the application,
for tax-qualified plans and those plans where an employer believes that the
NORRIS decision applies. In this case, references made to the mortality tables
applicable to this Policy are to be disregarded and substituted with an 80% male
20% female blend of the 1980 Commissioner's Standard Ordinary Smoker and
Non-Smoker Mortality Tables, Age Last Birthday.
DISTRIBUTION OF THE POLICIES
We intend to sell the Policies in all jurisdictions where we are licensed.
The Policies will be sold by licensed insurance agents who are also registered
representatives of broker-dealers registered with the SEC under the Securities
Exchange Act of 1934 who are members of the National Association of Securities
Dealers, Inc.
The Policies will be distributed by the general distributor, Washington
Square Securities, Inc., (WSSI), a Minnesota corporation, which is an affiliate
of ours. WSSI is a securities broker-dealer registered with the SEC and is
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a member of the National Association of Securities Dealers, Inc. It is primarily
a mutual funds dealer and has dealer agreements under which it markets shares of
more than 50 mutual funds. It also markets limited partnerships and other
tax-sheltered or tax-deferred investments, and acts as general distributor
(principal underwriter) for variable annuity products issued by us. The Policies
may also be sold through other broker-dealers authorized by WSSI and applicable
law to do so. Registered representatives of such broker-dealers may be paid on a
different basis than described below.
Registered representatives who sell the Policies will receive commissions
based on a commission schedule. In the first Policy Year, commissions generally
will be no more than 55% of the premiums paid up to the annualized Minimum
Monthly Premium. In any subsequent Policy Year, commissions generally will be
- --% of premiums paid in that year. Corresponding commissions will be paid upon a
requested increase in Face Amount. In addition, a commission of .25% of the
average monthly Accumulation Value during each Policy Year may be paid. Further,
registered representatives may be eligible to receive certain overrides, expense
allowances and other benefits based on the amount of earned commissions.
MANAGEMENT
DIRECTORS
<TABLE>
<CAPTION>
TERM PRINCIPAL OCCUPATION
DIRECTORS EXPIRES AND BUSINESS EXPERIENCE
--------- ------- -----------------------
<S> <C> <C>
Stephen A. Carb 1997 Partner of Carb, Luria, Glassner, Cook & Kufeld(law firm) since 1962.
Richard R. Crowl 1997 Senior Vice President, General Counsel and Secretary of ReliaStar Financial Corp. since
1996; Senior Vice President and General Counsel of ReliaStar Life Insurance Company,
ReliaStar Bankers Security Life Insurance Company, Northern Life Insurance Company, and
United Services Life Insurance Company since 1996; Vice President and Associate General
Counsel of ReliaStar Financial Corp. from 1989 to 1996; Vice President and Associate
General Counsel of ReliaStar Life Insurance Company from 1985 to 1996; Director of
various subsidiaries of ReliaStar Financial Corp.
John H. Flittie 1997 President and Chief Operating Officer of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1993; President and Chief Executive Officer of ReliaStar Bankers
Security Life Insurance Company since 1996; Vice Chairman of United Services Life
Insurance Company and Bankers Security Life Insurance Society since 1995; Senior
Executive Vice President and Chief Operating Officer of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company from 1992 to 1993; Senior Executive Vice President from
1991 to 1992; Executive Vice President and Chief Financial Officer from 1989 to 1991;
Director of Community First BankShares, Inc. and various subsidiaries of ReliaStar
Financial Corp.
James T. Hale 1997 Senior Vice President of Dayton Hudson Corporation since 1981.
Wayne R. Huneke 1997 Senior Vice President, Chief Financial Officer and Treasurer of ReliaStar Financial Corp.
and ReliaStar Life Insurance Company since 1994; Vice President, Treasurer and Chief
Accounting Officer from 1990 to 1994; Director of various subsidiaries of ReliaStar
Financial Corp.
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<CAPTION>
Kenneth U. Kuk 1997 Vice President, Strategic Marketing of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1996; Vice President, Investments of ReliaStar Financial Corp.
from 1991 to 1996; President of Washington Square Advisers, Inc. since 1995; Chairman of
ReliaStar Mortgage Corporation since 1988; Director of various subsidiaries of ReliaStar
Financial Corp.
Richard E. Nolan 1997 Senior Counsel of Davis Polk & Wardwell (law firm) since 1996 and Partner from 1990 to
1996.
Fioravante G. Perrotta 1997 Retired 1996; Formerly Senior Partner of Rogers & Wells (law firm) since 1970.
Robert C. Salipante 1997 Senior Vice President, Technology of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1996; Senior Vice President, Individual Division of ReliaStar
Life Insurance Company since 1996; Senior Vice President, Strategic Marketing and
Technology of ReliaStar Financial Corp. and ReliaStar Life Insurance Company from 1994 to
1996; Senior Vice President and Chief Financial Officer from 1992 to 1994; Executive Vice
President of Ameritrust Corporation from 1988 to 1992; Director of various subsidiaries
of ReliaStar Financial Corp.
John G. Turner 1997 Chairman and Chief Executive Officer of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1993; Chairman of United Services Life Insurance Company and
ReliaStar Bankers Security Life Insurance Company since 1995; Chairman of Northern Life
Insurance Company since 1992; Chairman, President and Chief Executive Officer of
ReliaStar Financial Corp. and ReliaStar Life Insurance Company in 1993; President and
Chief Executive Officer from 1991 to 1993; President and Chief Operating Officer from
1989 to 1991; President and Chief Operating Officer of ReliaStar Life Insurance Company
from 1986 to 1991; Director of various subsidiaries of ReliaStar Financial Corp.
Charles B. Updike 1997 Partner of Schoeman, Marsh & Updike (law firm) since 1976.
Ross M. Weale 1997 President of Waccabuc Enterprise, Inc. (management consulting firm) since 1996; President
and Chief Executive Officer of Country Bank (financial institution) from 1986 to 1996.
Steven W. Wishart 1997 Senior Vice President and Chief Investment Officer of ReliaStar Financial Corp. since
1989; Senior Vice President of ReliaStar Life Insurance Company since 1981; President and
Chief Executive Officer of ReliaStar Investment Research, Inc. since 1996; President of
Washington Square Capital Inc. from 1981 to 1996; President of WSCR, Inc. from 1986 to
1996; Director of National Benefit Resources Group Services Inc. and various subsidiaries
of ReliaStar Financial Corp.
</TABLE>
The Executive Committee of our Board of Directors consists of Directors Flittie,
Hale, Turner, and Weale.
The Compliance Committee of our Board of Directors consists of Directors Carb,
Hale, Nolan, Perrotta, Updike, and Weale.
EXECUTIVE OFFICERS
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John G. Turner Chairman
John H. Flittie Vice Chairman, President and Chief Executive Officer
David J. Sloane Executive Vice President and Chief Operating Officer
Thomas Y. Moon Executive Vice President
Richard R. Crowl Senior Vice President and General Counsel
STATE REGULATION
We are subject to the laws of the State of New York governing insurance
companies and to regulation and supervision by the Insurance Department of the
State of New York. An annual statement in a prescribed form is filed with the
Insurance Department each year, and in each state we do business, covering our
operations for the preceding year and our financial condition as of the end of
that year. Our books and accounts are subject to review by the Insurance
Division and a full examination of our operations is conducted periodically
(usually every three years) by the National Association of Insurance
Commissioners. This regulation does not, however, involve supervision or
management of our investment practices or policies.
In addition, we are subject to regulation under the insurance laws of other
jurisdictions in which we operate.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party. We
are engaged in litigation of various kinds; however, our management does not
believe that any of this litigation is of material importance in relation to our
total assets.
BONDING ARRANGEMENTS
An insurance company blanket bond is maintained providing $25,000,000
coverage for our officers and employees and those of Washington Square
Securities, Inc., (WSSI), subject to a $500,000 deductible.
LEGAL MATTERS
Legal matters in connection with the Variable Account and the Policy
described in this Prospectus have been passed upon by Robert B. Saginaw,
Esquire, Attorney for the Company.
EXPERTS
The financial statements of ReliaStar Bankers Security Variable Life
Separate Account I as of December 31, 1995 and for each of the three years then
ended and the annual financial statements of ReliaStar Bankers Security Life
Insurance Company included in this Prospectus have been audited by
____________________, independent auditors, as stated in their reports which
will be included in a pre-effective amendment, and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Steven
P. West, F.S.A., M.A.A.A., as stated in the opinion filed as an exhibit to the
Registration Statement.
REGISTRATION STATEMENT CONTAINS FURTHER INFORMATION
A Registration Statement has been filed with the SEC under the
Securities Act of 1933 with respect to the Policies. This Prospectus does not
contain all information included in the Registration Statement, its amendments
and
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exhibits. For further information concerning the Variable Account, the Funds,
the Policies and us, please refer to the Registration Statement.
Statements in this Prospectus concerning provisions of the Policy and other
legal documents are summaries. Please refer to the documents as filed with the
SEC for a complete statement of the provisions of those documents.
Information may be obtained from the SEC's principal office in Washington,
D.C., for a fee it prescribes, or examined there without charge.
FINANCIAL STATEMENTS
The financial statements for the Variable Account reflect the operations of
the Variable Account and its Sub-Accounts as of December 31, 1995 and for each
of the three years in the period then ended. Although the financial statements
are audited, the periods they cover are not necessarily indicative of the longer
term performance of the assets held in the Variable Account.
The financial statements of ReliaStar Bankers Security Life Insurance
Company which are included in this Prospectus should be distinguished from the
financial statements of the Variable Account and should be considered only as
bearing upon the ability of ReliaStar Bankers Security Life Insurance Company to
meet its obligations under the Policies. They should not be considered as
bearing on the investment performance of the assets held in the Variable
Account.
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APPENDIX A
THE FIXED ACCOUNT
The Fixed Account consists of all of our assets other than those in our
separate accounts. We have complete ownership and control of all of the assets
of the Fixed Account.
Because of exemptions and exclusions contained in the Securities Act of
1933 and the Investment Company Act of 1940, the Fixed Account has not been
registered under these acts. Neither the Fixed Account nor any interest in it is
subject to the provisions of these acts and as a result the SEC has not reviewed
the disclosures in this Prospectus relating to the Fixed Account. However,
disclosures relating to the Fixed Account are subject to generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
We guarantee both principal and interest on amounts credited to the
Fixed Account. We credit interest at an effective annual rate of at least 4%,
independent of the investment experience of the Fixed Account. From time to
time, we may guarantee interest at a rate higher than 4%.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN
EXCESS OF 4% PER YEAR WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE
RISK THAT INTEREST CREDITED TO THE FIXED ACCOUNT MAY NOT EXCEED THE MINIMUM
GUARANTEE OF 4% FOR A GIVEN YEAR.
We do not use a specific formula for determining excess interest
credits. However, we consider the following:
o General economic trends,
o Rates of return currently available on our investments,
o Rates of return anticipated in our investments, regulatory and
tax factors, and
o Competitive factors.
We are not aware of any statutory limitations to the maximum amount of
interest we may credit and our Board of Directors has not set any limitations.
The Fixed Accumulation Value of the Policy is the sum of the Net
Premiums credited to it in the Fixed Account. It is increased by transfers and
Loan Amounts from the Variable Account, and interest credits. It is decreased by
Monthly Deductions and partial withdrawals taken from it in the Fixed Account
and transfers to the Variable Account. The Fixed Accumulation Value will be
calculated at least monthly on the monthly anniversary date.
You may transfer all or part of your Fixed Accumulation Value to the
Sub-Accounts of the Variable Account, subject to the following transfer
limitations:
o The request to transfer must be postmarked no more than 30
days before the Policy Anniversary and no later than 30 days
after the Policy Anniversary. Only one transfer is allowed
during this period.
o The Fixed Accumulation Value after the transfer must be at
least equal to the Loan Amount.
o No more than 50% of the Fixed Accumulation Value (minus any
Loan Amount) may be transferred unless the balance, after the
transfer, would be less than $1,000. If the balance would be
less than $1,000, the full Fixed Accumulation Value (minus any
Loan Amount) may be transferred.
o You must transfer at least:
_ $500, or
_ the total Fixed Accumulation Value (minus any Loan Amount) if
less than $500.
We make the Monthly Deduction from your Fixed Accumulation Value in
proportion to the total Accumulation Value of the Policy.
The Surrender Charge described in the Prospectus applies to the total
Accumulation Value, which includes the Fixed Accumulation Value. If the Owner
surrenders the Policy for its Cash Surrender Value, the Fixed Accumulation Value
will be reduced by any applicable Surrender Charge, any Loan Amount and unpaid
Monthly Deductions applicable to the Fixed Account.
A-1
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APPENDIX B
CALCULATION OF ACCUMULATION VALUE
The Accumulation Value of the Policy is equal to the sum of the
Variable Accumulation Value plus the Fixed Accumulation Value.
VARIABLE ACCUMULATION VALUE
The Variable Accumulation Value is the total of your values in each
Sub-Account. The value for each Sub-Account is equal to:
1 multiplied by 2, where:
1
Is your current number of Accumulation Units (described below).
2
Is the current Unit Value (described below).
The Variable Accumulation Value will vary from Valuation Date to
Valuation Date (described below) reflecting changes in 1 and 2 above.
ACCUMULATION UNITS. When transactions are made which affect the
Variable Accumulation Value, dollar amounts are converted to Accumulation Units.
The number of Accumulation Units for a transaction is found by dividing the
dollar amount of the transaction by the current Unit Value.
The number of Accumulation Units for a Sub-Account increases when:
o Net Premiums are credited to that Sub-Account; or
o Transfers from the Fixed Account or other Sub-Accounts are
credited to that Sub-Account.
The number of Accumulation Units for a Sub-Account decreases when:
o You take out a Policy loan from that Sub-Account;
o You take a partial withdrawal from that Sub-Account;
o We take a portion of the Monthly Deduction from that
Sub-Account; or
o Transfers are made from that Sub-Account to the Fixed Account
or other Sub-Accounts.
UNIT VALUE. The Unit Value for a Sub-Account on any Valuation Date is
equal to the previous Unit Value times the Net Investment Factor for that
Sub-Account (described below) for the Valuation Period (described below) ending
on that Valuation Date. The Unit Value was initially set at $10 when the
Sub-Account first purchased Fund shares.
NET INVESTMENT FACTOR. The Net Investment Factor is a number that
reflects charges to the Policy and the investment performance during a Valuation
Period of the Fund in which a Sub-Account is invested. If the Net Investment
Factor is greater than one, the Unit Value is increased. If the Net Investment
Factor is less than one, the Unit Value is decreased. The Net Investment Factor
for a Sub-Account is determined by dividing 1 by 2.
(1/2), where:
1
Is the result of:
o The net asset value per share of the Fund shares in which the
Sub-Account invests, determined at the end of the current
Valuation Period;
o Plus the per share amount of any dividend or capital gain
distributions made on the Fund shares in which the Sub-Account
invests during the current Valuation Period;
B-1
<PAGE>
o Plus or minus a per share charge or credit for any taxes
reserved which we determine has resulted from the investment
operations of the Sub-Account and to be applicable to the
Policy.
2
Is the result of:
o The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the last prior
Valuation Period;
o Plus or minus a per share charge or credit for any taxes
reserved for during the last prior Valuation Period which we
determine resulted from the investment operations of the
Sub-Account and was applicable to the Policy.
VALUATION DATE; VALUATION PERIOD. A Valuation Date is 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; Presidents' Day; Good Friday; Memorial Day; July Fourth; Labor Day;
Veterans Day; Thanksgiving Day; and Christmas Day. A Valuation Period is the
period between two successive Valuation Dates, commencing at the close of
business of a Valuation Date and ending at the close of business on the next
Valuation Date.
FIXED ACCUMULATION VALUE
The Fixed Accumulation Value on the Policy Date is your Net Premium
credited to the Fixed Account on that date minus the Monthly Deduction
applicable to the Fixed Accumulation Value for the first Policy Month.
After the Policy Date, the Fixed Accumulation Value is calculated as:
1 + 2 + 3 + 4 - 5 - 6, where:
1
Is the Fixed Accumulation Value on the preceding Monthly Anniversary, plus
interest from the Monthly Anniversary to the date of the calculation.
2
Is the total of your Net Premiums credited to the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date premiums are credited
to the date of the calculation.
3
Is the total of your transfers from the Variable Account to the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation.
4
Is the total of your Loan Amount transferred from the Variable Account since
the preceding Monthly Anniversary.
5
Is the total of your transfers to the Variable Account from the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation.
6
Is the total of your partial withdrawals from the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date of withdrawal to the
date of the calculation.
If the date of the calculation is a Monthly Anniversary, we also reduce
the Fixed Accumulation Value by the applicable Monthly Deduction for the Policy
Month following the Monthly Anniversary.
The minimum interest rate applied in the calculation of the Fixed
Accumulation Value is an effective annual rate of 4%. Interest in excess of the
minimum rate may be applied in the calculation of your Fixed Accumulation Value
in a manner which our Board of Directors determines.
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APPENDIX C
ILLUSTRATION OF ACCUMULATION VALUES, SURRENDER CHARGES,
CASH SURRENDER VALUES, AND DEATH BENEFITS
The following tables illustrate how the Accumulation Values, Cash
Surrender Values, and Death Benefits of a Policy may change with the investment
experience of the Variable Account. The tables show how the Accumulation Values,
Cash Surrender Values, and Death Benefits of a Policy issued to an Insured of a
given Age (who pays the given Planned Periodic Premiums annually) would vary
over time if the investment return of the assets held in the Funds were a
uniform, gross, after-tax, annual rate of 0 percent, 6 percent or 12 percent.
The tables on pages C-2 through C-7 illustrate a Policy issued to a
male Age 40, in a standard Rate Class and qualifying for non-smoker rates. The
Accumulation Values, Cash Surrender Values, and Death Benefits would be lower if
the Insured were in a substandard Rate Class or did not qualify for the
nonsmoker rates because the cost of insurance would be increased. The
Accumulation Values, Cash Surrender Values and Death Benefits would be different
from those shown if the gross annual investment returns averaged 0 percent, 6
percent, and 12 percent over a period of years, but fluctuated above and below
those averages for individual Policy Years.
Within the tables, the second and fifth columns illustrate the
Accumulation Value of the Policy over the designated period. The Accumulation
Value is the total amount that a Policy provides for investment at any time. The
third and sixth columns illustrate the Cash Surrender Value of a Policy over the
designated period. The Cash Surrender Value is equal to the Accumulation Value
less any Surrender Charges, Loan Amount (assumed to be zero in these
illustrations) and unpaid Monthly Deductions (also assumed to be zero). The
fourth and seventh columns illustrate the Death Benefit of a Policy over the
designated period. The second, third, and fourth columns assume that throughout
the life of the Policy, the monthly charge for the cost of insurance, the
Monthly Mortality and Expense Charge and the Monthly Administrative Charge are
based upon the maximums (i.e. guaranteed) permitted in the policy. The maximum
allowable cost of insurance rates are based on the 1980 Commissioners Standard
Ordinary Mortality Tables for Nonsmokers and Smokers. The fifth, sixth, and
seventh columns assume that the monthly charge for cost of insurance, the
Monthly Mortality and Expense Charge, and the Monthly Administrative Charge are
based on the current amounts expected to be charged. The Death Benefits also
vary between tables depending upon whether the Level Amount Death Benefit Option
(Tables at pages C-2 through C-4) or the Variable Amount Death Benefit Option
(Tables at pages C-5 through C-7) is illustrated.
The amounts shown for the Accumulation Values, Cash Surrender Values,
and Death Benefits reflect the fact that the net investment return of the
Sub-Accounts of the Variable Account is lower than the gross, after-tax return
on the assets held in the Funds as a result of the Funds' operating expenses.
The values shown take into account the daily total operating expenses paid by
the available portfolios of the VIPF, VIPF II, Northstar and Putnam VT which
together are assumed to be at an average annual rate of 0.74% for all years.
This figure is derived based on an average of the Funds' 1995 operating expenses
net of any limitations on such expenses paid by the Funds. Thus, the illustrated
gross annual investment rates of return of 0 percent, 6 percent, and 12 percent
correspond to approximate net annual rates of return of -0.74%, 5.26%, and
11.26%, respectively.
The hypothetical values shown in the tables do not reflect any charges
for Federal income taxes attributable to the Variable Account because we do not
currently make any such charges. However, such charges may be made in the future
and, in that event, the gross annual investment return would have to exceed 0
percent, 6 percent, or 12 percent by an amount sufficient to cover the tax
charges in order to produce the Accumulation Values, Cash Surrender Values, and
Death Benefits illustrated. (See section entitled "Federal Tax Matters" in the
prospectus).
The tables illustrate the Policy values that would result based upon
the hypothetical rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Variable Account, and if no Policy loans have been
made. The tables are also based on the assumptions that the Policy owner has not
requested an increase or decrease in the Face Amount, that no partial
withdrawals have been made, that no transfers have been made, and total
operating expenses of the Funds continue as anticipated. Actual results will
depend on the expenses and performance of the investment choice made by the
owner.
Upon request, we will provide a comparable illustration based upon the
proposed Insured's Age, sex, underwriting classification, the Face Amount and
Planned Periodic Premium schedule requested, and any available riders requested.
C-1
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER ACCUMULATION CASH SURRENDER
POLICY YEAR VALUE VALUE DEATH BENEFIT VALUE VALUE DEATH BENEFIT
--------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 768 0 100,000* 818 0 100,000*
2 1,507 0 100,000* 1,609 0 100,000*
3 2,218 388 100,000 2,373 543 100,000
4 2,899 1,069 100,000 3,107 1,277 100,000
5 3,548 1,718 100,000 3,810 1,980 100,000
6 4,165 2,518 100,000 4,481 2,834 100,000
7 4,748 3,284 100,000 5,120 3,656 100,000
8 5,294 4,013 100,000 5,725 4,444 100,000
9 5,804 4,706 100,000 6,293 5,195 100,000
10 6,274 5,359 100,000 6,824 5,909 100,000
11 6,700 5,968 100,000 7,347 6,615 100,000
12 7,079 6,530 100,000 7,828 7,279 100,000
13 7,404 7,038 100,000 8,261 7,895 100,000
14 7,669 7,486 100,000 8,639 8,456 100,000
15 7,868 7,868 100,000 8,958 8,958 100,000
20 7,665 7,665 100,000 9,458 9,458 100,000
AGE
70 0 0 0 3,922 3,922 100,000
**
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ASSUMES A $1,200 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE DIFFERENT
IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
*BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING THE
YEARS SHOWN. THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 75.
THE HYPOTHETICAL INVESTMENT RESULTS .ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 0%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-2
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER ACCUMULATION CASH SURRENDER
POLICY YEAR VALUE VALUE DEATH BENEFIT VALUE VALUE DEATH BENEFIT
--------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 824 0 100,000 876 0 100,000
2 1,667 0 100,000 1,776 0 100,000
3 2,531 701 100,000 2,701 871 100,000
4 3,413 1,583 100,000 3,648 1,818 100,000
5 4,313 2,483 100,000 4,617 2,787 100,000
6 5,231 3,584 100,000 5,608 3,961 100,000
7 6,164 4,700 100,000 6,621 5,157 100,000
8 7,112 5,831 100,000 7,655 6,374 100,000
9 8,075 6,977 100,000 8,709 7,611 100,000
10 9,050 8,135 100,000 9,781 8,866 100,000
11 10,034 9,302 100,000 10,920 10,188 100,000
12 11,023 10,474 100,000 12,082 11,533 100,000
13 12,011 11,645 100,000 13,262 12,896 100,000
14 12,993 12,810 100,000 14,454 14,271 100,000
15 13,964 13,964 100,000 15,656 15,656 100,000
20 18,432 18,432 100,000 21,678 21,678 100,000
AGE
70 20,191 20,191 100,000 34,220 34,220 100,000
75 9,267 9,267 100,000 36,826 36,826 100,000
80 0 0 0 31,442 31,442 100,000
85 0 0 0 3,970 3,970 100,000
**
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ASSUMES A $1,200 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE DIFFERENT
IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
*BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING THE
YEARS SHOWN. THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 90.
THE HYPOTHETICAL INVESTMENT RESULTS .ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 6%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-3
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER ACCUMULATION CASH SURRENDER
POLICY YEAR VALUE VALUE DEATH BENEFIT VALUE VALUE DEATH BENEFIT
--------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 880 0 100,000* 934 0 100,000*
2 1,835 5 100,000 1,951 121 100,000
3 2,871 1,041 100,000 3,056 1,226 100,000
4 3,995 2,165 100,000 4,258 2,428 100,000
5 5,215 3,385 100,000 5,566 3,736 100,000
6 6,538 4,891 100,000 6,988 5,341 100,000
7 7,976 6,512 100,000 8,537 7,073 100,000
8 9,538 8,257 100,000 10,224 8,943 100,000
9 11,236 10,138 100,000 12,062 10,964 100,000
10 13,084 12,169 100,000 14,067 13,152 100,000
11 15,093 14,361 100,000 16,327 15,595 100,000
12 17,279 16,730 100,000 18,807 18,258 100,000
13 19,657 19,291 100,000 21,526 21,160 100,000
14 22,243 22,060 100,000 24,507 24,324 100,000
15 25,059 25,059 100,000 27,781 27,781 100,000
20 43,560 43,560 100,000 49,888 49,888 100,000
AGE
70 123,520 123,520 143,284 151,038 151,038 175,204
75 203,439 203,439 217,680 254,451 254,451 272,263
80 332,504 332,504 349,130 425,620 425,620 446,901
85 533,142 533,142 559,799 701,350 701,350 736,418
90 835,893 835,893 877,688 1,138,116 1,138,116 1,195,023
95 1,319,078 1,319,078 1,332,269 1,856,861 1,856,861 1,875,431
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ASSUMES A $1,200 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE DIFFERENT
IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
*BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING THE
YEARS SHOWN. THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
THE HYPOTHETICAL INVESTMENT RESULTS .ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-4
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER ACCUMULATION CASH SURRENDER
POLICY YEAR VALUE VALUE DEATH BENEFIT VALUE VALUE DEATH BENEFIT
--------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 765 0 100,766* 816 0 100,816*
2 1,500 0 101,501* 1,603 0 101,603*
3 2,204 374 102,205 2,360 530 102,361
4 2,876 1,046 102,877 3,086 1,256 103,086
5 3,515 1,685 103,515 3,777 1,947 103,778
6 4,117 2,470 104,117 4,434 2,787 104,435
7 4,681 3,217 104,682 5,056 3,592 105,056
8 5,207 3,926 105,208 5,639 4,358 105,640
9 5,691 4,593 105,692 6,183 5,085 106,183
10 6,132 5,217 106,133 6,684 5,769 106,685
11 6,525 5,793 106,526 7,173 6,441 107,174
12 6,865 6,316 106,866 7,615 7,066 107,615
13 7,146 6,780 107,146 8,002 7,636 108,002
14 7,360 7,177 107,361 8,326 8,143 108,327
15 7,503 7,503 107,503 8,585 8,585 108,586
20 6,914 6,914 106,915 8,658 8,658 108,658
AGE
70 0 0 0 1,942 1,942 101,942
**
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ASSUMES A $1,200 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE DIFFERENT
IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
*BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING THE
YEARS SHOWN. THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 75.
THE HYPOTHETICAL INVESTMENT RESULTS .ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 0%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-5
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER ACCUMULATION CASH SURRENDER
POLICY YEAR VALUE VALUE DEATH BENEFIT VALUE VALUE DEATH BENEFIT
--------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 822 0 100,822* 874 0 100,874*
2 1,660 0 101,661* 1,769 0 101,770*
3 2,515 685 102,516 2,686 856 102,687
4 3,386 1,556 103,387 3,622 1,792 103,622
5 4,271 2,441 104,272 4,576 2,746 104,576
6 5,168 3,521 105,168 5,546 3,899 105,547
7 6,074 4,610 106,075 6,533 5,069 106,534
8 6,989 5,708 106,990 7,535 6,254 107,535
9 7,910 6,812 107,911 8,548 7,450 108,548
10 8,834 7,919 108,834 9,570 8,655 109,570
11 9,756 9,024 109,756 10,646 9,914 110,646
12 10,669 10,120 110,669 11,731 11,182 111,731
13 11,566 11,200 111,567 12,817 12,451 112,817
14 12,439 12,256 112,439 13,896 13,713 113,896
15 13,278 13,278 113,279 14,962 14,962 114,962
20 16,642 16,642 116,642 19,799 19,799 119,800
AGE
70 11,765 11,765 111,766 25,298 25,298 125,299
75 0 0 0 18,337 18,337 118,338
**
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ASSUMES A $1,200 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE DIFFERENT
IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
*BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING THE
YEARS SHOWN. THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 80.
THE HYPOTHETICAL INVESTMENT RESULTS .ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 6%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-6
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER ACCUMULATION CASH SURRENDER
POLICY YEAR VALUE VALUE DEATH BENEFIT VALUE VALUE DEATH BENEFIT
--------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 878 0 100,878 932 0 100,932
2 1,827 0 101,827 1,943 113 101,943
3 2,853 1,023 102,854 3,040 1,210 103,040
4 3,963 2,133 103,964 4,228 2,398 104,228
5 5,162 3,332 105,163 5,515 3,685 105,516
6 6,457 4,810 106,458 6,909 5,262 106,910
7 7,856 6,392 107,856 8,420 6,956 108,421
8 9,366 8,085 109,367 10,057 8,776 110,057
9 10,997 9,899 110,997 11,829 10,731 111,829
10 12,756 11,841 112,757 13,747 12,832 113,747
11 14,654 13,922 114,654 15,895 15,163 115,895
12 16,696 16,147 116,697 18,230 17,681 118,230
13 18,891 18,525 118,892 20,763 20,397 120,764
14 21,246 21,063 121,247 23,508 23,325 123,509
15 23,770 23,770 123,770 26,483 26,483 126,483
20 39,282 39,282 139,283 45,448 45,448 145,448
AGE
70 87,957 87,957 187,958 119,554 119,554 219,555
75 120,921 120,921 220,921 184,041 184,041 284,042
80 154,555 154,555 254,555 276,522 276,522 376,522
85 178,791 178,791 278,791 408,026 408,026 508,026
90 169,530 169,530 269,530 596,336 596,336 696,336
95 86,717 86,717 186,717 872,466 872,466 972,466
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ASSUMES A $1,200 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE DIFFERENT
IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
*BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING THE
YEARS SHOWN. THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-7
<PAGE>
APPENDIX D
MAXIMUM SURRENDER CHARGE
PER $1,000 OF FACE AMOUNT
<TABLE>
<CAPTION>
Insured's Age at Insured's Age at
Policy Date or Policy Date or
Effective Date of Charge Per $1,000 of Face Amount Effective Date Charge Per $1,000 of Face Amount
Increase, as (Initial Face Amount or Amount of of Increase, as (Initial Face Amount or Amount of
Appropriate Requested Increase) Appropriate Requested Increase)
- ------------------- -------------------------------------- ------------------ --------------------------------------
MALE FEMALE MALE FEMALE
NONSMOKER NONSMOKER NONSMOKER NONSMOKER
AND STANDARD AND STANDARD AND STANDARD AND STANDARD
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
0 6.00 6.00 38 17.40 16.10
1 6.10 6.00 39 17.80 16.50
2 6.20 6.00 40 18.30 16.80
3 6.30 6.00 41 18.80 17.20
4 6.40 6.00 42 19.30 17.60
5 6.50 6.00 43 19.80 18.10
6 6.60 6.00 44 20.40 18.50
7 6.80 6.00 45 20.90 19.00
8 7.00 6.00 46 21.60 19.50
9 7.20 6.20 47 22.20 20.00
10 7.50 6.40 48 22.90 20.60
11 7.80 6.60 49 23.70 21.20
12 8.00 6.80 50 24.50 21.80
13 8.20 7.00 51 25.30 22.40
14 8.50 7.20 52 26.20 23.10
15 8.80 7.40 53 27.20 23.90
16 9.00 7.60 54 28.20 24.60
17 9.20 7.80 55 29.30 25.50
18 9.50 8.00 56 30.40 26.30
19 9.80 8.20 57 31.60 27.20
20 10.00 8.50 58 32.90 28.20
21 10.30 8.90 59 34.30 29.30
22 10.90 9.20 60 35.70 30.40
23 11.30 9.50 61 37.30 31.60
24 11.90 10.00 62 39.00 32.90
25 12.50 10.50 63 40.70 34.30
26 12.80 11.10 64 42.60 35.80
27 13.40 11.70 65 44.60 37.30
28 13.80 12.30 66 46.70 38.90
29 14.40 12.70 67 48.90 40.60
30 14.70 13.00 68 48.60 42.40
31 15.00 13.60 69 48.30 44.40
32 15.30 14.20 70 48.10 46.60
33 15.60 14.60 71 47.80 47.90
34 15.90 14.80 72 47.60 47.50
35 16.20 15.10 73 47.40 47.10
36 16.60 15.40 74 47.20 46.70
37 17.00 15.80 75 46.90 46.20
- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
</TABLE>
D-1
<PAGE>
APPENDIX E
Surrender Charge Whole Life Premium Per $1,000 of Face Amount
The following table prevides the Surrender Charge Whole Life Premium factors
that are used in determining the Premium Related Surrender Charge Reduction. See
section entitled "Surrender Charge" in Prospectus.
<TABLE>
<CAPTION>
INSURED'S AGE SURRENDER CHARGE WHOLE LIFE PREMIUM INSURED'S AGE SURRENDER CHARGE WHOLE LIFE PREMIUM
AT POLICY DATE PER $1,000 OF INITIAL FACE AMOUNT AT POLICY DATE PER $1,000 OF INITIAL FACE AMOUNT
------------ ----------------------------- ------------ -----------------------------
MALE FEMALE MAKE FEMALE
NONSMOKER NONSMOKER NONSMOKER NONSMOKER
AND SMOKER AND SMOKER AND SMOKER AND SMOKER
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 $3.31 $2.81 38 $13.31 $11.43
1 3.34 2.85 39 13.93 11.94
2 3.45 2.94 40 14.58 12.47
3 3.55 3.04 41 15.27 13.02
4 3.67 3.13 42 16.00 13.61
5 3.79 3.24 43 16.77 14.22
6 3.92 3.35 44 17.58 14.87
7 4.06 3.46 45 18.44 15.55
8 4.21 3.58 46 19.36 16.27
9 4.36 3.71 47 20.32 17.03
10 4.53 3.85 48 21.35 17.83
11 4.70 3.99 49 22.44 18.67
12 4.87 4.13 50 23.60 19.57
13 5.05 4.29 51 24.84 20.52
14 5.24 4.45 52 26.15 21.52
15 5.42 4.61 53 27.55 22.59
16 5.61 4.78 54 29.04 23.71
17 5.80 4.96 55 30.63 24.91
18 6.00 5.14 56 32.31 26.18
19 6.21 5.33 57 34.11 27.54
20 6.42 5.53 58 36.03 28.99
21 6.65 5.74 59 38.08 30.55
22 6.89 5.96 60 40.28 32.23
23 7.14 6.19 61 42.63 34.03
24 7.41 6.44 62 45.15 35.98
25 7.69 6.69 63 47.84 38.06
26 8.00 6.96 64 50.72 40.29
27 8.32 7.24 65 53.79 42.67
28 8.66 7.53 66 57.09 45.23
29 9.02 7.84 67 60.62 47.98
30 9.40 8.16 68 64.41 50.96
31 9.80 8.50 69 68.50 54.21
32 10.22 8.86 70 72.90 57.75
33 10.67 9.24 71 77.65 61.62
34 11.14 9.63 72 82.75 65.84
35 11.64 10.05 73 88.20 70.41
36 12.17 10.49 74 94.00 75.36
37 12.73 10.95 75 100.17 80.71
</TABLE>
E-1
<PAGE>
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
and Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforeable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted to such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
"REASONABLENESS" REPRESENTATION PURSUANT
TO SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
The fees and charges deducted under the flexible premium variable life
insurance policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
ReliaStar Bankers Security Life Insurance Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant certifies that it meets all of the requirements of
effectiveness of this Registration Statement pursuant to Rule 485(a) under the
Securities Act of 1933 and has caused this Registration Statement to be signed
on its behalf, in the City of Woodbury, and State of New York, on the 31st day
of December, 1996.
RELIASTAR BANKERS SECURITY VARIABLE LIFE
SEPARATE ACCOUNT I
(Registrant)
By: RELIASTAR BANKERS SECURITY LIFE INSURANCE
COMPANY
(Depositor)
By: /s/ John H. Flittie
------------------------------------
John H. Flittie
President and Chief Executive Officer
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Depositor has caused this Registration Statement to be signed on its
behalf, in the City of Woodbury and State of New York, on this 31st day of
December, 1996.
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
(Depositor)
By: /s/ John H. Flittie
------------------------------------
John H. Flittie
President and Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has been
signed on this 31st day of December, 1996 by the following directors and
officers of Depositor in the capacities indicated:
/s/ John H. Flittie President and Chief Executive Officer
- -----------------------
John H. Flittie
/s/ Rebecca B. Crunk Vice President, Treasurer and Controller
- -----------------------
Rebecca B. Crunk
Stephen A. Carb Kenneth U. Kuk John G. Turner
Richard R. Crowl Richard E. Nolan Charles B. Updike
John H. Flittie Fioravante G. Perrotta Ross M. Weale
James T. Hale Robert C. Salipante Steven W. Wishart
Wayne R. Huneke
* 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 Bankers Security
Life Insurance Company pursuant to powers of attorney duly executed by such
persons.
/s/ Robert B. Saginaw
-----------------------------------
Robert B. Saginaw, Attorney-In-Fact
<PAGE>
PART II
Contents of Registration Statement
This Registration Statement comprises the following papers and documents:
The Facing Sheet.
The general form of Prospectus, consisting of 69 pages. Undertakings to
file reports.
Undertakings to file reports.
Rule 484 Undertaking.
"Reasonableness" representation pursuant to Section 26(e)(2)(A) of the
Investment Company Act of 1940.
The signatures.
Written consents of the following persons;
1. Robert B. Saginaw - Filed as part of EX-99.2.
2. Steve P. West, FSA, MAAA - Filed as part of EX-99.C6.
3. Auditors - To be filed by Pre-Effective Amendment.
The following exhibits:
1. The following exhibits correspond to those required by Paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolutions of Board of Directors of ReliaStar Bankers Security
Life Insurance Company ("RBSL") establishing the ReliaStar
Bankers Security Variable Life Separate Account I. Filed as part of
EX-99.1.A.(1).
(2) Not applicable.
(3) (a) Form of General Distributor Agreement between Washington
Square Securities Inc. and RBSL. Filed as part of
EX-99.A3A.
(b) Specimens of WSSI Selling Agreements. Filed as part of
EX-99.A3B.
(4) Not applicable.
(5) Form of Policy available (together with available Policy riders).
Filed as part of EX-99.A7.
(6) (a) Amended Charter of ReliaStar Bankers Security Life
Insurance Company. Filed as part of EX-99.A6.
(6) (b) Amended By-laws of ReliaStar Bankers Security Life
Insurance Company. Filed as part of EX-99.A6.
(7) Not applicable.
(8) (a) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and
Form of Amendment No. 1. Filed as part of EX-99.8(a).
(8) (b) Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation and
Form of Amendment No. 1. Filed as part of EX-99.8(b).
(8) (c) Form of Participation Agreement with Putnam Variable Trust
(formerly known as Putnam Capital Manager Trust) and Putnam
Mutual Funds Corp. Filed as part of EX-99.8(c).
(8) (d) Form of Management Services Agreement with ReliaStar Life
Insurance Company (formerly known as Northwestern National
Life Insurance Company). Filed as part of EX-99.8(e).
(9) Not applicable.
(10) Policy application. Filed as part of EX-99.A.10.
2. Opinion and consent of Robert B. Saginaw, Esquire, as to the legality of
the Securities being registered. See EX-99.2.
3. Not applicable.
4. Not applicable.
EX-99.C1. Auditor's Consent. To be filed by Pre-Effective Amendment.
EX-99.C2. Not applicable.
EX-99.C3. Not applicable.
EX-99.C4. See EX-99.2.
EX-99.C5. Not applicable.
EX-99.C6. Actuarial Opinion and Consent.
EX-99.D1. Memorandum describing ReliaStar Bankers Security Life's
issuance, transfer and redemption procedures for the Policies
and ReliaStar Bankers Security Life's procedure for conversion
to the fixed account of the policy.
EX-24. Powers of Attorney.
Stephen A. Carb
Richard R. Crowl
John H. Flittie
James T. Hale
Wayne R. Huneke
Kenneth U. Kuk
Richard E. Nolan
Fioravante G. Perrotta
Robert C. Salipante
John G. Turner
Charles B. Updike
Ross M. Weale
Steven W. Wishart
EX-27. Financial Data Schedule. To be filed by Pre-Effective Amendment.
BANKERS SECURITY LIFE INSURANCE SOCIETY
VARIABLE LIFE SEPARATE ACCOUNTS I AND II
RESOLVED, That, pursuant to Section 227 of the Insurance Law of the
State of New York, the Society is authorized to establish Bankers Security
Variable Life Separate Account I ("Separate Account I") and Bankers Security
Variable Life Separate Account II ("Separate Account II"). Separate Accounts I
and II are empowered to:
(a) to the extent required by the Securities Act of 1933, effect one or
more registrations thereunder and in connection with such registrations
file one or more registration statements thereunder, or amendments
thereto, including any documents or exhibits required as a part
thereof;
(b) to the extent required by the Investment Company Act of 1940, register
under such Act or file a notification of claim of exemption from such
registration, and make applications for such other exemptions or orders
under such provisions thereof as may appear to be necessary or
desirable;
(c) provide for investment management services;
(d) provide for the sale of variable life insurance policies issued and
administered by the Society, to the extent such policies provide for
allocation of amounts to Separate Account I and Separate Account II;
(e) provide for custodial or depository arrangements for assets allocated
to Separate Account I and Separate Account II;
(f) select an independent public accountant to audit the books and
records of Separate Account I and Separate Account II; and
(g) perform such additional functions and take such additional action as
may be necessary or desirable to carry out the foregoing and the intent
and purpose thereof;
FURTHER RESOLVED, That Separate Accounts I and II shall constitute
funding mediums to support reserves under such variable life insurance policies
issued by the Society as the Chief Executive Officer may from time to time
designate for such purpose;
FURTHER RESOLVED, That the Society may register under the Securities
Act of 1933 variable life insurance policies under which amounts will be
allocated by the Society to Separate Account I and to Separate Account II to
support reserves for such policies and, in connection therewith, the officers of
the Society, and each of them, are hereby authorized to prepare, execute and
file with the Securities and Exchange Commission, in the name and on behalf of
the Society, registration statements under the Securities Act of 1933, including
prospectuses, supplements, exhibits and other documents relating thereto, and
amendments to the foregoing, in such form as the officer executing the same may
deem necessary or appropriate;
FURTHER RESOLVED, That the President of the Society is hereby appointed
as agent for service under any such registration statement duly authorized to
receive communications and notices from the Securities and Exchange Commission
with respect thereto;
FURTHER RESOLVED, That, pursuant to Section 227(6) of the Insurance Law
of the State of New York, Separate Account I and Separate Account II shall each
have a committee designated the "Separate Account I Committee" and the "Separate
Account II Committee" respectively, initially each to consist of five members to
be designated by the Chairman of the Board or the President, each of whom or any
replacements similarly designated shall serve until the first meeting of the
variable life insurance policyholders having voting rights in respect of
Separate Account I and Separate Account II, as provided by their Rules and
Regulations to be hereafter adopted or approved, and until his successor shall
qualify, and thereafter the members of each Committee shall be elected by such
policyholders;
FURTHER RESOLVED, That all members so designated or from time to time
so elected as members of each Committee shall be deemed to be, and are hereby,
requested by the Society to serve as such;
FURTHER RESOLVED, That, in cooperation with the Committees, the
officers of the Society and each of them are hereby authorized, to prepare,
execute, and file with the Securities and Exchange Commission applications for
such exemptions from or orders under the Investment Company Act of 1940 as they
may from time to time deem necessary or desirable;
FURTHER RESOLVED, That the officers of the Society, and each of them,
are hereby authorized to effect, in the name and on behalf of the Society all
such registrations, filings and qualifications under blue sky or securities laws
and under insurance securities laws and insurance laws of such states and other
jurisdictions as he may deem necessary or appropriate, with respect to the
Society, and with respect to any variable life insurance policies under which
amounts will be allocated by the Society to Separate Accounts I or II to support
reserves for such policies; such authorization to include registration, filing
and qualifications of the Society and of said policies, as well as registration,
filing and qualification of officers, employees and agents of the Society as
brokers, dealers, agents, salesmen, or otherwise; and such authorization shall
also include, in connection therewith, authority to prepare, execute,
acknowledge and file all such applications, applications for exemptions,
certificates, affidavits, covenants,
2
consents to service of process and other instruments and to take all such action
as the officer executing the same or taking such action may deem necessary or
desirable;
FURTHER RESOLVED, That the Chairman of the Board and the President, and
each of them, is hereby authorized to change the designation of Separate Account
I and Separate Account II and their Committees, or either of them, to such other
designation or designations as he may deem necessary or desirable; and
FURTHER RESOLVED, That the Society is hereby authorized to enter into
agreements with the Committees and others for investment management, sales and
other services, and the officers of the Society and each of them is hereby
authorized to execute all such agreements on behalf of the Society with respect
thereto containing such provisions as shall satisfy the requirements of the
Investment Company Act of 1940 and the rules and regulations issued thereunder;
FURTHER RESOLVED, That the officers of the Society and each of them are
hereby authorized to execute and deliver all such documents and papers and to do
or cause to be done all such acts and things as he may deem necessary or
desirable to carry out the foregoing resolutions and the intent and purpose
thereof.
Executive Committee Meeting
23 March 1982
3
<PAGE>
BANKERS SECURITY LIFE INSURANCE SOCIETY
VARIABLE LIFE SEPARATE ACCOUNTS III AND IV
RESOLVED, That, pursuant to Section 4240 of the Insurance Law, of the
State of New York, the Society is authorized to establish Bankers Security
Variable Life Separate Account III ("Separate Account III") and Bankers Security
Variable Life Separate Account IV ("Separate Account IV"). Separate Accounts III
and IV are empowered to;
(a) to the extent required by the Securities Act of 1933, effect one
or more registrations thereunder and in connection with such
registrations file one or more registration statements thereunder,
or amendments thereto, including any documents or exhibits
required as a part thereof;
(b) to the extent required by the investment Company Act of 1940,
register under such Act or file a notification of claim of
exemption from such registration, and make applications for such
other exemptions or orders under such provisions thereof as may
appear to be necessary or desirable;
(c) provide for investment management services;
(d) provide for the sale of variable life insurance policies issued
and administered by the Society, to the extent such policies
provide for allocation of amounts to Separate Account III and
Separate Account IV;
(e) provide for custodial or depository arrangements for assets
allocated to Separate Account III and Separate Account IV;
(f) select an independent public accountant to audit the books and
records of Separate Account III and Separate Account IV; and
(g) perform such additional functions and take such additional action
as may be necessary or desirable to carry out the foregoing and
the intent and purpose thereof;
FURTHER RESOLVED, That Separate Accounts III and IV shall constitute
funding mediums to support reserves under such variable life insurance policies
issued by the Society as the Chief Executive Officer may from time to time
designate for such purpose;
<PAGE>
FURTHER RESOLVED, That the Society may register under the Securities
Act of 1933 variable life insurance policies under which amounts will be
allocated by the Society to Separate Account III and to Separate Account IV to
support reserves for such policies and, in connection therewith, the officers of
the Society, and each of them are hereby authorized to prepare, execute and file
with the Securities and Exchange Commission, in the name and on behalf of the
Society, registration statements under the Securities Act of 1933, including
prospectuses, supplements, exhibits and other documents relating thereto, and
amendments to the foregoing, in such form as the officer executing the same may
deem necessary or appropriate;
FURTHER RESOLVED, That the President of the Society is hereby appointed
as agent for service under any such registration statement duly authorized to
receive communications and notices from the Securities and Exchange Commission
with respect thereto;
FURTHER RESOLVED, That, pursuant to Section 4240 of the insurance Law
of the State of New York, Separate Account III and Separate Account IV shall
each have a committee designated the "Separate Account III Committee" and the
"Separate Account IV Committee" respectively, initially each to consist of five
members to be designated by the Chairman of the Board or the President, each of
whom or any replacements similarly designated shall serve until the first
meeting of the variable life insurance policyholders having voting rights in
respect of Separate Account III and Separate Account IV, as provided by their
Rules and Regulations to be hereafter adopted or approved, and until his
successor shall qualify, and thereafter the members of each Committee shall be
elected by such policyholders;
FURTHER RESOLVED, That all members so designated or from time to time
so elected as members of each Committee shall be deemed to be, and are hereby,
requested by the Society to serve as such;
FURTHER RESOLVED, That, in cooperation with the committees, the
officers of the Society and each of them are hereby authorized, to prepare,
execute, and file with the Securities and Exchange Commission applications for
such exemptions from or orders under the Investment Company Act of 1940 as they
may from time to time deem necessary or desirable;
FURTHER RESOLVED, That the officers of the Society, and each of them
are hereby authorized to effect, in the name and on behalf of the Society all
such registrations, filings and qualifications under blue sky or securities laws
and under insurance securities laws and insurance laws of such states and other
jurisdictions as he may deem necessary or appropriate, with respect to the
Society, and with respect to any variable life insurance policies under which
amounts will be allocated by the Society to Separate Accounts III or IV to
support reserves for such policies; such authorization to include registration,
filing and qualifications of the Society and of said policies, as well as
registration, filing and qualification of officers, employees and agents of the
2
Society as brokers, dealers, agents, salesmen, or otherwise; and such
authorization shall also include, in connection therewith, authority to prepare,
execute, acknowledge and file all such applications, applications for
exemptions, certificates, affidavits, covenants, consents to service of process
and other instruments and to take all such action as the officer executing the
same or taking such action may deem necessary or desirable;
FURTHER RESOLVED, That the Chairman of the Board and the President, and
each of them, is hereby authorized to change the designation of Separate Account
III and Separate Account IV and their Committees, or either of them to such
other designation or designations as he may deem necessary or desirable; and
FURTHER RESOLVED, That the Society is hereby authorized to enter into
agreements with the Committees and others for investment management, sales and
other services, and the officers of the Society and each of them is hereby
authorized to execute all such agreements on behalf of the Society with respect
thereto containing such provisions as shall satisfy the requirements of the
Investment Company Act of 1940 and the rules and regulations issued thereunder;
FURTHER RESOLVED, That the officers of the Society and each of them are
hereby authorized to execute and deliver all such documents and papers and to do
or cause to be done all such acts and things as he may deem necessary or
desirable to carry out the foregoing resolutions and the intent and purpose
thereof.
Board of Directors
25 July 1985
3
<PAGE>
RESOLVED, That, pursuant to the Insurance Laws of this Company's
domiciliary state, the Company is authorized to establish and amend Variable
Life and Variable Universal Life Separate Accounts ("Separate Accounts") and is
empowered to:
(a) to the extent required by the Securities Act of 1933, effect
one or more registrations thereunder and in connection with
such registrations file one or more registration statements
thereunder, or amendments thereto, including any documents or
exhibits required as a part thereof;
(b) to the extent required by the Investment Company Act of 1940,
register under such Act or file a notification of claim of
exemption from such registration, and make applications for
such other exemptions or orders under such provisions thereof
as may appear to be necessary or desirable;
(c) to file Plans of Operations and Amendments to such Plans with
the New York Insurance Department and where necessary, other
state insurance departments;
(d) provide for investment management services;
(e) provide for the sale of variable life and variable universal
life insurance policies issued and administered by the
Company, to the extent such policies provide for allocation of
amounts to the Separate Accounts;
(f) provide for custodial or depository arrangements for assets
allocated to the Separate Accounts;
(g) select an independent public accountant to audit the books and
records of the Separate Accounts;
(h) perform such additional functions and take such additional
action as may be necessary or desirable to carry out the
foregoing and the intent and purpose thereof;
FURTHER RESOLVED, That the Separate Accounts shall constitute funding
mediums to support reserves under such variable life and variable universal life
insurance policies issued by the Company as the President of the Company may
from time to time designate for such purpose;
FURTHER RESOLVED, That the Company may register under the Securities
Act of 1933 variable life and variable universal life insurance policies under
which amounts will be allocated by the Company to the Separate Accounts to
support reserves for such policies and, in connection herewith, the officers of
the Company and each of them are hereby authorized to prepare, execute and file
with the Securities and Exchange Commission, in the name and on behalf of the
Company, registration statements under the Securities Act of 1933, including
prospectuses, supplements, exhibits and other documents relating thereto, and
amendments to the foregoing, in such form as the officer executing the same may
deem necessary or appropriate;
FURTHER RESOLVED, That the General Counsel of the Company is hereby
appointed as agent for service under any such registration statement duly
authorized to receive communications and notices from the Securities and
Exchange Commission with respect thereto;
FURTHER RESOLVED, That the officers of the Company are authorized to
establish unit investment trusts, and funds to support these trusts, for the
sale of variable life and variable universal life insurance policies, and are
authorized to prepare, execute and file registration statements, amendments
thereto, exhibits, applications and other documents as may be required;
FURTHER RESOLVED, That the officers of the Company, and each of them
are hereby authorized to effect, in the name and on behalf of the Company all
such registrations, filings and qualifications under blue sky or securities laws
and under insurance securities laws and insurance laws of such states and other
jurisdictions as such officer may deem necessary or appropriate, with respect to
the Company, and with respect to any variable life and variable universal life
insurance policies under which amounts will be allocated by the Company to the
Separate Accounts to support reserves for such policies; such authorization to
include registration, filing and qualifications of the Company and of said
policies, as well as registration, filing and qualification of officers,
employees and agents of the Company as brokers, dealers, agents, salesmen, or
otherwise; and such authorization shall also include, in connection therewith,
authority to prepare, execute, acknowledge and file all such applications,
applications for exemptions, certificates, affidavits, covenants, consents to
service of process and other instruments and to take all such action as the
officer executing the same or taking such action may deem necessary or
desirable;
FURTHER RESOLVED, That the officers of the Company and each of them are
hereby authorized to execute and deliver all such documents and papers and to do
or cause to be done all such acts and things as such officer may deem necessary
or desirable to carry out the foregoing resolutions and the intent and purpose
thereof;
FURTHER RESOLVED, That the following Standards of Suitability are
adopted:
Standards of Suitability are intended for use by the Company in its
variable life and variable universal life insurance operations and shall also be
applicable to any affiliate or subsidiary of the Company, any director, officer
or employee of the Company, and its affiliated companies and any life insurance
agent of the Company or an affiliate:
The Standards of Suitability which express the criteria of the Company
with respect to determining the suitability for applicants are as follows:
(a) No recommendation shall be made to an applicant to purchase a
variable life or variable universal life insurance policy and
no such policy shall be issued in the absence of reasonable
grounds to believe that the purchase of such policy is not
unsuitable for such applicant on the basis of information
furnished after reasonable inquiry of such applicant
concerning the applicant's insurance and investment
objectives, financial situation and needs, and any other
information known to the Company or any affiliated company or
to the agent making the recommendation;
(b) All representatives of the Company who recommend to a prospect
the purchase of an equity product must, to the best of their
ability, assure themselves that this recommendation is not
unsuitable. This judgment should be based upon the prospect's
investment objectives, financial situation and needs, and any
other pertinent information known by the associated person. In
order to obtain an adequate basis for determining suitability,
a reasonable effort must be made by the associated person to
obtain the information requested in the suitability portion of
an application to purchase such products;
(c) Lapse rates for variable life and variable universal life
insurance within the first two policy years which are
significantly higher than those encountered by the Company or
any affiliate for corresponding fixed benefit and variable
benefit life insurance policies shall be considered in
determining whether the Company and the agents of the Company
are engaging, as a general business practice, in the sale of
variable life and variable universal life insurance to
persons for whom it is unsuitable. Conversions from such
policies to fixed life insurance policies pursuant to
Regulations or terms of the policy shall not be considered
lapses for purposes of this section;
FURTHER RESOLVED, That the following Standards of Conduct are adopted:
The responsibility for maintaining a high Standard of Conduct and the
conduct of the affairs of the variable life and variable universal life
insurance operations of the Company rests upon many persons affiliated with the
Company. In recognition of that responsibility, a Statement of Standards of
Conduct hereby adopted by the Company, provides certain specific and detailed
guidance with respect to investments of variable life and variable universal
life insurance separate accounts and operations. These Standards of Conduct are
intended to apply to transactions of or with the Company, any affiliate of the
Company, any other person directly or indirectly controlling, controlled by or
under common control with either, any person that regularly furnishes investment
advice to the Company with respect to its variable separate accounts for which a
specific fee or commission is charged, any director, officer or employee of any
of the foregoing;
The Company hereby adopts Standards of Conduct in respect to its
variable life and variable universal life insurance separate accounts and
operations as follows:
(a) With respect to variable life and variable universal life
insurance separate accounts, neither the Company nor any
affiliate shall (unless otherwise approved in writing in
advance of the transaction by the insurance regulatory
official of each state requiring such approval in which the
Company shall be authorized to issue variable life insurance):
1) Sell to or purchase from any such separate account
established by the Company any securities or other
property, other than variable contracts;
2) Accept any compensation, other than a regular salary
or wages from the Company or an affiliate, for the
sale or purchase of securities to or from any such
separate account other than as provided below;
3) Engage in any joint transaction, participation or
common undertaking whereby the Company or an
affiliate participates with such a separate account
in any transaction in which the Company or affiliate
obtains an advantage in the price or quality of the
item purchased, in the service received, or in the
course of such service and the Company or any other
affiliate is disadvantaged in any of these respects
by the same transaction;
4) Borrow money or securities from any such separate
account other than under a policy loan provision;
No provision of this statement shall be construed to prohibit:
1) The investment of separate account assets and
securities issued by one or more investment companies
registered pursuant to The Investment Company Act of
1940 which is sponsored or managed by the Company or
an affiliate company and the payment of investment
management or advisory fees on such assets;
2) The combination of orders for the purchase or sale of
securities for the Company, any affiliate, any
separate accounts or any one or more of them, which
is for their mutual benefit or convenience so long as
any securities so purchased or the proceeds of any
sale thereof are allocated among the participants on
some predetermined basis expressed in writing which
is designed to assure the equitable treatment of all
participants;
3) The company or any affiliate to act as a broker or
dealer in connection with the sale of securities to
or by such separate account, provided that any
commission, fee or remuneration charge therefore
shall not exceed the minimum broker's commission
established for any such transaction by any national
securities exchange through which such transaction
could be effected or such charges prevailing in the
ordinary cost of business in the community where such
transaction is effective;
4) The offering of investment management or investment
advisory services by the Company or any affiliate
for a fee, subject to any applicable variable life
or variable universal life insurance regulation;
References in the foregoing Standards of Conduct to sales to, purchases
from, or other transactions of or with any separate account shall embrace sales,
purchases or transactions in respect of securities, money or other property
allocated, or to be allocated, to such separate account;
FURTHER RESOLVED, That the officers of this Company are authorized to
enter into custodial agreements to carry out the foregoing and the intent and
purposes thereof.
Board of Directors
28 October 1996
DISTRIBUTION AGREEMENT
AGREEMENT made this _______ day of _______________, 1997, between ReliaStar
Bankers Security Life Insurance Company, a New York corporation, (ReliaStar
Bankers) on its own behalf and on behalf of the ReliaStar Bankers Security
Variable Life Separate Account I (Variable Account) and Washington Square
Securities, Inc. (WSSI) which is a member of the National Association of
Securities Dealers, Inc. (NASD) and is registered as a broker-dealer with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 (the "1934 Act").
WHEREAS, ReliaStar Bankers sells variable life insurance contracts
(Contracts), assets for which are allocated to the Variable Account, a separate
investment account. ReliaStar Bankers proposes to sell additional Contracts to
commence after the effectiveness of the Registration Statement relating to the
Contract and Variable Account filed with the Securities and Exchange Commission
on Form S-6 pursuant to the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, WSSI is an affiliate of ReliaStar Bankers, and ReliaStar Bankers
desires to retain WSSI as the General Distributor and Principal Underwriter to
distribute and sell to the public the Contracts issued by ReliaStar Bankers and
WSSI is willing to render such services.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. PRINCIPAL UNDERWRITER.
ReliaStar Bankers hereby appoints WSSI, during the term of this Agreement,
subject to the registration requirements of the 1933 Act and the 1940 Act to be
the General Distributor and Principal Underwriter for the sale of Contracts to
the public in each state and other jurisdictions in which the contracts may be
lawfully sold. WSSI shall offer the Contracts for sale and distribution at
prices set by ReliaStar Bankers, through its own representatives and through
other broker dealers contracted under a Selling Agreement as described in
Paragraph 2 of this Agreement.
2. SELLING AGREEMENTS.
WSSI is hereby authorized to enter into separate written agreements, on
such terms and conditions as WSSI and ReliaStar Bankers determine are not
inconsistent with this Agreement, with other broker-dealers that agree to
participate as a broker-dealer in the distribution of the Contracts and to use
their best efforts to solicit applications for Contracts. Any such broker-dealer
(hereinafter "Broker"), shall be registered as a broker-dealer under the 1934
Act and shall be a member of the NASD. ReliaStar Bankers shall undertake to
appoint Broker's qualified agents or representatives as life insurance agents of
ReliaStar Bankers, provided that ReliaStar Bankers reserves the right to refuse
to appoint any proposed representative or agent, or once appointed, to terminate
such appointment.
3. SUITABILITY.
ReliaStar Bankers desires to ensure that Contracts will be sold to purchasers
for whom the Contract will be suitable. WSSI shall take reasonable steps to
ensure that the registered representatives of WSSI shall not make
recommendations to an applicant to purchase a Contract in the absence of
reasonable grounds to believe the purchase of the Contract is suitable for such
applicant, and shall impose similar obligations upon Brokers.
4. CONFORMITY WITH REGISTRATION STATEMENT AND APPROVED SALES MATERIALS.
In performing its duties as General Distributor, WSSI will act in conformity
with the Prospectus and with the instructions and directions of ReliaStar
Bankers, the requirements of the 1933 Act, the 1940 Act, the 1934 Act, and all
other applicable federal and state laws and regulations. WSSI shall not give any
information nor make any representations, concerning any aspect of the Contract
or of ReliaStar Banker's operations to any persons or entity unless such
information or representations are contained in the Registration Statement and
the pertinent prospectus filed with the Securities and Exchange Commission, or
are contained in sales or promotional literature approved by ReliaStar Bankers.
WSSI will not use and will take reasonable steps to ensure by representatives
will not use any sales promotion material and advertising which has not been
previously approved by ReliaStar Bankers. WSSI shall impose similar obligations
upon Brokers contracted under a Selling Agreement as described in Paragraph 2 of
this Agreement.
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5. APPLICATIONS.
Completed applications for Contracts solicited by WSSI through its agents or
representatives shall be transmitted directly to ReliaStar Bankers. All payments
under the Contracts shall be made by check payable to ReliaStar Bankers or by
other method acceptable to ReliaStar Bankers, and if received by WSSI, shall be
held at all times in a fiduciary capacity and remitted promptly to ReliaStar
Bankers.
6. STANDARD OF CARE.
WSSI shall be responsible for exercising reasonable care in carrying out the
provisions of this Agreement.
7. RECORDS AND REPORTS.
ReliaStar Bankers shall maintain and preserve such records as are required of
it, WSSI and the Variable Account, by applicable laws and regulations with
regard to the offer and sale of variable life insurance. The books, accounts,
and records of ReliaStar Bankers, the Variable Account and WSSI shall be
maintained by ReliaStar Bankers so as to clearly and accurately disclose the
nature and details of the transactions. ReliaStar Bankers agrees that it will
maintain and preserve all such records in conformity with the requirements of
the 1934 Act, to the extent such requirements are applicable to variable life
insurance. ReliaStar Bankers further agrees that all such records shall be and
are maintained and held in conformity with the 1934 Act and said records are and
shall remain at all times available to WSSI.
8. COMPENSATION.
For the services rendered under this Agreement, ReliaStar Bankers shall pay WSSI
_______ percent (___%) of first year agents commissions. ReliaStar Bankers shall
arrange for the payment of commissions to those Brokers that sell Contracts
under agreements entered into pursuant to Section 2, hereof, and to wholesalers
that solicit brokers to sell Contracts under agreements entered into pursuant to
Section 2, hereof, in amounts as may be agreed to by ReliaStar Bankers and WSSI
specified in such written agreements.
9. INVESTIGATION AND PROCEEDINGS.
WSSI and ReliaStar Bankers agree to cooperate fully in any regulatory
investigation or proceeding or judicial proceeding arising in connection with
the contracts distributed under this Agreement. WSSI further agrees to furnish
regulatory authorities with any information or reports in connection with such
services which may be requested in order to ascertain whether the operations of
3
ReliaStar Bankers and the Variable Account are being conducted in a manner
consistent with Applicable laws and regulations. WSSI and ReliaStar Bankers
further agree to cooperate fully in any securities regulatory investigation or
proceeding with respect to ReliaStar Bankers, WSSI, their affiliates and their
agents or representatives to the extent that such investigation or proceeding is
in connection with Contracts distributed under this Agreement. Without limiting
the foregoing:
(a) WSSI will be notified promptly of any customer complaint or
notice of any regulatory investigation or proceeding or judicial
proceeding received by ReliaStar Bankers with respect to WSSI or
any agent or representative of a Broker which may affect
ReliaStar Banker's issuance of any Contract sold under this
Agreement; and
(b) WSSI will promptly notify ReliaStar Bankers of any customer
complaint or notice of any regulatory investigation or
proceeding received by WSSI or its affiliates with respect to
WSSI or any agent or representative a Broker in connection with
any Contract distributed under this Agreement or any activity in
connection with any such Contract.
10. EMPLOYEES.
WSSI will not employ, except with the prior written approval of the Commissioner
of Insurance of the States of California and Texas, in any material connection
with the handling of the Variable Accounts assets any person who, to the
knowledge of WSSI:
(a) in the last 10 years has been convicted of any felony or
misdemeanor arising out of conduct involving embezzlement,
fraudulent conversion, or misappropriation of funds or
securities, or involving violations of Section 1341, 1342, or
1343 of Title 18, United States Code; or
(b) within the last 10 years has been found by any state regulatory
authority to have violated or has acknowledged violation of any
provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or
(c) within the last 10 years has been found by any federal or state
regulatory authorities to have violated or have acknowledged
violation of any revision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
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11. TERMINATION.
This Agreement may be terminated at any reason, for any either party on 60 days'
written notice to the other party, without the payment of any penalty. Upon
termination of this Agreement, all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder, including commissions
on purchase payments subsequently received for Contracts in effect at time of
termination, and the agreements contained in Sections 8 and 9 hereof.
12. ASSIGNMENT.
This Agreement is not assignable by either party.
13. REGULATION.
This Agreement shall be subject to the provisions of the 1940 Act and the 1934
Act and the rules, regulations and rulings thereunder, and of the applicable
rules and regulations of the NASD, and applicable state insurance law and other
applicable law, from time to time in effect, and the terms hereof shall be
interpreted and construed in accordance therewith.
14. NOTICES.
Notices of any kind to be given to WSSI by ReliaStar Bankers or the Variable
Account shall be in writing and shall be duly given if mailed, first class
postage prepaid, or delivery to the President of WSSI at 20 Washington Avenue
South, Minneapolis, MN 55401, or at such other address or to such individual as
shall be specified by WSSI. Notices of any kind to be given to ReliaStar Bankers
or the Variable Account shall be in writing and shall be duly given if mailed,
first class postage prepaid, or delivered to them at 20 Washington Avenue South,
Minneapolis, Minnesota 55401, Attention: Senior Vice President, Individual
Insurance Division, or at such other address or to such individual as shall be
specified by ReliaStar Bankers.
15. SEVERABILITY.
If any provisions of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
16. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
RELIASTAR BANKERS SECURITY
LIFE INSURANCE COMPANY
By: ------------------------
Name: Richard R. Crowl
Title: Senior Vice President and General Counsel
WASHINGTON SQUARE SECURITIES, INC.
By: -----------------------
Name: Michael R. Fanning
Title: President
6
"A"
BROKER-DEALER AGENCY
SELLING AGREEMENT
This Agreement is made among the following three parties:
1. RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102
Woodbury, New York 11797
a New York domiciled stock life insurance company
(hereinafter "INSURER"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and a member
of the National Association of Securities Dealers, Inc.
("NASD") (hereinafter "GENERAL DISTRIBUTOR"); and,
3. ------------------------------
------------------------------
Street
------------------------------
City State ZIP
registered as a broker-dealer with the SEC and a member of the
NASD and licensed as an insurance agency (hereinafter
"BROKER-DEALER").
RECITALS:
WHEREAS, Broker-Dealer is licensed as an insurance agency in order to
satisfy state insurance law requirements with respect to the sale of traditional
life insurance policies as well as variable insurance products which are
registered securities with the SEC.
WHEREAS, the parties wish to enter into an agreement for the distribution
of Variable Contracts and Traditional Life Insurance Policies by Broker-Dealer;
and
WHEREAS, Insurer has appointed General Distributor as principal underwriter
and distributor (as those terms are defined by the Investment Company Act of
1940) of the Variable Contracts and has authorized General Distributor to enter
into selling agreements with registered broker-dealers for the solicitation and
sale of Variable Contracts; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer's
registered representatives who are licensed as life insurance/variable contract
agents in appropriate jurisdictions ("Representatives") solicit and sell
Variable Contracts and Traditional Life Insurance Policies; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer
provide certain supervisory and administrative services as hereinafter described
with respect to the solicitation and sales of Variable Contracts and Traditional
Life Insurance Policies.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. DEFINITIONS
In this Agreement,
(a) The words "Variable Contract" shall mean those variable life insurance
policies and variable annuity contracts identified in Section 1 of
Compensation Schedule A attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to
Broker-Dealer, suspend sales of any Variable Contracts or amend any
policies or contracts evidencing such Variable Contracts if, in
Insurer's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations, or
administrative order(s); or, (2) necessary to prevent administrative
or financial hardship to Insurer. In all other situations, Insurer
shall provide 30 days notice to Broker-Dealer prior to suspending
sales of any Variable Contracts or amending any policies or contracts
evidencing such Variable Contracts.
Insurer may issue and propose additional or successor products, in
which event Broker-Dealer will be informed of the product and its
related Commission Schedule. If Broker-Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Commission Schedule for such product(s). If
Broker-Dealer does not indicate disapproval of the new product(s) or
the terms contained in the related Commission Schedule, Broker-Dealer
will be deemed to have thereby agreed to distribute such product(s)
and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
(b) The words "Traditional Life Insurance Policy" shall mean those life
insurance policies and annuity contracts identified in Section 2 of
Compensation Schedule A attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to
Broker-Dealer, suspend sales of any Traditional Life Insurance
Policies or amend any policies or contracts evidencing such
Traditional Life Insurance Policies if, in Insurer's opinion, such
suspension or amendment is: (1) necessary for compliance with federal,
state, or local laws, regulations, or administrative order(s); or, (2)
necessary to prevent administrative or financial hardship to Insurer.
In all other situations, Insurer shall provide 30 days notice to
Broker-Dealer prior to suspending sales of any Traditional Life
Insurance Policies or amending any policies or contracts evidencing
such Traditional Life Insurance Policies.
Insurer may issue and propose additional or successor products, in
which event Broker-Dealer will be informed of the product and its
related Compensation Schedule. If Broker-Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Compensation Schedule for such product(s).
If Broker-Dealer does not indicate disapproval of the new product(s)
or the terms contained in the related Compensation Schedule,
Broker-Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Compensation Schedule which shall
be attached to and made a part of this Agreement.
2. AGENCY APPOINTMENT
On the effective date, Insurer and General Distributor appoint
Broker-Dealer and Broker-Dealer accepts the appointment to solicit sales of
and to sell Variable Contracts and Traditional Life Insurance Policies,
pursuant to the terms of this Agreement.
3. DUTIES OF BROKER-DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
who are engaged directly or indirectly in the offer or sale of the
Variable Contracts, and all such persons shall be subject to the
control of Broker-Dealer with respect to such persons' securities
regulated activities in connection with the Variable Contracts.
Broker-Dealer will cause the Representatives to be trained in the sale
of the Variable Contracts, will cause such Representatives to qualify
under applicable federal and state laws to engage in the sale of the
Variable Contracts; will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in
the solicitation of applications for the Variable Contracts; and will
cause such Representatives to limit solicitation of applications for
the Variable Contracts to jurisdictions where Insurer has authorized
such solicitation. Broker-Dealer shall cause such Representatives'
qualifications to be certified to the satisfaction of General
Distributor and shall notify General Distributor if any Representative
ceases to be a registered representative of Broker-Dealer or ceases to
maintain the proper licensing required for the sale of the Variable
Contracts. All parties shall be liable for their own negligence and
misconduct under this paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts and Traditional Life Insurance Policies, shall require such
representatives to be validly insurance licensed, registered and
appointed by Insurer as a variable contract/life insurance agent in
accordance with the jurisdictional requirements of the place where the
solicitations and sales take place as well as the solicited person's
or entity's place of residence.
Broker-Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell Variable
Contracts and Traditional Life Insurance Policies. Broker-Dealer shall
fulfill all Insurer requirements in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of
Insurer. All such licensing/appointment papers shall be submitted to
Insurer or its designee by Broker-Dealer. Notwithstanding such
submission, Insurer shall have sole discretion to appoint, refuse to
appoint, discontinue, or terminate the appointment of any
Representative as an insurance agent of Insurer.
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the
requirements of the National Association of Securities Dealers, Inc.,
the Securities Exchange Act of 1934 and all other applicable federal
and state laws. In addition, Broker-Dealer will establish and maintain
such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives as
required by applicable law or regulation. Upon request by General
Distributor, Broker-Dealer shall furnish such records as may be
necessary to establish such diligent supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards
imposed by Broker-Dealer on its Representatives, Broker-Dealer shall
advise General Distributor of this fact and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Variable Contracts or Traditional Life Insurance Policies and
Broker-Dealer shall take whatever additional action may be necessary
to terminate the sales activities of such Representative relating to
such contracts and policies.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer
shall be provided, without any expense to Broker-Dealer, with
prospectuses relating to the Variable Contracts and such other
supplementary sales material as General Distributor determines is
necessary or desirable for use in connection with sales of the
Variable Contracts and Traditional Life Insurance Policies.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO THE
VARIABLE CONTRACTS AND TRADITIONAL LIFE INSURANCE POLICIES, INCLUDING
WITHOUT LIMITATION GENERIC ADVERTISING MATERIAL WHICH DOES NOT REFER
TO INSURER BY NAME, SHALL BE USED BY BROKER-DEALER UNLESS THE SPECIFIC
ITEM HAS BEEN APPROVED IN WRITING BY GENERAL DISTRIBUTOR PRIOR TO SUCH
USE.
In addition, Broker-Dealer shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless
such advertisement, circular or document shall have been approved in
writing by Insurer prior to such use.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars, documents and software relating to
the sales of Insurer's contracts shall be promptly turned over to
Insurer free from any claim or retention of rights by the
Broker-Dealer.
Insurer represents that the prospectus and registration statement
relating to the Variable Contracts contain no untrue statements of
material fact or omission to state material fact, the omission of
which makes any statement contained in the prospectus and registration
statement misleading. Insurer agrees to indemnify Broker-Dealer from
and against any claims, liabilities and expenses which may be incurred
under the Securities Act of 1933, the Investment Company Act of 1940,
common law or otherwise arising out of a breach of the agreement in
this paragraph.
Broker-Dealer agrees to hold harmless and indemnify Insurer and
General Distributor against any and all claims, liabilities and
expenses which Insurer or General Distributor may incur from
liabilities arising out of or based upon any alleged or untrue
statement other than statements contained in the registration
statement, prospectus or approved sales material of any Variable
Contract.
In accordance with the requirements of the laws of the several states,
Broker-Dealer shall maintain complete records indicating the manner
and extent of distribution of any such solicitation material, shall
make such records and files available to staff of Insurer or its
designated agent in field inspections and shall make such material
available to personnel of state insurance departments, the NASD or
other regulatory agencies, including the SEC, which have regulatory
authority over Insurer or General Distributor. Broker-Dealer holds
Insurer, General Distributor and their affiliates harmless from any
liability arising from the use of any material which either (a) has
not been specifically approved by Insurer in writing, or (b) although
previously approved, has been disapproved, in writing, for further
use.
(f) SECURING APPLICATIONS. All applications for Variable Contracts and
Traditional Life Insurance Policies shall be made on application forms
supplied by Insurer and all payments collected by Broker-Dealer or any
Representative thereof shall be remitted promptly in full, together
with such application forms and any other required documentation,
directly to Insurer at the address indicated on such application or to
such other address as Insurer may, from time-to-time, designate in
writing. Broker-Dealer shall review all such applications for accuracy
and completeness. Checks or money orders in payment on any such
Variable Contract or Traditional Life Insurance Policy shall be drawn
to the order of "ReliaStar Bankers Security Life Insurance Company."
All applications are subject to acceptance or rejection by Insurer at
its sole discretion. All records or information obtained hereunder by
Broker-Dealer shall not be disclosed or used except as expressly
authorized herein, and Broker-Dealer will keep such records and
information confidential, to be disclosed only as authorized or if
expressly required by federal or state regulatory authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker-Dealer agrees that all money
or other consideration tendered with or in respect of any application
for a Variable Contract or Traditional Life Insurance Policy and the
Variable Contract or Traditional Life Insurance Policy when issued is
the property of Insurer and shall be promptly remitted in full to
Insurer without deduction or offset for any reason, including by way
of example but not limitation, any deduction or offset for
compensation claimed by Broker-Dealer.
(h) POLICY DELIVERY. Insurer will transmit Variable Contracts and
Traditional Life Insurance Policies to Broker-Dealer for delivery to
Policyowners. Broker-Dealer hereby agrees to deliver all such Variable
Contracts to Policyowners within ten (10) days of their receipt by
Broker-Dealer from Insurer. Broker-Dealer agrees to indemnify and hold
harmless Insurer for any and all losses caused by Broker-Dealer's
failure to perform the undertakings described in this paragraph.
Broker-Dealer hereby authorizes Insurer to set off any amount it owes
Insurer under this paragraph against any and all amounts otherwise
payable to Broker-Dealer by Insurer.
(i) FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed
pursuant to this Agreement as Insurer's agents for state insurance law
purposes or who have access to funds of Insurer, including but not
limited to funds submitted with applications for the Variable
Contracts and Traditional Life Insurance Policies, or funds being
returned to owners, are and shall be covered by a blanket fidelity
bond, including coverage for larceny and embezzlement, issued by a
reputable bonding company. This bond shall be maintained by
Broker-Dealer at Broker-Dealer's expense. Such bond shall be, at
least, of the form, type and amount required under the NASD Rules of
Fair Practice. Insurer may require evidence, satisfactory to it, that
such coverage is in force and Broker-Dealer shall give prompt written
notice to Insurer of any notice of cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to
a deductible or otherwise, Broker-Dealer shall promptly pay Insurer
such amount on demand and Broker-Dealer hereby indemnifies and holds
harmless Insurer from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
4. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor, shall
pay a dealer concession to Broker-Dealer on all sales of Variable
Contracts through its Representatives, in accordance with the form of
Compensation Schedule A attached hereto, which is in effect when
purchase payment on such Variable Contracts are received by Insurer.
Dealer concessions will be paid as a percentage of premiums received
in cash or other legal tender and accepted by Insurer on applications
obtained by Broker-Dealer's Representatives unless otherwise indicated
in Compensation Schedule A. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to the Broker-Dealer.
Broker-Dealer agrees to hold Insurer and General Distributor harmless
from all claims of its Representatives for compensation in respect of
Representative's sales of Variable Contracts.
(b) TRADITIONAL LIFE INSURANCE POLICIES. Insurer shall pay commissions to
Broker-Dealer on all sales of Traditional Life Insurance Policies
through its Representatives in accordance with the form of
Compensation Schedule A attached hereto, which is in effect when
purchase payments on such Traditional Life Insurance Policies are
received by Insurer. Commissions will be paid as a percentage of
premiums received in cash or other legal tender and accepted by
insurer on applications obtained by Broker-Dealer's Representatives
unless otherwise indicated in Compensation Schedule A. Upon
termination of this Agreement, all compensation payable hereunder
shall cease; however, Broker-Dealer shall continue to be liable for
any chargebacks or for any other amounts advanced by or otherwise due
Insurer hereunder.
Insurer will pay all such compensation to the Broker-Dealer.
Broker-Dealer agrees to hold Insurer harmless from all claims of its
Representatives for compensation in respect of Representative's sales
of Traditional Life Insurance Policies.
(c) COMMISSION STATEMENTS. Broker-Dealer will be provided with copies of
its Representatives' commission statements together with
Broker-Dealer's own commission statement for each commission payment
period in which commissions are payable. Broker-Dealer agrees that,
except as to clerical errors and material undisclosed facts, if any,
such statements constitutes a complete and accurate statement of the
commission account unless written notice is provided to Insurer within
120 days after the date of the statement, which notice specifically
sets forth the objections or exceptions thereto.
(d) COMPENSATION SCHEDULES. The initial Compensation Schedule A is
attached.
Insurer and General Distributor reserve the right to change, amend, or
cancel any Compensation Schedule as to business produced after such
change by mailing notice of such change in the form of a new
Compensation Schedule to Broker-Dealer. Such change shall be
effective, unless otherwise specified, ten (10) days after the notice
is mailed.
(e) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to
discontinue writing any form of policy, to take possession of and
cancel any policy and return the premium or any part of it, and to
make any compromise settlement in respect of a policy. Broker-Dealer
will not be entitled to receive or retain any compensation on premiums
or parts of premiums Insurer does not receive and retain because of
such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker-Dealer is
not entitled, any amount credited will be charged back, and if the
account balance is insufficient to cover the credited amount,
Broker-Dealer as applicable agrees to promptly repay the credited
amount.
5. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated, for failure to
perform satisfactorily or other cause, by any party immediately; and shall
be terminated if Broker-Dealer ceases to be registered as a Broker-Dealer
under the Securities Exchange Act of 1934 and a member of the NASD or, if
Broker-Dealer ceases to maintain its insurance agent license(s) in good
standing in the jurisdictions in which it conducts business.
6. ARBITRATION
Any dispute, claim or controversy arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the NASD's
arbitration facilities. If the subject matter of the dispute, claim or
controversy is not within the scope of matters which may arbitrated through
the NASD arbitration facilities, then such dispute, claim or controversy
shall, upon the written request of any party, be submitted to three
arbitrators, one to be chosen by each party, and the third by the two so
chosen. If either party refuses or neglects to appoint an arbitrator within
thirty (30) days after the receipt of the written notice from the other
party requesting it to do so, the requesting party may appoint two
arbitrators. If the two arbitrators fail to agree in the selection of a
third arbitrator within thirty (30) days of their appointment, each of them
shall name two, of whom the other shall decline one and the decision shall
be made by drawing lots. All arbitrators shall be active or retired
executive officers of insurance companies not under the control of any
party to this Agreement. Each party shall submit its case to the
arbitrators within thirty (30) days of the appointment of the third
arbitrator. The arbitration shall be held in Minneapolis, Minnesota at the
times agreed upon by the arbitrators. The decision in writing of any two
arbitrators, when filed with the parties hereto shall be final and binding
on both parties. Judgment may be entered upon the final decision of the
arbitrators in any court having jurisdiction. Each party shall bear the
expense of its own arbitrator and shall jointly and equally bear with the
other party the expense of the third arbitrator and of the arbitration.
7. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor.
Insurer and General Distributor reserve the right to amend this
Agreement at any time, and the submission of an application by
Broker-Dealer after notice of any such amendment has been sent shall
constitute Broker-Dealer's agreement to any such amendment. No
additions, amendments or modifications of this Agreement or any waiver
of any provision will be valid unless approved, in writing, by one of
Insurer's duly authorized officers. In addition, no approved waiver of
any default, or failure of performance by Broker-Dealer will affect
Insurer's or General Distributor's rights with respect to any later
default or failure of performance.
(b) INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this
Agreement. Insurer and General Distributor are independent contractors
with respect to Broker-Dealer and its Representatives.
(c) ASSIGNMENTS. Broker-Dealer will not assign or transfer, either wholly
or partially, this Agreement or any of the benefits accrued or to
accrue under it, without the written prior consent of a duly
authorized officer of the Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker-Dealer receives or is served with any
notice or other paper concerning any legal action against Insurer or
General Distributor, Broker-Dealer agrees to notify Insurer
immediately (in any event not later than the first business day after
receipt) by telephone and further agrees to transmit any papers that
are served or received by facsimile to (612) 342-7531 and by overnight
mail to Insurer's Office of General Counsel.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is
held to be invalid or in conflict with any law or regulation, the
validity of the remaining portions or provisions will not be affected,
and the parties' rights and obligations will be construed and enforced
as if this Agreement did not contain the particular part, term or
provision held to be invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that the
Agreement and all of its provisions will be governed by the laws of
the State of Minnesota.
(g) LIMITATIONS. No party other than Insurer shall have the authority on
behalf of Insurer to make, alter, or discharge any policy, contract,
or certificate issued by Insurer, to waive any forfeiture or to grant,
permit, nor extend the time for making any payments nor to guarantee
earnings or rates, nor to alter the forms which Insurer may prescribe
or substitute other forms in place of those prescribed by Insurer, nor
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of Insurer, nor to open any bank
account in the full legal name of Insurer, any derivation thereof or
any tradename thereof.
8. TERRITORY
Broker-Dealer's territory is limited geographically to those jurisdictions
in which the Variable Contracts and Traditional Life Insurance Policies may
lawfully be offered, provided that Broker-Dealer's right to solicit sales
of and to sell the Variable Contracts and Traditional Life Insurance
Policies in such jurisdictions is not exclusive.
9. EFFECTIVE DATE
This Agreement shall be effective ________________, 199__.
IN WITNESS WHEREOF, we set our hands this ____ day of _________________,
199__.
INSURER:
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By: ________________________________
Title: _____________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By: ________________________________
Title: _____________________________
BROKER-DEALER:
By: ________________________________
Title: _____________________________
<PAGE>
"B"
BROKER-DEALER AGENCY
SELLING AGREEMENT
This Agreement is made among the following four parties:
1. RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102
Woodbury, New York 11797
a New York domiciled stock life insurance company
(hereinafter "INSURER"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") and a member
of the National Association of Securities Dealers, Inc. ("NASD")
(hereinafter "GENERAL DISTRIBUTOR"); and,
3. ------------------------------
------------------------------
Street
------------------------------
City State ZIP
registered as a broker-dealer with the SEC and a Member
of the NASD (hereinafter "BROKER-DEALER"); and,
4. ------------------------------
------------------------------
Street
------------------------------
City State ZIP
an affiliate of Broker-Dealer and a licensed insurance agency
(hereinafter "AGENCY").
RECITALS:
WHEREAS, Broker-Dealer has become affiliated with Agency in order to
satisfy state insurance law requirements with respect to the sale of variable
insurance products which are registered securities with the SEC.
WHEREAS, the parties wish to enter into an agreement for the distribution
of Variable Contracts and Traditional Life Insurance Policies by Broker-Dealer
and Agency; and
WHEREAS, Insurer has appointed General Distributor as principal underwriter
and distributor (as those terms are defined by the Investment Company Act of
1940) of the Variable Contracts and has authorized General Distributor to enter
into selling agreements with registered broker-dealers for the solicitation and
sale of Variable Contracts; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer's
registered representatives who are affiliated with Agency and who are licensed
as life insurance/variable contract agents in appropriate jurisdictions
("Representatives") solicit and sell Variable Contracts and Traditional Life
Insurance Policies; and,
WHEREAS, Insurer proposes to authorize Agency's employees who are not
registered representatives of Broker-Dealer but who are licensed as life
insurance agents in appropriate jurisdictions ("Agents") to solicit and sell
Traditional Life Insurance Policies; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer
provide certain supervisory and administrative services as hereinafter described
with respect to the solicitation and sales of Variable Contracts; and,
WHEREAS, Insurer proposes to have Agency provide certain supervisory and
administrative services as hereinafter described with respect to the
solicitation and sales of Traditional Life Insurance Policies by its Agents and
by Representatives who are affiliated with Agency.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. DEFINITIONS
In this Agreement,
(a) The words "Variable Contract" shall mean those variable life insurance
policies and variable annuity contracts identified in Section 1 of
Compensation Schedule A attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to
Broker-Dealer, suspend sales of any Variable Contracts or amend any
policies or contracts evidencing such Variable Contracts if, in
Insurer's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations, or
administrative order(s); or, (2) necessary to prevent administrative
or financial hardship to Insurer. In all other situations, Insurer
shall provide 30 days notice to Broker-Dealer prior to suspending
sales of any Variable Contracts or amending any policies or contracts
evidencing such Variable Contracts.
Insurer may issue and propose additional or successor products, in
which event Broker-Dealer will be informed of the product and its
related Commission Schedule. If Broker-Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Commission Schedule for such product(s). If
Broker-Dealer does not indicate disapproval of the new product(s) or
the terms contained in the related Commission Schedule, Broker-Dealer
will be deemed to have thereby agreed to distribute such product(s)
and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
(b) The words "Traditional Life Insurance Policy" shall mean those life
insurance policies and annuity contracts identified in Section 2 of
Compensation Schedule A attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to
Broker-Dealer, suspend sales of any Traditional Life Insurance
Policies or amend any policies or contracts evidencing such
Traditional Life Insurance Policies if, in Insurer's opinion, such
suspension or amendment is: (1) necessary for compliance with federal,
state, or local laws, regulations, or administrative order(s); or, (2)
necessary to prevent administrative or financial hardship to Insurer.
In all other situations, Insurer shall provide 30 days notice to
Broker-Dealer prior to suspending sales of any Traditional Life
Insurance Policies or amending any policies or contracts evidencing
such Traditional Life Insurance Policies.
Insurer may issue and propose additional or successor products, in
which event Broker-Dealer will be informed of the product and its
related Compensation Schedule. If Broker-Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Compensation Schedule for such product(s).
If Broker-Dealer does not indicate disapproval of the new product(s)
or the terms contained in the related Compensation Schedule,
Broker-Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Compensation Schedule which shall
be attached to and made a part of this Agreement.
2. AGENCY APPOINTMENTS
On the effective date,
(a) Insurer and General Distributor appoint Broker-Dealer and
Broker-Dealer accepts the appointment to solicit sales of and to sell
Variable Contracts only, pursuant to the terms of this Agreement.
(b) Insurer appoints Agency, and Agency accepts the appointment to solicit
sales of and to sell Traditional Life Insurance Policies only,
pursuant to the terms of this Agreement.
3. DUTIES OF BROKER-DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
who are engaged directly or indirectly in the offer or sale of the
Variable Contracts, and all such persons shall be subject to the
control of Broker-Dealer with respect to such persons' securities
regulated activities in connection with the Variable Contracts.
Broker-Dealer will cause the Representatives to be trained in the sale
of the Variable Contracts, will cause such Representatives to qualify
under applicable federal and state laws to engage in the sale of the
Variable Contracts; will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in
the solicitation of applications for the Variable Contracts; and will
cause such Representatives to limit solicitation of applications for
the Variable Contracts to jurisdictions where Insurer has authorized
such solicitation. Broker-Dealer shall cause such Representatives'
qualifications to be certified to the satisfaction of General
Distributor and shall notify General Distributor if any Representative
ceases to be a registered representative of Broker-Dealer or ceases to
maintain the proper licensing required for the sale of the Variable
Contracts. All parties shall be liable for their own negligence and
misconduct under this paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts, shall require such representatives to be validly insurance
licensed, registered and appointed by Insurer as a variable contract
agent in accordance with the jurisdictional requirements of the place
where the solicitations and sales take place as well as the solicited
person's or entity's place of residence.
Broker-Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell the
Variable Contracts. Broker-Dealer shall fulfill all Insurer
requirements in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of
Insurer. All such licensing/appointment papers shall be submitted to
Insurer or its designee by Broker-Dealer. Notwithstanding such
submission, Insurer shall have sole discretion to appoint, refuse to
appoint, discontinue, or terminate the appointment of any
Representative as an insurance agent of Insurer.
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the
requirements of the National Association of Securities Dealers, Inc.,
the Securities Exchange Act of 1934 and all other applicable federal
and state laws. In addition, Broker-Dealer will establish and maintain
such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives as
required by applicable law or regulation. Upon request by General
Distributor, Broker-Dealer shall furnish such records as may be
necessary to establish such diligent supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards
imposed by Broker-Dealer on its Representatives, Broker-Dealer shall
advise General Distributor of this fact and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Variable Contracts and Broker-Dealer shall take whatever additional
action may be necessary to terminate the sales activities of such
Representative relating to the Variable Contracts.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer
shall be provided, without any expense to Broker-Dealer, with
prospectuses relating to the Variable Contracts and such other
supplementary sales material as General Distributor determines is
necessary or desirable for use in connection with sales of the
Variable Contracts.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO THE
VARIABLE CONTRACTS, INCLUDING WITHOUT LIMITATION GENERIC ADVERTISING
MATERIAL WHICH DOES NOT REFER TO INSURER BY NAME, SHALL BE USED BY
BROKER-DEALER UNLESS THE SPECIFIC ITEM HAS BEEN APPROVED IN WRITING BY
GENERAL DISTRIBUTOR PRIOR TO SUCH USE.
In addition, Broker-Dealer shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless
such advertisement, circular or document shall have been approved in
writing by Insurer prior to such use.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars, documents and software relating to
the sales of the Variable Contracts shall be promptly turned over to
Insurer free from any claim or retention of rights by the
Broker-Dealer.
Insurer represents that the prospectus and registration statement
relating to the Variable Contracts contain no untrue statements of
material fact or omission to state material fact, the omission of
which makes any statement contained in the prospectus and registration
statement misleading. Insurer agrees to indemnify Broker-Dealer from
and against any claims, liabilities and expenses which may be incurred
under the Securities Act of 1933, the Investment Company Act of 1940,
common law or otherwise arising out of a breach of the agreement in
this paragraph.
Broker-Dealer agrees to hold harmless and indemnify Insurer and
General Distributor against any and all claims, liabilities and
expenses which Insurer or General Distributor may incur from
liabilities arising out of or based upon any alleged or untrue
statement other than statements contained in the registration
statement, prospectus or approved sales material of any Variable
Contract.
In accordance with the requirements of the laws of the several states,
Broker-Dealer shall maintain complete records indicating the manner
and extent of distribution of any such solicitation material, shall
make such records and files available to staff of Insurer or its
designated agent in field inspections and shall make such material
available to personnel of state insurance departments, the NASD or
other regulatory agencies, including the SEC, which have regulatory
authority over Insurer or General Distributor. Broker-Dealer holds
Insurer, General Distributor and their affiliates harmless from any
liability arising from the use of any material which either (a) has
not been specifically approved in writing, or (b) although previously
approved, has been disapproved, in writing, for further use.
(f) SECURING APPLICATIONS. All applications for Variable Contracts shall
be made on application forms supplied by Insurer and all payments
collected by Broker-Dealer or any Representative thereof shall be
remitted promptly in full, together with such application forms and
any other required documentation, directly to Insurer at the address
indicated on such application or to such other address as Insurer may,
from time-to-time, designate in writing. Broker-Dealer shall review
all such applications for accuracy and completeness. Checks or money
orders in payment on any such Variable Contract shall be drawn to the
order of "ReliaStar Bankers Security Life Insurance Company." All
applications are subject to acceptance or rejection by Insurer at its
sole discretion. All records or information obtained hereunder by
Broker-Dealer shall not be disclosed or used except as expressly
authorized herein, and Broker-Dealer will keep such records and
information confidential, to be disclosed only as authorized or if
expressly required by federal or state regulatory authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker-Dealer agrees that all money
or other consideration tendered with or in respect of any application
for a Variable Contract and the Variable Contract when issued is the
property of Insurer and shall be promptly remitted in full to Insurer
without deduction or offset for any reason, including by way of
example but not limitation, any deduction or offset for compensation
claimed by Broker-Dealer.
(h) POLICY DELIVERY. Insurer will transmit Variable Contracts to
Broker-Dealer for delivery to Policyowners. Broker-Dealer hereby
agrees to deliver all such Variable Contracts to Policyowners within
ten (10) days of their receipt by Broker-Dealer from Insurer.
Broker-Dealer agrees to indemnify and hold harmless Insurer for any
and all losses caused by Broker-Dealer's failure to perform the
undertakings described in this paragraph. Broker-Dealer hereby
authorizes Insurer to set off any amount it owes Insurer under this
paragraph against any and all amounts otherwise payable to
Broker-Dealer by Insurer.
(i) FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed
pursuant to this Agreement as Insurer's agents for state insurance law
purposes or who have access to funds of Insurer, including but not
limited to funds submitted with applications for the Variable
Contracts or funds being returned to owners, are and shall be covered
by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall
be maintained by Broker-Dealer at Broker-Dealer's expense. Such bond
shall be, at least, of the form, type and amount required under the
NASD Rules of Fair Practice. Insurer may require evidence,
satisfactory to it, that such coverage is in force and Broker-Dealer
shall give prompt written notice to Insurer of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to
a deductible or otherwise, Broker-Dealer shall promptly pay Insurer
such amount on demand and Broker-Dealer hereby indemnifies and holds
harmless Insurer from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
4. DUTIES OF AGENCY
(a) SUPERVISION OF AGENTS AND REPRESENTATIVES. Agency shall have full
responsibility for the training and supervision of all Agents and
Representatives who are engaged directly or indirectly in the offer or
sale of Traditional Life Insurance Policies. Agency will cause the
Agents and Representatives to be trained in the sale of Traditional
Life Insurance Policies, will cause such Agents and Representatives to
qualify under applicable state insurance laws to engage in the sale of
life insurance before such Agents and Representatives engage in the
solicitation of applications for Traditional Life Insurance Policies;
and will cause such Agents and Representatives to limit solicitation
of applications for Traditional Life Insurance Policies to
jurisdictions where Insurer has authorized such solicitation. Agency
shall cause such Agents' and Representatives' qualifications to be
certified to the satisfaction of Insurer and shall notify Insurer if
any Agent or Representative ceases to be an employee of Agency or
ceases to maintain the proper licensing required for the sale of
Traditional Life Insurance Policies. All parties shall be liable for
their own negligence and misconduct under this paragraph.
(b) AGENT INSURANCE COMPLIANCE. Agency, prior to allowing Agents or
Representatives to solicit for sales or sell Traditional Life
Insurance Policies, shall require such agents to be validly insurance
licensed, registered and appointed by Insurer as a life insurance
agent in accordance with the jurisdictional requirements of the place
where the solicitations and sales take place as well as the solicited
person's or entity's place of residence.
Agency shall assist Insurer in the appointment of Agents and
Representatives under the applicable insurance laws to sell
Traditional Life Insurance Policies. Agency shall fulfill all Insurer
requirements in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of
Insurer. All such licensing/appointment papers shall be submitted to
Insurer or its duly appointed agent by Agency. Notwithstanding such
submission, Insurer shall have sole discretion to appoint, refuse to
appoint, discontinue, or terminate the appointment of any Agent or
Representative as an insurance agent of Insurer.
(c) SALES PROMOTION MATERIAL AND ADVERTISING. Agency shall be provided,
without any expense to Agency, such sales promotion and advertising
materials as Insurer determines is necessary or desirable for use in
connection with sales of Traditional Life Insurance Policies.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO
TRADITIONAL LIFE INSURANCE POLICIES, INCLUDING WITHOUT LIMITATION
GENERIC ADVERTISING MATERIAL WHICH DOES NOT REFER TO INSURER BY NAME,
SHALL BE USED BY AGENCY UNLESS THE SPECIFIC ITEM HAS BEEN APPROVED IN
WRITING BY INSURER PRIOR TO SUCH USE.
In addition, Agency shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless
such advertisement, circular or document shall have been approved in
writing by Insurer prior to such use.
Upon termination of this Agreement, all sales promotion material,
advertising, circulars, documents and software relating to the sales
of Traditional Life Insurance Policies shall be promptly turned over
to Insurer free from any claim or retention of rights by the Agency.
In accordance with the requirements of the laws of the several states,
Agency shall maintain complete records indicating the manner and
extent of distribution of any such solicitation material, shall make
such records and files available to staff of Insurer or its designated
agent in field inspections and shall make such material available to
personnel of state insurance departments other regulatory agencies
which have regulatory authority over Insurer. Agency holds Insurer and
its affiliates harmless from any liability arising from the use of any
material which either (a) has not been specifically approved in
writing, or (b) although previously approved, has been disapproved, in
writing, for further use.
(d) SECURING APPLICATIONS. All applications for Traditional Life Insurance
Policies shall be made on application forms supplied by Insurer and
all payments collected by Agency or any Agent, Broker-Dealer or any
Representative thereof shall be remitted promptly in full, together
with such application forms and any other required documentation,
directly to Insurer at the address indicated on such application or to
such other address as Insurer may, from time-to-time, designate in
writing. Agency shall review all such applications for accuracy and
completeness. Checks or money orders in payment on any such
Traditional Life Insurance Policy shall be drawn to the order of
ReliaStar Bankers Security Life Insurance Company." All applications
are subject to acceptance or rejection by Insurer at its sole
discretion. All records or information obtained hereunder by Agency
shall not be disclosed or used except as expressly authorized herein,
and Agency will keep such records and information confidential, to be
disclosed only as authorized or if expressly required by federal or
state regulatory authorities.
(e) COLLECTION OF PURCHASE PAYMENTS. Agency agrees that all money or other
consideration tendered with or in respect of any application for a
Traditional Life Insurance Policy and the Traditional Life Insurance
Policy when issued is the property of Insurer and shall be promptly
remitted in full to Insurer without deduction or offset for any
reason, including by way of example but not limitation, any deduction
or offset for compensation claimed by Agency.
(f) POLICY DELIVERY. Insurer may, upon written request of Agency, transmit
Traditional Life Insurance Policies to Agency or Broker-Dealer for
delivery to Policyowners. Agency and Broker-Dealer hereby agree to
deliver all such Traditional Life Insurance Policies to Policyowners
within ten (10) days of their receipt by Agency or Broker-Dealer from
Insurer. Agency and Broker-Dealer agree to indemnify and hold harmless
Insurer for any and all losses caused by Agency's or Broker-Dealer's
failure to perform the undertakings described in this paragraph.
Agency and Broker-Dealer hereby authorize Insurer to set off any
amount it owes Insurer under this paragraph against any and all
amounts otherwise payable to Agency or Broker-Dealer by Insurer.
5. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor, shall
pay a dealer concession to Broker-Dealer on all sales of Variable
Contracts through such Representatives, in accordance with the form of
Compensation Schedule A attached hereto, which is in effect when
purchase payment on such Variable Contracts are received by Insurer.
Dealer concessions will be paid as a percentage of premiums received
in cash or other legal tender and accepted by Insurer on applications
obtained by Broker-Dealer's Representatives unless otherwise indicated
in Compensation Schedule A. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to and in the name of
Broker-Dealer. Broker-Dealer agrees to hold Insurer and General
Distributor harmless from all claims of its Representatives for
compensation in respect of such Representative's sales of Variable
Contracts.
(b) TRADITIONAL LIFE INSURANCE POLICIES. Insurer shall pay commissions to
Broker-Dealer on all sales of Traditional Life Insurance Policies
through Agents and Representatives in accordance with the form of
Compensation Schedule A attached hereto, which is in effect when
purchase payments on such Traditional Life Insurance Policies are
received by Insurer. Commissions will be paid as a percentage of
premiums received in cash or other legal tender and accepted by
insurer on applications obtained by Agency's Agents or Broker-Dealer's
Representatives unless otherwise indicated in Compensation Schedule A.
Upon termination of this Agreement, all compensation payable hereunder
shall cease; however, Broker-Dealer shall continue to be liable for
any chargebacks or for any other amounts advanced by or otherwise due
Insurer hereunder.
Insurer will pay all such Compensation to and in the name of
Broker-Dealer. Agency hereby assigns to Broker-Dealer all compensation
which would otherwise be paid to Agency in respect of Representative's
and Agent's sales of Traditional Life Insurance Policies. Agency
agrees to hold Insurer harmless from all claims Agents or
Representatives have for compensation in respect of Agent's or
Representative's sales of Traditional Life Insurance Policies.
(c) COMMISSION STATEMENTS. Broker-Dealer will be provided with copies of
its Representatives' commission statements together with
Broker-Dealer's own commission statements for each commission payment
period in which commissions are payable. Broker-Dealer agrees that,
except as to clerical errors and material undisclosed facts, if any,
such statements constitutes a complete and accurate statement of the
commission account unless written notice is provided to Insurer within
120 days after the date of the statement, which notice specifically
sets forth the objections or exceptions thereto.
(d) COMPENSATION SCHEDULES. The initial Compensation Schedule A is
attached.
Insurer and General Distributor reserve the right to change, amend, or
cancel any Compensation Schedule as to business produced after such
change by mailing notice of such change in the form of a new
Compensation Schedule to Broker-Dealer. Such change shall be
effective, unless otherwise specified, ten (10) days after the notice
is mailed.
(e) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to
discontinue writing any form of policy, to take possession of and
cancel any policy and return the premium or any part of it, and to
make any compromise settlement in respect of a policy. Broker-Dealer
will not be entitled to receive or retain any compensation on premiums
or parts of premiums Insurer does not receive and retain because of
such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker-Dealer is
not entitled, any amount credited will be charged back, and if the
account balance is insufficient to cover the credited amount,
Broker-Dealer as applicable agrees to promptly repay the credited
amount.
6. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated, for failure to
perform satisfactorily or other cause, by any party immediately; and shall
be terminated if Broker-Dealer ceases to be registered as a Broker-Dealer
under the Securities Exchange Act of 1934 and a member of the NASD or, if
Agency ceases to maintain its insurance agent license(s) in good standing
in the jurisdictions in which it conducts business.
7. ARBITRATION
Any dispute, claim or controversy arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the NASD's
arbitration facilities. If the subject matter of the dispute, claim or
controversy is not within the scope of matters which may arbitrated through
the NASD arbitration facilities, then such dispute, claim or controversy
shall, upon the written request of any party, be submitted to three
arbitrators, one to be chosen by each party, and the third by the two so
chosen. If either party refuses or neglects to appoint an arbitrator within
thirty (30) days after the receipt of the written notice from the other
party requesting it to do so, the requesting party may appoint two
arbitrators. If the two arbitrators fail to agree in the selection of a
third arbitrator within thirty (30) days of their appointment, each of them
shall name two, of whom the other shall decline one and the decision shall
be made by drawing lots. All arbitrators shall be active or retired
executive officers of insurance companies not under the control of any
party to this Agreement. Each party shall submit its case to the
arbitrators within thirty (30) days of the appointment of the third
arbitrator. The arbitration shall be held in Minneapolis, Minnesota at the
times agreed upon by the arbitrators. The decision in writing of any two
arbitrators, when filed with the parties hereto shall be final and binding
on both parties. Judgment may be entered upon the final decision of the
arbitrators in any court having jurisdiction. Each party shall bear the
expense of its own arbitrator and shall jointly and equally bear with the
other party the expense of the third arbitrator and of the arbitration.
8. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor.
Insurer and General Distributor reserve the right to amend this
Agreement at any time, and the submission of an application by either
Broker-Dealer or Agency after notice of any such amendment has been
sent shall constitute Broker-Dealer's or Agency's, as applicable,
agreement to any such amendment. No additions, amendments or
modifications of this Agreement or any waiver of any provision will be
valid unless approved, in writing, by one of Insurer's duly authorized
officers. In addition, no approved waiver of any default, or failure
of performance by Broker-Dealer or Agency will affect Insurer's or
General Distributor's rights with respect to any later default or
failure of performance.
(b) INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this
Agreement. Insurer and General Distributor are independent contractors
with respect to Broker-Dealer, its Representatives, Agency and its
Agents.
(c) ASSIGNMENTS. Neither Broker-Dealer nor Agency will assign or transfer,
either wholly or partially, this Agreement or any of the benefits
accrued or to accrue under it, without the written prior consent of a
duly authorized officer of the Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker-Dealer or Agency receives or is served
with any notice or other paper concerning any legal action against
Insurer or General Distributor, Broker-Dealer or Agency agrees to
notify Insurer immediately (in any event not later than the first
business day after receipt) by telephone and transmit any papers that
are served or received by facsimile to (612) 342-7531 and by overnight
mail to Insurer's Office of General Counsel.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is
held to be invalid or in conflict with any law or regulation, the
validity of the remaining portions or provisions will not be affected,
and the parties' rights and obligations will be construed and enforced
as if this Agreement did not contain the particular part, term or
provision held to be invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that the
Agreement and all of its provisions will be governed by the laws of
the State of Minnesota.
(g) LIMITATIONS. No party other than Insurer shall have the authority on
behalf of Insurer to make, alter, or discharge any policy, contract,
or certificate issued by insurer, to waive any forfeiture or to grant,
permit, nor extend the time for making any payments nor to guarantee
earnings or rates, nor to alter the forms which Insurer may prescribe
or substitute other forms in place of those prescribed by Insurer, nor
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of Insurer, nor to open any bank
account in the full legal name of Insurer, any derivation thereof or
any tradename thereof.
9. TERRITORY
Broker-Dealer's territory is limited geographically to those jurisdictions
in which the Variable Contracts may lawfully be offered, provided that
Broker-Dealer's right to solicit sales of and to sell the Variable
Contracts in such jurisdictions is not exclusive.
Agency's territory is limited geographically to those jurisdictions in
which the Traditional Life Insurance policies may be lawfully be offered,
provided that Agency's and Broker-Dealer's right to solicit sales of and to
sell the Traditional Life Insurance Policies in such territory is not
exclusive.
10. EFFECTIVE DATE
This Agreement shall be effective ________________, 199__.
IN WITNESS WHEREOF, we set our hands this ____ day of _________________,
199__.
INSURER:
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By: ________________________________
Title: _____________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By: ________________________________
Title: _____________________________
BROKER-DEALER:
____________________________________
By: ________________________________
Title: _____________________________
AGENCY:
____________________________________
By: ________________________________
Title: _____________________________
<PAGE>
"C"
BROKER-DEALER AGENCY SELLING AGREEMENT
FOR VARIABLE CONTRACTS
This Agreement is made among the following three parties:
1. RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102
Woodbury, New York 11797
a New York domiciled stock life insurance company
(hereinafter "INSURER"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and a member
of the National Association of Securities Dealers, Inc. ("NASD")
(hereinafter "GENERAL DISTRIBUTOR"); and,
3. ------------------------------
------------------------------
Street
------------------------------
City State ZIP
registered as a broker-dealer with the SEC and a member of the
NASD and licensed as an insurance agency (hereinafter
"BROKER-DEALER").
RECITALS:
WHEREAS, Broker-Dealer is licensed as an insurance agency in order to
satisfy state insurance law requirements with respect to the sale of variable
insurance products which are registered securities with the SEC.
WHEREAS, the parties wish to enter into an agreement for the distribution
of Variable Contracts by Broker-Dealer; and
WHEREAS, Insurer has appointed General Distributor as principal underwriter
and distributor (as those terms are defined by the Investment Company Act of
1940) of the Variable Contracts and has authorized General Distributor to enter
into selling agreements with registered broker-dealers for the solicitation and
sale of Variable Contracts; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer's
registered representatives who are licensed as life insurance/variable contract
agents in appropriate jurisdictions ("Representatives") solicit and sell
Variable Contracts and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer
provide certain supervisory and administrative services as hereinafter described
with respect to the solicitation and sales of Variable Contracts.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. VARIABLE CONTRACTS
In this Agreement, the words "Variable Contract" shall mean those variable life
insurance policies and variable annuity contracts identified in Section 1 of the
Compensation Schedule attached hereto, and as may hereafter be amended.
Insurer may in its sole discretion and without notice to Broker-Dealer, suspend
sales of any Variable Contracts or amend any policies or contracts evidencing
such Variable Contracts if, in Insurer's opinion, such suspension or amendment
is: (1) necessary for compliance with federal, state, or local laws,
regulations, or administrative order(s); or, (2) necessary to prevent
administrative or financial hardship to Insurer. In all other situations,
Insurer shall provide 30 days notice to Broker-Dealer prior to suspending sales
of any Variable Contracts or amending any policies or contracts evidencing such
Variable Contracts.
Insurer may issue and propose additional or successor products, in which event
Broker-Dealer will be informed of the product and its related Commission
Schedule. If Broker-Dealer does not agree to distribute such product(s), it must
notify Insurer in writing within 30 days of receipt of the Commission Schedule
for such product(s). If Broker-Dealer does not indicate disapproval of the new
product(s) or the terms contained in the related Commission Schedule,
Broker-Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
2. AGENCY APPOINTMENT
On the effective date, Insurer and General Distributor appoint
Broker-Dealer and Broker-Dealer accepts the appointment to solicit sales of and
to sell Variable Contracts, pursuant to the terms of this Agreement.
3. DUTIES OF BROKER-DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
who are engaged directly or indirectly in the offer or sale of the
Variable Contracts, and all such persons shall be subject to the
control of Broker-Dealer with respect to such persons' securities
regulated activities in connection with the Variable Contracts.
Broker-Dealer will cause the Representatives to be trained in the sale
of the Variable Contracts, will cause such Representatives to qualify
under applicable federal and state laws to engage in the sale of the
Variable Contracts; will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in
the solicitation of applications for the Variable Contracts; and will
cause such Representatives to limit solicitation of applications for
the Variable Contracts to jurisdictions where Insurer has authorized
such solicitation. Broker-Dealer shall cause such Representatives'
qualifications to be certified to the satisfaction of General
Distributor and shall notify General Distributor if any Representative
ceases to be a registered representative of Broker-Dealer or ceases to
maintain the proper licensing required for the sale of the Variable
Contracts. All parties shall be liable for their own negligence and
misconduct under this paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts, shall require such representatives to be validly insurance
licensed, registered and appointed by Insurer as a variable
contract/life insurance agent in accordance with the jurisdictional
requirements of the place where the solicitations and sales take place
as well as the solicited person's or entity's place of residence.
Broker-Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell Variable
Contracts. Broker-Dealer shall fulfill all Insurer requirements in
conjunction with the submission of licensing/appointment papers for
all applicants as insurance agents of Insurer. All such
licensing/appointment papers shall be submitted to Insurer or its
designee by Broker-Dealer. Notwithstanding such submission, Insurer
shall have sole discretion to appoint, refuse to appoint, discontinue,
or terminate the appointment of any Representative as an insurance
agent of Insurer.
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the
requirements of the National Association of Securities Dealers, Inc.,
the Securities Exchange Act of 1934 and all other applicable federal
and state laws. In addition, Broker-Dealer will establish and maintain
such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives as
required by applicable law or regulation. Upon request by General
Distributor, Broker-Dealer shall furnish such records as may be
necessary to establish such diligent supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards
imposed by Broker-Dealer on its Representatives, Broker-Dealer shall
advise General Distributor of this fact and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Variable Contracts and Broker-Dealer shall take whatever additional
action may be necessary to terminate the sales activities of such
Representative relating to such contracts and policies.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer
shall be provided, without any expense to Broker-Dealer, with
prospectuses relating to the Variable Contracts and such other
supplementary sales material as General Distributor determines is
necessary or desirable for use in connection with sales of the
Variable Contracts.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO THE
VARIABLE CONTRACTS, INCLUDING WITHOUT LIMITATION GENERIC ADVERTISING
MATERIAL WHICH DOES NOT REFER TO INSURER BY NAME, SHALL BE USED BY
BROKER-DEALER UNLESS THE SPECIFIC ITEM HAS BEEN APPROVED IN WRITING BY
GENERAL DISTRIBUTOR PRIOR TO SUCH USE.
In addition, Broker-Dealer shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless
such advertisement, circular or document shall have been approved in
writing by Insurer prior to such use.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars, documents and software relating to
the sales of Insurer's contracts shall be promptly turned over to
Insurer free from any claim or retention of rights by the
Broker-Dealer.
Insurer represents that the prospectus and registration statement
relating to the Variable Contracts contain no untrue statements of
material fact or omission to state material fact, the omission of
which makes any statement contained in the prospectus and registration
statement misleading. Insurer agrees to indemnify Broker-Dealer from
and against any claims, liabilities and expenses which may be incurred
under the Securities Act of 1933, the Investment Company Act of 1940,
common law or otherwise arising out of a breach of the agreement in
this paragraph.
Broker-Dealer agrees to hold harmless and indemnify Insurer and
General Distributor against any and all claims, liabilities and
expenses which Insurer or General Distributor may incur from
liabilities arising out of or based upon any alleged or untrue
statement other than statements contained in the registration
statement, prospectus or approved sales material of any Variable
Contract.
In accordance with the requirements of the laws of the several states,
Broker-Dealer shall maintain complete records indicating the manner
and extent of distribution of any such solicitation material, shall
make such records and files available to staff of Insurer or its
designated agent in field inspections and shall make such material
available to personnel of state insurance departments, the NASD or
other regulatory agencies, including the SEC, which have regulatory
authority over Insurer or General Distributor. Broker-Dealer holds
Insurer, General Distributor and their affiliates harmless from any
liability arising from the use of any material which either (a) has
not been specifically approved by Insurer in writing, or (b) although
previously approved, has been disapproved, in writing, for further
use.
(f) SECURING APPLICATIONS. All applications for Variable Contracts shall
be made on application forms supplied by Insurer and all payments
collected by Broker-Dealer or any Representative thereof shall be
remitted promptly in full, together with such application forms and
any other required documentation, directly to Insurer at the address
indicated on such application or to such other address as Insurer may,
from time-to-time, designate in writing. Broker-Dealer shall review
all such applications for accuracy and completeness. Checks or money
orders in payment on any such Variable Contract shall be drawn to the
order of "ReliaStar Bankers Security Life Insurance Company." All
applications are subject to acceptance or rejection by Insurer at its
sole discretion. All records or information obtained hereunder by
Broker-Dealer shall not be disclosed or used except as expressly
authorized herein, and Broker-Dealer will keep such records and
information confidential, to be disclosed only as authorized or if
expressly required by federal or state regulatory authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker-Dealer agrees that all money
or other consideration tendered with or in respect of any application
for a Variable Contract and the Variable Contract when issued is the
property of Insurer and shall be promptly remitted in full to Insurer
without deduction or offset for any reason, including by way of
example but not limitation, any deduction or offset for compensation
claimed by Broker-Dealer.
(h) POLICY DELIVERY. Insurer will transmit Variable Contracts to
Broker-Dealer for delivery to Policyowners. Broker-Dealer hereby
agrees to deliver all such Variable Contracts to Policyowners within
ten (10) days of their receipt by Broker-Dealer from Insurer.
Broker-Dealer agrees to indemnify and hold harmless Insurer for any
and all losses caused by Broker-Dealer's failure to perform the
undertakings described in this paragraph. Broker-Dealer hereby
authorizes Insurer to set off any amount it owes Insurer under this
paragraph against any and all amounts otherwise payable to
Broker-Dealer by Insurer.
(i) FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed
pursuant to this Agreement as Insurer's agents for state insurance law
purposes or who have access to funds of Insurer, including but not
limited to funds submitted with applications for the Variable
Contracts, or funds being returned to owners, are and shall be covered
by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall
be maintained by Broker-Dealer at Broker-Dealer's expense. Such bond
shall be, at least, of the form, type and amount required under the
NASD Rules of Fair Practice. Insurer may require evidence,
satisfactory to it, that such coverage is in force and Broker-Dealer
shall give prompt written notice to Insurer of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to
a deductible or otherwise, Broker-Dealer shall promptly pay Insurer
such amount on demand and Broker-Dealer hereby indemnifies and holds
harmless Insurer from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
4. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor, shall
pay a dealer concession to Broker-Dealer on all sales of Variable
Contracts through its Representatives, in accordance with the form of
the Compensation Schedule attached hereto, which is in effect when
purchase payment on such Variable Contracts are received by Insurer.
Dealer concessions will be paid as a percentage of premiums received
in cash or other legal tender and accepted by Insurer on applications
obtained by Broker-Dealer's Representatives unless otherwise indicated
in Compensation Schedule A. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to the Broker-Dealer.
Broker-Dealer agrees to hold Insurer and General Distributor harmless
from all claims of its Representatives for compensation in respect of
Representative's sales of Variable Contracts.
(b) COMMISSION STATEMENTS. Broker-Dealer will be provided with copies of
its Representatives' commission statements together with
Broker-Dealer's own commission statement for each commission payment
period in which commissions are payable. Broker-Dealer agrees that,
except as to clerical errors and material undisclosed facts, if any,
such statements constitutes a complete and accurate statement of the
commission account unless written notice is provided to Insurer within
120 days after the date of the statement, which notice specifically
sets forth the objections or exceptions thereto.
(c) COMPENSATION SCHEDULES. The initial Compensation Schedule is attached.
Insurer and General Distributor reserve the right to change, amend, or
cancel any Compensation Schedule as to business produced after such
change by mailing notice of such change in the form of a new
Compensation Schedule to Broker-Dealer. Such change shall be
effective, unless otherwise specified, ten (10) days after the notice
is mailed.
(d) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to
discontinue writing any form of policy, to take possession of and
cancel any policy and return the premium or any part of it, and to
make any compromise settlement in respect of a policy. Broker-Dealer
will not be entitled to receive or retain any compensation on premiums
or parts of premiums Insurer does not receive and retain because of
such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker-Dealer is
not entitled, any amount credited will be charged back, and if the
account balance is insufficient to cover the credited amount,
Broker-Dealer as applicable agrees to promptly repay the credited
amount.
5. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days prior written notice; and may be terminated, for failure to perform
satisfactorily or other cause, by any party immediately; and shall be terminated
if Broker-Dealer ceases to be registered as a Broker-Dealer under the Securities
Exchange Act of 1934 and a member of the NASD or, if Broker-Dealer ceases to
maintain its insurance agent license(s) in good standing in the jurisdictions in
which it conducts business.
6. ARBITRATION
Any dispute, claim or controversy arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the NASD's arbitration
facilities. If the subject matter of the dispute, claim or controversy is not
within the scope of matters which may arbitrated through the NASD arbitration
facilities, then such dispute, claim or controversy shall, upon the written
request of any party, be submitted to three arbitrators, one to be chosen by
each party, and the third by the two so chosen. If either party refuses or
neglects to appoint an arbitrator within thirty (30) days after the receipt of
the written notice from the other party requesting it to do so, the requesting
party may appoint two arbitrators. If the two arbitrators fail to agree in the
selection of a third arbitrator within thirty (30) days of their appointment,
each of them shall name two, of whom the other shall decline one and the
decision shall be made by drawing lots. All arbitrators shall be active or
retired executive officers of insurance companies not under the control of any
party to this Agreement. Each party shall submit its case to the arbitrators
within thirty (30) days of the appointment of the third arbitrator. The
arbitration shall be held in Minneapolis, Minnesota at the times agreed upon by
the arbitrators. The decision in writing of any two arbitrators, when filed with
the parties hereto shall be final and binding on both parties. Judgment may be
entered upon the final decision of the arbitrators in any court having
jurisdiction. Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the expense of the third
arbitrator and of the arbitration.
7. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor.
Insurer and General Distributor reserve the right to amend this
Agreement at any time, and the submission of an application for the
purchase of a Variable Contract by Broker-Dealer after notice of any
such amendment has been sent shall constitute Broker-Dealer's
agreement to any such amendment. No additions, amendments or
modifications of this Agreement or any waiver of any provision will be
valid unless approved, in writing, by one of Insurer's duly authorized
officers. In addition, no approved waiver of any default, or failure
of performance by Broker-Dealer will affect Insurer's or General
Distributor's rights with respect to any later default or failure of
performance.
(b) INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this
Agreement. Insurer and General Distributor are independent contractors
with respect to Broker-Dealer and its Representatives.
(c) ASSIGNMENTS. Broker-Dealer will not assign or transfer, either wholly
or partially, this Agreement or any of the benefits accrued or to
accrue under it, without the written prior consent of a duly
authorized officer of the Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker-Dealer receives or is served with any
notice or other paper concerning any legal action against Insurer or
General Distributor, Broker-Dealer agrees to notify Insurer
immediately (in any event not later than the first business day after
receipt) by telephone and further agrees to transmit any papers that
are served or received by facsimile to (612) 342-7531 and by overnight
mail to Insurer's Office of General Counsel.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is
held to be invalid or in conflict with any law or regulation, the
validity of the remaining portions or provisions will not be affected,
and the parties' rights and obligations will be construed and enforced
as if this Agreement did not contain the particular part, term or
provision held to be invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that the
Agreement and all of its provisions will be governed by the laws of
the State of Minnesota.
(g) LIMITATIONS. No party other than Insurer shall have the authority on
behalf of Insurer to make, alter, or discharge any policy, contract,
or certificate issued by Insurer, to waive any forfeiture or to grant,
permit, nor extend the time for making any payments nor to guarantee
earnings or rates, nor to alter the forms which Insurer may prescribe
or substitute other forms in place of those prescribed by Insurer, nor
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of Insurer, nor to open any bank
account in the full legal name of Insurer, any derivation thereof or
any tradename thereof.
8. TERRITORY
Broker-Dealer's territory is limited geographically to those jurisdictions in
which the Variable Contracts may lawfully be offered, provided that
Broker-Dealer's right to solicit sales of and to sell the Variable Contracts in
such jurisdictions is not exclusive.
9. EFFECTIVE DATE
This Agreement shall be effective ________________, 199__.
IN WITNESS WHEREOF, we set our hands this ____ day of _________________,
199__.
INSURER:
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By: ________________________________
Title: _____________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By: ________________________________
Title: _____________________________
BROKER-DEALER:
____________________________________
By: ________________________________
Title: _____________________________
<PAGE>
"D"
BROKER-DEALER AGENCY SELLING AGREEMENT
FOR VARIABLE CONTRACTS
This Agreement is made among the following four parties:
1. RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102
Woodbury, New York 11797
a New York domiciled stock life insurance company
(hereinafter "INSURER"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and a
member of the National Association of Securities Dealers, Inc.
("NASD") (hereinafter "GENERAL DISTRIBUTOR"); and,
3. ------------------------------
------------------------------
Street
------------------------------
City State ZIP
registered as a broker-dealer with the SEC and a member
of the NASD (hereinafter "BROKER-DEALER"); and,
4. ------------------------------
------------------------------
Street
------------------------------
City State ZIP
an affiliate of Broker-Dealer and a licensed insurance agency
(hereinafter "AGENCY").
RECITALS:
WHEREAS, Broker-Dealer has become affiliated with Agency in order to
satisfy state insurance law requirements with respect to the sale of variable
insurance products which are registered securities with the SEC.
WHEREAS, the parties wish to enter into an agreement for the distribution
of Variable Contracts by Broker-Dealer and Agency; and
WHEREAS, Insurer has appointed General Distributor as principal underwriter
and distributor (as those terms are defined by the Investment Company Act of
1940) of the Variable Contracts and has authorized General Distributor to enter
into selling agreements with registered broker-dealers for the solicitation and
sale of Variable Contracts; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer's
registered representatives who are affiliated with Agency and who are licensed
as life insurance/variable contract agents in appropriate jurisdictions
("Representatives") solicit and sell Variable Contracts; and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer
provide certain supervisory and administrative services as hereinafter described
with respect to the solicitation and sales of Variable Contracts; and,
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. VARIABLE CONTRACTS
In this Agreement, The words "Variable Contract" shall mean those variable life
insurance policies and variable annuity contracts identified in Section 1 of the
Compensation Schedule attached hereto, and as may hereafter be amended.
Insurer may in its sole discretion and without notice to Broker-Dealer, suspend
sales of any Variable Contracts or amend any policies or contracts evidencing
such Variable Contracts if, in Insurer's opinion, such suspension or amendment
is: (1) necessary for compliance with federal, state, or local laws,
regulations, or administrative order(s); or, (2) necessary to prevent
administrative or financial hardship to Insurer. In all other situations,
Insurer shall provide 30 days notice to Broker-Dealer prior to suspending sales
of any Variable Contracts or amending any policies or contracts evidencing such
Variable Contracts.
Insurer may issue and propose additional or successor products, in which event
Broker-Dealer will be informed of the product and its related Commission
Schedule. If Broker-Dealer does not agree to distribute such product (s), it
must notify Insurer in writing within 30 days of receipt of the Commission
Schedule for such product(s). If Broker-Dealer does not indicate disapproval of
the new product(s) or the terms contained in the related Commission Schedule,
Broker-Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
2. AGENCY APPOINTMENTS
On the effective date, Insurer and General Distributor appoint Broker-Dealer and
its affiliated Agency and Broker-Dealer and Agency accept the appointment to
solicit sales of and to sell Variable Contracts only, pursuant to the terms of
this Agreement.
3. DUTIES OF BROKER-DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
who are engaged directly or indirectly in the offer or sale of the
Variable Contracts, and all such persons shall be subject to the
control of Broker-Dealer with respect to such persons' securities
regulated activities in connection with the Variable Contracts.
Broker-Dealer will cause the Representatives to be trained in the sale
of the Variable Contracts, will cause such Representatives to qualify
under applicable federal and state laws to engage in the sale of the
Variable Contracts; will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in
the solicitation of applications for the Variable Contracts; and will
cause such Representatives to limit solicitation of applications for
the Variable Contracts to jurisdictions where Insurer has authorized
such solicitation. Broker-Dealer shall cause such Representatives'
qualifications to be certified to the satisfaction of General
Distributor and shall notify General Distributor if any Representative
ceases to be a registered representative of Broker-Dealer or ceases to
maintain the proper licensing required for the sale of the Variable
Contracts. All parties shall be liable for their own negligence and
misconduct under this paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts, shall require such representatives to be validly insurance
licensed, registered and appointed by Insurer as a variable contract
agent in accordance with the jurisdictional requirements of the place
where the solicitations and sales take place as well as the solicited
person's or entity's place of residence.
Broker-Dealer and Agency shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell the
Variable Contracts. Broker-Dealer shall fulfill all Insurer
requirements in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of
Insurer. All such licensing/appointment papers shall be submitted to
Insurer or its designee by Broker-Dealer. Notwithstanding such
submission, Insurer shall have sole discretion to appoint, refuse to
appoint, discontinue, or terminate the appointment of any
Representative as an insurance agent of Insurer.
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the
requirements of the National Association of Securities Dealers, Inc.,
the Securities Exchange Act of 1934 and all other applicable federal
and state laws. In addition, Broker-Dealer will establish and maintain
such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives as
required by applicable law or regulation. Upon request by General
Distributor, Broker-Dealer shall furnish such records as may be
necessary to establish such diligent supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards
imposed by Broker-Dealer on its Representatives, Broker-Dealer shall
advise General Distributor of this fact and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Variable Contracts and Broker-Dealer shall take whatever additional
action may be necessary to terminate the sales activities of such
Representative relating to the Variable Contracts.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer
shall be provided, without any expense to Broker-Dealer, with
prospectuses relating to the Variable Contracts and such other
supplementary sales material as General Distributor determines is
necessary or desirable for use in connection with sales of the
Variable Contracts.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO THE
VARIABLE CONTRACTS, INCLUDING WITHOUT LIMITATION GENERIC ADVERTISING
MATERIAL WHICH DOES NOT REFER TO INSURER BY NAME, SHALL BE USED BY
BROKER-DEALER OR AGENCY UNLESS THE SPECIFIC ITEM HAS BEEN APPROVED IN
WRITING BY GENERAL DISTRIBUTOR PRIOR TO SUCH USE.
In addition, neither Broker-Dealer nor Agency shall print, publish or
distribute any advertisement, circular or any document relating to
Insurer unless such advertisement, circular or document shall have
been approved in writing by Insurer prior to such use.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars, documents and software relating to
the sales of the Variable Contracts shall be promptly turned over to
Insurer free from any claim or retention of rights by the
Broker-Dealer or Agency.
Insurer represents that the prospectus and registration statement
relating to the Variable Contracts contain no untrue statements of
material fact or omission to state material fact, the omission of
which makes any statement contained in the prospectus and registration
statement misleading. Insurer agrees to indemnify Broker-Dealer from
and against any claims, liabilities and expenses which may be incurred
under the Securities Act of 1933, the Investment Company Act of 1940,
common law or otherwise arising out of a breach of the agreement in
this paragraph.
Broker-Dealer and Agency agree to hold harmless and indemnify Insurer
and General Distributor against any and all claims, liabilities and
expenses which Insurer or General Distributor may incur from
liabilities arising out of or based upon any alleged or untrue
statement other than statements contained in the registration
statement, prospectus or approved sales material of any Variable
Contract.
In accordance with the requirements of the laws of the several states,
Broker-Dealer and Agency shall maintain complete records indicating
the manner and extent of distribution of any such solicitation
material, shall make such records and files available to staff of
Insurer or its designated agent in field inspections and shall make
such material available to personnel of state insurance departments,
the NASD or other regulatory agencies, including the SEC, which have
regulatory authority over Insurer or General Distributor.
Broker-Dealer and Agency, jointly and severally hold Insurer, General
Distributor and their affiliates harmless from any liability arising
from the use of any material which either (a) has not been
specifically approved in writing, or (b) although previously approved,
has been disapproved, in writing, for further use.
(f) SECURING APPLICATIONS. All applications for Variable Contracts shall
be made on application forms supplied by Insurer and all payments
collected by Broker-Dealer or any Representative thereof shall be
remitted promptly in full, together with such application forms and
any other required documentation, directly to Insurer at the address
indicated on such application or to such other address as Insurer may,
from time-to-time, designate in writing. Broker-Dealer shall review
all such applications for accuracy and completeness. Checks or money
orders in payment on any such Variable Contract shall be drawn to the
order of "ReliaStar Bankers Security Life Insurance Company." All
applications are subject to acceptance or rejection by Insurer at its
sole discretion. All records or information obtained hereunder by
Broker-Dealer shall not be disclosed or used except as expressly
authorized herein, and Broker-Dealer will keep such records and
information confidential, to be disclosed only as authorized or if
expressly required by federal or state regulatory authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker-Dealer agrees that all money
or other consideration tendered with or in respect of any application
for a Variable Contract and the Variable Contract when issued is the
property of Insurer and shall be promptly remitted in full to Insurer
without deduction or offset for any reason, including by way of
example but not limitation, any deduction or offset for compensation
claimed by Broker-Dealer.
(h) POLICY DELIVERY. Insurer will transmit Variable Contracts to
Broker-Dealer for delivery to Policyowners. Broker-Dealer hereby
agrees to deliver all such Variable Contracts to Policyowners within
ten (10) days of their receipt by Broker-Dealer from Insurer.
Broker-Dealer agrees to indemnify and hold harmless Insurer for any
and all losses caused by Broker-Dealer's failure to perform the
undertakings described in this paragraph. Broker-Dealer hereby
authorizes Insurer to set off any amount it owes Insurer under this
paragraph against any and all amounts otherwise payable to
Broker-Dealer by Insurer.
(i) FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed
pursuant to this Agreement as Insurer's agents for state insurance law
purposes or who have access to funds of Insurer, including but not
limited to funds submitted with applications for the Variable
Contracts or funds being returned to owners, are and shall be covered
by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall
be maintained by Broker-Dealer at Broker-Dealer's expense. Such bond
shall be, at least, of the form, type and amount required under the
NASD Rules of Fair Practice. Insurer may require evidence,
satisfactory to it, that such coverage is in force and Broker-Dealer
shall give prompt written notice to Insurer of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to
a deductible or otherwise, Broker-Dealer shall promptly pay Insurer
such amount on demand and Broker-Dealer hereby indemnifies and holds
harmless Insurer from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
4. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor, shall
pay a dealer concession to Broker-Dealer on all sales of Variable
Contracts through such Representatives, in accordance with the form of
the Compensation Schedule attached hereto, which is in effect when
purchase payment on such Variable Contracts are received by Insurer.
Dealer concessions will be paid as a percentage of premiums received
in cash or other legal tender and accepted by Insurer on applications
obtained by Broker-Dealer's Representatives unless otherwise indicated
in Compensation Schedule A. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to and in the name of
Broker-Dealer or its affiliated Agency. Broker-Dealer agrees to hold
Insurer and General Distributor harmless from all claims of its
Representatives for compensation in respect of such Representative's
sales of Variable Contracts.
(b) COMMISSION STATEMENTS. Broker-Dealer will be provided with copies of
its Representatives' commission statements together with
Broker-Dealer's own commission statements for each commission payment
period in which commissions are payable. Broker-Dealer agrees that,
except as to clerical errors and material undisclosed facts, if any,
such statements constitutes a complete and accurate statement of the
commission account unless written notice is provided to Insurer within
120 days after the date of the statement, which notice specifically
sets forth the objections or exceptions thereto.
(c) COMPENSATION SCHEDULES. The initial Compensation Schedule is attached.
Insurer and General Distributor reserve the right to change, amend, or
cancel any Compensation Schedule as to business produced after such
change by mailing notice of such change in the form of a new
Compensation Schedule to Broker-Dealer. Such change shall be
effective, unless otherwise specified, ten (10) days after the notice
is mailed.
(d) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to
discontinue writing any form of policy, to take possession of and
cancel any policy and return the premium or any part of it, and to
make any compromise settlement in respect of a policy. Broker-Dealer
will not be entitled to receive or retain any compensation on premiums
or parts of premiums Insurer does not receive and retain because of
such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker-Dealer is
not entitled, any amount credited will be charged back, and if the
account balance is insufficient to cover the credited amount,
Broker-Dealer as applicable agrees to promptly repay the credited
amount.
5. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days prior written notice; and may be terminated, for failure to perform
satisfactorily or other cause, by any party immediately; and shall be terminated
if Broker-Dealer ceases to be registered as a Broker-Dealer under the Securities
Exchange Act of 1934 and a member of the NASD or, if Agency ceases to maintain
its insurance agent license(s) in good standing in the jurisdictions in which it
conducts business.
6. ARBITRATION
Any dispute, claim or controversy arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the NASD's arbitration
facilities. If the subject matter of the dispute, claim or controversy is not
within the scope of matters which may arbitrated through the NASD arbitration
facilities, then such dispute, claim or controversy shall, upon the written
request of any party, be submitted to three arbitrators, one to be chosen by
each party, and the third by the two so chosen. If either party refuses or
neglects to appoint an arbitrator within thirty (30) days after the receipt of
the written notice from the other party requesting it to do so, the requesting
party may appoint two arbitrators. If the two arbitrators fail to agree in the
selection of a third arbitrator within thirty (30) days of their appointment,
each of them shall name two, of whom the other shall decline one and the
decision shall be made by drawing lots. All arbitrators shall be active or
retired executive officers of insurance companies not under the control of any
party to this Agreement. Each party shall submit its case to the arbitrators
within thirty (30) days of the appointment of the third arbitrator. The
arbitration shall be held in Minneapolis, Minnesota at the times agreed upon by
the arbitrators. The decision in writing of any two arbitrators, when filed with
the parties hereto shall be final and binding on both parties. Judgment may be
entered upon the final decision of the arbitrators in any court having
jurisdiction. Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the expense of the third
arbitrator and of the arbitration.
7. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor.
Insurer and General Distributor reserve the right to amend this
Agreement at any time, and the submission of an application for the
purchase of a Variable Contract by either Broker-Dealer or Agency
after notice of any such amendment has been sent shall constitute
Broker-Dealer's or Agency's, as applicable, agreement to any such
amendment. No additions, amendments or modifications of this Agreement
or any waiver of any provision will be valid unless approved, in
writing, by one of Insurer's duly authorized officers. In addition, no
approved waiver of any default, or failure of performance by
Broker-Dealer or Agency will affect Insurer's or General Distributor's
rights with respect to any later default or failure of performance.
(b) INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this
Agreement. Insurer and General Distributor are independent contractors
with respect to Broker-Dealer, its Representatives, Agency and its
Agents.
(c) ASSIGNMENTS. Neither Broker-Dealer nor Agency will assign or transfer,
either wholly or partially, this Agreement or any of the benefits
accrued or to accrue under it, without the written prior consent of a
duly authorized officer of the Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker-Dealer or Agency receives or is served
with any notice or other paper concerning any legal action against
Insurer or General Distributor, Broker-Dealer or Agency agrees to
notify Insurer immediately (in any event not later than the first
business day after receipt) by telephone and transmit any papers that
are served or received by facsimile to (612) 342-7531 and by overnight
mail to Insurer's Office of General Counsel.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is
held to be invalid or in conflict with any law or regulation, the
validity of the remaining portions or provisions will not be affected,
and the parties' rights and obligations will be construed and enforced
as if this Agreement did not contain the particular part, term or
provision held to be invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that the
Agreement and all of its provisions will be governed by the laws of
the State of Minnesota.
(g) LIMITATIONS. No party other than Insurer shall have the authority on
behalf of Insurer to make, alter, or discharge any policy, contract,
or certificate issued by insurer, to waive any forfeiture or to grant,
permit, nor extend the time for making any payments nor to guarantee
earnings or rates, nor to alter the forms which Insurer may prescribe
or substitute other forms in place of those prescribed by Insurer, nor
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of Insurer, nor to open any bank
account in the full legal name of Insurer, any derivation thereof or
any tradename thereof.
8. TERRITORY
Broker-Dealer's territory is limited geographically to those jurisdictions in
which the Variable Contracts may lawfully be offered, provided that
Broker-Dealer's right to solicit sales of and to sell the Variable Contracts in
such jurisdictions is not exclusive.
9. EFFECTIVE DATE
This Agreement shall be effective ________________, 199__.
IN WITNESS WHEREOF, we set our hands this ____ day of _________________,
199__.
INSURER:
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By: ________________________________
Title: _____________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By: ________________________________
Title: _____________________________
BROKER-DEALER:
____________________________________
By: ________________________________
Title: _____________________________
AGENCY:
_____________________________________
By: _________________________________
Title: ______________________________
<PAGE>
BROKER/DEALER AGENCY COMPENSATION SCHEDULE
FOR RELIASTAR BANKERS SECURITY VARIABLE CONTRACTS
I
EFFECTIVE _____________
This Compensation Schedule shall be used to determine compensation payable to
the Broker/Dealer under the Broker-Dealer Agency Selling Agreement for Variable
Contracts through Broker-Dealer from the Effective Date of this Schedule until
it is suspended, canceled, changed or replaced.
This Schedule is applicable to the following Variable Contracts:
1. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY 85-251 AND STATE
EXCEPTIONS
Broker-Dealer shall be paid a total dealer concession according to the following
schedule:
ISSUE AGES 0 - 65 ISSUE AGES 66-75
----------------- ----------------
1st Year 90.00% 81.00%
Excess Premium
(1st Year) 3.60% 3.60%
Basic Renewal and
Lifetime Renewal
Commissions 3.60% 3.60%
II
GENERAL RULES PERTAINING TO VARIABLE CONTRACTS
1. CHANGE OF DEALER AUTHORIZATION. No compensation of any kind shall be
payable in respect of Variable Contracts following Insurer's or General
Distributor's receipt of a change of dealer authorization applicable to
such Variable contract.
2. CHANGE IN REPRESENTATIVE'S STATUS. Broker-Dealer agrees that in the event a
Representative ceases to be an associated person of Broker-Dealer or ceases
to be validly licensed or registered, Broker- Dealer shall not receive any
compensation based on any Variable Contract, its values or on premiums or
purchase payments thereafter received by ReliaStar Bankers Security Life
Insurance Company and/or WSSI from such former Representative's customers.
Provided, however, if within 60 days after such Representative ceases to be
a representative of Broker-Dealer, Broker-Dealer designates another
registered representative of Broker-Dealer to service the former
Representative's business, the compensation not paid shall be payable to
Broker-Dealer. If an assigned Representative's replacement is not
designated within such 60 day period, Broker-Dealer may not thereafter
designate a replacement Representative for such Variable contracts and
shall not be entitled to such compensation.
3. EXCLUSIVE COMPENSATION. Broker-Dealer agrees that no compensation of any
kind other than as described herein is payable by Insurer or General
Distributor in respect of Broker-Dealer's sales of Variable Contracts.
4. VESTING. First year commissions and Basic Renewal commissions in respect of
Variable Contracts issued after the effective date and prior to the
termination date of Broker-Dealer's appointment are vested in Broker-Dealer
and will be paid to Broker-Dealer as and when the related premium is
received by the issuer and applied to the Variable Contract issued, and
provided, however, that no First Year commissions or Basic Renewal
Commissions (Policy years 2 through 10), including those on cost of living
or any other policy increases, will be paid after Broker-Dealer's
appointment has been terminated for more than ten years.
5. REPLACEMENT BUSINESS. If any policy is issued to replace a policy
previously issued by Insurer or an affiliate, commissions will accrue only
if and to the extent that Insurer's established practices provide for
commissions on such replacements.
6. COMMISSIONS. Commissions shall accrue on Variable Contracts Issued as and
when premiums are received by Insurer and applied as premiums due or
payable on such policies, except as Insurer's practices may otherwise
provide.
7. CHARGE-BACKS. In any case, where Insurer has credited a commission to
Broker-Dealer on the basis of a premium on a Variable Contract issued and
the premium is returned to the purchaser Insurer will charge back such
commissions.
8. ADDITIONAL BENEFITS AND RIDERS. Commissions will be credited based on
premiums for additional benefits (for example, waiver of premium and term
riders) added at issue of a policy at the same rate as applied to the base
policy premium.
FLEXIBLE PREMIUM
VARIABLE LIFE
INSURANCE POLICY
- -------------------------------------------------
Variable and/or Fixed
Accumulation Values
Flexible Premiums Payable to the
Insured's Age 95
Adjustable Face Amount
Death Benefit Guarantee
Death Benefit Options
Nonparticipating
- --------------------------------------------------
NOTICE
Right to Return Policy
Please read this policy carefully. If for any reason you do not want it, you may
return it for a refund of all premiums paid.
You must return this policy to us or your agent by midnight of the 20th day
after you receive it.
We will then consider this policy void from the start and refund to you all
premiums paid.
We will pay the proceeds according to the Death Benefits portion of the Summary
of Benefits on page 3, if we receive written proof that the insured died while
this policy was in force. This policy also provides other benefits and rights.
We issue this policy in consideration of the application and payment of the
initial premium.
THE AMOUNT OF THE PROCEEDS PAYABLE AT THE INSURED'S DEATH WILL BE AT LEAST EQUAL
TO THE FACE AMOUNT OF THE POLICY AS LONG AS THIS POLICY IS IN FORCE AND THERE IS
NO LOAN AMOUNT OR UNPAID MONTHLY DEDUCTIONS.
THE PERIOD OF TIME THIS LIFE INSURANCE STAYS IN FORCE WILL VARY DEPENDING ON THE
INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNT, INTEREST CREDITED TO THE NET
PREMIUMS ALLOCATED TO THE FIXED ACCOUNT, THE AMOUNT OF PREMIUMS YOU PAY, ANY
PARTIAL WITHDRAWALS, LOANS, AND CHARGES MADE AGAINST THIS POLICY. IF YOU PAY
PREMIUMS SUFFICIENT TO MAINTAIN THE DEATH BENEFIT GUARANTEE, WE GUARANTEE THIS
POLICY WILL STAY IN FORCE DURING THE DEATH BENEFIT GUARANTEE PERIOD SHOWN ON THE
POLICY DATA PAGE.
THE VARIABLE ACCUMULATION VALUE WILL INCREASE OR DECREASE REFLECTING THE
INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNT.
RELIASTAR
RELIASTAR BANKERS SECURITY Executed at our Home Office
LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102 John H. Flittie President
P. O. Box 9004 /s/ John H. Flittie
Woodbury, New York 11797
Susan M. Bergen Secretary
/s/ Susan M. Bergen
Page 1 85-251
<PAGE>
INDEX
PAGE
Accumulation Value .................................. 9
Age and Sex .........................................23
Allocation of Premiums .............................. 7
Amendment ...........................................24
Annual Statement ....................................24
Beneficiary .........................................17
Cash Surrender Value ................................14
Cash Value ..........................................14
Changes in Face Amount .............................. 6
Changes in Death Benefit Option ..................... 7
Claims ..............................................25
Control of Policy ...................................17
Conversion Right ....................................23
Death Benefit ....................................... 5
Definitions ......................................... 3
Death Benefit Guarantee ............................. 8
Fixed Accumulation Value ............................ 9
General Provisions ..................................21
Grace Period ........................................ 9
Incontestability ....................................23
Insured ............................................. 1
Monthly Deduction ...................................11
Net Premium ......................................... 7
Nonforfeiture Provisions ............................13
Ownership ...........................................17
Partial Withdrawal ..................................15
Payment of Proceeds .................................22
Policy Data Page .................................... A
Policy Loans ........................................15
Premiums ............................................ 7
Right to Return Policy .............................. 1
Reinstatement ....................................... 9
Settlement Options ..................................18
Suicide .............................................23
Summary of Benefits ................................. 3
Termination .........................................23
Transfers ...........................................13
Variable Accumulation Value .........................10
Voting of Mutual Fund Shares ........................21
Additional benefits and restrictions, if any, are listed on the Policy
Data Page.
Page 2 5245
<PAGE>
POLICY DATA PAGE
TABLE OF MONTHLY GUARANTEED COST
OF INSURANCE RATES PER $1,000
MALE - NONSMOKER
ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE
20 .14013 45 .28804 70 3.09817
21 .13846 46 .31147 71 3.44161
22 .13596 47 .33657 72 3.83999
23 .13262 48 .36420 73 4.29329
24 .12928 49 .39435 74 4.79447
25 .12511 50 .42870 75 5.33374
26 .12260 51 .46809 76 5.90739
27 .12093 52 .51338 77 6.51160
28 .12010 53 .56541 78 7.15074
29 .12010 54 .62336 79 7.84590
30 .12093 55 .68807 80 8.62093
31 .12344 56 .75873 81 9.49889
32 .12678 57 .83367 82 10.50136
33 .13178 58 .91712 83 11.62822
34 .13763 59 1.01078 84 12.86210
35 .14431 60 1.11555 85 14.17886
36 .15182 61 1.23232 86 15.56507
37 .16184 62 1.36708 87 17.00226
38 .17270 63 1.51991 88 18.48644
39 .18439 64 1.69009 89 20.04132
40 .19859 65 1.87687 90 21.69371
41 .21363 66 2.07951 91 23.48857
42 .22951 67 2.29213 92 25.50430
43 .24707 68 2.53461 93 27.96193
44 .26630 69 2.79859 94 31.38386
83-702
<PAGE>
POLICY DATA PAGE
TABLE OF MONTHLY GUARANTEED COST
OF INSURANCE RATES PER $1,000
MALE - STANDARD
ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE
0 .21948 35 .22701 70 4.87787
1 .08589 36 .24372 71 5.31499
2 .08255 37 .26463 72 5.81208
3 .08088 38 .28804 73 6.36667
4 .07754 39 .31481 74 6.97905
5 .07337 40 .34578 75 7.63863
6 .06920 41 .37927 76 8.31871
7 .06503 42 .41613 77 9.00762
8 .06253 43 .45133 78 9.71026
9 .06170 44 .50080 79 10.45174
10 .06253 45 .54778 80 11.25817
11 .06753 46 .59648 81 12.15491
12 .07671 47 .64940 82 13.16081
13 .08922 48 .70657 83 14.26297
14 .10341 49 .76883 84 15.42768
15 .11842 50 .83788 85 16.61725
16 .13261 51 .91627 86 17.80318
17 .14347 52 1.00487 87 19.03928
18 .15182 53 1.10541 88 20.34824
19 .15683 54 1.21539 89 21.01372
20 .19358 55 1.33315 90 23.03012
21 .19358 56 1.45789 91 24.46831
22 .19024 57 1.58964 92 26.16956
23 .18690 58 1.72843 93 28.40686
24 .18189 59 1.87260 94 31.56339
25 .17604 60 2.04442
26 .17270 61 2.23291
27 .17103 62 2.44595
28 .17103 63 2.68460
29 .17353 64 2.94650
30 .17771 65 3.22493
31 .18356 66 3.51222
32 .19108 67 3.82160
33 .20110 68 4.14189
34 .21280 69 4.49090
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POLICY DATA PAGE
TABLE OF MONTHLY GUARANTEED COST
OF INSURANCE RATES PER $1,000
FEMALE - NONSMOKER
ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE
20 .08422 45 .25794 70 1.87772
21 .08589 46 .27550 71 2.08208
22 .08672 47 .29474 72 2.33335
23 .08839 48 .31481 73 2.63543
24 .09006 49 .33741 74 2.98461
25 .09173 50 .36252 75 3.37628
26 .09423 51 .39016 76 3.80234
27 .09590 52 .42199 77 4.26157
28 .09840 53 .45719 78 4.76166
29 .10174 54 .49325 79 5.31946
30 .10424 55 .53184 80 5.95868
31 .10758 56 .57045 81 6.70043
32 .11092 57 .60824 82 7.56415
33 .11509 58 .64604 83 8.55015
34 .12010 59 .68891 84 9.65170
35 .12594 60 .73938 85 10.86110
36 .13429 61 .80167 86 12.17441
37 .14431 62 .87918 87 13.59464
38 .15516 63 .97448 88 15.12828
39 .16685 64 1.08174 89 16.79399
40 .18105 65 1.19761 90 18.61343
41 .19609 66 1.31789 91 20.64005
42 .21113 67 1.44091 92 22.96852
43 .22617 68 1.56838 93 25.79734
44 .24122 69 1.71054 94 29.58621
83-704
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POLICY DATA PAGE
TABLE OF MONTHLY GUARANTEED COST
OF INSURANCE RATES PER $1,000
FEMALE - STANDARD
ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE
0 .15683 35 .16769 70 2.47090
1 .07004 36 .18189 71 2.71222
2 .06670 37 .19859 72 3.00887
3 .06503 38 .21781 73 3.36322
4 .06420 39 .23871 74 3.76908
5 .06253 40 .26379 75 4.21491
6 .06086 41 .29055 76 4.69167
7 .05919 42 .31733 77 5.19278
8 .05836 43 .34411 78 5.72587
9 .05753 44 .37090 79 6.31058
10 .05669 45 .39937 80 6.97084
11 .05836 46 .42870 81 7.72700
12 .06086 47 .45887 82 8.59578
13 .06420 48 .49157 83 9.61111
14 .06837 49 .52764 84 10.72696
15 .07253 50 .56625 85 11.93000
16 .07670 51 .60740 86 13.21417
17 .08004 52 .65445 87 14.57012
18 .08338 53 .70657 88 16.00842
19 .08588 54 .75958 89 17.53216
20 .09757 55 .81430 90 19.25682
21 .09924 56 .86822 91 21.15691
22 .10174 57 .91880 92 23.31971
23 .10424 58 .96858 93 25.93788
24 .10675 59 1.02176 94 29.58621
25 .10925 60 1.08512
26 .11342 61 1.16461
27 .11676 62 1.26705
28 .12093 63 1.39168
29 .12594 64 1.53097
30 .13178 65 1.67817
31 .13679 66 1.82821
32 .14264 67 1.97342
33 .15015 68 2.12062
34 .15850 69 2.28097
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SUMMARY OF BENEFITS
LIVING BENEFITS
While the insured is alive, subject to this policy's provisions, you may:
1.
Change the amount and frequency of your premium payments;
2.
Change the allocation of your premiums;
3.
Change the Face Amount;
4.
Change the Death Benefit Option;
5.
Make transfers between accounts;
6.
Surrender this policy for its Cash Surrender Value;
7.
Make a Partial Withdrawal;
8.
Take a Policy Loan;
9.
Assign this policy as collateral;
10.
Change the beneficiary;
11.
Transfer ownership; and
12.
Exercise any other rights this policy allows.
DEATH BENEFITS
At the insured's death, the proceeds payable include the Death Benefit then in
force:
Plus any additional amounts provided by rider;
Plus a refund of any policy loan interest we have charged but not earned;
Minus any Loan Amount; and
Minus any unpaid Monthly Deductions.
THE CONTRACT
This policy is a legal contract. Read your policy carefully! You rely on us to
provide its benefits; we rely on you to pay its premiums. The entire contract is
this policy and all applications, Policy Data Pages, riders, and amendments
attached at time of issue or agreed upon later.
Unless fraudulent, all statements made by or on behalf of anyone covered by this
policy are representations and not warranties. No statement can be used to
cancel this policy or can be used in our defense if we refuse to pay a claim,
unless it is found in an application, rider, or amendment.
CHANGES
Policy changes must be in writing and signed by our President or Secretary, or
one of our Vice Presidents or Assistant Secretaries. No agent or any other
person may alter or change the terms and conditions of this policy.
GENERAL DEFINITIONS
IN FORCE
This policy is in effect.
THE INSURED
The person upon whose life this policy is issued. The Policy Data Page lists the
insured.
PROCEEDS
The amount we pay when the insured dies or when this policy is surrendered.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
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GENERAL DEFINITIONS (CONTINUED)
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office.
The form and content of the request or notice must be acceptable to us.
YOU, YOUR
The owner of this policy, as shown on the Policy Data Page, unless changed as
allowed in this policy. The insured owns this policy unless another owner is
named.
POLICY DEFINITIONS
ACCUMULATION UNIT
A unit of measure used to determine the Variable Accumulation Value.
ACCUMULATION VALUE
The total amount that this policy provides for investment at any time. The
Accumulation Value is the total of the Fixed Accumulation Value and the Variable
Accumulation Value.
AGE 65, 75, AND 95
The policy anniversary on or next following the insured's 65th, 75th, and 95th
birthdays, respectively.
CASH VALUE
The Accumulation Value minus any Surrender Charge.
CASH SURRENDER VALUE
The amount payable to you if you surrender this policy. It is the Cash Value
minus any Loan Amount and unpaid Monthly Deductions.
THE CODE
The Internal Revenue Code of 1986, as amended.
FACE AMOUNT
The minimum Death Benefit payable as long as this policy is in force. The
initial Face Amount is shown on the Policy Data Page. You may change the Face
Amount as described in this policy.
FIXED ACCOUNT
All our assets other than those allocated to the Variable Account or any other
separate account. We have complete ownership and control of the assets in the
Fixed Account.
LOAN AMOUNT
The sum of all unpaid policy loans, including preferred loans.
MONTHLY ANNIVERSARY
Whenever your Monthly Anniversary falls on a date other than a Valuation Date,
the Monthly Anniversary will be the next Valuation Date. The first Monthly
Anniversary is on the Policy Date.
POLICY DATE
The Policy Date is shown on the Policy Data Page. We use the Policy Date to
determine policy years, policy months, Monthly Anniversaries, and policy
anniversaries.
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POLICY DEFINITIONS (CONTINUED)
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-account invests exclusively in
the shares of one of the mutual funds shown on the Policy Data Page, or added
later.
VALUATION DATE
The close of business each day that the New York Stock Exchange is open for
trading and valuations have not been suspended by the Securities and Exchange
Commission. We may also declare a Valuation Date on any other day on which there
is sufficient trading in the mutual funds' portfolio to materially affect the
Accumulation Unit Value in the corresponding Sub-account.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
ReliaStar Bankers Security Variable Life Separate Account I, a separate
investment account of ours. The Variable Account is used only to receive and
invest Net Premiums paid under our variable life insurance policies. The assets
of the Variable Account will be valued on each Valuation Date. We have complete
ownership and control of the assets in the Variable Account.
Assets of the Variable Account equal to its liabilities will not be charged with
liabilities arising out of any other business we conduct. However, we may
transfer any assets which exceed the liabilities of the Variable Account to our
Fixed Account.
The Variable Account is treated as a unit investment trust under federal
securities laws. It is registered with the Securities and Exchange Commission
according to the Investment Company Act of 1940. It was established under the
insurance laws of the State of New York. Any change in the investment policy of
the Variable Account must be approved by the Department of Insurance of the
State of New York according to the approval process on file with the State.
DEATH BENEFIT
This policy has two Death Benefit Options. The Death Benefit Option in effect on
the Policy Date is shown on the Policy Data Page. All values are determined as
of the Valuation Date on or next following the date of the insured's death. The
two Death Benefit Options are:
OPTION A (LEVEL AMOUNT OPTION) -The Death Benefit is the greater of:
1.
The Face Amount; or
2.
The Accumulation Value multiplied by the Corridor Percentage, according to the
insured's attained age, as shown on the Policy Data Page.
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DEATH BENEFIT (CONTINUED)
OPTION B (VARIABLE AMOUNT OPTION) -The Death Benefit is the greater of:
1.
The Face Amount plus the Accumulation Value; or
2.
The Accumulation Value multiplied by the Corridor Percentage, according to the
insured's attained age, as shown on the Policy Data Page.
On or after the anniversary after the insured's Age 95, the Death Benefit is
equal to the Accumulation Value.
REQUESTED CHANGES IN FACE AMOUNT
After the second policy year, you may request an increase or decrease in your
Face Amount by notifying us in writing. Changes in Death Benefit Option also
change the Face Amount. (See Changes in Death Benefit Option.)
INCREASES
Increases in Face Amount must be at least $5,000. You cannot increase the Face
amount after the insured's Age 75.
We may require written proof that the insured is still insurable before making
an increase. An approved increase goes into effect on the Monthly Anniversary on
or next following the date of the approval. At least two years must lapse
between increases.
An increase is subject to a free look period during which you have the right to
request us to cancel the increase and receive a refund. The request must be made
by midnight of the 20th day after you receive the new Policy Data Page for the
increase.
If you cancel an increase during this period, we will restore the Accumulation
Value by refunding the amount of any deductions and charges associated with the
increase, or, upon request, you can receive that amount in cash.
DECREASES
You cannot decrease the Face Amount below the Minimum Face Amount shown on the
Policy Data Page. If, following a requested decrease in Face Amount, this Policy
would no longer qualify as life insurance under federal tax law, we will limit
the decrease to an amount that would maintain that qualification.
Changes go into effect on the Monthly Anniversary on or next following the date
we receive your request. At least six months must elapse between decreases.
For the purpose of determining the cost of insurance when more than one Rate
Class applies to the current Face Amount, the Face Amount will be reduced in the
following order:
1.
The Face Amount provided by the most recent increase;
2.
The next most recent increases successively; and
3.
The initial Face Amount.
EFFECT OF REQUESTED CHANGES IN FACE AMOUNT
A change in Face Amount will affect the Monthly Deduction because the cost of
insurance and the Monthly Expense Charge are based on the Face Amount. The cost
of certain rider benefits may also be affected.
If the Death Benefit Guarantee is in effect, we will calculate a new Minimum
Monthly Premium for the Death Benefit Guarantee from the effective date of the
change in Face Amount. Additional premium payments may be required to maintain
the Death Benefit Guarantee. A decrease in Face Amount will reduce the Minimum
Monthly Premium. We will send you a new Policy Data Page with the new Minimum
Monthly Premium.
An increase in Face Amount will increase Surrender Charges. We will send you a
new Policy Data Page showing the amount and duration of the new Surrender
Charges. Decreases in Face Amount do not reduce the Surrender Charge.
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<PAGE>
CHANGES IN DEATH BENEFIT OPTION
You may request in writing to change the Death Benefit Option. A change in Death
Benefit Option will also change the Face Amount. If you change from Option A
(Level Amount Option) to Option B (Variable Amount Option), the Face Amount is
decreased by an amount equal to the Accumulation Value on the effective date of
the change. The change is effective on the Monthly Anniversary on or next
following the date we receive your request. You cannot change the Death Benefit
Option if the resulting Face Amount would fall below the Minimum Face Amount
shown on the Policy Data Page.
If you change from Option B (Variable Amount Option) to Option A (Level Amount
Option), the Face Amount is increased by an amount equal to the Accumulation
Value on the effective date of the change. The change is effective on the
Monthly Anniversary on or next following the date we receive your request. We do
not require proof of insurability for this increase.
A change in Face Amount due to a change in Death Benefit Option will affect the
Monthly Deduction because the cost of insurance and the Monthly Expense Charge
depend on the Face Amount. The cost of certain rider benefits may also be
affected.
The Surrender Charges will not be affected by a change in the Death Benefit
Option.
PREMIUMS
There is no insurance under this policy until the initial premium is paid. The
initial premium is shown on the Policy Data Page. All premiums are payable in
advance of the period to which they apply.
NET PREMIUM
When you pay a premium, we deduct the Premium Expense Charge. The Premium
Expense Charge is equal to 1 plus 2 (1 + 2), where:
1.
Is the premium multiplied by the Percent of Premium Charge shown on the Policy
Data Page; and
2.
Is the Premium Processing Charge. The Premium Processing Charge is subject to
change, but will not exceed the Maximum Premium Processing Charge shown on the
Policy Data Page.
The amount remaining after we have deducted the Premium Expense Charge from a
premium is the Net Premium. The Net Premium is credited to the Fixed Account and
the Sub-accounts of the Variable Account according to your allocation.
The portion of the Net Premium allocated to the Fixed Account earns interest as
described in the Fixed Accumulation Value provision of the policy.
The portion of the Net Premium allocated to a Sub-account is invested at net
asset value in shares of a specified mutual fund. As of the Policy Date, the
mutual funds in which the Sub-accounts invest are listed on the Policy Data
Page. A Sub-account may be added later or deleted according to the "Substitution
of Mutual Fund Shares" provision of this policy.
ALLOCATION OF PREMIUMS
The initial allocation of premiums to the Fixed Account and the Sub-accounts of
the Variable Account is specified on the application for this policy, and is
shown on the Policy Data Page. You may change the allocation at any time by
notifying us in writing. Changes will not be effective until the date we receive
your notice, and will only affect premiums we receive on or after that date. You
may allocate 100% to any account or divide your allocation in whole percentage
points totaling 100%.
85-254 7
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PREMIUMS (CONTINUED)
AMOUNT AND TIMING OF PREMIUM PAYMENTS
The amount and frequency of premium payments will affect the Accumulation Value,
the Cash Surrender Value, and how long the life insurance provided by this
policy will remain in force.
After the initial premium you may determine the amount and timing of premium
payments, within the following restrictions:
1.
We may require proof which satisfies us that the insured is still insurable if
any premium, planned or unscheduled, would increase the difference between the
Death Benefit and the Accumulation Value;
2.
We reserve the right to refuse to accept any premium which would disqualify your
policy for favorable tax treatment under the Code. If premiums paid during any
Policy Year exceed the maximum permitted under the Code, we will return the
excess premiums with interest to you within 60 days after the end of the policy
year. However, you have the right to pay the premium required to keep this
policy in force to the end of the policy year;
3.
We may refuse to accept any premium less than $25; and
4.
We reserve the right to refuse any premium after the insured's Age 95.
You may pay premiums by sending them to the address shown below. Please include
your policy number. The current address for payment is:
ReliaStar Bankers Security Life Insurance Company
P.O. Box 802511
Chicago, Illinois 60680-2511
Upon request, we will send you a receipt signed by one of our officers.
PLANNED PERIODIC PREMIUMS
You may pay planned periodic premiums annually, semi-annually, quarterly, or, if
you choose, we can also deduct planned periodic premiums from your bank account
monthly. We will notify you of your planned periodic premium at least once a
year.
The amount and frequency of the initial planned periodic premiums are shown on
the Policy Data Page. You may change the frequency and amount of planned
periodic premiums by notifying us in writing of the change. We reserve the right
to limit the amount of any increase.
We may send you periodic premium notices depending on the frequency and method
of premium payment you have chosen.
UNSCHEDULED ADDITIONAL PREMIUMS
Premiums, other than planned periodic premiums, may be paid at any time except
while this policy is in force as paid-up life insurance. We may limit the number
and amount of these additional payments. (See "Amount and Timing of Premium
Payments" above.)
DEATH BENEFIT GUARANTEE
The Death Benefit Guarantee Period is shown on the Policy Data Page and begins
on the Policy Date. The Death Benefit Guarantee is in effect during the Death
Benefit Guarantee Period if, on each Monthly Anniversary since the Policy Date,
1 is equal to or greater than 2, where:
1.
Is the sum of all premiums paid minus any partial withdrawals and any Loan
Amount; and
2.
Is the sum of Minimum Monthly Premiums since the Policy Date, including the
Minimum Monthly Premium for the current Monthly Anniversary.
If the Death Benefit Guarantee is in effect, we guarantee that we will not lapse
your policy, even if the Cash Surrender Value is not sufficient to pay the
Monthly Deduction that is due. Although we determine each month whether or not
you have made sufficient premium payments to maintain the Death Benefit
Guarantee, you do not have to pay premiums monthly.
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<PAGE>
DEATH BENEFIT GUARANTEE (CONTINUED)
If, on any Monthly Anniversary you have not made sufficient premium payments to
maintain the Death Benefit Guarantee, we will send you notice of the required
payment. If we do not receive the required payment within 61 days following the
date we mail you written notice, the Death Benefit Guarantee is no longer in
effect and cannot be reinstated.
POLICY CHANGES AFFECTING THE MINIMUM MONTHLY PREMIUM
The Minimum Monthly Premium may be affected by requested changes in Face Amount,
changes in the Death Benefit Option, and may also be changed when a rider is
added or terminated. The new Minimum Monthly Premium will be shown on a new
Policy Data Page and applies from the date of the change.
GRACE PERIOD AND POLICY LAPSE
If the Death Benefit Guarantee is not in effect, the policy will lapse if, on
any Monthly Anniversary, the Cash Surrender Value is less than the Monthly
Deduction due.
We will lapse this policy at the end of a 61-day grace period if sufficient
premium is not received. Sufficient premium is any premium such that the Net
Premium is larger than the sum of 1 + 2, where:
1.
Is the amount by which the Accumulation Value is less than the Surrender Charge
as of the beginning of the grace period; and
2.
Is the sum of past due Monthly Deductions.
The grace period begins on the date we send you written notice of the required
payment.
If the insured dies during the grace period, we deduct any Loan Amount and any
unpaid Monthly Deductions from the proceeds.
If the Death Benefit Guarantee is in effect, we will not lapse the policy.
REINSTATEMENT
Reinstatement means putting a lapsed policy back in force. You may reinstate
this policy by written request any time within five years after it has lapsed,
unless you surrendered this policy for its Cash Surrender Value.
This policy will be reinstated only as of a Monthly Anniversary. To reinstate
this policy and any riders you must:
1.
Submit proof which satisfies us that all insureds are still insurable; and
2.
Pay a premium large enough such that the Net Premium is as large as the sum of
the Surrender Charge after reinstatement, plus the Monthly Deductions for the
date of reinstatement and the following Monthly Anniversary.
The Surrender Charges after reinstatement will be those in effect on the date of
termination, reduced in the same proportion as the Accumulation Value on the
date of termination to the Surrender Charge on that date. The Surrender Charge
will not be less than zero.
The Accumulation Value on the date of reinstatement will be the amount provided
by the Net Premium paid to reinstate this policy. Subsequent Accumulation Values
will be calculated as shown in the Accumulation Value provision of this policy.
If you have met the above conditions and the insured dies before the Monthly
Anniversary on which the policy would be reinstated, we will pay the Death
Benefit as of that Monthly Anniversary.
The Death Benefit Guarantee cannot be reinstated.
ACCUMULATION VALUE
The Accumulation Value of this policy is equal to the sum of the Fixed
Accumulation Value plus the Variable Accumulation Value.
FIXED ACCUMULATION VALUE
The Fixed Accumulation Value on the Policy Date is your Net Premium credited to
the Fixed Account on that date minus the Monthly Deduction applicable to the
Fixed Accumulation Value for the first policy month.
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ACCUMULATION VALUE (CONTINUED)
After the Policy Date, the Fixed Accumulation Value is calculated as 1 + 2 + 3 +
4 - 5 - 6, where:
1.
Is the Fixed Accumulation Value on the preceding Monthly Anniversary, plus
interest from the Monthly Anniversary to the date of the calculation;
2.
Is the total of your Net Premiums credited to the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date premiums are credited
to the date of the calculation;
3.
Is the total of your transfers from the Variable Account to the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation;
4.
Is the total of your Loan Amount transferred from the Variable Account since the
preceding Monthly Anniversary;
5.
Is the total of your transfers to the Variable Account from the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation; and
6.
Is the total of your partial withdrawals from the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date of withdrawal to the
date of the calculation.
If the date of the calculation is a Monthly Anniversary, we also reduce the
Fixed Accumulation Value by the applicable Monthly Deduction for the policy
month following the Monthly Anniversary.
INTEREST RATE ON THE FIXED ACCUMULATION VALUE
The interest rate applied in the calculation of the Fixed Accumulation Value
will not be less than the Minimum Annual Interest Rate shown on the Policy Data
Page. This rate is an effective annual interest rate compounded yearly. Interest
in excess of the Minimum Annual Interest Rate may be applied in the calculation
of your Fixed Accumulation Value in a manner which our Board of Directors
determines.
The interest rate applied to any portion of the Accumulation Value which
represents the Loan Amount may be less than the interest rate applied to the
rest of the Accumulation Value, but not less than the Minimum Annual Interest
Rate. Interest credited on the loaned Accumulation Value is credited annually on
the Policy Anniversary to the Fixed Account and the Variable Account according
to your premium allocation.
VARIABLE ACCUMULATION VALUE
The Variable Accumulation Value is the total of your values in each Sub-account.
The value for each Sub-account is equal to 1 multiplied by 2, where:
1.
Is your current number of Accumulation Units; and
2.
Is the current Unit Value.
The Variable Accumulation Value will vary from Valuation Date to Valuation Date
reflecting changes in 1 and 2 above.
ACCUMULATION UNITS
When transactions are made which affect the Variable Accumulation Value, dollar
amounts are converted to Accumulation Units. The number of Accumulation Units
for a transaction is found by dividing the dollar amount of the transaction by
the current Unit Value.
The number of Accumulation Units for a Sub-account increases when:
1.
Net Premiums are credited to that Sub-account; or
2.
Transfers from the Fixed Account or other Sub-accounts are credited to that
Sub-account.
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ACCUMULATION VALUE (CONTINUED)
The number of Accumulation Units for a Sub-account decreases when:
1.
You take out a Policy Loan from that Sub-account;
2.
You take a partial withdrawal from that Sub-account;
3.
We take a portion of the Monthly Deduction from that sub-account; or
4.
Transfers are made from that Sub-account to the Fixed Account or other
Sub-accounts.
UNIT VALUE
The Unit Value for a Sub-account on any Valuation Date is equal to the previous
Unit Value multiplied by the Net Investment Factor for that Sub-account for the
Valuation Period ending on that Valuation Date. The Unit Value was initially set
at 10.00 when the Sub-account first purchased mutual fund shares.
NET INVESTMENT FACTOR
The Net Investment Factor is a number that reflects charges to this policy and
the investment performance during a Valuation Period of the mutual fund in which
a Sub-account is invested. If the Net Investment Factor is greater than one, the
Unit Value is increased. If the Net Investment Factor is less than one, the Unit
Value is decreased. The Net Investment Factor for a Sub-account is determined by
dividing 1 by 2, ( 1/2 ), where:
1.
Is the result of:
a.
The net asset value per share of the mutual fund shares in which the Sub-account
invests, determined at the end of the current Valuation Period;
b.
Plus the per share amount of any dividend or capital gain distributions made on
the mutual fund shares in which the Sub-account invests during the current
Valuation Period; and
c.
Plus or minus a per share charge or credit for any taxes reserved for which we
determine to have resulted from the investment operations of the Sub-account and
to be applicable to this policy.
2.
Is the result of:
a.
The net asset value per share of the mutual fund shares held in the Sub-account,
determined at the end of the last prior Valuation Period; and
b.
Plus or minus a per share charge or credit for any taxes reserved for the last
prior Valuation Period which we determine to have resulted from the investment
operations of the Sub-account and to be applicable to this policy.
MONTHLY DEDUCTION
The Monthly Deduction is a charge made monthly against the Accumulation Value.
The Monthly Deduction for a policy month will be calculated as 1, plus 2, plus
3, plus 4, plus 5 (1 + 2 + 3 + 4 + 5), where:
1.
Is the cost of any rider benefits, other than any Waiver of Monthly Deduction
rider, for the policy month;
2.
Is the cost of insurance for this policy for the policy month;
3.
Is the Monthly Mortality and Expense Risk Charge for the policy month;
4.
Is the Monthly Expense Charge for the policy month; and
5.
Is the cost of any Waiver of Monthly Deduction rider for the policy month.
The Monthly Deduction is taken from the Fixed Accumulation Value and the
Variable Accumulation Value on a proportionate basis as of the Monthly
Anniversary.
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MONTHLY DEDUCTION (CONTINUED)
The portion of the Monthly Deduction we deduct from the Fixed Accumulation Value
is determined by the proportion of the Fixed Accumulation Value minus the Loan
Amount to the Accumulation Value minus the Loan Amount.
The portion of the Monthly Deduction we deduct from each Sub-account of the
Variable Account is based on the proportion of the value of each Sub-account to
the Accumulation Value minus the Loan Amount.
COST OF INSURANCE
We determine the cost of insurance on a monthly basis. The cost of insurance for
a policy month is calculated as 1 multiplied by the result of 2 minus 3 (1 x (2
- - 3)), where:
1.
Is the cost of insurance rate as described in the Cost of Insurance Rates
provision of this policy;
2.
Is the Death Benefit at the beginning of the policy month, divided by 1.004074;
and
3.
Is the Accumulation Value immediately before the Monthly Deduction, minus the
cost of any rider benefits other than any Waiver of Monthly Deduction rider, for
the month.
The cost of insurance is determined separately for the Initial Face Amount and
any increases made later. If the Rate Class for the initial Face Amount is
different from that of an increase, the Accumulation Value used in 3 above will
be first considered a part of the initial Face Amount. If the Accumulation Value
on the Monthly Anniversary exceeds the initial Face Amount, it will be
considered to be part of any increase in the Face Amount in order of the
increases.
COST OF INSURANCE RATES
The monthly cost of insurance rate for this policy is based on the insured's
sex, Issue Age, and Rate Class as shown on the Policy Data Page, and the policy
year. If your Death Benefit is a percentage of the accumulation value as
described under the definition of "Death Benefit" in Level Amount Option, item
2, or Variable Amount Option, item 2, the Rate Class with the most recent
effective date will apply. Issue Age means age last birthday on the effective
date of the coverage.
Except for Face Amounts in a rated Rate Class, the cost of insurance rates can
never be greater than those shown in the Table of Monthly Guaranteed Cost of
Insurance Rates. This table is based on the Commissioners Standard Ordinary
Mortality (CSO) Table shown on the Policy Data Page. For Face Amounts in a rated
Rate Class, the guaranteed cost of insurance rates are calculated by multiplying
the rates shown in the Table of Guaranteed Cost of Insurance Rates by the Rate
Class Rating Factor shown on the Policy Data Page. The rates may also be
increased by any extra cost of insurance shown on the Policy Data Page.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE
The Monthly Mortality and Expense Risk Charge for a policy month will be
calculated as 1 multiplied by 2, ( 1 x 2 ), where:
1.
Is the Mortality and Expense Risk Charge, which will not exceed the Maximum
Mortality and Expense Risk Charge shown on the Policy Data Page, divided by 12;
and
2.
Is the Accumulation Value before the Monthly Deduction, minus the cost of any
rider benefits other than any Waiver of Monthly Deduction rider, minus the Cost
of Insurance, minus the Monthly Expense Charge.
The Monthly Mortality and Expense Risk Charge pays us for assuming the mortality
and expense risks under this policy.
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MONTHLY DEDUCTION (CONTINUED)
MONTHLY EXPENSE CHARGE
The Monthly Expense Charge for a policy month will be calculated as 1, plus 2,
plus 3, plus 4 (1 + 2 + 3 + 4), where:
1.
Is the Monthly Administrative Charge. The Monthly Administrative Charge is
subject to change, but will not exceed the Maximum Monthly Administrative Charge
shown on the Policy Data Page.
2.
Is the Death Benefit Guarantee Charge shown on the Policy Data Page;
3.
Is the Monthly Policy Charge. This charge and the Term during which it is
applied are shown on the Policy Data Page; and
4.
Is the Monthly Amount Charge. This charge is equal to the Monthly Amount Charge
per $1,000, as shown on the Policy Data Page, multiplied by the Face Amount
divided by $1,000. This charge applies to the Initial Face Amount and any
increases in Face Amount during the Term shown on the Policy Data Page. The Term
applies to the Initial Face Amount from the Policy Date and to any increases in
Face Amount from the Effective Date of that increase. Any change in Face Amount
due solely to a change of Death Benefit Option does not affect the charge.
ADJUSTMENTS TO POLICY COST FACTORS
Adjustments to the monthly cost of insurance rate and Monthly Administrative
Charge will be by Rate Class and based upon changes in future expectations for
mortality, persistency, interest, taxes, and expenses. Any changes to the
monthly cost of insurance rate or Monthly Administrative Charge will be made
only prospectively, based on future expectations, in accordance with procedures
and standards on file with the New York Insurance Department. Changes will not
be used to recoup past losses or distribute past gains. The experience
underlying the monthly cost of insurance rate will be reviewed at regular
intervals, no less often than every five years.
BASIS OF COMPUTATIONS
Where required, a detailed statement of the method of computation of cash values
under this policy has been filed with the insurance department of the state in
which this policy was delivered. Cash values under this policy are not less than
the minimums required by the state in which this policy was delivered.
NONFORFEITURE PROVISIONS
CONTINUATION OF INSURANCE
Even if you do not make additional premium payments your insurance coverage
under this policy, and any benefits provided by rider, will stay in force as
long as the Cash Surrender Value is large enough to cover the Monthly Deduction.
If the Cash Surrender Value is less than the Monthly Deduction due, we will use
the Cash Surrender Value to continue the insurance during the grace period.
TRANSFERS
You may request in writing the transfer of all or part of your Accumulation
Value between the Fixed Account and the Sub-accounts of the Variable Account. We
only allow four transfers in a policy year. We consider all transfers received
in the same request and made on the same Valuation Date as one transfer. We make
a transfer on the first Valuation Date after we receive your written request.
We may make a charge for each transfer, but the charge may not exceed $25.00.
All transfers are also subject to any charges and conditions imposed by the
mutual fund whose shares are involved.
TRANSFERS FROM THE FIXED ACCOUNT
To transfer all or part of your Fixed Accumulation Value, you must meet the
following conditions:
1.
The request to transfer must be postmarked no more than 30 days before the
policy anniversary, and no later than 30 days after the
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TRANSFERS (CONTINUED)
policy anniversary. Only one transfer is allowed during this period;
2.
The Fixed Accumulation Value after the transfer must be at least equal to the
Loan Amount;
3.
No more than 50% of the Fixed Accumulation Value (minus any Loan Amount) may be
transferred unless the balance, after the transfer, would be less than $1,000.
If the balance would fall below $1,000, the full Fixed Accumulation Value (minus
any Loan Amount) may be transferred; and
4.
You must transfer at least $500, or the total Fixed Accumulation Value (minus
any Loan Amount) if less than $500.
TRANSFERS FROM A SUB-ACCOUNT
To transfer from a Sub-account, Accumulation Units are redeemed on the next
Valuation Date after we receive your request and their value is reinvested in
other Sub-accounts, or the Fixed Account, as directed in your request.
CASH VALUE, CASH SURRENDER VALUE, TOTAL SURRENDER, AND PARTIAL WITHDRAWAL
BENEFITS
CASH VALUE
The Cash Value of this policy is the Accumulation Value minus any Surrender
Charge.
The Cash Value is never less than zero.
CASH SURRENDER VALUE
The Cash Surrender Value of this policy is the Cash Value minus the Loan Amount
and any unpaid Monthly Deductions.
SURRENDER CHARGE
We make a Surrender Charge if you surrender this policy or it lapses. The
Surrender Charge is the Maximum Surrender Charge minus the Premium Related
Surrender Charge Reduction. The Surrender Charge is not less than zero.
INITIAL FACE AMOUNT
The Maximum Surrender Charge applicable to the Initial Fact Amount depends on
the Initial Face Amount and the insureds sex, Issue Age, and Rate Class. The
amount and duration of the Unadjusted Surrender Charge applicable to the Initial
Face Amount is shown on the Policy Data Page.
Whenever the total premiums paid are less than the Surrender Charge Whole Life
Premium shown on the Policy Data Page, the Surrender Charge applicable to the
Initial Face Amount will be reduced by the Premium Related Surrender Charge
Reduction. The Premium Related Surrender Charge Reduction is calculated as 1
multiplied by the result of 2 minus 3 (1 x (2 - 3)), where:
1.
Is the Surrender Charge Reduction Factor shown on the Policy Data Page;
2.
Is the Surrender Charge Whole Life Premium shown on the Policy Data Page; and
3.
Is the total premiums paid.
REQUESTED CHANGES IN FACE AMOUNT
Additional Surrender Charges will apply to any approved increase in Face Amount,
including Face Amount increases resulting from the Insured's Cost of Living
Rider, if included with the policy. The additional Surrender Charge depends on
the amount of the increase in Face Amount and the insured's sex, age, and Rate
Class on the effective date of the increase. We will send you written notice of
the amount and duration of the additional Surrender Charge. No Premium Related
Surrender Charge Reductions are made for additional Surrender Charges applicable
to increases in Face Amount.
If Surrender Charges are shown on an annual basis, they grade uniformly by
policy month between the consecutive years shown.
Any increases or decreases in Face Amount resulting from changes in the Death
Benefit Option, and any requested decreases in Face Amount, do not affect the
Surrender Charges.
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CASH VALUE, CASH SURRENDER VALUE, TOTAL SURRENDER, AND PARTIAL WITHDRAWAL
BENEFITS (CONTINUED)
TOTAL SURRENDER
You may surrender this policy for its Cash Surrender Value by sending us a
written request.
PARTIAL WITHDRAWAL
After the first policy year, you may withdraw part of your Cash Surrender Value
by sending us a written request. The amount of any partial withdrawal must be at
least equal to $500.00. The maximum partial withdrawal equals the Cash Surrender
Value multiplied by the Percent of Partial Withdrawal shown on the Policy Data
Page. Only one partial withdrawal is allowed in any policy year. We may make a
charge for each partial withdrawal, but the charge will not exceed $25.00.
Unless you specify, we make partial withdrawals from the Fixed Accumulation
Value and the Variable Accumulation Value on a proportionate basis. For the
purpose of calculating the proportion, the Loan Amount is subtracted from the
Fixed Accumulation Value. We make partial withdrawals from a Sub-account by the
automatic surrender of Accumulation Units.
THE EFFECT OF PARTIAL WITHDRAWALS
The Accumulation Value will be reduced by the amount of any partial withdrawal.
The Death Benefit will also be reduced by the amount of the withdrawal, or, if
the Death Benefit is based on the corridor percentage of Accumulation Value, by
an amount equal to the corridor percentage times the amount of the withdrawal.
The Face Amount will be reduced by the amount of the partial withdrawal if
Option A (Level Amount Option) is in effect. We do not allow a withdrawal if the
Face Amount after a partial withdrawal would be less than the Minimum Face
Amount shown on the Policy Data Page. If more than one Premium Class applies to
the current Face Amount, for the purpose of determining the cost of insurance,
the Face Amount will be reduced in the following order:
1.
The Face Amount provided by the most recent increase;
2.
The next most recent increases successively; and
3.
The initial Face Amount.
If Death Benefit Option B (Variable Amount Option) is in effect, a partial
withdrawal does not affect the Face Amount.
A partial withdrawal may cause the Death Benefit Guarantee to terminate. The
amount of the partial withdrawal is deducted from the total premium paid in
calculating whether sufficient premiums have been paid to maintain the Death
Benefit Guarantee.
POLICY LOANS
After the first policy year, if this policy has a Loan Value, you may take out a
loan from us by written request. We use this policy as security for the loan.
Each loan must be at least $500.
We will not lend you more than the Loan Value. The Loan Value is 1, minus 2, (1
- - 2), where:
1.
Is the Cash Value; and
2.
Is the existing Loan Amount.
When we make a policy loan, the amount of the policy loan will be segregated
within the Fixed Accumulation Value of your policy as security for the loan.
Unless you specify, amounts held as security for the loan will come from the
Fixed Accumulation Value and the Variable Accumulation Value on a proportionate
basis. For the purpose of determining the proportion, we subtract any existing
Loan Amount from the Fixed Accumulation Value.
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POLICY LOANS (CONTINUED)
Amounts equal to the portion of the policy loans coming from the Sub-accounts of
the Variable Account are transferred to the Fixed Account, reducing the Variable
Accumulation Value. These transfers are not treated as transfers for the purpose
of the transfer charge or the limit on the number of transfers in a policy year.
EFFECT OF THE POLICY LOANS
If not repaid, we deduct any unpaid policy loans before paying the proceeds. If,
at any time, the Loan Amount exceeds the Cash Value the grace period goes into
effect and we may lapse this policy. A loan may cause the Death Benefit
Guarantee to terminate. The Loan Amount is deducted from the total premiums paid
in calculating whether you have paid premiums sufficient to maintain the Death
Benefit Guarantee.
LOAN INTEREST
We charge interest on the Loan Amount at the Loan Interest Rate shown on the
Policy Data Page, unless we charge a lower rate. After the tenth policy year, we
charge interest at the Preferred Loan Interest Rate shown on the Policy Data
Page on the portion of your Loan Amount that is not greater than the result of (
1 - 2 + 3 ), where:
1.
Is the Accumulation Value;
2.
Is the sum of all premiums paid; and
3.
Is the sum of all partial withdrawals.
This result is called the Preferred Loan Amount.
The Preferred Loan Amount is calculated on the date of any loan and on each
policy anniversary thereafter. Policy loan repayments received will be applied
first to reduce the portion of your policy loan that is not the Preferred Loan
Amount, and then to reduce the Preferred Loan Amount.
On the date of any policy loan, interest is due in advance for the remainder of
the policy year. On each policy anniversary thereafter, interest is due in
advance for the next full policy year. Any unpaid interest is added to the Loan
Amount, and we charge interest on it.
REPAYMENT
You may repay all or part of any policy loan during the insured's lifetime. If
not repaid during the insured's lifetime, we deduct the Loan Amount from the
proceeds. We generally consider any payments we receive, planned or unscheduled,
as premium payments. Therefore, when you make a payment on a policy loan, to
avoid a Premium Expense Charge, you must tell us that you are making a loan
payment. We reserve the right to consider any payment we receive as a loan
repayment at our discretion.
Loan repayments reduce the Loan Amount. We will transfer from the Fixed Account
to each Sub-account of the Variable Account, 1 multplied by 2 ( 1 x 2 ), where:
1.
Is the amount of the loan repayment; and
2.
Is the current proportion used to allocate premiums to that Sub-account.
These transfers are not treated as transfers for the purpose of the transfer
charge or the limit on the number of transfers in a policy year.
DELAY OF PAYMENT ON SURRENDER, PARTIAL WITHDRAWALS AND LOANS
The amount surrendered, withdrawn, or loaned will normally be paid to you within
7 days of:
1.
Receipt of your written request; and
2.
Receipt of your policy, if required.
We may delay making the payment when we are not able to determine the Variable
Accumulation Value because:
1.
The New York Stock Exchange is closed for trading; or
2.
The Securities and Exchange Commission determines that a state of emergency
exists.
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DELAY OF PAYMENT ON SURRENDER, PARTIAL WITHDRAWALS AND LOANS (CONTINUED)
We have the right to delay making a surrender, partial withdrawal, or loan from
the Fixed Account for up to six months from the date we receive your request. If
we delay payment for 30 days or more, we pay interest at an effective annual
rate of 3-1/2% from the date of the surrender, partial withdrawal, or loan
request to the date of payment.
BENEFICIARY
The beneficiary is named to receive the proceeds to be paid at the insured's
death. You may name one or more beneficiaries on the application. Later, you may
name, add, or change beneficiaries by written request as described below. You
may also choose to name a beneficiary whom you cannot change without his or her
consent. This is an irrevocable beneficiary.
NAMING, ADDING, OR CHANGING BENEFICIARIES
You can name, add, or change beneficiaries by written request if all of these
are true:
1.
This policy is in force;
2.
The insured is alive; and
3.
We have the written consent of all irrevocable beneficiaries.
A change will take effect as of the date it is signed but will not affect any
payment we make or action we take before receiving your request.
PAYING PROCEEDS
We pay death proceeds in the following order:
1.
Collateral assignees, if any, have first priority;
2.
The beneficiary, if any, receives any proceeds that remain. If there is more
than one beneficiary, each receives an equal share, unless you have requested
another method in writing. To receive proceeds, a beneficiary must be living on
the 10th day after the insured's death; then
3.
If there are no beneficiaries, you receive any proceeds that remain.
CONTROL OF POLICY
OWNERSHIP
As owner, you have the rights and duties outlined in this policy. However, we
need the written consent of all irrevocable beneficiaries and collateral
assignees, if you wish to:
1.
Surrender this policy or make a partial withdrawal;
2.
Take out a policy loan;
3.
Change the owner;
4.
Name or change a contingent owner;
5.
Add a Children's Insurance Rider;
6.
Add an Additional Insured Rider;
7.
Add a Term Insurance Rider;
8.
Change the Face Amount; or
9.
Change the Death Benefit Option.
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CONTROL OF POLICY (CONTINUED)
We need the written consent of all irrevocable beneficiaries, if you wish to
1.
Change a beneficiary;
2.
Choose or change a Settlement Option; or
3.
Assign this policy or any of its benefits as collateral.
Your rights, as outlined in this policy, end at the insured's death.
COLLATERAL ASSIGNMENT
You may assign the benefits of this policy as collateral for a debt. This limits
your rights to the Cash Surrender Value and the beneficiary's rights to the
proceeds. A collateral assignment does not change the owner. A collateral
assignee does not have ownership rights.
An assignment is not binding on us until we receive written notice of it. We
assume no responsibility as to the validity of any assignment. When we pay
proceeds, we may rely on what the collateral assignee states as the debt due.
CHANGING OWNERSHIP
You can change the owner of this policy by sending us a written request. This is
called an "absolute assignment." You transfer all your rights and duties as
owner to a new owner. The new owner can then make any change the policy allows.
You can also name a contingent owner who will own this policy at your death. You
may name, change, or withdraw a contingent owner by sending us a written
request.
An absolute assignment or contingent owner request:
1.
Does not change the coverage or the beneficiary;
2.
Applies only if we receive your request;
3.
Takes effect from the date signed;
4.
Does not affect any payment we make or action we take before receiving your
request; and
5.
Is not a collateral assignment.
SETTLEMENT OPTIONS
Settlement Options are ways of paying the proceeds of this policy. These options
apply to:
1.
Payment of proceeds at death; and
2.
Proceeds payable upon full surrender of this policy for its Cash Surrender
Value.
Proceeds applied under a settlement option no longer earn interest at the rate
applied to the Fixed Account or participate in the investment experience of the
Variable Account.
CHOOSING OPTIONS
Settlement Options are chosen or withdrawn by making a written agreement with us
or by sending us written notice. Our approval is needed for an option to be
chosen or withdrawn. Before the insured's death, only you can choose or withdraw
an option. After the insured's death, a beneficiary may choose an option
depending on prior restrictions made by you or a collateral assignee. A change
of beneficiary or owner withdraws all chosen options; you must choose again any
options you want.
We issue a supplemental contract for proceeds applied under any option. We need
not accept an option where less than $2,500 will be applied for each payee. In
this case, we may pay a payee's proceeds in one sum. Under an installment
option, each payment must be at least $25. If needed, we may increase the time
between payments to three months, six months, or a year to make each payment at
least $25.
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SETTLEMENT OPTIONS (CONTINUED)
PAYING PROCEEDS
A payee is one to whom we may pay part or all of the proceeds or interest. The
primary payee is the first person to whom benefits are payable. If the primary
payee dies before we have made all payments under Options 2, 3, or 4, we pay the
remaining payments to any contingent payee. We pay the proceeds in one sum,
unless one or more of the following options are requested and we agree to it. We
will also use any other method of payment that is acceptable to you and to us.
Under Options 2, 3, 4, and 5, we pay the first installment as of the date we
issue a supplemental contract to pay the proceeds.
Under Option 6, we pay the first installment at the end of the interval it
applies to.
OPTION 1
The proceeds are left with us to earn interest. The withdrawal rights, the
length of time we will hold the proceeds, and any future change of option are
subject to our approval.
OPTION 2
We pay the proceeds with interest in equal installments for the amount you
choose at equal intervals until the proceeds and interest are all paid. The
interval you choose may be a month, 3 months, 6 months, or a year. The amount
chosen for each installment must be such that the total installments payable in
any 12 months is at least 7% of the total amount of the proceeds.
The last installment will be for the remaining proceeds and interest, and might
not be equal to the other installments.
OPTION 3
We pay the proceeds in equal installments at equal intervals for the number of
years you choose. The interval may be a month, three months, six months, or a
year. Use the Option 3 Table to determine the amount of each installment. If you
ask, we will tell you the payment amounts for numbers of years or intervals not
shown.
OPTION 3 TABLE
NUMBER OF MONTHLY PAYMENTS
YEARS PER $1000
OF PROCEEDS
5 $18.12
10 $ 9.83
15 $ 7.10
20 $ 5.75
25 $ 4.96
OPTION 4
The proceeds are used to provide an annuity with 60, 120, 180, or 240 months
"certain". This means that we continue paying the primary payee in equal monthly
installments for as long as the primary payee lives with a number of months
"certain". "Certain" means that we make payments for at least as long as the
period you choose (either 60, 120, 180, or 240 months), no matter when the
primary payee dies. If the primary payee dies before the "certain" period ends,
the remaining payments are payable to the contingent payee.
We compute the installments using the calendar year in which the proceeds are
applied and the payee's sex and age at that time. We require written proof of
the payee's age. The Option 4 Table shows the amount of each installment for a
120-month "certain" period plus as long after as the primary payee lives. We
compute the amount of each installment for the other "certain" periods on a
similar basis. If you ask, we will tell you any of these payment amounts.
OPTION 4 TABLE
MONTHLY INCOME WITH 120 MONTHS CERTAIN
MONTHLY INCOME
PER $1000 OF PROCEEDS
MALE FEMALE
AGE
50 $ 4.50 $ 4.23
55 $ 4.88 $ 4.56
60 $ 5.38 $ 5.00
65 $ 6.03 $ 5.58
70 $ 6.85 $ 6.38
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SETTLEMENT OPTIONS (CONTINUED)
OPTION 5
The proceeds are used to provide a "joint and two-thirds to survivor" life
income for two payees. We make monthly payments jointly to the two payees as
long as they both live. When one payee dies, the other receives two-thirds of
the amount of the joint monthly payment for life. Payments stop when both payees
have died. We compute the payment amounts using the calendar year in which the
proceeds are applied and the payees' sexes and ages when the proceeds are
applied. The original monthly payment for joint payees, one male and one female,
is shown for selected ages in the Option 5 Table. We will quote values for other
age and sex combinations upon request.
OPTION 5 TABLE
ORIGINAL MONTHLY INSTALLMENT FOR EACH $1000 OF PROCEEDS ACCORDING TO THE AGE AND
SEX OF EACH PAYEE.
Male Age
Female 60 65 70
Age
60 $5.65 $5.95 $6.29
65 5.99 6.36 6.77
70 6.39 6.86 7.39
OPTION 6 (ANNUITY OPTION)
The proceeds are used to provide an annuity. Each annuity installment is 103% of
the payment that we would make if the payee had used the proceeds to buy a
similar, nonparticipating, single premium immediate annuity at our rates on the
date the proceeds are applied. We pay these installments at the end of the
interval to which they apply. We will not apply this option if a similar option
would be more favorable to the payee when proceeds are applied.
DEATH OF PAYEE
Unless we have agreed otherwise, if a payee dies after we have paid or credited
proceeds under Option 1, we will pay the proceeds and any unpaid interest in one
sum to the payee's estate. Unless we have agreed otherwise, if a payee dies
after we have paid or credited proceeds under Options 2, 3, or 4, we will pay
the remaining payments to any contingent payees. If there are no contingent
payees, we pay the following amounts to the primary payee's estate.
1.
Under Option 2, we will pay any unpaid sum left with us plus any unpaid interest
on that sum.
2.
Under Option 3, we will pay the commuted value (based on interest at an
effective annual rate of 3-1/2%) of any unpaid installments.
3.
Under Option 4, we will pay the commuted value (based on interest at an
effective annual rate of 3-1/2%) of any unpaid installments remaining in the
"certain" period.
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SETTLEMENT OPTIONS (CONTINUED)
PROTECTION OF PROCEEDS
Unless we agree to it, a payee may not do any of the following:
1.
Withdraw any part of the proceeds or interest;
2.
Change the fixed payment intervals or the length of the payment
period;
3.
Change the settlement option;
4.
Change the amount of payment;
5.
Surrender the supplemental contract for cash;
6.
Borrow against the supplemental contract; or
7.
Assign the supplemental contract.
If the payee chooses Options 1, 2, or 3, the payee may change the option and
transfer the funds that remain to a new option. This applies unless prevented by
a written agreement with us.
A payee's creditors may not claim any of the proceeds or interest. This
provision applies unless altered by federal or state law.
INTEREST ON SETTLEMENT OPTIONS
We base the interest rate for proceeds applied under Options 1 and 2 on the
interest rate we declare on funds that we consider to be in the same
classification based on the option, restrictions on withdrawal, and other
factors. The interest rate will never be less than an effective annual rate of
3-1/2%.
In determining amounts to be paid under Options 3 and 4, we assume interest at
an effective annual rate of 3-1/2%. Also, for Option 3 and "certain" periods
under Option 4, we credit any excess interest we may declare on funds that we
consider to be in the same classification based on the option, restrictions on
withdrawal, and other factors.
GENERAL PROVISIONS
VOTING OF MUTUAL FUND SHARES
While this policy is in force, you have the right to instruct us how to vote the
the mutual fund shares attributable to this policy. All fund proxy material and
forms used to give voting instructions will be sent to persons having voting
interests.
We will vote the mutual fund shares held in Sub-accounts according to the
instructions received, as long as:
1.
The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940; and
2.
The assets of the Variable Account are allocated to Sub-accounts that are
invested in mutual funds shares.
We may vote the mutual fund shares held in the Sub-accounts at our discretion if
we determine that, because of applicable law or regulation, we do not have to
vote the mutual fund shares according to the voting instructions received.
If we do not receive timely voting instructions from you, we will vote the
applicable mutual fund shares in proportion to the instructions which are
received with respect to the other policies providing benefits related to the
applicable Sub-account.
The persons entitled to give voting instructions and the number of votes
affected by their instructions will be determined as of a record date selected
by us, not more than 90 days before the meeting of the applicable mutual fund.
This policy does not give you the right to vote at meetings of our stockholders
and/or policyholders.
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GENERAL PROVISIONS (CONTINUED)
SUBSTITUTION OF MUTUAL FUND SHARES
We reserve the right, if permitted by law, to:
1.
Create new variable accounts;
2.
Combine variable accounts, including the ReliaStar Bankers Security Variable
Life Separate Account I;
3.
Remove, add, or combine Sub-accounts and make the new Sub-accounts available to
you at our discretion;
4.
Substitute shares of other investment funds or series thereof for those of the
investment funds and series made available under the policy;
5.
Transfer assets of the ReliaStar Bankers Security Variable Life Separate Account
I, which we determine to be associated with the class of contracts to which this
policy belongs, to another variable account. (If this type of transfer is made,
the term "ReliaStar Bankers Security Variable Life Separate Account I" as used
in this poicy will then mean the variable account to which the assets were
transferred.);
6.
Deregister the ReliaStar Bankers Security Variable Life Separate Account I under
the Investment Company Act of 1940 if registration is no longer required;
7.
Make any changes required by the Investment Company Act of 1940;
8.
Operate the ReliaStar Bankers Security Variable Life Separate Account I as a
managed company under the Investment Company Act of 1940 or any other form
permitted by law; and
9.
Restrict or eliminate any voting privileges you or other persons may have as to
the ReliaStar Bankers Security Variable Life Separate Account I.
PAYMENT OF PROCEEDS
We pay all proceeds of this policy when we receive the policy and proof of
death. We make payments under Settlement Options 4, 5, and 6 only to a natural
person in that person's own right. We adjust the proceeds payable on the death
of the insured as follows:
1.
We refund any policy loan interest charged but not earned;
2.
We deduct any Loan Amount; and
3.
We deduct any unpaid Monthly Deductions due on or before the insured's death.
As of the date of death, the proceeds no longer earn interest at the rate
applied to the Fixed Account or participate in the investment experience of the
Variable Account. If payment is delayed more than 30 days, we pay interest on
the proceeds at death for the time between the insured's death and the earlier
of the following:
1.
The date we pay proceeds; or
2.
The date we issue a supplemental contract.
Interest on these funds is never less than an effective annual rate of 3-1/2%.
BENEFITS AT AGE 95
If the insured is living at Age 95, the Death Benefit will be equal to the
Accumulation Value and the cost of insurance will be zero.
5255 22
<PAGE>
GENERAL PROVISIONS (CONTINUED)
INCONTESTABILITY
This policy has a two-year contestable period running from the Issue Date shown
on the Policy Data Page. After this policy has been in force during the
insured's lifetime for two years from the Issue Date, we cannot claim your
policy is void or refuse to pay any proceeds unless the policy has lapsed.
If you make a Face Amount increase or premium payment which requires proof of
insurability, the corresponding Death Benefit increase has its own two-year
contestable period measured from the date of the increase in Death Benefit.
If this policy is reinstated, this provision will be measured from the date of
reinstatement.
AGE AND SEX
If the insured's age or sex is misstated, the Death Benefit will be the amount
that the most recent cost of insurance would purchase using the current cost of
insurance rate for the correct age and sex.
SUICIDE
If the insured commits suicide within two years of the Issue Date, we do not pay
the Death Benefit. Instead, we refund all premiums paid on this policy and any
attached riders, minus any Loan Amounts and partial withdrawals.
If you make a Face Amount increase or premium payment which requires proof of
insurability, the corresponding Death Benefit increase has its own two-year
suicide limitation for the proceeds associated with that increase. If the
insured commits suicide, while sane or insane, within two years of the effective
date of the increase, we pay the Death Benefit prior to the increase and refund
the cost of insurance for that increase.
TERMINATION
This policy terminates when any of the following occur:
1.
The required payment is not paid by the end of the grace period;
2.
The insured dies;
3.
The policy is surrendered for its full Cash Surrender Value; or
4.
The policy is amended according to the Amendment provision of this policy and
you do not accept the amendment.
If we make a Monthly Deduction from the Accumulation Value after this policy
terminates, the deduction is not considered a reinstatement of the policy or a
waiver of the termination.
CONVERSION RIGHT
During the first two policy years and the first 24 months following the
effective date of an increase in Face Amount, you may, by written request,
convert this policy to a policy in which the benefits do not vary with the
investment performance of the Variable Account. This conversion is done by
transferring all or part of your Variable Accumulation Value to your Fixed
Accumulation Value. You must tell us you are exercising your conversion rights
when requesting the transfer. We will then waive the transfer charge and that
transfer is not counted against the limit on the number of transfers in a policy
year. You are allowed only one such transfer in each of these 24-month periods.
If you exercise this conversion right, we will automatically credit all future
premium payments to the Fixed Account, until you specify a change in allocation.
At the time of the transfer, there is no effect on the policy's Death Benefit,
Accumulation Value, Face Amount, net amount at risk, Rate Class, or Issue Age.
85-262 23
<PAGE>
GENERAL PROVISIONS (CONTINUED)
ANNUAL STATEMENT
Each year we will send you an annual statement, free of charge, showing the
following:
1.
Face Amount;
2.
Cash Surrender Values;
3.
Accumulation Values;
4.
Premiums paid;
5.
Planned periodic premiums;
6.
Interest credits;
7.
Death Benefit;
8.
Loan Amounts;
9.
Partial withdrawals;
10.
Transfers; and
11.
Charges since the last statement.
We will make a charge not to exceed $50 for any additional statements you
request.
PROJECTION REPORT
If you ask, we will provide a report projecting future results. The report will
be based on the following:
1.
The Death Benefit Option you specify;
2.
Planned periodic premiums you specify;
3.
The Accumulation Value at the end of the prior policy year; and
4.
Any other assumptions specified by you or us, subject to any limitations imposed
by the Securities and Exchange Commission.
We will make a charge not to exceed $50 for each Projection Report you request.
NONPARTICIPATING
This contract does not entitle you to participate in our surplus.
AMENDMENT
We reserve the right to amend this policy to include any future changes relating
to the following:
1.
Any Securities and Exchange Commission rulings and regulations;
2.
This policy's qualification for treatment as a Life Insurance policy under the
following:
o The Code;
o Internal Revenue Service rulings and regulations; and
o Any requirements imposed by the Internal Revenue Service.
We will send you a copy of any amendments promptly.
DISCLAIMER
We are not liable for any tax or tax penalty you owe resulting from failure to
comply with the requirements of the Code, regulations and rulings imposed on
this policy.
5256 24
<PAGE>
FLEXIBLE PREMIUM
VARIABLE LIFE
INSURANCE POLICY
- ---------------------------------
Variable and/or Fixed
Accumulation Values
Flexible Premiums Payable to the
Insured's Age 95
Adjustable Face Amount
Death Benefit Guarantee
Death Benefit Options
Nonparticipating
- -----------------------------------------------
NOTICE
To make a claim or exercise your rights under this policy, please write to us at
the address below and include your policy number:
RELIASTAR RELIASTAR BANKERS SECURITY
LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102
P. O. Box 9004
Woodbury, New York 11797
Writing directly to us will save time and expense. You do not need to hire any
person, firm, or corporation unless, because of a dispute, you wish to.
Page 25 85-251
<PAGE>
ACCELERATED BENEFIT RIDER
This rider is a part of the base policy whose number is shown below. If not
shown below, the Rider Data is shown on the Policy Data Page.
RIDER DATA
BASE POLICY NUMBER
RIDER ISSUE DATE
RIDER EFFECTIVE DATE
THIS IS A LIFE INSURANCE RIDER WHICH PAYS ACCELERATED DEATH BENEFITS AT YOUR
OPTION UNDER CONDITIONS SPECIFIED IN THIS RIDER. THIS RIDER IS NOT INTENDED TO
PROVIDE HEALTH, NURSING HOME, OR LONG-TERM CARE INSURANCE. CASH VALUES, LOAN
VALUES, IF ANY, AND DEATH BENEFITS WILL BE REDUCED IF YOU RECEIVE BENEFITS UNDER
THIS RIDER. BENEFIT PAYMENTS MAY AFFECT YOUR ELIGIBILITY TO RECEIVE MEDICAID AND
OTHER GOVERNMENT BENEFITS OR ENTITLEMENTS.
BENEFITS PAID UNDER THIS RIDER MAY BE TAXABLE. YOU SHOULD CONSULT YOUR PERSONAL
TAX ADVISOR TO ASSESS THE IMPACT OF THIS BENEFIT.
DEFINITIONS
THE INSURED
The person insured under the base policy.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at its Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office.
The form and content of the request or notice must be acceptable to us. You may
get forms for this purpose from us or from a ReliaStar Bankers Security Life
agent.
POLICY
The base policy to which this rider is attached, including riders attached at
time of issue and those agreed upon later.
ACCELERATED BENEFIT
The amount we will pay to you as described in this rider.
BENEFIT DATE
The date on which we approve your written request for an Accelerated Benefit.
ELIGIBLE DEATH BENEFIT
The death benefit payable under the policy and any riders by reason of death of
the Insured, not reduced by policy loans, excluding accidental death benefit
riders, decreasing term riders, and any death benefit that is within five years
of its expiry date on the Benefit Date.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-267 1
<PAGE>
DEFINITIONS (CONTINUED)
PHYSICIAN
A doctor of medicine or osteopathy legally authorized to practice medicine and
surgery by the state in which he or she performs such function or action. This
person may not be you, the Insured, a beneficiary, or be related to you, the
Insured or a beneficiary under the policy.
TERMINAL ILLNESS
A non-correctable illness or physical condition that, with a reasonable degree
of medical certainty, will result in the death of the Insured in 12 months or
less from the date of a written statement, in a form acceptable to us, by a
Physician.
BENEFITS
We will pay the Accelerated Benefit in a lump sum when we receive, during the
lifetime of the Insured, written proof that the Insured has been diagnosed as
having a Terminal Illness, subject to the conditions and limitations described
in this rider. In the event of remission or cure of the Terminal Illness, we
will not attempt to recover the Accelerated Benefit payment.
You may choose the amount of Accelerated Benefit, subject to the following:
1.
The maximum Accelerated Benefit is 50% of the Eligible Death Benefit.
2.
The sum of the Accelerated Benefit under all policies and riders issued by us on
the life of the Insured may not exceed $250,000.
3.
The minimum Accelerated Benefit is the lesser of 25% of the Eligible Death
Benefit or $50,000.
CONDITIONS
We will not pay the Accelerated Benefit until we receive proof of the Insured's
Terminal Illness and the following conditions have been met:
1.
We have received your written request for an Accelerated Benefit in a form
acceptable to us;
2.
We have received written consent from all irrevocable beneficiaries waiving
their rights to any death benefit required to pay off the lien at the time of
death. At our discretion, we may require written consent from a spouse, the
Insured, other beneficiaries, or any other person whom we believe has a
potential interest in the proceeds of the policy; and
3.
We have received an assignment form making us assignee of the policy for the
amount of the lien.
LIMITATIONS
We will not pay the Accelerated Benefit:
1.
If either you or the Insured is required by a government agency to use the
Accelerated Benefit in order to apply for, obtain, or otherwise keep a
government benefit or entitlement;
2.
If either you or the Insured is required by a public health facility as defined
in section 20 of the Public Health Law to use the Accelerated Benefit as a
condition of admission to such health care facility or for providing any care in
such facility;
3.
If either you or the Insured is required by law to use the Accelerated Benefit
to meet the claims of creditors, whether in bankruptcy or otherwise;
4.
If the Terminal Illness results from intentionally self-inflicted injuries;
5.
If the policy is in force as either Extended Term Insurance or Reduced Paid-Up
Insurance;
6.
If the policy is legally or equitably assigned, except to us as security for the
lien;
5261 2
<PAGE>
LIMITATIONS (CONTINUED)
7.
If the policy is not in force or the death benefit under the policy is not
payable for any reason;
8.
If the amount of the Accelerated Benefit, plus the amount of all Accelerated
Benefits on the Insured from all policies issued by us, exceeds $250,000; or
9.
If there has already been an Accelerated Benefit paid on this policy through
this Accelerated Benefit Rider.
EFFECT ON YOUR POLICY
The Accelerated Benefit will first be used to repay any outstanding policy loans
and interest due. The remainder of the Accelerated Benefit will be paid to you.
BENEFITS PAID CREATE LIEN
The Accelerated Benefit plus accrued interest from the date of payment will be a
lien against the policy and any riders that are part of the Eligible Death
Benefit. The initial amount of the lien will be the amount of the Accelerated
Benefit, plus any premiums or payments due under the policy on the Benefit Date,
plus an administrative charge not to exceed $300.
When there is a lien against your policy:
1.
The amount payable at the death of the Insured under the policy will be reduced
by the amount of the lien;
2.
Your access to the cash value of the policy through surrender, withdrawal, loan,
or application of nonforfeiture provisions will be limited to the excess of the
cash value of the policy over the amount of the lien;
3.
You may not make any changes to the policy which would reduce the proceeds
payable at death without written permission from us. We reserve the right to
require you to repay all or part of the lien before you make any changes to your
policy; and
4.
Any premiums or other payments required under the terms of the policy will
continue to be due and payable. Any premiums or other payments required to keep
the policy in force which are not paid by you will be paid by us, and the amount
of any such payments will be added to the amount of the lien. Interest will
accrue on amounts added to the lien.
INTEREST RATE ON LIEN
Interest on the lien will accrue daily, and be added to the amount of the lien.
The maximum interest rate used will not be more than the greater of the
following:
1.
The current yield on 90 day treasury bills available on the date we receive your
written request for an Accelerated Benefit; or
2.
The higher of:
a.
The current maximum statutory adjustable policy loan interest rate, and
b.
The policy guaranteed cash value interest rate plus one percent.
The interest rate accrued on the portion of the lien which is equal to the cash
value of the policy on the Benefit Date will never be more than the policy loan
interest rate, if any, stated in the policy.
You may repay all or any portion of the lien during the lifetime of the Insured.
The lien, including interest on the lien, and any additions to the lien, will be
repaid out of the proceeds of the policy.
85-268 3
<PAGE>
WRITTEN PROOF OF TERMINAL ILLNESS
Proof of Terminal Illness includes a written statement, in a form acceptable to
us, from a Physician. The written statement must state that the Insured has a
non-correctable illness or physical condition that, with a reasonable degree of
medical certainty, will result in the death of the Insured in 12 months or less
from the date of the Physician's statement. The written statement must give the
Physician's diagnoses of the non-correctable illness or physical condition.
You must obtain proof of the Insured's Terminal Illness at your own expense.
We reserve the right to get a second opinion, at our expense, from a Physician
we choose. We may rely on the statement of the Physician of our choice. The
opinion of the Physician we choose will control in the event of conflicting
opinions.
TERMINATION
This rider ends:
1.
When the Paid-Up Option of the policy is exercised;
2.
When the policy is surrendered or ends;
3.
When the policy reaches its maturity date; or
4.
When you ask us in writing to end this rider and you repay any lien under this
rider. In this case, we may ask that you return the policy and this rider so
that we can endorse them. This rider will end on the first Monthly Anniversary
Date after we receive your written request to end this rider.
REINSTATEMENT
If the policy lapses, you can reinstate this rider if:
1.
This rider was in effect when the policy lapsed; and
2.
You reinstate the policy.
To reinstate this rider you must do both of the following:
1.
Give us proof of insurability for the Insured; and
2.
Pay a premium large enough such that the Net Premium is as large as the sum of
the Surrender Charge after reinstatement, plus the Monthly Deductions for the
date of reinstatement and the following Monthly Anniversary.
The policy may be reinstated without this rider.
AMENDMENTS
We may amend this rider so that it is in compliance with all applicable laws,
rules, regulations, interpretations, holdings and orders. When required by law,
we will obtain your approval of these changes and obtain approval from any
appropriate regulatory authority.
NONPARTICIPATING
This rider does not entitle you to participate in our surplus.
GENERAL PROVISIONS
All policy provisions apply to this rider, unless changed by this rider. The
Incontestability Provision of the policy applies to this rider from the Rider
Issue Date. This rider does not increase any cash, loan, paid-up insurance, or
extended term insurance values of the base policy.
5262 4
<PAGE>
ADDITIONAL INSURED RIDER (AIR)
This rider is a part of the base policy whose number is shown below. If not
shown below, the Base Policy Number is shown on the Policy Data Page.
RIDER DATA
BASE POLICY NUMBER
DEFINITIONS
THE ADDITIONAL INSURED
The person insured under this rider. The Additional Insured is shown on the
Policy Data Page.
THE INSURED
The person insured under the base policy.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office,
in a form we accept. You may get forms for this purpose from us.
BENEFITS
When we have written proof that the Additional Insured died while this rider was
in force, we will pay the AIR Face Amount then in force.
While the Additional Insured is living, you may choose to have the proceeds
applied under any base policy settlement option. After the Additional Insured's
death, a beneficiary may choose to have the proceeds applied under any base
policy settlement option, depending on any prior restrictions made by you and
agreed to by us.
BENEFICIARY
The beneficiary is named to receive the proceeds to be paid at the Additional
Insured's death. You may name one or more beneficiaries on the application.
Later, you may name, add or change beneficiaries by written request if all of
these are true:
1.
The base policy is in force;
2.
This rider is in force;
3.
The Additional Insured is alive; and
4.
We have the written consent of all irrevocable beneficiaries of this rider.
A change of beneficiary will take effect as of the date it is signed but will
not affect any payment we make or action we take before receiving your notice.
When you name, add, or change a beneficiary, we will assume that this applies to
the base policy unless you tell us that it applies to the Additional Insured
Rider. If you assign the benefits of this rider as collateral for a debt, this
limits the beneficiary's rights to the proceeds.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-269 1
<PAGE>
COST OF INSURANCE AND MONTHLY AMOUNT CHARGES
The total monthly deduction for this rider includes the sum of 1 plus 2, where:
1.
Is the Monthly Amount Charge per $1,000 (shown on the Policy Data Page)
multiplied by the AIR Face Amount divided by $1,000.
This charge applies to the Initial AIR Face Amount and to any increases in AIR
Face Amount during the Term shown on the Policy Data Page. The Term applies to
the Initial Face Amount from the Policy Date of the policy and to any increases
in Face Amount from the Effective Date of that increase.
2.
Is the AIR Face Amount times the monthly cost of insurance rate described below.
COST OF INSURANCE RATES
The monthly cost of insurance rate is based on the Additional Insured's sex,
issue age, and Rate Class as shown on the Policy Data Page, and the policy year
of the rider. Issue age means age last birthday on the Rider Effective Date.
Policy years of the rider are measured from the Rider Effective Date.
Adjustments to the monthly cost of insurance rate will be by Rate Class and
based upon changes in future expectations for mortality, persistency, interest,
taxes, and expenses. Any changes to the monthly cost of insurance rate will be
made only prospectively, based on future expectations, in accordance with
procedures and standards on file with the New York Insurance Department. Changes
will not be used to recoup past losses or distribute past gains. The experience
underlying the monthly cost of insurance rate will be reviewed at regular
intervals, no less often than every five years.
Except for Face Amounts in a rated Rate Class the cost of insurance rates can
never be greater than the rates shown in the Table of Monthly Guaranteed Cost of
Insurance Rates shown on the Policy Data Page. For those in a rated Rate Class,
the cost of insurance rates are calculated by multiplying the rates shown in the
Table of Monthly Guaranteed Cost of Insurance Rates by the Rate Class Rating
Factor shown on the Policy Data Page. The rates may also be increased by any
extra cost of insurance rates shown on the Policy Data Page.
PAYING PROCEEDS
We pay proceeds in the following order:
1.
Collateral assignees, if any, have first priority;
2.
The beneficiary, if any, receives any proceeds that remain. If there is more
than one beneficiary, each receives an equal share, unless you have requested
another method in writing. To receive proceeds, a beneficiary must be living on
the 10th day after the Additional Insured's death; then
3.
If there are no beneficiaries, you receive any proceeds that remain.
5263 2
<PAGE>
CONVERSION
The insurance on the life of the Additional Insured may be converted to a new
individual life insurance policy without proof of insurability. This rider may
be converted only:
1.
While the Additional Insured is alive;
2.
While this rider is in force;
3.
Before the Additional Insured reaches age 75; and
4.
While the base policy is in force or within 31 days of the insured's death.
Application for conversion must be in writing. Only you may apply. But if the
insured has died, only the Additional Insured may apply. We may require that you
send us the base policy and this rider so that we can endorse them.
THE NEW POLICY
The amount of the new policy may be for an amount up to the AIR Face Amount in
force at the time of the conversion. The date of the new policy will be the date
of the conversion. The new policy, which will be in the same Rate Class as this
rider, can be on any of our plans in use at the time of the conversion that:
1.
We would normally issue;
2.
Provide for a level amount of insurance with level premiums;
3.
Have level premiums that are at least equal to those of the whole life plan we
offer that has the lowest level premiums;
4.
Do not participate in our surplus; and
5.
Do not contain any benefits or rights involving a greater aggregate risk,
relative to premium, than is insured under this policy. However, the new policy
may contain a disability waiver benefit provision on the Additional Insured if
you give us written proof of the Additional Insured's insurability.
TERMINATION
This rider ends:
1.
On the Rider Expiry Date shown on the Policy Data Page;
2.
If this rider is converted;
3.
If the base policy is surrendered or ends, other than at the insured's death;
4.
31 days after the insured's death. During this 31 days we do not charge you for
the continued coverage;
5.
If you ask us in writing to end this rider. In this case, we may ask that you
return the policy and this rider so that we can endorse them. This rider will
end on the first Monthly Anniversary Date after we receive your written request
to end this rider; or
6.
If the Cash Surrender Value of the base policy is used to purchase paid-up
insurance.
After this rider ends, we are not liable for its benefits, even if we have
included the cost of insurance and monthly amount charges for this rider in the
total monthly deduction for the base policy. We will refund any such amounts
that we deduct after this rider ends.
85-270 3
<PAGE>
REINSTATEMENT
If this rider and the base policy lapse, you can reinstate this rider if:
1.
This rider was in effect when the base policy lapsed;
2.
This rider would otherwise not have expired during the time it was lapsed; and
3.
You reinstate the base policy.
To reinstate this rider, you must do both of the following:
1.
Give us proof of insurability for the Additional Insured; and
2.
Pay a premium large enough such that the Net Premium is as large as the sum of
the Surrender Charge after reinstatement, plus the Monthly Deductions for the
date of reinstatement and the following Monthly Anniversary.
The base policy may be reinstated without this rider, in which case proof and
payment for this rider are not needed.
AGE AND SEX
If the Additional Insured's age or sex is misstated, the Death Benefit will be
the amount that the most recent cost of insurance would purchase using the
current cost of insurance rates for the correct age and sex.
SUICIDE
The Suicide provision of the base policy is changed to also apply to the
Additional Insured from the Rider Issue Date in the same way that it applies to
the insured from the policy's Issue Date. The Suicide provision of the base
policy also applies in this way to any increases in the AIR Face Amount for
which we require evidence of insurability from the effective date of each
increase.
INCONTESTABILITY
This rider has a 2-year contestable period running from the Rider Issue Date.
During this period, we may ask for information that could lead to our contesting
this rider or refusing to pay its benefits. After this rider has been in force
during the Additional Insured's lifetime for 2 years from the Rider Issue Date,
we cannot claim this rider is void or refuse to pay any benefits with respect to
the initial AIR Face Amount unless this rider has lapsed.
If you make an increase in the AIR Face Amount that requires proof of
insurability, that increase has its own 2 year contestable period running from
the effective date of the increase.
If this rider lapses and is then reinstated, this provision will be measured
from the date of reinstatement.
GENERAL PROVISIONS
This rider does not increase any cash or loan values of the base policy.
All base policy provisions apply to this rider, unless changed by this rider.
5264 4
<PAGE>
INSURED'S COST OF LIVING RIDER
This rider is a part of the base policy whose number is shown below. If not
shown below, the Base Policy Number is shown on the Policy Data Page.
RIDER DATA
BASE POLICY NUMBER
DEFINITIONS
THE INSURED
The person upon whose life the base policy is issued. The insured is shown on
the Policy Data Page.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office
in a form we accept. You may get forms for this purpose from us.
INCREASE DATE
A date on which we make a cost of living increase according to the terms of this
rider.
CPI
The U.S. Consumer Price Index for All Urban Consumers as published by the U.S.
Department of Labor. We will substitute what we believe is an appropriate index
for the CPI if:
1.
The composition of, base of, or method of calculating the CPI changes so that,
in our opinion, it is not appropriate for use with this rider; or
2.
The publication of the CPI is delayed or ceases.
If required, we will file a detailed description of any alternate price index
with the Insurance Department of the state where this rider is issued.
BENEFITS AND MONTHLY DEDUCTIONS
We will increase the Face Amount of the base policy on the Increase Dates under
the terms of this rider. We will make these cost of living increases without
requiring proof of insurability.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-271 1
<PAGE>
BENEFITS AND MONTHLY DEDUCTIONS (CONTINUED)
On each Increase Date, the Monthly Deduction will be increased to account for
the following:
1.
The larger cost of insurance;
2.
The Monthly Expense Charge;
3.
The Death Benefit Guarantee Charge, if the Death Benefit Guarantee is in effect;
and
4.
The Cost of Waiver Benefits, if a Waiver of Monthly Deduction Rider is part of
the base policy.
DETERMINING INCREASE DATES
Increase Dates normally occur every two years, beginning with the first Monthly
Anniversary two years after the Rider Issue Date. But, if you increase the Face
Amount of the base policy 10% or more, then the next Increase Date is the first
Monthly Anniversary two years after the increase. If this rider terminates and
is then reinstated, the next Increase Date after reinstatement is the first
Monthly Anniversary two years after the reinstatement date.
CALCULATING A COST OF LIVING INCREASE
The Increase Factor is [A divided by B] - 1, where:
A
Is the CPI five months before an Increase Date; and
B
Is the CPI 29 months before an Increase Date.
If the Increase Factor is zero or less, we make no change. If the Increase
Factor is greater than zero, we multiply it by the insured's CPI Increase Base
shown on the Policy Data Page. We round the result to the next higher $500. We
will not permit an increase higher than the Maximum Increase Amount for the
Insured, which is shown on the Policy Data Page. The Maximum Increase Amount for
the insured is 20% of the insured's CPI Increase Base, or $50,000, whichever is
less.
ACCEPTING OR REFUSING AN INCREASE
We will notify you of the amount of each cost of living increase at least 30
days before its effective date. If you wish to accept the increase, you must
notify us in writing.
If you do not accept the full amount of any cost of living increase before the
insured's Age 21, we will not offer you any further increases until the policy
anniversary on or next following the insured's 21st birthday. If you do not
accept the full amount of an increase at that time, this rider terminates.
However, you can reinstate this rider with proof of insurability for the
insured.
BENEFITS WHEN MONTHLY DEDUCTIONS ARE WAIVED
If the insured becomes eligible for benefits under a waiver of monthly deduction
rider, cost of living increases are not available. If the insured recovers from
the disability and we are notified in writing, the next Increase Date is the
next Monthly Anniversary two years after we receive the notice, unless the rider
has otherwise terminated. Future Increase Dates then follow as shown above in
"Determining Increase Dates."
TERMINATION
This rider terminates:
1.
On the Policy Anniversary on or next following the insured's 55th
birthday;
2.
On the first Increase Date for which you do not accept the increase on or after
the insured's 21st birthday;
3.
On the Monthly Anniversary on or after we receive your written request to
terminate this rider. We may ask you to return the policy and this rider so that
we can endorse them;
4.
When the policy terminates; or
5.
When the base policy is in force as paid-up life insurance.
After this rider terminates, we will make no further cost of living increases.
GENERAL PROVISIONS
All base policy provisions apply to this rider, unless changed by this rider.
5265 2
<PAGE>
ACCIDENTAL DEATH BENEFIT RIDER (ADB)
This rider is a part of the base policy whose number is shown below. If not
shown below, the Base Policy Number is shown on the Policy Data Page.
BASE POLICY NUMBER
DEFINITIONS
THE INSURED
The person upon whose life the base policy is issued.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office.
The form and content of the request or notice must be acceptable to us.
ACCIDENTAL DEATH
Death that is directly caused by external, violent, and accidental bodily
injury. There must be a bruise or wound that can be seen on the outside of the
body, except in the case of drowning or internal injuries revealed by autopsy.
Death must occur within 365 days after the date of this injury.
BENEFITS
We pay the ADB Amount shown on the Policy Data Page to the beneficiary, subject
to the terms of this rider, when we receive written proof that the insured's
death:
1.
Was an Accidental Death as defined above; and
2.
Occurred while the base policy and this rider were in force.
Any benefit we pay under this rider is in addition to the amount payable under
the base policy.
REQUESTED CHANGES IN ADB AMOUNT
After the second policy year, you may request an increase or decrease in your
ADB Amount by notifying us in writing.
INCREASES
Increases in the ADB Amount must be at least $5,000. You cannot increase the
Face Amount after the policy anniversary on or next following the insured's 60th
birthday.
We may require written proof that the insured is still insurable before making
an increase. An approved increase goes into effect on the Monthly Anniversary on
or next following the date of the approval.
An increase is subject to a free look period during which you have the right to
request us to cancel the increase and receive a refund. The request must be made
by the latest of:
1.
The 20th day after you receive the new Policy Data Page for the increase; or
2.
The 45th day after the date of your written request.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-273 1
<PAGE>
REQUESTED CHANGES IN ADB AMOUNT (CONTINUED)
If you cancel an increase during this period, we will restore the Accumulation
Value by refunding the amount of any deductions and charges associated with the
increase, or, upon request, you can receive that amount in cash.
DECREASES
You cannot decrease the ADB Amount below $5,000.
Changes go into effect on the Monthly Anniversary on or next following the date
we receive you request. At least six months must elapse between decreases.
BENEFITS NOT PROVIDED
We will not pay benefits under this rider when one or more of the following
caused or contributed to death:
1.
Disease, illness, mental illness, or medical or surgical treatment of them;
2.
Any poison, gas, fumes, drug, or sedative that was voluntarily taken, injected,
or inhaled, by the insured;
3.
Suicide;
4.
A felony that the insured committed or tried to commit;
5.
Travel in or descent from any type of aircraft where the insured:
a.
Was a pilot or a crew member;
b.
Was giving or receiving aviation training; or
c.
Had any duties on the aircraft whether or not they were related to operating it.
6.
An act of war or service in the military of any country at war. WAR is defined
as an armed conflict, whether declared or not, that any country resists. COUNTRY
includes any government or group of governments.
COST OF RIDER BENEFITS
The cost of this rider's benefits is in addition to the cost of the base policy
and is included in the Monthly Deduction. The cost of this rider's benefits is 1
multiplied by 2, divided by 1,000, (1 x 2)/1,000, where:
1.
Is the ADB Rate as described below; and
2.
Is the ADB Amount at the beginning of the policy month.
ADB RATES
The ADB Rates are based on the insured's sex, attained age, and Rate Class for
this rider shown on the Policy Data Page. Attained age means the insured's age
on the prior policy anniversary. The ADB Rates are shown on the Policy Data
Page. For insureds in a Rated Rate Class for this rider, the ADB Rates will be
increased appropriately.
TERMINATION
This rider terminates:
1.
On the Rider Expiry Date;
2.
On the first Monthly Anniversary Date after we receive your written request to
terminate this rider. We may ask that you return the policy and this rider so
that we can endorse them;
3.
When the base policy is surrendered or terminates; or
4.
When the base policy is in force as paid-up life insurance.
After this rider terminates, we are not liable for its benefits. If we deduct
the cost of this rider's benefits after it terminates, it is not considered a
reinstatement of the rider. The deduction will be added back to the Accumulation
Value of the policy as of the date of the deduction.
GENERAL PROVISIONS
This rider does not increase the Accumulation Value, Cash Surrender Value, or
Loan Value of the base policy. All base policy provisions apply to this rider,
unless changed by the rider. The Incontestability provision of the base policy
applies to this rider from the Rider Issue Date, and any increases in ADB Amount
from the date of the increase.
5266 2
<PAGE>
CHILDREN'S INSURANCE RIDER (CIR)
This rider is a part of the base policy whose number is shown below. If not
shown below, the Base Policy Number is shown on the Policy Data Page.
BASE POLICY NUMBER
DEFINITIONS
THE INSURED
The person upon whose life the base policy is issued.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office.
The form and content of the request or notice must be acceptable to us.
INSURED CHILD
A child of the insured who is at least 15 days old, and one of the following:
1.
A child named in the application for this rider who is less than 19 years old on
the Rider Issue Date and for whom you give written proof of insurability we
accept;
2.
A stepchild or legally adopted child who is named in a later application and is
less than 19 years old on the date of that application. You must give written
proof of insurability for each child which we accept;
3.
A child born on or after the Rider Issue Date and while this rider is in force;
or
4.
A child born after the date of application for this rider but before this rider
is in force.
BENEFITS
We will pay the CIR Face Amount shown on the Policy Data Page when we receive
written proof that an Insured Child died while this rider was in force.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-275 1
<PAGE>
BENEFICIARY
The insured, if living, is the beneficiary. If the insured has died, the
insured's spouse, if living, is the beneficiary. If both have died, the spouse
of the deceased Insured Child, if living, is the beneficiary. If none of these
people are living, we pay the proceeds to the estate of either the Insured Child
or the Insured Child's spouse, whoever died last.
No one can change this beneficiary designation. None of the following affect
this beneficiary designation:
1.
The beneficiary designation of the base policy;
2.
The beneficiary provisions of the base policy; or
3.
An assignment of the base policy.
FACE AMOUNT CHANGE
While the base policy and this rider are in force, you may change the CIR Face
Amount by notifying us in writing.
INCREASES
You may increase the CIR Face Amount for all insured children who have not
reached Age 19 if:
1.
The increase is at least $500;
2.
After the increase the CIR Face Amount does not exceed $10,000;
3.
You give us written proof of the insured's insurability and written proof that
each Insured Child is insurable at standard rates under our underwriting rules
then in effect; and
4.
You make the increase on or before the policy anniversary on or next following
the insured's 55th birthday.
An increase will go into effect on the date shown on a new Policy Data Page.
You may not make any increases while we are paying the cost of insurance for
this rider due to the death or disability of the insured.
DECREASES
You may also request in writing to decrease the CIR Face Amount but you may not
decrease it to less than $1,000. At least six months must elapse between
decreases. Any decrease will go into effect on the first Monthly Anniversary
after the day we receive your written request.
COST OF RIDER BENEFITS
The cost of this rider's benefits is in addition to the cost for the base policy
and is included in the Monthly Deduction. This cost is shown on the Policy Data
Page.
WAIVER OF COST OF RIDER BENEFITS
If the insured dies while this rider is in force, we will pay the cost of this
rider's benefits until the Rider Expiry Date. We will not pay the cost of these
benefits if the insured commits suicide within two years of the Rider Issue
Date.
Also, we will not pay the cost of insurance for any increase in the CIR Face
Amount if the insured commits suicide within two years of the effective date of
that increase. In this case, we will refund the cost of insurance for the
increase amount.
5267 2
<PAGE>
CONVERSION
The insurance on the life of an Insured Child may be converted to a new
individual life insurance policy without proof of insurability. This insurance
may only be converted while the Insured Child is alive and:
1.
While this rider is in force;
2.
Within 31 days after this rider terminates; or
3.
On or within 31 days after coverage on that Insured Child terminates.
We will pay the CIR Face Amount if an Insured Child dies within the 31 day
period.
Application for conversion must be in writing. On or within 31 days after the
Insured Child's 25th birthday, only he or she may apply for the conversion.
Before this time, the insured, if living, may apply for the conversion. If the
insured is not living, the Insured Child may apply for the conversion, if not
too young to contract for life insurance. If the insured is not living, and the
Insured Child cannot apply for the conversion, the court appointed guardian of
the Insured Child may apply. If there is no court appointed guardian, the
surviving natural parent of the Insured Child, if any, may apply for the
conversion.
THE NEW POLICY
The new policy may only be for an amount up to the CIR Face Amount for that
Insured Child, unless it is converted on one of the dates below. The new policy
may be for an amount up to five times the CIR Face Amount for that Insured Child
if it is converted on one of these dates:
1.
On or within 31 days after the Insured Child's 25th birthday; or
2.
On or within 31 days after the Rider Expiry Date.
The coverage for each Insured Child under this rider may only be converted once
for that Insured Child.
The date of the new policy will be the date of the conversion. The Insured
Child's coverage may be converted to a flexible premium variable life insurance
policy. If not, the new policy may be on any of our plans in use at the time of
the conversion that:
1.
We would normally issue;
2.
Provides for a level amount of insurance;
3.
Has level premiums that are at least equal to those of the whole life plan we
offer that has the lowest level premiums; and
4.
Does not participate in our surplus.
We base the premiums for the new policy on the plan chosen and the Insured
Child's age and sex on the date of the conversion.
WAIVER OF PREMIUM BENEFITS FOR THE NEW POLICY
We will include a disability waiver benefit provision in the new policy without
proof of insurability if all of these are true:
1.
The premiums are payable to at least Age 85 under the new policy. If such a plan
is not available, then the new policy must be on the lowest level premium plan
available upon conversion of this rider. We require written proof of
insurability to include this provision in a policy issued on a higher level
premium plan;
2.
This provision is chosen when the new policy is applied for; and
3.
The Insured Child is not disabled at the time of the application for the new
policy.
We will base the waiver premiums on the Insured Child's age and sex on the date
of the conversion.
85-276 3
<PAGE>
TERMINATION
This rider's coverage of an Insured Child terminates:
1.
When this rider terminates;
2.
On the Insured Child's 25th birthday; or
3.
When the insurance on that Insured Child is converted.
This rider terminates:
1.
On the Rider Expiry Date;
2.
On the Monthly Anniversary Date on or after we receive your written request to
terminate this rider. We may ask you to return the policy and this rider so that
we can endorse them;
3.
If the base policy is surrendered or terminates, other than at the insured's
death. However, this rider terminates if the insured commits suicide within two
years after the Rider Issue Date. We will refund the cost of insurance for this
rider if the insured commits suicide within the two-year period; or
4.
When the base policy is in force as paid-up life insurance.
After this rider terminates, we are not liable for its benefits. If we deduct
the cost of this rider's benefits after it terminates, it is not considered a
reinstatement of this rider. The deduction will be added back to the
Accumulation Value of the base policy as of the date of the deduction.
REINSTATEMENT
If this rider and the base policy lapse, you can reinstate the rider if:
1.
You reinstate the base policy;
2.
The rider was in effect until it lapsed; and
3.
This rider would not otherwise have expired during the time it lapsed.
To reinstate this rider and the base policy, you must:
1.
Give us proof of insurability for the insured and each child whom you wish to be
insured on the reinstatement date; and
2.
Pay a premium large enough such that the Net Premium is as large as the sum of
the Surrender Charge after reinstatement, plus the Monthly Deductions for the
date of reinstatement and the following Monthly Anniversary.
The base policy may be reinstated without this rider, in which case proof and
payment for this rider are not needed.
SUICIDE
This rider's benefits are not payable for an Insured Child if that child commits
suicide within two years after he or she becomes insured under this rider. Also,
if the Insured Child commits suicide within two years after an increase in the
CIR Face Amount, the amount of that increase is not payable for that child.
INCONTESTABILITY
This rider has a two-year contestable period starting on the Rider Issue Date.
During this period, we may ask for information that could lead to our contesting
this rider or refusing to pay its benefits. After this rider has been in force
during the Insured Child's and the insured's lifetime for two years from the
Rider Issue Date, we cannot claim this rider is void or refuse to pay its
benefits unless this rider has lapsed. :p.If this rider lapses and is then
reinstated, this provision will be measured from the reinstatement date with
respect to statements made in the application for reinstatement.
This provision applies separately for each Insured Child.
OTHER PROVISIONS
This rider does not increase the Accumulation Value, Cash Surrender Value, or
Loan Value of the base policy. All base policy provisions apply to this rider,
unless changed by the rider.
5268 4
<PAGE>
WAIVER OF MONTHLY DEDUCTION RIDER
This rider is a part of the base policy whose number is shown below. If not
shown below, the Base Policy Number is shown on the Policy Data Page.
BASE POLICY NUMBER
DEFINITIONS
THE INSURED
The person insured under the base policy.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office
in a form we accept. The form and content of the request or notice must be
acceptable to us.
AGE
The insured's age as of the prior policy anniversary; however, if the insured's
birthday is a policy anniversary, the insured's age on that birthday.
TOTAL DISABILITY
For the first 24 months of the insured's disability, we consider the insured
totally disabled if:
1.
The insured is unable to work at his or her regular occupation; or
2.
The insured has a Specific Loss.
After the first 24 months of the insured's disability, we consider the insured
totally disabled if:
1.
The insured is unable to work at any job suited to his or her education,
training, and experience; or
2.
The insured has a Specific Loss.
Specific Loss means the total and permanent loss of any of the following:
1.
The sight in both eyes;
2.
The use of both hands;
3.
The use of both feet; or
4.
The use of one hand and one foot.
We consider the insured totally disabled for as long as the Specific Loss lasts.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-278 1
<PAGE>
WAIVER BENEFITS
We will pay the Monthly Deduction for you if the insured becomes totally
disabled and meets the Conditions for Waiver Benefits. We do not apply the
Minimum Premium Requirement for the Death Benefit Guarantee during the period of
total disability.
The length of time we continue the Waiver Benefits depends on when total
disability begins. If the insured becomes totally disabled before Age 60, we
will pay the Monthly Deduction for as long as the insured remains totally
disabled. If the insured becomes totally disabled after Age 60, we will continue
to pay the Monthly Deduction if the insured remains totally disabled until the
later of:
1.
The insured's Age 65; or
2.
Two years from the date of disability.
When the insured is no longer totally disabled, we will stop paying the Monthly
Deduction for you. If the Death Benefit Guarantee was in effect when total
disability began, we apply the Minimum Premium Requirement for the Death Benefit
Guarantee as of the Monthly Anniversary on or next following the date the
insured is no longer totally disabled.
If the insured becomes totally disabled again, we consider it a new period of
total disability. The terms of this rider apply to the new period separately
from any earlier period.
CONDITIONS FOR WAIVER BENEFITS
To pay Waiver Benefits, we need written Notice of Claim and Proof of Total
Disability. All of the following conditions must also be met:
1.
The policy and this rider must be in force when the sickness or injury causing
the total disability occurs;
2.
The policy and this rider must be in force when total disability begins;
3.
Total disability must begin on or after the insured's Age five and before the
insured's Age 65;
4.
The insured must be continuously totally disabled for at least six months; and
5.
You must pay all the required premiums until the end of this six month period.
If we approve your claim, the Waiver Benefit begins with the Monthly Deduction
due on or after the date the total disability began. Any Monthly Deductions that
were deducted from the Accumulation Value of the base policy after the
disability began will be added back to the Accumulation Value as of the date we
approve your claim. We credit those Monthly Deductions as Net Premiums without
Premium Expense Charges.
If this rider and the base policy lapse, you may still qualify for Waiver
Benefits if:
1.
We receive written Notice of Claim within one year of the date of total
disability;
2.
The total disability for which claim is made began before the date of lapse; and
3.
All other terms of this rider are met.
5269 2
<PAGE>
CONDITIONS FOR WAIVER BENEFITS
NOTICE OF CLAIM
We require written Notice of Claim before we will pay any future Monthly
Deductions. We must receive this Notice:
1.
While the insured is living; and
2.
Within one year of the date that total disability begins.
If you cannot give us Notice within one year, your claim may still be valid if
you show that you gave us notice as soon as you could.
PROOF OF TOTAL DISABILITY
We may require written proof of the insured's total disability before we provide
Waiver Benefits. This proof may include physical exams at our expense by doctors
we choose. However, for each period of total disability, we can only require one
exam a year after we have paid the Monthly Deductions for two consecutive years.
We cannot require any exam after the insured's Age 65. We will stop paying the
Monthly Deductions if you do not give us the required proof.
COST OF RIDER BENEFITS
The cost of this rider's benefits is in addition to the cost for the base policy
and is included in the Monthly Deduction. This cost is based on a Percent of the
Monthly Deduction which is shown on the Policy Data Page.
FACE AMOUNT CHANGES DURING TOTAL DISABILITY
While the insured is totally disabled and we are paying the Monthly Deduction
for you, you are limited to making increases in the Face Amount of the base
policy under the terms of a future purchase option rider, if any, attached to
the base policy. You may not make any adjustments in Face Amount while we are
paying the Monthly Deduction.
DEATH BENEFIT OPTION
If the Death Benefit Option in effect at the end of the first six months of
total disability is Option A (Level Amount Option), it will be changed to Option
B (Variable Amount Option) on the first Monthly Anniversary Date after we
approve your claim. In this case, the Face Amount of the base policy is
decreased on that date so that it equals the Death Benefit under Option A minus
the Accumulation Value on the Monthly Anniversary on or next following the date
we approve your claim. If the Death Benefit Option in effect at the end of the
first six months of the total disability is Option B, we make no change. You
cannot make changes in Death Benefit Option while the insured is totally
disabled.
BENEFITS NOT PROVIDED
This rider does not cover total disability that results from service in the
military of any country at war. WAR is defined as an armed conflict, whether
declared or not, that any country resists. COUNTRY includes any government or
group of governments.
TERMINATION
This rider terminates:
1.
If we are not paying Waiver Benefits, at the insured's Age 65;
2.
If we are paying Waiver Benefits due to total disability which began after the
insured's Age 60, the later of:
a.
The insured's Age 65, or
b.
Two years after the date of disability;
3.
On the Monthly Anniversary on or next following the date we receive your written
request to terminate this rider. We may ask that you return the policy and this
rider so that we can endorse them;
4.
If the base policy is surrendered or terminates; or
5.
When the base policy is in force as paid-up life insurance.
After this rider terminates, we are not liable for its benefits. If we deduct
the cost of this rider's benefits after it terminates, it is not considered a
reinstatement of this rider. The deduction will be added back to the
Accumulation Value of the base policy as of the date of the deduction.
85-279 3
<PAGE>
REINSTATEMENT
If this rider and the base policy lapse, you can reinstate this rider if:
1.
You reinstate the base policy;
2.
This rider was in effect when the base policy lapsed; and
3.
This rider would otherwise not have terminated during the time it was lapsed.
To reinstate the base policy and this rider you must do all of the following:
1.
Give us proof of insurability for the insured; and
2.
Pay a premium large enough such that the Net Premium is as large as the sum of
the Surrender Charge after reinstatement, plus the Monthly Deductions for the
date of reinstatement and the following Monthly Anniversary.
The base policy may be reinstated without this rider, in which case proof and
payment for this rider are not needed.
GENERAL PROVISIONS
All base policy provisions apply to this rider, unless changed by this rider.
The Incontestability Provision of the base policy applies to this rider from the
Rider Issue Date.
5270 4
<PAGE>
WAIVER OF SPECIFIED PREMIUM RIDER (WSP)
This rider is a part of the base policy whose number is shown below. If not
shown below, the Rider Data is shown on the Policy Data Page.
RIDER DATA
BASE POLICY NUMBER
RIDER ISSUE DATE
RIDER EXPIRY DATE
DEFINITIONS
THE INSURED
The person insured under the base policy.
YOU, YOUR
The current owner of the base policy.
WE, US, OUR
ReliaStar Bankers Security Life Insurance Company at our Home Office in
Woodbury, New York.
WRITTEN, IN WRITING
A written request or notice, signed and dated, and received at our Home Office.
The form and content of the request or notice must be acceptable to us.
AGE 5, AGE 60, OR AGE 65
The policy anniversary on or next following the insured's 5th, 60th, or 65th
birthday.
MAXIMUM WSP AGE
Maximum Waiver of Specified Premium Age as shown on the Policy Data Page.
WAR
An armed conflict, whether declared or not, that any country resists.
COUNTRY
Any government or group of governments.
TOTAL DISABILITY
During the first 24 months of the insured's disability, we consider the insured
totally disabled if the insured is unable to work at his or her regular
occupation.
After the first 24 months of the insured's disability, we consider the insured
totally disabled if the insured is unable to work at any job suited to his or
her education, training, and experience.
We also consider the insured totally disabled if the insured has a Specific
Loss. Specific Loss means the total and permanent loss of any of the following:
1.
The sight in both eyes;
2.
The use of both hands;
3.
The use of both feet; or
4.
The use of one hand and one foot.
In any case, the insured must be totally disabled due to sickness or injury.
RELIASTAR
RELIASTAR BANKERS SECURITY Excuted at our Home Office
LIFE INSURANCE COMPANY John H. Flittie President
/s/ John H. Flittie
1000 Woodbury Road, Suite 102
P. O. Box 9004 Susan M. Bergen Secretary
Woodbury, New York 11797 /s/ Susan M. Bergen
85-280 1
<PAGE>
BENEFITS
If the insured is totally disabled, this rider provides a monthly benefit. The
monthly benefit is that we credit your base policy with the following premium
amount:
1.
If the insured's age is less than the Maximum WSP Age, as shown on the Policy
Data Page, we credit the greater of a or b, where:
a.
Is the Monthly Specified Premium, as shown on the Policy Data Page; and
b.
Is the sum of i, plus ii, plus iii, (i + ii + iii), where:
i.
Is the Monthly Deduction of the base policy, excluding any mortality and expense
risk charges and the cost of any rider benefits;
ii.
Is the cost of insurancefor the Waiver of Specified Premium Rider; and
iii.
Is any base policy premium expense charges associated with i and ii.
2.
If the insured's age is equal to or greater than the Maximum WSP Age, as shown
on the Policy Data Page, we credit the sum of a, plus b, plus c, (a + b + c),
where:
a.
Is the Monthly Deduction of the base policy, excluding any mortality and expense
risk charges and the cost of any rider benefits;
b.
Is the cost of insurance for the Waiver of Specified Premium Rider; and
c.
Is any base policy premium expense charges associated with a and b.
If the insured is totally disabled at or after Age 5 and before Age 60, the
monthly benefit is payable until the base policy ends or is changed to paid-up
insurance. If the insured becomes totally disabled at or after Age 60 but before
Age 65, the monthly benefit is payable to Age 65 or for 2 years, whichever is
longer. No benefits will be paid if the insured is not totally disabled.
We will not provide benefits for total disability that starts before Age 5,
after Age 65, or while this rider is not in force.
Any benefit payment which would cause this policy to fail to qualify as life
insurance under applicable tax laws, as interpreted by us, will be paid to the
Owner.
Before we will provide the benefits of this rider, the following must be true:
1.
The base policy must be in force;
2.
This rider must be in force;
3.
The insured must be totally disabled; and
4.
1, 2, and 3 must be continuously true for 6 months.
If the base policy enters the grace period during this 6-month period, you must
pay the required premium to keep the policy in force. If we approve your claim,
we will provide monthly benefits beginning on the first monthly anniversary
after the date we approve your claim. Upon approval of your claim, we will also
provide monthly benefits for the period after the date your disability began and
up to the date we approved your claim.
If this rider and the base policy lapse during the first 6 months of total
disability because a premium large enough to cover a Monthly Deduction was not
paid within the grace period, you may still be eligible for this rider's
benefits if:
1.
We receive written notice of claim within 1 year of the date of lapse;
2.
The total disability for which claim is made began before the date of lapse; and
3.
All other terms of this rider are met.
When the insured is no longer totally disabled, we stop providing the benefits.
If the insured becomes totally disabled again, we consider it a new period of
total disability. The terms of this rider apply to the new period separately
from any earlier period.
5271 2
<PAGE>
COST OF INSURANCE
The cost of insurance for this rider, and the cost of insurance for the base
policy, are determined separately, on a monthly basis. The cost of insurance for
this rider is 1 multiplied by 2; that is, 1 x 2, where:
1.
Is the Waiver of Specified Premium Rate as described below; and
2.
Is the Monthly Specified Premium shown on the Policy Data Page.
WAIVER OF SPECIFIED PREMIUM RATES
The Waiver of Specified Premium Rate is based on the insured's sex, attained
age, and premium class for this rider as shown on the Policy Data Page. Attained
age means age last birthday on the prior policy anniversary. The Waiver of
Specified Premium Rates are shown on the Policy Data Page. For those in a rated
waiver premium class, the Waiver of Specified Premium Rates are calculated by
multiplying the Waiver of Specified Premium Rates shown on the Policy Data Page
by the Waiver Premium Class Rating Factor shown on the Policy Data Page.
NOTICE OF CLAIM
We require written notice of claim before we will provide any future benefits.
We must receive this notice:
1.
While the insured is living;
2.
While the insured is totally disabled; and
3.
Within 1 year of the date that total disability starts. If you cannot give us
notice within 1 year, your claim may still be valid if you show us that you gave
us notice as soon as you could.
PHYSICAL EXAMS
We may require written proof of the insured's total disability before we will
provide any benefits. This proof may include physical exams by doctors we
choose. However, for each period of total disability, we can only require one
exam a year after we have provided the benefits for 2 consecutive years. We
cannot require any exam after the insured's Age 65. We will stop providing the
benefits if you do not give us the proof we ask for.
FACE AMOUNT CHANGES
The Monthly Specified Premium after any Face Amount increase must be increased,
if necessary, to be greater than or equal to the Minimum Monthly Premium for the
policy as shown on the Policy Data Page.
The Monthly Specified Premium after any Face Amount decrease must be reduced, if
necessary, to be less than or equal to 1/12th of the Guideline Level Premium for
the policy as defined in Section 7702 of the Internal Revenue Code. You may not
make any other Monthly Specified Premium changes.
While we are providing benefits under this rider, you are limited to making
increases in the Face Amount of the base policy under the terms of a future
purchase option rider if one is attached to the base policy. You may not make
any other Face Amount increases while we are providing the benefits.
BENEFITS NOT PROVIDED
This rider does not cover total disability which was the result of any of the
following:
1.
Intentional, self-inflicted injury;
2.
Bodily injury occurring or sickness first manifesting itself before this rider
is in force, unless it is disclosed on the application; or
3.
Service in the military, naval, or air forces of any Country at War.
85-281 3
<PAGE>
TERMINATION
This rider ends at the earliest of the following:
1.
When the base policy becomes in force as paid-up life insurance.
2.
When the base policy is surrendered or ends.
3.
At the death of the insured.
4.
If you ask us in writing to end this rider. In this case, we may ask that you
return the policy and this rider so that we can endorse them. This rider will
end on the first Monthly Anniversary Date after we receive your written request
to end this rider.
5.
When the insured reaches Age 65 if we are not providing benefits due to the
disability of the insured.
6.
When the monthly benefit for this rider ends if we are providing monthly
benefits under this rider after Age 65.
After this rider ends, we are not liable for its benefits, even if we deduct the
cost of insurance for this rider after it ends. We will add to the accumulation
value any cost of insurance we have deducted for this rider after it ends.
REINSTATEMENT
If this rider and the base policy lapse, you can reinstate this rider if:
1.
This rider was in effect when the base policy lapsed;
2.
This rider would otherwise not have expired during the time it was lapsed; and
3.
You reinstate the base policy.
To reinstate this rider you must do both of the following:
1.
Give us proof of insurability for the insured;
and
2.
Pay a premium large enough such that the Net Premium is as large as the sum of
the Surrender Charge after reinstatement, plus the Monthly Deductions for the
date of reinstatement and the following Monthly Anniversary.
The base policy may be reinstated without this rider, in which case proof and
payment for this rider are not needed.
GENERAL PROVISIONS
All base policy provisions apply to this rider, unless changed by this rider.
The Incontestability Provision of the base policy applies to this rider from the
Rider Issue Date.
5272 4
RELIASTAR BANKERS SECURITY
LIFE INSURANCE COMPANY
Charter
as amended and restated,
Effective July 1, 1996
Home office:
1000 Woodbury Road, Suite 102, P. O. Box 9004, Woodbury, NY 11797
Incorporated Under the Laws of the State of New York
July, 1996
<PAGE>
ARTICLE I
The name of the Corporation shall be "ReliaStar Bankers Security Life
Insurance Company".
ARTICLE II
The principal office of the Corporation shall be located in the County
of Nassau, State of New York. The Corporation may establish and maintain other
offices, agencies or branches within or without the State of New York and in any
part of the world.
ARTICLE III
The Corporation is formed for the following purposes:
To transact the following kinds of insurance business as defined in
paragraphs 1, 2 and 3 of Section 46 of the Insurance Law of the State of New
York:
"1. 'Life insurance,' meaning every insurance upon the lives of
human beings and every insurance appertaining thereto. The business of
life insurance shall be deemed to include the granting of endowment
benefits; additional benefits in the event of death by accident or
accidental means; additional benefits operating to safeguard the
contract from lapse, or to provide a special surrender of value, in the
event of total and permanent disability of the insured; and optional
modes of settlement of proceeds.
7/96 -2-
2. 'Annuities,' meaning all agreements to make periodical
payments where the making or continuance of all or of some of a series
of such payments, or the amount of any such payment, is dependent upon
the continuance of human life, except payments made under the authority
of paragraph one. Any such agreement may provide that any amounts paid
to the insurer to provide annuities shall be allocated by the insurer
to one or more separate accounts pursuant to section two hundred
twenty-seven, whether such annuities are payable in fixed or variable
amounts or both.
3. 'Accident and health insurance,' meaning (a) Insurance
against death or personal injury by accident or by any specified kind
or kinds of accident and insurance against sickness, ailment or bodily
injury, including insurance providing disability benefits pursuant to
article nine of the workmen's compensation law, except as specified in
subparagraph(b) following; and
(b) Non-cancellable disability insurance, meaning insurance
against disability resulting from sickness, ailment or bodily injury,
(but not including insurance solely against accidental injury) under
any contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date."
To effect reinsurance of risks taken by it, and to assume by way of
reinsurance similar risks taken by other insurers or reinsurers.
7/96 -3-
To do such other business as a stock life insurance company now is or
hereafter may be permitted to do under the Insurance Law of the State of New
York and for which the Corporation shall have the required capital and surplus.
ARTICLE IV
The amount of the capital of the Corporation shall be Two Million Seven
Hundred Fifty Five Thousand Seven Hundred Twenty Six Dollars ($2,755,726) to
consist of One Million Three Hundred Seventy Seven Thousand Eight Hundred Sixty
Three (1,377,863) shares of Capital Stock of the par value of Two Dollars
($2.00) each.
No holder of stock of the Corporation shall be entitled, as such, to
any pre-emptive rights to subscribe for the purchase of or to receive any part
of any issue of shares, or of bonds, notes, debentures, preferred stock, or
other securities convertible into shares, of the Corporation whether now or
hereafter authorized or issued; and the Corporation shall have the right from
time to time, without offering the same to the holders of shares of any class
then outstanding, to issue and sell shares of its stock of any class, or any
such bonds, notes, debentures, or other securities convertible into stock, to
such person or persons as the Board of Directors from time to time shall
determine. As used in this paragraph the expression "securities convertible into
stock" shall be deemed to include securities to which are attached or with which
are issued warrants or other instruments evidencing the right to purchase or
otherwise acquire shares to any class of stock of the Corporation.
7/96 -4-
ARTICLE V
Section I. The corporate powers shall be exercised by a Board of Directors and
by a president and by one or more vice presidents, a secretary and a treasurer
and by such other officers and such committees as the Board of Directors may
elect or appoint and empower. The number of Directors shall be not less than
thirteen nor more than twenty-two. The actual number of Directors of the
Corporation shall be such as from time to time shall be fixed by or in the
manner provided in the By-laws.
Section 2. The Board of Directors or the Stockholder(s) shall have the
powers to make, prescribe amend or repeal the By-Laws. The Board of Directors
shall also have the powers to make and prescribe rules and regulations for the
transaction of business of the Corporation and the conduct of its affairs, not
inconsistent with this Charter of the laws of the State, and to amend or repeal
the same.
ARTICLE VI
Section 1. The directors shall be elected by the stockholders, as
prescribed by the laws of the State of New York or by By-laws not inconsistent
with this charter or the laws of the State of New York. An election of directors
shall be held annually at a time, place and date specified by the Board of
Directors during the month of April and, in the event the Board of Directors
shall fail to specify such a time, place or date, the election shall be held on
the fourth Thursday of April, if not a legal holiday, and, if a legal holiday,
then on the next succeeding business day not a legal holiday at the
Corporation's Executive
7/96 -5-
Office at 9:00 a.m. The stockholders by a majority vote at a meeting may remove
any directors with or without cause. Any director may be removed by the Board of
Directors for cause, at any time, or whenever such action is requested by the
Superintendent of Insurance of the State of New York.
Section 2. The president, one or more vice presidents, a secretary and
a treasurer shall be elected annually by the Directors at the first meeting of
the Board of Directors held after the election of the Directors as provided in
Section 1 of this Article; and each of them shall hold office until the election
of his successor. All other officers shall be elected or appointed by the Board
of Directors, or in such manner as the By-laws may prescribe. Any officers may
be removed at any time by the Board of Directors.
Section 3. Whenever any vacancy or vacancies shall occur in the Board
of Directors by death, resignation, removal or otherwise, a majority of the
remaining members of the Board, at a meeting called for that purpose, or at any
regular meeting, shall elect a Director or Directors to fill the vacancy or
vacancies thus occasioned and each Director so elected shall serve until his
successor is elected and is qualified. If, because of any vacancy or vacancies
in the Board of Directors, the number of Directors shall be less than thirteen,
the Corporation shall not for that reason be dissolved, but every Director shall
continue to hold office and discharge his duties until his successor shall have
been elected and qualified.
Section 4. Vacancies in any office may be filled for the remainder of
the term of the term in which the same shall occur by a majority vote of the
Board of Directors.
7/96 -6-
Section 5. At all times, not less than three directors shall be
residents of New York and no director shall be less than twenty-one years of
age. Not less than one-third of the Board of Directors shall be persons who are
not officers or employees of the Corporation or any entity controlling,
controlled by, or under common control with the Corporation and who are not
beneficial owners of a controlling interest in the voting stock of the
Corporation or any such entity. Directors need not be stockholders.
ARTICLE VII
The names and post office residence addresses of the Directors who
shall serve until the next annual meeting of stockholders and until their
successors are duly elected are:
NAME RESIDENCE
---- ---------
Wallace F. Forbes 609 Sleepy Hollow Road
Briarcliff Manor, NY 10510
Charles V. Giuffra 1612 Forest Lane
McLean, VA 22101
George Graves 4221 Willow Woods Drive
Annandale, VA 22203
John F. Haggerty 115 Greenway North
Forest Hills, NY 11375
John J. Jaskot 12505 Galway Drive
Silver Spring, MD 20904
Arthur D. Lewis 4986 Sentinel Drive, #304
Bethesda, MD 20816
NAME RESIDENCE
---- ---------
Thomas Y. Moon 806 Crooked Crow Lane
Great Falls, VA 22066
7/96 -7-
Fioravante G. Perrotta 20 Sutton Place
New York, NY 10022
Peter M. Regan 13813 Esworthy Road
Darnestown, MD 20874
James M. Schultz 3305 Thorngate Drive
Berndon, VA 22071
Henry G. Stifel 84 Farley Road
Short Hills, NY 07078
Eli Weinberg 100 Hill Drive
Oyster Bay, NY 11771
ARTICLE VIII
Any person made a party to any action, suit or proceeding, civil or
criminal, by reason of the fact that he or she is or was an officer or employee
of the Corporation, or of any corporation which he or she served as such at the
request of the Corporation, shall be indemnified by the Corporation against the
reasonable expenses, including attorney's fees, actually and necessarily
incurred by him or her in connection with the defense of such action, suit or
proceeding, civil or criminal, or in connection with any appeal therein, except
in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that he or she is liable for negligence or misconduct in the
performance of his or her duties. No director shall be personally liable to the
Corporation or any of its stockholders for damages for any breach of duty as a
director; provided, however, that the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to him or her establishes that his or her acts or omissions were in bad
faith or involved intentional misconduct or any violation of the Insurance Law
or a knowing violation of any other law or that he or she personally gained in
fact a financial profit or other advantage to which he or she was
7/96 -8-
not legally entitled; or (ii) the liability of a director for any act or
omission prior to the adoption of this amendment by the stockholders of the
Corporation. Any amount payable by way of indemnity shall be determined and paid
in such manner as the Board of Directors may determine or the stockholders by
appropriate resolution may specify: provided, however, that if such amount is
paid otherwise than pursuant to a court order or by resolution of the
stockholders, the Corporation shall, not later than the next annual meeting of
stockholders unless such meeting is held within three months of the date of
payment and, in any event, within fifteen months of the date of such payment,
mail to its stockholders of record at the time entitled to vote for the election
of directors a statement specifying the persons paid, the amounts paid and the
nature and status at the time of such payment of the litigation or threatened
litigation.
ARTICLE IX
The duration of the corporate existence of the Corporation shall be
perpetual.
7/96 -9-
<PAGE>
RELIASTAR BANKERS SECURITY
LIFE INSURANCE COMPANY
Bylaws
as amended and restated
Effective AUGUST 19, 1996
---------------
Home Office: 1000 Woodbury Road, Suite 102, P.O. Box 9004,
Woodbury, NY 11797
Incorporated Under the Laws of the State of New York
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
BYLAWS
ARTICLE I
1. The annual meeting of the stockholders of the Company for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the second Thursday
of April, if not a legal holiday, and if a legal holiday, then on the next
succeeding business day not a legal holiday, at such time and place as specified
by the Board of Directors.
2. Special meetings of the stockholders may be called at any time by a
majority of the Board of Directors or by the President, and shall be called upon
the written request of stockholders of record owning at least one-fourth of the
capital stock. Such meetings shall be held at such time and in such place as
shall be designated in the notice thereof.
3. Notice of each meeting of stockholders shall be in writing, signed by
the President, a Vice President, the Secretary or an Assistant Secretary. It
shall state the purpose of the meeting and shall be served, either personally or
by mail, upon each stockholder of record entitled to vote at such meeting, not
less than then ten nor more than fifty days before the meeting. If mailed, said
notice shall be directed to a stockholder at his last know post office address
appearing on the records of the Company.
7/96 -2-
ARTICLE II
1. No election of directors shall be valid unless a copy of the Notice
of Election shall have been filed in the office of the Superintendent of
Insurance at least ten days before the day of such election. Whenever any of the
directors of the Company shall have resigned and successors shall have been
chosen pursuant to the provisions of these Bylaws, such successors shall not
take office nor exercise the duties thereof until ten days after written notice
of their election shall have been filed in the office of the Superintendent of
Insurance.
2. In case it shall happen at any time that an election of directors
shall not be had on the date hereinbefore designated, the Company shall not for
that reason be dissolved; but every director shall continue to hold his or her
office and discharge his or her duties until a successor has been elected.
3. Each share of voting stock shall entitle the holder thereof to one
vote, either in person or by proxy, in the election of directors or on any other
matter that may properly come before any meeting of the stockholders of the
Company.
4. A majority in interest of the outstanding voting stock of the Company
represented either in person or by proxy shall constitute a quorum for the
transaction of business at any annual or special meeting of the stockholders. A
majority of such quorum shall decide any question that may come before the
meeting, except as
7/96 -3-
otherwise required by statute or as otherwise provided in the Certificate of
Incorporation or Bylaws of the Company.
ARTICLE III
1. Certificates of stock shall be issued in numerical order and each
stockholder shall be entitled to a certificate signed by the President or a Vice
President, and the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer, and sealed with the seal of the Company (which may be a
facsimile, engraved or printed), certifying to the number of shares owned by the
stockholder; provided, however, that where any such certificate is signed by a
transfer agent or a transfer clerk and by a registrar acting on behalf of the
Company, the signature of any such officials of the Company may be facsimiles,
engraved or printed thereon.
2. All transfers of stock shall be made upon the transfer books of the
Company, which books shall be kept in the State of New York. Before any new
certificate is issued, the old certificate or all rights therein shall be
surrendered.
3. A person in whose name shares of capital stock stand on the books of
the Company shall be deemed the owner thereof for all purposes.
4. The transfer books of the Company may be closed by order of the Board
of Directors or the Executive Committee for the period not exceeding forty days
next preceding the day fixed for any annual or special meeting of the
stockholders and may
7/96 -4-
likewise be closed for the payment of any dividend for a similar period next
preceding the day fixed for such payment.
ARTICLE IV
1. The management of all the affairs, property and interests of the
Company shall be vested in a Board of Directors consisting of not less than
thirteen (13) nor more than twenty-two (22) Directors as fixed by the Resolution
of the Board of Directors who shall be annually elected. In addition to the
powers and authorities expressly conferred upon them by these Bylaws and the
Certificate of Incorporation, the Board of Directors may exercise all such
powers of the Company and do all such lawful acts and things as are not, by
statute or by the Certificate of Incorporation or by these Bylaws, directed or
required to be exercised or done by the stockholders.
2. A regular meeting of the Board of Directors shall be held once each
year and at any other time at dates to be fixed by resolution of said Board.
3. Special meetings of the Board of Directors may be held at any time
upon call of the Chairman of the Board, the Executive Committee, or the
President, or of a majority of the members of the said Board.
4. Meetings of the Board of Directors may be held at the Home Office of
the Company or at such other place or places as the Board of Directors or the
Executive Committee may from time to time designate. Directors may participate
in a meeting of
7/96 -5-
the Board by means of conference telephone or similar communications equipment
allowing all persons participating in such meeting to hear each other at the
same time. Participation by such means shall constitute presence in person at
the meeting.
5. At least three days written notice of any regular or special meeting
of the Board of Directors shall be given to each director.
6. A quorum of the Board of Directors shall be a majority of the members
thereof; provided that at least one member of the Board of Directors who is not
an officer or employee of the Company or any entity controlling, controlled by,
or under common control with the Company and who is not a beneficial owner of a
controlling interest in the voting stock of the Company or any such entity must
be included in any quorum for the transaction of business of any meeting of the
Board of Directors or any committee thereof.
7. The Board of Directors may appoint from its own membership an
Executive Committee of not less than three members which shall act for the Board
of Directors between the meetings of said Board, during which time the Executive
Committee shall exercise all of the powers and duties of the Board of Directors
except that it shall not have the power or authority to alter or amend the
Bylaws or to remove or change the compensation of any senior officer or
director. The Executive Committee shall consist of not less than one-third of
its members who shall be persons who are not officers or employees of the
Company or any entity controlling, controlled by, or under
7/96 -6-
common control with the Company and who are not beneficial owners of a
controlling interest in the voting stock of the Company or any such entity. At
least one such person must be included in any quorum. The Executive Committee
shall meet at stated times or on notice to all by any of its own members. It
shall fix its own rules of procedure. A majority of the members shall constitute
a quorum. The Executive Committee shall keep regular minutes of its proceedings
and report the same to the Board of Directors at its next regular meeting.
8. In the event a vacancy occurs on the Executive Committee in the
interim between meetings of the Board of Directors, the Chairman of the Board is
authorized and empowered to appoint a member of the Board of Directors as a
successor who shall serve until the next regular meeting of the Board of
Directors at which time the Board of Directors shall fill the vacancy.
9. A Compliance Committee of not less than three members of the Board of
Directors shall be appointed by the Board of Directors. Such members shall not
be persons who are officers or employees of the Company or any entity
controlling, controlled by, or under common control with the Company and who are
not beneficial owners of a controlling interest in the voting stock of the
Company or any such entity. The Compliance Committee shall have responsibility
for recommending the selection of independent certified public accountants,
reviewing the Company's financial condition, the scope and results of the
independent audit and any internal audit, nominating candidates for director for
election by stockholders, and evaluating the performance of
7/96 -7-
officers deemed by such committee to be principal officers of the Company and
recommending to the Board of Directors the selection and compensation of such
principal officers.
Standing or temporary committees of not less than three members of the
Board of Directors may also be appointed by the Board of Directors from time to
time and the Board of Directors may from time to time invest such committee with
such powers as it may see fit. Not less than one-third of the members of any
such committee shall be persons who are not officers or employees of the Company
or any entity, controlling, controlled by or under common control with the
Company and who are not beneficial owners of a controlling interest in the
voting stock of the Company or any such entity. At least one such person must be
included in any quorum of any such committee.
10. Each committee so appointed shall keep minutes of the transactions of
its meetings and shall cause them to be recorded in the books kept for that
purpose in the office of the Company and shall report the same to the Board of
Directors at its next regular meeting.
11. No stated salary shall be paid directors for their services as such,
but in accordance with a plan recommended by the Compliance Committee and by
resolution of the Board of Directors, expenses of attendance, if any, or a fixed
sum, or both, may be allowed for attendance at any meeting of the Board of
Directors, provided that
7/96 -8-
nothing herein contained shall be construed to preclude any director from
serving the Company in any other capacity and receiving compensation therefore.
12. Whenever a vacancy shall occur in the Board of Directors, whether
caused by resignation, death or otherwise, it may be filled by a majority vote
of the remaining directors present at a regular meeting, or at a special meeting
called for that purpose, although less than a quorum. A director thus elected to
fill any vacancy shall hold office for the unexpired term of his or her
predecessor and until his or her successor is elected and qualified. Whenever
the number of directors shall be increased, additional directors may be elected
by a majority of the directors in office at the time of such increase.
ARTICLE V
1. The senior officers of the Company shall be a Chairman of the Board,
a Vice Chairman of the Board, and a President, one of whom shall be designated
as Chief Executive Officer. In addition, the senior officers of the Company
shall include one or more Vice Presidents, a Secretary and a Treasurer. Each
senior officer shall be elected annually by the Board of Directors at its first
regular meeting following the annual meeting of stockholders and shall hold
office for a period of one year or until his successor shall be elected and
qualified. The Chief Executive Officer may appoint such additional officers as
he deems necessary for the proper conduct of the business of the Company, and
such officers shall serve at his pleasure.
7/96 -9-
2. In the event a vacancy occurs in the office of Chairman of the Board,
the Vice Chairman of the Board, the President, or Secretary, or Treasurer, the
Board of Directors shall, at the earliest practicable date, elect a successor
who shall hold office for the unexpired term of his or her predecessor. Any
vacancy in any office of Vice President may be filled for the unexpired portion
of the term by the Board of Directors at any regular or special meeting.
3. Any senior officer may be removed at any time by the affirmative vote
of not less than a majority of the entire Board of Directors.
4. More than one office may be held by the same person with the
exception that the same person may not hold the offices of President and
Secretary.
5. The duties of the officers shall be those customarily pertaining to
their respective offices or positions, elective or appointive, together with
such other duties as may be prescribed by law or assigned by the Board of
Directors.
ARTICLE VI
1. The funds of the Company shall be deposited, in the name of the
Company, only in banks or trust companies approved by the Board of Directors.
The officers of the Company are authorized to establish and maintain such bank
accounts as are deemed necessary for the normal conduct of business, subject to
7/96 -10-
the requirements that such accounts must be reported to and approved by the
Executive Committee. The Board of Directors shall authorize and direct such
depositories to honor checks, drafts, bills of exchange, acceptances,
undertakings, or other orders for the payment of money, or receipts evidencing
the withdrawal of funds of the Company from such depositories, only when signed
on behalf of the Company by such persons as may be designated by the Board of
Directors.
2. Any one of the following officers: The Chairman of the Board, the
Vice Chairman of the Board, the Chairman of the Executive Committee, the
President, a Vice President, the Treasurer or the Secretary shall have the power
and be authorized to execute transfers of stock, powers of attorney, deeds,
leases, releases of mortgages, satisfaction pieces, contracts and instruments in
writing necessary to the Company in the management of its affairs and to attest
the Company's seal thereon when necessary. Upon contracts for insurance and
instruments relating thereto, facsimile signatures shall be sufficient.
3. No stockholder, policyowner or creditor of the Company, or his
personal representative, shall have the right to inspect any account or book or
document of the Company, except as conferred by law or by resolution of the
stockholders or Board of Directors.
7/96 -11-
ARTICLE VII
1. Whenever the provisions of the applicable statute of the State of New
York or these Bylaws require notice to be given to any director, officer or
stockholder, such notice shall be given in writing to his or her address as the
same appears in the books of the Company, and the time when the same shall be
mailed shall be deemed to be the time of the giving of such notice.
2. A waiver of any notice in writing, signed by a stockholder, director,
or officer before or after the time stated in said waiver for holding a meeting,
shall be deemed equivalent to a notice required to be given to any director,
officer or stockholders.
ARTICLE VIII
The seal of the Company shall be circular in form and shall contain the
words: "ReliaStar Bankers Security Life Insurance Company, New York, Corporate
Seal, 1917," which seal shall be kept in the custody of the Secretary of this
Company and affixed to all instruments requiring such corporate seal.
ARTICLE IX
Alterations, amendment or repeal of these Bylaws may be made by the
Stockholders or at any meeting of the Board of Directors at which a quorum is
present by a majority of the Directors attending such meeting.
7/96 -12-
Article X
Unless otherwise provided in the Articles of Incorporation, any action
required or permitted to be taken at any meeting of the shareholders, Board of
Directors, or of any committee thereof may be taken without a meeting if, a
written consent to such action is signed by all shareholders, all members of the
Board or of any Board committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the shareholders, the Board or the
committee.
7/96 -13-
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
BANKERS SECURITY LIFE INSURANCE SOCIETY
THIS AGREEMENT, made and entered into as of the 9th day of March, 1995 by
and among BANKERS SECURITY LIFE INSURANCE SOCIETY, (hereinafter the "Company"),
a New York corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and
FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
under this Agreement, as may be amended from time to time by mutual agreement of
the parties hereto (each such series hereinafter referred to as a "Portfolio");
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the Company shall
be the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts with the form number(s) which are
listed on Schedule A attached hereto and incorporated herein by this reference,
as such Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund; or (b) the Company
gives the Fund and the Underwriter 45 days written notice of its intention to
make such other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the Company so
informs the Fund and Underwriter prior to their signing this Agreement (a list
of such funds appearing on Schedule C to this Agreement); or (d) the Fund or
Underwriter consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Boston time)
and shall use its best efforts to make such net asset value per share available
by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 4240 of the New York Insurance Code and has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New York and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of New
York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company with as many printed copies
of the Fund's current prospectus and Statement of Additional Information as the
Company may reasonably request. If requested by the Company in lieu thereof, the
Fund shall provide camera-ready film or computer diskettes containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film or computer diskettes
in lieu of receiving printed copies of the Fund's prospectus, the Fund will
reimburse the Company in an amount equal to the product of A and B where A is
the number of such prospectuses distributed to owners of the Contracts, and B is
the Fund's per unit cost of typesetting and printing the Fund's prospectus. The
same procedures shall be followed with respect to the Fund's Statement of
Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications (except for
prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been received in
a particular separate account in the same proportion as Fund
shares of such portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee reasonably objects to such use within fifteen Business Days
after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee or
by the Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or its separate
account(s), is named at least fifteen Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (I.E., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Underwriter may make payments to the Company or to the underwriter for
the Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Fund. Currently, no such payments
are contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance with the grace period afforded by Regulation
1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (I.E., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Company, as limited by and in accordance with
the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance
with the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts;
or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company
under Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund
may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter
has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity;
or
(h) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter
the written notice specified in Section 1.6(b) hereof and at the
time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement;
provided, however any termination under this Section 10.1(h)
shall be effective forty five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Bankers Security Life Insurance Society
4601 N. Fairfax Drive
Arlington, Virginia 22203
Attention: Elizabeth Schwarzman
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 90 days after the end
of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 45 days after
the end of each quarterly period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
BANKERS SECURITY LIFE INSURANCE SOCIETY
By: /s/ Francis A. Podlesney
Name: FRANCIS A. PODLESNEY
Title: GENERAL COUNSEL & SECRETARY
VARIABLE INSURANCE PRODUCTS FUND
By: /s/ J. Gary Burkhead
Name: J. GARY BURKHEAD
Title: SENIOR VICE PRESIDENT
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Kurt A. Lange
Name: KURT A. LANGE
Title: PRESIDENT
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
NAME OF SEPARATE ACCOUNT AND POLICY FORM NUMBERS OF CONTRACTS FUNDED
DATE ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT
Separate Account M -- 3/81 B-ORD-1928-90
Separate Account P -- 12/81
Separate Account Q -- 9/82
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed
and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund MUST allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of SHARES.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Oppenheimer Variable Account Funds
Alliance Capital Management Funds
USLICO Fund (an in-house fund that supports Bankers Security Life Insurance
Society's and United Services Life Insurance Company's Variable Life Insurance
products.)
<PAGE>
AMENDMENT NO. 1
Amendment to the Participation Agreement among ReliaStar Bankers
Security Life Insurance Company (formerly Bankers Security Life Insurance
Society) (the "Company"), Variable Insurance Products Fund I (the "Fund") and
Fidelity Distributors Corporation (the "Underwriter") dated March 9, 1995 (the
"Agreement").
WHEREAS each of the parties desire to expand the ability of the Company
to develop and market Variable Life Insurance Policies and Variable Annuity
Contracts which have separate accounts using the Fund as the investment vehicle
for said separate accounts, the Company, Underwriter and Fund hereby agree to
amend Schedule A of the Agreement by inserting the following additional item
therein:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME OF SEPARATE ACCOUNT AND CONTRACTS FUNDED BY
DATE ESTABLISHED BY BOARD OF DIRECTORS SEPARATE ACCOUNT
-------------------------------------- ----------------
ReliaStar Bankers Security Variable Life Separate Account I -- 3/82 85-251
</TABLE>
and, upon making such insertion, replaces the existing Schedule A in its
entirety with the attached new Schedule A dated December 20, 1996.
WHEREAS the Fund or Underwriter consents to the Company's intention to
make another investment company available as a funding vehicle for the
Contracts, the Company, Underwriter and Fund hereby agree to amend Schedule C of
the Agreement by inserting the following additional items therein:
Putnam Capital Manager Trust Funds
Northstar Variable Trust Funds
and, upon making such insertion, replaces the existing Schedule C in its
entirety with the attached new Schedule C dated December 20, 1996.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representative as
of December 20, 1996.
ReliaStar Bankers Security Life Insurance Company
By: /s/ ROBERT B. SAGINAW
Name: ROBERT B. SAGINAW
Title: ASSISTANT SECRETARY
Variable Insurance Products Fund
By: ---------------------------
Name: ---------------------------
Title: ---------------------------
Fidelity Distributors Corporation
By: ---------------------------
Name: ---------------------------
Title: ---------------------------
<PAGE>
SCHEDULE A
CONTRACTS
December 20, 1996
<TABLE>
<CAPTION>
POLICY FORM NUMBERS OF
NAME OF SEPARATE ACCOUNT AND CONTRACTS FUNDED BY
DATE ESTABLISHED BY BOARD OF DIRECTORS SEPARATE ACCOUNT
- -------------------------------------- ----------------
<S> <C>
Separate Account M -- 3/81 B-ORD-1928-90
Separate Account P -- 12/81
Separate Account Q -- 9/82
ReliaStar Bankers Security Variable Life Separate Account I -- 3/82 85-251
</TABLE>
<PAGE>
SCHEDULE C
December 20, 1996
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Oppenheimer Variable Account Funds
Alliance Capital Management Funds
USLICO Series Fund (an in-house fund that supports ReliaStar Bankers Security
Life Insurance Company's and United Services Life Insurance
Company's variable life insurance products.)
Putnam Capital Manager Trust Funds
Northstar Variable Trust Funds
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
BANKERS SECURITY LIFE INSURANCE SOCIETY
THIS AGREEMENT, made and entered into as of the 9th day of March, 1995, by
and among BANKERS SECURITY LIFE INSURANCE SOCIETY, (hereinafter the "Company"),
a New York corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
under this Agreement, as may be amended from time to time by mutual agreement of
the parties hereto (each such series hereinafter referred to as a "Portfolio");
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 17, 1986 (File No. 812-6422), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit
1
shares of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the Company shall
be the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall
2
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 9:00 a.m. Boston time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts with the form number(s) which are
listed on Schedule A attached hereto and incorporated herein by this reference,
as such Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has
3
investment objectives or policies that are substantially different from the
investment objectives and policies of all the Portfolios of the Fund; or (b) the
Company gives the Fund and the Underwriter 45 days written notice of its
intention to make such other investment company available as a funding vehicle
for the Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this Agreement); or
(d) the Fund or Underwriter consents to the use of such other investment
company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Boston time)
and shall use its best efforts to make such net asset value per share available
by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset
4
account under Section 4240 of the New York Insurance Code and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
5
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New York and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of New
York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company with as many printed copies
of the Fund's current prospectus and Statement of Additional Information as the
Company may reasonably request. If requested by the Company in lieu thereof, the
Fund shall provide camera-ready film or computer diskettes containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to
6
have the prospectus for the Contracts and the Fund's prospectus printed together
in one document, and to have the Statement of Additional Information for the
Fund and the Statement of Additional Information for the Contracts printed
together in one document. Alternatively, the Company may print the Fund's
prospectus and/or its Statement of Additional Information in combination with
other fund companies' prospectuses and statements of additional information.
Except as provided in the following three sentences, all expenses of printing
and distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications (except for
prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been received in
a particular separate account in the same proportion as Fund
shares of such portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract
7
owners. The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that each of
their separate accounts participating in the Fund calculates voting privileges
in a manner consistent with the standards set forth on Schedule B attached
hereto and incorporated herein by this reference, which standards will also be
provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee reasonably objects to such use within fifteen Business Days
after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee or
by the Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or its separate
account(s), is named at least fifteen Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration
8
statement or prospectus for the Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in published
reports for each Account which are in the public domain or approved by the
Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with the
permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (I.E., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Underwriter may make payments to the Company or to the underwriter for
the Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Fund. Currently, no such payments
are contemplated.
9
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance with the grace period afforded by Regulation
1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
10
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (I.E., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
11
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement to any
12
of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
Registration Statement or prospectus for the Contracts or in the Contracts
or sales literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by the
Company, or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
13
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission
14
or such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Underwriter or Fund by or
on behalf of the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Fund, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VI
of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
15
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure to comply with the diversification requirements specified in
Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
16
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
17
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision,
or if the Company reasonably believes that the Fund may fail to so
qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written notice to
the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial
18
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice
was given there was no notice of termination outstanding under any
other provision of this Agreement; provided, however any termination
under this Section 10.1(h) shall be effective forty five (45) days
after the notice specified in Section 1.6(b) was given.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
19
If to the Company:
Bankers Security Life Insurance Society
4601 N. Fairfax Drive
Arlington, Virginia, 22203
Attention: Elizabeth Schwarzman
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance
20
Commissioner with any information or reports in connection with services
provided under this Agreement which such Commissioner may request in order to
ascertain whether the insurance operations of the Company are being conducted in
a manner consistent with the California Insurance Regulations and any other
applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 90 days after the end
of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 45 days after
the end of each quarterly period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
21
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
BANKERS SECURITY LIFE INSURANCE SOCIETY
By: /s/ Francis A. Podlesney
Name: FRANCIS A. PODLESNEY
Title: GENERAL COUNSEL & SECRETARY
VARIABLE INSURANCE PRODUCTS FUND II
By: /s/ J. Gary Burkhead
Name: J. GARY BURKHEAD
Title: SENIOR VICE PRESIDENT
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Kurt A. Lange
Name: KURT A. LANGE
Title: PRESIDENT
22
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts Funded
DATE ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT
Separate Account M -- 3/81 B-ORD-1928-90
Separate Account P -- 12/81
Separate Account q -- 9/82
23
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
24
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed
and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund MUST allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, if the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
25
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of SHARES.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Oppenheimer Variable Account Funds
Alliance Capital Management Funds
USLICO Series Fund (an in-house fund that supports Bankers Security Life
Insurance Society's and United Services Life Insurance Company's Variable Life
insurance products.)
27
<PAGE>
AMENDMENT NO. 1
Amendment to the Participation Agreement among ReliaStar Bankers Security Life
Insurance Company (formerly Bankers Security Life Insurance Society) (the
"Company"), Variable Insurance Products Fund II (the "Fund") and Fidelity
Distributors Corporation (the "Underwriter") dated March 9, 1995 (the
"Agreement").
WHEREAS each of the parties desire to expand the ability of the Company to
develop and market Variable Life Insurance Policies and Variable Annuity
Contracts which have separate accounts using the Fund as the investment vehicle
for said separate accounts, the Company, Underwriter and Fund hereby agree to
amend Schedule A of the Agreement by inserting the following additional item
therein:
<TABLE>
<CAPTION>
<S> <C> <C>
POLICY FORM NUMBERS OF
NAME OF SEPARATE ACCOUNT AND CONTRACTS FUNDED BY
DATE ESTABLISHED BY BOARD OF DIRECTORS SEPARATE ACCOUNT
-------------------------------------- ----------------
ReliaStar Bankers Security Variable Life Separate Account I -- 3/82 85-251
</TABLE>
and, upon making such insertion, replaces the existing Schedule A in its
entirety with the attached new Schedule A dated December 20, 1996.
WHEREAS the Fund or Underwriter consents to the Company's intention to make
another investment company available as a funding vehicle for the Contracts, the
Company, Underwriter and Fund hereby agree to amend Schedule C of the Agreement
by inserting the following additional items therein:
Putnam Capital Manager Trust Funds
Northstar Variable Trust Funds
and, upon making such insertion, replaces the existing Schedule C in its
entirety with the attached new Schedule C dated December 20, 1996.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and on its behalf by its duly authorized representative as of
December 20, 1996.
ReliaStar Bankers Security Life Insurance Company
By: /s/ ROBERT B. SAGINAW
Name: ROBERT B. SAGINAW
Title: ASSISTANT SECRETARY
Variable Insurance Products Fund
By: ---------------------------
Name: ---------------------------
Title: ---------------------------
Fidelity Distributors Corporation
By: --------------------------
Name: --------------------------
Title: --------------------------
<PAGE>
SCHEDULE A
CONTRACTS
December 20, 1996
<TABLE>
<CAPTION>
<S> <C>
POLICY FORM NUMBERS OF
NAME OF SEPARATE ACCOUNT AND CONTRACTS FUNDED BY
DATE ESTABLISHED BY BOARD OF DIRECTORS SEPARATE ACCOUNT
- -------------------------------------- ----------------
Separate Account M -- 3/81 B-ORD-1928-90
Separate Account P -- 12/81
Separate Account Q -- 9/82
ReliaStar Bankers Security Variable Life Separate Account I -- 3/82 85-251
</TABLE>
<PAGE>
SCHEDULE C
December 20, 1996
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Oppenheimer Variable Account Funds
Alliance Capital Management Funds
USLICO Series Fund (an in-house fund that supports ReliaStar Bankers Security
Life Insurance Company's and United Services Life Insurance
Company's variable life insurance products.)
Putnam Capital Manager Trust Funds
Northstar Variable Trust Funds
PARTICIPATION AGREEMENT
AMONG
PUTNAM CAPITAL MANAGER TRUST
PUTNAM MUTUAL FUNDS, CORP.
AND
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 23rd day of December,
1996, by and among RELIASTAR BANKERS SECURITY COMPANY (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and PUTNAM CAPITAL MANAGER TRUST, a Massachusetts business trust
organized under the laws of Massachusetts (hereinafter the "Trust") and PUTNAM
MUTUAL FUNDS CORP. (hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Trust engages in business as an open-end diversified
management investment company and is available to act as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies which have entered into Participation,
agreements with the Trust and the Underwriter (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated ______________ (File No._________), granting the Company and
certain variable annuity and variable life insurance separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the
Investment Company Act of 1940, as amended (hereinafter the "1940 Act"), and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by certain variable annuity
and variable life insurance separate account of the Company (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and the sale of its shares is registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Putnam Investment Management, Inc. (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940; and
WHEREAS, the Company has registered or will register certain variable life
and variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the one or more variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life and variable annuity
contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust and the Underwriter agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1 The Underwriter agrees, subject to the Trust's rights under Section
1.2, to sell to the Company those shares of the Trust which each Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the shares of the
Trust. For purposes of this Section 1.1, the Company shall be the designee of
the Trust for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Trust; provided that the Trust receives
notice of such
2
order by 9:30 a.m. Boston time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2 The Trust agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Trust calculates its net asset value pursuant to rules
of the Securities and Exchange Commission and the Trust shall use reasonable
efforts to calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Trustees of the
Trust (hereinafter the "Trustees") may refuse to sell shares of any Fund to any
person, or suspend or terminate the offering of shares of any Fund if such
action is required by law or by regulatory authorities having jurisdiction or if
the Trustees determine, in the exercise of their fiduciary responsibilities,
that suspending or terminating the sale of Fund shares would be in the best
interests of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Fund will be sold to the general public.
1.4 The Trust agrees to redeem its shares in accordance with the terms of
its then current prospectus. For purposes of this Section 1.4, the Company shall
be the designee of the Trust for receipt of requests for redemption from each
Account and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such request for redemption on the
next following Business Day.
1.5 The Company agrees to purchase and redeem the shares of each Fund
offered by the then current prospectus of the Trust and in accordance with the
provisions of such prospectus. The Company agrees that all net amounts available
under the variable life and variable annuity contracts with the form number(s)
which are listed on Schedule A attached hereto and incorporated herein by this
reference, as such Schedule A may be amended from time to time hereafter by
mutual written agreement of all the parties hereto (the "Contracts"), shall be
invested in the Trust, in such other registered investment companies advised by
the Adviser ("Putnam Funds") as may be mutually agreed to in writing by the
parties hereto, or in the Company's general account, provided that such amounts
may also be invested in an investment company other than the Trust or a Putnam
Fund if (a) such other investment company was available as a funding vehicle for
the Contracts prior to the date of this Agreement and the Company so informs the
Trust and Underwriter prior to their signing this Agreement; or (b) the Company
gives the Trust and the Underwriter 60 days
3
written notice of its intention to make such other investment company available
as a funding vehicle for the Contract.
1.6 The Company shall pay for Trust shares on the next Business Day after
an order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Trust of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Trust.
1.7 Issuance and transfer of the Trust's shares will be by book entry only.
Share certificates will not be issued to the Company or any Account, Shares
ordered from the Trust will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.8 The Underwriter shall furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Underwriter
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9 The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 7 p.m. Boston time.
1.10 The Company shall limit sales of the variable annuity insurance
contracts listed in Schedule A hereto in any calendar year to $50,000,000 in the
aggregate and sales of such variable annuity insurance contracts through any
single broker-dealer firm or other financial institution in any calendar year to
$10,000,000, excluding from these limitations sales through Washington Square
Securities, Inc.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that at all times during the term
of this Agreement the Contracts are or will be registered under the 1933 Act;
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws and the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company
4
duly organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof as a
segregated asset account under Section 4240 of the New York Insurance Laws and
has registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2 The Trust represents and warrants that at all times during the term of
this Agreement Trust shares sold pursuant to this Agreement shall be registered
under the 1933 Act, duly authorized for issuance and sold by the Trust to the
Company in compliance with all applicable federal laws and that the Trust is and
shall remain registered under the 1940 Act. The Underwriter represents that
Trust shares are duly authorized for issuance in compliance with the applicable
laws of the State of New York and all applicable state securities laws. The
Trust shall amend the Registration Statement for its shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Trust shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust or the Underwriter in connection with their sale
by the Trust to the Company.
2.3 The Trust represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will use its best efforts to maintain such
qualification (under Subchapter M or any successor provision) and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the future.
2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Trust and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5 The Trust currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. To the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1, the Trust undertakes to
have a board of trustees, a majority of whom are not interested persons of the
Trust, approve any plan under Rule 12b-1 to finance distribution expenses.
5
2.6 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Trust shares
in accordance with the laws of the State of New York and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Trust represents that it is lawfully organized and validly existing
under the laws of Massachusetts and that it does and will comply in all material
respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and hall
remain duly registered, to the extent required, in all material respects under
all applicable federal and state securities laws and that the Adviser shall
perform its obligations for the Trust in compliance in all material respects
with the laws of the State of New York and any applicable state and federal
securities laws.
2.10 The Trust and Underwriter represent and warrant that all of their
respective directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Trust are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Trust are and shall continue to be at
all times covered by a blanket fidelity bond or similar coverage for the benefit
of the Trust, in an amount not less than the minimal coverage as required
currently by entities subject to the requirements of Rule 17g-1 of the 1940 Act
or related provisions as may be promulgated from time to time. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Trust shall provide such documentation (including a final copy of
its prospectus as set in type at the Trust's expense) and other assistance as is
6
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Trust is amended) to have the prospectus for the
Contracts and the Trust's prospectus printed together in one document (such
printing to be at the Company's expense).
3.2 The Trust's prospectus shall state that the Statement of Additional
Information for the Trust is available from the Underwriter or its designee (or
in the Trust's discretion, the Prospectus shall state that such Statement is
available from the Trust), and the Underwriter (or the Trust), at its expense,
shall print and provide such Statement free of charge to the Company and to any
owner of a Contract or prospective owner who requests such Statement.
3.3 The Trust, at its expense, shall provide the Company with copies of its
proxy material reports to stockholders and other communications to stockholders
in such quantity as the Company shall reasonably require for distributing to
Contract owners.
3.4 The Company shall vote all Trust shares as required by law and the,
Shared Funding Exemptive Order. The Company reserves the right to vote Trust
shares held in any segregated asset account in its own right, to the extent
permitted by law and the Shared Funding Exemptive Order. The Company shall be
responsible for assuring that each of its separate accounts participating in the
Trust calculates voting privileges in a manner consistent with all legal
requirements.
3.5 The Trust will comply with all applicable provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Trust will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Underwriter each piece of sales literature or other promotional material in
which the Trust or its investment adviser or the Underwriter is named at least
15 days prior to its use. No such material shall be used if the Underwriter
objects to such use within five Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in connection with
the sale of the Contracts other than the information or
7
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in annual or semi-annual reports or proxy
statements for the Trust, or in sales literature or other promotional material
approved by the Trust or its designee or by the Underwriter, except with the
written permission of the Trust or the Underwriter or the designee of either.
4.3 The Underwriter or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its separate account(s)
is named at least 15 days prior to its use. No such material shall be used if
the Company or its designee objects to such use within five Business Days after
receipt of such material.
4.4 Neither the Trust nor the Underwriter shall give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, and the Underwriter will
provide at least one complete copy of all sales literature and other promotional
materials that relate to the Trust or its shares, excluding sales literature and
other promotional materials relating to separate accounts of other participating
insurance companies, promptly following the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6 The Company will provide to the Trust and the Underwriter at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, solicitations for voting instructions, sales
literature and other promotional materials (to the Underwriter only),
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the Contracts or each Account, promptly
following the filing of such document with the Securities and Exchange
Commission.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
8
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all registered representatives.
ARTICLE V. FEES AND EXPENSES
5.1 The Trust and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Trust or any Fund adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Trust. As of the date of this
Agreement, no such payments are contemplated.
5.2 All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Underwriter, in accordance
with applicable state laws prior to their sale to the Company. The Trust shall
bear the expenses for the cost of registration and qualification of the Trust's
shares, preparation and filing of the Trust's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
all taxes on the issuance or transfer of the Trust's shares.
5.3 The Company shall bear the expenses of printing and distributing the
Trust's prospectus in connection with sales of the Contracts and of distributing
the Trust's proxy materials and reports to owners of the Contracts.
5.4 Notwithstanding any other provision of this Agreement, the Trust shall
be responsible for the registration and qualification of its shares and of the
Trust itself under the laws of any jurisdiction only in connection with the
sales of shares directly to the Company. The Trust shall not be responsible, and
the Company shall take full responsibility for, determining any jurisdiction in
which any qualification or registration of Trust shares or the Trust by the
Trust may be
9
required in connection with the sale of the Contracts and advising the Trust
thereof at such time and in such manner as is necessary to permit the Trust to
comply.
ARTICLE VI. DIVERSIFICATION
6.1 Each Fund will maintain a diversified pool of investments that would,
if the Fund were a segregated asset account, satisfy the diversification
provisions of Treas. Reg. Section 1.8175(b)(1) or (2). The Underwriter shall be
jointly and severally liable, with the Trust for any losses, claims, litigation,
damages or expenses resulting to the Company due to the failure to satisfy the
diversification requirements described in this Section 6.1.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the Contract owners of all
separate accounts investing in the Trust. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities law or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
Contract owners; or (f) a decision by an insurer to disregard the voting
instructions of Contract owners. The Trust shall promptly inform the Company if
the Trustees determine that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing conflicts of which it
is aware to the Board. The Company will assist the Trustees in carrying out
their responsibilities under the Shared Funding Exemptive Order, by providing
the Trustees with all information reasonably necessary for the Trustees to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Trustees whenever Contract owner voting
instructions are disregarded.
7.3 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall to the extent reasonably practicable (as determined by a majority
of the disinterested Trustees), take, at the Company's expense, whatever steps
are necessary to remedy or eliminate the irreconcilable material conflict, up to
and including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Fund and reinvesting such assets in a
different
10
investment medium including (but not limited to) another Fund of the Trust, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity Contract owners, life insurance Contract
owners, or variable Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Any such withdrawal
and termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented, and until the end of
that six month period the Underwriter and Trust shall, to the extent permitted
by law and any exemptive relief previously granted to the Trust, continue to
accept and implement orders by the Company for the purchase (or redemption) of
shares of the Trust.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company to disregard Contract
owner voting instructions and that decision represents a minority position that
would preclude a majority vote, then the Company may be required, at the Trust's
direction, to withdraw the affected Account's investment in the Trust; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Trustees. Until the end of the foregoing six month
period, the Underwriter and Trust shall, to the extent permitted by law and any
exemptive relief previously granted to the Trust, continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Trust.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict. Neither the Trust nor
the Underwriter shall be required to establish a new funding medium for the
Contracts, nor shall the Company be required to do so, if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that the Trustees
11
determine that any proposed action does not adequately remedy any irreconcilable
material conflict, then the Company will withdraw the Account's investment in
the Trust and terminate this Agreement within six (6) months (or such shorter
period as may be required by law or any exemptive relief previously granted to
the Trust) after the Trustees inform the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
7.7 The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and to bear the
cost of such remedial action shall be the obligation of the Company, and the
obligation of the Company set forth in this Section 7 shall be carried out with
a view only to the interests of Contract owners.
7.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
7.9 The Company has reviewed the Shared Funding Exemption Order and hereby
assumes all obligations referred to therein which are required, as conditions to
such Order, to be assumed or undertaken by the Company.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a) The Company agrees to indemnify and hold harmless the Trust and the
Underwriter and each of the Trustees, directors of the Underwriter and officers
of the Trust or the Underwriter and each person, if any, who controls the Trust
or the Underwriters within the meaning of Section 15 of the 1933
Act.(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
12
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Trust's shares or
the Contracts or the performance by the parties of their obligations hereunder
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement, Prospectus or Statement of Additional
Information for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Trust for
use in the Registration Statement, Prospectus or Statement of
Additional Information for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Trust's Registration Statement or prospectus, or in sales
literature for Trust shares not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the Contracts
or Trust Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Trust or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Trust
or the Underwriter by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
13
8.1(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party to the extent such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Trust, whichever is applicable.
8.1(c) The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such claim, but
failure to notify the Company of any such claim shall not relieve the Company
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Company to such party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust Shares or the Contracts or the operation of
the Trust.
8.1(e) The provisions of this Section 8.l shall survive any termination of
this Agreement.
8.2 INDEMNIFICATION BY THE UNDERWRITER
8.2(a) The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against
14
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Underwriter) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in thereof) or settlements are
related to the sale or acquisition of the Trust's shares or the Contracts or the
performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, Prospectus, Statement of Additional Information
or sales literature of the Trust prepared by or approved by the Trust
or Underwriter(or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Trust by or on behalf of the Company for use in the
Registration Statement, Prospectus, or Statement of Additional
Information for the Trust or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than amendments or representations contained in
the Registration Statement, Prospectus, Statement of Additional
Information or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the
Trust, Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Trust shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
Prospectus, Statement of Additional Information or sales literature
covering the Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished to the Company by or on
behalf of the Trust; or
15
(iv) arise as a result of any failure, whether intentional or
unintentional or in good faith or otherwise, to comply with the
diversification requirements specified in Article VI of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter, as limited by and in accordance with
the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Underwriter of any such claim
shall not relieve the Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of the Underwriter's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Underwriter
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d) The Company agrees to promptly notify the Underwriter of the Trust
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
16
8.2(e) The provisions of this Section 8.2 shall survive any termination of
this Agreement.
8.3 INDEMNIFICATION BY THE TRUST
8.3(a) The Trust agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Trust) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Trustees or any member
thereof are related to the operations of the Trust and:
(i) arise as a result of any failure by the Trust to provide
the services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust, as limited by and in accordance with the provisions of
Sections 8.3(b) and 8.3(c) hereof.
8.3(b) The Trust shall not be liable under the indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Trust, the Underwriter or each Account,
whichever is applicable.
8.3(c) The Trust shall not be liable under this indemnification provision
with respect to any claim made against any Indemnified Party unless such
Indemnified Party shall have notified the Trust in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent) on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such claim, but
failure to notify the Trust of any such claim shall not relieve the Trust from
any liability
17
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Trust will be entitled to
participate, at its own expense, in the defense thereof. The Trust also shall be
entitled to assume the defense thereof with counsel satisfactory to the party
named in the action. After notice from the Trust to such party of the Trust's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Trust will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the Trust
of the commencement of any litigation or proceedings against them or any of
their respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts or the sale or acquisition of shares of the
Trust.
8.3(e) The provisions of this Section 8.3 shall survive any termination of
this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written notice to the
other parties; provided, however, such notice shall not be given earlier than
one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of the Funds are
not reasonably available to meet the requirements of the Contracts, provided,
however, that such termination shall apply only to the Fund(s) not
18
reasonably available. Prompt notice of the election to terminate for such cause
shall be furnished by the Company; or
(c) at the option of the Trust or the Underwriter in the event that formal
administrative proceedings are instituted against the Company by the NASD, the
Securities and Exchange Commission, the Commerce Commissioner of the State of
Minnesota or any other regulatory body regarding the Company's duties under this
Agreement or related to the sales of the Contracts, with respect to the
operation of any Account, or the purchase of the Trust shares, provided,
however, that the Trust or the Underwriter determines in its sole judgment
exercised in good faith, that any such administrative proceedings will have
material adverse effect upon the ability of the Company to perform its
obligations under this Agreement; or
(d) at the option of the Company in the event that formal administrative
proceedings are instituted against the Trust or Underwriter by the NASD, the
Securities and Exchange Commission, or any state securities or insurance
department or any other regulatory body, provided, however, that the Company
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the ability
of the Trust or Underwriter to perform its obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the Contract owners
having an interest in such Account (or any subaccount) to substitute the shares
of another investment company for the corresponding Fund shares of the Trust in
accordance with the terms of the Contracts for which those Fund shares had been
selected to serve as the underlying investment media. The Company will give 30
days' prior written notice to the Trust of the date of any proposed vote to
replace the Trust's shares; or
(f) at the option of the Company, in the event any of the Trust's shares
are not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by the Company; or
(g) at the option of the Company, if the Trust ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably believes that the
Trust may fail to so qualify; or
(h) at the option of the Company, if the Trust falls to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Trust or the Underwriter, if (1) the Trust
or the Underwriter, respectively, shall determine, in its sole judgment
reasonably
19
exercised in good faith, that the Company has suffered a material adverse change
in its business or financial condition or is the subject of material adverse
publicity such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of either the Trust or
the Underwriter, (2) the Trust or the Underwriter shall notify the Company in
writing of such determination and its intent to terminate this Agreement, and
(3) after considering the actions taken by the Company and any other changes in
circumstances since the giving of such notice, such determination of the Trust
or the Underwriter shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the effective date of
termination; or
(j) at the option of the Company, if (1) the Company shall determine, in
its sole judgment reasonably exercised in good faith, that either the Trust or
the Underwriter has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity and such
material adverse change or material adverse publicity will have a material
adverse impact upon the business and operations of the Company, (2) the Company
shall notify the Trust and the Underwriter in writing of such determination and
its intent to terminate the Agreement, and (3) after considering the actions
taken by the Trust and/or the Underwriter and any other changes in circumstances
since the giving of such notice, such determination shall continue to apply or,
the sixtieth (60th) day following the giving of such notice, which sixtieth day
shall be the effective date of termination; or
(k) at the option of either the Trust or the Underwriter, if the Company
gives the Trust and the Underwriter the written notice specified in Section
1.5(b) hereof and at the time such notice was given there was no notice of
termination outstanding under any other provision of this Agreement; provided,
however, any termination under this Section 10.1(k) shall be effective forty
five (45) days after the notice specified in Section 1.5(b) was given.
10.2 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3 NOTICE REQUIREMENT. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for such termination.
Furthermore,
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1(a), 10.1(i), 10.1(j) or 10.1(k) of
this Agreement, such prior written notice shall be given in advance of the
effective date of termination as required by such provisions; and
20
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be
given at least ninety (90) days before the effective date of termination.
10.4 EFFECT OF TERMINATION. Notwithstanding any termination of this
agreement, subject to Section 1.2 of this Agreement, the Trust and the
Underwriter shall, at the option of the Company, continue to make available
additional shares of the Trust pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitations subject to Section 1.2 of this Agreement, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.4 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement.
10.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in either Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Trust and the Underwriter the opinion of counsel for the Company,
reasonably satisfactory to the Trust, to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, subject to Section 1.2
of this Agreement, the Company shall not prevent Contract owners from allocating
payments to a Fund that was otherwise available under the Contracts without
first giving the Trust or the Underwriter 90 days notice of its intention to do
so.
21
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust:
One Post Office Square
Boston, MA 02109
Attention: ___________________
If to the Company:
20 Washington Avenue South
Minneapolis, Minnesota 55440
Attention: Robert B. Saginaw
If to the Underwriter:
One Post Office Square
Boston, MA 02109
Attention: General Counsel
ARTICLE XII. MISCELLANEOUS
12.1 A copy of the Agreement and Declaration of Trust of the Fund is on
file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Fund as Trustees and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees or
shareholders individually but binding only upon the assets and property of the
Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until without the express written
consent of the affected party such time as it may come into the public domain.
22
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the California Insurance
Commissioner with any information or reports in connection with services
provided under this Agreement which such Commissioner may request in order to
ascertain whether the variable life insurance operations of the Company are
being conducted in a manner consistent with the California Variable Life
Insurance Regulations and any other applicable law or regulations.
12.7 The Underwriter agrees that to the extent any advisory or other fees
received by the Trust, the Underwriter or the Adviser are determined to be
unlawful in legal or administrative proceedings under the 1973 NAIC model
variable life insurance regulation in the states of California, Colorado,
Maryland or Michigan, the Underwriter shall indemnify and reimburse the Company
for any out of pocket expenses and actual damages the Company has incurred as a
result of any such proceeding; provided, however, that the amount of such
indemnity shall be limited to the amount of the fees determined to be unlawful
and that the provisions of Section 8.2(b) and 8.2(c) of this Agreement shall
apply to such indemnification and reimbursement obligation. Such indemnification
and reimbursement obligation shall be in addition to any other indemnification
and reimbursement obligations of the Trust and/or the Underwriter under this
Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
23
12.9 Notwithstanding any other provision of this Agreement, the obligations
of the Trust and the Underwriter are several and, without limiting in any way
the generality of the foregoing, neither party shall have any liability for any
action or failure to act by the other party, or any person acting on such other
party's behalf.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
Company:
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By its authorized officer,
(SEAL)
By: /s /RICHARD R. CROWL
Name: RICHARD R. CROWL
Title: SENIOR VICE PRESIDENT AND GENERAL COUNSEL
Date: -----------------------
Trust:
(SEAL)
PUTNAM CAPITAL MANAGER TRUST
By its authorized officer,
By: -----------------------
Name: -----------------------
Title: -----------------------
Date: -----------------------
Underwriter:
(SEAL)
PUTNAM MUTUAL FUNDS CORP.
By its authorized officer,
By: -----------------------
Name: -----------------------
Title: -----------------------
Date: -----------------------
24
<PAGE>
SCHEDULE A
CONTRACTS
1. ReliaStar Bankers Security Variable Life Separate Account I
(a) Flexible Premium Variable Life Insurance Policy.
Contract Form Number: 85-251 and State Exceptions.
25
MANAGEMENT SERVICES AGREEMENT
This Agreement is made by and between Northwestern National Life Insurance
Company , an insurance corporation organized and existing under the laws of the
State of Minnesota, herein called "NWNL", and Bankers Security Life Insurance
Society, an insurance corporation organized and existing under the laws of the
State of New York, herein called "BSL".
WHEREAS, NWNL provides management and policy services and goods for itself;
and
WHEREAS, BSL desires to obtain from NWNL certain management and policy
services and goods,
NOW, THEREFORE, it is agreed as follows:
1. SERVICES. NWNL shall undertake and provide the management services and
functions requested by BSL and described in Exhibit A and the appendices
thereto.
2. LIMITATIONS. This Agreement covers only those services and functions
specifically described in Exhibit A and the appendices thereto. Any
amendment or addition to the Agreement, Exhibits or appendices will not be
effective until such amendment or addition is filed with, and non-objected
to by, the New York Insurance Department ("Department"). In the event any
services provided hereunder require the exercise of judgment by BSL, NWNL
will perform such services in accordance with written standards and
guidelines developed by BSL.
3. EXPENSE ALLOCATION.
a. Unless included within 3.c. herein, services provided for BSL by
NWNL's corporate officers or staff shall be reimbursed by application
of a reimbursement charge to the product of the employee's scheduled
work hours during a servicing period and the percentage of time,
approximated as precisely as practicable based on servicing records,
spent by the employee during such period on BSL services. The
reimbursement charge shall be the aggregate of the hourly equivalent
dollar amount of the employee's total annualized compensation and the
employee's pro rata share of corporate overhead costs, provided that
corporate overhead costs shall not exceed 30% of total annualized
compensation. "Total annualized compensation" means salary, incentive
compensation and the dollar value of employee benefits provided by
NWNL during the servicing year to the employee.
b. Direct costs incurred by NWNL in providing the services and the cost
of all materials purchased by NWNL for the benefit of BSL shall be
reimbursed by BSL at such cost.
c. Costs incurred by NWNL's service areas, including, but not limited to,
accounting, computer services, corporate management, and data
processing units collectively, which allocate cost among the various
users of such services in proportion to the services actually rendered
to each user, shall be determined monthly by the appropriate NWNL
servicing unit based on the assessment of a mutually agreed upon
operational or maintenance servicing unit cost multiplied by the
number of hours billed to, or the volume of activity incurred by, BSL
during the month for services rendered.
d. No cost will be included in any billing to BSL unless NWNL documents,
based on company records, that the function resulted in a specific
service or benefit to BSL during the calendar period involved and that
the billable amount is reasonable in relation to the service or
benefit provided to BSL.
e. The determination of charges hereunder by NWNL shall be presented to
BSL, and if BSL objects to any such determination, it shall so advise
NWNL within thirty (30) days of receipt of notice of said
determination. Unless the parties can reconcile any such objection,
they shall agree to the selection of a firm of independent certified
public accountants which shall determine the charges properly
allocable to BSL and shall, within a reasonable time, submit such
determination, together with the basis therefor, in writing to NWNL
and BSL, whereupon such determination shall be binding. The expenses
of such a determination by a firm of independent certified accountants
shall be borne equally by NWNL and BSL. Determination of charges
hereunder shall be in accordance with New York Insurance Department
Regulation No. 33 to the extent applicable.
4. PAYMENT. NWNL shall submit to BSL monthly a written itemized statement
together with supporting documentation of the amount owed by BSL for
services and the use of facilities provided pursuant to this Agreement
during the preceding period; and BSL shall pay to NWNL within fifteen (15)
days following receipt of such written statement the amount set forth in
the statement.
5. ACCOUNTING RECORDS AND DOCUMENTS. NWNL shall be responsible for maintaining
full and accurate accounting records of all services rendered and
facilities used pursuant to this Agreement and such additional information
as BSL may reasonably request for purposes of its internal bookkeeping and
accounting operations. NWNL shall keep such accounting records, insofar as
they pertain to the computation of charges hereunder, available at its
principal
2
<PAGE>
offices for audit, inspection and copying by BSL or any governmental agency
having jurisdiction over BSL during all reasonable business hours.
6. OTHER RECORDS AND DOCUMENTS. All books, records, and files established and
maintained by NWNL by reason of its performance under this Agreement which,
absent this Agreement, would have been held by BSL, shall be deemed the
property of BSL, and shall be subject to examination by BSL and persons
authorized by it at all times. All such books, records and files shall be
promptly transferred to BSL by NWNL upon termination of this Agreement at
the expense of NWNL.
7. BSL CONTROL. BSL will maintain at its Home Office in the State of New York
qualified personnel, including an Officer, knowledgeable of and responsible
for the functions which will be performed for it by NWNL.
8. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to
grant NWNL an exclusive right to provide services to BSL, and BSL retains
the right to contract with any third party, affiliated or unaffiliated, for
the performance of services or for the use of facilities as are available
to or have been requested by BSL pursuant to this Agreement.
9. TERMINATION. This Agreement shall take effect as of January 1, 1996, and
shall remain in force until terminated by either NWNL or BSL upon giving
thirty (30) days or more advance written notice. Upon termination, NWNL
shall at its expense promptly deliver to BSL all books and records that
are, or are deemed by this Agreement to be, the property of BSL.
10. SETTLEMENT ON TERMINATION. No later than sixty (60) days after the
effective date of termination of this Agreement, NWNL shall deliver to BSL
a detailed written statement for all charges incurred prior to the
effective date of termination and not included in any previous statement.
The amount owed thereunder shall be due and payable within fifteen (15)
days of receipt of such statement.
3
<PAGE>
11. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party ___________ hereto, without the other party's
prior written consent. Except as, and to the extent, specifically provided
in this Agreement, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto, or their
respective legal successors, any rights, remedies, obligations or
liabilities, or to relieve any person other than the parties hereto, or
their respective legal successors, from any obligations or liabilities that
would otherwise be applicable. The covenants and agreements contained in
this Agreement shall be binding upon, extend to and inure to the benefit of
the parties hereto, and each of their successors and assigns respectively.
12. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by,
interpreted under, and the rights of the parties determined in accordance
with, the laws of the State of New York.
13. ARBITRATION. Any unresolved difference of opinion between the parties
arising out of or relating to this Agreement, or the breach thereof, except
as provided in Section 3, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association and the Expedited Procedures thereof, and judgment upon the
award rendered by the Arbitrator may be entered in any Court having
jurisdiction thereof. The arbitration shall take place in the State of New
York and the arbitrator(s) shall be unaffiliated with the parties hereto.
14. COMMITMENT AGREEMENT. It is understood that NWNL and BSL have certain
obligations under a Commitment Agreement with the New York Insurance
Department dated January 1, 1996 and it is agreed that no services will be
provided under this Agreement in violation of the aforementioned Commitment
Agreement, except for those allowed hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the 1st day of January 1996.
NORTHWESTERN NATIONAL LIFE BANKERS SECURITY LIFE
INSURANCE COMPANY INSURANCE SOCIETY
/s/ Richard R. Crowl /s/ Royce N. Sanner
- -------------------------------- --------------------------------
By: Richard R. Crowl By: Royce N. Sanner
Its: Vice President & Its: Vice President &
Associate General Counsel General Counsel
/s/ Wayne R. Huneke /s/ Susan M. Bergen
- -------------------------------- --------------------------------
By: Wayne R. Huneke By: Susan M. Bergen
Its: Senior Vice President Its: Assistant Secretary
Chief Financial Officer
4
<PAGE>
BANKERS SECURITY LIFE INSURANCE SOCIETY
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
HOLDING COMPANY AGREEMENT - SCHEDULE OF SERVICES
GENERAL SERVICES
<TABLE>
<CAPTION>
COMPANY PROVIDING
NUMBER SERVICE SERVICE
<S> <C>
A-1 BSL Financial Services and As Needed NMO Central
Systems Accounting Services NWNL
A-2 BSL Actuarial Services NWNL
A-3 Interior Design Services NWNL
A-4 Employee Benefits and 401(k) Business NWNL
A-5 Informational Service Support Functions NWNL
A-6 Legal Services NWNL
A-7 Personnel, Compensation Design, Benefits and Training NWNL
A-8 Printing Services NWNL
A-9 Sales Promotional Materials NWNL
SPECIALIZED SERVICES
COMPANY PROVIDING
NUMBER SERVICE SERVICE
A-10 Corporate Management Services NWNL
A-11 Medical Advice for Underwriting and Claims Support NWNL
SERVICES TO BE PERFORMED ON A "NEED" BASIS
COMPANY PROVIDING
NUMBER SERVICE SERVICE
A-12 Claims Processing and Support Services NWNL
A-13 Policy Holder Services NWNL
A-14 New Business and Administration NWNL
A-15 Underwriting Services NWNL
</TABLE>
<PAGE>
EXHIBIT A
BSL Financial Services and As Needed NMO Central Systems Accounting Services
NWNL will provide the following Accounting and Financial Services to BSL:
The preparation and filing of premium tax returns, preparation and
processing of accounting and financial records and transactions,
investment accounting, treasury services, general ledger, cost and
related areas, bank reconciliation, cashiers services including income
receipts and disbursements, assistance in accounting services for
commission processing, assistance in the preparation of and planning
relative to financial quarterly and annual statements, assistance in
accounting and financial services for budget preparation and planning,
and accounting and financial support.
The above services will be performed for BSL operations other than the
National Marketing Organization ("NMO") except that the NMO is eligible
to benefit from these financial services to achieve efficiencies
resulting from the use of central systems and processes, to achieve
economies of scale or when required because of overflow situations.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in billings to BSL for Accounting Services. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-1
<PAGE>
BSL Actuarial Services
NWNL will provide the following Actuarial Services to BSL:
Actuarial services including clerical, technical and product actuarial
support.
The Actuarial Services provided by NWNL to BSL, and also to that part of
BSL known as the NMO, shall not be duplications of actuarial services which
USL provides to BSL or the NMO.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in billings to BSL for Actuarial Services. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-2
<PAGE>
Interior Design Services
NWNL will provide Interior Design Services to BSL.
All final decisions related to these services shall be under the control of BSL
and it appropriate personnel.
A-3
<PAGE>
Employee Benefits and 401(k) Business
NWNL shall provide clerical, technical and professional staff support services
for business activities related to employee benefits and 401(k) businesses.
Included in such support shall be informational and data base services, issuance
of new business and servicing of existing business, underwriting and payment of
claims.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-4
<PAGE>
Informational Service Support Functions
NWNL will provide Informational services to BSL. An example of a service NWNL
would provide would be programmers knowledgeable in the Vantage (policy
administration) System. Services would include:
professional, technical, supervisory, programming and clerical support for
Informational services.
Informational and computer services provided by NWNL may be in the nature
of applications and programming support, enhancing existing systems, help
in installing new systems and centralized computer systems. A procedure
will be in place to prevent duplications in billings to BSL for information
data services it receives from affiliated companies.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and it appropriate personnel.
A-5
<PAGE>
Legal Services
NWNL will provide the following Legal services functions to BSL:
Legal and legal related technical, paralegal and clerical services, including
general representation, legal opinions and advice, compliance, industry and
government relations, policy filing support.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-6
<PAGE>
Personnel, Compensation Design, Benefits and Training
NWNL will provide compensation design and benefit services to BSL and training
where it has expertise. Services will be related to the following functions:
1. NWNL will provide BSL with benefit and compensation design services,
payroll services and related functions.
2. BSL will be a participating employer under various employee benefit plans
maintained by NWNL, which will also provide administrative support
services.
3. Training functions and on a when needed basis, personnel recruiting.
A procedure will be in place to prevent duplications in billings to BSL for
Personnel Matters. Such services will be under the control of BSL.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-7
<PAGE>
Printing Services
NWNL will provide printing services functions to BSL when economy of scale can
be achieved and if requested by BSL. Example of printed materials might be
Compliance Manuals and Personnel Handbooks. A procedure will be in place to
prevent duplications in billings to BSL for printing services it receives from
affiliated companies.
BSL may purchase printing services from NWNL under the control of BSL.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-8
<PAGE>
Sales Promotional Materials
If requested by BSL, and in those cases where NWNL has expertise, NWNL will
provide Sales promotional services to BSL. An example of such services would be
advertising, announcements and related communications.
A procedure will be in place to prevent duplications in billings to BSL for
sales promotional services. All final decisions related to these services shall
be under the control of BSL and it appropriate personnel.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-9
<PAGE>
Corporate Management Services
Upon the request of the appropriate officers of BSL, NWNL will provide the
following Corporate Management Services functions to BSL:
NWNL through its Chairman and Chief Executive Officer; President and Chief
Operating Officer; Senior Vice President, General Counsel and Secretary; Senior
Vice President, Financial Management; Senior Vice President, Strategic Marketing
and Technology; Senior Vice President, Investments; Senior Vice President and
Chief Financial Officer; or through other officers and/or the staff of NWNL,
shall provide to BSL the following services:
1. Consultative and advisory services to BSL's senior executive officers and
staff with respect to the conducting of BSL's business operations and the
execution of directives and resolutions of BSL's Board of Directors pertaining
to business operations and functions.
2. Consultation and participation in BSL's strategic planning process; the
development of business goals, objectives and policy; the development of
operational, administrative and quality programs; and the coordination of such
processes, goals, objectives, policy and programs with those of the Holding
Company system.
3. Management reporting services, both with respect to internal and external
reports, including the completion of peer company review analysis, coordination
of the annual planning process, consolidation of monthly operation results,
management and policyholder information reports, e.g., annual report,
maintenance of reporting systems and provision of cost account reports and
services.
4. Advice and assistance with respect to the maintaining of BSL's capital and
surplus, the development and implementation of financing strategies, plans and
the production of financial reports and records, and in all matters relating to
corporate financing, cash management, financial analysis and specialized
financial systems and programming.
5. Representation of BSL's interests at government affairs and insurance
industry meetings; participation in the deliberation and affairs of trade
associations and promotion of BSL's products provided that all promotional
materials shall receive BSL's prior approval before use.
6. Consultative advisory and administrative services to BSL's senior executive
officers and staff in respect to the development, implementation and
administration of human resource programs and policies; the delivery of
communications and information to employees regarding enterprise plans,
objectives and results; and the maintenance of employee relations, morale, and
developmental opportunities.
7. Consultation and participation in press releases and other public
announcements related to BSL.
8. Advice and strategies with regard to matching assets and liabilities.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A procedure will be in place to prevent duplications in billings to BSL for
Corporate Management Services.
A-10
<PAGE>
Medical Advice for Underwriting and Claims Support
At present BSL does not have a medical doctor in its employment. It will
typically request medical advice from USL but as a back-up NWNL will provide
Medical advice for underwriting and claims support services functions to BSL. A
procedure will be in place to prevent duplications in billings to BSL for
Medical Advice. All final decisions related to these services shall be under the
control of BSL and its appropriate personnel.
A-11
<PAGE>
Claims Processing and Support Services
NWNL will provide Claims processing services on an as needed basis with BSL
officers and appropriate personnel who are resident in New York having overall
operational responsibility and control. Such services will be provided in
overflow situations and where NWNL has the expertise.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in billings to BSL for claims processing. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-12
<PAGE>
Policy Holder Services
NWNL will provide, on a when needed basis, Policy holder services to BSL with
BSL officers and appropriate personnel who are resident in New York having
overall operational responsibility and control. Such services will be performed,
if requested, in overflow situations where the Agreement between USL and BSL
does not provide sufficient overload capacity and where expertise is available
at NWNL.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in billings to BSL for policy holder service. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-13
<PAGE>
New Business and Administration
NWNL will provide, on a when needed basis, New business and administration
services to BSL with BSL officers and appropriate personnel who are resident in
New York having overall operational responsibility and control. Such assistance,
if requested, will be available in overflow situations where the Agreement
between BSL and USL does not provide sufficient overload capacity and where NWNL
has expertise.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in billings to BSL for New Business and Administration. All final
decisions related to these services shall be under the control of BSL and it
appropriate personnel.
A-14
<PAGE>
Underwriting Services
NWNL will provide, on a when needed basis, Underwriting services to BSL with BSL
officers and appropriate personnel who are resident in New York having overall
operational responsibility and control. Such assistance, if requested, will be
available in overflow situations where the agreement between USL and BSL does
not provide sufficient overload capacity where NWNL has the expertise.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in billings to BSL for Underwriting Services. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-15
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 WOODBURY ROAD, WOODBURY, NEW YORK 11797
APPLICATION FOR LIFE INSURANCE
DIRECTIONS
The Agent is responsible for completing the necessary forms required to process
and underwrite this application. All forms must be completed in full and must be
legible. The directions below should be followed carefully.
<TABLE>
<CAPTION>
DO DON'T
<S> <C>
Submit separate applications on each person to be insured. Don't send money on applications totaling over $1,000,000
(Except when applying for spouse, children or other ($25,000 for proposed insured(s) under age 15) including
insured with amount of insurance below $100,000, any ADB amount (remember to include all pending and in
use Part III ). force (with ADB) with RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, Bankers Security Life Insurance
Print application in black ink, if possible. Get all required Society or The North Atlantic Life Insurance Company of
signatures. All corrections must be initialed America in your calculation).
by the proposed insured. Put one line through the
incorrect answer and insert the correct information. Don't type or use pencil.
DO NOT USE WHITEOUT.
Don't forget to tell your client to fast a minimum
Complete and sign the Agent's Report, especially of 4 hours before any underwriting testing (Exam, HOS,
Question 5. Review the appropriate state replacement EKG and Blood Profile).
regulation for the definition of 'Replacement.'
</TABLE>
Complete Part II if Proposed Insured is to be
considered for non-medical coverage.
Refer to Company Beneficiary Brochure for sample wording.
Complete a Financial Supplement, if the application is for
more than: $ 300,000 - up to age 60
$ 250,000 - over age 60
Submit appropriate form and premium(s) for Check-0-Matic (COM).
Give the Notification below to the applicant.
- --------------------------------------------------------------------------------
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
NOTICE AS REQUIRED BY THE FAIR CREDIT REPORTING ACT
ABBREVIATED NOTICE REGARDING INSURANCE INFORMATION PRACTICES
A consumer report about you and any other person proposed for insurance may be
made; this is in connection with and is a normal part of our processing of your
application. The people making the report will talk to your friends, neighbors,
family members, co-workers and others having knowledge of you; they will ask
about your business and personal life. You have a right to ask us in writing
whether such a report was prepared; we must give you the name and address of the
Agency which made the report, if any. The Agency will give you a copy of the
report if you ask them for it. All information collected by us either from you
or other sources may in certain circumstances be disclosed to third parties
without authorization more specific than as set forth in this application. You
have a right of access and correction with respect to the data, except that
which relates to a claim or civil or criminal proceeding or to medical record
information. Medical record information may be accessed by a medical
professional you designate. Our Underwriting Department will provide a more
detailed review of our information practices if you request it.
(PLEASE SEE REVERSE SIDE FOR IMPORTANT NOTICE)
FCRA/93
<PAGE>
NOTICE REGARDING MEDICAL INFORMATION BUREAU
PLEASE READ CAREFULLY
Information regarding your insurability will be treated as confidential.
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY, or its reinsurers may,
however, make a brief report thereon to the Medical Information Bureau, a
non-profit membership organization of life insurance companies, which operates
an information exchange on behalf of its members. If you apply to another Bureau
member company for life or health insurance coverage, or a claim for benefits is
submitted to such a company, the Bureau, upon request, will supply such company
with the information in its file.
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY, or its reinsurers, may also
release information in its file to other life insurance companies to whom you
may apply for life or health insurance, or to whom a claim for life benefits may
be submitted.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. If you question the accuracy of
information in the Bureau's file, you may contact the Bureau and seek a
correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address of the Bureau's information office is Post
Office Box 105 Essex Station, Boston, Massachusetts 02112, telephone number
(617) 426-3660.
MIB/93 (PLEASE SEE REVERSE SIDE FOR IMPORTANT NOTICE)
- --------------------------------------------------------------------------------
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 WOODBURY ROAD, WOODBURY, NEW YORK 11797
CONDITIONAL PREMIUM RECEIPT
(Not Valid Unless Signed by Agent and Applicant)
THIS CONDITIONAL PREMIUM RECEIPT DOES NOT PROVIDE TEMPORARY OR IMMEDIATE
INSURANCE COVERAGE, IT IS HEREBY UNDERSTOOD AND AGREED THAT UNLESS EACH AND
EVERY CONDITION SPECIFIED IN PARAGRAPH 'FIRST' IS FULFILLED EXACTLY, NO
INSURANCE WILL BECOME EFFECTIVE PRIOR TO POLICY DELIVERY. NEITHER THE AGENT
WHOSE SIGNATURE APPEARS BELOW, NOR ANY OTHER AGENT OF THE COMPANY OR BROKER IS
AUTHORIZED TO ALTER OR WAIVE ANY OF SUCH CONDITIONS.
Received from _______________________ (Payor) the sum of $ _________________ as
premium deposit which is tendered, subject to the conditions of this Conditional
Premium Receipt, as payment toward the first premium of the life insurance
policy applied for in the written application to RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, bearing the same date and number as this Conditional Premium
Receipt.
FIRST. CONDITIONS UNDER WHICH INSURANCE MAY BECOME EFFECTIVE PRIOR TO POLICY
DELIVERY. IF EACH AND EVERY ONE OF THE FOLLOWING CONDITIONS SHALL HAVE BEEN
FULFILLED EXACTLY:
(a) the amount of money taken with the application is at least equal to 1/12
of an annual premium for the amount and plan of insurance applied for and
is $20 or more;
(b) the completion of all parts of the initial application;
(c) the first and second medical examination, (if required by the Company's
published rules for the age of the person and amount of insurance applied
for) must be completed, within 60 days from the date of the application;
(d) completion of all investigations required by the Company;
(e) On the Effective Date, as defined below, all persons proposed for insurance
as named in this application were risks acceptable for insurance exactly as
applied for under the Company's rules, limits and standards, without
modification for the Plan and amount of insurance.
then insurance, as provided by the terms and conditions of the policy applied
for and in use by the Company on the Effective Date, but for an amount not
exceeding that specified in paragraph "SECOND", will become effective as of the
Effective Date.
Date: _____________________________
No.
DO NOT DETACH THIS CONDITIONAL PREMIUM RECEIPT UNLESS A PREMIUM DEPOSIT IS MADE
AT THE TIME OF APPLICATION.
"Effective Date", as used herein, means the latest of: (a) the date of the
application, or (b) the date of the first medical examination, (or if required
by the Company's published rules for the age of the person and amount of
insurance applied for, the second medical examination).
SECOND. LIMITS PROVISION: MAXIMUM AMOUNT OF INSURANCE WHICH MAY BECOME EFFECTIVE
PRIOR TO POLICY DELIVERY.
The total amount of insurance which may become effective on the life of each
person proposed for insurance prior to policy delivery is limited to the lesser
of: (a) $1,000,000, ($25,000 for proposed insureds under age 15), reduced by
any life insurance (life insurance plus Accidental Death Benefit) on the life of
the individual currently pending issue or additionally applied for with the
Company, or (b) the amount applied for under this application.
THIRD. RETURN OF PREMIUM DEPOSIT TAKEN.
If one or more of the conditions in paragraph "FIRST" have not been fulfilled
exactly, this Conditional Premium Receipt shall be considered null and void and
there shall be no liability on the part of the Company except to return the
Premium Deposit. Any delay in the Return of the Premium Deposit will not be
construed as approval of the application.
Agent: ___________________________________________________
I ACKNOWLEDGE THAT I HAVE READ THE CONDITIONAL PREMIUM RECEIPT AND THE AGREEMENT
IN THE APPLICATION. THE TERMS, CONDITIONS AND LIMITS PROVISION, TO WHICH I
AGREE, AND THE AGREEMENT IN THE APPLICATION HAVE BEEN EXPLAINED TO ME FULLY BY
THE AGENT AND I UNDERSTAND THEM.
Applicant: _______________________________________________
CR-93
<PAGE>
APPLICATION FOR RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
LIFE INSURANCE 1000 Woodbury Road, Woodbury, New York 11797
PART I No.__________
1 a. Name of Proposed [] Male [] Female
First Middle Last
b. Are you known, or have you ever been known by any other name?
[] Yes [] No
List name(s):
c. Date of Birth
Month Day Year
d. Birthplace
(state/country)
e. Social Security No.:
_ _ _ - _ _ - _ _ _ _
f. Are you a citizen of the U.S.?
[] Yes [] No
g. [] Single [] Married [] Divorced [] Widowed [] Separated
h. Residence (Street, City, State, Zip) How Long
Phone #( )
i. Former Residence (within 5 years) How Long
j. Employer's Name and Address
k. Occupation Describe Duties How Long
l. Send premium notice to:
2 a. Name and Address of Policy Owner (if other than Proposed Insured)
b. Relationship to Proposed Insured:
c. Soc. Sec. No. or Tax. I.D. No.:
d. Owner is: [] Individual [] Partnership
[] Corporation [] Trustee
3 a. Face Amount of Basic Policy
b. Policy Plan
c. Death Benefit Option (if applicable)
[] Option A -level
[] Option B - additional/increasing
d. Have you used tobacco in any form in the past 12 months? [] Yes [] No
e. If "No," check whichever is appropriate:
[] Never used [] Quit - give month and year
4 COMPLETE FOR UNIVERSAL LIFE ONLY
a. First year planned periodic premium based on Mode
$
b. Subsequent planned periodic
premium based on Mode
$
c. Other Insured Rider (OIR) [] Yes
Name:
Amount: $
5 a. Premiums Payable:
[] Annual [] Semi-annual
[] Quarterly [] Check-O-Matic Monthly
Automatic Premium Loan [] Yes [] No
List Billing (minimum 5 lives)
Bulk Billing [] New [] BB# __________
Pension Trust [] New [] PT# __________
b. Additional Benefits (check if desired)
[] Waiver of Premium/Waiver Monthly Deduction
[] Accidental Death Benefit $
[] Spouse Protection Rider (SPR)__________________ units
[] Children's Protection Rider (CPR) _____________ units
[] ACT Rider $ ______________________________
[] Other $
6 FOR INDETERMINATE PREMIUM POLICY ONLY: I understand that:
(a) the current premium for the policy applied for may change after the
initial guarantee period:
(b) the current premium then charged is not guaranteed and the Company
may charge the full maximum guaranteed premium [] YES
7 a. Beneficiary(ies) (Give full legal Name and Date of Birth)
Relationship to Proposed Insured
b. Contingent Beneficiary(ies) (Give full legal Name and Date of Birth)
Relationship to Proposed Insured
8 INSURANCE NOW IN FORCE AMOUNT AMOUNT ADB YEAR OF ISSUE
(IF NONE, STATE NONE)
COMPANY NAME
------------------------- --------- ----------- ----------------
------------------------- --------- ----------- ----------------
------------------------- --------- ----------- ----------------
Is the insurance applied for intended to replace, change or borrow against
any insurance or annuity in this or any other company? [] Yes (If, "Yes,"
give company, policy number and amount)
10 HOME OFFICE ENDORSEMENT SPECIAL REQUESTS:
Form 1092
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
11 a. Does any person proposed for insurance have any applications for life Yes No
insurance now pending? If 'Yes,' give Company, kind, amount and Owner/
Beneficiary. [] []
b. Has any person proposed for insurance ever had an application for life
or health insurance or reinstatement declined, rated, modified,
postponed, withdrawn or canceled? [] []
12 Has any person proposed for insurance, in the past 3 years engaged in, or
do they expect to engage in any hazardous or dangerous activities such as:
hang gliding, flying ultra lights, mountain climbing, ballooning, racing
(automobile, go-karts, midgets, cycle, boat, snowmobile), white water
rafting or diving (skin, scuba, sky)? If 'Yes,' complete Avocation
Questionnaire. [] []
13 Has any person proposed for insurance ever flown or do they intend to fly
as a pilot or crew member? If, 'Yes,' complete Aviation Questionnaire. [] []
14 Does any person proposed for insurance intend to travel or reside outside
the country except for vacation? If, 'Yes,' answer where, why and duration
in Remarks. [] []
FOR (QUESTIONS 15 AND 16, if 'Yes,' give details plus driver's license number
and state in REMARKS Section. [] []
15 In the past 3 years, has any person proposed for insurance been charged
with:
a. any motor vehicle violations other than parking violations? [] []
b. driving under the influence of alcohol and/or drugs? [] []
16 Has any person proposed for insurance ever had their driver's license
restricted, revoked or suspended? [] []
17 Has any person proposed for insurance ever been convicted of a felony or
misdemeanor? If "Yes," provide details. [] []
18 Is any person proposed for insurance in the Reserves, National Guard or on
active duty in the military? If, "Yes," provide details. [] []
</TABLE>
REMARKS - USE WHERE MORE SPACE IS NEEDED.
Question No. Details
- ----------- -----------------------------------------------------------------
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19 AMOUNT PAID WITH THIS APPLICATION: $________ IN EXCHANGE FOR CONDITIONAL
[] None PREMIUM RECEIPT BEARING THE
SAME NUMBER AS THIS
APPLICATION.
AGREEMENT. The Proposed Insured and the Applicant, if other than the Proposed
Insured, represent, each to the best of his/her knowledge and belief, that all
statements and answers contained in this application and any amendments thereto,
are true and correctly recorded and expressly agree as follows: (1) This
application (Part 1, and any other required part(s), shall be the basis for and
a part of any policy issued; (2) No information acquired by any representative
of the Company shall bind the Company unless set out in writing in this
application; (3) No contract of the Company can be made, modified or discharged,
nor may any of its rights or requirements be waived, except in writing signed by
its President, Vice President, Secretary or Assistant Secretary; (4) Except as
otherwise provided in the Conditional Premium Receipt bearing the same number as
this Part 1, no insurance shall take effect until a policy is issued and
delivered to the Owner and the full first premium paid, all while the health and
other conditions affecting the insurability of each person on whom insurance is
requested remain as described in this application; (5) The Company may indicate
changes for administrative purposes only in the space for Home Office
Endorsement in the application. The acceptance of any policy issued on this
application shall constitute acceptance and ratification of any such changes. No
changes shall be made in the amount of insurance, classification of risk, plan
of insurance, benefits, beneficiaries or ownership without written consent of
the Proposed Insured and Owner.
The Applicant, if other than the Proposed Insured, otherwise the Proposed
Insured, shall be the Owner of any policy issued hereon.
ACKNOWLEDGMENT. If a premium deposit is tendered with the application, the
Proposed insured and the Applicant, if other than the Proposed insured represent
that he/she has carefully read the Conditional Premium Receipt and understands
and agrees to the terms thereof including the conditions under which a limited
amount of insurance may become effective prior to policy delivery.
AUTHORIZATION. I hereby authorize any licensed physician, medical practitioner,
hospital, clinic, or other medical or medically related facility, insurance
company, the Medical Information Bureau or other organization, institution or
person, that has any records or knowledge of me or my children for whom
insurance application is made, or my health, or their health, to give to
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY, or its reinsurers any such
information. I further authorize RELIASTAR BANKERS SECURITY LIFE INSURANCE
COMPANY to request that an investigative consumer report be prepared as
described in the notice given to me. If a consumer report is prepared, I elect
to be interviewed. [] No.
I acknowledge receipt of, and have read, the Notifications given to me. This
Authorization is valid for 30 months from the date this form was signed. A
photographic copy of this authorization shall be as valid as the original.
<TABLE>
<CAPTION>
<S> <C>
Signature of
Signed at:________________ Date: ___________ Proposed Insured:---------------------------
(if age 15 or over - Parent if under age 15)
- ------------------------------------------
Signature of Agent as Witness Signature of Spouse
or Other Insured: --------------------
Signature of
Applicant (Owner):--------------------
----------------------------------------------------------
(If a Firm or Corporation or Trust insert name and title)
</TABLE>
<PAGE>
APPLICATION RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
NON-MEDICAL 1000 Woodbury Road, Woodbury, NY 11797
Part II No.__________
1 a. Name of Proposed
First Middle Last
b. Date of Birth
Month Day Year
c. Sex
[] M
[] F
d. Height _____ft.
_____in.
Weight _____lbs.
2 Who is your doctor (if none, so state). How Long ?
Address
Date of last visit Reason
What did he tell you about his findings?
3 Have you ever had or do you now have any disease, disorder, or injury of
the following or any sickness listed below: (Circle item(s) and give
details under question number 4.) Use Additional Remarks section if needed.
Yes No
Stroke or dizziness [] []
Paralysis or epilepsy [] []
Convulsions or fainting [] []
Brain, nervous system [] []
Nervous or mental disorder [] []
Lungs, bronchitis, asthma [] []
Shortness of breath [] []
Tuberculosis, pneumonia [] []
Heart or blood vessels [] []
Chest pains or palpitations [] []
Heart murmur, rheumatic fever [] []
High blood pressure [] []
Liver, gallbladder, hepatitis [] []
Stomach, ulcers, hernia [] []
Pancreas, Intestines [] []
Colitis, diverticulitis [] []
Rectum, rectal bleeding [] []
Kidney, bladder, kidney stone [] []
Prostate, reproductive organ [] []
Blood, pus or albumin in urine [] []
Diabetes or sugar in urine [] []
Cancer, tumor, cyst or polyp [] []
Lymph gland, thyroid or other
endocrine disorder [] []
Anemia or other blood disorder [] []
Eyes or skin disorder [] []
Arthritis, neuritis, gout [] []
Bone, joint or muscle disorder [] []
Sexually transmitted or venereal
disease, except for AIDS [] []
4 Give diagnosis, date of each occurrence, duration, current status and names
and addresses of doctors and medical facilities
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Give details in Additional Remarks Section. (dates, results, doctors consulted
and addresses, etc.)
<TABLE>
<CAPTION>
Yes No Additional Remarks
<S> <C> <C>
5 a. Are you at the present time taking any medication? [] []
b. Are you presently under a doctor's care for any condition? [] []
6 Has your weight changed more than 10 pounds in the past year? [] []
7 Have you ever had or do you now have chronic or unexplained fatigue,
malaise, loss of appetite, diarrhea, fever of unknown origin, severe night
sweats, unexplained or unusual infections or skin lesions, unexplained
swelling of the lymph glands, Kapposi's Sarcoma or Pneumocystis Carinii
Pneumonia? [] []
8 Have you been diagnosed or treated by a member of the medical profession
for Acquired Immune Deficiency Syndrome (AIDS) or AIDS-Related Complex
(ARC)? [] []
9 Other than above, have you in the past 5 years:
a. Had any mental or physical disorder not listed above? [] []
b. Had a check-up, consultation, EKG, X-ray, or other diagnostic
procedures, except for AIDS, illness, injury or surgery? [] []
c. Been a patient in a hospital, clinic or other health care facility? [] []
d. Been advised to have any diagnostic test, treatment, hospitalization
or surgery that was not completed other than an HIV test? [] []
10 Have you ever requested or received a pension, benefits, or payment because
of an injury, sickness or disability? [] []
11 Have you ever used cocaine, heroin, barbiturates or any illegal, restricted
or controlled substance or any other drugs except as prescribed by a doctor
or other licensed practitioner; or received treatment or advice from a
doctor or other practitioner regarding the use of drugs except for medical
purposes; or received treatment, counseling or advice from an organization
which assists those who have a drug problem? [] []
</TABLE>
NM 2092
<PAGE>
<TABLE>
<CAPTION>
Give details in Additional Remarks Section. (dates, results, doctors consulted
and addresses, etc.) Yes No Additional Remarks
<S> <C> <C>
12 Have you ever:
a. Used alcoholic beverages? If "Yes," how often, how many ounces, and
for how many years? [] []
b. Been advised to reduce or discontinue the use of alcoholic beverages? [] []
c. Been counseled, sought help or treatment, or been advised to go for
treatment or counseling for alcoholism or drug use? [] []
d. Attended or joined any organization such as Alcoholics Anonymous (AA)
or Narcotics Anonymous (NA) for alcohol and/or drug related problems? [] []
13 Family History:
Is there history of diabetes, heart disease, high blood pressure, cancer,
kidney disease, mental illness, suicide, or any hereditary disease? [] []
14 a. Age if Living Age at Death Cause of Death b. Brothers and Sisters:
Father: _____________ _____________ _______________ No. Living: _____
Mother: _____________ _____________ _______________ No. Dead ______ Cause _______
</TABLE>
ADDITIONAL REMARKS (CONTINUED)
Question No. Details
- ------------ ---------------------------------------------------------------
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- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
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- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
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- ------------ ---------------------------------------------------------------
- ------------ ---------------------------------------------------------------
I represent that all statements and answers to the foregoing questions are, to
the best of my knowledge and belief, complete and true. I agree: (a) that they
shall form a part of my application; (b) that they shall be subject to the terms
of the agreement found in Part I; and, (c) that they shall become a part of any
policy based on this application.
Signed at: _________________ Date:___________ Signature of
City and State Proposed Insured: ---------------
- ---------------------------------------------
Signature of Agent as Witness
<PAGE>
SUPPLEMENTARY RELIASTAR
LIFE APPLICATION RELIASTAR BANKERS SECURITY LIFE
1000 Woodbury Road, Suite 102
Woodbury, NY 11797
PLEASE PRINT ALL ANSWERS IN BLACK INK. CHANGES AND CORRECTIONS MUST BE INITIALED
BY APPLICANT.
1. NAME OF PROPOSED INSURED (First, Middle, Last)
<TABLE>
<CAPTION>
<S> <C>
2. IF PARTICIPATING, INDICATE OPTION:
[] Paid in Cash [] Paid Up Additions [] Premium Payment []Left at Interest [] Other
3. IF APPLYING FOR UNIVERSAL LIFE, INDICATE COVERAGE OPTION:
[] Option 1: The Specified Amount includes the Cash Value Fund
[] Option 2: The Specified Amount is in addition to the Cash Value Fund
Planned Premium: $ _______________
Additional 1st Year Deposit: $ _______________
4. COMPLETE FOR VARIABLE UNIVERSAL LIFE
A. ALLOCATION OF PREMIUM PAYMENTS: Allocation must be in whole
percentage points totaling 100%
a.____% Fixed Account FIDELITY'S VARIABLE INSURANCE OTHER INVESTMENT COMPANIES/
PRODUCTS FUNDS I AND II FUNDS
PUTNAM VARIABLE TRUST (PUTNAM VT) j.____% Money Market Portfolio (FMM) s. ___% _____________
b.____% Putnam VT Asia Pacific Growth Fund (PAP) k.____% High Income Portfolio (FHI) _____________
c.____% Putnam VT Diversified l.____% Growth Portfolio (FGP) _____________
Income Fund (PDI) m.____% Equity-Income Portfolio (EFI)
d.____% Putnam VT Growth and n.____% Overseas Portfolio (FOS) t. ___% _____________
Income Fund (PGI) o.____% Index 500 Portfolio (FIN) _____________
e.____% Putnam VT New Opportunities Fund (PNO) p.____% Asset Manager Portfolio (FAM) _____________
f.____% Putnam VT Utilities Growth and Income q.____% Contrafund Portfolio (FCF)
Fund (PUT) r.____% Investment Grade Bond Portfolio (FIG) u. ___% _____________
g.____% Putnam VT Voyager Fund (PVY) _____________
_____________
NORTHSTAR VARIABLE TRUST
h.____% Northstar Income and v. ___% _____________
Growth Fund (NIG) _____________
i.____% Northstar Multi Sector Bond Fund (NMS) _____________
</TABLE>
Allocation affects all future payments until changed by you. If no allocations
are indicated above, then the Total Net Premium is credited to the Money Market
Portfolio, pending allocation by the Owner.
<TABLE>
<CAPTION>
B. SUITABILITY: YES NO
<S> <C> <C> <C>
a. Have you, the proposed insured or the proposed purchaser, if other
than The proposed insured, received a prospectus describing the
policy, investment divisions, and important features? [ ] [ ]
b. Date of prospectus? __/__/__
c. Date of any supplement? __/__/__
d. Do you understand that under the policy applied for (exclusive of any
optional benefits), the amount of death benefit above the face amount,
The entire amount of the cash value, and duration of coverage may
increase or decrease depending upon investment experience? [ ] [ ]
e. With this in mind, is the policy in accord with your insurance
objectives and your anticipated financial need? [ ] [ ]
</TABLE>
C. DEATH BENEFIT OPTION:
[] Level [] Variable
Form 4096
----------------------------------------------------
NOTICE TO APPLICANTS APPLYING FOR A VARIABLE UNIVERSAL LIFE INSURANCE POLICY:
We will furnish illustrations of benefits, including death benefits and
cash values, for the variable universal life insurance policy applied for.
IT IS UNDERSTOOD THAT UNDER THE POLICY APPLIED FOR (EXCLUSIVE OF ANY OPTIONAL
BENEFITS), THE AMOUNT OF THE DEATH BENEFIT ABOVE THE FACE AMOUNT, THE CASH
VALUE, AND DURATION OF COVERAGE MAY INCREASE OR DECREASE BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
I represent that the above statements and answers are true and complete to the
best of my knowledge and belief. It is understood and agreed that this
Supplementary Application, together with Parts One, Two and Three, if
applicable, of my application for life insurance shall form the basis of the
policy applied for. If there is any conflict between the above statements and
answers and those given in Parts One, Two and Three, if applicable, of my
application, the answers herein will control.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------ --------------------------------------------------------------
Signature of Agent Signature of Proposed Insured
Signed at: ------------------------------- --------------------------------------------------------------
City State Signature of Owner (If other than Proposed Insured)
Date: ------------------------------------ --------------------------------------------------------------
Signature of Other Insured
- ------------------------------------------ --------------------------------------------------------------
Witness (to all signatures) Signature of any Child Covered by a Rider (if age 15 or older)
</TABLE>
<PAGE>
SUMMARY OF ACCELERATED RELIASTAR
BENEFIT PROVISIONS RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102, Woodbury, New York 11797
READ YOUR RIDER CAREFULLY. This summary only provides a very brief description
of the important features of your Accelerated Benefit Rider. You should be aware
that policy loans and withdrawal options are available, as described in the
policy, which could possibly be used instead of an Accelerated Benefit.
RECEIPT OF THE ACCELERATED BENEFIT MAY BE TAXABLE. YOU SHOULD CONSULT YOUR
PERSONAL TAX ADVISOR TO ASSESS THE IMPACT OF THIS BENEFIT.
RECEIPT OF THE ACCELERATED BENEFIT MAY ADVERSELY AFFECT YOUR ELIGIBILITY FOR
PUBLIC ASSISTANCE PROGRAMS SUCH AS MEDICAID, AID TO FAMILIES WITH DEPENDENT
CHILDREN, AND SUPPLEMENTAL SECURITY INCOME. BEFORE YOU REQUEST AN ACCELERATED
BENEFIT, YOU SHOULD CONSULT WITH THE APPROPRIATE SOCIAL SERVICES AGENCY TO
ASSESS THE IMPACT OF THIS BENEFIT.
No health care facility as defined in section 20 of the Public Health Law can
require you to use the Accelerated Benefit as a condition of admission to such
health care facility or for providing any care in such facility.
We will pay the Accelerated Benefit if the insured has a terminal illness. A
terminal illness is a non-correctable illness or physical condition that will
result in the death of the insured within 12 months, as certified by a
physician.
The Accelerated Benefit will be paid in a lump sum. The amount paid will not be
more than 50% of the amount that would be payable at the death of the insured.
The Accelerated Benefit will first be used to pay off any outstanding policy
loans and interest due. The remainder will be paid to the policyowner.
Limitations, as described in the Accelerated Benefit Rider, may apply.
A lien will be established against the policy for the amount paid, plus the
administrative charge, plus interest on the lien. Any proceeds from the policy
will first be used to repay this lien. The cash value available to the
policyowner will be reduced by the amount of the lien. The proceeds payable to
the beneficiary will be reduced by the amount of the lien.
The administrative charge will not exceed $300 when the benefit is paid.
The premium payable on the policy will not be affected by the Accelerated
Benefit.
An example of the immediate effect of an Accelerated Benefit payment is shown
below.
<TABLE>
<CAPTION>
Policy Values Policy Values
Before Accelerated After Accelerated
Benefit Benefit
<S> <C> <C>
Death Benefit $ 100,000.00 $100,000.00
Minus Lien (includes administrative charge) $ 0.00 $50,300.00
------------ -----------
PAYABLE TO BENEFICIARY AT DEATH OF INSURED $100,000.00 $49,700.00
Accumulation Value $30,000.00 $30,000.00
Minus Policy Loan $10,000.00 $ 0.00
Minus Surrender Charge $5,000.00 $ 5,000.00
Minus Lien $ 0.00 $50,300.00
------------ -----------
NET CASH SURRENDER VALUE $15,000.00 $0.00
========== =====
</TABLE>
Interest and any unpaid premiums will be added to the lien, further reducing
both the amount payable to the beneficiary at the death of the insured and the
cash surrender value.
I acknowledge that I have received and read this summary which has been
furnished to me on this date.
- --------------------------------------------- -------------------------------
Policyowner's Signature Date
- --------------------------------------------- -------------------------------
Agent's Signature Date
NY45266 Copies: White-Policy Owner * Canary -Company
(12-96)
[RELIASTAR LIFE INSURANCE COMPANY LETTERHEAD]
December 20, 1996
ReliaStar Bankers Security Life Insurance Company
1000 Woodbury Road, Suite 102
Woodbury, NY 11797
Madam/Sir:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of a flexible premium variable life insurance policy (the "Policy")
and interests in ReliaStar Bankers Security Variable Life Separate Account I
(the "Variable Account"), I have examined documents relating to the
establishment of the Variable Account by the Board of Directors of our
affiliated company, ReliaStar Bankers Security Life Insurance Company (the
"Company"), as a separate account for assets applicable to variable contracts,
pursuant to New York Insurance Law Section 4240, as amended, and the
Registration Statement, on Form S-6 (the "Registration Statement") and I have
examined such other documents and have reviewed such matters as I deemed
necessary for this opinion, and I advise you that in my opinion:
1. The Variable Account is a separate account of the Company
duly created and validly existing pursuant to the laws of the
State of New York.
2. The Policy, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon
compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their
respective terms.
3. The portion of the assets held in the Variable Account equal
to reserves and other contract liabilities with respect to the
Variable Accounts are not chargeable with liabilities arising
out of any other business the Company may conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Matters" in the
Prospectus constituting a part of the Registration Statement and to the
references to me wherever appearing therein.
Very truly yours,
/s/ Robert B. Saginaw
- -----------------------
Robert B. Saginaw
Counsel
[RELIASTAR LIFE INSURANCE COMPANY LETTERHEAD]
December 20, 1996
ReliaStar Bankers Security Life Insurance Company
1000 Woodbury Road, Suite 102
Woodbury, NY 11797
Madam/Sir:
This opinion is furnished in connection with the registration by our affiliated
company, ReliaStar Bankers Security Life Insurance Company, of a flexible
premium variable life insurance policy (the "Contract") under the Securities Act
of 1933, as amended. The Contract, including variations thereof used in various
states, is described in the Prospectus constituting a part of the Registration
Statement on Form S-6, as amended.
The form of Contract was reviewed by me, and I am familiar with the Registration
Statement and Exhibits thereto.
In my opinion:
The illustrations of Accumulation Values, Surrender Charges, Cash
Surrender Values, and Death Benefits, included in the section entitled,
"Illustration of Accumulation Values, Surrender Charges, Cash Surrender
Values, and Death Benefits" in Appendix C of the Prospectus
constituting part of the Registration Statement, based on the
assumptions stated in the illustrations, are consistent with the
provision of the Contract (including, as appropriate, any state
variation thereof). The rate structure of the Contract has not been
designed so as to make the relationship between premiums and benefits,
as shown in the illustrations, appear more favorable to a prospective
purchaser of a Contract for a male age 40 than to prospective
purchasers of the Contract for other ages or for females. In any state
where charges cannot be based upon the insured's sex, the rate
structure of the Contract has not been designed so as to make the
relationship between premium and benefits, as shown in the
illustrations, appear more favorable to a prospective purchaser of the
Contract for an insured age 40 than to prospective purchasers of the
Contract for other ages.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
Prospectus constituting a part of the Registration Statement.
Sincerely,
/s/ Steven P. West
- ------------------------
Steven P. West, FSA, MAAA
Actuary
DESCRIPTION OF RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY'S
PURCHASE, REDEMPTION, TRANSFER, AND CONVERSION
PROCEDURES FOR POLICY
This document sets forth the administrative procedures that will be followed by
ReliaStar Bankers Security Life Insurance Company ("ReliaStar Bankers Security
Life") in connection with the issuance of its Flexible Premium Variable Life
Insurance Policy (the "Policy") described in the Registration Statement, the
transfer of the Policy's assets, the redemption by Policy owners of their
interest in the Policies and conversion to fixed benefit insurance. Unless
otherwise defined herein, all capitalized terms used below have the meanings
ascribed to them in the Prospectus for the Policy contained in this Registration
Statement.
"PUBLIC OFFERING PRICE": PURCHASE AND RELATED TRANSACTIONS
The following is a summary of the principal Policy provisions and administrative
procedures which constitute either direct or indirect purchase transactions. The
insurance aspects of the Policy cause procedures to differ in certain
significant respects from purchase procedures of mutual funds or contractual
plans.
PREMIUM SCHEDULES AND UNDERWRITING STANDARDS
Premiums for the Policy will not be the same for all Policy owners. There is no
insurance until the initial premium is paid. The initial premium must be equal
to or greater than three Minimum Monthly Premiums (see "Payment and Allocation
of Premiums - Minimum Initial Premium") unless the Policy owner authorizes
premiums to be paid by bank account monthly deduction or government allotment.
In those cases, ReliaStar Bankers Security Life will accept one Minimum Monthly
Premium.
The Policy has a Death Benefit Guarantee if the Policy owner chooses to pay
premiums sufficient to maintain the Death Benefit Guarantee set forth in the
Policy. If the Death Benefit Guarantee is in effect during the Death Benefit
Guarantee Period (to age 65 of the Insured, or five years, if longer) ReliaStar
Bankers Security Life will then guarantee that the Policy will remain in force
during such period, even if the Policy's Cash Surrender Value is not sufficient
to pay the Monthly Deduction due.
After the initial premium, the Policy owner will determine a planned periodic
premium schedule that provides for a level premium payable at a fixed interval.
Payment of premium according to this schedule is not, however, mandatory and
failure to do so will not of itself cause the Policy to lapse. Instead, Policy
owners may determine the amount and timing of subsequent premiums subject to the
following restrictions:
1. In most cases, payment of a cumulative premium sufficient to maintain the
Death Benefit Guarantee will be required to keep the Policy in force during
the Death Benefit Guarantee Period.
2. ReliaStar Bankers Security Life may choose not to accept a premium less
than $25.00.
3. ReliaStar Bankers Security Life may require proof that the insured is still
insurable if any premium would increase the difference between the Death
Benefit Guarantee and the Accumulation Value.
4. ReliaStar Bankers Security Life will return to the Policy owner any premium
paid that would exceed the current maximum premium payments allowed for
life insurance under federal law.
The Policy will stay in force as long as the Cash Surrender Value is sufficient
to pay the Monthly Deduction (the charges imposed in connection with the
Policy). The amount of premium, if any, required to keep the Policy in force
depends on the Cash Surrender Value which in turn depends on such factors as the
investment experience, the amount of any outstanding loans, and the Surrender
Charge. The Monthly Deduction varies with the cost of insurance charge and
Mortality and Expense Risk Charge. The cost of insurance charge is based on the
principal of pooling and distribution of mortality risks, which assumes that
each Policy owner pays a premium commensurate with the insureds mortality risks
which are actuarially determined based on attained age, premium rate class, and
in most instances, sex. The same rate applies to all insureds in a given
actuarial category. The rate is based on ReliaStar Bankers Security Life's
expectations as to future mortality experience. The Mortality and Expense Risk
Charge depends upon the amount of the Variable Accumulation Value.
The Policy will be sold according to established underwriting standards and
state insurance laws. State insurance laws prohibit unfair discrimination among
Policy owners but recognize that premiums must be based on factors such as age,
health occupation and in most states, the sex of the insured.
APPLICATION AND INITIAL PREMIUM PROCESSING
ReliaStar Bankers Security Life will follow certain insurance underwriting
procedures to determine whether the proposed insureds are insurable.
Underwriting evaluates risks from the information on the application,
verification procedures such as medical examinations, and additional information
furnished by the applicant on request. ReliaStar Bankers Security Life will not
issue the Policy until the underwriting procedure has been completed.
If the minimum initial premium is submitted with the application, insurance
coverage will begin on the Issue Date. The Issue Date will ordinarily be the
later of the date of the application or the date of any required medical
examination undertaken according to ReliaStar Bankers Security Life's's
underwriting requirements. When, however, underwriting approval has not occurred
within 45 days of the receipt of the application, the Issue Date will be the
date of underwriting approval. If a premium is not paid with the application,
insurance coverage will begin on the later of the Issue Date or the date the
premium is received.
The Policy Date is generally the same date as the Issue Date. It is used in
determining Policy Years, Policy Months, Monthly Anniversaries and Policy
Anniversaries. It is also the date as of which the insurance ages of the
proposed insureds is determined. A Policy Date may be any other date mutually
agreed to by ReliaStar Bankers Security Life and the Policy owner.
ReliaStar Bankers Security Life will credit net Premiums (gross premiums less
the Premium Expense Charge) from the Policy to the ReliaStar Bankers Security
Variable Life Separate Account I ("Variable Account") or to the Fixed Account on
the later of the following dates:
1. The Valuation Date 1/ following the date of underwriting approval;
2. The Valuation Date on or next following the Policy Date; or
3. The Valuation Date on or next following the date ReliaStar Bankers Security
Life receives at least the required minimum initial premium payment.
ALLOCATION OF PREMIUMS
The Policy owner chooses the initial allocation of Net Premiums to the Fixed
Account and the Sub-accounts of the Variable Account on the application for the
Policy. The Policy owner may change the allocation at any time by notifying
ReliaStar Bankers Security Life in writing. The Policy owner may allocate 100%
of Net Premiums to any Sub-account or the Policy owner may divide in whole
percentages the Net Premium and allocate such amounts among more than one
Sub-Account. ReliaStar Bankers Security Life reserves the right to adjust the
allocation of Net Premiums to eliminate fractional percentages.
PREMIUM PROCESSING
Whenever a premium payment is received during the first 10 Policy Years,
ReliaStar Bankers Security Life will subtract 5% of the premium as a Premium
Expense Charge. After the tenth Policy Year, the Premium Expense Charge will be
reduced to 3% of the premium, guaranteed not to exceed 5% of the premium for the
duration of the Policy. ReliaStar Bankers Security Life may, in the future,
deduct a premium processing charge of up to $2.00 from each premium payment as a
part of this charge. The Net Premium is credited to the Variable and/or Fixed
Account on the Valuation Date on or next following the date ReliaStar Bankers
Security Life receives the premium payment in accordance with the Policy owner's
current premium allocation.
REINSTATEMENT
A lapsed Policy and most riders may be reinstated anytime within five years
after lapse as long as the Policy has not been surrendered for its Cash
Surrender Value. To reinstate the Policy and any riders, the Policy owner must
submit evidence of insurability satisfactory to ReliaStar Bankers Security Life
for each insured and due proof that the death occurred before the Policy
terminated. The Policy owner must pay a premium sufficient to keep the Policy
and any riders in force for at least two months following the date of
reinstatement.
The Death Benefit Guarantee provision cannot be reinstated.
LOAN REPAYMENTS
The interest rate charged on Policy loans will be an annual rate of 5.66%,
payable in advance. After the tenth Policy Year, ReliaStar Bankers Security Life
will charge interest at an annual rate of 3.85%, payable in advance, on that
portion of the loan amount that is not in excess of (a) the Accumulation Value
less (b) the total of all premiums paid and all partial withdrawals. Any excess
of this amount will be charged interest at the annual rate of 5.66%.
A Policy loan may be repaid anytime while the insured is living and before the
insured reaches age 95. Unless the Policy owner specifies that a payment is a
loan repayment, ReliaStar Bankers Security Life generally considers any payments
it receives as premium payments and not loan repayments. However, ReliaStar
Bankers Security Life reserves the right, at its discretion, to apply any
payment it receives as a loan repayment.
Loan repayments are credited to the Fixed Account and the Variable Account in
the form of Net Premiums without a Premium Expense Charge. ReliaStar Bankers
Security Life credits repayments according to the current premium allocation.
Repayments are credited at the end of the Valuation period during which the
payment was received.
CORRECTION OF MISSTATEMENT OF AGE OR SEX
If any insured's age or sex is misstated, ReliaStar Bankers Security Life
adjusts the proceeds by the difference between the Monthly Deductions made and
those that should have been made.
"REDEMPTION PROCEDURES": SURRENDER AND RELATED TRANSACTIONS
The following is a summary of the principal Policy provisions and administrative
procedures which constitute redemptions under the Policy. These procedures
differ in certain significant respects from redemption procedures of mutual
funds or contractual plans.
CASH SURRENDER VALUE
At any time before the earlier of the death of the insured or the maturity date,
the Policy owner may totally surrender the Policy by sending ReliaStar Bankers
Security Life a written request. The amount available for surrender is the
Accumulation Value of the Policy reduced by any Loan amount, unpaid Monthly
Deductions, and during the first 15 Policy Years and the first 15 years
following a requested increase in Face Amount, this amount is also reduced by a
Surrender Charge. The Surrender Charge is determined separately for the Face
Amount and any subsequent increase in Face Amount. The surrender Charge is based
on several factors such as the Face Amount, the Policy Year, and the insureds'
age and sex. The Surrender Charge is shown in the Policy. The total amount
available at surrender is called the Cash Surrender Value.
The Cash Surrender Value is calculated at the end of the Valuation Period during
which ReliaStar Bankers Security Life receives the Policy owner's surrender
request. The Policy owner may, however, elect to receive all or part of the Cash
Surrender Value under one of the settlement options described in the Policy. All
fixed benefit settlement options are subject to the restrictions and limitations
set forth in the Policy.
PARTIAL WITHDRAWALS
The Policy owner may also withdraw part of the Policy's Cash Surrender Value by
sending ReliaStar Bankers Security Life a written request. Only one partial
withdrawal is allowed in any Policy Year. The amount of any partial withdrawal
must be at least $500.00 but may not be more than 20% of the Cash Surrender
Value. ReliaStar Bankers Security Life currently makes a $10.00 charge for each
partial withdrawal. ReliaStar Bankers Security Life makes partial withdrawals
from the Fixed Accumulation Value and the Variable Accumulation Value on a
proportionate basis. For the purpose of determining the proportions, the
outstanding loan amount is subtracted from the Fixed Accumulation Value.
ReliaStar Bankers Security Life will generally pay the partial withdrawal within
seven days of receipt of the written request. 2/
DEATH BENEFIT AND BENEFITS AT AGE 95
As long as the Policy is in force, ReliaStar Bankers Security Life will
generally pay the proceeds of the Policy to the named beneficiary in accordance
with the designated Death Benefit Option within seven days after the receipt of
due proof of the insured's death. Payment of proceeds may, however, be postponed
under certain circumstances 2/. The amount of the Death Benefit is determined on
the Valuation Date on or next following the date of the insured's death. The
proceeds payable will be reduced by any Loan amount and any unpaid Monthly
Deduction. These proceeds will be increased by any additional insurance provided
by rider and by the refund of any unearned Policy loan interest.
The amount of the Death Benefit to age 95 of the Insured is guaranteed not to be
less than the current Face Amount of the Policy. The Death Benefit may, however,
exceed the current Face Amount. The amount by which the Death Benefit exceeds
the Face Amount depends upon the Death Benefit Option in effect and the
Accumulation Value of the Policy. Under the Level Amount Option, the Death
Benefit to age 95 is the greater of the Face Amount or the applicable percentage
of Accumulation Value set forth in the Option. Under the Variable Amount Option,
the Death Benefit will always vary with the Accumulation Value since the Death
Benefit to age 95 is the greater of the Face Amount plus the Accumulation Value
of the Policy, or the applicable percentage of the Accumulation Value set forth
in the Option.
If the insured is living at age 95 and the Policy is in force, the Death Benefit
is the Accumulation Value.
LOANS
After the first Policy Year, the Policy owner may use the Policy as security to
take out a loan. The maximum amount that the Policy owner may borrow at any time
is the Policy's Cash Value (the Accumulation Value Less any Surrender Charge)
less any existing loan amount. Each Policy loan must be at least $500.00. The
Loan Value will be determined on the Valuation Date following the date the
request was received.
The portion of the loan allocated to the Sub-accounts of the Variable Account
will normally be paid within seven days after receipt of the written request.
Postponement of loans may take place under certain circumstances. 2/
The amounts held as security for the Policy loan are segregated within the Fixed
Accumulation Value of the Policy but will be credited with interest on a basis
different from other amounts in the Fixed Account. The total of all outstanding
loans is called the Loan Amount. All amounts held in the Fixed Account as
security for Policy loans will be credited with interest at an effective annual
rate currently equal to 5.50%. No additional interest will be credited to these
amounts.
The interest charged on Policy loans will be an annual rate of 5.66%, payable in
advance. After the tenth Policy Year, ReliaStar Bankers Security Life will
charge interest at an annual rate of 3.85%, payable in advance, on that portion
of the Loan Amount that is not in excess of (a) Accumulation Value less (b) the
total of all premiums paid and all partial withdrawals. Any excess of this
amount will be charged interest at the annual rate of 5.66%.
Amounts held as security for a Policy loan will come from the Fixed Account and
Sub-accounts of the Variable Accounts in the same proportion that the Policy's
Fixed Accumulation Value less any Loan Amount and the Policy Variable
Accumulation Value in each Sub-account, bear to the Policy's total Accumulation
Value less any Loan Amount.
The portion of the Policy loan allocated to each Sub-account will be transferred
from the Sub-account to the Fixed Account thereby reducing the value held in the
Sub-account.
The Loan Amount is deducted from the total premium paid for purposes of
calculating whether the Policy owner has paid premiums sufficient to maintain
the Death Benefit Guarantee. The Loan Amount is deducted from the proceeds when
ReliaStar Bankers Security Life pays a death claim. Loans have priority over the
claims of an assignee or any other person. A Policy loan may be repaid in whole
or in part at any time on or before the insured's age 95.
POLICY LAPSE
If the Death Benefit Guarantee is not in effect, the Policy will lapse at the
end of a 61-day grace period if, as of that Monthly Anniversary, the Loan Amount
is greater than the Policy's Accumulation Value reduced by the applicable
Surrender Charge; or the Cash Surrender Value is not sufficient to pay the
Monthly Deduction due. The grace period begins on the date ReliaStar Bankers
Security Life notifies the Policy owner and any collateral assignees of record
of the required premium. The Policy owner will then have 61 days from the date
the notice is mailed, to make the required payment to keep the Policy in force.
If the payment is not received within the 61-day period, the Policy will lapse.
If the insured dies during this 61-day period, the Loan Amount and any unpaid
Monthly Deduction will be deducted from the proceeds payable.
TRANSFERS
The Variable Account currently has four series Funds with 17 portfolios
available for investment by the Sub-accounts. Each Sub-account invests in
shares, at net asset value, of a specified portfolio of the four series Funds. A
Policy owner may transfer Accumulation Value between the Fixed Account and the
Sub-accounts of the Variable Account or among the Sub-accounts of the Variable
Account by written request (or by telephone if a telephone authorization form
has been completed, is in effect and an I.D. number has been assigned), subject
to any conditions the Funds whose share are involved by impose. ReliaStar
Bankers Security Life currently allows 12 transfers in a Policy Year but
reserves the right to limit you to four transfers per year. ReliaStar Bankers
Security Life considers all transfers received in the same request and made on
the same initial Valuation Date as one transfer. Transfers are made on the
Valuation Date on or next following the date the request is received.
To transfer all or part of the Variable Accumulation Value from a Sub-account,
Accumulation Units are redeemed and their value is reinvested in other
Sub-accounts or in the Fixed Account as directed by the Policy owner.
A Policy owner may transfer all or part of the Fixed Accumulation Value to the
Sub-accounts of the Variable Account, subject to the following limitations:
1. The request to transfer must be postmarked no more than 30 days before or
after the Policy Anniversary in any year, and only one transfer is
permitted during this period;
2. The Fixed Accumulation Value after the transfer must be at least equal to
the Loan Amount;
3. No more than 50% of the Fixed Accumulation Value, less any Loan Amount, may
be transferred unless the balance, after the transfer, would be less than
$1,000.00, in which event the full Fixed Accumulation Value, less any Loan
Amount, may be transferred; and
4. The Policy owner must transfer at least the lesser of $500.00 or the total
Fixed Accumulation Value, less any Loan Amount.
While ReliaStar Bankers Security Life does not currently impose a transfer
charge, it reserves the right to make a charge not to exceed $25.00 per
transfer.
Transfers resulting from loans and exercising Conversion Rights under the Policy
are not subject to any transfer charges and do not count against the limitation
on the number of transfers.
CONVERSION
At any time during the first two Policy Years or the first two years following a
requested increase in Face Amount, the Policy owner can request a transfer from
the Variable Account to the Fixed Account and indicate that he or she is
exercising the Conversion Rights under the Policy. Such transfer will not be
subject to the transfer charge and will not count against the limitation on the
number of transfers. At the time of the transfer, there is no effect on the
Policy's Death Benefit, Face Amount, net amount at risk, Rate Class, or issue
age. To the extent that the Accumulation Value is held in the Fixed Account, the
benefits of the Policy do not vary with the investment performance of the
Variable Account.
1 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;
PRESIDENTS' DAY; GOOD FRIDAY; MEMORIAL DAY; JULY FOURTH; LABOR DAY;
VETERANS DAY; THANKSGIVING DAY; AND CHRISTMAS DAY.
VALUATION PERIOD - THE PERIOD BETWEEN TWO SUCCESSIVE VALUATION DATES,
COMMENCING AT THE CLOSE OF BUSINESS OF A VALUATION DATE AND ENDING AT
THE CLOSE OF BUSINESS OF THE NEXT VALUATION DATE.
2 PAYMENTS FROM THE VARIABLE ACCOUNT FOR DEATH BENEFITS, CASH SURRENDER,
PARTIAL WITHDRAWAL, OR POLICY LOANS WILL NORMALLY BE PAID WITHIN SEVEN
DAYS OF RECEIPT OF THE WRITTEN REQUEST AND RECEIPT OF THE POLICY FORM,
IF REQUIRED.
RELIASTAR BANKERS SECURITY LIFE MAY DELAY MAKING PAYMENT WHEN IT IS NOT
ABLE TO DETERMINE THE VARIABLE ACCUMULATION VALUE BECAUSE THE NEW YORK
STOCK EXCHANGE IS CLOSED FOR TRADING; OR THE SECURITIES AND EXCHANGE
COMMISSION DETERMINES THAT A STATE OF EMERGENCY EXISTS.
RELIASTAR BANKERS SECURITY LIFE HAS THE RIGHT TO DELAY SUCH PAYMENTS
FROM THE FIXED ACCOUNT FOR UP TO SIX MONTHS FROM THE DATE IT RECEIVES
THE REQUEST, SUBJECT TO ANY STATE REQUIREMENTS. IF PAYMENT IS DELAYED
FOR 30 DAYS OR MORE, RELIASTAR BANKERS SECURITY LIFE PAYS INTEREST AT
AN EFFECTIVE ANNUAL RATE OF 3 1/2% FROM THE DATE OF THE INSURED'S
DEATH, SURRENDER, PARTIAL WITHDRAWAL, OR POLICY LOAN REQUEST TO THE
DATE OF PAYMENT.
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Stephen A. Carb
------------------------------
Stephen A. Carb
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Richard R. Crowl
------------------------------
Richard R. Crowl
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ John H. Flittie
------------------------------
John H. Flittie
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ James T. Hale
------------------------------
James T. Hale
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Wayne R. Huneke
------------------------------
Wayne R. Huneke
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Kenneth U. Kuk
------------------------------
Kenneth U. Kuk
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Richard E. Nolan
------------------------------
Richard E. Nolan
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 4th day of November, 1996.
/s/ Fioravante G. Perrotta
------------------------------
Fiorvavante G. Perrotta
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Robert C. Salipante
------------------------------
Robert C. Salipante
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ John G. Turner
------------------------------
John G. Turner
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Charles B. Updike
------------------------------
Charles B. Updike
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Ross M. Weale
------------------------------
Ross M. Weale
<PAGE>
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, JAMES E. NELSON, ROBERT B.
SAGINAW, STEWART GREGG, JEFFREY A. PROULX, DEBORAH A. LJUNGKULL AND JODY A. ROSE
and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including pre-effective and post-effective
amendments, thereto, to be filed by said Company with the Securities and
Exchange Commission, Washington, DC, in connection with the registration under
the 1933 and 1940 Acts, as amended, of variable annuity and variable life
contracts and accumulation units in related Separate Accounts and to file those
Separate Accounts with all exhibits thereto and other supporting documents, with
said Commission, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
this 28th day of October, 1996.
/s/ Steven W. Wishart
------------------------------
Steven W. Wishart
