<PAGE>
As filed with the Securities and Exchange Commission on April 16, 1999
Registration No. 333-47527
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
REGISTRATION STATEMENT
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
---------------
ReliaStar Life Insurance Company of New York
Variable Life Separate Account I
(Exact Name of Registrant)
ReliaStar Life Insurance Company of New York
1000 Woodbury Road
Woodbury, New York 11797
(Name and Address of Principal Executive Office of Depositor)
---------------
Stewart D. Gregg
Counsel
ReliaStar Life Insurance Company of New York
20 Washington Avenue South
Minneapolis, MN 55440
Copy to:
Jeffrey A. Proulx
Associate Counsel
ReliaStar Life Insurance Company of New York
20 Washington Avenue South
Minneapolis, MN 55440
It is proposed that this filing will become effective
__ immediately upon filing pursuant to paragraph (b) of Rule 485
X_ on April 30, 1999 pursuant to paragraph (b) of Rule 485
__ 60 days after filing pursuant to paragraph (a) of Rule 485
__ on __ , 1999 pursuant to paragraph (a) of Rule 485
Title of Securities Being Registered: Variable Life Contracts Issued by a
Registered Separate Account.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
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>
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 ReliaStar Life Insurance Company of New York; 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; Additional Information on
the 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; Additional Information on the Investments of the Variable
Account
12 Additional Information on the Investments of the Variable Account
13 Deductions and Charges
14 The Policies; General Provisions; Distribution of the Policies
15 Payment and Allocation of Premiums; Additional Information on the Investments of
the Variable Account
16 Payment and Allocation of Premiums; Surrender Benefits; Additional Information on
the 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
19 Voting Rights, General Provisions
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Bonding Arrangements
24 Definitions; General Provisions
25 ReliaStar Life Insurance Company of New York
26 Not Applicable
27 ReliaStar Life Insurance Company of New York
28 Management
29 ReliaStar Life Insurance Company of New York
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 Management
43 Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Number of
Form N-8B-2 Heading in the Prospectus
- --------------- ----------------------------------------------------------------------------------
<S> <C>
44 Additional Information on the Investments of the Variable Account; Payment
Allocation of Premiums; Deductions and Charges
45 Not Applicable
46 Additional Information on the Investments of the Variable Account; Deductions and
Charges
47 Additional Information on the Investments of the Variable Account
48 ReliaStar Life Insurance Company of New York; 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 Additional Information on the 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 Financial Statements
</TABLE>
<PAGE>
[GRAPHIC OMITTED]
ReliaStar Life Insurance Company of New York
1000 Woodbury Road
Woodbury, New York 11797
---------------------------
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
Issued by
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I
of
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
ReliaStar Life Insurance Company of New York is offering the survivorship
flexible premium variable life insurance policy described in this prospectus.
ReliaStar designed the Policy to provide (1) a death benefit payable when the
surviving joint insured person dies; and (2) maximum flexibility regarding
premium payments and death benefits. Subject to certain restrictions, Policy
owners may:
o vary the frequency and amount of premium payments;
o increase or decrease the level of death benefits payable under the
Policy; and
o allocate premiums to:
-- the Fixed Account, an account that provides a minimum specified
rate of interest; and
-- Sub-Accounts of ReliaStar Life Insurance Company of New York Variable
Life Separate Account I, a variable account allowing you to invest in
certain portfolios of the following Funds:
<TABLE>
<S> <C>
The Alger American Fund Neuberger Berman Advisers Management Trust
Fidelity Variable Insurance Products Fund Northstar Galaxy Trust
Fidelity Variable Insurance Products Fund II OCC Accumulation Trust
Janus Aspen Series Putnam Variable Trust
</TABLE>
If you allocate net premiums to Sub-Accounts of ReliaStar Life Insurance
Company of New York Variable Life Separate Account I, the amount of the Policy's
death benefit may, and the total value attributed to a Policy will, vary to
reflect the investment performance of the Sub-Accounts you select.
The Policy's primary purpose is to provide insurance protection for the
beneficiary. ReliaStar does not claim that investing in the Policy is in any way
similar or comparable to a systematic investment plan of a mutual fund.
Generally, the Policy will remain in force as long as the cash surrender
value (that is, the amount that ReliaStar would pay if you surrender the Policy)
is sufficient to pay certain monthly charges. However, under certain
circumstances the Policy provides a death benefit guarantee that allows the
Policy to remain in force without regard to the cash surrender value. See "Death
Benefit Guarantee."
Interests in the Policies and shares of the Funds are not deposits or
obligations of or guaranteed by a bank, and are not Federally insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
The Securities and Exchange Commission has not approved these securities or
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
Please read this prospectus carefully and keep it for future reference.
Call 1-800-456-6965 to obtain a current prospectus for any of the Funds. 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 April 30, 1999.
1
<PAGE>
<TABLE>
<S> <C>
DEFINITIONS ................................................. 5
PART 1. SUMMARY
The Policy .................................................. 7
Free Look Rights ............................................ 8
Premium Payments ............................................ 8
The Variable Account ........................................ 8
The Fixed Account ........................................... 8
The Funds ................................................... 8
Charges Against the Accumulation Value ...................... 11
Charge Upon Lapse or Total Surrender of the Policy .......... 11
Surrenders .................................................. 11
Partial Withdrawals ......................................... 11
Loans ....................................................... 11
Transfers ................................................... 12
Death Benefit Overview ...................................... 12
Adjusting the Death Benefit ................................. 12
Death Benefit Guarantee ..................................... 12
Lapse ....................................................... 12
Taxation of Death Benefit Proceeds .......................... 13
Taxation of the Policy ...................................... 13
PART 2. DETAILED INFORMATION
ReliaStar Life Insurance Company of New York ................ 13
The Policies ................................................ 13
Deductions and Charges ...................................... 13
Premium Expense Charge ..................................... 14
Monthly Deduction .......................................... 14
Cost of Insurance ........................................ 14
Monthly Administrative Charge ............................ 14
Monthly Amount Charge .................................... 14
Monthly Mortality and Expense Risk Charge ................ 15
Optional Insurance Benefit Charges ....................... 15
Surrender Charge ......................................... 15
Partial Withdrawal and Transfer Charges .................. 16
Modification of Charges .................................. 16
Investment Advisory Fees and Other Fund Expenses ......... 16
Fund Expenses ............................................ 17
The Variable Account ........................................ 19
Investments of the Variable Account ........................ 19
Performance Information .................................... 19
Death Benefit ............................................... 20
Death Benefit Options ...................................... 20
Level Amount Option ...................................... 20
Variable Amount Option ................................... 21
Which Death Benefit Option to Choose ....................... 22
Requested Changes in Face Amount ............................ 22
Increases .................................................. 22
Decreases .................................................. 22
Effect of Requested Changes in Face Amount ................. 22
Insurance Protection ........................................ 23
Changing the Death Benefit Option ........................... 24
Payment and Allocation of Premiums .......................... 24
Issuing the Policy ......................................... 24
Coverage ................................................. 24
Minimum Initial Premium .................................. 24
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Temporary Insurance ................................................... 24
Allocating Premiums ..................................................... 25
Crediting New Premiums ................................................ 25
Refunding Premiums .................................................... 25
Amount and Timing of Premiums ........................................... 25
Planned Periodic Premiums ............................................... 26
Unscheduled Additional Premiums ......................................... 26
Paying Premiums by Mail ................................................. 26
Death Benefit Guarantee .................................................. 27
Requirements for the Death Benefit Guarantee ............................ 27
Accumulation Value ....................................................... 28
Specialized Uses of the Policy ........................................... 29
Policy Lapse and Reinstatement ........................................... 29
Lapse ................................................................... 29
Reinstatement ........................................................... 29
Surrender Benefits ....................................................... 29
Total Surrender ......................................................... 30
Partial Withdrawal ...................................................... 30
Effect of Partial Withdrawal(s) ......................................... 30
Transfers ................................................................ 31
Telephone/Fax Instructions .............................................. 31
Dollar Cost Averaging Service ........................................... 31
Portfolio Rebalancing Service ........................................... 32
Transfer Limits ......................................................... 32
Transfer Charges ........................................................ 32
Policy Loans ............................................................. 32
General ................................................................. 32
Immediate Effect of Policy Loans ........................................ 33
Effect on Investment Performance ........................................ 33
Effect on Policy Coverage ............................................... 33
Interest ................................................................ 34
Repayment of Loan Amount ................................................ 34
Tax Considerations ...................................................... 34
Free Look and Conversion Rights .......................................... 34
Free Look Rights ........................................................ 34
Conversion Rights ....................................................... 34
General Option ........................................................ 34
Additional Information on the Investments of the Variable Account ....... 35
Investment Limits ..................................................... 35
Addition, Deletion, or Substitution of Investments .................... 35
Voting Rights ............................................................ 36
Disregarding Voting Instructions ........................................ 36
Benefits After Age 100 ................................................... 37
General Provisions ....................................................... 37
Ownership ............................................................... 37
Proceeds ................................................................ 37
Beneficiary ............................................................. 37
Postponement of Payments ................................................ 37
Settlement Options ...................................................... 38
Interest on Settlement Options ........................................ 38
Incontestability ........................................................ 38
Misstatement of Age and Sex ............................................. 38
Suicide ................................................................. 39
Termination ............................................................. 39
Amendment ............................................................... 39
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Reports ................................................................ 39
Annual Statement ..................................................... 39
Projection Report .................................................... 39
Other Reports ........................................................ 39
Dividends .............................................................. 39
Collateral Assignment .................................................. 39
Optional Insurance Benefits ............................................ 40
Policy Split Option Rider (PSO) ...................................... 40
Survivorship Term Rider (STR) ........................................ 40
Four Year Term Rider (FTR) ........................................... 40
Federal Tax Matters ..................................................... 40
Introduction ......................................................... 40
Tax Status of the Policy ............................................. 40
Tax Treatment of Policy Benefits ..................................... 41
In General .......................................................... 41
Modified Endowment Contracts ........................................ 41
Distributions from Modified Endowment Contracts ..................... 41
Distributions for Policies That Are Not Modified Endowment Contracts 41
Policy Loans ........................................................ 42
Multiple Policies ................................................... 42
Taxation of ReliaStar Life Insurance Company of New York ............. 42
Possible Changes in Taxation ......................................... 42
Other Considerations ................................................. 42
Preparing for Year 2000 ................................................. 42
Distribution of the Policies ............................................ 42
Management .............................................................. 43
Directors and Officers ................................................. 43
State Regulation ........................................................ 47
Legal Proceedings ....................................................... 47
Bonding Arrangements .................................................... 48
Legal Matters ........................................................... 48
Experts ................................................................. 48
Registration Statement Contains Further Information ..................... 48
Financial Statements .................................................... 48
Appendices .............................................................. A-1
</TABLE>
The Policy may not be available in all jurisdictions. This prospectus
constitutes an offering or solicitation only in those jurisdictions where such
offering or solicitation may lawfully be made.
ReliaStar has not authorized any person to give any information or to make any
representations regarding the Policy other than those contained in this
prospectus or the accompanying fund prospectuses. Do not rely on any such
information or representations.
4
<PAGE>
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 28 and
Appendix B.
Average Age. The sum of the ages of the Joint Insureds divided by two rounded
to the higher age.
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.
We will reduce the proceeds payable to the beneficiary upon the death of the
Surviving Joint Insured by any Loan Amount and any unpaid Monthly Deductions.
See "Death Benefit" at page 20.
Death Benefit Guarantee. A feature of the Policy guaranteeing that the Policy
will not lapse during the Death Benefit Guarantee Period specified in your
Policy 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.
See "Death Benefit Guarantee" at page 27.
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 20.
Face Amount. The minimum Death Benefit under the Policy to age 100 of the
younger Joint Insured as long as the Policy remains in force. See "Death
Benefit" at page 20.
Fixed Account. ReliaStar Life Insurance Company of New York's assets 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 based upon
amounts in the Fixed Account. Unlike the Variable Accumulation Value, the
Fixed Accumulation Value will not reflect the investment performance of the
Funds. See "Accumulation Value" at page 28 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. See
"Investments of the Variable Account" at page 19.
Issue Date. The date insurance coverage under a Policy begins.
Joint Insureds. The persons upon whose lives we issue this Policy.
Loan Amount. The sum of all unpaid Policy loans including unpaid interest due
thereon. See "Policy Loans" at page 32.
Minimum Monthly Premium. A monthly premium amount that we determine when we
issue the Policy. See "Death Benefit Guarantee" at page 27.
Monthly Anniversary. The same date in each succeeding month as the Policy Date.
If the Monthly Anniversary falls on a date other than a Valuation Date, then
the Monthly Anniversary will be the next Valuation Date. The first Monthly
Anniversary is on the Policy Date.
Monthly Deduction. A monthly charge that we deduct from the Accumulation Value
of the Policy. See "Deductions and Charges -- Monthly Deduction" at page
14.
Net Premium. The gross premium you pay less a Premium Expense Charge.
Planned Periodic Premium. The scheduled premium selected by you of a level
amount at a fixed interval. The Policy will show the initial Planned
Periodic Premium you select. See "Payment and Allocation of Premiums --
Planned Periodic Premiums" at page 26.
Policy. The survivorship flexible premium variable life insurance policy
described in this Prospectus.
5
<PAGE>
Policy Anniversary. The same date in each succeeding year as the Policy Date. If
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 date shown on your Policy that ReliaStar uses to determine
Policy Years, Policy Months, Monthly Anniversaries and Policy
Anniversaries.
Policy Month. A one-month period beginning on a Monthly Anniversary.
Policy Year. A 12-month period beginning on a Policy Anniversary.
Premium Expense Charge. An amount (currently 6.25% in Policy Years 1-10 and
3.75% thereafter) ReliaStar deducts from each premium payment. See
"Deductions and Charges -- Premium Expense Charge" at page 14.
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 that 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 15.
Surviving Joint Insured. The Joint Insured who remains alive after the other
Joint Insured has died.
Unit Value. The unit measure by which we determine the value of the Policy's
interest in each Sub-Account. See Appendix B.
Valuation Date. Each day the New York Stock Exchange is open for business
except for days 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; Rev. Dr. Martin Luther King, Jr.
Day; Presidents' Day; Good Friday; Memorial Day; July Fourth; Labor Day;
Thanksgiving Day; and Christmas Day.
Valuation Period. The period beginning at the close of business on a Valuation
Date and ending at the close of business on the next Valuation Date. See
Appendix B.
Variable Account. ReliaStar Life Insurance Company of New York Variable Life
Separate Account I, a separate investment account we established to receive
and invest Net Premiums paid under the Policy and other variable life
insurance policies we issue. See "The Variable Account" at page 19.
Variable Accumulation Value. The value attributable to a specific Policy based
upon amounts in the Variable Account. See "Accumulation Value" and Appendix
B.
We, Us, Our, the Company, or ReliaStar. ReliaStar Life Insurance Company of New
York.
You, Your. The Policy owner(s) 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.
6
<PAGE>
PART 1. SUMMARY
This is a brief summary of the Policy's features. Please read the entire
Prospectus and the Policy for more detailed information.
The Policy
The Policy is a survivorship flexible premium variable life insurance
contract with death benefits, cash values, and other features of traditional
life insurance contracts. The Policy is:
o "survivorship" because it pays a death benefit when the Surviving Joint
Insured dies;
o "flexible premium" because you do not have to pay premiums according to
a fixed schedule; and
o "variable" because Accumulation Values and, under certain circumstances,
the Death Benefit will increase and decrease based on the investment
performance of the Funds corresponding to the Sub-Accounts to which you
allocate your premium payments.
Under current Federal tax law, as long as the Policy qualifies as life
insurance, Accumulation Value increases will 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 until you request a
distribution. See "Federal Tax Matters -- Tax Status of the Policy." The
following chart outlines the various features, charges and expenses of the
Policies. Additional, detailed information pertaining to charges and expenses is
contained in this Summary and in "Deductions and Charges."
<TABLE>
<S> <C>
PREMIUM PAYMENTS ---------------------------|
|
MINUS |
|
PREMIUM EXPENSE CHARGES |
|
Invested in Variable Sub-Account |
or Fixed Account |
| | |
| | |
Fund Managers Fixed Account |
| | |
------------------------------------------------------------ |
| | | | | | | |
| Alger | Fidelity* | Janus | |
| | | | |
Northstar Putnam OpCap Neuberger Berman |
|
|
|
DEATH BENEFIT
PLUS
INVESTMENT RETURN
(Net of Fund Expenses)
MINUS
Monthly ---------- MONTHLY DEDUCTIONS ---------- Mortality and Expense
Administrative | | Risk Charge
Charge -------- MINUS --------
| |
| |
| |
Cost of Insurance --- PARTIAL WITHDRAWALS --- Optional Benefit Charges
EQUALS
ACCUMULATION VALUE
MINUS
SURRENDERS, WITHDRAWALS,
SURRENDER CHARGES AND POLICY LOANS
EQUALS
CASH SURRENDER VALUE
</TABLE>
7
<PAGE>
Free Look Rights
o If you return the Policy to us by midnight of the 10th day after you receive
it, we will send you a refund of all premiums paid, unless otherwise
stipulated by state law (see "Free Look and Conversion Rights.")
Premium Payments
o You choose when to pay and how much to pay. o We may refuse to accept any
premium less than $25. o You cannot pay additional premiums after age 100.
o We may refuse any premium that would disqualify your Policy as life insurance
under Section 7702 of the Code.
o You may pay enough premiums to maintain the Death Benefit Guarantee to keep
the Policy in force during at least the first several Policy Years. See
"Death Benefit Guarantee" and "Payment and Allocation of Premiums -- Amount
and Timing of Premiums."
o We deduct a Premium Expense Charge (6.25% of each premium payment in Policy
Years 1-10 and 3.75% of each premium payment after the tenth Policy Year) and
credit the remaining premium (the Net Premium) to the Variable Account or the
Fixed Account according to your instructions. See "Deductions and Charges --
Premium Expense Charge."
The Variable Account (ReliaStar Life Insurance Company of New York Variable Life
Separate Account I)
o ReliaStar Life Insurance Company of New York Variable Life Separate Account I
is one of our separate accounts and consists of several Sub-Accounts. We only
invest premiums from our variable life insurance policies in the Variable
Account.
o We invest any Net Premiums you allocate to each Sub-Account in shares of the
Fund related to that Sub-Account. o Variable Accumulation Value will vary
with the investment performance of the Funds and the charges deducted from
the Variable Accumulation Value. See "Accumulation Value."
The Fixed Account
o Consists of all of our assets other than those in our separate accounts
(including the Variable Account).
o We credit interest of at least 4% per year on any amounts you allocate to the
Fixed Account.
o We may, in our sole discretion, credit interest in excess of 4%. See Appendix
A, "The Fixed Account."
The Funds
o You can instruct ReliaStar to place your Net Premium in or transfer to up to
17 of 29 investment portfolios over the lifetime of your Policy.
8
<PAGE>
The following chart lists the currently available Funds and outlines
certain of their important characteristics.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME INTERNATIONAL
- ------------------------- ---------------- ------------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
The Alger Alger American Fred Alger
American Fund Growth Management, Inc.
Portfolio
New York, N.Y.
-----------------------------------------------------------------------------------------------------
Alger American Fred Alger
MidCap Management, Inc.
Growth
Portfolio
-----------------------------------------------------------------------------------------------------
Alger American Fred Alger
Small Management, Inc.
Capitalization
Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fidelity Management X
Investments(R) Equity-Income & Research Company
Boston, Mass. Portfolio
-----------------------------------------------------------------------------------------------------
VIP Growth Fidelity Management
Portfolio & Research Company
-----------------------------------------------------------------------------------------------------
VIP Fidelity Management X
High Income & Research Company
Portfolio
-----------------------------------------------------------------------------------------------------
VIP Fidelity Management X
Money Market & Research Company
Portfolio
-----------------------------------------------------------------------------------------------------
VIP II Fidelity Management
Contrafund & Research Company
Portfolio
-----------------------------------------------------------------------------------------------------
VIP II Fidelity Management X
Index 500 & Research Company
Portfolio
-----------------------------------------------------------------------------------------------------
VIP II Fidelity Management X
Investment & Research Company
Grade Bond
Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Janus
Aggressive Capital
Denver, Colo. Growth Corporation
Portfolio
-----------------------------------------------------------------------------------------------------
Aspen Series Janus
Growth Capital
Portfolio Corporation
-----------------------------------------------------------------------------------------------------
Aspen Series Janus X
International Capital
Growth Corporation
Portfolio
-----------------------------------------------------------------------------------------------------
Aspen Series Janus X
Worldwide Capital
Growth Corporation
Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ADVISER/ AGGRESSIVE
FUND GROUP FUND SUBADVISER BALANCED GROWTH GROWTH
- ------------------------- ---------------- ------------------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C>
The Alger Alger American Fred Alger X
American Fund Growth Management, Inc.
Portfolio
New York, N.Y.
----------------------------------------------------------------------------
Alger American Fred Alger X
MidCap Management, Inc.
Growth
Portfolio
----------------------------------------------------------------------------
Alger American Fred Alger X
Small Management, Inc.
Capitalization
Portfolio
- -------------------------------------------------------------------------------------------------------
Fidelity VIP Fidelity Management
Investments(R) Equity-Income & Research Company
Boston, Mass. Portfolio
----------------------------------------------------------------------------
VIP Growth Fidelity Management X
Portfolio & Research Company
----------------------------------------------------------------------------
VIP Fidelity Management
High Income & Research Company
Portfolio
----------------------------------------------------------------------------
VIP Fidelity Management
Money Market & Research Company
Portfolio
----------------------------------------------------------------------------
VIP II Fidelity Management X
Contrafund & Research Company
Portfolio
----------------------------------------------------------------------------
VIP II Fidelity Management
Index 500 & Research Company
Portfolio
----------------------------------------------------------------------------
VIP II Fidelity Management
Investment & Research Company
Grade Bond
Portfolio
- -------------------------------------------------------------------------------------------------------
Janus Aspen Series Janus X
Aggressive Capital
Denver, Colo. Growth Corporation
Portfolio
----------------------------------------------------------------------------
Aspen Series Janus X
Growth Capital
Portfolio Corporation
----------------------------------------------------------------------------
Aspen Series Janus
International Capital
Growth Corporation
Portfolio
----------------------------------------------------------------------------
Aspen Series Janus
Worldwide Capital
Growth Corporation
Portfolio
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ADVISER/ PRIMARY
FUND GROUP FUND SUBADVISER OBJECTIVE INVESTMENTS
- ------------------------- ---------------- ------------------- ---------------------------------- -----------------------------
<S> <C> <C> <C> <C>
The Alger Alger American Fred Alger Long-term capital Equity securities of
American Fund Growth Management, Inc. appreciation large companies
Portfolio
New York, N.Y.
---------------------------------------------------------------------------------------------------------
Alger American Fred Alger Long-term capital Equity securities
MidCap Management, Inc. appreciation within the range of
Growth S&P MidCap 400 Index
Portfolio
---------------------------------------------------------------------------------------------------------
Alger American Fred Alger Long-term capital Equity securities within
Small Management, Inc. appreciation the range of Russell 2000
Capitalization Growth or S&P SmallCap
Portfolio 600 Indexes
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fidelity Management Reasonable income; Income-producing
Investments(R) Equity-Income & Research Company also considers potential for equity securities and
Boston, Mass. Portfolio capital appreciation debt obligations
---------------------------------------------------------------------------------------------------------
VIP Growth Fidelity Management Capital appreciation Common stocks
Portfolio & Research Company
---------------------------------------------------------------------------------------------------------
VIP Fidelity Management High current income Income-producing debt
High Income & Research Company securities, preferred stocks
Portfolio and convertible securities, with
an emphasis on lower-quality
debt securities
---------------------------------------------------------------------------------------------------------
VIP Fidelity Management High level of current income U.S. dollar - denominated
Money Market & Research Company consistent with preservation money market securities
Portfolio of capital and liquidity
---------------------------------------------------------------------------------------------------------
VIP II Fidelity Management Capital appreciation Securities of companies
Contrafund & Research Company whose value the adviser
Portfolio believes is not fully
recognized by the public
---------------------------------------------------------------------------------------------------------
VIP II Fidelity Management Total return that Common stocks of
Index 500 & Research Company corresponds to that of S&P 500
Portfolio S&P 500 Index
---------------------------------------------------------------------------------------------------------
VIP II Fidelity Management High current income Investment-grade
Investment & Research Company consistent with intermediate
Grade Bond preservation of capital fixed
Portfolio income securities
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Janus Long-term growth of Nondiversified portfolio
Aggressive Capital capital of common stocks
Denver, Colo. Growth Corporation
Portfolio
---------------------------------------------------------------------------------------------------------
Aspen Series Janus Long-term capital Diversified common
Growth Capital growth stocks
Portfolio Corporation
---------------------------------------------------------------------------------------------------------
Aspen Series Janus Long-term capital Foreign issuers of
International Capital growth common stocks
Growth Corporation
Portfolio
---------------------------------------------------------------------------------------------------------
Aspen Series Janus Long-term capital Foreign and domestic
Worldwide Capital growth common stocks
Growth Corporation
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME INTERNATIONAL
- ---------------- ------------------------ ----------------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Neuberger Advisers Management Neuberger Berman X
Berman Trust Limited Maturity Management Inc./
Bond Portfolio Neuberger Berman, LLC
New York, N.Y.
------------------------------------------------------------------------------------------------------------------
Advisers Management Neuberger Berman
Trust Partners Management Inc./
Portfolio Neuberger Berman, LLC
------------------------------------------------------------------------------------------------------------------
Advisers Management Neuberger Berman
Trust Socially Management Inc./
Responsive Portfolio Neuberger Berman, LLC
- -----------------------------------------------------------------------------------------------------------------------------------
Northstar Galaxy Trust Northstar Investment
Emerging Growth Management
Stamford, Conn. Portfolio Corporation
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment
Growth + Value Management
Portfolio Corporation/Navellier Fund
Management, Inc.
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment X
High Yield Management
Portfolio Corporation
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment X
International Management
Value Portfolio Corporation/Brandes
Investment Partners, L.P.
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment
Research Enhanced Management
Index Portfolio Corporation/J.P. Morgan
Investment
Management, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
OCC OCC Accumulation OpCap
Trust Equity Advisors
New York, N.Y. Portfolio
------------------------------------------------------------------------------------------------------------------
OCC Accumulation OpCap X
Trust Global Equity Advisors
Portfolio
------------------------------------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Managed Advisors
Portfolio
------------------------------------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Small Advisors
Cap Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Putnam VT Growth Putnam Investment X
Investments, Inc. and Income Fund - Class Management, Inc.
Boston, Mass. IA Shares
------------------------------------------------------------------------------------------------------------------
Putnam VT New Putnam Investment
Opportunities Management, Inc.
Fund - Class IA Shares
------------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Putnam Investment
Fund - Class IA Shares Management, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADVISER/ AGGRESSIVE
FUND GROUP FUND SUBADVISER BALANCED GROWTH GROWTH OBJECTIVE(S)
- ---------------- ------------------------ ----------------------- -------- ------ ----------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Neuberger Advisers Management Neuberger Berman Highest available current
Berman Trust Limited Maturity Management Inc./ income consistent with
Bond Portfolio Neuberger Berman, LLC liquidity and low risk to
New York, N.Y. principal; total return is a
secondary goal
------------------------------------------------------------------------------------------------------------------
Advisers Management Neuberger Berman X Growth of capital
Trust Partners Management Inc./
Portfolio Neuberger Berman, LLC
------------------------------------------------------------------------------------------------------------------
Advisers Management Neuberger Berman X Long-term
Trust Socially Management Inc./ growth of capital by investing
Responsive Portfolio Neuberger Berman, LLC primarily in companies that
meet financial and social
criteria
- -----------------------------------------------------------------------------------------------------------------------------------
Northstar Galaxy Trust Northstar Investment X Long-term capital
Emerging Growth Management appreciation
Stamford, Conn. Portfolio Corporation
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment X Capital appreciation from
Growth + Value Management investing in a diversified
Portfolio Corporation/Navellier Fund portfolio of equity securities
Management, Inc.
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment High current yield and
High Yield Management capital appreciation
Portfolio Corporation
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment Long-term capital
International Management appreciation
Value Portfolio Corporation/Brandes
Investment Partners, L.P.
------------------------------------------------------------------------------------------------------------------
Galaxy Trust Northstar Investment X Long-term capital
Research Enhanced Management appreciation
Index Portfolio Corporation/J.P. Morgan
Investment
Management, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
OCC OCC Accumulation OpCap X Long-term capital
Trust Equity Advisors appreciation
New York, N.Y. Portfolio
------------------------------------------------------------------------------------------------------------------
OCC Accumulation OpCap Long-term capital
Trust Global Equity Advisors appreciation
Portfolio
------------------------------------------------------------------------------------------------------------------
OCC Accumulation OpCap X Growth of capital
Trust Managed Advisors
Portfolio
------------------------------------------------------------------------------------------------------------------
OCC Accumulation OpCap X Capital appreciation
Trust Small Advisors
Cap Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Putnam VT Growth Putnam Investment Capital growth and
Investments, Inc. and Income Fund - Class Management, Inc. current income
Boston, Mass. IA Shares
------------------------------------------------------------------------------------------------------------------
Putnam VT New Putnam Investment X Long-term capital
Opportunities Management, Inc. appreciation
Fund - Class IA Shares
------------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Putnam Investment X Capital appreciation
Fund - Class IA Shares Management, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADVISER/ PRIMARY
FUND GROUP FUND SUBADVISER INVESTMENTS
- ---------------- ------------------------ ----------------------- -------------------------------
<S> <C> <C> <C>
Neuberger Advisers Management Neuberger Berman Short to intermediate-term
Berman Trust Limited Maturity Management Inc./ investment-grade debt
Bond Portfolio Neuberger Berman, LLC securities
New York, N.Y.
------------------------------------------------------------------------ -------------
Advisers Management Neuberger Berman Common stocks of
Trust Partners Management Inc./ medium-to-large
Portfolio Neuberger Berman, LLC capitalization
companies
------------------------------------------------------------------------ -------------
Advisers Management Neuberger Berman Common stocks of medium-to-
Trust Socially Management Inc./ large-capitalization companies
Responsive Portfolio Neuberger Berman, LLC
- -------------------------------------------------------------------------------------------------------
Northstar Galaxy Trust Northstar Investment Common stocks
Emerging Growth Management
Stamford, Conn. Portfolio Corporation
------------------------------------------------------------------------ -------------
Galaxy Trust Northstar Investment Equity securities
Growth + Value Management
Portfolio Corporation/Navellier Fund
Management, Inc.
------------------------------------------------------------------------ -------------
Galaxy Trust Northstar Investment High-yield bonds
High Yield Management
Portfolio Corporation
------------------------------------------------------------------------ -------------
Galaxy Trust Northstar Investment International equities
International Management
Value Portfolio Corporation/Brandes
Investment Partners, L.P.
------------------------------------------------------------------------ -------------
Galaxy Trust Northstar Investment Common stocks
Research Enhanced Management
Index Portfolio Corporation/J.P. Morgan
Investment
Management, Inc.
- -------------------------------------------------------------------------------------------------------
OCC OCC Accumulation OpCap Securities of
Trust Equity Advisors undervalued
New York, N.Y. Portfolio companies
------------------------------------------------------------------------ -------------
OCC Accumulation OpCap Global investments in
Trust Global Equity Advisors equity securities
Portfolio
------------------------------------------------------------------------ -------------
OCC Accumulation OpCap Common stocks,
Trust Managed Advisors bonds and cash
Portfolio equivalents
------------------------------------------------------------------------ -------------
OCC Accumulation OpCap Equity securities of
Trust Small Advisors companies under
Cap Portfolio $1 billion
- -------------------------------------------------------------------------------------------------------
Putnam Putnam VT Growth Putnam Investment Common stocks
Investments, Inc. and Income Fund - Class Management, Inc.
Boston, Mass. IA Shares
------------------------------------------------------------------------ -------------
Putnam VT New Putnam Investment Common stocks
Opportunities Management, Inc.
Fund - Class IA Shares
------------------------------------------------------------------------ -------------
Putnam VT Voyager Putnam Investment Common stocks
Fund - Class IA Shares Management, Inc.
- -------------------------------------------------------------------------------------------------------
</TABLE>
For each Fund's expenses, see "Investment Advisory Fees and Other Fund
Expenses."
10
<PAGE>
Charges Against the Accumulation Value
The Accumulation Value of the Policy is subject to the Monthly Deduction
charges. Except for the Monthly Mortality and Expense Risk Charge, we will
deduct the Monthly Deduction each month from both the Fixed Accumulation Value
and the Variable Accumulation Value on a proportionate basis depending on their
relative Accumulation Values at that time. We will deduct the Monthly Mortality
and Expense Risk Charge on a proportionate basis from each Sub-Account of the
Variable Account depending on their relationship to the Variable Accumulation
Value at that time. See "Deductions and Charges -- Monthly Deduction."
The Monthly Deduction includes:
o Cost of Insurance -- A charge determined by multiplying the applicable cost
of insurance rate(s) by the net amount at risk.
o Monthly Administrative Charge -- currently $7.50 per month and guaranteed
not to exceed the product of $5.00 and the ratio (not to exceed 2.00) of
(a) the Consumer Price Index (for all urban households) for the preceding
September to (b) the Consumer Price Index for September 1985.
o Monthly Mortality and Expense Risk Charge -- equal to .90% of the Variable
Accumulation Value for the first 10 Policy Years and anticipated to be .25%
of the Variable Accumulation Value thereafter. The Monthly Mortality and
Expense Risk Charge is guaranteed not to exceed 1.20% of the Variable
Accumulation Value during the first 10 Policy Years and .55% of the
Accumulation Value thereafter.
o Monthly Amount Charge -- a monthly charge determined by multiplying the
Face Amount by the applicable charge per $1,000 of Face Amount and assessed
during the first 20 Policy Years (and first 20 years after a Face Amount
increase). The maximum amount of this charge is $1.27 per $1,000 Face
Amount for policies issued to Joint Insureds with an Average Age of 85.
o Any charges for optional insurance benefits -- vary depending upon the
benefit(s) selected.
Charge Upon Lapse or Total Surrender of the Policy
o We assess a Surrender Charge if your Policy lapses or if you surrender the
Policy during the first 15 Policy Years (or during the first 15 years
following a Face Amount increase).
o We will determine the maximum Surrender Charge for the initial Face Amount
and any requested increases in Face Amount on the Policy Date and on the
effective date of any such requested increase.
o The maximum Surrender Charge for the initial Face Amount or requested
increase in Face Amount will be equal to $8.50 per thousand of initial Face
Amount.
o You do not pay this charge if the Policy remains in force during the
entire relevant 15-year period. See "Deductions and Charges -- Surrender
Charge."
Surrenders
o In general, you will receive the Cash Surrender Value if you surrender
the Policy.
o To determine the Cash Surrender Value, we reduce your Accumulation Value
by the Surrender Charge, if any, and any Loan Amount and unpaid Monthly
Deductions. See "Surrender Benefits -- Total Surrender."
Partial Withdrawals
o After the first Policy Year, once each Policy Year, you can withdraw part
of your Cash Surrender Value.
o You will not incur a surrender charge, but partial withdrawals are
subject to a processing charge (currently $10, guaranteed not to exceed
$25). See "Surrender Benefits -- Partial Withdrawal."
Loans
o At any time after the first Policy Year, generally you can borrow up to
100% of your Policy's Cash Value less any existing Loan Amount.
o Interest is payable in advance for each Policy Year and accrues daily at an
effective annual rate that will not exceed 5.66%
11
<PAGE>
o After the 10th Policy Year, we currently charge interest at an annual rate
of 3.85% on the portion of your Loan Amount that is not in excess of (1)
the Accumulation Value, less (2) the total of all premiums paid net of all
partial withdrawals.
Transfers
o Currently, you can transfer all or part of your Accumulation Value among
the investment options.
o We currently allow up to 12 transfers per year. o There are certain
restrictions on transfers from the Fixed Account.
o We currently assess no charge for transfers. However, we reserve the
right to assess a maximum charge of $25 for each transfer in excess of 12
transfers per Policy Year. See "Transfer Charges."
Death Benefit Overview
You also can choose one of two Death Benefit Options:
o Level Amount Option -- whereby the Death Benefit until age 100 of the
younger Joint Insured is the greater of the Face Amount or the corridor
percentage of Accumulation Value according to the younger Joint Insured's
attained age; or
o Variable Amount Option -- whereby the Death Benefit until age 100 of the
younger Joint Insured is equal to the greater of the Face Amount plus the
Accumulation Value, or the corridor percentage of Accumulation Value
according to the younger Joint Insured's attained age.
The Death Benefit until age 100 of the younger Joint Insured under the
Level Amount Option and the Variable Amount Option 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. After age 100 of the younger Joint Insured, the Death
Benefit under all Death Benefit Options will be the Accumulation Value.
We will reduce the proceeds payable upon the death of the surviving Joint
Insured under any Death Benefit Option by any Loan Amount and any unpaid Monthly
Deductions.
Adjusting the Death Benefit
Although we reserve the right to limit Face Amount increases and decreases
during the first four Policy Years, 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 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 fourth Policy Year.
See "Death Benefit -- Insurance Protection" for a discussion of available
techniques to adjust the amount of insurance protection to satisfy changing
insurance needs.
Death Benefit Guarantee
If you meet the requirements for the Death Benefit Guarantee, we will not
lapse your Policy during the Death Benefit Guarantee Period even if the Cash
Surrender Value is not sufficient to cover the Monthly Deduction that is due.
See "Death Benefit Guarantee."
Lapse
If the Death Benefit Guarantee is not in effect, the Policy will lapse if
the Cash Surrender Value is less than the Monthly Deduction due and if you do
not make a sufficient payment during the grace period of 61 days. See "Policy
Lapse and Reinstatement -- Lapse."
12
<PAGE>
Taxation of Death Benefit Proceeds
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 -- Tax Status of the Policy."
Taxation of the Policy
The Company intends for the Policy to satisfy the definition of a life
insurance contract under Section 7702 of the Code. Under certain circumstances,
a Policy could be treated as a "modified endowment contract." The company will
monitor Policies and will attempt to notify an owner on a timely basis if his or
her Policy is in jeopardy of becoming a modified endowment contract. See
"Federal Tax Matters" for further discussion of the tax status of a Policy and
the tax consequences of being treated as a life insurance contract or a modified
endowment contract.
A Policy lapse, surrender, partial withdrawal or loan may have adverse tax
consequences in certain circumstances. See "Federal Tax Matters."
PART 2. DETAILED INFORMATION
ReliaStar Life Insurance Company of New York
ReliaStar Life Insurance Company of New York is a stock life insurance
company which was incorporated under the laws of the State of New York in 1917.
We are an indirect, wholly-owned subsidiary of ReliaStar Financial Corp. We
offer individual life insurance and annuities. Our home office is located at
1000 Woodbury Road, Suite 102, P.O. Box 9004, Woodbury, New York 11797.
We may occasionally publish in advertisements, sales literature, and
reports the ratings and other information assigned to us by one or more
independent rating organizations such as A.M. Best Company, Standard & Poor's,
Moody's, and Duff & Phelps. The purpose of the ratings is to reflect our
financial strength and/or claims-paying ability. They should not be considered
as bearing on the investment performance of assets held in the Variable Account.
Each year the A.M. Best Company reviews the financial status of many insurers,
culminating in the assignment of Best's Ratings. These ratings reflect their
current opinion of the relative financial strength and operating performance of
an insurance company in comparison to the norms of the life/health insurance
industry. Our rating of A+ by A.M. Best is assigned to companies demonstrating
superior overall performance and a very strong ability to meet obligations to
Policy holders over a long period. Such ratings do not reflect the investment in
the Variable Account.
ReliaStar is a charter member of the Insurance Marketplace Standard
Association ("IMSA"). Companies that belong to IMSA subscribe to a rigorous set
of standards that cover the various aspects of sales and service for
individually sold life insurance and annuities. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.
The Policies
The Policies are survivorship flexible premium variable life insurance
contracts with death benefits, cash values, and other features of traditional
life insurance contracts.
Deductions and Charges
We deduct certain charges in connection with the Policy to compensate us
for (1) providing the insurance benefits of the Policy (including any riders),
(2) administering the Policy, (3) assuming certain risks in connection with the
Policy, and (4) incurring expenses in distributing the Policy.
We deduct some of these charges from each Premium Payment. We deduct
certain other charges monthly from both the Fixed Account and the Variable
Account, or from the Variable Account only. We may also assess a charge for each
partial withdrawal and for each transfer.
13
<PAGE>
The Surrender Charge usually exceeds the Accumulation Value in the early
Policy Years. This occurs because the Surrender Charge is usually more than the
accumulated Minimum Monthly Premiums less Policy charges in the early Policy
Years.
We may realize a profit on one or more of these charges, such as the
Mortality and Expense Risk Charge. We may use any such profits for any proper
corporate purpose, including, among other things, payment of sales expenses.
Premium Expense Charge
We deduct the Premium Expense Charge from each premium. The Premium Expense
Charge is currently 6.25% of each premium payment in Policy Years 1-10 and 3.75%
of each premium after the tenth Policy Year. The amount remaining after we
deduct the Premium Expense Charge is called the Net Premium.
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.
We will deduct the Monthly Deduction 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, we reduce the Fixed Accumulation Value 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, 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 (1) the Death Benefit at the beginning of the Policy Month divided by
1.00327374 (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 4%), less (2) the Accumulation Value at the beginning of
the Policy Month (reduced by any charges for rider benefits). 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 any Joint Insured may affect the cost of insurance. We
currently place Insureds into standard Rate Classes or into substandard Rate
Classes that involve a higher mortality risk. In an otherwise identical Policy,
any Joint Insured in the standard Rate Class will have a lower cost of insurance
than any Joint 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, we will first assume the Accumulation Value 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.
We base cost of insurance rates on the sex, Issue age, Policy Year and Rate
Class(es) of each Joint 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 the product of $5.00 and the
ratio (not to exceed 2.00) of (1) the Consumer Price Index (for all urban
households) for the preceding September to (2) the Consumer Price Index for
September 1985.
Monthly Amount Charge. Each month during the first 20 Policy Years (and for
20 Policy Years following any requested increase in Face Amount) we deduct a
monthly charge per $1,000 of Face Amount. The amount of this charge varies by
Average Age of the Joint Insureds on the Policy Date (or on the effective date
of any
14
<PAGE>
requested increase in Face Amount, as appropriate). See Appendix D. This charge
compensates us for expenses relating to the distribution of the Policy,
including agents' commissions, advertising, and the printing of the Prospectus
and sales literature for new sales of the Policy. A portion of this charge may
also contribute to company profits.
Monthly Mortality and Expense Risk Charge. Each month during the first 10
Policy Years we will deduct a charge which is anticipated to be at an annual
rate of .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 .25% of the Variable Accumulation Value. The Monthly Mortality
and Expense Risk Charge is guaranteed not to exceed 1.20% of the Variable
Accumulation Value of the Policy during the first 10 Policy Years, and .55% of
the Accumulation Value of the Policy per Policy Year thereafter. The mortality
and expense risk we assume is that our cost of insurance charges and other
expense charges are not sufficient to cover our costs of death benefits, and any
other expenses incurred in issuing and administering the Policies.
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
General. During the first 15 Policy Years and during the first 15 years
following a requested increase in Face Amount, there is a Surrender Charge if
you surrender the Policy or the Policy lapses. The Surrender Charge will not be
affected by any decrease in Face Amount or by any change in Face Amount
resulting from a change in the Death Benefit Option.
The Surrender Charge imposed upon early surrender or lapse will be
significant. For example, if you make premium payments no greater than the
Minimum Monthly 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 of time.
Surrender Charge. 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 maximum
Surrender Charge on the Initial Face Amount will be equal to $8.50 per $1,000 of
Initial Face Amount. The maximum Surrender Charge on any requested increase in
Face Amount will be equal to $8.50 per $1,000 of increase in the Face Amount.
This Surrender Charge for the Initial Face Amount remains level equal to the
maximum Surrender Charge during the first five Policy Years and then reduces in
equal monthly increments until it becomes zero at the end of 15 years. The
Surrender Charge for any requested increase in Face Amount follows a similar
pattern.
Surrender Charge Calculation. We determine the Surrender Charge for the
Initial Face Amount or any requested increase in Face Amount by multiplying (1)
$8.50 by (2) the Initial Face Amount or the Face Amount of the increase, as
applicable, and by (3) the applicable percentage from the Surrender Charge
Percentage Table below, and then dividing this amount by 1000. For example, a
$250,000 Face Amount Policy would have a maximum $2,125 Surrender Charge ($8.50
x 250,000 / 1,000 x 100%) the first five years of the Policy, and the Surrender
Charge would decline during the next ten years as indicated by the Table below.
For the Initial Face Amount, a Surrender Charge is measured from the Issue Date
and applies for 15 years from that Date. An increase in Face Amount of $100,000
in year 5 of the Policy would have its own (additional) Surrender Charge of $850
at the end of the first year ($8.50 x 100,000 / 1,000), and vary according to
the Table below. The 15 year applicable Surrender Charge for each increase is
measured from the date of the increase and applies for 15 years from the
Increase Date. In this example, all Surrender Charges would cease to apply after
the twentieth Policy Year.
15
<PAGE>
Surrender Charge Percentage Table
<TABLE>
<CAPTION>
If surrender or lapse occurs The following percentage of the
in the last month of Policy Year Surrender Charge will be payable:
- ---------------------------------- ----------------------------------
<S> <C>
1 100%
2 100%
3 100%
4 100%
5 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 and later 0%
</TABLE>
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 eleventh Policy Year, the percentage reduces equally each
month from 50% at the end of the tenth Policy Year to 40% at the end of the
eleventh Policy Year.
Partial Withdrawal and Transfer Charges
We currently make no charge for transfers but we do charge $10 for each
partial withdrawal. These charges are guaranteed not to exceed $25 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.
Modification of Charges
ReliaStar may modify any of the charges under the Policy, as well as the
Minimum Face Amount set forth in this Prospectus, 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 Policy holders 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. Modifications will not be unfairly discriminatory against any
person, including the affected Policy owners and owners of all other policies
funded by the Variable Account.
Investment Advisory Fees and Other Fund Expenses
Because the Variable Account purchases shares of the Funds, the net asset
value of the Variable Account's investments 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 1998 annual expenses as a percentage of the
Fund's average net assets. See the prospectuses for the Funds for more
information concerning these expenses.
16
<PAGE>
Fund Expenses
(Net of Fee Waivers)
<TABLE>
<CAPTION>
Total Investment
Management Other Fund Annual
Fund Fees Expenses Expenses
- ---------------------------------------------------------------------- ------------ ---------- -----------------
<S> <C> <C> <C>
Alger American Growth Portfolio (a) .................................. 0.75% 0.04% 0.79%
Alger American MidCap Growth Portfolio (a) ........................... 0.80% 0.04% 0.84%
Alger American Small Capitalization Portfolio (a) .................... 0.85% 0.04% 0.89%
Fidelity VIP Equity-Income Portfolio (a) (b) ......................... 0.49% 0.09% 0.58%
Fidelity VIP Growth Portfolio (a) (b) ................................ 0.59% 0.09% 0.68%
Fidelity VIP High Income Portfolio (a) ............................... 0.58% 0.12% 0.70%
Fidelity VIP Money Market Portfolio .................................. 0.20% 0.10% 0.30%
Fidelity VIP II Contrafund Portfolio (a) (b) ......................... 0.59% 0.11% 0.70%
Fidelity VIP II Index 500 Portfolio (a) (b) .......................... 0.24% 0.11% 0.35%
Fidelity VIP II Investment Grade Bond Portfolio (a) .................. 0.43% 0.14% 0.57%
Janus Aggressive Growth Portfolio (a) (c) ............................ 0.72% 0.03% 0.75%
Janus Growth Portfolio (a) (c) ....................................... 0.65% 0.03% 0.68%
Janus International Growth Portfolio (a) (c) ......................... 0.66% 0.20% 0.86%
Janus Worldwide Growth Portfolio (a) (c) ............................. 0.65% 0.07% 0.72%
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio (a) (d) .............................................. 0.65% 0.11% 0.76%
Neuberger Berman Advisers Management Trust Partners
Portfolio (a) (d) ................................................... 0.78% 0.06% 0.84%
Neuberger Berman Advisers Management Trust Socially Responsive
Portfolio (a) (d) (e) ............................................... 0.85% 0.65% 1.50%
Northstar Galaxy Trust Emerging Growth Portfolio (f) ................. 0.75% 0.15% 0.90%
Northstar Galaxy Trust Growth + Value Portfolio (f) .................. 0.75% 0.05% 0.80%
Northstar Galaxy Trust High Yield Bond Portfolio (f) ................. 0.75% 0.05% 0.80%
Northstar Galaxy Trust International Value Portfolio (f) ............. 1.00% 0.00% 1.00%
Northstar Galaxy Trust Research Enhanced Index Portfolio (f) ......... 0.75% 0.15% 0.90%
OCC Equity Portfolio (a) (g) ......................................... 0.80% 0.14% 0.94%
OCC Global Equity Portfolio (a) (g) .................................. 0.80% 0.33% 1.13%
OCC Managed Portfolio (a) (g) ........................................ 0.78% 0.04% 0.82%
OCC Small Cap Portfolio (a) (g) ...................................... 0.80% 0.08% 0.88%
Putnam VT Growth and Income Fund-Class IA Shares ..................... 0.46% 0.04% 0.50%
Putnam VT New Opportunities Fund-Class IA Shares ..................... 0.56% 0.05% 0.61%
Putnam VT Voyager Fund-Class IA Shares ............................... 0.54% 0.04% 0.58%
</TABLE>
(a) The Company or its affiliates may receive compensation from an affiliate or
affiliates of certain of the Funds based upon an annual percentage of the
average net assets held in that Fund by the Company and by certain of the
Company's insurance company affiliates. These amounts are intended to
compensate the Company or the Company's affiliates for administrative,
record keeping, and in some cases distribution, and other services provided
by the Company and its affiliates to Funds and/or the Funds' affiliates.
Payments of such amounts by an affiliate or affiliates of the Funds do not
increase the fees paid by the Funds or their shareholders. The percentage
paid may vary from one Fund company to another.
(b) A portion of the brokerage commissions that certain Portfolios pay was used
to reduce Portfolio expenses. In addition, certain Portfolios have entered
into arrangements with their custodian whereby credits realized as a result
of uninvested cash balances are used to reduce custodian expenses.
Including these reductions,
17
<PAGE>
the total operating expenses presented in the table would have been: 0.57% for
Fidelity VIP Equity-Income Portfolio; 0.66% for Fidelity VIP Growth Portfolio;
and 0.28% for Fidelity VIP II Index 500 Portfolio; and 0.66% for Fidelity VIP
II Contrafund Portfolio.
(c) The fees and expenses in the table above are based on net expenses after
expense offset arrangements for the fiscal year ended December 31, 1998. The
information is net of fee reductions from Janus Capital. Fee reductions for
the Aggressive Growth, Growth, International Growth, and Worldwide Growth
Portfolios reduce the management fee to the level of the corresponding Janus
retail fund. Other waivers, if applicable, are first applied against the
Management Fee and then Other Expenses. Without such reductions, the
Management Fee, Other Expenses and Total Investment Fund Annual Expenses
would have been: 0.72%, 0.03%, and 0.75% for Janus Aggressive Growth
Portfolio; 0.72%, 0.03%, and 0.75% for Janus Growth Portfolio; 0.75%, 0.20%,
and 0.95% for Janus International Growth Portfolio; and 0.67%, 0.07%, and
0.74% for Janus Worldwide Growth Portfolio. Janus Capital has agreed to
continue these fee reductions until at least the next annual renewal of the
advisory agreement.
(d) Neuberger Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets in a
corresponding series ("Series") of Advisers Managers Trust. The figures
reported under "Management Fees" include the aggregate of the administration
fees paid by the Portfolio and the management fees paid by its corresponding
Series. Similarly, "Other Expenses" includes all other expenses of the
Portfolio and its corresponding Series.
(e) Neuberger Berman Management Inc. ("NBMI") has undertaken to reimburse the
Socially Responsive Portfolio for certain operating expenses, including the
compensation of Neuberger Berman Advisers Management Trust and excluding
taxes, interest, extraordinary expenses, brokerage commissions and
transaction costs, that exceed in the aggregate, 1.50% of the average daily
net asset value of the Socially Responsive Portfolio. The Socially
Responsive Portfolio had not commenced operations as of December 31, 1998,
and thereof these expense figures are estimated. Estimated expenses are
expected to be 2.50% for the fiscal period ending December 31, 1999, prior
to the reimbursement. The expense reimbursement policy is subject to
termination upon 60 days' written notice. There can be no assurance that
this policy will be continued after April 30, 2000. See "Expense Limitation"
in the Socially Responsive Portfolio prospectus for further information.
(f) The fee and expense information for the Northstar Galaxy Trust Emerging
Growth Portfolio and International Value Portfolio has been restated to
reflect current fees and expenses effective November 9, 1998. The fee and
expense information for the Northstar Galaxy Trust Research Enhanced Index
Portfolio has been restated to reflect current fees and expenses effective
April 30, 1999. The investment adviser to the Northstar Galaxy Trust has
agreed to reimburse the Northstar Growth + Value Portfolio and High Yield
Bond Portfolio for any expenses in excess of 0.80% of each Portfolio's
average daily net assets. It has also agreed to reimburse the Emerging
Growth, Research Enhanced Index, and International Value Portfolios for
amounts in excess of 0.90%, 0.90% and 1.00%, respectively. In the absence of
the investment adviser's expense reimbursements, the Total Investment Fund
Annual Expenses that would have been paid by each Portfolio during its
fiscal year ended December 31, 1998 would have been: Northstar Galaxy Trust
Growth + Value Portfolio: 1.02%; Northstar Galaxy Trust High Yield Bond
Portfolio: 1.23%; Northstar Galaxy Trust Research Enhanced Index Portfolio:
1.29%; Northstar Galaxy Trust Emerging Growth Portfolio: 1.14%. For the
Northstar Galaxy Trust International Value Portfolio, on an annualized
basis, absent expense reimbursement, the actual expenses for this Portfolio
are 1.68%. Expense reimbursements are voluntary. There is no assurance of
ongoing reimbursement. The Northstar Galaxy Trust Emerging Growth Portfolio
(formerly the Northstar Galaxy Trust Income and Growth Portfolio) operated
under an investment objective of seeking income balanced with capital
appreciation from inception through November 8, 1998, when the investment
objective was modified to seeking long-term capital appreciation. The
Northstar Galaxy Trust Research Enhanced Index Portfolio (formerly the
Northstar Galaxy Trust Multi-Sector Bond Portfolio) operated under an
investment objective of seeking current income while preserving capital
through April 29, 1999, when the investment objective was modified to
seeking long-term capital appreciation.
(g) Management Fees reflect effective management fees after taking into effect
any waiver. Other Expenses are shown net of expense offsets afforded the
Portfolios. Total Portfolio Expenses for the Equity, Small Cap and Managed
Portfolios are limited by OpCap Advisors so that their respective annualized
operating expenses (net of any expense offsets) do not exceed 1.00% of
average daily net assets. Total Portfolio Expenses for the Global Equity
Portfolio are limited to 1.25% of average daily net assets (net of expense
offsets).
18
<PAGE>
The Variable Account
On March 23, 1982, we established the ReliaStar Life Insurance Company of
New York Variable Life Separate Account I as one of our separate accounts
pursuant to the laws of the State of New York. The Variable Account :
o will receive and invest the Net Premiums paid and allocated to it under
this Policy;
o currently receives and invests net premiums for other classes of flexible
premium variable life insurance policies we issue and may do so for
additional classes in the future;
o meets the definition of a "separate account" under the federal
securities laws; and
o is registered with the SEC as a unit investment trust under the Investment
Company Act of 1940 ("1940 Act"). Such 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 Variable Account's assets. However, New York law provides that
we cannot charge the Variable Account 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).
Investments of the Variable Account
There are currently 29 investment options (Funds) available under the
Variable Account. However, we only permit you to participate in a maximum of 17
investment options over the lifetime of your Policy. The Summary and section
entitled "Additional Information on the Investments of the Variable Account"
describe the Funds currently offered. You also should read the Funds'
prospectuses for more detailed information, particularly because several of the
Funds and portfolios may have objectives that are quite similar. Please call the
telephone number listed on the first page of this Prospectus to request a Fund's
prospectus. There is no assurance that any Fund will achieve its investment
objective(s).
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. Such 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. We will accompany quotations of performance information for
the Funds with 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.
We may provide performance information showing total returns and average annual
total returns for periods prior to the date a Sub-Account commenced operation.
We will calculate such performance information 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.
We may also provide individualized hypothetical illustrations of
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 Charge and the Surrender Charge. We will base these
hypothetical illustrations on the actual historical experience of the Funds as
if the Sub-Accounts were in existence and a Policy issued for the same periods
as those indicated for the Funds.
We may compare performance of the Sub-Accounts and/or the Funds in
advertisements and sales literature:
o to other variable life insurance issuers in general
o to the performance of particular types of variable life insurance
policies investing in mutual funds
19
<PAGE>
o to investment series of mutual funds with investment objectives similar to
each of the Sub-Accounts, whose performance is reported by Lipper
Analytical Services, Inc. and Morningstar, Inc. (independent services that
monitor and rank the performances of variable life insurance issuers in
each of the major categories of investment objectives on an industry-wide
basis), 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 and
Fortune
o 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.
Death Benefit
If the Surviving Joint Insured dies while the Policy is in force, we will
pay the Death Benefit reduced by any Loan Amount and unpaid Monthly Deductions.
This amount is called the proceeds. We may pay all or part of the proceeds in
cash to your beneficiaries or under one or more of the settlement options we
offer. See "General Provisions -- Settlement Options."
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 Policy provides two Death Benefit Options as shown below. You choose
the Death Benefit Option on the application for the Policy. Subject to certain
limitations, you can change the Death Benefit Option after the Policy is
issued. See "Death Benefit -- Changing the Death Benefit Option."
Level Amount Option. (Option A.) The Death Benefit is the greater of the
current Face Amount of the Policy or the Corridor Percentage of Accumulation
Value on the Valuation Date on or next following the date of the Surviving Joint
Insured's death. 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 younger Joint 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 before the
younger Joint Insured's age 100, 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 younger Joint Insured's age
increases. If the current age of the younger Joint 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).
20
<PAGE>
Corridor Percentage Table
<TABLE>
<CAPTION>
Corridor Corridor Corridor
Younger Joint Insured's Percentage of Younger Joint Insured's Percentage of Younger Joint Insured's Percentage of
Age on Previous Policy Accumulation Age on Previous Policy Accumulation Age on PreviousPolicy Accumulation
Anniversary Value Anniversary Value Anniversary Value
- ------------------------- --------------- ------------------------- --------------- ------------------------ --------------
<S> <C> <C> <C> <C> <C>
40 or younger 250% 54 157 68 117
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 113
44 222 58 138 72 111
45 215 59 134 73 109
46 209 60 130 74 107
47 203 61 128 75-90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95-100 100
53 164 67 118
</TABLE>
Variable Amount Option. (Option B.) The Death Benefit is equal to the
greater of the current Face Amount plus the Accumulation Value of the Policy, or
the Accumulation Value multiplied by the corridor percentage according to the
younger Joint Insured's attained age. The corridor percentage is 250% for the
younger Joint Insured age 40 or below, and the percentage declines with
increasing age as shown in the Corridor Percentage Table above. 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 younger Joint 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 before the
younger Joint Insured's age 100, 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. The Death Benefit after age 100 is the
Accumulation Value.
The corridor percentage becomes lower as the younger Joint Insured's age
increases. If the current age of the younger Joint 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).
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<PAGE>
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
and lower cost of insurance charges, 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. You must submit a written request to us to increase the Face
Amount. 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. We currently permit increases until any Joint Insured exceeds age 85.
You cannot request an increase in the Face Amount more frequently than once
every four 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") 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."
Decreases. You must submit a written request to us to decrease the Face
Amount. 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
rules, the Minimum Face Amount is $250,000, but we reserve the right to
establish a different Minimum Face Amount. If, following a decrease in Face
Amount, the Policy would no longer qualify as life insurance under Federal tax
law (see "Federal Tax Matters -- Tax Status of the Policy"), we will limit the
decrease 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:
(1) The Face Amount provided by the most recent increase;
(2) The next most recent increases successively; and
(3) 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. 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 and the
Monthly Amount Charge depend 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
22
<PAGE>
Face Amount will not reduce the Surrender Charge or the Monthly Amount 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. Face Amount changes may also change the Death Benefit
Guarantee Period. 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
As your insurance needs change, 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. These
ways include:
o increasing or decreasing the Face Amount of insurance, changing the level
of premium payments, and,
o 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:
o 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.
o A decrease in the Face Amount will, subject to the corridor percentage
limitations (see "Death Benefit Options -- Death Benefit Options"),
decrease the pure insurance protection without reducing the Accumulation
Value. If the Face Amount is decreased, the Cost of Insurance charges
generally will decrease as well. (Note that the Surrender Charge will not
be reduced. See "Deductions and Charges -- Surrender Charge.")
o A change in the level of premium can have a variety of effects, as
follows.
Under the Level Amount Option, until the corridor percentage of Accumulation
Value exceeds the Face Amount, (a) an increased level of premium payments
will reduce the amount of pure insurance protection, and (b) a reduced level
of premium payments will increase the amount of pure insurance protection.
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.)
Under any Death Benefit Option, if the Death Benefit is the corridor
percentage of Accumulation Value, then (a) 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 (b) a reduced level of premium payments will
reduce the pure insurance protection.
o 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.
23
<PAGE>
You should consider 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) together with the other restrictions and
considerations described elsewhere in this Prospectus.
Changing the Death Benefit Option
After the fourth Policy Year, you may change the Death Benefit Option once
each Policy Year. 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).
If you request to change the Death Benefit Option from the Variable Amount
Option to the Level Amount Option, we will increase the Face Amount 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. A change in the Face Amount resulting
from a change in the Death Benefit Option may also affect the charge for certain
optional insurance benefits. See "Deductions and Charges -- Monthly Deduction."
However, a Face Amount change resulting from a Death Benefit Option change will
not affect the Surrender Charge.
Changes in the Death Benefit Option do not currently require additional
evidence of insurability.
Payment and Allocation of Premiums
Issuing the Policy
Both individuals applying for a Policy must complete an application and
personally deliver it to our licensed agent. We will generally only issue a
Policy to applicants where both Joint Insureds' ages are 85 or less and both
supply 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.
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 applicants pay 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.
Temporary Insurance. When the application is taken, you can receive
temporary insurance coverage by paying a premium equal to 10% of annualized
Minimum Monthly Premium. The temporary insurance will be for the face amount
specified in the premium receipt and will be effective until the earliest of the
following:
o The date the coverage under the Policy is effective.
24
<PAGE>
o The date you receive an offer for an alternative policy, a notice of
termination of temporary insurance coverage, or notice that we have
rejected the application.
o The date of death of the proposed Surviving Joint Insured or any proposed
additional Joint Insured.
o The 180th day after the date of the receipt for the temporary insurance.
Allocating 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. 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 current Net Premium
allocation will not affect the allocation of existing Accumulation Value.
Crediting Net Premiums. We will credit Net Premiums 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 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, we
will hold premium payments in our General Account. No interest will be earned on
these premium payments during this period of time.
Refunding Premiums. We will return all premiums paid without interest if
any of the following occur:
o We send notice to the applicant(s) that the insurance is declined.
o The applicant(s) refuses an offer for an alternative policy.
o The applicant(s) does not supply required medical exams or tests within
30 days of the date of the application.
o The applicant(s) returns the Policy under the limited free look right.
See "Free Look and Conversion Rights -- Free Look Rights."
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 We require that you pay cumulative premiums sufficient to maintain the
Death Benefit Guarantee 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.
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 lives of the Joint Insureds, 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. 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
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premium payment would increase the net amount at risk if at the time of
payment the Death Benefit would be based upon the applicable corridor
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 Code. If at any time you pay a premium
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. We will return any part of the premium in
excess of that amount, and we will not accept further premiums until
allowed by the current maximum premium limitations.
o You may pay additional premiums (other than Planned Periodic Premiums) at
any time while the Policy is in force. We may limit the number and amount
of these additional premiums.
o If you want to make 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 you can pay into the Policy. See "Federal Tax Matters -- Tax Status
of the Policy."
Planned Periodic Premiums
You may choose a Planned Periodic Premium schedule which indicates a
preference as to future amounts and frequency of payment. You may pay Planned
Periodic Premiums annually, semi-annually, quarterly, by bank account monthly
deduction, or government allotment.
Your Policy will show the amount and frequency of your initial Planned
Periodic Premium. You may change the Planned Periodic Premium at any time by
written request. We may limit the amount of any increase, if such an increase
would result in planned periodic premiums that are larger than (a) the maximum
premium we would accept under the Amount and Timing of Premium Payments
provisions in the Policy or (b) the Planned Periodic Premium which would total
more than $50,000 per year. 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 Life Insurance Company of New York
NW 7353
P.O. Box 1450
Minneapolis, MN 55485-7353
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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." Each Policy will specify the Death Benefit Guarantee Period.
The Death Benefit Guarantee Period depends on the issue ages and premium classes
of the Joint Insureds, Death Benefit Option, and any Optional Insurance
Benefits. Certain Policy changes may also change the Death Benefit Guarantee
Period.
Following is a table of typical Death Benefit Guarantee Periods. The
examples assume that the Joint Insureds are a male and a female, both of the
same issue age, both with no substandard ratings, a $1,000,000 Face Amount, and
no Optional Insurance Benefits. Policies with substandard ratings and Optional
Insurance Benefits will typically have a shorter Death Benefit Guarantee Period.
<TABLE>
<CAPTION>
Death Benefit Death Benefit
Age and Class of Joint Insureds Option Guarantee Period
- --------------------------------- --------------- -----------------
<S> <C> <C>
45 Non-Tobacco ............. A (Level) 37 Years
45 Non-Tobacco ............. B (Variable) 35 Years
65 Non-Tobacco ............. A (Level) 17 Years
65 Non-Tobacco ............. B (Variable) 16 Years
45 Tobacco ................. A (Level) 35 Years
45 Tobacco ................. B (Variable) 33 Years
65 Tobacco ................. A (Level) 15 Years
65 Tobacco ................. B (Variable) 14 Years
</TABLE>
In general, the two most significant benefits from the Death Benefit
Guarantee are as follows:
o First, during the early Policy Years, the Cash Surrender Value may 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.
o 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
significant protection provided by the Death Benefit Guarantee by paying
less than the Minimum Monthly Premiums.
Requirements for the Death Benefit Guarantee
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. You must satisfy
the requirements for the Death Benefit Guarantee as of each Monthly Anniversary,
even though you do not have to pay premiums monthly.
Example: The Policy Date is January 1, 2000. The Minimum Monthly Premium
is $1000 per month. No Policy loans or partial withdrawals are taken and no
Face Amount changes have occurred.
Case 1. You pay $1000 each month. The Death Benefit Guarantee is
maintained.
Case 2. You pay $10,000 on January 1, 2000. The $10,000 maintains the Death
Benefit Guarantee without your paying any additional premiums for the
next 10 months (through October 31, 2000). However, you must pay at
least $1000 by November 1, 2000 to maintain the Death Benefit
Guarantee through November 30, 2000.
We will determine (and the Policy will indicate) the amount of the initial
Minimum Monthly Premium at issuance of the Policy. The initial Minimum Monthly
Premium will depend upon each Joint 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.
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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 -- Changing the
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 you have not made sufficient premium payments to maintain the Death
Benefit Guarantee as of any Monthly Anniversary, 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 is equal to the sum of the Variable
Accumulation Value plus the Fixed Accumulation Value. You should distinguish the
Accumulation Value 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." You should also distinguish the Accumulation Value
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 generally vary daily and will increase
or decrease to reflect the investment performance of the Funds in which
Sub-Accounts of the Variable Account have been invested.
We will increase the Variable Accumulation Value by:
o any Net Premiums credited to the Variable Account, and
o any transfers from the Fixed Account.
We will reduce the Variable Accumulation Value by:
o the Monthly Deduction attributable to the Variable Account,
o partial withdrawals from the Variable Account,
o any transfer and partial withdrawal charges attributable to the Variable
Account, and
o 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").
We will increase the Fixed Accumulation Value by:
o any Net Premiums credited to the Fixed Account.
o any interest credited to the Fixed Account (determined at our discretion,
but guaranteed not to be less than 4%), and
o any amounts transferred from the Variable Account to the Fixed Account
(including amounts transferred to the Fixed Account as security for Policy
loans -- see "Policy Loans").
We will reduce the Fixed Accumulation Value by:
o the Monthly Deduction attributable to the Fixed Account,
o partial withdrawals from the Fixed Account,
o any transfer and partial withdrawal charges attributable to the Fixed
Account, and
o any amounts transferred from the Fixed Account to the Variable Account.
See Appendix B for a detailed discussion of the calculation of Accumulation
Value. Appendix C includes an illustration of various Accumulation Values, Cash
Surrender Values, and Death Benefits, assuming different levels of premium
payments and various investment returns for selected Ages and Face Amounts.
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Specialized Uses of the Policy
Because the Policy provides for an accumulation of Cash Surrender Value as
well as a Death Benefit, the Policy can be used for various individual and
business financial planning purposes. Purchasing the Policy in part for such
purposes entails certain risks. For example, if the investment performance of
the Sub-Accounts to which Accumulation Value is allocated is poorer than
expected or if sufficient premiums are not paid, the Policy may lapse or may not
accumulate sufficient Accumulation Value or Cash Surrender Value to fund the
purpose for which the Policy was purchased. Withdrawals and Policy loans may
significantly affect current and future Accumulation Value, Cash Surrender
Value, or Death Benefit proceeds. Depending upon Sub-Account investment
performance and the amount of a Policy loan, the loan may cause a Policy to
lapse. Because the Policy is designed to provide benefits on a long-term basis,
you should consider whether the long-term nature of the Policy is consistent
with the purpose for which it is being considered. Using a Policy for a
specialized purpose may have tax consequences. See "Federal Tax Matters."
Policy Lapse and Reinstatement
Lapse. Unlike traditional life insurance policies, the failure to make a
Planned Periodic Payment will not by itself cause the Policy to lapse
(terminate). If the Death Benefit Guarantee is not in effect, the Policy will
lapse only 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 payment.
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 will indicate the amount of the payment
required to avoid lapse. If you do not make a sufficient payment within the
grace period, then the Policy will lapse without value.
If the Surviving Joint 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 Surviving Joint 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 that each Joint Insured is still insurable, or
if the Policy lapsed after the first death of the Joint Insured, then evidence
of insurability for the Surviving Joint Insured. 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. We will determine the amount available for a total
surrender or partial withdrawal at the end of the Valuation Period when we
receive your written request. Generally, we will pay any amounts from the
Variable Account upon total surrender or partial withdrawal within seven days
after we receive your written request. We may postpone payments in certain
circumstances. See "General Provisions -- Postponement of Payments."
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<PAGE>
Total Surrender
You may surrender the Policy at any time for its Cash Surrender Value by
making a written request. 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. Appendix C
shows 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.
Partial Withdrawal
After the first Policy Year, you may also withdraw part of the Cash
Surrender Value by sending us a written request. If the amount being withdrawn
exceeds $25,000, then the written request must include a Signature Guarantee. We
currently allow only one partial withdrawal in any Policy Year. We currently
make a $10.00 charge for each partial withdrawal. We guarantee that this charge
will not 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. No interest will accrue on amounts represented by uncashed distribution
or redemption checks.
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. We will determine these
proportions at the end of the Valuation Period during which we receive your
written request. For purposes of determining these proportions, we first
subtract any outstanding Loan Amount from the Fixed Accumulation Value.
Effect of Partial Withdrawals. We will reduce the Accumulation Value by the
amount of any partial withdrawal. We will also reduce the Death Benefit 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, we will reduce the Face Amount 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:
(1) The Face Amount provided by the most recent increase;
(2) The next most recent increases successively; and
(3) The Face Amount when the Policy was issued.
(This assumption also applies to requested decreases in Face Amount -- see
"Death Benefits -- 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 $250,000).
If the Variable Amount Option is in effect, a partial withdrawal does not
affect the Face Amount.
A partial withdrawal may also cause the Death Benefit Guarantee to
terminate because we deduct the amount of the partial withdrawal from the total
premiums paid in calculating whether you have paid sufficient premiums 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 -- Tax Status of the Policy."
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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. You must make your transfer request 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, we redeem Accumulation Units and reinvest their values in other
Sub-Accounts, or the Fixed Account, as you direct 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 (1) you have requested the
Portfolio Rebalancing service, or (2) you are transferring all of the Variable
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:
o 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,
o the Fixed Accumulation Value after the transfer must be equal to at least
the Loan Amount,
o you may only transfer up to 50% of the Fixed Accumulation Value, less any
Loan Amount, unless the balance, after the transfer, would be less than
$1,000, in which event you may transfer the full Fixed Accumulation Value,
less any Loan Amount, and
o 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/Fax Instructions. You are allowed to enter certain types of
instructions either by telephone or by fax if you complete a telephone/fax
instruction authorization form. If you complete the form, you can enter the
following types of instructions by telephone or fax:
o transfers between Sub-Accounts
o changes of allocations among fund options
By completing the telephone/fax form, you agree that we will not be liable for
any loss, liability, cost or expense when we act in accordance with the
telephone/fax transfer instructions that we receive or are recorded on voice
recording equipment. If we later determine that you did not make a telephone/fax
transfer request or the request was made without your authorization, and loss
results from such unauthorized transfer, you bear the risk of this loss. We
consider any requests made via fax as telephone requests and such requests are
bound by the conditions in the telephone/fax transfer authorization form you
sign. Any fax request should include your name, daytime telephone number, Policy
number and, in the case of transfers, the names of the Sub-Accounts from which
and to which money will be transferred and the allocation percentage. ReliaStar
will employ reasonable procedures to confirm that instructions communicated by
telephone/fax are genuine. If 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/fax instructions, providing written confirmation of such
instructions, and/or tape recording telephone instructions.
Dollar Cost Averaging Service. You may request this service if 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. We do not permit transfers from the Fixed
Account under this service. You may request that we make transfers of this type
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.
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If you are interested in the Dollar Cost Averaging service, you may obtain
a separate application form and information about this service and its
restrictions from us or our registered representative.
We will discontinue the Dollar Cost Averaging service (1) on receipt of any
request to begin a Portfolio Rebalancing service, (2) if the Policy is in the
grace period on any date when Dollar Cost Averaging transfers are scheduled, or
(3) 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
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. We
will also change your allocation of future Net Premium payments to be equal to
this specified percentage allocation. You may request that we make transfers
made under this service 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 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 information about this service and its
restrictions from us or our registered representative.
If you are using the Portfolio Rebalancing service, we will discontinue
this service immediately (1) on receipt of any request to change the allocation
of premiums to the Fixed Account and Sub-Account of the Variable Account, (2) on
receipt of any request to begin a Dollar Cost Averaging service, (3) upon
receipt of any request to transfer Accumulation Value among the Fixed Account or
Sub-Accounts, or (4) 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. We
reserve the right to limit the number of transfers per year to twelve. 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. We currently do not charge for the first 12 transfers in
a Policy Year. We reserve the right to make a charge not to exceed $25 per any
subsequent transfer in a Policy Year for the duration of the Policy. See
"Deductions and Charges -- Partial Withdrawal and Transfer Charges." We will not
impose any charge for exercising the conversion right or for transfers occurring
as the result of Policy Loans. All transfers are subject to any charges and
conditions imposed by the Fund whose shares are involved. We will treat all
transfers that are effective on the same Valuation Date as one transfer
transaction for the pupose of assessing any charge.
Policy Loans
General. While the Policy is in force, you may borrow money from us at any
time after the first Policy Year using the Policy as security for the loan. The
maximum amount you may borrow at any time is equal to the Loan Value of the
Policy. The Loan Value of the Policy is equal to 100% of the Cash Value less the
existing Loan Amount. Each Policy loan must be at least $500.
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You may request a loan in writing or by telephoning us on any Valuation
Date. Any loan request in excess of $25,000 will require a Signature Guarantee.
Telephone loan requests cannot exceed $10,000. We currently do not require an
election form 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 subsequent assignee or
other person. You may repay a Policy loan in whole or in part at any time.
We will normally pay the loan proceeds to you within seven days after we
receive your request. We may postpone payment of loan proceeds to you 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 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."
Immediate Effect of Policy Loans. When we make a Policy loan, we will
segregate an amount equal to the Policy loan (which includes interest payable in
advance) within the Accumulation Value of your Policy and hold it in the Fixed
Account as security for the loan. 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. We will include the amount
segregated in the Fixed Account as security for the Policy loan as part of the
Fixed Accumulation Value under the Policy, but we will credit that amount 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). We will transfer assets equal to the portion of the Policy loan coming
from the Variable Accumulation Value from the Sub-Accounts of the Variable
Account to the Fixed Account, THEREBY REDUCING THE ACCUMULATION VALUE HELD IN
THE SUB-ACCOUNTS. We do not treat these transfers as transfers for the purposes
of assessing the transfer charge or calculating the limit on the number of
transfers.
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. We will credit all amounts held in the
Fixed Account as security for Policy loans (that is, the Loan Amount) with
interest at an effective annual rate equal to 4.00%. WE WILL NOT CREDIT
ADDITIONAL INTEREST TO THESE AMOUNTS. On the Policy Anniversary, we will
allocate any interest credited on these amounts to the Fixed Account and the
Variable Account according to the premium allocation then in effect. See
"Payment and Allocation of Premiums -- Allocating Premiums."
Although you may repay Policy loans in whole or in part at any time, 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 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. We will notify you if, on any Monthly
Anniversary, the Loan Amount is greater than the Accumulation Value, less the
then applicable Surrender Charge. 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."
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A Policy loan may also cause termination of the Death Benefit Guarantee,
because we deduct the Loan Amount 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."
We will reduce proceeds payable upon the death of the Surviving Joint
Insured 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 (1) the Accumulation Value, less (2) the
total of all premiums paid and all partial withdrawals. This portion of your
loan amount is called a preferred loan. We will charge interest on any excess of
this amount at the annual rate of 5.66%, payable in advance.
Interest is payable in advance to the next Policy Anniversary when any
Policy loan is made and at the beginning of each Policy Year thereafter. If you
do not pay the interest when due, we will deduct it from the Cash Surrender
Value as an additional Policy loan (see "Immediate Effect of Policy Loans"
above) and we will add it to the existing Loan Amount.
We will refund any interest that we have not earned to you upon lapse or
surrender of the Policy or repayment of the Policy Loan.
Repayment of Loan Amount. You may repay the Loan Amount any time. If not
repaid, we will deduct the Loan Amount from any amount payable under the Policy.
Unless you provide us with notice to the contrary, we generally will treat any
payments on the Policy as premium payments. Such premium payments are subject to
the Premium Expense Charge. 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 -- Tax Status of the
Policy."
Free Look and Conversion Rights
Free Look Rights
The Policy provides for a "free look" period after application for and
issuance of the Policy. The Policy also provides for a "free look" period after
any requested increase in the Face Amount.
During the free look period after application for and issuance of the
Policy, you have a right to return the Policy for cancellation. You must return
the Policy to your agent or us and ask us to cancel the Policy by midnight of
the 10th day after receiving the Policy. Upon requesting cancellation of the
Policy, you will receive a refund of premiums paid for the Policy.
During the free look period after a requested increase in Face Amount, you
have the right to cancel the increase. You must request cancellation of the
increase by midnight of the 10th day after receiving the new Policy Data Page
reflecting the increase. 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 cost arising from 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. This option is made available by permitting you to transfer all or a
part of your Variable Accumulation Value to the Fixed Account.
General Option. 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, we will not assess
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any transfer charge on the transfer, 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.
Additional Information on the Investments of the Variable Account
Investment Limits
Although the Variable Account currently consists of 29 investment options,
we currently only permit you to participate in a maximum of 17 investment
options over the lifetime of your Policy. You do not have to choose your
investment options in advance, but once you participate in the 17th Fund since
your Policy was issued, you would only be able to transfer within those 17 Funds
already used and which are still available.
The Fund shares may be available to fund benefits under both variable
annuity and variable life contracts and policies. This could 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.
There also is a possibility that one fund might become liable for any
misstatement, inaccuracy or incomplete disclosure in another Fund's prospectus.
The Funds distribute dividends and capital gains. However, we
automatically reinvest distributions 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."
ReliaStar has entered into service arrangements with the managers or
distributors of certain of the Funds. Under these arrangements, ReliaStar or its
affiliates may receive compensation from affiliates of the Funds. This
compensation is for providing administrative, recordkeeping, distribution and
other services to the Funds or their affiliates. Such compensation is paid based
upon assets invested in the particular Funds, or based on the aggregated net
asset goals. Payments of such amounts by an affiliate or affiliates of the Funds
do not increase the fees paid by the Funds or their shareholders. The percentage
paid may vary from one Fund to another.
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.
o We 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. We may establish
new Sub-Accounts when, in our sole discretion, marketing needs or
investment conditions warrant, and we will make any new Sub-Accounts
available to existing Policy owners on a basis we determine.
o We may eliminate one or more Sub-Accounts, or prohibit additional new
premium or transfers into a Sub-Account, if, in our sole discretion,
marketing, tax, regulatory requirements or investment conditions warrant.
o 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. 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.
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Nothing contained herein shall prevent the Variable Account from:
o Purchasing other securities of other Funds or classes of polices,
o Permitting a conversion between Funds or classes of policies on the basis
of requests made by Policy owners, or
o Substituting the shares of one Fund for shares of another Fund in the event
of a merger of Funds or similar transaction.
In the event of any such substitution, deletion or change, we may make
appropriate changes in this and other polices to reflect such substitution,
deletion or change. If you allocated all or a portion of your investments to any
of the current funds that are being substituted for or deleted, you may transfer
the portion of the Accumulation Value affected without paying a transfer charge.
If we deem it to be in the best interests of persons having voting rights
under the Policies, we may:
o operate the Variable Account as a management company under the 1940 Act,
o deregister the Variable Account under the 1940 Act in the event such
registration is no longer required, or
o combine the Variable Account 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 Variable Account's assets 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.
We will vote 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, 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. We would disapprove a change 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. If we do disregard voting instructions, we
will include a summary of that action and the reasons for such action in the
next annual report to owners.
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Benefits After Age 100
If either of the Joint Insureds is living after age 100 of the younger
Joint Insured and the Policy is in force, the Death Benefit will be the
Accumulation Value.
General Provisions
Ownership
While the Surviving Joint Insured is alive, subject to the Policy's
provisions you may:
o Change the amount and frequency of premium payments.
o Change the allocation of premiums.
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.
While both Joint Insureds are alive, subject to the Policy's provisions,
you may:
o Change the Death Benefit Option.
o Change the Face Amount.
Proceeds
At the Surviving Joint 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
Surviving Joint 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. You may
also name a beneficiary whom you cannot change without his or her consent
(irrevocable beneficiary). If no beneficiary is surviving when the Surviving
Joint Insured dies, we will pay the Death Benefit to you, if surviving, or
otherwise to your estate.
Postponement of Payments
We generally make payments from the Variable Account for Death Benefits,
cash surrender, partial withdrawal, or loans 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 (1) the New York Stock Exchange is
closed, other than customary weekend or holiday closings, or the SEC restricts
trading on the New York Stock Exchange , (2) the SEC by order permits
postponement for the protection of Policyholders, or (3) the SEC determines that
an emergency exists which makes disposing of securities not reasonably
practicable, or which makes it not reasonably practicable to determine the value
of the Variable Account's net assets. We may also postpone transfers and
allocations to and from any Sub-Account of the Variable Account under these
circumstances.
We may delay any of the payments that we make from the Fixed Account for up
to six months from the date we receive the documents required. We will pay
interest at an effective annual rate of not less than 3.50% if we delay payment
more than 10 days. We will not credit any additional interest 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.
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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 Surviving Joint Insured's death.
o On total surrender of the Policy.
We pay the proceeds to one or more payees. We may pay the proceeds in a
lump sum or we may apply them to one of the following Settlement Options. You
may request that we use a combination of options. You must apply at least $2,500
to any Option for each payee under that option. Under an installment Option,
each payment must be at least $25. We may adjust the interval between payments
to make each payment at least $25.
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 we pay 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.
Incontestability
After the Policy has been in force during each Joint 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, we measure the contestable period from the
date of reinstatement with respect to statements made on the application for
reinstatement.
Misstatement of Age And Sex
If any Joint Insured's age or sex or both are 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.
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Suicide
If any Joint Insured commits suicide 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
any Joint Insured commits suicide 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 Surviving Joint Insured dies.
o You surrender the Policy for its Cash Surrender Value.
o We amend the Policy 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 Code.
-- Internal Revenue Service rulings and regulations.
-- Any requirements imposed by the Internal Revenue Service.
Reports
Annual Statement. We will send you an Annual Statement once each year,
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 for each additional Annual Statement you request.
Projection Report. After the first Policy Year, you may request 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. We may make a charge not to exceed $50 for
each Projection Report you request after the first report in any Policy Year.
Other Reports. To reduce expenses, only one copy of most financial reports
and prospectuses will be mailed to your household, even if you or other persons
in your household have more than one Policy. Call 1-800-456-6965 if you need
copies of financial reports, prospectuses, or historical account information.
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.
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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:
Policy Split Option Rider (PSO). Allows the Policy owner to split the
Policy into two individual permanent life insurance policies in the event of a
divorce of the Joint Insureds, dissolution of a business partnership of the
Joint Insureds, or if there is a change in the federal estate tax laws that
would eliminate the unlimited marital deduction or reduce by at least 50% the
estate taxes payable at death. Evidence of insurability on each Joint Insured
may be required to exercise this option. There is no cost for this rider.
Survivorship Term Rider (STR). Provides a level term insurance benefit
payable on the death of the Surviving Joint Insured if death occurs prior to age
100 of the younger Joint Insured. The current cost of insurance rates for the
rider are expected to be the same as for the base Policy. The Monthly Amount
Charge per $1,000 for the rider is expected to be lower than for the base
Policy. In addition, the base Policy's Surrender Charge does not apply to
coverage under the rider. However, the Survivorship Term Rider will cause the
Death Benefit Guarantee Period of the base Policy to be shortened.
By Company practice, if the base Death Benefit is equal to the Accumulation
Value multiplied by the corridor percentage (see "Death Benefit"), the STR
amount may be replaced with base coverage without providing evidence of
insurability. The entire rider amount must be replaced if any amount is
replaced. Neither Surrender Charges nor Monthly Amount Charges will apply to the
new additional base coverage. Cost of insurance rates on this new additional
base coverage will be equal to the cost of insurance rates for the original base
coverage.
There may be times in which it will be to your economic advantage to
include a significant portion of your insurance coverage under a term rider. In
some other circumstances, it may be in your interest to obtain a Policy without
term rider coverage. These circumstances depend on many factors, including the
premium levels and amount and duration of coverage you choose, as well as the
age, sex, and premium class of each Joint Insured.
Four Year Term Rider (FTR). Provides a four year, level term benefit if the
Surviving Joint Insured dies during the first four Policy Years.
Federal Tax Matters
Introduction
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all tax situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based upon the Company's understanding
of the present Federal income tax laws. No representation is made as to the
likelihood of continuation of the present Federal income tax laws or as to how
they may be interpreted by the Internal Revenue Service (the "IRS").
Any qualified plan contemplating the purchase of a life policy should
consult a tax advisor.
Tax Status of the Policy
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a Policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited. Nevertheless, the Company believes
that a Policy issued on the basis of a standard risk class should satisfy the
applicable requirements. There is less guidance with respect to Policies issued
on a substandard basis (i.e., a premium class involving higher than standard
mortality risk), and it is not clear whether such a Policy would satisfy the
applicable requirements, particularly if the owner pays the full amount of
premiums permitted under the Policy. If it is subsequently determined that a
Policy does not satisfy the applicable requirements, the Company may take
appropriate steps to bring the Policy into compliance with such requirements and
reserves the right to restrict Policy transactions in order to do so.
In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of the variable account supporting their policies due to their ability to
exercise investment control over these assets. Where this is the case, the
Policy owners have been currently
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taxed on income and gains attributable to the variable account assets. There is
little guidance in this area, and some features of the Policies, such as the
flexibility of an owner to allocate premium payments and Policy Accumulation
Values, have not been explicitly addressed in published rulings. While the
Company believes that the Policies do not give owners investment control over
Variable Account assets, the Company reserves the right to modify the Policies
as necessary to prevent an owner from being treated as the owner of the Variable
Account assets supporting the Policy.
In addition, the Code requires that the investments of the Variable Account
be "adequately diversified" in order for the Policies to be treated as life
insurance contracts for Federal income tax purposes. It is intended that the
Variable Account, through the Funds, will satisfy these diversification
requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
Tax Treatment of Policy Benefits
In General. The Company believes that the Death Benefit under a Policy
should be excludible from the gross income of the Beneficiary. Federal, state
and local transfer, and other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each owner or beneficiary. A tax advisor
should be consulted on these consequences.
Generally, the owner will not be deemed to be in constructive receipt of
the Policy Accumulation Value until there is a distribution. When distributions
from a Policy occur, including payments arising from any maturity benefits, or
when loans are taken out from or secured by (e.g., by assignment) a Policy, the
tax consequences depend on whether the Policy is classified as a "Modified
Endowment Contract."
Modified Endowment Contracts. Under the Internal Revenue Code, certain life
insurance contracts are classified as "Modified Endowment Contracts," with less
favorable tax treatment than other life insurance contracts. Due to the
flexibility of the Policies as to premiums and benefits, the individual
circumstances of each Policy will determine whether it is classified as a
Modified Endowment Contract. The rules are too complex to be summarized here,
but generally depend on the amount of premiums paid during the first seven
Policy Years. Certain changes in a Policy after it is issued could also cause it
to be classified as a Modified Endowment Contract. A current or prospective
owner should consult with a competent advisor to determine whether a Policy
transaction will cause the Policy to be classified as a Modified Endowment
Contract. The Company will monitor the Policies, however, and will attempt to
notify an owner on a timely basis if it believes that such owner's Policy is in
jeopardy of becoming a Modified Endowment Contract.
Distributions from Modified Endowment Contracts. Policies classified as
Modified Endowment Contracts are subject to the following tax rules:
(1) All distributions, including distributions upon surrender and
withdrawals, will be treated as ordinary income subject to tax up to an
amount equal to the excess (if any) of the unloaned Policy Accumulation
Value (Cash Surrender Value for surrenders) immediately before the
distribution plus prior distributions over the owner's total investment
in the Policy at that time. "Total investment in the Policy" means the
aggregate amount of any premiums or other considerations paid for a
Policy, plus any previously taxed distributions, minus any credited
dividends.
(2) Loans taken from or secured by (e.g., by assignment) such a Policy are
treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount included in
income except where distribution or loan is made when the owner has
attained age 59 1/2 or is disabled, or where the distribution is part of
a series of substantially equal periodic payments for the life (or life
expectancy) of the owner or the joint lives (or joint life expectancies)
of the owner and the owner's beneficiary or designated beneficiary.
Distributions from Policies that are not Modified Endowment Contracts.
Distributions from a Policy that is not a Modified Endowment Contract are
generally treated first as a recovery of an owner's investment in the Policy and
only after the recovery of all investments in the Policy as taxable income.
However, certain distributions which must be made in order to enable the Policy
to continue to qualify as a life insurance contract for Federal
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income tax purposes if Policy benefits are reduced during the first 15 Policy
Years may be treated in whole or in part as ordinary income subject to tax.
Loans from or secured by a Policy that is not a Modified Endowment Contract
are not treated as distributions, except that upon a lapse of a Policy any
outstanding Policy loan will be deemed to be distributed.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a modified Endowment Contract are subject to the 10 percent
additional tax.
Policy Loans. In general, interest on a loan from a Policy will not be
deductible. Before taking out a Policy loan, an owner should consult a tax
advisor as to the tax consequences.
Multiple Policies. All Modified Endowment Contracts that we issue (or our
affiliates issue) to the same owner during any calendar year are treated as one
Modified Endowment Contract for purposes of determining the amount includible in
the owner's income when a taxable distribution occurs.
Taxation of ReliaStar Life Insurance Company of New York
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, we currently make no charge 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.
Possible Changes in Taxation
Although the likelihood of legislative changes is uncertain, there is
always the possibility that the tax treatment of the Policy could change by
legislation or other means. Moreover, it is also possible that any change could
be retroactive (that is, effective prior to the date of the change). You should
consult a tax advisor with respect to legislative developments and their effect
on the Policy.
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
advisor. This discussion is based on our understanding of the present Federal
income tax laws as they are currently interpreted by the IRS. We make no
representation as to the likelihood of continuation of these current laws and
interpretations. In addition, this discussion is not exhaustive and that special
rules not described in this Prospectus may be applicable in certain situations.
Moreover, we have made no attempt to consider any applicable state or other tax
laws.
Preparing for Year 2000
Like all financial services providers, the Company utilizes systems that
may be affected by Year 2000 transition issues and it relies upon service
providers, including the Funds, that also may be affected. The Company has
developed, and is in the process of implementing, a Year 2000 transition plan,
and is confirming its service providers are also so engaged. The resources that
are being devoted to this effort are substantial. It is difficult to predict
with precision whether the amount of resources ultimately devoted, or the
outcome of these efforts, will have any negative impact on the Company. However,
as of the date of this prospectus, it is not anticipated that Policy owners will
experience negative effects on their investment, or on the services provided in
connection therewith, as a result of Year 2000 transition implementation. The
Company currently anticipates that its systems will be Year 2000 compliant by
the end of the second quarter of 1999, but there can be no assurance that the
Company will be successful, or that interaction with other service providers
will not impair its services at that time.
Distribution of the Policies
We intend to sell the Policies in all jurisdictions where we are licensed.
42
<PAGE>
The Policies will be distributed by the general distributor, Washington
Square Securities, Inc. (WSSI), a Minnesota corporation, which is our affiliate.
WSSI is a securities broker-dealer registered with the SEC and is 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 many
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.
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 NASD. 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,
plus 8% of additional premiums. In subsequent Policy Years 2 through 10,
commissions generally will be no more than 8% of premiums paid in that year. We
will pay corresponding commissions upon a requested increase in Face Amount. In
addition, we may pay a commission of .10% of the average monthly Accumulation
Value during each Policy Year. Registered representatives may be eligible to
receive certain overrides and other benefits which may be based on the amount of
earned commissions.
For all Policies which use the ReliaStar Life Insurance Company of New York
Variable Life Separate Account I, the aggregate amount paid to WSSI under our
Distribution Agreement was $837,517 in 1998 and $49,373 in 1997.
Management
The following is a list of the current directors and executive officers of
the Company, their principal occupation and business experience.
<TABLE>
<CAPTION>
Principal Occupation
Directors and Officers and Business Experience
- ------------------------ ---------------------------------------------------------------------------
<S> <C>
William D. Bonneville Senior Vice President and Chief
Administrative Officer of ReliaStar Life Insurance
Company of New York since 1998; Vice President of
ReliaStar Bankers Security Life Insurance Company
from 1996 to 1998; Vice President of North Atlantic
Life Insurance Company from 1992 to 1995.
Stephen A. Carb* Partner of Carb, Luria, Glassner, Cook & Kufeld LLP (New York law firm)
since 1962.
James. G. Cochran Executive Vice President of ReliaStar Life Insurance Company of New
York since 1997; Chief Operating Officer and Executive Vice President of
ReliaStar United Services Life Insurance Company from 1986 to 1998.
R. Michael Conley* Senior Vice President of ReliaStar
Financial Corp. since 1991; Senior Vice President,
ReliaStar Employee Benefits of ReliaStar Life
Insurance Company since 1986; President of NWNL
Benefits Corporation since 1988; Executive Vice
President of ReliaStar Life Insurance Company of New
York since 1996; Director of various subsidiaries of
ReliaStar Financial Corp.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Richard R. Crowl** Senior Vice President, General Counsel and
Secretary of ReliaStar Financial Corp. since
1996; Senior Vice President and General Counsel
of ReliaStar Life Insurance Company, Northern
Life Insurance Company, and ReliaStar United
Services Life Insurance Company since 1996;
Senior Vice President and General Counsel of
ReliaStar Life Insurance Company of New York
since 1996; Senior Vice President and General
Counsel of Washington Square Advisers, Inc.
since 1986; 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 and Senior
Vice President of various subsidiaries of
ReliaStar Financial Corp.
<S> <C>
John H. Flittie** Vice Chairman, President and Chief Operating Officer of ReliaStar Life
Insurance Company since 1996; President, Chief Operating Officer and
Director of ReliaStar Financial Corp. and ReliaStar Life Insurance
Company since 1993; Vice Chairman of ReliaStar Life Insurance Company
of New York since 1996; Chief Executive Officer and President of
ReliaStar Life Insurance Company of New York from 1996 to 1998; Vice
Chairman of ReliaStar United Services Life Insurance Company and
ReliaStar Life Insurance Company of New York 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 and Chief Operating Officer of ReliaStar
Financial Corp. from 1991 to 1992; Executive Vice President and Chief
Financial Officer of ReliaStar Financial Corp. and ReliaStar Life Insurance
Company from 1989 to 1991; Senior Vice President and Chief Financial
Officer of ReliaStar Financial Corp. since 1985; Director of Community
First BankShares, Inc. and Director and Officer of various subsidiaries of
ReliaStar Financial Corp.
James R. Gelder Executive Vice President of ReliaStar Life Insurance Company of New
York since 1998; President and Chief Executive Officer of Security-
Connecticut Life Insurance Company since 1998; Executive Vice President
and Chief Operating Officer of Security-Connecticut Life Insurance
Company from 1997 to 1998; Vice President of ReliaStar Life Insurance
Company from 1994 to 1997; Director and Officer of various subsidiaries
of ReliaStar Financial Corp.
Ambassador Ulric Haynes, Jr. Dean and Executive Dean of Hofstra University since 1991; Sr. Vice
President of Drake Beam Morin, Inc. from 1989 to 1991; Private consultant
from 1988 to 1989; Director of Marine Midland Bank from 1969 to
present; Director of Pall Corporation from 1994 to present; Director of
Environmental Products Corporation from 1993 to present; Director of
Grand Palais Casino, Inc from 1994 to 1996; Director of USAfrica Airways
from 1994 to 1996; Director of Hemmeter Enterprises, Inc. from 1994 to
1996.
Wayne R. Huneke** Senior Vice President of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1994; Chief Financial Officer and Treasurer of
ReliaStar Financial Corp. and ReliaStar Life Insurance Company from
1994 to 1997; Vice President, Treasurer and Chief Accounting Officer from
1990 to 1994; Director and Officer of various subsidiaries of ReliaStar
Financial Corp.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Ronald D. Jarvis* Senior Vice President of ReliaStar Financial Corp.
since 1997; Director of ReliaStar Life Insurance
Company of New York since 1997; Director, President
and Chief Executive Officer of Security-Connecticut
Corporation from 1993 to 1997; Chief Executive
Officer of Security-Connecticut Life Insurance
Company since 1984; President of
Security-Connecticut Life Insurance Company since
1976; Chairman, Director, President and Chief
Executive Officer of Lincoln Security Life Insurance
Company from 1984 to 1997; Director and Officer of
various subsidiaries at ReliaStar Financial
Corp.
<S> <C>
Mark S. Jordahl Senior Vice President and Chief Investment Officer of ReliaStar Life
Insurance Company and ReliaStar Financial Corp. since 1998; Vice
President of ReliaStar Life Insurance Company and ReliaStar Financial
Corp. from 1987 to 1998; Director and Officer of various subsidiaries of
ReliaStar Financial Corp.
Kenneth U. Kuk** Senior Vice President of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1996; Vice President, Strategic Marketing of
ReliaStar Financial Corp. and ReliaStar Life Insurance Company since
1996; Vice President of 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 and
Officer of various subsidiaries of ReliaStar Financial Corp.
James R. Miller Senior Vice President, Chief Financial
Officer and Treasurer of ReliaStar Financial Corp.
and of ReliaStar Life Insurance Company since 1997;
Executive Vice President and Chief Operating Officer
of Northern Life Insurance Company from 1992 to
1997; Director and Officer of various subsidiaries
of ReliaStar Financial Corp.
Richard E. Nolan* Senior Counsel of Davis Polk & Wardell (New York law firm) since 1996
and Partner from 1990 to 1996.
Fioravante G. Perrotta* Retired 1996; Formerly Senior Partner
of Rogers & Wells (New York law firm) since 1970.
Roger D. Roenfeldt Executive Vice President and Chief
Operating Officer of ReliaStar Life Insurance
Company of New York since 1997; Executive Vice
President and Chief Operating Officer of Lincoln
Security Life Insurance Company from 1996 to 1997;
President and Chief Executive Officer of The R.E.
Lee Group/US, Inc. from 1991 to 1996.
Robert C. Salipante** Senior Vice President, Personal Financial Services, ReliaStar Financial
Corp. and ReliaStar Life Insurance Company since 1996; President and
Chief Executive Officer of ReliaStar Life Insurance Company of New York
since 1998; Executive Vice President of ReliaStar Life Insurance Company
of New York from 1996 to 1998; Senior Vice President, Individual Division
and Technology of ReliaStar Life Insurance Company in 1996; Senior Vice
President of Strategic Marketing and Technology of ReliaStar Financial
Corp. and ReliaStar Life Insurance Company from 1994 to 1996; Senior
Vice President and Chief Financial Officer of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company from 1992 to 1994; Executive Vice
President of Ameritrust Corporation from 1988 to 1992; Director and
Officer of various subsidiaries of ReliaStar Financial Corp.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
John G. Turner** Chairman and Chief Executive Officer of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company
since 1993; Chairman of ReliaStar United Services Life
Insurance Company and ReliaStar Life Insurance Company of
New York 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 of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company from 1991 to 1993;
President and Chief Operating Officer of ReliaStar
Financial Corp. from 1989 to 1991; President and Chief
Operating Officer of ReliaStar Life Insurance Company
from 1986 to 1991; Director and Officer of various
subsidiaries of ReliaStar Financial Corp.
Charles B. Updike* Partner of Schoeman, Marsh & Updike (New York law firm) since 1976.
Ross M. Weale* President of Waccabuc Enterprise, Inc. (New York management consulting
firm) since 1996; President and Chief Executive Officer
of Country Bank (financial institution) from 1986 to
1996.
</TABLE>
- ----------
* Director
** Director and Officer
The Executive Committee of our Board of Directors consists of Directors
Turner, Flittie, Salipante, Updike, and Weale.
The Compliance Committee of our Board of Directors consists of Directors
Weale, Carb, Conley, Haynes, Perrotta, and Updike.
46
<PAGE>
The following is a list of the current directors and executive officers of
the principal underwriter and their business addresses.
<TABLE>
<CAPTION>
Name and Principal
Business Address Positions and Offices
- -------------------------- ------------------------------------------------------
<S> <C>
John H. Flittie* Director; Chairman
Anne W. Dowdle* Director
Michael J. Dubes Director
1501 Fourth Avenue
Seattle, Washington 98111
James R. Gelder Director
20 Security Drive
Avon, Connecticut 06001
Wayne R. Huneke* Director
Robert C. Salipante* Director
Jeffrey A. Montgomery* President and Chief Executive Officer
Kenneth S. Cameranesi* Executive Vice President and Chief Operations Officer
Gene Grayson* Vice President, National Sales and Marketing
David Braun* Assistant Vice President
Karin Callanan* Assistant Vice President
Susan M. Bergen* Secretary
Margaret B. Wall Treasurer and Chief Financial Officer
Loralee A. Renelt* Assistant Secretary
Allen Kidd Assistant Secretary
222 North Arch Road
Richmond, Virginia 23236
</TABLE>
- ----------
* 20 Washington Avenue South Minneapolis, Minnesota 55401
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. We file an annual statement in a prescribed form 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
The Company and its affiliates, like other life insurance companies, are
involved in lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been sought and/or
material settlement payments have been made. Although the outcome of any
litigation cannot be predicted with certainty, the Company believes that at the
present time there are not pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on the Variable Account or the Company.
47
<PAGE>
Bonding Arrangements
We maintain an insurance company blanket bond 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 Jeffrey A. Proulx,
Esquire, Attorney for the Company.
Experts
The statement of assets and liabilities of ReliaStar Life Insurance Company
of New York Variable Life Separate Account I as of December 31, 1998 and the
related statements of operations and changes in policyowners' equity for the
year ended December 31, 1988 and for the period from August 8, 1997 (date of
inception) to December 31, 1998 and the annual financial statements of ReliaStar
Life Insurance Company of New York included in this Prospectus have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports which
are included herein, 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 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 as of December 31, 1998 and for the year ended December 31,
1998 and for the period from August 8, 1997 (date of inception) to December 31,
1997. The financial statements are audited. The periods covered are not
necessarily indicative of the longer term performance of the assets held in the
Variable Account.
The financial statements of ReliaStar Life Insurance Company of New York
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 Life Insurance Company of New York 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. These
financial statements are as of December 31, 1998 and 1997 and for each of the
two years in the period ended December 31, 1998. The periods covered are not
necessarily indicative of the longer term performance of the Company.
48
<PAGE>
Independent Auditors' Report
Board of Directors
ReliaStar Life Insurance Company of New York and ReliaStar Life Insurance
Company of New York Variable Life Separate Account I Policy Owners:
We have audited the accompanying statement of assets and liabilities of
ReliaStar Life Insurance Company of New York Variable Life Separate Account I as
of December 31, 1998 and the related statements of operations and changes in
policy owners' equity for the year ended December 31, 1998 and for the period
from August 8, 1997 (date of inception) to December 31, 1997 (consisting of the
portfolios listed in the statements of operations and changes in policy owners'
equity). These financial statements are the responsibility of the management of
ReliaStar Life Insurance Company of New York. Our responsibility is to express
an opinion on these financial statements based on our audit.
We have conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of the securities owned as of December 31, 1998, by correspondence
with the account custodians. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
portfolios constituting the ReliaStar Life Insurance Company of New York
Separate Account I as of December 31, 1998 and the results of its operations and
changes in its policy owners' equity for the year ended December 31, 1998 and
for the period from August 8, 1997 (date of inception) to December 31, 1997, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, Minnesota
February 19, 1999
49
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
(In Thousands, Except Shares)
ASSETS:
INVESTMENTS IN MUTUAL FUNDS AT MARKET VALUE:
<TABLE>
<CAPTION>
Shares Cost Market Value
-------- --------- -------------
<S> <C> <C> <C>
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ....................... 1,018 $ 47 $ 54
Alger American MidCap Growth Portfolio ................ 836 22 24
Alger American Small Capitalization Portfolio ......... 790 31 35
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP) AND
VARIABLE INSURANCE PRODUCTS FUND (VIP II):
VIP Equity-Income Portfolio ........................... 9,860 232 251
VIP Growth Portfolio .................................. 2,432 95 109
VIP High Income Portfolio ............................. 403 5 5
VIP Money Market Portfolio ............................ 66,163 66 66
VIP II Contrafund Portfolio ........................... 9,013 183 220
VIP II Index 500 Portfolio ............................ 2,068 254 292
VIP II Investment Grade Bond Portfolio ................ 1,452 18 19
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ........................... 2,141 48 59
Growth Portfolio ...................................... 2,983 61 70
International Growth Portfolio ........................ 758 15 16
Worldwide Growth Portfolio ............................ 6,791 183 197
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ....................... 1,358 19 19
Partners Portfolio .................................... 13,926 247 264
NORTHSTAR GALAXY TRUST:
Northstar Growth + Value Portfolio .................... 2,546 41 48
Northstar High Yield Bond Portfolio ................... 1,846 10 9
Northstar Emerging Growth Portfolio ................... 1,069 14 15
Northstar International Value Portfolio ............... 4,577 50 51
Northstar Multi-Sector Bond Portfolio ................. 1,328 7 6
OCC ACCUMULATION TRUST:
Equity Portfolio ...................................... 95 3 4
Global Equity Portfolio ............................... 2,130 34 33
Managed Portfolio ..................................... 1,047 45 46
Small Cap Portfolio ................................... 2,002 48 46
PUTNAM VARIABLE TRUST:
Putnam VT Diversified Income Fund ..................... 2,249 24 23
Putnam VT Growth and Income Fund ...................... 5,491 148 158
Putnam VT Voyager Fund ................................ 7,893 313 362
------ ------
TOTAL INVESTMENTS ..................................... $2,263
TOTAL ASSETS ........................................ $2,501
======
LIABILITIES AND POLICY OWNERS' EQUITY:
Due from ReliaStar Life Insurance Company of New York $ (3)
POLICY OWNERS' EQUITY ................................. 2,504
======
TOTAL LIABILITIES AND POLICY OWNERS' EQUITY ......... $2,501
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
50
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN POLICY OWNERS' EQUITY For the year ended
December 31, 1998 and the period from August 8, 1997 (date of inception) to
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Alger American
Total All Funds Growth Portfolio
-------------------------------------------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------------------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ............... $ 6 $ -- $ -- $--
Reinvested capital gains ................. 16 -- 3 --
Administrative expenses .................. (7) -- -- --
--------------- ----------- ------------ ----------
Net investment income (loss) and
capital gains ........................... 15 -- 3 --
-------------- ----------- ------------ ----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares .............. (8) -- -- --
Increase (decrease) in unrealized
appreciation of investments ............. 238 -- 7 --
-------------- ----------- ------------ ----------
Net realized and unrealized gains
(losses) ................................ 230 -- 7 --
-------------- ----------- ------------ ----------
Additions (reductions) from
operations .............................. 245 -- 10 --
-------------- ----------- ------------ ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ..................... 2,298 122 45 1
Surrenders ............................... (1) -- -- --
Transfers between funds and/or fixed
acct .................................... -- -- 2 --
Policy loans ............................. -- -- -- --
Loan collateral interest crediting ....... -- -- -- --
Death benefits ........................... -- (1) -- --
Cost of insurance charges ................ (144) (3) (3) --
Monthly Expense Charge ................... (12) -- (1) --
-------------- ------------- --------------- ----------
Additions (reductions) for policy
owners' transactions .................... 2,141 118 43 1
-------------- ------------- -------------- ----------
Net additions (reductions) for the
year/period ............................. 2,386 118 53 1
Policy Owners' Equity, beginning of the
year/period .............................. 118 -- 1 --
-------------- ------------- -------------- ----------
Policy Owners' Equity, end of the
year/period .............................. $ 2,504 $ 118 $ 54 $ 1
============== ============= ============== ==========
Units Outstanding, beginning of the
year/period .............................. 10,339.628 -- 86.866 --
Units Outstanding, end of the
year/period .............................. 147,342.662 10,339.628 3,716.345 86.866
Net Asset Value per Unit: $ -- $ -- $ 14.592177 $ 9.854808
<CAPTION>
Alger American Alger American
MidCap Growth Portfolio Small Capitalization Portfolio
----------------------------------------------------------------------
1998 1997 1998 1997
------------------- --------------- ----------------------------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ............... $ -- $ -- $ -- $ --
Reinvested capital gains ................. 1 -- 2 --
Administrative expenses .................. -- -- -- --
------------ ----------- ------------ -----------
Net investment income (loss) and
capital gains ........................... 1 -- 2 --
------------ ----------- ------------ -----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares .............. -- -- -- --
Increase (decrease) in unrealized
appreciation of investments ............. 2 -- 4 --
------------ ----------- ----------- -----------
Net realized and unrealized gains
(losses) ................................ 2 -- 4 --
------------ ----------- ------------ -----------
Additions (reductions) from
operations .............................. 3 -- 6 --
------------ ----------- ------------ -----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ..................... 20 2 27 5
Surrenders ............................... -- -- -- --
Transfers between funds and/or fixed
acct .................................... -- -- 1 --
Policy loans ............................. -- -- -- --
Loan collateral interest crediting ....... -- -- -- --
Death benefits ........................... -- -- -- --
Cost of insurance charges ................ (1) -- (2) --
Monthly Expense Charge ................... -- -- -- --
-------------- ----------- ----------- -----------
Additions (reductions) for policy
owners' transactions .................... 19 2 26 5
-------------- ----------- ----------- -----------
Net additions (reductions) for the
year/period ............................. 22 2 32 5
Policy Owners' Equity, beginning of the
year/period .............................. 2 -- 5 --
-------------- ----------- ----------- -----------
Policy Owners' Equity, end of the
year/period .............................. $ 24 $ 2 $ 37 $ 5
============== =========== ============== ===========
Units Outstanding, beginning of the
year/period .............................. 206.735 -- 467.792 --
Units Outstanding, end of the
year/period .............................. 1,885.358 206.735 2,983.060 467.792
Net Asset Value per Unit: $ 12.802277 $ 9.825275 $ 11.635433 $10.071361
<CAPTION>
Fidelity's VIP
Equity-Income Portfolio
-----------------------------------
1998 1997
-------------------- --------------
<S> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ............... $ -- $ --
Reinvested capital gains ................. -- --
Administrative expenses .................. (1) --
---------------- ----------
Net investment income (loss) and
capital gains ........................... (1) --
---------------- ----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares .............. -- --
Increase (decrease) in unrealized
appreciation of investments ............. 19 --
--------------- ----------
Net realized and unrealized gains
(losses) ................................ 19 --
--------------- ----------
Additions (reductions) from
operations .............................. 18 --
--------------- ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ..................... 244 --
Surrenders ............................... -- --
Transfers between funds and/or fixed
acct .................................... -- --
Policy loans ............................. -- --
Loan collateral interest crediting ....... -- --
Death benefits ........................... -- --
Cost of insurance charges ................ (10) --
Monthly Expense Charge ................... (1) --
---------------- ----------
Additions (reductions) for policy
owners' transactions .................... 233 --
--------------- ----------
Net additions (reductions) for the
year/period ............................. 251 --
Policy Owners' Equity, beginning of the
year/period .............................. -- --
--------------- ----------
Policy Owners' Equity, end of the
year/period .............................. $ 251 $ --
=============== ==========
Units Outstanding, beginning of the
year/period .............................. 5.405 --
Units Outstanding, end of the
year/period .............................. 10,662.981 5.405
Net Asset Value per Unit: $23.531218 $ 21.080180
</TABLE>
The accompanying notes are an integral part of the financial statements.
51
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN POLICY OWNERS' EQUITY, continued For the
year ended December 31, 1998 and the period from August 8, 1997 (date
of inception) to December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Fidelity's VIP Fidelity's VIP
Growth Portfolio High Income Portfolio
----------------------------------- ---------------------------------
1998 1997 1998 1997
------------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ........................ $ -- $ -- $ -- $ --
Reinvested capital gains .......................... -- -- -- --
Administrative expenses ........................... (1) -- -- --
--------------- ----------- ---------- -----------
Net investment income (loss) and capital
gains ............................................ (1) -- -- --
--------------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on redemptions of
fund shares ...................................... -- -- 2 --
Increase (decrease) in unrealized appreciation
of investments ................................... 14 -- -- --
-------------- ----------- ---------- -----------
Net realized and unrealized gains (losses) ....... 14 -- 2 --
-------------- ----------- ---------- -----------
Additions (reductions) from operations ........... 13 -- 2 --
-------------- ----------- ---------- -----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments .............................. 99 2 131 --
Surrenders ........................................ (1) -- -- --
Transfers between funds and/or fixed acct ......... 1 -- (126) --
Policy loans ...................................... -- -- -- --
Loan collateral interest crediting ................ -- -- -- --
Death benefits .................................... -- -- -- --
Cost of insurance charges ......................... (7) -- (1) --
Monthly Expense Charge ............................ (1) -- -- --
--------------- ----------- ------------ -----------
Additions (reductions) for policy owners'
transactions ..................................... 91 2 4 --
-------------- ----------- ------------ -----------
Net additions (reductions) for the
year/period ...................................... 104 2 6 --
Policy Owners' Equity, beginning of the
year/period ....................................... 2 -- -- --
-------------- ----------- ------------ -----------
Policy Owners' Equity, end of the year/period ...... $ 106 $ 2 $ 6 $ --
============== =========== ============ ===========
Units Outstanding, beginning of the year/period..... 103.336 -- -- --
Units Outstanding, end of the year/period .......... 4,087.116 103.336 308.121 --
Net Asset Value per Unit: $ 26.727479 $ 19.160956 $ 15.116470 $ 15.800365
<CAPTION>
Fidelity's VIP Fidelity's VIP II
Money Market Portfolio Contrafund Portfolio
---------------------------------- -----------------------------------
1998 1997 1998 1997
------------------- -------------- ------------------- ---------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ........................ $ 1 $ -- $ -- $ --
Reinvested capital gains .......................... -- -- 1 --
Administrative expenses ........................... -- -- (1) --
------------ ---------- --------------- ---------
Net investment income (loss) and capital
gains ............................................ 1 -- -- --
------------ ---------- -------------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on redemptions of
fund shares ...................................... -- -- -- --
Increase (decrease) in unrealized appreciation
of investments ................................... -- -- 37 --
------------ ---------- -------------- -----------
Net realized and unrealized gains (losses) ....... -- -- 37 --
------------ ---------- -------------- -----------
Additions (reductions) from operations ........... 1 -- 37 --
------------ ---------- -------------- -----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments .............................. 77 1 182 9
Surrenders ........................................ -- -- -- --
Transfers between funds and/or fixed acct ......... (7) -- 1 --
Policy loans ...................................... -- -- -- --
Loan collateral interest crediting ................ -- -- -- --
Death benefits .................................... -- -- -- --
Cost of insurance charges ......................... (5) -- (8) --
Monthly Expense Charge ............................ (1) -- (1) --
--------------- ---------- --------------- -----------
Additions (reductions) for policy owners'
transactions ..................................... 64 1 174 9
-------------- ---------- -------------- ----------
Net additions (reductions) for the
year/period ...................................... 65 1 211 9
Policy Owners' Equity, beginning of
the year/period ....................................... 1 -- 9 --
-------------- ---------- -------------- ----------
Policy Owners' Equity, end of the year/period ...... $ 66 $ 1 $ 220 $ 9
============== ========== ============== ===========
Units Outstanding, beginning of the year/period..... 75.083 -- 495.110 --
Units Outstanding, end of the year/period .......... 5,112.620 75.083 9,211.711 495.110
Net Asset Value per Unit: $ 12.941412 $ 12.269546 $23.909755 $ 18.395120
<CAPTION>
Fidelity's VIP II
Index 500 Portfolio
--------------------------------------
1998 1997
-------------------- -----------------
<S> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ........................ $ -- $ --
Reinvested capital gains .......................... -- --
Administrative expenses ........................... (1) --
---------------- ----------
Net investment income (loss) and capital
gains ............................................ (1) --
---------------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on redemptions of
fund shares ...................................... 1 --
Increase (decrease) in unrealized appreciation
of investments ................................... 38 --
--------------- ----------
Net realized and unrealized gains (losses) ....... 39 --
--------------- ----------
Additions (reductions) from operations ........... 38 --
--------------- ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments .............................. 265 5
Surrenders ........................................ -- --
Transfers between funds and/or fixed acct ......... 2 --
Policy loans ...................................... -- --
Loan collateral interest crediting ................ -- --
Death benefits .................................... -- --
Cost of insurance charges ......................... (17) (1)
Monthly Expense Charge ............................ (1) --
---------------- ------------
Additions (reductions) for policy owners'
transactions ..................................... 249 4
--------------- ------------
Net additions (reductions) for the
year/period ...................................... 287 4
Policy Owners' Equity, beginning of the
year/period ....................................... 4 --
--------------- ------------
Policy Owners' Equity, end of the year/period ...... $ 291 $ 4
=============== ============
Units Outstanding, beginning of the year/period..... 203.033 --
Units Outstanding, end of the year/period .......... 10,104.460 203.033
Net Asset Value per Unit: $ 28.934443 $ 22.547720
</TABLE>
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN POLICY OWNERS' EQUITY, continued For the
year ended December 31, 1998 and the period from August 8, 1997 (date
of inception) to December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Fidelity's VIP II
Investment Grade Janus Aspen Series
Bond Portfolio Aggressive Growth Portfolio
--------------------------------------------------------------------
1998 1997 1998 1997
------------------- --------------- ---------------------------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ............. $ -- $ -- $ -- $ --
Reinvested capital gains ............... -- -- -- --
Administrative expenses ................ -- -- -- --
------------ ----------- ------------ ----------
Net investment income (loss)
and capital gains ..................... -- -- -- --
------------ ----------- ------------ ----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares ............ -- -- -- --
Increase (decrease) in unrealized
appreciation of investments ........... 1 -- 11 --
------------ ----------- ------------ ----------
Net realized and unrealized
gains (losses) ........................ 1 -- 11 --
------------ ----------- ------------ ----------
Additions (reductions) from
operations ............................ 1 -- 11 --
------------ ----------- ------------ ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ................... 19 -- 51 --
Surrenders ............................. -- -- -- --
Transfers between funds and/or
fixed acct ............................ -- -- -- --
Policy loans ........................... -- -- -- --
Loan collateral interest crediting ..... -- -- -- --
Death benefits ......................... -- -- -- --
Cost of insurance charges .............. (1) -- (2) --
Monthly Expense Charge ................. -- -- -- --
-------------- ----------- -------------- ----------
Additions (reductions) for
policy owners' transactions ........... 18 -- 49 --
-------------- ----------- -------------- ----------
Net additions (reductions) for
the year/period ....................... 19 -- 60 --
Policy Owners' Equity, beginning of
the year/period ........................ -- -- -- --
-------------- ----------- -------------- ----------
Policy Owners' Equity, end of the
year/period ............................ $ 19 $ -- $ 60 $ --
============== =========== ============== ==========
Units Outstanding, beginning of the
year/period ............................ -- -- 2.178 --
Units Outstanding, end of the
year/period ............................ 1,362.857 -- 4,022.517 2.178
Net Asset Value per Unit: $ 13.807112 $ 12.685026 $ 14.714669 $10.960002
<CAPTION>
Janus Aspen Series Janus Aspen Series
Growth Portfolio International Growth Portfolio
----------------------------------- -----------------------------------
1998 1997 1998 1997
------------------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ............. $ 1 $ -- $ -- $ --
Reinvested capital gains ............... -- -- -- --
Administrative expenses ................ -- -- -- --
------------ ----------- ------------ ----------
Net investment income (loss)
and capital gains ..................... 1 -- -- --
------------ ----------- ------------ -----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares ............ -- -- -- --
Increase (decrease) in unrealized
appreciation of investments ........... 9 -- 1 --
------------ ----------- ------------ -----------
Net realized and unrealized
gains (losses) ........................ 9 -- 1 --
------------ ----------- ------------ -----------
Additions (reductions) from
operations ............................ 10 -- 1 --
------------ ----------- ------------ -----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ................... 65 -- 13 4
Surrenders ............................. -- -- -- --
Transfers between funds and/or
fixed acct ............................ -- -- -- --
Policy loans ........................... -- -- -- --
Loan collateral interest crediting ..... -- -- -- --
Death benefits ......................... -- -- -- --
Cost of insurance charges .............. (4) -- (2) --
Monthly Expense Charge ................. -- -- -- --
-------------- ----------- -------------- -----------
Additions (reductions) for
policy owners' transactions ........... 61 -- 11 4
-------------- ----------- -------------- -----------
Net additions (reductions) for
the year/period ....................... 71 -- 12 4
Policy Owners' Equity, beginning of
the year/period ........................ -- -- 4 --
-------------- ----------- -------------- -----------
Policy Owners' Equity, end of the
year/period ............................ $ 71 $ -- $ 16 $ 4
============== =========== ============== ===========
Units Outstanding, beginning of the
year/period ............................ -- -- 427.927 --
Units Outstanding, end of the
year/period ............................ 5,105.809 -- 1,430.417 427.927
Net Asset Value per Unit: $ 13.819668 $ 10.187114 $ 11.284244 $ 9.625377
<CAPTION>
Janus Aspen Series
Worldwide Growth Portfolio
----------------------------------------
1998 1997
-------------------- -------------------
<S> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ............. $ 2 $ --
Reinvested capital gains ............... 1 --
Administrative expenses ................ (1) --
---------------- ------------
Net investment income (loss)
and capital gains ..................... 2 --
--------------- ------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares ............ 1 --
Increase (decrease) in unrealized
appreciation of investments ........... 14 --
--------------- ------------
Net realized and unrealized
gains (losses) ........................ 15 --
--------------- ------------
Additions (reductions) from
operations ............................ 17 --
--------------- ------------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ................... 169 25
Surrenders ............................. -- --
Transfers between funds and/or
fixed acct ............................ 3 --
Policy loans ........................... -- --
Loan collateral interest crediting ..... -- --
Death benefits ......................... -- (1)
Cost of insurance charges .............. (15) --
Monthly Expense Charge ................. (1) --
---------------- --------------
Additions (reductions) for
policy owners' transactions ........... 156 24
--------------- --------------
Net additions (reductions) for
the year/period ....................... 173 24
Policy Owners' Equity, beginning of
the year/period ........................ 24 --
--------------- --------------
Policy Owners' Equity, end of the
year/period ............................ $ 197 $ 24
=============== ==============
Units Outstanding, beginning of the
year/period ............................ 2,468.532 --
Units Outstanding, end of the
year/period ............................ 15,578.182 2,468.532
Net Asset Value per Unit: $ 12.681124 $ 9.836310
</TABLE>
The accompanying notes are an integral part of the financial statements.
53
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN POLICY OWNERS' EQUITY, continued For the
year ended December 31, 1998 and the period from August 8, 1997 (date
of inception) to December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Neuberger&Berman Neuberger&Berman
Advisers Management Trust Advisers Management Trust
Limited Maturity Bond Portfolio Partners Portfolio
----------------------------------------------------------------------
1998 1997 1998 1997
------------------- --------------- -------------------- --------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ......... $ -- $ -- $ -- $ --
Reinvested capital gains ........... -- -- 1 --
Administrative expenses ............ -- -- (1) --
------------ ----------- ---------------- ----------
Net investment income (loss)
and capital gains ................. -- -- -- --
------------ ----------- --------------- ----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares ........ -- -- (1) --
Increase (decrease) in
unrealized appreciation of
investments ....................... -- -- 17 --
------------ ----------- --------------- ----------
Net realized and unrealized
gains (losses) .................... -- -- 16 --
------------ ----------- --------------- ----------
Additions (reductions) from
operations ........................ -- -- 16 --
------------ ----------- --------------- ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ............... 22 1 258 1
Surrenders ......................... -- -- -- --
Transfers between funds and/or
fixed acct ........................ -- -- 1 --
Policy loans ....................... -- -- -- --
Loan collateral interest
crediting ......................... -- -- -- --
Death benefits ..................... -- -- -- --
Cost of insurance charges .......... (4) -- (10) --
Monthly Expense Charge ............. -- -- (1) --
-------------- ----------- ---------------- ----------
Additions (reductions) for
policy owners'
transactions ...................... 18 1 248 1
-------------- ----------- --------------- ----------
Net additions (reductions) for
the year/period ................... 18 1 264 1
Policy Owners' Equity, beginning
of the year/period ................. 1 -- 1 --
-------------- ----------- --------------- ----------
Policy Owners' Equity, end of the
year/period ........................ $ 19 $ 1 $ 265 $ 1
============== =========== =============== ==========
Units Outstanding, beginning of
the year/period .................... 105.555 -- 55.116 --
Units Outstanding, end of the
year/period ........................ 1,753.632 105.555 24,509.783 55.116
Net Asset Value per Unit: $ 10.704404 $ 10.254171 $ 10.760407 $ 10.325813
<CAPTION>
Northstar Galaxy Trust Northstar Galaxy Trust Northstar Galaxy Trust
Growth + Value Portfolio High Yield Bond Portfolio Emerging Growth Portfolio
------------------------------------- --------------------------- ------------------------
1998 1997 1998 1997 1998
------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ......... $ -- $ -- $ 1 $ -- $ --
Reinvested capital gains ........... -- -- -- -- 1
Administrative expenses ............ -- -- -- -- --
------------ ------------- ---------- ---------- ----------
Net investment income (loss)
and capital gains ................. -- -- 1 -- 1
------------ ------------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares ........ -- -- -- -- --
Increase (decrease) in
unrealized appreciation of
investments ....................... 7 -- (1) -- 1
------------ ------------- ------------- ---------- ----------
Net realized and unrealized
gains (losses) .................... 7 -- (1) -- 1
------------ ------------- ------------- ---------- ----------
Additions (reductions) from
operations ........................ 7 -- -- -- 2
------------ ------------- ------------ ---------- ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ............... 38 11 12 -- 13
Surrenders ......................... -- -- -- -- --
Transfers between funds and/or
fixed acct ........................ (4) -- (2) -- --
Policy loans ....................... -- -- -- -- --
Loan collateral interest
crediting ......................... -- -- -- -- --
Death benefits ..................... -- -- -- -- --
Cost of insurance charges .......... (5) -- -- -- (1)
Monthly Expense Charge ............. -- -- -- -- --
-------------- ------------- ------------ ---------- ------------
Additions (reductions) for
policy owners'
transactions ...................... 29 11 10 -- 12
-------------- ------------- ------------ ---------- ------------
Net additions (reductions) for
the year/period ................... 36 11 10 -- 14
Policy Owners' Equity, beginning
of the year/period ................. 11 -- -- -- 1
-------------- ------------- ------------ ---------- ------------
Policy Owners' Equity, end of the
year/period ........................ $ 47 $ 11 $ 10 $ -- $ 15
============== ============= ============ ========== ============
Units Outstanding, beginning of
the year/period .................... 1,076.181 -- 13.072 -- 49.892
Units Outstanding, end of the
year/period ........................ 3,924.431 1,076.181 858.616 13.072 804.528
Net Asset Value per Unit: $ 12.158465 $ 10.189337 $10.468149 $10.406855 $ 18.810805
<CAPTION>
Northstar
Galaxy Trust
Emerging Growth
Portfolio
--------------
1997
--------------
<S> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ......... $ --
Reinvested capital gains ........... --
Administrative expenses ............ --
----------
Net investment income (loss)
and capital gains ................. --
----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Net realized gains (losses) on
redemptions of fund shares ........ --
Increase (decrease) in
unrealized appreciation of
investments ....................... --
----------
Net realized and unrealized
gains (losses) .................... --
----------
Additions (reductions) from
operations ........................ --
----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ............... 1
Surrenders ......................... --
Transfers between funds and/or
fixed acct ........................ --
Policy loans ....................... --
Loan collateral interest
crediting ......................... --
Death benefits ..................... --
Cost of insurance charges .......... --
Monthly Expense Charge ............. --
----------
Additions (reductions) for
policy owners'
transactions ...................... 1
----------
Net additions (reductions) for
the year/period ................... 1
Policy Owners' Equity, beginning
of the year/period ................. --
----------
Policy Owners' Equity, end of the
year/period ........................ $ 1
==========
Units Outstanding, beginning of
the year/period .................... --
Units Outstanding, end of the
year/period ........................ 49.892
Net Asset Value per Unit: $ 16.036372
</TABLE>
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN POLICY OWNERS' EQUITY, continued
For the year ended December 31, 1998 and the period from August 8, 1997 (date
of inception) to December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Northstar Galaxy Trust Northstar Galaxy Trust
International Value Portfolio Multi-Sector Portfolio
------------------------------------- --------------------------------
1998 1997 1998 1997
------------------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ................... $ 1 $ -- $ -- $ --
Reinvested capital gains ..................... 2 -- -- --
Administrative expenses ...................... -- -- -- --
------------ ---------- ---------- ----------
Net investment income (loss) and
capital gains ............................... 3 -- -- --
------------ ---------- ---------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on
redemptions of fund shares .................. -- -- -- --
Increase (decrease) in unrealized
appreciation of investments ................. 1 -- (1) --
------------ ---------- ------------- ----------
Net realized and unrealized gains
(losses) .................................... 1 -- (1) --
------------ ---------- ------------- ----------
Additions (reductions) from
operations .................................. 4 -- (1) --
------------ ---------- ------------- ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ......................... 46 9 7 1
Surrenders ................................... -- -- -- --
Transfers between funds and/or fixed
acct ........................................ 1 -- -- --
Policy loans ................................. -- -- -- --
Loan collateral interest crediting ........... -- -- -- --
Death benefits ............................... -- -- -- --
Cost of insurance charges .................... (7) (1) (1) --
Monthly Expense Charge ....................... -- -- -- --
-------------- ------------ ------------ ----------
Additions (reductions) for policy
owners' transactions ........................ 40 8 6 1
-------------- ------------ ------------ ----------
Net additions (reductions) for the
year/period ................................. 44 8 5 1
Policy Owners' Equity, beginning of the
year/period .................................. 8 -- 1 --
-------------- ------------ ------------ ----------
Policy Owners' Equity, end of the
year/period .................................. $ 52 $ 8 $ 6 $ 1
============== ============ ============ ==========
Units Outstanding, beginning of the
year/period .................................. 823.667 -- 29.810 --
Units Outstanding, end of the year/period ..... 4,281.249 823.667 443.781 29.810
Net Asset Value per Unit: $ 11.844211 $ 10.129526 $ 14.457253 $ 14.264010
<CAPTION>
OCC Accumulation Trust OCC Accumulation Trust
Equity Portfolio Global Equity Portfolio
--------------------------------------------------------------------
1998 1997 1998 1997
----------------- --------------- ----------------------------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ................... $ -- $ -- $ -- $ --
Reinvested capital gains ..................... -- -- 1 --
Administrative expenses ...................... -- -- -- --
---------- ----------- ------------ ----------
Net investment income (loss) and
capital gains ............................... -- -- 1 --
---------- ----------- ------------ -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on
redemptions of fund shares .................. -- -- -- --
Increase (decrease) in unrealized
appreciation of investments ................. 1 -- (1) --
---------- ----------- ------------- -----------
Net realized and unrealized gains
(losses) .................................... 1 -- (1) --
---------- ----------- ------------- -----------
Additions (reductions) from
operations .................................. 1 -- -- --
---------- ----------- ------------- -----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ......................... 1 3 29 5
Surrenders ................................... -- -- -- --
Transfers between funds and/or fixed
acct ........................................ -- -- -- --
Policy loans ................................. -- -- -- --
Loan collateral interest crediting ........... -- -- -- --
Death benefits ............................... -- -- -- --
Cost of insurance charges .................... (1) -- (1) --
Monthly Expense Charge ....................... -- -- -- --
------------ ----------- -------------- -----------
Additions (reductions) for policy
owners' transactions ........................ -- 3 28 5
------------ ----------- -------------- -----------
Net additions (reductions) for the
year/period ................................. 1 3 28 5
Policy Owners' Equity, beginning of the
year/period .................................. 3 -- 5 --
------------ ----------- -------------- ----------
Policy Owners' Equity, end of the
year/period .................................. $ 4 $ 3 $ 33 $ 5
============ =========== ============== ===========
Units Outstanding, beginning of the
year/period .................................. 265.451 -- 473.059 --
Units Outstanding, end of the year/period ..... 304.805 265.451 3,071.262 473.059
Net Asset Value per Unit: $ 12.029100 $ 10.753858 $ 10.782965 $ 9.518205
<CAPTION>
OCC Accumulation Trust
Managed Portfolio
---------------------------------------
1998 1997
------------------- -------------------
<S> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ................... $ -- $ --
Reinvested capital gains ..................... 1 --
Administrative expenses ...................... -- --
------------ ------------
Net investment income (loss) and
capital gains ............................... 1 --
------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on
redemptions of fund shares .................. 1 --
Increase (decrease) in unrealized
appreciation of investments ................. 1 --
------------ ------------
Net realized and unrealized gains
(losses) .................................... 2 --
------------ ------------
Additions (reductions) from
operations .................................. 3 --
------------ ------------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ......................... 38 13
Surrenders ................................... -- --
Transfers between funds and/or fixed
acct ........................................ -- --
Policy loans ................................. -- --
Loan collateral interest crediting ........... -- --
Death benefits ............................... -- --
Cost of insurance charges .................... (6) (1)
Monthly Expense Charge ....................... (1) --
--------------- --------------
Additions (reductions) for policy
owners' transactions ........................ 31 12
-------------- --------------
Net additions (reductions) for the
year/period ................................. 34 12
Policy Owners' Equity, beginning of the
year/period .................................. 12 --
-------------- --------------
Policy Owners' Equity, end of the
year/period .................................. $ 46 $ 12
============== ==============
Units Outstanding, beginning of the
year/period .................................. 1,233.680 --
Units Outstanding, end of the year/period ..... 4,201.605 1,233.680
Net Asset Value per Unit: $ 10.900163 $ 10.175476
</TABLE>
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN POLICY OWNERS' EQUITY, continued
For the year ended December 31, 1998 and the period from August 8, 1997 (date
of inception) to December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
OCC Accumulation Trust Putnam VT
Small Cap Portfolio Diversified Income Fund
-----------------------------------------------------------------------
1998 1997 1998 1997
------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ................... $ -- $ -- $ -- $ --
Reinvested capital gains ..................... -- -- -- --
Administrative expenses ...................... -- -- -- --
------------ ------------- ------------ ----------
Net investment income (loss) and
capital gains ............................... -- -- -- --
------------ ------------- ------------ ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on
redemptions of fund shares .................. -- -- -- --
Increase (decrease) in unrealized
appreciation of investments ................. (2) -- (1) --
--------------- ------------- --------------- ----------
Net realized and unrealized gains
(losses) .................................... (2) -- (1) --
--------------- ------------- --------------- ----------
Additions (reductions) from
operations .................................. (2) -- (1) --
--------------- ------------- --------------- ----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ......................... 42 11 25 --
Surrenders ................................... -- -- -- --
Transfers between funds and/or fixed
acct ........................................ -- -- -- --
Policy loans ................................. -- -- -- --
Loan collateral interest crediting ........... -- -- -- --
Death benefits ............................... -- -- -- --
Cost of insurance charges .................... (5) -- (2) --
Monthly Expense Charge ....................... -- -- -- --
-------------- ------------- ------------- ----------
Additions (reductions) for policy
owners' transactions ........................ 37 11 23 --
-------------- ------------- ------------- ----------
Net additions (reductions) for the
year/period ................................. 35 11 22 --
Policy Owners' Equity, beginning of the
year/period .................................. 11 -- -- --
-------------- ------------- -------------- ----------
Policy Owners' Equity, end of the
year/period .................................. $ 46 $ 11 $ 22 $ --
============== ============= ============== ==========
Units Outstanding, beginning of the
year/period .................................. 1,063.874 -- 16.242 --
Units Outstanding, end of the year/period ..... 4,950.484 1,063.874 1,802.260 16.242
Net Asset Value per Unit: $ 9.327299 $ 10.252721 $ 13.108403 $ 13.290543
<CAPTION>
Putnam VT Putnam VT
Growth and Income Fund Voyager Fund
-----------------------------------------------------------------------
1998 1997 1998 1997
------------------- --------------- -------------------- ---------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Reinvested dividend income ................... $ -- $ -- $ -- $ --
Reinvested capital gains ..................... 1 -- 1 --
Administrative expenses ...................... (1) -- -- --
--------------- ----------- ------------- -----------
Net investment income (loss) and
capital gains ............................... -- -- 1 --
-------------- ----------- ------------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on
redemptions of fund shares .................. (1) -- (11) --
Increase (decrease) in unrealized
appreciation of investments ................. 10 -- 49 --
-------------- ----------- ------------- -----------
Net realized and unrealized gains
(losses) .................................... 9 -- 38 --
-------------- ----------- ------------- ----------
Additions (reductions) from
operations .................................. 9 -- 39 --
-------------- ----------- ------------- -----------
POLICY OWNERS' TRANSACTIONS:
Net premium payments ......................... 104 3 256 9
Surrenders ................................... -- -- -- --
Transfers between funds and/or fixed
acct ........................................ 52 -- 75 --
Policy loans ................................. -- -- -- --
Loan collateral interest crediting ........... -- -- -- --
Death benefits ............................... -- -- -- --
Cost of insurance charges .................... (9) -- (14) --
Monthly Expense Charge ....................... (1) -- (2) --
--------------- ----------- ---------------- -----------
Additions (reductions) for policy
owners' transactions ........................ 146 3 315 9
-------------- ----------- --------------- -----------
Net additions (reductions) for the
year/period ................................. 155 3 354 9
Policy Owners' Equity, beginning of the
year/period .................................. 3 -- 9 --
-------------- ----------- --------------- -----------
Policy Owners' Equity, end of the
year/period .................................. $ 158 $ 3 $ 363 $ 9
============== =========== =============== ===========
Units Outstanding, beginning of the
year/period .................................. 161.028 -- 431.004 --
Units Outstanding, end of the year/period ..... 6,624.776 161.028 14,239.896 431.004
Net Asset Value per Unit: $ 23.912286 $ 20.717931 $ 25.445248 $ 20.460670
</TABLE>
The accompanying notes are an integral part of the financial statements.
56
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
ReliaStar Life Insurance Company of New York Variable Life Separate Account I
("Separate Account I") was established by ReliaStar Life Insurance Company of
New York ("ReliaStar Life of New York"), previously ReliaStar Bankers Security
Life Insurance Society, in 1986 under the New York insurance laws. Separate
Account I operates as a unit investment trust under the Investment Company Act
of 1940 and is used to fund certain benefits for variable life insurance
policies issued by ReliaStar Life of New York. The assets of Separate Account I
and its sub-accounts are the property of ReliaStar Life of New York. The portion
of Separate Account I assets applicable to the variable life policies will not
be charged with liabilities arising out of any other business ReliaStar Life of
New York may conduct. The net assets maintained in the sub-accounts provide the
basis for the periodic determination of the amount of increased or decreased
benefits under the policies. The net assets may not be less than the amount
required under the state insurance law to provide for death benefits (without
regard to the minimum death benefit guarantee) and other policy benefits.
Additional assets are held in ReliaStar Life of New York's general account to
cover the contingency that the guaranteed minimum death benefit might exceed the
death benefit which would have been payable in the absence of such guarantee.
Payments received under the polices are allocated to sub-accounts of the
account, each of which invested in one of the following funds during the year.
<TABLE>
<CAPTION>
The Alger American Fund Fidelity's VIP and VIP II Janus Aspen Series
- -------------------------------- --------------------------------- -------------------------------
<S> <C> <C>
Growth Portfolio Equity-Income Portfolio Aggressive Growth Portfolio
MidCap Growth Portfolio Growth Portfolio Growth Portfolio
Small Capitalization Portfolio High Income Portfolio International Growth Portfolio
Money Market Portfolio Worldwide Growth Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
</TABLE>
<TABLE>
<CAPTION>
Neuberger&Berman Advisers Management Trust Northstar Galaxy Trust
- -------------------------------------------- ------------------------------
<S> <C>
Limited Maturity Bond Portfolio Growth + Value Portfolio
Partners Portfolio High Yield Bond Portfolio
Emerging Growth Portfolio
International Value Portfolio
Multi-Sector Bond Portfolio
</TABLE>
<TABLE>
<CAPTION>
OCC Accumulation Trust Putnam Variable Trust
- ------------------------------- ----------------------------------
<S> <C>
Equity Portfolio Putnam VT Diversified Income Fund
Global Equity Portfolio Putnam VT Growth and Income Fund
Managed Portfolio Putnam VT Voyager Fund
Small Capitalization Portfolio
</TABLE>
Fred Alger Management, Inc. is the investment adviser for the three portfolios
of The Alger American Fund and is paid fees for its services by The Alger
American Fund's Portfolios. Fidelity Management & Research Company is the
investment adviser for Fidelity's Variable Insurance Products Fund (VIP) and
Variable Insurance Products Fund II (VIP II) and is paid for its services by the
VIP and VIP II Portfolios. Janus Capital Corporation is the investment adviser
of for the four portfolios of Janus Aspen Series and is paid fees for its
services by the Janus Aspen Series Portfolios. Neuberger&Berman Management is
the investment adviser for the two portfolios of the Advisers Management Trust
and is paid fees for its services by the Neuberger&Berman Advisers Management
57
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I -- (Continued)
1. ORGANIZATION: -- (Continued)
Trust Funds. Northstar Investment Management Corporation, an affiliate of
ReliaStar Life Insurance Company of New York, is the investment adviser for the
five Northstar Galaxy Trust Portfolios and is paid fees for its services by the
Galaxy Trust portfolios. OpCap Advisors is the investment adviser for the four
portfolios of the OCC Accumulation Trust and is paid fees for its services by
the OCC Accumulation Trust Funds.
Putnam Investment Management, Inc. is the investment adviser for Putnam Variable
Trust and is paid fees for its services by Putnam Variable Trust. See the
related Funds' prospectuses for further information. On August 8, 1997,
Sub-Accounts investing in The Alger American Fund, Fidelity VIP and VIP II,
Janus Aspen Series, Neuberger&Berman Advisers Management Trust, Northstar Galaxy
Trust and OCC Accumulation Trust were made available to ReliaStar Life of New
York policies.
On July 29, 1998, Northstar Variable Trust Portfolio's changed its name to
Northstar Galaxy Trust Portfolios (GT). Also on July 29, 1998, the Northstar
Variable Trust Growth Portfolio changed its name to Northstar Galaxy Trust
Growth + Value Portfolio.
On November 9, 1998, Northstar Galaxy Trust Income and Growth Portfolio changed
its name to Northstar Galaxy Trust Emerging Growth Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION TRANSACTIONS AND RELATED INVESTMENT INCOME: The market
value of investments in the sub-accounts is based on the closing net asset
values of the fund shares held at the end of the year. Investment transactions
are accounted for on the trade date (date the order to purchase or redeem is
executed) and dividend income and capital gain distributions are recorded on the
exdividend date. Net realized gains and losses on redemptions of shares of the
funds are determined on the basis of specific identification of fund share
costs.
3. FEDERAL INCOME TAXES:
ReliaStar Life of New York is taxed as a life insurance company under the
Internal Revenue Code of 1986, as amended (the "Code"). Since the Separate
Account is not a separate entity from ReliaStar Life of New York, and its
operations form a part of ReliaStar Life of New York, it is not taxed separately
as a "regulated investment company" under Sub-chapter M of the Code. Under
existing Federal income tax law, investment income of the Separate Account, to
the extent that it is applied to increase reserves under a contract, is not
taxed and may be compounded through reinvestment without additional tax to
ReliaStar Life of New York.
4. POLICY CHARGES:
Certain charges are made by ReliaStar Life of New York to policy owners'
Variable Accumulation Values in the Account in accordance with the terms of the
policies. These charges may include: cost of insurance; a monthly expense
charge: death benefit guarantee charge; optional insurance benefit charges based
upon the policy terms for optional benefits; and surrender charges and sales
charge refunds, as set forth in the policies.
58
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I -- (Continued)
5. INVESTMENTS:
For the year ended December 31, 1998, investment activity in the funds was as
follows (in thousands):
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases From Sales
----------- -----------
<S> <C> <C>
Investing Fund
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ....................... $ 48 $ 2
Alger American MidCap Growth Portfolio ................ 21 1
Alger American Small Capitalization Portfolio ......... 27 1
FIDELITY'S VIP AND VIP II:
VIP Equity-Income Portfolio ........................... 236 4
VIP Growth Portfolio .................................. 100 7
VIP High Income Portfolio ............................. 218 215
VIP Money Market Portfolio ............................ 204 139
VIP II Contrafund Portfolio ........................... 178 4
VIP II Index 500 Portfolio ............................ 257 9
VIP II Investment Grade Bond Portfolio ................ 20 2
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ........................... 52 4
Growth Portfolio ...................................... 64 3
International Growth Portfolio ........................ 12 1
Worldwide Growth Portfolio ............................ 166 8
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ....................... 20 2
Partners Portfolio .................................... 253 6
NORTHSTAR GALAXY TRUST:
Northstar Growth + Value Portfolio .................... 34 4
Northstar High Yield Bond Portfolio ................... 14 4
Northstar Emerging Growth Portfolio ................... 13 --
Northstar International Value Portfolio ............... 45 3
Northstar Multi-Sector Bond Portfolio ................. 7 --
OCC ACCUMULATION TRUST:
Equity Portfolio ...................................... -- --
Global Equity Portfolio ............................... 30 1
Managed Portfolio ..................................... 35 3
Small Cap Portfolio ................................... 39 2
PUTNAM VARIABLE TRUST:
Putnam VT Diversified Income Fund ..................... 25 1
Putnam VT Growth and Income Fund ...................... 154 8
Putnam VT Voyager Fund ................................ 362 47
------ ----
Total ................................................. $2,634 $481
====== ====
</TABLE>
59
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK (A Wholly Owned
Subsidiary of Security-Connecticut Life Insurance Company)
Financial Statements
For The Years Ended December 31, 1998 and 1997
and
Independent Auditors' Report
60
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholder
ReliaStar Life Insurance Company of New York
(A Wholly Owned Subsidiary of Security-Connecticut Life Insurance Company)
Woodbury, New York
We have audited the accompanying balance sheets of ReliaStar Life Insurance
Company of New York (the Company) as of December 31, 1998 and 1997, and the
related statements of income, shareholder's equity, and cash flows for each of
the two years in the period ended December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ReliaStar Life Insurance
Company of New York as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, effective January 1, 1998,
Lincoln Security Life Insurance Company, an affiliate, merged with and into the
Company.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 4, 1999
61
<PAGE>
BALANCE SHEETS
ReliaStar Life Insurance Company of New York
(A Wholly Owned Subsidiary of Security-Connecticut Life Insurance Company)
<TABLE>
<CAPTION>
December 31
-------------------------------
(In Millions) 1998 1997
- ---------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
ASSETS
Fixed Maturity Securities (Amortized Cost: 1998, $1,503.9; 1997, $1,559.5) $ 1,585.6 $ 1,644.5
Equity Securities (Cost: 1998, $5.5; 1997, $2.5) 5.7 2.8
Mortgage Loans on Real Estate 288.9 290.4
Real Estate 2.8 1.6
Policy Loans 81.6 80.7
Other Invested Assets 8.0 7.6
Short-Term Investments 35.9 5.2
- ---------------------------------------------------------------------------- ----------- -----------
Total Investments 2,008.5 2,032.8
Cash -- 2.5
Accounts and Notes Receivable 7.8 12.2
Reinsurance Receivable 43.2 47.0
Deferred Policy Acquisition Costs 134.4 124.4
Present Value of Future Profits 68.2 79.1
Property and Equipment, Net 1.7 1.4
Accrued Investment Income 26.4 29.8
Goodwill 34.6 35.1
Other Assets 5.3 --
Assets Held in Separate Accounts 529.3 493.1
- ---------------------------------------------------------------------------- ----------- -----------
Total Assets $ 2,859.4 $ 2,857.4
============================================================================ =========== ===========
LIABILITIES
Future Policy and Contract Benefits $ 1,736.3 $ 1,814.8
Pending Policy Claims 27.7 34.1
Other Policyholder Funds 17.6 14.5
Income Taxes 33.4 30.7
Other Liabilities 56.3 39.8
Liabilities Related to Separate Accounts 526.8 490.6
- ---------------------------------------------------------------------------- ----------- -----------
Total Liabilities 2,398.1 2,424.5
- ---------------------------------------------------------------------------- ----------- -----------
SHAREHOLDER'S EQUITY
Common Stock (Shares Issued: 1.4) 2.8 2.8
Additional Paid-In Capital 235.2 235.2
Retained Earnings 181.2 154.8
Accumulated Other Comprehensive Income 42.1 40.1
- ---------------------------------------------------------------------------- ----------- -----------
Total Shareholder's Equity 461.3 432.9
============================================================================ =========== ===========
Total Liabilities and Shareholder's Equity $ 2,859.4 $ 2,857.4
============================================================================ =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
62
<PAGE>
STATEMENTS OF INCOME
ReliaStar Life Insurance Company of New York
(A Wholly Owned Subsidiary of Security-Connecticut Life Insurance Company)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------
(In Millions) 1998 1997
- --------------------------------------------------- ----------- -----------
<S> <C> <C>
REVENUES
Premiums $ 41.7 $ 48.1
Net Investment Income 157.0 146.0
Realized Investment Gains, Net 4.9 1.7
Policy and Contract Charges 95.5 80.1
Other Income 3.5 3.6
- --------------------------------------------------- -------- --------
Total 302.6 279.5
- --------------------------------------------------- -------- --------
BENEFITS AND EXPENSES
Benefits to Policyholders 166.9 161.5
Sales and Operating Expenses 54.5 49.3
Amortization of Deferred Policy Acquisition Costs
and Present Value of Future Profits 37.7 46.7
Dividends and Experience Refunds to Policyholders 2.4 1.0
- --------------------------------------------------- -------- --------
Total 261.5 258.5
- --------------------------------------------------- -------- --------
Income Before Income Taxes 41.1 21.0
Income Tax Expense 14.7 7.8
- --------------------------------------------------- -------- --------
Net Income $ 26.4 $ 13.2
=================================================== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
63
<PAGE>
STATEMENTS OF SHAREHOLDER'S EQUITY
ReliaStar Life Insurance Company of New York
(A Wholly Owned Subsidiary of Security-Connecticut Life Insurance Company)
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------
1998 1997
------------------------ ------------------------
Compre- Compre-
Total hensive Total hensive
(In Millions) Equity Income Equity Income
- --------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
COMMON STOCK
Beginning and End of Year $ 2.8 $ 2.8
- --------------------------------------- -------- --------
ADDITIONAL PAID-IN CAPITAL
Beginning of Year 235.2 165.4
Acquisition -- 69.8
- --------------------------------------- -------- --------
End of Year 235.2 235.2
- --------------------------------------- -------- --------
RETAINED EARNINGS
Beginning of Year 154.8 141.6
Net Income 26.4 $ 26.4 13.2 $ 13.2
- --------------------------------------- -------- -------- -------- --------
End of Year 181.2 154.8
- --------------------------------------- -------- --------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Beginning of Year 40.1 28.0
Change for the Year 2.0 2.0 12.1 12.1
- --------------------------------------- -------- -------- -------- --------
End of Year 42.1 40.1
- --------------------------------------- -------- --------
Comprehensive Income $ 28.4 $ 25.3
======================================= ======== ========
Total Shareholder's Equity $ 461.3 $ 432.9
======================================= ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
64
<PAGE>
STATEMENTS OF CASH FLOWS
ReliaStar Life Insurance Company of New York
(A Wholly Owned Subsidiary of Security-Connecticut Life Insurance Company)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------
(In Millions) 1998 1997
- -------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 26.4 $ 13.2
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities
Interest Credited to Insurance Contracts 74.1 77.6
Future Policy Benefits (115.7) ( 58.6)
Capitalization of Policy Acquisition Costs ( 29.0) ( 25.2)
Amortization of Deferred Policy Acquisition Costs and Present
Value of Future Profits 37.7 46.7
Deferred Income Taxes ( 2.3) ( 6.4)
Net Change in Receivables and Payables 25.6 7.0
Other Assets ( 1.1) 2.8
Realized Investment Gains, Net ( 4.9) ( 1.7)
Other ( 5.3) 7.4
- -------------------------------------------------------------------- -------- --------
Net Cash Provided by Operating Activities 5.5 62.8
- -------------------------------------------------------------------- -------- --------
INVESTING ACTIVITIES
Proceeds from Sales of Fixed Maturity Securities 71.9 75.1
Proceeds from Maturities or Repayment of Fixed Maturity Securities 173.0 119.8
Cost of Fixed Maturity Securities Acquired (182.5) (161.8)
Sales (Purchases) of Equity Securities, Net ( 3.0) 5.0
Proceeds of Mortgage Loans Sold, Matured or Repaid 64.3 54.0
Cost of Mortgage Loans Acquired ( 62.8) ( 68.9)
Sales (Purchases) of Real Estate, Net ( 1.4) .8
Policy Loans Issued, Net ( .9) ( 3.4)
Sales of Other Invested Assets, Net 2.4 .1
Sales (Purchases) of Short-Term Investments, Net ( 30.7) 3.5
Cash Acquired with Acquisition -- 4.7
- -------------------------------------------------------------------- -------- --------
Net Cash Provided by Investing Activities 30.3 28.9
- -------------------------------------------------------------------- -------- --------
FINANCING ACTIVITIES
Deposits to Insurance Contracts 144.0 135.0
Maturities and Withdrawals from Insurance Contracts (182.3) (219.5)
- -------------------------------------------------------------------- -------- --------
Net Cash Used by Financing Activities ( 38.3) ( 84.5)
- -------------------------------------------------------------------- -------- --------
Increase (Decrease) in Cash ( 2.5) 7.2
Cash at Beginning of Year 2.5 ( 4.7)
- -------------------------------------------------------------------- -------- --------
Cash at End of Year $ -- $ 2.5
==================================================================== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ReliaStar Life Insurance Company of New York
(A Wholly Owned Subsidiary of Security-Connecticut Life Insurance Company)
NOTE 1. CHANGES IN ACCOUNTING PRINCIPLES
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities
Effective for transactions occurring on or after January 1, 1998, ReliaStar Life
Insurance Company of New York (the Company) adopted those provisions of
Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
"which were deferred by SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125." Effective for transactions occurring on
or after January 1, 1997, the Company adopted those provisions of SFAS No. 125
which were not deferred by SFAS No. 127. SFAS No. 125 requires a company to
recognize the financial and servicing assets it controls and the liabilities it
has incurred and to derecognize financial assets when control has been
surrendered in accordance with the criteria provided in SFAS No. 125. The
adoption of this standard had no effect on the financial results of the Company.
Reporting Comprehensive Income
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in a company's full set of
financial statements. Comprehensive income encompasses all changes in
shareholder's equity from transactions and other events and circumstances from
nonowner sources. Adoption of this standard had no effect on the financial
results of the Company.
Employers' Disclosures about Pensions and Other Postretirement Benefits
Effective December 31, 1998, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132
requires new disclosures relating to a company's pension and other
postretirement benefit plans. Adoption of this standard had no effect on the
financial results of the Company.
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use
Effective January 1, 1998, the Company adopted Statement of Position (SOP) No.
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP No. 98-1 provides guidance on accounting for costs associated
with computer software developed or obtained for internal use. Adoption of this
standard did not have a significant effect on the financial results of the
Company.
NOTE 2. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is principally engaged in the business of providing life insurance
and related financial services products. The Company provides and distributes
individual life insurance and annuities; employee benefit products and services;
life and health reinsurance and retirement plans. The Company operates primarily
in the United States and is authorized to conduct business in all 50 states.
Basis of Presentation
The Company is a wholly-owned subsidiary of Security-Connecticut Life Insurance
Company which is a wholly-owned subsidiary of ReliaStar Life Insurance Company
(ReliaStar Life) whose parent is ReliaStar Financial Corp. (ReliaStar).
Effective January 1, 1998, Lincoln Security Life Insurance Company (Lincoln
Security), an affiliate, merged with and into the Company pursuant to a
statutory merger. This transaction was accounted for in a manner similar to a
pooling of interests. The financial statements as of and for the year ended
December 31, 1997 have been restated to reflect this merger. Lincoln Security
was acquired by ReliaStar effective July 1, 1997. The acquisition was accounted
for using the purchase method of accounting, therefore, the financial statements
include the accounts of Lincoln Security only since the date of acquisition.
Goodwill of approximately $19 million was recorded.
66
<PAGE>
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
During 1998 and 1997, the Company updated certain assumptions affecting deferred
policy acquisition costs and present value of future profits for interest
sensitive products. The change in assumptions reduced the deferred policy
acquisition costs and present value of future profit balances by approximately
$3 million and $22 million in 1998 and 1997, respectively.
During December 1998, ReliaStar approved a plan to consolidate its five
individual life insurance and annuity service center operations into one new
center. This consolidation is expected to be substantially complete by the end
of the year 2000 and anticipates the termination of approximately 60 positions
at the Company's current service center operation. The transitioning of
operations to the new center is scheduled to begin during 1999. Estimated costs
recorded by the Company related to this plan of approximately $4.3 million
(pre-tax) are primarily related to employee-related termination costs and
non-cancellable lease contracts costs associated with vacated facilities.
During 1997, ReliaStar approved a plan to eliminate redundancies and create
operational efficiencies through consolidation of certain functions, some of
which impacted the Company. The plan was substantially completed by December 31,
1998. The remaining costs accrued by the Company as of December 31, 1998 ($.6
million) are primarily related to remaining unpaid severance benefits and
non-cancellable lease contracts costs associated with vacated facilities and are
considered adequate for all remaining obligations.
Investments
Fixed maturity securities (bonds and redeemable preferred stocks) are classified
as available-for-sale and are carried at fair value.
Equity securities (common stocks and nonredeemable preferred stocks) are carried
at fair value.
Mortgage loans on real estate are carried at amortized cost less an impairment
allowance for estimated uncollectible amounts.
Real estate acquired through foreclosure is carried at the lower of fair value
less estimated costs to sell or cost.
Short-term investments are carried at amortized cost, which approximates fair
value.
Unrealized investment gains and losses of equity securities and fixed maturity
securities, net of related deferred policy acquisition costs (DAC), present
value of future profits (PVFP) and tax effects, are accounted for as a direct
increase or decrease to the accumulated other comprehensive income component of
shareholder's equity.
Realized investment gains and losses enter into the determination of net income.
Realized investment gains and losses on sales of securities are determined on
the specific identification method. Write-offs of investments that decline in
value below cost on other than a temporary basis and the change in the allowance
for mortgage loans and wholly owned real estate are included with realized
investment gains and losses in the Statements of Income.
The Company records write-offs or allowances for its investments based upon an
evaluation of specific problem investments. The Company periodically reviews all
invested assets (including marketable bonds, private placements, mortgage loans
and real estate investments) to identify investments where the Company has
credit concerns. Investments with credit concerns include those the Company has
identified as problem investments, which are issues delinquent in a required
payment of principal or interest, issues in bankruptcy or foreclosure and
restructured or foreclosed assets. The Company also identifies investments as
potential problem investments, which are investments where the Company has
serious doubts as to the ability of the borrowers to comply with the present
loan repayment terms.
67
<PAGE>
Property and Equipment
Property and equipment are carried at cost, net of accumulated depreciation of
$2.9 million and $1.8 million at December 31, 1998 and 1997, respectively. The
Company provides for depreciation of property and equipment using straight-line
and accelerated methods over the estimated useful lives of the assets.
Depreciation expense for the years ending December 31, 1998 and 1997 totaled $.8
million and $.5 million, respectively.
Separate Accounts
The Company operates separate accounts. The assets and liabilities of the
separate accounts are primarily related to variable annuity, variable life and
401(k) contracts and represent policyholder directed funds that are separately
administered. The assets (principally investments) and liabilities (principally
to contractholders) of each account are clearly identifiable and distinguishable
from other assets and liabilities of the Company. Assets are carried at fair
value. Revenues from these separate account contracts consist primarily of
charges for mortality risk and expenses, cost of insurance, contract
administration and surrender charges. Revenue for these products is recognized
when due.
Premium Revenue and Benefits to Policyholders
Recognition of Traditional Life, Group and Annuity Premium Revenue and Benefits
to Policyholders -- Traditional life insurance products include those products
with fixed and guaranteed premiums and benefits and consist principally of term
and whole life insurance policies and certain annuities with life contingencies
(immediate annuities). Life insurance premiums and immediate annuity premiums
are recognized as premium revenue when due. Group insurance premiums are
recognized as premium revenue over the time period to which the premiums relate.
Benefits and expenses are associated with earned premiums so as to result in
recognition of profits over the life of the contracts. This association is
accomplished by means of the provision for liabilities for future policy
benefits and the amortization of DAC and PVFP.
Recognition of Universal Life-Type Contract Revenue and Benefits to
Policyholders -- Universal life-type policies are insurance contracts with terms
that are not fixed and guaranteed. The terms that may be changed could include
one or more of the amounts assessed the policyholder, premiums paid by the
policyholder or interest accrued to policyholder balances. Amounts received as
deposits to such contracts are not reported as premium revenues.
Revenues for universal life-type policies consist of charges assessed against
policy account values for deferred policy loading and the cost of insurance and
policy administration. Policy benefits and claims that are charged to expense
include interest credited to contracts and benefit claims incurred in the period
in excess of related policy account balances.
Recognition of Investment Contract Revenue and Benefits to Policyholders --
Contracts that do not subject the Company to risks arising from policyholder
mortality or morbidity are referred to as investment contracts. Certain deferred
annuities are considered investment contracts. Amounts received as deposits for
such contracts are not reported as premium revenues.
Revenues for investment products consist of investment income and charges
assessed against contract account values for policy administration. Contract
benefits that are charged to expense include benefit claims incurred in the
period in excess of related contract balances, and interest credited to contract
balances.
Policy Acquisition Costs
Those costs of acquiring new business, which vary with and are primarily related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable. Such costs include commissions, certain costs of
policy issuance and underwriting and certain variable agency expenses.
Costs deferred related to traditional life insurance products are amortized over
the premium paying period of the related policies, in proportion to the ratio of
annual premium revenues to total anticipated premium revenues. Such anticipated
premium revenues are estimated using the same assumptions used for computing
liabilities for future policy benefits.
68
<PAGE>
Costs deferred related to universal life-type policies and investment contracts
are amortized over the lives of the policies, in relation to the present value
of estimated gross profits from mortality, investment, surrender and expense
margins.
Present Value of Future Profits
The present value of future profits reflects the estimated fair value of
acquired insurance business in force and represents the portion of the
acquisition cost that was allocated to the value of future cash flows from
insurance contracts existing at the date of acquisition. Such value is the
present value of the actuarially determined projected net cash flows from the
acquired insurance contracts. An analysis of the PVFP asset account is presented
below:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
(In Millions) 1998 1997
- ------------------------------------------------------ ---------- ----------
<S> <C> <C>
Balance, Beginning of Year $ 79.1 $ 53.3
Acquisition .8 48.4
Imputed Interest 5.9 5.0
Amortization (21.3) (19.3)
Impact of Net Unrealized Investment Gains and Losses 3.7 ( 8.3)
- ------------------------------------------------------ ------- -------
Balance, End of Year $ 68.2 $ 79.1
====================================================== ======= =======
</TABLE>
Based on current conditions and assumptions as to future events on acquired
policies in force, the Company expects that the net amortization of the December
31, 1998 PVFP balance will be between 6% and 11% in each of the years 1999
through 2003. The interest rates used to determine the amount of imputed
interest on the unamortized PVFP balance ranged from 5% to 8%.
Goodwill
Goodwill is the excess of the amount paid to acquire a company over the fair
value of the net assets acquired and is amortized on a straight-line basis over
40 years. The carrying value of goodwill is monitored for indicators of
impairment of value. No events or circumstances were identified which warrant
consideration of impairment or a revised estimate of useful lives.
Future Policy and Contract Benefits
Liabilities for future policy benefits for traditional life insurance contracts
are calculated using the net level premium method and assumptions as to
investment yields, mortality, withdrawals and dividends. The assumptions are
based on projections of past experience and include provisions for possible
unfavorable deviation. These assumptions are made at the time the contract is
issued or, for purchased contracts, at the date of acquisition.
Liabilities for future policy and contract benefits on universal life-type and
investment contracts are based on the policy account balance.
The liabilities for future policy and contract benefits for group disabled life
reserves and long-term disability reserves are based upon interest rate
assumptions and morbidity and termination rates from published tables, modified
for Company experience.
Income Taxes
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the cumulative temporary differences in the assets
and liabilities determined on a tax return and financial statement basis.
The Company files a consolidated tax return with certain of its affiliates. The
method by which the total consolidated federal income tax for each entity is
allocated to each of the companies is subject to a written agreement approved by
the Company's Board of Directors. Allocation is based upon a separate return
calculation such that each company in the consolidated return pays the same tax
or receives the same refunds it would have paid or received had it consistently
filed separate federal income tax returns. Intercompany tax balances are settled
within a reasonable time after filing of the consolidated federal income tax
returns with the Internal Revenue Service.
69
<PAGE>
Interest Rate Swap Agreements
Interest rate swap agreements are used as hedges for asset/liability management
of adjustable rate and short-term invested assets. The Company does not enter
into any interest rate swap agreements for trading purposes. The interest rate
swap transactions involve the exchange of fixed and floating rate interest
payments without the exchange of underlying principal amounts and do not contain
other optional provisions. The Company utilizes the settlement method of
accounting for its interest rate swap agreements whereby the difference between
amounts paid and amounts received or accrued on interest rate swap agreements is
reflected in net investment income.
The characteristics (notional amount, maturity and payment dates) of the
interest rate swap agreements are similar to the characteristics of the
designated hedged assets. Interest rate swaps are carried at fair value, and
changes in fair value are recorded as a direct increase or decrease in the
accumulated other comprehensive income component of shareholder's equity. In the
event an interest rate swap agreement would cease to qualify for hedge
accounting, changes in fair value of the affected swap would be recorded as
income or expense. There were no terminations of interest rate swap agreements
during 1998 or 1997.
NOTE 3. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------
(In Millions) 1998 1997
- ------------------------------- ------------ ------------
<S> <C> <C>
Fixed Maturity Securities $ 126.7 $ 116.8
Equity Securities .1 .2
Mortgage Loans on Real Estate 23.7 24.8
Real Estate .3 .4
Policy Loans 6.1 5.3
Other Invested Assets .9 .4
Short-Term Investments 2.1 1.7
- ------------------------------- --------- ---------
Gross Investment Income 159.9 149.6
Investment Expenses (2.9) (3.6)
- ------------------------------- --------- ---------
Net Investment Income $ 157.0 $ 146.0
=============================== ========= =========
</TABLE>
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
(In Millions) 1998 1997
- ----------------------------------- ---------- ----------
<S> <C> <C>
Net Gains (Losses) on Sales
Fixed Maturity Securities
Gross Gains $ 3.9 $ 1.3
Gross Losses (1.1) (1.2)
Equity Securities -- 1.0
Other 2.7 .7
- ----------------------------------- ------- -------
5.5 1.8
- ----------------------------------- ------- -------
Provisions for Losses
Fixed Maturity Securities (.4) (.1)
Foreclosed Real Estate (.2) --
- ----------------------------------- ------- -------
(.6) (.1)
- ----------------------------------- ------- -------
Pretax Realized Investment Gains $ 4.9 $ 1.7
=================================== ======= =======
</TABLE>
70
<PAGE>
The amortized cost and fair value of investments in fixed maturity securities by
type of investment were as follows:
<TABLE>
<CAPTION>
December 31, 1998
-------------------------------------------------------
Gross Unrealized
Amortized ----------------------- Fair
(In Millions) Cost Gains (Losses) Value
- --------------------------------------------------- ------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
United States Government and Government
Agencies and Authorities $ 24.4 $ 2.2 -- $ 26.6
States, Municipalities and Political Subdivisions 7.4 .3 -- 7.7
Foreign Governments 17.1 1.9 -- 19.0
Public Utilities 105.7 11.0 -- 116.7
Corporate Securities 1,016.4 59.7 $ (7.0) 1,069.1
Mortgage-Backed/Structured Finance 331.7 14.5 (.7) 345.5
Redeemable Preferred Stock 1.2 -- (.2) 1.0
- --------------------------------------------------- ---------- ------- -------- ----------
Total $ 1,503.9 $ 89.6 $ (7.9) $ 1,585.6
=================================================== ========== ======= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------------------
Gross Unrealized
Amortized ----------------------- Fair
(In Millions) Cost Gains (Losses) Value
- --------------------------------------------------- ------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
United States Government and Government
Agencies and Authorities $ 27.9 $ 2.0 -- $ 29.9
States, Municipalities and Political Subdivisions 10.9 .7 -- 11.6
Foreign Governments 17.1 1.5 -- 18.6
Public Utilities 159.4 12.3 $ (.2) 171.5
Corporate Securities 996.2 54.8 (1.1) 1,049.9
Mortgage-Backed/Structured Finance 347.8 15.9 (.9) 362.8
Redeemable Preferred Stock .2 -- -- .2
- --------------------------------------------------- ---------- ------- -------- ----------
Total $ 1,559.5 $ 87.2 $ (2.2) $ 1,644.5
=================================================== ========== ======= ======== ==========
</TABLE>
The amortized cost and fair value of fixed maturity securities by contractual
maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
----------------------------- -----------------------------
Amortized Fair Amortized Fair
(In Millions) Cost Value Cost Value
- ------------------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Maturing in:
One Year or Less $ 75.6 $ 76.2 $ 32.6 $ 32.8
One to Five Years 576.4 604.3 595.9 622.3
Five to Ten Years 370.9 399.5 420.5 452.5
Ten Years or Later 149.3 160.1 162.7 174.1
Mortgage-Backed/Structured Finance 331.7 345.5 347.8 362.8
- ------------------------------------ ---------- ---------- ---------- ----------
Total $ 1,503.9 $ 1,585.6 $ 1,559.5 $ 1,644.5
==================================== ========== ========== ========== ==========
</TABLE>
The fair values for actively traded marketable bonds are determined based upon
the quoted market prices. The fair values for marketable bonds without an active
market are obtained through several commercial pricing services which provide
the estimated fair values. Fair values of privately placed bonds which are not
considered problems are determined using a matrix-based pricing model. The model
considers the current level of risk-free interest rates, current corporate
spreads, the credit quality of the issuer and cash flow characteristics of the
security. Using this data, the model generates estimated market values which the
Company considers reflective of the fair value of each privately placed bond.
Fair values for privately placed bonds which are considered problems are
determined through consideration of factors such as the net worth of borrower,
the value of collateral, the capital structure of the borrower, the presence of
guarantees and the Company's evaluation of the borrower's ability to compete in
their relevant market.
71
<PAGE>
At December 31, 1998, the largest industry concentration in the private
placement portfolio was financial services, where 17.8% of the portfolio was
invested, and the largest industry concentration in the marketable bond
portfolio was mortgage-backed/structured finance where 23.7% of the portfolio
was invested. At December 31, 1998, the largest geographic concentration of
commercial mortgage loans was in the Midwest region of the United States, where
approximately 37.1% of the commercial mortgage loan portfolio was invested.
At December 31, 1998 and 1997, gross unrealized appreciation of equity
securities was $.4 million and $.4 million, respectively, and gross unrealized
depreciation was $.2 million and $.1 million, respectively.
Invested assets which were nonincome producing (no income received for the 12
months preceding the balance sheet date) were as follows:
<TABLE>
<CAPTION>
December 31
---------------------
(In Millions) 1998 1997
- ------------------------------- --------- ---------
<S> <C> <C>
Fixed Maturity Securities $ .1 --
Mortgage Loans on Real Estate .1 $ .1
Real Estate .7 3.2
- ------------------------------- ------ ------
Total $ .9 $ 3.3
=============================== ====== ======
</TABLE>
Allowances for losses on investments are reflected on the Balance Sheets as a
reduction of the related assets and were as follows:
<TABLE>
<CAPTION>
December 31
---------------------
(In Millions) 1998 1997
- ------------------------ --------- ---------
<S> <C> <C>
Mortgage Loans $ 1.2 $ 1.2
Foreclosed Real Estate 1.1 .9
======================== ====== ======
</TABLE>
At December 31, 1998 and 1997, the total investment in impaired mortgage loans
(before allowances for credit losses), the related allowance for credit losses
and the average investment related to impaired mortgage loans were as follows:
<TABLE>
<CAPTION>
December 31
---------------------
(In Millions) 1998 1997
- ------------------------------- --------- ---------
<S> <C> <C>
Impaired Mortgage Loans
Total Investment $ 2.0 $ 2.1
Allowance for Credit Losses 1.2 1.2
Average Investment 1.0 1.0
=============================== ====== ======
</TABLE>
There were no increases or decreases in the allowance for credit losses during
1998 and 1997. Interest income recognized on impaired mortgage loans during 1998
and 1997 was $.2 million and $.2 million, respectively. The Company does not
accrue interest income on impaired mortgage loans when the likelihood of
collection is doubtful. Cash receipts for interest payments are recognized as
income in the period received.
Noncash investing activities consisted of $.8 million of real estate assets
acquired through foreclosure during the year ended December 31, 1997.
The components of net unrealized investment gains included in the accumulated
other comprehensive income of shareholder's equity are shown below:
<TABLE>
<CAPTION>
December 31
-------------------------
(In Millions) 1998 1997
- ----------------------------- ----------- -----------
<S> <C> <C>
Unrealized Investment Gains $ 84.5 $ 88.4
DAC/PVFP Adjustment (19.7) (26.7)
Deferred Income Taxes (22.7) (21.6)
- ----------------------------- -------- --------
Total $ 42.1 $ 40.1
============================= ======== ========
</TABLE>
72
The change in net unrealized investment gains and losses included in the change
in accumulated other comprehensive income consisted of the following:
<TABLE>
<CAPTION>
December 31
----------------------
(In Millions) 1998 1997
- -------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Unrealized Investment Gains (Losses) Arising During The Period (1) $ (.6) $ 18.1
Reclassification Adjustments (2) (1.9) (.7)
Change in DAC/PVFP Adjustment (3) 4.5 (5.3)
- -------------------------------------------------------------------- ------ -------
Total $ 2.0 $ 12.1
==================================================================== ====== =======
</TABLE>
(1) Net of income tax expense (benefit) totaling $.4 million and $(9.8) million
for 1998 and 1997, respectively.
(2) Net of income tax expense (benefit) totaling $1.0 million and $.4 million
for 1998 and 1997, respectively.
(3) Net of income tax expense (benefit) totaling $(2.5) million and $2.8 million
for 1998 and 1997, respectively.
NOTE 4. INCOME TAXES
The income tax liability as reflected on the Balance Sheets consisted of the
following:
<TABLE>
<CAPTION>
December 31
---------------------
(In Millions) 1998 1997
- ----------------------- --------- ---------
<S> <C> <C>
Current Income Taxes $ 3.9 $ (.3)
Deferred Income Taxes 29.5 31.0
- ----------------------- ------- -------
Total $ 33.4 $ 30.7
======================= ======= =======
</TABLE>
The provision for income taxes reflected on the Statements of Income consisted
of the following:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
(In Millions) 1998 1997
- ------------------- ---------- ----------
<S> <C> <C>
Currently Payable $ 17.0 $ 14.2
Deferred (2.3) (6.4)
- ------------------- ------- -------
Total $ 14.7 $ 7.8
=================== ======= =======
</TABLE>
The Internal Revenue Service has completed its review of the Company's tax
return for all years through 1995.
Deferred income taxes reflect the impact for financial statement reporting
purposes of "temporary differences" between the financial statement carrying
amounts and tax bases of assets and liabilities. The "temporary differences"
that give rise to the net deferred tax liability relate to the following:
<TABLE>
<CAPTION>
December 31
-------------------------
(In Millions) 1998 1997
- -------------------------------------- ----------- -----------
<S> <C> <C>
Future Policy and Contract Benefits $ (43.8) $ (46.7)
Investment Write-Offs and Allowances (.9) (2.5)
Other (6.0) (.8)
- -------------------------------------- ------- --------
Gross Deferred Tax Asset (50.7) (50.0)
- -------------------------------------- ------- --------
Deferred Policy Acquisition Costs 24.0 27.4
Present Value of Future Profits 30.2 31.0
Net Unrealized Investment Gains 16.2 13.8
Other 9.8 8.8
- -------------------------------------- ------- --------
Gross Deferred Tax Liability 80.2 81.0
- -------------------------------------- ------- --------
Net Deferred Tax Liability $ 29.5 $ 31.0
====================================== ======= ========
</TABLE>
Federal income tax regulations allowed certain special deductions for 1983 and
prior years which are accumulated in a memorandum tax account designated as
"policyholders' surplus." Generally, this policyholders' surplus account will
become subject to tax at the then current rates only if the accumulated balance
exceeds certain maximum limitations or if certain cash distributions are deemed
to be paid out of the account. At December 31, 1998, the Company had accumulated
approximately $11.3 million in its separate policyholders' surplus accounts.
Deferred taxes have not been provided on this temporary difference.
73
<PAGE>
The difference between the U.S. federal income tax rate and the consolidated
tax provision rate is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Statutory Tax Rate 35.0% 35.0%
Other .8 2.1
- --------------------- ---- ----
Effective Tax Rate 35.8% 37.1%
===================== ==== ====
</TABLE>
Cash paid for federal income taxes was $12.8 million and $14.9 million for the
years ended December 31, 1998 and 1997, respectively.
NOTE 5. EMPLOYEE BENEFIT PLANS
Pension and Other Postretirement Benefits
The Company participates in funded and unfunded noncontributory defined benefit
retirement plans sponsored by ReliaStar Life covering substantially all
employees which provide benefits to employees upon retirement (Pension Plans).
Effective December 31, 1998, the qualified defined benefit retirement plan was
amended to suspend the accrual of additional benefits for future services.
Employees will retain all of their accrued benefits as of December 31, 1998,
which will be paid monthly at retirement according to the provisions of the
plan. Employees meeting certain age and service requirements will receive
certain transition benefits until retirement. A curtailment gain was recorded in
1998 to reflect the impact of this plan amendment and employee reductions
resulting from the transfer of certain accident and health administrative
operations of ReliaStar Life to a third party.
The Company provides certain health care and life insurance benefits to retired
employees and their eligible dependents through a plan sponsored by ReliaStar
Life (Other Plans). The postretirement health care plan is contributory, with
retiree contribution levels adjusted annually; the life insurance plan provides
a flat amount of noncontributory coverage and optional contributory coverage.
Net periodic expense or benefit for ReliaStar and its subsidiaries for the
pension and other plans included the following components:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
(In Millions) 1998 1997
- ------------------------------------ ---------- ----------
<S> <C> <C>
Pension Plans
Service Cost $ 3.2 $ 4.9
Interest Cost 16.7 15.2
Expected Return on Plan Assets (20.9) (17.0)
Amortization of Prior Service Cost .8 1.1
Amortization of Transition Asset (.1) (.3)
Curtailment Gain (3.7) --
Actuarial Loss 1.6 1.8
- ------------------------------------ ------- -------
Net Expense (Benefit) $ (2.4) $ 5.7
==================================== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
(In Millions) 1998 1997
- ------------------------------------ ----------- ---------
<S> <C> <C>
Other Plans
Service Cost $ .5 $ .4
Interest Cost .7 .7
Amortization of Prior Service Cost (1.5) (1.6)
Curtailment Gain (1.7) --
Actuarial Gain (.1) (.1)
- ------------------------------------ ------- ------
Net Expense (Benefit) $ (2.1) $ (.6)
==================================== ======== =======
</TABLE>
74
<PAGE>
The funded status of the plans and net amounts recognized in ReliaStar's
Consolidated Balance Sheets were as follows:
<TABLE>
<CAPTION>
Pension Plans Other Plans
------------------------- ------------------------
December 31 (In Millions) 1998 1997 1998 1997
- ------------------------------------------------ ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Benefit Obligation at Beginning of Year $ 237.1 $ 195.8 $ 10.9 $ 9.8
Service Cost 3.2 4.9 .5 .4
Interest Cost 16.7 15.2 .7 .7
Actuarial (Gain) Loss 14.9 25.6 (.2) .3
SCC Acquisition -- 8.6 -- .6
Benefits Paid (15.4) (13.0) (.4) (.9)
Plan Amendments 2.0 -- -- --
Termination Cost 1.0 -- -- --
Curtailment (20.8) -- (.7) --
- ------------------------------------------------ -------- -------- ------- -------
Benefit Obligation at End of Year 238.7 237.1 10.8 10.9
- ------------------------------------------------ -------- -------- ------- -------
Fair Value of Plan Assets at Beginning of Year 229.1 184.9 -- --
Actual Return on Plan Assets 36.6 45.2 -- --
SCC Acquisition -- 9.2 -- --
Employer Contributions 1.4 2.8 .4 .4
Participant Contributions -- -- .5 .5
Benefits Paid (15.4) (13.0) (.9) (.9)
- ------------------------------------------------ -------- -------- ------- -------
Fair Value of Plan Assets at End of Year 251.7 229.1 -- --
- ------------------------------------------------ -------- -------- ------- -------
Funded Status 13.0 (8.0) (10.8) (10.9)
Unrecognized Net (Gain) Loss (2.2) 10.3 91.8) (1.7)
Unrecognized Prior Service Cost 3.6 8.5 (4.7) (7.2)
Unrecognized Transition Asset -- (9.1) -- --
- ------------------------------------------------ -------- -------- ------- -------
Net Asset (Liability) Recognized $ 14.4 $ 10.7 $ (17.3) $ (19.8)
================================================ ======== ======== ======= =======
</TABLE>
Amounts recognized in ReliaStar's Consolidated Balance Sheets were as follows:
<TABLE>
<CAPTION>
Pension Plans Other Plans
------------------------- -------------------------
December 31 (In Millions) 1998 1997 1998 1997
- ---------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Prepaid Benefit Cost $ 28.2 $ 22.5 -- --
Accrued Benefit Liability (19.1) (15.7) $ (17.3) $ (19.8)
Intangible Asset 5.3 3.9 -- --
- ---------------------------------- -------- -------- ------- -------
Net Asset (Liability) Recognized $ 14.4 $ 10.7 $ (17.3) $ (19.8)
================================== ======== ======== ======= =======
</TABLE>
The aggregate projected benefit obligation and aggregate accumulated benefit
obligation for the unfunded pension plans were $19.4 million and $19.1 million,
respectively, as of December 31, 1998; and $17.2 million and $15.7 million,
respectively, as of December 31, 1997. As of December 31, 1998 and 1997, pension
plan assets included 1,232,982 shares of ReliaStar common stock with a fair
value of $56.9 million and $50.8 million, respectively. The benefit obligations
for the pension and other postretirement plans were determined using assumed
discount rates of 7.0% and 7.25% as of January 1, 1999 and 1998, respectively. A
weighted-average long-term rate of compensation increase of 4.5% was used for
the pension benefit obligation. The assumed long-term rate of return on pension
plan assets was 10.5% in 1998 and 10.0% in 1997. The assumed health care cost
trend rate for 1999 and thereafter used in measuring the postretirement health
care benefit obligation was 5.0%. The assumed health care cost trend rate has an
effect on the amounts reported. For example, a one-percentage-point increase in
the rate would increase the 1998 total service and interest cost by $.1 million
and the postretirement health care benefit obligation by $.4 million. A
one-percentage-point decrease in the rate would decrease the 1998 total service
and interest cost by $.1 million and the postretirement health care benefit
obligation by $.4 million.
75
<PAGE>
The above amounts are for ReliaStar and its subsidiaries as the Company's
portion is not determinable. The net periodic pension benefit allocated to the
Company for all plans was $.3 million for the year ended December 31, 1998. The
amount allocated to the Company for the year ended December 31, 1997 was
immaterial.
Success Sharing Plan and ESOP
The Success Sharing Plan and ESOP (Success Sharing Plan) was designed to
increase employee ownership and reward employees when certain Company
performance objectives are met. Essentially all employees are eligible to
participate in the Success Sharing Plan. The Success Sharing Plan has both
qualified and nonqualified components. The nonqualified component is equal to
25% of the annual award and is paid in cash to employees. The qualified
component is equal to 75% of the annual award which is contributed to the ESOP
portion of the Success Sharing Plan. Costs charged to expense for the Success
Sharing Plan were $.5 million, and $.5 million in 1998 and 1997 respectively.
Stock Based Compensation
Officers and key employees of the Company participate in stock-based
compensation plans of ReliaStar. ReliaStar applies Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees,"and related
interpretations in accounting for its stock-based compensation plans.
Accordingly, the Company has recorded no compensation expense for their
stock-based compensation plans other than for restricted stock and
performance-based awards.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company and its affiliates have entered into agreements whereby affiliates
and the Company provide certain management, administrative, legal, and other
services for each other. The net amounts billed to the Company were $20.5
million and $26.3 million in 1998 and 1997, respectively. The net costs
allocated to the Company under these agreements may not be indicative of costs
the Company might incur if these services were not provided by the Company's
affiliates.
ReliaStar Life and Security-Connecticut reinsure certain life policies written
by the Company. Premiums ceded under these agreements were $15.6 million and
$8.9 million for the years ended December 31, 1998 and 1997, respectively, and
the net amount recoverable by the Company under these agreements were $10.5
million and $14.9 million as of December 31, 1998 and 1997, respectively.
NOTE 7. SHAREHOLDER'S EQUITY
Dividend Restrictions
The ability of the Company to pay cash dividends to its parent is restricted by
law or subject to approval of the insurance regulatory authorities of the state
of New York. These authorities recognize only statutory accounting practices for
the ability of an insurer to pay dividends to its shareholders.
Under New York insurance law regulating the payment of dividends by the Company,
any such payment must be paid solely from the earned surplus of the Company and
advance notice thereof must be provided to the Superintendent of the New York
Department of Insurance (the Superintendent). Earned surplus means the earned
surplus as determined in accordance with statutory accounting practices
(unassigned funds), less the amount of such earned surplus which is attributable
to unrealized capital gains. Further, without approval of the Superintendent,
the Company may not pay in any calendar year any dividend which, when combined
with other dividends paid within the preceding 12 months, exceeds the lesser of
(i) 10% of the Company's statutory surplus at the prior year end or (ii) 100% of
the Company's statutory net investment income for the prior calendar year.
Statutory Surplus and Net Income
Net income of the Company as determined in accordance with statutory accounting
practices, was $19.6 million and $20.4 million for 1998 and 1997, respectively.
The Company's statutory capital and surplus was $202.4 million and $186.8
million at December 31, 1998 and 1997, respectively.
76
<PAGE>
NOTE 8. REINSURANCE
The Company is a member of reinsurance associations established for the purpose
of ceding the excess of life insurance over retention limits. Reinsurance
contracts do not relieve the Company from its obligations to policyholders.
Failure of reinsurers to honor their obligations could result in losses to the
Company; consequently, allowances are established for amounts deemed
uncollectible. The amount of the allowance for uncollectible reinsurance
receivables was immaterial at December 31, 1998 and 1997. The Company evaluates
the financial condition of its reinsurers and monitors concentrations of credit
risk to minimize its exposure to significant losses from reinsurer insolvencies.
At December 31, 1998, approximately 63% of the Company's reinsurance ceded,
based on in force, was ceded with one reinsurer. The Company's retention limit
is $300,000 per life for individual coverage. For group coverage and reinsurance
assumed, the retention is $300,000 per life with per occurrence limitations,
subject to certain maximums. As of December 31, 1998, $3.6 billion of life
insurance in force was ceded to other companies. The Company has assumed $2.8
billion of life insurance in force as of December 31, 1998.
The effect of reinsurance on premiums and recoveries is as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------
(In Millions) 1998 1997
- ------------------------- ----------- -----------
<S> <C> <C>
Direct Premiums $ 76.7 $ 70.9
Reinsurance Assumed 2.5 --
Reinsurance Ceded ( 37.5) ( 22.8)
- ------------------------- -------- --------
Net Premiums $ 41.7 $ 48.1
- ------------------------- -------- --------
Reinsurance Recoveries $ 18.6 $ 5.5
========================= ======== ========
</TABLE>
NOTE 9. LIABILITY FOR UNPAID ACCIDENT AND HEALTH CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
The change in the liability for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
(In Millions) 1998 1997
- ------------------------------- ---------- ----------
<S> <C> <C>
Balance at January 1 $ 9.3 $ 9.5
Less Reinsurance Recoverables 3.1 2.1
- ------------------------------- ------- -------
Net Balance at January 1 6.2 7.4
Incurred Related to:
Current Year .9 1.7
Prior Year .8 ( .9)
- ------------------------------- ------- -------
Total Incurred 1.7 .8
Paid Related to:
Current Year .4 .8
Prior Year 3.0 1.2
- ------------------------------- ------- -------
Total Paid 3.4 2.0
Net Balance at December 31 4.5 6.2
Plus Reinsurance Recoverables 9.1 3.1
- ------------------------------- ------- -------
Balance at December 31 $ 13.6 $ 9.3
=============================== ======= =======
</TABLE>
The liability for unpaid accident and health claims and claim adjustment
expenses is included in Future Policy and Contract Benefits on the Balance
Sheets.
77
<PAGE>
NOTE 10. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is a defendant in a number of lawsuits arising out of the normal
course of the business of the Company, some of which include claims for punitive
damages. In the opinion of management, the ultimate resolution of such
litigation will not result in any material adverse impact to the financial
position of the Company.
Financial Instruments
The Company is a party to financial instruments with on and off-balance-sheet
risk in the normal course of business to reduce its exposure to fluctuations in
interest rates. These financial instruments include commitments to extend credit
and interest rate swaps. Those instruments involve, to varying degrees, elements
of credit, interest rate or liquidity risk in excess of the amount recognized in
the Balance Sheets.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The Company uses the
same credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments. For interest rate swap transactions, the
contract or notional amounts do not represent exposure to credit loss. For
swaps, the Company's exposure to credit loss is limited to those swaps where the
Company has an unrealized gain.
Unless otherwise noted, the Company does not require collateral or other
security to support financial instruments with credit risk.
<TABLE>
<CAPTION>
December 31
-----------------------
(In Millions) 1998 1997
- ---------------------------------------------------------------- ----------- ---------
<S> <C> <C>
CONTRACT OR NOTIONAL AMOUNT
Financial Instruments Whose Contract Amounts Represent
Credit Risk
Commitments to Extend Credit $ 16.2 $ .5
Financial Instruments Whose Notional or Contract Amounts Exceed
the Amount of Credit Risk
Interest Rate Swap Agreements 62.0 112.0
================================================================ ======== ======
</TABLE>
Commitments to Extend Credit -- Commitments to extend credit are legally binding
agreements to lend to a customer. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. They
generally may be terminated by the Company in the event of deterioration in the
financial condition of the borrower. Since some of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future liquidity requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis.
Interest Rate Swap Agreements -- The Company enters into interest rate swap
agreements to manage interest rate exposure. The primary reason for the interest
rate swap agreements is to extend the duration of adjustable rate investments.
Interest rate swap transactions generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange of the
underlying principal amounts. Changes in market interest rates impact income
from adjustable rate investments and have an opposite (and approximately
offsetting) effect on the reported income from the swap portfolio. The risks
under interest rate swap agreements are generally similar to those of futures
contracts. Notional principal amounts are often used to express the volume of
these transactions but do not represent the much smaller amounts potentially
subject to credit risk. The amount subject to credit risk is approximately equal
to the unrealized gain on the agreements which was $1.1 million as of December
31, 1998.
Leases
The Company has operating leases for office space and certain computer
processing and other equipment. Rental expense for these items was $1.8 million
and $1.7 million for 1998 and 1997, respectively.
78
<PAGE>
Future minimum aggregate rental commitments at December 31, 1998 for operating
leases were as follows:
<TABLE>
<CAPTION>
(In Millions)
- ---------------
<S> <C>
1999 -- $1.9 2002 -- $1.2
2000 -- $1.9 2003 -- $.7
2001 -- $1.8 2004 and thereafter -- $1.3
=============== ============================
</TABLE>
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures are made in accordance with the requirements of SFAS
No. 107, "Disclosures about Fair Value of Financial Instruments." SFAS No. 107
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates, in many cases, could not be realized in immediate
settlement of the instrument.
SFAS No. 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1998 and 1997. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Fixed Maturity Securities -- The estimated fair value disclosures for debt
securities satisfy the fair value disclosure requirements of SFAS No. 107 (see
Note 3).
Equity Securities -- Fair value equals carrying value as these securities are
carried at quoted market value.
Mortgage Loans on Real Estate -- The fair values for mortgage loans on real
estate are estimated using discounted cash flow analyses and rates currently
being offered in the marketplace for similar loans to borrowers with similar
credit ratings. Loans with similar characteristics are aggregated for purposes
of the calculations.
Cash, Short-Term Investments and Policy Loans -- The carrying amounts for these
assets approximate the assets' fair values.
Other Financial Instruments Reported as Assets -- The carrying amounts for these
financial instruments (primarily premiums and other accounts receivable and
accrued investment income) approximate those assets' fair values.
Investment Contract Liabilities -- The fair value for deferred annuities was
estimated to be the amount payable on demand at the reporting date, as those
investment contracts have no defined maturity and are similar to a deposit
liability. The amount payable at the reporting date was calculated as the
account balance less applicable surrender charges.
The fair values for supplementary contracts without life contingencies and
immediate annuities were estimated using discounted cash flow analyses. The
discount rate was based upon treasury rates plus a pricing margin.
The carrying amounts reported for other investment contracts, which includes
retirement plan deposits, approximate those liabilities' fair value.
79
<PAGE>
Claim and Other Deposit Funds -- The carrying amounts for claim and other
deposit funds approximate the liabilities' fair value.
Other Financial Instruments Reported as Liabilities -- The carrying amounts for
other financial instruments (primarily normal payables of a short-term nature)
approximate those liabilities' fair values. The carrying amounts and estimated
fair values of the Company's financial instruments as of December 31, 1998 and
1997 are as follows:
The carrying amounts and estimated fair values of the Company's financial
instruments as of December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------- -----------------------------
Carrying Fair Carrying Fair
(In Millions) Amount Value Amount Value
- ------------------------------------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FINANCIAL INSTRUMENTS RECORDED AS ASSETS
Fixed Maturity Securities $ 1,585.6 $ 1,585.6 $ 1,644.5 $ 1,644.5
Equity Securities 5.7 5.7 2.8 2.8
Mortgage Loans on Real Estate
Commercial 247.1 262.8 226.8 238.3
Residential and Other 41.8 42.8 63.6 64.9
Policy Loans 81.6 81.6 80.7 80.7
Cash and Short-Term Investments 35.9 35.9 7.7 7.7
Other Financial Instruments Recorded as Assets 39.1 39.1 43.7 43.7
FINANCIAL INSTRUMENTS RECORDED AS LIABILITIES
Investment Contracts
Deferred Annuities (747.2) (729.1) (846.7) (822.8)
Supplementary Contracts and Immediate Annuities (31.9) (33.1) (35.5) (33.0)
Other Investment Contracts (11.8) (11.8) (10.9) (10.9)
Claim and Other Deposit Funds (7.1) (7.1) (6.5) (6.5)
Other Financial Instruments Recorded as Liabilities (51.0) (51.0) (18.3) (18.3)
====================================================== ========== ========== ========== ==========
</TABLE>
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on judgments regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. In addition, the tax ramifications related to the
realization of the unrealized gains and losses can have a significant effect on
fair value estimates and have not been considered in the estimates.
80
<PAGE>
[zz]
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
<PAGE>
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;
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.
B-1
<PAGE>
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 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. 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.
B-2
<PAGE>
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 two hypothetical
Joint Insureds (who pay 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-3 through C-8 illustrate a Policy issued to a male
Joint Insured Age 55 and a female Joint Insured Age 55 both in a standard Rate
Class and qualifying for preferred non-smoker rates. The Accumulation Values,
Cash Surrender Values, and Death Benefits would be lower if either Joint Insured
were in a substandard Rate Class or did not qualify for the preferred non-smoker
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 frasierized 1980
Commissioners Standard Ordinary Mortality Tables for Non-smokers 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-3 through C-5) or the Variable
Amount Death Benefit Option (Tables at pages C-6 through C-8) 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 three portfolios of The Alger American Fund, the four portfolios of Fidelity
VIP Fund, the three portfolios of Fidelity VIP Fund II, the four portfolios of
Janus Aspen Series, the two portfolios of Neuberger&Berman Advisers Management
Trust, the five portfolios of the Northstar Variable Trust, the four portfolios
of the OCC Accumulation Trust, and the three portfolios of Putnam Variable
Trust, which together are assumed to be at an average annual rate of 0.75% for
all years. This figure is derived based on a simple average of the Funds' 1998
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
- -0.75%, 5.25%, and 11.25%, respectively. Without such expense reimbursements,
total expenses would be 0.88%. Hypothetical Accumulation Values, Cash Surrender
Values and the Death Benefits may be lower without the expense reimbursement.
Expense reimbursements are voluntary. While it is currently anticipated that
expense reimbursements will continue past the current year, there is no
assurance of ongoing reimbursements.
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).
C-1
<PAGE>
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 each
proposed Joint Insureds' Age, sex, underwriting classification, the Face Amount
and Planned Periodic Premium schedule requested, and any available riders
requested.
C-2
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$11,140.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
----------------------------------------------- ----------------------------------------------
Accumulation Cash Surrender Death Accumulation Cash Surrender Death
Policy Value Value Benefit Value Value Benefit
Year (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
- --------- -------------- ---------------- ----------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 9,127 0 1,000,000 9,182 0 1,000,000
2 17,987 7,987 1,000,000 18,127 8,127 1,000,000
3 26,562 16,562 1,000,000 26,836 16,836 1,000,000
4 34,827 24,827 1,000,000 35,302 25,302 1,000,000
5 42,757 32,757 1,000,000 43,521 33,521 1,000,000
6 50,315 41,315 1,000,000 51,487 42,487 1,000,000
7 57,455 49,455 1,000,000 59,176 51,176 1,000,000
8 64,112 57,112 1,000,000 66,557 59,557 1,000,000
9 70,206 64,206 1,000,000 73,596 67,596 1,000,000
10 75,643 70,643 1,000,000 80,256 75,256 1,000,000
11 80,322 76,322 1,000,000 87,306 83,306 1,000,000
12 84,134 81,134 1,000,000 93,933 90,933 1,000,000
13 86,973 84,973 1,000,000 100,106 98,106 1,000,000
14 88,695 87,695 1,000,000 105,783 104,783 1,000,000
15 89,130 89,130 1,000,000 110,913 110,913 1,000,000
16 88,040 88,040 1,000,000 115,461 115,461 1,000,000
17 85,103 85,103 1,000,000 119,346 119,346 1,000,000
18 79,887 79,887 1,000,000 122,465 122,465 1,000,000
19 71,868 71,868 1,000,000 124,637 124,637 1,000,000
20 60,448 60,448 1,000,000 125,793 125,793 1,000,000
AGE
80 0 0 1,000,000 124,412 124,412 1,000,000
85 0 0 1,000,000 35,914 35,914 1,000,000
**
</TABLE>
(1) Assumes a $11,140.00 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.
** 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 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-3
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$11,140.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
----------------------------------------------- ----------------------------------------------
Accumulation Cash Surrender Death Accumulation Cash Surrender Death
Policy Value Value Benefit Value Value Benefit
Year (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
- -------- -------------- ---------------- ----------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 9,711 0 1,000,000 9,768 0 1,000,000
2 19,720 9,720 1,000,000 19,867 9,867 1,000,000
3 30,014 20,014 1,000,000 30,309 20,309 1,000,000
4 40,580 30,580 1,000,000 41,099 31,099 1,000,000
5 51,398 41,398 1,000,000 52,243 42,243 1,000,000
6 62,436 53,436 1,000,000 63,749 54,749 1,000,000
7 73,655 65,655 1,000,000 75,603 67,603 1,000,000
8 84,993 77,993 1,000,000 87,787 80,787 1,000,000
9 96,371 90,371 1,000,000 100,279 94,279 1,000,000
10 107,695 102,695 1,000,000 113,052 108,052 1,000,000
11 118,862 114,862 1,000,000 127,163 123,163 1,000,000
12 129,757 126,757 1,000,000 141,647 138,647 1,000,000
13 140,266 138,266 1,000,000 156,496 154,496 1,000,000
14 150,239 149,239 1,000,000 171,694 170,694 1,000,000
15 159,495 159,495 1,000,000 187,219 187,219 1,000,000
16 167,789 167,789 1,000,000 203,066 203,066 1,000,000
17 174,788 174,788 1,000,000 219,190 219,190 1,000,000
18 180,057 180,057 1,000,000 235,528 235,528 1,000,000
19 183,062 183,062 1,000,000 251,954 251,954 1,000,000
20 183,189 183,189 1,000,000 268,442 268,442 1,000,000
AGE
80 118,071 118,071 1,000,000 362,928 362,928 1,000,000
85 0 0 1,000,000 425,136 425,136 1,000,000
90 0 0 1,000,000 395,606 395,606 1,000,000
95 0 0 1,000,000 111,018 111,018 1,000,000
**
</TABLE>
(1) Assumes a $11,140.00 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.
** Policy terminates prior to age 100.
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-4
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$11,140.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
----------------------------------------------- ----------------------------------------------
Accumulation Cash Surrender Death Accumulation Cash Surrender Death
Policy Value Value Benefit Value Value Benefit
Year (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
- -------- -------------- ---------------- ----------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 10,296 296 1,000,000 10,354 354 1,000,000
2 21,523 11,523 1,000,000 21,678 11,678 1,000,000
3 33,752 23,752 1,000,000 34,068 24,068 1,000,000
4 47,060 37,060 1,000,000 47,625 37,625 1,000,000
5 61,525 51,525 1,000,000 62,461 52,461 1,000,000
6 77,228 68,228 1,000,000 78,698 69,698 1,000,000
7 94,248 86,248 1,000,000 96,455 88,455 1,000,000
8 112,657 105,657 1,000,000 115,858 108,858 1,000,000
9 132,522 126,522 1,000,000 137,041 131,041 1,000,000
10 153,912 148,912 1,000,000 160,158 155,158 1,000,000
11 176,902 172,902 1,000,000 186,865 182,865 1,000,000
12 201,583 198,583 1,000,000 216,217 213,217 1,000,000
13 228,069 226,069 1,000,000 248,500 246,500 1,000,000
14 256,472 255,472 1,000,000 284,031 283,031 1,000,000
15 286,919 286,919 1,000,000 323,167 323,167 1,000,000
16 319,526 319,526 1,000,000 366,332 366,332 1,000,000
17 354,398 354,398 1,000,000 413,978 413,978 1,000,000
18 391,642 391,642 1,000,000 466,622 466,622 1,000,000
19 431,396 431,396 1,000,000 524,827 524,827 1,000,000
20 473,887 473,887 1,000,000 589,338 589,338 1,000,000
AGE
80 753,987 753,987 1,000,000 1,052,471 1,052,471 1,105,095
85 1,252,895 1,252,895 1,315,540 1,831,875 1,831,875 1,923,470
90 2,040,512 2,040,512 2,142,538 3,109,070 3,109,070 3,264,524
95 3,294,571 3,294,571 3,327,517 5,231,572 5,231,572 5,283,889
100 5,436,919 5,436,919 5,436,920 8,877,863 8,877,863 8,877,864
</TABLE>
(1) Assumes a $11,140.00 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.
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-5
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$11,140.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
----------------------------------------------- ----------------------------------------------
Accumulation Cash Surrender Death Accumulation Cash Surrender Death
Policy Value Value Benefit Value Value Benefit
Year (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
- -------- -------------- ---------------- ----------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 9,127 0 1,009,127 9,182 0 1,009,182
2 17,984 7,984 1,017,984 18,125 8,125 1,018,125
3 26,549 16,549 1,026,550 26,826 16,826 1,026,827
4 34,797 24,797 1,034,798 35,281 25,281 1,035,281
5 42,696 32,696 1,042,696 43,480 33,480 1,043,481
6 50,205 41,205 1,050,205 51,417 42,417 1,051,418
7 57,270 49,270 1,057,270 59,063 51,063 1,059,063
8 63,819 56,819 1,063,819 66,382 59,382 1,066,382
9 69,758 63,758 1,069,758 73,335 67,335 1,073,335
10 74,982 69,982 1,074,982 79,877 74,877 1,079,878
11 79,375 75,375 1,079,375 86,763 82,763 1,086,763
12 82,814 79,814 1,082,814 93,176 90,176 1,093,176
13 85,177 83,177 1,085,177 99,076 97,076 1,099,077
14 86,307 85,307 1,086,307 104,412 103,412 1,104,412
15 86,019 86,019 1,086,020 109,121 109,121 1,109,122
16 84,064 84,064 1,084,064 113,160 113,160 1,113,161
17 80,105 80,105 1,080,106 116,433 116,433 1,116,434
18 73,711 73,711 1,073,712 118,819 118,819 1,118,819
19 64,376 64,376 1,064,377 120,112 120,112 1,120,113
20 51,565 51,565 1,051,566 120,233 120,233 1,120,234
AGE
80 0 0 1,000,000 111,809 111,809 1,111,809
85 0 0 1,000,000 10,573 10,573 1,010,573
**
</TABLE>
(1) Assumes a $11,140.00 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.
** 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 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-6
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$11,140.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
----------------------------------------------- ----------------------------------------------
Accumulation Cash Surrender Death Accumulation Cash Surrender Death
Policy Value Value Benefit Value Value Benefit
Year (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
- --------- -------------- ---------------- ----------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 9,711 0 1,009,711 9,767 0 1,009,768
2 19,716 9,716 1,019,716 19,864 9,864 1,019,865
3 30,000 20,000 1,030,001 30,299 20,299 1,030,299
4 40,545 30,545 1,040,546 41,074 31,074 1,041,074
5 51,323 41,323 1,051,324 52,194 42,194 1,052,194
6 62,297 53,297 1,062,297 63,660 54,660 1,063,660
7 73,412 65,412 1,073,412 75,453 67,453 1,075,453
8 84,592 77,592 1,084,593 87,547 80,547 1,087,547
9 95,736 89,736 1,095,736 99,907 93,907 1,099,908
10 106,721 101,721 1,106,722 112,494 107,494 1,112,495
11 117,411 113,411 1,117,411 126,334 122,334 1,126,334
12 127,650 124,650 1,127,650 140,447 137,447 1,140,448
13 137,278 135,278 1,137,279 154,802 152,802 1,154,802
14 146,088 145,088 1,146,088 169,349 168,349 1,169,350
15 153,834 153,834 1,153,835 184,031 184,031 1,184,032
16 160,187 160,187 1,160,188 198,802 198,802 1,198,803
17 164,714 164,714 1,164,714 213,561 213,561 1,213,561
18 166,855 166,855 1,166,856 228,174 228,174 1,228,174
19 165,946 165,946 1,165,946 242,413 242,413 1,242,413
20 161,252 161,252 1,161,253 256,166 256,166 1,256,167
AGE
80 57,811 57,811 1,057,812 327,121 327,121 1,327,121
85 0 0 1,000,000 311,093 311,093 1,311,094
90 0 0 1,000,000 94,354 94,354 1,094,355
**
</TABLE>
(1) Assumes a $11,140.00 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.
** Policy terminates prior to age 95.
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-7
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$11,140.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
----------------------------------------------- ----------------------------------------------
Accumulation Cash Surrender Death Accumulation Cash Surrender Death
Policy Value Value Benefit Value Value Benefit
Year (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
- -------- -------------- ---------------- ----------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 10,295 295 1,010,296 10,354 354 1,010,354
2 21,518 11,518 1,021,519 21,675 11,675 1,021,675
3 33,736 23,736 1,033,737 34,057 24,057 1,034,057
4 47,018 37,018 1,047,019 47,596 37,596 1,047,597
5 61,435 51,435 1,061,435 62,400 52,400 1,062,401
6 77,052 68,052 1,077,053 78,585 69,585 1,078,586
7 93,930 85,930 1,093,930 96,259 88,259 1,096,259
8 112,111 105,111 1,112,112 115,531 108,531 1,115,531
9 131,623 125,623 1,131,624 136,516 130,516 1,136,517
10 152,478 147,478 1,152,479 159,338 154,338 1,159,339
11 174,678 170,678 1,174,679 185,599 181,599 1,185,599
12 198,217 195,217 1,198,217 214,312 211,312 1,214,312
13 223,084 221,084 1,223,085 245,699 243,699 1,245,699
14 249,232 248,232 1,249,232 279,991 278,991 1,279,991
15 276,573 276,573 1,276,573 317,437 317,437 1,317,437
16 304,939 304,939 1,304,939 358,329 358,329 1,358,329
17 334,050 334,050 1,334,051 402,936 402,936 1,402,936
18 363,489 363,489 1,363,490 451,530 451,530 1,451,531
19 392,711 392,711 1,392,711 504,321 504,321 1,504,322
20 421,072 421,072 1,421,073 561,674 561,674 1,561,674
AGE
80 528,121 528,121 1,528,122 949,440 949,440 1,949,440
85 445,010 445,010 1,445,011 1,480,738 1,480,738 2,480,739
90 0 0 1,000,000 2,150,938 2,150,938 3,150,938
95 0 0 1,000,000 2,960,520 2,960,520 3,960,520
100 0 0 1,000,000 3,926,791 3,926,791 4,926,791
</TABLE>
(1) Assumes a $11,140.00 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.
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-8
<PAGE>
APPENDIX D
Monthly Amount Charge
Per $1,000 of Face Amount
<TABLE>
<CAPTION>
Average Age of Monthly Amount Charge Average Age of Monthly Amount Charge Per
Joint Insureds Per $1,000 of Face Amount Joint Insureds $1,000 of Face Amount
- ---------------- --------------------------- ---------------- --------------------------
<S> <C> <C> <C>
0-26 $ 0.045 56 0.134
27 0.046 57 0.143
28 0.046 58 0.153
29 0.047 59 0.162
30 0.048 60 0.172
31 0.049 61 0.183
32 0.050 62 0.193
33 0.051 63 0.204
34 0.053 64 0.214
35 0.055 65 0.225
36 0.057 66 0.238
37 0.059 67 0.253
38 0.061 68 0.271
39 0.063 69 0.292
40 0.065 70 0.316
41 0.067 71 0.345
42 0.069 72 0.379
43 0.071 73 0.418
44 0.073 74 0.465
45 0.075 75 0.520
46 0.077 76 0.579
47 0.080 77 0.642
48 0.083 78 0.710
49 0.087 79 0.781
50 0.092 80 0.855
51 0.097 81 0.934
52 0.102 82 1.014
53 0.109 83 1.098
54 0.116 84 1.183
55 0.125 85 1.270
</TABLE>
D-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, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
"REASONABLENESS" REPRESENTATION PURSUANT TO 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Depositor represents that 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 Life Insurance Company of New York.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has duly
caused this Post-Effective Amendment No. 1 to this Registration Statement to be
signed on its behalf, in the City of Minneapolis, and State of Minnesota, on
the 5th day of April, 1999.
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I
(Registrant)
By: RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
By: /S/ ROBERT C. SALIPANTE
---------------------------------------------
Robert C. Salipante
Chief Executive Officer and President
As required by the Securities Act of 1933, Depositor has caused this
Post-Effective Amendment No. 1 to this Registration Statement to be signed on
its behalf, in the City of Minneapolis and State of Minnesota, on this 5th day
of April, 1999.
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
By: /S/ ROBERT C. SALIPANTE
---------------------------------------------
Robert C. Salipante
Chief Executive Officer and President
As required by the Securities Act of 1933, this Post-Effective Amendment No. 1
to this Registration Statement has been signed on this 5th day of April, 1999
by the following directors and officers of Depositor in the capacities
indicated:
/S/ ROBERT C. SALIPANTE Chief Executive Officer and President
-----------------------------
Robert C. Salipante
/S/ JAMES R. MILLER Vice President (Chief Financial Officer)
-----------------------------
James R. Miller
Stephen A. Carb Wayne R. Huneke Robert C. Salipante
R. Michael Conley Mark S. Jordahl John G. Turner
Richard R. Crowl Kenneth U. Kuk Charles B. Updike
John H. Flittie James R. Miller Ross M. Weale
Ambassador Ulric Haynes, Jr. Fioravante G. Perrotta
*Jeffrey A. Proulx, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named directors of ReliaStar Life Insurance
Company of New York pursuant to powers of attorney duly executed by such
persons.
/S/ JEFFREY A. PROULX
---------------------------------------------
Jeffrey A. Proulx, 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 92 pages. 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. Jeffrey A. Proulx - Filed as part of EX-99.2.
2. Steve P. West, FSA, MAAA - Filed as part of EX-99.C6.
3. Auditors' Consent - Filed as part of EX-99.C1
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)(a) Resolution of Board of Directors of ReliaStar Life Insurance
Company of New York ("RLICNY") establishing the RLICNY Variable
Life Separate Account I.(1)
(b) Resolution of Board of Directors of RLICNY changing the name of
RLICNY Separate Account I.(4)
(2) Not applicable.
(3)(a) Form of General Distributor Agreement between Washington Square
Securities Inc. and RLICNY.(2)
(b) Specimens of WSSI Selling Agreements.(3)
(4) Not applicable.
(5) Form of Policy available (together with available Policy riders).
Filed as part of EX-99.A5.
(6)(a) Amended Charter of RLICNY.(4)
(b) Amended Bylaws of RLICNY.(4)
(7) Not applicable.
(8)(a) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and Amendment
No. 1.(1)
(b) Form of Amendment Nos. 2 and 3 to Participation Agreement with
Fidelity's Variable Insurance Products Fund and Fidelity
Distributors Corporation.(4)
(c) Form of Amendment No. 4 to Participation Agreement among
Depositor and Fidelity's Variable Insurance Products Fund and
Fidelity Distributors Corporation.(5)
(d) Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation and Form
of Amendment No. 1.(1)
(e) Form of Amendment No. 4 to Participation Agreement among
Depositor and Fidelity's Variable Insurance Products Fund II
and Fidelity Distributors Corporation.(5)
(f) Form of Amendment Nos. 2 and 3 to Participation Agreement with
Fidelity's Variable Insurance Products Fund II and Fidelity
Distributors Corporation.(4)
(g) Form of Service Contract with Fidelity Distributors
Corporation.(2)
II-1
<PAGE>
(h) Form of Service Agreement with Fidelity Investments Institutional
Operations Company, Inc.(2)
(i) Form of Participation Agreement with Putnam Variable Trust
(formerly known as Putnam Capital Manager Trust) and Putnam
Mutual Funds Corp.(2)
(j) Form of Amendment No. 1 to Participation Agreement with Putnam
Variable Trust and Putnam Mutual Funds Corp.(4)
(k) Form of Amendment No. 2 to Participation Agreement among
Depositor and Putnam Variable Trust and Putnam Mutual Funds
Corp.(5)
(l) Form of Management Services Agreement with ReliaStar Life
Insurance Company.(1)
(m) Form of Amendment No. 1 to Participation Agreement by and between
Depositor and Fred Alger Management, Inc.(5)
(n) Form of Participation Agreement by and between RLICNY and Fred
Alger Management, Inc.(3)
(o) Form of Participation Agreement by and between RLICNY and Janus
Aspen Series.(3)
(p) Form of Amendment No. 1 to Participation Agreement by and between
Depositor and Janus Aspen Series.(5)
(q) Form of Participation Agreement by and between RLICNY,
Neuberger Berman Advisers Management Trust, Advisers Managers
Trust and NBMI.(3)
(r) Form of Amendment No. 1 to Participation Agreement by and among
Depositor, Neuberger Berman Advisers Management Trust, Advisers
Managers Trust and Neuberger Berman Management, Inc.(5)
(s) Form of Participation Agreement by and between RLICNY and OpCap
Advisors.(3)
(t) Amendment No. 1 to Participation Agreement by and between
Depositor and OpCap Advisors.(5)
(u) Form of Service Agreement by and RLICNY and Fred Alger
Management, Inc.(3)
(v) Form of Service Agreement by and between RLICNY and Janus Capital
Corporation.(3)
(w) Form of Service Agreement by and between RLICNY and
Neuberger Berman Management Incorporated ("NBMI").(3)
(x) Form of Service Agreement by and between RLICNY and OpCap
Advisors.(3)
(y) Form of Management Services Agreement with ReliaStar Life
Insurance Company.(1)
(9) Not applicable.
(10) Policy application.(4)
2. Opinion and Consent of Jeffrey A. Proulx, Esquire, as to the legality of
the Securities being registered. Filed as part of EX-99.2.
3. Not applicable.
4. Not applicable.
EX-99.C1 Auditors' Consent.
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 RLICNY's issuance, transfer and redemption
procedures for the Policies and RLICNY's procedure for conversion
to a fixed benefit policy.(4)
EX-24. Powers of Attorney.
Stephen A. Carb(4)
R. Michael Conley(4)
Richard R. Crowl(4)
John H. Flittie(4)
Ambassador Ulric Haynes, Jr.(5)
Wayne R. Huneke(4)
Mark S. Jordahl(5)
II-2
<PAGE>
Kenneth U. Kuk(4)
James R. Miller(5)
Fioravante G. Perrotta(4)
Robert C. Salipante(4)
John G. Turner(4)
Charles B. Updike(4)
Ross M. Weale(4)
- --------------------------
(1) Incorporated by reference to Registrant's Form S-6 Registration Statement,
File No. 333-19123, filed December 31, 1996.
(2) Incorporated by reference to Registrant's Form S-6 Registration Statement,
File No. 333-19123, filed May 9, 1997.
(3) Incorporated by reference to Registrant's Form S-6 Registration Statement,
File No. 333-19123, filed August 1, 1997.
(4) Incorporated by reference to Registrant's Form S-6 Registration Statement,
File No. 333-47527, filed March 6, 1998.
(5) Incorporated by reference to Registrant's Form 485BPOS, File No. 333-19123,
filed on April 9, 1999.
- ---------------------------
II-3
<PAGE>
INDEX TO EXHIBITS
1. EX-99.A.5. Form of Policy available (together with available
Policy riders)
2. EX-99.C1. Auditors' Consent
3. EX.99-C6. Actuarial Opinion and Consent
4. EX-99.2. Opinion and Consent of Jeffrey A. Proulx, Esquire, as
to the legality of the Securities being registered.
SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE
INSURANCE POLICY
- -------------------------------------------------
Variable and/or Fixed
Accumulation Values
Flexible Premiums Payable During
Lifetime of Surviving Joint Insured
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 don't 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 10th day after you receive it.
We will then consider this policy void from the start and refund all premiums
you paid.
The Death Benefit is payable on the death of the Surviving Joint Insured. 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 Surviving Joint Insured
died while this policy was in force. However, you must give us written proof of
the first death of a Joint Insured as soon as it occurs. 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 SURVIVING JOINT INSURED'S DEATH PRIOR
TO AGE 100 OF THE YOUNGER JOINT INSURED 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
<PAGE>
INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNT.
RELIASTAR RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK Executed at our Home
Office
P.O. Box 9004 John H. Flittie President
1000 Woodbury Road, Suite 102 /s/ John H. Flittie
Woodbury, NY 11797-9004
Susan M. Bergen Secretary
/s/ Susan M. Bergen
Page 1 85-438
<PAGE>
INDEX
PAGE
Accumulation Value 10
Age and Sex 27
Allocation of Premiums 8
Amendment 29
Annual Statement 28
Beneficiary 20
Cash Surrender Value 17
Cash Value 17
Changes in Face Amount 6
Changes in Death Benefit Option 7
Claims 30
Contract 3
Control of Policy 20
Conversion Right 27
Death Benefit 5
Definitions 3
Death Benefit Guarantee 9
Fixed Accumulation Value 10
General Provisions 25
Grace Period 9
Incontestability 27
Insureds 1
Monthly Deduction 12
Net Premium 7
Nonforfeiture Provision 14
Ownership 20
Partial Withdrawal 17
Payment of Proceeds 26
Policy Data Page A
Policy Loans 18
Premiums 7
Reinstatement 9
Right to Return Policy 1
Settlement Options 21
Suicide 27
<PAGE>
Summary of Benefits 3
Termination 27
Total Surrender 17
Transfers 14
Variable Accumulation Value 11
Voting of Mutual Fund Shares 25
Additional benefits and restrictions, if any, are listed on the Policy Data
Page.
<TABLE>
Page 2 5391
<S> <C> <C>
INFORMATION OWNER John Doe
---------------------------------- -------------------------------
POLICY DATE January 1, 1998
ISSUE DATE January 1, 1998
EFFECTIVE DATE January 1, 1998
---------------------------------- -------------------------------
JOINT INSURED James Doe
SEX, ISSUE AGE Male, 35
RATE CLASS, RATING FACTOR Preferred No Tobacco, 100%
---------------------------------- -------------------------------
JOINT INSURED Jane Doe
SEX, ISSUE AGE Female, 35
RATE CLASS, RATING FACTOR Preferred No Tobacco, 100%
- ---------------------------- ---------------------------------- -------------------------------
DEATH BENEFITS INITIAL FACE AMOUNT $250,000
CURRENT FACE AMOUNT $250,000
MINIMUM FACE AMOUNT $250,000
DEATH BENEFIT OPTION Level Amount Option (A)
---------------------------------- -------------------------------
CORRIDOR PERCENTAGE TABLE
Attained Corridor Attained Corridor
Age Percent Age Percent
0-40 250% 65 120
45 215 70 115
50 185 75-90 105
55 150 95-100 100
60 130
For ages not listed, the progression of
percentages is linear between listed ages.
- ---------------------------- ---------------------------------- -------------------------------
PREMIUMS INITIAL PREMIUM $1,500.00
PLANNED PREMIUM AMOUNT $1,500.00
PLANNED PREMIUM FREQUENCY Annual
MINIMUM MONTHLY PREMIUM $103.45
DEATH BENEFIT GUARANTEE PERIOD 47 Years
-----------------------------------------------------------------------------------------------
PREMIUM ALLOCATION
64% Fixed Account
3% Fidelity Contrafund Portfolio (FCF) 3% NorthStar Multi-Sector Bond Fund
(NMS)
3% Fidelity Equity Income Portfolio (FEI) 3% NorthStar Income and Growth Fund
(NIG)
3% Fidelity Growth Portfolio (FGP) 3% Putnam VT Diversified Income (PDI)
3% Fidelity High Income Portfolio (FHI) 3% Putnam VT Growth and Income (PGI)
3% Fidelity Index 500 Portfolio (FIN) 3% Putnam VT Voyager (PVY)
3% Fidelity Investment Grade Bond Portfolio (FIG)
3% Fidelity Money Market Portfolio (FMM)
</TABLE>
<PAGE>
We reserve the right to limit your participation to a total of seventeen
Sub-Accounts over the lifetime of your Policy. Upon participation in the
seventeenth Sub-Account, you would be able to allocate premiums to and
transfer within the seventeen Sub-Accounts already used and which are still
available, but could not participate in any other Sub-Accounts.
<PAGE>
<TABLE>
<S> <C> <C>
FIXED ACCOUNT INTEREST MINIMUM ANNUAL INTEREST RATE 4.00%
RATES MINIMUM MONTHLY INTEREST RATE 0.327374%
LOAN INTEREST RATE 5.66% payable in advance
PREFERRED LOAN INTEREST RATE 3.85% payable in advance
- ---------------------------- ------------------------------------------------------------------
DEDUCTIONS AND PREMIUM EXPENSE CHARGE
CHARGES MAXIMUM PERCENT PREMIUM CHARGE 6.25% Years 1-10
3.75% Years 11+
MAXIMUM PREMIUM Zero
PROCESSING CHARGE
------------------------------------------------------------------
MONTHLY EXPENSE CHARGE
MAXIMUM MONTHLY $10.00 per month
ADMINISTRATIVE CHARGE
DEATH BENEFIT GUARANTEE CHARGE Zero
MONTHLY POLICY CHARGE Zero
MONTHLY AMOUNT CHARGE PER $1,000 $.055
TERM 20 Years
MAXIMUM MORTALITY AND 1.20% Years 1-10
EXPENSE RISK CHARGE 0.55% Years 11+
The Mortality and Expense Risk Charge rate in years 11 and
later will be 0.65% lower than the Mortality and Expense Risk
Charge rate concurrently being charged in years 1 through 10
on policies that have the same Mortality and
Expense Risk Charge rate structure.
------------------------------------------------------------------
TABLE OF SURRENDER CHARGES
0 $2,125.00
1 $2,125.00 6 $1,912.50 11 $850.00
2 $2,125.00 7 $1,700.00 12 $637.50
3 $2,125.00 8 $1,487.50 13 $425.00
4 $2,125.00 9 $1,275.00 14 $212.50
5 $2,125.00 10 $1,062.50 15 $0.00
Surrender Charges grade uniformly by policy month
between the consecutive years shown above.
- ---------------------------- ------------------------------------------------------------------
NONFORFEITURE ITEMS MORTALITY
1980 COMMISSIONER'S STANDARD ORDINARY MORTALITY TABLE FOR
NONSMOKERS,
AGE LAST BIRTHDAY, MALES
1980 COMMISSIONER'S STANDARD ORDINARY MORTALITY TABLE FOR
NONSMOKERS,
AGE LAST BIRTHDAY, FEMALES
------------------------------------ -----------------------------
GUARANTEED INTEREST RATE ON 4.00%
FIXED ACCOUNT
PERCENT OF PARTIAL WITHDRAWAL 0% in policy year 1;
20% per policy year in
policy years 2-15;
100% thereafter
</TABLE>
- --------------------------------------------------------------------------------
IMPORTANT NOTICE: IT IS POSSIBLE THAT COVERAGE WILL EXPIRE WHERE EITHER NO
PREMIUMS ARE PAID FOLLOWING THE INITIAL PREMIUM, OR SUBSEQUENT PREMIUMS ARE
INSUFFICIENT TO CONTINUE COVERAGE. THE PERIOD FOR WHICH THE POLICY AND COVERAGE
WILL CONTINUE IN FORCE WILL DEPEND ON: (1) THE AMOUNT, TIMING, AND FREQUENCY OF
PREMIUM PAYMENTS; (2) CHANGES IN THE FACE AMOUNT AND THE DEATH BENEFIT OPTION;
(3) CHANGE IN INTEREST RATES CREDITED TO THE FIXED ACCOUNT AND IN THE INVESTMENT
PERFORMANCE OF THE SUB-ACCOUNTS; (4) CHANGES IN THE MONHTLY COST OF INSURANCE
DEDUCTIONS FROM THE ACCUMULATION VALUE OF THIS THIS POLICY AND ANY BENEFITS
PROVIDED BY RIDERS TO THIS POLICY; AND (5) LOAN AND PARTIAL WITHDRAWAL ACTIVITY.
ADDITIONAL AMOUNTS ARE NOT GUARANTEED AND WE HAVE THE RIGHT TO CHANGE THE AMOUNT
OF INTEREST CREDITED TO
<PAGE>
THE POLICY AND THE AMOUNT OF COST OF INSURANCE OR OTHER EXPENSE CHARGES DEDUCTED
FUNDER THE POLICY WHICH MAY REQUIRE MORE PREMIUM TO BE PAID THAN WAS ILLUSTRATED
OR THE CASH VALUES MAY BE LESS THAN THOSE ILLUSTRATED.
- --------------------------------------------------------------------------------
<PAGE>
OPTIONAL BENEFITS
<TABLE>
- --------------------------------------------------------------------------------------
<S> <C> <C>
POLICY SPLIT OPTION RIDER RIDER EFFECTIVE DATE January 1, 1998
(PSO) RIDER ISSUE DATE January 1, 1998
RIDER EXPIRY DATE January 1, 2043
COST OF INSURANCE None
- --------------------------------------------------------------------------------------
FOUR YEAR SURVIVORSHIP RIDER EFFECTIVE DATE January 1, 1998
TERM RIDER (FTR) RIDER ISSUE DATE January 1, 1998
RIDER EXPIRY DATE January 1, 2002
FTR FACE AMOUNT $250,000
COST OF INSURANCE RATE See Table of Monthly
Guaranteed COI Rates
MONTHLY AMOUNT CHARGE PER $1,000 $.010
- --------------------------------------------------------------------------------------
SURVIVORSHIP TERM RIDER RIDER EFFECTIVE DATE January 1, 1998
(STR) RIDER ISSUE DATE January 1, 1998
RIDER EXPIRY DATE January 1, 2063
STR FACE AMOUNT $250,000
COST OF INSURANCE RATE See Table of Monthly
Guaranteed COI Rates
MONTHLY AMOUNT CHARGE PER $1,000 $.010
TERM 20 Years
</TABLE>
<PAGE>
TABLE OF MONTHLY GUARANTEED COST OF INSURANCE RATES
FOR
BASE POLICY
FOUR YEAR TERM RIDER (FTR)
SURVIVORSHIP TERM RIDER (STR)
<TABLE>
<S> <C> <C> <C> <C> <C>
JOINT RATE JOINT RATE JOINT RATE
INSURED PER INSURED PER INSURED PER
AGES $1,000 AGES $1,000 AGES $1,000
----- ------ ---- ------ ---- ------
35/35 0.001 65/65 0.439 95/95 34.247
36/36 0.001 66/66 0.521 96/96 41.323
37/37 0.001 67/67 0.614 97/97 53.491
38/38 0.002 68/68 0.721 98/98 73.327
39/39 0.003 69/69 0.845 99/99 83.333
40/40 0.004 70/70 0.993 Thereafter 0.000
41/41 0.005 71/71 1.173
42/42 0.007 72/72 1.393
43/43 0.008 73/73 1.660
44/44 0.010 74/74 1.977
45/45 0.013 75/75 2.344
46/46 0.015 76/76 2.761
47/47 0.019 77/77 3.229
48/48 0.023 78/78 3.752
49/49 0.027 79/79 4.345
50/50 0.032 80/80 5.027
51/51 0.039 81/81 5.818
52/52 0.047 82/82 6.739
53/53 0.056 83/83 7.795
54/54 0.067 84/84 8.980
55/55 0.080 85/85 10.280
56/56 0.095 86/86 11.688
57/57 0.112 87/87 13.193
58/58 0.132 88/88 14.794
59/59 0.155 89/89 16.503
60/60 0.183 90/90 18.337
61/61 0.216 91/91 20.340
62/62 0.257 92/92 22.592
63/63 0.307 93/93 25.283
64/64 0.368 94/94 28.854
</TABLE>
The above Monthly Guaranteed Cost of Insurance Rates reflect the Rate Class and
Rating Factor of each Joint Insured, as well as any applicable flat extra
mortality ratings. This Table applies to the Face Amount with an effective date
of January 1, 1998.
<PAGE>
BASE POLICY
TABLE OF MONTHLY AMOUNT CHARGES PER $1,000 INCREASE IN FACE AMOUNT
<TABLE>
<S> <C> <C> <C>
AVERAGE OF RATE AVERAGE OF RATE
JOINT INSURED PER JOINT INSURED PER
AGES $1,000 AGES $1,000
- - ---- ------ ---- ------
35 0.055 65 0.225
36 0.057 66 0.238
37 0.059 67 0.253
38 0.061 68 0.271
39 0.063 69 0.292
40 0.065 70 0.316
41 0.067 71 0.345
42 0.069 72 0.379
43 0.071 73 0.418
44 0.073 74 0.465
45 0.075 75 0.520
46 0.077 76 0.579
47 0.080 77 0.642
48 0.083 78 0.710
49 0.087 79 0.781
50 0.092 80 0.855
51 0.097 81 0.934
52 0.102 82 1.014
53 0.109 83 1.098
54 0.116 84 1.183
55 0.125 85 1.270
56 0.134
57 0.143
58 0.153
59 0.162
60 0.172
61 0.183
62 0.193
63 0.204
64 0.214
</TABLE>
An Additional Monthly Amount Charge will apply to any approved increase in the
Face Amount of the policy. The Additional Monthly Amount Charge is equal to the
Monthly Amount Charge per $1,000 from the above table, multiplied by the amount
of the increase in Face Amount, and divided by $1,000. This charge is based on
the average age (rounded to the higher age) of the Joint Insureds on the
effective date of any requested increase in Face Amount and will apply for 20
years from that date.
SURRENDER CHARGE ON INCREASE IN FACE AMOUNT
An Additional Surrender Charge will also apply to any approved increase in the
Face Amount of the policy. The maximum Additional Surrender Charge is equal to
$8.50 multiplied by the amount of the increase in Face Amount divided by $1,000.
The Additional Surrender Charge is level 60 months after the increase date,
after which it decreases uniformly each policy month to zero at the end of the
180th month following the increase date.
<PAGE>
Summary of Benefits
Living Benefits
While any Joint Insured is alive, subject to this policy's provisions, you may:
Change the amount and frequency of your premium payments; Change the allocation
of your premiums; Make transfers between accounts; Surrender this policy for its
Cash Surrender Value; Make a Partial Withdrawal; Take a Policy Loan; Assign this
policy as collateral; Change the beneficiary; Transfer ownership; and Exercise
any other rights this policy provides.
While both Joint Insureds are alive, subject to this policy's provisions, you
may:
Change the Face Amount; and
Change the Death Benefit Option.
Death Benefits
At the Surviving Joint 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 Death Benefit Option in effect is shown on the Policy Data Page. All values
are determined as of the Valuation Date on or next following the date of the
Surviving Joint Insured's death. The Death Benefit after the younger Joint
Insured reaches age 100 is the Accumulation Value.
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.
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
<PAGE>
This policy is in effect.
Joint Insureds
The persons upon whose lives this policy is issued. The Policy Data Page lists
the Joint Insureds.
Surviving Joint Insured
The Joint Insured who remains alive after the other Joint Insured dies.
Proceeds
The amount we pay when the Surviving Joint Insured dies or when this policy is
surrendered.
We, Us, Our
ReliaStar Life Insurance Company of New York at our Home Office in Woodbury, New
York.
85-439
Page 3
General Definitions
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 Joint Insureds own this policy as joint tenants with
right of surviviorship, unless another owner is named. During the lifetime of
the Joint Insureds, if owners, we reserve the right to require both Joint
Insured's to sign any request to exercise rights under this policy.
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.
Average Age
The sum of the ages of the Joint Insureds divided by two, rounded to the higher
age.
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.
<PAGE>
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.
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.
5392
Page 4
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 Life Insurance Company of New York 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 Options
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 Surviving Joint
Insured's death. The two Death Benefit Options are:
<PAGE>
Option A (Level Amount Option)
The Death Benefit prior to age 100 of the younger Joint Insured is the greater
of:
The Face Amount; or
The Accumulation Value multiplied by the Corridor Percentage, as shown on the
Policy Data Page, according to the younger Joint Insured's attained age.
Option B (Variable Amount Option)
The Death Benefit prior to Age 100 of the younger Joint Insured is the greater
of:
The Face Amount plus the Accumulation Value; or
The Accumulation Value multiplied by the Corridor Percentage, as shown on the
Policy Data Page, according to the younger Joint Insured's attained age.
85-440
Page 5
Requested Changes in Face Amount
After the fourth 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 DeathBenefit Option.)
Increases
Increases in Face Amount must be at least $5,000. You cannot increase the Face
Amount after any Joint Insured's age exceeds age 85.
We may require written proof that each Joint 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.
Decreases
You cannot decrease the Face Amount below the Minimum Face Amount shown on the
Policy Data Page. You cannot decrease the Face Amount if any Survivorship Term
Rider (STR) is attached. 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 lapse 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:
The Face Amount provided by the most recent increase; The next most recent
increases successively; and
The Initial Face Amount.
5393
Page 6
Requested Changes in Face Amount
<PAGE>
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.
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.
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:
Is the premium multiplied by the Percent of Premium Charge shown on the Policy
Data Page; and 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.
<PAGE>
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.
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Premiums
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%. We reserve the right to adjust your allocations to
eliminate fractional percentages.
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:
We may require proof which satisfies us that each Joint Insured is still
insurable if any premium, planned or unscheduled, would increase the difference
between the Death Benefit and the Accumulation Value;
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 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;
We may refuse to accept any premium less than $25; and
We will not accept premium payments after age 100 of the younger Joint Insured.
You may pay premiums by sending them to the address shown below. Please include
your policy number. The current address for payment is:
ReliaStar Life Insurance Company of New York
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.
<PAGE>
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 in planned periodic premiums if such
increase would result in planned periodic premiums that are larger than either
of 1 or 2, where:
Is the maximum premium we would accept under the terms of the Amount and Timing
of Premium Payments provision; and
Is a planned periodic premium which would total more than $50,000 per year.
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. We may
limit the number and amount of these additional payments. (See "Amount and
Timing of Premium Payments" above.)
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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:
Is the sum of all premiums paid minus any partial withdrawals and any Loan
Amount; and 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.
If, on any Monthly Anniversary you have not paid sufficient premiums 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 and the Death Benefit
Guarantee Period
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 and Death Benefit Guarantee
Period will be shown on a new Policy Data Page and applies from the date of the
change.
Grace Period and Policy Lapse
If on any Monthly Anniversary the Death Benefit Guarantee is not in effect and
the Cash Surrender Value is less than the Monthly Deduction due, within 30 days
we will send you written notice of the payment required to keep this policy in
force.
<PAGE>
If we do not receive sufficient premium from you within 61 days from the date we
send written notice to you, this policy will lapse. Sufficient premium is any
premium such that the Net Premium is larger than the sum of 1 plus 2, (1 + 2),
where:
Is the amount by which the Accumulation Value is less than the Surrender Charge
as of the beginning of the grace period; and 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 Surviving Joint 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,
as long as it has not been surrendered 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:
Submit proof which satisfies us that each Joint Insured, or Surviving Joint
Insured, is still insurable. You must also submit due proof that any Joint
Insured not living when you apply for reinstatement died while the policy was in
force.
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.
This policy will be reinstated only as of a Monthly Anniversary. If you have met
the above conditions, and the Surviving Joint 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 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.
The Surrender Charges will also be reinstated.
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 Death Benefit Guarantee cannot be reinstated.
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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
<PAGE>
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:
Is the Fixed Accumulation Value on the preceding Monthly Anniversary, plus
interest from the Monthly Anniversary to the date of the calculation;
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;
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;
Is the total of your Loan Amount transferred from the Variable Account since the
preceding Monthly Anniversary;
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
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. We will credit interest no less frequently than annually.
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. Any interest is nonforfeitable, except as it is subject to the deductions
and charges, including Surrender Charges, stated elsewhere in this policy.
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.
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Page 10
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, (1 x 2), where:
Is your current number of Accumulation Units; and
Is the current Unit Value.
<PAGE>
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:
Net Premiums are credited to that Sub-account; or
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:
You take out a Policy Loan from that Sub-account;
You take a partial withdrawal from that Sub-account;
We take a portion of the Monthly Deduction from that Sub-account; or
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.
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Accumulation Value
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:
Is the result of:
<PAGE>
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;
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
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.
Is the result of:
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
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.
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:
Is the cost of insurance for this policy for the policy month; Is the Monthly
Expense Charge for the policy month;
Is the Monthly Expense Charge for the policy month;
Is the cost of any rider benefits, other than any Waiver of Monthly Deduction
rider, for the policy month;
Is the Monthly Mortality and Expense Risk Charge for the policy month; and
Is the cost of any Waiver of Monthly Deduction rider for the policy month.
The Monthly Deduction is deducted from the Fixed Accumulation Value and the
Variable Accumulation Value as of the Monthly Anniversary. The amount of the
Monthly Deduction we deduct from the Fixed Accumulation Value is 1 multiplied by
2 divided by 3, ((1 x 2) / 3)), where:
Is the cost of any riders benefits plus the cost of insurance for this policy
plus the Monthly Expense Charge, for the policy month;
Is the Fixed Accumulation Value minus the Loan Amount; and
Is the Accumulation Value minus the Loan Amount.
The remainder of the Monthly Deduction is deducted from the Variable
Accumulation Value. The portion of the Monthly Deduction we deduct from each
Sub-account of the Variable Accumulation Value is the amount of Monthly
Deduction deducted from the Variable Accumulation Value times the ratio of the
value of each Sub-account to the Variable Accumulation Value.
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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:
Is the cost of insurance rate as described in the Cost of Insurance Rates
provision of this policy;
Is the Death Benefit at the beginning of the policy month, divided by the sum of
1.000000 plus the Minimum Monthly Interest Rate shown on the Policy Data Page;
and
Is the Accumulation Value immediately before the Monthly Deduction, for the
policy 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
first be considered a part of the Initial Face Amount. If the Accumulation Value
on the Monthly Anniversary
<PAGE>
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 each Joint
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 when one or both Joint Insureds
are in a rated Rate Class, the cost of insurance charges 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 (CSO) Tables shown on
the Policy Data Page. For Face Amounts where one or both Joint Insureds are in a
rated Rate Class, the guaranteed cost of insurance rates are calculated based on
appropriate adjustments to the appropriate CSO tables. The rates may also be
increased by any extra cost of insurance shown on the Policy Data Page for
either or both Joint Insureds.
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:
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. The Monthly Administrative Charge will not exceed
the product of $5.00 and the ratio(not to exceed 2.00) of a to b, where:
Is the Consumer Price Index (for all urban households) for the preceding
September; and
Is the Consumer Price Index for September 1985.
Is the Death Benefit Guarantee Charge and the Term shown on the Policy Data
Page;
Is the Monthly Policy Charge. This charge and the Term during which it is
applied are shown on the Policy Data Page; and
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 during the
Term shown on the Policy Data Page. An Additional Monthly Amount Charge Per
$1,000 will apply to any approved increase in Face Amount. We will send you
written notice of the amount and Term of the Additional Monthly Amount Charge.
Any change in Face Amount due solely to a change of Death Benefit Option does
not affect the charge.
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Monthly Deduction
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:
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
<PAGE>
Is the Variable Accumulation Value before the Monthly Deduction, minus the
portion which was taken from the Variable Account for each of the following
deductions:
The Cost of Insurance for the policy month;
The cost of any rider benefits, other than any Waiver of Monthly Deduction
rider, for the policy month;
The Monthly Expense Charge for the policy month.
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.
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.
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.
Paid-up Life Insurance
Any time before the oldest Joint Insured's age 100, you may use the Cash
Surrender Value to purchase single premium paid-up life insurance.
Any paid-up life insurance purchased under the terms of this policy will not be
larger than the sum of the Cash Value of the paid-up life insurance, plus the
Death Benefit of the policy, minus the Accumulation Value of the policy. Any
Cash Surrender Value not used to purchase paid-up life insurance will be paid to
you in cash.
Noforfeiture Provisions (continued)
We base the single premium for paid-up insurance on both the Joint Insureds'
sex, age, and rate class(es) at the time this option is exercised, and the
single premium life insurance rates in effect at that time. These rates may
not exceed the net single premium rates based on the Commissioners Standard
Ordinary Mortality (CSO) Table and the Non-forfeiture Interest Rate, both of
which are shown on the Policy Data Page. The Cash Value of the paid-up life
insurance is also calculated based on the CSO Table and Non-forfeiture Interest
Rate.
To purchase paid-up life insurance, we transfer the Cash Surrender Value of this
policy to the Fixed Account.
If this policy is in force as paid-up life insurance:
1. The Accumulation Value provision of this policy no longer applies;
2. You cannot pay additional premiums;
3. You cannot make partial withdrawals; and
4. We do not make any further Monthly Deductions.
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
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 do not make a charge for the first 12 transfers in a policy year. However, we
may make a charge for each transfer in excess of the first 12 transfers in a
policy year, but the charge may not exceed $25.00. We reserve the right to limit
the number of transfers to 12 per year. All transfers are also subject to any
charges and conditions imposed by the mutual fund whose shares are involved.
5397
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<PAGE>
Transfers
Transfers from the Fixed Account
To transfer all or part of your Fixed Accumulation Value, you must meet the
following conditions:
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;
The Fixed Accumulation Value after the transfer must be at least equal to the
Loan Amount;
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
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. 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 you have requested the Portfolio
Rebalancing Service, or you are transferring all of the Variable Accumulation
Value from the Variable Account to the Fixed Account in exercise of conversion
rights.
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Transfers
Dollar Cost Averaging Service
You may request this service if your Face Amount is at
least $100,000 and either your Accumulation Value, less any Loan Amount, is at
least $5,000 or your initial premium is at least $5,000. If you request this
service in writing, we will 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. We make no guarantees that Dollar Cost Averaging
will result in a profit or protect against loss.
The Dollar Cost Averaging service will be discontinued immediately:
If you make a written request to discontinue this service;
On receipt of any request to begin a Portfolio Rebalancing service;
If the policy is in the grace period on any date when Dollar Cost Averaging
transfers are scheduled;
If the specified transfer amount from any Sub-account is more than the
Accumulation Value in that Sub-account; or
<PAGE>
If the specified transfer amount from any Sub-account is more than the
Accumulation Value in that Sub-account; or Thirty-six months after the Dollar
Cost Averaging start date.
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 Accumulation Value, less any Loan Amount,
is at least $10,000. If you request this service in writing, we will 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.
The Portfolio Rebalancing service will be discontinued immediately:
If you make a written request to discontinue this service;
On receipt of any request to change the allocation of premiums to the Fixed
Account and Sub-account of the Variable Account;
On receipt of any request to begin a Dollar Cost Averaging service;
On receipt of any request to transfer Accumulation Value among the Fixed Account
or Sub-accounts;
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 you.
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Cash Value, Cash Surrender Value, Total Surrender, and Partial Withdrawal
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.
<PAGE>
Surrender Charge
We make a Surrender Charge if you surrender this policy or it lapses. The
amount and duration of this charge is shown on the Policy Data Page.
Additional Surrender Charges will apply to any approved increase in Face
Amount. We will send you written notice of the amount and duration of the
additional Surrender Charge.
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.
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.
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Cash Value, Cash Surrender Value, Total Surrender, and Partial Withdrawal
Benefits
<PAGE>
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:
The Face Amount provided by the most recent increase;
The next most recent increases successively; and
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:
Is the Cash Value; and
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. 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.
5398
Page 18
Policy Loans
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.
<PAGE>
Loan Interest
We charge interest on the Loan Amount at the Loan Interest Rate shown on the
Policy Data Page. 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 minus 2 plus 3, ( 1 -
2 + 3 ), where:
Is the Accumulation Value;
Is the sum of all premiums paid; and
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. If, on any Monthly Anniversary, the Loan
Amount exceeds the Cash Value, we will notify you within 30 days. If we do not
receive sufficient payment within 61 days from the date we send notice to you,
this policy will lapse.
Repayment
You may repay all or part of any policy loan during any Joint Insured's
lifetime. If not repaid during the Surviving Joint Insured's lifetime, we deduct
the Loan Amount from the proceeds. We generally consider any payments we
receive, planned or unscheduled, as a premium payment subject to a Premium
Expense Charge. 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 treat a loan payment as a premium payment if doing so will:
Prevent this policy from lapsing; or
Prevent borrowing from this policy to pay premiums.
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:
Is the amount of the loan repayment; and
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
seven days of:
Receipt of your written request; and
Receipt of your policy, if required
<PAGE>
We may delay making the payment when we are 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.
85-446
Page 19
Delay of Payment on Surrender, Partial Withdrawals and Loans
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 10 days or more, we pay interest at the same rate we are
currently paying on proceeds at death from the date of the surrender, partial
withdrawal, or loan request to the date of payment. However, our inability to
determine the Variable Accumulation Value will not delay payments fromthe Fixed
Accumulation Value if both the amount of the Fixed Accumulation Value and the
amount of payment to be paid from the Fixed Accumulation Value can be
determined.
Beneficiary
The beneficiary is named to receive the proceeds to be paid at the Surviving
Joint 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:
This policy is in force;
The Surviving Joint Insured is alive; and
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:
Collateral assignees, if any, have first priority;
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. Unless otherwise provided, to receive proceeds, a
beneficiary must be living on the 10th day after the Surviving Joint Insured's
death; then
If there are no beneficiaries, you receive any proceeds that remain.
Control of Policy
Ownership
<PAGE>
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:
Surrender this policy or make a partial withdrawal;
Take out a policy loan;
Change the owner;
Name or change a contingent owner;
Add or delete a term insurance rider;
Change the Face Amount; or
Change the Death Benefit Option
5399
Page 20
Control of Policy
We need the written consent of all irrevocable beneficiaries, if you wish to:
Change a beneficiary;
Choose or change a Settlement Option; or
Assign this policy or any of its benefits as collateral.
Your rights, as outlined in this policy, end at the Surviving Joint 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:
<PAGE>
Does not change the coverage or the beneficiary;
Applies only if we receive your request;
Takes effect from the date signed;
Does not affect any payment we make or action we take before receiving your
request; and
Is not a collateral assignment.
Settlement Options
Settlement Options are ways of paying the proceeds of this policy. These options
apply to:
Payment of proceeds at death; and
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.
85-447
Page 21
Settlement Options
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 Surviving Joint Insured's death, only you can
choose or withdraw an option. After the Surviving Joint 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.
Paying Proceeds
We pay proceeds to a payee. 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
<PAGE>
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. Interest is guaranteed to be at least 3.5% per year.
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. Interest is guaranteed to be at least
3.5% per year.
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. The Option 3 Table is computed assuming 3.5% interest per year. Interest
is guaranteed to be at least 3.5% per year.
5400
Page 22
Settlement Options
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 sex and age. If you ask, we will tell you payment amounts for this
option. The amount of the installments are computed using the 1983 Table a with
Projection Scale G and interest at 3.5% per year.
85-448
Page 23
Settlement Options
<PAGE>
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. We require written proof of the payees' ages. If you ask, we will tell
you any of these amounts. The amounts of the monthly payments are computed using
the 1983 Table a with Projection Scale G and interest at 3.5% per year.
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.
Under Option 2, we will pay any unpaid sum left with us plus any unpaid interest
on that sum.
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.
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.
5401
Page 24
Settlement Options
Protection of Proceeds
Unless we agree to it, a payee may not do any of the following:
Withdraw any part of the proceeds or interest;
Change the fixed payment intervals or the length of the payment period;
Change the settlement option;
Change the amount of payment;
Surrender the supplemental contract for cash;
Borrow against the supplemental contract; or
<PAGE>
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
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:
The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940; and
The assets of the Variable Account are allocated to Sub-accounts that are
invested in 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.
85-449
Page 25
General Provisions
Substitution of Mutual Fund Shares
We reserve the right, if permitted by law and subject to the approval of the
Superintendent, to:
Create new variable accounts;
Combine variable accounts; Including the ReliaStar Life Insurance Company of
New York Variable Life Separate Account 1;
<PAGE>
Remove, add, or combine Sub-accounts and make the new Sub-accounts available to
you at our discretion;
Substitute shares of other investment funds or series thereof for those of the
investment funds and series made available under the policy;
Transfer assets of the ReliaStar Life Insurance Company of New York 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 Life Insurance Company of New York
Variable Life Separate Account I" as used in this policy will then mean the
variable account to which the assets were transferred);
Deregister the ReliaStar Life Insurance Company of New York Variable Life
Separate Account I under the Investment Company Act, of 1940, if registration is
no longer required;
Make any changes required by the Investment Company Act of 1940;
Operate the ReliaStar Life Insurance Company of New York Variable Life Separate
Account I as a managed company under the Investment Company Act of 1940, or any
other form permitted by law; and
Restrict or eliminate any voting privileges you or other persons may have as to
the ReliaStar Life Insurance Company of New York Variable Life Separate Account
I.
Payment of Proceeds
We pay all proceeds of this policy when we receive this 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 Surviving Joint Insured as follows:
We refund any policy loan interest charged but not earned;
We deduct any Loan Amount; and
We deduct any unpaid Monthly Deductions due on or before the Surviving Joint
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 10 days, we pay interest on
the proceeds at death for the time between the Surviving Joint Insured's death
and the earlier of the following:
The date we pay proceeds; or
The date we issue a supplemental contract.
Interest on these funds will be the current interest rate being credited on the
interest only settlement option (Option I) but it will never be less than an
effective annual rate of 3.5%.
Simultaneous Death
If the Joint Insureds die simultaneously or in circumstances making it uncertain
who is the Surviving Joint Insured, the older Joint Insured will be deemed to
have been the Surviving Joint Insured, and no payment will be made for the death
of the younger Joint Insured.
5402
Page 26
<PAGE>
General Provisions
Incontestability
This policy has a two-year contestable period running from the Issue Date shown
on the Policy Data Page. During this period, we could ask for information that
could lead us to contest this policy or refuse to pay its benefits. After this
policy has been in force during both Joint 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 any Joint 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 any Joint 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 any Joint
Insured commits suicide 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:
The required payment is not paid by the end of the grace period;
The Surviving Joint Insured dies;
The policy is surrendered for its full Cash Surrender Value; or
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.
85-450
Page 27
General Provisions
Conversion Right
<PAGE>
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 without evidence of insurability 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 trasnfers in a policy year. You are allowed only one such transfer
in each of these 24-month periods.
Also, in the event of a material change in the investment policy of any
Sub-account of the Variable Account, you may, by written request convert this
policy to a policy in which 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. The option to convert is
exercisable within 60 days after the effective date of such change in the
investment policy or your receipt of the notice of the change in investment
policy, whichever is later.
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.
Annual Statement
Each year we will send you an annual statement, free of charge, showing the
following:
Face Amount;
Cash Surrender Values;
Accumulation Values;
Premiums paid;
Planned periodic premiums;
Interest credits;
Death Benefit;
Loan Amounts;
Partial withdrawals;
Transfers;
Charges since the last statement; and
Any other information required by the Superintendent.
We will make a charge not to exceed $50 for any additional statements you
request.
5403
Page 28
General Provisions
Projection Report
If you ask we will provide a report projecting future results. The report will
be based on the following:
<PAGE>
The Death Benefit Option you specify;
Planned periodic premiums you specify;
The Accumulation Value at the end of the prior policy year; and
Any other assumptions specified by you or us, subject to any limitations imposed
by the Securities and Exchange Commission.
We will charge a fee for each report after the first report in any policy year.
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:
Any Securities and Exchange Commission rulings and regulations;
This policy's qualification for treatment as a life insurance policy under the
following:
The Code;
Internal Revenue Service rulings and regulations; and
Any requirements imposed by the Internal Revenue Service.
We will send you 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.
85-465
Page 29
SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE
INSURANCE POLICY
- ---------------------------------------------------
Variable and/or Fixed
Accumulation Values
Flexible Premiums Payable During
Lifetime of Surviving Joint lnsured
Adjustable Face Amount
Death Benefit Guarantee
<PAGE>
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:
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.
RELIASTAR RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
P. O. Box 9004
1000 Woodbury Road, Suite 102
Woodbury, NY 11797-9004
85-438
Page 30
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Policyowners
ReliaStar Life Insurance Company of New York Variable Life Separate Account I
We consent to the use in the Post-Effective Amendment No. 1 to Registration
Statement on Form S-6 (File No. 333-47527) of ReliaStar Life Insurance Company
of New York Variable Life Separate Account I filed under the Securities Act of
1933 of our report dated February 19, 1999 on the audit of the financial
statements of ReliaStar Life Insurance Company of New York Variable Life
Separate Account I as of December 31, 1998 and for the year ended December 31,
1998 and the period from August 8, 1997 (date of inception) to December 31,
1997, and our report dated February 4, 1999 on the audit of the financial
statements of ReliaStar Life Insurance Company of New York Life as of and for
the years ended December 31, 1998 and 1997 appearing in the Prospectus, which is
a part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Prospects.
/s/ Deloitte & Touche
Minneapolis, Minnesota
April 14, 1999
EX-99.C6
April 16, 1999
ReliaStar Life Insurance Company of New York
1000 Woodbury Lane, Suite 102
Woodbury, NY 11797
Madam/Sir:
This opinion is furnished in connection with the registration by ReliaStar Life
Insurance Company of New York of a flexible premium survivorship 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 through and including Post-Effective Amendment No. 1 thereto, File
No. 333-47527.
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 provisions 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 Joint Insured Age 55 and a female Joint Insured Age
55, both nonsmokers in a standard Rate Class, than to prospective
purchasers of the Contract for other ages, sexes, or Rate Classes. 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 Joint Insureds who are both Age 55 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/ Steve West
- ---------------------------
Steve West, FSA, MAAA
Actuary
JEFFREY A. PROULX
Associate Counsel
Phone (612) 372-1810
Fax (612) 342-7531
April 16, 1999
ReliaStar Life Insurance Company of New York
1000 Woodbury Road, Suite 102
Woodbury, NY 11797
Dear Sir or Madam:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of a survivorship flexible premium variable life insurance policy
(the "Policy") and interests in ReliaStar Life Insurance Company of New York
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 Life Insurance Company of New
York (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.
Sincerely,
/s/ JEFFREY A. PROULX
- ---------------------------
Jeffrey A. Proulx
Associate Counsel
