<PAGE>
As filed with the Securities and Exchange Commission on April 9, 1999
Registration No. 333-19123
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM S-6
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 (date) pursuant to paragraph (a) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
---------------
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>
<S> <C>
Item Number of
Form N-8B-2 Heading in the Prospectus
- ---------------- ---------------------------------------------------------------------------------------------------
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; Additional Information on the 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
44 Additional Information on the Investments of the Variable Account; Payment and Allocation of
Premiums; Deductions and Charges
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Item Number
of Form
N-8B-2 Heading in the Prospectus
- -------- ----------------------------------------------------------------------------------------------
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>
[RELIASTAR LOGO APPEARS HERE]
ReliaStar Life Insurance Company of New York
1000 Woodbury Road
Woodbury, New York 11797
-------------------
SELECT*LIFE NY
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 flexible
premium variable life insurance policy (Select*Life NY) described in this
prospectus. ReliaStar designed the Policy to provide (1) a death benefit
payable when the 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 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 or 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 Federally insured by the
Federal Deposit Insurance Corporation or any other government 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 ............................................ 9
Premium Payments ............................................ 9
The Variable Account ........................................ 9
The Fixed Account ........................................... 9
The Funds ................................................... 9
Charges Against the Accumulation Value ...................... 11
Charges Upon Lapse or Total Surrender of the Policy ......... 12
Surrenders .................................................. 12
Partial Withdrawals ......................................... 12
Loans ....................................................... 12
Transfers ................................................... 12
Death Benefit Overview ...................................... 12
Adjusting the Death Benefit ................................. 13
Death Benefit Guarantee ..................................... 13
Lapse ....................................................... 13
Taxation of Death Benefit Proceeds .......................... 13
Taxation of the Policy ...................................... 13
PART 2. DETAILED INFORMATION
ReliaStar Life Insurance Company of New York ................ 14
The Policies ................................................ 14
Deductions and Charges ..................................... 14
Premium Expense Charge ..................................... 14
Monthly Deduction .......................................... 14
Cost of Insurance ........................................ 15
Monthly Administrative Charge ............................ 15
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 ........... 17
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 ....................... 21
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 ........................... 23
Accelerated Benefit Rider ................................... 24
Payment and Allocation of Premiums .......................... 24
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Issuing the Policy ............................................... 24
Coverage ....................................................... 24
Minimum Initial Premium ........................................ 24
Allocating Premiums .............................................. 24
Crediting Net Premiums ......................................... 25
Refunding Premiums ............................................. 25
Amount and Timing of Premiums .................................... 25
Planned Periodic Premiums ........................................ 25
Paying Premiums by Mail .......................................... 26
Death Benefit Guarantee ........................................... 26
Requirements for the Death Benefit Guarantee ..................... 26
Accumulation Value ................................................ 27
Specialized Uses of the Policy .................................... 28
Policy Lapse and Reinstatement .................................... 28
Lapse ............................................................ 28
Reinstatement .................................................... 28
Surrender Benefits ................................................ 28
Total Surrender .................................................. 28
Partial Withdrawal ............................................... 29
Effect of Partial Withdrawal ................................... 29
Transfers ......................................................... 29
Telephone/Fax Instructions ....................................... 30
Dollar Cost Averaging Service .................................... 30
Portfolio Rebalancing Service .................................... 30
Transfer Limits .................................................. 31
Transfer Charges ................................................. 31
Policy Loans ...................................................... 31
General .......................................................... 31
Immediate Effect of Policy Loans ................................. 32
Effect on Investment Performance ................................. 32
Effect on Policy Coverage ........................................ 32
Interest ......................................................... 32
Repayment of Loan Amount ......................................... 32
Tax Considerations ............................................... 33
Free Look and Conversion Rights ................................... 33
Free Look Rights ................................................. 33
Conversion Rights ................................................ 33
General Option ................................................. 33
Additional Information on the Investments of the Variable Account . 33
Investment Limits .............................................. 33
Addition, Deletion, or Substitution of Investments ............. 34
Voting Rights ..................................................... 34
Disregarding Voting Instructions ................................. 34
Benefits at Age 95 ................................................ 35
General Provisions ................................................ 35
Ownership ........................................................ 35
Proceeds ......................................................... 35
Beneficiary ...................................................... 35
Postponement of Payments ......................................... 35
Settlement Options ............................................... 36
Interest on Settlement Options ................................. 36
Incontestability ................................................. 36
Misstatement of Age and Sex ...................................... 36
Suicide .......................................................... 37
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Termination ................................................................. 37
Amendment ................................................................... 37
Reports ..................................................................... 37
Annual Statement .......................................................... 37
Projection Report ......................................................... 37
Other Reports ............................................................. 37
Dividends ................................................................... 37
Collateral Assignment ....................................................... 37
Optional Insurance Benefits ................................................. 37
Accelerated Benefit Rider ................................................. 38
Accidental Death Benefit Rider ............................................ 38
Additional Insured Rider .................................................. 38
Waiver of Monthly Deduction Rider ......................................... 38
Cost of Living Increase Rider ............................................. 38
Waiver of Specified Premium Rider ......................................... 38
Federal Tax Matters .......................................................... 38
Introduction ................................................................ 38
Tax Status of the Policy .................................................... 38
Tax Treatment of Policy Benefits ............................................ 38
In General ................................................................ 38
Modified Endowment Contracts .............................................. 39
Distributions from Modified Endowment Contracts ........................... 39
Distributions from Policies That Are Not Modified Endowment Contracts ..... 39
Policy Loans .............................................................. 39
Multiple Policies ......................................................... 39
Taxation of ReliaStar Life Insurance Company of New York .................... 39
Possible Changes in Taxation ................................................ 40
Other Considerations ........................................................ 40
Legal Developments Regarding Employment-Related Benefit Plans ............... 40
Preparing for Year 2000 ..................................................... 40
Distribution of the Policies ................................................. 40
Management ................................................................... 41
Directors and Officers ...................................................... 41
State Regulation ............................................................. 44
Legal Proceedings ............................................................ 44
Bonding Arrangements ......................................................... 44
Legal Matters ................................................................ 44
Experts ...................................................................... 44
Registration Statement Contains Further Information .......................... 44
Financial Statements ......................................................... 44
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 27
and Appendix B.
Age. The Insured's age at the last birthday determined as of the beginning of
each Policy Year.
Cash Surrender Value. The Accumulation Value less any Surrender Charge, Loan
Amount and unpaid Monthly Deductions.
Cash Value. The Accumulation Value less any Surrender Charge.
Code. Internal Revenue Code of 1986, as amended.
Death Benefit. The amount determined under the applicable Death Benefit Option.
We will reduce the proceeds payable to the beneficiary upon the Insured's
death 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 26.
Death Benefit Option. Either of two death benefit options available under the
Policy (the Level Amount Option and the Variable Amount Option). See "Death
Benefit -- Death Benefit Options" at page 20.
Face Amount. The minimum Death Benefit under the Policy 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 27 and Appendix B.
Funds. Any open-end management investment company (or portfolio thereof) or
unit investment trust (or series thereof) in which a Sub-Account invests.
See "Investments of the Variable Account" at page 19.
Insured. The person upon whose life we issue the Policy.
Issue Date. The date insurance coverage under a Policy begins.
Loan Amount. The sum of all unpaid Policy loans including unpaid interest due
thereon. See "Policy Loans" at page 31.
Minimum Monthly Premium. A monthly premium amount that we determine when we
issue the Policy. Your Policy will specify this amount. See "Death Benefit
Guarantee" at page 26.
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 premium you pay less a Premium Expense Charge.
Planned Periodic Premium. The scheduled premium you select 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 25.
Policy. Select*Life NY, the flexible premium variable life insurance policy
described in this prospectus.
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 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.
5
<PAGE>
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 5%) ReliaStar deducts from each
premium payment, resulting in the Net Premium. 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 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.
Surrender Charge Whole Life Premium. An amount used in calculating the Premium
Related Surrender Charge Reduction. The Surrender Charge Whole Life Premium
will equal the amount obtained by dividing the Face Amount or the amount of
a requested increase, as the case may be, by $1,000, and multiplying the
result by the applicable factor from Appendix E. See "Deductions and
Charges -- Surrender Charge" at page 15.
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. See Appendix B.
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 that 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" at page 27
and Appendix B.
We, Us, Our, the Company, or ReliaStar. ReliaStar Life Insurance Company of New
York.
You, Your. The Policy owner as designated in the application for the Policy or
as subsequently changed. If a Policy has been absolutely assigned, the
assignee is the Policy owner. A collateral assignee is not the Policy
owner.
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
Select*Life NY is a flexible premium variable life insurance contract
with death benefits, cash, values, and other features of traditional life
insurance contracts. The Policies are:
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."
7
<PAGE>
How Select*Life NY Works
PREMIUM PAYMENTS ---------------------------|
|
MINUS |
|
PREMIUM EXPENSE CHARGES |
|
Invested in Variable Sub-Account |
or Fixed Account |
| | |
| | |
Fund Managers Fixed Account |
| | |
------------------------------------------------------------ |
| | | | | | | |
| Alger | Fidelity(R) | 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
<PAGE>
<TABLE>
<S> <C> <C>
Free Look Rights o If you return the Policy to us by midnight of the 20th 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 -- Free Look 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 95.
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 in order 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 (5.00% of each premium payment) 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 o ReliaStar Life Insurance Company of New York Variable Life Separate Account I is
(ReliaStar Life Insurance one of our separate accounts and consists of several Sub-Accounts. We only invest
Company of New York premiums from our variable life insurance policies in the Variable Account.
Variable Life Separate
Account I) o We invest any Net Premiums you allocate to each Sub-Account in shares of the Fund
related to that Sub-Acount.
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.
</TABLE>
9
<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
-----------------------------------------------------------------------------------------------------
Fidelity Investments(R) is VIP II Fidelity Management X
a registered trademark Investment & Research Company
of FMR Corp. 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
----------------------------------------------------------------------------
Fidelity Investments(R) is VIP II Fidelity Management
a registered trademark Investment & Research Company
of FMR Corp. 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
---------------------------------------------------------------------------------------------------------
Fidelity Investments(R) is VIP II Fidelity Management High current income Investment-grade
a registered trademark Investment & Research Company consistent with intermediate
of FMR Corp. 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>
10
<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-large
Trust Socially Management Inc./ 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."
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
11
<PAGE>
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 A charge for the cost of insurance -- varies based on the Insured's
sex, Age, Rate Class and Face Amount.
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 -- currently equal to .60 of
1% (.60%) of the Variable Accumulation Value and guaranteed not to exceed
.90 of 1% (.90%) of the Variable Accumulation Value.
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 Surrender Charge for the initial Face Amount will depend on the
initial Face Amount, the Insured's Age on the Policy Date, and the
Insured's sex and Rate Class.
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 o Once each Policy Year after the first Policy Year, you
Withdrawals 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 After the first Policy Year, 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%.
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. We will charge interest at an annual rate of
5.66% on any excess of this amount.
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. See "Transfers."
Death Benefit Overview
You may choose one of two Death Benefit Options:
o Level Amount Option -- whereby the Death Benefit until Age 95 is the
greater of the Face Amount or the corridor percentage of Accumulation
Value; or
12
<PAGE>
o Variable Amount Option -- whereby the Death Benefit until Age 95 is
equal to the greater of the Face Amount plus the Accumulation Value, or
the corridor percentage of Accumulation Value.
The Death Benefit until Age 95 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.
We will reduce the proceeds payable upon the death of the Insured under
any Death Benefit Option by any Loan Amount and any unpaid Monthly Deductions.
Under certain circumstances, you may receive a part of the Death Benefit
when the Insured has been diagnosed as having a terminal illness. See "Death
Benefit -- Accelerated Benefit Rider."
Adjusting the Death Benefit
Although we reserve the right to limit Face Amount increases and decreases
during the first two 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 second Policy Year. See "Death Benefit -- Changing the Death Benefit
Option."
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."
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."
13
<PAGE>
PART 2. DETAILED INFORMATION
ReliaStar Life Insurance Company of New York
ReliaStar Life Insurance Company of New York is a stock life insurance
company incorporated under the laws of the State of New York in 1917. We are a
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.
From time to time, we may 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 investments 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. We have been
assigned a rating of A+ by A.M. Best, which is a rating 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 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 also assess a charge for each
partial withdrawal and we may assess a charge for each transer.
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, payments of sales expenses.
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.
Premium Expense Charge
We deduct the Premium Expense Charge from each premium payment. The
Premium Expense Charge equals 5.00% of each premium payment. 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."
14
<PAGE>
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
1.004074 (which reduces the net amount at risk, solely for purposes of
computing the Cost of Insurance, by taking into account assumed monthly
earnings at an annual rate of 5%), less (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 an 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,
an Insured in a standard Rate Class will have a lower Cost of Insurance than an
Insured in a Rate Class with higher mortality risks.
If there is an increase in the Face Amount and the Rate Class applicable
to the increase is different from that for the initial Face Amount or any prior
requested increases in Face Amount, the net amount at risk will be calculated
separately for each Rate Class. For purposes of determining the net amount at
risk for each Rate Class, 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, Age, Policy Year and Rate
Class(es) of the Insured. The actual monthly Cost of Insurance rates will
reflect our expectations as to future experience. They will not, however, be
greater than the guaranteed Cost of Insurance rates shown in the Policy, which
are based on the Commissioner's 1980 Standard Ordinary Mortality Tables for
smokers or nonsmokers, respectively.
Monthly Administrative Charge. Each month we deduct an administrative
charge of $7.50 which is guaranteed not to exceed 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.
Monthly Mortality and Expense Risk Charge. We currently anticipate that
each month we will deduct this charge at an annual rate of .60 of 1% (.60%) of
the Variable Accumulation Value but in no event will it exceed .90 of 1%
(.90%). 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
During the first 15 years the Policy is in force and the first 15 years
following a requested increase in the Face Amount, there is a Surrender Charge
if you surrender the Policy or the Policy lapses. We will determine the maximum
Surrender Charge for the initial Face Amount or any requested increase in Face
Amount on the Policy Date or on the effective date of any requested increase.
The Surrender Charge remains level for the first five years in the relevant 15
year period, and then reduces in equal monthly increments until it becomes zero
at the end of 15 years. Thus, if the Policy remains in force during the entire
relevant 15-year period, you do not pay the Surrender Charge. The Surrender
Charge will vary depending on the Insured's Age, sex, and Rate Class on the
Policy Date or on the effective date of an increase in Face Amount. The maximum
amount of the Surrender Charge is $37.30 per $1,000 of Face Amount for a female
Insured at Issue Age 65.
The Surrender Charge for the initial Face Amount or any requested increase
in Face Amount is determined by multiplying (1) the applicable Surrender Charge
per $1,000 of Face Amount from Appendix D 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. Then the Surrender Charge is reduced by the Premium
Related Surrender Charge Reduction.
The Premium Related Surrender Charge Reduction will apply only to the
Surrender Charge for the initial Face Amount when the cumulative premiums are
less than the Surrender Charge Whole Life Premium. The Premium Related
Surrender Charge Reduction will be zero when the cumulative premiums equal or
exceed the Surrender Charge Whole Life Premium. The Premium Related Surrender
Charge Reduction also will be zero for any requested increase in Face Amount.
The Premium Related Surrender Charge Reduction for the initial Face Amount is
calculated by multiplying 70% by the excess of (i) the Surrender Charge Whole
Life Premium over (ii) the cumulative premiums. The Surrender Charge Whole Life
premium is calculated by multiplying (i) the applicable Surrender Charge Whole
Life premium per $1000 of Face Amount from Appendix E by (ii) the initial Face
Amount, and then dividing by 1000.
15
<PAGE>
Example. The following example illustrates how we determine the Surrender
Charge. Assume that a male nonsmoker, Age 35 buys a Policy with an initial Face
Amount of $100,000 and surrenders the Policy during the third Policy Year at
which time he has paid cumulative premiums of $2,000.
Based on these assumptions the Surrender Charge will be the result of
multiplying (1) $16.20 (from Appendix D for a male nonsmoker Age 35) by (2)
$100,000 (the initial Face Amount) and by (3) 100% (the applicable percentage
from the Surrender Charge Percentage Table), and then dividing by 1000, which
results in a Surrender Charge of $1,620 ($16.20 x $100,000 x 100% / 1000).
The Surrender Charge Whole Life Premium is determined by multiplying (i)
$11.64 (from Appendix E for a male nonsmoker Age 35) by (ii) $100,000 (the
initial Face Amount), and then dividing by 1000, which results in a Surrender
Charge Whole Life Premium of $1,164 ($11.64 x $100,000 / 1000). The Surrender
Charge Whole Life Premium of $1,164 is less than the cumulative premium of
$2,000, so the Premium Related Surrender Charge Reduction is zero.
The additional Surrender Charge for requested increases in Face Amount
will be calculated in the same manner as illustrated in the example above,
except that the Premium Related Surrender Charge is zero for requested
increases in Face Amount.
Surrender Charge Percentage Table
<TABLE>
<S> <C>
If surrender or lapse occurs in the last The following percentage of the
month of Policy Year: Surrender Charge will be payable:
- ----------------------------------------------------- ----------------------------------
1 through 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 seventh Policy Year, the percentage reduces equally
each month from 90% at the end of the sixth Policy Year to 80% at the end of
the seventh Policy Year.
Partial Withdrawal and Transfer Charges
We currently make no charge for transfers and assess a $10 charge for each
partial withdrawal. These charges are guaranteed not to exceed $25 per transfer
in excess of twelve transfers per Policy Year, or $25 per 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 policyholders or those of affiliated
insurance companies, or sales to employees or clients of members of our
affiliated group of insurance companies. The amount of any reductions will
reflect the reduced sales effort and administrative costs resulting from, or
the different mortality experience expected as a result of, the special
circumstances. Reductions will not be unfairly discriminatory against any
person, including the affected Policy owners and owners of all other policies
funded by the Variable Account.
16
<PAGE>
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.
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, the total operating expenses presented
17
<PAGE>
in the table would have been 0.57% for Fidelity VIP Equity-Income Portfolio,
0.66% for Fidelity VIP Growth Portfolio; 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 comprised of separate
Portfolios, the following of which are available as funding options under
the contract: Limited Maturity Bond Portfolio, Partners Portfolio and
Socially Responsive Portfolio ("Portfolio series"). Unlike the other
funding options available under the contract, each of the Portfolio series
invests all of its net investable assets in AMT Limited Maturity Bond
Investments, AMT Partners Investments and AMT Socially Responsive
Investments, respectively, of Advisers Managers Trust ("Investment
series"). The Investment series in turn, invest directly in securities.
For a more complete discussion of this structure, please see the
prospectus for Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio, Partners Portfolio and Socially Responsive Portfolio.
Please note that the figures reported under "Management Fees" and "Other
Expenses" include the aggregate of (i) the management fees paid by the
Investment series, (ii) the administration fees paid by the Portfolio
series, and (iii) all other expenses in the aggregate for the Investment
series and Portfolio series, respectively.
(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 therefore 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, International Value, and Research Enhanced Index Portfolios for
amounts in excess of 0.90%, 1.00% and 0.90%, 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 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
"Additional Information on the Investments of the Variable Account" section
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 by performance information for the Sub-Accounts.
Performance information for the Funds will take into account all fees and
charges at the Fund level, but will not reflect any deductions from the
Variable Account. Performance information reflects only the performance of a
hypothetical investment during a particular time period in which the
calculations are based. 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 had been 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
o to investment series of mutual funds with investment objectives similiar
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.
19
<PAGE>
o to the Standard & Poor's Index of 500 common stocks and the Dow Jones
Industrial, 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 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 issuance of the
Policy. See "Death Benefit -- Change in 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 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 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 $250. 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 $250. If,
for example, the Accumulation Value is reduced from $75,000 to $70,000 because
of partial withdrawals, charges, or negative investment performance, the Death
Benefit will be reduced from $187,500 to $175,000. If at any time, however, the
Accumulation Value multiplied by the corridor percentage is less than the Face
Amount, the Death Benefit will equal the current Face Amount of the Policy.
The corridor percentage becomes lower as the Insured's Age increases. If
the current Age of the Insured in the illustration above were, for example, 50
(rather than under Age 40), the corridor percentage would be 185%. The Death
Benefit would not exceed the $100,000 Face Amount unless the Accumulation Value
exceeded approximately $54,055 (rather than $40,000), and each $1 then added to
or taken from the Accumulation Value would change the Death Benefit by $1.85
(rather than $2.50).
20
<PAGE>
Corridor Percentage Table
<TABLE>
<CAPTION>
Insured's Corridor
Age on Percentage of
Previous Policy Accumulation
Anniversary Value
- ----------------- --------------
<S> <C>
40 or younger 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
</TABLE>
<TABLE>
<CAPTION>
Insured's Corridor
Age on Percentage of
Previous Policy Accumulation
Anniversary Value
- ----------------- --------------
<S> <C>
54 157%
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
</TABLE>
<TABLE>
<CAPTION>
Insured's Corridor
Age on Percentage of
Previous Policy Accumulation
Anniversary Value
- ----------------- --------------
<S> <C>
68 117%
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95 100
</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 corridor percentage of the Accumulation Value on the Valuation Date on
or next following the date of the Insured's death. Under the Variable Amount
Option, the amount of the Death Benefit will always vary as the Accumulation
Value varies.
Illustration of Variable Amount Option. For purposes of this illustration,
assume that the Insured is under Age 40 and that there is no Loan Amount. Under
the Variable Amount Option, a Policy with a Face Amount of $100,000 will
generally pay a Death Benefit of $100,000 plus the Accumulation Value. Thus,
for example, a Policy with an Accumulation Value of $20,000 will have a Death
Benefit of $120,000 ($100,000 + $20,000); an Accumulation Value of $40,000 will
yield a Death Benefit of $140,000 ($100,000 + $40,000). The Death Benefit,
however, must be at least 250% of the Accumulation Value. As a result, if the
Accumulation Value of the Policy exceeds approximately $66,667, the Death
Benefit will be greater than the Face Amount plus the Accumulation Value. Each
additional dollar of the Accumulation Value above $66,667 will increase the
Death Benefit by $250. 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 $250. If,
for example, the Accumulation Value is reduced from $75,000 to $70,000 because
of partial withdrawals, charges, or negative investment performance, the Death
Benefit will be reduced from $187,500 to $175,000. If at any time, however, the
Accumulation Value multiplied by the corridor percentage is less than the Face
Amount plus the Accumulation Value, then the Death Benefit will be the current
Face Amount plus the Accumulation Value of the Policy.
The corridor percentage becomes lower as the Insured's Age increases. If
the current Age of the Insured in the illustration above were, for example, 50
(rather than under 40), the corridor percentage would be 185%. The amount of
the Death Benefit would be the sum of the Accumulation Value plus $100,000
unless the Accumulation Value exceeded approximately $117,647 (rather than
$66,667), and each $1 then added to or taken from the Accumulation Value would
change the Death Benefit by $1.85 (rather than $2.50).
Which Death Benefit Option to Choose
If you prefer to have premium payments and favorable investment
performance reflected partly in the form of an increasing Death Benefit, you
should choose the Variable Amount Option. If you are satisfied with the amount
of your existing insurance coverage and prefer to have premium payments and
favorable investment performance reflected to the maximum extent in the
Accumulation Value and lower cost of insurance charges, you should choose the
Level Amount Option.
21
<PAGE>
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 Policy Year.
Increases. For an increase in the Face Amount, you must submit a written
request to us. We may also require additional evidence of insurability
satisfactory to us. The effective date of the increase will be the Monthly
Anniversary on or next following our approval of the increase. The increase may
not be less than $5,000. We will currently permit increases to the Insured's
Age 75. We will deduct any charges associated with the increase (the increases
in the Cost of Insurance and the Surrender Charge upon lapse or total surrender
- -- see "Effect of Requested Changes in Face Amount" below) from the
Accumulation Value, whether or not you pay an additional premium in connection
with the increase. You will be entitled to limited conversion rights with
respect to requested increases in Face Amount. See "Free Look and Conversion
Rights."
Decreases. For a decrease in the Face Amount, a written request must also
be submitted to us. Any decrease in the Face Amount will be effective on the
Monthly Anniversary on or next following our receipt of a written request. 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 $25,000, but we reserve the right to establish a
different Minimum Face Amount in the future. If, following a decrease in Face
Amount, the Policy would no longer qualify as life insurance under Federal tax
law (see "Federal Tax Matters -- 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
depends upon the Face Amount. The charge for certain optional insurance
benefits may also be affected. See "Deductions and Charges -- Monthly
Deduction." An increase in the Face Amount will increase the Surrender Charge,
but a decrease in the Face Amount will not reduce the Surrender Charge. The
Surrender Charge is, however, imposed only upon lapse or total surrender of the
Policy and not upon a requested decrease in Face Amount. See "Deductions and
Charges -- Surrender Charge."
An increase in the Face Amount will increase the Minimum Monthly Premium
as of the effective date of the increase. Therefore, additional premium
payments may be required to maintain the Death Benefit Guarantee. A decrease in
the Face Amount will reduce the Minimum Monthly Premium as of the effective
date of the decrease. See "Death Benefit Guarantee."
The additional Surrender Charge on a requested increase in the Face Amount
will reduce the Cash Surrender Value (which is the Accumulation Value less any
Surrender Charge, Loan Amount and unpaid Monthly Deductions). If the resulting
Cash Surrender Value is not sufficient to cover the Monthly Deduction, the
Policy may lapse unless the Death Benefit Guarantee is in effect. See "Policy
Lapse and Reinstatement -- Lapse" and "Death Benefit Guarantee."
22
<PAGE>
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 -- 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.
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 first two Policy Years and at least two years after any increase
in Face Amount, you may change the Death Benefit Option once each Policy Year.
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
23
<PAGE>
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.
Accelerated Benefit Rider
Under certain circumstances, the Accelerated Benefit Rider allows a Policy
owner to accelerate benefits from the Policy that we otherwise would pay upon
the Insured's death. The benefit may vary state-by-state and you should consult
your registered representive as to whether and to what extent the rider is
available in a particular state and on any particular Policy. Generally, we
will provide an Accelerated Benefit if the Insured has a terminal illness that
will result in the death of the Insured within 12 months as certified by a
physician. The Accelerated Benefit will not be more than 50% of the amount that
would be payable at the death of the Insured. The Accelerated Benefit will
first be used to pay off any outstanding Policy loans and interest due. The
remainder of the Accelerated Benefit will be paid in a lump sum to the Policy
owner. Limitations, as described in the Accelerated Benefit Rider, may apply.
We will establish a lien against the Policy for the amount of the
Accelerated Benefit plus an administrative charge, plus interest on the lien.
We will first use any proceeds from the Policy to repay this lien. We will
reduce your access to the Cash Value by the amount of the lien. We also will
reduce the proceeds payable to the beneficiary by the amount of the lien. We
may assess an administrative charge of up to $300 at the time we pay the
Accelerated Benefit. The Accelerated Benefit will not affect the premium
payable on the Policy. Receipt of a benefit under the Accelerated Benefit Rider
may give rise to Federal or state income tax. Consult a competent tax advisor
for further information.
The above information is not a complete summary of the Rider. All of the
terms and provisions of the Accelerated Benefit Rider are set forth in the
Rider, and you should refer to the Rider in order to fully ascertain its
benefits and limitations.
Payment and Allocation of Premiums
Issuing the Policy
An individual applying for a Policy must complete an application and
personally deliver it to our licensed agent. We will generally only issue a
Policy to an applicant Age 75 or less who supplies evidence of insurability
satisfactory to us. The minimum Face Amount is currently $25,000, but we
reserve the right to specify a different minimum Face Amount in the future for
issuing a new Policy. 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 applicant pays at least the minimum
initial premium with the application, the Issue Date will be the later of the
date of the application or the date of any medical examination required by our
underwriting procedures. However, if underwriting approval has not occurred
within 45 days after we receive the application or if you authorize premiums to
be paid by bank account monthly deduction, the Issue Date will be the date of
underwriting approval.
If you authorize premiums to be paid by government allotment, the Issue
Date generally will be, subject to our underwriting approval, the first day of
the month in which we receive the first Minimum Monthly Premium through
government allotment, whether or not a Minimum Monthly Premium is collected
with the application. If a Minimum Monthly Premium is collected with the
application, it will be allocated to the Sub-Accounts of the Variable Account
and the Fixed Account on the Valuation Date next following the Issue Date.
Minimum Initial Premium. The minimum initial premium is three Minimum
Monthly Premiums. See "Death Benefit Guarantee." If, however, you authorize
premiums to be paid by bank account monthly deduction or government allotment,
we will accept one Minimum Monthly Premium together with the required
authorization forms. The Minimum Monthly Premium is specified in the Policy and
determines the payments required to maintain the Death Benefit Guarantee.
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
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the Sub-Accounts or divided among the Fixed Account and the Sub-Accounts in
whole percentage points totaling 100%. We reserve the right to adjust any
allocation to eliminate fractional percentages. Changing the Net Premium
allocation will not affect the allocation of existing Accumulation Value.
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
least the required minimum initial premium payment.
o In the case of Policies issued under government allotment programs, the
Valuation Date next following the Issue Date.
Until the date on which Net Premiums are credited as described above, 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 that the insurance is declined.
o The applicant refuses an offer for an alternative policy.
o The applicant does not supply required medical exams or tests within 30
days of the date of the application.
o The applicant returns the Policy under the limited free look right. See
"Free Look and Conversion Rights -- Free Look Rights."
Amount and Timing of Premiums
The amount and frequency of premium payments will affect the Accumulation
Value, the Cash Surrender Value, and how long the Policy will remain in force
(including affecting whether the Death Benefit Guarantee is in effect -- see
"Death Benefit Guarantee"). After the initial premium, you may determine the
amount and timing of subsequent premium payments within the following
restrictions:
o In most cases, we will 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 life of any Insured, whether such
payments are received on a Policy or on any other insurance policy issued
by us or our affiliates. Also, we will not accept any premium payment in
excess of $50,000 on any Policy after the first Policy Year. We may waive
any of these premium limitations.
o We may require additional evidence of insurability satisfactory to us if
any premium would increase the difference between the Death Benefit and
the Accumulation Value (that is, the net amount at risk). A premium
payment would increase the net amount at risk if at the time of payment
the Death Benefit would be based upon the applicable 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 payments.
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 can be paid 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 or, if you choose, you can
pay the Planned Periodic Premiums by bank account monthly deduction or
government allotment.
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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 terms of the Amount and Timing of Premium
Payments provision 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."
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, Minnesota 55485-7353
Death Benefit Guarantee
If you meet the requirements described below, we guarantee that we will
not lapse the Policy even if the Cash Surrender Value is not sufficient to
cover the Monthly Deduction that is due. This feature of the Policy is called
the "Death Benefit Guarantee." The Death Benefit Guarantee expires at the
Insured's Age 65 or five Policy Years if longer.
In general, the two most significant benefits from the Death Benefit
Guarantee are as follows:
o First, during the early Policy Years, the Cash Surrender Value will
generally not be sufficient to cover the Monthly Deduction, so that the
Death Benefit Guarantee will be necessary to avoid lapse of the Policy.
See "Policy Lapse and Reinstatement." This occurs because the Surrender
Charge usually exceeds the Accumulation Value in these years. In this
regard, you should consider that if you request an increase in Face
Amount, an additional Surrender Charge would apply for the 15 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 $100 per month. No Policy loans or partial withdrawals are taken and no Face
Amount changes have occurred.
Case 1. You pay $100 each month. The Death Benefit Guarantee is maintained.
Case 2. You pay $1,000 on January 1, 2000. The $1,000 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 $100 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 the Insured's sex, Age at issue, Rate Class, optional
insurance benefits added by rider, and the initial Face Amount.
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The following Policy changes may change the Minimum Monthly Premium:
o A requested increase or decrease in the Face Amount. See "Death Benefit
-- Requested Changes in Face Amount."
o A change in the Death Benefit Option. See "Death Benefit -- 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, as of any Monthly Anniversary, you have not made sufficient premium
payments to maintain the Death Benefit Guarantee, we will send you notice of
the premium payment required to maintain it. If we do not receive the required
premium payment within 61 days from the date of our notice, the Death Benefit
Guarantee will terminate. THE DEATH BENEFIT GUARANTEE CANNOT BE REINSTATED.
Even if the Death Benefit Guarantee terminates, the Policy will not
necessarily lapse. For a discussion of the circumstances under which the Policy
may lapse, see "Policy Lapse and Reinstatement."
Accumulation Value
The Accumulation Value of the Policy (that is, the total value
attributable to a specific Policy in the Variable Account and the Fixed
Account) is equal to the sum of the Variable Accumulation Value (the amount
attributable to the Variable Account) plus the Fixed Accumulation Value (the
amount attributable to the Fixed Account). 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.
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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.
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,
before purchasing a Policy for a specialized purpose a purchaser 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 Premium 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 premium 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 premium
payment within the grace period, then the Policy will lapse without value.
If the Insured dies during the grace period, the proceeds payable will
equal the amount of the Death Benefit on the Valuation Date on or next
following the date of the Insured's death, reduced by any Loan Amount and any
unpaid Monthly Deductions.
If the Death Benefit Guarantee is in effect, we will not lapse the Policy.
See "Death Benefit Guarantee."
Reinstatement. Reinstatement means putting a lapsed Policy back in force.
You may reinstate a lapsed Policy by written request any time within five years
after it has lapsed if it has not been surrendered for its Cash Surrender
Value.
To reinstate the Policy and any riders you must submit evidence of
insurability satisfactory to us and you must pay a premium large enough such
that the Net Premium is as large as the sum of the Surrender Charge after
reinstatement, plus the Monthly Deductions for the date of reinstatement and
the following Monthly Anniversary.
The Death Benefit Guarantee cannot be reinstated. See "Death Benefit
Guarantee."
Surrender Benefits
Subject to certain limitations, you may make a total surrender of the
Policy or a partial withdrawal of the Policy's Cash Surrender Value by sending
us a written request. 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, however, in
certain circumstances. See "General Provisions -- Postponement of Payments."
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.
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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 charge for each partial withdrawal. We guarantee that this charge
will not exceed $25 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 recieve your
written request. For purposes of determining these proportions, we first
subtract any outstanding Loan Amount from the Fixed Accumulation Value.
Effect of Partial Withdrawal. 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 Benefit -- Requested Changes in Face Amount.") Thus, partial withdrawals
may affect the way in which the Cost of Insurance is calculated and the amount
of pure insurance protection under the Policy. See "Death Benefit -- Requested
Changes in Face Amount," "Deductions and Charges -- Monthly Deduction" and
"Death Benefit -- Insurance Protection."
We do not allow a partial withdrawal if the Face Amount after a partial
withdrawal would be less than the Minimum Face Amount (currently $25,000).
If the Variable Amount Option is in effect, a partial withdrawal does not
affect the Face Amount.
A partial withdrawal may also cause the termination of the Death Benefit
Guarantee because 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."
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
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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 at least equal
to 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 Face
Amount is at least $100,000 and your Accumulation Value, less any Loan Amount,
is at least $5,000. If you request this service, you direct us to automatically
make specific periodic transfers of a fixed dollar amount from any of the
Sub-Accounts to one or more of the Sub-Accounts or to the Fixed Account. 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.
If you are interested in the Dollar Cost Averaging service, you may obtain
a separate application form and full information concerning this service and
its restrictions from us or our registered representative.
We will discontinue the Dollar Cost Averaging service immediately (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 Face
Amount is at least $200,000 and your Accumulation Value, less any Loan Amount,
is at least $10,000. If you request this service, you direct us to
automatically make periodic transfers to maintain your specified percentage
allocation of Accumulation Value, less any Loan Amount, among the Sub-Accounts
of the Variable Account and the Fixed Account. We will also change your
allocation of future Net Premium payments to be
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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 full information concerning 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 12 transfers in a Policy Year. We
reserve the right to limit you to no more than 12 transfers per Policy Year.
All transfers that are effective on the same Valuation Date will be treated as
one transfer transaction. Transfers made due to the Dollar Cost Averaging or
Portfolio Rebalancing services do not currently count toward the limit on the
number of transfers.
Transfer Charges. While there is currently no charge imposed on a
transfer, we reserve the right to make a charge not to exceed $25 per transfer
for transfers in excess of 12 per Policy Year for the duration of the Policy.
See "Deductions and Charges -- Partial Withdrawal and Transfer Charges." In no
event, however, will we impose any charge in connection with the exercise of a
conversion right or transfers occurring as the result of Policy loans. All
transfers are also subject to any charges and conditions imposed by the Fund
whose shares are involved. We will treat all transfers that are effective on
the same Valuation Date as one transfer transaction for purposes of assessing
any transfer charge.
Policy Loans
General. As long as the Policy remains in effect, you may borrow money
from us at any time after the first Policy Year using the Policy as security
for the loan. The maximum amount you may borrow at any time is equal to the
loan value of the Policy, which is equal to the Cash Value less the existing
Loan Amount. Each Policy loan must be at least $500.
You can make loan requests 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 any 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 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 you make generally will be treated as premium payments, rather
than Policy loan repayments, unless you indicate that we should treat the
payment 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."
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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 held 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 currently 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 before
the Insured's Age 95, Policy loans will permanently affect the Policy's
potential Accumulation Value. As a result, to the extent that the Death Benefit
depends upon the Accumulation Value (see "Death Benefit -- Death Benefit
Options"), Policy loans will also affect the Death Benefit under the Policy.
This effect could be favorable or unfavorable depending on whether the
investment performance of the assets allocated to the Sub-Account(s) is less
than or greater than the interest being credited on the 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."
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 you have paid sufficient premiums in order to maintain the Death
Benefit Guarantee. See "Death Benefit Guarantee."
We will reduce proceeds payable upon the death of the 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. 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 (for the rest of the Policy Year) at the
time any Policy loan is made and at the beginning of each Policy Year
thereafter (for that entire Policy Year). If you do not pay 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.
Because we charge interest in advance, 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 at any time. If
not repaid, we will deduct the Loan Amount from any amount payable under the
Policy. As described above, unless you provide us with notice to the contrary,
we generally will treat any payments on the Policy as premium payments, which
are subject to the Premium Expense Charge, rather than repayments on the Loan
Amount. Any repayments on the Loan Amount will result in amounts being
reallocated from the Fixed Account and to the Sub-Accounts of the Variable
Account according to your current premium allocation.
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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 an initial free look period during which you have
a right to return the Policy for cancellation and receive a refund of all
premiums paid. You must return the Policy to us or your agent and ask us to
cancel the Policy by midnight of the 20th day after receiving it.
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 any transfer charge on
the transfer, and the transfer 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.
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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.
Nothing contained herein shall prevent the Variable Account from:
o Purchasing other securities of other Funds or classes of policies,
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
appropriate changes in this and other policies 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.
Disregarding 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
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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.
In the event 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.
Benefits at Age 95
If the Insured is living at Age 95 and the Policy is in force, the Cash
Surrender Value of the Policy will automatically be applied to purchase single
premium paid-up life insurance, unless you notify us in writing on or before
the Insured's attained Age 95 that the Cash Surrender Value should be paid in
cash. While the Cash Surrender Value of the new paid-up policy will be the same
as this Policy, the face amount of the new policy will be whatever the single
premium will purchase.
General Provisions
Ownership
While the 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 Change the Death Benefit Option.
o Change the Face Amount.
o Make transfers between accounts.
o Surrender the Policy for cash.
o Make a partial withdrawal for cash.
o Receive a cash loan.
o Assign the Policy as collateral.
o Change the beneficiary.
o Transfer ownership of the Policy.
o Enjoy any other rights the Policy allows.
Proceeds
At the Insured's death, the proceeds payable include the Death Benefit then
in force:
o Plus any additional amounts provided by rider on the life of the Insured;
o Plus any Policy loan interest that we have collected but not earned;
o Minus any Loan Amount; and
o Minus any unpaid Monthly Deductions.
Beneficiary
You may name one or more beneficiaries on the application when you apply
for the Policy. You may later change beneficiaries by written request. You may
also name a beneficiary whom you cannot change without his or her consent
(irrevocable beneficiary). If no beneficiary is surviving when the 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
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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
against any Sub-Account of the Variable Account under these circumstances.
We may delay any of the payments that we make from the Fixed Account up to
six months from the date we receive the documents required. We will pay
interest at the same rate we are currently paying on proceeds at death from the
date of the request to the date of payment 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.
Settlement Options
Settlement Options are ways you can choose to have the Policy's proceeds
paid. These options apply to proceeds paid:
o At the Insured's death.
o On total surrender of the Policy.
We pay the proceeds to one or more payees. We may pay the proceeds in a
lump sum or we may apply the proceeds 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 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 the Insured's lifetime for two
years from the Policy's Issue Date, we cannot claim the Policy is void or
refuse to pay any proceeds unless the Policy has lapsed.
If you make a Face Amount increase or a premium payment which requires
proof of insurability, the corresponding Death Benefit increase has its own
two-year contestable period measured from the date of the increase.
If the Policy is reinstated, 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 the Insured's Age or sex or both are misstated (except where unisex
rates apply), the Death Benefit will be the amount that the most recent cost of
insurance would purchase using the current cost of insurance rate for the
correct Age and sex.
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Suicide
If the 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
the 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 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 free
of charge, showing the Face Amount, Death Benefit, Accumulation Value, Cash
Surrender Value, Loan Amount, premiums paid, Planned Periodic Premiums,
interest credits, partial withdrawals, transfers, and charges since the last
statement.
Additional statements are available upon request. We may make a charge not
to exceed $50.00 for each additional Annual Statement you request.
Projection Report. Upon request, we will provide you a report projecting
future results based on the Death Benefit Option you specify, the Planned
Periodic Premiums you specify, the Accumulation Value of your Policy at the end
of the prior Policy Year. We may make a charge not to exceed $50.00 for each
Projection Report you request.
Other Reports. The Company will mail to you at your last known address of
record at least annually a report containing such information as may be
required by any applicable law. 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.
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:
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Accelerated Benefit Rider. Under certain circumstances we may pay a part
of the Death Benefit to you when the Insured has been diagnosed as having a
terminal illness. See "Accelerated Benefit Rider."
Accidental Death Benefit Rider. Provides an additional benefit if the
Insured dies from an accidental injury.
Additional Insured Rider. Provides a 10 year, guaranteed level premium and
level term coverage for the Insured, the Insured's spouse, or a child of the
Insured.
Waiver of Monthly Deduction Rider. The Monthly Deduction for the Policy is
waived while the Insured is totally disabled under the terms of the rider.
Cost of Living Increase Rider. Provides optional increases in Face Amount
on the life of the Insured every two years based on the cost of living without
evidence of insurability.
Waiver of Specified Premium Rider. Contributes a specified amount of
premium to the Policy each month while the Insured is totally disabled under
the terms of the rider.
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 our 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 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.
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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 Policy owner's total
investment in the Policy at that time. "Total investment in the Policy"
means the aggregate amount on 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 is made when the Policy 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 Policy owner or the joint lives (or joint life
expectancies) of the Policy owner and the Policy 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 a Policy 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
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, a Policy owner should consult a
tax advisor as to the tax consequences.
Multiple Policies. All Modified Endowment Contracts that we (or our
affiliates) issue to the same Policy owner during any calendar year are treated
as one Modified Endowment Contract for purposes of determining the amount
includible in the Policy 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, we may make charges for such taxes,
if any, attributable to the Variable Account.
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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, the foregoing discussion is not exhaustive and
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.
Legal Developments Regarding Employment-Related Benefit Plans
The Policy is based on actuarial tables which distinguish between men and
women and therefore provide different benefits to men and women of the same
Age. Employers and employee organizations should consider, in consultation with
legal counsel, the impact of the Supreme Court decision of July 6, 1983 in
Arizona Governing Committee v. Norris. That decision stated that optional
annuity benefits provided under an employee's deferred compensation plan could
not, under Title VII of the Civil Rights Act of 1964, vary between men and
women on the basis of sex. Employers and employee organizations should also
consider, in consultation with legal counsel, the impact of Title VII
generally, and comparable state laws that may be applicable, on any
employment-related insurance or benefit plan for which a Policy may be
purchased.
Because of the Norris decision, the charges under the Policy that vary
depending on sex may in some cases not vary on the basis of the Insured's sex.
Unisex rates to be provided by us will apply, if requested on the application,
for tax-qualified plans and those plans where an employer believes that the
Norris decision applies. In this case, references made to the mortality tables
applicable to this Policy are to be disregarded and substituted with an 60%
male 40% female blend of the 1980 Commissioner's Standard Ordinary Smoker and
Non-Smoker Mortality Tables, Age Last Birthday.
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 that 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.
The Policies will be distributed by the general distributor, Washington
Square Securities, Inc. ("WSSI"), a Minnesota corporation, which is an
affiliate of ours. WSSI is a securities broker-dealer registered with the SEC
and is a member of the National Association of Securities Dealers, Inc.
("NASD"). 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
40
<PAGE>
will be no more than 55% of the premiums paid up to the annualized Minimum
Monthly Premium, plus 3% of any additional premium. In any subsequent Policy
Year, commissions generally will be 3% 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 .25% of the average monthly Accumulation
Value during each Policy Year. Further, registered representatives may be
eligible to receive certain overrides, and other benefits 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 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, 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* Retired 1998; Senior Vice President of ReliaStar Financial Corp. from 1991 to 1998; 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 from 1996 to 1998; Director of various subsidiaries of
ReliaStar Financial Corp.
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.
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 1995; 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.
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Directors and Officers and Business Experience
- ------------------------- -----------------------------------------------------------------------------------------------
<S> <C>
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 Dean and Executive Dean of Hofstra University since 1991; Sr. Vice President of Drake Beam
Haynes, Jr.* 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, Chief Financial Officer and Treasurer of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company since 1994; Vice President, Treasurer and Chief Accounting
Officer from 1990 to 1994; Director and Officer of various subsidiaries of ReliaStar Financial
Corp.
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 & Wardwell (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 of 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>
42
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Directors and Officers and Business Experience
- ------------------------ ---------------------------------------------------------------------------------------------
<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 Enterprises, Inc. (New York management consulting firm) since 1996;
President and Chief Executive Officer of Country Bank (financial institution) from 1986 to
1996.
</TABLE>
* Director
** Officer
*** 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.
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 Position 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
43
<PAGE>
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
Department 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.
Bonding Arrangements
The Company maintains 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 financial statements of ReliaStar Life Insurance Company of New York
Variable Life Separate Account I as of and for the year ended December 31, 1998
and for the period from August 8, 1997 (date of inception) to December 31, 1997
and the annual financial statements of ReliaStar Life Insurance Company of New
York included in this Prospectus have been audited by Deloitte & Touche,
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 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 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.
44
<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
45
<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.
46
<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.
47
<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.
48
<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.
49
<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 Emerging Growth
Growth + Value Portfolio High Yield Bond Portfolio 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.
50
<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.
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>
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.
52
<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 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.
53
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS, Continued
1. ORGANIZATION: -- CONTINUED:
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.
54
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS, 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>
55
<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
56
<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.
57
<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.
58
<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.
59
<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.
60
<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.
61
<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.
62
<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.
63
<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.
64
<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>
65
<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.
66
<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>
67
<PAGE>
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.
68
<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>
69
<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 (1.8) (1.7)
Unrecognized Prior Service Cost 3.6 8.5 (4.7) (7.2)
Unrecognized Transition Asset -- (.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.
70
<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.
71
<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.
72
<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.
73
<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.
74
<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:
<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.
75
<PAGE>
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>
(This Page Left Blank Intentionally)
<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.
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.
B-1
<PAGE>
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 an
Insured of a given Age (who pays the given Planned Periodic Premiums annually)
would vary over time if the investment return of the assets held in the Funds
were a uniform, gross, after-tax, annual rate of 0 percent, 6 percent or 12
percent.
The tables on pages C-3 through C-8 illustrate a Policy issued to a male
Age 40, in a standard Rate Class and qualifying for non-smoker rates. The
Accumulation Values, Cash Surrender Values, and Death Benefits would be lower
if the Insured were in a substandard Rate Class or did not qualify for the
nonsmoker rates because the cost of insurance would be increased. The
Accumulation Values, Cash Surrender Values and Death Benefits would be
different from those shown if the gross annual investment returns averaged 0
percent, 6 percent, and 12 percent over a period of years, but fluctuated above
and below those averages for individual Policy Years.
Within the tables, the second and fifth columns illustrate the
Accumulation Value of the Policy over the designated period. The Accumulation
Value is the total amount that a Policy provides for investment at any time.
The third and sixth columns illustrate the Cash Surrender Value of a Policy
over the designated period. The Cash Surrender Value is equal to the
Accumulation Value less any Surrender Charges, Loan Amount (assumed to be zero
in these illustrations) and unpaid Monthly Deductions (also assumed to be
zero). The fourth and seventh columns illustrate the Death Benefit of a Policy
over the designated period. The second, third, and fourth columns assume that
throughout the life of the Policy, the monthly charge for the cost of
insurance, the Monthly Mortality and Expense Charge and the Monthly
Administrative Charge are based upon the maximums (i.e. guaranteed) permitted
in the policy. The maximum allowable cost of insurance rates are based on the
1980 Commissioners Standard Ordinary Mortality Tables for Nonsmokers and
Smokers. The fifth, sixth, and seventh columns assume that the monthly charge
for cost of insurance, the Monthly Mortality and Expense Charge, and the
Monthly Administrative Charge are based on the current amounts expected to be
charged. The Death Benefits also vary between tables depending upon whether the
Level Amount Death Benefit Option (Tables at pages C-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 available
through Fidelity Variable Insurance Products Fund, the three portfolios
available through Fidelity Variable Insurance Products Fund II, the four
portfolios of Janus Aspen Series, the three funds of NeubergerBerman Advisers
Management Trust, the five portfolios available through Northstar Galaxy Trust,
the four portfolios available through the OCC Accumulatioon Trust, and the
three funds available through 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 any expense reimbursement arrangements, total
operating expenses would be an average annual rate of 0.88%. Hypothetical Cash
Surrender Values, Accumulation Values, and the Death Benefit 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 the
proposed Insured's 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
FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
---------------------------------------------- ---------------------------------------------
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>
1 769 0 100,000* 821 0 100,000*
2 1,510 0 100,000* 1,617 0 100,000*
3 2,222 392 100,000 2,387 557 100,000
4 2,904 1,074 100,000 3,130 1,300 100,000
5 3,555 1,725 100,000 3,843 2,013 100,000
6 4,172 2,525 100,000 4,527 2,880 100,000
7 4,755 3,291 100,000 5,180 3,716 100,000
8 5,302 4,021 100,000 5,800 4,519 100,000
9 5,812 4,714 100,000 6,385 5,287 100,000
10 6,282 5,367 100,000 6,934 6,019 100,000
11 6,709 5,977 100,000 7,442 6,710 100,000
12 7,087 6,538 100,000 7,913 7,364 100,000
13 7,412 7,046 100,000 8,341 7,975 100,000
14 7,676 7,493 100,000 8,724 8,541 100,000
15 7,876 7,876 100,000 9,058 9,058 100,000
16 8,003 8,003 100,000 9,336 9,336 100,000
17 8,052 8,052 100,000 9,558 9,558 100,000
18 8,020 8,020 100,000 9,719 9,719 100,000
19 7,897 7,897 100,000 9,815 9,815 100,000
20 7,673 7,673 100,000 9,840 9,840 100,000
AGE
70 0 0 100,000 4,926 4,926 100,000
**
</TABLE>
(1) Assumes a $1,200 premium (which exceeds the annualized minimum monthly
premium) is paid at the beginning of each policy year. Values will be
different if premiums are paid with a different frequency or in different
amounts.
(2) Assumes that no policy loans or partial withdrawals have been made.
Excessive loans or withdrawals may cause the policy to lapse because of
insufficient cash surrender value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect during
the years shown. Therefore, the policy remains in force even though the cash
surrender value is zero.
** Policy terminates prior to age 75.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-3
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
---------------------------------------------- ---------------------------------------------
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>
1 826 0 100,000* 879 0 100,000*
2 1,671 0 100,000* 1,784 0 100,000*
3 2,536 706 100,000 2,717 887 100,000
4 3,419 1,589 100,000 3,675 1,845 100,000
5 4,321 2,491 100,000 4,658 2,828 100,000
6 5,239 3,592 100,000 5,667 4,020 100,000
7 6,173 4,709 100,000 6,702 5,238 100,000
8 7,122 5,841 100,000 7,761 6,480 100,000
9 8,085 6,987 100,000 8,845 7,747 100,000
10 9,060 8,145 100,000 9,952 9,037 100,000
11 10,044 9,312 100,000 11,080 10,348 100,000
12 11,033 10,484 100,000 12,232 11,683 100,000
13 12,020 11,654 100,000 13,407 13,041 100,000
14 13,002 12,819 100,000 14,601 14,418 100,000
15 13,971 13,971 100,000 15,813 15,813 100,000
16 14,922 14,922 100,000 17,039 17,039 100,000
17 15,850 15,850 100,000 18,281 18,281 100,000
18 16,749 16,749 100,000 19,533 19,533 100,000
19 17,613 17,613 100,000 20,795 20,795 100,000
20 18,430 18,430 100,000 22,065 22,065 100,000
AGE
70 20,169 20,169 100,000 34,690 34,690 100,000
75 9,312 9,312 100,000 39,929 39,929 100,000
80 0 0 100,000 42,411 42,411 100,000
85 0 0 100,000 37,649 37,649 100,000
90 0 0 100,000 13,144 13,144 100,000
**
</TABLE>
(1) Assumes a $1,200 premium (which exceeds the annualized minimum monthly
premium) is paid at the beginning of each policy year. Values will be
different if premiums are paid with a different frequency or in different
amounts.
(2) Assumes that no policy loans or partial withdrawals have been made.
Excessive loans or withdrawals may cause the policy to lapse because of
insufficient cash surrender value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect during
the years shown. Therefore, the policy remains in force even though the
cash surrender value is zero.
** Policy terminates prior to age 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-4
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
-------------------------------------------- --------------------------------------------
Cash Cash
Accumulation Surrender Death Accumulation 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>
1 882 0 100,000* 937 0 100,000*
2 1,839 9 100,000 1,960 130 100,000
3 2,876 1,046 100,000 3,075 1,245 100,000
4 4,002 2,172 100,000 4,291 2,461 100,000
5 5,224 3,394 100,000 5,618 3,788 100,000
6 6,549 4,902 100,000 7,065 5,418 100,000
7 7,987 6,523 100,000 8,647 7,183 100,000
8 9,550 8,269 100,000 10,374 9,093 100,000
9 11,249 10,151 100,000 12,263 11,165 100,000
10 13,097 12,182 100,000 14,329 13,414 100,000
11 15,107 14,375 100,000 16,589 15,857 100,000
12 17,292 16,743 100,000 19,069 18,520 100,000
13 19,668 19,302 100,000 21,789 21,423 100,000
14 22,252 22,069 100,000 24,775 24,592 100,000
15 25,064 25,064 100,000 28,058 28,058 100,000
16 28,128 28,128 100,000 31,667 31,667 100,000
17 31,471 31,471 100,000 35,644 35,644 100,000
18 35,127 35,127 100,000 40,031 40,031 100,000
19 39,132 39,132 100,000 44,879 44,879 100,000
20 43,527 43,527 100,000 50,244 50,244 100,000
AGE
70 123,143 123,143 142,846 149,460 149,460 173,374
75 202,599 202,599 216,782 250,591 250,591 268,133
80 330,769 330,769 347,308 417,176 417,176 438,035
85 529,860 529,860 556,353 686,019 686,019 720,321
90 830,345 830,345 871,862 1,114,667 1,114,667 1,170,401
95 1,309,783 1,309,783 1,322,882 1,816,060 1,816,060 1,834,221
</TABLE>
(1) Assumes a $1,200 premium (which exceeds the annualized minimum monthly
premium) is paid at the beginning of each policy year. Values will be
different if premiums are paid with a different frequency or in different
amounts.
(2) Assumes that no policy loans or partial withdrawals have been made.
Excessive loans or withdrawals may cause the policy to lapse because of
insufficient cash surrender value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect during
the years shown. Therefore, the policy remains in force even though the
cash surrender value is zero.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-5
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
---------------------------------------------- ---------------------------------------------
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>
1 767 0 100,767* 819 0 100,819*
2 1,504 0 101,504* 1,610 0 101,610*
3 2,209 379 102,209 2,374 544 102,374
4 2,882 1,052 102,882 3,108 1,278 103,108
5 3,521 1,691 103,521 3,810 1,980 103,810
6 4,124 2,477 104,124 4,479 2,832 104,479
7 4,689 3,225 104,689 5,114 3,650 105,114
8 5,215 3,934 105,215 5,713 4,432 105,713
9 5,700 4,602 105,700 6,273 5,175 106,273
10 6,140 5,225 106,140 6,792 5,877 106,792
11 6,533 5,801 106,533 7,266 6,534 107,266
12 6,873 6,324 106,873 7,697 7,148 107,697
13 7,154 6,788 107,154 8,080 7,714 108,080
14 7,368 7,185 107,368 8,412 8,229 108,412
15 7,510 7,510 107,510 8,689 8,689 108,689
16 7,574 7,574 107,574 8,903 8,903 108,903
17 7,553 7,553 107,553 9,055 9,055 109,055
18 7,443 7,443 107,443 9,138 9,138 109,138
19 7,237 7,237 107,237 9,148 9,148 109,148
20 6,924 6,924 106,924 9,080 9,080 109,080
AGE
70 0 0 94,391 3,008 3,008 103,008
**
</TABLE>
(1) Assumes a $1,200 premium (which exceeds the annualized minimum monthly
premium) is paid at the beginning of each policy year. Values will be
different if premiums are paid with a different frequency or in different
amounts.
(2) Assumes that no policy loans or partial withdrawals have been made.
Excessive loans or withdrawals may cause the policy to lapse because of
insufficient cash surrender value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect during
the years shown. Therefore, the policy remains in force even though the cash
surrender value is zero.
** Policy terminates prior to age 75.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-6
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
---------------------------------------------- ---------------------------------------------
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>
1 823 0 100,823* 877 0 100,877*
2 1,664 0 101,664* 1,777 0 101,777*
3 2,521 691 102,521 2,702 872 102,702
4 3,393 1,563 103,393 3,649 1,819 103,649
5 4,279 2,449 104,279 4,617 2,787 104,617
6 5,176 3,529 105,176 5,605 3,958 105,605
7 6,084 4,620 106,084 6,613 5,149 106,613
8 6,999 5,718 106,999 7,639 6,358 107,639
9 7,920 6,822 107,920 8,681 7,583 108,681
10 8,844 7,929 108,844 9,736 8,821 109,736
11 9,766 9,034 109,766 10,800 10,068 110,800
12 10,679 10,130 110,679 11,876 11,327 111,876
13 11,575 11,209 111,575 12,959 12,593 112,959
14 12,447 12,264 112,447 14,043 13,860 114,043
15 13,286 13,286 113,286 15,125 15,125 115,125
16 14,081 14,081 114,081 16,196 16,196 116,196
17 14,824 14,824 114,824 17,255 17,255 117,255
18 15,508 15,508 115,508 18,293 18,293 118,293
19 16,119 16,119 116,119 19,306 19,306 119,306
20 16,642 16,642 116,642 20,285 20,285 120,285
AGE
70 11,776 11,776 111,776 26,285 26,285 126,285
75 0 0 94,621 23,513 23,513 123,513
80 0 0 45,036 11,868 11,868 111,868
**
</TABLE>
(1) Assumes a $1,200 premium (which exceeds the annualized minimum monthly
premium) is paid at the beginning of each policy year. Values will be
different if premiums are paid with a different frequency or in different
amounts.
(2) Assumes that no policy loans or partial withdrawals have been made.
Excessive loans or withdrawals may cause the policy to lapse because of
insufficient cash surrender value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect during
the years shown. Therefore, the policy remains in force even though the
cash surrender value is zero.
** Policy terminates prior to age 85.
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
FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 95
MALE ISSUE AGE: 40
NON-SMOKER
$1,200 ANNUAL PREMIUM
$100,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
Guaranteed Costs Current Costs
---------------------------------------------- -------------------------------------------------
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>
1 880 0 100,880* 935 0 100,935*
2 1,831 1 101,831 1,952 122 101,952
3 2,859 1,029 102,859 3,058 1,228 103,058
4 3,971 2,141 103,971 4,261 2,431 104,261
5 5,171 3,341 105,171 5,567 3,737 105,567
6 6,468 4,821 106,468 6,986 5,339 106,986
7 7,868 6,404 107,868 8,529 7,065 108,529
8 9,379 8,098 109,379 10,205 8,924 110,205
9 11,010 9,912 111,010 12,025 10,927 112,025
10 12,770 11,855 112,770 14,003 13,088 114,003
11 14,667 13,935 114,667 16,149 15,417 116,149
12 16,709 16,160 116,709 18,483 17,934 118,483
13 18,903 18,537 118,903 21,020 20,654 121,020
14 21,256 21,073 121,256 23,775 23,592 123,775
15 23,776 23,776 123,776 26,768 26,768 126,768
16 26,474 26,474 126,474 30,014 30,014 130,014
17 29,358 29,358 129,358 33,540 33,540 133,540
18 32,444 32,444 132,444 37,368 37,368 137,368
19 35,741 35,741 135,741 41,524 41,524 141,524
20 39,258 39,258 139,258 46,036 46,036 146,036
AGE
70 87,720 87,720 187,720 119,593 119,593 219,593
75 120,482 120,482 220,482 187,128 187,128 287,128
80 153,936 153,936 253,936 289,488 289,488 389,488
85 178,346 178,346 278,346 443,751 443,751 543,751
90 170,665 170,665 270,665 677,273 677,273 777,273
95 93,333 93,333 193,333 1,035,401 1,035,401 1,135,401
</TABLE>
(1) Assumes a $1,200 premium (which exceeds the annualized minimum monthly
premium) is paid at the beginning of each policy year. Values will be
different if premiums are paid with a different frequency or in different
amounts.
(2) Assumes that no policy loans or partial withdrawals have been made.
Excessive loans or withdrawals may cause the policy to lapse because of
insufficient cash surrender value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect during
the years shown. Therefore, the policy remains in force even though the
cash surrender value is zero.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-8
<PAGE>
APPENDIX D
Maximum Surrender Charge Per $1,000 of Face Amount
<TABLE>
<CAPTION>
Insured's Age at Charge Per $1,000 of Face Insured's Age at Charge Per $1,000 of Face
Policy Date or Amount Policy Date or Amount
Effective Date of (Initial Face Amount or Effective Date (Initial Face Amount or
Increase, as Amount of of Increase, as Amount of
Appropriate Requested Increase) Appropriate Requested Increase)
- ------------------- ----------------------------- ----------------- ----------------------------
Male Female Male Female
Nonsmoker Nonsmoker Nonsmoker Nonsmoker
and Standard and Standard and Standard and Standard
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
0 6.00 6.00 38 17.40 16.10
1 6.10 6.00 39 17.80 16.50
2 6.20 6.00 40 18.30 16.80
3 6.30 6.00 41 18.80 17.20
4 6.40 6.00 42 19.30 17.60
5 6.50 6.00 43 19.80 18.10
6 6.60 6.00 44 20.40 18.50
7 6.80 6.00 45 20.90 19.00
8 7.00 6.00 46 21.60 19.50
9 7.20 6.20 47 22.20 20.00
10 7.50 6.40 48 22.90 20.60
11 7.80 6.60 49 23.70 21.20
12 8.00 6.80 50 24.50 21.80
13 8.20 7.00 51 25.30 22.40
14 8.50 7.20 52 26.20 23.10
15 8.80 7.40 53 27.20 23.90
16 9.00 7.60 54 28.20 24.60
17 9.20 7.80 55 29.30 25.50
18 9.50 8.00 56 30.40 26.30
19 9.80 8.20 57 31.60 27.20
20 10.00 8.50 58 32.90 28.20
21 10.30 8.90 59 34.30 29.30
22 10.90 9.20 60 35.70 30.40
23 11.30 9.50 61 37.30 31.60
24 11.90 10.00 62 39.00 32.90
25 12.50 10.50 63 40.70 34.30
26 12.80 11.10 64 42.60 35.80
27 13.40 11.70 65 44.60 37.30
28 13.80 12.30 66 46.70 38.90
29 14.40 12.70 67 48.90 40.60
30 14.70 13.00 68 48.60 42.40
31 15.00 13.60 69 48.30 44.40
32 15.30 14.20 70 48.10 46.60
33 15.60 14.60 71 47.80 47.90
34 15.90 14.80 72 47.60 47.50
35 16.20 15.10 73 47.40 47.10
36 16.60 15.40 74 47.20 46.70
37 17.00 15.80 75 46.90 46.20
---- ----- ----- -- ----- -----
</TABLE>
D-1
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
APPENDIX E
Surrender Charge Whole Life Premium Per $1,000 of Face Amount
The following table provides the Surrender Charge Whole Life Premium factors
that are used in determining the Premium Related Surrender Charge Reduction.
See section entitled "Surrender Charge" in the Prospectus.
<TABLE>
<CAPTION>
Surrender Charge Whole Life Surrender Charge Whole Life
Insured's Age Premium Per $1,000 of Insured's Age Premium Per $1,000 of
at Policy Date Initial Face Amount at Policy Date Initial Face Amount
- ---------------- --------------------------- ---------------- --------------------------
Male Female Male Female
Nonsmoker Nonsmoker Nonsmoker Nonsmoker
and Smoker and Smoker and Smoker and Smoker
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
0 $3.31 $ 2.81 38 $13.31 $ 11.43
1 3.34 2.85 39 13.93 11.94
2 3.45 2.94 40 14.58 12.47
3 3.55 3.04 41 15.27 13.02
4 3.67 3.13 42 16.00 13.61
5 3.79 3.24 43 16.77 14.22
6 3.92 3.35 44 17.58 14.87
7 4.06 3.46 45 18.44 15.55
8 4.21 3.58 46 19.36 16.27
9 4.36 3.71 47 20.32 17.03
10 4.53 3.85 48 21.35 17.83
11 4.70 3.99 49 22.44 18.67
12 4.87 4.13 50 23.60 19.57
13 5.05 4.29 51 24.84 20.52
14 5.24 4.45 52 26.15 21.52
15 5.42 4.61 53 27.55 22.59
16 5.61 4.78 54 29.04 23.71
17 5.80 4.96 55 30.63 24.91
18 6.00 5.14 56 32.31 26.18
19 6.21 5.33 57 34.11 27.54
20 6.42 5.53 58 36.03 28.99
21 6.65 5.74 59 38.08 30.55
22 6.89 5.96 60 40.28 32.23
23 7.14 6.19 61 42.63 34.03
24 7.41 6.44 62 45.15 35.98
25 7.69 6.69 63 47.84 38.06
26 8.00 6.96 64 50.72 40.29
27 8.32 7.24 65 53.79 42.67
28 8.66 7.53 66 57.09 45.23
29 9.02 7.84 67 60.62 47.98
30 9.40 8.16 68 64.41 50.96
31 9.80 8.50 69 68.50 54.21
32 10.22 8.86 70 72.90 57.75
33 10.67 9.24 71 77.65 61.62
34 11.14 9.63 72 82.75 65.84
35 11.64 10.05 73 88.20 70.41
36 12.17 10.49 74 94.00 75.36
37 12.73 10.95 75 100.17 80.71
------ ------ ------ -- ------- -------
</TABLE>
E-1
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
(This Page Intentionally Left Blank)
<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>
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 93 pages.
Undertaking 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 Ex-99.C.6
3. Independent Auditor's Consent of Deloitte & Touche -- Filed as Ex-99.C.1
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:
<TABLE>
<S> <C>
(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 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.2
(4) Not applicable.
(5) Form of Policy available (together with available Policy riders).4
(6)(a) Amended Charter of RLICNY.4
(b) Amended Bylaws of RLICNY.4
(7) Not applicable.
(8)(a) Form of Participation Agreement by and between RLICNY and Fred Alger Management, Inc.3
(b) Form of Amendment No. 1 to Participation Agreement by and between Depositor and Fred Alger
Management, Inc.
(c) Participation Agreement with Fidelity's Variable Insurance Products Fund and Fidelity Distributors
Corporation and Form of Amendment No. 1.1
(d) Form of Amendment Nos. 2 and 3 to Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation.4
(e) Form of Amendment No. 4 to Participation Agreement among Depositor and Fidelity's Variable
Insurance Products Fund and Fidelity Distributors Corporation.
(f) Participation Agreement with Fidelity's Variable Insurance Products Fund II and Fidelity Distributors
Corporation and Form of Amendment No. 1.1
(g) Form of Amendment Nos. 2 and 3 to Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation.4
(h) Form of Amendment No. 4 to Participation Agreement among Depositor and Fidelity's Variable
Insurance Products Fund II and Fidelity Distributors Corporation.
(i) Form of Participation Agreement by and between RLICNY and Janus Aspen Series.3
(j) Form of Amendment No. 1 to Participation by and between Depositor and Janus Aspen Series.
(k) Form of Participation Agreement by and between RLICNY, Neuberger Berman Advisers Management
Trust, Advisers Managers Trust and Neuberger Berman Management Inc.3
(l) Amendment No. 1 to Participation Agreement by and among Depositor, Neuberger Berman Advisers
Management Trust, Advisers Managers Trust and Neuberger Berman Management Inc.
(m) Form of Participation Agreement by and between RLICNY and OpCap Advisors.3
(n) Amendment No. 1 to Participation Agreement by and between Depositor and OpCap Advisors.
(o) Form of Participation Agreement with Putnam Variable Trust (formerly known as Putnam Capital
Manager Trust) and Putnam Mutual Funds Corp.2
(p) Form of Service Agreement by and between RLICNY and Janus Capital Corporation.3
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
(q) Form of Amendment No. 1 to Participation Agreement with Putnam Variable Trust and Putnam Mutual
Funds Corp.4
(r) Form of Amendment No. 2 to Participation Agreement among Depositor and Putnam Variable Trust
and Putnam Mutual Funds Corp.
(s) Form of Service Agreement by and RLICNY and Fred Alger Management, Inc.3
(t) Form of Service Contract with Fidelity Distributors Corporation.2
(u) Form of Service Agreement with Fidelity Investments Institutional Operations Company, Inc.2
(v) Form of Service Agreement by and between RLICNY and Neuberger Berman Management Inc. .3
(w) Form of Service Agreement by and between RLICNY and OpCap Advisors.3
(x) Form of Management Services Agreement with ReliaStar Life Insurance Company.1
(9) Not applicable.
(10) Policy application.4
</TABLE>
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.
<TABLE>
<S> <C>
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. Carb4
R. Michael Conley4
Richard R. Crowl4
John H. Flittie4
Ambassador Ulric Haynes, Jr.
Wayne R. Huneke4
Mark S. Jordahl
Kenneth U. Kuk4
James R. Miller
Fioravante G. Perrotta4
Robert C. Salipante4
John G. Turner4
Charles B. Updike4
Ross M. Weale4
</TABLE>
---------
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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Registrant certifies that it meets all of the requirements
of effectiveness of Post-Effective Amendment No. 4 to this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
caused this Amendment to this Registration Statement to be signed on its behalf,
in the City of Minneapolis, and State of Minnesota, on this 9th 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 and the Investment Company Act of
1940, Depositor has caused Post-Effective Amendment No. 4 to this Registration
Statement to be signed on its behalf, in the City of Minneapolis and State of
Minnesota, on this 9th 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, Post-Effective Amendment No. 4 to
this Registration Statement has been signed on this 9th 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/ Chris D. Schreier Treasurer and Controller
- --------------------------
Chris D. Schreier
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. Milller Ross M. Weale
Ambassador Ulric Haynes, Jr. Fioravante G. Perrotta
* A majority of the Board of Directors
*Jeffrey A. Proulx, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named directors of ReliaStar Life Insurance
Company of New York pursuant to powers of attorney duly executed by such
persons.
/s/ Jeffrey A. Proulx
-------------------------------------
Jeffrey A. Proulx, Attorney-In-Fact
<PAGE>
INDEX TO EXHIBITS
EX-99.A.8b Form of Amendment No. 1 to Participation Agreement by and
between Depositor and Fred Alger Management, Inc.
EX-99.A.8e Form of Amendment No. 4 to Participation Agreement among
Depositor and Fidelity's Variable Insurance Products Fund
and Fidelity Distributors Corporation.
EX-99.A.8h Form of Amendment No. 4 to Participation Agreement among
Depositor and Fidelity's Variable Insurance Products Fund
II and Fidelity Distributors Corporation.
EX-99.A.8j Form of Amendment No. 1 to Participation Agreement by and
between Depositor and Janus Aspen Series.
EX-99.A.8l Amendment No. 1 to Participation Agreement by and among
Depositor, Neuberger Berman Advisers Management Trust,
Advisers Managers Trust and NBMI.
EX-99.A.8n Amendment No. 1 to Participation Agreement by and between
Depositor and OpCap Advisors.
EX-99.A.8r Form of Amendment No. 2 to Participation Agreement among
Depositor and Putnam Variable Trust and Putnam Mutual
Funds Corp.
EX-99.2. Opinion and consent of Jeffrey A. Proulx, Esquire, as to
the legality of the Securities being registered.
EX-99.C1. Independent Auditors' Consent
EX.99-C6. Actuarial Opinion and Consent
EX-24. Powers of Attorney
MARCH __, 1999 AMENDMENT TO
PARTICIPATION AGREEMENT
AMONG
THE ALGER AMERICAN FUND,
FRED ALGER & COMPANY, INCORPORATED, AND
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
This is an amendment to the Participation Agreement dated August 8, 1997
("Agreement") among The Alger American Fund, Fred Alger & Company, Incorporated
and ReliaStar Life Insurance Company of New York (formerly ReliaStar Bankers
Security Life Insurance Company) ("the Company").
Schedule A to the Agreement is hereby amended and replaced to include
the following separate accounts of the Company:
- ReliaStar Life Insurance Company of New York Variable Annuity
Separate Account II
- ReliaStar Life Insurance Company of New York Variable Life
Separate Account I
Schedule A, as amended, is hereby made a part of the Agreement.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Amendment to the Agreement as of March __, 1999.
THE ALGER AMERICAN FUND
By:__________________________________________
Name:________________________________________
Title:_______________________________________
FRED ALGER & COMPANY, INCORPORATED
By:__________________________________________
Name:________________________________________
Title:_______________________________________
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By:__________________________________________
Name:________________________________________
Title:_______________________________________
VIP PARTICIPATION AGREEMENT AMENDMENT
AMENDMENT NO. 4
Amendment to the Participation Agreement among ReliaStar Life Insurance Company
of New York (the "Company"), Variable Insurance Products Fund (the "Fund") and
Fidelity Distributors Corporation (the "Underwriter") dated March 9, 1995 (the
"Agreement").
1) Schedule A is hereby revised to include the following additional separate
account:
Schedule A
Name of Separate Account Policy Form Numbers of Contracts
and Date Established by Funded by Separate Account
Board of Directors --------------------------
------------------
ReliaStar Life Insurance 85-499
Company of New York
Variable Annuity Separate
Account II
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and on its behalf by its duly authorized representative as of
_______________, 1999.
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By:__________________________________________
Name: Robert C. Salipante
________________________________________
Title: President and Chief Executive Officer
________________________________________
VARIABLE INSURANCE PRODUCTS FUND
By:__________________________________________
Name: Robert C. Pozen
________________________________________
Title: Senior Vice President
________________________________________
FIDELITY DISTRIBUTORS CORPORATION
By:__________________________________________
Name: Kevin J. Kelly
________________________________________
Title: Vice President
________________________________________
VIP II PARTICIPATION AGREEMENT AMENDMENT
AMENDMENT NO. 4
Amendment to the Participation Agreement among ReliaStar Life Insurance Company
of New York (the "Company"), Variable Insurance Products Fund II (the "Fund")
and Fidelity Distributors Corporation (the "Underwriter") dated March 9, 1995
(the "Agreement").
1) Schedule A is hereby revised to include the following additional separate
account:
Schedule A
Name of Separate Account Policy Form Numbers of Contracts
and Date Established by Funded by Separate Account
Board of Directors --------------------------
------------------
ReliaStar Life Insurance 85-499
Company of New York
Variable Annuity Separate
Account II
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and on its behalf by its duly authorized representative as of
_______________, 1999.
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By:__________________________________________
Name: Robert C. Salipante
________________________________________
Title: President and Chief Executive Officer
________________________________________
VARIABLE INSURANCE PRODUCTS FUND II
By:__________________________________________
Name: Robert C. Pozen
________________________________________
Title: Senior Vice President
________________________________________
FIDELITY DISTRIBUTORS CORPORATION
By:__________________________________________
Name: Kevin J. Kelly
________________________________________
Title: Vice President
________________________________________
AMENDMENT TO FUND PARTICIPATION AGREEMENT
This Amendment to the Fund Participation Agreement ("Agreement") dated
August 8, 1997, between Janus Aspen Series, an open-end management investment
company organized as a Delaware business trust (the "Trust"), and ReliaStar Life
Insurance Company of New York, a New York life insurance company (the "Company")
is effective as of____________,1999.
AMENDMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree to amend the Agreement as follows:
1. Schedule A of this Agreement shall be deleted and replaced with
the attached Schedule A.
2. All other terms of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Amendment as of the date and year first above written.
RELIASTAR LIFE INSURANCE COMPANY
OF NEW YORK
By:__________________________________________
Name:________________________________________
Title:_______________________________________
JANUS ASPEN SERIES
By:__________________________________________
Name:________________________________________
Title:_______________________________________
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and the Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
ReliaStar Life Insurance Company of New #85-251
York Variable Life Separate Account I #85-438
Established March 23, 1982
ReliaStar Life Insurance Company of New #85-499
York Variable Annuity Separate Account II
Established June 15, 1998
Exhibit-99.A.8l
AMENDMENT NO. 1 TO THE
FUND PARTICIPATION AGREEMENT
This AMENDMENT NO. 1, dated as of February 1, 1999, among
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK (f/k/a ReliaStar Bankers Security
Life Insurance Company). ("LIFE COMPANY"), and NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST ("TRUST"), ADVISERS MANAGERS TRUST ("MANAGERS TRUST"), and
NEUBERGER BERMAN MANAGEMENT INC. ("NB MANAGEMENT"), is made to the Fund
Participation Agreement, dated as of August 8, 1997, among LIFE COMPANY, TRUST,
MANAGERS TRUST and NB MANAGEMENT (the "Agreement"). Terms defined in the
Agreement are used herein as therein defined.
WHEREAS, the parties desire to amend Appendices A and B to the
Agreement to add one or more Portfolios and Series.
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the parties agree as follows:
1. Appendix A of the Agreement is hereby deleted and replaced with new Appendix
A attached hereto.
2. Appendix B of the Agreement is hereby deleted and replaced with new Appendix
B attached hereto.
3. Except as modified hereby, all other terms and conditions of the
Agreement shall remain in full force and effect.
3. This Amendment No. 1 may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same First Amendment.
NEUBERGER BERMAN NEUBERGER BERMAN
ADVISERS MANAGEMENT TRUST MANAGEMENT INC.
By: /s/ Stanley Egener By: /s/ Daniel J. Sullivan
-------------------- -------------------------
Name: Stanley Egener Name: Daniel J. Sullivan
Title: President Title: Senior Vice President
ADVISERS MANAGERS TRUST RELIASTAR LIFE INSURANCE
COMPANY OF NEW YORK
By: /s/ Stanley Egener By: /s/ Richard R. Crowl
-------------------- -------------------------
Name: Stanley Egener Name: Richard R. Crowl
Title: President Title: Senior Vice President and
General Counsel
<PAGE>
<TABLE>
<CAPTION>
APPENDIX A
----------
Neuberger Berman Advisers Corresponding Series of
Management Trust and its Series (Portfolios) Advisers Managers Trust (Series)
- -------------------------------------------- --------------------------------
<S> <C>
Balanced Portfolio AMT Balanced Investments
Growth Portfolio AMT Growth Investments
Guardian Portfolio AMT Guardian Investments
International Portfolio AMT International Investments
Limited Maturity Bond Portfolio AMT Limited Maturity Bond Investments
Liquid Asset Portfolio AMT Liquid Asset Investments
Mid-Cap Growth Portfolio AMT Mid-Cap Growth Investments
Partners Portfolio AMT Partners Investments
Socially Responsive Portfolio AMT Socially Responsive Investments
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
----------
Separate Accounts Selected Portfolios
- ----------------- -------------------
<S> <C>
ReliaStar Life Insurance Company Partners Portfolio
of New York Variable Life Limited Maturity Bond Portfolio
Separate Account I Socially Responsive Portfolio
Partners Portfolio
ReliaStar Life Insurance Company Limited Maturity Bond Portfolio
of New York Variable Annuity Socially Responsive Portfolio
Separate Account II
</TABLE>
3
SEPTEMBER 1, 1998 AMENDMENT TO
PARTICIPATION AGREEMENT
AMONG
OCC ACCUMULATION TRUST,
OCC DISTRIBUTORS, AND
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
This is an amendment to the August 8, 1997 Participation Agreement
("Agreement") among OCC Accumulation Trust, OCC Distributors and ReliaStar Life
Insurance Company of New York (formerly ReliaStar Bankers Security Life
Insurance Company).
Schedule A to the Agreement is hereby amended to add the following
separate account of the Company:
o ReliaStar Life Insurance Company of New York Variable Annuity
Separate Account II
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Amendment to the Agreement as of September 1, 1998.
OCC ACCUMULATION TRUST
By: /s/ Deborah Kaback
----------------------------------------
Name: Deborah Kaback
--------------------------------------
Title: Secretary
---------------------------------------
OCC DISTRIBUTORS
By: /s/ Thomas E. Duggan
----------------------------------------
Name: Thomas E. Duggan
--------------------------------------
Title: Secretary
---------------------------------------
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ Robert B. Saginaw
----------------------------------------
Name: Robert B. Saginaw
--------------------------------------
Title: Assistant Secretary
---------------------------------------
PUTNAM PARTICIPATION AGREEMENT AMENDMENT
AMENDMENT NO. 2
Amendment to the Participation Agreement among ReliaStar Life Insurance
Company of New York (formerly ReliaStar Bankers Security Life Insurance Company)
(the "Company"), Putnam Variable Trust (the "Trust" ) and Putnam Mutual Funds
Corp. (the "Underwriter") dated January 16, 1997 (the "Agreement").
Schedule A is hereby revised to read as follows:
SCHEDULE A
CONTRACTS
MARCH __, 1999
1. ReliaStar Life Insurance Company of New York Variable Life Separate
Account I
(a) Flexible Premium Variable Life Insurance Policy Contract
Form Number: 85-251 and State Exceptions
(b) Survivorship Flexible Premium Variable Life Insurance
Policy Contract Form Number: 85-438
2. ReliaStar Life Insurance Company of New York Variable Life Separate
Account II
(a) Flexible Premium Variable Annuity Insurance Policy
Contract Form Number: 85-499
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representative as
of _________, 1999.
ReliaStar Life Insurance Company of New York
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Page 1 of 2
<PAGE>
Putnam Variable Trust
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Putnam Mutual Funds Corp.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Page 2 of 2
JEFFREY A. PROULX
Associate Counsel
Phone (612) 372-1810
Fax (612) 342-7531
April 9, 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 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 Policies, 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
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. 4 to Registration
Statement on Form S-6 (File No. 333-19123) 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 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 Prospectus.
/s/ Deloitte & Touche
Minneapolis, Minnesota
April 7, 1999
April 9, 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 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. 4 thereto, File No.
333-19123.
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 Insured Age 40, 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 an Insureds who is Age 40 than to prospective
purchasers of the Contract for other ages.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
Prospectus constituting a part of the Registration Statement.
Sincerely,
/s/ Steven P. West
- ---------------------------
Steven P. West, FSA, MAAA
Assistant Vice President and Actuary
SVUL NY
Rev. 2/98
mis8011i
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
POWER OF ATTORNEY
OF DIRECTOR AND OFFICER
The undersigned director and/or officer of RELIASTAR LIFE INSURANCE
COMPANY OF NEW YORK, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, ROBERT B.
SAGINAW, JEFFREY A. PROULX, and GREGORY A. OLSON each or any one of them, the
undersigned's true and lawful attorneys-in-fact, with full power of
substitution, for the undersigned and in the undersigned's name, place and
stead, to sign and affix the undersigned's name as such director and/or officer
of said Company to a Registration Statement or Registration Statements, under
the Securities Act of 1933 (1933 Act) and the Investment Company Act of 1940
(1940 Act) and any other forms applicable to such registrations, and all
amendments, including post-effective amendments, thereto, to be filed by said
Company with the Securities and Exchange Commission, Washington, DC, in
connection with the registration under the 1933 and 1940 Acts, as amended, of
variable annuity contracts and accumulation units in the ReliaStar Life
Insurance Company of New York Variable Life Separate Account I ("Variable
Account"), and of variable life insurance policies and accumulation units in the
Variable Account, and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 23rd day of March, 1999.
/s/ Ambassador Ulric Haynes, Jr.
--------------------------------
Ambassador Ulric Haynes, Jr.
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
POWER OF ATTORNEY
OF DIRECTOR AND OFFICER
The undersigned director and/or officer of RELIASTAR LIFE INSURANCE
COMPANY OF NEW YORK, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, ROBERT B.
SAGINAW, JEFFREY A. PROULX and GREGORY A. OLSON, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with full power of
substitution, for the undersigned and in the undersigned's name, place and
stead, to sign and affix the undersigned's name as such director and/or officer
of said Company to a Registration Statement or Registration Statements, under
the Securities Act of 1933 (1933 Act) and the Investment Company Act of 1940
(1940 Act) and any other forms applicable to such registrations, and all
amendments, including post-effective amendments, thereto, to be filed by said
Company with the Securities and Exchange Commission, Washington, DC, in
connection with the registration under the 1933 and 1940 Acts, as amended, of
variable annuity contracts and accumulation units in the ReliaStar Life
Insurance Company of New York Variable Life Separate Account I ("Variable
Account"), and of variable life insurance policies and accumulation units in the
Variable Account, and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 30th day of March, 1999.
/s/ Mark S. Jordahl
----------------------------
Mark S. Jordahl
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
POWER OF ATTORNEY
OF DIRECTOR AND OFFICER
The undersigned director and/or officer of RELIASTAR LIFE INSURANCE
COMPANY OF NEW YORK, a New York corporation, does hereby make, constitute and
appoint RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, ROBERT B.
SAGINAW, JEFFREY A. PROULX and GREGORY A. OLSON, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with full power of
substitution, for the undersigned and in the undersigned's name, place and
stead, to sign and affix the undersigned's name as such director and/or officer
of said Company to a Registration Statement or Registration Statements, under
the Securities Act of 1933 (1933 Act) and the Investment Company Act of 1940
(1940 Act) and any other forms applicable to such registrations, and all
amendments, including post-effective amendments, thereto, to be filed by said
Company with the Securities and Exchange Commission, Washington, DC, in
connection with the registration under the 1933 and 1940 Acts, as amended, of
variable annuity contracts and accumulation units in the ReliaStar Life
Insurance Company of New York Variable Life Separate Account I ("Variable
Account"), and of variable life insurance policies and accumulation units in the
Variable Account, and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 23rd day of March, 1999.
/s/ James R. Miller
-------------------------
James R. Miller
