As filed with the Securities Exchange Commission on April 29, 1999.
Registration No. 2-99260
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-6
Post-Effective Amendment No. 23
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
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PRUCO LIFE
SINGLE PREMIUM
VARIABLE LIFE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(888) PRU-2888
(Address and telephone number of principal executive offices)
----------
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copies to:
CHRISTOPHER E. PALMER LEE D. AUGSBURGER
SHEA & GARDNER ASSISTANT GENERAL COUNSEL
1800 MASSACHUSETTS AVENUE, N.W. THE PRUDENTIAL INSURANCE COMPANY
WASHINGTON, D.C. 20036 OF AMERICA
751 BROAD STREET
NEWARK, NEW JERSEY 07102-3777
----------
Flexible Premium Variable Life Insurance Contracts.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 30, 1999 pursuant to paragraph (b) of Rule 485
(date)
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485_
[ ] on _________ pursuant to paragraph (a) of Rule 485
(date)
================================================================================
<PAGE>
CROSS REFERENCE SHEET
(as required by Form N-8B-2))
----------
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. Pruco Life Single Premium Variable Life
Account
6. Pruco Life Single Premium Variable Life
Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Brief Description of the Contract;
Short-Term Cancellation Right or "Free Look";
Pruco Life Single Premium Variable Life
Account; Transfers; Surrenders; Loans;
Amount of Life Insurance; Lapse and
Reinstatement; When Proceeds are Paid;
Voting Rights; Substitution of Series Fund
Shares
11. Brief Description of the Contract; Pruco
Life Single Premium Variable Life Account;
Amount of Life Insurance
12. Not Applicable
13. Brief Description of the Contract;
Allocation of the Premium Payment; Charges;
Additional Premium Payments; Sale of the
Contract and Sales Commissions
14. Brief Description of the Contract;
Short-Term Cancellation Right or "Free
Look"; Requirements for Issuance of a
Contract
15. Brief Description of the Contract;
Allocation of the Premium Payment;
Additional Premium Payments
16. Cover Page; Brief Description of the
Contract; General Information About Pruco
Life Insurance Company, Pruco Life Single
Premium Variable Life Account, and The
Variable Investment Options Available Under
the Contract
17. Transfers; Surrenders; When Proceeds are
Paid
18. Brief Description of the Contract; Pruco
Life Single Premium Variable Life Account;
Amount of Life Insurance
19. Reports to Contract Owners
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
25. Pruco Life Insurance Company
26. Charges
Pruco Life Insurance Company; The
27. Prudential Series Fund, Inc.
28. Pruco Life Insurance Company; Directors and
Officers
29. Pruco Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
i
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
34. Not Applicable
35. Pruco Life Insurance Company
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
44. Brief Description of the Contract; The
Prudential Series Fund, Inc.; Charges;
Pruco Life Single Premium Variable Life
Account; Amount of Life Insurance;
Additional Premium Payments
45. Not Applicable
46. Brief Description of the Contract; Pruco
Life Single Premium Variable Life Account;
The Prudential Series Fund, Inc.
47. Pruco Life Single Premium Variable Life
Account
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Series Fund Shares
53. Federal Tax Status
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements: Financial Statements
of Pruco Life Single Premium Variable Life
Account; Consolidated Financial Statements
of Pruco Life Insurance Company and
Subsidiaries
ii
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PROSPECTUS
MAY 1, 1999
PRUCO LIFE INSURANCE COMPANY DISCOVERY
SINGLE PREMIUM VARIABLE LIFE ACCOUNT LIFE
VARIABLE LIFE INSURANCE CONTRACTS PLUS
[LOGO]
This prospectus describes the DISCOVERY(R) Life Plus Contract*, a variable life
insurance contract (the "Contract") issued by Pruco Life Insurance Company
("Pruco Life"), a stock life insurance company that is a wholly-owned subsidiary
of The Prudential Insurance Company of America . You must pay an initial premium
of at least $10,000. (In some cases, the minimum initial premium is more than
$10,000.)
The Contract provides lifetime insurance coverage, as long as you do not
surrender the Contract and as long as the Contract is not in default beyond its
grace period. The Contract also provides a cash surrender value if the Contract
is surrendered during your lifetime. The death benefit will be the face amount
of insurance stated in the Contract or, under certain circumstances, a higher
amount. The cash surrender value of the Contract varies daily to reflect charges
and the investment performance of the investment options you select. There is no
guaranteed minimum cash surrender value, and if investment performance is poor
for a sufficiently long time, the cash surrender value could decline to zero.
You may invest your premium and its earnings in the following ways:
o Invest in one or more of 15 available subaccounts of the Pruco Life Single
Premium Variable Life Account, each of which invests in a corresponding
portfolio of The Prudential Series Fund, Inc. (the "Series Fund"). The
portfolios are listed below.
CONSERVATIVE BALANCED PORTFOLIO HIGH YIELD BOND PORTFOLIO
DIVERSIFIED BOND PORTFOLIO MONEY MARKET PORTFOLIO
EQUITY PORTFOLIO NATURAL RESOURCES PORTFOLIO
EQUITY INCOME PORTFOLIO PRUDENTIAL JENNISON PORTFOLIO
FLEXIBLE MANAGED PORTFOLIO SMALL CAPITALIZATION STOCK PORTFOLIO
GLOBAL PORTFOLIO STOCK INDEX PORTFOLIO
GOVERNMENT INCOME PORTFOLIO ZERO COUPON BOND 2000 AND 2005 PORTFOLIOS
o Invest in the fixed-rate option, which pays an interest rate periodically
declared by Pruco Life, in its sole discretion. Any such interest rate will
never be less than an effective annual rate of 3%.
o Invest in a real estate investment option. The Pruco Life Variable Contract
Real Property Account (the "Real Property Account") is a separate account of
Pruco Life that, through a partnership, invests primarily in income-producing
real property.
The Contract is a Modified Endowment Contract under federal tax law. Any policy
loan, surrender or other pre-death distribution may result in adverse tax
consequences, and, if the insured is less than age 59-1/2, a 10% tax penalty.
This prospectus describes the Contract generally and the Pruco Life Single
Premium Variable Life Account. The attached prospectus for the Series Fund and
its statement of additional information describe the investment objectives and
the risks of investment in the portfolios. The attached prospectus for the Pruco
Life Variable Contract Real Property Account described the real estate
investment option and the risks of investment in that option. Please read this
prospectus and the attached prospectuses and keep them for future reference.
----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
213 Washington Street P.O. Box 14215
Newark, New Jersey 07102-2992 New Brunswick, New Jersey 08906-4215
Telephone: (888) PRU-2888 Telephone: (888) PRU-2888
*DISCOVERY is a registered mark of Prudential.
SPVL-1 Ed 5-99
Catalog No. 6401654
<PAGE>
PROSPECTUS CONTENTS
PAGE
GLOSSARY.................................................................... 1
INTRODUCTION AND SUMMARY.................................................... 2
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE SINGLE
PREMIUM VARIABLE LIFE ACCOUNT, AND THE VARIABLE INVESTMENT OPTIONS
AVAILABLE UNDER THE CONTRACT................................................ 5
PRUCO LIFE INSURANCE COMPANY............................................. 5
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT.......................... 5
THE PRUDENTIAL SERIES FUND, INC. ........................................ 6
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT....................... 7
THE FIXED-RATE OPTION.................................................... 8
WHICH INVESTMENT OPTION SHOULD BE SELECTED?.............................. 8
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS........................ 9
REQUIREMENTS FOR ISSUANCE OF A CONTRACT.................................. 9
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK" ............................ 9
ALLOCATION OF THE PREMIUM PAYMENT........................................ 9
TRANSFERS................................................................ 10
SURRENDERS............................................................... 11
LOANS.................................................................... 11
CHARGES AND EXPENSES..................................................... 12
AMOUNT OF LIFE INSURANCE (THE DEATH BENEFIT)............................. 15
LAPSE AND REINVESTMENT................................................... 16
ADDITIONAL PREMIUM PAYMENTS.............................................. 16
LIVING NEEDS BENEFIT..................................................... 17
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND
ACCUMULATED PREMIUMS..................................................... 18
WHEN PROCEEDS ARE PAID................................................... 19
REPORTS TO CONTRACT OWNERS............................................... 19
TAX TREATMENT OF CONTRACT BENEFITS....................................... 19
VOTING RIGHTS............................................................ 21
SALE OF THE CONTRACT AND SALES COMMISSIONS............................... 22
SUBSTITUTION OF SERIES FUND SHARES....................................... 22
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS...... 22
OTHER GENERAL CONTRACT PROVISIONS........................................ 22
STATE REGULATION......................................................... 23
EXPERTS.................................................................. 23
LITIGATION............................................................... 23
YEAR 2000 COMPLIANCE..................................................... 24
ADDITIONAL INFORMATION................................................... 25
FINANCIAL STATEMENTS..................................................... 25
DIRECTORS AND OFFICERS...................................................... 26
FINANCIAL STATEMENTS OF PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT..... A1
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY AND
SUBSIDIARIES............................................................. B1
<PAGE>
GLOSSARY
AMOUNT CREDITED UNDER THE CONTRACT -- See Contract fund below.
CASH SURRENDER VALUE -- The amount payable to the Contract owner upon surrender
of the Contract, equal to the Contract fund minus any applicable contingent
deferred sales charge and any Contract debt.
CONTRACT ANNIVERSARY -- The same date as the Contract date in each later year.
CONTRACT DATE -- The date Pruco Life received the initial premium payment and
certain required documentation.
CONTRACT FUND -- The total amount credited to a specific Contract. On any date,
it is equal to the sum of all amounts in the subaccounts, the amountinvested
under the fixed-rate option, the amount invested in the Real Property Account,
and the principal amount and any accrued interest credited with respect to any
Contract loan. At times throughout this prospectus, when an alternative
identification may be desirable for complete clarity or to further describe the
role of the Contract fund, we refer to the Contract fund as "the amount credited
under the Contract".
CONTRACT OWNER -- Unless a different owner is named in the application, the
owner of the contract is the insured.
CONTRACT YEAR -- A year that starts on the Contract date or on a Contract
anniversary.
DEATH BENEFIT. --The amount we will pay upon the death of the insured before the
reduction of any Contract debt and amounts needed to pay charges through the
date of death.
DISCOVERY LIFE -- A fixed life insurance contract issued by Pruco Life that is
similar to Discovery Life Plus except that the owner may not invest the Contract
fund in variable investment options.
FACE AMOUNT -- The initial amount of life insurance as shown on the cover page
of the Contract.
FIXED-RATE OPTION -- An investment option under which Pruco Life guarantees that
interest will be added to the amount allocated at a rate declared periodically
in advance.
MONTHLY DATE -- The Contract date and the same date in each subsequent month.
PRUCO LIFE INSURANCE COMPANY. -- Us, we, Pruco Life. The company offering the
Contact.
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT (THE "ACCOUNT") -- A separate
account of Pruco Life registered as a unit investment trust under the Investment
Company Act of 1940.
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT (THE "REAL PROPERTY ACCOUNT")
- -- A separate account of Pruco Life which, through a partnership, invests
primarily in income-producing real property.
SUBACCOUNT -- A division of the Account, the assets of which are invested in
shares of the corresponding portfolio of the Series Fund.
TARGET LOAN AMOUNT -- The amount, equal to 10% of the initial premium for each
completed Contract year, that may be borrowed as a first loan in any year at the
most favorable net cost to the Contract owner.
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND") -- A mutual fund with
separate portfolios, one or more of which may be chosen as an underlying
investment for the Contract.
VALUATION PERIOD -- The period of time from one determination of the value of
the amount invested in a subaccount to the next. Such determinations are made
when the net asset values of the portfolios of the Series Fund are calculated,
which is generally at 4:15 p.m. Eastern Standard time on each day during which
the New York Stock Exchange is open.
VARIABLE INVESTMENT OPTIONS -- The subaccounts and the Real Property
Account.
WE -- Pruco Life Insurance Company.
YOU -- The owner of the Contract.
1
<PAGE>
INTRODUCTION AND SUMMARY
THIS SUMMARY PROVIDES A BRIEF OVERVIEW OF THE MORE SIGNIFICANT ASPECTS OF THE
CONTRACT. YOU WILL FIND FURTHER DETAIL IN THE FOLLOWING SECTIONS OF THIS
PROSPECTUS AND IN THE CONTRACT. THE CONTRACT, WHICH INCLUDES THE APPLICATION
ATTACHED TO IT, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN YOU AND PRUCO LIFE. YOU
SHOULD RETAIN THESE DOCUMENTS.
As you read this prospectus, you should keep in mind that this is a life
insurance contract. Variable life insurance has significant investment aspects
and requires you to make investment decisions. Therefore, it is also a
"security". Securities that are offered to the public must be registered with
the U.S. Securities and Exchange Commission. The prospectus that is part of the
registration statement must be given to all prospective purchasers. A
substantial part of the premium pays for life insurance that will pay a death
benefit to the beneficiary in the event of the insured's death. This death
benefit generally far exceeds your total premium payment. You should not buy
this contract unless the primary reason for the purchase is to provide life
insurance protection.
BRIEF DESCRIPTION OF THE CONTRACT
The Contract is a form of variable life insurance. It is based on a Contract
Fund, the value of which changes every business day. The chart below describes
how the value of your Contract Fund changes.
You can purchase this contract by making an initial premium payment. The minimum
initial payment is $10,000. For insureds aged 76 through 85 the minimum initial
payment is $50,000. You decide the amount of the initial premium (as long as it
meets the minimum requirement) and from this we determine the initial amount of
life insurance. Although the Contract will begin to vary immediately to reflect
the investment results, the amount of life insurance will ordinarily not change
for several years. The amount of life insurance may not change at all. If
investment results are sufficiently favorable the amount of insurance will
eventually increase.
You may invest your premium in one or more of the 15 available subaccounts, a
real estate investment option or in the fixed-rate option. The amount invested
will be your initial premium payment minus any charge for taxes attributable to
premiums. Your Contract Fund value changes every day depending upon the change
in the value of the particular investment options that you have selected.
Although the value of your Contract Fund will increase if there is favorable
investment performance in the subaccounts you select, there is a risk that
investment performance will be unfavorable and that the value of your Contract
Fund will decrease. The risk will be different, depending upon which investment
options you choose. See WHICH INVESTMENT OPTION SHOULD BE SELECTED?, page 9. If
you select the fixed-rate option, we credit your account with a declared rate or
rates of interest but you assume the risk that the rate may change.
You may surrender the Contract in full and receive the cash surrender value.
Partial surrenders and contract splits are not permitted. You may borrow against
the value of your Contract. See LOANS, page 12.
The Contract is a Modified Endowment Contract under federal tax law. Any policy
loan, surrender or other pre-death distribution may result in adverse tax
consequences, and, if the insured is less than age 59-1/2, a 10% tax penalty.
CHARGES
The following chart outlines the components of your Contract Fund and the
adjustments which may be made including the maximum charges which may be
deducted from your premium payment and from the amounts held in the designated
investment options. These charges are largely designed to cover insurance costs
and risks as well as sales and administrative expenses. The maximum charges
shown in the chart, as well as the current lower charges, are fully described
under CHARGES AND EXPENSES, page 13.
2
<PAGE>
-----------------------------------------------------------
PREMIUM PAYMENT
-----------------------------------------------------------
--------------------------------------------------
o Less charge for taxes attributable to premiums.
(Under certain circumstances, this charge may
be reduced or eliminated, see Charges and
Expenses, page 12).
--------------------------------------------------
- -------------------------------------------------------------------------------
INVESTED PREMIUM AMOUNT
- -------------------------------------------------------------------------------
o To be invested in one or a combination of:
o 15 investment portfolios of the Series Fund.
o The Real Property Account.
o The Fixed Rate Option.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CONTRACT FUND
- -------------------------------------------------------------------------------
On the Contract Date, the Contract Fund is equal to the invested premium
amount minus any of the charges described below which may be due on that
date. Thereafter, the value of the Contract Fund changes daily.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PRUCO LIFE ADJUSTS THE CONTRACT FUND FOR:
- -------------------------------------------------------------------------------
o Addition of any increase due to investment results of the chosen
subaccounts.
o Addition of guaranteed interest at an effective annual rate of 3% (plus
any excess interest if applicable) on the portion of the Contract Fund
allocated to the fixed-rate option.
o Addition of guaranteed interest at an effective annual rate of either 5.5%
or 4% on the amount of any Contract loan. (Separately, interest charged on
the loan accrues at an effective annual rate of 6%. See LOANS, page 12.)
o Subtraction of any decrease due to investment results of the chosen
subaccounts.
o Addition of any new invested premium amounts. (Additional premiums may be
paid daily, in limited circumstances.)
o Subtraction of the charges listed below, as applicable.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DAILY CHARGES
- -------------------------------------------------------------------------------
o ADMINISTRATIVE EXPENSE CHARGE - We deduct a daily administrative expense
charge, equivalent to an annual rate of 0.35% from the variable investment
options.
o MORTALITY AND EXPENSE RISK CHARGE - We deduct a daily mortality and
expense risk charge, equivalent to an annual rate of 0.9 % from the
variable investment options.
o MANAGEMENT FEES AND EXPENSES - We deduct these fees and expenses from the
Series Fund and Real Property Account assets.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MONTHLY CHARGES
- -------------------------------------------------------------------------------
o INSURANCE PROTECTION CHARGE - We generally deduct an amount equal to 0.05%
of the contract fund per month If the contract fund falls so low that
making a monthly charge of 0.05% is inadequate, the charge may be
increased to the amount permitted by the 1980 Commissioners Standard
Ordinary Mortality Table ("1980 CSO Table").
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
- -------------------------------------------------------------------------------
o During the first six years, we will assess a contingent deferred sales
charge if the contract is surrendered. The maximum contingent sales charge
during the first year is 9% of the amount credited under the contract.
This charge is decreased by 1% each year until the sixth year when it
equals 4% of the amount credited under the contract. We do not assess a
charge after the sixth year. This charge will never be greater than 9% of
your initial premium payment.
- -------------------------------------------------------------------------------
3
<PAGE>
REFUND
For a limited time, you may return your contract for a refund in accordance with
the terms of its free-look provision. See SHORT-TERM CANCELLATION RIGHT or "FREE
LOOK", page 10.
For the definition of special terms used in this prospectus, see GLOSSARY, page
2.
THE REPLACEMENT OF LIFE INSURANCE IS GENERALLY NOT IN YOUR BEST INTEREST. IN
MOST CASES, IF YOU REQUIRE ADDITIONAL COVERAGE, THE BENEFITS OF THE EXISTING
CONTRACT CAN BE PROTECTED BY PURCHASING ADDITIONAL COVERAGE OR A SUPPLEMENTAL
CONTRACT. IF YOU ARE CONSIDERING REPLACING A CONTRACT, YOU SHOULD COMPARE THE
BENEFITS AND COSTS OF SUPPLEMENTING YOUR EXISTING CONTRACT WITH THE BENEFITS AND
COSTS OF PURCHASING THE CONTRACT DESCRIBED IN THIS PROSPECTUS AND YOU SHOULD
CONSULT WITH A QUALIFIED TAX ADVISER.
THIS PROSPECTUS MAY ONLY BE OFFERED IN JURISDICTIONS IN WHICH THE OFFERING IS
LAWFUL. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN THE PROSPECTUSES
AND STATEMENT OF ADDITIONAL INFORMATION FOR THE SERIES FUND AND THE PROSPECTUS
FOR THE PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT.
4
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE
INSURANCE COMPANY, PRUCO LIFE SINGLE PREMIUM
VARIABLE LIFE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company,
organized in 1971 under the laws of the State of Arizona. It is licensed to sell
life insurance and annuities in the District of Columbia, Guam, and in all
states except New York. Pruco Life is a wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential"), a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. Prudential is
currently considering reorganizing itself into a publicly traded stock company
through a process known as "demutualization." On February 10, 1998, the
Company's Board of Directors authorized management to take the preliminary steps
necessary to allow the Company to demutualize. On July 1, 1998, legislation was
enacted in New Jersey that would permit this conversion to occur and that
specified the process for conversion. Demutualization is a complex process
involving development of a plan of reorganization, adoption of a plan by the
Company's Board of Directors, a public hearing, voting by qualified
policyholders and regulatory approval, all of which could take two or more years
to complete. Prudential's management and Board of Directors have not yet
determined to demutualize and it is possible that, after careful review,
Prudential could decide not to go public.
The plan of reorganization, which hasn't been developed and approved, would
provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible.
Generally, the amount of shares or other consideration eligible customers would
receive would be based on a number of factors, including the types, amounts and
issue years of their policies. As a general rule, owners of Prudential-issued
insurance policies and annuity contracts would be eligible, while mutual fund
customers and customers of the Company's subsidiares, such as the Pruco Life
insurance companies, would not be. It has not yet been determined whether any
exceptions to that general rule will be made with respect to policyholders and
contractowners of Prudential's subsidiaries.
As of December 31, 1998, Prudential has invested over $442 million in Pruco Life
in connection with Pruco Life's organization and operation. Prudential may make
additional capital contributions to Pruco Life as needed to enable it to meet
its reserve requirements and expenses. Prudential is under no obligation to make
such contributions and its assets do not back the benefits payable under the
Contract. Pruco Life's consolidated financial statements begin on page B-1 and
should be considered only as bearing upon Pruco Life's ability to meet its
obligations under the Contracts.
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
The Pruco Life Single Premium Variable Life Account (the "Account") was
established on April 15, 1985 under Arizona law as a separate investment
account. The Account meets the definition of a "separate account" under the
federal securities laws. The Account holds assets that are segregated from all
of Pruco Life's other assets.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life. Pruco Life is also the legal
owner of the assets in the Account. Pruco Life will maintain assets in the
Account with a total market value at least equal to the reserve and other
liabilities relating to the variable benefits attributable to the Account. These
assets may not be charged with liabilities which arise from any other business
Pruco Life conducts. In addition to these assets, the Account's assets may
include funds contributed by Pruco Life to commence operation of the Account and
may include accumulations of the charges Pruco Life makes against the Account.
From time to time these additional assets will be transferred to Pruco Life's
general account. Pruco Life will consider any possible adverse impact the
transfer might have on the Account before making any such transfer.
The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve
5
<PAGE>
any supervision by the SEC of the management or investment policies or practices
of the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life. Currently, you may invest in one or a combination of 15
subaccounts within the Account, each of which invests in a single corresponding
portfolio of the Series Fund. We may add additional subaccounts in the future.
The Account's financial statements begin on page A-1.
THE PRUDENTIAL SERIES FUND, INC.
The Prudential Series Fund, Inc. (the "Series Fund") is registered under the
1940 Act as an open-end diversified management investment company. The Series
Fund has 15 separate portfolios. The following is a list of those portfolios and
their investment objectives.
o CONSERVATIVE BALANCED PORTFOLIO - The investment objective is a total
investment return consistent with a conservatively managed diversified
portfolio. The portfolio invests in a mix of equity securities, debt
obligations and money market instruments.
o DIVERSIFIED BOND PORTFOLIO - The investment objective is a high level of
income over a longer term while providing reasonable safety of capital. The
portfolio invests primarily in higher grade debt obligations and high quality
money market investments.
o EQUITY PORTFOLIO - The investment objective is capital appreciation. The
portfolio invests primarily in common stocks of major established
corporations as well as smaller companies that offer attractive prospects of
appreciation.
o EQUITY INCOME PORTFOLIO - The investment objective is both current income and
capital appreciation. The portfolio invests primarily in common stocks and
convertible securities that provide good prospects for returns above those of
the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index")
or the NYSE Composite Index.
o FLEXIBLE MANAGED PORTFOLIO - The investment objective is a total investment
return consistent with an aggressively managed diversified portfolio. The
portfolio invests in a mix of equity securities, debt obligations and money
market instruments.
o GLOBAL PORTFOLIO - The investment objective is long-term growth of capital.
The portfolio invests primarily in common stocks (and their equivalents) of
foreign and U.S. companies.
o GOVERNMENT INCOME PORTFOLIO - The investment objective is a high level of
income over the longer term consistent with the preservation of capital. The
portfolio invests primarily in U.S. Government securities, including
intermediate and long-term U.S. Treasury securities and debt obligations
issued by agencies or instrumentalities established by the U.S. government.
o HIGH YIELD BOND PORTFOLIO - The investment objective is a high total return.
The portfolio invests primarily in high yield/high risk debt securities.
o MONEY MARKET PORTFOLIO - The investment objective is maximum current income
consistent with the stability of capital and the maintenance of liquidity.
The portfolio invests in high quality short-term debt obligations that mature
in 13 months or less.
o NATURAL RESOURCES PORTFOLIO - The investment objective is long-term growth of
capital. The portfolio invests primarily in common stocks and convertible
securities of natural resource companies and securities that are related to
the market value of some natural resource.
o PRUDENTIAL JENNISON PORTFOLIO - The investment objective is to achieve
long-term growth of capital. The portfolio invests primarily in equity
securities of major established corporations that offer above-average growth
prospects.
o SMALL CAPITALIZATION STOCK PORTFOLIO - The investment objective is long-term
growth of capital. The portfolio invests primarily in equity securities of
publicly-traded companies with small market capitalization.
o STOCK INDEX PORTFOLIO - The investment objective is investment results that
generally correspond to the performance of publicly-traded common stocks. The
portfolio attempts to duplicate the price and yield performance of the
Standard & Poor's 500 Composite Stock Index (the "S&P 500 Index").
o TWO ZERO COUPON BOND PORTFOLIOS - 2000 AND 2005 - The investment objective of
these two portfolios is the highest predictable compound investment for a
specific period of time, consistent with the safety of invested capital. The
portfolio invests primarily in debt obligations of the U.S. Treasury and
corporations that have been
6
<PAGE>
issued without interest coupons or have been stripped to their interest
coupons, or have interest coupons that have been stripped from the debt
obligations.
Prudential is the investment advisor for the assets of each of the portfolios
within the Series Fund. Prudential's principal business address is 751 Broad
Street, Newark, New Jersey 07102-3777. Prudential has a Service Agreement with
its wholly-owned subsidiary Prudential Investment Corporation ("PIC"), which
provides that, subject to Prudential's supervision, PIC will furnish investment
advisory services in connection with the management of the Series Fund. In
addition, Prudential has entered into a Subadvisory Agreement with its
wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio. For more information, see the
attached Series Fund prospectus and the Series Fund's statement of additional
information.
As an investment advisor, Prudential charges the Series Fund a daily investment
management fee as compensation for its services. In addition to the investment
management fee, each portfolio incurs certain expenses such as accounting and
custodian fees. These fees and expenses are listed in the table in the
DEDUCTIONS FROM PORTFOLIOS section of page 13, and are more fully described in
the attached prospectus for the Series Fund.
In the future it may become disadvantageous for both variable life insurance and
variable annuity contract separate accounts to invest in the same underlying
mutual fund. Although neither the companies that invest in the Series Fund, nor
the Series Fund currently foresees any such disadvantage, the Series Fund's
Board of Directors intends to monitor events in order to identify any material
conflict between variable life insurance and variable annuity contract owners
and to determine what action, if any, should be taken. Material conflicts could
result from such things as:
o changes in state insurance law;
o changes in federal income tax law;
o changes in the investment management of any portfolio of the Series Fund; or
o differences between voting instructions given by variable life insurance and
variable annuity contract owners.
A FULL DESCRIPTION OF THE SERIES FUND, ITS INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, RESTRICTIONS, EXPENSES, INVESTMENT RISKS, AND ALL OTHER ASPECTS OF ITS
OPERATION IS CONTAINED IN THE ATTACHED PROSPECTUS FOR THE SERIES FUND AND IN ITS
STATEMENT OF ADDITIONAL INFORMATION, WHICH SHOULD BE READ IN CONJUNCTION WITH
THIS PROSPECTUS. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE
MET.
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
The Pruco Life Variable Contract Real Property Account (the "Real Property
Account") is a separate account of Pruco Life that, through a general
partnership formed by Prudential and two of its subsidiaries, invests primarily
in income-producing real property such as office buildings, shopping centers,
agricultural land, hotels, apartments or industrial properties. It also invests
in mortgage loans and other real estate-related investments, including
sale-leaseback transactions. The objectives of the Real Property Account and the
partnership are to preserve and protect capital, provide for compounding of
income as a result of reinvestment of cash flow from investments, and provide
for increases over time in the amount of such income through appreciation in the
value of assets.
The partnership has entered into an investment management agreement with
Prudential, under which Prudential selects the properties and other investments
held by the partnership. Prudential charges the partnership a daily fee for
investment management which amounts to 1.25% per year of the average daily gross
assets of the partnership.
A FULL DESCRIPTION OF THE REAL PROPERTY ACCOUNT, ITS MANAGEMENT, POLICIES, AND
RESTRICTIONS, ITS CHARGES AND EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN, THE PARTNERSHIP'S INVESTMENT OBJECTIVES, AND ALL OTHER ASPECTS OF THE
REAL PROPERTY ACCOUNT'S AND THE PARTNERSHIP'S OPERATIONS IS CONTAINED IN THE
ATTACHED PROSPECTUS FOR THE REAL PROPERTY ACCOUNT, WHICH SHOULD BE READ TOGETHER
WITH THIS PROSPECTUS IF YOU ARE CONSIDERING THE REAL PROPERTY ACCOUNT AS AN
INVESTMENT OPTION. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE
MET.
7
<PAGE>
THE FIXED-RATE OPTION
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED-RATE
OPTION UNDER THE CONTRACT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, INTERESTS IN THE
FIXED-RATE OPTION ARE NOT SUBJECT TO THE PROVISIONS OF THESE ACTS, AND PRUCO
LIFE HAS BEEN ADVISED THAT THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE
IN THIS PROSPECTUS RELATING TO THE FIXED-RATE OPTION. ANY INACCURATE OR
MISLEADING DISCLOSURE REGARDING THE FIXED-RATE OPTION MAY, HOWEVER, SUBJECT
PRUCO LIFE AND ITS OFFICERS TO CIVIL LIABILITY IF THAT RESULTS IN ANY DAMAGE.
You may elect to allocate, either initially or by transfer, all or part of the
amount credited under the contract to a fixed-rate option.This amount becomes
part of Pruco Life's general account. The general account consists of all assets
owned by Pruco Life other than those in the Account and in other separate
accounts that have been or may be established by Pruco Life. Subject to
applicable law, Pruco Life has sole discretion over the investment of the assets
of the general account, and you do not share in the investment experience of
those assets. Instead, Pruco Life guarantees that the part of the contract fund
allocated to the fixed-rate option will accrue interest daily at an effective
annual rate that Pruco Life declares periodically, but not less than an
effective annual rate of 3%.
Currently, declared interest rates remain in effect from the date money is
allocated to the fixed-rate option until the third contract anniversary
following the date of the allocation. Thereafter, a new crediting rate will be
declared each year, and will remain in effect for the calendar year. Pruco Life
reserves the right to change this practice. Pruco Life is not obligated to
credit interest at a higher rate than 3%, although in its sole discretion it may
do so. Different crediting rates may be declared for different portions of the
contract fund allocated to the fixed-rate option. On request, you will be
advised of the interest rates that currently apply to your Contract.
Transfers from the fixed-rate option are subject to strict limits. See
TRANSFERS, page 11. The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to 6 months. See WHEN PROCEEDS ARE PAID,
page 20. For contracts issued in Texas, the fixed-rate option is not available.
WHICH INVESTMENT OPTION SHOULD BE SELECTED?
Historically, for investments held over relatively long periods, the investment
performance of common stocks has generally been superior to that of short or
long-term debt securities, even though common stocks have been subject to much
more dramatic changes in value over short periods of time. Accordingly,
portfolios such as the Stock Index, Equity Income, Equity, Prudential Jennison,
Small Capitalization Stock or Global may be desirable options if you are willing
to accept such volatility in your Contract values. Each of these equity
portfolios involves different policies and investment risks.
You may prefer the somewhat greater protection against loss of principal (and
reduced chance of high total return) provided by the Diversified Bond,
Government Income or Zero Coupon Bond Portfolios. Or, you may want even greater
safety of principal and may prefer the Money Market Portfolio or the fixed-rate
option, recognizing that the level of short-term rates may change rather
rapidly. If you are willing to take risks and possibly achieve a higher total
return, you may prefer the High Yield Bond Portfolio, recognizing that the risks
are greater for lower quality bonds with higher yields. You may choose to
allocate a portion of your investment to specialized investment options, such as
the Natural Resources Portfolio and the Real Property Account. You may wish to
divide your invested premium among two or more of the investment options. You
may wish to obtain diversification by relying on Prudential's judgment for an
appropriate asset mix by choosing the Conservative Balanced or Flexible Managed
Portfolio.
Your choice should take into account how willing you are to accept investment
risks, how your other assets are invested, and what investment results you may
experience in the future. You should consult your Prudential representative from
time to time about the choices available to you under the Contract. Prudential
recommends AGAINST frequent transfers among the several options. Experience
generally indicates that "market timing" investing, particularly by
non-professional investors, is likely to prove unsuccessful.
8
<PAGE>
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
For insureds below the age of 76, the minimum initial premium payment is
$10,000. For insureds aged 76 through 85, the minimum initial premium payment is
$50,000. Pruco Life requires evidence of insurability, which may include a
medical examination, before issuing any contract. We will only issue the
contract on insureds who are classified as standard risks following Pruco Life's
regular underwriting process. If we do not approve your application, because the
current underwriting requirements are not met, we will promptly return your
premium payment. The Company reserves the right to change these requirements on
a non-discriminatory basis.
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"
Generally, you can return a contract for a refund
o within 10 days after you receive it,
o within 45 days you sign Part I of the application or
o within 10 days after Pruco Life mails or delivers a Notice of Withdrawal
Right, whichever is latest.
Some states allow a longer period of time during which a Contract may be
returned for a refund. You can request a refund by mailing or delivering the
contract to the representative who sold it or to the Prudential Annuity Service
Center specified in the contract. If you return the contract according to this
provision it shall be deemed void from the beginning. You will then receive a
refund of all premium payments made, plus or minus any change due to investment
experience. If applicable law so requires, the contractowner who exercises his
or her short-term cancellation right will receive a refund of all premium
payments made, with no adjustment for investment experience.
CONTRACT DATE
The Contract date will be the date we receive the initial payment and the
completed application in the Prudential Annuity Service Center. On the Contract
date, the amount credited under the Contract will begin to vary with the
investment results of the variable investment options that you have chosen or
the declared interest rate, if you have selected the fixed-rate option. Your
insurance protection begins on the Contract date. Your Contract date is listed
on your Contract.
ALLOCATION OF THE PREMIUM PAYMENT
You determine how the initial premium payment, after the deduction for any taxes
attributable to premiums, will be allocated among the subaccounts, the
fixed-rate option, and the Real Property Account. You may choose to allocate
nothing to a particular subaccount or to the fixed-rate option or the Real
Property Account, but any allocation made must be at least 10% and may not be a
fractional percent.
Additionally, a feature called Dollar Cost Averaging is available if you make an
allocation to the Money Market Subaccount. Under this feature, automatic flat
dollar amounts will be transferred monthly from the Money Market Subaccount into
other investment options available under the Contract, excluding the fixed-rate
option, but including the Real Property Account. At issue, the minimum amount
initially designated for transfer under this feature must be the greater of
$10,000 and 10% of the initial premium payment. After issue, Pruco Life will
accept an amount less than $10,000 provided it brings the balance in any current
Dollar Cost Averaging account up to $10,000. Automatic monthly transfers must be
at least 3% of the amount INITIALLY allocated to the Dollar Cost Averaging
account (that is, if $10,000 is INITIALLY ALLOCATED the minimum monthly transfer
is $300), with a minimum of $20 transferred into any one investment option.
These amounts are subject to change at Pruco Life's discretion. The minimum
transfer amount will only be recalculated upon an increase in the amount
allocated to the account.
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<PAGE>
Each automatic monthly transfer will take effect as of the end of the valuation
period on the Monthly date, provided the New York Stock Exchange (NYSE) is open
on that date. If the NYSE is not open on the Monthly date, the transfer will
take effect as of the end of the valuation period on the next day that the NYSE
is open. If the Monthly date does not occur in a particular month (e.g.,
February 30), the transfer will take effect as of the end of the valuation
period on the last day of the month that the NYSE is open. Automatic monthly
transfers will continue until the amount designated for Dollar Cost Averaging
has been transferred, or until you give notification of a change in allocation
or cancellation of the account. Currently, there is no charge for using the
Dollar Cost Averaging account.
TRANSFERS
You may, at least four times each Contract year, transfer amounts from one
subaccount to another subaccount, to the fixed-rate option, or to the Real
Property Account. We are not currently enforcing this limit, however, we may do
so in the future if it becomes necessary due to excessive transfer activity. The
amount you transfer from any one subaccount must be at least $300 (unless the
subaccount balance is less than $300, in which case you may transfer the entire
balance).
A transfer will take effect as of the end of the valuation period in which a
proper transfer request is received at the Prudential Annuity Service Center.
You may transfer amounts by proper written notice to the Prudential Annuity
Service Center, or by telephone, provided you are enrolled to use the Telephone
Transfer System. You will automatically be enrolled to use the Telephone
Transfer System unless the contract is jointly owned or you elect not to have
this privilege. Telephone transfers are not available if Pruco Life has received
proper notice that the contract is assigned. See ASSIGNMENT, page 23.
We will use reasonable procedures, such as asking you to provide certain
personal information provided on your application for insurance, to confirm that
instructions given by phone are genuine. We will not be held liable for
following telephone instructions we reasonably believe to be genuine. Pruco Life
cannot guarantee that you will be able to get through to complete a transfer
during peak periods such as periods of drastic economic or market change.
In addition, you may transfer the entire amount of the contract fund in the
subaccounts to the fixed-rate option at any time. If you wish to convert your
contract to a fixed-benefit contract you must request a complete transfer of
funds to the fixed-rate option and you should also change your allocation
instructions regarding any future premiums. The fixed-rate option is not
available for contracts issued in Texas. However, for contracts issued in Texas,
you may convert your variable contract to a comparable fixed-benefit policy
during the first 2 contract years.
On the liquidation date of a Zero Coupon Bond Subaccount, all the shares held by
it in the corresponding portfolio of the Series Fund will be redeemed and the
proceeds of the redemption applicable to each Contract will be transferred to
the Money Market Subaccount unless you direct that it be transferred to another
subaccount. A transfer that occurs upon the liquidation date of a Zero Coupon
Bond Subaccount will not be counted as one of the four permissible transfers in
a contract year.
Transfers from the fixed-rate option to the subaccounts are currently permitted
only once each Contract year and only during the 30-day period beginning on the
Contract anniversary. The maximum amount which may currently be transferred out
of the fixed-rate option each year is the greater of:
o 25% of the amount in the fixed-rate option and
o $5,000.
If we receive a proper request to transfer from the fixed-rate option before the
Contract anniversary, we will process the transfer request as of the Contract
anniversary. If we receive a proper transfer request during the 30-day period
after the Contract anniversary, we will process the transfer request as of the
end of the valuation period in which the request is received at the Prudential
Annuity Service Center. We may change these limits and procedures in the future.
Transfers to and from the Real Property Account are subject to restrictions
described in a separate prospectus for that investment option.
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<PAGE>
The contract was not designed for professional market timing organizations or
other organizations or individuals using programmed, large or frequent
transfers. A pattern of exchanges that coincides with a "market timing" strategy
may be disruptive to the Account and the Series Fund and will be discouraged. If
such a pattern were to be found, Pruco Life may be required to modify the
transfer procedures, including but not limited to, not accepting transfer
requests of an agent acting under a power of attorney on behalf of more than one
owner.
SURRENDERS
You may surrender the contract at any time for its full cash surrender value
(which takes into account the contingent deferred sales charge, if any, and any
contract debt). Partial surrenders and contract splits are not permitted. To
surrender a contract, we may require you to deliver or mail it, together with a
written request in a form that meets our needs, to the Prudential Annuity
Service Center. We will determine the cash surrender value of the contract as of
the end of the valuation period during which proper notice is received at the
Prudential Annuity Service Center. See WHEN PROCEEDS ARE PAID, page 20.
Surrender of the Contract may have tax consequences. See TAX TREATMENT OF
CONTRACT BENEFITS, page 20.
LOANS
You may borrow from Pruco Life an amount up to the "loan value" of the contract
using only the contract as security for the loan. Your Contract provides that
loans will be made only on or after your first contract anniversary. However, as
an administrative practice, we currently allow you to make a loan during your
first contract year. We may change this practice. The loan value of your
contract is 90% of an amount equal to your contract fund, reduced by any charges
due upon surrender. However, as an administrative practice, we currently allow
you to borrow up to 100% of the portion of your Contract fund attributable to
the fixed-rate option (or any portion of the Contract fund attributable to a
prior loan supported by the fixed-rate option), reduced by any charges due upon
surrender. We may change this practice. Loans will be treated as distributions
for tax purposes. See TAX TREATMENT OF CONTRACT BENEFITS, page 20.
Interest charged on a loan is accrued daily. Interest is due on each Contract
anniversary or when the loan is paid back, whichever comes first. If interest is
not paid when due, it will become part of the loan and we will charge interest
on it too. We charge interest at an effective annual rate of 6%.
When you make a loan, an amount equal to the loan proceeds will be transferred
out of your investment options. We will generally reduce the amount invested in
each investment option in the same proportions as the value in each subaccount,
the fixed-rate option and the Real Property Account bears to the total value of
the Contract. The amount transferred out of the investment options continues to
be part of your Contract fund. It will be credited daily with interest at an
effective annual rate of either 4% or 5.5%. We determine the rate or rates
applicable to your Contract in the following way. The loan amount is divided
into two parts, the "target loan amount" and the remainder. The target loan
amount for any contract year is 10% of the initial premium for each contract
year. Thus in the first year it is 10% of the premium payment, in the second
year 20% of the premium payment, and so on. Any borrowed amount that is part of
the target loan amount is credited with interest daily at an effective annual
rate of 5.5%. Amounts borrowed in excess of the target loan amount, and second
loans in any year, are credited daily with interest at an effective annual rate
of 4%. So the net cost of the loan to you is about 0.5% per year on the target
loan amount and 2% per year on amounts in excess of the target loan amount and
on second loans in any year; however, since the amount borrowed is not invested
in the variable investment option[s] the cash surrender value does not, to that
extent, participate in either favorable or unfavorable investment performance.
Upon each contract anniversary any outstanding loan up to the new target loan
amount will be credited interest at the 5.5% rate even if some of that loan had
been credited interest at 4% in the prior year.
Any Contract debt will directly reduce a Contract's cash surrender value and
will be subtracted from the death benefit to determine the amount payable. In
addition, even if the loan is fully repaid, it may have an effect on future
death benefits because the investment results of the selected investment options
will apply only to the amount remaining invested under those options. The longer
the loan is outstanding, the greater the effect is likely to be.
11
<PAGE>
The effect could be favorable or unfavorable. If investment results are greater
than the rate being credited on the amount of the loan while the loan is
outstanding, values under the Contract will not increase as rapidly as they
would have if no loan had been made. If investment results are below that rate,
Contract values will be higher than they would have been had no loan been made.
In addition, you should note that a contract loan will increase the difference
between the gross investment return in the underlying portfolio[s] of the Series
Fund and the net return in the selected subaccount[s]. This is because the cost
of insurance charge (see MONTHLY DEDUCTION FROM CONTRACT FUND, page 15) is not
reduced when you make a contract loan but the amount in the subaccount[s] from
which the charges are deducted is reduced by the amount of the loan.
When you repay all or part of a loan, we will increase the portion of the
Contract fund in the investment options by the amount of the loan you repay. If
loan interest is paid when due, it will not change the portion of the Contract
fund allocated to the investment options.
CHARGES AND EXPENSES
This section provides a detailed description of each charge that is described
briefly in the chart on page 4, and an explanation of the purpose of the charge.
DEDUCTION FROM PREMIUM PAYMENTS.
We will deduct the amount of premium-based taxes applicable to your Contract
from the initial premium payment. These taxes vary from state to state and also
vary in some states by municipalities and counties. The tax rates in those
jurisdictions that impose a tax generally range from 0.75% to 5% (but in some
instances may exceed 5%). The amount remaining after the deduction of premium
taxes is allocated to the investment option[s] as you direct. However, if
o the sum of the initial premiums under the Contract and all other DISCOVERY
Life Plus and DISCOVERY Life contracts issued on the same insured equal
$50,000 or more, or
o contracts are purchased on all children of a parent or all grandchildren of a
grandparent, each contract has an initial premium of $25,000 or more and the
total initial premiums add up to $50,000 or more,
we will deduct for initial and additional premium taxes only the portion of the
applicable state premium taxes which is in excess of 4% of the premium, and any
applicable local premium taxes. If total premiums under the Contract and all
other DISCOVERY Life Plus and DISCOVERY Life contracts issued on the same
insured equal or exceed $50,000, any premium taxes previously deducted will be
used to increase the Contract Fund on the most recent contract. In many cases,
if a contract is purchased with an initial premium of $50,000 or more, there
will be no deduction from the payment and the entire amount will be invested as
you direct. During 1998, 1997, and 1996, Pruco Life received a total of
approximately $-0-, $-0-, and $1,442, respectively, in charges for payment of
premium taxes.
DEDUCTIONS FROM PORTFOLIOS
Subject to certain caps and offsets, the charges and expenses of the Series Fund
are indirectly borne by the Contract owners. The Account purchases shares of the
Series Fund at net asset value. The net asset value of those shares reflects
investment management fees and expenses already deducted from the assets of the
Series Fund. More detailed information is contained in the attached prospectus
for the Series Fund and its statement of additional information. Higher charges
and expenses are incurred if the Real Property Account is selected, as described
in the attached prospectus for the Real Property Account.
The total expenses of each portfolio for the year 1998 expressed as a percentage
of the average assets during the year are shown below:
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<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Other Expenses Total Expenses
Investment (after expense (after expense
Portfolio Advisory Fee reimbursement)* reimbursement)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO 0.40% 0%* 0.40%*
DIVERSIFIED BOND PORTFOLIO 0.40% 0%* 0.40%*
GOVERNMENT INCOME PORTFOLIO 0.40% 0.03% 0.43%
ZERO COUPON BOND PORTFOLIO 2000 0.40% 0%* 0.40%*
ZERO COUPON BOND PORTFOLIO 2005 0.40% 0%* 0.40%*
CONSERVATIVE BALANCED PORTFOLIO 0.55% 0%* 0.40%*
FLEXIBLE MANAGED PORTFOLIO 0.60% 0%* 0.40%*
HIGH YIELD BOND PORTFOLIO 0.55% 0.03% 0.58%
STOCK INDEX PORTFOLIO 0.35% 0.02% 0.37%
EQUITY INCOME PORTFOLIO 0.40% 0.02% 0.42%
EQUITY PORTFOLIO 0.45% 0%* 0.40%*
PRUDENTIAL JENNISON PORTFOLIO 0.60% 0.03% 0.63%
SMALL CAPITALIZATION STOCK PORTFOLIO 0.40% 0.07% 0.47%
GLOBAL PORTFOLIO 0.75% 0.11% 0.86%
NATURAL RESOURCES PORTFOLIO 0.45% 0.04% 0.49%
- ---------------------------------------------------------------------------------------
</TABLE>
* Some investment management fees and expenses charged to the Series Fund may
be higher than those that were previously charged to the Pruco Life Series
Fund, Inc., in which the Account previously invested. For the Money Market,
Diversified Bond, Zero Coupon Bond Portfolio 2000, Zero Coupon Bond Portfolio
2005, Conservative Balanced, Flexible Managed, and Equity Portfolios, Pruco
Life will make daily adjustments that will offset the effect on contract
owners of any higher investment management fees and expenses charged against
the Series Fund. Pruco Life also makes, on a non-guaranteed basis, daily
adjustments to ensure that the portfolio expenses indirectly borne by a
contract owner investing in the Zero Coupon Bond Portfolio 2005 will not
exceed the investment management fee.
Without such adjustments the portfolio expenses indirectly borne by a Contract
owner, expressed as a percentage of the average daily net assets by portfolio,
would have been 0.41% for the Money Market Portfolio, 0.42% for the Diversified
Bond Portfolio, 0.62% for the Zero Coupon Bond Portfolio 2000, 0.61% for the
Zero Coupon Bond Port-folio 2005, 0.57% for the Conservative Balanced Portfolio,
0.61% for the Flexible Managed Portfolio, and 0.47% for the Equity Portfolio in
1998. Pruco Life does not intend to discontinue the adjustments for the Zero
Coupon Bond Portfolio 2005 in the future, although it retains the right to do
so. No such offset will be made with respect to the remaining portfolios.
DAILY DEDUCTION FROM THE CONTRACT FUND
We impose a charge for the expenses we incur in administering the contracts,
which includes such things as underwriting the contract, conducting any medical
examinations, establishing and maintaining records, and providing reports to
contract owners. We deduct this charge daily from the assets of each of the
variable investment options, in an amount equivalent to an effective annual rate
of up to 0.35% (.00095723%, daily). During 1998, 1997 and 1996, Pruco Life
received a total of approximately $1,076,663, $1,033,988, and $974,407,
respectively, in annual administrative charges under the Contracts. We guarantee
that we will not increase this charge above an effective annual rate of 0.35%
over the life of the Contract.
We charge for assuming the risk that our estimates of longevity and of the
expenses it expects to incur, over the lengthy periods that this contract may be
in effect--estimates that are the basis for the level of the other charges it
makes under the contracts--will turn out to be incorrect. The mortality and
expense risk charge will be made by deducting daily, from the assets of each of
the subaccounts and/or the Real Property Account, a percentage of those assets
equivalent to an effective annual rate of up to 0.9% (.00245475%, daily). During
1998, 1997, and 1996, Pruco Life received a total of approximately $2,761,039,
$2,651,601, and $2,498,810, respectively, in mortality and expense risk charges
under the Contracts.
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<PAGE>
MONTHLY DEDUCTION FROM CONTRACT FUND
Immediately after your Contract is issued the amount of insurance payable upon
your death (the face amount) will be substantially higher than the initial
premium payment. As you grow older, and if investment results (or interest
credited) have been reasonably favorable, the difference between the Contract
Fund and the amount payable to the beneficiary in the event of your death will
become smaller. But the death benefit will always be higher than the Contract
Fund. To enable us to pay this additional amount, we make a monthly charge
commencing on the Contract date. The National Association of Insurance
Commissioners publishes mortality tables from which it can be determined what an
appropriate monthly charge for this purpose should be, depending upon the
insured's age and sex (except where unisex rates apply). One set of such tables
is known as the 1980 CSO Table. Although we have the contractual right to charge
maximum cost of insurance rates, based on the 1980 CSO Table, the actual cost of
insurance charge will generally be lower than that specified by the 1980 CSO
Table. Except as explained in the next paragraph, the charge will be imposed on
each of the Contract's Monthly dates (i.e., the contract date and the same day
of each succeeding month) in an amount equal to 0.05% per month of the contract
fund on such dates. The sum of 12 monthly mortality charges is likely to be
between 0.6% and 0.65% per Contract year of the contract fund. The exact
percentage is uncertain because the contract fund varies in amount daily. If the
contract fund remains level throughout the entire contract year, the sum of the
charges would be 0.6% of the Contract fund. If the contract fund declined
uniformly throughout the year, the sum would be less than 0.6%. If the contract
fund increased uniformly throughout the year, the sum would be greater than
0.6%. (For example, at a 12% gross rate of return, the sum of the monthly
charges would be approximately 0.65%.)
The monthly insurance charge generally will be assessed at a rate of 0.05% per
month of the contract fund, unless as a result of very unfavorable investment
experience, the contract fund falls so low as to make a monthly charge based
upon a rate of 0.05% per month inadequate. In that event, the charge may be
increased to the amount permitted by the 1980 CSO Table. This higher charge
would generally be assessed only when the Contract fund is at least 40% lower
than that which would exist were a net rate of 6% earned in the applicable
variable investment option[s] and maximum mortality charges based on the 1980
CSO Table deducted. This will require that the return average somewhat less than
6% for several years or that a substantial depreciation in the contract fund
occur in a particular year. For example, for a male who buys a contract at age
35, investment results could average a net return of 2.22% per year for about 19
years before we will make a higher cost of insurance charge. As another example,
for a male who buys a contract at age 40 and experiences an average net return
of 6% per year for 8 years, it would take a loss of about 43% in the ninth year
(which could occur if there was a substantial market drop) in order to bring
about an increase in the insurance charge.
SURRENDER CHARGE
A contingent deferred sales charge may be imposed upon surrender of this
contract. This charge compensates us for paying all of the expenses of selling
and distributing the contracts, including sales commissions, printing of
prospectuses, preparation of sales literature, and other promotional activities.
No sales charge will be made if the contract is surrendered after the sixth
contract year. If the contract is surrendered in the first year, the charge will
be 9% of the amount credited under the contract. For each year after the first
that the contract is in effect, the contingent deferred sales charge as a
percentage of the contract fund is reduced by 1% until it reaches 4% in year
six. However, in no event will the sales charge be greater than 9% of the
initial premium payment. If there is an outstanding loan, the amount of any
deferred sales charge will be computed as if the loan had been repaid
immediately before the surrender. No deferred sales charge is applicable to the
death benefit, no matter when that may become payable. During 1998, 1997, and
1996, Pruco Life received a total of approximately $28,197, $33,566, and
$177,363, respectively, in sales charges on surrenders of the Contracts.
OTHER INFORMATION ABOUT CHARGES
As you can see from the foregoing description, the amount credited under the
Contract at the outset of the Contract will be less than the initial premium
payment by the amount of the premium tax payable, unless the initial premium
payment satisfies our standards for elimination or reduction of the premium tax
charge as explained above. Thereafter, assuming a total Series Fund expense
ratio of 0.47% (taking into account any applicable offsets described under THE
PRUDENTIAL SERIES FUND, INC. on page 7), a cost of insurance charge of 0.05% per
month and no Contract debt, the amount credited under the Contract will vary at
a rate that is approximately 2.32% to 2.37% lower than the gross investment
return of the underlying portfolio of the Series Fund in which the assets held
under the Contract are invested.
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The account is not a separate taxpayer for purposes of the Internal Revenue
Code. The earnings of the account are taxed as part of the operations of Pruco
Life. No charge is currently being made against the Account for company federal
income taxes (excluding any charge for taxes attributable to premiums). We will
review the question of a charge to the account for company federal income taxes
periodically. Such a charge may be made in future years for any company federal
income taxes that would be attributable to the Account.
Under current law, Pruco Life may incur state and local taxes (in addition to
premium-based taxes) in several states. At present, these taxes are not
significant and they are not charged against the account. If there is a material
change in the applicable state or local tax laws, the imposition of any such
taxes upon Pruco Life that are attributable to the Account may result in a
corresponding charge against the Account.
AMOUNT OF LIFE INSURANCE (THE DEATH BENEFIT)
As stated earlier, when we issue the contract, we will determine the initial
amount of life insurance based on the amount of the initial premium payment.
That amount will be shown on the cover page of the contract and is called the
"face amount". We calculate the face amount as the amount of whole life
insurance that can be provided for the insured by the initial premium, after the
deduction of any applicable state and local premium taxes. This calculation is
based on the 1980 CSO Table and an interest rate of at least 6%. The amount
payable to the beneficiary upon death of the insured...the death benefit...will
never be less than the face amount as long as the Contract remains in force,
except that it will be reduced by the amount of any outstanding loan plus
interest. However, the contract's death benefit may be higher than the face
amount, depending upon the length of time the contract is in force and the
contract's investment results.
1. SOME TYPICAL FACE AMOUNTS. The following table shows for insureds of various
ages what the face amount of insurance will be for an initial premium payment of
$10,000 or $50,000. The table assumes that at issuance the fixed-rate option is
not being credited more than 6% (if a higher rate is being credited under the
fixed-rate option, the face amount will be slightly higher) and, for the $10,000
premium payment, assumes a total state and local premium tax rate of 2%.
-------------------------------------------------------------
AGE OF FACE AMOUNT FACE AMOUNT
INSURED FOR $10,000 FOR $50,000
ON THE PREMIUM PREMIUM
CONTRACT ---------------------- -------------------------
DATE MALE FEMALE MALE FEMALE
---------- ---------------------- -------------------------
5 $231,211 $298,154 $1,179,644 $1,521,193
15 $151,173 $198,359 $ 771,290 $1,012,032
25 $104,157 $129,799 $ 531,412 $ 662,236
35 $ 66,654 $ 82,561 $ 340,069 $ 421,229
45 $ 42,601 $ 52,980 $ 217,353 $ 270,304
55 $ 28,260 $ 35,032 $ 144,183 $ 178,734
65 $ 19,832 $ 23,624 $ 101,180 $ 120,529
75 $ 14,982 $ 16,631 $ 76,439 $ 84,850
-------------------------------------------------------------
In some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 23.
2. INCREASE IN DEATH BENEFIT DUE TO FAVORABLE INVESTMENT EXPERIENCE. It is
likely that the amount of insurance will not change for several years after the
contract date. Then, if investment experience is sufficiently favorable (by
which is generally meant an average annual net return of greater than 6%), the
death benefit may increase. The Contract provides that the death benefit will
never be less than the face amount or a stated multiple (which changes every
year with the attained age of the insured) of the contract fund. The latter
ensures that the contract will always have a death benefit large enough to be
treated as life insurance for tax purposes under current law. Representative
multiples for insureds are shown in the table below.
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------------------------------------------------------------
DEATH BENEFIT IS NO LESS THAN
THE CONTRACT FUND TIMES THE
FOLLOWING MULTIPLE (ASSUMES NO LOAN)
AGE OF --------------------------------------------
INSURED MALE FEMALE
--------- ------------------- -----------------------
5 4.80 7.50
15 4.80 7.50
25 4.56 6.11
35 3.76 4.52
45 2.27 2.64
55 1.55 1.82
65 1.23 1.40
75 1.09 1.15
85 1.05 1.05
95 1.02 1.02
------------------------------------------------------------
Thus, for a male age 55 who purchased a contract with a face amount of $133,307
when he was 35 for a premium payment of $20,000, if the contract fund has
increased to $123,049 due to a gross return in the selected Series Fund
portfolios of 12%, the death benefit payable will be $196,879 at the end of 20
years, based on the assumptions reflected in the table on page T1. If the
Contract fund were to drop subsequently because of unfavorable investment
results, the death benefit would also drop, but not below the face amount. In
some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain Contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 23.
LAPSE AND REINSTATEMENT
If the investment results of a contract's variable investment option[s] have
been so unfavorable that the net cash surrender value on any Monthly date has
decreased to zero or less, the contract will go into default.
Should this happen, Pruco Life will send you a notice of default setting forth
the payment necessary to keep the contract in force. This payment must be
received at the Prudential Annuity Service Center within the 61 day grace period
after the notice of default is mailed or the contract will lapse and have no
value. A contract that lapses with an outstanding contract loan may have tax
consequences. See TAX TREATMENT OF CONTRACT BENEFITS on page 20.
A contract that has lapsed may be reinstated within 3 years after the date of
default unless the contract has been surrendered for its cash surrender value.
To reinstate a lapsed Contract, Pruco Life requires renewed evidence of
insurability, and submission of certain payments due under the contract.
A contract that has lapsed has no value and provides no benefits.
ADDITIONAL PREMIUM PAYMENTS
After the contract has been in force for several years, you may be allowed the
option of paying additional premium payments in order to increase your Contract
fund. Such premium payments are allowed when they will not cause the contract to
fail to qualify as life insurance for tax purposes and will not then increase
the amount of insurance. Upon request, we will tell you whether an additional
premium payment can be made and its maximum amount. If
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you make an additional premium payment, the amount of that payment, less any
applicable premium taxes, will increase the contract fund but not the death
benefit. These premium payments will not increase the maximum possible deferred
sales charge. We will not accept an additional premium payment if it would,
through the application of the multiples shown on page 17, immediately result in
an increase in the death benefit.
Several factors affect when additional premium payments may be made. For
example, the contract years in which a female issue age 55 may make additional
payments depend upon investment performance. Based upon a hypothetical gross
annual rate of return of 8% in the selected Series Fund portfolio[s], and upon
the assumptions reflected in the table on page T1, an additional payment may
first be made in year 12, and additional payments may be made as late as year
20.
LIVING NEEDS BENEFIT
You may elect to add the Living Needs BenefitSM to your Contract at the time of
issue, provided we receive satisfactory evidence of insurability. The benefit
may vary state-by-state. It can generally be added only to contracts with face
amounts of $50,000 or more or when the aggregate face amounts of the insured's
eligible contracts equal $50,000 or more.
The Living Needs Benefit allows you to elect to receive an accelerated payment
of all or part of the contract's death benefit, adjusted to reflect current
value, at a time when certain special needs exist. The adjusted death benefit
will always be less than the death benefit, but will generally be greater than
the contract's cash surrender value. Depending upon state regulatory approval,
one or both of the following options may be available. You should consult with a
Pruco Life representative to determine whether additional options may be
available.
TERMINAL ILLNESS OPTION. This option is available if the insured is diagnosed as
terminally ill with a life expectancy of 6 months or less. When satisfactory
evidence is provided, Pruco Life will provide an accelerated payment of the
portion of the death benefit selected by you as a Living Needs Benefit. You may:
o elect to receive the benefit in a single sum or
o receive equal monthly payments for 6 months.
If the insured dies before all of the payments have been made, the present value
of the remaining payments will be paid to the beneficiary designated in the
Living Needs Benefit claim form in a single sum.
NURSING HOME OPTION. This option is available after the insured has been
confined to an eligible nursing home for 6 months or more. When satisfactory
evidence is provided, including certification by a licensed physician, that the
insured is expected to remain in the nursing home until death, Pruco Life will
provide an accelerated payment of the portion of the death benefit selected by
you as a Living Needs Benefit. You may:
o elect to receive the benefit in a single sum or
o receive equal monthly payments for a specified number of years (not more than
10 nor less than 2), depending upon the age of the insured.
If the insured dies before all of the payments have been made, the present value
of the remaining payments will be paid to the beneficiary designated in the
Living Needs Benefit claim form in a single sum.
All or part of the contract's death benefit may be accelerated under the Living
Needs Benefit. If the benefit is only partially accelerated, a death benefit of
at least $25,000 must remain under the contract. Pruco Life reserves the right
to determine the minimum amount that may be accelerated.
The Living Needs Benefit is available only to the extent regulatory approval has
been obtained. If you want this benefit, it must be requested on the contract's
application. There is no charge for adding the benefit to the contract. However,
an administrative charge (not to exceed $150) will be made at the time the
Living Needs Benefit is paid.
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No benefit will be payable if you are required to elect it in order to meet the
claims of creditors or to obtain a government benefit. Pruco Life can furnish
details about the amount of Living Needs Benefit that is available to you , and
the adjusted premium payments that would be in effect if less than the entire
death benefit is accelerated.
You should consider whether adding this settlement option is appropriate in your
situation. Adding the Living Needs Benefit to the contract has no adverse
consequences; however, electing to use it could. With the exception of certain
business-related policies, the Living Needs Benefit is excluded from income if
the insured is terminally ill or chronically ill as defined in the tax law
(although the exclusion in the latter case may be limited). You should consult
with a qualified tax adviser before electing to receive this benefit. Receipt of
a Living Needs Benefit payment may also affect your eligibility for certain
government benefits or entitlements.
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS
The following four tables have been prepared to show you how values under this
contract change with investment performance of the account. The tables assume
that no portion of the contract fund is allocated to the fixed-rate option or
the Real Property Account. The tables illustrate how cash surrender values
(reflecting the deduction of deferred sales charges, if any) and death benefits
under contracts issued on an insured of a given age would vary over time if the
return on the assets held in the Series Fund portfolios were a uniform, gross,
after tax, annual rate of 0%, 4%, 8%, and 12%. The death benefits and cash
surrender values would be different from those shown if the returns averaged 0%,
4%, 8%, and 12% but fluctuated over and under those averages throughout the
years. For the hypothetical returns of 0% and 4%, the tables also show when the
contract would go into default, at which time additional payments would be
needed to keep it in force.
The amounts shown for the death benefit and cash surrender value as of each
contract anniversary reflect the fact that the net investment return on the
assets held in the subaccounts is lower than the gross after tax return of the
portfolios. This is because these tables assume a total Series Fund expense
ratio of 0.47%, and also reflect the daily charge to the account for the cost of
administration, which is equivalent to an effective annual charge of 0.35%, and
the daily charge to the account for assuming mortality and expense risks, which
is equivalent to an effective annual charge of 0.9%. The actual fees and
expenses of the portfolios associated with a particular contract may be more or
less than 0.47% and will depend on which subaccounts are selected. Based on the
above assumptions, gross annual rates of return of 0%, 4%, 8%, and 12% thus
correspond in the tables to approximate net annual rates of return of -1.72%,
2.28%, 6.28%, and 10.28%.
The tables on pages T1 and T3 also reflect the fact that Pruco Life generally
makes its monthly charge for providing insurance protection at an amount equal
to 0.05% per month (approximately 0.6% to 0.65% per year) of the assets in the
subaccounts attributable to the contract, even though it has the contractual
right to charge a higher amount. Where the amount credited under a contract
falls to such a level as to make this monthly charge inadequate in Pruco Life's
judgment (i.e., where the contract fund value is at least 40% below that which
would exist were a net rate of 6% earned in the applicable subaccounts and
maximum mortality charges deducted), Pruco Life will deduct the maximum monthly
mortality charge. See MONTHLY DEDUCTION FROM CONTRACT FUND, page 14. The 0% and
4% columns in the tables on pages T1 and T3 reflect the deduction of these
larger mortality charges in later years in accordance with this standard. The
tables on pages T2 and T4 reflect the deduction of the maximum cost of insurance
charge at all times, even though Pruco Life does not currently intend to charge
the maximum contractual cost of insurance rates other than under the
circumstances where the contract fund value falls to a specified level, as
explained above. All of the tables reflect the deduction of a sales charge in
the calculation of the cash surrender value during the first 6 contract years.
The tables also reflect the fact that no charges for federal or state income
taxes are currently made against the account. If such a charge is made in the
future, it will take a higher gross rate of return than it does now to produce
the net after-tax returns shown in the tables.
If you are considering the purchase of a variable life insurance contract from
another insurance company, you
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should not rely upon these tables for comparison purposes. A comparison between
two tables, each showing values for a 35 year old man, may be useful for a 35
year old man but would be inaccurate if made for insureds of other ages or sex.
Your Pruco Life representative can provide you with a hypothetical illustration
for your own age and sex. You can obtain an illustration using a premium amount
other than those shown in this prospectus. You may use assumed gross returns
different than those shown in the tables, although currently they may not be
higher than 12%.
WHEN PROCEEDS ARE PAID
Pruco Life will generally pay any death benefit, cash surrender value or loan
proceeds within 7 days after receipt at the Prudential Annuity Service Center of
all the documents required for such a payment. Other than the death benefit,
which is determined as of the date of death, the amount will be determined as of
the end of the valuation period in which the necessary documents are received.
However, Pruco Life may delay payment of proceeds from the subaccount[s] and the
portion of the death benefit due under the contract in excess of the face amount
if the disposal or valuation of the account's assets is not reasonably
practicable because the NYSE is closed for other than a regular holiday or
weekend, trading is restricted by the SEC or the SEC declares an emergency.
With respect to the amount of any cash surrender value allocated to the
fixed-rate option, Pruco Life expects to pay the cash surrender value promptly
upon request. However, Pruco Life has the right to delay payment of such cash
surrender value for up to 6 months (or a shorter period if required by
applicable law). Pruco Life will pay interest of at least 3% a year if it delays
such a payment for 30 days or more (or a shorter period if required by
applicable law).
REPORTS TO CONTRACT OWNERS
Once each contract year, you will be sent statements that provide certain
information pertinent to your contract. These statements detail values and
transactions made and specific contract data that apply only to each particular
contract. On request, you will be sent a current statement in a form similar to
that of the annual statement described above, but Pruco Life may limit the
number of such requests or impose a reasonable charge if such requests are made
too frequently.
You will be sent annual and semi-annual reports of the Series Fund showing the
financial condition of the portfolios and the investments held in each.
If a single individual or company invests in the Series Fund through more than
one variable insurance contract, then the individual or company will receive
only one copy of each annual and semi-annual report issued by the Series Fund.
However, if such individual or company wishes to receive multiple copies of any
such report, a request may be made by calling the toll-free telephone number
listed on the cover page of this prospectus.
TAX TREATMENT OF CONTRACT BENEFITS
INTRODUCTION.
This summary provides general information on the federal income tax treatment of
the contract. It is not a complete statement of what the federal income taxes
will be in all circumstances. It is based on current law and interpretations,
which may change. It does not cover state taxes or other taxes. It is not
intended as tax advice. You should consult your own qualified tax adviser for
complete information and advice.
TREATMENT AS LIFE INSURANCE.
This contract must meet certain requirements to qualify as life insurance for
tax purposes. These requirements include certain definitional tests and rules
for diversification of the contract's investments.
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We believe we have taken adequate steps to insure that the contract qualifies as
life insurance for tax purposes. Generally speaking this means that:
o you will not be taxed on the growth of the investment option in the contract,
unless you receive a distribution from the contract.
o the contract's death benefit will be tax free to your beneficiary.
Although we believe that the contract should qualify as life insurance for tax
purposes, there are some uncertainties, particularly because the Secretary of
the Treasury has not yet issued permanent regulations that bear on this
question. Accordingly, we reserve the right to make changes, which will be
applied uniformly to all Contract owners after advance written notice, that we
deem necessary to insure that the contract will qualify as life insurance.
PRE-DEATH DISTRIBUTIONS.
The contract is modified endowment contract under federal tax law. This means
that:
o amounts you receive under the contract before the insured's death, including
loans and withdrawals, are included in your income on an income first basis
(that is, you will have taxable income to the extent that the contract fund
before surrender charges exceeds the premiums paid for the contract increased
by the amount of any loans previously included in income and reduced by any
untaxed amounts previously received other than the amount of any loans
excludible from income). An assignment of a modified endowment contract is
taxable in the same way. These rules also apply to pre-death distributions,
including loans, made during the two-year period before the time that the
contract became a modified endowment contract.
o any taxable income on pre-death distributions (including full surrenders) is
subject to a penalty of 10 percent unless the amount is received on or after
age 59-1/2, on account of you becoming disabled or as a life annuity. It is
presently unclear how the penalty tax provisions apply to the contracts owned
by a business.
o all modified endowment contracts issued by us to you during the same calendar
year are treated as a single contract for purposes of applying these rules.
WITHHOLDING
You must affirmatively elect that no taxes be withheld from a pre-death
distribution. Otherwise, the taxable portion of any amounts you receive will be
subject to withholding. You are not permitted to elect out of withholding if you
do not provide a social security number or other taxpayer identification number.
You may be subject to penalties under the estimated tax payment rules if your
withholding and estimated tax payments are insufficient to cover the tax due.
OTHER TAX CONSIDERATIONS
If you transfer or assign the contract to someone else, there may be gift,
estate and/or income tax consequences. If you transfer the contract to a person
two or more generations younger than you (or designate such a younger person as
a beneficiary), there may be generation skipping transfer tax consequences.
Deductions for interest paid or accrued on contract debt or on other loans that
are incurred or continued to purchase or carry the contract may be denied. Your
individual situation or that of your beneficiary will determine the federal
estate taxes and the state and local estate, inheritance and other taxes due if
you or the insured dies.
BUSINESS-OWNED LIFE INSURANCE.
If a business, rather than an individual, is owner of the contract, there are
some additional rules. Business contract owners generally cannot deduct premium
payments. Business contract owners generally cannot take tax
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deductions for interest on contract debt paid or accrued after October 13, 1995.
An exception permits the deduction of interest on policy loans on contracts for
up to 20 key persons. The interest deduction for contract debt on these loans is
limited to a prescribed interest rate and a maximum aggregate loan amount of
$50,000 per key insured person. The corporate alternative minimum tax also
applies to business-owned life insurance. This is an indirect tax on additions
to the contract fund or death benefits received under business-owned life
insurance policies.
VOTING RIGHTS
As stated above, all of the assets held in the subaccounts of the account will
be invested in shares of the corresponding portfolios of the Series Fund. Pruco
Life is the legal owner of those shares and has the right to vote on any matter
voted on at Series Fund shareholders meetings. However, Pruco Life will, as
required by law, vote the shares of the Series Fund at any regular and special
shareholders meetings it is required to hold in accordance with voting
instructions received from contract owners. The Series Fund will not hold annual
shareholders meetings when not required to do so under Maryland law or the
Investment Company Act of 1940. Series Fund shares for which no timely
instructions from contract owners are received, and any shares attributable to
general account investments of Pruco Life, will be voted in the same proportion
as shares in the respective portfolios for which instructions are received.
Should the applicable federal securities laws or regulations, or their current
interpretation, change so as to permit Pruco Life to vote shares of the Series
Fund in its own right, it may elect to do so.
Matters on which contract owners may give voting instructions include the
following:
o election of the Board of Directors of the Series Fund;
o ratification of the independent accountant of the Series Fund;
o approval of the investment advisory agreement for a portfolio of the Series
Fund corresponding to the contract owner's selected subaccount[s];
o any change in the fundamental investment policy of a portfolio corresponding
to the contract owner's selected subaccount[s]; and
o any other matter requiring a vote of the shareholders of the Series Fund.
With respect to approval of the investment advisory agreement or any change in a
portfolio's fundamental investment policy, contract owners participating in such
portfolios will vote separately on the matter, pursuant to the requirements of
Rule 18f-2 under the 1940 Act.
The number of Series Fund shares for which instructions may be given by a
contract owner is determined by dividing the portion of the value of the
Contract derived from participation in a subaccount, by the value of one share
in the corresponding portfolio of the Series Fund. The number of votes for which
each Contract owner may give Pruco Life instructions will be determined as of
the record date chosen by the Board of Directors of the Series Fund. Pruco Life
will furnish contract owners with proper forms and proxies to enable them to
give these instructions. Pruco Life reserves the right to modify the manner in
which the weight to be given voting instructions is calculated where such a
change is necessary to comply with current federal regulations or
interpretations of those regulations.
Pruco Life may, if required by state insurance regulations, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of the Series Fund's portfolios, or to approve or disapprove an investment
advisory contract for the Series Fund. In addition, Pruco Life itself may
disregard voting instructions that would require changes in the investment
policy or investment advisor of one or more of the Series Fund's portfolios,
provided that Pruco Life reasonably disapproves such changes in accordance with
applicable federal regulations. If Pruco Life does disregard voting
instructions, it will advise Contract owners of that action and its reasons for
such action in the next annual or semi-annual report to contract owners.
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SALE OF THE CONTRACT AND SALES COMMISSIONS
Currently, Pruco Securities Corporation ("Prusec"), an indirect wholly-owned
subsidiary of Prudential, which was organized in 1971 under New Jersey law, acts
as the principal underwriter of the contract. Pruco Life expects that during
1999 Prusec's responsibilities as principal underwriter will be assigned to
Prudential Investment Management Services LLC ("PIMS"). PIMS, also an indirect
wholly-owned subsidiary of Prudential, is a limited liability corporation
organized under Delaware law in 1996. PIMS will act as principal underwriter
under substantially the same terms as Prusec does currently. Both Prusec and
PIMS are registered as broker-dealers under the Securities Exchange Act of 1934
and are members of the National Association of Securities Dealers, Inc. The
principal business address of both Prusec and PIMS is 751 Broad Street, Newark,
New Jersey 07102-3777.
The Contract is currently sold by registered representatives of the principal
underwriter and may also be sold through other broker-dealers authorized by the
principal underwriter, including broker-dealers otherwise unaffiliated with
Prudential. Registered representatives of such other unaffiliated broker-dealers
may be paid on a different basis than registered representatives of the
principal underwriter or broker-dealers affiliated with Prudential. The maximum
commission that will be paid to the broker-dealer to cover both the individual
representative's commission and other distribution expenses will not exceed 6%
of the purchase payment. In addition, trail commissions based on the size of the
contract fund may be paid.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life expects to recover its total sales expenses over the periods
the contracts are in effect. To the extent that the sales charges are
insufficient to cover total sales expenses, the sales expenses will be recovered
from Pruco Life's surplus, which may include the amounts derived from the
mortality and expense risk charge.
SUBSTITUTION OF SERIES FUND SHARES
Although Pruco Life believes it to be unlikely, it is possible that in the
judgment of its management, one or more of the portfolios of the Series Fund may
become unsuitable for investment by Contract owners because of investment policy
changes, tax law changes or the unavailability of shares for investment. In that
event, Pruco Life may seek to substitute the shares of another portfolio or of
an entirely different mutual fund. Before this can be done, the approval of the
SEC, and possibly one or more state insurance departments, will be required. You
will be notified of any substitution.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS
The contract generally employs mortality tables that distinguish between males
and females. Thus, initial amounts of insurance that a given premium will buy,
cost of insurance charges, and benefits under contracts issued on males and
females of the same age will generally differ. However, in those states that
have adopted regulations prohibiting sex-distinct insurance rates, initial
amounts of insurance, cost of insurance charges and benefits will be based on
male mortality tables whether the insured is male or female. In addition,
employers and employee organizations considering purchase of a contract should
consult their legal advisors to determine whether purchase of a contract based
on sex-distinct actuarial tables is consistent with Title VII of the Civil
Rights Act of 1964 or other applicable law. We may offer the contract with
unisex mortality rates to such prospective purchasers.
OTHER GENERAL CONTRACT PROVISIONS
ASSIGNMENT. This contract may not be assigned if such assignment would violate
any federal, state or local law or regulation. Generally, the contract may not
be assigned to another insurance company without Pruco Life's consent. Pruco
Life assumes no responsibility for the validity or sufficiency of any
assignment, and it will not be obligated to comply with any assignment unless it
has received a copy at the Prudential Annuity Service Center.
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BENEFICIARY. You designate the beneficiary in the application. Thereafter, you
may change the beneficiary, provided it is in accordance with the terms of the
contract. Should the insured die with no surviving beneficiary, the insured's
estate will become the beneficiary.
INCONTESTABILITY. After the contract has been in force during the insured's
lifetime for two years from the contract date, Pruco Life will not contest its
liability under the contract in accordance with its terms.
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex (except where
unisex rates apply) or both are incorrect in the contract, Pruco Life will
adjust the benefits payable, as required by law, to reflect what the premium
would have purchased for the correct age and sex.
SETTLEMENT OPTIONS. The contract grants you, or your beneficiary, a variety of
ways to receive contract proceeds, other than in a lump sum. Any Pruco Life
representative authorized to sell this Contract can explain these options upon
request.
SUICIDE EXCLUSION. Generally, if the insured, whether sane or insane, dies by
suicide within two years from the contract date, Pruco Life will pay no more
under the contract than the sum of the premiums paid.
STATE REGULATION
Pruco Life is subject to regulation and supervision by the Department of
Insurance of the State of Arizona, which periodically examines its operations
and financial condition. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business.
Pruco Life is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.
In addition to the annual statements referred to above, Pruco Life is required
to file with Arizona and other jurisdictions a separate statement with respect
to the operations of all its variable contract accounts, in a form promulgated
by the National Association of Insurance Commissioners.
EXPERTS
The consolidated financial statements of Pruco Life and Subsidiaries as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 and the financial statements of the Account as of December 31,
1998 and for each of the three years in the period then ended included in this
prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP's
principal business address is 1177 Avenue of the Americas, New York, New York
10036.
Actuarial matters included in this prospectus have been examined by Ikwhan Oh,
FSA, MAA, Vice President and Company Actuary of Pruco Life whose opinion is
filed as an exhibit to the registration statement.
LITIGATION
Several actions have been brought against Pruco Life alleging that Pruco Life
and its agents engaged in improper life insurance sales practices. Prudential
has agreed to indemnify Pruco Life for losses, if any, resulting from such
23
<PAGE>
litigation. No other significant litigation is being brought against Pruco Life
that would have a material effect on its financial position.
YEAR 2000 COMPLIANCE
THE YEAR 2000 ISSUE
The services provided to you as a purchaser of Discovery Life Plus depend on the
smooth functioning of numerous computer systems. Many computer systems in use
today are programmed to recognize only the last two digits of a date as the
year. As a result, any systems using this kind of programming can not
distinguish a date using "00" and may treat it as "1900" instead of "2000." This
problem may impact computer systems that store business information, but it
could also affect other equipment used in our business like telephone, fax
machines and elevators. If this problem is not corrected, the "Year 2000" issue
could affect the accuracy and integrity of business records. Prudential's
regular business operations could be interrupted as well as those of other
companies that deal with us.
In addition, the operations of the mutual funds associated with Discovery Life
Plus could experience problems resulting from the Year 2000 issue. Please refer
to the respective mutual fund's prospectus for information regarding their
approach to Year 2000 concerns. The following described Prudential's effort to
address Year 2000 concerns.
To address this potential problem Prudential, as the parent company of Pruco
Life, organized its Year 2000 efforts around the following three areas:
o BUSINESS SYSTEMS - Computer programs directly used to support our business;
o INFRASTRUCTURE - Computers and other business equipment like telephones and
fax machines; and
o BUSINESS PARTNERS - Year 2000 readiness of essential business partners.
BUSINESS SYSTEMS. The business systems component includes a wide range of
computer programs that directly support Prudential's business operations
including systems for: insurance product processing, securities trading,
personnel record keeping and general accounting systems. All business systems
were analyzed to determine whether each computer program with a Year 2000
problem should be retired, replaced or renovated. The majority of this work has
been completed. A few remaining programs are currently being tested and
completion of this process is expected by June, 1999.
INFRASTRUCTURE. As with business applications, we established a specific
methodology and process for addressing infrastructure issues. The infrastructure
effort includes mainframe computer system hardware and operating system
software, mid-range systems and servers, telecommunications equipment and
systems, buildings and facilities systems, personal computers, and vendor
hardware and software. Other than desktop systems, substantially all other
infrastructure systems have been thoroughly tested. Presently, a small number of
midrange computers, and building and facilities systems are in the testing
phase. We expect to have the infrastructure implementation process completed by
June, 1999.
BUSINESS PARTNERS. Prudential recognizes the importance of determining the Year
2000 readiness of external business relationships especially those that involve
electronic data transfer products and services, and products that impact our
essential business processes. Prudential first classified each business partner
as "highly critical" or "less critical" to our business, and then began to
develop risk assessment and contingency plans to address the potential that a
business partner could experience a Year 2000 failure. All highly critical
business partner relationships have been assessed and contingency planning is
completed. Risk assessment and contingency planning continues for less critical
business partners, and the target completion date for these relationships is
June 1999.
Prudential believes that the Business Application, Infrastructure and Business
Partners components of the Year 2000 project are substantially on schedule. A
small number of the projects may not meet their targeted completion
24
<PAGE>
date. However, Prudential expects that these projects will be completed by
September, 1999. If there are any delays, they should not have a significant
impact on the timing of the project as a whole.
THE COST OF YEAR 2000 READINESS
Prudential is funding the Year 2000 program from internal operating budgets, and
estimates that its total costs to address the Year 2000 issue will total
approximately $220 million. Because these expenses were part of the operating
budget, they did not impact the management of Discovery Life Plus. During the
course of the Year 2000 program, some optional computer projects have been
delayed, but these delays have not had any material effect on Discovery Life
Plus.
YEAR 2000 RISKS AND CONTINGENCY PLANNING
Prudential believes that it is well positioned to lessen the impact of the Year
2000 problem. However, given the nature of this issue, we can not be 100%
certain that we are completely prepared, particularly because we cannot be
certain of Year 2000 readiness of third parties. As a result, we are unable to
determine at this time whether the consequences of Year 2000 failures may have a
material adverse effect on the results of Prudential's operations, liquidity or
financial condition. In the worst case, it is possible that a Year 2000
technology failure, whether internal or external, could have a material impact
on Prudential's results of operations, liquidity, or financial position. If
Prudential is unable to address the Year 2000 problem, we may have difficulty in
responding to your incoming phone calls, calculating your contract value or
processing withdrawals and purchase payments. It is also possible that the
mutual funds associated with Discovery Life Plus will be unable to value their
securities, in turn creating difficulties in purchasing or selling shares of the
respective mutual fund and calculating corresponding unit asset values. The
objective of Prudential's Year 2000 program has been to reduce these risks as
much as possible.
Most of the operations of Discovery Life Plus involve such a large number of
individual transactions that they can only be handled with the help of
computers. As a result, our current contingency plans include responses to the
failure of specific business programs or infrastructure components. However, our
contingency responses are now being reviewed and we expect to finalize them by
June, 1999 to ensure that they are workable under the special conditions of a
Year 2000 failure. Prudential believes that with the completion of its Year 2000
program as scheduled, the possibility of significant interruptions of normal
operations will be reduced.
ADDITIONAL INFORMATION
Pruco Life has filed a registration statement with the SEC under the Securities
Act of 1933, relating to the offering described in this prospectus. This
prospectus does not include all of the information set forth in the registration
statement. Certain portions have been omitted pursuant to the rules and
regulations of the SEC. The omitted information may, however, be obtained from
the SEC's principal office in Washington, D.C., upon payment of a prescribed
fee.
Further information may also be obtained from Pruco Life's office. The address
and telephone number are set forth on the cover of this prospectus.
FINANCIAL STATEMENTS
The consolidated financial Statements of Pruco Life and Subsidiaries included
herein should be distinguished from the financial statements of the Account.
They should be considered only as bearing upon the ability of Pruco Life to meet
its obligations under the contracts.
25
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life, listed with their principal
occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE
JAMES J. AVERY, JR., CHAIRMAN AND DIRECTOR -- Senior Vice President, Chief
Actuary and CFO, Prudential Individual Insurance since 1997; 1995 to 1997:
President, Prudential Select; 1993 to 1995: Chief Operating Officer, Prudential
Select. Age 47.
WILLIAM M. BETHKE, DIRECTOR -- Chief Investment Officer since 1997; prior to
1997: President, Prudential Capital Markets Group. Age 52.
IRA J. KLEINMAN, DIRECTOR -- Executive Vice President, International Insurance
Group since 1997; 1995 to 1997: Chief Marketing and Product Development Officer,
Prudential Individual Insurance Group; 1993 to 1995: President, Prudential
Select. Age 52.
ESTHER H. MILNES, PRESIDENT AND DIRECTOR -- Vice President and Actuary,
Prudential Individual Insurance Group since 1996; 1993 to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services. Age
48.
I. EDWARD PRICE, VICE CHAIRMAN AND DIRECTOR -- Senior Vice President and
Actuary, Prudential Individual Insurance Group since 1995; 1994 to 1995: Chief
Executive Officer, Prudential International Insurance. Age 56.
KIYOFUMI SAKAGUCHI, DIRECTOR -- President, Prudential International Insurance
Group since 1995; 1994 to 1995: Chairman and Chief Executive Officer, The
Prudential Life Insurance Company., Ltd.; prior to 1994: President and Chief
Executive Officer, Asia Pacific Region -- Prudential International Insurance and
President, The Prudential Life Insurance Co., Ltd. Age 56.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, TREASURER -- Vice President and Treasurer of Prudential since
1995; 1993 to 1995: Managing Director and Assistant Treasurer of Prudential. Age
42.
JAMES C. DROZANOWSKI, SENIOR VICE PRESIDENT -- Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996:
President, Credit Card Division, Chase Manhattan Bank; prior to 1995: Chase
Manhattan Bank. Age 56.
CLIFFORD E. KIRSCH, CHIEF LEGAL OFFICER AND SECRETARY -- Chief Counsel, Variable
Products, Law Department of Prudential since 1995. Age 39.
FRANK P. MARINO, SENIOR VICE PRESIDENT -- Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; prior to 1996:
Senior Vice President, Prudential Mutual Fund Services. Age 54.
EDWARD A. MINOGUE, SENIOR VICE PRESIDENT -- Vice President, Annuity Services,
Prudential Investments since 1997; prior to 1997: Director, Merrill Lynch. Age
56.
HIROSHI NAKAJIMA, SENIOR VICE PRESIDENT -- President & CEO, Pruco Life Insurance
Company Taiwan Branch, since 1997; 1993 to 1997: Senior Managing Director,
Prudential Life Insurance Co., Ltd. Age 55.
IMANTS SAKSONS, SENIOR VICE PRESIDENT -- Vice President, Compliance, Prudential
Individual Financial Services since 1998; prior to 1998: Vice President, Market
Conduct, U.S. Operations, Manulife Financial. Age 48.
SHIRLEY H. SHAO, SENIOR VICE PRESIDENT AND CHIEF ACTUARY -- Vice President and
Associate Actuary, Prudential. Age 44.
DENNIS G. SULLIVAN, VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER -- Vice
President and Deputy Controller, Prudential, since 1998; 1997 to 1998, Vice
President & Controller, ContiFinancial Corporation. Prior to 1997, Director,
Salomon Brothers. Age 43.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992. Pruco Life directors and
officers are elected annually.
26
<PAGE>
ILLUSTRATIONS
----------
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307
15 $ 36,019 $133,307 $133,307 $133,307 $ 150,028
20 $ 43,822 $133,307 $133,307 $133,307 $ 196,879
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 270,741
30 $ 64,868 $ 0 $133,307 $133,307 $ 385,391
35 $ 78,922 $ 0 $ 0(2) $155,351 $ 566,137
40 $ 96,020 $ 0 $ 0 $193,877 $ 849,885
45 $116,824 $ 0 $ 0 $248,201 $1,308,770
<CAPTION>
CASH SURRENDER VALUE
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $ 20,800 $17,424 $18,134 $ 18,906 $ 19,686
2 $ 21,632 $17,209 $18,639 $ 20,125 $ 21,752
3 $ 22,497 $16,995 $19,155 $ 21,492 $ 24,018
4 $ 23,397 $16,781 $19,684 $ 22,949 $ 26,604
5 $ 24,333 $16,568 $20,226 $ 24,502 $ 29,473
6 $ 25,306 $16,356 $20,779 $ 26,158 $ 32,649
7 $ 26,319 $16,644 $22,006 $ 28,785 $ 37,281
8 $ 27,371 $16,093 $22,373 $ 30,410 $ 40,868
9 $ 28,466 $15,347 $22,746 $ 32,126 $ 44,799
10 $ 29,605 $14,571 $23,126 $ 33,940 $ 49,109
15 $ 36,019 $10,130 $25,120 $ 44,661 $ 77,734
20 $ 43,822 $ 4,184 $26,679 $ 58,770 $ 123,049
25 $ 53,317 $ 0(2) $22,345 $ 77,336 $ 194,777
30 $ 64,868 $ 0 $12,618 $ 101,767 $ 308,312
35 $ 78,922 $ 0 $ 0(2) $ 133,923 $ 488,048
40 $ 96,020 $ 0 $ 0 $ 176,251 $ 772,622
45 $116,824 $ 0 $ 0 $ 231,963 $1,223,149
</TABLE>
- ------------------------
(1) Illustrated values assume 2% state and/or local premium taxes, no contract
loan, and the deduction of the monthly cost of insurance charge in
accordance with the standard explained in the prospectus. The cash surrender
values reflect the contingent deferred sales charges applicable to
surrenders within the first 6 contract years. The face amount is based upon
the assumption that at issuance the fixed-rate option is not being credited
more than 6%.
(2) Based on a gross return of 0%, the contract would go into default in policy
year 23 unless an additional premium payment was made. Based on a gross
return of 4%, the contract would go into default in policy year 34 unless an
additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates of
inflation. The death benefit and cash surrender value for a contract would be
different from those shown if the actual rates of return averaged 0%, 4%, 8%,
and 12% over a period of years but also fluctuated above or below those averages
for individual contract years. No representations can be made by Pruco Life or
the Series Fund that these hypothetical rates of return can be achieved for any
one year or sustained over any period of time.
T-1
<PAGE>
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307
15 $ 36,019 $133,307 $133,307 $133,307 $ 142,897
20 $ 43,822 $133,307 $133,307 $133,307 $ 187,517
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 257,798
30 $ 64,868 $ 0 $ 0(2) $133,307 $ 366,895
35 $ 78,922 $ 0 $ 0 $133,307 $ 538,805
40 $ 96,020 $ 0 $ 0 $133,307 $ 808,533
45 $116,824 $ 0 $ 0 $164,351 $1,243,578
<CAPTION>
CASH SURRENDER VALUE
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $ 20,800 $17,306 $18,016 $ 18,777 $ 19,556
2 $ 21,632 $16,953 $18,384 $ 19,872 $ 21,480
3 $ 22,497 $16,579 $18,742 $ 21,083 $ 23,610
4 $ 23,397 $16,180 $19,087 $ 22,362 $ 26,033
5 $ 24,333 $15,753 $19,415 $ 23,708 $ 28,711
6 $ 25,306 $15,295 $19,721 $ 25,126 $ 31,671
7 $ 26,319 $15,259 $20,621 $ 27,440 $ 36,025
8 $ 27,371 $14,562 $20,668 $ 28,759 $ 39,354
9 $ 28,466 $13,836 $20,680 $ 30,132 $ 43,007
10 $ 29,605 $13,079 $20,653 $ 31,562 $ 47,020
15 $ 36,019 $ 8,723 $19,800 $ 39,639 $ 74,040
20 $ 43,822 $ 2,839 $17,065 $ 49,414 $ 117,198
25 $ 53,317 $ 0(2) $10,852 $ 61,057 $ 185,466
30 $ 64,868 $ 0 $ 0(2) $ 75,094 $ 293,516
35 $ 78,922 $ 0 $ 0 $ 92,595 $ 464,486
40 $ 96,020 $ 0 $ 0 $117,028 $ 735,029
45 $116,824 $ 0 $ 0 $153,599 $1,162,222
</TABLE>
- ------------------------
(1) Illustrated values assume 2% state and/or local premium taxes, no contract
loan, and the deduction of maximum monthly cost of insurance charges. The
cash surrender values reflect the contingent deferred sales charges
applicable to surrenders within the first 6 contract years. The face amount
is based upon the assumption that at issuance the fixed-rate option is not
being credited more than 6%.
(2) Based on a gross return of 0% and the deduction of maximum cost of insurance
charges, the contract would go into default in policy year 22 unless an
additional premium payment was made. Based on a gross return of 4% and the
deduction of maximum cost of insurance charges, the contract would go into
default in policy year 30 unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates of
inflation. The death benefit and cash surrender value for a contract would be
different from those shown if the actual rates of return averaged 0%, 4%, 8%,
and 12% over a period of years but also fluctuated above or below those averages
for individual contract years. No representations can be made by Pruco Life or
the Series Fund that these hypothetical rates of return can be achieved for any
one year or sustained over any period of time.
T-2
<PAGE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468
2 $108,160 $357,468 $357,468 $357,468 $ 357,468
3 $112,486 $357,468 $357,468 $357,468 $ 357,468
4 $116,986 $357,468 $357,468 $357,468 $ 357,468
5 $121,665 $357,468 $357,468 $357,468 $ 357,468
6 $126,532 $357,468 $357,468 $357,468 $ 357,468
7 $131,593 $357,468 $357,468 $357,468 $ 357,468
8 $136,857 $357,468 $357,468 $357,468 $ 357,468
9 $142,331 $357,468 $357,468 $357,468 $ 357,468
10 $148,024 $357,468 $357,468 $357,468 $ 360,800
15 $180,094 $357,468 $357,468 $357,468 $ 511,626
20 $219,112 $ 0(2) $357,468 $357,468 $ 734,532
25 $266,584 $ 0 $357,468(2) $434,039 $1,093,142
<CAPTION>
CASH SURRENDER VALUE
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $104,000 $88,900 $ 92,668 $ 96,644 $100,620
2 $108,160 $87,802 $ 95,095 $102,678 $111,166
3 $112,486 $86,708 $ 97,732 $109,652 $122,726
4 $116,986 $85,618 $100,430 $117,087 $135,734
5 $121,665 $84,531 $103,192 $125,011 $150,375
6 $126,532 $83,449 $106,017 $133,457 $166,576
7 $131,593 $84,920 $112,277 $146,864 $190,210
8 $136,857 $82,960 $114,150 $155,153 $208,508
9 $142,331 $78,562 $116,054 $163,910 $228,567
10 $148,024 $73,329 $117,989 $173,162 $250,555
15 $180,094 $40,982 $128,164 $227,865 $396,609
20 $219,112 $ 0(2) $139,215 $299,849 $627,804
25 $266,584 $ 0 $151,219(2) $394,581 $993,765
</TABLE>
- -----------------------
(1) Illustrated values assume no deduction for state and/or local premium taxes,
no contract loan, and the deduction of the monthly cost of insurance charge
in accordance with the standard explained in the prospectus. The cash
surrender values reflect the contingent deferred sales charges applicable to
surrenders within the first 6 contract years. The face amount is based upon
the assumption that at issuance the fixed-rate option is not being credited
more than 6%.
(2) Based on a gross return of 0%, the contract would go into default in policy
year 20 unless an additional premium payment was made. Based on a gross
return of 4%, the contract would go into default in policy year 33 unless an
additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates of
inflation. The death benefit and cash surrender value for a contract would be
different from those shown if the actual rates of return averaged 0%, 4%, 8%,
and 12% over a period of years but also fluctuated above or below those averages
for individual contract years. No representations can be made by Pruco Life or
the Series Fund that these hypothetical rates of return can be achieved for any
one year or sustained over any period of time.
T-3
<PAGE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468
2 $108,160 $357,468 $357,468 $357,468 $ 357,468
3 $112,486 $357,468 $357,468 $357,468 $ 357,468
4 $116,986 $357,468 $357,468 $357,468 $ 357,468
5 $121,665 $357,468 $357,468 $357,468 $ 357,468
6 $126,532 $357,468 $357,468 $357,468 $ 357,468
7 $131,593 $357,468 $357,468 $357,468 $ 357,468
8 $136,857 $357,468 $357,468 $357,468 $ 357,468
9 $142,331 $357,468 $357,468 $357,468 $ 357,468
10 $148,024 $357,468 $357,468 $357,468 $ 357,468
15 $180,094 $357,468 $357,468 $357,468 $ 475,293
20 $219,112 $ 0(2) $357,468 $357,468 $ 682,125
25 $266,584 $ 0 $ 0(2) $357,468 $1,014,643
<CAPTION>
CASH SURRENDER VALUE
---------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ---------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ------ -------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1 $104,000 $87,723 $ 91,371 $ 95,345 $ 99,318
2 $108,160 $85,294 $ 92,581 $100,164 $108,438
3 $112,486 $82,713 $ 93,727 $105,657 $118,539
4 $116,986 $79,975 $ 94,771 $111,458 $130,189
5 $121,665 $77,061 $ 95,692 $117,582 $143,133
6 $126,532 $73,939 $ 96,458 $124,033 $157,517
7 $131,593 $72,746 $100,024 $134,857 $178,873
8 $136,857 $68,229 $ 99,307 $140,715 $195,187
9 $142,331 $63,407 $ 98,264 $146,759 $213,201
10 $148,024 $58,225 $ 96,842 $152,985 $233,135
15 $180,094 $25,809 $ 82,758 $187,644 $368,444
20 $219,112 $ 0(2) $ 48,106 $229,442 $583,012
25 $266,584 $ 0 $ 0 $280,678 $922,403
</TABLE>
- ------------------------
(1) Illustrated values assume no deduction for state and/or local premium taxes,
no contract loan, and the deduction of maximum monthly cost of insurance
charges. The cash surrender values reflect the contingent deferred sales
charges applicable to surrenders within the first 6 contract years. The face
amount is based upon the assumption that at issuance the fixed-rate option
is not being credited more than 6%.
(2) Based on a gross return of 0% and the deduction of maximum cost of insurance
charges, the contract would go into default in policy year 18 unless an
additional premium payment was made. Based on a gross return of 4% and the
deduction of maximum cost of insurance charges, the contract would go into
default in policy year 24 unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates of
inflation. The death benefit and cash surrender value for a contract would be
different from those shown if the actual rates of return averaged 0%, 4%, 8%,
and 12% over a period of years but also fluctuated above or below those averages
for individual contract years. No representations can be made by Pruco Life or
the Series Fund that these hypothetical rates of return can be achieved for any
one year or sustained over any period of time.
T-4
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------------------
ZERO COUPON
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE BOND
MARKET BOND EQUITY MANAGED BALANCED 2000
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in The Prudential Series
Fund, Inc. Portfolios, at net asset
value [Note 3] ........................ $13,081,800 $ 8,440,315 $55,413,656 $72,702,369 $88,170,079 $ 2,526,541
----------- ----------- ----------- ----------- ----------- -----------
Net Assets ............................. $13,081,800 $ 8,440,315 $55,413,656 $72,702,369 $88,170,079 $ 2,526,541
=========== =========== =========== =========== =========== ===========
NET ASSETS, representing:
Equity of contract owners .............. $13,081,800 $ 8,440,315 $55,413,656 $72,702,369 $88,170,079 $ 2,526,541
----------- ----------- ----------- ----------- ----------- -----------
$13,081,800 $ 8,440,315 $55,413,656 $72,702,369 $88,170,079 $ 2,526,541
=========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (Continued)
---------------------------------------------------------------------------------------------------------------------------------
HIGH ZERO COUPON SMALL
YIELD STOCK EQUITY NATURAL GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
BOND INDEX INCOME RESOURCES GLOBAL INCOME 2005 JENNISON STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,145,789 $17,195,438 $16,779,538 $ 2,103,093 $ 4,296,124 $ 3,772,366 $ 1,390,555 $ 6,839,323 $ 4,350,328
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 6,145,789 $17,195,438 $16,779,538 $ 2,103,093 $ 4,296,124 $ 3,772,366 $ 1,390,555 $ 6,839,323 $ 4,350,328
=========== =========== =========== =========== =========== =========== =========== =========== ===========
$ 6,145,789 $17,195,438 $16,779,538 $ 2,103,093 $ 4,296,124 $ 3,772,366 $ 1,390,555 $ 6,839,323 $ 4,350,328
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 6,145,789 $17,195,438 $16,779,538 $ 2,103,093 $ 4,296,124 $ 3,772,366 $ 1,390,555 $ 6,839,323 $ 4,350,328
=========== =========== =========== =========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A2
</TABLE>
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
PORTFOLIO PORTFOLIO
--------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
---------- ----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income .......................... $ 765,485 $ 812,540 $ 849,922 $ 531,318 $ 730,224 $ 734,790
----------- ----------- ----------- ---------- ---------- ----------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Notes 5A and 5B] ........ 181,268 190,711 202,024 109,480 126,244 142,663
Reimbursement for excess expenses
[Note 5C] ............................... (2,166) (3,465) (6,908) (2,147) (2,547) (5,597)
----------- ----------- ----------- ---------- ---------- ----------
NET EXPENSES .............................. 179,102 187,246 195,116 107,333 123,697 137,066
----------- ----------- ----------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS) .............. 586,383 625,294 654,806 423,985 606,527 597,724
----------- ----------- ----------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received ..... 0 0 0 32,315 116,326 0
Realized gain (loss) on shares redeemed .. 0 0 0 45,770 92,708 46,177
Net change in unrealized gain (loss) on
investments ............................. 0 0 0 (6,633) (116,684) (366,764)
----------- ----------- ----------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS ............ 0 0 0 71,452 92,350 (320,587)
----------- ----------- ----------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ............................... $ 586,383 $ 625,294 $ 654,806 $ 495,437 $ 698,877 $ 277,137
=========== =========== =========== ========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE
EQUITY MANAGED BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------- ---------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,024,182 $ 1,252,483 $ 1,193,506 $ 2,358,856 $ 2,170,546 $ 2,143,818 $ 3,695,174 $ 4,020,882 $ 3,496,167
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
703,699 685,445 614,748 909,393 907,245 882,801 1,093,841 1,096,279 1,080,118
(49,226) (42,912) (54,196) (166,085) (165,166) (178,092) (151,572) (144,445) (173,327)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
654,473 642,533 560,552 743,308 742,079 704,709 942,269 951,834 906,791
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
369,709 609,950 632,954 1,615,548 1,428,467 1,439,109 2,752,905 3,069,048 2,589,376
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
6,071,668 3,061,685 4,590,879 7,397,085 10,983,219 6,748,281 5,205,075 9,442,317 5,364,643
2,177,325 3,103,596 1,516,095 962,703 2,316,946 1,582,636 894,531 1,726,707 1,560,460
(4,180,231) 4,613,512 1,084,389 (3,534,674) (3,350,945) (1,468,777) (45,061) (4,126,123) (59,931)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
4,068,762 10,778,793 7,191,363 4,825,114 9,949,220 6,862,140 6,054,545 7,042,901 6,865,172
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 4,438,471 $11,388,743 $ 7,824,317 $ 6,440,662 $11,377,687 $ 8,301,249 $ 8,807,450 $10,111,949 $ 9,454,548
=========== =========== =========== =========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A4
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------------------
ZERO COUPON BOND 2000 HIGH YIELD BOND
PORTFOLIO PORTFOLIO
-------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
--------- ---------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ........................... $ 126,278 $ 153,810 $ 143,328 $ 614,576 $ 620,079 $ 608,481
---------- ---------- ---------- ------------ ------------ ------------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Notes 5A and 5B] ......... 32,152 36,334 43,571 80,740 81,445 79,734
Reimbursement for excess expenses
[Note 5C] ................................ (5,684) (7,849) (3,977) 0 0 0
---------- ---------- ---------- ------------ ------------ ------------
NET EXPENSES ............................... 26,468 28,485 39,594 80,740 81,445 79,734
---------- ---------- ---------- ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ............... 99,810 125,325 103,734 533,836 538,634 528,747
---------- ---------- ---------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received ..... 33,785 122,909 0 0 0 0
Realized gain (loss) on shares redeemed .. 20,011 31,433 61,546 (18,283) (634) (8,889)
Net change in unrealized gain (loss)
on investments .......................... 8,455 (101,802) (156,572) (733,132) 221,974 89,453
---------- ---------- ---------- ------------ ------------ ------------
NET GAIN (LOSS) ON INVESTMENTS ............. 62,251 52,540 (95,026) (751,415) 221,340 80,564
---------- ---------- ---------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS ................................ $ 162,061 $ 177,865 $ 8,708 $ (217,579) $ 759,974 $ 609,311
========== ============ ========= ============ =========== ==========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (Continued)
- ---------------------------------------------------------------------------------------------------------------------------------
STOCK INDEX EQUITY INCOME NATURAL RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------- ----------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
- ------------ ------------ ----------- ------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 180,944 $ 167,019 $ 140,579 $ 489,322 $ 421,273 $ 437,689 $ 24,100 $ 22,099 $ 27,824
- ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------ ------------
181,109 136,243 94,079 235,069 200,384 159,086 36,097 54,219 49,128
0 0 0 0 0 0 0 0 0
- ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------ ------------
181,109 136,243 94,079 235,069 200,384 159,086 36,097 54,219 49,128
- ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------ ------------
(165) 30,776 46,500 254,253 220,889 278,603 (11,997) (32,120) (21,304)
- ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------ ------------
258,678 354,981 97,668 1,059,876 1,682,299 428,472 169,689 456,104 531,704
864,659 565,902 322,008 705,153 499,434 258,878 (318,262) 75,644 207,066
2,371,413 1,893,795 980,432 (2,718,706) 2,374,752 1,389,905 (408,664) (1,044,069) 223,037
- ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------ ------------
3,494,750 2,814,678 1,400,108 (953,677) 4,556,485 2,077,255 (557,237) (512,321) 961,807
- ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------ ------------
$ 3,494,585 $ 2,845,454 $ 1,446,608 $ (699,424) $ 4,777,374 $ 2,355,858 $ (569,234) $ (544,441) $ 940,503
============ ============ ============ ============ ============ =========== ============= ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A6
</TABLE>
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
GLOBAL GOVERNMENT INCOME
PORTFOLIO PORTFOLIO
--------------------------------------- --------------------------------------
1998 1997 1996 1998 1997 1996
--------- ---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ......................... $ 55,840 $ 57,845 $ 86,459 $206,665 $206,624 $ 212,588
-------- --------- -------- -------- -------- ---------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Note 5A and 5B] ........ 52,526 59,939 41,077 44,271 39,739 41,693
Reimbursement for excess expenses
[Note 5C] .............................. 0 0 0 0 0 0
-------- --------- -------- -------- -------- ---------
NET EXPENSES ............................. 52,526 59,939 41,077 44,271 39,739 41,693
-------- --------- -------- -------- -------- ---------
NET INVESTMENT INCOME (LOSS) ............. 3,314 (2,094) 45,382 162,394 166,885 170,895
-------- --------- -------- -------- -------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received ... 179,296 220,780 67,416 0 0 0
Realized gain on shares redeemed ....... 292,867 217,305 44,616 27,863 10,360 19,693
Net change in unrealized gain (loss) on
investments ........................... 490,506 (195,352) 399,470 75,637 79,214 (151,572)
-------- --------- -------- -------- -------- ---------
NET GAIN (LOSS) ON INVESTMENTS ........... 962,669 242,733 511,502 103,500 89,574 (131,879)
-------- --------- -------- -------- -------- ---------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .............................. $965,983 $ 240,639 $556,884 $265,894 $256,459 $ 39,016
======== ========= ======== ======== ======== =========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
</TABLE>
A7
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
ZERO COUPON BOND 2005 PRUDENTIAL JENNISON SMALL CAPITALIZATION STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------- -------------------------------------- --------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
- --------- --------- --------- ---------- -------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 67,610 $ 82,336 $ 95,552 $ 10,066 $ 5,707 $ 2,691 $ 20,302 $ 13,030 $ 5,233
-------- -------- --------- ---------- -------- -------- --------- -------- -------
16,747 17,408 21,882 58,214 30,596 13,404 40,152 23,358 7,208
(2,960) (4,673) (2,205) 0 0 0 0 0 0
-------- -------- --------- ---------- -------- -------- --------- -------- -------
13,787 12,735 19,677 58,214 30,596 13,404 40,152 23,358 7,208
-------- -------- --------- ---------- -------- -------- --------- -------- -------
53,823 69,601 75,875 (48,148) (24,889) (10,713) (19,850) (10,328) (1,975)
-------- -------- --------- ---------- -------- -------- --------- -------- -------
1,572 29,827 20,412 98,997 190,081 0 257,177 199,000 16,901
13,858 32,242 4,000 199,887 79,675 9,875 7,316 68,599 8,724
74,315 18,525 (134,741) 1,286,712 328,629 151,305 (227,600) 97,148 67,298
-------- -------- --------- ---------- -------- -------- --------- -------- -------
89,745 80,594 (110,329) 1,585,596 598,385 161,180 36,893 364,747 92,923
-------- -------- --------- ---------- -------- -------- --------- -------- -------
$143,568 $150,195 $ (34,454) $1,537,448 $573,496 $150,467 $ 17,043 $345,419 $90,948
======== ======== ========= ========== ======== ======== ========= ======== =======
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
</TABLE>
A8
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
PORTFOLIO PORTFOLIO
---------------------------------------- -------------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .............. $ 586,383 $ 625,294 $ 654,806 $ 423,985 $ 606,527 $ 597,724
Capital gains distributions received ...... 0 0 0 32,315 116,326 0
Realized gain (loss) on shares redeemed ... 0 0 0 45,770 92,708 46,177
Net change in unrealized gain (loss) on
investments .............................. 0 0 0 (6,633) (116,684) (366,764)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ................................ 586,383 625,294 654,806 495,437 698,877 277,137
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS [Note 7] .............. (1,706,948) (1,729,693) (5,721,859) (810,206) (2,743,619) (2,217,069)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RETAINED IN THE
ACCOUNT [Note 8] .......................... (137,157) 106,939 (915,025) (154,788) 103,316 43,136
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ................................ (1,257,722) (997,460) (5,982,078) (469,557) (1,941,426) (1,896,796)
NET ASSETS:
Beginning of year ......................... 14,339,522 15,336,982 21,319,060 8,909,872 10,851,298 12,748,094
----------- ----------- ----------- ----------- ----------- -----------
End of year ............................... $13,081,800 $14,339,522 $15,336,982 $ 8,440,315 $ 8,909,872 $10,851,298
=========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE
EQUITY MANAGED BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------ ---------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>S
$ 369,709 $ 609,950 $ 632,954 $ 1,615,548 $ 1,428,467 $ 1,439,109 $ 2,752,905 $ 3,069,048 $ 2,589,376
6,071,668 3,061,685 4,590,879 7,397,085 10,983,219 6,748,281 5,205,075 9,442,317 5,364,643
2,177,325 3,103,596 1,516,095 962,703 2,316,946 1,582,636 894,531 1,726,707 1,560,460
(4,180,231) 4,613,512 1,084,389 (3,534,674) (3,350,945) (1,468,777) (45,061) (4,126,123) (59,931)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
4,438,471 11,388,743 7,824,317 6,440,662 11,377,687 8,301,249 8,807,450 10,111,949 9,454,548
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(4,245,718) (7,797,946) (4,080,845) (6,579,039) (9,503,739) (7,933,681) (7,722,127) (10,144,349) (9,872,985)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(30,743) (95,520) 83,397 (36,959) (476,182) 215,390 (211,759) (26,817) (92,223)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
162,010 3,495,277 3,826,869 (175,336) 1,397,766 582,958 873,564 (59,217) (510,660)
55,251,646 51,756,369 47,929,500 72,877,705 71,479,939 70,896,981 87,296,515 87,355,732 87,866,392
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$55,413,656 $55,251,646 $51,756,369 $72,702,369 $72,877,705 $71,479,939 $88,170,079 $87,296,515 $87,355,732
=========== =========== =========== =========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A10
</TABLE>
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
ZERO COUPON HIGH
BOND 2000 YIELD BOND
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............. $ 99,810 $ 125,325 $ 103,734 $ 533,836 $ 538,634 $ 528,747
Capital gains distributions received ..... 33,785 122,909 0 0 0 0
Realized gain (loss) on shares redeemed .. 20,011 31,433 61,546 (18,283) (634) (8,889)
Net change in unrealized gain (loss) on
investments ............................. 8,455 (101,802) (156,572) (733,132) 221,974 89,453
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ............................... 162,061 177,865 8,708 (217,579) 759,974 609,311
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS [Note 7] ............. (325,127) (502,896) (883,895) (271,458) (363,077) (652,164)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RETAINED IN THE
ACCOUNT [Note 8] ......................... (1,670) (103,168) 85,488 1,358 7,704 (26,102)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ............................... (164,736) (428,199) (789,699) (487,679) 404,601 (68,955)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS:
Beginning of year ........................ 2,691,277 3,119,476 3,909,175 6,633,468 6,228,867 6,297,822
----------- ----------- ----------- ----------- ----------- -----------
End of year .............................. $ 2,526,541 $ 2,691,277 $ 3,119,476 $ 6,145,789 $ 6,633,468 $ 6,228,867
=========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------------
NATURAL
STOCK INDEX EQUITY INCOME RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------- ---------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
- ----------- ----------- ----------- ---------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(165) $ 30,776 $ 46,500 $ 254,253 $ 220,889 $ 278,603 $ (11,997) $ (32,120) $ (21,304)
258,678 354,981 97,668 1,059,876 1,682,299 428,472 169,689 456,104 531,704
864,659 565,902 322,008 705,153 499,434 258,878 (318,262) 75,644 207,066
2,371,413 1,893,795 980,432 (2,718,706) 2,374,752 1,389,905 (408,664) (1,044,069) 223,037
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
3,494,585 2,845,454 1,446,608 (699,424) 4,777,374 2,355,858 (569,234) (544,441) 940,503
- ----------- ----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
986,955 1,333,982 694,843 (1,194,994) 194,694 (1,077,303) (845,964) (329,203) 405,943
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(53,472) (16,739) (5,765) (13,031) (14,032) (36,611) 5,119 3,421 (372,815)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
4,428,068 4,162,697 2,135,686 (1,907,449) 4,958,036 1,241,944 (1,410,079) (870,223) 973,631
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
12,767,370 8,604,673 6,468,987 18,686,987 13,728,951 12,487,007 3,513,172 4,383,395 3,409,764
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$17,195,438 $12,767,370 $ 8,604,673 $16,779,538 $18,686,987 $13,728,951 $ 2,103,093 $ 3,513,172 $ 4,383,395
=========== =========== =========== =========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A12
</TABLE>
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
GOVERNMENT
GLOBAL INCOME
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............. $ 3,314 $ (2,094) $ 45,382 $ 162,394 $ 166,885 $ 170,895
Capital gains distributions received ..... 179,296 220,780 67,416 0 0 0
Realized gain (loss) on shares redeemed .. 292,867 217,305 44,616 27,863 10,360 19,693
Net change in unrealized gain (loss) on
investments ............................. 490,506 (195,352) 399,470 75,637 79,214 (151,572)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ............................... 965,983 240,639 556,884 265,894 256,459 39,016
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS [Note 7] ............. (1,220,082) (172,011) 1,711,765 193,233 (261,680) (20,151)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RETAINED IN THE
ACCOUNT [Note 8] ......................... (60,770) (1,051) (8,688) (4,569) (3,582) (301,155)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ............................... (314,869) 67,577 2,259,961 454,558 (8,803) (282,290)
NET ASSETS:
Beginning of year ......................... 4,610,993 4,543,416 2,283,455 3,317,808 3,326,611 3,608,901
----------- ----------- ----------- ----------- ----------- -----------
End of year ............................... $ 4,296,124 $ 4,610,993 $ 4,543,416 $ 3,772,366 $ 3,317,808 $ 3,326,611
=========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------------
ZERO COUPON PRUDENTIAL SMALL CAPITALIZATION
BOND 2005 JENNISON STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------- --------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 53,823 $ 69,601 $ 75,875 $ (48,148) $ (24,889) $ (10,713) $ (19,850) $ (10,328) $ (1,975)
1,572 29,827 20,412 98,997 190,081 0 257,177 199,000 16,901
13,858 32,242 4,000 199,887 79,675 9,875 7,315 68,599 8,724
74,315 18,525 (134,741) 1,286,712 328,629 151,305 (227,599) 97,148 67,298
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
143,568 150,195 (34,454) 1,537,448 573,496 150,467 17,043 354,419 90,948
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
1,736 (419,095) 95,080 1,935,923 1,286,255 893,360 1,367,260 1,315,574 708,061
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
460 (378,102) 351,597 (3,857) 18,394 (35,955) (47,114) 26,783 22,215
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
145,764 (647,002) 412,223 3,469,514 1,878,145 1,007,872 1,337,189 1,696,776 821,224
1,244,791 1,891,793 1,479,570 3,369,809 1,491,664 483,792 3,013,139 1,316,363 495,139
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,390,555 $ 1,244,791 $ 1,891,793 $ 6,839,323 $ 3,369,809 $ 1,491,664 $ 4,350,328 $ 3,013,139 $ 1,316,363
=========== =========== =========== =========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A14
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
DECEMBER 31, 1998
NOTE 1: GENERAL
Pruco Life Single Premium Variable Life Account (the "Account") was
established on April 15, 1985 under Arizona law as a separate
investment account of Pruco Life Insurance Company ("Pruco Life")
which is a wholly-owned subsidiary of The Prudential Insurance Company
of America ("Prudential"). The assets of the Account are segregated
from Pruco Life's other assets. Proceeds from sales of the Pruco Life
Discovery Life Plus product are invested in the Account as directed by
the contract owners.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. There are fifteen subaccounts
within the Account, each of which invests only in a corresponding
portfolio of The Prudential Series Fund, Inc. (the "Series Fund"). The
Series Fund is a diversified open-end management investment company,
and is managed by Prudential.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of
the financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates.
Investments--The investments in shares of the Series Fund are stated
at the net asset value of the respective portfolio.
Security Transactions--Realized gains and losses on security
transactions are reported on an average cost basis. Purchase and sale
transactions are recorded as of the trade date of the security being
purchased or sold.
Distributions Received--Dividend and capital gain distributions
received are reinvested in additional shares of the Series Fund and
are recorded on the ex-dividend date.
A15
<PAGE>
NOTE 3: INVESTMENT INFORMATION FOR THE PRUDENTIAL SERIES FUND, INC. PORTFOLIOS
The net asset value per share (rounded) for each portfolio of the
Series Fund, the number of shares of each portfolio held by the
subaccounts and the aggregate cost of investments in such shares at
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Number of shares: .......................... 1,308,180 763,058 1,869,758 4,390,038 5,846,605
Net asset value per share (rounded): ....... $ 10.00 $ 11.06 $ 29.64 $ 16.56 $ 15.08
Cost: ...................................... $13,081,800 $ 8,297,537 $41,668,997 $69,915,782 $82,569,908
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------
ZERO COUPON HIGH YIELD STOCK EQUITY NATURAL
BOND 2000 BOND INDEX INCOME RESOURCES
------------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Number of shares: .......................... 198,367 852,646 455,629 837,615 175,500
Net asset value per share (rounded): ....... $ 12.74 $ 7.21 $ 37.74 $ 20.03 $ 11.98
Cost: ...................................... $ 2,420,336 $ 6,825,616 $10,392,695 $14,553,881 $ 3,055,925
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------
SMALL
GOVERNMENT ZERO COUPON PRUDENTIAL CAPITALIZATION
GLOBAL INCOME BOND 2005 JENNISON STOCK
----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Number of shares: .......................... 203,060 317,790 103,459 286,082 295,727
Net asset value per share (rounded): ....... $ 21.16 $ 11.87 $ 13.44 $ 23.91 $ 14.71
Cost: ...................................... $ 3,549,144 $ 3,617,835 $ 1,282,251 $ 5,057,832 $ 4,405,926
</TABLE>
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding contract owner units, unit values and total value of
contract owner equity at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding ...... 7,218,740 3,270,705 9,923,063 18,705,520 26,970,833
Unit Value ............................ $ 1.81220 $ 2.58058 $ 5.58433 $ 3.88668 $ 3.26909
----------- ----------- ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY ........... $13,081,800 $ 8,440,315 $55,413,656 $72,702,369 $88,170,079
=========== =========== =========== =========== ===========
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------
ZERO COUPON HIGH YIELD STOCK EQUITY NATURAL
BOND 2000 BOND INDEX INCOME RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding ...... 881,154 2,777,243 3,571,942 4,276,196 1,040,800
Unit Value ............................ $ 2.86731 $ 2.21291 $ 4.81403 $ 3.92394 $ 2.02065
----------- ----------- ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY ........... $ 2,526,541 $ 6,145,789 $17,195,438 $16,779,538 $ 2,103,093
=========== =========== =========== =========== ===========
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------
SMALL
GOVERNMENT ZERO COUPON PRUDENTIAL CAPITALIZATION
GLOBAL INCOME BOND 2005 JENNISON STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding ...... 2,521,022 1,869,646 558,487 2,753,716 2,552,395
Unit Value ............................ $ 1.70412 $ 2.01769 $ 2.48986 $ 2.48367 $ 1.70441
----------- ----------- ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY ........... $ 4,296,124 $ 3,772,366 $ 1,390,555 $ 6,839,323 $ 4,350,328
=========== =========== =========== =========== ===========
</TABLE>
A16
<PAGE>
NOTE 5: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges, at an effective
annual rate of 0.90% are applied daily against the net assets
representing equity of contract owners held in each subaccount.
Mortality risk is that contract owners may not live as long as
estimated and expense risk is that the cost of issuing and
administering the policies may exceed the related charges by
Pruco Life.
B. Administration Charges
The administration charges at an effective annual rate of 0.35%
are applied daily against the net assets representing equity of
contract owners held in each subaccount. Administration charges
include costs associated with issuing the contract, establishing
and maintaining records, and providing reports to contract
owners.
C. Expense Reimbursement
The Account is reimbursed by Pruco Life for expenses in excess of
0.40% of the average daily net assets incurred by the Money
Market, Diversified Bond, Equity, Flexible Managed, Conservative
Balanced and Zero Coupon Bond 2000 Portfolios of the Series Fund.
In addition, the Account is reimbursed by Pruco Life, on a
non-guaranteed basis, for expenses incurred by the Series Fund in
excess of the effective rate of 0.40% of the average daily net
assets of the Zero Coupon Bond 2005 Portfolio.
D. Deferred Sales Charge
A deferred sales charge is imposed upon surrenders of certain
variable life insurance contracts to compensate Pruco Life for
sales and other marketing expenses. The amount of any sales
charge will depend on the number of years that have elapsed since
the contract was issued. No sales charge will be imposed after
the sixth year of the contract. No sales charge will be imposed
on death benefits.
E. Cost of Insurance Charges
Contract owner contributions are subject to certain deductions
prior to being invested in the Account. The deductions are for
(1) transaction costs which are deducted from each premium
payment to cover premium collection and processing costs; (2)
state premium taxes; (3) sales charges which are deducted in
order to compensate Prudential for the cost of selling the
contract. Contracts are also subject to monthly charges for the
costs of administering the contract and to compensate Prudential
for the guaranteed minimum death benefit risk.
NOTE 6: TAXES
Pruco Life is taxed as a "life insurance company" as defined by
the Internal Revenue Code and the results of operations of the
Account form a part of Prudential's consolidated federal tax
return. Under current federal law, no federal income taxes are
payable by the Account. As such, no provision for tax liability
has been recorded in these financial statements.
A17
<PAGE>
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING TRANSFERS
The following amounts represent components of contract owner activity
for the years ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
PORTFOLIO PORTFOLIO
------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Contract Owner Net Payments .............................. $ 357,060 $ 2,455 $ (15,424) $ 28,055
Policy Loans ............................................. (510,262) (504,190) (246,911) (342,659)
Policy Loan Repayments and Interest ...................... 453,037 832,657 397,247 656,320
Surrenders, Withdrawals and Death Benefits ............... (2,569,176) (3,173,140) (1,156,635) (2,236,152)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ...................................... 667,550 1,219,681 272,626 (778,186)
Administrative and Other Charges ......................... (105,157) (107,156) (61,109) (70,997)
----------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers .... $(1,706,948) $(1,729,693) $ (810,206) $(2,743,619)
=========== =========== ========== ===========
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------
FLEXIBLE
EQUITY MANAGED
PORTFOLIO PORTFOLIO
------------------------- ---------------------------
1998 1997 1998 1997
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Contract Owner Net Payments .............................. $ 271,858 $ 202,208 $ 67,707 $ 288,737
Policy Loans ............................................. (1,507,262) (1,731,662) (2,021,771) (2,609,808)
Policy Loan Repayments and Interest ...................... 1,102,094 2,080,991 2,440,602 2,179,726
Surrenders, Withdrawals and Death Benefits ............... (2,700,048) (6,467,482) (6,108,904) (6,737,097)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ...................................... (1,027,848) (1,503,850) (452,448) (2,119,657)
Administrative and Other Charges ......................... (384,512) (378,151) (504,225) (505,640)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers .... $(4,245,718) $(7,797,946) $(6,579,039) $(9,503,739)
=========== =========== =========== ===========
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------
ZERO
CONSERVATIVE COUPON BOND
BALANCED 2000
PORTFOLIO PORTFOLIO
------------------------- ---------------------------
1998 1997 1998 1997
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Contract Owner Net Payments .............................. $ 75,425 $ 219,959 $ 70 $ 0
Policy Loans ............................................. (2,037,303) (2,403,648) (54,838) (32,633)
Policy Loan Repayments and Interest ...................... 2,607,154 2,631,712 25,690 37,545
Surrenders, Withdrawals and Death Benefits ............... (6,533,648) (8,978,479) (279,446) (192,247)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ...................................... (1,234,671) (1,016,900) 1,081 (295,618)
Administrative and Other Charges ......................... (599,084) (596,993) (17,684) (19,943)
----------- ------------ --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers .... $(7,722,127) $(10,144,349) $(325,127) $(502,896)
=========== ============ ========= =========
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------
HIGH YIELD BOND STOCK INDEX
PORTFOLIO PORTFOLIO
-------------------------- ---------------------------
1998 1997 1998 1997
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Contract Owner Net Payments .............................. $ 210,930 $ 87,727 $ 206,175 $ 150,392
Policy Loans ............................................. (231,180) (390,814) (538,580) (493,833)
Policy Loan Repayments and Interest ...................... 182,691 330,877 267,666 225,133
Surrenders, Withdrawals and Death Benefits ............... (272,377) (571,349) (875,404) (815,101)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ...................................... (107,059) 233,793 2,027,486 2,343,353
Administrative and Other Charges ......................... (54,463) (53,311) (100,388) (75,962)
---------- ----------- ---------- ----------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers .... $ (271,458) $ (363,077) $ 986,955 $1,333,982
========== =========== ========== ==========
</TABLE>
A18
<PAGE>
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS (CONTINUED)
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------
EQUITY INCOME NATURAL RESOURCES
PORTFOLIO PORTFOLIO
-------------------------- ----------------------------
1998 1997 1998 1997
----------- --------- --------- --------
<S> <C> <C> <C> <C>
Contract Owner Net Payments .............................. $ 951 $ 101,609 $ (3,119) $ 30,997
Policy Loans ............................................. (581,170) (539,621) (68,853) (132,941)
Policy Loan Repayments and Interest ...................... 352,296 273,356 103,273 78,125
Surrenders, Withdrawals and Death Benefits ............... (720,743) (956,562) (268,172) (284,770)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ...................................... (113,110) 1,428,935 (589,122) 10,453
Administrative and Other Charges ......................... (133,218) (113,023) (19,971) (31,067)
----------- ---------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers .... $(1,194,994) $ 194,694 $(845,964) $(329,203)
=========== ========== ========= =========
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------
GOVERNMENT
GLOBAL INCOME
PORTFOLIO PORTFOLIO
-------------------------- ----------------------------
1998 1997 1998 1997
----------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Contract Owner Net Payments .............................. $ (6,219) $ 12,437 $ (282) $ 1,959
Policy Loans ............................................. (103,658) (244,308) (143,783) (267,116)
Policy Loan Repayments and Interest ...................... 79,871 235,021 187,537 121,127
Surrenders, Withdrawals and Death Benefits ............... (235,225) (460,434) (268,690) (100,728)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ...................................... (925,202) 319,629 444,167 6,179
Administrative and Other Charges ......................... (29,649) (34,356) (25,716) (23,101)
----------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers .... $(1,220,082) $(172,011) $ 193,233 $(261,680)
=========== ========= ========= =========
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------
ZERO
COUPON BOND PRUDENTIAL
2005 JENNISON
PORTFOLIO PORTFOLIO
------------------------- ------------------------------
1998 1997 1998 1997
------------ --------- ---------- ----------------
<S> <C> <C> <C> <C>
Contract Owner Net Payments ............................... $20,226 $ 0 $ 276,061 $ 48,980
Policy Loans .............................................. (19,041) (20,480) (111,328) (122,317)
Policy Loan Repayments and Interest ....................... 15,402 16,234 51,582 18,884
Surrenders, Withdrawals and Death Benefits ................ (31,559) (37,869) (62,418) (129,973)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ....................................... 26,097 (367,259) 1,814,286 1,487,125
Administrative and Other Charges .......................... (9,389) (9,721) (32,260) (16,444)
------- --------- ---------- ----------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers ..... $ 1,736 $(419,095) $1,935,923 $1,286,255
======= ========= ========== ==========
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------
SMALL
CAPITALIZATION
STOCK
PORTFOLIO
--------------------------
1998 1997
---------- -----------
<S> <C> <C>
Contract Owner Net Payments ............................... $ 66,678 $ 47,025
Policy Loans .............................................. (36,942) (30,825)
Policy Loan Repayments and Interest ....................... 21,502 11,340
Surrenders, Withdrawals and Death Benefits ................ (74,173) (87,528)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ....................................... 1,411,270 1,387,801
Administrative and Other Charges .......................... (21,075) (12,239)
---------- ----------
Net Increase (Decrease) in Net Assets Resulting
From Premium Payments and Other Operating Transfers ..... $1,367,260 $1,315,574
========== ==========
</TABLE>
A19
<PAGE>
NOTE 8: NET INCREASE (DECREASE) IN NET ASSETS RETAINED IN THE ACCOUNT
The increase (decrease) in net assets retained in the account
represents the net contributions (withdrawals) of Pruco Life to (from)
the Account. Effective October 13, 1998 Pruco Life no longer maintains
a position in the account. Previously, Pruco Life maintained a
position in the Account for liquidity purposes including unit
purchases and redemptions, fund share transactions and expense
processing.
NOTE 9: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) for the
years ended December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
--------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
--------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 4,898,552 5,466,810 7,216,650 499,444 651,969 1,291,975
Contract Owner Redemptions: (5,840,803) (6,468,089) (10,746,898) (820,111) (1,808,895) (2,326,211)
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED
PORTFOLIO PORTFOLIO
--------------------------------------- -------------------------------------------
1998 1997 1996 1998 1997 1996
--------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 615,879 1,048,054 1,690,948 1,084,619 1,082,825 1,350,356
Contract Owner Redemptions: (1,380,990) (2,683,804) (2,764,410) (2,832,805) (3,925,584) (4,146,398)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
CONSERVATIVE BALANCED ZERO COUPON BOND 2000
PORTFOLIO PORTFOLIO
---------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 1,293,114 1,593,155 1,965,622 24,113 16,351 150,307
Contract Owner Redemptions: (3,776,432) (5,145,688) (5,968,854) (142,259) (207,678) (504,229)
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
HIGH YIELD BOND STOCK INDEX
PORTFOLIO PORTFOLIO
--------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
---------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 632,269 841,648 797,424 914,189 1,245,598 1,062,804
Contract Owner Redemptions: (745,640) (1,005,588) (1,128,838) (694,885) (856,444) (795,555)
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
EQUITY INCOME NATURAL RESOURCES
PORTFOLIO PORTFOLIO
--------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
--------- -------- ------------ --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 548,985 808,744 595,203 169,484 454,152 916,223
Contract Owner Redemptions: (864,017) (764,150) (1,007,416) (544,078) (584,279) (755,614)
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
GLOBAL GOVERNMENT INCOME
PORTFOLIO PORTFOLIO
--------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
--------- ---------- ----------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 398,412 1,536,857 2,603,488 454,867 218,187 294,632
Contract Owner Redemptions: (1,194,394) (1,659,345) (1,186,505) (354,278) (369,775) (305,048)
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
ZERO COUPON PRUDENTIAL
BOND 2005 PORTFOLIO JENNISON PORTFOLIO
--------------------------------------- -------------------------------------------
1998 1997 1996 1998 1997 1996
---------- --------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 112,598 277,366 363,946 1,670,396 1,274,986 1,293,924
Contract Owner Redemptions: (110,069) (470,673) (320,642) (758,770) (490,572) (605,796)
</TABLE>
SUBACCOUNTS (CONTINUED)
-------------------------------------
SMALL CAPITALIZATION
STOCK PORTFOLIO
-------------------------------------
1998 1997 1996
--------- --------- ----------
Contract Owner Contributions: 1,224,706 1,446,653 1,030,250
Contract Owner Redemptions: (382,979) (665,592) (516,974)
A20
<PAGE>
NOTE 10: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of
investments in the Series Fund for the year ended December 31, 1998
were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
------------ ------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Purchases ............................ $ 6,746,936 $ 679,770 $ 1,176,417 $ 967,736 $ 613,943
Sales ................................ $(8,770,142) $(1,752,098) $(6,107,352) $(8,327,042) $(9,490,098)
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------------
ZERO COUPON HIGH YIELD STOCK EQUITY NATURAL
BOND 2000 BOND INDEX INCOME RESOURCES
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchases ............................ $ 69,855 $ 1,350,306 $ 3,058,583 $ 1,729,244 $ 99,915
Sales ................................ $ (382,668) $(1,681,964) $(2,306,208) $(3,149,060) $ (976,858)
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------------
SMALL
GOVERNMENT ZERO COUPON PRUDENTIAL CAPITALIZATION
GLOBAL INCOME BOND 2005 JENNISON STOCK
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Purchases ............................ $ 517,620 $ 763,028 $ 248,021 $ 3,097,260 $ 1,913,931
Sales ................................ $(1,850,998) $ (618,635) $ (199,544) $(1,219,355) $ (633,938)
</TABLE>
A21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of the
Pruco Life Single Premium Variable Life Account
and the Board of Directors of
Pruco Life Insurance Company
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of the subaccounts (Money Market
Portfolio, Diversified Bond Portfolio, Equity Portfolio, Flexible Managed
Portfolio, Conservative Balanced Portfolio, Zero Coupon Bond 2000 Portfolio,
High Yield Bond Portfolio, Stock Index Portfolio, Equity Income Portfolio,
Natural Resources Portfolio, Global Portfolio, Government Income Portfolio, Zero
Coupon Bond 2005 Portfolio, Prudential Jennison Portfolio and Small
Capitalization Stock Portfolio) of the Pruco Life Single Premium Variable Life
Account at December 31, 1998, the results of each of their operations and the
changes in each of their net assets for each of the three years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Pruco Life Insurance Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of fund shares owned at December 31, 1998, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
March 19, 1999
A22
<PAGE>
<TABLE>
Pruco Life Insurance Company and Subsidiaries
Consolidated Statements of Financial Position
December 31, 1998 and 1997 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 1998: $2,738,654;
1997: $2,526,554) $ 2,763,926 $ 2,563,852
Held to maturity, at amortized cost (fair value, 1998: $421,845; 1997:
$350,056) 410,558 338,848
Equity securities - available for sale, at fair value (cost, 1998: $2,951; 2,847 1,982
1997: $1,289)
Mortgage loans on real estate 17,354 22,787
Policy loans 766,917 703,955
Short-term investments 240,727 316,355
Other long-term investments 1,047 1,317
------------ ------------
Total investments 4,203,376 3,949,096
Cash 89,679 71,358
Deferred policy acquisition costs 861,713 655,242
Accrued investment income 61,114 67,000
Other assets 65,145 86,692
Separate Account assets 11,531,754 8,022,079
------------ ------------
TOTAL ASSETS $ 16,812,781 $ 12,851,467
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances $ 2,696,191 $ 2,380,460
Future policy benefits and other policyholder liabilities 534,599 472,460
Cash collateral for loaned securities 73,336 143,421
Securities sold under agreement to repurchase 49,708 --
Income taxes payable 44,524 71,703
Net deferred income tax liability 148,834 138,483
Payable to affiliate 66,568 70,375
Other liabilities 55,038 120,260
Separate Account liabilities 11,490,751 7,948,788
------------ ------------
Total liabilities 15,159,549 11,345,950
------------ ------------
Contingencies (See Note 11)
Stockholder's Equity
Common stock, $10 par value;
1,000,000 shares, authorized;
250,000 shares, issued and outstanding at
December 31, 1998 and 1997 2,500 2,500
Paid-in-capital 439,582 439,582
Retained earnings 1,202,833 1,050,871
Accumulated other comprehensive income
Net unrealized investment gains 9,902 17,129
Foreign currency translation adjustments (1,585) (4,565)
------------ ------------
Accumulated other comprehensive income 8,317 12,564
------------ ------------
Total stockholder's equity 1,653,232 1,505,517
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 16,812,781 $ 12,851,467
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
B-1
<PAGE>
<TABLE>
Pruco Life Insurance Company and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 1998, 1997 and 1996 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
1998 1997 1996
--------- --------- ---------
REVENUES
<S> <C> <C> <C>
Premiums $ 57,467 $ 49,496 $ 51,525
Policy charges and fee income 364,719 330,292 324,976
Net investment income 261,430 259,634 247,328
Realized investment gains, net 44,841 10,974 10,835
Other income 41,267 33,801 20,818
--------- --------- ---------
Total revenues 769,724 684,197 655,482
--------- --------- ---------
BENEFITS AND EXPENSES
Policyholders' benefits 186,527 179,419 186,873
Interest credited to policyholders' account balances 118,935 110,815 118,246
General, administrative and other expenses 228,067 225,721 122,006
--------- --------- ---------
Total benefits and expenses 533,529 515,955 427,125
--------- --------- ---------
Income from operations before income taxes 236,195 168,242 228,357
--------- --------- ---------
Income taxes
Current 69,768 73,326 60,196
Deferred 14,465 (11,458) 18,939
--------- --------- ---------
Total income taxes 84,233 61,868 79,135
--------- --------- ---------
NET INCOME 151,962 106,374 149,222
--------- --------- ---------
Other comprehensive income, net of tax:
Unrealized gains on securities, net of
reclassification adjustment (7,227) 3,025 (17,952)
Foreign currency translation adjustments 2,980 (2,863) (482)
--------- --------- ---------
Other comprehensive income (4,247) 162 (18,434)
--------- --------- ---------
TOTAL COMPREHENSIVE INCOME $ 147,715 $ 106,536 $ 130,788
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
B-2
<PAGE>
<TABLE>
Pruco Life Insurance Company and Subsidiaries
Consolidated Statements of Changes in Stockholder's Equity
Years Ended December 31, 1998, 1997, and 1996 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
Accumulated
other Total
Common Paid-in- Retained comprehensive stockholder's
stock capital earnings income equity
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $ 2,500 $ 439,582 $ 795,275 $ 30,836 $ 1,268,193
Net income -- -- 149,222 -- 149,222
Change in foreign currency
translation adjustments -- -- -- (482) (482)
Change in net unrealized
investment gains, net of
reclassification adjustment -- -- -- (17,952) (17,952)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 2,500 439,582 944,497 12,402 1,398,981
Net income -- -- 106,374 -- 106,374
Change in foreign currency
translation adjustments -- -- -- (2,863) (2,863)
Change in net unrealized
investment gains, net of
reclassification adjustment -- -- -- 3,025 3,025
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 2,500 439,582 1,050,871 12,564 1,505,517
Net income -- -- 151,962 -- 151,962
Change in foreign currency
translation adjustments -- -- -- 2,980 2,980
Change in net unrealized
investment gains, net of
reclassification adjustment -- -- -- (7,227) (7,227)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 $ 2,500 $ 439,582 $ 1,202,833 $ 8,317 $ 1,653,232
=========== =========== =========== =========== ============
</TABLE>
See Notes to Consolidated Financial Statements
B-3
<PAGE>
<TABLE>
Pruco Life Insurance Company and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 1998, 1997, and 1996 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 151,962 $ 106,374 $ 149,222
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Policy charges and fee income (47,230) (40,783) (50,286)
Interest credited to policyholders' account balances 118,935 110,815 118,246
Realized investment gains, net (44,841) (10,974) (10,835)
Amortization and other non-cash items 18,611 (31,181) 29,334
Change in:
Future policy benefits and other policyholders' liabilities 62,139 39,683 54,176
Accrued investment income 5,886 (4,890) (2,248)
Separate Accounts 32,288 (13,894) (38,025)
Payable to affiliate (3,807) 20,547 16,519
Policy loans (62,962) (64,173) (70,509)
Deferred policy acquisition costs (206,471) (22,083) (66,183)
Income taxes payable (27,179) 78,894 (816)
Deferred income tax liability 10,351 (10,477) 7,912
Other, net (43,675) 34,577 7,814
----------- ----------- -----------
Cash Flows (Used In) From Operating Activities (35,993) 192,435 144,321
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 5,429,396 2,828,665 3,886,254
Held to maturity 74,767 138,626 138,127
Equity securities 4,101 6,939 7,527
Mortgage loans on real estate 5,433 24,925 19,226
Other long-term investments 1,140 3,276 288
Investment real estate -- -- 4,488
Payments for the purchase of:
Fixed maturities:
Available for sale (5,617,208) (3,141,785) (4,008,810)
Held to maturity (145,919) (70,532) (114,494)
Equity securities (2,274) (4,594) (4,697)
Other long-term investments (409) (51) (657)
Cash collateral for loaned securities, net (70,085) 143,421 -
Securities sold under agreement to repurchase, net 49,708 - -
Short-term investments, net 75,771 (147,030) 58,186
----------- ----------- -----------
Cash Flows Used In Investing Activities (195,579) (218,140) (14,562)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 3,098,721 2,099,600 536,370
Withdrawals (2,848,828) (2,076,303) (633,798)
----------- ----------- -----------
Cash Flows From (Used in) Financing Activities 249,893 23,297 (97,428)
----------- ----------- -----------
Net increase (decrease) in Cash 18,321 (2,408) 32,331
Cash, beginning of year 71,358 73,766 41,435
----------- ----------- -----------
CASH, END OF PERIOD $ 89,679 $ 71,358 $ 73,766
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid (received) $ 99,810 $ (7,904) $ 61,760
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
B-4
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
1. BUSINESS
Pruco Life Insurance Company (the Company) is a stock life insurance company,
organized in 1971 under the laws of the state of Arizona. The Company markets
individual life insurance, variable life insurance, variable annuities, fixed
annuities, and a group annuity program (the Contracts) in all states and
territories except the District of Columbia and Guam. In addition, the Company
markets individual life insurance through its branch office in Taiwan. The
Company has two wholly owned subsidiaries, Pruco Life Insurance Company of New
Jersey (PLNJ) and The Prudential Life Insurance Company of Arizona (PLICA). PLNJ
is a stock life insurance company organized in 1982 under the laws of the state
of New Jersey. It is licensed to sell individual life insurance, variable life
insurance, fixed annuities, and variable annuities only in the states of New
Jersey and New York. PLICA is a stock life insurance company organized in 1988
under the laws of the state of Arizona. PLICA had no new business sales in 1997
or 1998 and at this time will not be issuing new business.
The Company is a wholly owned subsidiary of The Prudential Insurance Company of
America (Prudential), a mutual insurance company founded in 1875 under the laws
of the state of New Jersey. Prudential intends to make additional capital
contributions to the Company, as needed, to enable it to comply with its reserve
requirements and fund expenses in connection with its business. Generally,
Prudential is under no obligation to make such contributions and its assets do
not back the benefits payable under the Contracts.
The Company is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
engaged in marketing insurance products, and individual and group annuities.
There are approximately 1,620 stock, mutual and other types of insurers in the
life insurance business in the United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP"). All significant intercompany
balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
Investments
Fixed maturities classified as "available for sale" are carried at estimated
fair value. Fixed maturities that the Company has both the intent and ability to
hold to maturity are stated at amortized cost and classified as "held to
maturity". The amortized cost of fixed maturities is written down to estimated
fair value if a decline in value is considered to be other than temporary.
Unrealized gains and losses on fixed maturities "available for sale", including
the effect on deferred policy acquisition costs and participating annuity
contracts that would result from the realization of unrealized gains and losses,
net of income taxes, are included in a separate component of equity,
"Accumulated other comprehensive income."
Equity securities, available for sale, comprised of common and non-redeemable
preferred stock, are carried at estimated fair value. The associated unrealized
gains and losses, net of income tax, the effects on deferred policy acquisition
costs and on participating annuity contracts that would result from the
realization of unrealized gains and losses, are included in a separate component
of equity, "Accumulated other comprehensive income."
Mortgage loans on real estate are stated primarily at unpaid principal balances,
net of unamortized discounts and allowance for losses. The allowance for losses
is based upon a loan specific review and management's consideration of past
results, current trends, the estimated value of the underlying collateral,
composition of the loan portfolio, current economic conditions and other
relevant factors. Impaired loans are identified by management as loans in which
a probability exists that all amounts due according to the contractual terms of
the loan agreement will not be collected.
B-5
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impaired loans are measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate, or the fair value of the
collateral if the loan is collateral dependent.
Interest received on impaired loans, including loans that were previously
modified in a troubled debt restructuring, is either applied against the
principal or reported as revenue, according to management's judgment as to the
collectibility of principal. Management discontinues the accrual of interest on
impaired loans after the loans are 90 days delinquent as to principal or
interest, or earlier when management has serious doubts about collectibility.
When a loan is recognized as impaired, any accrued but unpaid interest
previously recorded on such loan is reversed against interest income of the
current period. Generally, a loan is restored to accrual status only after all
delinquent interest and principal are brought current and, in the case of loans
where interest has been interrupted for a substantial period, a regular payment
performance has been established.
Policy loans are carried at unpaid principal balances.
Short-term investments, consists primarily of highly liquid debt instruments
purchased with an original maturity of twelve months or less and are carried at
amortized cost, which approximates fair value.
Other long-term investments primarily represent the Company's investments in
joint ventures and partnerships in which the Company does not have control.
These investments are recorded using the equity method of accounting, reduced
for other than temporary declines in value.
Realized investment gains, net are computed using the specific identification
method. Costs of fixed maturity and equity securities are adjusted for
impairments considered to be other than temporary.
Cash
Cash includes cash on hand, amounts due from banks, and money market
instruments.
Deferred Policy Acquisition Costs
The costs which vary with and that are related primarily to the production of
new insurance business are deferred to the extent that they are deemed
recoverable from future profits. Such costs include certain commissions, costs
of policy issuance and underwriting, and certain variable field office expenses.
Deferred policy acquisition costs are subject to recoverability testing at the
time of policy issue and loss recognition testing at the end of each accounting
period. Deferred policy acquisition costs are adjusted for the impact of
unrealized gains or losses on investments as if these gains or losses had been
realized, with corresponding credits or charges included in "Accumulated other
comprehensive income."
Acquisition costs related to interest-sensitive life products and
investment-type contracts are deferred and amortized in proportion to total
estimated gross profits arising principally from investment results, mortality
and expense margins and surrender charges based on historical and anticipated
future experience. Amortization periods range from 15 to 30 years. For
participating life insurance, deferred policy acquisition costs are amortized
over the expected life of the contracts in proportion to estimated gross margins
based on historical and anticipated future experience, which is updated
periodically. Deferred policy acquisition costs are analyzed to determine if
they are recoverable from future income, including investment income. If such
costs are determined to be unrecoverable, they are expensed at the time of
determination. The effect of revisions to estimated gross profits on unamortized
deferred acquisition costs is reflected in earnings in the period such estimated
gross profits are revised.
Securities loaned
Securities loaned are treated as financing arrangements and are recorded at the
amount of cash received as collateral. The Company obtains collateral in an
amount equal to 102% of the fair value of the securities. The Company monitors
the market value of securities loaned on a daily basis with additional
collateral obtained as necessary. Non-cash collateral received is not reflected
in the consolidated statements of financial position. Substantially all of the
Company's securities loaned are with large brokerage firms.
B-6
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Securities Sold Under Agreements to Repurchase
Securities sold under agreements to repurchase are treated as financing
arrangements and are carried at the amounts at which the securities will be
subsequently reacquired, including accrued interest, as specified in the
respective agreements. The Company's policy is to take possession of securities
purchased under agreements to resell. The market value of securities to be
repurchased is monitored and additional collateral is requested, where
appropriate, to protect against credit exposure.
Securities lending and securities repurchase agreements are used to generate net
investment income and facilitate trading activity. These instruments are
short-term in nature (usually 30 days or less). Securities loaned are
collateralized principally by U.S. Government and mortgage-backed securities.
Securities sold under repurchase agreements are collateralized principally by
cash. The carrying amounts of these instruments approximate fair value because
of the relatively short period of time between the origination of the
instruments and their expected realization.
Separate Account Assets and Liabilities
Separate Account assets and liabilities are reported at estimated fair value and
represent segregated funds which are invested for certain policyholders and
other customers. Separate Account assets include common stocks, fixed
maturities, real estate related securities, and short-term investments. The
assets of each account are legally segregated and are not subject to claims that
arise out of any other business of the Company. Investment risks associated with
market value changes are borne by the customers, except to the extent of minimum
guarantees made by the Company with respect to certain accounts. The investment
income and gains or losses for Separate Accounts generally accrue to the
policyholders and are not included in the Consolidated Statement of Operations.
Mortality, policy administration and surrender charges on the accounts are
included in "Policy charges and fee income."
Separate Accounts represent funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
policyholders, with the exception of the Pruco Life Modified Guaranteed Annuity
Account. The Pruco Life Modified Guaranteed Annuity Account is a non-unitized
separate account, which funds the Modified Guaranteed Annuity Contract and the
Market Value Adjustment Annuity Contract. Owners of the Pruco Life Modified
Guaranteed Annuity and the Market Value Adjustment Annuity Contracts do not
participate in the investment gain or loss from assets relating to such
accounts. Such gain or loss is borne, in total, by the Company.
Insurance Revenue and Expense Recognition
Premiums from insurance policies are generally recognized when due. Benefits are
recorded as an expense when they are incurred. For traditional life insurance
contracts, a liability for future policy benefits is recorded using the net
level premium method. For individual annuities in payout status, a liability for
future policy benefits is recorded for the present value of expected future
payments based on historical experience.
Premiums from non-participating group annuities with life contingencies are
generally recognized when due. For single premium immediate annuities, premiums
are recognized when due with any excess profit deferred and recognized in a
constant relationship to insurance in-force or, for annuities, the amount of
expected future benefit payments.
Amounts received as payment for interest-sensitive life, individual annuities,
and guaranteed investment contracts are reported as deposits to "Policyholders'
account balances." Revenues from these contracts reflected as "Policy charges
and fee income" consist primarily of fees assessed during the period against the
policyholders' account balances for mortality charges, policy administration
charges and surrender charges. In addition, interest earned from the investment
of these account balances is reflected in "Net investment income." Benefits and
expenses for these products include claims in excess of related account
balances, expenses of contract administration, interest credited and
amortization of deferred policy acquisition costs.
Foreign Currency Translation Adjustments
Assets and liabilities of the Taiwan branch are translated to U.S. dollars at
the exchange rate in effect at the end of the period. Revenues, benefits and
other expenses are translated at the average rate prevailing during the period.
Cumulative translation adjustments arising from the use of differing exchange
rates from period to period are charged or credited directly to "Other
comprehensive income." The cumulative effect of changes in foreign exchange
rates are included in "Accumulated other comprehensive income."
B-7
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Other Income
Other income consists primarily of asset management fees which are received by
the Company from Prudential for services Prudential provides to the Prudential
Series Fund, an underlying investment option of the Separate Accounts.
Derivative Financial Instruments
Derivatives are financial instruments whose values are derived from interest
rates, foreign exchange rates, various financial indices, or the value of
securities or commodities. Derivative financial instruments used by the Company
include futures, currency swaps, and options contracts and can be
exchange-traded or contracted in the over-the-counter market. The Company uses
derivative financial instruments to hedge market risk from changes in interest
rates or foreign currency exchange rates, and to alter interest rate or currency
exposures arising from mismatches between assets and liabilities. All
derivatives used by the Company are for other than trading purposes.
To qualify as a hedge, derivatives must be designated as hedges for existing
assets, liabilities, firm commitments, or anticipated transactions which are
identified and probable to occur, and effective in reducing the market risk to
which the Company is exposed. The effectiveness of the derivatives must be
evaluated at the inception of the hedge and throughout the hedge period.
When derivatives qualify as hedges, the changes in the fair value or cash flows
of the derivatives and the hedged items are recognized in earnings in the same
period. If the Company's use of other than trading derivatives does not meet the
criteria to apply hedge accounting, the derivatives are recorded at fair value
in "Other liabilities" in the Consolidated Statements of Financial Position, and
changes in their fair value are recognized in earnings in "Realized investment
gains, net" without considering changes in the hedged assets or liabilities.
Cash flows from other than trading derivative assets and liabilities are
reported in the operating activities section in the Consolidated Statements of
Cash Flows.
Income Taxes
The Company and its subsidiaries are members of the consolidated federal income
tax return of Prudential and files separate company state and local tax returns.
Pursuant to the tax allocation arrangement with Prudential, total federal income
tax expense is determined on a separate company basis. Members with losses
record tax benefits to the extent such losses are recognized in the consolidated
federal tax provision. Deferred income taxes are generally recognized, based on
enacted rates, when assets and liabilities have different values for financial
statement and tax reporting purposes. A valuation allowance is recorded to
reduce a deferred tax asset to that portion that is expected to be realized.
New Accounting Pronouncements
In June 1996, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
("SFAS 125"). The statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
and provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. SFAS 125
became effective January 1, 1997 and is to be applied prospectively. Subsequent
to June 1996, FASB issued SFAS No. 127 "Deferral of the Effective Date of
Certain Provisions of SFAS 125" ("SFAS 127"). SFAS 127 delays the implementation
of SFAS 125 for one year for certain transactions, including repurchase
agreements, dollar rolls, securities lending and similar transactions. Adoption
of SFAS 125 did not have a material impact on the Company's results of
operations, financial position and liquidity.
During 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income,"
which was issued by the FASB in June 1997. This statement defines comprehensive
income and establishes standards for reporting and displaying comprehensive
income and its components in financial statements. The statement requires that
the Company classify items of other comprehensive income by their nature and
display the accumulated balance of other comprehensive income separately from
retained earnings in the equity section of the Statement of Financial Position.
Application of this statement did not change recognition or measurement of net
income and, therefore, did not affect the Company's financial position or
results of operations.
B-8
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
On January 1, 1999, the Company adopted the American Institute of Certified
Public Accountants ("AICPA") Statement of Position 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments" ("SOP 97-3").
This statement provides guidance for determining when an insurance company or
other enterprise should recognize a liability for guaranty-fund assessments as
well as guidance for measuring the liability. The adoption of SOP 97-3 is not
expected to have a material effect on the Company's financial position or
results of operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires that companies recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. SFAS No. 133 provides, if certain conditions
are met, that a derivative may be specifically designated as (1) a hedge of the
exposure to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment (fair value hedge), (2) a hedge of the exposure to
variable cash flows of a forecasted transaction (cash flow hedge), or (3) a
hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security or a
foreign-currency-denominated forecasted transaction (foreign currency hedge).
SFAS No. 133 does not apply to most traditional insurance contracts. However,
certain hybrid contracts that contain features which can affect settlement
amounts similarly to derivatives may require separate accounting for the "host
contract" and the underlying "embedded derivative" provisions. The latter
provisions would be accounted for as derivatives as specified by the statement.
Under SFAS No. 133, the accounting for changes in fair value of a derivative
depends on its intended use and designation. For a fair value hedge, the gain or
loss is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item. For a cash flow hedge, the effective
portion of the derivative's gain or loss is initially reported as a component of
other comprehensive income and subsequently reclassified into earnings when the
forecasted transaction affects earnings. For a foreign currency hedge, the gain
or loss is reported in other comprehensive income as part of the foreign
currency translation adjustment. For all other derivatives not designated as
hedging instruments, the gain or loss is recognized in earnings in the period of
change. The Company is required to adopt this Statement no later than January 1,
2000 and is currently assessing the effect of the new standard.
In October, 1998, the AICPA issued Statement of Position 98-7, "Deposit
Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not
Transfer Insurance Risk," ("SOP 98-7"). This statement provides guidance on how
to account for insurance and reinsurance contracts that do not transfer
insurance risk. SOP 98-7 is effective for fiscal years beginning after June 15,
1999. The adoption of this statement is not expected to have a material effect
on the Company's financial position or results of operations.
Reclassifications
Certain amounts in the prior years have been reclassified to conform to current
year presentation.
B-9
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS
Fixed Maturities and Equity Securities:
The following tables provide additional information relating to fixed maturities
and equity securities as of December 31,:
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. government corporations and agencies 110,294 864 318 110,840
Foreign government bonds 87,112 2,003 696 88,419
Corporate securities 2,540,498 30,160 6,897 2,563,761
Mortgage-backed securities 750 156 -- 906
---------- ---------- ---------- ----------
Total fixed maturities available for sale $2,738,654 $ 33,183 $ 7,911 $2,763,926
========== ========== ========== ==========
Equity securities available for sale $ 2,951 $ 168 $ 272 $ 2,847
========== ========== ========== ==========
Fixed maturities held to maturity
Corporate securities $ 410,558 $ 11,287 $ -- $ 421,845
---------- ---------- ---------- ----------
Total fixed maturities held to maturity $ 410,558 $ 11,287 $ -- $ 421,845
========== ========== ========== ==========
1997
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 177,691 $ 1,231 $ 20 $ 178,902
Foreign government bonds 83,889 1,118 19 84,988
Corporate securities 2,263,898 36,857 2,017 2,298,738
Mortgage-backed securities 1,076 180 32 1,224
---------- ---------- ---------- ----------
Total fixed maturities available for sale $2,526,554 $ 39,386 $ 2,088 $2,563,852
========== ========== ========== ==========
Equity securities available for sale $ 1,289 $ 802 $ 109 $ 1,982
========== ========== ========== ==========
Fixed maturities held to maturity
Corporate securities $ 338,848 $ 11,427 $ 219 $ 350,056
---------- ---------- ---------- ----------
Total fixed maturities held to maturity $ 338,848 $ 11,427 $ 219 $ 350,056
========== ========== ========== ==========
</TABLE>
B-10
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The amortized cost and estimated fair value of fixed maturities, categorized by
contractual maturities at December 31, 1998 are shown below:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
-------------------------------- ---------------------------------
Amortized Estimated Fair Amortized Estimated Fair
Cost Value Cost Value
--------- -------------- ---------- --------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 72,931 $ 73,254 $ 3,036 $ 3,064
Due after one year through five years 1,050,981 1,059,389 193,749 201,136
Due after five years through ten years 1,142,507 1,156,664 155,568 158,801
Due after ten years 471,485 473,713 58,205 58,844
Mortgage-backed securities 750 906 -- --
---------- ---------- ---------- ----------
Total $2,738,654 $2,763,926 $ 410,558 $ 421,845
========== ========== ========== ==========
</TABLE>
Actual maturities will differ from contractual maturities because, in certain
circumstances, issuers have the right to call or prepay obligations.
Proceeds from the sale of fixed maturities available for sale during 1998, 1997,
and 1996 were $5,327.3 million, $2,796.3 million, and $3,667.1 million,
respectively. Gross gains of $46.3 million, $18.6 million, and $22.1 million and
gross losses of $14.1 million, $7.9 million, and $17.6 million were realized on
those sales during 1998, 1997, and 1996, respectively.
Proceeds from the maturity of fixed maturities available for sale during 1998,
1997, and 1996 were $102.1 million, $32.4 million, and $219.2 million,
respectively. During the years ended December 31, 1998, 1997, and 1996, there
were no securities classified as held to maturity that were sold.
Writedowns for impairments of fixed maturities which were deemed to be other
than temporary were $2.8 million, $.1 million and $.1 million for the years
1998, 1997 and 1996, respectively.
B-11
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The following table describes the credit quality of the fixed maturity
portfolio, based on ratings assigned by the National Association of Insurance
Commissioners ("NAIC") or Standard & Poor's Corporation, an independent rating
agency as of December 31, 1998:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
------------------------------ -------------------------------------
Amortized Estimated Fair Amortized Estimated Fair
Cost Value Cost Value
---------- -------------- ---------- --------------
(In Thousands) (In Thousands)
NAIC Standard & Poor's
<S> <C> <C> <C> <C>
1 AAA to AA- $1,195,301 $1,211,995 $ 180,070 $ 186,683
2 BBB+ to BBB- 1,254,522 1,263,656 182,298 185,417
3 BB+ to BB- 201,033 204,278 39,346 40,654
4 B+ to B- 59,799 57,695 8,821 9,068
5 CCC or lower 27,552 26,061 -- --
6 In or near default 447 241 23 23
---------- ---------- ---------- ----------
Total $2,738,654 $2,763,926 $ 410,558 $ 421,845
========== ========== ========== ==========
</TABLE>
The fixed maturity portfolio consists largely of investment grade assets (rated
"1" or "2" by the NAIC), with such investments accounting for 89% and 94% of the
portfolio at December 31, 1998 and 1997, respectively, based on fair value. As
of both of those dates, less than 1% of the fixed maturities portfolio was rated
"6" by the NAIC, defined as public and private placement securities which are
currently non-performing or believed subject to default in the near-term.
The Company continually reviews fixed maturities and identifies potential
problem assets which require additional monitoring. The Company defines
"problem" fixed maturities as those for which principal and/or interest payments
are in default. The Company defines "potential problem" fixed maturities as
assets which are believed to present default risk associated with future debt
service obligations and therefore require more active management. At December
31, 1998 management identified $264.0 thousand of fixed maturity investments as
problem or potential problem. An immaterial amount of problem or potential
problem fixed maturities were identified in 1997.
Mortgage Loans on Real Estate
The Company's mortgage loans were collateralized by the following property types
at December 31, 1998 and 1997.
1998 1997
------------------ -------------------
(In Thousands)
Office buildings $ -- -- $ 4,607 20%
Retail stores 7,356 42% 8,090 35%
Apartment complexes 5,988 35% 6,080 27%
Industrial buildings 4,010 23% 4,010 18%
------------------ ------------------
Net carrying value $17,354 100% $22,787 100%
================== ==================
B-12
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The largest concentration of mortgage loans are in the states of Pennsylvania
(35%), Washington (34%), and New Jersey (23%).
Special Deposits
Fixed maturities of $8.6 million and $8.3 million at December 31, 1998 and 1997,
respectively, were on deposit with governmental authorities or trustees as
required by certain insurance laws.
Other Long-Term Investments
The Company's "Other long-term investments" of $1.0 million and $1.3 million as
of December 31, 1998 and 1997, respectively, are comprised of joint ventures and
limited parterships. The Company's share of net income from these entities was
$.1 million, $2.2 million and $1.4 million for the years ended December 31,
1998, 1997 and 1996, respectively, and is reported in "Net investment income."
Investment Income and Investment Gains and Losses
Net investment income arose from the following sources for the years ended
December 31:
1998 1997 1996
--------- --------- ---------
(In Thousands)
Fixed maturities - available for sale $ 179,184 $ 161,140 $ 152,445
Fixed maturities - held to maturity 26,128 26,936 33,419
Equity securities 14 76 44
Mortgage loans on real estate 1,818 2,585 5,669
Policy loans 40,928 37,398 33,449
Short-term investments 23,110 22,011 16,780
Other 6,886 14,920 10,051
--------- --------- ---------
Gross investment income 278,068 265,066 251,857
Less: investment expenses (16,638) (5,432) (4,529)
--------- --------- ---------
Net investment income $ 261,430 $ 259,634 $ 247,328
========= ========= =========
Realized investment gains ,net including charges for other than temporary
reductions in value, for the years ended December 31, were from the following
sources:
1998 1997 1996
--------- --------- ---------
(In Thousands)
Fixed maturities - available for sale $ 29,330 $ 9,039 $ 9,036
Fixed maturities - held to maturity 487 821 --
Equity securities 3,489 8 781
Mortgage loans on real estate -- 797 1,677
Derivative instruments 12,414 -- --
Other (879) 309 (659)
--------- --------- ---------
Realized investment gains, net $ 44,841 $ 10,974 $ 10,835
========= ========= =========
B-13
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
Net Unrealized Investment Gains
Net unrealized investment gains on securities available for sale are included in
the Consolidated Statement of Financial Position as a component of "Accumulated
other comprehensive income." Changes in these amounts include reclassification
adjustments to avoid double-counting in "Comprehensive income," items that are
included as part of "Net income" for a period that also have been part of "Other
comprehensive income" in earlier periods. The amounts for the years ended
December 31, net of tax, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Net unrealized investment gains, beginning of year $ 17,129 $ 14,104 $ 32,056
Changes in net unrealized investment gains attributable to:
Investments:
Net unrealized gains on investments arising during the period 14,593 13,880 (20,405)
Reclassification adjustment for gains included in net income 22,799 6,680 6,165
-------- -------- --------
Change in net unrealized gains on investments, net of adjustments (8,206) 7,200 (26,570)
Impact of net unrealized investment gains on:
Policyholder's account balances (1,063) 1,293 (2,467)
Deferred policy acquisition costs 2,042 (5,468) 11,085
-------- -------- --------
Change in net unrealized investment gains (7,227) 3,025 (17,952)
-------- -------- --------
Net unrealized investment gains, end of year $ 9,902 $ 17,129 $ 14,104
======== ======== ========
</TABLE>
Unrealized gains (losses) on investments arising during the periods reported in
the above table are net of income tax (benefit) expense of $(8.2) million,
$(7.6) million and $12.1 million for the years ended December 31, 1998, 1997 and
1996, respectively.
Reclassification adjustments reported in the above table for the years ended
December 31, 1998, 1997 and 1996 are net of income tax expense of $12.8 million,
$3.6 million and $3.8 million, respectively.
Policyholder's account balances reported in the above table are net of income
tax (benefit) expense of $(.2) million, $.0 million and $1.4 million for the
years ended December 31, 1998, 1997 and 1996, respectively.
Deferred policy acquisition costs in the above tables for the years ended
December 31, 1998, 1997 and 1996 are net of income tax (benefit) expense of
$(1.1) million, $2.9 million and $(6.2) million, respectively.
4. POLICYHOLDERS' LIABILITIES
Future policy benefits and other policyholder liabilities at December 31 are as
follows:
1998 1997
-------- --------
(In Thousands)
Life insurance $506,249 $444,737
Annuities 28,350 27,723
-------- --------
$534,599 $472,460
======== ========
B-14
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
4. POLICYHOLDERS' LIABILITIES (continued)
Life insurance liabilities include reserves for death benefits. Annuity
liabilities include reserves for immediate annuities.
The following table highlights the key assumptions generally utilized in
calculating these reserves:
<TABLE>
<CAPTION>
Product Mortality Interest Rate Estimation Method
- ------------------------------ ------------------------- ------------- -----------------------
<S> <C> <C> <C>
Life insurance - Domestic Generally rates 2.5% to 7.5% Net level premium based
guaranteed in on non-forfeiture
calculating cash interest rate
surrender values
Life insurance - International Generally rates 6.25% to 6.5% Net level premium based
guaranteed in on the expected
calculating cash investment return
surrender values
Individual immediate annuities 1983 Individual Annuity 6.25% to 11.0% Present value of
Mortality Table with expected future payment
certain modifications based on historical
experience
</TABLE>
Policyholders' account balances at December 31, are as follows:
1998 1997
---------- ----------
(In Thousands)
Interest-sensitive life contracts $1,386,829 $1,345,089
Individual annuities 1,077,996 1,035,371
Guaranteed investment contracts 231,366 --
---------- ----------
$2,696,191 $2,380,460
========== ==========
Policyholders' account balances for interest-sensitive life, individual
annuities, and guaranteed investment contracts are equal to policy account
values plus unearned premiums. The policy account values represent an
accumulation of gross premium payments plus credited interest less withdrawals,
expenses, mortality charges.
Certain contract provisions that determine the policyholder account balances are
as follows:
<TABLE>
<CAPTION>
Product Interest Rate Withdrawal / Surrender Charges
- --------------------------------- -------------- ----------------------------------
<S> <C> <C>
Interest sensitive life contracts 4.0% to 6.5% Various up to 10 years
Individual annuities 3.0% to 5.6% 0% to 8% for up to 8 years
Guaranteed investment contracts 5.02% to 6.23% Subject to market value withdrawal
provisions for any funds withdrawn
other than for benefit responsive
and contractual payments
</TABLE>
B-15
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
5. REINSURANCE
The Company participates in reinsurance, with Prudential and other companies, in
order to provide greater diversification of business, provide additional
capacity for future growth and limit the maximum net loss potential arising from
large risks. Reinsurance ceded arrangements do not discharge the Company or the
insurance subsidiaries as the primary insurer, except for cases involving a
novation. Ceded balances would represent a liability to the Company in the event
the reinsurers were unable to meet their obligations to the Company under the
terms of the reinsurance agreements. The likelihood of a material reinsurance
liability reassumed by the Company is considered to be remote.
Reinsurance amounts included in the Consolidated Statement of Operations for the
year ended December 31 are below.
1998 1997 1996
-------- -------- --------
(In Thousands)
Direct Premiums $ 65,423 $ 51,851 $ 53.776
Reinsurance assumed 1,395 1,369 1,128
Reinsurance ceded - affiliated (6,532) (686) (254)
Reinsurance ceded - unaffiliated (2,819) (3,038) (3,125)
-------- -------- --------
Premiums $ 57,467 $ 49,496 $ 51,525
======== ======== ========
Policyholders' benefits ceded $ 27,991 $ 25,704 $ 26,796
======== ======== ========
Reinsurance recoverables, included in "Other assets" in the Company's
Consolidated Statements of Financial Position, at December 31 include amounts
recoverable on unpaid and paid losses and were as follows:
1998 1997
------- -------
(In Thousands)
Life insurance - affiliated $ 6,481 $ 2,618
Other reinsurance - affiliated 21,650 23,243
------- -------
$28,131 $25,861
======= =======
B-16
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
6. EMPLOYEE BENEFIT PLANS
Pension and Other Postretirement Plans
The Company has a non-contributory defined benefit pension plan which covers
substantially all of its Taiwanese employees. This plan was established as of
September 30, 1997 and the projected benefit obligation and related expenses at
September 30, 1998 was not material to the Consolidated Statements of Financial
Position or results of operations for the years presented. All other employee
benefit costs are allocated to the Company from Prudential in accordance with
the service agreement described in Note 13.
7. INCOME TAXES
The components of income taxes for the years ended December 31, are as follows:
1998 1997 1996
-------- -------- --------
(In Thousands)
Current tax expense (benefit):
U.S $ 67,272 $ 71,989 $ 59,489
State and local 2,496 1,337 703
Foreign -- -- 4
-------- -------- --------
Total 69,768 73,326 60,196
-------- -------- --------
Deferred tax expense (benefit):
U.S 14,059 (11,458) 18,413
State and local 406 -- 526
-------- -------- --------
Total 14,465 (11,458) 18,939
-------- -------- --------
Total income tax expense $ 84,233 $ 61,868 $ 79,135
======== ======== ========
The income tax expense for the years ended December 31, differs from the amount
computed by applying the expected federal income tax rate of 35% to income from
operations before income taxes for the following reasons:
1998 1997 1996
-------- -------- --------
(In Thousands)
Expected federal income tax expense $ 82,668 $ 58,885 $ 79,925
State and local income taxes 1,886 869 799
Other (321) 2,114 (1,589)
-------- -------- --------
Total income tax expense $ 84,233 $ 61,868 $ 79,135
======== ======== ========
B-17
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
7. INCOME TAXES (continued)
Deferred tax assets and liabilities at December 31, resulted from the items
listed in the following table:
1998 1997
-------- --------
(In Thousands)
Deferred tax assets
Insurance reserves $ 93,564 $ 52,144
-------- --------
Deferred tax assets 93,564 52,144
-------- --------
Deferred tax liabilities
Deferred acquisition costs 224,179 167,128
Net investment gains 12,241 16,068
Other 5,978 7,431
-------- --------
Deferred tax liabilities 242,398 190,627
-------- --------
Net deferred tax liability $148,834 $138,483
======== ========
Management believes that based on its historical pattern of taxable income, the
Company and its subsidiaries will produce sufficient income in the future to
realize its deferred tax assets after valuation allowance. Adjustments to the
valuation allowance will be made if there is a change in management's assessment
of the amount of the deferred tax asset that is realizable. At December 31, 1998
and 1997, respectively, the Company and its subsidiaries had no federal or state
operating loss carryforwards for tax purposes.
The Internal Revenue Service (the "Service") has completed examinations of all
consolidated federal income tax returns through 1989. The Service has examined
the years 1990 through 1992. Discussions are being held with the Service with
respect to proposed adjustments. However, management believes there are adequate
defenses against, or sufficient reserves to provide for, such adjustments. The
Service has begun their examination of the years 1993 through 1995.
B-18
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
8. EQUITY
Reconciliation of Statutory Surplus and Net Income
Accounting practices used to prepare statutory financial statements for
regulatory purposes differ in certain instances from GAAP. The following table
reconciles the Company's statutory net income and surplus as of and for the
years ended December 31, determined in accordance with accounting practices
prescribed or permitted by the Arizona and New Jersey Departments of Banking and
Insurance with net income and equity determined using GAAP.
1998 1997 1996
--------- --------- ---------
(In Thousands)
Statutory net income $ (33,097) $ 12,778 $ 48,846
Adjustments to reconcile to net
income on a GAAP basis:
Statutory income of subsidiaries 18,953 18,553 25,001
Deferred acquisition costs 202,375 38,003 48,862
Deferred premium 2,625 1,144 1,295
Insurance liabilities (24,942) 26,517 28,662
Deferred taxes (14,465) 11,458 (18,939)
Valuation of investments 20,077 506 365
Other, net (19,564) (2,585) 15,130
--------- --------- ---------
GAAP net income $ 151,962 $ 106,374 $ 149,222
========= ========= =========
1998 1997
----------- -----------
(In Thousands)
Statutory surplus $ 931,164 $ 853,130
Adjustments to reconcile to equity
on a GAAP basis:
Valuation of investments 117,254 97,787
Deferred acquisition costs 861,713 655,242
Deferred premium (15,625) (14,817)
Insurance liabilities (133,811) (107,525)
Deferred taxes (148,834) (138,483)
Other, net 41,371 160,183
----------- -----------
GAAP stockholder's equity $ 1,653,232 $ 1,505,517
=========== ===========
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values presented below have been determined using available
information and valuation methodologies. Considerable judgment is applied in
interpreting data to develop the estimates of fair value. Accordingly, such
estimates presented may not be realized in a current market exchange. The use of
different market assumptions and/or estimation methodologies could have a
material effect on the estimated fair values. The following methods and
assumptions were used in calculating the estimated fair values (for all other
financial instruments presented in the table, the carrying value approximates
estimated fair value).
B-19
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Fixed maturities and Equity securities
Estimated fair values for fixed maturities and equity securities, other than
private placement securities, are based on quoted market prices or estimates
from independent pricing services. Fair values for private placement securities
are estimated using a discounted cash flow model which considers the current
market spreads between the U.S. Treasury yield curve and corporate bond yield
curve, adjusted for the type of issue, its current credit quality and its
remaining average life. The estimated fair value of certain non-performing
private placement securities is based on amounts estimated by management.
Mortgage loans on real estate
The estimated fair value of the mortgage loan portfolio is primarily based upon
the present value of the scheduled future cash flows discounted at the
appropriate U.S. Treasury rate, adjusted for the current market spread for a
similar quality mortgage.
Policy loans
The estimated fair value of policy loans is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan
repayments.
Policyholders' account balances
Estimated fair values of policyholders' account balances are derived by using
discounted projected cash flows, based on interest rates being offered for
similar contracts, with maturities consistent with those remaining for the
contracts being valued.
Derivative financial instruments
The fair value of futures is estimated based on market quotes for a transactions
with similar terms.
The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31,:
<TABLE>
<CAPTION>
1998 1997
------------------------------- ---------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----------- ----------- ------------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities:
Available for sale $ 2,763,926 $ 2,763,926 $ 2,563,852 $ 2,563,852
Held to maturity 410,558 421,845 338,848 350,056
Equity securities 2,847 2,847 1,982 1,982
Mortgage loans 17,354 19,465 22,787 24,994
Policy loans 766,917 806,099 703,955 703,605
Short-term investments 240,727 240,727 316,355 316,355
Cash 89,679 89,679 71,358 71,358
Separate Account assets 11,531,754 11,531,754 8,022,079 8,022,079
Financial Liabilities:
Policyholders'
account balances $ 2,696,191 $ 2,703,725 $ 2,380,460 $ 2,374,040
Cash collateral for loaned
securities 123,044 123,044 143,421 143,421
Separate Account liabilities 11,490,751 11,490,751 7,948,788 7,948,788
Derivatives 1,723 2,374 653 653
</TABLE>
B-20
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
10. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS
Futures & Options
The Company uses exchange-traded Treasury futures and options to reduce market
risks from changes in interest rates, to alter mismatches between the duration
of assets in a portfolio and the duration of liabilities supported by those
assets, and to hedge against changes in the value of securities it owns or
anticipates acquiring. The Company enters into exchange-traded futures and
options with regulated futures commissions merchants who are members of a
trading exchange. The fair value of futures and options is estimated based on
market quotes for a transaction with similar terms.
Under exchange-traded futures, the Company agrees to purchase a specified number
of contracts with other parties and to post variation margin on a daily basis in
an amount equal to the difference in the daily market values of those contracts.
Futures are typically used to hedge duration mismatches between assets and
liabilities by replicating Treasury performance. Treasury futures move
substantially in value as interest rates change and can be used to either
generate new or hedge existing interest rate risk. This strategy protects
against the risk that cash flow requirements may necessitate liquidation of
investments at unfavorable prices resulting from increases in interest rates.
This strategy can be a more cost effective way of temporarily reducing the
Company's exposure to a market decline than selling fixed income securities and
purchasing a similar portfolio when such a decline is believed to be over.
For futures that meet hedge accounting criteria, changes in their fair value are
deferred and recognized as an adjustment to the carrying value of the hedged
item. Deferred gains or losses from the hedges for interest-bearing financial
instruments are amortized as a yield adjustment over the remaining lives of the
hedged item. Futures that do not qualify as hedges are carried at fair value
with changes in value reported in current period earnings. The notional value of
futures contracts was $40.8 million and $115.7 million at December 31, 1998 and
1997, respectively. The fair value of futures contracts was immaterial at
December 31, 1998 and 1997.
When the Company anticipates a significant decline in the stock market which
will correspondingly affect its diversified portfolio, it may purchase put index
options where the basket of securities in the index is appropriate to provide a
hedge against a decrease in the value of the equity portfolio or a portion
thereof. This strategy effects an orderly sale of hedged securities. When the
Company has large cash flows which it has allocated for investment in equity
securities, it may purchase call index options as a temporary hedge against an
increase in the price of the securities it intends to purchase. This hedge
permits such investment transactions to be executed with the least possible
adverse market impact.
Option premium paid or received is reported as an asset or liability and
amortized into income over the life of the option. If options meet the criteria
for hedge accounting, changes in their fair value are deferred and recognized as
an adjustment to the hedged item. Deferred gains or losses from the hedges for
interest-bearing financial instruments are recognized as an adjustment to
interest income or expense of the hedged item. If the options do not meet the
criteria for hedge accounting, they are fair valued, with changes in fair value
reported in current period earnings. The fair value of options was immaterial at
December 31, 1998, and there were no options in 1997.
Currency Derivatives
The Company uses currency swaps to reduce market risks from changes in currency
values of investments denominated in foreign currencies that the Company either
holds or intends to acquire and to alter the currency exposures arising from
mismatches between such foreign currencies and the US Dollar.
Under currency swaps, the Company agrees with other parties to exchange, at
specified intervals, the difference between one currency and another at a
forward exchange rate and calculated by reference to an agreed principal amount.
Generally, the principal amount of each currency is exchanged at the beginning
and termination of the currency swap by each party. These transactions are
entered into pursuant to master agreements that provide for a single net payment
to be made by one counterparty for payments made in the same currency at each
due date.
If currency derivatives are effective as hedges of foreign currency translation
and transaction exposures, gains or losses are recorded in "Foreign currency
translation adjustments". If currency derivatives do not meet hedge accounting
criteria, gains or losses from those derivatives are recognized in current
period earnings.
As of December 31, 1998, the notional value of the swaps was $40.5 million with
a fair value of ($2.3) million. There were no currency swaps at year end 1997.
B-21
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
10. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)
Credit Risk
The current credit exposure of the Company's derivative contracts is limited to
the fair value at the reporting date. Credit risk is managed by entering into
transactions with creditworthy counterparties and obtaining collateral where
appropriate and customary. The Company also attempts to minimize its exposure to
credit risk through the use of various credit monitoring techniques. As of
December 31, 1998, 47% of notional consisted of interest rate derivatives, 47%
of notional consisted of foreign currency derivatives, and 6% of notional
consisted of equity derivatives.
11. CONTINGENCIES
Several actions have been brought against the Company on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by Prudential, the Company and agents appointed by Prudential and the
Company. Prudential has agreed to indemnify the Company for any and all losses
resulting from such litigation.
In the normal course of business, the Company is subject to various claims and
assessments. Management believes the settlement of these matters would not have
a material effect on the financial position or results of operations of the
Company.
12. DIVIDENDS
The Company is subject to Arizona law which limits the amount of dividends that
insurance companies can pay to stockholders. The maximum dividend which may be
paid in any twelve month period without notification or approval is limited to
the lesser of 10% of statutory surplus as of December 31 of the preceding year
or the net gain from operations of the preceding calendar year. Cash dividends
may only be paid out of surplus derived from realized net profits. Based on
these limitations and the Company's surplus position at December 31, 1998, the
Company would not be permitted a dividend distribution in 1998.
13. RELATED PARTY TRANSACTIONS
Service Agreements
Prudential and Pruco Life operate under service and lease agreements whereby
services of officers and employees (except for those agents employed by the
Company in Taiwan), supplies, use of equipment and office space are provided by
Prudential. The net cost of these services allocated to the Company were $269.9
million, $139.5 million and $101.7 million for the years ended December 31,
1998, 1997, and 1996, respectively. These costs are treated in a manner
consistent with the Company's policy on deferred acquisition costs.
Prudential and Pruco Life have an agreement with respect to administrative
services for the Prudential Series Fund. The Company invests in the various
portfolios of the Series Fund through the Separate Accounts. Under this
agreement, Prudential pays compensation to Pruco Life in the amount equal to a
portion of the gross investment advisory fees paid by the Prudential Series
Fund. The Company received from Prudential its allocable share of such
compensation in the amount of $40.1 million, $29.4 million and $19.1 million
during 1998, 1997 and 1996, respectively, recorded in other income.
Reinsurance
The Company currently has three reinsurance agreements in place with Prudential
(the reinsurer). Specifically a reinsurance Group Annuity Contract, whereby the
reinsurer, in consideration for a single premium payment by the Company,
provides reinsurance equal to 100% of all payments due under the contract, and
two yearly renewable term agreements in which the Company may offer and the
reinsurer may accept reinsurance on any life in excess of the Company's maximum
limit of retention. The Company is not relieved of its primary obligation to the
policyholder as a result of these reinsurance transactions. These agreements had
no material effect on net income for the years ended December 31, 1998, 1997,
and 1996.
B-22
<PAGE>
Pruco Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS (continued)
Debt Agreements
In July 1998, the Company established a revolving line of credit facility of up
to $300 million with Prudential Funding Corporation, a wholly owned subsidiary
of Prudential. There is no outstanding debt relating to this credit facility as
of December 31, 1998.
B-23
<PAGE>
Report of Independent Accountants
---------------------------------
To the Board of Directors of
Pruco Life Insurance Company
In our opinion, the accompanying consolidated statements of financial position
and the related consolidated statements of operations, of changes in
stockholder's equity and of cash flows present fairly, in all material respects,
the financial position of Pruco Life Insurance Company and its subsidiaries at
December 31, 1998 and 1997, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
New York, New York
February 26, 1999
B-24
<PAGE>
DISCOVERY |
LIFE |LOGO
PLUS |
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE CONTRACTS
- --------------------------------------------------------------------------------
=======================================
A Subsidiary of
Prudential LOGO
PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (888) PRU-2888
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities 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.
REPRESENTATION WITH RESPECT TO CHARGES
Pruco Life Insurance Company represents that the fees and charges deducted under
the variable life insurance contracts registered by this registration statement,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Pruco Life Insurance
Company.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
Arizona, being the state of organization of Pruco Life Insurance Company
(
("Pruco"), permits entities organized under its jurisdiction to indemnify
directors and officers with certain limitations. The relevant provisions of
Arizona law permitting indemnification can be found in Section 10-850 et seq. of
the Arizona Statues Annotated. The text of Pruco's By-law, Article VIII, which
relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its Form 10-Q filed August 15, 1997. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to director, 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 against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 76 pages.
The undertaking to file reports.
The representation with respect to charges.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
1. PricewaterhouseCoopers, LLP, independent accountants.
2. Clifford E. Kirsch, Esq.
3 Ikwhan Oh, FSA, MAAA, actuarial expert.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of Pruco Life Insurance Company
establishing the Pruco Life Single Premium Variable Life Account.
(Note 8)
(2) Not Applicable
(3) Distribution Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and Pruco Life Insurance Company. (Note 8)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale
of the Contracts. (Note 8)
(c) Revised Schedule of Sales Commissions. (Note 1)
(4) Not Applicable
(5) (a) Flexible Premium Variable Life Insurance Contract.
(b) Contract jacket for use in Georgia and Maryland. (Note 1)
(c) Contract data page for use in South Dakota. (Note 1)
(d) Contract data page for use in Minnesota. (Note 1)
(e) Contract page 5 for use in Colorado and North Dakota.
(Note 1)
(f) Contract page 6 for use in Colorado and North Dakota.
(Note 1)
(g) Contract page 7 for use in Missouri. (Note 1)
(h) Contract page 8 for use in Missouri. (Note 1)
(i) Contract page 7 for use in South Carolina. (Note 1)
(j) Contract page 7 for use in Oklahoma. (Note 1)
(k) Unisex Endorsement for use in Montana. (Note 1)
(l) Contract jacket for use in Pennsylvania. (Note 1)
(m) Contract jacket for use in Minnesota. (Note 1)
(n) Contract jacket for use in Texas. (Note 1)
(o) Contract jacket for use in Virginia. (Note 1)
(p) Contract page 5 for use in Massachusetts. (Note 1)
(q) Contract page 5 for use in Texas. (Note 1)
(r) Contract page 5 for use in Pennsylvania. (Note 1)
(s) Contract page 6 for use in Pennsylvania. (Note 1)
(t) Contract page 7 for use in Kentucky. (Note 1)
(u) Contract page 7 for use in Texas. (Note 1)
(v) Contract page 7 for use in Connecticut. (Note 1)
(w) Contract page 7 for use in Pennsylvania. (Note 1)
(x) Contract page 9 for use in Connecticut and Kentucky.
(Note1)
(y) Contract page 9 for use in Texas. (Note 1)
(z) Contract page 11 for use in Massachusetts. (Note 1)
(aa) Contract page 11 for use in Kentucky. (Note 1)
(bb) Contract page 11 for use in Pennsylvania. (Note 1)
(cc) Contract page 13 for use in Kentucky. (Note 1)
<PAGE>
(dd) Contract page 19 for use in Pennsylvania. (Note 1)
(ee) Contract jacket for use in Massachusetts. (Note 1)
(ff) Contract Endorsement for use in California. (Note 1)
(gg) Contract page 8 for use in Texas. (Note 1)
(hh) Contract page 9 for use in Connecticut. (Note 1)
(ii) Contract page 10 for use in Texas. (Note 1)
(ji) Contract page 11 for use in Texas. (Note 1)
(kk) Contract page 13 for use in Texas. (Note 1)
(ll) Contract page 19 for use in Texas. (Note 1)
(mm) Contract page 12 for use in Texas. (Note 1)
(nn) Contract page 17 for use in Texas (Note 1)
(6)
(a) Articles of Incorporation of Pruco Life Insurance Company,
as amended October 19, 1993. (Note 2) (b) By-laws of Pruco
Life Insurance Company, as amended May 6, 1997. (Note 3)
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10)
(a) Application Form for Flexible Premium Variable Life
Insurance Contract.
(b) Supplement to the Application for Flexible Premium Variable
Life Insurance Contract.
(c) Supplement to the Application for Flexible Premium Variable
Life Insurance Contract. (Note 1)
(11) Revised Form of Notice of Withdrawal Right. (Note 1)
(12) Memorandum describing Pruco Life Insurance Company's issuance,
transfer, and redemption procedures for the Contracts pursuant
to Rule 6e-3(T)(b)(12)(ii) and method of computing cash
adjustment upon exercise of right to exchange for
fixed-benefit insurance pursuant to Rule 6e-3(T)
(b)(13)(v)(B). (Note 1)
(13)
(a) Living Needs Benefit Rider for use in Florida. (Note 1)
(b) Living Needs Benefit Rider for use in all other approved
jurisdictions. (Note 1)
2. See Exhibit 1.A.(5). 3. Opinion and Consent of Clifford E. Kirsch, Esq.,
as to the legality of the securities being registered. (Note 1)
4. None.
5. Not Applicable.
6. Opinion and Consent of Ikwhan Oh, FSA, MAAA, as to actuarial matters
pertaining to the securities being registered. (Note 1)
7. Powers of Attorney:
(a) Esther H. Milnes, I. Edward Price, Ira J. Kleinman, William M.
Bethke (Note 4)
(b) Kiyofumi Sakaguchi (Note 6)
(c) James J. Avery, Jr. (Note 7)
(d) Dennis G. Sullivan (Note 9)
<PAGE>
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Form S-6, Registration No. 333-07451,
filed July 2, 1996, on behalf of the Pruco Life Variable Appreciable
Account.
(Note 3) Incorporated by reference to Exhibit 3(ii) to Form 10-Q for Pruco Life
Insurance Company, File No. 33-37587, filed August 15, 1997.
(Note 4) Incorporated by reference to Form 10-K, Registration No. 33-08698,
filed March 31, 1997 on behalf of the Pruco Life Variable Contract
Real Property Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 4 to Form
S-1, Registration No. 33-86780, filed April9, 1998 on behalf of the
Pruco Life Variable Contract Real Property Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 8 to Form
S-6, Registration No. 33-49994, filed April, 1997 on behalf of the
Pruco Life PRUvider Variable Appreciable Account.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 2 to Form
S-6, Registration No. 333-07451, filed June 25, 1997 on behalf of the
Pruco Life Variable Appreciable Account.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 22 to this
Registration Statement, filed April 27, 1998.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 6
to Form S-1, Registration No. 33-86780, filed April, 1999 on behalf
of the Pruco Life Variable Contract Real Property Account.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, the
Registrant certifies that this Amendment is filed solely for one or more of the
purposes specified in Rule 485(b)(1) under the Securities Act of 1933 and that
no material event requiring disclosure in the prospectus, other than one listed
in Rule 485(b)(1), has occurred since the effective date of the most recent
Post-Effective Amendment to the Registration Statement which included a
prospectus, and has caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal hereto affixed
and attested, all in the City of Newark and the State of New Jersey, on this 29
day of April, 1999.
(SEAL) PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
(Registrant)
BY: PRUCO LIFE INSURANCE COMPANY
(Depositor)
Attest: /s/ CLIFFORD E. KIRSCH By: /s/ ESTHER H. MILNES
--------------------------------- -----------------------
CLIFFORD E. KIRSCH ESTHER H. MILNES
CHIEF LEGAL OFFICER AND SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 23 to the Registration Statement has been signed
below by the following persons in the capacities indicated on this 23 day of
April, 1999.
SIGNATURES TITLE
---------- -----
/s/ * President and Director
- --------------------------
(ESTHER MILNES)
/s/ * Vice President and Chief Accounting Officer
- -------------------------- (Principal Financial and Chief Accounting
(DENNIS G. SULLIVAN) Officer)
/s/ * Director
- --------------------------
(JAMES J. AVERY, JR.)
/s/ * Director
- --------------------------
(WILLIAM M. BETHKE)
/s/ * Director
- --------------------------
(IRA J. KLEINMAN)
/s/ * Director By: /s/ CLIFFORD E. KIRSCH
- -------------------------- -----------------------
(I. EDWARD PRICE) CLIFFORD E. KIRSCH
/s/ * Director
- --------------------------
(KIYOFUMI SAKAGUCHI)
<PAGE>
EXHIBIT INDEX
1.A.(5)(a) Flexible Premium Variable Life Insurance Contract
(b) Contract jacket for use in Georgia and Maryland.
(c) Contract data page for use in South Dakota.
(d) Contract data page for use in Minnesota.
(e) Contract page 5 for use in Colorado and North Dakota.
(f) Contract page 6 for use in Colorado and North Dakota.
(g) Contract page 7 for use in Missouri.
(h) Contract page 8 for use in Missouri.
(i) Contract page 7 for use in South Carolina.
(j) Contract page 7 for use in Oklahoma.
(k) Unisex Endorsement for use in Montana.
(l) Contract jacket for use in Pennsylvania.
(m) Contract jacket for use in Minnesota.
(n) Contract jacket for use in Texas.
(o) Contract jacket for use in Virginia.
(p) Contract page 5 for use in Massachusetts.
(q) Contract page 5 for use in Texas.
(r) Contract page 5 for use in Pennsylvania.
(s) Contract page 6 for use in Pennsylvania.
(t) Contract page 7 for use in Kentucky.
(u) Contract page 7 for use in Texas.
(v) Contract page 7 for use in Connecticut.
(w) Contract page 7 for use in Pennsylvania.
(x) Contract page 9 for use in Connecticut and Kentucky.
(y) Contract page 9 for use in Texas.
(z) Contract page 11 for use in Massachusetts.
(aa) Contract page 11 for use in Kentucky.
(bb) Contract page 11 for use in Pennsylvania.
(cc) Contract page 13 for use in Kentucky.
(dd) Contract page 19 for use in Pennsylvania.
(ee) Contract jacket for use in Massachusetts.
(ff) Contract Endorsement for use in California.
(gg) Contract page 8 for use in Texas.
(hh) Contract page 9 for use in Connecticut.
(ii) Contract page 10 for use in Texas.
(ji) Contract page 11 for use in Texas.
(kk) Contract page 13 for use in Texas.
(ll) Contract page 19 for use in Texas.
(mm) Contract page 12 for use in Texas.
(nn) Contract page 17 for use in Texas
(a) Application Form for Flexible Premium Variable Life Insurance
Contract.
(b) Supplement to the Application for Flexible Premium Variable Life
Insurance Contract.
(c) Supplement to the Application for Flexible Premium Variable Life
Insurance Contract.
(11) Revised Form of Notice of Withdrawal Right.
(12) Memorandum describing Pruco Life Insurance Company's issuance, transfer,
and redemption procedures for the Contracts pursuant to Rule
6e-3(T)(b)(12)(ii) and method of computing cash adjustment upon exercise
of right to exchange for fixed-benefit insurance pursuant to Rule
6e-3(T) (b)(13)(v)(B).
(13)
(a) Living Needs Benefit Rider for use in Florida.
<PAGE>
(b) Living Needs Benefit Rider for use in all other approved
jurisdictions.
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the legality of the
securities being registered.
6. Opinion and Consent of Ikwhan Oh, FSA, MAAA, as to actuarial matters
pertaining to the securities being registered.
24. Consent of PricewaterhouseCoopers LLP, independent accountants.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 23 to the registration statement on Form S-6 (the
"Registration Statement") of our report dated March 19, 1999, relating to the
financial statements of the Pruco Life Single Premium Variable Life Account,
which appears in such Prospectus.
We also consent to the use in the Prospectus constituting part of this
Registration Statement of our report dated February 26, 1999, relating to the
consolidated financial statements of Pruco Life Insurance Company and
Subsidiaries, which appears in such Prospectus.
We also consent to the reference to us under the heading "Experts" in the
Prospectus.
PricewaterhouseCoopers LLP
New York, New York
April 23, 1999
EXHIBIT A(3) (c)
- ----------------
Commission Schedule For
Discovery Life Plus Insurance Contracts
---------------------------------------
I. Discovery Agencies
------------------
A. First year commissions on contracts issued are equal to 2% of the
initial premium plus $20 per contract.
B. On any additional premiums which are paid, there are no commissions
payable.
II. Ordinary Agencies
-----------------
A. First year commissions on contracts issued are equal to 3% of the
initial premium.
B. On any additional premiums which are paid, there are no commissions
payable.
III. The registered representatives of various broker-dealers which have entered
into contractual arrangements with Pruco Life Insurance Company and Pruco
Securities Corporation will be paid up to 3% of the initial premium on
contracts they sell. On any additional premiums which are paid, there are
no commissions payable.
IV. In the event a contract lapses or is surrendered within the first contract
year, the entire first year commission is subject to recapture by the Pruco
Life Insurance Company.
II-13
Pruco Life Insurance Company
================================================================================
Insured Contract Number
Contract Date
Face Amount
Agency
================================================================================
We will pay the beneficiary the proceeds of this contract promptly if we receive
due proof that the Insured died. We make this promise subject to all the
provisions of the contract.
The cash value may increase or decrease daily depending on the payment of
premiums, the investment experience of the separate account and the level of
mortality charges made. There is no guaranteed minimum.
The Death Benefit will be the insurance amount which is the greater of (1) the
face amount we show above, and (2) the contract fund times the attained age
factor that applies.
Please read this contract with care. A guide to its contents is on the last page
before the back cover. A summary is on page 5. If there is ever a question about
it, or if there is a claim, just see a Company representative or get in touch
with one of our offices.
Right to Cancel Contract.--You may return this contract to us within (1) 10 days
after you get it, or (2) 45 days after Part 1 of the application was signed, or
(3) 10 days after we mail or deliver the Notice of Withdrawal Right, whichever
is latest. All you have to do is take the contract or mail it to one of our
offices or to the representative who sold it to you. It will be canceled from
the start and we will promptly give you the value of your Contract Fund on the
date you return the contract to us. We will also give back any charges we made
in accord with this contract.
Signed for Pruco Life Insurance Company,
an Arizona Corporation.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Secretary President
Variable Life Insurance Policy with Premium Flexibility. Initial premium, with
additional premiums payable during Insured's lifetime as stated in the
contract. Benefits reflect premium payments, investment results and mortality
charges. Insurance payable upon death. Non-participating.
II-13
INSURED'S SEX AND ISSUE AGE M-35
RATING CLASS STANDARD
INSURED JOHN DOE XX XXX XXX CONTRACT NUMBER
JULY 1, 1985 CONTRACT DATE
FACE AMOUNT $100,000--
AGENCY R-NK 1
BENEFICIARY CLASS 1 MARY DOE, WIFE
CLASS 2 ROBERT DOE, SON
SCHEDULE OF PREMIUMS
INITIAL PREMIUM IS $XX,XXX.XX
*****END OF SCHEDULE*****
INTEREST RATES
FOR THE PORTION OF THE CONTRACT FUND IN THE FIXED ACCOUNT: SEE GUARANTEED
INTEREST AND EXCESS INTEREST ON PAGES 10 AND 11.
FOR THE PORTION OF THE CONTRACT FUND EQUAL TO ANY CONTRACT LOAN: SEE INTEREST
CREDIT ON PAGE 10.
*****NOTICE*****
THIS IS A LEGAL CONTRACT BETWEEN YOU AND PRUCO LIFE.
READ YOUR CONTRACT CAREFULLY.
CONTRACT DATA CONTINUED ON NEXT PAGE
PAGE 3 (85)
II-15
CONTRACT DATA
INSURED'S SEX AND ISSUE AGE M-35
RATING CLASS STANDARD
INSURED JOHN DOE XX XXX XXX CONTRACT NUMBER
JULY 1, 1985 CONTRACT DATE
FACE AMOUNT $100,000--
AGENCY R-NK 1
BENEFICIARY CLASS 1 MARY DOE, WIFE
CLASS 2 ROBERT DOE, SON
SCHEDULE OF PREMIUMS
INITIAL PREMIUM IS $XXX,XXX.XX
*****END OF SCHEDULE*****
INTEREST RATES
FOR THE PORTION OF THE CONTRACT FUND IN THE FIXED ACCOUNT: SEE GUARANTEED
INTEREST AND EXCESS INTEREST ON PAGES 10 AND 11.
FOR THE PORTION OF THE CONTRACT FUND EQUAL TO ANY CONTRACT LOAN: SEE INTEREST
CREDIT ON PAGE 10.
SURRENDER CHARGES
FOR SURRENDER CHARGES MADE ON WITHDRAWAL: SEE SURRENDER CHARGE ON PAGE 11.
*****NOTICE*****
THIS IS A LEGAL CONTRACT BETWEEN YOU AND PRUCO LIFE.
READ YOUR CONTRACT CAREFULLY.
CONTRACT DATA CONTINUED ON NEXT PAGE
II-16
CONTRACT SUMMARY
We offer this summary to help you understand this contract. We do not intend
that it change any of the provisions of the contract.
This is a contract of life insurance. It calls for the payment of an initial
premium. Additional premiums may be payable as described on page 8. The initial
premium minus any applicable deductions for state and/or local premium taxes is
the contract fund at the start. The value of the contract fund will vary with
the payment of premiums, the investment performance of those subaccounts of the
Pruco Life Single Premium Variable Life Account that you select, the extent to
which interest is credited to any portion allocated to the fixed account, and
the extent to which the monthly mortality charges are less than the guaranteed
maximums.
We describe on page 8 the way in which the contract may go into default. If the
contract remains in default at the end of its days of grace, the contract will
end and have no value.
Proceeds is a word we use to mean the amount we would pay if we were to settle
the contract in one sum. To compute the proceeds that may arise from the
Insured's death, we start with a basic amount. We may adjust that amount if
there is a loan. The table below tells what the basic amount is. The table will
refer you to the parts of the contract that tell you how we may adjust the basic
amount. If you surrender the contract, the proceeds will be the net cash value.
We describe it under Cash Value Option on Page 11.
Proceeds often are not taken in one sum. For instance, on surrender, you may be
able to put proceeds under a settlement option to provide retirement income or
for some other purpose. Also, for all or part of the proceeds that arise from
the Insured's death, you may be able to choose a manner of payment for the
beneficiary. If the Insured dies and an option has not been chosen, the
beneficiary may be able to choose one. We will pay interest under Option 3 from
the date of death on any proceeds to which no other manner of payment applies.
This will be automatic as we state on page 17. There is no need to ask for it.
You and we may agree on a change in the ownership of this contract. Also, unless
we endorse it to say otherwise, the contract gives you these rights, among
others:
o You may change the beneficiary under it.
o You may borrow on it up to its loan value.
o You may surrender it for its net cash value.
o You may change the allocation of additional premiums, minus any deductions
for state and/or local premium taxes, among the subaccounts and the fixed
account.
o You may transfer amounts among subaccounts and the fixed account.
- --------------------------------------------------------------------------------
TABLE OF BASIC AMOUNTS
- --------------------------------------------------------------------------------
When the proceeds arise from the Insured's death:
- --------------------------------------------------------------------------------
And the Contract is Then The Basic And We Adjust The
In Force: Amount Is: Basic Amount For:
- --------------------------------------------------------------------------------
other than during the the insurance amount contract debt
days of grace (see page 8) (see page 10) (see page 12)
- --------------------------------------------------------------------------------
during the days the insurance contract debt and any
of grace additional premium due
in the days of grace
(see pages 12 and 8)
- --------------------------------------------------------------------------------
This table is part of the Contract Summary and of the Contract.
II-17
Exhibit A(5)(f
GENERAL PROVISIONS
Definitions.--We define here some of the words and phrases used all through this
contract. We explain others, not defined here, in other parts of the text.
We, Our, Us, and Company.--Pruco Life Insurance Company, an Arizona
Corporation.
You and Your.--The owner of the contract.
Insured.--The person named as the Insured on the first page. He or she need not
be the owner.
Example: Suppose we issue a contract on the life of your spouse. You applied for
it and named no one else as owner. Your spouse is the Insured and you are the
owner.
SEC.--The Securities and Exchange Commission.
Issue Date.--The contract date.
Monthly Date.--The contract date and the same day as the contract date in each
later month. But if the contract date is the 29th, 30th or 31st day of the month
and the later month has fewer days, then the monthly date will be the first day
of the next month.
Example: If the contract date is March 9, 1986, the Monthly Dates are each March
9, April 9, MAy 9, and so on.
Anniversary or Contract Anniversary.--The same day and month as the contract
date in each later year.
Example: If the contract date is March 9, 1986, the first anniversary is March
9, 1987. The second is March 9, 1988, and so on.
Contract Year.--A year that starts on the contract date or on an anniversary.
Example: If the contract date is March 9, 1986, the first contract year starts
then and ends on March 8, 1987. The second starts on March 9, 1987 and ends on
March 8, 1988, and so on.
Contract Month.--A month that starts on a Monthly Date.
Example: If March 9, 1986 is a Monthly Date, a contract month starts then and
ends on April 8, 1986. The next contract month starts on April 9, 1986 and ends
on May 8, 1986, and so on.
Attained Age.--The Insured's attained age at any time is the issue age plus the
length of time since the contract date. You will find the issue age near the top
of page 3.
The Contract.--This policy and the application, a copy of which is attached,
form the whole contract. We assume that all statements in the application were
made to the best of the knowledge and belief of the person(s) who made them; in
the absence of fraud they are deemed to be representations and not warranties.
We relied on those statements when we issued the contract. We will not use any
statement, unless made in the application, to try to void the contract or deny
a claim.
Contract Modifications.--Only a Company officer may agree to modify this
contract, and then only in writing.
Non-Participating.--This contract will not share in our profits or surplus
earnings. We will pay no dividends on it.
Service Office.--This is the office that will service this contract. Its mailing
address is the one we show in the Contract Data pages, unless we notify you of
another one.
Ownership and Control.--Unless we endorse this contract to say otherwise: (1)
the owner of the contract is the Insured; and (2) while the Insured is living
the owner alone is entitled to (a) any contract benefit and value, and (b) the
exercise of any right and privilege granted by the contract or by us.
Suicide Exclusion.--If the Insured, whether sane or insane, dies by suicide
within one year from the issue date, we will pay no more under this contract
than the sum of the premiums paid.
Currency.--Any money we pay, or that is paid to us, must be in United States
currency. Any amount we owe will be payable at our Service Office.
(Continued on Next Page)
Page 6 (VFL--85) (COL. & N.D.)
II-18
Exhibit A(5)(g)
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.-- If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required, we have given the insurance regulator a
detailed statement of how we will make these adjustments.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we received
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim,
we will actually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets ours needs. It will take effect only when we file it at
our Service Office; this will be after you send the contract to us to be
endorsed, if we ask you to do so. Then any previous beneficiary's interest will
end as of the date of the request. It will end then even if the Insured is not
living when we file the request. Any beneficiary's interest is subject to the
rights of any assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identify, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
Page 7 (VFL--85) (MO)
II-19
Exhibit A(5)(h)
PREMIUMS
Initial Premium.--The intial premium, which we show on page 3, is due on the
contract date. It may be paid at our Service Office or to one of our
representatives. If we are asked to do so, we will give a signed receipt. The
initial premium minus any applicable deductions for state and/or local premium
taxes, becomes the contract fund. (See Page 10.)
Additional Premiums--Additional premiums may be paid as we describe below:
1. An additional premium may be paid if (1) it is permitted according to the
definition of life insurance contained in the applicable federal tax law, and
(2) it does not result in an increase in the insurance amount. If you ask us to
do so, we will let you know the amount of any additional premium allowed and
when it can be paid. We will also include that information as part of the annual
report. (See page 7.)
2. If the contract goes into default, an additional premium sufficient to bring
the contract out of default may be paid during the grace period.
Additional premiums paid in accord with 1 or 2 above minus any applicable
deductions for state and/or local premium taxes will be added to the contract
fund but will not increase the insurance amount.
Premium Taxes.--State and local taxes on premiums paid vary according to
jurisdiction. We will deduct from each premium paid the appropriate amount
applicable for these taxes.
Default.--If on any monthly date the net cash value equals zero this contract is
in default. In this case we will tell you what premium payment is needed to
bring the contract out ot default.
Grace Period.--We grant 61 days of grace from any Monthly Date on which the
contract goes into default. We will send you a notice of default and state the
amount to pay that will bring the contract out of default. This amount is the
amount that, after deduction of any state and/or local premium taxes, is
sufficient to pay the mortality charges (see page 11) for the Monthly Date on
which the contract goes into default and the next Monthly Date. If that amount
has not been paid by the end of the grace period the contract will end and have
no value.
The Insured might die while the contract is in default during its days of grace.
If so the proceeds will be reduced by the amount that, after deduction of any
state and/or local premium taxes is sufficient to pay the mortality charges
which have not yet been deducted for Monthly Dates prior to the date on which
death occurred.
Reinstatment.--If this contract ends as we describe under Grace Period, you may
reinstate it, if all these conditions are met:
1. No more than five years must have elapsed since the date of default.
2. You must give us any facts we need to satisfy us that the Insured is
insurable for the contract.
3. We must be paid an amount that after deduction of any state and/or local
premium taxes leaves the balance equal to the sum of:
(a) the mortality charges not previously made for the grace period; and
(b) the mortality charges for the first two monthly dates on or after the date
of reinstatement.
If we approve the reinstatement, these statements apply. The date of
reinstatement will be the date of your request or the date the required premium
is paid if later. The face amount will be the same as it was at the end of the
grace period. The contract debt will be equal to the contract debt at the and of
the grace period. The contract fund as of the date of reinstatement will be
equal to the amount paid to reinstate the contract, minus any applicable
deductions for state and/or local premium taxes, minus the charges in (a) above,
and plus the contract debt. And we will start to make monthly charges and
credits again as of the first Monthly Date on or after the date of
reinstatement.
Page 8 (VFL--85) (MO)
II-20
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required, we have given the insurance regulator a
detailed statement of how we will make these adjustments.
Incontestability.--We will not contest this contract after two years from the
issue date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim,
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But
we have the right to defer paying any portion of the proceeds greater than the
face amount shown on pege 3 if (1) the New York Stock Exchange is closed; or
(2) the SEC requires that trading be restricted or declares an emergency: or (3)
the SEC lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form whlch meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed if
we ask you to do so. Then any previous beneficiary's interest will end as of the
date of the request. It will end then even if the Insured is not living when we
file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be pald only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof we will not have to make the payment(s) again.
II-21
Exhibit A(5)(j)
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required we have given the insurance regulator a
detailed statement of how we will make these adjustments.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be creditd
until further notice to the amoumt in the Fixed Account; {8) any additional
premium which you have the right to pay; and (9) any outstanding contract debt.
The report will include any other data that may be currently required where this
contract is delivered. You may ask for a report like this at any time. But,
except for the report we send you once a year, we have the right to charge a fee
for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer paymant to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed if
we ask you to do so. Then any previous beneficiary's interest will end as of the
date of the request. It will end then even if the Insured is not living when we
file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured
unless otherwise stated. To show priority we may use numbered classes so that
the class with first priority is called class 1 the class with next pnority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
II-22
Exhibit A 5(k)
II-12
<PAGE>
Exhibit A 5(k)
Endorsement
(Only we can endorse this contract.)
This endorsement is attached to and made a part of this contract on the contract
date:
Any reference, in any provision of this contract, to the sex of any person will
be ignored except for the purpose of identification. For any settlement payable
for the lifetime of one or more payees, the female rates we show in the contract
will apply to both male and female payees.
Pruco Life Insurance Company,
By /s/ Isabella L. Kirchner
Secretary
- -----------
PLI 195--85
- -----------
II-13
Pruco Life Insurance Company
================================================================================
Insured Contract Number
Contract Date
Face Amount
Agency
================================================================================
We will pay the beneficiary the proceeds of this contract promptly if we receive
due proof that the Insured died. We make this promise subject to all the
provisions of the contract.
The cash value may increase or decrease daily depending on the payment of
premiums, the investment experience of the separate account and the level of
mortality charges made. There is no guaranteed minimum.
The Death Benefit will be the insurance amount which is the greater of (1) the
face amount we show above, and (2) the contract fund times the attained age
factor that applies.
Please read this contract with care. A guide to its contents is on the last page
before the back cover. A summary is on page 5. If there is ever a question about
it, or if there is a claim, just see a Company representative or get in touch
with one of our offices.
Right to Cancel Contract.--You may return this contract to us within (1) 10 days
after you get it, or (2) 45 days after Part 1 of the application was signed, or
(3) 10 days after we mail or deliver the Notice of Withdrawal Right, whichever
is latest. All you have to do is take the contract or mail it to one of our
offices or to the representative who sold it to you. It will be canceled from
the start and we will promptly give back your money within 10 days after we
receive the contract.
Signed for Pruco Life Insurance Company,
an Arizona Corporation.
/s/ Isabelle L. Kirchner /s/ [ILLEGIBLE]
Secretary President
Variable Life Insurance Policy with Premium Flexibility. Initial premium, with
additional premiums payable during Insured's lifetime as stated in the
contract. Benefits reflect premium payments, investment results and mortality
charges. Insurance payable upon death. Non-participating.
II-14
Prudential Pruco Life Insurance Company
- ---------- Phoenix, Arizona
A Stock Company Subsidiary of
The Prudential Insurance Company of America
================================================================================
Insured Contract Number
Contract Date
Face Amount
Agency
================================================================================
We will pay the beneficiary the proceeds of this contract promptly if we receive
due proof that the Insured died. We make this promise subject to all the
provisions of the contract.
The cash value may increase or decrease daily depending on the payment of
premiums, the investment experience of the separate account and the level of
mortality charges made. There is no guaranteed minimum.
The Death Benefit will be the insurance amount which is the greater of (1) the
face amount we show above, and (2) the contract fund times the attained age
factor that applies.
Please read this contract with care. A guide to its contents is on the last page
before the back cover. A summary is on page 5. If there is ever a question about
it, or if there is a claim, just see a Company representative or get in touch
with one of our offices.
RIGHT TO CANCEL.--You may cancel this policy by delivering or mailing a written
notice or sending a telegram to Pruco Life Insurance Company, P.O. Box 2925,
Phoenix, Arizona 85062, and by returning the policy before midnight of the tenth
day after the date you receive the policy. Notice given by mail and return of
the policy by mail are effective on being postmarked, properly addressed and
postage prepaid. The insurer must return all payments made for this policy
within ten days after it receives notice of cancellation and the returned
policy.
Signed for Pruco Life Insurance Company,
an Arizona Corporation.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Secretary President
Variable Life Insurance Policy with Premium Flexibility. Initial premium, with
additional premiums payable during Insured's lifetime as stated in the
contract. Benefits reflect premium payments, investment results and mortality
charges. Insurance payable upon death. Non-participating.
II-16
Pruco Life Insurance Company
Phoenix, Arizona
Prudential A Stock Company Subsidiary of
The Prudential Insurance Company of America
================================================================================
Insured Contract Number
Contract Date
Face Amount
Agency
================================================================================
We will pay the beneficiary the proceeds of this contract
promptly if we receive due proof that the insured died. We make
this promise subject to all the provisions of the contract.
The cash value may increase or decrease daily depending on the
payment of premiums, the investment experience of the separate
account and the level of mortality charges made. There is no
guaranteed minimum.
The Death Benefit will be the insurance amount which is the
greater of (1) the face amount we show above, and (2) the
contract fund times the attained age factor that applies. The
Death Benefit will vary in amount and may vary in duration
depending upon the payment of premiums, the investment experience
of the separate account and the level of mortality changes made,
(see page 10.)
Please read this contract with care. A guide to its contents is
on the last page before the back cover. A summary is on page 5.
If there is ever a question about it, or if there is a claim,
just see a Company representative or get in touch with one of our
offices.
Right to Cancel Contract.--You may return this contract to us
within (1) 10 days after you get it, or (2) 45 days after Part I
of the application was signed, or (3) 10 days after we mail or
deliver the Notice of Withdrawal Right, whichever is latest. All
you have to do is take the contract or mail it to one of our
offices or to the representative who sold it to you. It will be
canceled from the start and we will promptly give back your money
within ten days after we receive the contract.
Signed for Pruco Life Insurance Company,
an Arizona Corporation.
/s/ Isabelle L. Kirchner /s/ Donald G. [ILLEGIBLE]
Secretary President
Variable Life Insurance Policy with Limited Premium Flexibility. Initial
premium, with additional premiums payable during Insured's lifetime as stated in
the contract. Benefits reflect premium payments, investment results and
mortality charges. Insurance payable only upon death. Non-participating.
II-16
Prudential Pruco Life Insurance Company
- ---------- Phoenix, Arizona
A Stock Company Subsidiary of
The Prudential Insurance Company of America
================================================================================
Insured Contract Number
Contract Date
Face Amount
Agency
================================================================================
We will pay the beneficiary the proceeds of this contract promptly if we receive
due proof that the Insured died. We make this promise subject to all the
provisions of the contract.
The cash value may increase or decrease daily depending on the payment of
premiums, the investment experience of the separate account and the level of
mortality charges made. There is no guaranteed minimum.
The Death Benefit will be the insurance amount which is the greater of (1) the
face amount we show above, and (2) the contract fund times the attained age
factor that applies.
During the first contract year the loan value is zero. After the first contract
year it is 90% of the sum of the net cash value and any existing contract debt.
Please read this contract with care. A guide to its contents is on the last page
before the back cover. A summary is on page 5. If there is ever a question about
it, or if there is a claim, just see a Company representative or get in touch
with one of our offices.
Right to Cancel Contract.--You may return this contract to us within (1) 10 days
after you get it, or (2) 45 days after Part 1 of the application was signed, or
(3) 10 days after we mail or deliver the Notice of Withdrawal Right, whichever
is latest. All you have to do is take the contract or mail it to one of our
offices or to the representative who sold it to you. It will be canceled from
the start and we will promptly give you the value of your Contract Fund on the
date you return the contract to us. We will also give back any charges we made
in accord with this contract.
Signed for Pruco Life Insurance Company,
an Arizona Corporation.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Secretary President
Variable Life Insurance Policy with Premium Flexibility. Initial premium, with
additional premiums payable during Insured's lifetime as stated in the
contract. Benefits reflect premium payments. investment results and mortality
charges. Insurance payable upon death. Non-participating.
II-17
CONTRACT SUMMARY
We offer this summary to help you understand this contract. We do not intend
that it change any of the provisions of the contract.
This is a modified single premium variable life insurance contract. It calls for
the payment of an initial premium. The initial premium minus any applicable
deductions for state and/or local premium taxes, minus the mortality charges
deducted on the contract date is the contract fund at the start. The value of
the contract fund will vary with the payment of premiums, the investment
performance of those subaccounts of the Pruco Life Single Premium Variable Life
Account that you select, the extent to which interest is credited to any portion
allocated to the fixed account, and the extent to which the monthly mortality
charges are less than the guaranteed maximums. There are two circumstances in
which additional premiums may be paid:
1. If the net cash value of this contract becomes zero, the contract will be in
default and an additional premium sufficient to bring the contract out of
default may be paid during the grace period.
2. An additional premium may be paid if (1) it is permitted according to the
definition of life insurance contained in the applicable federal tax law and (2)
it does not result in an increase in the insurance amount.
Extensive borrowing will affect policy values, possibly resulting in the
eventual loss of coverage unless the loan is repaid with accrued interest and/or
additional premiums are paid.
We describe on page 8 the way in which the contract may go into default. If the
contract remains in default at the end of its days of grace, the contract will
end and have no value.
Proceeds is a word we use to mean the amount we would pay if we were to settle
the contract in one sum. To compute the proceeds that may arise from the
Insured's death, we start with a basic amount. We may adjust that amount if
there is a loan. The table below tells what the basic amount is. The table will
refer you to the parts of the contract that tell you how we may adjust the basic
amount. If you surrender the contract the proceeds will be the net cash value.
We describe it under Cash Value Option on page 11.
Proceeds often are not taken in one sum. For instance, on surrender, you may be
able to put proceeds under a settlement option to provide retirement income or
for some other purpose. Also, for all or part of the proceeds that arise from
the Insured's death, you may be able to choose a manner of payment for the
beneficiary. If the Insured dies and an option has not been chosen, the
beneficiary may be able to choose one. We will pay interest under Option 3 from
the date of death on any proceeds to which no other manner of payment applies.
This will be automatic as we state on page 17. There is no need to ask for it.
You and we may agree on a change in the ownership of this contract. Also unless
we endorse it to say otherwise, the contract gives you these rights among
others:
o You may change the beneficiary under it.
o You may borrow on it up to its loan value.
o You may surrender it for its net cash value.
o You may change the allocation of additional premiums, minus any deductions
for state and/or local premium taxes, among the subaccounts and the fixed
account.
o You may transfer amounts among subaccounts and the fixed account.
- --------------------------------------------------------------------------------
TABLE OF BASIC AMOUNTS
- --------------------------------------------------------------------------------
When the proceeds arise from the Insured's death:
- --------------------------------------------------------------------------------
And the Contract Is Then The Basic And We Adjust The
In force: Amount Is: Basic Amount For:
- --------------------------------------------------------------------------------
other than during the the insurance amount contract debt
days of grace (see page 8) (see page 10) (see page 12)
- --------------------------------------------------------------------------------
during the days of grace the insurance amount contract debt and any
additional premium due
in the days of grace
(see pages 12 and 8)
- --------------------------------------------------------------------------------
This table is part of the Contract Summary and of the Contract.
Page 5 (VFL-85) (MA)
II-18
Exhibit A(5)(q)
CONTRACT SUMMARY
We offer this summary to help you understand this contract. We do not intend
that it change any of the provisions of the contract.
This is a contract of life insurance. It calls for the payment of an initial
premium. Additional premiums may be payable as described on page 8. The initial
premium minus any applicable deductions for state and/or local premium taxes is
the contract fund at the start. The value of the contract fund will vary with
the payment of premiums, the investment performance of those subaccounts of the
Pruco Life Single Premium Variable Life Account that you select, the extent to
which interest is credited to any portion allocated to the fixed account, and
the extent to which the monthly mortality charges are less than the guaranteed
maximums.
We describe on page 8 the way in which the contract may go into default. If the
contract remains in default at the end of its days of grace, the contract will
end and have no value.
Proceeds is a word we use to mean the amount we would pay if we were to settle
the contract in one sum. To compute the proceeds that may arise from the
Insured's death, we start with a basic amount. We may adjust that amount if
there is a loan. The table below tells what the basic amount is. The table will
refer you to the parts of the contract that tell you how we may adjust the basic
amount. If you surrender the contract, the proceeds will be the net cash value.
We describe it under Cash Value Option on page 11.
Proceeds often are not taken in one sum. For instance, on surrender, you may be
able to put proceeds under a settlement option to provide retirement income or
for some other purpose. Also, for all or part of the proceeds that arise from
the Insured's death, you may be able to choose a manner of payment for the
beneficiary. If the Insured dies and an option has not been chosen, the
beneficiary may be able to choose one. We will pay interest under Option 3 from
the date of death on any proceeds to which no other manner of payment applies.
This will be automatic as we state on page 17. There is no need to ask for it.
You and we may agree on a change in the ownership of this contract. Also, unless
we endorse it to say otherwise, the contract gives you these rights among
others:
o You may change the beneficiary under it.
o You may borrow on it up to its loan value.
o You may surrender it for its net cash value.
o You may change the allocation of additional premiums minus any deductions
for state and/or local premium taxes, among the subaccounts and the fixed
account.
o You may transfer amounts among subaccounts and the fixed account.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
TABLE OF BASIC AMOUNTS
- -----------------------------------------------------------------------------------------------------------
When the proceeds arise from the Insured's death:
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
And the Contract Is Then The Basic And We Adjust The
In Force: Amount Is: Basic Amount For:
- -----------------------------------------------------------------------------------------------------------
other than during the the insurance amount which is the contract debt
days of grace (see page 8) greater of the initial face amount and (see page 12)
the contract fund times the attained age
factor that applies (see page 10 for a
description of those items that may
cause the contract fund to vary from day
to day including the investment
experience of the separate account)
- -----------------------------------------------------------------------------------------------------------
during the days the insurance amount contract debt and
of grace any additional premium
due in the days of
grace (see pages 12 and 8)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
This table is part of the Contract Summary and of the Contract.
II-19
Exhibit A(5)(r)
CONTRACT SUMMARY
We offer this summary to help you understand this contract. We do not intend
that it change any of the provisions of the contract.
This is a contract of life insurance. It calls for the payment of an initial
premium. Additional premiums may be payable as described on page 8. The initial
premium minus any applicable deductions for state and/or local premium taxes is
the contract fund at the start. The value of the contract fund will vary with
the payment of premiums, the investment performance of those subaccounts of the
Pruco Life Single Premium Variable Life Account that you select, the extent to
which interest is credited to any portion allocated to the fixed account, and
the extent to which the monthly mortality charges are less than the guaranteed
maximums.
We describe on page 8 the way in which the contract may go into default. If the
contract remains in default at the end of its days of grace, the contract will
end and have no value.
Proceeds is a word we use to mean the amount we would pay if we were to settle
the contract in one sum. To compute the proceeds that may arise from the
Insured's death, we start with a basic amount. We may adjust that amount if
there is a loan. The table below tells what the basic amount is. The table will
refer you to the parts of the contract that tell you how we may adjust the basic
amount. If you surrender the contract, the proceeds will be the net cash value.
We describe it under Cash Value Option on page 11.
Proceeds often are not taken in one sum. For instance, on surrender, you may be
able to put proceeds under a settlement option to provide retirement income or
for some other purpose. Also, for all or part of the proceeds that arise from
the Insured's death, you may be able to choose a manner of payment for the
beneficiary. If the Insured dies and an option has not been chosen, the
beneficiary may be able to choose one. We will pay interest under Option 3 from
the date of death on any proceeds to which no other manner of payment applies.
This will be automatic as we state on page 17. There is no need to ask for it.
You and we may agree on a change in the ownership of this contract. Also, unless
we endorse it to say otherwise, the contract gives you these rights, among
others:
o You may change the beneficiary under it.
o You may borrow on it up to its loan value.
o You may surrender it for its net cash value.
o You may change the allocation of additional premiums, minus any deductions
for state and/or local premium taxes, among the subaccounts and the fixed
account.
o You may transfer amounts among subaccounts and the fixed account.
- --------------------------------------------------------------------------------
TABLE OF BASIC AMOUNTS
- --------------------------------------------------------------------------------
When the proceeds arise from the Insured's death:
- --------------------------------------------------------------------------------
And the Contract Is Then The Basic And We Adjust The
In Force: Amount Is: Basic Amount For:
- --------------------------------------------------------------------------------
other than during the the insurance amount contract debt
days of grace (see page 8) (see page 10) (see page 12)
- --------------------------------------------------------------------------------
during the days the insurance amount contract debt and any
of grace additional premium due
in the days of grace
(see pages 12 and 8)
- --------------------------------------------------------------------------------
This table is part of the Contract Summary and of the Contract.
Page 5 (VFL--85) (P)
II-20
GENERAL PROVISIONS
Definitions.--We define here some of the words and phrases used all through this
contract. We explain others, not defined here, in other parts of the text.
We, Our, Us, and Company.--Pruco Life Insurance Company, an Arizona Corporation.
You and Your.--The owner of the contract.
Insured.--The person named as the Insured on the first page. He or she need not
be the owner.
Example: Suppose we issue a contract on the life of your spouse. You applied for
it and named no one else as owner. Your spouse is the Insured and you are the
owner.
SEC.--The Securities and Exchange Commission.
Issue Date.--The contract date.
Monthly Date.--The contract date and the same day as the contract date in each
later month. But if the contract date is the 29th, 30th or 31st day of the month
and the later month has fewer days, then the monthly date will be the first day
of the next month.
Example: If the contract date is March 9, 1986, the Monthly Dates are each March
9, April 9, May 9 and so on.
Anniversary or Contract Anniversary.--The same day and month as the contract
date in each later year.
Example: If the contract date is March 9, 1986, the first anniversary is March
9, 1987. The second is March 9, 1988, and so on.
Contract Year.--A year that starts on the contract date or on an anniversary.
Example: If the contract date is March 9, 1986, the first contract year starts
then and ends on March 8, 1987. The second starts on March 9, 1987 and ends on
March 8, 1988, and so on.
Contract Month.--A month that starts on a Monthly Date.
Example: If March 9, 1986 is a Monthly Date, a contract month starts then and
ends on April 8, 1986. The next contract month starts on April 9, 1986 and ends
on May 8, 1986, and so on.
Attained Age.--The Insured's attained age at any time is the issue age plus the
length of time since the contract date. You will find the issue age near the top
of page 3.
The Contract.--This policy and the application, a copy of which is attached,
form the whole contract. We assume that all statements in the application were
made to the best of the knowledge and belief of the person(s) who made them; in
the absence of fraud they are deemed to be representations and not warranties.
We relied on those statements when we issued the contract. We will not use any
statement, unless made in the application, to try to void the contract or to
deny a claim.
Contract Modifications.--Only a Company officer with the rank and/or title of
Vice President and above may agree to modify this contract, and then only in
writing.
Non-participating.--This contract will not share in our profits or surplus
earnings. We will pay no dividends on it.
Service Office.--This is the office that will service this contract. Its mailing
address is the one we show in the Contract Data pages, unless we notify you of
another one.
Ownership and Control.--Unless we endorse this contract to say otherwise: (1)
the owner of the contract is the Insured; and (2) while the Insured is living
the owner alone is entitled to (a) any contract benefit and value, and (b) the
exercise of any right and privilege granted by the contract or by us.
Suicide Exclusion.--If the Insured, whether sane or insane, dies by suicide
within two years from the issue date, we will pay no more under this contract
than the sum of the premiums paid.
Currency.--Any money we pay, or that is paid to us, must be in United States
currency. Any amount we owe will be payable at our Service Office.
(Continued on Next Page)
Page 6 (VFL--85) (P)
II-21
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required, we have given the insurance regulator a
detailed statement of how we will make these adjustments.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim,
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 that is to come from the subaccounts if (1) the New York
Stock Exchange is closed; or (2) the SEC requires that trading be restricted or
declares an emergency; or (3) the SEC lets us defer payment to protect our
contract owners. We have the right to postpone paying any portion of the
proceeds greater than the face amount shown on page 3 that is to come from the
fixed account for up to six months.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed,
if we ask you to do so. Then any previous beneficiary's interest will end as of
the date of the request. It will end then even if the Insured is not living when
we file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
II-22
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to what would
have been provided if the contract had been issued at the correct age or sex or
both, based upon the ratio of the accumulated premiums per $1,000 of insurance
for the incorrect age and sex to that for the correct age and sex, both adjusted
for interest at the guaranteed rate. Where required, we have given the insurance
regulator a detailed statement of how we will make these adjustments.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim.
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3} the SEC
lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed,
if we ask you to do so. Then any previous beneficiary's interest will end as of
the date of the request. It will end then even if the Insured is not living when
we file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s} based on that
proof, we will not have to make the payment(s) again.
Page 7 (VFL--85) (TX)
II-23
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required, we have given the insurance regulator a
detailed statement of how we will make these adjustments.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in
the fixed account; (5) the net cash value; (6) the premiums paid, interest
credited and monthly charges made during the year; (7) the interest rate that
will be credited until further notice to the amount in the Fixed Account; (8)
any additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim,
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed,
if we ask you to do so. Then any previous beneficiary's interest will end as of
the date of the request. It will end then even if the Insured is not living when
we file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
II-24
PREMIUMS
Initial Premium.--The initial premium, which we show on page 3, is due on the
contract date. It may be paid at our Service Office or to one of our
representatives. If we are asked to do so, we will give a signed receipt. The
initial premium minus any applicable deductions for state and/or local premium
taxes, becomes the contract fund. (See page 10.)
Additional Premiums.--Additional premiums may be paid as we describe below:
1. An additional premium may be paid if (1) it is permitted according to the
definition of life insurance contained in the applicable federal tax law, and
(2) it does not result in an increase in the insurance amount. If you ask us to
do so, we will let you know the amount of any additional premium allowed and
when it can be paid. We will also include that information as part of the annual
report. (See page 7.)
2. If the contract goes into default, an additional premium sufficient to bring
the contract out of default may be paid during the grace period.
Additional premiums paid in accord with 1 or 2 above minus any applicable
deductions for state and/or local premium taxes, will be added to the contract
fund but will not increase the insurance amount.
Premium Taxes.--State and local taxes on premiums paid vary according to
jurisdiction. We will deduct from each premium paid the appropriate amount
applicable for these taxes.
Default.--If on any monthly date the net cash value equals zero, this contract
is in default. In this case we will tell you what premium payment is needed to
bring the contract out of default.
Grace Period.--We grant 61 days of grace from any Monthly Date on which the
contract goes into default. We will send you a notice of default and state the
amount to pay that will bring the contract out of default. This amount is the
amount that, after deduction of any state and/or local premium taxes, is
sufficient to pay the mortality charges (see page 11) for the Monthly Date on
which the contract goes into default and the next Monthly Date. If that amount
has not been paid by the end of the grace period the contract will end and have
no value.
The Insured might die while the contract is in default during its days of grace.
If so, the proceeds will be reduced by the amount that, after deduction of any
state and/or local premium taxes, is sufficient to pay the mortality charges
which have not yet been deducted for Monthly Dates prior to the date on which
death occurred.
Reinstatement.--If this contract ends as we describe under Grace Period, you may
reinstate it, if all these conditions are met:
1. No more than five years must have elapsed since the date of default.
2. You must give us any facts we need to satisfy us that the Insured is
insurable for the contract.
3. We must be paid an amount that, after deduction of any state and/or local
premium taxes, leaves the balance equal to the sum of:
(a) the mortality charges not previously made for the grace period; and
(b) the mortality charges for the first two monthly dates on or after the date
of reinstatement.
If we approve the reinstatement, these statements apply. The date of
reinstatement will be the date of your request or the date the required premium
is paid, if later. The face amount will be the same as it was at the end of the
grace period. The contract debt will be equal to the contract debt at the end of
the grace period. The contract fund as of the date of reinstatement will be
equal to the amount paid to reinstate the contract, minus any applicable
deductions for state and/or local premium taxes, minus the charges in (a) above,
and plus the contract debt. And we will start to make monthly charges and
credits again as of the first Monthly Date on or after the date of
reinstatement.
II-25
GENERAL PROVISIONS {Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required we have given the insurance regulator a
detailed statement of how we will make these adjustments.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and {9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim,
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed,
if we ask you to do so. Then any previous beneficiary's interest will end as of
the date of the request. It will end then even if the Insured is not living when
we file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
II-26
GENERAL PROVISIONS (Continued)
Misstatement of Age or Sex.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. To do so, we will compute the face amount of insurance
which the initial premium would have bought at the correct age and sex. We will
reconstruct the contract fund and death benefit of the contract, assuming the
insured made the same allocations and paid the same additional premiums, if any,
as under the incorrect contract.
It is possible that, when we reconstruct values, we will find that the correct
contract would be in default past its days of grace while the incorrect contract
was not. In that event, if the insured has died, we will pay what the death
benefit of the correct contract would have been if the insured had died on the
day before the default occurred. If the insured is living, we will inform him or
her of the payment needed to end the default, and a 61 day grace period will
begin on the day we mail that notice.
Incontestability.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
Assignment.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
Annual Report.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other date that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
Payment of Death Claim.--If we settle this contract in one sum as a death claim,
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed,
if we ask you to do so. Then any previous beneficiary's interest will end as of
the date of the request. It will end then even if the Insured is not living when
we file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
Page 7 (VFL--85) (P)
II-27
SEPARATE ACCOUNT
The Account.--The word account, where we use it in this contract without
qualification, means the Pruco Life Single Premium Variable Life Account. This
is a unit investment trust registered with the SEC under the Investment Company
Act of 1940. It is also subject to the laws of Arizona. We own the assets of the
account; we keep them separate from the assets of our general investment
account. We established the account to support variable life insurance
contracts.
Subaccounts.--The account has several subaccounts. We list them on the Contract
Data page(s). You determine, using percentages, how invested premium amounts
will be allocated among the subaccounts. You may choose to allocate nothing to a
particular subaccount. But any allocation you make must be at least 10%; you may
not choose a fractional percent.
Example: You may choose a percentage of 0, or 100, or l0, 11, 12, and so on, up
to 90. But you may not choose a percentage of 1 through 9, or 91 through 99, or
any percent that is not a whole number.
You may change the allocation for additional invested premium amounts at any
time if the contract is not in default. To do so, you must notify us in writing
in a form that meets our needs. The change will take effect on the date we
receive your notice at our Service Office.
Transfers Among Subaccounts and the Fixed Account.--You may transfer amounts
among subaccounts and to the fixed account as often as four times in a contract
year, if the contract is not in default. In addition, at any time in the first
two contract years, the entire amount in the subaccounts may be transferred to
the Fixed account. Transfers out of the fixed account to the subaccounts will be
allowed only with the Company's consent. To do so, you must notify us in writing
in a form that meets our needs. The transfer will take effect on the date we
receive your notice at our Service Office.
The Fund.--The word fund, where we use it in this contract without
qualification, means the fund we identify in the Contract Data pages. The fund
is registered with the SEC under the Investment Company Act of 1940 as an
open-end diversified management investment company. The fund has several
portfolios; there is a portfolio that corresponds to each of the subaccounts of
the account. We list these portfolios in the Contract Data pages.
Account Investments.--We use the assets of the account to buy shares in the
fund. Each subaccount is invested in a corresponding specific portfolio. Income
and realized and unrealized gains and losses from assets in each subaccount are
credited to, or charged against, the subaccount. This is without regard to
income, gains, or losses in our other investment accounts.
We will determine the value of the assets in the account at the end of each
business day. When we use the term business day, we mean a day when the New York
Stock Exchange is open for trading. We might need to know the value of an asset
on a day that is not a business day or on which trading in that asset does not
take place. In this case, we will use the value of that asset as of the end of
the last prior business day on which trading took place.
Example: If we need to know the value of an asset on a Sunday, we will normally
use the value of the asset as of the end of business on Friday.
We will always keep assets in the account with a total value at least equal to
the amount of the investment amounts under contracts like this one. (See page
10.) To the extent those assets do not exceed this amount, we use them only to
support those contracts; we do not use those assets to support any other
business we conduct. We may use any excess over this amount in any way we
choose.
Change in Investment Policy.--A portfolio of the fund might make a material
change in its investment policy. In that case, we will send you a notice of the
change. We will make a change in the investment policy only after having
received the approval of the Insurance Commissioner of the State of Arizona and
having filed a description of the approval process with the insurance regulator
of the state where this contract is delivered.
Change of Fund.--A portfolio might, in our judgment, become unsuitable for
investment by a subaccount. This might happen because of a change in investment
policy, or a change in the laws or regulations, or because the shares are no
longer available for investment, or for some other reason. If that occurs, we
have the right to substitute another portfolio of the fund, or to invest in a
fund other than the one we show on the Contract Data page(s). But we would first
seek approval from the SEC and, where required, the insurance regulator where
this contract is delivered.
FIXED ACCOUNT
The Fixed Account.--In addition to allocating your invested premium amount to
one or more of the subaccounts described above, you may direct all or part of
your invested premium amount into the fixed account. The fixed account is funded
by the general account of Pruco Life. The fixed account is credited with
interest as described under Guaranteed Interest and Excess Interest on pages 10
and 11. As described above, you may also transfer amounts from the subaccounts
to the fixed account. Transfers from the fixed account to the subaccounts may be
made only with the consent of and to the extent allowed by the Company.
Right to Transfer.--You may at any time transfer that portion of your contract
fund allocated to one or more of the subaccounts into the fixed account. The
fixed account earns a fixed rate of interest as described on page 10
Page 9 (VFL-85) (C)
II-28
Exhibit A(5)(aa)
SEPARATE ACCOUNT
The Account.--The word account, where we use it in this contract without
qualification, means the Pruco Life Single Premium Variable Life Account. This
is a unit investment trust registered with the SEC under the Investment Company
Act of 1940. It is also subject to the laws of Arizona. We own the assets of the
account; we keep them separate from the assets of our general investment
account. We established the account to support variable life insurance
contracts.
Subaccounts.--The account has several subaccounts. We list them on the Contract
Data page(s). You determine, using percentages, how invested premium amounts
will be a11ocated among the subaccounts. You may choose to a11ocate nothing to
a particular subaccount. But any allocation you make must be at least 10%; you
may not choose fractional percent.
Example: You may choose a percentage of 0, or 100, or 10, 11, 12, and so on, up
to 90. But you may not choose a percentage of 1 through 9, or 91 through 99, or
any percent that is not a whole number.
You may change the allocation for additional invested premium amounts at any
time if the contract is not in default: To do so, you must notify us in writing
in a form that meets our needs. The change will take effect on the date we
receive your notice at our Service Office.
Transfers Among Subaccounts and the Fixed Account.--You may transfer amounts
among subaccounts and to the fixed account as often as four times in a contract
year, if the contract is not in default. In addition, at any time in the first
two contract years, the entire amount in the subaccounts may be transferred to
the Fixed Account. Transfers out of the fixed account to the subaccounts will
be allowed only with the Company's consent. To do so, you must notify us in
writing in a form that meets our needs. The transfer will take effect on the
date we receive your notice at our Service Office.
The Fund.--The word fund, where we use it in this contract without
qualification, means the fund we identify in the Contract Data pages. The fund
is registered with the SEC under the Investment Company Act of 1940 as an
open-end diversified management investment company. The fund has several
portfolios; there is a portfolio that corresponds to each of the subaccounts of
the account. We list these portfolios in the Contract Data pages.
Account Investments.--We use the assets of the account to buy shares in the
fund. Each subaccount is invested in a corresponding specific portfolio. Income
and realized and unrealized gains and losses from assets in each subaccount are
credited to, or charged against, the subaccount. This is without regard to
income, gains, or losses in our other investment accounts.
We will determine the value of the assets in the account at the end of each
business day. When we use the term business day, we mean a day when the New York
Stock Exchange is open for trading. We might need to know the value of an asset
on a day that is not a business day or on which trading in that asset does not
take place. In this case, we will use the value of that asset as of the end of
the last prior business day on which trading took place.
Example: If we need to know the value of an asset on a Sunday, we will normally
use the value of the asset as of the and of business on Friday.
We will always keep assets in the account with a total value at least equal to
the amount of the investment amounts under contracts like this one. (See page
10.) To the extent those assets do not exceed this amount, we use them only to
support those contracts: we do not use those assets to support any other
business we conduct. We may use any excess over this amount in any way we
choose.
Change in Investment Policy.--A portfolio of the fund might make a material
change in its investment policy. In that case, we will send you a notice of the
change. We will make a change in the investment policy only after having
received the approval of the Insurance Commissioner of the State of Arizona and
having filed a description of the approval process with the insurance regulator
of the state where the contract is delivered.
Change of Fund.--A portfolio might, in our judgment, become unsuitable for
investment by a subaccount. This might happen because of a change in investment
policy, or a change in the laws or regulations, or because the shares are no
longer available for investment, or for some other reason. If that occurs, we
have the right to substitute another portfolio of the fund, or to invest in a
fund other than the one we show on the Contract Data page(s). But we would first
seek approval from the SEC and, where required, the insurance regulator where
this contract is delivered.
FIXED ACCOUNT
The Fixed Account.--In addition to allocating your invested premium amount to
one or more of the subaccounts described above, you may direct all or part of
your invested premium amount into the fixed account. The fixed account is funded
by the general account of Pruco Life. The fixed account is credited with
interest as described under Guaranteed Interest and Excess Interest on pages 10
and 11. As described above, you may also transfer amounts from the subaccounts
to the fixed account. Transfers from the fixed account to the subaccounts may be
made only with the consent of and to the extent allowed by the Company.
Right to Transfer.--You may at any time transfer that portion of your contract
fund allocated to one or more of the subaccounts into the fixed account. The
fixed account earns a fixed rate of interest as described on page 10.
II-29
INSURANCE AMOUNT AND CONTRACT FUND (Continued)
Excess Interest.--Excess interest on that portion of the contract fund in the
fixed account may be credited in addition to the 3% guaranteed interest rate.
The rate of any excess interest is not guaranteed. It will be determined from
time to time and will continue thereafter until a new rate is determined. We may
use different rates of excess interest for different portions of the contract
fund that are in the fixed account.
Mortality Charge.--At the beginning of each contract month we will deduct a
mortality charge from the contract fund. The maximum charge we can deduct is
determined by applying to the coverage amount a monthly rate based on the
Commissioners 1980 Standard Ordinary Mortality Table. The coverage amount is the
difference between the insurance amount and the contract fund.
We may deduct a lower monthly charge than we describe above. The actual monthly
mortality charges we deduct are based on our expectations as to future mortality
experience. At least once every five years, but not more often than once a year,
we will consider the need to change the basis for the charges. We will make
such a change only if we do so for all contracts like this one dated in the same
year as this one.
Where required, we have given the insurance regulator where this contract is
delivered, a detailed description of our method for determining mortality
charges.
CASH VALUE OPTION
Cash Value Option.--You may surrender this contract for its net cash value. To
do so, you must ask us in writing and in form that meets our needs. You must
also send the contract to us.
As of any date the net cash value is the cash value minus any contract debt.
(See page 12.) The cash value is equal to the contract fund minus any surrender
charge that applies.
We will usually pay any net cash value within 7 days after we receive your
request and the contract at our Service Office.
But we have the right to defer payment if (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency; or (3) the SEC lets us defer payments to protect our contract owners.
Surrender Charge.--For each of the first six contract years the surrender charge
is the contract fund times the surrender factor that applies. We show the
surrender factors below. But the surrender charge will not exceed 9% of the
initial premium. For the seventh and later contract years there is no surrender
charge.
- --------------------------------------------------------------------------------
TABLE OF SURRENDER FACTORS
- --------------------------------------------------------------------------------
Contract Surrender Contract Surrender
Year Factor Year Factor
- --------------------------------------------------------------------------------
1 .09 5 .05
2 .08 6 .04
3 .07 7 and later .00
4 .06
- --------------------------------------------------------------------------------
CONTINUATION OF INSURANCE
If the contract ends as we describe under the Grace Period provision on page 8,
we will use any remaining net cash value in the Contract fund, minus any
contract debt, to keep this contract in force as long as that value permits.
To do this, we will first deduct the mortality costs for the Monthly Date on
which the contract went into default and for the next Monthly Date. On each
subsequent Monthly Date, we will deduct an amount sufficient to pay mortality
costs as long as value remains.
II-30
INSURANCE AMOUNT AND CONTRACT FUND (Continued)
Excess Interest.--Excess interest on that portion of the contract fund in the
fixed account may be credited in addition to the 3% guaranteed interest rate.
The rate of any excess interest is not guaranteed. It will be determined from
time to time and will continue thereafter until a new rate is determined. We may
use different rates of excess interest for different portions of the contract
fund that are in the fixed account.
Mortality Charge.--At the beginning of each contract month we will deduct a
mortality charge from the contract fund. The maximum charge we can deduct is
determined by applying to the coverage amount a monthly rate determined as
indicated in the Basis of Computation. The coverage amount is the difference
between the insurance amount and the contract fund.
We may deduct a lower monthly charge than we describe above. The actual monthly
mortality charges we deduct are based on our expectations as to future mortality
experience. At least once every five years, but not more often than once a year,
we will consider the need to change the basis for the charges. We will make such
a change only if we do so for all the contracts like this one dated in the same
year as this one.
Where required, we have given the insurance regulator where this contract is
delivered, a detailed description of our method for determining mortality
charges.
CASH VALUE OPTION
Cash Value Option.--You may surrender this contract for its net cash value. To
do so, you must ask us in writing and in a form that meets our needs. You must
also send the contract to us.
As of any date the net cash value is the cash value minus any contract debt.
(See page 12.) The cash value is equal to the contract fund minus any surrender
charge that applies.
We will usually pay any net cash value within 7 days after we receive your
request and the contract at our Service Office.
But we have the right to defer paying that portion of the payment to be taken
from the subaccounts if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payments to protect our contract owners. We also have the right to
postpone paying that portion of the payment to be taken from the fixed account
for up to six months.
Surrender Charge.--For each of the first six contract years the surrender charge
is the contract fund times the surrender factor that applies. We show the
surrender factors below. But the surrender charge will not exceed 9% of the
initial premium. For the seventh and later contract years there is no
surrender charge.
- --------------------------------------------------------------------------------
TABLE OF SURRENDER FACTORS
- --------------------------------------------------------------------------------
Contract Surrender Contract Surrender
Year Factor Year Factor
- --------------------------------------------------------------------------------
1 .09 5 .05
2 .08 6 .04
3 .07 7 and later .00
4 .06
- --------------------------------------------------------------------------------
II-31
INSURANCE AMOUNT AND CONTRACT FUND (Continued)
Excess Interest.--Excess Interest on that portion of the contract fund in the
fixed account may be credited in addition to the 3% guaranteed interest rate.
The rate of any excess interest is not guaranteed. It will be determined from
time to time and will continue thereafter until a new rate is determined. We may
use different rates of excess interest for different portions of the contract
fund that are in the fixed account.
Mortality Charge.--At the beginning of each contract month we will deduct a
mortality charge from the contract fund. The maximum charge we can deduct is
determined by applying to the coverage amount a monthly rate determined as
indicated in the Basis of Computation. The coverage amount is the difference
between the insurance amount and the contract fund.
We may deduct a lower monthly charge than we describe above. The actual monthly
mortality charges we deduct are based on our expectations as to future mortality
experience. At least once every five years, but not more often than once a year
we will consider the need to change the basis for the charges. We will make such
a change only if we do so for all contracts like this one dated in the same year
as this one.
Where required we have given the insurance regulator where this contract is
delivered, a detailed description of our method for determining mortality
charges.
CASH VALUE OPTION
Cash Value Option.--You may surrender this contract for its net cash value. To
do so, you must ask us in writing and in a form that meets our needs. You must
also send the contract to us.
As of any date the net cash value is the cash value minus any contract debt.
(See page 12.) The cash value is equal to the contract fund minus any surrender
charge that applies.
We will usually pay any net cash value within 7 days after we receive your
request and the contract at our Service Office.
But we have the right to defer payment if (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency; or (3) the SEC lets us defer payments to protect our contract owners.
Surrender Charge.--For each of the first six contract years the surrender charge
is the contract fund times the surrender factor that applies. We show the
surrender factors below. But the surrender charge will not exceed 9% of
the ininal premium. For the seventh and later contract years there is no
surrender charge.
- --------------------------------------------------------------------------------
TABLE OF SURRENDER FACTORS
- --------------------------------------------------------------------------------
Contract Surrender Contract Surrender
Year Factor Year Factor
- --------------------------------------------------------------------------------
1 .09 5 .05
2 .08 6 .04
3 .07 7 and later .00
4 .06
- --------------------------------------------------------------------------------
CONTINUATION OF INSURANCE
If the contract ends as we describe under the Grace Period provision on page 8,
we will use any remaining net cash value in the Contract Fund, minus any
contract debt, to keep this contract in force as long as that value permits.
To do this, we will first deduct the mortality costs for the Monthly Date on
which the contract went into default and for the next Monthly Date. On each
subsequent Monthly Date, we will deduct an amount sufficient to pay mortality
costs as long as value remains.
II-32
Exhibit A(5)(ee)
LOANS (continued)
We will allocate loans and repayments among the subaccounts and the fixed
account in proportion to the amount in each as of the date of loan or repayment.
Only the investment amount will reflect the investment results of the
subaccounts. Since the amount you borrow is removed from the investment amount
and/or the fixed account, a loan may have a permanent effect on the net cash
value of this contract. The longer the loan is outstanding, the greater this
effect is likely to be.
Excess Contract Debt.--If, on a monthly date, contract debt is ever equal to or
more than the cash value, all the contract's benefits will end 61 days after
that monthly date. We will mail a notice to you and any assignee of whom we
know. Also, we may send a notice to the Insured's last known address. In the
notice we will state the amount that, if paid to us, will reduce the contract
debt enough to keep the contract's benefits from ending for a limited time.
Postponement of Loan.--We will usually make a loan within 7 days after we
receive your request at our Service Office. But we have the right to defer
making that portion of the loan to be taken from the subaccounts if (1) the New
York Stock Exchange is closed; or (2) the SEC requires that trading be
restricted or declares an emergency; or (3) the SEC lets us defer payments to
protect our contract owners. We also have the right to postpone making that
portion of the loan to be taken from the fixed account for up to six months.
II-33
GUIDE TO CONTENTS
Page
Contract Data .............................................................3
Rating Class; Schedule of Premiums;
Interest Rates; List of Subaccounts and Portfolios
Service Office
Contract Summary ..........................................................5
Table of Basic Amounts ....................................................5
General Provisions ........................................................6
Definitions; The Contract; Contract Modifications; Non-participating;
Service Office; Ownership and Control; Suicide Exclusion; Currency;
Misstatement of Age or Sex; Incontestability; Assignment; Annual Report;
Payment of Death Claim
Beneficiary ...........................................................3 & 7
Premiums ..............................................................3 & 8
Initial Premium; Additional Premiums; Premium Taxes; Default; Grace
Period; Reinstatement
Separate Account ..........................................................9
The Account; Subaccounts; Transfers Among Subaccounts and the Fixed
Account, The Fund; Account Investments; Change in Investment Policy;
Change of Fund
Fixed Account .............................................................9
Insurance Amount and Contract Fund .......................................10
Insurance Amount; Contract
Fund; Invested Premium Amount; Investment
Amount; Interest Credit; Guaranteed Interest;
Excess Interest; Mortality Charge
Cash Value Option ........................................................11
Cash Value Option; Surrender Charge
Continuation of Insurance ................................................11
Loans ....................................................................12
Loan Requirements; Contract Debt;
Loan Value; Interest Charge; Repayment;
Effect of a Loan; Excess Contract Debt;
Postponement of Loan
Settlement Options .......................................................14
Payee Defined; Choosing an Option; Options
Described; First Payment Due Date; Residue
Described; Income Tables; Withdrawal of
Residue; Designating Contingent Payee(s);
Changing Options; Conditions; Death of Payee
Automatic Mode of Settlement .............................................17
Applicability; Interest on Proceeds; Settlement
at Payee's Death; Spendthrift and Creditor
Basis of Computation .....................................................17
Mortality Table Described; Minimum Legal Values
Attained Age Factors .....................................................18
A copy of the application follows Page 20
II-34
Exhibit A(5)(gg)
PREMIUMS
Initial Premium.--The initial premium, which we show on page 3, is due on the
contract date. It may be paid at our Service Office or to one of our
representatives. If we are asked to do so, we will give a signed receipt. The
initial premium minus any applicable deductions for state and/or local premium
taxes, becomes the contract fund. (See page 10.)
Additional Premiums.--Additional premiums may be, paid as we describe below:
1. An additional premium may be paid if (1) it is permitted according to the
definition of life insurance contained in the applicable federal tax law, and
(2) it does not result in an increase in the insurance amount. If you ask us to
do so, we will let you know the amount of any additional premium allowed and
when it can be paid. We will also include that information as part of the annual
report. (See page 7.)
2. If the contract goes into default, an additional premium sufficient to bring
the contract out of default may be paid during the grace period.
Additional premiums paid in accord with 1 or 2 above minus any applicable
deductions for state and/or local premium taxes, will be added to the contract
fund but will not increase the insurance amount.
Additional premiums may be paid at our Service Office or to one of our
representatives. If we are asked to do so we will give a signed receipt.
Premium Taxes.--State and local taxes on premiums paid vary according to
jurisdiction. We will deduct from each premium paid the appropriate amount
applicable for these taxes.
Default.--If on any monthly date the net cash value equals zero, this contract
is in default. In this case we will tell you what premium payment is needed to
bring the contract out of default.
Grace Period.--We grant 61 days of grace from any Monthly Date on which the
contract goes into default. We will send you a notice of default and state the
amount to pay that will bring the contract out of default. This amount is the
amount that, after deduction of any state and/or local premium taxes, is
sufficient to pay the mortality charges (See page 11.) for the Monthly Date on
which the contract goes into default and the next Monthly Date. If that amount
has not been paid by the end of the grace period the contract will end and have
no value.
The Insured might die while the contract is in default during its days of grace.
If so, the proceeds will be reduced by the amount that, after deduction of any
state and/or local premium taxes, is sufficient to pay the mortality charges
which have not yet been deducted for Monthly Dates prior to the date on which
death occurred.
Reinstatement.--If this contract ends as we describe under Grace Period, you may
reinstate it, if all these conditions are met:
1. No more than three years must have elapsed since the date of default.
2. You must give us any facts we need to satisfy us that the Insured is
insurable for the contract.
3. We must be paid an amount that, after deduction of any state and/or local
premium taxes, leaves the balance equal to the sum of:
(a) the mortality charges not previously made for the grace period; and
(b) the mortality charges for the first two monthly dates on or after the date
of reinstatement.
If we approve the reinstatement, these statements apply. The date of
reinstatement will be the date of your request or the date the required premium
is paid, if later. The face amount will be the same as it was at the end of the
grace period. The contract debt will be equal to the contract debt at the end of
the grace period. The contract fund as of the date of reinstatement will be
equal to the amount paid to reinstate the contract, minus any applicable
deductions for state and/or local premium taxes, minus the charges in (a) above,
and plus the contract debt. And we will start to make monthly charges and
credits again as of the first Monthly Date on or after the date of
reinstatement.
II-14
Exhibit A(5)(hh)
PREMIUMS
Initial Premium.--The initial premium, which we show on page 3, is due on the
contract date. It may be paid at our Service Office or to one of our
representatives. If we are asked to do so, we will give a signed receipt. The
initial premium minus any applicable deductions for state and/or local premium
taxes, becomes the contract fund. (See page 10.)
Additional Premiums.--Additional premiums may be paid as we describe below:
1. An additional premium may be paid if (1) it is permitted according to the
definition of life insurance contained in the applicable federal tax law, and
(2) it does not result in an increase in the insurance amount. If you ask us to
do so, we will let you know the amount of any additional premium allowed and
when it can be paid. We will also include that information as part of the annual
report. (See page 7.)
2. If the contract goes into default, an additional premium sufficient to bring
the contract out of default may be paid during the grace period.
Additional premiums paid in accord with 1 or 2 above minus any applicable
deductions for state and/or local premium taxes, will be added to the contract
fund but will not increase the insurance amount.
Premium Taxes.--State and local taxes on premiums paid vary according to
jurisdiction. We will deduct from each premium paid the appropriate amount
applicable for these taxes.
Default.--If on any monthly date the net cash value equals zero, this contract
is in default. In this case we will tell you what premium payment is needed to
bring the contract out of default.
Grace Period.--We will send you a notice of default and grant 61 days of grace
from the mailing date of that notice. The notice will state the amount to pay
that will bring the contract out of default. This amount is the amount that,
after deduction of any state and/or local premium taxes, is sufficient to pay
the mortality charges (See page 11.) for the Monthly Date on which the contract
goes into default and the next Monthly Date. If that amount has not been paid by
the end of the grace period the contract will end and have no value.
The Insured might die while the contract is in default during its days of grace.
If so, the proceeds will be reduced by the amount that, after deduction of any
state and/or local premium taxes, is sufficient to pay the mortality charges
which have not yet been deducted for Monthly Dates prior to the date on which
death occurred.
Reinstatement.--If this contract ends as we describe under Grace Period, you may
reinstate it, if all these conditions are met:
1. No more than three years must have elasped since the date of default.
2. You must give us any facts we need to satisfy us that the Insured is
insurable for the contract.
3. We must be paid an amount that, after deduction of any state and/or local
premium taxes, leaves the balance equal to the sum of:
(a) the mortality charges not previously made for the grace period; and
(b) the mortality charges for the first two monthly dates on or after the date
of reinstatement.
If we approve the reinstatement, these statements apply. The date of
reinstatement will be the date of your request or the date the required premium
is paid, if later. The face amount will be the same as it was at the end of the
grace period. The contract debt will equal to the contract debt at the end of
the grace period. The contract fund as of the date of reinstatement will be
equal to the amount paid to reinstate the contract, minus any applicable
deductions for state and/or local premium taxes, minus the charges in (a) above,
and plus the contract debt. And we will start to make monthly charges and
credits again as of the first Monthly Date on or after the date of
reinstatement.
Page 8 (VFL--85) (C)
II-15
Exhibit A(5)(ii)
SEPARATE ACCOUNT
The Account.--The word account, where we use it in this contract without
qualification, means the Pruco Life Single Premium Variable Life Account. This
is a unit investment trust registered with the SEC under the Investment Company
Act of 1940. It is also subject to the laws of Arizona. We own the assets of the
account; we keep them separate from the assets of our general investment
account. We established the account to support variable life insurance
contracts.
Subaccounts.--The account has several subaccounts. We list them on the Contract
Data page(s). You determine, using percentages, how invested premium amounts
will be a11ocated among the subaccounts. You may choose to a11ocate nothing to a
particular subaccount. But any allocation you make must be at least 10%; you may
not choose a fractional percent.
Example: You may choose a percentage of 0, or 100, or 10,11,12, and so on,
up to 90. But you may not choose a percentage of 1 through 9, or 91 through 99,
or any percent that is not a whole number.
You may change the allocation for additional invested premium amounts at any
time if the contract is not in default. To do so, you must notify us in writing
in a form that meets our needs. The change will take effect on the date we
receive your notice at our Service Office.
Transfers Among Subaccounts and the Fixed Account.--You may transfer amounts
among subaccounts and to the fixed account as often as four times in a contract
year, if the contract is not in default. In addition, the entire amount in the
subaccounts may be transferred to the Fixed Account at any time in the first two
contract years, or, if we make a material change in the investment policy of a
portfolio of the fund at any time during the life of the contract. Transfers out
of the fixed account to the subaccounts will be allowed only with the Company's
consent. To do so, you must notify us in writing in a form that meets our needs.
The transfer will take effect on the date we receive your notice at our Service
Office.
The Fund.--The word fund, where we use it in this contract without
qualification, means the fund we identify in the Contract Data pages. The fund
is registered with the SEC under the Investment Company Act of 1940 as an
open-end diversified management investment company. The fund has several
portfolios; there is a portfolio that corresponds to each of the subaccounts of
the account. We list these portfolios in the Contract Data pages.
Account Investments.--We use the assets of the account to buy shares in the
fund. Each subaccount is invested in a corresponding specific portfolio. Income
and realized and unrealized gains and losses from assets in each subaccount are
credited to, or charged against, the subaccount. This is without regard to
income, gains, or losses in our other investment accounts.
We will determine the value of the assets in the account at the end of each
business day. When we use the term business day, we mean a day when the New York
Stock Exchange is open for trading. We might need to know the value of an asset
on a day that is not a business day or on which trading in that asset does not
take place. In this case, we will use the value of that asset as of the end of
the last prior business day on which trading took place.
Example: If we need to know the value of an asset on a Sunday, we will normally
use the value of the asset as of the end of business on Friday.
We will always keep assets in the account with a total value at least equal to
the amount of the investment amounts under contracts like this one. (See page
10.) To the extent those assets do not exceed this amount, we use them only to
support those contracts; we do not use those assets to support any other
business we conduct. We may use any excess over this amount in any way we
choose.
Change in Investment Policy.--A portfolio of the fund might make a material
change in its investment policy. In that case, we will send you a notice of the
change. Within 60 days after you receive the notice, or within 60 days of the
effective date of the change, if later, you may transfer the entire amount in
the subaccounts to the Fixed Account.
Change of Fund.--A portfolio might, in our judgment, become unsuitable for
investment by a subaccount. This might happen because of a change in investment
policy, or a change in the laws or regulations, or because the shares are no
longer available for investment, or for some other reason. If that occurs, we
have the right to substitute another portfolio of the fund, or to invest in a
fund other than the one we show on the Contract Data page(s). But we would first
seek approval from the SEC and, where required, the insurance regulator where
this contract is delivered.
FIXED ACCOUNT
The Fixed Account.--In addition to allocating your invested premium amount to
one or more of the subaccounts described above, you may direct all or part of
your invested premium amount into the fixed account. The fixed account is funded
by the general account of Pruco Life. The fixed account is credited with
interest as described under Guaranteed Interest and Excess Interest on pages 10
and 11. As described above, you may also transfer amounts from the subaccounts
to the fixed account. Transfers from the fixed account to the subaccounts may be
made only with the consent of and to the extent allowed by the Company.
Right to Transfer.--You may at any time transfer that portion of your contract
fund allocated to one or more of the subaccounts into the fixed account. The
fixed account earns a fixed rate of interest as described on page 10.
II-16
Exhibit A(5)(jj)
INSURANCE AMOUNT AND CONTRACT FUND
Insurance Amount.--The insurance amount at any time is the greater of (1) the
face amount which we show on page 3 and (2) the contract fund times the attained
age factor that applies. We show the attained age factors on page 18.
Contract Fund.--On the contract date the contract fund is equal to the invested
premium amounts received, (see below), minus any of the charges described in
items (d) through (g) below which may have been due on that date. On any day
after that the contract fund is equal to what it was on the previous day, plus
any invested premium amounts received, plus these items:
(a) any increase due to investment results in the value of the
subaccounts; and
(b) interest at the rates shown below on that portion of the contract fund
that is equal to any contract loan;
Minus these items:
(c) any decrease due to investment results in the value of the
subaccounts;
(d) a charge against the investment amount at a rate of .00245475% a day
(.90% a year) for mortality and expense risks that we assume;
(e) a charge against the investment amount at a rate of .00095723% a day
(.35% a year) for the cost of administering the contract;
(f) any amount charged against the Contract Fund for Federal or State
income taxes;
(g) a charge for the cost of expected mortality;
We describe under Reinstatement on page 8 what the contract fund will be equal
to on any reinstatement date.
Invested Premium Amount.--This is the portion of each premium paid that we add
to the contract fund. It is equal to the premium paid, minus any applicable
deduction for state and/or local premium taxes.
Investment Amount.--The investment amount for this contract is the amount we use
to compute the investment return. The investment amount is allocated among the
subaccounts. The amount of the investment amount and its allocation to
subaccounts depend on (1) how you choose to allocate invested premium amounts;
(2) whether or not you transfer amounts among subaccounts; (3) the investment
performance of the subaccounts to which amounts are allocated or transferred;
(4) the amount and timing of any additional premium payments you make; and (5)
whether or not you take any loan. The account, subaccounts, and account
investments are described on page 9.
The investment amount at any time is equal to the contract fund, minus the
portion of the contract fund equal to any contract loan.
Interest Credit.--On the portion of the contract fund equal to any contract
loan: During each contract year we will use a monthly rate that is equivalent to
an effective annual rate of 5 1/2% on the part of the contract fund equal to the
first amount you borrow in each contract year up to the excess of the target
loan amount over any existing loan. Interest due but not paid on any loan amount
eligible for the 5 1/2% crediting rate will become part of the loan and will
also be credited with interest at 5 1/2%.
For any part of the contract fund equal to the loan amount not eligible for the
5 1/2% crediting rate as described above, we will use a monthly rate that is
equivalent to an effective annual rate of not less than 4%.
On each contract anniversary, we will transfer the part of the contract fund
equal to any contract loan (up to the target loan amount) not eligible for the 5
1/2% crediting rate to the portion of the contract fund eligible for the 5 1/2%
crediting rate.
Target loan amount means an amount equal to 10% of the initial premium for each
completed contract year since the contract date.
Example: Suppose the initial premium is $20,000 and the loan value is enough to
provide the amounts stated here. The target loan amount in the second contract
year is $2,000 (10% of $20,000). In that year you borrow $1,000. Since it is the
first amount you have borrowed, we will credit interest on that part of the
contract fund equal to $1,000 at a monthly rate equivalent to an effective
annual rate of 5 1/2%. If you borrow an additional amount in that contract year,
we will credit interest on that part of the contract fund equal to the
additional loan at a monthly rate equivalent to an effective annual rate of not
less than 4%. In the next contract year your target loan amount would be $4,000
($2,000 for each of the two completed contract years since the Contract Date).
II-17
Exhibit A(5)(kk)
INSURANCE AMOUNT AND CONTRACT FUND (Continued)
Mortality Charge.--We will compute daily and deduct at the beginning of each
contract month a mortality charge from the contract fund. The maximum charge we
can deduct is determined by applying to the coverage amount a monthly rate
determined as indicated in the Basis of Computation. The coverage amount is the
difference between the insurance amount and the contract fund.
We may deduct a lower monthly charge than we describe above. The actual monthly
mortality charges we deduct are based on our expectations as to future mortality
experience. At least once every five years, but not more often than once a year,
we will consider the need to change the basis for the charges. We will make such
a change only if we do so for all contracts like this one dated in the same year
as this one.
Where required, we have given the insurance regulator where this contract is
delivered, a detailed description of our method for determining mortality
charges.
CASH VALUE OPTION
Cash Value Option.--You may surrender this contract for its net cash value. To
do so, you must ask us in writing and in a form that meets our needs. You must
also send the contract to us.
As of any date the net cash value is the cash value minus any contract debt.
(See page 12.) Here is how we will compute the cash value.
1. If the contract is not in default: The cash value on surrender at any time in
the first six contract years is the contract fund, minus a surrender charge. The
cash value on surrender at the end of the sixth contract year or later is the
contract fund.
2. If the contract is in default during its days of grace: We will compute the
net cash value as of the date the contract went into default. But we will adjust
this value for any loan you take out or pay back or any premium payments you
make in the days of grace.
We will usually pay any net cash value within 7 days after we receive your
request and the contract at our Service Office.
But we have the right to defer payment if (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency; or (3) the SEC lets us defer payments to protect our contract owners.
Surrender Charge.--For each of the first six contract years the surrender charge
is the contract fund times the surrender factor that applies. We show the
surrender factors below. But the surrender charge will not exceed 9% of the
initial premium. For the seventh and later contract years there is no surrender
charge.
- --------------------------------------------------------------------------------
TABLE OF SURRENDER FACTORS
- --------------------------------------------------------------------------------
Contract Surrender Contract Surrender
Year Factor Year Factor
- --------------------------------------------------------------------------------
1 .09 5 .05
2 .08 6 .04
3 .07 7 and later .00
4 .06
- --------------------------------------------------------------------------------
II-18
LOANS (continued)
We will allocate loans and repayments among the subaccounts in proportion to the
amount in each as of the date of loan or repayment. Only the investment amount
will reflect the investment results of the subaccounts. Since the amount you
borrow is removed from the investment amount, a loan may have a permanent effect
on the net cash value of this contract. The longer the loan is outstanding, the
greater this effect is likely to be.
Excess Contract Debt.--If, on a monthly date, contract debt is ever equal to or
more than the cash value, all the contract's benefits will end 61 days after
that monthly date. We will mail a notice to you and any assignee of whom we
know. Also, we may send a notice to the Insured's last known address. In the
notice we will state the amount that, if paid to us, will reduce the contract
debt enough to keep the contract's benefits from ending for a limited time.
Postponement of Loan.--We will usually make a loan within 7 days after we
receive your request at our Service Office. But we have the right to defer
making the loan if (1) the New York Stock Exchange is closed; or (2) the SEC
requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payments to protect our contract owners.
EXCHANGE OF CONTRACT
Right to Exchange.--Before the second anniversary you may exchange this contract
for a new contract of fixed benefit insurance on the Insured's life. You will
not have to prove to us that the Insured is insurable. Also, you may make such
an exchange at any time if there is a material change in the investment policy
of a portfolio (see Change in Investment Policy on page 9). When we use the term
new contract we mean the contract for which this contract may be exchanged.
Conditions.--Your right to make this exchange is subject to all these
conditions: (1) You must ask for the exchange in writing in a form that meets
our needs. (2) You must surrender the contract to us. (3) We must have your
request and the contract at our Service Office while the contract is in force
and not in default past its days of grace. (4) You must pay back any contract
debt under this contract, to the extent it may exceed the loan value of the new
contract. (5) You must pay any other charges required for the exchange.
Exchange Date.--The exchange date will be the later of: (1) the date we receive
the contract and your request at our Service Office; and (2) the date we receive
the payment, if any, required for the exchange. The new contract will take
effect on the exchange date only if the Insured is then living. If the new
contract takes effect, this contract will end just before the exchange date.
Contract Specifications.--The new contract will be on the Life Insurance Policy
with Premium Flexibility plan. It will have a face amount equal to the face
amount of this one. It will have the same contract date and issue age as this
contract and be in the same rating class.
If, for any reason, we are not issuing the Life Insurance Policy with Premium
Flexibility Contract on the exchange dates, then the new contract will be
another life plan that we would regularly issue on that date for the same rating
class, amount, issue age and sex.
A charge may be made on exchange in the following situation: If, on the date of
exchange, the contract fund of this contract is less than the tabular contract
fund, a charge will be made for the difference in the two amounts. If the
contract fund of this contract is equal to or greater than the tabular contract
fund, no charge will be made. In these cases, the contract fund of the new
contract will be equal to that of this contract.
Exchange at Other Times.--You may be able to exchange this contract for a fixed
benefit Life Insurance Policy with Premium Flexibility contract at a time other
than those described under Right to Exchange above. But any such exchange may be
made only if we consent, and will be subject to conditions and charges which we
then determine.
II-19
Exhibit A(5)(nn)
LOANS
Loan Requirements.--On or after the first contract anniversary, you may borrow
from us on the contract. Al1 these conditions must be met:
1. The insured is living.
2. The contract is in force.
3. The contract debt will not be more than the loan value. (We explain these
terms below.)
4. As sole security for the loan, you assign the contract to us in a form that
meets our needs.
If there is already contract debt when you borrow from us, we will add the new
amount you borrow to that debt.
Contract Debt.--Contract debt at any time means the loan on the contract, plus
the interest we have charged that is not yet due and that we have not yet added
to the loan.
Example 1: Suppose the contract date is in 1987 and the initial premium was
$10,000. Three months before the anniversary in 1992 the contract has a contract
fund of $15,000. Six monthS ago you borrowed $1,500. By now there is interest of
$45 charged but not yet due. The contract debt is now $1,546, which is made up
of the $1,5OO loan and the $45 interest.
Loan Value.--You may borrow any amount up to the difference between the loan
value and any existing contract debt. On any day, the loan value is equal to 90%
of the cash value.
Example 2: Suppose, in example 1, you want to borrow all that you can. We will
lend you $11,280, which is the difference between the $12,825 loan value and the
$1,545 contract debt. This will increase the contract debt to $12,825. We will
add the new amount borrowed to the existing loan and will charge interest on it,
too.
Interest Charge.--We will charge interest daily on any loan at an effective rate
of 3% a year.
Interest is due on each contract anniversary, or when the loan is paid back if
that comes first. If interest is not paid when due, it will become part of the
loan. Then we will start to charge interest on it, too.
Example 3: Suppose the contract date is in 1987. Six months before the
anniversary in 1996 you borrow $1,000 out of a $15,000 loan value. We charge 6%
a year.
Four months later, but still two months before the anniversary we will have
charged about $20 interest. This amount will be a few cents more or less than
$20 since some months have more days than others. The interest will not be due
until the anniversary unless the loan is paid back sooner. The loan will still
be $1,000. The contract debt will be $1,020, since contract debt includes
interest charged but not yet due.
On the anniversary in 1996 we will have charged about $30 interest. The interest
will then be due.
Example 4: Suppose the $30 interest in example 3 was paid on the anniversary.
The loan and contract debt each became $1,000 right after the payment.
Example 5: Suppose the $30 interest in example 3 was not paid on the
anniversary. The interest became part of the loan, and we began to charge
interest on it, too. The loan and contract debt each became $1,030.
Repayment.--All or part of any contract debt may be paid back at any time while
the insured is living and the contract is not in default. A repayment will first
be applied to reduce the part of the loan, if any, that is subject to the lowest
interest crediting rate. When we settle the contract, any contract debt is due
us. We will make an adjustment so that the proceeds will not include the amount
of that debt.
Effect of a Loan.--When you take a loan, the amount of any loan continues to be
a part of the contract fund. However, the amount equal to the amount of the loan
is credited with interest only at the rates we state on page 10.
We will reduce the contract fund by this amount, and by loan interest that
becomes part of the loan because it is not paid when due. When you repay part or
all of a loan we will increase the contract fund by the amount of loan you
repay, plus, if you repay all the loan, interest credits accrued on the loan (at
the rate we state on page 10) since the last Monthly Date, we will not increase
the contract fund by loan interest that is paid before we make it part of the
loan.
(Continued on Next Page)
II-13
Exhibit A(5)(oo)
AUTOMATIC MODE OF SETTLEMENT
Applicability.--these provisions apply to proceeds arising from the Insured's
death and payable in one sum to a Payee who is a beneficiary. They do not apply
to any periodic payment.
Interest on Proceeds.--We will hold the proceeds at interest under Option 3 of
the Settlement Options provision. The Payee may withdraw the residue. We will
pay it promptly on request. We will pay interest annually unless we agree to pay
it more often. We have the right to pay the residue in one sum after one year if
(1) the Payee is not a natural person who will be paid in his or her own right;
(2) the Payee will be paid as assignee; or (3) the original amount we hold under
Option 3 for the Payee is less than S1,000.
Settlement at Payee's Death.--If the Payee dies and leaves an Option 3 residue,
we will honor any contingent payee provision then in effect. If there is none,
here is what we will do. We will look to the beneficiary designation of the
contract; we will see what other beneficiary(ies), if any, would have been
entitled to the portion of the proceeds that produced the Option 3 residue if
the Insured had not died until immediately after the Payee died. Than we will
pay the residue in one sum to such other beneficiary(ies), in accord with that
designation. But if, as stated in that designation, payment would be due the
estate of someone else, we will instead pay the estate of the Payee.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. Jane was living when the Insured died. Jane later died
without having chosen an option or naming someone other than Paul and John as
contingent payee. If Paul and John are living at Jane's death we owe them the
residue. If only one of them is living then, and if the contract called for
payment to the survivor of them, we owe him the residue. If neither of them is
living then, we owe Jane's estate.
Spendthrift and Creditor.--A beneficiary or contingent payee may not, at or
after the Insured's death, assign, transfer, or encumber any benefit payable. To
the extent allowed by law, the benefits will not be subject to the claims of any
creditor of any beneficiary or contingent payee.
ENDORSEMENTS
(Only we can endorse this contract.)
BASIS OF COMPUTATION
Mortality Table Described.--We base premiums, values and maximum mortality
charges to which we refer in this contract on the Insured's issue age and sex
and on the length of time since the contract date. We use {1) the Commissioners
1980 Standard Ordinary Mortality Table; and (2) continuous functions based on
age last birthday. Monthly mortality charges are equal to one-twelfth of the
corresponding annual charges.
Minimum Legal Values.--The minimum legal values for this contract are at least
as large as those set by law where it is delivered. The minimum legal values are
calculated according to the Standard Nonforfeiture Law for Life Insurance using:
(1) the Commissioners 1980 Standard Ordinary Mortality Table; (2) a rate of
interest of 6% a Year (this interest rate is not guaranteed) and (3) continuous
functions based on age last birthday.
Pruco Life Insurance Company,
Secretary
II-14
Pruco Life Insurance Company
No.________________
A Supplement to the Life Insurance Application for a variable contract
in which __________________ is named as the proposed Insured.
- --------------------------------------------------------------------------------
I BELIEVE THIS CONTRACT MEETS MY INSURANCE NEEDS AND FINANCIAL OBJECTIVES. I
ACKNOWLEDGE RECEIPT OF A CURRENT PROSPECTUS FOR THE CONTRACT. I UNDERSTAND THAT
THE CONTRACT'S VALUE AND DEATH BENEFIT MAY VARY DEPENDING ON THE CONTRACT'S
INVESTMENT EXPERIENCE, BUT THE INSURANCE AMOUNT WILL NEVER BE LESS THAN THE FACE
AMOUNT AS LONG AS THE POLICY IS IN FORCE........................................
...................................................................YES[_] NO[_]
Date______________________ Signature of Applicant____________________
II-15
Exhibit A(11)
II-14
<PAGE>
Exhibit A(ll)
XXX XXX XXX PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE SERVICE OFFICE
XXXXXXXXXXXXXXXXXXXXXXXXXXX P.O. BOX 2925, PHOENIX, AZ 85062
XXXXXXXXXXXXXXXXXXXXXXXXXXX FOR INSURANCE SERVICE CONTACT YOUR
XXXXXXXXXXXXXXXXXXXXXXXXXXX REPRESENTATIVE.
XXXXXXXXXXXXXXXXXXXXXXXXXXX
X - XXXX (REGION - AGENCY CODE)
NOTICE OF WITHDRAWAL RIGHT
IN ORDER TO COMPLY WITH THE LAWS ADMINISTERED BY THE SECURITIES AND EXCHANGE
COMMISSION, WE ARE SENDING YOU THIS NOTICE. PLEASE READ IT CAREFULLY AND KEEP IT
WITH YOUR RECORDS.
YOU HAVE RECENTLY PURCHASED A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
FROM PRUCO LIFE. THE BENEFITS OF THIS CONTRACT DEPEND ON THE INVESTMENT
EXPERIENCE OF THE MONEY MARKET, BOND, COMMON STOCK, AGGRESSIVELY MANAGED
FLEXIBLE, CONSERVATIVELY MANAGED FLEXIBLE AND ZERO COUPON BOND SUBACCOUNTS OF
PRUCO LIFE'S SINGLE PREMIUM VARIABLE LIFE ACCOUNT. THESE SUBACCOUNTS ARE
DESCRIBED IN THE PROSPECTUS THAT WAS GIVEN TO YOU AT THE TIME OF SALE.
YOU HAVE THE RIGHT TO EXAMINE AND CANCEL THIS CONTRACT. UPON ITS RETURN, YOU ARE
ENTITLED TO A FULL REFUND OF ALL PREMIUMS PAID. [WHERE STATE LAW PERMITS, THE
PRIOR SENTENCE WILL READ: "UPON ITS RETURN, YOU ARE ENTITLED TO A REFUND OF ALL
PREMIUS PAID, PLUS OR MINUS ANY CHANGE DUE TO INVESTMENT PERFORMANCE IN THE
VALUE OF THE INVESTED PORTIONS OF SUCH PREMIUMS."] THE CANCELLATION DEADLINE IS
THE LATEST OF:
1. 10 DAYS AFTER YOU HAVE RECEIVED THE CONTRACT.
2. 45 DAYS FROM THE DATE YOU COMPLETED PART 1 OF THE APPLICATION.
3. 10 DAYS FROM THE DATE OF DELIVERY OF THIS NOTICE.
IN DETERMINING WHETHER OR NOT TO CANCEL YOUR CONTRACT, YOU SHOULD CONSIDER,
ALONG WITH OTHER FACTORS SUCH AS THE NEEDS AND OTHER REASONS WHICH MOTIVATED YOU
TO PURCHASE THIS CONTRACT, THE PROJECTED COST AND YOUR ABILITY TO MAKE THE
SCHEDULED PREMIUM PAYMENTS AS STATED IN YOUR CONTRACT. PLEASE CONSULT AND REVIEW
THE PROSPECTUS YOU HAVE RECEIVED. THE PROSPECTUS DESCRIBES THE DEDUCTION FROM
PREMIUMS BEFORE AMOUNTS ARE ALLOCATED TO THE SUBACCOUNTS MENTIONED ABOVE. THE
DEDUCTION IS FOR STATE AND/OR LOCAL PREMIUM TAXES AND IS EQUAL TO THE EXACT
AMOUNT OF ANY SUCH TAXES.
IN ADDITION, THE PROSPECTUS DESCRIBES CERTAIN CHARGES THAT ARE DEDUCTED
PERIODICALLY FROM AMOUNTS ALLOCATED TO THE SUBACCOUNTS. THE PROSPECTUS ALSO
DESCRIBES CHARGES THAT MAY BE ASSESSED UPON SURRENDER.
IF YOU DECIDE TO CANCEL YOUR CONTRACT, COMPLETE THE ENCLOSED FORM AND RETURN IT
ALONG WITH YOUR CONTRACT. THE POSTMARK OF THE RETURNED CONTRACT MUST BE ON OR
BEFORE THE DEADLINE DESCRIBED ABOVE.
II-15
<PAGE>
Exhibit A (11) Cont.
INSTRUCTIONS
Please read carefully
If, after reading the enclosed notice, you decide to return your contract for
cancellation, you must:
1. Sign and date the bottom portion of this form.
2. Mail this notice together with your contract to:
Pruco Life Insurance Company
Pruco Life Service Office
P.O. Box 2925
Phoenix, AZ 85062
3. Make certain that the postmark on the envelope is on or before the
latest date permitted for cancellation as described in the enclosed
notice.
4. Check the box at the bottom if you have not yet received your contract
when mailing this form.
To be Filled Out by Owner
To: Pruco Life
Pursuant to the terms of the notice previously furnished me by Pruco Life, I
hereby return the contract numbered below for cancellation and request a refund
of all premiums paid by me. I release Pruco Life from any claims in connection
with the sale or issuance of this contract, and acknowledge that Pruco Life's
only liability is the refund of the premiums paid for the contract. [Where state
law permits, this paragraph will read: "Pursuant to the terms of the notice
previously furnished me by Pruco Life, I hereby return the contract numbered
below for cancellation and request a refund of all premiums paid by me, plus or
minus any change due to investment performance in the value of the invested
portions of such premiums. I release Pruco Life from any claims in connection
with the sale or issuance of this contract, and acknowledge that Pruco Life's
only liability is the refund of the premiums paid for the contract, plus or
minus any change due to investment performance in the value of the invested
portions of such premiums."]
- ---------------------------- ----------------------------------------
Date Signature of Contract Owner
----------------------------------------
Contract Number
----------------------------------------
Name of Insured
(if other than Owner)
- ------I have not yet received the contract and, should it be received, I will
return it to Pruco Life.
II-16
Exhibit A(12)
II-23
<PAGE>
Exhibit A(12)
-------------
Description of Pruco Life's Issuance, Transfer
and Redemption Procedures for
Discovery Life Plus Insurance Contracts
Pursuant to Rule 6e-3(T)(b)(12)(ii)
and
Method of Computing Adjustments in
Payments and Cash Values Upon
Transfer of Entire amount
from Subaccounts to Fixed-Rate Option
Pursuant to Rule 6e-3(T)(b)(13)(v)(B)
----------------------------------------
This document sees forth the administrative procedures that will be
followed by Pruco Life Insurance Company ("Pruco Life") in connection with the
issuance of its Discovery Life Plus Insurance Contract ("Contract"), the
transfer of assets held thereunder, and the redemption by Contract Owners of
their interests in said Contracts. The document also explains the method that
Pruco Life will follow in making a cash adjustment when the entire amount in the
subaccounts is transferred to a fixed-rate option pursuant to Rule
6e-3(T)(b)(13)(v)(B).
I. Procedures Relating to Issuance and Purchase of the
Contracts
A. Premium Schedules, Face Amounts of Insurance and Underwriting
Standards
Face amounts of insurance for the Contract will not be the same for all
Owners, given the same initial premium. Insurance is based on the principle of
pooling and distribution of mortality risks, which assumes that each Owner pays
a premium and has a face amount of insurance commensurate with
II-24
<PAGE>
- 2 -
the insured's mortality risk as actuarially determined utilizing factors such as
age, sex, health and occupation. A uniform face amount for all insureds, given
the same initial premium, would discriminate unfairly in favor of those insureds
representing greater risks. However, for a given premium, Contracts issued on
insureds of the same age and sex (with the same initial interest guarantee for
the fixed-rate option) who are determined to be insurable will have the same
face amount of insurance.
The underwriting standards and premium processing practices followed by
Pruco Life are similar to those followed in connection with the offer and sale
of fixed-benefit life insurance, modified where necessary to meet the
requirements of the federal securities laws. Pruco Life will have only one
premium class -- "standard". Proposed insureds will either be found to be an
acceptable "standard" risk or will be found to be unacceptable, in which case
the risk will be declined.
B. Application ant Initial Premium Processing
Upon receipt of a completed application form from a prospective Owner,
Pruco Life will follow certain insurance underwriting (i.e., evaluation of risk)
procedures designed to determine whether the proposed insured is insurable. In
the majority of cases this will involve both evaluation of the answers to the
questions on the application and a medical examination. In other cases, the
process may involved other verification procedures, and may require that further
information be provided by the proposed insured before a determination can be
made. A Contract cannot be issued, i.e., physically
II-25
<PAGE>
- 3 -
issued through Pruco Life's computerized issue system, until this underwriting
procedure has been completed.
These processing procedures are designed to provide immediate benefits to
every prospective Owner who pays the initial premium at the time the application
is submitted, without diluting any benefit payable to any existing Owner.
Although a Contract cannot be issued until after the underwriting process has
been completed, such a proposed insured will receive immediate insurance
coverage for the face amount of the Contract, if he or she proves to be
insurable and the Owner has paid the initial premium.
The Contract Date marks the date on which benefits begin to vary in
accordance with the investment performance of the selected subaccounts of the
Pruco Life Single Premium Variable Life Account ("Account"). It is also the date
as of which the insurance age of the proposed insured is determined. It
represents the first day of the Contract year and therefore determines the
Contract anniversary and also the Monthly Dates. It also represents the
commencement of the suicide and contestable periods for purposes of the
Contract.
If the proposed insured proves to be insurable, the Contract Date will be
the date on which the application and initial premium are received by Pruco Life
at its Service Office.
C. Premium Processing
The owner will, in certain circumstances, have the option of paying
additional premiums, thereby increasing Contract values beyond what they would
be if only the initial premium were paid. Additional premiums will be
II-26
<PAGE>
- 4 -
permitted if the qualification of the contract as "life insurance", for purposes
of the Internal Revenue Code, is not thereby jeopardized and if the payment does
not result in an immediate increase in the death benefit payable under the
Contract. Premiums are also permitted to cure defaults and to reinstate the
Contract after it has lapsed. Whenever a premium after the first is received,
unless the Contract is in default past its days of grace, Pruco Life will
subtract the applicable state and/or local premium tax. What is left will be
invested in the Account on the date received (or, if that is not a business day,
on the next business day). There is an exception if the Contract is in default
within its days of grace. Then, to the extent necessary to end the default,
premiums will be credited as of the date of the default or the Monthly Date
after default, and premiums greater than this amount will be credited when
received.
D. Reinstatement
The Contract may be reinstated within three years after default (this
period will be longer if required by state law) unless the Contract has been
surrendered for its cash surrender value. A Contract will be reinstated upon
receipt by Pruco Life of a written application for reinstatement, production of
evidence of insurability satisfactory to Pruco Life and payment of at least the
amount that, after deduction of any state and/or local premium taxes, leaves the
balance equal to the sum of: (a) the mortality charges not previously made for
the grace period, and (b) the mortality charges for the first two Monthly Dates
on or after the date of reinstatement.
II-27
<PAGE>
-5-
Pruco Life will treat the amount paid upon reinstatement as a premium. It
will deduct the applicable state and/or local premium tax. The contract fund of
the reinstated Contract will, immediately upon reinstatement, be equal to this
net premium payment, minus the mortality charges not previously made for the
grace period, plus the contract debt, plus an amount equal to the contingent
deferred sales charge that would be charged were the Contract surrendered
immediately after reinstatement. The face amount will be the same as it was at
the end of the grace period. The contract debt will be equal to the contract
debt at the end of the grace period. The original Contract Date still controls
for purposes of calculating any subsequent contingent deferred sales charges.
The reinstatement will take effect as of the date the required proof of
insurability and payment of the reinstatement amount have been received by Pruco
Life at its Service Office.
E. Repayment of Loan
-----------------
A loan made under the Contract may be repaid with an amount equal to the
monies borrowed plus interest which accrues daily at a fixed annual rate of
6%.
When a loan is made, the amount of any loan continues to be a part of the
contract fund. However, the amount equal to the amount of the loan is not part
of the Account. Instead, interest will be credited as follows:
1. The part of the loan equal to the first amount borrowed in
each contract year up to the excess of the target loan amount over any
existing loan will be credited with interest at an annual rate of
5-1/2%. Target loan amount means an amount equal to 10% of the initial
premium for each completed contract year.
II-28
<PAGE>
- 6 -
2. The part of the loan not eligible for the 5-1/2% crediting
rate will be credited with interest at an annual rate of 4%.
3. On each contract anniversary, Pruco Life will transfer the
part of the loan (up to the target loan amount) not previously
eligible for the 5-1/2% crediting rate to the amount eligible for that
rate.
Upon repayment of Contract debt, the payment will be added to the Account
and allocated among the subaccounts in proportion to the amounts in each
subaccount attributable to the Contract as of the date of repayment.
II. Transfer Among Subaccounts
The Account will have nine subaccounts, each of which is invested in shares
of a corresponding portfolio of the Pruco Life Series Fund, Inc. ("Fund"), which
is registered under the 1940 Act as an open-end diversified management
investment company. The Owner may, up to four times in each contract year,
transfer amounts from one subaccount to another or to the fixed-rate option. All
or a portion of the amount credited to a subaccount may be transferred, but if
only a portion is transferred out of a subaccount, the transfer may not result
in less than $300 being held on the day of transfer in either the subaccount
from which the transfer is made or the subaccount to which the transfer is made.
Transfers will take effect on the day a proper written request is received
at a Pruco Life Service Office. The request may be in terms of dollars, such as
a request to transfer $10,000 from one subaccount to another,
II-29
<PAGE>
- 7 -
or may be in terms of a percentage reallocation among subaccounts. In the later
case, as with premium reallocations, the percentages must be in whole numbers.
Transfers from the fixed-rate option to the subaccounts are permitted once
each contract year and only during the one-month period beginning on the
contract anniversary. The maximum amount which may be transferred out of the
fixed-rate option each year is the greater of (a) 25% of the amount in the
fixed-rate option, and (b) $2500. Requests received prior to the contract
anniversary will be effected on the contract anniversary. Requests received
within the one-month period beginning on the contract anniversary will be
effected as of the end of the business day on which the request is received.
III. "Redemption" Procedures: Surrender and Related Transactions
A. Surrender for Cash Value
If the insured party under a Contract is alive, Pruco Life will pay, within
seven days, the Contract's net cash value as of the date of receipt at its
Service Office of the Contract and a signed request for surrender. The
Contract's net cash value (i.e., its cash surrender value) is computed as
follows:
1. If the Contract is not in default: The net cash value or cash
surrender value at any time in the first six contract years is the
contract fund, minus a surrender charge, minus contract debt. The net
cash
II-30
<PAGE>
- 8 -
value on surrender at the end of the 6th contract year or later is the
contract fund minus contract debt.
The amount of the surrender charge depends upon the contract year
in which the Contract is surrendered. If the Contract is surrendered
in the first year, the surrender charge will be 9% of the contract
fund. For each year after the first that the Contract is in effect,
the surrender charge as a percent of the contract fund is reduced by
1% until it reaches 4% in the 6th contract year. No surrender charge
is imposed on surrenders after the 6th contract year. Also, in no
event will the surrender charge ever exceed 9% of the initial premium.
2. If the Contract is in default during its days of grace, the
net cash value on surrender will be equal to zero.
3. If the Contract is in default beyond its days of grace, the
net cash value on surrender will be equal to zero.
In lieu of the payment of the net cash value in a single sum upon
surrender of a Contract, an election may be made by the Owner to apply
all or a portion of the proceeds under one of the fixed benefit
settlement options described in the Contract or, with the approval of
Pruco Life, a combination of options. An option is available only if
the proceeds to be applied are
II-31
<PAGE>
- 9 -
$l,OOO or more or would result in periodic payments of at least $20.00. The
fixed benefit settlement options are subject to the restrictions and limitations
set forth in the Contract.
B. Death Claims
Pruco Life will pay a death benefit to the beneficiary within seven days
after receipt at its Service Office of due proof of death of the insured, and
all other requirements necessary to make payment.1/ The following describes the
death benefit if the Contract is not in default past its days of grace. The
death benefit is the greater of: (a) the face amount, and (b) the contract fund
times the attained age factor that applies. Attachment 1 to this exhibit shows
the attained age factors. The death benefit will be adjusted for any contract
debt.
The proceeds payable on death also will include interest (at a rate
determined by Pruco Life from time to time) from the date that the death benefit
is computed (the date of death) until the date of payment.
Pruco Life will make payment of the death benefit out of its general
account, and will transfer assets from the Account to the general account in an
amount equal to the portion of the contract fund in the Account.
- ---------------
1/ State insurance law impose various requirements, such as receipt of a tax
waiver, before payment of the death benefit may be made. In addition, payment of
the death benefit is subject to the provisions of the Contract regarding suicide
ant incontestability. In the event Pruco Life should contest the validity of a
death claim, an amount equal to the portion of the Contract's contract fund held
in the Account will be withdrawn from the Account and held in Pruco Life's
general account.
II-32
<PAGE>
- 10 -
In lieu of payment of the death benefit in a single sum, an election may be
made to apply all or a portion of the proceeds under one of the fixes benefit
settlement options described in the Contract or, with the approval of Pruco
Life, a combination of options. The election may be mate by the Owner during the
insures's lifetime, or, if no election is in effect at death, by the
beneficiary. An option in effect at death may not be changes to another form of
benefit after death. An option is available only if the proceeds to be applied
are $1,000 or more or would result in periodic payments of at least $20.00. The
fixed benefit settlement options are subject to the restrictions and limitations
set forth in the Contract.
C. Default and Options on Lapse
The Contract is in default on any Monthly Date on which the net cash value
equals zero. Monthly Dates occur on the Contract Date and in each later month on
the same day in the month as the Contract Date. The Contract provides for a
61-day grace period, commencing with the mailing date of the notice of default,
in which to remedy the default. The insurance coverage continues in force during
the grace period, but if the insured ties during the grace period, any charges
due during the grace period are deducted from the amount payable to the
beneficiary.
If the amount needed to bring the Contract out of default is not paid by
the end of the grace period, the Contract will end and have no value.
D. Loans
The Contract provides that an Owner, if the Contract is in force, may take
out a loan at any time a loan value is available. The owner may
II-33
<PAGE>
- 11 -
borrow money on completion of a form satisfactory to Pruco Life. The Contract is
the only security for the loan. Disbursement of the amount of the loan will be
made within seven days of receipt of the form at Pruco Life's Service Office.
The Account will be debited in the amount of the loan on the day the for is
received. The percentage of the loan withdrawn from each subaccount of the
Account will be equal to the percentage of the value of the assets relating to
the Contract held in such subaccounts to the value of such assets held in the
Account. An Owner may borrow up to the Contract's loan value. During the first
contract year, the loan value is zero. After the first contract year, the loan
value is 90% of the cash value. The loan provisions have previously been
described. See pp. 5-6.
A loan does not affect the amount of any additional premiums which may be
paid. When a loan is made, the contract fund is not reduced but the value of the
assets relating to the Contract held in the Account is reduced. Accordingly, the
daily changes in the net cash value will be different from what they would have
been had no loan been taken. Cash values are thus permanently affected by any
Contract debt, whether or not repaid.
On settlement the amount of any Contract debt is subtracted from the
insurance proceeds.
If Contract debt ever becomes equal to or more than what the net cash value
would be if there were no Contract debt, all the Contract's benefits will end 61
days after notice is mailed to the Owner and any known assignee, unless
repayment of an amount sufficient to end the default is made within that period.
II-34
<PAGE>
E. When Proceeds are Paid
In general, Pruco Life will pay any death benefit, cash surrender value, or
loan proceeds within seven days after receipt at a Pruco Life Service Office of
all the documents required for such a payment. Other than the death benefit,
which is determined as of the date of death, the amount will be determined as of
the date of receipt. However, Pruco Life may delay payment of the cash surrender
value that is in the subaccounts and any portion of the death benefit due under
the Contract in excess of the face amount if (1) the disposal or valuation of
the Account's assets is not reasonably practicable because the New York Stock
Exchange is closed, trading is restricted by the SEC, or the SEC declares that
an emergency exists; or (2) the SEC by order permits postponement of payment to
protect Pruco Life's contract owners. In those states which require such a
provision in the Contract, Pruco Life has the right to postpone paying the
amount of any cash surrender value allocable co the fixed-rate option for up to
six months. If payment is delayed for more than 30 days, Pruco Life will pay
interest at the rate of at least 3% a year.
IV. Cash Adjustment Pursuant to
Rule 6e-3(T)(b)(13)(v)(B)
At any time during the first 24 months after a Contract is issued, so long
as the Contract is not in default, the Owner may transfer the entire amount in
the subaccounts to the fixed-rate option. This is funded by Pruco Life's general
account, with guaranteed minimum values. No evidence of insurability will be
required to make such a transfer. The policy's contract
II-35
<PAGE>
- 13 -
fund and death benefit will be the same as before the transfer. The policy will
retain the same issue date and risk classification for the insured. It is not
necessary that any outstanding Contract debt be repaid.
At the time of the exchange, Pruco Life will transfer the portion of the
original Contract's contract fund held in the Account to the general account.
II-36
SETTLEMENT OPTIONS TO PROVIDE ACCELERATION OF DEATH BENEFITS
Subject to all the provisions of this rider and of the rest of
the contract, we will make available the payments described below
if the Insured becomes terminally ill, has an organ transplant,
or is receiving care in a nursing home.
Definition Convertible Proceeds.--The proceeds payable under this contract
at the death of the Insured, after adjustment for any contract
debt, excluding any term insurance arising from supplementary
benefits (except level term insurance riders still in the
conversion period and for which we charge a premium).
Benefit Base.--The value we will use to determine the monthly
benefit payable under the terminal illness option or the nursing
home option. It will be computed based on the amount of
convertible proceeds you elect to place under the option and a
reduced life expectancy, calculated by us, that recognizes the
Insured's eligibility for the benefit. We will also consider,
when applicable:
1. expected future premiums;
2. future dividends according to the scale in effect when we
make the computation;
3. continuation of any reduction in contractually guaranteed
charges;
4. continuation of the current rate of any excess interest
credited on contract values; and
5. an expense charge of up to $150.
The benefit base will be at least as great as the net cash value
of the contract multiplied by the percentage of the convertible
proceeds placed under the terminal illness option or the nursing
home option, whichever is elected.
Eligible Organ Transplant Center.--A facility licensed or
approved as an organ transplant center by the state in which it
is located.
Eligible Nursing Home.--An institution or special nursing unit of
a hospital which meets at least one of the following
requirements:
1) it is Medicare approved as a provider of skilled nursing
care services; or
2) it is licensed as a skilled nursing home or as an
intermediate care facility by the state in which it is
located; or
3) it meets all the requirements listed below:
a. it is licensed as a nursing home by the state in which
it is located;
b. its main function is to provide skilled, intermediate,
or custodial nursing care;
c. it is engaged in providing continuous room and board
accommodations to 3 or more persons;
d. it is under the supervision of a registered nurse (RN)
or licensed practical nurse (LPN);
e. it maintains a daily medical record of each patient;
and
f. it maintains control and records for all medications
dispensed.
Institutions which primarily provide residential facilities are
not eligible nursing homes.
Terminal If we receive evidence satisfactory to us, including
Illness certification by a licensed physician, that the Insured's life
Option expectancy is 6 months or less, you may elect this option to
provide equal monthly payments for 6 months. For each $1,000 of
benefit base, each payment will be at least $168.37, which
assumes an annual interest rate of 5%.
If the Insured dies before all the payments have been made, we
will pay the beneficiary in one sum the present value of the
remaining payments, calculated at the interest rate we used to
determine those payments.
II-7
<PAGE>
If you do not wish to receive monthly payments, you may elect to
receive a single sum of equivalent value.
Organ You may elect this option if the Insured has a heart, liver,
Transplant heart-lung, or bone marrow transplant prescribed by a licensed
Option physician as necessary due to illness, injury, or infirmity. You
may choose the amount you wish to receive, up to the lesser of
the cost of the transplant and 75% of the convertible proceeds,
but no more than $250,000. This amount will be paid to you in a
single sum unless you ask to be paid in instalments. In that
case, we will pay the equivalent amount in 6 monthly payments.
The transplant must be performed after the contract date in an
eligible organ transplant center. We must have your request for
payment at our Home Office no later than 90 days after the
transplant has been performed.
Nursing Home If (1) the Insured is receiving care in an eligible nursing home
Option and has received such care continuously for the preceding six
months, and (2) we receive evidence satisfactory to us, including
certification by a licensed physician, that the Insured is
expected to remain in the nursing home until death, you may elect
level monthly payments for the number of years shown in the table
that follows. For each $1,000 of benefit base, each payment will
be at least the minimum amount shown in that table, which assumes
an annual interest rate of 5%.
ATTAINED AGE PAYMENT PERIOD MINIMUM MONTHLY PAYMENT FOR
OF INSURED IN YEARS EACH $1,000 OF BENEFIT BASE
64 and under 10 $ 10.50
65 - 67 8 12.56
68 - 70 7 14.02
71 - 73 6 15.99
74 - 77 5 18.74
78 - 81 4 22.89
82 - 86 3 29.80
87 and over 2 43.64
If the Insured dies before all the payments have been made, we
will pay the beneficiary in one sum the present value of the
remaining payments, calculated at the interest rate we used to
determine those payments.
If we agree, you may elect a longer payment period than that
shown in the table; if you do, monthly payments will be reduced
so that the present value of the monthly payments for the longer
payment period is equal to the present value of the payments for
the period shown in the table, calculated at an interest rate of
at least 5%.
We reserve the right to set a maximum monthly benefit that we
will pay under this option. If we set a maximum, it will be at
least $5,000; we will advise you of the amount before the payment
period begins.
If you do not wish to receive monthly payments, you may elect to
receive a single sum of equivalent value.
Effect on The convertible proceeds will be reduced by any amount used under
Contract one of these options.
If you use only a portion of your convertible proceeds under one
of these options, the contract will remain in force and reduced
premiums will be payable. For insurance included in the
convertible proceeds, premiums, values, and the amount of
insurance will be reduced in the same proportion as the reduction
in convertible proceeds. Insurance not included in the
convertible proceeds will be unaffected.
If you we only a portion of your convertible proceeds under the
terminal illness option or the nursing home option, the remaining
convertible proceeds must be at least $25,000.
II-8
<PAGE>
If you use all of your convertible proceeds under the terminal
illness option or the nursing home option, all other benefits
under the contract based on the Insured's life will end. Any
insurance under the contract on the life of someone other than
the Insured will remain in effect and we will waive all future
premiums for this insurance.
Conditions Your right to receive payment under any of these options is
subject to the following conditions:
1. The contract must be in force other than as extended
insurance.
2. You must elect the option in writing in a form that meets
our needs.
3. The contract must not be assigned except to us as security
for a loan.
4. We reserve the right to set a minimum of no more than
$50,000 on the amount of convertible proceeds you may place
under an option.
5. You must send us the contract.
6. The primary purpose of life insurance is to meet your estate
planning needs. This benefit provides for the accelerated
payment of life insurance proceeds and is not intended to
cause you to involuntarily invade proceeds ultimately
payable to the named beneficiary. Therefore, accelerated
death benefit proceeds will be made available to you on a
voluntary basis only. Accordingly:
(a) If you are required by law to exercise this option to
satisfy the claims of creditors, whether in bankruptcy
or otherwise, you are not eligible for this benefit.
(b) If you are required by a government agency to exercise
this option in order to apply for, obtain, or retain a
government benefit or entitlement, you are not eligible
for this benefit.
Right to If you ask us in writing and send us the contract, we will cancel
Cancel this rider.
Rider attached to and made a part of this contract
on the Contract Date
Pruco Life Insurance Company,
By /s/ DOROTHY K. LIGHT
Secretary
II-9
SETTLEMENT OPTIONS TO PROVIDE ACCELERATION OF DEATH BENEFITS
Subject to all the provisions of this rider and of the rest of the contract, we
will make the payments described below if the Insured is terminally ill or is
confined to a nursing home.
This rider is non-participating. Any dividend we pay under this contract will be
the same as the one we pay under a contract that is like this one in all other
respects but that does not have this rider.
Definitions
Convertible Proceeds. -- The proceeds we would pay under this contract at the
death of the Insured, less any contract debt and any term insurance that comes
from supplementary benefits (except level term insurance riders still in the
conversion period and for which we charge a premium).
Benefit Base. -- The value we will use to determine the monthly benefit we will
pay under the terminal illness option or the nursing home option. It will be
computed based on: (1) the amount of convertible proceeds you place under the
option; and (2) a reduced life expectancy. When we compute the life expectancy
and the benefit base, we will use our assumptions. We may change those
assumptions from time to time. We will consider, among other things, the
Insured's age and sex and which of the options is being applied for. We will
also consider, if they apply:
1. expected future premiums;
2. future dividends at the scale in effect when we make the computation;
3. continuation of any reduction in guaranteed charges;
4. continuation of the current rate of any excess interest credited on
contract values; and
5. a processing charge of up to $150.
The benefit base for an option will be at least as great as the net cash value
of the contract multiplied by the percentage of the convertible proceeds placed
under that option.
Eligible Nursing Home. -- An institution or special nursing unit of a hospital
which meets at least one of the following requirements:
1) it is Medicare approved as a provider of skilled nursing care services; or
2) it is licensed as a skilled nursing home or as an intermediate care
facility by the state in which it is located; or
3) it meets all the requirements listed below:
a. it is licensed as a nursing home by the state in which it is located;
b. its main function is to provide skilled, intermediate, or custodial
nursing care;
c. it is engaged in providing continuous room and board accommodations to
3 or more persons;
d. it is under the supervision of a registered nurse (RN) or licensed
practical nurse (LPN);
e. it maintains a daily medical record of each patient; and
f. it maintains control and records for all medications dispensed.
Institutions which primarily provide residential facilities are not eligible
nursing homes.
Terminal Illness Option
To choose this option you must give us evidence that satisfies us that the
Insured's life expectancy is 6 months or less; part of that evidence must
be a certification by a licensed physician. This option provides equal
monthly payments for 6 months. For each $1,000 of benefit base, each
payment will be at least $168.37; this assumes an annual interest rate of
5%.
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<PAGE>
If the Insured dies before all payments have been made, we will pay the
beneficiary in one sum. The one sum we pay will be the present value of the
payments that remain; we will compute the value based on the interest rate we
used to determine those payments.
If you do not want monthly payments, we will pay you the benefit base in one
sum if you ask us to.
Nursing Home Option
You may choose this option if: (1) the Insured is confined to an eligible
nursing home and has been confined there for all of the preceding six months;
and (2) you give us evidence that satisfies us that the Insured is expected to
stay in the nursing home until death. Part of that evidence must be a
certification by a licensed physician. This option provides level monthly
payments for the number of years shown in the table that follows. For each
$1,000 of benefit base, each payment will be at least the minimum amount shown
in the table. The table uses an annual interest rate of 5%; we may use a higher
rate.
ATTAINED AGE OF INSURED PAYMENT PERIOD MINIMUM MONTHLY PAYMENT FOR
IN YEARS EACH $1,000 OF BENEFIT BASE
64 and under 10 $10.50
65-67 8 12.56
68-70 7 14.02
71-73 6 15.99
74-77 5 18.74
78-81 4 22.89
82-86 3 29.80
87 and over 2 43.64
If the Insured dies before all the payments have been made, we will pay the
beneficiary in one sum. The one sum we pay will be the present value of the
payments that remain; we will compute the value based on the interest rate we
used to determine those payments.
If we agree, you may choose a longer payment period than that shown in the
table; if you do, monthly payments will be reduced so that the present value of
the payments is the same. We will use an interest rate of at least 5%.
We reserve the right to set a maximum monthly benefit that we will pay under
this option. If we do so, it will be at least $5,000.
If you do not want monthly payments, we will pay you the benefit base in one sum
if you ask us to.
Effect on Contract
The convertible proceeds will be reduced by any amount converted under one of
these options.
If you convert only a part of your convertible proceeds, the contract will stay
in force and premiums will be reduced. For insurance included in the convertible
proceeds, values and the amount of the insurance will be reduced in the same
proportion as the reduction in convertible proceeds. The new premiums will be
the ones that would apply if the contract had been issued at the reduced amount.
Insurance not included in the convertible proceeds will not be affected.
If you convert only a part of your convertible proceeds, the convertible
proceeds that remain must be at least $25,000.
If you convert all of your convertible proceeds, all other benefits under the
contract based on the Insured's life will end. Any insurance under the contract
on the life of someone other than the Insured will stay in effect; we will waive
all future premiums for that insurance.
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<PAGE>
Conditions
Your right to be paid under one of these options is subject to the following
conditions:
1. The contract must be in force other than as extended insurance.
2. You must choose the option in writing in a form that meets our needs.
3. The contract must not be assigned except to us as security for a loan.
4. We reserve the right to set a minimum of no more than $50,000 on the amount
of convertible proceeds you may place under an option.
5. You must send us the contract.
6. The main purpose of life insurance is to meet your estate planning needs.
This benefit provides for the accelerated payment of life insurance
proceeds. It is not meant to cause you to involuntarily invade proceeds
ultimately payable to the named beneficiary. Accelerated death benefits
will be made available to you on a voluntary basis only. Therefore:
(a) If you are required by law to use this option to meet the claims of
creditors, whether in bankruptcy or otherwise, you are not eligible
for this benefit.
(b) If you are required by a government agency to use this option in order
to apply for, obtain, or keep a government benefit or entitlement, you
are not eligible for this benefit.
Right to Cancel
If you ask us in writing and send us the contract, we will cancel this rider.
Rider attached to and made a part of this contract on the Contract Date
Pruco Life Insurance Company,
By [ILLEGIBLE]
SPECIMEN
Secretary
II - 12
CLIFFORD I. KIRSCH
Chief Legal Officer
PRUCO LIFE INSURANCE COMPANY
[LOGO] 213 Washington Street, Newark, NJ 07102-2992
201 802-7333 Fax: 201 802-8357
April 29, 1999
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
Gentlemen:
In my capacity as Chief Legal Officer of Pruco Life Insurance Company ("Pruco
Life"), I have reviewed the establishment of Pruco Life Single Premium Variable
Life Account ("the Account") on April 15, 1985 by the Executive Committee of the
Board of Directors of Pruco Life as a separate account for assets applicable to
certain single premium variable life insurance contracts, pursuant to the
provisions of Section 20-651 of the Arizona Insurance Code. I was responsible
for oversight of the preparation and review of the Registration Statement on
Form S-6, as amended, filed by Pruco Life with the Securities and Exchange
Commission (Registration Number 2-99260) under the Securities Act of 1933 for
the registration of certain single premium variable life insurance contracts
issued with respect to the Account.
I am of the following opinion:
(1) Pruco Life was duly organized under the laws of Arizona and is a
validly existing corporation.
(2) The Account has been duly created and is validly existing as a
separate account pursuant to the aforesaid provisions of New Jersey
law.
(3) The portion of the assets held in the Account equal to the reserve and
other liabilities for variable benefits under the single premium
variable life insurance contracts is not chargeable with liabilities
arising out of any other business Pruco Life may conduct.
(4) The single premium variable life insurance contracts are legal and
binding obligations of Pruco Life in accordance with their terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Clifford E. Kirsch, Esq.
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[LOGO]
IKWAHN OH, FSA, MAAA
Vice President & Actuary
Pruco Life Insurance Company
71 Hanover Road
Florham Park, NJ 07932-1597
Tel (973) 966-3243
EXHIBIT 6
April 29, 1999
Pruco Life Insurance Company
213 Washington Street
Newark, NJ 07102-2992
To Pruco Life Insurance Company:
This opinion is furnished in connection with the registration by Pruco Life
Insurance Company of single premium variable life insurance contracts
("Contracts") under the Securities Act of 1933. The prospectus included in
Post-Effective Amendment No. 23 to Registration Statement No. 2-99260 on form
S-6 describes the Contract. I have reviewed the Contract form and I have
participated in the preparation and review of the Registration Statement and
Exhibits thereto. In my opinion:
(1) The illustrations of face amounts of insurance included in the section
entitled "Some typical face amounts" ("Amount of Life Insurance"),
based on the assumptions stated in the illustrations, are consistent
with the provisions of the Contract.
(2) The illustrations of death benefits included in the section entitled
"Increase in death benefit due to favorable investment experience"
("Amount of Life Insurance"), based on the assumptions stated in the
illustrations, are consistent with the provisions of the contract.
(3) the illustrations of cash surrender values and death benefits included
in the section entitled "Illustrations", based on the assumptions
stated in the illustrations, are consistent with the provisions of the
Contract. The rate structure of the Contract has not been designed so
as to make the relationship between the premium and benefits, as shown
in the illustrations, appear more favorable to a prospective purchaser
of a Contract for male age 35 or female age 55, than to prospective
purchasers of Contracts on insureds of 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.
Very truly yours,
Ikwahn OH, FSA, MAAA
Vice President & Actuary
Pruco Life Insurance Company
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