AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1999
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FILE NO. 033-50884
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7 TO FORM S-1
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NORTHBROOK LIFE INSURANCE COMPANY
(Exact Name of Registrant)
ARIZONA 36-3001527
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062
847-402-2400
(Address and Phone Number of Principal Executive Office)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
NORTHBROOK LIFE INSURANCE COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847-402-2400
(Name, Complete Address and Telephone Number of Agent for Service)
COPIES TO:
RICHARD T. CHOI, ESQUIRE CHRISTINE A. EDWARDS, ESQ.
FREEDMAN, LEVY, KROLL & SIMONDS DEAN WITTER REYNOLDS INC.
1050 CONNECTICUT AVENUE, N.W. TWO WORLD TRADE CENTER, 74TH FLOOR
SUITE 825 NEW YORK, NY 10048
WASHINGTON, D.C. 20036-5366
Approximate date of commencement of proposed sale to the public: The annuity
contract covered by this registration statement is to be issued promptly and
from time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
<PAGE>
THE CUSTOM ANNUITY
Northbrook Life Insurance Company Prospectus dated May 1, 1999
3100 Sanders Road, Northbrook, IL 60062
Telephone Number: 1-800-654-2397
Northbrook Life Insurance Company ("Northbrook") has issued The Custom Annuity,
a group and individual flexible premium deferred annuity contract ("Contract").
This prospectus contains information about the Contract that you should know
before investing. Please keep it for future reference.
The Contracts are no longer being offered for sale. However, if you have already
purchased a Contract, you may continue to add to it. Each subsequent payment
must be at least $1,000.
The Securities and Exchange Commission has not approved
or disapproved the securities described in this
prospectus, nor has it passed on the accuracy or the
adequacy of this prospectus. Anyone who tells you
IMPORTANT otherwise is committing a federal crime.
NOTICES
The Contracts are not FDIC insured.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
Overview Important Terms........................................
The Contract At A Glance...............................
How the Contract Works.................................
The Contract...........................................
Purchases and Contract
Value..................................................
Contract Features Guarantee Periods......................................
Expenses...............................................
Access To Your Money...................................
Income Payments........................................
Death Benefits.........................................
More Information:
Northbrook.........................................
Other Information The Contract.......................................
Qualified Plans....................................
Legal Matters......................................
Year 2000..........................................
Taxes..................................................
Experts................................................
Annual Reports and Other Documents.....................
Appendix A - Market Value Adjustment...................
</TABLE>
<PAGE>
IMPORTANT TERMS
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This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
Page
Accumulation Phase........................................
Annuitant.................................................
Automatic Additions Program...............................
Automatic Laddering Program...............................
Beneficiary...............................................
*Contract ................................................
Contract Value............................................
Contract Owner ("You") ...................................
Due Proof of Death........................................
Free Withdrawal Amount....................................
Northbrook ("We").........................................
Guarantee Periods........................................
Income Plan ..............................................
Issue Date ...............................................
Market Value Adjustment ..................................
Payout Phase..............................................
Payout Start Date .......................................
Qualified Contracts.......................................
SEC.......................................................
Settlement Value..........................................
Systematic Withdrawal Program.............................
*In certain states, the Contract is only available as a group Contract.
In these states, we issued you a certificate that represents your
ownership and that summarizes the provisions of the group Contract.
References to "Contract" in this prospectus include certificates,
unless the context requires otherwise.
<PAGE>
THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
<TABLE>
<CAPTION>
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<S> <C>
Flexible Payments We have discontinued offering new
Contracts. You can add to your existing
Contract as often and as much as you like,
but each payment must be at least $1,000.
You must maintain a minimum account size of
$1,000.
---------------------------------- -----------------------------------------
Expenses o A withdrawal charge will apply to withdrawals made from a Guarantee
Period prior to its expiration. Withdrawal charges will be the
lesser of (a) the amount withdrawn in excess of the Free Withdrawal
Amount times one half of the interest rate for the Guarantee Period,
or (b) interest earned on the amount withdrawn. Certain limits may
apply to reduce this charge.
o State premium tax (if your state imposes one).
---------------------------------- -----------------------------------------
Guaranteed Interest The Contract offers fixed interest
rates that we guarantee for specified
periods we call "Guarantee Periods." To
find out what the current rates are on the
Guarantee Periods, call us at
1-800-654-2397.
---------------------------------- -----------------------------------------
Special Services For your convenience, we offer these special services:
o Automatic Additions Program
o Systematic Withdrawal Program
----------------------------------- ----------------------------------------
Income Payments The Contract offers three income payment plans:
o life income with guaranteed payments
o a joint and survivor life income with guaranteed payments
o guaranteed payments for a specified period (5 to 30 years)
----------------------------------- ----------------------------------------
Death Benefits If you die or if the Annuitant
dies before the Payout Start Date, we will
pay benefits as described in the Contract.
----------------------------------- ----------------------------------------
Withdrawals You may withdraw some or all of your
Contract value ("Contract Value") at any
time prior to the Payout Start Date. If
you withdraw Contract Value from a
Guarantee Period before its maturity, a
withdrawal charge, Market Value
Adjustment, and taxes (including a 10%
penalty tax for withdrawals before age 59
1/2) may apply.
----------------------------------- ----------------------------------------
</TABLE>
<PAGE>
HOW THE CONTRACT WORKS
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The Contract basically works in two ways.
First, the Contract can help you (we assume you are the Contract owner)
save for retirement because you can invest in the Contract and pay no federal
income taxes on any earnings until you withdraw them. You do this during what we
call the "Accumulation Phase" of the Contract. The Accumulation Phase begins on
the date we issue your Contract (we call that date the "Issue Date") and
continues until the "Payout Start Date", which is the date we apply your money
to provide income payments. During the Accumulation Phase, you may allocate your
purchase payments to one or more Guarantee Periods that earn a fixed rate of
interest that we declare periodically.
Second, the Contract can help you plan for retirement because you can use
it to receive retirement income for life and/or for a pre-set number of years,
by selecting one of the income payment options (we call these "Income Plans")
described on page __. You receive income payments during what we call the
"Payout Phase" of the Contract, which begins on the Payout Start Date and
continues until we make the last income payment required by the Income Plan you
select. During the Payout Phase, we guarantee the amount of your payments, which
will remain fixed. The amount of money you accumulate under your Contract during
the Accumulation Phase and apply to an Income Plan will determine the amount of
your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Issue Payout Start
Date Accumulation Phase Date Payout Phase
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You save for retirement
| | | ?
You buy You elect to receive You can receive Or you can
a Contract income payments or income payments receive income
receive a lump sum payment for a set period payments for life
</TABLE>
As the Contract owner, you exercise all of the rights and privileges
provided by the Contract. If you die, any surviving Contract owner or if none,
the Beneficiary will exercise the rights and privileges provided by the
Contract. See "The Contract." In addition, if you die before the Payout Start
Date, we will pay a death benefit to any surviving Contract owner or, if there
is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-654-2397 if you have any question about how the
Contract works.
<PAGE>
THE CONTRACT
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CONTRACT OWNER
The Custom Annuity is a contract between you, the Contract owner, and
Northbrook, a life insurance company. As the Contract owner, you may
exercise all of the rights and privileges provided to you by the Contract.
That means it is up to you to select or change (to the extent permitted):
o the amount and timing of your purchase payments and withdrawals, o the
programs you want to use to invest or withdraw money,
o the income payment plan you want to use to receive retirement income,
o the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
o the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when you die, and
o any other rights that the Contract provides.
If you die, any surviving Contract owner or, if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-natural person and a natural
person.
You can use the Contract with or without a "qualified plan." A qualified plan is
a personal retirement savings plan, such as an IRA or tax-sheltered annuity,
that meets the requirements of the Internal Revenue Code. Qualified plans may
limit or modify your rights and privileges under the Contract. We use the term
"Qualified Contract" to refer to a Contract issued with a qualified plan. See
"Qualified Plans" on page ___.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for
specified periods). The Contract requires that there be an Annuitant at all
times during the Accumulation Phase and on the Payout Start Date. The Annuitant
must be a natural person.
You initially designate an Annuitant in your application. You (or the youngest
Contract owner if there is more than one) will be the Annuitant unless a
different person is named. You may not change the Annuitant. You may designate a
joint Annuitant, who is a second person on whose life income payments depend.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner if the sole surviving Contract owner dies before
the Payout Start Date. If the sole surviving Contract owner dies after the
Payout Start Date, the Beneficiary will receive any guaranteed income payments
scheduled to continue.
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time while the Annuitant is alive unless you
have designated an irrevocable Beneficiary. We will provide a change of
Beneficiary form to be signed and filed with us. Any change will be effective at
the time you sign the written notice. Until we receive your written notice to
change a Beneficiary, we are entitled to rely on the most recent Beneficiary
information in our files. We will not be liable as to any payment or settlement
made prior to receiving the written notice. Accordingly, if you wish to change
your Beneficiary, you should deliver your written notice to us promptly. If the
Contract owner is a natural person, we will determine the Beneficiary from the
most recent request of the Contract owner.
If you did not name a Beneficiary or if the named Beneficiary is no longer
living, the Beneficiary will be:
o your spouse or, if he or she is no longer alive,
o your surviving children equally, or if you have no surviving children,
o your estate.
If more than one Beneficiary survives you (the Annuitant if the Contract owner
is not a natural person), we will divide the death benefit among your
Beneficiaries according to your most recent written instructions. If you have
not given us written instructions, we will pay the death benefit in equal
amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only a Northbrook officer may approve a change in or waive any provision of the
Contract. Any change or waiver must be in writing. None of our agents has the
authority to change or waive the provisions of the Contract. We may not change
the terms of the Contract without your consent, except to conform the Contract
to applicable law or changes in the law. If a provision of the Contract is
inconsistent with state law, we will follow state law.
ASSIGNMENT
We will not honor an assignment of an interest in a Contract as collateral or
security for a loan. However, you may otherwise assign periodic income payments
under the Contract prior to the Payout Start Date. No Beneficiary may assign
benefits under the Contract until they are due. We will not be bound by any
assignment until you sign it and file it with us. We are not responsible for the
validity of any assignment. Federal law prohibits or restricts the assignment of
benefits under many types of retirement plans and the terms of such plans may
themselves contain restrictions on assignments. An assignment may also result in
taxes or tax penalties. You should consult with an attorney before trying to
assign your Contract.
<PAGE>
PURCHASES AND CONTRACT VALUE
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MINIMUM PURCHASE PAYMENTS
We have discontinued offering new Contracts. You can add to your existing
Contract, but each subsequent purchase payment must be $1,000 or more. You may
make purchase payments at any time prior to the Payout Start Date. We reserve
the right to limit the maximum amount and number of purchase payments we will
accept.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money
from your bank account or your Morgan Stanley Dean Witter Active Assets ((TM))
Account. Please call or write us for an enrollment form.
ALLOCATION OF PURCHASE PAYMENTS
For each purchase payment, you must select a Guarantee Period. A Guarantee
Period is a period of years during which you will earn a guaranteed interest
rate on your money. You must allocate at least $1,000 to any one Guarantee
Period at the time you make your purchase payment or select a renewal Guarantee
Period.
We will apply your purchase payment to the Guarantee Period you select within 7
days of the receipt of the payment.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the
purchase payments you have invested in the Guarantee Periods, plus earnings
thereon, and less any amounts previously withdrawn.
<PAGE>
GUARANTEE PERIODS
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Each payment allocated to a Guarantee Period earns interest at a specified rate
that we guarantee for a period of years. Guarantee Periods may range from 1 to
10 years. You select the Guarantee Period for each purchase payment.
Amounts allocated to Guarantee Periods become part of our general account, which
supports our insurance and annuity obligations. The general account consists of
our general assets other than those in segregated asset accounts. We have sole
discretion to invest the assets of the general account, subject to applicable
law. Any money you allocate to a Guarantee Period does not entitle you to share
in the investment experience of the general account.
INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We will not change the interest rate that we credit to a
particular allocation until the end of the relevant Guarantee Period. We may
declare different interest rates for Guarantee Periods of the same length that
begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, sales commissions and administrative expenses,
general economic trends, and competitive factors. We determine the interest
rates to be declared in our sole discretion. We can neither predict nor
guarantee what those rates will be in the future. For current interest rate
information, please contact your sales representative or Northbrook at
1-800-654-2397. The interest rate will never be less than the minimum guaranteed
rate stated in the Contract.
HOW WE CREDIT INTEREST
We will credit interest to your initial purchase payment from the Issue Date. We
will credit interest to your additional purchase payments from the date we
receive them.
We will credit interest daily to each amount allocated to a Guarantee Period at
a rate that compounds to the annual interest rate that we declared at the
beginning of the applicable Guarantee Period.
The following example illustrates how a purchase payment would grow, given an
assumed Guarantee Period and annual interest rate:
Purchase Payment..............................$10,000
Guarantee Period..............................5 years
Annual Interest Rate........................... 4.50%
<TABLE>
<CAPTION>
END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C>
Beginning Contract Value $10,000.00
X (1 + Annual Interest Rate) X 1.045
$10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X 1.045
$10,920.25
Contract Value at end of Contract Year $10,920.25
X (1 + Annual Interest Rate) X 1.045
$11,411.66
Contract Value at end of Contract Year $11,411.66
X (1 + Annual Interest Rate) X 1.045
$11,925.19
Contract Value at end of Contract Year $11,925.19
X (1 + Annual Interest Rate) X 1.045
$12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82 -$10,000)
</TABLE>
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. The hypothetical interest rate
is for illustrative purposes only and is not intended to predict future interest
rates to be declared under the Contract. Actual interest rates declared for any
given Guarantee Period may be more or less than shown above but will never be
less than the guaranteed minimum rate stated in the Contract.
RENEWALS
We will mail you a notice 21 days prior to the end of each Guarantee Period
asking you what to do with your money. During the 10-day period after the end of
the Guarantee Period, you may:
1) take no action. We will automatically apply your money to a new Guarantee
Period of the same length as the expiring Guarantee Period. The new
Guarantee Period will begin on the day the previous Guarantee Period ends.
The new interest rate will be set at the time of renewal; or
2) instruct us to apply your money to one or more new Guarantee Periods of
your choice. The new Guarantee Period(s) will begin on the day the previous
Guarantee Period ends. The interest rate for the new Guarantee Period will
be our then current declared rate for that Guarantee Period; or
3) withdraw all or a portion of your money from the expired Guarantee Period
without incurring a withdrawal charge or a Market Value Adjustment. Amounts
not withdrawn will be applied to a new Guarantee Period of the same length
as the previous Guarantee Period. The new Guarantee Period will begin on
the day the previous Guarantee Period ends.
During the first 10 days of a renewal Guarantee Period, any amount withdrawn
will not reflect any interest earned during the 10-day period.
Under our Automatic Laddering Program, you may choose, in advance, to use
Guarantee Periods of the same length for all renewals. You can select this
program at any time during the Accumulation Phase, including on the Issue Date.
We will apply renewals to Guarantee Periods of the selected length until you
direct us in writing to stop. We may stop offering this Program at any time. For
additional information on the Automatic Laddering Program, please call our
customer support unit at 1-800-654-2397.
MARKET VALUE ADJUSTMENT
All withdrawals from a Guarantee Period, other than those taken within the first
10 days of a renewal of a Guarantee Period, are subject to a Market Value
Adjustment. A Market Value Adjustment may also apply upon payment of a death
benefit under a Contract.
We will not apply the Market Value Adjustment to withdrawals you make:
o to satisfy IRS minimum distribution rules for the Contract, or
o within the Free Withdrawal Amount, described under "Expenses" below.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time the amount being withdrawn was allocated to a Guarantee Period to the
time you withdraw it. We calculate the Market Value Adjustment by comparing the
interest rate for the Guarantee Period at its inception to the interest rate for
a period equal to the time remaining in the Guarantee Period when you remove
your money.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, withdrawal charge, premium
taxes, and income tax withholding (if applicable) could reduce the amount you
receive upon full withdrawal of your Contract Value to an amount that is less
than the purchase payments plus interest at the minimum guaranteed interest rate
under the Contract. However, we guarantee that the amount received upon
surrender (prior to any withholding and before deduction for any applicable
premium taxes) will be at least equal to the purchase payments less any prior
partial withdrawals.
Generally, if the annual interest rate for the Guarantee Period is lower than
the applicable current annual interest rate for a period equal to the time
remaining in the Guarantee Period, then the Market Value Adjustment will result
in a lower amount payable to you. Conversely, if the annual interest rate for
the Guarantee Period is higher than the applicable current annual interest rate,
then the Market Value Adjustment will result in a higher amount payable to you.
For example, assume that you purchase a Contract and select an initial Guarantee
Period of 5 years that has an annual interest rate of 4.50%. Assume that at the
end of 3 years, you make a partial withdrawal. If, at that later time, the
current interest rate for a 2 year Guarantee Period is 4.00%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current interest rate for the 2 year
Guarantee Period is 5.00%, then the Market Value Adjustment will be negative,
which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
<PAGE>
EXPENSES
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As a Contract owner, you will bear the charges and expenses described below.
WITHDRAWAL CHARGE
We may assess a withdrawal charge from purchase payment(s) you withdraw.
However, each year you may withdraw up to 10% of the funds initially allocated
to the Guarantee Period from which you are making the withdrawal without paying
a withdrawal charge. We measure each year from the commencement of the relevant
Guarantee Period. Unused portions of this 10% "Free Withdrawal Amount" are not
carried forward to future years or other Guarantee Periods. We will deduct
withdrawal charges, if applicable, from the amount paid unless you instruct
otherwise.
The withdrawal charge is equal to the lesser of:
a. one-half the annual interest rate for the Guarantee Period multiplied by
the amount withdrawn in excess of the 10% Free Withdrawal Amount, or
b. interest earned on the amount of the withdrawal.
We do not apply a withdrawal charge in the following situations:
o on the Payout Start Date; or
o money withdrawn within 10 days after the expiration of a Guarantee Period
to which it had been allocated.
Withdrawals may be subject to tax penalties or income tax and a Market Value
Adjustment. You should consult your own tax counsel or other tax advisers
regarding any withdrawals.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
We may some time in the future discontinue this practice and deduct premium
taxes from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from each
Guarantee Period in the proportion that the Contract owner's value in that
Guarantee Period bears to the total Contract Value.
<PAGE>
ACCESS TO YOUR MONEY
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You can withdraw some or all of your money at any time prior to the Payout Start
Date. You may not make any withdrawals or surrender your Contract once the
Payout Phase has begun.
You must specify the Guarantee Period from which you would like to withdraw your
money. The minimum you may withdraw is $100. If the amount you withdraw reduces
the amount invested in any Guarantee Period to less than $1,000, we will treat
the withdrawal request as a request to withdraw the entire amount in that
Guarantee Period.
The amount you receive may be reduced by a withdrawal charge, income tax
withholding, 10% tax penalty, and any premium taxes. The amount you receive may
be increased or reduced by a Market Value Adjustment. If you request a total
withdrawal, we may require that you return your Contract to us.
POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to 6 months from the date we receive
your withdrawal request.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $100. We will deposit
systematic withdrawal payments into the Contract owner's bank account or Morgan
Stanley Dean Witter Active Assets(TM) Account. Please consult with your Morgan
Stanley Dean Witter Financial Advisor for details.
Income taxes may apply to systematic withdrawals. Please consult your tax
advisor before taking any withdrawal.
We may modify or suspend the Systematic Withdrawal Program and charge a
processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
RETURN OF PURCHASE PAYMENTS GUARANTEE
When you withdraw your money, a withdrawal charge and a Market Value Adjustment
may apply. However, if you decide to surrender your Contract, we guarantee that
the amount you receive upon surrender (prior to withholding and the deduction of
any applicable premium taxes) will never be less than the sum of your initial
and any subsequent purchase payments, less amounts previously withdrawn. Premium
taxes and income tax withheld may reduce the amount you receive on surrender to
less than the sum of your initial and any subsequent purchase payments. This
guarantee does not apply to earnings on purchase payments. The renewal of a
Guarantee Period does not in any way change this guarantee.
MINIMUM CONTRACT VALUE
If a withdrawal would reduce your Contract Value to less than $1,000, we will
treat the request as a request to withdraw the entire Contract Value and the
Contract will terminate. If you surrender your Contract, we will pay you its
Contract Value adjusted by any applicable Market Value Adjustment, less any
applicable withdrawal charges and taxes.
<PAGE>
INCOME PAYMENTS
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PAYOUT START DATE
You select the Payout Start Date in your application. The Payout Start Date is
the day that money is applied to an Income Plan. The Payout Start Date must be:
o at least 30 days after the Issue Date, and
o no later than the Annuitant's 90th birthday, or the 10th Contract
anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designated. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years. After the Payout Start Date, you may not make withdrawals or change your
choice of Income Plan.
The three Income Plans available under the Contract are:
Income Plan 1 -- Life Income with Guaranteed Payments. Under this plan,
we make periodic income payments for at least as long as the Annuitant
lives. If the Annuitant dies before we have made all of the guaranteed
income payments, we will continue to pay the remainder of the
guaranteed income payments as required by the Contract.
Income Plan 2 -- Joint and Survivor Life Income with Guaranteed
Payments. Under this plan, we make periodic income payments for at
least as long as either the Annuitant or the joint Annuitant is alive.
If both the Annuitant and the joint Annuitant die before we have made
all of the guaranteed income payments, we will continue to pay the
remainder of the guaranteed income payments as required by the
Contract.
Income Plan 3 -- Guaranteed Payments for a Specified Period (5 to 30
years). Under this plan, we make periodic income payments for the
period you have chosen. If the Annuitant dies before we have made all
of the guaranteed income payments, we will continue to pay the
remainder of the guaranteed income payments as required by the
Contract. You may elect to receive guaranteed payments for periods
ranging from 5 to 30 years.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amount of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments will be greater than the income payments made
under the same Income Plan with a minimum specified period for guaranteed
payments.
We may make other Income Plans available, including ones that you and we agree
upon. You may obtain information about them by writing or calling us.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we will
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant are alive
before we make each payment. Please note that under such Income Plans, if you
elect to take no minimum guaranteed payments, it is possible that the payee
could receive only 1 income payment if the Annuitant and any joint Annuitant
both die before the second income payment, or only 2 income payments if they die
before the third income payment, and so on.
We will apply your Contract Value, less applicable taxes to your Income Plan on
the Payout Start Date. If the amount available to apply under an Income Plan is
less than $2,000, or if your initial monthly payment would be less than $20, and
state law permits, we may:
o pay you the Contract Value, less any applicable taxes, in a lump sum
instead of the periodic payments you have chosen, or
o reduce the frequency of your payments so that each payment will be at least
$20.
INCOME PAYMENTS
We guarantee income payment amounts for the duration of the Income Plan. We
calculate income payments by:
1) determining your Contract Value as of the Payout Start Date;
2) deducting any applicable premium tax; and
3) applying the resulting amount to the greater of (a) the appropriate
value from the income payment table in your Contract or (b) such other
value as we are offering at that time.
We may defer making fixed income payments for a period of up to six months or
such shorter time state law may require. If we defer such payments for 30 days
or more, we will pay interest as required by law from the date we receive the
withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex, to the extent permitted by
law. In certain employment-related situations, employers are required by law to
use the same income payment tables for men and women. Accordingly, if the
Contract is to be used in connection with an employment-related retirement or
benefit plan and we do not offer unisex annuity tables in your state, you should
consult with legal counsel as to whether the purchase of a Contract is
appropriate.
<PAGE>
DEATH BENEFITS
- ------------------------------------------------------------------------------
The Contract offers a death benefit prior to the Payout Start Date on the
earlier of:
1) the death of any Contract owner, or
2) the death of the Annuitant.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract Owner would be a surviving
Contract owner or, if none, the Beneficiary.
A claim for a distribution on death must include Due Proof of Death. We will
accept the following documentation as "Due Proof of Death":
o a certified copy of a death certificate;
o a certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or
o any other proof acceptable to us.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greater of:
(1) the Contract Value, and (2) the "Settlement Value," which is the Contract
Value, adjusted by any Market Value Adjustment, less withdrawal charges and
taxes. We will calculate the value of the death benefit as of the date we
receive a complete request for payment of the death benefit.
DEATH BENEFIT PAYMENTS
Upon death of the Contract owner, the new Contract owner generally has the
following 3 options:
1) receive the Settlement Value within 5 years of the date of death;
2) receive the death benefit in a lump sum; or
3) apply the death benefit to an Income Plan, with income payments
beginning within one year of the date of death. Income payments must be
made over the life of the new Contract owner, or a period not to exceed
the life expectancy of the new Contract owner.
Options 2 and 3 above are available only if you elect one of these options and
we receive Due Proof of Death within 60 days of the date of death. We are
currently waiving the 60 day limitation but may enforce it in the future. For
Options 1 and 3, if there is no Annuitant at the time, the new Annuitant will be
the youngest Contract owner unless the Contract owner names a different
Annuitant.
If the new Contract owner is a non-natural person, the new Contract owner must
elect to receive the death benefit in a lump sum. If we receive Due Proof of
Death within 60 days of the date of death, we will pay a death benefit.
Otherwise, we will pay a Settlement Value.
If the surviving spouse of the deceased Contract owner is the new Contract
owner, then the spouse may elect Options 2 or 3 listed above or may continue the
Contract in the Accumulation Phase as if the death had not occurred. If there is
no Annuitant at that time, the new Annuitant will be the surviving spouse.
If the Contract owner is not the Annuitant and the Annuitant dies, then the
Contract owner has the following 3 options:
1) continue the Contract as if the death had not occurred;
2) receive the death benefit in a lump sum; or
3) apply the death benefit to an Income Plan, which must begin within 1
year of the date of death and must be for a period equal to or less
than the life expectancy of the Contract owner.
If the Contract owner chooses Options 1 or 3, the new Annuitant will be the
youngest Contract owner unless the Contract owner names a different Annuitant.
Options 1 and 3 are not available if the Contract owner is a non-natural person.
Options 2 and 3 above are available only if you elect one of these options and
we receive Due Proof of Death within 60 days of the date of death. We are
currently waiving the 60 day limitation but may enforce it in the future.
Please refer to your Contract for more details on the above options.
<PAGE>
MORE INFORMATION
- ------------------------------------------------------------------------------
NORTHBROOK
Northbrook is the issuer of the Contract. Northbrook is a stock life insurance
company organized under the laws of the State of Arizona in 1998. Previously, it
was organized under the laws of the State of Illinois in 1978.
Northbrook is currently licensed to operate in the District of Columbia and all
states except New York. We intend to offer the Contract in those jurisdictions
in which we are licensed. Our home office is located at 3100 Sanders Road,
Northbrook, Illinois, 60062.
Northbrook is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate
Insurance Company, a stock property-liability insurance company incorporated
under the laws of Illinois. All of the outstanding capital stock of Allstate
Insurance Company is owned by The Allstate Corporation.
Northbrook and Allstate Life entered into a reinsurance agreement effective
December 31, 1987. Under the reinsurance agreement, Allstate Life reinsures all
of Northbrook's liabilities under the Contracts. The reinsurance agreement
provides us with financial backing from Allstate Life. However, it does not
create a direct contractual relationship between Allstate Life and you. In other
words, the obligations of Allstate Life under the reinsurance agreement are to
Northbrook; Northbrook remains the sole obligor under the Contract to you.
Several independent rating agencies regularly evaluate life insurers'
claims-paying ability, quality of investments, and overall stability. A.M. Best
Company assigns A+ (Superior) to Allstate Life which automatically reinsures all
net business of Northbrook. A.M. Best Company also assigns Northbrook the rating
of A+(r) because Northbrook automatically reinsures all net business with
Allstate Life. Standard & Poor's Insurance Rating Services assigns an AA+ (Very
Strong) financial strength rating and Moody's assigns an Aa2 (Excellent)
financial strength rating to Northbrook. Northbrook shares the same ratings of
its parent, Allstate Life. We may from time to time advertise these ratings in
our sales literature.
THE CONTRACT
Dean Witter Reynolds Inc. ("Dean Witter"), located at Two World Trade Center,
74th Floor, New York, NY 10048, serves as distributor of the Contracts. Dean
Witter is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. Dean
Witter is a registered broker-dealer under the Securities Exchange Act of 1934,
as amended ("Exchange Act") and is a member of the National Association of
Securities Dealers. Dean Witter is also registered with the Securities and
Exchange Commission ("SEC") as an investment adviser.
We may pay up to a maximum sales commission of 8% both upon sale of the Contract
and upon renewal of a Guarantee Period. In addition, sale of the Contract may
count toward incentive program awards for the Financial Advisor.
The General Agency Agreement between Northbrook and Morgan Stanley Dean Witter
provides that Northbrook will indemnify Morgan Stanley Dean Witter for certain
damages that may be caused by actions, statements or omissions by Northbrook.
<PAGE>
QUALIFIED PLANS
If you use the Contract with a qualified plan, the plan may impose different or
additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Northbrook on
certain federal securities law matters. All matters of state law pertaining to
the Contracts, including the validity of the Contracts and Northbrook's right to
issue such Contracts under applicable state insurance law, have been passed upon
by Michael J. Velotta, General Counsel of Northbrook.
YEAR 2000
Northbrook is heavily dependent upon complex computer systems for all phases of
its operations, including customer service, and policy and contract
administration. Since many of Northbrook's older computer software programs
recognize only the last two digits of the year in any date, some software may
fail to operate properly in or after the year 1999, if the software is not
reprogrammed or replaced ("Year 2000 Issue"). Northbrook believes that many of
its counterparties and suppliers also have Year 2000 Issues that could affect
Northbrook. In 1995, Allstate Insurance Company commenced a plan intended to
mitigate and/or prevent the adverse effects of Year 2000 Issues. These
strategies include normal development and enhancement of new and existing
systems, upgrades to operating systems already covered by maintenance agreements
and modifications to existing systems to make them Year 2000 compliant. The plan
also includes Northbrook actively working with its major external counterparties
and suppliers to assess their compliance efforts and Northbrook's exposure to
them. Northbrook presently believes that it will resolve the Year 2000 Issue in
a timely manner, and the financial impact will not materially affect its results
of operations, liquidity or financial position. Year 2000 costs are and will be
expensed as incurred.
<PAGE>
TAXES
- ------------------------------------------------------------------------------
The following discussion is general and is not intended as tax advice. We make
no guarantee regarding the tax treatment of any Contract or transaction
involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax advisor.
TAXATION OF NORTHBROOK
Northbrook is taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code ("Tax Code" or "Code").
TAXATION OF ANNUITIES IN GENERAL
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where the owner is a natural
person. As a general rule, annuity contracts owned by non-natural persons such
as corporations, trusts, or other entities are not treated as annuity contracts
for federal income tax purposes. The income on such contracts is taxed as
ordinary income received or accrued by the owner during the taxable year.
Contracts will generally be treated as held by a natural person if the nominal
owner is a trust that holds the Contract for the benefit of a natural person.
Please see a competent tax advisor to discuss other possible exceptions to the
nonnatural owner rule.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
Contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a partial withdrawal
under a Qualified Contract, the portion of the payment that is not taxable is
equal to the payment times the ratio of the investment in the Contract (i.e.,
nondeductible IRA contributions, after tax contributions to qualified plans) to
the Contract Value.
You should contact a competent tax advisor about the potential tax consequences
of a Market Value Adjustment, as no definitive guidance exists on the proper tax
treatment of Market Value Adjustments. If you make a full withdrawal under a
non-Qualified Contract or a Qualified Contract, the amount received will be
taxable only to the extent it exceeds the investment in the Contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are taxable only to the extent that distributions exceed
contributions. "Qualified distributions" from Roth IRAs are not taxable.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to any Roth IRA and which
are:
o made on or after the date the individual attains age 59 1/2,
o made to a beneficiary after the owner's death,
o attributable to the owner being disabled, or
o for a first time home purchase (first time home purchases are subject to a
lifetime limit of $10,000).
If you transfer a non-Qualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Contract Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Contract Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. The amount excluded from income
is determined by multiplying the payment by the ratio of the investment in the
Contract (adjusted for any refund feature or period certain) to the total
expected value of annuity payments for the term of the Contract. The annuity
payments will be fully taxable after the total amount of the investment in the
Contract is excluded using these ratios. If you die, and annuity payments cease
before the total amount of the investment in the Contract is recovered, the
unrecovered amount will be allowed as a deduction for your last taxable year.
Taxation of Annuity Death Benefits. Death of a Contract owner, or death of the
Annuitant if the Contract is owned by a non-natural person, will cause a
distribution of death benefits from a Contract. Generally, such amounts are
included in income as follows:
(1) if distributed in a lump sum, the amounts are taxed in the same manner as a
full withdrawal, or
(2) if distributed under an Income Plan, the amounts are taxed in the same
manner as an annuity payment.
IRS Required Distribution at Death Rules. To qualify as an annuity contract for
federal income tax purposes, a non-Qualified Contract must provide:
(1) if any Contract owner dies on or after the annuity start date, but
before the entire interest in the Contract has been distributed,
the remaining portion of such interest must be distributed at
least as rapidly as under the method of distribution being used as
of the date of the owner's death;
(2) if any Contract owner dies prior to the annuity start date, the
entire interest in the Contract must be distributed within 5 years
after the date of the owner's death.
The 5-year requirement is satisfied if:
o any portion of the Contract owner's interest which is payable to a
designated beneficiary is distributed over the life of such beneficiary (or
over a period not extending beyond the life expectancy of the beneficiary),
and
o the distributions begin within 1 year of the Contract owner's death.
If the Contract owner's designated beneficiary is a surviving spouse, the
Contract may be continued with the surviving spouse as the new owner. If the
owner of the Contract is a non-natural person, the Annuitant is treated as the
owner for purposes of applying the distribution at death rules. In addition, a
change in the Annuitant on a Contract owned by a non-natural person is treated
as the death of the owner.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2.
However, no penalty tax is incurred on distributions:
o made on or after the date the owner attains age 59 1/2;
o made as a result of the owner's death or disability;
o made in substantially equal periodic payments over the owner's
life or life expectancy,
o made under an immediate annuity; or
o attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts
issued by Northbrook (or its affiliates) to the same owner during any calendar
year will be aggregated and treated as one annuity contract for purposes of
determining the taxable amount of a distribution.
TAX QUALIFIED CONTRACTS
The Contract may be used with several types of qualified plans. The tax rules
applicable to participants in qualified plans vary according to the type of plan
and the terms and conditions of the plan. Qualified plan participants, and
Contract owners, Annuitants and Beneficiaries under the Contract may be subject
to the terms and conditions of the qualified plan regardless of the terms of the
Contract.
TYPES OF QUALIFIED PLANS
IRAs Section 408 of the Code permits eligible individuals to contribute to an
individual retirement plan known as an IRA. IRAs are subject to limitations on
the amount that can be contributed and on the time when distributions may
commence. Certain distributions from other types of qualified plans may be
"rolled over" on a tax-deferred basis into an IRA. An IRA generally may not
provide life insurance, but it may provide a death benefit that equals the
greater of the premiums paid or the Contract value. The Contract provides a
death benefit that in certain situations, may exceed the greater of the payments
or the Contract Value. If the IRS treats the death benefit as violating the
prohibition on investment in life insurance contracts, the Contract would not
qualify as an IRA.
Roth IRAs. Section 408A of the Code permits eligible individuals to make
nondeductible contributions to an individual retirement plan known as a Roth
IRA. Roth IRAs are subject to limitations on the amount that can be contributed.
In certain instances, distributions from Roth IRAs are excluded from gross
income. Subject to certain limits, a traditional Individual Retirement Account
or Annuity may be converted or "rolled over" to a Roth IRA. The taxable portion
of a conversion or rollover distribution is included in gross income, but is
exempt from the 10% penalty tax on premature distributions.
Simplified Employee Pension Plans. Section 408(k) of the Code allows employers
to establish simplified employee pension plans for their employees using the
employees' IRAs if certain criteria are met. Under these plans the employer may,
within limits, make deductible contributions on behalf of the employees to their
individual retirement annuities. Employers intending to use the Contract in
connection with such plans should seek competent advice.
Savings Incentive Match Plans for Employees (SIMPLE Plans). Sections 408(p) and
401(k) of the Tax Code allow employers with 100 or fewer employees to establish
SIMPLE retirement plans for their employees. SIMPLE plans may be structured as a
SIMPLE retirement account using an employee's IRA to hold the assets, or as a
Section 401(k) qualified cash or deferred arrangement. In general, a SIMPLE plan
consists of a salary deferral program for eligible employees and matching or
nonelective contributions made by employers. Employers intending to use the
Contract in conjunction with SIMPLE plans should seek competent tax and legal
advice.
Tax Sheltered Annuities. Section 403(b) of the Tax Code permits public school
employees and employees of certain types of tax-exempt organizations (specified
in Section 501(c)(3) of the Code) to have their employers purchase Contracts for
them. Subject to certain limitations, a Section 403(b) plan allows an employer
to exclude the purchase payments from the employees' gross income. A Contract
used for a Section 403(b) plan must provide that distributions attributable to
salary reduction contributions made after December 31, 1988, and all earnings on
salary reduction contributions, may be made only:
1) on or after the date the employee:
o attains age 59 1/2,
o separates from service,
o dies, or
o becomes disabled; or
2) on account of hardship (earnings on salary reduction contributions may not
be distributed for hardship).
These limitations do not apply to withdrawals where Northbrook is directed to
transfer some or all of the Contract Value to another 403(b) plan.
Corporate and Self-Employed Pension and Profit Sharing Plans. Sections 401(a)
and 403(a) of the Tax Code permit corporate employers to establish various types
of tax favored retirement plans for employees. The Tax Code permits
self-employed individuals to establish tax favored retirement plans for
themselves and their employees. Such retirement plans may permit the purchase of
Contracts to provide benefits under the plans.
State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans. Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current income taxes. The employees must be participants in an eligible
deferred compensation plan. Employees with Contracts under the plan are
considered general creditors of the employer. The employer, as owner of the
Contract, has the sole right to the proceeds of the Contract. Under these plans,
contributions made for the benefit of the employees will not be taxable to the
employees until distributed from the plan. However, all compensation deferred
under a 457 plan must remain the sole property of the employer. As property of
the employer, the assets of the plan are subject only to the claims of the
employer's general creditors, until such time as the assets become available to
the employee or a beneficiary.
INCOME TAX WITHHOLDING
Northbrook is required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless you elect to make a "direct rollover"
of such amounts to an IRA or eligible retirement plan. Eligible rollover
distributions generally include all distributions from Qualified Contracts,
excluding IRAs, with the exception of:
o required minimum distributions, or
o a series of substantially equal periodic payments made over a period
of at least 10 years, or,
o over the life (joint lives) of the participant (and beneficiary).
Northbrook may be required to withhold federal and state income taxes on any
distributions from non-Qualified Contracts, or Qualified Contracts that are not
eligible rollover distributions, unless you notify us of your election to not
have taxes withheld.
EXPERTS
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The financial statements and the related financial statement schedule of
Northbrook incorporated in this prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
<PAGE>
ANNUAL REPORTS AND OTHER DOCUMENTS
- ------------------------------------------------------------------------------
Northbrook's annual report on Form 10-K for the year ended December 31, 1998
("Form 10-K Annual Report") is incorporated herein by reference, which means
that it is legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act are also incorporated herein by reference, which means
that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000716791. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of the SEC's Public Reference
Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents) , please
write or call us at 3100 Sanders Road, Northbrook, Illinois 60062 (telephone:
1-800-654-2397).
ANNUAL STATEMENTS
At least once a year prior to the Payout Start Date, we will send you a
statement containing information about your Contract Value. For more
information, please contact your Morgan Stanley Dean Witter Financial Advisor or
call our customer support unit at 1-800-654-2397.
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the interest crediting rate for a Guarantee Period
N = the number of complete days from the date we receive the withdrawal
request to the end of the Guarantee Period; and
J = the current interest crediting rate offered for a Guarantee Period
of length N on the date we receive the withdrawal request.
If we are not currently offering a Guarantee Period of length N, we
will determine J by linear interpolation (weighted average) between the
current interest rates for the next higher and lower integral years. If
N is less than or equal to 365 days, J will be the rate for a Guarantee
Period of 365 days duration.
The Market Value Adjustment factor is determined from the following formula:
.9 X (I - J) X N/365
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount withdrawn (in excess of the Free Withdrawal
Amount) from a Guarantee Period, other than amounts withdrawn from a renewal
Guarantee Period during the first 10 days thereof.
A-1
<PAGE>
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
<TABLE>
<CAPTION>
EXAMPLE 1: (Assumes declining interest rates)
<S> <C>
Step 1. Calculate Contract Value at End of Contract Year 3: 10,000.00 X (1.0450)3 = $11,411.66
Step 2. Calculate the Amount in excess of Free Withdrawal Amount (.10 X 10,000) = $1,000
the Free Withdrawal Amount: Amount in Excess: $11,411.66 - 1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .0225 X $10,411.66 = $234.26
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.2%
N = 730 days
Market Value Adjustment Factor: .9 X (I-J) X N/365
= .9 X (.045 - .042) X (730/365) = .0054
Market Value Adjustment = Market Value Adjustment Factor
X Amount Subject to Market Value Adjustment:
= .0054 X $10,411.66 = $56.22
Step 5. Calculate the amount received by a Contract owner
as a result of full withdrawal at the end of Contract Year 3: $11,411.66 - $234.26 + $56.22 = $11,233.62
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE 2: (Assumes rising interest rates)
<S> <C>
Step 1. Calculate Contract Value at End of Contract Year 3: 10,000.00 X (1.045)3 = $11,411.66
Step 2. Calculate the Amount in excess of Free Withdrawal Amount (.10 X 10,000) = $1,000
the Free Withdrawal Amount: Amount in Excess: $11,411.66 - 1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .0225 X $10,411.66 = $234.26
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.8%
N = 730
Market Value Adjustment Factor: .9 X (I-J) X N/365
= .9 X (.045 - .048) X (730/365) = -.0054
Market Value Adjustment = Market Value Adjustment Factor
X Amount Subject to Market Value Adjustment
= -.0054 X $10,411.66 = - $56.22
Step 5. Calculate the amount received by a Contract owner
as a result of full withdrawal at the end of Contract Year 3: $11,411.66 - $234.26 - $56.22 = $11,121.18
</TABLE>
A-3
<PAGE>
[back cover]
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. We do not authorize anyone to provide
any information or representations regarding the offering described in this
prospectus other than as contained in this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Northbrook Life Insurance Company ("Registrant") provide
that Registrant will indemnify its officers and directors for certain damages
and expenses that may be incurred in the performance of their duty to
Registrant. No indemnification is provided, however, when such person is
adjudged to be liable for negligence or misconduct in the performance of his or
her duty, unless indemnification is deemed appropriate by the court upon
application.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Description
(1) Form of Underwriting Agreement (Incorporated herein by reference to
Post-Effective Amendment No. 13 to Form N-4 Registration Statement of
Northbrook Variable Annuity Account II of Northbrook Life Insurance Company
(File No. 33-35412) dated December 31, 1996.)
(2) None
(4) Form of Northbrook Life Insurance Company Flexible Premium Deferred Annuity
Contract and Application
(5)(a) Opinion of General Counsel re: Legality (Previously filed in the initial
filing of this Registration Statement (File No. 033-50884) dated August 14,
1992.)
(5)(b) Opinion and Consent of General Counsel re: Legality
(8) None
(11) None
(12) None
(15) None
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Attorneys
(24)(a) Powers of Attorney for Louis G. Lower, II and Casey J. Sylla (Previously
filed in Post-Effective Amendment No. 4 to this Registration Statement
(File No. 033-50884) dated April 4, 1996.)
(24)(b) Powers of Attorney for Michael J. Velotta, Peter H. Heckman, John R.
Hunter, Kevin R. Slawin and Keith A. Hauschildt (Previously filed in
Post-Effective Amendment No. 5 to this Registration Statement (File No.
033-50884) dated April 1, 1997.)
(24)(c) Power of Attorney for Thomas J. Wilson, II
(25) None
(26) None
(27) Not applicable
(99) Form of Resolution of Board of Directors (Incorporated herein by reference
to the Post-Effective Amendment No. 3 to Registrant's Form S-1 Registration
Statement (File No. 033-84480) dated April 1, 1997.)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof ) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, Northbrook Life Insurance Company, 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 registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it will meet all of the
requirements for filing on Form S-3 and has duly caused this amended
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, and its seal to be hereunto affixed and attested, in the
Township of Northfield, State of Illinois on the 27th day of April, 1999.
NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
(SEAL)
Attest: /s/BRENDA D. SNEED By: /s/MICHAEL J. VELOTTA
------------------- ----------------------
Brenda D. Sneed Michael J. Velotta
Assistant Secretary Vice President, Secretary and
And Assistant General Counsel General Counsel
Pursuant to the requirements of the Securities Act of 1933, this amended
registration statement has been signed by the following persons in the
capacities indicated and on the 27th day of April, 1999.
*/LOUIS G. LOWER, II Chairman of the Board, Chief
Louis G. Lower, II Executive Officer and Director
(Principal Executive Officer)
*/THOMAS J. WILSON, II Vice Chairman and Director
Thomas J. Wilson, II (Principal Operating Officer)
/s/MICHAEL J. VELOTTA Vice President, Secretary, General
Michael J. Velotta Counsel and Director
*/PETER H. HECKMAN President, Chief Operating Officer
Peter H. Heckman and Director
*/JOHN R. HUNTER Director
John R. Hunter
*/KEVIN R. SLAWIN Vice President and Director
Kevin R. Slawin (Principal Financial Officer)
*/CASEY J. SYLLA Chief Investment Officer and Director
Casey J. Sylla
*/KEITH A. HAUSCHILDT Assistant Vice President and Controller
Keith A. Hauschildt (Principal Accounting Officer)
*/ By Michael J. Velotta, pursuant to Powers of Attorney previously filed or
filed herewith..
<PAGE>
EXHIBIT LIST
The following exhibits are filed herewith:
Exhibit No. Description
(4) Form of Northbrook Life Insurance Company Flexible Premium Deferred
Annuity Contract and Application
(5)(b) Opinion and Consent of General Counsel re: Legality
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Attorneys
(24)(c) Power of Attorney for Thomas J. Wilson, II
NORTHBROOK LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM DEFERRED
ANNUITY CERTIFICATE
Northbrook Life Insurance Company, A Stock Company, Home Office: Allstate Plaza,
Northbrook, Illinois 60062
This Certificate is issued according to the terms of Master Policy Number
648900007 issued by Northbrook Life Insurance Company to Dean Witter Reynolds
Inc. Dean Witter Reynolds Inc. is called the Master Policyholder. This
Certificate is issued in the state of Delaware and is governed by Delaware law.
Throughout this Certificate, "you" and "your" refer to the Certificate's
owner(s). "We", "us" and "our" refer to Northbrook Life Insurance Company.
This flexible premium deferred annuity provides a cash withdrawal benefit and a
death benefit during the accumulation phase and periodic income payments
beginning on the payout start date during the payout phase.
This Certificate and the Master Policy do not pay dividends.
PLEASE READ YOUR CERTIFICATE CAREFULLY
Return Privilege
If you are not satisfied with this Certificate for any reason, you may return it
to us within 20 days after you receive it. We will refund any purchase payments
to you.
Secretary President
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
ANNUITY DATA...................................................................3
THE PEOPLE INVOLVED............................................................4
ACCUMULATION PHASE.............................................................5
PAYOUT PHASE...................................................................8
INCOME PAYMENT TABLES..........................................................9
GENERAL PROVISIONS............................................................10
<PAGE>
Northbrook Life Insurance Company
FREE WITHDRAWAL CERTIFICATE AMENDMENT
The following language replaces the Free Withdrawal Amount section of your
Certificate.
Free Withdrawal Amount. A withdrawal amount free of withdrawal charges and
market value adjustments will be available in each sub-account year for each
sub-account. The free withdrawal amount is 10% of the amount of the
sub-account's purchase payment or funds allocated to the sub-account.
Any free withdrawal amount not withdrawn in a sub-account year may not be
carried over to increase the free withdrawal amount in a subsequent sub-account
year. Similarly, the free withdrawal amount not withdrawn from one sub-account
may not be transferred to increase the free withdrawal amount in another
sub-account.
The initial sub-account year is defined as beginning on the date of
establishment of the sub-account. Subsequent sub-account years are defined as
beginning on the anniversary date of the establishment of the sub-account.
Secretary President
<PAGE>
- --------------------------------------------------------------------------------
THE PEOPLE INVOLVED
- --------------------------------------------------------------------------------
Owner. The person named at the time of enrollment is the owner of this
Certificate unless subsequently changed. As owner, you will receive any periodic
income payments.
You may exercise all rights stated in this Certificate, subject to the rights of
any irrevocable beneficiary.
You may change the owner or beneficiary while the annuitant is alive. You may
not, however, change the annuitant. Once we have received a satisfactory written
request for an owner or beneficiary change, the change will take effect as of
the date you signed it. We are not liable for any payment we make or other
action we take before receiving any written request from you.
The owner will receive the death benefit upon the death of the annuitant, who is
not also an owner.
You may not assign an interest in this Certificate as collateral or security for
a loan. Other than stated previously, you may assign benefits under this
Certificate prior to the payout start date. No beneficiary may assign benefits
under the Certificate until they are due to them. We are not bound by an
assignment unless it is signed by you and filed with us. We are not responsible
for the validity of an assignment.
If the owner is more than one person:
o owner as used in this Certificate is defined as all people named as owners,
unless other wise indicated;
o any request to exercise ownership rights must be signed by all owners; and
o on the first death of a person who is an owner, the new owner shall be the
surviving person(s) named as the owner.
Annuitant. The annuitant must be a natural person. The annuitant's life may
affect the timing or amount of the payout under this Certificate. The owner is
the annuitant unless a different annuitant has been named.
Beneficiary. The beneficiary becomes the new owner if the sole surviving owner
dies prior to the payout start date.
If the sole surviving owner dies after the payout start date, the beneficiary
will receive any guaranteed income payments scheduled to continue.
We will determine the beneficiary from the most recent written request we have
received from you. If you do not name a beneficiary or if the beneficiary named
is no longer living, the beneficiary will be:
o your spouse if living; otherwise
o you children equally if living; otherwise
o your estate.
<PAGE>
- --------------------------------------------------------------------------------
Accumulation Phase
- --------------------------------------------------------------------------------
Accumulation Phase Defined. The accumulation phase is the first of two phases in
the life of your Certificate. The accumulation phase begins on the issue date
stated on the Annuity Data page. This phase will continue until the payout start
date unless the Certificate is terminated before that date.
Account Value. Your account value is the sum of all sub-account values.
Sub-accounts. Sub-accounts are identified by the guarantee period and the date
the guarantee begins. Sub-accounts are established:
o When purchase payments are made; or
o When previous sub-accounts expire and a new sub-account is selected or
established.
Sub-account Values. Your sub-account value is equal to the funds allocated to
that sub-account plus interest credited thereon. Those funds can be either
purchase payments or previous sub-account values. Any withdrawals will affect
you sub-account value.
Purchase Payments. Purchase payments may be made at any time during accumulation
phase. Purchase payments after the initial purchase payment are not required. We
may limit the amount of purchase payments we will accept. We may also limit the
number of additional purchase payments - see annuity data page 3 for details.
You will be required to designate a guarantee period for each purchase payment
made.
Interest Credited. Interest will be credited daily using the effective annual
interest rate declared by us for that particular guarantee period at the time
the sub-account is established. Interest will be credited to the initial
purchase payment from the issue date. Interest will be credited to subsequent
purchase payments from the date of receipt. "Effective annual rate" is defined
as the yield resulting when interest credited at the underlying daily rate has
compounded for a full year. Interest rates will be declared periodically for
each guarantee period then being offered. The declared rates will be greater
than or equal to the minimum guaranteed rate shown on the annuity data page.
Guarantee Period. Guarantee periods will be offered at our discretion. They may
range from one to ten years.
A notice will be mailed 21 years prior to the expiry of each sub-account
directing you to select a renewal guarantee period(s). If we do not receive a
selection by the expiry of the sub-account, a renewal guarantee period of the
same duration as the previous guarantee period will automatically be
established. If a renewal guarantee period selection is made within the ten
calendar days following the sub-account expiry, a sub-account will be
established according to that selection as of the sub-account expiry date.
No less than [$1,000] may be allocated to any one guarantee period at the time a
purchase payment is made or a renewal guarantee period is selected.
Partial withdrawal or Surrender. You have the right to make a partial withdrawal
or full surrender at any time during the accumulation phase. You must specify
the sub-account(s) from which you wish to make a withdrawal. The amount of any
withdrawal you request, plus any applicable withdrawal charge and taxes, will
reduce your sub-account value. In addition, a market value adjustment will be
applied to your withdrawal or surrender amount when applicable. If a withdrawal
is made prior to the end of a guarantee period, a withdrawal charge and a market
value adjustment will be applied to the amount of the withdrawal in excess of
the free withdrawal amount. In addition, the amount you receive will reflect the
deduction of any applicable taxes.
Any partial withdrawal must be at least [$100]. If a partial withdrawal would
leave a sub-account value of less than [$1000], we will treat the request as a
withdrawal of that sub-account's entire value. If any partial withdrawal reduces
the account value of your Certificate to less than [$1000], we will treat the
request as a full surrender of the entire account value and the Certificate will
terminate.
If you surrender your Certificate, we will pay you its account value adjusted by
any applicable market value adjustment, less any applicable withdrawal charges
and taxes. Upon surrender, the Certificate will terminate.
During the first ten days of a renewal guarantee period, any amount withdrawn
will not incur withdrawal charges or market value adjustments, nor will it
reflect any interest earned during this period.
Withdrawal Charge. A withdrawal charge will be applied to a withdrawal from the
sub-account prior to the end of its guarantee period.
Withdrawal charges will be the lesser of:
(a) one half the interest crediting rate for the sub-account multiplied by
the amount withdrawn in excess of the free withdrawal amount; or
(b) interest earned on the amount withdrawn.
Free Withdrawal Amount. A withdrawal amount free of withdrawal charges and
market value adjustments will be available in each sub-account year for each
sub-account after the sub-account reaches its first anniversary. The free
withdrawal amount is 10% of the amount of the sub-account's purchase payment or
funds allocated to the sub-account.
Any free withdrawal amount not withdrawn in a sub-account year may not be
carried over to increase the free withdrawal amount in a subsequent sub-account
year. Similarly, the free withdrawal amount not withdrawn from one sub-account
may not be transferred to increase the free withdrawal amount in another
sub-account.
The sub-account year is defined as beginning on the anniversary date of the
establishment of the sub-account.
Taxes. Any premium taxes or other applicable taxes imposed on amounts relating
to this Certificate may be deducted from purchase payments or the account value
when the tax is incurred or at a later time.
Market Value Adjustment. If money is withdrawn from the sub-account prior to the
end of its guarantee period, an adjustment will be made prior to distribution.
The market value adjustment formula may be either positive or negative and will
be based on the following.
I = the interest crediting rate for that sub-account;
N = the number of complete days from the date the withdrawal
request is received to the end of the sub-account's guarantee
period; and
J = The current interest crediting rate offered, on the date the
withdrawal request is received, for a guarante period of duration
N. If a guarantee period of duration N is not currently being
offered, J will be determined by linear interpolation (weighted
average). If N is less than or equal to 365 days, J will be the
rate for a guarantee period of duration 365.
The market value adjustment factor is determined from the following formula:
.9 x (I - J) x (N / 365)
The amount withdrawn in excess of the free withdrawal amount will be multiplied
by the result of the adjustment factor to determine the market value adjustment.
Return of Purchase Payment Guarantee. If you surrender this Certificate, you
will receive an amount at least equal to all purchase payments less any prior
partial withdrawals.
Death of Owner or Annuitant. If any owner or annuitant dies prior to the payout
start date, a death benefit may be paid.
If an owner dies prior to the payout start date, the new owner (any surviving
owner(s) or if none, the beneficiary) may elect, within 60 days of the date of
death, to receive the death benefit in a lump sum or apply the death benefit to
an income plan. Payments from the income plan must begin within one year of the
date of death and must be over the life of the new owner, or a period not to
exceed the life expectancy of the new owner.
Otherwise, the new owner may elect to receive the settlement value payable in a
lump sum within five years of the date of death. Any remaining funds will be
distributed at the end of the five year period. An annuitant is necessary to
continue the Certificate between the date of the owner's death and the final
distribution. If there is no annuitant at that time, the new annuitant will be
the youngest new owner.
If the owner is the surviving spouse of the deceased owner, then the spouse may
continue the Certificate in the accumulation phase as if the death had not
occurred. If there is no annuitant at that time, the new annuitant will be the
surviving spouse. The surviving spouse may also select one of the options listed
above.
If the new owner is a non-natural person, then the owner must receive the death
benefit in a lump sum, and the options listed above are not available.
If the annuitant, not also an owner, dies prior to the payout start date, then
the owner may elect within 60 days of the date of death, to receive the death
benefit in a lump sum, or apply the death benefit to an income plan. The options
listed above are not available.
Death Benefit. The death benefit is the greater of:
(a) the account value, or
(b) the settlement value
We will calculate the value of the death benefit as of the date we receive a
complete request for payment of the death benefit. A complete request includes
due proof of death.
Settlement Value. The settlement value is the account value adjusted by the
market value adjustment, less any applicable withdrawal charges and taxes.
<PAGE>
PAYOUT PHASE
- --------------------------------------------------------------------------------
Payout Phase Defined. The payout phase is the second of the two phases in the
life of your Certificate. During this phase the account value is applied to the
income plan you choose and is paid out as provided in that plan.
The payout phase begins on the payout start date. It continues until we make the
last payment as provided by the income plan chosen.
Payout Start Date. The anticipated payout start date is shown on the Annuity
Data page. You may change the payout start date by writing to us at least 30
days prior to the payout start date.
The payout start date must be on or before the later of:
o the annuitant's 90th birthday; or
o the 10th anniversary of this Certificate's issue date.
Unless changed as described above, we will use the payout start date shown on
the Annuity Data page.
Income Plans. An income plan distributes payments on a scheduled basis. The
account value on the payout start date, less any applicable tax, will be applied
to your income plan choice from the following list:
1. Life Income with Guaranteed Payments. We will make payments to you for as
long as the annuitant lives. If the annuitant dies before all guaranteed
payments have been made, we will continue to pay you the remainder of the
guaranteed payments.
2. Joint and Survivor Life Income with Guaranteed Payments. We will make
payments to you for as long as either the annuitant named by you or any
joint annuitant, named at the time of income plan selection, lives. If both
the annuitant and the joint annuitant die before all guaranteed payments
have been made, we will continue to pay you the remainder of the guaranteed
payments.
3. Guaranteed Payments for a Specified Period. We will make payments beginning
on the payout start date for a specified period. These payments do not
depend on the annuitant's life. The number of months guaranteed may be from
60 to 360.
We reserve the right to accept other income plans.
Payout Terms and Conditions. The income payments are subject to the following
terms and conditions:
o If we do not receive a written choice of an income plan from you at least
30 days before the payout start date, the income plan will be life income
with 120 months guaranteed.
o If you choose an income plan which depends on any person's life, we may
require proof of age and sex before income payments begin.
o We may require proof that the annuitant or joint annuitant is still alive
before we make each payment that depends on their continued life.
o After the account value has been applied to an income plan on the payout
start date, the income plan cannot be changed and no withdrawals can be
made.
o If any owner dies during the payout phase, income payments will continue as
scheduled.
o Should the account value be less than $2,000, or not be enough to provide
an initial payment of at least $20, we reserve the right to:
o change the payment frequency to make the payment at least $20; or
o terminate the Certificate and pay you the account value in a lump sum.
<PAGE>
INCOME PAYMENT TABLES
- --------------------------------------------------------------------------------
Income payments will be at least the amount shown in the tables below, less any
federal taxes which are required to be withheld. The Income Payment Tables are
based on 4.0% interest and the 1983 Table a Annuity Mortality Tables. Income
payments for ages not shown in this section will be determined on a basis
consistent with that used to determine those that are shown.
Income Plan 1 - Life Income with 120 Months Guaranteed
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Monthly Income Payment for each $1,000 Applied to this Income Plan
- --------------------------------------------------------------------------------
Annuitant's Annuitant's Annuitant's
Age Male Female Age Male Female Age Male Female
- ------------- ----------- ---------- ----------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $4.05 $3.88 49 $4.73 $4.42 63 $6.07 $5.53
36 4.09 3.90 50 4.80 4.47 64 6.21 5.65
37 4.13 3.93 51 4.87 4.53 65 6.35 5.77
38 4.17 3.96 52 4.95 4.59 66 6.50 5.90
39 4.21 3.99 53 5.02 4.65 67 6.65 6.04
40 4.25 4.03 54 5.11 4.72 68 6.81 6.18
41 4.30 4.06 55 5.19 4.79 69 6.97 6.34
42 4.34 4.10 56 5.28 4.87 70 7.14 6.50
43 4.39 4.14 57 5.38 4.95 71 7.31 6.66
44 4.44 4.18 58 5.48 5.03 72 7.48 6.84
45 4.49 4.22 59 5.59 5.12 73 7.65 7.02
46 4.55 4.27 60 5.70 5.21 74 7.82 7.21
47 4.61 4.31 61 5.82 5.31 75 8.00 7.40
48 4.67 4.36 62 5.94 5.42
- ------------- ----------- ---------- ----------- ---------- ----------- ----------- ---------- -----------
</TABLE>
Income Plan 2 - Joint and Survivor Life Income with 120 Months Guaranteed
<TABLE>
<CAPTION>
- --------------- ------------------------------------------------------------------------------------------
Male Monthly Income Payment for each $1,000 Applied to this Income Plan
Annuitant's ------------------------------------------------------------------------------------------
Female Annuitant's Age
35 40 45 50 55 60 65 70 75
- --------------- --------- --------- --------- --------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.72 3.78 3.84 3.89 3.93 3.97 4.00 4.02 4.03
40 3.76 3.84 3.92 3.99 4.06 4.11 4.16 4.19 4.22
45 3.79 3.89 3.99 4.09 4.19 4.27 4.34 4.40 4.44
50 3.82 3.93 4.05 4.18 4.32 4.44 4.55 4.64 4.71
66 3.83 3.96 4.10 4.26 4.44 4.62 4.78 4.93 5.04
60 3.85 3.98 4.14 4.33 4.55 4.78 5.02 5.25 5.43
65 3.86 4.00 4.17 4.38 4.63 4.93 5.25 5.58 5.88
70 3.87 4.01 4.19 4.42 4.70 5.04 5.44 5.89 6.33
75 3.87 4.02 4.21 4.44 4.74 5.12 5.59 6.14 6.74
- --------------- --------- --------- --------- --------- ---------- --------- --------- --------- ---------
</TABLE>
Income Plan 3 - Guaranteed Payments for a Specified Period
- ------------------------------ ------------------------------------
Monthly Income Payment for Each
Specified Period $1,000 Applied to this Income Plan
- ------------------------------ ------------------------------------
10 Years $10.06
11 Years 9.31
12 Years 8.69
13 Years 8.17
14 Years 7.72
15 Years 7.34
16 Years 7.00
17 Years 6.71
18 Years 6.44
19 Years 6.21
20 Years 6.00
- ------------------------------ ------------------------------------
<PAGE>
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
The Entire Contract. The entire contract consists of the Master Policy, the
Master Policy application, any written enrollments, and any endorsements.
All statements made in written enrollments are representations and not
warranties. No statement will be used by us in defense of a claim or to void a
Certificate unless it is included in a written enrollment.
Only our officers may change the Master Policy or Certificate or waive a right
or requirement. No other individual may do this.
The Master Policy may be amended by us, terminated by us, or terminated by the
Master Policyholder without the consent of any other person. No termination
completed after the issue date of this Certificate will adversely affect your
rights under this Certificate.
We may not modify this Certificate without your consent, except to make it
comply with any changes in the Internal Revenue Code or as required by any other
applicable law.
Incontestability. We will not contest the validity of this Certificate after the
issue date.
Misstatement of Age or Sex. If any age or sex has been misstated, we will pay
the amounts which would have been paid at the correct age or sex.
If we find the misstatement of age or sex after the income payments begin, we
will:
o pay all amounts underpaid including interest; or
o stop payments until the total payments are equal to the corrected
amount plus due interest.
For purposes of the Misstatement of Age or Sex provision, due interest will be
calculated at an effective annual rate of 6%.
Annual Statement. At least once a year, prior to the payout start date, we will
send you a statement containing account value information. The information
presented will comply with any applicable law.
Settlements. We may require that this Certificate be returned to us prior to any
settlement. We must receive due proof of death of the owner or annuitant prior
to settlement of a death claim. Due proof of death is one of the following:
o a certified copy of a death certificate; or
o a certified copy of a decree of a court of competent jurisdiction as
to a finding of death; or
o any other proof acceptable to us.
Any cash surrender or death benefit under this Certificate will not be less than
the minimum benefits required by Delaware.
Deferment of Payments. We reserve the right to defer payment of any partial
withdrawal or full surrender for up to six months after the date you request it.
<PAGE>
<TABLE>
<CAPTION>
Custom Annuity and Custom G&I
Enrollment for Coverage under Group Annuity Contract(s) issued to Dean Witter Reynolds, Inc.
Issued by Northbrook Life Insurance Company, Northbrook, Illinois
Send Enrollment to: Northbrook Life Insurance Company [P.O. Box 9030, North Suburban, IL 60197-9030]
<S> <C>
- ------------------------------------------------------------------------------------------------------------
1. Total Purchase Payment 2. Annuity Plan (check only one Plan
$___________________ |_| Custom Annuity (fill in Sub-account Allocation (s))
$_______for_____year(s) $________for_____years
$_______for_____years $________for_____years
$_______for_____years $________for_____years
$_______for_____years $________for_____years
$_______for_____years $________for_____years
|_| Custom Growth & Income Annuity for ______years (5 - 10)
- --------------------------------------- --------------------------------------------------------------------
- --------------------------------------- --------------------------------------------------------------------
3. Federal Withholding Election Do you wish to have Federal Income Tax withheld
from you annuity payments?
|_| Yes |_| No
- --------------------------------------- --------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
4. Owner(s) |_| Male |_| Female (mm / dd / yy)
Name ___________________________________ Soc. Sec. No. ____________________ Birthdate _________________
Address _________________________________ City ____________________________ State _____ Zip __________
|_| Male |_| Female
Name ___________________________________ Soc. Sec. No. ____________________ Birthdate _________________
Address _________________________________ City ____________________________ State _____ Zip __________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
5. Annuitant (Leave blank if Annuitant same as sole Owner or if this annuity
will be part of an IRA, 403(b), or SEP) (Defining life only, not entitle to
benefits)
|_| Male |_| Female Relationship to Owner _____________
Name ___________________________________ Soc. Sec. No. ____________________ Birthdate _________________
Address _________________________________ City ____________________________ State _____ Zip __________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
6. Beneficiary(ies) (Entitled to benefits upon last Owner's death)
Name ___________________________________ Relationship to Owner ____________________
Name ___________________________________ Relationship to Owner ____________________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
7. Replacement Will this annuity replace or change any existing annuity or life
insurance? |_| Yes|_| No (If yes, complete the following.)
Company _____________________________________________ Policy No. ____________________________________
Cost basis amount _____________________________________ Policy Date ___________________________________
(Intended to qualify as a 1035 exchange? |_| Yes |_| No (if yes, attach copy of signed Absolute Assignment form.)
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
8. Tax Qualified Plan |_| Yes |_| No (If yes, complete the following)
|_| IRA Rollover |_| IRA Transfer |_|IRA/Year of Contribution ______ |_| 401(a)(pension)
|_| 403(b)(TSA) |_| SEP/Year of Contribution ________(Attach Form 5305) |_| Other __________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
9. Special Instructions
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
A copy of this Enrollment signed by the Account Executive will be receipt
for the first purchase payment. If this Enrollment is declined, Northbrook Life
Insurance Company ("Northbrook") will have no liability except to return the
first
purchase payment.
I have read the above statements and represent that they are complete and
true to the best of my knowledge and belief. I agree that this Enrollment shall
be a part of the Certificate issued by Northbrook. Northbrook may add to or
correct the Enrollment in space labeled "Home Office Endorsement." By accepting
the Certificate issued, I agree to any additions or corrections to this
Enrollment. Northbrook will obtain written agreement from me for any change in
the benefits, type of plan, or birth dates.
I UNDERSTAND THAT WITHDRAWALS AND SURRENDERS MAY BE SUBJECT TO A MARKET
VALUE ADJUSTMENT IF EXERCISED PRIOR TO THE END OF A RATE GUARANTEE PERIOD. I
ALSO ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUS FOR THIS PRODUCT.
Signed at _________________________________________________________________ Date _____/_____/_____
City State
Signature(s) of Owner(s) _____________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Home Office Endorsement
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
AE Use Only Do you have any reason to believe that the Certificate(s) applied
for is (are) to replace or change any existing annuity or life insurance? |_|
YES |_| NO
AE's Signature _____________________________________________ Quote # _____________________________
Branch/AE No. ___________ Phone Number (____) ______________ Transaction # _______________________
- ------------------------------------------------------------------------------------------------------------
</TABLE>
NORTHBROOK LIFE INSURANCE COMPANY
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, J5B
Northbrook, Illinois 60062
Direct Dial Number 847-402-2400
Facsimile 847-402-4371
Michael J. Velotta Please direct reply to:
Vice President, Secretary Post Office Box 3005
and General Counsel Northbrook, Illinois 60065-3005
April 14, 1999
TO: NORTHBROOK LIFE INSURANCE COMPANY
NORTHBROOK, ILLINOIS 60062
FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 033-50884
With reference to the Registration Statement on Form S-3 filed by
Northbrook Life Insurance Company (the "Company") with the Securities and
Exchange Commission covering the Flexible Premium Deferred Annuity Contracts, I
have examined such documents and such law as I have considered necessary and
appropriate, and on the basis of such examination, it is my opinion that as of
December 28, 1998:
1. The Company is duly organized and existing under the laws of the State
of Arizona and has been duly authorized to do business by the Director
of Insurance of the State of Arizona.
2. The securities registered by the above Registration Statement when
issued will be valid, legal and binding obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the
above referenced Registration Statement and to the use of my name under the
caption "Legal Matters" in the Prospectus constituting a part of the
Registration Statement.
Sincerely,
/s/ MICHAEL J. VELOTTA
- -------------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 7 to Form S-1 to Registration Statement No. 033-50884 of Northbrook Life
Insurance Company to Form S-1 on Form S-3 of our report dated February 19, 1999,
appearing in the Annual Report on Form 10-K of Northbrook Life Insurance Company
for the year ended December 31, 1998, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of such Registration
Statement.
/s/ DELOITTE & TOUCHE
Chicago, Illinois
April 26, 1999
Freedman, Levy, Kroll & Simonds
CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus contained in Post-Effective Amendment No. 7 to Form
S-1 on the Form S-3 Registration Statement of Northbrook Life Insurance Company
(File No. 033-50884).
/s/FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 26, 1999
POWER OF ATTORNEY
WITH RESPECT TO
NORTHBROOK LIFE INSURANCE COMPANY
Know all men by these presents that Thomas J. Wilson, II, whose
signature appears below, constitutes and appoints Louis G. Lower, II and Michael
J. Velotta, each acting individually, his attorney-in-fact, with power of
substitution and in any and all capacities, to sign any registration statements
and amendments thereto for the Northbrook Life Insurance Company and related
Contracts and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 23, 1999
Date
/s/Thomas J. Wilson, II
Thomas J. Wilson, II
Vice Chairman and Director
