<PAGE>
AS FILED WITH SECURITIES AND EXCHANGE COMMISSION ON JUNE 22, 1995
REGISTRATION NO. 33-88082
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-6
PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
(EXACT NAME OF TRUST)
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
501 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02117
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
MARIE C. SWIFT, ESQ.
COUNSEL
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02117
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
STEPHEN E. ROTH, ESQ.
SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYLVANIA AVE., N.W.
WASHINGTON, D.C. 20004-2404
----------------
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICIES--
REGISTRATION OF AN INDEFINITE AMOUNT OF SECURITIES
PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940
(TITLE, AMOUNT, AND PROPOSED MAXIMUM OFFERING PRICE OF
SECURITIES BEING REGISTERED)
AMOUNT OF FILING FEE: THE FILING FEE OF $500 WAS PAID CONCURRENTLY WITH THE
FILING OF THE REGISTRATION STATEMENT ON FORM S-6 (FILE NO. 33-88082) ON
DECEMBER 30, 1994.
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement under the
Securities Act of 1933 on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
Registration Statement on Form S-6
Cross-Reference Sheet
<TABLE>
<CAPTION>
Form N-8B-2
Item No. Caption in Prospectus
- --------- ---------------------
<S> <C>
1 Cover Page
2 Cover Page
3 Inapplicable
4 NEVLICO's Distribution and Other Agreements
5 NEVLICO and The New England
6 The Variable Account
9 Inapplicable
10(a) Other Policy Features
10(b) Policy Values and Benefits
10(c),(d),(e) Death Benefit; Cash Value; 24 Month Right; Surrender; Partial Surrender and Partial
Withdrawal; Right to Return the Policy; Loan Provision; Transfer Option; Premiums
10(f),(g),(h) Voting Rights; Rights Reserved by NEVLICO
10(i) Limits to NEVLICO's Right to Challenge the Policy; Payment of Proceeds; Investment
Options
11 The Variable Account
12 Investments of the Variable Account; NEVLICO's Distribution and Other Agreements
13 Charges and Expenses; NEVLICO's Distribution and Other Agreements; Charge for
NEVLICO's Income Taxes; Appendix A
14 Amount Provided for Investment Under the Policy; NEVLICO's Distribution and Other
Agreements
15 Premiums
16 Investments of the Variable Account
17 Captions referenced under Items 10(c),(d),(e) and (i) above
18 The Variable Account; Net Investment Experience
19 Reports; NEVLICO's Distribution and Other Agreements
20 Captions referenced under Items 6 and 10(g) above
21 Loan Provision
22 Inapplicable
23 NEVLICO's Distribution and Other Agreements
24 Limits to NEVLICO's Right to Challenge the Policy
25 NEVLICO and The New England
26 NEVLICO's Distribution and Other Agreements
27 NEVLICO and The New England
28 Management
29 NEVLICO and The New England
30 Inapplicable
31 Inapplicable
32 Inapplicable
33 Inapplicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2
Item No. Caption in Prospectus
- ----------- ---------------------
<S> <C>
34 NEVLICO's Distribution and Other Agreements
35 NEVLICO and The New England
36 Inapplicable
37 Inapplicable
38 NEVLICO's Distribution and Other Agreements
39 NEVLICO's Distribution and Other Agreements
40 NEVLICO's Distribution and Other Agreements
41(a) NEVLICO's Distribution and Other Agreements
42 Inapplicable
43 Inapplicable
44(a) Investments of the Variable Account; Amount Provided for
Investment Under the Policy; Deductions from Premiums;
Flexible Premiums
44(b) Charges and Expenses
44(c) Flexible Premiums; Deductions from Premiums
45 Inapplicable
46 Investments of the Variable Account; Captions referenced
under Items 10(c), (d) and (e) above
47 Inapplicable
48 Inapplicable
49 Inapplicable
50 Inapplicable
51 Cover Page; Death Benefit; Lapse and Reinstatement; Charges
and Expenses; Additional Benefits by Rider; 24 Month Right;
Payment Options; Policy Owner and Beneficiary; Premiums;
NEVLICO's Distribution and Other Agreements
52 Rights Reserved by NEVLICO
53 Tax Considerations
54 Inapplicable
55 Inapplicable
59 Financial Statements
</TABLE>
<PAGE>
ZENITH FLEXIBLE LIFE
SUPPLEMENT DATED JULY , 1995
TO PROSPECTUS DATED JULY , 1995
Set out below are hypothetical illustrations of the investment experience of
sub-accounts investing in four series of the New England Zenith Fund ("Cloned
Series") that are newly-established and are modeled on existing funds or
portfolios ("Model Funds"). The Cloned Series are the Loomis Sayles Balanced
Series, the Draycott International Equity Series, the Venture Value Series,
and the Alger Equity Growth Series. Each Cloned Series will be managed in a
manner substantially similar to its corresponding Model Fund, and will have
the same portfolio managers as its corresponding Model Fund. More detailed
information about the Model Funds is provided below and in the supplement
dated May 1, 1995 to the prospectus for the New England Zenith Fund. The
information below reflects the level of annualized expenses borne by each
Model Fund during the period shown, which is at an equal or higher level than
the level of annualized expenses that are projected to be borne by the
corresponding Cloned Series for its initial fiscal period, after giving effect
to the voluntary expense deferral arrangement applicable to that Series. THIS
PERFORMANCE INFORMATION IS IN EACH CASE BASED ON A MODEL FUND BELIEVED TO BE
COMPARABLE TO EACH CLONED SERIES AND NOT ON THE CLONED SERIES ITSELF, WHICH
ONLY RECENTLY COMMENCED OPERATIONS.
The illustrations reflect a charge for mortality and expense risks against
the Variable Account's assets at an annual rate of .75% The illustrations
assume that premiums are paid at the beginning of each Policy year and that no
loans, transfers or other Policy Owner transactions were made during the
periods shown. (See Appendix B in the prospectus for more information
regarding Variable Account investment experience.)
LOOMIS SAYLES BALANCED SERIES. This Series is modeled on one Model Fund, the
New England Balanced Fund, which began pursuing its current investment
objective on March 1, 1990, and is managed by Loomis, Sayles & Company, L.P.,
the sub-adviser for the Series.
<PAGE>
SUB-ACCOUNT NET RATES OF RETURN
BASED ON INVESTMENT EXPERIENCE OF NEW ENGLAND BALANCED FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN 3/1/90- 3/1/90-
FOR ONE YEAR ENDING 12/31/94 12/31/94
3/1/90- ------------------------------------------------- TOTAL EFFECTIVE
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
- -7.35% 28.25% 13.08% 13.33% -3.49% 46.96% 8.29%
</TABLE>
POLICY PERFORMANCE (based on current Policy charges)
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- -------- -------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
March 1, 1990.. $ 4,025 $250,000 $250,000 $ 3,666 $ 2,568 -- --
December 31,
1990.......... 4,025 250,000 250,000 2,900 1,802 -61.79% --
December 31,
1991.......... 8,050 250,000 250,000 7,264 6,124 -18.85 795.01%
December 31,
1992.......... 12,075 250,000 250,000 11,619 9,746 -11.24 288.54
December 31,
1993.......... 16,100 250,000 250,000 16,613 14,802 -3.57 160.05
December 31,
1994.......... 20,124 250,000 250,000 18,987 17,239 -5.41 105.85
</TABLE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- -------- -------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
March 1, 1990.. $ 4,025 $250,000 $253,666 $ 3,666 $ 2,568 -- --
December 31,
1990.......... 4,025 250,000 252,895 2,895 1,797 -61.90% --
December 31,
1991.......... 8,050 250,000 257,247 7,247 6,106 -19.03 809.86%
December 31,
1992.......... 12,075 250,000 261,578 11,578 9,705 -11.46 295.52
December 31,
1993.......... 16,100 250,000 266,532 16,532 14,721 -3.80 165.13
December 31,
1994.......... 20,124 250,000 268,869 18,869 17,121 -5.65 109.59
</TABLE>
2
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- -------- -------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
March 1, 1990.. $ 7,916 $500,000 $500,000 $ 7,317 $ 5,121 -- --
December 31,
1990.......... 7,916 500,000 500,000 6,044 3,848 -57.82% --
December 31,
1991.......... 15,832 500,000 500,000 15,138 12,856 -14.63 803.70%
December 31,
1992.......... 23,747 500,000 500,000 24,217 20,471 -7.88 291.12
December 31,
1993.......... 31,663 500,000 500,000 34,645 31,024 -.87 161.37
December 31,
1994.......... 39,579 500,000 500,000 39,640 36,144 -3.19 106.71
</TABLE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- -------- -------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
March 1, 1990.. $ 7,916 $500,000 $507,316 $ 7,316 $ 5,120 -- --
December 31,
1990.......... 7,916 500,000 506,038 6,038 3,841 -57.90% --
December 31,
1991.......... 15,832 500,000 515,112 15,112 12,830 -14.77 819.33%
December 31,
1992.......... 23,747 500,000 524,157 24,157 20,411 -8.03 298.43
December 31,
1993.......... 31,663 500,000 534,527 34,527 30,906 -1.03 166.70
December 31,
1994.......... 39,579 500,000 539,466 39,466 35,970 -3.35 110.63
</TABLE>
DRAYCOTT INTERNATIONAL EQUITY SERIES. This Series is modeled on two Model
Funds, the New England International Equity Fund and a separate account of The
New England, both of which are managed by Draycott Partners, Ltd., the sub-
adviser to the Series. The information shown below is based solely on the
historical performance of the New England International Equity Fund, which
commenced operations on May 21, 1992, and whose performance NEVLICO believes
is representative of the historical performance realized by the two Model
Funds for this Series. The supplement dated May 1, 1995 to the prospectus of
the New England Zenith Fund provides information concerning the composite
returns of both Model Funds, taken together.
3
<PAGE>
SUB-ACCOUNT NET RATES OF RETURN
BASED ON INVESTMENT EXPERIENCE OF NEW ENGLAND INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN 5/21/92- 5/21/92-
FOR ONE YEAR ENDING 12/31/94 12/31/94
5/21/92- ----------------------------------------- TOTAL EFFECTIVE
12/31/92 12/31/93 12/31/94 RETURN ANNUAL
- -------- ------------- ------------ -------- ---------
<S> <C> <C> <C> <C>
- -5.33% 28.31% 6.62% 29.51% 10.41%
</TABLE>
POLICY PERFORMANCE (based on current Policy charges)
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- -------- -------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
May 21, 1992... $ 4,025 $250,000 $250,000 $ 3,666 $2,568 -- --
December 31,
1992.......... 4,025 250,000 250,000 3,076 1,978 -68.75% --
December 31,
1993.......... 8,050 250,000 250,000 7,351 6,200 -21.46 1,136.37%
December 31,
1994.......... 12,075 250,000 250,000 10,937 9,054 -16.96 342.73
</TABLE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- -------- -------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
May 21, 1992... $ 4,025 $250,000 $253,666 $ 3,666 $2,568 -- --
December 31,
1992.......... 4,025 250,000 253,072 3,072 1,974 -68.84% --
December 31,
1993.......... 8,050 250,000 257,335 7,335 6,184 -21.66 1,159.86%
December 31,
1994.......... 12,075 250,000 260,902 10,902 9,018 -17.18 350.82
</TABLE>
4
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
May 21, 1992... $ 7,916 $500,000 $500,000 $ 7,317 $ 5,121 -- --
December 31,
1992.......... 7,916 500,000 500,000 6,343 4,147 -65.30% --
December 31,
1993.......... 15,832 500,000 500,000 15,253 12,951 -16.86 1,149.96%
December 31,
1994.......... 23,747 500,000 500,000 22,729 18,962 -13.41 345.89
</TABLE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
May 21, 1992... $ 7,916 $500,000 $507,316 $ 7,316 $ 5,120 -- --
December 31,
1992.......... 7,916 500,000 506,337 6,337 4,141 -65.37% --
December 31,
1993.......... 15,832 500,000 515,230 15,230 12,928 17.00 1,174.59%
December 31,
1994.......... 23,747 500,000 522,677 22,677 18,910 -13.57 354.36
</TABLE>
ALGER EQUITY GROWTH SERIES. This Series is modeled on three Model Funds
managed by Fred Alger Management, Inc., the sub-adviser for the Series. The
information below is based solely on the historical performance of one of
these funds, the Alger American Growth Portfolio, a series of the Alger
American Fund, which commenced operations on January 9, 1989, and whose
performance NEVLICO believes is representative of the historical performance
realized by all three Model Funds for this Series. The supplement dated May 1,
1995 to the prospectus of the New England Zenith Fund provides information
concerning the composite returns for all three Model Funds, taken together.
5
<PAGE>
SUB-ACCOUNT NET RATES OF RETURN
BASED ON INVESTMENT EXPERIENCE OF ALGER AMERICAN GROWTH PORTFOLIO
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN 1/9/89- 1/9/89-
FOR ONE YEAR ENDING 12/31/94 12/31/94
1/9/89- -------------------------------------------- TOTAL EFFECTIVE
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
25.08% 2.21% 39.34% 11.54% 21.55% -0.93% 139.27% 15.72%
</TABLE>
POLICY PERFORMANCE (based on current Policy charges)
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
January 9,
1989.......... $ 4,025 $250,000 $250,000 $ 3,666 $ 2,568 -- --
December 31,
1989.......... 4,025 250,000 250,000 3,904 2,806 -30.92% --
December 31,
1990.......... 8,050 250,000 250,000 7,245 6,115 -17.25 659.62%
December 31,
1991.......... 12,075 250,000 250,000 14,878 13,016 3.85 261.90
December 31,
1992.......... 16,100 250,000 250,000 19,866 18,066 4.71 150.11
December 31,
1993.......... 20,124 250,000 250,000 27,890 26,153 8.94 100.92
December 31,
1994.......... 24,149 250,000 250,000 30,572 29,124 5.41 74.04
</TABLE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
January 9,
1989.......... $ 4,025 $250,000 $253,666 $ 3,666 $ 2,568 -- --
December 31,
1989.......... 4,025 250,000 253,897 3,897 2,799 -31.10% --
December 31,
1990.......... 8,050 250,000 257,225 7,225 6,094 -17.45 671.34%
December 31,
1991.......... 12,075 250,000 264,821 14,821 12,958 3.62 269.82
December 31,
1992.......... 16,100 250,000 269,759 19,759 17,959 4.47 155.73
December 31,
1993.......... 20,124 250,000 277,699 27,699 25,961 8.68 106.06
December 31,
1994.......... 24,149 250,000 280,312 30,312 28,864 5.15 78.18
</TABLE>
6
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
January 9,
1989.......... $ 7,916 $500,000 $500,000 $ 7,317 $ 5,121 -- --
December 31,
1989.......... 7,916 500,000 500,000 8,144 5,948 -25.40% --
December 31,
1990.......... 15,832 500,000 500,000 15,103 12,843 -13.37 666.51%
December 31,
1991.......... 23,747 500,000 500,000 30,916 27,191 7.01 264.19
December 31,
1992.......... 31,663 500,000 500,000 41,360 37,760 7.24 151.34
December 31,
1993.......... 39,579 500,000 500,000 58,093 54,618 11.02 101.73
December 31,
1994.......... 47,495 500,000 500,000 63,744 60,848 7.17 74.64
</TABLE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
January 9,
1989.......... $ 7,916 $500,000 $507,316 $ 7,316 $ 5,120 -- --
December 31,
1989.......... 7,916 500,000 508,134 8,134 5,937 -25.54% --
December 31,
1990.......... 15,832 500,000 515,073 15,073 12,813 -13.51 678.84%
December 31,
1991.......... 23,747 500,000 530,832 30,832 27,107 6.85 272.47
December 31,
1992.......... 31,663 500,000 541,203 41,203 37,603 7.07 157.22
December 31,
1993.......... 39,579 500,000 557,813 57,813 54,337 10.84 107.11
December 31,
1994.......... 47,495 500,000 563,364 63,364 60,468 6.99 78.97
</TABLE>
VENTURE VALUE SERIES. This Series is modeled on two Model Funds managed by
Selected/Venture Advisers, L.P., the sub-adviser for the Series. The
information below is based solely on the historical performance of one of
these funds, the New York Venture Fund, which commenced operations on February
17, 1969, and whose performance NEVLICO believes is representative of the
historical performance realized by both Model Funds for this Series. The
supplement dated May 1, 1995 to the prospectus of the New England Zenith Fund
provides information concerning the composite returns for both Model Funds,
taken together.
7
<PAGE>
NET RATES OF RETURN
BASED ON INVESTMENT EXPERIENCE OF NEW YORK VENTURE FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
FOR ONE YEAR ENDING
2/17/69- --------------------------------------------------------------
12/31/69 12/31/70 12/31/71 12/31/72 12/31/73 12/31/74 12/31/75 12/31/76
- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
19.37% -26.79% 27.08% 22.83% -25.73% -20.71% 22.33% 19.86%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
FOR ONE YEAR ENDING
- ------------------------------------------------------------------------------------------
12/31/77 12/31/78 12/31/79 12/31/80 12/31/81 12/31/82
- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
2.26% 20.63% 37.69% 43.02% 0.59% 24.49%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
FOR ONE YEAR ENDING
- ------------------------------------------------------------------------
12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90
- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
22.25% 4.04% 36.60% 20.55% -1.54% 19.59% 36.10% -4.51%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN 2/17/69- 2/17/69-
FOR ONE YEAR ENDING 12/31/94 12/31/94
- -------------------------------------------------------- TOTAL EFFECTIVE
12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
39.57% 11.38% 15.25% -2.27% 1,910.49% 12.30%
</TABLE>
POLICY PERFORMANCE (based on current Policy charges)
8
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
February 17,
1969......... $ 4,025 $250,000 $250,000 $ 3,666 $ 2,568 -- --
December 31,
1969......... 4,025 250,000 250,000 3,748 2,649 -38.21% --
December 31,
1970......... 8,050 250,000 250,000 5,019 3,883 -42.94 759.22%
December 31,
1971......... 12,075 250,000 250,000 9,961 8,093 -19.99 281.86
December 31,
1972......... 16,100 250,000 250,000 15,763 13,958 -5.94 157.61
December 31,
1973......... 20,124 250,000 250,000 14,166 12,423 -16.41 104.65
December 31,
1974......... 24,149 250,000 250,000 13,738 12,266 -19.92 76.22
December 31,
1975......... 28,174 250,000 250,000 20,236 19,053 -10.15 58.77
December 31,
1976......... 32,199 250,000 250,000 27,501 26,608 -4.39 47.10
December 31,
1977......... 36,224 250,000 250,000 31,342 30,738 -3.40 38.81
December 31,
1978......... 40,249 250,000 250,000 41,770 41,456 .55 32.65
December 31,
1979......... 44,274 250,000 250,000 61,622 61,598 5.53 27.91
December 31,
1980......... 48,299 250,000 250,000 92,167 92,167 9.79 24.18
December 31,
1981......... 52,324 250,000 250,000 96,214 96,214 8.54 21.16
December 31,
1982......... 56,348 250,000 250,000 124,032 124,032 10.17 18.68
December 31,
1983......... 60,373 250,000 250,000 155,484 155,484 11.29 16.62
December 31,
1984......... 64,398 250,000 250,000 165,378 165,378 10.54 14.87
December 31,
1985......... 68,423 250,000 335,860 230,041 230,041 12.57 16.22
December 31,
1986......... 72,448 250,000 398,666 280,751 280,751 13.15 16.31
December 31,
1987......... 76,473 250,000 385,129 279,079 279,079 11.92 14.66
December 31,
1988......... 80,498 250,000 451,958 337,282 337,282 12.42 14.77
December 31,
1989......... 84,523 250,000 601,965 463,050 463,050 13.85 15.81
December 31,
1990......... 88,548 250,000 569,915 445,246 445,246 12.58 14.34
December 31,
1991......... 92,572 250,000 787,538 625,031 625,031 14.01 15.56
December 31,
1992......... 96,597 250,000 867,089 699,265 699,265 13.85 15.23
December 31,
1993......... 100,622 250,000 986,640 808,722 808,722 13.91 15.12
December 31,
1994......... 104,647 250,000 950,995 792,496 792,496 13.01 14.07
</TABLE>
9
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$250,000 FACE AMOUNT
$4,025 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
February 17,
1969....... $ 4,025 $250,000 $ 253,666 $ 3,666 $ 2,568 -- --
December 31,
1969....... 4,025 250,000 253,741 3,741 2,643 -38.38% --
December 31,
1970....... 8,050 250,000 255,005 5,005 3,870 -43.10 768.93%
December 31,
1971....... 12,075 250,000 259,925 9,925 8,057 -20.19 287.69
December 31,
1972....... 16,100 250,000 265,686 15,686 13,881 -6.17 162.35
December 31,
1973....... 20,124 250,000 264,078 14,078 12,335 -16.65 107.43
December 31,
1974....... 24,149 250,000 263,637 13,637 12,165 -20.16 78.19
December 31,
1975....... 28,174 250,000 270,063 20,063 18,881 -10.39 61.03
December 31,
1976....... 32,199 250,000 277,228 27,228 26,335 -4.63 49.59
December 31,
1977....... 36,224 250,000 280,980 30,980 30,377 -3.64 41.20
December 31,
1978....... 40,249 250,000 291,224 41,224 40,910 .30 35.38
December 31,
1979....... 44,274 250,000 310,699 60,699 60,675 5.28 31.37
December 31,
1980....... 48,299 250,000 340,597 90,597 90,597 9.54 28.60
December 31,
1981....... 52,324 250,000 344,385 94,385 94,385 8.28 25.32
December 31,
1982....... 56,348 250,000 371,429 121,429 121,429 9.91 23.40
December 31,
1983....... 60,373 250,000 401,855 151,855 151,855 11.02 21.85
December 31,
1984....... 64,398 250,000 411,072 161,072 161,072 10.26 19.97
December 31,
1985....... 68,423 250,000 473,498 223,498 223,498 12.28 19.49
December 31,
1986....... 72,448 250,000 522,312 272,312 272,312 12.87 18.71
December 31,
1987....... 76,473 250,000 520,279 270,279 270,279 11.64 17.19
December 31,
1988....... 80,498 250,000 576,064 326,064 326,064 12.15 16.68
December 31,
1989....... 84,523 250,000 697,046 447,046 447,046 13.58 16.90
December 31,
1990....... 88,548 250,000 679,245 429,245 429,245 12.32 15.58
December 31,
1991....... 92,572 250,000 851,830 601,830 601,830 13.76 16.09
December 31,
1992....... 96,597 250,000 922,618 672,618 672,618 13.60 15.62
December 31,
1993....... 100,622 250,000 1,027,320 777,320 777,320 13.67 15.37
December 31,
1994....... 104,647 250,000 1,011,065 761,065 761,065 12.77 14.43
</TABLE>
10
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 1--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
February
17,
1969... $ 7,916 $500,000 $ 500,000 $ 7,317 $ 5,121 -- --
December
31,
1969... 7,916 500,000 500,000 7,805 5,608 -32.75% --
December
31,
1970... 15,832 500,000 500,000 10,534 8,263 -39.20 767.44%
December
31,
1971... 23,747 500,000 500,000 20,837 17,101 -16.60 284.36
December
31,
1972... 31,663 500,000 500,000 32,974 29,363 -3.16 158.91
December
31,
1973... 39,579 500,000 500,000 29,698 26,213 -14.07 105.50
December
31,
1974... 47,495 500,000 500,000 28,861 25,916 -17.82 76.84
December
31,
1975... 55,410 500,000 500,000 42,508 40,143 -8.35 59.26
December
31,
1976... 63,326 500,000 500,000 57,794 56,009 -2.82 47.50
December
31,
1977... 71,242 500,000 500,000 65,893 64,687 -1.99 39.15
December
31,
1978... 79,158 500,000 500,000 87,762 87,135 1.78 32.95
December
31,
1979... 87,073 500,000 500,000 129,459 129,411 6.61 28.18
December
31,
1980... 94,989 500,000 500,000 193,534 193,534 10.75 24.42
December
31,
1981... 102,905 500,000 500,000 201,797 201,797 9.41 21.38
December
31,
1982... 110,821 500,000 500,000 259,775 259,775 10.95 18.88
December
31,
1983... 118,737 500,000 510,732 325,307 325,307 11.99 17.04
December
31,
1984... 126,652 500,000 518,582 345,721 345,721 11.19 15.42
December
31,
1985... 134,568 500,000 701,531 480,501 480,501 13.15 16.80
December
31,
1986... 142,484 500,000 832,241 586,085 586,085 13.69 16.84
December
31,
1987... 150,400 500,000 803,619 582,333 582,333 12.43 15.16
December
31,
1988... 158,315 500,000 942,607 703,438 703,438 12.90 15.23
December
31,
1989... 166,231 500,000 1,254,807 965,236 965,236 14.29 16.24
December
31,
1990... 174,147 500,000 1,187,486 927,724 927,724 12.99 14.75
December
31,
1991... 182,063 500,000 1,640,321 1,301,842 1,301,842 14.40 15.95
December
31,
1992... 189,978 500,000 1,805,455 1,456,012 1,456,012 14.22 15.59
December
31,
1993... 197,894 500,000 2,053,852 1,683,485 1,683,485 14.26 15.47
December
31,
1994... 205,810 500,000 1,979,219 1,649,349 1,649,349 13.34 14.40
</TABLE>
11
<PAGE>
MALE NON-SMOKER PREFERRED RISK, AGE 40
OPTION 2--DEATH BENEFIT
$500,000 FACE AMOUNT
$7,916 ANNUAL PREMIUM
<TABLE>
<CAPTION>
INTERNAL INTERNAL
RATE OF RATE OF
TOTAL MINIMUM VARIABLE RETURN ON RETURN ON
PREMIUMS DEATH DEATH CASH NET CASH NET CASH DEATH
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE BENEFIT
- ---- -------- ------- -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
February
17,
1969... $ 7,916 $500,000 $ 507,316 $ 7,316 $ 5,120 -- --
December
31,
1969... 7,916 500,000 507,795 7,795 5,599 -32.88% --
December
31,
1970... 15,832 500,000 510,514 10,514 8,243 -39.31 777.72%
December
31,
1971... 23,747 500,000 520,784 20,784 17,049 -16.75 290.49
December
31,
1972... 31,663 500,000 532,860 32,860 29,249 -3.32 163.89
December
31,
1973... 39,579 500,000 529,568 29,568 26,083 -14.23 108.42
December
31,
1974... 47,495 500,000 528,712 28,712 25,767 -17.99 78.92
December
31,
1975... 55,410 500,000 542,253 42,253 39,888 -8.52 61.64
December
31,
1976... 63,326 500,000 557,390 57,390 55,604 -2.99 50.13
December
31,
1977... 71,242 500,000 565,357 65,357 64,151 -2.16 41.67
December
31,
1978... 79,158 500,000 586,953 86,953 86,325 1.61 35.82
December
31,
1979... 87,073 500,000 628,090 128,090 128,042 6.44 31.80
December
31,
1980... 94,989 500,000 691,174 191,174 191,174 10.57 29.04
December
31,
1981... 102,905 500,000 698,955 198,955 198,955 9.22 25.73
December
31,
1982... 110,821 500,000 755,561 255,561 255,561 10.75 23.80
December
31,
1983... 118,737 500,000 819,243 319,243 319,243 11.78 22.24
December
31,
1984... 126,652 500,000 838,312 338,312 338,312 10.96 20.34
December
31,
1985... 134,568 500,000 969,090 469,090 469,090 12.92 19.87
December
31,
1986... 142,484 500,000 1,071,268 571,268 571,268 13.46 19.08
December
31,
1987... 150,400 500,000 1,066,801 566,801 566,801 12.19 17.54
December
31,
1988... 158,315 500,000 1,183,518 683,518 683,518 12.67 17.03
December
31,
1989... 166,231 500,000 1,436,716 936,716 936,716 14.06 17.25
December
31,
1990... 174,147 500,000 1,399,112 899,112 899,112 12.77 15.91
December
31,
1991... 182,063 500,000 1,760,264 1,260,264 1,260,264 14.18 16.42
December
31,
1992... 189,978 500,000 1,908,190 1,408,190 1,408,190 14.00 15.94
December
31,
1993... 197,894 500,000 2,127,107 1,627,107 1,627,107 14.05 15.68
December
31,
1994... 205,810 500,000 2,092,881 1,592,881 1,592,881 13.13 14.72
</TABLE>
EXPERTS. Actuarial matters included in this Supplement have been examined by
Rodney J. Chandler, F.S.A., M.A.A.A., Chief Actuary of NEVLICO, as stated in
his opinion filed as an exhibit to the Registration Statement.
Not to be used after October 31, 1995
12
<PAGE>
NEW ENGLAND VARIABLE LIFE
INSURANCE COMPANY
Flexible Premium Adjustable
Variable Life Insurance Policies
Issued by
New England Variable Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus describes individual Flexible Premium Adjustable Variable
Life Insurance Policies (the "Policies") offered by New England Variable Life
Insurance Company ("NEVLICO"), a wholly-owned subsidiary of New England Mutual
Life Insurance Company ("The New England").
Each Policy provides premium flexibility together with two types of death
benefit guarantees as long as the total amount of premiums paid with interest,
less any partial surrenders with interest, at least equals certain minimum
amounts and there is no policy loan.
You may choose between two death benefit options, one of which provides a
fixed death benefit equal to the Policy's face amount and one of which
provides a variable death benefit which may vary daily with the net investment
experience of one or more mutual fund portfolios. Under either of the death
benefit options, the minimum death benefit guarantees will be available. The
cash value of the Policy generally will increase with the payment of each
premium but will vary daily with the investment experience of the mutual fund
portfolios. There is no guaranteed minimum cash value for investments in the
mutual fund portfolios.
You may cancel the Policy during the "right to return the Policy" period.
The first net premium for the Policy will be allocated to the Zenith Money
Market Sub-Account until the later of 45 days after the date Part 1 of the
application is signed or 10 days after NEVLICO mails the Notice of Withdrawal
Right. Thereafter, the Policy's cash value will be invested according to your
instructions.
You may, within limits, allocate premiums to one or more of the 16
investment Sub-Accounts of NEVLICO's Variable Life Separate Account (the
"Variable Account") or to NEVLICO's Fixed Account, after certain deductions
have been made. Each Sub-Account of the Variable Account invests in the shares
of one of the Eligible Funds. The Eligible Funds are: the Back Bay Advisors
Money Market Series, the Back Bay Advisors Bond Income Series, the Capital
Growth Series, the Westpeak Stock Index Series, the Back Bay Advisors Managed
Series, the Westpeak Value Growth Series, the Loomis Sayles Avanti Growth
Series, the Loomis Sayles Small Cap Series, the Alger Equity Growth Series*,
the Loomis Sayles Balanced Series*, the Venture Value Series* and the Draycott
International Equity Series* of the New England Zenith Fund (the "Zenith
Fund"); the Equity-Income Portfolio, Overseas Portfolio and High Income
Portfolio of the Variable Insurance Products Fund ("VIP Fund"); and the Asset
Manager Portfolio of the Variable Insurance Products Fund II ("VIP Fund II").
The Series of the Zenith Fund are advised by affiliates of The New England.
The VIP Fund and VIP Fund II are advised by Fidelity Management & Research
Company.
SPECIAL LIMITS APPLY TO TRANSFERS OF CASH VALUE OUT OF THE FIXED ACCOUNT.
It may not be advantageous to replace existing insurance with the Policy
described in this prospectus. (See "Charges and Expenses".)
- ----------
* (subject to any necessary state insurance department approvals)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THIS PROSPECTUS IS NOT VALID UNLESS ACCOMPANIED OR PRECEDED BY THE
CURRENT PROSPECTUSES OF THE NEW ENGLAND ZENITH FUND AND OF THE VARIABLE
INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II, WHICH ARE
ATTACHED AT THE END OF THIS PROSPECTUS. THESE PROSPECTUSES SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES ARE OFFERED FOR SALE IN THE COMMONWEALTH OF PUERTO RICO
PURSUANT TO REGISTRATION WITH THE SECURITIES OFFICE OF THE DEPARTMENT OF THE
TREASURY, BUT SUCH REGISTRATION DOES NOT CONSTITUTE A FINDING THAT THIS
PROSPECTUS IS TRUE, COMPLETE, AND NOT MISLEADING, NOR HAS THE SECURITIES
OFFICE OF THE DEPARTMENT OF THE TREASURY PASSED IN ANY WAY UPON THE MERITS OF,
RECOMMENDED, OR GIVEN APPROVAL TO SUCH SECURITIES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
JULY , 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY.................................................................. A-4
INTRODUCTION TO THE POLICIES.............................................. A-6
The Policies............................................................ A-6
Availability of the Policy.............................................. A-8
Policy Charges.......................................................... A-8
How the Policy Works.................................................... A-10
Receipt of Communications and Payments at NEVLICO's Administrative Of-
fice................................................................... A-11
NEVLICO and The New England............................................. A-11
POLICY VALUES AND BENEFITS................................................ A-12
Death Benefit........................................................... A-12
Minimum Guaranteed Death Benefit........................................ A-12
Adjustments to the Death Proceeds Payable............................... A-14
Change in Death Benefit Option.......................................... A-14
Cash Value.............................................................. A-14
Net Investment Experience............................................... A-14
Allocation of Net Premiums.............................................. A-15
Amount Provided for Investment under the Policy......................... A-15
Right to Return the Policy.............................................. A-16
CHARGES AND EXPENSES...................................................... A-16
Deductions from Premiums................................................ A-16
Surrender Charge........................................................ A-17
Monthly Deduction from Cash Value....................................... A-19
Charges Against the Eligible Funds and the Sub-Accounts of the Variable
Account................................................................ A-21
Group or Sponsored Arrangements......................................... A-21
PREMIUMS.................................................................. A-21
Flexible Premiums....................................................... A-21
Lapse and Reinstatement................................................. A-23
OTHER POLICY FEATURES..................................................... A-23
Increase in Face Amount................................................. A-23
Loan Provision.......................................................... A-24
Surrender............................................................... A-25
Partial Surrender....................................................... A-26
Reduction in Face Amount................................................ A-26
Investment Options...................................................... A-27
Transfer Option......................................................... A-27
Substitute of Insured Person............................................ A-27
Payment of Proceeds..................................................... A-28
24 Month Right.......................................................... A-28
Payment Options......................................................... A-29
Additional Benefits by Rider............................................ A-29
Policy Owner and Beneficiary............................................ A-30
THE VARIABLE ACCOUNT...................................................... A-30
Investments of the Variable Account..................................... A-31
Investment Management................................................... A-34
THE FIXED ACCOUNT......................................................... A-35
General Description..................................................... A-35
Values and Benefits..................................................... A-36
Policy Transactions..................................................... A-36
NEVLICO'S DISTRIBUTION AND OTHER AGREEMENTS............................... A-37
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LIMITS TO NEVLICO'S RIGHT TO CHALLENGE THE POLICY......................... A-37
Misstatement of Age or Sex.............................................. A-38
Suicide................................................................. A-38
TAX CONSIDERATIONS........................................................ A-38
Policy Proceeds......................................................... A-38
Charge for NEVLICO's Income Taxes....................................... A-41
MANAGEMENT................................................................ A-42
VOTING RIGHTS............................................................. A-43
RIGHTS RESERVED BY NEVLICO................................................ A-43
TOLL-FREE NUMBERS......................................................... A-44
REPORTS................................................................... A-44
ADVERTISING PRACTICES..................................................... A-44
LEGAL MATTERS............................................................. A-44
REGISTRATION STATEMENT.................................................... A-44
EXPERTS................................................................... A-45
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, NET CASH VALUES
AND ACCUMULATED PREMIUMS................................................. A-46
APPENDIX B: INVESTMENT EXPERIENCE INFORMATION............................. A-56
APPENDIX C: LONG TERM MARKET TRENDS....................................... A-72
APPENDIX D: USES OF LIFE INSURANCE........................................ A-74
APPENDIX E: TAX INFORMATION............................................... A-75
FINANCIAL STATEMENTS...................................................... A-76
</TABLE>
A-3
<PAGE>
GLOSSARY
ACCOUNT. A sub-account of the Variable Account or the Fixed Account.
ACTUAL INVESTMENT RETURN. This term appears in the Policy only. The Actual
Investment Return of a sub-account is the same as its net investment
experience. (See "Net Investment Experience".)
AGE. For purposes of this prospectus, the age of an insured refers to the
insured's age at his or her nearest birthday.
CASH VALUE. A Policy's cash value includes the amount of its cash value held
in the Variable Account, the amount held in the Fixed Account and, if there is
an outstanding policy loan, the amount of its cash value held in NEVLICO's
general account as a result of the loan. (See "Cash Value".)
COST OF INSURANCE CHARGE. This charge for providing insurance protection is
deducted on the Policy Date and on the first day of each policy month. The
cost of insurance for a policy month is equal to the amount at risk multiplied
by the cost of insurance rate for that month. Cost of insurance rates vary
monthly. (See "Monthly Deduction from Cash Value".)
DEATH BENEFIT OPTION 1. Death Benefit equals the greater of (i) the face
amount of the Policy and (ii) a percentage, determined in accordance with
federal income tax laws, of the Policy's cash value, including the pro rata
portion of any Monthly Deduction made for a period beyond the date of death.
(See "Death Benefit".)
DEATH BENEFIT OPTION 2. Death Benefit equals the greater of (i) the face
amount of the Policy plus the Policy's cash value and (ii) a percentage,
determined in accordance with federal income tax laws, of the Policy's cash
value, including the pro rata portion of any Monthly Deduction made for a
period beyond the date of death. (See "Death Benefit".)
ELIGIBLE FUNDS. Each Sub-Account of the Variable Account invests in the
shares of one of the Eligible Funds. The Eligible Funds are: the Back Bay
Advisors Money Market Series, the Back Bay Advisors Bond Income Series, the
Capital Growth Series, the Westpeak Stock Index Series, the Back Bay Advisors
Managed Series, the Westpeak Value Growth Series, the Loomis Sayles Avanti
Growth Series, the Loomis Sayles Small Cap Series, the Alger Equity Growth
Series*, the Loomis Sayles Balanced Series*, the Venture Value Series* and the
Draycott International Equity Series* of the Zenith Fund; the Equity-Income
Portfolio, Overseas Portfolio and the High Income Portfolio of the VIP Fund;
and the Asset Manager Portfolio of VIP Fund II. (*Availability of these Series
is subject to any necessary state insurance department approvals.) (See "The
Variable Account".)
EXCESS POLICY LOAN. The situation when policy loans plus accrued interest
exceed the Policy's cash value less the applicable Surrender Charge. (See
"Loan Provision".)
FIXED ACCOUNT. The Fixed Account is a part of NEVLICO's general account to
which net premiums may be allocated. NEVLICO provides guarantees of principal
and interest with respect to amounts allocated to the Fixed Account. (See "The
Fixed Account".)
INVESTMENT START DATE. This is the latest of the date NEVLICO first receives
a premium payment for the Policy, the date Part II of the Policy application
is signed and the Policy Date. It is the date when an amount is first provided
for investment under the Policy. (See "Amount Provided for Investment under
the Policy".)
MATURITY DATE. The Policy anniversary on which the insured is (or would have
been) age 100.
MINIMUM GUARANTEED DEATH BENEFIT A. The Policy will not lapse, regardless of
whether the net cash value is sufficient to pay a Monthly Deduction, if the
total of: (1) premiums paid in each prior Policy year accumulated at a 4% rate
from the first day of the year of payment to the most recent Policy
anniversary, less partial surrenders accumulated at a 4% rate from the date of
surrender to the most recent Policy anniversary, plus (2) premiums paid less
partial surrenders in the current Policy year, is at least equal to: the
amount shown in the Table of Guaranteed Death Benefit A Premiums Accumulated
at 4% for the prior Policy year plus 1/12 of the Benefit A Premium for each
Policy month of the current year up to and including the month for which the
Monthly Deduction is being processed, and there is no outstanding Policy loan.
Generally, NEVLICO determines whether this benefit is in effect on the first
day of each Policy month. However, certain Policy transactions could terminate
this guarantee. (See "Minimum Guaranteed Death Benefit".)
MINIMUM GUARANTEED DEATH BENEFIT B. The Policy will not lapse, regardless of
whether the net cash value is sufficient to pay a Monthly Deduction, if the
total of: (1) premiums paid in each prior Policy year accumulated at a 4% rate
from the first day of the year of payment to the most recent Policy
anniversary, less partial surrenders accumulated at a 4% rate from the date of
surrender to the most recent Policy anniversary, plus (2) premiums paid less
partial surrenders in the current Policy year, is at least equal to: the
amount shown in the Table of Guaranteed Death Benefit B Premiums Accumulated
at 4% for the prior Policy year plus 1/12 of the Benefit B Premium for each
Policy month of the current year up to and including the month for which the
A-4
<PAGE>
Monthly Deduction is being processed, and there is no outstanding Policy loan.
Generally, NEVLICO determines whether this benefit is in effect on the first
day of each Policy month prior to the later of: the date when the insured
attains age 80, and 20 years from the Policy Date, but no later than the
Maturity Date. However, certain Policy transactions could terminate this
guarantee. (See "Minimum Guaranteed Death Benefit".)
MINIMUM PREMIUM. Generally, the Minimum Premium is that amount which, if
timely paid, guarantees that the Policy will not lapse during the first three
Policy years even if the Policy's net cash value is insufficient to pay the
Monthly Deduction in any month. The Minimum Premium amount may be recalculated
following certain Policy transactions. In addition, no three-year Minimum
Premium death benefit guarantee will apply to the Policy following certain
other Policy transactions. (See "Premiums".)
MONTHLY DEDUCTION. The Monthly Deduction is the amount of charges deducted
from the Policy's cash value each month and includes the monthly cost of
insurance, the monthly cost of any benefits provided by riders, the monthly
policy fee, the monthly administrative charge and the monthly minimum death
benefit guarantee charge. (See "Monthly Deduction from Cash Value".)
MORTALITY AND EXPENSE RISK CHARGE. This charge is made daily from the value
of each Sub-Account's assets that come from the Policies. The charge is
currently at an annual rate of .75% of the Sub-Accounts' assets, and is
guaranteed not to exceed .90% of the Sub-Accounts' assets. The mortality risk
NEVLICO assumes is that insureds may live for shorter periods of time than
estimated. The expense risk NEVLICO assumes is that the costs of issuing and
administering Policies may be more than estimated. (See "Charges Against the
Eligible Funds and the Sub-Accounts of the Variable Account".)
NET CASH VALUE. The amount you may obtain upon surrender of the Policy and
which is equal to the Policy's cash value reduced by any Surrender Charge that
would apply on surrender and by any outstanding policy loan and accrued
interest on the loan. (See "Cash Value".)
NET INVESTMENT EXPERIENCE. For any period, a Sub-Account's net investment
experience equals the investment experience of the underlying Eligible Fund's
shares for the same period, reduced by the amount of charges against the Sub-
Account for that period. (See "Net Investment Experience".)
PLANNED PREMIUM. The Planned Premium is the premium payment schedule you
choose in an effort to meet your future goals under the Policy. The Planned
Premium is a level amount that is subject to certain limits under the Policy.
Payments in addition to any Planned Premium are referred to in the Policy as
unscheduled payments and can be paid at any time, subject to certain limits.
(See "Premiums".)
PREMIUMS. Premiums include all payments under the Policy, whether a Planned
Premium or an unscheduled payment. (See "Premiums".)
POLICY DATE. If you make a premium payment with the application, the Policy
Date is generally the later of the date Part II of the application was signed
and receipt of the premium payment. If you choose to pay the initial premium
upon delivery of the Policy, the Policy will be issued with a Policy Date
which is generally five days after issue. (See "Amount Provided for Investment
under the Policy".)
TABLE OF GUARANTEED DEATH BENEFIT A PREMIUMS ACCUMULATED AT 4%. The Table of
Guaranteed Death Benefit A Premiums Accumulated at 4%, which appears in your
Policy, is a measurement used to determine if the Minimum Guaranteed Death
Benefit A is in effect. This Table assumes the Guaranteed Death Benefit A
Premium that appears in the Policy is paid on the first day of each Policy
year. The Table shows the value of those premiums accumulated at 4% per year.
(See "Minimum Guaranteed Death Benefit".)
TABLE OF GUARANTEED DEATH BENEFIT B PREMIUMS ACCUMULATED AT 4%. The Table of
Guaranteed Death Benefit B Premiums Accumulated at 4%, which appears in your
Policy, is a measurement used to determine if the Minimum Guaranteed Death
Benefit B is in effect. This Table assumes the Guaranteed Death Benefit B
Premium that appears in the Policy is paid on the first day of each Policy
year. The Table shows the value of those premiums accumulated at 4% per year.
(See "Minimum Guaranteed Death Benefit".)
TARGET PREMIUM. The Target Premium is used to determine the amount of
Deferred Sales Charge that may apply in the event of a surrender, partial
surrender, lapse or face amount reduction. It varies by issue age, sex and
underwriting class of the insured and the Policy's face amount. The Target
Premium is less than or equal to 75% of the annual premium necessary to
maintain a fixed benefit whole life insurance Policy for the same face amount
on the life of the insured. The annual whole life premium is calculated using
an assumed interest rate of 4%, guaranteed cost of insurance charges and the
current level of other Policy charges. (See "Surrender Charge".)
YOU. When used in this prospectus, "you" refers to the Policy Owner.
A-5
<PAGE>
INTRODUCTION TO THE POLICIES
This prospectus describes Policies under which net premiums are allocated to
the Variable Account. If the Fixed Account is available in your state, you may
choose to allocate or transfer all or part of your funds to that account.
NEVLICO provides guarantees of principal and interest with respect to the
Fixed Account which is part of NEVLICO's general account. Amounts in the Fixed
Account are backed by NEVLICO's general account, rather than the Variable
Account. For a description of the Fixed Account, see "The Fixed Account" which
appears later in this prospectus.
THE POLICIES
The individual Flexible Premium Adjustable Variable Life Insurance Policies
offered by this prospectus are designed to provide lifetime insurance
coverage. They are not offered primarily as an investment.
The following is a brief listing of the basic features of the Policy. These
and other features of the Policy are explained in detail throughout the
prospectus. You should be sure to read the entire prospectus for more complete
information.
--You may choose to make premium payments under the Policy based on a
schedule you determine, subject to certain limits. NEVLICO can limit or
prohibit unscheduled payments in certain situations, including cases where
the insured is in a substandard risk class. (See "Premiums".)
--Net premiums are invested according to your instructions in one or more of
the Sub-Accounts of the Variable Account corresponding to mutual fund
portfolios, or the Fixed Account, after an initial period in the Zenith
Back Bay Advisors Money Market Sub-Account. (See "Allocation of Net
Premiums" and "Investment Options".)
--The mutual fund portfolios available to you under the Policy include
several common stock funds, including funds which invest primarily in
foreign securities, two bond funds, two managed funds, a balanced fund,
and a money market fund, subject to any necessary state insurance
department approvals. You may allocate your Policy's cash value to a
maximum of ten accounts (including the Fixed Account) at any one time.
(See "Investments of the Variable Account".)
--If the Fixed Account is available in your state, you may also allocate
funds to that account. NEVLICO provides guarantees of Fixed Account
principal and interest. SPECIAL LIMITS APPLY TO TRANSFERS OF CASH VALUE
FROM THE FIXED ACCOUNT. NEVLICO also reserves the right to restrict
transfers of cash value and allocations of premiums into the Fixed
Account. (See "The Fixed Account".)
--The cash value of the Policy will vary daily based on, among other things,
the net investment experience of the Sub-Accounts to which amounts have
been allocated and the amount of interest credited to any of the Policy's
cash value in the Fixed Account. (See "Cash Value", "Charges and
Expenses", "Premiums", "Loan Provision" and "Partial Surrender".)
--The portion of the cash value which you invest in the Sub-Accounts is not
guaranteed. You bear the investment risk on this portion of the cash
value. (See "Cash Value".)
--You may choose between two death benefit options under the Policy. The
level option provides a death benefit equal to the Policy's face amount.
The variable option provides a death benefit equal to the face amount plus
any cash value, which varies with the net investment experience of the
Sub-Accounts to which amounts have been allocated and the rate of interest
credited on any cash value in the Fixed Account. Under either of these
options the death benefit could be increased to satisfy tax law
requirements if the cash value reaches certain levels. (See "Death
Benefit".)
--You may increase (after the first Policy year) or decrease the Policy's
face amount. The increase or decrease will be reflected in the Policy's
charges. (See "Increase in Face Amount" and "Reduction in Face Amount.")
--Regardless of investment experience, each form of death benefit is
guaranteed never to be less than the Policy's face amount, as long as the
total amount of premiums paid, with interest, less any partial surrenders,
with interest, at least equals certain minimum amounts and there is no
outstanding Policy loan. (See "Death Benefit" and "Minimum Guaranteed
Death Benefit".)
--If the insured is alive and the Policy is in force on the Maturity Date,
the Policy will then terminate. The net cash value as of the Maturity Date
will be paid to you.
--You may change your allocation of future net premiums at any time. (See
"Allocation of Net Premiums" and "Investment Options".)
A-6
<PAGE>
--After the "right to return the Policy" period, you may transfer portions
of the Policy's cash value among the Sub-Accounts and, generally, to the
Fixed Account up to four times per policy year without NEVLICO's consent.
NEVLICO currently allows 12 transfers per policy year. Transfers and
allocations involving the Fixed Account are subject to certain limits.
(See "Transfer Option" and "The Fixed Account--Policy Transactions".)
--A loan privilege is available under the Policy. A partial surrender
feature is also available. (See "Loan Provision" and "Partial Surrender".)
--Death benefits paid to the beneficiary under the Policy generally are not
subject to Federal income tax. Under current law, undistributed increases
in cash value generally are not taxable to you. (See "Tax
Considerations".)
--Loans, assignments and other pre-death distributions under the Policy may
have tax consequences depending primarily on the amount which you have
paid into the Policy but also on any "material change" in the terms or
benefits of the Policy or any death benefit reduction. If premium
payments, a death benefit reduction, or a material change in the terms or
benefits of the Policy cause it to become a "modified endowment contract",
then pre-death distributions (including loans) will be included in income
on an income first basis, and a 10% penalty tax may be imposed on income
distributed before the Policy Owner attains age 59. Tax considerations may
therefore influence the amount and timing of premium payments and certain
Policy transactions which you choose to make. (See "Tax Considerations".)
--If the Policy is not a modified endowment contract, NEVLICO believes that
loans under the Policy will not be taxable to you as long as the Policy
has not lapsed, been surrendered or terminated. With certain exceptions,
other pre-death distributions under a Policy that is not a modified
endowment contract are includible in income only to the extent they exceed
the investment in the Policy. (See "Tax Considerations".)
--You have an opportunity during the "right to return the Policy" period to
return the Policy for a refund. You also have the right for a limited
period to cancel an increase in the Policy's face amount which you have
requested. (See "Right to Return the Policy".)
--Within 24 months after a Policy's date of issue or the effective date of a
face amount increase, you may exercise the Policy's 24 Month Right, which
will result in the allocation of all or part of your Policy's cash value
and future premiums to the Fixed Account. The purpose of the 24 Month
Right is to provide you with fixed Policy values and benefits. (See "24
Month Right.")
In many respects the Policies are similar to fixed-benefit universal life
insurance. Like universal life insurance, the Policies offer death benefits
and provide flexible premiums, a cash value, and loan privileges.
The Policies are different from fixed-benefit universal life insurance in
that the death benefit may, and the cash value will, vary to reflect the
investment experience of the selected Sub-Accounts of the Variable Account.
The variable universal life insurance policies offered by NEVLICO are
designed to provide insurance protection. Although the underlying mutual fund
portfolios invest in securities similar to those in which mutual funds
available directly to the public invest, in many ways the Policies differ from
mutual fund investments. The main differences are:
--The Policy provides a death benefit based on NEVLICO's assumption of an
actuarially calculated risk.
--If the net cash value is not sufficient to pay a Monthly Deduction, the
Policy may lapse with no value unless additional premiums are paid. If the
Policy lapses when Policy loans are outstanding, adverse tax consequences
may result.
--In addition to sales charges, insurance-related charges not associated
with mutual fund investments are deducted from the premiums and values of
the Policy. These charges include various insurance, risk, administrative
and premium tax charges. (See "Charges and Expenses".)
--The Variable Account, not the Policy Owner, owns the mutual fund shares.
--Federal income tax liability on any earnings is deferred until you receive
a distribution from the Policy. Transfers from one underlying fund
portfolio to another are accomplished without tax liability under current
law.
--Dividends and capital gains are automatically reinvested.
For a discussion of some of the uses of the Policies, see "Appendix D: Uses
of Life Insurance".
A-7
<PAGE>
AVAILABILITY OF THE POLICY
Generally, the Policies may be issued on the lives of insureds from the age
of one to 80 on an underwritten basis, and on the lives of insureds from the
age of 20 to 70 on an automatic issue basis. With NEVLICO's consent, the
Policies may be issued on the lives of insureds less than the age of one. All
persons must meet NEVLICO's underwriting and other criteria for issuance.
Generally, the minimum face amount available is $250,000 unless NEVLICO
consents to a lower amount. However, the minimum face amount available is
$50,000 in business situations (situations in which two or more Policies, on
more than one life, are totally or partially funded, directly or indirectly,
by an employer) where either (1) the average face amount is at least $250,000
or (2) the Policies are issued on the lives of at least 25 persons and the
average face amount is at least $150,000. The Policies are not available to
employee benefit plans qualified under Section 401 of the Internal Revenue
Code, except with NEVLICO's consent.
POLICY CHARGES
PREMIUM-BASED CHARGES. NEVLICO deducts the following charges from premiums:
--A maximum sales charge of 4%. NEVLICO currently intends to waive this
charge on premiums paid after the first 20 policy years. (If you increase
your Policy's face amount, NEVLICO currently intends to waive this charge
on the portion of premiums attributable to the face amount increase after
20 years from the date of the increase.) A 3% sales charge will apply to
certain larger Policies and to Policies sold in certain larger business
situations;
--A state premium tax charge of 2.5%;
--A charge for federal taxes of 1%.
SURRENDER CHARGE. The Surrender Charge includes:
--A deferred sales charge. This charge applies to a lapse, total or partial
surrender or reduction in face amount during Policy years one through
eleven. The maximum Deferred Sales Charge is imposed for Policies which
cover insureds whose issue age is 55 or less at issue, if you lapse or
surrender the Policy, or reduce its face amount, in Policy years three
through five. The maximum Deferred Sales Charge in those years equals 45%
of one Target Premium plus 13.5% of a second Target Premium and 13.5% of a
third Target Premium. After the fifth Policy year, the maximum Deferred
Sales Charge declines on a monthly basis until it reaches 0% in the last
month of the eleventh Policy year. If you lapse or surrender the Policy,
or reduce its face amount, in the first two Policy years, the maximum
Deferred Sales Charge in the first Policy year will be 25% of one Target
Premium and in the second Policy year will be 25% of one Target Premium
plus 5% of a second Target Premium.
--A deferred administrative charge. This charge applies to a lapse, total or
partial surrender or reduction in face amount during Policy years one
through eleven. This charge is $2.50 per $1,000 of face amount for the
first Policy year, and then reduces monthly until it reaches 0 at the end
of the 11th Policy year. The charge will be less if the issue age is
greater than 65.
--If you increase your Policy's face amount, a new Surrender Charge period
and a separate Target Premium amount will apply to the portion of the
Policy resulting from the face amount increase, starting with the date of
the increase.
The Surrender Charge is deducted from the Policy's available cash value,
regardless of whether that cash value is derived from premiums or investment
experience.
MONTHLY DEDUCTION FROM CASH VALUE. NEVLICO deducts certain charges from the
cash value:
--Monthly charge for the cost of insurance and for any benefits provided by
rider;
--Monthly administrative charge, currently equal to $0.06 per $1,000 of face
amount for the first Policy year and $0.02 per $1,000 thereafter
(guaranteed not to exceed $0.08 per $1,000 of face amount in the first
Policy year and $0.04 per $1,000 thereafter). For certain larger Policies
and Policies sold in certain larger business situations the monthly
administrative charge for the first Policy year currently equals $0.05 per
$1,000 of face amount rather than $0.06;
--Monthly minimum death benefit guarantee charge of $0.01 per $1,000 of face
amount;
--Monthly policy fee, currently equal to $4.50 per month (guaranteed not to
exceed $7.00 per month).
A-8
<PAGE>
CHARGE FOR FACE AMOUNT INCREASES. If you increase your Policy's face amount
and medical underwriting is required for the increase, a charge of $2.50 per
$1,000 of face amount increase will be deducted from your Policy's cash value
on the date the increase takes effect. NEVLICO currently limits this charge to
a maximum of $200.
CHARGES DEDUCTED FROM THE VARIABLE ACCOUNT AND THE ELIGIBLE FUNDS. The
following charges are deducted from the Variable Account and Eligible Fund
assets:
--Daily charge against the Sub-Account assets for NEVLICO's mortality and
expense risk, currently equal to an annual rate of .75% (guaranteed not to
exceed .90%);
--Daily charges against the Eligible Fund portfolios for investment advisory
services and fund operating expenses.
Currently, no charge is made to the Variable Account for federal income
taxes that may be attributable to the Variable Account. NEVLICO may, however,
impose such a charge in the future.
See "Charges and Expenses" and "Other Policy Features--Increase in Face
Amount".
A-9
<PAGE>
HOW THE POLICY WORKS
Premium Payments
. Flexible
. Planned premium options
-Minimum premium (in first three Policy years)
-Guaranteed Death Benefit B Premium (to age 80)
-Guaranteed Death Benefit A Premium (to age 100)
Charges from Premium Payments
. Sales Load: 4% (3% for certain larger Policies and Policies sold
in certain business situations). NEVLICO intends to waive after
20 policy yrs. and after 20 years for premiums relating to a face
amount increase
. State Premium Tax Charge: 2.5%
. Charge for Federal Taxes: 1%
Loans
. After the free look period, you may borrow a portion of your
cash value
. Loan interest charge is 5.5%. Loaned funds are transferred out
of the Eligible Funds into the General Account where they are
credited with not less than 4.0% interest
Retirement Benefits
. Fixed settlement options are available for policy proceeds
Cash Values
. Net premium payments invested in your choice of Eligible Fund
investments or the fixed Account (after an initial period in the
Zenith Money Market Sub-Account)
. The cash value reflects investment experience, interest, premium
payments, policy charges and any distributions from the Policy
. The cash value invested in mutual funds is not guaranteed
. Any earnings are accumulated free of any current income taxes
. You may change the allocation of future net premiums at any
time. You may currently transfer funds among investment
options (and to the Fixed Account) up to 12 times per policy year
after the free look period.
Transfers from (and, in certain circumstances, to) the Fixed
Account are limited as to timing, frequency and amount
. Your cash value may be allocated among a maximum of ten
accounts at any one time
Death Benefit
. Level or Variable Death Benefit Options
. Guaranteed not to be less than initial face amount if Death
Benefit Guarantee is in effect
. Income tax free to named beneficiary
. Face amount may be increased, subject to a processing fee
of $2.50 per $1,000 face amount and any necessary
underwriting
Daily Deductions from Assets
. Mortality and expense risk charges of .75% (guaranteed not to
exceed .90%) on an annual basis are deducted from the cash
value daily
. Investment advisory fees and other expenses are deducted from
the Eligible Fund values daily
Beginning of Month Charges
. The cost of insurance protection (reflecting any substandard risk
or automatic issue rating) is deducted from the cash value each
month
. Any Rider Charges
. Policy Fee: $4.50 (not to exceed $7.00) per month
. Minimum Death Benefit Guarantee Charge: $.01 per $1000 face
amount monthly
. Administrative Charge: $.06 (guaranteed not to exceed $.08) per
$1000 face amount monthly (first year) and $.02 (guaranteed not
to exceed $.04) per $1000 face amount monthly (after first year).
For certain larger Policies and Policies sold in certain business
situations charge is currently $.05 per $1,000 in first year.
Surrender Charges
. Consist of Deferred Sales Charge and Deferred Administrative
Charge (see page A-17)
Living Benefits
. If policyholder has elected and qualified for benefits for
disability and becomes totally disabled, company will waive
monthly charges during the period of disability up to certain
limits.
. Policy may be surrendered at any time for its cash surrender
value
. Deferred income taxes, including taxes on amounts borrowed,
become payable upon surrender
. Grace period for lapsing with no value is 62 days from the first
date in which Monthly Deduction was not paid due to
insufficient cash value
. Subject to NEVLICO's rules, a lapsed Policy may be reinstated
within seven years of date of lapse if it has not been surrendered
A-10
<PAGE>
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT NEVLICO'S ADMINISTRATIVE OFFICE
NEVLICO will treat your request for a Policy transaction, or your submission
of a payment, as received at the Administrative Office if it is received there
before the close of regular trading on the New York Stock Exchange on that
day. If it is received after that time, or if the New York Stock Exchange is
not open that day, then it will be treated as received on the next day when
the New York Stock Exchange is open.
NEVLICO AND THE NEW ENGLAND
NEVLICO was organized as a stock life insurance company in Delaware in 1980
and is licensed to sell life insurance in all states, the District of Columbia
and Puerto Rico. NEVLICO's Home Office is in Wilmington, Delaware and its
Administrative Office is at 501 Boylston Street, Boston, Massachusetts 02116.
NEVLICO's mailing address is: P.O. Box 9116, Boston, Massachusetts 02117.
NEVLICO is a wholly-owned subsidiary of The New England, which was organized
in Massachusetts in 1835. The New England is the oldest chartered mutual life
insurance company in the United States. On December 31, 1994, The New England
had over $15 billion of assets and over $69 billion of life insurance in
force. As of December 31, 1994, The New England and its affiliates had over
$65 billion in assets under management.
As of December 31, 1994, the value of The New England's investment in
NEVLICO was $96.7 million. It is expected that The New England may from time
to time contribute additional amounts to NEVLICO; however, The New England is
under no obligation to do so, and its assets do not support the benefits under
the Policies. NEVLICO may reinsure a portion of a Policy's death benefit with
The New England.
The following chart illustrates the relationship of NEVLICO, the Fixed
Account, the Variable Account and the Eligible Funds.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------
NEVLICO
--------------------------------------------------------------------------------------------------------------------
(Insurance company subsidiary of The New England)
Charges are deducted.
Net premiums and net unscheduled payments are allocated to the Policy Owner's choice of sub-accounts
in the Variable Account or to the Fixed Account.
Premiums -----------------------------------------------------------------------------------------------------------
and VARIABLE ACCOUNT
Unscheduled \ -----------------------------------------------------------------------------------------------------------
Payments +++ Zenith Zenith Zenith Zenith Zenith Zenith Zenith Zenith Zenith Zenith Zenith Zenith
/ Capital Bond Money Man- Stock Value Avanti Small Bal- Equity Value Inter-
Fixed Growth Income Market aged Index Growth Growth Cap anced Growth Sub- national
Account Sub- Sub- Sub- Sub- Sub- Sub- Sub- Sub- Sub- Sub- Account Equity
Account Account Account Account Account Account Account Account Account Account Sub-
Account
--------------------------------------------------------------------------------------------------------------------
+ + + + + + + + + + + +
Sub-accounts buy + + + + + + + + + + + +
shares of the + + + + + + + + + + + +
Eligible Funds. + + + + + + + + + + + +
+ + + + + + + + + + + +
\ + / \ + / \ + / \ + / \ + / \ + / \ + / \ + / \ + / \ + / \ + / \ + /
---------------------------------------------------------------------------------------------------------------
NEW ENGLAND ZENITH FUND
---------------------------------------------------------------------------------------------------------------
Capital Back Bay Back Bay Back Bay Westpeak Westpeak Loomis Loomis Loomis Alger Venture Draycott
Growth Advisors Advisors Advisors Stock Value Sayles Sayles Sayles Equity Value Inter-
Series Bond Money Managed Index Growth Avanti Small Bal- Growth Series national
Income Market Series Series Series Growth Cap anced Series Equity
Series Series Series Series Series Series
---------------------------------------------------------------------------------------------------------------
Eligible Funds buy portfolio investments to support values and benefits of the Policies.
<CAPTION>
<S> <C>
--------------------------------------------------------------------------------------------------------------------
NEVLICO
--------------------------------------------------------------------------------------------------------------------
(Insurance company subsidiary of The New England)
Charges are deducted.
Net premiums and net unscheduled payments are allocated to the Policy Owner's choice of sub-accounts
in the Variable Account or to the Fixed Account.
Premiums ----------------------------------------------------------------------------------------------------------
and VARIABLE ACCOUNT
Unscheduled \ ----------------------------------------------------------------------------------------------------------
Payments +++ Equity- Over- High Asset
/ Income seas Income Man-
Fixed Sub- Sub- Sub- ager
Account Account Account Account Sub-
Account
--------------------------------------------------------------------------------------------------------------------
+ + + +
Sub-accounts buy + + + +
shares of the + + + +
Eligible Funds. + + + +
+ + + +
\ + / \ + / \ + / \ + /
----------------------------------------------------------------------------------------------------------
VIP
FUND
VIP FUND II
----------------------------------------------------------------------------------------------------------
Equity Over- High Asset
Income seas Income Man-
Port- Port- Port- ager
folio folio folio Port-
folio
---------------------------------------------------------------------------------------------------------
Eligible Funds buy portfolio investments to support values and benefits of the Policies.
</TABLE>
A-11
<PAGE>
POLICY VALUES AND BENEFITS
DEATH BENEFIT
If the insured dies before the Maturity Date, NEVLICO will pay a death
benefit to the beneficiary.
DEATH BENEFIT OPTIONS. When you apply for a Policy, you may choose between
two death benefit options.
The Option 1 (Face Amount) death benefit provides a death benefit equal to
the face amount of the Policy. The Option 1 death benefit is fixed, subject to
increases required by the Internal Revenue Code.
The Option 2 (Face Amount Plus Cash Value) death benefit provides a death
benefit equal to the face amount of the Policy plus the amount, if any, of the
Policy's cash value. The Option 2 death benefit is also subject to increases
required by the Internal Revenue Code.
In order to meet the Internal Revenue Code's definition of life insurance,
the Policies provide that the death benefit will not be less than a percentage
of the Policy's cash value, including the pro rata portion of any Monthly
Deduction made for a period beyond the date of death, as set forth in Table I
below. This means that, if the cash value grows to certain levels, the death
benefit will be increased to satisfy the tax law requirements. At that point,
any payment you make into the Policy will increase the death benefit by more
than it increases the cash value. (See "Premiums".)
TABLE I
<TABLE>
<CAPTION>
AGE OF AGE OF
INSURED AT START OF PERCENTAGE OF INSURED AT START OF PERCENTAGE OF
THE POLICY YEAR CASH VALUE* THE POLICY YEAR CASH VALUE*
------------------- ------------- ------------------- -------------
<S> <C> <C> <C>
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 through 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 through 99 101
59 134 100 100
60 130
</TABLE>
- ----------
* including the pro rata portion of any Monthly Deduction made for a period
beyond the date of death.
MINIMUM GUARANTEED DEATH BENEFIT
The Policy provides two Minimum Guaranteed Death Benefits. If either Minimum
Guaranteed Death Benefit is in effect, as determined on the first day of each
Policy month, the Policy will not lapse even if the net cash value is
insufficient to cover the Monthly Deduction due for that month. The death
benefit will be adjusted as described below before the proceeds are paid.
If premiums are paid in certain amounts, then a Minimum Guaranteed Death
Benefit may be in effect unless you make certain Policy transactions. These
premiums are shown in Section 1 of your Policy and also appear in your
personalized illustration. See
A-12
<PAGE>
Appendix A. Generally, if you pay premiums in the amount specified for a
Minimum Guaranteed Death Benefit each year, that Minimum Guaranteed Death
Benefit will apply to your Policy in accordance with its terms. (For this
purpose, a premium paid within 20 days prior to a Policy anniversary is
treated as if paid in the next Policy year.) If you do not pay one of these
premiums in a Policy year, or if you make certain Policy transactions, you
could lose the Minimum Guaranteed Death Benefit on either a temporary or
permanent basis.
For example, no Minimum Guaranteed Death Benefit will apply to your Policy
while a Policy loan is outstanding, regardless of your premium payments.
However, if the total premiums you have paid, adjusted for interest and any
partial surrenders, as described below under "Minimum Guaranteed Death Benefit
A" and "Minimum Guaranteed Death Benefit B", are sufficient, the applicable
Minimum Guaranteed Death Benefit will apply to the Policy once the loan is
repaid.
In addition, if you reduce the Policy's face amount or make a partial
surrender which reduces the face amount, or reduce or delete a rider benefit
from your Policy, or if your Policy's rating classification is improved, you
may lose the death benefit guarantee. Whether a guarantee still applies will
depend on the total premiums you have paid and the amount you have withdrawn
from the Policy by means of partial surrenders, as described below under
"Minimum Guaranteed Death Benefit A" and "Minimum Guaranteed Death Benefit B".
The applicable minimum death benefit premiums shown in Section 1 of your
Policy will be recalculated following each of these transactions and also
following an increase in the Policy's face amount or in the amount of coverage
provided by riders. (See "Premiums" below.) Federal tax law limits the amount
of premiums that can be paid into the Policy, and if, following one of these
transactions, the Federal tax law limits the minimum death benefit premium for
your Policy to an amount less than zero, your Policy will lose its death
benefit guarantee permanently.
If you do not pay a minimum death benefit premium in a Policy year, a
Minimum Guaranteed Death Benefit may still apply to your Policy, depending on
the total premiums paid and partial surrenders made, as described below under
"Minimum Guaranteed Death Benefit A" and "Minimum Guaranteed Death Benefit B".
However, once a death benefit guarantee is lost due to insufficient premium
payments, Federal tax law limits may prevent you from paying sufficient
premiums in future Policy years to regain the guarantee. Although it may be
possible to regain the Guaranteed Minimum Death Benefit B, it is unlikely that
Federal tax law limits will permit you to pay sufficient premiums in future
years to regain the Guaranteed Minimum Death Benefit A.
MINIMUM GUARANTEED DEATH BENEFIT A. NEVLICO will determine if Minimum
Guaranteed Death Benefit A is in effect on the first day of each Policy month
the Policy is in force, until the Maturity Date. This Benefit is in effect if
the total of: (1) premiums paid under the Policy in each prior Policy year
accumulated at a 4% rate from the first day of the year of payment to the most
recent Policy anniversary, less partial surrenders accumulated at a 4% rate
from the date of surrender to the most recent Policy anniversary, plus (2)
premiums paid less partial surrenders in the current Policy year, is at least
equal to: the applicable amount shown in the Table of Guaranteed Death Benefit
A Premiums Accumulated at 4% for the prior Policy year plus 1/12 of the
Benefit A Premium for each Policy month of the current policy year up to and
including the month for which the Monthly Deduction is being processed, and
there is no outstanding Policy loan. For these purposes, premiums paid within
20 days prior to a Policy anniversary are treated as if paid in the next
Policy year.
The Table of Guaranteed Death Benefit A Premiums Accumulated at 4% assumes
that the Guaranteed Death Benefit A Premium that appears in your Policy is
paid on the first day of each Policy year and accumulates at a 4% rate per
year.
MINIMUM GUARANTEED DEATH BENEFIT B. NEVLICO will determine if Minimum
Guaranteed Death Benefit B is in effect on the first day of each Policy month
the Policy is in force, until the later of: the date the insured attains age
80, or 20 years from the Policy Date, but no later than the Maturity Date of
the Policy. This Benefit is in effect if the total of: (1) premiums paid under
the Policy in each prior Policy year accumulated at a 4% rate from the first
day of the year of payment to the most recent Policy anniversary, less partial
surrenders accumulated at a 4% rate from the date of surrender to the most
recent Policy anniversary, plus (2) premiums paid less partial surrenders in
the current Policy year, is at least equal to: the amount shown in the Table
of Guaranteed Death Benefit B Premiums Accumulated at 4% for the prior Policy
year plus 1/12 of the Benefit B Premium for each Policy month of the current
Policy year up to and including the month for which the Monthly Deduction is
being processed, and there is no outstanding Policy loan. For these purposes,
premiums paid within 20 days prior to a Policy anniversary are treated as if
paid in the next Policy year.
The Table of Guaranteed Death Benefit B Premiums Accumulated at 4% assumes
that the Guaranteed Death Benefit B Premium that appears in your Policy is
paid on the first day of each Policy year and accumulates at a 4% rate per
year.
A-13
<PAGE>
ADJUSTMENTS TO THE DEATH PROCEEDS PAYABLE
The death proceeds actually paid to the beneficiary are equal to the death
benefit in effect on the date of the insured's death reduced by any
outstanding loan and accrued loan interest as of that date and by the portion
of any unpaid Monthly Deduction for the period prior to that date. The death
proceeds will be increased (1) by any rider benefits payable and (2) by any
portion of a Monthly Deduction made for a period beyond the date of death,
unless this amount was already included in the death benefit calculation as a
result of Federal tax law requirements (see "Death Benefit Options" above).
The death proceeds may also be adjusted if the insured's age or sex was
misstated in the application, if death results from the insured's suicide
within two years (or less if provided by state law) from the Policy's date of
issue or within two years (or less if provided by state law) from an increase
in the Policy's face amount, or if limits on the death benefit are imposed by
rider. (See "Limits to NEVLICO's Right to Challenge the Policy".)
CHANGE IN DEATH BENEFIT OPTION
At any time after the first Policy year, you may change your death benefit
option by sending your written request for change to NEVLICO's Administrative
Office. The request will be effective on the date it is received at NEVLICO's
Administrative Office. A change in death benefit option may result in tax
consequences to you. (See "Tax Considerations".)
If you change from Option 1 (Face Amount) to Option 2 (Face Amount Plus Cash
Value), the Policy's face amount will be reduced by the amount necessary for
the death benefit to be the same immediately before and after the change. The
face amount reduction will apply to the Policy's initial face amount and any
prior increases in face amount on a pro rata basis. A face amount reduction
below $250,000 is permitted only with NEVLICO's consent; however, special
rules apply for certain business situations. Any rider benefits under the
Policy may also have to be decreased. In some circumstances a partial
surrender of cash value may be necessary in order to comply with Federal tax
law limits on the amount of premiums that can be paid into the Policy. No
Surrender Charge will be assessed in connection with a face amount reduction
or partial surrender resulting from a change from Option 1 to Option 2.
If you change from Option 2 (Face Amount Plus Cash Value) to Option 1 (Face
Amount), the Policy's face amount will be increased, if necessary, for the
death benefit to be the same immediately before and after the change. The
resulting increase in face amount will be applied to the Policy's initial face
amount and any prior increase in face amount on a pro rata basis.
CASH VALUE
Your Policy's cash value includes its cash value in the Variable Account, in
the Fixed Account and, if you have an outstanding policy loan, in NEVLICO's
general account as a result of the loan. The cash value reflects net premium
payments, the net investment experience of the Policy's Sub-Accounts, interest
credited on its cash value in the Fixed Account and on amounts held in the
general account as a result of a loan, the death benefit option chosen,
amounts deducted for Policy charges (including Monthly Deductions and any
Surrender Charge that applies if you reduce the Policy's face amount or make a
partial surrender), amounts surrendered and transfers among the Policy's Sub-
Accounts and the Fixed Account.
Your Policy's net cash value is the amount you will receive if you surrender
the Policy. The net cash value is the cash value reduced by any outstanding
policy loan (and accrued interest) and by any applicable Surrender Charge. The
net cash value is increased by the portion of any cost of insurance charge
deducted that applies to the period beyond the date of surrender. If you
surrender the Policy during the grace period, the net cash value you receive
is reduced by an amount to cover the Monthly Deduction to the date of
surrender. (See "Loan Provision", "Surrender Charge" and "Monthly Deduction
from Cash Value".)
The Policy's cash value in the Variable Account may increase or decrease
daily depending on the net investment experience of the Policy's Sub-Accounts.
Unfavorable investment experience can reduce the net cash value to zero.
Because there is no guaranteed minimum cash value in the Variable Account, you
bear the entire investment risk with respect to the cash value. The premium
payment schedule you choose will also affect the Policy's net cash value.
NET INVESTMENT EXPERIENCE
The net investment experience of the Policy's Sub-Accounts will affect the
Policy's cash value and, in some circumstances, the death benefit. The net
investment experience of the Sub-Accounts is determined as of the close of
regular trading on the New York Stock Exchange on each day when the Exchange
is open for trading.
A-14
<PAGE>
A Sub-Account's net investment experience for any period reflects the
investment experience of the underlying Eligible Fund shares for the same
period, reduced by the charges against the Sub-Account for that period.
(Currently the Sub-Accounts are charged only for NEVLICO's mortality and
expense risk, but in the future NEVLICO may impose a charge against the Sub-
Accounts for taxes if appropriate. See "Charges Against the Eligible Funds and
the Sub-Accounts of the Variable Account" and "Charge for NEVLICO's Income
Taxes".)
The investment experience of the Eligible Fund shares for any period is the
increase or decrease in their net asset value for the period, increased by the
amount of any dividends or capital gains distributions on the shares during
the period. Dividends and capital gains distributions on Eligible Fund shares
are reinvested in additional shares of the Eligible Fund and affect subsequent
investment experience.
A sub-account's net investment experience is referred to in the Policy as
the sub-account's "Actual Investment Return".
ALLOCATION OF NET PREMIUMS
As of the "investment start date", the net premium will be allocated to the
Zenith Money Market Sub-Account until the later of 45 days after the date Part
I of the application is signed or 10 days after NEVLICO mails the Notice of
Withdrawal Right. (See "Right to Return the Policy". For the definition of the
"investment start date", see "Amount Provided for Investment under the
Policy".) Thereafter, the cash value (which will reflect at least one Monthly
Deduction) is allocated to the Sub-Accounts and/or the Fixed Account according
to your instructions. (See "Investment Options" and "Monthly Deduction from
Cash Value".) Therefore, your selection of accounts does not take effect until
after the initial period described above, when the cash value is allocated to
the Zenith Money Market Sub-Account. If the face amount of the Policy is
increased, the portion of net premiums attributable to the increase will be
allocated among accounts in accordance with your current allocation
instructions. Allocations can be made to a maximum of ten accounts (including
the Fixed Account) at any one time.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
An amount is first invested under the Policy as of the investment start
date. That is the latest of: the date when NEVLICO first receives a premium
payment for the Policy, the date Part II of the Policy application is signed
and the Policy Date. (For this purpose, receipt of the premium payment means
receipt by a NEVLICO agent or, if a broker-dealer other than New England
Securities is involved, by a NEVLICO agency.)
If you make a premium payment with the application, the Policy Date is
generally the later of the date Part II of the application is signed and
receipt of the premium payment. In this case the Policy Date and investment
start date are the same. The amount of premium paid with the application must
be at least 10% of the annual Planned Premium for the Policy. Only one premium
payment may be made before the Policy is issued.
If you make a premium payment with the application, the insured will be
covered under a temporary insurance agreement for a limited period that is
described in the temporary insurance agreement form. Generally, coverage under
the temporary insurance agreement begins on the later of the date when NEVLICO
receives the premium for the Policy and the date when Part II of the
application is signed. The maximum amount of coverage provided is the lesser
of the amount of insurance applied for and $500,000 for standard and preferred
risks ($250,000 for substandard risks and $50,000 for persons who are
determined to be uninsurable). There may be variations to these provisions
required by state law.
If a Policy is issued, Monthly Deductions, including cost of insurance
charges, begin as of the Policy Date, even if the Policy's issuance was
delayed due to underwriting requirements; and will be in amounts based on the
face amount of the Policy issued, even if the temporary insurance coverage
received during the underwriting period was for a lesser amount. If NEVLICO
declines an application, it will refund the premium payment made plus interest
at the rate currently in use by NEVLICO.
If you choose to pay the initial premium upon delivery of the Policy, the
Policy will have a Policy Date which is generally five days after issue. The
investment start date will be the later of the Policy Date and the date the
premium is received. Monthly Deductions will begin on the Policy Date.
Interest at a 4% net rate will be credited on the applicable net Minimum
Premium for the period, if any, between the Policy Date and the investment
start date. Insurance coverage under the Policy will begin upon receipt of the
portion of the Minimum Premium due for the first quarter (or, upon receipt of
the number of monthly payments due under The New England's Master Service
Account arrangement.)
Under limited circumstances, NEVLICO may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
Backdating may be desirable, for example, so that you can purchase a
particular Policy face amount for lower cost of insurance rates, based on a
younger insurance age. Backdating in some cases may result in a Policy with a
A-15
<PAGE>
higher Surrender Charge if the backdating results in the Surrender Charge
being based on a lower age bracket. (See "Surrender Charge".) For a backdated
Policy, you must also pay the Minimum Premium payable for the period between
the Policy Date and the investment start date. As of the investment start
date, NEVLICO will allocate to the Policy those net premiums, adjusted for
monthly Policy charges and interest at a 4% net rate, for the period between
the Policy Date and the investment start date.
The amount provided for investment in the Policy is adjusted as of each day
the New York Stock Exchange is open to reflect the net investment experience
of the Sub-Accounts for that day.
RIGHT TO RETURN THE POLICY
You may cancel the Policy within 45 days after the date Part 1 of the
application is signed, within 10 days (or more where required by applicable
state insurance law) after you receive the Policy or within 10 days after
NEVLICO mails the Notice of Withdrawal Right, whichever is latest. The Policy
may be returned to NEVLICO or its agent. Insurance coverage ends as soon as
the Policy is returned (as determined by its postmark, if the Policy is
mailed). If you choose to cancel the Policy, NEVLICO will refund any premiums
paid (or any other amount that is required by state insurance law and
permitted by the Securities and Exchange Commission) with interest at the rate
currently in use by NEVLICO.
You may cancel an increase in face amount which you have requested within 45
days after the date Part 1 of the application for the increased coverage is
signed, within 10 days (or more where required by state law) after you receive
the adjusted Policy, or within 10 days after NEVLICO mails the Notice of
Withdrawal Right for the face amount increase, whichever is latest. You may
return the face amount increase to NEVLICO or its agent. The face amount
increase will be canceled from its beginning and any Monthly Deduction and
Face Amount Increase Administrative Charge deducted in connection with the
face amount increase will be returned to your cash value.
CHARGES AND EXPENSES
DEDUCTIONS FROM PREMIUMS
SALES CHARGE. NEVLICO deducts 4% from each premium (whether a Planned
Premium or an unscheduled payment) as a sales charge. NEVLICO currently
intends to waive this charge on premiums after the 20th policy year and on the
portion of premiums attributable to a face amount increase after 20 years from
the effective date of the increase; however, NEVLICO retains the right not to
waive the charge, or to reimpose it once it has been waived. For Policies that
are not used in a business situation and which have a face amount of at least
$500,000, the sales charge deducted from premiums will be 3% rather than 4%.
In addition, for Policies used in a business situation (a situation in which
two or more Policies, on more than one life, are totally or partially funded,
directly or indirectly, by an employer) where either (1) the average face
amount is $500,000 or (2) the Policies are issued on the lives of at least 25
persons and the average face amount is at least $250,000, the sales charge
deducted from premiums will be 3% rather than 4%.
During the first 11 Policy years, if you surrender or lapse the Policy,
reduce the face amount or make a partial surrender that reduces the face
amount, a Deferred Sales Charge also applies. (For insureds whose issue age is
56 to 65 at issue of the Policy, the period when the Deferred Sales Charge
applies is 10 years, for insureds whose issue age is 66 to 75, 9 years, and
for insureds whose issue age is 76 to 80, 5 years. See "Surrender Charge"
below.)
The sales charges under a Policy in a given Policy year are not necessarily
related to NEVLICO's actual sales expenses for that year. NEVLICO expects that
total revenues from the sales charges will fall short of its total
distribution expenses, and the excess will be recovered from NEVLICO's surplus
and other revenues, including mortality gains and any profit realized from the
minimum death benefit guarantee charge or mortality and expense risk charge.
Sales charges for Policies sold in certain group or sponsored arrangements
may be reduced. NEVLICO may in the future reduce or eliminate the sales
charge, when you purchase a Policy, on cash value transferred in the first
year, from life insurance policies issued by The New England that meet certain
premium, cash value and/or face amount minimums, as currently published by
NEVLICO. NEVLICO's normal issuance criteria, including reinsurance and other
limitations, would also apply in these situations. NEVLICO may, however, waive
underwriting requirements in these situations. NEVLICO may also reduce the
Surrender Charge on such policies. Your NEVLICO agent can advise you regarding
the availability of this feature.
STATE PREMIUM TAX CHARGE. NEVLICO deducts 2.5% from each premium to cover
state premium taxes and administrative expenses. Premium taxes vary from state
to state and the 2.5% charge reflects an average. Administrative expenses
covered by this charge include those related to premium tax and certain other
state filings. This charge is not intended to produce a profit.
A-16
<PAGE>
The stated premium tax rates in the jurisdictions where NEVLICO transacts
business range from .75% to 4.00%. However, because of the effect of
retaliatory tax law provisions, the actual premium tax rates imposed on
NEVLICO range from slightly less than 2.00% to 4.00%.
FEDERAL PREMIUM TAX CHARGE. NEVLICO deducts 1% from each premium to recover
a portion of that part of NEVLICO's federal income tax liability that is
determined solely by the amount of life insurance premiums it receives. The
federal premium tax charge is a factor NEVLICO must use when computing the
maximum sales load chargeable under SEC rules.
EXAMPLE: The following chart shows the net amount that would be allocated to
the Variable Account, assuming a premium payment of $2,000.
<TABLE>
<CAPTION>
NET
PREMIUM PREMIUM
------- -------
<C> <C> <S>
$2,000 $1,850 (7.5% X 2,000 = total sales and premium tax charge)
</TABLE>
NEVLICO may waive the 4% sales charge on premiums paid after the 20th Policy
year. In that case, the net premium in this example would be $2,000 - $70
(3.5% X 2,000), or $1,930.)
SURRENDER CHARGE
If, during the first eleven policy years, a Policy is totally surrendered or
lapses, the face amount is reduced, or a partial surrender reduces the face
amount, NEVLICO deducts a Surrender Charge from the cash value. (For insureds
whose issue age is 66 to 75 at issue of the Policy, the Surrender Charge
period is nine years, and for insureds whose issue age is 76 to 80, five
years.) The Surrender Charge includes a Deferred Sales Charge and a Deferred
Administrative Charge. The maximum Surrender Charge is set forth in your
Policy.
A new Surrender Charge period and a separate Target Premium will apply to
each portion of the Policy resulting from a face amount increase, starting
with the effective date of the increase.
Any Surrender Charge deducted upon lapse is credited back to the Policy's
cash value upon reinstatement. The Surrender Charge on the date of
reinstatement will be the same as it was on the date of lapse. For purposes of
determining the Surrender Charge on any date after reinstatement, the period
the Policy was lapsed will not count.
DEFERRED SALES CHARGE. The Deferred Sales Charge is based on a percentage of
the Target Premium. The Target Premium is used to determine the amount of the
Deferred Sales Charge and is less than or equal to 75% of the annual premium
necessary to maintain a fixed benefit whole life insurance policy for the same
face amount on the life of the insured. The annual whole life premium on which
the Target Premium is based is calculated using an assumed interest rate of
4%, guaranteed cost of insurance charges and the current level of other Policy
charges. The Target Premium varies by issue age, sex and underwriting class of
the insured and the Policy's face amount. (For purposes of determining the
Target Premium, all non-smoker underwriting classes use the nonsmoker
aggregate or nonsmoker substandard classes, as applicable. See "Monthly
Charges for the Cost of Insurance" below.) If you increase the Policy's face
amount, a separate Target Premium amount will apply to the face amount
increase, based on the insured's age and underwriting class at the time of the
increase.
For Policies which cover insureds whose issue age is 55 or less at issue,
the greatest Deferred Sales Charge is paid if you lapse or surrender, or
reduce the face amount, in Policy years three through five. The Deferred Sales
Charge in these years equals 45% of actual premiums paid up to one Target
Premium, plus 13.5% of additional premiums paid in excess of one Target
Premium up to a second Target Premium, plus 13.5% of additional premiums paid
in excess of two Target Premiums up to a third Target Premium. After the fifth
Policy year, the maximum Deferred Sales Charge declines on a monthly basis
until it reaches 0% in the last month of the eleventh Policy year.
The Deferred Sales Charge that applies during the first Policy year is equal
to 25% of premiums paid up to one Target Premium. The Deferred Sales Charge
during the second Policy year is equal to 25% of premiums paid up to one
Target Premium plus 5% of additional premiums paid up to a second Target
Premium. As described above, after the second Policy year, the maximum
Deferred Sales Charge increases substantially.
A-17
<PAGE>
The table below shows the maximum Deferred Sales Charge that applies to
Policies covering insureds whose issue age is 55 or less at issue, and assumes
that one Target Premium per year is paid under the Policy. The table shows the
charge, expressed as a percentage of total Target Premiums paid to date, if
the lapse, surrender or face reduction occurs at the end of each of the Policy
years shown. During Policy years six through eleven, the Deferred Sales Charge
declines on a monthly basis.
<TABLE>
<CAPTION>
THE MAXIMUM DEFERRED
SALES CHARGE IS THE FOLLOWING
PERCENTAGE OF TOTAL TARGET
FOR POLICIES WHICH ARE PREMIUMS PAID TO DATE OF
SURRENDERED, LAPSED OR SURRENDER, LAPSE, OR
REDUCED DURING FACE AMOUNT REDUCTION
---------------------- -----------------------------
<S> <C> <C>
Entire Policy Year 3 24.00%
4 18.00%
5 14.40%
Last Month of Policy
Years 6 10.00%
7 6.86%
8 4.50%
9 2.67%
10 1.20%
11 0.00%
</TABLE>
For insureds whose issue age is above 55 at issue, the Deferred Sales Charge
percentages are less than or equal to those described above, with the maximum
charge occurring in Policy years 3 through 5 for insureds with an issue age up
through 65, in Policy years 2 through 4 for insureds with an issue age from 66
through 75, and in Policy year 2 for insureds with an issue age above 75.
In the case of a partial surrender or reduction in face amount, any Deferred
Sales Charge that applies is deducted from the Policy's cash value in an
amount proportional to the amount of the Policy's face amount surrendered.
(See "Partial Surrender".) The charge is deducted from the Policy's cash value
in the Sub-Accounts and the Fixed Account in proportion to the amount of the
Policy's cash value in each. In no event will the Deferred Sales Charge exceed
limits established by the Investment Company Act of 1940 and regulations
thereunder.
DEFERRED ADMINISTRATIVE CHARGE. The Table below shows the Deferred
Administrative Charge deducted if you totally or partially surrender, lapse or
reduce the face amount of the Policy during the first eleven Policy years or
during the first eleven Policy years following an increase in face amount (see
"Surrender Charge" above).
<TABLE>
<CAPTION>
FOR POLICIES WHICH ARE
SURRENDERED, LAPSED DEFERRED ADMINISTRATIVE
OR REDUCED DURING THE CHARGE PER $1,000 OF
POLICY YEAR SHOWN FACE AMOUNT
---------------------- -----------------------
<S> <C> <C>
Entire Policy year 1 $2.50
Last Month of Policy Year* 2 2.25
3 2.00
4 1.75
5 1.50
6 1.25
7 1.00
8 0.75
9 0.50
10 0.25
11 0.00
</TABLE>
- ----------
* The charge declines monthly after the end of the first Policy year.
The applicable Deferred Administrative Charge will be deducted from the
Policy's available cash value, regardless of whether that cash value is
derived from premiums or investment experience.
For insureds whose issue age is above 65 at issue, the Deferred
Administrative Charge is less than or equal to that in the table above.
A-18
<PAGE>
The Deferred Administrative Charge partially covers the administrative costs
of processing surrenders, lapses, and reductions in face amount, as well as
legal, actuarial, systems, mailing, and other overhead costs connected with
NEVLICO's variable life insurance operations. This charge has been designed to
cover actual costs and is not intended to produce a profit.
MONTHLY DEDUCTION FROM CASH VALUE
On the first day of each Policy month, starting with the Policy Date,
NEVLICO deducts the "Monthly Deduction" from your cash value. If either
Minimum Guaranteed Death Benefit is in effect, or if the Policy is protected
against lapse by payment of the Minimum Premium during the first three Policy
years, the Monthly Deduction is made, whether or not premiums are paid, until
the cash value equals zero. Otherwise, the Monthly Deduction is made, whether
or not premiums are paid, as long as the net cash value is sufficient to cover
the entire Monthly Deduction. If the net cash value is insufficient to cover
the entire Monthly Deduction and no Minimum Guaranteed Death Benefit or
Minimum Premium guarantee is in effect, the Policy will be in default and may
lapse. (See "Lapse and Reinstatement".) The Monthly Deduction reduces the cash
value in each Sub-Account of the Variable Account and in the Fixed Account in
proportion to the cash value in each.
The Monthly Deduction includes the following charges:
POLICY FEE. The Policy fee is currently equal to $4.50 per month (guaranteed
not to exceed $7.00 per month).
ADMINISTRATIVE CHARGE. The Administrative Charge is currently equal to $0.06
per $1,000 of Policy face amount in the first Policy year and $0.02 per $1,000
of Policy face amount thereafter (guaranteed not to exceed $0.08 per $1,000 of
face amount in the first Policy year and $0.04 per $1,000 of Policy face
amount thereafter). For Policies not used in a business situation and which
have a face amount of at least $500,000, the monthly administrative charge for
the first Policy year is currently $0.05 per $1,000 of face amount rather than
$0.06. In addition, for Policies issued in business situations where either
(1) the average face amount is at least $500,000 or (2) the Policies are
issued on the lives of at least 25 persons and the average face amount is at
least $250,000, the monthly administrative charge for the first Policy year is
currently $0.05 per $1,000 of face amount rather than $0.06.
The Policy Fee and the Administrative Charge together cover the cost of
administering the Policies (such as the cost of processing Policy
transactions, issuing Policy Owner statements and reports, and record
keeping), as well as legal, actuarial, systems, mailing and other overhead
costs connected with NEVLICO's variable life insurance operations. These
charges have been designed to cover actual costs and are not intended to
produce a profit.
MINIMUM DEATH BENEFIT GUARANTEE CHARGE. The minimum death benefit guarantee
charge is $0.01 per $1,000 of Policy face amount. This charge compensates
NEVLICO for its guarantee that, regardless of the investment experience of the
Policy's Sub-Accounts, the Policy's death benefit will never be less than the
face amount, provided that the total amount of premiums paid with interest,
less any partial surrenders with interest, equals or exceeds the applicable
amount derived from the Tables of Minimum Guaranteed Death Benefit Premiums
Accumulated at 4% for the Policy. (See "Minimum Guaranteed Death Benefit" and
"Adjustments to the Death Proceeds Payable".)
MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of
providing insurance protection under your Policy. The cost of insurance charge
for a Policy month is equal to the "amount at risk" under the Policy,
multiplied by the cost of insurance rate for that Policy month. The amount at
risk is determined on the first day of the Policy month after any applicable
Monthly Deduction has been processed and is the amount by which the death
benefit (discounted at the monthly equivalent of 4% per year) exceeds the
Policy's cash value. The cost of insurance rate for your Policy changes from
month to month.
If a Policy loan is outstanding and your Policy's net cash value is not
large enough to cover the cost of insurance charge for a policy month, the
difference between the net cash value available and the cost of insurance
charge is treated as an excess policy loan and the Policy may terminate. (See
"Loan Provision".)
The guaranteed cost of insurance rates for a Policy depend on the insured's
underwriting class, age on the first day of the Policy year and sex (if the
Policy is sex-based). The current cost of insurance rates will also depend on
the insured's age at issue of the Policy and on the duration of the Policy. In
addition, for Policies not sold in a business situation, current cost of
insurance rates will also depend on the face amount; for Policies sold in a
business situation, current cost of insurance rates will also depend on the
average face amount of Policies sold to the group and may also depend on the
number of lives in the group. For non-juvenile insureds (those who are age 20
or more at issue) the rates are guaranteed not to be higher than rates based
on the 1980 Commissioners Standard Ordinary Mortality Tables with
smoker/nonsmoker modifications (the "1980 CSO Tables"). For
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<PAGE>
juvenile insureds, the rates are guaranteed not to be higher than rates based
on the 1980 Commissioners Standard Ordinary Mortality Tables. The rates
actually used may be lower than these maximum rates, depending on NEVLICO's
expectations regarding future mortality and expense experience, lapse rates
and investment earnings. NEVLICO reviews the adequacy of its current cost of
insurance rates annually and may adjust their level periodically. Any change
in the current cost of insurance rates will be applied prospectively only and
will be on a non-discriminatory basis. The current cost of insurance rate for
a Policy is set forth in the Policy Owner's annual statement. (For information
regarding a Policy's cost of insurance rates following a face amount increase,
see "Increase in Face Amount".)
The underwriting classes used for determining cost of insurance rates for
insureds other than juveniles are smoker standard, smoker substandard,
nonsmoker preferred, nonsmoker standard, nonsmoker aggregate, nonsmoker
substandard and automatic issue. For juvenile insureds the underwriting
classes are standard and substandard. Substandard and automatic issue ratings
result in higher cost of insurance deductions. The guaranteed maximum
mortality charges for substandard ratings are based on multiples of the 1980
CSO Tables. (For information regarding a Policy's underwriting classification
following a face amount increase, see "Increase in Face Amount".)
For fully underwritten Policies with a face amount of $250,000 or more, the
nonsmoker underwriting classes (other than nonsmoker substandard) are
nonsmoker preferred and nonsmoker standard; for Policies with a face amount
less than $250,000 (available only in business situations) the only nonsmoker
underwriting class (other than nonsmoker substandard) is nonsmoker aggregate.
Among these three nonsmoker classes, the nonsmoker preferred class generally
offers the most favorable rates on a current basis and the nonsmoker standard
class generally offers the least favorable rates on a current basis.
Cost of insurance rates are generally more favorable for nonsmoker than for
smoker insureds and generally more favorable for female than for male
insureds. Within a given underwriting class, cost of insurance rates are
generally more favorable for insureds with lower issue ages. Where required by
state law, and for Policies sold in connection with certain employee benefit
plans, cost of insurance rates (and Policy values and benefits) do not vary
based on the sex of the insured.
Currently, for underwritten Policies that are not issued in a business
situation, cost of insurance rates will be more favorable under Policies with
a face amount of at least $500,000 than for policies with a lower face amount
on the same insured. Currently, for underwritten Policies issued in a business
situation, cost of insurance rates will be more favorable for a Policy issued
on a given insured with a given face amount where either (1) the average face
amount for Policies covering the group (at issue) is at least $500,000, or (2)
the Policies are issued on the lives of at least 25 persons and the average
face amount (at issue) is at least $250,000.
NEVLICO may offer Policies on an automatic issue basis to certain group or
sponsored arrangements. If an eligible group or sponsored arrangement
purchases Policies on an automatic issue basis, the Policies will be issued up
to a predetermined face amount limit, with only minimum evidence of
insurability. Automatic issue Policies provide substantial benefit to such
arrangements in that minimal time and effort is necessary to qualify an entire
group of persons for coverage without extensive applications or medical
examinations. Because only limited underwriting information is obtained,
NEVLICO has determined that the issuance of Policies on an automatic issue
basis may present additional mortality cost to NEVLICO relative to Policies
issued to individuals in the smoker standard class. Therefore, NEVLICO will
deduct an additional insurance charge from the cash value of automatic issue
Policies. The additional charge will vary based on the issue age of the
insured and, for certain group or sponsored arrangements, may vary based on
the size of the group, the total premium to be paid by the group and certain
characteristics of its members. The overall guaranteed maximum monthly cost of
insurance charges, including the additional charge for automatic issue status,
will exceed charges based on 100% of the 1980 CSO Tables.
Policies issued on an automatic issue basis will have underlying cost of
insurance rates that vary depending on whether the insured is a smoker or
nonsmoker. Nonsmokers will be treated as a group in that no preferred
nonsmoker rates will be available. The underlying cost of insurance rates for
automatic issue Policies will not vary according to the face amount of an
individual Policy; however, currently the rates may be lower if the Policy is
issued to a group or sponsored arrangement where its members have certain
characteristics, the Policies are issued on the lives of at least 25 persons,
the face amount of each individual Policy is at least $100,000 and the average
face amount is at least $250,000. Generally the overall monthly cost of
insurance charges, including the additional charge for automatic issue status,
will be higher than they would be for the same insured under a fully
underwritten Policy, if the insured is not a substandard risk.
Eligible group or sponsored arrangements may also elect to purchase Policies
on a simplified underwriting basis, either as an alternative to automatic
issue or for amounts of insurance which exceed NEVLICO's automatic issue
limits, but may not elect
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automatic issue for some members of the group and simplified underwriting for
others. Policies issued on a simplified underwriting basis will have the same
cost of insurance rates as fully underwritten Policies.
CHARGES FOR ADDITIONAL BENEFITS AND SERVICES. NEVLICO imposes charges for
the cost of any additional rider benefits as described in the rider form.
NEVLICO also reserves the right to charge Policy Owners a nominal fee, which
will be billed directly to the Policy Owner, in the event that a Policy re-
issue or re-dating is requested.
CHARGES AGAINST THE ELIGIBLE FUNDS AND THE SUB-ACCOUNTS OF THE VARIABLE
ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE. NEVLICO charges the Sub-Accounts of the
Variable Account for the mortality and expense risks that NEVLICO assumes.
Currently, the charge is made daily at an annual rate of .75% of the Sub-
Accounts' assets. NEVLICO reserves the right to increase the charge, up to a
maximum annual rate of .90%. The mortality risk NEVLICO assumes is that
insureds may live for shorter periods of time than NEVLICO estimated. The
expense risk is that NEVLICO's costs of issuing and administering the Policies
may be more than NEVLICO estimated.
If all the money NEVLICO collects from this charge is not needed to cover
death benefits and expenses, the money is contributed to NEVLICO's general
account. Conversely, even if the money NEVLICO collects is insufficient,
NEVLICO will provide for all death benefits and expenses.
CHARGES FOR INCOME TAXES. NEVLICO currently makes no charge for income taxes
against the Variable Account, but in the future NEVLICO may impose such a
charge, if appropriate. NEVLICO reserves the right to make a charge for any
taxes imposed on the Policies by any governmental body in the future. (See
"Charge for NEVLICO's Income Taxes".)
ELIGIBLE FUND EXPENSES. Charges for investment advisory fees and other
expenses are deducted from the assets of the Eligible Funds. (See "Investment
Management".)
GROUP OR SPONSORED ARRANGEMENTS
The Policies may be issued to group or sponsored arrangements, as well as on
an individual basis. A "group arrangement" includes a program under which a
trustee, employer or similar entity purchases individual Policies covering a
group of individuals. An example of such an arrangement is a non-tax qualified
deferred compensation plan. A "sponsored arrangement" includes a program under
which an employer permits group solicitation of its employees or an
association permits group solicitation of its members for the purchase of the
Policies on an individual basis. The Policies are not currently available to
group or sponsored arrangements in New York.
For Policies issued in connection with group or sponsored arrangements,
NEVLICO may waive or reduce one or more of the following charges: the sales
charge, Surrender Charge, monthly charge for the cost of insurance including
any additional charge for automatic issue status, mortality and expense risk
charge, administrative charges, Policy Fee, Face Amount Increase
Administrative Charge, and/or federal and state premium tax charges described
in "Charges and Expenses". (In addition, the interest rate credited on amounts
taken from the sub-accounts as a result of a Policy loan may be increased for
these Policies.) NEVLICO will waive or reduce these charges according to its
rules in effect when the Policy application is approved. To qualify for a
waiver or reduction, a group or sponsored arrangement must satisfy certain
criteria as to, for example, size and number of years in existence. Generally,
the sales contacts and effort, administrative costs and mortality cost per
Policy vary based on such factors as the size of the group or sponsored
arrangement, its stability, the purposes for which the Policies are purchased
and certain characteristics of its members. The amount of reduction and the
criteria for qualification will reflect the reduced sales and administrative
effort resulting from sales to qualifying group or sponsored arrangements.
NEVLICO may modify from time to time both the amounts of reductions and the
criteria for qualification. Reductions in or waiver of these charges will not
be unfairly discriminatory against any person, including the affected Policy
Owners and all other Policy Owners of Policies funded by the Variable Account.
The United States Supreme Court has held that certain insurance policies
providing values and benefits that vary with the sex of the insured may not be
used to fund certain employee benefit programs. Therefore, NEVLICO offers
Policies that do not vary based on the sex of the insured for use in
connection with certain employee benefit programs. NEVLICO recommends that any
employer proposing to offer the Policies to employees under a group or
sponsored arrangement consult its attorney before doing so.
PREMIUMS
FLEXIBLE PREMIUMS
Within the limits described below, you may choose the amount and frequency
of premium payments. You may select a Planned Premium schedule, which is a
level amount. This schedule, which must be within NEVLICO's minimum and
maximum
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limits, appears in your Policy. It is not necessarily designed to keep your
Policy in force, and you may skip Planned Premium payments or make additional
payments. Additional payments could be subject to underwriting. No payment can
be less than $25, and the total of Planned Premiums and other payments will be
limited to NEVLICO's published maximum.
Planned Premiums can be paid on an annual, semi-annual or quarterly schedule
or, with NEVLICO's consent, monthly. You can change your Planned Premium
schedule by sending your request to NEVLICO's Administrative Office. However,
the amount of your Planned Premium cannot be increased except with the consent
of the Company, and underwriting may be required. Cash values and death
benefits are permanently affected by the amount and frequency of premium
payments.
You may make payments by check or money order. NEVLICO will send premium
notices for annual, semi-annual or quarterly Planned Premiums. You may also
choose to have The New England withdraw your premium payments from your bank
checking account or TNE Cash Management Trust account. (This is known as the
Master Service Account arrangement.)
NEVLICO offers three types of premium payment levels that can protect your
Policy against lapse over specified time periods.
First, NEVLICO determines a three-year Minimum Premium amount based on the
Policy's face amount, the age, sex (unless unisex rates apply) and
underwriting class of the insured, the current level of Policy charges and any
rider benefit selected. Generally, during this three-year period, as long as
the Minimum Premium amount is timely paid, the Policy is guaranteed not to
lapse even if the Policy's net cash value is insufficient to pay the Monthly
Deduction in any month. (To determine whether the Policy will lapse, NEVLICO
compares (a) the total monthly Minimum Premiums for the Policy from the Policy
Date to that Policy month, to (b) the total premiums paid to date, less all
partial surrenders and any outstanding Policy loan balance. If (b) is greater
than or equal to (a), the Policy will not lapse.) However, no three-year
Minimum Premium death benefit guarantee will apply if you increase the Policy
face amount, substitute the insured or reinstate the Policy in the first three
Policy years. The Minimum Premium will be recalculated if you reduce the face
amount or make a partial surrender that reduces the face amount, or add,
reduce or delete a rider benefit, or if the rating classification of your
Policy is improved in the first three Policy years.
Second, NEVLICO also determines a guaranteed minimum death benefit premium
(to maturity) which will guarantee that the Policy will mature for the net
cash value at age 100 of the insured. Insufficient premium payments, a
reduction in the face amount or partial surrender that reduces the face
amount, reduction or deletion of a rider benefit, or improvement in rating
classification of the Policy could terminate this guarantee. See "Minimum
Guaranteed Death Benefit". This guaranteed minimum death benefit premium is
based on the Policy's face amount, the age, sex (unless unisex rates apply)
and underwriting class of the insured, the death benefit option chosen, the
guaranteed level of cost of insurance charges, the current level of other
Policy charges and any rider benefit selected. The premium is recalculated
following the type of Policy transactions described above in connection with a
recalculation of the three-year Minimum Premium amount, as well as following
an increase in face amount or in rider coverage.
Third, the Policy's guaranteed minimum death benefit premium (to age 80)
guarantees that the Policy will stay in force until the later of age 80 of the
insured, or 20 years after issue, but no later than the Maturity Date of the
Policy. This premium is based on factors similar to the guaranteed minimum
death benefit premium (to maturity), but is based on the guaranteed level of
both cost of insurance and other Policy charges and is actuarially determined
to provide guaranteed coverage to the earlier age. NEVLICO limits this premium
so that it will be less than or equal to the guaranteed minimum death benefit
premium (to maturity). Insufficient premium payments, a reduction in the face
amount or a partial surrender that reduces the face amount, reduction or
deletion of a rider benefit, or improvement in the rating classification of
the Policy could also terminate this guarantee, although termination for
insufficient premium payments is less likely here than in the case of the
guaranteed minimum death benefit premium (to maturity). The guaranteed minimum
death benefit premium (to age 80) is recalculated following the type of Policy
transactions described above in connection with a recalculation of the three-
year Minimum Premium amount, as well as following an increase in face amount
or in rider coverage.
Federal tax law limits the amount of premiums that can be paid under the
Policy. In addition, if any payments under the Policy exceed the "7-pay test"
under Federal tax law, you may be taxed on certain distributions. (See "Tax
Considerations".) NEVLICO's consent is required if, in order to satisfy tax
law requirements, any payment would increase the Policy's death benefit by
more than it would increase cash value. NEVLICO may require evidence of
insurability before accepting the payment.
NEVLICO allocates net payments to your Policy's Sub-Accounts as of the date
the payment is received at NEVLICO's Administrative Office. (See "Receipt of
Communications and Payments at NEVLICO's Administrative Office".)
A payment is treated first as a Planned Premium, second as repayment of
Policy loan interest, third as repayment of a Policy loan, and last as an
unscheduled payment, unless you designate otherwise in writing to NEVLICO. If
you have a Policy loan, it
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<PAGE>
may be more advantageous to repay the loan than to make a premium payment,
because the premium payment is subject to sales and tax charges, whereas the
loan repayment is not subject to any charges; however, repayment of the loan
in place of a premium payment could cause your Policy to lose its eligibility
for a death benefit guarantee. (See "Loan Provision" and "Deductions from
Premiums".)
LAPSE AND REINSTATEMENT
LAPSE. Unless either Minimum Guaranteed Death Benefit is in effect (or,
during the first three Policy years, unless the Minimum Premium requirements
described under "Premiums" have been met), in any month that there is
insufficient net cash value to pay a Monthly Deduction the Policy will be in
default. The Policy provides a 62 day grace period for payment of a premium
sufficient to permit the Monthly Deduction to be made (as well as applicable
deductions from the premium). NEVLICO will notify you of the amount due.
During the grace period insurance coverage continues under your Policy, but if
the insured dies before the premium is paid, NEVLICO will deduct from the
death proceeds the portion of the unpaid Monthly Deduction for the period
prior to the date of death.
REINSTATEMENT. If your Policy has lapsed, it may be reinstated within 7
years after the date of lapse. If more than 7 years have passed, or if you
have surrendered the Policy, NEVLICO's consent is required to reinstate.
Reinstatement in all cases is subject to payment of certain charges described
in the Policy and generally requires evidence of insurability that is
satisfactory to NEVLICO.
Any Surrender Charge deducted upon lapse is credited to the Policy's cash
value upon reinstatement. The Surrender Charge on the date of reinstatement is
the same as it was on the date of lapse. For purposes of determining the
Surrender Charge and other charges that vary by duration of the Policy
(unlike, for example, cost of insurance charges that vary by age of the
insured) on any date after reinstatement, the period the Policy was lapsed
does not count.
OTHER POLICY FEATURES
INCREASE IN FACE AMOUNT
After the first Policy year you may increase the face amount of your Policy.
The request for an increase will be subject to NEVLICO's underwriting rules
and requirements, including proof of insurability. The amount of the increase
must be at least $10,000. A Face Amount Increase Administrative Charge of
$2.50 per $1,000 of the face amount increase will be deducted on the date the
increase takes effect from the Policy's cash value in the sub-accounts and the
Fixed Account, in proportion to the amount of cash value in each. This charge
will not apply if the increase in face amount was not medically underwritten.
NEVLICO currently limits the charge to a maximum of $200.
After a face amount increase, NEVLICO will attribute a portion of each
premium payment you make to the face amount increase, even if you do not
increase the amount or frequency of your premiums. NEVLICO will calculate the
portion of the premium that is attributable to the face amount increase in
accordance with SEC regulations.
A new Surrender Charge period will apply to each portion of the Policy
resulting from an increase in face amount, starting with the effective date of
the increase. A separate Target Premium will apply to the face amount
increase, based on the insured's age and underwriting class at the time of the
increase. (The insured's age at the time of the increase will be the insured's
age at the start of that Policy year.) A sales charge will be deducted from
the portion of each premium that is attributable to the face amount increase
for at least 20 years from the date of the increase. See "Charges and
Expenses" for a description of the Surrender Charges and sales charges that
will apply. The Monthly Deduction applicable to the Policy will be adjusted
beginning with the effective date of the increase to reflect the new face
amount and amount at risk under the Policy. In addition, cost of insurance
charges will reflect any change in risk classification of the insured if the
face amount increase was medically underwritten. Generally, if the insured's
risk classification improved as a result of the underwriting, future cost of
insurance rates for the entire Policy will be based on the new underwriting
class. If the insured is determined to be in a worse risk classification than
at issue of the Policy (or at the time of a previous face amount increase),
then only the portion of the cost of insurance charge that is applied to the
net amount at risk associated with the increase in face amount will be based
on the new underwriting class. If the Policy was issued to a juvenile insured
and the face amount increase occurs when the insured is age 20 or older, cost
of insurance rates for the original face amount will continue to be based on
juvenile underwriting classes and cost of insurance rates for the face amount
increase will be based on non-juvenile underwriting classes. In that
situation, cost of
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insurance rates for the original face amount will be guaranteed not to be
higher than rates based on the 1980 CSO Tables, and cost of insurance rates
for the face amount increase will be guaranteed not to be higher than rates
based on the 1980 CSO Tables with smoker/nonsmoker modifications. (See
"Charges and Expenses--Monthly Deduction from Cash Value.")
NEVLICO determines the net amount at risk associated with a face amount
increase by calculating the face amount increase as a percentage of the
Policy's total net amount at risk immediately following the increase. The
resulting percentage of the Policy's total net amount at risk is applicable to
the face amount increase. The remaining percentage of the Policy's total net
amount at risk is applicable to the initial face amount. (For example, if the
Policy's face amount is increased by $100,000 and the total net amount at risk
immediately following the increase in $250,000, then 40% of the total net
amount at risk applies to the face amount increase. The remaining 60% applies
to the initial face amount.) On each monthly processing day, the net amount at
risk used to determine the cost of insurance charge associated with the face
amount increase is the Policy's total net amount at risk at that time,
multiplied by the percentage calculated as described above. This percentage
remains fixed until there is another face amount increase.
An increase in face amount will take effect on the first day of the Policy
month following NEVLICO's approval of your application for the increase. You
can contact NEVLICO's Administrative Office or a NEVLICO agent to determine
the procedures for requesting a face amount increase. You have a limited time
in which you may cancel a face amount increase. (See "Right to Return the
Policy".)
Only one face amount increase can be processed on a processing date.
Therefore, if your Policy has a Level Term Insurance rider, and you request an
exchange of the term insurance rider for a face amount increase as well as an
additional face amount increase, the two requests will be combined and
processed as one adjustment if the same underwriting class would be applicable
to each; otherwise, the additional face amount increase will be processed
first, and the exchange of term insurance will be processed one month later.
In connection with Policies issued in certain business situations on an
automatic issue basis, NEVLICO may offer annual face amount increases which
are related to increases in salary or which are based on a fixed annual
percentage (the "Salary Refresh" program). Limits on the annual and/or total
amount of face increases per Policy that will be permitted on an automatic
issue basis will be determined at issue of the Policies. Increases which
exceed this limit will require underwriting. The Salary Refresh program is not
available for Policies with the Option 2 death benefit.
NEVLICO may also offer the Salary Refresh program in connection with
Policies issued on an underwritten basis in certain business situations. Any
Salary Refresh face amount increases under such Policies will be underwritten
in connection with the application for the initial face amount of the
Policies, and will be subject to limits determined at that time.
The terms and conditions of the Salary Refresh program are contained in
NEVLICO's published rules which are furnished at the time of application.
LOAN PROVISION
You may borrow all or part of the Policy's "loan value" at any time after
the Right to Return the Policy period. NEVLICO will make the loan as of the
date when a loan request is received at NEVLICO's Administrative Office. (See
"Receipt of Communications and Payments at NEVLICO's Administrative Office".)
You should contact NEVLICO's Administrative Office or a NEVLICO agent for
information regarding the procedures to follow for requesting a loan.
The Policy's loan value is equal to (i) 90% of the Policy's cash value
projected using current Policy charges and a 4% annual rate to the next Policy
anniversary or, if earlier, to the next Planned Premium due date; less (ii)
the Surrender Charge that would apply upon surrender on the next Planned
Premium due date or, if greater, on the date the loan is made; less (iii) loan
interest to the next loan interest due date. If required by state law, the
Policy's loan value may be a greater percentage of the cash value, as
described in your Policy. The amount of loan value available to be borrowed at
any time is reduced by the amount of any outstanding Policy loan plus accrued
interest.
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The example below illustrates how the loan value is determined.
- -------------------------------------------------------------------------------
EXAMPLE: Using the Policy illustrated on page A-48 assume that the Policy's
Planned Premiums have been paid and that the Policy's Sub-Accounts have earned
a constant 6% hypothetical gross annual rate of return (equal to a constant
net annual rate of return of 4.40%). After the premium payment on the 10th
Policy anniversary, the maximum amount that could be borrowed would be
determined as follows under (i) an annual premium payment schedule and (ii) a
quarterly premium payment schedule:
<TABLE>
<CAPTION>
ANNUAL QUARTERLY
------- ---------
<S> <C> <C>
(1) Cash Value after Premium Payment on 10th Policy Anni-
versary.............................................. $43,079 $40,287
(2) Cash Value Projected at a Constant Annual Rate of Re-
turn of 4% to the
(a) 11th Policy Anniversary........................... 44,068
(b) Next Planned Premium Due Date..................... 40,501
(3) 90% of Amount Calculated in (2)...................... 39,661 36,451
(4) Amount Calculated in (3), Reduced by the Applicable
Surrender Charge..................................... 39,396 36,186
(5) Amount Calculated in (4), Reduced by Loan Interest to
the Next Interest Due Date........................... 37,342 34,300
</TABLE>
- -------------------------------------------------------------------------------
A Policy loan reduces the Policy's cash value in the Sub-Accounts by the
amount of the loan. A loan repayment increases the cash value in the Sub-
Accounts by the amount of the repayment. Unless you request otherwise, Policy
loans are attributed first to the Sub-Accounts of the Variable Account in
proportion to the cash value in each, and then the Fixed Account. All loan
repayments are allocated first to the outstanding loan balance attributed to
the Fixed Account and then to the Sub-Accounts of the Variable Account in
proportion to the cash value in each.
The interest rate charged on Policy loans is 5.5% per year, accrues daily,
and is due on the Policy anniversary. If not paid at that time, the interest
accrued on the loan is added to the loan, and an amount equal to the unpaid
interest is deducted from the Policy's cash value in the Sub-Accounts and the
Fixed Account in proportion to the amount in each. The amount taken from the
Policy's Sub-Accounts as a result of the loan earns interest at not less than
a 4% rate per year. The rate currently credited is a 4% annual rate. This
interest earned is credited to the Policy's Sub-Accounts annually, in
proportion to the cash value in each.
The amount taken from the Policy's Sub-Accounts as a result of a loan does
not participate in the investment experience of the Sub-Accounts. Therefore,
the death benefit and cash value of the Policy can be permanently affected by
a Policy loan, even if it is repaid. In addition, any proceeds payable under a
Policy are reduced by the amount of any outstanding loan plus accrued
interest.
Any payment received while a Policy loan is outstanding is treated first as
a Planned Premium, second as repayment of Policy loan interest, third as
repayment of a Policy loan, and last as an unscheduled payment, unless you
designate otherwise in writing to NEVLICO. If a Policy loan is outstanding, it
may be more advantageous to repay the loan than to pay a premium, because the
payment is subject to sales and premium tax charges, and the loan repayment is
not subject to charges; however, repayment of the loan in place of a premium
payment could cause your Policy to lose its eligibility for a death benefit
guarantee. (See "Deductions from Premiums" and "Death Benefit".)
If Policy loans plus accrued interest exceed the Policy's cash value less
the Surrender Charge on the next Policy loan interest due date (or, if the
Surrender Charge would be greater, on the date the calculation is made),
NEVLICO will notify you that the Policy is going to terminate. (This situation
is referred to as an "excess policy loan".) The Policy will terminate without
value 62 days after the notice is mailed unless the excess amount is paid to
NEVLICO within that time. If the Policy lapses with a loan outstanding,
adverse tax consequences may result. (See "Tax Considerations" below.)
SURRENDER
You may surrender a Policy for its net cash value at any time while the
insured is living by a request conforming to NEVLICO's administrative
procedures. The net cash value of the surrendered Policy is determined as of
the date when a surrender request is received at NEVLICO's Administrative
Office. The net cash value equals the cash value reduced by any Policy loan
and accrued interest and by any applicable Surrender Charge. (See "Surrender
Charge".) The net cash value paid on surrender is increased by the portion of
any cost of insurance charge deducted that applies to the period beyond the
date of surrender. If you surrender the Policy during the grace period, (that
is, at a time when the net cash value was not sufficient to cover the Monthly
Deduction and no Minimum Guaranteed Death Benefit or three year Minimum
Premium guarantee applies to the Policy), the net cash value you receive is
reduced by an amount to cover the Monthly Deduction to the date of surrender.
You may elect in writing to have
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all or part of the net cash value applied to a payment option. (See "Payment
Options".) A surrender may result in adverse tax consequences. (See "Tax
Considerations" below.)
PARTIAL SURRENDER
You may make a partial surrender of the Policy after the Right to Return the
Policy period, to receive a portion of its net cash value. A partial surrender
will cause a reduction in the Policy's death benefit and may cause a reduction
in the Policy's face amount if necessary in order that the amount at risk
under the Policy not increase. Any reduction in the face amount causes a
proportionate reduction in the Policy's Target Premium, on which any future
Surrender Charges are based. Rider benefits may also be reduced. For purposes
of calculating the applicable Surrender Charge and any future cost of
insurance charges, any face amount reduction will apply to the initial face
amount and to any prior increase in face amount on a pro rata basis. No
partial surrender may reduce the face amount below the Policy's required
minimum except with NEVLICO's consent; special rules apply for Policies sold
in business situations.
Partial surrenders in any one Policy year are limited, except with NEVLICO's
consent, to 20% of the Policy's net cash value as of the date of the first
partial surrender for the Policy year or, if less, the Policy's available loan
value. Currently, NEVLICO permits partial surrenders of up to 75% of the
Policy's net cash value per year, assuming sufficient available loan value.
(In certain business situations NEVLICO may permit a higher percentage of the
net cash value to be withdrawn.)
Any Surrender Charge that applies to a partial surrender is deducted from
the Policy's remaining cash value in an amount proportional to the amount of
the Policy's face amount surrendered. The Surrender Charge applied reduces any
remaining Surrender Charge that can be applied under your Policy.
You should be aware that cash value paid upon partial surrender may not be
reinvested in the Policy except as premium payments, which are subject to the
charges described under "Deductions From Premiums". A partial surrender could
terminate your Policy's Minimum Guaranteed Death Benefit A or B. See "Minimum
Guaranteed Death Benefit".
A partial surrender first reduces the Policy's cash value in the Sub-
Accounts of the Variable Account, in proportion to the amount of cash value in
each, and then the Fixed Account, unless you request otherwise. (See "The
Fixed Account" below.) The amount of net cash value paid upon partial
surrender is determined as of the date when a request conforming to NEVLICO's
administrative procedures is received at NEVLICO's Administrative Office.
NEVLICO's administrative procedures can be determined by contacting a NEVLICO
agent or the Administrative Office.
A reduction in the death benefit as a result of a partial surrender may
cause the Policy to become a "modified endowment contract". If you are
contemplating a partial surrender, you should consult your tax advisor
regarding the tax consequences of the transaction. (See "Tax Considerations".)
REDUCTION IN FACE AMOUNT
You may reduce the face amount of your Policy without receiving a
distribution of any of the Policy's cash value. (This feature differs from a
partial surrender in that a partial surrender causes part of the Policy's cash
value to be distributed to you.)
If you decrease the face amount of your Policy, the Target Premium, on which
any future Surrender Charges are based, is also decreased. Your Policy's
actual cash value is not reduced except by the amount of any applicable
Surrender Charge. Generally, the Policy's death benefit is decreased.
(However, if the death benefit is being increased in accordance with federal
income tax laws, the death benefit will not be decreased unless a Surrender
Charge was deducted from the cash value in connection with the face amount
reduction. A reduction in face amount in this situation is not advisable,
because it will not reduce your death benefit or cost of insurance charges and
may result in a Surrender Charge.) Any rider benefits attached to the Policy
may also have to be decreased. For purposes of calculating the applicable
Surrender Charge and future cost of insurance charges, a face amount reduction
will apply to the initial face amount and to any prior increase in face amount
on a pro rata basis. The face amount remaining after a reduction has to meet
NEVLICO's minimum face amount requirements for issue, except with NEVLICO's
consent; special rules apply in business situations.
A reduction in the face amount of your Policy will reduce the Federal tax
law limitations on the amount of premiums that can be paid under the Policy.
In these cases, a partial surrender of cash value may be required to comply
with Federal tax law. This could result in termination of the Minimum
Guaranteed Death Benefit A or B. See "Minimum Guaranteed Death Benefit".
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A face amount reduction takes effect as of the date when NEVLICO has
received a request at its Administrative Office meeting NEVLICO's
administrative requirements. You can determine NEVLICO's administrative
requirements by contacting a NEVLICO agent or the Administrative Office.
A reduction in the face amount of a Policy that causes a death benefit
reduction may cause the Policy to become a "modified endowment contract". If
you are contemplating a reduction in face amount, you should consult your tax
advisor regarding the tax consequences of the transaction. (See "Tax
Considerations".)
INVESTMENT OPTIONS
You may allocate your Policy's premiums among the Sub-Accounts of the
Variable Account and the Fixed Account in any combination, provided that
allocations can be made to a maximum of 10 accounts (including the Fixed
Account) at any time. A minimum of 10% of the premium must be allocated to
each Sub-Account selected. Percentages allocated must be in whole numbers.
Your Policy's cash value may be distributed among no more than 10 accounts
(including the Fixed Account) at any one time.
You make the initial premium allocation when you apply for a Policy. You may
change the allocation of future premiums at any time thereafter. The change
will be effective for premiums applied on or after the date when NEVLICO
receives your request. You may request the change by telephone or by written
request in a form satisfactory to NEVLICO. (See "Receipt of Communications and
Payments at NEVLICO's Administrative Office.")
See "Transfer Option" below for information on how to request a transfer or
reallocation by telephone.
TRANSFER OPTION
After the Right to Return the Policy period, you may transfer your Policy's
cash value between Sub-Accounts up to four times in a policy year without
NEVLICO's consent. NEVLICO currently allows 12 Sub-Account transfers per
policy year. Transfers out of the Fixed Account are not counted against this
limit. All Sub-Account transfer requests made at the same time will be treated
as a single request. The transfer will be effective as of the date when
NEVLICO receives the transfer request at its Administrative Office. (See
"Receipt of Communications and Payments at NEVLICO's Administrative Office".)
For special rules regarding transfers involving the Fixed Account, see "The
Fixed Account". Your Policy's cash value may be distributed among no more than
10 accounts (including the Fixed Account) at any one time.
You may request a Sub-Account transfer or reallocation of future premiums by
written request (which may be telecopied) to NEVLICO's Administrative Office
or by telephoning The New England. To request a transfer or reallocation by
telephone, you should contact your registered representative or contact The
New England at 1-800-200-2214. Requests for transfers (up to NEVLICO's current
limit per policy year) or reallocations by telephone will be automatically
permitted. NEVLICO and The New England will use reasonable procedures, such as
requiring certain identifying information from the caller, tape recording the
telephone instructions, and providing written confirmation of the transaction,
in order to confirm that instructions communicated by telephone are genuine.
Any telephone instructions reasonably believed by The New England and NEVLICO
to be genuine will be your responsibility, including losses arising from any
errors in the communication of instructions. As a result of this policy, you
will bear the risk of loss. If NEVLICO and The New England do not employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine, they may be liable for any losses due to unauthorized or
fraudulent instructions.
For Policies issued in New York, transfers may be made by written (including
telecopied) request only. The New York Insurance Department does not currently
allow transfer requests to be made by telephone.
SUBSTITUTION OF INSURED PERSON
Subject to state insurance department approval, NEVLICO offers a rider
benefit that will allow you to substitute the insured person under your
Policy, if you provide satisfactory evidence that the person proposed to be
insured is insurable. The right to substitute the insured person is subject to
certain restrictions and may also result in a cost or credit to you. A
substitution of the insured person will result in a taxable exchange. In
addition, a substitution of the insured person could reduce the amount of
premiums allowed to be paid into the Policy under Federal tax law and, as a
result, may require a partial surrender of cash value. No Surrender Charge
will be assessed in that situation. This rider may not be approved in every
state and therefore may not be available in every state. Your NEVLICO agent
can provide current information on the availability of the rider. Since
substituting
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the insured person may be a taxable event, you should consult your tax advisor
before substituting the insured person under your Policy.
PAYMENT OF PROCEEDS
NEVLICO will ordinarily pay any net cash value, loan value or death benefit
proceeds payable from the Sub-Accounts within seven days after receipt at the
Administrative Office of a request, or proof of death of the insured, in a
form satisfactory to NEVLICO. (See "Receipt of Communications and Payments at
NEVLICO's Administrative Office".) However, NEVLICO may delay payment (except
when a loan is made to pay a premium to NEVLICO) or transfers from the Sub-
Accounts: (i) if the New York Stock Exchange is closed for other than weekends
or holidays, or if trading on the New York Stock Exchange is restricted, (ii)
if the SEC determines that a state of emergency exists that makes payments or
Sub-Account transfers impractical, or (iii) at any other time when the
Eligible Funds or the Variable Account have the legal right to suspend
payment. NEVLICO may withhold payment of surrender or loan proceeds to the
extent that those proceeds are derived from a Policy Owner's check, or from a
Master Service Account premium transaction, which has not yet cleared. In
those cases, NEVLICO will process the surrender or loan to the extent of
policy values for which the Policy Owner has made full payment. The balance of
the surrender or loan proceeds will be paid when the Policy Owner's check, or
the Master Service Account premium transaction, has cleared. NEVLICO may also
delay payment if it considers whether to contest the Policy. NEVLICO will pay
interest on the death benefit proceeds from the date they become payable to
the date they are paid in one sum or, if a payment option was selected, to the
effective date of the option. (See "Payment Options".)
Death benefit proceeds may be paid pursuant to NEVLICO's Access Plus
program. If the Access Plus program is elected, an Access Plus account will be
established at State Street Bank & Trust Company at the time that death
benefit proceeds are payable. The Access Plus account provides convenient
access to proceeds, which are maintained in NEVLICO's general account, through
checkbook privileges with State Street. A beneficiary may elect to have death
benefit proceeds paid through the Access Plus program at any time prior to the
payment of death benefit proceeds.
Payments of cash value, or of any loan value available, from cash value in
the Fixed Account will normally be paid promptly. However, NEVLICO has the
right to delay such payments for up to six months from the date of the request
(to the extent allowed by state insurance law). NEVLICO will pay interest in
accordance with state insurance law requirements on payments that are delayed.
24 MONTH RIGHT
Generally, during the first 24 months after the Policy's issue date, and
during the first 24 months after the effective date of an increase in face
amount, you may convert this Policy, or a portion thereof, to fixed benefit
coverage by transferring all or a portion of your Policy's cash value, and
allocating all or a portion of future premiums, to the Fixed Account. The
request to convert to fixed benefit coverage must be in written form
satisfactory to NEVLICO.
This privilege may be exercised only once within 24 months after issue, and
only once within 24 months after each increase in face amount. Transfers into
the Fixed Account pursuant to this right will not count toward the limit on
the number of cash value transfers permitted under the Policy each year. Cash
value that is transferred to the Fixed Account, and future premium amounts
allocated to the Fixed Account, may subsequently be transferred back to one or
more Sub-Accounts of the Variable Account, subject to the Policy's general
limits on transfers from the Fixed Account (see "The Fixed Account").
The Policy generally permits NEVLICO to limit allocations to the Fixed
Account under certain circumstances. (See "The Fixed Account.") If NEVLICO
limits such allocations and you subsequently wish to exercise the 24 Month
Right, your right will be limited to (i) the Policy's cash value prior to any
face amount increase plus that portion of future premiums attributable to the
Policy's face amount prior to any increase, if the right is exercised during
the first 24 months after issue, or (ii) that portion of the Policy's cash
value and future premiums attributable to the face amount increase, if the
right is exercised within 24 months after a face amount increase. After
exercising the 24 Month Right, you may continue to allocate to the Fixed
Account only the percentage of premiums that was allocated to the Fixed
Account pursuant to your most recent exercise of the 24 Month Right. In
addition, if you have exercised this right, and NEVLICO subsequently limits
such allocations, then you may continue to allocate to the Fixed Account only
the lowest percentage of premiums that was allocated to the Fixed Account at
any time since your most recent exercise of the 24 Month Right.
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For a Policy issued in connection with certain group or sponsored
arrangements, NEVLICO may in the future offer the additional option of
exchanging the entire Policy at any time during the first 36 months after the
Policy's issue date, if the Policy has not lapsed, to a fixed-benefit term
life insurance policy issued by The New England. (Availability of this feature
will also depend on state insurance department approval.) The exchange will be
made without evidence of insurability. The new term insurance policy will have
the same face amount, policy date, issue age and risk classification for the
insured as the variable life Policy had. For the exchange of a face amount
increase, special rules may apply. Policy Owners should refer to the rider
providing this option. Premiums for the new term insurance policy will be
based on the premium rates for comparable fixed-benefit term life insurance
policies issued by The New England which were in effect on the Policy Date of
the original Policy. Any riders to the original Policy will be attached to the
new policy if they are available. If you exercise this option, you will bear
any investment loss you had under the variable life insurance policy. If your
Policy has this feature, upon surrender of the Policy in the first 36 months,
you will receive the greater of the Policy's net cash value and the value
which you would receive upon exercise of the exchange to term insurance
option. Your NEVLICO agent can advise you as to the availability of this
feature.
PAYMENT OPTIONS
The Policy's death benefit and net cash value will be paid in one sum unless
the Policy Owner or payee chooses to put all or part of the proceeds under a
payment option. You can choose a combination of payment options. The selection
of a payment option and the naming of a payee must be in written form
satisfactory to NEVLICO. You can make, change or revoke the selection before
the death of the insured. The payment options available are fixed benefit
options only; therefore, proceeds applied to an option will no longer be
affected by the investment experience of the Variable Account. The guaranteed
mortality assumptions used in determining payment levels under the options
will not vary based on sex. (For Policies issued in New York and Oregon,
however, and which are not issued for use in connection with certain employee
benefit plans and fringe benefit programs, the mortality assumptions will vary
based on sex. See "Group or Sponsored Arrangements".) Once payments under an
option begin, withdrawal rights may be restricted.
The following payment options are available:
(i) INCOME FOR A SPECIFIED NUMBER OF YEARS. Proceeds are paid in equal
monthly installments for up to 30 years, with interest at a rate not
less than 3.5% a year, compounded yearly. Additional interest paid by
NEVLICO for any year will be added to the monthly payments for that
year.
(ii) LIFE INCOME. Proceeds are paid in equal monthly installments (i)
during the life of the payee, (ii) for the longer of the life of the
payee or 10 years, or (iii) for the longer of the life of the payee or
20 years.
(iii) LIFE INCOME WITH REFUND. Proceeds are paid in equal monthly
installments during the life of the payee. At the payee's death, any
unpaid proceeds remaining are paid either in one sum or in equal
monthly installments until the total proceeds have been paid.
(iv) INTEREST. Proceeds are held for the life of the payee or another
agreed upon period. Interest of at least 3.5% a year is paid monthly
or added to the principal annually. At the death of the payee, or at
the end of the period agreed to, the balance of principal and any
interest will be paid in one sum.
(v) SPECIFIED AMOUNT OF INCOME. Proceeds plus accrued interest of at least
3.5% a year are paid in an amount and at a frequency elected until
total proceeds have been paid. Any amounts unpaid at the death of the
payee will be paid in one sum.
(vi) LIFE INCOME FOR TWO LIVES. Proceeds will be paid in equal monthly
installments (i) while either of two payees is living, (ii) for the
longer of the surviving payee or 10 years, or (iii) while the two
payees are living and, after the death of one payee, two-thirds of the
monthly amount for the life of the surviving payee will be paid.
NEVLICO's consent to use of an option is required if the installment
payments would be less than $20.
ADDITIONAL BENEFITS BY RIDER
A Policy can include additional benefits provided by rider to the Policy,
subject to NEVLICO's underwriting and issuance standards. These additional
benefits usually require an additional charge as part of the Monthly Deduction
from cash value. The rider benefits available with the Policies provide fixed
benefits that do not vary with the investment experience of the Variable
Account.
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There may be circumstances in which it will be to your economic advantage to
include a significant portion or percentage of your insurance coverage under a
term rider. In many other circumstances, it may be in your interest to obtain
a Policy without term rider coverage. These circumstances depend on many
factors, including the premium levels and amount and duration of coverage you
choose, as well as the age, sex and risk classification of the insured.
Reductions in or elimination of term rider coverage do not trigger the
imposition of a Surrender Charge, and use of a term rider generally reduces
sales compensation. Your NEVLICO agent can provide you more information on the
uses of term rider coverage.
The following riders are available:
LEVEL TERM INSURANCE, which provides term insurance.
WAIVER OF MONTHLY DEDUCTION, which provides for waiver of Monthly
Deductions upon the disability of the insured.
TEMPORARY TERM INSURANCE, which provides for insurance from the date of
issue to the Policy Date.
CHILDREN'S INSURANCE, which provides insurance on the life of the insured's
children.
Not all riders may be available and riders in addition to those listed above
may be made available. You should consult your NEVLICO agent regarding the
availability of particular riders.
POLICY OWNER AND BENEFICIARY
The Policy Owner is named in the application but may be changed from time to
time. At the death of the Policy Owner, his or her estate will become the
Policy Owner unless a successor Policy Owner has been named. The Policy
Owner's rights (except for rights to payment of benefits) terminate at the
death of the insured.
The beneficiary is also named in the application. The beneficiary of the
Policy may be changed at any time before the death of the insured. The
beneficiary has no rights under the Policy until the death of the insured and
must survive the insured in order to receive the death proceeds. If no named
beneficiary survives the insured, the proceeds will be paid to the Policy
Owner.
A change of Policy Owner or beneficiary must be in written form satisfactory
to NEVLICO and must be dated and signed by the Policy Owner making the change.
The change will be subject to all payments made and actions taken by NEVLICO
under the Policy before the signed change form is received by NEVLICO at its
Administrative Office.
You may assign (transfer) your rights in the Policy to someone else. An
absolute assignment of the Policy is a change of Policy Owner and beneficiary
to the assignee. A collateral assignment of the Policy does not change the
Policy Owner or beneficiary, but their rights will be subject to the terms of
the assignment. Assignments will be subject to all payments made and actions
taken by NEVLICO under the Policy before a signed copy of the assignment form
is received at NEVLICO's Administrative Office. NEVLICO will not be
responsible for determining whether or not an assignment is valid. Changing
the Policy Owner or assigning the Policy may have tax consequences. (See "Tax
Considerations" below.)
THE VARIABLE ACCOUNT
The Variable Account was established as a separate investment account of
NEVLICO on January 31, 1983 under Delaware Insurance Law. The Variable Account
is the funding vehicle for other NEVLICO variable life insurance policies in
addition to the Policies. The Variable Account meets the definition of a
"separate account" under Federal securities laws. The Variable Account is a
type of investment company called a unit investment trust and is registered
with the Securities and Exchange Commission (the "SEC") under the Investment
Company Act of 1940. Registration with the SEC does not involve supervision by
the SEC of the management or investment practices or policies of the Variable
Account. However, both NEVLICO and the Variable Account are subject to
regulation by the Delaware Insurance Commissioner and to the insurance laws
and regulations in every jurisdiction where the Policies are sold.
Although the assets of the Variable Account are owned by NEVLICO, applicable
law provides that the portion of the Variable Account assets equal to the
reserves and other liabilities of the Variable Account may not be charged with
liabilities that arise out of any other business NEVLICO may conduct. NEVLICO
believes this means that the assets of the Variable Account equal to the
reserves and other liabilities of the Variable Account are not available to
meet the claims of NEVLICO's general creditors, and
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may only be used to support the cash values under its variable life insurance
policies issued by the Variable Account. But NEVLICO may transfer to its
general account assets which exceed the reserves and other liabilities of the
Variable Account. Before making any such transfer, NEVLICO will consider any
possible adverse impact the transfer might have on the Variable Account.
Income and realized and unrealized capital gains and losses of the Variable
Account are credited to the Variable Account without regard to any of
NEVLICO's other income or capital gains and losses.
INVESTMENTS OF THE VARIABLE ACCOUNT
The Variable Account currently has 16 Sub-Accounts, each of which invests in
a series of an Eligible Fund. The Sub-Accounts of the Variable Account are:
--The Zenith Money Market Sub-Account, which invests in the Back Bay
Advisors Money Market Series of the Zenith Fund
--The Zenith Bond Income Sub-Account, which invests in the Back Bay
Advisors Bond Income Series of the Zenith Fund
--The Zenith Capital Growth Sub-Account, which invests in the Capital
Growth Series of the Zenith Fund
--The Zenith Stock Index Sub-Account, which invests in the Westpeak Stock
Index Series of the Zenith Fund
--The Zenith Managed Sub-Account, which invests in the Back Bay Advisors
Managed Series of the Zenith Fund
--The Zenith Value Growth Sub-Account, which invests in the Westpeak Value
Growth Series of the Zenith Fund
--The Zenith Avanti Growth Sub-Account, which invests in the Loomis Sayles
Avanti Growth Series of the Zenith Fund
--The Zenith Small Cap Sub-Account, which invests in the Loomis Sayles
Small Cap Series of the Zenith Fund
--The Zenith Equity Growth Sub-Account, which invests in the Alger Equity
Growth Series of the Zenith Fund*
--The Zenith Balanced Sub-Account, which invests in the Loomis Sayles
Balanced Series of the Zenith Fund*
--The Zenith Value Sub-Account, which invests in the Venture Value Series
of the Zenith Fund*
--The Zenith International Equity Sub-Account, which invests in the
Draycott International Equity Series of the Zenith Fund*
--The Equity-Income Sub-Account, which invests in the Equity-Income
Portfolio of the VIP Fund
--The Overseas Sub-Account, which invests in the Overseas Portfolio of the
VIP Fund
--The High Income Sub-Account, which invests in the High Income Portfolio
of the VIP Fund
--The Asset Manager Sub-Account, which invests in the Asset Manager
Portfolio of VIP Fund II
* Availability of these Sub-Accounts is subject to any necessary state
insurance department approvals.
The Zenith Fund is an open-end diversified management investment company,
more commonly known as a mutual fund. The Zenith Fund was established by The
New England as an investment vehicle for separate investment accounts of
NEVLICO and of other life insurance companies. Currently the Zenith Fund is
the funding vehicle for the Variable Account and for separate accounts of The
New England and NEVLICO that issue variable annuity contracts.
The VIP Fund and VIP Fund II are open-end, diversified management investment
companies (mutual funds) that serve as the investment vehicles for variable
life insurance and variable annuity separate accounts of various insurance
companies. The VIP Fund and VIP Fund II were organized by Fidelity Management
& Research Company.
Shares of the Eligible Funds are purchased and sold by the Variable Account
at their net asset value (without a deduction for sales load) determined as of
the close of regular trading on the New York Stock Exchange on each day when
the exchange is open for trading.
The investment objectives of the Eligible Funds' portfolios are described
briefly below. There is, of course, no assurance that these objectives will be
met. A full description of the Eligible Funds, including their investment
objectives and policies, expenses, and risks of investing in the Eligible
Funds, is contained in the attached Eligible Fund prospectuses, as well as in
the Zenith Fund's Statement of Additional Information, which is referenced in
the Zenith Fund prospectus, and in the Statement of Additional Information for
the VIP Fund and VIP Fund II, which is referenced in those Funds' prospectus.
The Zenith Back Bay Advisors Money Market Series' investment objective is to
provide the highest possible level of current income consistent with
preservation of capital. The Series seeks to achieve its objective through
investment in a managed portfolio of high quality money market instruments.
Money market funds are neither insured nor guaranteed by the U.S. Government
and there can be no assurance that the Series will maintain a stable net asset
value of $100 per share.
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The Zenith Back Bay Advisors Bond Income Series' investment objective is to
provide a high level of current income consistent with preservation of capital
and moderate investment risk. The Series seeks to achieve its objective
through investment primarily in an investment quality bond portfolio.
The Zenith Capital Growth Series' investment objective is long-term growth
of capital through investment primarily in equity securities.
The Zenith Westpeak Stock Index Series' investment objective is to provide
investment results that correspond to the composite price and yield
performance of United States publicly traded common stocks. The Series
currently seeks to achieve its objective by attempting to duplicate the
composite price and yield performance of the Standard & Poor's 500 Composite
Stock Price Index.
The Zenith Back Bay Advisors Managed Series' investment objective is to
provide a favorable total investment return through investment in a
diversified portfolio. The Series' portfolio is expected to include (i) common
stocks, (ii) notes and bonds and (iii) money market instruments.
The Zenith Westpeak Value Growth Series' investment objective is long-term
total return (capital appreciation and dividend income) through investment in
equity securities. Emphasis will be given to both undervalued securities
("value" style) and securities of companies with growth potential ("growth"
style).
The Zenith Loomis Sayles Avanti Growth Series' investment objective is long-
term growth of capital. The Series normally will invest primarily in equity
securities of companies with medium and large capitalization (capitalization
of $1 billion to $5 billion and over $5 billion, respectively) but will also
invest a portion of its assets in equity securities of companies with a
relatively small market capitalization (under $1 billion).
The Zenith Loomis Sayles Small Cap Series' investment objective is long-term
capital growth from investments in common stock or their equivalent. The
Series will normally invest at least 65% of its total assets in companies with
market capitalization of less than $500 million.
The Zenith Loomis Sayles Balanced Series' investment objective is reasonable
long-term investment return from a combination of long-term capital
appreciation and moderate current income. The Series is "flexibly managed" in
that sometimes it invests more heavily in equity securities and at other times
it invests more heavily in fixed-income securities. Under normal conditions,
the Series will invest at least 25% of its assets in bonds and at least 50% of
its assets in common stocks.
The Zenith Draycott International Equity Series' investment objective is to
seek total return from long-term growth of capital and dividend income. The
Series will invest primarily in common stocks of issuers either headquartered
outside the U.S. or deriving a substantial part of their revenues from
countries outside of the U.S.
The Zenith Venture Value Series' investment objective is growth of capital.
The Series will primarily invest in domestic common stocks (and securities
convertible into common stock) that the Series' subadviser believes have
capital growth potential due to factors such as undervalued assets or earnings
potential, product development and demand, favorable operating ratios,
resources for expansion, management abilities, reasonableness of market price,
and favorable overall business prospects. The Series will generally invest
predominantly in equity securities of companies with market capitalizations of
at least $250 million.
The Zenith Alger Equity Growth Series' investment objective is to seek long-
term capital appreciation. The Series' assets will be invested primarily in a
diversified, actively managed portfolio of equity securities, with a majority
of issuers having a total market capitalization of $1 billion or greater.
The VIP Fund Equity-Income Portfolio's investment objective is to seek
reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Equity-Income Portfolio will
also consider the potential for capital appreciation.
The VIP Fund Overseas Portfolio's investment objective is long-term growth
of capital primarily through investments in foreign securities. The Overseas
Portfolio provides a means for investors to diversify their own portfolio by
participating in companies and economies outside of the United States.
The VIP Fund High Income Portfolio's investment objective is to obtain a
high level of current income by investing primarily in high-yielding, lower-
rated, fixed-income securities, while also considering growth of capital.
High-yielding, lower-rated debt securities present higher risks of untimely
interest and principal payments, default and price volatility than higher-
rated securities, and may present problems of liquidity and valuation.
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The VIP Fund II Asset Manager Portfolio's investment objective is to seek
high total return with reduced risk over the long-term by allocating its
assets among domestic and foreign stocks, bonds and short-term fixed-income
instruments.
The basic objective of the Policy is to provide benefits which increase in
value when the investment experience of the Policy's sub-accounts is
favorable. Historically, the investment performance of common stocks over the
long term has generally been superior to that of long or short term debt
securities, although common stocks have been subject to more dramatic changes
in value over short periods of time. The Zenith Capital Growth, Zenith Avanti
Growth, Zenith Equity Growth, Zenith Value, Zenith Value Growth, Zenith Stock
Index, Zenith International Equity or Zenith Small Cap Sub-Accounts, or the
Equity-Income or Overseas Sub-Accounts, or some combination of these sub-
accounts, may, therefore, be a more desirable selection for Policy Owners who
are willing to accept such risks of short term fluctuations in value. For a
demonstration of certain of these market trends, see Appendix C: Long Term
Market Trends. Historically, the investment performance of "small cap" stocks
over the long term has generally been superior to stocks of large
capitalization companies, although "small cap" stocks have been substantially
more volatile. Historically, having a small percentage of a portfolio invested
in overseas stocks and the rest in domestic stocks has produced a portfolio
that has less, although still substantial, volatility than a completely
domestic portfolio. Equity investors should recognize that overseas and "small
cap" funds traditionally involve more risk than most domestic stock funds.
The performance of the various financial markets over shorter periods of
time has sometimes differed from their long term historical results. Short
term interest rates were very high in the late 1970's and early 1980's, but
are now lower. Long term bond values continue to fluctuate, and common stock
prices, which have risen substantially at times, have also had periods of
volatility. Policy Owners who seek somewhat greater protection against loss of
principal in the short term than that afforded by a stock fund may prefer the
High Income Sub-Account or the Zenith Bond Income Sub-Account. However,
because the High Income Portfolio invests in higher yielding, lower rated and
unrated fixed income securities (including bonds commonly referred to as
"junk" bonds), it has a higher degree of risk associated with it relative to
more conservative fixed income funds. Those who seek even greater safety of
principal may select the Zenith Money Market Sub-Account, although it is
subject to possible rapid changes in short term interest rates. Those who
primarily seek safety of principal should consider fixed life insurance as an
alternative to variable life insurance.
NEVLICO guarantees the principal invested in the Fixed Account, although
this guarantee is subject to NEVLICO's claims paying ability.
You may wish to consider diversifying your investments by allocating the
Policy's cash value among two or more sub-accounts.
Policy Owners may also diversify by selecting the Zenith Managed Sub-
Account, Zenith Balanced Sub-Account or the Asset Manager Sub-Account, since
each generally invests its assets at most times in a combination of bonds,
stocks and short term instruments, in varying proportions depending upon the
investment adviser's evaluation of the economy and financial markets. The
Asset Manager Portfolio has the ability to invest its stock portfolio more
aggressively than the Back Bay Advisors Managed Series. You may also wish to
diversify your cash value by country. The Overseas Sub-Account and Zenith
International Equity Sub-Account allow you to participate primarily in
companies and economies outside the United States.
The selection of a Policy's sub-accounts is a matter of your own choice and
should depend on your willingness to accept investment risks, the other types
of investments you have and your own assessment of future economic and
financial market conditions.
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<PAGE>
INVESTMENT MANAGEMENT
The adviser and sub-adviser for each series of the Zenith Fund are listed in
the chart below. TNE Advisers, which is a subsidiary of The New England, and
each of the sub-advisers are registered with the SEC as investment advisers
under the Investment Advisers Act of 1940.
<TABLE>
<CAPTION>
SERIES ADVISER SUB-ADVISER
------ ------- -----------
<S> <C> <C>
Capital Growth Capital Growth Management Limited
Partnership ("CGM")*
Back Bay Advisors Money TNE Advisers, Inc. Back Bay Advisors, L.P.**
Market
Back Bay Advisors Bond TNE Advisers, Inc. Back Bay Advisors, L.P.**
Income
Back Bay Advisors Man- TNE Advisers, Inc. Back Bay Advisors, L.P.**
aged
Westpeak Stock Index TNE Advisers, Inc. Westpeak Investment Advisors, L.P.**
Westpeak Value Growth TNE Advisers, Inc. Westpeak Investment Advisors, L.P.**
Loomis Sayles Avanti TNE Advisers, Inc. Loomis, Sayles & Company, L.P.**
Growth
Loomis Sayles Small Cap TNE Advisers, Inc. Loomis, Sayles & Company, L.P.**
Loomis Sayles Balanced TNE Advisers, Inc. Loomis, Sayles & Company, L.P.**
Draycott International TNE Advisers, Inc. Draycott Partners, Ltd.**
Equity
Venture Value TNE Advisers, Inc. Selected/Venture Advisers, L.P.
Alger Equity Growth TNE Advisers, Inc. Fred Alger Management, Inc.
</TABLE>
- --------
* An affiliate of The New England
** An indirect subsidiary of The New England
In the case of the Back Bay Advisors Money Market Series, Back Bay Advisors
Bond Income Series, Back Bay Advisors Managed Series, Westpeak Stock Index
Series, Westpeak Value Growth Series, Loomis Sayles Avanti Growth Series and
Loomis Sayles Small Cap Series, TNE Advisers became the adviser on May 1,
1995. Prior to that date those series were advised by their current sub-
advisers, except as follows. The New England itself served as investment
adviser to the Back Bay Advisors Money Market and Back Bay Advisors Bond
Income Series until September 10, 1986 when Back Bay Advisors assumed The New
England's responsibilities under the investment advisory agreements with those
Series. Back Bay Advisors served as investment adviser to the Westpeak Stock
Index Series until August 2, 1993, when Westpeak became the investment
adviser. The Capital Growth Series was managed by Loomis Sayles until March 1,
1990, when its Capital Growth Management Division was reorganized into CGM.
The Zenith Fund Series incur charges for advisory fees and certain other
expenses. Under a voluntary expense cap by TNE Advisers for each of the
Capital Growth, Back Bay Advisors Bond Income, Back Bay Advisors Money Market,
Back Bay Advisors Managed, Westpeak Stock Index, Westpeak Value Growth and
Loomis Sayles Avanti Growth Series, TNE Advisers will bear those expenses
(other than the management fee) that exceed 0.15% of average daily net assets;
for the Loomis Sayles Small Cap Series, TNE Advisers will bear all expenses
that exceed 1.00% of average daily net assets. For the remaining Zenith Fund
Series, TNE Advisers, under a voluntary expense deferral arrangement, will
bear those expenses (other than the management fee) which exceed a certain
limit in the year in which they are incurred and will charge those expenses to
the series in a future year when actual expenses of the series are below the
limit. The expense cap and expense deferral arrangement may be terminated at
any time.
The following table shows the annual operating expenses for each Series,
based on actual expenses incurred for 1994, after giving effect to the
applicable expense cap or expense deferral arrangement:
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER EXPENSE CAP)
<TABLE>
<CAPTION>
BACK BACK
BAY BAY BACK LOOMIS LOOMIS
ADVISORS ADVISORS BAY WESTPEAK WESTPEAK SAYLES SAYLES
CAPITAL BOND MONEY ADVISORS STOCK VALUE AVANTI SMALL
GROWTH INCOME MARKET MANAGED INDEX GROWTH GROWTH CAP
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
------- -------- -------- -------- -------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .65% .40% .35% .50% .25% .70% .70% 1.00%
Other Expenses.......... .05% .14% .15% .14% .15% .15% .15% --
---- ---- ---- ---- ---- ---- ---- -----
Total Series Operating
Expenses............. .70% .54% .50% .64% .40% .85% .85% 1.00%
</TABLE>
A-34
<PAGE>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER EXPENSE DEFERRAL)
<TABLE>
<CAPTION>
LOOMIS ALGER
SAYLES DRAYCOTT VENTURE EQUITY
BALANCED INTERNATIONAL VALUE GROWTH
SERIES EQUITY SERIES SERIES SERIES
-------- ------------- ------- ------
<S> <C> <C> <C> <C>
Management Fee............................ .70% .90% .75% .70%
Other Expenses............................ .15% .40% .15% .15%
---- ----- ---- ----
Total Series Operating Expenses......... .85% 1.30% .90% .85%
</TABLE>
For more information about the Series' advisory agreements, see the Zenith
Fund prospectus attached at the end of this prospectus and the Zenith Fund's
Statement of Additional Information.
The investment adviser for the VIP Fund and VIP Fund II is Fidelity
Management & Research Company, a registered investment adviser under the
Investment Advisers Act of 1940. The Portfolios of the VIP Fund and VIP Fund
II, as part of their operating expenses, pay investment management fees to
Fidelity Management & Research Company. The Portfolios also bear certain other
expenses. For the year ended December 31, 1994, the total operating expenses
of the Portfolios, as a percentage of Portfolio average net assets, were as
follows:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSE EXPENSES
- --------- ---------- ------- ------------
<S> <C> <C> <C>
Equity-Income................................... .52% .06% .58%*
Overseas........................................ .77% .15% .92%
High Income..................................... .61% .10% .71%
Asset Manager................................... .72% .08% .80%*
</TABLE>
- --------
* A portion of the brokerage commissions the portfolio paid was used to reduce
its expenses. Without this reduction total operating expenses would have
been .60% for the Equity-Income Portfolio and .81% for the Asset Manager
Portfolio.
Fidelity Management & Research Company is the original Fidelity company and
was founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 1994, it advised funds having
more than 22 million shareholder accounts with a total value of more than $250
billion. For more information regarding the Equity-Income, Overseas High
Income and Asset Manager Portfolios and Fidelity Management & Research
Company, see the VIP Fund and VIP Fund II prospectus attached at the end of
this prospectus and their Statement of Additional Information.
THE FIXED ACCOUNT
A FIXED ACCOUNT OPTION IS AVAILABLE UNDER THE POLICY IN STATES WHERE IT HAS
BEEN APPROVED BY THE STATE INSURANCE DEPARTMENT. THE FIXED ACCOUNT MAY NOT BE
APPROVED BY EVERY STATE INSURANCE DEPARTMENT AND THEREFORE IT MAY NOT BE
AVAILABLE IN EVERY STATE.
You may allocate net premiums for your Policy, and may transfer your
Policy's cash value, to the Fixed Account, which is part of NEVLICO's general
account. Because of exemptive and exclusionary provisions in the Federal
securities laws, interests in the Fixed Account have not been registered under
the Securities Act of 1933, and neither the Fixed Account nor the general
account has been registered as an investment company under the Investment
Company Act of 1940. Therefore, neither the Fixed Account, the general account
nor any interests therein are generally subject to the provisions of these
Acts, and NEVLICO has been advised that the staff of the SEC does not review
disclosures relating to the general account. Disclosures regarding the Fixed
Account may, however, be subject to certain generally applicable provisions of
the Federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
GENERAL DESCRIPTION
NEVLICO's general account includes all the assets owned by NEVLICO, other
than the assets in the Variable Account or in any other separate accounts that
NEVLICO may establish. NEVLICO has sole discretion over the investment of
assets in the general account, including the Fixed Account. Policy Owners who
allocate cash value to the Fixed Account will not share in the actual
investment experience of the Fixed Account. Instead, NEVLICO guarantees that
cash values in the Fixed Account will
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<PAGE>
earn interest at an annual rate of at least 4%. NEVLICO may from time to time
credit interest at a higher rate than 4%, but it is under no obligation to do
so. NEVLICO declares the current interest rate for the Fixed Account
periodically. Your Policy cash values that are in the Fixed Account will earn
interest daily.
NEVLICO may vary the way in which it credits interest in the Fixed Account
from time to time. The following is a description of NEVLICO's current method
for crediting interest to cash value in the Fixed Account. All of your
Policy's cash value in the Fixed Account on a Policy anniversary will earn
interest at the declared annual rate in effect on the anniversary. It will
earn interest at this rate until the next Policy anniversary, when it will be
credited with the current rate declared by NEVLICO. (Although NEVLICO's
current practice is to credit your entire Fixed Account cash value on a Policy
anniversary with the most recently declared annual rate until the next
anniversary, NEVLICO can select any portion, from 0% to 100%, of your Fixed
Account cash value on a Policy anniversary to earn interest at the most
recently declared rate until the next Policy anniversary. For Policies issued
in New Jersey, NEVLICO will always credit the Policy's entire Fixed Account
cash value on a Policy anniversary with the most recently declared annual rate
until the next anniversary.) Any net premiums allocated or any portion of your
Policy's cash value transferred to the Fixed Account from the Variable Account
on a date other than a Policy anniversary will earn interest at NEVLICO's most
recently declared rate until the next Policy anniversary. Any loan repayment
allocated to the Fixed Account will be credited with the lesser of the most
recently declared interest rate and the effective interest rate for your
Policy's cash value in the Fixed Account on the date of the repayment. The
effective interest rate credited at any time to your cash value in the Fixed
Account will be a weighted average of all the Fixed Account rates for your
Policy.
VALUES AND BENEFITS
The Policy's cash value in the Fixed Account reflects the net premiums
allocated to the Fixed Account, interest credited to cash value in the Fixed
Account, any loans, partial surrenders made from the Fixed Account cash value,
charges deducted, and any transfers of cash value to or from the Variable
Account. Charges will be deducted from the Policy's cash value in the Fixed
Account and in the Policy's Sub-Accounts in proportion to the amount of the
Policy's cash value in each. (See "Monthly Deduction from Cash Value".) A
Policy's total cash value will include its cash value in the Variable Account,
its cash value in the Fixed Account, and any of its cash value held in
NEVLICO's general account (but outside of the Fixed Account) as a result of a
Policy loan.
The amount of the Policy's cash value in the Fixed Account will be taken
into account in the calculation of the Policy's death benefit in the same
manner as the cash value in the Variable Account. (See "Death Benefit".)
POLICY TRANSACTIONS
NEVLICO reserves the right to restrict allocations to the Fixed Account if
the effective annual rate of interest that would apply to the amount allocated
is the minimum 4% rate. Otherwise, allocations of net premiums to the Fixed
Account are subject to the same percentage requirements that apply to the
Variable Account. (See "Allocation of Net Premiums".)
Except as described below, amounts in the Fixed Account are subject to the
same rights and limitations regarding transfers, loans, surrenders and partial
surrenders that apply to amounts in the Variable Account. (See "Other Policy
Features".) The following special rules apply to transactions involving
amounts in the Fixed Account.
TRANSFERS OF AMOUNTS FROM THE FIXED ACCOUNT TO THE VARIABLE ACCOUNT WILL BE
ALLOWED ONLY ONCE IN EACH POLICY YEAR. A TRANSFER OF CASH VALUE FROM THE FIXED
ACCOUNT WILL BE PROCESSED ONLY IF NEVLICO RECEIVES THE TRANSFER REQUEST WITHIN
THE 30 DAY PERIOD AFTER THE POLICY ANNIVERSARY, AND THE TRANSFER WILL BE
EFFECTED AS OF THE DATE THE TRANSFER REQUEST IS RECEIVED AT NEVLICO'S
ADMINISTRATIVE OFFICE. THE AMOUNT OF CASH VALUE WHICH MAY BE TRANSFERRED FROM
THE FIXED ACCOUNT IS LIMITED TO THE GREATER OF 25% OF THE POLICY'S CASH VALUE
IN THE FIXED ACCOUNT ON THE TRANSFER DATE OR THE AMOUNT OF CASH VALUE
TRANSFERRED FROM THE FIXED ACCOUNT IN THE PRECEDING POLICY YEAR. Regardless of
these limits, if a transfer of cash value from the Fixed Account would reduce
the remaining cash value in the Fixed Account below $100, you may transfer the
entire amount of cash value from the Fixed Account. The total number of
transfers among Sub-Accounts and from the Sub-Accounts to the Fixed Account
may not exceed four in one Policy year without NEVLICO's consent. NEVLICO
currently allows 12 such transfers per Policy year. Transfers out of the Fixed
Account will not be counted against this limit. NEVLICO reserves the right to
restrict transfers of cash value into the Fixed Account, if the effective
annual rate of interest that would apply to the amount transferred is the
minimum 4% rate.
Unless you request otherwise, a Policy loan will reduce the Policy's cash
value in the Sub-Accounts and not the cash value in the Fixed Account. If
there is not enough cash value in the Policy's Sub-Accounts to provide the
amount of the loan, however, the balance of the loan will be taken from the
cash value in the Fixed Account. All loan repayments will be allocated first
to the
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<PAGE>
outstanding loan balance attributable to the Fixed Account. The amount removed
from the Policy's Sub-Accounts and the Fixed Account as a result of a loan
will earn interest at not less than 4% per year, which will be credited
annually to the Policy's cash value in the Sub-Accounts and the Fixed Account
in proportion to the Policy's cash value in each on the day it is credited.
Unless you request otherwise, partial surrenders will be taken only from the
Policy's Sub-Accounts and not the Fixed Account. If there is not enough cash
value in the Policy's subaccounts to provide the full amount requested, the
balance of the partial surrender will be taken from the Fixed Account.
NEVLICO has the right to delay transfers, surrenders, and Policy loans from
the Fixed Account for up to six months (to the extent allowed by state
insurance law). Loans to pay premiums on policies issued by NEVLICO will not
be delayed.
NEVLICO'S DISTRIBUTION AND OTHER AGREEMENTS
NEVLICO sells the Policies through agents who are licensed by state
insurance officials to sell NEVLICO's variable life insurance policies. These
agents are also registered representatives of New England Securities. New
England Securities, a Massachusetts corporation organized in 1968, is
registered with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers,
Inc.
New England Securities, whose principal business address is 399 Boylston
Street, Boston, Massachusetts 02116, serves as the principal underwriter for
the Policies under a Distribution Agreement between NEVLICO and New England
Securities.
Under the Distribution Agreement, NEVLICO pays the following sales expenses:
general agent and agency manager's compensation, agents' training allowances,
deferred compensation and insurance benefits of agents, general agents and
agency managers and advertising expenses and all other expenses of
distributing the Policies.
NEVLICO pays the following commissions and/or service fees to the selling
agent: a maximum of 50% of the Target Premium (plus any additional portion of
a premium which NEVLICO attributes to certain riders for commission paying
purposes) paid in the first Policy year, and a maximum of 3% thereafter.
Agents receive a maximum commission of 3% of each payment in excess of the
Target Premium (plus any additional portion of a premium which NEVLICO
attributes to certain riders for commission paying purposes) in any year. For
Policies sold to certain group or sponsored arrangements the maximum 50% first
year commission may be paid in installments over a period of years rather than
all in the first Policy year. Agents who meet certain productivity and
persistency standards in selling policies issued by NEVLICO and The New
England may be eligible for additional compensation. Non-cash forms of
compensation may also be paid in compliance with applicable state law. Sales
expenses in any year are not equal to the deduction for sales load in that
year.
New England Securities distributes mutual funds, variable annuity contracts
and variable life insurance policies. It is the principal underwriter for the
Zenith Fund; The New England Variable Account; New England Retirement
Investment Account; New England Variable Annuity Separate Account; and New
England Variable Annuity Fund I. New England Securities also sells interests
in various investment partnerships.
New England Securities may enter into selling agreements with other broker-
dealers registered under the Securities Exchange Act of 1934 whose
representatives are authorized by applicable law to sell variable life
insurance policies. Under the agreements with those broker-dealers, the
commission paid to the broker-dealer will not exceed 50% of the Target Premium
(plus any additional portion of a premium which NEVLICO attributes to certain
riders for commission paying purposes) in the first Policy year, 3%
thereafter, and 3% of all payments in excess of the Target Premium (plus any
additional portion of a premium which NEVLICO attributes to certain riders for
commission paying purposes) in any year. Commissions will be paid through the
registered broker-dealer, which may also be reimbursed for portions of
expenses incurred in connection with the sale of the Policies.
Under a Services Agreement between NEVLICO, The New England and New England
Securities, The New England performs underwriting, issuance and other
administrative services for NEVLICO'S variable life insurance policies.
NEVLICO paid The New England approximately $39.6 million in 1994 for services
provided under this agreement.
LIMITS TO NEVLICO'S RIGHT TO CHALLENGE THE POLICY
Generally, NEVLICO can challenge the validity of your Policy or a rider to
your Policy during the insured's lifetime for two years (or less, if required
by state law) from the date of issue, based on misrepresentations made in the
application. NEVLICO can challenge the portion of the death benefit resulting
from payment of an underwritten premium payment for two years during the
insured's lifetime from the date the premium payment was received and can
challenge the portion of the death benefit
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<PAGE>
resulting from an increase in face amount for two years during the insured's
lifetime from the effective date of the increase. However, if the insured dies
within two years of the date of issue, NEVLICO can challenge all or part of
the Policy at any time with respect to misrepresentations in the application.
If the insured dies within two years of the effective date of an increase in
face amount, NEVLICO can challenge the portion of the death benefit resulting
from the face amount increase at any time with respect to misrepresentation.
MISSTATEMENT OF AGE OR SEX
If the insured's age or sex is misstated in the application, the Policy's
death benefit will be the amount that the most recent Monthly Deduction which
was made would have provided, based on the insured's correct age and, if the
Policy is sex-based, on the insured's correct sex.
SUICIDE
If the insured commits suicide within two years (or less, if required by
state law) from the date of issue set forth in the Policy, the death benefit
will be limited to the amount of the premiums paid, less any policy loan
balance, and less any partial surrenders. If the insured commits suicide more
than two years from the issue date of the Policy but within two years from the
effective date of an increase in face amount, the death benefit for the
increase in face amount will be limited to the Monthly Deductions and any Face
Amount Increase Administrative Charge made to pay for that increase. (Where
required by state law, NEVLICO will determine the death benefit under this
provision by using the greater of: the reserve of the insurance which is
subject to the provision; and the amounts used to purchase the insurance which
is subject to the provision.)
TAX CONSIDERATIONS
POLICY PROCEEDS
The following discussion of Federal income tax issues relating to the
Policies is general in nature and is not intended as tax advice. It describes
what NEVLICO believes is the Federal income tax treatment of the Policies in
the most commonly occurring circumstances and does not reflect the effect of
Federal income taxes in all situations. In addition, there is no guarantee
that the Federal income tax laws and regulations or interpretation of them
will not change. Therefore, NEVLICO recommends that you consult your own tax
advisor for more complete information and advice.
DEFINITION OF LIFE INSURANCE. Section 7702 of the Internal Revenue Code of
1986, as amended ("Code") defines a life insurance contract for Federal income
tax purposes.
The Section 7702 definition can be met if a life insurance contract
satisfies either one of two tests set forth in that section. The manner in
which these tests should be applied to certain features of the Policy is not
directly addressed by Section 7702 or proposed regulations issued under that
section. The presence of these Policy features, the absence of final
regulations, and the lack of other pertinent interpretations of Section 7702,
thus creates some uncertainty about the application of Section 7702 to the
Policy.
Nevertheless, NEVLICO believes that the Policy qualifies as a life insurance
contract for federal tax purposes. This means that:
. the death benefit should be fully excludible from the gross income of the
beneficiary under Section 101(a)(1) of the Code; and
. the Policy Owner should not be considered in constructive receipt of the
cash surrender value, including any increases, unless and until they are
distributed from the Policy.
Because of the absence of final regulations or any other pertinent
interpretations, it, however, is unclear whether substandard risk and
automatic issue Policies or Policies with term riders added will, in all
cases, meet the statutory life insurance contract definition. If a Policy were
determined not to be a life insurance contract for purposes of Section 7702,
such Policy would not provide most of the tax advantages normally provided by
a life insurance contract.
NEVLICO thus reserves the right to make changes in the Policy if such
changes are deemed necessary to attempt to assure its qualification as a life
insurance contract for tax purposes.
TAX LAW EFFECTS ON CERTAIN PRE-DEATH DISTRIBUTIONS. Section 7702A of the
Code contains provisions affecting the tax treatment of any loan, assignment
or other pre-death distribution from a life insurance policy which is also a
"modified endowment contract" (defined below under "Modified Endowment
Contracts"). Whether a Policy will be classified as a modified endowment
contract will depend upon the amount and timing of payments made under the
Policy.
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<PAGE>
NON-MODIFIED ENDOWMENT CONTRACTS. For Policies not classified as modified
endowment contracts NEVLICO believes any Policy loans received under such
Policies will be treated as indebtedness of the Policy Owner and will not be
treated as taxable income to you. This assumes that the Policy has not lapsed,
been surrendered or terminated. As a general rule, Policy loan interest is not
deductible under current Federal income tax law.
You may be subject to Federal income tax upon surrender of your Policy if
the net cash surrender value of the Policy is greater than the investment in
the Policy less prior distributions from the Policy that were not taxed. If a
Policy has a Policy loan and is surrendered or lapses, the Policy loan is
treated as a distribution and would be taxable if there is a gain in the
Policy. In that case, the gain in the Policy would be taxable even if the
Policy has no net cash surrender value. If you incur a loss upon the surrender
it is not likely to be deductible for Federal income tax purposes.
Generally, a partial surrender of the Policy will not be taxable to you
unless it is greater than the investment in the Policy less the untaxed
portions of any prior distributions. The Code does provide, however, that in
certain situations in the first 15 years of the Policy partial surrenders may
be taxable, in whole or in part, if the cash value is greater than the total
investment in the Policy. In this case, an amount may be taxable even if the
amount of the partial surrender is less than the investment in the Policy.
MODIFIED ENDOWMENT CONTRACTS. A modified endowment contract is a life
insurance contract which fails to satisfy a "7-pay test". In general, a Policy
will fail to satisfy the 7-pay test if the total amount paid under the Policy
at any time during the first seven Policy years exceeds the sum of the net
level premiums that would have been paid on or before such time if the Policy
provided for paid up future benefits after the payment of seven level annual
premiums. (The amount of premiums payable under the 7-pay test are calculated
based upon certain assumptions regarding the Policy's earnings and the use of
a reasonable mortality charge. Variable Account investment experience above a
4% net rate of return does not affect whether or not a Policy will become a
modified endowment contract.) Riders to the Policy are considered part of the
Policy for purposes of applying the 7-pay test. If there is a reduction in the
Policy's death benefit (for example, as a result of a partial surrender or
face amount reduction) at any time during the first seven Policy years or
within seven years of a face amount increase or "material change" (see below),
the 7-pay test will be applied back to issue (or to the date of the most
recent face amount increase or material change, whichever is latest), as if
the Policy's coverage were equal to the reduced face amount at that time. If
there is a reduction in rider or other benefits during the first seven Policy
years, the 7-pay test will be applied as if the Policy had originally been
issued at the reduced benefit amount. Any Policy received in exchange for a
modified endowment contract will also be a modified endowment contract.
Your agent can provide you with information about the maximum amount of
premiums which you can make under your Policy during the first seven Policy
years and still satisfy the 7-pay test. This information will be based upon
NEVLICO's current understanding of the Federal tax law. As is the case with
any provision of the Internal Revenue Code, there is no assurance that the
Internal Revenue Service will agree with NEVLICO's interpretation. NEVLICO
will monitor any IRS announcements or rulings concerning compliance with the
7-pay test.
MATERIAL CHANGES. If a "material change" in the benefits or other Policy
terms occurs under a Policy which has satisfied the 7-pay test, the Policy may
be treated as a new Policy entered into on the day on which the material
change occurred. The Policy will be retested under the 7-pay test, after
making certain adjustments to reflect the Policy's existing cash value. Any
increase in future benefits under the Policy may constitute a material change
if the increase is not due to the payment of premiums necessary to fund the
Policy's lowest death benefit payable in the first seven Policy years, or the
crediting of interest or other earnings with respect to such premiums. A
material change would also occur if certain Policy changes occurred.
If you do not wish to have the Policy become a modified endowment contract,
you may be required to limit the payment of premiums under the Policy at some
point. The point at which you may have to limit the payment of premiums will
depend upon the issue age, sex and underwriting class of the insured,
investment experience and the amount of your previous payments.
If you exchange your policy for another life insurance policy, the new
insurance policy should be reviewed to determine how the rules regarding
modified endowment contracts may apply to the new policy. (See "Exchange of
Policy During First 24 Months.")
DISTRIBUTIONS UNDER MODIFIED ENDOWMENT CONTRACTS. If a Policy is a modified
endowment contract, then the following rules will apply to distributions under
such contract:
(a) Distributions will be includible in your gross income to the extent
the cash value of the Policy exceeds your investment in the Policy (i.e.,
will be treated as income first).
(b) Loans are considered distributions. Your investment in the Policy
will be increased by the amount of any prior loan that was included in your
gross income.
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<PAGE>
(c) A Policy assignment is treated as a distribution. For example, in a
split dollar insurance plan involving a collateral assignment of the
Policy, the collateral assignment is a distribution which will subject any
gain that accrues in the Policy to taxation.
(d) For purposes of determining the amount of the distribution which is
includible in gross income, all modified endowment contracts issued by
NEVLICO or its affiliates to the same Policy Owner during any 12 month
period must be treated as one modified endowment contract.
Any taxable distribution will be subject to an additional tax equal to 10%
of the taxable amount of the distribution unless the distribution is:
(a) made on or after the date when you attain age 59 1/2;
(b) is attributable to your becoming disabled; or
(c) is part of a series of substantially equal periodic payments made no
less frequently than annually for your life (or life expectancy) or for the
joint lives (or life expectancies) of you and your beneficiary.
If a Policy becomes a modified endowment contract, distributions made during
the Policy year in which it becomes a modified endowment contract,
distributions in any subsequent Policy year and distributions within two years
before the Policy becomes a modified endowment contract will be subject to the
tax treatment described above. This means that a distribution from a Policy
that is not a modified endowment contract could later become taxable as a
distribution from a modified endowment contract. In addition, regulations or
other interpretations may be issued which will apply similar tax treatment to
other distributions made in anticipation of a Policy becoming a modified
endowment contract.
OTHER POLICY OWNER TAX MATTERS. Federal and state estate, inheritance and
other tax consequences of ownership or receipt of proceeds under the Policy
depend upon the individual circumstances of each Policy Owner or beneficiary.
Section 817(h) of the Code requires the investments of the Variable Account
to be "adequately diversified" in accordance with Treasury Regulations for the
Policy to qualify as a life insurance contract under Section 7702 of the Code.
Failure to comply with the diversification requirements may result in not
treating the Policy as life insurance. If the Policy does not qualify as life
insurance, you may be subjected to immediate taxation on the incremental
increases in cash value of the Policy plus the cost of insurance protection
for the year. Regulations specifying the diversification requirements have
been issued by the Department of Treasury, and NEVLICO believes it complies
fully with such requirements.
In connection with the issuance of the diversification regulations, the
Treasury Department stated that it anticipates the issuance of regulations or
rulings prescribing the circumstances in which an owner's control of the
investments of a separate account may cause a Policy Owner, rather than the
insurance company, to be treated as the owner of the assets in the separate
account. To date, no such regulations or guidance has been issued. If a Policy
Owner is considered the owner of the assets of the Separate Account, income
and gains from the Account would be included in the Owner's gross income.
The ownership rights under the Policy are similar to, but different in
certain respects from, those described by the Internal Revenue Service in
rulings in which it determined that the owners were not owners of separate
account assets. For example, a Policy Owner has additional flexibility in
allocating payments and cash values. These differences could result in the
owner being treated as the owner of a pro rata share of the assets of the
Separate Account. In addition, NEVLICO does not know what standards will be
set forth in the regulations or rulings which the Treasury has stated it
expects to be issued. NEVLICO therefore reserves the right to modify the
Policy as necessary to attempt to prevent the Policy Owner from being
considered the owner of the assets of the Separate Account.
The Policies may be used in various arrangements, including nonqualified
deferred compensation or salary continuance plans, split dollar insurance
plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans,
retiree medical benefit plans and others. The tax consequences of such plans
may vary depending on the particular facts and circumstances of each
individual arrangement. Therefore, if you are contemplating the use of the
Policies in any arrangement the value of which depends in part on its tax
consequences, you should be sure to consult a qualified tax advisor regarding
the tax attributes of the particular arrangement and the suitability of this
product for the arrangement.
NEVLICO believes that Policies subject to the provisions of the Puerto Rican
tax law will generally receive the same tax treatment as that described above
for Policies subject to the Internal Revenue Code. You should note that
Policies governed by the Puerto Rican tax law are not currently subject to the
above described rules regarding modified endowment contracts. If such
A-40
<PAGE>
a Policy becomes subject to the Internal Revenue Code, however, the rules
regarding modified endowment contracts will apply, and they may apply
retroactively. You should consult your tax advisor if a Policy governed by the
Puerto Rican tax law subsequently becomes subject to the Internal Revenue
Code.
CHARGE FOR NEVLICO'S INCOME TAXES
Under current Federal income tax law no tax is imposed on NEVLICO as a
result of the operations of the Variable Account. Thus, no charge is being
made currently to the Variable Account for company Federal income taxes,
except for the charge for federal taxes that is deducted from premiums.
NEVLICO reserves its rights to charge the Variable Account for company Federal
income taxes in the future.
Under current laws NEVLICO may incur state and local taxes (in addition to
premium taxes) in several states. At present these taxes are not significant
and, accordingly, NEVLICO is not currently making a charge for them. If they
increase, however, charges for such taxes attributable to the Variable Account
may be made.
A-41
<PAGE>
MANAGEMENT
The directors and executive officers of NEVLICO and their principal business
experience during the past five years are:
DIRECTORS OF NEVLICO
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DURING
NAME THE PAST FIVE YEARS
---- ------------------------------------------------------
<C> <S>
Edward C. Hall President--New England Services (a business unit of
The New England) since 1994; formerly, Executive Vice
President--Client Services, 1988 to 1994, of The New
England; Vice President--Administration of NEVLICO
Kernan F. King Director of The New England and President--New England
Life (a business unit of The New England) since 1994;
formerly, Director, Executive Vice President and
Chief Marketing Officer, 1992 to 1994, Director,
Executive Vice President--Administration and General
Counsel, 1990 to 1992, of The New England
Robert E. Schneider Director, Executive Vice President and Chief Financial
Officer of The New England since 1993; formerly,
Executive Vice President and Chief Financial Officer,
1990 to 1993, of The New England
Robert A. Shafto Chairman, President and Chief Executive Officer of The
New England since 1993; formerly, President and Chief
Executive Officer, 1992 to 1993, President and Chief
Operating Officer, 1990 to 1992, of The New England;
Chairman, President and Chief Executive Officer of
NEVLICO
Daniel J. Toran Executive Vice President of The New England since
1991; formerly, Senior Vice President--Agencies, 1986
to 1991, of The New England
H. James Wilson Executive Vice President and General Counsel of The
New England since 1993; formerly, Senior Vice
President and General Counsel, 1992 to 1993, Senior
Vice President and Associate General Counsel, 1990 to
1992, of The New England; General Counsel and
Secretary of NEVLICO
Frederick K. Zimmermann Executive Vice President and Chief Investment Officer
of The New England since 1993; formerly, Senior Vice
President--Investments, 1989 to 1993, of The New
England; Vice President--Investments of NEVLICO
EXECUTIVE OFFICERS OF NEVLICO
OTHER THAN DIRECTORS
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DURING
NAME THE PAST FIVE YEARS
---- ------------------------------------------------------
<C> <S>
Rodney J. Chandler Second Vice President and Actuary of The New England
since 1990; Chief Actuary of NEVLICO
Chester R. Frost Senior Vice President of The New England since 1984;
Vice President--Controller of NEVLICO
John F. Guthrie Vice President of The New England since 1983; Vice
President--Portfolio Strategy of NEVLICO
John G. Small Senior Vice President of The New England since 1990;
Vice President and Chief Underwriter of NEVLICO
Phillip G. Sullivan Second Vice President and Medical Director of The New
England since 1974; Vice President and Medical
Director of NEVLICO
Newton H. Thompson Second Vice President and Treasurer of The New England
since 1993; formerly, Second Vice President and
Assistant Treasurer, 1991 to 1992, and Assistant Vice
President and Assistant Treasurer, 1989 to 1991, of
The New England; Vice President and Treasurer of
NEVLICO
H. James Wilson See Directors above
Frederick K. Zimmermann See Directors above
</TABLE>
The principal business address for each of the directors and executive
officers is the same as NEVLICO's.
A-42
<PAGE>
VOTING RIGHTS
NEVLICO is the legal owner of the Eligible Fund shares held in the Variable
Account and has the right to vote those shares at meetings of the Eligible
Fund shareholders. However, to the extent required by applicable Federal
securities law, NEVLICO will give you, as Policy Owner, the right to instruct
NEVLICO how to vote the shares that are attributable to your Policy.
The Policy Owners who are entitled to give voting instructions and the
number of shares attributable to their Policies will be determined as of the
record date for the meeting. All Eligible Fund shares held in any Sub-Account
of the Variable Account, or in any other separate account of NEVLICO or an
affiliate, the policyholders of which have rights of instruction with respect
to the Eligible Fund shares, and for which timely instructions are not
received, will be voted in the same proportion as (i) the aggregate cash value
of policies giving instructions, respectively, to vote, for, against, or
withhold votes on a proposition, bears to (ii) the total cash value in that
Sub-Account for all policies for which voting instructions are received. No
voting privileges apply with respect to cash value removed from the Variable
Account as a result of a Policy loan.
All Zenith Fund shares held by the general account (or any unregistered
separate account for which voting privileges were not extended) of NEVLICO or
its affiliates will be voted in the same proportion as the total of (i) shares
for which voting instructions were received and (ii) shares that are voted in
proportion to such voting instructions.
The SEC requires the Eligible Funds' Boards of Trustees to monitor events to
identify conflicts that may arise from the sale of Eligible Fund shares to
variable life and variable annuity separate accounts of affiliated and, if
applicable, unaffiliated insurance companies. Conflicts could arise as a
result of changes in state insurance law or Federal income tax law, changes in
investment management of any portfolio of the Eligible Funds, or differences
in voting instructions given by variable life and variable annuity contract
owners, for example. If there is a material conflict, the Board of Trustees
will have an obligation to determine what action should be taken, including
the removal of the affected Sub-Accounts from the Eligible Fund(s), if
necessary. If NEVLICO believes any Eligible Fund action is insufficient,
NEVLICO will consider taking other action to protect Policy Owners. There
could, however, be unavoidable delays or interruptions of operations of the
Variable Account that NEVLICO may be unable to remedy.
If required by state insurance authorities, NEVLICO may disregard voting
instructions if they would require that shares be voted to cause a change in
the investment objectives of the portfolios of the Eligible Funds or to
approve or disapprove an investment advisory or underwriting contract for a
portfolio. In addition, NEVLICO may disregard voting instructions in favor of
changes, initiated by a Policy Owner or an Eligible Fund's Board of Trustees,
in the investment policy, investment adviser or principal underwriter of the
Eligible Fund portfolio if NEVLICO (i) reasonably disapproves of the changes
and (ii) in the case of a change in investment policy or investment adviser,
makes a good faith determination that the proposed change is contrary to state
law or is prohibited by state regulatory authorities or that the change would
be inconsistent with a Sub-Account's investment objectives or would result in
the purchase of securities which vary from the general quality and nature of
investments and investment techniques utilized by other separate accounts of
NEVLICO or of an affiliated life insurance company, which separate accounts
have investment objectives similar to those of the Sub-Account. If NEVLICO
does disregard voting instructions, a summary of that action and the reasons
for it will be included in the next semiannual report to Policy Owners.
RIGHTS RESERVED BY NEVLICO
NEVLICO and The New England may change the voting procedures described
above, and may vote Eligible Fund shares in their own right without
instructions from Policy Owners, if the applicable Federal securities laws or
regulations or interpretations of them change. NEVLICO also reserves the
right: (1) to create new investment accounts; (2) to combine any two or more
separate investment accounts including the Variable Account; (3) to make
available additional Sub-Accounts of the Variable Account investing in
additional Eligible Fund portfolios or in portfolios of other mutual funds;
(4) to invest the assets of the Variable Account in securities other than
Eligible Fund shares or in shares of a different series of the Eligible Funds
as a substitute for such shares already purchased or as the securities to be
purchased in the future, to withdraw the availability of a series of the
Eligible Funds as an investment option under the Policies, or to transfer
assets to NEVLICO's general account as permitted by applicable law; (5) to
operate the Variable Account as a management investment company under the
Investment Company Act of 1940 or in any other form permitted by law; and (6)
to deregister the Variable Account under the Investment Company Act of 1940 if
registration is no longer required. NEVLICO will exercise these rights in
accordance with applicable law, including approval of Policy Owners if
required. NEVLICO will notify you if exercise of any of these rights would
result in a material change in the Variable Account or its investments.
A-43
<PAGE>
TOLL-FREE NUMBERS
For information about historical values of the Variable Account Sub-
Accounts, call the toll-free number 1-800-333-2501.
For Sub-Account transfers or premium reallocations, call the toll-free
number 1-800-800-2214. (This number is not available for Sub-Account transfers
under Policies issued in New York.)
REPORTS
NEVLICO will send you a statement annually showing your Policy's death
benefit, cash value and any outstanding Policy loan principal. NEVLICO will
also confirm Policy loans, subaccount transfers, lapses, surrenders and other
Policy transactions when they occur.
You will be sent semiannual reports containing the financial statements of
the Variable Account and the Eligible Funds.
ADVERTISING PRACTICES
NEVLICO may from time to time receive endorsements of the Policies from
professional organizations. NEVLICO may refer to or use such endorsements in
advertisements or sales material for the Policies. NEVLICO may also pay the
professional organization making the endorsement for the use of its customer
or mailing lists in order to distribute promotional materials regarding the
Policies. An endorsement of the Policies by a third party is not necessarily
indicative of the future performance or results which may be obtained by
persons who purchase the Policies.
From time to time, articles discussing the Variable Account's investment
experience, performance rankings and other characteristics may appear in
national publications. Some or all of these publishers or ranking services
(including, but not limited to Lipper Analytical Services, Inc. and
Morningstar, Inc.) may publish their own rankings or performance reviews of
variable contract separate accounts, including the Variable Account.
References to, reprints or portions of reprints of such articles or rankings
may be used by NEVLICO as sales literature or advertising material and may
include rankings that indicate the names of other variable contract separate
accounts and their investment experience.
Articles and releases, developed by NEVLICO, the Eligible Funds and other
parties, about the Variable Account or the Eligible Funds regarding individual
Eligible Funds' and fund groups' asset levels and sales volumes, statistics
and analyses of industry sales volume and asset levels, and other
characteristics may appear in various publications. References to or reprints
of such articles may be used in promotional literature for the Policies or the
Variable Account. Such literature may refer to personnel of the advisers, who
have portfolio management responsibility, and their investment style. The
reference may allude to or include excerpts from articles appearing in the
media.
The advertising and sales literature for the Policies and the Variable
Account may refer to historical, current and prospective economic trends.
In addition, sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and
prospective Policy Owners. These materials may include, but are not limited
to, discussions of college planning, retirement planning, reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.
LEGAL MATTERS
Legal matters in connection with the Policies described in this prospectus
have been passed on by H. James Wilson, General Counsel and Secretary of
NEVLICO. Sutherland, Asbill & Brennan, of Washington, D.C., has provided
advice on certain matters relating to federal securities laws.
REGISTRATION STATEMENT
This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. Copies of such additional
information may be obtained from the SEC upon payment of the prescribed fee.
A-44
<PAGE>
EXPERTS
The financial statements of the New England Variable Life Separate Account
as of December 31, 1994 and for each of the periods indicated therein, and the
financial statements of New England Variable Life Insurance Company as of
December 31, 1994 and 1993 and for the two years in the period ended December
31, 1994 included in this Pre-Effective Amendment to the Registration
Statement, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing. The interim financial statements of New
England Variable Life Insurance Company as of March 31, 1995 and for each of
the three month periods ended March 31, 1995 and 1994 and the interim
financial statements of the Variable Account as of March 31, 1995 and for each
of the three month periods ended March 31, 1995 and 1994 have not been
audited.
Actuarial matters included in this prospectus have been examined by Rodney
J. Chandler, F.S.A., M.A.A.A., Chief Actuary of NEVLICO, as stated in his
opinion filed as an exhibit to the Registration Statement.
A-45
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
NET CASH VALUES AND ACCUMULATED PREMIUMS
The tables in Appendix A illustrate the way the Policies operate. They show
how the death benefit, net cash value and cash value could vary over an
extended period of time assuming hypothetical gross rates of return (i.e.,
investment income and capital gains and losses, realized or unrealized) for
the Variable Account equal to constant after tax annual rates of 0%, 6% and
12%. The tables are based on face amounts of $250,000 and $500,000 for a male
aged 40. The insured is assumed to be in the nonsmoker preferred risk
classification. The Tables assume no rider benefits and assume that no
allocations are made to the Fixed Account. Values are first given based on
current mortality and other Policy charges and then based on guaranteed
mortality and other Policy charges. The illustrations for the $500,000 face
amount reflect the lower sales charge and, in the illustrations based on
current charges, the lower cost of insurance and first-year administrative
charges that would apply to the Policy if issued in the personal market or if
issued in business situations which qualify for those lower charges. (See
"Charges and Expenses".) In addition, each illustration is given for a Policy
with an Option 1 and an Option 2 death benefit. These tables may assist in the
comparison of death benefits, net cash values and cash values for the Policies
with those under other variable life insurance policies which may be issued by
NEVLICO or other companies.
Death benefits, net cash values and cash values for a Policy would be
different from the amounts shown if the actual gross rates of return averaged
0%, 6% or 12%, but varied above and below that average for the period, if
premiums were paid in other amounts or at other than annual intervals. They
would also be different depending on the allocation of cash value among the
Variable Account's Sub-Accounts, if the actual gross rate of return for all
Sub-Accounts averaged 0%, 6% or 12%, but varied above or below that average
for individual Sub-Accounts. They would also differ if any policy loan or
partial surrender were made during the period of time illustrated, if the
insured were female or in another risk classification, or if the Policies were
issued at unisex rates.
The death benefits, net cash values and cash values shown in the tables
reflect the fact that: (i) deductions have been made from premiums for the
sales charge and state and federal premium tax charge; and (ii) a Monthly
Deduction (consisting of a Policy fee, an administrative charge, a minimum
death benefit guarantee charge and a charge for the cost of insurance) are
deducted from the cash value on the first day of each Policy month. The net
cash values shown in the tables reflect the fact that a Surrender Charge
(consisting of a Deferred Sales Charge and a Deferred Administrative Charge)
is deducted from the cash value upon surrender, face reduction or lapse during
the first 11 Policy years. The death benefits, net cash values and cash values
also reflect a daily charge assessed against the Variable Account for
mortality and expense risks equivalent to an annual charge of .75% (on a
current basis) and .90% (on a guaranteed basis) of the average daily value of
the assets in the Variable Account attributable to the Policies. (See "Charges
and Expenses".) The amounts shown in the table are based on an average of the
investment advisory fees and operating expenses incurred by the Eligible
Funds, at an annual rate of .775% of the average daily net assets of the
Eligible Funds. This average reflects voluntary expense cap and expense
deferral arrangements between TNE Advisers and the Zenith Fund, under which
TNE Advisers bears operating expenses of the Zenith Fund that exceed certain
amounts. TNE Advisers could terminate the expense cap and expense deferral
arrangements at any time. If TNE Advisers terminates these arrangements, the
values illustrated on the following pages could be less. (See "Charges Against
the Eligible Funds and the Sub-Accounts of the Variable Account" and
"Investment Management".)
Taking account of the charges for mortality and expense risks in the
Variable Account and the average investment advisory fee and operating
expenses of the Eligible Funds, the gross annual rates of return of 0%, 6% and
12% correspond to net investment experience at constant annual rates of -
1.51%, 4.40% and 10.30%, respectively, based on NEVLICO's current charge for
mortality and expense risks, and -1.66%, 4.24% and 10.14%, respectively, based
on NEVLICO's guaranteed maximum charge for mortality and expense risks. (See
"Net Investment Experience".)
The hypothetical rates of return shown in the tables do not reflect any tax
charges attributable to the Variable Account since no such charges are
currently made. If any such charges are imposed in the future, the gross
annual rate of return would have to exceed the rates shown by an amount
sufficient to cover the tax charges, in order to produce the death benefits,
net cash values and cash values illustrated. (See "Charges for NEVLICO's
Income Taxes".)
The second column of each table shows the amount which would accumulate if
an amount equal to the annual premium were invested to earn interest, after
taxes, of 5% per year, compounded annually.
A-46
<PAGE>
The internal rate of return on net cash value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the net cash value of the
Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated
premiums could have been invested outside the Policy to arrive at the death
benefit of the Policy. The internal rate of return is compounded annually, and
the premiums are assumed to be paid at the beginning of each Policy year.
NEVLICO will furnish upon request a personalized illustration reflecting the
proposed insured's age, sex, underwriting classification, and the face amount
or premium payment schedule requested. Where applicable, NEVLICO will also
furnish upon request an illustration for a Policy which is not affected by the
sex of the insured.
A-47
<PAGE>
MALE ISSUE AGE 40
$4,025 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$250,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ------------------------- ---------------------- ---------------------- -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,226 250,000 250,000 250,000 1,892 2,090 2,289 2,990 3,189 3,387 -52.99 -48.06 -43.13
2 8,664 250,000 250,000 250,000 4,914 5,501 6,110 6,045 6,631 7,241 -28.71 -22.85 -17.03
3 13,323 250,000 250,000 250,000 7,165 8,337 9,603 9,028 10,200 11,466 -23.92 -17.41 -11.02
4 18,215 250,000 250,000 250,000 10,119 12,079 14,281 11,919 13,879 16,081 -17.74 -11.17 -4.74
5 23,352 250,000 250,000 250,000 13,019 15,974 19,428 14,757 17,712 21,165 -14.18 -7.60 -1.17
6 28,746 250,000 250,000 250,000 16,091 20,255 25,318 17,539 21,703 26,766 -11.50 -5.00 1.35
7 34,409 250,000 250,000 250,000 19,091 24,685 31,763 20,249 25,843 32,921 -9.75 -3.31 3.00
8 40,356 250,000 250,000 250,000 22,054 29,304 38,856 22,923 30,173 39,725 -8.48 -2.10 4.16
9 46,600 250,000 250,000 250,000 24,939 34,082 46,625 25,518 34,661 47,204 -7.58 -1.22 5.01
10 53,156 250,000 250,000 250,000 27,789 39,066 55,184 28,078 39,356 55,473 -6.87 -.54 5.67
15 91,194 250,000 250,000 250,000 40,316 66,241 111,872 40,316 66,241 111,872 -5.24 1.15 7.38
20 139,741 250,000 250,000 274,084 50,667 99,000 204,541 50,667 99,000 204,541 -4.65 1.93 8.23
25 201,701 250,000 250,000 434,792 58,655 139,410 356,387 58,655 139,410 356,387 -4.46 2.42 8.73
30 280,780 250,000 250,000 697,744 62,339 189,174 601,503 62,339 189,174 601,503 -4.70 2.76 9.03
35 381,706 250,000 270,550 1,068,007 59,348 252,850 998,137 59,348 252,850 998,137 -5.53 3.04 9.23
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,111.35 6,111.35 6,111.35
2 639.71 639.71 639.71
3 257.64 257.64 257.64
4 148.47 148.47 148.47
5 100.09 100.09 100.09
6 73.55 73.55 73.55
7 57.05 57.05 57.05
8 45.91 45.91 45.91
9 37.94 37.94 37.94
10 32.00 32.00 32.00
15 16.39 16.39 16.39
20 9.88 9.88 10.63
25 6.44 6.44 9.99
30 4.35 4.35 9.78
35 2.99 3.37 9.51
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-48
<PAGE>
MALE ISSUE AGE 40
$4,025 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$250,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ----------------------- ---------------------- ---------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,226 250,000 250,000 250,000 1,798 1,993 2,189 2,896 3,091 3,287 -55.34 -50.48 -45.62
2 8,664 250,000 250,000 250,000 4,551 5,120 5,712 5,681 6,250 6,842 -32.49 -26.63 -20.80
3 13,323 250,000 250,000 250,000 6,522 7,644 8,860 8,385 9,506 10,723 -27.78 -21.18 -14.70
4 18,215 250,000 250,000 250,000 9,200 11,059 13,155 11,000 12,859 14,956 -21.17 -14.47 -7.92
5 23,352 250,000 250,000 250,000 11,793 14,576 17,842 13,531 16,314 19,580 -17.31 -10.56 -3.99
6 28,746 250,000 250,000 250,000 14,521 18,419 23,181 15,969 19,867 24,629 -14.38 -7.69 -1.17
7 34,409 250,000 250,000 250,000 17,154 22,363 28,988 18,313 23,521 30,146 -12.44 -5.78 .71
8 40,356 250,000 250,000 250,000 19,691 26,408 35,310 20,560 27,277 36,179 -11.06 -4.42 2.05
9 46,600 250,000 250,000 250,000 22,130 30,559 42,201 22,709 31,138 42,780 -10.06 -3.42 3.04
10 53,156 250,000 250,000 250,000 24,464 34,813 49,717 24,753 35,103 50,007 -9.30 -2.66 3.81
15 91,194 250,000 250,000 250,000 33,128 56,406 98,027 33,128 56,406 98,027 -7.96 -.85 5.85
20 139,741 250,000 250,000 250,000 37,277 79,737 175,509 37,277 79,737 175,509 -8.09 -.09 6.95
25 201,701 250,000 250,000 368,460 34,912 104,495 302,017 34,912 104,495 302,017 -9.58 .29 7.67
30 280,780 250,000 250,000 581,856 20,902 129,482 501,600 20,902 129,482 501,600 -16.08 .45 8.10
35 381,706 250,000 250,000 875,306 0 153,457 818,043 0 153,457 818,043 -100.00 .47 8.38
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,111.35 6,111.35 6,111.35
2 639.71 639.71 639.71
3 257.64 257.64 257.64
4 148.47 148.47 148.47
5 100.09 100.09 100.09
6 73.55 73.55 73.55
7 57.05 57.05 57.05
8 45.91 45.91 45.91
9 37.94 37.94 37.94
10 32.00 32.00 32.00
15 16.39 16.39 16.39
20 9.88 9.88 9.88
25 6.44 6.44 8.95
30 4.35 4.35 8.86
35 2.99 2.99 8.67
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-49
<PAGE>
MALE ISSUE AGE 40
$4,025 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$250,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ------------------------- ---------------------- ---------------------- -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,226 252,984 253,183 253,381 1,886 2,084 2,283 2,984 3,183 3,381 -53.13 -48.21 -43.29
2 8,664 256,028 256,613 257,220 4,898 5,482 6,090 6,028 6,613 7,220 -28.89 -23.03 -17.22
3 13,323 258,993 260,161 261,421 7,131 8,298 9,559 8,993 10,161 11,421 -24.11 -17.62 -11.24
4 18,215 261,860 263,808 265,997 10,060 12,008 14,197 11,860 13,808 15,997 -17.95 -11.39 -4.97
5 23,352 264,665 267,599 271,026 12,928 15,861 19,288 14,665 17,599 21,026 -14.41 -7.83 -1.41
6 28,746 267,409 271,535 276,552 15,961 20,087 25,104 17,409 21,535 26,552 -11.73 -5.24 1.11
7 34,409 270,071 275,604 282,604 18,913 24,446 31,446 20,071 25,604 32,604 -9.98 -3.55 2.75
8 40,356 272,691 279,850 289,278 21,822 28,981 38,409 22,691 29,850 39,278 -8.72 -2.34 3.91
9 46,600 275,222 284,231 296,586 24,642 33,652 46,007 25,222 34,231 46,586 -7.82 -1.48 4.75
10 53,156 277,712 288,803 304,644 27,422 38,513 54,355 27,712 38,803 54,644 -7.12 -.80 5.40
15 91,194 289,500 314,738 359,094 39,500 64,738 109,094 39,500 64,738 109,094 -5.52 .87 7.09
20 139,741 299,009 345,313 446,208 49,009 95,313 196,208 49,009 95,313 196,208 -5.01 1.58 7.89
25 201,701 305,279 380,374 585,227 55,279 130,374 335,227 55,279 130,374 335,227 -5.00 1.94 8.34
30 280,780 305,865 417,861 805,346 55,865 167,861 555,346 55,865 167,861 555,346 -5.59 2.05 8.62
35 381,706 297,795 454,481 1,153,513 47,795 204,481 903,513 47,795 204,481 903,513 -7.25 1.98 8.80
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,185.51 6,190.41 6,195.34
2 649.13 650.04 650.98
3 262.39 263.00 263.65
4 151.84 152.38 152.99
5 102.84 103.38 104.00
6 75.96 76.51 77.17
7 59.24 59.82 60.53
8 47.95 48.56 49.35
9 39.87 40.52 41.38
10 33.84 34.53 35.47
15 18.00 18.91 20.34
20 11.34 12.49 14.52
25 7.74 9.15 11.84
30 5.47 7.14 10.51
35 3.83 5.80 9.83
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-50
<PAGE>
MALE ISSUE AGE 40
$4,025 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$250,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ----------------------- --------------------- --------------------- -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,226 252,890 253,085 253,280 1,792 1,987 2,182 2,890 3,085 3,280 -55.47 -50.63 -45.78
2 8,664 255,661 256,227 256,817 4,531 5,097 5,687 5,661 6,227 6,817 -32.71 -26.86 -21.04
3 13,323 258,341 259,456 260,666 6,478 7,594 8,803 8,341 9,456 10,666 -28.05 -21.46 -14.99
4 18,215 260,925 262,769 264,849 9,125 10,969 13,049 10,925 12,769 14,849 -21.46 -14.77 -8.23
5 23,352 263,413 266,168 269,401 11,676 14,431 17,663 13,413 16,168 19,401 -17.63 -10.89 -4.32
6 28,746 265,799 269,648 274,348 14,351 18,200 22,900 15,799 19,648 24,348 -14.72 -8.03 -1.52
7 34,409 268,078 273,206 279,727 16,920 22,048 28,568 18,078 23,206 29,727 -12.78 -6.13 .35
8 40,356 270,247 276,841 285,574 19,379 25,972 34,705 20,247 26,841 35,574 -11.43 -4.80 1.66
9 46,600 272,304 280,551 291,933 21,725 29,971 41,354 22,304 30,551 41,933 -10.44 -3.82 2.64
10 53,156 274,239 284,328 298,844 23,950 34,039 48,554 24,239 34,328 48,844 -9.71 -3.07 3.38
15 91,194 281,757 303,887 343,373 31,757 53,887 93,373 31,757 53,887 93,373 -8.56 -1.43 5.28
20 139,741 284,277 322,918 409,777 34,277 72,918 159,777 34,277 72,918 159,777 -9.09 -.95 6.15
25 201,701 279,228 337,909 507,780 29,228 87,909 257,780 29,228 87,909 257,780 -11.62 -1.06 6.64
30 280,780 261,797 341,695 649,888 11,797 91,695 399,888 11,797 91,695 399,888 -25.44 -1.84 6.91
35 381,706 0 321,759 852,324 0 71,759 602,324 0 71,759 602,324 -- -4.16 7.05
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,183.16 6,188.02 6,192.86
2 648.56 649.44 650.36
3 262.05 262.63 263.26
4 151.58 152.10 152.67
5 102.61 103.12 103.70
6 75.74 76.26 76.88
7 59.03 59.57 60.24
8 47.74 48.31 49.04
9 39.66 40.26 41.06
10 33.62 34.26 35.13
15 17.70 18.53 19.86
20 10.93 11.95 13.85
25 7.16 8.39 10.96
30 4.61 6.07 9.42
35 -- 4.20 8.55
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-51
<PAGE>
MALE ISSUE AGE 40
$7,916 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ------------------------- ------------------------- ------------------------- -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 8,312 500,000 500,000 500,000 4,092 4,498 4,903 6,289 6,694 7,099 -48.30 -43.18 -38.06
2 17,039 500,000 500,000 500,000 10,389 11,595 12,849 12,649 13,856 15,109 -25.00 -19.05 -13.14
3 26,202 500,000 500,000 500,000 15,153 17,573 20,185 18,879 21,298 23,910 -20.84 -14.32 -7.91
4 35,824 500,000 500,000 500,000 21,347 25,401 29,951 24,947 29,001 33,551 -15.16 -8.62 -2.21
5 45,927 500,000 500,000 500,000 27,435 33,556 40,702 30,910 37,031 44,177 -11.98 -5.45 .93
6 56,534 500,000 500,000 500,000 33,873 42,508 52,997 36,769 45,404 55,893 -9.59 -3.16 3.14
7 67,673 500,000 500,000 500,000 40,177 51,788 66,464 42,494 54,105 68,781 -8.05 -1.69 4.55
8 79,368 500,000 500,000 500,000 46,400 61,462 81,278 48,138 63,200 83,016 -6.96 -.66 5.53
9 91,648 500,000 500,000 500,000 52,486 71,492 97,527 53,645 72,650 98,685 -6.18 .07 6.22
10 104,542 500,000 500,000 500,000 58,499 81,956 115,421 59,078 82,535 116,000 -5.58 .63 6.76
15 179,351 500,000 500,000 500,000 84,111 138,141 233,047 84,111 138,141 233,047 -4.45 1.87 8.05
20 274,830 500,000 500,000 568,831 104,669 205,204 424,501 104,669 205,204 424,501 -4.13 2.41 8.68
25 396,687 500,000 500,000 899,403 120,139 287,609 737,216 120,139 287,609 737,216 -4.10 2.77 9.06
30 552,210 500,000 500,000 1,440,726 127,075 389,413 1,242,005 127,075 389,413 1,242,005 -4.42 3.02 9.28
35 750,703 500,000 555,902 2,202,949 120,746 519,534 2,058,831 120,746 519,534 2,058,831 -5.28 3.26 9.43
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,216.50 6,216.50 6,216.50
2 646.34 646.34 646.34
3 259.89 259.89 259.89
4 149.69 149.69 149.69
5 100.90 100.90 100.90
6 74.15 74.15 74.15
7 57.52 57.52 57.52
8 46.30 46.30 46.30
9 38.28 38.28 38.28
10 32.29 32.29 32.29
15 16.58 16.58 16.58
20 10.02 10.02 11.07
25 6.55 6.55 10.31
30 4.45 4.45 10.03
35 3.07 3.58 9.71
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-52
<PAGE>
MALE ISSUE AGE 40
$7,916 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ------------------------- ------------------------ ------------------------ ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 8,312 500,000 500,000 500,000 3,874 4,272 4,671 6,070 6,468 6,867 -51.06 -46.03 -40.99
2 17,039 500,000 500,000 500,000 9,416 10,577 11,787 11,677 12,838 14,048 -30.02 -24.05 -18.13
3 26,202 500,000 500,000 500,000 13,392 15,680 18,160 17,118 19,406 21,886 -26.02 -19.36 -12.82
4 35,824 500,000 500,000 500,000 18,783 22,568 26,837 22,383 26,168 30,437 -19.83 -13.10 -6.51
5 45,927 500,000 500,000 500,000 24,003 29,662 36,305 27,478 33,137 39,780 -16,23 -9.46 -2.86
6 56,534 500,000 500,000 500,000 29,493 37,411 47,087 32,389 40,307 49,983 -13.48 -6.78 -.25
7 67,673 500,000 500,000 500,000 34,793 45,363 58,816 37,110 47,680 61,132 -11.66 -5.00 1.49
8 79,368 500,000 500,000 500,000 39,900 53,523 71,587 41,637 55,261 73,325 -10.38 -3.75 2.72
9 91,648 500,000 500,000 500,000 44,810 61,897 85,511 45,968 63,056 86,670 -9.45 -2.83 3.63
10 104,542 500,000 500,000 500,000 49,510 70,481 100,702 50,089 71,061 101,281 -8.75 -2.12 4.33
15 179,351 500,000 500,000 500,000 67,000 114,112 198,413 67,000 114,112 198,413 -7.57 -.50 6.18
20 274,830 500,000 500,000 500,000 75,466 161,371 355,275 75,466 161,371 355,275 -7.75 .18 7.19
25 396,687 500,000 500,000 745,564 70,926 211,736 611,118 70,926 211,736 611,118 -9.23 .52 7.86
30 552,210 500,000 500,000 1,177,005 43,162 263,049 1,014,660 43,162 263,049 1,014,660 -15.41 .65 8.24
35 750,703 500,000 500,000 1,770,294 0 313,426 1,654,480 0 313,426 1,654,480 -100.00 .67 8.50
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,216.50 6,216.50 6,216.50
2 646.34 646.34 646.34
3 259.89 259.89 259.89
4 149.69 149.69 149.69
5 100.90 100.90 100.90
6 74.15 74.15 74.15
7 57.52 57.52 57.52
8 46.30 46.30 46.30
9 38.28 38.28 38.28
10 32.29 32.29 32.29
15 16.58 16.58 16.58
20 10.02 10.02 10.02
25 6.55 6.55 9.13
30 4.45 4.45 9.00
35 3.07 3.07 8.79
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-53
<PAGE>
MALE ISSUE AGE 40
$7,916 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ------------------------- ------------------------- ------------------------- -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 8,312 506,280 506,685 507,090 4,084 4,489 4,894 6,280 6,685 7,090 -48.40 -43.29 -38.17
2 17,039 512,625 513,829 515,080 10,364 11,568 12,819 12,625 13,829 15,080 -25.13 -19.18 -13.27
3 26,202 518,829 521,241 523,845 15,104 17,515 20,120 18,829 21,241 23,845 -20.98 -14.47 -8.06
4 35,824 524,860 528,897 533,428 21,260 25,297 29,828 24,860 28,897 33,428 -15.31 -8.78 -2.37
5 45,927 530,775 536,864 543,973 27,300 33,389 40,498 30,775 36,864 43,973 -12.13 -5.62 .77
6 56,534 536,577 545,157 555,577 33,681 42,261 52,681 36,577 45,157 55,577 -9.75 -3.33 2.97
7 67,673 542,231 553,753 568,313 39,914 51,437 65,997 42,231 53,753 68,313 -8.21 -1.86 4.37
8 79,368 547,795 562,723 582,357 46,058 60,985 80,619 47,795 62,723 82,357 -7.13 -.84 5.35
9 91,648 553,206 572,016 597,772 52,048 70,857 96,614 53,206 72,016 97,772 -6.35 -.11 6.04
10 104,542 558,535 581,717 614,776 57,956 81,138 114,197 58,535 81,717 114,776 -5.76 .45 6.57
15 179,351 582,721 635,613 728,424 82,721 135,613 228,424 82,721 135,613 228,424 -4.67 1.64 7.82
20 274,830 601,513 698,285 909,174 101,513 198,285 409,174 101,513 198,285 409,174 -4.46 2.10 8.37
25 396,687 613,439 769,813 1,197,290 113,439 269,813 697,290 113,439 269,813 697,290 -4.61 2.31 8.70
30 552,210 614,042 846,531 1,653,987 114,042 346,531 1,153,987 114,042 346,531 1,153,987 -5.28 2.34 8.90
35 750,703 597,375 921,935 2,377,203 97,375 421,935 1,877,203 97,375 421,935 1,877,203 -6.96 2.22 9.04
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,295.85 6,300.96 6,306.08
2 656.29 657.23 658.21
3 264.88 265.51 266.19
4 153.23 153.80 154.42
5 103.79 104.35 104.99
6 76.68 77.25 77.94
7 59.83 60.43 61.17
8 48.45 49.09 49.90
9 40.31 40.99 41.87
10 34.23 34.95 35.92
15 18.25 19.20 20.68
20 11.52 12.71 14.80
25 7.88 9.33 12.08
30 5.58 7.30 10.72
35 3.93 5.94 10.03
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-54
<PAGE>
MALE ISSUE AGE 40
$7,916 ANNUAL PREMIUM FOR NONSMOKER
PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY INTEREST ------------------------- ------------------------ ------------------------ -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- -- -- --- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 8,312 506,062 506,460 506,858 3,866 4,263 4,662 6,062 6,460 6,858 -51.16 -46.14 -41.11
2 17,039 511,638 512,795 514,001 9,377 10,535 11,741 11,638 12,795 14,001 -30.22 -24.27 -18.35
3 26,202 517,032 519,307 521,774 13,307 15,582 18,049 17,032 19,307 21,774 -26.29 -19.64 -13.11
4 35,824 522,233 525,989 530,224 18,632 22,388 26,624 22,233 25,989 30,224 -20.12 -13.39 -6.81
5 45,927 527,243 532,846 539,421 23,768 29,370 35,946 27,243 32,846 39,421 -16.54 -9.78 -3.19
6 56,534 532,046 539,866 549,418 29,150 36,970 46,522 32,046 39,866 49,418 -13.81 -7.12 -.59
7 67,673 536,636 547,045 560,288 34,319 44,728 57,971 36,636 47,045 60,288 -12.00 -5.36 1.13
8 79,368 541,006 554,381 572,106 39,269 52,643 70,368 41,006 54,381 72,106 -10.75 -4.12 2.34
9 91,648 545,150 561,869 584,960 43,991 60,711 83,801 45,150 61,869 84,960 -9.83 -3.22 3.23
10 104,542 549,051 569,496 598,932 48,472 68,917 98,353 49,051 69,496 98,932 -9.16 -2.54 3.91
15 179,351 564,231 609,020 689,003 64,231 109,020 189,003 64,231 109,020 189,003 -8.16 -1.08 5.62
20 274,830 569,402 647,584 823,452 69,402 147,584 323,452 69,402 147,584 323,452 -8.74 -.67 6.40
25 396,687 559,426 678,184 1,022,119 59,426 178,184 522,119 59,426 178,184 522,119 -11.22 -.82 6.83
30 552,210 524,676 686,516 1,310,651 24,676 186,516 810,651 24,676 186,516 810,651 -24.28 -1.61 7.07
35 750,703 0 647,582 1,722,527 0 147,582 1,222,527 0 147,582 1,222,527 -- -3.85 7.19
<CAPTION>
INTERNAL RATE OF RETURN
ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF
POLICY -----------------------------
YEAR 0% 6% 12%
- ------ -- -- ---
<S> <C> <C> <C>
1 6,293.08 6,298.11 6,303.14
2 655.51 656.42 657.37
3 264.41 265.01 265.65
4 152.86 153.39 153.98
5 103.47 103.98 104.58
6 76.38 76.90 77.54
7 59.53 60.08 60.76
8 48.16 48.73 49.48
9 40.02 40.62 41.44
10 33.93 34.58 35.46
15 17.90 18.73 20.08
20 11.08 12.11 14.02
25 7.28 8.52 11.10
30 4.72 6.18 9.55
35 -- 4.31 8.67
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH
VALUE AND NET CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY NEVLICO OR THE ELIGIBLE FUNDS THAT THOSE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-55
<PAGE>
APPENDIX B
INVESTMENT EXPERIENCE INFORMATION
The information contained in this Appendix gives hypothetical illustrations
of the Variable Account's and the Policy's investment experience based on the
historical investment experience of the Eligible Funds. It does not represent
what may happen in the future.
The Policies were not available until , 1995. The Zenith Fund and the
Variable Account commenced operations on August 26, 1983. The Westpeak Stock
Index and Back Bay Advisors Managed Series of the Zenith Fund commenced
operations on May 1, 1987. The Westpeak Value Growth Series and Loomis Sayles
Avanti Growth Series of the Zenith Fund commenced operations on April 30,
1993. The Loomis Sayles Small Cap Series of the Zenith Fund commenced
operations on May 2, 1994. The remaining Zenith Fund Series commenced
operations on October 31, 1994. The Equity-Income Portfolio and Overseas
Portfolio of the VIP Fund commenced operations on October 9, 1986 and January
28, 1987, respectively. The High Income Portfolio of the VIP Fund and the
Asset Manager Portfolio of the VIP Fund II commenced operations on September
19, 1985 and September 6, 1989, respectively.
The illustrations are based on the actual investment experience of the
relevant Eligible Funds for the periods shown (net of actual charges and
expenses incurred by the Eligible Funds), and reflect a charge for mortality
and expense risks against the Variable Account's assets at an annual rate of
.75%. The illustrations assume that premiums are paid at the beginning of each
year and that no loans, transfers or other Policy Owner transactions were made
during the periods shown.
VARIABLE ACCOUNT INVESTMENT EXPERIENCE
The Policies are supported by the Variable Account which invests in the
Eligible Funds. The investment experience of the Sub-Account or Sub-Accounts
you choose will affect the values and benefits of your Policy.
Many factors in addition to investment experience will affect the actual
values and benefits of your Policy. For instance, these investment experience
figures do not reflect the charges deducted from Premiums and Monthly
Deductions from the cash value. (See "Charges and Expenses".)
NET RATES OF RETURN
The annual net rate is the effective earnings rate at which the investment
Sub-Accounts increased or decreased over a one-year period, based on the
investment experience of the relevant Eligible Funds. The rate is calculated
by taking the difference between the Sub-Accounts' ending values and beginning
values of the period and dividing it by the beginning values of the period.
The effective annual net rate of return since inception is the annualized
effective interest rate at which the Sub-Accounts increased or decreased since
the inception dates of the Sub-Accounts. For each Sub-Account, the rate is
calculated by taking the difference between the Sub-Account's ending value and
the value on the date of its inception and dividing it by the value on the
date of inception. This result is the total net rate of return since inception
("Total Return"). The effective annual net rate of return is the rate which,
if compounded annually, would equal the total net rate of return since
inception.
A-56
<PAGE>
SUB-ACCOUNT INVESTING IN ZENITH FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT FOR ONE YEAR ENDING
----------- 8/26/83- --------------------------------------------------------------------------------------------------
12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*. 8.58% -1.11% 66.84% 93.75% 51.56% -9.50% 30.61% -4.78% 52.83% -6.75% 14.11% -8.43%
Bond Income..... 2.77% 11.93 17.87 13.98 1.50 7.47 11.51 7.32 17.08 7.37 11.77 -4.30
Money Market.... 3.03% 9.80 7.45 6.01 5.73 6.78 8.41 7.34 5.42 3.02 2.20 3.23
<CAPTION>
8/26/83- 8/28/93-
SUB-ACCOUNT 12/31/94 12/31/94
----------- TOTAL EFFECTIVE
RETURN ANNUAL
-------- ---------
<S> <C> <C>
Capital Growth*. 781.73% 21.14%
Bond Income..... 171.26 9.19
Money Market.... 93.98 6.01
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------------------------------------- 5/1/87- 5/1/87-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/94 12/31/94
----------- 5/1/87- -------------------------------------------------------------- TOTAL EFFECTIVE
12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index............. -13.06% 14.50% 32.53% -6.47% 29.46% 6.49% 8.90% .30% 85.80% 8.41%
Managed................. -1.15% 8.27 19.65 1.57 19.28 5.90 9.82 -1.93 76.95 7.72
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------- 4/30/93- 4/30/93-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/94 12/31/94
----------- 4/30/93- ------------------- TOTAL EFFECTIVE
12/31/93 12/31/94 RETURN ANNUAL
--------- ------------------- --------- ---------
<S> <C> <C> <C> <C>
Value Growth.................. 13.67% -2.26% 11.10% 6.50%
Avanti Growth................. 14.16 -2.09 11.77 6.89
<CAPTION>
ANNUAL NET RATE OF RETURN 5/2/94- 5/2/94-
----------------------------- 12/31/94 12/31/94
5/2/94- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/934 RETURN ANNUAL
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Small Cap..................... -4.49% -4.49% --
<CAPTION>
ANNUAL NET RATE OF RETURN 10/31/94- 10/31/94-
----------------------------- 12/31/94 12/31/94
10/31/94- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/934 RETURN ANNUAL
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Equity Growth................. -5.63% -5.63% --
Balanced...................... -.33 -.33 --
Value......................... -3.33 -3.33 --
International Equity.......... 2.07 2.07 --
</TABLE>
- --------
* Rates of return reflect the Capital Growth Series' former investment
advisory fee of .50% of average daily net assets for the period through
December 31, 1987 and its current advisory fee schedule thereafter.
SUB-ACCOUNTS INVESTING IN VARIABLE INSURANCE PRODUCTS FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-------------------------------------------------------------------------------- 10/9/86- 10/9/86-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/94 12/31/94
----------- 10/9/86- ----------------------------------------------------------------------- TOTAL EFFECTIVE
12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity-Income..... .03% -1.87% 21.01% 18.65% -16.93% 30.46% 16.01% 17.41% 6.12% 120.75% 10.10%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------------------------------------- 1/28/87- 1/28/87-
FOR ONE YEAR ENDING 12/31/94 12/31/94
1/28/87- -------------------------------------------------------------- TOTAL EFFECTIVE
12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Overseas................ -6.03% 8.80% 23.04% -1.93% 7.19% -11.39% 36.33% .44% 60.44% 6.15%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------------------------------------------------------- 9/19/85- 9/19/85-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/94 12/31/94
----------- 9/19/85- ----------------------------------------------------------------------- TOTAL EFFECTIVE
12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Income..... 6.15% 16.80% 0.46% 10.68% -4.79% -2.96% 34.07% 22.24% 19.50% -2.20% 143.99% 10.09%
</TABLE>
SUB-ACCOUNT INVESTING IN VARIABLE INSURANCE PRODUCTS FUND II
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------------------- 9/6/89- 9/6/89-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/94 12/31/94
----------- 9/6/89- -------------------------------------------- TOTAL EFFECTIVE
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Manager........... 1.07% 5.40% 21.64% 10.88% 20.33% -7.14% 60.54% 9.31%
</TABLE>
A-57
<PAGE>
POLICY PERFORMANCE
The material below assumes a Policy was issued with a $250,000 and $500,000
face amount, respectively, with annual premiums paid on August 26 of each year
(May 1 in the case of the Zenith Stock Index, Zenith Managed and Zenith Small
Cap Sub-Accounts; October 31 in the case of the Zenith Balanced, Zenith
International Equity, Zenith Value and Zenith Equity Growth Sub-Accounts;
October 9 in the case of the Equity-Income Sub-Account, January 28 in the case
of the Overseas Sub-Account; April 30 in the case of the Zenith Value Growth
and Zenith Avanti Growth Sub-Accounts; September 19 in the case of the High
Income Sub-Account; September 6 in the case of the Asset Manager Sub-Account),
to a male age 40 in the nonsmoker preferred risk category. Values and benefits
are shown first for Policies with the Option 1 death benefit and then for
Policies with the Option 2 death benefit. The death benefits, cash values and
internal rates of return assume in each instance that the entire Policy value
was invested in the particular Sub-Account for the period shown. These
illustrations of policy investment experience reflect all Policy charges based
on NEVLICO's current rates. The illustrations for the $500,000 face amount
reflect the lower sales charge, cost of insurance and first-year
administrative charges that would apply to the Policy if issued in the
personal market or if issued in business situations which qualify for those
lower charges. (See "Charges and Expenses".) (See Appendix A for the
definition of the internal rate of return.)
MALE NONSMOKER PREFERRED RISK, AGE 40
$250,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1983....... 4,025 250,000 250,000 3,755 2,657 -69.68% --
December 31, 1984....... 8,050 250,000 250,000 6,772 5,605 -36.71 1,965.76%
December 31, 1985....... 12,075 250,000 250,000 15,095 13,196 6.70 432.72
December 31, 1986....... 16,100 250,000 250,000 32,306 30,469 36.70 206.04
December 31, 1987....... 20,124 250,000 250,000 51,343 49,569 40.04 127.04
December 31, 1988....... 24,149 250,000 250,000 49,653 48,036 24.31 88.73
December 31, 1989....... 28,174 250,000 250,000 67,613 66,286 25.32 66.61
December 31, 1990....... 32,199 250,000 250,000 67,424 66,386 18.40 52.41
December 31, 1991....... 36,224 250,000 250,000 106,605 105,857 23.73 42.60
December 31, 1992....... 40,249 250,000 250,000 102,916 102,457 18.41 35.48
December 31, 1993....... 44,274 250,000 250,000 120,805 120,636 17.72 30.09
December 31, 1994....... 48,299 250,000 250,000 113,549 113,549 13.82 25.89
ZENITH BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1983....... 4,025 250,000 250,000 3,540 2,442 -76.23% --
December 31, 1984....... 8,050 250,000 250,000 7,300 6,133 -28.64 1,965.76%
December 31, 1985....... 12,075 250,000 250,000 11,923 10,024 -13.34 432.72
December 31, 1986....... 16,100 250,000 250,000 16,773 14,936 -4.03 206.04
December 31, 1987....... 20,124 250,000 250,000 20,150 18,376 -3.86 127.04
December 31, 1988....... 24,149 250,000 250,000 24,817 23,200 -1.41 88.73
December 31, 1989....... 28,174 250,000 250,000 30,817 29,489 1.36 66.61
December 31, 1990....... 32,199 250,000 250,000 36,287 35,250 2.34 52.41
December 31, 1991....... 36,224 250,000 250,000 45,801 45,053 4.96 42.60
December 31, 1992....... 40,249 250,000 250,000 52,237 51,779 5.11 35.48
December 31, 1993....... 44,274 250,000 250,000 61,440 61,271 5.94 30.09
December 31, 1994....... 48,299 250,000 250,000 61,819 61,819 4.14 25.89
</TABLE>
A-58
<PAGE>
<TABLE>
ZENITH MONEY MARKET SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1983....... 4,025 250,000 250,000 3,547 2,449 -76.02% --
December 31, 1984....... 8,050 250,000 250,000 7,077 5,910 -32.03 1,965.76%
December 31, 1985....... 12,075 250,000 250,000 10,818 8,919 -21.24 432.72
December 31, 1986....... 16,100 250,000 250,000 14,626 12,790 -12.21 206.04
December 31, 1987....... 20,124 250,000 250,000 18,607 16,832 -7.57 127.04
December 31, 1988....... 24,149 250,000 250,000 23,015 21,398 -4.25 88.73
December 31, 1989....... 28,174 250,000 250,000 28,084 26,756 -1.54 66.61
December 31, 1990....... 32,199 250,000 250,000 33,261 32,223 .02 52.41
December 31, 1991....... 36,224 250,000 250,000 38,150 37,401 .73 42.60
December 31, 1992....... 40,249 250,000 250,000 42,352 41,893 .82 35.48
December 31, 1993....... 44,274 250,000 250,000 46,330 46,161 .78 30.09
December 31, 1994....... 48,299 250,000 250,000 50,892 50,892 .89 25.89
ZENITH STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1987....... 4,025 250,000 250,000 2,859 1,761 -70.97% --
December 31, 1988....... 8,050 250,000 250,000 6,624 5,473 -29.01 1,028.86%
December 31, 1989....... 12,075 250,000 250,000 12,510 10,627 -7.48 327.26
December 31, 1990....... 16,100 250,000 250,000 14,825 13,004 -9.65 173.58
December 31, 1991....... 20,124 250,000 250,000 22,612 20,853 1.34 112.36
December 31, 1992....... 24,149 250,000 250,000 27,373 25,829 2.12 80.63
December 31, 1993....... 28,174 250,000 250,000 33,095 31,840 3.33 61.58
December 31, 1994....... 32,199 250,000 250,000 36,353 35,387 2.26 49.02
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1987....... 4,025 250,000 250,000 3,241 2,143 -61.04% --
December 31, 1988....... 8,050 250,000 250,000 6,807 5,655 -26.84 1,029.86%
December 31, 1989....... 12,075 250,000 250,000 11,707 9,824 -11.91 327.26
December 31, 1990....... 16,100 250,000 250,000 15,218 13,397 -8.32 173.58
December 31, 1991....... 20,124 250,000 250,000 21,570 19,811 -.59 112.36
December 31, 1992....... 24,149 250,000 250,000 26,183 24,638 .63 80.63
December 31, 1993....... 28,174 250,000 250,000 31,982 30,727 2.36 61.58
December 31, 1994....... 32,199 250,000 250,000 34,501 33,535 .97 49.02
ZENITH VALUE GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1993....... 4,025 250,000 250,000 3,692 2,594 -48.04% --
December 31, 1994....... 8,050 250,000 250,000 6,768 5,622 -27.18 1,024.16%
</TABLE>
A-59
<PAGE>
<TABLE>
ZENITH AVANTI GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1993....... 4,025 250,000 250,000 3,710 2,612 -47.50% --
December 31, 1994....... 8,050 250,000 250,000 6,836 5,690 -26.37 1,024.16%
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1994............. 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 250,000 3,114 2,016 -64.60% --
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 250,000 3,540 2,442 -94.97% --
ZENITH INTERNATIONAL EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 250,000 3,627 2,529 -93.80% --
ZENITH VALUE SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 250,000 3,430 2,332 -96.18% --
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 250,000 3,347 2,249 -96.93% --
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1986....... 4,025 250,000 250,000 3,557 2,458 -88.56% --
December 31, 1987....... 8,050 250,000 250,000 5,990 4,813 -55.93 2,709.25%
December 31, 1988....... 12,075 250,000 250,000 10,333 8,423 -27.47 488.44
December 31, 1989....... 16,100 250,000 250,000 15,179 13,332 -10.76 221.13
December 31, 1990....... 20,124 250,000 250,000 15,991 14,206 -15.56 133.47
December 31, 1991....... 24,149 250,000 250,000 24,131 22,466 -2.65 92.16
December 31, 1992....... 28,174 250,000 250,000 31,392 30,016 1.96 68.70
December 31, 1993....... 32,199 250,000 250,000 39,895 38,809 4.96 53.79
December 31, 1994....... 36,224 250,000 250,000 45,359 44,562 4.84 43.58
</TABLE>
A-60
<PAGE>
<TABLE>
OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1987....... 4,025 250,000 250,000 2,867 1,769 -58.95% --
December 31, 1988....... 8,050 250,000 250,000 6,691 5,561 -23.36 705.23%
December 31, 1989....... 12,075 250,000 250,000 12,012 10,150 -8.77 271.30
December 31, 1990....... 16,100 250,000 250,000 14,848 13,048 -8.49 153.68
December 31, 1991....... 20,124 250,000 250,000 19,258 17,520 -4.71 102.71
December 31, 1992....... 24,149 250,000 250,000 19,719 18,271 -8.10 75.09
December 31, 1993....... 28,174 250,000 250,000 31,013 29,854 1.48 58.04
December 31, 1994....... 32,199 250,000 250,000 34,123 33,254 .73 46.60
HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1985....... 4,025 250,000 250,000 3,714 2,616 -78.27% --
December 31, 1986....... 8,050 250,000 250,000 7,554 6,382 -26.82 2,325.76%
December 31, 1987....... 12,075 250,000 250,000 10,684 8,780 -23.43 461.69
December 31, 1988....... 16,100 250,000 250,000 14,983 13,141 -11.21 214.04
December 31, 1989....... 20,124 250,000 250,000 17,186 15,406 -11.64 130.47
December 31, 1990....... 24,149 250,000 250,000 19,709 18,068 -10.48 90.57
December 31, 1991....... 28,174 250,000 250,000 29,587 28,236 .07 67.74
December 31, 1992....... 32,199 250,000 250,000 39,218 38,156 4.45 53.16
December 31, 1993....... 36,224 250,000 250,000 50,071 49,298 7.07 43.13
December 31, 1994....... 40,249 250,000 250,000 51,983 51,500 5.07 35.86
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... 4,025 250,000 250,000 3,666 2,568 -- --
December 31, 1989....... 4,025 250,000 250,000 3,534 2,436 -79.41% --
December 31, 1990....... 8,050 250,000 250,000 6,993 5,822 -34.52 2,119.26%
December 31, 1991....... 12,075 250,000 250,000 11,755 9,850 -14.87 445.60
December 31, 1992....... 16,100 250,000 250,000 16,251 14,409 -6.04 209.64
December 31, 1993....... 20,124 250,000 250,000 22,832 21,052 1.95 128.59
December 31, 1994....... 24,149 250,000 250,000 24,141 22,500 -2.51 89.56
OPTION 2 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1983....... 4,025 250,000 253,753 3,753 2,655 -69.77% --
December 31, 1984....... 8,050 250,000 256,761 6,761 5,594 -36.88 2,008.52%
December 31, 1985....... 12,075 250,000 265,053 15,053 13,154 6.45 447.47
December 31, 1986....... 16,100 250,000 282,164 32,164 30,328 36.41 218.99
December 31, 1987....... 20,124 250,000 301,021 51,021 49,247 39.73 138.82
December 31, 1988....... 24,149 250,000 299,256 49,256 47,639 24.01 96.62
December 31, 1989....... 28,174 250,000 316,942 66,942 65,614 25.02 74.55
December 31, 1990....... 32,199 250,000 316,626 66,626 65,588 18.09 58.76
December 31, 1991....... 36,224 250,000 355,123 105,123 104,375 23.42 50.52
December 31, 1992....... 40,249 250,000 351,269 101,269 100,811 18.10 42.07
December 31, 1993....... 44,274 250,000 368,605 118,605 118,436 17.41 36.70
December 31, 1994....... 48,299 250,000 361,226 111,226 111,226 13.50 31.48
</TABLE>
A-61
<PAGE>
<TABLE>
ZENITH BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1983....... 4,025 250,000 253,537 3,537 2,439 -76.30% --
December 31, 1984....... 8,050 250,000 257,288 7,288 6,121 -28.82 2,011.85%
December 31, 1985....... 12,075 250,000 261,891 11,891 9,992 -13.56 444.42
December 31, 1986....... 16,100 250,000 266,706 16,706 14,870 -4.27 212.90
December 31, 1987....... 20,124 250,000 270,044 20,044 18,270 -4.11 131.88
December 31, 1988....... 24,149 250,000 274,651 24,651 23,034 -1.66 92.83
December 31, 1989....... 28,174 250,000 280,565 30,565 29,238 1.11 70.44
December 31, 1990....... 32,199 250,000 285,934 35,934 34,897 2.08 56.00
December 31, 1991....... 36,224 250,000 295,278 45,278 44,530 4.69 46.34
December 31, 1992....... 40,249 250,000 301,543 51,543 51,084 4.84 39.10
December 31, 1993....... 44,274 250,000 310,502 60,502 60,334 5.66 33.77
December 31, 1994....... 48,299 250,000 310,757 60,757 60,757 3.85 29.19
</TABLE>
<TABLE>
ZENITH MONEY MARKET SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1983....... 4,025 250,000 253,545 3,545 2,446 -76.09% --
December 31, 1984....... 8,050 250,000 257,065 7,065 5,899 -32.21 2,010.45%
December 31, 1985....... 12,075 250,000 260,789 10,789 8,890 -21.46 443.35
December 31, 1986....... 16,100 250,000 264,570 14,570 12,734 -12.44 212.04
December 31, 1987....... 20,124 250,000 268,512 18,512 16,737 -7.81 131.52
December 31, 1988....... 24,149 250,000 272,867 22,867 21,250 -4.50 92.54
December 31, 1989....... 28,174 250,000 277,862 27,862 26,535 -1.79 70.12
December 31, 1990....... 32,199 250,000 282,947 32,947 31,910 -.23 55.72
December 31, 1991....... 36,224 250,000 287,727 37,727 36,979 .47 45.76
December 31, 1992....... 40,249 250,000 291,810 41,810 41,352 .56 38.46
December 31, 1993....... 44,274 250,000 295,656 45,656 45,487 .50 32.94
December 31, 1994....... 48,299 250,000 300,061 50,061 50,061 .61 28.66
</TABLE>
<TABLE>
ZENITH STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1987....... 4,025 250,000 252,855 2,855 1,757 -71.05% --
December 31, 1988....... 8,050 250,000 256,610 6,610 5,459 -29.18 1,047.57%
December 31, 1989....... 12,075 250,000 262,471 12,471 10,587 -7.69 335.99
December 31, 1990....... 16,100 250,000 264,760 14,760 12,939 -9.87 178.57
December 31, 1991....... 20,124 250,000 272,481 22,481 20,722 1.10 117.09
December 31, 1992....... 24,149 250,000 277,175 27,175 25,630 1.88 84.70
December 31, 1993....... 28,174 250,000 282,803 32,803 31,548 3.08 65.36
December 31, 1994....... 32,199 250,000 285,974 35,974 35,009 2.00 52.39
</TABLE>
<TABLE>
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1987....... 4,025 250,000 253,238 3,238 2,139 -61.15% --
December 31, 1988....... 8,050 250,000 256,792 6,792 5,641 -27.01 1,048.08%
December 31, 1989....... 12,075 250,000 261,670 11,670 9,787 -12.12 335.44
December 31, 1990....... 16,100 250,000 265,152 15,152 13,331 -8.55 178.70
December 31, 1991....... 20,124 250,000 271,446 21,446 19,688 -.82 116.87
December 31, 1992....... 24,149 250,000 275,995 25,995 24,451 .39 84.53
December 31, 1993....... 28,174 250,000 281,703 31,703 30,448 2.11 65.24
December 31, 1994....... 32,199 250,000 284,146 34,146 33,180 .72 52.23
</TABLE>
A-62
<PAGE>
<TABLE>
ZENITH VALUE GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1993....... 4,025 250,000 253,687 3,687 2,589 -48.19% --
December 31, 1994....... 8,050 250,000 256,752 6,752 5,606 -27.37 1,043.15%
</TABLE>
<TABLE>
ZENITH AVANTI GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1993....... 4,025 250,000 253,705 3,705 2,607 -47.65% --
December 31, 1994....... 8,050 250,000 256,820 6,820 5,674 -26.56 1,043.35%
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL 250,000MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1994............. 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 253,111 3,111 2,012 64.70% --
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL 250,000MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 253,538 3,538 2,440 -94.99% --
ZENITH INTERNATIONAL EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL 250,000MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 253,626 3,626 2,528 -93.82% --
ZENITH VALUE SUB-ACCOUNT
<CAPTION>
TOTAL 250,000MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 253,429 3,429 2,331 -96.20% --
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL 250,000MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------------- -------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1994....... 4,025 250,000 253,346 3,346 2,247 -96.94% --
</TABLE>
A-63
<PAGE>
<TABLE>
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1986....... 4,025 250,000 253,555 3,555 2,457 -88.59% --
December 31, 1987....... 8,050 250,000 255,982 5,982 4,805 -56.07 2,765.47%
December 31, 1988....... 12,075 250,000 260,309 10,309 8,399 -27.68 500.21
December 31, 1989....... 16,100 250,000 265,125 15,125 13,278 -10.99 227.89
December 31, 1990....... 20,124 250,000 265,918 15,918 14,133 -15.79 137.55
December 31, 1991....... 24,149 250,000 273,989 23,989 22,324 -2.89 96.31
December 31, 1992....... 28,174 250,000 281,160 31,160 29,785 1.72 72.72
December 31, 1993....... 32,199 250,000 289,533 39,533 38,447 4.72 57.83
December 31, 1994....... 36,224 250,000 294,868 44,868 44,072 4.58 47.36
OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1987....... 4,025 250,000 252,862 2,862 1,764 -59.08% --
December 31, 1988....... 8,050 250,000 256,673 6,673 5,542 -23.55 717.01%
December 31, 1989....... 12,075 250,000 261,967 11,967 10,104 -8.99 278.00
December 31, 1990....... 16,100 250,000 264,772 14,772 12,971 -8.73 158.03
December 31, 1991....... 20,124 250,000 269,133 19,133 17,395 -4.95 106.38
December 31, 1992....... 24,149 250,000 269,563 19,563 18,115 -8.35 77.84
December 31, 1993....... 28,174 250,000 280,724 30,724 29,566 1.23 61.39
December 31, 1994....... 32,199 250,000 283,749 33,749 32,881 .47 49.62
HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... 4,025 250,000 253,666 3,666 2.568 -- --
December 31, 1985....... 4,025 250,000 253,712 3,712 2,614 -78.33% --
December 31, 1986....... 8,050 250,000 257,542 7,542 6,371 -27.01 2,384.47%
December 31, 1987....... 12,075 250,000 260,657 10,657 8,753 -23.64 473.05
December 31, 1988....... 16,100 250,000 264,927 14,927 13,086 -11.44 220.47
December 31, 1989....... 20,124 250,000 267,101 17,101 15,321 -11.88 134.75
December 31, 1990....... 24,149 250,000 269,588 19,588 17,947 -10.72 93.93
December 31, 1991....... 28,174 250,000 279,361 29,361 28,010 -.18 71.49
December 31, 1992....... 32,199 250,000 288,852 38,852 37,790 4.20 57.08
December 31, 1993....... 36,224 250,000 299,514 49,514 48,742 6.82 47.23
December 31, 1994....... 40,249 250,000 301,308 51,308 50,825 4.80 39.51
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... 4,025 250,000 253,666 3,666 2,568 -- --
December 31, 1989....... 4,025 250,000 253,532 3,532 2,434 -79.47% --
December 31, 1990....... 8,050 250,000 256,983 6,983 5,811 -34.69 2,167.73%
December 31, 1991....... 12,075 250,000 261,725 11,725 9,821 -15.09 457.56
December 31, 1992....... 16,100 250,000 266,191 16,191 14,349 -6.27 216.43
December 31, 1993....... 20,124 250,000 272,715 22,715 20,936 1.71 134.13
December 31, 1994....... 24,149 250,000 273,984 23,984 22,343 -2.76 93.60
</TABLE>
- ----------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
A-64
<PAGE>
MALE NONSMOKER PREFERRED RISK, AGE 40
$500,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1983....... 7,916 500,000 500,000 7,612 5,415 -66.41% --
December 31, 1984....... 15,832 500,000 500,000 13,959 11,625 -32.03 1,992.57%
December 31, 1985....... 23,747 500,000 500,000 31,219 27,421 10.96 436.92
December 31, 1986....... 31,663 500,000 500,000 66,949 63,275 40.06 207.81
December 31, 1987....... 39,579 500,000 500,000 106,498 102,950 42.60 128.08
December 31, 1988....... 47,495 500,000 500,000 103,031 99,797 26.28 89.45
December 31, 1989....... 55,410 500,000 500,000 140,392 137,737 26.96 67.17
December 31, 1990....... 63,326 500,000 500,000 140,030 137,955 19.78 52.86
December 31, 1991....... 71,242 500,000 500,000 221,446 219,950 24.92 42.98
December 31, 1992....... 79,158 500,000 500,000 213,775 212,858 19.46 35.80
December 31, 1993....... 87,073 500,000 500,000 250,931 250,593 18.66 30.37
December 31, 1994....... 94,989 500,000 500,000 235,843 235,843 14.66 26.14
ZENITH BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1983....... 7,916 500,000 500,000 7,183 4,986 -73.51% --
December 31, 1984....... 15,832 500,000 500,000 15,027 12,694 -23.76 1,992.57%
December 31, 1985....... 23,747 500,000 500,000 24,639 20,841 -9.45 436.92
December 31, 1986....... 31,663 500,000 500,000 34,745 31,072 -1.02 207.81
December 31, 1987....... 39,579 500,000 500,000 41,819 38,271 -1.43 128.08
December 31, 1988....... 47,495 500,000 500,000 51,576 48,342 .62 89.45
December 31, 1989....... 55,410 500,000 500,000 64,129 61,474 3.09 67.17
December 31, 1990....... 63,326 500,000 500,000 75,589 73,514 3.85 52.86
December 31, 1991....... 71,242 500,000 500,000 95,484 93,988 6.28 42.98
December 31, 1992....... 79,158 500,000 500,000 108,983 108,065 6.30 35.80
December 31, 1993....... 87,073 500,000 500,000 128,250 127,912 7.00 30.37
December 31, 1994....... 94,989 500,000 500,000 129,072 129,072 5.12 26.14
ZENITH MONEY MARKET SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1983....... 7,916 500,000 500,000 7,198 5,002 -73.26% --
December 31, 1984....... 15,832 500,000 500,000 14,572 12,238 -27.28 1,992.57%
December 31, 1985....... 23,747 500,000 500,000 22,357 18,558 -17.47 436.92
December 31, 1986....... 31,663 500,000 500,000 30,307 26,634 -9.22 207.81
December 31, 1987....... 39,579 500,000 500,000 38,637 35,089 -5.11 128.08
December 31, 1988....... 47,495 500,000 500,000 47,867 44,633 -2.18 89.45
December 31, 1989....... 55,410 500,000 500,000 58,488 55,833 .23 67.17
December 31, 1990....... 63,326 500,000 500,000 69,345 67,270 1.57 52.86
December 31, 1991....... 71,242 500,000 500,000 79,608 78,112 2.11 42.98
December 31, 1992....... 79,158 500,000 500,000 88,453 87,535 2.06 35.80
December 31, 1993....... 87,073 500,000 500,000 96,835 96,497 1.91 30.37
December 31, 1994....... 94,989 500,000 500,000 106,414 106,414 1.92 26.14
</TABLE>
A-65
<PAGE>
<TABLE>
ZENITH STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1987....... 7,916 500,000 500,000 5,884 3,687 -68.11% --
December 31, 1988....... 15,832 500,000 500,000 13,728 11,426 -25.02 1,040.86%
December 31, 1989....... 23,747 500,000 500,000 25,958 22,191 -4.01 330.25
December 31, 1990....... 31,663 500,000 500,000 30,813 27,171 -6.95 175.03
December 31, 1991....... 39,579 500,000 500,000 47,067 43,550 3.60 113.27
December 31, 1992....... 47,495 500,000 500,000 57,031 53,942 4.02 81.29
December 31, 1993....... 55,410 500,000 500,000 69,003 66,493 4.96 62.09
December 31, 1994....... 63,326 500,000 500,000 75,844 73,914 3.69 49.44
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1987....... 7,916 500,000 500,000 6,667 4,471 -57.46% --
December 31, 1988....... 15,832 500,000 500,000 14,097 11,795 -22.82 1,040.86%
December 31, 1989....... 23,747 500,000 500,000 24,284 20,517 -8.54 330.25
December 31, 1990....... 31,663 500,000 500,000 31,617 27,976 -5.64 175.03
December 31, 1991....... 39,579 500,000 500,000 44,880 41,363 1.66 113.27
December 31, 1992....... 47,495 500,000 500,000 54,529 51,439 2.52 81.29
December 31, 1993....... 55,410 500,000 500,000 66,664 64,155 3.99 62.09
December 31, 1994....... 63,326 500,000 500,000 71,968 70,037 2.41 49.44
ZENITH VALUE GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1993....... 7,916 500,000 500,000 7,614 5,418 -43.16% --
December 31, 1994....... 15,832 500,000 500,000 14,031 11,740 -23.10 1,036.09%
ZENITH AVANTI GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1993....... 7,916 500,000 500,000 7,650 5,454 -42.60% --
December 31, 1994....... 15,832 500,000 500,000 14,168 11,877 -22.29 1,036.09%
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1994............. 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1994....... 7,916 500,000 500,000 6,416 4,220 -61.13% --
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1994....... 7,916 500,000 500,000 7,124 4,928 -94.13% --
</TABLE>
A-66
<PAGE>
<TABLE>
ZENITH INTERNATIONAL EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1994....... 7,916 500,000 500,000 7,299 5,103 -92.77% --
ZENITH VALUE SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1994....... 7,916 500,000 500,000 6,905 4,709 -95.53% --
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1994....... 7,916 500,000 500,000 6,738 4,542 -96.40% --
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1986....... 7,916 500,000 500,000 7,156 4,959 -87.21% --
December 31, 1987....... 15,832 500,000 500,000 12,283 9,929 -51.87 2,749.05%
December 31, 1988....... 23,747 500,000 500,000 21,309 17,490 -23.56 493.31
December 31, 1989....... 31,663 500,000 500,000 31,413 27,719 -7.62 223.05
December 31, 1990....... 39,579 500,000 500,000 33,133 29,564 -13.04 134.57
December 31, 1991....... 47,495 500,000 500,000 50,108 46,777 -.56 92.91
December 31, 1992....... 55,410 500,000 500,000 65,265 62,514 3.72 69.27
December 31, 1993....... 63,326 500,000 500,000 83,041 80,869 6.48 54.25
December 31, 1994....... 71,242 500,000 500,000 94,489 92,896 6.18 43.96
OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1987....... 7,916 500,000 500,000 6,021 3,825 -54.51% --
December 31, 1988....... 15,832 500,000 500,000 13,967 11,706 -19.44 712.72%
December 31, 1989....... 23,747 500,000 500,000 25,053 21,328 -5.49 273.69
December 31, 1990....... 31,663 500,000 500,000 30,989 27,389 -5.90 154.95
December 31, 1991....... 39,579 500,000 500,000 40,215 36,739 -2.54 103.54
December 31, 1992....... 47,495 500,000 500,000 41,234 38,338 -6.23 75.70
December 31, 1993....... 55,410 500,000 500,000 64,831 62,514 3.07 58.53
December 31, 1994....... 63,326 500,000 500,000 71,368 69,630 2.14 47.00
</TABLE>
A-67
<PAGE>
<TABLE>
HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1985....... 7,916 500,000 500,000 7,505 5,309 -75.73% --
December 31, 1986....... 15,832 500,000 500,000 15,512 13,168 -21.74 2,358.75%
December 31, 1987....... 23,747 500,000 500,000 22,032 18,223 -19.66 466.24
December 31, 1988....... 31,663 500,000 500,000 30,992 27,309 -8.20 215.89
December 31, 1989....... 39,579 500,000 500,000 35,634 32,076 -9.17 131.55
December 31, 1990....... 47,495 500,000 500,000 40,955 37,673 -8.36 91.31
December 31, 1991....... 55,410 500,000 500,000 61,594 58,891 1.85 68.30
December 31, 1992....... 63,326 500,000 500,000 81,730 79,606 5.99 53.61
December 31, 1993....... 71,242 500,000 500,000 104,415 102,871 8.41 43.51
December 31, 1994....... 79,158 500,000 500,000 108,464 107,498 6.27 36.19
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... 7,916 500,000 500,000 7,317 5,121 -- --
December 31, 1989....... 7,916 500,000 500,000 7,141 4,945 -77.24% --
December 31, 1990....... 15,832 500,000 500,000 14,373 12,029 -29.89 2,148.68%
December 31, 1991....... 23,747 500,000 500,000 24,263 20,455 -11.01 449.96
December 31, 1992....... 31,663 500,000 500,000 33,634 29,951 -3.04 211.44
December 31, 1993....... 39,579 500,000 500,000 47,356 43,797 4.38 129.65
December 31, 1994....... 47,495 500,000 500,000 50,143 46,861 -.48 90.30
OPTION 2 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1983....... 7,916 500,000 507,608 7,608 5,411 -66.48% --
December 31, 1984....... 15,832 500,000 513,942 13,942 11,609 -32.15 2,037.21%
December 31, 1985....... 23,747 500,000 531,158 31,158 27,360 10.79 452.29
December 31, 1986....... 31,663 500,000 566,741 66,741 63,068 39.85 221.29
December 31, 1987....... 39,579 500,000 606,026 106,026 102,478 42.39 140.34
December 31, 1988....... 47,495 500,000 602,448 102,448 99,214 26.07 97.66
December 31, 1989....... 55,410 500,000 639,406 139,406 136,751 26.75 75.41
December 31, 1990....... 63,326 500,000 638,857 138,857 136,781 19.57 59.46
December 31, 1991....... 71,242 500,000 719,265 219,265 217,769 24.71 51.19
December 31, 1992....... 79,158 500,000 711,350 211,350 210,433 19.24 42.64
December 31, 1993....... 87,073 500,000 747,692 247,692 247,354 18.44 37.23
December 31, 1994....... 94,989 500,000 732,408 232,408 232,408 14.44 31.94
</TABLE>
A-68
<PAGE>
<TABLE>
ZENITH BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1983....... 7,916 500,000 507,179 7,179 4,983 -73.56% --
December 31, 1984....... 15,832 500,000 515,010 15,010 12,676 -23.90 2,040.62%
December 31, 1985....... 23,747 500,000 524,591 24,591 20,793 -9.61 449.09
December 31, 1986....... 31,663 500,000 534,648 34,648 30,975 -1.19 214.96
December 31, 1987....... 39,579 500,000 541,663 41,663 38,115 -1.60 133.13
December 31, 1988....... 47,495 500,000 551,333 51,333 48,099 .44 93.73
December 31, 1989....... 55,410 500,000 563,759 63,759 61,104 2.91 71.16
December 31, 1990....... 63,326 500,000 575,069 75,069 72,993 3.67 56.61
December 31, 1991....... 71,242 500,000 594,712 94,712 93,216 6.09 46.88
December 31, 1992....... 79,158 500,000 607,957 107,957 107,040 6.11 39.58
December 31, 1993....... 87,073 500,000 626,866 126,866 126,528 6.81 34.22
December 31, 1994....... 94,989 500,000 627,494 127,494 127,494 4.92 29.59
</TABLE>
<TABLE>
ZENITH MONEY MARKET SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1983....... 7,916 500,000 507,195 7,195 4,998 -73.32% --
December 31, 1984....... 15,832 500,000 514,554 14,554 12,221 -27.41 2,039.16%
December 31, 1985....... 23,747 500,000 522,314 22,314 18,516 -17.62 447.98
December 31, 1986....... 31,663 500,000 530,225 30,225 26,552 -9.38 214.06
December 31, 1987....... 39,579 500,000 538,497 38,497 34,949 -5.28 132.75
December 31, 1988....... 47,495 500,000 547,649 47,649 44,415 -2.35 93.43
December 31, 1989....... 55,410 500,000 558,161 58,161 55,507 .05 70.83
December 31, 1990....... 63,326 500,000 568,882 68,882 66,807 1.39 56.32
December 31, 1991....... 71,242 500,000 578,985 78,985 77,488 1.92 46.27
December 31, 1992....... 79,158 500,000 587,653 87,653 86,735 1.87 38.92
December 31, 1993....... 87,073 500,000 595,839 95,839 95,501 1.72 33.35
December 31, 1994....... 94,989 500,000 605,179 105,179 105,179 1.73 29.04
</TABLE>
<TABLE>
ZENITH STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1987....... 7,916 500,000 505,879 5,879 3,682 -68.17% --
December 31, 1988....... 15,832 500,000 513,708 13,708 11,406 -25.14 1,060.45%
December 31, 1989....... 23,747 500,000 525,901 25,901 22,134 -4.16 339.38
December 31, 1990....... 31,663 500,000 530,717 30,717 27,075 -7.11 180.25
December 31, 1991....... 39,579 500,000 546,874 46,874 43,358 3.43 118.21
December 31, 1992....... 47,495 500,000 556,739 56,739 53,650 3.85 85.54
December 31, 1993....... 55,410 500,000 568,573 68,573 66,063 4.79 66.04
December 31, 1994....... 63,326 500,000 575,286 75,286 73,355 3.51 52.96
</TABLE>
<TABLE>
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1987....... 7,916 500,000 506,661 6,661 4,465 -57.54% --
December 31, 1988....... 15,832 500,000 514,076 14,076 11,774 -22.95 1,060.98%
December 31, 1989....... 23,747 500,000 524,230 24,230 20,463 -8.69 338.80
December 31, 1990....... 31,663 500,000 531,520 31,520 27,878 -5.80 180.38
December 31, 1991....... 39,579 500,000 544,698 44,698 41,181 1.49 117.99
December 31, 1992....... 47,495 500,000 554,253 54,253 51,164 2.35 85.36
December 31, 1993....... 55,410 500,000 566,254 66,254 63,744 3.81 65.92
December 31, 1994....... 63,326 500,000 571,445 71,445 69,514 2.23 52.79
</TABLE>
A-69
<PAGE>
<TABLE>
ZENITH VALUE GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1993....... 7,916 500,000 507,607 7,607 5,410 -43.27% --
December 31, 1994....... 15,832 500,000 514,009 14,009 11,717 -23.23 1,055.99%
ZENITH AVANTI GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1993....... 7,916 500,000 507,643 7,643 5,446 -42.71% --
December 31, 1994....... 15,832 500,000 514,145 14,145 11,854 -22.42 1,056.19%
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1994............. 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1994....... 7,916 500,000 506,410 6,410 4,214 -61.21% --
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1994....... 7,916 500,000 507,122 7,122 4,926 -94.15% --
ZENITH INTERNATIONAL EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1994....... 7,916 500,000 507,297 7,297 5,100 -92.79% --
ZENITH VALUE SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1994....... 7,916 500,000 506,903 6,903 4,707 -95.54% --
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1994....... 7,916 500,000 506,736 6,736 4,540 -96.41% --
</TABLE>
A-70
<PAGE>
<TABLE>
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... 7,915 500,000 507,316 7,316 5,120 -- --
December 31, 1986....... 7,916 500,000 507,153 7,153 4,957 -87.23% --
December 31, 1987....... 15,832 500,000 512,271 12,271 9,917 -51.98 2,807.50%
December 31, 1988....... 23,747 500,000 521,273 21,273 17,455 -23.71 505.54
December 31, 1989....... 31,663 500,000 531,334 31,334 27,640 -7.78 230.08
December 31, 1990....... 39,579 500,000 533,026 33,026 29,457 -13.20 138.82
December 31, 1991....... 47,495 500,000 549,898 49,898 46,568 -.72 97.24
December 31, 1992....... 55,410 500,000 564,924 64,924 62,173 3.55 73.46
December 31, 1993....... 63,326 500,000 582,507 82,507 80,335 6.31 58.45
December 31, 1994....... 71,242 500,000 593,765 93,765 92,172 6.00 47.91
OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1987....... 7,916 500,000 506,013 6,013 3,817 -54.61% --
December 31, 1988....... 15,832 500,000 513,940 13,940 11,680 -19.58 725.13%
December 31, 1989....... 23,747 500,000 524,986 24,986 21,261 -5.64 280.72
December 31, 1990....... 31,663 500,000 530,877 30,877 27,277 -6.06 159.50
December 31, 1991....... 39,579 500,000 540,031 40,031 36,556 -2.71 107.38
December 31, 1992....... 47,495 500,000 541,004 41,004 38,108 -6.40 78.59
December 31, 1993....... 55,410 500,000 564,406 64,406 62,089 2.90 62.04
December 31, 1994....... 63,326 500,000 570,817 70,817 69,079 1.96 50.16
HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... 7,915 500,000 507,316 7,316 5,120 -- --
December 31, 1985....... 7,916 500,000 507,502 7,502 5,306 -75.78% --
December 31, 1986....... 15,832 500,000 515,495 15,495 13,151 -21.88 2,419.84%
December 31, 1987....... 23,747 500,000 521,992 21,992 18,184 -19.81 478.04
December 31, 1988....... 31,663 500,000 530,912 30,912 27,228 -8.36 222.57
December 31, 1989....... 39,579 500,000 535,510 35,510 31,951 -9.34 136.00
December 31, 1990....... 47,495 500,000 540,777 40,777 37,495 -8.53 94.81
December 31, 1991....... 55,410 500,000 561,262 61,262 58,559 1.68 72.21
December 31, 1992....... 63,326 500,000 581,191 81,191 79,067 5.81 57.70
December 31, 1993....... 71,242 500,000 603,594 103,594 102,050 8.23 47.79
December 31, 1994....... 79,158 500,000 607,466 107,466 106,501 6.08 39.99
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL MINIMUM VARIABLE INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... 7,916 500,000 507,316 7,316 5,120 -- --
December 31, 1989....... 7,916 500,000 507,139 7,139 4,942 -77.28% --
December 31, 1990....... 15,832 500,000 514,358 14,358 12,014 -30.00 2,199.14%
December 31, 1991....... 23,747 500,000 524,220 24,220 20,411 -11.17 462.39
December 31, 1992....... 31,663 500,000 533,546 33,546 29,862 -3.21 218.51
December 31, 1993....... 39,579 500,000 547,184 47,184 43,626 4.21 135.42
December 31, 1994....... 47,495 500,000 549,912 49,912 46,630 -.65 94.50
</TABLE>
- ----------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
A-71
<PAGE>
APPENDIX C
LONG TERM MARKET TRENDS
The information below is a comparison of the average annual returns of
common stock, high grade corporate bonds and 30-day U.S. Treasury bills over
20-year and 30-year holding periods.* The average annual returns assume the
reinvestment of dividends, capital gains and interest. This is an historical
record and is not intended as a projection of future performance. Charges
associated with a variable life policy are not reflected.
The data indicates that, historically, the investment performance of common
stocks over long periods of time has been positive and has generally been
superior to that of long-term, high grade debt securities. Common stocks have,
however, been subject to more dramatic market adjustments over short periods
of time. These trends indicate the potential advantages of holding a variable
life insurance policy for a long period of time.
Over the 50 20-year time periods beginning in 1926 and ending in 1994 (i.e.,
1926-1945, 1927-1946, and so on through 1975-1994):
--The average annual return of common stocks was superior to that of high
grade, long-term corporate bonds in 47 of the 50 periods.
--The average annual return of common stocks surpassed that of U.S.
Treasury bills in each of the 50 periods.
--Common stock average annual returns exceeded the average annual rate of
inflation in each of the 50 periods.
Over the 40 30-year periods beginning in 1926 and ending in 1994, the
average annual return of common stocks was superior to that of high grade,
long-term corporate bonds, U.S. Treasury bills and inflation in all 40
periods.
From 1926 through 1994 the average annual return for common stocks was
10.2%, compared to 5.4% for high grade, long-term corporate bonds, 3.7% for
U.S. Treasury bills and 3.1% for the Consumer Price Index.
- ----------
* Source: Stocks, Bonds, Bills and Inflation 1995 Yearbook (TM), Ibbotson
Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
----------------
SUMMARY: HISTORIC S&P STOCK INDEX RESULTS FOR
SPECIFIC HOLDING PERIODS
The following chart categorizes the historical results of the Standard &
Poor's 500 Stock Index with dividends reinvested, over one-year, five-year and
twenty-year periods beginning in 1926 and ending 1994.
The chart shows that, historically, the longer that a portfolio matching the
S&P 500 Stock Index was held, the less likely was the chance of a loss.
Conversely, the shorter the holding period of such a portfolio, the more
likely was the chance of a loss. The chart also shows that shorter term
results tend to be more extreme than longer term results.
The chart is not a projection or representation of future stock market
results. It cannot be taken as representative of the performance of any one
fund. Rather it shows the historic performance of a broad index of stocks.
----------------
PERCENT OF HOLDING PERIODS WITH THE FOLLOWING RETURNS:
<TABLE>
<CAPTION>
GREATER
THAN
HOLDING NEGATIVE 0-5.00% 5.01-10.00% 10.01-15.00% 15.01-20.00% 20.00%
PERIOD RETURN RETURN RETURN RETURN RETURN RETURN
- ------- -------- ------- ----------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1 year......... 29% 4% 12% 7% 12% 36%
5 years........ 11% 15% 16% 33% 17% 9%
10 years........ 3% 12% 36% 22% 25% 2%
20 years........ 0% 6% 34% 54% 6% 0%
</TABLE>
- ----------
Source: Stocks, Bonds, Bills and Inflation 1995 Yearbook (TM), Ibbotson
Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
A-72
<PAGE>
DOLLAR COST AVERAGING
Dollar cost averaging allows a person to take advantage of the historical
long-term stock market results, assuming that they continue, although it does
not guarantee a profit or protect against a loss. If an investor follows a
program of dollar cost averaging on a long-term basis, and the stock fund
selected performs at least as well as the S&P 500 has historically, it is
likely although not guaranteed that the price at which shares are surrendered,
for whatever reason, will be higher than the average cost per share.
An investor using dollar cost averaging invests the same amount of money in
the same professionally managed fund at regular intervals over a long period
of time. Dollar cost averaging keeps an investor from investing too much when
the price of shares is high and too little when the price is low. When the
price of shares is low, the money invested buys more shares. When it is high,
the money invested buys fewer shares. If the investor has the ability and
desire to maintain this program over a long period of time (for example, 20
years), and the stock fund chosen follows the historical upward market trends,
the price at which the shares are sold should be higher than their average
cost. This price could be lower, however, if the fund chosen does not follow
these historical trends.
Investors contemplating the use of dollar cost averaging should consider
their ability to continue the on-going purchases so that they can take
advantage of periods of low price levels.
A-73
<PAGE>
APPENDIX D
USES OF LIFE INSURANCE
The following are examples of ways in which the Policy can be used to
address certain financial objectives.
FAMILY INCOME PROTECTION
Life insurance may be purchased on the lives of the family income earners to
provide a death benefit to cover final expenses, and continue the current
income to the family. The amount of insurance purchased should be an amount
which will provide a death benefit that when invested outside the policy at a
reasonable interest rate, will generate enough money to replace the
individual's income.
ESTATE PROTECTION
Life insurance may be purchased by a trust on the life of the person whose
estate will incur federal estate taxes upon the person's death. The amount of
insurance purchased would equal the amount of the estimated estate tax
liability. Upon the insured's death, the trustee could make the death proceeds
available to the estate for the payment of estate tax costs.
EDUCATION FUNDING
Life insurance may be purchased on the life of the parent(s) or primary
person funding an education. The amount of insurance purchased should equal
the total education cost projected at a reasonable inflation rate.
In the event of death, the guaranteed death benefit is available to help pay
the education costs. If the insured lives through the education years, the
cash value accumulations may be accessed to help offset the remaining
education costs. Any cash value loans or surrenders will reduce the policy
death benefit.
MORTGAGE PROTECTION
Life insurance may be purchased on the life of the person responsible for
making mortgage payments. The amount of insurance purchased should equal the
mortgage amount. In the event of the insured's death, the guaranteed death
benefit can be used to offset the remaining mortgage balance.
During the insured's lifetime, the cash value accumulations may be accessed
late in the mortgage term to help make the remaining mortgage payments. Any
cash value loans or surrenders will reduce the policy death benefit.
KEY PERSON PROTECTION
Life insurance may be purchased by the business on the life of the key
person in an amount equal to the key person's value, considering salary,
benefits, and contribution to business profits. Upon the key person's death,
the business uses the death benefit to ease the interruption of business
operations and/or to provide a replacement fund for hiring a new executive.
BUSINESS CONTINUATION PROTECTION
Life insurance may be purchased on the life of each business owner in an
amount equal to the value of each owner's business interest. In the event of
death, the guaranteed death benefit may provide the funds needed to carry out
the purchase of the deceased's business interest by the business, or surviving
owners, from the deceased owner's heirs.
RETIREMENT INCOME
Life insurance may be purchased on the life of a family income earner during
his or her working life. If the insured lives to retirement, the cash value
accumulations may be accessed to provide retirement payments. In the event of
the insured's death, the proceeds may be used to provide retirement income to
his or her spouse. Any cash value loans or surrenders will reduce the policy
death benefit.
If you wish to access your Policy's cash value, through loans, surrenders or
withdrawals, you should consult your tax advisor about possible tax
consequences.
A-74
<PAGE>
APPENDIX E
TAX INFORMATION
The Office of Tax Analysis of the U.S. Department of the Treasury published
a "Report to the Congress on the Taxation of Life Insurance Company Products"
in March 1990. Page 4 of this report is Table 1.1, a "Comparison of Tax
Treatment of Life Insurance Products and Other Retirement Savings Plans".
Because it is a convenient summary of the relevant tax characteristics of
these products and plans, we have reprinted it here, and added footnotes to
reflect exceptions to the general rules.
---------------------
TABLE 1.1
COMPARISON OF TAX TREATMENT OF LIFE INSURANCE PRODUCTS AND
OTHER RETIREMENT SAVINGS PLANS
<TABLE>
<CAPTION>
CASH-VALUE
LIFE NON-QUALIFIED QUALIFIED
INSURANCE ANNUITIES IRA'S PENSION
---------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Annual Contribution Limits No No Yes Yes
Income Eligibility Limits No No Yes** No
Borrowing Treated as No* Yes Loans not Yes,
Distributions allowed beyond
$50,000
Income Ordering Rules (Income No* Yes Yes Yes
included in First
Distribution)
Early Withdrawal Penalties No* Yes*** Yes*** Yes***
Minimum Distribution Rules by No No Yes Yes
Age 70 1/2
Maximum Annual Distribution No No Yes Yes
Rules
Anti-discrimination Rules No No No Yes
</TABLE>
- ----------
Department of the Treasury March 1990
Office of Tax Analysis
* If the Policy is not a modified endowment contract.
** If amounts paid in to fund the IRA are deductible; once over the income
eligibility limits amounts paid into an IRA are permitted but not
deductible.
*** There are several exceptions to the application of the early withdrawal
penalties for annuities, IRAs and qualified pensions.
The foregoing information is not intended as tax advice. You should consult
with your own tax advisor for more complete information.
A-75
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
REPORT OF INDEPENDENT ACCOUNTANTS
To the Policy Owners and Board of Directors of New England Variable Life
Insurance Company:
We have audited the accompanying statement of assets and liabilities of New
England Variable Life Separate Account (comprised of Capital Growth Sub-
Account, Bond Income Sub-Account, Money Market Sub-Account, Stock Index Sub-
Account, Managed Sub-Account, Avanti Growth Sub-Account, Value Growth Sub-
Account, Small Cap Sub-Account, Equity-Income Sub-Account, Overseas Sub-
Account, High Income Sub-Account, and Asset Manager Sub-Account) of New
England Variable Life Insurance Company as of December 31, 1994, and the
related statements of operations and changes in net assets for each of the
periods indicated therein. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments held by the custodian as of
December 31, 1994. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the respective aforementioned
sub-accounts comprising New England Variable Life Separate Account of New
England Variable Life Insurance Company as of December 31, 1994, and the
results of their operations and changes in their net assets for each of the
periods indicated therein, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 3, 1995
A-76
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI
GROWTH INCOME MARKET INDEX MANAGED GROWTH
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund and
Variable Insurance Products Fund, and
Variable Insurance Products Fund II at
market value (Note 2).................... $304,826,810 $20,250,408 $18,328,233 $11,767,226 $16,974,440 $8,143,351
<CAPTION>
SUB-ACCOUNT SHARES COST
- ----------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth... 976,070 $ 294,934,737
Bond Income...... 211,980 22,279,301
Money Market..... 183,282 18,328,233
Stock Index...... 156,209 13,412,970
Managed.......... 130,272 16,271,198
Avanti Growth.... 72,212 7,937,671
Value Growth..... 47,081 5,131,286
Small Cap........ 2,276 215,214
Equity-Income.... 1,503,462 22,928,486
Overseas......... 2,206,564 34,315,959
High Income...... 3,379 36,150
Asset Manager.... 16,410 227,797
Amount due and accrued from policy-related
transactions............................. 184,202 6,345 1,007,405 3,223 (4,968) 28,694
Dividends receivable...................... -- -- 82,924 -- -- --
------------ ----------- ----------- ----------- ------------ ----------
Total Assets............................ 305,011,012 20,256,753 19,418,562 11,770,449 16,969,472 8,172,045
LIABILITIES
Due New England Variable Life Insurance
Company.................................. 55,516,275 3,506,622 2,537,819 2,091,485 2,209,894 1,760,834
------------ ----------- ----------- ----------- ------------ ----------
Total liabilities....................... 55,516,275 3,506,622 2,537,819 2,091,485 2,209,894 1,760,834
------------ ----------- ----------- ----------- ------------ ----------
NET ASSETS FOR VARIABLE LIFE INSURANCE
POLICIES................................. $249,494,737 $16,750,131 $16,880,743 $ 9,678,964 $14,759,578 $6,411,211
============ =========== =========== =========== ============ ==========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
-------------------- ------------------------------- --------- ------------
VALUE SMALL EQUITY- HIGH ASSET
GROWTH CAP INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
---------- -------- ----------- ----------- ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund and
Variable Insurance Products Fund, and
Variable Insurance Products Fund II at
market value (Note 2).................... $5,133,204 $219,876 $23,078,145 $34,576,854 $36,363 $226,294 $443,561,204
<CAPTION>
SUB-ACCOUNT SHARES COST
- ----------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth... 976,070 $ 294,934,737
Bond Income...... 211,980 22,279,301
Money Market..... 183,282 18,328,233
Stock Index...... 156,209 13,412,970
Managed.......... 130,272 16,271,198
Avanti Growth.... 72,212 7,937,671
Value Growth..... 47,081 5,131,286
Small Cap........ 2,276 215,214
Equity-Income.... 1,503,462 22,928,486
Overseas......... 2,206,564 34,315,959
High Income...... 3,379 36,150
Asset Manager.... 16,410 227,797
Amount due and accrued from policy-related
transactions............................. 12,591 16,120 72,148 65,247 -- 5,412 1,396,419
Dividends receivable...................... -- -- -- -- -- -- 82,924
---------- -------- ----------- ----------- ------- --------- ------------
Total Assets............................ 5,145,795 235,996 23,150,293 34,642,101 36,363 231,706 445,040,547
LIABILITIES
Due New England Variable Life Insurance
Company.................................. 1,052,814 45,166 4,018,126 6,773,269 5,941 31,012 79,549,257
---------- -------- ----------- ----------- ------- --------- ------------
Total liabilities....................... 1,052,814 45,166 4,018,126 6,773,269 5,941 31,012 79,549,257
---------- -------- ----------- ----------- ------- --------- ------------
NET ASSETS FOR VARIABLE LIFE INSURANCE
POLICIES................................. $4,092,981 $190,830 $19,132,167 $27,868,832 $30,422 $200,694 $365,491,290
========== ======== =========== =========== ======= ========= ============
</TABLE>
See Notes to Financial Statements
A-77
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI
GROWTH INCOME MARKET INDEX MANAGED GROWTH
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund and
Variable Insurance Products Fund, and
Variable Insurance Products Fund II at
market value (Note 2).................... $337,926,501 $23,472,496 $20,531,037 $14,242,750 $18,862,471 $10,670,113
<CAPTION>
SUB-ACCOUNT SHARES COST
- ----------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth... 1,022,749 $ 309,777,084
Bond Income...... 233,906 24,436,883
Money Market..... 205,310 20,531,037
Stock Index...... 172,535 14,713,688
Managed.......... 134,761 16,884,548
Avanti Growth.... 87,604 9,736,328
Value Growth..... 60,840 6,684,457
Small Cap........ 23,891 2,349,170
Equity-Income.... 2,015,024 30,812,575
Overseas......... 2,497,689 38,741,907
High Income...... 67,305 706,171
Asset Manager.... 89,196 1,221,030
Amount due and accrued from policy-related
transactions............................. 93,383 12,972 217,490 11,263 15,596 41,880
Dividends receivable...................... -- -- 95,221 -- -- --
------------ ----------- ----------- ----------- ----------- -----------
Total Assets............................ 338,019,884 23,485,468 20,843,748 14,254,013 18,878,067 10,711,993
LIABILITIES
Due New England Variable Life Insurance
Company.................................. 62,702,099 4,021,124 3,478,890 2,538,604 2,710,493 2,418,764
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities....................... 62,702,099 4,021,124 3,478,890 2,538,604 2,710,493 2,418,764
------------ ----------- ----------- ----------- ----------- -----------
NET ASSETS FOR VARIABLE LIFE INSURANCE
POLICIES................................. $275,317,785 $19,464,344 $17,364,858 $11,715,409 $16,167,574 $ 8,293,229
============ =========== =========== =========== =========== ===========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
---------------------- -------------------------------- ----------- ------------
VALUE SMALL EQUITY- HIGH ASSET
GROWTH CAP INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
---------- ---------- ----------- ----------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund and
Variable Insurance Products Fund, and
Variable Insurance Products Fund II at
market value (Note 2).................... $7,124,369 $2,447,646 $31,877,675 $38,464,404 $711,411 $1,231,793 $507,562,666
<CAPTION>
SUB-ACCOUNT SHARES COST
- ----------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth... 1,022,749 $ 309,777,084
Bond Income...... 233,906 24,436,883
Money Market..... 205,310 20,531,037
Stock Index...... 172,535 14,713,688
Managed.......... 134,761 16,884,548
Avanti Growth.... 87,604 9,736,328
Value Growth..... 60,840 6,684,457
Small Cap........ 23,891 2,349,170
Equity-Income.... 2,015,024 30,812,575
Overseas......... 2,497,689 38,741,907
High Income...... 67,305 706,171
Asset Manager.... 89,196 1,221,030
Amount due and accrued from policy-related
transactions............................. 54,703 6,186 46,225 16,203 29 (4,931) 510,999
Dividends receivable...................... -- -- -- -- -- -- 95,221
---------- ---------- ----------- ----------- -------- ----------- ------------
Total Assets............................ 7,179,072 2,453,832 31,923,900 38,480,607 711,440 1,226,862 508,168,886
LIABILITIES
Due New England Variable Life Insurance
Company.................................. 1,509,107 440,595 5,516,047 8,351,192 88,222 213,729 93,988,866
---------- ---------- ----------- ----------- -------- ----------- ------------
Total liabilities....................... 1,509,107 440,595 5,516,047 8,351,192 88,222 213,729 93,988,866
---------- ---------- ----------- ----------- -------- ----------- ------------
NET ASSETS FOR VARIABLE LIFE INSURANCE
POLICIES................................. $5,669,965 $2,013,237 $26,407,853 $30,129,415 $623,218 $1,013,133 $414,180,020
========== ========== =========== =========== ======== =========== ============
</TABLE>
See Notes to Financial Statements
A-78
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-----------------------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI VALUE SMALL
GROWTH INCOME MARKET INDEX MANAGED GROWTH GROWTH CAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
------------ ----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income
Dividends....... $ 13,519,083 $ 1,399,070 $691,932 $ 307,159 $ 678,949 $ 43,109 $ 89,817 $ 327
EXPENSE
Mortality and
expense risk
charge (Note
3)............. 1,637,278 107,252 93,830 59,230 86,049 31,737 18,214 28
------------ ----------- -------- ----------- ---------- -------- -------- ------
Net investment
income (loss).. 11,881,805 1,291,818 598,102 247,929 592,900 11,372 71,603 299
NET REALIZED AND
UNREALIZED GAIN
ON INVESTMENTS
Net unrealized
appreciation
(depreciation)
on investments:
Beginning of
period......... 46,100,393 41,284 -- (1,457,732) 1,602,795 143,154 67,310 --
End of period... 9,892,073 (2,028,893) -- (1,645,744) 703,242 205,680 1,918 4,662
------------ ----------- -------- ----------- ---------- -------- -------- ------
Net change in
unrealized
appreciation
(depreciation). (36,208,320) (2,070,177) -- (188,012) (899,553) 62,526 (65,392) 4,662
Net realized
gain (loss) on
investments.... 67,810 1,763 -- 6,200 37,994 542 776 --
------------ ----------- -------- ----------- ---------- -------- -------- ------
Net realized and
unrealized gain
(loss) on
investments.... (36,140,510) (2,068,414) -- (181,812) (861,559) 63,068 (64,616) 4,662
------------ ----------- -------- ----------- ---------- -------- -------- ------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS..... $(24,258,705) $ (776,596) $598,102 $ 66,117 $ (268,659) $ 74,440 $ 6,987 $4,961
============ =========== ======== =========== ========== ======== ======== ======
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
------------------------------------- ------------- -------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT** TOTAL
----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Income
Dividends....... $670,101 $ 69,390 $ -- $ -- $ 17,468,937
EXPENSE
Mortality and
expense risk
charge (Note
3)............. 75,586 133,276 6 34 2,242,520
----------- ----------- ------------- ------------- -------------
Net investment
income (loss).. 594,515 (63,886) (6) (34) 15,226,417
NET REALIZED AND
UNREALIZED GAIN
ON INVESTMENTS
Net unrealized
appreciation
(depreciation)
on investments:
Beginning of
period......... 93,013 700,341 -- -- 47,290,558
End of period... 149,659 260,895 213 (1,503) 7,542,202
----------- ----------- ------------- ------------- -------------
Net change in
unrealized
appreciation
(depreciation). 56,646 (439,446) 213 (1,503) (39,748,356)
Net realized
gain (loss) on
investments.... (929) (471) -- -- 113,685
----------- ----------- ------------- ------------- -------------
Net realized and
unrealized gain
(loss) on
investments.... 55,717 (439,917) 213 (1,503) (39,634,671)
----------- ----------- ------------- ------------- -------------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS..... $650,232 $(503,803) $207 $(1,537) $(24,408,254)
=========== =========== ============= ============= =============
</TABLE>
*For the period May 2, 1994 (Commencement of Operations) through December 31,
1994.
**For the period December 19, 1994 (Commencement of Operations) through
December 31, 1994.
See Notes to Financial Statements
A-79
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
---------------------------------------------------------------------------------------
CAPITAL MONEY STOCK AVANTI
GROWTH BOND INCOME MARKET INDEX MANAGED GROWTH VALUE GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
----------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME
Dividends........................ $14,407,828 $1,721,493 $415,332 $ 286,517 $ 778,823 $ 31,181 $31,108
EXPENSE
Mortality and expense risk charge
(Note 3)........................ 1,317,363 89,763 74,167 40,270 73,721 5,506 3,166
----------- ---------- -------- ---------- ---------- -------- -------
Net investment income (loss)..... 13,090,465 1,631,730 341,165 246,247 705,102 25,675 27,942
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period............. 26,130,492 (62,020) -- (1,863,474) 1,105,911 -- --
End of period................... 46,100,393 41,284 -- (1,457,732) 1,602,795 143,154 67,310
----------- ---------- -------- ---------- ---------- -------- -------
Net change in unrealized
appreciation.................... 19,969,901 103,304 -- 405,742 496,884 143,154 67,310
Net realized gain (loss) on
investments..................... 436,493 84,686 -- (4,995) 93,335 (88) 64
----------- ---------- -------- ---------- ---------- -------- -------
Net realized and unrealized gain
on investments.................. 20,406,394 187,990 -- 400,747 590,219 143,066 67,374
----------- ---------- -------- ---------- ---------- -------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... $33,496,859 $1,819,720 $341,165 $ 646,994 $1,295,321 $168,741 $95,316
=========== ========== ======== ========== ========== ======== =======
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
-------------------------- -----------
EQUITY-INCOME OVERSEAS
SUB-ACCOUNT* SUB-ACCOUNT* TOTAL
------------- ------------ -----------
<S> <C> <C> <C>
INCOME
Dividends........................ $ 46,757 $ -- $17,719,039
EXPENSE
Mortality and expense risk charge
(Note 3)........................ 7,615 17,666 1,629,237
---------- -------- -----------
Net investment income (loss)..... 39,142 (17,666) 16,089,802
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period............. -- -- 25,310,909
End of period................... 93,013 700,341 47,290,558
---------- -------- -----------
Net change in unrealized
appreciation.................... 93,013 700,341 21,979,649
Net realized gain (loss) on
investments..................... (59) 729 610,165
---------- -------- -----------
Net realized and unrealized gain
on investments.................. 92,954 701,070 22,589,814
---------- -------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... $132,096 $683,404 $38,679,616
========== ======== ===========
</TABLE>
* For the period April 30, 1993 (Commencement of Operations) through December
31, 1993.
See Notes to Financial Statements
A-80
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
--------------------------------------------------------------- -----------
CAPITAL BOND MONEY STOCK
GROWTH INCOME MARKET INDEX MANAGED
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Dividends............... $ 2,544,247 $1,038,401 $541,442 $2,971,910 $ 521,129 $ 7,617,129
EXPENSE
Mortality and expense
risk charge (Note 3)... 872,975 57,034 75,654 24,160 51,418 1,081,241
------------ ---------- -------- ---------- --------- -----------
Net investment income... 1,671,272 981,367 465,788 2,947,750 469,711 6,535,888
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net unrealized
appreciation
(depreciation) on
investments:
Beginning of period.... 36,250,872 132,914 -- 767,700 1,283,603 38,435,089
End of period.......... 26,130,492 (62,020) -- (1,863,474) 1,105,911 25,310,909
------------ ---------- -------- ---------- --------- -----------
Net change in unrealized
depreciation........... (10,120,380) (194,934) -- (2,631,174) (177,692) (13,124,180)
Net realized gain on
investments............ 3,522 45,768 -- 14,077 350,133 413,500
------------ ---------- -------- ---------- --------- -----------
Net realized and
unrealized gain (loss)
on investments......... (10,116,858) (149,166) -- (2,617,097) 172,441 (12,710,680)
------------ ---------- -------- ---------- --------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $ (8,445,586) $ 832,201 $465,788 $ 330,653 $ 642,152 $(6,174,792)
============ ========== ======== ========== ========= ===========
</TABLE>
See Notes to Financial Statements
A-81
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-----------------------------------------------------------------------------------------------
SMALL
CAPITAL MONEY STOCK AVANTI VALUE CAP
GROWTH BOND INCOME MARKET INDEX MANAGED GROWTH GROWTH SUB-
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ACCOUNT
----------- ----------- ----------- ----------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME
Dividends........................ $ -- $ -- $276,334 $ -- $ -- $ -- $ -- $ --
EXPENSE
Mortality and expense risk charge
(Note 3)........................ 439,383 30,361 27,486 18,117 24,132 13,409 8,870 1,861
----------- ---------- -------- ---------- ---------- -------- -------- -------
Net investment income (loss)..... (439,383) (30,361) 248,848 (18,117) (24,132) (13,409) (8,870) (1,861)
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period............. 9,892,073 (2,028,893) -- (1,645,744) 703,242 205,680 1,918 4,662
End of period................... 28,149,417 (964,387) -- (470,938) 1,977,923 933,785 439,912 98,476
----------- ---------- -------- ---------- ---------- -------- -------- -------
Net change in unrealized
appreciation (depreciation)..... 18,257,344 1,064,506 -- 1,174,806 1,274,681 728,105 437,994 93,814
Net realized gain (loss) on
investments..................... 56,893 551 -- 1,084 2,791 922 502 153
----------- ---------- -------- ---------- ---------- -------- -------- -------
Net realized and unrealized gain
(loss) on investments........... 18,314,237 1,065,057 -- 1,175,890 1,277,472 729,027 438,496 93,967
----------- ---------- -------- ---------- ---------- -------- -------- -------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS...................... $17,874,854 $1,034,696 $248,848 $1,157,773 $1,253,340 $715,618 $429,626 $92,106
=========== ========== ======== ========== ========== ======== ======== =======
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS PRODUCTS
FUND FUND II
------------------------------- --------- -----------
HIGH ASSET
EQUITY- INCOME MANAGER
INCOME OVERSEAS SUB- SUB-
SUB-ACCOUNT SUB-ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ----------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
INCOME
Dividends........................ $1,499,750 $ 282,521 $ 8,412 $11,896 $ 2,078,913
EXPENSE
Mortality and expense risk charge
(Note 3)........................ 39,589 51,822 392 1,041 656,463
---------- --------- ------- ------- -----------
Net investment income (loss)..... 1,460,161 230,699 8,020 10,855 1,422,450
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period............. 149,659 260,895 213 (1,503) 7,542,202
End of period................... 1,065,100 (277,503) 5,240 10,763 30,967,788
---------- --------- ------- ------- -----------
Net change in unrealized
appreciation (depreciation)..... 915,441 (538,398) 5,027 12,266 23,425,586
Net realized gain (loss) on
investments..................... 1,316 4,086 2 11 68,311
---------- --------- ------- ------- -----------
Net realized and unrealized gain
(loss) on investments........... 916,757 (534,312) 5,029 12,277 23,493,897
---------- --------- ------- ------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS...................... $2,376,918 $(303,613) $13,049 $23,132 $24,916,347
========== ========= ======= ======= ===========
</TABLE>
See Notes to Financial Statements
A-82
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
VARIABLE INSURANCE
NEW ENGLAND ZENITH FUND PRODUCTS FUND
------------------------------------------------------------------------------- -------------------
BOND MONEY AVANTI VALUE EQUITY-
CAPITAL INCOME MARKET STOCK MANAGED GROWTH GROWTH INCOME OVERSEAS
GROWTH SUB- SUB- INDEX SUB- SUB- SUB- SUB- SUB-
SUB-ACCOUNT ACCOUNT ACCOUNT SUB-ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ --------- -------- ----------- ---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income
Dividends....... $ -- $ -- $108,990 $ -- $ -- $ -- $ -- $ 369,654 $ 69,390
Expense
Mortality and
expense risk
charge (Note
3)............. 397,839 26,121 19,344 13,389 21,087 5,619 2,992 9,427 20,300
------------ --------- -------- ----------- ---------- --------- --------- --------- --------
Net investment
income (loss).. (397,839) (26,121) 89,646 (13,389) (21,087) (5,619) (2,992) 360,227 49,090
Net Realized and
Unrealized Gain
(Loss) on In-
vestments
Net unrealized
appreciation
(depreciation)
on investments:
Beginning of pe-
riod........... 46,100,393 41,284 -- (1,457,732) 1,602,795 143,154 67,310 93,013 700,341
End of period... 33,585,082 (571,916) -- (1,865,421) 839,891 (48,802) (47,443) (535,663) 770,768
------------ --------- -------- ----------- ---------- --------- --------- --------- --------
Net change in
unrealized ap-
preciation (de-
preciation).... (12,515,311) (613,200) -- (407,689) (762,904) (191,956) (114,753) (628,676) 70,427
Net realized
gain (loss) on
investments.... -- -- -- -- -- -- -- -- --
------------ --------- -------- ----------- ---------- --------- --------- --------- --------
Net realized and
unrealized gain
(loss) on in-
vestments...... (12,515,311) (613,200) -- (407,689) (762,904) (191,956) (114,753) (628,676) 70,427
------------ --------- -------- ----------- ---------- --------- --------- --------- --------
Net Increase (De-
crease) in Net
Assets Resulting
from Operations. $(12,913,150) $(639,321) $ 89,646 $ (421,078) $(783,991) $(197,575) $(117,745) $(268,449) $119,517
============ ========= ======== =========== ========== ========= ========= ========= ========
<CAPTION>
-------------
TOTAL
-------------
<S> <C>
Income
Dividends....... $ 548,034
Expense
Mortality and
expense risk
charge (Note
3)............. $ 516,118
-------------
Net investment
income (loss).. 31,916
Net Realized and
Unrealized Gain
(Loss) on In-
vestments
Net unrealized
appreciation
(depreciation)
on investments:
Beginning of pe-
riod........... 47,290,558
End of period... 32,126,496
-------------
Net change in
unrealized ap-
preciation (de-
preciation).... (15,164,062)
Net realized
gain (loss) on
investments.... --
-------------
Net realized and
unrealized gain
(loss) on in-
vestments...... (15,164,062)
-------------
Net Increase (De-
crease) in Net
Assets Resulting
from Operations. $(15,132,146)
=============
</TABLE>
See Notes to Financial Statements
A-83
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-----------------------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI VALUE SMALL
GROWTH INCOME MARKET INDEX MANAGED GROWTH GROWTH CAP
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT*
------------ ----------- ------------ ----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment
income (loss)... $ 11,881,805 $ 1,291,818 $ 598,102 $ 247,929 $ 592,900 $ 11,372 $ 71,603 $ 299
Net realized and
unrealized gain
(loss) on
investments..... (36,140,510) (2,068,414) -- (181,812) (861,559) 63,068 (64,616) 4,662
------------ ----------- ------------ ----------- ----------- ----------- ----------- --------
Increase
(decrease) in
net assets
derived from
investment
activities..... (24,258,705) (776,596) 598,102 66,117 (268,659) 74,440 6,987 4,961
FROM POLICY-RELATED
TRANSACTIONS
Net premiums
transferred from
New England
Variable Life
Insurance
Company......... 101,802,783 6,362,705 39,544,492 3,600,140 4,112,835 3,173,029 1,762,484 4,323
Net transfers
(to) from other
sub-accounts.... (1,234,289) (822,617) (29,858,294) 718,688 (186,357) 2,527,486 2,012,595 226,677
Net transfers to
New England
Variable Life
Insurance
Company......... (56,761,722) (4,458,223) (6,161,941) (2,075,140) (3,102,454) (2,027,427) (1,190,128) (45,131)
------------ ----------- ------------ ----------- ----------- ----------- ----------- --------
Increase in net
assets derived
from policy-
related
transactions.... 43,806,772 1,081,865 3,524,257 2,243,688 824,024 3,673,088 2,584,951 185,869
------------ ----------- ------------ ----------- ----------- ----------- ----------- --------
Net increase in
net assets...... 19,548,067 305,269 4,122,359 2,309,805 555,365 3,747,528 2,591,938 190,830
NET ASSETS, AT
BEGINNING OF THE
PERIOD.......... 229,946,670 16,444,862 12,758,384 7,369,159 14,204,213 2,663,683 1,501,043 --
------------ ----------- ------------ ----------- ----------- ----------- ----------- --------
NET ASSETS, AT
END OF THE
PERIOD.......... $249,494,737 $16,750,131 $ 16,880,743 $ 9,678,964 $14,759,578 $ 6,411,211 $ 4,092,981 $190,830
============ =========== ============ =========== =========== =========== =========== ========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------- ---------- -------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT** ACCOUNT** TOTAL
------------ ------------ --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment
income (loss)... $ 594,515 $ (63,886) $ (6) $ (34) $ 15,226,417
Net realized and
unrealized gain
(loss) on
investments..... 55,717 (439,917) 213 (1,503) (39,634,671)
------------ ------------ --------- ---------- -------------
Increase
(decrease) in
net assets
derived from
investment
activities..... 650,232 (503,803) 207 (1,537) (24,408,254)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums
transferred from
New England
Variable Life
Insurance
Company......... 9,237,234 11,268,285 102 8,495 180,876,907
Net transfers
(to) from other
sub-accounts.... 9,868,299 16,487,055 36,048 224,709 --
Net transfers to
New England
Variable Life
Insurance
Company......... (4,905,512) (8,836,370) (5,935) (30,973) (89,600,956)
------------ ------------ --------- ---------- -------------
Increase in net
assets derived
from policy-
related
transactions.... 14,200,021 18,918,970 30,215 202,231 91,275,951
------------ ------------ --------- ---------- -------------
Net increase in
net assets...... 14,850,253 18,415,167 30,422 200,694 66,867,697
NET ASSETS, AT
BEGINNING OF THE
PERIOD.......... 4,281,914 9,453,665 -- -- 298,623,593
------------ ------------ --------- ---------- -------------
NET ASSETS, AT
END OF THE
PERIOD.......... $19,132,167 $27,868,832 $30,422 $200,694 $365,491,290
============ ============ ========= ========== =============
</TABLE>
*For the period May 2, 1994 (Commencement of Operations) through December 31,
1994.
**For the period December 19, 1994 (Commencement of Operations) through
December 31, 1994.
See Notes to Financial Statements
A-84
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI VALUE
GROWTH INCOME MARKET INDEX MANAGED GROWTH GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
------------ ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment
income (loss).. $ 13,090,465 $ 1,631,730 $ 341,165 $ 246,247 $ 705,102 $ 25,675 $ 27,942
Net realized and
unrealized gain
on investments. 20,406,394 187,990 -- 400,747 590,219 143,066 67,374
------------ ----------- ----------- ---------- ----------- ---------- ----------
Increase in net
assets derived
from investment
activities..... 33,496,859 1,819,720 341,165 646,994 1,295,321 168,741 95,316
FROM POLICY-
RELATED
TRANSACTIONS
Net premiums
transferred
from New
England
Variable Life
Insurance
Company........ 88,880,791 5,429,522 27,439,024 2,696,124 3,325,220 579,106 252,321
Net transfers
(to) from other
sub-accounts... (185,104) 1,155,530 (22,054,415) 1,088,665 1,967,320 2,787,043 1,529,391
Net transfers to
New England
Variable Life
Insurance
Company........ (41,091,866) (2,588,466) (5,031,875) (1,483,033) (1,785,088) (871,207) (375,985)
------------ ----------- ----------- ---------- ----------- ---------- ----------
Increase in net
assets derived
from policy-
related
transactions... 47,603,821 3,996,586 352,734 2,301,756 3,507,452 2,494,942 1,405,727
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net increase in
net assets..... 81,100,680 5,816,306 693,899 2,948,750 4,802,773 2,663,683 1,501,043
NET ASSETS, AT
BEGINNING OF
THE PERIOD..... 148,845,990 10,628,556 12,064,485 4,420,409 9,401,440 -- --
------------ ----------- ----------- ---------- ----------- ---------- ----------
NET ASSETS, AT
END OF THE
PERIOD......... $229,946,670 $16,444,862 $12,758,384 $7,369,159 $14,204,213 $2,663,683 $1,501,043
============ =========== =========== ========== =========== ========== ==========
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
-------------------------- -------------
EQUITY-INCOME OVERSEAS
SUB-ACCOUNT* SUB-ACCOUNT* TOTAL
------------- ------------ -------------
<S> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment
income (loss).. $ 39,142 $ (17,666) $ 16,089,802
Net realized and
unrealized gain
on investments. 92,954 701,070 22,589,814
------------- ------------ -------------
Increase in net
assets derived
from investment
activities..... 132,096 683,404 38,679,616
FROM POLICY-
RELATED
TRANSACTIONS
Net premiums
transferred
from New
England
Variable Life
Insurance
Company........ 964,191 1,568,988 131,135,287
Net transfers
(to) from other
sub-accounts... 4,320,708 9,390,862 --
Net transfers to
New England
Variable Life
Insurance
Company........ (1,135,081) (2,189,589) (56,552,190)
------------- ------------ -------------
Increase in net
assets derived
from policy-
related
transactions... 4,149,818 8,770,261 74,583,097
------------- ------------ -------------
Net increase in
net assets..... 4,281,914 9,453,665 113,262,713
NET ASSETS, AT
BEGINNING OF
THE PERIOD..... -- -- 185,360,880
------------- ------------ -------------
NET ASSETS, AT
END OF THE
PERIOD......... $4,281,914 $9,453,665 $298,623,593
============= ============ =============
</TABLE>
* For the period April 30, 1993 (Commencement of Operations) through December
31, 1993.
See Notes to Financial Statements
A-85
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
----------------------------------------------------------------- ------------
CAPITAL BOND MONEY STOCK
GROWTH INCOME MARKET INDEX MANAGED
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------ ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment income.. $ 1,671,272 $ 981,367 $ 465,788 $ 2,947,750 $ 469,711 $ 6,535,888
Net realized and
unrealized gain (loss)
on investments........ (10,116,858) (149,166) -- (2,617,097) 172,441 (12,710,680)
------------ ----------- ------------ ----------- ----------- ------------
Increase (decrease) in
net assets derived
from investment
activities........... (8,445,586) 832,201 465,788 330,653 642,152 (6,174,792)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums
transferred from New
England Variable Life
Insurance Company..... 67,808,576 3,248,052 24,616,186 1,485,555 2,274,457 99,432,826
Net transfers (to) from
other sub-accounts.... 16,957,727 1,845,009 (19,527,266) 849,096 (124,566) --
Net transfers to New
England Variable Life
Insurance Company..... (50,969,349) (2,798,256) (4,457,696) (1,217,417) (1,765,986) (61,208,704)
------------ ----------- ------------ ----------- ----------- ------------
Increase in net assets
derived from policy-
related transactions.. 33,796,954 2,294,805 631,224 1,117,234 383,905 38,224,122
------------ ----------- ------------ ----------- ----------- ------------
Net increase in net
assets................ 25,351,368 3,127,006 1,097,012 1,447,887 1,026,057 32,049,330
NET ASSETS, AT
BEGINNING OF THE
PERIOD................ 123,494,622 7,501,550 10,967,473 2,972,522 8,375,383 153,311,550
------------ ----------- ------------ ----------- ----------- ------------
NET ASSETS, AT END OF
THE PERIOD............ $148,845,990 $10,628,556 $ 12,064,485 $ 4,420,409 $ 9,401,440 $185,360,880
============ =========== ============ =========== =========== ============
</TABLE>
See Notes to Financial Statements
A-86
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI VALUE SMALL
GROWTH INCOME MARKET INDEX MANAGED GROWTH GROWTH CAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment
income (loss).. $ (439,383) $ (30,361) $ 248,848 $ (18,117) $ (24,132) $ (13,409) $ (8,870) $ (1,861)
Net realized and
unrealized gain
(loss) on
investments.... 18,314,237 1,065,057 -- 1,175,890 1,277,472 729,027 438,496 93,967
------------ ----------- ----------- ----------- ----------- ---------- ---------- ----------
Increase
(decrease) in
net assets
derived from
investment
activities..... 17,874,854 1,034,696 248,848 1,157,773 1,253,340 715,618 429,626 92,106
FROM POLICY-
RELATED
TRANSACTIONS
Net premiums
transferred
from New
England
Variable Life
Insurance
Company........ 25,722,175 1,780,708 9,465,300 986,905 1,099,252 1,115,160 741,646 226,111
Net transfers
(to) from other
sub-accounts... (3,905,585) 1,017,980 (7,907,360) 565,572 112,558 933,440 974,824 1,899,579
Net transfers to
New England
Variable Life
Insurance
Company........ (13,868,396) (1,119,171) (1,322,673) (673,805) (1,057,154) (882,200) (569,112) (395,389)
------------ ----------- ----------- ----------- ----------- ---------- ---------- ----------
Increase in net
assets derived
from policy-
related
transactions... 7,948,194 1,679,517 235,267 878,672 154,656 1,166,400 1,147,358 1,730,301
------------ ----------- ----------- ----------- ----------- ---------- ---------- ----------
Net increase in
net assets..... 25,823,048 2,714,213 484,115 2,036,445 1,407,996 1,882,018 1,576,984 1,822,407
NET ASSETS, AT
BEGINNING OF
THE PERIOD..... 249,494,737 16,750,131 16,880,743 9,678,964 14,759,578 6,411,211 4,092,981 190,830
------------ ----------- ----------- ----------- ----------- ---------- ---------- ----------
NET ASSETS, AT
END OF THE
PERIOD......... $275,317,785 $19,464,344 $17,364,858 $11,715,409 $16,167,574 $8,293,229 $5,669,965 $2,013,237
============ =========== =========== =========== =========== ========== ========== ==========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
------------------------------------ ----------- -------------
HIGH ASSET
INCOME MANAGER
EQUITY-INCOME OVERSEAS SUB- SUB-
SUB-ACCOUNT SUB-ACCOUNT ACCOUNT ACCOUNT TOTAL
------------- ------------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net investment
income (loss).. $ 1,460,161 $ 230,699 $ 8,020 $ 10,855 $1,422,450
Net realized and
unrealized gain
(loss) on
investments.... 916,757 (534,312) 5,029 12,277 23,493,897
------------- ------------ --------- ----------- -------------
Increase
(decrease) in
net assets
derived from
investment
activities..... 2,376,918 (303,613) 13,049 23,132 24,916,347
FROM POLICY-
RELATED
TRANSACTIONS
Net premiums
transferred
from New
England
Variable Life
Insurance
Company........ 2,792,818 4,383,055 45,649 112,441 48,471,220
Net transfers
(to) from other
sub-accounts... 4,290,808 541,432 618,437 858,315 --
Net transfers to
New England
Variable Life
Insurance
Company........ (2,184,858) (2,360,291) (84,339) (181,449) (24,698,837)
------------- ------------ --------- ----------- -------------
Increase in net
assets derived
from policy-
related
transactions... 4,898,768 2,564,196 579,747 789,307 23,772,383
------------- ------------ --------- ----------- -------------
Net increase in
net assets..... 7,275,686 2,260,583 592,796 812,439 48,688,730
NET ASSETS, AT
BEGINNING OF
THE PERIOD..... 19,132,167 27,868,832 30,422 200,694 365,491,290
------------- ------------ --------- ----------- -------------
NET ASSETS, AT
END OF THE
PERIOD......... $26,407,853 $30,129,415 $623,218 $1,013,133 $414,180,020
============= ============ ========= =========== =============
</TABLE>
See Notes to Financial Statements
A-87
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK AVANTI VALUE
GROWTH INCOME MARKET INDEX MANAGED GROWTH GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
From Investment
Activities
Net investment
income (loss).. $ (397,839) $ (26,121) $ 89,646 $ (13,389) $ (21,087) $ (5,619) $ (2,992)
Net realized and
unrealized gain
(loss) on
investments.... (12,515,311) (613,200) -- (407,689) (762,904) (191,956) (114,753)
------------ ----------- ----------- ---------- ----------- ---------- ----------
Increase
(decrease) in
net assets
derived from
investment
activities..... (12,913,150) (639,321) 89,646 (421,078) (783,991) (197,575) (117,745)
From Policy-Re-
lated Transac-
tions
Net premiums
transferred
from New En-
gland Variable
Life Insurance
Company........ 24,821,435 1,527,273 9,207,969 800,105 1,018,233 547,155 250,281
Net transfers
(to) from other
sub-accounts... 208,123 (304,609) (7,757,679) 278,059 (298,321) 678,748 439,767
Net transfers to
New England
Variable Life
Insurance Com-
pany........... (14,167,009) (1,022,593) (1,022,211) (635,420) (560,487) (427,514) (183,687)
------------ ----------- ----------- ---------- ----------- ---------- ----------
Increase in net
assets derived
from policy-re-
lated transac-
tions.......... 10,862,549 200,071 428,079 442,744 159,425 798,389 506,361
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net increase
(decrease) in
net assets..... (2,050,601) (439,250) 517,725 21,666 (624,566) 600,814 388,616
Net Assets, at
beginning of the
period.......... 229,946,670 16,444,862 12,758,384 7,369,159 14,204,213 2,663,683 1,501,043
------------ ----------- ----------- ---------- ----------- ---------- ----------
Net Assets, at
end of the peri-
od.............. $227,896,069 $16,005,612 $13,276,109 $7,390,825 $13,579,647 $3,264,497 $1,889,659
============ =========== =========== ========== =========== ========== ==========
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
------------------------- -------------
EQUITY-
INCOME OVERSEAS
SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------ ------------ -------------
<S> <C> <C> <C>
From Investment
Activities
Net investment
income (loss).. $ 360,227 $ 49,090 $ 31,916
Net realized and
unrealized gain
(loss) on
investments.... (628,676) 70,427 (15,164,062)
------------ ------------ -------------
Increase
(decrease) in
net assets
derived from
investment
activities..... (268,449) 119,517 (15,132,146)
From Policy-Re-
lated Transac-
tions
Net premiums
transferred
from New En-
gland Variable
Life Insurance
Company........ 1,007,038 1,685,466 40,864,955
Net transfers
(to) from other
sub-accounts... 1,959,302 4,796,610 --
Net transfers to
New England
Variable Life
Insurance Com-
pany........... (936,094) (1,833,389) (20,788,404)
------------ ------------ -------------
Increase in net
assets derived
from policy-re-
lated transac-
tions.......... 2,030,246 4,648,687 20,076,551
------------ ------------ -------------
Net increase
(decrease) in
net assets..... 1,761,797 4,768,204 4,944,405
Net Assets, at
beginning of the
period.......... 4,281,914 9,453,665 298,623,593
------------ ------------ -------------
Net Assets, at
end of the peri-
od.............. $6,043,711 $14,221,869 $303,567,998
============ ============ =============
</TABLE>
See Notes to Financial Statements
A-88
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(INFORMATION WITH RESPECT TO THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND
1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. New England Variable Life Separate Account (the "Account") of New England
Variable Life Insurance Company ("NEVLICO"), was established by NEVLICO's
Board of Directors on January 31, 1983 in accordance with the regulations of
the Delaware Insurance Department. NEVLICO is a wholly-owned subsidiary of New
England Mutual Life Insurance Company ("The New England"). The Account is
registered as a unit investment trust under the Investment Company Act of
1940. The assets of the Account are owned by NEVLICO. However, that portion of
the Account assets equal to the reserves and other liabilities of the Account
may not be charged with liabilities that arise out of any other business
NEVLICO may conduct.
2. The Account has twelve investment sub-accounts each of which invests in the
shares of one portfolio of New England Zenith Fund ("Zenith Fund"), the
Variable Insurance Products Fund or the Variable Insurance Products Fund II.
The portfolios of the Zenith Fund, the Variable Insurance Products Fund and
Variable Insurance Products Fund II in which the sub-accounts invest are
referred to herein as the "Eligible Funds." The Zenith Fund, the Variable
Insurance Products Fund and Variable Insurance Products Fund II are
diversified, open-end management investment companies. The Account purchases
or redeems shares of the twelve Eligible Funds based on the amount of net
premiums invested in the Account, transfers among the sub-accounts, policy
loans, surrender payments, and death benefit payments. The values of the
shares of the Eligible Funds are determined as of the close of the New York
Stock Exchange (normally 4:00 p.m. Boston time) on each day the Exchange is
open for trading. Realized gains and losses on the sale of the Eligible Funds'
shares are computed on the basis of identified cost on the trade date. Income
from dividends is recorded on the ex-dividend date.
3. Certain deductions are made from each premium payment paid to NEVLICO to
arrive at a net premium that is transferred to the Account, and certain
deductions are made from the variable life insurance policies' cash value.
These deductions include sales load, administrative expenses, a risk charge,
premium taxes and the cost of providing insurance protection. Charges for
investment advisory fees and other expenses are deducted from the assets of
the Eligible Funds.
NEVLICO charges the Account for mortality and expense risks NEVLICO assumes.
Currently, the charges are made daily at an effective annual rate of .35% of
the Account assets attributable to fixed premium variable life policies, .45%
of the Account assets attributable to single premium variable life policies,
.60% of the Account assets attributable to variable ordinary life policies and
limited payment variable life policies, and .90% of the Account assets
attributable to variable survivorship life policies.
4. For federal income tax purposes the Account's operations are included with
those of NEVLICO. NEVLICO intends to make appropriate charges against the
Account in the future if and when tax liabilities arise.
5. The Back Bay Advisors Bond Income, Back Bay Advisors Money Market and Back
Bay Advisors Managed Series of the Zenith Fund receive investment advice from
Back Bay Advisors, L.P. ("Back Bay Advisors"), an indirect subsidiary of The
New England. Capital Growth Management Limited Partnership ("CGM") serves as
investment adviser to the Capital Growth Series. Loomis, Sayles serves as
investment adviser to the Loomis Sayles Avanti Growth Series and the Loomis
Sayles Small Cap Series, and Westpeak Investment Advisers, L.P. ("Westpeak")
serves as investment adviser to the Westpeak Stock Index Series and the
Westpeak Value Growth Series. Back Bay Advisors served as investment adviser
to the Westpeak Stock Index Series until August 2, 1993, when Westpeak became
the investment adviser pursuant to an advisory agreement that was approved by
shareholders of the Westpeak Stock Index Series on July 14, 1993. Loomis,
Sayles, Westpeak, and CGM are indirect subsidiaries of The New England. The
Equity-Income, Overseas, and High Income Portfolios of the Variable Insurance
Products Fund and the Asset Manager Portfolio of the Variable Insurance
Products Fund II receive investment advice from Fidelity Management & Research
Company.
A-89
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
OF
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(INFORMATION WITH RESPECT TO THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND
1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--continued
6. The following table shows the aggregate cost of shares purchased and
proceeds from sales of each sub-account as of December 31, 1994:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Capital Growth..................................... $164,839,394 $104,764,194
Bond Income........................................ 12,808,505 9,812,380
Money Market....................................... 55,266,374 50,824,342
Stock Index........................................ 6,625,186 3,854,139
Managed............................................ 8,429,317 6,603,077
Avanti Growth...................................... 7,196,134 2,478,839
Value Growth....................................... 4,869,047 1,506,335
Small Cap.......................................... 231,338 5
Fidelity Equity-Income............................. 24,975,998 7,189,332
Fidelity Overseas.................................. 32,894,034 9,110,672
Fidelity High Income............................... 36,150 --
Fidelity Asset Manager............................. 245,398 6,777
</TABLE>
7. The following tables show the net investment return of the sub-accounts for
each type of variable life insurance policy investing in the Account. The net
investment return reflects the appropriate mortality and expense risk charge
against sub-account assets for each type of variable life insurance policy
shown. These figures do not reflect charges deducted from premiums and cash
values of the policies. Such charges will affect the actual cash values and
benefits of the policies. Certain amounts in 1988, 1989, and 1990 have been
recalculated to conform with the current presentation.
FIXED PREMIUM ("ZENITH LIFE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
-----------------------------------------------------------------------------------------
1/1/85- 1/1/86- 1/1/87- 1/1/88- 1/1/89 - 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth.......... 67.51% 94.53% 52.17% -9.11% 30.30% -3.82% 53.45% -6.38% 14.57% -8.06%
Bond Income............. 18.34% 14.43% 1.91% 7.99% 11.91% 7.71% 17.55% 7.80% 12.22% -3.91%
Money Market............ 7.88% 6.43% 6.16% 7.14% 8.87% 7.81% 5.84% 3.43% 2.61% 3.65%
<CAPTION>
5/1/87- 1/1/88- 1/1/89 - 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock-Index............................... -12.40% 15.93% 29.70% -4.48% 29.98% 6.92% 9.34% 0.71%
Managed................................... -.89% 9.10% 18.67% 2.85% 19.75% 6.33% 10.26% -1.53%
<CAPTION>
4/30/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Avanti Growth................................................................................... 14.47% -1.70%
Value Growth.................................................................................... 13.97% -1.86%
<CAPTION>
1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Equity-Income.......................................................................... 17.88% 6.55%
Fidelity Overseas............................................................................... 36.87% 0.85%
<CAPTION>
5/2/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap................................................................................................ -4.23%
<CAPTION>
1/1/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity High Income..................................................................................... -1.80%
Fidelity Asset Manager................................................................................... -6.76%
</TABLE>
A-90
<PAGE>
SINGLE PREMIUM ("ZENITH LIFE ONE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
-----------------------------------------------------------------------------------------
1/1/85- 1/1/86- 1/1/87- 1/1/88- 1/1/89- 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth.......... 67.34% 94.33% 52.02% -9.20% 30.17% -3.91% 53.29% -6.47% 14.46% -8.16%
Bond Income............. 18.23% 14.32% 1.81% 7.88% 11.79% 7.60% 17.43% 7.69% 12.10% -4.01%
Money Market............ 7.78% 6.32% 6.05% 7.03% 8.77% 7.71% 5.74% 3.33% 2.51% 3.54%
<CAPTION>
5/1/87- 1/1/88- 1/1/89- 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index............................... -12.46% 15.82% 29.57% -4.58% 29.85% 6.81% 9.23% 0.60%
Managed................................... -.96% 8.99% 18.55% 2.75% 19.63% 6.22% 10.15% -1.63%
<CAPTION>
4/30/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Avanti Growth................................................................................... 14.39% -1.80%
Value Growth.................................................................................... 13.90% -1.96%
<CAPTION>
1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Equity-Income.......................................................................... 17.76% 6.44%
Fidelity Overseas............................................................................... 36.74% 0.75%
<CAPTION>
5/2/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap................................................................................................ -4.30%
<CAPTION>
1/1/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity High Income..................................................................................... -1.90%
Fidelity Asset Manager................................................................................... -6.85%
</TABLE>
VARIABLE ORDINARY ("ZENITH LIFE PLUS" AND "ZENITH LIFE PLUS II") AND LIMITED
PAYMENT ("ZENITH LIFE EXECUTIVE 65") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
-----------------------------------------------------------------------------------------
1/1/85- 1/1/86- 1/1/87- 1/1/88- 1/1/89- 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth.......... 67.09% 94.04% 51.79% -9.36% 30.80% -4.64% 53.06% -6.61% 14.28% -8.30%
Bond Income............. 18.05% 14.15% 1.65% 7.63% 11.68% 7.48% 17.25% 7.53% 11.94% -4.16%
Money Market............ 7.61% 6.16% 5.89% 6.94% 8.58% 7.50% 5.58% 3.18% 2.36% 3.39%
<CAPTION>
5/1/87- 1/1/88- 1/1/89- 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index............................... -12.55% 14.67% 32.72% -6.33% 29.65% 6.65% 9.07% 0.45%
Managed................................... -1.06% 8.43% 19.83% 1.72% 19.45% 6.06% 9.99% -1.78%
<CAPTION>
4/30/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Avanti Growth................................................................................... 14.28% -1.94%
Value Growth.................................................................................... 13.78% -2.11%
<CAPTION>
1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Equity-Income.......................................................................... 17.59% 6.28%
Fidelity Overseas............................................................................... 36.53% 0.59%
<CAPTION>
5/2/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap................................................................................................ -4.40%
<CAPTION>
1/1/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity High Income..................................................................................... -2.05%
Fidelity Asset Manager................................................................................... -7.00%
</TABLE>
A-91
<PAGE>
VARIABLE ORDINARY ("ZENITH SURVIVORSHIP LIFE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
-----------------------------------------------------------------------------------------
1/1/85- 1/1/86- 1/1/87- 1/1/88- 1/1/89- 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth.......... 66.59% 93.46% 51.34% -9.63% 30.41% -4.92% 52.61% -6.90% 13.94% -8.57%
Bond Income............. 17.70% 13.81% 1.35% 7.30% 11.34% 7.16% 16.90% 7.21% 11.60% -4.45%
Money Market............ 7.29% 5.85% 5.57% 6.62% 8.25% 7.18% 5.26% 2.87% 2.05% 3.08%
<CAPTION>
5/1/87- 1/1/88- 1/1/89- 1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index............................... -12.73% 14.32% 32.33% -6.61% 29.27% 6.33% 8.74% 0.15%
Managed................................... -1.26% 8.10% 19.47% 1.42% 19.10% 5.74% 9.69% -2.07%
<CAPTION>
4/30/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Avanti Growth................................................................................... 14.05% -2.24%
Value Growth.................................................................................... 13.55% -2.40%
<CAPTION>
1/1/93- 1/1/94-
SUB-ACCOUNT 12/31/93 12/31/94
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Equity-Income.......................................................................... 17.23% 5.96%
Fidelity Overseas............................................................................... 36.12% 0.29%
<CAPTION>
5/2/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap................................................................................................ -4.59%
<CAPTION>
1/1/94-
SUB-ACCOUNT 12/31/94
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity High Income..................................................................................... -2.34%
Fidelity Asset Manager................................................................................... -7.28%
</TABLE>
The net investment return of a sub-account is calculated by taking the
difference between the sub-account's ending value and beginning value for the
period and dividing it by the beginning value for the period.
A-92
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of New England Variable Life
Insurance Company:
We have audited the accompanying balance sheets of New England Variable Life
Insurance Company (a wholly-owned subsidiary of New England Mutual Life
Insurance Company) as of December 31, 1994 and 1993, and the related
statements of operations, surplus, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New England Variable Life
Insurance Company as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Insurance Department of
the State of Delaware, which are considered generally accepted accounting
principles for wholly-owned stock life insurance subsidiaries of mutual life
insurance companies.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 24, 1995
A-93
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1994 1993 1995
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Bonds................................ $ 7,828,833 $ 7,987,043 $7,701,093
Mortgage loan........................ 2,221,942 2,230,000 2,219,110
Policy loans......................... 43,967,343 30,673,718 46,446,322
Cash and short-term investments...... 10,669,045 21,282,674 18,704,054
Accrued investment income............ 1,377,286 1,061,822 1,530,001
Federal income tax receivable........ -- -- 2,433,950
Premiums deferred and uncollected.... 6,892,888 5,452,658 10,223,184
Due from separate account, net....... 79,549,258 63,855,885 93,988,866
Due from New England Mutual Life
Insurance Company................... 1,889,855 475,007 7,402,390
Other assets......................... 814,991 1,636,853 2,842,805
Separate account assets.............. 445,040,547 362,479,478 508,168,886
------------ ------------ ------------
Total assets..................... $600,251,988 $497,135,138 $701,660,661
============ ============ ============
LIABILITIES AND SURPLUS
Policy reserves...................... $ 44,648,304 $ 26,905,146 $65,852,227
Due New England Mutual Life Insurance
Company............................. 3,219,350 7,917,908 8,796,244
Notes Payable........................ -- -- 25,000,000
Federal income taxes................. 4,611,653 1,644,852 --
Accrued expenses..................... 4,746,096 2,866,665 1,135,952
Other liabilities.................... 1,120,620 735,987 5,579,830
Separate account liabilities......... 445,040,547 362,479,478 508,168,886
------------ ------------ ------------
Total liabilities................ 503,386,570 402,550,036 614,533,139
Surplus:
Common stock (shares authorized:
50,000; issued and outstanding:
20,000; par value $125)........... 2,500,000 2,500,000 2,500,000
Paid-in capital in excess of par
value............................. 117,709,808 107,709,808 117,709,808
Unassigned surplus................. (23,481,592) (15,831,154) (33,225,921)
Asset valuation reserve.......... 137,202 206,448 143,635
------------ ------------ ------------
Total surplus.................... 96,865,418 94,585,102 87,127,522
------------ ------------ ------------
Total liabilities and surplus.... $600,251,988 $497,135,138 $701,660,661
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-94
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
-------------------------- -------------------------
MARCH 31, MARCH 31,
1994 1993 1995 1994
------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Income:
Premiums.............. $201,732,909 $146,137,792 $ 58,304,402 $41,698,085
Investment income..... 3,093,024 2,724,046 853,160 773,423
------------ ------------ ------------ -----------
204,825,933 148,861,838 59,157,562 42,471,508
Expenses:
Death and other
benefits............. 23,345,664 18,207,816 8,597,141 5,469,083
Increase in policy
reserves............. 17,743,158 5,573,679 21,203,923 6,986,930
Commissions........... 37,220,361 29,849,384 8,482,194 8,216,377
Net transfers to
separate account..... 87,853,704 58,823,455 23,981,027 19,712,621
General and
administrative....... 43,395,223 31,727,803 8,953,519 9,667,168
------------ ------------ ------------ -----------
209,558,110 144,182,137 71,217,804 50,052,179
------------ ------------ ------------ -----------
Income (loss) before
provision for taxes.... (4,732,177) 4,679,701 (12,060,242) (7,580,671)
Provision for (benefit
of) income taxes....... 2,968,375 5,066,507 (2,431,450) (1,814,000)
------------ ------------ ------------ -----------
Net loss from operations
before realized capital
losses................. (7,700,552) (386,806) (9,628,792) (5,766,671)
Net realized investment
gains (losses) less
capital gains tax of $0
in 1994 and $4,916 in
1993................... 9 (5,780) -- --
------------ ------------ ------------ -----------
Net loss................ $ (7,700,543) $ (392,586) $ (9,628,792) $(5,766,671)
============ ============ ============ ===========
STATEMENTS OF SURPLUS
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
-------------------------- -------------------------
MARCH 31, MARCH 31,
1994 1993 1995 1994
------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Surplus, beginning of
year................... $ 94,585,102 $ 69,988,844 $96,865,418 $94,585,102
Net loss................ (7,700,543) (392,586) (9,628,792) (5,766,671)
Change in non-admitted
assets................. (19,141) (11,156) (109,104) (21,172)
Paid-in capital......... 10,000,000 25,000,000 -- --
------------ ------------ ------------ -----------
Surplus, end of year.... $ 96,865,418 $ 94,585,102 $87,127,522 $88,797,259
============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-95
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
--------------------------- --------------------------
MARCH 31, MARCH 31,
1994 1993 1995 1994
------------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from
operating activities:
Insurance premiums
and other
considerations...... $ 199,670,506 $143,259,367 $ 55,171,671 $ 43,554,799
Investment income.... 2,773,220 2,479,596 642,733 661,132
Benefits............. (23,510,882) (18,036,117) (8,338,501) (7,019,536)
Expenses and taxes... (80,900,670) (62,011,687) (23,873,989) (18,921,765)
Net transfers to
separate account.... (103,547,077) (72,721,602) (38,420,636) (29,885,192)
Net increase in
policy loans........ (13,293,625) (9,308,284) (2,478,980) (3,151,012)
Other disbursements,
net................. (1,972,032) (2,914,732) 201,220 9,992,547
------------- ------------ ------------ ------------
Net cash flows used
in operating
activities........ (20,780,560) (19,253,459) (17,096,482) (4,769,027)
Cash flows from
investing activities:
Proceeds of long-term
investments sold,
matured or repaid
(net of tax)........ 166,942 576,687 131,491 21,899
Cost of long-term
investments
acquired............ (11) (922) -- --
------------- ------------ ------------ ------------
Net cash flows from
investing
activities........ 166,931 575,765 131,491 21,899
Cash flows from
financing activities:
Paid-in capital...... 10,000,000 25,000,000 -- --
Notes Payable........ -- -- 25,000,000 --
------------- ------------ ------------ ------------
Net cash flows......... (10,613,629) 6,322,306 8,035,009 (4,747,128)
Cash and short-term
investments, beginning
of year............... 21,282,674 14,960,368 10,669,045 21,282,674
------------- ------------ ------------ ------------
Cash and short-term
investments, end of
year.................. $ 10,669,045 $ 21,282,674 $ 18,704,054 $ 16,535,546
============= ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-96
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
(INFORMATION WITH RESPECT TO THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND
1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. GENERAL:
New England Variable Life Insurance Company (the "Company") is a wholly-
owned stock life insurance subsidiary of New England Mutual Life Insurance
Company ("The New England"). The Company is authorized to transact variable
life insurance business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The Company prepares its statutory financial statements, except as to form,
in accordance with accounting practices prescribed or permitted by the
Insurance Department of the State of Delaware, which are currently considered
generally accepted accounting principles (GAAP) for wholly-owned stock life
insurance subsidiaries of a mutual life insurance company. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as state laws,
regulations, and general administrative rules. Permitted accounting practices
encompass all accounting practices not so prescribed.
The Financial Accounting Standards Board (FASB) issued Interpretation No.
40, Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises, and Statement of Financial Accounting
Standards No. 120, Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts. The American Institute of Certified Public
Accountants issued Statement of Position 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. Neither of these
groups has a role in establishing regulatory accounting practices. These
pronouncements will require stock life subsidiaries of a mutual life insurance
company parent to modify their financial statements in order for them to
continue to be in accordance with generally accepted accounting principles,
effective for 1996 financial statements. The manner in which policy reserves,
new business acquisition costs, asset valuations and the related tax effects
are recorded will change. Management has not determined the impact of such
changes on its financial statements.
Certain amounts from the 1993 financial statements have been reclassified to
conform with the 1994 presentation.
INVESTED ASSETS
Carrying values of bonds have been determined in accordance with methods and
values adopted by the National Association of Insurance Commissioners. Bonds
are carried primarily at amortized cost.
The Company's mortgage loans on real estate are carried at outstanding
principal balance or amortized cost. The estimated fair value of these loans
is determined using an internal matrix based on market rates and a credit
rating system. The Company establishes investment valuation reserves equal to
the amount by which the admitted value of each mortgage loan that has been
modified, is delinquent 90 days or more, or is in the process of modification,
exceeds the estimated fair value of its underlying collateral. These
investment valuation reserves are adjusted annually based on current
valuations.
Policy loans are carried at the aggregate of the unpaid balances. Policy
loans are an integral part of insurance products and have no maturity dates.
Consequently, it is not practicable to value these instruments.
Short term investments are carried principally at cost, which approximates
fair value, and include securities with a maturity date at purchase of less
than one year.
Realized gains and losses on the sales of investments are determined on the
specific identification method. See Note 3 for accounting treatment of
realized gains and losses attributable to interest rate changes. Unrealized
gains and losses are accounted for as direct increases or decreases in
surplus.
A-97
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
(INFORMATION WITH RESPECT TO THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND
1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
SEPARATE ACCOUNT
Assets and liabilities held in the separate account are included as separate
captions on the balance sheet. The statements of operations include the general
account business and the net transfers to the separate account. The separate
account's net transfers, investment income, realized and unrealized capital
gains and losses, and investment expenses are offset by corresponding increases
or decreases in reserves required to provide for future payments to
policyholders. These assets consist principally of investments in mutual funds
and are carried at fair value.
VARIABLE LIFE RESERVES
Reserves for variable life insurance policies are developed using the 1958
and 1980 Commissioners' Standard Ordinary Mortality Tables on the Net Level
Premium Method, the Net Single Premium Method, or the Modified Full Preliminary
Term Method with assumed interest rates ranging from 4% to 5%.
DUE FROM SEPARATE ACCOUNT, NET
The Company records as a receivable amounts that are due from the separate
account for policy charges (including cost of insurance charges, administrative
charges and minimum death benefit charges), and amounts held for policy account
values in excess of the statutory reserve.
Amounts held in excess of the reserve cannot be transferred unless the policy
is terminated or the policy account value is withdrawn.
Actual transfers from the separate account to the general account for the
policy charges are made on a periodic basis to reduce this receivable. The
components of the amount due from the separate account, net as of December 31,
1994 and December 31, 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Account values in excess of reserves................ $75,718,686 $60,722,683
Policy charges...................................... 3,830,572 3,133,202
----------- -----------
Total............................................. $79,549,258 $63,855,885
=========== ===========
</TABLE>
RECOGNITION OF PREMIUM REVENUE AND RELATED EXPENSES
Variable life premium revenue is recognized during the premium paying period.
Commissions and other expenses in connection with acquiring new business are
charged to current operations as incurred.
FEDERAL INCOME TAXES
The Company's federal income tax return is consolidated with The New England.
The method of allocation between the companies is subject to a tax sharing
agreement, and allocation is based upon separate return calculations with
current credit for net losses. Net operating loss carryforwards to the extent
not previously reimbursed will be utilized as a deduction before determining
the tax liability to The New England.
3. INVESTMENT RESERVES AND INTEREST MAINTENANCE RESERVE:
The Asset Valuation Reserve (AVR) is designed to mitigate the effect of
valuation and credit-related losses on unassigned surplus. The AVR covers all
invested asset classes with risk of loss, including bonds, common stock,
mortgage loans and real estate. This balance has been classified under the
surplus caption within the balance sheet. This presentation differs from the
Company's statutory filing, however, in management's opinion, it is consistent
with industry practice which considers such reserves part of surplus.
A-98
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
(INFORMATION WITH RESPECT TO THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND
1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The Interest Maintenance Reserve (IMR) accumulates realized capital gains and
losses on the sale of all types of fixed income securities which result from
changes in the overall level of interest rates. These gains are amortized into
operating income over the remaining life of each investment sold. The IMR is
included in Other liabilities and amounted to $75,451 and $75,672 as of
December 31, 1994 and 1993, respectively. The amortization of the IMR into net
income net of federal income tax for 1994 and 1993, respectively, was $2,702
and $1,888.
4. INVESTMENTS:
The carrying value and estimated fair values of debt securities in the
general account are as follows:
<TABLE>
<CAPTION>
1994
GROSS UNREALIZED ESTIMATED
CARRYING ------------------ FAIR
VALUE GAINS LOSSES VALUE
-------- ----- ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government
corporations and agencies.............. $4,191 $ 62 $ (60) $4,193
Corporate securities.................... 3,546 125 (7) 3,664
Mortgage-backed securities.............. 92 0 (3) 89
------ -------- -------- ------
Total................................... $7,829 $ 187 $ (70) $7,946
====== ======== ======== ======
<CAPTION>
1993
GROSS UNREALIZED ESTIMATED
CARRYING ------------------ FAIR
VALUE GAINS LOSSES VALUE
-------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government
corporations and agencies.............. $3,727 $ 220 $ 0 $3,947
Corporate securities.................... 4,112 469 (1) 4,580
Mortgage-backed securities.............. 148 3 0 151
------ -------- -------- ------
Total................................... $7,987 $ 692 $ (1) $8,678
====== ======== ======== ======
</TABLE>
Publicly traded debt securities are valued based upon quoted market prices.
The fair values of private placement obligations are determined using an
internal matrix based on market interest rates, the credit rating of the
specific security, and public prices of similar securities.
The carrying value and estimated fair value of debt securities at December
31, 1994, by contractual maturity, are shown below. Stated maturities may
differ from contractual maturities because some borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
Due in 1 year or less........................................ $ 426 $ 426
Due after 1 year through 5 years............................. 5,195 5,142
Due after 5 years through 10 years........................... 467 524
Due after 10 years........................................... 1,649 1,765
Mortgage-backed securities................................... 92 89
------ ------
Total........................................................ $7,829 $7,946
====== ======
</TABLE>
Gross realized gains from sale of debt securities were $3,817 and $44,496,
and gross realized losses were $0 and $770 in 1994 and 1993, respectively. Net
realized gains of $2,481 and $28,422 in 1994 and 1993, respectively, were
transferred to the IMR.
A-99
<PAGE>
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY)
(INFORMATION WITH RESPECT TO THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND
1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The carrying value of the mortgage loan was $2,221,942 and $2,230,000 and
estimated fair value of the mortgage loan was $2,240,539 and $2,371,315 at
December 31, 1994 and December 31, 1993, respectively.
5. RELATED-PARTY TRANSACTIONS:
Under the terms of a service agreement, The New England furnishes all
executive, legal, clerical, and other personnel services to the Company. The
fees for such services amounted to $40,071,822 in 1994 and $29,059,452 in 1993.
All of the officers and directors of the Company are officers of The New
England.
On June 22, 1994 and June 30, 1993, The New England contributed $10,000,000
and $25,000,000 of capital to the Company, respectively.
6. FEDERAL INCOME TAXES:
Federal income taxes are provided on the basis of amounts estimated to be
payable under the Internal Revenue Code. The Company files a consolidated
federal income tax return with The New England.
Below is a reconciliation of income before federal income taxes to taxable
gain from operations:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
----------------
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Operating gain (loss) before federal income taxes............. $(4,732) $ 4,680
Deferred acquisition costs.................................... 11,035 8,660
Nontaxable income............................................. (25) (38)
Expense-related differences................................... 3,816 3,971
Other income-related differences.............................. (1,614) (2,797)
------- -------
Taxable gain from operations.................................. $ 8,480 $14,476
------- -------
Federal income taxes at 35%................................... $ 2,968 $ 5,067
======= =======
</TABLE>
The Internal Revenue Service has completed its examination of the Company's
income tax returns through 1989 and is currently examining the income tax
returns for 1990 to 1991. The New England is contesting certain issues since
1976. The outcome of these proceedings is not currently determinable but, in
the opinion of management, would not have a materially adverse effect on the
financial statements.
7. REINSURANCE:
The Company's practice on individual products is to retain not more than
$75,000 of risk on any person, excluding accidental death benefits. Total
individual life premiums ceded were $13.8 million and $9.8 million at December
31, 1994 and 1993, respectively. In 1994, $9.5 million of the $13.8 million
premiums were ceded to The New England, and in 1993, $7.6 million of the $9.8
million premiums were ceded to The New England.
The individual life insurance in force ceded was $9.7 billion and $7.0
billion at December 31, 1994 and 1993, respectively.
The Company is contingently liable with respect to ceded insurance should any
reinsurer be unable to meet the obligations assumed by it.
A-100
<PAGE>
PART II--OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Section 6.4 of NEVLICO's By-Laws provides for indemnification of a director,
officer or employee to the full extent of the law. Generally, Section 145 of
the General Corporation Law of the State of Delaware permits indemnification
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred if the indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. However, no indemnification shall be made in any type of action
by or in the right of NEVLICO if the proposed indemnitee is adjudged to be
liable for negligence or misconduct in the performance of his duty to NEVLICO,
unless a court determines otherwise.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
NEVLICO pursuant to the foregoing provisions, or otherwise, NEVLICO has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification may be against public policy as expressed in the Act and may
be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by NEVLICO of expenses incurred
or paid by a director, officer, or controlling person of NEVLICO 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, NEVLICO will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
REPRESENTATIONS PURSUANT TO RULE 6E-3(T)
This filing is made pursuant to Rule 6e-3(T) under the Investment Company
Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Policies described in the
Prospectus.
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risk and guaranteed benefits risk
charge is within the range of industry practice for comparable flexible
or scheduled contracts.
(3) Registrant has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the Separate Account will benefit
the Separate Account and Policy owners and will keep and make available
to the Commission on request a memorandum setting forth the basis for
this representation.
(4) The Separate Account will invest only in management investment companies
which have undertaken to have a board of directors, a majority of whom
are not interested persons of the company, formulate and approve any
plan under Rule 12b-1 to finance distribution expenses.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of the mortality and expense risk and guaranteed
benefits risk charge contained in other variable life insurance contracts.
Registrant undertakes to keep and make available to the Commission on request
the documents used to support the representation in paragraph (2) above.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement consists of the following papers and documents:
The facing sheet.
A reconciliation and tie of the information shown in the prospectus with
the items of Form N-8B-2.
The prospectus consisting of pages.
The undertaking to file reports.
The Rule 484 Undertaking.
The signatures.
Written consents of the following persons:
Independent Auditors
H. James Wilson, Esquire
Rodney J. Chandler, F.S.A., M.A.A.A.
Sutherland, Asbill & Brennan
The following exhibits:
<TABLE>
<C> <S>
1.A. (1) January 31, 1983 resolution of the Board of Directors of
NEVLICO**
(2) None
(3)(a) Distribution Agreement between NEVLICO and NELESCO*
(b)(i) Form of Contract between NEVLICO and its General Agents+++
(ii) Form of Contract between NEVLICO and its Agents+++
(c) Commission Schedule for Policies
(d) Form of Contract among NES, TNE, NEVLICO and other
broker-dealers++
(4) None
(5)(a) Specimen of Policy[_][_]
(b) Riders and Endorsements[_][_]
(6)(a) Certificate of Incorporation and By-Laws of NEVLICO**
(b) Amended Certificates of Incorporation dated April 10, 1984,
July 25, 1984 and October 9, 1986++
(c) Amended By-laws dated October 12, 1983++
(7) None
(8) Services Agreement among TNE, NEVLICO and NELESCO***
(9) None
(10) Specimen of Application for Policy[_][_]
2. See Exhibit 3.(i)
3.(i) Opinion and Consent of H. James Wilson, Esquire
(ii) Opinion and Consent of Rodney J. Chandler, F.S.A., M.A.A.A.
4. None
5. Inapplicable
6. Consent of Sutherland, Asbill & Brennan
7. Powers of Attorney##
8. Notice of Withdrawal Right for Policies
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
9. Form of reinsurance agreement between NEVLICO and New England
Life(degree)
10. Inapplicable
11. Consent of Independent Auditors
12. Schedule for computation of performance quotations#
13. Memorandum describing certain procedures, filed pursuant to
Rule 6e-3(T)(b)(12)(iii)[_] [_] [_]
14.(i) Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation and New England Variable Life
Insurance Company[_]
(ii) Amendment No. 1 to Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation and New England
Variable Life Insurance Company
(iii) Participation Agreement among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and New England Variable Life
Insurance Company
27. Financial Data Schedule
</TABLE>
- --------
* Filed with Pre-Effective Amendment No. 1 to the Variable
Account's Form S-6 Registration Statement, File No. 2-82838,
filed July 28, 1983.
** Filed with the Variable Account's Form S-6 Registration Statement,
File No. 2-82838, filed April 4, 1983.
*** Filed with the Variable Account's Form S-6 Registration Statement,
File No. 33-19540, filed January 8, 1988.
(degree) Filed with Pre-Effective Amendment No. 1 to the Variable
Account's Form S-6 Registration Statement, File No. 33-19540,
filed May 13, 1988.
# Filed with Post-Effective Amendment No. 2 to the Variable
Account's Form S-6 Registration Statement, File No. 33-19540,
filed April 28, 1989.
## Filed with Post-Effective Amendment No. 4 to the Variable
Account's Form S-6 Registration Statement, File No. 33-66864,
filed March 2, 1995.
++ Filed with the Variable Account's Form S-6 Registration Statement,
File No. 33-52050, filed September 16, 1992.
+++ Filed with Pre-Effective Amendment No. 1 to the Variable
Account's Form S-6 Registration Statement, File No. 33-52050,
filed January 12, 1993.
[_] Filed with the Variable Account's Form S-6 Registration Statement,
File No. 33-64170, filed June 9, 1993.
[_] [_] Filed with the Variable Account's Form S-6 Registration Statement,
File No. 33-88082, filed December 30, 1994.
[_] [_] [_] Filed with Post-Effective Amendment No. 6 to the Variable
Account's Form S-6 Registration Statement, File No. 33-52050,
filed April 28, 1995.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT, 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, ALL IN THE
CITY OF BOSTON, AND THE COMMONWEALTH OF MASSACHUSETTS, ON THE 22ND DAY OF
JUNE, 1995.
New England Variable Life Separate
Account
(Registrant)
By: New England Variable Life
Insurance Company
(Depositor)
By: /s/ Rodney J. Chandler
---------------------------------
RODNEY J. CHANDLER
Attest:
/s/ Marie C. Swift
- -------------------------------------
MARIE C. SWIFT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, NEW ENGLAND
VARIABLE LIFE INSURANCE COMPANY 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, ALL IN THE CITY
OF BOSTON, AND THE COMMONWEALTH OF MASSACHUSETTS, ON THE 22ND DAY OF JUNE,
1995.
New England Variable Life Insurance
Company
(Seal)
/s/ Marie C. Swift /s/ Rodney J. Chandler
Attest: ----------------------------- By: ---------------------------------
MARIE C. SWIFT RODNEY J. CHANDLER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THIS 22ND DAY OF JUNE, 1995.
SIGNATURE TITLE
--------- -----
Robert A. Shafto* Chairman; President; Chief
- ------------------------------------- Executive Officer
ROBERT A. SHAFTO
Chester R. Frost* Vice President--Controller;
- ------------------------------------- Principal Accounting Officer;
CHESTER R. FROST Principal Financial Officer
Edward C. Hall* Director
- -------------------------------------
EDWARD C. HALL
II-4
<PAGE>
SIGNATURE TITLE
--------- -----
Kernan F. King* Director
- -------------------------------------
KERNAN F. KING
Robert E. Schneider* Director
- -------------------------------------
ROBERT E. SCHNEIDER
Daniel J. Toran* Director
- -------------------------------------
DANIEL J. TORAN
H. James Wilson* Director; General Counsel;
- ------------------------------------- Secretary
H. JAMES WILSON
Frederick K. Zimmermann* Director
- -------------------------------------
FREDERICK K. ZIMMERMANN
By: /s/ Anne M. Goggin
---------------------------------
ANNE M. GOGGIN
ATTORNEY-IN-FACT
* Executed by Anne M. Goggin, Esquire on behalf of those indicated pursuant to
powers of attorney filed with the Variable Account's Form S-6 Registration
Statement, File No. 33-66864, on March 2, 1995.
II-5
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER TITLE NUMBERED PAGE*
------- ----- --------------
<C> <C> <S> <C>
1. A.(3)(c) Commission Schedule for policies
3. (i) Opinion and Consent of H. James Wilson, Esq.
(ii) Opinion and Consent of Rodney J. Chandler,
F.S.A., M.A.A.A.
6. Consent of Sutherland, Asbill & Brennan
8. Notice of Withdrawal Right for Policies
11. Consent of Independent Auditors
14. (ii) Amendment No. 1 to Participation Agreement among
Variable Insurance Products Fund, Fidelity
Distributors Corporation and New England
Variable Life Insurance Company
(iii) Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors
Corporation and New England Variable Life
Insurance Company
27. Financial Data Schedule
</TABLE>
- --------
* Page numbers inserted on manually-signed copy only.
<PAGE>
Exhibit 1.A.(3)(c)
Commission Schedule
The following maximum percentages of the Target Premium (plus any
additional portion of a premium which NEVLICO attributes to certain riders for
commission paying purposes) paid for each policy year will be paid to the
NEVLICO agent involved in the sale of a Policy:
Policy Year Maximum Percentage
----------- ------------------
1 50%
2 and later 3%
Agents will also receive a commission of 3% of each payment in excess of
the Target Premium (plus any additional portion of a premium which NEVLICO
attributes to certain riders for commission paying purposes) in any year. For
Policies sold to certain group or sponsored arrangements the maximum 50% first
year commission may be paid in level installments over a period of years rather
than all in the first policy year.
Agents who meet certain productivity and persistency standards in selling
policies issued by NEVLICO and The New England may be eligible for additional
compensation.
New England Securities may enter into selling agreements with other broker-
dealers registered under the Securities Exchange Act of 1934 whose
representatives are authorized by applicable law to sell variable life insurance
policies. Under the agreements with those broker-dealers, the commission paid
to the broker-dealer will be based on the schedule illustrated above.
Commissions will be paid through the registered broker-dealer, which may also be
reimbursed for portions of expenses incurred in connection with the sale of the
Policies.
<PAGE>
Exhibit 3.(i)
June 19, 1995
New England Variable Life Separate Account
New England Variable Life Insurance Company
501 Boylston Street
Boston, MA 02117
Gentlemen:
In my capacity as General Counsel of New England Variable Life Insurance Company
(the "Company"), I am rendering the following opinion in connection with the
filing with the Securities and Exchange Commission of a registration statement
on Form S-6 under the Securities Act of 1933. This Registration Statement is
being filed with respect to individual Flexible Premium Adjustable Variable Life
Insurance Policies (the "Policies") issued by New England Variable Life Separate
Account (the "Account").
It is my professional opinion that:
1. The Account is a separate investment account of the Company and is
duly created and validly existing pursuant to the laws of the State of
Delaware.
2. The Flexible Premium Adjustable Variable Life Insurance Policies, when
issued in accordance with the prospectus contained in the Registration
Statement and in compliance with applicable local law, are and will be
legal and binding obligations of the Company in accordance with their
terms; and
3. Assets attributable to reserves and other contract liabilities and
held in the Account will not be chargeable with liabilities arising
out of any other business the Company may conduct.
In forming this opinion, I have made such examination of law and examined such
records and other documents as in my judgment are necessary and appropriate.
<PAGE>
New England Variable Life Separate Account
New England Variable Life Insurance Company
June 19, 1995
Page 2
I hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the prospectus contained in the Registration Statement.
Very truly yours,
H. James Wilson
General Counsel
<PAGE>
Exhibit 3.(ii)
June 19, 1995
New England Variable Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
Gentlemen:
In my capacity as Chief Actuary of New England Variable Life insurance Company
(the "Company"), I have provided actuarial advice concerning:
The preparation of Pre-Effective Amendment No. 1 to the registration
statement on Form S-6 (File No. 33-88082) filed by New England Variable
Life Separate Account and the Company with the Securities and Exchange
Commission under the Securities Act of 1933 with respect to variable life
insurance policies (the "Registration Statement"); and
The preparation of policy forms for the variable life insurance policies
described in the Registration Statement (the "Policies").
It is my professional opinion that:
1. The percentage of sales load under a Policy will never exceed (1) the sum
of 30% of aggregate payments less than or equal to one guideline annual
premium (as defined in Rule 6e-3(T)(c)(8), plus 10% of aggregate payments
greater than one guideline annual premium but not more than two guideline
annual premiums and (2) 9% of each payment made in excess of two guideline
annual premiums, for surrender, face amount reduction or lapse in the first
two policy years, and will not exceed 9% of the sum of guideline premium
payments that would be paid for the period equal to the lesser of 20 years
or the anticipated life expectancy of the insured, and 9% of payments in
excess of that amount.
2. The illustrations of death benefits, net cash values, accumulated premiums,
internal rates of return on net cash values and internal rates of return on
death benefits shown in Appendix A of the Prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions
of the Policies. The rate structure of the Policies has not been designed
so as to make the relationship between premiums and benefits, as shown in
the illustrations, appear to be correspondingly more favorable to
prospective purchasers of Policies for male insureds, aged 40 in the
underwriting class illustrated than to prospective
<PAGE>
purchasers of Policies for insureds of other sexes or ages. Insureds in
other underwriting classes may have higher cost of insurance charges.
3. The information contained in the description of historical investment
experience in Appendix B, based on the assumptions stated in the Appendix,
is consistent with the provisions of the Policies.
4. The illustration of net premiums shown under the heading "Charges and
Expenses-Deductions from Premiums" in the Prospectus contains the net
premium amounts allocated to the Variable Account for a $2,000 premium
under a Policy.
5. The information contained in the example of how the maximum loanable amount
is determined under the heading "Other Policy Features-Loan Provision" in
the Prospectus is consistent with the provisions of the Policies.
6. The information contained in the Supplement dated July , 1995 to the
Prospectus dated July , 1995 depicting hypothetical illustrations of
investment experience of specified sub-accounts, based on the investment
experience of the specified Model Funds and on the assumptions stated in
the Supplement, is consistent with the provisions of the Policies.
I hereby consent to the filing of this opinion as an Exhibit to this Pre-
Effective Amendment to the Registration Statement and to the use of my name
under the heading "Experts" in the Prospectus and in the Supplement dated
July , 1995 to the Prospectus.
Sincerely,
Rodney J. Chandler, F.S.A., M.A.A.A.
Chief Actuary
2
<PAGE>
SUTHERLAND, ASBILL & BRENNAN
EXHIBIT 6
CONSENT OF SUTHERLAND, ASBILL & BRENNAN
We consent to the reference to our firm under the heading "Legal
Matters" in the prospectus included in Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6 for certain variable life insurance policies
issued through New England Variable Life Separate Account of New England
Variable Life Insurance Company (File No. 33-88082). In giving this consent, we
do not admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933.
SUTHERLAND, ASBILL & BRENNAN
/s/ Sutherland, Asbill & Brennan
Washington, D.C.
June 14, 1995
<PAGE>
EXHIBIT 8
NOTICE OF WITHDRAWAL RIGHT
Bob Hope June 12, 1995
2100 Washington Street RE: POL#: 0Z000001
Jacksonville, FL 32216 INSURED: Bob Hope
PLAN: Zenith Flexible Life
PLANNED PREMIUM: $18,000
MODE: Semi-Annually
PLANNED ANNUAL
PREMIUM: $36,000
Dear Policyholder:
Thank you for choosing New England Variable Life Insurance Company ("NEVLICO")
for your variable life insurance benefits. All of us will work hard to make our
relationship with you a long and satisfying one. We'd like to take this
opportunity to point out certain features and rights under your policy in
accordance with the requirements of the Securities and Exchange Commission
("SEC"). Please read this letter carefully and retain it and your policy with
other important documents.
Zenith Flexible Life's combination of insurance protection and investment
flexibility should help you to achieve your financial goals and you should feel
very good about your decision to buy a Zenith Flexible Life policy. The benefits
of this policy vary with the investment performance of the New England Variable
Life Separate Account ("Separate Account"). The Separate Account and its
investment options are described in the prospectus you received at the time of
the sale.
If for any reason you are not comfortable with your purchase, you have the right
to examine and return your policy for cancellation. Should you decide to
cancel, we will refund all of your premium payments. The deadline for
cancellation is the latest of:
* 10 days after you received this policy
* 45 days after you signed Part 1 of the Application
* 10 days from the date of the postmark of this notice
In determining whether to exercise your right of withdrawal, you should
consider, among other things, the needs and other reasons that motivated you to
purchase this policy, your ability to make premium payments and the deductions
and charges under the policy.
<PAGE>
The prospectus you received describes the charges and deductions from premium
payments before amounts are allocated to the Separate Account. They are a
federal tax charge of 1% , a state premium tax charge of 2.5% and a sales charge
of 4% of each premium. NEVLICO currently intends to waive the sales charge
after the first twenty policy years.
In addition, the prospectus describes certain charges that are deducted from the
cash value each month, including the policy fee, administrative charge per
$1,000 of coverage, minimum death benefit guarantee charge, cost of insurance
charges (including any substandard extra or automatic issue charge) and any
rider charges. The prospectus also describes charges that may be assessed upon
surrender, partial surrender, face amount reduction or face amount increase.
Section 3 of your policy shows the policy's maximum surrender charge.
If you decide to cancel your policy, please complete and sign the enclosed form
and return it and your policy, as outlined in the instructions on the form,
postmarked on or before the deadline described above.
Again, thank you for your business. We will do everything possible to
demonstrate that your decision was the right one. Welcome to the New England
family.
Sincerely Yours,
H. James Wilson
Secretary
<PAGE>
Instructions
Please read carefully
______________________________________________________________________________
TO THE POLICY OWNER:
If, after reading the enclosed notice, you elect to return your policy for
cancellation you must:
1. Sign and date the bottom of the form.
2. Mail the form together with your policy (if received by you) to:
New England Variable Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116-3700
3. The post mark on the envelope must be on or before the latest date
permitted for cancellation as described in the attached letter.
4. Please check the box below if you have not received your policy when
mailing this card.
- --------------------------------------------------------------------------------
TO: NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
Pursuant to the terms of the notice previously furnished me by New England
Variable Life Insurance Company, I hereby return the policy ([_] Check here
if I have not received the policy and should it be received, I will return
it to New England Variable Life Insurance Company) numbered below for
cancellation and request a full refund of the premium paid by me for the
policy.
____________ _______________________________________
Date Signature of Policy Owner
Policy Number: 0Z000001
Insured's Name: Bob Hope
Date Generated: June 12, 1995
Agency Number: 064
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6 (File No. 33-88082) of our report dated
February 3, 1995, on our audits of the financial statements of New England
Variable Life Separate Account of New England Variable Life Insurance Company as
of December 31, 1994, and for each of the periods indicated therein. We also
consent to the inclusion of our report dated February 24, 1995, on our audits of
the financial statements of New England Variable Life Insurance Company as of
December 31, 1994 and 1993, and for the two years in the period ended December
31, 1994. We also consent to the reference to our Firm under the caption
"Experts" in this Pre-Effective Amendment.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 16, 1995
<PAGE>
Exhibit 14.(i)
AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT AMONG
VARIABLE INSURANCE PRODUCTS FUND
FIDELITY DISTRIBUTORS CORPORATION
and
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
WHEREAS, NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY (the "Company"),
VARIABLE INSURANCE PRODUCTS FUND (the "Fund") and FIDELITY DISTRIBUTORS
CORPORATION have previously entered into a Participation Agreement (the
"Agreement") containing certain arrangements concerning prospectus costs; and
WHEREAS, the Trustees of the Fund have approved certain changes to the
expense structure of the Fund; and
NOW, THEREFORE, the parties do hereby agree to amend the Agreement by
substituting the following arrangement in place of any inconsistent language in
the Participation Agreement, wherever found:
1. The Fund will provide to the Company each year, at the Fund's cost,
such number of prospectuses and Statements of Additional Information as are
actually distributed to the Company's then-existing variable life and/or
variable annuity contract owners.
2. If the Company takes camera-ready film or computer diskettes containing
the Fund's prospectus and/or Statement of Additional Information in lieu of
receiving hard copies of these documents, the Fund will reimburse the Company in
an amount computed as follows. The number of prospectuses and Statements of
Additional Information actually distributed to existing contract owners by the
Company will be multiplied by the Fund's actual per-unit cost of printing the
documents.
3. The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund in order to verify that
the prospectuses and Statements of Additional Information provided to the
Company, or the reimbursement made to the Company, are or have been used only
for the purposes set forth hereinabove.
IN WITNESS WHEREOF we have set our hand as of the 15th day of December,
1994.
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
By: /s/ Rodney J. Chandler
----------------------
Name: Rodney J. Chandler
----------------------
Title: Chief Actuary
----------------------
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS CORPORATION
By: /s/ J. Gary Burkhead By: /s/ Kurt A. Lange
---------------------- -----------------
Name: J. Gary Burkhead Name: Kurt A. Lange
---------------------- -----------------
Title: Senior Vice President Title: President
---------------------- -----------------
<PAGE>
Exhibit 14.(ii)
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
-----------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
-------------------------------------------
THIS AGREEMENT, made and entered into this 1st day of December,
1994 by and among New England Variable Life Insurance Company (hereinafter the
"Company"), a Delaware corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
<PAGE>
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable life and variable
annuity contracts; and
WHEREAS, the Company has registered or will register the Accounts
as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of the Accounts to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from the
Accounts and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which
<PAGE>
the Fund calculates its net asset value pursuant to rules of the Securities and
Exchange Commission and the Fund shall use reasonable efforts to calculate such
net asset value on each day which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Board of Trustees of the Fund
(hereinafter the "Trustees") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life or variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and incorporated herein
by this reference, as such Schedule B may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter 45 days written notice of
its intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was available as
a funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement; or (d) the Fund or Underwriter consents to the use of such other
investment company.
<PAGE>
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For the purpose of Sections 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Funds' shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 2932 of the Insurance Code of the State of Delaware and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Delaware and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
<PAGE>
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Delaware and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Delaware to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Delaware and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Delaware and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or
<PAGE>
securities of the Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimal coverage as required currently by Rule 17g-(1)
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid Bond shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage in an amount not
less than $10,000,000. The aforesaid Bond shall include coverage for larceny
and embezzlement and shall be issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
<PAGE>
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in the same proportion as Fund shares of such
portfolio for which instructions have been received from
Contract owners :
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen Business
Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales
<PAGE>
literature or other promotional material approved by the Fund or its designee or
by the Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to such use
within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities. The Fund will make a good
faith effort to notify the Company of any impending changes to its methods of
operation (including, but not limited to, fees and expenses and investment
policies).
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or the Account, contemporaneously with the filing of such document
with the Securities and Exchange Commission or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials. Sales literature
<PAGE>
or other promotional material does not include material which does not mention
the Fund or any of its affiliated companies.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5 relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. The Fund will provide the Company with position holdings as soon
as reasonably available after each quarter.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities
<PAGE>
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a decision
by an insurer to disregard the voting instructions of contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
----
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
<PAGE>
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
<PAGE>
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
<PAGE>
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2 (a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature for the Contracts not supplied by the Underwriter or
persons under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure of the Fund, whether
unintentional or in good faith or otherwise, to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and
in accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b) The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense
<PAGE>
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company
, and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Trustees or any member
thereof, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is
<PAGE>
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The Fund
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Fund to such party of
the Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
<PAGE>
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by written notice
to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that the Fund, the Underwriter and/or their affiliated
companies have suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts") and all contracts issued pursuant to applications dated on or before
the effective date of termination. Specifically, without limitation, the owners
of the Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the making
of additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.2 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated
transactions, (ii) as required by state and/or
<PAGE>
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption"), and
(iii) in case of termination under Article 7 or Article 10 of this Agreement.
Upon request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
501 Boylston Street
Boston, MA 02116
Attention: H. James Wilson
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
<PAGE>
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory
or other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the 1973
NAIC model variable life insurance regulation in the states of California,
Colorado, Maryland or Michigan, the Underwriter shall indemnify and reimburse
the Company for any out of pocket expenses and actual damages the Company has
incurred as a result of any such proceeding; provided however that the
provisions of Section 8.2(b) of this and 8.2(c) shall apply to such
indemnification and reimbursement obligation. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.9 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.10. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
<PAGE>
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report, as soon as practical and in any
event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory), as soon as
practical and in any event within 45 days after the end of each quarterly
period:
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/ or policyholders, as soon as practical
after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange Commission or
any state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/ Rodney J. Chandler
------------------------
Title: Chief Actuary
-------------------------
Date: June 1, 1995
-------------------------
Fund:
VARIABLE INSURANCE
PRODUCTS FUND II
By its authorized officer,
By: _________________________
Title: _________________________
Date: _________________________
<PAGE>
Underwriter:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By: _______________________
Title: _______________________
Date: _______________________
<PAGE>
Schedule A
----------
Accounts
--------
<TABLE>
<CAPTION>
Date of Resolution of Company's Board
Name of Account which Established the Account
- --------------- -----------------------------
<S> <C>
New England Variable Life Separate Account January 31, 1983
</TABLE>
<PAGE>
Schedule B
----------
Contracts
---------
1. Contract Forms
NEV-2
NEV-4
NEV-5
NEV-6
NEV-7
NEV-8
NEV-9
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contractowner/ policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company either
before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4 business days for printing
information on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
----
as the shareowner. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
---
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and
has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
------
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
