<PAGE>
As filed with Securities and Exchange Commission on
February 25, 1998
Registration No. 33-66864
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 9
TO REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_________________________
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Trust)
NEW ENGLAND LIFE INSURANCE COMPANY
(Name of Depositor)
501 Boylston Street
Boston, Massachusetts 02117
(Address of depositor's principal executive offices)
_________________________
MARIE C. SWIFT
Counsel
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
(Name and address of agent for service)
Copies to:
STEPHEN E. ROTH
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
_________________________
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[_] on May 1, 1998 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[X] on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
Registration Statement on Form S-6
Cross-Reference Sheet
Form N-8B-2
Item No. Caption in Prospectus
- ----------- ---------------------
1 Cover Page
2 Cover Page
3 Inapplicable
4 NELICO's Distribution Agreement
5 NELICO
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; Exchange of Policy During First 24
Months; Lapse and Reinstatement; Surrender; Partial Surrender;
Right to Return the Policy; Loan Provision; Transfer Option;
Premiums
10(f), (g), (h)Voting Rights; Rights Reserved by NELICO
10(i) Limits to NELICO's Right to Challenge the Policy; Payment of
Proceeds; Investment Options
11 The Variable Account
12 Investments of the Variable Account; NELICO's Distribution
Agreement
13 Charges and Expenses; NELICO's Distribution Agreement; Charge for
NELICO's Income Taxes; Appendix A
14 Amount Provided for Investment Under the Policy; NELICO's
Distribution Agreement
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; NELICO's Distribution Agreement
20 Captions referenced under Items 6 and 10(g) above
21 Loan Provision
22 Inapplicable
23 NELICO's Distribution Agreement
24 Limits to NELICO's Right to Challenge the Policy
25 NELICO
26 NELICO's Distribution Agreement
<PAGE>
Form N-8B-2
Item No. Caption in Prospectus
- ------------- ---------------------
27 NELICO
28 Management
29 NELICO
30 Inapplicable
31 Inapplicable
32 Inapplicable
33 Inapplicable
34 NELICO's Distribution Agreement
35 NELICO
36 Inapplicable
37 Inapplicable
38 NELICO's Distribution Agreement
39 NELICO's Distribution Agreement
40 NELICO's Distribution Agreement
41(a) NELICO's Distribution Agreement
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; Exchange of Policy During
First 24 Months; Payment Options; Policy Owner and Beneficiary;
Premiums; NELICO's Distribution Agreement
52 Rights Reserved by NELICO
53 Tax Considerations
54 Inapplicable
55 Inapplicable
59 Financial Statements
<PAGE>
NEW ENGLAND LIFE
INSURANCE COMPANY
Flexible Premium Adjustable
Variable Survivorship Life Insurance Policies
Issued by
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus describes individual Flexible Premium Adjustable Variable
Survivorship Life Insurance Policies (the "Policies") offered by New England
Life Insurance Company ("NELICO"), an indirect, wholly-owned subsidiary of
Metropolitan Life Insurance Company ("MetLife").
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, equals certain minimum amounts and
there is no policy loan. Insurance coverage is provided on the joint lives of
two insureds. The death benefit is payable upon the death of the second to
die.
You may choose among four death benefit options, two of which provide a
fixed death benefit equal to the Policy's face amount and two of which provide
a variable death benefit which may vary daily with the net investment
experience of one or more mutual fund portfolios. Under any of the death
benefit options, the minimum death benefit guarantees will be available. The
cash value of the Policy generally increases with the payment of each premium
and varies 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 part of the first net premium for the Policy that you direct to the mutual
fund portfolios 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 NELICO mails the Notice of Withdrawal Right. Thereafter, the
Policy's cash value will be invested according to your instructions.
You may allocate premiums to one or more of the 16 investment sub-accounts
of NELICO's Variable Life Separate Account (the "Variable Account") or to
NELICO'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 Growth
and Income Series, the Loomis Sayles Small Cap Series, the Loomis Sayles
Balanced Series, the Alger Equity Growth Series, the Davis Venture Value
Series, the Goldman Sachs Midcap Value Series, and the Morgan Stanley
International Magnum 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").
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".)
- --------
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.
SHARES OF THE ZENITH FUND, THE VIP FUND AND THE VIP FUND II, AND INTERESTS
IN THE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, A BANK, AND THE SHARES AND INTERESTS ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
MAY 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY.................................................................. A-4
INTRODUCTION TO THE POLICIES.............................................. A-7
The Policies............................................................. A-7
Availability of the Policy............................................... A-9
Policy Charges........................................................... A-9
How the Policy Works..................................................... A-11
Receipt of Communications and Payments at NELICO's Home Office........... A-12
NELICO................................................................... A-12
POLICY VALUES AND BENEFITS................................................ A-13
Death Benefit............................................................ A-13
Minimum Guaranteed Death Benefit......................................... A-14
Adjustments to the Death Proceeds Payable................................ A-15
Change in Death Benefit Option........................................... A-15
Extending the Maturity Date.............................................. A-16
Cash Value............................................................... A-16
Net Investment Experience................................................ A-16
Allocation of Net Premiums............................................... A-17
Amount Provided for Investment under the Policy.......................... A-17
Right to Return the Policy............................................... A-18
CHARGES AND EXPENSES...................................................... A-18
Deductions from Premiums................................................. A-18
Surrender Charge......................................................... A-19
Monthly Deduction from Cash Value........................................ A-21
Charges Against the Eligible Funds and the Sub-Accounts of the Variable
Account................................................................. A-23
Group or Sponsored Arrangements.......................................... A-24
PREMIUMS.................................................................. A-25
Flexible Premiums........................................................ A-25
Lapse and Reinstatement.................................................. A-26
OTHER POLICY FEATURES..................................................... A-27
Loan Provision........................................................... A-27
Surrender................................................................ A-28
Partial Surrender........................................................ A-28
Reduction in Face Amount................................................. A-29
Investment Options....................................................... A-30
Transfer Option.......................................................... A-30
Payment of Proceeds...................................................... A-30
Exchange of Policy During First 24 Months................................ A-31
Policy Split Rider....................................................... A-32
Payment Options.......................................................... A-32
Additional Benefits by Rider............................................. A-33
Policy Owner and Beneficiary............................................. A-33
THE VARIABLE ACCOUNT...................................................... A-34
Investments of the Variable Account...................................... A-34
Investment Management.................................................... A-38
THE FIXED ACCOUNT......................................................... A-39
General Description...................................................... A-39
Values and Benefits...................................................... A-39
Policy Transactions...................................................... A-40
NELICO'S DISTRIBUTION AGREEMENT........................................... A-40
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY.......................... A-41
Notification of First Death.............................................. A-41
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
Misstatement of Age or Sex............................................... A-41
Suicide.................................................................. A-41
TAX CONSIDERATIONS........................................................ A-42
Policy Proceeds.......................................................... A-42
Charge for NELICO's Income Taxes......................................... A-46
MANAGEMENT................................................................ A-47
VOTING RIGHTS............................................................. A-50
RIGHTS RESERVED BY NELICO................................................. A-50
TOLL-FREE NUMBERS......................................................... A-51
REPORTS................................................................... A-51
ADVERTISING PRACTICES..................................................... A-51
LEGAL MATTERS............................................................. A-52
REGISTRATION STATEMENT.................................................... A-52
EXPERTS................................................................... A-52
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, NET CASH VALUES
AND ACCUMULATED SCHEDULED PREMIUMS ...................................... A-53
APPENDIX B: INVESTMENT EXPERIENCE INFORMATION............................. A-61
APPENDIX C: LONG TERM MARKET TRENDS....................................... A-80
APPENDIX D: USES OF SURVIVORSHIP LIFE INSURANCE........................... A-83
APPENDIX E: TAX INFORMATION............................................... A-84
APPENDIX F: ENHANCED DEATH BENEFIT LIMITATIONS............................ A-85
FINANCIAL STATEMENTS...................................................... F-1
</TABLE>
A-3
<PAGE>
GLOSSARY
ACCOUNT. A sub-account of the Variable Account or the Fixed Account.
AGE. For purposes of this prospectus, the age of an insured refers to the
insured's age at his or her nearest birthday.
BENCHMARK PREMIUM. The Benchmark 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 is the level premium necessary
to keep a level death benefit Policy, without riders, in-force until age 80 of
the younger insured (or 20 years after issue, if later, but not later than the
Maturity Date) based on certain assumptions. (See "Surrender Charge".)
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 NELICO'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 A. 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, multiplied by an
enhancement factor. (See "Death Benefit".)
DEATH BENEFIT OPTION B. 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, multiplied by an enhancement factor. (See "Death Benefit".)
DEATH BENEFIT OPTION C. 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. (See "Death Benefit".)
DEATH BENEFIT OPTION D. 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. (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 Growth and Income Series, the Loomis Sayles Small
Cap Series, the Loomis Sayles Balanced Series, the Alger Equity Growth Series,
the Davis Venture Value Series, the Goldman Sachs Midcap Value Series, and the
Morgan Stanley International Magnum 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. (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 NELICO's general account to
which net premiums may be allocated and which provides guarantees of principal
and interest. (See "The Fixed Account".)
A-4
<PAGE>
GUARANTEED DEATH BENEFIT 1 FUND. The Guaranteed Death Benefit 1 Fund is a
measurement used to determine if the Minimum Guaranteed Death Benefit 1 is in
effect. This Fund assumes the Guaranteed Death Benefit 1 Premium that appears
in the Policy is paid on the first day of each Policy year. The Fund equals
the value of those premiums accumulated at 4% per year. The Fund values shown
in your Policy are for the end of each Policy year. (See "Minimum Guaranteed
Death Benefit".)
GUARANTEED DEATH BENEFIT 2 FUND. The Guaranteed Death Benefit 2 Fund is a
measurement used to determine if the Minimum Guaranteed Death Benefit 2 is in
effect. This Fund assumes the Guaranteed Death Benefit 2 Premium that appears
in the Policy is paid on the first day of each Policy year. The Fund equals
the value of those premiums accumulated at 4% per year. The Fund values shown
in your Policy are for the end of each Policy year. (See "Minimum Guaranteed
Death Benefit".)
INVESTMENT START DATE. This is the latest of the date NELICO receives a
premium payment for the Policy, the date each of the insureds has signed
his/her Part II of the Policy application and the Policy Date and 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 younger insured is (or
would have been) age 100, unless the extended maturity option has been added
to the Policy. (See "Extending the Maturity Date".)
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 three-year Minimum Premium is based on the
Policy's face amount, the age, sex (unless unisex rates apply) and
underwriting class of each of the insureds, the current level of Policy
charges and any rider benefits selected. Certain Policy transactions will
terminate this guarantee. (See "Premiums".)
MINIMUM GUARANTEED DEATH BENEFIT 1. The Policy will not lapse, regardless of
whether the net cash value is sufficient to pay a Monthly Deduction, if (at
the time of the Monthly Deduction) premiums paid, accumulated at a 4% rate as
if they were paid on the first day of each Policy year, less partial
surrenders, accumulated at a 4% rate per year, is at least equal to the
Guaranteed Death Benefit 1 Fund and there is no outstanding Policy loan.
Generally, NELICO determines whether this benefit is in effect on the first
day of each Policy month. Certain Policy transactions can terminate this
guarantee. (See "Minimum Guaranteed Death Benefit".)
MINIMUM GUARANTEED DEATH BENEFIT 2. The Policy will not lapse, regardless of
whether the net cash value is sufficient to pay a Monthly Deduction, if (at
the time of the Monthly Deduction prior to the later of: the date when the
younger insured attains age 80, or would have attained age 80 if that person
died before reaching age 80, and 20 years from the Policy Date, but no later
than the Maturity Date of the Policy) premiums paid, accumulated at a 4% rate
as if they were paid on the first day of each Policy year, less partial
surrenders, accumulated at a 4% rate per year, is at least equal to the
Guaranteed Death Benefit 2 Fund and there is no outstanding Policy loan.
Generally, NELICO determines whether this benefit is in effect on the first
day of each Policy month. Certain Policy transactions can terminate this
guarantee. (See "Minimum Guaranteed Death Benefit".)
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. Currently, the
charge is 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
NELICO assumes is that insureds may live for shorter periods of time than
estimated. The expense risk NELICO 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".)
A-5
<PAGE>
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 applicable Surrender
Charge and by any outstanding policy loan and accrued interest. (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 can be a fixed amount or can vary over time and 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 each of the insureds has signed
his/her Part II of the application 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".)
TARGET PREMIUM The Target Premium is used to measure the portion of the
total premiums paid in a Policy year that is currently subject to the 9% sales
charge, and commissions payable in connection with sales of the Policies. It
is the level premium necessary to keep a level death benefit base Policy in-
force until age 80 of the younger insured, based on certain assumptions, if
both insureds are a standard or better underwriting risk. If the younger
insured's issue age is above 60, the Target Premium may be calculated using a
period of less than 20, but no less than five, years. If an insured is
assigned to a class below standard, a higher Target Premium will apply.
Certain riders increase the Target Premium for the Policy above the amounts
described herein. (See "Deductions from Premiums".)
YOU. When used in this prospectus, "you" refers to the Policy Owner.
A-6
<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.
NELICO provides guarantees of principal and interest with respect to the Fixed
Account which is part of NELICO's general account. Amounts in the Fixed
Account are backed by NELICO'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 Survivorship Life
Insurance Policies offered by this prospectus are designed to provide lifetime
insurance coverage for two insureds payable upon the death of the second to
die. 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 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. NELICO can limit or
prohibit unscheduled payments in certain situations, including cases
where an insured is in a substandard risk class. (See "Premiums".)
--Net premiums are invested according to your instructions in the Fixed
Account or, after an initial period in the Zenith Money Market Sub-
Account, in one or more of the sub-accounts of the Variable Account
corresponding to mutual fund portfolios. (See "Allocation of Net
Premiums" and "Investment Options".)
--The mutual fund portfolios available to you under the Policy include
several common stock funds, including a fund which invests primarily in
foreign securities, two bond funds, two managed funds, a balanced fund,
and a money market fund. You may allocate your Policy's cash value to a
maximum of nine 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. NELICO provides guarantees of Fixed Account
principal and Interest. SPECIAL LIMITS APPLY TO TRANSFERS OF CASH VALUE
FROM THE FIXED ACCOUNT. NELICO 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 among four forms of death benefit options under the
Policy. The two level options provide a death benefit equal to the
Policy's face amount. The two variable options provide 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 any of these options the death benefit could be
increased to satisfy tax law requirements if the cash value reaches
certain levels. One of the level and one of the variable options provide
for an enhanced increase. (See "Death Benefit".)
--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".)
A-7
<PAGE>
--You may change your allocation of future net premiums at any time. (See
"Allocation of Net Premiums" and "Investment Options".)
--After the "Right to Return the Policy" period, the Policy provides that
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 (twelve times per policy year for Policies issued in New York)
without NELICO's consent. NELICO currently allows 12 transfers per policy
year in all states. 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 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 1/2.
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, NELICO 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. (See "Right to Return the Policy".)
--Within 24 months after a Policy's date of issue, you may exchange the
Policy, without evidence of insurability, for a comparable fixed-benefit
survivorship life insurance policy issued by NELICO or an affiliate on
the joint lives of the insureds. If you exercise this option, you will
have to make up any investment loss. (See "Exchange of Policy During
First 24 Months".)
In many respects the Policies are similar to fixed-benefit survivorship
universal life insurance. Like survivorship universal life insurance, the
Policies provide for a death benefit upon the death of the second insured,
flexible premiums, a cash value, and loan privileges.
The Policies are different from fixed-benefit survivorship 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 life insurance policies offered by NELICO 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 NELICO'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".)
A-8
<PAGE>
--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 Survivorship Life Insurance".
AVAILABILITY OF THE POLICY
Generally, a Policy may be issued on the lives of Insureds from the age of
20 to 85, and, if NELICO consents, to older or younger insureds. All persons
must meet NELICO's underwriting and other criteria for issuance. The minimum
face amount available is $100,000 unless NELICO consents to a lower amount.
The Policies are not available to employee benefit plans qualified under
Section 401 of the Internal Revenue Code, except with NELICO's consent.
Policies for which insurance charges do not vary based on the sex of the
insured may not be available.
POLICY CHARGES
PREMIUM-BASED CHARGES. NELICO deducts the following charges from premiums:
--A sales charge of 9%. NELICO currently intends to waive this charge on
all premiums paid after the first 15 policy years (17 policy years, for
Policies issued in Pennsylvania). In addition, NELICO currently intends
to deduct this charge from premium payments made in a Policy year
(through the first 15 or 17 Policy years, as applicable) only until an
amount equal to a Target Premium has been paid in that Policy year.
Premium payments during a Policy year in excess of a Target Premium will
not be subject to the sales charge;
--A state premium tax charge of 2.5%;
--A charge for federal taxes of 1%.
SURRENDER CHARGE. The Surrender Charge includes:
--A deferred administrative charge. This charge applies to a lapse,
surrender, reduction in face amount or partial surrender that reduces the
face amount during Policy years one through fourteen. This charge is
$4.00 per $1,000 of face amount for the first five Policy years, and then
reduces monthly until it reaches $2.00 at the end of the tenth Policy
year and 0 at the end of the 14th Policy year. The charge may be less if
the average of the issue ages is greater than 60.
--A deferred sales charge. This charge applies to a lapse, surrender,
reduction in face amount or partial surrender that reduces the face
amount during Policy years one through fourteen. The maximum Deferred
Sales Charge is imposed for Policies which cover insureds whose average
issue age is 60 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 41% of one Benchmark
Premium plus 41% of a second Benchmark Premium and 8% of a third
Benchmark Premium. In no event will the Deferred Sales Charge be more
than $30 per $1,000 of face amount. 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 fourteenth Policy year. If you lapse
or surrender the Policy, reduce its face amount, or make a partial
surrender that reduces the face amount in the first two Policy years, the
maximum Deferred Sales Charge will be 21% of one Benchmark Premium.
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. NELICO deducts certain charges from the
cash value:
--Monthly charge for the cost of insurance and for any benefits provided by
rider;
A-9
<PAGE>
--Monthly administrative charge, equal to: (1) $0.16 per $1,000 of face
amount for the first Policy year; (2) currently, in Policy years two
through ten, $0.05 per $1,000 of face amount for two insureds who are
each in a standard or better underwriting class, $0.075 per $1,000 if
only one insured is in a standard or better class, and $0.10 per $1,000
if neither insured is in a standard or better class (guaranteed not to
exceed $0.10 per $1,000 for all Policies); and (3) currently, in Policy
years 11 and after, $0.03 per $1,000 (guaranteed not to exceed $0.10 per
$1,000). Currently, NELICO intends to apply this charge to no more than
$4 million of Policy face amount beginning in the second Policy year;
--Monthly minimum death benefit guarantee charge of $0.01 per $1,000 of
face amount;
--Monthly policy fee, currently equal to $5.00 per month (guaranteed not to
exceed $7.50 per month).
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 NELICO'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.
See "Charges and Expenses".
A-10
<PAGE>
HOW THE P0LICY WORKS
PREMIUM PAYMENTS
. Flexible
. Planned premium options
-Minimum premium (in first three Policy years)
-Guaranteed Death Benefit 2 Premium (to age 80)
-Guaranteed Death Benefit 1 Premium (to age 100)
CHARGES FROM PREMIUM PAYMENTS
. Sales Load: 9.00% up to Target Premium; currently 0%
above Target, NELICO intends to waive after 15 policy yrs.
(17 policy years in PA)
. 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 (Currently
NELICO intends to credit 5.0% interest after 15 policy
years.)
RETIREMENT BENEFITS
. Fixed settlement options are available for policy proceeds
CASH VALUES
. Net premium payments invested in your choice of Eligible Fund
investments (after an initial period in the Zenith Money Market
Sub-Account) or the Fixed 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 the Fixed Account are limited as to timing,
frequency and amount
. Your cash value may be allocated among a maximum of nine
accounts at any one time
DEATH BENEFIT
. Paid upon the 2nd death
. Level of Variable Death Options
. Guaranteed not to be less than initial face amount if Death
Benefit Guarantee is in effect
. Income tax free to named beneficiary
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
rating) is deducted from the cash value each month
. Any Rider Charges
. Policy fee: $5.00 (not to exceed $7.50) per month
. Minimum Death Benefit Guarantee Charge: $.01 per $1000 face
amount monthly
. Administrative Charge: $0.16 per $1000 of face amount monthly
in the first year; $0.05 per $1000 monthly for two Standard
insureds [$0.075 for Standard/(Substandard or Uninsurable) or
$0.10 for Substandard/(Substandard or Unisurable] in years 2-
10; and $0.03 per $1000 monthly in subsequent years. On a
guaranteed basis, the Administration Charge is $0.16 per $1000
of face amount in the first year and $0.10 per $1000 in
subsequent years.
SURRENDER CHARGES
. Consist of Deferred Sales Charge and Deferred Administrative
Charge (see page A-19)
LIVING BENEFITS
. If policyholder has elected and qualified for benefits for
disability of covered insured who becomes totally disabled,
company will provide specified premium amounts or waive
monthly charges, depending on the option selected, 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 NELICO's rules, a lapsed Policy may be reinstated
within seven years of date of lapse if it has not been surrendered
A-11
<PAGE>
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT NELICO'S HOME OFFICE
NELICO will treat your request for a Policy transaction, or your submission
of a payment, as received at the Home 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.
NELICO
NELICO 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. Before August 30, 1996, NELICO was a wholly-owned subsidiary
of New England Mutual Life Insurance Company ("New England Mutual"). Effective
August 30, 1996, New England Mutual merged into MetLife, a mutual life
insurance company whose principal office is One Madison Avenue, New York, NY
10010. With the merger, New England Mutual's separate corporate existence
ended, and MetLife became the parent of NELICO. In connection with the merger,
NELICO changed its name from "New England Variable Life Insurance Company" to
"New England Life Insurance Company", and changed its domicile from the State
of Delaware to the Commonwealth of Massachusetts. NELICO's Home Office is now
at 501 Boylston Street, Boston, Massachusetts 02116. NELICO's mailing address
is: P.O. Box 9116, Boston, Massachusetts 02117.
The following chart illustrates the relationship of NELICO, the Fixed
Account, the Variable Account and the Eligible Funds.
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
NELICO
- --------------------------------------------------------------------------------
(Insurance company subsidiary of MetLife)
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.
- --------------------------------------------------------------------------------
VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
(Premiums and Unscheduled Payments)
Fixed Account
Zenith Capital Growth Sub-Account
Zenith Bond Income Sub-Account
Zenith Money Market Sub-Account
Zenith Managed Sub-Account
Zenith Stock Index Sub-Account
Zenith Growth and Income Sub-Account
Zenith Small Cap Sub-Account
Zenith Balanced Sub-Account
Zenith Equity Growth Sub-Account
Zenith Venture Value Sub-Account
Zenith Midcap Value Sub-Account
Zenith International Magnum Equity Sub-Account
Equty-Income Sub-Account
Overseas Sub-Account
High Income Sub-Account
Asset Manager Sub-Account
Sub-accounts buy shares of the Eligible Funds
- --------------------------------------------------------------------------------
NEW ENGLAND ZENITH FUND
- --------------------------------------------------------------------------------
Capital Growth Series
Back Bay Advisors Bond Income Series
Back Bay Advisors Money Market Series
Back Bay Advisors Managed Series
Westpeak Stock Index Series
Westpeak Growth and Income Series
Loomis Sayles Small Cap Series
Loomis Sayles Balanced Series
Alger Equity Growth Series
Davis Venture Value Series
Goldman Sachs Midcap Value Series
Morgan Stanley International Magnum Equity Series
- --------------------------------------------------------------------------------
VIP FUND
- --------------------------------------------------------------------------------
Equity Income Portfolio
Overseas Portfolio
High Income Portfolio
- --------------------------------------------------------------------------------
VIP FUND II
- --------------------------------------------------------------------------------
Asset Manager Portfolio
Eligible Funds buy portfolio investments to support values and benefits of the
Policies.
A-12
<PAGE>
POLICY VALUES AND BENEFITS
DEATH BENEFIT
DEATH BENEFIT OPTIONS. When you apply for a Policy, you may choose among
four death benefit options. The death benefit is payable to the beneficiary
upon the death of the second insured to die.
The Option A (Enhanced with Face Amount) death benefit provides a death
benefit equal to the face amount of the Policy. The Option A death benefit is
fixed, subject to increases required by the Internal Revenue Code on an
enhanced basis, as described below.
The Option B (Enhanced with 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 B death benefit is also
subject to increases required by the Internal Revenue Code on an enhanced
basis, as described below. In general, the Option B death benefit does not
significantly exceed the Option D death benefit.
The Option C (Face Amount) death benefit provides a death benefit equal to
the face amount of the Policy. The Option C death benefit, like the Option A
death benefit, is fixed, subject to increases required by the Internal Revenue
Code. In the case of the Option C death benefit, these increases are not
enhanced.
The Option D (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 D death benefit is also subject to increases
required by the Internal Revenue Code but, unlike the Option B death benefit,
these increases are not enhanced.
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 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 YOUNGER AGE OF YOUNGER
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>
20 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>
A-13
<PAGE>
In the case of Option A or Option B, the death benefit will be a maximum of
1.45 times the amount required to satisfy tax law requirements, until age 91
of the younger insured, resulting in a higher death benefit than required by
law. After age 91 of the younger insured, the maximum enhancement factor of
1.45 is reduced by .05 each year for nine years, at which time the factor is
1.00. The enhanced death benefit is subject to certain limits that depend in
part on the tabular cash value, set forth in Appendix F, but will never be
less than the amount required to satisfy tax law requirements. Tabular cash
value is a hypothetical value that uses the Guaranteed Death Benefit 1 Premium
(as shown in the Policy), maximum guaranteed charges and a 4% interest rate.
See Appendix F.
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. If the death
of the second insured occurs while either Minimum Guaranteed Death Benefit is
in effect, the death benefit will be adjusted as described below before the
proceeds are paid. The minimum premiums necessary to maintain either Minimum
Guaranteed Death Benefit in effect under your Policy are shown in your Policy
and also appear in your personalized illustration. See Appendix A.
MINIMUM GUARANTEED DEATH BENEFIT 1. NELICO will determine if Minimum
Guaranteed Death Benefit 1 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 at
the end of a Policy year if (1) the total of all premiums paid under the
Policy for each completed Policy year, accumulated at a 4% rate as if they
were paid on the first day of each Policy year, less any partial surrender
under the Policy in each completed Policy year, accumulated at a 4% rate from
the date of surrender, is at least equal to (2) the Guaranteed Death Benefit 1
Fund, 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.
During a Policy year, the amount of premiums paid in (1) above will include
premiums paid less partial surrenders in the current Policy year, and the
amount in (2) above will be calculated as the Minimum Guaranteed Death Benefit
1 Fund amount shown in your Policy for the prior Policy year end plus 1/12 of
the Guaranteed Death Benefit 1 Premium for each Policy month of the current
Policy year up to and including the current Policy month.
The Guaranteed Death Benefit 1 Fund assumes that the Guaranteed Death
Benefit 1 Premium, that appears in your Policy, is paid on the first day of
each Policy year and accumulates at a 4% rate per year.
If the Guaranteed Minimum Death Benefit 1 is lost due to insufficient
premium payments, it is unlikely because of Federal tax law limitations that
you will be permitted to pay sufficient premiums in future years to regain the
guarantee. Federal tax law limitations also may prevent the payment of
sufficient premiums to maintain the Minimum Guaranteed Death Benefit 1
following: certain reductions in face amount, including certain partial
surrenders that reduce the face amount, reduction or deletion of a rider
benefit, or improvement in your Policy's rating classification (see "Reduction
in Face Amount").
Under Policies issued in New York, the Minimum Guaranteed Death Benefit 1 is
referred to as the "No Lapse Guarantee Benefit 1", the Minimum Guaranteed
Death Benefit 1 Fund is referred to as the "No Lapse Guarantee Benefit 1
Fund", and the Minimum Guaranteed Death Benefit 1 Premium is referred to as
the "No Lapse Guarantee Benefit 1 Premium".
MINIMUM GUARANTEED DEATH BENEFIT 2. NELICO will determine if Minimum
Guaranteed Death Benefit 2 is in effect on the first day of each Policy month
the Policy is in force, until the later of: the date the younger insured
attains age 80 (or would have attained age 80, if that person died before
reaching age 80), or 20 years from the Policy Date, but no later than the
Maturity Date of the Policy. This Benefit is in effect at the end of a Policy
year if (1) the total of all premiums paid under the Policy for each completed
Policy year, accumulated at a 4% rate as if they were paid on the first day of
each Policy year, less any partial surrender under the Policy in each
completed Policy year, accumulated at a 4% rate from the date of surrender, is
at least equal to (2) the Guaranteed Death Benefit 2 Fund, 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.
A-14
<PAGE>
During a Policy year, the amount of premiums paid in (1) above will include
premiums paid less partial surrenders in the current Policy year, and the
amount in (2) above will be calculated as the Minimum Guaranteed Death Benefit
2 Fund amount shown in your Policy for the prior Policy year end plus 1/12 of
the Guaranteed Death Benefit 2 Premium for each Policy month of the current
Policy year up to and including the current Policy month.
The Guaranteed Death Benefit 2 Fund assumes that the Guaranteed Death
Benefit 2 Premium, that appears in your Policy, is paid on the first day of
each Policy year and accumulates at a 4% rate per year.
If the Guaranteed Minimum Death Benefit 2 is lost due to insufficient
premium payments, it may be possible to regain the guarantee in future years.
Federal tax law limitations may prevent the payment of sufficient premiums to
maintain the Minimum Guaranteed Death Benefit 2 following: certain reductions
in face amount, including certain partial surrenders that reduce the face
amount, reduction or deletion of a rider benefit, or improvement in your
Policy's rating classification (see "Reduction in Face Amount").
Under Policies issued in New York, the Minimum Guaranteed Death Benefit 2 is
referred to as the "No Lapse Guarantee Benefit 2", the Minimum Guaranteed
Death Benefit 2 Fund is referred to as the "No Lapse Guarantee Benefit 2
Fund", and the Minimum Guaranteed Death Benefit 2 Premium is referred to as
the "No Lapse Guarantee Benefit 2 Premium".
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 second 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 by any rider benefits payable and by any portion of
a Monthly Deduction made for a period beyond the date of the second insured's
death.
The death proceeds may also be adjusted if either insured's age or sex was
misstated in the application, if death results from either insured's suicide
within two years (or less if provided by state law) from the Policy's date of
issue, or if limits on the death benefit are imposed by rider. (See "Limits to
NELICO's Right to Challenge the Policy".)
CHANGE IN DEATH BENEFIT OPTION
At any time after the first Policy year, before or after the death of the
first insured, you may change your death benefit option by sending your
written request for change to NELICO's Home Office. The request will be
effective on the first day of the Policy month on or after it is received. A
change in death benefit option may result in tax consequences to you. (See
"Tax Considerations".)
If you change from Option A or C (face amount options) to Option B or D
(face amount plus cash value options), 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. A face amount reduction below
$100,000 is permitted only with NELICO's consent. 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 that situation.
If you change from Option B or D (face amount plus cash value options) to
Option A or C (face amount options), the Policy's face amount may be
increased, if necessary, for the death benefit to be the same immediately
before and after the change.
If you change from Option A or B (enhanced) to Option C or D, the Policy's
death benefit amount in most cases will be reduced, if the Internal Revenue
Code increases are in effect, or will remain the same, if they are not in
effect.
A-15
<PAGE>
Changes from Option C or D to Option A or B (enhanced) are subject to
underwriting approval, and both insureds must be living if the amount at risk
under the Policy would increase as a result of the change.
EXTENDING THE MATURITY DATE
If approved in your state, NELICO will issue or amend your Policy with an
extended maturity endorsement. (The endorsement will be added only prior to
the original Maturity Date.) If the extended maturity endorsement is added to
the Policy, the Policy will not mature until the date of the younger insured's
death (the "Extended Maturity Date"). In addition, on and after the original
Maturity Date, the death benefit will equal the cash value on the date of
death; or the greater of (1) the cash value on the date of death and (2) the
Policy face amount, if, on the original Maturity Date, the total premiums paid
in each Policy year accumulated at 4% from the first day of the Policy year,
less every partial surrender accumulated at 4% from the date of surrender, is
not less than the "Age 100 Amount" shown in the Policy. (For this purpose,
premiums paid within 20 days prior to a Policy anniversary are treated as if
paid in the next Policy year.) The Age 100 Amount is based on the Guaranteed
Death Benefit 2 premium being paid each Policy year until the original
Maturity Date (rather than until age 80 of the younger insured.) Currently, no
cost of insurance or minimum death benefit guarantee charges will be deducted
after the original Maturity Date. No premiums can be paid after the original
Maturity Date unless necessary to prevent lapse of the Policy. All riders
attached to the Policy and in effect on the original Maturity Date, other than
the extended maturity endorsement, will terminate on the original Maturity
Date.
The tax consequences associated with extending the Maturity Date beyond age
100 are unclear and a tax advisor should be consulted before effecting such an
extension. For more information about the extended maturity option, contact
your registered representative or NELICO.
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 NELICO's
general account as a result of the loan. The cash value reflects 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, any
Surrender Charge that applies if you reduce the Policy's face amount or make a
partial surrender and any due and unpaid interest on Policy loans), 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.
(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 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 NELICO's mortality and
expense risk, but in the future NELICO 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 NELICO's Income
Taxes".)
A-16
<PAGE>
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.
ALLOCATION OF NET PREMIUMS
As of the "investment start date", the net premium to be allocated to any of
the variable sub-accounts is 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 NELICO 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 according to your instructions. (See "Investment Options".)
Therefore, your selection of sub-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. Amounts to be allocated to the Fixed Account are so
allocated as of the investment start date and are not invested in the Money
Market Sub-Account. Allocations can be made to a maximum of nine accounts
(including the Fixed Account) at any time.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
An amount is first provided for investment under the Policy as of the
investment start date. That is the latest of: the date when NELICO first
receives a premium payment for the Policy, the date each of the insureds has
signed his/her Part II of the Policy application and the Policy Date. (For
this purpose, receipt of the premium payment means receipt by your registered
representative, if the payment is made with the application; otherwise, it
means receipt by a NELICO agency or, in the case of a Policy sold through
MetLife Brokerage, receipt by MetLife Brokerage at its Princeton, New Jersey
office.)
If you make a premium payment with the application, the Policy Date is
generally the later of the date each of the insureds has signed his/her Part
II of the application and receipt of the premium payment. In that case the
Policy Date and investment start date are the same. (Under NELICO's
administrative rules, a Policy which would be dated the 28th day or later in a
month will receive a Policy Date of the 28th.) 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 insureds 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 NELICO
receives the premium for the Policy and the date when each of the insureds has
signed his/her Part II of the application. The maximum amount of coverage
provided is the lesser of the amount of insurance applied for and $500,000
when both insureds are standard risks ($250,000 for when at least one insured
is not a standard risk and $50,000 when both persons 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 NELICO
declines an application, it will refund the premium payment made plus interest
at the rate currently in use by NELICO.
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 to the Policy 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, with NELICO's consent, upon receipt of the
number of monthly payments due under the Master Service Account arrangement.
This arrangement is not available under the Policies as of the date of this
prospectus, but NELICO plans to make it available in the future).
A-17
<PAGE>
Under limited circumstances, NELICO 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
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, NELICO 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
NELICO mails the Notice of Withdrawal Right, whichever is latest. The Policy
may be returned to NELICO or your registered representative. 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, NELICO
will refund any premium paid (or any other amount that is required by state
insurance law) with interest at the rate currently in use by NELICO.
CHARGES AND EXPENSES
DEDUCTIONS FROM PREMIUMS
SALES CHARGE. NELICO deducts a 9% sales charge from premiums (whether a
Planned Premium or an unscheduled payment). NELICO currently intends to waive
this charge on all premiums after the 15th Policy year (after the 17th Policy
year, for Policies issued in Pennsylvania). In addition, NELICO currently
intends to deduct this charge from premiums paid in a Policy year (through the
first 15 or 17 Policy years, as applicable) only until an amount equal to a
Target Premium has been paid in that Policy year; premium payments during a
Policy year in excess of a Target Premium currently will not be subject to the
sales charge. However, NELICO retains the right not to waive the charge or to
resume the charge in either of these circumstances.
The Target Premium for a Policy covering two insureds who are each assigned
to a standard or better underwriting class equals the level annual premium
necessary to keep a level death benefit base Policy in-force until age 80 of
the younger insured, if that insured's issue age is 60 or below, assuming
charges are imposed at the guaranteed levels and a 4% rate of interest. (The
Policy duration used for calculating the Target Premium is 20 years if the
younger insured's issue age is above 60 up to 65, to age 85 of the younger
insured if that insured's issue age is above 65 up to 80, and five years if
the younger insured's issue age is above 80). If an insured is assigned to a
class below standard, the Target Premium for the Policy will be up to 140% of
the comparable Target Premium described above, depending on the underwriting
class of each insured. Certain riders increase the Target Premium for the
Policy above the amounts described herein. The Target Premium is designated on
your personalized illustration.
During the first 14 Policy years, if you surrender or lapse the Policy, make
a partial surrender or reduce the face amount, a Deferred Sales Charge also
applies. (For joint insureds whose average issue age was 60 to 70 at issue of
the Policy, the period when the Deferred Sales Charge applies is 9 years, for
insureds whose average issue age was 70 to 80, 6 years, and above 80, 5 years.
See "Surrender Charge" below.)
The sales charges under a Policy in a given Policy year are not necessarily
related to NELICO's actual sales expenses for that year.
Sales charges for Policies sold in certain group or sponsored arrangements
may be reduced. NELICO may reduce or eliminate the sales charge, when you
purchase a Policy, on cash value transferred in the first year, from
A-18
<PAGE>
life insurance policies that were issued by The New England, NELICO or
NELICO's affiliates and that meet certain premium, cash value and/or face
amount minimums, as currently published by NELICO. NELICO's normal issuance
criteria, including reinsurance and other limitations, as well as certain
other eligibility requirements, would also apply in these situations. NELICO
may, however, waive underwriting requirements in these situations. NELICO may
also reduce the Surrender Charge on such policies. Your registered
representative can advise you regarding the availability of this feature.
STATE PREMIUM TAX CHARGE. NELICO deducts 2.5% from each premium to cover
state premium taxes and administrative expenses. These 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.
FEDERAL PREMIUM TAX CHARGE. NELICO deducts 1% from each premium to recover a
portion of that part of NELICO's federal income tax liability that is
determined solely by the amount of life insurance premiums it receives.
EXAMPLE: The following chart shows the net amount that currently would be
allocated to the Variable Account assuming a premium payment of $5,000 and a
Target Premium of $2,000.
<TABLE>
<CAPTION>
NET
PREMIUM PREMIUM
------- -------
<C> <C> <S>
$5,000 $2,000
(12.5% X 2,000 = total sales and premium tax charge up to
-250 Target Premium)
------
$1,750
$3,000
-105
------
$2,895 (3.5% X 3,000 = total sales and premium tax charge on
payments in excess of Target Premium, based on NELICO's
current rules)
$1,750
+2,895
------
$4,645 Net Premium
======
</TABLE>
NELICO may waive the 9% sales charge on premiums paid after the 15th Policy
year (after the 17th Policy year for Policies issued in Pennsylvania). In that
case, the net premium in this example would be $5,000 - 175 (3.5% X 5,000), or
$4,825.
SURRENDER CHARGE
If, during the first 14 Policy years, a Policy is totally surrendered or
lapses, the face amount is reduced, or a partial surrender reduces the face
amount, a Surrender Charge will be deducted from the cash value. (For joint
insureds whose average issue age is 60 1/2 to 70 at issue of the Policy, the
Surrender Charge period is nine years, for insureds whose average issue ages
are 70 1/2 to 80, six years, and above 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.
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 Benchmark Premium, rather than the Target Premium. In general, the Target
Premium differs from the Benchmark Premium in that the Target Premium may be
up to 110% of the Benchmark Premium for the same base Policy. In addition,
certain riders to the Policy increase the Target Premium but do not increase
the Benchmark Premium. The Policy's
A-19
<PAGE>
Benchmark Premium equals the level annual premium necessary to keep a level
death benefit Policy, without riders, in-force until age 80 of the younger
insured (or 20 years after issue, if later, but not later than the Maturity
Date) assuming charges are imposed at the guaranteed levels and a 4% rate of
interest.
For Policies which cover insureds whose average issue age is 60 or less at
issue, the maximum Deferred Sales Charge applies in Policy years three through
five. The Deferred Sales Charge in these years equals 41% of actual premiums
paid up to one Benchmark Premium, plus 41% of additional premiums paid up to a
second Benchmark Premium, plus 8% of additional premiums paid up to a third
Benchmark Premium. In no event will the Deferred Sales Charge exceed $30 per
$1,000 of face amount. 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 fourteenth Policy year.
The Deferred Sales Charge during either of the first two Policy years for
insureds whose average issue age is 70 or less is equal to 21% of the premiums
paid in the first Policy year, up to a maximum of 21% of one Benchmark
Premium. As described above, after the second Policy year, the maximum
Deferred Sales Charge increases substantially.
The table below shows the maximum Deferred Sales Charge that applies to
Policies covering insureds whose average issue age is 60 or less at issue, and
assumes that one Benchmark Premium per year is paid under the Policy. The
table shows the charge, expressed as a percentage of the Benchmark 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 14, the
maximum Deferred Sales Charge declines on a monthly basis.
<TABLE>
<CAPTION>
THE MAXIMUM DEFERRED SALES
CHARGE IS THE FOLLOWING
PERCENTAGE OF ONE BENCHMARK
FOR POLICIES WHICH ARE PREMIUM PER YEAR TO DATE
SURRENDERED, LAPSED OF SURRENDER, LAPSE OR
OR REDUCED DURING FACE AMOUNT REDUCTION
---------------------- ---------------------------
<S> <C> <C>
Entire policy year 3 30.00%
4 22.50%
5 18.00%
Last Month of Policy
years 6 13.33%
7 10.00%
8 7.50%
9 5.56%
10 4.00%
11 2.73%
12 1.67%
13 .77%
14 0.00%
</TABLE>
For insureds whose average issue age is above 60 at issue, the Deferred
Sales Charge percentages are less than or equal to those described above, with
the maximum charge occurring in Policy year three, for insureds with an
average issue age up through 70, and in Policy year one, for insureds with an
average issue age above 70.
The applicable Deferred Sales Charge will be deducted from the Policy's
available cash value, regardless of whether that cash value is derived from
premiums or investment experience.
In the case of a reduction in face amount or partial surrender that reduces
the face amount, any Deferred Sales Charge that applies is deducted from the
Policy's remaining 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.
A-20
<PAGE>
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.
<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 $4.00
2 4.00
3 4.00
4 4.00
5 4.00
Last Month of Policy year* 6 3.60
7 3.20
8 2.80
9 2.40
10 2.00
11 1.50
12 1.00
13 0.50
14 0.00
</TABLE>
- --------
* The charge declines monthly after the end of the fifth 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 average issue age is above 60 at issue, the Deferred
Administrative Charge is less than or equal to that in the table above.
MONTHLY DEDUCTION FROM CASH VALUE
On the first day of each Policy month, starting with the Policy Date, NELICO
deducts the "Monthly Deduction" from your cash value. If either Minimum
Guaranteed Death Benefit is in effect, or if the Policy coverage is being
protected by payment of the Minimum Premium during the first three Policy
years, the Monthly Deduction is made until the cash value equals zero.
Otherwise, the Monthly Deduction is made 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 $5.00 per month (guaranteed
not to exceed $7.50 per month).
ADMINISTRATIVE CHARGE. Currently, the Administrative Charge is $0.16 per
$1,000 of Policy face amount in the first Policy year. The Administrative
Charge in the second through tenth Policy years is, on a current basis, $0.05
per $1,000 of Policy face amount, for two insureds who are each assigned to a
standard or better underwriting class; $0.075 per $1,000 of Policy face amount
if only one insured is in a standard or better class; and $0.10 per $1,000 of
Policy face amount if neither insured is in a standard or better class. In
Policy years eleven and after, currently the Administrative Charge is $0.03
per $1,000 of Policy face amount.
The current monthly Administrative Charge will apply to no more than $4
million of Policy face amount beginning in the second Policy year. As a
result, the maximum monthly charge currently deducted in the second
A-21
<PAGE>
Policy year, for example, will be $200 per month for two insureds who are each
a standard or better risk and $400 per month if neither insured is a standard
or better risk.
The guaranteed maximum monthly Administrative Charge is $0.16 per $1,000 of
face amount in the first Policy year and $0.10 per $1,000 thereafter.
The Policy Fee, the Administrative Charge and the Deferred Administrative
Charge together cover the cost of administering the Policies, as well as
legal, actuarial, systems, mailing and other overhead costs connected with
NELICO's variable life insurance operations.
MINIMUM DEATH BENEFIT GUARANTEE CHARGE. The minimum death benefit guarantee
charge is $0.01 per $1,000 of Policy face amount. This charge compensates
NELICO 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
Minimum Guaranteed Death Benefit Fund amount 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. There are no future
mortality charges attributable to an insured from the time he or she reaches
age 100 (or would have reached age 100, if that person died before reaching
age 100). 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 each 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 for a given Policy
also depend on the insureds' issue ages and on the duration of the Policy. The
joint rates are guaranteed not to be higher than joint rates based on the 1980
Commissioners Standard Ordinary Mortality Tables with smoker/nonsmoker
modifications (the "1980 CSO Tables"). The rates actually used may be lower
than these maximum rates, depending on NELICO's expectations regarding future
mortality and expense experience, lapse rates and investment earnings. NELICO
reviews the adequacy of its current cost of insurance rates periodically and
may adjust their level. 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.
Each insured person is underwritten separately. The underwriting classes
used for determining cost of insurance rates are smoker standard, smoker
substandard, nonsmoker standard, nonsmoker preferred, nonsmoker residual, and
nonsmoker substandard. Substandard 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.
Availability of the three standard nonsmoker classes varies. Under a Policy
with a face amount of $500,000 or more the available standard nonsmoker
classes for an insured whose issue age is 20 through 75 are nonsmoker
preferred and nonsmoker residual. For Policies with a face amount below
$500,000 and for all insureds whose issue age is above 75, only the nonsmoker
standard class is used. Among these three standard nonsmoker classes, the
nonsmoker preferred class generally offers the most favorable rates on a
current basis and the nonsmoker residual class generally offers the least
favorable rates on a current basis.
A-22
<PAGE>
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. NELICO may offer
Policies for which cost of insurance rates (and Policy values and benefits) do
not vary based on the sex of the insured. Such Policies would be available, if
at all, only where required by state law or to certain employee benefit plans.
CHARGES FOR ADDITIONAL BENEFITS AND SERVICES. Charges are imposed for the
cost of any additional rider benefits as described in the rider form. NELICO
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. NELICO charges the sub-accounts of the
Variable Account for the mortality and expense risks that NELICO assumes.
Currently, the charge is made daily at an annual rate of .75% of the sub-
accounts' assets. NELICO reserves the right to increase the charge, up to a
maximum annual rate of .90%. The mortality risk NELICO assumes is that
insureds may live for shorter periods of time than NELICO estimated. The
expense risk is that NELICO's costs of issuing and administering the Policies
may be more than NELICO estimated. If proceeds from this charge are not needed
to cover mortality and expense risks, NELICO may use proceeds to finance
distribution of the Policies.
CHARGES FOR INCOME TAXES. NELICO currently makes no charge for income taxes
against the Variable Account, but in the future NELICO may impose such a
charge, if appropriate. NELICO reserves the right to make a charge for any
taxes imposed on the Policies by any governmental body in the future. (See
"Charge for NELICO's Income Taxes".)
ELIGIBLE FUND EXPENSES. Charges for investment advisory fees and other
expenses are deducted from the assets of the Eligible Funds.
The Zenith Fund Series incur charges for advisory fees and certain other
expenses. The series (other than the Capital Growth Series) are advised by TNE
Advisers, Inc., an affiliate of NELICO. Under a voluntary expense cap by TNE
Advisers for each of the Back Bay Advisors Bond Income, Back Bay Advisors
Money Market, Back Bay Advisors Managed, Westpeak Stock Index, and Westpeak
Growth and Income 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
(other than the Capital Growth 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 up until two years after the end of the fiscal
year in which the expense was incurred. 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 for 1997, (for the Goldman Sachs Midcap Value Series,
anticipated expenses for 1998), after giving effect to the applicable expense
cap or expense deferral arrangement.
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER ANY
EXPENSE CAP)
<TABLE>
<CAPTION>
BACK BACK
BAY BAY BACK WESTPEAK LOOMIS
ADVISORS ADVISORS BAY WESTPEAK GROWTH SAYLES
CAPITAL BOND MONEY ADVISORS STOCK AND SMALL
GROWTH INCOME MARKET MANAGED INDEX INCOME CAP
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
------- -------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee .63% .40% .35% .50% .25% .70% 1.00%
Other Expenses .04% .12% .10% .11% .15% .12% --
---- ---- ---- ---- ---- ---- -----
Total Series Operating
Expenses .67% .52% .45% .61% .40% .82% 1.00%
</TABLE>
A-23
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER EXPENSE
DEFERRAL)
<TABLE>
<CAPTION>
GOLDMAN
SACHS LOOMIS MORGAN STANLEY DAVIS ALGER
MIDCAP SAYLES INTERNATIONAL VENTURE EQUITY
VALUE BALANCED MAGNUM VALUE GROWTH
SERIES* SERIES EQUITY SERIES SERIES SERIES
------- -------- -------------- ------- ------
<S> <C> <C> <C> <C> <C>
Management Fee .75% .70% .90% .75% .75%
Other Expenses .15% .15% .40% .15% .12%
---- ---- ----- ---- ----
Total Series Operating
Expenses .90% .85% 1.30% .90% .87%
</TABLE>
- --------
* Anticipated annual operating expenses for the Goldman Sachs Midcap Value
Series are based on the management fee approved by shareholders of the
Series that became effective on May 1, 1998, and other expenses actually
incurred for the Series for 1997.
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, 1997, the total operating expenses incurred by the Portfolios, as a
percentage of Portfolio average net assets, were as follows:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
- --------- ---------- -------- ------------
<S> <C> <C> <C>
Equity-Income .50% .08% .58%*
Overseas .75% .17% .92%*
High Income .59% .12% .71%*
Asset Manager .55% .10% .65%*
</TABLE>
- --------
* Total annual expenses do not reflect certain expense reductions due to
directed brokerage arrangements and custodian interest credits. Had these
reductions been included, total annual expenses would have been .57% for
Equity-Income Portfolio, .90% for Overseas Portfolio, .64% for Asset Manager
Portfolio, and .71% for High Income Portfolio.
Affiliates of Fidelity Management & Research Company compensate NELICO
and/or certain affiliates for administrative, distribution, or other services
relating to these Portfolios of VIP Fund and VIP Fund II. Such compensation is
based on assets of the Portfolios attributable to the Policies and certain
other variable insurance products issued by NELICO and its affiliates.
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.
For Policies issued in connection with group or sponsored arrangements,
NELICO may waive or reduce one or more of the following charges: the sales
charge, Surrender Charge, charges for the cost of insurance, mortality and
expense risk charge, administrative charges, Policy Fee 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.) NELICO 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-24
<PAGE>
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. NELICO 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 waiver or reduction of
Policy charges for group or sponsored arrangements described above will not
apply to Policies issued in the state of New York, other than Policies issued
to non-tax qualified deferred compensation plans.
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. NELICO may offer Policies that
do not vary based on the sex of the insured for use in connection with certain
employee benefit programs. Your registered representative can advise you as to
the availability of such Policies. NELICO 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 may be a
fixed amount or a varying amount. This schedule, which must be within NELICO's
minimum and maximum limits, appears in your Policy form. 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 NELICO's published maximum.
Planned Premiums can be paid on an annual, semi-annual or quarterly schedule
or, with NELICO's consent, monthly. You can change your Planned Premium
schedule at any time by sending your request to NELICO's Home Office. 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. NELICO will send premium
notices for annual, semi-annual or quarterly Planned Premiums. In the future,
NELICO may make available the Master Service Account arrangement under which
you may have NELICO withdraw your premium payments from your bank checking
account or TNE Cash Management Trust account.
NELICO offers three types of premium payment levels that can protect your
Policy against lapse over specified time periods.
First, NELICO 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 each of the insureds, 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. However, no three-year Minimum Premium
death benefit guarantee will apply if you make a Policy loan or reinstate the
Policy, if you reduce the face amount or make a partial surrender that reduces
the face amount, if you add, reduce or delete a rider benefit, or if the
rating classification of your Policy is improved in the first three Policy
years.
A-25
<PAGE>
Second, NELICO 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 younger 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". The guaranteed minimum death benefit premium is
based on the Policy's face amount, the age, sex (unless unisex rates apply)
and underwriting class of each of the insureds, the death benefit option
chosen, the guaranteed level of Policy charges and any rider benefit selected.
The premium is recalculated following the Policy transactions described above
(other than insufficient premiums) and is also recalculated following an
increase 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
younger 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 actuarially determined to
provide guaranteed coverage to the earlier age. 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
these transactions (other than insufficient premiums) and is also recalculated
following an increase 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".) NELICO'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. NELICO may require evidence of insurability
before accepting the payment.
NELICO allocates payments to your Policy's sub-accounts as of the date the
payment is received at NELICO's Home Office. (See "Receipt of Communications
and Payments at NELICO's Home Office".)
A payment is treated first as a Planned Premium, second as repayment of a
Policy loan, and third as an unscheduled payment, unless you designate
otherwise in writing to NELICO. (For Policies issued in New York, a payment
will be treated as a Planned Premium when a Policy loan is outstanding only if
the payment is in the exact amount of the Planned Premium next due; otherwise,
it will be treated first as repayment of Policy loan interest due, second as
repayment of a Policy loan, third as a Planned Premium, and last as an
unscheduled payment.) If you have a Policy loan, it 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", "Deductions from Premiums" and "Death Benefit".)
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 pay the amount in default plus applicable deductions from
premium payments. NELICO will notify you of the amount due. During the grace
period insurance coverage continues under your Policy, but if the second
insured dies before the premium is paid, NELICO will deduct from the death
proceeds the portion of the unpaid Monthly Deduction for the period prior to
the date of death. If the required premium is unpaid at the end of the grace
period, the Policy will lapse without value.
REINSTATEMENT. If your Policy has lapsed, it may be reinstated within seven
years after the date of lapse. If more than seven years have passed, or if you
have surrendered the Policy, NELICO's consent is required to
A-26
<PAGE>
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 NELICO.
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 (rather
than by age of the insured) on any date after reinstatement, the period the
Policy was lapsed does not count.
OTHER POLICY FEATURES
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. NELICO will make the loan as of the
date when a loan request is received at NELICO's Home Office. (See "Receipt of
Communications and Payments at NELICO's Home Office".) You should contact
NELICO's Home Office or your registered representative 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 ("projected
cash value"); 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 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. NELICO currently intends to base the loan value on 100%
of the Policy's projected cash value, rather than 90%, as described above in
item (i), for Policy years 16 and after.
The example below illustrates how the loan value is determined.
- -------------------------------------------------------------------------------
EXAMPLE: Using the Policy illustrated on page A-54 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 4.24%). 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
-------- ---------
<C> <S> <C> <C>
(1) Cash Value after Premium Payment on 10th Policy
Anniversary........................................ $172,252 $161,752
(2) Cash Value Projected at a Constant Annual Rate of
Return of 4% to the
(a) 11th Policy Anniversary......................... 177,963
(b) Next Planned Premium Due Date................... 163,054
(3) 90% of Amount Calculated in (2)..................... 160,167 146,749
(4) Amount Calculated in (3), Reduced by the Applicable
Surrender Charge................................... 154,350 140,932
(5) Amount Calculated in (4), Reduced by Loan Interest
to the Next Interest Due Date...................... 146,303 139,020
</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 an effective rate of 5.5% per
year (using simple interest during the year) and is due on the Policy
anniversary. If not paid, the interest accrued on the loan is added to the
loan,
A-27
<PAGE>
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 (compounded daily) at an effective rate of not less than 4% per
year. The rate currently credited is 4% per year for the first 15 Policy years
and 5% thereafter. 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 a Policy loan, and third as an
unscheduled payment, unless you designate otherwise in writing to NELICO. (For
Policies issued in New York, a payment will be treated as a Planned Premium
when a Policy loan is outstanding only if the payment is in the exact amount
of the Planned Premium next due; otherwise, it will be treated first as
repayment of Policy loan interest due, second as repayment of a Policy loan,
third as a Planned Premium, and last as an unscheduled payment.) 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 Benefits".)
If Policy loans plus accrued interest at any time 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), NELICO will notify you that the Policy is going to terminate. (This
situation is referred to as an "excess Policy loan". NELICO tests for an
excess Policy loan on each monthly processing date and any time a loan-related
transaction is made.) The Policy will terminate without value 62 days after
the notice is mailed unless the excess amount is paid to NELICO within that
time. (See "Lapse and Reinstatement".) If the Policy lapses with a loan
outstanding, adverse tax consequences may result. (See "Tax Considerations"
below.)
Department of Labor ("DOL") regulations set forth requirements for
participant loans under retirement plans subject to the Employee Retirement
Income Security Act of 1974 ("ERISA"). Generally, the DOL regulations will
apply to plans that qualify under Section 401 of the Internal Revenue Code
(the "Code"). If the retirement plan is subject to ERISA, the plan fiduciary
authorized to oversee/direct the plan loan program must fulfill the
requirements of the regulations including charging a "commercially reasonable"
rate of interest. The policy loan interest rate may not be considered
"commercially reasonable" within the meaning of the DOL regulations. In
addition, the DOL regulations require that a plan loan be adequately secured
but provide that not more than 50% of the participant's vested account balance
(including the Policy cash value) be used as security for the loan. The DOL
regulations and applicable tax law may also contain other requirements for
plan loans. Therefore, plan loan provisions may differ from Policy loan
provisions. If you are a participant in a retirement plan subject to ERISA,
you should consult with the fiduciary administering the plan loan program.
Failure of the plan loan program to comply with the requirements of the DOL
regulations and of tax law may result in tax penalties under the Code and
under ERISA.
SURRENDER
You may surrender a Policy for its net cash value at any time while either
insured is living by a request conforming to NELICO's administrative
procedures. The net cash value of the surrendered Policy is determined as of
the date when a surrender request is received at NELICO's Home 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".) You
may elect in writing to have 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 on the first day of any
Policy month 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
A-28
<PAGE>
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
Benchmark Premium, on which any future Surrender Charges are based, and in the
Target Premium, on which the 9% sales charge is currently based. Rider
benefits may also be reduced. No partial surrender may reduce the face amount
below the Policy's required minimum except with NELICO's consent.
Partial surrenders in any one Policy year are limited, except with NELICO'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, NELICO permits partial surrenders of up to 75% of the
Policy's net cash value per year, assuming sufficient available loan value.
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 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 1 or 2. 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. The amount of
net cash value paid upon partial surrender is determined as of the first day
of the Policy month on or after the date when a request conforming to NELICO's
administrative procedures is received at NELICO's Home Office. NELICO's
administrative procedures can be determined by contacting your registered
representative or the Home 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 Benchmark Premium, on
which any future Surrender Charges are based, and the Target Premium, on which
the 9% sales charge is currently based, are 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 may not be advisable,
although it will reduce your administrative charges, 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. The face amount remaining after a reduction has to meet NELICO's
minimum face amount requirements for issue, except with NELICO's consent.
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 1 or 2. See "Minimum Guaranteed Death Benefit".
A-29
<PAGE>
A face amount reduction takes effect as of the first day of the Policy month
on or after the date when NELICO has received a request at its Home Office
meeting NELICO's administrative requirements. You can determine NELICO's
administrative requirements by contacting your registered representative or
the Home 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 nine accounts (including the Fixed
Account) at any time. The Policy provides that a minimum of 10% of the premium
must be allocated to each sub-account selected and that percentages allocated
must be in whole numbers; currently, however, NELICO is waiving the
requirement of a 10% minimum and will permit any whole percentage to be
allocated to a sub-account. Your Policy's cash value may be distributed among
no more than nine accounts (including the Fixed Account) at any one time.
You make the initial 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 NELICO receives your
request. You may request the change by telephone or by written request in a
form satisfactory to NELICO. (See "Receipt of Communications and Payments at
NELICO's Home 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, the Policy provides that you
may transfer your Policy's cash value between sub-accounts up to four times in
a policy year (twelve times per policy year for Policies issued in New York)
without NELICO's consent. NELICO currently allows 12 sub-account transfers per
policy year under all Policies. 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 NELICO receives the transfer request at its Home Office. (See
"Receipt of Communications and Payments at NELICO's Home 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 nine
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 NELICO's Home Office or by
telephoning NELICO. To request a transfer or reallocation by telephone, you
should contact your registered representative or contact NELICO at 1-800-200-
2214. Requests for transfers (up to NELICO's current limit per policy year) or
reallocations by telephone will be automatically permitted. NELICO 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 NELICO 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 NELICO does not employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine, it may be liable for any losses due to unauthorized or fraudulent
instructions.
PAYMENT OF PROCEEDS
NELICO 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
Home Office of a request, or proof of death of an insured, in a form
A-30
<PAGE>
satisfactory to NELICO. (See "Receipt of Communications and Payments at
NELICO's Home Office".) However, NELICO may delay payment (except when a loan
is made to pay a premium to NELICO) 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. NELICO 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, NELICO
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. NELICO may also delay payment if it
considers whether to contest the Policy. NELICO 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 NELICO'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 MetLife'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 net cash value, or of any loan value available, from cash value
in the Fixed Account will normally be paid promptly. However, NELICO 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). NELICO will pay interest in
accordance with state insurance law requirements on payments that are delayed.
EXCHANGE OF POLICY DURING FIRST 24 MONTHS
During the first 24 months after the issue date of the Policy, if the Policy
has not lapsed, you may exchange it for a comparable fixed-benefit traditional
survivorship life insurance policy issued by NELICO or MetLife, as described
below. This exchange is available to a surviving insured. If you exercise this
option, you will have to make up any investment loss you had under the
variable life insurance policy.
The exchange will be made without evidence of insurability. The new policy
will have the same face amount (or the same net amount at risk) as the
original Policy on the date of the exchange, the same policy date as the
original Policy, the same issue ages as of the Policy Date of the original
Policy and risk classifications based on the actual underwriting classes to
which each insured was assigned by NELICO on the date of issue of the original
Policy. For Policies issued in New York, you have the option of exchanging for
a new, fixed-benefit traditional survivorship policy with a face amount equal
to the current death benefit of the exchanged variable life policy. Premiums
for the new policy will be based on the premium rates for comparable fixed-
benefit traditional survivorship life insurance policies issued by NELICO or
MetLife 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.
Your Policy may be issued or amended with an endorsement providing for an
exchange right to a fixed benefit policy issued by NELICO (if such a policy
was available on the Policy Date of your variable life Policy), or otherwise,
to a fixed benefit policy issued by MetLife. If your Policy does not have such
an endorsement, the exchange right will be to a fixed benefit policy issued by
MetLife or, at your option, to a fixed benefit policy issued by NELICO if such
a policy was available on the Policy Date of your variable life Policy.
The exchange will be effective on the date when NELICO receives written
notice at its Home Office in a form satisfactory to NELICO, the Policy and
payment to NELICO of any cost to exchange. (See "Receipt of Communications and
Payments at NELICO's Home Office".) The cost to exchange will reflect any
differences in premiums and cash values between the two policies. Any Policy
loan outstanding must be repaid on or before the effective date of the
exchange.
A-31
<PAGE>
For a Policy issued in connection with certain group or sponsored
arrangements, you may (if approved in your state) have the additional option
of exchanging 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 NELICO or an affiliate. The terms and conditions applicable
to the 24 month exchange option will also be applicable to this option. 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.
POLICY SPLIT RIDER
Subject to state availability, a split rider may be added to the Policy
which allows the Policy Owner to "split" the Policy into two new individual
flexible premium adjustable variable life insurance policies issued by NELICO.
The rider permits the Policy to be split at the request of the Policy Owner in
the event of divorce of the insureds, if certain federal tax law changes
occur, or if certain business circumstances change (each, a "split event").
The rider sets forth the specific conditions that must be met in order for a
split event to be deemed to have occurred. If the split rider is exercised,
this Policy will be canceled, and its cash value will be transferred (in equal
portions, unless otherwise requested) to two new individual policies issued on
the effective date of the split. A Surrender Charge will apply to each
individual policy in accordance with such Policy's terms. Each new policy will
be issued with either a level or variable death benefit option in effect,
depending on which type of death benefit option is in effect under this Policy
at the time the split rider is exercised.
For more information about the Policy split rider and the conditions and
rules relating to the exercise of any rights under the split rider, you should
contact your registered representative or NELICO. You can also request a
prospectus and additional information regarding the individual policies to be
issued upon exercise of the split rider. For a discussion of the possible tax
consequences of splitting the Policy, see "Tax Considerations."
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 NELICO. You can make, change or revoke the selection
before the last death under the Policy. 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
NELICO 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.
A-32
<PAGE>
(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.
NELICO'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 NELICO'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, and rider benefits are subject to different terms, conditions, and
guarantees than is the Policy.
It may be to your economic advantage to include a significant portion or
percentage of your insurance coverage under a joint life term rider to age
100.
Reductions in or elimination of term rider coverage does not trigger the
imposition of a surrender charge, and use of a term rider generally reduces
sales compensation. However, like the cost of coverage under the Policy,
charges deducted from the Policy's cash value to pay for term rider coverage
no longer participate in the investment experience of the Variable Account,
and generally increase with the age of the covered individual. Your registered
representative can provide you more information on the uses of term rider
coverage.
The following riders are available:
TERM RIDER--JOINT LIFE TERM INSURANCE TO AGE 100, which provides joint
life term insurance.
TERM RIDER--JOINT 4 YEAR TERM INSURANCE, which provides joint life term
insurance for four policy years.
TERM RIDER--LEVEL SINGLE LIFE TERM INSURANCE, which provides additional
term insurance on one of the insureds.
TERM RIDER--DECREASING SINGLE LIFE TERM INSURANCE, which provides
additional term insurance on one of the insureds in an amount that
decreases each year to zero over a coverage period of 10, 15 or 20 years.
WAIVER OF MONTHLY DEDUCTION, which provides for waiver of Monthly
Deductions upon the disability of the insured covered by the waiver.
BENEFITS FOR DISABILITY OF COVERED INSUREDS, which provides for waiver of
the cost of the rider itself and for a premium benefit upon the disability
of an insured covered by the rider.
An extended maturity endorsement and/or a Policy split rider may also be
available. (See "Extending the Maturity Date" and "Policy Split Rider".) Not
all riders may be available to you and riders in addition to those listed
above may be made available. You should consult your registered representative
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 second insured.
A-33
<PAGE>
The beneficiary is also named in the application. The beneficiary of the
Policy may be changed at any time before the death of the second insured. The
beneficiary has no rights under the Policy until the death of the second
insured and must survive the second insured in order to receive the death
proceeds. If no named beneficiary survives the second insured, the proceeds
will be paid to the Policy Owner.
A change of Policy Owner or beneficiary must be in written form satisfactory
to NELICO 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 NELICO
under the Policy before the signed change form is received by NELICO at its
Home 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 NELICO under the Policy before a signed copy of the assignment form
is received at NELICO's Home Office. NELICO 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
NELICO on January 31, 1983 under Delaware law and became subject to
Massachusetts law when NELICO changed its domicile to Massachusetts on August
30, 1996. The Variable Account is the funding vehicle for other NELICO
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 registered with the Securities and Exchange
Commission (the "SEC") as a unit investment trust under the Investment Company
Act of 1940. Registration with the SEC does not involve supervision by the SEC
of management or investment practices or policies of the Variable Account.
However, both NELICO and the Variable Account are subject to regulation by the
Massachusetts 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 NELICO, 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 NELICO may conduct. NELICO
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 NELICO's general creditors, and may only be used to support
the cash values under its variable life insurance policies issued by the
Variable Account. But NELICO may transfer to its general account assets which
exceed the reserves and other liabilities of the Variable Account. Before
making any such transfer, NELICO 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 NELICO'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
A-34
<PAGE>
-- 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 Growth and Income Sub-Account, which invests in the Westpeak
Growth and Income 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 Balanced Sub-Account, which invests in the Loomis Sayles
Balanced 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 Venture Value Sub-Account, which invests in the Davis Venture
Value Series of the Zenith Fund
-- The Zenith Midcap Value Sub-Account, which invests in the Goldman Sachs
Midcap Value Series (formerly the Loomis Sayles Avanti Growth Series) of
the Zenith Fund
-- The Zenith International Magnum Equity Sub-Account, which invests in the
Morgan Stanley International Magnum 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
The Zenith Fund is an open-end diversified management investment company,
more commonly known as a mutual fund. The Zenith Fund was established as an
investment vehicle for separate investment accounts of NELICO and of other
life insurance companies. Currently the Zenith Fund is the funding vehicle for
the Variable Account and for certain separate accounts of NELICO and MetLife
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
the highest possible level of current income consistent with preservation of
capital 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.
A-35
<PAGE>
The Zenith Back Bay Advisors Bond Income Series' investment objective is to
provide a high level of current income consistent with protection of capital
and moderate investment risk through investment primarily in U.S. Government
and corporate bonds.
The Zenith Capital Growth Series' investment objective is long-term growth
of capital through investment primarily in equity securities of companies
whose earnings are expected to grow at a faster rate than the U.S. economy.
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 of common stocks and fixed income securities.
The Zenith Westpeak Growth and Income 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 Goldman Sachs Midcap Value Series' investment objective is long-
term capital appreciation. The Series invests, under normal circumstances,
substantially all of its assets in equity securities and at least 65% of its
total assets in equity securities of companies with public stock market
capitalizations of between $500 million and $10 billion at the time of
investment.
The Zenith Loomis Sayles Small Cap Series' investment objective is long-term
capital growth from investments in common stocks or their equivalent. The
Series invests primarily in stocks of small cap companies with good earnings
growth potential that Loomis Sayles believes are undervalued by the market.
Normally, the Series will invest at least 65% of its assets in companies with
market capitalization in the range of the average market capitalization of
those companies which make up the Russell 2000 index at the time of
investment, and which have better than average growth rates at below average
price/earnings ratios, and have strong balance sheets and cash flow.
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. The series invests at
least 25% of its assets in fixed income senior securities and, under normal
market conditions, more than 50% of its assets in common stocks.
The Zenith Morgan Stanley International Magnum Equity Series' investment
objective is long-term capital appreciation through investment primarily in
equity securities of non-U.S. issuers, in accordance with the EAFE country
weightings determined by the Series' sub-adviser. Under normal circumstances
at least 65% of the total assets of the Series will be invested in equity
securities of issuers in at least three countries outside the United States.
The Zenith Davis Venture Value Series' investment objective is growth of
capital. The Series will primarily invest in domestic common stocks 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, primarily of
companies having a total market capitalization of $1 billion or greater.
A-36
<PAGE>
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. Foreign
investments involve greater risks than U.S. investments, including political
and economic risks and the risks of currency fluctuation.
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.
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 Midcap
Value, Zenith Equity Growth, Zenith Venture Value, Zenith Growth and Income,
Zenith Stock Index, Zenith International Magnum 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 have a long term time horizon and/or 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 than "large cap" stocks. 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 taken alone 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 could lose
value if interest rates rise. Common stock prices, which have risen
substantially at times, have also had periods of significant negative returns.
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.
NELICO guarantees the principal invested in the Fixed Account, although this
guarantee is subject to NELICO'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
A-37
<PAGE>
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 Magnum 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.
INVESTMENT MANAGEMENT
The adviser and sub-adviser for each series of the Zenith Fund are listed in
the chart below. TNE Advisers, which is an indirect, wholly-owned subsidiary
of NELICO, CGM, 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 Growth and In- TNE Advisers, Inc. Westpeak Investment Advisors,
come L.P.*
Loomis Sayles Small Cap TNE Advisers, Inc. Loomis, Sayles & Company,
L.P.*
Loomis Sayles Balanced TNE Advisers, Inc. Loomis, Sayles & Company,
L.P.*
Morgan Stanley TNE Advisers, Inc. Morgan Stanley Asset
International Magnum Management Inc.
Equity
Goldman Sachs Midcap TNE Advisers, Inc. Goldman Sachs Asset Management
Value
Davis Venture Value TNE Advisers, Inc. Davis Selected Advisers, L.P.
Alger Equity Growth TNE Advisers, Inc. Fred Alger Management, Inc.
</TABLE>
- --------
* An affiliate of NELICO
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 Growth and Income 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-
adviser, except as follows. The New England 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 Morgan
Stanley International Magnum Equity Series' sub-adviser was Draycott Partners
until May 1, 1997, when Morgan Stanley Asset Management became the sub-
adviser. The Goldman Sachs Midcap Value Series' sub-adviser was Loomis, Sayles
until May 1, 1998, when Goldman Sachs Asset Management became the sub-adviser.
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.
Fidelity Management & Research Company, the investment adviser for the VIP
Fund and VIP Fund II, 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. 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.
A-38
<PAGE>
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 NELICO'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 NELICO 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
NELICO's general account includes all the assets owned by NELICO, other than
the assets in the Variable Account or in any other separate accounts that
NELICO may establish. NELICO 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, NELICO guarantees that
cash values in the Fixed Account will earn interest at an annual rate of at
least 4%. NELICO may from time to time credit interest at a higher rate than
4%, but it is under no obligation to do so. NELICO declares the current
interest rate for the Fixed Account periodically. Your Policy cash values that
are in the Fixed Account will earn interest daily.
NELICO may vary the way in which it credits interest in the Fixed Account
from time to time. The following is a description of NELICO'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 NELICO. (Although NELICO'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, NELICO 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, unless otherwise
required by state law.) Any net premiums allocated or any portion of your
Policy's cash value transferred to the Fixed Account on a date other than a
Policy anniversary will earn interest at NELICO's most recently declared rate
until the next Policy anniversary. 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, net 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
NELICO'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".)
A-39
<PAGE>
POLICY TRANSACTIONS
NELICO 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 4%. 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 IF NELICO RECEIVES THE TRANSFER REQUEST NO MORE THAN
30 DAYS BEFORE THE POLICY ANNIVERSARY, AND THE TRANSFER WILL BE EFFECTED AS OF
THE DATE THE TRANSFER REQUEST IS RECEIVED AT NELICO'S HOME OFFICE; HOWEVER,
YOU MAY REQUEST A TRANSFER FROM THE FIXED ACCOUNT WITHIN 30 DAYS AFTER A
POLICY ANNIVERSARY IF YOU HAVE NOT REQUESTED SUCH A TRANSFER IN THE 30 DAY
PERIOD BEFORE THE ANNIVERSARY. 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 NELICO's consent.
NELICO currently allows 12 such transfers per Policy year. Transfers out of
the Fixed Account will not be counted against this limit. NELICO 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 4%.
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 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 sub-accounts to provide the full amount requested, the
balance of the partial surrender will be taken from the Fixed Account.
NELICO 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 NELICO will not be
delayed.
NELICO'S DISTRIBUTION AGREEMENT
NELICO sells the Policies through agents who are licensed by state insurance
officials to sell NELICO's variable life insurance policies. These agents are
also registered representatives of New England Securities Corporation ("New
England Securities"). New England Securities, a Massachusetts corporation
organized in 1968 and an indirect, wholly-owned subsidiary of NELICO, 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 NELICO and New England
Securities.
A-40
<PAGE>
Under the Distribution Agreement, NELICO 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.
NELICO pays the following commissions and/or service fees to the selling
agent: a maximum of 50% of the Target Premium paid in the first Policy year;
5% in Policy years two through ten and 4% thereafter. Agents receive a
commission of 3% of each payment in excess of the Target Premium in any year.
Agents who meet certain productivity and persistency standards in selling
policies issued by NELICO may be eligible for additional compensation. Non-
cash forms of compensation may also be paid. 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
in the first Policy year, 5% in the second through tenth Policy years, 4%
thereafter, and 3% of all payments in excess of the Target Premium 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.
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY
NOTIFICATION OF FIRST DEATH
Generally, NELICO can challenge the validity of your Policy or a rider to
your Policy during either 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. NELICO can challenge the portion of the death benefit
resulting from payment of an underwritten premium payment for two years
(during either insured's lifetime) from the date the premium payment was
received. However, if either insured dies within two years of the date of
issue, NELICO can challenge all or part of the Policy at any time with respect
to misrepresentations relating to that insured.
NELICO should be notified immediately upon the first death of an insured
under the Policy. Even if premiums continue to be paid after the first death,
NELICO generally has the right to contest the Policy or to limit benefits
under the suicide provision (described below) and terminate the Policy at any
time, even beyond the two-year period, if it was not notified of a death that
occurred during the period of contestability. Policies issued in New York are
not contestable after they have been in force for two years during the life of
either insured.
MISSTATEMENT OF AGE OR SEX
If either 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 insureds' correct ages and, if the
Policy is sex-based, on the insureds' correct sexes.
SUICIDE
If either of the insureds dies by 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 (or such greater amount
required by state law). The Policy will terminate as of the date of the first
death by suicide.
A-41
<PAGE>
An eligible insured, if age 75 or younger, can request a new single life
variable life insurance policy, with the same face amount as the original
Policy, within 60 days of the date of the suicide. An eligible insured over
age 75 may request a single life ordinary life policy and not a single life
variable life insurance policy. For these purposes an eligible insured is a
surviving insured on whom NELICO would have issued a single life policy on the
Policy Date of the original Policy. The new single life policy is based on the
surviving insured's underwriting class at the time of issue of the original
Policy, with a policy date equal to the date of the suicidal death, and
premiums must be paid from the policy date. The single life variable life
insurance policy can be exchanged for an ordinary life policy, if desired,
using the 24-month exchange provision.
If the eligible surviving insured dies within the 60 day period and before
submitting an application, the death benefit will be paid as if the new policy
had been issued and, if the new policy would have been a variable life policy,
assuming all premiums had been allocated to the Fixed Account and that the
death benefit option chosen equals the face amount of the new policy.
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 NELICO 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, NELICO 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 create some uncertainty about the application of Section 7702 to the
Policy.
Nevertheless, NELICO believes it is reasonable to conclude that the Policy
qualifies as a life insurance contract for federal income tax purposes. This
means that:
. the death benefit should be fully excludable 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 a Policy will meet the
statutory life insurance definition, particularly if it is a substandard risk
Policy. 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.
NELICO 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
A-42
<PAGE>
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.
NON-MODIFIED ENDOWMENT CONTRACTS. For Policies not classified as modified
endowment contracts NELICO 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 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. A joint term rider could cause the Policy to be
treated less favorably for purposes of 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 Policy's existence the 7-pay
test will be applied as if the Policy had originally been issued at the
reduced face 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
NELICO'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 NELICO's interpretation. NELICO 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 (or limit your reduction of benefits). 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 insureds, investment experience and the amount of
your previous payments.
A-43
<PAGE>
If you exchange your policy for another life insurance policy, including a
fixed-benefit policy pursuant to the 24 month exchange right, 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 (including any unpaid interest) 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.
(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
NELICO or its affiliates to the same Policy Owner during any calendar year
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 NELICO 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 additional
guidance 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. 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.
A-44
<PAGE>
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, NELICO does not know what standards will be set
forth in the additional guidance which the Treasury has stated it expects to
be issued. NELICO 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.
In the event that a Policy is owned by the trustee under a pension or profit
sharing plan, or similar deferred compensation arrangement, the Federal, state
and estate tax consequences of ownership or receipt of proceeds under the
Policy could differ from the principles stated herein. However, if ownership
of such Policy is transferred from the plan to a plan participant (upon
termination of employment, for example), the Policy will be subject to all of
the rules described above relating to Federal tax treatment, including the
rules regarding modified endowment contracts. Policies owned by the trustee
under the plans described above may be subject to restrictions under ERISA.
You should consult a qualified tax advisor regarding any applicable
requirements of ERISA.
If the Policy is owned as part of a pension or profit-sharing plan qualified
under Section 401 of the Code, the current cost of insurance for the net
amount at risk is treated as a "current fringe benefit" and is required to be
included annually in the plan participant's gross income. This cost (generally
referred to as the "P.S. 58" cost) is reported to the participant annually. If
the plan participant dies while covered by the plan and the Policy proceeds
are paid to the participant's beneficiary, then the excess of the death
benefit over the cash value will not be subject to Federal income tax.
However, the cash value will generally be taxable to the extent it exceeds the
participant's cost basis in the Policy. The participant's cost basis will
generally include the costs of insurance previously reported as income to the
participant. Special rules may apply if the participant had borrowed from his
cash value or was an owner-employee under the plan.
There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharing plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased
by a tax qualified plan.
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. Moreover, in recent years, Congress has adopted
new rules relating to corporate owned life insurance. Any business
contemplating the purchase of a new life insurance contract or a change in an
existing contract should consult a tax advisor.
NELICO believes that Policies subject to the provisions of the Puerto Rican
tax law will generally receive the same tax treatment, with certain
modifications, 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 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.
TAX TREATMENT OF POLICY SPLIT. The policy split rider permits a Policy to be
split into two individual contracts, provided certain conditions are met. A
policy split could have adverse tax consequences; for example, it is not clear
whether a policy split will be treated as a nontaxable exchange under Sections
1031 through 1043 of the Code. If the policy split is not treated as a
nontaxable exchange, a split could result in the recognition of taxable income
in an amount up to any gain in the Policy at the time of the split. In
addition, it is not clear whether the
A-45
<PAGE>
individual policies that result from a policy split would be classified as
modified endowment contracts. (See above.) Before the Policy Owner exercises
rights provided by the policy split rider, it is important that he or she
consult with a competent tax advisor regarding the possible consequences of a
policy split.
OTHER TAX CONSIDERATIONS. The transfer of the Policy or designation of a
beneficiary may have federal, state, and/or local transfer and inheritance tax
consequences, including the imposition of gift, estate, and generation-
skipping transfer taxes. For example, the transfer of the Policy to, or the
designation as a beneficiary of, or the payment of proceeds to, a person who
is assigned to a generation which is two or more generations below the
generation assignment of the Policy Owner, may have Generation Skipping
Transfer tax considerations under Section 2601 of the Code.
The individual situation of each Policy Owner or beneficiary will determine
the extent, if any, to which federal, state, and local transfer and
inheritance taxes may be imposed. Consult with your tax advisor for specific
information in connection with these taxes.
The particular situation of each Policy Owner or beneficiary will determine
how ownership or receipt of Policy proceeds will be treated for purposes of
federal, state and local estate, inheritance, generation skipping and other
taxes.
CHARGE FOR NELICO'S INCOME TAXES
Under current Federal income tax law no tax is imposed on NELICO 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. NELICO reserves
its rights to charge the Variable Account for company Federal income taxes in
the future.
Under current laws NELICO may incur state and local taxes (in addition to
premium taxes) in several states. At present these taxes are not significant
and, accordingly, NELICO is not currently making a charge for them. If they
increase, however, charges for such taxes attributable to the Variable Account
may be made.
46
<PAGE>
MANAGEMENT
The directors and executive officers of NELICO and their principal business
experience during the past five years are:
DIRECTORS OF NELICO
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS DURING THE PAST FIVE YEARS
------------------ -----------------------------
<S> <C>
Robert A. Shafto........ Chairman of NELICO since 1998; formerly, Chairman, and
Chief Executive Officer 1997-1998 and Chairman, President
and Chief Executive Officer 1996-1997 of NELICO;
Chairman, President and Chief Executive Officer 1993-1996
of The New England.
James M. Benson......... President and Chief Executive Officer of NELICO since
1998; formerly, President and Chief Operating Officer
1997-1998 of NELICO; President and CEO 1996-1997 of
Equitable Life Assurance Society and COO of Equitable
Companies, Inc.; Senior Vice President 1993-1996 of
Equitable Life Assurance Society.
Susan C. Crampton....... Director of NELICO since 1996 and serves as Principal of
127 Tarbox Road The Vermont Partnership, a business consulting firm
Jericho, VT 05465 located in Jericho, Vermont since 1989; formerly,
Director 1989-1996 of The New England.
Edward A. Fox........... Director of NELICO since 1996 and Chairman of the Board of
RR Box 67-15 SLM Holdings since 1997; formerly, Director 1994-1996 of
Harborside, ME 04642 The New England and Dean 1990-1994 of The Amos Tuck
School of Business Administration at Dartmouth College.
George J. Goodman....... Director of NELICO since 1996 and author, television
Adam Smith's Money journalist, and editor.
World
50th Floor, Craig Drill
Capital
General Motors Building
767 Fifth Street
New York, NY 10153
Dr. Paul E. Gray........ Director of NELICO since 1996 and Professor of Electrical
MIT Engineering and Retired Chairman of the Corporation of
77 Massachusetts Ave- the Massachusetts Institute of Technology (MIT);
nue, formerly, Director 1973-1996 of The New England and
Cambridge, MA 01239 Chairman of the Corporation 1990-1997 of MIT.
Dr. Evelyn E. Handler... Director of NELICO since 1996 and Executive Director and
California Academy of Chief Executive Officer of the California Academy of
Sciences Golden Gate Sciences since 1994; formerly Director 1987-1996 of The
Park New England and Research Fellow and an Associate 1991-
San Francisco, CA 94118 1994 of the Graduate School of Education at Harvard
University and a Senior Fellow at The Carnegie Foundation
for the Advancement of Teaching.
Philip K. Howard, Esq... Director of NELICO since 1996 and Partner of the law firm
Howard, Darby & Levin of Howard, Darby & Levin in New York City.
1330 Avenue of the
Americas
New York, NY 10019
Harry P. Kamen.......... Director of NELICO since 1996 and Chairman and Chief
Metropolitan Life Executive Officer of Metropolitan Life Insurance Company
One Madison Avenue since 1997; formerly, Chairman, President, and Chief
New York, NY 10010 Executive Officer 1995-1997 and Chairman and CEO 1993-
1995 of Metropolitan Life.
Terence Lennon.......... Director of NELICO since 1996 and Senior Vice President of
Metropolitan Life Metropolitan Life Insurance Company since 1994; formerly,
One Madison Avenue Assistant Deputy Superintendent and Chief Examiner 1984-
New York, NY 10010 1994 of the New York Insurance Department.
</TABLE>
A-47
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS DURING THE PAST FIVE YEARS
------------------ -----------------------------
<S> <C>
Bernard A. Leventhal.... Director of NELICO since 1996 and Vice Chairman of the
Burlington Industries Board of Directors of Burlington Industries, Inc.;
1345 Avenue of the formerly, President since 1978 and Corporate Group Vice
Americas President since 1985 and Director since 1990 of
New York, NY 10105 Burlington Menswear Division.
Thomas J. May........... Director of NELICO since 1996 and Chairman, President and
Boston Edison Company Chief Executive Officer of Boston Edison Company since
800 Boylston Street 1994; formerly, Director 1994-1996 of The New England;
Boston, MA 02199 President and Chief Operating Officer 1993-1994 of Boston
Edison Co.
Stewart G. Nagler....... Director of NELICO since 1996 and Senior Executive Vice
Metropolitan Life President and Chief Financial Officer of Metropolitan
One Madison Avenue Life Insurance Company since 1986.
New York, NY 10010
Rand N. Stowell......... Director of NELICO since 1996 and President of United
United Timber Corp. Timber Corp. of Dixfield, Maine; formerly, Director 1990-
P.O. Box 650 1996 of The New England.
Pine Street
Dixfield, ME 04224
Alexander B. Trowbridge. Director of NELICO since 1996 and President of Trowbridge
Trowbridge Partners Partners, Inc. in Washington, DC; formerly, Director
Inc. 1983-1996 of The New England.
1317 F Street, NW,Suite
500
Washington, D.C. 20004
</TABLE>
EXECUTIVE OFFICERS OF NELICO
OTHER THAN DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE
NAME DURING THE PAST FIVE YEARS
---- -----------------------------
<S> <C>
Robert A. Shafto........ See Directors above.
James M. Benson......... See Directors above
David W. Allen.......... Senior Vice President of NELICO since 1996; formerly,
Senior Vice President 1994-1996 and Vice President 1990-
1994 of The New England.
Thom A. Faria........... President, Career Agency System (a business unit of
NELICO) since 1996; formerly, Executive Vice President in
1996, Senior Vice President 1993-1996 of The New England.
Anne M. Goggin.......... Senior Vice President and Associate General Counsel of
NELICO since 1997; formerly, Vice President and Counsel
of NELICO in 1996, Vice President and Counsel 1994-1996
and Second Vice President and Counsel 1988-1994 of The
New England.
Daniel D. Jordan........ Second Vice President, Counsel and Secretary since 1996;
formerly, Counsel and Assistant Secretary 1990-1996 of
The New England.
Richard D. Keidan....... Senior Vice President of NELICO since 1996; formerly, Vice
President 1994-1996 of Metropolitan Life (Chief Marketing
Officer of MetLife Brokerage) and Regional Sales and
Marketing Manager 1989-1994 of Phoenix Home Life.
Alan C. Leland, Jr. .... Senior Vice President of NELICO since 1996; formerly, Vice
President 1984-1996 of The New England.
Bruce C. Long........... President, New England Annuities (a business unit of
NELICO) since 1996; formerly, President 1994-1996 New
England Annuities (a business unit of The New England)
and Senior Vice President in 1994 of New England
Annuities; Vice President 1992-1994 of Keyport Life
Insurance.
</TABLE>
A-48
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE
NAME DURING THE PAST FIVE YEARS
---- -----------------------------
<S> <C>
George J. Maloof........ Senior Vice President of NELICO since 1996; formerly, Vice
President 1991-1996 of The New England.
Thomas W. McConnell..... Senior Vice President of NELICO since 1996 and Director,
Chief Executive Officer and President of New England
Securities Corporation since 1993; formerly, National
Sales Manager of Alliance Fund Distributors in 1993;
National Sales Manager 1992-1993 of Equitable Capital
Securities.
Thomas W. Moore......... Senior Vice President of NELICO since 1996; formerly, Vice
President 1990-1996 of The New England.
Robert W. Powell........ President, Life Brokerage (a business unit of NELICO)
since 1996; formerly, Officer-In-Charge 1994-1996 of
MetLife Brokerage (a subsidiary of Metropolitan Life
Insurance Company) and Marketing Vice President 1988-1994
of MetLife.
Richard A. Robinson..... Second Vice President and Chief Accounting Officer of
NELICO since 1998; formerly, Second Vice President of
NELICO.
Gregory A. Ross......... Executive Vice President and Chief Information Officer
since 1997 and President, TNE Information Services (a
business unit of NELICO) since 1996; formerly, President,
TNE Information Services (a business unit of The New
England) and Chief Information Officer 1994-1996 and
Senior Vice President and Chief Information Officer 1993-
1994 of The New England. President of TNE Information
Services, Inc.
Robert E. Schneider..... Executive Vice President and Chief Financial Officer of
NELICO since 1996; formerly, Director, Executive Vice
President and Chief Financial Officer 1993-1996 and
Executive Vice President and Chief Financial Officer
1990-1993 of The New England.
John G. Small, Jr....... President, New England Services (a business unit of
NELICO) since 1997; formerly, Senior Vice President 1996-
1997 of NELICO and Senior Vice President 1990-1996 of The
New England.
Ellen D. Sullivan....... Senior Vice President and Associate General Counsel of
NELICO since 1997; formerly, Vice President and Counsel
in 1996 of NELICO; Vice President and Counsel 1994-1996
and Second Vice President and Counsel 1985-1994 of The
New England.
H. James Wilson......... Executive Vice President and General Counsel of NELICO
since 1996; formerly, Executive Vice President and
General Counsel 1993-1996, Senior Vice President and
General Counsel 1992-1993 of The New England.
John W. Wright.......... President, New England Employee Benefits Group (a business
unit of NELICO) since 1996; formerly, President 1993-1996
New England Employee Benefits Group (a business unit of
The New England), Senior Vice President 1989-1993 of New
England Employee Benefits Group of The New England.
Frederick K. Zimmermann. Executive Vice President and Chief Investment Officer of
NELICO since 1996; formerly, Executive Vice President and
Chief Investment Officer 1993-1996 and Senior Vice
President--Investments 1989-1993 of The New England.
</TABLE>
The principal business address for each of the directors and executive
officers is the same as NELICO's except where indicated otherwise.
A-49
<PAGE>
VOTING RIGHTS
NELICO 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, NELICO will give you, as Policy Owner, the right to instruct
NELICO 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 registered (or to the extent voting
privileges are granted by the issuing insurance company, unregistered)
separate account of NELICO or an affiliate, 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 NELICO 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 NELICO believes any Eligible Fund action is insufficient, NELICO
will consider taking other action to protect Policy Owners. There could,
however, be unavoidable delays or interruptions of operations of the Variable
Account that NELICO may be unable to remedy.
If required by state insurance authorities, NELICO 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, NELICO 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 NELICO (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
NELICO or of an affiliated life insurance company, which separate accounts
have investment objectives similar to those of the sub-account. If NELICO 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 NELICO
NELICO and its affiliates 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. NELICO 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 NELICO's
general account as permitted by applicable law; (5) to operate the Variable
Account as a management
A-50
<PAGE>
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. NELICO
will exercise these rights in accordance with applicable law, including
approval of Policy Owners if required. NELICO will notify you if exercise of
any of these rights would result in a material change in the Variable Account
or its investments.
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, premium reallocations, or Statements of
Additional Information for the Eligible Funds, call the toll-free number 1-
800-200-2214.
You may also call our Client TeleService Center toll-free at 1-800-388-4000
to request current information about your Policy values, to change or update
Policy information such as your address, billing mode, beneficiary or
ownership, or to request Policy loans of less than $25,000. Requests must be
in writing if the Policy is owned by a corporation or a pension trust.
For all other types of Policy changes, please contact your registered
representative.
REPORTS
NELICO will send you a statement annually showing your Policy's death
benefit, cash value and any outstanding Policy loan principal. NELICO will
also confirm Policy loans, sub-account 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
NELICO may from time to time receive endorsements of the Policies from
professional organizations. NELICO may refer to or use such endorsements in
advertisements or sales material for the Policies. NELICO 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 NELICO 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 NELICO, 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,
A-51
<PAGE>
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 of NELICO. Sutherland,
Asbill & Brennan, L.L.P., Washington, D.C., has provided advice on certain
matters relating to the 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.
EXPERTS
The financial statements of New England Variable Life Separate Account of
New England Life Insurance Company ("NELICO") (formerly New England Variable
Life Insurance Company) and the consolidated financial statements of NELICO
and subsidiaries as of and for the periods ended December 31, 1997 and 1996
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein (whose
reports express unqualified opinions and, with respect to NELICO, includes an
explanatory paragraph referring to the change in the basis of accounting and
the change in corporate organization), and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing. The adjustments that were applied to restate the 1995
financial statements to reflect the effects of the changes for adoption of
generally accepted accounting principles and the changes in corporate
organization have also been audited by Deloitte & Touche LLP.
The statutory balance sheets of New England Variable Life Insurance Company
and New England Pension and Annuity Company as of December 31, 1995, and the
related statutory statements of operations, surplus, and cash flows for the
year ended December 31, 1995 (not included herein), have been incorporated
herein in reliance on the reports (which reports include adverse opinions as
to generally accepted accounting principles and unqualified opinions as to
statutory accounting practices prescribed or permitted by the Insurance
Department of the State of Delaware) of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing. The statutory balance sheet of Exeter Reassurance Company, Ltd. as
at December 31, 1995, and the related statutory statements of income, capital
and surplus, and cash flows for the year then ended (not included herein),
have been incorporated herein in reliance on the report (which report includes
an adverse opinion as to generally accepted accounting principles and an
unqualified opinion as to conformity with The Insurance Act 1978, amendments
thereto and related regulations) of Coopers & Lybrand, chartered accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated statement of financial condition of New England Securities
Corporation as of December 31, 1995, and the related consolidated statements
of operations, shareholder's equity, and cash flows for the year then ended
(not included herein); the balance sheet of TNE Advisers, Inc. as of December
31, 1995, and the related statements of operations, changes in shareholder's
equity (deficit), and cash flows for the year ended December 31, 1995 (not
included herein), have been incorporated herein in reliance on the reports of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing. The balance sheet of Newbury
Insurance Company, Limited as of December 31, 1995, and the related statements
of earnings and retained earnings, and cash flows for the year ended December
31, 1995 (not included herein), have been incorporated herein in reliance on
the reports of Coopers & Lybrand, chartered accountants, given on the
authority of that firm as experts in accounting and auditing.
The statements of operations and changes in net assets of New England
Variable Life Separate Account for the period ended December 31, 1995, have
been incorporated herein in reliance on the reports of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Rodney
J. Chandler, F.S.A., M.A.A.A., Second Vice President and Actuary of NELICO, as
stated in his opinion filed as an exhibit to the Registration Statement.
A-52
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES, NET CASH VALUES AND ACCUMULATED SCHEDULED 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 annual premium payments of $16,000 for a male and
a female, both aged 55. The insureds are each assumed to be in the nonsmoker
standard risk classification. The Tables assume no rider benefits. Values are
first given based on current mortality and other Policy charges and then based
on guaranteed mortality and other Policy charges. Each illustration is given
for a Policy with an Option A death benefit, a Policy with an Option B death
benefit and a Policy with an Option C death benefit. A Policy with an Option D
death benefit, under the circumstances illustrated, will have the same values
as a Policy with an Option B 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
NELICO 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 either
or both insureds were in the smoker standard risk classification or a
substandard 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: (i) deductions 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, a charge for the cost of insurance and charges for any additional
benefits) from the cash value on the first day of each Policy month. The net
cash values reflect a Surrender Charge that is deducted from the cash value
upon surrender, face reduction or lapse during the first 14 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
illustrations are based on an average of the investment advisory fees and
operating expenses incurred by the Eligible Funds, at an annual rate of .76%
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 bear operating expenses of the
Zenith Fund Series (other than the Capital Growth Series) 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".)
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 - %,
%, and %, respectively, based on NELICO's current charge for mortality and
expense risks, and -1.66%, 4.24% and 10.15%, respectively, based on NELICO'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
A-53
<PAGE>
produce the death benefits, net cash values and cash values illustrated. (See
"Charges for NELICO'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.
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.
NELICO will furnish upon request a personalized illustration reflecting the
proposed insureds' age, sex, underwriting classification, and the face amount
or premium payment schedule requested. Where applicable, NELICO will also
furnish upon request an illustration for a Policy which is not affected by the
sex of the insureds.
The illustrations using current Policy charges assume that the 9% sales
charge is waived after the 15th policy year. For Policies issued in
Pennsylvania, NELICO does not intend to waive this charge until after the 17th
policy year. Purchasers in Pennsylvania should refer to a personalized
illustration, which will reflect the longer duration of this sales charge.
A-54
<PAGE>
MALE AND FEMALE BOTH ISSUE AGE 55
$16,000 ANNUAL PREMIUM FOR NON-SMOKER STANDARD UNDERWRITING RISK
$1,000,000 FACE AMOUNT
OPTION A (ENHANCED WITH FACE AMOUNT)--FIXED DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
END ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,000,000 $1,000,000 $1,000,000 $ 6,047 $ 6,820 $ 7,595 $ 12,115 $ 12,888 $ 13,664
2 34,440 1,000,000 1,000,000 1,000,000 18,575 20,889 23,299 24,644 26,957 29,368
3 52,962 1,000,000 1,000,000 1,000,000 23,990 28,646 33,686 36,856 41,512 46,552
4 72,410 1,000,000 1,000,000 1,000,000 35,885 43,700 52,496 48,751 56,566 65,362
5 92,831 1,000,000 1,000,000 1,000,000 47,460 59,270 73,091 60,326 72,136 85,957
6 114,272 1,000,000 1,000,000 1,000,000 60,098 76,755 97,034 71,579 88,236 108,515
7 136,786 1,000,000 1,000,000 1,000,000 72,412 94,788 123,137 82,507 104,883 133,233
8 160,425 1,000,000 1,000,000 1,000,000 84,394 113,381 151,613 93,105 122,092 160,323
9 185,246 1,000,000 1,000,000 1,000,000 96,037 132,550 182,700 103,363 139,875 190,025
10 211,309 1,000,000 1,000,000 1,000,000 107,336 152,311 216,664 113,276 158,252 222,605
15 362,520 1,000,000 1,000,000 1,000,000 163,994 266,661 447,188 163,994 266,661 447,188
20 555,508 1,000,000 1,000,000 1,267,244 210,150 401,840 816,786 210,150 401,840 816,786
25 801,815 1,000,000 1,000,000 2,120,297 231,327 553,827 1,392,642 231,327 553,827 1,392,642
30 1,116,173 1,000,000 1,094,750 3,389,671 199,518 719,047 2,226,385 199,518 719,047 2,226,385
35 1,517,381 1,000,000 1,283,644 4,906,171 23,468 843,116 3,222,444 23,468 843,116 3,222,444
<CAPTION>
INTERNAL RATE OF RETURN
ON NET CASH VALUE INTERNAL RATE OF RETURN
ASSUMING ON DEATH BENEFIT
END HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ----------------------------- --------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 -62.21% -57.38% -52.53% 6,150.00% 6,150.00% 6,150.00%
2 -31.22 -25.28 -19.38 642.15 642.15 642.15
3 -30.87 -23.68 -16.69 258.47 258.47 258.47
4 -21.85 -14.69 -7.77 148.92 148.92 148.92
5 -16.92 -9.84 -3.00 100.39 100.39 100.39
6 -13.25 -6.36 .31 73.77 73.77 73.77
7 -10.92 -4.17 2.37 57.22 57.22 57.22
8 -9.35 -2.70 3.75 46.06 46.06 46.06
9 -8.23 -1.66 4.73 38.07 38.07 38.07
10 -7.41 -.90 5.44 32.11 32.11 32.11
15 -4.93 1.31 7.45 16.46 16.46 16.46
20 -4.20 2.12 8.27 9.93 9.93 11.85
25 -4.53 2.42 8.62 6.48 6.48 11.26
30 -6.50 2.49 8.66 4.39 4.89 10.79
35 -40.54 2.17 8.34 3.02 4.22 10.12
</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 NELICO 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>
MALE AND FEMALE BOTH ISSUE AGE 55
$16,000 ANNUAL PREMIUM FOR NON-SMOKER STANDARD UNDERWRITING RISK
$1,000,000 FACE AMOUNT
OPTION B (ENHANCED WITH FACE AMOUNT PLUS CASH VALUE)--VARIABLE DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
END ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,012,115 $1,012,888 $1,013,663 $ 6,046 $ 6,819 $ 7,594 $ 12,115 $ 12,888 $ 13,663
2 34,440 1,024,640 1,026,953 1,029,362 18,571 20,884 23,294 24,640 26,953 29,362
3 52,962 1,036,842 1,041,495 1,046,534 23,976 28,629 33,668 36,842 41,495 46,534
4 72,410 1,048,717 1,056,527 1,065,316 35,851 43,661 52,450 48,717 56,527 65,316
5 92,831 1,060,261 1,072,056 1,085,860 47,395 59,190 72,994 60,261 72,056 85,860
6 114,272 1,071,466 1,088,093 1,108,335 59,985 76,612 96,854 71,466 88,093 108,335
7 136,786 1,082,327 1,104,646 1,132,922 72,231 94,550 122,826 82,327 104,646 132,922
8 160,425 1,092,832 1,121,720 1,159,818 84,121 113,009 151,107 92,832 121,720 159,818
9 185,246 1,102,968 1,139,317 1,189,237 95,642 131,991 181,911 102,968 139,317 189,237
10 211,309 1,112,725 1,157,443 1,221,418 106,785 151,502 215,478 112,725 157,443 221,418
15 362,520 1,163,044 1,264,921 1,443,984 163,044 264,921 443,984 163,044 264,921 443,984
20 555,508 1,206,799 1,394,825 1,802,739 206,799 394,825 802,739 206,799 394,825 802,739
25 801,815 1,218,793 1,522,505 2,347,843 218,793 522,505 1,347,843 218,793 522,505 1,347,843
30 1,116,173 1,163,616 1,604,711 3,147,251 163,616 604,711 2,147,251 163,616 604,711 2,147,251
35 1,517,381 1,528,113 4,242,190 528,113 3,242,190 528,113 3,242,190
<CAPTION>
INTERNAL RATE OF RETURN
ON NET CASH VALUE INTERNAL RATE OF RETURN
ASSUMING ON DEATH BENEFIT
END HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ----------------------------- --------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 -62.21% -57.38% -52.54% 6,225.72% 6,230.55% 6,235.40%
2 -31.23 -25.29 -19.39 651.81 652.71 653.65
3 -30.90 -23.70 -16.71 263.34 263.95 264.60
4 -21.88 -14.73 -7.80 152.39 152.93 153.54
5 -16.97 -9.88 -3.04 103.22 103.76 104.38
6 -13.31 -6.41 .25 76.24 76.80 77.46
7 -10.99 -4.24 2.31 59.47 60.05 60.77
8 -9.42 -2.78 3.68 48.14 48.76 49.55
9 -8.32 -1.75 4.64 40.04 40.69 41.55
10 -7.51 -.99 5.35 33.98 34.67 35.62
15 -5.01 1.23 7.36 18.11 19.03 20.47
20 -4.37 1.96 8.13 11.46 12.62 14.65
25 -5.04 2.00 8.42 7.77 9.19 11.89
30 -8.30 1.45 8.48 5.23 6.96 10.42
35 -.33 8.37 5.03 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 NELICO 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-56
<PAGE>
MALE AND FEMALE BOTH ISSUE AGE 55
$16,000 ANNUAL PREMIUM FOR NON-SMOKER STANDARD UNDERWRITING RISK
$1,000,000 FACE AMOUNT
OPTION C (FACE AMOUNT)--FIXED DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
END ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,000,000 $1,000,000 $1,000,000 $ 6,047 $ 6,820 $ 7,595 $ 12,115 $ 12,888 $ 13,664
2 34,440 1,000,000 1,000,000 1,000,000 18,575 20,889 23,299 24,644 26,957 29,368
3 52,962 1,000,000 1,000,000 1,000,000 23,990 28,646 33,686 36,856 41,512 46,552
4 72,410 1,000,000 1,000,000 1,000,000 35,885 43,700 52,496 48,751 56,566 65,362
5 92,831 1,000,000 1,000,000 1,000,000 47,460 59,270 73,091 60,326 72,136 85,957
6 114,272 1,000,000 1,000,000 1,000,000 60,098 76,755 97,034 71,579 88,236 108,515
7 136,786 1,000,000 1,000,000 1,000,000 72,412 94,788 123,137 82,507 104,883 133,233
8 160,425 1,000,000 1,000,000 1,000,000 84,394 113,381 151,613 93,105 122,092 160,323
9 185,246 1,000,000 1,000,000 1,000,000 96,037 132,550 182,700 103,363 139,875 190,025
10 211,309 1,000,000 1,000,000 1,000,000 107,336 152,311 216,664 113,276 158,252 222,605
15 362,520 1,000,000 1,000,000 1,000,000 163,994 266,661 447,188 163,994 266,661 447,188
20 555,508 1,000,000 1,000,000 1,000,000 210,150 401,840 818,035 210,150 401,840 818,035
25 801,815 1,000,000 1,000,000 1,492,343 231,327 553,827 1,421,279 231,327 553,827 1,421,279
30 1,116,173 1,000,000 1,000,000 2,510,248 199,518 722,599 2,390,713 199,518 722,599 2,390,713
35 1,517,381 1,000,000 1,000,000 4,121,254 23,468 923,004 3,925,004 23,468 923,004 3,925,004
<CAPTION>
INTERNAL RATE OF RETURN
ON NET CASH VALUE INTERNAL RATE OF RETURN
ASSUMING ON DEATH BENEFIT
END HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ----------------------------- --------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 -62.21% -57.38% -52.53% 6,150.00% 6,150.00% 6,150.00%
2 -31.22 -25.28 -19.38 642.15 642.15 642.15
3 -30.87 -23.68 -16.69 258.47 258.47 258.47
4 -21.85 -14.69 -7.77 148.92 148.92 148.92
5 -16.92 -9.84 -3.00 100.39 100.39 100.39
6 -13.25 -6.36 .31 73.77 73.77 73.77
7 -10.92 -4.17 2.37 57.22 57.22 57.22
8 -9.35 -2.70 3.75 46.06 46.06 46.06
9 -8.23 -1.66 4.73 38.07 38.07 38.07
10 -7.41 -.90 5.44 32.11 32.11 32.11
15 -4.93 1.31 7.45 16.46 16.46 16.46
20 -4.20 2.12 8.28 9.93 9.93 9.93
25 -4.53 2.42 8.75 6.48 6.48 9.06
30 -6.50 2.52 9.03 4.39 4.39 9.28
35 -40.54 2.62 9.18 3.02 3.02 9.39
</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 NELICO 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-57
<PAGE>
MALE AND FEMALE BOTH ISSUE AGE 55
$16,000 ANNUAL PREMIUM FOR NON-SMOKER STANDARD UNDERWRITING RISK
$1,000,000 FACE AMOUNT
OPTION A (ENHANCED WITH FACE AMOUNT)--FIXED DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
END ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,000,000 $1,000,000 $1,000,000 $ 5,541 $ 6,298 $ 7,057 $ 11,610 $ 12,367 $ 13,126
2 34,440 1,000,000 1,000,000 1,000,000 17,565 19,815 22,161 23,634 25,884 28,230
3 52,962 1,000,000 1,000,000 1,000,000 22,463 26,976 31,864 35,329 39,842 44,730
4 72,410 1,000,000 1,000,000 1,000,000 33,811 41,370 49,882 46,677 54,236 62,748
5 92,831 1,000,000 1,000,000 1,000,000 44,791 56,191 69,545 57,657 69,057 82,411
6 114,272 1,000,000 1,000,000 1,000,000 56,758 72,811 92,373 68,239 84,292 103,854
7 136,786 1,000,000 1,000,000 1,000,000 68,292 89,820 117,128 78,388 99,916 127,224
8 160,425 1,000,000 1,000,000 1,000,000 79,340 107,182 143,958 88,051 115,892 152,669
9 185,246 1,000,000 1,000,000 1,000,000 89,835 124,840 173,016 97,161 132,165 180,341
10 211,309 1,000,000 1,000,000 1,000,000 99,692 142,724 204,463 105,633 148,664 210,404
15 362,520 1,000,000 1,000,000 1,000,000 135,060 231,700 404,262 135,060 231,700 404,262
20 555,508 1,000,000 1,000,000 1,089,549 127,020 302,423 702,256 127,020 302,423 702,256
25 801,815 1,000,000 1,000,000 1,707,834 26,002 316,905 1,121,730 26,002 316,905 1,121,730
30 1,116,173 1,000,000 2,391,034 158,067 1,570,466 158,067 1,570,466
35 1,517,381 2,715,295 1,783,445 1,783,445
<CAPTION>
INTERNAL RATE OF RETURN
ON NET CASH VALUE INTERNAL RATE OF RETURN
ASSUMING ON DEATH BENEFIT
END HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ----------------------------- --------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 -65.37% -60.64% -55.89% 6,150.00% 6,150.00% 6,150.00%
2 -33.90 -28.00 -22.13 642.15 642.15 642.15
3 -33.43 -26.17 -19.13 258.47 258.47 258.47
4 -23.95 -16.71 -9.72 148.92 148.92 148.92
5 -18.74 -11.55 -4.63 100.39 100.39 100.39
6 -14.86 -7.85 -1.10 73.77 73.77 73.77
7 -12.40 -5.52 1.12 57.22 57.22 57.22
8 -10.76 -3.96 2.61 46.06 46.06 46.06
9 -9.62 -2.87 3.65 38.07 38.07 38.07
10 -8.82 -2.09 4.41 32.11 32.11 32.11
15 -7.60 -.44 6.28 16.46 16.46 16.46
20 -9.95 -.54 7.00 9.93 9.93 10.63
25 -38.09 -1.84 7.23 6.48 6.48 9.92
30 -8.63 6.84 4.39 9.03
35 5.74 7.60
</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 NELICO 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-58
<PAGE>
MALE AND FEMALE BOTH ISSUE AGE 55
$16,000 ANNUAL PREMIUM FOR NON-SMOKER STANDARD UNDERWRITING RISK
$1,000,000 FACE AMOUNT
OPTION B (ENHANCED WITH FACE AMOUNT PLUS CASH VALUE)--VARIABLE DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
END ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,011,609 $1,012,366 $1,013,125 $ 5,541 $ 6,297 $ 7,057 $ 11,609 $ 12,366 $ 13,125
2 34,440 1,023,629 1,025,879 1,028,224 17,560 19,810 22,155 23,629 25,879 28,224
3 52,962 1,035,313 1,039,824 1,044,711 22,447 26,958 31,845 35,313 39,824 44,711
4 72,410 1,046,640 1,054,192 1,062,697 33,774 41,326 49,831 46,640 54,192 62,697
5 92,831 1,057,582 1,068,966 1,082,300 44,716 56,100 69,434 57,582 68,966 82,300
6 114,272 1,068,103 1,084,119 1,103,637 56,622 72,639 92,156 68,103 84,119 103,637
7 136,786 1,078,158 1,099,615 1,126,832 68,063 89,520 116,736 78,158 99,615 126,832
8 160,425 1,087,686 1,115,396 1,151,966 78,976 106,685 143,286 87,686 115,396 151,966
9 185,246 1,096,603 1,131,378 1,179,233 89,277 124,052 171,908 96,603 131,378 179,233
10 211,309 1,104,806 1,147,454 1,208,634 98,865 141,513 202,693 104,806 147,454 208,634
15 362,520 1,130,961 1,224,406 1,391,162 130,961 224,406 391,162 130,961 224,406 391,162
20 555,508 1,113,977 1,272,253 1,633,940 113,777 272,253 633,940 113,777 272,253 633,940
25 801,815 1,218,496 1,899,477 218,496 899,477 218,496 899,477
30 1,116,173 2,074,649 1,074,649 1,074,649
35 1,517,381 1,880,484 880,484 880,484
<CAPTION>
INTERNAL RATE OF RETURN
ON NET CASH VALUE INTERNAL RATE OF RETURN
ASSUMING ON DEATH BENEFIT
END HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ----------------------------- --------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 -65.37% -60.64% -55.90% 6,222.56% 6,227.29% 6,232.03%
2 -33.92 -28.01 -22.14 651.42 652.29 653.21
3 -33.45 -26.19 -19.16 263.14 263.73 264.37
4 -23.99 -16.75 -9.76 152.24 152.77 153.36
5 -18.80 -11.60 -4.69 103.09 103.61 104.22
6 -14.93 -7.92 -1.17 76.13 76.67 77.31
7 -12.48 -5.60 1.04 59.36 59.92 60.62
8 -10.86 -4.06 2.50 48.03 48.62 49.39
9 -9.75 -3.00 3.52 39.92 40.55 41.38
10 -8.98 -2.25 4.26 33.85 34.52 35.44
15 -8.04 -.84 5.89 17.81 18.67 20.06
20 -11.35 -1.57 6.14 10.81 11.88 13.87
25 -5.05 5.77 7.77 10.58
30 4.79 8.30
35 2.39 5.98
</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 NELICO 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-59
<PAGE>
MALE AND FEMALE BOTH ISSUE AGE 55
$16,000 ANNUAL PREMIUM FOR NON-SMOKER STANDARD UNDERWRITING RISK
$1,000,000 FACE AMOUNT
OPTION C (FACE AMOUNT)--FIXED DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
END ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,000,000 $1,000,000 $1,000,000 $ 5,541 $ 6,298 $ 7,057 $ 11,610 $ 12,367 $ 13,126
2 34,440 1,000,000 1,000,000 1,000,000 17,565 19,815 22,161 23,634 25,884 28,230
3 52,962 1,000,000 1,000,000 1,000,000 22,463 26,976 31,864 35,329 39,842 44,730
4 72,410 1,000,000 1,000,000 1,000,000 33,811 41,370 49,882 46,677 54,236 62,748
5 92,831 1,000,000 1,000,000 1,000,000 44,791 56,191 69,545 57,657 69,057 82,411
6 114,272 1,000,000 1,000,000 1,000,000 56,758 72,811 92,373 68,239 84,292 103,854
7 136,786 1,000,000 1,000,000 1,000,000 68,292 89,820 117,128 78,388 99,916 127,224
8 160,425 1,000,000 1,000,000 1,000,000 79,340 107,182 143,958 88,051 115,892 152,669
9 185,246 1,000,000 1,000,000 1,000,000 89,835 124,840 173,016 97,161 132,165 180,341
10 211,309 1,000,000 1,000,000 1,000,000 99,692 142,724 204,463 105,633 148,664 210,404
15 362,520 1,000,000 1,000,000 1,000,000 135,060 231,700 404,262 135,060 231,700 404,262
20 555,508 1,000,000 1,000,000 1,000,000 127,020 302,423 703,099 127,020 302,423 703,099
25 801,815 1,000,000 1,000,000 1,261,478 26,002 316,905 1,201,407 26,002 316,905 1,201,407
30 1,116,173 1,000,000 2,098,400 158,067 1,998,476 158,067 1,998,476
35 1,517,381 3,372,010 3,211,438 3,211,438
<CAPTION>
INTERNAL RATE OF RETURN
ON NET CASH VALUE INTERNAL RATE OF RETURN
ASSUMING ON DEATH BENEFIT
END HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ----------------------------- --------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 -65.37% -60.64% -55.89% 6,150.00% 6,150.00% 6,150.00%
2 -33.90 -28.00 -22.13 642.15 642.15 642.15
3 -33.43 -26.17 -19.13 258.47 258.47 258.47
4 -23.95 -16.71 -9.72 148.92 148.92 148.92
5 -18.74 -11.55 -4.63 100.39 100.39 100.39
6 -14.86 -7.85 -1.10 73.77 73.77 73.77
7 -12.40 -5.52 1.12 57.22 57.22 57.22
8 -10.76 -3.96 2.61 46.06 46.06 46.06
9 -9.62 -2.87 3.65 38.07 38.07 38.07
10 -8.82 -2.09 4.41 32.11 32.11 32.11
15 -7.60 -.44 6.28 16.46 16.46 16.46
20 -9.95 -.54 7.02 9.93 9.93 9.93
25 -38.09 -1.84 7.68 6.48 6.48 7.99
30 -8.63 8.11 4.39 8.36
35 8.33 8.53
</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 NELICO 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-60
<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 January, 1994. 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 Growth and Income Series and Goldman
Sachs Midcap Value Series of the Zenith Fund commenced operations on April 30,
1993. The Loomis Sayles Small Cap Series commenced operations on May 2, 1994
and was made available under the Policies on December 19, 1994. The remaining
Zenith Fund series commenced operations on October 31, 1994 and were made
available under the Policies in May 1996. 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, and were added as
investment options on December 19, 1994. The illustrations are based on the
actual investment experience of the relevant Eligible Funds for the periods
shown (and reflect 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-61
<PAGE>
SUB-ACCOUNT INVESTING IN ZENITH FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
8/26/83- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 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*. 8.52% -1.25% 66.59% 93.46% 51.34% -9.61% 29.59% -4.35% 52.61% -6.90% 13.94% -7.90%
Bond Income..... 2.72 11.77 17.70 13.81 1.35 7.40 11.29 7.11 16.90 7.21 11.60 -4.23
Money Market.... 2.97 9.63 7.29 5.85 5.57 6.55 8.28 7.22 5.26 2.87 2.05 3.04
<CAPTION>
8/26/83- 8/26/83-
12/31/97 12/31/97
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 RETURN ANNUAL
- ----------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Capital Growth*. 36.80% 19.98% % %
Bond Income..... 20.12 3.67
Money Market.... 4.75 4.18
<CAPTION>
ANNUAL NET RATE OF RETURN
---------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
5/1/87- ------------------------------------------------------------------------------------------
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 12/31/95 12/31/96 12/31/97
- ----------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index......... -12.73% 15.30% 28.99% -5.01% 29.27% 6.33% 8.74% 0.21% 35.69% 21.36%
Managed............. -1.26 8.50 18.02 2.28 19.10 5.74 9.69 -2.00 30.09 13.99
<CAPTION>
5/1/87- 5/1/87-
12/31/97 12/31/97
SUB-ACCOUNT TOTAL EFFECTIVE
- ----------- -------- ---------
<S> <C> <C>
Stock Index......... % %
Managed.............
<CAPTION>
ANNUAL NET RATE OF RETURN
--------------------------------------------- 4/30/93- 4/30/93-
FOR ONE YEAR ENDING 12/31/97 12/31/97
4/30/93- ------------------------------------ TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 RETURN ANNUAL
- ----------- -------- --------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth and Income............ 13.55% -2.09% 35.25% 17.03% % %
Midcap Value**............... 14.05 -1.16 29.19 16.55
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------------
FOR ONE YEAR 5/2/94- 5/2/94-
ENDING 12/31/97 12/31/97
5/3/94- -------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 RETURN ANNUAL
- ----------- --------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................... -3.80% 27.69% 29.50% % %
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------------
FOR ONE YEAR 10/31/94- 10/31/94-
ENDING 12/31/97 12/31/97
10/31/94- -------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 RETURN ANNUAL
- ----------- --------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Equity Growth...................... -4.34% 47.37% 12.15% % %
Balanced........................... -.25 23.68 15.86
Venture Value...................... -3.64 38.04 24.71
International Magnum Equity***..... 2.45 5.28 5.71
</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.
** The Goldman Sachs Midcap Value Series' sub-adviser was Loomis Sayles until
May 1, 1998, when Goldman Sachs Asset Management became the sub-adviser.
Rates of return reflect the Series' former investment advisory fee of .70%
of average daily net assets. Beginning May 1, 1998, the Series' investment
advisory fee is .75%.
*** The Morgan Stanley International Magnum Equity Series' sub-adviser was
Draycott Partners until May 1, 1997, when Morgan Stanley Asset Management
became the sub-adviser.
A-62
<PAGE>
SUB-ACCOUNTS INVESTING IN VARIABLE INSURANCE PRODUCTS FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
--------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
10/9/86- -----------------------------------------------------------------------------------------
SUB-ACCOUNT 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 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity-Income............ 0.00% -2.02% 21.61% 16.30% -16.05% 30.26% 15.84% 17.23% 6.11% 33.89% 13.25%
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
1/28/87- --------------------------------------------------------------------------------
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 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Overseas.......................... -6.16% 7.16% 25.15% -2.55% 7.03% -11.52% 36.12% 0.82% 8.70% 12.19%
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
9/19/85- --------------------------------------------------------------------------------------------------
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 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Income..... 6.11% 16.63% 0.31% 10.64% -5.03% -3.11% 33.87% 22.06% 19.32% -2.43% 19.53% 13.00%
<CAPTION>
10/9/86- 10/9/86-
12/31/97 12/31/97
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 RETURN ANNUAL
- ----------- -------- -------- ---------
<S> <C> <C> <C>
Equity-Income............ % %
<CAPTION>
5/1/87- 5/1/87-
12/31/97 12/31/97
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 RETURN ANNUAL
- ----------- -------- -------- ---------
<S> <C> <C> <C>
Overseas..................... %..... %
<CAPTION>
9/19/85- 9/19/85-
12/31/97 12/31/97
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 RETURN ANNUAL
- ----------- -------- -------- ---------
<S> <C> <C> <C>
High Income..... % %
SUB-ACCOUNT INVESTING IN VARIABLE INSURANCE PRODUCTS FUND II
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------
FOR ONE YEAR ENDING
9/6/89- --------------------------------------------------------------
SUB-ACCOUNT 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Manager....................................... 0.53% 5.76% 21.46% 10.71% 20.15% -6.93% 15.91% 13.57%
<CAPTION>
9/6/89- 9/6/89-
12/31/97 12/31/97
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 RETURN ANNUAL
- ----------- -------- -------- ---------
<S> <C> <C> <C>
Asset Manager................ %........ %...............
</TABLE>
A-63
<PAGE>
POLICY PERFORMANCE
The material below assumes a Policy was issued with a $1 million face amount
and annual premiums of $16,000, paid on August 26 of each year (May 1 in the
case of the Zenith Stock Index and Managed Sub-Accounts; May 2 in the case of
the Zenith Small Cap Sub-Account; October 31 in the case of the Zenith
Balanced, Zenith International Magnum Equity, Zenith Venture 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 Growth and Income and Zenith Midcap Value 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 and a female, both age 55 in
the nonsmoker standard risk category. The first example shows such a Policy
with an Option A death benefit, the second example shows a Policy with an
Option B death benefit and the third example shows a Policy with an Option C
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 also reflect all Policy charges based on NELICO's
current rates. (See Appendix A for the definition of the internal rate of
return.)
OPTION A DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,000,000 14,491 8,422 -84.19% --
December 31, 1984....... 32,000 1,000,000 1,000,000 26,856 20,787 -42.50 1,975.63%
December 31, 1985....... 48,000 1,000,000 1,000,000 60,394 47,528 -.73 434.27
December 31, 1986....... 64,000 1,000,000 1,000,000 129,603 116,737 34.44 206.69
December 31, 1987....... 80,000 1,000,000 1,000,000 205,962 193,096 39.09 127.42
December 31, 1988....... 96,000 1,000,000 1,000,000 198,941 186,652 23.49 88.99
December 31, 1989....... 112,000 1,000,000 1,000,000 270,617 259,713 24.89 66.82
December 31, 1990....... 128,000 1,000,000 1,000,000 269,342 259,823 18.01 52.57
December 31, 1991....... 144,000 1,000,000 1,000,000 424,971 416,837 23.52 42.74
December 31, 1992....... 160,000 1,000,000 1,000,000 409,235 402,486 18.18 35.59
December 31, 1993....... 176,000 1,000,000 1,000,000 479,444 474,123 17.53 30.19
December 31, 1994....... 192,000 1,000,000 1,000,000 450,141 446,304 13.64 25.98
December 31, 1995....... 208,000 1,000,000 1,088,149 635,972 633,621 16.31 23.78
December 31, 1996....... 224,000 1,000,000 1,315,133 775,204 774,337 16.65 23.32
December 31, 1997.......
</TABLE>
A-64
<PAGE>
ZENITH BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,000,000 13,680 7,611 -88.18% --
December 31, 1984....... 32,000 1,000,000 1,000,000 28,890 22,822 -34.63 1,975.63%
December 31, 1985....... 48,000 1,000,000 1,000,000 47,663 34,797 -22.48 434.27
December 31, 1986....... 64,000 1,000,000 1,000,000 67,356 54,490 -8.59 206.69
December 31, 1987....... 80,000 1,000,000 1,000,000 81,112 68,245 -6.74 127.42
December 31, 1988....... 96,000 1,000,000 1,000,000 99,937 87,648 -3.20 88.99
December 31, 1989....... 112,000 1,000,000 1,000,000 124,057 113,153 .31 66.82
December 31, 1990....... 128,000 1,000,000 1,000,000 145,900 136,381 1.64 52.57
December 31, 1991....... 144,000 1,000,000 1,000,000 183,803 175,669 4.52 42.74
December 31, 1992....... 160,000 1,000,000 1,000,000 209,173 202,424 4.78 35.59
December 31, 1993....... 176,000 1,000,000 1,000,000 245,781 240,459 5.71 30.19
December 31, 1994....... 192,000 1,000,000 1,000,000 247,530 243,694 4.00 25.98
December 31, 1995....... 208,000 1,000,000 1,000,000 311,461 309,109 6.04 22.62
December 31, 1996....... 224,000 1,000,000 1,000,000 336,221 335,354 5.69 19.89
December 31, 1997.......
ZENITH MONEY MARKET SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,000,000 13,710 7,642 -88.04% --
December 31, 1984....... 32,000 1,000,000 1,000,000 28,017 21,948 -38.00 1,975.63%
December 31, 1985....... 48,000 1,000,000 1,000,000 43,264 30,398 -31.13 434.27
December 31, 1986....... 64,000 1,000,000 1,000,000 58,797 45,931 -17.46 206.69
December 31, 1987....... 80,000 1,000,000 1,000,000 75,013 62,147 -10.68 127.42
December 31, 1988....... 96,000 1,000,000 1,000,000 92,845 80,556 -6.17 88.99
December 31, 1989....... 112,000 1,000,000 1,000,000 113,251 102,347 -2.70 66.82
December 31, 1990....... 128,000 1,000,000 1,000,000 133,966 124,447 -.73 52.57
December 31, 1991....... 144,000 1,000,000 1,000,000 153,354 145,221 .19 42.74
December 31, 1992....... 160,000 1,000,000 1,000,000 169,848 163,099 .40 35.59
December 31, 1993....... 176,000 1,000,000 1,000,000 185,716 180,395 .46 30.19
December 31, 1994....... 192,000 1,000,000 1,000,000 204,420 200,583 .74 25.98
December 31, 1995....... 208,000 1,000,000 1,000,000 227,033 224,682 1.21 22.62
December 31, 1996....... 224,000 1,000,000 1,000,000 249,272 248,406 1.50 19.89
December 31, 1997.......
</TABLE>
A-65
<PAGE>
ZENITH STOCK INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,000,000 11,256 5,188 -81.45% --
December 31, 1988....... 32,000 1,000,000 1,000,000 26,542 20,473 -32.91 1,033.28%
December 31, 1989....... 48,000 1,000,000 1,000,000 50,376 37,510 -14.14 328.36
December 31, 1990....... 64,000 1,000,000 1,000,000 59,886 47,020 -13.80 174.11
December 31, 1991....... 80,000 1,000,000 1,000,000 91,460 78,594 -.66 112.69
December 31, 1992....... 96,000 1,000,000 1,000,000 110,640 98,698 .87 80.87
December 31, 1993....... 112,000 1,000,000 1,000,000 133,587 123,030 2.56 61.77
December 31, 1994....... 128,000 1,000,000 1,000,000 146,438 137,266 1.67 49.18
December 31, 1995....... 144,000 1,000,000 1,000,000 215,224 207,437 7.71 40.32
December 31, 1996....... 160,000 1,000,000 1,000,000 273,032 266,630 9.65 33.80
December 31, 1997.......
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,000,000 12,752 6,684 -72.90% --
December 31, 1988....... 32,000 1,000,000 1,000,000 27,239 21,170 -30.79 1,033.28%
December 31, 1989....... 48,000 1,000,000 1,000,000 47,116 34,250 -19.04 328.36
December 31, 1990....... 64,000 1,000,000 1,000,000 61,438 48,572 -12.39 174.11
December 31, 1991....... 80,000 1,000,000 1,000,000 87,193 74,327 -2.75 112.69
December 31, 1992....... 96,000 1,000,000 1,000,000 105,767 9325 -.72 80.87
December 31, 1993....... 112,000 1,000,000 1,000,000 129,080 118,522 1.54 61.77
December 31, 1994....... 128,000 1,000,000 1,000,000 138,970 129,797 .33 49.18
December 31, 1995....... 144,000 1,000,000 1,000,000 196,363 188,575 5.71 40.32
December 31, 1996....... 160,000 1,000,000 1,000,000 236,097 229,695 6.87 33.80
December 31, 1997.......
ZENITH GROWTH AND INCOME SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1993....... 16,000 1,000,000 1,000,000 14,577 8,508 -60.97% --
December 31, 1994....... 32,000 1,000,000 1,000,000 27,146 21,078 -31.00 1,028.55%
December 31, 1995....... 48,000 1,000,000 1,000,000 52,666 39,800 -10.84 327.65
December 31, 1996....... 64,000 1,000,000 1,000,000 75,783 62,917 -.78 173.87
December 31, 1997.......
</TABLE>
A-66
<PAGE>
ZENITH MIDCAP VALUE SUB-ACCOUNT**
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1993....... 16,000 1,000,000 1,000,000 14,645 8,576 -60.51% --
December 31, 1994....... 32,000 1,000,000 1,000,000 27,406 21,338 -30.21 1,028.55%
December 31, 1995....... 48,000 1,000,000 1,000,000 51,283 38,417 -12.80 327.65
December 31, 1996....... 64,000 1,000,000 1,000,000 73,313 60,447 -2.62 173.87
December 31, 1997.......
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 12,279 6,210 -75.86% --
December 31, 1995....... 32,000 1,000,000 1,000,000 31,142 25,073 -19.28 1,038.05%
December 31, 1996....... 48,000 1,000,000 1,000,000 55,058 42,192 -7.57 329.07
December 31, 1997.......
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 12,802 6,733 -100.00% --
December 31, 1995....... 32,000 1,000,000 1,000,000 31,158 25,089 -32.53 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 48,185 35,319 -24.88 522.96
December 31, 1997.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 13,532 7,464 -98.96% --
December 31, 1995....... 32,000 1,000,000 1,000,000 29,802 23,733 -38.93 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 47,858 34,992 -25.59 522.96
December 31, 1997.......
ZENITH VENTURE VALUE SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 13,117 7,049 -100.00% --
December 31, 1995....... 32,000 1,000,000 1,000,000 31,121 25,052 -32.71 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 52,326 39,460 -16.20 522.96
December 31, 1997.......
</TABLE>
A-67
<PAGE>
ZENITH INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 13,863 7,795 -98.65% --
December 31, 1995....... 32,000 1,000,000 1,000,000 27,965 21,896 -47.56 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 42,658 29,792 -37.55 522.96
December 31, 1997.......
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1986....... 16,000 1,000,000 1,000,000 13,590 7,521 -96.38% --
December 31, 1987....... 32,000 1,000,000 1,000,000 23,548 17,479 -63.02 2,723.89%
December 31, 1988....... 48,000 1,000,000 1,000,000 41,197 28,331 -39.03 490.23
December 31, 1989....... 64,000 1,000,000 1,000,000 60,910 48,044 -16.25 221.84
December 31, 1990....... 80,000 1,000,000 1,000,000 64,281 51,415 -19.75 133.88
December 31, 1991....... 96,000 1,000,000 1,000,000 97,173 84,653 -4.62 92.44
December 31, 1992....... 112,000 1,000,000 1,000,000 126,352 115,217 .88 68.91
December 31, 1993....... 128,000 1,000,000 1,000,000 160,443 150,694 4.34 53.96
December 31, 1994....... 144,000 1,000,000 1,000,000 182,079 173,714 4.39 43.72
December 31, 1995....... 160,000 1,000,000 1,000,000 258,099 251,120 9.26 36.31
December 31, 1996....... 176,000 1,000,000 1,000,000 303,832 298,262 9.72 30.74
December 31, 1997.......
OVERSEAS SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,000,000 11,596 5,527 -68.38% --
December 31, 1988....... 32,000 1,000,000 1,000,000 27,183 21,115 -25.92 707.99%
December 31, 1989....... 48,000 1,000,000 1,000,000 48,821 35,955 -14.30 272.18
December 31, 1990....... 64,000 1,000,000 1,000,000 60,413 47,547 -11.91 154.15
December 31, 1991....... 80,000 1,000,000 1,000,000 78,294 65,428 -6.81 103.01
December 31, 1992....... 96,000 1,000,000 1,000,000 80,122 68,641 -9.74 75.31
December 31, 1993....... 112,000 1,000,000 1,000,000 125,608 115,513 .79 58.22
December 31, 1994....... 128,000 1,000,000 1,000,000 137,840 129,129 .20 46.75
December 31, 1995....... 144,000 1,000,000 1,000,000 165,500 158,174 1.90 38.57
December 31, 1996....... 160,000 1,000,000 1,000,000 197,835 191,894 3.32 32.48
December 31, 1997.......
</TABLE>
A-68
<PAGE>
HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1985....... 16,000 1,000,000 1,000,000 14,274 8,205 -90.62% --
December 31, 1986....... 32,000 1,000,000 1,000,000 29,761 23,692 -33.71 2,337.90%
December 31, 1987....... 48,000 1,000,000 1,000,000 42,563 29,697 -34.27 463.37
December 31, 1988....... 64,000 1,000,000 1,000,000 60,045 47,179 -16.70 214.72
December 31, 1989....... 80,000 1,000,000 1,000,000 69,113 56,247 -15.33 130.87
December 31, 1990....... 96,000 1,000,000 1,000,000 79,401 66,997 -13.01 90.84
December 31, 1991....... 112,000 1,000,000 1,000,000 119,247 108,228 -1.05 67.95
December 31, 1992....... 128,000 1,000,000 1,000,000 157,896 148,262 3.86 53.32
December 31, 1993....... 144,000 1,000,000 1,000,000 201,189 192,940 6.72 43.27
December 31, 1994....... 160,000 1,000,000 1,000,000 208,379 201,515 4.75 35.98
December 31, 1995....... 176,000 1,000,000 1,000,000 262,022 256,576 6.94 30.49
December 31, 1996....... 192,000 1,000,000 1,000,000 308,587 304,627 7.70 26.21
December 31, 1997.......
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1989....... 16,000 1,000,000 1,000,000 13,583 7,514 -90.73% --
December 31, 1990....... 32,000 1,000,000 1,000,000 27,598 21,529 -40.93 2,130.09%
December 31, 1991....... 48,000 1,000,000 1,000,000 46,904 34,038 -24.47 447.21
December 31, 1992....... 64,000 1,000,000 1,000,000 65,176 52,310 -10.91 210.30
December 31, 1993....... 80,000 1,000,000 1,000,000 91,834 78,968 -.56 128.98
December 31, 1994....... 96,000 1,000,000 1,000,000 97,152 84,747 -4.43 89.83
December 31, 1995....... 112,000 1,000,000 1,000,000 126,191 115,172 .84 67.33
December 31, 1996....... 128,000 1,000,000 1,000,000 156,439 146,805 3.57 52.92
December 31, 1997.......
</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.
** Rates of return and Policy values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average
daily net assets. Beginning May 1, 1998, the Series' investment advisory
fee is .75%.
A-69
<PAGE>
OPTION B DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,014,491 14,491 8,422 -84.19% --
December 31, 1984....... 32,000 1,000,000 1,026,854 26,854 20,785 -42.51 2,018.29%
December 31, 1985....... 48,000 1,000,000 1,060,380 60,380 47,514 -.75 449.10
December 31, 1986....... 64,000 1,000,000 1,129,535 129,535 116,669 34.41 219.75
December 31, 1987....... 80,000 1,000,000 1,205,770 205,770 192,904 39.05 139.32
December 31, 1988....... 96,000 1,000,000 1,198,653 198,653 186,364 23.43 96.96
December 31, 1989....... 112,000 1,000,000 1,270,045 270,045 259,141 24.83 74.82
December 31, 1990....... 128,000 1,000,000 1,268,560 268,560 259,041 17.93 58.97
December 31, 1991....... 144,000 1,000,000 1,423,320 423,320 415,186 23.43 50.71
December 31, 1992....... 160,000 1,000,000 1,407,176 407,176 400,428 18.09 42.22
December 31, 1993....... 176,000 1,000,000 1,476,651 476,651 471,329 17.43 36.83
December 31, 1994....... 192,000 1,000,000 1,447,430 447,430 443,593 13.55 31.60
December 31, 1995....... 208,000 1,000,000 1,631,940 631,940 629,588 16.22 29.35
December 31, 1996....... 224,000 1,000,000 1,770,021 770,021 769,154 16.56 27.04
December 31, 1997.......
ZENITH BOND INCOME SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,013,680 13,680 7,611 -88.18% --
December 31, 1984....... 32,000 1,000,000 1,028,888 28,888 22,819 -34.64 2,021.51%
December 31, 1985....... 48,000 1,000,000 1,047,652 47,652 34,786 -22.50 446.02
December 31, 1986....... 64,000 1,000,000 1,067,324 67,324 54,458 -8.62 213.62
December 31, 1987....... 80,000 1,000,000 1,081,045 81,045 68,179 -6.78 132.32
December 31, 1988....... 96,000 1,000,000 1,099,811 99,811 87,522 -3.25 93.15
December 31, 1989....... 112,000 1,000,000 1,123,830 123,830 112,926 .25 70.70
December 31, 1990....... 128,000 1,000,000 1,145,530 145,530 136,011 1.57 56.21
December 31, 1991....... 144,000 1,000,000 1,183,177 183,177 175,044 4.44 46.52
December 31, 1992....... 160,000 1,000,000 1,208,239 208,239 201,491 4.68 39.25
December 31, 1993....... 176,000 1,000,000 1,244,514 244,514 239,192 5.61 33.91
December 31, 1994....... 192,000 1,000,000 1,246,235 246,235 242,398 3.91 29.32
December 31, 1995....... 208,000 1,000,000 1,309,757 309,757 307,406 5.96 26.33
December 31, 1996....... 224,000 1,000,000 1,334,246 334,246 333,379 5.61 23.51
December 31, 1997.......
</TABLE>
A-70
<PAGE>
ZENITH MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,013,710 13,710 7,641 -88.04% --
December 31, 1984....... 32,000 1,000,000 1,028,015 28,015 21,946 -38.01 2,020.13%
December 31, 1985....... 48,000 1,000,000 1,043,254 43,254 30,388 -31.15 444.95
December 31, 1986....... 64,000 1,000,000 1,058,770 58,770 45,904 -17.49 212.76
December 31, 1987....... 80,000 1,000,000 1,074,953 74,953 62,087 -10.72 131.96
December 31, 1988....... 96,000 1,000,000 1,092,731 92,731 80,442 -6.22 92.86
December 31, 1989....... 112,000 1,000,000 1,113,048 113,048 102,144 -2.76 70.38
December 31, 1990....... 128,000 1,000,000 1,133,632 133,632 124,114 -.80 55.93
December 31, 1991....... 144,000 1,000,000 1,152,843 152,843 144,710 .11 45.93
December 31, 1992....... 160,000 1,000,000 1,169,110 169,110 162,362 .30 38.61
December 31, 1993....... 176,000 1,000,000 1,184,796 184,796 179,474 .36 33.07
December 31, 1994....... 192,000 1,000,000 1,203,402 203,402 199,565 .66 28.79
December 31, 1995....... 208,000 1,000,000 1,225,863 225,863 223,511 1.13 25.42
December 31, 1996....... 224,000 1,000,000 1,247,899 247,899 247,033 1.42 22.67
December 31, 1997.......
ZENITH STOCK INDEX SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,011,256 11,256 5,187 -81.45% --
December 31, 1988....... 32,000 1,000,000 1,026,538 26,538 20,470 -32.92 1,052.13%
December 31, 1989....... 48,000 1,000,000 1,050,361 50,361 37,494 -14.16 337.20
December 31, 1990....... 64,000 1,000,000 1,059,852 59,852 46,986 -13.83 179.18
December 31, 1991....... 80,000 1,000,000 1,091,373 91,373 78,507 -.71 117.50
December 31, 1992....... 96,000 1,000,000 1,110,481 110,481 98,538 .82 85.01
December 31, 1993....... 112,000 1,000,000 1,133,312 133,312 122,755 2.50 65.61
December 31, 1994....... 128,000 1,000,000 1,146,026 146,026 136,854 1.60 52.60
December 31, 1995....... 144,000 1,000,000 1,214,419 214,419 206,631 7.63 44.45
December 31, 1996....... 160,000 1,000,000 1,271,698 271,698 265,296 9.55 38.23
December 31, 1997.......
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,012,752 12,752 6,683 -72.91% --
December 31, 1988....... 32,000 1,000,000 1,027,235 27,235 21,167 -30.80 1,052.62%
December 31, 1989....... 48,000 1,000,000 1,047,102 47,102 34,236 -19.06 336.64
December 31, 1990....... 64,000 1,000,000 1,061,403 61,403 48,537 -12.42 179.31
December 31, 1991....... 80,000 1,000,000 1,087,111 87,111 74,245 -2.79 117.29
December 31, 1992....... 96,000 1,000,000 1,105,617 105,617 93,674 -.77 84.84
December 31, 1993....... 112,000 1,000,000 1,128,816 128,816 118,259 1.48 65.49
December 31, 1994....... 128,000 1,000,000 1,138,582 138,582 129,410 .26 52.43
December 31, 1995....... 144,000 1,000,000 1,195,635 195,635 187,848 5.63 44.12
December 31, 1996....... 160,000 1,000,000 1,234,958 234,958 228,556 6.78 37.69
December 31, 1997.......
</TABLE>
A-71
<PAGE>
ZENITH GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $16,000 $1,000,000 $1,013,861 $13,861 $ 7,792 -- --
December 31, 1993....... 16,000 1,000,000 1,014,576 14,576 8,508 -60.98% --
December 31, 1994....... 32,000 1,000,000 1,027,143 27,143 21,074 -31.01 1,047.72%
December 31, 1995....... 48,000 1,000,000 1,052,648 52,648 39,782 -10.86 336.86
December 31, 1996....... 64,000 1,000,000 1,075,763 75,736 62,870 -.82 180.24
December 31, 1997.......
ZENITH MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $16,000 $1,000,000 $1,013,861 $13,861 $ 7,792 -- --
December 31, 1993....... 16,000 1,000,000 1,014,645 14,645 8,576 -60.51% --
December 31, 1994....... 32,000 1,000,000 1,027,403 27,403 21,334 -30.23 1,047.90%
December 31, 1995....... 48,000 1,000,000 1,051,266 51,266 38,400 -12.83 336.63
December 31, 1996....... 64,000 1,000,000 1,073,268 73,268 60,401 -2.65 180.04
December 31, 1997.......
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $16,000 $1,000,000 $1,013,861 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,012,279 12,279 6,210 -75.87% --
December 31, 1995....... 32,000 1,000,000 1,031,138 31,138 25,069 -19.29 1,060.27%
December 31, 1996....... 48,000 1,000,000 1,055,041 55,041 42,175 -7.59 338.75
December 31, 1997.......
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,013,861 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,012,801 12,801 6,733 -100.00% --
December 31, 1995....... 32,000 1,000,000 1,031,155 31,155 25,087 -32.54 3,363.77%
December 31, 1996....... 48,000 1,000,000 1,048,176 48,176 35,310 -24.90 537.86
December 31, 1997.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,013,861 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,013,532 13,532 7,463 -98.96% --
December 31, 1995....... 32,000 1,000,000 1,029,800 29,800 23,731 -38.94 3,359.77%
December 31, 1996....... 48,000 1,000,000 1,047,849 47,849 34,983 -25.61 537.76
December 31, 1997.......
</TABLE>
A-72
<PAGE>
ZENITH VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,013,117 13,117 7,049 -100.00% --
December 31, 1995....... 32,000 1,000,000 1,031,119 31,119 25,050 -32.72 3,363.66%
December 31, 1996....... 48,000 1,000,000 1,052,316 52,316 39,450 -16.22 539.12
December 31, 1997.......
ZENITH INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,013,863 13,863 7,794 -98.65% --
December 31, 1995....... 32,000 1,000,000 1,027,963 27,963 21,895 -47.57 3,354.36%
December 31, 1996....... 48,000 1,000,000 1,042,650 42,650 29,784 -37.57 536.17
December 31, 1997.......
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1986....... 16,000 1,000,000 1,013,589 13,589 7,521 -96.38% --
December 31, 1987....... 32,000 1,000,000 1,023,546 23,546 17,477 -63.03 2,779.50%
December 31, 1988....... 48,000 1,000,000 1,041,189 41,189 28,323 -39.05 502.03
December 31, 1989....... 64,000 1,000,000 1,060,885 60,885 48,019 -16.28 228.66
December 31, 1990....... 80,000 1,000,000 1,064,237 64,237 51,371 -19.78 138.00
December 31, 1991....... 96,000 1,000,000 1,097,066 97,066 84,547 -4.67 96.64
December 31, 1992....... 112,000 1,000,000 1,126,145 126,145 115,011 .82 72.98
December 31, 1993....... 128,000 1,000,000 1,160,068 160,068 150,318 4.28 58.04
December 31, 1994....... 144,000 1,000,000 1,181,497 181,497 173,133 4.31 47.54
December 31, 1995....... 160,000 1,000,000 1,257,002 257,002 250,023 9.17 40.82
December 31, 1996....... 176,000 1,000,000 1,302,262 302,262 296,693 9.62 35.30
December 31, 1997.......
OVERSEAS SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,011,595 11,595 5,526 -68.38% --
December 31, 1988....... 32,000 1,000,000 1,027,179 27,179 21,110 -25.93 720.03%
December 31, 1989....... 48,000 1,000,000 1,048,802 48,802 35,936 -14.33 279.02
December 31, 1990....... 64,000 1,000,000 1,060,370 60,370 47,504 -11.94 158.60
December 31, 1991....... 80,000 1,000,000 1,078,207 78,207 65,341 -6.85 106.76
December 31, 1992....... 96,000 1,000,000 1,079,990 79,990 68,509 -9.79 78.13
December 31, 1993....... 112,000 1,000,000 1,125,323 125,323 115,227 .72 61.64
December 31, 1994....... 128,000 1,000,000 1,137,413 137,413 128,702 .12 49.82
December 31, 1995....... 144,000 1,000,000 1,164,829 164,829 157,503 1.81 41.68
December 31, 1996....... 160,000 1,000,000 1,196,804 196,804 190,863 3.23 35.67
December 31, 1997.......
</TABLE>
A-73
<PAGE>
HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1985....... 16,000 1,000,000 1,014,274 14,274 8,205 -90.62% --
December 31, 1986....... 32,000 1,000,000 1,029,758 29,758 23,690 -33.72 2,396.09%
December 31, 1987....... 48,000 1,000,000 1,042,554 42,554 29,688 -34.29 474.74
December 31, 1988....... 64,000 1,000,000 1,060,019 60,019 47,153 -16.73 221.19
December 31, 1989....... 80,000 1,000,000 1,069,061 69,061 56,195 -15.37 135.19
December 31, 1990....... 96,000 1,000,000 1,079,309 79,309 66,905 -13.06 94.24
December 31, 1991....... 112,000 1,000,000 1,119,043 119,043 108,024 -1.10 71.75
December 31, 1992....... 128,000 1,000,000 1,157,513 157,513 147,879 3.79 57.30
December 31, 1993....... 144,000 1,000,000 1,200,524 200,524 192,275 6.64 47.42
December 31, 1994....... 160,000 1,000,000 1,207,472 207,472 200,608 4.66 39.67
December 31, 1995....... 176,000 1,000,000 1,260,674 260,674 255,228 6.85 34.46
December 31, 1996....... 192,000 1,000,000 1,306,964 306,964 303,004 7.62 30.31
December 31, 1997.......
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 16,000 $1,000,000 $1,013,861 $ 13,861 $ 7,792 -- --
December 31, 1989....... 16,000 1,000,000 1,013,583 13,583 7,514 -90.73% --
December 31, 1990....... 32,000 1,000,000 1,027,596 27,596 21,527 -40.94 2,178.20%
December 31, 1991....... 48,000 1,000,000 1,046,894 46,894 34,028 -24.49 459.19
December 31, 1992....... 64,000 1,000,000 1,065,147 65,147 52,281 -10.94 217.15
December 31, 1993....... 80,000 1,000,000 1,091,762 91,762 78,896 -.60 134.58
December 31, 1994....... 96,000 1,000,000 1,097,034 97,034 84,630 -4.48 93.92
December 31, 1995....... 112,000 1,000,000 1,125,967 125,967 114,948 .78 71.30
December 31, 1996....... 128,000 1,000,000 1,156,053 156,053 146,419 3.50 56.83
December 31, 1997.......
</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.
**Rates of return and Policy values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average daily
net assets. Beginning May 1, 1998, the Series' investment advisory fee is
.75%.
A-74
<PAGE>
OPTION C DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,000,000 14,491 8,422 -84.19% --
December 31, 1984....... 32,000 1,000,000 1,000,000 26,856 20,787 -42.50 1,975.63%
December 31, 1985....... 48,000 1,000,000 1,000,000 60,394 47,528 -.73 434.27
December 31, 1986....... 64,000 1,000,000 1,000,000 129,603 116,737 34.44 206.69
December 31, 1987....... 80,000 1,000,000 1,000,000 205,962 193,096 39.09 127.42
December 31, 1988....... 96,000 1,000,000 1,000,000 198,941 186,652 23.49 88.99
December 31, 1989....... 112,000 1,000,000 1,000,000 270,617 259,713 24.89 66.82
December 31, 1990....... 128,000 1,000,000 1,000,000 269,342 259,823 18.01 52.57
December 31, 1991....... 144,000 1,000,000 1,000,000 424,971 416,837 23.52 42.74
December 31, 1992....... 160,000 1,000,000 1,000,000 409,235 402,486 18.18 35.59
December 31, 1993....... 176,000 1,000,000 1,000,000 479,444 474,123 17.53 30.19
December 31, 1994....... 192,000 1,000,000 1,000,000 450,141 446,304 13.64 25.98
December 31, 1995....... 208,000 1,000,000 1,000,000 635,988 633,637 16.31 22.62
December 31, 1996....... 224,000 1,000,000 1,000,000 775,345 774,478 16.65 19.89
December 31, 1997.......
ZENITH BOND INCOME SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,000,000 13,680 7,611 -88.18% --
December 31, 1984....... 32,000 1,000,000 1,000,000 28,890 22,822 -34.63 1,975.63%
December 31, 1985....... 48,000 1,000,000 1,000,000 47,663 34,797 -22.48 434.27
December 31, 1986....... 64,000 1,000,000 1,000,000 67,356 54,490 -8.59 206.69
December 31, 1987....... 80,000 1,000,000 1,000,000 81,112 68,245 -6.74 127.42
December 31, 1988....... 96,000 1,000,000 1,000,000 99,937 87,648 -3.20 88.99
December 31, 1989....... 112,000 1,000,000 1,000,000 124,057 113,153 .31 66.82
December 31, 1990....... 128,000 1,000,000 1,000,000 145,900 136,381 1.64 52.57
December 31, 1991....... 144,000 1,000,000 1,000,000 183,803 175,669 4.52 42.74
December 31, 1992....... 160,000 1,000,000 1,000,000 209,173 202,424 4.78 35.59
December 31, 1993....... 176,000 1,000,000 1,000,000 245,781 240,459 5.71 30.19
December 31, 1994....... 192,000 1,000,000 1,000,000 247,530 243,694 4.00 25.98
December 31, 1995....... 208,000 1,000,000 1,000,000 311,461 309,109 6.04 22.62
December 31, 1996....... 224,000 1,000,000 1,000,000 336,221 335,345 5.69 19.89
December 31, 1997.......
</TABLE>
A-75
<PAGE>
ZENITH MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1983....... 16,000 1,000,000 1,000,000 13,710 7,642 -88.04% --
December 31, 1984....... 32,000 1,000,000 1,000,000 28,017 21,948 -38.00 1,975.63%
December 31, 1985....... 48,000 1,000,000 1,000,000 43,264 30,398 -31.13 434.27
December 31, 1986....... 64,000 1,000,000 1,000,000 58,797 45,931 -17.46 206.69
December 31, 1987....... 80,000 1,000,000 1,000,000 75,013 62,147 -10.68 127.42
December 31, 1988....... 96,000 1,000,000 1,000,000 92,845 80,556 -6.17 88.99
December 31, 1989....... 112,000 1,000,000 1,000,000 113,251 102,347 -2.70 66.82
December 31, 1990....... 128,000 1,000,000 1,000,000 133,966 124,447 -.73 52.57
December 31, 1991....... 144,000 1,000,000 1,000,000 153,354 145,221 .19 42.74
December 31, 1992....... 160,000 1,000,000 1,000,000 169,848 163,099 .40 35.59
December 31, 1993....... 176,000 1,000,000 1,000,000 185,716 180,395 .46 30.19
December 31, 1994....... 192,000 1,000,000 1,000,000 204,420 200,583 .74 25.98
December 31, 1995....... 208,000 1,000,000 1,000,000 227,033 224,682 1.21 22.62
December 31, 1996....... 224,000 1,000,000 1,000,000 249,272 248,406 1.50 19.89
December 31, 1997.......
ZENITH STOCK INDEX SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,000,000 11,256 5,188 -81.45% --
December 31, 1988....... 32,000 1,000,000 1,000,000 26,542 20,473 -32.91 1,033.28%
December 31, 1989....... 48,000 1,000,000 1,000,000 50,376 37,510 -14.14 328.36
December 31, 1990....... 64,000 1,000,000 1,000,000 59,886 47,020 -13.80 174.11
December 31, 1991....... 80,000 1,000,000 1,000,000 91,460 78,594 -.66 112.69
December 31, 1992....... 96,000 1,000,000 1,000,000 110,640 98,698 .87 80.87
December 31, 1993....... 112,000 1,000,000 1,000,000 133,587 123,030 2.56 61.77
December 31, 1994....... 128,000 1,000,000 1,000,000 146,438 137,266 1.67 49.18
December 31, 1995....... 144,000 1,000,000 1,000,000 215,224 207,437 7.71 40.32
December 31, 1996....... 160,000 1,000,000 1,000,000 273,032 266,630 9.65 33.80
December 31, 1997.......
ZENITH MANAGED SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,000,000 12,752 6,684 -72.90% --
December 31, 1988....... 32,000 1,000,000 1,000,000 27,239 21,170 -30.79 1,033.28%
December 31, 1989....... 48,000 1,000,000 1,000,000 47,116 34,250 -19.04 328.36
December 31, 1990....... 64,000 1,000,000 1,000,000 61,438 48,572 -12.39 174.11
December 31, 1991....... 80,000 1,000,000 1,000,000 87,193 74,327 -2.75 112.69
December 31, 1992....... 96,000 1,000,000 1,000,000 105,767 93,825 -.72 80.87
December 31, 1993....... 112,000 1,000,000 1,000,000 129,080 118,522 1.54 61.77
December 31, 1994....... 128,000 1,000,000 1,000,000 138,970 129,797 .33 49.18
December 31, 1995....... 144,000 1,000,000 1,000,000 196,363 188,575 5.71 40.32
December 31, 1996....... 160,000 1,000,000 1,000,000 236,097 229,695 6.87 33.80
December 31, 1997.......
</TABLE>
A-76
<PAGE>
ZENITH GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1993....... 16,000 1,000,000 1,000,000 14,577 8,508 -60.97% --
December 31, 1994....... 32,000 1,000,000 1,000,000 27,146 21,078 -31.00 1,028.55%
December 31, 1995....... 48,000 1,000,000 1,000,000 52,666 39,800 -10.84 327.65
December 31, 1996....... 64,000 1,000,000 1,000,000 75,783 62,917 -.78 173.87
December 31, 1997.......
ZENITH MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1993....... 16,000 1,000,000 1,000,000 14,645 8,576 -60.51% --
December 31, 1994....... 32,000 1,000,000 1,000,000 27,406 21,338 -30.21 1,028.55%
December 31, 1995....... 48,000 1,000,000 1,000,000 51,283 38,417 -12.80 327.65
December 31, 1996....... 64,000 1,000,000 1,000,000 73,313 60,447 -2.62 173.87
December 31, 1997.......
ZENITH SMALL CAP SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 12,279 6,210 -75.86% --
December 31, 1995....... 32,000 1,000,000 1,000,000 31,142 25,073 -19.28 1,038.05%
December 31, 1996....... 48,000 1,000,000 1,000,000 55,058 42,192 -7.57 329.07
December 31, 1997.......
ZENITH EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 12,802 6,733 -100.00% --
December 31, 1995....... 32,000 1,000,000 1,000,000 31,158 25,089 -32.53 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 48,185 35,319 -24.88 522.96
December 31, 1997.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $16,000 $1,000,000 $1,000,000 $13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 13,532 7,464 -98.96% --
December 31, 1995....... 32,000 1,000,000 1,000,000 29,802 23,733 -38.93 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 47,858 34,992 -25.59 522.96
December 31, 1997.......
</TABLE>
A-77
<PAGE>
ZENITH VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 13,117 7,049 -100.00% --
December 31, 1995....... 32,000 1,000,000 1,000,000 31,121 25,052 -32.71 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 52,326 39,460 -16.20 522.96
December 31, 1997.......
ZENITH INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1994....... 16,000 1,000,000 1,000,000 13,863 7,795 -98.65% --
December 31, 1995....... 32,000 1,000,000 1,000,000 27,965 21,896 -47.56 3,271.69%
December 31, 1996....... 48,000 1,000,000 1,000,000 42,658 29,792 -37.55 522.96
December 31, 1997.......
EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1986....... 16,000 1,000,000 1,000,000 13,590 7,521 -96.38% --
December 31, 1987....... 32,000 1,000,000 1,000,000 23,548 17,479 -63.02 2,723.89%
December 31, 1988....... 48,000 1,000,000 1,000,000 41,197 28,331 -39.03 490.23
December 31, 1989....... 64,000 1,000,000 1,000,000 60,910 48,044 -16.25 221.84
December 31, 1990....... 80,000 1,000,000 1,000,000 64,281 51,415 -19.75 133.88
December 31, 1991....... 96,000 1,000,000 1,000,000 97,173 84,653 -4.62 92.44
December 31, 1992....... 112,000 1,000,000 1,000,000 126,352 115,217 .88 68.91
December 31, 1993....... 128,000 1,000,000 1,000,000 160,443 150,694 4.34 53.96
December 31, 1994....... 144,000 1,000,000 1,000,000 182,079 173,714 4.39 43.72
December 31, 1995....... 160,000 1,000,000 1,000,000 258,099 251,120 9.26 36.31
December 31, 1996....... 176,000 1,000,000 1,000,000 303,832 298,262 9.72 30.74
December 31, 1997.......
OVERSEAS SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1987....... 16,000 1,000,000 1,000,000 11,596 5,527 -68.38% --
December 31, 1988....... 32,000 1,000,000 1,000,000 27,183 21,115 -25.92 707.99%
December 31, 1989....... 48,000 1,000,000 1,000,000 48,821 35,955 -14.30 272.18
December 31, 1990....... 64,000 1,000,000 1,000,000 60,413 47,547 -11.91 154.15
December 31, 1991....... 80,000 1,000,000 1,000,000 78,294 65,428 -6.81 103.01
December 31, 1992....... 96,000 1,000,000 1,000,000 80,122 68,641 -9.74 75.31
December 31, 1993....... 112,000 1,000,000 1,000,000 125,608 115,513 .79 58.22
December 31, 1994....... 128,000 1,000,000 1,000,000 137,840 129,129 .20 46.75
December 31, 1995....... 144,000 1,000,000 1,000,000 165,500 158,174 1.90 38.57
December 31, 1996....... 160,000 1,000,000 1,000,000 197,835 191,894 3.32 32.48
December 31, 1997.......
</TABLE>
A-78
<PAGE>
HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1985....... 16,000 1,000,000 1,000,000 14,274 8,205 -90.62% --
December 31, 1986....... 32,000 1,000,000 1,000,000 29,761 23,692 -33.71 2,337.90%
December 31, 1987....... 48,000 1,000,000 1,000,000 42,563 29,697 -34.27 463.37
December 31, 1988....... 64,000 1,000,000 1,000,000 60,045 47,179 -16.70 214.72
December 31, 1989....... 80,000 1,000,000 1,000,000 69,113 56,247 -15.33 130.87
December 31, 1990....... 96,000 1,000,000 1,000,000 79,401 66,997 -13.01 90.84
December 31, 1991....... 112,000 1,000,000 1,000,000 119,247 108,228 -1.05 67.95
December 31, 1992....... 128,000 1,000,000 1,000,000 157,896 148,262 3.86 53.32
December 31, 1993....... 144,000 1,000,000 1,000,000 201,189 192,940 6.72 43.27
December 31, 1994....... 160,000 1,000,000 1,000,000 208,379 201,515 4.75 35.98
December 31, 1995....... 176,000 1,000,000 1,000,000 262,022 256,576 6.94 30.49
December 31, 1996....... 192,000 1,000,000 1,000,000 308,587 304,627 7.70 26.21
December 31, 1997.......
ASSET MANAGER SUB-ACCOUNT
<CAPTION>
INTERNAL RATE
TOTAL MINIMUM VARIABLE OF RETURN ON INTERNAL RATE
PREMIUMS DEATH DEATH CASH NET CASH NET CASH OF RETURN ON
DATE PAID BENEFIT BENEFIT VALUE VALUE VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 16,000 $1,000,000 $1,000,000 $ 13,861 $ 7,792 -- --
December 31, 1989....... 16,000 1,000,000 1,000,000 13,583 7,514 -90.73% --
December 31, 1990....... 32,000 1,000,000 1,000,000 27,598 21,529 -40.93 2,130.09%
December 31, 1991....... 48,000 1,000,000 1,000,000 46,904 34,038 -24.47 447.21
December 31, 1992....... 64,000 1,000,000 1,000,000 65,176 52,310 -10.91 210.30
December 31, 1993....... 80,000 1,000,000 1,000,000 91,834 78,968 -.56 128.98
December 31, 1994....... 96,000 1,000,000 1,000,000 97,152 84,747 -4.43 89.83
December 31, 1995....... 112,000 1,000,000 1,000,000 126,191 115,172 .84 67.33
December 31, 1996....... 128,000 1,000,000 1,000,000 156,439 146,805 3.57 52.92
December 31, 1997.......
</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.
** Rates of return and Policy values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average daily
net assets. Beginning May 1, 1998, the Series' investment advisory fee is
.75%.
A-79
<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 53 20-year time periods beginning in 1926 and ending in 1997 (i.e.,
1926-1945, 1927-1946, and so on through 1978-1997):
-- The average annual return of common stocks was superior to that of high
grade, long-term corporate bonds in 50 of the 53 periods.
-- The average annual return of common stocks surpassed that of U.S.
Treasury bills in each of the 53 periods.
-- Common stock average annual returns exceeded the average annual rate of
inflation in each of the 53 periods.
Over the 43 30-year time periods beginning in 1926 and ending in 1997, 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 43
periods.
From 1926 through 1997 the average annual return for common stocks was
10.7%, compared to 5.6% 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 1998 Yearbook(TM), Ibbotson
Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
A-80
<PAGE>
---------------------
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 1997.
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
5.01- 10.01- 15.01- THAN
HOLDING NEGATIVE 0-5.00% 10.00% 15.00% 20.00% 20.00%
PERIOD RETURN RETURN RETURN RETURN RETURN RETURN
------- -------- ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1 year........................ 28% 4% 11% 7% 11% 38%
5 years....................... 10% 15% 15% 31% 19% 9%
10 years....................... 3% 10% 34% 24% 26% 2%
20 years....................... 0% 6% 32% 56% 6% 0%
</TABLE>
- --------
Source: Stocks, Bonds, Bills and Inflation 1998 Yearbook(TM), Ibbotson
Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
A-81
<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-82
<PAGE>
APPENDIX D
USES OF SURVIVORSHIP LIFE INSURANCE
The following are examples of ways in which the Policy can be used to
address certain personal, estate and business planning objectives.
ESTATE TAX PAYMENT
Federal estate taxes may be deferred for a married couple until the second
death. At that time, the estate tax liability may exceed 50% of a family's
estate. Survivorship life is especially suited to fund for this liability at
the second death.
EDUCATION AND SUPPORT OF CHILDREN
Often, parents will have sufficient insurance to provide for children if
either of the parents dies. However, few have sufficient insurance to provide
for children in the event both parents die while the children are in need of
education and support. Survivorship life can provide protection against the
extraordinary expenses that arise if both parents die while the children are
dependent.
CHARITABLE GIVING
Life insurance can be used to facilitate charitable giving, and survivorship
life is especially well suited for this purpose. Assets left to charity at
death can be deductible from a decedent's taxable estate. An individual may be
reluctant to give assets to charity if a surviving spouse may need those
assets for support or if the individual may want the children to receive the
value of those assets. Survivorship life can enable a client to defer the
charitable gift until the spouse dies. At the spouse's death, assets that
otherwise would be subject to estate tax can pass to charity. The children can
be provided for using survivorship life, which provides for payment of death
benefit proceeds directly to the children at the same time that the assets in
the spouse's estate pass to charity. Children can receive those life insurance
proceeds free of income and estate taxes.
GIFTS TO GRANDCHILDREN
Grandparents can provide substantial gifts to grandchildren using
survivorship life. For very large estates, survivorship life can take
advantage of exceptions to the generation skipping tax to maximize the gifts
grandchildren will receive.
BUSINESS USES
Survivorship life can be used in business planning to provide benefits or
funding for replacement of key people, for buy-sell agreements and the like.
The policy can cover two owners, a parent and child active in the business,
two related or unrelated key executives, an executive and the executive's
spouse, etc. The policy can be used to accumulate cash to help fund a living
buyout under a buy-sell agreement or a deferred compensation plan for
executives or for directors.
Because the Policy provides a death benefit and for the accumulation of cash
value, the Policy can be used for various individual and business planning
purposes. Purchasing the Policy in part for such purposes entails certain
risks, particularly if the Policy's cash value, as opposed to its death
benefit, will be the principal Policy feature used for such planning purposes.
If the investment performance of the Sub-Accounts to which cash value is
allocated is poorer than expected, or if sufficient premiums are not paid or
cash values maintained, the Policy may lapse or may not accumulate sufficient
cash value or net cash value to fund the purpose for which the Policy was
purchased. Because the Policy is designed to provide benefits on a long-term
basis, before purchasing a Policy for a specialized purpose, a purchaser
should consider whether the long-term nature of the Policy is consistent with
the purpose for which it is being considered. 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. (See "Tax
Considerations".)
A-83
<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 NON-
LIFE 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 Distributions No* Yes Loans Yes,
not beyond
allowed $50,000
Income Ordering Rules (Income in- No* Yes Yes Yes
cluded in First Distribution)
Early Withdrawal Penalties No* Yes*** Yes*** Yes***
Minimum Distribution Rules by Age 70 No No Yes Yes
1/2
Maximum Annual Distribution Rules No No Yes Yes
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-84
<PAGE>
APPENDIX F
ENHANCED DEATH BENEFIT LIMITATIONS
As noted under "Policy Values and Benefits" in the Prospectus, the
enhancement factor that applies to the Option A and B death benefits is
subject to certain limits in order to contain cost of insurance charges
against the Policy. The maximum death benefit under Option A is the lesser of
(i) the percent of the cash value at the age of the younger insured at the
start of the Policy year as shown in Table II below and (ii) the cash value of
the Policy times: the face amount divided by the Tabular Cash Value of the
Policy at the start of the Policy month. The maximum death benefit under
Option B is the lesser of (i) the percent of the cash value at the age of the
younger insured at the start of the Policy year as shown in Table II below and
(ii) the cash value of the Policy times: the sum of the face amount plus the
Tabular Cash Value, divided by the Tabular Cash Value.
In no event will the death benefit be less than the amount required to
satisfy tax law requirements.
The Tabular Cash Value at the start of each Policy month assumes: the
Guaranteed Death Benefit 1 Premium, as shown in the Policy, is paid on the
first day of each Policy year; maximum charges are charged; and the Actual
Investment Return is equivalent to an annual rate of 4% in all policy years.
---------------------
TABLE II
<TABLE>
<CAPTION>
AGE PERCENT AGE PERCENT
--- ------- --- -------
<S> <C> <C> <C>
20 through 40 362.50 63 179.80
41 352.35 64 176.90
42 342.20 65 174.00
43 332.05 66 172.55
44 321.90 67 171.10
45 311.75 68 169.65
46 303.05 69 168.20
47 294.35 70 166.75
48 285.65 71 163.85
49 276.95 72 160.95
50 268.25 73 158.05
51 258.10 74 155.15
52 247.95 75 through 90 152.25
53 237.80 91 150.80
54 227.65 92 144.20
55 217.50 93 137.70
56 211.70 94 131.30
57 205.90 95 126.25
58 200.10 96 121.20
59 194.30 97 116.15
60 188.50 98 111.10
61 185.60 99 106.05
62 182.70 100 100.00
</TABLE>
A-85
<PAGE>
NEW ENGLAND LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MA 02116
RECEIPT
This is to acknowledge receipt of a Zenith Survivorship Life Prospectus
dated May 1, 1998. This Variable Life Policy is offered by New England Life
Insurance Company.
- ------------------------------------- -------------------------------------
(Date) (Client's Signature)
<PAGE>
- --------------------------------------------------------------------------------
New England Life Insurance Company
501 Boylston Street, Boston, Massachusetts 02116-3700 VL-89-98
<PAGE>
Part II
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 9 of NELICO's By-Laws provides that NELICO shall, to the extent
legally permissible, indemnify its directors and officers against liabilities
and expenses relating to lawsuits and proceedings based on such persons' roles
as directors or officers. However, Section 9 further provides that no such
indemnification shall be made with respect to any matter as to which a director
or officer is adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the corporation. Section 9
also provides that in the event a matter is disposed of by a settlement payment
by a director or officer, indemnification will be provided only if the
settlement is approved as in the best interest of the corporation by (a) a
disinterested majority of the directors then in office, (b) a majority of the
disinterested directors then in office, or (c) the holders of a majority of
outstanding voting stock (exclusive of any stock owned by any interested
director or officer).
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
NELICO pursuant to the foregoing provisions, or otherwise, NELICO 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 NELICO of expenses incurred or paid by a
director, officer, or controlling person of NELICO 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. NELICO
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.
II - 1
<PAGE>
REPRESENTATIONS
New England Life Insurance Company hereby represents that the fees and
charges deducted under the flexible premium adjustable variable survivorship
life insurance policies described in this registration statement, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by New England Life Insurance
Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
A reconciliation and tie-in of the information shown in the prospectus with
the items of Form N-8B-2.
The prospectus consisting of 85 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484(b) under the Securities Act of 1933.
The signatures.
Written consents of the following persons:
H. James Wilson, Esq. (see Exhibit 3(i) below)
Rodney J. Chandler, F.S.A., M.A.A.A.
(see Exhibit 3(ii) below)
Sutherland, Asbill & Brennan LLP
(see Exhibit 6 below)
Independent Auditors (see Exhibit 11 below)
The following exhibits:
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 NELICO and its
General Agents
II - 2
<PAGE>
(ii) Form of contract between NEVLICO and its
Agents ++
(c) Commission Schedule for Policies
(d) Form of contract among NES, NELICO and
other broker dealers #####
(4) None
(5) (a) Specimen of Policy, including Applications
(b) Riders to Policy
(6) (a) Amended and restated Articles of
Incorporation of NELICO ####
(b) Amended and restated By-Laws of NELICO #####
(7) None
(8) None
(9) None
2. See Exhibit 1.A.(5)
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.(to be filed by amendment)
4. None
5. Inapplicable
6. Consent of Sutherland, Asbill & Brennan LLP
(to be filed by amendment)
7. (i) Powers of Attorney ####
(ii) Power of Attorney for James M. Benson #####,
(iii) Power of Attorney for Richard Robinson @
8. Notice of Withdrawal Right for Policies
9. Inapplicable
10. Computation of basis for exchange right
pursuant to Rule 6e-3(T) (b) (13) (v) under
the Investment Company Act of 1940
11. Consent of Independent Auditors (to be filed
by amendment)
12. Schedule for computation of performance
quotations +
13. (i) Consolidated memorandum describing certain
procedures, filed pursuant to Rule
6e-2(b)(12)(ii) and
Rule 6e-3(T)(b)(12)(iii) #
(ii) Addendum to Consolidated 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 - 3
<PAGE>
(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 ##
___________
* Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 2-82838,
filed July 28, 1983.
+ Incorporated herein by reference to Post-Effective Amendment No. 2 to the
Variable Account's Form S-6 Registration Statement, File No. 33-19540,
filed April 28, 1989.
++ Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 33-52050,
filed January 12, 1993.
+++ Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 33-64170, filed June 9, 1993.
# Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Variable Account's Form S-6 Registration Statement, File No. 33-52050,
filed April 28, 1995.
## Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 33-88082,
filed June 22, 1995.
### Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Variable Account's Form S-6 Registration Statement, File No. 33-66864,
filed April 26, 1996.
#### Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 333-21767, filed February 13, 1997.
##### Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 333-21767,
filed July 16, 1997.
@ Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 333-46401, filed February 17, 1998.
II - 4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
New England Variable Life Separate Account, has duly caused this amendment to
the 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 25th day of
February, 1998.
New England Variable Life Separate
Account
(Registrant)
By: New England Life Insurance
Company
(Depositor)
By: /s/ H. James Wilson
-------------------
H. James Wilson
Executive Vice President and
General Counsel
Attest:
/s/Marie C. Swift
- -----------------
Marie C. Swift
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, New England
Life Insurance Company has duly caused this amendment to the 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 25th day of February,
1998.
New England Life Insurance Company
(Seal)
Attest: /s/Marie C. Swift By: /s/ H. James Wilson
----------------- -------------------
Marie C. Swift H. James Wilson
Executive Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated on February 25, 1998.
President and Chief
* Executive Officer
- -------------------------------------------------
James M. Benson
* Director
- -------------------------------------------------
Susan C. Crampton
* Director
- -------------------------------------------------
Edward A. Fox
* Director
- -------------------------------------------------
George J. Goodman
* Director
- -------------------------------------------------
Paul E. Gray
* Director
- -------------------------------------------------
Evelyn E. Handler
* Director
- -------------------------------------------------
Philip K. Howard
* Director
- -------------------------------------------------
Harry P. Kamen
* Director
- -------------------------------------------------
Terence Lennon
* Director
- -------------------------------------------------
Bernard A. Leventhal
<PAGE>
* Director
- -------------------------------------------------
Thomas J. May
* Director
- -------------------------------------------------
Stewart G. Nagler
Second Vice President and
* Chief Accounting Officer
- -------------------------------------------------
Richard A. Robinson
Executive Vice President
* and Chief Financial Officer
- -------------------------------------------------
Robert E. Schneider
* Chairman
- -------------------------------------------------
Robert A. Shafto
* Director
- -------------------------------------------------
Rand N. Stowell
* Director
- -------------------------------------------------
Alexander B. Trowbridge
By: /s/ Anne M. Goggin
------------------
Anne M. Goggin, Esq.
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. 333-21767, on February 13, 1997, Pre-
Effective Amendment No. 1 to the Variable Account's Form S-6 Registration
Statement, File No. 333-21767, on July 16, 1997, and the Variable Account's
Form S-6 Registration Statement, File No. 333-46401, on February 17, 1998.
<PAGE>
EXHIBIT LIST
Sequentially
Exhibit Number Title Numbered Page*
- -------------- ----- --------------
1.A.1. Resolution of the Board
of Directors of NEVLICO
1.A.3.(b)(i) Form of Contract between
NELICO and its General Agents
1.A.3.(c) Commission Schedule
1.A.5.(a) Specimen of Policy
and Applications
1.A.5(b) Riders to the Policy
3(i) Opinion and Consent of
H. James Wilson, Esquire
8. Notice of Withdrawal Right
10. Computation of basis for
exchange right pursuant to
Rule 6e-3(T) (b) (13) (v) under
the Investment Company Act of 1940
_________
* Page numbers inserted on manually-signed copy only.
<PAGE>
Exhibit 1.A.1.
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
Actions of the Board of Directors
Effective January 31, 1983
The following actions of NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(the "Company") are taken, effective January 31, 1983, by the execution hereof
by the undersigned, who constitute all members of the Company's Board of
Directors. These actions have the same effect for all purposes as resolutions
duly adopted at a meeting of the Board of Directors.
Establishment of Variable Life Account
--------------------------------------
RESOLVED: That the Company establish a separate account, to be known as "New
England Variable Life Separate Account" (the "Variable Account") or
such other name as shall be determined by the Chairman of the Board,
in accordance with the provisions of Section 2932 of the Delaware
Insurance Code for the purpose of investing payments received under
variable life insurance policies issued by the Company (the
"Policies"); that the assets of the Variable Account be invested in
shares of the NEL Series Fund, Inc. (the "Series Fund") or, in lieu
thereof or in addition thereto, in the shares of any other investment
company registered under the Investment Company Act of 1940, at the
net asset value of such shares; and that all steps deemed necessary
or appropriate be taken to comply with applicable federal and state
laws in order that the Policies may be sold in all jurisdictions in
which the Company is authorized to conduct a variable life insurance
business.
Registration of Variable Life Account
-------------------------------------
RESOLVED: That the Variable Account be organized as a unit investment trust,
that it be registered, if necessary or appropriate, with the United
States Securities and Exchange Commission under the Investment
Company Act of 1940, and that the Policies be registered for sale
under the Securities Act of 1933; that for that purpose the Chairman
of the Board, the President, the Secretary and the General Counsel
hereby are severally authorized and empowered to execute and file or
cause to be filed with the Securities and Exchange Commission, in the
name of and on behalf of the Company and the Variable Account, a
Notification of Registration on Form N-8A, a Registration Statement
on Form N-8B-2 and a Registration Statement on Form S-6, or on any
other forms which the rules of said Commission may permit and to take
all other actions which are necessary in connection with the offering
of the Policies for sale
<PAGE>
and the operation of the Variable Account in order to comply with the
Investment Company Act of 1940, the Securities Exchange Act of 1934,
the Securities Act of 1933 and other applicable federal laws,
including the filing of any amendments to registration statements,
any undertakings, and any applications for exemptions from the
Investment Company Act of 1940 or other applicable federal laws as
the individual or individuals so acting shall deem necessary or
appropriate; and that Edward N. Wadsworth is hereby appointed as
agent for service under any such registration statements duly
authorized to receive communications and notices from the Securities
and Exchange Commission with respect thereto.
Services and Distribution Agreements
------------------------------------
RESOLVED: That the Chairman of the Board, the President, the Secretary and the
General Counsel hereby are severally authorized and empowered to
execute such agreement or agreements as are deemed necessary and
appropriate including but not limited to an agreement under which New
England Mutual Life Insurance Company will provide all services
required to sell, issue and maintain the Policies, and an agreement
under which NEL Equity Services Corporation will act as principal
underwriter and distributor for the Policies and will provide certain
administrative services for the Variable Account.
Standards of Suitability
------------------------
RESOLVED: That the following Standards of Suitability which express the policy
of the Company with respect to determining the suitability of the
variable life insurance policies are hereby adopted:
A. No recommendation shall be made to an applicant to purchase a
variable life insurance policy (a "Policy") and no Policy shall
be issued in the absence of reasonable grounds to believe that
the purchase of such Policy is not unsuitable for such applicant
on the basis of information furnished after reasonable inquiry of
such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and any
other information known to the Company or any Affiliate or to the
agent making the recommendation.
B. Lapse rates for variable life insurance policies within the first
two policy years which are significantly higher than both those
encountered by the Company or any Affiliate for corresponding
fixed-benefit life insurance policies and lapse
2
<PAGE>
rates of other insurers issuing variable life insurance policies
shall be considered in determining whether the procedures
followed by the Company are reasonable and also whether the
Company and the agents of the Company or any Affiliate are
engaging, as a general business practice, in the sale of Policies
to persons for whom they are unsuitable. For purposes of this
Clause B, conversions from variable life insurance to fixed-
benefit life insurance policies pursuant to conversion rights
mandated by federal or state law relating to variable life
insurance policies shall not be considered lapses.
Standards of Conduct
--------------------
RESOLVED: That the following Standards of Conduct in respect to variable life
insurance separate accounts and variable life insurance operations
are hereby adopted:
A. With respect to variable life insurance separate accounts,
neither the Company nor any Affiliate shall (unless otherwise
approved in writing in advance of the transaction by the
insurance regulatory official of each state requiring such
approval in which the Company shall be authorized to issue
variable life insurance):
(1) sell to or purchase from any such separate account
established by the Company any securities or other property,
other than variable life insurance policies;
(2) purchase or allow to be purchased for any such separate
account any securities of which the Company or any Affiliate
is the issuer;
(3) accept any compensation, other than a regular salary or
wages from the Company or an Affiliate, for the sale or
purchase of securities to or from any such separate account
other than as provided in paragraph B(3) below;
(4) engage in any joint transaction, participation, or common
undertaking whereby the Company or an Affiliate participates
with such separate account in any transaction in which the
Company or any Affiliate obtains an advantage in the price
or quality of the item purchased, in the service received,
or in the cost of such service and the Company or any other
Affiliate is disadvantaged in any of these respects by the
same transaction; or
3
<PAGE>
(5) borrow money or securities from any such separate account
other than under a policy loan provision.
B. No provision of this Statement shall be construed to prohibit:
(1) the investment of separate account assets in securities
issued by one or more investment companies registered
pursuant to the Investment Company Act of 1940 which is
sponsored or managed by the Company or an Affiliate and the
payment of investment management or advisory fees on such
assets;
(2) the combination of orders for the purchase or sale of
securities for the Company, an Affiliate, any separate
accounts, or any one or more of them which is for their
mutual benefit or convenience so long as any securities so
purchased or the proceeds of any sale thereof are allocated
among the participants on some predetermined basis expressed
in writing which is designed to assure the equitable
treatment of all participants;
(3) the performance by the Company or an Affiliate of brokerage
or dealer activities in connection with the sale of
securities to or by such separate account, provided that any
commission, fee or remuneration charged therefor shall not
exceed the minimum broker's commission established for any
such transaction by any national securities exchange through
which such transaction could be effected or such charges
prevailing in the ordinary course of business in the
community where such transaction is effected; or
(4) the rendering of investment management or investment
advisory services by the Company or an Affiliate for a fee,
subject to any applicable variable life insurance
regulation.
/s/ Herbert J. Boothroyd
/s/ J. Sheldon Caras
/s/ John A. Fibiger
/s/ Edward E. Phillips
/s/ Robert A. Shafto
4
<PAGE>
EXHIBIT 1.A.3(B)(I)
- --------------------------------------------------------------------------------
NEW ENGLAND LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MANAGING
PARTNER
CONTRACT
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1 Definitions 2
2 Duties 2
3 Responsibilities 2
4 Legal Relationship 2
5 Scope of Authority 2
6 Limitation of Authority 3
7 Books of the Firm 3
8 Office Supplies 3
9 Right to Audit 3
10 Commissions, Fees, Expense Allowances 3
11 Payment of Allowances 4
12 Commissions after Termination of the Firm 4
13 Special Rules for Compensation 4
14 Personal Business 4
15 Payment of Fees 4
16 Chargebacks 5
17 Forfeiture of Contract 5
18 Termination of Firm 5
19 Right of Offset 5
20 Assignment 5
21 Attribution of Acts of Partners 6
22 Service Mark License 6
23 Complete Agreement 6
</TABLE>
[LOGO OF THE NEW ENGLAND APPEARS HERE](R)
The Managing Partner Contract is made and entered into by and among the NEW
ENGLAND LIFE INSURANCE COMPANY of Boston, MA, referred to as "Company," and
_____________________________________________
referred to as "Managing Partner."
The provisions set forth herein, the Schedule of Managing Partner Compensation
and all Amendments attached hereto are hereby made part of the Managing Partner
Contract, referred to as "the Contract."
The Contract shall supersede all previous agreements between the Company and
the Managing Partner with respect to policies or coverages, credited to the
Firm, whose Home Office Receipt Dates are on or after the Effective Date of the
Contract.
The parties to the Contract agree that the law of the Commonwealth of
Massachusetts shall control the interpretation of the Contract.
The Contract shall take effect on the __________ day of ______________,
19____ referred to as "the Effective Date."
New England Life Insurance Company
by: ____________________________________________________________________________
Authorized Officer (date signed)
Managing Partner
by: ____________________________________________________________________________
Managing Partner (date signed)
by: ____________________________________________________________________________
Managing Partner (date signed)
by: ____________________________________________________________________________
Managing Partner (date signed)
The Company hereby appoints the Managing Partner as general agent to market
Insurance Products in the following territory assigned to the Firm:
(See Territorial Attachment)
The Company may at any time change the territory, open said territory to other
agents, appoint other agents or Managing Partners to operate in said territory
on a national or regional basis, or discontinue doing business in all or any
part of said territory.
1
<PAGE>
SECTION 1
DEFINITIONS
The following definitions are adopted for use in the Contract:
(A) "Firm" shall mean the entire operation conducted by the Managing Partner
while continuing to perform the duties of a Managing Partner under the
Contract.
(B) "Insurance Product(s)" shall mean individual life insurance products
(including universal life and variable life), annuity contracts, disability
insurance products, group pension products, group life and health products
and such other financial products as may be designated from time to time by
the Company.
(C) "NES" shall refer to New England Securities Inc., a broker dealer affiliated
with the Company.
SECTION 2
DUTIES
The Managing Partner agrees that he will devote his full-time during normal
business times to honestly and faithfully perform for the Company the regular
duties of a Managing Partner, and will conform to the Contract and the rules and
instructions of the Company concerning its Firms. He further agrees that as a
Managing Partner he has a fiduciary relationship to the Company.
His duties shall also include the recruitment, appointment and training of
agents and brokers so that the Company will be adequately represented throughout
his territory, the maintenance of a financially sound Firm, the provision of
service to policyholders of the Company, and the collection of premiums for the
Company.
Further, the Managing Partner agrees to exclusively market the Insurance
Products of the Company and not to market, whether directly or indirectly,
without the express written permission of the Company, products of other
companies which in the judgment of the Company compete with Insurance Products
of the Company or to accept compensation relating to the sale of such other
products. The Managing Partner agrees to terminate within 180 days any contract
or agreement he may have on the Effective Date with any company or organization
for which he markets products which in the judgment of the Company compete with
the Insurance Products of the Company.
The Managing Partner shall not affiliate with any registered investment advisor
or become a registered representative of a broker/dealer other than NES without
the prior consent of the Company.
The Managing Partner also agrees that for a period of 90 days after termination
of the Contract he will not recruit or contract with any of the agents he has
contracted with in his capacity as a Managing Partner of the Company to solicit
on behalf of any other insurance company or financial services organization in
the territory assigned to the Firm. If the 90 day period shall be deemed
unenforceable at law, then such period shall be reduced to such period as shall
be legally enforceable.
SECTION 3
RESPONSIBILITIES
The Managing Partner shall be responsible for all Company-related moneys,
checks, receipts, applications and policies of the Company collected by the
Managing Partner or any person employed or under contract with him.
The Managing Partner hereby agrees to indemnify the Company and hold it harmless
from all claims in connection with the Firm of agents, employees or other
persons.
The Managing Partner shall furnish to the Company a bond satisfactory to the
Company for the faithful performance of all duties and responsibilities as set
forth by the Contract, the rules and regulations of the Company pertaining to
the Firm, its agents, employees and former agents and employees. The Managing
Partner shall be responsible for his share of the cost of employee benefits as
established by the Company for agents, employees and former agents and employees
of the Firm, predecessor firms or firms merged with the Firm.
SECTION 4
LEGAL RELATIONSHIP
It is agreed that the Managing Partner is an independent contractor with respect
to the Company and that nothing herein shall create the relationship of employer
and employee between the parties or between the Company and any employee or
agent of the Managing Partner. As an independent contractor the Managing Partner
shall be credited compensation and expense allowances as indicated in the
Contract and shall at all times be responsible to the Company for any amounts
advanced by the Company and any debts owed to the Company by him.
SECTION 5
SCOPE OF AUTHORITY
The Managing Partner is hereby authorized, subject to the rules and regulations
of the Company, to appoint, change the status of and contract with agents and
brokers, to procure, personally and through such agents and brokers,
2
<PAGE>
applications for all products of the Company and to forward them to the Home
Office of the Company for consideration. The Managing Partner is also authorized
to deliver policies and premium receipts of the Company upon receipt of the
payment of the amounts specified therein and upon compliance with the terms and
conditions governing such delivery.
SECTION 6
LIMITATION OF AUTHORITY
The Managing Partner is forbidden to make, alter or discharge any policies,
contracts or agreements on behalf of, or in the name of, the Company or to waive
any forfeitures. Except as otherwise agreed to in writing by a duly authorized
officer of the Company, the Managing Partner is also forbidden to incur any
obligations or liability for which the Company shall be responsible.
SECTION 7
BOOKS, RECORDS AND BANK DEPOSITS OF THE FIRM
The Managing Partner shall keep complete and accurate records of all
transactions involving the Company, shall maintain expense vouchers satisfactory
to the Company, shall promptly enter all receipts and disbursements in the
cashbook provided by the Company. The Managing Partner shall keep all funds
collected and received for or on account of the Company on variable policies and
contracts separate and distinct from personal or other funds and shall deposit
both sets of funds in such bank or trust company as shall be designated by the
Company in an account entitled "New England Life Insurance Company," (Name of
Managing Partner), Managing Partner for New England Life Insurance Company
funds. The Managing Partner shall hold the same in trust for the Company in
accordance with its rules and instructions and shall not use such funds for any
unauthorized purpose. Alternatively, provided that separate and distinct books,
records and subaccounts are kept, the Managing Partner may deposit all funds
collected and received including those for variable policies in one account
entitled "New England Life Insurance Company (Name of Managing Partner),
Managing Partner."
The books and records of the Firm which document financial transactions of the
Firm or which contain policyholder information whether or not physically located
in the Firm shall be the property of the Company. The Managing Partner agrees to
furnish during regular business hours to the Company's authorized representative
such books and records of the Firm as the Company may request.
SECTION 8
OFFICE SUPPLIES, FURNITURE, EQUIPMENT AND FIXTURES
Any office supplies, furniture, equipment, personal computers, hardware and
software and fixtures furnished by the Company shall at all times be the
property of the Company, subject to the use and control of its authorized
representatives and subject to the particular terms and conditions as have been
or shall be agreed upon between the Managing Partner and the Company. The
Company will make available such prospecting and advertising material,
stationery, books, records and blank forms as it may deem necessary for the
proper conduct of the business of the Firm. In the event of termination of the
Firm for any reason whatsoever, all of the above property shall be turned over
to the Company or its authorized representative on demand.
SECTION 9
RIGHT TO AUDIT
The Company shall have the right at any time to audit and inspect any books and
records of the Managing Partner or books and records to which the Managing
Partner has access which relate to the operation of the Firm or which relate to
any entity marketing or providing financial advice, products or services. This
right shall survive the termination of the Contract for a period of three years.
All information obtained by such audit shall be treated as confidential by the
Company and its representatives and shall not be disclosed to third parties
except as required by law or judicial or regulatory rule.
SECTION 10
COMMISSIONS, SERVICE FEES AND EXPENSE ALLOWANCES PAYABLE DURING OPERATION OF THE
FIRM
During the operation of the Firm, the Company shall pay to the Managing Partner:
(A) First year and renewal commissions, service fees and other forms of
compensation payable to agents and brokers by the Managing Partner under
contracts provided by the Company for use by the Managing Partner with any
agent or broker, including the Managing Partner's personal business;
(B) The overriding commissions set forth in the effective Schedule of Overriding
Commissions;
(C) The service fees set forth in the effective Schedule of Service Fees; and
(D) The expense allowances set forth in the effective Schedule of Expense
Allowances.
3
<PAGE>
SECTION 11
THE PAYMENT OF EXPENSE AND TRAINING ALLOWANCES
The Firm will be paid expense and training allowances as specified by the
Contract only as reimbursement for the expenses of maintaining the Firm and
training agents. Such reimbursement shall be limited to the allowances
stipulated in the Contract, shall be paid by the Managing Partner to the person
(if any) designated in the Contract, and the expense allowances shall not in any
event exceed the total amount of allowable expenses actually incurred by the
Managing Partner. No other expenses of any kind or nature shall be charged to,
or will be paid or allowed by the Company, except as approved in writing by a
duly authorized officer of the Company. Expense and training allowances will be
paid only to the extent permitted by law
The Managing Partner shall furnish the Company with satisfactory proof for any
expense and training allowances so reimbursed, and any such allowances paid by
the Company which have not been paid by the Managing Partner to the person (if
any) designated in said rules or Contract or for which the Managing Partner has
not furnished proof satisfactory to the Company shall be refunded by the
Managing Partner.
"Satisfactory proof" supporting the expense allowances reimbursed by the Company
shall mean such proof as shall enable the verification of expenses which clearly
support the expense limits required by law for the Company.
No expense allowances will be paid on amounts collected for temporary term
insurance.
SECTION 12
COMMISSIONS AFTER TERMINATION OF FIRM
After termination of the Managing Partner, except as otherwise provided herein,
the Company will pay to the Managing Partner, or his assigns, on policies or
coverages placed under the Contract, the overriding commissions set forth in
Section 10 above, except that no such overriding commissions will be payable
after the death of the Managing Partner or if the Managing Partner qualifies for
payments under the Managing Partner Retirement Plan ("MPRP"). Any such payments
by the Company will be made only if all conditions required by the Contract
shall have been fulfilled by the Managing Partner. After termination of the
Managing Partner, the Company may at its option, pay to any person employed by
or under contract with the Managing Partner any commission or other item payable
or owing from the Managing Partner to such person and offset such payments
against any amount due the Managing Partner, his executor, administrator or
assigns. Payments provided by this Section shall be made within a reasonable
time after termination of the Managing Partner.
SECTION 13
SPECIAL RULES FOR COMPENSATION
Under the following circumstances, the payment of compensation shall be
determined, not by the Schedule of Managing Partner Compensation and Allowances,
but by such rules and practices as may be established by the Company:
(A) When any policy or contract is converted or changed; or
(B) When any new policy, contract or coverage is issued as the result of a
conversion or change; or
(C) When in the judgment of the Company any new policy, contract, or
coverage replaces previous insurance in the Company; or
(D) When any special class policy or contract is issued; or
(E) When any policy, contract or coverage for which an agent of the Managing
Partner is agent of record and which is credited to another Firm of the Company.
No compensation will be paid on amounts collected for temporary term insurance.
SECTION 14
PERSONAL BUSINESS OF THE MANAGING PARTNER
It is agreed that with respect to business for which the Managing Partner is an
agent of record ("personal business"), placed during the tenure of the Managing
Partner, the Managing Partner will be compensated in accordance with the
compensation schedule of the Incentive Career Contract ("ICC") in effect at the
time the business is placed. The Managing Partner acknowledges that he is not a
party to the ICC and shall receive no benefits whatsoever under the ICC. All
compensation to the Managing Partner on personal business shall be paid pursuant
to this Contract.
SECTION 15
PAYMENT OF FEES
The Company will pay the fees of medical examiners and will also pay license
fees in accordance with local laws or ordinances, within such limits as the
Company may prescribe.
4
<PAGE>
SECTION 16
CHARGEBACKS
Compensation and expense allowances shall be charged back to the Managing
Partner in the following cases:
(A) On policies or contracts on which premiums or purchase payments are refunded
for any reason by the Company except when only the portion of the premium
attributable to a period after death is refunded as a result of a death claim;
or
(B) On policies or contracts on which first year commissions, whether earned or
advanced, of agents or brokers are charged back by the Company; or
(C) As is otherwise specifically provided herein.
SECTION 17
FORFEITURE OF CONTRACT
It is expressly agreed between the parties hereto that if the Managing Partner
shall withhold or convert to his own use, or for the benefit of others, any
moneys, securities, or other property of the Company or its subsidiaries; or if
he shall knowingly act in a fraudulent or unlawful manner as such Managing
Partner; or if he shall knowingly materially misrepresent information on his
application for appointment as Managing Partner, the Contract shall at once
terminate without notice, and thereafter the Managing Partner's claims for
compensation or any other benefit under the Contract or any contract with any of
the Company's subsidiaries shall be forfeited and void.
The Managing Partner, his executor or administrator, shall remain liable after
said termination to the Company and its subsidiaries for all losses which may
result from any of the above-described actions and misrepresentations, and any
other debts he may owe the Company or its subsidiaries or which the Company may
have guaranteed on his behalf. Such debts shall become due and payable
immediately upon termination.
SECTION 18
TERMINATION OF THE CONTRACT
The Contract shall terminate on the death of the Managing Partner. Except as
provided in Section 17, each of the parties hereto reserves the right to
terminate the Contract at will and without cause at any prior time upon giving
sixty (60) days' notice in writing. Notice of termination of the Contract shall
also be notice of termination of the Managing Partner's contracts with the
subsidiaries of the Company unless specifically stated to the contrary in such
contracts.
Any debt including advances not earned which are owed the Company by the
Managing Partner at the time of termination shall become due and payable 60 days
after termination. Any final expense allowance shall be paid to the Managing
Partner within 60 days after termination.
In cases in which the total of the amounts advanced by the Company to the
Managing Partner and debts owed to the Company by the Managing Partner ("Total
Indebtedness") on his termination exceeds the present value (as determined by
the Company's rules then in effect) of the future amounts payable on certain
products pursuant to the Contract, the Company, at its discretion, may deduct
such present value from such Total Indebtedness in lieu of paying such future
amounts to the Managing Partner.
SECTION 19
RIGHT OF OFFSET
It is understood and agreed that the Company may at any time offset against any
commissions or other items payable or owing from the Company or its subsidiaries
to the Managing Partner, his executor, administrator, beneficiaries or assigns,
any indebtedness due from the Managing Partner to the Company or its
subsidiaries, whether such indebtedness is based on debts accrued under the
Contract or any other agreement, implied or written, with the Company or its
subsidiaries.
By executing the Contract, the Managing Partner specifically recognizes that he
will make a collateral assignment contemporaneously herewith to the Company of
life insurance on his life issued by the Company to the extent that there is any
debt owing to the Company or its subsidiaries at the time of his death.
SECTION 20
ASSIGNMENT
No assignment or attempted assignment of the Contract, or any of the rights
accruing hereunder, by the Managing Partner, his executor or administrator,
shall be effective against the Company unless the assignment (a) is set forth on
Company-approved forms; (b) is agreed to in writing by an authorized officer of
the Company; (c) clearly designates the assignee; (d) recites the Company's
first and prior lien on commissions and other payments under the Contract; and
(e) is filed with the Company at its Home Office.
5
<PAGE>
SECTION 21
ATTRIBUTION OF ACTS OF PARTNERS
If the Managing Partner is a partnership, all acts of any of the partners,
whether or not authorized by the other partner(s), shall be considered to be
acts of the partnership and be attributed thereto.
SECTION 22
SERVICE MARK LICENSE
(A) Grant of License
The Company hereby grants to the Managing Partner ("Licensee") a
nonexclusive, personal and nontransferable right and license to use the
service marks "The New England", the logo and corporate signature of The New
England and the trade name "New England Life Insurance Company" (hereinafter
referred to as "Marks") in the territory of the Managing Partner described
on the first page of the Contract in connection with the products and
services of the Company and its subsidiaries upon the terms and conditions
contained herein.
(B) Term
This License shall be in effect as long as the Licensee is a Managing
Partner of the Company.
(C) Use and Ownership of Service Marks
The Managing Partner shall use the Marks only with the products and services
of the Company and its subsidiaries and in accordance with the manuals and
instructions distributed to the Managing Partner. The Managing Partner
acknowledges the Company's exclusive right, title and interest in and to the
Marks and will not at any time do or cause to be done any act or thing
contesting or in any way impairing any part of such right, title and
interest.
(D) Termination
This License shall terminate:
1. when the Contract terminates, or
2. if the Managing Partner makes any assignment of assets or business for
the benefit of creditors or if a trustee or receiver is appointed to
administer or conduct the Managing Partner's business or affairs or if
the Managing Partner is adjudged in any legal proceeding to be either a
voluntary or involuntary bankrupt, or
3. if the Managing Partner fails to comply with any provision of this
License, after written notice thereof to the Managing Partner by the
Company.
Upon termination of this License the Managing Partner shall immediately cease
and desist from all use of the Marks in any way, including any use as a trade
name, and will deliver up to the Company all material, papers and other media
upon which the Marks appear. The Managing Partner shall at no time adopt or use
any word or mark which is likely to be similar to or confused with the Marks,
without the Company' prior written consent, and such consent shall terminate
upon termination of this License.
SECTION 23
COMPLETE AGREEMENT
The parties understand and agree that the right of either party to terminate
this Contract at will and without cause at any time upon giving sixty (60) days'
notice in writing, as provided in Section 18, is an integral part of this
Contract. Therefore, no change, waiver, or modification of this right to
terminate, whether in writing, verbally, or through course of conduct, shall be
valid, unless memorialized in writing, signed by the Managing Partner and a
Senior Officer of the Company, and specifically designated as an Amendment to
Section 18 of the Managing Partner Contract.
The parties further agree that the Managing Partner Contract constitutes the
entire agreement between the parties with respect to the relationship of the
parties and with respect to the right of either party to terminate this Contract
at will and without cause, superseding all other prior or contemporaneous
understandings or agreements between the parties pertaining to the subject
matter of this Contract. The parties agree that there are no representations,
understandings or agreements relative thereto which are not fully expressed by
the Managing Partner Contract.
6
<PAGE>
- ------------------------------------
NEW ENGLAND LIFE INSURANCE COMPANY
- ------------------------------------
MANAGING
PARTNER
CONTRACT
SCHEDULE OF MANAGING PARTNER
COMPENSATION AND ALLOWANCES
The Schedule of Managing Partner Compensation and Allowances shall consist of
the following Parts and any amendment or revision thereto ("the Schedule"):
PART I:
Definitions and General Provisions
PART II:
Schedule of Overriding Commissions
PART III:
Schedule of Service Fees
PART IV:
Schedule of Expense Allowances
1. Cash Monthly Allowance
2. New Business Allowance
3. Productivity Allowance
4. Recruiting Allowance
5. Growth Allowance
6. Lives Allowance
7. DI Incentive Driven Compensation
8. Firm Employees Retirement Plan
9. Social Security
10. Experienced Agent Allowances
11. Supervisory Allowances
12. Transitional Allowances
PART V:
Incentive Training Allowances
The provisions of the Schedule shall apply to Individual Life, Disability
Insurance and Annuities and shall be subject to all the terms and conditions
of the Contract.
The right is reserved by the Company to amend, revise, or terminate the
Schedule, any Part thereof or any amendment to the Schedule. Any amendment to
or revision of Part II shall apply only to policies, coverages or changes
credited to the Firm on or after the effective date of the amendment or
revision. Any amendment to or revision of Part III shall apply to renewal
premiums and purchase payments credited to the Firm on or after the effective
date of the amendment or revision.
7
<PAGE>
PART I: DEFINITIONS AND GENERAL PROVISIONS
This Part I is effective on or after January 1, 1998.
A. DEFINITIONS
1. Home Office Receipt Date ("HORD")
The date on which the policy or coverage application is received at the
Company Home Office.
2. Full Time Agent
An agent who the Company has determined as having met the requirements for a
full-time contract and for entitlement to fringe benefits.
3. First Year Commissions ("FYC")
Those first year commissions set forth in the agent's and broker's contracts
for individual life, DI, and annuity products, except as otherwise
specifically noted. Any reference to "FYC all products" shall mean all
Insurance Products and all products of NES
4. NBA Unit
A unit of one or more agents under Full Time Agent contracts or sub-agents
under corporate agent contracts whose FYC credited in the previous twelve
months exceeded NBA Threshold I. Units of two or more must be approved by
the Company.
5. NBA Threshold
For a one-member NBA Unit, the amount shown below of FYC issued by the
Company, credited to the Unit through any Firm of the Company:
<TABLE>
<CAPTION>
1997 THRESHOLDS FOR
NBA THRESHOLDS ONE-MEMBER UNIT*
<S> <C>
I $139,800
II 167,800
III 223,600
IV 279,450
</TABLE>
For a two member Unit, add $27,950 to the Thresholds for a one-member Unit.
For larger Units, add another $55,850 for each additional person in the
Unit.
6. Qualified Business
Individual life insurance, excluding Paid-Up Additions Riders, VL
unscheduled payments, single premium annuities, Single Premium Whole Life,
and excess premiums on UL, VUL, VULC, FTD, and VSL
7. Override Unit
A unit of one or more agents under Full Time Agent contracts or sub-agents
under corporate agent contracts whose annualized FYC exceeds Override
Threshold I. Units of two or more must be approved by the Company. Any
changes to the composition of a Unit shall not be effective until approved
in writing by the Company.
8. Override Threshold
For a one-member Override Unit, the amount shown below of annualized first
year commissions on all individual products issued by the Company in a given
calendar year, credited to the Unit through any Firm of the Company:
<TABLE>
<CAPTION>
NBA OVERRIDE 1997 THRESHOLDS FOR
THRESHOLDS ONE-MEMBER UNIT*
<S> <C>
I $150,000
II 223,600
</TABLE>
For a two member Unit, add $27,950 to the Thresholds for a one-member Unit.
For larger Units, add another $55,850 for each additional person in the
Unit.
If annualized FYC credited to a Unit on disability insurance policies
exceeds $33,550* before Override Threshold I is reached, then the excess
will not be counted toward any of the Override Thresholds.
B. GENERAL PROVISIONS
1. Special Rules for Compensation and Allowances for Universal Life policies
Notwithstanding any other provision of the Contract, payment of
compensation and expense allowances shall be determined by such rules and
practices as may be established by the Company whenever any change is made
which affects the Target Premiums/+/ for Universal Life policies.
2. Riders
Compensation on all riders attached at issue of the basic policy, unless
specified elsewhere in this Schedule, is payable at the rate for the basic
policy. Dividends (and additional premiums paid to provide coverage where
the dividends are insufficient) applied to provide coverage under any
policy provision are not subject to compensation.
3. Limitation on Payment
Compensation and expense allowances will be paid only to the extent
permitted by law. No payment will be used by the Managing Partner to effect
compensation in excess of the limits prescribed by the New York Insurance
Law.
*Future year thresholds and multi member increments will be as published by
the Company.
+As used in the Contract, Target Premiums shall be as published by the
Company.
8
<PAGE>
4. Modified Cash Surrenders
If a Modified Cash Surrender Value is paid on surrender of a policy, then
the difference in commissions between what has been paid on the policy and
what would have been paid on a yearly renewable term policy for the same
amount and issue age will be charged back.
5. Securities Commissions
Overriding commissions will not be paid if the Managing Partner is barred
from receiving such under National Association of Securities Dealers
regulations. In the event a Flexible Payment Retirement Annuity or Variable
Annuity is surrendered under the provisions of section 27(f) of the
Investment Company Act of 1940, or comparable legislation or regulation,
overriding commissions will be charged back.
9
<PAGE>
PART II: SCHEDULE OF OVERRIDING COMMISSIONS
This Part II is effective for policies or coverages, credited for the purposes
of this Part II to the Firm, whose HORD falls on or after January 1, 1998.
A. STANDARD OVERRIDING COMMISSION SCALES.
When first and renewal premiums/purchase payments (not in excess of Target
Premiums on UL or scheduled premiums on VL) are received and credited by the
Company, overriding commissions equal to the following percentages of such
premiums or purchase payments, except for adjustments pursuant to subsections B,
C & D below, shall be paid:
<TABLE>
<CAPTION>
PERCENTAGE OF PREMIUMS OR PURCHASE PAYMENTS
POLICY YEARS 1 2 3 4 5 6 7 8 9 10 11+
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. LIFE INSURANCE - EXCEPT UL & VL
PERMANENT INSURANCE
Whole Life - Band 1 (OL1)
Limited Pay Life (10 or more premiums) (LPL)
Graded Premium Life (issue ages 60+)* (GPL)
Full Time Agents - Contract years 1-4 5 7 5 3 2 2 0 0 0 0 0
All Other Agents & Brokers 0 7 5 3 2 2 2 2 2 0 0
Whole Life - Band 2 (OL2)
Modified Premium Life - Band 2 (MPL2)
Survivorship Life (SWL)
Modified Premium Survivorship Life (MPSL) 0 7 5 2 1.5 1.5 1.5 1.5 1.5 1.5 0
Modified Premium Life - Band 1 (MPL1)
Pension Whole Life (POL) 0 8 6 3 1.5 1.5 1.5 1.5 1.5 1.5 0
Limited Pay Life (less than 10 premiums) (LPL) 0 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 0 0
Graded Premium Life (issue ages below 60)*(GPL) 0 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 0
Endowment @95 Paid-Up at 65 (EP65) 0 4 3 1.5 1.5 1.5 1.5 1.5 1.5 1.5 0
*Rates shown are paid on the renewal portion of the premium only.
TERM INSURANCE
YRT 95 (YRT 70 in NY) 0 3 3 3 3 3 3 3 3 3 0
YRT 4 0 0 0 0 0 0 0 0 0 0 0
10, 15, 20 Year Term (10T, 15T, 20T) 0 3.5 3 2.5 2 1 1 1 1 1 0
2. UNIVERSAL LIFE
UL-CCL 2 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 0
UL-91 - Bands 1-3 4 4 4 3 1.5 1.5 1.5 1.5 1.5 1.5 0
- Band 4 2 2 2 1.5 1 1 1 1 1 1 0
First to Die (FTD) 4 4 4 4 2 1.5 1.5 1.5 1.5 1.5 0
3. VARIABLE LIFE INSURANCE
Whole Life - Band 1 (VOL1)
Full Time Agents - Contract Years 1-4 5 5 3.5 3 3 3 0 0 0 0 0
All Other Agents & Brokers 0 5 3.5 3 3 3 2 2 2 0 0
Whole Life - Band 2 (VOL2) 0 7 5 2 1.5 1.5 1.5 1.5 1.5 1.5 0
Life Paid-Up at 65 (VL65) 0 4 3 1.5 1.5 1.5 1.5 1.5 1.5 1.5 0
Variable Universal 97 - Band 1 (VUL1) 4 3 3 3 3 2 2 1 0 0 0
- Band 2 (VUL2) 4 3 3 2 2 2 2 1 1 0 0
Variable Universal Survivorship (VSL) 4 4 4 4 2 1.5 1.5 1.5 1.5 1.5 0
Variable Universal COLI (VULC) 1 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 0
4. DISABILITY INSURANCE (DI) 0 5.5 5 4.5 1.5 1.5 1 1 1 1 0
(Excluding premium refund benefit riders)
5. ANNUITIES
Zenith Accumulator (ZAVA)** 0 .75 .75 .75 .75 .75 .75 .75 .75 .75 0
American Growth Series (AGS)** - Normal Option 0 .75 .75 .75 .75 .75 .75 .75 .75 .75 0
American Growth Series (AGS)** - Trail Option 0 .10 .10 .10 .10 .10 .10 .15 .15 .15 0
</TABLE>
**Notes - Trail option rates are percentages of assets.
AGS - rates on renewal deposits are not guaranteed; renewal rates may
change in the future for prior issues.
AGS - normal option rate is reduced by 5% for each year that attained
age is over 75.
ZAVA - rates on renewal deposits are reduced for maturities of less
than 10 years.
10
<PAGE>
SINGLE PREMIUM/PURCHASE PAYMENT
POLICIES
When single premiums/purchase payments, or premiums in excess of target on UL or
scheduled on VL, are received and credited by the Company, overriding
commissions equal to the following percentages of such premiums or purchase
payments shall be paid:
<TABLE>
<CAPTION>
Percentage of Premiums or
POLICY Purchase Payments
<S> <C>
1. Universal Life - Excess over Target:
UL CCL & 91 Band 4 0.5
UL 91 Bands 1-3, FTD and VSL 1.0
2. Paid Up Additions Rider 0.5
3. Variable Life Unscheduled Payment 0.5
4. Variable Universal 97-Excess over Target
- Band 1 0.5
- Band 2 0.4
5. Variable Universal COLI-
Excess over Target: 0.5***
6. Single Premium Deferred Annuity 0.5
7. Single Premium Immediate Annuity 0.5
8. Single Premium Variable Life - Band 1 0.65*
- Band 2 0.30**
</TABLE>
*0.50 over age 75 for single life policies 0.35 for additional premium.
** 0.25 over age 75 for single life policies
*** 0.3 in years 11+
B. TOP PRODUCER ADJUSTMENT
On Qualified Business credited to an Override Unit in any calendar year after
Override Threshold I is reached by the Unit in such year, the overriding
commissions payable shall be the following percentages of the overriding
commissions in Subsection A above:
Percentage of Overriding
Commissions in Subsection A
after Override Threshold I is
reached but before Override
Threshold II is reached 60%
after Override Threshold II
is reached 25%
C. PERSONAL PRODUCING MANAGING PARTNER
If in any calendar year the personal volume credited by the Company to the
Managing Partner for individual life insurance and annuities exceeds one half of
the total volume credited under the Contract for such insurance and annuities to
the Firm, the overriding commissions for the Managing Partner will be reduced by
factors established by the Company.
D. OVERRIDES PAYABLE
Anything in the Contract to the contrary notwithstanding, no overriding
commissions will be paid after the death of the Managing Partner, either before
or after termination of the Firm. Nor will overriding commissions be paid after
the termination of the Firm if the Managing Partner qualifies for payment under
the Managing Partner Retirement Plan (MPRP). In the event of the death of a
Managing Partner in a partnership Firm, the overriding commissions attributable
to the deceased Managing Partner's share of the partnership shall terminate.
PART III: SCHEDULE OF SERVICE
FEES
This Part III is effective for renewal premiums or purchase payments credited
for the purposes of this Part III to the Firm on and after January 1, 1998.
While this Part III is in effect, when renewal premiums or purchase payments are
credited to the Firm before termination of the Firm, the following amounts shall
be paid by the Company as Service Fees:
<TABLE>
<CAPTION>
Percentage of
Premiums or
POLICY Purchase Payments
<S> <C>
1. Life Insurance - except UL & VL
All except EP 65 & YRT 4 1.0#
EP 65 0.5
YRT 4 0.0
2. Universal Life
Up to Target Premium
Years 2-10 0.5
Years 11+ 1.0
Excess over Target Premium
UL-CCL 0.0
UL 91 Bands 1-3
and First to Die 1.0
UL 91 Band 4 0.67
3. Variable Life Insurance
Whole Life 1.0
Life paid-up at 65 0.5
Variable Universal 97
Up to Target Years 2-10 0.5
Years 11+ 1.0
Excess over Target Band I 1.0
Band II 0.67
Variable Universal
Survivorship
Up to and over Target 1.0
Variable Universal COLI
Up to Target 1.0
Excess over Target 1.17*
4. Disability Insurance
All policies 0.5
(excluding premium refund
benefit rider)
5. Annuities**
ZAVA and AGS- Normal
Option
Years 2-10 1.15
Years 11+ 1.90
AGS - Trail Option
Years 2-7 1.15
years 8+ 1.10
</TABLE>
#For YRT 4, paid on renewal portion of the premium only.
*0.67 in years 11+; for brokers, 1.4 except 0.8 in years 11+.
** Notes -- AGS rates as % of purchase payments are reduced by 5% for
each year that attained age is over 75.
-- For AGS-Trail Option, an additional service fee of .15% of
assets is payable in policy years 11+.
-- Service Fees will not be paid on Variable Annuities if the
Corporate Developmental Managing Partner is barred from
receiving such under the National Association of
Securities Dealers regulations.
-- For AGS-rates on renewal deposits are not guaranteed;
renewal rates may change in the future for prior issues.
11
<PAGE>
PART IV: SCHEDULE OF EXPENSE ALLOWANCE
The Managing Partner will be reimbursed for the expenses of maintaining the
Firm. Such reimbursement shall be limited to the allowances set forth in the
Contract and shall not in any event exceed the total amount of allowable
expenses actually incurred by the Managing Partner in fulfilling the Managing
Partner's obligations under the Contract. No other expenses of any kind or
nature shall be charged to, or will be paid or allowed by, the Company, except
as approved in writing by a duly authorized officer of the Company.
The Expense Allowances in any month are payable only while this Part IV is in
effect, shall be payable only if the Firm was active during the entire preceding
month and shall consist of the sum of the following items:
1. CASH MONTHLY ALLOWANCE (CMA)
A level monthly payment, determined as of January 1 of a given year, and paid in
equal monthly installments throughout that year, equal to 5% of the prior three
year average of the Firm's life and disability insurance FYC on recurring
premium plans (up to target on flexible premium plans) from Full Time Agents,
excluding FYC from brokers, associate agents and the Managing Partner.
2. NEW BUSINESS ALLOWANCE (NBA)
An amount payable in a given month equal to a percentage of FYC earned* by
agents and brokers in the preceding month, as follows:
SCHEDULE A: RECURRING PREMIUMS/PURCHASE PAYMENTS
Status of Agent/Broker
On the HORD
PERCENTAGES OF FYC
-------------------------
Life Annuities DI
---- --------- --
A. Full Time Agents
First Contract Year 45 50 45
Second Contract Year 45 50 40
Third Contract Year 45 50 35
Fourth Contract Year 45 50 30
Fifth Contract Year 45 50 25
Sixth/+/ Contract Year 45 50 20
B. Brokers 85 75 35
C. Managing Partner 53 53 25
D. Agents other than Full-
time Agents 35 35 20
For 10, 15, 20-year term policies, deduct 5% from the above life rates. For
Brokers, 75% on VUL, UL-91, UL-CCL, VULC.
*"Paid to" instead of "earned by" for those FYC paid pursuant to the Modified
Surrender Commission Amendment to a Full Time Agent, corporate agent, or broker
contract.
SCHEDULE B: SINGLE PREMIUMS/PURCHASE PAYMENTS
An amount equal to the following percentages of the FYC earned by agents or
brokers in the preceding month:
Percentage
Policy or Coverage of FYC
All except Brokers
Brokers
1. Universal Life-Excess over Target 33 1/3 50
(including single life, first-to die and
survivorship plans)
2. Pension Universal Excess Premiums 50 50
3. Variable Universal Excess Premiums 33 1/3 33 1/3
4. Variable Universal COLI: 33 1/3 40
5. Paid up Additions Rider 25 33 1/3
6. Variable Life Unscheduled Payments 25 33 1/3
7. Single Premium Deferred Annuities 25 33 1/3
8. Single Premium Immediate Annuities 25 33 1/3
9. Single Premium Variable Life 25 33 1/3
Except on Pension Universal Excess Premiums, the above rates do not apply to
commissions paid in renewal years.
3. PRODUCTIVITY ALLOWANCE (FACTOR P)
An amount payable in a given month equal to a percentage of Schedule A Life and
Annuity FYC earned in the preceding month by Full Time Agents in their 6/th/ or
later contract year, providing the agent had FYC in the prior 12-month period
equal to the following:
FYC IN PRIOR 12 MONTHS* FACTOR P%
Band
1. $0 - 22,999 0%
2. $23,000 - 49,999 2.5%
3. $50,000 - 80,999 5.0%
4. $81,000 - 139,799 7.5%
5. $139,800 - 223,599* 10.0%
6. $223,600 - 279,449* 15.0%
7. $279,450* 20.0%
*Qualification for these bands will be by units of one or more approved agents.
For a two-member unit, add $27,950 to these band requirements. For larger
units, add another $55,850 for each additional person in the unit. Should a
multi-member unit not qualify for Band 5 or higher, each unit member will be
treated as an individual for calculation of Factor P.
4. RECRUITING ALLOWANCE (FACTOR R)
An amount payable in a given month equal to a percentage of Schedule A Life and
Annuity FYC earned in the preceding month by Full Time Agents in their first
through fifth contract years, where the percentage is determined for each agent
and is the sum of up to six components, as follows:
For contract years 1 - 4:
a) 18%; plus
b) 5%, if the agent is full-time and is eligible for a financing plan at
time of contracting; plus
c) 5%, if the agent is full-time and is assigned to a supervisor's unit and
the supervisor is receiving a Company-determined minimum level of
compensation on the agent; plus
d) 2%, if the Firm recruited at least 10* new agents in the prior calendar
year; plus
e) 2%, if the Company met its recruiting objective for the prior calendar
year; plus
* For 1998; then as published by the Company.
12
<PAGE>
f) up to 12%, depending on the Firm's ranking (versus other firms) as of the
end of the prior calendar year in annualized FYC from new agents hired in
that year and in the prior three years, as follows:
<TABLE>
<CAPTION>
RANKING FACTOR R%*
<S> <C>
1 - 3 12%
4 - 6 10
7 - 9 9
10 - 12 8
13 - 15 7
16 - 18 6
19 - 21 5
22 - 24 4
25 - 27 3
28 - 30 2
31 - 38 1
</TABLE>
*For 1998; future years as published by the Company.
Note: For a Firm to receive 4.f, it must recruit in the prior calendar year the
greater of 5 agents or a number of agents equal to 15% of total Full Time Agents
as of the beginning of that year; or be in the top 20 of the above ranking and
have net manpower growth, as determined by Company.
Note: If any Firm should merge with another Firm after January 1 of a given
calendar year, the ranking in 4.f. shall be determined based upon procedures
established by the Company as if the merger did not occur until the end of that
calendar year.
For contract year 5:
a) 8%, plus
b) 2%, if the agent is full-time and is eligible for financing plan; plus
c) 5%, if the agent is full-time and is assigned to a supervisor's unit and
the supervisor is receiving a Company-determined minimum level of
compensation on the agent.
5. GROWTH ALLOWANCE (FACTOR G)
An amount payable as a lump sum in the first quarter of the year (first payable
in 1999) equal to up to 2.5% of Schedule A Life and Annuity FYC earned in the
preceding year by Full Time Agents in the Firm, based on the average annual
growth in the number of Full Time Agents and the average percentage growth in
Full Time Agent annualized FYC, as follows (these bands are illustrative; for
the 1999 payments, the specific bands will be announced in early 1998):
NOTE: The average annual growth in the number of Full Time Agents is a number
arrived at by subtracting from the number of Full Time Agents as of the
end of the preceding calendar year, the number of Full Time Agents as of
the end of the fourth preceding calendar year and dividing the result by
three. Thus, to determine the 1999 payment, subtract from the number of
Full Time Agents as of year end 1998, the number of Full Time Agents as
of year end 1994, and divide by three.
The average percentage growth in Full Time Agent annualized FYC is
arrived at by dividing A by B, where A is the growth in Full Time Agent
annualized FYC from the fourth preceding calendar year to the preceding
calendar year, and where B is the sum of the Full Time Agent annualized
FYC in the three preceding calendar years.
<TABLE>
<CAPTION>
Average Annual Growth
in Number of Full-time Average Percentage Growth in Full Time Agent Annualized FYC
Agents -3 to-0.1% 0 to +2.9% 3 to +5.9% 6 to +8.9% 9 to +11.9% Over 12%
<S> <C> <C> <C> <C> <C> <C>
-1 to -0.1 0 0.25 0.50 0.75 1.00 1.25
0 to 0.9 0.25 0.50 0.75 1.00 1.25 1.50
1 to 1.9 0.50 0.75 1.00 1.25 1.50 1.75
2 to 2.9 0.75 1.00 1.25 1.50 1.75 2.00
3 to 3.9 1.00 1.25 1.50 1.75 2.00 2.25
4 & over 1.25 1.50 1.75 2.00 2.25 2.50
</TABLE>
13
<PAGE>
6. LIVES ALLOWANCE
An amount payable as a lump sum in the first quarter of the year equal to
between $1,000 and $7,000 for each Full Time Agent in the Firm who sells a
minimum of 50 individual life, annuity and disability policies (excluding policy
changes, term conversions, and rewrites) during the prior year, as follows:
<TABLE>
<CAPTION>
Number of Policies Allowance
<S> <C>
50 - 59 $1,000
60 - 69 1,250
70 - 79 1,500
80 - 89 1,750
90 - 99 2,000
100 - 124 2,500
125 - 149 3,250
150 - 174 4,250
175 - 199 5,500
200+ 7,000
</TABLE>
This allowance must be passed through to the agent.
7. DI INCENTIVE DRIVEN COMPENSATION
In a given calendar year if an individual producer has in excess of $15,000* of
FYP (first year premiums) credited on DI, the following percentages of DI FYP
earned in the calendar year will be paid.
<TABLE>
<CAPTION>
DI FYP* PERCENTAGE OF DI FYP*
<S> <C>
$0 to 15,000 0
$15,000 to 60,000 20
in excess of $60,000 25
</TABLE>
*Effective for 1997, future years as published by the Company.
8. FIRM EMPLOYEES RETIREMENT PLAN
One-third of the Firm's share of the Normal Cost for the plan. The Firm's share
is determined based on its proportion of the total covered payroll for Firm
employees. The Normal Cost is determined under the Entry Age Actuarial Cost
Method without regard to performance indexing and adjusted to reflect the
current actuarial cost method.
9. SOCIAL SECURITY
An amount equal to the sum of (a) and (b):
(a) The amount paid by the Managing Partner for F.I.C.A. taxes on each Full
Time Agent, and
(b) The amount paid by an entity under a Corporate Agent's Contract ("Corporate
Agent") for FICA taxes for each employee under a subagent's contract,
subject to the following conditions:
(1) the employee, but for being an employee of the Corporate Agent, would have
met the requirements for a Full Time Agent;
(2) the sum of the amount payable under this subsection (b) and the amount
payable under subsection (a) for the same employee does not exceed the
F.I.C.A. limit for that employee. If such sum exceeds the F.I.C.A. limit
for that employee, then the amount payable under this subsection (b) shall
be reduced by such excess.
The amount paid under this subsection (b) must be paid to the Corporate Agent
by the Managing Partner upon receipt.
10. EXPERIENCED AGENT ALLOWANCE PLAN (EAAP)
Under this allowance, the percentage of FYC set forth in NBA Schedule A will
increase by 30 percentage points for eligible agents in their first contract
year with the Company. This additional percentage will be paid on the first
$100,000 of FYC paid in the agent's first contract year (maximum payment
$30,000). No payments will be made beyond the first contract year, even on
policies written during that year.
An eligible agent is an active Full Time Agent who meets the following
requirements:
a) the agent met MDRT (Million Dollar Round Table) -level requirements in the
full calendar year prior to becoming an agent of the Company; and
b) the agent had at least five years of experience as an insurance agent (life,
annuities, disability) prior to becoming an agent of the Company; and
c) the agent is approved for the program by both the Managing Partner and the
Company.
If the agent fails to produce at least $26,000 of FYC in his first contract year
with the Company, or $28,000 in his second year, or terminates from full-time
status within 24 months of his full-time contract date, then the full amount of
EAAP allowance paid to the Managing Partner will be charged back to the Managing
Partner.
The Managing Partner shall pay to each eligible agent the entire EAAP allowance
which the Managing Partner receives on account of that agent, provided that the
total amount of all allowances payable to or incurred for the agent on Schedule
A products shall not exceed 65% of the FYC paid on such products. If the total
amount would exceed the 65% limit, a portion of the EAAP allowance will be
charged back until the total allowances are within the limit, and such portion
shall be returned to the Company.
The EAAP allowance shall be paid to the eligible agent in addition to and not in
lieu of any other allowances the Managing Partner would have paid to the agent
if not for the EAAP allowance.
14
<PAGE>
11. SUPERVISORY ALLOWANCES
A. SUPERVISOR INCENTIVE PLAN (SIP) AND BROKERAGE INCENTIVE PLAN (BIP)
The SIP and BIP Allowances shown below reimburse the Managing Partner for part
of the cost of developing a sales manager (SM) or a brokerage manager (BM). A
Company-approved SM/BM receives a monthly salary that decreases every few months
for 36 months, as long as the SM/BM's unit is producing a minimum amount of FYC
(referred to as validating), as follows (per $1,000 of initial salary):
<TABLE>
<CAPTION>
Month Under Monthly Allowance To Validation For Unit
Contract Salary Managing Partner (for the period)
<S> <C> <C> <C>
1 - 4 $1,000 $833 $ 1,250
5 - 8 850 683 3,000
9 - 12 650 483 4,500
13 - 18 600 433 8,750
19 - 24 500 333 15,000
25 - 30 400 233 16,000
31 - 36 200 33 20,000
</TABLE>
If the SM/BM fails to validate, the Managing Partner must immediately pay back a
percentage of the total SIP/BIP Allowance equal to the percentage of the
validation requirement by which the SM/BM failed.
The Managing Partner may elect to provide a salary increase to an SM/BM who
exceeds his validation requirement for a given period. His salary would increase
for that period, and at the Managing Partner's discretion, for subsequent
periods by the same percentage by which he exceeded the validation requirement,
provided that he reaches one of four levels of excess validation requirements.
Those levels vary depending on the initial monthly salary as follows:
<TABLE>
<CAPTION>
Excess Production as a Percent of
Validation Requirement
Initial Monthly
<S> <C> <C> <C> <C>
Salary Level 1 Level 2 Level 3 Level 4
$500 100% 200% 300% 400%
1,000 50% 100% 150% 200%
1,500 33% 67% 100% 133%
2,000 25% 50% 75% 100%
2,500 20% 40% 60% 80%
3,000 17% 33% 50% 67%
4,000 13% 25% 38% 50%
5,000 10% 20% 30% 40%
</TABLE>
Any salary adjustment is shared between the Managing Partner and the Company in
the same proportion as is the pre-adjusted salary.
B. SALES MANAGER INCENTIVES
1. A monthly allowance will be paid to the Managing Partner, to be passed
through to the SM, for those SM's who qualified for an Agency Builders
Conference in the current year (plus qualified for a prior Agency Builders
Conference, if the SM has been an SM for less than four calendar years).
The amount will be either $200 or $300 per Qualifying Agent* in the SM's
unit, as follows:
<TABLE>
<CAPTION>
FYC (all products)
In Prior Calendar Year
Status as of 1/1 - Current Yr. For $200/month For $300/month
<S> <C> <C>
Agents in 1st contract year $22,000 $29,500
Agents in 2nd contract year 25,000 33,500
Agents in 3rd contract year 31,000 43,000
Agents in 4th contract year 37,500 54.000
Agents in 5th+ contract year 38,500 54,000
</TABLE>
*Agent with FYC from all products as indicated in above table with at least 50%
from individual life, DI, and annuities (minimum of $10K FYC in annuities), or
50% from individual life and DI. Regarding new recruits in current year, for
SM to receive $200 in a given month, recruit must average $1800 FYC YTD per
month; for SM to receive $300 in a given month, recruit must have produced
$29,500 YTD.
2. A monthly allowance will be paid to the Managing Partner, to be passed
through to the SM, for those SM's who qualified for the Agency Builders
Conference in the current year and have been an SM for at least 24 months.
The amount shall be paid for Qualified Recruits, who are agents recruited
by the SM during the current calendar year who are either financed or, if
not financed, are averaging at least $1,200 per month YTD in FYC for all
products, with at least 50% from life, DI, and annuities (minimum of 10K
FYC in annuities), or 50% from individual life and DI. The amount of this
allowance shall be $150 per month per Qualified Recruit plus 10% of the FYC
of the Qualified Recruit in the prior month.
3. SM Management Trainee Allowance - A monthly allowance of $500 per sales
-------------------------------
management trainee, for up to one year, will be paid to the Managing
Partner, to be passed through to the trainee, for company-approved SM
candidates. These trainees must be following Company-approved development
plans to continue receiving the allowance, and will be eligible for SIP at
the completion of the Management Trainee Program.
C. BROKERAGE MANAGER INCENTIVES
1. A monthly allowance will be paid to the Managing Partner, to be passed
through to the BM, for those BM's who are not in the BIP program and who
have qualified for the Agency Builders Conference in the current year. The
payment is $100 per month for each year, up to four years, for which they
have qualified for the Agency Builders Conference. When the BM's qualify a
fifth year, they become Master Brokerage Managers as provided below.
15
<PAGE>
2. A monthly allowance will be paid to the Managing Partner, to be passed
through to the BM, for those BM's who are not in the BIP program and who
have qualified for the Agency Builders Conference in the current year. The
amount will be 6% of the FYC paid to the BM's unit in the previous calendar
year and will be paid monthly in 12 equal installments.
D. MASTER BUILDERS ALLOWANCE
A Master Sales Manager (MSM) or Master Brokerage Manager (MBM) is an SM or BM
who has qualified for the Agency Builders Conference (an "Agency Builder"), in
at least five of the last seven years including the current year.
A monthly allowance will be payable to the Managing Partner, to be passed
through to the MSM or MBM who subsequently qualifies as an Agency Builder, as
follows:
<TABLE>
<CAPTION>
MONTHLY ALLOWANCE
<S> <C>
First eligible as MSM or MBM $ 500
Master plus one year as Agency Builder 600
Master plus two years as Agency Builder 700
Master plus three years as Agency Builder 800
Master plus four years as Agency Builder 900
Master plus five years (or more) as Agency Builder 1,000
</TABLE>
If the MSM/MBM fails to qualify an Agency Builder for a given year, the monthly
allowance for such year will be reduced.
E. DISTRICT AGENCY DEVELOPMENT ALLOWANCE
For a newly organized and Company-approved district office, a Managing Partner
may elect to receive the following allowances for expenses associated with
establishing and operating the district office:
1. Start-Up Allowance - An up-front payment of $5,000 for rent, salaries and
------------------
equipment;
2. Development Allowance - During the first three years of the district, a
---------------------
monthly allowance equal to a percentage of FYC earned in the prior month by
Full Time Agents in the district (excluding the SM) on policies covered by
Schedule A of the NBA, as follows:
1st district year: 25%
2nd district year: 10%
3rd district year: 3%
3. Penetration Allowance - During the first ten agent contract years for each
---------------------
agent in the district, a monthly allowance equal to 7% of FYC earned by the
agent in the preceding month on policies covered by Schedule A of the NBA.
The Managing Partner may elect to receive all three allowances, or may choose to
receive only (3). The combined payout under (1) and (2) may not exceed $100,000
over the life of the district. Continued payment of the Development and
Penetration Allowances is contingent on both of the following validation
requirements being met:
<TABLE>
<CAPTION>
FYC Earned by
Validation Period FYC Earned by Agents in Their
District Agency the District First Contract Year
Months During the Period During the Period
<S> <C> <C>
1 - 4 $ 4,000
5 - 8 6,000
9 - 12 10,000 $ 20,000
-------------------------------------------------------------------------
13 - 18 29,000
19 - 24 35,000 $ 20,000
-------------------------------------------------------------------------
25 - 30 45,000
31 - 36 45,000 $ 20,000
-------------------------------------------------------------------------
37 - 48 100,000 $ 20,000
-------------------------------------------------------------------------
Each 12 months thereafter 105,000
</TABLE>
If the District Agency terminates or fails to validate during its first three
years, the Managing Partner must pay back to the Company a portion of the Start-
Up and Development Allowances as follows:
1st District Year: 90%
2nd District Year: 75%
3rd District Year: 35%
4th District Year: 25%
F. MARKETING DIRECTOR ALLOWANCE
This allowance provides a sharing with the Managing Partner of the cost of a
Marketing Director during the first three years after hiring of the Marketing
Director, as follows:
1st year: Company pays 75% of base compensation, up to a maximum payment of
$25,000.
2nd year: Company pays 50% of base compensation, up to a maximum payment of
$15,000.
3rd year: Company pays 25% of base compensation, up to a maximum payment of
$5,000.
The Marketing Director provides marketing support to the agents in the Firm
pursuant to a Company- approved performance plan. Such a plan will include such
quantitative measures as (1) increasing market penetration by 10%, and (2)
increasing average agent productivity by 15%. Review and validation of the
Marketing Director's performance will occur every six months.
16
<PAGE>
12. TRANSITIONAL ALLOWANCES
A. SUPPLEMENTAL CASH MONTHLY ALLOWANCE (CMA)
1. In 1998, a level monthly payment beginning January 1 will be paid in
equal monthly installments throughout that year, equal to 1/12 of 2% of
the greater of the prior 3-year and 5-year averages of the Firm's
individual life and disability FYC on annual premium plans (up to
target on flexible premium plans) from Full Time Agents.
2. In 1999 and thereafter (until the Supplemental NBA below is phased
out), a similar payment will be made, except that the greater of the
prior 3-year and 5-year averages will be replaced by the prior 3-year
average.
B. SUPPLEMENTAL NEW BUSINESS ALLOWANCE (NBA)
An additional NBA will be paid on Schedule A premium beginning on 1/1/98. The
initial supplement will be as follows, as a percent of FYC:
<TABLE>
<S> <C>
Full Time Agents contract years 1-4......9.00%
contract years 5-6......6.00%
contract years 7+.......3.75%
Brokers, Associate Agents...................6.00%
Managing Partner............................2.25%
</TABLE>
Reductions occur every six months, beginning 7/1/98 and will be by one-third of
the above supplement if the Company's FYC on individual life and disability
insurance for all Firms combined in the prior 12 months has increased by 10% or
more over the previous 12 months; otherwise the reduction will be by one-sixth
of the above supplement.
C. SUPPLEMENTAL RECRUITING ALLOWANCE
1. For 1998: for contract years 1-4, the minimum total payment for components
(a),(b),(c) & (f) under the Recruiting Allowance will be 30%;
for contract year 5, the base will be 15% instead of 3% and
component (b) is deleted;
for contract year 6, the base will be 10% and component (c) from
contract year 5 is added.
2. For 1999: for contract years 1-4, the minimum total payment for components
(a),(b),(c) & (f) will be 29% if the agent is full time and is
eligible for a financing plan at the time of contracting;
otherwise, the minimum will be 26.5%;
for contract year 5, the base will be 10% instead of 3% and
component (b) is deleted;
for contract year 6, the base will be 2.5% and component (c) from
contract year 5 is added.
D. SUPPLEMENTAL SUPERVISORY ALLOWANCE
In 1998, an additional allowance of $500 will be paid to the Managing Partner
for each Full Time Agent hired in 1994 and 1995 who is validating his contract
as of 12/31/97. This amount must be passed through to the SM in whose unit the
agent resides.
17
<PAGE>
PART V: INCENTIVE TRAINING
ALLOWANCE PROGRAM (ITAP)
A. DEFINITIONS
1. ITAP Agent
A Full Time Agent of the Company who has signed an ITAP Agreement and has
been approved as a participant in the ITAP by the Company.
2. ITAP Agreement
The Incentive Training Allowance Program Agreement entered into between any
ITAP Agent and the Managing Partner.
3. Subsidy
The Subsidy is equal to:
(i) The total of all payments made to the ITAP Agent under his ITAP
Agreement, less
(ii) The total of all Eligible Commissions credited to the Agent under his
ITAP Agreement.
4. Eligible Commissions
Eligible Commissions for the purposes of this ITAP agreement only shall
mean all first year and renewal commissions on products for which a
commission would have been payable if the ITAP Agreement were not in
effect:
(a) Under the ITAP Agent's agent contract with the Company except large
group products and products for which the Agent is the insured; and
(b) Under the ITAP Agent's Registered Representative Agreement with New
England Securities Corporation; provided that Cash Management Trust
Service Fees, Agent Bonuses, Discount Brokerage compensation and
12(b)(1) fees shall not be considered Eligible Commissions.
5. Net ITAP Loss
The Net ITAP Loss shall be calculated as of the date of termination of the
ITAP Agreement unless otherwise required by this Amendment and be equal to
the Subsidy (a) less 90% of any deferred first year commissions and (b)
less the present value of the vested renewal commissions, utilizing
discounts determined by the Company, to be earned on all products of the
Company except annuities and group products, having a Home Office Receipt
Date occurring during the term of the ITAP Agreement.
B. ITAP ALLOWANCE
The Company shall pay to the Managing Partner an allowance ("ITAP) Allowance")
each week equal to the amount which has been approved by the Company and is
payable to an ITAP Agent under his ITAP Agreement upon the ITAP Agent meeting
all of the payment requirements set forth in his ITAP Agreement.
The Company shall not pay either directly or through loss sharing any ITAP
Allowance to the Managing Partner:
1. For any ITAP Agent whose ITAP Agreement has been amended without written
consent of the Company, or
2. For any amounts paid or to be paid to an ITAP Agent which are not approved
by the Company.
Payments made by the Company without knowledge of the foregoing shall be charged
back to the Managing Partner.
C. ITAP AGENT COMPENSATION
The Managing Partner shall pay to each ITAP Agent all of the ITAP Allowance
received from the Company for such ITAP Agent. Such amount shall be paid to each
ITAP Agent in his next scheduled paycheck following receipt by the Managing
Partner of the ITAP Allowance.
The Managing Partner shall not increase or decrease an ITAP Agent's amount
payable or make any lump sum payment without obtaining prior approval from the
Company.
The Managing Partner shall notify the Company within ten days of the termination
of an ITAP Agent from the ITAP.
If an ITAP Agent terminates without formal notice, the Managing Partner shall
determine the effective date of termination subject to approval of the Company.
D. CHARGEBACKS
If the Managing Partner does not pay to an ITAP Agent the ITAP Allowance
received from the Company for such ITAP Agent, the Company shall charge back to
the Managing Partner such unpaid amounts. The Managing Partner may not under any
circumstances convert such unpaid amounts to his own use.
18
<PAGE>
E. RECOVERY OF ITAP ALLOWANCE
1. Upon termination of an ITAP Agent from the ITAP, the Managing Partner shall
reimburse to the Company a percentage as provided below of any Net ITAP
Loss; provided, however, that if:
(a) the ITAP Agreement terminates upon (i) the Subsidy equaling $40,000 or
(ii) the 156th week of the ITAP; and
(b) the ITAP Agent's agent contract is then in effect; then the Managing
Partner shall not reimburse to the Company any percentage of any Net
ITAP Loss unless the ITAP Agent terminates from Full Time Agent status
within 365 days of the ITAP Agreement termination. If the ITAP Agent
does terminate from fulltime agent status within 365 days of the ITAP
Agreement termination, the Managing Partner shall reimburse to the
Company a percentage as provided below of any NET ITAP Loss; however,
for purposes of calculating the Managing Partner's share of the Net
ITAP Loss, the week during which termination shall be considered to
have occurred shall be equal to 156 plus the number of weeks between
termination of the ITAP Agreement and termination from fulltime agent
status.
2. The Managing Partner shall reimburse to the Company a percentage of the Net
ITAP Loss as set forth in the table below:
<TABLE>
<CAPTION>
Following Weeks
Beginning With The First Managing Partner Percentage
Week of the ITAP Share of NET ITAP Loss
<S> <C>
weeks 1-18 40
weeks 19-52 60
weeks 53-130 50
weeks 131-143 40
weeks 144-156 25
weeks 157-169 20
weeks 170-182 14
weeks 183-195 8
weeks 196-208 2
</TABLE>
The Managing Partner shall reimburse the Company for each Net ITAP Loss in a
lump sum upon notification by the Company of the amount of the Net ITAP Loss.
3. If calculation of the Net ITAP Loss results in a gain, the Managing Partner
shall share in the gain to the same extent as he would have shared in the
Net ITAP Loss.
4. The Managing Partner shall be liable for any Net ITAP Loss for ITAP Agents
enrolled in the ITAP prior to the Effective Date except as provided in
sections F and G or unless otherwise agreed to in writing by the Managing
Partner and the Company.
F. ITAP AGENT TRANSFER
1. If an ITAP Agent shall transfer to another Firm and if his ITAP Agreement
terminates on or before 90 days after the date of transfer, the Firm prior
to the transfer shall be liable for the Firm percentage share (determined
as of the date of termination) of the Net ITAP Loss (determined as of the
date of transfer).
The Firm after the ITAP Agent transfer shall be liable for the Firm's
percentage share determined as of the date of termination of any excess of
the Net ITAP Loss (determined as of the date of termination) over the Net
ITAP Loss (determined as of the date of transfer).
2. If an ITAP Agent shall transfer to another Firm and if his ITAP Agreement
terminates more than 90 days after the date of transfer, the Firm prior to
the transfer owes nothing and the Firm after the ITAP Agent transfer shall
be liable for the Firm's percentage share of the Net ITAP Loss (both
determined as of the date of termination).
G. FIRM TERMINATION AND LOSS SHARING
If a Firm shall terminate from the Company (the "prior Firm"), and, within a
reasonable time to be determined by the Company and the prior Firm, such time to
be no less than 30 days from the date of the prior Firm's termination, any ITAP
Agent (i) shall be terminated from the ITAP for not fulfilling his validation
requirement on a prorate basis as of the date of the ITAP Agent's termination or
(ii) shall voluntarily terminate from the ITAP, the prior Firm shall pay the
Firm's percentage share of the Net ITAP Loss. Termination of the ITAP Agent
shall include failure to reinstate. For any other ITAP Agent, the Firm that
succeeds the prior Firm shall be liable for the entire Firm's share of the Net
ITAP Loss should any such ITAP Agent later terminate from the ITAP.
Except that, if any ITAP Agent shall terminate his fulltime status within 90
days of the prior Firm's termination and contracts with the prior Firm to
solicit on behalf of any other insurance company or financial services
organization, the prior Firm shall pay the Firm's percentage share of the Net
ITAP Loss.
19
<PAGE>
Exhibit 1.A.3(c)
Commission Schedule
The following maximum percentages of the Benchmark 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%
2-10 5%
11 and later 4%
Agents will also receive a commission of 3% of each unscheduled payment
made.
Agents who meet certain productivity and persistency standards with respect
to 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 1A.5(a)
New England Variable Life
Insurance Company
Flexible Premium Adjustable Variable Survivorship Life Policy
Plan
Flexible Premium Adjustable Variable Survivorship Life
New England Variable Life Insurance Company Agrees to pay the Death Benefit of
this Policy to the Beneficiary on receipt of proof that the Last Death occurred
before the Maturity Date; or to pay the Net Cash Value of the Policy to the
Owner if at least one Insured is living on the Maturity Date; and to provide the
other rights and benefits of the Policy.
These agreements are subject to all of the provisions of the Policy.
Signed on the Date of Issue for the Company at its Administrative Office, 501
Boylston Street Boston, MA 02117
/s/ Robert A. Shafto
Robert A. Shafto
President
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
Flexible Premium Adjustable Variable Survivorship Life Policy
. The Death Proceeds are payable at the Last Death, if the Last Death occurs
before the Maturity Date and the Policy is in force.
. The Net Cash Value, if any, is payable on the Maturity Date, if at least
one Insured is still living and the Policy is in force.
. The Policy can be adjusted by decreasing the Face Amount.
. The amount and frequency of premium payments can be changed.
. The Policy does not share in dividends.
THE DEATH BENEFIT ON THE POLICY DATE WILL BE EQUAL TO THE FACE AMOUNT SHOWN IN
SECTION 1. THEREAFTER, THE DEATH BENEFIT CAN VARY FROM DAY TO DAY. IT CAN
INCREASE OR DECREASE, DEPENDING ON
<PAGE>
SEPARATE INVESTMENT ACCOUNT PERFORMANCE AND ON FIXED ACCOUNT INTEREST; BUT IT
WILL NOT BE LESS THAN THE FACE AMOUNT. SEE SECTION 9.
THE CASH VALUE OF THIS POLICY CAN VARY FROM DAY TO DAY. IT CAN INCREASE OR
DECREASE, DEPENDING ON SEPARATE INVESTMENT ACCOUNT PERFORMANCE AND ON FIXED
ACCOUNT INTEREST. SEE SECTION 13.
Please Read Your Policy Carefully
This Policy is a legal Contract between you and the Company.
Right to Return the Policy
When this Policy is issued, you should examine it. You can return the Policy to
the Company or its Agent for any reason within the latest of: (a) 10 days after
you receive it from the Company; (b) 45 days after Part I of the Application is
signed; and (c) 10 days after the Company mails the separate Notice of
Withdrawal Right. If you return the Policy: an amount equal to any premium paid
plus an unscheduled payment made will be refunded to you; and the Policy will be
cancelled from the start.
<PAGE>
Policy Provisions Alphabetical Guide
Section Section
1 Policy Schedule 1, 6 Age of Insured
2 Table of Guaranteed 11 Amount at Risk
Insurance Factors Per 17 Assignments
$1,000 17 Beneficiary
3 Surrender Charge 18 Benefits, Payment of
4 Guaranteed Death Benefit 1 13 Cash Value
Fund 6 Claims of Creditors
5 Guaranteed Death Benefit 2 6 Contestable
Fund 6 Contract
6 Contract 1, 6 Date of Issue
7 The Variable Account 1, 6 Date, Policy
8 The Fixed Account 9 Death Benefit
9 Death Benefit 15 Decrease in Face Amount
10 Premiums 16 Exchange of Policy
11 Monthly Deduction 1 Face Amount
12 Reinstatement After Lapse 8 Fixed Account
13 Cash Value of the Policy 11 Grace Period
14 Policy Loans 2 Insurance Factors
15 Policy Changes 13 Investment Return
16 Exchange of Policy 18, 19 Life Income Options
17 Owner and Beneficiary 20 Life Income Tables
18 Payment of Benefits 1 Loan Interest Rate
19 Payment Options 14 Loans, policy
20 Life Income Tables 1 Maturity Date
. Riders, if any 11 Monthly Deduction
. Amendments and 13 Net Cash Value
Endorsements 17 Owner
. Copy of the Application 15 Partial Surrender
19 Payment Options
6 Periodic Reports
15 Policy Changes
14 Policy Loan Balance
6 Postponement of Payments
10 Premiums
12 Reinstatement
1 Schedule, Policy
7 Sub-Accounts
6 Suicide
3 Surrender Charge
3, 13 Surrender of the Policy
7 Variable Account
<PAGE>
New England Variable Life
Insurance Company
1. Policy Schedule
Owner and Beneficiary
As named in the Application or as later changed. See the Owner and Beneficiary
Section of the Policy.
Policy Number
Specimen
Policy Date Date of Issue Maturity Date*
October 1, 1993 October 1, 1993 October 1, 2058
Policy Loan Interest Rate Death Benefit Option
5.5% C
THIS POLICY IS ADJUSTABLE. IF IT IS ADJUSTED, A NEW POLICY SCHEDULE WILL
SUPERSEDE THIS SCHEDULE.
Schedule of Insureds
Insured 1: John Alden Age and Sex: 35 Male
Insured 2: Myles Standish Age and Sex: 35 Male
Policy Class: Standard Smoker
Policy Class: Standard Smoker
Schedule of Benefits
Flexible Premium Adjustable Variable Survivorship Life
$100,000
Schedule of Premiums
Planned Annual Premium: $ 1,062.68**
Guaranteed Death Benefit 1 Premium: $ 1,361.79
Guaranteed Death Benefit 2 Premium: $ 1,062.68
Maximum Monthly Expense charge:
Year 1 $ 17.00
Thereafter 11.00
Premium Expense Charge: 12.5%
Maximum Monthly Administrative Charge $ 7.50
*This coverage may expire prior to the Maturity Date if premiums paid are
insufficient to continue the coverage to that date. There may be little or no
Cash Value on that date.
<PAGE>
**If the Planned Annual Premium is paid on the first day of each policy year,
and the Actual Investment Return is 4% and the guaranteed maximum charges apply
in all years, this Policy will terminate in policy year 46 unless additional
premium is paid.
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
<PAGE>
New England Variable Life
Insurance Company
2. Table of Guaranteed Insurance Factors per
$1,000
Based on the 1980 CSO Smoker Table
Policy Number: Specimen
Policy Year Monthly Factor Policy Year Monthly Factor
1 $ .0006 34 $ 2.2448
2 .0019 35 2.5494
3 .0035 36 2.8913
4 .0055 37 3.2761
5 .0080 38 3.7166
6 .0111 39 4.2180
7 .0151 40 4.7750
8 .0199 41 5.3988
9 .0259 42 6.0596
10 .0331 43 6.7460
11 .0419 44 7.4456
12 .0522 45 8.1702
13 .0646 46 8.9418
14 .0790 47 9.7747
15 .0963 48 10.6882
16 .1165 49 11.6882
17 .1410 50 12.7422
18 .1702 51 13.8176
19 .2056 52 14.8807
20 .2482 53 15.9144
21 .2979 54 17.0246
22 .3560 55 18.1139
23 .4220 56 19.1958
24 .4978 57 20.2900
25 .5830 58 21.4397
26 .6817 59 22.8934
27 .7970 60 24.7464
28 .9320 61 27.4231
29 1.0905 62 31.9931
30 1.2737 63 39.9825
31 1.4824 64 54.8157
32 1.7133 65 83.3333
33 1.9683
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
<PAGE>
New England Variable Life
Insurance Company
3. Surrender Charge
Policy Number
Specimen
A Surrender Charge will be deducted from partial surrender, full surrender,
decrease in Face Amount and lapse transactions during the first 14 policy years.
The Surrender Charge is equal to a Deferred Sales Charge plus any Deferred
Administrative Charge. The schedule of Surrender Charges is different at and
after Reinstatement. (See below.)
The Maximum Deferred Sales Charges for years 1 through 5 are shown in the table
on the next page. The Maximum Deferred Sales Charges for the last policy month
of each of years 6 through 15 are shown in the table on the next page; the
Maximum Charges for other months will reflect the number of completed policy
months in the year of surrender, lapse or decrease in Face Amount.
The Deferred Administrative Charge for the first five policy years is shown in
the table on the next page; the Charge is level throughout each year. The Charge
for the last policy month of each of years 6 through 14 is shown in the table on
the next page; the Charge for other months will reflect the number of completed
policy months in the year of surrender, lapse or decrease in Face Amount.
Surrender Charge at and after Reinstatement
A Surrender Charge will be applied if the Policy lapses. If the Policy is
reinstated, the Charge will be credited to the Cash Value of the Policy. The
Surrender Charge on the date of reinstatement will be the same as it was on the
date of lapse. For the purpose of determining the Surrender Charge on any date
after reinstatement, the period the Policy was lapsed will not count.
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
<PAGE>
New England Variable Life
Insurance Company
3. Surrender Charge (Second Page)
Policy Number
Specimen
Year of
Surrender, Maximum Deferred
Decrease or Deferred Administrative
Lapse Sales Charge Charge
1 $223.16 $400.00
2 223.16 400.00
3 956.41 400.00
4 956.41 400.00
5 956.41 400.00
6 850.55 360.00
7 743.88 320.00
8 637.61 280.00
9 531.34 240.00
10 425.07 200.00
11 318.80 150.00
12 212.54 100.00
13 106.27 50.00
14 0.00 0.00
15 0.00 0.00
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
<PAGE>
New England Variable Life
Insurance Company
4. Guaranteed Death Benefit 1 Fund
Policy Number
Specimen
The Guaranteed Death Benefit 1 Fund is used to determine if the Minimum
Guaranteed Death Benefit 1 is in effect. (See Section 11.) The Fund assumes the
Guaranteed Death Benefit 1 Premium shown in Section 1 is paid on the first day
of each policy year. The Fund is equal to each Guaranteed Death Benefit 1
Premium accumulated at 4%.
Year Year
1 $1,361.79 36 $105,672.61
2 2,778.05 37 111,261.30
3 4,250.96 38 117,073.54
4 5,782.79 39 123,118.28
5 7,375.89 40 129,404.80
6 9,032.72 41 135,942.78
7 10,755.82 42 142,742.28
8 12,547.84 43 149,813.76
9 14,411.54 44 157,168.10
10 16,349.80 45 164,816.62
11 18,365.58 46 172,771.07
12 20,461.99 47 181,043.70
13 22,642.26 48 189,647.24
14 24,909.74 49 198,594.92
15 27,267.92 50 207,900.51
16 29,720.43 51 217,578.32
17 32,271.04 52 227,643.24
18 34,923.67 53 238,110.76
19 37,682.40 54 248,996.98
20 40,551.49 55 260,318.65
21 43,535.34 56 272,093.19
22 46,638.54 57 284,338.70
23 49,865.87 58 297,074.04
24 53,222.30 59 310,318.79
25 56,712.98 60 324,093.34
26 60,343.29 61 338,418.86
27 64,118.81 62 353,317.40
28 68,045.35 63 368,811.89
29 72,128.96 64 384,926.15
30 76,375.91 65 401,684.99
31 80,792.73
32 85,386.23
33 90,163.47
34 95,131.80
35 100,298.86
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
<PAGE>
New England Variable Life
Insurance Company
5. Guaranteed Death Benefit 2 Fund
Policy Number
Specimen
The Guaranteed Death Benefit 2 Fund is used to determine if the Minimum
Guaranteed Death Benefit 2 is in effect. (See Section 11.) The Fund assumes the
Guaranteed Death Benefit 2 Premium shown in Section 1 is paid on the first day
of each policy year. The Fund is equal to each Guaranteed Death Benefit 2
Premium accumulated at 4%.
Year Year
1 1,062.68 26 47,089.20
2 2,167.87 27 50,035.45
3 3,317.26 28 53,099.55
4 4,512.63 29 56,286.21
5 5,755.82 30 59,600.34
6 7,048.73 31 63,047.04
7 8,393.36 32 66,631.60
8 9,791.77 33 70,359.54
9 11,246.12 34 74,236.60
10 12,758.65 35 78,268.75
11 14,331.68 36 82,462.18
12 15,967.62 37 86,823.34
13 17,669.01 38 91,358.96
14 19,438.45 39 96,076.00
15 21,278.67 40 100,981.72
16 23,192.49 41 106,083.66
17 25,182.87 42 111,389.69
18 27,252.87 43 116,907.96
19 29,405.66 44 122,646.96
20 31,644.57 45 128,615.51
21 33,973.03
22 36,394.63
23 38,913.10
24 41,532.30
25 44,256.27
/s/ Edward N. Wadsworth
Edward N. Wadsworth
Secretary
<PAGE>
6. Contract
The Contract
This Policy is a legal contract between the Owner of the Policy (called "you")
and New England Variable Life Insurance Company, a Delaware corporation, (called
"the Company"). The Policy, which includes the attached Application and any
Application for adjustment of the Policy, is the entire contract between you and
the Company. All riders are listed in Section 1. No change in or waiver of the
provisions of the Policy is valid unless the change or waiver is signed by the
President or the Secretary of the Company.
Payments Under the Contract
All contract amounts are in dollars of the United States of America. Payments by
the Company under the contract will be made at the Administrative Office of the
Company. The obligations of the Company are subject to all payments made and
actions taken by the Company under the Policy before receipt by the Company at
its Administrative Office of proof of the Last Death.
Dates
Policy years, months and anniversaries are all measured from the Policy Date.
Contestable and suicide periods start on the Date of Issue. The Policy Date and
the Date of Issue are shown in Section 1.
Last Death
The Last Death is the later of: the death of Insured 1; and the death of Insured
2.
Not Contestable After Two Years
Insurance is issued by the Company in reliance on the statements made in the
Application for the insurance. Those statements are representations; they are
not warranties. No statement can be used to contest or rescind insurance on the
life of an Insured or to defend against a claim unless contained in the
Application for the insurance on that Insured. The insurance issued under this
Policy will not be contestable after it has been in force during the life of the
Insured:
. With respect to the amount of Death Benefit which results from other than
payments for which proof of insurability is required, for two years from
the Date of Issue; and
. With respect to any amount of Death Benefit which results from a payment
for which proof of insurability is required, for two years from the date
that payment is received.
<PAGE>
Suicide Within Two Years
If either of the Insureds dies by suicide while sane or insane within two years
from the Date of Issue, the Death Benefit will be limited to: the amount of the
premiums paid; less any Policy Loan Balance; and less any partial surrenders.
The Policy will terminate as of the date of the first death by suicide.
Within 60 days after the first death by suicide, the Owner can purchase new life
insurance on an Eligible Insured without evidence of insurability. For purposes
of this provision, an Eligible Insured is a surviving Insured on whom the
Company would have issued a single life policy on the Policy Date of this
Policy. The new policy will be issued:
. On the most recently approved plan of single life variable insurance
issued by the Company on the Policy Date of the new policy, if the issue
age on the new policy is age 75 or younger;
. On a single life Ordinary Life plan with a level face amount issued by
New England Mutual Life Insurance Company on the Policy Date of the new
policy, if the issue age on the new policy is greater than 75;
. On a policy form and at rates in use on the Policy Date by the company
issuing the new policy;
. Subject to any assignments and limitations to which this Policy is
subject;
. With a Policy Date and Date of Issue the same as the date of the first
death by suicide under this Policy;
. Based on the underwriting class to which the Eligible Insured was
assigned by the Company on the Policy Date of this Policy;
. At the age of the Eligible Insured on that Insured's birthday nearest the
Policy Date of the new policy; and
. With a Face Amount equal to the Face Amount of this Policy plus the
amount of any single life term rider for the Eligible Insured under this
Policy.
Riders can be added to the new policy only with the consent of the company
issuing the new policy. Application for the new policy must be: in writing;
signed by the Owner and by the Eligible Insured; and received by the company
issuing the new policy within 60 days after the date of the first death by
<PAGE>
suicide. However, a death benefit for the Eligible Insured's death will be paid
as if the new policy had been issued: if that Insured dies within this 60 day
period; and before the application for a new policy is received by the company
issuing the new policy; and, if the new policy is a variable life policy,
assuming all premiums for the new policy were allocated to the Fixed Account and
the Death Benefit Option chosen is equal to the face amount of the policy.
Notification of First Death
The Company should be notified immediately when the first death occurs. Even if
premiums continue to be paid after the first death, the Company has the right:
to contest the Policy under the Not Contestable After Two Years provision; or to
limit benefits and terminate the Policy under the Suicide Within Two Years
provision.
Age of insured
The age of an Insured on the Policy Date and on each policy anniversary means
the age at the nearest birthday of that Insured.
If the age or the sex of either Insured has not been correctly stated in the
Application, the Death Benefit will be the amount that the most recent Monthly
Deduction which was made would have provided for the correct age and sex.
Claims of Creditors
The Policy and payments under it are exempt from the claims of creditors to the
extent allowed by law.
Basis of Values
"1980 CSO" means Commissioners 1980 Standard Ordinary; it is used to describe
mortality tables. Minimum Cash Values, Reserves and Guaranteed Insurance Factors
are based on the mortality table shown in Section 2. Interest is compounded
daily at the effective rate of 4% per year. A detailed statement of the method
of computing values has been filed with the Insurance Department of the state in
which the Policy is delivered. All values are equal to or in excess of the
minimum values required by the law of that state.
Periodic Reports
The Company will send you all reports required by law and regulation. Such
reports will be sent once each year or more often if required by law or
regulation. The annual report will include, as of the date for which the report
is made: the Death Benefit; the Cash Value; any Policy Loan Balance; all
transactions in connection with the Policy since the most recent report; and any
other required information.
<PAGE>
Policy Illustration of Benefits and Values
Upon written request the Company will send you a policy illustration which will
illustrate benefits and values under the Policy.
Postponement of Variable Benefits
The Company can postpone the determination of and the payment or transfer of
amounts based on separate investment account performance if:
. The New York Stock Exchange is closed for trading (except for normal
weekend and holiday closing) or when trading is restricted; or
. The Securities and Exchange Commission determines that a state of
emergency exists which may make payment or transfer impractical; or
. The Securities and Exchange Commission orders the New England Zenith Fund
or its successor or any other investment company in which the Variable
Account is invested to postpone payment or transfer of variable benefits.
Postponement of Surrenders, Transfers and Loans From The Fixed Account
The Company can postpone the payment of the portion of the Policy's Net Cash
Value which is in the Fixed Account for not more than six months after
surrender. If payment is postponed for more than 30 days, it will be credited
with interest from the date of surrender. The rate of interest will be set each
year by the Company; but the rate will not be less than 3 1/2% per year.
The Company can postpone transfers from the Fixed Account for not more than six
months from the date of the request. The effective date of the transfer is the
date on which values are transferred from the Fixed Account.
The Company can postpone the making of any Policy Loan from the Fixed Account
for not more than six months from the day you apply, except Loans to pay
premiums on policies issued by the Company.
7. The Variable Account
The Variable Account
The Variable Account (called "the Account") is a separate investment account
established by the Company in accordance with Delaware law. The assets of the
Account are owned by the Company.
<PAGE>
The assets of the Account will be used to provide values and benefits under this
Policy and similar policies; but the Account is not chargeable with liabilities
arising out of any other business the Company may conduct.
Sub-Accounts
The Account consists of sub-accounts, each of which is invested in shares of one
portfolio of the New England Zenith fund or its successor or any other
investment company in which the Account is invested. Shares of a portfolio are
purchased for a sub-account at their net asset value.
The initial premium is allocated to the Account and the Fixed Account based on
allocation instructions in the Application for insurance. The portion of the
initial premium allocated to the Account is invested in the Money Market sub-
account as of the latest of:
. The Policy Date;
. The date of the last Part II of the Application, if any is required;
. The effective date of the choice of the Account; and
. The date the first premium is received by the Company.
The Policy's Cash Value in the Money Market sub-account will be transferred,
based on your choice, to the sub-accounts as of the later of: 45 days after Part
I of the Application is signed; and 10 days after the Company mails the separate
Notice of Withdrawal Right. Before this transfer, the values and benefits of the
Policy will depend on: the net investment performance of the Money Market sub-
account if any portion of the initial premium is allocated to the Account; and
the Policy's portion of the Fixed Account. After this transfer each net premium
allocated to the Account and each net unscheduled payment allocated to the
Account will be invested in the sub-accounts you chose as of the date it is
received by the Company at its Administrative Office.
Each distribution of income, dividends and capital gains from a portfolio to a
sub-account will be reinvested for the benefit of the owners of the policies in
that sub-account at net asset value in shares of the portfolio which made the
distribution.
The Cash Value of the Policy at any time cannot be allocated among more than 9
sub-accounts, except with the consent of the Company; and the Fixed Account will
be counted in the limit of 9.
<PAGE>
The values and benefits of a policy depend on: the investment performance of
the portfolios in which the sub-accounts are invested; and the interest credited
to the Fixed Account. The Company does not guarantee the investment performance
of the portfolios of the sub-accounts. You bear the investment risk for amounts
invested in the sub-accounts for your Policy.
Choice of Sub-Accounts
You choose the sub-accounts in which net premiums and net unscheduled payments
are to be invested. You can change the choice for future premiums and future
unscheduled payments at any time by notice to the Company. The portion of the
net premium and the net unscheduled payment to be applied to each sub-account
chosen must be a whole percent not less than 10.
The portfolios as of the Date of Issue are listed in the then current prospectus
for the Account.
Change in Portfolios
The Company can add or remove portfolios as sub-account investments as permitted
by law. When a change is made, the Company will send you: a revised prospectus
for the Account which will describe all of the portfolios then available in the
New England Zenith Fund or its successor or any other investment company in
which the Account is invested; and any notice required by law.
When a portfolio is removed, the Company has the right to substitute a different
portfolio in which the sub-account will then invest:
. The value of the removed portfolio; and
. Future net premiums and future net unscheduled payments applied to that
sub-account.
Transfer Option
After the Right to Return the Policy period you can transfer all or a portion of
the Policy's existing share of a sub-account to another sub-account or to the
Fixed Account. (See Restriction of New Amounts Applied to the Fixed Account
provision.) Requests for transfers can be made in writing or by telephone. The
Company is not responsible for determining the authenticity of transfer
instructions received by telephone. Transfers will be subject to a limit of 4 in
each policy year, except with the consent of the Company.
Change of Investment Policy
The investment policy of the Account will not be changed unless: (a) the change
has been approved by the Insurance Commissioner of
<PAGE>
the state of Delaware; and (b) a statement of the approval process has been
filed with the Insurance Department of the state in which this Policy is
delivered. If the investment policy of the Account is changed, the Company will
give you written notice of the change. You can then choose to exchange this
Policy for a new policy which has a fixed death benefit. The exchange will be on
the same basis as that described in the Exchange of Policy section. (See Section
16.) If you choose to make the exchange, the request for the exchange must be
made within 60 days of the later of: (a) the effective date of the investment
policy change; or (b) the date you receive the notice of the change.
Rights Reserved by the Company
The Company reserves the right to take certain actions subject to compliance
with law including, if required, the approval of the owners of the policies.
These actions are: (a) to create new investment accounts; (b) to combine any two
or more separate investment accounts, including the Account; (c) to invest some
or all of the assets of the Account other than in the New England Zenith Fund;
(d) to invest some or all of the assets of the Account in any other investment
company chosen by New England Variable Life Insurance Company; (e) to remove a
portfolio in which the sub-account is invested or to substitute a different
portfolio; (f) to operate the Account as a management investment company and to
charge investment advisory fees under the Investment Company Act of 1940 or to
operate the Account in any other form permitted by law; and (g) to deregister
the Account under the Investment Company Act of 1940 if registration is no
longer required.
8. The Fixed Account
The Fixed Account
The Fixed Account is a segmented fund within the general account of the Company.
The initial premium is allocated to the Account and the Fixed Account based on
allocation instructions in the Application for insurance. The portion of the
initial premium allocated to the Fixed Account is first invested in the Fixed
Account as of the latest of:
. The Policy Date;
. The date of the last Part II of the Application, if any is required;
. The effective date of the choice of the Fixed Account; and
<PAGE>
. The date the first premium is received by the Company.
Thereafter, each net premium allocated to the Fixed Account and each net
unscheduled payment allocated to the Fixed Account will be applied as of the
date it is received by the Company at its Administrative Office. Each transfer
to the Fixed Account will be applied as of the transfer date.
Fixed Account Interest
The rate of interest for each amount applied to the Fixed Account: will be the
rate set by the Company in advance for the date the amount is applied to the
Fixed Account; and will not be less than a rate equivalent to an annual
effective rate of 4%. The effective interest rate used on the Policy will be the
weighted average of all such rates for the Policy.
Each year, on the policy anniversary, the Company will determine a portion, if
any, of the Policy's portion of the Fixed Account which will be reinvested at
the rate effective on that date.
Interest will be credited to the Fixed Account on a daily basis.
Restriction of New Amounts Applied to the Fixed Account
The Company reserves the right to restrict new amounts applied to the Fixed
Account if the rate of interest that would be used for the new amount is a rate
equivalent to an annual effective rate of 4%.
Transfers Out of the Fixed Account
You can transfer a limited amount of the Policy's portion of the Fixed Account
to the sub-accounts once within 30 days before each policy anniversary. The
transfer will be limited to the greater of: 25% of the Policy's portion of the
Fixed Account; and the amount of the Policy's portion of the Fixed Account
transferred to the sub-accounts the prior year. Requests for transfers can be
made in writing or by telephone. The Company is not responsible for determining
the authenticity of transfer instructions received by telephone.
Choice of the Fixed Account
You can choose to have net premiums and net unscheduled payments applied to the
Fixed Account. You can change the choice for future net premiums and future net
unscheduled payments at any time by notice to the Company in writing. (See the
Restriction of New Amounts Applied to the Fixed Account provision.) The portion
of the net premium and net unscheduled payment to be applied to the Fixed
Account must be a whole percent not less than 10.
<PAGE>
9. Death Benefit
Death Benefit
If both Insureds die before the Maturity Date, the Company will pay a Death
Benefit to the Beneficiary. The amount of the Death Benefit will depend on the
Death Benefit Option in effect on the date of the Last Death. The amount payable
will be reduced by any Policy Loan Balance on the date of the Last Death. The
policy proceeds will be paid in one sum unless all or part of the proceeds are
applied to a Payment Option. (See Payment of Benefits, Section 18.)
Death Benefit Options
This Policy provides four Death Benefit Options. The Death Benefit Option will
be as chosen in the Application or as later changed. The Death Benefit Option is
shown in Section 1.
Option A (called "Enhanced with Face Amount") The Death Benefit is equal to the
greater of:
. The Face Amount shown in Section 1; and
. The greater of (a) and (b), where: (a) is equal to the lesser of the
percent of the Cash Value at the age of the younger Insured at the start of
the policy year as shown in Table I below AND: the Face Amount divided by
the Tabular Cash Value of the Policy at the start of the policy month;
times the Cash Value of the Policy; and (b) is equal to the percent of the
Cash Value at the age of the younger Insured at the start of the policy
year as shown in Table 11 below.
Option B (called "Enhanced with Face Amount Plus Cash Value")
The Death Benefit is equal to the greater of:
. The Face Amount shown in Section 1 plus the Cash Value; and
. The greater of (a) and (b), where: (a) is equal to the lesser of the
percent of the Cash Value at the age of the younger Insured at the start of
the policy year as shown in Table I below AND: the Face Amount plus the
Tabular Cash Value divided by the Tabular Cash Value of the Policy at the
start of the policy month; times the Cash Value of the Policy; and (b) is
equal to the percent of the Cash Value at the age of the younger Insured at
the start of the policy year as shown in Table II below.
<PAGE>
Option C
The Death Benefit is equal to:
. The Face Amount shown in Section 1; or, if greater,
. The percent of the Cash Value of the Policy at the age of the younger
Insured at the start of the policy year as shown in Table II below.
Option D
The Death Benefit is equal to:
. The Face Amount shown in Section 1 plus the Cash Value; or, if greater,
. The percent of the Cash Value of the Policy at the age of the younger
Insured at the start of the policy year as shown in Table II below.
Tabular Cash Value
The Tabular Cash Value at the start of each policy month assumes: the Guaranteed
Death Benefit 1 Premium is paid on the first day of each policy year: maximum
charges are charged; and the Actual Investment Return is equivalent to an
effective annual rate of 4% in all policy years.
Table I
------------------------------------------------------------------------
Age Percent Age Percent
------------------------------------------------------------------------
20 through 40 362.50 63 179.80
41 352.35 64 176.90
42 342.20 65 174.00
43 332.05 66 172.55
44 321.90 67 171.10
45 311.75 68 169.65
46 303.05 69 168.20
47 294.35 70 166.75
48 285.65 71 163.85
49 276.95 72 160.95
50 268.25 73 158.05
51 258.10 74 155.15
52 247.95 75 through 90 152.25
53 237.80 91 150.80
54 227.65 92 144.20
55 217.50 93 137.70
56 211.70 94 131.30
57 205.90 95 126.25
58 200.10 96 121.20
<PAGE>
59 194.30 97 116.15
60 188.50 98 111.10
61 185.60 99 106.05
62 182.70 100 100.00
Table II
------------------------------------------------------------------------
Age Percent Age Percent
------------------------------------------------------------------------
20 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75 through 90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 94 through 99 101
60 130 100 100
Changing the Death Benefit Option
After the first policy year you can change the Death Benefit Option on the first
day of any policy month by written application to the Company. However, if the
change would increase the amount at risk (see Section 11), the change can be
made: only if both Insureds are living on the Adjustment Date; and only if there
has been no change in the insurability of both Insureds. A change in Death
Benefit Option will be effective on the Adjustment Date shown in the new Policy
Schedule.
Except with the consent of the Company, a change from Option A or C to Option B
or D can be made only if the Face Amount after the change is at least $100,000.
If you change from Option A or C to Option B or D: the Face Amount will be
decreased by the amount of the Cash Value; and no Surrender Charge will apply. A
decrease in Face Amount may require a decrease in the amounts provided by riders
attached to this Policy.
<PAGE>
If you change from Option B or D to Option A or C the Face Amount will be
increased by the amount of the Cash Value.
10. Premiums
Payment
Premiums are payments made to the Company to pay for the Policy. The Policy will
not be in force until the first premium is paid. After the first premium is
paid, premiums can be paid: at any time; and in any amount, subject to the
Limits on Premiums below. Payments can be made at the Administrative Office of
the Company or at any Agency of the Company. A receipt for payment signed by the
Secretary of the Company will be given on request. Unless you request otherwise
in writing to the Company, any payment received by the Company when a Policy
Loan exists on the Policy will be used: first, as a planned premium; and second,
as a repayment of the Policy Loan Balance; and third, as an unscheduled payment.
Amount and Frequency
Planned annual premiums are shown in Section 1. Payments and Planned Premium
Dates can be annual, semi-annual or quarterly or can be at any frequency agreed
to by the Company. (See Limits on Premiums below.)
Unscheduled payments can be made at any time prior to the Maturity Date. (See
Limits on Premiums below.)
Cash Values and Death Benefits will be permanently affected by the amount and
frequency of planned and unscheduled payments.
Limits on Premiums
Payments are subject to these limits:
. No payment can be less than $25; and
. Total planned and unscheduled payments will be limited to the Company's
published maximum; and
. No planned premium or unscheduled payment can be made if it increases the
Death Benefit by more than it increases the Cash Value, except with the
consent of the Company.
This Policy is intended to qualify as a flexible premium adjustable life
insurance contract under the Internal Revenue Code and any interpretive
regulation or rulings by the Internal Revenue Service. To that end, premiums on
this Policy are limited to an amount no greater than that allowing the Policy to
continue to qualify.
<PAGE>
Net Premium
The net premium is equal to: the premium payment; less the Premium Expense
Charge at the rate shown in Section 1.
11. Monthly Deduction
Monthly Deduction
On the first day of each policy month the Company will make a Monthly Deduction
for that policy month from the Cash Value of this Policy. The amount of the
Monthly Deduction for a policy month is equal to:
. The cost of insurance and the cost of any riders for the policy month;
PLUS
. An amount not greater than the Maximum Monthly Expense Charge shown in
Section 1;
PLUS
. An amount not greater than the Maximum Monthly Administrative Charge shown
in Section 1.
If either Minimum Guaranteed Death Benefit is in effect, the Monthly Deduction
will be made, whether or not premiums are paid, until the Cash Value equals
zero. Otherwise, the Monthly Deduction will be made, whether or not premiums are
paid, as long as the Net Cash Value is sufficient to cover the entire Monthly
Deduction. This provision will not continue the Policy beyond the Maturity Date;
nor will it continue any rider beyond the termination date as provided in the
rider.
The Monthly Deduction will be deducted in the same proportion as the Cash Value
of the Policy is in the sub-accounts and the Fixed Account.
Cost of Insurance
The monthly cost of insurance for the Policy is equal to: the amount at risk;
times the cost of insurance rate per $1,000 for that month divided by 1,000. The
amount at risk is equal to:
. The Death Benefit on the first day of the policy month discounted at the
monthly equivalent of 4% per year;
LESS
. The Cash Value on the first day of the policy month after the Monthly
Deduction has been processed.
<PAGE>
Cost of Insurance Rates
The cost of insurance rates for each policy year are based on: the sexes of the
Insureds; the underwriting classes of the Insureds; and the ages of the Insureds
on the first day of the policy year. The rates will be set by the Company each
year on the policy anniversary, based on the expectations of the Company as to
future experience. The rates are guaranteed for one year. The Table of
Guaranteed Insurance Factors per $1,000 (see Section 2) shows the maximum
guaranteed factor for each policy month which starts on the Policy Date or a
policy anniversary. The factors between anniversaries vary monthly based on
uniform distribution of deaths throughout the policy year.
Monthly Deduction Adjustment At Death
The portion of any Monthly Deduction made for a period beyond the date of the
Last Death will be added to the policy proceeds. If the Last Death occurs during
the grace period, an amount will be deducted from the policy proceeds to cover
Monthly Deductions to the date of the Last Death.
Grace Period
If the Net Cash Value on the first day of a policy month is not enough to cover
the Monthly Deduction for that month, the Company will mail a premium notice to
you at your address on record with the Company, unless either Minimum Guaranteed
Death Benefit is in effect. There is a grace period of 62 days from the date
when the Monthly Deduction was due in which to pay a premium large enough to
permit the Monthly Deduction to be made. The insurance remains in force during
the grace period. If the premium remains unpaid at the end of its 62-day grace
period, the Policy will lapse without value. Any riders will also lapse without
value unless otherwise stated in the rider.
Minimum Guaranteed Death Benefits
This Policy provides two Minimum Guaranteed Death Benefits. On the first day of
each policy month the Company will determine if either Benefit is in effect. If
either Benefit is in effect the Policy will not be lapsed if the Net Cash Value
on the first day of the policy month is not enough to cover the Monthly
Deduction due for that month. If the Last Death occurs while either Benefit is
in effect, the Death Benefit of the Policy will be based on the Death Benefit
Option in effect on the date of the Last Death.
Benefit 1
While the Policy is in force, the Company will test for Benefit 1 until the
Maturity Date. This Benefit is in effect if:
. No Policy Loan exists; and
<PAGE>
. The Benefit 1 Fund (see Section 4) is not greater than:
The total of the premiums paid in each policy year accumulated at 4% from
the first day of the policy year, except premiums paid within 20 days prior
to a policy anniversary are treated as if paid in the next policy year;
less
Every partial surrender accumulated at 4% from the date of surrender.
Benefit 2
While the Policy is in force, the Company will test for Benefit 2 until the
later of: attained age 80 of the younger Insured; and 20 years from the Policy
Date, or the Maturity Date if earlier. This Benefit is in effect if:
. No Policy Loan exists; and
. The Benefit 2 Fund (see Section 5) is not greater than:
The total of the premiums paid in each policy year accumulated at 4% from
the first day of the policy year, except premiums paid within 20 days prior
to a policy anniversary are treated as if paid in the next policy year;
less
Every partial surrender accumulated at 4% from the date of surrender.
12. Reinstatement After Lapse
Reinstatement
If the Policy lapses, the Policy and riders can be reinstated. (See Limitations
on Reinstatement below.) Reinstatement is subject to:
. Written application to reinstate; and
. Proof that both Insureds are insurable; and
. Payment of a premium large enough to keep the Policy and any riders in
force for at least two months: and
. Payment or reinstatement of any Policy Loan Balance which existed on the
date when the Policy lapsed.
<PAGE>
Limitations on Reinstatement
The Policy and riders cannot be reinstated, except with the consent of the
Company, if more than seven years have passed since the date of lapse.
Any rider which provides life or disability insurance on a person other than one
of the Insureds can be reinstated only as stated in the rider.
Effective Date of Reinstatement
Reinstatement will take effect: only if the application for reinstatement is
approved by the Company; and only when the premium for reinstatement has been
paid, provided that at the time of payment there has been no change in
insurability as represented in the application for reinstatement.
Surrender Charge After Reinstatement
Any Surrender Charge applied when the Policy lapsed will be credited to the Cash
Value of the Policy at reinstatement. The Surrender Charge on the date of
reinstatement will be the same as it was on the date of lapse. For the purpose
of determining the Surrender Charge on any date after reinstatement, the period
the Policy was lapsed will not count.
Maximum Monthly Expense Charge After Reinstatement
For the purpose of determining the Maximum Monthly Expense Charge on any date
after reinstatement, the period the Policy was lapsed will not count.
13. Cash Value of the Policy
Cash Value
The first net premium will be credited to the Policy as of the latest of:
. The Policy Date;
. The date of the last Part II of the Application; and
. The date the first premium is received by the Company.
Each future net premium will be credited to the Cash Value as of the date it is
received by the Company.
The Cash Value of the Policy will depend on the net investment performance of
the Money Market sub-account and the Policy's portion of the Fixed Account (see
the Sub-Accounts provision of Section 7 and The Fixed Account provision of
Section 8) until the later of: 45 days after Part I of the Application is
signed; and 10 days after the Company mails the separate Notice of Withdrawal
Right. Thereafter, the Cash Value of the Policy is equal to: the
<PAGE>
Policy's share of the chosen sub-accounts; plus the Policy's portion of the
Fixed Account; plus the amount of any assets transferred to the general account
of the Company because of Policy Loans. (See Section 14.) The amount of the Cash
Value depends on: the frequency and amount of net planned premiums; the
frequency and amount of net unscheduled payments; investment performance of the
chosen sub-accounts; interest credited to the Policy's portion of the Fixed
Account; Monthly Deductions; all chosen Death Benefit Options; partial
surrenders; transfers among sub-accounts and the Fixed Account; and Policy
Loans. The Cash Value can increase or decrease on a daily basis, depending on:
the actual investment performance of the chosen sub-accounts; and the interest
credited to the Policy's portion of the Fixed Account. (See Actual Investment
Return below.)
The Cash Value of the Policy is not increased by the cash value of any rider,
unless stated in the rider.
Net Cash Value
The Net Cash Value is equal to:
. The Cash Value of the Policy;
LESS
. Any Policy Loan Balance;
LESS
. The Surrender Charge that would apply upon surrender, whether or not there
is a surrender. (See Section 3.)
Surrender of the Policy
You can surrender the Policy for its Net Cash Value at any time before the
Maturity Date by notice to the Company in writing. The Policy will be cancelled
on the first day of the policy month which starts on or next following the date
of surrender. The Net Cash Value will be paid to you in one sum, unless you
choose in writing to apply all or part to a Payment Option. (See Payment of
Benefits, Section 18.)
Actual Investment Return
The Policy has an Actual Investment Return for each Valuation Period for its
share of each chosen sub-account and for its portion of the Fixed Account. The
Policy's Actual Investment Return for each sub-account for each Valuation Period
is equal to (a) minus (b); where:
<PAGE>
. (a) is equal to the Policy's share of the sub-account as of the end of the
Valuation Period;
PLUS
the monthly charges deducted in the Valuation Period;
LESS
any net planned premium and net unscheduled payment credited during the
Valuation Period;
PLUS
the total of the partial surrenders made during the Valuation Period;
PLUS
the interest credited during the Valuation Period to any borrowed portion
of the Policy's Cash Value;
PLUS or LESS
a charge or credit for the Policy's share of any reserve for taxes which
the Company determines to apply to the sub-account; and
. (b) is equal to the Policy's share of the sub-account as of the end of the
most recent Valuation Period;
PLUS or LESS
a charge or credit for the Policy's share of any reserve for taxes which
the Company determines to apply to the sub-account.
The Actual Investment Return for the Fixed Account for each Valuation Period is
equal to (a) minus (b); where:
. (a) is equal to the Policy's portion of the Fixed Account as of the end of
the Valuation Period;
PLUS
the monthly charges deducted in the Valuation Period;
LESS
any net planned premium and net unscheduled payment credited during the
Valuation Period;
PLUS
the total of the partial surrenders made during the Valuation Period;
PLUS
<PAGE>
the interest credited during the Valuation Period to any borrowed portion
of the Policy's Cash Value; and
. (b) is equal to the Policy's portion of the Fixed Account as of the end of
the most recent Valuation Period.
There is a daily charge for mortality risk and expense risk against the Policy's
share of the sub-accounts. This charge will not be greater than: a rate
equivalent to .90% per year; or, if less, the rate allowed by federal securities
law.
Valuation Periods and Valuation Dates
A Valuation Period for each sub-account is a period:
. Which starts on a Valuation Date; and
. Which ends on the next succeeding Valuation Date.
Each day the New York Stock Exchange is open for trading is a Valuation Date.
14. Policy Loans
Policy Loans
After the Right to Return the Policy period you can borrow all or part of the
Loan Value of the Policy by written request to the Company. Policy Loans are
made on the sole security of the Policy. The amount you can borrow at any time
is equal to the Loan Value less any Policy Loan Balance at that time.
Unless you request otherwise, Policy Loans will reduce first, the Policy's share
of the sub-accounts proportionately and second, the Policy's portion of the
Fixed Account, except as noted below in the Interest on Loans; Policy Loan
Balance provision. Assets equal to the amount of the Loan:
. Will be transferred to the general account of the Company; and
. Will earn interest at the effective rate per year of not less than: the
Policy Loan interest rate; less 1.5%.
Policy Loans, whether or not repaid, can have a permanent effect on Cash Values
and Death Benefits.
Loan Value
The Loan Value of the Policy on the date the Loan is made is equal to:
<PAGE>
. 90% of the Cash Value of the Policy projected to the next policy
anniversary or, if earlier, to the next Planned Premium Date;
LESS
. The Surrender Charge that would apply upon surrender (whether or not there
will be a surrender) on the next Planned Premium Date or, if greater, on
the date the loan is made;
LESS
. Loan interest to the next loan interest due date.
The Cash Value will be projected with interest at the effective rate per year of
1.5% less than the Policy Loan interest rate.
Interest on Loans; Policy Loan Balance
Interest will be charged on Policy Loans at the rate shown in Section 1.
Interest accrues daily. The Policy Loan Balance at any time means Policy Loans
outstanding plus interest accrued to date. Loan interest is due on the policy
anniversary each year. Loan interest not paid when due will be added to the Loan
and interest will be charged on it; when loan interest is added to the Loan, the
Policy's share of the sub-accounts and the Policy's portion of the Fixed Account
will be reduced proportionately.
Repayment of Loans
Policy Loans can be repaid to the Company at any time in whole or in part. Loan
repayments will be allocated: first, to repay the Loans made against the Fixed
Account; and second, unless you request otherwise, to repay the Loans made
against the sub-accounts in the same proportion as the Policy is invested in the
sub-accounts.
A Policy Loan is a charge against the Policy. The proceeds of the Policy will be
reduced by any Policy Loan Balance on the date of the Last Death. If the Policy
Loan Balance at any time exceeds the Cash Value of the Policy less the Surrender
Charge on the next loan interest due date or, if greater, on the current
Valuation Date (called "excess Policy Loan"), the Company will mail a notice to
you and to any assignee. The notice will be mailed to the addresses on record
with the Company. If the excess amount is not paid to the Company within 62 days
after the mailing of the notice, the Policy will lapse without value.
Unless you request otherwise, any payment received by the Company when a Policy
Loan exists on the Policy will be used: first, as a planned premium; second, as
a repayment of the Policy Loan Balance; and third, as an unscheduled payment.
<PAGE>
15. Policy Changes
Decrease in Face Amount
The Face Amount may be decreased on the first day of any policy month by written
request to the Company; but only if the Face Amount which will remain after a
decrease is at least $100,000, except with the consent of the Company. No
portion of the Cash Value will be paid to you. A Surrender Charge may apply to a
decrease in Face Amount. (See Section 3.) The Cash Value after the decrease in
Face Amount will be equal to: the Cash Value just prior to the decrease; less
any Surrender Charge for the decrease. The Death Benefit will be recalculated
based on the new Face Amount and the Cash Value after the decrease. A decrease
in Face Amount may require a decrease in the amounts provided by riders attached
to this Policy.
Partial Surrender
After the first policy year you can make a partial surrender on the first day of
any policy month by written request to the Company. A portion the Cash Value
will be paid to you. A Surrender Charge may apply if you make a partial
surrender. (See Section 3.) In each policy year, partial surrenders will be
limited, except with the consent of the Company, to: 20% of the Net Cash Value
on the day the first partial surrender is made for the policy year; or, if less,
the Loan Value minus any Policy Loan Balance. The amount of the partial
surrender will be deducted from the Cash Value. The Death Benefit of the Policy
will be based on the reduced Cash Value. The Face Amount of the Policy will be
reduced, if necessary, so the amount at risk before and after the partial
surrender is the same. The Face Amount which will remain after the partial
surrender must be at least $100,000, except with the consent of the Company. A
decrease in Face Amount may require a decrease in the amounts provided by riders
attached to this Policy.
Unless you request otherwise, a partial surrender will reduce: first, the
Policy's portion of the sub-accounts proportionately; and second, the Policy's
portion of the Fixed Account.
16. Exchange of Policy
Exchange of Policy
Within 24 months after its Date of issue, you can exchange this Policy, if the
Policy is in force, for a policy which provides fixed benefit insurance. The new
policy will be issued:
. By New England Mutual Life Insurance Company;
<PAGE>
. On any plan of survivorship insurance with a level face amount issued by
New England Mutual Life Insurance Company on the Policy Date;
. With the same Insureds, Policy Date, and Face Amount as this Policy;
. Based on the age of each Insured on the Policy Date of this Policy;
. Based on the actual underwriting class to which each Insured was assigned
by the Company on the Date of Issue of this Policy;
. Subject to any cost or credit and the repayment of any Policy Loan Balance;
and
. Subject to any assignments of this Policy, and limitations on this Policy
stated in riders.
Riders which provide benefits that are the same as those provided by riders on
this Policy will be attached to the new policy, if they are available.
Change Cost or Credit
Any change cost or credit will be quoted by the Company on request.
A detailed statement of the method of computing the change cost or credit has
been filed with the Insurance Department of the state in which the Policy is
delivered.
17. Owner and Beneficiary
Owner
The Owner of the Policy is named in the Application (see copy attached); but,
the Owner can be changed. The new Owner will succeed to all rights of the Owner,
including the right to make a further change of Owner. At the death of the
Owner, his or her estate will be the Owner, unless a successor Owner has been
named. In this Policy "you" means the Owner, whether the Owner is a person, a
partnership, a corporation, a fiduciary or any other legal entity. The rights of
the Owner will end at the Last Death, except for Payment of Benefits. (See
Section 18.)
Beneficiary
The Beneficiary is named in the Application (see copy attached); but, the
Beneficiary can be changed before the Last Death. The Beneficiary has no rights
in the Policy until the Last Death. The
<PAGE>
Beneficiary can be a person, a corporation, a partnership, a fiduciary or any
other legal entity. A person must survive the last Insured to die to qualify as
Beneficiary. If none survives, the proceeds will be paid to the Owner.
Change of Owner or Beneficiary
A change of Owner or Beneficiary must be in written form satisfactory to the
Company, and must be dated and signed by the Owner who is making the change. The
change will be subject to all payments made and actions taken by the Company
under the Policy before the signed change form is received by the Company at its
Administrative Office.
Assignments
An absolute assignment of the Policy by the Owner is a change of Owner and
Beneficiary to the assignee. A collateral assignment of the Policy by the Owner
is not a change of 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 the Company before a signed copy of the assignment form is
received by the Company at its Administrative Office. The Company will not be
responsible for determining whether or not an assignment is valid.
Designation of Owner and Beneficiary
A numbered sequence can be used to name successive Owners or Beneficiaries. Co-
Beneficiaries will receive equal shares unless otherwise stated.
In naming Owners or Beneficiaries, unless otherwise stated:
. "Child" includes an adopted or posthumous child;
. "Provision for issue" means that if a Beneficiary does not survive both
Insureds, the share of that Beneficiary will be taken by his or her living
issue by right of representation; and
. A family relation such as "wife", "husband" or "child" means the relation
to Insured 1.
At the time for payment of benefits the Company can rely on an affidavit of any
Owner or other responsible person to determine family relations or members of a
class.
<PAGE>
18. Payment of Benefits
Payment
The policy proceeds will be paid in one sum, unless all or part of the proceeds
are applied to a Payment Option. (See Section 19.) The Company will pay interest
on the death and maturity proceeds from the date the proceeds become payable to
the date of payment in one sum, or to the Option Date. The rate of interest will
be set each year by the Company. The rate will not be less than: that required
by law; or 3 1/2% per year. The interest payable on surrender proceeds is
described in Section 6.
Selection of Payment Options; Option Date
The selection of a Payment Option and the naming of the Payee must be in written
form satisfactory to the Company. You can make or change or revoke the selection
before the Last Death. The Option Date is the effective date of the Payment
Option, as stated in the selection form.
Payee
The Payee is a person, a corporation, a partnership, a fiduciary or any other
legal entity entitled to receive payment in one sum or under a Payment Option.
Selection by Payees
Any proceeds payable in one sum at the Last Death, or upon surrender or maturity
of the Policy, can be applied to any Payment Option chosen by the Payee.
Further, with the consent of the Company, any Payee who is entitled to receive
proceeds in one sum when a Payment Option ends, or at the death of a prior
Payee, or when proceeds are withdrawn, can choose to apply the proceeds to a
Payment Option.
Rights of Payees
In the selection of a Payment Option the right can be given to the Payee:
. To withdraw principal and interest under the Fourth or Fifth Option; or
. To withdraw the commuted value of payments certain under the First, Second,
or Sixth Option.
Under the Life Income Options only payments certain can be commuted. No Payee
can assign, commute or withdraw the payments under any Payment Option, unless
the right is reserved in the selection of the Option.
<PAGE>
Limitations
If installments under an Option would be less than $20, proceeds can be applied
to a Payment Option only with the consent of the Company.
Life Income Options
Guaranteed Life Income Options are based on the age of the Payee on the Payee's
birthday nearest the Option Date. The Company will require proof of age. The
Life Income payments will be based: on the rates shown in the Life Income Tables
(Section 20); or, if they are greater, on the Payment Option rates of the
Company on the Option Date. If the rates at a given age are the same for
different periods certain, the longest period certain will be used.
Purchase of Increased Payment Option Benefits
On the Option Date, a one sum purchase payment can be made to the Company to be
added to the proceeds being applied to any Payment Option. The portion of Life
Income payments purchased in this way will be based on the Payment Option rates
of the Company on the Option Date, which may not be the rates shown in the Life
Income Tables (Section 20). The purchase payment will be limited to the
Company's published maximum for single premium immediate annuities on the Option
Date. A portion of the purchase payment may be used by the Company to pay
premium taxes on the purchase payment.
Death of Payee
If a Payee under a Life Income Option dies within 30 days after the Option Date,
the amount applied to the Option, less any payments made, will be paid in one
sum, unless a Payment Option is chosen by the successor Payee. Otherwise,
amounts to be paid after the death of a Payee under a Payment Option will be
paid as due to the successor Payee. If there is no successor Payee, amounts to
be paid in one sum, or the commuted value of any unpaid payments certain, will
be paid in one sum to the estate of the last Payee to die.
Commutation Rate
The interest rate used to compute the commuted value of any unpaid payments
certain:
. Under the First Option will be 3 1/2% per year; and
. Under the Life Income Options will be the rate used by the Company in
computing the amount of the monthly payments.
<PAGE>
19. Payment Options
Payment Options
All or part of the policy proceeds can be applied to any one of the following
Options, subject to Section 18, Payment of Benefits:
First Option: Income for a Specified Number of Years
The Company will make monthly payments which will include both principal and
interest. Payments will start on the Option Date and will continue for the
number of years chosen. The number of years chosen cannot be more than 30.
Interest is at the rate of 3 1/2% per year compounded yearly. Additional
interest paid by the Company for any year will be added to the monthly payments
for that year.
Guaranteed monthly payments per $1,000 of proceeds applied to the First Option
are shown below:
Number Number Number
of Years of Years of Years
1 $84.65 11 $9.09 21 $5.56
2 43.05 12 8.46 22 5.39
3 29.19 13 7.94 23 5.24
4 22.27 14 7.49 24 5.09
5 18.12 15 7.10 25 4.96
6 15.35 16 6.76 26 4.84
7 13.38 17 6.47 27 4.73
8 11.90 18 6.20 28 4.63
9 10.75 19 5.97 29 4.53
10 9.83 20 5.75 30 4.45
Second Option: Life Income
The Company will make equal payments. Payments will start on the Option Date and
will continue:
. During the life of the Payee, with no payment after the death of the
Payee, called "Life Income, No Refund"; or
. During the life of the Payee, but for at least 10 years, called "Life
Income, 10 Years Certain"; or
. During the life of the Payee, but for at least 20 years, called "Life
Income, 20 Years Certain".
Third Option: Life Income with Refund
The Company will make equal monthly payments. Payments will start on the Option
Date and will continue during the life of the
<PAGE>
Payee. At the death of the Payee, if the total payments made are less than the
total proceeds applied to the Option, then:
. The difference will be paid in one sum, called "Life Income, Cash Refund";
or
. The equal monthly payments will continue until the total payments are
equal to the total proceeds applied to the Option, called "Life Income,
Instalment Refund".
Fourth Option: Interest
The Company will hold the proceeds at interest during the life of the Payee or
for any other period agreed to by the Company. Interest on the proceeds:
. Will be paid each month to the Payee starting one month after the Option
Date; or
. Will be added to the principal amount each year and will earn interest.
At the death of the Payee, or at the end of the period agreed to, the balance of
principal and any accrued interest will be paid in one sum. The rate of interest
will be set each year by the Company; but the rate will not be less than 3 1/2%
per year.
Fifth Option: Specified Amount of Income
The Company will make monthly payments which will include both principal and
interest. Payments will be in the amount chosen. Payments can be quarterly or at
any other frequency chosen, and payments can be for different amounts, all
subject to the consent of the Company. Payments will start on the Option Date
and will continue until the balance is fully paid out. At the death of the Payee
any unpaid balance and accrued interest will be paid in one sum. The rate of
interest will be set each year by the Company; but the rate will not be less
than 3 1/2% per year. Interest will be added each year to the principal and will
earn interest.
Sixth Option: Life Income for Two Lives
The Company will make monthly payments. Payments will start on the Option Date
and will continue:
. While either of two Payees is living, called "Joint and Survivor Life
Income"; or
. While either of two Payees is living, but for at least 10 years, called
"Joint and Survivor Life Income, 10 Years Certain"; or
<PAGE>
. While two Payees are living, and after the death of one Payee, two-thirds
of the monthly amount while the other Payee is living, called "Joint and
2/3 to Survivor Life Income".
20. Life Income Tables
Life income Tables
Guaranteed monthly payments per $1,000 of amounts applied to the Life Income
Options are shown below:
- --------------------------------------------------------------------------------
Second and Third Options: Life Income
- --------------------------------------------------------------------------------
Age of No 10 Years 20 Years Cash Installment
Payee Refund Certain Certain Refund Refund
*15 $3.19 $3.19 $3.19 $3.18 $3.19
16 3.21 3.20 3.20 3.19 3.20
17 3.22 3.22 3.21 3.21 3.21
18 3.23 3.23 3.23 3.22 3.22
19 3.25 3.24 3.24 3.23 3.24
20 3.26 3.26 3.25 3.25 3.25
21 3.27 3.27 3.27 3.26 3.26
22 3.29 3.29 3.28 3.28 3.28
23 3.31 3.30 3.30 3.29 3.29
24 3.32 3.32 3.31 3.31 3.31
25 3.34 3.34 3.33 3.32 3.33
26 3.36 3.36 3.35 3.34 3.35
27 3.38 3.37 3.37 3.36 3.36
28 3.40 3.39 3.39 3.38 3.38
29 3.42 3.41 3.41 3.40 3.40
30 3.44 3.44 3.43 3.42 3.42
31 3.46 3.46 3.45 3.44 3.44
32 3.49 3.48 3.47 3.46 3.47
33 3.51 3.51 3.50 3.49 3.49
34 3.54 3.53 3.52 3.51 3.52
35 3.56 3.56 3.55 3.54 3.54
36 3.59 3.59 3.58 3.56 3.57
37 3.62 3.62 3.60 3.59 3.60
38 3.66 3.65 3.63 3.62 3.63
39 3.69 3.69 3.67 3.65 3.66
40 3.73 3.72 3.70 3.68 3.69
41 3.76 3.76 3.73 3.71 3.72
42 3.80 3.79 3.77 3.75 3.76
43 3.84 3.84 3.80 3.78 3.79
44 3.89 3.88 3.84 3.82 3.83
45 3.93 3.92 3.88 3.86 3.87
46 3.98 3.97 3.92 3.90 3.91
47 4.03 4.02 3.97 3.94 3.96
48 4.08 4.07 4.01 3.99 4.00
49 4.14 4.12 4.06 4.03 4.05
<PAGE>
50 4.20 4.18 4.11 4.08 4.10
51 4.26 4.23 4.16 4.13 4.15
52 4.32 4.30 4.21 4.19 4.21
53 4.39 4.36 4.26 4.24 4.27
54 4.46 4.43 4.32 4.30 4.33
55 4.54 4.50 4.37 4.36 4.39
56 4.62 4.58 4.43 4.43 4.46
57 4.70 4.65 4.49 4.49 4.53
58 4.79 4.74 4.56 4.57 4.60
59 4.89 4.83 4.62 4.64 4.68
60 4.99 4.92 4.68 4.72 4.76
61 5.10 5.02 4.75 4.80 4.85
62 5.22 5.12 4.82 4.89 4.94
63 5.34 5.23 4.88 4.98 5.03
64 5.47 5.35 4.95 5.07 5.13
65 5.61 5.47 5.02 5.17 5.24
66 5.76 5.60 5.08 5.28 5.35
67 5.92 5.73 5.15 5.39 5.47
68 6.10 5.87 5.21 5.51 5.59
69 6.28 6.02 5.27 5.63 5.72
- --------------------------------------------------------------------------------
Age of No 10 Years 20 Years Cash Installment
Payee Refund Certain Certain Refund Refund
70 $6.48 $6.17 $5.33 $5.76 $5.86
71 6.70 6.33 5.38 5.89 6.00
72 6.92 6.49 5.43 6.04 6.16
73 7.17 6.66 5.48 6.19 6.32
74 7.43 6.84 5.52 6.34 6.49
75 7.71 7.02 5.56 6.52 6.67
76 8.02 7.20 5.60 6.69 6.86
77 8.34 7.38 5.63 6.87 7.06
78 8.69 7.56 5.66 7.07 7.27
79 9.07 7.75 5.68 7.27 7.50
80 9 47 7.93 5.70 7.49 7.74
81 9.90 8.11 5.71 7.73 7.99
82 10.36 8.28 5.73 7.96 8.25
83 10.86 8.45 5.73 8.21 8.53
84 11.39 8.62 5.74 8.50 8.83
**85 11.96 8.77 5.75 8.78 9.14
- --------------------------------------------------------------------------------
*and under **and over
- --------------------------------------------------------------------------------
Sixth Option: Life Income for Two Lives
- --------------------------------------------------------------------------------
Age of One Age of Other Payee
Payee
55 60 65 70 75
-----------------------------------------------------------------------------
Joint and Survivor
<PAGE>
55 $4.04 $4.17 $4.28 $4.37 $4.43
60 4.17 4.36 4.53 4.68 4.79
65 4.28 4.53 4.79 5.02 5.22
70 4.37 4.68 5.02 5.38 5.71
75 4.43 4.79 5.22 5.71 6.22
80 4.47 4.87 5.37 5.98 6.68
Joint and Survivor, 10 Years Certain
55 $3.96 $4.09 $4.20 $4.36 $4.42
60 4.09 4.27 4.44 4.59 4.77
65 4.20 4.44 4.69 4.91 5.09
70 4.36 4.59 4.91 5.22 5.50
75 4.42 4.77 5.09 5.50 5.88
80 4.46 4.85 5.33 5.72 6.21
------------------------------------------------------------
Joint and 2/3 to Survivor
55 $4.37 $4.56 $4.76 $4.99 $5.23
60 4.56 4.78 5.02 5.30 5.59
65 4.76 5.02 5.33 5.67 6.03
70 4.99 5.30 5.67 6.10 6.57
75 5.23 5.59 6.03 6.57 7.18
80 5.48 5.89 6.41 7.06 7.84
------------------------------------------------------------
Payments for other ages will be quoted by the Company on request.
The rates shown above are based on an interest rate of 3 1/2% per year; and on
mortality: using a 60/40 male/female weighting; based on the Individual
Annuitant Mortality Table for 1983; and with projection on Scale G to the year
2000 and then on Scale B Modified to year 2010.
<PAGE>
- ------------------------------------------------------------
Amendments and Endorsements (To be made only by the Company)
<PAGE>
Please notify the Company of any change in your name or address. The Company
will communicate with you at your address on record with the Company.
New England Variable Life
Insurance Company
Administrative Office:
501 Boylston Street
Boston, Massachusetts 02117
Flexible Premium Adjustable Variable Survivorship Life Policy
. The Death Proceeds are payable at the Last Death, if the Last Death occurs
before the Maturity Date and the Policy is in force.
. The Net Cash Value, if any, is payable on the Maturity Date, if at least
one Insured is still living and the Policy is in force.
. The Policy can be adjusted by decreasing the Face Amount.
. The amount and frequency of premium payments can be changed.
. The Policy does not share in dividends.
<PAGE>
501 Boylston Street
Boston, MA 02117
Policy Number__________
Application To New England Variable Life Insurance Company for Flexible Premium
Adjustable Variable Survivorship Life Insurance
Part I Section A (Section B must be completed for both Proposed Insureds.)
Address
1. Premium Notice Address
Name
------------------------------------------------
Street
----------------------------------------------
City/State/Zip
--------------------------------------
Beneficiary and Owner
(A family relation such as "wife", "husband" or "child" means the relation to
Proposed Insured 1.)
2. a. Owner (Use a numbered sequence to designate successive
owners.)
b. First Owner's Social Security or Taxpayer ID Number
----------------------------
3. Beneficiary,Primary
-----------------------------------------------------
Secondary
-----------------------------------------------------
Plan/Amount
4. Face Amount $
----------
5. Planned Annual Premium
Year 1 $ Renewal $
----------- -----------
(Continued)
<PAGE>
Part I Application Continued
Section A Continued
6. Death Benefit Option
___ Option A (Enhanced with Face Amount)
___ Option B (Enhanced with Face Amount plus Cash Value)
___ Option C (Face Amount)
___ Option D (Face Amount plus Cash Value)
Benefits/Riders
7. a. ___ Survivorship Level Term
b. ___ Survivorship Four Year Level Term
Premium Payment (*Complete additional form.)
8. ___ Annual ___ Semi-Annual ___ Quarterly
___ Other
9. Prepayment* $__________ _____ None
(If question 11 or 12 in any Section B of this Application is answered YES,
no prepayment is permitted.)
Policy Date
10. If available, special Policy Date requested is:
_________________ (Month/Day/Year)
Note: Date more than 30 days prior to date of application not allowed.
Replacement
11. Any life Insurance or annuity in this or any other company which has been or
will be replaced as a result of this Application for insurance?
____ YES ___ NO (If YES, complete the following and submit replacement
forms if required.)
- ---------------------------------------------------------
Company 1035 Policy Policy Number Amount
Exch. Date
- ---------------------------------------------------------
$
- ---------------------------------------------------------
$
- ---------------------------------------------------------
$
- ---------------------------------------------------------
(Continued)
<PAGE>
Part I Application Continued
Section A Continued
Variable Life Section
12. Account allocations (Whole %)(Minimum 10% in each selected account)*
- --------------------------------------------------------------
% Capital Growth**
- --------------------------------------------------------------
% Money Market**
- --------------------------------------------------------------
% Bond Income**
- --------------------------------------------------------------
% Stock lndex**
- --------------------------------------------------------------
% Managed**
- --------------------------------------------------------------
% Avanti Growth**
- --------------------------------------------------------------
% Fund Value/Growth**
- --------------------------------------------------------------
% Equity lncome**
- --------------------------------------------------------------
% Overseas**
- --------------------------------------------------------------
% Fixed Account
- --------------------------------------------------------------
%
- --------------------------------------------------------------
100% Total
13. Suitability Statement by Applicant
a. Did you receive the prospectus? ___ YES ___ NO
---------------
(If YES, give date of prospectus.) Month/Day/Year
b. Do you understand that:
the Option B and D death benefit may increase or decrease depending on the
policy's investment return?
___ YES ___ NO
the cash value may increase or decrease depending on the policy's
investment return? ___ YES ___ NO
c. Do you believe that this policy will meet your insurance needs and
financial objectives?
___ YES ___ NO
**Money allocated to this account will be invested in the Money Market account
for an initial period described on page 1 of the prospectus.
(Continued)
<PAGE>
Part I Application Continued
Section A Continued
THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER SPECIFIED CONDITIONS.
THE CASH VALUE MAY INCREASE OR DECREASE IN ACCORDANCE WITH SEPARATE INVESTMENT
ACCOUNT EXPERIENCE.
Special Requests
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Note: The cost of insurance rates currently being charged are not guaranteed;
and the Company may charge the full maximum guaranteed rates.
(Continued)
<PAGE>
Policy Number
------------
Proposed Insured Number
----------
Part I Application Continued
Section B (Section B must be completed for each Proposed Insured.)
Questions below pertain to the Proposed Insured.
Personal Data
1. Print Name as it is to appear on the policy. (First/Middle Initial/Last)
---------------------------------------------------------------------------
2. Social Security Number
-------------------
3. Birthplace State/Country
-----------------------
4. Marital Status
___ Single ___ Widowed ___ Separated
___ Married ___ Divorced
5. Birth Date (Month/Day/Year)
-------------------
6. Age As of Birthday Nearest Policy Date
------------------
7. Sex ___ Female ___ Male
Address
8. a. Residence
Street
------------------------------------------------
City/State/zip
----------------------------------------
b. Business
Street
------------------------------------------------
City/State/zip
----------------------------------------
Benefits/Riders
9. a. ___ Waiver of Monthly Deductions
b. ___ Benefits for Disability of Covered Insured
(Continued)
<PAGE>
Part I Application Continued
Section B Continued
10. a. ___ Level Term $ _________________
b. ___ Decreasing Term for ____ years $____________
Health
11. Any treatment for or consultation with a physician concerning a heart
attack, a stroke or cancer (other than skin cancer) within past 2 years?
___YES ___NO (If YES, explain in REMARKS.)
12. Any change in health or any treatment by or consultation with a physician
since the date of Part II of this Application? ___YES ___NO (If YES,
explain in REMARKS.)
Existing Insurance
13. Life Insurance In Force (If none, so state.) Type: P = Personal, B =
Business, G = Group)
- -------------------------------------------------------------
Company Type Yr of Issue Life Amount ADB Amount
- -------------------------------------------------------------
$ $
- -------------------------------------------------------------
$ $
- -------------------------------------------------------------
$ $
- -------------------------------------------------------------
$ $
- -------------------------------------------------------------
Existing Insurance (Continued)
14. Any other negotiations for life, disability or accidental death insurance
pending or contemplated? ___YES ___NO (If YES, explain in REMARKS.)
15. Has life or disability insurance on your life ever been declined, postponed
or modified as to plan, amount or rate? ___YES ___NO (If YES, explain in
REMARKS.)
(Continued)
<PAGE>
Part I Application Continued
Section B Continued
Smoking/Driving
16. Has Proposed Insured:
a. Used any tobacco in the past year? ___YES ___NO
If YES, complete the following:
How many cigarettes per day?
-------------
If other than cigarettes, please explain.
-------------
-------------------------------------------------------
b. Been convicted in the past 2 years of: driving under the influence of
alcohol or drugs; or 2 or more moving violations? ___YES ___NO (If
YES, complete supplemental form.)
17. a. Driver's License No.
-----------------------
b. State
-----------------
Avocation/Aviation/Foreign Travel
18. Have you in the past 2 years participated in, or do you intend to
participate in: any flights as a trainee, pilot or crew member; underwater
sports (SCUBA diving, skin diving, snorkeling, hardhat); sky sports (sky
diving, hang gliding, parachuting, ballooning); or motor racing (auto,
motorcycle, motorboat)? (If YES, complete supplemental form.)
___YES ___NO
19. Do you intend to travel or reside outside of the United States? (If YES,
give details in REMARKS.) ___YES ___NO
Occupation and Financial
20. a. Occupation
-------------------------------------------
(Give Job Title and Duties)
b. Employed by
------------------------------------------
21. a. Annual Income
--------------------
b. Net Worth
-----------------------
(Continued)
<PAGE>
Part I Application Continued
Section B Continued
22. Is Proposed Insured currently employed less than full time? (If YES, give
details in REMARKS.) ___YES ___NO
Remarks (Attach additional sheet, if necessary.)
(Continued)
<PAGE>
Application Continued
Company Use (Additions and Amendments)
Declarations
General. To the best of my knowledge and belief the answers recorded are
true and complete. In those states where written consent is required by
law, my agreement in writing is required to any entry made by the Company
in the "Company Use" section as to: (a) age; or (b) plan of insurance; or
(c) riders; or (d) amounts; or (e) rate class.
When Insurance Takes Effect. If a prepayment is made in connection with
this Application, the insurance will take effect as stated in the
Prepayment Receipt and Temporary Life Insurance Agreement. Otherwise, the
insurance will take effect only when the first premium is paid; provided
that at the time of such payment: (a) this Application has been approved by
the Company at 501 Boylston Street, Boston. MA; and (b) there has been no
change in insurability as represented in this Application since the date of
the Application.
Limitation on Authority of Agents and Examiners. Agents and Examiners do
not have authority: (a) to determine insurability; (b) to change any terms
of this Application; or (c) to make a contract for the Company.
Authorization
In order that insurance can be issued, I authorize each of the following
having records or knowledge of me or my health to give this information to
the Company: a medical practitioner; a medical facility; an insurance
company; the Medical Information Bureau; a consumer reporting bureau; and
any other company, concern or person. If insurance on any minor child is
applied for this authorization extends to records and knowledge of that
child and the child's health. Information received by the Company may be
disclosed to third parties in the conduct of the Company's business.
I understand that: I have a right of access to and correction of all
information obtained by the Company; I can ask to be interviewed with
respect to any investigative consumer report; and I can ask for a copy of
any such report. A photocopy of this authorization is as valid as the
original. This authorization is valid for 30 months from the date it is
signed. I have received a Notice of Information
(Continued)
<PAGE>
Practices; this Notice gives a more detailed description of the information
practices of the Company.
Signatures
Signed at ________________________ Date _____________
city state month day year
All Proposed Insureds
-----------------------------------
-----------------------------------
Applicant if Other than
Proposed Insureds
---------------------------------------
Agent
--------------------------------------------------
End of Application
(Continued)
<PAGE>
Owner's Certification (in lieu of W9)
Owner's Social Security or Taxpayer Identification Number:
I am I am not subject to backup withholding under Section
3406(a)(I)(C) of the Internal Revenue Code. Under penalties of perjury, I
certify that the information in this section is true, correct and complete.
Signature Date
of Owner -------------------
------------------------- month day year
(Continued)
<PAGE>
Agent's Certificate
(Completion required in every case.)
Questions
1. Did you see each Proposed Insured on the date the application was signed?
(If NO, attach additional sheet with explanation.) ___YES ___NO
2. Is each Proposed Insured a citizen of the U.S.?
___YES ___NO If NO, specify the date of entry and the type of visa for
each Proposed Insured who is not a citizen of the U.S.
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
3. If a Proposed Insured's name has been changed in the past 10 years, give
former name(s). (Attach additional sheet, if necessary.)
---------------------------------------------------------
---------------------------------------------------------
4. Provide phone number where each Proposed Insured can be contacted and
preferred calling time.
- --------------------------------------------------------------------------------
Proposed Phone Time Proposed Phone Time
Insured Number ___am ____ pm Insured Number ___am ____ pm
- --------------------------------------------------------------------------------
5. Has a nonmedical been submitted based on expanded nonmedical limit? If YES,
give physician's name and address and the date of the physician's exam
detailed in APS. ___YES ___NO (Attach additional sheet, if necessary.)
- -------------------------------------------------------------------------
Proposed Physician's Name
Insured Date and Address
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
(Continued)
<PAGE>
Agent's Certificate Continued
(Completion required in every case.)
6. Do you have knowledge or reason to believe that any insurance or annuity in
this or any other company has been or will be replaced as a result of this
Application for insurance? ____YES ____NO
7. Is there a corporate, partnership or association beneficiary (excluding
regular split dollar plans) or is this to fund a buy-sell agreement?
____YES ____NO (If YES, complete the following.)
a. Are other key individuals, owners or partners being insured for
similar amounts? (If NO, state why not.)
--------------------------------------------------------
--------------------------------------------------------
b. What percentage of the business does each Proposed Insured own or
control?
Give names and amount of business coverage in force and/or applied
for for all key associates, plus the percentage of ownership in each:
Name Amount % Name Amount %
---------------------------------------------------------------------------
$ $
---------------------------------------------------------------------------
c. Year Business was established. ________
d. For the Business, provide approximate amount of:
Assets Liabilities Net Worth Net Income
---------------------------------------------------------------------------
$ $ $ $
---------------------------------------------------------------------------
8. State Source of Funds if $10,000 or greater.
--------------------------------------------
Signatures
To the best of my knowledge, I have presented the Company all pertinent
facts regarding the Proposed Insureds and regarding this Application.
(Continued)
<PAGE>
Agent Certificate Continued
(Completion required in every case.)
Signature --------------------
of Agent Date month day year
-----------------------
Accepted for --------------------
the Company by Date month day year
-----------------------
General Agent's Certificate
If Agent of another company, give name of company.
-------------------------------
Is Agent licensed where Application is written?
___YES ___NO
Signature of --------------------
General Agent Date month day year
---------------------------
Agent's Identification
---------------------------------------------------------------
Agent's Name Agent Agency Commission Split
Number Number
---------------------------------------------------------------
First Renewal
------------------
------------------
------------------
------------------
------------------
---------------------------------------------------------------
COMPLETE ABOVE DATA IN ALL CASES FOR PROPER CREDITING OF COMMISSIONS.
(Continued)
<PAGE>
Amendment to Application for Insurance
Proposed Insured 1: _____________ No. _________________
Proposed Insured 2:
----------------
Date of Application:
----------------
I agree to these changes which the Company has noted in the "Additions and
Amendments" space of the Application.
Date:
------------- ---------------------------------
Proposed Insured 1
Date:
------------- ---------------------------------
Proposed Insured 2
Date:
------------- ---------------------------------
Applicant, if other than
Proposed Insured 1 or 2
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
/s/ Robert A. Shafto /s/ Edward N. Wadsworth
Robert A. Shafto Edward N. Wadsworth
President Secretary
<PAGE>
New England Variable Life Insurance Company
Administrative Office:
501 Boylston street
Boston, Massachusetts 02117
Prepayment Statement For
Flexible Premium Adjustable Variable Survivorship Life
Proposed Insured 1:
-------------------------------------
Proposed Insured 2:
-------------------------------------
Date of Part I:
-------------------------------------
Face Amount:
-------------------------------------
This Statement is in connection with the Application to the New England Variable
Life Insurance Company for life insurance described above.
These statements are made to the best of my knowledge and belief.
1. The answer to every question in the Application and any other material
information disclosed in the Application are reaffirmed as of this date.
2. Since the date of Part I of the Application, the Proposed Insureds have not
consulted with or been examined by a physician or other practitioner,
except in connection with the Application described above, and have
undergone no change in health.
Exceptions to foregoing:
Signed at Date
--------------------- -----------------
City and State
- ------------------ ------------------ -----------------------
Agent Proposed Insured 1 Applicant if other than
Proposed Insured 1 or 2
------------------
Proposed Insured 2
<PAGE>
NOTICE: This form is to be used in cases where prepayment is made other than on
the date of Part I of the Application. No prepayment is permitted if
any question listed in the Prepayment Receipt Amount question of Part I
of the Application:
is answered "YES;" or
---
Would now be answered "YES."
---
<PAGE>
NEV APP-25-93
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street
Boston, Massachusetts 02117
PREPAYMENT RECEIPT AND TEMPORARY LIFE INSURANCE AGREEMENT
TEMPORARY LIFE INSURANCE AGREEMENT
TEMPORARY LIFE INSURANCE AGREEMENT, $50,000 MAXIMUM
Temporary life insurance on the life of the Proposed Insureds will become
effective on the later of:
. The date of this Receipt and Agreement; and
. The date of the latest Part II of the Application for the Proposed
Insureds.
There will be no insurance until a Part II on each Proposed Insured is
completed. The temporary life insurance will be all joint life or part joint
life and part single life insurance, based on the policy and any riders applied
for.
This insurance will be subject to the terms of the policy applied for. The sum
of all benefits payable under this Agreement upon the Last Death will be the
amount applied for on the last Proposed Insured to die; but the sum will be
limited to a maximum of $50,000.
The Last Death is the later of: the death of Proposed Insured 1; and the death
of Proposed Insured 2.
INCREASE IN MAXIMUM AMOUNT OF TEMPORARY LIFE INSURANCE
If the Company determines that both of the Proposed Insureds are insurable, but
at least one of them is not insurable as a standard risk, the $50,000 maximum
will increase to $250,000.
If the Company determines that both of the Proposed Insureds are insurable as
standard risks, the $50,000 maximum will increase to $500,000.
This increase in maximum will be retroactive to the effective date of the
temporary life insurance without regard to change of insurability or death after
that date.
(Continued on Reverse Side)
PAGE 1
<PAGE>
PAGE 2
If more than one Temporary Insurance Agreement is in effect on the same proposed
insureds, the temporary life insurance will in no event exceed the sum of
$500,000.
STATEMENTS IN APPLICATION
The temporary life insurance is issued by the Company in reliance on the
statements made in the Application for the insurance. Those statements are
representations; they are not warranties. No statement can be used to contest
or rescind insurance or to defend against a claim unless contained in the
Application for the insurance.
TERMINATION OF TEMPORARY LIFE INSURANCE
Any policy issued on the basis of the Application will replace the temporary
life insurance if: (a) at least one of the Proposed Insureds is living when the
policy is delivered to the Owner; and (b) the Owner accepts the policy; and (c)
any balance of premium then due is paid.
If the policy is not accepted and paid for at the time of delivery: (a) the
temporary life insurance will terminate; and (b) the policy will not be in
force; and (c) the prepayment will be refunded to the Owner.
The Company can terminate the temporary life insurance before the Last Death by:
(a) notice of termination to the Owner at the premium notice address shown in
Part 1 of the Application; and (b) refund of the prepayment to the Owner at the
same address.
If it is not sooner terminated, life insurance will expire 120 days after the
date of the latest of Part II of the Application for the Proposed Insureds.
Notice of the termination will be sent to the Owner. If both Proposed Insureds
die while the temporary life insurance is in force, the prepayment will be used
as the premium; any excess will be refunded to the Owner or any additional
premium due will be deducted from the death proceeds.
INSURABILITY AND POLICY DATE
The Company will determine if the Proposed Insureds are insurable; (a) using the
regular underwriting rules, limits and standards of the Company; and (b) as of
the effective date of the temporary life insurance, but the Company can require
for this purpose further medical examinations, tests and reports after the
effective date. Any policy issued on the basis of the Application will be dated
as of the effective date of the temporary life insurance.
<PAGE>
PAGE 3
CONDITIONS
This Receipt and Agreement is subject to these conditions. (a) It must be
signed by the Applicant and countersigned by a licensed agent of the Company.
(b) Any check, draft or money order for the prepayment must be collectable.
(c) No agent has authority to make any change in the terms of the printed text.
(d) The liability of the Company if any Proposed Insured commits suicide will be
limited to refund of the prepayment.
- --------------------------------------------------------------------------------
PREPAYMENT RECEIPT
Proposed Insured 1 Applicant
------------------------- ---------------------
Proposed Insured 2
-------------------------
Prepayment as shown below has been received.
It is in connection with Policy No.
-------------------------
This Application is for: Life Insurance
Face Amount $ ; Prepayment $
-------------- -------------------
New England Variable Life Insurance Company
BY
/s/ Edward N. Wadsworth
Secretary
Countersigned at (City and State)
- --------------------------------------------------------------------------------
on (date)
-----------------------------------------------------------------------
BY
------------------------------------------------------------------------------
The Applicant has read carefully, understands and agrees to all of the limits,
conditions and provisions of this Receipt and Agreement.
Signature of Applicant
- --------------------------------------------------------------------------------
NOTICE: This form must be signed in duplicate. The Company and the Applicant
should keep a signed copy. If a prepayment is made other than on the date of
Part 1 of the Application, an Insurability Statement (Form NEV APP-26) is
required.
<PAGE>
Page 4
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO THE COMPANY; DO NOT MAKE CHECKS
PAYABLE TO THE AGENT OR LEAVE THE PAYEE BLANK.
<PAGE>
Exhibit 1.A. 5.(b)
NEV-40
Rider: Temporary Term Insurance
The Company agrees that the Policy and its Riders will be in force as temporary
term insurance from the Date of Issue to the Policy Date. During that period the
amounts of insurance under the Policy and its Riders will be the same as the
amounts on the Policy Date.
The premium for this Rider is due on the Date of Issue in the amount shown in
the Policy Schedule.
During the temporary term insurance period the Policy will have no cash or loan
value.
This Rider is made a part of the Policy to which it is attached if the Rider is
listed in the Policy Schedule.
New England Variable Life Insurance Company
501 Boylston Street, Boston, Massachusetts
John A. Fibiger Kernan F. King
/s/ /s/
President Secretary
<PAGE>
NEV-45
Rider: Decreasing Term Insurance
The Company agrees that if the Insured dies while this Rider is in force, the
applicable Amount Insured shown in the attached Table of Decreasing Term
Insurance Provided By Rider will be paid.
Renewal
The Rider will be renewed automatically for successive periods of one year from
the Expiry Date to a new expiry date one year later by payment of the monthly
deduction for the Rider. It cannot be renewed beyond the Final Expiry Date shown
in the Policy Schedule.
Term Insurance
The amount of insurance during any rider year is shown in the Table of
Decreasing Term Insurance Provided By Rider. If any insurance provided by this
Rider is exchanged for a new policy, you will be given a new Table of Decreasing
Term Insurance Provided By Rider.
Cost of Rider
The cost of this Rider is charged as part of the Monthly Deductions. The rates
will be set by the Company each year on the policy anniversary based on the
expectations of the Company as to future experience. The rates are guaranteed
for one year. The rates for the Rider will never be more than the rates shown in
the Table of Guaranteed Monthly Insurance Rates per $1,000 of Decreasing Term
Insurance.
Date of Issue
The Date of Issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule.
Rider years will coincide with policy years. If this Rider is issued after the
Date of Issue of the Policy, the first rider year will begin on the policy
anniversary on or next following the Date of Issue of the Rider. The term
insurance provided by this Rider will be in force from the Date of Issue of the
Rider. The effective date of this Rider is its Date of Issue.
<PAGE>
Not Contestable After Two Years
This Rider will not be contestable after it has been in force during the life of
the Insured for two years from its Date of Issue.
Insured: John Alden
Suicide Within Two Years
If the Insured dies by suicide while sane or insane within two years from the
Date of Issue of this Rider: the amount of term insurance will not be paid; and
the amount payable under the Rider will be limited to the monthly deductions
made to pay for the Rider.
Contract
A copy of the application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule. This Rider has no cash value.
Exchange Option
The Owner can from time to time exchange any portion of the insurance then in
force under this Rider for a new policy. The new policy will be issued:
. Without proof that the Insured is insurable;
. With a Face Amount equal to the amount of term insurance exchanged;
. With the same Insured as this Rider;
. Based on the actual underwriting class to which the Insured was assigned
by the Company on the Date of Issue of this Rider;
. On any plan of single life Variable Life insurance, with a level face
amount, issued by the Company on the Policy Date of the new policy;
. On a policy form and at rates in use by the Company on the Policy Date of
the new policy;
. With a current Policy Date and Age of Insured; and
<PAGE>
. Subject to any assignments and limitations to which this Rider is subject,
and to the payment of the first premium for the new policy.
The exchange may be made only with the consent of the Company if:
. The amount exchanged or the amount of term insurance to be continued under
this Rider is less than the Company's published minimum limits of issue;
or
. Any rider is to be attached to the new policy.
The Contestable and Suicide periods of the new policy will be measured from the
Date of Issue of this Rider.
Termination
This Rider will terminate upon the earliest of: (a) termination or maturity of
the Policy; (b) exchange of the entire amount of insurance provided under the
Rider for a new policy; (c) receipt by the Company at its Administrative Office
of written request signed by the Owner of the Policy to terminate the Rider; and
(d) the end of the Final Expiry Date shown for the Rider in the Policy Schedule.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
Table of Decreasing Term Insurance Provided By Rider
Policy Number: Specimen Insured: John Alden
Rider Amount Insured
Year During Rider Year
1 $25,000
2 23,750
3 22,500
4 21,250
5 20,000
6 18,750
7 17,500
8 16,250
9 15,000
10 13,750
11 12,500
12 11,250
13 10,000
14 8,750
15 7,500
16 6,250
17 5,000
18 3,750
19 2,500
20 1,250
H. James Wilson
/s/
Secretary
<PAGE>
Table of Guaranteed Monthly Insurance Rates Per
$1,000 of Decreasing Term Insurance
Policy Number: Specimen Insured: John Alden
Year Rate
1 0.2192
2 0.2342
3 0.2533
4 0.2750
5 0.3000
6 0.3283
7 0.3617
8 0.3958
9 0.4350
10 0.4758
11 0.5225
12 0.5692
13 0.6200
14 0.6733
15 0.7333
16 0.7967
17 0.8700
18 0.9517
19 1.0450
20 1.1500
H. James Wilson
/s/
Secretary
<PAGE>
NEV-46
Rider: Level Term Insurance
The Company agrees that if the Insured dies while this Rider is in force, the
amount of level term insurance under this Rider will be paid.
Renewal
The Rider will be renewed automatically for successive periods of one year from
the Expiry Date to a new expiry date one year later by payment of the monthly
deduction for the Rider. It cannot be renewed beyond the Final Expiry Date shown
in the Policy Schedule.
Cost of Rider
The cost for this Rider is charged as part of the Monthly Deductions. The rates
will be set by the Company each year on the policy anniversary based on the
expectations of the Company as to future experience. The rates are guaranteed
for one year. The rates for the Rider will never be more than the rates shown in
the Table of Guaranteed Monthly Insurance Rates per $1,000 of Level Term
Insurance.
Decrease in Term Amount
The Term Amount can be decreased on the first day of any policy month by written
application to the Company; but only if the Term Amount which will remain after
a decrease is at least $10,000, except with the consent of the Company. The
application for a decrease will be made a part of the Rider.
Date of Issue
The Date of Issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule.
Rider years will coincide with policy years. If this Rider is issued after the
Date of Issue of the Policy, the first rider year will begin on the policy
anniversary on or next following the Date of Issue of the Rider. The term
insurance provided by this Rider will be in force from the Date of Issue of the
Rider. The effective date of this Rider is its Date of Issue.
Not Contestable After Two Years
This Rider will not be contestable after it has been in force during the life of
the Insured for two years from its Date of Issue.
<PAGE>
Insured: John Alden
Suicide Within Two Years
If the Insured dies by suicide while sane or insane within two years from the
Date of Issue of this Rider: the amount of level term insurance will not be
paid; and the amount payable under the Rider will be limited to the monthly
deductions made to pay for the Rider.
Contract
A copy of the application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule. This Rider has no cash value.
Exchange Option
The Owner can exchange this Rider for a new policy. The new policy will be
issued:
. Without proof that the Insured is insurable;
. With a Face Amount equal to the amount of term insurance then provided by
this Rider;
. With the same Insured as this Rider:
. Based on the actual underwriting class to which the Insured was assigned by
the Company on the Date of Issue of this Rider;
. On any plan of single life Variable Life insurance with a level face
amount, issued by the Company on the Policy Date of the new policy;
. On a policy form and at rates in use by the Company on the Policy Date of
the new policy;
. With a current Policy Date and Age of Insured; and
. Subject to any assignments and limitations to which this Rider is subject,
and to the payment of the first premium for the new policy.
Riders can be attached to the new policy only with the consent of the Company.
<PAGE>
The Contestable and Suicide periods of the new policy will be measured from the
Date of Issue of this Rider.
Termination
This Rider will terminate upon the earliest of: (a) termination or maturity of
the Policy; (b) exchange of the Rider for a new policy; (c) receipt by the
Company at its Administrative Office of written request signed by the Owner of
the Policy to terminate the Rider; and (d) the end of the Final Expiry Date
shown for the Rider in the Policy Schedule.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
Table of Guaranteed Monthly Insurance Rates Per $1,000 of Level Term Insurance
Policy Number: Specimen Insured: John Alden
<TABLE>
<CAPTION>
Year Rate
<S> <C>
1 0.2192
2 0.2343
3 0.2533
4 0.2750
5 0.3000
6 0.3283
7 0.3617
8 0.3958
9 0.4350
10 0.4758
11 0.5225
12 0.5692
13 0.6200
14 0.6733
15 0.7333
16 0.7967
17 0.8700
18 0.9517
19 1.0450
20 1.1500
</TABLE>
H. James Wilson
/s/
Secretary
<PAGE>
NEV-47
Rider: Survivorship Four Year Level Term Insurance
The Company agrees that if the Last Death occurs while this Rider is in force,
the amount of Level Term Insurance will be paid as a part of the policy
proceeds.
Cost of Rider
The cost for this Rider is charged as part of the Monthly Deductions. The rates
will be set by the Company each year on the policy anniversary based on the
expectations of the Company as to future experience. The rates are guaranteed
for one year. The rates for the Rider will never be more than the rates shown in
the Table of Guaranteed Monthly Insurance Rates Per $1,000 of Survivorship Four
Year Level Term Insurance.
Date of Issue
The Date of Issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule.
Rider years will coincide with policy years. If this Rider is issued after the
Date of Issue of the Policy, the first rider year will begin on the policy
anniversary on or next following the Date of Issue of the Rider. The term
insurance provided by this Rider will be in force from the Date of Issue of the
Rider. The effective date of this Rider is its Date of Issue.
Not Contestable After Two Years
With respect to statements made in the application, this Rider will not be
contestable after it has been in force, for statements regarding: Insured 1,
during the life of Insured 1 for two years from its Date of Issue; and Insured
2, during the life of Insured 2 for two years from its Date of issue.
Suicide Within Two Years
If either of the lnsureds dies by suicide while sane or insane within two years
from the Date of Issue of this Rider: the amount of Level Term Insurance will
not be paid; and the amount payable under the Rider will be limited to the
monthly deductions made to pay for the Rider.
<PAGE>
Contract
A copy of the application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule. This Rider has no cash value.
Termination
This Rider will terminate upon the earliest of: (a) termination or maturity of
the Policy; (b) receipt by the Company at its Administrative Office of written
request signed by the Owner of the Policy to terminate the Rider; and (c) the
end of the Expiry Date shown for the Rider in the Policy Schedule.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto Edward N. Wadsworth
/s/ /s/
President Secretary
<PAGE>
Table of Guaranteed Monthly Insurance Rates Per $1,000 of Survivorship Four Year
Level Term Insurance
Policy Number: Specimen Insured: John Alden
--------------------------
Year Rate
--------------------------
1 .0006
--------------------------
2 .0019
--------------------------
3 .0035
--------------------------
4 .0055
--------------------------
Edward N. Wadsworth
/s/
Secretary
<PAGE>
NEV-48
Rider: Survivorship Level Term Insurance
The Company agrees that if the Last Death occurs while this Rider is in force,
the amount of Level Term Insurance will be paid as a part of the policy
proceeds.
Cost of Rider
The cost for this Rider is charged as part of the Monthly Deductions. The rates
will be set by the Company each year on the policy anniversary based on the
expectations of the Company as to future experience. The rates are guaranteed
for one year. The rates for the Rider will never be more than the rates shown in
the Table of Guaranteed Monthly Insurance Rates Per $1,000 of Survivorship Level
Term Insurance.
Decrease in Term Amount
The Term Amount can be decreased on the first day of any policy month by written
application to the Company; but only if the Term Amount which will remain after
a decrease is at least $10,000, except with the consent of the Company. The
application for a decrease will be made a part of the Policy.
Exchange Option
The Owner can, before the policy anniversary on which the younger Insured is 80,
exchange this Rider for a new Policy:
. If the ages of the lnsureds meet the Company's issue age requirements on the
Policy Date of the new policy:
. If the Company's underwriting class requirements on the Policy Date of the
new policy can be met; and
. If both Insureds under this Rider are living on the Date of Issue of the new
policy.
The new policy will be issued:
. Without proof that the Insureds are insurable;
. With a Face Amount equal to the amount of Level Term Insurance then provided
by this Rider;
. With the same Insureds as this Rider;
<PAGE>
. Based on the actual underwriting class to which each Insured was assigned by
the Company on the Date of Issue of this Rider;
. On any plan of Variable Survivorship Life insurance with a level face amount
issued by the Company on the Policy Date of the new policy;
. On a policy form and at rates in use by the Company on the Policy Date of the
new policy;
. With a current Policy Date and current ages of insureds; and
. Subject to any assignments and limitations to which this Rider is subject,
and to the exchange cost described below.
The exchange can be made only with the consent of the Company if:
. The amount of Level Term Insurance is less than the Company's published
minimum limits of issue; or
. Any rider is to be attached to the new policy.
The Contestable and Suicide periods of the new policy will be measured from the
Date of Issue of this Rider.
Exchange Cost
The exchange is subject to payment of the first premium for the new policy.
Date of Issue
The Date of Issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule.
Rider years will coincide with policy years. If this Rider is issued after the
Date of Issue of the Policy, the first rider year will begin on the policy
anniversary on or next following the Date of Issue of the Rider. The term
insurance provided by this Rider will be in force from the Date of Issue of the
Rider. The effective date of this Rider is its Date of Issue.
Not Contestable After Two Years
With respect to statements made in the application, this Rider will not be
contestable after it has been in force,
<PAGE>
for statements regarding: Insured 1, during the life of Insured 1 for two years
from its Date of Issue; and Insured 2, during the life of Insured 2 for two
years from its Date of Issue.
Suicide Within Two Years
If either of the lnsureds dies by suicide while sane or insane within two years
from the Date of Issue of this Rider: the amount of Level Term Insurance will
not be paid; and the amount payable under the Rider will be limited to the
monthly deductions made to pay for the Rider.
Contract
A copy of the application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule. This Rider has no cash value.
Termination
This Rider will terminate upon the earliest of: (a) termination or maturity of
the Policy; (b) receipt by the Company at its Administrative Office of written
request signed by the Owner of the Policy to terminate the Rider; (c) exchange
of the Level Term Insurance for a new policy; and (d) the end of the Expiry Date
shown for the Rider in the Policy Schedule.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
Table of Guaranteed Monthly Insurance Rates Per $1,000 of Survivorship Level
Term Insurance
Policy Number: Specimen
Year Rate Year Rate
1 $ .0006 34 $ 2.2448
2 .0019 35 2.5494
3 .0035 36 2.8913
4 .0055 37 3.2761
5 .0080 38 3.7166
6 .0111 39 4.2180
7 .0151 40 4.7750
8 .0199 41 5.3988
9 .0259 42 6.0596
10 .0331 43 6.7460
11 .0419 44 7.4456
12 .0522 45 8.1702
13 .0646 46 8.9418
14 .0790 47 9.7747
15 .0963 48 10.6882
16 .1165 49 11.6882
17 .1410 50 12.7422
18 .1702 51 13.8176
19 .2056 52 14.8807
20 .2482 53 15.9144
21 .2979 54 17.0246
22 .3560 55 18.1139
23 .4220 56 19.1958
24 .4978 57 20.2900
25 .5830 58 21.4397
26 .6817 59 22.8934
27 .7970 60 24.7464
28 .9320 61 27.4231
29 1.0905 62 31.9931
30 1.2737 63 39.9825
31 1.4824 64 54.8157
32 1.7133 65 83.3333
33 1.9683
H. James Wilson
/s/
Secretary
<PAGE>
NEV-71
Rider: Waiver of Monthly Deductions
- Disability of Insured
Insured: John Alden
The Company agrees to waive the monthly deductions for the Policy and all Riders
on receipt of proof that total disability of the Insured:
. Started while this Rider was in force; and
. Has continued for at least six months.
Definitions
"Total disability" means disability of the Insured:
. Which results from sickness or accidental bodily injury; and
. Which continuously prevents the Insured from working for pay or profit.
During the first 36 months of disability, "working" means engaging in the
occupation which was the regular occupation of the Insured when total disability
started; and thereafter means engaging in any occupation for which the Insured
is or becomes fit by education, training or experience.
Total disability may be the result of a sickness which began or an injury which
occurred either before or after this Rider was issued.
"Working for pay or profit" includes attending school or college as a full time
student, if that was the main occupation of the Insured when the disability
started.
Total disability will be presumed if, as the result of a sickness or an
accidental bodily injury, the Insured has a total loss, which begins while this
Rider is in force, of:
. Speech; or sight in both eyes; or hearing in both ears; or
. Use of both hands; or use of both feet; or use of one hand and one foot.
<PAGE>
Total disability will be presumed as long as the loss continues, even if the
Insured is working for pay or profit.
Exclusion
This Rider does not provide benefits for total disability which results from a
sickness or an injury caused by war or an act of war after the Date of Issue of
this Rider.
Monthly Deductions to be Waived
After total disability has continued for at least six months, monthly deductions
will be waived for the period:
. Which starts on the first day of the policy month in which total disability
started; and
. Which ends at the end of the second full policy month after total
disability ends.
No monthly deductions will be waived beyond the policy anniversary on which the
Insured is age 65, unless total disability has been continuous for the full five
year period which ends on that anniversary.
Monthly deductions will not be waived for any period more than one year before
proof of total disability is received by the Company at its Administrative
Office.
The amount of all monthly deductions made after the start of total disability
but before the Company approves a claim for waiver will be added to the cash
value by the Company when a claim is approved.
Proof of Disability
Proof of total disability must be furnished:
. During the life of the Insured; and
. During the period of total disability; and
. Not more than one year after (a) the due date of a premium in
default; or (b) the policy anniversary on which the Insured is age 65; or
(c) the surrender or maturity of the Policy.
The Company has the right to require proof that total disability continues to
exist. This right will be exercised at reasonable times; but after total
disability has continued for two years, proof will not be required more often
than once a year.
<PAGE>
Failure to furnish proof of total disability within the time required will not
void or reduce a claim for benefits if it is shown that:
. It was not reasonably possible to furnish proof within that time; and
. Proof was furnished as soon as reasonably possible.
Policy Benefits
The Policy proceeds will be the same while Monthly Deductions are being waived
as they would be if each Monthly Deduction were paid in cash on the first day of
the policy month.
Premiums For This Rider
Premiums for this Rider are charged as part of the monthly deductions. The
factors for calculating the premiums for the Rider are shown in the Table of
Premium Factors for Waiver of Monthly Deductions.
Date of Issue
The Date of issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule. The
effective date of this Rider is its Date of issue.
Not Contestable After Two Years
This Rider will not be contestable after it has been in force during the life of
the Insured, and without the occurrence of total disability of the Insured, for
two years from its Date of Issue.
<PAGE>
Contract
A copy of the application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule.
Termination
This Rider will terminate upon the earliest of:
. Termination of the Policy;
. Death of the Insured;
. Receipt of the Company at its Administrative Office of written election
signed by the Owner of the Policy to terminate the Rider; and
. Addition of a Benefit for Disability of Covered Insured Rider to the
Policy.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
Policy Number: Specimen Insured: John Alden
Table of Premium Factors For Waiver of Monthly Deductions - Disability of
Insured Rider
The monthly premium for the Waiver Rider is equal to: the current Cost of
Insurance, expense charges and administrative charges for this Policy and the
Cost of any riders, excluding any single life Term Insurance Riders, times the
Factor from Part A of the Table for the attained age of the Insured; plus the
amount of each single life term insurance rider divided by 1000 times the factor
from Part B of the Table for the attained age of the Insured. This premium is
part of the Policy's Monthly Deduction.
Part A
<TABLE>
<CAPTION>
Age Factor Age Factor
<S> <C> <C> <C>
20 .0108 42 .0277
21 .0114 43 .0297
22 .0119 44 .0319
23 .0123 45 .0344
24 .0128 46 .0372
25 .0133 47 .0407
26 .0136 48 .0449
27 .0141 49 .0503
28 .0145 50 .0571
29 .0150 51 .0657
30 .0155 52 .0765
31 .0160 53 .0899
32 .0166 54 .1065
33 .0172 55 .1266
34 .0178 56 .1522
35 .0186 57 .1742
36 .0195 58 .1987
37 .0205 59 .2259
38 .0216 60 .1273
39 .0229 61 .1026
40 .0244 62 .0760
41 .0259 63 .0472
64 .0177
</TABLE>
H. James Wilson
/s/
Secretary
<PAGE>
Part-B
<TABLE>
<CAPTION>
Age Factor Age Factor
<S> <C> <C> <C>
20 .01 42 .02
21 .01 43 .02
22 .01 44 .02
23 .01 45 .03
24 .01 46 .03
25 .01 47 .04
26 .01 48 .04
27 .01 49 .05
28 .01 50 .06
29 .01 51 .08
30 .01 52 .09
31 .01 53 .12
32 .01 54 .15
33 .01 55 .18
34 .01 56 .23
35 .01 57 .27
36 .01 58 .33
37 .01 59 .39
38 .01 60 .23
39 .01 61 .23
40 .02 62 .23
41 .02 63 .16
64 .06
</TABLE>
H. James Wilson
/s/
Secretary
<PAGE>
NEV-78
Rider: Benefits for Disability of Covered Insured
The Company agrees to provide Premium Benefits for the Policy and to waive the
cost of this Rider on receipt of proof that total disability of a Covered
Insured (see Section 1):
. Started while this Rider was in force; and
. Has continued for at least six months.
If there are two Covered lnsureds under this Rider and both are totally
disabled, only one benefit under the Rider will be paid.
Definitions
"Total disability" means disability of a Covered Insured:
. Which results from sickness or accidental bodily injury; and
. Which continuously prevents the Covered Insured from working for
pay or profit.
During the first 36 months of disability, "working" means engaging in the
occupation which was the regular occupation of that Insured when total
disability started; and thereafter means engaging in any occupation for which
that Covered Insured is or becomes fit by education, training or experience.
Total disability may be the result of a sickness which began or an injury which
occurred either before or after this Rider was issued.
"Working for pay or profit" includes attending school or college as a full time
student, if that was the main occupation of the Covered Insured when the
disability started.
Total disability will be presumed if, as the result of a sickness or an
accidental bodily injury, the Covered Insured has a total loss, which begins
while this Rider is in force, of:
. Speech; or sight in both eyes; or hearing in both ears; or
<PAGE>
. Use of both hands; or use of both feet; or use of one hand and one foot.
Total disability will be presumed as long as the loss continues, even if the
Covered Insured is working for pay or profit.
Exclusion
This Rider does not provide benefits for total disability which results from a
sickness or an injury caused by war or an act of war after the Date of Issue of
this Rider.
Benefits
After total disability of a Covered Insured has continued for at least six
months, Premium Benefits will be provided and the cost of this Rider will be
waived for the period:
. Which starts on the first day of the policy month in which total disability
started; and
. Which ends at the end of the second full policy month after total
disability ends.
No benefits will be provided beyond the policy anniversary on which that
disabled Covered Insured is age 65, unless: total disability of that Covered
Insured has been continuous for the full five year period which ends on that
anniversary; or another Insured is a Covered Insured under this Rider and
qualifies for benefits under this Rider.
Benefits will not be provided for any period more than one year before proof of
total disability for that Covered Insured is received by the Company at its
Administrative Office.
When the Company approves a claim, the amount of all Net Premium Benefits will
be added to the Cash Value based on the premium allocation in effect on the date
the claim is approved. The amount of all costs for this Rider made as part of
the Monthly Deduction after the start of total disability but before the Company
approves the claim under this Rider will be added to the Cash Value by the
Company when a claim is approved.
The Policy to which this Rider is attached is intended to qualify as a flexible
premium adjustable life insurance contract under the Internal Revenue Code or
any interpretive regulation or rulings by the Internal Revenue Service. To that
end, premiums on the Policy are limited to an amount no greater than that
allowing the Policy to continue to qualify. Therefore, the portion of any
Premium Benefit that would disqualify the Policy will be paid to you in cash.
<PAGE>
Annual Premium Benefit
The Annual Premium Benefit is used to determine: the premium for this Rider; and
the Premium Benefit.
Each year on the policy anniversary the Company will determine the Annual
Premium Benefit, unless a Covered Insured is totally disabled.
On the Policy Date the Annual Premium Benefit is equal to the lesser of: the
Specified Amount for the Rider shown in Section 1 of the Policy; and the
Guaranteed Death Benefit 1 Premium shown in Section 1.
On the first and second policy anniversaries the Annual Premium Benefit is equal
to the least of: the Specified Amount for the Rider shown in Section 1 of the
Policy; the Guaranteed Death Benefit 1 Premium shown in Section 1; and the
average premium paid since the Policy's Date of issue. For the purpose of this
provision, premiums paid within 20 days prior to a policy anniversary will be
treated as if paid in the next policy year.
Thereafter the Annual Premium Benefit is equal to the least of: the Specified
Amount for the Rider shown in Section 1 of the Policy; the Guaranteed Death
Benefit 1 Premium shown in Section 1; and the average premium paid within the
past three policy years. For the purpose of this provision, premiums paid within
20 days prior to a policy anniversary will be treated as if paid in the next
policy year.
If a Covered Insured is totally disabled, the Annual Premium Benefit is equal to
the last Annual Premium Benefit calculated by the Company prior to the start of
total disability.
Amount of Premium Benefit
The amount of the Premium Benefit will be one twelfth of the Annual Premium
Benefit as described above.
Amount of Net Premium Benefit
The amount of the Net Premium Benefit is equal to: the Premium Benefit; less the
Premium Expense Charge at the rate shown in Section 1 of the Policy.
Proof of Disability
Proof of total disability must be furnished:
. During the life of a disabled Covered Insured; and
. During the period of total disability; and
. Not more than one year after: (a) the date total disability started; or (b)
the policy anniversary on
<PAGE>
which that Covered Insured is age 65; or (c) the surrender or maturity of
the Policy.
The Company has the right to require proof that total disability continues to
exist. This right will be exercised at reasonable times; but after total
disability of that Covered Insured has continued for two years, proof will not
be required more often than once a year.
Failure to furnish proof of total disability within the time required will not
void or reduce a claim for benefits if it is shown that:
. It was not reasonably possible to furnish proof within that time; and
. Proof was furnished as soon as reasonably possible.
Premiums For This Rider
Premiums for this Rider are charged as part of the monthly deductions. The
factors for calculating the premiums for the Rider are shown in the Table of
Premium Factors for Benefits for Disability of Covered Insured Rider.
Date of Issue
The Date of Issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule. The
effective date of this Rider is its Date of issue.
Not Contestable After Two Years
With respect to statements made in the Application, this Rider will not be
contestable after it has been in force, for statements regarding a Covered
Insured, during the life of that Covered Insured, and without the occurrence of
total disability of that Covered Insured for two years from its Date of Issue.
Contract
A copy of the application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule.
Termination
This Rider will terminate upon the earliest of:
. Termination of the Policy;
. Death of the Covered Insureds;
<PAGE>
. Receipt of the Company at its Administrative Office of written election
signed by the Owner of the Policy to terminate the Rider; and
. Addition of a Waiver of Monthly Deductions - Disability of Insured Rider to
the Policy.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
Table of Premium Factors for Benefits for Disability of Covered Insured Rider
The monthly premium for this Rider is equal to: the Annual Premium Benefit for
the policy year divided by 12; times the factor from this Table for policy year.
This premium is part of the Policy's Monthly Deduction.
<TABLE>
<CAPTION>
Policy Policy
Year Factor Year Factor
<S> <C> <C> <C>
1 .0108 23 .0277
2 .0114 24 .0297
3 .0119 25 .0319
4 .0123 26 .0344
5 .0128 27 .0372
6 .0133 28 .0407
7 .0136 29 .0449
8 .0141 30 .0503
9 .0145 31 .0571
10 .0150 32 .0657
11 .0155 33 .0765
12 .0160 34 .0899
13 .0166 35 .1065
14 .0172 36 .1266
15 .0178 37 .1522
16 .0186 38 .1742
17 .0195 39 .1987
18 .0205 40 .2259
19 .0216 41 .1273
20 .0229 42 .1026
21 .0244 43 .0760
22 .0259 44 .0472
45 .0177
</TABLE>
H. James Wilson
/s/
Secretary
<PAGE>
NEV-91
Rider: Aviation Limitation
The Policy to which this Rider is attached is issued by the Company subject to
the provisions of this Rider.
Aviation Limitation
If the death of the Insured is an Aviation Death, as defined below, the Death
Benefit of the Policy will not be paid; and the amount of any insurance benefit
provided by other riders upon the death of the Insured will not be paid. The
policy proceeds will be limited to the Aviation Death Benefit.
Aviation Death
The death of the Insured will be an "Aviation Death" if death results from, or
is contributed to by, flight in or descent from or with any kind of aircraft or
spacecraft. However, it will not be an "Aviation Death" if the Insured was only
a passenger, with no duties in connection with the flight or descent, and the
flight or descent was not for a training or experimental purpose.
Aviation Death Benefit
If the death of the Insured is an Aviation Death, the policy proceeds payable at
the death of the Insured will be limited to the following amounts as of the date
of death:
. The reserve for the Policy; plus
. The reserve for any other riders which provide an Insurance benefit upon
the death of the Insured; less
. Any Policy Loan Balance.
Insured: John Alden
If the death of the Insured is within five years after the Date of Issue of the
Policy, the Aviation Death Benefit will be not less than the following amounts
as of the date of death:
. The total premiums paid for the Policy; plus
<PAGE>
. The total of any unscheduled payments made for the Policy; and less
. The total amount of partial surrenders and partial withdrawals; and less
. Any Policy Loan Balance.
In no event will the Aviation Death Benefit be greater than the policy proceeds
which would be payable in the absence of this Aviation Limitation Rider.
Contract
This Rider is made part of the Policy to which it is attached if the Rider is
listed in the Policy Schedule. (See Section 1 of the Policy.) This Rider has no
cash value.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
NEV-92
Rider: Military and Naval Aviation Limitation
The Policy to which this Rider is attached is issued by the Company subject to
the provisions of this Rider.
Aviation Limitation
If the death of the Insured is an Aviation Death, as defined below, the Death
Benefit of the Policy will not be paid; and the amount of any insurance benefit
provided by other riders upon the death of the Insured will not be paid. The
policy proceeds will be limited to the Aviation Death Benefit.
Aviation Death
The death of the Insured will be an "Aviation Death" if death results from, or
is contributed to by, flight in or descent from or with any kind of military or
naval aircraft or spacecraft. However, it will not be an "Aviation Death" if the
Insured was only a passenger, with no duties in connection with the flight or
descent. and the flight or descent was not for a training or experimental
purpose.
Aviation Death Benefit
If the death of the Insured is an Aviation Death, the policy proceeds payable at
the death of the Insured will be limited to the following amounts as of the date
of death:
. The reserve for the Policy; plus
. The reserve for any other riders which provide an insurance benefit upon
the death of the Insured; less
. Any Policy Loan Balance.
Insured: John Alden
If the death of the Insured is within five years after the Date of Issue of the
Policy, the Aviation Death Benefit will be not less than the following amounts
as of the date of death:
. The total premiums paid for the Policy; plus
<PAGE>
. The total of any unscheduled payments made for the Policy; and less
. The total amount of partial surrenders and partial withdrawals; and less
. Any Policy Loan Balance.
In no event will the Aviation Death Benefit be greater than the policy proceeds
which would be payable in the absence of this Aviation Limitation Rider.
Contract
This Rider is made a part of the Policy to which it is attached if the Rider is
listed in the Policy Schedule. (See Section 1 of the Policy.) This Rider has no
cash value.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
NEV-93-1
Rider: Exclusion from Benefits
Any rider which provides a benefit upon total disability of _________________,
that is attached to Policy Number __________________ is issued subject to the
terms of this Rider (NEV-93-1).
Exclusion from Benefits
Any rider which provides a benefit upon total disability excludes certain risks.
By means of this Rider (NEV-93-1), the Company also excludes the risk and will
not provide benefits if total disability results from:
Contract
This Rider (NEV-93-1) is issued with and made a part of any rider which provides
a benefit upon total disability. None of the provisions of any rider which
provides a benefit upon total disability are changed except as provided in this
Rider.
Acceptance
The Owner accepts any rider attached to the Policy which provides a benefit upon
total disability with full knowledge and understanding of the effect of this
Rider (NEV-93-1).
Date Owner
- ----------------- ---------------------------
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
NEV-94-1
Rider: Exclusion from Benefits
Any rider which provides a benefit upon total disability of _________________,
that is attached to Policy Number ________________ is reinstated subject to the
terms of this Rider (NEV-94-1).
Exclusion from Benefits
Any rider which provides a benefit upon total disability excludes certain risks.
By means of this Rider (NEV-94-1), the Company also excludes the risk and will
not provide benefits if total disability results from:
Contract
This Rider (NEV-94-1) is issued with and made a part of any rider which provides
a benefit upon total disability. None of the provisions of any rider which
provides a benefit upon total disability are changed except as provided in this
Rider.
Acceptance
The Owner accepts any rider attached to the Policy which provides a benefit upon
total disability with full knowledge and understanding of the effect of this
Rider (NEV-94-1).
Date Owner
- ------------------ -----------------------
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
NEV-228-85
Endorsement
As of the Date of Issue, each Policy or Rider provision that contains any
differences based on sex is modified to provide for males and females the same:
. Rates;
. Benefits; or
. Values.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
Robert A. Shafto H. James Wilson
/s/ /s/
President Secretary
<PAGE>
Exhibit 3(i)
New England Variable Life Insurance Company
501 Boylston Street
Boston, MA 02117
December 21, 1993
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 have provided legal advice concerning the preparation of a
registration statement on Form S-6, filed by New England Variable Life Separate
Account the ("Account") and the Company with the Securities and Exchange
Commission under the Securities Act of 1933 with respect to individual Variable
Survivorship Life Insurance Policies (the "Registration Statement").
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 Variable Survivorship 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.
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 8
Notice of Withdrawal Right
[Date]
RE: POL#: 1Z000001
[Name] INSUREDS: [Names]
[Address]
PLAN: VLSURV
PLANNED PREMIUM: $
MODE: Semi-Annually
PLANNED ANNUAL
PREMIUM: $
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 Survivorship 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 Survivorship 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.
The prospectus you received describes the charges and deductions from premium
payments before amounts are allocated to the
<PAGE>
Separate Account. They are a federal tax charge of 1%, a state premium tax
charge of 2.5% and a sales charge of 9% of each premium. NEVLICO currently
intends to waive the sales charge after the first fifteen policy years.
In addition, the prospectus describes certain charges that are deducted from the
cash value each month, including the policy fee, administrative per thousand
charge, minimum death benefit guarantee charge, cost of insurance charges
(including any substandard extra charge) and any rider charges. The prospectus
also describes charges that may be assessed upon surrender, partial surrender or
face amount reduction.
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 Contract Owner:
If, after reading the enclosed notice, you elect to return your contract for
cancellation you must:
1. Sign and date the bottom of the form
2. Mail the form together with your contract (if received by you) to:
New England Variable Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
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 contract 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 contract numbered below for
cancellation and request a full refund of the premium paid by me for the
contract.
- ------------------------- ---------------------------------------
Date Signature of Contract Owner
---------------------------------------
Contract Number
[_] I have not received the contract and should it be received, I will return
it to New England Variable Life Insurance Company
<PAGE>
Exhibit 10
EXPLANATION OF EXCHANGE COST OR CREDIT
NEV-8
The variable life insurance ("VLI") policies issued by New England Variable
Life Insurance Company ("NEVLICO") provide, in accordance with Rule 6e-
3(T)(b)(13)(v)(B) under the 1940 Act, that within 24 months of issuance of a
Policy, while the Policy is in full force, the owner may convert the Policy,
without submission of new evidence of insurability, to a permanent fixed benefit
traditional survivorship life insurance policy offered by the New England Mutual
Life Insurance Company ("TNE"). The new policy will have a fixed amount of
coverage equal to the Face Amount of the original Policy. The new policy may be
issued on any plan of Whole Life survivorship life insurance with a level face
amount issued by TNE on the Policy Date of the original Policy. This conversion
privilege is designed to permit a flexible premium adjustable variable
survivorship policyholder to change his mind ab initio and obtain a fixed
-- ------
benefit policy based on the original issue ages for the original Policy -- just
as if the policyholder had originally decided to buy fixed benefit traditional
survivorship life insurance.
This conversion will be subject to an equitable adjustment to reflect the
difference, if any, in the cash value, cost of insurance deductions, monthly
deductions and gross premium expense loadings under the original policy and the
premium and dividends under the new policy. The policyholder will be charged
(or credited if negative) with the gross premiums less dividends payable to date
on the new policy (both accumulated with interest) less the cash value, cost of
insurance deductions, monthly deductions and gross premium expense loadings
under the original policy; thus it is the policyholder, rather than NEVLICO, who
assumes the investment risk. The cash value used for this purpose will be that
next computed after receipt at NEVLICO's Administrative Office of the policy and
a signed request for conversion. If the sum of these adjustments results in a
credit, NEVLICO will pay the policyholder in cash. If the sum results in a
charge to the policyholder, such charge must be paid by the policyholder on or
before the effective date of the new policy. Any outstanding indebtedness would
have to be paid by the policyholder on or before the effective date of the
conversion.
Once the conversion takes effect, there will be an appropriate transfer for
funds between NEVLICO and TNE to reflect the assumption of the risk by TNE. At
the same time, NEVLICO will transfer assets from the separate account to the
general account in an amount equal to the policy cash value held in the separate
account.
