<PAGE>
As filed with Securities and Exchange Commission on
February 24, 1999
Registration No. 33-65263
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 4
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, ESQ.
Counsel
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
(Name and address of agent for service)
Copies to:
STEPHEN E. ROTH, ESQ.
Sutherland Asbill & Brennan 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 (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on April 30, 1999 pursuant to paragraph (a)(1) of Rule 485
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
Title of Securities Being Registered: Units of Interest in Modified Single
Premium Variable Life Insurance Policies.
<PAGE>
AMERICAN GATEWAY SERIES
Modified Single Premium Variable Life Insurance Policies
Issued by
New England Variable Life Separate Account
Home Office:
New England Life Insurance
Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus offers individual modified single premium variable life
insurance policies (the "Policies") issued by New England Life Insurance
Company ("NELICO").
You may purchase a Single Insured Policy or a Last Survivor Policy. A Single
Insured Policy pays a death benefit on the death of a single named insured. A
Last Survivor Policy pays a death benefit on the last of two named insureds to
die. The death benefit is the greater of the variable death benefit and the
minimum guaranteed death benefit. The variable death benefit amount is the
Policy's cash value divided by the applicable net single premium. The initial
minimum guaranteed death benefit is based on premium payments made.
You may allocate premiums to one or more investment Sub-Accounts of NELICO's
Variable Life Separate Account (the "Variable Account"). Each Sub-Account of
the Variable Account invests in shares of an Eligible Fund of the New England
Zenith Fund. The Eligible Funds are:
Loomis Sayles Small Cap Series Westpeak Stock Index Series
Morgan Stanley International Magnum Loomis Sayles Balanced Series
Equity Series Back Bay Advisors Managed Series
Alger Equity Growth Series Salomon Brothers Strategic Bond
Goldman Sachs Midcap Value Opportunities Series
Davis Venture Value Series Back Bay Advisors Bond Income Series
Salomon Brothers U.S. Government
MFS Investors Series Series
MFS Research Managers Series Back Bay Advisors Money Market
Westpeak Growth and Income Series Series
You may make partial surrenders and Policy loans from time to time, subject
to certain restrictions. In almost all cases, the Policies will be modified
endowment contracts for federal income tax purposes.
A loan, distribution or other amount received from a modified endowment
contract during the life of an insured will be taxed to the extent of any
accumulated income in the policy. Any amounts that are taxable withdrawals
will be subject to a 10% additional tax, with certain exceptions, including an
exception for distributions made on or after the date when you attain age 59
1/2.
The cash value of your Policy will vary daily with the investment experience
of the Eligible Funds.
You may cancel the Policy during the "right to return the Policy" period.
Because of this right, we will invest your initial premium in the Money Market
Sub-Account until 15 days (in most states) after we mail the confirmation for
the initial premium. Thereafter, the cash value will be invested in the Sub-
Accounts according to your instructions.
It may not be advantageous to replace existing insurance with the Policy
described in this prospectus.
The Securities and Exchange Commission has not approved or disapproved the
policies and has not passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense. The Eligible Fund
prospectuses are attached. Please read them and keep them for reference.
The policies have risks, including possible loss of principal. The policies
are not deposits or obligations of, or guaranteed or endorsed by, any
financial institution, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency.
April 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY................................................................... A-4
INTRODUCTION TO THE POLICIES............................................... A-5
The Policies.............................................................. A-5
Comparison to Other Policies and Other Investments........................ A-5
Diagram of Policy......................................................... A-7
Availability of the Policy................................................ A-9
Policy Charges............................................................ A-9
Right to Return the Policy................................................ A-11
Receipt of Communications and Payments at NELICO's Home Office............ A-11
NELICO..................................................................... A-12
PREMIUMS................................................................... A-12
Applying for a Policy..................................................... A-12
Premium Payments.......................................................... A-12
Lapse and Reinstatement................................................... A-13
ALLOCATION OF PREMIUM PAYMENTS AND TRANSFER OF CASH VALUE.................. A-14
Allocation of Premium Payments............................................ A-14
Amount Provided for Investment under the Policy........................... A-14
Transfer Option........................................................... A-15
Dollar Cost Averaging..................................................... A-15
Asset Rebalancing......................................................... A-15
Transfer and Reallocation Requests........................................ A-16
DEATH BENEFIT.............................................................. A-16
How the Death Benefit is Determined....................................... A-16
Minimum Guaranteed Death Benefit.......................................... A-17
Adjustments to the Death Proceeds Payable................................. A-17
Payment of Death Benefit Proceeds......................................... A-17
CASH VALUE AND CASH VALUE BENEFITS......................................... A-17
Cash Value................................................................ A-17
Net Investment Experience................................................. A-18
Loan Privilege............................................................ A-18
Effect of Policy Loan..................................................... A-18
Surrender................................................................. A-19
Partial Surrenders........................................................ A-20
Effect of Partial Surrender on Cash Value and Death Benefit............... A-20
Acceleration of Benefits Rider--Terminal Illness.......................... A-20
Acceleration of Benefits Rider--Long-Term Care............................ A-21
Payment of Proceeds....................................................... A-21
Payment Options........................................................... A-21
CHARGES AND EXPENSES....................................................... A-22
Deductions from Payments.................................................. A-22
Monthly Deduction from Cash Value......................................... A-22
Sales Charges............................................................. A-23
State Premium Tax Charge.................................................. A-23
Charges Under Policies Issued to New York Residents....................... A-23
Cost of Insurance Charge.................................................. A-24
Administrative Charge..................................................... A-25
Monthly Maintenance Charge................................................ A-25
Surrender Charge.......................................................... A-26
Daily Charges Deducted from the Variable Account Assets................... A-26
Charges Deducted from Eligible Fund Assets................................ A-26
Mortality and Expense Risk Charge......................................... A-26
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
Charges for Additional Services.......................................... A-26
Group or Sponsored Arrangements.......................................... A-27
THE VARIABLE ACCOUNT...................................................... A-27
Investments of the Variable Account...................................... A-28
Investment Management.................................................... A-30
OTHER POLICY FEATURES..................................................... A-30
Policy Owner and Beneficiary............................................. A-30
Exchange of Policy....................................................... A-31
NELICO'S DISTRIBUTION AGREEMENT........................................... A-31
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY.......................... A-32
Misstatement of Age or Sex............................................... A-32
Suicide.................................................................. A-32
TAX CONSIDERATIONS........................................................ A-32
Policy Proceeds.......................................................... A-32
Definition of Life Insurance............................................. A-32
Tax Treatment of Loans and Other Distributions........................... A-33
Accelerated Benefits Rider............................................... A-34
Special Treatment of Loans on the Policy................................. A-34
Aggregation of Modified Endowment Contracts.............................. A-34
Other Policy Owner Tax Matters........................................... A-34
Possible Tax Law Changes................................................. A-35
Charge for NELICO's Income Taxes......................................... A-35
MANAGEMENT................................................................ A-36
VOTING RIGHTS............................................................. A-39
RIGHTS RESERVED BY NELICO................................................. A-39
TOLL-FREE NUMBERS......................................................... A-40
REPORTS................................................................... A-40
ADVERTISING PRACTICES..................................................... A-40
LEGAL MATTERS............................................................. A-41
REGISTRATION STATEMENT.................................................... A-41
EXPERTS................................................................... A-41
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, NET CASH VALUES
AND ACCUMULATED PREMIUMS................................................. A-42
APPENDIX B: INVESTMENT EXPERIENCE INFORMATION............................. A-54
APPENDIX C: EXAMPLE OF EFFECT OF NEGATIVE INVESTMENT PERFORMANCE ON
CALCULATION OF SURRENDER CHARGES; EXAMPLE OF ADJUSTMENT TO PREMIUM TAX
CHARGE RESULTING FROM ADDITIONAL PAYMENTS................................ A-76
APPENDIX D: EXAMPLES OF EFFECT OF SURRENDERS AND PARTIAL SURRENDERS ON
OPERATION OF POLICY...................................................... A-77
APPENDIX E: LONG-TERM MARKET TRENDS....................................... A-79
APPENDIX F: DOLLAR COST AVERAGING......................................... A-80
FINANCIAL STATEMENTS...................................................... F-1
</TABLE>
A-3
<PAGE>
GLOSSARY
We have tried to make this prospectus as understandable for you as possible.
However, in explaining how the Policy works, we have had to use certain terms
that have special meanings. These terms are defined below.
Age. For purposes of this prospectus, the age of an insured refers to the
insured's age at his or her last birthday. Joint insureds are assigned the
same "joint equal age," which reflects the anticipated mortality of both
insureds (except in Texas and New Jersey where the age of the younger insured
is used).
Cash Value. A Policy's cash value is the sum of the amount of its cash value
held in the Variable 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.
Face Amount. The amount of the initial premium.
Investment Start Date. This is the latest of the date NELICO receives the
initial premium for the Policy, the date when the last Part II of the Policy
application or the Supplement to the Part I Application is signed, if any is
required, and the Policy Date. It is the date when an amount is first provided
for investment under the Policy.
Issue Age. The age of an insured as of the last birthday on or before the
Policy Date. In the case of a Last Survivor Policy, "issue age" refers to the
joint equal age assigned to both insureds (insureds' ages must be no more than
9 years apart). For a Last Survivor Policy issued in Texas and New Jersey, the
"issue age" is the age of the younger insured (insureds' ages must be no more
than 5 years apart).
Net Cash Value. On any day, the Policy's net cash value is equal to the cash
value for that day, reduced by any outstanding Policy loan balance and also
reduced by any Surrender Charge that would apply on surrender.
Policy Date. If you make the initial premium payment with the application or
during the underwriting process, the Policy Date is generally the later of the
date when the last Part II of the application or the Supplement to the Part I
Application is signed, if any is required, and receipt of the premium payment.
If you do not submit the initial premium with the application or during the
underwriting process, the Policy Date will generally be the date NELICO
receives the initial premium payment for the Policy. The Policy Date is the
date used to determine all future cyclical periods under the Policy, e.g.,
Policy Months and Policy Years.
Policy Loan Balance. Policy loans outstanding plus interest accrued to date.
Preferred Surrender Amount. This amount may be surrendered from the Policy's
cash value during the Surrender Charge Period free of any Surrender Charge.
This amount is equal to the greater of (a) cash value in excess of initial
premium paid (minus any previous partial surrenders attributable to the
initial premium) and (b) 10% of the initial premium paid (minus previous
partial surrenders in that Policy Year).
A-4
<PAGE>
INTRODUCTION TO THE POLICIES
The Policies
The Policies are designed to provide lifetime insurance coverage. They are
not offered primarily as an investment.
Here is a summary of your Policy's basic features. You should read the
entire prospectus for more complete information.
-- Premium Payments. You must pay an initial premium of at least $10,000
unless we consent otherwise. After the first Policy Year, you may make
additional payments, subject to certain restrictions and limitations.
The tax consequences associated with continuing a Policy beyond age 100
of the insured(s) are unclear. A tax advisor should be consulted on this
issue.
-- Investment of Premiums. After an initial period in the Money Market Sub-
Account, your initial premium is invested according to your instructions
in one or more of the Sub-Accounts. Any net additional payments will be
invested in the Sub-Accounts according to your instructions.
-- Available Portfolios. The mutual fund portfolios (Eligible Funds)
available include several common stock funds, including a fund which
invests primarily in foreign securities, three bond funds, one managed
fund, two balanced funds, and a money market fund. (See "Investments of
the Variable Account.")
-- Limits on Allocations. You can allocate your Policy's cash value to a
maximum of 10 Sub-Accounts.
-- Transfers. Fifteen days (longer in certain states) after we mail the
confirmation for your initial premium payment, you may transfer portions
of the Policy's cash value among the Sub-Accounts. Currently, you are
permitted twelve transfers each Policy Year without our consent. We will
always allow at least four transfers each Policy Year without our
consent (except for Policies issued in New York, where the minimum
number of transfers permitted each Policy Year will never be less than
twelve). (See "Transfer Option.")
-- Fluctuating Cash Value. The cash value of your Policy will vary daily
based on the net investment experience of your Policy's Sub-Accounts.
The cash value is not guaranteed. You bear the investment risk.
-- Death Benefit. The death benefit is the greater of the variable death
benefit and the minimum guaranteed death benefit.
-- Policy Loans and Partial Surrenders. A loan privilege is available under
your Policy. We also allow partial surrenders. (See "Loan Privilege" and
"Partial Surrenders.")
-- Federal Income Tax Consequences. Death benefits paid under a life
insurance contract generally are not subject to Federal income tax.
Under current law, undistributed increases in cash value of a life
insurance contract generally are not taxable. In almost all situations,
your Policy will be treated as a modified endowment contract. Pre-death
distributions (including partial surrenders and loans) from a modified
endowment contract are included in income on an income first basis, and
a 10% penalty tax may be imposed on income distributed before you reach
age 59 1/2.
Comparison to Other Policies and Other Investments
In many respects the Policies are similar to fixed-benefit life insurance.
Like fixed-benefit life insurance, the Policies offer a death benefit and
provide a cash value, loan privileges and surrender values.
The Policies are different from fixed-benefit life insurance in that the
death benefit will in most cases, and the cash value will always, vary to
reflect the investment experience of your selected Sub-Accounts.
A-5
<PAGE>
We designed the Policies 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 our assumption of an
actuarially calculated risk.
-- If the net cash value is not sufficient to pay a Monthly Deduction
because there is an excess Policy loan, the Policy will lapse with no
value unless you make a payment. 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 your Policy's cash value
and any additional premiums. These charges include various insurance,
risk, administrative and state premium tax charges.
-- The Variable Account, not you, owns the mutual fund shares.
-- Federal income tax liability on any earnings on the mutual fund
investment is deferred until you receive a distribution from the Policy.
Transfers from one underlying fund portfolio to another do not incur tax
liability under current law.
-- Dividends and capital gains are automatically reinvested.
The chart on the following pages shows how the Policy operates.
A-6
<PAGE>
DIAGRAM OF POLICY
PREMIUM PAYMENTS
--Minimum initial premium required is $10,000.
--You may make additional payments after the first Policy
Year, within limits. See page A-12.
DEDUCTIONS FROM PREMIUMS BEFORE ALLOCATION
-- From initial premium: NONE
-- From additional payments:
--6.5% charge for sales load expense (reduced to 5.10% for
additional payments on Policies with initial premiums of
$2,000,000 or more).
--2.5% charge for state premium tax. See page A-24.
INVESTMENT OF PREMIUMS
-- You direct the allocation of initial premiums and any net additional
payments among Sub-Accounts. See pages A-14 to A-15 for rules and limits
on allocations.
-- The Sub-Accounts invest in corresponding portfolios of the New England
Zenith Fund (Eligible Funds). See page A-28. Eligible Funds are:
Loomis Sayles Small Cap Westpeak Growth and Income Series
Series Westpeak Stock Index Series
Morgan Stanley Loomis Sayles Balanced Series
International Magnum Back Bay Advisors Managed Series
Equity Series Salomon Brothers Strategic Bond
Alger Equity Growth Series Opportunities Series
Goldman Sachs Midcap Value Back Bay Advisors Bond Income Series
Series Salomon Brothers U.S. Government
Davis Venture Value Series Series
Back Bay Advisors Money Market
MFS Investor Series Series
MFS Research Managers
Series
A-7
<PAGE>
CASH VALUE
-- Cash value is equal to the initial premium and any net additional
payments, as adjusted each day the New York Stock Exchange is open to
reflect Sub-Account net investment experience, charges deducted and other
Policy transactions (such as transfers and partial surrenders). See page
A-18.
-- Cash value varies from day to day. There is no minimum guaranteed cash
value. The Policy may lapse if you have a Policy loan. See pages A-18 and
A-19.
-- You can transfer cash value among the Sub-Accounts. See pages A-15 to A-
16 for rules and limits. Policy loans reduce the amount available for
allocations and transfers.
-- Dollar cost averaging and asset rebalancing programs are available. See
pages A-15 and A-16.
-- Cash value is the starting point for calculating certain values under
your Policy, such as the net cash value and the death benefit.
DEDUCTIONS FROM CASH VALUE
-- Monthly Deduction from cash value for:
-- cost of insurance (currently calculated as a percentage of cash value
at an annual rate, depending on the issue age and risk class of the
insured, ranging from:
Single Insured Policy: 0.45% to 1.25% for standard risk class
(0.70% to 1.90% for substandard risk class)
Last Survivor Policy: 0.25% to 1.05% for standard risk class
(0.40% to 1.60% for substandard risk class)
-- Administrative charge, calculated as a percentage of cash value at an
annual rate of 0.35% (currently reducing to 0.10% after ten years).*
-- During first ten Policy Years, sales charge and state premium tax
charge, calculated as percentages of cash value at annual rates of
0.40% and 0.25%, respectively.*
-- Mortality and expense risk charge, calculated as a percentage of cash
value at an annual rate of 0.90%.
-- For Policies with cumulative premiums less than $50,000, a Monthly
Maintenance Charge of $2.50 per month.
--------
* For Policies with initial premiums of $2,000,000 or more, the 0.40%
sales charge and the 0.25% state premium tax charge will be waived, and
the 0.35% Administrative Charge currently will be waived after the
tenth Policy Year.
See page A-22.
-- Investment advisory fees and fund operating expenses are deducted from
the assets of each Eligible Fund. See pages A-10 to A-11.
CASH VALUE BENEFITS DEATH BENEFITS
-- You may take loans for amounts -- Income tax free to Beneficiary.
up to 90% of net cash value at (See "Tax Considerations.")
a net interest rate charge of -- Available as lump sum or under
0.75%. Preferred loans are cur- a variety of payment options.
rently available (with a net -- Greater of variable death bene-
interest rate charge of 0%). fit or minimum guaranteed death
See pages A-18 to A-19 for benefit.
rules and limits.
-- Variable death benefit
-- You may surrender your Policy equals the cash value di-
in full at any time for its net vided by the applicable net
cash value, less the Monthly single premium. See page A-16.
Deduction to the date of sur-
render. A declining sales -- Minimum guaranteed death
charge of up to 8.0% of the benefit is the initial pre-
initial premium will apply to a mium plus additional pay-
full surrender made during the ments, less partial surren-
first nine Policy Years. Fed- ders, as long as there is
eral taxes and a tax penalty not an excess Policy loan.
also may apply. See page A-19. See page A-17. On each five-
year anniversary of the Pol-
-- You may make partial surren- icy Date up to age 75, the
ders. A pro rata portion of the minimum guaranteed death
Surrender Charge may apply on benefit will be reset as the
partial surrenders made during greater of the minimum guar-
the first nine Policy Years. anteed death benefit before
Federal taxes and a tax penalty the recalculation, and the
also may apply. See page A-20 cash value on that date. See
for rules and limits. page A-17. We will reduce
the proceeds paid by any
-- Preferred surrender amounts Policy loan balance.
(with no surrender charges ap-
plicable) are available.
-- Payment options are available.
See page A-21.
A-8
<PAGE>
Availability of fhe Policy
We issue the Policies on the lives of insureds from the ages of 20 to 80. In
the case of a Single Insured Policy, the proposed insured must meet our
underwriting and other requirements for issuance. In the case of a Last
Survivor Policy, both of the insureds must meet those requirements. An insured
may qualify for "simplified underwriting." (See "Applying for a Policy.")
Individuals, and entities who may want to use Policies with certain
retirement plans that qualify for tax benefited treatment under Section 401(a)
(but not Section 401(k)) of the Internal Revenue Code (the "Code") may
purchase the Policies.
Policy Charges
-- Deductions From Initial Premium. We do not deduct any charges from the
initial premium before allocation to the Sub-Accounts, although a
monthly sales charge and state premium tax charge are deducted as part
of the Monthly Deduction during the first ten Policy Years, and a
Surrender Charge applies during the Surrender Charge Period (the first
nine Policy Years).
-- Deductions From Additional Payments. We will deduct the following
charges from an additional payment before allocation to the Sub-Accounts
you select:
-- 6.5% sales charge (reduced to 5.10% for Policies with Initial
Premiums of $2,000,000 or more).
-- 2.5% state premium tax charge.
-- Monthly Deduction Deducted From Cash Value. We deduct a charge from the
cash value on each Monthly Deduction Date after the date we issued your
Policy. This charge equals the total of the charges below, shown at
their current annual rates:
-- Cost of insurance charge,* ranging from:
Single Insured Policy: 0.45% to 1.25% for standard risk class
(0.70% to 1.90% for substandard risk class)
Last Survivor Policy: 0.25% to 1.05% for standard risk class
(0.40% to 1.60% for substandard risk class)
-- 0.35% Administrative Charge (currently reduced to 0.10% after the
first ten Policy Years)**
-- 0.40% sales charge (deducted during the first ten Policy Years
only)**
-- 0.25% state premium tax charge (deducted during the first ten Policy
Years only)**
-- 0.90% mortality and expense risk charge
-- For Policies with cumulative premiums less than $50,000, a $2.50
Monthly Maintenance Charge
- --------
* No cost of insurance charge is deducted on or after the Policy Anniversary
when the insured(s) is age 100.
** For Policies with initial premiums of $2,000,000 or more, we waive the
0.40% sales charge and 0.25% premium tax charge for the initial premium,
and we currently waive the 0.35% Administrative Charge after the tenth
Policy Year.
We calculate each charge, except the $2.50 Monthly Maintenance Charge, as a
percentage of cash value on the Monthly Deduction Date. We deduct each charge
pro rata from the cash value in the Sub-Accounts.
We may change the charges shown above. We guarantee that the current cost of
insurance charges will not exceed the maximum permitted under the 1980
Commissioners' Standard Ordinary Smoker/Nonsmoker Tables (or multiples of or
additives to, in the case of substandard classifications). We may adjust the
rate of the state premium tax charge downward proportionately if cash value
increases as a result of an additional payment. We also will monitor the sales
charge so that the total dollar amount deducted, as part of the Monthly
Deduction and any Surrender Charge, does not exceed 9.0% of the initial
premium. We guarantee that the Administrative Charge will
A-9
<PAGE>
not exceed an annual rate of 0.35% of cash value. The $2.50 Monthly
Maintenance Charge will apply only if cumulative premiums you paid are less
than $50,000.
-- Charges Deducted From Eligible Fund Assets. The value of shares of the
Eligible Funds reflect charges and deductions from assets for investment
advisory services and fund operating expenses.
Annual Series Operating Expenses for the year ended December 31, 1998
(as a percentage of average net assets after expense cap or expense
deferral)*
<TABLE>
<CAPTION>
Loomis Morgan Goldman Westpeak
Sayles Stanley Alger Sachs Davis MFS Growth
Small International Equity Midcap Venture MFS Research and
Cap Magnum Growth Value Value Investor Manager's Income
Series Equity Series Series Series** Series Series*** Series*** Series
------ ------------- ------ -------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... 1.00% .90% .75% .75% .75% .75% .75% .70%
Other Expenses.......... -- .40% .08% .15% .08% .08%
----- ----- ---- ---- ---- ---- ---- ----
Total Operating Ex-
penses................ 1.00% 1.30% .83% .90% .83% .78%
===== ===== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Salomon
Brothers Back Bay Salomon Back Bay
Westpeak Loomis Back Bay Strategic Advisors Brothers Advisors
Stock Sayles Advisors Bond Bond U.S. Money
Index Balanced Managed Opportunities Income Government Market
Series Series Series Series Series Series Series
-------- -------- -------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .25% .70% .50% .65% .40% .55% .35%
Other Expenses.......... .12% .12% .08% .20% .08% .15% .10%
---- ---- ---- ---- ---- ---- ----
Total Operating Ex-
penses................ .37% .82% .58% .85% .48% .70% .45%
==== ==== ==== ==== ==== ==== ====
</TABLE>
- --------
* The Total Operating Expenses are based on the amount of such expenses
applied against assets at December 31, 1998, after giving effect to the
applicable voluntary expense cap or expense deferral. Under an expense cap
or expense deferral, TNE Advisers, Inc., adviser to the Zenith Fund Series,
voluntarily limits the expenses of the Series it advises. For the Loomis
Sayles Small Cap Series, Total Series Operating Expenses take into account
a voluntary cap on expenses by TNE Advisers who will bear all expenses that
exceed 1.00% of average daily net assets. In the absence of this cap or any
other expense reimbursement arrangement, Total Operating Expenses for the
Loomis Sayles Small Cap Series for the year ended December 31, 1998 would
have been 1.10%. Total Operating Expenses for the Westpeak Growth and
Income, Westpeak Stock Index, Back Bay Advisors Managed, Back Bay Advisors
Bond Income and Back Bay Advisors Money Market Series are after giving
effect to a voluntary expense cap. For each of these Series, TNE Advisers
will bear those expenses (other than the management fee) that exceed 0.15%
of average daily net assets. Prior to May 1, 1998, the Goldman Sachs Midcap
Value Series was subject to a voluntary expense cap, under which TNE
Advisers bore those expenses (other than the management fee) that exceeded
0.15% of average daily net assets. Effective May 1, 1998 the Goldman Sachs
Midcap Value Series was subject to the voluntary expense deferral described
below for the six other Series shown, with an annual expense limit of .90%
of net assets. For the eight other Series shown, the Total Operating
Expenses are after giving effect to a voluntary expense deferral. Under the
deferral, expenses that exceed a certain limit are paid by TNE Advisers in
the year in which they are incurred and transferred to the Series in a
future year when actual expenses of the Series are below the limit. The
limit on expenses for each of these Series is: 1.30% of average daily net
assets for the Morgan Stanley International Magnum Equity Series; .90% of
average daily net assets for the Alger Equity Growth, Davis Venture Value
and Goldman Sachs Midcap Value (formerly Loomis Sayles Avanti Growth)
Series; .85% of average daily net assets for the Loomis Sayles Balanced and
Salomon Brothers Strategic Bond Opportunities Series; and .70% of average
daily net assets for the Salomon Brothers U.S. Government Series. Absent
the expense deferral, Total Operating Expenses for these Series for the
year ended December 31, 1998 would have been: 1.40% for Morgan Stanley
International Magnum Equity Series, and .77% for Salomon Brothers U.S.
Government Series. The expense cap and expense deferral arrangements are
voluntary and may
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be terminated at any time. (See the attached New England Zenith Fund
prospectus for more complete information.)
** Goldman Sachs Midcap Value Series bases its annual operating expenses on
the management fee approved by shareholders of the Series that became
effective on May 1, 1998, and other actual expenses for the Series for
1998.
*** MFS Investor Series and MFS Research Managers Series each bases its
estimated annual operating expenses on the management fee approved by the
Zenith Fund Board of Trustees on March , 1999 and on estimated other
expenses for the year ending December 31, 1999.
-- Surrender Charge. If you surrender your Policy, take a partial surrender
from your Policy or if your Policy lapses during the first nine Policy
Years (the Surrender Charge Period), we may deduct a Surrender Charge.
The Surrender Charge is a deferred sales charge. The amount of this
charge decreases over the course of the Surrender Charge Period. The
table below shows the Surrender Charge as a percentage of the portion of
the amount surrendered subject to the Surrender Charge:
<TABLE>
<CAPTION>
Policy Year Charge
----------- ------
<S> <C>
1............................... 8.0%
2............................... 8.0%
3............................... 7.0%
4............................... 6.0%
5............................... 5.0%
6............................... 4.0%
7............................... 3.0%
8............................... 2.0%
9............................... 1.0%
10............................... 0.0%
</TABLE>
We deduct the Surrender Charge from the amount surrendered.
During the Surrender Charge period, a partial surrender is taken first from
the "preferred surrender amount" free of any Surrender Charge and then from
the cash value subject to the Surrender Charge. The "preferred surrender
amount" is equal to the greater of (a) cash value on the date of surrender in
excess of the initial premium paid (minus any previous partial surrenders
attributable to the initial premium) and (b) 10% of the initial premium paid
(minus previous partial surrenders in that Policy Year). If you make a full
surrender during the Surrender Charge Period, the preferred surrender amount
will be deducted from the amount of the full surrender before the Surrender
Charge is calculated.
For more information concerning the Surrender Charge, see "Surrender
Charge."
For more information concerning the charges and expenses associated with
your Policy, see "Charges and Expenses."
Right to Return the Policy
You may cancel the Policy within 10 days (or more in some states) after you
receive the Policy. You can return the Policy to us or your registered
representative. Insurance coverage ends as soon as you return the Policy (as
determined by its postmark, if the Policy is mailed). If you choose to cancel
the Policy, we will refund any premiums paid (or any other amount that is
required in some states) with interest at our current rate.
Receipt of Communications and Payments at NELICO's Home Office
We will treat your request for a Policy transaction, or your submission of a
payment, as received at our Home Office if we receive it there before the
close of regular trading on the New York Stock Exchange on that day. If we
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receive it after that time, or if the New York Stock Exchange is not open that
day, then we will treat it 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. NELICO was formerly a wholly-owned subsidiary of New England
Mutual Life Insurance Company ("New England Mutual"). On August 30, 1996, New
England Mutual merged into MetLife, a mutual insurance company whose principal
office is at One Madison Avenue, New York, NY 10010. MetLife then 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 501 Boylston
Street, Boston, Massachusetts 02116. NELICO's mailing address is: P.O. Box
9116, Boston, Massachusetts 02117.
PREMIUMS
Applying for a Policy
To purchase a Policy you must submit an application and provide evidence of
insurability of the proposed insured(s). You must also pay the initial premium
before we issue the Policy. We will issue a Single Life Policy for an insured
who is between the ages of 20 to 80 and meets our insurability requirements.
We will issue a Last Survivor Policy on two insureds only if each of them is
between the ages of 20 and 80 and each of them meets our insurability
requirements. The ages of the two insureds may not be more than nine years
apart (except in Texas and New Jersey where the ages of the two insureds may
not be more than five years apart).
Before accepting an application, we conduct underwriting to determine
insurability. Depending on the amount of the initial premium and the age of
the insured(s), the insured may qualify for simplified underwriting. To
qualify, a written questionnaire concerning the insured's health must be
completed.
We reserve the right to reject an application or premium for any reason. If
we do not issue a Policy, we will return to you, any premium payment you
submitted plus interest at our current rate. If we issue a Policy, it is
effective on the Policy Date.
Premium Payments
The minimum initial premium we require is $10,000, unless we otherwise
consent. Currently, we will not accept a premium payment that would cause your
policy value, including the value of all other policies you may own with us,
to exceed $5,000,000. You may purchase a Policy with the proceeds of another
life insurance policy, so long as the following conditions are met.
(1) you must complete the application forms.
(2) if the value to be applied from the existing policy is subject to a
policy loan, then as part of the initial premium you must submit an
additional amount so that the unloaned cash value at issue is $10,000. Any
loan remaining cannot exceed 75% of the cash value of the Policy at the
time of issue.
It may not be advantageous to replace existing insurance with a Policy.
You may make additional payments by check or money order until the
insured(s) is age 100, subject to our underwriting requirements (an exception
may apply during a grace period (See "Lapse and Reinstatement")).
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However, the following requirements apply:
(1) Any additional payments you make must be at least $1,000 (except for
a payment made during a grace period (see "Lapse and Reinstatement")).
(2) You may make only one additional payment during each Policy Year
beginning with the second year.
(3) If you have a loan, we will apply any payment we receive first
towards repayment of the loan interest due, second towards repayment of the
loan and last as an additional payment (unless you tell us otherwise, in
writing when you send us the payment). (See Effect of Policy Loan.")
(4) Before we accept an additional payment, we may require satisfactory
evidence of insurability if the additional payment would increase the death
benefit by more than it would increase the cash value.
We reserve the right to reject an additional payment for any reason. If we
accept an additional payment, we will credit your net additional payment,
after deductions for sales and state premium tax charges, to your Policy's
cash value. We will credit the additional payment on the date the payment is
received at our Home Office, if underwriting was not required, or the date
underwriting was completed if required. (See "Allocation of Premiums,"
"Charges and Expenses," and "Receipt of Communications and Payments at
NELICO's Home Office.")
If an additional payment is accepted, a proportional downward adjustment
will be made in the rate of the state premium tax charge deducted as part of
the Monthly Deduction. (See "Charges and Expenses" and Appendix C.)
If you have a Policy loan, it may be more advantageous to repay the loan
than to make an additional payment, because an additional payment is subject
to sales and state premium tax charges, whereas the loan repayment is not
subject to any charges. (See "Loan Privilege" and "Deductions from Premiums.")
Lapse and Reinstatement
As a single premium policy, we designed your Policy to be fully paid-up when
issued. Accordingly, it will not lapse, regardless of adverse investment
experience, unless there are excessive Policy loans. See "Policy Loans." If a
Policy loan is outstanding, and the net cash value on a Monthly Deduction Date
is not enough to cover the entire Monthly Deduction for that Policy Month,
your Policy will be in default.
We will notify you of the amount due to continue your Policy. Your Policy
provides a 62-day grace period from the date the Monthly Deduction was due
(unless otherwise provided in some states) for you to make an additional
payment in an amount sufficient to cover three months of Monthly Deductions
and loan interest due after the notice is sent. During the grace period,
insurance coverage continues under your Policy, but if the insured dies (in
the case of a Last Survivor Policy, if the last surviving insured dies) before
the grace period payment is made, we will deduct from the death proceeds the
portion of the unpaid Monthly Deduction(s) for the period prior to the date of
death.
If your Policy has lapsed, you may reinstate it within seven years after the
date of lapse. If more than seven years have passed, or if you have
surrendered the Policy, you must obtain our consent to reinstate.
Reinstatement in all cases is subject to payment of certain charges described
in the Policy and generally requires evidence of insurability that is
satisfactory to us. If your Policy lapses and is reinstated, the lapsed period
will not count for purposes of determining:
(i) the Surrender Charge on any date after reinstatement;
(ii) the ten-year period during which the Monthly Deduction includes
deductions for sales charges and state premium taxes; and
(iii) the ten-year period during which we deduct higher administrative
charges.
For determining the dates on which we will recalculate the minimum
guaranteed death benefit, the lapsed period will count. If we would have
recalculated the minimum guaranteed death benefit during the lapsed period, we
will recalculate it upon reinstatement.
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ALLOCATION OF PREMIUM PAYMENTS AND TRANSFER OF CASH VALUE
Allocation of Premium Payments
We will allocate your initial premium to the Money Market Sub-Account as of
the Investment Start Date. The Investment Start Date is the latest of: the
Policy Date, the date when the last Part II of the application for the Policy
or the Supplement to the Part I Application is signed, if any is required, and
the date when we first receive the initial premium. We will mail you a
confirmation for the initial premium when we approve your application and
receive your initial premium. Fifteen days after we mail the confirmation, we
will allocate the cash value in the Money Market Sub-Account to the Sub-
Accounts you selected. (For Policies issued in Maryland, this allocation to
your selected Sub-Accounts will occur on the later of fifteen days after the
confirmation has been mailed and 45 days after the date of Part I of the
application.) (See "Investment Options.")
You can allocate your premium to a maximum of 10 Sub-Accounts at any one
time. Currently, we will permit any whole percentage to be allocated to a Sub-
Account.
You select the initial premium allocation when you apply for a Policy. We
will use this allocation for any additional payments, unless you specify
otherwise when submitting the payment. You also may change the allocation
instructions for future payments at any time, provided that your Policy's cash
value is distributed among no more than 10 Sub-Accounts at any one time. The
change will be effective for additional payments accepted on or after the date
when we receive your instructions. You may change your instructions by
telephone or by written request to us. (See "Receipt of Communications and
Payments at NELICO's Home Office.") See "Transfer and Reallocation Requests"
below for information on how to request a transfer or reallocation by
telephone.
Amount Provided for Investment under the Policy
We invest your initial premium as of the Investment Start Date. (For this
purpose only, receipt of the premium means receipt by your registered
representative if the payment is made with the application; otherwise, it
means receipt by us at our Home Office.)
If you pay the initial premium with the application or during the
underwriting process, the Policy Date is the later of the date when the last
Part II of the application or the Supplement to the Part I Application is
signed, if any is required, and receipt of the premium payment. In this case
the Policy Date and investment start date are the same.
If you pay the initial premium with the application, we will cover the
insured under a temporary insurance agreement for a limited period that
generally begins when we receive the premium payment or, if later, the date
when the last Part II of the application or the Supplement to the Part I
Application is signed, if any is required. The maximum amount of coverage
provided is either the amount of insurance applied for or $500,000, whichever
is less, for standard and preferred risks ($250,000 for substandard risks and
$50,000 for persons who are determined to be uninsurable). There may be
variations to these provisions required by state law.
If we issue a Policy, Monthly Deductions begin from the first Monthly
Deduction Date, even if we delayed issuance for underwriting requirements, and
will be for the face amount of the Policy, even if the temporary insurance
coverage during underwriting was for a lower amount.
If you do not submit the initial premium with the application or during the
underwriting process, the Policy Date will generally be the date we receive
the initial premium payment and will be the same as the investment start date.
However, at your request and under limited circumstances, we may assign your
Policy a Policy Date that is prior to the investment start date in this
situation. We will not deduct charges and we will not credit interest to the
Policy for the period between the Policy Date and the investment start date.
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Transfer Option
Fifteen days after we mail the confirmation for the initial premium, you may
transfer your Policy's cash value among the Sub-Accounts. (For Policies issued
in Maryland, you may make Sub-Account transfers beginning with the later of
fifteen days after we mail the initial premium confirmation and 45 days after
the date of Part I of the application.) Currently, we permit you to make
twelve transfers each Policy Year without our consent. You will always be
allowed at least four transfers each Policy Year without our consent (except
for Policies issued in New York, where the minimum number of transfers
permitted each Policy Year will never be less than twelve).
Currently, the minimum transfer amount is $100. (If the full amount of cash
value in a Sub-Account is less than $100, that full amount may be
transferred). The maximum you may transfer is $500,000. We will treat as one
transfer all transfers that you request on the same day for all Policies you
own. If you exceed $500,000 on one day, no amount of the transfer will be
made.
A transfer will be effective as of the date when we receive the transfer
request at our Home Office. (See "Receipt of Communications and Payments at
NELICO's Home Office.")
For transfers that we determine are based on "market-timing" (e.g.,
transfers under different Policies that are being requested under Powers of
Attorney with a common attorney-in-fact or that are in our determination based
on the recommendation of a common investment adviser or broker-dealer), we
will allow one transfer every 30 days. Each transfer is subject to a $500,000
maximum. We will treat as one transfer all transfers requested under different
Policies that are being requested under Powers of Attorney with a common
attorney-in-fact or that are, in our determination, based on the
recommendation of a common investment adviser or broker-dealer. If a transfer
is executed under one Policy and, within the next 30 days, a transfer request
for another Policy is determined by us to be related, the second transfer
request will not be made.
See "Transfer and Reallocation Requests" for information regarding transfers
made by written request and by telephone.
Dollar Cost Averaging
We offer an automated transfer privilege called dollar cost averaging. We
will transfer the same dollar amount to selected Sub-Accounts each month. Over
time, more purchases of Eligible Fund shares are made when the value of those
shares is low, and fewer shares are purchased when the value is high. As a
result, you may achieve a lower than average cost of purchases over the long
term. This plan of investing allows you to take advantage of investment
fluctuations, but does not assure a profit or protect against a loss in
declining markets.
Under this feature you may request a transfer of a certain amount of your
cash value on any selected business day of each month (or if not a day when
the New York Stock Exchange is open, the next such day), from any one Sub-
Account to one or more of the other Sub-Accounts. The minimum transfer amount
is $100 that must be transferred to each Sub-Account that you select under
this feature. Currently, we do not count transfers made under the dollar cost
averaging program against the 12 transfers that may be made each year. You may
select a dollar cost averaging program when you apply for the Policy or at a
later date by contacting our Home Office. You may not participate in the
dollar cost averaging program while you are participating in the asset
rebalancing program. You may cancel your use of the dollar cost averaging
program at any time prior to the monthly transfer date. Transfers will
continue until you notify us to stop making transfers or there no longer is
sufficient cash value in the Sub-Account from which you are transferring.
Asset Rebalancing
We offer an asset rebalancing program for cash value. Cash value allocated
to the Sub-Accounts can be expected to increase or decrease at different rates
due to market fluctuations. An asset rebalancing program automatically
reallocates your cash value among the Sub-Accounts each quarter to return the
allocation to the
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allocation percentages you specify. Asset rebalancing is intended to transfer
cash value from those Sub-Accounts that have increased in value to those that
have declined, or not increased as much, in value. Over time, this method of
investing may help you "buy low and sell high," although there can be no
assurance that this objective will be achieved. Asset rebalancing does not
guarantee profits, nor does it assure that you will not have losses.
You may select an asset rebalancing program when you apply for the Policy or
at a later date by contacting our Home Office. You specify the percentage
allocations to which your cash value will be reallocated among the Sub-
Accounts. You may not participate in the asset rebalancing program while you
are participating in the dollar cost averaging program. On the last day of
each calendar quarter on which the New York Stock Exchange is open, we will
transfer cash value among the Sub-Accounts to the extent necessary to return
the allocation to your specifications. Asset rebalancing will continue until
you notify us in writing or by telephone at our Home Office. Currently, we
don't count transfers made under an asset rebalancing program for purposes of
the transfer rules described above.
Transfer and Reallocation Requests
You may request a Sub-Account transfer or change the allocation of net
additional payments by:
. written request to our Home Office;
. fax (617-578-5412);
. telephone (1-877-633-7785); or
. contacting your registered representative.
Requests for transfers (up to our current limit each Policy Year) or
reallocations by telephone will be automatically permitted. We will use
reasonable procedures, such as requiring certain identifying information from
you, 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 us 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.
DEATH BENEFIT
If the insured under a Single Insured Policy dies, we will pay a death
benefit to the beneficiary. In the case of a Last Survivor Policy, we will pay
a death benefit on the last of the two insureds to die.
How The Death Benefit Is Determined. The death benefit payable on any day is
the greater of the variable death benefit and the minimum guaranteed death
benefit. We determine the variable death benefit by dividing your Policy's
cash value by the applicable net single premium (per $1.00 of death benefit)
calculated as provided in the Internal Revenue Code. We base net single
premiums on the age, sex and smoker/nonsmoker status of the insured at the
time of the calculation. Net single premiums increase over time resulting in a
decreasing death benefit for the same amount of cash value. Set forth below
are net single premiums for selected ages of male and female, nonsmoker
insureds.
<TABLE>
<CAPTION>
Net Single Premium
-------------------------------
Age Male Nonsmoker Female Nonsmoker
--- -------------- ----------------
<S> <C> <C>
30.............. .19992 .17824
40.............. .27992 .24926
50.............. .38723 .34338
60.............. .52085 .46422
70.............. .66655 .61117
</TABLE>
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As an example of how the variable death benefit is calculated, assume that
the cash value of a Policy held by a 40-year-old male nonsmoker is $10,000.
The variable death benefit would be $35,724 ($10,000 divided by the applicable
net single premium of .27992).
Minimum Guaranteed Death Benefit
The minimum guaranteed death benefit guarantees, regardless of investment
performance, that as long as there is not an "excess Policy loan," the death
benefit will never be less than the initial premium paid plus additional
payments, less adjustments for partial surrenders. On the Policy Date, the
minimum guaranteed death benefit is equal to the initial premium paid.
Thereafter, we will increase the minimum guaranteed death benefit by each
additional payment, and decrease the benefit proportionately by any partial
surrenders. We will base the reduction at the time of a partial surrender on
the ratio of the cash value after the surrender to the cash value before the
surrender. (See Appendix D for an example illustrating the effect of a partial
surrender on a Policy.) At the end of the fifth Policy Year and every five
years thereafter until the insured is (or insureds are) age 75, we will
recalculate the guaranteed death benefit. On each of these days, the
guaranteed death benefit is equal to the greater of: (i) the guaranteed death
benefit before the recalculation; and (ii) the cash value on the date of
recalculation.
If, however, an "excess Policy loan" exists, the Policy may terminate. (See
"Loan Privilege" for the definition of "excess Policy loan.")
Adjustments to the Death Proceeds Payable
The death proceeds actually paid to the beneficiary are equal to the amount
of the death benefit determined on the date of the insured's death, reduced by
any Policy loan balance as of that date and by a pro rata portion of the
Monthly Deduction.
We may also adjust the death proceeds if you misstated an insured's age in
the application, if death results from the insured's suicide (or an insured's
suicide under a Last Survivor Policy) within two years (or less in some
states) from the date the Policy was issued or if limits on the death benefit
are imposed by rider. (See "Limits to NELICO's Right to Challenge the
Policy.")
Payment of Death Benefit Proceeds
We will pay death benefit proceeds in one sum unless you or the payee choose
to put all or part of the proceeds under a payment option. (See "Payment of
Proceeds" and "Payment Options.") We may also pay death benefit proceeds under
our Access Plus program. Under this program, we will establish an Access Plus
account 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.
CASH VALUE AND CASH VALUE BENEFITS
Cash Value
Your Policy's cash value includes its cash value in the Variable Account
and, if you have an outstanding Policy loan, in our general account as a
result of the loan. (See "Loan Privilege.") The cash value reflects:
-- premium payments
-- the net investment experience of the Policy's Sub-Accounts
-- interest credited on amounts held in the general account as a result of
a loan
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-- amounts deducted for Policy charges (including Monthly Deductions and
any Surrender Charge that applies if you make a partial surrender)
-- partial surrenders
-- transfers among the Sub-Accounts.
The net cash value is the cash value on any day, reduced by any loan balance
and any applicable Surrender Charge. (See "Loan Privilege," "Surrender
Charge," and "Monthly Deduction Deducted from Cash Value.") If you surrender
your Policy, we will reduce the net cash value by the applicable portion of
the Monthly Deduction for the period from the last deduction to the date of
surrender.
We adjust the amount provided for investment in the Policy (i.e., the cash
value) to reflect the net investment experience of the Sub-Accounts. The
Policy's cash value in the Variable Account may increase or decrease daily
depending on the net investment experience of the Sub-Accounts. Unfavorable
investment experience can reduce the net cash value to zero. You bear the
entire investment risk with respect to cash value in the Variable Account.
Net Investment Experience. The net investment experience of the Policy's
Sub-Accounts will affect the Policy's cash value and, in some cases, the death
benefit. We determine the net investment experience of the Sub-Accounts 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 is based on the investment experience of the underlying
Eligible Fund shares for the same period. (See "Daily Charges Deducted from
Variable Account Assets" and "Charges Deducted from Eligible Fund Assets.")
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.
Loan Privilege
You may borrow all or part of the Policy's "loan value" once fifteen days
have passed after we mail the confirmation for the initial premium. (For
Policies issued in Maryland, you may take a loan once fifteen days from the
initial premium confirmation mailing and 45 days from the date of Part 1 of
the application have passed.) We will make the loan as of the date when we
receive a loan request at our Home Office. (See "Receipt of Communications and
Payments at NELICO's Home Office.") You should contact our 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 90% (more in some states) of: the
Policy's cash value minus the surrender charge. The loan value available is
reduced by any outstanding loan plus interest.
A Policy loan may result in adverse tax consequences. (See "Tax
Considerations.")
Effect of Policy Loan. When we pay Policy loan proceeds to you, we take cash
value in the amount of the loan from the Sub-Accounts and transfer it to our
general account as collateral for the loan. When you make a loan repayment, we
transfer cash value held as collateral from the general account back to the
Sub-Accounts. This increases the cash value in the Sub-Accounts by the amount
of the repayment. Unless you specify a different allocation, we transfer cash
value for a Policy loan from the Sub-Accounts in proportion to the cash value
in each. We allocate loan repayments to the Sub-Accounts in proportion to the
cash value in each, unless you request otherwise.
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The interest rate charged on Policy loans is 6.0% per year. Interest accrues
daily and is due on the Policy Anniversary. If not paid at that time, we add
the interest accrued on the loan to the loan, and we deduct an amount equal to
the unpaid interest from the Policy's cash value in the Sub-Accounts in
proportion to the amount in each.
The amount we take as collateral for a loan earns interest at not less than
a 5.25% rate per year. Currently, on preferred loans, the rate we credit is a
6.0% annual rate (guaranteed in some states). "Preferred loans" are loans that
represent an amount less than or equal to the excess of cash value over
premiums paid (as adjusted for any partial surrenders). (You should consult a
tax advisor as to the tax consequences associated with a preferred loan.) We
credit interest earned on amounts held in our general account as collateral
for a loan to the Policy's Sub-Accounts on the Policy Anniversary, 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 loan, even if it is repaid. In addition, we reduce any proceeds payable
under a Policy by the amount of any outstanding loan plus accrued interest.
While a loan is outstanding, we apply your payments as follows:
(1) as a repayment of Policy loan interest due,
(2) then as repayment of a Policy loan, and
(3) last as an additional payment (if no previous additional payment has
been made in that Policy Year), unless you designate otherwise in writing
to us
If a previous additional payment has been made in that Policy Year, the
portion of the payment in excess of any outstanding Policy loan balance will
be returned. If a Policy loan is outstanding, it may be more advantageous to
repay the loan than to make an additional payment, because an additional
payment is subject to sales and state premium tax charges, and the loan
repayment is not subject to charges.
If a Policy loan is outstanding, and the net cash value on a Monthly
Deduction Date is not enough to cover the entire Monthly Deduction for the
month, we will notify you that the Policy is going to terminate unless a
sufficient payment is made within the 62-day grace period. (This situation is
referred to as an "excess Policy loan.") The Policy will terminate without
value 62 days after the notice is mailed (unless otherwise provided in some
states) unless you pay us the excess amount within that time. (See "Lapse and
Reinstatement.") If the Policy lapses with a loan outstanding, adverse tax
consequences may result. (See "Tax Considerations" below.)
If you purchase a Policy with the proceeds of another life insurance policy
that has an outstanding policy loan (see "Premium Payments"), the following
conditions must be met. First, you must complete appropriate application
forms. Second, if the value to be applied from the existing policy is subject
to a policy loan, then as part of the initial premium you must submit an
additional amount so that the unloaned cash value at issue is $10,000. Any
loan remaining against the new Policy cannot exceed 75% of the cash value of
the Policy at issue. It may not be advantageous to replace existing insurance
with a Policy.
Surrender
You may surrender a Policy for its net cash value, less the applicable
portion of the Monthly Deduction to the date of surrender, at any time while
the insured (or at least one insured under a Last Survivor Policy) is living.
Your request must conform to our administrative procedures. We determine the
net cash value of the surrendered Policy as of the date when we received the
surrender request at our Home Office. (See "Receipt of Communications and
Payments at NELICO's Home Office.") The net cash value equals the cash value,
reduced by any Policy loan balance and also reduced by any applicable
Surrender Charge (see "Surrender Charge"). Upon surrender, we will deduct the
applicable portion of the Monthly Deduction from net cash value. (See "Monthly
Deduction Deducted from Cash Value.") You may elect in writing to have all or
part of the surrender amount applied to a payment option. (See "Payment
Options.") A surrender may result in adverse tax consequences. (See "Tax
Considerations.")
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Partial Surrenders
You may make a partial surrender of cash value once fifteen days have passed
after we mail the confirmation for the initial premium payment. (For Policies
issued in Maryland, you may make partial surrenders once fifteen days from the
confirmation mailing and 45 days from the date of Part 1 of the application
have passed.)
In each Policy Year, we will limit partial surrenders, except with our
consent to: 20% of the net cash value on the day the first partial surrender
is made for the Policy Year; or, if less, the Policy's loan value less the
amount of any Policy loan balance on that day. Currently, we do not limit the
maximum amount of a partial surrender as long as the cash value immediately
after the partial surrender is at least $10,000. The minimum amount for a
partial surrender is $500.
A partial surrender made in excess of the preferred surrender amount may be
subject to a Surrender Charge. (See "Surrender Charge" and "Monthly
Deduction.") If any charges apply, we will deduct these charges from the
amount requested to be surrendered. There are no limits on the number of
partial surrenders that may be made during a Policy Year. However, there are
tax consequences. (See "Tax Considerations.")
Effect of Partial Surrender on Cash Value and Death Benefit. A partial
surrender reduces the minimum guaranteed death benefit based on the ratio of
the cash value immediately after the partial surrender to the cash value just
before the partial surrender. See "Death Benefit" and Appendix D.
You cannot reinvest the net cash value paid on a partial surrender in the
Policy except as additional payments, which are subject to the charges
described under "Charges and Expenses."
The amount paid to you as the result of a partial surrender is equal to the
amount requested less any amount deducted for the Surrender Charge. We will
deduct the applicable portion of the Monthly Deduction (based on the portion
of the Policy Month elapsed and on the proportion of cash value withdrawn)
from the cash value remaining. (See "Surrender Charge" and "Monthly Deduction
Deducted from Cash Value.") We will determine the amount of net cash value
paid on a partial surrender as of the date when we receive a request
conforming to our administrative procedures at our Home Office. For more
information about our administrative procedures, please contact your
registered representative or our Home Office. (See "Receipt of Communications
and Payments at NELICO's Home Office," "Payment of Proceeds," and "Payment
Options.")
Unless you specify a different allocation, the partial surrender reduces the
Policy's cash value in the Sub-Accounts in proportion to the amount of cash
value in each.
Acceleration of Benefits Rider--Terminal Illness
We offer a rider benefit that allows you to receive an accelerated payment
of benefits. This advance payment of benefits is available where certain
special circumstances exist, as described briefly below.
If the insured is diagnosed as terminally ill, as defined in the rider, you
may request this benefit. (In the case of a Last Survivor Policy, both
insureds, or the surviving insured, must be diagnosed as terminally ill in
order to request the benefit.) The rider is available in states where it has
been approved.
We calculate the accelerated benefit using the Policy's Eligible Proceeds,
multiplied by the Payout Factor. The Policy's Eligible Proceeds are equal to
the death benefit, less an amount to cover Monthly Deductions that would be
made in the event of death. In determining the Payout Factor, we may take into
consideration the life expectancy, age, gender and underwriting class of the
insured as well as other factors. The Payout Factor used will be determined by
us on the date we receive a written request for an accelerated benefit, at our
Home Office. The rider lists various items which may affect the Payout Factor.
If we accept a request for this benefit, we will notify you of the Payout
Factor and payment terms which will apply to the benefit.
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We will reduce the accelerated benefit payment made to you by any
outstanding Policy loan balance. Our consent is necessary to obtain payment of
a partial accelerated benefit.
Exercise of the accelerated benefits rider cannot be reversed and is subject
to a number of conditions as set forth in the rider, including evidence
satisfactory to us.
Acceleration of Benefits Rider--Long-Term Care
We may offer in the future a second rider benefit that will allow you to
receive an accelerated payment of benefits where certain special circumstances
exist, as described briefly below. These benefits will depend on certain
conditions contained in the rider.
We expect that payment of the rider benefit will be available if one or
more of the insured(s) is receiving qualified long-term care services, as
defined in the rider and by the Internal Revenue Code. The benefit may be
subject to discounting and charges. Payment will be subject to evidence
satisfactory to us.
We will make this accelerated benefits rider available to you only if: (1)
your state insurance department has approved the rider, (2) we believe that
the rider will meet the definition of an accelerated death benefit for Federal
income tax purposes and (3) we believe that the rider will not jeopardize the
qualification of the Policy as life insurance under Federal income tax law.
Payment of Proceeds
We will ordinarily pay any surrender, partial surrender, loan or death
benefit proceeds from the Sub-Accounts within seven days after we receive at
the Home Office a request, or proof of death of an insured, in a form
satisfactory to us. (See "Receipt of Communications and Payments at NELICO's
Home Office.") However, we may delay payment (except when a loan is made to
pay a premium to us) or transfers from the Sub-Accounts: (i) if the New York
Stock Exchange is closed other than on a weekend or holiday, 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) if the SEC orders the Variable Account or orders the
Zenith Fund or its successor or any other Eligible Fund to postpone payment or
transfer of variable benefits.
We may withhold payment of surrender, partial surrender or loan proceeds if
those proceeds are coming from a Policy Owner's check that has not yet
cleared. In those cases, we will process the surrender or loan up to the
amount of Policy values for which the Policy Owner has made full payment. We
will pay the balance of the surrender, partial surrender or loan proceeds when
the Policy Owner's check has cleared. We may also delay payment if we consider
whether to contest the Policy. We will pay interest on the death benefit
proceeds from the date they become payable to the date they are paid. (See
"Payment Options.")
Payment Options
We will pay the Policy's death benefit and any partial surrender or
surrender of net cash value in one sum unless you or the payee choose 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 us. You can make,
change or revoke the selection before the death of the insured. The payment
options available are fixed benefit options only, and are not affected by the
investment experience of the Eligible Funds. 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,
we may restrict withdrawal rights.
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The following payment options are available:
(1) Income for a Specified Number of Years. We pay proceeds in monthly
installments for up to 30 years, with interest at a rate not less than
3.5% a year, compounded yearly. Additional interest that we pay for any
year will be added to the monthly payments for that year.
(2) Life Income. We pay proceeds 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.
(3) Life Income with Refund. We pay proceeds 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.
(4) Interest. We hold proceeds for the life of the payee or another agreed
upon period. We pay interest of at least 3.5% a year monthly on the
proceeds or add the interest to the principal annually. At the death of
the payee, or at the end of the period agreed to, we will pay the
balance of principal and any interest in one sum.
(5) Specified Amount of Income. We pay proceeds plus accrued interest of at
least 3.5% a year in an amount and at a frequency elected until we have
paid total proceeds. We will pay any amounts unpaid at the death of the
payee in one sum.
(6) Life Income for Two Lives. We will pay proceeds in equal monthly
installments (i) while either of two payees is living, (ii) for the
longer of the life of the surviving payee or 10 years, or (iii) while
the two payees are living and, after the death of one payee, we will
pay two-thirds of the monthly amount for the life of the surviving
payee.
You must have our consent to use of an option if the installment payments
would be less than $20.
CHARGES AND EXPENSES
The amount of a charge may not necessarily correspond to the costs of
providing the services or benefits that are implied by the name of the charge
or that are associated with the particular Policy. For example, the sales
charge may not fully cover all of the sales and distribution expenses we
actually incur, and proceeds from other charges, including the mortality and
expense risk charge, may be used in part to cover those expenses.
Deductions from Payments. We do not deduct charges from the initial premium
before allocation to the Sub-Accounts.
We will deduct the following charges from an additional payment before
allocation to the Sub-Accounts:
-- 6.5% sales charge (reduced to 5.10% for Policies with initial premiums
of $2,000,000 or more).
-- 2.5% state premium tax charge.
Monthly Deduction from Cash Value. We deduct a charge from the cash value on
each Monthly Deduction Date after the Policy Date. This Monthly Deduction
includes the following charges, shown below at their current annual rates:
-- Cost of insurance charge,* currently ranging from:
Single Insured Policy: 0.45% to 1.25% for standard risk class (0.70%
to 1.90% for substandard risk class)
Last Survivor Policy: 0.25% to 1.05% for standard risk class (0.40%
to 1.60% for substandard risk class)
-- 0.35% Administrative Charge (currently reduced to 0.10% after the first
ten Policy Years)**
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<PAGE>
-- 0.40% sales charge (deducted during the first ten Policy Years only)**
-- 0.25% state premium tax charge (deducted during the first ten Policy
Years only)**
-- 0.90% mortality and expense risk charge
-- For Policies with cumulative premiums less than $50,000, a $2.50 Monthly
Maintenance Charge also is included in the Monthly Deduction.
- --------
* We do not deduct the cost of insurance charge on or after the Policy
Anniversary when the age of the insured(s) is equal to 100.
** For Policies with initial premiums of $2,000,000 or more, we will waive the
0.40% sales charge and 0.25% premium tax charge, and we will waive the
0.35% Administrative Charge currently after the tenth Policy Year.
We calculate each charge, except the $2.50 Monthly Maintenance Charge, as a
percentage of cash value (including cash value transferred to the general
account as collateral for Policy loans). We first calculate all charges, other
than the cost of insurance charge, based on the cash value on the Monthly
Deduction Date (before we deduct monthly charges, but reflecting daily charges
deducted from Eligible Fund Assets), and then deduct the charges. We then
calculate the cost of insurance charge based on the cash value for that date,
as reduced by all other charges deducted that day. We deduct the Monthly
Deduction pro rata from the cash value in the Sub-Accounts.
Sales Charges. We deduct a sales charge calculated as a percentage of cash
value at an annual rate of 0.40%. In no event will the aggregate amount
deducted as part of the Monthly Deduction for sales charges plus the Surrender
Charge exceed 9% of the initial premium. We currently waive the charge:
. for Policies with initial premiums of $2,000,000 or more
. after the first ten policy years (on amounts attributable to the
initial premium)
If a Policy lapses and is reinstated, the lapsed period will not count
towards the ten-year period during which the sales charges apply.
State Premium Tax Charge. We deduct this charge from your cash value in the
Sub-Accounts for the first ten Policy Years, as part of the Monthly Deduction.
The annual rate of this charge is 0.25% of cash value. Because net additional
payments will have the immediate effect of increasing the cash value, the
monthly charge for state premium tax is proportionately adjusted downward when
you make an additional payment. Appendix C provides an example illustrating
the effect of such an additional payment.
For Policies with initial premiums of $2,000,000 or more, we will waive the
0.25% monthly charge for premium tax.
If a Policy lapses and is reinstated, the lapsed period will not count
towards the ten-year period during which the Monthly Deduction includes a
deduction for state premium taxes.
We designed the state premium tax charge to reimburse us for state premium
taxes and administrative expenses. Premium taxes vary from state to state and
the 2.5% charge reflects an average. Administrative expenses covered by this
charge include those related to premium tax and certain other state filings.
Charges under Policies Issued to New York Residents. The charges described
above apply to Policies issued to New York residents except as follows:
-- We do not deduct any sales or premium tax charge from additional
payments;
-- The sales charge deducted as part of the Monthly Deduction is 0.65%
(deducted for the first ten Policy Years only);
A-23
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-- The administrative charge deducted as part of the Monthly Deduction is
0.10% during the first ten Policy Years, and 0.35% thereafter, and
-- We base the surrender charge on the initial premium and each additional
payment made within the first nine years.
We limit sales and surrender charges so that any surrender charges you pay,
plus 61.5385% of the sales charge on your initial premium, is never more than
9% of all the payments you make under this Policy.
Your preferred surrender amount is the greater of (a) cash value on the
surrender date in excess of your total premiums paid (less previous partial
surrenders) and (b) 10% of premiums paid (less partial surrenders in that
Policy Year.
Cost of Insurance Charge. Until the Policy Anniversary when insured(s) reach
age 100, we deduct this charge from the cash value in the Sub-Accounts as part
of the Monthly Deduction.
The cost of insurance charge covers the cost of providing insurance
protection under your Policy. Currently, the amount of this charge is based on
the risk class and issue age of the insured(s). (It does not currently vary by
sex of the insured(s), although it may in the future.) We assign insureds to
risk classes based on underwriting conducted when we receive an application
for a Policy. The risk classes are:
-- standard nonsmoker
-- standard smoker
-- substandard nonsmoker
-- substandard smoker
Once we issue a Policy, an insured's risk class does not change except in the
following circumstances. If you submit an additional payment that, if
accepted, will have the effect of increasing the death benefit, acceptance of
the payment is subject to underwriting review to determine whether the
insured(s) qualify for the same or a better risk class.
If the new risk class is better and has lower cost of insurance rates than
the original risk class, the risk class for the additional payment will be
used for cost of insurance charges under the entire Policy. If, however, the
new risk class has higher cost of insurance rates than the original risk
class, we will decline the additional payment.
Currently, we calculate the cost of insurance charge for a Policy as a
percentage of the cash value on the Monthly Deduction Date. For a Single Life
Policy, we calculate the current charge based on whether the issue age is 70
or less, or over 70, is a smoker or non-smoker, and has been assigned to a
standard or substandard risk class. The current monthly rates for these
classes are equivalent to the annual percentage rates shown in the following
table:
<TABLE>
<CAPTION>
Rating Class and Issue Age Nonsmoker Smoker
-------------------------- --------- ------
<S> <C> <C>
Standard issue age 70 or less............................... 0.45% 0.75%
Standard over issue age 70.................................. 0.85% 1.25%
Substandard issue age 70 or less............................ 0.70% 1.15%
Substandard over issue age 70............................... 1.30% 1.90%
</TABLE>
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<PAGE>
In the case of a Last Survivor Policy, we calculate the current charge based
on whether the joint equal issue age is 70 or less or over 70, (except in
Texas and New Jersey in which case the age of the younger insured is used),
the smoker/nonsmoker status of each insured, and whether at least one insured
is substandard.
<TABLE>
<CAPTION>
Nonsmoker Nonsmoker Smoker
Rating Class and Issue Age Nonsmoker Smoker Smoker
-------------------------- --------- --------- ------
<S> <C> <C> <C>
Standard issue age 70 or less..................... 0.25% 0.40% 0.55%
Standard over issue age 70........................ 0.65% 0.85% 1.05%
Substandard issue age 70 or less.................. 0.40% 0.60% 0.85%
Substandard over issue age 70..................... 1.00% 1.30% 1.60%
</TABLE>
We guarantee the cost of insurance charge we deduct on a Monthly Deduction
Date will not exceed the amount calculated using the guaranteed cost of
insurance rates set forth in your Policy for that date. Guaranteed cost of
insurance rates depend on the insured's sex, risk class, and age on the first
day of a Policy Year. Guaranteed cost of insurance rates applicable to joint
insureds under a Last Survivor Policy depend on the sex of each insured, their
joint equal issue age (the age of the younger insured is used in Texas or New
Jersey), their risk classes, and the Policy Year. The guaranteed cost of
insurance rates change from month to month. The risk classes used for
determining guaranteed cost of insurance rates for insureds are smoker
standard, smoker substandard, nonsmoker standard, and nonsmoker substandard.
Substandard ratings result in higher cost of insurance charges. We base the
guaranteed cost of insurance rates for substandard ratings on multiples of or
additives to the guaranteed standard rates provided by the 1980 Commissioners
Standard Ordinary Mortality Tables.
Cost of insurance rates--whether current or guaranteed--are generally more
favorable for nonsmoker than for smoker insureds. Within a given rating class,
guaranteed cost of insurance rates are generally more favorable for insureds
of lower ages than for insureds of higher ages.
If a Policy loan is outstanding, and the net cash value on a Monthly
Deduction Date is not enough to cover the entire Monthly Deduction for the
Policy Month, we will notify you that the Policy is going to terminate unless
a sufficient payment is made within the 62-day grace period. (See "Effect of a
Policy Loan.")
Eligible group or sponsored arrangements may also elect to purchase Policies
on a simplified underwriting basis above the underwriting limits applicable to
other purchasers. Policies issued on a simplified underwriting basis will have
the same cost of insurance rates as fully underwritten Policies.
Administrative Charge. This charge is currently set at an annual rate of
0.35% of cash value and decreases to 0.10% after the first 10 Policy Years. We
guarantee the charge will never exceed an amount equivalent to an annual rate
of 0.35% of cash value. This charge is for the cost of administering the
Policies (such as the cost of processing Policy transactions, issuing Policy
Owner statements and reports, and record keeping), as well as legal,
actuarial, systems, mailing and other overhead costs connected with our
variable life insurance operations.
For Policies with initial premiums of $2,000,000 or more, we will waive the
Administrative Charge after the tenth Policy Year.
For purposes of calculating the 10-year period after which the
Administrative Charge is reduced to 0.10%, the period that a Policy was lapsed
will not count.
Monthly Maintenance Charge. If the initial premium paid for your Policy is
less than $50,000, we will deduct a $2.50 fee from cash value on each Monthly
Deduction Date to cover administrative expenses. This fee is in addition to
the administrative charge. We will continue to deduct this monthly fee until
cumulative premium payments made are at least $50,000. After cumulative
premium payments of at least $50,000 have been made, we will not take this
charge even if your Policy's cash value is reduced to less than $50,000 as a
result of investment performance or partial surrenders.
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<PAGE>
Surrender Charge. If, during the first nine Policy Years, a Policy is
totally surrendered or lapses or a partial surrender (other than a preferred
partial surrender) is made, we deduct a Surrender Charge from the amount
requested to be surrendered. This charge is based on the portion of the
initial premium deemed to be surrendered in accordance with the following
rules. Appendix C provides an example of the effect of negative investment
performance on Surrender Charges. If there has been negative investment
performance under your Policy, we calculate the Surrender Charge by
attributing negative performance first, to reducing additional payments, and
then, to reducing the initial premium.
When you make a full or partial surrender, we take the requested surrender
amount first from the preferred surrender amount. The preferred surrender
amount is equal to the greater of (a) the cash value on the date of surrender
which exceeds the initial premium paid (minus any previous partial surrenders
attributable to the initial premium) and (b) 10% of the initial premium paid
(minus previous partial surrenders in that Policy Year). No Surrender Charge
applies to the preferred surrender amount. The balance of the requested
surrender amount is subject to a Surrender Charge, which we determine by
multiplying the balance by the applicable percentage for the Policy Year. The
Surrender Charge period and the amount of the Surrender Charge are shown in
the following table:
<TABLE>
<CAPTION>
Policy Year Charge
----------- ------
<S> <C>
1............................... 8.0%
2............................... 8.0%
3............................... 7.0%
4............................... 6.0%
5............................... 5.0%
6............................... 4.0%
7............................... 3.0%
8............................... 2.0%
9............................... 1.0%
10............................... 0.0%
</TABLE>
We credit back to the Policy's cash value upon reinstatement any surrender
charge we deducted upon lapse. 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 lapsed
period will not count.
Mortality and Expense Risk Charge. We deduct a charge from your cash value
in the Sub-Accounts on each Monthly Deduction Date for the mortality and
expense risks that we assume. This charge is currently set at the equivalent
of an annual rate of 0.90% of cash value. The mortality risk we assume is that
insureds may live for shorter periods of time than we estimated. The expense
risk is that our costs of issuing and administering the Policies may be more
than we estimated.
Daily Charges Deducted from the Variable Account Assets. Currently, we do
not deduct any daily charges from the Variable Account. However, we reserve
the right to make deductions from the Variable Account for federal or state
income taxes with respect to earnings or capital gains that may be
attributable to the Variable Account. Should we determine that this type of
tax will be imposed, we may make deductions from the Variable Account to pay
these taxes. The imposition of such taxes would reduce your cash value.
Charges Deducted from Eligible Fund Assets. The value of shares of the
Eligible Funds reflect charges and deductions from assets for investment
advisory fees and operating expenses. See "Investment Management" and the
prospectus for the Zenith Fund for more information.
Charges for Additional Services. We reserve the right to charge a nominal
fee, which we will bill directly to you, in the event that a Policy re-issue
or re-dating is requested.
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<PAGE>
We may sell the Policies directly, without compensation, to a registered
representative, to employees, officers, directors, and trustees of the Company
and its affiliated companies, and certain family members of the foregoing, and
to employees, officers, directors, trustees and registered representatives of
any broker-dealer authorized to sell the Policies or any bank affiliated with
such a broker-dealer and of any sub-adviser to the Eligible Funds, and certain
family members of the foregoing.
If consistent with applicable state insurance law, we may sell the Policies,
without compensation, to the Company or MetLife for use with deferred
compensation plans for agents, employees, officers, directors, and trustees of
the Company and its affiliated companies, subject to any restrictions imposed
by the terms of such plans, or to persons who obtain their Policies through a
bank, adviser or consultant to whom they pay a fee for investment or planning
advice. If sold under these circumstances, we will credit the Policies with an
additional percentage of premium to reflect in part or in whole any cost
savings associated with the direct sale, but only if such credit will not be
unfairly discriminatory to any person. We will not credit any additional
premium to Policies purchased by persons described above in exchange for
another variable life policy issued by the Company or its affiliated
companies.
Group or Sponsored Arrangements
We may issue the Policies to group or sponsored arrangements, as well as on
an individual basis. A "group arrangement" includes a situation where 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 situation
where an employer or an association permits group solicitation of its
employees or members for the purchase of individual policies.
We may waive or reduce any of the Policy charges sold to a group or
sponsored plan. We may also increase the interest rate credited to loaned
amounts under these Policies. The amount of reductions and our eligibility
rules may vary from time to time. In general they will reflect cost savings we
anticipate for Policies sold to the eligible group or sponsored arrangements
and will relate to factors such as the size of the group, its stability, the
purpose of the funding arrangement and characteristics of the group members.
The amount of reduction and the criteria will reflect the reduced sales and
administrative efforts resulting from sales to qualifying group or sponsored
arrangements. Reductions in or waiver of these charges will not be unfairly
discriminatory against any person.
The United States Supreme Court has ruled that insurance policies with
values and benefits that vary with the sex of the insured may not be used to
fund certain employee benefit programs. Therefore, we offer Policies that do
not vary based on the sex of the insured to certain employee benefit programs.
We recommend that employers consult an attorney before offering or purchasing
the Policies in connection with an employee benefit program.
THE VARIABLE ACCOUNT
We established the Variable Account as a separate investment account on
January 31, 1983 under Delaware law. It 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; these other policies impose different costs, and provide
different benefits, from the Policies. The Variable Account meets the
definition of a "separate account" under Federal securities laws, and is
registered with the Securities and Exchange Commission (the "SEC") as a unit
investment trust under the Investment Company Act of 1940. The Massachusetts
Insurance Commissioner regulates NELICO and the Variable Account, which are
also subject to the insurance laws and regulations where the Policies are
sold.
Although NELICO owns the assets of the Variable Account, 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
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<PAGE>
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. NELICO may transfer to its general account assets which exceed the
reserves and other liabilities of the Variable Account. NELICO will consider
any possible adverse impact such a 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 15 Sub-Accounts. Each invests in an
Eligible Fund of the Zenith Fund. The Sub-Accounts are:
-- The Small Cap Sub-Account, which invests in the Loomis Sayles Small Cap
Series
-- The International Magnum Equity Sub-Account, which invests in the Morgan
Stanley International Magnum Equity Series
-- The Equity Growth Sub-Account, which invests in the Alger Equity Growth
Series
-- The Midcap Value Sub-Account, which invests in the Goldman Sachs Midcap
Value Series (formerly the Loomis Sayles Avanti Growth Series)
-- The Venture Value Sub-Account, which invests in the Davis Venture Value
Series
-- The Investor Sub-Account, which invests in the MFS Investor Series
-- The Research Manager's Sub-Account, which invests in the MFS Research
Manager's Series
-- The Growth and Income Sub-Account, which invests in the Westpeak Growth
and Income Series
-- The Stock Index Sub-Account, which invests in the Westpeak Stock Index
Series
-- The Balanced Sub-Account, which invests in the Loomis Sayles Balanced
Series
-- The Managed Sub-Account, which invests in the Back Bay Advisors Managed
Series
-- The Strategic Bond Opportunities Sub-Account, which invests in the
Salomon Brothers Strategic Bond Opportunities Series
-- The Bond Income Sub-Account, which invests in the Back Bay Advisors Bond
Income Series
-- The U.S. Government Sub-Account, which invests in the Salomon Brothers
U.S. Government Series
-- The Money Market Sub-Account, which invests in the Back Bay Advisors
Money Market Series
The Zenith Fund is an open-end diversified management investment company,
more commonly known as a mutual fund. The Zenith Fund is 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 Variable Account purchases and sells Eligible Fund Shares 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' are described briefly
below. These objectives may not be met. More about the Eligible Funds,
including their investment expenses, and risks is in the attached Zenith Fund
prospectus and the Statement of Additional Information.
A-28
<PAGE>
The investment objectives and policies of certain Eligible Funds are similar
to the investment objectives and policies of other funds that may be managed
by the same sub-adviser. The investment results of the Eligible Funds may be
higher or lower than the results of these funds. There is no assurance, and no
representation is made, that the investment results of any of the Eligible
Funds will be comparable to the investment results of any other fund.
The Loomis Sayles Small Cap Series seeks long-term capital growth from
investments in common stocks or their equivalents.
The Morgan Stanley International Magnum Equity Series seeks long-term
capital appreciation through investment primarily in international equity
securities.
The Alger Equity Growth Series seeks long-term capital appreciation.
The Goldman Sachs Midcap Value Series seeks long-term capital appreciation.
The Davis Venture Value Series seeks growth of capital.
The MFS Investor Series seeks to provide reasonable current income and long-
term growth of capital and income.
The MFS Research Managers Series seeks to provide long-term growth of
capital.
The Westpeak Growth and Income Series seeks long-term total return through
investment in equity securities.
The Westpeak Stock Index Series seeks to provide investment results that
correspond to the composite price and yield performance of United States
publicly traded common stocks.
The Loomis Sayles Balanced Series seeks reasonable long-term investment
return from a combination of long-term capital appreciation and moderate
current income.
The Back Bay Advisors Managed Series seeks to provide a favorable total
return through investment in a diversified portfolio of common stocks and
fixed income securities.
The Salomon Brothers Strategic Bond Opportunities Series seeks a high level
of total return consistent with preservation of capital.
The Back Bay Advisors Bond Income Series seeks to provide a high level of
current income consistent with protection of capital.
The Salomon Brothers U.S. Government Series seeks to provide a high level of
current income consistent with preservation of capital and maintenance of
liquidity.
The Back Bay Advisors Money Market Series seeks to provide the highest
possible level of current income consistent with preservation of capital.
The policy's basic objective is to provide benefits which increase when the
sub-account's performance is favorable. Historically, the performance of
common stocks over the long term has been superior to that of long or short
term debt securities, although common stocks have been subject to more
dramatic changes in value over certain periods. Policy owners may want to
select the Small Cap, International Magnum Equity, Equity Growth, Midcap
Value, Venture Value, Investor, Research Managers, Stock Index or Growth and
Income Sub-Accounts, or some combination of these sub-accounts, for a long
term time horizon, if willing to accept such risks of short term fluctuations
in value. See Appendix E: Long Term Market Trends.
A-29
<PAGE>
Investment Management
TNE Advisers, which is an indirect, wholly-owned subsidiary of NELICO, is
the investment adviser of each of the Series. The chart below lists the sub-
adviser of each Series. TNE Advisers and each of the sub-advisers are
registered with the SEC as investment advisers under the Investment Advisers
Act of 1940.
<TABLE>
<CAPTION>
Series Sub-Adviser
- ------ -----------
<S> <C>
Loomis Sayles Small Cap
Series Loomis, Sayles & Company, L.P.*
Morgan Stanley Interna-
tional Magnum Equity
Series Morgan Stanley Dean Witter Investment Management Inc.
Alger Equity Growth Se-
ries Fred Alger Management, Inc.
Goldman Sachs Midcap
Value Series Goldman Sachs Asset Management
Davis Venture Value Se-
ries Davis Selected Advisers, L.P.**
MFS Investor Series Massachusetts Financial Services Company
MFS Research Managers
Series Massachusetts Financial Services Company
Westpeak Growth and In-
come Series Westpeak Investment Advisors, L.P.*
Westpeak Stock Index Se-
ries Westpeak Investment Advisors, L.P.*
Loomis Sayles Balanced
Series Loomis, Sayles & Company, L.P.*
Back Bay Advisors Man-
aged Series Back Bay Advisors, L.P.*
Salomon Brothers Strate-
gic Bond Opportunities
Series Salomon Brothers Asset Management Inc***
Back Bay Advisors Bond
Income Series Back Bay Advisors, L.P.*
Salomon Brothers U.S.
Government Series Salomon Brothers Asset Management Inc
Back Bay Advisors Money
Market Series Back Bay Advisors, L.P.*
</TABLE>
- --------
* An affiliate of NELICO
** Davis Selected may also delegate any of its responsibilities to Davis
Selected Advisers-NY, Inc., a wholly-owned subsidiary of Davis Selected.
*** In connection with Salomon Brothers Asset Management's service as sub-
adviser to the Strategic Bond Opportunities Series, Salomon Brothers'
London-based affiliate, Salomon Brothers Asset Management Limited,
provides certain sub-advisory services to Salomon Brothers Asset
Management.
The Goldman Sachs Midcap Value Series' sub-adviser was Loomis Sayles until May
1, 1998, when Goldman Sachs Asset Management became the sub-adviser.
The table on pages A-10 to A-11 shows the annual operating expenses of each
Series.
For more information about the Series' advisory agreements, see the attached
Zenith Fund prospectus and the Zenith Fund's Statement of Additional
Information.
OTHER POLICY FEATURES
Policy Owner and Beneficiary
You name the Policy Owner in the application but may change the owner. At
the death of the Policy Owner, his or her estate will become the Policy Owner
unless a successor Policy Owner has been named. The Policy Owner's rights
(except for rights to payment of benefits) terminate at the death of the
insured (or the second death under a Last Survivor Policy) or the receipt of
all death proceeds under an accelerated death benefits rider.
You also name the beneficiary in the application. You may change the
beneficiary of the Policy at any time before the death of the insured. The
beneficiary has no rights under the Policy until the death of the insured(s)
and must survive the insured(s) in order to receive the death proceeds. The
beneficiary may have no rights if the Owner elects to receive all death
proceeds payable under an accelerated death benefits rider. If no named
beneficiary survives the insured(s), we will pay the proceeds to the Policy
Owner.
A-30
<PAGE>
A change of Policy Owner or beneficiary must be in written form satisfactory
to us 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 us under the
Policy before we receive the signed change form at our 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 us under the Policy before we receive a signed copy of the assignment
form is at our Home Office. We 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.)
Exchange of Policy
You may exchange the Policy within 24 months after it was issued for a
policy that provides fixed benefit insurance. The new policy will be issued by
us or MetLife, as described below, on any plan of whole life or endowment
insurance (or, if the Policy exchanged is a Last Survivor Policy, on any plan
of survivorship insurance) with a level face amount.
The new policy will be issued with:
-- the same insured, Face Amount, Policy Date and risk class(es)
-- the age of the insured on the Policy Date
-- a rider that purchases paid-up additions if the cash value is more than
is required to purchase the new policy.
The new policy will be issued subject to any cost or credit and the
repayment of any Policy loan balance, and subject to any assignments of this
Policy.
NELICO'S DISTRIBUTION AGREEMENT
We sell the Policies through licensed insurance agents. These agents are
also registered representatives of New England Securities. New England
Securities, the principal underwriter of the variable life insurance policies,
is a Massachusetts corporation organized in 1968 and an indirect, wholly-owned
subsidiary of NELICO. New England Securities 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
intends to 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. In some states,
Policies may be sold by representatives or employees of banks that may be
acting as broker-dealers.
We will pay compensation to the New England Securities registered
representatives or other broker-dealers or banks involved in the sale of a
Policy. Such compensation will generally have a present value that does not
exceed 8% of premiums under the Policy (although a lower amount may be paid in
some circumstances, such as sales of the Policies to a person over age 75).
Such compensation may be paid either as a percentage of premiums at the time
we receive them, as a percentage of cash value on an ongoing basis, or in some
combination of both.
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.
A-31
<PAGE>
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY
We can challenge that amount of the death benefit that results from the
initial premium for two years during an insured's lifetime from the date of
issue, based on misrepresentations made in the application. We can challenge
any amount of the death benefit that results from an additional payment for
which proof of insurability is required for two years during an insured's
lifetime from receipt of the payment. However, if an insured dies within two
years of the date of issue, we can challenge all or part of the Policy at any
time based on misrepresentations in the application. If an insured dies within
two years of the receipt of an additional payment for which proof of
insurability is required, NELICO can challenge any amount of the death benefit
resulting from that additional payment at any time with respect to
misrepresentation.
Misstatement of Age or Sex
If the application misstates the insured's age (or either insured's age
under a Last Survivor Policy) or sex, the Policy's death benefit will be the
amount that the most recent Monthly Deduction (for Policies issued in
Maryland, the most recent cost of insurance deduction) which was made would
provide, based on the insured's correct age(s) and sex(es).
Suicide
Single Insured Policies. If the Insured dies by suicide while sane or insane
within two years (or less, in some states) from the date of issue (or the
Policy Date, if earlier, in some states), the Death Benefit is limited to: the
initial premium; plus any additional payments made; less any outstanding
Policy Loan Balance and partial surrenders (or such greater amount, in some
states).
Last Survivor Policies. If either of the Insureds dies by suicide while sane
or insane within two years (or less, in some states) from the date of issue
(or the Policy Date, if earlier, in some states) set forth in the Policy, the
Death Benefit is limited to: the initial premium; plus any additional payments
made; less any outstanding Policy Loan Balance and partial surrenders (or such
greater amount, in some states). The Policy will terminate on the first death
by suicide.
Within 60 days after the first death by suicide under a Last Survivor
Policy, the Owner can purchase new life insurance on an Eligible Insured
without evidence of insurability. An Eligible Insured is a surviving Insured
whom we would have issued a single life policy on the Policy Date of this
Policy. The new policy will be issued subject to certain conditions. Contact
your agent or us.
TAX CONSIDERATIONS
Introduction
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all tax situations. This discussion is not intended as
tax advice. Counsel or other competent tax advisors should be consulted for
more complete information. This discussion is based upon our understanding of
the present Federal income tax laws. No representation is made as to the
likelihood of continuation of the present Federal income tax laws or as to how
they may be interpreted by the Internal Revenue Service.
Tax Status of the Policy
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a Policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited.
A-32
<PAGE>
Nevertheless, we believe that the Policy should satisfy the applicable
requirements. There is less guidance, however, with respect to Policies issued
on a rated or automatic issue basis and Policies with term riders added and it
is not clear whether such Policies will in all cases satisfy the applicable
requirements. If it is subsequently determined that a Policy does not satisfy
the applicable requirements, we may take appropriate steps to bring the Policy
into compliance with such requirements and we reserve the right to restrict
Policy transactions in order to do so.
In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of variable account supporting their contracts due to their ability to
exercise investment control over those assets. Where this is the case, the
contract owners have been currently taxed on income and gains attributable to
variable account assets. There is little guidance in this area, and some
features of the Policies, such as the flexibility of a Policy Owner to
allocate Premiums and Cash Values, have not been explicitly addressed in
published rulings. While we believe that the Policies do not give Policy
Owners investment control over Variable Account assets, we reserve the right
to modify the Policies as necessary to prevent a Policy Owner from being
treated as the owner of the Variable Account assets supporting the Policy.
In addition, the Code requires that the investments of the Variable Account
be "adequately diversified" in order for the Policies to be treated as life
insurance contracts for Federal income tax purposes. It is intended that the
Variable Account, through the Funds, will satisfy these diversification
requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
Tax Treatment of Policy Benefits
In General. We believe that the death benefit under a Policy should be
excludible from the gross income of the beneficiary. Federal, state and local
transfer, and other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each Policy Owner or beneficiary. A
tax advisor should be consulted on these consequences.
Generally, the Policy Owner will not be deemed to be in constructive receipt
of the Policy Cash Value until there is a distribution. When distributions
from a Policy occur, or when loans are taken out from or secured by a Policy,
the tax consequences depend on whether the Policy is classified as a "Modified
Endowment Contract."
Modified Endowment Contracts. Under the Internal Revenue Code, certain life
insurance contracts are classified as "Modified Endowment Contracts," with
less favorable tax treatment other than life insurance contracts. Due to the
flexibility of the Policies as to premiums and benefits, the individual
circumstances of each Policy will determine whether it is classified as a
Modified Endowment Contract. The rules are too complex to be summarized here,
but generally depend on the amount of premiums paid during the first seven
Policy years. Certain changes in a Policy after it is issued could also cause
it to be classified as a Modified Endowment Contract. A current or prospective
Policy Owner should consult with a competent advisor to determine whether a
Policy transaction will cause the Policy to be classified as a Modified
Endowment Contract.
Distributions Other Than Death Benefits from Modified Endowment
Contracts. Policies classified as Modified Endowment Contracts are subject to
the following tax rules:
(1) All distributions other than death benefits, including distributions
upon surrender and withdrawals, from a Modified Endowment Contract will be
treated first as distributions of gain taxable as ordinary income and as
tax-free recovery of the Policy Owner's investment in the Policy only after
all gain has been distributed.
(2) Loans taken from or secured by a Policy classified as a Modified
Endowment Contract are treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount subject
to tax except where the distribution or loan is made when the Policy Owner
has attained age 59 1/2 or is disabled, or where the distribution is part
of a series of substantially equal periodic payments for the life (or life
expectancy) of the
A-33
<PAGE>
Policy Owner or the joint lives (or joint life expectancies) of the Policy
Owner and the Policy Owner's beneficiary or designed beneficiary.
Distributions Other Than Death Benefits from Policies that are not Modified
Endowment Contracts. Distributions other than death benefits from a Policy
that is not classified as a Modified Endowment Contract are generally treated
first as a recovery of the Policy Owner's investment in the Policy and only
after the recovery of all investment in the Policy as taxable income. However,
certain distributions which must be made in order to enable the Policy to
continue to qualify as a life insurance contract for Federal income tax
purposes if Policy benefits are reduced during the first 15 Policy years may
be treated in whole or in part as ordinary income subject to tax.
Loans from or secured by a Policy that is not a Modified Endowment contract
are generally not treated as distributions. However, the tax consequences
associated with Policy loans that are outstanding after the first 15 Policy
years is less clear and a tax adviser should be consulted about such loans.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a Modified Endowment Contract are subject to the 10 percent
additional income tax.
Investment in the Policy. Your investment in the Policy is generally your
aggregate Premiums. When a distribution is taken from the Policy, your
investment in the Policy is reduced by the amount of the distribution that is
tax free.
Policy Loans. In general, interest on a Policy loan will not be deductible.
Before taking out a Policy loan, you should consult a tax adviser as to the
tax consequences.
Multiple Policies. All Modified Endowment Contracts that are issued by
NELICO (or its affiliates) to the same Policy Owner during any calender year
are treated as one Modified Endowment Contract for purposes of determining the
amount includible in the Policy Owner's income when a taxable distribution
occurs.
Accelerated Benefits Rider. We believe that payments received under the
accelerated benefit rider should be fully excludable from the gross income of
the beneficiary if the beneficiary is the insured under the Policy. (See
"Acceleration of Death Benefit Rider" for more information regarding the
rider.) However, you should consult a qualified tax adviser about the
consequences of adding this rider to a Policy or requesting payment under this
rider.
Other Policy Owner Tax Matters. Federal and state estate, inheritance and
other tax consequences depend on the individual circumstances of each Policy
Owner or beneficiary.
The tax consequences of continuing the Policy beyond an insured's 100th year
are unclear. You should consult a tax adviser if you intend to keep the Policy
in force beyond an insured's 100th year.
If a trustee under a pension or profit-sharing plan, or similar deferred
compensation arrangement, owns a Policy, the Federal, state and estate tax
consequences could differ. The amounts of life insurance that may be purchased
on behalf of a participant in a pension or profit-sharing plan are limited.
The current cost of insurance for the net amount at risk is treated as a
"current fringe benefit" and must be included annually in the plan
participant's gross income. We report this cost (generally referred to as the
"P.S. 58" cost) 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 is not taxable. However, the cash value will generally be taxable to the
extent it exceeds the participant's cost basis in the Policy. Policies owned
under these types of plans may be subject to restrictions under the Employee
Retirement Income Security Act of 1974 ("ERISA"). You should consult a
qualified adviser regarding ERISA.
Department of Labor ("DOL") regulations impose requirements for participant
loans under retirement plans covered by ERISA. Plan loans must also satisfy
tax requirements to be treated as nontaxable. Plan loan requirements and
provisions may differ from Policy loan provisions. Failure of plan loans to
comply with the requirements and provisions of the DOL regulations and of tax
law may result in adverse tax consequences and/or
A-34
<PAGE>
adverse consequences under ERISA. Plan fiduciaries and participants should
consult a qualified adviser before requesting a loan under a Policy held in
connection with a retirement plan.
Businesses can use the Policies 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. If
you are purchasing the Policy for any arrangement the value of which depends
in part on its tax consequences, you should consult a qualified tax adviser.
In recent years, moreover, Congress has adopted new rules relating to life
insurance owned by businesses. Any business contemplating the purchase of a
new Policy or a change in an existing Policy should consult a tax adviser.
We believe that Policies subject to Puerto Rican tax law will generally
receive treatment similar, with certain modifications, to that described
above. Among other differences, Policies governed by Puerto Rican tax law are
not currently subject to the rules described above regarding Modified
Endowment Contracts. You should consult your tax adviser with respect to
Puerto Rican tax law governing the Policies.
Possible Tax Law Changes. Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax treatment of the
Policy could change by legislation or otherwise. Consult a tax adviser with
respect to legislative developments and their effect on the Policy.
NELICO's Income Taxes
Under current Federal income tax law, NELICO is not taxed on the Variable
Account's operations. Thus, currently we do not deduct charge from the
Variable Account for Federal income taxes. We reserve the right to charge the
Variable Account for any future Federal income taxes we may incur.
Under current laws in several states, we may incur state and local taxes (in
addition to premium taxes). These taxes are not now significant and we are not
currently charging for them. If they increase, we may deduct charges for such
taxes.
A-35
<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
------------------ -----------------------------
<C> <S>
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.
Robert H. Benmosche ............ Director of NELICO since 1998 and Chairman,
Metropolitan Life Insurance Co. President and Chief Executive Officer of
One Madison Avenue Metropolitan Life Insurance Company since
New York, NY 10010 1998; formerly, Director, President and Chief
Operating Officer 1997-1998; Executive Vice
President 1995-1997 of Metropolitan Life;
Executive Vice President 1989-1995 of
PaineWebber.
Susan C. Crampton............... Director of NELICO since 1996 and serves as
127 Tarbox Road Principal of The Vermont Partnership, a
Jericho, VT 05465 business consulting firm located in Jericho,
Vermont since 1989; formerly, Director 1989-
1996 of New England Mutual.
Edward A. Fox................... Director of NELICO since 1996 and Chairman of
RR Box 67-15 the Board of SLM Holdings since 1997;
Harborside, ME 04642 formerly, Director 1994-1996 of New England
Mutual 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,
Adam Smith's Money World television journalist, and editor.
50th Floor, Craig Drill Capital
General Motors Building
767 Fifth Street
New York, NY 10153
Dr. Evelyn E. Handler........... Director of NELICO since 1996; formerly
74 Tater Street Director 1987-1996 of New England Mutual and
Mont Vernon, NH 03057 Executive Director and Chief Executive Officer
1994-1997 of the California Academy of
Sciences and Research Fellow and an Associate
1991-1994 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
Howard, Darby & Levin the law firm of Howard, Darby & Levin in New
1330 Avenue of the Americas York City.
New York, NY 10019
</TABLE>
A-36
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Principal Business Experience
Business Address During the Past Five Years
------------------ -----------------------------
<C> <S>
Bernard A. Leventhal...... Director of NELICO since 1996; formerly, Vice
Burlington Industries Chairman of the Board of Directors 1995-1998 of
1345 Avenue of the Burlington Industries, Inc.; President since 1978
Americas and Corporate Group Vice President since 1985 and
New York, NY 10105 Director since 1990 of Burlington Menswear Division.
Thomas J. May............. Director of NELICO since 1996 and Chairman, President
Boston Edison Company and Chief Executive Officer of Boston Edison Company
800 Boylston Street since 1994; formerly, Director 1994-1996 of New
Boston, MA 02199 England Mutual; President and Chief Operating
Officer 1993-1994 of Boston Edison Co.
Stewart G. Nagler......... Director of NELICO since 1996 and Vice Chairman and
Metropolitan Life Chief Financial Officer of Metropolitan Life
One Madison Avenue Insurance Company since 1986; formerly, Senior
New York, NY 10010 Executive Vice President and Chief Financial Officer
1986-1998 of Metropolitan Life Insurance Company.
Catherine A. Rein......... Director of NELICO since 1998 and Senior Executive
Metropolitan Life Vice President of Metropolitan Life Insurance
Insurance Company Company since 1998; formerly, Executive Vice
One Madison Avenue President 1989-1998 of Metropolitan Life Insurance
New York, NY 10010 Company.
Rand N. Stowell........... Director of NELICO since 1996 and President of United
United Timber Corp. Timber Corp. of Dixfield, Maine; formerly, Director
P.O. Box 650 1990-1996 of New England Mutual.
Pine Street
Dixfield, ME 04224
Alexander B. Trowbridge... Director of NELICO since 1996 and President of
Trowbridge Partners, Inc. Trowbridge Partners, Inc. in Washington, DC;
1317 F Street, NW, formerly, Director 1983-1996 of New England Mutual.
Suite 500
Washington, D.C. 20004
Executive Officers of NELICO
Other than Directors
<CAPTION>
Principal Business Experience
Name During the Past Five Years
---- -----------------------------
<C> <S>
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 New England Mutual.
Mary Ann Brown............ President, New England Products and Services (a
business unit of NELICO) since 1999; formerly,
Director, Worldwide Life Insurance of Swiss
Reinsurance - and President & Chief
Executive Officer of Atlantic International
Reinsurance Company - and Executive Vice
President of Swiss Re Atrium and Swiss Re Services
- and Principal of Tillinghast/Towers Perrin
- .
Anthony J. Candito........ President, NEF Information Services (a business unit
of NELICO) and Chief Information Officer since 1998;
formerly, Senior Vice President 1995-1998 of New
England Life and Vice President 1994-1995 of New
England Mutual.
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 New England Mutual.
</TABLE>
A-37
<PAGE>
<TABLE>
<CAPTION>
Principal Business Experience
Name During the Past Five Years
---- -----------------------------
<C> <S>
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 New England Mutual.
Daniel D. Jordan.......... Second Vice President, Counsel and Secretary since
1996; formerly, Counsel and Assistant Secretary
1990-1996 of New England Mutual.
Stephan M. Largent........ Senior Vice President of NELICO since 1998; formerly,
President 1995-1998 of First Variable Life Company,
President 1993-1995 of ING Equities, Inc. and Vice
President 1993-1995 of Security Life of Denver.
Alan C. Leland, Jr........ Senior Vice President of NELICO since 1996; formerly,
Vice President 1984-1996 of New England Mutual.
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 New
England Mutual) and Senior Vice President in 1994 of
New England Annuities; Vice President 1992-1994 of
Keyport Life Insurance.
George J. Maloof.......... Senior Vice President of NELICO since 1996; formerly,
Vice President 1991-1996 of New England Mutual.
Thomas W. McConnell....... Senior Vice President of NELICO since 1996 and
Director, Chief Executive Officer and President of
New England Securities Corporation since 1993.
Thomas W. Moore........... Senior Vice President of NELICO since 1996; formerly,
Vice President 1990-1996 of New England Mutual.
Richard A. Robinson....... Second Vice President and chief accounting officer of
NELICO since 1998; formerly, Second Vice President
1997-1998 of NELICO; Manager of Life Insurance
Accounting 1994-1997 and Chief Accountant 1992-1994
of Liberty Life Assurance Company.
David Y. Rogers........... Executive Vice President and Chief Financial Officer
of NELICO since 1999; formerly, Partner, Actuarial
Consulting of Price Waterhouse Coopers LLP 1992-
1999.
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 New England Mutual.
H. James Wilson........... Executive Vice President and General Counsel of
NELICO since 1996; formerly, Executive Vice
President and General Counsel 1993-1996.
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 New England Mutual).
Frederick K. Zimmermann... Executive Vice President and Chief Investment Officer
of NELICO since 1996; formerly, Executive Vice
President and Chief Investment Officer 1993-1996 of
New England Mutual.
</TABLE>
The principal business address for each of the directors and officers is the
same as our's except where indicated.
Like all financial services providers, we utilize systems that may be
affected by Year 2000 transition issues and it relies on a number of third
parties, including banks, custodians, and investment managers, that also may
be affected. We and our affiliates have developed, and are in the process of
implementing, a Year 2000 transition plan. We are also confirming that our
service providers are also so engaged. The resources being devoted to this
effort are substantial. We cannot predict whether the resources being devoted,
or the outcome of these efforts, will have any negative impact. However, if we
or our service providers are not successful in the Year 2000 transition,
A-38
<PAGE>
computer systems could fail or erroneous results and delays could occur when
processing information dated after December 31, 1999. As of the date of this
prospectus, we do not anticipate that Owners will experience negative effects
on their investment, or on Policy services provided as a result of Year 2000
transition implementation. Currently, we have converted our systems to be Year
2000 compliant. We are conducting systems testing and compliance verification
which we expect to complete in mid-1999. Service providers may not have
anticipated every step necessary to avoid any adverse effect on the Variable
Account attributable to Year 2000 transition.
VOTING RIGHTS
We own the Eligible Fund shares held in the Variable Account and vote those
shares at meetings of the Eligible Fund shareholders. As required by
applicable Federal securities law, you have the right to instruct us how to
vote the shares that are attributable to your Policy.
We determine Policy Owners who are entitled to give voting instructions and
the number of shares attributable to their Policies as of the meeting record
date. If we do not receive timely instructions, we will vote shares in the
same proportion as the aggregate cash value of policies giving instructions,
respectively, to vote for, against, or withhold votes on a proposition, bears
to the total cash value in that Sub-Account for all policies for which voting
instructions are received. No voting privileges apply to cash value removed
from the Variable Account as a result of a Policy loan. We will vote all
Zenith Fund shares held in our or an affiliate's general account (or any
unregistered separate account for which voting privileges were not extended)
in the same proportion as the total of (i) shares for which we received voting
instructions and (ii) shares that we vote in proportion to such voting
instructions.
The Eligible Funds' Board of Trustees 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 result from changes in state
insurance law or Federal income tax law, changes in investment management of
any of the Eligible Funds, or differences in voting instructions given by
variable life and variable annuity contract owners. If there is a material
conflict, the Board of Trustees will determine what action should be taken,
including the removal of the affected Sub-Accounts from the Eligible Fund(s),
if necessary. If we believe any Eligible Fund action is insufficient, we will
consider taking other action to protect Policy Owners. There could, however,
be unavoidable delays or interruptions of operations of the Variable Account
that we may be unable to remedy.
We may disregard voting instructions for changes in the investment policy,
investment adviser or principal underwriter of the Eligible Fund portfolio if
required by state insurance law or if we (i) reasonably disapprove of the
changes and (ii) in the case of a change in investment policy or investment
adviser, make a good faith determination that the proposed change is contrary
to state law, prohibited by state regulatory authorities, inconsistent with a
sub-account's investment objectives, or quality of investments purchased by
the sub-account or similar sub-accounts with investments similar to those of
the sub-account. If we do disregard voting instructions, the next report to
Policy owners will include a summary of that action and the reasons for it.
RIGHTS RESERVED BY NELICO
We and our affiliates may change the voting procedures described above, and
vote Eligible Fund shares without Policy Owner instructions, if the securities
laws change. We also reserve the right: (1) to add sub-accounts; (2) to
combine sub-accounts; (3) to invest some or all of the assets of the Variable
Account other than in the Zenith Fund; (4) to invest some or all of the assets
of the Variable Account in any other investment company chosen by us; (5) to
remove a portfolio in which the Sub-Account is invested or to substitute a
different portfolio; (6) to operate the Variable Account as a management
investment company under the Investment Company Act of 1940 or in any other
form; and (7) to deregister the Variable Account under the Investment Company
Act of 1940. We will exercise these rights in accordance with applicable law,
including approval of Policy Owners if required. We will notify you if
exercise of any of these rights would result in a material change in the
Variable Account or its investments.
A-39
<PAGE>
TOLL-FREE NUMBERS
For Sub-Account transfers or premium reallocations, call 1-877-633-7785.
To request a copy of the Statement of Additional Information for the New
England Zenith Fund, call 1-800-356-5015.
You may also call our Customer Service at 1-877-633-7785 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
Dollar Cost Averaging, Asset Reallocation or 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 Policy changes, please contact your registered representative.
For information about historical values of the Variable Account Sub-
Accounts, please call 1-800-333-2501.
REPORTS
We will send you an annual statement showing your Policy's death benefit,
cash value and any outstanding Policy loan balance. We will also confirm
Policy loans, sub-account transfers, lapses, surrenders and other Policy
transactions.
You will be sent semiannual reports containing the financial statements of
the Variable Account and the Eligible Funds.
ADVERTISING PRACTICES
Professional organizations may endorse the Policies. We may use such
endorsements in Policy sales material. We may pay the professional
organization for the use of its customer or mailing lists to distribute Policy
promotional materials. An endorsement by a third party does not predict the
future performance of the Policies. Articles discussing the Variable Account's
investment performance, rankings and other characteristics may appear in
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. We may use references to or
reprints of such articles or rankings as sales material and may include
rankings that indicate the names of other variable contract separate accounts
and their investment experience.
Publications may use articles and releases, developed by us, the Eligible
Funds and other parties, about the Variable Account or the Eligible Funds. We
may use references to or reprints of such articles in sales material 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 and include excerpts from media articles.
We are a member of the Insurance Marketplace Standards Association ("IMSA"),
and may include the IMSA logo and information about IMSA membership in its
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities.
Policy sales material may refer to historical, current and prospective
economic trends. In addition, sales material may discuss topics of general
investor interest for the benefit of registered representatives and
prospective Policy Owners. These materials may include, but are not limited
to, discussions of college planning, retirement planning, reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.
A-40
<PAGE>
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 LLP, of 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 we filed with the SEC. You may obtain copies of such
additional information from the SEC upon payment of the prescribed fee, or for
free by accessing the SEC's internet site at http://www.sec.gov.
EXPERTS
The financial statements of New England Variable Life Separate Account of
New England Life Insurance Company ("NELICO") and the consolidated financial
statements of NELICO and subsidiaries 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.
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-41
<PAGE>
APPENDIX A:
ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES, NET CASH VALUES AND ACCUMULATED PREMIUMS
The tables in Appendix A illustrate the way the Policies work. 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%. We based
the tables on an initial premium of $50,000 and show the initial death benefit
based on that premium. We assumed the insureds to be in the standard nonsmoker
underwriting class. We first give values based on current Policy charges and
then based on guaranteed Policy charges. (See "Charges and Expenses.") The
issue ages represented in the illustrations are age 70 or less; if an issue
age were over age 70, the death benefit, net cash value and cash value in the
illustrations based on current Policy charges would be lower, all other things
being equal, because the current cost of insurance charge under the Policy
increases for issue ages over 70. 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 that may be issued by NELICO or
other companies.
The illustrated 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 during the
period, if the initial premium was paid in another amount, or additional
payments were made. 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 a
Policy loan or partial surrender were made during the period of time
illustrated, or if the insured were in another risk class.
The death benefits, net cash values and cash values shown in the tables
reflect a Monthly Deduction (consisting of an administrative charge, a charge
for the cost of insurance, a mortality and expense risk charge, and, during
the first ten Policy Years, a sales charge and state premium tax charge) from
cash value on each Monthly Deduction Date. (Because an initial premium of
$50,000 has been assumed for purposes of these illustrations, no Monthly
Maintenance Charge is reflected in the illustrations. If we assumed an initial
premium of less than $50,000, a $2.50 Monthly Maintenance Charge would apply.)
The net cash values shown in the tables reflect the fact that we deduct a
Surrender Charge (consisting of a deferred sales charge) from cash value upon
surrender or lapse during the first nine Policy Years. (See "Charges and
Expenses.") The illustrations reflect an average of the investment advisory
fees and operating expenses of the Eligible Funds, at an annual rate of .79%
of the average daily net assets of the Eligible Funds. This average reflects
voluntary expense cap and expense deferral arrangements between TNE Advisers
and the Zenith Fund, under which TNE Advisers bears operating expenses of the
Zenith Fund that exceed certain amounts. TNE Advisers could terminate the
expense cap and expense deferral arrangements at any time.
Taking account of 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. (See "Net Investment Experience.")
The hypothetical rates of return shown in the tables do not reflect any tax
charges attributable to the Variable Account since no such charges are
currently made. If any such charges are imposed in the future, the gross
annual rate of return would have to exceed the rates shown by an amount
sufficient to cover the tax charges, in order to produce the death benefits,
net cash values and cash values illustrated. (See "Charge for NELICO's Income
Taxes.")
The second column of each table shows the amount which would accumulate if
the initial premium of $50,000 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 initial premium could have
been invested outside the Policy to arrive at the net cash value of the
Policy.
A-42
<PAGE>
The internal rate of return on the death benefit is equivalent to an interest
rate (after taxes) at an amount equal to the initial premium could have been
invested outside the Policy to arrive at the death benefit of the Policy. The
internal rate of return is compounded annually.
We will furnish upon request a personalized illustration reflecting the
proposed insured's age, sex, and underwriting classification. Where
applicable, we will also furnish upon request an illustration for a Policy
which is not affected by the sex of the insured.
A-43
<PAGE>
Single Insured Policy
Male Issue Age 50
$50,000 Initial Premium for Standard Nonsmoker
$129,122 Initial Death Benefit
This illustration is based on CURRENT Policy charges.
<TABLE>
<CAPTION>
Internal Rate of Return
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE on Net Cash Value
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
Accumulated Gross Annual Gross Annual Gross Annual Gross Annual
End of at 5% Rate of Return of 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% 0% 6% 12%
- ------ ----------- ------- ------- --------- ------ ------- --------- ------ ------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 121,586 128,890 136,182 44,452 47,363 50,269 48,452 51,363 54,269 (11.10) (5.27) .54
2 55,125 114,221 128,356 143,291 42,952 48,763 54,902 46,952 52,763 58,902 (7.32) (1.24) 4.79
3 57,881 107,337 127,867 150,820 41,999 50,701 60,431 45,499 54,201 63,931 (5.65) .47 6.52
4 60,775 100,905 127,427 158,804 41,090 52,678 66,389 44,090 55,678 69,389 (4.79) 1.31 7.34
5 63,814 94,897 127,039 167,278 40,225 54,696 72,812 42,725 57,196 75,312 (4.26) 1.81 7.81
6 67,005 89,285 126,706 176,278 39,402 56,755 79,742 41,402 58,755 81,742 (3.89) 2.13 8.09
7 70,355 84,040 126,427 185,842 38,621 58,856 87,221 40,121 60,356 88,721 (3.62) 2.36 8.27
8 73,873 79,135 126,200 196,003 37,879 61,002 95,295 38,879 62,002 96,295 (3.41) 2.52 8.40
9 77,566 74,548 126,027 206,808 37,175 63,191 104,016 37,675 63,691 104,516 (3.24) 2.64 8.48
10 81,445 70,258 125,911 218,306 36,509 65,428 113,439 36,509 65,428 113,439 (3.10) 2.73 8.54
15 103,946 55,083 132,148 301,694 32,634 78,293 178,743 32,634 78,293 178,743 (2.80) 3.03 8.86
20 132,665 50,000 140,817 423,313 29,171 93,688 281,638 29,171 93,688 281,638 (2.66) 3.19 9.03
25 169,318 50,000 152,615 604,095 26,076 112,111 443,768 26,076 112,111 443,768 (2.57) 3.28 9.13
30 216,097 50,000 168,702 879,288 23,309 134,156 699,230 23,309 134,156 699,230 (2.51) 3.34 9.19
35 275,801 50,000 189,513 1,300,621 20,835 160,536 1,101,752 20,835 160,536 1,101,752 (2.47) 3.39 9.24
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical
Gross Annual
End of Rate of Return of
Policy -----------------------
Year 0% 6% 12%
- ------ ------- ------- -------
<S> <C> <C> <C>
1 143.17 157.78 172.36
2 51.14 60.22 69.29
3 29.00 36.75 44.49
4 19.19 26.35 33.50
5 13.67 20.50 27.32
6 10.15 16.76 23.37
7 7.70 14.17 20.63
8 5.91 12.27 18.62
9 4.54 10.82 17.09
10 3.46 9.68 15.88
15 .65 6.69 12.73
20 0 5.31 11.27
25 0 4.56 10.48
30 0 4.14 10.03
35 0 3.88 9.76
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-44
<PAGE>
Single Insured Policy
Male Issue Age 50
$50,000 Initial Premium for Standard Nonsmoker
$129,122 Initial Death Benefit
This illustration is based on GUARANTEED Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ----------------------- --------------------- --------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------- ------- ------- ------ ------ ------- ------ ------ ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 121,167 128,451 135,723 44,285 47,188 50,086 48,285 51,188 54,086 (11.43) (5.62) .17
2 55,125 113,401 127,445 142,284 42,615 48,388 54,488 46,615 52,388 58,488 (7.68) (1.62) 4.39
3 57,881 106,133 126,448 149,163 41,488 50,099 59,728 44,988 53,599 63,228 (6.03) .07 6.11
4 60,775 99,329 125,457 156,373 40,401 51,818 65,326 43,401 54,818 68,326 (5.19) .90 6.91
5 63,814 92,962 124,474 163,933 39,354 53,541 71,306 41,854 56,041 73,806 (4.68) 1.38 7.36
6 67,005 87,002 123,498 171,857 38,344 55,268 77,692 40,344 57,268 79,692 (4.33) 1.68 7.62
7 70,355 81,425 122,530 180,165 37,372 56,996 84,511 38,872 58,496 86,011 (4.07) 1.89 7.79
8 73,873 76,204 121,570 188,875 36,439 58,727 91,793 37,439 59,727 92,793 (3.88) 2.03 7.89
9 77,566 71,318 120,617 198,007 35,543 60,457 99,568 36,043 60,957 100,068 (3.72) 2.13 7.95
10 81,445 66,746 119,671 207,579 34,683 62,185 107,865 34,683 62,185 107,865 (3.59) 2.20 7.99
15 103,946 50,000 118,856 271,548 29,328 70,418 160,882 29,328 70,418 160,882 (3.49) 2.31 8.10
20 132,665 50,000 118,044 355,247 23,335 78,537 236,353 23,335 78,537 236,353 (3.74) 2.28 8.08
25 169,318 50,000 117,226 464,738 14,101 86,114 341,396 14,101 86,114 341,396 (4.94) 2.20 7.99
30 216,097 50,000 116,417 608,041 0 92,577 483,528 0 92,577 483,528 -- 2.07 7.86
35 275,801 50,000 115,608 795,556 0 97,931 673,912 0 97,931 673,912 -- 1.94 7.71
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 142.33 156.90 171.45
2 50.60 59.65 68.69
3 28.52 36.24 43.96
4 18.72 25.86 32.98
5 13.21 20.01 26.81
6 9.67 16.26 22.85
7 7.21 13.66 20.10
8 5.41 11.75 18.07
9 4.02 10.28 16.52
10 2.93 9.12 15.30
15 0 5.94 11.94
20 0 4.39 10.30
25 0 3.47 9.33
30 0 2.86 8.68
35 0 2.42 8.23
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-45
<PAGE>
Single Insured Policy
Female Issue Age 50
$50,000 Initial Premium for Standard Nonsmoker
$145,611 Initial Death Benefit
This illustration is based on CURRENT Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ------------------------- ------------------------ ------------------------ ---------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------- ------- --------- ------ ------- --------- ------ ------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 137,136 145,375 153,599 44,452 47,363 50,269 48,452 51,363 54,269 (11.10) (5.27) .54
2 55,125 128,844 144,789 161,636 42,952 48,763 54,902 46,952 52,763 58,902 (7.32) (1.24) 4.79
3 57,881 121,083 144,242 170,135 41,999 50,701 60,431 45,499 54,201 63,931 (5.65) .47 6.52
4 60,775 113,820 143,735 179,129 41,090 52,678 66,389 44,090 55,678 69,389 (4.79) 1.31 7.34
5 63,814 107,018 143,265 188,643 40,225 54,696 72,812 42,725 57,196 75,312 (4.26) 1.81 7.81
6 67,005 100,646 142,829 198,709 39,402 56,755 79,742 41,402 58,755 81,742 (3.89) 2.13 8.09
7 70,355 94,671 142,420 209,351 38,621 58,856 87,221 40,121 60,356 88,721 (3.62) 2.36 8.27
8 73,873 89,062 142,031 220,590 37,879 61,002 95,295 38,879 62,002 96,295 (3.41) 2.52 8.40
9 77,566 83,791 141,653 232,450 37,175 63,191 104,016 37,675 63,691 104,516 (3.24) 2.64 8.48
10 81,445 78,840 141,290 244,972 36,509 65,428 113,439 36,509 65,428 113,439 (3.10) 2.73 8.54
15 103,946 61,083 146,543 334,558 32,634 78,293 178,743 32,634 78,293 178,743 (2.80) 3.03 8.86
20 132,665 50,000 153,627 461,823 29,171 93,688 281,638 29,171 93,688 281,638 (2.66) 3.19 9.03
25 169,318 50,000 162,889 644,764 26,076 112,111 443,768 26,076 112,111 443,768 (2.57) 3.28 9.13
30 216,097 50,000 176,118 917,943 23,309 134,156 699,230 23,309 134,156 699,230 (2.51) 3.34 9.19
35 275,801 50,000 194,153 1,332,469 20,835 160,536 1,101,752 20,835 160,536 1,101,752 (2.47) 3.39 9.24
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 174.27 190.75 207.20
2 60.53 70.17 79.80
3 34.29 42.36 50.41
4 22.83 30.21 37.58
5 16.44 23.43 30.42
6 12.37 19.12 25.86
7 9.55 16.13 22.70
8 7.48 13.94 20.39
9 5.90 12.27 18.62
10 4.66 10.95 17.22
15 1.34 7.43 13.51
20 0 5.77 11.76
25 0 4.84 10.77
30 0 4.29 10.19
35 0 3.95 9.83
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-46
<PAGE>
Single Insured Policy
Female Issue Age 50
$50,000 Initial Premium for Standard Nonsmoker
$145,611 Initial Death Benefit
This illustration is based on GUARANTEED Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ----------------------- ---------------------- ---------------------- ---------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------- ------- ------- ------ ------- ------- ------ ------- ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 136,637 144,851 153,052 44,276 47,178 50,075 48,276 51,178 54,075 (11.45) (5.64) .15
2 55,125 127,881 143,719 160,453 42,601 48,373 54,471 46,601 52,373 58,471 (7.69) (1.64) 4.38
3 57,881 119,685 142,594 168,211 41,473 50,082 59,708 44,973 53,582 63,208 (6.04) .05 6.09
4 60,775 112,014 141,479 176,344 40,391 51,804 65,310 43,391 54,804 68,310 (5.20) .89 6.91
5 63,814 104,835 140,372 184,870 39,354 53,541 71,306 41,854 56,041 73,806 (4.68) 1.38 7.36
6 67,005 98,116 139,274 193,810 38,362 55,293 77,727 40,362 57,293 79,727 (4.32) 1.69 7.63
7 70,355 91,828 138,185 203,183 37,416 57,062 84,607 38,916 58,562 86,107 (4.06) 1.91 7.80
8 73,873 85,943 137,106 213,010 36,517 58,852 91,986 37,517 59,852 92,986 (3.85) 2.06 7.92
9 77,566 80,436 136,035 223,313 35,666 60,665 99,908 36,166 61,165 100,408 (3.68) 2.17 7.99
10 81,445 75,281 134,972 234,114 34,861 62,502 108,412 34,861 62,502 108,412 (3.54) 2.26 8.05
15 103,946 55,842 134,064 306,271 29,835 71,626 163,630 29,835 71,626 163,630 (3.38) 2.43 8.22
20 132,665 50,000 133,162 400,682 24,988 81,207 244,352 24,988 81,207 244,352 (3.41) 2.45 8.26
25 169,318 50,000 132,250 524,165 18,712 91,023 360,764 18,712 91,023 360,764 (3.86) 2.43 8.23
30 216,097 50,000 131,336 685,718 7,862 100,043 522,336 7,862 100,043 522,336 (5.98) 2.34 8.13
35 275,801 50,000 130,418 897,078 0 107,836 741,748 0 107,836 741,748 -- 2.22 8.01
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 173.27 189.70 206.10
2 59.93 69.54 79.14
3 33.77 41.81 49.84
4 22.34 29.70 37.04
5 15.96 22.93 29.89
6 11.89 18.62 25.33
7 9.07 15.63 22.18
8 7.01 13.44 19.86
9 5.42 11.76 18.09
10 4.18 10.44 16.69
15 .74 6.80 12.84
20 0 5.02 10.97
25 0 3.97 9.86
30 0 3.27 9.12
35 0 2.78 8.60
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-47
<PAGE>
Single Insured Policy
Male Issue Age 70
$50,000 Initial Premium for Standard Nonsmoker
$75,013 Initial Death Benefit
This illustration is based on CURRENT Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ---------------------- ---------------------- ---------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------ ------- ------- ------ ------- ------- ------ ------- ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 71,284 75,567 79,842 44,452 47,363 50,269 48,452 51,363 54,269 (11.10) (5.27) .54
2 55,125 67,664 76,038 84,885 42,952 48,763 54,902 46,952 52,763 58,902 (7.32) (1.24) 4.79
3 57,881 64,278 76,573 90,318 41,999 50,701 60,431 45,499 54,201 63,931 (5.65) .47 6.52
4 60,775 61,116 77,179 96,184 41,090 52,678 66,389 44,090 55,678 69,389 (4.79) 1.31 7.34
5 63,814 58,161 77,860 102,522 40,225 54,696 72,812 42,725 57,196 75,312 (4.26) 1.81 7.81
6 67,005 55,396 78,614 109,371 39,402 56,755 79,742 41,402 58,755 81,742 (3.89) 2.13 8.09
7 70,355 52,805 79,438 116,769 38,621 58,856 87,221 40,121 60,356 88,721 (3.62) 2.36 8.27
8 73,873 50,369 80,325 124,754 37,879 61,002 95,295 38,879 62,002 96,295 (3.41) 2.52 8.40
9 77,566 50,000 81,272 133,366 37,175 63,191 104,016 37,675 63,691 104,516 (3.24) 2.64 8.48
10 81,445 50,000 82,276 142,651 36,509 65,428 113,439 36,509 65,428 113,439 (3.10) 2.73 8.54
15 103,946 50,000 92,425 211,006 32,634 78,293 178,743 32,634 78,293 178,743 (2.80) 3.03 8.86
20 132,665 50,000 105,513 317,184 29,171 93,688 281,638 29,171 93,688 281,638 (2.66) 3.19 9.03
25 169,318 50,000 120,171 475,675 26,076 112,111 443,768 26,076 112,111 443,768 (2.57) 3.28 9.13
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 42.57 51.13 59.68
2 16.33 23.32 30.30
3 8.73 15.27 21.79
4 5.15 11.46 17.77
5 3.07 9.26 15.44
6 1.72 7.83 13.93
7 .78 6.84 12.88
8 .09 6.10 12.11
9 0 5.55 11.52
10 0 5.11 11.05
15 0 4.18 10.07
20 0 3.80 9.68
25 0 3.57 9.43
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-48
<PAGE>
Single Insured Policy
Male Issue Age 70
$50,000 Initial Premium for Standard Nonsmoker
$75,013 Initial Death Benefit
This illustration is based on GUARANTEED Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest --------------------- --------------------- --------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------ ------ ------- ------ ------ ------- ------ ------ ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 70,329 74,561 78,786 43,803 46,679 49,551 47,803 50,679 53,551 (12.39) (6.64) (.90)
2 55,125 65,816 73,974 82,595 41,670 47,331 53,313 45,670 51,331 57,313 (8.71) (2.71) 3.26
3 57,881 61,591 73,391 86,588 40,096 48,449 57,790 43,596 51,949 61,290 (7.09) (1.04) 4.94
4 60,775 57,637 72,812 90,773 38,580 49,528 62,485 41,580 52,528 65,485 (6.28) (.24) 5.73
5 63,814 53,936 72,238 95,162 37,121 50,566 67,406 39,621 53,066 69,906 (5.78) .23 6.16
6 67,005 50,473 71,668 99,762 35,722 51,564 72,561 37,722 53,564 74,561 (5.45) .51 6.40
7 70,355 50,000 71,103 104,587 34,303 52,524 77,964 35,803 54,024 79,464 (5.24) .71 6.55
8 73,873 50,000 70,543 109,645 32,689 53,451 83,633 33,689 54,451 84,633 (5.17) .84 6.64
9 77,566 50,000 69,988 114,949 30,828 54,349 89,584 31,328 54,849 90,084 (5.23) .93 6.69
10 81,445 50,000 69,438 120,511 28,654 55,218 95,833 28,654 55,218 95,833 (5.42) 1.00 6.72
15 103,946 50,000 68,955 157,675 6,794 58,412 133,566 6,794 58,412 133,566 (12.46) 1.04 6.77
20 132,665 50,000 68,480 206,328 0 60,805 183,205 0 60,805 183,205 -- .98 6.71
25 169,318 50,000 68,041 270,122 0 63,477 252,003 0 63,477 252,003 -- .96 6.68
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 40.66 49.12 57.57
2 14.73 21.63 28.53
3 7.20 13.65 20.09
4 3.62 9.85 16.08
5 1.53 7.64 13.74
6 .16 6.18 12.20
7 0 5.16 11.12
8 0 4.40 10.31
9 0 3.81 9.69
10 0 3.34 9.20
15 0 2.17 7.96
20 0 1.58 7.34
25 0 1.24 6.98
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-49
<PAGE>
Single Insured Policy
Female Issue Age 70
$50,000 Initial Premium for Standard Nonsmoker
$81,811 Initial Death Benefit
This illustration is based on CURRENT Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ---------------------- ---------------------- ---------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------ ------- ------- ------ ------- ------- ------ ------- ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 77,454 82,107 86,752 44,452 47,363 50,269 48,452 51,363 54,269 (11.10) (5.27) .54
2 55,125 73,205 82,265 91,837 42,952 48,763 54,902 46,952 52,763 58,902 (7.32) (1.24) 4.79
3 57,881 69,235 82,477 97,282 41,999 50,701 60,431 45,499 54,201 63,931 (5.65) .47 6.52
4 60,775 65,530 82,753 103,130 41,090 52,678 66,389 44,090 55,678 69,389 (4.79) 1.31 7.34
5 63,814 62,077 83,102 109,424 40,225 54,696 72,812 42,725 57,196 75,312 (4.26) 1.81 7.81
6 67,005 58,857 83,525 116,203 39,402 56,755 79,742 41,402 58,755 81,742 (3.89) 2.13 8.09
7 70,355 55,850 84,019 123,504 38,621 58,856 87,221 40,121 60,356 88,721 (3.62) 2.36 8.27
8 73,873 53,037 84,581 131,363 37,879 61,002 95,295 38,879 62,002 96,295 (3.41) 2.52 8.40
9 77,566 50,401 85,205 139,820 37,175 63,191 104,016 37,675 63,691 104,516 (3.24) 2.64 8.48
10 81,445 50,000 85,893 148,922 36,509 65,428 113,439 36,509 65,428 113,439 (3.10) 2.73 8.54
15 103,946 50,000 94,688 216,173 32,634 78,293 178,743 32,634 78,293 178,743 (2.80) 3.03 8.86
20 132,665 50,000 106,516 320,202 29,171 93,688 281,638 29,171 93,688 281,638 (2.66) 3.19 9.03
25 169,318 50,000 120,327 476,291 26,076 112,111 443,768 26,076 112,111 443,768 (2.57) 3.28 9.13
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 54.91 64.21 73.50
2 21.00 28.27 35.53
3 11.46 18.16 24.84
4 7.00 13.42 19.84
5 4.42 10.70 16.96
6 2.76 8.93 15.09
7 1.59 7.70 13.79
8 .74 6.79 12.83
9 .09 6.10 12.10
10 0 5.56 11.53
15 0 4.35 10.25
20 0 3.85 9.73
25 0 3.58 9.43
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-50
<PAGE>
Single Insured Policy
Female Issue Age 70
$50,000 Initial Premium for Standard Nonsmoker
$81,811 Initial Death Benefit
This illustration is based on GUARANTEED Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical NET CASH VALUE Assuming Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Hypothetical Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest --------------------- --------------------------- --------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------ ------ ------- -------- -------- --------- ------ ------ ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 76,731 81,346 85,954 44,000 46,887 49,769 48,000 50,887 53,769 (12.00) (6.23) (.46)
2 55,125 71,810 80,708 90,110 42,057 47,764 53,794 46,057 51,764 57,794 (8.29) (2.26) 3.72
3 57,881 67,203 80,073 94,466 40,663 49,121 58,580 44,163 52,621 62,080 (6.66) (.59) 5.42
4 60,775 62,890 79,443 99,032 39,314 50,451 63,631 42,314 53,451 66,631 (5.83) .22 6.21
5 63,814 58,854 78,817 103,818 38,007 51,747 68,954 40,507 54,247 71,454 (5.34) .69 6.64
6 67,005 55,077 78,196 108,835 36,743 53,006 74,560 38,743 55,006 76,560 (5.00) .98 6.89
7 70,355 51,541 77,580 114,096 35,526 54,230 80,463 37,026 55,730 81,963 (4.77) 1.17 7.03
8 73,873 50,000 76,969 119,612 34,334 55,422 86,681 35,334 56,422 87,681 (4.59) 1.30 7.12
9 77,566 50,000 76,363 125,396 33,026 56,582 93,235 33,526 57,082 93,735 (4.50) 1.38 7.17
10 81,445 50,000 75,762 131,460 31,545 57,711 100,138 31,545 57,711 100,138 (4.50) 1.44 7.19
15 103,946 50,000 75,233 171,980 17,389 62,206 142,202 17,389 62,206 142,202 (6.80) 1.47 7.22
20 132,665 50,000 74,710 225,018 0 65,712 197,918 0 65,712 197,918 -- 1.38 7.12
25 169,318 50,000 74,219 294,532 0 69,151 274,420 0 69,151 274,420 -- 1.31 7.05
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 53.46 62.69 71.91
2 19.84 27.05 34.25
3 10.36 17.00 23.62
4 5.90 12.27 18.63
5 3.31 9.53 15.73
6 1.62 7.74 13.84
7 .43 6.48 12.51
8 0 5.54 11.52
9 0 4.82 10.76
10 0 4.24 10.15
15 0 2.76 8.58
20 0 2.03 7.81
25 0 1.59 7.35
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-51
<PAGE>
Last Survivor Policy
Male Issue Age 65
Female Issue Age 60
(Joint Equal Age 63)
$50,000 Initial Premium for Standard Nonsmoker
$114,909 Initial Death Benefit
This illustration is based on CURRENT Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ------------------------- ------------------------ ------------------------ --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------- ------- --------- ------ ------- --------- ------ ------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 107,901 114,384 120,855 44,658 47,581 50,499 48,658 51,581 54,499 (10.68) (4.84) 1.00
2 55,125 100,988 113,486 126,691 43,325 49,182 55,370 47,325 53,182 59,370 (6.91) (.82) 5.23
3 57,881 94,516 112,596 132,809 42,499 51,298 61,135 45,999 54,798 64,635 (5.27) .86 6.93
4 60,775 88,459 111,711 139,222 41,679 53,424 67,319 44,679 56,424 70,319 (4.45) 1.67 7.72
5 63,814 82,822 110,877 145,999 40,883 55,578 73,975 43,383 58,078 76,475 (3.95) 2.14 8.15
6 67,005 77,605 110,133 153,224 40,124 57,780 81,170 42,124 59,780 83,170 (3.60) 2.44 8.41
7 70,355 72,775 109,483 160,937 39,402 60,033 88,952 40,902 61,533 90,452 (3.35) 2.65 8.58
8 73,873 68,305 108,931 169,186 38,715 62,336 97,371 39,715 63,336 98,371 (3.15) 2.79 8.69
9 77,566 64,170 108,485 178,026 38,062 64,693 106,483 38,562 65,193 106,983 (2.99) 2.90 8.76
10 81,445 60,350 108,156 187,527 37,443 67,104 116,349 37,443 67,104 116,349 (2.85) 2.99 8.81
15 103,946 50,000 113,563 259,270 33,806 81,106 185,170 33,806 81,106 185,170 (2.58) 3.28 9.12
20 132,665 50,000 123,152 370,218 30,523 98,031 294,699 30,523 98,031 294,699 (2.44) 3.42 9.27
25 169,318 50,000 137,951 546,062 27,558 118,486 469,015 27,558 118,486 469,015 (2.35) 3.51 9.37
30 216,097 50,000 157,448 820,649 24,881 143,210 746,440 24,881 143,210 746,440 (2.30) 3.57 9.43
35 275,801 50,000 178,645 1,226,063 22,464 173,094 1,187,963 22,464 173,094 1,187,963 (2.26) 3.61 9.47
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 115.80 128.77 141.71
2 42.12 50.66 59.18
3 23.65 31.07 38.49
4 15.33 22.26 29.18
5 10.62 17.27 23.90
6 7.60 14.07 20.52
7 5.51 11.85 18.18
8 3.98 10.22 16.46
9 2.81 8.99 15.15
10 1.90 8.02 14.13
15 0 5.62 11.60
20 0 4.61 10.53
25 0 4.14 10.04
30 0 3.90 9.78
35 0 3.71 9.57
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-52
<PAGE>
Last Survivor Policy
Male Issue Age 65
Female Issue Age 60
(Joint Equal Age 63)
$50,000 Initial Premium for Standard Nonsmoker
$114,909 Initial Death Benefit
This illustration is based on GUARANTEED Policy charges.
<TABLE>
<CAPTION>
Initial DEATH BENEFIT NET CASH VALUE CASH VALUE Internal Rate of Return
Premium Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical on Net Cash Value
Accumulated Gross Annual Gross Annual Gross Annual Assuming Hypothetical Gross
End of at 5% Rate of Return of Rate of Return of Rate of Return of Annual Rate of Return of
Policy Interest ----------------------- --------------------- --------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------ ----------- ------- ------- ------- ------ ------ ------- ------ ------ ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52,500 107,901 114,384 120,855 44,658 47,581 50,499 48,658 51,581 54,499 (10.68) (4.84) 1.00
2 55,125 100,988 113,486 126,691 43,325 49,182 55,370 47,325 53,182 59,370 (6.91) (.82) 5.23
3 57,881 94,516 112,596 132,809 42,499 51,298 61,135 45,999 54,798 64,635 (5.27) .86 6.93
4 60,775 88,459 111,711 139,222 41,679 53,424 67,319 44,679 56,424 70,319 (4.45) 1.67 7.72
5 63,814 82,789 110,834 145,945 40,865 55,555 73,947 43,365 58,055 76,447 (3.95) 2.13 8.14
6 67,005 77,482 109,962 152,992 40,057 57,688 81,044 42,057 59,688 83,044 (3.63) 2.41 8.38
7 70,355 72,515 109,097 160,379 39,256 59,816 88,638 40,756 61,316 90,138 (3.40) 2.59 8.52
8 73,873 67,865 108,239 168,123 38,459 61,934 96,753 39,459 62,934 97,753 (3.23) 2.71 8.60
9 77,566 63,513 107,386 176,240 37,667 64,032 105,410 38,167 64,532 105,910 (3.10) 2.79 8.64
10 81,445 59,439 106,539 184,749 36,878 66,101 114,625 36,878 66,101 114,625 (3.00) 2.83 8.65
15 103,946 50,000 105,782 241,600 31,272 75,549 172,550 31,272 75,549 172,550 (3.08) 2.79 8.61
20 132,665 50,000 105,027 315,984 21,836 83,603 251,527 21,836 83,603 251,527 (4.06) 2.60 8.41
25 169,318 50,000 104,273 413,312 0 89,561 354,995 0 89,561 354,995 -- 2.36 8.16
30 216,097 50,000 103,561 540,854 0 94,196 491,946 0 94,196 491,946 -- 2.13 7.92
35 275,801 50,000 102,851 707,716 0 99,655 685,724 0 99,655 685,724 -- 1.99 7.77
<CAPTION>
Internal Rate of Return
on Death Benefit
Assuming Hypothetical Gross
End of Annual Rate of Return of
Policy -----------------------------
Year 0% 6% 12%
- ------ --------- --------- ---------
<S> <C> <C> <C>
1 115.80 128.77 141.71
2 42.12 50.66 59.18
3 23.65 31.07 38.49
4 15.33 22.26 29.18
5 10.61 17.26 23.89
6 7.57 14.04 20.49
7 5.45 11.79 18.12
8 3.89 10.14 16.37
9 2.69 8.86 15.03
10 1.74 7.86 13.96
15 0 5.12 11.07
20 0 3.78 9.66
25 0 2.98 8.82
30 0 2.46 8.26
35 0 2.08 7.87
</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, WHETHER ADDITIONAL PAYMENTS ARE MADE, 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 OR PARTIAL SURRENDER 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-53
<PAGE>
APPENDIX B
INVESTMENT EXPERIENCE INFORMATION
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 predict future performance.
The Policies became available July, 1996. 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 of the Zenith Fund commenced operations on May
2, 1994. The MFS Investor Series and the MFS Research Manager's Series
commenced operations on April 30, 1999. The remaining Zenith Fund Series
commenced operations on October 31, 1994.
The illustrations are based on the actual investment experience of the
relevant Eligible Funds for the periods shown (net of actual charges and
expenses incurred by the Eligible Funds). The illustrations assume that an
initial premium of $50,000 was paid and that no loans, transfers or other
Policy Owner transactions were made during the periods shown.
Sub-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 other than investment experience affect the values and benefits
of your Policy. These investment experience figures do not reflect the charges
deducted from additional Premiums and the Monthly Deductions from the cash
value. (See "Charges and Expenses.")
Net Rates of Return
A Sub-Account's investment experience is expressed below as a net rate of
return. The annual net rate is the effective earnings rate at which the 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-54
<PAGE>
Sub-Accounts Investing in New England Zenith Fund
<TABLE>
<CAPTION>
8/26/83-
Sub-Account 12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88
- ----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bond Income..... 3.20% 12.61% 18.76% 14.83% 2.27% 8.37%
Money Market.... 3.20 10.73 8.26 6.80 6.53 7.52
<CAPTION>
5/1/87-
Sub-Account 12/31/87 12/31/88
- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stock Index......................................... (12.20%) 16.34%
Managed............................................. (0.66) 9.48
<CAPTION>
Sub-Account
- -----------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income.........................................................................................
Midcap Value**............................................................................................
<CAPTION>
Sub-Account
- -----------
<S> <C> <C> <C> <C> <C> <C>
Small Cap..........................................................................................................
<CAPTION>
Sub-Account
- -----------
<S> <C> <C> <C> <C> <C> <C>
Equity Growth......................................................................................................
Balanced...........................................................................................................
Venture Value......................................................................................................
International Magnum Equity*.......................................................................................
U.S. Government....................................................................................................
Strategic Bond Opportunities.......................................................................................
<CAPTION>
Annual Net Rate of Return
------------------------------------------------------------------------------------------ 8/26/83- 8/28/83-
For One Year Ending 12/31/98 12/31/98
------------------------------------------------------------------------------------------ Total Effective
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 12/31/97 12/31/98 Return Annual
- ----------- -------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Income..... 12.30% 8.09% 17.96% 8.18% 12.61% (3.36%) 21.20% 4.61% 10.89% % % %
Money Market.... 9.25 8.19 6.21 3.80 2.97 3.97 5.70 5.13 5.34
<CAPTION>
Annual Net Rate of Return
------------------------------------------------------------------------------------------ 5/1/87- 5/1/87-
For One Year Ending 12/31/98 12/31/98
------------------------------------------------------------------------------------------ Total Effective
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 12/31/97 12/31/98 Return Annual
- ----------- -------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.......30.15%..(4.14%)...30.43%...7.30%.....9.72%....1.12%....36.92%...22.47%...32.50%.... %... 337.49% 14.89%
Managed...........19.08....3.21.....20.17....6.70.....10.65....(1.11)....31.26....15.03....26.56 258.44 12.71
<CAPTION>
Annual Net Rate of Return
------------------------------------------------------ 4/30/93- 4/30/93-
For One Year Ending 12/31/98 12/31/98
4/30/93- --------------------------------------------- Total Effective
Sub-Account 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 Return Annual
- ----------- -------- --------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income.....................14.24%...(1.21%)...36.47%...18.10%...33.47%.... %......... %...... %......................
Midcap Value**........................14.74.....(.27)....30.35....17.61....17.32................. ........ ......................
<CAPTION>
Annual Net Rate of Return
--------------------------------------------- 5/2/94- 5/2/94-
For One Year Ending 12/31/98 12/31/98
5/2/94- ----------------------------------- Total Effective
Sub-Account 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 Return Annual
- ----------- --------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap......................................(3.23%)...28.84%...30.68%...24.85%.... %......... %....... %.....................
<CAPTION>
Annual Net Rate of Return
--------------------------------------------- 10/31/94- 10/31/94-
For One Year Ending 12/31/98 12/31/98
10/31/94- -------------------------- Total Effective
Sub-Account 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 Return Annual
- ----------- --------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Growth..................................(4.20%)...48.69%...13.17%...25.63%.... %......... %...... %......................
Balanced........................................(.10)....24.79....16.91....16.18...................................................
Venture Value..................................(3.50)....39.28....25.84....33.50...................................................
International Magnum Equity*....................2.60......6.23.....6.67....(1.30)..................................................
U.S. Government.................................0.60.....15.02.....3.31.....8.47...................................................
Strategic Bond Opportunities...................(1.40)....19.38....14.36....11.07...................................................
</TABLE>
- -------
* The Morgan Stanley International Magnum Equity Series' sub-adviser was
Draycott Partners until May 1, 1997, when Morgan Stanley Dean Witter
Investment 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.
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%.
A-55
<PAGE>
Policy Performance
The material below assumes a Policy was issued with an initial premium of
$50,000 paid on August 26, 1983, in the case of the Bond Income and Money
Market Sub-Accounts (May 1, 1987, in the case of the Stock Index and Managed
Sub-Accounts; April 30, 1993, in the case of the Growth and Income and Midcap
Value Sub-Accounts; May 2, 1994, in the case of the Small Cap Sub-Account;
October 31, 1994, in the case of the Balanced, International Magnum Equity,
Equity Growth, Venture Value, U.S. Government and Strategic Bond Opportunities
Sub-Accounts), to (1) a male age 50, (2) a female age 50, (3) a male age 70,
(4) a female age 70, and (5) a male age 65 and female age 60, each in the
standard nonsmoker risk category. The death benefits, cash values and internal
rates of return assume in each instance that the entire Policy value was
invested in the particular Sub-Account for the period shown. These
illustrations of policy investment experience reflect all Policy charges
(except for the $2.50 Monthly Maintenance Charge) based on NELICO's current
rates. (See Appendix A for the definition of the internal rate of return.)
Male Standard Non Smoker, Issue Age 50
$50,000 Initial Premium
$129,122 Initial Death Benefit
Bond Income Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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......... $50,000 $ 50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 130,655 51,122 47,122 -15.66% --
December 31, 1984....... 50,000 50,000 139,494 56,311 52,311 3.41 114.08%
December 31, 1985....... 50,000 50,000 156,886 65,320 61,820 9.46 62.75
December 31, 1986....... 50,000 50,000 170,674 73,266 70,266 10.70 44.30
December 31, 1987....... 50,000 50,000 165,419 73,185 70,685 8.29 31.68
December 31, 1988....... 50,000 75,767 169,828 77,406 75,406 7.99 25.69
December 31, 1989....... 50,000 75,767 180,974 84,942 83,442 8.40 22.46
December 31, 1990....... 50,000 75,767 185,675 89,706 88,706 8.11 19.55
December 31, 1991....... 50,000 75,767 207,916 103,356 102,856 9.02 18.62
December 31, 1992....... 50,000 75,767 213,612 109,212 109,212 8.72 16.81
December 31, 1993....... 50,000 120,283 229,245 120,487 120,487 8.87 15.85
December 31, 1994....... 50,000 120,283 212,033 114,506 114,506 7.57 13.58
December 31, 1995....... 50,000 120,283 247,171 137,081 137,081 8.51 13.82
December 31, 1996....... 50,000 120,283 248,295 141,335 141,335 8.10 12.76
December 31, 1997....... 50,000 120,283 264,560 154,468 154,468 8.18 12.31
December 31, 1998....... 50,000 159,637 277,374 166,011 166,011 8.13 11.81
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......... $50,000 $ 50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 130,974 51,247 47,247 -15.02% --
December 31, 1984....... 50,000 50,000 137,164 55,371 51,371 2.03 111.42%
December 31, 1985....... 50,000 50,000 140,631 58,553 55,053 4.19 55.34
December 31, 1986....... 50,000 50,000 142,293 61,083 58,083 4.58 36.67
December 31, 1987....... 50,000 50,000 143,656 63,557 61,057 4.70 27.47
December 31, 1988....... 50,000 65,444 146,543 66,793 64,793 4.97 22.27
December 31, 1989....... 50,000 65,444 151,824 71,260 69,760 5.39 19.12
December 31, 1990....... 50,000 65,444 155,804 75,274 74,274 5.53 16.73
December 31, 1991....... 50,000 65,444 157,095 78,093 77,593 5.41 14.70
December 31, 1992....... 50,000 65,444 154,861 79,175 79,175 5.04 12.86
December 31, 1993....... 50,000 79,450 151,970 79,873 79,873 4.63 11.34
December 31, 1994....... 50,000 79,450 151,626 81,884 81,884 4.44 10.27
December 31, 1995....... 50,000 79,450 153,789 85,291 85,291 4.42 9.53
December 31, 1996....... 50,000 79,450 155,211 88,350 88,350 4.36 8.86
December 31, 1997....... 50,000 79,450 157,100 91,726 91,726 4.32 8.31
December 31, 1998....... 50,000 93,939 159,001 95,164 95,164 4.28 7.83
</TABLE>
A-56
<PAGE>
Managed Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 124,238 48,993 44,993 -14.60% --
December 31, 1988....... 50,000 50,000 128,321 52,204 48,204 -2.17 75.93%
December 31, 1989....... 50,000 50,000 146,503 61,467 57,967 5.70 49.61
December 31, 1990....... 50,000 50,000 142,039 61,437 58,437 4.34 32.92
December 31, 1991....... 50,000 50,000 161,786 72,115 69,615 7.35 28.60
December 31, 1992....... 50,000 70,177 163,688 75,159 73,159 6.95 23.27
December 31, 1993....... 50,000 70,177 171,814 81,230 79,730 7.25 20.33
December 31, 1994....... 50,000 70,177 161,126 78,405 77,405 5.86 16.49
December 31, 1995....... 50,000 70,177 202,017 101,135 100,635 8.40 17.48
December 31, 1996....... 50,000 70,177 219,535 113,022 113,022 8.80 16.54
December 31, 1997....... 50,000 118,897 265,421 140,455 140,455 10.17 16.94
December 31, 1998....... 50,000 118,897 304,675 165,641 165,641 10.81 16.75
Midcap Value Sub-Account*
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 142,840 56,477 52,477 7.47% --
December 31, 1994....... 50,000 50,000 133,421 54,419 50,419 .50 79.91%
December 31, 1995....... 50,000 50,000 166,943 70,222 66,722 11.41 57.04
December 31, 1996....... 50,000 50,000 185,560 80,465 77,465 12.67 42.93
December 31, 1997....... 50,000 50,000 206,351 92,209 89,709 13.33 35.45
December 31, 1998....... 50,000 104,570 184,989 85,149 83,149 9.38 25.95
Small Cap Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 120,049 47,342 43,342 -19.32% --
December 31, 1995....... 50,000 50,000 147,654 60,069 56,069 7.12 91.57%
December 31, 1996....... 50,000 50,000 182,739 76,670 73,170 15.35 62.61
December 31, 1997....... 50,000 50,000 216,164 93,499 90,499 17.57 49.09
December 31, 1998....... 50,000 50,000 201,412 89,778 87,278 12.68 34.80
Balanced Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 127,694 49,705 45,705 -41.58% --
December 31, 1995....... 50,000 50,000 151,641 60,900 56,900 11.71 158.73%
December 31, 1996....... 50,000 50,000 167,190 69,256 65,756 13.47 74.54
December 31, 1997....... 50,000 50,000 184,004 78,591 75,591 13.94 50.89
December 31, 1998....... 50,000 50,000 190,258 83,758 81,258 12.36 37.81
</TABLE>
A-57
<PAGE>
International Magnum Equity Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 130,766 50,900 46,900 -31.81% --
December 31, 1995....... 50,000 50,000 132,641 53,270 49,270 -1.25 130.69%
December 31, 1996....... 50,000 50,000 133,372 55,248 51,748 1.60 57.26
December 31, 1997....... 50,000 50,000 124,702 53,263 50,263 .17 33.45
December 31, 1998....... 50,000 50,000 126,771 55,808 53,308 1.55 25.01
Equity Growth Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 120,911 47,065 43,065 -59.08% --
December 31, 1995....... 50,000 50,000 172,803 69,399 65,399 25.86 189.37%
December 31, 1996....... 50,000 50,000 184,931 76,605 73,105 19.16 82.86
December 31, 1997....... 50,000 50,000 220,084 94,002 91,002 20.81 59.67
December 31, 1998....... 50,000 50,000 308,218 135,687 133,187 26.50 54.72
Growth and Income Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 142,221 56,232 52,232 6.72% --
December 31, 1994....... 50,000 50,000 132,620 54,093 50,093 .11 79.26%
December 31, 1995....... 50,000 50,000 172,204 72,435 68,935 12.77 58.88
December 31, 1996....... 50,000 50,000 192,400 83,431 80,431 13.82 44.35
December 31, 1997....... 50,000 50,000 243,407 108,768 106,268 17.52 40.33
December 31, 1998....... 50,000 124,211 287,242 132,215 130,215 18.39 36.11
Stock Index Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $129,122 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 109,807 43,303 39,303 -30.24% --
December 31, 1988....... 50,000 50,000 119,943 48,796 44,796 -6.38 68.95%
December 31, 1989....... 50,000 50,000 151,676 63,637 60,137 7.16 51.57
December 31, 1990....... 50,000 50,000 135,410 58,570 55,570 2.92 31.20
December 31, 1991....... 50,000 50,000 167,404 74,619 72,119 8.16 29.54
December 31, 1992....... 50,000 73,892 170,317 78,203 76,203 7.72 24.14
December 31, 1993....... 50,000 73,892 177,273 83,811 82,311 7.76 20.90
December 31, 1994....... 50,000 73,892 170,021 82,733 81,733 6.62 17.30
December 31, 1995....... 50,000 73,892 222,827 111,553 111,053 9.64 18.81
December 31, 1996....... 50,000 73,892 257,217 132,421 132,421 10.60 18.46
December 31, 1997....... 50,000 141,939 325,557 172,277 172,277 12.29 19.20
December 31, 1998....... 50,000 141,939 399,564 217,228 217,228 13.42 19.50
</TABLE>
A-58
<PAGE>
Venture Value Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $129,122 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 123,857 48,211 44,211 -52.11% --
December 31, 1995....... 50,000 50,000 163,802 65,784 61,784 19.88 176.41%
December 31, 1996....... 50,000 50,000 194,017 80,369 76,869 21.95 86.95
December 31, 1997....... 50,000 50,000 245,356 104,796 101,796 25.17 65.24
December 31, 1998....... 50,000 50,000 266,031 117,115 114,615 22.03 49.35
U.S. Government Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $129,122 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 128,589 50,053 46,053 -38.86% --
December 31, 1995....... 50,000 50,000 140,033 56,238 52,238 3.82 141.67%
December 31, 1996....... 50,000 50,000 137,128 56,804 53,304 3.00 59.29
December 31, 1997....... 50,000 50,000 140,903 60,182 57,182 4.33 38.70
December 31, 1998....... 50,000 50,000 143,687 63,255 60,755 4.79 28.83
Strategic Bond Opportunities Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $129,122 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 125,905 49,008 45,008 -46.71% --
December 31, 1995....... 50,000 50,000 142,849 57,369 53,369 5.75 145.82%
December 31, 1996....... 50,000 50,000 154,412 63,963 60,463 9.16 68.26
December 31,1997........ 50,000 50,000 162,474 69,396 66,396 9.37 45.08
December 31, 1998....... 50,000 50,000 157,108 69,164 66,664 7.15 31.62
</TABLE>
- --------
* 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-59
<PAGE>
Female Standard Non Smoker, Issue Age 50
$50,000 Initial Premium
$145,611 Initial Death Benefit
Bond Income Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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......... $50,000 $ 50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 147,348 51,122 47,122 -15.66% --
December 31, 1984....... 50,000 50,000 157,343 56,311 52,311 3.41 134.08%
December 31, 1985....... 50,000 50,000 176,974 65,320 61,820 9.46 71.32
December 31, 1986....... 50,000 50,000 192,526 73,266 70,266 10.70 49.59
December 31, 1987....... 50,000 50,000 186,573 73,185 70,685 8.29 35.37
December 31, 1988....... 50,000 75,767 191,487 77,406 75,406 7.99 28.54
December 31, 1989....... 50,000 75,767 203,947 84,942 83,442 8.40 24.79
December 31, 1990....... 50,000 75,767 209,082 89,706 88,706 8.11 21.50
December 31, 1991....... 50,000 75,767 233,873 103,356 102,856 9.02 20.30
December 31, 1992....... 50,000 75,767 239,936 109,212 109,212 8.72 18.27
December 31, 1993....... 50,000 120,283 257,039 120,487 120,487 8.87 17.14
December 31, 1994....... 50,000 120,283 237,248 114,506 114,506 7.57 14.71
December 31, 1995....... 50,000 120,283 275,927 137,081 137,081 8.51 14.84
December 31, 1996....... 50,000 120,283 276,495 141,335 141,335 8.10 13.67
December 31, 1997....... 50,000 120,283 293,838 154,468 154,468 8.18 13.14
December 31, 1998....... 50,000 159,637 307,231 166,011 166,011 8.13 12.56
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......... $50,000 $ 50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 147,709 51,247 47,247 -15.02% --
December 31, 1984....... 50,000 50,000 154,715 55,371 51,371 2.03 131.17%
December 31, 1985....... 50,000 50,000 158,639 58,553 55,053 4.19 63.52
December 31, 1986....... 50,000 50,000 160,511 61,083 58,083 4.58 41.68
December 31, 1987....... 50,000 50,000 162,027 63,557 61,057 4.70 31.05
December 31, 1988....... 50,000 65,444 165,232 66,793 64,793 4.97 25.05
December 31, 1989....... 50,000 65,444 171,098 71,260 69,760 5.39 21.38
December 31, 1990....... 50,000 65,444 175,446 75,274 74,274 5.53 18.63
December 31, 1991....... 50,000 65,444 176,708 78,093 77,593 5.41 16.33
December 31, 1992....... 50,000 65,444 173,946 79,175 79,175 5.04 14.27
December 31, 1993....... 50,000 79,450 170,396 79,873 79,873 4.63 12.58
December 31, 1994....... 50,000 79,450 169,657 81,884 81,884 4.44 11.37
December 31, 1995....... 50,000 79,450 171,681 85,291 85,291 4.42 10.51
December 31, 1996....... 50,000 79,450 172,838 88,350 88,350 4.36 9.74
December 31, 1997....... 50,000 79,450 174,486 91,726 91,726 4.32 9.10
December 31, 1998....... 50,000 93,939 176,116 95,164 95,164 4.28 8.55
</TABLE>
A-60
<PAGE>
Managed Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 140,118 48,993 44,993 -14.60% --
December 31, 1988....... 50,000 50,000 144,744 52,204 48,204 -2.17 89.09%
December 31, 1989....... 50,000 50,000 165,263 61,467 57,967 5.70 56.52
December 31, 1990....... 50,000 50,000 160,221 61,437 58,437 4.34 37.36
December 31, 1991....... 50,000 50,000 182,464 72,115 69,615 7.35 31.95
December 31, 1992....... 50,000 70,177 184,543 75,159 73,159 6.95 25.91
December 31, 1993....... 50,000 70,177 193,592 81,230 79,730 7.25 22.51
December 31, 1994....... 50,000 70,177 181,395 78,405 77,405 5.86 18.30
December 31, 1995....... 50,000 70,177 227,163 101,135 100,635 8.40 19.08
December 31, 1996....... 50,000 70,177 246,487 113,022 113,022 8.80 17.94
December 31, 1997....... 50,000 118,897 297,453 140,455 140,455 10.17 18.19
December 31, 1998....... 50,000 118,897 340,716 165,641 165,641 10.81 17.88
Midcap Value Sub-Account*
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 161,101 56,477 52,477 7.47% --
December 31, 1994....... 50,000 50,000 150,498 54,419 50,419 .50 93.35%
December 31, 1995....... 50,000 50,000 188,321 70,222 66,722 11.41 64.29
December 31, 1996....... 50,000 50,000 209,312 80,465 77,465 12.67 47.70
December 31, 1997....... 50,000 50,000 232,720 92,209 89,709 13.33 38.99
December 31, 1998....... 50,000 104,570 208,551 85,149 83,149 9.38 28.64
Small Cap Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 135,395 47,342 43,342 -19.32% --
December 31, 1995....... 50,000 50,000 166,551 60,069 56,069 7.12 105.93%
December 31, 1996....... 50,000 50,000 206,139 76,670 73,170 15.35 70.13
December 31, 1997....... 50,000 50,000 243,835 93,499 90,499 17.57 54.07
December 31, 1998....... 50,000 50,000 227,155 89,778 87,278 12.68 38.32
Balanced Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 144,006 49,705 45,705 -41.58% --
December 31, 1995....... 50,000 50,000 171,041 60,900 56,900 11.71 186.84%
December 31, 1996....... 50,000 50,000 188,598 69,256 65,756 13.47 84.52
December 31, 1997....... 50,000 50,000 207,566 78,591 75,591 13.94 56.74
December 31, 1998....... 50,000 50,000 214,598 83,758 81,258 12.36 41.85
</TABLE>
A-61
<PAGE>
International Magnum Equity Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 147,470 50,900 46,900 -31.81% --
December 31, 1995....... 50,000 50,000 149,611 53,270 49,270 -1.25 155.76%
December 31, 1996....... 50,000 50,000 150,449 55,248 51,748 1.60 66.25
December 31, 1997....... 50,000 50,000 140,671 53,263 50,263 .17 38.63
December 31, 1998....... 50,000 50,000 142,988 55,808 53,308 1.55 28.68
Equity Growth Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 136,356 47,065 43,065 -59.08% --
December 31, 1995....... 50,000 50,000 194,910 69,399 65,399 25.86 220.82%
December 31, 1996....... 50,000 50,000 208,610 76,605 73,105 19.16 93.31
December 31, 1997....... 50,000 50,000 248,266 94,002 91,002 20.81 65.86
December 31, 1998....... 50,000 50,000 347,649 135,687 133,187 26.50 59.26
Growth and Income Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 160,403 56,232 52,232 6.72% --
December 31, 1994....... 50,000 50,000 149,594 54,093 50,093 .11 92.66%
December 31, 1995....... 50,000 50,000 194,256 72,435 68,935 12.77 66.21
December 31, 1996....... 50,000 50,000 217,029 83,431 80,431 13.82 49.16
December 31, 1997....... 50,000 50,000 274,512 108,768 106,268 17.52 43.99
December 31, 1998....... 50,000 124,211 323,827 132,215 130,215 18.39 39.02
Stock Index Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $145,611 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 123,843 43,303 39,303 -30.24% --
December 31, 1988....... 50,000 50,000 135,293 48,796 44,796 -6.38 81.59%
December 31, 1989....... 50,000 50,000 171,099 63,637 60,137 7.16 58.57
December 31, 1990....... 50,000 50,000 152,745 58,570 55,570 2.92 35.58
December 31, 1991....... 50,000 50,000 188,801 74,619 72,119 8.16 32.92
December 31, 1992....... 50,000 73,892 192,017 78,203 76,203 7.72 26.79
December 31, 1993....... 50,000 73,892 199,743 83,811 82,311 7.76 23.08
December 31, 1994....... 50,000 73,892 191,409 82,733 81,733 6.62 19.13
December 31, 1995....... 50,000 73,892 250,564 111,553 111,053 9.64 20.43
December 31, 1996....... 50,000 73,892 288,795 132,421 132,421 10.60 19.89
December 31, 1997....... 50,000 141,939 364,847 172,277 172,277 12.29 20.48
December 31, 1998....... 50,000 141,939 446,830 217,228 217,228 13.42 20.65
</TABLE>
A-62
<PAGE>
Venture Value Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $145,611 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 139,678 48,211 44,211 -52.11% --
December 31, 1995....... 50,000 50,000 184,758 65,784 61,784 19.88 206.45%
December 31, 1996....... 50,000 50,000 218,859 80,369 76,869 21.95 97.64
December 31, 1997....... 50,000 50,000 276,775 104,796 101,796 25.17 71.65
December 31, 1998....... 50,000 50,000 300,064 117,115 114,615 22.03 53.73
U.S. Government Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $145,611 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 145,014 50,053 46,053 -38.86% --
December 31, 1995....... 50,000 50,000 157,948 56,238 52,238 3.82 167.93%
December 31, 1996....... 50,000 50,000 154,686 56,804 53,804 3.00 68.39
December 31, 1997....... 50,000 50,000 158,946 60,182 57,182 4.33 44.08
December 31, 1998....... 50,000 50,000 162,069 63,255 60,755 4.79 32.61
Strategic Bond Opportunities Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $145,611 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 141,987 49,008 45,008 -46.71% --
December 31, 1995....... 50,000 50,000 161,124 57,369 53,369 5.75 172.53%
December 31, 1996....... 50,000 50,000 174,183 63,963 60,463 9.16 77.88
December 31, 1997....... 50,000 50,000 183,279 69,396 66,396 9.37 50.70
December 31, 1998....... 50,000 50,000 177,206 69,164 66,664 7.15 35.48
</TABLE>
- --------
* 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-63
<PAGE>
Male Standard Non Smoker, Issue Age 70
$50,000 Initial Premium
$75,013 Initial Death Benefit
Bond Income Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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......... $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 76,157 51,122 47,122 -15.66% --
December 31, 1984....... 50,000 50,000 82,136 56,311 52,311 3.41 44.52%
December 31, 1985....... 50,000 50,000 93,356 65,320 61,820 9.46 30.47
December 31, 1986....... 50,000 50,000 102,688 73,266 70,266 10.70 23.98
December 31, 1987....... 50,000 50,000 100,681 73,185 70,685 8.29 17.47
December 31, 1988....... 50,000 75,767 104,613 77,406 75,406 7.99 14.80
December 31, 1989....... 50,000 75,767 112,870 84,942 83,442 8.40 13.69
December 31, 1990....... 50,000 75,767 117,286 89,706 88,706 8.11 12.30
December 31, 1991....... 50,000 75,767 133,050 103,356 102,856 9.02 12.44
December 31, 1992....... 50,000 75,767 138,501 109,212 109,212 8.72 11.52
December 31, 1993....... 50,000 75,767 150,616 120,487 120,487 8.87 11.24
December 31, 1994....... 50,000 75,767 141,178 114,506 114,506 7.57 9.58
December 31, 1995....... 50,000 75,767 166,804 137,081 137,081 8.51 10.25
December 31, 1996....... 50,000 75,767 169,862 141,335 141,335 8.10 9.60
December 31, 1997....... 50,000 75,767 183,500 154,468 154,468 8.18 9.49
December 31, 1998....... 50,000 75,767 195,084 166,011 166,011 8.13 9.28
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......... $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 76,344 51,247 47,247 -15.02% --
December 31, 1984....... 50,000 50,000 80,764 55,371 51,371 2.03 42.72%
December 31, 1985....... 50,000 50,000 83,684 58,553 55,053 4.19 24.53
December 31, 1986....... 50,000 50,000 85,612 61,083 58,083 4.58 17.43
December 31, 1987....... 50,000 50,000 87,435 63,557 61,057 4.70 13.72
December 31, 1988....... 50,000 65,444 90,269 66,793 64,793 4.97 11.68
December 31, 1989....... 50,000 65,444 94,690 71,260 69,760 5.39 10.58
December 31, 1990....... 50,000 65,444 98,417 75,274 74,274 5.53 9.65
December 31, 1991....... 50,000 65,444 100,528 78,093 77,593 5.41 8.73
December 31, 1992....... 50,000 65,444 100,408 79,175 79,175 5.04 7.74
December 31, 1993....... 50,000 65,444 99,846 79,873 79,873 4.63 6.91
December 31, 1994....... 50,000 65,444 100,957 81,884 81,884 4.44 6.39
December 31, 1995....... 50,000 65,444 103,785 85,291 85,291 4.42 6.09
December 31, 1996....... 50,000 65,444 106,182 88,350 88,350 4.36 5.80
December 31, 1997....... 50,000 65,444 108,965 91,726 91,726 4.32 5.58
December 31, 1998....... 50,000 65,444 111,829 95,164 95,164 4.28 5.38
</TABLE>
A-64
<PAGE>
Managed Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 72,598 48,993 44,993 -14.60% --
December 31, 1988....... 50,000 50,000 75,754 52,204 48,204 -2.17 28.28%
December 31, 1989....... 50,000 50,000 87,415 61,467 57,967 5.70 23.29
December 31, 1990....... 50,000 50,000 85,703 61,437 58,437 4.34 15.82
December 31, 1991....... 50,000 50,000 98,762 72,115 69,615 7.35 15.70
December 31, 1992....... 50,000 70,177 101,141 75,159 73,159 6.95 13.23
December 31, 1993....... 50,000 70,177 107,496 81,230 79,730 7.25 12.16
December 31, 1994....... 50,000 70,177 102,108 78,405 77,405 5.86 9.76
December 31, 1995....... 50,000 70,177 129,698 101,135 100,635 8.40 11.62
December 31, 1996....... 50,000 70,177 142,811 113,022 113,022 8.80 11.47
December 31, 1997....... 50,000 70,177 174,963 140,455 140,455 10.17 12.46
December 31, 1998....... 50,000 70,177 203,540 165,641 165,641 10.81 12.78
Midcap Value Sub-Account*
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 83,538 56,477 52,477 7.47% --
December 31, 1994....... 50,000 50,000 78,833 54,419 50,419 .50 31.32%
December 31, 1995....... 50,000 50,000 99,702 70,222 66,722 11.41 29.48
December 31, 1996....... 50,000 50,000 112,069 80,465 77,465 12.67 24.59
December 31, 1997....... 50,000 50,000 126,092 92,209 89,709 13.33 21.90
December 31, 1998....... 50,000 104,570 114,420 85,149 83,149 9.38 15.72
Small Cap Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 70,151 47,342 43,342 -19.32% --
December 31, 1995....... 50,000 50,000 87,167 60,069 56,069 7.12 39.61%
December 31, 1996....... 50,000 50,000 109,037 76,670 73,170 15.35 33.97
December 31, 1997....... 50,000 50,000 130,428 93,499 90,499 17.57 29.89
December 31, 1998....... 50,000 50,000 122,952 89,778 87,278 12.68 21.27
Balanced Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 74,308 49,705 45,705 -41.58% --
December 31, 1995....... 50,000 50,000 89,133 60,900 56,900 11.71 64.10%
December 31, 1996....... 50,000 50,000 99,308 69,256 65,756 13.47 37.25
December 31, 1997....... 50,000 50,000 110,499 78,591 75,591 13.94 28.45
December 31, 1998....... 50,000 50,000 115,571 83,758 81,258 12.36 22.27
</TABLE>
A-65
<PAGE>
International Magnum Equity Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 76,095 50,900 46,900 -31.81% --
December 31, 1995....... 50,000 50,000 77,966 53,270 49,270 -1.25 46.32%
December 31, 1996....... 50,000 50,000 79,221 55,248 51,748 1.60 23.66
December 31, 1997....... 50,000 50,000 74,887 53,263 50,263 .17 13.60
December 31, 1998....... 50,000 50,000 77,006 55,808 53,308 1.55 10.92
Equity Growth Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 70,361 47,065 43,065 -59.08% --
December 31, 1995....... 50,000 50,000 101,572 69,399 65,399 25.86 83.54%
December 31, 1996....... 50,000 50,000 109,846 76,605 73,105 19.16 43.79
December 31, 1997....... 50,000 50,000 132,165 94,002 91,002 20.81 35.92
December 31, 1998....... 50,000 50,000 187,225 135,687 133,187 26.50 37.28
Growth and Income Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 83,176 56,232 52,232 6.72% --
December 31, 1994....... 50,000 50,000 78,360 54,093 50,093 .11 30.84%
December 31, 1995....... 50,000 50,000 102,844 72,435 68,935 12.77 30.99
December 31, 1996....... 50,000 50,000 116,200 83,431 80,431 13.82 25.82
December 31, 1997....... 50,000 50,000 148,735 108,768 106,268 17.52 26.29
December 31, 1998....... 50,000 124,211 177,666 132,215 130,215 18.39 25.05
Stock Index Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $ 75,013 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 64,166 43,303 39,303 -30.24% --
December 31, 1988....... 50,000 50,000 70,808 48,796 44,796 -6.38 23.19%
December 31, 1989....... 50,000 50,000 90,502 63,637 60,137 7.16 24.90
December 31, 1990....... 50,000 50,000 81,703 58,570 55,570 2.92 14.32
December 31, 1991....... 50,000 50,000 102,192 74,619 72,119 8.16 16.55
December 31, 1992....... 50,000 73,892 105,237 78,203 76,203 7.72 14.03
December 31, 1993....... 50,000 73,892 110,912 83,811 82,311 7.76 12.69
December 31, 1994....... 50,000 73,892 107,745 82,733 81,733 6.62 10.53
December 31, 1995....... 50,000 73,892 143,059 111,553 111,053 9.64 12.89
December 31, 1996....... 50,000 73,892 167,323 132,421 132,421 10.60 13.31
December 31, 1997....... 50,000 73,892 214,604 172,277 172,277 12.29 14.63
December 31, 1998....... 50,000 73,892 266,932 217,228 217,228 13.42 15.44
</TABLE>
A-66
<PAGE>
Venture Value Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 75,013 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 72,075 48,211 44,211 -52.11% --
December 31, 1995....... 50,000 50,000 96,282 65,784 61,784 19.88 75.32%
December 31, 1996....... 50,000 50,000 115,242 80,369 76,869 21.95 47.01
December 31, 1997....... 50,000 50,000 147,342 104,796 101,796 25.17 40.67
December 31, 1998....... 50,000 50,000 161,599 117,115 114,615 22.03 32.51
U.S. Government Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 75,013 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 74,828 50,053 46,053 -38.86% --
December 31, 1995....... 50,000 50,000 82,311 56,238 52,238 3.82 53.28%
December 31, 1996....... 50,000 50,000 81,452 56,804 53,304 3.00 25.25
December 31, 1997....... 50,000 50,000 84,616 60,182 57,182 4.33 18.07
December 31, 1998....... 50,000 50,000 87,282 63,255 60,755 4.79 14.30
Strategic Bond Opportunities Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 75,013 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 73,266 49,008 45,008 -46.71% --
December 31, 1995....... 50,000 50,000 83,966 57,369 53,369 5.75 55.92%
December 31, 1996....... 50,000 50,000 91,718 63,963 60,463 9.16 32.31
December 31, 1997....... 50,000 50,000 97,569 69,396 66,396 9.37 23.50
December 31, 1998....... 50,000 50,000 95,434 69,164 66,664 7.15 16.78
</TABLE>
- --------
* 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-67
<PAGE>
Female Standard Non Smoker, Issue Age 70
$50,000 Initial Premium
$81,811 Initial Death Benefit
Bond Income Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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......... $50,000 $50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 82,947 51,122 47,122 -15.66% --
December 31, 1984....... 50,000 50,000 89,088 56,311 52,311 3.41 53.50%
December 31, 1985....... 50,000 50,000 100,818 65,320 61,820 9.46 34.81
December 31, 1986....... 50,000 50,000 110,400 73,266 70,266 10.70 26.69
December 31, 1987....... 50,000 50,000 107,750 73,185 70,685 8.29 19.31
December 31, 1988....... 50,000 75,767 111,447 77,406 75,406 7.99 16.17
December 31, 1989....... 50,000 75,767 119,699 84,942 83,442 8.40 14.74
December 31, 1990....... 50,000 75,767 123,826 89,706 88,706 8.11 13.14
December 31, 1991....... 50,000 75,767 139,851 103,356 102,856 9.02 13.11
December 31, 1992....... 50,000 75,767 144,956 109,212 109,212 8.72 12.06
December 31, 1993....... 50,000 75,767 156,979 120,487 120,487 8.87 11.69
December 31, 1994....... 50,000 75,767 146,552 114,506 114,506 7.57 9.94
December 31, 1995....... 50,000 75,767 172,489 137,081 137,081 8.51 10.55
December 31, 1996....... 50,000 75,767 175,005 141,335 141,335 8.10 9.84
December 31, 1997....... 50,000 75,767 188,391 154,468 154,468 8.18 9.69
December 31, 1998....... 50,000 75,767 199,606 166,011 166,011 8.13 9.44
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......... $50,000 $50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 83,150 51,247 47,247 -15.02% --
December 31, 1984....... 50,000 50,000 87,600 55,371 51,371 2.03 51.59%
December 31, 1985....... 50,000 50,000 90,373 58,553 55,053 4.19 28.67
December 31, 1986....... 50,000 50,000 92,041 61,083 58,083 4.58 19.99
December 31, 1987....... 50,000 50,000 93,574 63,557 61,057 4.70 15.51
December 31, 1988....... 50,000 65,444 96,167 66,793 64,793 4.97 13.01
December 31, 1989....... 50,000 65,444 100,419 71,260 69,760 5.39 11.61
December 31, 1990....... 50,000 65,444 103,905 75,274 74,274 5.53 10.47
December 31, 1991....... 50,000 65,444 105,667 78,093 77,593 5.41 9.38
December 31, 1992....... 50,000 65,444 105,088 79,175 79,175 5.04 8.27
December 31, 1993....... 50,000 65,444 104,064 79,873 79,873 4.63 7.34
December 31, 1994....... 50,000 65,444 104,800 81,884 81,884 4.44 6.74
December 31, 1995....... 50,000 65,444 107,322 85,291 85,291 4.42 6.38
December 31, 1996....... 50,000 65,444 109,397 88,350 88,350 4.36 6.04
December 31, 1997....... 50,000 65,444 111,869 91,726 91,726 4.32 5.77
December 31, 1998....... 50,000 65,444 114,422 95,164 95,164 4.28 5.54
</TABLE>
A-68
<PAGE>
Managed Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 78,989 48,993 44,993 -14.60% --
December 31, 1988....... 50,000 50,000 82,078 52,204 48,204 -2.17 34.59%
December 31, 1989....... 50,000 50,000 94,298 61,467 57,967 5.70 26.84
December 31, 1990....... 50,000 50,000 92,035 61,437 58,437 4.34 18.09
December 31, 1991....... 50,000 50,000 105,576 72,115 69,615 7.35 17.36
December 31, 1992....... 50,000 70,177 107,626 75,159 73,159 6.95 14.48
December 31, 1993....... 50,000 70,177 113,873 81,230 79,730 7.25 13.14
December 31, 1994....... 50,000 70,177 107,683 78,405 77,405 5.86 10.52
December 31, 1995....... 50,000 70,177 136,181 101,135 100,635 8.40 12.25
December 31, 1996....... 50,000 70,177 149,310 113,022 113,022 8.80 11.98
December 31, 1997....... 50,000 70,177 182,171 140,455 140,455 10.17 12.88
December 31, 1998....... 50,000 70,177 211,085 165,641 165,641 10.81 13.14
Midcap Value Sub-Account*
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 90,861 56,477 52,477 7.47% --
December 31, 1994....... 50,000 50,000 85,382 54,419 50,419 .50 37.74%
December 31, 1995....... 50,000 50,000 107,511 70,222 66,722 11.41 33.19
December 31, 1996....... 50,000 50,000 120,302 80,465 77,465 12.67 27.02
December 31, 1997....... 50,000 50,000 134,739 92,209 89,709 13.33 23.64
December 31, 1998....... 50,000 104,570 121,710 85,149 83,149 9.38 16.98
Small Cap Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 76,327 47,342 43,342 -19.32% --
December 31, 1995....... 50,000 50,000 94,443 60,069 56,069 7.12 46.49%
December 31, 1996....... 50,000 50,000 117,621 76,670 73,170 15.35 37.84
December 31, 1997....... 50,000 50,000 140,064 93,499 90,499 17.57 32.45
December 31, 1998....... 50,000 50,000 131,435 89,778 87,278 12.68 23.02
Balanced Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 80,987 49,705 45,705 -41.58% --
December 31, 1995....... 50,000 50,000 96,746 60,900 56,900 11.71 76.04%
December 31, 1996....... 50,000 50,000 107,324 69,256 65,756 13.47 42.26
December 31, 1997....... 50,000 50,000 118,886 78,591 75,591 13.94 31.45
December 31, 1998....... 50,000 50,000 123,778 83,758 81,258 12.36 24.30
</TABLE>
A-69
<PAGE>
International Magnum Equity Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $ 50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 82,935 50,900 46,900 -31.81% --
December 31, 1995....... 50,000 50,000 84,624 53,270 49,270 -1.25 56.96%
December 31, 1996....... 50,000 50,000 85,615 55,248 51,748 1.60 28.17
December 31, 1997....... 50,000 50,000 80,571 53,263 50,263 .17 16.26
December 31, 1998....... 50,000 50,000 82,475 55,808 53,308 1.55 12.76
Equity Growth Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $ 50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 76,685 47,065 43,065 -59.08% --
December 31, 1995....... 50,000 50,000 110,247 69,399 65,399 25.86 96.89%
December 31, 1996....... 50,000 50,000 118,713 76,605 73,105 19.16 49.03
December 31, 1997....... 50,000 50,000 142,197 94,002 91,002 20.81 39.10
December 31, 1998....... 50,000 50,000 200,521 135,687 133,187 26.50 39.56
Growth and Income Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $ 50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 90,467 56,232 52,232 6.72% --
December 31, 1994....... 50,000 50,000 84,870 54,093 50,093 .11 37.24%
December 31, 1995....... 50,000 50,000 110,899 72,435 68,935 12.77 34.74
December 31, 1996....... 50,000 50,000 124,737 83,431 80,431 13.82 28.28
December 31, 1997....... 50,000 50,000 158,935 108,768 106,268 17.52 28.09
December 31, 1998....... 50,000 124,211 188,986 132,215 130,215 18.39 26.42
Stock Index Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $ 50,000 $ 81,811 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 69,815 43,303 39,303 -30.24% --
December 31, 1988....... 50,000 50,000 76,718 48,796 44,796 -6.38 29.25%
December 31, 1989....... 50,000 50,000 97,627 63,637 60,137 7.16 28.50
December 31, 1990....... 50,000 50,000 87,740 58,570 55,570 2.92 16.57
December 31, 1991....... 50,000 50,000 109,242 74,619 72,119 8.16 18.22
December 31, 1992....... 50,000 73,892 111,985 78,203 76,203 7.72 15.29
December 31, 1993....... 50,000 73,892 117,491 83,811 82,311 7.76 13.67
December 31, 1994....... 50,000 73,892 113,627 82,733 81,733 6.62 11.30
December 31, 1995....... 50,000 73,892 150,209 111,553 111,053 9.64 13.53
December 31, 1996....... 50,000 73,892 174,938 132,421 132,421 10.60 13.83
December 31, 1997....... 50,000 73,892 223,445 172,277 172,277 12.29 15.07
December 31, 1998....... 50,000 73,892 276,826 217,228 217,228 13.42 15.80
</TABLE>
A-70
<PAGE>
Venture Value Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 81,811 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 78,554 48,211 44,211 -52.11% --
December 31, 1995....... 50,000 50,000 104,505 65,784 61,784 19.88 88.07%
December 31, 1996....... 50,000 50,000 124,545 80,369 76,869 21.95 52.37
December 31, 1997....... 50,000 50,000 158,526 104,796 101,796 25.17 43.96
December 31, 1998....... 50,000 50,000 173,075 117,115 114,615 22.03 34.71
U.S. Government Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 81,811 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 81,555 50,053 46,053 -38.86% --
December 31, 1995....... 50,000 50,000 89,340 56,238 52,238 3.82 64.43%
December 31, 1996....... 50,000 50,000 88,027 56,804 53,304 3.00 29.82
December 31, 1997....... 50,000 50,000 91,038 60,182 57,182 4.33 20.83
December 31, 1998....... 50,000 50,000 93,480 63,255 60,755 4.79 16.20
Strategic Bond Opportunities Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $ 81,811 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 79,852 49,008 45,008 -46.71% --
December 31, 1995....... 50,000 50,000 91,137 57,369 53,369 5.75 67.26%
December 31, 1996....... 50,000 50,000 99,122 63,963 60,463 9.16 37.13
December 31, 1997....... 50,000 50,000 104,975 69,396 66,396 9.37 26.39
December 31, 1998....... 50,000 50,000 102,211 69,164 66,664 7.15 18.72
</TABLE>
- --------
* 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-71
<PAGE>
Male Standard Non Smoker, Issue Age 65
Female Standard Non Smoker, Issue Age 60
(Joint Equal Age 63)
$50,000 Initial Premium
$114,909 Initial Death Benefit
Bond Income Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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......... $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 116,136 51,194 47,194 -15.29% --
December 31, 1984....... 50,000 50,000 123,559 56,620 52,620 3.86 95.65%
December 31, 1985....... 50,000 50,000 138,437 65,906 62,406 9.90 54.30
December 31, 1986....... 50,000 50,000 149,980 74,131 71,131 11.10 38.83
December 31, 1987....... 50,000 50,000 144,724 74,216 71,716 8.65 27.69
December 31, 1988....... 50,000 76,937 147,943 78,654 76,654 8.32 22.49
December 31, 1989....... 50,000 76,937 157,032 86,484 84,984 8.72 19.76
December 31, 1990....... 50,000 76,937 160,543 91,517 90,517 8.41 17.21
December 31, 1991....... 50,000 76,937 179,230 105,654 105,154 9.31 16.52
December 31, 1992....... 50,000 76,937 183,685 111,864 111,864 9.00 14.93
December 31, 1993....... 50,000 123,368 196,769 123,659 123,659 9.14 14.16
December 31, 1994....... 50,000 123,368 181,797 117,756 117,756 7.84 12.05
December 31, 1995....... 50,000 123,368 211,855 141,254 141,254 8.77 12.40
December 31, 1996....... 50,000 123,368 212,910 145,930 145,930 8.36 11.47
December 31, 1997....... 50,000 123,368 227,113 159,809 159,809 8.44 11.12
December 31, 1998....... 50,000 123,368 238,541 172,096 172,096 8.39 10.72
Money Market Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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......... $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1983....... 50,000 50,000 116,420 51,320 47,320 -14.64% --
December 31, 1984....... 50,000 50,000 121,496 55,674 51,674 2.47 93.22%
December 31, 1985....... 50,000 50,000 124,093 59,077 55,577 4.61 47.28
December 31, 1986....... 50,000 50,000 125,037 61,803 58,803 4.96 31.49
December 31, 1987....... 50,000 50,000 125,682 64,451 61,951 5.05 23.61
December 31, 1988....... 50,000 66,453 127,657 67,868 65,868 5.29 19.16
December 31, 1989....... 50,000 66,453 131,737 72,553 71,053 5.69 16.49
December 31, 1990....... 50,000 66,453 134,714 76,793 75,793 5.82 14.44
December 31, 1991....... 50,000 66,453 135,418 79,828 79,328 5.68 12.68
December 31, 1992....... 50,000 66,453 133,164 81,096 81,096 5.31 11.05
December 31, 1993....... 50,000 81,486 130,440 81,975 81,975 4.89 9.71
December 31, 1994....... 50,000 81,486 130,002 84,207 84,207 4.70 8.78
December 31, 1995....... 50,000 81,486 131,814 87,887 87,887 4.67 8.17
December 31, 1996....... 50,000 81,486 133,089 91,221 91,221 4.61 7.61
December 31, 1997....... 50,000 81,486 134,862 94,896 94,896 4.57 7.16
December 31, 1998....... 50,000 81,486 136,739 98,650 98,650 4.53 6.77
</TABLE>
A-72
<PAGE>
Managed Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 110,338 49,114 45,114 -14.26% --
December 31, 1988....... 50,000 50,000 113,557 52,538 48,538 -1.76 63.50%
December 31, 1989....... 50,000 50,000 129,144 62,065 58,565 6.10 42.70
December 31, 1990....... 50,000 50,000 124,677 62,198 59,198 4.71 28.28
December 31, 1991....... 50,000 50,000 141,388 73,167 70,667 7.96 24.94
December 31, 1992....... 50,000 71,261 142,449 76,409 74,409 7.27 20.29
December 31, 1993....... 50,000 71,261 148,947 82,746 81,246 7.55 17.78
December 31, 1994....... 50,000 71,261 139,206 80,028 79,028 6.15 14.28
December 31, 1995....... 50,000 71,261 174,028 103,435 102,935 8.69 15.47
December 31, 1996....... 50,000 71,261 188,682 115,824 115,824 9.08 14.72
December 31, 1997....... 50,000 121,946 227,744 144,226 144,226 10.44 15.72
December 31, 1998....... 50,000 121,946 261,190 170,428 170,428 11.08 15.22
Midcap Value Sub-Account*
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 126,824 56,636 52,636 7.96% --
December 31, 1994....... 50,000 50,000 118,034 54,784 50,784 .94 67.19%
December 31, 1995....... 50,000 50,000 147,115 70,924 67,424 11.84 49.78
December 31, 1996....... 50,000 50,000 162,823 81,480 78,480 13.07 37.93
December 31, 1997....... 50,000 50,000 180,270 93,571 91,071 13.70 31.59
December 31, 1998....... 50,000 106,185 160,933 86,580 84,580 9.71 22.89
Small Cap Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 106,618 47,459 43,459 -18.99% --
December 31, 1995....... 50,000 50,000 130,666 60,454 56,454 7.56 78.01%
December 31, 1996....... 50,000 50,000 161,089 77,417 73,917 15.79 55.10
December 31, 1997....... 50,000 50,000 189,750 94,662 91,662 17.98 43.88
December 31, 1998....... 50,000 50,000 176,028 91,093 88,593 13.04 30.96
Balanced Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 113,571 49,740 45,740 -41.31% --
December 31, 1995....... 50,000 50,000 134,404 61,196 57,196 12.21 133.32%
December 31, 1996....... 50,000 50,000 147,631 69,842 66,342 13.94 64.81
December 31, 1997....... 50,000 50,000 161,815 79,489 76,489 14.37 44.89
December 31, 1998....... 50,000 50,000 166,580 84,909 82,409 12.74 33.48
</TABLE>
A-73
<PAGE>
International Magnum Equity Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 116,303 50,936 46,936 -31.50% --
December 31, 1995....... 50,000 50,000 117,564 53,529 49,529 -.81 108.03%
December 31, 1996....... 50,000 50,000 117,768 55,715 52,215 2.02 48.49
December 31, 1997....... 50,000 50,000 109,661 53,869 50,869 .55 28.14
December 31, 1998....... 50,000 50,000 110,990 56,574 54,074 1.90 21.09
Equity Growth Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1994....... 50,000 50,000 107,538 47,098 43,098 -58.89% --
December 31, 1995....... 50,000 50,000 153,160 69,736 65,736 26.42 160.95%
December 31, 1996....... 50,000 50,000 163,296 77,253 73,753 19.65 72.66
December 31, 1997....... 50,000 50,000 193,545 95,076 92,076 21.26 53.32
December 31, 1998....... 50,000 50,000 269,870 137,558 135,058 26.93 49.87
Growth and Income Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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.......... $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1993....... 50,000 50,000 126,274 56,391 52,391 7.21% --
December 31, 1994....... 50,000 50,000 117,325 54,455 50,455 .54 66.59%
December 31, 1995....... 50,000 50,000 151,751 73,160 69,660 13.22 51.53
December 31, 1996....... 50,000 50,000 168,827 84,484 81,484 14.23 39.30
December 31, 1997....... 50,000 50,000 212,647 110,377 107,877 17.89 36.33
December 31, 1998....... 50,000 126,133 249,894 134,440 132,440 18.74 32.81
Stock Index Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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............. $50,000 $50,000 $114,909 $ 50,000 $ 46,000 -- --
December 31, 1987....... 50,000 50,000 97,521 43,409 39,409 -29.96% --
December 31, 1988....... 50,000 50,000 106,142 49,107 45,107 -5.99 57.01%
December 31, 1989....... 50,000 50,000 133,705 64,257 60,757 7.58 44.57
December 31, 1990....... 50,000 50,000 118,858 59,295 56,295 3.29 26.62
December 31, 1991....... 50,000 50,000 146,300 75,709 73,209 8.51 25.86
December 31, 1992....... 50,000 75,033 148,219 79,503 77,503 8.04 21.13
December 31, 1993....... 50,000 75,033 153,680 85,376 83,876 8.07 18.34
December 31, 1994....... 50,000 75,033 146,891 84,446 83,446 6.91 15.09
December 31, 1995....... 50,000 75,033 191,956 114,091 113,591 9.93 16.79
December 31, 1996....... 50,000 75,033 221,069 135,706 135,706 10.88 16.62
December 31, 1997....... 50,000 145,580 279,345 176,903 176,903 12.57 17.50
December 31, 1998....... 50,000 145,580 342,539 223,508 223,508 13.69 17.93
</TABLE>
A-74
<PAGE>
Venture Value Sub-Account
<TABLE>
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $114,909 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 110,158 48,245 44,245 -51.89% --
December 31, 1995....... 50,000 50,000 145,183 66,104 62,104 20.41 149.26%
December 31, 1996....... 50,000 50,000 171,321 81,049 77,549 22.45 76.52
December 31, 1997....... 50,000 50,000 215,775 105,996 102,996 25.63 58.67
December 31, 1998....... 50,000 50,000 232,929 118,729 116,229 22.44 44.66
U.S. Government Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $114,909 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 114,367 50,088 46,088 -38.58% --
December 31, 1995....... 50,000 50,000 124,115 56,512 52,512 4.29 117.93%
December 31, 1996....... 50,000 50,000 121,085 57,284 53,784 3.42 50.40
December 31, 1997....... 50,000 50,000 123,910 60,869 57,869 4.72 33.18
December 31, 1998....... 50,000 50,000 125,803 64,124 61,624 5.14 24.78
Strategic Bond Opportunities Sub-Account
<CAPTION>
Minimum Internal Rate
Total Guaranteed 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........ $50,000 $50,000 $114,909 $50,000 $46,000 -- --
December 31, 1994....... 50,000 50,000 111,979 49,043 45,043 -46.46% --
December 31, 1995....... 50,000 50,000 126,611 57,648 53,648 6.22 121.68%
December 31, 1996....... 50,000 50,000 136,347 64,504 61,004 9.61 58.87
December 31, 1997....... 50,000 50,000 142,880 70,188 67,188 9.78 39.31
December 31, 1998....... 50,000 50,000 137,553 70,114 67,614 7.51 27.49
</TABLE>
- --------
* 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-75
<PAGE>
APPENDIX C
EXAMPLE OF EFFECT OF NEGATIVE INVESTMENT PERFORMANCE
ON CALCULATION OF SURRENDER CHARGES
If there has been negative investment performance under your Policy (that
is, cash value is less than your total premium payments because net investment
experience of the Sub-Accounts has not been at least equal to total charges or
has been negative), we will calculate any Surrender Charge by deeming
additional payments to have been reduced before the initial premium. If we
consider negative investment performance to completely reduce additional
payments and to further reduce initial premium, we will consider any
subsequent increase in cash value (from earnings or net additional payments)
to increase initial premium before additional payments.
For example, assume that an initial premium of $30,000 and a net additional
payment of $20,000 have been paid, so that total net premium payments equals
$50,000. Assume further that because of negative investment performance, cash
value is equal to $40,000, or $10,000 less than total net premium payments.
For purposes of calculating the Surrender Charge upon a surrender, we would
consider the amount of additional payments at this time to equal $10,000, and
the amount of the initial premium to equal $30,000. If, because of negative
investment performance, cash value were equal to $20,000, we will consider the
negative investment performance to have completely reduced additional
payments, and the initial premium remaining would be $20,000. If, in this last
situation, there was a subsequent increase in cash value (from earnings or net
additional payments) of $15,000 occurring after the negative investment
performance, $10,000 will be deemed to increase the initial premium first back
to $30,000, and the remaining $5,000 would be deemed then to increase
additional payments to $5,000.
EXAMPLE OF ADJUSTMENT TO PREMIUM TAX CHARGE RESULTING FROM ADDITIONAL PAYMENTS
As described under "Charges and Expenses," if an additional payment is
accepted, a proportional adjustment will be made in the rate of the state
premium tax charge deducted as part of the Monthly Deduction.
For example, assume that the cash value immediately before the additional
payment is $30,000, and the net additional payment would increase the cash
value to $50,000. As a result, the state premium tax charge deducted monthly
as part of the Monthly Deduction would be 60% of what it was originally,
resulting in deductions thereafter at an annual rate of 0.15% for the state
premium tax charge.
A-76
<PAGE>
APPENDIX D
EXAMPLES OF EFFECT OF SURRENDERS AND PARTIAL
SURRENDERS ON OPERATION OF POLICY
The following examples assume that an initial premium of $40,000 was paid.
The examples further assume that no additional payments have been made and
that there have been no partial surrenders.
Based on these hypothetical assumptions, the examples demonstrate the effect
of surrenders and partial surrenders on a hypothetical Policy at the beginning
of Policy Year 5, assuming that current cash value is either $60,000 or
$30,000.
THE HYPOTHETICAL CURRENT CASH VALUES OF $60,000 AND $30,000 ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
INVESTMENT PERFORMANCE.
Surrender Charge on Full Surrender
$60,000 current cash value:
Preferred Surrender $20,000 [The maximum of (1) $20,000 (cash value
Amount: calculated on the date of surrender, or $60,000,
in excess of the initial premium paid, or
$40,000); and (2) $4,000 (10% of the initial
premium paid, or $40,000)]
Surrender Charge Imposed: $2,000[5% of $40,000 ($60,000, the amount being
surrendered, less $20,000, the preferred
surrender amount)]
Surrender Proceeds:
$58,000 [$60,000, the cash value of the Policy,
less $2,000, the Surrender Charge]
$30,000 current cash value:
Preferred Surrender $4,000 [The maximum of (1)--$10,000 (cash value
Amount: calculated on the date of surrender, or $30,000,
in excess of the initial premium paid, or
$40,000); and (2) $4,000 (10% of the initial
premium paid, or $40,000)]
Surrender Charge Imposed: $1,300 [5% of $26,000 ($30,000, or the amount
being surrendered, less $4,000, the preferred
surrender amount)]
Surrender Proceeds:
$28,700 [$30,000, the cash value of the Policy,
less $1,300, the Surrender Charge]
Surrender Charge on Partial Surrender and Effect on Cash Value
$60,000 current cash value:
Partial Surrender: $30,000
Preferred Surrender
Amount: $20,000The maximum of (1) $20,000 (cash value
calculated on the date of surrender, or $60,000,
in excess of the initial premium paid, or
$40,000); and (2) $4,000 (10% of the initial
premium paid, or $40,000)]
A-77
<PAGE>
Surrender Charge Imposed:
$500 [5% of $10,000 ($30,000, the amount being
surrendered, less $20,000, the preferred
surrender amount)]
Surrender Proceeds: $29,500($30,000, the amount being surrendered,
less $500, the Surrender Charge being imposed)
Remaining Cash Value: $30,000
Remaining Initial Premium: $30,000
Remaining Surrender $1,500 [5% of $30,000]
Charge:
Remaining Cash Surrender $28,500
Value:
$30,000 current cash value:
Partial Surrender: $20,000
Preferred Surrender $4,000 [The maximum of (1)--$10,000 (cash value
Amount: calculated on the date of surrender, or $30,000,
in excess of the initial premium paid, or
$40,000); and (2) $4,000 (10% of the initial
premium paid, or $40,000)]
Surrender Charge Imposed: $800 [5% of $16,000 ($20,000, or the amount being
surrendered, less $4,000, the preferred surrender
amount)]
Surrender Proceeds: $19,200[$20,000, the amount being surrendered,
less $800, the surrender charge being imposed]
Remaining Cash Value: $10,000
Remaining Initial Premium: $20,000
Remaining Surrender $1,000 [5% of $20,000]
Charge:
Remaining Cash Surrender $9,000
Value:
Effect of Partial Surrender on Guaranteed Death Benefit
Making a partial surrender will reduce the amount of the minimum guaranteed
death benefit on a proportionate basis, based on the amount of the reduction
in cash value (including any Surrender Charge) because of the partial
surrender, as compared to the cash value before the reduction (but not more
than the partial surrender amount).
Cash Value: $60,000
Partial Surrender: $15,000
Cash Value after $45,000
Surrender:
Minimum Guaranteed Death
Benefit before partial $40,000 [Initial premium paid]
surrender:
Minimum Guaranteed Death
Benefit after partial $30,000 [$40,000, or the minimum guaranteed death
surrender: benefit before partial surrender, multiplied by
$45,000, the cash value after the partial
surrender, divided by $60,000, the cash value
before the partial surrender]
A-78
<PAGE>
APPENDIX E
LONG-TERM MARKET TRENDS
The information below compares 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 does
not predict future performance. The information does not reflect policy
charges associated with a variable life policy.
The data indicates that, historically, the investment performance of common
stocks over long periods has been positive and generally superior to that of
long-term, high grade debt securities. Common stocks have, however, been
subject to more dramatic market adjustments over short periods.
Over the 53 20-year time periods beginning in 1926 and ending in 1998 (i.e.,
1926-1945, 1927-1946, and so on through 1979-1998):
-- The average annual return of common stocks was superior to that of high
grade, long-term corporate bonds in 51 of the 54 periods.
-- The average annual return of common stocks surpassed that of U.S.
Treasury bills in each of the 54 periods.
-- Common stock average annual returns exceeded the average annual rate of
inflation in each of the 54 periods.
Over the 44 30-year periods beginning in 1926 and ending in 1998, 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 44
periods.
From 1926 through 1998 the average annual return for common stocks was
11.0%, compared to 5.7% for high grade, long-term corporate bonds, 3.8% for
U.S. Treasury bills and 3.1% for the Consumer Price Index.
- --------
* Source: Stocks, Bonds, Bills and Inflation 1999 Yearbook(TM), Ibbotson
Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
----------------
SUMMARY: HISTORIC S&P STOCK INDEX RESULTS FOR SPECIFIC HOLDING PERIODS
The following chart categorizes the historical results of the Standard &
Poor's 500 Stock Index with dividends reinvested, over one-year, five-year and
twenty-year periods beginning in 1926 and ending in 1998.
The chart does not predict future stock market results. It shows the
historic performance of a broad index of stocks and not the performance of any
fund or investment.
----------------
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% 39%
5 years 10% 15% 15% 31% 19% 10%
10 years 3% 10% 34% 24% 27% 2%
20 years 0% 6% 32% 55% 7% 0%
</TABLE>
- --------
Source: Stocks, Bonds, Bills and Inflation 1999 Yearbook(TM), Ibbotson
Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
A-79
<PAGE>
APPENDIX F
DOLLAR COST AVERAGING
Dollar cost averaging 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--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. Under dollar cost averaging, an investor does not invest more when
the price of shares is high and less 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 you have 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
you sell shares should be higher than their average cost. This price could be
lower, however, if the fund you choose does not follow these historical
trends.
You should consider your ability to continue on-going dollar cost averaging
purchases so that you can take advantage of periods of low price levels if you
are considering dollar cost averaging.
A-80
<PAGE>
NEW ENGLAND LIFE INSURANCE COMPANY
501 Boylston Street
Boston, MA 02116
RECEIPT
This is to acknowledge receipt of an American Gateway Series Prospectus
dated April 30, 1999. This Variable Life Policy is offered by New England Life
Insurance Company.
_____________________________________ _____________________________________
(Date) (Client's Signature)
<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 modified single premium variable 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 80 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484(b) under the Securities Act of 1933.
Representations.
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) (to be filed by amendment)
Sutherland Asbill & Brennan LLP
(see Exhibit 6 below)(to be filed by amendment)
Independent Auditor (see Exhibit 11 below)
(to be filed by amendment)
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 NELICO and other
broker dealers *
(e) Additional Forms of selling agreement among
NELICO, NES and other broker-dealers ####
(4) None
(5) (a) Specimens of Policy #
(b) Accelerated Death Benefit Rider +
(c) Accelerated Death Benefit Rider- Long Term Care
(6) (a) Amended and restated Articles of
Organization of NELICO ###
(b) Amended and restated By-Laws of NELICO *
(c) Amendment to the Amended and restated
Articles of Organization of NELICO
(7) None
(8) None
(9) None
(10) (a) Specimen of Applications for Policy #
(b) Additional specimen of Applications
2. See Exhibit 3(i)
3. (i) Opinion and Consent of H. James Wilson, Esquire ##
(ii) Opinion and Consent of Rodney J. Chandler,
F.S.A., M.A.A.A. (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,
Robert H. Benmosche and Catherine A. Rein ++
(iii) Powers of Attorney for David Rogers and
Richard Robinson +++
8.
Inapplicable
9. Inapplicable
10. Inapplicable
11. Consent of Independent Auditor
(to be filed by amendment)
12. Schedule for computation of performance
quotations ***
13. Consolidated memorandum describing certain
procedures, filed pursuant to Rule 6e-3(T)
(b)(12)(iii) ***
# Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 33-65263, filed December 21, 1995.
II - 3
<PAGE>
## Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 33-65263,
filed June 10, 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 be reference to the Post-Effective Amendment No.2 to
the Variable Account's Form S-6 Registration Statement, File No. 33-65263,
filed April 30, 1997.
* Incorporated herein by reference to the 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 Post-Effective Amendment No. 9 to the
Variable Account's Form S-6 Registration Statement, File No. 33-66864,
filed February 25, 1998.
*** Incorporated herein by reference to Post-Effective Amendment No. 9 to the
Variable Account's Form S-6 Registration Statement, File No. 33-52050,
filed April 24, 1998.
+ Incorporated herein by reference to Post-Effective Amendment No. 3 to the
Variable Account's Form S-6 Registration Statement, File No. 33-65263,
filed April 30, 1998.
++ Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 333-46401,
filed July 9, 1998.
+++ Incorporated herein by reference to Post-Effective Amendment No. 4 to the
Variable Account's Form S-6 Registration Statement, File No. 33-88082,
filed January 20, 1999.
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 24th day of
February, 1999.
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 24th day of
February, 1999.
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 24, 1999.
*
- --------------------- Chairman, President and
James M. Benson Chief Executive Officer
* Director
- ---------------------
Robert H. Benmosche
* Director
- ---------------------
Susan C. Crampton
* Director
- ---------------------
Edward A. Fox
* Director
- ---------------------
George J. Goodman
* Director
- ---------------------
Evelyn E. Handler
* Director
- ---------------------
Philip K. Howard, Esq.
* Director
- ---------------------
Bernard A. Leventhal
* Director
- ---------------------
Thomas J. May
* Director
- ---------------------
Stewart G. Nagler
* Director
- ---------------------
Catherine A. Rein
<PAGE>
*
- --------------------------- Second Vice President and
Richard A. Robinson Chief Accounting Officer
*
- --------------------------- Executive Vice President and
David Y. Rogers Chief Financial Officer
*
- --------------------------- 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. 333-46401, on July 9, 1998, and Post-Effective
Amendment No. 4 to the Variable Account's Form S-6 Registration Statement,
File No. 33-88082, on January 20, 1999.
<PAGE>
EXHIBIT LIST
Sequentially
Exhibit Number Title Numbered Page*
- -------------- ----- --------------
1.A.(5)(c) Accelerated Death Benefit Rider-
Long Term Care
1.A.(6)(c) Amendment to the Amended and
restated Articles of Organization
of NELICO
1.A.(10)(b) Specimen Applications to policy
_________
* Page numbers inserted on manually-signed copy only.
<PAGE>
Exhibit 99.1.A.5(c)
Rider: Long Term Care Accelerated Benefits
Receipt of benefits under this Rider may be taxable. Therefore, prior to
requesting an accelerated benefit, you should consult a personal tax advisor
to determine any tax consequences.
The Company agrees to pay accelerated benefits to the Owner of the Policy if
one or more of the Insureds is receiving Qualified Long Term Care Services, as
defined below. This agreement is subject to the following provisions.
Conditions
The Company will pay accelerated benefits subject to the following condi-
tions:
. The Policy must be in force.
. Each assignee, if any, must give written consent to the payment of accel-
erated benefits in a form satisfactory to the Company.
. Each irrevocable beneficiary, if any, must give written consent to the
payment of accelerated benefits in a form satisfactory to the Company.
. You are not required by law to use the accelerated benefits to meet the
claims of any creditors, whether in bankruptcy or not.
. You are not required by a government agency to accelerate benefits in or-
der to apply for, obtain or keep a government benefit or entitlement.
Eligible Proceeds
Eligible Proceeds at any time equal: the amount of Death Benefit at that
time provided under the Policy; less an amount to cover Monthly Deductions
that would be made in the event of death.
Payout Factor
The Payout Factor applicable to accelerated benefits will be determined by
the Company as of the date the first written request for accelerated benefits
is received by the Company at its Home Office. This Payout Factor will apply
for as long as the Policy is in force. The Payout Factor will remain the same,
even if the payment of accelerated benefits stops for a period of time and
then resumes.
The Company's schedule of Payout Factors may change from time to time. Any
change will affect only the Payout Factor for accelerated benefit requests on
or after the date of the change. In determining Payout Factors, the Company
may consider:
. The life expectancy of the Insured.
. The age, gender and underwriting class of the Insured.
. Whether the Policy covers one or two Insureds.
. The Net Cash Value on the date used to calculate the Eligible Proceeds.
. The Death Benefit on the date the accelerated benefit request is received
by the Company at its Home Office.
. Expected future charges under the Policy and investment management reve-
nue which would be generated by the Policy without the payment of an ac-
celerated benefit.
. The nature of the Qualified Long Term Care Services an Insured receives.
. Interest at a rate set by the Company.
. The maximum percentage of the Policy's death benefit which will be sur-
rendered with each accelerated benefit payment.
. The maximum amount of each accelerated benefit payment.
. Whether the Qualified Long Term Care Services result from mental, emo-
tional or nervous disorders other than Alzheimer's disease or similar
forms of senility or irreversible dementia.
. The costs of processing accelerated benefit requests and payments.
Accelerated Benefit Eligibility
In order to qualify for accelerated benefit payments, the Insured must be
receiving Qualified Long Term Care Services.
Qualified Long Term Care Services means necessary diagnostic, preventive,
therapeutic, caring, treating, mitigating, and rehabilitative services, and
maintenance or personal care services which:
are required by a Chronically Ill Individual; and
are provided pursuant to a plan of care prescribed by a licensed health
care practitioner.
NEV-81-2
<PAGE>
An insured will be considered to be a Chronically Ill Individual only if he
or she has been certified by a licensed health care practitioner within the
preceding 12 months as:
being unable to perform without Substantial Assistance from another indi-
vidual at least 2 Activities of Daily Living for a period of at least 90
days due to loss of functional capacity; or
requiring Substantial Supervision to protect such individual from threats
of health and safety due to Severe Cognitive Impairment.
Activities of Daily Living are the following: eating; toileting; transfer-
ring (getting in and out of a chair or bed); bathing; dressing; and conti-
nence.
A person requires Substantial Assistance if he or she requires hands-on as-
sistance or standby assistance to perform an Activity of Daily Living or to
prevent, by physical intervention, an injury while an individual is performing
an Activity of Daily Living.
Severe Cognitive Impairment is the deterioration or loss of intellectual ca-
pacity from Alzheimer's disease or similar forms of senility or irreversible
dementia as measured and confirmed by clinical evidence and standardized tests
that reliably measure:
. Short or long term memory;
. Orientation as to person, place and time; and
. Deductive or abstract reasoning.
Substantial Supervision means continual supervision (which may include cuing
by verbal prompting, gestures, or other demonstrations) by another person that
is necessary to protect a person with a Severe Cognitive Impairment from
threats to his or her safety.
Maintenance and personal care services means any care the primary purpose of
which is the provision of needed assistance with any of the disabilities as a
result of which the individual is considered to be a Chronically Ill Individ-
ual (including the protection from threats to health and safety due to Severe
Cognitive Impairment).
Accelerated benefits will not be paid under this Rider for any of the fol-
lowing:
Qualified Long Term Care Services that are rendered to an Insured who be-
came a Chronically Ill Individual in whole or in part as a result of an at-
tempted suicide or a self-inflicted injury.
Expenses that are reimbursable under title XVIII of the Social Security Act
or would be so reimbursable but for the application of a deductible or co-
insurance amount. This limitation does not apply to any expense reimburs-
able under title XVIII of the Social Security Act only as a secondary pay-
or.
Expenses compensated by any other insurance.
Medical or other types of supplies.
Home Delivered Meals.
Services provided by members of the Insured's immediate family (spouse,
parent, child, brother, or sister).
Services provided by anyone who resides in an Insured's household.
Services for which no charges would be made in the absence of insurance.
Accelerated Benefit Request Process
A request to receive accelerated benefits under this Rider must be in writ-
ten form satisfactory to the Company.
You must also provide the Company with:
. A certification signed by a licensed health care practitioner that an In-
sured is a Chronically Ill Individual and is receiving Qualified Long
Term Care Services; and
. Any other information needed by the Company to process your request.
The certification must be supported by evidence satisfactory to the Company,
including the plan of care prescribed by a licensed health care practitioner
pursuant to which an Insured is receiving Qualified Long Term Care Services.
The Company may require a second opinion by a licensed health care practi-
tioner chosen by the Company, at the Company's expense. This right will be ex-
ercised at a location convenient to the Insured.
Once eligibility has been determined by the Company, you will be notified in
writing of the Payout Factor and payment terms that will apply to the acceler-
ated benefit. In order to receive the accelerated benefit, you must sign and
return to the Company the election form included with the notice. To continue
receiving the accelerated benefit, the Insured must be recertified by a li-
censed health care practitioner every 12 months as satisfying the conditions
described above necessary to be considered a Chronically Ill Individual.
<PAGE>
Amount of Accelerated Benefits
Accelerated benefits will be paid monthly and are limited to actual costs
incurred by the payee for Qualified Long Term Care Services provided for an
Insured during the previous month, unless the Company has elected to pay a per
diem amount as described below. The maximum amount of Eligible Proceeds sur-
rendered for each monthly payment is 2% of the Eligible Proceeds on the day
the first request for accelerated benefits is received by the Company at its
Home Office.
The accelerated benefit paid will equal: the amount of Eligible Proceeds
surrendered for each payment multiplied by the Payout Factor; less the de-
crease in Policy Loan Balance described below in the first paragraph of the
Effect of Accelerated Benefit Payments on Policy Values provision.
In lieu of paying accelerated benefits for actual costs incurred by the
payee for Qualified Long Term Care Services provided for an Insured, the Com-
pany may elect to pay a per diem amount not to exceed $175 per day (adjusted
for inflation as provided in section 7702B(d) of the Internal Revenue Code of
1986, as amended (the "Code")).
Effect of Accelerated Benefit Payments on Policy Values
Each monthly accelerated benefit payment will result in a reduction, as de-
scribed below, in the Death Benefit of the Policy. The Death Benefit under the
policy after each payment will equal: the Death Benefit immediately prior to
the payment; less the amount of Eligible Proceeds surrendered for the payment.
After each accelerated benefit payment is paid, the Variable Account Value,
Minimum Guaranteed Death Benefit and Policy Loan Balance will be reduced in
proportion to the reduction in Death Benefit.
Accelerated benefits will be paid monthly to the extent that the remaining
Eligible Proceeds of the Policy are greater than zero. You must provide proof
satisfactory to the Company of the type and the cost of Qualified Long Term
Care Services. You must also notify the Company when any Insured is no longer
receiving Qualified Long Term Care Services.
Any actions taken and payments made by the Company before it receives your
written request for accelerated benefits will affect the amounts paid under
this Rider.
Contract
This Rider is made part of the Policy to which it is attached if the Rider
is listed in the Policy Schedule. This Rider has no cash value.
This Rider is intended to provide benefits that will be treated as amounts
paid by reason of the death of the Insured under section 101(g) of the Code.
Any provision of this Rider or the Policy to the contrary notwithstanding,
this Rider shall be construed in a manner consistent with section 7702B of the
Code.
Date of Issue
The Date of Issue of this Rider is the same as the Date of Issue of the Pol-
icy unless the later Date of Issue is shown for the Rider in the Policy Sched-
ule. The effective date of the Rider is its Date of Issue.
Termination
This Rider will terminate upon the earliest of:
. Termination of the Policy;
. The date on which the Policy with this Rider attached would be disquali-
fied as life insurance under the Internal Revenue Code as interpreted by
the Internal Revenue Service;
. Receipt by the Company at its Home Office of a written election signed by
you to terminate the Rider;
. The death of the Insured if only one Insured is covered under the Policy;
and
. The death of both Insureds if two Insureds are covered under this Policy.
New England Life Insurance Company
501 Boylston Street, Boston, Massachusetts
<TABLE>
<S> <C>
ABCD ABCD
President Secretary
</TABLE>
<PAGE>
Exhibit 99.1.A.10(b)
Amendment to Application for
[_]Single Life Insurance (Complete for (Proposed) Insured 1.)
[_]Survivorship Life Insurance (Complete for (Proposed) Insureds 1 and 2.)
- --------------------------------------------------------------------------------
(Proposed) Insured 1: _______________ Policy 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
For New Issues
Date: _________________________ ____________________________________________
Applicant, if other than Proposed
Insured(s)
For Policy Changes
Date: _________________________ ____________________________________________
Owner of Policy Before Change, if other
than Insured(s)
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
<TABLE>
<S> <C>
(LOGO) (LOGO)
President Secretary
</TABLE>
NEV APP-38-95
<PAGE>
Administrative Office:
501 Boylston Street
Boston, Massachusetts 02117
(LOGO)
- --------------------------------------------------------------------------------
Application to New England Variable Life Insurance Company For
[_] Single Premium Variable Life Insurance (Complete for Insured 1.)
[_] Single Premium Variable Survivorship Life Insurance (Complete for
Insureds 1 and 2.)
For [_] Reinstatement [_] Reduction in Rating [_] Other
Policy No.(s): ______________________________________________________
On the Insured(s): ______________________________________________________
(Print name(s) of Insured(s).)
Questions below pertain to the Insured(s) unless otherwise indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Insured 1 Insured 2
<C> <S> <C> <C> <C> <C>
1. Have you been actively at work at
least 30 hours per week for the past
six months: at your usual place of
employment; performing all the
regular duties of your occupation;
and on a work schedule not reduced or
changed because of health? (If NO,
explain in REMARKS.) [_] YES [_] NO [_] YES [_] NO
2. Occupation (Give job title and
duties.)
3. Employed by (Give name and address.)
4. Financial a. Annual Income $ $
Status: b. Net worth, exclusive of
home, furnishings and autos $ $
5. 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, Circle all that apply and
give details in REMARKS.) [_] YES [_] NO [_] YES [_] NO
6. Have you:
a. Used any tobacco in the past year?
(If YES, complete the following.) [_] YES [_] NO [_] YES [_] NO
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?
(If YES, give details in REMARKS.) [_] YES [_] NO [_] YES [_] NO
7. a. Driver's License No.
b. State
8. Do you intend to travel or reside
outside of the United States?
(If YES, give details in REMARKS.) [_] YES [_] NO [_] YES [_] NO
9. Any other negotiations for life
insurance or annuities pending or
contemplated? (If YES, give details
in REMARKS.) [_] YES [_] NO [_] YES [_] NO
10. Life Insurance in Force (If NONE, so state. Type P = Personal; B =
Business; G = Group) (Use separate sheet if more space needed.)
</TABLE>
<TABLE>
<CAPTION>
Insured Company Type Year of Issue Life Amount ADB Amount
-------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
[_] 1 [_] 2 $ $
-------------------------------------------------------------------
[_] 1 [_] 2 $ $
-------------------------------------------------------------------
[_] 1 [_] 2 $ $
</TABLE>
11. If this is an Application for Reduction in Rating, ________________________
state the reasons why it is believed this
Application should be approved. ________________________
NEV APP-39-95
<PAGE>
(Use separate sheet if more space needed.)
Application (continued)
- --------------------------------------------------------------------------------
(Complete 12-17 unless a current Part II Application is or will be available
for inclusion as part of this Application.)
- --------------------------------------------------------------------------------
Give details to each YES answer to questions 12 through 15 in REMARKS.
<TABLE>
<CAPTION>
Insured 1 Insured 2
<C> <S> <C> <C> <C> <C>
12. Has life or disability insurance on
your life ever been declined,
postponed or modified as to plan,
amount or rate? [_] YES [_] NO [_] YES [_] NO
13. Have benefits or payments ever been
requested or received because of any
injury, sickness or disability? [_] YES [_] NO [_] YES [_] NO
14. Any existing impairment to health or
physical condition? [_] YES [_] NO [_] YES [_] NO
15. a. Height ft. in. ft. in.
b. Weight lbs. lbs.
c. Any weight change in the past
year? [_] YES [_] NO [_] YES [_] NO
If YES: lbs. Gain/Loss lbs. Gain/Loss
16. Name and address of your personal
physician? (If NONE, so state.)
17. Have you within the past 5 years:
had a checkup or consultation; been
a patient in a medical facility; or
been advised to have any diagnostic
test, hospitalization or surgery?
(If YES, complete the following.) [_] YES [_] NO [_] YES [_] NO
</TABLE>
<TABLE>
<CAPTION>
Name and address Reason for consultation What was prescribed
Insured Date of physician or examination Diagnosis or recommended?
- -------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C>
[_] 1 [_] 2
- -------------------------------------------------------------------------------------------
[_] 1 [_] 2
- -------------------------------------------------------------------------------------------
[_] 1 [_] 2
- -------------------------------------------------------------------------------------------
[_] 1 [_] 2
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(If this is an Application for Reinstatement, complete questions 18 through
20.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Insured 1 Insured 2
--------------------------------------
<C> <S> <C> <C>
18. Residence (Street) (Street)
--------------------------------------
Address (City/State/Zip) (City/State/Zip)
--------------------------------------
19. Social Security Number
</TABLE>
20.Send communications to: [_] Insured 1 [_] Insured 2 [_] Other (Give name
and address.)
Name _______________________________________________________________________
Street _____________________________________________________________________
City/State/Zip _____________________________________________________________
REMARKS
NEV APP-39-95
<PAGE>
Application (continued)
- -------------------------------------------------------------------------------
Company Use (Additions and Amendments)
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 Action Requested by this Application Takes Effect. The action will take
effect only: (a) if this Application is approved by the Company at its
Administrative Office; and (b) when any change cost is paid to the Company;
provided that at the time of payment there has been no change in insurability
since the date of the Application.
- ------------------------------------- -------------------------------------
Date Insured 1
- ------------------------------------- -------------------------------------
Date Insured 2
- ------------------------------------- -------------------------------------
Agent Owner, if other than Insured(s)
NEV APP-39-95
<PAGE>
New England Life Insurance Company
Home Office:
501 Boylston Street
Boston, Massachusetts 02117
- -------------------------------------------------------------------------------
PREPAYMENT RECEIPT AND TEMPORARY LIFE INSURANCE AGREEMENT
FOR: [_] SINGLE LIFE INSURANCE [_] SURVIVORSHIP LIFE INSURANCE
- -------------------------------------------------------------------------------
TEMPORARY LIFE INSURANCE AGREEMENT
TEMPORARY LIFE INSURANCE AGREEMENT, $50,000 MAXIMUM
The Effective Date of this temporary life insurance will be the later of:
. The date of this Receipt and Agreement; and
. The date of the last Part II of the Application, or Supplement to Part I
Application, if any is required.
There will be no insurance until any required Part II Applications are
completed. The temporary life insurance will be based on the policy and any
riders applied for. This insurance will be subject to the terms of the policy
applied for.
For Single Life Insurance, the sum of all death benefits payable under this
Agreement will be the amount applied for; but the sum will be limited to a
maximum of $50,000.
For Survivorship Life Insurance, the sum of all death 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
For Single Life Insurance, if the Company determines that the Proposed
Insured is insurable, but not as a standard risk, the $50,000 maximum will
increase to $250,000. If the Company determines that the Proposed Insured is
insurable as a standard risk, the $50,000 maximum will increase to $500,000.
For Survivorship 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.
If more than one Temporary Insurance Agreement is in effect on the same
Proposed Insured(s), 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) the Proposed Insured is living when the policy is
delivered to the Owner (for Survivorship Life Insurance, at least one Proposed
Insured must be living); 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 by: (a) notice of
termination to the Owner at the premium notice address shown in Part I of the
Application; and (b) refund of the prepayment to the Owner at the same
address.
(Continued on Reverse Side)
NEV APP-52-95
PAGE 1
<PAGE>
PAGE 2
If it is not sooner terminated, life insurance will expire 120 days after
the Effective Date of this temporary life insurance. Notice of the termination
will be sent to the Owner. If a death benefit becomes payable 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 insurability: (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.
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 or Registered Representative has authority to make any change in
the terms of the printed text. (d) The liability of the Company if any
Proposed Insured(s) commit(s) suicide will be limited to refund of the
prepayment.
- -------------------------------------------------------------------------------
Prepayment Receipt
- -------------------------------------------------------------------------------
Proposed Insured 1 Applicant
- ----------------------------------------
Proposed Insured 2 (For Survivorship Life Insurance)
Prepayment as shown below has been received.
It is in connection with Policy No.
Prepayment $
New England Life Insurance Company
BY
(LOGO)
Secretary
Countersigned at (City and State____________________________________________)
on (date____________________________________________________________________)
BY (Agent/Registered Representative_________________________________________)
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 I of the Application, an Insurability Statement is required.
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO THE COMPANY; DO NOT MAKE CHECKS
PAYABLE TO THE AGENT, REGISTERED REPRESENTATIVE, OR LEAVE THE PAYEE BLANK.
NEV APP-52-95
<PAGE>
Exhibit 99.1.A.(6)(c)
Federal Identification
No. 04-2708937
---------------
000547950
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
(and Chapter 175, Sections 50 and 50B)
We, James M. Benson , *President
-----------------------------------------------------------------
and Daniel D. Jordan, , *Secretary
-----------------------------------------------------------------
of New England Life Insurance Company
------------------------------------------------------------------------------
(Exact name of corporation)
located at: 501 Boylston Street, Boston, Massachusetts 02116
---------------------------------------------------------------------
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
III and IV
- --------------------------------------------------------------------------------
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended)
of the Articles of Organization were duly adopted by written consent dated
December 2, 1998, by vote of:
50,000 shares of Common Stock of 50,000 shares outstanding
------------------------------------
(type, class & series, if any)
shares of of shares outstanding and
- ------ ----------------------------- ---------
(type, class & series, if any)
shares of of shares outstanding
- ------ ----------------------------- ---------
(type, class & series, if any)
2**being at least two-thirds of each type, class or series outstanding and
entitled to vote thereon and of each type, class or series of stock whose
rights are adversely affected thereby:
*Delete the inapplicable words. **Delete the inapplicable clause.
1-For amendments adopted pursuant to Chapter 156B, Section 70.
2-For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided any article or item on this form is insufficient,
additions shall be set forth on one side only of separate 8 1/2 x 11
sheets of paper with a left margin of at least 1 inch. Additions to more
than one article may be made on a single sheet so long as each article
requiring each addition is clearly indicated.
<PAGE>
To change the number of shares and the par value (if any) of any type, class
or series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
WITHOUT PAR VALUE STOCKS
TYPE NUMBER OF SHARES
Common:
Preferred:
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
Common: 50,000 $125.00
Preferred: None
Change the total authorized to:
WITHOUT PAR VALUE STOCKS
TYPE NUMBER OF SHARES
Common:
Preferred: 1,000,000
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
Common: 50,000 $125.00
Preferred:
See attached continuation sheet 2A
<PAGE>
Continuation Sheet 2A
(For inclusion in Article IV of Articles of Organization)
The total number of shares of all classes of capital stock the corporation
shall be authorized to issue is 1,050,000 shares, consisting of 50,000 shares
of Common Stock, $125 par value per share (the "Common Stock"), and 1,000,000
shares of Preferred Stock, without par value (the "Preferred Stock").
The shares of Preferred Stock may be issued from time to time in one or more
series. The directors may determine, in whole or in part, the preferences,
voting powers, qualifications and special or relative rights or privileges of
any such series before the issuance of any shares of that series. The
directors shall determine the number of shares constituting each series of
Preferred Stock and each series shall have a distinguishing designation.
Common Stock
The holders of the Common Stock shall have the exclusive right to vote for
the election of directors and on all other matters requiring action by the
stockholders or submitted to the stockholders for action, except as may be
determined as to a particular series of Preferred Stock by the directors
pursuant to Article IV hereof prior to issuance of any shares of that series
or as may otherwise be required by law, and each share of the Common Stock
shall entitle the holder thereof to one vote.
The holders of the Common Stock shall be entitled to receive, to the extent
permitted by law, such dividends as may from time to time be declared by the
directors.
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the corporation, the holders of the Common Stock shall be entitled to receive
the net assets of the corporation, after the corporation shall have satisfied
or made provision for its debts and obligations and for payment to the holders
of shares of any class or series having preferential rights to receive
distributions of the net assets of the corporation.
<PAGE>
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6*
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such late date *and
Chapter 175, Section 50B
Later effective date: _____________ .
SIGNED UNDER THE PENALTIES OF PERJURY, this day of , 1998
[Signatures appear on pages 3A and 3B attached hereto.)
____________________________________________________________ , *President/Vice
President
____________________________________________________________ ,
*Clerk/Assistant
Clerk
* Delete the inapplicable words.
<PAGE>
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, the undersigned,
constituting the president, secretary and a majority of the board of
directors, have hereto signed our names this 2nd day of December in the year
1998.
/s/ James M. Benson
___________________________________________
James M. Benson, President and Director
/s/ Daniel D. Jordan
___________________________________________
Daniel D. Jordan, Secretary
/s/ Robert H. Benmosche
___________________________________________
Robert H. Benmosche, Director
/s/ Susan C. Crampton
___________________________________________
Susan C. Crampton, Director
/s/ Edward A. Fox
___________________________________________
Edward A. Fox, Director
/s/ George J. Goodman
___________________________________________
George J. Goodman, Director
/s/ Evelyn E. Handler
___________________________________________
Evelyn E. Handler, Director
___________________________________________
Philip K. Howard, Director
/s/ Bernard A. Leventhal
___________________________________________
Bernard A. Leventhal, Director
/s/ Thomas J. May
___________________________________________
Thomas J. May, Director
/s/ Stewart G. Nagler
___________________________________________
Stewart G. Nagler, Director
/s/ Catherine A. Rein
___________________________________________
Catherine A. Rein, Director
/s/ Rand N. Stowell, Jr.
___________________________________________
Rand N. Stowell, Jr., Director
/s/ Alexander B. Trowbridge
___________________________________________
Alexander B. Trowbridge, Director
<PAGE>
641847
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
--------------------------------------------------
I hereby approve the within Articles of Amendment
and, the filing fee in the amount of $1,100
having been paid, said articles are deemed to
have Been filed with me this 29th day of December
1998.
Effective date: __________________________________
/s/ WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Daniel D. Jordan, Clerk
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
Telephone: _______________
<PAGE>
Federal Identification
No. 04-2708937
-------------
000547950
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A CLASS OR SERIES OF STOCK
(General Laws, Chapter 156B, Section 26)
We, James M. Benson , President
-----------------------------------------------------------------
and Daniel D. Jordan , Clerk
---------------------------------------------------------------------
of New England Life Insurance Company
------------------------------------------------------------------------------
(Exact name of corporation)
located at: 501 Boylston Street, Boston, Massachusetts 02116
---------------------------------------------------------------------
do hereby certify that a meeting of the directors of the corporation held on
December 2, 1998, the following vote establishing and designating a class or
series of stock and determining the relative rights and preferences thereof
was duly adopted:
See attached continuation sheets 2A - 2E.
* Delete the inapplicable words.
Note: Votes for which the space provided above is not sufficient should be
provided on one side of separate 8 1/2 x 11 sheets of white paper, number
2A, 2B, etc., with a left margin of at least 1 inch.
<PAGE>
Continuation Sheet 2A
VOTE OF DIRECTORS
OF
NEW ENGLAND LIFE INSURANCE COMPANY
ESTABLISHING
SERIES A ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK
(Pursuant to Chapter 156B, Section 26 of the General Laws of the Commonwealth
of Massachusetts)
VOTED: That pursuant to the authority granted to the Board of Directors in
the Amended and Restated Articles of Organization of the Corporation, as
amended, the Board hereby establishes and authorizes to be issued 200,000
shares of Preferred Stock, Series A, no par value, having the following
designation, preferences, voting powers, qualifications and special or
relative rights and privileges:
1. Designation.
The designation of such series of Preferred Stock is Series A Adjustable
Rate Cumulative Preferred Stock. The number of shares of Series A
Adjustable Rate Cumulative Preferred Stock is 200,000, without par value.
All shares of Series A Adjustable Rate Cumulative Preferred Stock shall be
identical and shall be equal in all respects to every other share of Series
A Adjustable Rate Cumulative Preferred Stock.
2. Dividends.
(a) Dividend Rate
The dividend rate on shares of Series A Adjustable Rate Cumulative
Preferred Stock during the period from and after the date of original
issuance to March 31, 1999 shall be the Applicable Rate in effect on
the date of original issuance times the Liquidation Preference (as
defined below) of such shares. Commencing on April 1, 1998, the
dividend rate on shares of Series A Adjustable Rate Cumulative
Preferred Stock for each subsequent quarterly period shall be the
Applicable Rate in effect on the Dividend Payment Date that immediately
precedes the start of such quarterly period times the Liquidation
Preference of such shares.
(b) Cash Dividends
The holders of Series A Adjustable Rate Cumulative Preferred Stock
shall be entitled to receive cash dividends out of any funds legally
available therefor, when and as declared by the Board of Directors, as
provided for below.
(c) Dividend Payment Dates
Dividends on the outstanding Series A Adjustable Rate Cumulative
Preferred Stock shall be payable quarterly in arrears on the last day
of each March, June, September, and December (each such date a
"Dividend Payment Date"), respectively, commencing on March 31, 1999.
Each such dividend shall be paid to those holders of record of such
Preferred Stock as they appear on the stock register of the Corporation
on the date 15 days prior to the Dividend Payment Date. Dividend
arrearages for any past dividend periods may be declared and paid at
any time, whether or not on any Dividend Payment Date, to holders of
record on such date as may be fixed by the Board of Directors of the
Corporation, which date shall not be more than forty-five (45) days
before the payment date for such dividend. Dividends payable for any
partial or full quarterly period, and for the first dividend period,
shall be computed using the actual number of days elapsed, based on a
360-day year.
(d) Cumulative Dividends
Dividends on the Series A Adjustable Rate Cumulative Preferred Stock
shall be cumulative from the date such Preferred Stock is initially
issued. If the full amount of the dividends, including all accrued and
<PAGE>
Continuation Sheet 2B
unpaid dividends payable upon any Dividend Payment Date, is not paid on
such Dividend Payment Date, the cumulative amount of all unpaid
dividends shall be payable on the next quarterly Dividend Payment Date.
No interest shall be payable in respect of any dividend payment that
may be in arrears.
(e) Dividend Preference
The Series A Adjustable Rate Cumulative Preferred Stock shall, with
respect to dividend payments, rank senior to the Corporation's Common
Stock, $125.00 par value per share (the "Common Stock"), and to all
other Junior Stock.
So long as any of the Series A Adjustable Rate Cumulative Preferred
Stock is outstanding, the Corporation will not declare, make or pay any
Junior Stock Payment unless all dividends on the Series A Adjustable
Rate Cumulative Preferred stock for all past quarterly dividend periods
shall have been paid or declared and a sum sufficient for the payment
thereof shall have been set aside by the Corporation separate and apart
from its other funds in trust and the full dividend thereon for the
then current quarterly dividend period shall have been declared and
paid or so set aside in trust.
No dividend shall at any time be paid or declared on the shares of any
class or series of Parity Stock, if such Parity Stock bears cumulative
dividends payable semiannually or quarterly on the same dates as the
dividends are payable on the Series A Adjustable Rate Cumulative
Preferred Stock, unless dividends shall simultaneously be paid or
declared pro rata, as nearly as practicable, according to the amounts
of the dividends at the time accrued and unpaid on the shares of the
Series A Adjustable Rate Cumulative Preferred Stock and on the shares
of each such class or series of Parity Stock. If at any time arrearages
exist in the payment in full of accrued dividends payable on the shares
of the Series A Adjustable Rate Cumulative Preferred Stock, no dividend
shall be paid or declared on the shares of any class or series of
Parity Stock which bears cumulative dividends payable otherwise than
semiannually or quarterly on the same dates as the quarterly dividends
are payable on the Series A Adjustable Rate Cumulative Preferred Stock,
unless dividends shall simultaneously be paid or declared on the shares
of the Series A Adjustable Rate Cumulative Preferred Stock and on each
such class or series of Parity Stock, pro rata, as nearly as
practicable, according to the amounts of the dividends at the time in
arrears in respect of the Series A Adjustable Rate Cumulative Preferred
Stock and the dividends at the time accrued and unpaid on such class or
series of Parity Stock
(f) Confirmation of Applicable Rate
The Applicable Rate with respect to each dividend period will be
calculated at or before 1:00 PM New York time by the Corporation on the
first Business Day after the Dividend Payment Date for the previous
dividend period (or after the date of original issuance with respect to
the first dividend period) according to the appropriate method
described below. The mathematical accuracy of each such calculation
will be certified in writing by the Chief Financial Officer of the
Corporation. On the first Business Day after each Dividend Payment
Date, the Corporation will cause notice of the Applicable Rate to be
sent by telecopy, receipt confirmed, to each registered holder of
Series A Adjustable Rate Cumulative Preferred Stock.
(g) Compliance With Law
Notwithstanding any other provisions herein, dividends declared by the
Board of Directors of the Corporation shall be paid only if such
payment would be in compliance with all restrictions and limitations
imposed by applicable law of the Commonwealth of Massachusetts,
including any requirement that payment of such dividends be approved by
the Massachusetts Commissioner of Insurance.
3. Voting Rights.
(a) No Voting Rights
The holders of the shares of the Series A Adjustable Rate Cumulative
Preferred Stock shall not, except as otherwise required by law or as
set forth herein, have any right or power to vote on any question or in
any proceeding, or to be represented at, or to receive notice of, any
meeting of stockholders.
<PAGE>
Continuation Sheet 2C
(b) Voting Shift
If, however, and whenever, at any time or times (i) the dividends
payable on the Series A Adjustable Rate Cumulative Preferred Stock
shall be in arrears in an aggregate amount equal to or greater than the
aggregate amount of dividends accrued thereon (whether or not paid)
during the two most recent quarterly dividend periods, (ii) the final
redemption to be made on the seventh anniversary of the original
issuance of the Series A Adjustable Rate Cumulative Preferred Stock as
provided below shall not be made or (iii) the outstanding shares of any
one or more other series of Preferred Stock upon which like voting
rights may be conferred, by reason of dividend payments or redemption
requirements (including final redemption requirements for the shares of
such series) being in arrears, shall then have the right to elect
directors of the Corporation, then, the holders of the outstanding
Series A Adjustable Rate Cumulative Preferred Stock shall have the
right, voting as a separate class together with the holders of all
other series of Preferred Stock outstanding having like voting rights,
to elect two additional directors to the Board of Directors of the
Corporation. Such additional directors shall be entitled to serve on
the Board of Directors until all accumulated and unpaid dividends have
been paid on the Series A Adjustable Rate Cumulative Preferred Stock or
such final redemption shall be made or the outstanding shares of such
other series of Preferred Stock shall cease to have such like voting
rights, as the case may be (any of such periods called the "Class
Voting Period"), subject to revesting in the event of each and every
subsequent default of the character and at the time mentioned above.
The Board of Directors of the Corporation shall as expeditiously as
reasonably practicable, but in any event within 30 days after such
voting power shall be vested in the Series A Adjustable Rate Cumulative
Preferred Stock, take all actions necessary to effect the election of
the additional two directors by the holders of such Series A Adjustable
Rate Cumulative Preferred Stock and any other series of Preferred Stock
having like voting rights, including, without limitation, taking such
actions as may be necessary to expand the number of directors
comprising the Board of Directors and calling a special meeting of the
holders of such Series A Adjustable Rate Cumulative Preferred Stock and
any other series of Preferred Stock having like voting rights for the
purpose of electing such directors. Upon the expiration of any Class
Voting Period, the term of office of any director elected by the
holders of such Series A Adjustable Rate Cumulative Preferred Stock and
any other series of Preferred Stock having like voting rights shall
terminate and the number of directors constituting the Board of
Directors of the Corporation shall, without further action, be reduced
by two.
Any director who shall have been elected by holders of the Series A
Adjustable Rate Cumulative Preferred Stock and any other series of
Preferred Stock having like voting rights may be removed at any time
during a Class Voting Period, with or without cause, only by the vote
of the holders of a majority of the outstanding shares of such Series A
Adjustable Rate Cumulative Preferred Stock and such other series of
Preferred Stock, if any, voting together as a class, and any vacancy
thereby created may be filled during such Class Voting Period only by
such holders.
On any matters on which the holders of the Series A Adjustable Rate
Cumulative Preferred Stock shall be entitled to vote, they shall be
entitled to one vote for each share held.
4. Redemption Provisions.
The Corporation shall redeem on the seventh anniversary of the date of
original issuance of the Series A Adjustable Rate Cumulative Preferred
Stock (the "Redemption Date") all outstanding shares of Series A Adjustable
Rate Cumulative Preferred Stock (to the extent that such redemption shall
not violate any applicable provisions of the laws of the Commonwealth of
Massachusetts) at a price equal to $1,000 per share, plus an amount, if
any, equal to accrued and unpaid dividends thereon. The term "accrued and
unpaid dividends" shall mean a sum equal to the dividends payable per share
per annum from the first date on which dividends on the shares of Series A
Adjustable Rate Cumulative Preferred Stock shall have accrued to the
Redemption Date, less the aggregate amount of all dividends paid thereon.
If the Corporation is unable on the Redemption Date to redeem any shares of
Series A Adjustable Rate Cumulative Preferred Stock to be redeemed because
<PAGE>
Continuation Sheet 2D
such redemption would violate applicable laws of the Commonwealth of
Massachusetts, the Corporation shall redeem such shares as soon as the
restrictions precluding such redemption shall no longer be applicable.
Until such time as the shares of Series A Adjustable Rate Cumulative
Preferred Stock are redeemed in full, such shares shall remain outstanding
and continue to be entitled to all the dividends, rights and preferences
provided herein.
Except as the Corporation may otherwise from time to time agree with any
one or more holders thereof, the Series A Adjustable Rate Cumulative
Preferred Stock is not subject to redemption except as provided herein.
Notwithstanding any other provisions herein, shares of Series A Adjustable
Rate Cumulative Preferred Stock shall be redeemed only if such redemption
would be in compliance with all restrictions and limitations imposed by
applicable law of the Commonwealth of Massachusetts, including any
requirement that the redemption be approved by the Massachusetts
Commissioner of Insurance.
5. Amendments.
So long as any of the Series A Adjustable Rate Cumulative Preferred Stock
is outstanding, the Corporation, without the consent of all of the holders
of the outstanding shares of such series of Preferred Stock, will not:
(i) authorize the creation of any class or series of Prior Stock, or
increase the authorized amount of any class or series of Prior Stock
theretofore authorized, or
(ii) authorize the creation of any class or series of Parity Stock, or
increase the authorized amount of any class or series of Parity Stock
theretofore authorized, or
(iii) alter or change the powers, preferences or special rights of the
shares of the Series A Adjustable Rate Cumulative Preferred Stock.
6. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the Series A Adjustable Rate
Cumulative Preferred Stock shall be entitled to receive out of the assets
of the Corporation available for distribution to its stockholders, whether
such assets are capital or surplus, an amount in cash equal to $1,000 per
share (the "Liquidation Preference"), together with any accrued and unpaid
dividends to the date fixed for liquidation, dissolution or winding up,
whether or not declared, before any distribution is made on any Junior
Stock, including the Common Stock. If the assets of the Corporation shall
be insufficient to permit the payment of the Liquidation Preference in
full, then said assets shall be distributed ratably among the holders of
the Series A Adjustable Rate Cumulative Preferred Stock and any Parity
Stock in proportion to the amounts which would be payable on such
liquidation, dissolution or winding up if the Liquidation Preference
amount, together with any such accrued and unpaid dividends, were paid in
full. For the purposes of this paragraph 6 neither a consolidation or
merger of the Corporation with or into any other corporation, nor a merger
of any other corporation into the Corporation, nor the purchase or
redemption of all or any part of the outstanding shares of any class or
classes of stock of the Corporation, nor the sale or transfer of the
property and business of the Corporation as or substantially as an
entirety, shall be construed to be a dissolution or liquidation of the
Corporation.
7. Affiliated Transactions.
The Corporation will not permit any Subsidiary at any time to purchase any
shares of the Series A Adjustable Rate Cumulative Preferred Stock, and will
not itself at any time purchase any outstanding shares of such series,
except pursuant to an offer to purchase made on a comparable basis to all
the holders of all the outstanding shares of the Series A Adjustable Rate
Cumulative Preferred Stock.
<PAGE>
Continuation Sheet 2E
8. Definitions.
For the purposes hereof, the following terms shall have the following
respective meanings:
"AA" Composite Commercial Paper (Financial) Rate on any date, shall mean
(i) the 90-day rate on commercial paper (financial) placed on behalf of
issuers whose corporate bonds are rated "AA" by Standard & Poor's
Corporation ("S&P"), or the equivalent of such rating by S&P by another
rating agency, as made available on the display page on the Bloomberg's
Financial Markets System ("Bloomberg's") (Page H15FO90D or on such other
display on Bloomberg's as shall replace H15FO90D) on the first Business Day
after such date, or (ii) in the event that Bloomberg's does not make
available such a rate, then such rate as made available on the Federal
Reserve Board's internet website, http: //www. bog. frb.
fed.us/releases/cp/ (or on such other internet website as shall replace
http: //www. bog. frb. fed.us/releases/cp/) on the first Business Day after
such date.
Applicable Rate for any dividend period shall be a per annum rate equal to
the product of (1-the highest federal income tax rate for corporations
applicable during such dividend period) times (the "AA" Composite
Commercial Paper (Financial) Rate + 180 basis points).
Business Day shall mean any day on which banks are required to be open to
carry on their normal business in the State of New York.
Dividend Payment Date shall have the meaning set forth in paragraph 2(c)
hereof.
Junior Stock is the Common Stock of the Corporation and any other class of
stock of the Corporation hereafter authorized over which the Series A
Adjustable Rate Cumulative Preferred Stock has preference or priority in
the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
Junior Stock Payment shall mean
(a) any dividend (other than a dividend payable in stock ranking junior to
the Series A Adjustable Rate Cumulative Preferred Stock both as to the
payment of dividends and the distribution of assets on any liquidation,
dissolution or winding up of the Corporation) on any class of Junior
Stock; or
(b) any redemption, purchase or the acquisition for value, or setting apart
money for any sinking or other analogous fund for the redemption or
purchase, of any shares of any class of Junior Stock, or any other
distribution made in respect of any class of Junior Stock, either
directly or indirectly.
Parity Stock is any stock of the Corporation ranking on a parity with the
Series A Adjustable Rate Cumulative Preferred Stock as to payment of
dividends and distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
Prior Stock is any stock of the Corporation ranking prior to the Series A
Adjustable Rate Cumulative Preferred Stock as to the payment of dividends
or distribution of assets on any liquidation, dissolution or winding up of
the Corporation.
Subsidiary is any corporation of which a majority of the Voting Securities
is at the time directly or indirectly owned or controlled by the
Corporation.
Voting Securities of any corporation are the outstanding stock of such
corporation having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation, irrespective of
whether or not stock of any other class or classes of such corporation
shall have or might have voting power by reason of the occurrence of any
contingency.
<PAGE>
SIGNED UNDER THE PENALTIES OF PERJURY, this 2nd day of December, 1998
/s/ James M. Benson , President
- ------------------------------------------
/s/ Daniel D. Jordan , Clerk
- ------------------------------------------
* Delete the inapplicable words.
<PAGE>
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, the undersigned,
constituting the president, secretary and a majority of the board of
directors, have hereto signed our names this 2nd day of December in the year
1998.
/s/ James M. Benson
___________________________________________
James M. Benson, President and Director
/s/ Daniel D. Jordan
___________________________________________
Daniel D. Jordan, Secretary
/s/ Robert H. Benmosche
___________________________________________
Robert H. Benmosche, Director
/s/ Susan C. Crampton
___________________________________________
Susan C. Crampton, Director
/s/ Edward A. Fox
___________________________________________
Edward A. Fox, Director
/s/ George J. Goodman
___________________________________________
George J. Goodman, Director
/s/ Evelyn E. Handler
___________________________________________
Evelyn E. Handler, Director
___________________________________________
Philip K. Howard, Director
/s/ Bernard A. Leventhal
___________________________________________
Bernard A. Leventhal, Director
/s/ Thomas J. May
___________________________________________
Thomas J. May, Director
/s/ Stewart G. Nagler
___________________________________________
Stewart G. Nagler, Director
/s/ Catherine A. Rein
___________________________________________
Catherine A. Rein, Director
/s/ Rand N. Stowell, Jr.
___________________________________________
Rand N. Stowell, Jr., Director
/s/ Alexander B. Trowbridge
___________________________________________
Alexander B. Trowbridge, Director
<PAGE>
641846
THE COMMONWEALTH OF MASSACHUSETTS
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A SERIES OF A CLASS OF STOCK
(General Laws, Chapter 156B, Section 72)
--------------------------------------------------
I hereby approve the within Certificate of Vote
of Directors and, the filing fee in the amount of
$100 having been paid, said certificate are
deemed to have been filed with me this 29th day
of December 1998.
Effective date: __________________________________
/s/ WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Daniel D. Jordan, Clerk
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
Telephone: _______________
