<PAGE>
As filed with Securities and Exchange Commission on
March 1, 2000
Registration No. 333-46401
____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM S-6
POST-EFFECTIVE AMENDMENT No. 2 to the
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________________
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Trust)
NEW ENGLAND LIFE INSURANCE COMPANY
(Name of Depositor)
501 Boylston Street
Boston, Massachusetts 02117
(Address of depositor's principal executive offices)
_____________________
MARIE C. SWIFT
Counsel
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
(Name and address of agent for service)
Copies to:
STEPHEN E. ROTH
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
___________________________
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on May 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on May 1, 2000 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 Securites Being Registered: Units of Interest in Flexible Premium
Adjustable Variable Life Insurance Policies
<PAGE>
ZENITH EXECUTIVE ADVANTAGE PLUS
Flexible Premium Adjustable
Variable Life Insurance Policies
Issued by: Administrative Office:
New England Variable P.O. Box 725209
Life Separate Account of Atlanta, Georgia 30339
New England Life Insurance Company (800) 621-5086
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus offers individual flexible premium adjustable variable life
insurance policies (the "Policies") issued by New England Life Insurance
Company ("NELICO").
The Policy provides premium flexibility and a death benefit. In some cases
you can choose a rider that provides a death benefit guarantee as long as your
total premiums paid meet certain minimum requirements.
You may choose between two death benefit options. One provides a fixed death
benefit equal to the Policy's face amount. The other provides a death benefit
that may vary daily with the investment experience of the Eligible Funds. Cash
value allocated to the Eligible Funds is not guaranteed, and fluctuates daily
with the investment results of the Eligible Funds.
You allocate net premiums among the investment Sub-Accounts of NELICO's
Variable Life Separate Account (the "Variable Account"). Each Sub-Account of
the Variable Account invests in the shares of an Eligible Fund. The Eligible
Funds are:
<TABLE>
<S> <C>
NEW ENGLAND ZENITH FUND METROPOLITAN SERIES FUND, INC.
Back Bay Advisors Bond Income Putnam Large Cap Growth Portfolio*
Series Janus Mid Cap Portfolio*
Back Bay Advisors Managed Series Russell 2000 Index Portfolio*
Back Bay Advisors Money Market
Series
Capital Growth Series VARIABLE INSURANCE PRODUCTS FUND ("VIP")
Westpeak Growth and Income Series
Westpeak Stock Index Series Overseas Portfolio
Balanced Series Equity-Income Portfolio
Loomis Sayles Small Cap Series High Income Portfolio
Alger Equity Growth Series
Davis Venture Value Series VARIABLE INSURANCE PRODUCTS FUND II
Harris/Oakmark Midcap Value Series ("VIP II")
Morgan Stanley International
Magnum Equity Series Asset Manager Portfolio
MFS Investors Series
MFS Research Managers Series
</TABLE>
You may also allocate net premiums to a Fixed Account in most states. Limits
apply to transfers to and from the Fixed Account.
You may cancel the Policy during the "Right to Return the Policy" period. In
addition, replacing existing insurance with the Policy might not be to your
advantage.
- ----------
*Availability is subject to any necessary state insurance department
approvals.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
POLICIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ELIGIBLE FUND PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM
FOR REFERENCE.
WE DO NOT GUARANTEE HOW ANY OF THE SUB-ACCOUNTS OR ELIGIBLE FUNDS WILL
PERFORM. 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.
MAY 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY................................................................... A-4
INTRODUCTION TO THE POLICIES............................................... A-5
The Policies............................................................. A-5
Availability of the Policy............................................... A-6
Policy Charges........................................................... A-7
How the Policy Works..................................................... A-8
Communications and Payments.............................................. A-9
NELICO................................................................... A-9
POLICY VALUES AND BENEFITS................................................. A-11
Death Benefit............................................................ A-11
Guaranteed Death Benefit Rider........................................... A-11
Death Proceeds Payable................................................... A-12
Change in Death Benefit Option........................................... A-12
Cash Value............................................................... A-13
Allocation of Net Premiums............................................... A-14
Amount Provided for Investment under the Policy.......................... A-14
Right to Return the Policy............................................... A-14
CHARGES AND EXPENSES....................................................... A-15
Deductions from Premiums................................................. A-15
Deductions from Cash Value............................................... A-15
Charges Against the Eligible Funds....................................... A-17
Special Arrangements..................................................... A-18
PREMIUMS................................................................... A-19
Flexible Premiums........................................................ A-19
Lapse and Reinstatement.................................................. A-20
OTHER POLICY FEATURES...................................................... A-20
Increase in Face Amount.................................................. A-20
Loan Provision........................................................... A-21
Surrender................................................................ A-22
Partial Surrender........................................................ A-22
Reduction in Face Amount................................................. A-23
Acceleration of Death Benefit Rider...................................... A-23
Investment Options....................................................... A-23
Transfer Option.......................................................... A-24
Dollar Cost Averaging.................................................... A-24
Asset Rebalancing........................................................ A-24
Substitution of Insured Person........................................... A-25
Payment of Proceeds...................................................... A-25
24 Month Right........................................................... A-25
Payment Options.......................................................... A-26
Additional Benefits by Rider............................................. A-26
Policy Owner and Beneficiary............................................. A-27
THE VARIABLE ACCOUNT....................................................... A-27
Investments of the Variable Account...................................... A-28
Investment Management.................................................... A-29
THE FIXED ACCOUNT.......................................................... A-30
General Description...................................................... A-30
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Values and Benefits...................................................... A-30
Policy Transactions...................................................... 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-33
Introduction............................................................. A-33
Tax Status of the Policy................................................. A-33
Tax Treatment of Policy Benefits......................................... A-33
NELICO's Income Taxes.................................................... A-35
MANAGEMENT................................................................. A-36
VOTING RIGHTS.............................................................. A-38
RIGHTS RESERVED BY NELICO.................................................. A-39
TOLL-FREE NUMBERS.......................................................... A-39
REPORTS.................................................................... A-39
ADVERTISING PRACTICES...................................................... A-39
LEGAL MATTERS.............................................................. A-40
REGISTRATION STATEMENT..................................................... A-40
EXPERTS.................................................................... A-40
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
AND ACCUMULATED PREMIUMS.................................................. A-41
APPENDIX B: INVESTMENT EXPERIENCE INFORMATION.............................. A-50
APPENDIX C: LONG TERM MARKET TRENDS........................................ A-76
APPENDIX D: TAX INFORMATION................................................ A-78
APPENDIX E: CASH VALUE ACCUMULATION TEST AND GUIDELINE PREMIUM TEST........ A-79
FINANCIAL STATEMENTS....................................................... AA-1
</TABLE>
A-3
<PAGE>
GLOSSARY
ACCOUNT. A sub-account of the Variable Account or the Fixed Account.
AGE. The age of an insured refers to the insured's age at his or her nearest
birthday.
CASH VALUE. A Policy's cash value includes the amount of its cash value held
in the Variable Account, the amount held in the Fixed Account and, if there is
an outstanding Policy loan, the amount of its cash value held in our general
account as a result of the loan.
EXCESS POLICY LOAN. When Policy loans plus accrued interest exceed the
Policy's cash value less the applicable Surrender Charge.
FIXED ACCOUNT. The Fixed Account is a part of our general account to which
you may allocate net premiums. It provides guarantees of principal and
interest.
INVESTMENT START DATE. This is the latest of the date we first receive a
premium payment for the Policy, the date Part II of the Policy application is
signed and the Policy Date.
NET CASH VALUE. The amount you receive if you surrender the Policy. It is
equal to the Policy's cash value reduced by any outstanding Policy loan and
accrued interest on the loan.
NET INVESTMENT EXPERIENCE. For any period, a Sub-Account's net investment
experience equals the investment experience of the underlying Eligible Fund's
shares for the same period.
PLANNED PREMIUM. The Planned Premium is the premium payment schedule you
choose to help meet your future goals under the Policy. The Planned Premium is
a level amount that is subject to certain limits under the Policy. Payments in
addition to any Planned Premium are called unscheduled payments in the Policy
and can be paid at any time, subject to certain limits.
PREMIUMS. Premiums include all payments under the Policy, whether a Planned
Premium or an unscheduled payment. (See "Premiums".)
POLICY DATE. If you make a premium payment with the application, the Policy
Date is generally the later of the date Part II of the application was signed
and receipt of the premium payment. If you choose to pay the initial premium
upon delivery of the Policy, we issue the Policy with a Policy Date which is
generally five days after issue.
TARGET PREMIUM. Currently we use the Target Premium to determine the amount
of Sales Charge deducted from each premium payment, and also sales
commissions. It varies by issue age, sex and underwriting class of the insured
and the Policy's face amount. The Target Premium for a standard risk Policy
with no riders is equal to the net annual premium that would be paid if the
Policy provided for paid-up benefits after the payment of seven level net
annual premiums, determined under federal income tax laws. Substandard ratings
and certain riders increase the Target Premium above this amount.
YOU. "You" refers to the Policy Owner.
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. Policies are issued as part of a
"case", where a number of Policies share a common factor (for example, a
corporate owner).
Here is a summary of the Policy's basic features. You should read the entire
prospectus for more complete information.
--You can make premium payments under the Policy based on a schedule you
determine, subject to some limits. We can limit or prohibit unscheduled
payments in some situations, including cases where the insured is in a
substandard risk class. (See "Premiums".)
--You can allocate net premiums to one or more of the Sub-Accounts of the
Variable Account corresponding to mutual fund portfolios, in some cases
after an initial period in the Zenith Money Market Sub-Account. (See
"Allocation of Net Premiums" and "Investment Options".)
--The mutual fund portfolios available under the Policy include several
common stock funds, including funds which invest primarily in foreign
securities, two bond funds, two managed funds, a balanced fund, and a
money market fund. Currently, you may allocate your Policy's cash value to
an unlimited number of the available accounts (including the Fixed
Account). (See "Investments of the Variable Account".)
--If the Fixed Account is available in your state, you may also allocate
funds to that account. We provide guarantees of Fixed Account principal
and interest. SPECIAL LIMITS APPLY TO TRANSFERS OF CASH VALUE FROM THE
--------------------------------------------------------
FIXED ACCOUNT. We have the right to restrict transfers of cash value and
--------------
allocations of premiums into the Fixed Account. (See "The Fixed Account".)
--The cash value of the Policy will vary daily based on the net investment
experience of your Policy's Sub-Accounts and the amount of interest
credited to your Policy's cash value in the Fixed Account. (See "Cash
Value", "Charges and Expenses", "Premiums", "Loan Provision" and "Partial
Surrender".)
--The portion of the cash value in the Sub-Accounts is not guaranteed. You
bear the investment risk on this portion of the cash value. (See "Cash
Value".)
--You may choose between two death benefit options under the Policy. The
level option provides a death benefit equal to the Policy's face amount.
The variable option provides a death benefit equal to the face amount plus
any cash value, which varies with the net investment experience of your
Policy's Sub-Accounts and the rate of interest credited on your cash value
in the Fixed Account. The death benefit in either case could increase to
satisfy tax law requirements if the cash value reaches certain levels.
(See "Death Benefit".)
--After the first Policy year, you may increase or decrease the Policy's
face amount. (See "Increase in Face Amount" and "Reduction in Face
Amount".)
--If it is available to you and you elect the Guaranteed Death Benefit
rider, then regardless of investment experience, the death benefit is
guaranteed not to be less than the Policy's face amount, as long as the
total amount of premiums paid less any partial surrenders and outstanding
Policy loan plus accrued loan interest at least equals certain minimum
amounts. (See "Death Benefit" and "Guaranteed Death Benefit Rider".)
--You may change your allocation of future net premiums at any time. (See
"Allocation of Net Premiums" and "Investment Options".)
--Beginning 15 days after we mail the initial payment confirmation, the
Policy allows you to transfer cash value among the Sub-Accounts and,
generally, to the Fixed Account up to four times in a Policy year (twelve
times in a Policy year for Policies issued in New York) without our
consent. Currently we do not limit the number of sub-account transfers you
may make in a Policy year. Transfers and allocations involving the Fixed
Account are subject to some limits. (See "Transfer Option" and "The Fixed
Account--Policy Transactions".)
--A loan privilege and a partial surrender feature are also available. (See
"Loan Provision" and "Partial Surrender".)
--Death benefits paid to the beneficiary generally are not subject to
Federal income tax. Under current law, undistributed increases in cash
value generally are not taxable to you. (See "Tax Considerations".)
A-5
<PAGE>
--Loans, assignments and other pre-death distributions may have tax
consequences depending primarily on the amount which you have paid into
the Policy but also on any "material change" in the terms or benefits of
the Policy or any death benefit reduction. If premium payments, a death
benefit reduction, or a material change cause the Policy to become a
"modified endowment contract", then pre-death distributions (including
loans) will be included in income on an income first basis, and a 10%
penalty tax may be imposed on income distributed before the Policy Owner
attains age 59 1/2. Tax considerations may therefore influence the amount
and timing of premium payments and certain Policy transactions which you
choose to make. (See "Tax Considerations".)
--If the Policy is not a modified endowment contract, we believe that loans
under the Policy during the first 10 Policy years will not be taxable to
you as long as the Policy has not lapsed, been surrendered or terminated.
The tax consequences of a policy loan after the tenth policy year are not
clear. You should consult a tax advisor if you intend to take out or
maintain a policy loan after the tenth policy year. With some exceptions,
other pre-death distributions under a Policy that is not a modified
endowment contract are includible in income only to the extent they exceed
your investment in the Policy. (See "Tax Considerations".)
--In recent years, Congress has adopted new rules relating to life insurance
owned by businesses. Any business contemplating the purchase of a new life
insurance contract or a change in an existing life insurance contract
should consult a tax adviser. (See "Tax Considerations".)
--During the "Right to Return the Policy" period you can return the Policy
for a refund. In some states we are required to refund premiums paid; in
other states, we refund an amount that reflects investment experience and
certain charges. For a limited period you can cancel a requested increase
in the Policy's face amount. (See "Right to Return the Policy".)
--Within 24 months after a Policy's date of issue or the effective date of a
face amount increase, you may exercise the Policy's 24 Month Right. If you
do, we allocate all or part of your Policy's cash value and future
premiums to the Fixed Account. The purpose of the 24 Month Right is to
provide you with fixed Policy values and benefits. (See "24 Month Right"
for a description of this provision generally and for a description of the
variation which applies to Policies issued in Maryland and New Jersey.)
In many respects the Policies are similar to fixed-benefit universal life
insurance. Like universal life insurance, the Policies offer death benefits
and provide flexible premiums, a cash value, and loan privileges.
The Policies are different from fixed-benefit universal life insurance in
that the death benefit may, and the cash value will, vary to reflect the
investment experience of the selected Sub-Accounts.
The Policies are designed to provide insurance protection. Although the
underlying mutual fund portfolios invest in securities similar to those in
which mutual funds available directly to the public invest, in many ways the
Policies differ from mutual fund investments. The main differences are:
--The Policy provides a death benefit based on our assumption of an
actuarially calculated risk.
--If the net cash value is not sufficient to pay a Monthly Deduction, the
Policy may lapse with no value unless you pay additional premiums. If the
Policy lapses when Policy loans are outstanding, adverse tax consequences
may result.
--In addition to sales charges, insurance-related charges not associated
with mutual fund investments are deducted from the premiums and values of
the Policy. These charges include various insurance, risk, administrative
and premium tax charges. (See "Charges and Expenses".)
--The Variable Account, not the Policy Owner, owns the mutual fund shares.
--Federal income tax liability on any earnings is deferred until you receive
a distribution from the Policy. Transfers from one underlying fund
portfolio to another do not incur tax liability under current law.
--Dividends and capital gains are automatically reinvested.
AVAILABILITY OF THE POLICY
Each Policy is part of a "case," which is a group of one or more Policies
linked by a factor such as a common employer of the insureds. We decide what
Policies constitute a case. Policies in a case usually have a common Policy
owner (for example,
A-6
<PAGE>
the employer of the insureds). In addition, the total annual premium payment
payable on the Policies included in the case must meet the following minimums:
cases of at least five Policies--$100,000; and cases of fewer than five
Policies--$250,000.
The Policies are available for insureds from the age of 20 to 80 on an
underwritten basis and from the age of 20 to 65 on a guaranteed issue basis.
We issue guaranteed issue Policies based on very limited underwriting
information. (Guaranteed issue Policies may not be available in New Jersey.)
All persons must meet our underwriting and other requirements. The minimum
face amount available is $50,000 unless we consent to a lower amount. We allow
you to include Adjustable Term Insurance Rider coverage to meet our minimum
size requirements. The Policies are not available to employee benefit plans
qualified under Section 401 of the Internal Revenue Code ("tax-qualified
pension plans"), except with our consent.
POLICY CHARGES
PREMIUM-BASED CHARGES. We deduct the following charges from premiums:
--A sales charge of 8% on each premium payment you make during a Policy
year. Currently we reduce the charge to 1% on each premium payment you
make in excess of a Target Premium during a Policy year; and
--A premium tax charge of 2%.
MONTHLY DEDUCTION FROM CASH VALUE. We deduct certain charges from the cash
value:
--Monthly charge for the cost of insurance; and for any rider benefits you
elect, including the Minimum Guaranteed Death Benefit;
--Monthly mortality and expense risk charge, equal to an annual rate of
0.75% during the first ten Policy years, and currently, 0.25% thereafter
(guaranteed not to exceed 0.75%);
--Monthly policy fee currently equal to $5.00 per month (guaranteed not to
exceed $10.00 per month).
CHARGE FOR FACE AMOUNT INCREASES. If you increase your Policy's face amount
and medical underwriting is required for the increase, we deduct a charge of
$0.80 per $1,000 of the face amount increase (not to exceed $25.00) from your
Policy's cash value on the date that the increase takes effect, and on the
first day of the next eleven Policy months.
CHARGES DEDUCTED FROM THE ELIGIBLE FUNDS. Daily charges against the Eligible
Fund portfolios are deducted for investment advisory services and fund
operating expenses.
Currently, we do not charge the Variable Account for federal income taxes.
We may, however, impose such a charge in the future.
You can designate a Single Source Expense Sub-Account from which we will
take Monthly Deductions and any charges for face amount increases.
See "Charges and Expenses" and "Other Policy Features--Increase in Face
Amount".
A-7
<PAGE>
HOW THE POLICY WORKS
[CHART APPEARS HERE]
PREMIUM PAYMENTS
. Flexible
. Planned premium options
. Minimum premium (in first three Policy years)
. Guaranteed Death Benefit Premium (to age 100)(available only if cash value
accumulation test elected for Policy)
CHARGES FROM PREMIUM PAYMENTS
. Sales Load: 8% on amount paid up to a Target Premium in each Policy year and
currently 1% on amount paid above a Target Premium in each Policy year (for
each underwritten face amount segment and each segment resulting from a term
conversion)
. State Premium Tax Charge: 2%
LOANS
. Beginning 15 days after mailing of initial premium confirmation, you may
borrow a portion of your cash value
. Loan interest charge is 4.75%. We transfer loaned funds out of the Eligible
Funds into the General Account where they are credited with not less than
4.0% interest. (Currently NELICO intends to credit 4.50% interest after
10 Policy years.)
RETIREMENT BENEFITS
. Fixed settlement options are available for policy proceeds
CASH VALUES
. Net premium payments invested in your choice of Eligible Fund investments or
the Fixed Account (generally after an initial period during which net
investment experience equal to that of the Zenith Money Market Sub-Account
may be credited)
. The cash value reflects investment experience, interest, premium payments,
policy charges and any distributions from the Policy
. The cash value invested in mutual funds is not guaranteed
. Any earnings accumulate free of any current income taxes
. You may change the allocation of future net premiums at any time. You may
transfer funds among investment options (and to the Fixed Account), beginning
15 days after mailing of the initial premium confirmation. Currently we do
not limit the number of sub-account transfers you can make in a Policy year.
Transfers from (and, in certain circumstances, to) the Fixed Account are
limited as to timing, frequency and amount
. You may allocate cash value among a maximum of ten accounts at any one
time. Currently we are not imposing this limit.
DEATH BENEFIT
. Level or Variable Death Benefit Options
. We guarantee the Policy will not lapse regardless of net cash value amount if
Guaranteed Death Benefit rider is in effect (available under certain
circumstances)
. Income tax free to named beneficiary
. Death benefit will not be less than that required by federal tax law, using
tax law test you select (guideline premium or cash value accumulation)
. If you add term insurance coverage, you elect whether to include it in the
calculation of the Option 1 or Option 2 death benefit
. You may increase the face amount, subject to any necessary underwriting and a
monthly charge of $0.80 per $1,000 of increase (not to exceed $25) for 12
months, if the increase is underwritten
DAILY DEDUCTIONS FROM ASSETS
. Investment advisory fees and other expenses are deducted from the Eligible
Fund values daily
BEGINNING OF MONTH CHARGES
. The cost of insurance charge (reflecting any substandard risk or guaranteed
issue rating)
. Any Rider Charges
. Policy Fee: $5.00 (not to exceed $10.00) per month
. Mortality and expense risk charge of .75% in the first 10 Policy years and
.25% thereafter (guaranteed not to exceed .75%)
. Guaranteed Death Benefit Charge (if rider selected): $.01 per $1000 face
amount monthly
LIVING BENEFITS
. If policyholder has elected and qualified for benefits for disability and
becomes totally disabled, we will waive monthly charges during the period
of disability up to certain limits.
. You may surrender the Policy at any time for its cash surrender value
. Deferred income taxes, including taxes on amounts borrowed, become payable
upon surrender
. Grace period for lapsing with no value is 62 days from the first date in
which Monthly Deduction was not paid due to insufficient cash value
. Subject to our rules, you may reinstate a lapsed Policy within seven years
of date of lapse if it has not been surrendered
A-8
<PAGE>
COMMUNICATIONS AND PAYMENTS
We will treat your request for a Policy transaction, or your submission of a
payment, as received by us, if we receive a request or payment conforming to
our administrative procedures at our Administrative Office before the close of
regular trading on the New York Stock Exchange on that day. If we 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. Originally, NELICO was a wholly-owned subsidiary of New
England Mutual Life Insurance Company ("New England Mutual"). On August 30,
1996, New England Mutual merged into Metropolitan Life Insurance Company
("MetLife"), a mutual life insurance company whose principal office is 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 Administrative Office for the Policies and mailing
address is: New England Life Insurance Company, P.O. Box 725209, Atlanta, GA,
31139.
A-9
<PAGE>
The following chart illustrates the relationship of NELICO, the Fixed
Account, the Variable Account and the Eligible Funds.
[CHART APPEARS HERE]
NELICO
(Insurance company subsidiary of MetLife)
We deduct charges.
We allocate net premiums and net unscheduled payments to your choice of
sub-accounts in the Variable Account or to the Fixed Account.
Premiums and Unscheduled Payments
Fixed Account
VARIABLE ACCOUNT
Zenith Capital Growth Sub-Account
Zenith Back Bay Bond Income Sub-Account
Zenith Back Bay Money Market Sub-Account
Zenith Back Bay Managed Sub-Account
Zenith Westpeak Stock Index Sub-Account
Zenith Westpeak Growth and Income Sub-Account
Zenith Loomis Sayles Small Cap Sub-Account
Zenith Balanced Sub-Account
Zenith Alger Equity Growth Sub-Account
Zenith Davis Venture Value Sub-Account
Zenith Harris/Oakmark Midcap Value Sub-Account
Zenith Morgan Stanley International Magnum Equity Sub-Account
Zenith MFS Investors Sub-Account
Zenith MFS Research Managers Sub-Account
Metropolitan Putnam Large Cap Growth Sub-Account
Metropolitan Janus Mid Cap Sub-Account
Metropolitan Russell 2000 Index Sub-Account
VIP Equity-Income Sub-Account
VIP Overseas Sub-Account
VIP High Income Sub-Account
VIP II Asset Manager Sub-Account
Sub-accounts buy shares of the Eligible Funds.
NEW ENGLAND ZENITH FUND
Capital Growth Series
Back Bay Advisors Bond Income Series
Back Bay Advisors Money Market Series
Back Bay Advisors Managed Series
Westpeak Stock Index Series
Westpeak Growth and Income Series
Loomis Sayles Small Cap Series
Balanced Series
Alger Equity Growth Series
Davis Venture Value Series
Harris/Oakmark Midcap Value Series
Morgan Stanley International Magnum Equity Series
MFS Investors Series
MFS Research Managers Series
METROPOLITAN SERIES FUND, INC.*
Putnam Large Cap Growth Portfolio
Janus Mid Cap Portfolio
Russell 2000 Index Portfolio
VIP
Equity-Income Portfolio
Overseas Portfolio
High Income Portfolio
VIP II
Asset Manager Portfolio
Eligible Funds buy portfolio investments to support values and benefits of the
Policies.
* Availability of the Portfolios of the Metropolitan Series Fund, Inc. is
subject to any necessary state insurance department approvals.
A-10
<PAGE>
POLICY VALUES AND BENEFITS
DEATH BENEFIT
If the insured dies while the Policy is in force, we pay a death benefit to
the beneficiary.
DEATH BENEFIT OPTIONS. When you apply for a Policy, you choose between two
death benefit options.
The Option 1 (Face Amount) death benefit is equal to the face amount of the
Policy. The Option 1 death benefit is fixed, subject to increases required by
the Internal Revenue Code.
The Option 2 (Face Amount Plus Cash Value) death benefit is equal to the
face amount of the Policy, plus the Policy's cash value, if any. The Option 2
death benefit is also subject to increases required by the Internal Revenue
Code.
CHOICE OF TAX TEST. To meet the Internal Revenue Code's definition of life
insurance, the death benefit, which for these purposes includes any coverage
--------
provided under the Adjustable Term Insurance Rider, will not be less than what
is required by either (1) the "cash value accumulation test" under Section
------
7702(a)(1) of the Internal Revenue Code, or (2) the "guideline premium test"
--
under Section 7702(a)(2) of the Internal Revenue Code, whichever you select
--------------------
when the Policy is issued. The test you select at issue is used for the life
- -------------------------
of the Policy.
Under the cash value accumulation test, the death benefit is not less than
the Policy's cash value, including the portion of any Monthly Deduction made
for a period beyond the date of death, divided by the applicable net single
premium set by the Internal Revenue Code. Net single premiums are based on the
age and sex of the insured at the time of the calculation, and increase over
time. Sample net single premiums appear in Appendix E.
Under the guideline premium test, the death benefit is not less than a
certain multiple of the Policy's cash value, including the portion of any
Monthly Deduction made for a period beyond the date of death. (See Appendix
E.) This means that, if the cash value grows to certain levels, the death
benefit increases to satisfy tax law requirements. At that point, any payment
you make into the Policy will increase the death benefit by more than it
increases the cash value. (See "Premiums".)
If you select the cash value accumulation test, you can generally make a
higher amount of premium payments for any given face amount; and a higher
death benefit may result in the long term. If cash value growth in the early
Policy years is your primary objective, the cash value accumulation test may
be the appropriate choice because it allows you to invest more premiums in the
Policy for each dollar of death benefit. If cash value growth in the later
Policy years is your primary objective, the guideline premium test may be the
appropriate choice because it requires a lower death benefit, and therefore
lower mortality charges, once the Policy's death benefit is subject to
increases required by the Internal Revenue Code.
IF YOU SELECT THE GUIDELINE PREMIUM TEST, YOU WILL NOT BE ABLE TO ADD THE
GUARANTEED DEATH BENEFIT RIDER TO YOUR POLICY. (SEE "GUARANTEED DEATH BENEFIT
RIDER" BELOW.)
TERM RIDER "IN" OR "OUT". If you add an Adjustable Term Insurance Rider to
the Policy, you can have the face amount of the Rider added to the face amount
of the Policy for purposes of calculating the Option 1 or Option 2 death
benefit. If you include the rider coverage in the calculation of the death
benefit, the Policy may provide greater potential for cash value to grow
relative to the death benefit. If you do not include the rider coverage in the
calculation of the death benefit, the Policy may provide greater potential for
the death benefit to grow relative to cash value.
If you elect the Adjustable Term Insurance Rider after the Policy is issued
and your Policy has the Guaranteed Death Benefit Rider, then you must choose
----
to add the Adjustable Term Insurance Rider coverage to the Policy's face
amount in the calculation of the Policy's Option 1 or Option 2 death benefit.
See "Guaranteed Death Benefit Rider" below.
AGE 100. If death occurs at or after the Policy Anniversary when the insured
reaches attained age 100, the death benefit is equal to the greater of (i) the
cash value on the date of death; or (ii) the face amount, if the Policy had a
Guaranteed Death Benefit rider attached, and the Guaranteed Death Benefit was
in effect on the Policy Anniversary when the Insured reached attained age 100.
If the Policy has an Adjustable Term Insurance Rider as well as a Guaranteed
Death Benefit Rider in effect at the insured's attained age 100, we exchange
the term amount for an increase in the Policy's face amount. We do not require
evidence of insurability or a Face Amount Increase Charge (see "Charges and
Expenses") for the increase.
GUARANTEED DEATH BENEFIT RIDER
Subject to state availability, if you choose the cash value accumulation
test, you may also elect at issue a rider that provides a Guaranteed Death
Benefit. (If you have elected an Adjustable Term Insurance Rider, you may
elect the Guaranteed Death
A-11
<PAGE>
Benefit Rider only if you have chosen to add the Adjustable Term Insurance
Rider coverage to the Policy's face amount in the calculation of the Policy's
Option 1 or Option 2 death benefit).
If you elect this benefit, we determine whether the Guaranteed Death Benefit
is in effect on the first day of each Policy month until the insured reaches
age 100. If the Guaranteed Death Benefit is in effect, the Policy will not
lapse even if the net cash value is less than the Monthly Deduction for that
month.
On the first day of a Policy month, if the total premiums you have paid,
less all partial surrenders and less any outstanding Policy loan plus accrued
loan interest, are at least equal to: the Guaranteed Death Benefit Premium,
multiplied by the number of completed Policy years, plus 1/12 of that premium
for each Policy month of the current Policy year up to and including the
current Policy month, then the guarantee will apply for that month. The
Guaranteed Death Benefit Premium appears in Section 1 of your Policy.
We recalculate the Guaranteed Death Benefit premium if:
--you reduce or increase the face amount
--you make a partial surrender that reduces the face amount
--you increase or decrease rider coverage.
When testing whether the Guaranteed Death Benefit is in effect, we use the
Policy's original Guaranteed Death Benefit premium for the period of time it
was in effect, and each recalculated Guaranteed Death Benefit premium for the
period of time it was in effect.
If you elect this benefit, the Monthly Deduction will include a charge for
the rider, currently until the Policy anniversary when the insured reaches age
100, unless you request that the rider terminate before then. You cannot add
the rider after issue of the Policy.
We can restrict any unplanned premium payment that would increase your
Policy's death benefit by more than it would increase cash value. (See
"Flexible Premiums.") This could prevent you from making unplanned premium
payments that are necessary to keep the Guaranteed Death Benefit rider benefit
in effect.
DEATH PROCEEDS PAYABLE
The death proceeds we pay are equal to the death benefit on the date of the
insured's death, reduced by any outstanding loan and accrued loan interest on
that date. If the death occurs during the grace period, we reduce the proceeds
by an amount to cover unpaid Monthly Deductions to the date of death. (See
"Lapse and Reinstatement".) We increase the death proceeds by any rider
benefits payable.
We may adjust the death proceeds if the insured's age or sex was misstated
in the application, if death results from the insured's suicide within two
years (less in some states) from the Policy's date of issue or within two
years (less in some states) from an increase in the Policy's face amount, or
if a rider limits the death benefit. (See "Limits to NELICO's Right to
Challenge the Policy".)
CHANGE IN DEATH BENEFIT OPTION
After the first Policy year, you may change your death benefit option by
sending your written request to our Administrative Office. The request will be
effective on the date we receive it. A change in death benefit option may have
tax consequences. (See "Tax Considerations".)
If you change from Option 1 (Face Amount) to Option 2 (Face Amount Plus Cash
Value), we reduce the Policy's face amount if necessary so that the death
benefit is the same immediately before and after the change. The face amount
reduction will apply to the Policy's initial face amount and any prior
increases in face amount on a pro rata basis. A face amount reduction below
$50,000 requires our consent. We may also decrease any rider benefits under
the Policy. If you selected the guideline premium test for the Policy, a
partial surrender of cash value may be necessary to meet Federal tax law
limits on the amount of premiums that you can pay into the Policy.
If you change from Option 2 (Face Amount Plus Cash Value) to Option 1 (Face
Amount), we increase the Policy's face amount, if necessary, so that the death
benefit is the same immediately before and after the change. We will apply the
increase to the Policy's initial face amount and any prior increase in face
amount on a pro rata basis.
A-12
<PAGE>
AFTER THE POLICY IS ISSUED, YOU CANNOT CHANGE YOUR CHOICE OF TAX TEST (CASH
------
VALUE ACCUMULATION TEST OR GUIDELINE PREMIUM TEST). IN ADDITION, YOU CANNOT
-----------------------
CHANGE YOUR ELECTION WHETHER TO ADD THE FACE AMOUNT OF AN ADJUSTABLE TERM
- -------------------------------------------------------------------------
INSURANCE RIDER TO THE FACE AMOUNT OF THE BASE POLICY FOR PURPOSES OF
- ---------------------------------------------------------------------
CALCULATING THE OPTION 1 OR OPTION 2 DEATH BENEFIT. (SEE "DEATH BENEFIT
- -----------------------------------------------------------------------
OPTIONS".)
- ----------
CASH VALUE
Your Policy's total cash value includes its cash value in the Variable
Account and in the Fixed Account. If you have a Policy loan, the cash value
also includes the amount we hold in our general account as a result of the
loan. The cash value reflects:
--net premium payments
--the net investment experience of the Policy's sub-accounts
--interest credited to cash value in the Fixed Account
--interest credited to amounts held in the general account for a Policy loan
--the death benefit option you choose
--Policy charges
--partial surrenders
--transfers among the sub-accounts and Fixed Account
--the premium payment schedule (annual vs. quarterly, for example) you
choose
We pay you the NET cash value if you surrender the Policy. It equals the
cash value minus any outstanding Policy loan (plus interest). We add to the
net cash value the cost of insurance charge for the remainder of the month. If
you surrender in the grace period, we reduce the net cash value by the Monthly
Deduction that applies to the date of surrender. (See "Loan Provision" and
"Monthly Deduction from Cash Value".)
The Policy's cash value in the Variable Account may increase or decrease
daily depending on net investment experience. Poor investment experience can
reduce the cash value to zero. YOU HAVE THE ENTIRE INVESTMENT RISK FOR THE
CASH VALUE IN THE VARIABLE ACCOUNT.
The Policy's total cash value in the Variable Account equals the number of
units credited in each sub-account multiplied by that sub-account's unit
value. We convert any premium or cash value allocated to a sub-account into
units of the sub-account. Full or partial surrenders, Policy loans, transfers
and charges deducted from the cash value reduce the number of units credited
in a sub-account. We determine the number of units by dividing the dollar
amount of the transaction by the sub-account's unit value next determined
following the transaction. (In the case of an initial premium, we use the unit
value on the Investment Start Date.)
The unit value of a sub-account depends on the net investment experience of
its corresponding Eligible Fund and reflects fees and expenses of the Eligible
Fund. The unit value for each sub-account was set at $100.00 on or about the
time when shares of the corresponding Eligible Fund first became available to
investors. We determine the unit value as of the close of regular trading on
the New York Stock Exchange on each day that the Exchange is open for trading
by multiplying the most recent unit value by the net investment factor ("NIF")
for that day (see below).
The NIF for a sub-account reflects:
--the change in net asset value per share of the corresponding Eligible Fund
(as of the close of regular trading on the Exchange) from its last value,
--the amount of dividends or other distributions from the Eligible Fund
since the last determination of net asset value per share, and
--any deductions for taxes that we make from the Variable Account.
The NIF can be greater or less than one.
A-13
<PAGE>
ALLOCATION OF NET PREMIUMS
Your cash value is held in the general account of NELICO or an affiliate
until we mail the confirmation for the initial premium. We credit the first
net premium with net investment experience equal to that of the Zenith Money
Market Sub-Account from the investment start date until the day that we mail
the confirmation for the initial premium (in states that require a refund of
premiums if you exercise the Right to Return the Policy, until 15 days after
we mail the initial premium confirmation). Then, we allocate the Policy's cash
value to the Sub-Accounts and/or the Fixed Account as you choose. (See
"Investment Options" and "Monthly Deduction from Cash Value.")
If you increase the Policy face amount, we allocate the portion of net
premiums attributable to the increase among accounts in accordance with your
current allocation instructions. Currently, you can allocate to an unlimited
number of available accounts (including the Fixed Account) at any one time.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
INVESTMENT START DATE. The investment start date is the latest of: the date
when we first receive a premium payment for the Policy, the date Part II of
the Policy application is signed and the Policy Date. (For this purpose,
receipt of the premium payment means receipt by your registered
representative, if the payment is made with the application; otherwise, it
means receipt by a NELICO agency.)
PREMIUM WITH APPLICATION. If you make a premium payment with the
application, the Policy Date is generally the later of the date Part II of the
application is signed and receipt of the premium payment. In that case, the
Policy Date and investment start date are the same. The amount of premium paid
with the application must be at least 10% of the annual Planned Premium for
the Policy. You may make only one premium payment before the Policy is issued.
If you make a premium payment 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 for the Policy (or, if later, on
the date when Part II of the application is signed). The maximum temporary
coverage is the lesser of the amount of insurance applied for and $500,000 for
standard and preferred risks ($250,000 for substandard risks and $50,000 for
persons who are determined to be uninsurable). These provisions vary in some
states.
If we issue a Policy, Monthly Deductions begin from the Policy Date, even if
we delayed the Policy's issuance for underwriting. The deductions are for the
face amount of the Policy issued, even if the temporary insurance coverage
during underwriting was for a lower amount. If we decline an application, we
refund the premium payment made.
PREMIUM ON DELIVERY. If you pay the initial premium on delivery of the
Policy, the Policy Date is usually five days after issue. The investment start
date is the later of the Policy Date and the date we received the premium.
Monthly Deductions begin on the Policy Date. We credit interest at a 4% net
rate on the net Minimum Premium (see "Premiums") for any period between the
Policy Date and the investment start date. Insurance coverage under the Policy
begins when we receive the number of monthly payments due.
BACKDATING. We may sometimes backdate a Policy, if you request, by assigning
a Policy Date earlier than the date the application is signed. You may wish to
backdate so that you can obtain lower cost of insurance rates, based on a
younger insurance age. For a backdated Policy, you must also pay the Minimum
Premium payable for the period between the Policy Date and the investment
start date. As of the investment start date, we allocate to the Policy those
net premiums, adjusted for monthly Policy charges and interest at a 4% net
rate for that period.
RIGHT TO RETURN THE POLICY
You may cancel the Policy within 10 days (more in some states) after you
receive the Policy. You may return the Policy to us or your registered
representative. Insurance coverage ends as soon as you return the Policy
(determined by postmark, if the Policy is mailed). If you cancel the Policy,
we refund the cash value of the Policy plus any sales and premium tax charges
that were deducted from the premiums you paid, or if required by state
insurance law, any premiums paid.
You may cancel an increase in face amount within 10 days (more in some
states) after you receive the adjusted Policy. You may return the face amount
increase to NELICO or your registered representative. The face amount increase
will be canceled from its beginning and we will return to your cash value any
processing charge and Monthly Deduction made for the face amount increase.
A-14
<PAGE>
CHARGES AND EXPENSES
The amount of a charge may not necessarily correspond to the costs of 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 our sales and distribution expenses, and we may use
proceeds from other charges, including the mortality and expense risk charge,
to help cover those expenses.
DEDUCTIONS FROM PREMIUMS
SALES CHARGE. We deduct a sales charge of 8% from each premium payment you
make during a Policy year. Currently we reduce the charge to 1% for each
premium payment you make above a Target Premium during a Policy year. For this
purpose, we consider premiums we receive during the twenty days prior to a
Policy anniversary as paid in the next Policy year.
We indicated your Target Premium on your personalized illustration.
Sales charges for Policies sold to some cases may be reduced. We may reduce
or eliminate the sales charge when you purchase a Policy, on cash value
transferred in the first year from certain life insurance policies that were
issued by New England Mutual, NELICO or NELICO's affiliates. Eligibility
requirements will apply. Your registered representative can advise you
regarding the availability of this feature.
PREMIUM TAX CHARGE. We deduct 2% from each premium payment made to cover
premium taxes. Premium taxes vary from state to state.
DEDUCTIONS FROM CASH VALUE
MONTHLY DEDUCTION. On the first day of each Policy month, starting with the
Policy Date, we deduct the "Monthly Deduction" from your cash value.
--If your Policy is protected against lapse by the Guaranteed Death Benefit
rider or three year Minimum Premium guarantee, we make the Monthly
Deduction unless the net cash value equals zero. (See "Premiums".)
--If you do not have the Guaranteed Death Benefit rider and the three year
Minimum Premium guarantee is not in effect, we make the Monthly Deduction
as long as the net cash value is large enough to cover the entire Monthly
Deduction. If it is not large enough, the Policy will be in default and
may lapse. (See "Lapse and Reinstatement".)
Currently, there is no Monthly Deduction on or after the Policy Anniversary
when the insured reaches age 100.
The Monthly Deduction reduces the cash value in each Sub-Account of the
Variable Account and in the Fixed Account in proportion to the cash value in
each, unless you choose a "Single Source Expense Sub-Account" on the Policy
application. If you choose a Single Source Expense Sub-Account, we will take
the Monthly Deduction from that Sub-Account until the cash value there is
gone. Then we will take the Monthly Deduction from your remaining Sub-Accounts
and the Fixed Account in proportion to the cash value in each. You cannot
choose the Fixed Account as the Single Source Expense Sub-Account.
The Monthly Deduction includes the following charges:
--POLICY FEE. The Policy fee is currently equal to $5.00 per month. The fee
is guaranteed not to exceed $10.00 per month.
--MORTALITY AND EXPENSE RISK CHARGE. We deduct a charge for the mortality
and expense risks that we assume. This charge is at an annual rate of 0.75%
during the first ten Policy years (and during the first ten years following a
face amount increase), and 0.25% thereafter (guaranteed not to exceed 0.75%).
The rate is applied against the entire cash value, including any cash value
held in the general account as collateral for a Policy loan. 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.
We deduct the mortality and expense risk charge last after all other
components of the Monthly Deduction. We calculate it separately for each
underwritten segment of coverage and each segment resulting from a term
insurance conversion. The actual charge is a weighted average of the mortality
and expense risk charge applicable to each segment (based on the relative
Target Premium for each segment).
--MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of
providing insurance protection under your Policy. There is no cost of
insurance charge on or after the Policy Anniversary when the insured reaches
age 100. The
A-15
<PAGE>
cost of insurance charge for a Policy month is equal to the "amount at risk"
under the Policy, multiplied by the cost of insurance rate for that Policy
month. We determine the amount at risk on the first day of the Policy month
after we process the Monthly Deduction (except for the mortality and expense
risk charge). The amount at risk is the amount by which the death benefit
(discounted at the monthly equivalent of 4% per year) exceeds the Policy's
cash value. The cost of insurance rate for your Policy changes from month to
month.
The guaranteed cost of insurance rates for a Policy depend on the insured's
--underwriting class
--age on the first day of the Policy year
--sex (if the Policy is sex-based).
The current cost of the insurance rates will also depend on
--the insured's age at issue
--the Policy year.
We guarantee that the rates will not be higher than rates based on the 1980
Commissioners Standard Ordinary Mortality Tables (the "1980 CSO Tables"). The
actual rates we use may be lower than the maximum rates, depending on our
expectations about our future mortality and expense experience, lapse rates
and investment earnings. We review the adequacy of our cost of insurance rates
periodically and may adjust them. Any change will apply prospectively. (For
information regarding a Policy's cost of insurance rates following a face
amount increase, see "Increase in Face Amount".)
The underwriting classes we use are smoker standard, smoker rated, nonsmoker
preferred, nonsmoker standard, nonsmoker rated and guaranteed issue. Rated and
guaranteed issue classes have higher cost of insurance deductions. We base the
guaranteed maximum mortality charges for rated Policies on multiples of the
1980 CSO Tables. (For information regarding a Policy's underwriting
classification following a face amount increase, see "Increase in Face
Amount". See below for a discussion of guaranteed issue Policies.)
The nonsmoker classes are available as follows:
--nonsmoker preferred and nonsmoker standard, for Policies with face amounts
(including any Adjustable Term Insurance Rider coverage) of $100,000 or
more where the issue age is 20 through 75
--nonsmoker standard, for Policies with face amounts below $100,000 and for
all Policies where the issue age is above 75.
The nonsmoker preferred class generally offers better current cost of
insurance rates than the nonsmoker standard class.
Cost of insurance rates are generally lower for nonsmokers than for smokers
and generally lower for females than for males. Within a given underwriting
class, cost of insurance rates are generally lower for insureds with lower
issue ages. Where required by state law, and for Policies sold in connection
with some employee benefit plans, cost of insurance rates (and Policy values
and benefits) do not vary based on the sex of the insured.
Under Policies issued in New Jersey, an insured's underwriting class may not
be improved from smoker to nonsmoker during the first two Policy years.
We may offer Policies on a guaranteed issue basis to certain cases. We issue
these Policies up to predetermined face amount limits. Because we issue these
Policies based on minimal underwriting information, they may present a greater
mortality cost to us than Policies in the standard class. Therefore, we
generally use higher current cost of insurance rates for guaranteed issue
Policies. For some cases, the charge may vary based on the size of the group,
the total premium for the group and certain characteristics of the group
members. The guaranteed maximum monthly cost of insurance charges for
guaranteed issue status will exceed charges based on 100% of the 1980 CSO
Tables.
Guaranteed issue Policies have cost of insurance rates that vary based on
whether the insured is a smoker or nonsmoker, and the preferred nonsmoker
class is not available. The current cost of insurance rates do not vary by
individual Policy face amount but may be lower if the members of the group
have certain characteristics.
Some cases may be eligible to purchase Policies on a simplified underwriting
basis. They may elect simplified underwriting instead of guaranteed issue or
for amounts of insurance above our guaranteed issue limits. However, they may
not choose guaranteed issue for some members of the group and simplified
underwriting for others. Policies issued on a simplified
A-16
<PAGE>
underwriting basis will have the same cost of insurance rates as fully
underwritten Policies; however, the nonsmoker preferred class is not available
to these Policies.
--TERM RIDER. The Adjustable Term Insurance Rider has its own cost of
insurance rates that are different from those of the base Policy. If you elect
to add the Adjustable Term Insurance Rider to the face amount of the base
Policy in the calculation of Death Benefit Option 1 or 2, then once the net
amount at risk of the base Policy is zero, any excess cash value of the base
Policy reduces the net amount at risk under the term insurance rider. If the
Adjustable Term Insurance Rider is not added to the face amount of the base
Policy in the calculation of Death Benefit Option 1 or 2, then the term
rider's net amount at risk will not be reduced by any of the base Policy's
cash value.
--GUARANTEED DEATH BENEFIT RIDER CHARGE. The charge for the Guaranteed Death
Benefit rider is $0.01 per $1,000 of face amount (including the base Policy
and any Adjustable Term Insurance Rider).
--CHARGES FOR ADDITIONAL BENEFITS AND SERVICES. We charge for the cost of
any additional Rider benefits as described in the rider form. We also may
charge you a nominal fee, which we will bill directly to you, if you request a
Policy re-issue or re-dating.
FACE AMOUNT INCREASE CHARGE. For an underwritten face amount increase, we
deduct a charge of $0.80 per $1,000 of face amount increase (not to exceed
$25.00) when the increase takes effect, and on the first day of the next
eleven Policy months. Currently, there is no Face Amount Increase Charge on or
after the Policy Anniversary when the insured reaches age 100.
CHARGES FOR INCOME TAXES. We currently do not charge for income taxes
against the Variable Account, but in the future we may make such a charge, if
appropriate. We have the right to make a charge for any taxes imposed on the
Policies in the future. (See "Charge for NELICO's Income Taxes".)
CHARGES AGAINST THE ELIGIBLE FUNDS
The following table shows the annual operating expenses for each series,
based on actual expenses for 1999, after giving effect to the applicable
expense cap or expense deferral arrangement:
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER ANY EXPENSE CAP)
<TABLE>
<CAPTION>
BACK BACK
BAY BAY BACK WESTPEAK LOOMIS
ADVISORS ADVISORS BAY WESTPEAK GROWTH SAYLES
CAPITAL BOND MONEY ADVISORS STOCK AND SMALL
GROWTH INCOME MARKET MANAGED INDEX INCOME CAP
SERIES SERIES SERIES SERIES SERIES SERIES SERIES*
-------------- -------- ------------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .62% .40% .35% .50% .25% .68% .90%
Other Expenses.......... .04% .08% .05% .08% .10% .06% .10%
---- ---- ----- ---- ---- ---- -----
Total Series
Operating............ .66% .48% .40% .58% .35% .74% 1.00%
EXPENSES
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER EXPENSE DEFERRAL)
<CAPTION>
MORGAN
HARRIS/OAKMARK STANLEY DAVIS ALGER MFS
MIDCAP INTERNATIONAL VENTURE EQUITY MFS RESEARCH
VALUE BALANCED MAGNUM VALUE GROWTH INVESTORS MANAGERS
SERIES SERIES EQUITY SERIES SERIES SERIES SERIES* SERIES*
-------------- -------- ------------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .75% .70% .90% .75% .75% .75% .75%
Other Expenses.......... .13% .07% .40% .06% .05% .15% .15%
---- ---- ----- ---- ---- ---- -----
Total Operating
Expenses............. .88% .77% 1.30% .81% .80% .90% .90%
</TABLE>
- --------
* Without the applicable expense cap or expense deferral arrangement
(described below), Total Series Operating Expenses for the year ended
December 31, 1999 would have been: MFS Investors Series, 2.03%; and MFS
Research Managers Series, 2.03%. In 1999 the management fee for the Loomis
Sayles Small Cap Series was 1.00%, and Total Series Operating Expenses were
capped at 1.00%. Without the expense cap, Total Series Operating Expenses
would have been 1.10%.
A-17
<PAGE>
Our affiliate, New England Investment Management, Inc. (formerly known as TNE
Advisers, Inc.), advises the series of the Zenith Fund except for the Capital
Growth Series. New England Investment Management voluntarily limits the
expenses of certain series with either an expense cap or expense deferral
arrangement. Under the expense cap, New England Investment Management bears
expenses of the Loomis Sayles Small Cap Series that exceed 1.00% of average
daily net assets. Under the expense deferral agreement, New England Investment
Management bears expenses of the Harris/Oakmark Midcap Value, Morgan Stanley
International Magnum Equity, MFS Investors, and MFS Research Managers Series
that exceed .90% of average daily net assets (1.30% for the Morgan Stanley
International Magnum Equity Series) in the year the series incurs them and
charges those expenses to the series in a future year if actual expenses of
the series are below the limit. New England Investment Management may end
these expense limits at any time.
MetLife is the investment advisor for the Portfolios of the Metropolitan
Series Fund, Inc. The Portfolios pay investment management fees to MetLife and
also bear other expenses. The chart below shows the total operating expenses
of the Portfolios for the year ended December 31, 1999 (in the case of the
Putnum Large Cap Growth Portfolio, anticipated expenses for 2000) as a
percentage of Portfolio net assets.
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
- --------- ---------- -------- ------------
<S> <C> <C> <C>
Putnum Large Cap Growth........................ *
Janus Mid Cap..................................
Russell 2000 Index............................. *
</TABLE>
- --------
* MetLife voluntarily pays expenses (other than the management fee, brokerage
commissions, taxes, interest and other loan costs, and any unusual one-time
expenses) of the Putnam Large Cap Growth Portfolio that exceed .20% of net
assets. Without this subsidy, the anticipated total annual expenses of the
Putnam Large Cap Growth Portfolio would be %. MetLife also paid such
expenses that exceeded .20% of net assets for the Russell 2000 Index
Portfolio until December 3, 1999. Without this subsidy the total annual
expenses of the Russell 2000 Index Portfolio for 1999 would have been %.
Beginning February 22, 2000, MetLife is paying such expenses that exceed
.30% of the Russell 2000 Index Portfolio's net assets until the earlier of
(i) April 30, 2001 and (ii) the date when the Portfolio's net assets reach
$200 million.
The investment adviser for VIP and VIP II is Fidelity Management & Research
Company ("FMR"). The Portfolios of VIP and VIP II pay investment management
fees to FMR and also bear certain other expenses. For the year ended December
31, 1999, the total operating expenses of the Portfolios, as a percentage of
Portfolio average net assets, were:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
- --------- ---------- -------- ------------
<S> <C> <C> <C>
VIP Equity-Income.............................. .48% .09% .57%*
VIP Overseas................................... .73% .18% .91%*
VIP High Income................................ .58% .11% .69%
VIP II Asset Manager........................... .53% .10% .63%*
</TABLE>
- --------
* Total annual expenses do not reflect certain expense reductions due to
directed brokerage arrangements and custodian interest credits. If we
included these reductions, total annual expenses would have been .56% for
VIP Equity-Income Portfolio, .87% for VIP Overseas Portfolio and .62% for
VIP II Asset Manager Portfolio.
Affiliates of FMR compensate NELICO and/or certain affiliates for
administrative, distribution, or other services relating to these Portfolios
of VIP and VIP II. This compensation is based on assets of the Portfolios
attributable to the Policies and certain other variable insurance products
that we and our affiliates issue.
SPECIAL ARRANGEMENTS
We may waive, reduce or vary any Policy charges under Policies sold to some
cases. We may also raise the interest rate credited to loaned amounts under
these Policies. The amount of the variations and our eligibility rules may
change from time to time. In general, they reflect cost savings over time that
we anticipate for Policies sold to the eligible group or sponsored
arrangements and relate to objective factors such as the size of the group,
its stability, the purpose of the funding arrangement and characteristics of
the group members. These variations of charges do not apply to Policies sold
in New York other than
A-18
<PAGE>
Policies sold to non-tax qualified deferred compensation plans of various
types. Consult your registered representative for any variations that may be
available and appropriate for your case.
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.
PREMIUMS
FLEXIBLE PREMIUMS
Within limits, you choose the amount and frequency of premium payments. You
select a Planned Premium schedule, which is a level amount. This schedule
appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP YOUR
POLICY IN FORCE. You may skip Planned Premium payments or make additional
payments. Additional payments could be subject to underwriting and our
consent. No payment can be less than $25 ($10 for payments made under certain
monthly payment arrangements). We limit the total of Planned Premiums and
other payments to our published maximum.
You can pay Planned Premiums on an annual, semi-annual, quarterly or monthly
schedule. You can change your Planned Premium schedule by sending your request
to us. However, you cannot increase the amount of your Planned Premium unless
we consent, and we may require underwriting.
You may make payments by check or money order. We will send premium notices
for annual, semi-annual, quarterly or monthly Planned Premiums. You may also
make premium payments by wire transfer of federal funds in accordance with our
current procedures.
You may not make premium payments on and after the Policy anniversary on
which the insured reaches age 100, except under the Policy's grace period
provision. (See "Lapse and Reinstatement.")
If you have selected the guideline premium test, Federal tax law limits the
amount of premiums that you can pay under the Policy. In addition, if any
payments under the Policy exceed the "7-pay test" under Federal tax law, your
Policy will become a "modified endowment contract" and you may have more
adverse tax consequences with respect to certain distributions than would
otherwise be the case if premium payments did not exceed the "7-pay test".
(See "Tax Considerations".)
We allocate net payments to your Policy's Sub-Accounts as of the date we
receive the payment. (See "Communications and Payments".)
Under current processing, we treat a payment first as a Planned Premium,
second as repayment of Policy loan interest due, and last as an unscheduled
payment, unless you instruct us otherwise in writing. (For Policies issued in
-----------------------
New York, we treat a payment as a Planned Premium when a Policy loan is
- --------
outstanding only if the payment is in the exact amount of the Planned Premium
----
next due; otherwise, we treat it first as repayment of Policy loan interest
due, second as a Planned Premium, and last as an unscheduled payment.) We do
not treat a payment as repayment of a Policy loan unless you instruct us to.
If you have a Policy loan, it may be better to repay the loan than to make a
premium payment, because the premium payment is subject to sales and tax
charges, whereas the loan repayment is not subject to any charges. (See "Loan
Provision", "Deductions from Premiums" and "Death Benefit".)
A-19
<PAGE>
Two types of premium payment levels can protect your Policy against lapse
(1) for the first three Policy years, and (2) until age 100 of the insured.
- --------------------------------------------------------------------------------
First three Policy years--In general, if you pay the three year Minimum
------------------------
Premium amounts on time, the Policy will not lapse even if the net cash
value is less than the Monthly Deduction in any month. If (a) the total
premiums you have paid, less all partial surrenders and any outstanding
Policy loan balance, at least equal (b) the total monthly Minimum Premiums
for the Policy up to that Policy month, the Policy will not lapse. The
guarantee will not apply if you substitute the insured or reinstate the
Policy, unless on reinstatement you pay all your unpaid Minimum Premiums,
including those for the period of lapse. We recalculate the Minimum Premium
if you (1) reduce the face amount or make a partial surrender that reduces
the face amount, (2) increase or decrease rider coverage, (3) increase the
face amount, or (4) if the rating classification for your Policy is
improved. The Minimum Premium amount (shown in your Policy) is based on your
Policy's face amount, the age, sex (unless unisex rates apply) and
underwriting class of the insured, current Policy charges and any riders to
the Policy.
To age 100 of the insured--If you elect the Guaranteed Death Benefit rider
-------------------------
and pay the Guaranteed Death Benefit premium amounts on time, the Policy
will stay in force until age 100 of the insured. We recalculate the
Guaranteed Death Benefit premium following the same Policy transactions
described above for a recalculation of the three year Minimum Premium
amount. The Guaranteed Death Benefit premium amount (shown in your Policy)
is based on the same factors as the three year Minimum Premium, except that
it is based on the guaranteed level of Policy charges.
Under Policies issued in New Jersey, if you have met the requirements for
-----------------------------------
the three-year Minimum Premium death benefit guarantee at the end of the
three year guarantee period, the Minimum Premium death benefit guarantee
will continue to apply during the fourth Policy year as long as (a) payments
made during that Policy year, less partial surrenders and loans made in that
year, equal (b) the guaranteed maximum Policy charges for the fourth Policy
year. If you make a Policy transaction that changes the amount of the
guaranteed maximum Policy charges for that year, then the amount needed to
preserve the Minimum Premium death benefit guarantee for an extra Policy
year will change accordingly.
- --------------------------------------------------------------------------------
LAPSE AND REINSTATEMENT
LAPSE. Unless your Policy is protected by the Guaranteed Death Benefit or
the Minimum Premium guarantee, any month that your Policy's net cash value is
not large enough to cover a Monthly Deduction, your Policy will be in default.
Your Policy provides a 62 day grace period for payment of a premium large
enough to cover the Monthly Deduction and all deductions from the premium.
(For Policies issued in New Jersey the amount due is the least of: a premium
- ----------------------------------
large enough to cover the Monthly Deduction and all deductions from the
premium; a premium large enough to permit the Guaranteed Death Benefit to be
in effect; and a premium large enough to permit the three year Minimum Premium
death benefit to be in effect.) We will notify you of the amount due. You have
insurance coverage during the grace period, but if the insured dies before you
have paid the premium, we deduct from the death proceeds the unpaid Monthly
Deduction for the period prior to the date of death. If you have not paid the
required premium by the end of the grace period, your Policy will lapse
without value.
REINSTATEMENT. 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 need our consent to reinstate. Reinstatement
in all cases requires payment of certain charges described in the Policy and
usually requires evidence of insurability that is satisfactory to us.
OTHER POLICY FEATURES
INCREASE IN FACE AMOUNT
After the first Policy year you may increase the Policy's face amount. Our
underwriting rules and requirements, including proof of insurability, will
apply. The increase must be at least $10,000. If the increase requires medical
underwriting, we will deduct a face amount increase charge of $0.80 per $1,000
of the face amount increase (not to exceed $25.00) when the increase takes
effect, and on the first day of the next eleven Policy months. We will deduct
the charge from the Policy's cash value in the sub-accounts and the Fixed
Account, in proportion to the amount of cash value in each (unless you have
elected a Single Source Expense Sub-Account).
An increase in face amount may have tax consequences. (See "Tax
Considerations".)
After an underwritten face amount increase, we assign a Target Premium to
the new face amount segment. It is based on the insured's age at the start of
that Policy year and current underwriting class, and on the amount of the face
amount increase.
A-20
<PAGE>
Face amount increases that are not medically underwritten do not require a
face amount increase charge and usually do not increase the Policy's Target
Premium. (The exception is a conversion from term insurance, which does
increase the Target Premium but does not trigger a face amount increase
charge.)
- --------------------------------------------------------------------------------
Sales charge--After a face amount increase, we currently deduct the sales
------------
charge based on the total Target Premium for your Policy, including Target
Premiums assigned to any face amount increases. Therefore, we currently
deduct 8% from each premium you make in a Policy year until you have paid an
amount equal to the Policy's total Target Premium and 1% from any premium
balance in that year.
Monthly deduction--We adjust the Monthly Deduction starting on the
-----------------
effective date of a face amount increase to reflect the new face amount and
amount at risk. We base cost of insurance charges for the face amount
increase on the insured's age at the time of the increase (if underwritten
or from a term conversion), or on age at issue (if not underwritten) and
reflect any change in risk class (if underwritten). Generally, if the
insured's risk class improved, we base future cost of insurance rates for
the whole Policy on the better class. If the insured's risk class is worse
than at issue (or at the time of an earlier face amount increase), only the
cost of insurance charge for the face amount increase will be based on the
worse risk class. We base cost of insurance rates for the Policy after a
face amount increase on a weighted average of the net amounts at risk for
each face amount segment. (See "Charges and Expenses--Monthly Deduction from
Cash Value.")
We determine the net amount at risk of a face increase segment by
calculating the percentage of the Policy's new net amount at risk that the
face increase added. For example, if you increase the face amount by
$100,000 and the total net amount at risk just after the face increase is
$250,000, then 40% of the total net amount at risk applies to the face
amount increase and 60% applies to the initial face amount. In that case,
the net amount at risk used to determine the cost of insurance charge for
the face amount increase would be the Policy's total net amount at risk on a
monthly processing day, multiplied by 40%.
Mortality and expense risk charge--We calculate the mortality and expense
---------------------------------
risk charge separately for each face amount segment that was underwritten or
resulted from a term insurance conversion. We base the total charge on a
weighted average of the mortality and expense risk charge that applies to
each segment, which in turn is based on the relative Target Premium for each
segment.
For commission purposes, we attribute a portion of each premium you pay to
a face amount increase, based on the relative Target Premium for each face
amount segment.
- --------------------------------------------------------------------------------
An increase in face amount will take effect on the first day of the Policy
month following our approval of your application for the increase. You can
contact our Administrative Office or your registered representative for
information on requesting a face amount increase. You have a limited time in
which you may cancel a face amount increase. (See "Right to Return the
Policy".)
If a Policy has an Adjustable Term Insurance Rider, then we may offer
increases in term insurance coverage, including annual term insurance
increases which are related to increases in salary or which are based on a
fixed annual percentage (the "Salary Refresh" program). We may also offer
increases that relate to premium contributions by an employer. We determine
limits on the annual and/or total amount of term insurance increases per
Policy that we will permit on a guaranteed issue basis at issue of the
Policies. Increases that are not pursuant to an annual increase, or which
exceed this limit, will require underwriting. The terms and conditions of the
Salary Refresh program are contained in our published rules which are
furnished at the time of application.
LOAN PROVISION
You may borrow all or part of the Policy's "loan value" beginning fifteen
days after we mail the confirmation for the initial premium. We make the loan
as of the date when we receive a loan request. (See "Communications and
Payments".) You should contact our Administrative Office or your registered
representative for information on loan procedures.
The Policy's loan value is equal to 90% (or more if required by state law)
of the Policy's cash value. The loan value available is reduced by any
outstanding loan plus interest.
If you purchase a Policy with the proceeds of another life insurance policy
that has an outstanding policy loan (see "Premium Payments"), then any loan
remaining against the new Policy cannot exceed 75% of the Policy's cash value
at issue. It may not be advantageous to replace existing insurance with a
Policy.
A-21
<PAGE>
When we pay the loan proceeds to you, we transfer cash value in the amount
of the loan from the Sub-Accounts to our general account as collateral for the
loan. When you make a loan repayment, we transfer cash value in the amount of
the repayment and held as collateral from the general account back to the Sub-
Accounts. Unless you request otherwise, we transfer cash value for a Policy
loan from the Sub-Accounts in proportion to the cash value in each. We
allocate all loan repayments, unless you request otherwise, to the Sub-
Accounts in proportion to the cash value in each at the time of repayment.
(See "The Fixed Account" for information on when loans and loan repayments can
impact cash value in the Fixed Account.)
The interest rate charged on Policy loans is an effective rate of 4.75% per
year. It accrues daily, and is due on the Policy Anniversary. If not paid, we
add the interest accrued to the loan amount, 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. Amounts we take as collateral for a loan
earn interest at an effective rate of not less than 4.00% per year. The rate
we currently credit is 4.00% for the first 10 Policy years and 4.50%
thereafter. (You should consult a tax advisor as to the tax consequences
associated with a Policy loan outstanding after the tenth Policy year.) We
credit this interest amount 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,
loans can permanently affect the death benefit and cash value of the Policy,
even if repaid. In addition, we reduce any proceeds payable under a Policy by
the amount of any outstanding loan plus accrued interest.
If a Policy loan is outstanding, it may be better to repay the loan than to
pay a premium, because the payment is subject to sales and premium tax
charges, and the loan repayment is not subject to charges. (See "Deductions
from Premiums" and "Death Benefit".)
If Policy loans plus accrued interest exceed the Policy's cash value at any
time, we will notify you that the Policy is going to terminate. (This is
called an "excess Policy loan".) The Policy will terminate without value 62
days after we mail the notice unless you pay us the excess Policy loan amount
within that time. If the Policy lapses with a loan outstanding, adverse tax
consequences may result. If your Policy is a "modified endowment contract",
loans under your Policy may be treated as taxable distributions. (See "Tax
Considerations" below.)
Department of Labor ("DOL") regulations impose requirements for participant
loans under tax-qualified pension plans. Therefore, plan loan provisions may
differ from Policy loan provisions. (See "Tax Considerations".)
SURRENDER
You may surrender a Policy for its net cash value at any time while the
insured is living. We determine the net cash value of the surrendered Policy
as of the date when we receive a surrender request. The net cash value equals
the cash value reduced by any Policy loan and accrued interest. We increase
the net cash value paid on surrender by the portion of any cost of insurance
charge we deducted for the period beyond the date of surrender. If you
surrender the Policy during the grace period, we reduce the net cash value you
receive by an amount to cover the Monthly Deduction to the date of surrender.
You may apply all or part of the net cash value to a payment option. (See
"Payment Options".) A surrender may result in adverse tax consequences. (See
"Tax Considerations" below.)
PARTIAL SURRENDER
You may make a partial surrender of the Policy beginning fifteen days after
we mail the confirmation of the initial premium payment. A partial surrender
reduces the Policy's death benefit and may reduce the Policy's face amount if
necessary so that the amount at risk under the Policy will not increase. Any
reduction in the face amount causes a proportionate reduction in the Policy's
Target Premium. A partial surrender may also reduce rider benefits. For
purposes of the cost of insurance charge, any face amount reduction will apply
to each face amount segment on a pro rata basis. We reserve the right to
decline a partial surrender request that would reduce the face amount below
the Policy's required minimum.
We have the right to limit partial surrenders in any one Policy year to 20%
of the Policy's net cash value on the date of the first partial surrender for
the Policy year or, if less, the Policy's available loan value. Currently, we
permit partial surrenders of up to 90% of the Policy's net cash value per
year, if there is sufficient available loan value.
You may not reinvest cash value paid upon partial surrender in the Policy
except as premium payments, which are subject to the charges described under
"Deductions From Premiums."
A-22
<PAGE>
A partial surrender first reduces the Policy's cash value in the Sub-
Accounts of the Variable Account, in proportion to the amount of cash value in
each, and then the Fixed Account, unless you request otherwise. (See "The
Fixed Account" below.) We determine the amount of net cash value paid upon
partial surrender as of the date when we receive a request. You can contact
your registered representative or the Administrative Office for information on
partial surrender procedures.
A reduction in the death benefit as a result of a partial surrender may
create a "modified endowment contract" or have other adverse tax consequences.
If you are contemplating a partial surrender, you should consult your tax
advisor regarding the tax consequences. (See "Tax Considerations".)
REDUCTION IN FACE AMOUNT
After the first Policy year, you may reduce the face amount of your Policy
without receiving a distribution of any Policy cash value. (This feature
differs from a partial surrender, which reduces the Policy's net cash value.)
For purposes of the cost of insurance charge, a face amount reduction will
apply to each face amount segment on a pro rata basis. The face amount
remaining has to meet our minimum face amount requirements, except with our
consent.
If you decrease the face amount of your Policy, we also decrease the Target
Premium. A face amount reduction usually decreases the death benefit. However,
if we are increasing the death benefit to satisfy federal income tax laws, a
face amount reduction will not decrease the death benefit. A reduction in face
amount in this situation is not advisable, because it will not reduce your
death benefit or cost of insurance charges. We also may decrease any rider
benefits attached to the Policy.
If you have selected the guideline premium test, a reduction in face amount
reduces the Federal tax law limits on the amount of premiums that you can pay
under the Policy. In these cases, you may need to have a portion of the
Policy's cash value paid to you to comply with Federal tax law.
A face amount reduction takes effect as of the first day of the Policy month
on or after the date when we receive a request. You can contact your
registered representative or the Administrative Office for information on face
reduction procedures.
A reduction in the face amount of a Policy may create a "modified endowment
contract". If you are contemplating a reduction in face amount, you should
consult your tax advisor regarding the tax consequences of the transaction.
(See "Tax Considerations".)
ACCELERATION OF DEATH BENEFIT RIDER
We may offer in the future a rider benefit that will allow you to receive an
accelerated payment of your Policy's death benefit. This benefit will be
available where certain special needs exist, as described briefly below. Your
right to exercise the rider will be subject to certain conditions.
We will make the accelerated benefits rider available to you only if: (1)
-------------------------------------------------------------------------
your state insurance department has approved the rider, and (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.
- ---------------
We expect that payment of the rider benefit will be available if the insured
is diagnosed as terminally ill, as defined in the rider. The benefit may be
subject to discounting and charges. Payment will be subject to evidence
satisfactory to us.
See "Tax Considerations", below, for a discussion of the tax consequences
associated with the accelerated benefits rider.
INVESTMENT OPTIONS
You can allocate your Policy's premiums and cash value among the Sub-
Accounts of the Variable Account and the Fixed Account in any combination.
Currently, you can allocate to an unlimited number of the available accounts
(including the Fixed Account) at any one time; we have the right to limit to
ten the number of accounts to which you can allocate at any one time. You must
allocate whole percentages.
You make the initial allocation when you apply for a Policy. You can change
the allocation of future premiums at any time thereafter. The change will be
effective for premiums applied on or after the date when we receive your
request. You may
A-23
<PAGE>
request the change by telephone or by written request. (See "Communications
and Payments".)
See "Transfer Option" below for information on how to request a transfer or
reallocation by telephone.
TRANSFER OPTION
Beginning fifteen days after we mail the confirmation for the initial
premium, you may transfer your Policy's cash value between Sub-Accounts. We
reserve the right to limit sub-account transfers to four per Policy year
(twelve per Policy year for Policies issued in New York). Currently we do not
limit the number of transfers per Policy year. We reserve the right to make a
charge for transfers in excess of twelve in a Policy year. A transfer is
effective as of the date when we receive the transfer request. (See
"Communications and Payments".) For special rules regarding transfers
involving the Fixed Account, see "The Fixed Account".
We did not design the Policy's transfer privilege to give you a way to
speculate on short-term market movements. To prevent excessive transfers that
could disrupt the management of the Eligible Funds and increase transaction
costs, we may adopt procedures to limit excessive transfer activity. For
example, we may impose conditions and limits on, or refuse to accept, transfer
requests that we receive from third parties. Third parties include investment
advisors or registered representatives acting under power(s) of attorney from
one or more Policy owners.
You may request a Sub-Account transfer or reallocation of future premiums by
written request (which may be telecopied) to our Administrative Office or by
telephoning us. To request a transfer or reallocation by telephone, you should
contact your registered representative or contact us at 1-800-621-5086. We use
reasonable procedures to confirm that instructions communicated by telephone
are genuine. Any telephone instructions that we reasonably believe to be
genuine will be your responsibility, including losses arising from any errors
in the communication of instructions.
DOLLAR COST AVERAGING
We offer an automated transfer privilege called dollar cost averaging. The
same dollar amount is transferred 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, a lower than average cost of purchases may be achieved 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. (See Appendix C.)
Under this feature, you may request that a certain amount of your cash value
be transferred 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. We have the right to
limit allocation of cash value to no more than 10 of the Sub-Accounts at any
one time. You must transfer a minimum of $100 to each Sub-Account that you
select under this feature. You can select a dollar cost averaging program when
you apply for the Policy or at a later date by contacting our Administrative
Office. You may participate in the dollar cost averaging program while you are
participating in the asset rebalancing program as long as the Sub-Account from
which you are transferring cash value under the dollar cost averaging program
is not included in the asset rebalancing program. (See "Asset Rebalancing"
---
below). You can cancel your use of the dollar cost averaging program at any
time before the monthly transfer date. Transfers will continue until you
notify us to stop 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. An asset rebalancing program automatically reallocates your cash value
among the Sub-Accounts each quarter to return the allocation to the 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 can select an asset rebalancing program when you apply for the Policy or
at a later date by contacting our Administrative Office. You specify the
percentage allocations by which your cash value will be reallocated among the
Sub-Accounts. You may participate in the asset rebalancing program while you
are participating in the dollar cost averaging program
A-24
<PAGE>
as long as the Sub-Account from which you are transferring cash value under
the dollar cost averaging program is not included in the asset rebalancing
---
program. (See "Dollar Cost Averaging" above). 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 as necessary to return the allocation to your
specifications. Asset rebalancing will continue until you notify us in writing
or by telephone at our Administrative Office.
SUBSTITUTION OF INSURED PERSON
Subject to state insurance department approval, we offer a rider benefit
that permits you to substitute the insured person under your Policy, if you
provide satisfactory evidence that the person proposed to be insured is
insurable. The right to substitute the insured person is subject to some
restrictions. A substitution of the insured person is a taxable exchange. In
addition, a substitution of the insured person could reduce the amount of
premiums you can pay into the Policy under Federal tax law if you selected the
guideline premium test and, therefore, may require a partial surrender of cash
value.
Your registered representative can provide current information on the
availability of the rider. You should consult your tax advisor before
substituting the insured person under your Policy.
PAYMENT OF PROCEEDS
We ordinarily pay any net cash value, loan value or death benefit proceeds
payable from the Sub-Accounts within seven days after we receive a request, or
satisfactory proof of death of the insured. (See "Communications and
Payments".) 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 for other than weekends or holidays, or if trading on the
New York Stock Exchange is restricted, (ii) if the SEC determines that a state
of emergency exists that makes payments or Sub-Account transfers impractical,
or (iii) at any other time when the Eligible Funds or the Variable Account
have the legal right to suspend payment.
We may withhold payment of surrender or loan proceeds if those proceeds are
coming from a Policy Owner's check which has not yet cleared. We may also
delay payment while we consider whether to contest the Policy. We pay interest
on the death benefit proceeds from the date they become payable to the date we
pay them.
The beneficiary can elect our Access Plus program for payment of death
proceeds at any time before we pay them. We establish an Access Plus account
at State Street Bank & Trust Company at the time for payment. The Access Plus
account provides convenient access to proceeds, which are maintained in
MetLife's general account, through checkbook privileges with State Street.
Normally we promptly make payments of cash value, or of any loan value
available, from cash value in the Fixed Account. However, we may delay those
payments for up to six months. We pay interest in accordance with state
insurance law requirements on delayed payments.
24 MONTH RIGHT
GENERAL RIGHT. Generally, during the first 24 months after the Policy's
issue date, and during the first 24 months after the date of an increase in
face amount, you may convert the Policy, or a portion of it, to fixed benefit
coverage by transferring all or a portion of your Policy's cash value, and
allocating all or a portion of future premiums, to the Fixed Account. The
request to convert to fixed benefit coverage must be in written form
satisfactory to us.
You may exercise this privilege only once within 24 months after issue, and
only once within 24 months after each increase in face amount. Transfers into
the Fixed Account pursuant to this right will not count toward the limit on
the number of cash value transfers permitted under the Policy each year.
Transfers of cash value back to one or more Sub-Accounts of the Variable
Account are subject to the Policy's general limits on transfers from the Fixed
Account (see "The Fixed Account").
The Policy permits us to limit allocations to the Fixed Account under some
circumstances. (See "The Fixed Account.") If we limit such allocations and you
then wish to exercise the 24 Month Right, you may allocate to the Fixed
Account only (i) the Policy's cash value before any face amount increase plus
the portion of future premiums attributable to the Policy's face amount before
any increase, if you exercise the right during the first 24 months after
issue, or (ii) the portion of the Policy's cash value and future premiums
attributable to the face amount increase, if you exercise the right within 24
months after a face amount increase. After exercising the 24 Month Right, you
may continue to allocate to the Fixed Account only the percentage of premiums
that you allocated to the Fixed Account pursuant to your most recent exercise
of the 24 Month Right. In addition, if
A-25
<PAGE>
you have exercised this right, and we later limit such allocations, then you
may continue to allocate to the Fixed Account only the lowest percentage of
premiums that you allocated to the Fixed Account at any time since your most
recent exercise of the 24 Month Right.
FOR POLICIES ISSUED IN MARYLAND AND NEW JERSEY. Under Policies issued in
Maryland and New Jersey, you can exchange the initial face amount of your
Policy, and any increase in face amount of your Policy, for a fixed benefit
whole life or endowment life insurance policy provided that you repay any
policy loans and (1) the Policy has not lapsed and (2) the exchange is made
within 24 months after the Policy's issue date or, if you are exchanging an
increase in face amount, within 24 months after the date of the increase.
We make the exchange without evidence of insurability. The new policy will
have, at your option, either the same death benefit or the same net amount at
risk as that being exchanged. For the exchange of the initial face amount of
the variable life policy, the new policy will have the same issue age,
underwriting class and policy date as the variable life policy had. For the
exchange of an increase in face amount, the new policy will have the same
issue age and underwriting class of the insured as on the date of the
increase, and a policy date equal to the effective date of the increase. We
will attach any riders to the original Policy to the new policy if they are
available.
Contact us or your registered representative for more specific information
about the 24 Month Right in these states. The exchange may result in a cost or
credit to you. On the exchange, you may need to make an immediate premium
payment on the new policy in order to keep it in force.
PAYMENT OPTIONS
We pay the Policy's death benefit and net cash value in one sum unless you
or the payee choose a payment option for all or part of the proceeds. You can
choose a combination of payment options. You can make, change or revoke the
selection of payee or payment option before the death of the insured. You can
contact your registered representative or the Administrative Office for the
procedure to follow. The payment options available are fixed benefit options
only and are not affected by the investment experience of the Variable
Account. Once payments under an option begin, withdrawal rights may be
restricted.
The following payment options are available:
(i) INCOME FOR A SPECIFIED NUMBER OF YEARS. We pay proceeds in equal
monthly installments for up to 30 years, with interest at a rate not
less than 3.5% a year, compounded yearly. Additional interest that we
pay for any year is added to the monthly payments for that year.
(ii) 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.
(iii) LIFE INCOME WITH REFUND. We pay proceeds in equal monthly
installments during the life of the payee. At the payee's death, we
pay any unpaid proceeds remaining either in one sum or in equal
monthly installments until we have paid the total proceeds.
(iv) 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 or add it
to the principal annually. At the death of the payee, or at the end of
the period agreed to, we pay the balance of principal and any interest
in one sum.
(v) 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 pay any amounts unpaid at the death of
the payee in one sum.
(vi) LIFE INCOME FOR TWO LIVES. We 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 pay
two-thirds of the monthly amount for the life of the surviving payee.
You need our consent to use an option if the installment payments would be
less than $20.
ADDITIONAL BENEFITS BY RIDER
If you elect the Guaranteed Death Benefit at issue, we add it to the Policy
by rider. You can add other additional benefits to the Policy by rider,
subject to our underwriting and issuance standards. These additional benefits
usually require an additional
A-26
<PAGE>
charge as part of the Monthly Deduction from cash value. The rider benefits
available with the Policies provide fixed benefits that do not vary with the
investment experience of the Variable Account.
It may be to your economic advantage to include a significant portion or
percentage of your insurance coverage under an Adjustable Term Insurance
Rider. However, like the cost of coverage under the Policy, charges deducted
from the Policy's cash value to pay for term coverage no longer participate in
the investment experience of the Variable Account, and generally increase with
the age of the covered individual. Use of a term rider reduces sales
compensation. Your registered representative can provide you more information
on the uses of term rider coverage.
The following riders are available:
ADJUSTABLE TERM RIDER, which provides term insurance. This Rider terminates
no later than the Policy anniversary on which the insured has reached age
100.
WAIVER OF MONTHLY DEDUCTION, which provides for waiver of Monthly Deductions
upon the disability of the insured.
TEMPORARY TERM INSURANCE, which provides for insurance from the date of
issue to the Policy Date.
Not all riders may be available to you and riders in addition to those
listed above may be made available. Restrictions on rider coverage may apply
in some states. You should consult your registered representative regarding
the availability of riders.
POLICY OWNER AND BENEFICIARY
The Policy Owner is named in the application but may be changed from time to
time. At the death of the Policy Owner, his or her estate will become the
Policy Owner unless a successor Policy Owner has been named. The Policy
Owner's rights (except for rights to payment of benefits) terminate at the
death of the insured.
The beneficiary is also named in the application. 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 and
must survive the insured in order to receive the death proceeds. If no named
beneficiary survives the insured, we pay proceeds to the Policy Owner.
A change of Policy Owner or beneficiary is subject to all payments made and
actions taken by us under the Policy before we receive a signed change form.
You can contact your registered representative or the Administrative Office
for the procedure to follow.
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. We are not responsible for determining whether or not an assignment is
valid. Changing the Policy Owner or assigning the Policy may have tax
consequences. (See "Tax Considerations" below.)
THE VARIABLE ACCOUNT
We established the Variable Account as a separate investment account on
January 31, 1983 under Delaware law. It became subject to Massachusetts law
when we changed our domicile to Massachusetts on August 30, 1996. The Variable
Account is the funding vehicle for the Policies and 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. Registration with
the SEC does not involve SEC supervision of the Variable Account's management
or investments. However, 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 we own 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 we may conduct. We believe this means
that the assets of the Variable Account equal to the reserves and other
liabilities of the Variable Account are not available to meet the claims of
our general creditors, and may only be used to support the cash values under
our variable life insurance policies issued by the Variable Account. We may
transfer to our general
A-27
<PAGE>
account assets which exceed the reserves and other liabilities of the Variable
Account. We 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 our
other income or capital gains and losses.
INVESTMENTS OF THE VARIABLE ACCOUNT
Sub-Accounts of the Variable Account that are available in this Policy
invest in the following Eligible Funds:
The Zenith Back Bay Advisors Money Market Series. Its investment objective
is the highest possible level of current income consistent with preservation
of capital. An investment in the Money Market Series is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Money Market Series seeks to maintain a net
asset value of $100 per share, it is possible to lose money by investing in
the Money Market Series.
The Zenith Back Bay Advisors Bond Income Series. Its investment objective is
a high level of current income consistent with protection of capital.
The Zenith Capital Growth Series. Its investment objective is the long-term
growth of capital through investment primarily in equity securities of
companies whose earnings are expected to grow at a faster rate than the United
States economy.
The Zenith Westpeak Stock Index Series. Its investment objective is
investment results that correspond to the composite price and yield
performance of the S&P 500 Index.
The Zenith Back Bay Advisors Managed Series. Its investment objective is a
favorable total investment return through investment in a diversified
portfolio.
The Zenith Westpeak Growth and Income Series. Its investment objective is
long-term total return through investment in equity securities.
The Zenith Loomis Sayles Small Cap Series. Its investment objective is long-
term capital growth from investments in common stocks or their equivalents.
The Zenith Balanced Series (formerly, the Loomis Sayles Balanced Series).
Its investment objective is long-term total return from a combination of
capital appreciation and current income.
The Zenith Morgan Stanley International Magnum Equity Series. Its investment
objective is long-term capital appreciation through investment primarily in
international equity securities. In addition to the risks associated with
equity securities generally, foreign securities present additional risks.
The Zenith Harris/Oakmark Midcap Value Series (formerly, the Goldman Sachs
Midcap Value Series). Its investment objective is long-term capital
appreciation.
The Zenith Davis Venture Value Series. Its investment objective is growth of
capital.
The Zenith Alger Equity Growth Series. Its investment objective is long-term
capital appreciation.
The Zenith MFS Investors Series. Its investment objective is reasonable
current income and long-term growth of capital and income.
The Zenith MFS Research Managers Series. Its investment objective is long-
term growth of capital.
The Metropolitan Putnam Large Cap Growth Portfolio.* Its investment
objective is capital appreciation.
The Metropolitan Janus Mid Cap Portfolio.* Its investment objective is long-
term growth of capital.
The Metropolitan Russell 2000 Index Portfolio.* Its investment objective is
to equal the return of the Russell 2000 Index.
The VIP Equity-Income Portfolio. It seeks reasonable income. The fund will
also consider the potential for capital appreciation. The fund seeks a yield
which exceeds the composite yield on the securities comprising the S&P 500.
The VIP Overseas Portfolio. It seeks long-term growth of capital. Foreign
markets, particularly emerging markets, can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory, market
or economic developments and can perform differently than the U.S. market.
A-28
<PAGE>
The VIP High Income Portfolio. It seeks a high level of current income while
also considering growth of capital. Lower-quality debt securities (those of
less than investment-grade quality) can be more volatile due to increased
sensitivity to adverse issuer, political, regulatory, market or economic
developments.
The VIP II Asset Manager Portfolio. It seeks high total return with reduced
risk over the long-term by allocating its assets among stocks, bonds and
short-term instruments.
- --------
*Availability is subject to any necessary state insurance department
approvals.
The Zenith Fund and the Metropolitan Series Fund, Inc. are open-end
management investment companies, more commonly known as mutual funds. These
funds are available as investment vehicles for separate investment accounts of
MetLife, NELICO and other life insurance companies.
VIP and VIP II are mutual funds that serve as the investment vehicles for
variable life insurance and variable annuity separate accounts of various
insurance companies.
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 Eligible Funds' investment objectives may not be met. More about the
Eligible Funds, including their investments, expenses, and risks, is in the
attached Eligible Fund prospectuses and the Eligible Funds' Statements of
Additional Information.
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.
INVESTMENT MANAGEMENT
The adviser and sub-adviser for each series of the Zenith Fund are listed in
the chart below. New England Investment Management, which is an indirect,
wholly-owned subsidiary of NELICO, CGM, and each of the sub-advisers are
registered with the SEC as investment advisers under the Investment Advisers
Act of 1940.
<TABLE>
<CAPTION>
SERIES ADVISER SUB-ADVISER
------ ------- -----------
<S> <C> <C>
Capital Growth Capital Growth Management Limited
Partnership ("CGM")*
Back Bay Advisors Money New England Investment Management, Inc. Back Bay Advisors, L.P.*
Market
Back Bay Advisors Bond New England Investment Management, Inc. Back Bay Advisors, L.P.*
Income
Back Bay Advisors New England Investment Management, Inc. Back Bay Advisors, L.P.*
Managed
Westpeak Stock Index New England Investment Management, Inc. Westpeak Investment Advisors, L.P.*
Westpeak Growth and New England Investment Management, Inc. Westpeak Investment Advisors, L.P.*
Income
Loomis Sayles Small Cap New England Investment Management, Inc. Loomis, Sayles & Company, L.P.*
Balanced New England Investment Management, Inc. Wellington Management Company, LLP
Morgan Stanley New England Investment Management, Inc. Morgan Stanley Dean Witter
International Investment Management Inc.
Magnum Equity
Harris/Oakmark Midcap New England Investment Management, Inc. Harris Associates L.P.
Value
Davis Venture Value New England Investment Management, Inc. Davis Selected Advisers, L.P.**
Alger Equity Growth New England Investment Management, Inc. Fred Alger Management, Inc.
MFS Investors New England Investment Management, Inc. Massachusetts Financial Services Company
MFS Research Managers New England Investment Management, Inc. Massachusetts Financial Services Company
</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.
A-29
<PAGE>
In the case of the Back Bay Advisors Money Market Series, Back Bay Advisors
Bond Income Series, Back Bay Advisors Managed Series, Westpeak Stock Index
Series, Westpeak Growth and Income Series, Harris/Oakmark Midcap Value Series
and Loomis Sayles Small Cap Series, New England Investment Management became
the adviser on May 1, 1995. The Morgan Stanley International Magnum Equity
Series' sub-adviser was Draycott Partners, Ltd. until May 1, 1997, when Morgan
Stanley Dean Witter Investment Management became the sub-adviser. The
Harris/Oakmark Midcap Value Series' sub-adviser was Loomis Sayles until May 1,
1998, when Goldman Sachs Asset Management, a separate operating division of
Goldman Sachs & Co., became the sub-adviser. Harris Associates became the sub-
adviser on May 1, 2000. The Balanced Series' sub-adviser was Loomis Sayles
until May 1, 2000, when Wellington Management Company became the sub-adviser.
For more information about the Series' advisory agreements, see the Zenith
Fund prospectus attached at the end of this prospectus and the Zenith Fund's
Statement of Additional Information.
MetLife is the investment adviser for the Metropolitan Series Fund
Portfolios. Putnam Investment Management, Inc. is the sub-investment manager
of the Putnam Large Cap Growth Portfolio. Janus Capital Corporation is the
sub-investment manager of the Janus Mid Cap Portfolio. For more information
regarding the investment adviser and sub-investment managers of the
Metropolitan Series Fund Portfolios, see the Metropolitan Series Fund
prospectus attached at the end of this prospectus and its Statement of
Additional Information.
Fidelity Management & Research Company ("FMR") is the investment adviser for
VIP and VIP II. For more information regarding the VIP Equity-Income, VIP
Overseas, VIP High Income and VIP II Asset Manager Portfolios and FMR, see the
VIP and VIP II prospectuses attached at the end of this prospectus and their
Statements of Additional Information.
THE FIXED ACCOUNT
THE POLICY HAS A FIXED ACCOUNT OPTION ONLY IN STATES THAT APPROVE IT.
You may allocate net premiums and transfer cash value to the Fixed Account,
which is part of NELICO's general account. Because of exemptive and
exclusionary provisions in the Federal securities laws, interests in the Fixed
Account are not registered under the Securities Act of 1933. Neither the Fixed
Account nor the general account is registered as an investment company under
the Investment Company Act of 1940. Therefore, neither the Fixed Account, the
general account nor any interests therein are generally subject to the
provisions of these Acts, and the SEC does not review Fixed Account
disclosure. This disclosure may, however, be subject to certain provisions of
the Federal securities laws on the accuracy and completeness of prospectuses.
GENERAL DESCRIPTION
Our general account includes all of our assets, except assets in the
Variable Account or in our other separate accounts. We decide how to invest
our general account assets. Fixed Account allocations do not share in the
actual investment experience of the Fixed Account. Instead, we guarantee that
the Fixed Account will credit interest at an annual effective rate of at least
4%. We may or may not credit interest at a higher rate. We declare the current
interest rate for the Fixed Account periodically. The Fixed Account earns
interest daily.
We can change our Fixed Account interest crediting procedures. Currently,
all cash value in the Fixed Account on a Policy anniversary earns interest at
the declared annual rate in effect on the anniversary until the next Policy
anniversary, when it is credited with our current rate. (Although our current
practice is to credit your entire Fixed Account cash value on a Policy
anniversary with our current annual rate until the next anniversary, we can
select any portion, from 0% to 100%, of your Fixed Account cash value on a
Policy anniversary to earn interest at our current rate until the next Policy
anniversary, unless otherwise required by state law.) Any net premiums
allocated or cash value transferred to the Fixed Account on a date other than
a Policy anniversary earn interest at our current rate until the next Policy
anniversary. Any loan repayment allocated to the Fixed Account is credited
with the lesser of our current interest rate and the effective interest rate
for your Policy's cash value in the Fixed Account on the date of the
repayment. The effective interest rate is a weighted average of all the Fixed
Account rates for your Policy.
VALUES AND BENEFITS
Cash value in the Fixed Account increases from net premiums allocated and
transfers to the Fixed Account and Fixed Account interest, and decreases from
loans, partial surrenders made from the Fixed Account, charges, and transfers
from the
A-30
<PAGE>
Fixed Account. We deduct charges from the Fixed Account and the Policy's sub-
accounts in proportion to the amount of cash value in each. (See "Monthly
Deduction from Cash Value"). A Policy's total cash value includes cash value
in the Variable Account, the Fixed Account, and any cash value held in our
general account (but outside of the Fixed Account) due to a Policy loan.
Cash value in the Fixed Account is included in the calculation of the
Policy's death benefit in the same manner as the cash value in the Variable
Account. (See "Death Benefit".)
POLICY TRANSACTIONS
We can restrict allocations and transfers to the Fixed Account if the
effective annual rate of interest on the amount would be 4%. Otherwise, the
requirements for Fixed Account and Variable Account allocations are the same.
(See "Allocation of Net Premiums".)
Except as described below, the Fixed Account has the same rights and
limitations about premium allocations, transfers, loans, surrenders and
partial surrenders as the Variable Account. (See "Other Policy Features".) The
following special rules apply to the Fixed Account.
TRANSFERS FROM THE FIXED ACCOUNT TO THE VARIABLE ACCOUNT ARE ALLOWED ONLY
ONCE IN EACH POLICY YEAR. WE PROCESS A TRANSFER FROM THE FIXED ACCOUNT IF WE
RECEIVE THE TRANSFER REQUEST WITHIN THE 30 DAY PERIOD AFTER THE POLICY
ANNIVERSARY. WE MAKE THE TRANSFER AS OF THE DATE WE RECEIVE THE TRANSFER
REQUEST AT OUR ADMINISTRATIVE OFFICE.
THE AMOUNT OF CASH VALUE YOU MAY TRANSFER FROM THE FIXED ACCOUNT IS LIMITED
TO THE GREATER OF 25% OF THE POLICY'S CASH VALUE IN THE FIXED ACCOUNT ON THE
TRANSFER DATE OR THE AMOUNT OF CASH VALUE TRANSFERRED FROM THE FIXED ACCOUNT
IN THE PRECEDING POLICY YEAR. Regardless of these limits, if a transfer of
cash value from the Fixed Account would reduce the remaining cash value in the
Fixed Account below $100, you may transfer the entire amount of Fixed Account
cash value. The total number of transfers among sub-accounts and from the sub-
accounts to the Fixed Account may not exceed four in one Policy year without
our consent. We currently do not limit the number of these transfers in a
Policy year.
Unless you request otherwise, a Policy loan reduces the Policy's cash value
in the sub-accounts and not the Fixed Account. If there is not enough cash
value in the Policy's sub-accounts for the loan, we take the balance from the
Fixed Account. We allocate all loan repayments first to the outstanding loan
balance attributable to the Fixed Account. The amount removed from the
Policy's sub-accounts and the Fixed Account as a result of a loan earns
interest at an effective rate of at least 4% per year, which we credit
annually to the Policy's cash value in the sub-accounts and the Fixed Account
in proportion to the Policy's cash value in each on the day it is credited.
Unless you request otherwise, we take partial surrenders only from the
Policy's sub-accounts and not the Fixed Account. If there is not enough cash
value in the Policy's sub-accounts for the partial surrender, we take the
balance from the Fixed Account.
We can delay transfers, surrenders, and Policy loans from the Fixed Account
for up to six months (to the extent allowed by state insurance law). We will
not delay loans to pay premiums on policies issued by us.
NELICO'S DISTRIBUTION AGREEMENT
We sell the Policies through licensed insurance agents. These agents are
also registered representatives of New England Securities Corporation ("New
England Securities"). New England Securities, a Massachusetts corporation
organized in 1968 and an indirect, wholly-owned subsidiary of NELICO, is
registered with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers,
Inc.
New England Securities, 399 Boylston Street, Boston, Massachusetts 02116,
also serves as the principal underwriter for the Policies under a Distribution
Agreement with NELICO. Under the Distribution Agreement, we pay the following
sales expenses: general agent and agency manager's compensation, agents'
training allowances, deferred compensation and insurance benefits of agents,
general agents and agency managers and advertising expenses and all other
expenses of distributing the Policies.
The selling agent may select one of three schedules for payment of
commissions and/or service fees: (1) a maximum of 12.5% of the Target Premium
paid in the first Policy year (or in the first year after a face amount
increase), a maximum of 6% in
A-31
<PAGE>
Policy years two through ten, and a maximum of 2% thereafter; with a maximum
commission of .75% of each payment above the Target Premium in the first
Policy year (.60% in renewal years); or (2) a maximum of 8% of the Target
Premium paid in the first through fourth Policy years (or in the first through
fourth years after a face amount increase) and 2% of the Target Premium paid
in the fifth through fifteenth such years, and, beginning in the fifth Policy
year, a maximum of .15% of the Policy's cash value (reducing to .11% in the
eleventh Policy year and .074% in the sixteenth Policy year); with a maximum
commission of .75% of each payment above the Target Premium in the first
Policy year (.20% in renewal years); or (3) a maximum commission of 12.5% of
the Target Premium paid in the first Policy year (or in the first year after a
face amount increase), plus a maximum of .26% of the Policy's cash value after
the first Policy year; with a maximum commission of .75% of each payment above
the Target Premium in the first Policy year. Each face amount segment has its
own Target Premium. For commission purposes we attribute a portion of each
premium payment to each face amount segment, based on the segment's relative
Target Premiums. Agents who meet certain NELICO productivity and persistency
standards may be eligible for additional compensation. Agents may receive a
portion of the general agent's expense reimbursement allowance.
New England Securities may enter into selling agreements with other broker-
dealers registered under the Securities Exchange Act of 1934 whose
representatives are authorized by applicable law to sell variable life
insurance policies. Under the agreements with those broker-dealers,
commissions paid to the broker-dealer on behalf of the registered
representative will not exceed those described above (except for a maximum
possible 6.5% of Target Premium commission in years two through ten under the
first schedule). We may pay certain broker-dealers an additional bonus after
the first Policy year on behalf of certain registered representatives, which
may be up to the amount of the basic commission for the particular Policy
year. We pay commissions through the registered broker-dealer, and may also
pay additional compensation to the broker-dealer and/or reimburse it for
portions of Policy sales expenses. The registered representative may receive a
portion of the expense reimbursement allowance paid to the broker-dealer.
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY
Generally, we can challenge the validity of your Policy or a rider to your
Policy during the insured's lifetime for two years (or less, if required by
state law) from the date of issue, based on misrepresentations made in the
application. We can challenge the portion of the death benefit resulting from
payment of an underwritten premium payment for two years during the insured's
lifetime from receipt of the premium payment and can challenge the portion of
the death benefit resulting from an increase in face amount for two years
during the insured's lifetime from the date of the increase. However, if the
insured dies within two years of the date of issue, we can challenge all or
part of the Policy at any time for misrepresentations in the application. If
the insured dies within two years of an increase in face amount, we can
challenge the portion of the death benefit resulting from the face amount
increase at any time for misrepresentation.
MISSTATEMENT OF AGE OR SEX
If the application misstates the insured's age or sex, the Policy's death
benefit is the amount that the most recent Monthly Deduction which was made
would provide, based on the insured's correct age and, if the Policy is sex-
based, correct sex.
SUICIDE
If the insured commits suicide within two years (or less, if required by
state law) from the date of issue, the death benefit is limited to premiums
paid, less any policy loan balance and partial surrenders. If the insured
commits suicide more than two years from the issue date of the Policy but
within two years from the date of an increase in face amount, the death
benefit for the increase in face amount is limited to the Monthly Deductions
and any Face Amount Increase Administrative Charge made to pay for that
increase. (Where required by state law, we determine the death benefit under
this provision by using the greater of: the reserve of the insurance which is
subject to the provision; and the amounts used to purchase the insurance which
is subject to the provision.)
A-32
<PAGE>
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. 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 guaranteed 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 the 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
the 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 Eligible 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 income tax treatment than other life insurance contracts. In
general a Policy will be classified as a Modified Endowment Contract if the
amount of premiums paid into the Policy causes the Policy to fail the "7-pay
test." A Policy will fail the 7-pay test if at any time in the first seven
Policy years, the amount paid into the Policy exceeds the sum of the level
premiums that would have been paid at that point under a Policy that provided
for paid-up future benefits after the payment of seven level annual payments.
If there is a reduction in the benefits under the Policy during the first
seven Policy years, for example, as a result of a partial surrender, the 7-pay
test will have to be reapplied as if the Policy had originally been issued at
the reduced face amount. If there is a "material change" in the Policy's
benefits or other terms, even after the first seven Policy years, the Policy
may have to be retested as if it were a newly issued Policy. A material change
can occur, for example, when there is an increase in the death benefit which
is due to the payment of an unnecessary premium. Unnecessary premiums are
premiums paid into the
A-33
<PAGE>
Policy which are not needed in order to provide a death benefit equal to the
lowest death benefit that was payable in the first seven Policy years. A
material change may also occur if you request an increase in the face amount
of your Policy. To prevent your Policy from becoming a Modified Endowment
Contract, it may be necessary to limit premium payments, to limit increases in
face amount, or to limit reductions in benefits. A current or prospective
Policy Owner should consult a tax 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 Policy Owner or the joint lives (or joint
life expectancies) of the Policy Owner and the Policy Owner's
beneficiary or designated 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 calendar 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. If such a rider is made available, 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,
transfer and other tax consequences depend on the individual circumstances of
each Policy Owner or beneficiary.
The tax consequences of continuing the Policy beyond the insured's 100th
year are unclear. You should consult a tax adviser if you intend to keep the
Policy in force beyond the 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
A-34
<PAGE>
"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 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 a charge from the
Variable Account for company 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 Chairman, President and Chief Executive Officer of
NELICO since 1998 and President, Individual Business
of Metropolitan Life Insurance Company since 1999;
formerly, Director, President and Chief Operating
Officer 1997-1998 of NELICO; President and Chief
Executive Officer 1996-1997 of Equitable Life
Assurance Society; President and Chief Operating
Officer 1996-1997 of Equitable Companies, Inc.;
President and Chief Operating Officer 1994-1996 of
Equitable Life Assurance Society.
Robert H. Benmosche Director of NELICO since 1998 and Chairman, President
Metropolitan Life and Chief Executive Officer of Metropolitan Life
Insurance Co. Insurance Company since 1998; formerly, Director,
One Madison Avenue President and Chief Operating Officer 1997-1998;
New York, NY 10010 Executive Vice President 1995-1997 of Metropolitan
Life; Executive Vice President 1989-1995 of Paine
Webber.
Susan C. Crampton Director of NELICO since 1996 and serves as Principal
6 Tarbox Road of The Vermont Partnership, a business consulting firm
Jericho, VT 05465 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 the Board
R.R. Box 67-15 of SLM Holdings since 1997; formerly, Director 1994-
Harborside, ME 04642 1996 of New England Mutual.
George J. Goodman Director of NELICO since 1996 and author, television
Adam Smith's Money World 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 and President of
Ten Sterling Place Merrimack Higher Education Associates, Inc. since
Bow, NH 03304 1998; formerly Director 1987-1996 of New England
Mutual and Executive Director and Chief Executive
Officer 1994-1997 of the California Academy of
Sciences.
Philip K. Howard, Esq. Director of NELICO since 1996 and Partner of the law
Howard, Smith & Levin LLP firm of Howard, Smith & Levin LLP in New York City.
1330 Avenue of the
Americas
New York, NY 10019
Bernard A. Leventhal Director of NELICO since 1996; formerly, Vice Chairman
Burlington Industries of the Board of Directors 1995-1998 of Burlington
1345 Avenue of the Industries, Inc.; Director and Executive Vice
Americas President 1993-1995 of Burlington Menswear Division.
17th Floor
New York, NY 10105
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.
Stewart G. Nagler Director of NELICO since 1996 and Vice Chairman and
Metropolitan Life Chief Financial Officer of Metropolitan Life Insurance
Insurance Co. Company since 1998; formerly, Senior Executive Vice
One Madison Avenue President and Chief Financial Officer 1986-1998 of
New York, NY 10010 Metropolitan Life Insurance Company.
</TABLE>
A-36
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS DURING THE PAST FIVE YEARS
------------------ -----------------------------
<C> <S>
Catherine A. Rein Director of NELICO since 1998 and President and Chief
Metropolitan Property and Executive Officer of Metropolitan Property and
Casualty Casualty Insurance Company since 1999; formerly,
Insurance Company Senior Executive Vice President 1998-1999; Executive
700 Quaker Lane Vice President 1989-1998 of Metropolitan Life
Warwick, RI 02887 Insurance Company.
Rand N. Stowell Director of NELICO since 1996 and President of United
P.O. Box 60 Timber Corp. of Dixfield, Maine; formerly, Director
Weld, ME 04285 1990-1996 of New England Mutual.
Alexander B. Trowbridge Director of NELICO since 1996 and President of
Trowbridge Partners Inc. Trowbridge Partners, Inc. in Washington, DC; formerly,
1317 F Street, NW, 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 of New England Mutual.
A. Frank Beaz Executive Vice President of NELICO since 1999,
formerly, Senior Vice President 1998-1999 of NELICO;
Chief Administrative Officer and Senior Vice President
1997-1998 of Equitable Distributors and Senior Vice
President 1994-1997 of The Equitable Life Insurance
Companies.
Pauline V. Belisle Senior Vice President of NELICO since 1996; formerly,
Senior Vice President 1994-1996 of New England Mutual.
Mary Ann Brown President, New England Products and Services (a
business unit of NELICO) since 1998; formerly,
Director, Worldwide Life Insurance 1997-1998 for Swiss
Reinsurance New Markets; President & Chief Executive
Officer 1996-1998 of Atlantic International
Reinsurance Company; Executive Vice President 1996-
1997 of Swiss Re Atrium and Swiss Re Services and
Principal 1987-1996 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 1996-1998 of NELICO;
Senior Vice President 1995-1996 and Vice President
1994-1995 of New England Mutual.
Anne Marie Faria Senior Vice President of NELICO since 1996; formerly,
Vice President 1990-1996 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.
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 of New England Mutual.
Daniel D. Jordan Second Vice President, Counsel, Secretary and Clerk
since 1996; formerly, Counsel and Assistant Secretary
1990-1996 of New England Mutual.
Alan C. Leland, Jr. Senior Vice President of NELICO since 1996; formerly,
Vice President 1984-1996 of New England Mutual.
</TABLE>
A-37
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE
NAME DURING THE PAST FIVE YEARS
---- -----------------------------
<C> <S>
George J. Maloof Senior Vice President of NELICO since 1996; formerly,
Vice President 1991-1996 of New England Mutual.
Kenneth D. Martinelli Senior Vice President of NELICO since 1999; formerly,
Vice President 1997-1999 of NELICO and Vice President
1994-1997 of The Equitable Life Assurance Company.
Thomas W. McConnell Senior Vice President of NELICO since 1996 and
Director, Chief Executive Officer and President of New
England Securities Corporation since 1993.
Hugh C. McHaffie Senior Vice President of NELICO since 1999; formerly,
Vice President 1994-1999 of Manaufacturers Life
Insurance Company of North America.
Stephen J. McLaughlin Senior Vice President of NELICO since 1999; formerly,
Vice President 1996-1999 of NELICO and Vice President
1994-1996 of New England Mutual.
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 of Liberty Life Assurance
Company.
David Y. Rogers Executive Vice President and Chief Financial Officer of
NELICO since 1999; formerly, Partner, Actuarial
Consulting 1992-1999 of Price Waterhouse Coopers LLP.
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 of New England Mutual.
John W. Wright President, New England Financial 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).
</TABLE>
The principal business address for each of the directors and executive
officers is the same as NELICO's except where indicated otherwise.
VOTING RIGHTS
We own the Eligible Fund shares held in the Variable Account and vote those
shares at meetings of the Eligible Fund shareholders. Under Federal securities
law, you currently have the right to instruct us how to vote shares that are
attributable to your Policy.
Policy Owners who are entitled to give voting instructions and the number of
shares attributable to their Policies are determined as of the meeting record
date. If we do not receive timely instructions, we will vote shares in the
same proportion as (i) the aggregate cash value of policies giving
instructions, respectively, to vote for, against, or withhold votes on a
proposition, bears to (ii) the total cash value in that sub-account for all
policies for which we receive voting instructions. No voting privileges apply
to the Fixed Account or to cash value removed from the Variable Account due to
a Policy loan.
We will vote all Eligible Fund shares held by our 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 voting
instructions were received and (ii) shares that are voted in proportion to
such voting instructions.
The Eligible Funds' Boards 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
an Eligible Fund, 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.
A-38
<PAGE>
We may disregard voting instructions for changes in the investment policy,
investment adviser or principal underwriter of an 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
prohibited by state authorities or inconsistent with a sub-account's
investment objectives. If we do disregard voting instructions, the next annual
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 sub-account assets as a substitute for
Eligible Fund shares, to close a sub-account, or to transfer assets to our
general account as permitted by applicable law; (4) to operate the Variable
Account as a management investment company under the Investment Company Act of
1940 or in any other form; and (5) 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.
TOLL-FREE NUMBERS
For information about historical values of the Variable Account Sub-
Accounts, call 1-800-333-2501.
For Sub-Account transfers, premium reallocations, or Statements of
Additional Information for the Eligible Funds, call 1-800-621-5086.
You may also call our Administrative Office at 1-800-621-5086 to request
current information about your Policy values, to change or update Policy
information such as your address, billing mode, beneficiary or ownership, or
to request Policy loans of less than $25,000. Requests must be in writing if
the Policy is owned by a corporation or a pension trust.
For all other Policy changes, please contact your registered representative.
REPORTS
We will send you an annual statement showing your Policy's death benefit,
cash value and any outstanding Policy loan principal. We will also confirm
Policy loans, sub-account transfers, lapses, surrenders and other Policy
transactions when they occur.
You will be sent semiannual reports containing the financial statements of
the Variable Account and the Eligible Funds.
ADVERTISING PRACTICES
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. We may also use unit values to provide information about the
Variable Account's investment performance in this prospectus, marketing
materials, and historical illustrations.
Publications may use articles and releases, developed by NELICO, 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.
A-39
<PAGE>
We are a member of the Insurance Marketplace Standards Association ("IMSA"),
and may include the IMSA logo and information about IMSA membership in our
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.
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 has been filed with the SEC. Copies of such additional
information may be obtained from the SEC upon payment of the prescribed fee.
EXPERTS
The financial statements of New England Variable Life Separate Account of
New England Life Insurance Company ("NELICO") 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, and are 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-40
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
AND ACCUMULATED PREMIUMS
The tables in Appendix A illustrate the way the Policies work. They show how
the death benefit and cash value could vary over an extended period of time
assuming hypothetical gross rates of return (i.e., investment income and
capital gains and losses, realized or unrealized) for the Variable Account
equal to constant after tax annual rates of 0%, 6% and 12%. The insured is
assumed to be in the nonsmoker preferred risk classification. The Tables
assume no rider benefits and assume that no allocations are made to the Fixed
Account. (See "Charges and Expenses.") Illustrations show Option 1 and Option
2 death benefits, for the cash value accumulation test and guideline premium
test.
The illustrated death benefits and cash values for a Policy would be
different, either higher or lower, 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 premiums were paid in other amounts or at other
than annual intervals. They would also be different depending on the
allocation of cash value among the Variable Account's Sub-Accounts, if the
actual gross rate of return for all Sub-Accounts averaged 0%, 6% or 12%, but
varied above or below that average for individual Sub-Accounts. They would
also differ if a Policy loan or partial surrender were made during the period
of time illustrated, if the insured were female or in another risk
classification, or if the Policies were issued at unisex rates. For example,
as a result of variations in actual returns additional premium payments beyond
those illustrated may be necessary to maintain the Policy in force for the
periods shown or to realize the Policy values shown on particular
illustrations even if the average rate of return is achieved.
The death benefits and cash values shown in the tables reflect: (i)
deductions from premiums for the sales charge and premium tax charge; and (ii)
a Monthly Deduction (consisting of a Policy fee, a mortality and expense risk
fee, and a charge for the cost of insurance) from the cash value on the first
day of each Policy month. (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 .76% of the average daily net assets
of the Eligible Funds. This average reflects voluntary expense cap and expense
deferral arrangements between New England Investment Management and the Zenith
Fund that New England Investment Management could terminate 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 -0.76%,
5.2% and 11.15%, respectively.
The second column of each table shows the amount which would accumulate if
an amount equal to the annual premium were invested to earn interest, after
taxes, of 5% per year, compounded annually.
The internal rate of return on net cash value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the net cash value of the
Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated
premiums could have been invested outside the Policy to arrive at the death
benefit of the Policy. The internal rate of return is compounded annually, and
the premiums are assumed to be paid at the beginning of each Policy year.
If you request, we will furnish a personalized illustration reflecting the
proposed insured's age, sex, underwriting classification, and the face amount
or premium payment schedule requested. Where applicable, we will also furnish
on request an illustration for a Policy which is not affected by the sex of
the insured.
A-41
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $1,054,000 $1,054,000 $1,054,000 $ 42,015 $ 44,605 $ 47,193 -15.97% -10.79% -5.61%
2 107,625 1,054,000 1,054,000 1,054,000 83,415 91,205 99,292 -11.50 -5.98 -0.47
3 165,506 1,054,000 1,054,000 1,054,000 124,133 139,817 156,739 -9.17 -3.47 2.21
4 226,282 1,054,000 1,054,000 1,054,000 164,084 190,443 220,015 -7.76 -1.95 3.85
5 290,096 1,054,000 1,054,000 1,054,000 203,461 243,369 289,934 -6.79 -0.89 4.98
6 357,100 1,054,000 1,054,000 1,054,000 243,313 299,716 368,175 -5.96 -0.03 5.88
7 427,455 1,054,000 1,054,000 1,231,484 282,541 358,565 454,300 -5.36 0.60 6.53
8 448,828 1,054,000 1,054,000 1,313,790 276,838 373,044 499,591 -4.67 1.28 7.17
9 471,270 1,054,000 1,054,000 1,401,829 271,095 388,086 549,352 -4.23 1.73 7.61
10 494,833 1,054,000 1,054,000 1,496,420 265,427 403,824 604,167 -3.92 2.05 7.93
15 631,546 1,054,000 1,082,929 2,134,836 242,139 504,943 995,422 -3.04 3.09 8.97
20 806,031 1,054,000 1,180,866 3,065,931 213,259 629,131 1,633,439 -2.88 3.50 9.38
25 1,028,722 1,054,000 1,294,410 4,426,144 172,863 779,267 2,664,648 -3.16 3.69 9.58
30 1,312,940 1,054,000 1,429,710 6,438,469 112,308 959,283 4,319,973 -4.14 3.79 9.69
35 1,675,681 1,054,000 1,603,808 9,511,616 33,081 1,182,121 7,010,743 -7.14 3.87 9.76
<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 2008.00% 2008.00% 2008.00%
2 311.84 311.84 311.84
3 136.03 136.03 136.03
4 79.23 79.23 79.23
5 52.55 52.55 52.55
6 37.45 37.45 37.45
7 27.90 27.90 31.95
8 22.64 22.64 27.34
9 18.98 18.98 24.11
10 16.30 16.30 21.74
15 9.47 9.71 15.85
20 6.65 7.35 13.41
25 5.11 6.09 12.09
30 4.15 5.33 11.29
35 3.50 4.86 10.80
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-42
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $1,054,000 $1,054,000 $1,054,000 $ 41,183 $ 43,748 $ 46,310 -17.63% -12.50% -7.38%
2 107,625 1,054,000 1,054,000 1,054,000 81,610 89,297 97,279 -12.81 -7.31 -1.82
3 165,506 1,054,000 1,054,000 1,054,000 121,312 136,760 153,435 -10.24 -4.55 1.14
4 226,282 1,054,000 1,054,000 1,054,000 160,284 186,218 215,330 -8.66 -2.84 2.98
5 290,096 1,054,000 1,054,000 1,054,000 198,548 237,791 283,611 -7.59 -1.66 4.23
6 357,100 1,054,000 1,054,000 1,054,000 236,105 291,583 358,985 -6.81 -0.81 5.15
7 427,455 1,054,000 1,054,000 1,197,387 272,981 347,736 441,721 -6.22 -0.16 5.82
8 448,828 1,054,000 1,054,000 1,269,811 264,627 359,150 482,867 -5.56 0.52 6.48
9 471,270 1,054,000 1,054,000 1,346,646 256,023 370,835 527,727 -5.17 0.97 6.92
10 494,833 1,054,000 1,054,000 1,428,159 247,123 382,778 576,607 -4.92 1.28 7.24
15 631,546 1,054,000 1,054,000 1,916,457 196,179 445,845 893,597 -4.75 2.03 8.02
20 806,031 1,054,000 1,054,000 2,572,471 127,052 512,573 1,370,538 -5.83 2.26 8.28
25 1,028,722 1,054,000 1,054,000 3,453,697 24,993 580,726 2,079,211 -11.42 2.32 8.37
30 1,312,940 0 1,054,000 4,637,355 0 644,581 3,111,493 -100.00 2.28 8.38
35 1,675,681 0 1,054,000 6,227,164 0 695,393 4,589,867 -100.00 2.17 8.33
<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 2,008.00% 2,008.00% 2,008.00%
2 311.84 311.84 311.84
3 136.03 136.03 136.03
4 79.23 79.23 79.23
5 52.55 52.55 52.55
6 37.45 37.45 37.45
7 27.90 27.90 31.21
8 22.64 22.64 26.61
9 18.98 18.98 23.38
10 16.30 16.30 21.00
15 9.47 9.47 14.86
20 6.65 6.65 12.27
25 5.11 5.11 10.86
30 4.15 4.15 9.97
35 3.50 3.50 9.36
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-43
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $1,095,918 $1,098,502 $1,101,084 $ 41,918 $ 44,502 $ 47,084 -16.16% -11.00% -5.83%
2 107,625 1,137,123 1,144,883 1,152,938 83,123 90,883 98,938 -11.71 -6.21 -0.71
3 165,506 1,177,531 1,193,128 1,209,954 123,531 139,128 155,954 -9.40 -3.72 1.96
4 226,282 1,217,031 1,243,190 1,272,533 163,031 189,190 218,533 -8.01 -2.21 3.58
5 290,096 1,255,833 1,295,354 1,341,459 201,833 241,354 287,459 -7.05 -1.17 4.69
6 357,100 1,295,295 1,351,103 1,418,819 241,295 297,103 364,819 -6.19 -0.28 5.62
7 427,455 1,334,040 1,409,184 1,504,029 280,040 355,184 450,029 -5.58 0.37 6.29
8 448,828 1,327,868 1,422,831 1,548,378 273,868 368,831 494,378 -4.88 1.05 6.96
9 471,270 1,321,632 1,436,919 1,597,137 267,632 382,919 543,137 -4.44 1.50 7.42
10 494,833 1,315,489 1,451,630 1,650,928 261,489 397,630 596,928 -4.13 1.83 7.75
15 631,546 1,289,264 1,544,687 2,106,957 235,264 490,687 982,423 -3.27 2.84 8.85
20 806,031 1,256,147 1,653,673 3,025,883 202,147 599,673 1,612,103 -3.19 3.21 9.30
25 1,028,722 1,209,675 1,775,265 4,368,321 155,675 721,265 2,629,837 -3.63 3.33 9.52
30 1,312,940 1,141,871 1,902,878 6,354,349 87,871 848,878 4,263,532 -5.01 3.33 9.63
35 1,675,681 1,058,374 2,043,136 9,387,338 4,374 989,136 6,919,141 -12.90 3.29 9.72
<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 2,091.84% 2,097.00% 2,102.17%
2 329.50 331.12 332.79
3 146.63 147.91 149.29
4 87.50 88.74 90.11
5 59.71 60.99 62.45
6 44.00 45.36 46.94
7 34.05 35.49 37.22
8 27.57 29.06 30.90
9 23.04 24.56 26.49
10 19.72 21.26 23.28
15 11.27 12.89 15.73
20 7.74 9.46 13.32
25 5.77 7.61 12.03
30 4.46 6.44 11.24
35 3.51 5.65 10.75
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-44
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $1,095,054 $1,097,610 $1,100,165 $ 41,054 $ 43,610 $ 46,165 -17.89% -12.78% -7.67%
2 107,625 1,135,209 1,142,855 1,150,794 81,209 88,855 96,794 -13.10 -7.62 -2.15
3 165,506 1,174,479 1,189,805 1,206,347 120,479 135,805 152,347 -10.56 -4.89 0.78
4 226,282 1,212,836 1,238,494 1,267,290 158,836 184,494 213,290 -9.01 -3.20 2.59
5 290,096 1,250,283 1,288,987 1,334,166 196,283 234,987 280,166 -7.96 -2.06 3.82
6 357,100 1,286,791 1,341,321 1,407,544 232,791 287,321 353,544 -7.21 -1.23 4.71
7 427,455 1,322,364 1,395,566 1,488,083 268,364 341,566 434,083 -6.64 -0.61 5.39
8 448,828 1,312,660 1,404,787 1,526,846 258,660 350,787 472,846 -6.01 0.04 6.05
9 471,270 1,302,662 1,413,961 1,569,141 248,662 359,961 515,141 -5.64 0.47 6.51
10 494,833 1,292,321 1,423,032 1,615,278 238,321 369,032 561,278 -5.43 0.76 6.85
15 631,546 1,233,424 1,464,254 1,916,381 179,424 410,254 862,381 -5.47 1.33 7.71
20 806,031 1,155,710 1,488,861 2,480,539 101,710 434,861 1,321,559 -7.07 1.28 8.05
25 1,028,722 0 1,478,889 3,330,228 0 424,889 2,004,879 -100.00 0.88 8.20
30 1,312,940 0 1,399,370 4,471,530 0 345,370 3,000,231 -100.00 -0.05 8.23
35 1,675,681 0 1,193,448 6,004,455 0 139,448 4,425,714 -100.00 -2.84 8.21
<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 2,090.11% 2,095.22% 2,100.33%
2 329.11 330.70 332.35
3 146.38 147.64 148.99
4 87.29 88.52 89.87
5 59.52 60.79 62.22
6 43.79 45.12 46.68
7 33.82 35.23 36.93
8 27.33 28.79 30.59
9 22.78 24.27 26.17
10 19.45 20.95 22.94
15 10.87 12.41 14.86
20 7.22 8.80 12.04
25 5.11 6.73 10.68
30 4.15 5.25 9.82
35 3.50 3.90 9.24
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-45
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR TWENTY POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$2,900,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
GUIDELINE PREMIUM TEST
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $2,900,000 $2,900,000 $ 2,900,000 $ 37,899 $ 40,357 $ 42,815 -24.20% -19.29% -14.37%
2 107,625 2,900,000 2,900,000 2,900,000 75,090 82,361 89,917 -17.64 -12.26 -6.88
3 165,506 2,900,000 2,900,000 2,900,000 111,338 125,837 141,506 -14.18 -8.53 -2.89
4 226,282 2,900,000 2,900,000 2,900,000 146,340 170,536 197,732 -12.11 -6.27 -0.46
5 290,096 2,900,000 2,900,000 2,900,000 180,644 217,063 259,654 -10.64 -4.67 1.27
6 357,100 2,900,000 2,900,000 2,900,000 217,692 268,995 331,407 -9.10 -3.11 2.85
7 427,455 2,900,000 2,900,000 2,900,000 253,932 322,994 410,383 -8.03 -2.01 3.98
8 501,328 2,900,000 2,900,000 2,900,000 289,667 379,454 497,641 -7.22 -1.17 4.84
9 578,895 2,900,000 2,900,000 2,900,000 324,547 438,135 593,712 -6.62 -0.53 5.50
10 660,339 2,900,000 2,900,000 2,900,000 358,972 499,528 699,906 -6.13 -0.02 6.03
15 1,132,875 2,900,000 2,900,000 2,900,000 529,300 864,758 1,452,255 -4.50 1.76 7.89
20 1,735,963 2,900,000 2,900,000 3,530,284 675,561 1,319,296 2,715,603 -3.91 2.57 8.78
25 2,215,577 2,900,000 2,900,000 5,410,965 563,581 1,622,297 4,509,137 -3.79 3.07 9.30
30 2,827,700 2,900,000 2,900,000 8,599,552 398,175 1,993,010 7,477,871 -4.56 3.33 9.58
35 3,608,942 2,900,000 2,900,000 13,049,926 183,089 2,477,971 12,428,501 -6.73 3.54 9.78
<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 5,700.00% 5,700.00% 5,700.00%
2 613.22 613.22 613.22
3 248.60 248.60 248.60
4 143.55 143.55 143.55
5 96.81 96.81 96.81
6 71.12 71.12 71.12
7 55.12 55.12 55.12
8 44.31 44.31 44.31
9 36.57 36.57 36.57
10 30.80 30.80 30.80
15 15.64 15.64 15.64
20 9.32 9.32 10.92
25 6.64 6.64 10.38
30 5.12 5.12 10.24
35 4.15 4.15 9.97
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-46
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR TWENTY POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$2,900,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
GUIDELINE PREMIUM TEST
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $2,900,000 $2,900,000 $2,900,000 $ 35,655 $ 38,042 $ 40,429 -28.69% -23.92% -19.14%
2 107,625 2,900,000 2,900,000 2,900,000 70,123 77,102 84,363 -21.45 -16.13 -10.81
3 165,506 2,900,000 2,900,000 2,900,000 103,437 117,251 132,199 -17.47 -11.82 -6.18
4 226,282 2,900,000 2,900,000 2,900,000 135,519 158,451 184,269 -14.98 -9.10 -3.25
5 290,096 2,900,000 2,900,000 2,900,000 166,373 200,751 241,033 -13.28 -7.23 -1.22
6 357,100 2,900,000 2,900,000 2,900,000 195,927 244,121 302,926 -12.07 -5.86 0.28
7 427,455 2,900,000 2,900,000 2,900,000 224,188 288,620 370,521 -11.16 -4.82 1.42
8 501,328 2,900,000 2,900,000 2,900,000 251,110 334,258 444,414 -10.47 -4.00 2.34
9 578,895 2,900,000 2,900,000 2,900,000 276,676 381,077 525,301 -9.92 -3.34 3.08
10 660,339 2,900,000 2,900,000 2,900,000 300,791 429,048 613,899 -9.50 -2.80 3.70
15 1,132,875 2,900,000 2,900,000 2,900,000 395,406 684,859 1,205,029 -8.53 -1.14 5.73
20 1,735,963 2,900,000 2,900,000 2,900,000 431,856 962,623 2,174,024 -8.92 -0.36 6.93
25 2,215,577 2,900,000 2,900,000 4,157,370 153,974 986,279 3,464,475 -13.12 -0.09 7.72
30 2,827,700 0 2,900,000 6,334,859 0 888,154 5,508,573 -100.00 -0.58 8.15
35 3,608,942 0 2,900,000 9,213,315 0 507,450 8,774,586 -100.00 -2.67 8.44
<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 5,700.00% 5,700.00% 5,700.00%
2 613.22 613.22 613.22
3 248.60 248.60 248.60
4 143.55 143.55 143.55
5 96.81 96.81 96.81
6 71.12 71.12 71.12
7 55.12 55.12 55.12
8 44.31 44.31 44.31
9 36.57 36.57 36.57
10 30.80 30.80 30.80
15 15.64 15.64 15.64
20 9.32 9.32 9.32
25 6.64 6.64 8.81
30 5.12 5.12 8.81
35 4.15 4.15 8.62
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-47
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
GUIDELINE PREMIUM TEST
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $1,095,918 $1,098,502 $1,101,084 $ 41,918 $ 44,502 $ 47,084 -16.16% -11.00% -5.83%
2 107,625 1,137,123 1,144,883 1,152,938 83,123 90,883 98,938 -11.71 -6.21 -0.71
3 165,506 1,177,531 1,193,128 1,209,954 123,531 139,128 155,954 -9.40 -3.72 1.96
4 226,282 1,217,031 1,243,190 1,272,533 163,031 189,190 218,533 -8.01 -2.21 3.58
5 290,096 1,255,833 1,295,354 1,341,459 201,833 241,354 287,459 -7.05 -1.17 4.69
6 357,100 1,295,295 1,351,103 1,418,819 241,295 297,103 364,819 -6.19 -0.28 5.62
7 427,455 1,334,040 1,409,184 1,504,029 280,040 355,184 450,029 -5.58 0.37 6.29
8 448,828 1,327,868 1,422,831 1,548,378 273,868 368,831 494,378 -4.88 1.05 6.96
9 471,270 1,321,632 1,436,919 1,597,137 267,632 382,919 543,137 -4.44 1.50 7.42
10 494,833 1,315,489 1,451,630 1,650,928 261,489 397,630 596,928 -4.13 1.83 7.75
15 631,546 1,289,264 1,544,687 2,036,567 235,264 490,687 982,567 -3.27 2.84 8.85
20 806,031 1,256,147 1,653,673 2,671,856 202,147 599,673 1,617,856 -3.19 3.21 9.32
25 1,028,722 1,209,675 1,775,265 3,716,865 155,675 721,265 2,662,865 -3.63 3.33 9.58
30 1,312,940 1,141,871 1,902,878 5,436,955 87,871 848,878 4,382,955 -5.01 3.33 9.74
35 1,675,681 1,058,374 2,043,136 8,293,903 4,374 989,136 7,239,903 -12.90 3.29 9.87
<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 2,091.84% 2,097.00% 2,102.17%
2 329.50 331.12 332.79
3 146.63 147.91 149.29
4 87.50 88.74 90.11
5 59.71 60.99 62.45
6 44.00 45.36 46.94
7 34.05 35.49 37.22
8 27.57 29.06 30.90
9 23.04 24.56 26.49
10 19.72 21.26 23.28
15 11.27 12.89 15.41
20 7.74 9.46 12.52
25 5.77 7.61 11.22
30 4.46 6.44 10.61
35 3.51 5.65 10.33
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-48
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
GUIDELINE PREMIUM TEST
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $1,095,054 $1,097,610 $1,100,165 $ 41,054 $ 43,610 $ 46,165 -17.89% -12.78% -7.67%
2 107,625 1,135,209 1,142,855 1,150,794 81,209 88,855 96,794 -13.10 -7.62 -2.15
3 165,506 1,174,479 1,189,805 1,206,347 120,479 135,805 152,347 -10.56 -4.89 0.78
4 226,282 1,212,836 1,238,494 1,267,290 158,836 184,494 213,290 -9.01 -3.20 2.59
5 290,096 1,250,283 1,288,987 1,334,166 196,283 234,987 280,166 -7.96 -2.06 3.82
6 357,100 1,286,791 1,341,321 1,407,544 232,791 287,321 353,544 -7.21 -1.23 4.71
7 427,455 1,322,364 1,395,566 1,488,083 268,364 341,566 434,083 -6.64 -0.61 5.39
8 448,828 1,312,660 1,404,787 1,526,846 258,660 350,787 472,846 -6.01 0.04 6.05
9 471,270 1,302,662 1,413,961 1,569,141 248,662 359,961 515,141 -5.64 0.47 6.51
10 494,833 1,292,321 1,423,032 1,615,278 238,321 369,032 561,278 -5.43 0.76 6.85
15 631,546 1,233,424 1,464,254 1,916,381 179,424 410,254 862,381 -5.47 1.33 7.71
20 806,031 1,155,710 1,488,861 2,377,999 101,710 434,861 1,323,999 -7.07 1.28 8.06
25 1,028,722 0 1,478,889 3,086,179 0 424,889 2,032,179 -100.00 0.88 8.26
30 1,312,940 0 1,399,370 4,167,135 0 345,370 3,113,135 -100.00 -0.05 8.38
35 1,675,681 0 1,193,448 5,813,070 0 139,448 4,759,070 -100.00 -2.84 8.45
<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 2,090.11% 2,095.22% 2,100.33%
2 329.11 330.70 332.35
3 146.38 147.64 148.99
4 87.29 88.52 89.87
5 59.52 60.79 62.22
6 43.79 45.12 46.68
7 33.82 35.23 36.93
8 27.33 28.79 30.59
9 22.78 24.27 26.17
10 19.45 20.95 22.94
15 10.87 12.41 14.86
20 7.22 8.80 11.77
25 5.11 6.73 10.30
30 4.15 5.25 9.54
35 3.50 3.90 9.13
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL
GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY
OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-49
<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 August, 1998. 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 Investors Series and MFS Research Managers Series of the
Zenith Fund commenced operations on April 30, 1999. The remaining Zenith Fund
Series commenced operations on October 31, 1994. The commencement of
operations for the Metropolitan Series Fund, Inc. Portfolios was: March 3,
1997 for the Janus Mid Cap Portfolio; and November 9, 1998 for the Russell
2000 Index Portfolio. The Putnam Large Cap Growth Portfolio of the
Metropolitan Series Fund, Inc. commenced operations on May 1, 2000 and is not
included in this Appendix. The VIP Equity-Income Portfolio and VIP Overseas
Portfolio commenced operations on October 9, 1986 and January 28, 1987,
respectively. The VIP High Income Portfolio and the VIP II Asset Manager
Portfolio commenced operations on September 19, 1985 and September 6, 1989,
respectively.
We base the illustrations 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
premiums are paid at the beginning of each year and that no loans, transfers
or other Policy Owner transactions were made during the periods shown.
Many factors other than investment experience affect Policy values and
benefits. These investment experience figures do not reflect the charges
deducted from Premiums and Monthly Deductions from the cash value. (See
"Charges and Expenses".)
NET RATES OF RETURN
The annual net rate is the effective earnings rate at which the investment
Sub-Accounts increased or decreased over a one-year period, based on the
investment experience of the relevant Eligible Funds. The rate is calculated
by taking the difference between the Sub-Accounts' ending values and beginning
values of the period and dividing it by the beginning values of the period.
The effective annual net rate of return since inception is the annualized
effective interest rate at which the Sub-Accounts increased or decreased since
the inception dates of the Sub-Accounts. For each Sub-Account, we calculate
the rate 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-50
<PAGE>
SUB-ACCOUNTS INVESTING IN NEW ENGLAND ZENITH FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
8/26/83- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*. 8.87% -0.59% 68.10% 95.21% 52.71% -8.81% 30.76% -3.48% 53.98% -6.05% 14.97% -7.07%
Bond Income..... 3.20 12.61 18.76 14.83 2.27 8.37 12.30 8.09 17.96 8.18 12.61 -3.36
Money Market.... 3.20 10.73 8.26 6.80 6.53 7.52 9.25 8.19 6.21 3.80 2.97 3.97
<CAPTION>
8/26/83- 8/26/83-
12/31/99 12/31/99
-------------------------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*. 38.03% 21.07% 23.48% 34.09%
Bond Income..... 21.20 4.61 10.89 9.04
Money Market.... 5.70 5.13 5.34 5.26
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
5/1/87- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index..... -12.20% 16.34% 30.15% -4.14% 30.43% 7.30% 9.72% 1.12% 36.92% 22.47% 32.50% 27.93%
Managed......... -0.66 9.48 19.08 3.21 20.17 6.70 10.65 -1.11 31.26 15.03 26.56 19.65
<CAPTION>
5/1/87- 5/1/87-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/99 RETURN ANNUAL
- ----------- -------- -------- ---------
<S> <C> <C> <C>
Stock Index.....
Managed.........
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-------------------------------------------------------------- 4/30/93- 4/30/93-
FOR ONE YEAR ENDING 12/31/99 12/31/99
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 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income....... 14.24% -1.21% 36.47% 18.10% 33.47% 24.45%
Midcap Value***......... 14.74 -.27 30.35 17.61 17.32 -5.46
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------------------- 5/2/94- 5/2/94-
FOR ONE YEAR ENDING 12/31/99 12/31/99
5/2/94- -------------------------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap............... -3.23% 28.84% 30.68% 24.85% -1.69%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------------------------------ 10/31/94- 10/31/94-
FOR ONE YEAR ENDING 12/31/99 12/31/99
10/31/94- -------------------------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- --------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Growth........... -4.20% 48.69% 13.17% 25.63% 47.78%
Balanced****............ -.10 24.79 16.91 16.18 9.11
Venture Value........... -3.50 39.28 25.84 33.50 14.41
International Magnum Eq-
uity**................. 2.60 6.23 6.67 -1.30 7.27
</TABLE>
<TABLE>
<CAPTION>
ANNUAL
NET RATE
OF RETURN
---------
4/30/99- 4/30/99-
12/31/99 12/31/99
4/30/99- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/99 RETURN ANNUAL
- ----------- --------- -------- ---------
<S> <C> <C> <C>
Investors..........................................
Research Managers..................................
</TABLE>
- -------
* Rates of return reflect the Capital Growth Series' former investment
advisory fee of .50% of average daily net assets for the period through
December 31, 1987 and its current advisory fee schedule thereafter.
** The 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 Harris/Oakmark Midcap Value Series' sub-adviser was Loomis Sayles
until May 1, 1998, when Goldman Sachs Asset Management became the sub-
adviser. Harris Associates became the sub-adviser on May 1, 2000. Rates of
return reflect the Series' former investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998 and .75%
thereafter.
**** The Balanced Series' sub-adviser was Loomis Sayles until May 1, 2000, when
Wellington Management Company became the sub-adviser.
SUB-ACCOUNTS INVESTING IN METROPOLITAN SERIES FUND, INC.
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------ 3/3/97- 3/3/97-
FOR ONE YEAR ENDING 12/31/99 12/31/99
3/3/97- --------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Mid Cap.....................
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------- 11/9/98- 11/9/98-
FOR ONE YEAR ENDING 12/31/99 12/31/99
11/9/98- -------------------- TOTAL EFFECTIVE
12/31/98 12/31/99 RETURN ANNUAL
-------- -------------------- -------- ---------
<S> <C> <C> <C> <C>
Russell 2000 Index.............
</TABLE>
SUB-ACCOUNTS INVESTING IN VIP
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
10/9/86- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity-Income... .20% -1.13% 21.93% 19.54% -16.31% 31.44% 16.89% 18.29% 6.93% 35.90% 13.75% 28.11%
<CAPTION>
10/9/86- 10/9/86-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- ---------
<S> <C> <C> <C> <C>
Equity-Income... 11.63%
</TABLE>
A-51
<PAGE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
--------------------------------------------------------------------------------
1/28/87-
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Overseas.......................... -5.38% 9.63% 23.97% -1.20% 8.00% -10.72% 37.35% 1.21% 11.02% 12.43%
<CAPTION>
1/28/87- 1/28/87-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Overseas........ 11.56% 12.75%
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
--------------------------------------------------------------------------------------------------
<CAPTION> 9/19/85-
SUB-ACCOUNT 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Income..... 6.38% 17.68% 1.22% 11.53% -4.07% -2.23% 35.08% 23.17% 20.40% -1.45% 20.79% 13.75%
9/19/85- 9/19/85-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
High Income..... 17.67% -4.33%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
--------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
-----------------------------------------------------------------------------------------
9/6/89-
12/31/99
9/6/89- TOTAL
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 12/31/99 RETURN
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Manager... 1.32% 6.19% 22.56% 11.71% 21.23% -6.43% 17.68% 14.31% 20.65% 15.05%
<CAPTION>
9/6/89-
12/31/99
EFFECTIVE
SUB-ACCOUNT ANNUAL
- ----------- ---------
<S> <C>
Asset Manager...
</TABLE>
SUB-ACCOUNT INVESTING IN VIP II
POLICY PERFORMANCE
The material below assumes a Policy was issued with a $1,054,000 face amount
($2,900,000 face amount in the case of the Option 1 death benefit, guideline
premium test example) with premiums paid on August 26 of the years in which
they are paid (May 1 in the case of the Zenith Westpeak Stock Index, Zenith
Back Bay Managed and Zenith Loomis Sayles Small Cap Sub-Accounts; October 31
in the case of the Zenith Balanced, Zenith Morgan Stanley International Magnum
Equity, Zenith Davis Venture Value and Zenith Alger Equity Growth Sub-
Accounts; October 9 in the case of the VIP Equity-Income Sub-Account, January
28 in the case of the VIP Overseas Sub-Account; April 30 in the case of the
Zenith Westpeak Growth and Income and Zenith Harris/Oakmark Midcap Value Sub-
Accounts; September 19 in the case of the VIP High Income Sub-Account;
September 6 in the case of the VIP II Asset Manager Sub-Account; March 3 in
the case of the Metropolitan Janus Mid Cap Sub-Account; November 9 in the case
of the Metropolitan Russell 2000 Index Sub-Account), to a male age 40 in the
nonsmoker preferred risk category. Values and benefits are shown for Policies
with an Option 1 and Option 2 death benefit, and for the cash value
accumulation test and guideline premium test. 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. (See
"Charges and Expenses".) (See Appendix A for the definition of the internal
rate of return.)
MALE NONSMOKER PREFERRED RISK, AGE 40
$1,054,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1983....... 50,000 1,054,000 47,893 47,893 -11.64% --
December 31, 1984....... 100,000 1,054,000 90,141 90,141 -11.72 786.55%
December 31, 1985....... 150,000 1,054,000 202,325 202,325 23.49 215.77
December 31, 1986....... 200,000 1,317,627 435,027 435,027 45.37 125.72
December 31, 1987....... 250,000 2,028,976 691,181 691,181 45.49 101.61
December 31, 1988....... 300,000 1,901,908 668,310 668,310 28.39 68.21
December 31, 1989....... 350,000 2,513,993 910,975 910,975 28.33 59.72
December 31, 1990....... 350,000 2,314,394 864,610 864,610 21.09 45.30
December 31, 1991....... 350,000 3,421,043 1,317,258 1,317,258 25.69 45.67
December 31, 1992....... 350,000 3,086,150 1,224,464 1,224,464 20.50 36.78
December 31, 1993....... 350,000 3,413,880 1,395,329 1,395,329 19.67 33.39
December 31, 1994....... 350,000 3,041,428 1,280,197 1,280,197 16.18 27.76
December 31, 1995....... 350,000 4,100,847 1,777,020 1,777,020 18.28 28.43
December 31, 1996....... 350,000 4,777,283 2,130,349 2,130,349 18.42 27.32
December 31, 1997....... 350,000 5,700,131 2,614,672 2,614,672 18.77 26.65
December 31, 1998....... 350,000 7,387,973 3,484,349 3,484,349 19.83 26.87
December 31, 1999.......
</TABLE>
A-52
<PAGE>
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1983....... 50,000 1,054,000 45,279 45,279 -24.80% --
December 31, 1984....... 100,000 1,054,000 96,850 96,850 -3.72 786.55%
December 31, 1985....... 150,000 1,054,000 159,420 159,420 4.57 215.77
December 31, 1986....... 200,000 1,054,000 225,497 225,497 6.56 107.68
December 31, 1987....... 250,000 1,054,000 272,105 272,105 3.62 66.26
December 31, 1988....... 300,000 1,054,000 336,745 336,745 4.06 45.19
December 31, 1989....... 350,000 1,160,419 420,491 420,491 5.46 35.61
December 31, 1990....... 350,000 1,203,948 449,770 449,770 5.78 29.05
December 31, 1991....... 350,000 1,363,182 524,887 524,887 7.65 26.39
December 31, 1992....... 350,000 1,415,920 561,782 561,782 7.56 22.99
December 31, 1993....... 350,000 1,534,036 626,995 626,995 8.08 21.08
December 31, 1994....... 350,000 1,428,274 601,189 601,189 6.59 17.61
December 31, 1995....... 350,000 1,675,579 726,079 726,079 7.98 17.58
December 31, 1996....... 350,000 1,693,258 755,080 755,080 7.60 15.97
December 31, 1997....... 350,000 1,814,263 832,209 832,209 7.82 15.20
December 31, 1998....... 350,000 1,912,093 901,790 901,790 7.87 14.41
December 31, 1999.......
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1983....... 50,000 1,054,000 45,386 45,386 -24.29% --
December 31, 1984....... 100,000 1,054,000 93,940 93,940 -7.18 786.55%
December 31, 1985....... 150,000 1,054,000 144,651 144,651 -2.68 215.77
December 31, 1986....... 200,000 1,054,000 196,689 196,689 -0.90 107.68
December 31, 1987....... 250,000 1,054,000 251,449 251,449 0.25 66.26
December 31, 1988....... 300,000 1,054,000 312,688 312,688 1.45 45.19
December 31, 1989....... 350,000 1,059,314 383,855 383,855 2.75 32.86
December 31, 1990....... 350,000 1,099,292 410,673 410,673 3.68 26.85
December 31, 1991....... 350,000 1,120,728 431,531 431,531 3.94 22.45
December 31, 1992....... 350,000 1,116,907 443,145 443,145 3.74 18.94
December 31, 1993....... 350,000 1,106,471 452,239 452,239 3.52 16.25
December 31, 1994....... 350,000 1,111,254 467,749 467,749 3.51 14.35
December 31, 1995....... 350,000 1,134,254 491,506 491,506 3.67 13.04
December 31, 1996....... 350,000 1,151,536 513,508 513,508 3.75 11.92
December 31, 1997....... 350,000 1,172,026 537,613 537,613 3.83 11.02
December 31, 1998....... 350,000 1,192,370 562,351 562,351 3.89 10.27
December 31, 1999.......
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1987....... 50,000 1,054,000 37,995 37,995 -33.68% --
December 31, 1988....... 100,000 1,054,000 89,361 89,361 -9.27 463.55%
December 31, 1989....... 150,000 1,054,000 169,006 169,006 7.31 168.48
December 31, 1990....... 200,000 1,054,000 200,966 200,966 0.22 91.74
December 31, 1991....... 250,000 1,054,000 307,644 307,644 7.85 58.80
December 31, 1992....... 300,000 1,056,259 374,034 374,034 6.98 41.13
December 31, 1993....... 350,000 1,243,164 453,936 453,936 7.07 34.80
December 31, 1994....... 350,000 1,205,716 453,861 453,861 5.59 27.21
December 31, 1995....... 350,000 1,597,712 619,840 619,840 10.24 28.00
December 31, 1996....... 350,000 1,864,592 745,335 745,335 11.60 26.45
December 31, 1997....... 350,000 2,380,041 979,993 979,993 13.87 26.59
December 31, 1998....... 350,000 2,940,467 1,246,779 1,246,779 15.25 26.27
December 31, 1999.......
</TABLE>
A-53
<PAGE>
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1987....... 50,000 1,054,000 43,013 43,013 -20.16% --
December 31, 1988....... 100,000 1,054,000 91,682 91,682 -7.22 463.55%
December 31, 1989....... 150,000 1,054,000 158,023 158,023 3.15 168.48
December 31, 1990....... 200,000 1,054,000 206,075 206,075 1.38 91.74
December 31, 1991....... 250,000 1,054,000 293,132 293,132 6.01 58.80
December 31, 1992....... 300,000 1,054,000 357,390 357,390 5.54 41.06
December 31, 1993....... 350,000 1,200,639 438,408 438,408 6.13 33.82
December 31, 1994....... 350,000 1,138,609 428,601 428,601 4.35 25.91
December 31, 1995....... 350,000 1,443,373 559,963 559,963 8.40 26.04
December 31, 1996....... 350,000 1,585,778 633,885 633,885 9.07 23.76
December 31, 1997....... 350,000 1,933,488 796,123 796,123 11.00 23.54
December 31, 1998....... 350,000 2,234,132 947,288 947,288 11.85 22.67
December 31, 1999.......
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1993....... 50,000 1,054,000 49,314 49,314 -2.04% --
December 31, 1994....... 100,000 1,054,000 91,336 91,336 -7.51 461.80%
December 31, 1995....... 150,000 1,054,000 176,580 176,580 10.05 168.16
December 31, 1996....... 200,000 1,054,000 254,295 254,295 11.33 91.62
December 31, 1997....... 250,000 1,133,755 390,254 390,254 17.06 62.05
December 31, 1998....... 300,000 1,488,574 528,482 528,482 18.06 53.10
December 31, 1999.......
ZENITH HARRIS/OAKMARK MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1993....... 50,000 1,054,000 49,536 49,536 -1.38% --
December 31, 1994....... 100,000 1,054,000 92,180 92,180 -6.76 461.80%
December 31, 1995....... 150,000 1,054,000 171,888 171,888 8.35 168.16
December 31, 1996....... 200,000 1,054,000 245,951 245,951 9.72 91.62
December 31, 1997....... 250,000 1,054,000 336,903 336,903 11.34 58.74
December 31, 1998....... 300,000 1,054,000 351,743 351,743 5.03 41.02
December 31, 1999.......
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1994....... 50,000 1,054,000 41,500 41,500 -24.41% --
December 31, 1995....... 100,000 1,054,000 104,932 104,932 4.20 465.32%
December 31, 1996....... 150,000 1,054,000 185,031 185,031 13.09 168.81
December 31, 1997....... 200,000 1,054,000 282,743 282,743 16.55 91.85
December 31, 1998....... 250,000 1,054,000 313,593 313,593 8.60 58.86
December 31, 1999.......
</TABLE>
A-54
<PAGE>
ZENITH BALANCED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL NET INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1994....... 50,000 1,054,000 44,272 44,272 -51.72% --
December 31, 1995....... 100,000 1,054,000 99,674 99,674 -0.49 1,177.18%
December 31, 1996....... 150,000 1,054,000 159,765 159,765 5.47 253.93
December 31, 1997....... 200,000 1,054,000 227,978 227,978 7.93 119.01
December 31, 1998....... 250,000 1,054,000 291,839 291,839 7.16 71.25
December 31, 1999.......
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1994....... 50,000 1,054,000 45,344 45,344 -44.28% --
December 31, 1995....... 100,000 1,054,000 93,476 93,476 -9.80 1,177.18%
December 31, 1996....... 150,000 1,054,000 142,219 142,219 -4.52 253.93
December 31, 1997....... 200,000 1,054,000 181,110 181,110 -5.91 119.01
December 31, 1998....... 250,000 1,054,000 236,575 236,575 -2.54 71.25
December 31, 1999.......
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1994....... 50,000 1,054,000 42,929 42,929 -59.84% --
December 31, 1995....... 100,000 1,054,000 104,157 104,157 6.22 1,177.18%
December 31, 1996....... 150,000 1,054,000 174,848 174,848 13.51 253.93
December 31, 1997....... 200,000 1,054,000 275,721 275,721 19.77 119.01
December 31, 1998....... 250,000 1,060,572 359,422 359,422 16.92 71.59
December 31, 1999.......
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1994....... 50,000 1,054,000 41,903 41,903 -65.26% --
December 31, 1995....... 100,000 1,054,000 104,376 104,376 6.55 1,177.18%
December 31, 1996....... 150,000 1,054,000 161,043 161,043 6.17 253.93
December 31, 1997....... 200,000 1,054,000 244,056 244,056 12.13 119.01
December 31, 1998....... 250,000 1,206,651 408,928 408,928 23.05 78.74
December 31, 1999.......
ZENITH MFS INVESTORS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $1,054,000 $ $ -- --
December 31, 1999....... 50,000 1,054,000 % --
</TABLE>
A-55
<PAGE>
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $1,054,000 $ $ -- --
December 31, 1999....... 50,000 1,054,000 % --
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997........... $ 50,000 $1,054,000
December 31, 1997....... 50,000 1,054,000
December 31, 1998....... 100,000 1,054,000
December 31, 1999....... 150,000 1,054,000
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998........ $ 50,000 $1,054,000
December 31, 1998....... 50,000 1,054,000
December 31, 1999....... 100,000 1,054,000
</TABLE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1986....... 50,000 1,054,000 44,463 44,463 -40.32% --
December 31, 1987....... 100,000 1,054,000 78,734 78,734 -29.50 1,017.57%
December 31, 1988....... 150,000 1,054,000 137,473 137,473 -6.99 239.99
December 31, 1989....... 200,000 1,054,000 203,562 203,562 1.02 115.01
December 31, 1990....... 250,000 1,054,000 214,954 214,954 -6.76 69.51
December 31, 1991....... 300,000 1,054,000 326,357 326,357 3.08 46.94
December 31, 1992....... 350,000 1,184,343 426,982 426,982 6.12 37.39
December 31, 1993....... 350,000 1,344,307 499,678 499,678 8.45 32.57
December 31, 1994....... 350,000 1,379,723 528,604 528,604 7.96 27.22
December 31, 1995....... 350,000 1,800,224 710,727 710,727 11.62 27.67
December 31, 1996....... 350,000 1,968,492 800,624 800,624 11.75 25.26
December 31, 1997....... 350,000 2,434,931 1,019,946 1,019,946 13.45 25.09
December 31, 1998....... 350,000 2,625,214 1,132,142 1,132,142 13.19 23.25
December 31, 1999.......
</TABLE>
A-56
<PAGE>
VIP OVERSEAS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1987....... 50,000 1,054,000 40,135 40,135 -21.18% --
December 31, 1988....... 100,000 1,054,000 91,763 91,763 -5.89 338.48%
December 31, 1989....... 150,000 1,054,000 164,134 164,134 4.75 142.48
December 31, 1990....... 200,000 1,054,000 203,149 203,149 0.65 81.84
December 31, 1991....... 250,000 1,054,000 263,833 263,833 1.85 53.89
December 31, 1992....... 300,000 1,054,000 271,968 271,968 -2.86 38.23
December 31, 1993....... 350,000 1,161,488 428,478 428,478 5.16 30.96
December 31, 1994....... 350,000 1,128,240 429,032 429,032 4.15 24.44
December 31, 1995....... 350,000 1,202,367 471,186 471,186 5.06 21.61
December 31, 1996....... 350,000 1,298,212 524,142 524,142 5.91 19.73
December 31, 1997....... 350,000 1,397,586 581,186 581,186 6.50 18.26
December 31, 1998....... 350,000 1,521,845 651,618 651,618 7.10 17.24
December 31, 1999.......
VIP HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1985....... 50,000 1,054,000 46,970 46,970 -19.87% --
December 31, 1986....... 100,000 1,054,000 99,624 99,624 -0.48 900.55%
December 31, 1987....... 150,000 1,054,000 142,133 142,133 -4.16 228.43
December 31, 1988....... 200,000 1,054,000 200,698 200,698 0.20 111.57
December 31, 1989....... 250,000 1,054,000 231,477 231,477 -3.37 68.00
December 31, 1990....... 300,000 1,054,000 267,146 267,146 -4.17 46.13
December 31, 1991....... 350,000 1,117,594 403,944 403,944 4.35 35.07
December 31, 1992....... 350,000 1,320,836 492,193 492,193 7.99 31.75
December 31, 1993....... 350,000 1,526,457 586,286 586,286 9.89 29.03
December 31, 1994....... 350,000 1,444,273 571,612 571,612 7.92 23.57
December 31, 1995....... 350,000 1,677,709 684,034 684,034 9.40 22.63
December 31, 1996....... 350,000 1,842,678 773,738 773,738 9.82 21.14
December 31, 1997....... 350,000 2,094,154 905,285 905,285 10.54 20.37
December 31, 1998....... 350,000 1,935,418 861,029 861,029 8.99 17.51
December 31, 1999.......
</TABLE>
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 50,000 $1,054,000 $ 44,778 $ 44,778 -- --
December 31, 1989....... 50,000 1,054,000 44,725 44,725 -29.59% --
December 31, 1990....... 100,000 1,054,000 92,438 92,438 -9.30 835.70%
December 31, 1991....... 150,000 1,054,000 156,791 156,791 3.39 221.42
December 31, 1992....... 200,000 1,054,000 218,058 218,058 4.79 109.43
December 31, 1993....... 250,000 1,054,000 307,968 307,968 9.06 67.04
December 31, 1994....... 300,000 1,054,000 327,179 327,179 3.08 45.62
December 31, 1995....... 350,000 1,183,071 427,610 427,610 6.01 36.48
December 31, 1996....... 350,000 1,297,728 483,582 483,582 7.51 31.07
December 31, 1997....... 350,000 1,502,896 577,237 577,237 9.52 28.52
December 31, 1998....... 350,000 1,660,147 657,050 657,050 10.16 25.86
December 31, 1999.......
</TABLE>
A-57
<PAGE>
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1983....... 50,000 1,101,847 47,847 47,847 -11.88% --
December 31, 1984....... 100,000 1,143,947 89,947 89,947 -11.96 846.61%
December 31, 1985....... 150,000 1,255,588 201,588 201,588 23.19 244.67
December 31, 1986....... 200,000 1,486,851 432,851 432,851 45.05 135.93
December 31, 1987....... 250,000 2,019,199 687,851 687,851 45.26 101.33
December 31, 1988....... 300,000 1,893,368 665,309 665,309 28.22 68.03
December 31, 1989....... 350,000 2,503,211 907,068 907,068 28.21 59.58
December 31, 1990....... 350,000 2,304,467 860,901 860,901 20.99 45.19
December 31, 1991....... 350,000 3,406,369 1,311,607 1,311,607 25.61 45.58
December 31, 1992....... 350,000 3,072,911 1,219,212 1,219,212 20.43 36.70
December 31, 1993....... 350,000 3,399,235 1,389,344 1,389,344 19.60 33.32
December 31, 1994....... 350,000 3,028,380 1,274,705 1,274,705 16.13 27.70
December 31, 1995....... 350,000 4,083,254 1,769,396 1,769,396 18.23 28.38
December 31, 1996....... 350,000 4,756,787 2,121,209 2,121,209 18.37 27.28
December 31, 1997....... 350,000 5,675,676 2,603,454 2,603,454 18.73 26.61
December 31, 1998....... 350,000 7,356,275 3,469,400 3,469,400 19.79 26.83
December 31, 1999.......
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1983....... 50,000 1,099,237 45,237 45,237 -25.00% --
December 31, 1984....... 100,000 1,150,642 96,642 96,642 -3.97 851.03%
December 31, 1985....... 150,000 1,212,855 158,855 158,855 4.30 238.79
December 31, 1986....... 200,000 1,278,327 224,327 224,327 6.28 123.21
December 31, 1987....... 250,000 1,324,219 270,219 270,219 3.32 78.11
December 31, 1988....... 300,000 1,387,988 333,988 333,988 3.77 55.72
December 31, 1989....... 350,000 1,470,804 416,804 416,804 5.20 42.84
December 31, 1990....... 350,000 1,499,199 445,199 445,199 5.55 34.41
December 31, 1991....... 350,000 1,572,973 518,973 518,973 7.44 29.30
December 31, 1992....... 350,000 1,608,993 554,993 554,993 7.36 25.20
December 31, 1993....... 350,000 1,673,078 619,078 619,078 7.90 22.38
December 31, 1994....... 350,000 1,647,160 593,160 593,160 6.42 19.49
December 31, 1995....... 350,000 1,769,967 715,967 715,967 7.83 18.23
December 31, 1996....... 350,000 1,798,178 744,178 744,178 7.45 16.61
December 31, 1997....... 350,000 1,873,850 819,850 819,850 7.69 15.51
December 31, 1998....... 350,000 1,942,155 888,155 888,155 7.74 14.55
December 31, 1999.......
</TABLE>
A-58
<PAGE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1983....... 50,000 1,099,343 45,343 45,343 -24.50% --
December 31, 1984....... 100,000 1,147,737 93,737 93,737 -7.43 849.11%
December 31, 1985....... 150,000 1,198,146 144,146 144,146 -2.93 236.73
December 31, 1986....... 200,000 1,249,703 195,703 195,703 -1.17 121.34
December 31, 1987....... 250,000 1,303,765 249,765 249,765 -0.04 77.28
December 31, 1988....... 300,000 1,364,218 310,218 310,218 1.18 55.05
December 31, 1989....... 350,000 1,434,553 380,553 380,553 2.49 42.07
December 31, 1990....... 350,000 1,460,434 406,434 406,434 3.44 33.77
December 31, 1991....... 350,000 1,480,365 426,365 426,365 3.71 28.06
December 31, 1992....... 350,000 1,491,084 437,084 437,084 3.52 23.88
December 31, 1993....... 350,000 1,499,238 445,238 445,238 3.30 20.74
December 31, 1994....... 350,000 1,513,601 459,601 459,601 3.29 18.37
December 31, 1995....... 350,000 1,535,945 481,945 481,945 3.46 16.56
December 31, 1996....... 350,000 1,556,386 502,386 502,386 3.53 15.08
December 31, 1997....... 350,000 1,578,689 524,689 524,689 3.61 13.86
December 31, 1998....... 350,000 1,601,397 547,397 547,397 3.67 12.84
December 31, 1999.......
</TABLE>
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1987....... 50,000 1,091,937 37,937 37,937 -33.83% --
December 31, 1988....... 100,000 1,143,122 89,122 89,122 -9.48 494.44%
December 31, 1989....... 150,000 1,222,315 168,315 168,315 7.05 186.73
December 31, 1990....... 200,000 1,253,814 199,814 199,814 -0.04 103.46
December 31, 1991....... 250,000 1,359,318 305,318 305,318 7.56 70.53
December 31, 1992....... 300,000 1,424,819 370,819 370,819 6.71 51.58
December 31, 1993....... 350,000 1,503,874 449,874 449,874 6.83 40.20
December 31, 1994....... 350,000 1,503,254 449,254 449,254 5.37 32.27
December 31, 1995....... 350,000 1,667,075 613,075 613,075 10.04 28.83
December 31, 1996....... 350,000 1,844,004 737,106 737,106 11.43 26.27
December 31, 1997....... 350,000 2,353,759 969,171 969,171 13.72 26.43
December 31, 1998....... 350,000 2,907,995 1,233,010 1,233,010 15.11 26.12
December 31, 1999.......
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1987....... 50,000 1,096,947 42,947 42,947 -20.34% --
December 31, 1988....... 100,000 1,145,433 91,433 91,433 -7.44 495.23%
December 31, 1989....... 150,000 1,211,375 157,375 157,375 2.90 185.60
December 31, 1990....... 200,000 1,258,900 204,900 204,900 1.12 103.74
December 31, 1991....... 250,000 1,344,937 290,937 290,937 5.72 70.03
December 31, 1992....... 300,000 1,408,362 354,362 354,362 5.27 51.17
December 31, 1993....... 350,000 1,488,502 434,502 434,502 5.88 39.90
December 31, 1994....... 350,000 1,478,168 424,168 424,168 4.13 31.88
December 31, 1995....... 350,000 1,607,562 553,562 553,562 8.19 28.12
December 31, 1996....... 350,000 1,680,281 626,281 626,281 8.88 24.72
December 31, 1997....... 350,000 1,910,059 786,476 786,476 10.83 23.37
December 31, 1998....... 350,000 2,207,058 935,808 935,808 11.70 22.52
December 31, 1999.......
</TABLE>
A-59
<PAGE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1993....... 50,000 1,103,229 49,229 49,229 -2.29% --
December 31, 1994....... 100,000 1,145,066 91,066 91,066 -7.74 493.20%
December 31, 1995....... 150,000 1,229,807 175,807 175,807 9.77 187.14
December 31, 1996....... 200,000 1,306,729 252,729 252,729 11.03 106.19
December 31, 1997....... 250,000 1,441,180 387,180 387,180 16.75 73.22
December 31, 1998....... 300,000 1,578,246 524,246 524,246 17.80 55.19
December 31, 1999.......
</TABLE>
ZENITH HARRIS/OAKMARK MIDCAP VALUE SUB-ACCOUNT**
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1993....... 50,000 1,103,451 49,451 49,451 -1.63% --
December 31, 1994....... 100,000 1,145,907 91,907 91,907 -7.00 493.49%
December 31, 1995....... 150,000 1,225,137 171,137 171,137 8.08 186.66
December 31, 1996....... 200,000 1,298,436 244,436 244,436 9.43 105.75
December 31, 1997....... 250,000 1,388,208 334,208 334,208 11.03 71.45
December 31, 1998....... 300,000 1,402,594 348,594 348,594 4.74 50.98
December 31, 1999.......
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,095,437 41,437 41,437 -24.59% --
December 31, 1995....... 100,000 1,158,647 104,647 104,647 3.96 501.66%
December 31, 1996....... 150,000 1,238,246 184,246 184,246 12.81 188.75
December 31, 1997....... 200,000 1,335,054 281,054 281,054 16.25 107.97
December 31, 1998....... 250,000 1,365,084 311,084 311,084 8.29 70.80
December 31, 1999.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,098,247 44,247 44,247 -51.88% --
December 31, 1995....... 100,000 1,153,493 99,493 99,493 -0.76 1,286.61%
December 31, 1996....... 150,000 1,213,257 159,257 159,257 5.19 281.82
December 31, 1997....... 200,000 1,280,890 226,890 226,890 7.64 136.50
December 31, 1998....... 250,000 1,343,936 289,936 289,936 6.86 84.85
December 31, 1999.......
</TABLE>
A-60
<PAGE>
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,099,319 45,319 45,319 -44.47% --
December 31, 1995....... 100,000 1,147,314 93,314 93,314 -10.04 1,279.86%
December 31, 1996....... 150,000 1,195,790 141,790 141,790 -4.77 278.87
December 31, 1997....... 200,000 1,234,304 180,304 180,304 -6.17 133.10
December 31, 1998....... 250,000 1,289,145 235,145 235,145 -2.82 82.47
December 31, 1999.......
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,096,905 42,905 42,905 -59.98% --
December 31, 1995....... 100,000 1,157,964 103,964 103,964 5.93 1,291.50%
December 31, 1996....... 150,000 1,228,275 174,275 174,275 13.22 284.35
December 31, 1997....... 200,000 1,328,338 274,338 274,338 19.46 139.87
December 31, 1998....... 250,000 1,410,942 356,942 356,942 16.59 87.64
December 31, 1999.......
</TABLE>
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,095,879 41,879 41,879 -65.37% --
December 31, 1995....... 100,000 1,158,176 104,176 104,176 6.25 1,291.73%
December 31, 1996....... 150,000 1,214,515 160,515 160,515 5.88 282.04
December 31, 1997....... 200,000 1,296,853 242,853 242,853 11.83 137.64
December 31, 1998....... 250,000 1,460,168 406,168 406,168 22.72 89.63
December 31, 1999.......
ZENITH MFS INVESTORS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $ $ $ -- --
December 31, 1999....... 50,000 % --
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $ $ $ -- --
December 31, 1999....... 50,000 % --
</TABLE>
A-61
<PAGE>
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997........... $ 50,000
December 31, 1997....... 50,000
December 31, 1998....... 100,000
December 31, 1999....... 150,000
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998........ $ 50,000
December 31, 1998....... 50,000
December 31, 1999....... 100,000
VIP EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1986....... 50,000 1,098,437 44,437 44,437 -40.47% --
December 31, 1987....... 100,000 1,132,591 78,591 78,591 -29.70 1,089.85%
December 31, 1988....... 150,000 1,191,049 137,049 137,049 -7.23 262.58
December 31, 1989....... 200,000 1,256,614 202,614 202,614 0.75 130.16
December 31, 1990....... 250,000 1,267,660 213,660 213,660 -7.03 79.53
December 31, 1991....... 300,000 1,377,925 323,925 323,925 2.81 57.57
December 31, 1992....... 350,000 1,477,517 423,517 423,517 5.87 44.34
December 31, 1993....... 350,000 1,549,149 495,149 495,149 8.23 36.14
December 31, 1994....... 350,000 1,577,413 523,413 523,413 7.77 30.00
December 31, 1995....... 350,000 1,781,952 703,513 703,513 11.44 27.49
December 31, 1996....... 350,000 1,948,511 792,497 792,497 11.60 25.10
December 31, 1997....... 350,000 2,410,214 1,009,592 1,009,592 13.31 24.95
December 31, 1998....... 350,000 2,598,563 1,120,649 1,120,649 13.07 23.13
December 31, 1999.......
VIP OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1987....... 50,000 1,094,042 40,042 40,042 -21.38% --
December 31, 1988....... 100,000 1,145,445 91,445 91,445 -6.12 359.94%
December 31, 1989....... 150,000 1,217,331 163,331 163,331 4.49 157.10
December 31, 1990....... 200,000 1,255,791 201,791 201,791 0.37 92.30
December 31, 1991....... 250,000 1,315,613 261,613 261,613 1.56 63.21
December 31, 1992....... 300,000 1,323,539 269,539 269,539 -3.12 45.62
December 31, 1993....... 350,000 1,478,446 424,446 424,446 4.92 37.41
December 31, 1994....... 350,000 1,478,431 424,431 424,431 3.93 30.33
December 31, 1995....... 350,000 1,519,389 465,389 465,389 4.85 25.90
December 31, 1996....... 350,000 1,571,038 517,038 517,038 5.70 22.75
December 31, 1997....... 350,000 1,626,798 572,798 572,798 6.31 20.37
December 31, 1998....... 350,000 1,695,764 641,764 641,764 6.92 18.58
December 31, 1999.......
</TABLE>
A-62
<PAGE>
VIP HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1985....... 50,000 1,100,934 46,934 46,934 -20.09% --
December 31, 1986....... 100,000 1,153,424 99,424 99,424 -0.74 978.99%
December 31, 1987....... 150,000 1,195,660 141,660 141,660 -4.41 250.45
December 31, 1988....... 200,000 1,253,727 199,727 199,727 -0.08 126.04
December 31, 1989....... 250,000 1,283,975 229,975 229,975 -3.65 78.49
December 31, 1990....... 300,000 1,319,107 265,107 265,107 -4.45 54.86
December 31, 1991....... 350,000 1,454,591 400,591 400,591 4.10 43.22
December 31, 1992....... 350,000 1,541,609 487,609 487,609 7.77 35.59
December 31, 1993....... 350,000 1,634,486 580,486 580,486 9.70 30.44
December 31, 1994....... 350,000 1,619,660 565,660 565,660 7.75 25.57
December 31, 1995....... 350,000 1,730,656 676,656 676,656 9.24 23.10
December 31, 1996....... 350,000 1,822,644 765,325 765,325 9.68 21.00
December 31, 1997....... 350,000 2,071,381 895,441 895,441 10.42 20.24
December 31, 1998....... 350,000 1,914,301 851,635 851,635 8.88 17.39
December 31, 1999.......
VIP II ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1989....... 50,000 1,098,691 44,691 44,691 -29.76% --
December 31, 1990....... 100,000 1,146,261 92,261 92,261 -9.52 902.09%
December 31, 1991....... 150,000 1,210,271 156,271 156,271 3.13 244.76
December 31, 1992....... 200,000 1,270,991 216,991 216,991 4.52 124.75
December 31, 1993....... 250,000 1,359,903 305,903 305,903 8.77 80.46
December 31, 1994....... 300,000 1,378,526 324,526 324,526 2.79 55.98
December 31, 1995....... 350,000 1,477,881 423,881 423,881 5.74 43.32
December 31, 1996....... 350,000 1,532,801 478,801 478,801 7.28 35.18
December 31, 1997....... 350,000 1,625,146 571,146 571,146 9.32 30.13
December 31, 1998....... 350,000 1,703,877 649,877 649,877 9.98 26.32
December 31, 1999.......
</TABLE>
- ----------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series' investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
** Rates of return and Policy values and benefits shown reflect the
Harris/Oakmark Midcap Value Series' investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998 and .75%
thereafter.
A-63
<PAGE>
MALE NON-SMOKER PREFERRED RISK AGE 40
$2,900,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
GUIDELINE PREMIUM TEST
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1983....... 50,000 2,900,000 46,146 46,146 -20.59% --
December 31, 1984....... 100,000 2,900,000 83,880 83,880 -19.27 1,859.74%
December 31, 1985....... 150,000 2,900,000 186,199 186,199 16.71 415.88
December 31, 1986....... 200,000 2,900,000 398,104 398,104 39.81 198.89
December 31, 1987....... 250,000 2,900,000 632,523 632,523 41.30 122.80
December 31, 1988....... 300,000 2,900,000 612,555 612,555 25.25 85.77
December 31, 1989....... 350,000 2,900,000 836,915 836,915 25.81 64.36
December 31, 1990....... 400,000 2,900,000 836,806 836,806 18.76 50.59
December 31, 1991....... 450,000 2,900,000 1,325,785 1,325,785 23.90 41.08
December 31, 1992....... 500,000 2,900,000 1,282,024 1,282,024 18.55 34.16
December 31, 1993....... 550,000 2,900,000 1,509,458 1,509,458 17.85 28.92
December 31, 1994....... 600,000 2,900,000 1,427,553 1,427,553 14.00 24.85
December 31, 1995....... 650,000 3,472,482 2,030,691 2,030,691 16.66 24.07
December 31, 1996....... 700,000 4,085,881 2,491,391 2,491,391 17.02 23.25
December 31, 1997....... 750,000 4,879,152 3,107,740 3,107,740 17.56 22.77
December 31, 1998....... 800,000 6,300,730 4,200,487 4,200,487 18.90 23.21
December 31, 1999.......
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1983....... 50,000 2,900,000 43,537 43,537 -32.82% --
December 31, 1984....... 100,000 2,900,000 90,352 90,352 -11.47 1,859.74%
December 31, 1985....... 150,000 2,900,000 146,915 146,915 -1.54 415.88
December 31, 1986....... 200,000 2,900,000 206,124 206,124 1.64 198.89
December 31, 1987....... 250,000 2,900,000 247,103 247,103 -0.50 122.80
December 31, 1988....... 300,000 2,900,000 305,270 305,270 0.61 85.77
December 31, 1989....... 350,000 2,900,000 382,025 382,025 2.61 64.36
December 31, 1990....... 400,000 2,900,000 452,527 452,527 3.19 50.59
December 31, 1991....... 450,000 2,900,000 573,774 573,774 5.51 41.08
December 31, 1992....... 500,000 2,900,000 656,781 656,781 5.53 34.16
December 31, 1993....... 550,000 2,900,000 775,953 775,953 6.28 28.92
December 31, 1994....... 600,000 2,900,000 786,330 786,330 4.52 24.85
December 31, 1995....... 650,000 2,900,000 995,369 995,369 6.48 21.59
December 31, 1996....... 700,000 2,900,000 1,080,815 1,080,815 6.11 18.94
December 31, 1997....... 750,000 2,900,000 1,237,191 1,237,191 6.51 16.75
December 31, 1998....... 800,000 2,900,000 1,387,271 1,387,271 6.67 14.91
December 31, 1999.......
</TABLE>
A-64
<PAGE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1983....... 50,000 2,900,000 43,632 43,632 -32.40% --
December 31, 1984....... 100,000 2,900,000 87,603 87,603 -14.77 1,859.74%
December 31, 1985....... 150,000 2,900,000 133,251 133,251 -8.59 415.88
December 31, 1986....... 200,000 2,900,000 179,616 179,616 -5.76 198.89
December 31, 1987....... 250,000 2,900,000 227,974 227,974 -3.92 122.80
December 31, 1988....... 300,000 2,900,000 282,977 282,977 -2.05 85.77
December 31, 1989....... 350,000 2,900,000 348,241 348,241 -0.15 64.36
December 31, 1990....... 400,000 2,900,000 415,087 415,087 0.96 50.59
December 31, 1991....... 450,000 2,900,000 478,510 478,510 1.41 41.08
December 31, 1992....... 500,000 2,900,000 533,501 533,501 1.33 34.16
December 31, 1993....... 550,000 2,900,000 586,724 586,724 1.20 28.92
December 31, 1994....... 600,000 2,900,000 649,443 649,443 1.34 24.85
December 31, 1995....... 650,000 2,900,000 725,127 725,127 1.71 21.59
December 31, 1996....... 700,000 2,900,000 800,191 800,191 1.93 18.94
December 31, 1997....... 750,000 2,900,000 880,405 880,405 2.15 16.75
December 31, 1998....... 800,000 2,900,000 963,624 963,624 2.33 14.91
December 31, 1999.......
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1987....... 50,000 2,900,000 35,600 35,600 -39.84% --
December 31, 1988....... 100,000 2,900,000 82,139 82,139 -15.76 981.11%
December 31, 1989....... 150,000 2,900,000 154,280 154,280 1.69 315.22
December 31, 1990....... 200,000 2,900,000 182,221 182,221 -4.25 167.71
December 31, 1991....... 250,000 2,900,000 277,357 277,357 3.91 108.65
December 31, 1992....... 300,000 2,900,000 337,612 337,612 3.73 77.95
December 31, 1993....... 350,000 2,900,000 410,999 410,999 4.37 59.50
December 31, 1994....... 400,000 2,900,000 453,983 453,983 3.03 47.32
December 31, 1995....... 450,000 2,900,000 671,492 671,492 8.44 38.75
December 31, 1996....... 500,000 2,900,000 856,518 856,518 10.16 32.43
December 31, 1997....... 550,000 2,900,000 1,180,208 1,180,208 12.95 27.60
December 31, 1998....... 600,000 2,900,000 1,551,832 1,551,832 14.52 23.81
December 31, 1999.......
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1987....... 50,000 2,900,000 40,344 40,344 -27.46% --
December 31, 1988....... 100,000 2,900,000 84,386 84,386 -13.72 981.11%
December 31, 1989....... 150,000 2,900,000 144,341 144,341 -2.29 315.22
December 31, 1990....... 200,000 2,900,000 186,992 186,992 -3.08 167.71
December 31, 1991....... 250,000 2,900,000 264,466 264,466 2.11 108.65
December 31, 1992....... 300,000 2,900,000 322,870 322,870 2.32 77.95
December 31, 1993....... 350,000 2,900,000 397,206 397,206 3.44 59.50
December 31, 1994....... 400,000 2,900,000 431,010 431,010 1.79 47.32
December 31, 1995....... 450,000 2,900,000 613,062 613,062 6.54 38.75
December 31, 1996....... 500,000 2,900,000 741,449 741,449 7.48 32.43
December 31, 1997....... 550,000 2,900,000 982,902 982,902 9.92 27.60
December 31, 1998....... 600,000 2,900,000 1,216,718 1,216,718 10.99 23.81
December 31, 1999.......
</TABLE>
A-65
<PAGE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1993....... 50,000 2,900,000 46,028 46,028 -11.60% --
December 31, 1994....... 100,000 2,900,000 83,837 83,837 -14.19 976.68%
December 31, 1995....... 150,000 2,900,000 161,175 161,175 4.36 314.55
December 31, 1996....... 200,000 2,900,000 230,701 230,701 6.67 167.48
December 31, 1997....... 250,000 2,900,000 353,035 353,035 13.15 108.54
December 31, 1998....... 300,000 2,900,000 478,883 478,883 14.88 77.89
December 31, 1999.......
ZENITH HARRIS/OAKMARK MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1993....... 50,000 2,900,000 46,246 46,246 -10.98% --
December 31, 1994....... 100,000 2,900,000 84,668 84,668 -13.44 976.68%
December 31, 1995....... 150,000 2,900,000 157,024 157,024 2.76 314.55
December 31, 1996....... 200,000 2,900,000 223,270 223,270 5.12 167.48
December 31, 1997....... 250,000 2,900,000 304,772 304,772 7.49 108.54
December 31, 1998....... 300,000 2,900,000 318,104 318,104 1.85 77.89
December 31, 1999.......
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1994............. $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1994....... 50,000 2,900,000 38,815 38,815 -31.64% --
December 31, 1995....... 100,000 2,900,000 96,567 96,567 -2.96 985.58%
December 31, 1996....... 150,000 2,900,000 168,954 168,954 7.30 315.90
December 31, 1997....... 200,000 2,900,000 257,201 257,201 11.91 167.93
December 31, 1998....... 250,000 2,900,000 283,263 283,263 4.71 108.75
December 31, 1999.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1994....... 50,000 2,900,000 43,234 43,234 -58.11% --
December 31, 1995....... 100,000 2,900,000 93,799 93,799 -9.31 3,057.30%
December 31, 1996....... 150,000 2,900,000 148,172 148,172 -1.05 499.94
December 31, 1997....... 200,000 2,900,000 209,514 209,514 2.80 221.34
December 31, 1998....... 250,000 2,900,000 266,360 255,360 2.93 132.31
December 31, 1999.......
</TABLE>
A-66
<PAGE>
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1994....... 50,000 2,900,000 44,295 44,295 -51.56% --
December 31, 1995....... 100,000 2,900,000 87,966 87,966 -18.10 3,057.30%
December 31, 1996....... 150,000 2,900,000 131,930 131,930 -10.74 499.94
December 31, 1997....... 200,000 2,900,000 166,391 166,391 -10.89 221.34
December 31, 1998....... 250,000 2,900,000 215,781 215,781 -6.78 132.31
December 31, 1999.......
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1994....... 50,000 2,900,000 41,902 41,902 -65.26% --
December 31, 1995....... 100,000 2,900,000 97,965 97,965 -3.05 3,057.30%
December 31, 1996....... 150,000 2,900,000 162,184 162,184 6.79 499.94
December 31, 1997....... 200,000 2,900,000 253,604 253,604 14.52 221.34
December 31, 1998....... 250,000 2,900,000 328,598 328,598 12.70 132.31
December 31, 1999.......
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1994....... 50,000 2,900,000 40,890 40,890 -69.99% --
December 31, 1995....... 100,000 2,900,000 98,083 98,083 -2.87 3,057.30%
December 31, 1996....... 150,000 2,900,000 149,352 149,352 -0.37 499.94
December 31, 1997....... 200,000 2,900,000 224,332 224,332 6.95 221.34
December 31, 1998....... 250,000 2,900,000 373,553 373,553 18.74 132.31
December 31, 1999.......
ZENITH MFS INVESTORS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 -- --
December 31, 1999....... 50,000 -- --
ZENITH MFS REASEARCH MANAGERS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 -- --
December 31, 1999....... 50,000 -- --
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997...........
December 31, 1997.......
December 31, 1998.......
December 31, 1999.......
</TABLE>
A-67
<PAGE>
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998........
December 31, 1998.......
December 31, 1999.......
VIP EQUITY-INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1986....... 50,000 2,900,000 43,444 43,444 -46.10% --
December 31, 1987....... 100,000 2,900,000 74,063 74,063 -36.03 2,552.32%
December 31, 1988....... 150,000 2,900,000 127,216 127,216 -13.02 468.95
December 31, 1989....... 200,000 2,900,000 186,445 186,445 -4.04 213.38
December 31, 1990....... 250,000 2,900,000 195,833 195,833 -10.92 128.99
December 31, 1991....... 300,000 2,900,000 295,975 295,975 -0.50 89.08
December 31, 1992....... 350,000 2,900,000 388,212 388,212 3.20 66.38
December 31, 1993....... 400,000 2,900,000 496,234 496,234 5.72 51.93
December 31, 1994....... 450,000 2,900,000 566,747 566,747 5.38 42.02
December 31, 1995....... 500,000 2,900,000 807,683 807,683 9.84 34.85
December 31, 1996....... 550,000 2,900,000 955,640 955,640 10.16 29.45
December 31, 1997....... 600,000 2,900,000 1,262,137 1,262,137 12.31 25.26
December 31, 1998....... 650,000 2,900,000 1,454,755 1,454,755 12.17 21.92
December 31, 1999.......
VIP OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1987....... 50,000 2,900,000 36,295 36,295 -29.32% --
December 31, 1988....... 100,000 2,900,000 82,978 82,978 -12.42 675.33%
December 31, 1989....... 150,000 2,900,000 148,046 148,046 -0.68 261.68
December 31, 1990....... 200,000 2,900,000 182,363 182,363 -3.77 148.57
December 31, 1991....... 250,000 2,900,000 235,931 235,931 -1.98 99.34
December 31, 1992....... 300,000 2,900,000 244,318 244,318 -5.97 72.60
December 31, 1993....... 350,000 2,900,000 386,981 386,981 2.56 56.08
December 31, 1994....... 400,000 2,900,000 428,024 428,024 1.53 44.97
December 31, 1995....... 450,000 2,900,000 517,621 517,621 2.83 37.06
December 31, 1996....... 500,000 2,900,000 622,936 622,936 4.01 31.16
December 31, 1997....... 550,000 2,900,000 738,747 738,747 4.90 26.62
December 31, 1998....... 600,000 2,900,000 875,109 875,109 5.75 23.04
December 31, 1999.......
</TABLE>
A-68
<PAGE>
VIP HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1985....... 50,000 2,900,000 45,524 45,524 -28.27% --
December 31, 1986....... 100,000 2,900,000 93,442 93,442 -8.42 2,195.51%
December 31, 1987....... 150,000 2,900,000 131,564 131,564 -9.98 443.48
December 31, 1988....... 200,000 2,900,000 183,998 183,998 -4.65 206.58
December 31, 1989....... 250,000 2,900,000 210,570 210,570 -7.49 126.11
December 31, 1990....... 300,000 2,900,000 242,185 242,185 -7.72 87.55
December 31, 1991....... 350,000 2,900,000 366,840 366,840 1.43 65.45
December 31, 1992....... 400,000 2,900,000 489,002 489,002 5.26 51.31
December 31, 1993....... 450,000 2,900,000 626,858 626,858 7.60 41.59
December 31, 1994....... 500,000 2,900,000 653,038 653,038 5.48 34.53
December 31, 1995....... 550,000 2,900,000 825,606 825,606 7.47 29.21
December 31, 1996....... 600,000 2,900,000 978,598 978,598 8.15 25.07
December 31, 1997....... 650,000 2,900,000 1,189,982 1,189,982 9.17 21.77
December 31, 1998....... 700,000 2,900,000 1,178,640 1,178,640 7.34 19.09
December 31, 1999.......
VIP II ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 50,000 $2,900,000 $ 44,434 $ 44,434 -- --
December 31, 1989....... 50,000 2,900,000 43,332 43,332 -36.26% --
December 31, 1990....... 100,000 2,900,000 86,547 86,547 -16.62 2,003.02%
December 31, 1991....... 150,000 2,900,000 144,853 144,853 -2.63 428.16
December 31, 1992....... 200,000 2,900,000 199,729 199,729 -0.07 202.35
December 31, 1993....... 250,000 2,900,000 280,075 280,075 4.92 124.30
December 31, 1994....... 300,000 2,900,000 296,799 296,799 -0.38 86.58
December 31, 1995....... 350,000 2,900,000 388,619 388,619 3.15 64.85
December 31, 1996....... 400,000 2,900,000 485,141 485,141 5.01 50.92
December 31, 1997....... 450,000 2,900,000 622,394 622,394 7.38 41.31
December 31, 1998....... 500,000 2,900,000 756,826 756,826 8.38 34.33
December 31, 1999.......
</TABLE>
A-69
<PAGE>
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
GUIDELINE PREMIUM TEST
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1983....... 50,000 1,101,847 47,847 47,847 -11.88% --
December 31, 1984....... 100,000 1,143,947 89,947 89,947 -11.96 846.61%
December 31, 1985....... 150,000 1,255,588 201,588 201,588 23.19 244.67
December 31, 1986....... 200,000 1,486,851 432,851 432,851 45.05 135.93
December 31, 1987....... 250,000 1,742,667 688,667 688,667 45.32 93.01
December 31, 1988....... 300,000 1,720,403 666,403 666,403 28.28 64.18
December 31, 1989....... 350,000 1,963,291 909,291 909,291 28.28 51.83
December 31, 1990....... 350,000 1,917,833 863,833 863,833 21.07 40.54
December 31, 1991....... 350,000 2,595,710 1,317,619 1,317,619 25.70 39.74
December 31, 1992....... 350,000 2,342,186 1,226,275 1,226,275 20.53 31.80
December 31, 1993....... 350,000 2,588,330 1,399,097 1,399,097 19.71 29.05
December 31, 1994....... 350,000 2,339,267 1,285,267 1,285,267 16.24 24.18
December 31, 1995....... 350,000 3,054,917 1,786,501 1,786,501 18.34 24.79
December 31, 1996....... 350,000 3,517,899 2,145,060 2,145,060 18.50 23.90
December 31, 1997....... 350,000 4,140,653 2,637,358 2,637,358 18.86 23.38
December 31, 1998....... 350,000 5,282,305 3,521,537 3,521,537 19.93 23.69
December 31, 1999.......
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1983....... 50,000 1,099,237 45,237 45,237 -25.00% --
December 31, 1984....... 100,000 1,150,642 96,642 96,642 -3.97 851.03%
December 31, 1985....... 150,000 1,212,855 158,855 158,855 4.30 238.79
December 31, 1986....... 200,000 1,278,327 224,327 224,327 6.28 123.21
December 31, 1987....... 250,000 1,324,219 270,219 270,219 3.32 78.11
December 31, 1988....... 300,000 1,387,988 333,988 333,988 3.77 55.72
December 31, 1989....... 350,000 1,470,804 416,804 416,804 5.20 42.84
December 31, 1990....... 350,000 1,499,199 445,199 445,199 5.55 34.41
December 31, 1991....... 350,000 1,572,973 518,973 518,973 7.44 29.30
December 31, 1992....... 350,000 1,608,993 554,993 554,993 7.36 25.20
December 31, 1993....... 350,000 1,673,078 619,078 619,078 7.90 22.38
December 31, 1994....... 350,000 1,647,160 593,160 593,160 6.42 19.49
December 31, 1995....... 350,000 1,769,967 715,967 715,967 7.83 18.23
December 31, 1996....... 350,000 1,798,178 744,178 744,178 7.45 16.61
December 31, 1997....... 350,000 1,873,850 819,850 819,850 7.69 15.51
December 31, 1998....... 350,000 1,942,155 888,155 888,155 7.74 14.55
December 31, 1999.......
</TABLE>
A-70
<PAGE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1983....... 50,000 1,099,343 45,343 45,343 -24.50% --
December 31, 1984....... 100,000 1,147,737 93,737 93,737 -7.43 849.11%
December 31, 1985....... 150,000 1,198,146 144,146 144,146 -2.93 236.73
December 31, 1986....... 200,000 1,249,703 195,703 195,703 -1.17 121.34
December 31, 1987....... 250,000 1,303,765 249,765 249,765 -0.04 77.28
December 31, 1988....... 300,000 1,364,218 310,218 310,218 1.18 55.05
December 31, 1989....... 350,000 1,434,553 380,553 380,553 2.49 42.07
December 31, 1990....... 350,000 1,460,434 406,434 406,434 3.44 33.77
December 31, 1991....... 350,000 1,480,365 426,365 426,365 3.71 28.06
December 31, 1992....... 350,000 1,491,084 437,084 437,084 3.52 23.88
December 31, 1993....... 350,000 1,499,238 445,238 445,238 3.30 20.74
December 31, 1994....... 350,000 1,513,601 459,601 459,601 3.29 18.37
December 31, 1995....... 350,000 1,535,945 481,945 481,945 3.46 16.56
December 31, 1996....... 350,000 1,556,386 502,386 502,386 3.53 15.08
December 31, 1997....... 350,000 1,578,689 524,689 524,689 3.61 13.86
December 31, 1998....... 350,000 1,601,397 547,397 547,397 3.67 12.84
December 31, 1999.......
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1987....... 50,000 1,091,937 37,937 37,937 -33.83% --
December 31, 1988....... 100,000 1,143,122 89,122 89,122 -9.48 494.44%
December 31, 1989....... 150,000 1,222,315 168,315 168,315 7.05 186.73
December 31, 1990....... 200,000 1,253,814 199,814 199,814 -0.04 103.46
December 31, 1991....... 250,000 1,359,318 305,318 305,318 7.56 70.53
December 31, 1992....... 300,000 1,424,819 370,819 370,819 6.71 51.58
December 31, 1993....... 350,000 1,503,874 449,874 449,874 6.83 40.20
December 31, 1994....... 350,000 1,503,254 449,254 449,254 5.37 32.27
December 31, 1995....... 350,000 1,667,075 613,075 613,075 10.04 28.83
December 31, 1996....... 350,000 1,791,119 737,119 737,119 11.43 25.78
December 31, 1997....... 350,000 2,023,653 969,653 969,653 13.72 24.21
December 31, 1998....... 350,000 2,288,723 1,234,723 1,234,723 15.13 22.99
December 31, 1999.......
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1987....... 50,000 1,096,947 42,947 42,947 -20.34% --
December 31, 1988....... 100,000 1,145,433 91,433 91,433 -7.44 495.23%
December 31, 1989....... 150,000 1,211,375 157,375 157,375 2.90 185.60
December 31, 1990....... 200,000 1,258,900 204,900 204,900 1.12 103.74
December 31, 1991....... 250,000 1,344,937 290,937 290,937 5.72 70.03
December 31, 1992....... 300,000 1,408,362 354,362 354,362 5.27 51.17
December 31, 1993....... 350,000 1,488,502 434,502 434,502 5.88 39.90
December 31, 1994....... 350,000 1,478,168 424,168 424,168 4.13 31.88
December 31, 1995....... 350,000 1,607,562 553,562 553,562 8.19 28.12
December 31, 1996....... 350,000 1,680,281 626,281 626,281 8.88 24.72
December 31, 1997....... 350,000 1,840,527 786,527 786,527 10.83 22.83
December 31, 1998....... 350,000 1,990,176 936,176 936,176 11.70 21.18
December 31, 1999.......
</TABLE>
A-71
<PAGE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1993....... 50,000 1,103,229 49,229 49,229 -2.29% --
December 31, 1994....... 100,000 1,145,066 91,066 91,066 -7.74 493.20%
December 31, 1995....... 150,000 1,229,807 175,807 175,807 9.77 187.14
December 31, 1996....... 200,000 1,306,729 252,729 252,729 11.03 106.19
December 31, 1997....... 250,000 1,441,180 387,180 387,180 16.75 73.22
December 31, 1998....... 300,000 1,578,246 524,246 524,246 17.80 55.19
December 31, 1999.......
ZENITH HARRIS/OAKMARK MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1993....... 50,000 1,103,451 49,451 49,451 -1.63% --
December 31, 1994....... 100,000 1,145,907 91,907 91,907 -7.00 493.49%
December 31, 1995....... 150,000 1,225,137 171,137 171,137 8.08 186.66
December 31, 1996....... 200,000 1,298,436 244,436 244,436 9.43 105.75
December 31, 1997....... 250,000 1,388,208 334,208 334,208 11.03 71.45
December 31, 1998....... 300,000 1,402,594 348,594 348,594 4.74 50.98
December 31, 1999.......
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,095,437 41,437 41,437 -24.59% --
December 31, 1995....... 100,000 1,158,647 104,647 104,647 3.96 501.66%
December 31, 1996....... 150,000 1,238,246 184,246 184,246 12.81 188.75
December 31, 1997....... 200,000 1,335,054 281,054 281,054 16.25 107.97
December 31, 1998....... 250,000 1,365,084 311,084 311,084 8.29 70.80
December 31, 1999.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,098,247 44,247 44,247 -51.88% --
December 31, 1995....... 100,000 1,153,493 99,493 99,493 -0.76 1,286.61%
December 31, 1996....... 150,000 1,213,257 159,257 159,257 5.19 281.82
December 31, 1997....... 200,000 1,280,890 226,890 226,890 7.64 136.50
December 31, 1998....... 250,000 1,343,936 289,936 289,936 6.86 84.85
December 31, 1999.......
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,099,319 45,319 45,319 -44.47% --
December 31, 1995....... 100,000 1,147,314 93,314 93,314 -10.04 1,279.86%
December 31, 1996....... 150,000 1,195,790 141,790 141,790 -4.77 278.87
December 31, 1997....... 200,000 1,234,304 180,304 180,304 -6.17 133.10
December 31, 1999....... 250,000 1,289,145 235,145 235,145 -2.82 82.47
</TABLE>
A-72
<PAGE>
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,096,905 42,905 42,905 -59.98% --
December 31, 1995....... 100,000 1,157,964 103,964 103,964 5.93 1,291.50%
December 31, 1996....... 150,000 1,228,275 174,275 174,275 13.22 284.35
December 31, 1997....... 200,000 1,328,338 274,338 274,338 19.46 139.87
December 31, 1998....... 250,000 1,410,942 356,942 356,942 16.59 87.64
December 31, 1999.......
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1994....... 50,000 1,095,879 41,879 41,879 -65.37% --
December 31, 1995....... 100,000 1,158,176 104,176 104,176 6.25 1,291.73%
December 31, 1996....... 150,000 1,214,515 160,515 160,515 5.88 282.04
December 31, 1997....... 200,000 1,296,853 242,853 242,853 11.83 137.64
December 31, 1998....... 250,000 1,460,168 406,168 406,168 22.72 89.63
December 31, 1999.......
ZENITH MFS INVESTORS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $ $ $ -- --
December 31, 1999....... 50,000 % --
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $ $ $ -- --
December 31, 1999....... 50,000 % --
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997........... $ 50,000
December 31, 1997....... 50,000
December 31, 1998....... 100,000
December 31, 1999....... 150,000
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998........ $ 50,000
December 31, 1998....... 50,000
December 31, 1999....... 100,000
</TABLE>
A-73
<PAGE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1986....... 50,000 1,098,437 44,437 44,437 -40.47% --
December 31, 1987....... 100,000 1,132,591 78,591 78,591 -29.70 1,089.85%
December 31, 1988....... 150,000 1,191,049 137,049 137,049 -7.23 262.58
December 31, 1989....... 200,000 1,256,614 202,614 202,614 0.75 130.16
December 31, 1990....... 250,000 1,267,660 213,660 213,660 -7.03 79.53
December 31, 1991....... 300,000 1,377,925 323,925 323,925 2.81 57.57
December 31, 1992....... 350,000 1,477,517 423,517 423,517 5.87 44.34
December 31, 1993....... 350,000 1,549,149 495,149 495,149 8.23 36.14
December 31, 1994....... 350,000 1,577,413 523,413 523,413 7.77 30.00
December 31, 1995....... 350,000 1,757,515 703,515 703,515 11.44 27.24
December 31, 1996....... 350,000 1,846,607 792,607 792,607 11.60 24.27
December 31, 1997....... 350,000 2,064,290 1,010,290 1,010,290 13.32 22.83
December 31, 1998....... 350,000 2,176,327 1,122,327 1,122,327 13.09 20.96
December 31, 1999.......
VIP OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1987....... 50,000 1,094,042 40,042 40,042 -21.38% --
December 31, 1988....... 100,000 1,145,445 91,445 91,445 -6.12 359.94%
December 31, 1989....... 150,000 1,217,331 163,331 163,331 4.49 157.10
December 31, 1990....... 200,000 1,255,791 201,791 201,791 0.37 92.30
December 31, 1991....... 250,000 1,315,613 261,613 261,613 1.56 63.21
December 31, 1992....... 300,000 1,323,539 269,539 269,539 -3.12 45.62
December 31, 1993....... 350,000 1,478,446 424,446 424,446 4.92 37.41
December 31, 1994....... 350,000 1,478,431 424,431 424,431 3.93 30.33
December 31, 1995....... 350,000 1,519,389 465,389 465,389 4.85 25.90
December 31, 1996....... 350,000 1,571,038 517,038 517,038 5.70 22.75
December 31, 1997....... 350,000 1,626,798 572,798 572,798 6.31 20.37
December 31, 1998....... 350,000 1,695,764 641,764 641,764 6.92 18.58
December 31, 1999.......
VIP HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- ---------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1985....... 50,000 1,100,934 46,934 46,934 -20.09% --
December 31, 1986....... 100,000 1,153,424 99,424 99,424 -0.74 978.99%
December 31, 1987....... 150,000 1,195,660 141,660 141,660 -4.41 250.45
December 31, 1988....... 200,000 1,253,727 199,727 199,727 -0.08 126.04
December 31, 1989....... 250,000 1,283,975 229,975 229,975 -3.65 78.49
December 31, 1990....... 300,000 1,319,107 265,107 265,107 -4.45 54.86
December 31, 1991....... 350,000 1,454,591 400,591 400,591 4.10 43.22
December 31, 1992....... 350,000 1,541,609 487,609 487,609 7.77 35.59
December 31, 1993....... 350,000 1,634,486 580,486 580,486 9.70 30.44
December 31, 1994....... 350,000 1,619,660 565,660 565,660 7.75 25.57
December 31, 1995....... 350,000 1,730,656 676,656 676,656 9.24 23.10
December 31, 1996....... 350,000 1,819,325 765,325 765,325 9.68 20.97
December 31, 1997....... 350,000 1,949,609 895,609 895,609 10.42 19.51
December 31, 1998....... 350,000 1,906,026 852,026 852,026 8.88 17.34
December 31, 1999.......
</TABLE>
A-74
<PAGE>
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 50,000 $1,098,770 $ 44,770 $ 44,770 -- --
December 31, 1989....... 50,000 1,098,691 44,691 44,691 -29.76% --
December 31, 1990....... 100,000 1,146,261 92,261 92,261 -9.52 902.09%
December 31, 1991....... 150,000 1,210,271 156,271 156,271 3.13 244.76
December 31, 1992....... 200,000 1,270,991 216,991 216,991 4.52 124.75
December 31, 1993....... 250,000 1,359,903 305,903 305,903 8.77 80.46
December 31, 1994....... 300,000 1,378,526 324,526 324,526 2.79 55.98
December 31, 1995....... 350,000 1,477,881 423,881 423,881 5.74 43.32
December 31, 1996....... 350,000 1,532,801 478,801 478,801 7.28 35.18
December 31, 1997....... 350,000 1,625,146 571,146 571,146 9.32 30.13
December 31, 1998....... 350,000 1,703,877 649,877 649,877 9.98 26.32
December 31, 1999.......
</TABLE>
- --------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series' investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
** Rates of return and Policy values and benefits shown reflect the
Harris/Oakmark Midcap Value Series' investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998 and .75%
thereafter.
A-75
<PAGE>
APPENDIX C
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 charges.
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 55 20-year time periods beginning in 1926 and ending in 1999 (i.e.,
1926-1945, 1927-1946, and so on through 1980-1999):
--The average annual return of common stocks was superior to that of high
grade, long-term corporate bonds in 52 of the 55 periods.
--The average annual return of common stocks surpassed that of U.S. Treasury
bills in each of the 55 periods.
--Common stock average annual returns exceeded the average annual rate of
inflation in each of the 55 periods.
Over the 45 30-year periods beginning in 1926 and ending in 1999, 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 45
periods.
From 1926 through 1999 the average annual return for common stocks was
11.2%, compared to 5.8% for high grade, long-term corporate bonds, 3.8% for
U.S. Treasury bills and 3.1% for the Consumer Price Index.
- ----------
* Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
----------------
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 1999.
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
THAN
HOLDING NEGATIVE 0-5.00% 5.01-10.00% 10.01-15.00% 15.01-20.00% 20.00%
PERIOD RETURN RETURN RETURN RETURN RETURN RETURN
- ------- -------- ------- ----------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1 year......... 27% 4% 11% 7% 11% 40%
5 years........ 10% 14% 14% 31% 19% 12%
10 years........ 3% 10% 33% 24% 28% 2%
20 years........ 0% 6% 31% 54% 9% 0%
</TABLE>
- ----------
Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
A-76
<PAGE>
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 you chose 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 chosen 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-77
<PAGE>
APPENDIX D
TAX INFORMATION
The Office of Tax Analysis of the U.S. Department of the Treasury published
a "Report to the Congress on the Taxation of Life Insurance Company Products"
in March 1990. Page 4 of this report is Table 1.1, a "Comparison of Tax
Treatment of Life Insurance Products and Other Retirement Savings Plans".
Because it is a convenient summary of the relevant tax characteristics of
these products and plans, we have reprinted it here, and added footnotes to
reflect exceptions to the general rules.
---------------------
TABLE 1.1
COMPARISON OF TAX TREATMENT OF LIFE INSURANCE PRODUCTS AND
OTHER RETIREMENT SAVINGS PLANS
<TABLE>
<CAPTION>
CASH-VALUE
LIFE NON-QUALIFIED QUALIFIED
INSURANCE ANNUITIES IRA'S PENSION
---------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Annual Contribution Limits No No Yes Yes
Income Eligibility Limits No No Yes** No
Borrowing Treated as Distribu-
tions No* Yes Loans not Yes,
allowed beyond
$50,000
Income Ordering Rules (Income
included in First No* Yes Yes Yes
Distribution)
Early Withdrawal Penalties No* Yes*** Yes*** Yes***
Minimum Distribution Rules by
Age 70 1/2 No No Yes Yes
Maximum Annual Distribution
Rules No No Yes Yes
Anti-discrimination Rules No No No Yes
</TABLE>
- ----------
Department of the Treasury March 1990
Office of Tax Analysis
* If the Policy is not a modified endowment contract.
** If amounts paid in to fund the IRA are deductible; once over the income
eligibility limits amounts paid into an IRA are permitted but not
deductible.
*** There are several exceptions to the application of the early withdrawal
penalties for annuities, IRAs and qualified pensions.
This appendix is not tax advice. You should consult with your own tax
advisor for more complete information.
A-78
<PAGE>
APPENDIX E
CASH VALUE ACCUMULATION TEST AND GUIDELINE PREMIUM TEST
In order to meet the Internal Revenue Code's definition of life insurance,
the Policies provide that the death benefit will not be less than what is
required by the "cash value accumulation test" under Section 7702(a)(1) of the
Internal Revenue Code, or the "guideline premium test" under Section
7702(a)(2) of the Internal Revenue Code, as selected by you when the Policy is
issued. The test you choose at issue will be used for the life of the Policy.
(See "Death Benefit".)
For the cash value accumulation test, sample net single premiums for
selected ages of male and female insureds are listed below.
<TABLE>
<CAPTION>
NET SINGLE PREMIUM
--------------------
AGE MALE FEMALE
--- --------- ----------
<S> <C> <C>
30...................................................... 0.2130 0.1818
40...................................................... 0.2961 0.2532
50...................................................... 0.4037 0.3458
60...................................................... 0.5328 0.4627
70...................................................... 0.6710 0.6060
80...................................................... 0.7949 0.7571
90...................................................... 0.8853 0.8760
100...................................................... 1.0000 1.0000
</TABLE>
For the guideline premium test, Table I shows the percentage of the Policy's
cash value that is used to determine the death benefit.
TABLE I
<TABLE>
<CAPTION>
AGE OF
AGE OF INSURED AT
INSURED AT START OF PERCENTAGE OF START OF PERCENTAGE OF
THE POLICY YEAR CASH VALUE* THE POLICY YEAR CASH VALUE*
- ------------------- ------------- --------------- -------------
<S> <C> <C> <C>
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 through 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 through 99 101
59 134 100+ 100
60 130
</TABLE>
- ----------
* including the pro rata portion of any Monthly Deduction made for a period
beyond the date of death.
A-79
<PAGE>
NEW ENGLAND LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MA 02116
RECEIPT
This is to acknowledge receipt of a Zenith Executive Advantage Plus
Prospectus dated May 1, 2000. This Variable Life policy is offered by New
England Life Insurance Company.
- ------------------------------------- -------------------------------------
(Date) (Client's Signature)
<PAGE>
ZENITH EXECUTIVE ADVANTAGE PLUS
Flexible Premium Adjustable
Variable Life Insurance Policies
Issued by
New England Variable
Life Separate Account of
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus offers individual flexible premium adjustable variable life
insurance policies (the "Policies") issued by New England Life Insurance
Company ("NELICO").
The Policy provides premium flexibility and a death benefit. In some cases
you can choose a rider that provides a death benefit guarantee as long as your
total premiums paid meet certain minimum requirements.
You may choose among three death benefit options. One provides a fixed death
benefit equal to the Policy's face amount. One provides a death benefit that
may vary daily with the investment experience of the Eligible Funds. One
provides a death benefit equal to the Policy's face amount plus premiums paid
(less partial surrenders). Cash value allocated to the Eligible Funds is not
guaranteed, and fluctuates daily with the investment results of the Eligible
Funds.
You allocate net premiums among the investment Sub-Accounts of NELICO's
Variable Life Separate Account (the "Variable Account"). Each Sub-Account of
the Variable Account invests in the shares of an Eligible Fund. The Eligible
Funds are:
<TABLE>
<S> <C>
NEW ENGLAND ZENITH FUND METROPOLITAN SERIES FUND, INC.
Back Bay Advisors Bond Income Series Putnam Large Cap Growth Portfolio*
Back Bay Advisors Managed Series Janus Mid Cap Portfolio*
Back Bay Advisors Money Market Russell 2000 Index Portfolio*
Series
Capital Growth Series VARIABLE INSURANCE PRODUCTS FUND
Westpeak Growth and Income Series ("VIP")
Westpeak Stock Index Series
Balanced Series Overseas Portfolio
Loomis Sayles Small Cap Series Equity-Income Portfolio
Alger Equity Growth Series High Income Portfolio
Davis Venture Value Series
Harris/Oakmark Midcap Value Series VARIABLE INSURANCE PRODUCTS FUND II
Morgan Stanley International Magnum ("VIP II")
Equity Series
MFS Investors Series Asset Manager Portfolio
MFS Research Managers Series
</TABLE>
You may also allocate net premiums to a Fixed Account in most states. Limits
apply to transfers to and from the Fixed Account.
You may cancel the Policy during the "Right to Return the Policy" period. In
addition, replacing existing insurance with the Policy might not be to your
advantage.
- ----------
* Availability is subject to any necessary state insurance department
approvals.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
POLICIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ELIGIBLE FUND PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM
FOR REFERENCE.
WE DO NOT GUARANTEE HOW ANY OF THE SUB-ACCOUNTS OR ELIGIBLE FUNDS WILL
PERFORM. 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.
MAY 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY................................................................... A-4
INTRODUCTION TO THE POLICIES............................................... A-5
The Policies............................................................. A-5
Availability of the Policy............................................... A-6
Policy Charges........................................................... A-7
How the Policy Works..................................................... A-8
Communications and Payments.............................................. A-9
NELICO................................................................... A-9
POLICY VALUES AND BENEFITS................................................. A-11
Death Benefit............................................................ A-11
Guaranteed Death Benefit Rider........................................... A-12
Death Proceeds Payable................................................... A-12
Change in Death Benefit Option........................................... A-13
Cash Value............................................................... A-13
Allocation of Net Premiums............................................... A-14
Amount Provided for Investment under the Policy.......................... A-14
Right to Return the Policy............................................... A-15
CHARGES AND EXPENSES....................................................... A-15
Deductions from Premiums................................................. A-15
Deductions from Cash Value............................................... A-16
Charges Against the Eligible Funds....................................... A-18
Special Arrangements..................................................... A-19
PREMIUMS................................................................... A-20
Flexible Premiums........................................................ A-20
Lapse and Reinstatement.................................................. A-21
OTHER POLICY FEATURES...................................................... A-21
Increase in Face Amount.................................................. A-21
Loan Provision........................................................... A-22
Surrender................................................................ A-23
Partial Surrender........................................................ A-23
Reduction in Face Amount................................................. A-23
Acceleration of Death Benefit Rider...................................... A-24
Investment Options....................................................... A-24
Transfer Option.......................................................... A-24
Dollar Cost Averaging.................................................... A-25
Asset Rebalancing........................................................ A-25
Substitution of Insured Person........................................... A-25
Payment of Proceeds...................................................... A-25
24 Month Right........................................................... A-26
Payment Options.......................................................... A-26
Additional Benefits by Rider............................................. A-27
Policy Owner and Beneficiary............................................. A-27
THE VARIABLE ACCOUNT....................................................... A-28
Investments of the Variable Account...................................... A-28
Investment Management.................................................... A-30
THE FIXED ACCOUNT.......................................................... A-31
General Description...................................................... A-31
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Values and Benefits...................................................... A-31
Policy Transactions...................................................... A-31
NELICO'S DISTRIBUTION AGREEMENT............................................ A-32
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY........................... A-32
Misstatement of Age or Sex............................................... A-33
Suicide.................................................................. A-33
TAX CONSIDERATIONS......................................................... A-34
Introduction............................................................. A-34
Tax Status of the Policy................................................. A-34
Tax Treatment of Policy Benefits......................................... A-34
NELICO's Income Taxes.................................................... A-36
MANAGEMENT................................................................. A-37
VOTING RIGHTS.............................................................. A-39
RIGHTS RESERVED BY NELICO.................................................. A-40
TOLL-FREE NUMBERS.......................................................... A-40
REPORTS.................................................................... A-40
ADVERTISING PRACTICES...................................................... A-41
LEGAL MATTERS.............................................................. A-41
REGISTRATION STATEMENT..................................................... A-41
EXPERTS.................................................................... A-41
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
AND ACCUMULATED PREMIUMS.................................................. A-42
APPENDIX B: INVESTMENT EXPERIENCE INFORMATION.............................. A-47
APPENDIX C: LONG TERM MARKET TRENDS........................................ A-61
APPENDIX D: TAX INFORMATION................................................ A-63
APPENDIX E: CASH VALUE ACCUMULATION TEST AND GUIDELINE PREMIUM TEST........ A-64
FINANCIAL STATEMENTS....................................................... AA-1
</TABLE>
3
<PAGE>
GLOSSARY
ACCOUNT. A sub-account of the Variable Account or the Fixed Account.
AGE. The age of an insured refers to the insured's age at his or her nearest
birthday.
CASH VALUE. A Policy's cash value includes the amount of its cash value held
in the Variable Account, the amount held in the Fixed Account and, if there is
an outstanding Policy loan, the amount of its cash value held in our general
account as a result of the loan.
EXCESS POLICY LOAN. When Policy loans plus accrued interest exceed the
Policy's cash value less the applicable Surrender Charge.
FIXED ACCOUNT. The Fixed Account is a part of our general account to which
you may allocate net premiums. It provides guarantees of principal and
interest.
INVESTMENT START DATE. This is the latest of the date we first receive a
premium payment for the Policy, the date Part II of the Policy application is
signed and the Policy Date.
NET CASH VALUE. The net cash value is equal to the Policy's cash value
reduced by any outstanding Policy loan and accrued interest on the loan.
NET INVESTMENT EXPERIENCE. For any period, a Sub-Account's net investment
experience equals the investment experience of the underlying Eligible Fund's
shares for the same period.
PLANNED PREMIUM. The Planned Premium is the premium payment schedule you
choose to help meet your future goals under the Policy. The Planned Premium is
a level amount that is subject to certain limits under the Policy. Payments in
addition to any Planned Premium are called unscheduled payments in the Policy
and can be paid at any time, subject to certain limits.
PREMIUMS. Premiums include all payments under the Policy, whether a Planned
Premium or an unscheduled payment. (See "Premiums".)
POLICY DATE. If you make a premium payment with the application, the Policy
Date is generally the later of the date Part II of the application was signed
and receipt of the premium payment. If you choose to pay the initial premium
upon delivery of the Policy, we issue the Policy with a Policy Date which is
generally five days after issue.
TARGET PREMIUM. Currently we use the Target Premium to determine the amount
of Sales Charge deducted from each premium payment, and also sales
commissions. It varies by issue age, sex and underwriting class of the insured
and the Policy's face amount at issue (or as later reduced). The Target
Premium for a standard risk Policy with no riders is equal to the net annual
premium that would be paid if the Policy provided for paid-up benefits after
the payment of seven level net annual premiums, determined under federal
income tax laws. Substandard ratings and certain riders increase the Target
Premium above this amount.
YOU. "You" refers to the Policy Owner.
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. Policies are issued as part of a
"case", where a number of Policies share a common factor (for example, a
corporate owner).
Here is a summary of the Policy's basic features. You should read the entire
prospectus for more complete information.
--You can make premium payments under the Policy based on a schedule you
determine, subject to some limits. We can limit or prohibit unscheduled
payments in some situations, including cases where the insured is in a
substandard risk class. (See "Premiums".)
--You can allocate net premiums to one or more of the Sub-Accounts of the
Variable Account corresponding to mutual fund portfolios, in some cases
after an initial period in the Zenith Money Market Sub-Account. (See
"Allocation of Net Premiums" and "Investment Options".)
--The mutual fund portfolios available under the Policy include several
common stock funds, including funds which invest primarily in foreign
securities, two bond funds, two managed funds, a balanced fund, and a
money market fund. Currently, you may allocate your Policy's cash value to
an unlimited number of the available accounts (including the Fixed
Account). (See "Investments of the Variable Account".)
--If the Fixed Account is available in your state, you may also allocate
funds to that account. We provide guarantees of Fixed Account principal
and interest. SPECIAL LIMITS APPLY TO TRANSFERS OF CASH VALUE FROM THE
--------------------------------------------------------
FIXED ACCOUNT. We have the right to restrict transfers of cash value and
-------------
allocations of premiums into the Fixed Account. (See "The Fixed Account".)
--The cash value of the Policy will vary daily based on the net investment
experience of your Policy's Sub-Accounts and the amount of interest
credited to your Policy's cash value in the Fixed Account. (See "Cash
Value", "Charges and Expenses", "Premiums", "Loan Provision" and "Partial
Surrender".)
--The portion of the cash value in the Sub-Accounts is not guaranteed. You
bear the investment risk on this portion of the cash value. (See "Cash
Value".)
--You may choose among three death benefit options under the Policy. The
first option provides a death benefit equal to the Policy's face amount.
The second option provides a death benefit equal to the face amount plus
any cash value, which varies with the net investment experience of your
Policy's Sub-Accounts and the rate of interest credited on your cash value
in the Fixed Account. The third option provides a death benefit equal to
the face amount plus premiums paid, less all partial surrenders. The death
benefit in each case could increase to satisfy tax law requirements if the
cash value reaches certain levels. (See "Death Benefit".)
--After the first Policy year, you may increase or decrease the Policy's
face amount. (See "Increase in Face Amount" and "Reduction in Face
Amount".)
--If it is available to you and you elect the Guaranteed Death Benefit
rider, then regardless of investment experience, the death benefit is
guaranteed not to be less than the Policy's face amount, as long as the
total amount of premiums paid less any partial surrenders and outstanding
Policy loan plus accrued loan interest at least equals certain minimum
amounts. (See "Death Benefit" and "Guaranteed Death Benefit Rider".)
--You may change your allocation of future net premiums at any time. (See
"Allocation of Net Premiums" and "Investment Options".)
--Beginning 15 days after we mail the initial payment confirmation, the
Policy allows you to transfer cash value among the Sub-Accounts and,
generally, to the Fixed Account up to four times in a Policy year (twelve
times in a Policy year for Policies issued in New York) without our
consent. Currently we do not limit the number of sub-account transfers you
may make in a Policy year. Transfers and allocations involving the Fixed
Account are subject to some limits. (See "Transfer Option" and "The Fixed
Account--Policy Transactions".)
5
<PAGE>
--A loan privilege and a partial surrender feature are also available. (See
"Loan Provision" and "Partial Surrender".)
--Death benefits paid to the beneficiary generally are not subject to
Federal income tax. Under current law, undistributed increases in cash
value generally are not taxable to you. (See "Tax Considerations".)
--Loans, assignments and other pre-death distributions may have tax
consequences depending primarily on the amount which you have paid into
the Policy but also on any "material change" in the terms or benefits of
the Policy or any death benefit reduction. If premium payments, a death
benefit reduction, or a material change cause the Policy to become a
"modified endowment contract", then pre-death distributions (including
loans) will be included in income on an income first basis, and a 10%
penalty tax may be imposed on income distributed before the Policy Owner
attains age 59 1/2. Tax considerations may therefore influence the amount
and timing of premium payments and certain Policy transactions which you
choose to make. (See "Tax Considerations".)
--If the Policy is not a modified endowment contract, we believe that loans
under the Policy during the first 10 Policy years will not be taxable to
you as long as the Policy has not lapsed, been surrendered or terminated.
The tax consequences of a policy loan after the tenth policy year are not
clear. You should consult a tax advisor if you intend to take out or
maintain a policy loan after the tenth policy year. With some exceptions,
other pre-death distributions under a Policy that is not a modified
endowment contract are includible in income only to the extent they exceed
your investment in the Policy. (See "Tax Considerations".)
--In recent years, Congress has adopted new rules relating to life insurance
owned by businesses. Any business contemplating the purchase of a new life
insurance contract or a change in an existing life insurance contract
should consult a tax adviser. (See "Tax Considerations".)
--During the "Right to Return the Policy" period you can return the Policy
for a refund. In some states we are required to refund premiums paid; in
other states, we refund an amount that reflects investment experience and
certain charges. For a limited period you can cancel a requested increase
in the Policy's face amount. (See "Right to Return the Policy".)
--Within 24 months after a Policy's date of issue or the effective date of a
face amount increase, you may exercise the Policy's 24 Month Right. If you
do, we allocate all or part of your Policy's cash value and future
premiums to the Fixed Account. The purpose of the 24 Month Right is to
provide you with fixed Policy values and benefits. (See "24 Month Right"
for a description of this provision generally and for a description of the
variation which applies to Policies issued in Maryland and New Jersey.)
In many respects the Policies are similar to fixed-benefit universal life
insurance. Like universal life insurance, the Policies offer death benefits
and provide flexible premiums, a cash value, and loan privileges.
The Policies are different from fixed-benefit universal life insurance in
that the death benefit may, and the cash value will, vary to reflect the
investment experience of the selected Sub-Accounts.
The Policies are designed to provide insurance protection. Although the
underlying mutual fund portfolios invest in securities similar to those in
which mutual funds available directly to the public invest, in many ways the
Policies differ from mutual fund investments. The main differences are:
--The Policy provides a death benefit based on our assumption of an
actuarially calculated risk.
--If the net cash value is not sufficient to pay a Monthly Deduction, the
Policy may lapse with no value unless you pay additional premiums. If the
Policy lapses when Policy loans are outstanding, adverse tax consequences
may result.
--In addition to sales charges, insurance-related charges not associated
with mutual fund investments are deducted from the premiums and values of
the Policy. These charges include various insurance, risk, administrative
and premium tax charges. (See "Charges and Expenses".)
--The Variable Account, not the Policy Owner, owns the mutual fund shares.
--Federal income tax liability on any earnings is deferred until you receive
a distribution from the Policy. Transfers from one underlying fund
portfolio to another do not incur tax liability under current law.
--Dividends and capital gains are automatically reinvested.
6
<PAGE>
AVAILABILITY OF THE POLICY
Each Policy is part of a "case," which is a group of one or more Policies
linked by a factor such as a common employer of the insureds. We decide what
Policies constitute a case. Policies in a case usually have a common Policy
owner (for example, the employer of the insureds). In addition, the total
annual premium payment payable on the Policies included in the case must meet
the following minimums: cases of at least five Policies--$100,000; and cases
of fewer than five Policies--$250,000.
The Policies are available for insureds from the age of 20 to 80 on an
underwritten basis and from the age of 20 to 65 on a guaranteed issue basis.
We issue guaranteed issue Policies based on very limited underwriting
information. (Guaranteed issue Policies may not be available in New Jersey.)
All persons must meet our underwriting and other requirements. The minimum
face amount available is $50,000 unless we consent to a lower amount. We allow
you to include Adjustable Term Insurance Rider coverage to meet our minimum
size requirements. The Policies are not available to employee benefit plans
qualified under Section 401 of the Internal Revenue Code ("tax-qualified
pension plans"), except with our consent.
POLICY CHARGES
PREMIUM-BASED CHARGES. We deduct the following charges from premiums:
--A sales charge of 8% on each premium payment you make during a Policy
year. Currently we reduce the charge to 3% on each premium payment you
make in excess of a Target Premium during a Policy year; and
--A premium tax charge of 2%.
MONTHLY DEDUCTION FROM CASH VALUE. We deduct certain charges from the cash
value:
--Monthly charge for the cost of insurance; and for any rider benefits you
elect, including the Minimum Guaranteed Death Benefit;
--Monthly mortality and expense risk charge, currently equal to an annual
rate of 0.50% (guaranteed not to exceed 0.75%);
--Monthly policy fee currently equal to $5.50 per month (guaranteed not to
exceed $10.00 per month).
CHARGE FOR FACE AMOUNT INCREASES. If you increase your Policy's face amount
and medical underwriting is required for the increase, we deduct a charge of
$0.80 per $1,000 of the face amount increase (not to exceed $25.00) from your
Policy's cash value on the date that the increase takes effect, and on the
first day of the next eleven Policy months.
CHARGES DEDUCTED FROM THE ELIGIBLE FUNDS. Daily charges against the Eligible
Fund portfolios are deducted for investment advisory services and fund
operating expenses.
Currently, we do not charge the Variable Account for federal income taxes.
We may, however, impose such a charge in the future.
You can designate a Single Source Expense Sub-Account from which we will
take Monthly Deductions and any charges for face amount increases.
See "Charges and Expenses" and "Other Policy Features--Increase in Face
Amount".
7
<PAGE>
HOW THE POLICY WORKS
[CHART APPEARS HERE]
Premium Payments
. Flexible
. Planned premium options
. Minimum premium (in first three Policy years)
. Guaranteed Death Benefit Premium (to age 100)(available only if Option 1
death benefit and cash value accumulation test with Net Single Premium
Corridor elected for Policy)
Charges from Premium Payments
. Sales Load: 8% on amount paid up to a Target Premium in each Policy year and
currently 3% on amount paid above a Target Premium in each Policy year
. State Premium Tax Charge: 2%
Loans
. Beginning 15 days after mailing of initial premium confirmation, you may
borrow a portion of your cash value
. Loan interest charge is 4.75%. We transfer loaned funds out of the Eligible
Funds into the General Account where they are credited with not less than
4.0% interest. (Currently NELICO intends to credit 4.50% interest after
10 Policy years.)
Retirement Benefits
. Fixed settlement options are available for policy proceeds
Cash Values
. Net premium payments invested in your choice of Eligible Fund investments or
the Fixed Account (generally after an initial period during which net
investment experience equal to that of the Zenith Money Market Sub-Account
may be credited)
. The cash value reflects investment experience, interest, premium payments,
policy charges and any distributions from the Policy
. The cash value invested in mutual funds is not guaranteed
. Any earnings accumulate free of any current income taxes
. You may change the allocation of future net premiums at any time. You may
transfer funds among investment options (and to the Fixed Account), beginning
15 days after mailing of the initial premium confirmation. Currently we do
not limit the number of sub-account transfers you can make in a Policy year.
Transfers from (and, in certain circumstances, to) the Fixed Account are
limited as to timing, frequency and amount
. You may allocate cash value among a maximum of ten accounts at any one
time. Currently we are not imposing this limit.
Death Benefit
. Three Death Benefit Options
. We guarantee the Policy will not lapse regardless of net cash value amount if
Guaranteed Death Benefit rider is in effect (available under certain
circumstances)
. Income tax free to named beneficiary
. Death benefit will not be less than that required by federal tax law, using
tax law test you select (guideline premium or cash value accumulation)
. If you add term insurance coverage, you elect whether to include it in the
calculation of the Option 1, Option 2 or Option 3 death benefit
. You may increase the face amount, subject to any necessary underwriting and a
monthly charge of $0.80 per $1,000 of increase (not to exceed $25) for 12
months, if the increase is underwritten
Daily Deductions from Assets
. Investment advisory fees and other expenses are deducted from the Eligible
Fund values daily
Beginning of Month Charges
. The cost of insurance charge (reflecting any substandard risk or guaranteed
issue rating)
. Any Rider Charges
. Policy Fee: $5.50 (not to exceed $10.00) per month
. Mortality and expense risk charge of .50% (guaranteed not to exceed .75%)
. Guaranteed Death Benefit Charge (if rider selected): $.01 per $1000 face
amount monthly
Living Benefits
. If policyholder has elected and qualified for benefits for disability and
becomes totally disabled, we will waive monthly charges during the period
of disability up to certain limits.
. You may surrender the Policy at any time for its cash surrender value
. Deferred income taxes, including taxes on amounts borrowed, become payable
upon surrender
. Grace period for lapsing with no value is 62 days from the first date in
which Monthly Deduction was not paid due to insufficient cash value
. Subject to our rules, you may reinstate a lapsed Policy within seven years
of date of lapse if it has not been surrendered
8
<PAGE>
COMMUNICATIONS AND PAYMENTS
We will treat your request for a Policy transaction, or your submission of a
payment, as received by us, if we receive a request or payment conforming to
our administrative procedures at our Home Office before the close of regular
trading on the New York Stock Exchange on that day. If we 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. Originally, NELICO was a wholly-owned subsidiary of New
England Mutual Life Insurance Company ("New England Mutual"). On August 30,
1996, New England Mutual merged into Metropolitan Life Insurance Company
("MetLife"), a mutual life insurance company whose principal office is 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 at 501 Boylston Street, Boston,
Massachusetts 02116. NELICO's mailing address is: P.O. Box 9116, Boston,
Massachusetts 02117.
9
<PAGE>
The following chart illustrates the relationship of NELICO, the Fixed
Account, the Variable Account and the Eligible Funds.
NELICO
(Insurance company subsidiary of MetLife)
We deduct charges.
We allocate net premiums and net unscheduled payments to your choice of
sub-accounts in the Variable Account or to the Fixed Account.
Premiums and Unscheduled Payments
Fixed Account
VARIABLE ACCOUNT
Zenith Capital Growth Sub-Account
Zenith Back Bay Bond Income Sub-Account
Zenith Back Bay Money Market Sub-Account
Zenith Back Bay Managed Sub-Account
Zenith Westpeak Stock Index Sub-Account
Zenith Westpeak Growth and Income Sub-Account
Zenith Loomis Sayles Small Cap Sub-Account
Zenith Balanced Sub-Account
Zenith Alger Equity Growth Sub-Account
Zenith Davis Venture Value Sub-Account
Zenith Harris/Oakmark Midcap Value Sub-Account
Zenith Morgan Stanley International Magnum Equity Sub-Account
Zenith MFS Investors Sub-Account
Zenith MFS Research Managers Sub-Account
Metropolitan Putnam Large Cap Growth Sub-Account
Metropolitan Janus Mid Cap Sub-Account
Metropolitan Russell 2000 Index Sub-Account
VIP Equity-Income Sub-Account
VIP Overseas Sub-Account
VIP High Income Sub-Account
VIP II Asset Manager Sub-Account
Sub-accounts buy shares of the Eligible Funds.
NEW ENGLAND ZENITH FUND
Capital Growth Series
Back Bay Advisors Bond Income Series
Back Bay Advisors Money Market Series
Back Bay Advisors Managed Series
Westpeak Stock Index Series
Westpeak Growth and Income Series
Loomis Sayles Small Cap Series
Balanced Series
Alger Equity Growth Series
Davis Venture Value Series
Harris/Oakmark Midcap Value Series
Morgan Stanley International Magnum Equity Series
MFS Investors Series
MFS Research Managers Series
METROPOLITAN SERIES FUND, INC.*
Putnam Large Cap Growth Portfolio
Janus Mid Cap Portfolio
Russell 2000 Index Portfolio
VIP
Equity-Income Portfolio
Overseas Portfolio
High Income Portfolio
VIP II
Asset Manager Portfolio
Eligible Funds buy portfolio investments to support values and benefits of the
Policies.
* Availability of the Portfolios of the Metropolitan Series Fund, Inc. is
subject to any necessary state insurance department approvals.
10
<PAGE>
POLICY VALUES AND BENEFITS
DEATH BENEFIT
If the insured dies while the Policy is in force, we pay a death benefit to
the beneficiary.
DEATH BENEFIT OPTIONS. When you apply for a Policy, you choose among three
death benefit options.
The Option 1 (Face Amount) death benefit is equal to the face amount of the
Policy. The Option 1 death benefit is fixed, subject to increases required by
the Internal Revenue Code.
The Option 2 (Face Amount Plus Cash Value) death benefit is equal to the
face amount of the Policy, plus the Policy's cash value, if any. The Option 2
death benefit is also subject to increases required by the Internal Revenue
Code.
The Option 3 (Face Amount Plus Premiums) death benefit is equal to the face
amount, plus premiums paid (less all partial surrenders). The Option 3 death
benefit is also subject to increases required by the Internal Revenue Code.
CHOICE OF TAX TEST. To meet the Internal Revenue Code's definition of life
insurance, the death benefit, which for these purposes includes any coverage
--------
provided under the Adjustable Term Insurance Rider, will not be less than what
is required by either (1) the "cash value accumulation test" under Section
7702(a)(1) of the Internal Revenue Code, or (2) the "guideline premium test"
under Section 7702(a)(2) of the Internal Revenue Code, whichever you select
--------------------
when the Policy is issued. The test you select at issue is used for the life
- -------------------------
of the Policy.
Under the cash value accumulation test, the death benefit is not less than
----------------------------
the Policy's cash value, including the portion of any Monthly Deduction made
for a period beyond the date of death, divided by the applicable net single
premium set by the Internal Revenue Code (the "Net Single Premium Corridor").
Net single premiums are based on the age and sex of the insured at the time of
the calculation, and increase over time. Sample net single premiums appear in
Appendix E.
If you choose the cash value accumulation test, you may choose an "Enhanced
Net Single Premium Corridor". If you do, the death benefit will not be less
than the Policy's cash value, including the portion of any Monthly Deduction
made for a period beyond the date of death, divided by the applicable net
single premium set by the Internal Revenue Code times the Enhanced Net Single
Premium Factor. The Enhanced Net Single Premium Factors vary by the attained
age of the insured. These factors are shown in Appendix E.
Under the guideline premium test, the death benefit is not less than a
----------------------
certain multiple of the Policy's cash value, including the portion of any
Monthly Deduction made for a period beyond the date of death. This means that,
if the cash value grows to certain levels, the death benefit increases to
satisfy tax law requirements. At that point, any payment you make into the
Policy will increase the death benefit by more than it increases the cash
value. (See "Premiums".)
If you choose the guideline premium test, you must select either the "IRS
Corridor" or the "Enhanced Corridor". Appendix E shows the percentages that
are applied to the cash value under both the IRS Corridor and the Enhanced
Corridor.
If you select the cash value accumulation test, you can generally make a
higher amount of premium payments for any given face amount; and a higher
death benefit may result in the long term. If cash value growth in the early
Policy years is your primary objective, the cash value accumulation test may
be the appropriate choice because it allows you to invest more premiums in the
Policy for each dollar of death benefit. If cash value growth in the later
Policy years is your primary objective, the guideline premium test may be the
appropriate choice because it requires a lower death benefit, and therefore
lower mortality charges, once the Policy's death benefit is subject to
increases required by the Internal Revenue Code.
IF YOU SELECT THE GUIDELINE PREMIUM TEST OR THE CASH VALUE ACCUMULATION TEST
WITH THE ENHANCED NET SINGLE PREMIUM CORRIDOR, YOU WILL NOT BE ABLE TO ADD THE
GUARANTEED DEATH BENEFIT RIDER TO YOUR POLICY. (SEE "GUARANTEED DEATH BENEFIT
RIDER" BELOW.)
TERM RIDER "IN" OR "OUT". If you add an Adjustable Term Insurance Rider to
the Policy, you can have the face amount of the Rider added to the face amount
of the Policy for purposes of calculating the Option 1, Option 2 or Option 3
death benefit. If you include the rider coverage in the calculation of the
death benefit, the Policy may provide greater potential for cash value to grow
relative to the death benefit. If you do not include the rider coverage in the
calculation of the death benefit, the Policy may provide greater potential for
the death benefit to grow relative to cash value.
11
<PAGE>
If you elect the Adjustable Term Insurance Rider after the Policy is issued
and your Policy has the Guaranteed Death Benefit Rider, then you must choose
to add the Adjustable Term Insurance Rider coverage to the Policy's face
amount in the calculation of the Policy's Option 1 death benefit. See
"Guaranteed Death Benefit Rider" below.
AGE 100. If death occurs at or after the Policy Anniversary when the insured
reaches attained age 100, the death benefit is equal to the greater of (i) the
cash value on the date of death; or (ii) the face amount, if the Policy had a
Guaranteed Death Benefit rider attached, and the Guaranteed Death Benefit was
in effect on the Policy Anniversary when the Insured reached attained age 100.
If the Policy has an Adjustable Term Insurance Rider as well as a Guaranteed
Death Benefit Rider benefit in effect at the insured's attained age 100, we
exchange the term amount for an increase in the Policy's face amount. We do
not require evidence of insurability or a Face Amount Increase Charge (see
"Charges and Expenses") for the increase.
GUARANTEED DEATH BENEFIT RIDER
Subject to state availability, if you choose the Option 1 death benefit and
the cash value accumulation test with the Net Single Premium Corridor, you may
also elect at issue a rider that provides a Guaranteed Death Benefit. (If you
have elected an Adjustable Term Insurance Rider, you may elect the Guaranteed
Death Benefit Rider only if you have chosen to add the Adjustable Term
Insurance Rider coverage to the Policy's face amount in the calculation of the
Policy's Option 1 death benefit).
If you elect this benefit, we determine whether the Guaranteed Death Benefit
is in effect on the first day of each Policy month until the insured reaches
age 100. If the Guaranteed Death Benefit is in effect, the Policy will not
lapse even if the net cash value is less than the Monthly Deduction for that
month.
On the first day of a Policy month, if the total premiums you have paid,
less all partial surrenders and less any outstanding Policy loan plus accrued
loan interest, are at least equal to: the Guaranteed Death Benefit Premium,
multiplied by the number of completed Policy years, plus 1/12 of that premium
for each Policy month of the current Policy year up to and including the
current Policy month, then the guarantee will apply for that month. The
Guaranteed Death Benefit Premium appears in Section 1 of your Policy.
We recalculate the Guaranteed Death Benefit premium if:
--you reduce or increase the face amount
--you make a partial surrender that reduces the face amount
--you increase or decrease rider coverage.
When testing whether the Guaranteed Death Benefit is in effect, we use the
Policy's original Guaranteed Death Benefit premium for the period of time it
was in effect, and each recalculated Guaranteed Death Benefit premium for the
period of time it was in effect.
If you elect this benefit, the Monthly Deduction will include a charge for
the rider, currently until the Policy anniversary when the insured reaches age
100, unless you request that the rider terminate before then. You cannot add
the rider after issue of the Policy. The rider will terminate if you change
your Policy's death benefit option or the corridor used under your Policy's
tax test.
We can restrict any unplanned premium payment that would increase your
Policy's death benefit by more than it would increase cash value. (See
"Flexible Premiums.") This could prevent you from making unplanned premium
payments that are necessary to keep the Guaranteed Death Benefit rider benefit
in effect.
DEATH PROCEEDS PAYABLE
The death proceeds we pay are equal to the death benefit on the date of the
insured's death, reduced by any outstanding loan and accrued loan interest on
that date. If the death occurs during the grace period, we reduce the proceeds
by an amount to cover unpaid Monthly Deductions to the date of death. (See
"Lapse and Reinstatement".) We increase the death proceeds by any rider
benefits payable.
12
<PAGE>
We may adjust the death proceeds if the insured's age or sex was misstated
in the application, if death results from the insured's suicide within two
years (less in some states) from the Policy's date of issue or within two
years (less in some states) from an increase in the Policy's face amount, or
if a rider limits the death benefit. (See "Limits to NELICO's Right to
Challenge the Policy".)
CHANGE IN DEATH BENEFIT OPTION
After the first Policy year, you may change your death benefit option by
sending your written request to our Administrative Office. The request will be
effective on the date we receive it. A change in death benefit option may have
tax consequences. (See "Tax Considerations".)
If you change from Option 1 (Face Amount) to Option 2 (Face Amount Plus Cash
Value), or from Option 3 (Face Amount Plus Premiums) to Option 2 (Face Amount
Plus Cash Value), we reduce the Policy's face amount if necessary so that the
death benefit is the same immediately before and after the change. The face
amount reduction will apply to the Policy's initial face amount and any prior
increases in face amount on a pro rata basis. A face amount reduction below
$50,000 requires our consent. We may also decrease any rider benefits under
the Policy. If you selected the guideline premium test for the Policy, a
partial surrender of cash value may be necessary to meet Federal tax law
limits on the amount of premiums that you can pay into the Policy.
If you change from Option 1 (Face Amount) to Option 3 (Face Amount Plus
Premiums), we require evidence that the insured is still eligible for the same
underwriting class that currently applies to the Policy. The death benefit,
but not the face amount, will change.
If you change from Option 2 (Face Amount Plus Cash Value) to Option 1 (Face
Amount), we increase the Policy's face amount, if necessary, so that the death
benefit is the same immediately before and after the change. We will apply the
increase to the Policy's initial face amount and any prior increase in face
amount on a pro rata basis.
If you change from Option 2 (Face Amount Plus Cash Value) to Option 3 (Face
Amount Plus Premiums), we require evidence that the insured is still eligible
for the same underwriting class that currently applies to the Policy. We
increase the Policy's face amount, if necessary, so that the death benefit is
the same immediately before and after the change. We will apply the increase
to the Policy's initial face amount and any prior increase in face amount on a
pro rata basis.
If you change from Option 3 (Face Amount Plus Premiums) to Option 1 (Face
Amount), the death benefit, but not the face amount, will change.
AFTER THE POLICY IS ISSUED, YOU CANNOT CHANGE YOUR CHOICE OF TAX TEST (CASH
------
VALUE ACCUMULATION TEST OR GUIDELINE PREMIUM TEST). IN ADDITION, YOU CANNOT
-----------------------
CHANGE YOUR ELECTION WHETHER TO ADD THE FACE AMOUNT OF AN ADJUSTABLE TERM
- -------------------------------------------------------------------------
INSURANCE RIDER TO THE FACE AMOUNT OF THE BASE POLICY FOR PURPOSES OF
- ---------------------------------------------------------------------
CALCULATING THE OPTION 1, OPTION 2 OR OPTION 3 DEATH BENEFIT. YOU CAN,
- ---------------------------------------------------------------------
HOWEVER, CHANGE THE CORRIDOR USED UNDER THE TAX TEST FOR YOUR POLICY. A CHANGE
- ------------------------------------------------------------------------------
TO AN ENHANCED CORRIDOR REQUIRES UNDERWRITING. (SEE "DEATH BENEFIT OPTIONS".)
- -----------------------------------------------------------------------------
CASH VALUE
Your Policy's total cash value includes its cash value in the Variable
Account and in the Fixed Account. If you have a Policy loan, the cash value
also includes the amount we hold in our general account as a result of the
loan. The cash value reflects:
--net premium payments
--the net investment experience of the Policy's sub-accounts
--interest credited to cash value in the Fixed Account
--interest credited to amounts held in the general account for a Policy loan
--the death benefit option you choose
--Policy charges
--partial surrenders
13
<PAGE>
--transfers among the sub-accounts and Fixed Account
--the premium payment schedule (annual vs. quarterly, for example) you
choose
We pay you the NET cash value if you surrender the Policy. It equals the
cash value minus any outstanding Policy loan (plus interest). We add to the
net cash value the cost of insurance charge for the remainder of the month. If
you surrender during the first two Policy years, we also refund the total
sales charges we deducted on premiums paid for the first Policy year. (See
"Charges and Expenses" for more information.) If you surrender in the grace
period, we reduce the net cash value by the Monthly Deduction that applies to
the date of surrender. (See "Loan Provision" and "Monthly Deduction from Cash
Value".)
The Policy's cash value in the Variable Account may increase or decrease
daily depending on net investment experience. Poor investment experience can
reduce the cash value to zero. YOU HAVE THE ENTIRE INVESTMENT RISK FOR THE
CASH VALUE IN THE VARIABLE ACCOUNT.
The Policy's total cash value in the Variable Account equals the number of
units credited in each sub-account multiplied by that sub-account's unit
value. We convert any premium or cash value allocated to a sub-account into
units of the sub-account. Full or partial surrenders, Policy loans, transfers
and charges deducted from the cash value reduce the number of units credited
in a sub-account. We determine the number of units by dividing the dollar
amount of the transaction by the sub-account's unit value next determined
following the transaction. (In the case of an initial premium, we use the unit
value on the Investment Start Date.)
The unit value of a sub-account depends on the net investment experience of
its corresponding Eligible Fund and reflects fees and expenses of the Eligible
Fund. The unit value for each sub-account was set at $100.00 on or about the
time when shares of the corresponding Eligible Fund first became available to
investors. We determine the unit value as of the close of regular trading on
the New York Stock Exchange on each day that the Exchange is open for trading
by multiplying the most recent unit value by the net investment factor ("NIF")
for that day (see below).
The NIF for a sub-account reflects:
--the change in net asset value per share of the corresponding Eligible Fund
(as of the close of regular trading on the Exchange) from its last value,
--the amount of dividends or other distributions from the Eligible Fund
since the last determination of net asset value per share, and
--any deductions for taxes that we make from the Variable Account.
The NIF can be greater or less than one.
ALLOCATION OF NET PREMIUMS
Your cash value is held in the general account of NELICO or an affiliate
until we mail the confirmation for the initial premium. We credit the first
net premium with net investment experience equal to that of the Zenith Money
Market Sub-Account from the investment start date until the day that we mail
the confirmation for the initial premium (in states that require a refund of
premiums if you exercise the Right to Return the Policy, until 15 days after
we mail the initial premium confirmation). Then, we allocate the Policy's cash
value to the Sub-Accounts and/or the Fixed Account as you choose. (See
"Investment Options" and "Monthly Deduction from Cash Value.")
If you increase the Policy face amount, we allocate the portion of net
premiums attributable to the increase among accounts in accordance with your
current allocation instructions. Currently, you can allocate to an unlimited
number of available accounts (including the Fixed Account) at any one time.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
INVESTMENT START DATE. The investment start date is the latest of: the date
when we first receive a premium payment for the Policy, the date Part II of
the Policy application is signed and the Policy Date. (For this purpose,
receipt of the premium payment means receipt by your registered
representative, if the payment is made with the application; otherwise, it
means receipt by a NELICO agency.)
14
<PAGE>
PREMIUM WITH APPLICATION. If you make a premium payment with the
application, the Policy Date is generally the later of the date Part II of the
application is signed and receipt of the premium payment. In that case, the
Policy Date and investment start date are the same. The amount of premium paid
with the application must be at least 10% of the annual Planned Premium for
the Policy. You may make only one premium payment before the Policy is issued.
If you make a premium payment 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 for the Policy (or, if later, on
the date when Part II of the application is signed). The maximum temporary
coverage is the lesser of the amount of insurance applied for and $500,000 for
standard and preferred risks ($250,000 for substandard risks and $50,000 for
persons who are determined to be uninsurable). These provisions vary in some
states.
If we issue a Policy, Monthly Deductions begin from the Policy Date, even if
we delayed the Policy's issuance for underwriting. The deductions are for the
face amount of the Policy issued, even if the temporary insurance coverage
during underwriting was for a lower amount. If we decline an application, we
refund the premium payment made.
PREMIUM ON DELIVERY. If you pay the initial premium on delivery of the
Policy, the Policy Date is usually five days after issue. The investment start
date is the later of the Policy Date and the date we received the premium.
Monthly Deductions begin on the Policy Date. We credit interest at a 4% net
rate on the net Minimum Premium (see "Premiums") for any period between the
Policy Date and the investment start date. Insurance coverage under the Policy
begins when we receive the number of monthly payments due.
BACKDATING. We may sometimes backdate a Policy, if you request, by assigning
a Policy Date earlier than the date the application is signed. You may wish to
backdate so that you can obtain lower cost of insurance rates, based on a
younger insurance age. For a backdated Policy, you must also pay the Minimum
Premium payable for the period between the Policy Date and the investment
start date. As of the investment start date, we allocate to the Policy those
net premiums, adjusted for monthly Policy charges and interest at a 4% net
rate for that period.
RIGHT TO RETURN THE POLICY
You may cancel the Policy within 10 days (more in some states) after you
receive the Policy. You may return the Policy to us or your registered
representative. Insurance coverage ends as soon as you return the Policy
(determined by postmark, if the Policy is mailed). If you cancel the Policy,
we refund the cash value of the Policy plus any sales and premium tax charges
that were deducted from the premiums you paid, or if required by state
insurance law, any premiums paid.
You may cancel an increase in face amount within 10 days (more in some
states) after you receive the adjusted Policy. You may return the face amount
increase to NELICO or your registered representative. The face amount increase
will be canceled from its beginning and we will return to your cash value any
processing charge and Monthly Deduction made for the face amount increase.
CHARGES AND EXPENSES
The amount of a charge may not necessarily correspond to the costs of 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 our sales and distribution expenses, and we may use
proceeds from other charges, including the mortality and expense risk charge,
to help cover those expenses.
DEDUCTIONS FROM PREMIUMS
SALES CHARGE. We deduct a sales charge of 8% from each premium payment you
make during a Policy year. Currently we reduce the charge to 3% for each
premium payment you make above a Target Premium during a Policy year. For this
purpose, we consider premiums we receive during the twenty days prior to a
Policy anniversary as paid in the next Policy year.
We indicated your Target Premium on your personalized illustration.
15
<PAGE>
If you surrender the Policy in the first two Policy years, we refund to you
the total sales charges we deducted on premiums paid in the first Policy year
(that is, on premiums we received prior to the twenty days immediately
preceding the first Policy anniversary).
Sales charges for Policies sold to some cases may be reduced. We may reduce
or eliminate the sales charge when you purchase a Policy, on cash value
transferred in the first year from certain life insurance policies that were
issued by New England Mutual, NELICO or NELICO's affiliates. Eligibility
requirements will apply. Your registered representative can advise you
regarding the availability of this feature.
PREMIUM TAX CHARGE. We deduct 2% from each premium payment made to cover
premium taxes. Premium taxes vary from state to state.
DEDUCTIONS FROM CASH VALUE
MONTHLY DEDUCTION. On the first day of each Policy month, starting with the
Policy Date, we deduct the "Monthly Deduction" from your cash value.
--If your Policy is protected against lapse by the Guaranteed Death Benefit
rider or three year Minimum Premium guarantee, we make the Monthly
Deduction unless the net cash value equals zero. (See "Premiums".)
--If you do not have the Guaranteed Death Benefit rider and the three year
Minimum Premium guarantee is not in effect, we make the Monthly Deduction
as long as the net cash value is large enough to cover the entire Monthly
Deduction. If it is not large enough, the Policy will be in default and
may lapse. (See "Lapse and Reinstatement".)
Currently, there is no Monthly Deduction on or after the Policy Anniversary
when the insured reaches age 100.
The Monthly Deduction reduces the cash value in each Sub-Account of the
Variable Account and in the Fixed Account in proportion to the cash value in
each, unless you choose a "Single Source Expense Sub-Account" on the Policy
application. If you choose a Single Source Expense Sub-Account, we will take
the Monthly Deduction from that Sub-Account until the cash value there is
gone. Then we will take the Monthly Deduction from your remaining Sub-Accounts
and the Fixed Account in proportion to the cash value in each. You cannot
choose the Fixed Account as the Single Source Expense Sub-Account.
The Monthly Deduction includes the following charges:
--POLICY FEE. The Policy fee is currently equal to $5.50 per month. The fee
is guaranteed not to exceed $10.00 per month.
--MORTALITY AND EXPENSE RISK CHARGE. We deduct a charge for the mortality
and expense risks that we assume. This charge is at an annual rate of 0.50%
(guaranteed not to exceed 0.75%). The rate is applied against the entire cash
value, including any cash value held in the general account as collateral for
a Policy loan. 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.
We deduct the mortality and expense risk charge last after all other
components of the Monthly Deduction.
--MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of
providing insurance protection under your Policy. There is no cost of
insurance charge on or after the Policy Anniversary when the insured reaches
age 100. The cost of insurance charge for a Policy month is equal to the
"amount at risk" under the Policy, multiplied by the cost of insurance rate
for that Policy month. We determine the amount at risk on the first day of the
Policy month after we process the Monthly Deduction (except for the mortality
and expense risk charge). The amount at risk is the amount by which the death
benefit (discounted at the monthly equivalent of 4% per year) exceeds the
Policy's cash value. The cost of insurance rate for your Policy changes from
month to month.
The guaranteed cost of insurance rates for a Policy depend on the insured's
--underwriting class
--age on the first day of the Policy year
--sex (if the Policy is sex-based).
16
<PAGE>
The current cost of the insurance rates will also depend on
--the insured's age at issue
--the Policy year.
We guarantee that the rates will not be higher than rates based on the 1980
Commissioners Standard Ordinary Mortality Tables (the "1980 CSO Tables"). The
actual rates we use may be lower than the maximum rates, depending on our
expectations about our future mortality and expense experience, lapse rates
and investment earnings. We review the adequacy of our cost of insurance rates
periodically and may adjust them. Any change will apply prospectively. (For
information regarding a Policy's cost of insurance rates following a face
amount increase, see "Increase in Face Amount".)
The underwriting classes we use are smoker standard, smoker rated, nonsmoker
preferred, nonsmoker standard, nonsmoker rated and guaranteed issue. Rated and
guaranteed issue classes have higher cost of insurance deductions. We base the
guaranteed maximum mortality charges for rated Policies on multiples of the
1980 CSO Tables. (For information regarding a Policy's underwriting
classification following a face amount increase, see "Increase in Face
Amount". See below for a discussion of guaranteed issue Policies.)
The nonsmoker classes are available as follows:
--nonsmoker preferred and nonsmoker standard, for Policies with face amounts
(including any Adjustable Term Insurance Rider coverage) of $100,000 or
more where the issue age is 20 through 75
--nonsmoker standard, for Policies with face amounts below $100,000 and for
all Policies where the issue age is above 75.
The nonsmoker preferred class generally offers better current cost of
insurance rates than the nonsmoker standard class.
Cost of insurance rates are generally lower for nonsmokers than for smokers
and generally lower for females than for males. Within a given underwriting
class, cost of insurance rates are generally lower for insureds with lower
issue ages. Where required by state law, and for Policies sold in connection
with some employee benefit plans, cost of insurance rates (and Policy values
and benefits) do not vary based on the sex of the insured.
Under Policies issued in New Jersey, an insured's underwriting class may not
be improved from smoker to nonsmoker during the first two Policy years.
We may offer Policies on a guaranteed issue basis to certain cases. We issue
these Policies up to predetermined face amount limits. Because we issue these
Policies based on minimal underwriting information, they may present a greater
mortality cost to us than Policies in the standard class. Therefore, we
generally use higher current cost of insurance rates for guaranteed issue
Policies. For some cases, the charge may vary based on the size of the group,
the total premium for the group and certain characteristics of the group
members. The guaranteed maximum monthly cost of insurance charges for
guaranteed issue status will exceed charges based on 100% of the 1980 CSO
Tables.
Guaranteed issue Policies have cost of insurance rates that vary based on
whether the insured is a smoker or nonsmoker, and the preferred nonsmoker
class is not available. The current cost of insurance rates do not vary by
individual Policy face amount but may be lower if the members of the group
have certain characteristics.
Some cases may be eligible to purchase Policies on a simplified underwriting
basis. They may elect simplified underwriting instead of guaranteed issue or
for amounts of insurance above our guaranteed issue limits. However, they may
not choose guaranteed issue for some members of the group and simplified
underwriting for others. Policies issued on a simplified underwriting basis
will have the same cost of insurance rates as fully underwritten Policies;
however, the nonsmoker preferred class is not available to these Policies.
--TERM RIDER. The Adjustable Term Insurance Rider has its own cost of
insurance rates that are different from those of the base Policy. If you elect
to add the Adjustable Term Insurance Rider to the face amount of the base
Policy in the calculation of Death Benefit Option 1, 2 or 3, then once the net
amount at risk of the base Policy is zero, any excess cash value of the base
Policy reduces the net amount at risk under the term insurance rider. If the
Adjustable Term Insurance Rider is not added to the face amount of the base
Policy in the calculation of Death Benefit Option 1, 2 or 3, then the term
rider's net amount at risk will not be reduced by any of the base Policy's
cash value.
17
<PAGE>
--GUARANTEED DEATH BENEFIT RIDER CHARGE. The charge for the Guaranteed Death
Benefit rider is $0.01 per $1,000 of face amount (including the base Policy
and any Adjustable Term Insurance Rider).
--CHARGES FOR ADDITIONAL BENEFITS AND SERVICES. We charge for the cost of
any additional Rider benefits as described in the rider form. We also may
charge you a nominal fee, which we will bill directly to you, if you request a
Policy re-issue or re-dating.
FACE AMOUNT INCREASE CHARGE. For an underwritten face amount increase, we
deduct a charge of $0.80 per $1,000 of face amount increase (not to exceed
$25.00) when the increase takes effect, and on the first day of the next
eleven Policy months. Currently, there is no Face Amount Increase Charge on or
after the Policy Anniversary when the insured reaches age 100.
CHARGES FOR INCOME TAXES. We currently do not charge for income taxes
against the Variable Account, but in the future we may make such a charge, if
appropriate. We have the right to make a charge for any taxes imposed on the
Policies in the future. (See "Charge for NELICO's Income Taxes".)
CHARGES AGAINST THE ELIGIBLE FUNDS
The following table shows the annual operating expenses for each series,
based on actual expenses for 1999, after giving effect to the applicable
expense cap or expense deferral arrangement:
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER ANY EXPENSE CAP)
<TABLE>
<CAPTION>
BACK BACK
BAY BAY BACK WESTPEAK LOOMIS
ADVISORS ADVISORS BAY WESTPEAK GROWTH SAYLES
CAPITAL BOND MONEY ADVISORS STOCK AND SMALL
GROWTH INCOME MARKET MANAGED INDEX INCOME CAP
SERIES SERIES SERIES SERIES SERIES SERIES SERIES*
-------------- -------- ------------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .62% .40% .35% .50% .25% .68% .90%
Other Expenses.......... .04% .08% .05% .08% .10% .06% .10%
---- ---- ----- ---- ---- ---- -----
Total Series
Operating............ .66% .48% .40% .58% .35% .74% 1.00%
EXPENSES
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER EXPENSE DEFERRAL)
<CAPTION>
MORGAN
HARRIS/OAKMARK STANLEY DAVIS ALGER MFS
MIDCAP INTERNATIONAL VENTURE EQUITY MFS RESEARCH
VALUE BALANCED MAGNUM VALUE GROWTH INVESTORS MANAGERS
SERIES SERIES EQUITY SERIES SERIES SERIES SERIES* SERIES*
-------------- -------- ------------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .75% .70% .90% .75% .75% .75% .75%
Other Expenses.......... .13% .07% .40% .06% .05% .15% .15%
---- ---- ----- ---- ---- ---- -----
Total Operating
Expenses............. .88% .77% 1.30% .81% .80% .90% .90%
</TABLE>
- --------
* Without the applicable expense cap or expense deferral arrangement
(described below), Total Series Operating Expenses for the year ended
December 31, 1999 would have been: MFS Investors Series, 2.03%; and MFS
Research Managers Series, 2.03%. In 1999 the management fee for the Loomis
Sayles Small Cap Series was 1.00%, and Total Series Operating Expenses were
capped at 1.00%. Without the expense cap, Total Series Operating Expenses
would have been 1.10%.
Our affiliate, New England Investment Management, Inc. (formerly known as TNE
Advisers, Inc.), advises the series of the Zenith Fund except for the Capital
Growth Series. New England Investment Management voluntarily limits the
expenses of certain series with either an expense cap or expense deferral
arrangement. Under the expense cap, New England Investment Management bears
expenses of the Loomis Sayles Small Cap Series that exceed 1.00% of average
daily net assets. Under the
18
<PAGE>
expense deferral agreement, New England Investment Management bears expenses
of the Harris/Oakmark Midcap Value, Morgan Stanley International Magnum
Equity, MFS Investors, and MFS Research Managers Series that exceed .90% of
average daily net assets (1.30% for the Morgan Stanley International Magnum
Equity Series) in the year the series incurs them and charges those expenses
to the series in a future year if actual expenses of the series are below the
limit. New England Investment Management may end these expense limits at any
time.
MetLife is the investment advisor for the Portfolios of the Metropolitan
Series Fund, Inc. The Portfolios pay investment management fees to MetLife and
also bear other expenses. The chart below shows the total operating expenses
of the Portfolios for the year ended December 31, 1999 (in the case of the
Putnum Large Cap Growth Portfolio, anticipated expenses for 2000) as a
percentage of Portfolio net assets.
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
- --------- ---------- -------- ------------
<S> <C> <C> <C>
Putnum Large Cap Growth........................ *
Janus Mid Cap..................................
Russell 2000 Index............................. *
</TABLE>
- --------
* MetLife voluntarily pays expenses (other than the management fee, brokerage
commissions, taxes, interest and other loan costs, and any unusual one-time
expenses) of the Putnam Large Cap Growth Portfolio that exceed .20% of net
assets. Without this subsidy, the anticipated total annual expenses of the
Putnam Large Cap Growth Portfolio would be %. MetLife also paid such
expenses that exceeded .20% of net assets for the Russell 2000 Index
Portfolio until December 3, 1999. Without this subsidy the total annual
expenses of the Russell 2000 Index Portfolio for 1999 would have been %.
Beginning February 22, 2000, MetLife is paying such expenses that exceed
.30% of the Russell 2000 Index Portfolio's net assets until the earlier of
(i) April 30, 2001 and (ii) the date when the Portfolio's net assets reach
$200 million.
The investment adviser for VIP and VIP II is Fidelity Management & Research
Company ("FMR"). The Portfolios of VIP and VIP II pay investment management
fees to FMR and also bear certain other expenses. For the year ended December
31, 1999, the total operating expenses of the Portfolios, as a percentage of
Portfolio average net assets, were:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
- --------- ---------- -------- ------------
<S> <C> <C> <C>
VIP Equity-Income.............................. .48% .09% .57%*
VIP Overseas................................... .73% .18% .91%*
VIP High Income................................ .58% .11% .69%
VIP II Asset Manager........................... .53% .10% .63%*
</TABLE>
- --------
* Total annual expenses do not reflect certain expense reductions due to
directed brokerage arrangements and custodian interest credits. If we
included these reductions, total annual expenses would have been .56% for
VIP Equity-Income Portfolio, .87% for VIP Overseas Portfolio and .62% for
VIP II Asset Manager Portfolio.
Affiliates of FMR compensate NELICO and/or certain affiliates for
administrative, distribution, or other services relating to these Portfolios
of VIP and VIP II. This compensation is based on assets of the Portfolios
attributable to the Policies and certain other variable insurance products
that we and our affiliates issue.
SPECIAL ARRANGEMENTS
We may waive, reduce or vary any Policy charges under Policies sold to some
cases. We may also raise the interest rate credited to loaned amounts under
these Policies. The amount of the variations and our eligibility rules may
change from time to time. In general, they reflect cost savings over time that
we anticipate for Policies sold to the eligible group or sponsored
arrangements and relate to objective factors such as the size of the group,
its stability, the purpose of the funding arrangement and characteristics of
the group members. These variations of charges do not apply to Policies sold
in New York other than Policies sold to non-tax qualified deferred
compensation plans of various types. Consult your registered representative
for any variations that may be available and appropriate for your case.
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.
19
<PAGE>
PREMIUMS
FLEXIBLE PREMIUMS
Within limits, you choose the amount and frequency of premium payments. You
select a Planned Premium schedule, which is a level amount. This schedule
appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP YOUR
POLICY IN FORCE. You may skip Planned Premium payments or make additional
payments. Additional payments could be subject to underwriting and our
consent. No payment can be less than $25 ($10 for payments made under certain
monthly payment arrangements). We limit the total of Planned Premiums and
other payments to our published maximum.
You can pay Planned Premiums on an annual, semi-annual, quarterly or monthly
schedule. You can change your Planned Premium schedule by sending your request
to us. However, you cannot increase the amount of your Planned Premium unless
we consent, and we may require underwriting.
You may make payments by check or money order. We will send premium notices
for annual, semi-annual, quarterly or monthly Planned Premiums. You may also
make premium payments by wire transfer of federal funds in accordance with our
current procedures.
You may not make premium payments on and after the Policy anniversary on
which the insured reaches age 100, except under the Policy's grace period
provision. (See "Lapse and Reinstatement".)
If you have selected the guideline premium test, Federal tax law limits the
amount of premiums that you can pay under the Policy. In addition, if any
payments under the Policy exceed the "7-pay test" under Federal tax law, your
Policy will become a "modified endowment contract" and you may have more
adverse tax consequences with respect to certain distributions than would
otherwise be the case if premium payments did not exceed the "7-pay test".
(See "Tax Considerations".)
We allocate net payments to your Policy's Sub-Accounts as of the date we
receive the payment. (See "Communications and Payments".)
Under current processing, we treat a payment first as a Planned Premium,
second as repayment of Policy loan interest due, and last as an unscheduled
payment, unless you instruct us otherwise in writing. (For Policies issued in
----------------------
New York, we treat a payment as a Planned Premium when a Policy loan is
- --------
outstanding only if the payment is in the exact amount of the Planned Premium
----
next due; otherwise, we treat it first as repayment of Policy loan interest
due, second as a Planned Premium, and last as an unscheduled payment.) We do
not treat a payment as repayment of a Policy loan unless you instruct us to.
If you have a Policy loan, it may be better to repay the loan than to make a
premium payment, because the premium payment is subject to sales and tax
charges, whereas the loan repayment is not subject to any charges. (See "Loan
Provision", "Deductions from Premiums" and "Death Benefit".)
20
<PAGE>
- -------------------------------------------------------------------------------
Two types of premium payment levels can protect your Policy against lapse
(1) for the first three Policy years, and (2) until age 100 of the insured.
First three Policy years--In general, if you pay the three year Minimum
------------------------
Premium amounts on time, the Policy will not lapse even if the net cash
value is less than the Monthly Deduction in any month. If (a) the total
premiums you have paid, less all partial surrenders and any outstanding
Policy loan balance, at least equal (b) the total monthly Minimum Premiums
for the Policy up to that Policy month, the Policy will not lapse. The
guarantee will not apply if you substitute the insured or reinstate the
Policy, unless on reinstatement you pay all your unpaid Minimum Premiums,
including those for the period of lapse. We recalculate the Minimum Premium
if you (1) reduce the face amount or make a partial surrender that reduces
the face amount, (2) increase or decrease rider coverage, (3) increase the
face amount, or (4) if the rating classification for your Policy is
improved. The Minimum Premium amount (shown in your Policy) is based on your
Policy's face amount, the age, sex (unless unisex rates apply) and
underwriting class of the insured, current Policy charges and any riders to
the Policy.
To age 100 of the insured--If you elect the Guaranteed Death Benefit rider
-------------------------
and pay the Guaranteed Death Benefit premium amounts on time, the Policy
will stay in force until age 100 of the insured. We recalculate the
Guaranteed Death Benefit premium following the same Policy transactions
described above for a recalculation of the three year Minimum Premium
amount. The Guaranteed Death Benefit premium amount (shown in your Policy)
is based on the same factors as the three year Minimum Premium, except that
it is based on the guaranteed level of Policy charges.
Under Policies issued in New Jersey, if you have met the requirements for
-----------------------------------
the three-year Minimum Premium death benefit guarantee at the end of the
three year guarantee period, the Minimum Premium death benefit guarantee
will continue to apply during the fourth Policy year as long as (a) payments
made during that Policy year, less partial surrenders and loans made in that
year, equal (b) the guaranteed maximum Policy charges for the fourth Policy
year. If you make a Policy transaction that changes the amount of the
guaranteed maximum Policy charges for that year, then the amount needed to
preserve the Minimum Premium death benefit guarantee for an extra Policy
year will change accordingly.
- -------------------------------------------------------------------------------
LAPSE AND REINSTATEMENT
LAPSE. Unless your Policy is protected by the Guaranteed Death Benefit or
the Minimum Premium guarantee, any month that your Policy's net cash value is
not large enough to cover a Monthly Deduction, your Policy will be in default.
Your Policy provides a 62 day grace period for payment of a premium large
enough to cover the Monthly Deduction and all deductions from the premium.
(For Policies issued in New Jersey the amount due is the least of: a premium
---------------------------------
large enough to cover the Monthly Deduction and all deductions from the
premium; a premium large enough to permit the Guaranteed Death Benefit to be
in effect; and a premium large enough to permit the three year Minimum Premium
death benefit to be in effect.) We will notify you of the amount due. You have
insurance coverage during the grace period, but if the insured dies before you
have paid the premium, we deduct from the death proceeds the unpaid Monthly
Deduction for the period prior to the date of death. If you have not paid the
required premium by the end of the grace period, your Policy will lapse
without value.
REINSTATEMENT. 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 need our consent to reinstate. Reinstatement
in all cases requires payment of certain charges described in the Policy and
usually requires evidence of insurability that is satisfactory to us.
OTHER POLICY FEATURES
INCREASE IN FACE AMOUNT
After the first Policy year you may increase the Policy's face amount. Our
underwriting rules and requirements, including proof of insurability, will
apply. To have a face amount increase, the insured must still be eligible for
the same underwriting class that currently applies to the Policy. The increase
must be at least $10,000. If the increase requires medical underwriting, we
will deduct a face amount increase charge of $0.80 per $1,000 of the face
amount increase (not to exceed $25.00) when the increase takes effect, and on
the first day of the next eleven Policy months. We will deduct the charge from
the Policy's cash value in the sub-accounts and the Fixed Account, in
proportion to the amount of cash value in each (unless you have elected a
Single Source Expense Sub-Account).
An increase in face amount may have tax consequences. (See "Tax
Considerations".)
21
<PAGE>
- -------------------------------------------------------------------------------
Sales charge--A face amount increase does not increase the Target Premium
------------
on which we currently base the sales charge. Therefore, after a face amount
increase, we currently deduct 8% from each premium you make in a Policy year
until you have paid an amount equal to the Policy's Target Premium and 3%
from any premium balance in that year.
Monthly deduction--We adjust the Monthly Deduction starting on the
-----------------
effective date of a face amount increase to reflect the new face amount and
amount at risk. Cost of insurance rates will not change due to a face amount
increase. (See "Charges and Expenses--Monthly Deduction from Cash Value.")
- --------------------------------------------------------------------------------
An increase in face amount will take effect on the first day of the Policy
month following our approval of your application for the increase. You can
contact our Administrative Office or your registered representative for
information on requesting a face amount increase. You have a limited time in
which you may cancel a face amount increase. (See "Right to Return the
Policy".)
If a Policy has an Adjustable Term Insurance Rider, then we may offer
increases in term insurance coverage, including annual term insurance
increases which are related to increases in salary or which are based on a
fixed annual percentage (the "Salary Refresh" program). We may also offer
increases that relate to premium contributions by an employer. We determine
limits on the annual and/or total amount of term insurance increases per
Policy that we will permit on a guaranteed issue basis at issue of the
Policies. Increases that are not pursuant to an annual increase, or which
exceed this limit, will require underwriting. The terms and conditions of the
Salary Refresh program are contained in our published rules which are
furnished at the time of application.
LOAN PROVISION
You may borrow all or part of the Policy's "loan value" beginning fifteen
days after we mail the confirmation for the initial premium. We make the loan
as of the date when we receive a loan request. (See "Communications and
Payments".) You should contact our Home Office or your registered
representative for information on loan procedures.
The Policy's loan value is equal to 90% (or more if required by state law)
of the Policy's cash value. The loan value available is reduced by any
outstanding loan plus interest.
If you purchase a Policy with the proceeds of another life insurance policy
that has an outstanding policy loan (see "Premium Payments"), then any loan
remaining against the new Policy cannot exceed 75% of the Policy's cash value
at issue. It may not be advantageous to replace existing insurance with a
Policy.
When we pay the loan proceeds to you, we transfer cash value in the amount
of the loan from the Sub-Accounts to our general account as collateral for the
loan. When you make a loan repayment, we transfer cash value in the amount of
the repayment and held as collateral from the general account back to the Sub-
Accounts. Unless you request otherwise, we transfer cash value for a Policy
loan from the Sub-Accounts in proportion to the cash value in each. We
allocate all loan repayments, unless you request otherwise, to the Sub-
Accounts in proportion to the cash value in each at the time of repayment.
(See "The Fixed Account" for information on when loans and loan repayments can
impact cash value in the Fixed Account.)
The interest rate charged on Policy loans is an effective rate of 4.75% per
year. It accrues daily, and is due on the Policy Anniversary. If not paid, we
add the interest accrued to the loan amount, 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. Amounts we take as collateral for a loan
earn interest at an effective rate of not less than 4.00% per year. The rate
we currently credit is 4.00% for the first 10 Policy years and 4.50%
thereafter. (You should consult a tax advisor as to the tax consequences
associated with a Policy loan outstanding after the tenth Policy year.) We
credit this interest amount 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,
loans can permanently affect the death benefit and cash value of the Policy,
even if repaid. In addition, we reduce any proceeds payable under a Policy by
the amount of any outstanding loan plus accrued interest.
If a Policy loan is outstanding, it may be better to repay the loan than to
pay a premium, because the payment is subject to sales and premium tax
charges, and the loan repayment is not subject to charges. (See "Deductions
from Premiums" and "Death Benefit".)
22
<PAGE>
If Policy loans plus accrued interest exceed the Policy's cash value at any
time, we will notify you that the Policy is going to terminate. (This is
called an "excess Policy loan".) The Policy will terminate without value 62
days after we mail the notice unless you pay us the excess Policy loan amount
within that time. If the Policy lapses with a loan outstanding, adverse tax
consequences may result. If your Policy is a "modified endowment contract",
loans under your Policy may be treated as taxable distributions. (See "Tax
Considerations" below.)
Department of Labor ("DOL") regulations impose requirements for participant
loans under tax-qualified pension plans. Therefore, plan loan provisions may
differ from Policy loan provisions. (See "Tax Considerations".)
SURRENDER
You may surrender a Policy for its net cash value at any time while the
insured is living. We determine the net cash value of the surrendered Policy
as of the date when we receive a surrender request. The net cash value equals
the cash value reduced by any Policy loan and accrued interest. We add to the
net cash value paid on surrender the portion of any cost of insurance charge
we deducted for the period beyond the date of surrender. If you surrender the
Policy during the first two Policy years, we also refund the total sales
charges we deducted on premiums paid in the first Policy year (that is, on
premiums we received prior to the twenty days immediately preceding the first
Policy anniversary). If you surrender the Policy during the grace period, we
reduce the net cash value you receive by an amount to cover the Monthly
Deduction to the date of surrender. You may apply all or part of the net cash
value to a payment option. (See "Payment Options".) A surrender may result in
adverse tax consequences. (See "Tax Considerations" below.)
PARTIAL SURRENDER
You may make a partial surrender of the Policy beginning fifteen days after
we mail the confirmation of the initial premium payment. A partial surrender
reduces the Policy's death benefit and may reduce the Policy's face amount if
necessary so that the amount at risk under the Policy will not increase. Any
reduction in the face amount causes a proportionate reduction in the Policy's
Target Premium. A partial surrender may also reduce rider benefits. For
purposes of the cost of insurance charge, any face amount reduction will apply
to each face amount segment on a pro rata basis. We reserve the right to
decline a partial surrender request that would reduce the face amount below
the Policy's required minimum.
We have the right to limit partial surrenders in any one Policy year to 20%
of the Policy's net cash value (that is, the cash value reduced by any
outstanding Policy loan balance) on the date of the first partial surrender
for the Policy year or, if less, the Policy's available loan value. Currently,
we permit partial surrenders of up to 90% of the Policy's net cash value per
year, if there is sufficient available loan value.
You may not reinvest cash value paid upon partial surrender in the Policy
except as premium payments, which are subject to the charges described under
"Deductions From Premiums."
A partial surrender first reduces the Policy's cash value in the Sub-
Accounts of the Variable Account, in proportion to the amount of cash value in
each, and then the Fixed Account, unless you request otherwise. (See "The
Fixed Account" below.) We determine the amount of net cash value paid upon
partial surrender as of the date when we receive a request. You can contact
your registered representative or the Administrative Office for information on
partial surrender procedures.
A reduction in the death benefit as a result of a partial surrender may
create a "modified endowment contract" or have other adverse tax consequences.
If you are contemplating a partial surrender, you should consult your tax
advisor regarding the tax consequences. (See "Tax Considerations".)
REDUCTION IN FACE AMOUNT
After the first Policy year, you may reduce the face amount of your Policy
without receiving a distribution of any Policy cash value. (This feature
differs from a partial surrender, which reduces the Policy's net cash value.)
For purposes of the cost of insurance charge, a face amount reduction will
apply to each face amount segment on a pro rata basis. The face amount
remaining has to meet our minimum face amount requirements, except with our
consent.
If you decrease the face amount of your Policy, we also decrease the Target
Premium. A face amount reduction usually decreases the death benefit. However,
if we are increasing the death benefit to satisfy federal income tax laws, a
face amount reduction will not decrease the death benefit. A reduction in face
amount in this situation is not advisable, because it will not reduce your
death benefit or cost of insurance charges. We also may decrease any rider
benefits attached to the Policy.
If you have selected the guideline premium test, a reduction in face amount
reduces the Federal tax law limits on the amount of premiums that you can pay
under the Policy. In these cases, you may need to have a portion of the
Policy's cash value paid to you to comply with Federal tax law.
23
<PAGE>
A face amount reduction takes effect as of the first day of the Policy month
on or after the date when we receive a request. You can contact your
registered representative or the Home Office for information on face reduction
procedures.
A reduction in the face amount of a Policy may create a "modified endowment
contract". If you are contemplating a reduction in face amount, you should
consult your tax advisor regarding the tax consequences of the transaction.
(See "Tax Considerations".)
ACCELERATION OF DEATH BENEFIT RIDER
We may offer in the future a rider benefit that will allow you to receive an
accelerated payment of your Policy's death benefit. This benefit will be
available where certain special needs exist, as described briefly below. Your
right to exercise the rider will be subject to certain conditions.
We will make the accelerated benefits rider available to you only if: (1)
-------------------------------------------------------------------------
your state insurance department has approved the rider, and (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.
- ---------------
We expect that payment of the rider benefit will be available if the insured
is diagnosed as terminally ill, as defined in the rider. The benefit may be
subject to discounting and charges. Payment will be subject to evidence
satisfactory to us.
See "Tax Considerations", below, for a discussion of the tax consequences
associated with the accelerated benefits rider.
INVESTMENT OPTIONS
You can allocate your Policy's premiums and cash value among the Sub-
Accounts of the Variable Account and the Fixed Account in any combination.
Currently, you can allocate to an unlimited number of the available accounts
(including the Fixed Account) at any one time; we have the right to limit to
ten the number of accounts to which you can allocate at any one time. You must
allocate whole percentages.
You make the initial allocation when you apply for a Policy. You can change
the allocation of future premiums at any time thereafter. The change will be
effective for premiums applied on or after the date when we receive your
request. You may request the change by telephone or by written request. (See
"Communications and Payments".)
See "Transfer Option" below for information on how to request a transfer or
reallocation by telephone.
TRANSFER OPTION
Beginning fifteen days after we mail the confirmation for the initial
premium, you may transfer your Policy's cash value between Sub-Accounts. We
reserve the right to limit sub-account transfers to four per Policy year
(twelve per Policy year for Policies issued in New York). Currently we do not
limit the number of transfers per Policy year. We reserve the right to make a
charge for transfers in excess of twelve in a Policy year. A transfer is
effective as of the date when we receive the transfer request. (See
"Communications and Payments".) For special rules regarding transfers
involving the Fixed Account, see "The Fixed Account".
We did not design the Policy's transfer privilege to give you a way to
speculate on short-term market movements. To prevent excessive transfers that
could disrupt the management of the Eligible Funds and increase transaction
costs, we may adopt procedures to limit excessive transfer activity. For
example, we may impose conditions and limits on, or refuse to accept, transfer
requests that we receive from third parties. Third parties include investment
advisors or registered representatives acting under power(s) of attorney from
one or more Policy owners.
You may request a Sub-Account transfer or reallocation of future premiums by
written request (which may be telecopied) to our Home Office or by telephoning
us. To request a transfer or reallocation by telephone, you should contact
your registered representative or contact us at 1-800-621-5086. We use
reasonable procedures to confirm that instructions communicated by telephone
are genuine. Any telephone instructions that we reasonably believe to be
genuine will be your responsibility, including losses arising from any errors
in the communication of instructions.
24
<PAGE>
DOLLAR COST AVERAGING
We offer an automated transfer privilege called dollar cost averaging. The
same dollar amount is transferred 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, a lower than average cost of purchases may be achieved 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. (See Appendix C.)
Under this feature, you may request that a certain amount of your cash value
be transferred 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. We have the right to
limit allocation of cash value to no more than 10 of the Sub-Accounts at any
one time. You must transfer a minimum of $100 to each Sub-Account that you
select under this feature. You can select a dollar cost averaging program when
you apply for the Policy or at a later date by contacting our Home Office. You
may participate in the dollar cost averaging program while you are
participating in the asset rebalancing program as long as the Sub-Account from
which you are transferring cash value under the dollar cost averaging program
is not included in the asset rebalancing program. (See "Asset Rebalancing"
below). You can cancel your use of the dollar cost averaging program at any
time before the monthly transfer date. Transfers will continue until you
notify us to stop 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. An asset rebalancing program automatically reallocates your cash value
among the Sub-Accounts each quarter to return the allocation to the 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 can 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 by which your cash value will be reallocated among the Sub-
Accounts. You may participate in the asset rebalancing program while you are
participating in the dollar cost averaging program as long as the Sub-Account
from which you are transferring cash value under the dollar cost averaging
program is not included in the asset rebalancing program. (See "Dollar Cost
Averaging" above). 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 as 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.
SUBSTITUTION OF INSURED PERSON
Subject to state insurance department approval, we offer a rider benefit
that permits you to substitute the insured person under your Policy, if you
provide satisfactory evidence that the person proposed to be insured is
insurable. The right to substitute the insured person is subject to some
restrictions. A substitution of the insured person is a taxable exchange. In
addition, a substitution of the insured person could reduce the amount of
premiums you can pay into the Policy under Federal tax law if you selected the
guideline premium test and, therefore, may require a partial surrender of cash
value.
Your registered representative can provide current information on the
availability of the rider. You should consult your tax advisor before
substituting the insured person under your Policy.
PAYMENT OF PROCEEDS
We ordinarily pay any net cash value, loan value or death benefit proceeds
payable from the Sub-Accounts within seven days after we receive a request, or
satisfactory proof of death of the insured. (See "Communications and
Payments".) 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 for other than weekends or holidays, or if trading on the
New York Stock Exchange is restricted, (ii) if the SEC determines that a state
of emergency exists that makes payments or Sub-Account transfers impractical,
or (iii) at any other time when the Eligible Funds or the Variable Account
have the legal right to suspend payment.
25
<PAGE>
We may withhold payment of surrender or loan proceeds if those proceeds are
coming from a Policy Owner's check which has not yet cleared. We may also
delay payment while we consider whether to contest the Policy. We pay interest
on the death benefit proceeds from the date they become payable to the date we
pay them.
The beneficiary can elect our Access Plus program for payment of death
proceeds at any time before we pay them. We establish an Access Plus account
at State Street Bank & Trust Company at the time for payment. The Access Plus
account provides convenient access to proceeds, which are maintained in
MetLife's general account, through checkbook privileges with State Street.
Normally we promptly make payments of cash value, or of any loan value
available, from cash value in the Fixed Account. However, we may delay those
payments for up to six months. We pay interest in accordance with state
insurance law requirements on delayed payments.
24 MONTH RIGHT
GENERAL RIGHT. Generally, during the first 24 months after the Policy's
issue date, and during the first 24 months after the date of an increase in
face amount, you may convert the Policy, or a portion of it, to fixed benefit
coverage by transferring all or a portion of your Policy's cash value, and
allocating all or a portion of future premiums, to the Fixed Account. The
request to convert to fixed benefit coverage must be in written form
satisfactory to us.
You may exercise this privilege only once within 24 months after issue, and
only once within 24 months after each increase in face amount. Transfers into
the Fixed Account pursuant to this right will not count toward the limit on
the number of cash value transfers permitted under the Policy each year.
Transfers of cash value back to one or more Sub-Accounts of the Variable
Account are subject to the Policy's general limits on transfers from the Fixed
Account (see "The Fixed Account").
The Policy permits us to limit allocations to the Fixed Account under some
circumstances. (See "The Fixed Account.") If we limit such allocations and you
then wish to exercise the 24 Month Right, you may allocate to the Fixed
Account only (i) the Policy's cash value before any face amount increase plus
the portion of future premiums attributable to the Policy's face amount before
any increase, if you exercise the right during the first 24 months after
issue, or (ii) the portion of the Policy's cash value and future premiums
attributable to the face amount increase, if you exercise the right within 24
months after a face amount increase. After exercising the 24 Month Right, you
may continue to allocate to the Fixed Account only the percentage of premiums
that you allocated to the Fixed Account pursuant to your most recent exercise
of the 24 Month Right. In addition, if you have exercised this right, and we
later limit such allocations, then you may continue to allocate to the Fixed
Account only the lowest percentage of premiums that you allocated to the Fixed
Account at any time since your most recent exercise of the 24 Month Right.
FOR POLICIES ISSUED IN MARYLAND AND NEW JERSEY. Under Policies issued in
Maryland and New Jersey, you can exchange the initial face amount of your
Policy, and any increase in face amount of your Policy, for a fixed benefit
whole life or endowment life insurance policy provided that you repay any
policy loans and (1) the Policy has not lapsed and (2) the exchange is made
within 24 months after the Policy's issue date or, if you are exchanging an
increase in face amount, within 24 months after the date of the increase.
We make the exchange without evidence of insurability. The new policy will
have, at your option, either the same death benefit or the same net amount at
risk as that being exchanged. For the exchange of the initial face amount of
the variable life policy, the new policy will have the same issue age,
underwriting class and policy date as the variable life policy had. For the
exchange of an increase in face amount, the new policy will have the same
issue age and underwriting class of the insured as on the date of the
increase, and a policy date equal to the effective date of the increase. We
will attach any riders to the original Policy to the new policy if they are
available.
Contact us or your registered representative for more specific information
about the 24 Month Right in these states. The exchange may result in a cost or
credit to you. On the exchange, you may need to make an immediate premium
payment on the new policy in order to keep it in force.
PAYMENT OPTIONS
We pay the Policy's death benefit and net cash value in one sum unless you
or the payee choose a payment option for all or part of the proceeds. You can
choose a combination of payment options. You can make, change or revoke the
selection of
26
<PAGE>
payee or payment option before the death of the insured. You can contact your
registered representative or the Administrative Office for the procedure to
follow. The payment options available are fixed benefit options only and are
not affected by the investment experience of the Variable Account. Once
payments under an option begin, withdrawal rights may be restricted.
The following payment options are available:
(i) INCOME FOR A SPECIFIED NUMBER OF YEARS. We pay proceeds in equal
monthly installments for up to 30 years, with interest at a rate not
less than 3.5% a year, compounded yearly. Additional interest that we
pay for any year is added to the monthly payments for that year.
(ii) 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.
(iii) LIFE INCOME WITH REFUND. We pay proceeds in equal monthly
installments during the life of the payee. At the payee's death, we
pay any unpaid proceeds remaining either in one sum or in equal
monthly installments until we have paid the total proceeds.
(iv) 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 or add it
to the principal annually. At the death of the payee, or at the end of
the period agreed to, we pay the balance of principal and any interest
in one sum.
(v) 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 pay any amounts unpaid at the death of the
payee in one sum.
(vi) LIFE INCOME FOR TWO LIVES. We 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 pay
two-thirds of the monthly amount for the life of the surviving payee.
You need our consent to use an option if the installment payments would be
less than $20.
ADDITIONAL BENEFITS BY RIDER
If you elect the Guaranteed Death Benefit at issue, we add it to the Policy
by rider. You can add other additional benefits to the Policy by rider,
subject to our underwriting and issuance standards. These additional benefits
usually require an additional charge as part of the Monthly Deduction from
cash value. The rider benefits available with the Policies provide fixed
benefits that do not vary with the investment experience of the Variable
Account.
It may be to your economic advantage to include a significant portion or
percentage of your insurance coverage under an Adjustable Term Insurance
Rider. However, like the cost of coverage under the Policy, charges deducted
from the Policy's cash value to pay for term coverage no longer participate in
the investment experience of the Variable Account, and generally increase with
the age of the covered individual. Use of a term rider reduces sales
compensation. Your registered representative can provide you more information
on the uses of term rider coverage.
The following riders are available:
ADJUSTABLE TERM RIDER, which provides term insurance. This Rider terminates
no later than the Policy anniversary on which the insured has reached age
100.
WAIVER OF MONTHLY DEDUCTION, which provides for waiver of Monthly Deductions
upon the disability of the insured.
TEMPORARY TERM INSURANCE, which provides for insurance from the date of
issue to the Policy Date.
Not all riders may be available to you and riders in addition to those
listed above may be made available. Restrictions on rider coverage may apply
in some states. You should consult your registered representative regarding
the availability of riders.
POLICY OWNER AND BENEFICIARY
The Policy Owner is named in the application but may be changed from time to
time. At the death of the Policy Owner, his or her estate will become the
Policy Owner unless a successor Policy Owner has been named. The Policy
Owner's rights (except for rights to payment of benefits) terminate at the
death of the insured.
27
<PAGE>
The beneficiary is also named 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 and
must survive the insured in order to receive the death proceeds. If no named
beneficiary survives the insured, we pay proceeds to the Policy Owner.
A change of Policy Owner or beneficiary is subject to all payments made and
actions taken by us under the Policy before we receive a signed change form.
You can contact your registered representative or the Home Office for the
procedure to follow.
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. We are not responsible for determining whether or not an assignment is
valid. Changing the Policy Owner or assigning the Policy may have tax
consequences. (See "Tax Considerations" below.)
THE VARIABLE ACCOUNT
We established the Variable Account as a separate investment account on
January 31, 1983 under Delaware law. It became subject to Massachusetts law
when we changed our domicile to Massachusetts on August 30, 1996. The Variable
Account is the funding vehicle for the Policies and 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. Registration with
the SEC does not involve SEC supervision of the Variable Account's management
or investments. However, 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 we own 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 we may conduct. We believe this means
that the assets of the Variable Account equal to the reserves and other
liabilities of the Variable Account are not available to meet the claims of
our general creditors, and may only be used to support the cash values under
our variable life insurance policies issued by the Variable Account. We may
transfer to our general account assets which exceed the reserves and other
liabilities of the Variable Account. We 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 our
other income or capital gains and losses.
INVESTMENTS OF THE VARIABLE ACCOUNT
Sub-Accounts of the Variable Account that are available in this Policy
invest in the following Eligible Funds:
The Zenith Back Bay Advisors Money Market Series. Its investment objective
is the highest possible level of current income consistent with preservation
of capital. An investment in the Money Market Series is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Money Market Series seeks to maintain a net
asset value of $100 per share, it is possible to lose money by investing in
the Money Market Series.
The Zenith Back Bay Advisors Bond Income Series. Its investment objective is
a high level of current income consistent with protection of capital.
The Zenith Capital Growth Series. Its investment objective is the long-term
growth of capital through investment primarily in equity securities of
companies whose earnings are expected to grow at a faster rate than the United
States economy.
The Zenith Westpeak Stock Index Series. Its investment objective is
investment results that correspond to the composite price and yield
performance of the S&P 500 Index.
The Zenith Back Bay Advisors Managed Series. Its investment objective is a
favorable total investment return through investment in a diversified
portfolio.
The Zenith Westpeak Growth and Income Series. Its investment objective is
long-term total return through investment in equity securities.
28
<PAGE>
The Zenith Loomis Sayles Small Cap Series. Its investment objective is long-
term capital growth from investments in common stocks or their equivalents.
The Zenith Balanced Series (formerly, the Loomis Sayles Balanced Series).
Its investment objective is long-term total return from a combination of
capital appreciation and current income.
The Zenith Morgan Stanley International Magnum Equity Series. Its investment
objective is long-term capital appreciation through investment primarily in
international equity securities. In addition to the risks associated with
equity securities generally, foreign securities present additional risks.
The Zenith Harris/Oakmark Midcap Value Series (formerly, the Goldman Sachs
Midcap Value Series). Its investment objective is long-term capital
appreciation.
The Zenith Davis Venture Value Series. Its investment objective is growth of
capital.
The Zenith Alger Equity Growth Series. Its investment objective is long-term
capital appreciation.
The Zenith MFS Investors Series. Its investment objective is reasonable
current income and long-term growth of capital and income.
The Zenith MFS Research Managers Series. Its investment objective is long-
term growth of capital.
The Metropolitan Putnam Large Cap Growth Portfolio.* Its investment
objective is capital appreciation.
The Metropolitan Janus Mid Cap Portfolio.* Its investment objective is long-
term growth of capital.
The Metropolitan Russell 2000 Index Portfolio.* Its investment objective is
to equal the return of the Russell 2000 Index.
The VIP Equity-Income Portfolio. It seeks reasonable income. The fund will
also consider the potential for capital appreciation. The fund seeks a yield
which exceeds the composite yield on the securities comprising the S&P 500.
The VIP Overseas Portfolio. It seeks long-term growth of capital. Foreign
markets, particularly emerging markets, can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory, market
or economic developments and can perform differently than the U.S. market.
The VIP High Income Portfolio. It seeks a high level of current income while
also considering growth of capital. Lower-quality debt securities (those of
less than investment-grade quality) can be more volatile due to increased
sensitivity to adverse issuer, political, regulatory, market or economic
developments.
The VIP II Asset Manager Portfolio. It seeks high total return with reduced
risk over the long-term by allocating its assets among stocks, bonds and
short-term instruments.
- --------
* Availability is subject to any necessary state insurance department
approvals.
The Zenith Fund and the Metropolitan Series Fund, Inc. are open-end
management investment companies, more commonly known as mutual funds. These
funds are available as investment vehicles for separate investment accounts of
MetLife, NELICO and other life insurance companies.
VIP and VIP II are mutual funds that serve as the investment vehicles for
variable life insurance and variable annuity separate accounts of various
insurance companies.
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 Eligible Funds' investment objectives may not be met. More about the
Eligible Funds, including their investments, expenses, and risks, is in the
attached Eligible Fund prospectuses and the Eligible Funds' Statements of
Additional Information.
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.
29
<PAGE>
INVESTMENT MANAGEMENT
The adviser and sub-adviser for each series of the Zenith Fund are listed in
the chart below. New England Investment Management, which is an indirect,
wholly-owned subsidiary of NELICO, CGM, and each of the sub-advisers are
registered with the SEC as investment advisers under the Investment Advisers
Act of 1940.
<TABLE>
<CAPTION>
SERIES ADVISER SUB-ADVISER
------ ------- -----------
<S> <C> <C>
Capital Growth Capital Growth Management Limited
Partnership ("CGM")*
Back Bay Advisors Money New England Investment Management, Inc. Back Bay Advisors, L.P.*
Market
Back Bay Advisors Bond New England Investment Management, Inc. Back Bay Advisors, L.P.*
Income
Back Bay Advisors New England Investment Management, Inc. Back Bay Advisors, L.P.*
Managed
Westpeak Stock Index New England Investment Management, Inc. Westpeak Investment Advisors, L.P.*
Westpeak Growth and New England Investment Management, Inc. Westpeak Investment Advisors, L.P.*
Income
Loomis Sayles Small Cap New England Investment Management, Inc. Loomis, Sayles & Company, L.P.*
Balanced New England Investment Management, Inc. Wellington Management Company, LLP
Morgan Stanley New England Investment Management, Inc. Morgan Stanley Dean Witter
International Investment Management Inc.
Magnum Equity
Harris/Oakmark Midcap New England Investment Management, Inc. Harris Associates L.P.
Value
Davis Venture Value New England Investment Management, Inc. Davis Selected Advisers, L.P.**
Alger Equity Growth New England Investment Management, Inc. Fred Alger Management, Inc.
MFS Investors New England Investment Management, Inc. Massachusetts Financial Services Company
MFS Research Managers New England Investment Management, Inc. Massachusetts Financial Services Company
</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 the case of the Back Bay Advisors Money Market Series, Back Bay Advisors
Bond Income Series, Back Bay Advisors Managed Series, Westpeak Stock Index
Series, Westpeak Growth and Income Series, Harris/Oakmark Midcap Value Series
and Loomis Sayles Small Cap Series, New England Investment Management became
the adviser on May 1, 1995. The Morgan Stanley International Magnum Equity
Series' sub-adviser was Draycott Partners, Ltd. until May 1, 1997, when Morgan
Stanley Dean Witter Investment Management became the sub-adviser. The
Harris/Oakmark Midcap Value Series' sub-adviser was Loomis Sayles until May 1,
1998, when Goldman Sachs Asset Management, a separate operating division of
Goldman Sachs & Co., became the sub-adviser. Harris Associates became the sub-
adviser on May 1, 2000. The Balanced Series' sub-adviser was Loomis Sayles
until May 1, 2000, when Wellington Management Company became the sub-adviser.
For more information about the Series' advisory agreements, see the Zenith
Fund prospectus attached at the end of this prospectus and the Zenith Fund's
Statement of Additional Information.
MetLife is the investment adviser for the Metropolitan Series Fund
Portfolios. Putnam Investment Management, Inc. is the sub-investment manager
of the Putnam Large Cap Growth Portfolio. Janus Capital Corporation is the
sub-investment manager of the Janus Mid Cap Portfolio. For more information
regarding the investment adviser and sub-investment managers of the
Metropolitan Series Fund Portfolios, see the Metropolitan Series Fund
prospectus attached at the end of this prospectus and its Statement of
Additional Information.
Fidelity Management & Research Company ("FMR") is the investment adviser for
VIP and VIP II. For more information regarding the VIP Equity-Income, VIP
Overseas, VIP High Income and VIP II Asset Manager Portfolios and FMR, see the
VIP and VIP II prospectuses attached at the end of this prospectus and their
Statements of Additional Information.
30
<PAGE>
THE FIXED ACCOUNT
THE POLICY HAS A FIXED ACCOUNT OPTION ONLY IN STATES THAT APPROVE IT.
You may allocate net premiums and transfer cash value to the Fixed Account,
which is part of NELICO's general account. Because of exemptive and
exclusionary provisions in the Federal securities laws, interests in the Fixed
Account are not registered under the Securities Act of 1933. Neither the Fixed
Account nor the general account is registered as an investment company under
the Investment Company Act of 1940. Therefore, neither the Fixed Account, the
general account nor any interests therein are generally subject to the
provisions of these Acts, and the SEC does not review Fixed Account
disclosure. This disclosure may, however, be subject to certain provisions of
the Federal securities laws on the accuracy and completeness of prospectuses.
GENERAL DESCRIPTION
Our general account includes all of our assets, except assets in the
Variable Account or in our other separate accounts. We decide how to invest
our general account assets. Fixed Account allocations do not share in the
actual investment experience of the Fixed Account. Instead, we guarantee that
the Fixed Account will credit interest at an annual effective rate of at least
4%. We may or may not credit interest at a higher rate. We declare the current
interest rate for the Fixed Account periodically. The Fixed Account earns
interest daily.
We can change our Fixed Account interest crediting procedures. Currently,
all cash value in the Fixed Account on a Policy anniversary earns interest at
the declared annual rate in effect on the anniversary until the next Policy
anniversary, when it is credited with our current rate. (Although our current
practice is to credit your entire Fixed Account cash value on a Policy
anniversary with our current annual rate until the next anniversary, we can
select any portion, from 0% to 100%, of your Fixed Account cash value on a
Policy anniversary to earn interest at our current rate until the next Policy
anniversary, unless otherwise required by state law.) Any net premiums
allocated or cash value transferred to the Fixed Account on a date other than
a Policy anniversary earn interest at our current rate until the next Policy
anniversary. Any loan repayment allocated to the Fixed Account is credited
with the lesser of our current interest rate and the effective interest rate
for your Policy's cash value in the Fixed Account on the date of the
repayment. The effective interest rate is a weighted average of all the Fixed
Account rates for your Policy.
VALUES AND BENEFITS
Cash value in the Fixed Account increases from net premiums allocated and
transfers to the Fixed Account and Fixed Account interest, and decreases from
loans, partial surrenders made from the Fixed Account, charges, and transfers
from the Fixed Account. We deduct charges from the Fixed Account and the
Policy's sub-accounts in proportion to the amount of cash value in each. (See
"Monthly Deduction from Cash Value"). A Policy's total cash value includes
cash value in the Variable Account, the Fixed Account, and any cash value held
in our general account (but outside of the Fixed Account) due to a Policy
loan.
Cash value in the Fixed Account is included in the calculation of the
Policy's death benefit in the same manner as the cash value in the Variable
Account. (See "Death Benefit".)
POLICY TRANSACTIONS
We can restrict allocations and transfers to the Fixed Account if the
effective annual rate of interest on the amount would be 4%. Otherwise, the
requirements for Fixed Account and Variable Account allocations are the same.
(See "Allocation of Net Premiums".)
Except as described below, the Fixed Account has the same rights and
limitations about premium allocations, transfers, loans, surrenders and
partial surrenders as the Variable Account. (See "Other Policy Features".) The
following special rules apply to the Fixed Account.
TRANSFERS FROM THE FIXED ACCOUNT TO THE VARIABLE ACCOUNT ARE ALLOWED ONLY
ONCE IN EACH POLICY YEAR. WE PROCESS A TRANSFER FROM THE FIXED ACCOUNT IF WE
RECEIVE THE TRANSFER REQUEST WITHIN THE 30 DAY PERIOD AFTER THE POLICY
ANNIVERSARY. WE MAKE THE TRANSFER AS OF THE DATE WE RECEIVE THE TRANSFER
REQUEST AT OUR HOME OFFICE.
THE AMOUNT OF CASH VALUE YOU MAY TRANSFER FROM THE FIXED ACCOUNT IS LIMITED
TO THE GREATER OF 25% OF THE POLICY'S CASH VALUE IN THE FIXED ACCOUNT ON THE
TRANSFER DATE OR THE AMOUNT OF CASH VALUE TRANSFERRED FROM THE FIXED ACCOUNT
31
<PAGE>
IN THE PRECEDING POLICY YEAR. Regardless of these limits, if a transfer of
cash value from the Fixed Account would reduce the remaining cash value in the
Fixed Account below $100, you may transfer the entire amount of Fixed Account
cash value. The total number of transfers among sub-accounts and from the sub-
accounts to the Fixed Account may not exceed four in one Policy year without
our consent. We currently do not limit the number of these transfers in a
Policy year.
Unless you request otherwise, a Policy loan reduces the Policy's cash value
in the sub-accounts and not the Fixed Account. If there is not enough cash
value in the Policy's sub-accounts for the loan, we take the balance from the
Fixed Account. We allocate all loan repayments first to the outstanding loan
balance attributable to the Fixed Account. The amount removed from the
Policy's sub-accounts and the Fixed Account as a result of a loan earns
interest at an effective rate of at least 4% per year, which we credit
annually to the Policy's cash value in the sub-accounts and the Fixed Account
in proportion to the Policy's cash value in each on the day it is credited.
Unless you request otherwise, we take partial surrenders only from the
Policy's sub-accounts and not the Fixed Account. If there is not enough cash
value in the Policy's sub-accounts for the partial surrender, we take the
balance from the Fixed Account.
We can delay transfers, surrenders, and Policy loans from the Fixed Account
for up to six months (to the extent allowed by state insurance law). We will
not delay loans to pay premiums on policies issued by us.
NELICO'S DISTRIBUTION AGREEMENT
We sell the Policies through licensed insurance agents. These agents are
also registered representatives of New England Securities Corporation ("New
England Securities"). New England Securities, a Massachusetts corporation
organized in 1968 and an indirect, wholly-owned subsidiary of NELICO, is
registered with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers,
Inc.
New England Securities, 399 Boylston Street, Boston, Massachusetts 02116,
also serves as the principal underwriter for the Policies under a Distribution
Agreement with NELICO. Under the Distribution Agreement, we pay the following
sales expenses: general agent and agency manager's compensation, agents'
training allowances, deferred compensation and insurance benefits of agents,
general agents and agency managers and advertising expenses and all other
expenses of distributing the Policies.
The selling agent may select one of two schedules for payment of commissions
and/or service fees: (1) ; or (2) . Agents who meet certain
NELICO productivity and persistency standards may be eligible for additional
compensation. Agents may receive a portion of the general agent's expense
reimbursement allowance.
New England Securities may enter into selling agreements with other broker-
dealers registered under the Securities Exchange Act of 1934 whose
representatives are authorized by applicable law to sell variable life
insurance policies. Under the agreements with those broker-dealers,
commissions paid to the broker-dealer on behalf of the registered
representative will not exceed . We may pay certain broker-
dealers an additional bonus after the first Policy year on behalf of certain
registered representatives, which may be up to the amount of the basic
commission for the particular Policy year. We pay commissions through the
registered broker-dealer, and may also pay additional compensation to the
broker-dealer and/or reimburse it for portions of Policy sales expenses. The
registered representative may receive a portion of the expense reimbursement
allowance paid to the broker-dealer.
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY
Generally, we can challenge the validity of your Policy or a rider to your
Policy during the insured's lifetime for two years (or less, if required by
state law) from the date of issue, based on misrepresentations made in the
application. We can challenge the portion of the death benefit resulting from
payment of an underwritten premium payment for two years during the insured's
lifetime from receipt of the premium payment and can challenge the portion of
the death benefit resulting from an increase in face amount for two years
during the insured's lifetime from the date of the increase. However, if the
insured dies within two years of the date of issue, we can challenge all or
part of the Policy at any time for misrepresentations in the application. If
the insured dies within two years of an increase in face amount, we can
challenge the portion of the death benefit resulting from the face amount
increase at any time for misrepresentation.
32
<PAGE>
MISSTATEMENT OF AGE OR SEX
If the application misstates the insured's age or sex, the Policy's death
benefit is the amount that the most recent Monthly Deduction which was made
would provide, based on the insured's correct age and, if the Policy is sex-
based, correct sex.
SUICIDE
If the insured commits suicide within two years (or less, if required by
state law) from the date of issue, the death benefit is limited to premiums
paid, less any policy loan balance and partial surrenders. If the insured
commits suicide more than two years from the issue date of the Policy but
within two years from the date of an increase in face amount, the death
benefit for the increase in face amount is limited to the Monthly Deductions
and any Face Amount Increase Administrative Charge made to pay for that
increase. (Where required by state law, we determine the death benefit under
this provision by using the greater of: the reserve of the insurance which is
subject to the provision; and the amounts used to purchase the insurance which
is subject to the provision.)
33
<PAGE>
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. 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 guaranteed 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 the 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
the 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 Eligible 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 income tax treatment than other life insurance contracts. In
general a Policy will be classified as a Modified Endowment Contract if the
amount of premiums paid into the Policy causes the Policy to fail the "7-pay
test." A Policy will fail the 7-pay test if at any time in the first seven
Policy years, the amount paid into the Policy exceeds the sum of the level
premiums that would have been paid at that point under a Policy that provided
for paid-up future benefits after the payment of seven level annual payments.
If there is a reduction in the benefits under the Policy during the first
seven Policy years, for example, as a result of a partial surrender, the 7-pay
test will have to be reapplied as if the Policy had originally been issued at
the reduced face amount. If there is a "material change" in the Policy's
benefits or other terms, even after the first seven Policy years, the Policy
may have to be retested as if it were a newly issued Policy. A material change
can occur, for example, when there is an increase in the death benefit which
is due to the payment of an unnecessary premium. Unnecessary premiums are
premiums paid into the
34
<PAGE>
Policy which are not needed in order to provide a death benefit equal to the
lowest death benefit that was payable in the first seven Policy years. A
material change may also occur if you request an increase in the face amount
of your Policy. To prevent your Policy from becoming a Modified Endowment
Contract, it may be necessary to limit premium payments, to limit increases in
face amount, or to limit reductions in benefits. A current or prospective
Policy Owner should consult a tax 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 Policy Owner or the joint lives (or joint
life expectancies) of the Policy Owner and the Policy Owner's
beneficiary or designated 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 calendar 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. If such a rider is made available, 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,
transfer and other tax consequences depend on the individual circumstances of
each Policy Owner or beneficiary.
The tax consequences of continuing the Policy beyond the insured's 100th
year are unclear. You should consult a tax adviser if you intend to keep the
Policy in force beyond the 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
35
<PAGE>
"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 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 a charge from the
Variable Account for company 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.
36
<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 Chairman, President and Chief Executive Officer of
NELICO since 1998 and President, Individual Business
of Metropolitan Life Insurance Company since 1999;
formerly, Director, President and Chief Operating
Officer 1997-1998 of NELICO; President and Chief
Executive Officer 1996-1997 of Equitable Life
Assurance Society; President and Chief Operating
Officer 1996-1997 of Equitable Companies, Inc.;
President and Chief Operating Officer 1994-1996 of
Equitable Life Assurance Society.
Robert H. Benmosche Director of NELICO since 1998 and Chairman, President
Metropolitan Life and Chief Executive Officer of Metropolitan Life
Insurance Co. Insurance Company since 1998; formerly, Director,
One Madison Avenue President and Chief Operating Officer 1997-1998;
New York, NY 10010 Executive Vice President 1995-1997 of Metropolitan
Life; Executive Vice President 1989-1995 of Paine
Webber.
Susan C. Crampton Director of NELICO since 1996 and serves as Principal
6 Tarbox Road of The Vermont Partnership, a business consulting firm
Jericho, VT 05465 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 the Board
R.R. Box 67-15 of SLM Holdings since 1997; formerly, Director 1994-
Harborside, ME 04642 1996 of New England Mutual.
George J. Goodman Director of NELICO since 1996 and author, television
Adam Smith's Money World 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 and President of
Ten Sterling Place Merrimack Higher Education Associates, Inc. since
Bow, NH 03304 1998; formerly Director 1987-1996 of New England
Mutual and Executive Director and Chief Executive
Officer 1994-1997 of the California Academy of
Sciences.
Philip K. Howard, Esq. Director of NELICO since 1996 and Partner of the law
Howard, Smith & Levin LLP firm of Howard, Smith & Levin LLP in New York City.
1330 Avenue of the
Americas
New York, NY 10019
Bernard A. Leventhal Director of NELICO since 1996; formerly, Vice Chairman
Burlington Industries of the Board of Directors 1995-1998 of Burlington
1345 Avenue of the Industries, Inc.; Director and Executive Vice
Americas President 1993-1995 of Burlington Menswear Division.
17th Floor
New York, NY 10105
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.
Stewart G. Nagler Director of NELICO since 1996 and Vice Chairman and
Metropolitan Life Chief Financial Officer of Metropolitan Life Insurance
Insurance Co. Company since 1998; formerly, Senior Executive Vice
One Madison Avenue President and Chief Financial Officer 1986-1998 of
New York, NY 10010 Metropolitan Life Insurance Company.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS DURING THE PAST FIVE YEARS
------------------ -----------------------------
<C> <S>
Catherine A. Rein Director of NELICO since 1998 and President and Chief
Metropolitan Property and Executive Officer of Metropolitan Property and
Casualty Insurance Casualty Insurance Company since 1999; formerly,
Company Senior Executive Vice President 1998-1999; Executive
700 Quaker Lane Vice President 1989-1998 of Metropolitan Life
Warwick, RI 02887 Insurance Company.
Rand N. Stowell Director of NELICO since 1996 and President of United
P.O. Box 60 Timber Corp. of Dixfield, Maine; formerly, Director
Weld, ME 04285 1990-1996 of New England Mutual.
Alexander B. Trowbridge Director of NELICO since 1996 and President of
Trowbridge Partners Inc. Trowbridge Partners, Inc. in Washington, DC; formerly,
1317 F Street, NW, 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 of New England Mutual.
A. Frank Beaz Executive Vice President of NELICO since 1999,
formerly, Senior Vice President 1998-1999 of NELICO;
Chief Administrative Officer and Senior Vice President
1997-1998 of Equitable Distributors and Senior Vice
President 1994-1997 of The Equitable Life Insurance
Companies.
Pauline V. Belisle Senior Vice President of NELICO since 1996; formerly,
Senior Vice President 1994-1996 of New England Mutual.
Mary Ann Brown President, New England Products and Services (a
business unit of NELICO) since 1998; formerly,
Director, Worldwide Life Insurance 1997-1998 for Swiss
Reinsurance New Markets; President & Chief Executive
Officer 1996-1998 of Atlantic International
Reinsurance Company; Executive Vice President 1996-
1997 of Swiss Re Atrium and Swiss Re Services and
Principal 1987-1996 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 1996-1998 of NELICO;
Senior Vice President 1995-1996 and Vice President
1994-1995 of New England Mutual.
Anne Marie Faria Senior Vice President of NELICO since 1996; formerly,
Vice President 1990-1996 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.
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 of New England Mutual.
Daniel D. Jordan Second Vice President, Counsel, Secretary and Clerk
since 1996; formerly, Counsel and Assistant Secretary
1990-1996 of New England Mutual.
Alan C. Leland, Jr. Senior Vice President of NELICO since 1996; formerly,
Vice President 1984-1996 of New England Mutual.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE
NAME DURING THE PAST FIVE YEARS
---- -----------------------------
<C> <S>
George J. Maloof Senior Vice President of NELICO since 1996; formerly,
Vice President 1991-1996 of New England Mutual.
Kenneth D. Martinelli Senior Vice President of NELICO since 1999; formerly,
Vice President 1997-1999 of NELICO and Vice President
1994-1997 of The Equitable Life Assurance Company.
Thomas W. McConnell Senior Vice President of NELICO since 1996 and
Director, Chief Executive Officer and President of New
England Securities Corporation since 1993.
Hugh C. McHaffie Senior Vice President of NELICO since 1999; formerly,
Vice President 1994-1999 of Manufacturers Life
Insurance Company of North America.
Stephen J. McLaughlin Senior Vice President of NELICO since 1999; formerly,
Vice President 1996-1999 of NELICO and Vice President
1994-1996 of New England Mutual.
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 of Liberty Life Assurance
Company.
David Y. Rogers Executive Vice President and Chief Financial Officer of
NELICO since 1999; formerly, Partner, Actuarial
Consulting 1992-1999 of Price Waterhouse Coopers LLP.
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 of New England Mutual.
John W. Wright President, New England Financial 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).
</TABLE>
The principal business address for each of the directors and executive
officers is the same as NELICO's except where indicated otherwise.
VOTING RIGHTS
We own the Eligible Fund shares held in the Variable Account and vote those
shares at meetings of the Eligible Fund shareholders. Under Federal securities
law, you currently have the right to instruct us how to vote shares that are
attributable to your Policy.
Policy Owners who are entitled to give voting instructions and the number of
shares attributable to their Policies are determined as of the meeting record
date. If we do not receive timely instructions, we will vote shares in the
same proportion as (i) the aggregate cash value of policies giving
instructions, respectively, to vote for, against, or withhold votes on a
proposition, bears to (ii) the total cash value in that sub-account for all
policies for which we receive voting instructions. No voting privileges apply
to the Fixed Account or to cash value removed from the Variable Account due to
a Policy loan.
39
<PAGE>
We will vote all Eligible Fund shares held by our 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 voting
instructions were received and (ii) shares that are voted in proportion to
such voting instructions.
The Eligible Funds' Boards 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
an Eligible Fund, 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 an 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
prohibited by state authorities or inconsistent with a sub-account's
investment objectives. If we do disregard voting instructions, the next annual
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 sub-account assets as a substitute for
Eligible Fund shares, to close a sub-account, or to transfer assets to our
general account as permitted by applicable law; (4) to operate the Variable
Account as a management investment company under the Investment Company Act of
1940 or in any other form; and (5) 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.
TOLL-FREE NUMBERS
For information about historical values of the Variable Account Sub-
Accounts, call 1-800-333-2501.
For Sub-Account transfers, premium reallocations, or Statements of
Additional Information for the Eligible Funds, call 1-800- .
You may also call our Home Office at 1-800- to request current
information about your Policy values, to change or update Policy information
such as your address, billing mode, beneficiary or ownership, or to request
Policy loans of less than $25,000. Requests must be in writing if the Policy
is owned by a corporation or a pension trust.
For all other Policy changes, please contact your registered representative.
REPORTS
We will send you an annual statement showing your Policy's death benefit,
cash value and any outstanding Policy loan principal. We will also confirm
Policy loans, sub-account transfers, lapses, surrenders and other Policy
transactions when they occur.
You will be sent semiannual reports containing the financial statements of
the Variable Account and the Eligible Funds.
40
<PAGE>
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. We may also use unit values to provide information about the
Variable Account's investment performance in this prospectus, marketing
materials, and historical illustrations.
Publications may use articles and releases, developed by NELICO, 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 our
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.
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 has been filed with the SEC. Copies of such additional
information may be obtained from the SEC upon payment of the prescribed fee.
EXPERTS
The financial statements of New England Variable Life Separate Account of
New England Life Insurance Company ("NELICO") 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, and are 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.
41
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
AND ACCUMULATED PREMIUMS
The tables in Appendix A illustrate the way the Policies work. They show how
the death benefit and cash value could vary over an extended period of time
assuming hypothetical gross rates of return (i.e., investment income and
capital gains and losses, realized or unrealized) for the Variable Account
equal to constant after tax annual rates of 0%, 6% and 12%. The insured is
assumed to be in the nonsmoker preferred risk classification. The Tables
assume no rider benefits and assume that no allocations are made to the Fixed
Account. (See "Charges and Expenses.") Illustrations show (1) the Option 1
death benefit using the cash value accumulation test with the Enhanced Net
Single Premium Corridor and (2) the Option 2 death benefit using the guideline
premium test with the IRS Corridor.
The illustrated death benefits and cash values for a Policy would be
different, either higher or lower, 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 premiums were paid in other amounts or at other
than annual intervals. They would also be different depending on the
allocation of cash value among the Variable Account's Sub-Accounts, if the
actual gross rate of return for all Sub-Accounts averaged 0%, 6% or 12%, but
varied above or below that average for individual Sub-Accounts. They would
also differ if a Policy loan or partial surrender were made during the period
of time illustrated, if the insured were female or in another risk
classification, or if the Policies were issued at unisex rates. For example,
as a result of variations in actual returns additional premium payments beyond
those illustrated may be necessary to maintain the Policy in force for the
periods shown or to realize the Policy values shown on particular
illustrations even if the average rate of return is achieved.
The death benefits and cash values shown in the tables reflect: (i)
deductions from premiums for the sales charge and premium tax charge; and (ii)
a Monthly Deduction (consisting of a Policy fee, a mortality and expense risk
fee, and a charge for the cost of insurance) from the cash value on the first
day of each Policy month. (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 .76% of the average daily net assets
of the Eligible Funds. This average reflects voluntary expense cap and expense
deferral arrangements between New England Investment Management and the Zenith
Fund that New England Investment Management could terminate 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 -0.76%,
5.2% and 11.15%, respectively.
The second column of each table shows the amount which would accumulate if
an amount equal to the annual premium were invested to earn interest, after
taxes, of 5% per year, compounded annually.
The internal rate of return on net cash value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the net cash value of the
Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated
premiums could have been invested outside the Policy to arrive at the death
benefit of the Policy. The internal rate of return is compounded annually, and
the premiums are assumed to be paid at the beginning of each Policy year.
If you request, we will furnish a personalized illustration reflecting the
proposed insured's age, sex, underwriting classification, and the face amount
or premium payment schedule requested. Where applicable, we will also furnish
on request an illustration for a Policy which is not affected by the sex of
the insured.
42
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT WITH ENHANCED NET SINGLE PREMIUM CORRIDOR
CASH VALUE ACCUMULATION TEST
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $ $ $ $ $ $ % % %
2 107,625
3 165,506
4 226,282
5 290,096
6 357,100
7 427,455
8 448,828
9 471,270
10 494,833
15 631,546
20 806,031
25 1,028,722
30 1,312,940
35 1,675,681
<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 % % %
2
3
4
5
6
7
8
9
10
15
20
25
30
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, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
43
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST WITH ENHANCED NET SINGLE PREMIUM CORRIDOR
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $ $ $ $ $ $ % % %
2 107,625
3 165,506
4 226,282
5 290,096
6 357,100
7 427,455
8 448,828
9 471,270
10 494,833
15 631,546
20 806,031
25 1,028,722
30 1,312,940
35 1,675,681
<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 % % %
2
3
4
5
6
7
8
9
10
15
20
25
30
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, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
44
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
GUIDELINE PREMIUM TEST WITH IRS CORRIDOR
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $ $ $ $ $ $ % % %
2 107,625
3 165,506
4 226,282
5 290,096
6 357,100
7 427,455
8 448,828
9 471,270
10 494,833
15 631,546
20 806,031
25 1,028,722
30 1,312,940
35 1,675,681
<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 % % %
2
3
4
5
6
7
8
9
10
15
20
25
30
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, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
45
<PAGE>
MALE ISSUE AGE 40
$50,000 ANNUAL PREMIUM FOR SEVEN POLICY YEARS
NONSMOKER PREFERRED UNDERWRITING RISK
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
GUIDELINE PREMIUM TEST WITH IRS CORRIDOR
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE INTERNAL RATE OF RETURN
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ON NET CASH VALUE
ACCUMULATED GROSS ANNUAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS
END OF AT 5% 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%
- ------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $ $ $ $ $ $ % % %
2 107,625
3 165,506
4 226,282
5 290,096
6 357,100
7 427,455
8 448,828
9 471,270
10 494,833
15 631,546
20 806,031
25 1,028,722
30 1,312,940
35 1,675,681
<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 % % %
2
3
4
5
6
7
8
9
10
15
20
25
30
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, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE
INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT AND CASH
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
46
<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 August, 1998. 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 Investors Series and MFS Research Managers Series of the
Zenith Fund commenced operations on April 30, 1999. The remaining Zenith Fund
Series commenced operations on October 31, 1994. The commencement of
operations for the Metropolitan Series Fund, Inc. Portfolios was: March 3,
1997 for the Janus Mid Cap Portfolio; and November 9, 1998 for the Russell
2000 Index Portfolio. The Putnam Large Cap Growth Portfolio of the
Metropolitan Series Fund, Inc. commenced operations on May 1, 2000 and is not
included in this Appendix. The VIP Equity-Income Portfolio and VIP Overseas
Portfolio commenced operations on October 9, 1986 and January 28, 1987,
respectively. The VIP High Income Portfolio and the VIP II Asset Manager
Portfolio commenced operations on September 19, 1985 and September 6, 1989,
respectively.
We base the illustrations 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
premiums are paid at the beginning of each year and that no loans, transfers
or other Policy Owner transactions were made during the periods shown.
Many factors other than investment experience affect Policy values and
benefits. These investment experience figures do not reflect the charges
deducted from Premiums and Monthly Deductions from the cash value. (See
"Charges and Expenses".)
NET RATES OF RETURN
The annual net rate is the effective earnings rate at which the investment
Sub-Accounts increased or decreased over a one-year period, based on the
investment experience of the relevant Eligible Funds. The rate is calculated
by taking the difference between the Sub-Accounts' ending values and beginning
values of the period and dividing it by the beginning values of the period.
The effective annual net rate of return since inception is the annualized
effective interest rate at which the Sub-Accounts increased or decreased since
the inception dates of the Sub-Accounts. For each Sub-Account, we calculate
the rate 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.
47
<PAGE>
SUB-ACCOUNTS INVESTING IN NEW ENGLAND ZENITH FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
8/26/83- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*. 8.87% -0.59% 68.10% 95.21% 52.71% -8.81% 30.76% -3.48% 53.98% -6.05% 14.97% -7.07%
Bond Income..... 3.20 12.61 18.76 14.83 2.27 8.37 12.30 8.09 17.96 8.18 12.61 -3.36
Money Market.... 3.20 10.73 8.26 6.80 6.53 7.52 9.25 8.19 6.21 3.80 2.97 3.97
<CAPTION>
8/26/83- 8/26/83-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*. 38.03% 21.07% 23.48% 34.09%
Bond Income..... 21.20 4.61 10.89 9.04
Money Market.... 5.70 5.13 5.34 5.26
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
5/1/87- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index..... -12.20% 16.34% 30.15% -4.14% 30.43% 7.30% 9.72% 1.12% 36.92% 22.47% 32.50% 27.93%
Managed......... -0.66 9.48 19.08 3.21 20.17 6.70 10.65 -1.11 31.26 15.03 26.56 19.65
<CAPTION>
5/1/87- 5/1/87-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/99 RETURN ANNUAL
- ----------- -------- -------- ---------
<S> <C> <C> <C>
Stock Index.....
Managed.........
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-------------------------------------------------------------- 4/30/93- 4/30/93-
FOR ONE YEAR ENDING 12/31/99 12/31/99
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 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income....... 14.24% -1.21% 36.47% 18.10% 33.47% 24.45%
Midcap Value***......... 14.74 -.27 30.35 17.61 17.32 -5.46
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------------------- 5/2/94- 5/2/94-
FOR ONE YEAR ENDING 12/31/99 12/31/99
5/2/94- -------------------------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap............... -3.23% 28.84% 30.68% 24.85% -1.69%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------------------------------ 10/31/94- 10/31/94-
FOR ONE YEAR ENDING 12/31/99 12/31/99
10/31/94- -------------------------------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- --------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Growth........... -4.20% 48.69% 13.17% 25.63% 47.78%
Balanced****............ -.10 24.79 16.91 16.18 9.11
Venture Value........... -3.50 39.28 25.84 33.50 14.41
International Magnum Eq-
uity**................. 2.60 6.23 6.67 -1.30 7.27
</TABLE>
<TABLE>
<CAPTION>
ANNUAL
NET RATE
OF RETURN
---------
4/30/99- 4/30/99-
12/31/99 12/31/99
4/30/99- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/99 RETURN ANNUAL
- ----------- --------- -------- ---------
<S> <C> <C> <C>
Investors..........................................
Research Managers..................................
</TABLE>
- -------
* Rates of return reflect the Capital Growth Series' former investment
advisory fee of .50% of average daily net assets for the period through
December 31, 1987 and its current advisory fee schedule thereafter.
** The 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 Harris/Oakmark Midcap Value Series' sub-adviser was Loomis Sayles
until May 1, 1998, when Goldman Sachs Asset Management became the sub-
adviser. Harris Associates became the sub-adviser on May 1, 2000. Rates of
return reflect the Series' former investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998 and .75%
thereafter.
**** The Balanced Series' sub-adviser was Loomis Sayles until May 1, 2000, when
Wellington Management Company became the sub-adviser.
SUB-ACCOUNTS INVESTING IN METROPOLITAN SERIES FUND, INC.
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------ 3/3/97- 3/3/97-
FOR ONE YEAR ENDING 12/31/99 12/31/99
3/3/97- --------------------- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Mid Cap.....................
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------- 11/9/98- 11/9/98-
FOR ONE YEAR ENDING 12/31/99 12/31/99
11/9/98- -------------------- TOTAL EFFECTIVE
12/31/98 12/31/99 RETURN ANNUAL
-------- -------------------- -------- ---------
<S> <C> <C> <C> <C>
Russell 2000 Index.............
</TABLE>
SUB-ACCOUNTS INVESTING IN VIP
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
10/9/86- --------------------------------------------------------------------------------------------------
SUB-ACCOUNT 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity-Income... .20% -1.13% 21.93% 19.54% -16.31% 31.44% 16.89% 18.29% 6.93% 35.90% 13.75% 28.11%
<CAPTION>
10/9/86- 10/9/86-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- ---------
<S> <C> <C> <C> <C>
Equity-Income... 11.63%
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
--------------------------------------------------------------------------------
1/28/87-
SUB-ACCOUNT 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Overseas.......... 5.38% 9.63% 23.97% -1.20% 8.00% -10.72% 37.35% 1.21% 11.02% 12.43%
<CAPTION>
1/28/87- 1/28/87-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Overseas..........11.56% 12.75%
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
--------------------------------------------------------------------------------------------------
<CAPTION> 9/19/85-
SUB-ACCOUNT 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Income..... 6.38% 17.68% 1.22% 11.53% -4.07% -2.23% 35.08% 23.17% 20.40% -1.45% 20.79% 13.75%
9/19/85- 9/19/85-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
High Income..... 17.67% -4.33%
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------
FOR ONE YEAR ENDING
--------------------------------------------------------------
9/6/89-
SUB-ACCOUNT 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Manager........ 1.32% 6.19% 22.56% 11.71% 21.23% -6.43% 17.68% 14.31%
SUB-ACCOUNT INVESTING IN VIP II
<CAPTION>
9/6/89- 9/6/89-
12/31/99 12/31/99
TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
- ----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Asset Manager..... 20.65% 15.05%
</TABLE>
POLICY PERFORMANCE
The material below assumes a Policy was issued with a $1,054,000 face amount
with premiums paid on August 26 of the years in which they are paid (May 1 in
the case of the Zenith Westpeak Stock Index, Zenith Back Bay Managed and
Zenith Loomis Sayles Small Cap Sub-Accounts; October 31 in the case of the
Zenith Balanced, Zenith Morgan Stanley International Magnum Equity, Zenith
Davis Venture Value and Zenith Alger Equity Growth Sub-Accounts; October 9 in
the case of the VIP Equity-Income Sub-Account, January 28 in the case of the
VIP Overseas Sub-Account; April 30 in the case of the Zenith Westpeak Growth
and Income and Zenith Harris/Oakmark Midcap Value Sub-Accounts; September 19
in the case of the VIP High Income Sub-Account; September 6 in the case of the
VIP II Asset Manager Sub-Account; March 3 in the case of the Metropolitan
Janus Mid Cap Sub-Account; November 9 in the case of the Metropolitan Russell
2000 Index Sub-Account), to a male age 40 in the nonsmoker preferred risk
category. Values and benefits are shown for Policies with (1) an Option 1
death benefit, using the cash value accumulation test with the Enhanced Net
Single Premium Corridor, and (2) an Option 2 death benefit, using the
guideline premium test with the IRS Corridor. 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. (See
"Charges and Expenses".) (See Appendix A for the definition of the internal
rate of return.)
MALE NONSMOKER PREFERRED RISK, AGE 40
$1,054,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
CASH VALUE ACCUMULATION TEST WITH ENHANCED NET SINGLE PREMIUM CORRIDOR
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983... $ 50,000 $ $ $
December 31, 1983. 50,000
December 31, 1984. 100,000
December 31, 1985. 150,000
December 31, 1986. 200,000
December 31, 1987. 250,000
December 31, 1988. 300,000
December 31, 1989. 350,000
December 31, 1990. 350,000
December 31, 1991. 350,000
December 31, 1992. 350,000
December 31, 1993. 350,000
December 31, 1994. 350,000
December 31, 1995. 350,000
December 31, 1996. 350,000
December 31, 1997. 350,000
December 31, 1998. 350,000
December 31, 1999.
</TABLE>
49
<PAGE>
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $ $ $
December 31, 1983....... 50,000
December 31, 1984....... 100,000
December 31, 1985....... 150,000
December 31, 1986....... 200,000
December 31, 1987....... 250,000
December 31, 1988....... 300,000
December 31, 1989....... 350,000
December 31, 1990....... 350,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $ $ $
December 31, 1983....... 50,000
December 31, 1984....... 100,000
December 31, 1985....... 150,000
December 31, 1986....... 200,000
December 31, 1987....... 250,000
December 31, 1988....... 300,000
December 31, 1989....... 350,000
December 31, 1990....... 350,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $ $ $
December 31, 1987....... 50,000
December 31, 1988....... 100,000
December 31, 1989....... 150,000
December 31, 1990....... 200,000
December 31, 1991....... 250,000
December 31, 1992....... 300,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
</TABLE>
50
<PAGE>
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $ $ $
December 31, 1987....... 50,000
December 31, 1988....... 100,000
December 31, 1989....... 150,000
December 31, 1990....... 200,000
December 31, 1991....... 250,000
December 31, 1992....... 300,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $ $ $
December 31, 1993....... 50,000
December 31, 1994....... 100,000
December 31, 1995....... 150,000
December 31, 1996....... 200,000
December 31, 1997....... 250,000
December 31, 1998....... 300,000
December 31, 1999.......
ZENITH HARRIS/OAKMARK MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $ $ $
December 31, 1993....... 50,000
December 31, 1994....... 100,000
December 31, 1995....... 150,000
December 31, 1996....... 200,000
December 31, 1997....... 250,000
December 31, 1998....... 300,000
December 31, 1999.......
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $ 50,000 $ $ $
December 31, 1994....... 50,000
December 31, 1995....... 100,000
December 31, 1996....... 150,000
December 31, 1997....... 200,000
December 31, 1998....... 250,000
December 31, 1999.......
</TABLE>
51
<PAGE>
ZENITH BALANCED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL NET INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- ----- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994..... $ 50,000 $ $ $
December 31, 1994.... 50,000
December 31, 1995.... 100,000
December 31, 1996.... 150,000
December 31, 1997.... 200,000
December 31, 1998.... 250,000
December 31, 1999....
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL NET INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- ----- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994..... $ 50,000 $ $ $
December 31, 1994.... 50,000
December 31, 1995.... 100,000
December 31, 1996.... 150,000
December 31, 1997.... 200,000
December 31, 1998.... 250,000
December 31, 1999....
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<CAPTION>
TOTAL NET INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- ----- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994..... $ 50,000 $ $ $
December 31, 1994.... 50,000
December 31, 1995.... 100,000
December 31, 1996.... 150,000
December 31, 1997.... 200,000
December 31, 1998.... 250,000
December 31, 1999....
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL NET INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- ----- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994..... $ 50,000 $ $ $
December 31, 1994.... 50,000
December 31, 1995.... 100,000
December 31, 1996.... 150,000
December 31, 1997.... 200,000
December 31, 1998.... 250,000
December 31, 1999....
ZENITH MFS INVESTORS SUB-ACCOUNT
<CAPTION>
TOTAL NET INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- ----- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999....... $ 50,000 $ $ $
December 31, 1999.... 50,000
</TABLE>
52
<PAGE>
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000 $ $ $
December 31, 1999....... 50,000
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997........... $ 50,000 $ $ $
December 31, 1997....... 50,000
December 31, 1998....... 100,000
December 31, 1999....... 150,000
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998........ $ 50,000 $ $ $
December 31, 1998....... 50,000
December 31, 1999....... 100,000
</TABLE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986... $ 50,000 $ $ $
December 31, 1986. 50,000
December 31, 1987. 100,000
December 31, 1988. 150,000
December 31, 1989. 200,000
December 31, 1990. 250,000
December 31, 1991. 300,000
December 31, 1992. 350,000
December 31, 1993. 350,000
December 31, 1994. 350,000
December 31, 1995. 350,000
December 31, 1996. 350,000
December 31, 1997. 350,000
December 31, 1998. 350,000
December 31, 1999.
</TABLE>
53
<PAGE>
VIP OVERSEAS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 50,000 $ $ $
December 31, 1987....... 50,000
December 31, 1988....... 100,000
December 31, 1989....... 150,000
December 31, 1990....... 200,000
December 31, 1991....... 250,000
December 31, 1992....... 300,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
VIP HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 50,000 $ $ $
December 31, 1985....... 50,000
December 31, 1986....... 100,000
December 31, 1987....... 150,000
December 31, 1988....... 200,000
December 31, 1989....... 250,000
December 31, 1990....... 300,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
VIP II ASSET MANAGER SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 50,000 $ $ $
December 31, 1989....... 50,000
December 31, 1990....... 100,000
December 31, 1991....... 150,000
December 31, 1992....... 200,000
December 31, 1993....... 250,000
December 31, 1994....... 300,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
</TABLE>
- --------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series' investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
** Rates of return and Policy values and benefits shown reflect the
Harris/Oakmark Midcap Value Series' investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998 and .75%
thereafter.
54
<PAGE>
$1,054,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
GUIDELINE PREMIUM TEST WITH IRS CORRIDOR
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $ $ $
December 31, 1983....... 50,000
December 31, 1984....... 100,000
December 31, 1985....... 150,000
December 31, 1986....... 200,000
December 31, 1987....... 250,000
December 31, 1988....... 300,000
December 31, 1989....... 350,000
December 31, 1990....... 350,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- ------- ----- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $ $ $
December 31, 1983....... 50,000
December 31, 1984....... 100,000
December 31, 1985....... 150,000
December 31, 1986....... 200,000
December 31, 1987....... 250,000
December 31, 1988....... 300,000
December 31, 1989....... 350,000
December 31, 1990....... 350,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
</TABLE>
55
<PAGE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- --------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983......... $ 50,000 $ $ $
December 31, 1983....... 50,000
December 31, 1984....... 100,000
December 31, 1985....... 150,000
December 31, 1986....... 200,000
December 31, 1987....... 250,000
December 31, 1988....... 300,000
December 31, 1989....... 350,000
December 31, 1990....... 350,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- --------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $ $ $
December 31, 1987....... 50,000
December 31, 1988....... 100,000
December 31, 1989....... 150,000
December 31, 1990....... 200,000
December 31, 1991....... 250,000
December 31, 1992....... 300,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- --------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987............. $ 50,000 $ $ $
December 31, 1987....... 50,000
December 31, 1988....... 100,000
December 31, 1989....... 150,000
December 31, 1990....... 200,000
December 31, 1991....... 250,000
December 31, 1992....... 300,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
</TABLE>
56
<PAGE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $ $ $
December 31, 1993....... 50,000
December 31, 1994....... 100,000
December 31, 1995....... 150,000
December 31, 1996....... 200,000
December 31, 1997....... 250,000
December 31, 1998....... 300,000
December 31, 1999.......
ZENITH HARRIS/OAKMARK MIDCAP VALUE SUB-ACCOUNT**
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.......... $ 50,000 $ $ $
December 31, 1993....... 50,000
December 31, 1994....... 100,000
December 31, 1995....... 150,000
December 31, 1996....... 200,000
December 31, 1997....... 250,000
December 31, 1998....... 300,000
December 31, 1999.......
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994............. $ 50,000 $ $ $
December 31, 1994....... 50,000
December 31, 1995....... 100,000
December 31, 1996....... 150,000
December 31, 1997....... 200,000
December 31, 1998....... 250,000
December 31, 1999.......
ZENITH BALANCED SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $ $ $
December 31, 1994....... 50,000
December 31, 1995....... 100,000
December 31, 1996....... 150,000
December 31, 1997....... 200,000
December 31, 1998....... 250,000
December 31, 1999.......
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $ $ $
December 31, 1994....... 50,000
December 31, 1995....... 100,000
December 31, 1996....... 150,000
December 31, 1997....... 200,000
December 31, 1999....... 250,000
</TABLE>
57
<PAGE>
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $ $ $
December 31, 1994....... 50,000
December 31, 1995....... 100,000
December 31, 1996....... 150,000
December 31, 1997....... 200,000
December 31, 1998....... 250,000
December 31, 1999.......
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994........ $ 50,000 $ $ $
December 31, 1994....... 50,000
December 31, 1995....... 100,000
December 31, 1996....... 150,000
December 31, 1997....... 200,000
December 31, 1998....... 250,000
December 31, 1999.......
ZENITH MFS INVESTORS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000
December 31, 1999....... 50,000
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.......... $ 50,000
December 31, 1999....... 50,000
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997........... $ 50,000
December 31, 1997....... 50,000
December 31, 1998....... 100,000
December 31, 1999....... 150,000
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998........ $ 50,000
December 31, 1998....... 50,000
December 31, 1999....... 100,000
</TABLE>
58
<PAGE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986......... $ 50,000 $ $ $
December 31, 1986....... 50,000
December 31, 1987....... 100,000
December 31, 1988....... 150,000
December 31, 1989....... 200,000
December 31, 1990....... 250,000
December 31, 1991....... 300,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
VIP OVERSEAS SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987........ $ 50,000 $ $ $
December 31, 1987....... 50,000
December 31, 1988....... 100,000
December 31, 1989....... 150,000
December 31, 1990....... 200,000
December 31, 1991....... 250,000
December 31, 1992....... 300,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
VIP HIGH INCOME SUB-ACCOUNT
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985...... $ 50,000 $ $ $
December 31, 1985....... 50,000
December 31, 1986....... 100,000
December 31, 1987....... 150,000
December 31, 1988....... 200,000
December 31, 1989....... 250,000
December 31, 1990....... 300,000
December 31, 1991....... 350,000
December 31, 1992....... 350,000
December 31, 1993....... 350,000
December 31, 1994....... 350,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
</TABLE>
59
<PAGE>
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
- ---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989....... $ 50,000 $ $ $
December 31, 1989....... 50,000
December 31, 1990....... 100,000
December 31, 1991....... 150,000
December 31, 1992....... 200,000
December 31, 1993....... 250,000
December 31, 1994....... 300,000
December 31, 1995....... 350,000
December 31, 1996....... 350,000
December 31, 1997....... 350,000
December 31, 1998....... 350,000
December 31, 1999.......
</TABLE>
- --------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series' investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
** Rates of return and Policy values and benefits shown reflect the
Harris/Oakmark Midcap Value Series' investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998 and .75%
thereafter.
60
<PAGE>
APPENDIX C
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 charges.
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 55 20-year time periods beginning in 1926 and ending in 1999 (i.e.,
1926-1945, 1927-1946, and so on through 1980-1999):
--The average annual return of common stocks was superior to that of high
grade, long-term corporate bonds in 52 of the 55 periods.
--The average annual return of common stocks surpassed that of U.S. Treasury
bills in each of the 55 periods.
--Common stock average annual returns exceeded the average annual rate of
inflation in each of the 55 periods.
Over the 45 30-year periods beginning in 1926 and ending in 1999, 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 45
periods.
From 1926 through 1999 the average annual return for common stocks was
11.2%, compared to 5.8% for high grade, long-term corporate bonds, 3.8% for
U.S. Treasury bills and 3.1% for the Consumer Price Index.
- ----------
* Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
----------------
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 1999.
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
THAN
HOLDING NEGATIVE 0-5.00% 5.01-10.00% 10.01-15.00% 15.01-20.00% 20.00%
PERIOD RETURN RETURN RETURN RETURN RETURN RETURN
- ------- -------- ------- ----------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1 year......... 27% 4% 11% 7% 11% 40%
5 years........ 10% 14% 14% 31% 19% 12%
10 years........ 3% 10% 33% 24% 28% 2%
20 years........ 0% 6% 31% 54% 9% 0%
</TABLE>
- ----------
Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
61
<PAGE>
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 you chose 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 chosen 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.
62
<PAGE>
APPENDIX D
TAX INFORMATION
The Office of Tax Analysis of the U.S. Department of the Treasury published
a "Report to the Congress on the Taxation of Life Insurance Company Products"
in March 1990. Page 4 of this report is Table 1.1, a "Comparison of Tax
Treatment of Life Insurance Products and Other Retirement Savings Plans".
Because it is a convenient summary of the relevant tax characteristics of
these products and plans, we have reprinted it here, and added footnotes to
reflect exceptions to the general rules.
---------------------
TABLE 1.1
COMPARISON OF TAX TREATMENT OF LIFE INSURANCE PRODUCTS AND
OTHER RETIREMENT SAVINGS PLANS
<TABLE>
<CAPTION>
CASH-VALUE
LIFE NON-QUALIFIED QUALIFIED
INSURANCE ANNUITIES IRA'S PENSION
---------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Annual Contribution Limits No No Yes Yes
Income Eligibility Limits No No Yes** No
Borrowing Treated as Distribu-
tions No* Yes Loans not Yes,
allowed beyond
$50,000
Income Ordering Rules (Income
included in First No* Yes Yes Yes
Distribution)
Early Withdrawal Penalties No* Yes*** Yes*** Yes***
Minimum Distribution Rules by
Age 70 1/2 No No Yes Yes
Maximum Annual Distribution
Rules No No Yes Yes
Anti-discrimination Rules No No No Yes
</TABLE>
- ----------
Department of the Treasury March 1990
Office of Tax Analysis
* If the Policy is not a modified endowment contract.
** If amounts paid in to fund the IRA are deductible; once over the income
eligibility limits amounts paid into an IRA are permitted but not
deductible.
*** There are several exceptions to the application of the early withdrawal
penalties for annuities, IRAs and qualified pensions.
This appendix is not tax advice. You should consult with your own tax
advisor for more complete information.
63
<PAGE>
APPENDIX E
CASH VALUE ACCUMULATION TEST AND GUIDELINE PREMIUM TEST
In order to meet the Internal Revenue Code's definition of life insurance,
the Policies provide that the death benefit will not be less than what is
required by the "cash value accumulation test" under Section 7702(a)(1) of the
Internal Revenue Code, or the "guideline premium test" under Section
7702(a)(2) of the Internal Revenue Code, as selected by you when the Policy is
-------------------------------------
issued. The test you choose at issue will be used for the life of the Policy.
- ------
(See "Death Benefit".)
For the cash value accumulation test, sample net single premiums for
selected ages of male and female insureds are listed below.
<TABLE>
<CAPTION>
NET SINGLE PREMIUM
--------------------
AGE MALE FEMALE
--- --------- ----------
<S> <C> <C>
30...................................................... 0.2130 0.1818
40...................................................... 0.2961 0.2532
50...................................................... 0.4037 0.3458
60...................................................... 0.5328 0.4627
70...................................................... 0.6710 0.6060
80...................................................... 0.7949 0.7571
90...................................................... 0.8853 0.8760
100...................................................... 1.0000 1.0000
</TABLE>
Listed below are Enhanced Net Single Premium Factors used for the Enhanced
Net Single Premium Corridor.
(Table to come.)
For the guideline premium test, Table I and Table II show the percentage of
the Policy's cash value that is used to determine the death benefit.
TABLE I -- IRS CORRIDOR
<TABLE>
<CAPTION>
AGE OF
AGE OF INSURED AT
INSURED AT START OF PERCENTAGE OF START OF PERCENTAGE OF
THE POLICY YEAR CASH VALUE* THE POLICY YEAR CASH VALUE*
- ------------------- ------------- --------------- -------------
<S> <C> <C> <C>
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 through 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 through 99 101
59 134 100+ 100
60 130
</TABLE>
- ----------
* including the pro rata portion of any Monthly Deduction made for a period
beyond the date of death.
TABLE II -- ENHANCED CORRIDOR
(Table to come.)
64
<PAGE>
NEW ENGLAND LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MA 02116
RECEIPT
This is to acknowledge receipt of a Zenith Executive Advantage Plus
Prospectus dated May 1, 2000. 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 flexible premium adjustable 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. (to be filed by amendment)
The prospectus consisting of 143 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 NES, NELICO and other
broker dealers *
(4) None
(5) (a) Specimen of Policy **
(b) Additional Specimen of Policy
(c) Riders and Endorsements +
(d) Endorsement- Unisex Rates***
(e) Additional Riders and Endorsements
(6) (a) Amended and restated Articles of Organization of NELICO ##
(b) Amended and restated By-Laws of NELICO *
(c) Amendments to the Amended and restated Articles of
Organization +++
(7) None
(8) None
(9) None
(10) (a) Specimen of Applications for Policy **
(b) Additional specimen of Application ++
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) Powers of Attorney for James M. Benson,
Robert H. Benmosche and Catherine A. Rein +
(iii) Powers of Attorney for David Y. Rogers and
Richard A. Robinson ++
8. Inapplicable
9. Inapplicable
10. Inapplicable
11. Consent of Independent Auditors
(to be filed by amendment)
12. Schedule for computation of performance
quotations ****
13. (i) Consolidated memorandum describing certain procedures,
filed pursuant to Rule 6e-2(b)(12)(ii) and
Rule 6e-3(T)(b)(12)(iii) ****
(ii) Second Addendum to Consolidated
Memorandum ++++
14. (i) Participation Agreement among
Variable Insurance Products Fund, Fidelity
Distributors Corporation and New England
Variable Life Insurance Company ****
II-3
<PAGE>
(ii) Amendment No. 1 to Participation Agreement
among Variable Insurance Products Fund,
Fidelity Distributors Corporation and New
England Variable Life Insurance Company #
(iii) Participation Agreement among Variable
Insurance Products Fund II, Fidelity
Distributors Corporation and New England
Variable Life Insurance Company #
# Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 33-88082,
filed June 22, 1995.
## Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 333-21767, filed February 13, 1997.
### Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Variable Account's Form S-6 Registration Statement, File No. 33-52050,
filed April 30, 1997.
* Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Variable Account's Form S-6 Registration Statement, File No. 333-21767,
filed July 16, 1997.
** Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 333-46401, filed February 17, 1998.
*** 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 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>
+++ Incorporated herein by reference to Post-Effective Amendment No. 4 to the
Variable Account's Form S-6 Registration Statement, File No. 33-65263,
filed February 24, 1999.
++++ Incorporated herein by reference to Post-Effective Amendment No. 10 to the
Variable Account's Form S-6 Registration Statement, File No. 33-52050,
filed April 26, 1999.
+++++ Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Variable Account's Form s-6 Registration Statement, File No. 333-46401,
filed April 26, 1999.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
New England Variable Life Separate Account, has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, all in the
city of Boston, and the Commonwealth of Massachusetts, on the 29th day of
February, 2000.
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 amended Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, and its seal
to be hereunto affixed and attested, all in the city of Boston, and the
Commonwealth of Massachusetts, on the 29th day of February, 2000.
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 amended
Registration Statement has been signed below by the following persons in the
capacities indicated on February 29, 2000.
* Chairman, President and
- ---------------------------- Chief Executive Officer
James M. Benson
* Director
- ----------------------------
Robert H. Benmosche
* Director
- ----------------------------
Susan C. Crampton
* Director
- ----------------------------
Edward A. Fox
* Director
- ----------------------------
George J. Goodman
* Director
- ----------------------------
Evelyn E. Handler
* Director
- ----------------------------
Philip K. Howard
* 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(b) Additional Specimen of Policy
(e) Additional Riders and Endorsements
_________
* Page numbers inserted on manually-signed copy only.
<PAGE>
EXHIBIT 1.A.5.(b)
NEV-14-E
NEW ENGLAND LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
VARIABLE LIFE POLICY
- --------------------------------------------------------------------------------
INSURED
JOHN ALDEN
POLICY NUMBER
Specimen
PLAN
Flexible Premium Adjustable Variable Life
- --------------------------------------------------------------------------------
NEW ENGLAND LIFE INSURANCE COMPANY Agrees to pay THE DEATH BENEFIT OF THIS
POLICY TO THE BENEFICIARY ON RECEIPT OF PROOF OF THE DEATH OF THE INSURED; AND
to provide THE OTHER RIGHTS AND BENEFITS OF THE POLICY.
These agreements are subject to all of the provisions of the Policy.
Signed on the Date of Issue for the Company at its
Administrative Office:
6425 Powers Ferry Road
Third Floor
Atlanta, GA 30339
/s/ James M. Benson
- ------------------------
President
/s/ Daniel D. Jordan
- ------------------------
Secretary
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE POLICY
. The Death Proceeds are payable at the death of the Insured if the Policy is
in force.
. The Policy can be adjusted by increasing or decreasing the Face Amount.
. The amount and frequency of premium payments can be changed.
. The Policy does not share in dividends.
THE DEATH BENEFIT ON THE POLICY DATE WILL BE EQUAL TO THE FACE AMOUNT SHOWN IN
SECTION 1. THEREAFTER, THE DEATH BENEFIT CAN VARY FROM DAY TO DAY. IT CAN
INCREASE OR DECREASE, DEPENDING ON SEPARATE INVESTMENT ACCOUNT PERFORMANCE AND
ON FIXED ACCOUNT INTEREST. SEE SECTION 8.
THE CASH VALUE OF THIS POLICY CAN VARY FROM DAY TO DAY. IT CAN INCREASE OR
DECREASE, DEPENDING ON SEPARATE INVESTMENT ACCOUNT PERFORMANCE AND ON FIXED
ACCOUNT INTEREST. SEE SECTION 12.
PLEASE READ YOUR POLICY CAREFULLY
This Policy is a legal Contract between you and the Company.
RIGHT TO RETURN THE POLICY
WHEN THIS POLICY IS ISSUED OR WHEN YOU RECEIVE AN INCREASE IN FACE AMOUNT, YOU
SHOULD EXAMINE IT. YOU CAN RETURN THE POLICY OR THE INCREASE IN FACE AMOUNT (SEE
SECTION 14) TO THE COMPANY OR ITS AGENT FOR ANY REASON WITHIN 10 DAYS AFTER YOU
RECEIVE IT FROM THE COMPANY. IF YOU RETURN AN INCREASE IN FACE AMOUNT: ANY
MONTHLY DEDUCTION AND ANY ADMINISTRATIVE CHARGE FOR THE INCREASE IN FACE AMOUNT
WILL THEN BE CREDITED TO THE POLICY; AND THE INCREASE IN FACE AMOUNT WILL BE
CANCELLED FROM THE START. OTHERWISE, IF YOU RETURN THE POLICY: AN AMOUNT EQUAL
TO ANY PREMIUM PAID PLUS ANY UNSCHEDULED PAYMENT MADE WILL BE REFUNDED TO YOU;
AND THE POLICY WILL BE CANCELLED FROM THE START.
<PAGE>
- --------------------------------------------------------------------------------
POLICY PROVISIONS
Section
1 Policy Schedule
2 Table of Guaranteed Maximum Cost of Insurance
Rates Per $1,000
3 Table of Net Single Premiums
4 Accounts Available on Date of Issue
5 Contract
6 The Variable Account
7 The Fixed Account
8 Death Benefit
9 Premiums
10 Monthly Deduction
11 Reinstatement After Lapse
12 Cash Value of the Policy
13 Policy Loans
14 Adjustments
15 24 Months Conversion Right
16 Owner and Beneficiary
17 Payment of Benefits
18 Payment Options
19 Life Income Tables
. Riders, if any
. Amendments and Endorsements
. Copy of the Application
. Adjustment Attachments
ALPHABETICAL GUIDE
Section
4 Accounts
6 Accumulation Units
12 Accumulation Unit Value
14 Adjustment
1, 5 Adjustment Date
1, 5 Age of Insured
10 Amount at Risk
16 Assignments
16 Beneficiary
17 Benefits, Payment of
12 Cash Value
8 Cash Value Accumulation Test
5 Claims of Creditors
5 Contestable
5 Contract
1, 5 Date of Issue
1, 5 Date, Policy
8 Death Benefit
14 Decrease in Face Amount
8 Definition of Life Insurance Test
1 Face Amount
7 Fixed Account
10 Grace Period
8 Guideline Premium Test
14 Increase in Face Amount
2 Insurance Rates
17, 18 Life Income Options
19 Life Income Tables
1 Loan Interest Rate
13 Loans, Policy
10 Monthly Deduction
10 Monthly Minimum Premium
12 Net Cash Value
3, 8 Net Single Premium
16 Owner
14 Partial Surrender
18 Payment Options
5 Periodic Reports
13 Policy Loan Balance
5 Postponement of Payments
9 Premiums
11 Reinstatement
1 Schedule, Policy
6 Sub-Accounts
5 Suicide
12 Surrender of the Policy
15 24 Months Conversion Right
6 Variable Account
<PAGE>
NEW ENGLAND LIFE
INSURANCE COMPANY
- --------------------------------------------------------------------------------
1. POLICY SCHEDULE OWNER AND BENEFICIARY
As named in the Application or as
later changed. See the Owner and
Beneficiary Section of the Policy.
- --------------------------------------------------------------------------------
POLICY NUMBER AGE SEX
Specimen 35 Male
POLICY DATE
March 1, 1998
POLICY LOAN INTEREST RATE
4.75%
- --------------------------------------------------------------------------------
THIS POLICY IS ADJUSTABLE. IF IT IS ADJUSTED, THIS SECTION 1 WILL BE CHANGED.
SEE SECTION 14.
- --------------------------------------------------------------------------------
SCHEDULE OF BENEFITS
- --------------------------------------------------------------------------------
Flexible Premium Adjustable Variable Life Death Benefit Option: 1
Definition of Life
Insurance Test:
Guideline Premium Test
FACE AMOUNT DATE OF ISSUE POLICY CLASS
$50,000 March 1, 1998 Smoker Standard
Maximum Monthly Policy Fee $10.00
Maximum Monthly Face Amount Increase
Administrative Charge for 12 months, lesser of:
$0.00080 times Face Amount
Increase; and $25
Maximum Monthly Mortality and Expense Risk Charge $0.000625 times Cash Value at
the beginning of the day
- --------------------------------------------------------------------------------
SCHEDULE OF ANNUAL PREMIUMS
- --------------------------------------------------------------------------------
Planned Annual Premium: $816.40*
Monthly Minimum Premium: $191.80
Maximum Premium Expense Charge: 10%
This coverage may expire if premiums paid are insufficient to continue the
coverage. There may be little or no Cash Value at that time.
* If the Planned Annual Premium is paid on the first day of each policy year,
and the investment return of the Policy's sub-accounts is 4% in all years and
the guaranteed maximum charges apply in all years, this Policy will terminate in
policy year 47 unless additional premium is paid.
- --------------------------------------------------------------------------------
/s/ Daniel D. Jordan
- ------------------------
Secretary
NEV-14-E
<PAGE>
NEW ENGLAND LIFE
INSURANCE COMPANY
- --------------------------------------------------------------------------------
2. TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES PER $1,000
Based on the 1980 CSO Table
- --------------------------------------------------------------------------------
POLICY NUMBER
Specimen
- ------------------------------ ----------------------- -------------------------
THIS POLICY IS ADJUSTABLE. IF IT IS ADJUSTED, THIS SECTION 2 WILL BE CHANGED.
SEE SECTION 14.
- --------------------------------------------------------------------------------
POLICY YEAR MONTHLY RATE POLICY YEAR MONTHLY RATE
1 $.1758 34 $2.7658
2 .1867 35 3.0142
3 .2000 36 3.2925
4 .2150 37 3.6083
5 .2325 38 3.9708
6 .2517 39 4.3867
7 .2742 40 4.8492
8 .2967 41 5.3492
9 .3225 42 5.8775
10 .3492 43 6.4267
11 .3792 44 6.9917
12 .4100 45 7.5875
13 .4433 46 8.2367
14 .4783 47 8.9567
15 .5175 48 9.7708
16 .5592 49 10.6883
17 .6083 50 11.6875
18 .6633 51 12.7458
19 .7258 52 13.8408
20 .7967 53 14.9625
21 .8725 54 16.1058
22 .9550 55 17.2742
23 1.0408 56 18.4808
24 1.1325 57 19.7483
25 1.2308 58 21.1208
26 1.3400 59 22.6758
27 1.4617 60 24.6583
28 1.5992 61 27.4967
29 1.7550 62 32.0458
30 1.9283 63 40.0167
31 2.1183 64 54.8317
32 2.3208 65 83.3333
33 2.5367
- --------------------------------------------------------------------------------
/s/ Daniel D. Jordan
- ------------------------
Secretary
<PAGE>
NEW ENGLAND LIFE
INSURANCE COMPANY
- --------------------------------------------------------------------------------
3. TABLE OF NET SINGLE PREMIUMS
- -------------------------------------------------------------------------------
POLICY NUMBER
Specimen
- ------------------------------ ----------------------- ------------------------
THIS POLICY IS ADJUSTABLE. IF IT IS ADJUSTED, THIS SECTION 3 WILL BE CHANGED.
SEE SECTION 14.
- -------------------------------------------------------------------------------
POLICY YEAR NSP POLICY YEAR NSP
1 .2376695 34 .6434748
2 .2597692 35 .6572332
3 .2684806 36 .6709628
4 .2774420 37 .6846215
5 .2866523 38 .6981480
6 .2961037 39 .7114574
7 .3057964 40 .7244527
8 .3157171 41 .7370717
9 .3258811 42 .7492933
10 .3362773 43 .7611339
11 .3469157 44 .7726415
12 .3577874 45 .7838881
13 .3689044 46 .7949130
14 .3802667 47 .8057063
15 .3918823 48 .8162260
16 .4037418 49 .8263842
17 .4158496 50 .8360805
18 .4281764 51 .8452698
19 .4407066 52 .8539594
20 .4534156 53 .8622086
21 .4662758 54 .8701060
22 .4792843 55 .8777684
23 .4924303 56 .8853373
24 .5057267 57 .8929799
25 .5191740 58 .9009007
26 .5327711 59 .9093471
27 .5464969 60 .9186246
28 .5603256 61 .9289634
29 .5742185 62 .9404744
30 .5881299 63 .9530315
31 .6020248 64 .9661629
32 .6158786 65 .9790418
33 .6296938
- --------------------------------------------------------------------------------
/s/ Daniel D. Jordan
- ------------------------
Secretary
<PAGE>
- -------------------------------------------------------------------------
4. ACCOUNTS AVAILABLE ON 3/1/98
. Variable
Capital Growth Sub-account
Money Market Sub-account
Bond Income Sub-account
Stock Index Sub-account
Managed Sub-account
Growth and Income Sub-account
Midcap Value Sub-account
Equity-Income Sub-account
Overseas Sub-account
Small Cap Sub-account
Equity Growth Sub-account
Balance Sub-account
Venture Value Sub-account
International Magnum Equity Sub-account
High Income Sub-account
Asset Manager Sub-account
. Fixed
<PAGE>
5. CONTRACT
THE CONTRACT
This Policy is a legal contract between the Owner of the Policy (called "you")
and New England Life Insurance Company, a Massachusetts corporation, (called
"the Company"). The Policy, which includes the attached Application and any
Application for adjustment of the Policy, is the entire contract between you and
the Company. All riders are listed in Section 1. A change in or waiver of the
provisions of the Policy must be signed by the President or the Secretary of the
Company to be valid.
PAYMENTS UNDER THE CONTRACT
All contract amounts are in dollars of the United States of America. Payments by
the Company under the contract will be made at the Home Office of the Company.
The obligations of the Company are subject to all payments made and actions
taken by the Company under the Policy before receipt by the Company at its
Administrative Office of proof of death of the Insured.
DATES
Policy years, months and anniversaries are all measured from the Policy Date.
Contestable and suicide periods start on the Date of Issue and on the Adjustment
Date for each increase in Face Amount. The Policy Date, the Date of Issue and
each Adjustment Date are all shown in Section 1.
NOT CONTESTABLE AFTER TWO YEARS
Insurance is issued by the Company in reliance on the statements made in the
Application for the insurance. Those statements are representations; they are
not warranties. No statement can be used to contest insurance unless contained
in the Application for the insurance. The insurance issued under this Policy
will not be contestable after it has been in force during the life of the
Insured:
. With respect to the amount of Death Benefit which results from other than
payments for which proof of insurability is required, for two years from
the Date of Issue; and
. With respect to any amount of Death Benefit which results from a payment
for which proof of insurability is required, for two years from the date
that payment is received; and
. With respect to the amount of the Death Benefit associated with each
increase in Face Amount, for two years from the Adjustment Date for that
increase.
SUICIDE WITHIN TWO YEARS
If the Insured dies by suicide while sane or insane within two years from the
Date of Issue, the Death Benefit will be limited to: the amount of the premiums
paid; less any Policy Loan Balance on the date of death; and less any partial
surrenders.
If the Insured dies by suicide while sane or insane more than two years after
the Date of Issue but within two years from the Adjustment Date for an increase
in Face Amount, the Death Benefit for that increase in Face Amount will be
limited to the Monthly Deductions and any Face Amount Increase Administrative
Charge made to pay for that increase.
AGE AND SEX OF INSURED
The age of the Insured on the Policy Date and on each policy anniversary means
the age at the nearest birthday of the Insured. For an increase in Face Amount
during a policy year, age means age at the start of that policy year.
If the age or sex of the Insured has not been correctly stated in the
Application, the Death Benefit will be the amount that the most recent Monthly
Deduction which was made would have provided for the correct age and sex.
CLAIMS OF CREDITORS
The Policy and payments under it are exempt from the claims of creditors to the
extent allowed by law.
NEV-14-E
<PAGE>
BASIS OF VALUES
"1980 CSO" means Commissioners 1980 Standard Ordinary; it is used to describe
mortality tables. Minimum Cash Values, Reserves and Guaranteed Insurance Factors
are based on the mortality table shown in Section 2. Interest is compounded
daily at the effective rate of 4% per year. A detailed statement of the method
of computing values has been filed, where required, with the Insurance
Department of the state in which the Policy is delivered. All values are equal
to or in excess of the minimum values required by the law of that state.
PERIODIC REPORTS
The Company will send you all reports required by law and regulation. Such
reports will be sent once each year or more often if required by law or
regulation. The annual report will include, as of the date for which the report
is made: the Death Benefit; the Cash Value; any Policy Loan Balance; and any
other information required by law or regulation.
POLICY ILLUSTRATION OF BENEFITS AND VALUES
Upon written request the Company will send you a policy illustration which will
illustrate benefits and values under the Policy.
POSTPONEMENT OF VARIABLE BENEFITS
Except for a Policy Loan that will be used to pay premiums on policies issued by
the Company, the Company can postpone the determination of and the payment or
transfer of amounts based on separate investment account performance if:
. The New York Stock Exchange is closed for trading (except for normal
weekend and holiday closing) or when trading is restricted; or
. The Securities and Exchange Commission determines that a state of emergency
exists which may make payment or transfer impractical; or
. The Securities and Exchange Commission orders the Variable Account or
orders the New England Zenith Fund or its successor or any other investment
company or pool of investment assets in which the Variable Account is
invested to postpone payment or transfer of variable benefits.
POSTPONEMENT OF SURRENDERS, TRANSFERS AND LOANS FROM THE FIXED ACCOUNT
The Company can postpone the payment of the portion of the Policy's Net Cash
Value which is in the Fixed Account for not more than six months after
surrender. If payment is postponed for more than 30 days, it will be credited
with interest from the date of surrender. The rate of interest will be set each
year by the Company; but the rate will not be less than 3 1/2% per year.
The Company can postpone transfers from the Fixed Account for not more than six
months from the date of the request. The effective date of the transfer is the
date on which values are transferred from the Fixed Account.
The Company can postpone the making of any Policy Loan and any partial surrender
from the Fixed Account for not more than six months from the day you apply,
except Loans or partial surrenders to pay premiums on policies issued by the
Company.
NEV-14-E
<PAGE>
6. THE VARIABLE ACCOUNT
THE VARIABLE ACCOUNT
The Variable Account (called "the Account") is a separate investment account
established by the Company in accordance with Delaware law and is now operated
in accordance with Massachusetts law. The assets of the Account are owned by the
Company. The assets of the Account will be used to provide values and benefits
under this Policy and similar policies. The portion of the Account assets equal
to the reserves plus other policy liabilities of the Account is not chargeable
with liabilities arising out of any other business the Company may conduct. The
Company reserves the right to transfer to its general account Variable Account
assets which exceed the total of reserves and other liabilities of the Account.
Income and realized and unrealized capital gains and losses of the Account are
credited to the Account without regard to any of the Company's other income or
capital gains and losses.
SUB-ACCOUNTS
The Account consists of sub-accounts, each of which is invested in shares of one
portfolio of the New England Zenith fund or its successor or any other
investment company or pool of investment assets in which the Account is
invested. Units of a portfolio are purchased for a sub-account at their net
asset value.
The Policy's first investment is made in the Money Market sub-account as of the
latest of:
. The Policy Date;
. The date of the Part II of the Application for the initial Face Amount, if
any is required; and
. The date the first premium is received by the Company.
The Policy's Cash Value will be transferred, based on your choice, to the
sub-accounts and the Fixed Account 15 days after the Company mails the
Confirmation for the initial premium. Before this transfer, the values and
benefits of the Policy will depend on the net investment performance of the
Money Market sub-account. After this transfer, each net premium allocated to the
Account and each net unscheduled payment allocated to the Account will be
applied to the sub-accounts you chose as of the date it is received by the
Company at its Administrative Office.
Each net purchase payment allocated to the Account will be credited in the form
of Accumulation Units to the sub-accounts you elect. The number of Accumulation
Units credited to a sub-account will be equal to the portion of the net purchase
payment credited to that sub-account divided by the Accumulation Unit Value (see
Section 12) for that sub-account for the applicable Valuation Period.
The number of Accumulation Units in a sub-account will be reduced whenever its
value is reduced due to any of these events: a full or partial surrender; a
decrease in Face Amount; a Policy Loan; a transfer; a Monthly Deduction; and
payment of a Face Amount Increase Administrative Charge. The reduction is
determined by dividing the dollar amount of the transaction by the Accumulation
Unit Value (see Section 12) for the Sub-Account.
Each distribution of income, dividends and capital gains from a portfolio to a
sub-account will be reinvested for the benefit of the owners of the policies in
that sub-account at net asset value in units of the portfolio which made the
distribution.
The Cash Value of the Policy at any time cannot be allocated among more than 10
sub-accounts, except with the consent of the Company; and the Fixed Account will
be counted in the limit of 10.
The values and benefits of a policy depend on: the investment performance of the
portfolios in which the sub-accounts are invested; and the interest credited to
the Fixed Account. The Company does not guarantee the investment performance of
the portfolios of the sub-accounts. You bear the investment risk for amounts
invested in the sub-accounts for your Policy.
CHOICE OF SUB-ACCOUNTS
You choose the sub-accounts in which net premiums and net unscheduled payments
are to be invested. See Section 4 or the current prospectus for a list of the
sub-accounts of the Account. You can change the choice for future premiums and
future unscheduled payments at any time by notice to the Company. The change
will be effective as of the date the request is received by the Company at its
Administrative Office. The portion of the net premium and the net unscheduled
payment to be applied to each sub-account chosen must be a whole percent.
NEV-14-E
<PAGE>
CHANGE IN PORTFOLIOS
The Company can add or remove portfolios as sub-account investments as permitted
by law. When a change is made, the Company will send you: a revised prospectus
for the Account which will describe all of the portfolios then available in the
New England Zenith Fund or its successor or any other investment company or pool
of investment assets in which the Account is invested; and any notice required
by law.
When a portfolio is removed, the Company has the right to substitute a different
portfolio in which the sub-account will then invest:
. The value of the removed portfolio; and
. Future net premiums and future net unscheduled payments applied to that
sub-account.
TRANSFER OPTION
After 15 days from the date the Company mails the Confirmation of the first
premium, you can transfer all or a portion of the Policy's existing share of a
sub-account to another sub-account or to the Fixed Account. (See Restriction of
New Amounts Applied to the Fixed Account provision.) Requests for transfers can
be made in writing or by telephone. The Company is not responsible for
determining the authenticity of transfer instructions received by telephone.
Transfers will be subject to a limit of 4 in each policy year, except with the
consent of the Company. A transfer out of the Fixed Account will not count
against this limit.
CHANGE OF INVESTMENT POLICY
The investment policy of the Account will not be changed unless: (a) the change
has been approved by the Insurance Commissioner of the Commonwealth of
Massachusetts; and (b) a statement of the approval process has been filed with
the Insurance Department of the state in which this Policy is delivered. If the
investment policy of the Account is changed, the Company will give you written
notice of the change. You can then choose to convert this Policy to fixed
benefit coverage. The conversion will be on the basis described in the 24 Months
Conversion Right section. (See Section 15.) Your request to convert this Policy
must be made within 60 days of the later of: (a) the effective date of the
investment policy change; or (b) the date you receive the notice of the change.
RIGHTS RESERVED BY THE COMPANY
The Company reserves the right to take certain actions subject to compliance
with law including, if required, the approval of the owners of the policies.
These actions are: (a) to create new investment accounts; (b) to combine any two
or more separate investment accounts, including the Account; (c) to invest some
or all of the assets of the Account other than in the New England Zenith Fund;
(d) to invest some or all of the assets of the Account in any other investment
company or pool of investment assets chosen by New England Life Insurance
Company ; (e) to remove a portfolio in which the sub-account is invested or to
substitute a different portfolio; (f) to operate the Account as a management
investment company and to charge investment advisory fees under the Investment
Company Act of 1940 or to operate the Account in any other form permitted by
law; and (g) to deregister the Account under the Investment Company Act of 1940
if registration is no longer required.
NEV-14-E
<PAGE>
7. THE FIXED ACCOUNT
THE FIXED ACCOUNT
The Fixed Account is a segmented fund within the general account of the Company.
If you choose the Fixed Account, the first date on which money is applied to the
Fixed Account for the Policy is the latest of:
. 15 days after the Company mails the Confirmation for the initial premium;
and
. The effective date of the choice of the Fixed Account.
Before this date, the value of the portion of the net premium and any net
Unscheduled Payment allocated to the Fixed Account will depend on the net
investment performance of the Money Market sub-account of the Variable Account.
After this date, each net premium allocated to the Fixed Account and each net
unscheduled payment allocated to the Fixed Account will be applied as of the
date it is received by the Company at its Administrative Office. Each transfer
to the Fixed Account will be applied as of the transfer date.
FIXED ACCOUNT INTEREST
Except as noted in the Repayment of Loans provision of Section 13, the rate of
interest for each amount applied to the Fixed Account: will be the rate set by
the Company in advance for the date the amount is applied to the Fixed Account;
and will not be less than a rate equivalent to an annual effective rate of 4%.
The effective interest rate used on the Policy will be the weighted average of
all such rates for the Policy.
Each year, on the policy anniversary, the Company will determine a portion, if
any, of the Policy's portion of the Fixed Account which will be reinvested at
the rate effective on that date.
Interest will be credited to the Fixed Account on a daily basis.
RESTRICTION OF NEW AMOUNTS APPLIED TO THE FIXED ACCOUNT
The Company reserves the right to restrict new amounts applied to the Fixed
Account if the rate of interest that would be used for the new amount is a rate
equivalent to an annual effective rate of 4%.
TRANSFERS OUT OF THE FIXED ACCOUNT
You can transfer a limited amount of the Policy's portion of the Fixed Account
to the sub-accounts once within 30 days after each policy anniversary. The
transfer will be limited to the greater of: 25% of the Policy's portion of the
Fixed Account on the transfer date; and the amount of the Policy's portion of
the Fixed Account transferred to the sub-accounts the prior year. However, if
less than $100.00 would remain in the Fixed Account after the transfer, you can
transfer the remainder to the sub-accounts. Requests for transfers can be made
in writing or by telephone. The Company is not responsible for determining the
authenticity of transfer instructions received by telephone.
CHOICE OF THE FIXED ACCOUNT
You can choose to have net premiums and net unscheduled payments applied to the
Fixed Account. You can change the choice for future net premiums and future net
unscheduled payments at any time by notice to the Company in writing. (See the
Restriction of New Amounts Applied to the Fixed Account provision.) The portion
of the net premium and net unscheduled payment to be applied to the Fixed
Account must be a whole percent.
NEV-14-E
<PAGE>
8. DEATH BENEFIT
DEATH BENEFIT
The Company will pay a Death Benefit to the Beneficiary upon receipt of proof of
the death of the Insured. The amount of the Death Benefit will depend on the
Death Benefit Option in effect on the date of death if death occurs prior to age
100. If death occurs on or after age 100, the Death Benefit will equal the
greater of: the Cash Value on the date of death; and the Face Amount of the
Policy if, at age 100, the Policy has a Guaranteed Death Benefit Rider attached
and the Guarantee is in effect. The amount payable at either event will be
reduced by any Policy Loan Balance on the date of death. If the Insured dies
during the grace period, an amount will be deducted from the policy proceeds to
cover Monthly Deductions to the date of death. The policy proceeds will be paid
in one sum unless all or part of the proceeds is applied to a Payment Option.
(See Payment of Benefits, Section 17.)
DEFINITION OF LIFE INSURANCE TEST
This Policy is intended to qualify as a flexible premium adjustable life
insurance contract under the Internal Revenue Code (called "the Code") and any
interpretive regulation or rulings by the Internal Revenue Service. The Code
provides two tests to determine whether the policy meets the definition of life
insurance: the Cash Value Accumulation Test; and the Guideline Premium Test. The
Test used for the life of this Policy will be the one chosen in the original
Application; that Test cannot be changed.
If you choose the Cash Value Accumulation Test, the Death Benefit will not be
less than: the Policy's Cash Value plus the pro rata portion of any Monthly
Deduction made for a period beyond the date of death; divided by the Net Single
Premium. (See Section 3.)
If you choose the Guideline Premium Test, the Death Benefit will not be less
than a percentage of: the Policy's Cash Value plus the pro rata portion of any
Monthly Deduction made for a period beyond the date of death. The percent used
will be based on the age of the Insured at the beginning of the policy year as
shown in the Table of Applicable Percentages below.
TABLE OF APPLICABLE PERCENTAGES
- ------------------ ------------ ----------------- ------------
AGE APPLICABLE AGE APPLICABLE
PERCENT PERCENT
- ------------------ ------------ ----------------- ------------
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75 through 90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 94 through 99 101
60 130 100 100
- ------------------ ------------ ----------------- ------------
DEATH BENEFIT OPTIONS
This Policy provides two Death Benefit Options. The Death Benefit Option will be
as chosen in the Application or as later changed. The Death Benefit Option is
shown in Section 1.
If Option 1 is chosen, the Death Benefit equals the greater of :
. The Face Amount shown in Section 1; and
. The death benefit required by the Cash Value Accumulation Test or the
Guideline Premium Test, depending on the Definition of Life Insurance Test
chosen for the Policy.
If Option 2 is chosen, the Death Benefit equals the greater of:
. The Face Amount shown in Section 1 plus the Cash Value; and
. The death benefit required by the Cash Value Accumulation Test or the
Guideline Premium Test, depending on the Definition of Life Insurance Test
chosen for the Policy.
When you apply for an Adjustable Term Rider, you can choose to have the Term
Amount of the Rider added to the Face Amount of the Policy for purposes of
calculating the Death Benefit. Your choice cannot be changed.
NEV-14-E
<PAGE>
CHANGING THE DEATH BENEFIT OPTION
After the first policy year you can change the Death Benefit Option by written
application to the Company. A change in Death Benefit Option will be effective
on the Adjustment Date shown in the new Policy Schedule.
Except with the consent of the Company, a change from Option 1 to Option 2 can
be made only if the Face Amount after the change will be at least $50,000. If
you change from Option 1 to Option 2:
. The Face Amount will be decreased such that the Death Benefit immediately
before and after the change is the same; and
. A decrease in Face Amount will be applied to reduce the initial Face Amount
and each increase in Face Amount on a pro rata basis.
A decrease in Face Amount may require a decrease in the amounts provided by
riders attached to this Policy. If you chose the Guideline Premium Test for the
Policy, a portion of the Cash Value will be paid to you if necessary in order to
allow the Policy to continue to qualify as life insurance.
If you change from Option 2 to Option 1:
. The Face Amount will be increased such that the Death Benefit immediately
before and after the change is the same; and
. This increase in Face Amount will be applied to the initial Face Amount and
to each prior increase in Face Amount on a pro rata basis.
The requirements in the Increase in Face Amount provision of Section 14 do not
apply to a change from Option 2 to Option 1.
9. PREMIUMS
PAYMENT
Premiums are payments made to the Company to pay for the Policy. The Policy will
not be in force until the first premium is paid. The Company will send you a
Confirmation for the first premium. After the first premium is paid, premiums
can be paid: at any time; and in any amount, subject to the Limits on Premiums
below. Payments can be made at the Administrative Office of the Company or at
any Agency of the Company. A receipt for payment signed by the Secretary of the
Company will be given on request. Unless you request otherwise in writing to the
Company, any payment received by the Company when a Policy Loan exists on the
Policy will be used: first, as a planned premium; second, as payment of the loan
interest due; third, as a repayment of the Policy Loan; and fourth, as an
unscheduled payment.
AMOUNT AND FREQUENCY
Planned annual premiums are shown in Section 1. Payments and Planned Premium
Dates can be annual, semi-annual or quarterly or can be at any frequency agreed
to by the Company. (See Limits on Premiums below.)
Unscheduled payments can be made at any time. (See Limits on Premiums below.)
Cash Values and Death Benefits will be permanently affected by the amount and
frequency of planned and unscheduled payments.
LIMITS ON PREMIUMS
Payments are subject to these limits:
. No payment can be made at and after age 100, except as stated in the Grace
Period provision (see Section 10); and
. No payment can be less than $25; and
. Total planned and unscheduled payments will be limited to the Company's
published maximum; and
. No unscheduled payment can be made if it increases the Death Benefit by
more than it increases the Cash Value, except with evidence of insurability
and the consent of the Company; and
. No planned premium can be increased except with the consent of the Company.
NEV-14-E
<PAGE>
If you have selected the Guideline Premium Test for the Policy (see Section 8,
Definition of Life Insurance Test), premiums on this Policy are limited to an
amount no greater than that allowing the Policy to continue to qualify.
NET PAYMENTS
Each net premium and each net unscheduled payment equals: the payment; less no
more than the Maximum Premium Expense Charge at the rate shown in Section 1.
10. MONTHLY DEDUCTION
MONTHLY DEDUCTION
On the first day of each policy month, whether or not premiums are paid, the
Company will make a Monthly Deduction for that policy month from the Cash Value
of this Policy. The amount of the Monthly Deduction for a policy month equals:
. The cost of insurance and the cost of any riders for the policy month;
PLUS
. An amount not greater than the Maximum Monthly Policy Fee shown in Section
1;
PLUS
. A monthly Mortality and Expense Risk Charge not greater than the Maximum
stated in Section 1.
If the Policy meets the Monthly Minimum Premium test (see below) or if a
Guaranteed Death Benefit Rider is attached and the Guarantee is in effect,
whether or not premiums are paid, the Monthly Deduction will be made until the
Cash Value equals zero. Otherwise, the Monthly Deduction will be made as long as
the Net Cash Value is sufficient to cover the entire Monthly Deduction. This
provision will not continue any rider beyond the termination date as provided in
the rider.
The Monthly Deduction will reduce the sub-accounts and the Fixed Account in the
same proportion as the Cash Value of the Policy is in the sub-accounts and the
Fixed Account. However, you can choose in writing to have Monthly Deductions
reduce: a specific sub-account until the Policy's portion of that sub-account
equals zero; and then the remaining sub-accounts and the Fixed Account in the
same proportion as the Cash Value of the Policy is in the sub-accounts and the
Fixed Account.
NEV-14-E
<PAGE>
COST OF INSURANCE
The monthly cost of insurance equals: the amount at risk; times the cost of
insurance rate per $1,000 for that month divided by 1,000. The amount at risk
equals:
. The Death Benefit on the first day of the policy month discounted at
.3273745% (the monthly equivalent of 4% per year);
LESS
. The Cash Value on the first day of the policy month after the deduction of:
the cost of insurance and the cost of any riders for the policy month; plus
the Monthly Policy Fee.
COST OF INSURANCE RATES
The cost of insurance rates will be set by the Company each year on the policy
anniversary, based on the expectations of the Company as to future experience.
The Table of Guaranteed Maximum Cost of Insurance Rates per $1,000 (see Section
2) shows the maximum guaranteed rate for each policy month which starts on the
Policy Date or a policy anniversary. The rates between anniversaries vary
monthly based on the assumption of uniform distribution of deaths throughout the
policy year. The cost of insurance rates for each policy year for the initial
Face Amount and for each increase in Face Amount are based on: the sex of the
Insured; the underwriting class of the Insured; and the age of the Insured on
the first day of the policy year.
MONTHLY DEDUCTION ADJUSTMENT AT DEATH
The portion of any Monthly Deduction made for a period beyond the date of death
will be added to the policy proceeds unless this amount has already been
included in the Death Benefit as described in the Definition of Life Insurance
Test provision in Section 8. If the Insured dies during the grace period, an
amount will be deducted from the policy proceeds to cover Monthly Deductions to
the date of death.
GRACE PERIOD
Unless the Policy meets the Monthly Minimum Premium test or unless a Guaranteed
Death Benefit Rider is attached and the Guarantee is in effect, if the Net Cash
Value on the first day of a policy month is not enough to cover the Monthly
Deduction for that month, the Company will mail a premium notice to you and any
assignee at the addresses on record with the Company. There is a grace period of
62 days from the date when the Monthly Deduction was due in which to pay a
premium large enough to permit the Monthly Deduction to be made. The insurance
remains in force during the grace period. If the premium remains unpaid at the
end of its 62-day grace period, the Policy will lapse without value. Any riders
will also lapse without value unless otherwise stated in the rider.
MONTHLY MINIMUM PREMIUM
If certain criteria are met, this Policy will not be lapsed even if the Net Cash
Value on the first day of the policy month is not enough to cover the Monthly
Deduction due for that month. During the first three policy years, on the first
day of each policy month, the Company will test for this benefit unless this
Policy is the result of exercising a Change to a New Insured rider.
The test will compare (a) to (b), where: (a) equals the total of the Monthly
Minimum Premiums for the Policy from the Policy Date to that policy month; and
(b) equals the total premiums paid to date less all partial surrenders and any
Cash Value paid to you to allow the Policy to continue to qualify as life
insurance and any Policy Loan Balance at that time. If (b) is greater than or
equal to (a), the Policy will not be lapsed if the Net Cash Value on the first
day of the policy month is not enough to cover the Monthly Deduction due for
that month.
The Monthly Minimum Premium is shown in the Policy Schedule. (See Section 1.)
This Premium will be recalculated when: the Face Amount is decreased; the amount
provided by riders attached to this Policy is changed; a partial surrender is
made which results in a decrease in Face Amount; or the underwriting class of
this Policy and its riders is changed to a more favorable underwriting class.
NEV-14-E
<PAGE>
11. REINSTATEMENT AFTER LAPSE
REINSTATEMENT
If the Policy lapses, the Policy and riders can be reinstated. (See Limitations
on Reinstatement below.) Reinstatement is subject to:
. Written application to reinstate; and
. Proof that the Insured is insurable; and
. Payment of a premium large enough to keep the Policy and any riders in
force for at least two months; and
. Payment or reinstatement of any Policy Loan Balance which existed on the
date when the Policy lapsed.
LIMITATIONS ON REINSTATEMENT
The Policy and riders cannot be reinstated, except with the consent of the
Company, if more than seven years have passed since the date of lapse.
Any rider which provides life or disability insurance on a person other than the
Insured can be reinstated only as stated in the rider.
EFFECTIVE DATE OF REINSTATEMENT
Reinstatement will take effect: only if the application for reinstatement is
approved by the Company; and only when the premium for reinstatement has been
paid, provided that at the time of payment there has been no change in
insurability as represented in the application for reinstatement.
12. CASH VALUE OF THE POLICY
CASH VALUE
The first net premium will be credited to the Policy as of the latest of:
. The Policy Date;
. The date of the last Part II of the Application for the initial Face
Amount; and
. The date the first premium is received by the Company.
Each future net premium will be credited to the Cash Value as of the date it is
received by the Company.
Until 15 days after the Company mails the Confirmation of the initial premium,
the Cash Value of the Policy equals the number of Accumulation Units credited to
the Money Market sub-account for the Policy times the applicable Accumulation
Unit Value for that sub-account. Thereafter, the Cash Value of the Policy
equals: the number of Accumulation Units credited to each sub-account for the
Policy times the applicable Accumulation Unit Value for each sub-account; plus
the Policy's portion of the Fixed Account; plus the amount transferred to the
general account of the Company because of Policy Loans on this Policy. (See
Section 13.) The amount of the Cash Value depends on: the frequency and amount
of net planned premiums; the frequency and amount of net unscheduled payments;
investment performance of the chosen sub-accounts; interest credited to the
Policy's portion of the Fixed Account; Monthly Deductions; partial surrenders;
increases and decreases in Face Amount; transfers among sub-accounts and the
Fixed Account; and Policy Loans. The Cash Value can increase or decrease on a
daily basis, depending on: the actual investment performance of the chosen sub-
accounts; and the interest credited to the Policy's portion of the Fixed
Account. (See Net Investment Factor below.)
The Cash Value of the Policy is not increased by the cash value of any rider,
unless stated in the rider.
NEV-14-E
<PAGE>
ACCUMULATION UNIT VALUE
An Accumulation Unit Value is determined for each sub-account for each Valuation
Period. The Accumulation Unit Value of each sub-account for its first Valuation
Period after it was added to the Account was set at $100.00 taking into account
the performance history of the underlying investment company. For each later
Valuation Period, each Accumulation Unit Value equals:
The Net Investment Factor for that Valuation Period;
TIMES
The Accumulation Unit Value for the immediately preceding Valuation Period.
The Net Investment Factor depends on the investment performance of the
sub-accounts elected and can be greater or less than one. Therefore, the
Accumulation Unit Value can increase or decrease.
NET INVESTMENT FACTOR
For each Valuation Period, the Net Investment Factor for each sub-account is
determined by dividing (a) by (b); where:
(a) equals the net asset value per unit of the portfolios held in the
sub-account as of the end of that Valuation Period;
PLUS
if the ex-dividend date occurs during that Valuation Period, the per unit amount
of all dividend and capital gains distributions made by the portfolios held in
the sub-account;
MINUS
a per unit amount of any taxes incurred by the Account, or amounts set aside as
a reserve for such taxes during that Valuation Period; and
(b) equals the net asset value per unit of the portfolios held in the
sub-account for the immediately preceding Valuation Period.
NET CASH VALUE
The Net Cash Value equals:
. The Cash Value of the Policy;
LESS
. Any Policy Loan Balance.
SURRENDER OF THE POLICY
You can surrender the Policy for its Net Cash Value at any time by notice to the
Company in writing. Upon surrender, the Policy will be cancelled. The Net Cash
Value will be paid to you in one sum, unless you choose in writing to apply all
or part to a Payment Option. (See Payment of Benefits, Section 17.) If you
surrender the Policy during the grace period, an amount will be deducted from
the Net Cash Value to cover the Monthly Deduction to the date of surrender.
MONTHLY COST OF INSURANCE ADJUSTMENT AT SURRENDER OR PARTIAL SURRENDER
The pro rata portion of any monthly cost of insurance deduction made for a
period beyond the date of surrender will be added to the surrender proceeds.
VALUATION PERIODS AND VALUATION DATES A Valuation Period for each sub-account is
a period:
. Which starts on a Valuation Date; and
. Which ends on the next succeeding Valuation Date.
Each day the New York Stock Exchange is open for trading is a Valuation Date.
NEV-14-E
<PAGE>
13. POLICY LOANS
POLICY LOANS
You can borrow all or part of the Loan Value of the Policy by request, in a
manner satisfactory to the Company. Unless the Company consents otherwise, no
request can be made until after 15 days from the date the Company mails the
Confirmation for the first premium. Policy Loans are made on the sole security
of the Policy. The amount you can borrow at any time equals the Loan Value less
any Policy Loan Balance at that time.
Unless you request otherwise, Policy Loans will reduce first, the Policy's share
of the sub-accounts proportionately and second, the Policy's portion of the
Fixed Account, except as noted below in the Interest on Loans; Policy Loan
Balance provision. Assets equal to the amount of the Loan:
. Will be transferred to the general account of the Company; and
. Will earn interest at the effective rate per year of not less than: the
Policy Loan Interest Rate; less .75%.
Policy Loans, whether or not repaid, can have a permanent effect on Cash Values
and Death Benefits.
LOAN VALUE
The Loan Value of the Policy equals 90% of the Cash Value of the Policy on the
date the Loan is made.
INTEREST ON LOANS; POLICY LOAN BALANCE
Interest will be charged on Policy Loans at the Policy Loan Interest Rate shown
in Section 1. Interest accrues daily. The Policy Loan Balance at any time means
Policy Loans outstanding plus interest accrued to date. Loan interest is due on
the policy anniversary each year. Loan interest not paid when due will be added
to the Loan and interest will be charged on it; when loan interest is added to
the Loan, the Policy's share of the sub-accounts and the Policy's portion of the
Fixed Account will be reduced proportionately.
REPAYMENT OF LOANS
Policy Loans can be repaid to the Company at any time in whole or in part. Loan
repayments will be allocated: first, to repay the Loans made against the Fixed
Account; and second, unless you request otherwise, to repay the Loans made
against the sub-accounts in the same proportion as the Policy is invested in the
sub-accounts at the time of repayment of the Policy Loan.
The rate of interest for each loan repayment allocated to the Fixed Account will
be the lesser of: the rate set by the Company in advance for the date the loan
repayment is allocated to the Fixed Account; and the effective interest rate
(see Fixed Account Interest) for the Policy on the date of the repayment.
A Policy Loan is a charge against the Policy. The proceeds of the Policy will be
reduced by any Policy Loan Balance on the date of death of the Insured. If the
Policy Loan Balance at any time exceeds the Cash Value of the Policy (called
"excess Policy Loan"), the Company will mail a notice to you and to any
assignee. The notice will be mailed to the addresses on record with the Company.
If the excess amount is not paid to the Company within 62 days after the mailing
of the notice, the Policy will lapse without value.
Unless you request otherwise, any payment received by the Company when a Policy
Loan exists on the Policy will be used: first, as a planned premium; second, as
payment of the loan interest due; third, as a repayment of the Policy Loan; and
fourth, as an unscheduled payment.
<PAGE>
14. ADJUSTMENT
INCREASE IN FACE AMOUNT
After the first policy year, the Face Amount can be increased effective on the
first day of any policy month. An increase in Face Amount is subject to:
. Written application to increase the Face Amount;
. Proof that the Insured is insurable;
. New insurance for the amount of the increase on the same plan at the age of
the Insured on the Adjustment Date being allowed under the underwriting
rules of the Company;
. The amount of the increase being at least $10,000, except with the consent
of the Company;
. A Monthly Deduction for the increase. (See Monthly Deduction, Section 10.);
and
. If the increase is medically underwritten, a monthly Face Amount Increase
Administrative Charge not greater than the Maximum stated in Section 1, to
be deducted from the Cash Value in the same manner as the Monthly Deduction
(see Monthly Deduction, Section 10).
The amount of any rider which is attached to the Policy can be increased only as
stated in the rider.
The Application to increase the Face Amount must be signed by the Insured and by
you. An increase will be effective on the Adjustment Date shown in the new
Policy Schedule.
DECREASE IN FACE AMOUNT
After the first policy year, the Face Amount may be decreased effective on the
first day of any policy month by written application to the Company; but only if
the Face Amount which will remain after a decrease is at least $50,000, except
with the consent of the Company. No part of the Cash Value will be paid to you
unless you chose the Guideline Premium Test for the Policy and paying a portion
of the Cash Value is necessary in order to allow the Policy to continue to
qualify as life insurance. Any decrease in Face Amount will be applied to reduce
the initial Face Amount and each increase in Face Amount on a pro rata basis,
except with the consent of the Company. The Death Benefit will be recalculated
based on the new Face Amount and the Cash Value. A decrease in Face Amount will
be effective on the Adjustment Date shown in the new Policy Schedule. A decrease
in Face Amount may require a decrease in the amounts provided by riders attached
to this Policy.
PARTIAL SURRENDER
After 15 days from the date the Company mails the Confirmation of the first
premium, you can make a partial surrender by written request to the Company. A
portion of the Cash Value will be paid to you. In each policy year, partial
surrenders will be limited, except with the consent of the Company, to: 20% of
the Net Cash Value on the day the first partial surrender is made for the policy
year; or, if less, the Loan Value minus any Policy Loan Balance. The amount of
the partial surrender will be deducted from the Cash Value. The Death Benefit of
the Policy will be based on the Face Amount after the partial surrender and the
reduced Cash Value. The Face Amount of the Policy will be reduced, if necessary,
so the amount at risk after the partial surrender is not greater than the amount
at risk before the partial surrender. (See Cost of Insurance, Section 10). Any
decrease in Face Amount will be applied to reduce the initial Face Amount and
each increase in Face Amount on a pro rata basis, except with the consent of the
Company. The Face Amount which will remain after the partial surrender must be
at least $50,000, except with the consent of the Company. A decrease in Face
Amount may require a decrease in the amounts provided by riders attached to this
Policy.
Unless you request otherwise, a partial surrender will reduce: first, the
Policy's portion of the sub-accounts proportionately; and second, the Policy's
portion of the Fixed Account.
NEV-14-E
<PAGE>
ADJUSTMENT OF THE POLICY
The Policy Schedule and Sections 2 and 3, must be changed to reflect an increase
or a decrease in the Face Amount. The Policy Schedule must be changed also to
reflect a change in the Death Benefit Option. The new Policy Schedule and the
new Sections 2 and 3, and the Application for the adjustment will be made part
of the Policy when the Company, at its option:
. Sends you a new Policy Schedule, and new Sections 2 and 3, and a copy of
the Application for the adjustment for you to attach to the Policy; or
. Requires that the Policy be returned to have the new Policy Schedule and
new Sections 2 and 3, and a copy of the Application for the adjustment
attached to the Policy by the Company; or
. Sends you an adjusted policy to take the place of this Policy.
Upon adjustment the Policy will be in force only as adjusted.
15. 24 MONTHS CONVERSION RIGHT
24 MONTHS CONVERSION RIGHT
The 24 Months Conversion Right allows you to convert all or a portion of this
Policy, subject to the terms of this Section, to fixed benefit coverage: by
transferring value to the Fixed Account; and by allocating future net premiums
and future net unscheduled payments to the Fixed Account.
A request to exercise the 24 Months Conversion Right must be in written form
satisfactory to the Company. The 24 Months Conversion Right can be exercised:
. Once within 24 months after the Date of Issue of the Policy;
. Once within 24 months after the Adjustment Date of an increase in Face
Amount; and
. Even if the Company is restricting new amounts applied to the Fixed
Account. (See Restriction of New Amounts Applied to the Fixed Account
provision of Section 7.)
If the Company is not restricting amounts applied to the Fixed Account: you can
transfer to the Fixed Account all or part of the Policy's Cash Value in the
sub-accounts; and you can allocate all or part of future net premiums and net
unscheduled payments to the Fixed Account. However, at any time in the future if
the Company is restricting new amounts applied to the Fixed Account, the Company
reserves the right to limit the allocation of future net premiums and net
unscheduled payments to the Fixed Account to the Policy's lowest Fixed Account
allocation percentage since the most recent date when this Right was exercised.
The Policy's share of the sub-accounts will be reduced proportionately when Cash
Value is transferred under this Right.
If the Company is restricting amounts applied to the Fixed Account: you can
transfer to the Fixed Account the portion of the Policy's Cash Value in the
sub-accounts which is attributable to the coverage for which this Right is being
exercised; and you can allocate future net premiums and net unscheduled payments
to the Fixed Account based on the Company's published rules. The Policy's share
of the sub-accounts will be reduced proportionately when Cash Value is
transferred under this Right.
Transfers to the Fixed Account resulting from the exercise of the 24 Months
Conversion Right are not counted in the limit of 4. (See Transfer Option
provision of Section 6.)
NEV-14-E
<PAGE>
16. OWNER AND BENEFICIARY
OWNER
The Owner of the Policy is named in the Application (see copy attached); but,
the Owner can be changed. The new Owner will succeed to all rights of the Owner,
including the right to make a further change of Owner. At the death of the
Owner, his or her estate will be the Owner, unless a successor Owner has been
named. In this Policy "you" means the Owner, whether the Owner is a person, a
partnership, a corporation, a fiduciary or any other legal entity. The rights of
the Owner will end at the death of the Insured, except for Payment of Benefits.
(See Section 17.)
BENEFICIARY
The Beneficiary is named in the Application (see copy attached); but, the
Beneficiary can be changed before the death of the Insured. The Beneficiary can
be a person, a corporation, a partnership, a fiduciary or any other legal
entity. A person must survive the Insured to qualify as Beneficiary. If none
survives, the proceeds will be paid to the Owner.
CHANGE OF OWNER OR BENEFICIARY
A change of Owner or Beneficiary must be in written form satisfactory to the
Company, and must be dated and signed by the Owner who is making the change. The
change will be subject to all payments made and actions taken by the Company
under the Policy before the signed change form is received by the Company at its
Administrative Office.
ASSIGNMENTS
An absolute assignment of the Policy by the Owner is a change of Owner and
Beneficiary to the assignee. A collateral assignment of the Policy by the Owner
is not a change of Owner or Beneficiary; but their rights will be subject to the
terms of the assignment except that the rights of an irrevocable beneficiary
named before the assignment are superior to those of the assignee. Assignments
will be subject to all payments made and actions taken by the Company before a
signed copy of the assignment form is received by the Company at its
Administrative Office. The Company will not be responsible for determining
whether or not an assignment is valid.
DESIGNATION OF OWNER AND BENEFICIARY
A numbered sequence can be used to name successive Owners or Beneficiaries.
Co-Beneficiaries will receive equal shares unless otherwise stated.
In naming Owners or Beneficiaries, unless otherwise stated:
. "Child" includes an adopted or posthumous child;
. "Provision for issue" means that if a Beneficiary does not survive the
Insured, the share of that Beneficiary will be taken by his or her living
issue by right of representation; and
. A family relation such as "wife", "husband" or "child" means the relation
to the Insured.
At the time for payment of benefits the Company can rely on an affidavit of
any Owner or other responsible person to determine family relations or
members of a class.
NEV-14-E
<PAGE>
17. PAYMENT OF BENEFITS
PAYMENT
The policy proceeds will be paid in one sum, unless all or part of the proceeds
is applied to a Payment Option. (See Section 18.) The Company will pay interest
on death proceeds from the date of death to the date of payment in one sum, or
to the Option Date. The rate of interest will be set each year by the Company.
The rate will not be less than: that required by law; or 3 1/2% per year. The
interest payable on surrender proceeds is described in Section 5.
SELECTION OF PAYMENT OPTIONS; OPTION DATE
The selection of a Payment Option and the naming of the Payee must be in written
form satisfactory to the Company. You can make or change or revoke the selection
before death of the Insured. The Option Date is the effective date of the
Payment Option, as stated in the selection form.
PAYEE
The Payee is a person, a corporation, a partnership, a fiduciary or any other
legal entity entitled to receive payment in one sum or under a Payment Option.
SELECTION BY PAYEES
Any proceeds payable in one sum at the death of the Insured, or upon surrender
of the Policy, can be applied to any Payment Option chosen by the Payee.
Further, with the consent of the Company, any Payee who is entitled to receive
proceeds in one sum when a Payment Option ends, or at the death of a prior
Payee, or when proceeds are withdrawn, can choose to apply the proceeds to a
Payment Option.
RIGHTS OF PAYEES
In the selection of a Payment Option the right can be given to the Payee:
. To withdraw principal and interest under the Fourth or Fifth Option; or
. To withdraw the commuted value of payments certain under the First, Second,
or Sixth Option.
Under the Life Income Options only payments certain can be commuted. No Payee
can assign, commute or withdraw the payments under any Payment Option, unless
the right is reserved in the selection of the Option.
LIMITATIONS
If instalments under an Option would be less than $20, proceeds can be applied
to a Payment Option only with the consent of the Company.
LIFE INCOME OPTIONS
Guaranteed Life Income Options are based on the age of the Payee on the Payee's
birthday nearest the Option Date. The Company will require proof of age. The
Life Income payments will be based: on the rates shown in the Life Income Tables
(Section 19); or, if they are greater, on the Payment Option rates of the
Company on the Option Date. If the rates at a given age are the same for
different periods certain, the longest period certain will be used.
PURCHASE OF INCREASED PAYMENT OPTION BENEFITS
On the Option Date, a one sum purchase payment can be made to the Company to be
added to the proceeds being applied to any Payment Option. The portion of Life
Income payments purchased in this way will be based on the Payment Option rates
of the Company on the Option Date, which may not be the rates shown in the Life
Income Tables (Section 19). The purchase payment will be limited to the
Company's published maximum for single premium immediate annuities on the Option
Date. A portion of the purchase payment may be used by the Company to pay
premium taxes on the purchase payment.
DEATH OF PAYEE
If a Payee under a Life Income Option dies within 30 days after the Option Date,
the amount applied to the Option, less any payments made, will be paid in one
sum, unless a Payment Option is chosen by the successor Payee. Otherwise,
amounts to be paid after the death of a Payee under a Payment Option will be
paid as due to the successor Payee. If there is no successor Payee, amounts to
be paid in one sum, or the commuted value of any unpaid payments certain, will
be paid in one sum to the estate of the last Payee to die.
COMMUTATION RATE
The interest rate used to compute the commuted value of any unpaid payments
certain:
. Under the First Option will be 3 1/2% per year; and
. Under the Life Income Options will be the rate used by the Company in
computing the amount of the monthly payments.
<PAGE>
18. PAYMENT OPTIONS
PAYMENT OPTIONS
All or part of the policy proceeds can be applied to any one of the following
Options, subject to Section 17, Payment of Benefits:
FIRST OPTION: INCOME FOR A SPECIFIED NUMBER OF YEARS
The Company will make monthly payments which will include both principal and
interest. Payments will start on the Option Date and will continue for the
number of years chosen. The number of years chosen cannot be more than 30.
Interest is at the rate of 3 1/2% per year compounded yearly. Additional
interest paid by the Company for any year will be added to the monthly payments
for that year.
Guaranteed monthly payments per $1,000 of proceeds applied to the First Option
are shown below:
- ------------- --------- ---------- ------- ---------- --------
Number of Number of Number of
Years Years Years
- ------------- --------- ---------- ------- ---------- --------
1 $84.65 11 $9.09 21 $5.56
2 43.05 12 8.46 22 5.39
3 29.19 13 7.94 23 5.24
4 22.27 14 7.49 24 5.09
5 18.12 15 7.10 25 4.96
6 15.35 16 6.76 26 4.84
7 13.38 17 6.47 27 4.73
8 11.90 18 6.20 28 4.63
9 10.75 19 5.97 29 4.53
10 9.83 20 5.75 30 4.45
- ------------- --------- ---------- ------- ---------- --------
SECOND OPTION: LIFE INCOME
The Company will make equal monthly payments. Payments will start on the Option
Date and will continue:
. During the life of the Payee, with no further payment after the death of
the Payee, called "Life Income, No Refund"; or
. During the life of the Payee, but for at least 10 years, called "Life
Income, 10 Years Certain"; or
. During the life of the Payee, but for at least 20 years, called "Life
Income, 20 Years Certain".
THIRD OPTION: LIFE INCOME WITH REFUND
The Company will make equal monthly payments. Payments will start on the Option
Date and will continue during the life of the Payee. At the death of the Payee,
if the total payments made are less than the total proceeds applied to the
Option, then:
. The difference will be paid in one sum, called "Life Income, Cash Refund";
or
. The equal monthly payments will continue until the total payments are equal
to the total proceeds applied to the Option, called "Life Income,
Instalment Refund".
FOURTH OPTION: INTEREST
The Company will hold the proceeds at interest during the life of the Payee or
for any other period agreed to by the Company. Interest on the proceeds:
. Will be paid each month to the Payee starting one month after the Option
Date; or
. Will be added to the principal amount each year and will earn interest.
At the death of the Payee, or at the end of the period agreed to, the balance of
principal and any accrued interest will be paid in one sum. The rate of interest
will be set each year by the Company; but the rate will not be less than 3 1/2%
per year.
FIFTH OPTION: SPECIFIED AMOUNT OF INCOME
The Company will make monthly payments which will include both principal and
interest. Payments will be in the amount chosen. Payments can be quarterly or at
any other frequency chosen, and payments can be for different amounts, all
subject to the consent of the Company. Payments will start on the Option Date
and will continue until the balance is fully paid out. At the death of the Payee
any unpaid balance and accrued interest will be paid in one sum. The rate of
interest will be set each year by the Company; but the rate will not be less
than 3 1/2% per year. Interest will be added each year to the principal and will
earn interest.
NEV-14-E
<PAGE>
SIXTH OPTION: LIFE INCOME FOR TWO LIVES
The Company will make monthly payments. Payments will start on the Option Date
and will continue:
. While either of two Payees is living, called "Joint and Survivor Life
Income"; or
. While either of two Payees is living, but for at least 10 years, called
"Joint and Survivor Life Income, 10 Years Certain"; or
. While two Payees are living, and after the death of one Payee, two-thirds
of the monthly amount while the other Payee is living, called "Joint and
2/3 to Survivor Life Income".
NEV-14-E
<PAGE>
19. LIFE INCOME TABLES
LIFE INCOME TABLES
Guaranteed monthly payments per $1,000 of amounts applied to the Life Income
Options are shown below:
- --------------------------------------------------------------
SECOND AND THIRD OPTIONS: LIFE INCOME
- --------------------------------------------------------------
AGE 10 20
OF NO YEARS YEARS CASH INSTALMENT
PAYEE REFUND CERTAIN CERTAIN REFUND REFUND
- ---------- --------- --------- --------- --------- -----------
*15 $3.19 $3.19 $3.19 $3.18 $3.19
16 3.21 3.20 3.20 3.19 3.20
17 3.22 3.22 3.21 3.21 3.21
18 3.23 3.23 3.23 3.22 3.22
19 3.25 3.24 3.24 3.23 3.24
20 3.26 3.26 3.25 3.25 3.25
21 3.27 3.27 3.27 3.26 3.26
22 3.29 3.29 3.28 3.28 3.28
23 3.31 3.30 3.30 3.29 3.29
24 3.32 3.32 3.31 3.31 3.31
25 3.34 3.34 3.33 3.32 3.33
26 3.36 3.36 3.35 3.34 3.35
27 3.38 3.37 3.37 3.36 3.36
28 3.40 3.39 3.39 3.38 3.38
29 3.42 3.41 3.41 3.40 3.40
30 3.44 3.44 3.43 3.42 3.42
31 3.46 3.46 3.45 3.44 3.44
32 3.49 3.48 3.47 3.46 3.47
33 3.51 3.51 3.50 3.49 3.49
34 3.54 3.53 3.52 3.51 3.52
35 3.56 3.56 3.55 3.54 3.54
36 3.59 3.59 3.58 3.56 3.57
37 3.62 3.62 3.60 3.59 3.60
38 3.66 3.65 3.63 3.62 3.63
39 3.69 3.69 3.67 3.65 3.66
40 3.73 3.72 3.70 3.68 3.69
41 3.76 3.76 3.73 3.71 3.72
42 3.80 3.79 3.77 3.75 3.76
43 3.84 3.84 3.80 3.78 3.79
44 3.89 3.88 3.84 3.82 3.83
45 3.93 3.92 3.88 3.86 3.87
46 3.98 3.97 3.92 3.90 3.91
47 4.03 4.02 3.97 3.94 3.96
48 4.08 4.07 4.01 3.99 4.00
49 4.14 4.12 4.06 4.03 4.05
50 4.20 4.18 4.11 4.08 4.10
51 4.26 4.23 4.16 4.13 4.15
52 4.32 4.30 4.21 4.19 4.21
53 4.39 4.36 4.26 4.24 4.27
54 4.46 4.43 4.32 4.30 4.33
55 4.54 4.50 4.37 4.36 4.39
56 4.62 4.58 4.43 4.43 4.46
57 4.70 4.65 4.49 4.49 4.53
58 4.79 4.74 4.56 4.57 4.60
59 4.89 4.83 4.62 4.64 4.68
60 4.99 4.92 4.68 4.72 4.76
61 5.10 5.02 4.75 4.80 4.85
62 5.22 5.12 4.82 4.89 4.94
63 5.34 5.23 4.88 4.98 5.03
64 5.47 5.35 4.95 5.07 5.13
65 5.61 5.47 5.02 5.17 5.24
66 5.76 5.60 5.08 5.28 5.35
67 5.92 5.73 5.15 5.39 5.47
68 6.10 5.87 5.21 5.51 5.59
69 6.28 6.02 5.27 5.63 5.72
- ---------- --------- --------- --------- --------- -----------
- ---------- --------- --------- --------- --------- -----------
AGE 10 20
OF NO YEARS YEARS CASH INSTALMENT
PAYEE REFUND CERTAIN CERTAIN REFUND REFUND
- ---------- --------- --------- --------- --------- -----------
70 $6.48 $6.17 $5.33 $5.76 $5.86
71 6.70 6.33 5.38 5.89 6.00
72 6.92 6.49 5.43 6.04 6.16
73 7.17 6.66 5.48 6.19 6.32
74 7.43 6.84 5.52 6.34 6.49
75 7.71 7.02 5.56 6.52 6.67
76 8.02 7.20 5.60 6.69 6.86
77 8.34 7.38 5.63 6.87 7.06
78 8.69 7.56 5.66 7.07 7.27
79 9.07 7.75 5.68 7.27 7.50
80 9.47 7.93 5.70 7.49 7.74
81 9.90 8.11 5.71 7.73 7.99
82 10.36 8.28 5.73 7.96 8.25
83 10.86 8.45 5.73 8.21 8.53
84 11.39 8.62 5.74 8.50 8.83
**85 11.96 8.77 5.75 8.78 9.14
* and under **and over
- ----------------------------------------------------------------
SIXTH OPTION: LIFE INCOME FOR TWO LIVES
- ----------------------------------------------------------------
AGE OF ONE AGE OF OTHER PAYEE
PAYEE 55 60 65 70 75
- ---------------- --------- -------- --------- -------- ---------
JOINT AND SURVIVOR
55 $4.04 $4.17 $4.28 $4.37 $4.43
60 4.17 4.36 4.53 4.68 4.79
65 4.28 4.53 4.79 5.02 5.22
70 4.37 4.68 5.02 5.38 5.71
75 4.43 4.79 5.22 5.71 6.22
80 4.47 4.87 5.37 5.98 6.68
- ---------------- --------- -------- --------- -------- ---------
JOINT AND SURVIVOR, 10 YEARS CERTAIN
55 $3.96 $4.09 $4.20 $4.36 $4.42
60 4.09 4.27 4.44 4.59 4.77
65 4.20 4.44 4.69 4.91 5.09
70 4.36 4.59 4.91 5.22 5.50
75 4.42 4.77 5.09 5.50 5.88
80 4.46 4.85 5.33 5.72 6.21
- ---------------- --------- -------- --------- -------- ---------
JOINT AND 2/3 TO SURVIVOR
55 $4.37 $4.56 $4.76 $4.99 $5.23
60 4.56 4.78 5.02 5.30 5.59
65 4.76 5.02 5.33 5.67 6.03
70 4.99 5.30 5.67 6.10 6.57
75 5.23 5.59 6.03 6.57 7.18
80 5.48 5.89 6.41 7.06 7.84
- ---------------- --------- -------- --------- -------- ---------
PAYMENTS FOR OTHER AGES WILL BE QUOTED BY THE COMPANY ON REQUEST.
The rates shown above are based on an interest rate of 3 1/2% per year; and on
mortality: using a 60/40 male/female weighting; based on the Individual
Annuitant Mortality Table for 1983; and with projection on Scale G to the year
2000 and then on Scale B Modified to year 2010.
NEV-14-E
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDMENTS AND ENDORSEMENTS (To be made only by the Company)
NEV-14-E
<PAGE>
Please notify the Company of any change in your name or address. The Company
will communicate with you at your address on record with the Company.
New England Life
Insurance Company
Home Office:
501 Boylston Street
Boston, Massachusetts 02117
Administrative Office:
6425 Powers Ferry Road
Third Floor
Atlanta, GA 30339
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE POLICY
. The Death Proceeds are payable at the death of the Insured if the Policy is
in force.
. The Policy can be adjusted by increasing or decreasing the Face Amount.
. The amount and frequency of premium payments can be changed.
. The Policy does not share in dividends.
NEV-14-E
<PAGE>
Exhibit 1.A.5(e)
NEL-474-00
- --------------------------------------------------------------------------------
Endorsement
MODIFICATION OF THE CONTRACT SECTION
As of the Date of Issue of this Policy, the following is substituted for the
Not Contestable After Two Years provision of the Policy.
NOT CONTESTABLE AFTER TWO YEARS
Insurance is issued by the Company in reliance on the statements made in the
Application for the insurance. Those statements are representations; they are
not warranties. No statement can be used to contest or rescind insurance or to
defend against a claim unless contained in the Application for the insurance.
The insurance issued under this Policy will not be contestable after it has been
in force during the life of the Insured:
. With respect to the amount of Death Benefit which results from other than
payments for which proof of insurability is required, for two years from the
Date of Issue; and
. With respect to any amount of Death Benefit which results from a payment for
which proof of insurability is required, for two years from the date that
payment is received; and
. With respect to the amount of the Death Benefit associated with each increase
in Face Amount, for two years from the Adjustment Date for that increase; and
. With respect to the amount of the increase in Death Benefit associated with a
change in Corridor for which proof of insurability is required, for two years
from the Adjustment Date for that change; and
. With respect to the amount of the increase in Death Benefit associated with
a change in Death Benefit Option for which proof of insurability is required,
for two years from the Adjustment Date for that change.
MODIFICATION OF THE DEATH BENEFIT SECTION
As of the Date of Issue of this Policy, the following is substituted for the
Death Benefit section of the Policy:
Death Benefit
DEATH BENEFIT
The Company will pay a Death Benefit to the Beneficiary upon receipt of proof of
the death of the Insured. The amount of the Death Benefit will depend on the
Death Benefit Option in effect on the date of death if death occurs prior to age
100. If death occurs on or after age 100, the Death Benefit will equal the
greater of: the Cash Value on the date of death; and the Face Amount of the
Policy if, at age 100, the Policy has a Guaranteed Death Benefit Rider attached
and the Guarantee is in effect. The amount payable in either event will be
reduced by any Policy Loan Balance on the date of death. If the Insured dies
during the grace period, an amount will be deducted from the policy proceeds to
cover Monthly Deductions to the date of death. The policy proceeds will be paid
in one sum unless all or part of the proceeds is applied to a Payment Option.
(See Payment of Benefits Section.)
DEFINITION OF LIFE INSURANCE TEST
This Policy is intended to qualify as a flexible premium adjustable life
insurance contract under the Internal Revenue Code ("the Code") and any
interpretive regulation or rulings by the Internal Revenue Service. The Code
provides two tests to determine whether the policy meets the definition of life
insurance: the Cash Value Accumulation Test; and the Guideline Premium Test. The
Test used for the life of this Policy will be the one chosen in the original
Application and shown in Section 1; that Test cannot be changed.
CASH VALUE ACCUMULATION TEST
If you choose the Cash Value Accumulation Test, you must choose one of two Net
Single Premium Corridors (the Net Single Premium Corridor or the Enhanced
Net Single Premium Corridor) in the original Application. The Corridor chosen
for the Policy is shown in Section 1.
If you choose the Net Single Premium Corridor, the Death Benefit will not be
less than: the Policy's Cash Value plus the pro rata portion of any Monthly
Deduction made for a period beyond the date of death; divided by the Net
Single Premium shown in Section 3.
NEL-474-00
<PAGE>
If you choose the Enhanced Net Single Premium Corridor, the Death Benefit
will not be less than: the Policy's Cash Value plus the pro rata portion of any
Monthly Deduction made for a period beyond the date of death; divided by: the
Net Single Premium shown in Section 3 times the Enhanced Net Single Premium
Factor shown in Table I below.
GUIDELINE PREMIUM TEST
If you choose the Guideline Premium Test, you must choose one of two Death
Benefit Corridors (the IRS Corridor or the Enhanced IRS Corridor) in the
original Application. The Corridor chosen for the Policy is shown in Section 1.
If you choose the IRS Corridor, the Death Benefit will not be less than a
percentage of: the Policy's Cash Value plus the pro rata portion of any
Monthly Deduction made for a period beyond the date of death. The percent used
will be based on the age of the Insured at the beginning of the policy year
as shown in Table II below.
If you choose the Enhanced IRS Corridor, the Death Benefit will not be less than
a percentage of: the Policy's Cash Value plus the pro rata portion of any
Monthly Deduction made for a period beyond the date of death. The percent used
will be based on the age of the Insured at the beginning of the policy year as
shown in Table III below.
CHANGING THE CORRIDOR
Although the Definition of Life Insurance Test for the Policy cannot be changed,
you can change your choice of the Corridor within each Test. A change in
Corridor will be effective on the Adjustment Date shown in the new Policy
Schedule. A change from a regular Corridor (Net Single Premium or IRS) to an
Enhanced Corridor will require evidence that the Insured is still eligible for
the Policy Class shown in Section 1. Otherwise, no underwriting will be
required. A change in Corridor will change the Death Benefit; but no other
policy values or benefits (including the Face Amount) will change.
TABLE I : ENHANCED NET SINGLE PREMIUM FACTORS
- --------------------------------------------------------------
AGE APPLICABLE AGE APPLICABLE
PERCENT PERCENT
- --------------------------------------------------------------
0 through 75 1.00 83 0.93
76 0.98 84 0.94
77 0.96 85 0.95
78 0.94 86 0.96
79 0.92 87 0.97
80 0.90 88 0.98
81 0.91 89 0.99
82 0.92 90 through 100 1.00
- --------------------------------------------------------------
TABLE II : APPLICABLE PERCENTAGES FOR IRS CORRIDOR
- --------------------------------------------------------------
AGE APPLICABLE AGE APPLICABLE
PERCENT PERCENT
- --------------------------------------------------------------
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75 through 90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 94 through 99 101
60 130 100 100
- --------------------------------------------------------------
NEL-474-00
<PAGE>
TABLE III : APPLICABLE PERCENTAGES FOR ENHANCED IRS CORRIDOR
- --------------------------------------------------------------
AGE APPLICABLE AGE APPLICABLE
PERCENT PERCENT
- --------------------------------------------------------------
0 through 40 250
41 243 71 113
42 236 72 111
43 229 73 109
44 222 74 107
45 215 75 105
46 209 76 107
47 203 77 109
48 197 78 112
49 191 79 114
50 185 80 117
51 178 81 115
52 171 82 114
53 164 83 113
54 157 84 112
55 150 85 111
56 146 86 109
57 142 87 108
58 138 88 107
59 134 89 106
60 130 90 105
61 128 91 104
62 126 92 103
63 124 93 102
64 122 94 through 99 101
65 120 100 100
66 119
67 118
68 117
69 116
70 115
- --------------------------------------------------------------
DEATH BENEFIT OPTIONS
This Policy provides for three Death Benefit Options. The Death Benefit Option
will be as chosen in the Application or as later changed. The Death Benefit
Option is shown in Section 1.
If Option 1 is chosen, the Death Benefit equals the greater of:
. The Face Amount shown in Section 1; and
. The death benefit required by the Definition of Life Insurance Test and
Corridor chosen for the Policy.
If Option 2 is chosen, the Death Benefit equals the greater of:
. The Face Amount shown in Section 1 plus the Cash Value; and
. The death benefit required by the Definition of Life Insurance Test and
Corridor chosen for the Policy.
If Option 3 is chosen, the Death Benefit equals the greater of:
. The Face Amount shown in Section 1 plus the total premiums paid for the
Policy less all partial surrenders; and
. The death benefit required by the Definition of Life Insurance Test and
Corridor chosen for the Policy.
When you apply for an Adjustable Term Rider, you can choose to have the Term
Amount of the Rider added to the Face Amount of the Policy for purposes of
calculating the Death Benefit. Your choice cannot be changed.
CHANGING THE DEATH BENEFIT OPTION
After the first policy year you can change the Death Benefit Option by
written application to the Company. A change in Death Benefit Option will be
effective on the Adjustment Date shown in the new Policy Schedule.
FROM OPTION 1
Except with the consent of the Company, a change from Option 1 to Option 2 can
be made only if the Face Amount after the change will be at least $50,000. If
you change from Option 1 to Option 2:
. The Face Amount will be decreased such that the Death Benefit immediately
before and after the change is the same; and
. A decrease in Face Amount will be applied to reduce the initial Face Amount
and each increase in Face Amount on a pro rata basis.
A decrease in Face Amount may require a decrease in the amounts provided by
riders attached to this Policy. If you chose the Guideline Premium Test for the
Policy, a portion of the Cash Value will be paid to you if necessary to allow
the Policy to continue to qualify as life insurance.
A change from Option 1 to Option 3 will require evidence that the Insured
is still eligible for the Policy Class shown in Section 1. The Death Benefit
will change. No other policy values or benefits (including the Face Amount) will
change.
FROM OPTION 2
If you change from Option 2 to Option 1:
. The Face Amount will be increased such that the Death Benefit immediately
before and after the change is the same; and
. This increase in Face Amount will be applied to the initial Face Amount
and to each prior increase in Face Amount on a pro rata basis.
NEL-474-00
<PAGE>
If you change from Option 2 to Option 3:
. Will require evidence that the Insured is still eligible for the Policy
Class shown in Section 1
. The Face Amount will be increased such that the Death Benefit immediately
before and after the change is the same; and
. This increase in Face Amount will be applied to the initial Face Amount and
to each prior increase in Face Amount on a pro rata basis.
The requirements in the Increase in Face Amount provision of the Adjustment
Section do not apply to increases in Face Amount as a result of a change from
Option 2.
FROM OPTION 3
A change from Option 3 to Option 1 will change the Death Benefit. No other
policy values or benefits (including the Face Amount) will change.
Except with the consent of the Company, a change from Option 3 to Option 2 can
be made only if the Face Amount after the change will be at least $50,000. If
you change from Option 3 to Option 2:
. The Face Amount will be decreased such that the Death Benefit immediately
before and after the change is the same; and
. A decrease in Face Amount will be applied to reduce the initial Face Amount
and each increase in Face Amount on a pro rata basis.
A decrease in Face Amount may require a decrease in the amounts provided by
riders attached to this Policy. If you chose the Guideline Premium Test for the
Policy, a portion of the Cash Value will be paid to you if necessary to allow
the Policy to continue to qualify as life insurance.
NEW ENGLAND LIFE INSURANCE COMPANY
501 Boylston Street, Boston, Massachusetts
James M. Benson [NEF LOGO APPEARS HERE]
President Secretary
NEL-474-00
<PAGE>
Nel-475-00
- --------------------------------------------------------------------------------
Endorsement
MODIFICATION OF THE PREMIUMS SECTION
As of the Date of Issue of this Policy, the following provision is added to the
Premiums section in the section of the Policy:
PREMIUM EXPENSE CHARGE ADJUSTMENT AT SURRENDER
If the Policy is surrendered within two years from the Date of Issue, the
following amount will be added to the surrender proceeds:
. The total Premium Expense Charges deducted from premium payments and net
unscheduled payments made in the first policy year (any payments made within
20 days prior to the first policy anniversary are treated as if paid in the
next policy year);
LESS
. 2% of the total of all premium payments and net unscheduled payments made in
the first year (any payments made within 20 days prior to the first policy
anniversary are treated as if paid in the next policy year).
MODIFICATION OF THE ADJUSTMENT SECTION
As of the Date of Issue of this Policy, the following provision is substituted
for the increase in Face Amount provision in the Adjustment section of the
Policy:
INCREASE IN FACE AMOUNT
After the first policy year, the Face Amount can be increased effective on the
first day of any policy month. An increase in Face Amount is subject to:
. Written application to increase the Face Amount;
. Proof that the Insured is insurable;
. The increase being available on the same underwriting basis as this Policy;
. New insurance for the amount of the increase on the same plan at the age
of the Insured on the Adjustment Date being allowed under the underwriting
rules of the Company;
. The amount of the increase being at least $10,000, except with the consent
of the Company;
. A Monthly Deduction for the increase (See Monthly Deduction Section); and
. If the increase is medically underwritten, a monthly Face Amount Increase
Administrative Charge not greater than the Maximum stated in Section 1, to
be deducted from the Cash Value in the same manner as the Monthly Deduction
(see Monthly Deduction Section).
The amount of any rider which is attached to the Policy can be increased only
as stated in the rider.
The Application to increase the Face Amount must be signed by the Insured and
by you. An increase will be effective on the Adjustment Date shown in the new
Policy Schedule.
NEW ENGLAND LIFE INSURANCE COMPANY
501 Boylston Street, Boston, Massachusetts
James M. Benson Daniel D. Jordan
President Secretary
NEL-475-00
<PAGE>
NEL-44-1
- --------------------------------------------------------------------------------
Rider: Adjustable Term Insurance
THE COMPANY agrees that if the Insured dies while this Rider is in force, the
amount of Adjustable Term Insurance will be paid as a part of the policy
proceeds.
When you apply for this Rider, you can choose to have the Term Amount of the
Rider added to the Face Amount of the Policy for purposes of calculating the
Death Benefit. Your choice cannot be changed.
COST OF RIDER
The cost for this Rider is charged as part of the Monthly Deductions. The rates
for the Rider are set by the Company each year on the policy anniversary, based
on the expectations of the Company as to future experience. The rates are
guaranteed for one year. The rates for the Rider will never be more than the
rates shown in the attached Table of Guaranteed Monthly Insurance Rates Per
$1,000.
DATE OF ISSUE
The Date of Issue of this Rider is the same as the Date of Issue of the Policy
unless a later Date of Issue is shown for the Rider in the Policy Schedule.
Rider years will coincide with policy years. If this Rider is issued after the
Date of Issue of the Policy, the first rider year will begin on the policy
anniversary on or next following the Date of Issue of the Rider. The term
insurance provided by this Rider will be in force from the Date of Issue of the
Rider. The effective date of this Rider is its Date of Issue.
INCREASE IN TERM AMOUNT
After the first policy year, the Term Amount can be increased effective on the
first day of any policy month. An increase in Term Amount is subject to:
. Written application to increase the Term Amount;
. Proof that the Insured is insurable;
. The increase being available on the same underwriting basis as this Rider;
. The underwriting rules of the Company allowing new insurance for the amount
of the increase at the age of the Insured on the Adjustment Date;
. The amount of the increase being at least $10,000, except with the consent of
the Company; and
. A Monthly Deduction for the increase.
The Application to increase the Term Amount must be signed by you and the
Insured. An increase will be effective on the Adjustment Date shown in the new
Policy Schedule.
DECREASE IN TERM AMOUNT
The Term Amount can be decreased effective on the first day of any policy month
by written application to the Company; but only if the Term Amount after the
decrease is at least $10,000, except with the consent of the Company. A decrease
in Term Amount will be applied to reduce the initial Term Amount and each
increase in Term Amount on a pro rata basis, except with the consent of the
Company. A decrease in Term Amount will be effective on the Adjustment Date
shown in the new Policy Schedule.
ADJUSTMENT OF THE POLICY
The Policy Schedule and the Rider's Table of Guaranteed Monthly Insurance Rates
Per $1,000 must reflect an increase or a decrease in the Term Amount. The new
Policy Schedule, the new Table, if any, and the Application for the adjustment
will be made part of the Policy when the Company, at its option:
. Sends you a new Policy Schedule and Table, if any, and a copy of the
Application for the adjustment for you to attach to the Policy; or
. Requires that the Policy be returned to have the new Policy Schedule and
Table, if any, and a copy of the Application for the adjustment attached to
the Policy by the Company; or
. Sends you an adjusted policy to take the place of this Policy.
Upon adjustment, the Policy will be in force only as adjusted.
NOT CONTESTABLE AFTER TWO YEARS
The insurance issued under this Rider will not be contestable after it has been
in force during the life of the Insured:
. For the Death Benefit associated with the initial Term Amount, for two years
from the Date of Issue of this Rider; and
. For the Death Benefit associated with each increase in Term Amount of this
Rider, for two years from the Adjustment Date for that increase.
NEL-44-1 (continued)
<PAGE>
SUICIDE WITHIN TWO YEARS
If the death of the Insured is by suicide while sane or insane within two years
of the Date of Issue of this Rider or within two years of the Adjustment Date of
an increase in Term Amount, a limited benefit will be paid.
THE AMOUNT PAYABLE UNDER THIS RIDER: WILL BE LIMITED TO THE PORTION OF THE
MONTHLY DEDUCTION MADE TO PAY FOR THE INSURANCE SUBJECT TO THIS PROVISION; AND
WILL BE PAID AS PART OF THE BENEFITS OF THE POLICY. CONTRACT
A copy of the Application for this Rider is attached to and made a part of the
Rider. This Rider is made a part of the Policy to which it is attached if the
Rider is listed in the Policy Schedule. This Rider has no cash value.
EXCHANGE OPTION
You can, after the first policy year and before the policy anniversary on which
the Insured is age 80, exchange any portion of the insurance then in force under
this Rider for an increase in Face Amount for this Policy effective on the first
day of any policy month. If you have not chosen to have the Term Amount of this
Rider added to the Face Amount of the Policy for purposes of calculating the
Death Benefit, you can, before the policy anniversary on which the Insured is
age 80, exchange any portion of the insurance then in force under this Rider:
for a policy issued on any plan of fixed or variable whole life insurance; or of
fixed or variable flexible premium adjustable life insurance issued by the
Company on the Policy Date of the new policy at any time. The exchange can be
made without proof that the Insured is insurable. The Term Amount in force after
the exchange will equal: the Term Amount in force immediately before the
exchange; less the Term Amount exchanged. The coverage resulting from an
exchange will not be subject to the Contestable and Suicide periods beyond the
date that the exchanged insurance would have been subject to those provisions.
EXCHANGE TO FIXED OR VARIABLE WHOLE LIFE INSURANCE OR TO FIXED OR VARIABLE
FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
Any policy resulting from an exchange under this Rider will be issued:
. With a Face Amount equal to the amount of term insurance being exchanged;
. With the same Insured and underwriting class as this Rider;
. On a policy form and at premium rates in use by the Company on the Policy
Date of the new policy;
. With a current Policy Date and Age of Insured; and
. Subject to any assignments and limitations to which this Rider is subject,
and to payment of the first premium for the new policy.
An exchange can be made only with the consent of the Company if: the amount of
term insurance you want to exchange is less than the Company's published minimum
limits of issue; or any rider is to be attached to the new policy.
EXCHANGE FOR AN INCREASE IN FACE AMOUNT FOR THIS POLICY
Any Increase in Face Amount for this Policy resulting from an exchange under
this Rider is subject to:
. The underwriting rules of the Company allowing new insurance for the amount
of the increase on the same plan at the age of the Insured on the Adjustment
Date;
. The amount of the increase being at least $10,000, except with the consent of
the Company;
. A Monthly Deduction for the increase.
An increase will be effective on the Adjustment Date shown in the new Policy
Schedule.
NEL-44-1 (continued)
<PAGE>
AUTOMATIC EXCHANGE AT AGE 100
At the Insured's age 100, if a Guaranteed Death Benefit rider is attached to the
Policy and the Benefit is in effect, the Term Amount will be exchanged for an
increase in Face Amount for this Policy. No evidence of insurability will be
required. No Face Amount Increase Administrative Charge will be imposed.
The increase will be effective on the Adjustment Date shown in the new Policy
Schedule.
TERMINATION
This Rider will terminate upon the earliest of: (a) termination of the Policy;
(b) exchange of the full amount of term insurance under the Rider for a new
policy; (c) a decrease in coverage which decreases the Term Amount to zero; (d)
receipt at the Administrative Office of the Company of written election signed
by the Owner of the Policy to terminate the Rider; and (e) the Insured's age
100.
NEW ENGLAND LIFE INSURANCE COMPANY
501 Boylston Street, Boston, Massachusetts
James M. Benson Daniel D. Jordan
President Secretary
NEL-44-1 (continued)
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Table of Guaranteed Monthly Insurance Rates Per $1,000
POLICY NUMBER: Specimen INSURED: John Smith
- ------------------------------------------------------------------------------------------------------------------------------------
RIDER MONTHLY RIDER MONTHLY RIDER MONTHLY
YEAR RATE YEAR RATE YEAR RATE
<S> <C> <C> <C> <C> <C>
1 .1758 23 1.0408 45 7.5875
2 .1867 24 1.1325 46 8.2367
3 .2000 25 1.2308 47 8.9567
4 .2150 26 1.3400 48 9.7708
5 .2325 27 1.4617 49 10.6883
6 .2517 28 1.5992 50 11.6875
7 .2742 29 1.7550 51 12.7458
8 .2967 30 1.9283 52 13.8408
9 .3225 31 2.1183 53 14.9625
10 .3492 32 2.3208 54 16.1058
11 .3792 33 2.5367 55 17.2742
12 .4100 34 2.7658 56 18.4808
13 .4433 35 3.0142 57 19.7483
14 .4783 36 3.2925 58 21.1208
15 .5175 37 3.6083 59 22.6758
16 .5592 38 3.9708 60 24.6583
17 .6083 39 4.3867 61 27.4967
18 .6633 40 4.8492 62 32.0458
19 .7258 41 5.3492 63 40.0167
20 .7967 42 5.8775 64 54.8317
21 .8725 43 6.4267 65 83.3333
22 .9550 44 6.9917
This Rider is adjustable. If it is adjusted, a new Table will supersede this
Table.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Daniel D. Jordan
Secretary
NEL-44-1
<PAGE>
NEL-41-1
- -------------------------------------------------------------------------------
Rider Guaranteed Death Benefit
The Policy to which this Rider is attached is issued by the Company subject to
the provisions of this Rider.
GUARANTEED DEATH BENEFIT
On the first day of each policy month the Company will determine if the
Guaranteed Death Benefit is in effect. If the Benefit is in effect, the Policy
will not be lapsed even if the Net Cash Value of the Policy on the first day of
the policy month is not enough to cover the full Monthly Deduction for that
month. If the Insured dies while the Benefit is in effect, the Death Benefit of
the Policy will be based on the Death Benefit Option in effect on the date of
death.
The Guaranteed Death Benefit Premium is shown in the Policy Schedule. This
Premium will be recalculated when: the Face Amount is increased or decreased;
the amount provided by riders attached to the Policy is increased or decreased;
a partial surrender which results in a decrease in Face Amount is made; or the
underwriting class of the Policy and its riders is changed to a more favorable
underwriting class. When this Premium is recalculated, the new Premium and its
effective date will be shown in Section 1 of the Policy.
The Benefit will be in effect if (a) is equal to or greater than (b) where: (a)
equals the total of the premiums paid to date; less every partial surrender made
to date; less any Cash Value paid to you to allow the Policy to continue to
qualify as life insurance; less the Policy Loan Balance; and (b) equals the sum
of 1/12 of each Guaranteed Death Benefit Premium times the number of completed
policy months the Premium was in effect plus 1/12 of the most recent Guaranteed
Death Benefit Premium.
If the Benefit is not in effect, the amount of premium required to put the
Benefit in force is: the sum of 1/12 of each Guaranteed Death Benefit Premium
times the number of completed policy months the Premium was in effect plus 1/12
of the most recent Guaranteed Death Benefit Premium; minus the total amount of
premium which has already been paid into the Policy; plus every partial
surrender made to date; plus any Cash Value paid to you to allow the Policy to
continue to qualify as life insurance; plus the Policy Loan Balance.
COST OF RIDER
Whether or not the Benefit is in effect, the cost for this Rider is Rider is
charged as part of the Monthly Deductions. The monthly cost for this Rider
equals: the Face Amount of the Policy plus the Term Amount of the Adjustable
Term Insurance Rider, if any; times $0.00001.
CONTRACT
This Rider is made part of the Policy to which it is attached if the Rider is
listed in the Policy Schedule. (See Section 1 of the Policy.) This Rider has no
cash value.
TERMINATION
This Rider will terminate upon the earliest of:
. Termination of the Policy;
. Death of the Insured;
. The Insured's age 100;
. A change in Death Benefit Option for
the Policy;
. A change from the Net Single Premium
Corridor to the Enhanced Net Single
Premium Corridor; or
. Receipt by the Company at its
Administrative Office of written
election signed by the Owner of the
Policy to terminate the Rider.
If you elect to terminate this Rider, there can be no Guaranteed Death Benefit
for this Policy.
NEW ENGLAND LIFE INSURANCE COMPANY
501 Boylston Street, Boston,
Massachusetts
ABCD ABCD
President Secretary
NEL-41-1
