<PAGE> 1
Registration No. 2-29240
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 / /
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 52 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /
Amendment No. 17 / X /
--
(Check appropriate box or boxes.)
NML VARIABLE ANNUITY ACCOUNT B
- -------------------------------------------------------------------------------
(Exact Name of Registrant)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
- -------------------------------------------------------------------------------
(Name of Depositor)
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
- ----------------------------------------------------------- ------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code 414-271-1444
----------------------------
JOHN M. BREMER, Senior Vice President, General Counsel and Secretary
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
- -------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate space)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on (DATE) pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_X_ on January 15, 1996 pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
THE ISSUER HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE RULE 24f-2 NOTICE FOR ISSUER'S MOST RECENT FISCAL YEAR WAS FILED ON
FEBRUARY 27, 1995.
<PAGE> 2
NML VARIABLE ANNUITY ACCOUNT B
--------------------------------------------------------------------
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
N-4, Part A Heading in
Item Prospectus
- ----------- ----------
<S> <C>
1 . . . . . . . . . . . . . . . . Cover Page
2 . . . . . . . . . . . . . . . . Index of Special Terms
3 . . . . . . . . . . . . . . . . Synopsis, The Contracts, The Fund, Deductions and Charges,
Right to Examine Deferred
Contract, Penalty Tax on Premature Payments, Expense Table
4 . . . . . . . . . . . . . . . . Accumulation Unit Values, Financial Statements
5 . . . . . . . . . . . . . . . . The Company, NML Variable Annuity Account B, The Fund, Voting Rights
6 . . . . . . . . . . . . . . . . Deductions, Distribution of the Contracts
7 . . . . . . . . . . . . . . . . The Contracts, Owners of the Contracts, Application of Purchase Payments, Transfers
Between Divisions and Payment Plans, Substitution and Change
8 . . . . . . . . . . . . . . . . Variable Payment Plans, Description of Payment Plans, Amount of Annuity
Payments, Maturity Benefit, Assumed Investment Rate, Transfers Between
Divisions and Payment Plans
9 . . . . . . . . . . . . . . . . Death Benefit
10 . . . . . . . . . . . . . . . . Amount and Frequency, Application of Purchase Payments, Net Investment
Factor, Distribution of the Contracts
11 . . . . . . . . . . . . . . . . Withdrawal Amount, Deferment of Benefit Payments, Right to Examine
Contract
12 . . . . . . . . . . . . . . . . Federal Income Taxes
13 . . . . . . . . . . . . . . . . Not Applicable
14 . . . . . . . . . . . . . . . . Table of Contents for Statement of Additional Information
</TABLE>
--------------------------------------------------------------------
<TABLE>
<CAPTION>
N-4, Part B Heading in Statement
Item of Additional Information
- ----------- -------------------------
<S> <C>
15 . . . . . . . . . . . . . . . . Cover Page
16 . . . . . . . . . . . . . . . . Table of Contents
17 . . . . . . . . . . . . . . . . Not Applicable
18 . . . . . . . . . . . . . . . . Experts
19 . . . . . . . . . . . . . . . . Not Applicable
20 . . . . . . . . . . . . . . . . Distribution of the Contracts
21 . . . . . . . . . . . . . . . . Not Applicable
22 . . . . . . . . . . . . . . . . Determination of Annuity Payments
23 . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
<PAGE> 3
January 15, 1996
P R O S P E C T U S
NML
Variable
Annuity
Account B
- - I N D I V I D U A L R E T I R E M E N T A N N U I T I E S
- - T A X D E F E R R E D A N N U I T I E S
- - N O N T A X - Q U A L I F I E D A N N U I T I E S
[NORTHWESTERN MUTUAL LIFE LOGO]
<PAGE> 4
P R O S P E C T U S
NML VARIABLE ANNUITY ACCOUNT B
This prospectus describes individual variable annuity contracts (the
"Contracts") offered by The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life"). The Contracts are offered for use in situations
which do not qualify for special treatment under the Internal Revenue Code of
1986, as amended (the "Code"). The Contracts are also offered as individual
retirement annuities pursuant to the provisions of Section 408 of the Code,
including those established by employer contributions under a simplified
employee pension arrangement, and as tax-deferred annuities, pursuant to
Section 403(b) of the Code, for employees of public school systems and
tax-exempt organizations described in Section 501(c)(3). The Contracts may also
be used to fund deferred compensation plans for public employees established
pursuant to Section 457 of the Code. In addition, the Contracts may be
purchased by individuals who have received fixed dollar annuities as
distributions of termination benefits from tax-qualified corporate or HR-10
plans or trusts and want to exchange their policies for the Contracts.
The Contracts contemplate periodic purchase payments until a selected
maturity date--usually retirement--after which the benefits under the Contracts
become payable. Purchase payments which are to be accumulated on a variable
basis or applied to provide variable benefits are credited by Northwestern
Mutual Life to NML Variable Annuity Account B (the "Account") and allocated
among one or more of the nine Divisions of the Account as directed by the
individual Contract owners. The Contracts also permit accumulation of funds on
a fixed basis, at rates of interest declared periodically by Northwestern
Mutual Life. This prospectus describes only the Account and the variable
provisions of the Contracts except where there are specific references to the
fixed provisions.
The assets of the Account are maintained separately from the general assets
of Northwestern Mutual Life. Assets of each Division of the Account are
invested entirely in shares of a corresponding Portfolio of Northwestern Mutual
Series Fund, Inc. (the "Fund"). The Fund is currently comprised of the Index
500 Stock, Select Bond, Money Market, Balanced, Growth and Income Stock, Growth
Stock, Aggressive Growth Stock, High Yield Bond and International Equity
Portfolios.
The value of interests in each Division before annuity benefits become
payable will vary continuously to reflect the investment performance of the
Portfolio selected by the Contract owner. When annuity benefits become payable
the Contracts provide lifetime annuity payments or other annuity payment plans
on either a variable or fixed basis. If a variable payment plan is selected the
annuity payments will continue to increase or decrease to reflect the
investment experience of the Portfolios for the Divisions to which Contract
values have been allocated. If a fixed payment plan is selected the amount of
annuity payments will remain fixed, except as they may be increased by
dividends.
Two versions of the Contracts are offered: Front Load Contracts and Back
Load Contracts. (See "Expense Table", p. 2, and "Deductions", p. 15.)
This prospectus sets forth concisely the information about the Contracts
that a prospective investor ought to know before investing. Additional
information about the Contracts and the Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information
which is incorporated herein by reference. The Statement of Additional
Information is available upon written or oral request and without charge from
The Northwestern Mutual Life Insurance Company, 720 East Wisconsin Avenue,
Milwaukee, Wisconsin, 53202, Telephone Number (414) 271-1444. The table of
contents for the Statement of Additional Information is found on page 17 of
this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS
FOR NORTHWESTERN MUTUAL SERIES FUND, INC. WHICH IS ATTACHED HERETO, AND
SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
The Date of the Statement of Additional Information is January 15, 1996
<PAGE> 5
INDEX OF SPECIAL TERMS
The following special terms used in this prospectus are discussed at the
pages indicated.
<TABLE>
<CAPTION>
TERM PAGE TERM PAGE
- ---- ---- ---- ----
<S> <C> <C> <C>
ACCUMULATION UNIT . . . . . . . . . . . . . . 9 ANNUITANT . . . . . . . . . . . . . . . . 11
ANNUITY (or ANNUITY PAYMENTS) . . . . . . . . 10 MATURITY DATE . . . . . . . . . . . . . . 10
NET INVESTMENT FACTOR . . . . . . . . . . . . 9 OWNER . . . . . . . . . . . . . . . . . . 11
PAYMENT PLANS . . . . . . . . . . . . . . . . 10 WITHDRAWAL AMOUNT . . . . . . . . . . . . . 9
</TABLE>
SYNOPSIS
THE CONTRACTS The Contracts are individual variable annuity contracts offered
for use under certain tax qualified plan and in non-tax qualified situations.
(See "Qualified and Non-Tax Qualified Plans", p. 13.) The Contracts provide for
accumulation of funds on a variable or fixed or combination basis until a
selected maturity date -- usually retirement -- and payment of annuity
benefits on either a variable or fixed basis. (See "Description of Payment
Plans", p. 10.) Two versions of the Contracts are offered: Front Load
Contracts and Back Load Contracts. See the Expense Table below, and
"Deductions", p. 15.
THE FUND The Account is comprised of nine Divisions which invest in the
corresponding Portfolios of Northwestern Mutual Series Fund, Inc. For more
information regarding the Fund and its Portfolios, including information about
their investment objectives and expenses, see "The Fund", p. 8 and the attached
Fund Prospectus.
DEDUCTIONS AND CHARGES For the Front Load Contract there is a maximum sales
load of 4% of purchase payments, reduced when cumulative purchase payments
exceed $100,000. For the Back Load Contract there is no deduction from purchase
payments for sales expenses, but a withdrawal charge of 0%-8% applies, depending
on the length of time funds have been held under the Contract and the Contract
size. The assets of the Account bear a charge for mortality and expense risks
assumed by Northwestern Mutual Life under the Contract. This charge is at the
annual rate of .40% for the Front Load Contract and 1.25% for the Back Load
Contract. In addition, the annual Contract fee is $30.00. For more information
about these and other expenses, see the Expense Table below and "Deductions", p.
15. Expenses of the Fund are described in the attached Prospectus for the
Fund.
RIGHT TO EXAMINE DEFERRED CONTRACT During the 10 days following the
delivery of a Contract the Owner may return it to Northwestern Mutual Life, by
mail or in person, if for any reason the Owner has changed his mind. On return
of the Contract, Northwestern Mutual Life will pay to the Owner the value of
Accumulation Units credited to the Contract determined as of the valuation next
following receipt of a written request at the Home Office of Northwestern Mutual
Life.
PENALTY TAX ON PREMATURE PAYMENTS Premature payment of benefits under an
annuity contract may cause a penalty tax to be incurred. (See "Taxation of
Contract Benefits", p. 14.)
EXPENSE TABLE
<TABLE>
FRONT LOAD CONTRACT
TRANSACTION EXPENSES FOR CONTRACTOWNERS ANNUAL EXPENSES OF THE ACCOUNT
--------------------------------------- ------------------------------
<S> <C> <C> <C>
Maximum Sales Load (as a percentage (AS A PERCENTAGE OF ASSETS)
of purchase payments) . . . . . . . . . . . 4% ----------------------------
Mortality Rate and Expense Guarantee
Withdrawal Charge . . . . . . . . . . . . . None Charge . . . . . . . . . . . . . . . . . .40%
ANNUAL CONTRACT FEE
-------------------
$30; waived if the Contract Value equals
or exceeds $50,000
-----------------------------------------------------------------------------------------------------------
BACK LOAD CONTRACT
TRANSACTION EXPENSES FOR CONTRACTOWNERS ANNUAL EXPENSES OF THE ACCOUNT
--------------------------------------- ------------------------------
Sales Load (as a percentage of purchase (AS A PERCENTAGE OF ASSETS)
payments) . . . . . . . . . . . . . . . . . None ----------------------------
Withdrawal Charge for Sales Expenses Mortality Rate and Expense Guarantee
(as a percentage of amounts paid) . . . . . 0%-8% Charge . . . . . . . . . . . . . . . . . . 1.25%
ANNUAL CONTRACT FEE
-------------------
$30; waived if the Contract Value equals or exceeds
$50,000
</TABLE>
2
<PAGE> 6
ANNUAL EXPENSES OF THE PORTFOLIOS
(AS A PERCENTAGE OF THE ASSETS)
<TABLE>
<CAPTION>
Total Annual
Management Fees Custody Fees Other Expenses Expenses
--------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Index 500 Stock .20% .00% .04% .24%
Select Bond .30% .00% .00% .30%
Money Market .30% .00% .00% .30%
Balanced .30% .00% .00% .30%
Growth and Income Stock .69% .00% .09% .78%
Growth Stock .60% .00% .11% .71%
Aggressive Growth Stock .56% .00% .02% .58%
High Yield Bond .60% .00% .13% .73%
International Equity .69% .14% .04% .87%
</TABLE>
EXAMPLE
FRONT LOAD CONTRACT - You would pay the following expenses on each $1,000
investment, assuming 5% annual return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------ ------- --------
<S> <C> <C> <C> <C>
Index 500 Stock $46 $64 $ 83 $137
Select Bond $47 $66 $ 86 $144
Money Market $47 $66 $ 86 $144
Balanced $47 $66 $ 86 $144
Growth and Income Stock $52 $80 $ 110 $197
Growth Stock $51 $78 $ 107 $189
Aggressive Growth Stock $50 $74 $ 100 $175
High Yield Bond $51 $78 $ 108 $192
International Equity $52 $83 $ 115 $207
</TABLE>
NOTE: THE MINIMUM INITIAL PURCHASE PAYMENT FOR A FRONT-LOAD CONTRACT IS
$10,000. THE NUMBERS ABOVE MUST BE MULTIPLIED BY 10 TO FIND THE EXPENSES FOR A
FRONT-LOAD CONTRACT OF MINIMUM SIZE.
EXAMPLE
BACK LOAD CONTRACT - You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) surrender at the end of each
time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------ ------- --------
<S> <C> <C> <C> <C>
Index 500 Stock $ 95 $111 $130 $198
Select Bond $ 96 $113 $133 $204
Money Market $ 96 $113 $133 $204
Balanced $ 96 $113 $133 $204
Growth and Income Stock $ 101 $128 $157 $254
Growth Stock $ 100 $126 $154 $247
Aggressive Growth Stock $ 99 $122 $147 $234
High Yield Bond $ 100 $126 $155 $249
International Equity $ 102 $130 $162 $264
</TABLE>
You would pay the following expenses on the same $1,000 investment, assuming no
surrender or annuitization:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Index 500 Stock $15 $51 $ 90 $198
Select Bond $16 $53 $ 93 $204
Money Market $16 $53 $ 93 $204
Balanced $16 $53 $ 93 $204
Growth and Income Stock $21 $68 $ 117 $254
Growth Stock $20 $66 $ 114 $247
Aggressive Growth Stock $19 $62 $ 107 $234
High Yield Bond $20 $66 $ 115 $249
International Equity $22 $70 $ 122 $264
</TABLE>
The purpose of the table above is to assist a Contract Owner in
understanding the expenses paid by the Account and the Portfolios and borne by
investors in the Contracts. The sales load for a Front Load Contract depends on
the
3
<PAGE> 7
amount of cumulative purchase payments. For the Back Load Contract the
withdrawal charge depends on the length of time funds have been held under the
Contract and the amounts held. The Contracts provide for charges for transfers
between the Divisions of the Account and for premium taxes, but no such charges
are currently being made. See "Transfers Between Divisions and Payment Plans",
p. 11 and "Deductions", p. 15, for additional information about expenses for
the Contracts. The expenses shown in the table for the Portfolios show the
annual expenses for each of the Portfolios, as a percentage of the average net
assets of the Portfolio, based on 1994 operations for the Portfolios and their
predecessors. For additional information about expenses of the Portfolios, see
the prospectus for the Fund attached hereto. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO THE GUARANTEES OF THE CONTRACTS.
The tables on the following pages present the accumulation unit values of
the nine Divisions of the Account for the Contracts issued prior to the date of
this prospectus. Those Contracts are different in certain material respects
from Contracts offered currently, but the values shown below for Contracts
issued after December 17, 1981 are calculated on the same basis as those for
the Back Load Contracts described in this prospectus. The Front Load Contracts
described in this prospectus have a lower mortality rate and expense guarantee
charge than any of the Contracts issued prior to March 31, 1995.
4
<PAGE> 8
ACCUMULATION UNIT VALUES
CONTRACTS ISSUED AFTER MARCH 31, 1995
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
JUNE 30, 1995
-------------
<S> <C>
Index 500 Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.094
Back Load Version
Beginning of Period $1.637
End of Period $1.787
Number of Accumulation Units
Outstanding, End of Period
Front Load 880,556
Back Load 1,816,915
Select Bond Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.062
Back Load Version
Beginning of Period $5.471
End of Period $5.798
Number of Accumulation Units
Outstanding, End of Period
Front Load 373,532
Back Load 261,835
Money Market Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.013
Back Load Version
Beginning of Period $2.090
End of Period $2.114
Number of Accumulation Units
Outstanding, End of Period
Front Load 1,172,601
Back Load 1,212,854
Balanced Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.073
Back Load Version
Beginning of Period $3.673
End of Period $3.932
Number of Accumulation Units
Outstanding, End of Period
Front Load 1,995,735
Back Load 1,774,117
Growth and Income Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.071
Back Load Version
Beginning of Period $1.083
End of Period $1.157
Number of Accumulation Units
Outstanding, End of Period
Front Load 1,038,171
Back Load 1,778,297
Growth Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.060
Back Load Version
Beginning of Period $1.082
End of Period $1.145
Number of Accumulation Units
Outstanding, End of Period
Front Load 445,019
Back Load 847,616
Aggressive Growth Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.086
Back Load Version
Beginning of Period $2.123
End of Period $2.300
Number of Accumulation Units
Outstanding, End of Period
Front Load 1,162,591
Back Load 1,947,925
High Yield Bond Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.064
Back Load Version
Beginning of Period $1.067
End of Period $1.132
Number of Accumulation Units
Outstanding, End of Period
Front Load 348,082
Back Load 611,776
International Equity Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.00
End of Period $1.080
Back Load Version
Beginning of Period $1.218
End of Period $1.313
Number of Accumulation Units
Outstanding, End of Period
Front Load 648,713
Back Load 1,722,216
</TABLE>
5
<PAGE> 9
ACCUMULATION UNIT VALUES
CONTRACTS
ISSUED AFTER DECEMBER 16, 1981 AND PRIOR TO MARCH 31, 1995
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, 1995 1994 1993 1992 1991 1990 1989
------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Index 500 Stock
Division
Accumulation
Unit Value:
Beginning of
Period* $1.499 $1.500 $1.384 $1.306 $1.021 $1.000 --
End of Period $1.787 $1.499 $1.500 $1.384 $1.306 $1.021 --
Number of
Accumulation
Units
Outstanding,
End of Period 127,397,063 119,845,898 105,795,927 32,924,088 12,058,133 189,751 --
Select Bond
Division
Accumulation
Unit Value:
Beginning of
Period $5.217 $5.437 $4.990 $4.722 $4.091 $3.824 $3.401
End of Period $5.798 $5.217 $5.437 $4.990 $4.722 $4.091 $3.824
Number of
Accumulation
Units
Outstanding,
End of Period 20,880,744 20,642,740 21,874,778 15,399,609 10,692,797 6,997,013 5,553,863
Money Market
Division
Accumulation
Unit Value:
Beginning of
Period $2.067 $2.012 $1.980 $1.940 $1.859 $1.743 $1.619
End of Period $2.114 $2.067 $2.012 $1.980 $1.940 $1.859 $1.743
Number of
Accumulation
Units
Outstanding,
End of Period 33,425,473 31,466,730 24,431,865 27,773,056 24,758,592 27,363,279 20,510,416
Balanced
Division
Accumulation
Unit Value:
Beginning of
Period $3.453 $3.497 $3.232 $3.107 $2.538 $2.544 $2.228
End of Period $3.932 $3.453 $3.497 $3.232 $3.107 $2.538 $2.544
Number of
Accumulation
Units
Outstanding,
End of Period 352,995,591 363,391,482 377,043,512 355,125,051 322,313,588 322,488,873 316,204,759
Growth and
Income Stock
Division
Accumulation
Unit Value:
Beginning of
Period** $0.994 $1.000 -- -- -- -- --
End of Period $1.157 $0.994 -- -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period 46,096,182 31,542,581 -- -- -- -- --
Growth Stock
Division
Accumulation
Unit Value:
Beginning of
Period** $1.006 $1.000 -- -- -- -- --
End of Period $1.145 $1.006 -- -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period 20,283,881 12,213,322 -- -- -- -- --
Aggressive
Growth Stock
Division
Accumulation
Unit Value:
Beginning of
Period* $2.001 $1.922 $1.634 $1.562 $1.014 $1.000 --
End of Period $2.300 $2.001 $1.922 $1.634 $1.562 $1.014 --
Number of
Accumulation
Units
Outstanding,
End of Period 140,541,771 123,249,312 77,246,018 53,918,035 19,966,511 205,590 --
High Yield Bond
Division
Accumulation
Unit Value:
Beginning of
Period** $1.022 $1.000 -- -- -- -- --
End of Period $1.132 $1.022 -- -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period 10,927,394 7,229,418 -- -- -- -- --
International
Equity Division
Accumulation
Unit Value:
Beginning of
Period*** $1.220 $1.236 $1.000 -- -- -- --
End of Period $1.313 $1.220 $1.236 -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period 182,136,866 186,097,279 74,174,799 -- -- -- --
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
------------------------------------------------
1988 1987 1986 1985
---- ---- ---- ----
<S> <C> <C> <C> <C>
Index 500 Stock
Division
Accumulation
Unit Value:
Beginning of
Period* -- -- -- --
End of Period -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period -- -- -- --
Select Bond
Division
Accumulation
Unit Value:
Beginning of
Period $3.175 $3.245 $2.805 $2.277
End of Period $3.401 $3.175 $3.245 $2.805
Number of
Accumulation
Units
Outstanding,
End of Period 4,236,105 3,349,440 3,462,289 1,850,468
Money Market
Division
Accumulation
Unit Value:
Beginning of
Period $1.530 $1.457 $1.386 $1.301
End of Period $1.619 $1.530 $1.457 $1.386
Number of
Accumulation
Units
Outstanding,
End of Period 20,642,227 15,666,117 8,694,717 9,997,153
Balanced
Division
Accumulation
Unit Value:
Beginning of
Period $2.070 $1.988 $1.731 $1.416
End of Period $2.228 $2.070 $1.988 $1.731
Number of
Accumulation
Units
Outstanding,
End of Period 307,488,444 290,102,949 186,218,711 134,808,75
Growth and
Income Stock
Division
Accumulation
Unit Value:
Beginning of
Period** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period -- -- -- --
Growth Stock
Division
Accumulation
Unit Value:
Beginning of
Period** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period -- -- -- --
Aggressive
Growth Stock
Division
Accumulation
Unit Value:
Beginning of
Period* -- -- -- --
End of Period -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period -- -- -- --
High Yield Bond
Division
Accumulation
Unit Value:
Beginning of
Period** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period -- -- -- --
International
Equity Division
Accumulation
Unit Value:
Beginning of
Period*** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation
Units
Outstanding,
End of Period -- -- -- --
</TABLE>
* The initial investments in the Index 500 Stock Division and Aggressive
Growth Stock Division were made on December 12, 1990.
** The initial investments in the Growth and Income Stock Division,
Growth Stock Division and High Yield Bond Division were made on May
3, 1994.
*** The initial investment in the International Equity Division was made
on April 30, 1993.
6
<PAGE> 10
ACCUMULATION UNIT VALUES CONTRACTS
ISSUED PRIOR TO DECEMBER 17, 1981
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEARS ENDED DECEMBER 31
MONTHS ENDED ---------------------------------------------------------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990 1989
------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Index 500 Stock
Division
Accumulation Unit
Value:
Beginning of
Period* $1.530 $1.523 $1.398 $1.313 $1.021 $1.000 --
End of Period $1.828 $1.530 $1.523 $1.398 $1.313 $1.021 --
Number of
Accumulation Units
Outstanding, End
of Period 13,695,167 14,230,394 15,442,799 317,023 326,395 4 --
Select Bond Division
Accumulation Unit
Value:
Beginning of
Period $5.569 $5.774 $5.273 $4.965 $4.280 $3.981 $3.522
End of Period $6.204 $5.569 $5.774 $5.273 $4.965 $4.280 $3.981
Number of
Accumulation Units
Outstanding, End
of Period 1,442,604 1,492,775 1,701,121 1,808,558 1,979,936 2,041,191 2,293,077
Money Market Division
Accumulation Unit
Value:
Beginning of
Period $2.206 $2.136 $2.092 $2.040 $1.945 $1.814 $1.677
End of Period $2.262 $2.206 $2.136 $2.092 $2.040 $1.945 $1.814
Number of
Accumulation Units
Outstanding, End
of Period 1,277,036 1,458,463 1,331,457 1,787,440 2,059,962 2,574,527 2,285,388
Balanced Division
Accumulation Unit
Value:
Beginning of
Period $3.685 $3.713 $3.414 $3.266 $2.655 $2.647 $2.307
End of Period $4.206 $3.685 $3.713 $3.414 $3.266 $2.655 $2.647
Number of
Accumulation Units
Outstanding, End
of Period 7,794,594 8,155,713 9,324,132 10,125,067 10,652,114 11,655,303 12,655,382
Growth and Income
Stock Division
Accumulation Unit
Value:
Beginning of
Period** -- -- -- -- -- -- --
End of Period -- -- -- -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- -- -- -- --
Growth Stock Division
Accumulation Unit
Value:
Beginning of
Period** -- -- -- -- -- -- --
End of Period -- -- -- -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- -- -- -- --
Aggressive Growth
Stock Division
Accumulation Unit
Value:
Beginning of
Period* $2.042 $1.952 $1.651 $1.570 $1.014 $1.000 --
End of Period $2.353 $2.042 $1.952 $1.651 $1.570 $1.014 --
Number of
Accumulation Units
Outstanding, End
of Period 1,654,773 1,474,133 969,604 833,606 534,196 22,431 --
High Yield Bond
Division
Accumulation Unit
Value:
Beginning of
Period** -- -- -- -- -- -- --
End of Period -- -- -- -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- -- -- -- --
International Equity
Division
Accumulation Unit
Value:
Beginning of
Period*** $1.230 $1.240 $1.000 -- -- -- --
End of Period $1.327 $1.230 $1.240 -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period 2,480,579 2,642,855 1,802,948 -- -- -- --
<CAPTION>
1988 1987 1986 1985
---- ---- ---- ----
<S> <C> <C> <C> <C>
Index 500 Stock
Division
Accumulation Unit
Value:
Beginning of
Period* -- -- -- --
End of Period -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- --
Select Bond Division
Accumulation Unit
Value:
Beginning of
Period $3.522 $3.272 $3.328 $2.863
End of Period $3.272 $3.328 $2.863 $2.312
Number of
Accumulation Units
Outstanding, End
of Period 2,426,254 2,524,235 2,886,855 3,044,800
Money Market Division
Accumulation Unit
Value:
Beginning of
Period $1.576 $1.494 $1.414 $1.321
End of Period $1.677 $1.576 $1.494 $1.414
Number of
Accumulation Units
Outstanding, End
of Period 2,680,348 3,054,691 1,867,702 2,357,507
Balanced Division
Accumulation Unit
Value:
Beginning of
Period $2.133 $2.038 $1.765 $1.438
End of Period $2.307 $2.133 $2.038 $1.765
Number of
Accumulation Units
Outstanding, End
of Period 14,097,822 15,526,997 7,534,399 7,819,431
Growth and Income
Stock Division
Accumulation Unit
Value:
Beginning of
Period** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- --
Growth Stock Division
Accumulation Unit
Value:
Beginning of
Period** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- --
Aggressive Growth
Stock Division
Accumulation Unit
Value:
Beginning of
Period* -- -- -- --
End of Period -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- --
High Yield Bond
Division
Accumulation Unit
Value:
Beginning of
Period** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- --
International Equity
Division
Accumulation Unit
Value:
Beginning of
Period*** -- -- -- --
End of Period -- -- -- --
Number of
Accumulation Units
Outstanding, End
of Period -- -- -- --
</TABLE>
* The initial investments in the Index 500 Stock Division and
Aggressive Growth Stock Division and were made on December 3, 1990.
** The initial investments in the Growth and Income Stock Division,
Growth Stock Division and High Yield Bond Division were made on May
3, 1994.
*** The initial investment in the International Equity Division was made
on April 30, 1993.
THE COMPANY
The Northwestern Mutual Life Insurance Company was organized by a special
act of the Wisconsin Legislature in 1857. It is the nation's seventh largest
life insurance company, based on total assets in excess of $48 billion on
December 31, 1994, and is licensed to conduct a conventional life insurance
business in the District of Columbia and in all states of the United States.
Northwestern Mutual Life sells life and disability income insurance policies
and annuity contracts through its own field force of approximately 6,000 full
time producing agents. The Home Office of Northwestern Mutual Life is located
at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
7
<PAGE> 11
NML VARIABLE ANNUITY ACCOUNT B
The Account was established on February 14, 1968 by the Board of Trustees
of Northwestern Mutual Life in accordance with the provisions of the Wisconsin
insurance law to facilitate the issuance of the Contracts and is registered as
a unit investment trust under the Investment Company Act of 1940.
The Account has nine Divisions. Considerations paid to Northwestern Mutual
Life to provide variable benefits under the Contracts are allocated to one or
more of the Divisions as directed by the Owner of the Contract. Assets
allocated to the Index 500 Stock, Select Bond, Money Market, Balanced, Growth
and Income Stock, Growth Stock, Aggressive Growth Stock, High Yield Bond and
International Equity Divisions are simultaneously invested in shares of the
corresponding Portfolios of Northwestern Mutual Series Fund, Inc.
Under Wisconsin law, the income, gains or losses, realized or unrealized,
of the Account are credited to or charged against the Account in accordance
with the Contracts, without regard to other income, gains or losses of
Northwestern Mutual Life. The assets of the Account are owned by Northwestern
Mutual Life and it is not a trustee with respect thereto. However, such assets
are not chargeable with any liabilities arising out of any other separate
account or other business of Northwestern Mutual Life. All obligations arising
under the Contracts are general obligations of Northwestern Mutual Life.
THE FUND
Northwestern Mutual Series Fund, Inc. is a mutual fund of the series type
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. The Fund is composed of nine separate portfolios
which operate as separate mutual funds. The portfolios are the Index 500 Stock
Portfolio, the Select Bond Portfolio, the Money Market Portfolio, the Balanced
Portfolio, the Growth and Income Stock Portfolio, the Growth Stock Portfolio,
the Aggressive Growth Stock Portfolio, the High Yield Bond Portfolio and the
International Equity Portfolio. Shares of each Portfolio of the Fund are
purchased by the corresponding Division of the Account at net asset value, that
is, without any sales charge.
Northwestern Mutual Investment Services, Inc. ("NMIS"), a wholly-owned
subsidiary of Northwestern Mutual Life, is the investment adviser to the Fund.
Northwestern Mutual Life provides certain personnel and facilities utilized by
NMIS in performing its investment advisory functions, and Northwestern Mutual
Life is a party to the investment advisory agreement. Northwestern Mutual Life
and NMIS also perform certain administrative functions and act as co-depositors
of the Account. J.P. Morgan Investment Management, Inc. and Templeton
Investment Counsel, Inc. have been retained under investment sub-advisory
agreements to provide investment advice to the Growth and Income Stock
Portfolio and the International Equity Portfolio, respectively.
FOR MORE INFORMATION REGARDING THE FUND AND ITS PORTFOLIOS, INCLUDING
INFORMATION ABOUT THEIR INVESTMENT OBJECTIVES AND EXPENSES, SEE THE PROSPECTUS
FOR THE FUND ATTACHED HERETO. AN INVESTOR SHOULD READ THE FUND'S PROSPECTUS
CAREFULLY BEFORE INVESTING IN THE CONTRACTS.
THE CONTRACTS
PURCHASE PAYMENTS UNDER THE CONTRACTS
AMOUNT AND FREQUENCY Purchase payments may be paid monthly, quarterly,
semiannually, annually or on any other frequency acceptable to Northwestern
Mutual Life.
For Back Load Contracts the minimum amount for each purchase payment is $25
for Contracts issued as tax-deferred annuities or for use with either
simplified employee pensions or deferred compensation plans for public
employees. For other Back Load Contracts, including individual retirement
annuities and nontax-qualified plans, the minimum initial purchase payment is
$100, or $3,500 for Back Load Contracts purchased in exchange for fixed dollar
annuities received as distribution benefits from qualified plans or trusts.
(See "Qualified and Nontax-Qualified Plans", p. 13). For Front Load Contracts
the minimum initial purchase payment is $10,000. The minimum amount for each
subsequent purchase payment is $25 for all Contracts. Minimum amounts for
payments by preauthorized check depend on payment frequency. Northwestern
Mutual Life will accept larger purchase payments than due, or payments at other
times, but total purchase payments under any Contract may not exceed $5,000,000
without the consent of Northwestern Mutual Life.
Purchase payments may not exceed the applicable limits of the Code. (See
"Federal Income Taxes", p. 13.)
APPLICATION OF PURCHASE PAYMENTS Net purchase payments, after deduction of any
sales load, are credited by Northwestern Mutual Life to the Account and
allocated to one or more Divisions in accordance with the direction of the
Owner. Assets allocated to each Division will thereupon be invested in shares
of the Portfolio which corresponds to that Division.
8
<PAGE> 12
Purchase payments are applied to provide "Accumulation Units" in one or
more Divisions. Accumulation Units represent the interest of an Owner in the
Account. The number of Accumulation Units provided by each net purchase payment
is determined by dividing the amount of the purchase payment to be allocated to
a Division by the value of an Accumulation Unit in that Division, based upon
the valuation of the assets of the Division next following receipt of the
purchase payment at the Home Office of Northwestern Mutual Life. Receipt of
purchase payments at a lockbox facility designated by Northwestern Mutual Life
will be considered the same as receipt at the Home Office. Assets are valued as
of the close of trading on the New York Stock Exchange for each day the
Exchange is open, and at any other time required by the Investment Company Act
of 1940.
The number of an Owner's Accumulation Units will be increased by additional
purchase payments or transfers into the Account and decreased by withdrawals or
transfers out of the Account. The investment experience of the Account does not
change the number (as distinguished from the value) of Accumulation Units.
The value of an Accumulation Unit in each Division varies with the
investment experience of the Division (which in turn is determined by the
investment experience of the corresponding Portfolio of the Fund), and is
determined by multiplying the value on the immediately preceding valuation date
by the net investment factor for the Division. (See "Net Investment Factor",
below.) Since the Owner bears the investment risk, there is no guarantee as to
the aggregate value of Accumulation Units; such value may be less than, equal
to or more than the cumulative net purchase payments.
All or part of a purchase payment may be directed to the Guaranteed
Interest Fund and invested on a fixed basis. See "The Guaranteed Interest
Fund", page 13.
NET INVESTMENT FACTOR
For each Division the net investment factor for any period ending on a
valuation date is 1.000000 plus the net investment rate for the Division for
that period. Under the Contract the net investment rate is related to the
assets of the Division. However, since all amounts are simultaneously invested
in shares of the corresponding Portfolio when allocated to the Division,
calculation of the net investment rate for each of the Divisions may also be
based upon the change in value of a single share of the corresponding
Portfolio.
Thus, for example, in the case of the Balanced Division the net investment
rate is equal to (a) the change in the net asset value of a Balanced Portfolio
share for the period from the immediately preceding valuation date up to and
including the current valuation date, plus the per share amount of any
dividends and other distributions made by the Balanced Portfolio during the
valuation period, less a deduction for any applicable taxes or for any expenses
resulting from a substitution of securities, (b) divided by the net asset value
of a Balanced Portfolio share on the valuation date immediately preceding the
current valuation date, (c) less an adjustment to provide for the deduction for
mortality rate and expense risks assumed by Northwestern Mutual Life. (See
"Deductions", p. 15.)
Investment income and realized capital gains will be received in the form
of dividend and capital gain distributions upon Portfolio shares held by each
Division; such distributions will be reinvested in additional shares of the
same Portfolio. Unrealized capital gains and realized and unrealized capital
losses will be reflected by changes in the value of the shares held by the
Account.
BENEFITS PROVIDED UNDER THE CONTRACTS
The benefits provided under the Contracts consist of a withdrawal amount, a
death benefit and a maturity benefit. Subject to the restrictions noted below,
all of these benefits may be paid in a lump sum or under the payment plans
described below.
WITHDRAWAL AMOUNT On or prior to the maturity date the Owner is entitled to
withdraw the Accumulation Units credited to his Contract and receive the
value thereof less the applicable withdrawal charge. (See "Withdrawal Charge",
p. 15.) The value, which may be either greater or less than the amount paid by
the Owner, is determined as of the valuation date coincident with or next
following receipt by Northwestern Mutual Life of a written request for
withdrawal on a form provided by Northwestern Mutual Life. The forms are
available from the Home Office and agents of Northwestern Mutual Life. A
portion of the Accumulation Units may be withdrawn on the same basis, except
Northwestern Mutual Life will not grant a partial withdrawal which would result
in less than 100 Accumulation Units remaining; a request for such a partial
withdrawal will be treated as a request to surrender the entire Contract.
Amounts distributed to an Annuitant upon withdrawal of all or a portion of
Accumulation Units may be subject to federal income tax. (See "Federal Income
Taxes", p. 13.) A penalty tax will apply to premature payments of Contract
benefits. A penalty tax of 10% of the amount of the payment which is
includible in income will be imposed on non-exempt withdrawals under individual
retirement annuities, tax deferred annuities, nontransferable annuity Contracts
and nonqualified deferred annuities. Payments which are exempt from the
penalty tax include payments upon disability, after age 59-1/2 or as
substantially equal periodic payments for life.
9
<PAGE> 13
If annuity payments are being made under Payment Plan 1 the payee may
surrender the Contract and receive the value of the Annuity Units credited to
his Contract, less the applicable withdrawal charge. (See "Withdrawal Charge",
p. 15.) Upon death during the certain period of the payee under Plan 2 or both
payees under Plan 3, the beneficiary may surrender the Contract and receive the
withdrawal value of the unpaid payments for the certain period. The withdrawal
value is based on the Annuity Unit value on the withdrawal date, with the
unpaid payments discounted at the Assumed Investment Rate. (See "Description
of Payment Plans", below.)
DEATH BENEFIT Upon the death of the Annuitant prior to the maturity date,
Northwestern Mutual Life will pay to the direct beneficiary a death benefit
equal to the Contract value, as of the valuation date coincident with or
next following the date on which proof of death is received at the Home Office
of Northwestern Mutual Life or, if later, the date on which a method of payment
is elected. If death occurs prior to the Annuitant's 65th birthday the death
benefit, where permitted by state law, will be not less than the amount of
purchase payments received by Northwestern Mutual Life under the Contract, less
withdrawals. The death benefit may be paid either in a lump sum or under a
payment plan.
MATURITY BENEFIT Purchase payments under the Contract are payable until the
maturity date specified in the Contract. Any date up to age 90 may be selected
as the maturity date, subject to applicable requirements of the Code. On the
maturity date, if no other permissible payment plan has been elected, the
maturity date will be changed to the Contract anniversary nearest the
Annuitant's 90th birthday. On that date, if no other permissible payment plan
has been elected, the value of the Contract will be paid in monthly payments
for life under a variable payment plan with payments certain for ten years.
VARIABLE PAYMENT PLANS
Part or all of the benefits under a Contract may be paid under a variable
payment plan. Under a variable plan the payee bears the entire investment risk,
since no guarantees of investment return are made. Accordingly, there is no
guarantee of the amount of the variable payments, and the amount of such
payments can be expected to change from month to month.
For a discussion of tax considerations and limitations regarding the
election of payment plans, see "Federal Income Taxes", p. 13.
DESCRIPTION OF PAYMENT PLANS The following payment plans are available:
1. Payments for a Certain Period. An annuity payable monthly for a
specified period of five to 30 years.
2. Life Annuity with or without Certain Period. An annuity payable
monthly until the payee's death, or until the expiration of a selected
certain period, whichever is later. After the payee's death during the
certain period, if any, payments becoming due are paid to the designated
contingent beneficiary. A certain period of either 10 or 20 years may be
selected, or a plan with no certain period may be chosen.
3. Joint and Survivor Life Annuity with Certain Period. An annuity
payable monthly for a certain period of 10 years and thereafter to two
persons for their joint lives. On the death of either payee, payments
continue for the remainder of the 10 years certain or the remaining
lifetime of the survivor, whichever is longer.
Northwestern Mutual Life may limit the election of a payment plan to one
that results in payments of at least $20.
From time to time Northwestern Mutual Life may establish payment plan rates
with greater actuarial value than those stated in the Contract
and make them available at the time of settlement. Northwestern Mutual Life may
also make available other payment plans, with provisions and rates as published
by Northwestern Mutual Life for those plans. AMOUNT OF ANNUITY PAYMENTS The
amount of the first annuity payment will be determined on the basis of the
particular payment plan selected, the annuity payment rate and, for plans
involving life contingencies, the Annuitant's adjusted age and sex. (A Contract
with annuity payment rates that are not based on sex is also available. See
"Special Contract for Employers", p. 11.) Variable annuity payments after the
first will vary from month to month to reflect the fluctuating value of the
Annuity Units credited to the Contract. Annuity Units represent the interest of
the Contract in each Division of the Account after annuity payments begin.
ASSUMED INVESTMENT RATE The variable annuity rate tables for the Contracts are
based upon an Assumed Investment Rate of 3 1/2%. Variable annuity rate tables
based upon an Assumed Investment Rate of 5% are also available where permitted
by state law.
The Assumed Investment Rate affects both the amount of the first variable
payment and the amount by which subsequent payments increase or decrease. The
Assumed Investment Rate does not affect the actuarial value of the future
payments as of the date when payments begin, though it does affect the actual
amount which may be received by an individual Annuitant.
Over a period of time, if each Division achieved a net investment result
exactly equal to the Assumed Investment Rate applicable to a particular payment
plan, the amount of annuity payments would be level. However, if the Division
10
<PAGE> 14
achieved a net investment result greater than the Assumed Investment Rate, the
amount of annuity payments would increase. Similarly, if the Division achieved
a net investment result smaller than the Assumed Investment Rate, the amount of
annuity payments would decrease.
A higher Assumed Investment Rate will result in a larger initial payment
but more slowly rising and more rapidly falling subsequent payments than a
lower Assumed Investment Rate.
ADDITIONAL INFORMATION
TRANSFERS BETWEEN DIVISIONS AND PAYMENT PLANS The Contracts provide
considerable flexibility for Owners to change the allocation of purchase
payments among the Divisions and to transfer values from one Division to
another both before and after annuity payments begin. In order to take full
advantage of these features Owners should carefully consider, on a continuing
basis, which Division or apportionment is best suited to their long-term
investment needs.
A Contract Owner may at any time change the allocation of purchase payments
among the Divisions by written notice to Northwestern Mutual Life. Purchase
payments received at the Home Office of Northwestern Mutual Life on and after
the date on which the notice is received will be applied to provide
Accumulation Units in one or more Divisions on the basis of the new allocation.
Before the effective date of a payment plan the owner may, upon written
request, transfer Accumulation Units from one Division to another. After the
effective date of a payment plan the payee may transfer Annuity Units from one
Division to another. The number of Accumulation or Annuity Units to be credited
will be adjusted to reflect the respective value of the Accumulation and
Annuity Units in each of the Divisions. For Accumulation Units the minimum
amount which may be transferred is the lesser of $100 or the entire value of
the Accumulation Units in the Division from which the transfer is being made.
For each transfer beginning with the thirteenth in any Contract year a transfer
fee of $25 may be deducted from the amount transferred. No charge is currently
being made for transfers.
Owners who contemplate the transfer of funds from one Division to another
should consider the risk inherent in a switch from one investment medium to
another. In general, frequent transfers based on short-term expectations for
the stock and bond markets, especially transfers of large sums, will tend to
accentuate the danger that a transfer will be made at an inopportune time.
Amounts which have been invested on a fixed basis may be transferred to any
Division of the Account, and the value of Accumulation Units in any Division of
the Account may be transferred to the Guaranteed Interest Fund for investment
on a fixed basis, subject to the restrictions described in the Contract. See
"The Guaranteed Interest Fund", page 13.
After the effective date of a payment plan which does not involve a life
contingency (i.e., Plan 1) a payee may transfer to either form of life annuity
at no charge. The value of the remaining payments will be applied to the new
plan selected, with the amount of the first annuity payment under the new plan
being determined on the basis of the particular plan selected, the annuity
payment rate and the Annuitant's adjusted age and sex. Subsequent payments will
vary to reflect changes in the value of the Annuity Units credited.
Other transfers between payment plans are permitted subject to such
limitations as Northwestern Mutual Life may reasonably determine. Generally,
however, transfer is not permitted from a payment plan involving a life
contingency to a payment plan which does not involve the same life contingency.
Transfers from the Money Market Division may be made at any time while a
payment plan is in force. The Contracts provide that transfers between the
other Divisions and transfers between payment plans may be made after the
payment plan has been in force for at least 90 days and thereafter whenever at
least 90 days have elapsed since the date of the last transfer. At present
Northwestern Mutual Life permits transfers at any time but Northwestern Mutual
reserves the right to change this practice in the future. The transfer will be
made as of the close of business on the valuation date coincident with or next
following the date on which the request for transfer is received at the Home
Office of Northwestern Mutual Life, or at a later date if requested.
OWNERS OF THE CONTRACTS The Owner of the Contract has the sole right to
exercise all rights and privileges under the Contract, except as the Contract
otherwise provides. The Owner is ordinarily the Annuitant, but may be an
employer or other entity. The Annuitant is the person upon whose life the
Contract is issued and Contract benefits depend. Following the death of the
Annuitant any remaining Contract benefits are payable to a beneficiary or
contingent beneficiary named in the Contract.
SPECIAL CONTRACT FOR EMPLOYERS The annuity payment rates for payment plans
which involve a life contingency (i.e., Plans 2 and 3) are based, in part, on
the sex of the Annuitant. For certain situations where the Contracts are to be
used in connection with an employer sponsored benefit plan or arrangement,
federal law, and the laws of certain states, may require that purchase payments
and annuity payment rates be determined without regard to sex. A special
Contract is available for this purpose. Prospective purchasers of the Contracts
are urged to review any questions in this area with qualified counsel.
11
<PAGE> 15
DISABILITY PROVISION A Contract may include, as an optional benefit, a
provision under which Northwestern Mutual Life will continue to pay purchase
payments during the total disability of the Annuitant. Each Contract containing
this provision specifies the additional cost of such benefit.
DEFERMENT OF BENEFIT PAYMENTS Northwestern Mutual Life reserves the right to
defer determination of the withdrawal value of the Contracts, or the payment of
benefits under a variable payment plan, until after the end of any period
during which the right to redeem Fund shares is suspended, or payment of the
redemption value is postponed, pursuant to the provisions of the Investment
Company Act of 1940 because: (a) the New York Stock Exchange is closed, except
for holidays or weekends; (b) the Securities and Exchange Commission has
determined that trading on the New York Stock Exchange is restricted; (c) the
Securities and Exchange Commission permits suspension or postponement and so
orders; (d) an emergency exists, as defined by the Securities and Exchange
Commission, so that valuation of the assets of the Fund or disposal of
securities held by it is not reasonably practical; or (e) such suspension or
postponement is otherwise permitted by the Act.
DIVIDENDS The Contracts share in the divisible surplus of Northwestern Mutual
Life, except while payments are being made under a variable payment plan. The
divisible surplus of Northwestern Mutual Life is determined annually for the
following year. State law requires that the surplus be distributed equitably
among participating contracts. Distributions of divisible surplus are commonly
referred to as "dividends".
Northwestern Mutual Life is paying dividends on approximately 10% of its
inforce individual variable annuities in 1996. Dividends are not guaranteed to
be paid in future years. The dividend amount is volatile since it is based on
the average variable Contract value which is defined as the value of the
Accumulation units on the last Contract anniversary adjusted to reflect any
transactions since that date which increased or decreased the Contract's
interest in the Account.
Dividends on variable annuities arise principally as a result of more
favorable expense experience than that assumed in determining deductions. Such
favorable experience is generated primarily by older and/or larger Contracts.
In general, Contracts with an average variable Contract value of less than
$30,000 will not receive dividends, and only about half of those with a value
above $30,000 will receive them.
Any dividend for a Contract is paid on the anniversary date of that
Contract. The dividend is applied as a net purchase payment unless the Owner
elects to have the dividend paid in cash. In the case of a Contract purchased
as an individual retirement annuity pursuant to Section 408(b) of the Internal
Revenue Code, dividends cannot be paid in cash but must be applied as net
purchase payments under the Contract.
VOTING RIGHTS As long as the Account continues to be registered as a unit
investment trust under the Investment Company Act of 1940, and Account assets
are invested in shares of the Portfolios of the Fund, Northwestern Mutual Life
will vote such shares held in the Account in accordance with instructions
received from the Owners of Accumulation Units or payees receiving payments
under variable payment plans. Each such Owner or payee will receive periodic
reports relating to the Fund, proxy material and a form with which to give such
instructions with respect to the proportion of shares of each Portfolio of the
Fund held in the Account corresponding to the Accumulation Units credited to his
Contract, or the number of shares of each Portfolio of the Fund held in the
Account representing the actuarial liability under the variable annuity payment
plan, as the case may be. The number of shares will increase from year to year
as additional purchase payments are paid by the Contract Owner; after a variable
annuity payment plan is in effect the number of shares will decrease from year
to year as the remaining actuarial liability declines. Shares as to which no
instructions have been received will be voted in the same proportion as the
shares as to which instructions have been received.
SUBSTITUTION AND CHANGE Pursuant to a vote of the Owners of Contracts having an
interest in any of the Divisions or as otherwise may be permitted by applicable
insurance and securities laws, and with any required approval of the Securities
and Exchange Commission or other regulatory authority, (a) the assets of the
Division may be invested in securities other than Fund shares as a substitute
for such shares already purchased or as the securities to be purchased in the
future, (b) if deemed by the Board of Trustees of Northwestern Mutual Life to be
in the best interests of Contract owners, the Account or a Division may be
operated as a management company under the Investment Company Act of 1940 or in
any other form permitted by law, (c) the Account may be deregistered under the
Investment Company Act of 1940 in the event such registration is no longer
required, or (d) the provisions of such Contracts may be modified to assure
qualification for the benefits provided by the provisions of the Internal
Revenue Code relating to retirement annuity or variable annuity contracts, or to
comply with any other applicable federal or state laws. In the event of any such
substitution or change, Northwestern Mutual Life may make appropriate
endorsement on Contracts having an interest in the Account and take such other
action as may be necessary to effect the substitution or change.
FIXED ANNUITY PAYMENT PLANS Contract benefits may also be paid under fixed
annuity payment plans which are not described in this Prospectus. If a fixed
annuity is selected the Accumulation Units credited to a Deferred Contract will
12
<PAGE> 16
be cancelled, the withdrawal value of the Contract will be transferred to the
general account of Northwestern Mutual Life, and the payee will no longer have
any interest in the Account. A withdrawal charge may be applicable in
determining the withdrawal value. (See "Withdrawal Amount", p. 9, and
"Withdrawal Charge", p. 15.)
FINANCIAL STATEMENTS Financial statements of the Account and financial
statements of Northwestern Mutual Life appear in the Statement of Additional
Information.
THE GUARANTEED INTEREST FUND
Contract Owners may direct all or part of their purchase payments to the
Guaranteed Interest Fund for investment on a fixed basis. Amounts previously
invested in the Account Divisions may be transferred to the Guaranteed Interest
Fund, prior to the maturity date, and amounts in the Guaranteed Interest Fund
may be transferred to the Account Divisions subject, in each case, to the
restrictions described in the Contract.
Amounts invested in the Guaranteed Interest Fund become part of the
general assets of Northwestern Mutual Life. In reliance on certain exemptive
and exclusionary provisions, interests in the Guaranteed Interest Fund have not
been registered under the Securities Act of 1933 and the Guaranteed Interest
Fund has not been registered as an investment company under the Investment
Company Act of 1940. Accordingly, neither the Guaranteed Interest Fund nor any
interests therein are generally subject to these Acts. Northwestern Mutual Life
has been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosure in this prospectus relating to the Guaranteed
Interest Fund. This disclosure, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
Amounts invested in the Guaranteed Interest Fund earn interest at rates
declared by Northwestern Mutual Life from time to time. The interest rate will
be guaranteed for each amount for at least one year and will be at an annual
effective rate of not less than 3%. At the expiration of the period for which
the interest rate is guaranteed a new interest rate may apply. Interest is
credited and compounded daily. The effective date for a transaction involving
the Guaranteed Interest Fund is determined in the same manner as the effective
date for a transaction involving a Division of the Account.
Investments in the Guaranteed Interest Fund are subject to a maximum of
$1,000,000 without prior consent of Northwestern Mutual Life. To the extent
that a purchase payment or transfer from a Division of the Account causes the
Contract's interest in the Guaranteed Interest Fund to exceed $1,000,000, the
amount of the excess will be placed in the Money Market Division and will remain
there until the Contract Owner instructs otherwise.
Transfers from the Guaranteed Interest Fund to the Account Divisions are
subject to strict limits described in the Contract. After a transfer from the
Guaranteed Interest Fund no further transfers either to or from the Guaranteed
Interest Fund will be allowed for a period of 365 days. The maximum amount that
maybe transferred from the Guaranteed Interest Fund in one transfer is the
greater of (1) 20% of the amount that was invested in the Guaranteed Interest
Fund as of the last Contract anniversary preceding the transfer and (2) the
amount of the most recent transfer from the Guaranteed Interest Fund. But in no
event will this maximum transfer amount be less than $1,000 or more than
$50,000.
The deduction for mortality rate and expense risks, as described below,
is not assessed against amounts in the Guaranteed Interest Fund, and amounts in
the Guaranteed Interest Fund do not bear any expenses of Northwestern Mutual
Series Fund, Inc. Other charges under the Contracts apply for amounts in the
Guaranteed Interest Fund as they are described in this prospectus for amounts
invested on a variable basis. See "Deductions", page 15. For purposes of
allocating and deducting the annual Contract fee, any investment in the
Guaranteed Interest Fund is considered as though it were an investment of the
same amount in one of the Account Divisions.
FEDERAL INCOME TAXES
QUALIFIED AND NONTAX-QUALIFIED PLANS
The Contracts are offered for use under the tax-qualified plans (i.e.,
contributions are generally not taxable) identified below:
1. Individual retirement annuities pursuant to the provisions of Section
408 of the Code, including simplified employee pensions established under
Section 408(j) and (k).
2. Tax-deferred annuities pursuant to the provisions of Section 403(b) of
the Code for employees of public school systems and tax-exempt
organizations described in Section 501(c)(3).
3. Deferred compensation plans for public employees established pursuant
to Section 457 of the Code.
4. Nontransferable annuity contracts issued in exchange for fixed dollar
annuities previously issued by Northwestern Mutual Life or other
insurance companies as distributions of termination benefits from
tax-qualified pension or profit-sharing plans or trusts or annuity
purchase plans.
The Contracts are also offered for use in non tax-qualified situations
(i.e., contributions are taxable).
13
<PAGE> 17
TAXATION OF CONTRACT BENEFITS
For Contracts held by individuals, no tax is payable as a result of any
increase in the value of a Contract until benefits from the Contract are
received. Contract benefits will be taxable as ordinary income when received in
accordance with Section 72 of the Code.
Since purchase payments for Contracts purchased under tax-qualified plans
will ordinarily be paid with funds which have been excluded from the Owner's
gross income, benefits received as annuity payments or upon death or withdrawal
will be taxable as ordinary income when received.
Where nondeductible contributions are made to individual retirement
annuities and other tax-qualified plans, the Owner may exclude from income that
portion of each benefit payment which represents a return of the Owner's
"investment in the contract" as defined in Section 72 until the entire
"investment in the contract" is recovered. Benefits paid in a form other than
an annuity will be taxed as ordinary income when received except for that
portion of the payment which represents a return of the employee's "investment
in the contract." A 15% penalty may be imposed on aggregate payments from
individual retirement annuities, tax-deferred annuities and nontransferable
annuity Contracts in excess of certain annual limits and a 50% penalty may be
imposed on payments made from individual retirement annuities, tax-deferred
annuities, nontransferable annuity Contracts and Section 457 deferred
compensation plans to the extent the payments are less than certain required
minimum amounts. With certain limited exceptions, benefits from individual
retirement annuities, tax-deferred annuities and nontransferable annuity
Contracts are subject to the tax-free roll-over provisions of the Code.
Purchase payments for nontax-qualified Contracts will ordinarily be paid
with funds which have been included in the Owner's gross income. Therefore,
benefits received as annuity payments from these Contracts will be taxable as
ordinary income to the extent they exceed that portion of each payment which
represents a return of the "investment in the contract" as defined in Section
72 until the entire "investment in the contract" is recovered. Benefits
received in a lump sum from these Contracts will be taxable as ordinary income
to the extent they exceed the "investment in the contract." A partial
withdrawal or collateral assignment prior to the Maturity Date will result in
the receipt of gross income by the Owner to the extent that the amounts
withdrawn or assigned do not exceed the excess (if any) of the total value of
Accumulation Units over total purchase payments paid under the Contract less
any amounts previously withdrawn or assigned. Thus, any investment gains
reflected in the Contract values are considered to be withdrawn first and are
taxable as ordinary income. With respect to Contracts issued after October 21,
1988, investment gains will be determined by aggregating all nontax-qualified
deferred Contracts issued by Northwestern Mutual Life to the Owner during the
same calendar year.
A special rule applies to certain nonqualified Contracts not held by
individuals, such as Contracts purchased by corporate employers in connection
with deferred compensation plans. With respect to purchase payments paid after
February 28, 1986, these Contracts will not be taxed as annuity contracts and
increases in the value of the Contracts will be taxable in the year earned.
A penalty tax will apply to premature payments of Contract benefits. A
penalty tax of 10% of the amount of the payment which is includible in income
will be imposed on non-exempt withdrawals under individual retirement
annuities, tax deferred annuities, nontransferable annuity Contracts and
nonqualified deferred annuities. Payments which are exempt from the penalty tax
include payments upon disability, after age 59-1/2 or as substantially equal
periodic payments for life.
For a tax-deferred annuity (funded pursuant to a salary reduction
agreement) no amounts accruing after 1988 may be withdrawn before the Owner
attains age 59-1/2, separates from service, dies or becomes disabled. A limited
exception is provided for hardship. Benefit payments from tax-deferred
annuities and nontransferable annuity contracts will be subject to mandatory
20% withholding unless (1) the payments from the tax-deferred annuities are
rolled over directly to another tax-deferred annuity or an individual
retirement arrangement, or the payments from the nontransferable annuity
contracts are rolled over directly to another nontransferable annuity contract,
a tax-qualified plan or an individual retirement arrangement, (2) they are paid
in substantially equal installments over the life or life expectancy of the
employee (or of the employee and the employee's beneficiary) or over a period
of 10 years or more, or (3) they are "required minimum distributions" payable
after age 70-1/2.
A loan transaction, using a Contract purchased under a tax-qualified plan
as collateral, will generally have adverse tax consequences. For example, such
a transaction destroys the tax status of the individual retirement annuity and
results in taxable income equal to the Contract value.
14
<PAGE> 18
TAXATION OF NORTHWESTERN MUTUAL LIFE
Northwestern Mutual Life may charge the appropriate contracts with their
shares of any tax liability which may result from the maintenance or operation
of the Divisions of the Account. No charge is currently being made. (See "Net
Investment Factor", p. 9 and "Deductions", below.)
OTHER CONSIDERATIONS
It should be understood that the tax rules for annuities and qualified
plans are complex and cannot be readily summarized. The foregoing discussion
does not address special rules applicable in many situations, rules governing
Contracts issued or purchase payments made in past years, current legislative
proposals or state or other law. It is not intended as tax advice. Prospective
purchasers of the Contracts are advised to consult qualified tax counsel.
DEDUCTIONS
The following deductions will be made:
1. Sales Load. For the Front Load Contract a sales load is deducted
from all purchase payments received. The deduction is based on cumulative
purchase payments received and the rates in the table below:
<TABLE>
<CAPTION>
Cumulative Purchase Payments
Paid Under the Contract Rate
<S> <C>
First $100,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0%
Next $400,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0%
Next $500,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0%
Balance over $1,000,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5%
</TABLE>
2. Deductions for Mortality Rate and Expense Risks. The net investment
factor (see "Net Investment Factor", p. 9) used in determining
the value of Accumulation and Annuity Units reflects a deduction on each
valuation date for mortality rate and expense risks assumed by Northwestern
Mutual Life. For the Front Load Contract, the deduction from Accumulation
Units is at a current annual rate of 0.4% of the assets of the Account,
while the deduction from Annuity Units is zero. For the Back Load Contract
the deduction is at a current annual rate of 1.25% of the assets of the
Account. The deduction may be increased or decreased by the Board of
Trustees of Northwestern Mutual Life, but in no event may the deduction
exceed an annual rate of .75% for the Front Load Contract and 1.50% for the
Back Load Contract. This deduction is the only expense item paid by the
Account to date. The Fund pays expenses which are described in the attached
prospectus for the Fund.
The risks assumed by Northwestern Mutual Life are (a) the risk that
annuity payments will continue for longer periods than anticipated because
the Annuitants as a group live longer than expected, and (b) the risk that
the charges made by Northwestern Mutual Life may be insufficient to cover
the actual costs incurred in connection with the Contracts. Northwestern
Mutual Life assumes these risks for the duration of the Contract.
The net investment factor also reflects the deduction of any
reasonable expenses which may result if there were a substitution of other
securities for shares of a Portfolio of the Fund as described under
"Substitution and Change", p. 12, and any applicable taxes, i.e., any tax
liability paid or reserved for by Northwestern Mutual Life resulting from
the maintenance or operation of a Division of the Account, other than
applicable premium taxes which may be deducted directly from
considerations. It is not presently anticipated that any deduction will be
made for federal income taxes (see "Federal Income Taxes", p. 13), nor is
it anticipated that maintenance or operation of the Account will give rise
to any deduction for state or local taxes. However, Northwestern Mutual
Life reserves the right to charge the appropriate Contracts with their
shares of any tax liability which may result under present or future tax
laws from the maintenance or operation of the Account or to deduct any such
tax liability in the computation of the net investment factor for such
Contracts.
3. Contract Fee. On each Contract anniversary prior to the maturity
date a deduction of $30 is made for administrative expenses relating to a
Deferred Contract during the prior year. The charge is made by reducing the
number of Accumulation Units credited to the Contract. For purposes of
allocating and deducting the annual Contract fee, any investment in the
Guaranteed Interest Fund is considered as though it were an investment of
the same amount in one of the Account Divisions. This charge may not be
increased, and is intended only to reimburse Northwestern Mutual Life for
its actual administrative expenses. The charge is currently being waived
if the Contract value on the Contract anniversary is $50,000 or more.
4. Withdrawal Charge. For the Back Load Contract if Accumulation Units
are withdrawn for cash a withdrawal charge for sales expenses will be
deducted. The withdrawal charge will be based on the Amount Categories and
the Rates in the table below. The amount in each Category is based on
cumulative purchase payments made and on the number of Contract
anniversaries that have occurred since each purchase payment was made.
15
<PAGE> 19
<TABLE>
<CAPTION>
AMOUNT AMOUNT
CATEGORY RATE CATEGORY RATE
-------- ---- -------- ----
<S> <C> <C> <C>
Eight . . . . . . . . . . . . . 8% Three . . . . . . . . . . . . . 3%
Seven . . . . . . . . . . . . . 7 Two . . . . . . . . . . . . . . 2
Six . . . . . . . . . . . . . . 6 One . . . . . . . . . . . . . . 1
Five . . . . . . . . . . . . . . 5 Zero . . . . . . . . . . . . . 0
Four . . . . . . . . . . . . . . 4
</TABLE>
The first $100,000 of total purchase payments paid over the life of the
Contract start out in Category Eight, the next $400,000 start out in
Category Four, the next $500,000 start out in Category Two, and all
additional purchase payments paid start out in Category One. As of each
Contract anniversary, any amount in a Category moves to the next lower
Category until the Contract anniversary on which that amount reaches
Category Zero. The total withdrawal charge will be the sum of all the
results calculated by multiplying the amount in each Category by the Rate
for that Category. The amounts used to calculate the withdrawal charge will
be limited to the value of the Contract benefits that are subject to the
withdrawal charge. The amounts used will be taken from those Categories
that produce the lowest withdrawal charge. However, any amounts used to
determine the charge for a partial withdrawal will not be used to determine
subsequent withdrawal charges. There is no withdrawal charge on the value
of Accumulation Units withdrawn in excess of the total purchase payments
paid under the Contract; but in the case of a partial withdrawal, the
purchase payments paid under the Contract are deemed to be withdrawn first,
except for amounts eligible for the withdrawal charge free amount described
in the next paragraph.
The withdrawal charge free amount is available on a Contract if the
Contract value is at least $10,000 on the Contract anniversary
preceding a withdrawal. For each Contract year, the withdrawal charge free
amount is equal to the lesser of 10% of the Contract value on the
last Contract anniversary, and the amount by which the Contract value
exceeds cumulative purchase payments as of the date of the withdrawal.
Eligible amounts withdrawn meeting these requirements will be taken first
from the portion of the Contract value that exceeds cumulative purchase
payments. The withdrawal charge for any amounts not included in the
withdrawal charge free amount will be based first on the purchase payments
that have been paid.
No withdrawal charge will be made upon the selection of a variable
payment plan. However, the withdrawal charge will be made if a withdrawal,
or partial withdrawal, is made within five years after the beginning of a
variable payment plan which is not contingent on the payee's life (Plan 1).
For fixed payment plans the Contract provides for deduction of the
withdrawal charge when the payment plan is selected. By current
administrative practice Northwestern Mutual Life will waive the withdrawal
charge upon selection of a fixed payment plan for a certain period of 12
years or more (Plan 1) or any fixed payment plan which involves a life
contingency (Plans 2 or 3) if the payment plan is selected after the
Contract has been in force for at least one full year.
The amount of withdrawal charges collected by Northwestern Mutual Life
from the Back Load Contracts as a group will depend on the volume and
timing of withdrawal transactions. Northwestern Mutual Life is unable to
determine in advance whether this amount will be greater or less than the
sales expenses incurred in connection with those Contracts, but based on
the information presently available Northwestern Mutual Life believes it is
more likely than not that the sales expenses Northwestern Mutual Life
incurs will be greater than the withdrawal charges Northwestern Mutual Life
receives. Northwestern Mutual Life bears this risk for the duration of the
Contracts. Any excess of sales expenses over withdrawal charges will be
paid from the general assets of Northwestern Mutual Life. These assets may
include proceeds from the charge for annuity rate and expense risks
described above.
5. Premium Taxes. The Contracts provide for the deduction of
applicable premium taxes, if any, from purchase payments or from Contract
benefits. Premium taxes are levied by various jurisdictions, and presently
range from 0% to 3.5% of total purchase payments. Many jurisdictions
presently exempt from premium taxes annuities such as the Contracts. As a
matter of current practice, Northwestern Mutual Life does not deduct
premium taxes from purchase payments received under the Contracts or from
Contract benefits. However, Northwestern Mutual Life reserves the right to
deduct premium taxes in the future.
CONTRACTS ISSUED PRIOR TO MARCH 31, 1995 For Contracts issued prior to March
31, 1995 and after December 16, 1981 there is no front-end sales load but there
is a surrender charge of 8% on the first $25,000 of considerations, 4% on the
next $75,000 and 2% on considerations in excess of $100,000, based on total
cumulative considerations paid under the Contract. The surrender charge
applicable for each consideration reduces by 1% on each Contract anniversary.
A surrender charge free corridor is available on the same basis described above
for the current Contracts. The charge for mortality and expense risks for
those Contracts is 1.25% of the assets of the Account. The annual Contract fee
is the lesser of $30 or 1% of the Contract value.
16
<PAGE> 20
CONTRACTS ISSUED PRIOR TO DECEMBER 17, 1981 For Contracts issued prior to
December 17, 1981 there is no surrender charge, but considerations are subject
to a deduction of 8% for sales expenses. The deduction is reduced to 4% on
considerations in excess of $5,000 received during a single Contract year as
defined in the Contract, 2% on the next $75,000 and 1% on the excess over
$100,000. The charge for mortality rate and expense risks for those
Contracts is .75% of the assets of the Account, which may be raised to a
maximum annual rate of 1%. There is no annual Contract fee.
CERTAIN NONTAX-QUALIFIED CONTRACTS For nontax-qualified Contracts issued after
December 16, 1981 and prior to May 1, 1983 considerations paid under the
Contract are subject to a deduction of 3% on the first $25,000 of
considerations, 2% on the next $75,000 and 1% on amounts in excess of $100,000,
based on total cumulative considerations paid under the Contract. The charge
for annuity rate and expense risks for these Contracts is .75% of the assets of
the Account, which may be raised to a maximum annual rate of 1%.
REDUCED CHARGES FOR EXCHANGE TRANSACTIONS As a matter of current practice,
owners of fixed dollar annuities previously issued by Northwestern Mutual Life
are permitted to exchange those contracts for Front Load or Back Load Contracts
without paying a second charge for sales expenses. This rule is subject to a
number of exceptions and qualifications and may be changed or withdrawn at any
time.
In general, a $25 administrative charge is made on these exchange
transactions and only one such transaction may be effected in any 12-month
period. Transactions on this basis are subject to a limit of 20% of the amount
held under the fixed annuity contract in any 12-month period, but this limit is
presently being waived.
Amounts exchanged from a fixed contract which provides for a surrender
charge are not charged for sales expenses when the exchange is effected and are
placed in the same withdrawal charge category under the new Back Load Contract
as they were before.
Exchange proceeds from fixed contracts which have no surrender charge
provisions are placed in the 0% withdrawal charge category. As an alternative,
exchange proceeds from such a fixed contract may be added to a Front Load
Contract or to a Deferred Contract issued prior to December 17, 1981 without
any deduction for sales expenses.
Fixed annuity contracts (which are not described in this prospectus) are
available in exchange for the Contracts on a comparable basis.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold through individuals who, in addition to being
licensed insurance agents of Northwestern Mutual Life, are registered
representatives of Northwestern Mutual Investment Services, Inc., a
wholly-owned subsidiary of Northwestern Mutual Life and a registered
broker-dealer under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers. Where state law requires, such
agents will also be licensed securities salesmen. Commissions paid to the
agents on sales of the Contracts will not exceed 4% of purchase payments.
17
<PAGE> 21
TABLE OF CONTENTS FOR THIS PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEX OF SPECIAL TERMS . . . . . . . . . . 2
SYNOPSIS . . . . . . . . . . . . . . . . . 2
The Contracts . . . . . . . . . . . . . 2
The Fund . . . . . . . . . . . . . . . . 2
Deductions and Charges . . . . . . . . . 2
Right to Examine Deferred Contract . . . 2
Penalty Tax on Premature Payments . . . 2
EXPENSE TABLE . . . . . . . . . . . . . . . 2
ACCUMULATION UNIT VALUES . . . . . . . . . 5
THE COMPANY . . . . . . . . . . . . . . . . 7
NML VARIABLE ANNUITY
ACCOUNT B . . . . . . . . . . . . . . . 8
THE FUND . . . . . . . . . . . . . . . . . 8
THE CONTRACTS . . . . . . . . . . . . . . . 8
Purchase Payments Under the Contracts . 8
Amount and Frequency . . . . . . . . 8
Application of Purchase Payments . . 8
Net Investment Factor . . . . . . . . . 9
Benefits Provided Under the Contracts . 9
Withdrawal Amount . . . . . . . . . 9
Death Benefit . . . . . . . . . . . 10
Maturity Benefit . . . . . . . . . 10
Variable Payment Plans . . . . . . . 10
Description of Payment Plans . . . 10
Amount of Annuity Payments . . . . 10
Assumed Investment Rate . . . . . . . 10
Additional Information . . . . . . . 11
Transfers Between Divisions and
Payment Plans . . . . . . . . . . 11
Owners of the Contracts . . . . . . 11
Special Contract for Employers . . 11
Disability Provision . . . . . . . 12
Deferment of Benefit Payments . . . 12
Dividends . . . . . . . . . . . . . 12
Voting Rights . . . . . . . . . . . 12
Substitution and Change . . . . . . 12
Fixed Annuity Payment Plans . . . . 12
Financial Statements . . . . . . . 13
THE GUARANTEED INTEREST FUND . . . . . . . 13
FEDERAL INCOME TAXES . . . . . . . . . . . 13
Qualified and Nontax-Qualified Plans . 13
Taxation of Contract Benefits . . . . . 14
Taxation of Northwestern Mutual Life . 15
Other Considerations . . . . . . . . . 15
DEDUCTIONS . . . . . . . . . . . . . . . . 15
Contracts Issued Prior to
March 31, 1995 . . . . . . . . . . . 16
Contracts Issued Prior to
December 17, 1981 . . . . . . . . . . 17
Certain Nontax-Qualified Contracts . . 17
Reduced Charges for Exchange
Transactions . . . . . . . . . . . . 17
DISTRIBUTION OF THE CONTRACTS . . . . . . . 17
</TABLE>
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE
CONTRACTS . . . . . . . . . . . . . . . . B-2
DETERMINATION OF ANNUITY
PAYMENTS . . . . . . . . . . . . . . . . B-2
Amount of Annuity Payments . . . . . . B-2
Annuity Unit Value . . . . . . . . . . B-3
Illustrations of Variable Annuity
Payments . . . . . . . . . . . . . . B-3
VALUATION OF ASSETS OF THE
ACCOUNT . . . . . . . . . . . . . . . . . B-4
TRANSFERABILITY RESTRICTIONS . . . . . . . B-4
EXPERTS . . . . . . . . . . . . . . . . . . B-4
FINANCIAL STATEMENTS OF THE
ACCOUNT (for the six months ended June
30, 1995 -- unaudited) . . . . . . . . . B-5
FINANCIAL STATEMENTS OF THE
ACCOUNT (for the year ended December
31, 1994) . . . . . . . . . . . . . . . . B-11
REPORT OF INDEPENDENT
ACCOUNTANTS (for year ended
December 31, 1994) . . . . . . . . . . B-16
FINANCIAL STATEMENTS OF
NORTHWESTERN MUTUAL LIFE (for
the three years ended
December 31, 1994) . . . . . . . . . . . B-17
REPORT OF INDEPENDENT
ACCOUNTANTS (for the three years
ended December 31, 1994) . . . . . . . . B-29
</TABLE>
18
<PAGE> 22
This Prospectus sets forth concisely the information about NML Variable
Annuity Account B that a prospective investor ought to know before investing.
Additional information about Account B has been filed with the Securities and
Exchange Commission in a Statement of Additional Information which is
incorporated herein by reference. The Statement of Additional Information is
available upon request and without charge from The Northwestern Mutual Life
Insurance Company. To receive a copy, return the request form to the address
listed below, or telephone (414) 271-1444.
TO: The Northwestern Mutual Life Insurance Company
Equity Services Division/Agency Department
720 East Wisconsin Avenue
Milwaukee, WI 53202
Please send a Statement of Additional Information for NML Variable
Annuity Account B to:
Name _______________________________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
City ___________________________________State ___________ Zip ______________
19
<PAGE> 23
N O R T H W E S T E R N M U T U A L L I F E
VARIABLE ANNUITY CONTRACTS
For Individual Retirement Annuities, Tax-Deferred Annuities, and
Nontax-Qualified Annuities
NML VARIABLE ANNUITY ACCOUNT B
NORTHWESTERN MUTUAL SERIES FUND, INC.
P R O S P E C T U S
90-1773 (4-94)
<PAGE> 24
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY CONTRACTS
(for Individual Retirement Annuities, Tax-Deferred Annuities
and Non-Qualified Plans)
NML VARIABLE ANNUITY ACCOUNT B
(the "Account"),
a separate investment account of
The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life")
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the prospectus for
the Contracts. A copy of the prospectus may be obtained from The
Northwestern Mutual Life Insurance Company, 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, telephone number (414) 271-1444.
The Date of the Prospectus to which this Statement of
Additional Information Relates is January 15, 1996.
The Date of this Statement of Additional Information
is January 15, 1996.
B-1
<PAGE> 25
DISTRIBUTION OF THE CONTRACTS
The Contracts are offered on a continuous basis exclusively through
individuals who, in addition to being life insurance agents of Northwestern
Mutual Life, are registered representatives of Northwestern Mutual Investment
Services, Inc. ("NMIS").
NMIS may be considered the underwriter of the Contracts for purposes
of the federal securities laws. The following amounts of commissions were paid
on sales of the Contracts during each of the last three years:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1994 $6,815,893
1993 $7,638,503
1992 $6,272,366
</TABLE>
DETERMINATION OF ANNUITY PAYMENTS
The following discussion of the method for determining the amount of
monthly annuity payments under a variable payment plan is intended to be read
in conjunction with these sections of the prospectus for the Contracts:
"Variable Payment Plans", p. 10, including "Description of Payment Plans", p.
10, "Amount of Annuity Payments", p. 10, and "Assumed Investment Rate", p. 10;
"Dividends", p. 12; "Net Investment Factor", p. 9; and "Deductions", p. 15.
AMOUNT OF ANNUITY PAYMENTS The amount of the first annuity payment
under a variable Payment Plan will be determined on the basis of the particular
Payment Plan selected, the annuity payment rate and, for plans involving life
contingencies, the Annuitant's adjusted age and sex. The amount of the first
payment is the sum of the payments from each Division of the Account determined
by applying the appropriate annuity payment rate to the product of the number
of Accumulation Units in the Division on the effective date of the Payment Plan
and the Accumulation Unit value for the Division on that date. Annuity rates
currently in use are based on the 1983 a Table with Projection Scale G and age
adjustment.
Variable annuity payments after the first will vary from month to
month and will depend upon the number and value of Annuity Units credited to
the Annuitant. After the effective date of a Payment Plan a Contract will not
share in the divisible surplus of Northwestern Mutual Life.
The number of Annuity Units in each Division is determined by dividing
the amount of the first annuity payment from the Division by the value of an
Annuity Unit on the effective date of the Payment Plan. The number of Annuity
Units thus credited to the Annuitant in each Division remains constant
throughout the annuity period. However, the value of Annuity Units in each
Division will fluctuate with the investment experience of the Division.
The amount of each variable annuity payment after the first is the sum
of payments from each Division determined by multiplying this fixed number of
Annuity Units each month by the value of an Annuity Unit for the Division on
(a) the fifth valuation date prior to the payment due date if the payment due
date is a valuation date, or (b) the sixth valuation date prior to the payment
due date if the payment due date is not a valuation date. To illustrate, if a
payment due date falls on a Friday, Saturday or Sunday, the amount of the
payment will normally be based upon the Annuity Unit value calculated on the
preceding Friday. The preceding Friday would be the fifth valuation date prior
to the
B-2
<PAGE> 26
Friday due date, and the sixth valuation date prior to the Saturday or Sunday
due dates.
ANNUITY UNIT VALUE The value of an Annuity Unit for each Division
was established at $1.00 as of the date operations began for that Division.
The value of an Annuity Unit on any later date varies to reflect the investment
experience of the Division, the Assumed Investment Rate on which the annuity
rate tables are based, and the deduction for mortality rate and expense risks
assumed by Northwestern Mutual Life.
The Annuity Unit value for each Division on any valuation date is
determined by multiplying the Annuity Unit value on the immediately valuation
date by two factors: (a) the net investment factor for the current period for
the Division; and (b) an adjustment factor to neutralize the Assumed Investment
Rate used in calculating the annuity rate tables.
ILLUSTRATIONS OF VARIABLE ANNUITY PAYMENTS To illustrate the manner
in which variable annuity payments are determined consider this example. Item
(4) in the example shows the applicable monthly payment rate for a male,
adjusted age 65, who has elected a life annuity Payment Plan with a certain
period of 10 years with an Assumed Investment Rate of 3-1/2% (Plan 2, as
described in the prospectus).
(1) Assumed number of Accumulation Units in
Balanced Division on maturity date. . . . . . . . .25,000
(2) Assumed Value of an Accumulation Unit in
Balanced Division at maturity . . . . . . . . . . .$2.000000
(3) Cash Value of Contract at maturity, (1) X (2) . . .$50,000
(4) Assumed applicable monthly payment rate per
$1,000 from annuity rate table. . . . . . . . . . .$5.44
(5) Amount of first payment from Balanced Division,
(3) X (4) divided by $1,000 . . . . . . . . . . . .$272.00
(6) Assumed Value of Annuity Unit in
Balanced Division at maturity . . . . . . . . . . .$1.500000
(7) Number of Annuity Units credited in
Balanced Division, (5) divided by (6) . . . . . . .181.33
The $50,000 value at maturity provides a first payment from the Balanced
Division of $272.00, and payments thereafter of the varying dollar value of
181.33 Annuity Units. The amount of subsequent payments from the Balanced
Division is determined by multiplying 181.33 units by the value of an Annuity
Unit in the Balanced Division on the applicable valuation date. For example,
if that unit value is $1.501000, the monthly payment from the Division will be
181.33 multiplied by $1.501000, or $272.18.
However, the value of the Annuity Unit depends entirely on the
investment performance of the Division. Thus in the example above, if the net
investment rate for the following month was less than the Assumed Investment
Rate of 3-1/2%, the Annuity Unit would decline in value. If the Annuity Unit
value declined to $1.499000 the succeeding monthly payment would then be 181.33
X $1.499000, or $271.81.
B-3
<PAGE> 27
For the sake of simplicity the foregoing example assumes that all of
the Annuity Units are in the Balanced Division. If there are Annuity Units in
two or more Divisions, the annuity payment from each Division is calculated
separately, in the manner illustrated, and the total monthly payment is the sum
of the payments from the Divisions.
VALUATION OF ASSETS OF THE ACCOUNT
The value of Portfolio shares of the Fund held in each Division of the
Account at the time of each valuation is the redemption value of such shares at
such time. If the right to redeem shares of the Fund has been suspended, or
payment of redemption value has been postponed, for the sole purpose of
computing annuity payments the shares held in the Account (and Annuity Units)
may be valued at fair value as determined in good faith by the Board of
Trustees of Northwestern Mutual Life.
TRANSFERABILITY RESTRICTIONS
Ownership of a Contract purchased as a tax-deferred annuity pursuant
to Section 403(b) of the Internal Revenue Code of 1954, as amended (the "Code")
cannot be changed and the Contract cannot be sold, assigned or pledged as
collateral for a loan, or for any other purpose, to any person other than
Northwestern Mutual Life. Similar restrictions are applicable to Contracts
purchased in exchange transactions by persons who have received fixed dollar
policies as distributions of termination benefits from tax-qualified corporate
or HR-10 plans or trusts. Ownership of a Contract purchased as an individual
retirement annuity pursuant to Section 408(b) of the Code cannot be transferred
except in limited circumstances involving divorce.
EXPERTS
The financial statements of the Account as of December 31, 1994 and
for each of the two years in the period ended December 31, 1994 and of
Northwestern Mutual Life as of December 31, 1994 and 1993 and for each of the
three years in the period ended December 31, 1994 included in this Statement of
Additional Information have been so included in reliance on the reports of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting. Price Waterhouse LLP provides
audit services for the Account. The address of Price Waterhouse LLP is 100
East Wisconsin Avenue, Suite 1500, Milwaukee, Wisconsin 53202.
B-4
<PAGE> 28
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
ASSETS
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Index 500 Stock
173,845 shares (cost $205,188)..................................... $ 261,636
Growth Stock
22,026 shares (cost $22,860)....................................... 24,998
Growth and Income Stock
49,881 shares (cost $51,450)....................................... 57,063
Aggressive Growth Stock
145,804 shares (cost $253,708)..................................... 335,057
International Equity
193,027 shares (cost $231,301)..................................... 247,268
Select Bond
116,565 shares (cost $133,975)..................................... 134,398
High Yield Bond
13,083 shares (cost $13,355)....................................... 13,645
Money Market
77,730 shares (cost $77,730)....................................... 77,730
Balanced
1,001,020 shares (cost $1,312,752)................................. 1,455,483 $ 2,607,278
----------
Due from Sale of Fund Shares............................................................ 4,514
Due from Northwestern Mutual Life Insurance Company..................................... 214
----------
Total Assets.................................................................... $ 2,612,006
==========
LIABILITIES
Due to Participants..................................................................... $ 1,401
Due to Northwestern Mutual Life Insurance Company....................................... 4,514
Due on Purchase of Fund Shares.......................................................... 214
----------
Total Liabilities............................................................... $ 6,129
----------
EQUITY (Note 7)
Contracts Issued Prior to December 17, 1981............................................. $ 80,061
Contracts Issued On or After December 17, 1981 and Before March 31, 1995................ 2,492,331
Contracts Issued On or After March 31, 1995:
Front Load Version................................................................... 8,642
Back Load Version.................................................................... 24,843
----------
Total Equity.................................................................... 2,605,877
----------
Total Liabilities and Equity.................................................... $ 2,612,006
==========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared From Unaudited Figures)
B-5
<PAGE> 29
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
INDEX 500 GROWTH STOCK
COMBINED STOCK DIVISION DIVISION #
--------------------------- --------------------------- ---------------------------
EIGHT MONTHS
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
------------ ------------ ------------ ------------ ------------ ------------
1995 1994 1995 1994 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income................ $ 59,210 $ 219,223 $ 2,545 $ 9,672 $ 188 $ 165
Annuity Rate and Expense
Guarantees................... 14,638 26,109 1,362 2,324 114 52
---------- ---------- -------- -------- ------- -------
Net Investment Income (Loss)... 44,572 193,114 1,183 7,348 74 113
---------- ---------- -------- -------- ------- -------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized Gain on Investments... 1,864 17,722 221 534 1 --
Unrealized Appreciation
(Depreciation) of Investments
During the Year.............. 256,626 (226,913) 39,099 (7,574) 2,278 (138)
---------- ---------- -------- -------- ------- -------
Net Gain (Loss) on
Investments.................. 258,490 (209,191) 39,320 (7,040) 2,279 (138)
---------- ---------- -------- -------- ------- -------
Increase (Decrease) in Equity
Derived from Investment
Activity..................... 303,062 (16,077) 40,503 308 2,353 (25)
---------- ---------- -------- -------- ------- -------
EQUITY TRANSACTIONS
Contract Owners' Net
Payments..................... 167,849 389,478 18,095 37,543 5,641 4,757
Annuity Payments............... (3,624) (4,241) (236) (476) (8) (1)
Surrenders and Other (net)..... (95,600) (121,978) (7,229) (8,669) (191) (85)
Transfers from Other
Divisions.................... 115,860 254,710 12,742 16,836 5,621 7,898
Transfers to Other Divisions... (115,860) (254,710) (7,576) (26,080) (804) (187)
---------- ---------- -------- -------- ------- -------
Increase (Decrease) in Equity
Derived from Equity
Transactions................... 68,612 263,259 15,796 19,154 10,259 12,382
---------- ---------- -------- -------- ------- -------
Net Increase (Decrease)
in Equity...................... 371,674 247,182 56,299 19,462 12,612 12,357
Equity
Beginning of Year.............. 2,234,203 1,987,021 205,214 185,752 12,357 0
---------- ---------- -------- -------- ------- -------
End of Year.................... $2,605,877 $2,234,203 $261,513 $205,214 $ 24,969 $ 12,357
========== ========== ======== ======== ======= =======
</TABLE>
# The initial investments in the Growth Stock and Growth and Income Stock
Divisions were made on May 3, 1994.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
B-6
<PAGE> 30
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH & INCOME AGGRESSIVE GROWTH INTERNATIONAL EQUITY
STOCK DIVISION # STOCK DIVISION DIVISION SELECT BOND DIVISION
- ----------------------------- ----------------------------- ----------------------------- -----------------------------
EIGHT MONTHS
PERIOD ENDED ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 418 $ 513 $ 1,785 $ 1,607 $ 1,696 $ 6,775 $ 3,550 $ 16,145
269 132 1,763 2,503 1,449 2,224 754 1,513
------- ------- ------- -------- -------- -------- -------- --------
149 381 22 (896) 247 4,551 2,796 14,632
------- ------- ------- -------- -------- -------- -------- --------
10 -- 662 297 1,981 96 216 1,449
6,434 (820) 40,969 10,133 15,366 (9,711) 10,243 (21,331)
------- ------- ------- -------- -------- -------- -------- --------
6,444 (820) 41,631 10,430 17,347 (9,615) 10,459 (19,882)
------- ------- ------- -------- -------- -------- -------- --------
6,593 (439) 41,653 9,534 17,594 (5,064) 13,255 (5,250)
------- ------- ------- -------- -------- -------- -------- --------
10,703 12,083 30,652 61,047 20,970 76,394 8,563 25,069
(16) (5) (90) (114) (83) (120) (152) (382)
(561) (579) (7,917) (6,864) (8,103) (5,559) (5,644) (9,838)
10,798 21,072 29,037 51,753 12,568 86,072 5,652 7,671
(2,009) (534) (9,587) (15,127) (27,655) (14,282) (5,508) (30,044)
------- ------- ------- -------- -------- -------- -------- --------
18,902 32,037 42,095 90,695 (2,303) 142,505 2,911 (7,524)
------- ------- ------- -------- -------- -------- -------- --------
25,495 31,598 83,748 100,229 15,291 137,441 16,166 (12,774)
31,598 0 251,206 150,977 231,900 94,459 118,116 130,890
------- ------- ------- -------- -------- -------- -------- --------
$ 57,093 $ 31,598 $334,954 $251,206 $247,191 $231,900 $134,282 $118,116
======= ======= ======= ======== ======== ======== ======== ========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
B-7
<PAGE> 31
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
HIGH YIELD BOND
DIVISION# MONEY MARKET DIVISION BALANCED DIVISION
----------------------- ----------------------- -------------------------
PERIOD EIGHT MONTHS PERIOD PERIOD
ENDED ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
-------- ------------ -------- ------------ ---------- ------------
1995 1994 1995 1994 1995 1994
-------- ------------ -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income........................ $ 494 $ 408 $ 2,075 2,486 $ 46,459 $ 181,452
Annuity Rate and Expense Guarantees.... 63 35 440 750 8,424 16,576
------- ------ -------- -------- ---------- ----------
Net Investment Income.................. 431 373 1,635 1,736 38,035 164,876
------- ------ -------- -------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized Gain (Loss) on Investments.... 2 14 -- -- (1,229) 15,332
Unrealized Appreciation (Depreciation)
of Investments During the Year....... 624 (333) -- -- 141,613 (197,139)
------- ------ -------- -------- ---------- ----------
Net Gain (Loss) on Investments......... 626 (319) 0 0 140,384 (181,807)
------- ------ -------- -------- ---------- ----------
Increase (Decrease) in Equity Derived
from Investment Activity............. 1,057 54 1,635 1,736 178,419 (16,931)
------- ------ -------- -------- ---------- ----------
EQUITY TRANSACTIONS
Contract Owners' Net Payments.......... 3,158 3,137 15,914 35,360 54,152 134,088
Annuity Payments....................... (6) (2) (29) (54) (3,004) (3,087)
Surrenders and Other (net)............. (162) (245) (9,884) (11,859) (55,909) (78,280)
Transfers from Other Divisions......... 3,447 5,400 23,199 37,145 12,796 20,863
Transfers to Other Divisions........... (1,327) (882) (21,822) (46,086) (39,572) (121,488)
------- ------ -------- -------- ---------- ----------
Increase (Decrease) in Equity
Derived from Equity Transactions....... 5,110 7,408 7,378 14,506 (31,537) (47,904)
------- ------ -------- -------- ---------- ----------
Net Increase (Decrease) in Equity........ 6,167 7,462 9,013 16,242 146,882 (64,835)
Equity
Beginning of Year...................... 7,462 0 68,690 52,448 1,307,660 1,372,495
------- ------ -------- -------- ---------- ----------
End of Year............................ $ 13,629 $7,462 $ 77,703 $ 68,690 $1,454,542 $1,307,660
======= ====== ======== ======== ========== ==========
</TABLE>
# The initial investment in the High Yield Bond Division was made on May 3,
1994.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
B-8
<PAGE> 32
NML VARIABLE ANNUITY ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
Note 1 -- NML Variable Annuity Account B (the "Account") is registered as a unit
investment trust under the Investment Company Act of 1940 and is a segregated
asset account of The Northwestern Mutual Life Insurance Company ("Northwestern
Mutual Life") used to fund variable annuity contracts for tax-deferred
annuities, individual retirement annuities and non-qualified plans. Principal
accounting policies are summarized below.
Note 2 -- All assets of each Division of the Account are invested in shares of
the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the
"Fund"). The shares are valued at the Fund's offering and redemption price per
share.
The Fund is an open-end investment company registered under the Investment
Company Act of 1940.
Note 3 -- Annuity reserves are based on published annuity tables with age
adjustment and benefit payments which reflect actual investment experience. For
variable payment plans issued prior to January 1, 1974, annuity reserves are
based on the 1955 American Annuity Table with assumed interest rates of 3%,
3 1/2% or 5%. For variable payment plans issued on or after January 1, 1974 and
before January 1, 1985, annuity reserves are based on the 1971 Individual
Annuity Table with assumed interest rates of 3 1/2% or 5%. For variable payment
plans issued on or after January 1, 1985, annuity reserves are based on the 1983
Table a with assumed interest rates of 3 1/2% or 5%.
Note 4 -- Dividend income from the Fund is recorded on the record date of the
dividends. Transactions in Fund shares are accounted for on the trade date. The
basis for determining cost on sale of Fund shares is identified cost. Purchases
and sales of Fund shares for the period ended June 30, 1995 by each Division are
shown below:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ -----------
<S> <C> <C>
Index 500 Stock
Division.............. $ 19,502,770 $ 2,470,889
Growth Stock Division... 10,360,006 8,658
Growth & Income Stock
Division.............. 19,188,309 132,860
Aggressive Growth
Division.............. 43,574,848 1,497,660
International Equity
Division.............. 10,753,958 12,807,165
Select Bond Division.... 9,245,877 3,688,199
High Yield Bond
Division.............. 5,966,738 419,040
Money Market Division... 20,745,182 11,808,145
Balanced Division....... 59,419,477 53,152,385
</TABLE>
Note 5 -- A deduction for annuity rate and expense guarantees is determined
daily and paid to Northwestern Mutual Life as compensation for assuming the risk
that annuity payments will continue for longer periods than anticipated because
the annuitants as a group live longer than expected, and the risk that the
charges made by Northwestern Mutual Life may be insufficient to cover the actual
costs incurred in connection with the contracts.
For contracts issued on or after March 31, 1995, for the Front Load Version and
the Back Load Version, the deduction for annuity rate and expense guarantees is
determined daily at annual rates of 4/10 of 1% and 1 1/4%, respectively, of the
net assets of each Division attributable to these contracts and is paid to
Northwestern Mutual Life. For these contracts, the rates may be increased or
decreased by the Board of Trustees of Northwestern Mutual Life not to exceed
3/4 of 1% and 1 1/2%, respectively.
Generally, for contracts issued on or after December 17, 1981, and before March
31, 1995, the deduction is at an annual rate of 1 1/4% of the net assets of each
Division attributable to these contracts. For these contracts, the rate may be
increased or decreased by the Board of Trustees of Northwestern Mutual Life not
to exceed a 1 1/2% annual rate.
Generally, for contracts issued prior to December 17, 1981, the deduction is at
an annual rate of 3/4 of 1% of the net assets of each Division attributable to
these contracts. For these contracts, the rate may be increased or decreased by
the Board of Trustees of Northwestern Mutual Life not to exceed a 1% annual
rate.
Note 6 -- Northwestern Mutual Life is taxed as a "life insurance company" under
the Internal Revenue Code and the operations of the Account form a part of and
are taxed with those of Northwestern Mutual Life. Currently, no charges for
taxes have been made by Northwestern Mutual Life to the Account. Accordingly, no
provision for any such liability has been made.
B-9
<PAGE> 33
NML VARIABLE ANNUITY ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(IN THOUSANDS)
Note 7 -- Equity Values by Division are shown below:
<TABLE>
<CAPTION>
CONTRACTS ISSUED:
CONTRACTS ISSUED: ON OR AFTER DECEMBER 17, 1981 AND
BEFORE DECEMBER 17, 1981 BEFORE MARCH 31, 1995
-------------------------------------- -----------------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- ---------------------------------------- ------------ ----------- ------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Index 500 Stock......................... $ 1.828241 13,695 $25,038 $ 1.786947 127,397 $ 227,652
Growth Stock............................ N/A N/A N/A 1.144767 20,284 23,220
Growth & Income Stock................... N/A N/A N/A 1.157353 46,096 53,350
Aggressive Growth Stock................. 2.353161 1,655 3,894 2.999410 140,541 323,238
International Equity.................... 1.327032 2,481 3,292 1.312743 182,136 239,099
Select Bond............................. 6.204162 1,443 8,950 5.798055 20,881 121,068
High Yield Bond......................... N/A N/A N/A 1.132473 10,927 12,375
Money Market............................ 2.261796 1,277 2,888 2.114122 33,425 70,666
Balanced................................ 4.206261 7,795 32,789 3.932070 352,995 1,388,003
------- ----------
Equity................................ 76,851 33,660
Annuity Reserves...................... 3,210 2,458,671
------- ----------
Total Equity.......................... $80,061 $2,492,331
======= ==========
</TABLE>
<TABLE>
<CAPTION>
CONTRACTS ISSUED: CONTRACTS ISSUED:
ON OR AFTER MARCH 31, 1995 ON OR AFTER MARCH 31, 1995
FRONT LOAD VERSION BACK LOAD VERSION
-------------------------------------- -----------------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- ---------------------------------------- ------------ ----------- ------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Index 500 Stock......................... $ 1.093889 881 $ 963 $ 1.751242 1,817 $ 3,247
Growth Stock............................ 1.059921 455 482 1.144767 848 970
Growth and Income Stock................. 1.071240 1,038 1,112 1.157353 1,778 2,058
Aggressive Growth Stock................. 1.085737 1,163 1,262 2.291539 1,948 4,480
International Equity.................... 1.080273 649 701 1.312743 1,722 2,261
Select Bond............................. 1.061944 374 397 5.742099 262 1,518
High Yield Bond......................... 1.063815 348 370 1.132473 612 693
Money Market............................ 1.013464 1,173 1,188 2.109535 1,213 2,564
Balanced................................ 1.072654 1,996 2,141 3.912731 1,774 6,976
------- ----------
Equity................................ 8,616 24,767
Annuity Reserves...................... 26 76
------- ----------
Total Equity.......................... $ 8,642 $ 24,843
======= ==========
</TABLE>
N/A -- Not Available. These divisions are currently not available to
contractholders on contracts issued before December 17, 1981.
B-10
<PAGE> 34
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
ASSETS
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Index 500 Stock
162,024 shares (cost $187,936)................................................. $ 205,285
Aggressive Growth Stock
125,738 shares (cost $210,969)................................................. 251,350
International Equity
194,773 shares (cost $231,373)................................................. 231,974
Select Bond
111,779 shares (cost $128,193)................................................. 118,374
Money Market
68,781 shares (cost $68,781)................................................... 68,781
Balanced
996,826 shares (cost $1,307,713)............................................... 1,308,833
Growth Stock
12,382 shares (cost $12,508)................................................... 12,369
Growth and Income Stock
32,078 shares (cost $32,384)................................................... 31,564
High Yield Bond
7,695 shares (cost $7,805)..................................................... 7,472 $ 2,236,002
----------
Due from Sale of Fund Shares....................................................................... 1,909
Due from Northwestern Mutual Life Insurance Company................................................ 45
----------
Total Assets................................................................................ $ 2,237,956
==========
LIABILITIES
Due to Participants................................................................................ $ 1,799
Due to Northwestern Mutual Life Insurance Company.................................................. 1,909
Due on Purchase of Fund Shares..................................................................... 45
----------
Total Liabilities........................................................................... 3,753
----------
EQUITY
Contracts Issued Prior to December 17, 1981:
Division:
Index 500 Stock: 14,230 Accumulation Units @ $1.529784................ $ 21,769
Annuity Reserves..................................... 1,412 23,181
----------
Aggressive Growth Stock: 1,474 Accumulation Units @ $2.042483................. 3,011
Annuity Reserves..................................... 42 3,053
----------
International Equity: 2,643 Accumulation Units @ $1.229716................. 3,250
Annuity Reserves..................................... 43 3,293
----------
Select Bond: 1,493 Accumulation Units @ $5.569001................. 8,313
Annuity Reserves..................................... 360 8,673
----------
Money Market: 1,458 Accumulation Units @ $2.206112................. 3,218
Annuity Reserves..................................... 37 3,255
----------
Balanced: 8,156 Accumulation Units @ $3.685079................. 30,054
Annuity Reserves..................................... 1,038 31,092
----------
Contracts Issued On or After December 17, 1981:
Division:
Index 500 Stock: 119,846 Accumulation Units @ $1.498956............... $ 179,644
Annuity Reserves..................................... 2,389 182,033
----------
Aggressive Growth Stock: 123,249 Accumulation Units @ $2.001269............... 246,655
Annuity Reserves..................................... 1,498 248,153
----------
International Equity: 186,097 Accumulation Units @ $1.219510............... 226,947
Annuity Reserves..................................... 1,660 228,607
----------
Select Bond: 20,643 Accumulation Units @ $5.217451................ 107,702
Annuity Reserves..................................... 1,741 109,443
----------
Money Market: 31,467 Accumulation Units @ $2.067227................ 65,049
Annuity Reserves..................................... 386 65,435
----------
Balanced: 363,391 Accumulation Units @ $3.453452............... 1,254,955
Annuity Reserves..................................... 21,613 1,276,568
----------
Growth Stock: 12,213 Accumulation Units @ $1.006136................ 12,288
Annuity Reserves..................................... 69 12,357
----------
Growth and Income Stock: 31,543 Accumulation Units @ $0.994105................ 31,357
Annuity Reserves..................................... 241 31,598
----------
High Yield Bond: 7,229 Accumulation Units @ $1.021705................. 7,386
Annuity Reserves..................................... 76 7,462
---------- ----------
Total Equity................................................................................ 2,234,203
----------
Total Liabilities and Equity................................................................ $ 2,237,956
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
B-11
<PAGE> 35
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL
APPRECIATION
STOCK INDEX 500
COMBINED DIVISION STOCK DIVISION
--------------------------- ------------ -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------- ------------ -----------------------
1994 1993 1993* 1994 1993
---------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income..................................... $ 219,223 $ 82,703 $ 2,838 $ 9,672 $ 1,094
Annuity Rate and Expense Guarantees................. 26,109 21,674 335 2,324 1,652
---------- ---------- -------- -------- --------
Net Investment Income (Loss)........................ 193,114 61,029 2,503 7,348 (558)
---------- ---------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized Gain (Loss) on Investments................. 17,722 9,157 (13) 534 141
Unrealized Appreciation (Depreciation) of
Investments During the Year....................... (226,913) 85,412 (1,770) (7,574) 12,793
---------- ---------- -------- -------- --------
Net Gain (Loss) on Investments...................... (209,191) 94,569 (1,783) (7,040) 12,934
---------- ---------- -------- -------- --------
Increase (Decrease) in Equity Derived from
Investment Activity............................... (16,077) 155,598 720 308 12,376
---------- ---------- -------- -------- --------
EQUITY TRANSACTIONS
Contract Owners' Net Payments....................... 389,478 351,661 3,993 37,543 40,608
Annuity Payments.................................... (4,241) (2,615) (87) (476) (266)
Surrenders and Other (net).......................... (121,978) (84,382) (1,986) (8,669) (4,762)
Transfers from Other Divisions...................... 254,710 147,730 1,559 16,836 18,562
Transfers to Other Divisions........................ (254,710) (147,730) (1,962) (26,080) (17,154)
Transfers from Merger............................... -- -- (90,171) -- 90,171
---------- ---------- -------- -------- --------
Increase (Decrease) in Equity Derived from Equity
Transactions........................................ 263,259 264,664 (88,654) 19,154 127,159
---------- ---------- -------- -------- --------
Net Increase (Decrease) in Equity..................... 247,182 420,262 (87,934) 19,462 139,535
Equity
Beginning of Year................................... 1,987,021 1,566,759 87,934 185,752 46,217
---------- ---------- -------- -------- --------
End of Year......................................... $2,234,203 $1,987,021 $ 0 $205,214 $185,752
========== ========== ======== ======== ========
</TABLE>
* Represents operations through April 30, 1993 (see note 5).
** The initial investment in the International Equity Division was made on April
30, 1993.
The Accompanying Notes are an Integral Part of the Financial Statements
B-12
<PAGE> 36
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL EQUITY BALANCED
STOCK DIVISION DIVISION** SELECT BOND DIVISION MONEY MARKET DIVISION DIVISION
--------------------- ----------------------------- --------------------- --------------------- ----------
EIGHT MONTHS YEAR ENDED
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED DECEMBER
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 31,
--------------------- ------------ ------------ --------------------- --------------------- ----------
1994 1993 1994 1993 1994 1993 1994 1993 1994
-------- -------- ------------ ------------ -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,607 $ 2,358 $ 6,775 $ 776 $ 16,145 $ 6,286 $ 2,486 $ 1,597 $ 181,452
2,503 1,384 2,224 318 1,513 1,348 750 689 16,576
-------- -------- -------- ------- -------- -------- -------- -------- ----------
(896) 974 4,551 458 14,632 4,938 1,736 908 164,876
-------- -------- -------- ------- -------- -------- -------- -------- ----------
297 996 96 -- 1,449 294 -- -- 15,332
10,133 18,522 (9,711) 10,312 (21,331) 3,690 -- -- (197,139)
-------- -------- -------- ------- -------- -------- -------- -------- ----------
10,430 19,518 (9,615) 10,312 (19,882) 3,984 -- -- (181,807)
-------- -------- -------- ------- -------- -------- -------- -------- ----------
9,534 20,492 (5,064) 10,770 (5,250) 8,922 1,736 908 (16,931)
-------- -------- -------- ------- -------- -------- -------- -------- ----------
61,047 37,426 76,394 30,342 25,069 38,454 35,360 29,078 134,088
(114) (79) (120) (14) (382) (224) (54) (57) (3,087)
(6,864) (4,177) (5,559) 193 (9,838) (4,412) (11,859) (6,526) (78,280)
51,753 24,001 86,072 53,717 7,671 13,402 37,145 12,487 20,863
(15,127) (16,476) (14,282) (549) (30,044) (13,023) (46,086) (42,645) (121,488)
-- -- -- -- -- -- -- -- --
-------- -------- -------- ------- -------- -------- -------- -------- ----------
90,695 40,695 142,505 83,689 (7,524) 34,197 14,506 (7,663) (47,904)
-------- -------- -------- ------- -------- -------- -------- -------- ----------
100,229 61,187 137,441 94,459 (12,774) 43,119 16,242 (6,755) (64,835)
150,977 89,790 94,459 -- 130,890 87,771 52,448 59,203 1,372,495
-------- -------- -------- ------- -------- -------- -------- -------- ----------
$251,206 $150,977 $231,900 $ 94,459 $118,116 $130,890 $ 68,690 $ 52,448 $1,307,660
======== ======== ======== ======= ======== ======== ======== ======== ==========
<CAPTION>
1993
----------
<S> <C>
$ 67,754
15,948
----------
51,806
----------
7,739
41,865
----------
49,604
----------
101,410
----------
171,760
(1,888)
(62,712)
24,002
(55,921)
--
----------
75,241
----------
176,651
1,195,844
----------
$1,372,495
==========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
B-13
<PAGE> 37
NML VARIABLE ANNUITY ACCOUNT B
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH AND HIGH YIELD
GROWTH STOCK INCOME STOCK BOND
DIVISION# DIVISION# DIVISION#
------------ ------------ ------------
EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1994
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend Income...................................... $ 165 $ 513 $ 408
Annuity Rate and Expense Guarantees.................. 52 132 35
------- ------- ------
Net Investment Income................................ 113 381 373
------- ------- ------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized Gain (Loss) on Investments.................. -- -- 14
Unrealized Depreciation of Investments
During the Year.................................... (138) (820) (333)
------- ------- ------
Net Loss on Investments.............................. (138) (820) (319)
------- ------- ------
Increase (Decrease) in Equity Derived from Investment
Activity........................................... (25) (439) 54
------- ------- ------
EQUITY TRANSACTIONS
Contract Owners' Net Payments........................ 4,757 12,083 3,137
Annuity Payments..................................... (1) (5) (2)
Surrenders and Other (net)........................... (85) (579) (245)
Transfers from Other Divisions....................... 7,898 21,072 5,400
Transfers to Other Divisions......................... (187) (534) (882)
Transfers from Merger................................ -- -- --
------- ------- ------
Increase in Equity Derived from Equity
Transactions......................................... 12,382 32,037 7,408
------- ------- ------
Net Increase in Equity................................. 12,357 31,598 7,462
Equity
Beginning of Year.................................... -- -- --
------- ------- ------
End of Year.......................................... $ 12,357 $ 31,598 $7,462
======= ======= ======
</TABLE>
#The initial investments in the Growth Stock, Growth and Income Stock, and High
Yield Bond Divisions were made on May 3, 1994.
The Accompanying Notes are an Integral Part of the Financial Statements
B-14
<PAGE> 38
NML VARIABLE ANNUITY ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
Note 1 -- NML Variable Annuity Account B (the "Account") is registered as a unit
investment trust under the Investment Company Act of 1940 and is a segregated
asset account of The Northwestern Mutual Life Insurance Company ("Northwestern
Mutual Life") used to fund variable annuity contracts for tax-deferred
annuities, individual retirement annuities and non-qualified plans. Principal
accounting policies are summarized below.
Note 2 -- All assets of each Division of the Account are invested in shares of
the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the
"Fund"). The shares are valued at the Fund's offering and redemption price per
share.
The Fund is an open-end investment company registered under the Investment
Company Act of 1940.
Note 3 -- Annuity reserves are based on published annuity tables with age
adjustment and benefit payments which reflect actual investment experience. For
variable payment plans issued prior to January 1, 1974, annuity reserves are
based on the 1955 American Annuity Table with assumed interest rates of 3%,
3 1/2% or 5%. For variable payment plans issued on or after January 1, 1974 and
before January 1, 1985, annuity reserves are based on the 1971 Individual
Annuity Table with assumed interest rates of 3 1/2% or 5%. For variable payment
plans issued on or after January 1, 1985, annuity reserves are based on the 1983
Table a with assumed interest rates of 3 1/2% or 5%.
Note 4 -- Dividend income from the Fund is recorded on the record date of the
dividends. Transactions in Fund shares are accounted for on the trade date. The
basis for determining cost on sale of Fund shares is identified cost. Purchases
and sales of Fund shares for the year ended December 31, 1994 by each Division
are shown below:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ -----------
<S> <C> <C>
Division:
Index 500 Stock........ $ 34,522,998 $ 8,093,785
Aggressive Growth
Stock................ 90,670,578 755,487
International Equity... 147,639,155 538,574
Select Bond............ 26,050,454 18,832,067
Money Market........... 44,048,451 27,785,925
Balanced............... 206,651,719 90,245,163
Growth Stock........... 12,520,418 12,925
Growth and Income
Stock................ 32,636,141 252,130
High Yield Bond........ 8,401,679 610,349
</TABLE>
Note 5 -- On April 30, 1993, Northwestern Mutual Capital Appreciation Stock Fund
was merged into the Northwestern Mutual Index 500 Stock Fund in a tax-free
exchange of fund shares. 63,692,924 shares of Capital Appreciation Stock
Division were exchanged for 66,806,801 shares of Index 500 Stock Division. The
shares exchanged were valued at $90,211,524 for each Division.
Note 6 -- A deduction for annuity rate and expense guarantees is determined
daily and paid to Northwestern Mutual Life as compensation for assuming the risk
that annuity payments will continue for longer periods than anticipated because
the annuitants as a group live longer than expected, and the risk that the
charges made by Northwestern Mutual Life may be insufficient to cover the actual
costs incurred in connection with the contracts.
Generally, for contracts issued prior to December 17, 1981, the deduction is at
an annual rate of 3/4 of 1% of the net assets of each Division attributable to
these contracts. For these contracts, the rate may be increased or decreased by
the Board of Trustees of Northwestern Mutual Life not to exceed a 1% annual
rate.
Generally, for contracts issued on or after December 17, 1981, the deduction is
at an annual rate of 1 1/4% of the net assets of each Division attributable to
these contracts. For these contracts, the rate may be increased or decreased by
the Board of Trustees of Northwestern Mutual Life not to exceed a 1 1/2% annual
rate.
Note 7 -- Northwestern Mutual Life is taxed as a "life insurance company" under
the Internal Revenue Code and the operations of the Account form a part of and
are taxed with those of Northwestern Mutual Life. Currently, no charges for
taxes have been made by Northwestern Mutual Life to the Account. Accordingly, no
provision for any such liability has been made.
B-15
<PAGE> 39
[PRICE WATERHOUSE LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To The Northwestern Mutual Life Insurance Company and
Contract Owners of NML Variable Annuity Account B
In our opinion, the accompanying combined statement of assets and liabilities
and the related combined and separate statements of operations and changes in
equity present fairly, in all material respects, the financial position of NML
Variable Annuity Account B and the Index 500 Stock Division, Aggressive Growth
Stock Division, International Equity Division, Select Bond Division, Money
Market Division, Balanced Division, Growth Stock Division, Growth and Income
Stock Division and the High Yield Bond Division thereof at December 31, 1994,
the results of their operations and the changes in their equity for each of the
two years in the period then ended for NML Variable Annuity Account B and the
Index 500 Stock Division, Aggressive Growth Stock Division, Select Bond
Division, Money Market Division and Balanced Division, for the year ended
December 31, 1994 and for the period from April 30, 1993 (commencement of
operations) through December 31, 1993 for the International Equity Division, for
the period from May 3, 1994 (commencement of operations) through December 31,
1994 for the Growth Stock Division, Growth and Income Stock Division, and High
Yield Bond Division, and for the period ended April 30, 1993 (date of merger
with the Index 500 Stock Division) for the Capital Appreciation Stock Division,
all in conformity with generally accepted accounting principles. These financial
statements are the responsibility of The Northwestern Mutual Life Insurance
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
direct confirmation of the number of shares owned at December 31, 1994 with
Northwestern Mutual Series Fund, Inc., provide a reasonable basis for the
opinion expressed above.
[sig.]
Milwaukee, Wisconsin
January 25, 1995
B-16
<PAGE> 40
NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
The following financial statements of Northwestern Mutual should be considered
only as bearing upon the ability of Northwestern Mutual Life to meet its
obligations under the Policies.
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
----------------------
(In millions)
<S> <C> <C>
ASSETS
BONDS
United States Government $ 3,501 $ 2,372
Industrial and other 19,232 18,077
----------------------
22,733 20,449
----------------------
STOCKS
Common 2,192 2,091
Unconsolidated subsidiaries 504 416
Preferred 511 459
----------------------
3,207 2,966
----------------------
MORTGAGE LOANS 7,099 6,505
REAL ESTATE
Investment 1,072 1,068
Home office 141 148
----------------------
1,213 1,216
----------------------
LOANS ON POLICIES 6,144 5,846
OTHER INVESTMENTS 1,301 1,257
CASH AND TEMPORARY INVESTMENTS 803 783
DUE AND ACCRUED INVESTMENT INCOME 650 690
----------------------
Total invested assets 43,150 39,712
----------------------
SEPARATE ACCOUNT BUSINESS 3,806 3,483
OTHER ASSETS 1,156 866
----------------------
Total Assets $48,112 $ 44,061
======================
LIABILITIES AND RESERVES
LIABILITY FOR POLICY BENEFITS
Insurance and annuity reserves $36,124 $ 32,861
Policy benefits left for future payments 866 829
Premium deposits 419 403
Policy benefits in process of payment 138 108
Policyowner dividends payable 1,950 1,785
----------------------
39,497 35,986
----------------------
OTHER LIABILITIES
Interest maintenance reserve 11 279
Income taxes 561 411
Miscellaneous 822 645
----------------------
1,394 1,335
----------------------
SEPARATE ACCOUNT BUSINESS 3,806 3,483
----------------------
ASSET VALUATION RESERVE 1,190 1,227
----------------------
Total liabilities and asset valuation reserve 45,887 42,031
----------------------
GENERAL CONTINGENCY RESERVE 2,225 2,030
----------------------
Total Liabilities and Contingency Reserves $48,112 $ 44,061
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
B-17
<PAGE> 41
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1994 1993 1992
----------------------------
(In millions)
<S> <C> <C> <C>
INCOME
PREMIUMS $ 5,743 $ 5,295 $ 4,889
NET INVESTMENT INCOME 3,106 2,913 2,753
POLICY BENEFITS LEFT WITH COMPANY
AND OTHER INCOME 636 570 523
----------------------------
Total income 9,485 8,778 8,165
----------------------------
DISPOSITION OF INCOME
COSTS
Agents' compensation 492 487 443
Other insurance costs 334 361 303
Premium and other taxes or assessments 120 116 112
----------------------------
946 964 858
----------------------------
BENEFITS TO POLICYOWNERS AND BENEFICIARIES
Death benefits 609 526 459
Matured endowments 54 44 49
Annuity benefits 94 85 75
Disability benefits 151 126 111
Surrender benefits 904 837 762
Payments from policy benefits
left with Company 568 498 482
Net transfers to separate accounts 344 302 258
Net additions to policy reserves 3,313 3,078 2,870
----------------------------
6,037 5,496 5,066
----------------------------
Total disposition of income 6,983 6,460 5,924
----------------------------
SAVINGS FROM OPERATIONS BEFORE
INCOME TAXES AND DIVIDENDS 2,502 2,318 2,241
INCOME TAX EXPENSE 281 208 242
----------------------------
SAVINGS FROM OPERATIONS BEFORE DIVIDENDS 2,221 2,110 1,999
POLICYOWNER DIVIDENDS 1,942 1,780 1,755
----------------------------
NET SAVINGS FROM OPERATIONS 279 330 244
NET REALIZED CAPITAL GAINS, LESS
TAX EXPENSE OF $85, $82, AND
$64 RESPECTIVELY 119 180 105
----------------------------
CONTRIBUTION TO GENERAL
CONTINGENCY RESERVE
FROM OPERATIONS $ 398 $ 510 $ 349
============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
B-18
<PAGE> 42
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF GENERAL CONTINGENCY RESERVE
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1994 1993 1992
------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C>
BEGINNING OF YEAR BALANCE $ 2,030 $ 1,850 $ 1,655
Contribution to general contingency
reserve from operations 398 510 349
Net unrealized capital losses (242) (89) (110)
Change in asset valuation reserve 37 (157) (119)
Transfer from voluntary investment reserve -- -- 106
Other -- net 2 (84) (31)
--------------------------------------
END OF YEAR BALANCE $ 2,225 $ 2,030 $ 1,850
======================================
</TABLE>
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1994 1993 1992
-----------------------------------------
(IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Insurance premiums, annuities
and other considerations $ 6,299 $ 5,777 $ 5,342
Net investment income received 3,013 2,813 2,666
Net loans on policies (297) (143) (159)
Benefits paid to policyholders and
beneficiaries (2,357) (2,116) (1,927)
Net transfers to separate accounts (344) (302) (258)
Policyowner dividends paid (1,777) (1,759) (1,596)
Expenses and taxes (1,033) (1,135) (1,071)
Other -- net 89 (81) 45
--------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,593 3,054 3,042
CASH FLOWS FROM INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD OR MATURED
Bonds 27,096 20,221 13,884
Stocks 1,469 1,122 1,027
Mortgage loans 512 394 300
Real estate 164 43 71
Other invested assets 213 132 24
Capital gain (tax) benefit 28 (124) (82)
--------------------------------------
29,482 21,788 15,224
COST OF INVESTMENTS ACQUIRED
Bonds 29,674 22,393 16,446
Stocks 1,606 1,288 755
Mortgage loans 1,356 970 510
Real estate 6 46 63
Other invested assets 413 152 238
--------------------------------------
33,055 24,849 18,012
NET CASH USED IN INVESTING ACTIVITIES (3,573) (3,061) (2,788)
--------------------------------------
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY INVESTMENTS 20 (7) 254
CASH AND TEMPORARY INVESTMENTS,
BEGINNING OF YEAR 783 790 536
--------------------------------------
CASH AND TEMPORARY INVESTMENTS, END OF YEAR $ 803 $ 783 $ 790
======================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
B-19
<PAGE> 43
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993, AND 1992
NOTE 1 - PRINCIPAL ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of The
Northwestern Mutual Life Insurance Company (the "Company") and its wholly-owned
life insurance subsidiary. The consolidated financial statements have been
prepared using accounting policies prescribed or permitted by the Insurance
Departments of the states in which the Company and its subsidiary are
domiciled. These policies are considered generally accepted accounting
principles for mutual life insurance companies.
In April 1993, the Financial Accounting Standards Board issued Interpretation
No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual
Life Insurance and Other Enterprises", which establishes a different definition
of generally accepted accounting principles for mutual life insurance
companies. Under the Interpretation, financial statements of mutual life
insurance companies for periods beginning after December 15, 1995 which are
prepared on the basis of statutory accounting will no longer be characterized
as in conformity with generally accepted accounting principles.
Management of the Company has not yet determined the effect on its December 31,
1994 financial statements of applying the Interpretation. The Company is
considering application of the accounting changes required to present its
financial statements in conformity with generally accepted accounting
principles. If the Company chooses to adopt the required accounting changes,
the effect of the changes would be reported retroactively through restatement
of all previously issued financial statements beginning with the earliest year
presented. The cumulative effect of adopting these changes would be included
in the earliest year presented.
INVESTMENTS
The Company's investments are valued on the following bases:
Bonds -Amortized cost using the interest method,
except for loan-backed and structured securities
which are amortized to estimated prepayment
dates using the prospective method
Common Stocks -Market value
Preferred Stocks -Cost
Unconsolidated
Subsidiaries -Equity in subsidiaries' net assets
Mortgage Loans -Amortized cost
Investment Real Estate -Lower of cost, less depreciation and
encumbrances, or estimated net realizable value
Home Office Real Estate -Cost, less depreciation
Loans on Policies -Cost
Other Investments-
Joint Ventures -Equity in ventures' net assets
B-20
<PAGE> 44
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
SEPARATE ACCOUNT BUSINESS
This business consists of annuities funded by specific assets held in separate
accounts. The assets in these accounts are carried at market value. The
policy values reflect the investment performance of the respective accounts.
INSURANCE, ANNUITY AND DISABILITY INCOME RESERVES
Life insurance reserves on substantially all policies issued since 1978 are
based on the Commissioner's Reserve Valuation Method with interest rates
ranging from 3-1/2% to 5-1/2%. Other policy reserves are based primarily on the
net level premium method employing various mortality tables at interest rates
ranging from 2% to 4-1/2%.
Deferred annuity reserves on policies issued since 1985 are valued using the
Commissioner's Annuity Reserve Valuation Method with interest rates ranging
from 3-1/2% to 6-1/4%. Other deferred annuity reserves are based on the
contract value. Immediate annuity reserves are present values of expected
benefit payments at interest rates ranging from 3-1/2% to 8-1/4%.
Active life reserves for disability income ("DI") policies issued since 1987
are primarily based on the two-year preliminary term method using a 4% interest
rate and the 1985 Commissioner's Individual Disability Table A ("CIDA") for
morbidity. Previous DI business used the net level premium method, using a 3%
or 4% interest rate and the 1964 Commissioner's Disability Table for morbidity.
Disabled life reserves for DI policies are based on the present values of
expected benefit payments using primarily the 1985 CIDA (modified for Company
experience in first two years of disability) with interest rates ranging from
3% to 5-1/2%.
INTEREST MAINTENANCE RESERVE
The Company is required to maintain an interest maintenance reserve ("IMR").
The IMR establishes a reserve for realized gains and losses, net of tax,
resulting from changes in interest rates on short and long-term fixed income
investments. Net realized gains and losses charged to the IMR are amortized
into investment income over the approximate remaining life of the investment
sold.
ASSET VALUATION RESERVE
The Company is also required to maintain an asset valuation reserve ("AVR").
The AVR establishes a reserve for certain invested assets held by the Company.
In the aggregate, AVR was 84% and 91% of the allowable maximum at December 31,
1994 and 1993, respectively.
PREMIUM INCOME
Life insurance premiums are recognized as income at the beginning of each
policy year.
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance enterprises or reinsurers under excess coverage
and co-insurance contracts.
B-21
<PAGE> 45
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
As of December 31, 1994 and 1993, total life insurance inforce approximated
$347 billion and $313 billion, respectively, of which approximately $104
billion and $96 billion, respectively, comprised principally of term insurance,
had been ceded to various reinsurers. The Company retains a maximum of $10
million of coverage per individual life.
OPERATING COSTS
Operating costs, including costs of acquiring new policies, are charged to
operations as incurred.
INCOME TAXES
Provisions for income taxes are based on current income tax returns without
recognition of deferred taxes due to timing differences. The portion of the
federal income tax based on mutual life insurance company equity is reflected
as a component of income tax expense, including related adjustments for prior
years.
The Company files a consolidated life-nonlife federal income tax return.
Federal income tax returns for years through 1988 are closed as to further
assessment of taxes. Adequate provision has been made in the financial
statements for any additional taxes which may become due with respect to the
open years.
The Company's effective tax rate on savings from operations before income tax
expense (after dividends) in 1994 was approximately 50.2%. Two significant
factors cause the Company's effective rate to exceed the federal corporate rate
of 35%. First, the Company pays "surplus tax", a tax that is assessed only on
mutual life insurance companies, which is an amount that proports to equate a
portion of policyholder dividends with nondeductible dividends paid to
shareholders of stock companies. Second, the Company must capitalize and
amortize (as opposed to immediately deducting) an amount deemed to represent
the cost of acquiring new business ("DAC tax").
POLICYOWNER DIVIDENDS
Dividends payable in the following year are charged to current operations.
NOTE 2 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summarizes the bases used by the Company in estimating its fair
value disclosures for financial instruments:
BONDS AND PREFERRED STOCKS - Fair values are based upon quoted market
prices, if available. For securities not actively traded, fair values are
estimated using independent pricing services or internally developed
pricing models.
MORTGAGE LOANS - Fair values are derived by discounting the future
estimated cash flows using current interest rates for debt securities with
similar credit risk and maturities, or utilizing net realizable values.
LOANS ON POLICIES - The carrying amount reported in the statement of
financial position approximates fair value since loans on policies reduce
the amount payable at death or at surrender of the contract.
B-22
<PAGE> 46
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
CASH AND TEMPORARY INVESTMENTS AND DUE AND ACCRUED INVESTMENT INCOME - The
carrying amounts reported in the statement of financial position
approximate fair value.
ANNUITY RESERVES (without mortality/morbidity features) - Fair values are
derived by discounting the future estimated cash flows using current
interest rates with similar maturities.
OTHER DEPOSIT LIABILITIES - The carrying amounts reported in the statement
of financial position approximate fair value.
NOTE 3 - INVESTMENTS
NET INVESTMENT INCOME
The Company's net investment income for the years ended December 31, 1994, 1993
and 1992 consists of the following:
<TABLE>
<CAPTION>
(IN MILLIONS)
1994 1993 1992
----------------------------
<S> <C> <C> <C>
Interest, dividends, rents, equity
in unconsolidated subsidiaries'
earnings and joint venture income $ 3,395 $ 3,215 $ 3,039
Less: Investment expenses and
depreciation (289) (302) (286)
----------------------------
Net Investment Income $ 3,106 $ 2,913 $ 2,753
============================
</TABLE>
REALIZED GAINS AND LOSSES
During 1994, 1993 and 1992, the Company, in its normal course of business, sold
certain invested assets realizing gains and losses before transfer to the IMR
and capital gains tax from such sales as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993 DECEMBER 31, 1992
------------------------------- --------------------------------- ------------------------------
NET NET NET
REALIZED REALIZED REALIZED
REALIZED REALIZED GAINS REALIZED REALIZED GAINS REALIZED REALIZED GAINS
GAINS LOSSES (LOSSES) GAINS LOSSES (LOSSES) GAINS LOSSES (LOSSES)
----------------------------------------------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bonds $171 $(535) $(364) $438 $(133) $305 $263 $ (90) $173
Stocks 499 (291) 208 297 (36) 261 266 (53) 213
Mortgage loans -- (37) (37) 1 (12) (11) -- (3) (3)
Real estate 16 (7) 9 13 (2) 11 15 (11) 4
Other invested assets 110 (98) 12 100 (54) 46 87 (131) (44)
----------------------------------------------------------------------------------------------------
$796 $(968) $(172) $849 $(237) $612 $631 $(288) $343
====================================================================================================
</TABLE>
B-23
<PAGE> 47
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
DEBT SECURITIES
Debt securities consist of all bonds, fixed maturity preferred stocks and short
term fixed income investments.
The statement values, which principally represent amortized cost, and estimated
market values of the Company's debt securities at December 31, 1994 and 1993
are as follows:
<TABLE>
<CAPTION>
December 31, 1994 RECONCILIATION TO ESTIMATED MARKET VALUE
- -------------------------------------------------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
US Government and
political obligations $ 3,334 $ 61 $ (41) $ 3,354
Mortgage-backed
securities 5,652 53 (321) 5,384
Corporate and other
debt securities 14,488 203 (515) 14,176
-----------------------------------------------------
23,474 317 (877) 22,914
Preferred stocks 71 1 (7) 65
-----------------------------------------------------
Total $23,545 $ 318 $ (884) $22,979
=====================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993 RECONCILIATION TO ESTIMATED MARKET VALUE
- -------------------------------------------------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
US Government and
political obligations $ 3,005 $ 230 $ (8) $ 3,227
Mortgage-backed
securities 4,894 212 (22) 5,084
Corporate and other
debt securities 13,260 1,076 (46) 14,290
-----------------------------------------------------
21,159 1,518 (76) 22,601
Preferred stocks 91 3 (2) 92
-----------------------------------------------------
Total $21,250 $ 1,521 $ (78) $ 22,693
=====================================================
</TABLE>
The amortized cost and estimated market value of debt securities at December
31, 1994 and 1993, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
B-24
<PAGE> 48
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
- --------------------------------------------------------------------------------
ESTIMATED ESTIMATED
STATEMENT MARKET STATEMENT MARKET
VALUE VALUE VALUE VALUE
- --------------------------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Due in one year or less $ 1,102 $ 1,100 $ 976 $ 981
Due after one year
through five years 4,491 4,444 3,568 3,804
Due after five years
through ten years 5,787 5,711 5,714 6,172
Due after ten years 6,513 6,340 6,098 6,652
------------------------------------------------------
17,893 17,595 16,356 17,609
Mortgage-backed
securities 5,652 5,384 4,894 5,084
------------------------------------------------------
$23,545 $22,979 $21,250 $22,693
======================================================
</TABLE>
The fair value of perpetual preferred stocks as of December 31, 1994 and 1993
approximates $440 million and $415 million, respectively, compared to the
statement values of $440 million and $368 million, respectively.
MORTGAGE LOANS
As of December 31, 1994 and 1993, the mortgage loan portfolio was distributed
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
- -------------------------------------------------------------------------------
STATEMENT % OF STATEMENT % OF
GEOGRAPHIC LOCATION VALUE TOTAL VALUE TOTAL
- -------------------------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Middle Atlantic $ 738 10.4% $ 518 8.0%
South Atlantic 1,943 27.4 1,492 22.9
North Central 1,289 18.2 1,341 20.6
South Central 921 13.0 1,014 15.6
Pacific Northwest 355 5.0 289 4.4
Pacific 1,531 21.5 1,508 23.2
Canada 322 4.5 343 5.3
------------------------------------------------------
$7,099 100.0% $6,505 100.0%
======================================================
PROPERTY TYPE
- --------------------------------------------------------------------------------
Retail $2,475 34.9% $2,561 39.4%
Office Building 2,176 30.6 2,079 32.0
Residential 1,526 21.5 1,013 15.5
Commercial 745 10.5 687 10.6
Other 177 2.5 165 2.5
------------------------------------------------------
$7,099 100.0% $6,505 100.0%
======================================================
</TABLE>
B-25
<PAGE> 49
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
The fair value of mortgage loans as of December 31, 1994 and 1993 approximates
$6,879 million and $6,900 million, respectively. Increases in current interest
rates were a major reason for the decline in fair value relative to statement
value in 1994. Loans with fair values that are less than statement values for
reasons other than changes in interest rates are adequately covered by normal
AVR reserves and by a $45 million special reserve established by the Company
for mortgage loans.
AFFILIATES
Since 1991, the Company has periodically sold shares of MGIC Investment
Corporation ("MGIC"), an affiliate. In 1992, the Company sold 6.6 million
shares of MGIC for $175 million, generating a realized capital gain of $88
million. In 1993, the Company sold 0.9 million shares for $52 million,
generating a realized capital gain of $38 million. In 1994, the Company sold
5.8 million shares for $51 million, generating a realized capital gain of $3
million. Of the shares sold in 1994, 5.7 million were sold to a subsidiary of
the Company in accordance with an option agreement with the subsidiary; no gain
or loss was realized on this sale. At December 31, 1994, the estimated market
value of the Company's remaining 19.96% investment in MGIC exceeded the
statement value by $214 million.
REAL ESTATE
For real estate and joint venture properties acquired subsequent to December
1990, the Company calculates depreciation using the straight-line method in
accordance with guidelines established by the National Association of Insurance
Commissioners. For properties acquired prior to December 1990, the Company
calculates depreciation using either the straight-line method or the
constant-yield method. Home office real estate is depreciated using the
straight-line method. At December 31, 1994 and 1993, investment real estate
includes $146 million and $126 million, respectively, of real estate acquired
through foreclosure.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company's current utilization of derivative financial instruments is
limited. Most of the Company's derivative transactions are used to reduce or
modify risks of volatility related to currency or interest rate movements.
These hedging strategies use forwards, futures and swaps. At December 31,
1994, the Company held foreign currency forward contracts with a notional value
of $605 million as a partial hedge against foreign currency exposure of foreign
denominated investments. Changes in the market value of these contracts offset
currency gains and losses on the hedged investments. The capital gains or
losses are unrealized before contract settlement and realized on settlement.
These currency hedges represent most of the Company's derivative positions.
The effect of derivative transactions is not significant to the Company's
results from operations or financial position.
NOTE 4 - ANNUITIES AND OTHER DEPOSIT LIABILITIES
The fair value of annuities and other deposit liabilities as of December 31,
1994 and 1993 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
- ---------------------------------------------------------------------------
STATEMENT FAIR STATEMENT FAIR
VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Annuities $2,474 $2,203 $2,263 $2,079
Other deposit liabilities 727 727 707 707
</TABLE>
B-26
<PAGE> 50
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NOTE 5 - BENEFIT PLANS
The Company maintains non-contributory defined benefit retirement plans for all
eligible employees and agents as well as a non-contributory defined
contribution plan for all full-time agents. These plans are funded currently
and plan assets of $939 million at December 31, 1994 are primarily included in
the separate accounts of the Company. As of January 1, 1994, the most recent
actuarial valuation date available, the defined benefit plans were fully
funded.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits ("postretirement benefits") for retired employees.
Substantially all employees may become eligible for these benefits if they
reach retirement age while working for the Company.
Postretirement benefit expenses, which includes the expected cost of
postretirement benefits for newly eligible and vested employees and interest
costs, was $7 million and $9 million for the years ended December 31, 1994 and
1993, respectively. At December 31, 1994 and 1993, the unfunded postretirement
benefit obligation for retirees and other fully eligible or vested employees
was $47 million and $50 million, respectively. The estimated postretirement
benefit obligation for active non-vested employees was $44 million and $45
million at December 31, 1994 and 1993, respectively. The discount rate used to
determine the postretirement benefit obligation was 8% and the health care cost
trend rate was 12% in 1994, declining by 1% per year to an ultimate rate of 6%
over 7 years. If the health care cost trend rate assumptions were increased by
1%, the postretirement benefit obligation as of December 31, 1994 would be
increased by $6 million.
At December 31, 1994 and 1993, plan assets attributable to postretirement
health care benefits totalled $25 million.
NOTE 6 - REINSURANCE
The amounts shown in the accompanying consolidated financial statements are net
of reinsurance activity. The effect of reinsurance on premiums and benefits
for the years ended December 31, 1994 and 1993 are as follows (in millions):
<TABLE>
<CAPTION>
1994 1993
----------------------
<S> <C> <C>
DIRECT PREMIUMS $5,977 $ 5,508
REINSURANCE CEDED (234) (213)
---------------------
NET PREMIUMS $5,743 $ 5,295
=====================
BENEFITS TO POLICYHOLDERS
AND BENEFICIARIES $6,178 $ 5,600
REINSURANCE RECOVERIES (141) (104)
---------------------
NET BENEFITS TO POLICYHOLDERS AND
BENEFICIARIES $6,037 $ 5,496
=====================
</TABLE>
In addition, during 1994 and 1993 the Company received credits of $63 million
and $59 million, respectively from reinsurers representing reimbursements of
commissions and other expenses. These credits are included in other income in
the consolidated summary of operations.
B-27
<PAGE> 51
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
Reinsurance contracts do not relieve the Company from its obligations to
policyholders. Failure of reinsurers to honor their obligations could result
in losses to the Company; consequently, allowances are established for amounts
deemed uncollectible. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk arising from similar
geographic regions, activities, or economic characteristics of the reinsurers
to minimize its exposure to significant losses from reinsurer insolvencies.
NOTE 7 - CONTINGENCIES
In the normal course of business, the Company enters into transactions to
reduce its exposure to fluctuations in interest rates and market volatility.
These instruments may involve credit risk and may also be subject to risk of
loss due to interest rate fluctuations.
The Company has guaranteed certain obligations of its affiliates. These
guarantees totalled approximately $83 million and $95 million at December 31,
1994 and 1993, respectively, and are generally supported by the underlying net
asset values of the affiliates.
The Company is engaged in various legal actions in the normal course of its
investment and insurance operations. In the opinion of management, any losses
resulting from such actions would not have a material effect on the Company's
financial condition.
B-28
<PAGE> 52
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
100 East Wisconsin Avenue Telephone 414 276 9500
Suite 1500
Milwaukee, WI 53202
[Price Waterhouse LLP Letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Trustees and Policyowners of
The Northwestern Mutual Life Insurance Company
In our opinion, the accompanying consolidated statement of financial position
and the related consolidated statement of operations, statement of general
contingency reserve and statement of cash flows present fairly, in all material
respects, the financial position of The Northwestern Mutual Life Insurance
Company and its subsidiary at December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
January 25, 1995
B-29
<PAGE> 53
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
DETERMINATION OF ANNUITY PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Amount of Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Annuity Unit Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
Illustrations of Variable Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
VALUATION OF ASSETS OF THE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4
TRANSFERABILITY RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4
FINANCIAL STATEMENTS OF THE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5
(for the six months ended June 30, 1995 -- unaudited)
FINANCIAL STATEMENTS OF THE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
(for year ended December 31, 1994)
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
(for year ended December 31, 1994)
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
(for the three years ended December 31, 1994)
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-29
(for the three years ended December 31, 1994)
</TABLE>
B-30
<PAGE> 54
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements of NML Variable Annuity Account B and The
Northwestern Mutual Life Insurance Company are included in the Statement
of Additional Information.
NML Variable Annuity Account B
(for the six months ended June 30, 1995 -- unaudited)
Statement of Assets and Liabilities
Statement of Operations and Changes in Equity
Notes to Financial Statements
(for year ended December 31, 1994)
Statement of Assets and Liabilities
Statement of Operations and Changes in Equity
Notes to Financial Statements
Report of Independent Accountants
The Northwestern Mutual Life Insurance Company
(for the three years ended December 31, 1994
Consolidated Statement of Financial Position
Consolidated Statement of Operations
Consolidated Statement of General Contingency Reserve
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Accountants
(b) Exhibits
EX-99.B1 Restated Articles of Incorporation of The Northwestern
Mutual Life Insurance Company.
EX-99.B2 By-Laws of The Northwestern Mutual Life Insurance Company.
EX-99.B9 Form of Variable Annuity Front Load Contract - Form
QQV.ACCT.B (0196) (sex neutral).
EX-99.B9(a) Form of Variable Annuity Back Load Contract - Form QQV.ACCT.B
(0196) (sex neutral).
EX-99.B9(b) Form of Variable Annuity Front Load and Back Load Contract
Payment Rate Tables - Form QQV.ACCT.A.B. (0196)
(sex distinct).
EX-99.B11 Consent of Price Waterhouse LLP.
EX-27 Financial Data Schedule for the period ended December 31,
1994.
EX-27a Financial Data Schedule for the period ended June 30, 1995.
Item 25. Directors and Officers of the Depositor
The following lists include all of the Trustees, executive officers and
other officers of The Northwestern Mutual Life Insurance Company as of October
1, 1995, without regard to their activities relating to variable annuity
contracts or their authority to act or their status as "officers" as that term
is used for certain purposes of the federal securities laws and rules
thereunder.
C-1
<PAGE> 55
TRUSTEES
<TABLE>
<CAPTION>
Name Business Address
- ---- ----------------
<S> <C>
R. Quintus Anderson The Aarque Companies
111 West Second Street
Jamestown, NY 14701
Edward E. Barr Sun Chemical Corporation
222 Bridge Plaza South
Fort Lee, NJ 07024
Gordon T. Beaham III Faultless Starch/Bon Ami Co.
1025 West Eighth Street
Kansas City, MO 64101
Frank H. Bertsch Flexsteel Industries, Inc.
P.O. Box 877
Dubuque, IA 52001
Robert C. Buchanan Fox Valley Corporation
P.O. Box 727
Appleton, WI 54912
Robert E. Carlson The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
George A. Dickerman Spalding Sports Worldwide
425 Meadow Street
P.O. Box 901
Chicopee, MA 01021-0901
Thomas I. Dolan A.O. Smith Corporation
P.O. Box 23971
Milwaukee, WI 53223-0971
Pierre S. du Pont IV Richards, Layton and Finger
1 Rodney Square
Wilmington, DE 19801
James D. Ericson The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
J. E. Gallegos Gallegos Law Firm
460 St. Michaels Drive
Building 300
Santa Fe, NM 87501
Patricia Albjerg Graham 420 Gutman
Graduate School of Education
Harvard University
Cambridge, MA 02138
</TABLE>
C-2
<PAGE> 56
Richard H. Holton Haas School of Business
350 Barrows Hall
University of California
Berkeley, CA 94720
Stephen F. Keller The Santa Anita Companies
P.O. Box 60014
Arcadia, CA 91066-6014
J. Thomas Lewis Monroe & Lemann
Suite 3300
210 St. Charles Avenue
New Orleans, LA 70170
Fred G. Luber Super Steel Products Corp.
P.O. Box 23418
Milwaukee, WI 53223
Daniel F. McKeithan, Jr. Tamarack Petroleum Company, Inc.
Suite 1920
777 East Wisconsin Avenue
Milwaukee, WI 53202
Guy A. Osborn Universal Foods Corp.
433 East Michigan Street
Milwaukee, WI 53202
Donald J. Schuenke The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
H. Mason Sizemore, Jr. The Seattle Times
P.O. Box 70
Seattle, WA 98111
Harold Byron Smith, Jr. Illinois Tool Works, Inc.
3600 West Lake Avenue
Glenview, IL 60625-5811
Sherwood H. Smith, Jr. Carolina Power & Light Company
P.O. Box 1551
Raleigh, NC 27602
John E. Steuri ALLTEL Information
Services, Inc.
4001 Rodney Parham Road
Little Rock, AR 72212-2496
John J. Stollenwerk Allen-Edmonds Shoe Corporation
201 East Seven Hills Road
P.O. Box 998
Port Washington, WI 53074-0998
Barry L. Williams Williams Pacific Ventures, Inc.
1200 Bayhill Drive, Suite 300
San Bruno, CA 94066
C-3
<PAGE> 57
Kathryn D. Wriston 870 United Nations Plaza
Apartment 23-A
New York, NY 10017
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME TITLE
- ---- -----
<S> <C>
Deborah A. Beck Senior Vice President
John M. Bremer Senior Vice President, General Counsel
and Secretary
Peter W. Bruce Executive Vice President
Robert E. Carlson Executive Vice President and Trustee
Steven T. Catlett Vice President
Mark G. Doll Senior Vice President and Treasurer
Thomas E. Dyer Vice President
James W. Ehrenstrom Senior Vice President
James D. Ericson President and Chief Executive Officer,
Trustee
Richard L. Hall Senior Vice President
William C. Koenig, FSA Senior Vice President and Chief Actuary
Gary E. Long Vice President and Controller
Susan A. Lueger Vice President
Meridee J. Maynard Vice President
Donald L. Mellish Vice President
Ralph A. Pelton Vice President
Gregory C. Oberland Vice President
Barbara F. Piehler Vice President
James F. Reiskytl Vice President
Virgil L. Renne, Jr. Vice President - Employer Product Marketing
Mason G. Ross Senior Vice President
Leonard F. Stecklein Vice President - Policyowner Services
Frederic H. Sweet Senior Vice President
Dennis Tamcsin Senior Vice President
Martha M. Valerio Vice President
W. Ward White Vice President
Walt J. Wojcik Senior Vice President
Edward J. Zore Executive Vice President
</TABLE>
OTHER OFFICERS
<TABLE>
<CAPTION>
NAME TITLE
- ---- -----
<S> <C>
John M. Abbott Associate Director - Benefits
Research
Ronald C. Alberts Investment Officer
Thomas R. Anderson Assistant Director - Advanced
Marketing
Maria J. Avila Assistant Controller
Michael J. Backus Associate Director of Information
Systems
Jerome R. Baier Director - Securities
John E. Bailey Senior Actuary
Nicholas H. Bandow Assistant Director-Information
Systems
Lynn F. Bardele Director - Corporate Services
Walter L. Barlow Assistant Director of Education
</TABLE>
C-4
<PAGE> 58
<TABLE>
<S> <C>
David A. Barras Associate Director
Bradford P. Bauer Assistant Director-Advanced Marketing
James M. Baumgartner Officer - Underwriting Standards &
Services
Robert J. Berdan Assistant General Counsel &
Assistant Secretary
Beth M. Berger Assistant General Counsel &
Assistant Secretary
James L. Bergschneider Director - Underwriting Services
Frederick W. Bessette Assistant General Counsel & Asst.
Secretary
Erik E. Bieck Director - Individual Annuity
Marketing
D. Rodney Bluhm Assistant General Counsel
Donald T. Bobbs Investment Officer
Timothy J. Bohannon Regional Director of
Agencies
Margaret Bowe Bonvicini Associate Director - Employment &
Affirmative Action
Willette Bowie Employee Relations Director
Mark C. Boyle Assistant General Counsel & Asst.
Secretary
Martin R. Braasch Director - Underwriting Standards &
Services
Patricia R. Braeger Assistant Director - Information Systems
Melissa C. Brooks Assistant Director - Advanced
Marketing
Mary P. Buczynski Assistant Director
Michael S. Bula Assistant General Counsel
Jerry C. Burg Associate Director - Field Benefits
Gregory B. Bynan Director - Corporate Services
Kim M. Cafaro Assistant General Counsel & Asst.
Secretary
Shanklin B. Cannon, M.D. Medical Director - Life
Products/Research
Terese J. Capizzi Actuarial Products Officer
Kurt P. Carbon Assistant Regional Director
Thomas A. Carroll Director - Common Stock Division
Michael G. Carter Assistant General Counsel & Asst.
Secretary
William W. Carter Associate Actuary
John E. Caspari Assistant Director - Advertising &
Corporate Information
Donald E. Chappie Associate Director of Field Benefits
Walter J. Chossek Associate Controller
Thomas R. Christenson Director - Employer Product Services
J. Thomas Christofferson Vice President
Alan E. Close Associate Controller
Carolyn M. Colbert Assistant Director - New
Business
Timothy S. Collins Associate Director
Margaret Winter Combe Assistant Director - Process
and Project Management
Virginia A. Corwin Assistant Director - New Business
Barbara E. Courtney Assistant Controller
Larry A. Curran Actuarial Administrative Officer
</TABLE>
C-5
<PAGE> 59
<TABLE>
<S> <C>
Daniel G. Cuske Associate Director - Fixed Income
Brian H. Davidson Associate Director
Thomas H. Davis Associate Director - Information
Systems
Jefferson V. De Angelis Vice President - Fixed Income
Nicholas De Fino Investment Officer - Portfolio
Management
David J. Derfus Assistant Controller
Carol A. Detlaf Associate Director - Human Resources
John Diliberti Assistant Director - New Business
Joseph Dobering, III Director - Underwriting Standards &
Services
Timothy Doubek Director - Fixed Income
Daniel C. Dougherty Director - Individual Product
Marketing
Margaret T. Dougherty Assistant Director - Information
Systems
William O. Drehfal Assistant Director - Media Services
Jeffrey S. Dunn Vice President
Somayajulu Durvasula Assistant Director - Field Financial
James R. Eben Assistant General Counsel and
Assistant Secretary
Christina H. Fiasca Associate Controller
Zenia J. Fieldbinder Assistant Director - Employer
Product Services
Richard F. Fisher Senior Actuary
Dennis J. Fitzpatrick Director - Advanced Marketing
Jon T. Flaschner Assistant Director - Employer
Product Services
Elfa O. Foldi Associate Director - Facilities
Planning
Donald Forecki Investment Officer
Stephen H. Frankel Vice President
H. Daniel Gardner Vice President & Insurance Counsel
Richard R. Garthwait Vice President - Field Financial
David L. Georgenson Director - Agent Development
Paulette A. Getschman Director - Policyowner Services
George Ghanem Assistant Regional Director - Agency
James W. Gillespie Vice President
Walter M. Givler Director - Corporate Services
Robert K. Gleeson, M.D. Vice President - Medical Director
Mark J. Gmach Assistant Regional Director - Agency
John W. Gordon Assistant Director - Information
Systems
Linda J. Gornens-Levey Associate Director
David Lee Gosse Assistant Director - Disability
Benefits
William F. Grady Associate Director of Field Finances
Francis A. Grandelis Regional Director - Central
John M. Grogan Assistant General Counsel and
Assistant Secretary
Jill M. Grueninger Investment Officer
Thomas C. Guay Associate Actuary
Colleen M. Gunther Investment Officer
Gerald A. Haas Assistant Director - Information
Systems
Stanley K. Hall Director - Policyowner Services
</TABLE>
C-6
<PAGE> 60
<TABLE>
<S> <C>
Thomas P. Hamilton Associate Director - Information
Systems
William M. Harris Assistant Regional Director - South
Dennis R. Hart Assistant Director - Agent
Development
James C. Hartwig Vice President - Advanced Marketing
Paul F. Heaton Assistant General Counsel and
Assistant Secretary
William L. Hegge Associate Director of
Telecommunications
Wayne F. Heidenreich Assistant Medical Director
Jacquelyn F. Heise Assistant Director - Information
Systems
Robert L. Hellrood Director - New Business
Herbert F. Hellwig Assistant Director - Individual
Annuity Marketing
Jane A. Herman Assistant Director - Term Upgrade
Gary M. Hewitt Vice President
Donna R. Higgins Assistant Director - Information
Systems
Susan G. Hill Assistant Regional Director - South
Hugh L. Hoffman Assistant Director - Information
Systems
Richard S. Hoffmann Director - Audit
Susan M. Hoffmann Life Product Officer
Bruce Holmes Assistant Actuary
Robert L. Holmes Regional Director - Agency
Cindy L. Jackson Investment Officer
Meg E. Jansky Human Resources - Training
Development Officer
Michael D. Jaquint Assistant Actuary
Ralph A. Jefferson, III Investment Officer
Dolores A. Juergens Associate Director of Restaurant
Operations
Marilyn J. Katz Assistant Director - Medical
Consultants
John W. Keller Managing Actuary - Product
Management
Kevin C. Kennedy Investment Officer - Architecture
James B. Kern Regional Director - Central Region
David R. Keuler Investment Officer
Carson D. Keyes Vice President
Donald C. Kiefer Vice President
Mark E. Kishler Investment Officer
Allen B. Kluz Director - Field Financial
Beatrice C. Kmiec Assistant Regional Director - East
Kent Knudsen Associate Director
Daniel C. Knuth Investment Officer
William S. Koch Assistant Regional Director - Agency
A. Kipp Koester Vice President
John L. Kordsmeier Human Resources Officer
Dennis Korjenek, Jr. Associate Director - Fixed Income
Robert J. Kowalsky Assistant Director - Information
Systems
Carol L. Kracht Assistant General Counsel & Asst.
Secretary
Todd L. Laszewski Assistant Actuary
</TABLE>
C-7
<PAGE> 61
<TABLE>
<S> <C>
Patrick J. Lavin Director - Life & Disability
Benefits
Patrick W. Lavin Assistant Treasurer & Assistant
Secretary
James L. Lavold Associate Director - Meetings
Russell M. Lemken Assistant Director - Consumer
Research
Sally Jo Lewis Assistant General Counsel & Asst.
Secretary
Mark P. Lichtenberger Assistant Director - LINK Technical
Planning
Steven M. Lindstedt Assistant Director - Information
Systems
James Lodermeier Assistant Director - Tax Planning
James G. Loduha Assistant Director - Asset
Management
George R. Loxton Assistant General Counsel &
Assistant Secretary
Mary M. Lucci Director - New Business
Mark J. Lucius Corporate Information Officer
Jeffrey J. Lueken Associate Director
Merrill C. Lundberg Assistant General Counsel & Asst.
Secretary
Jon K. Magalska Assistant Director - Policyowner
Services
Jean M. Maier Director - New Business
Joseph Maniscalco Associate Director - Information
Systems
Jeffrey S. Marks Multi Life, Research & Reinsurance
Officer
Steve Martinie Assistant General Counsel & Asst.
Secretary
Ted A. Matchulat Actuarial Products Officer
Margaret McCabe Associate Director - Policy Benefits
Systems
Roger A. McChesney Assistant Regional Director - Agency
Richard A. McComb Director - Human Resources
William L. McCown Vice President & Investment Counsel
Paul E. McElwee Assistant General Counsel & Asst.
Secretary
Mary C. McIntosh Assistant Director - Field Financial
Richard J. McMaster Regional Director - Agency
Daniel E. McGinley Assistant Director - Management
Development
Mark J. McLennon Assistant Director - Advanced
Marketing
Robert J. Meiers Ad Valorem Tax Manager
Larry S. Meihsner Assistant General Counsel &
Assistant Secretary
Robert G. Meilander Vice President
Kelly H. Mess Investment Officer
Charles L. Messler Director - Natural Gas Sales
Richard E. Meyers Assistant General Counsel
Jay W. Miller Vice President & Tax Counsel
Sara K. Miller Vice President
</TABLE>
C-8
<PAGE> 62
<TABLE>
<S> <C>
Tom M. Mohr Director of Policyowner Services -
South
Richard C. Moore Associate Actuary
Scott J. Morris Assistant General Counsel and
Assistant Secretary
Sharon A. Morton Investment Officer
Adrian J. Mullin Assistant Director - Individual
Product Marketing
Randolph J. Musil Assistant Director - Advanced
Marketing
David K. Nelson Assistant General Counsel
Ronald C. Nelson Actuary
Karen M. Niessing Assistant Director - Policyowner
Services
Donald L. O'Dell Vice President
Daniel J. O'Meara Director - Field Financial
John K. O'Meara Assistant Director - Advanced
Marketing
Mary Joy O'Meara Assistant Director - Advanced
Marketing
Kathleen A. Oman Associate Director - Information
Systems
Thomas A. Pajewski Investment Research Officer
Christen L. Partleton Assistant Director - Policyowner
Services
Dennis L. Paul Assistant General Counsel
Ralph A. Pelton Vice President
David W. Perez Assistant General Counsel
Judith L. Perkins Assistant General Counsel & Asst.
Secretary
Wilson D. Perry Assistant General Counsel & Asst.
Secretary
Gary N. Peterson Actuary
John C. Peterson Assistant Director of Policyowner
Services - West
Harvey W. Pogoriler Assistant General Counsel
Gary A. Poliner Vice President
Mark A. Prange Associate Director - Information
Systems
Thomas M. Price Investment Officer
David R. Remstad Actuary
David R. Retherford Assistant Director of New Business -
Central
Stephen M. Rhode Assistant Director - Qualified
Benefits
Robert C. Richardson Investment Officer
Gerald J. Richter Senior Real Estate Officer -
Asset Management
Richard R. Richter Vice President
Marcia Rimai Assistant General Counsel
Kathleen M. Rivera Assistant General Counsel & Asst.
Secretary
Faith B. Rodenkirk Assistant Director - Group Marketing
Ramona Windson-Rogers Financial Officer
James S. Rolfsmeyer Assistant Director - Information
Systems
Larry R. Roscoe Assistant Director - Compliance
Lora A. Rosenbaum Assistant Director - Compliance
</TABLE>
C-9
<PAGE> 63
<TABLE>
<S> <C>
Robert K. Roska Associate Director - Information
Systems
Sue M. Roska Director - Systems and
Services
Robert M. Ruess Vice President
Harry L. Ruppenthal Director of Policyowner Services -
East
Stephen G. Ruys Assistant Director - Information
Systems
Santo Saliture Associate Director of Advertising &
Corporate Information
Rose Kordich Sasich Assistant Director of Systems
Mary Ann Schachtner Assistant Director - Life Insurance
Marketing
Thomas F. Scheer Assistant General Counsel & Asst.
Secretary
Carlen A. Schenk Assistant Director
Jane A. Schiltz Director - Individual Product
Emily K. Schleinz Investment Officer
John E. Schlifske Director
Kathleen H. Schluter Assistant General Counsel &
Secretary
Calvin R. Schmidt Assistant Director - Information
Systems
Richard A. Schnell Assistant Director - Asset
Management
John O. Schnorr Director - Annuity Tax & Title
Services
Margaret R. Schoewe Vice President - Information Systems
Todd M. Schoon Assistant Regional Director - Agency
Jeffrey G. Schragin Associate Medical Director
John F. Schroeder Associate Director of Field Office
Real Estate
Melva T. Seabron Associate Director - Human Resources & Budget
Norman W. Seguin, II Investment Officer - Ad Valorem
Taxes
Catherine L. Shaw Assistant General Counsel & Asst.
Secretary
John E. Sheaffer, Jr. Assistant Director - Agent
Development
William Shinkwin Director of Tax Planning
Janet Z. Silverman Assistant Director - New Business
Stephen M. Silverman Assistant General Counsel
David W. Simbro Actuary
Eugene R. Skaggs Vice President
Paul W. Skalecki Assistant Actuary
Cynthia S. Slavik Investment Officer - Environmental
Engineer
Ignatius L. Smetek Associate Director
Lois A. Smith Director - Asset Management
Mark W. Smith Assistant General Counsel & Asst.
Secretary
Warren L. Smith, Jr. Investment Officer - Architecture
Steven W. Speer Director - Individual Product
Marketing
Barbara J. Stansberry Director - Administrative
Services/Medical Studies
</TABLE>
C-10
<PAGE> 64
<TABLE>
<S> <C>
Jason Steigman Investment Product Officer
Bonnie L. Steindorf Director - Department Operations
Colleen J. Stenholt Director - Organization Development
Karen J. Stevens Assistant General Counsel &
Assistant Secretary
Richard A. Strait Director
Linda L. Streifender Assistant Director - Training &
Communications
Steven J. Stribling Associate Actuary
Stephen J. Strommen Associate Director - Financial
Planning
Theodore H. Strupp Assistant Director
Daniel J. Suprenant Director - Group Disability
Marketing
Christopher P. Swain Investment Officer
Steven P. Swanson Vice President
Rachel L. Taknint Assistant General Counsel & Asst.
Secretary
Thomas Talajkowski Assistant Director - Tax
Compliance
Paul B. Tews Associate Director - Investment
Planning
Susan M. Tompkins Director - Recruitment & Management
Thomas W. Towers Associate Director - Public
Relations
Linda K. Tredupp Assistant Director - Information
Systems
Chris G. Trost Associate Actuary
Julie Van Cleave Director - Common Stock
Mark J. Van Cleave Assistant Director of Marketing
Research
Michael T. Van Grinsven Assistant Director - Management
Development
Mary Beth Van Groll Vice President - Information Systems
Patricia L. Van Kampen Vice President - Common Stocks
Glen J. Vanic Investment Research Officer
Gloria J. Venski Assistant Director - Disability
Benefits
Richard F. Von Haden Director - Real Estate Production
Margaret A. Wainer Assistant Director - Corporate
Planning & Information
William R. Walker Director - Common Stock
Scott E. Wallace Assistant Director - Operations
Hal W. Walter Regional Director - Agency
Robert J. Waltos Assistant Regional Director -
Agency
P. Andrew Ware Vice President
Kathleen S. Warner Assistant Director - Asset
Management
Mary L. Wehrle-Schnell Associate Director - Information
Systems
Daniel T. Weidner Assistant Director - Information
Systems
Ronald J. Weir Associate Director - Information
Systems
Kenneth D. Weiser Assistant Director - Sales Services
Karen J. Weiss Senior Actuary
</TABLE>
C-11
<PAGE> 65
<TABLE>
<S> <C>
Kenneth R. Wentland Assistant Director of Policyowner
Services - East
Sandra D. Wesley Assistant Director of Special
Projects
Charles D. Whittier Assistant Director - Disability
Income Marketing
Catherine A. Wilbert Assistant General Counsel &
Secretary
David L. Wild Director - Corporate Services
Jeffrey B. Williams Risk Manager
John K. Wilson Assistant Director - Individual
Product Marketing
Penelope A. Woodcock Associate Director - Benefit Systems
Stanford A. Wynn Assistant Director - Advanced
Marketing
Catherine M. Young Assistant General Counsel &
Secretary
Michael L. Youngman Vice President - Legislative
Representative
James A. Youngquist Associate Actuary
Richard S. Zakrzewski Associate Research Officer
John Zao Assistant Director - Information
Systems
Rick T. Zehner Director - Corporate Planning
Patricia A. Zimmermann Investment Officer - Real Estate
Systems
Ray Zimmermann Director - LINK Information Network
Robert E. Zysk Director - Tax Compliance
</TABLE>
The business addresses for all of the executive officers and other
officers is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
The subsidiaries of The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life"), as of May 30, 1995, are set forth on pages C-13
and C-14. In addition to the subsidiaries set forth on pages C-13 and C-14,
the following separate investment accounts (which include the Registrant) may
be deemed to be either controlled by, or under common control with,
Northwestern Mutual Life:
1. NML Variable Annuity Account A
2. NML Variable Annuity Account B
3. NML Variable Annuity Account C
4. Northwestern Mutual Variable Life Account
Northwestern Mutual Series Fund, Inc. (the "Fund"), shown on page C-13
as a subsidiary of Northwestern Mutual Life, is an investment company,
registered under the Investment Company Act of 1940, offering its shares to
the separate accounts identified above; and the shares of the Fund held in
connection with certain of the accounts are voted by Northwestern Mutual Life
in accordance with voting instructions obtained from the persons who own, or
are receiving payments under, variable annuity contracts or variable life
insurance policies issued in connection with the accounts, or in the same
proportions as the shares which are so voted.
C-12
<PAGE> 66
NML CORPORATE STRUCTURE CHART*
The Northwestern Mutual Life Insurance Company
General Account
NML Variable Annuity Account A
NML Variable Annuity Account B
NML Variable Annuity Account C
NML Group Annuity Separate Account
NML Variable Life Account
Eiger Corporation - 100%
Northwestern Mutual Life Foundation, Inc. - 100%
NML Corporation - 100%
Standard of America Life Insurance Company - 100%
Saskatoon Centre, Limited (inactive) - 100%
Northwestern Mutual Series Fund, Inc. (and its 9 portfolios) - 100%
MGIC Investment Corporation - 20%. MGIC holds 100% of the voting stock of the
following: Mortgage Guaranty Reinsurance Corporation, MGIC, MGIC
Reinsurance Corporation, MGIC Mortgage Insurance Corporation, and various
subsidiaries.
Baird Financial Corporation - 92.22%. Baird Financial Corporation holds 100%
of the voting stock of Robert W. Baird & Co., Incorporated and various
subsidiaries.
Northwestern Mutual Investment Services, Inc. - 100%
3950
The Grand Avenue Corporation - 98.54%
Marina Pacific, Ltd. - 100%
NW Pipeline, Inc. - 100%
NML - Bellevue Corporation - 100%
Solar Resources, Inc. - 100%
NH Corporation (inactive) - 100%
Rocket Sports, Inc. - 100%
Summit Sports, Inc. - 100%
Greenway Sports, Inc. - 100%
Painted Rock Development Corporation - 100%
NML Development Corporation - 100%
Stadium and Arena Management, Inc. - 100%
RE Corporation - 100%
Carlisle Ventures, Inc. - 100%
INV Corp. - 100%
Buffalo Promotions, Inc. - 100%
Park Forest Northeast, Inc. - 100%
NW Greenway #1 - 100%
NW Greenway #9 - 100%
Travers International Sales, Inc. - 100%
Highbrook International Sales, Inc. - 100%
Elderwood International Sales, Inc. - 100%
Mallon International Sales, Inc. - 100%
Higgins, Inc. - 100%
Hobby, Inc. - 100%
Logan, Inc. - 100%
Baraboo, Inc. - 100%
Mitchell, Inc. - 100%
Elizabeth International Sales, Inc. - 100% *Includes all NML mutual
Sean International Sales, Inc. - 100% funds and other corpor-
Alexandra International Sales, Inc. - 100% ations of which 50% or
Brian International Sales, Inc. - 100% more voting power con-
Jack International Sales, Inc. - 100% trolled by NML.
Brendan International Sales, Inc. - 100%
Justin International FSC, Inc. - 100% 5/30/95
C-13
<PAGE> 67
NML CORPORATE STRUCTURE, CONTINUED*
Cass Corporation - 100%
Mason & Marshall, Inc. - 100%
North Van Buren, Inc. - 100%
Rainbow Ventures, Inc. - 100%
White Oaks, Inc. - 100%
*Includes all NML mutual
funds and other corpor-
ations of which 50% or
more of voting power
controlled by NML
5-30-95
C-14
<PAGE> 68
Item 27. Number of Contract Owners
As of October 31, 1995, 155,168 variable annuity contracts issued in
connection with NML Variable Annuity Account B were outstanding. 129,993 such
contracts were issued as contracts for plans qualifying for special treatment
under various provisions of the Internal Revenue Code. 25,175 such contracts
were not so issued.
Item 28. Indemnification
That portion of the By-laws of Northwestern Mutual Life relating to
indemnification of Trustees and officers is set forth in full in Article VII of
the By-laws of Northwestern Mutual Life, amended by resolution and filed herein
as an exhibit to the Registration Statement.
Item 29. Principal Underwriters
(a) Northwestern Mutual Investment Services, Inc. ("NMIS"), the
co-depositor of the Registrant, may be considered the principal underwriter
currently distributing securities of the Registrant. NMIS is also
co-depositor, and may be considered the principal underwriter, for Northwestern
Mutual Variable Life Account, a separate investment account of Northwestern
Mutual Life registered under the Investment Company Act of 1940 as a unit
investment trust. In addition NMIS is the investment adviser for Northwestern
Mutual Series Fund, Inc.
(b) The directors and officers of NMIS are as follows:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Susan M. Achtenhagen Assistant Superintendent-New
Business
Edwin R. Ahrenhoerster Superintendent-Policy Benefits
Thomas A. Carroll Vice President-Common Stocks
Walter J. Chossek Treasurer
Thomas R. Christenson Superintendent-Policyowner Service
Carolyn M. Colbert Superintendent-Underwriting
Standards and New Business
Barbara E. Courtney Assistant Treasurer
Jefferson V. De Angelis Vice President-Fixed Income
Securities
Carol A. Detlef Superintendent-Underwriting
Standards and New Business
Mark G. Doll President and Director
Timothy Doubek Vice President
James R. Eben Assistant Secretary
James D. Ericson Director
Zenia J. Fieldbinder Superintendent-Policyowner Service
Loraine Garner Superintendent-Underwriting
Standards and New Business
Daniel R. Hernday Superintendent-Underwriting
Standards and New Business
Susan G. Hill Superintendent - Underwriting
Standards & New Business
Steven M. Kien Superintendent - Underwriting
Standards & New Business
</TABLE>
C-15
<PAGE> 69
<TABLE>
<S> <C>
Beatrice C. Kmiec Superintendent - Underwriting
Standards & New Business
Sharon J. Kraft Superintendent-Policyowner
Services
Patricia A. Krueger Superintendent - Policy Benefits
Patrick J. Lavin Superintendent - Underwriting
Standards & New Business
Patrick W. Lavin Assistant Treasurer
Merrill C. Lundberg Secretary
Meridee J. Maynard Superintendent - Sales
Standards/Compliance
Susan A. Milbeck Superintendent-Policy Benefits
Christine A. Milewski Superintendent-Policy Benefits
Johnny L. Miller Superintendent-Policy Benefits
Suzanne M. Mueller Superintendent-Underwriting
Standards and New Business
Elizabeth D. Pitterle Superintendent-Underwriting
Standards and New Business
Virgil L. Renne, Jr. Vice President
David R. Retherford Superintendent - Underwriting
Standards & New Business
Larry R. Roscoe Superintendent-Compliance and
Training
Donna B. Saltz Superintendent-Underwriting
Standards and New Business
John O. Schnorr Superintendent-Policy Benefits
Judith A. Shelton Superintendent - Policy Benefits
Ignatius L. Smetek Vice President - Common Stocks
Leonard F. Stecklein Vice President
Bonnie L. Steindorf Vice President
Steven P. Swanson Vice President
Carla A. Thoke Assistant Superintendent-Compliance
Patricia A. Valoe Superintendent-Underwriting
Standards and New Business
Julie Van Cleave Vice President - Common Stocks
Patricia L. Van Kampen Vice President-Common Stocks
Patrick J. Venuti Superintendent-Policy Benefits
William R. Walker Vice President
Evenly G. Werra Superintendent - Underwriting
Standards & New Business
Edward J. Zore Director
</TABLE>
The address for each director and officer of NMIS is 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
(c) During 1994 life insurance agents of Northwestern Mutual Life
who are also registered representatives of NMIS received commissions, including
general agent overrides, in the aggregate amount of $8,504,891 for sales of
variable annuity contracts, and interests therein, issued in connection with
the Registrant. NMIS received compensation for its investment advisory
services from Northwestern Mutual Series Fund, Inc., the investment company in
which assets of the Registrant are invested.
Item 30. Location of Accounts and Records
All accounts, books or other documents required to be maintained in
connection with the Registrant's operations are maintained in the physical
C-16
<PAGE> 70
possession of Northwestern Mutual Life at 720 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202.
Item 31. Management Services
There are no contracts, other than those referred to in Part A or Part
B of this Registration Statement, under which management-related services are
provided to the Registrant and pursuant to which total payments of $5,000 or
more were made during any of the last three fiscal years.
Item 32. Undertakings
(a) The Registrant undertakes to file a post-effective amendment
to this Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more than
16 months old for so long as payments under the variable annuity contracts may
be accepted.
(b) The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) The Registrant undertakes to deliver any Statement of
Additional Information and any financial statements required to be made
available under this Form promptly upon written or oral request.
(d) Reference is made to the indemnification provisions disclosed
in response to Item 28. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the registered securities, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
REPRESENTATION REGARDING TAX-DEFERRED ANNUITIES
Reference is made to a no-action letter dated November 28, 1988 from
the staff of the Securities and Exchange Commission and addressed to the
American Council of Life Insurance (the "no-action letter"). In accordance
with the requirements of paragraph (5) on page 4 of the no-action letter, the
Registrant represents that the no-action letter is being relied upon and that
the provisions of paragraphs (1)-(4) thereof have been complied with.
C-17
<PAGE> 71
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company
Act of 1940, the Registrant, NML Variable Annuity Account B, certifies that it
has duly caused this Amended Registration Statement to be signed on its behalf,
in the City of Milwaukee, and State of Wisconsin, on the 7th day of November,
1995.
<TABLE>
<CAPTION>
<S> <C>
NML VARIABLE ANNUITY ACCOUNT B
(Registrant)
By THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
---------------------------- ----------------------------
John M. Bremer James D. Ericson, President
Senior Vice President, and Chief Executive Officer
General Counsel and Secretary
By NORTHWESTERN MUTUAL
INVESTMENT SERVICES, INC.
(Depositor)
Attest: MERRILL C. LUNDBERG By: MARK G. DOLL
------------------------------ ----------------------------
Merrill C. Lundberg, Secretary Mark G. Doll
President
</TABLE>
As required by the Securities Act of 1933, this Amended Registration
Statement has been signed by the depositors on the 7th day of November, 1995.
<TABLE>
<S> <C>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
------------------------------ --------------------------
John M. Bremer James D. Ericson
Senior Vice President, President and Chief
General Counsel and Secretary Executive Officer
NORTHWESTERN MUTUAL INVESTMENT
SERVICES, INC.
(Depositor)
Attest: MERRILL C. LUNDBERG By: MARK G. DOLL
------------------------------ --------------------------
Merrill C. Lundberg, Secretary Mark G. Doll
President
</TABLE>
As required by the Securities Act of 1933, this Amended Registration
Statement has been signed by the following persons in the capacities with the
depositor and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C> <C>
Trustee, President and
JAMES D. ERICSON Principal Executive and Dated November 7, 1995
- --------------------------- Financial Officer
James D. Ericson
</TABLE>
C-18
<PAGE> 72
<TABLE>
<S> <C> <C>
GARY E. LONG Vice President, Controller
- ----------------------------- and Principal Accounting
Gary E. Long Officer
RICHARD H. HOLTON* Trustee
- -----------------------------
Richard H. Holton
HAROLD B. SMITH* Trustee
- -----------------------------
Harold B. Smith
J. THOMAS LEWIS* Trustee
- -----------------------------
J. Thomas Lewis
FRANK H. BERTSCH* Trustee
- -----------------------------
Frank H. Bertsch
PATRICIA ALBJERG GRAHAM* Trustee
- -----------------------------
Patricia Albjerg Graham
DONALD J. SCHUENKE* Trustee Dated November 7, 1995
- -----------------------------
Donald J. Schuenke
FRED G. LUBER* Trustee
- -----------------------------
Fred G. Luber
R. QUINTUS ANDERSON* Trustee
- -----------------------------
R. Quintus Anderson
STEPHEN F. KELLER* Trustee
- -----------------------------
Stephen F. Keller
PIERRE S. du PONT IV* Trustee
- -----------------------------
Pierre S. du Pont IV
J. E. GALLEGOS* Trustee
- -----------------------------
J. E. Gallegos
THOMAS I. DOLAN* Trustee
- -----------------------------
Thomas I. Dolan
KATHRYN D. WRISTON* Trustee
- -----------------------------
Kathryn D. Wriston
</TABLE>
C-19
<PAGE> 73
<TABLE>
<S> <C> <C>
BARRY L. WILLIAMS* Trustee
- -----------------------------
Barry L. Williams
GORDON T. BEAHAM III* Trustee
- -----------------------------
Gordon T. Beaham III
DANIEL F. McKEITHAN, JR.* Trustee
- -----------------------------
Daniel F. McKeithan, Jr.
ROBERT E. CARLSON* Trustee
- -----------------------------
Robert E. Carlson
Trustee
- -----------------------------
Edward E. Barr
ROBERT C. BUCHANAN* Trustee
- -----------------------------
Robert C. Buchanan
SHERWOOD H. SMITH, JR.* Trustee Dated November
- ----------------------------- 7, 1995
Sherwood H. Smith, Jr.
H. MASON SIZEMORE* Trustee
- -----------------------------
H. Mason Sizemore, Jr.
JOHN J. STOLLENWERK* Trustee
- -----------------------------
John J. Stollenwerk
GEORGE A. DICKERMAN* Trustee
- -----------------------------
George A. Dickerman
GUY A. OSBORN* Trustee
- -----------------------------
Guy A. Osborn
JOHN E. STEURI* Trustee
- -----------------------------
John E. Steuri
</TABLE>
*By: JAMES D. ERICSON
----------------------------------
James D. Ericson, Attorney in Fact
pursuant to the Power of Attorney
attached hereto
C-20
<PAGE> 74
POWER OF ATTORNEY
The undersigned Trustees of THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY hereby constitute and appoint James D. Ericson and Robert E. Carlson,
or either of them, their true and lawful attorneys and agents to sign the names
of the undersigned Trustees to (1) the registration statement or statements to
be filed under the Securities Act of 1933 and to any instrument or document
filed as part thereof or in connection therewith or in any way related thereto,
and any and all amendments thereto in connection with variable contracts issued
or sold by The Northwestern Mutual Life Insurance Company or any separate
account credited therein and (2) the Form 10-K Annual Report or Reports of The
Northwestern Mutual Life Insurance Company and/or its separate accounts for its
or their fiscal year ended December 31, 1995 to be filed under the Securities
Exchange Act of 1934 and to any instrument or document filed as part thereof or
in connection therewith or in any way related thereto, and any and all
amendments thereto. "Variable contracts" as used herein means any contracts
providing for benefits or values which may vary according to the investment
experience of any separate account maintained by The Northwestern Mutual Life
Insurance Company, including variable annuity contracts and variable life
insurance policies. Each of the undersigned hereby ratifies and confirms all
that said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents this 26th day of July, 1995.
<TABLE>
<S> <C>
R. QUINTUS ANDERSON Trustee
------------------------------------------
R. Quintus Anderson
Trustee
------------------------------------------
Edward E. Barr
GORDON T. BEAHAM III Trustee
------------------------------------------
Gordon T. Beaham III
FRANK H. BERTSCH Trustee
------------------------------------------
Frank H. Bertsch
ROBERT C. BUCHANAN Trustee
------------------------------------------
Robert C. Buchanan
ROBERT E. CARLSON Trustee
------------------------------------------
Robert E. Carlson
</TABLE>
C-21
<PAGE> 75
GEORGE A. DICKERMAN Trustee
------------------------------------------
George A. Dickerman
THOMAS I. DOLAN Trustee
------------------------------------------
Thomas I. Dolan
PIERRE S. du PONT IV Trustee
------------------------------------------
Pierre S. du Pont IV
JAMES D. ERICSON Trustee
------------------------------------------
James D. Ericson
J. E. GALLEGOS Trustee
------------------------------------------
J. E. Gallegos
PATRICIA ALBJERG GRAHAM Trustee
------------------------------------------
Patricia Albjerg Graham
RICHARD H. HOLTON Trustee
------------------------------------------
Richard H. Holton
STEPHEN F. KELLER Trustee
------------------------------------------
Stephen F. Keller
J. THOMAS LEWIS Trustee
------------------------------------------
J. Thomas Lewis
FRED G. LUBER Trustee
------------------------------------------
Fred G. Luber
DANIEL F. McKEITHAN, JR. Trustee
------------------------------------------
Daniel F. McKeithan, Jr.
GUY A. OSBORN Trustee
------------------------------------------
Guy A. Osborn
C-22
<PAGE> 76
<TABLE>
<S> <C>
DONALD J. SCHUENKE Trustee
------------------------------------------
Donald J. Schuenke
H. MASON SIZEMORE, JR. Trustee
-------------------------------------------
H. Mason Sizemore, Jr.
HAROLD B. SMITH Trustee
------------------------------------------
Harold B. Smith
SHERWOOD H. SMITH, JR. Trustee
------------------------------------------
Sherwood H. Smith, Jr.
JOHN E. STEURI Trustee
------------------------------------------
John E. Steuri
JOHN J. STOLLENWERK Trustee
------------------------------------------
John J. Stollenwerk
BARRY L. WILLIAMS Trustee
------------------------------------------
Barry L. Williams
KATHRYN D. WRISTON Trustee
------------------------------------------
Kathryn D. Wriston
</TABLE>
C-23
<PAGE> 77
EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-4
POST-EFFECTIVE AMENDMENT NO. 52 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NML VARIABLE ANNUITY ACCOUNT B
Exhibit Number Exhibit Name
- -------------- ------------
EX-99.B1 Restated Articles of Incorporation
of The Northwestern Mutual Life
Insurance Company.
EX-99.B2 By-Laws of The Northwestern Mutual
Life Insurance Company.
EX-99.B9 Form of Variable Annuity Front Load
Contract - Form QQV.ACCT.B (sex neutral).
EX-99.B9(a) Form of Variable Annuity Back Load
Contract - Form QQV.ACCT.B (sex neutral).
EX-99.B9(b) Form of Variable Annuity Front Load and Back
Load Contract Payment Rate Tables - Form
QQV.AACT.A.B. (sex distinct).
EX-99.B11 Consent of Independent Accountants.
EX-27 Financial Data Schedule for period
ended December 31, 1994.
EX-27a Financial Data Schedule for period
ended June 30, 1995.
<PAGE> 1
EX-99.B1
RESTATED ARTICLES OF INCORPORATION
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
a Wisconsin corporation
(Adopted July 26, 1972)
ARTICLE I
NAME
The name of the Company shall be The Northwestern Mutual Life
Insurance Company.
ARTICLE II
PERIOD OF EXISTENCE
The period of existence of the Company shall be perpetual.
ARTICLE III
PRINCIPLES AND PURPOSES
The Company is a mutual insurance company, without capital stock,
incorporated in 1857 by special act of the Wisconsin Legislature. The Company
is organized and operated for the mutual protection and benefit of those
persons who hold insurance policies or annuity contracts issued by the Company
or who have beneficial interests in such policies or contracts. Neither such
persons nor the policies or contracts are or shall be subject to assessment for
any purpose whatsoever.
The purposes of the Company are to engage in any lawful activity for
which insurance corporations may be organized under the Wisconsin Statutes,
including without limitation the conducting of an insurance business and
businesses incidental thereto, the making of investments and the ownership and
operation of subsidiaries, all as and to the extent authorized by the Wisconsin
Statutes.
ARTICLE IV
PRINCIPAL OFFICE
The location of the principal office of the Company shall be
determined by the board of trustees. At the date of adoption of these Articles
the principal office is located in the City of Milwaukee, Wisconsin.
ARTICLE V
MEMBERS
The members of the Company shall be those persons who are
policyholders of one or more insurance policies or deferred annuity contracts
issued by the Company, then in force and not matured by death of the insured or
annuitant or attainment of maturity date.
<PAGE> 2
The rights of members shall be as provided under the Wisconsin
Statutes, these Articles and the By-laws of the Company. The rules governing
voting by a member, including eligibility to vote and voting procedures, shall
be as provided in the Wisconsin Statutes and the By-laws.
ARTICLE VI
BOARD OF TRUSTEES
The board of trustees of the Company shall consist of such individual
members of the Company, not less than nine, as may be provided in the By-laws.
The By-laws may prescribe other qualifications for the trustees and may divide
them into classes according to their terms of office. The method of election
or appointment of the trustees and their terms of office shall be as provided
in the By-laws. The term "trustee" may be changed to "director" by an
amendment to the By-laws.
ARTICLE VII
MEMBERS' MEETINGS
Regular and special meetings of the members of the Company shall be
held as provided in the By-laws. The Company may make reasonable expenditures
in support of candidates nominated by the board for election as trustees and
the position of its management at any meeting.
ARTICLE VIII
AMENDMENTS
These Articles may be amended in the manner authorized by law at the
time of adoption of the amendment.
<PAGE> 1
EX-99.B2
BY-LAWS
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
MILWAUKEE, WISCONSIN
(Appendix--Restated Articles of Incorporation)
<PAGE> 2
BY-LAWS
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
AS AMENDED
JULY 22, 1987
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I--Meetings of Members; Voting by Members; Nominations
of Board Candidates
Section 1.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.5 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Furnishing Proxies and Other Materials . . . . . . . . . . . . . . . . 2
(c) Effect of Furnishing Proxies . . . . . . . . . . . . . . . . . . . . . 2
(d) Voting Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) Tabulation of Voting . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) Certificate of Election . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Number of Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.8 Nominations of Candidates for the Board . . . . . . . . . . . . . . . . . . . 3
(a) Filing of Board's Proposed Nominees . . . . . . . . . . . . . . . . . . 3
(b) Substitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(c) Nomination at Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II--Board of Trustees and Committees
Section 2.1 General Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Number and Tenure . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Citizenship, Age, Other Offices . . . . . . . . . . . . . . . . . . . . 5
(b) Non-attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Committees of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Composition and Powers . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 Finance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Composition and Powers . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Alternate Members on Standing Committees
of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9 Compensation of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE III--Meetings of the Board and Committees of the Board
Section 3.1 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.4 Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Notice of Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.7 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV--Executive and Other Officers
Section 4.1 Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.2 Powers and Duties of Executive Officers . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Vacancies and Absences . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.6 Election and Appointment of Officers . . . . . . . . . . . . . . . . . . . 10
ARTICLE V--Examining Committee
Section 5.1 Selection of the Examining Committee . . . . . . . . . . . . . . . . . . . 10
Section 5.2 Functions of the Examining Committee . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI--Official Bonds; Checks; Other Instruments
Section 6.1 Official Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.2 Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.3 Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VII--Indemnification
Section 7.1 Indemnification of Trustees, Officers and Employees . . . . . . . . . . . . 11
(a) Successful Defense . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Other Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.2 Determination of Right to Indemnification . . . . . . . . . . . . . . . . . 12
Section 7.3 Allowance of Expenses as Incurred . . . . . . . . . . . . . . . . . . . . . 13
Section 7.4 Additional Rights to Indemnification and Allowance
of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.6 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII--Emergency Provisions
Section 8.1 Continuity of Management . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Acting President . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Powers of Acting President . . . . . . . . . . . . . . . . . . . . . 14
(c) Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Committee Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Board Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX--Offices
Section 9.1 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE X--Corporate Seal
Section 10.1 Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XI--Amendments
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
Section 11.1 Amendment or Repeal of the By-laws . . . . . . . . . . . . . . . . . . . . 16
(a) By Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) By Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
APPENDIX--Restated Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
v
<PAGE> 7
BY-LAWS
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
AS AMENDED
JULY 22, 1987
ARTICLE I
MEETINGS OF MEMBERS; VOTING BY MEMBERS;
NOMINATIONS OF BOARD CANDIDATES
Section 1.1. ANNUAL MEETINGS.
An annual meeting of the members of the Company shall be held at such
time during normal business hours as may be fixed by the board of trustees (the
"board") or executive committee for the purpose of electing trustees and for
the transaction of such other business as may come before the meeting. The
board or executive committee may postpone the date of the annual meeting for
not more than 60 days, but such postponement shall not change the record date
for such annual meeting.
Section 1.2 SPECIAL MEETINGS.
A special meeting of members may be called by the president, the
board, the executive committee or members having 5% of the votes entitled to be
cast at such meeting.
Section 1.3 PLACE OF MEETINGS.
The board may designate any place, either within or without the State
of Wisconsin, as the place of any annual meeting or of any special meeting
called by the board. If no designation is made or if a special meeting is
otherwise called, the place of meeting shall be the principal office of the
Company.
Section 1.4 NOTICE OF MEETINGS.
Notice of the time and place of an annual or special meeting shall be
published once in each of 2 weeks, the first publication to be not more than
120 and the second publication to be not less than 10 days prior to the date of
the meeting, in at least 2 newspapers of general circulation, one published in
the City of Madison, Wisconsin, and one published in the City of Milwaukee,
Wisconsin, and in such other newspapers, if any, as the board or executive
committee may determine. Written notice of the time and place of an annual or
special meeting shall also be given by mailing a copy thereof, not more than
120 nor less than 10 days prior to the date of the meeting, to the
policyholders constituting substantially all of the members entitled to vote at
the meeting. In the case of a special meeting or when required by law, the
published and mailed notice of meeting shall include a statement of the purpose
or purposes for which the meeting is to be held. In case the date of the
annual meeting is postponed after published and mailed notices have begun, a
published notice of the postponement shall be made as in the case of the
initial published notice but no mailed notice of the postponement need be
given.
1
<PAGE> 8
Section 1.5 QUORUM.
Members having at least 5% of the votes entitled to be cast at any
meeting, present in person or by proxy at such meeting, shall constitute a
quorum at such meeting. If a quorum is not present at any meeting, a majority
of the members present may adjourn the meeting from time to time without
further notice.
Section 1.6 VOTING.
(a) PROCEDURES. All voting by members at annual and special
meetings shall be in person or by proxy executed in writing by
the member or his duly authorized attorney-in-fact and
delivered to the secretary of the Company on or before a day
specified in the notice of meeting which shall be at least 5
days prior to the date of the meeting. A majority of the
votes entitled to be cast by the members present in person or
by proxy at a meeting at which a quorum is present shall be
sufficient for the election of any trustee or for the adoption
of any other matter voted on at such meeting unless a greater
portion is required by law. Unless sooner revoked, proxies
shall be valid for 11 months from the date of execution and
for such additional period, if any, as may be provided
therein.
(b) FURNISHING PROXIES AND OTHER MATERIAL. The Company may
include the notice of meeting pursuant to Section 1.4 with or
as a part of its annual report for the preceding year or may
send such notice separately. The Company may provide proxies
to any or all of the members together with such information as
the Company deems pertinent with respect to the candidates or
matters being voted upon at the meeting.
(c) EFFECT OF FURNISHING PROXIES. The fact that the Company, by
mail or otherwise, furnishes a proxy to any person shall not
constitute nor be construed as an admission of the validity of
any policy or contract or that such person is a member
entitled to vote at the meeting; and such fact shall not be
competent evidence in any action or proceeding in which the
validity of any policy or contract or any claim under it is at
issue.
(d) VOTING INSPECTORS. Prior to each meeting of members the board
shall appoint, from among members who are not trustees,
candidates for trustee, officers, employees or agents of the
Company, 1 or more voting inspectors and shall fix their fees.
If an inspector so appointed is unable or unwilling to act the
chief executive officer may appoint a substitute from among
members eligible as aforesaid. The Company shall provide such
clerical and mechanical assistance to the inspectors as they
may reasonably require and shall pay the fees and reasonable
expenses of the inspectors.
(e) TABULATION OF VOTING. All voting at a meeting of members,
including voting by holders of proxies, shall be by written
ballot. The votes shall
2
<PAGE> 9
be tabulated by the voting inspectors and shall be
subject to such verification and ascertainment of the validity
thereof and of the qualification of the voters as the
inspectors deem appropriate. The inspectors may employ such
mechanical equipment as they deem advisable to assist in the
tabulation. In the absence of challenge the inspectors may
assume that the signature appearing on a proxy or ballot is
the valid signature of a member entitled to vote, that any
person signing in a representative capacity is duly authorized
so to do, and that the proxy, if not older than permitted
thereby, is valid. After the tabulation has been completed,
all proxies and ballots shall be placed in sealed packages and
preserved by the secretary of the Company for at least 4
months from the date of the meeting.
(f) CERTIFICATE OF ELECTION. Promptly after each meeting of
members the inspectors shall sign and file with the secretary
of the Company and the Wisconsin Commissioner of Insurance a
certificate of the results of the voting at such meeting.
Section 1.7 VOTING RIGHTS.
(a) RECORD DATE. Only those persons who are members of the
Company at the close of business on the record date for a
meeting of members shall be entitled to vote at such meeting.
The record date for an annual or special meeting shall be such
business day not more than 120 days prior to the date of the
meeting as may be established by the board or executive
committee.
(b) NUMBER OF VOTES. Each member shall be entitled to one vote on
each matter presented at a meeting for a vote by members,
regardless of the number or amount of, or the number of lives
insured by, policies or contracts owned by such member.
(c) ELIGIBILITY. All questions concerning the eligibility of
members to vote and the validity of the votes cast at any
meeting shall be determined by the voting inspectors on the
basis of the records of the Company. If a question concerning
eligibility to vote arises as between a person identified as
the owner of the policy or contract on the records of the
Company and a person otherwise claiming to control such policy
or contract, the person shown on the records of the Company as
the owner at the close of business on the record date for the
meeting shall be deemed to be the member entitled to vote at
such meeting.
Section 1.8 NOMINATIONS OF CANDIDATES FOR THE BOARD.
(a) FILING OF BOARD'S PROPOSED NOMINEES. Before each annual
meeting of members, the board shall propose for nomination at
such meeting a member as candidate for every vacancy on the
board to be filled at the ensuing annual meeting as provided
in Section 2.2 and shall cause to be filed with the records of
the Company and the Wisconsin Commissioner of Insurance a
certificate of such proposed nomination
3
<PAGE> 10
signed by the secretary of the Company, giving the
names, occupations and addresses of such proposed nominees and
the terms for which they are to be nominated and stating that
such proposed nominees meet the eligibility requirements then
pertaining to trustees prescribed by Section 2.3(a) and will
accept office if elected.
(b) SUBSTITUTION. In the event any candidate proposed by the
board for nomination pursuant to Section (a) above withdraws
as a candidate prior to the annual meeting, the board may
propose a member for nomination in substitution for the
withdrawing candidate and shall make such filings as are
required pursuant to Section (a) above promptly after such
substitution.
(c) NOMINATION AT MEETING. Subject to Section 2.3(a), nominations
of members as candidates for any vacancy on the board to be
filled at an annual meeting of members, including nomination
of the board's proposed nominees, shall be made at the
meeting; and such nomination may be made by any member who is
present in person or by proxy and is entitled to vote at such
meeting.
Section 1.9 INSPECTION OF RECORDS.
The Company shall keep on file after the record date for each meeting
and until the tabulation of voting at such meeting has been completed, a record
for voting purposes of the names and addresses of the persons shown as the
premium payers as of the close of business on such record date with respect to
the policies and contracts of the members. Subject to provisions of the
Wisconsin Statutes and with due regard to the Company's status as an insurance
company and financial institution, a member, or his agent or attorney, may
inspect such record at any reasonable time for the purpose of communicating
with other members in regard to nomination or election of candidates for the
board or any other matter being submitted for vote at a meeting of the members.
No person may, directly or indirectly, use any information obtained from any
such inspection for any other purpose, and the Company may impose reasonable
rules to insure that such information is not used for any other purpose.
ARTICLE II
BOARD OF TRUSTEES AND COMMITTEES
Section 2.1 GENERAL POWERS.
The business and affairs of the Company shall be managed by the board.
Section 2.2 COMPOSITION.
(a) NUMBER AND TENURE. The number of trustees of the Company
shall be not more than 30 or if permitted by law such other
number, not less than 9, as the board may establish from time
to time. The regular term of office of a trustee shall
commence immediately after the annual meeting of members at
which such trustee is elected and end
4
<PAGE> 11
on the date of the fourth succeeding annual meeting of
members. The vacancies on the board to be filled at each
annual meeting of members shall be the offices of those
trustees whose regular terms are scheduled to expire on the
date of such meeting and the offices of any other trustees
that become vacant during the 12 months ending on the January
1 preceding such meeting. All elections shall be for the
regular term except those to fill the offices of trustees that
become vacant during the 12 months ending on the January 1
preceding such meeting which shall be for the unexpired
regular term of such vacant offices. Except as provided in
paragraph (c), each trustee elected at an annual meeting shall
hold office for the term for which elected and until his
successor has been elected or appointed and qualified.
(b) CLASSIFICATION. Trustees shall be divided into 4 classes,
which may but need not be equal, according to the expiration
date of the regular terms of offices. The regular term of
office of one of the classes of trustees shall expire on the
date of each annual meeting of members. On July 26, 1972, the
4 classes of trustees shall be those whose regular terms are
scheduled to expire on the date of the annual meeting of
members in 1973, 1974, 1975 and 1976, respectively.
(c) RETIREMENT. The board may by resolution provide for mandatory
retirement of trustees and members of the committees of the
board. A trustee or member of a committee of the board shall
be retired on the date provided in the resolution even though
elected for a term extending beyond such date.
Section 2.3 QUALIFICATIONS.
(a) CITIZENSHIP, AGE, OTHER OFFICES. Only those members of the
Company shall be eligible to be nominated or elected or to
serve as a trustee who are citizens of the United States of
America, are not less than 25 years of age nor more than the
retirement age, if any, as then established by resolution of
the board pursuant to Section 2.2(c), are not ineligible under
paragraph (b) and have no relationship which would create a
conflict of interest or impair independence of judgment in
regard to the affairs of the Company in violation of the rules
then prescribed by the board or executive committee. Except
for the chairman of the board, the president and 2 other
executive officers, no trustee shall be an executive officer,
officer, other employee or agent of the Company.
(b) NON-ATTENDANCE. The failure of a trustee to attend at least 1
meeting of the board within a period of 9 consecutive calendar
months shall thereupon result in an automatic forfeiture of
his office, unless such forfeiture is avoided as provided
below; and such trustee shall not be eligible to be nominated
or elected or to serve as a trustee until at least 6 months
have elapsed following such forfeiture. Any such forfeiture
shall result in a vacancy to be filled as in the case of other
5
<PAGE> 12
vacancies on the board. A trustee may avoid such forfeiture if during
said 9 month period he attends a meeting of the executive committee
even though not a member of that committee, but no trustee may so
avoid forfeiture more than once during the term he is then serving
without the express approval of the executive committee.
Section 2.4 COMMITTEES OF THE BOARD.
The standing committees of the board shall be an executive committee
and a finance committee and such other standing committees as the board may
establish and designate as such. The board may from time to time establish
such other committees as it deems advisable; and the members of such other
committees shall be appointed by or in the manner provided by the board. Any
trustee may attend and participate in any meeting of a standing committee of
the board, except that no trustee who is not a member of or an alternate on a
standing committee may vote upon any matter before such committee.
Section 2.5 EXECUTIVE COMMITTEE.
(a) COMPOSITION AND POWERS. The executive committee shall consist
of such number of trustees as the board may determine, to be
elected annually by the board, plus the chairman of the board,
if any, and the president, if a trustee. When the board is
not in session, the executive committee shall have and may
exercise all of the powers of the board except (i) the powers
granted to the finance committee by Section 2.6, (ii) the
power to adopt, amend or repeal by-laws, (iii) the power to
elect a chairman of the board, president or other executive
officer, and (iv) the power to fill vacancies in the board or
any of its standing committees or, except as provided in
Section 4.4, in the office of chairman of the board, president
or other executive officer.
(b) RECORDS. The executive committee shall keep a record of its
transactions which record shall be made available to each
member of the board, and so much thereof shall be read at the
next regular meeting of the board as it may order.
Section 2.6 FINANCE COMMITTEE.
(a) COMPOSITION AND POWERS. The finance committee shall consist
of such number of trustees as the board may determine, to be
elected annually by the board, plus the chairman of the board,
if any, and the president, if a trustee. When the board is
not in session, the finance committee shall have and may
exercise all of the powers of the board in regard to the
assets and investments of the Company (except assets used in
the operation of the Company's principal office and agencies)
including, without limitation, the power directly or by
delegation to do all such acts and things as it may deem
necessary and proper to (i) establish the Company's financial
and investment policy, (ii) invest, reinvest, manage, select,
sell and otherwise dispose of the Company's assets, (iii)
designate depositories for the Company's funds and authorize
persons to make deposits in and withdrawals from such
depositories,
6
<PAGE> 13
(iv) appoint one or more managers of the Company's regional
loan and real estate offices, (v) borrow money for the
use and benefit of the Company in such amount and on such
terms as it shall determine, and (vi) pledge the Company's
assets as security for the payment of such loans or other
proper purposes.
(b) RECORDS. The finance committee shall keep a record of its
transactions which record shall be made available to each
member of the board and all standing committees of the board
and so much thereof shall be read at the next regular meeting
of the board as it may order.
Section 2.7 VACANCIES.
Vacancies in the board or any committee of the board may be filled by
the board at any meeting. A person appointed to fill a vacancy in the board
shall hold office until the next annual meeting of members and until his
successor has been elected or appointed and qualified, except that any person
appointed to fill any such vacancy occurring after January 1 of any year but
prior to the next following meeting of members shall hold office until the
second annual meeting of members following his appointment and until his
successor has been elected or appointed and qualified. A person appointed to
fill a vacancy on a committee shall hold office until the next annual meeting
of the board.
Section 2.8 ALTERNATE MEMBERS ON STANDING COMMITTEES OF THE BOARD.
(a) ELECTION. The board shall elect annually trustees to serve as
alternate members on any standing committee of the board, when
so designated by the committee or the chairman of the board or
the president to take the place of absent members, or to fill
vacancies on such committees until the next meeting of the
board.
(b) COMPENSATION. An alternative member on any committee shall
receive, during his period of service, compensation as fixed
by the board. The board may determine by a generally
applicable resolution to what extent, if any, the compensation
of absent members shall be withheld or reduced during the
period of service of alternates.
Section 2.9 COMPENSATION OF TRUSTEES.
By resolution of the board, each trustee may be paid his reasonable
expenses, if any, for attendance at each meeting of the board and its
committees and, if not an executive officer, may be paid a stated compensation
as trustee and committee member or a fixed sum for attendance at each meeting
of the board or its committees or both. Such payment shall not prevent the
payment of reasonable compensation to a trustee (other than an executive
officer) for the authorized performance of professional, appraisal, or other
technical or special service outside the scope of his regular duties as trustee
or member of a committee.
7
<PAGE> 14
ARTICLE III
MEETINGS OF THE BOARD AND
COMMITTEES OF THE BOARD
Section 3.1 REGULAR MEETINGS.
An annual meeting of the board for the election of standing committees
and the officers specified in Section 4.6(a), and the transaction of such other
business as may properly come before the meeting, shall be held annually at
such time and place, either within or without the State of Wisconsin, as
designated by resolution of the board and upon such notice as the board may
determine. Additional regular meetings of the board and regular meetings of a
committee may be held at such times and places and upon such notice as the
board or committee may determine.
Section 3.2 SPECIAL MEETINGS.
Special meetings of the board or a committee may be called at any time
by or at the request of the chairman of the board or the president, and in
addition, special meetings of the board may be called at any time by or at the
request of the executive committee or 9 or more trustees.
Section 3.3 QUORUM.
A quorum for the transaction of business at any meeting of the board
or any committee shall consist of a majority of the board or of the committee,
except that a quorum for a committee composed of an even number of persons
shall consist of 50% of the committee. Less than a quorum may adjourn the
meeting from time to time until a quorum is present.
Section 3.4 MANNER OF ACTING.
The act of a majority of the board or a committee present at a meeting
at which a quorum is present shall be the act of the board or committee, unless
the board or the committee determines a greater number is required.
Section 3.5 NOTICE OF SPECIAL MEETINGS.
Notice of special meetings of the board or a committee shall be given
in writing or by telegram to each trustee or committee member at his last known
address as it appears on the Company's records. Such notice shall be given at
least 6 days prior to the meeting date except in the case of finance and
executive committee meetings for which 2 days prior notice shall suffice. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, so addressed, with postage prepaid. If sent by telegram, such
notice shall be deemed to be given when the telegram is delivered to the
telegraph company. Neither the business to be transacted at, nor the purpose
of, any special meeting of the board or a committee need be specified in the
notice of such meeting except as provided in Section 11.1(b) in regard to
amendment or repeal of the By-laws.
Section 3.6 WAIVER OF NOTICE.
Any notice of the time or place of any special meeting of the board or
a committee may be dispensed with if every member of the board or committee
8
<PAGE> 15
attends such meeting or if at any time every absent member of the board or
committee signs a written waiver of notice or waives notice by telegram.
Neither the business to be transacted at, nor the purpose of, any meeting of
the board or committee need be specified in the waiver of such meeting.
Section 3.7 ACTION WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting by the board
or a committee may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed by every member of the board or committee.
ARTICLE IV
EXECUTIVE AND OTHER OFFICERS
Section 4.1 EXECUTIVE OFFICERS.
The executive officers of the Company shall consist of a president and
such other executive officers with such titles, powers and duties as may be
prescribed from time to time by the board. The board may from time to time
elect from among its members a chairman of the board, who shall be an executive
officer of the Company with such powers and duties as may be prescribed by the
board. Any 2 or more offices may be held by the same person except the offices
of president and secretary and the offices of president and vice president.
The executive officers shall hold office during the pleasure of the board. For
the purposes of the Wisconsin Statutes the principal officers shall be the
chairman of the board, if any, the president and the other executive officers.
There shall be at all times at least 3 principal officers.
Section 4.2 POWERS AND DUTIES OF EXECUTIVE OFFICERS.
The chairman of the board, if any, shall be chairman of and preside at
the meetings of the members and of the board and shall exercise such other
powers and perform such other duties as may be required by the board. In the
absence of action by the board vesting such powers in the chairman of the
board, the president shall be the chief executive officer and have the general
direction and management of the Company's affairs, and shall exercise such
powers and perform such duties as are incident to his office or as may be
required of him by the board or the executive or finance committees. The chief
executive officer, if a member of the Board, shall be chairman of and preside
at the meetings of the executive and finance committees. In the absence of, or
if there is no chairman of the board, the president shall preside at the
meetings of the members and, if a member of the board, at meetings of the
board. All other executive officers of the Company shall exercise such powers
and perform such duties as are usually incident to their office and such other
duties, including presiding at meetings of the members in the absence of the
chairman of the board and the president, as shall be assigned to or required of
them, from time to time, by the board, the executive committee, the finance
committee or the president or, if authorized by the board, the chairman of the
board.
Section 4.3 OTHER OFFICERS.
9
<PAGE> 16
The other officers of the Company shall include a secretary, a
treasurer and such assistants to the several executive officers and such other
officers as the board or executive committee may from time to time designate as
such, all of whom shall hold office during the pleasure of the board or
executive committee. Any such officer may be designated an executive officer
by the board or executive committee. Each officer of the Company shall perform
such duties as may be assigned to or required of him from time to time, by the
executive committee, the finance committee, the president, the head of his
department or, if authorized by the board, the chairman of the board.
Section 4.4 VACANCIES AND ABSENCES.
Any vacancy in the office of chairman of the board, president or other
executive officers may be filled at any meeting of the board, or until the next
meeting of the board, by the executive committee. In the event of the death,
prolonged absence or inability or refusal to act of a chairman of the board who
has been designated by the board as the chief executive officer, the president
shall be the chief executive officer of the Company. In the prolonged absence
of the president or in the event of his death, inability or refusal to act, an
individual designated by the board or the executive committee shall exercise the
powers and perform the duties of the president. Such designation, if made by
the executive committee, shall not extend beyond the next meeting of the board.
Section 4.5 COMPENSATION.
Compensation of executive officers, officers and other employees of the
Company shall be fixed by or in the manner provided by the board.
Section 4.6 ELECTION AND APPOINTMENT OF OFFICERS.
Officers shall be elected or appointed from time to time, but at least
annually, as follows:
(a) The chairman of the board, if any, the president and other
executive officers shall be elected by the board.
(b) Other officers shall be appointed by the board or in a manner
provided by resolution of the board.
ARTICLE V
EXAMINING COMMITTEE
Section 5.1 SELECTION OF THE EXAMINING COMMITTEE.
An examining committee, consisting of not more than 5 or less than 3
individuals who are either members of the Company or whose lives are insured by
the Company, who are not trustees, agents, executive officers, officers or
other employees of the Company, shall be elected annually by the board, and the
board shall designate the chairman of such committee. Not more than 2 members
of any examining committee shall have been members of the previous examining
committee. A vacancy in the examining committee may be filled at any time by
the board or one of its standing committees.
10
<PAGE> 17
Section 5.2 FUNCTIONS OF THE EXAMINING COMMITTEE.
The purpose of the examining committee shall be to make an
investigation of and to inquire into the general policies, operations and
management of the Company. The committee shall have such powers as may be
determined from time to time by the board and shall make its reports to the
board.
ARTICLE VI
OFFICIAL BONDS; CHECKS; OTHER INSTRUMENTS
Section 6.1 OFFICIAL BONDS.
The board, the executive committee or the finance committee may require
a bond from an executive officer, officer, other employee or agent of the
Company, in such sum and with such sureties as it may deem proper.
Section 6.2 CHECKS.
Disbursement of the funds of the Company shall be made upon the check
of the Company signed by such persons and in such manner as may be determined
by the finance committee. Such persons as may be designated by the finance
committee shall each have authority to endorse checks and other instruments
received by the Company or to execute powers of attorney authorizing other
persons to make such endorsements.
Section 6.3 OTHER INSTRUMENTS.
The chairman of the board, if any, the president and other executive
officers, the vice presidents, and such other persons as the board, the
executive committee or the finance committee may designate shall each have
authority to execute and acknowledge on behalf of the Company all instruments
executed in the name of the Company; and the chairman of the board, the
president and other executive officers, and the vice presidents shall each have
authority to execute powers of attorney authorizing other persons to execute
and acknowledge such instruments in specific instances. The secretary and any
associate or assistant secretary shall each have authority to attest,
countersign and acknowledge all such instruments requiring attestation,
countersignature or acknowledgement. Insurance policies and annuity contracts
issued by the Company and endorsements thereto shall be executed in the manner
provided by the board or executive committee.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION OF TRUSTEES, OFFICERS AND EMPLOYEES.
(a) SUCCESSFUL DEFENSE. The Company shall indemnify a trustee,
officer, employee or member of a committee, to the extent he or she
has been successful on the merits or otherwise in the defense of a
proceeding, for all reasonable expenses incurred in the proceeding
if the trustee, officer, employee or member of a committee was a
party because he
11
<PAGE> 18
or she is a trustee, officer, employee or member of a committee
of the Company.
(b) OTHER CASES. In cases not included under (a) above, the Company
shall indemnify a trustee, officer, employee or member of a
committee against liability incurred in a proceeding to which the
trustee, officer, employee or member of a committee was a party
because he or she is a trustee, officer, employee or member of a
committee of the Company or was serving at the Company's request
as a director, officer, employee, agent, partner, trustee, member
of any governing or decision-making committee of another
corporation, partnership, joint venture, trust or other
enterprise, unless liability was incurred because the trustee,
officer, employee or member of a committee breached or failed to
perform a duty owed to the Company and the breach or failure to
perform constitutes any of the following: (i) a wilful failure to
deal fairly with the Company or its members in connection with a
matter in which the trustee, officer, employee or member of a
committee has a material conflict of interest, (ii) a violation of
criminal law, unless the trustee, officer, employee or member of
a committee had reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her conduct was
unlawful; (iii) a transaction from which the trustee, officer,
employee or member of a committee derived an improper personal
profit; or (iv) wilful misconduct. The termination of a
proceeding by judgment, order, settlement, conviction or upon a
plea of no contest or its equivalent, does not, by itself, create
a presumption that indemnification is not required pursuant to this
section. A trustee, officer, employee or member of a committee
who seeks indemnification under this section shall make a written
request to the Company. Indemnification under this section is not
required if the trustee, officer, employee or member of a
committee previously received indemnification or allowance of
expenses in connection with the same proceeding.
Section 7.2 DETERMINATION OF RIGHT TO INDEMNIFICATION.
Any indemnification under Section 7.1, unless ordered by a court, shall
be made by the Company only as authorized in the specific case upon a
determination that indemnification of the trustee, officer, employee or member
of a committee is proper in the circumstances because he or she has met the
applicable standard of conduct. Such determination shall be made by one of the
following means selected by the person seeking indemnification:
(a) By majority vote of a quorum of the Board consisting of trustees
not at the time parties to the same or related proceedings. If a
quorum of disinterested trustees cannot be obtained, by majority
vote of a committee duly appointed by the Board and consisting
solely of two or more trustees not at the time parties to the same
or related proceedings. Trustees who are parties to the same or
related proceedings may participate in the designation of members
of the committee.
12
<PAGE> 19
(b) By independent legal counsel selected by a quorum of the Board
or its committee in the manner described in (a) or, if unable to
obtain such a quorum or committee, by majority vote of the
full Board, including trustees who are parties to the same or
related proceedings.
(c) By a panel of three arbitrators consisting of one arbitrator
selected by those trustees entitled under (b) to select
independent legal counsel, one arbitrator selected by the person
seeking indemnification, and one arbitrator selected by the two
arbitrators previously selected.
Section 7.3 ALLOWANCE OF EXPENSES AS INCURRED.
Upon written request by a trustee, officer, employee or member of a
committee who is party to a proceeding, the Company may pay or reimburse his or
her reasonable expenses as incurred, if such advance payment is authorized in a
manner provided in Section 7.2, and if the person provides the Company with the
following:
(a) A written affirmation of his or her good faith belief that he or
she has not breached or failed to perform his or her duties to
the Company; and
(b) A written undertaking, executed personally or on his or her
behalf, to repay the allowance to the extent that it is
ultimately determined under Section 7.2 that indemnification is
not required and that indemnification is not ordered by a court.
The undertaking under this section shall be an unlimited, general
obligation of the person involved, may be secured or unsecured,
and may be accepted without reference to his or her ability to
repay.
Section 7.4 ADDITIONAL RIGHTS TO INDEMNIFICATION AND ALLOWANCE OF EXPENSES.
Except as limited by law, the indemnification and allowance of expenses
provided by this article do not preclude any additional right to
indemnification or allowance of expenses that a trustee, officer, employee,
member of a committee, or other person serving at the request of the Company as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise may have under any written agreement
between such person and the Company, resolution of the Board, or resolution
adopted by the members.
Section 7.5 INSURANCE.
The Company may purchase and maintain insurance on behalf of any person
who is or was a trustee, officer, employee or member of a committee of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, or a partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under this article.
Section 7.6 GENERAL.
13
<PAGE> 20
For purposes of this article, the definitions contained in Section
181.041 of the Wisconsin Statutes are incorporated herein by this reference
except that "trustee" shall be used wherever the term "director" appears in
the statute. The term "employee" shall mean a natural person who is or was an
employee of the Company or who, while an employee of the Company, is or was
serving at the Company's request as a director, officer, partner, trustee,
member of any decision-making committee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, and, unless
the context requires otherwise, the estate or personal representative of the
employee. "Member of a committee" shall mean a member of the examining
committee described in Article V. The provisions of this article shall apply
from the date of adoption of this By-Law, regardless of the date of the
occurrence for which indemnification is sought. Any right to indemnification
under any prior By-Law of the Company is terminated as of the date of adoption
of this By-Law.
ARTICLE VIII
EMERGENCY PROVISIONS
Section 8.1 CONTINUITY OF MANAGEMENT.
To insure continuity of management in the event of a national emergency
caused by miltary attack or by a nuclear, atomic or other disaster, the
following delegation of executive authority and responsibility is provided on a
temporary basis pursuant to the Wisconsin Statutes until the executive committee
or a board of trustees can act:
(a) ACTING PRESIDENT. In the event such emergency results in the
disability or absence of the chairman of the board and the president,
then an executive officer in the order specified in the latest
resolution of the board relating to powers and duties of executive
officers shall be and is hereby designated as acting president and
chief executive officer, but if no executive officer is then
available, the trustee senior in point of service on the board of
trustees, who is able and willing to act, shall be and is hereby
designated the acting president and chief executive officer.
(b) POWERS OF ACTING PRESIDENT. The acting president shall exercise the
powers and perform the duties of the president, except as otherwise
provided in the By-laws, and shall have authority to relocate the
principal office within the United States, to take charge of all
Company property and records, including copies of such records as
may be deposited outside the principal office, and to sign all
instruments relating to the business of the Company, including
checks.
(c) EXECUTIVE COMMITTEE. The acting president shall immediately call a
meeting of the executive committee, and such committee shall have
authority to designate substitutes for absent or disabled executive
officers to act until the next meeting of the board, and shall have
14
<PAGE> 21
authority to determine a suitable location within the United
States for the Company's principal office.
(d) COMMITTEE QUORUM. If by reason of such emergency a quorum of
either the executive committee or finance committee
cannot be obtained, then the acting president shall have
authority to designate such number of trustees as may be
required for a quorum, to serve as substitutes on such
committee. If sufficient substitutes are not available, the
acting president may reduce the number constituting a quorum or
any committee to not less than 3.
(e) BOARD QUORUM. If by reason of such emergency a quorum of the
board cannot be obtained, 3 trustees shall constitute a
quorum for the transaction of business at all meetings of the
board. Any vacancy in the board may be filled by a majority of
the remaining trustees, though less than a quorum, or by a sole
remaining trustee. If there are no surviving trustees but at
least 3 executive officers of the Company survive, then the
president if he survives and 2 (or 3 if the president does not
survive) other executive officers in the order listed in the
latest resolution of the board relating to powers and duties of
executive officers shall be the trustees and shall possess
all of the powers of the previous board and such powers as are
granted herein. By majority vote such emergency board of
trustees may elect other trustees. If there are not at least 3
surviving executive officers, the Wisconsin Commissioner of
Insurance or duly designated person exercising the powers of
the Commissioner of Insurance shall appoint 3 persons as
trustees who shall possess all of the powers of the previous
board and such powers as are granted herein, and these persons
by majority vote may elect other trustees.
ARTICLE IX
OFFICES
Section 9.1 OFFICES.
The location of the principal office of the Company shall be determined
by the board. The Company may have other offices at such locations as may be
necessary or convenient for the conduct of its business.
ARTICLE X
CORPORATE SEAL
Section 10.1 CORPORATE SEAL.
The board may prescribe a corporate seal for the Company, which shall
contain the name of the Company, the words "Corporate Seal" and such other
devices, if any, as the board may determine.
15
<PAGE> 22
ARTICLE XI
AMENDMENTS
Section 11.1 AMENDMENT OR REPEAL OF THE BY-LAWS.
(a) BY MEMBERS. The members may, at any regular or special
meeting of the members at which a quorum is present, amend or
repeal these By-laws or adopt new By-laws by the affirmative
vote of at least two-thirds of the votes entitled to be cast
by the members present in person or by proxy at such meeting.
(b) BY BOARD. The board may, at any regular or special meeting of
the board, amend or repeal these By-laws or adopt new By-laws,
except that no by-law adopted by the members shall be subject
to amendment or repeal by the board. Written notice setting
forth the substance of the proposed action shall be given in
the manner provided in Section 3.5 to every member of the
board at least 6 days prior to the meeting date.
APPENDIX
RESTATED ARTICLES OF INCORPORATION
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
a Wisconsin corporation
(Adopted July 26, 1972)
ARTICLE I
NAME
The name of the Company shall be The Northwestern Mutual Life
Insurance Company.
ARTICLE II
PERIOD OF EXISTENCE
The period of existence of the Company shall be perpetual.
ARTICLE III
PRINCIPLES AND PURPOSES
The Company is a mutual insurance company, without capital stock,
incorporated in 1857 by special act of the Wisconsin Legislature. The Company
is organized and operated for the mutual protection and benefit of those
persons who hold insurance policies or annuity contracts issued by the Company
or who have beneficial interests in such policies or contracts. Neither such
persons nor the
16
<PAGE> 23
policies or contracts are or shall be subject to assessment for any purpose
whatsoever.
The purposes of the Company are to engage in any lawful activity for
which insurance corporations may be organized under the Wisconsin Statutes,
including without limitation the conducting of an insurance business and
businesses incidental thereto, the making of investments and the ownership and
operation of subsidiaries, all as and to the extent authorized by the Wisconsin
Statutes.
ARTICLE IV
PRINCIPAL OFFICE
The location of the principal office of the Company shall be
determined by the board of trustees. At the date of adoption of these Articles
the principal office is located in the City of Milwaukee, Wisconsin.
ARTICLE V
MEMBERS
The members of the Company shall be those persons who are
policyholders of one or more insurance policies or deferred annuity contracts
issued by the Company, then in force and not matured by death of the insured or
annuitant or attainment of maturity date.
The rights of members shall be as provided under the Wisconsin
Statutes, these Articles and the By-laws of the Company. The rules governing
voting by a member, including eligibility to vote and voting procedures, shall
be as provided in the Wisconsin Statutes and the By-laws.
ARTICLE VI
BOARD OF TRUSTEES
The board of trustees of the Company shall consist of such individual
members of the Company, not less than nine, as may be provided in the By-laws.
The By-laws may prescribe other qualifications for the trustees and may divide
them into classes according to their terms of office. The method of election
or appointment of the trustees and their terms of office shall be as provided
in the By-laws. The term "trustee" may be changed to "director" by an
amendment to the By-laws.
ARTICLE VII
MEMBERS' MEETINGS
Regular and special meetings of the members of the Company shall be
held as provided in the By-laws. The Company may make reasonable expenditures
in support of candidates nominated by the board for election as trustees and
the position of its management at any meeting.
17
<PAGE> 24
ARTICLE VIII
AMENDMENTS
These Articles may be amended in the manner authorized by law at the
time of adoption of the amendment.
18
<PAGE> 1
EXHIBIT 99.B9
The Northwestern Mutual Life Insurance Company agrees to pay the benefits
provided in this contract, subject to its terms and conditions. Signed at
Milwaukee, Wisconsin on the Issue Date.
/s/ James D. Ericson /s/ John M. Bremer
PRESIDENT AND C.E.O. SECRETARY
FLEXIBLE PAYMENT VARIABLE ANNUITY-ACCOUNT B
Net Purchase Payments accumulated in a Separate Account, assets
of which are invested in shares of one or more mutual funds, or
Guaranteed Interest Fund.
Retirement benefit payable at maturity.
Payment at death before maturity.
Contract benefits payable in one sum or as variable or
guaranteed monthly income. Variable Payment Plan benefits
described in Section 11.
Participating.
AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DIVISIONS AND VARIABLE PAYMENTS
PROVIDED BY THIS CONTRACT ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT BUT ARE
VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT EXPERIENCE OF
THE SEPARATE ACCOUNT.
RIGHT TO RETURN CONTRACT -- Please read this contract carefully. The Owner may
return the contract for any reason within ten days after receiving it. Return
of the contract is effective on the date written notice of the return is
delivered, mailed or sent by telegram to either The Northwestern Mutual Life
Insurance Company, 720 E. Wisconsin Avenue, Milwaukee, Wisconsin 53202 or the
agent who sold the contract. If returned, the contract will be cancelled and
the Company will refund the sum of (a) the difference between the Purchase
Payments paid and the amounts, if any, allocated to the Separate Account plus
(b) the value of the contract on the effective date of return.
[NORTHWESTERN MUTUAL LIFE LOGO]
CONTRACT NUMBER V12 345 678
ANNUITANT John J. Doe
ISSUE DATE January 15, 1996
Sex Neutral
<PAGE> 2
TABLE OF CONTENTS
PAGE
CONTRACT INFORMATION, SEPARATE ACCOUNT DIVISIONS 3
LOADS, FEES, AND CHARGES;
PURCHASE PAYMENTS, ACCUMULATION VALUE, PAYMENT PLANS 4
SECTION 1. GENERAL TERMS AND DEFINITIONS 5
SECTION 2. SEPARATE ACCOUNT 6
- Definition of Separate Account
- Accumulation Units
- Net Investment Factor
- Substitution and Change
SECTION 3. GUARANTEE INTEREST FUND 7
- Guaranteed Interest Fund
- Accumulation Value
- Transfer Restrictions
- Maximum Accumulation Value
SECTION 4. PURCHASE PAYMENTS TRANSFERS AND WITHDRAWALS 7
- Payment of Purchase Payments
- Application of Purchase Payments
- Selection of Division for Purchase Payments
- Transfer of Accumulation Units
- Withdrawals and Full Surrender
- Effective Date
SECTION 5. BENEFITS 8
- Maturity Benefit
- Payment at Death
SECTION 6. BENEFICIARIES 9
- Definition of Beneficiaries
- Naming and Change of Beneficiaries
- Succession in Interest of Beneficiaries
- General
SECTION 7. LOADS, FEES, AND CHARGES 10
- Contract Fee
- Sales Load and Premium Taxes
- Withdrawal Charge
SECTION 8. OWNERSHIP 11
- The Owner
- Transfer of Ownership
- Collateral Assignment
- Voting Rights and Reports to Owners
1
<PAGE> 3
PAGE
----
SECTION 9. THE CONTRACT 11
- Guarantees
- Valuation of Assets
- Determination of Values
- Deferment of Benefit Payments
- Dividends
- Incontestability
- Misstatement of Age or Sex
- Entire Contract; Changes
- Termination of Contract
SECTION 10. PAYMENT OF CONTRACT BENEFITS 12
- Payment of Benefits
- Payment at Death
- Effective Date for Payment Plan
- Payment Plan Elections
SECTION 11. PAYMENT PLANS 13
- Description of Payment Plans
- Allocation of Benefits
- Annuity Units under Variable Payment Plans
- Payments under Variable Payment Plans
- Transfers between Variable Payment Plans
- Withdrawal under Payment Plans
- Payment Plan Rates
ADDITIONAL BENEFITS (if any) Following page
APPLICATION Attached to the contract
ENDORSEMENTS
to be made only by the Company at the Home Office
2
<PAGE> 4
CONTRACT INFORMATION
CONTRACT NUMBER V12 345 678
PLAN Flexible Payment Variable Annuity
ADDITIONAL BENEFITS None
TAX REPORTING CATEGORY Personal Annuity
ANNUITANT John J. Doe
AGE AND SEX 35 Male - SN
OWNER John J. Doe, the Annuitant
ISSUE DATE January 15, 1996
CONTRACT ANNIVERSARY January 15, 1997 and each January 15
thereafter
MATURITY DATE January 15, 2026
DIRECT BENEFICIARY Jane K. Doe, Wife of the Annuitant
INVESTMENT DIVISIONS
On the Issue Date, Purchase Payments and contract values may be allocated among
the following Investment Accounts. Available Separate Account Divisions are
subject to change. See Section 2.1.
Divisions of Separate Account B:
Select Bond Division
International Equity Division
Money Market Division
Balanced Division
Index 500 Stock Division
Aggressive Growth Stock Division
High Yield Bond Division
Growth Stock Division
Growth and Income Stock Division
Guaranteed Accounts:
Guaranteed Interest Fund
Page 3
<PAGE> 5
CONTRACT NUMBER V12 345 678
LOADS, FEES, AND CHARGES
DEDUCTION FROM PURCHASE PAYMENTS:
SALES LOAD (See Section 7.2):
Total Purchase Payments Amount Deducted
Paid Under the Contract From Purchase Payment
First $100,000 4.0%
Next $400,000 2.0%
Next $500,000 1.0%
Balance over $1,000,000 0.5%
PREMIUM TAX (See Section 7.2):
For the first Contract Year, Premium Taxes are not deducted
from Purchase Payments. After the first Contract Year, the Company
may deduct Premium Taxes from Purchase Payments received or
benefits paid.
ANNUAL ANNUITY RATE AND EXPENSE GUARANTEE CHARGE (See Section 2.3):
0.40% at Issue; 0.75% Maximum
ANNUAL CONTRACT FEE (See Section 7.1):
$30 charged on the contract anniversary. The contract fee will
be waived if the Accumulation Value of the contract equals or exceeds
$50,000 on the contract anniversary.
TRANSFER FEE (See Sections 4.4 and 11.5):
$25 beginning with the thirteenth transfer in any Contract Year.
WITHDRAWAL CHARGE: Not Applicable
MINIMUM PURCHASE PAYMENTS, ACCUMULATION VALUE, PAYMENT PLANS
MINIMUM PURCHASE PAYMENT (See Section 4.1): $25
MINIMUM ACCUMULATION VALUE (See Section 9.9):
$2,000 after the first contract anniversary
MINIMUM PAYMENT UNDER PAYMENT PLAN (See Sections 9.9 and 10.4): $20
Page 4
<PAGE> 6
GUARANTEED INTEREST FUND - TABLE OF GUARANTEED VALUES
The table shows minimum guaranteed values and assumes a $10,000 Purchase
Payment made at the time of issue followed by subsequent $1,000 Purchase
Payments made annually thereafter on each contract anniversary. The values are
based on the assumption that 100% of all net Purchase Payments are allocated
to, and remain in, the Guaranteed Interest Fund.
<TABLE>
<CAPTION>
End of
Contract Accumulation Cash
Year October 1, Value Value
<S> <C> <C> <C>
1 1996 $ 9,888 $9,888
2 1997 11,143 11,143
3 1998 12,435 12,435
4 1999 13,766 13,766
5 2000 15,137 15,137
6 2001 16,549 16,549
7 2002 18,003 18,003
8 2003 19,501 19,501
9 2004 21,044 21,044
10 2005 22,633 22,633
11 2006 24,270 24,270
12 2007 25,956 25,956
13 2008 27,692 27,692
14 2009 29,481 29,481
15 2010 31,323 31,323
16 2011 33,221 33,221
17 2012 35,176 35,176
18 2013 37,189 37,189
19 2014 39,262 39,262
20 2015 41,398 41,398
Age 60 2020 53,108 53,108
Age 65 2025 66,817 66,817
</TABLE>
This table is based on the guaranteed annual interest rate of 3%. Higher
declared rates of interest will increase values. Values shown at the end of
contract years do not reflect any Purchase Payments paid on that contract
anniversary. The actual guaranteed values may differ from those shown above,
depending on the amount and frequency of Purchase Payments.
Page 4A
<PAGE> 7
SECTION 1. GENERAL TERMS AND DEFINITIONS
ACCUMULATION UNIT. A unit of measure used to determine the value of the
interest of this contract in the Separate Account prior to the date on which
amounts are placed under a payment plan.
ACCUMULATION VALUE. The Accumulation Value of a Separate Account Division is
the total value of all Accumulation Units in that Division. The Accumulation
Value of the Guaranteed Interest Fund is the sum of amounts applied to the
fund, plus credited interest, less amounts withdrawn or transferred from the
fund. The Accumulation Value of the contract is the sum of the Accumulation
Values of all Investment Accounts.
ANNUITANT. The person upon whose life this contract is issued and contract
benefits depend.
ANNUITY UNIT. A unit of measure used to determine the amount of variable
payments under a variable payment plan and the value of the interest of a
variable payment plan in the Separate Account.
COMPANY. The Northwestern Mutual Life Insurance Company.
CONTRACT FEE. An annual charge for administrative expenses made on each
contract anniversary prior to the Maturity Date.
CONTRACT YEAR. The first Contract Year is the period of time ending on the
first contract anniversary. Subsequent Contract Years are the annual periods
between contract anniversaries.
DIVISION. A component of the Separate Account to which the Owner may allocate
Purchase Payments and contract values.
GUARANTEED INTEREST FUND. The portion of the contract that is credited with a
guaranteed interest rate and which is held as part of the general assets of the
Company.
HOME OFFICE. The office of the Northwestern Mutual Life Insurance Company
located at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
INVESTMENT ACCOUNT. The Guaranteed Interest Fund and Separate Account
Divisions available for allocation of Purchase Payments and contract values.
The available Investment Accounts are listed on page 3.
ISSUE DATE. The date this contract is issued and becomes effective.
MATURITY DATE. The date upon which contract benefits will become payable.
If the contract is continued in force under the Optional Maturity Date
provision, the Optional Maturity Date will become the Maturity Date.
NET PURCHASE PAYMENT. A Purchase Payment less all applicable deductions.
Deductions may include the Sales Load and Premium Tax.
OPTIONAL MATURITY DATE. The contract anniversary nearest the Annuitant's 90th
birthday. Upon reaching the Maturity Date shown on page 3, the Owner may elect
to continue the contract in force until this Optional Maturity Date.
OWNER. The person possessing the ownership rights stated in this contract.
PREMIUM TAX. A tax imposed by a governmental entity when Purchase Payments and
charges for the Disability Waiver of Purchase Payment Benefit are received or
benefits are paid.
PURCHASE PAYMENT. A payment made by or on behalf of the Owner with respect to
this contract excluding any charge for the Disability Waiver of Purchase
Payment Benefit.
SALES LOAD. A deduction made from Purchase Payments received.
SEPARATE ACCOUNT. NML Variable Annuity Account B. The Separate Account
consists of assets set aside by the Company, the investment performance of
which is kept separate from that of the general assets and all other separate
account assets of the Company.
WITHDRAWAL CHARGE. A deduction that is made from maturity benefits and
withdrawal amounts.
WITHDRAWAL CHARGE FREE AMOUNT. For a withdrawal, the amount that can be
withdrawn without a Withdrawal Charge prior to the withdrawal of Net Purchase
Payments.
TRANSFER FEE. A deduction that is made from the amount transferred between
Investment Accounts.
VALUATION DATE. Any day on which the assets of the Separate Account are
valued. Assets are valued as of the close of trading on the New York Stock
Exchange for each day the Exchange is open.
5
<PAGE> 8
SECTION 2. SEPARATE ACCOUNT
2.1 SEPARATE ACCOUNT
The Separate Account (NML Variable Annuity Account B) has been
established by the Company and is registered as a unit investment trust under
the Investment Company Act of 1940. The Separate Account consists of assets set
aside by the Company, the investment performance of which is kept separate from
that of the general assets and all other separate account assets of the
Company. The assets of the Separate Account will not be charged with
liabilities arising out of any other business the Company may conduct.
Interests in the Separate Account are represented by Accumulation Units and
Annuity Units, described in Sections 2.2 and 11.3, respectively.
The Separate Account is comprised of the Divisions listed on page 3.
The assets allocated to these Divisions are invested in shares of corresponding
Portfolios of the Northwestern Mutual Series Fund, Inc. (the Series Fund). The
Series Fund is registered under the Investment Company Act of 1940 as an
open-end, diversified management investment company. Shares of the Series Fund
Portfolios are purchased for the Separate Account at their net asset value.
The Company reserves the right to eliminate or add additional Divisions
and Portfolios.
2.2 ACCUMULATION UNITS
The interest of this contract in the Separate Account, prior to the
date on which amounts become payable under a payment plan, is represented by
Accumulation Units. The dollar value of Accumulation Units for each Division
will increase or decrease to reflect the investment experience of the Division.
The value of an Accumulation Unit on any Valuation Date is determined by
multiplying:
- the value on the immediately preceding Valuation Date; by
- the Net Investment Factor for the period from the immediately
preceding Valuation Date up to and including the current Valuation
Date (the current period).
2.3 NET INVESTMENT FACTOR
For each Division of the Separate Account the Net Investment Factor for
the current period is one plus the net investment rate for the Division. The
net investment rate for the current period is equal to the gross investment
rate for the Division reduced on each Valuation Date by a charge for annuity
rate and expense guarantees. The charge for these guarantees on the Issue Date
is shown on page 4. The Company may increase or decrease the charge after the
Issue Date, but the Company may not increase the charge to exceed the maximum
charge shown on page 4.
The gross investment rate for the current period for each Division is
equal to a. divided by b. where:
a. is:
- the investment income of the Division for the current period; plus
- captial gains for the period, whether realized or unrealized,
on the assets of the Division; less
- capital losses for the period, whether realized or unrealized, on
the assets of the Division; less
- deduction for any tax liability paid or reserved for by the Company
resulting from the maintenance or operation of the Division; and
less
- any reasonable expenses paid or reserved for by the Company which
result from a substitution of other securities for shares of the
Portfolio(s) as set forth in Section 2.4 and
b. is the value of the assets in the Division on the immediately preceding
Valuation Date.
The gross investment rate may be positive or negative. The deduction
for any tax liability may be charged proportionately against those contracts to
which the liability is attributable by a reduction in the gross investment rate
for those contracts.
2.4 SUBSTITUTION AND CHANGE
Pursuant to a vote of the Owners of variable annuity contracts having
an interest in a Division or as otherwise permitted by applicable insurance and
securities law, a substitution or change may be made as follows:
- the assets of the Division may be invested in securities other than
shares of the Portfolio(s) as a substitute for those shares already
purchased or as the securities to be purchased in the future;
- the Separate Account, or a Division, may be operated as a management
company under the Investment Company Act of 1940, or in any other
form permitted by law, if deemed by the Company to be in the best
interests of the contract Owners;
- the Separate Account may be deregistered under the Investment
Company Act of 1940 in the event registration is no longer required;
or
- the provisions of the contracts may be modified to comply with any
other applicable federal or state laws.
In the event of a substitution or change, the Company may make
appropriate endorsement on this and other contracts having an interest in the
Separate Account and take other actions as may be necessary to effect the
substitution or change.
6
<PAGE> 9
SECTION 3. GUARANTEED INTEREST FUND
3.1 GUARANTEED INTEREST FUND
Net Purchase Payments (see Section 4.2) and amounts transferred from
other Investment Accounts under this contract (see Section 4.4) may be applied
to the Guaranteed Interest Fund. Contract benefits placed under a variable
payment plan may not be applied to the Guaranteed Interest Fund. Amounts
applied to the Guaranteed Interest Fund become part of the general assets of
the Company.
3.2 ACCUMULATION VALUE
The Accumulation Value of the Guaranteed Interest Fund is the sum of
the amounts applied to it, plus credited interest, less any amounts withdrawn
or transferred from the fund. Interest begins to accrue on the effective date
of the Purchase Payment or transfer (see Section 4.6). Interest will be
credited at an annual effective interest rate of not less than 3%. A higher
rate may be declared by the Company from time to time for a period set by the
Company.
3.3 TRANSFER RESTRICTIONS
Neither transfers of Accumulation Value into the Guaranteed Interest
Fund nor transfers of Accumulation Value from the Guaranteed Interest Fund will
be allowed for a period of 365 days following the most recent transfer of
Accumulation Value from the Guaranteed Interest Fund. The maximum amount of
the Accumulation Value that may be transferred from the Guaranteed Interest
Fund in one transfer is limited to the greater of:
- 20% of the Accumulation Value of the Guaranteed Interest Fund on the
last contract anniversary preceding the transfer, and
- the amount of the most recent transfer from the Guaranteed Interest
Fund.
However, in no event will this maximum transfer amount be less than
$1,000 or greater than $50,000.
3.4 MAXIMUM GUARANTEED INTEREST FUND
ACCUMULATION VALUE
The Accumulation Value of the Guaranteed Interest Fund may not exceed
$1,000,000 without prior consent of the Company, except when the maximum is
exceeded because of interest accruing to the Guaranteed Interest Fund.
3.5 TABLE OF GUARANTEED VALUES
Accumulation and cash values are shown on page 4A for the end of the
contract years shown. Values for contract years not shown are calculated on the
same basis as those shown on page 4A. All values are at least as great as
those required by the state in which this contract is delivered.
SECTION 4. PURCHASE PAYMENTS, TRANSFERS, WITHDRAWALS
4.1 PAYMENT OF PURCHASE PAYMENTS
All Purchase Payments are payable at the Home Office or to an
authorized agent. A receipt signed by an officer of the Company will be
furnished on request.
Purchase Payments may be made at any time prior to the Maturity Date.
The Owner may vary the amount of Purchase Payments, but no Purchase Payment
may be less than the minimum Purchase Payment shown on page 4. Total Purchase
Payments may not exceed $5,000,000 without the consent of the Company.
4.2 APPLICATION OF PURCHASE PAYMENTS
Each Purchase Payment, net of the Sales Load and Premium Tax, will be
applied to one or more Investment Accounts. Net Purchase Payments applied to
the Guaranteed Interest Fund will accrue interest from the effective date of
the Purchase Payment. Net Purchase Payments applied to the Separate Account
will provide Accumulation Units in one or more Divisions. Accumulation Units
are credited as of the effective date of the Purchase Payment.
The number of Accumulation Units will be determined by dividing the Net
Purchase Payment by the value of an Accumulation Unit on the effective date.
This number of Accumulation Units will not be changed by any subsequent change
in the dollar value of Accumulation Units.
4.3 SELECTION OF INVESTMENT ACCOUNT FOR PURCHASE PAYMENTS
The Owner may at any time change the allocation of Net Purchase
Payments among the Investment Accounts by written notice to the Company. Net
Purchase Payments received at the Home Office on or after the date on which
notice is received will be applied to the designated Investment Accounts on the
basis of the new allocation.
4.4 TRANSFER OF ACCUMULATION VALUE
Before the Maturity Date the Owner may, on request satisfactory to the
Company, transfer amounts from one Investment Account to another, subject to
the transfer restrictions described in Section 3.3. For transfers among the
Separate Account Divisions, the number of Accumulation Units to be applied or
deducted will be adjusted to reflect the respective value of the Accumulation
Units in each of the Divisions on the date the transfer is effective. A
Transfer Fee will be deducted from the amount transferred. The amount of the
Transfer Fee is shown on page 4. The minimum amount which may be transferred is
the lesser of $100 or the entire Accumulation Value of the Investment Account
from which the transfer is being made.
For transfers from the Guaranteed Interest Fund, amounts closest to
expiration of an interest rate guarantee will be removed first. In the event
that two amounts are equally close to expiration, the one which was applied to
the Guaranteed Interest Fund earlier will be removed first.
7
<PAGE> 10
4.5 WITHDRAWALS AND FULL SURRENDER
Before the Maturity Date the Owner may, on request satisfactory to the
Company, withdraw all or a portion of the Accumulation Value of the contract.
The Company may require that at least 100 Accumulation Units or $100 of
Accumulation Value of the Guaranteed Interest Fund remain after a partial
withdrawal. Withdrawal of the entire value of the contract constitutes a full
surrender, and receipt of the contract at the Home Office will terminate this
contract. Receipt of the contract may be waived by the Company.
The cash value of the amount withdrawn will be the Accumulation Value
withdrawn determined as of the date the withdrawal is effective, less any
applicable Withdrawal Charge. The Withdrawal Charge is described, in Section
7.3.
The term "withdrawal amounts" as used in this contract includes amounts
paid as full surrenders and withdrawals of a portion of the Accumulation Value
of the contract.
For withdrawals from the Guaranteed Interest Fund, amounts closest to
expiration of an interest rate guarantee will be removed first. In the event
that two amounts are equally close to expiration, the one which was applied to
the Guaranteed Interest Fund earlier will be removed first.
4.6 EFFECTIVE DATE
The effective date of a Purchase Payment, transfer, or withdrawal is
the Valuation Date on which the Purchase Payment or the request for transfer or
withdrawal is received at the Home Office. However, the Purchase Payment,
transfer, or withdrawal will be effective on the following Valuation Date if
the Purchase Payment or request for transfer or withdrawal is received at the
Home Office either:
- on a Valuation Date after the close of trading on the New York Stock
Exchange; or
- on a day on which the New York Stock Exchange is closed.
SECTION 5. BENEFITS
5.1 MATURITY BENEFIT
MATURITY OPTIONS. If the Annuitant is living on the Maturity Date shown on
page 3, and that Maturity Date is earlier than the contract anniversary nearest
the Annuitant's 90th birthday, the Owner may elect between the following
maturity options:
- payment of a monthly income to the Annuitant under a payment plan
chosen by the Owner; or
- deferral of the maturity benefit and continuation of this contract,
without any Disability Waiver of Purchase Payment Benefit, to the
Optional Maturity Date. The contract will continue under this
option if a written election for this purpose is received by the
Company or if on the Maturity Date shown on page 3, the Owner has
not chosen a payment plan.
If the Annuitant is living on the Maturity Date and that Maturity Date
is on or after the contract anniversary nearest the Annuitant's 90th birthday,
the Company will pay a monthly income to the Annuitant under a payment form
chosen by the Owner.
PAYMENT OF MATURITY BENEFIT. The amount of the monthly income paid as
the maturity benefit will depend on the payment plan chosen (see Section 11)
and the maturity value. The maturity value of this contract will be the
Accumulation Value of the contract on the effective date of the maturity
benefit, less any applicable Withdrawal Charge (see Section 7.3). The maturity
benefit will be effective on the Maturity Date. However, if the New York Stock
Exchange is closed on the Maturity Date, the effective date will be the
Valuation Date next preceding the Maturity Date.
If no payment form is chosen at the time a monthly income becomes
payable, payments will be made to the Annuitant under the variable payment form
of Life Income Plan (Option C), with installments certain for ten years, as
described in Section 11.1.
OPTIONAL MATURITY DATE. The Optional Maturity Date is the contract
anniversary nearest the Annuitant's 90th birthday. If the contract is
continued to the Optional Maturity Date, all contract rights of the Owner will
continue in effect to the Optional Maturity Date except that the Disability
Waiver of Purchase Payment Benefit will not continue in force after the
Maturity Date shown on page 3. The Optional Maturity Date will become the
Maturity Date for all other purposes of this contract.
5.2 PAYMENT AT DEATH
The Company will make a payment to the beneficiary upon receipt at its
Home Office of satisfactory proof of the death of the Annuitant before the
Maturity Date. The payment at death will be the Accumulation Value of the
contract determined on the effective date of the payment at death. The payment
at death will be effective on the Valuation Date on which proof of death is
received at the Home Office or, if later, the date on which a method of
payment is elected. However, payment at death will be effective on the next
following Valuation Date if the proof of death is received at the Home Office
either:
- on a Valuation Date after the close of trading on the New York Stock
Exchange; or
- on a day on which the New York Stock Exchange is closed.
If the date of death is before the Annuitant's 65th birthday, the
payment at death will not be less than:
- total Purchase Payments paid under the contract; less
- any amounts withdrawn under Section 4.5.
The term "death benefits" as used in this contract refers to the
payment at death.
8
<PAGE> 11
SECTION 6. BENEFICIARIES
6.1 DEFINITIONS
The term "beneficiaries" as used in this contract includes direct
beneficiaries, contingent beneficiaries and further payees.
6.2 NAMING AND CHANGE OF BENEFICIARIES
FOR MATURITY BENEFITS BY OWNER. The Owner may name and change the
beneficiaries of maturity benefits before the Maturity Date. If no direct
beneficiary is named by the Owner, the Annuitant will be the direct
beneficiary.
FOR DEATH BENEFITS BY OWNER. The Owner may name and change the beneficiaries:
- while the Annuitant is living; or
- during the first 60 days after the date of death of tire Annuitant,
if the Annuitant was not the Owner immediately prior to the
Annuitant's death. A change made during this 60 days cannot be
revoked.
FOR WITHDRAWAL AMOUNTS BY OWNER. The Owner may name the beneficiaries at the
time of withdrawal.
FOR DEATH BENEFITS BY DIRECT BENEFICIARY. A direct beneficiary may name and
change the contingent beneficiaries and further payees of the direct
beneficiary's share of the benefits:
- if the direct beneficiary is the Owner,
- if, at any time after the death of the Annuitant, no contingent
beneficiary or further payee of that share is living; or
- if, after the death of the Annuitant, the direct beneficiary
elects a payment plan. The interest of any other beneficiary
in the share of that direct beneficiary will end.
These direct beneficiary rights are subject to the Owner's rights during
the 60 days after the date of death of the Annuitant.
FOR MATURITY BENEFITS OR WITHDRAWAL AMOUNTS BY DIRECT BENEFICIARY. After a
withdrawal or the maturity of the contract, the direct beneficiary may name and
change the contingent beneficiaries and further payees of the direct
beneficiary's share of benefits that is under a payment plan.
FOR MATURITY OR DEATH BENEFITS OR WITHDRAWAL AMOUNTS BY SPOUSE (MARITAL
DEDUCTION PROVISION).
- POWER TO APPOINT. The spouse of the Annuitant will have the power
alone and in all events to appoint all amounts payable to the
spouse under the contract if:
a. just before the Annuitant's death, the Annuitant was the Owner,
and
b. the spouse is a direct beneficiary; and
c. the spouse survives the Annuitant.
- TO WHOM SPOUSE CAN APPOINT. Under this power, the spouse can
appoint:
a. to the estate of the spouse; or
b. to any other persons as contingent beneficiaries and further
payees.
- EFFECT OF EXERCISE. As to the amounts appointed, the exercise
of this power will:
a. revoke any other designation of beneficiaries;
b. revoke any election of payment plan as it applies to them; and
c. cause any provision to the contrary in Section 6 or 10 of this
contract to be of no effect.
EFFECTIVE DATE. A naming or change of a beneficiary will be made on receipt at
the Home Office of a written request that is acceptable to the Company. The
request will then take effect as of the date that it was signed. The Company
is not responsible for any payment or other action that is taken by it before
the receipt of the request. The Company may require that the contract be sent
to it to be endorsed to show the naming or change.
6.3 SUCCESSION IN INTEREST OF BENEFICIARIES
DIRECT BENEFICIARIES. The maturity or death benefits or withdrawal amounts
will be payable in equal shares to the direct beneficiaries who survive and
receive payment. If a direct beneficiary dies before receiving all or part of
the direct beneficiary's full share, the unpaid portion will be payable in equal
shares to the other direct beneficiaries who survive and receive payment.
CONTINGENT BENEFICIARIES. At the death of all of the direct beneficiaries, the
maturity or death benefits, the withdrawal amounts, or the present value of any
unpaid payments under a payment plan, will be payable in equal shares to the
contingent beneficiaries who survive and receive payment. If a contingent
beneficiary dies before receiving all or part of the contingent
beneficiary's full share, the unpaid portion will be payable in equal shares to
the other contingent beneficiaries who survive and receive payment.
FURTHER PAYEES. At the death of all the direct and contingent beneficiaries,
the maturity or death benefits, the withdrawal amounts, or the present value of
any unpaid payments under a payment plan, will be paid in one sum:
- in equal shares to the further payees who survive and receive
payment; or
- if no further payees survive and receive payment, to the estate of
the last to die of all beneficiaries who survive the Annuitant.
9
<PAGE> 12
OWNER OR THE OWNER'S ESTATE. If no beneficiaries are alive when the Annuitant
dies, the benefits will be paid to the Owner or to the Owner's estate.
6.4 TRUSTEE AS BENEFICIARY
If a trustee is named as a beneficiary and no qualified trustee makes
claim to the proceeds, or to the present value of any unpaid payments under a
payment plan, within one year after payment becomes due to the trustee, or if
satisfactory evidence is furnished to the Company within that year showing that
no trustee can qualify to receive payment, payment will be made as though the
trustee had not been named.
The Company will be fully discharged of liability for any action taken
by the trustee and for all amounts paid to, or at the direction of, the trustee
and will have no obligation as to the use of the amounts. In all dealings with
the trustee the Company will be fully protected against the claims of every
other person. The Company will not be charged with notice of a change of
trustee unless written evidence of the change is received at the Home Office.
6.5 GENERAL
TRANSFER OF OWNERSHIP. A transfer of ownership of itself will not change the
interest of a beneficiary.
CLAIMS OF CREDITORS. So far as allowed by law, no amount payable under this
contract will be subject to the claims of creditors of a beneficiary.
SUCCESSION UNDER PAYMENT PLANS. A direct or contingent beneficiary who
succeeds to an interest in a payment plan will continue under the terms of the
plan.
SECTION 7. FEES AND CHARGES
7.1 CONTRACT FEE
On each contract anniversary prior to the Maturity Date, a Contract
Fee will be charged for administrative expenses. The amount of the Contract
Fee is shown on page 4. The Contract Fee will be deducted from the Investment
Accounts in proportion to the Accumulation Value of the Investment Accounts.
The effective date of the Contract Fee will be the contract anniversary.
However, if the New York Stock Exchange is closed on the contract anniversary,
the effective date will be the next following Valuation Date.
7.2 SALES LOAD AND PREMIUM TAXES
The Company will deduct from Purchase Payments received the Sales Load
shown on page 4. The Company may also deduct from Purchase Payments received
any Premium Taxes incurred.
7.3 WITHDRAWAL CHARGE
CONDITIONS. Maturity benefits and withdrawals are subject to a Withdrawal
Charge described on page 4. There is no Withdrawal Charge on benefits that are
paid under a variable Instalment Income or variable Life Income Payment Plan.
However, the withdrawal of the present value of any unpaid installments under
a variable Installment Income Plan (Option B) will be subject to a withdrawal
charge if the withdrawal is made less than five years after the date that the
payment plan takes effect.
CALCULATIONS. The amount of the Withdrawal Charge on the contract is equal to
the sum of the Withdrawal Charges on all Net Purchase Payments. The Withdrawal
Charge on a Net Purchase Payment is equal to the Withdrawal Charge percentage
on the date the Withdrawal Charge is determined, multiplied by the amount of
the Net Purchase Payment. The Withdrawal Charge percentages are shown on page
4. The excess of the Accumulation Value of the contract over the total of Net
Purchase Payments paid is not subject to a Withdrawal Charge.
Withdrawal Charges are determined:
- for maturity benefits, as of the Maturity Date.
- for withdrawals under Section 4.5, as of the effective date of the
withdrawal.
- for withdrawals from payment plans, as of the effective date of the
withdrawal.
WITHDRAWAL CHARGE FREE AMOUNT. If the Accumulation Value of the contract is at
least $10,000 on the most recent contract anniversary preceding a withdrawal
under Section 4.5, then the amount withdrawn will be taken first from any
eligible portion of the Accumulation Value of the contract that exceeds the
total of Net Purchase Payments paid. For each Contract Year, the amount
eligible for the Withdrawal Charge Free Amount is the lesser of the following:
- the excess of the Accumulation Value of the contract on the
effective date of the withdrawal over the total of Net Purchase
Payments paid up to the effective date of the withdrawal; and
- 10% of the Accumulation Value of the contract on the most
recent contract anniversary preceding the withdrawal.
ORDER OF WITHDRAWAL. A withdrawal will be taken from the contract in
the following order:
- first, from the Withdrawal Charge Free Amount, if any;
- next, from the Net Purchase Payments in the order that
produces the lowest Withdrawal Charge; and
- last, from any remaining amount by which the Accumulation
Value of the contract exceeds the total of Net Purchase Payments.
10
<PAGE> 13
SECTION 8. OWNERSHIP
8.1 THE OWNER
The Owner is named on page 3. All contract rights may be exercised by the
Owner, the Owner's successor, or the Owner's transferee without the consent of
any beneficiary. After the Annuitant's death, contract rights may be exercised
only as provided in Sections 6 and 1).
If the contract has more than one Owner, contract rights may be exercised
only by authorization of all Owners.
8.2 TRANSFER OF OWNERSHIP
The Owner may transfer the ownership of this contract. Written proof of
transfer satisfactory to the Company must be received at its Home Office. The
transfer will then take effect as of the date it was signed. The Company may
require that the contract be sent to it for endorsement to show the transfer.
The Company will not be responsible to a transferee Owner for any payment or
other action taken by the Company before receipt of the proof of transfer at
its Home Office.
8.3 COLLATERAL ASSIGNMENT
The Owner may assign this contract as collateral security. The Company
is not responsible for the validity or effect of a collateral assignment. The
Company will not be responsible to an assignee for any payment or other action
taken by the Company before receipt of the assignment in writing at its Home
Office.
The interest of any beneficiary will be subject to any collateral
assignment made either before or after the beneficiary is named.
A collateral assignee is not an Owner. A collateral assignment is not a
transfer of ownership. Ownership can be transferred only by complying with
Section 8.2.
8.4 VOTING RIGHTS AND REPORTS TO OWNERS
As long as the Separate Account continues to be registered as a unit
investment trust under the Investment Company Act of 1940 and the assets of the
Separate Account are invested in shares of the Series Fund, the Company will
vote shares held by the Separate Account in accordance with instructions
received from the Owners of Accumulation Units or, after payments have commenced
under those payment plans from the payees receiving payments under those
payment plans. Each Owner or payee will receive:
* periodic reports relating to the Series Fund;
* proxy material;
* a form with which to give voting instructions; and
* information regarding the proportion of shares of each
Portfolio held in the Separate Account corresponding either to the
Accumulation Units credited to this contract or the number of shares
held in the Separate Account representing the Company's actuarial
liability under the variable payment plan.
At least once each Contract Year, the Company will also send to the Owner
or payee a statement of the Accumulation Values of the Investment Accounts, the
number of units credited to the contract, the dollar value of a unit as of a
date not more than two months previous to the date of mailing, and a statement
of the investments held by the Separate Account.
SECTION 9. THE CONTRACT
9.1 GUARANTEES
The Company guarantees that mortality and expense results will not
adversely affect the amount of variable payments.
9.2 VALUATION OF SEPARATE ACCOUNT ASSETS
The value of the shares of each Portfolio held in the Separate Account on
each Valuation Date will be the redemption value of the shares on that date. If
the right to redeem shares of a Portfolio has been suspended, or payment of the
redemption value has been postponed, the shares held in the Separate Account
(and Annuity Units) may be valued at fair value as determined in good faith by
the Board of Trustees of the Company for the sole purpose of computing annuity
payments.
9.3 DETERMINATION OF SEPARATE ACCOUNT VALUES
The method of determination by the Company of the Net Investment Factor,
and the number and value of Accumulation Units and Annuity Units, will be
conclusive upon the Owner, any assignee, the Annuitant, and any beneficiary.
9.4 DEFERMENT OF BENEFIT PAYMENTS
SEPARATE ACCOUNT DIVISIONS. The Company reserves the right to defer
determination of the contract values of the Separate Account portion of this
contract, or the payment of benefits under a variable payment plan, until
after the end of any period during which the right to redeem shares of a
Portfolio is suspended, or payment of the redemption value is postponed. Any
deferment would be in accordance with the provisions of the Investment Company
Act of 1940 by reason of closing of, or restriction of trading on, the New York
Stock Exchange, or other emergency, or as otherwise permitted by the Act. In
addition, the Company reserves the right to defer payment of contract values
until seven days after the end of any deferment in the determination of
contract values.
GUARANTEED INTEREST FUND. The Company may defer paying contract values of
the Guaranteed Interest Fund for up to six months from the effective date of
the withdrawal or full surrender. If payment is deferred for 30 days or more,
interest will be paid on the withdrawal amounts at an annual effective rate of
3% from the effective date of the withdrawal or surrender to the date of the
payment.
11
<PAGE> 14
9.5 DIVIDENDS
This contract will share in the divisible surplus of the Company, except
while payments are being made under a variable payment plan. This surplus will
be determined each year, and the dividend, if any, will be credited on the
contract anniversary. Any dividend credited prior to the Maturity Date will be
applied on the effective date as a Net Purchase Payment unless the Owner elects
to have the dividend paid in cash. The effective date of the dividend will be
the contract anniversary. However, if the New York Stock Exchange is
closed on the contract anniversary, the effective date will be the next
following Valuation Date.
9.6 INCONTESTABILITY
The Company will not contest this contract after it has been in force
during the lifetime of the Annuitant for two years from the Issue Date. This
Issue Date is shown on page 3.
9.7 MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, the amount payable
will be the amount which the Purchase Payments paid would have purchased at the
correct age and sex.
9.8 ENTIRE CONTRACT; CHANGES
This contract with the attached application is the entire contract.
Statements in the application are representations and not warranties. A change
in the contract is valid only if it is approved by an officer of the Company.
The Company may require that the contract be sent to it for endorsement to
show a change. No agent has the authority to change the contractor or to waive
any of its terms.
All payments by the Company under this contract are payable at its Home
Office.
Assets of the Separate Account are owned by the Company and the Company is
not a trustee with respect thereto. The Company may from time to time adjust
the amount of assets contained in the Separate Account, by periodic withdrawals
or additions, to reflect the contract deductions and the Company's reserves for
this and other similar contracts.
This contract is subject to the laws of the state in which it is delivered.
All benefits are at least as great as those required by that state.
9.9 TERMINATION OF CONTRACT
At any time after the first contract anniversary, the Company may terminate
the contract and pay the Owner the Accumulation Value of the contract and be
released of any further obligation if:
- prior to the Maturity Date no Purchase Payments have been received
under the contract for a period of two full years and each of the
following is less than the Minimum Accumulation Value shown on page 4:
a. the Accumulation Value of the contract; and
b. total Purchase Payments paid under the contract, less any amounts
withdrawn under Section 4.5; or
- on the Maturity Date the Accumulation Value of the contract is less
than the Minimum Accumulation Value shown on page 4 or would provide a
monthly income the initial amount of which is less than the minimum
payment amount shown on page 4.
SECTION 10. PAYMENT OF CONTRACT BENEFITS
10.1 PAYMENT OF BENEFITS
All or part of the contract benefits may be paid under one or more of the
following:
- a variable payment plan;
- a fixed payment plan; or
- in cash.
The provisions and rate for variable and fixed payment plans are described
in Section 11. Contract benefits may not be placed under a payment plan unless
the plan would provide to each beneficiary a monthly income the initial amount
of which is at least the minimum payment amount shown on page 4. A Withdrawal
Charge will be deducted from contract benefits before their payment under
certain conditions described in Section 7.3.
10.2 PAYMENT AT DEATH
Upon the death of the Annuitant prior to the Maturity Date, the payment at
death will be made under any payment plan previously elected. If no payment
plan has been elected, the payment at death will be made under a payment plan
or in cash as elected by the Owner or beneficiary.
12
<PAGE> 15
10.3 EFFECTIVE DATE FOR PAYMENT PLAN
A payment plan that is elected for maturity benefits will take effect on the
Maturity Date.
A payment plan that is elected for death benefits will take effect on the
date proof of death of the Annuitant is received at the Home Office if:
- the plan is elected by the Owner; and
- the election is received at the Home Office while the Annuitant is
living.
In all other cases, a payment plan that is elected will take effect:
- on the date the election is received at the Home Office; or
- on a later date, if requested.
10.4 PAYMENT PLAN ELECTIONS
FOR DEATH BENEFITS BY OWNER. The Owner may elect payment plans for death
benefits:
- while the Annuitant is living; or
- during the first 60 days after the date of death of the Annuitant, if
the Annuitant was not the Owner immediately prior to the Annuitant's
death. An election made during the 60 days cannot be changed.
FOR DEATH BENEFITS BY DIRECT OR CONTINGENT BENEFICIARY. A direct or contingent
beneficiary may elect payment plans for death benefits payable to the direct or
contingent beneficiary if no payment plan that has been elected is in effect.
This right is subject to the Owner's rights during the above 60 days.
FOR MATURITY BENEFITS OR WITHDRAWAL AMOUNTS. The Owner may elect payment plans
for maturity benefits or withdrawal amounts.
TRANSFER BETWEEN PAYMENT PLANS. A beneficiary who is receiving payment under a
payment plan which includes the right to withdraw may transfer the amount
withdrawable to any other payment plan that is available.
SECTION 11. PAYMENT PLANS
11.1 DESCRIPTION OF PAYMENT PLANS
INSTALLMENT INCOME FOR SPECIFIED PERIOD (OPTION B)
The Company will make monthly installment income payments providing for
payment of benefits over a specified period of 5 to 3 years.
LIFE INCOME PLANS
- SINGLE LIFE INCOME (OPTION C). The Company will make monthly payments
for the selected certain period, if any, and thereafter during the
remaining lifetime of the individual upon whose life income payments
depend. The selections available are: (a) no certain period; or (b) a
certain period of 10 or 20 years.
- JOINT AND SURVIVOR LIFE INCOME (OPTION E). The Company will make
monthly payments for a 10-year certain period and thereafter during
the joint lifetime of the two individuals upon whose lives income
payments depend and continuing during the remaining lifetime of the
survivor.
- OTHER SELECTIONS. The Company may offer other selections under the
Life Income Plans.
- LIMITATIONS. A direct or contingent beneficiary who is a natural
person may be paid under a Life Income Plan only if the payments
depend on that beneficiary's life. A corporation may be paid under a
Life Income Plan only if the payments depend on the life of the
Annuitant or, after the death of the Annuitant, on the life of the
Annuitant's spouse or dependent.
These payment plans are available on either a fixed or variable basis.
Under a fixed payment plan the payment remains level. Under a variable payment
plan the payment will increase or decrease as described in Section 11.4.
11.2 ALLOCATION OF BENEFITS
Upon election of a variable payment plan, the Owner or direct or contingent
beneficiary may select the allocation of variable benefits among the Divisions.
If no selection is made, the allocation of benefits will be as follows:
- for amounts in the Separate Account Divisions, benefits will be
allocated in proportion to the Accumulation Value of each Division on
the effective date of the variable payment plan, and
- for amounts in the Guaranteed Interest Fund, benefits will be
allocated 100% to the Money Market Division.
11.3 ANNUITY UNITS UNDER VARIABLE PAYMENT PLANS
The interest of this contract in the Separate Account after the effective
date of a variable payment plan is represented by Annuity Units. The dollar
value of Annuity Units for each Division will increase or decrease to reflect
the investment experience of the Division. The value of Annuity Unit on any
Valuation Date is the product of:
- the Annuity Unit value on the immediately preceding Valuation Date;
- the Net Investment Factor for the period from the immediately
preceding Valuation Date up to and including the current Valuation
Date (the current period); and
- the Daily Adjustment Factor of .99990575 raised to a power equal to
the number of days in the current period to reflect the Assumed
Investment Rate of 3 1/2% used in calculating the monthly payment
rate.
13
<PAGE> 16
11.4 PAYMENTS UNDER VARIABLE PAYMENT PLANS
FIRST PAYMENT. The first payment under a variable payment plan will be due as
of the effective date of the payment plan.
The amount of the first payment is the sum of payments from each Division,
each determined by multiplying the benefits allocated to the Division under the
variable payment plan by the applicable monthly variable payment rate per
$1,000 of benefits.
NUMBER OF ANNUITY UNITS. The number of Annuity Units in each Division under a
variable payment plan is determined by dividing the amount of the first payment
payable from the Division by the Annuity Unit value for the Division at the
close of business on the Valuation Date on which the variable payment plan
becomes effective. The number of Annuity Units will not be changed by any
subsequent change in the dollar value of Annuity Units.
SUBSEQUENT VARIABLE PAYMENTS. The amount of each subsequent payment from each
Division under a variable payment plan will increase or decrease in accord with
the increase or decrease in the value of an Annuity Unit which reflects the
investment experience of that Division of the Separate Account.
The Amount of subsequent variable payments is the sum of payments from each
Division, each determined by multiplying the fixed number of Annuity Units for
the Division by the value of an Annuity Unit for the Division on:
- the fifth Valuation Date prior to the payment due date if the payment
due date is a Valuation Date; or
- the sixth Valuation Date prior to the payment due date if the payment
due date is not a Valuation Date.
11.5 TRANSFER BETWEEN VARIABLE PAYMENT PLANS
A payee or joint payees receiving payments under a variable payment plan
may:
- transfer Annuity Units from one Division to another. The number of
Annuity Units in each Division will be adjusted to reflect the
respective value of the Annuity Units in the Divisions on the date the
transfer is effective. A Transfer Fee will be deducted from the
amount transferred. The amount of the Transfer Fee is shown on page
4. Transfers from the Money Market Division may be made at any time.
No transfer from the other Divisions may be made within 90 days of the
effective date of the variable payment plan or within 90 days from the
effective date of the last transfer.
- transfer from an Installment Income Plan (Option B) to either form of
the Life Income Plan (Option C or E).
Other transfers may be permitted subject to conditions set by the Company.
A transfer will be effective on the Valuation Date on which a satisfactory
transfer request is received in the Home Office, or a later date if requested.
However, the transfer will be effective on the following Valuation Date if the
request is received at the Home Office either:
- on a Valuation Date after the close of trading on the New York Stock
Exchange; or
- on a day on which the New York Stock Exchange is closed.
11.6 WITHDRAWAL UNDER PAYMENT PLANS
Withdrawal of the present value of any unpaid income payments may be
elected at any time by the beneficiary, except at withdrawal may not be elected
under a Life Income Plan (Option C or E) until the death of all individuals
upon whose lives income payments depend.
The withdrawal value under the Installment Income Plan (Option B) will be
the present value of any unpaid payments, less any applicable Withdrawal Charge
under Section 7.3. The withdrawal value under a Life Income Plan (Option C or
E) will be the present value of any unpaid payments for the certain period with
no Withdrawal Charge.
For a fixed payment plan, the present value of any unpaid income payments
will be based on the rate of interest used to determine the amount of the
payments. For a variable payment plan, the present value of any unpaid income
payments will be based on interest at the Assumed Investment Rate used in
calculating the amount of the variable payments. The amount of variable
payments used in calculating the present value of unpaid payments will be
determined by multiplying the number of Annuity Units by the value of an
Annuity Unit on the effective date of the withdrawal.
A withdrawal will be effective on the Valuation Date on which the request
is received in the Home Office. However, the withdrawal will be effective on
the following Valuation Date if the request is received at the Home Office
either:
- on a Valuation Date after the close of trading on the New York Stock
Exchange; or
- on a day on which the New York Stock Exchange is closed.
14
<PAGE> 17
11.7 PAYMENT PLAN RATES
PAYMENT RATE TABLES. The guaranteed monthly payment rates for both a fixed
payment plan and the first payment under a variable payment plan are shown in
the Payment Rate Tables. The tables show rates for the Installment Income Plan
for a Specified Period (Option B) and Life Income Plans (Options C and E).
Life Income Plan (Option C or E) rates are based on the sex and adjusted age of
any individual upon whose life payments depend. The adjusted age is:
- the age on the birthday that is nearest to the date on which the
payment plan takes effect; plus
- the age adjustment shown below for the number of Contract Years that
have elapsed from the Issue Date to the date that the payment plan
takes effect. A part of a Contract Year is counted as a full year.
<TABLE>
<CAPTION>
CONTRACT CONTRACT
YEARS AGE YEARS AGE
ELAPSED ADJUSTMENT ELAPSED ADJUSTMENT
- ---------------------------------------------------------------
<S> <C> <C> <C>
1 to 8 0 33 to 40 -4
9 to 16 -1 41 to 48 -5
17 to 24 -2 49 or more -6
25 to 32 -3
</TABLE>
CURRENT FIXED PAYMENT PLAN RATES
- INSTALLMENT INCOME FOR SPECIFIED PERIOD (OPTION B). The Company may
offer fixed payment plan rates higher than those guaranteed in this
contract with conditions on withdrawal.
- LIFE INCOME PLANS (OPTION C OR E). Payments will be based on rates
declared by the Company which will not be less than the rates
guaranteed in this contract. The declared rates will provide at least
as much income as would the Company's rates, on the date that the
payment plan takes effect, for a single premium immediate annuity
contract.
ALTERNATE VARIABLE RATE BASIS. The Company may from time to time publish
higher initial rates for variable payment plans under this contract. These
higher rates will not be available to increase payments under payment plans
already in effect.
When a variable payment plan is effective on an alternate rate basis, the
Daily Adjustment Factor described in Section 11.3 will be determined based on
the Assumed Investment Rate used in calculating the alternate payment rate.
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN
INSTALLMENT INCOME PLAN (OPTION B)
<TABLE>
<CAPTION>
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Years 1-4 11 $9.09 21 $5.56
Not Available 12 8.46 22 5.39
13 7.94 23 5.24
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
</TABLE>
GUARANTEED FIXED PAYMENT PLANS
INSTALLMENT INCOME PLAN (OPTION B)
<TABLE>
<CAPTION>
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT
<S> <C> <C> <C> <C> <C>
Years 1-4 11 $ 8.42 21 $ 4.85
Not Available 12 7.80 22 4.67
13 7.26 23 4.51
14 6.81 24 4.36
5 $17.49 15 6.42 25 4.22
6 14.72 16 6.07 26 4.10
7 12.74 17 5.77 27 3.98
8 11.25 18 5.50 28 3.87
9 10.10 19 5.26 29 3.77
10 9.18 20 5.04 30 3.68
</TABLE>
15
<PAGE> 18
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
LIFE INCOME PLAN (OPTION C)
<TABLE>
<CAPTION>
SINGLE LIFE MONTHLY PAYMENTS
- ---------------------------------------------
CHOSEN PERIOD (YEARS)
ADJUSTED
AGE ZERO 10 20
- ---------------------------------------------
<S> <C> <C> <C>
55 $ 4.17 $ 4.14 $ 4.06
56 4.23 4.20 4.11
57 4.31 4.28 4.17
58 4.39 4.35 4.23
59 4.47 4.43 4.29
60 4.56 4.51 4.35
61 4.65 4.59 4.42
62 4.76 4.69 4.49
63 4.87 4.79 4.56
64 4.98 4.90 4.63
65 5.10 5.00 4.70
66 5.24 5.12 4.77
67 5.38 5.24 4.84
68 5.54 5.37 4.91
69 5.70 5.51 4.98
70 5.88 5.66 5.05
71 6.07 5.81 5.12
72 6.27 5.96 5.19
73 6.49 6.13 5.24
74 6.73 6.30 5.30
75 6.99 6.48 5.36
76 7.27 6.67 5.40
77 7.58 6.86 5.45
78 7.91 7.05 5.49
79 8.26 7.25 5.52
80 8.64 7.45 5.55
81 9.05 7.65 5.58
82 9.50 7.84 5.60
83 9.98 8.02 5.62
84 10.50 8.20 5.63
85 and over 11.06 8.38 5.64
</TABLE>
LIFE INCOME PLAN (OPTION E)
<TABLE>
<CAPTION>
JOINT AND SURVIVOR MONTHLY PAYMENTS
- -------------------------------------------------------------------------
OLDER LIFE YOUNGER LIFE ADJUSTED AGE*
ADJUSTED
AGE 55 60 65 70 75 80 85 and over
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 $ 3.79
60 3.87 $ 4.07
65 3.94 4.18 $ 4.45
70 3.99 4.27 4.61 $ 4.99
75 4.02 4.34 4.73 5.20 $ 5.72
80 4.05 4.38 4.81 5.35 6.00 $ 6.67
85 and over 4.06 4.40 4.06 5.45 6.18 7.00 $ 7.75
</TABLE>
*See Section 10.7.
The amount of the payment for any other combination of ages will be furnished
by the Company on request. The maximum initial monthly income per $1,000 will
be $7.75.
Monthly payment rates are based on an Assumed Investment Rate of 3 1/2% and the
1983 Table a with Projection Scale G.
16
<PAGE> 19
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
MILWAUKEE, WISCONSIN
CONTRACT NUMBER
-----------------
DEFERRED ANNUITY APPLICATION
- -----------------------------------------------------------------------------
1 Has a Northwestern Mutual policy ever been issued on the annuitant's
life? / / Yes / / No
If yes, the last policy number is -------------------.
2 ANNUITANT
-------------------------------------------------------------------------
/X/ Mr. / / Mrs. / / Ms. / / Dr. / / Other: ------ /X/ Male / / Female
-------------------------------------------------------------------------
NAME BIRTHDATE (MONTH, DAY, YEAR)
JOHN J DOE 01-15-1961
-------------------------------------------------------------------------
STATE OF BIRTH (OR FOREIGN COUNTRY) TAXPAYER IDENTIFICATION NUMBER
Wisconsin ###-##-####
-------------------------------------------------------------------------
PRIMARY RESIDENCE
STREET OR PO BOX 1234 Main Street
-------------------------------------------------------------------------
CITY, STATE, ZIP (COUNTRY IF OTHER THAN U.S.)
Milwaukee, WI 53200
-------------------------------------------------------------------------
- -----------------------------------------------------------------------------
3 MARKET CATEGORY (Select One)
NON-TAX QUALIFIED
/ / Personal
/ / Estate or Business
/ / Eligible 457 Deferred Compensation Plan
GO TO QUESTION 4.
TAX QUALIFIED
/ / IRA Individual
/ / IRA Simplified Employee Pension Plan (SEPP)
/ / TDA Employee salary reduction only
/ / TDA Employer matching or non-elective contributions included
/ / 401(g) Non-transferable annuity
THE OWNER IS THE ANNUITANT. GO TO QUESTION 5.
/X/ Pension and Profit Sharing
If new trust, attach
Trust Number 000123 Declaration of Employer (31-3344).
MONTH DAY
Contract Anniversary Date / / - / / Complete only if
required by plan.
THE OWNER AND BENEFICIARY ARE THE TRUSTEE(S) OF THE PLAN. GO TO QUESTION 6.
<PAGE> 20
4 OWNER (NOTE: A minor owner limits future contract actions.)
/ / Annuitant / / See attached supplement / / Other: (Complete A, B, C
below)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other: / / Male / / Female
------
PERSONAL NAME BIRTHDATE (MONTH, DAY, YEAR)
- -
--------------------------------------- -----------
OR
BUSINESS/TRUST NAME
-----------------------------------------------------------------------
B. RELATIONSHIP TO ANNUITANT TAXPAYER IDENTIFICATION NUMBER
- -
---------------------------------------- ----------------
C. ADDRESS / / ANNUITANT'S ADDRESS, OR
STREET OR PO BOX
------------------------------------------------------------------------
CITY, STATE, ZIP (COUNTRY IF OTHER THAN US)
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5 BENEFICIARY (NOTE: Cannot be annuitant unless "Estate of Annuitant" named.)
A. Direct Beneficiary of payment at DEATH:
/ / Owner / / Other
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
B. Contingent Beneficiary of payment at DEATH:
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
Box (1) or (2) may be selected to include all children or brothers and
sisters without naming them, or to add to the contingent beneficiaries
named. Box (3) may be selected to provide for children of a deceased
contingent beneficiary; use only if contingent beneficiaries are named
and/or box (1) or (2) is checked. NOTE: The word "children" includes
child and legally adopted children.
/ / (1) and all (other) children of the Annuitant.
/ / (2) and all (other) brothers and sisters of the Annuitant born of the
marriage of or legally adopted by ________ and ________ before the
Annuitant's death.
/ / (3) any amount that would have been paid to a deceased contingent
beneficiary, if living, will be paid in one sum and in equal
shares to the children of that contingent beneficiary who
survive and receive payment.
C. Further Payee of payment at DEATH:
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
D. / / See attached supplement form (Use in place of 5A, 5B, 5C)
6 Will the policy applied for replace any Northwestern Mutual Life Insurance or
annuities? / / Yes /X/ No
7 Will the policy applied for replace insurance or annuities from another
insurance company? / / Yes /X/ No
8 PLAN (Select One)
/X/ VARIABLE ANNUITY. Complete Variable Annuity Supplement (Pages 3-4)
/ / FLEXIBLE PREMIUM ANNUITY. Complete Fixed Rate Annuity Supplement (Page 5)
/ / SINGLE PREMIUM RETIREMENT ANNUITY. Complete Fixed Annuity Supplement
(Page 5)
<PAGE> 21
VARIABLE ANNUITY SUPPLEMENT
V1 / / Back-end Design
TYPE /X/ Front-end Design ($10,000 minimum initial purchase payment)
(MONTH, DAY, YEAR)
V2 MATURITY AGE or MATURITY DATE - - If neither
specified,
defaults to
age 85.
V3 A. COMPLETE IN ALL CASES TO INDICATE ALLOCATION OF NET PURCHASE PAYMENTS.
(Use whole %. Total must equal 100%)
VARIABLE FUNDS
10 Select Bond
10 International Equity
10 Money Market
10 Balanced
10 Index 500 Stock
10 Aggressive Growth Stock
10 High Yield Bond
10 Growth Stock
10 Growth and Income Stock
FIXED FUNDS
10 Guaranteed Interest
----
100% Total
B. COMPLETE ONLY IF THE ALLOCATION OF THE ATTACHED INITIAL PAYMENT IS TO BE
DIFFERENT THAN INDICATED IN A.
(Use whole %. Total must equal 100%)
VARIABLE FUNDS
______ Select Bond
______ International Equity
______ Money Market
______ Balanced
______ Index 500 Stock
______ Aggressive Growth Stock
______ High Yield Bond
______ Growth Stock
______ Growth and Income Stock
FIXED FUNDS
______ Guaranteed Interest
100% Total
V4 INITIAL PURCHASE PAYMENT
/X/ PREPAID A purchase payment for the contract applied for has been paid
to the agent in exchange for the receipt with the same number as this
application. NOTE: ALL PURCHASE PAYMENT CHECKS MUST BE MADE PAYABLE TO
NORTHWESTERN MUTUAL LIFE. DO NOT MAKE CHECK PAYABLE TO AGENT OR LEAVE
PAYEE BLANK.
AMOUNT
$5,000.00
For IRA and SEPP only, indicate how initial purchase payment is to be
applied. Total must equal amount above.
$ Current (19 ) tax year
$ Prior (19 ) tax year
$ Rollover distribution received by Annuitant in last
60 days.
$ Direct transfer of / / IRA / / TDA / / Pension from
another insti-
tution or plan
trustee
/ / NON-PREPAID (NOTE: Contract will not be issued until initial purchase
payment is received.)
/ / Collected via Multiple Contract Bill (MCB).
/ / Automatic withdrawal from checking account (ISA/EFT).
/ / Check coming from another financial institution.
Estimated Amount $
V5 Waiver of Purchase Payment Benefit requested? / / Yes /X/ No (If yes, send
evidence of insurability).
If waiver not approved, issue contract without benefit? / / Yes /X/ No
<PAGE> 22
VARIABLE ANNUITY SUPPLEMENT (CONTINUED)
V6 SUBSEQUENT PURCHASE PAYMENTS (Select One) ISA NUMBER
/ / None Anticipated. ____________
/X/ Send Investment Reminders to Owner with Confirmations
and Quarterly Summary Statements.
ANTICIPATED ANNUAL AMOUNT
$2,000.00
/ / Automatic Withdrawal from Checking Account (ISA/EFT).
Amount DATE OF FIRST DRAFT (MONTH, DAY, YEAR)
$________ _____________ - _________ - __________
FREQUENCY
/ / Monthly / / Quarterly / / Semiannual / / Annual
NOTE: Subsequent withdrawals will be on the same day of the month (1-28
ONLY) as the initial draft. ATTACH VOID CHECK IF ONGOING DRAFT DRAWN ON
DIFFERENT ACCOUNT THAN INITIAL PAYMENT CHECK OR IF CHECK NOT ATTACHED.
ISA/EFT Payer / / Annuitant at annuitant address / / Other:
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other:______ / / Male / / Female
PERSONAL NAME BIRTHDATE (MONTH, DAY, YEAR)
_______________________________________ __________ - _______ - _____
OR
BUSINESS/TRUST NAME
_________________________________________________________________________
B. TAXPAYER IDENTIFICATION NUMBER DAYTIME TELEPHONE NUMBER
__________________________________ (___)_______________________
C. ADDRESS
STREET OR PO BOX ________________________________________________________
CITY, STATE, ZIP (COUNTRY IF OTHER THAN US)
_________________________________________________________________________
Payer signature below is authorization to the depository institution
named on the attached check to pay and charge named account electronic
funds transfers, or other form of pre-authorized check or withdrawal
order transfers, initiated by the Northwestern Mutual Life Insurance
Company to its own order. This authorization will remain in effect until
revoked in writing.
X____________________________________
ISA/EFT PAYER SIGNATURE
/ / Add to Multiple Contract Bill.
AMOUNT MCB NUMBER MCB PAYER
$_________________ _________________ ______________________________
V7 ANNUITANT'S PURPOSE FOR CONTRACT
/ / Fund tax-qualified retirement plan
/ / Personal retirement planning
/ / Other. Specify _____________________
CURRENT FINANCIAL STATUS
Total Annual Income (all sources) $ ______________
Total Net Worth $ ______________
ANTICIPATED NUMBER OF YEARS CONTRACT WILL BE IN FORCE _______________
INVESTMENT OBJECTIVES FOR CONTRACT
/ / Preservation of principal
/ / Lower risk, lower return potential
/ / Moderate risk, moderate return potential
/ / Higher risk, higher return potential
THE COMPANY IS REQUIRED TO MAKE THE ABOVE INQUIRIES FOR PURPOSES OF
DETERMINING SUITABILITY OF THIS SALE. ALL RESPONSES WILL BE KEPT STRICTLY
CONFIDENTIAL. CHECK ONE:
/ / The answers to V7 accurately describe my current financial status and
objectives.
/X/ I have been asked these questions and decline to answer.
ON (date of delivery: ____ - ___ - ____) THE FOLLOWING PROSPECTUS OR OFFERING
CIRCULAR AND REPORT WAS DELIVERED:
/ / Account A Offering Circular dated ___ - ___ - ___ and
Report dated ___ - ___ - ___ (Corporate Pension Plans)
/X/ Account A Prospectus dated 01-15-96 (Partnership or Sole Proprietorship
Pension Plans)
/ / Account B Prospectus dated ___ - ___ - ___ (all others)
I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS OR OFFERING CIRCULAR AND REPORT AND I
UNDERSTAND THAT ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO AMOUNT.
X X (signed) John J Doe
---------------------------------- ----------------------
ANNUITANT SIGNATURE APPLICANT SIGNATURE
(IF OTHER THAN APPLICANT)
<PAGE> 23
<TABLE>
<S><C>
FIXED RATE ANNUITY SUPPLEMENT
- ------------------------------------------------------------------------------
F1 Single Premium Retirement Annuity Guarantee Period: / / One Year
/ / Three Year
- ------------------------------------------------------------------------------
F2 Maturity Age ______. If not specified, defaults to age 85.
- ------------------------------------------------------------------------------
F3 Initial Premium:
A. Has the initial premium for the policy been paid to the agent
in exchange for the receipt with the same number as this application?
/ / Yes. Check attached. NOTE: ALL PREMIUM CHECKS MUST BE MADE PAYABLE
TO NORTHWESTERN MUTUAL LIFE. DO NOT MAKE
CHECK PAYABLE TO AGENT OR LEAVE PAYEE BLANK.
/ / Non-prepaid TDA or 457 Deferred Compensation.
/ / Check coming from another financial institution.
B. Amount $__________ (Can be estimated amount if check coming from another
financial institution)
C. For IRA and SEPP only, indicate how premium to be applied. Total must
equal amount above.
$__________ Current (19__) tax year
$__________ Prior (19__) tax year
$__________ Rollover/Transfer from another institution (Always
credited as of current year)
- ------------------------------------------------------------------------------
F4 Waiver of Premium Benefit requested? / / Yes / / No (If yes, send
evidence of insurability).
If waiver not approved, issue contract without benefit? / / Yes / / No
- ------------------------------------------------------------------------------
F5 Subsequent Premiums: (Flexible Premium Annuity only)
A. Periodic Billing Amount $_________________ or Monthly Retirement Life
Income $___________________________
DEFINED BENEFIT POLICY ONLY
B. Billing Frequency / / Monthly / / Quarterly / / Semiannual / / Annual
C. Billing Method: / / Send Billing Notices
/ / TDA Policy. Payer #__________
/ / Add to Multiple Contract Bill:
______________ _____________________________
(MCB NUMBER) (MCB PAYER)
/ / Automatic Withdrawal from DATE OF FIRST DRAFT (MONTH, DAY, YEAR)
Checking Account (ISA/EFT). - -
NOTE: Subsequent withdrawals will be on the
same day of the month (1-28 ONLY) as the initial draft.
ATTACH VOID CHECK IF ONGOING DRAFT DRAWN ON DIFFERENT
ACCOUNT THAN INITIAL PAYMENT CHECK OR IF CHECK NOT ATTACHED.
D. Send Billing To: / / Annuitant at Annuitant's Address
/ / Annuitant at address shown below:
/ / Owner at Owner's address (Pension and Profit
Sharing only)
/ / Owner at address shown below:
/ / MCB Payer
/ / Other/TDA Payer:
------------------------------------------------------------------------------
/ / Mr. / / Mrs. / / Ms. / / Dr. / / Other: ____________ / / Male / / Female
------------------------------------------------------------------------------
PERSONAL NAME BIRTHDATE (MONTH, DAY, YEAR)
- -
------------------------------------------------------------------------------
OR
------------------------------------------------------------------------------
BUSINESS/TRUST NAME
------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER DAYTIME TELEPHONE NUMBER ISA NUMBER
( )
------------------------------------------------------------------------------
ADDRESS
STREET OR PO BOX
------------------------------------------------------------------------------
CITY, STATE, ZIP (COUNTRY IF OTHER THAN US)
------------------------------------------------------------------------------
Payer signature below is authorization to the depository institution
named on the attached check to pay and charge named account electronic
funds transfers, or other form of pre-authorized check or withdrawal order
transfers, initiated by the Northwestern Mutual Life Insurance Company to
its own order. This authorization will remain in effect until revoked in
writing.
X
___________________________________
ISA/EFT PAYER SIGNATURE
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
THE ANNUITANT CONSENTS TO THIS APPLICATION.
EACH PERSON SIGNING THIS APPLICATION DECLARES THAT THE ANSWERS AND STATEMENTS
MADE ON PAGES 1, 2, (3 AND 4, OR 5) AND 6 ARE CORRECTLY RECORDED, COMPLETE AND
TRUE TO THE BEST OF HIS OR HER KNOWLEDGE AND BELIEF.
IT IS UNDERSTOOD AND AGREED THAT:
For the purposes of this application, if a Variable Annuity is applied for, the
word "policy" means contract and the word "premium" means purchase payment.
If the Owner is a Trustee or successor Trustee under a tax qualified plan or
the employer under a tax qualified non-trusteed plan, Northwestern Mutual Life
will be fully discharged of liability for any action taken by the Owner in the
exercise of any policy right and for all amounts paid to, or at the direction
of, the Owner and will have no obligation as to the use of the amounts. In all
dealings with the Owner, Northwestern Mutual Life will be fully protected
against the claims of every other person.
If paid at the time of application, the first premium will be credited the date
it is received at the Home Office, if this is a Flexible Premium or Single
Premium Retirement Annuity, or the valuation date coincident with or next
following the date it is received at the Home Office, if this is a Variable
Annuity.
If a Tax Qualified Employee Plan, an IRA or TDA is applied for, the Applicant
and/or Annuitant have received and reviewed the appropriate ERISA, IRA or
TDA disclosure statements.
FIXED RATE ANNUITY AND BACK LOADED VARIABLE ANNUITY POLICIES HAVE PROVISIONS
FOR THE ASSESSMENT OF SURRENDER CHARGES ON CASH WITHDRAWAL.
No agent is authorized to make or alter contracts or to waive the rights or
requirements of Northwestern Mutual Life.
X X (signed) John J. Doe
- -------------------------------------- ---------------------------------------
SIGNATURE OF ANNUITANT SIGNATURE OF APPLICANT
(If Other Than Applicant) (Indicate relationship below if
applicable)
/ / TRUSTEE / / EMPLOYER
SIGNED at Milwaukee, Milwaukee WI Date 01 - 15 - 1996
---------------------------- ----------------------------------
CITY COUNTY STATE MONTH DAY YEAR
X (signed) Norm M. Western
------------------------------------------
SIGNATURE OF LICENSED AGENT
<PAGE> 25
IT IS RECOMMENDED THAT YOU ...
read your contract.
notify your Northwestern Mutual agent or the Company at
720 E. Wisconsin Avenue, Milwaukee, Wis. 53202, of an
address change.
call your Northwestern Mutual agent for information --
particularly on a suggestion to terminate or exchange
this contract for another contract or plan.
ELECTION OF TRUSTEES
The members of The Northwestern Mutual Life Insurance
Company are its policyholders of insurance policies and
deferred annuity contracts. The members exercise
control through a Board of Trustees. Elections to the
Board are held each year at the annual meeting of
members. Members are entitled to vote in person or by
proxy.
FLEXIBLE PAYMENT VARIABLE ANNUITY-ACCOUNT B
AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DIVISIONS AND
VARIABLE PAYMENTS PROVIDED BY THIS CONTRACT ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT BUT ARE VARIABLE
AND MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT.
[NORTHWESTERN
MUTUAL LIFE LOGO]
<PAGE> 1
EXHIBIT 99.B9(a)
The Northwestern Mutual Life Insurance Company agrees
to pay the benefits provided in this contract, subject
to its terms and conditions. Signed at Milwaukee,
Wisconsin on the Issue Date.
James D. Ericson John M. Brenner
PRESIDENT AND C.E.O. SECRETARY
FLEXIBLE PAYMENT VARIABLE ANNUITY-ACCOUNT B
Net Purchase Payments accumulated in a Separate
Account, assets of which are invested in shares of one
or more mutual funds, or Guaranteed Interest Fund.
Retirement benefit payable at maturity.
Payment at death before maturity.
Contract benefits payable in one sum or as variable or
guaranteed monthly income. Variable Payment Plan
benefits described in Section 11.
Participating.
AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DIVISIONS AND
VARIABLE PAYMENTS PROVIDED BY THIS CONTRACT ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT BUT ARE VARIABLE
AND MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT.
RIGHT TO RETURN CONTRACT -- Please read this contract
carefully. The Owner may return the contract for any
reason within ten days after receiving it. Return of
the contract is effective on the date written notice of
the return is delivered, mailed or sent by telegram to
either The Northwestern Mutual Life Insurance Company,
720 E. Wisconsin Avenue, Milwaukee, Wisconsin 53202 or
the agent who sold the contract. If returned, the
contract will be cancelled and the Company will refund
the sum of (a) the difference between the Purchase
Payments paid and the amounts, if any, allocated to the
Separate Account plus (b) the value of the contract on
the effective date of return.
[NORTHWESTERN
MUTUAL LIFE LOGO]
CONTRACT NUMBER V12 345 678
ANNUITANT John J. Doe
ISSUE DATE January 15, 1996
Sex Neutral
<PAGE> 2
TABLE OF CONTENTS
CONTRACT INFORMATION, SEPARATE ACCOUNT DIVISIONS 3
LOADS, FEES, AND CHARGES;
PURCHASE PAYMENTS, ACCUMULATION VALUE, PAYMENT PLANS 4
SECTION 1. GENERAL TERMS AND DEFINITIONS 5
SECTION 2. SEPARATE ACCOUNT 6
- Definition of Separate Account
- Accumulation Units
- Net Investment Factor
- Substitution and Change
SECTION 3. GUARANTEE INTEREST FUND 7
- Guaranteed Interest Fund
- Accumulation Value
- Transfer Restrictions
- Maximum Accumulation Value
SECTION 4. PURCHASE PAYMENTS, TRANSFERS AND WITHDRAWALS 7
- Payment of Purchase Payments
- Application of Purchase Payments
- Selection of Division for Purchase Payments
- Transfer of Accumulation Units
- Withdrawals and Full Surrender
- Effective Date
SECTION 5. BENEFITS 8
- Maturity Benefit
- Payment at Death
SECTION 6. BENEFICIARIES 9
- Definition of Beneficiaries
- Naming and Change of Beneficiaries
- Succession in Interest of Beneficiaries
- General
SECTION 7. LOADS, FEES, AND CHARGES 10
- Contract Fee
- Sales Load and Premium Taxes
- Withdrawal Charge
SECTION 8. OWNERSHIP 11
- The Owner
- Transfer of Ownership
- Collateral Assignment
- Reports to Owners
- Voting Rights and Reports to Owners
1
<PAGE> 3
PAGE
----
SECTION 9. THE CONTRACT 11
- Guarantees
- Valuation of Assets
- Determination of Values
- Deferment of Benefit Payments
- Dividends
- Incontestability
- Misstatement of Age or Sex
- Entire Contract; Changes
- Termination of Contract
SECTION 10. PAYMENT OF CONTRACT BENEFITS 12
- Payment of Benefits
- Payment at Death
- Effective Date for Payment Plan
- Payment Plan Elections
SECTION 11. PAYMENT PLANS 13
- Description of Payment Plans
- Allocation of Benefits
- Annuity Units under Variable Payment Plans
- Payments under Variable Payment Plans
- Transfers between Variable Payment Plans
- Withdrawal under Payment Plans
- Payment Plan Rates
ADDITIONAL BENEFITS (IF ANY) Following page
APPLICATION Attached to the contract
ENDORSEMENTS
TO BE MADE ONLY BY THE COMPANY AT THE HOME OFFICE
2
<PAGE> 4
CONTRACT INFORMATION
CONTRACT NUMBER V12 345 678
PLAN Flexible Payment Variable Annuity
ADDITIONAL BENEFITS None
TAX REPORTING CATEGORY Pension Annuity
ANNUITANT John J. Doe
AGE AND SEX 35 Male - SN
OWNER John J. Doe, the Annuitant
ISSUE DATE January 15, 1996
CONTRACT ANNIVERSARY January 15, 1997 and each January 15
thereafter
MATURITY DATE January 15, 2026
DIRECT BENEFICIARY Jane K. Doe, wife of the Annuitant
INVESTMENT DIVISIONS
On the Issue Date, Purchase Payments and contract values may be allocated among
the following Investment Accounts. Available Separate Account Divisions are
subject to change. See Section 2.1.
Divisions of Separate Account B:
Select Bond Division
International Equity Division
Money Market Division
Balanced Division
Index 500 Stock Division
Aggressive Growth Stock Division
High Yield Bond Division
Growth Stock Division
Growth and Income Stock Division
Guaranteed Accounts:
Guaranteed Interest Fund
Page 3
<PAGE> 5
CONTRACT NUMBER V12 345 678
LOADS, FEES, AND CHARGES
DEDUCTION FROM PURCHASE PAYMENTS:
SALES LOAD: Not applicable.
PREMIUM TAX (See Section 7.2):
For the first Contract Year, Premium Taxes are not deducted
from Purchase payments. After the first Contract Year, the
Company may deduct Premium Taxes from Purchase Payments received
or benefits paid.
ANNUAL ANNUITY RATE AND EXPENSE GUARANTEE CHARGE (See Section 2.3):
1.25% at Issue; 1.50% Maximum
ANNUAL CONTRACT FEE (See Section 7.1):
$30 charged on the contract anniversary. The contract fee will be
waived if the Accumulation Value of the contract equals or exceeds
$50,000 on the contract anniversary.
TRANSFER FEE (See Sections 4.4 and 11.5):
$25 beginning with the thirteenth transfer in any Contract Year.
WITHDRAWAL CHARGE (See Section 7.3):
<TABLE>
<S> <C>
Total Purchase Payments Withdrawal Charge
Paid Under the Contract Starts at
First $100,000 8% of each Purchase Payment
Next $400,000 4% of each Purchase Payment
Next $500,000 2% of each Purchase Payment
Balance over $1,000,000 1% of each Purchase Payment
</TABLE>
The Withdrawal Charge for each Purchase Payment is reduced by 1% as of each
contract anniversary after the Purchase Payment is paid. The Withdrawal Charge
may be waived or deferred as described in the contract.
MINIMUM PURCHASE PAYMENTS, ACCUMULATION VALUE, PAYMENT PLANS
MINIMUM PURCHASE PAYMENT (See Section 4.1): $25
MINIMUM ACCUMULATION VALUE (See Section 9.9):
$2,000 after the first contract anniversary
MINIMUM PAYMENT UNDER PAYMENT PLAN (See Sections 9.9 and 10.4): $20
Page 4
<PAGE> 6
GUARANTEED INTEREST FUND - TABLE OF GUARANTEED VALUES
The table shows minimum guaranteed values and assumes a $1,000 Purchase Payment
made at the time of issue and annually thereafter on each contract anniversary.
The values are based on the assumption that 100% of all net Purchase Payments
are allocated to, and remain in, the Guaranteed Interest Fund.
<TABLE>
<CAPTION>
End of
Contract Accumulation Cash
Year October 1, Value Value
<S> <C> <C> <C>
1 1996 $ 1,030 $ 960
2 1997 2,060 1,930
3 1998 3,121 2,941
4 1999 4,214 3,994
5 2000 5,339 5,089
6 2001 6,498 6,228
7 2002 7,692 7,412
8 2003 8,922 8,642
9 2004 10,189 9,909
10 2005 11,494 11,214
11 2006 12,838 12,558
12 2007 14,222 13,942
13 2008 15,648 15,368
14 2009 17,116 16,836
15 2010 18,629 18,349
16 2011 20,187 19,907
17 2012 21,792 21,512
18 2013 23,444 23,164
19 2014 25,147 24,867
20 2015 26,900 26,620
Age 60 2020 36,489 36,209
Age 65 2025 47,605 47,325
</TABLE>
This table is based on the guaranteed annual interest rate of 3%. Higher
declared rates of interest will increase values. Values shown at the end of
contract years do not reflect any Purchase Payments paid on that contract
anniversary. The actual guaranteed values may differ from those shown above,
depending on the amount and frequency of Purchase Payments.
Page 4A
<PAGE> 7
SECTION 1. GENERAL TERMS AND DEFINITIONS
ACCUMULATION UNIT. A unit of measure used to determine the value of the
interest of this contract in the Separate Account prior to the date on which
amounts are placed under a payment plan.
ACCUMULATION VALUE. The Accumulation Value of a Separate Account Division is
the total value of all Accumulation Units in that Division. The Accumulation
Value of the Guaranteed Interest Fund is the sum of amounts applied to the
fund, plus credited interest, less amounts withdrawn or transferred from the
fund. The Accumulation Value of the contract is the sum of the Accumulation
Values of all Investment Accounts.
ANNUITANT. The person upon whose life this contract is issued and contract
benefits depend.
ANNUITY UNIT. A unit of measure used to determine the amount of variable
payments under a variable payment plan and the value of the interest of a
variable payment plan in the Separate Account.
COMPANY. The Northwestern Mutual Life Insurance Company.
CONTRACT FEE. An annual charge for administrative expenses made on each
contract anniversary prior to the Maturity Date.
CONTRACT YEAR. The first Contract Year is the period of time ending on the
first contract anniversary. Subsequent Contract Years are the annual
periods between contract anniversaries.
DIVISION. A component of the Separate Account to which the Owner may allocate
Purchase Payments and contract values.
GUARANTEED INTEREST FUND. The portion of the contract that is credited with a
guaranteed interest rate and which is held as part of the general assets of the
Company.
HOME OFFICE. The office of the Northwestern Mutual Life Insurance Company
located at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
INVESTMENT ACCOUNT. The Guaranteed Interest Fund and Separate Account
Divisions available for allocation of Purchase Payments and contract values.
The available investment Accounts are listed on page 3.
ISSUE DATE. The date this contract is issued and becomes effective.
MATURITY DATE. The date upon which contract benefits will become payable. If
the contract is continued in force under the Optional Maturity Date provision,
the Optional Maturity Date will become the Maturity Date.
NET PURCHASE PAYMENT. A Purchase Payment less all applicable deductions.
Deductions may include the Sales Load and Premium Tax.
OPTIONAL MATURITY DATE. The contract anniversary nearest the Annuitant's 90th
birthday. Upon reaching the Maturity Date shown on page 3, the Owner may elect
to continue the contract in force until this Optional Maturity Date.
OWNER. The person possessing the ownership rights stated in this contract.
PREMIUM TAX. A tax imposed by a governmental entity when Purchase Payments and
charges for the Disability Waiver of Purchase Payment Benefit are received
or benefits are paid.
PURCHASE PAYMENT. A payment made by or on behalf of the Owner with respect to
this contract excluding any charge for the Disability Waiver of Purchase
Payment Benefit.
SALES LOAD. A deduction made from Purchase Payments received.
SEPARATE ACCOUNT. NML Variable Annuity Account B. The Separate Account
consists of assets set aside by the Company, the investment performance of
which is kept separate from that of the general assets and all other separate
account assets of the Company.
WITHDRAWAL CHARGE. A deduction that is made from maturity benefits and
withdrawal amounts.
WITHDRAWAL CHARGE FREE AMOUNT. For a withdrawal, the amount that can be
withdrawn without a Withdrawal Charge prior to the withdrawal of Net Purchase
Payments.
TRANSFER FEE. A deduction that is made from the amount transferred between
Investment Accounts.
VALUATION DATE. Any day on which the assets of the Separate Account are
valued. Assets are valued as of the close of trading on the New York Stock
Exchange for each day the Exchange is open.
5
<PAGE> 8
SECTION 2. SEPARATE ACCOUNT
2.1 SEPARATE ACCOUNT
The Separate Account (NML Variable Annuity Account B) has been
established by the Company and is registered as a unit investment trust
under the Investment Company Act of 1940. The Separate Account consists of
assets set aside by the Company, the investment performance of which is kept
separate from that of the general assets and all other separate account assets
of the Company. The assets of the Separate Account will not be charged with
liabilities arising out of any other business the Company may conduct.
Interests in the Separate Account are represented by Accumulation Units and
Annuity Units, described in Sections 2.2 and 11.3, respectively.
The Separate Account is comprised of the Divisions listed on page 3.
The assets allocated to these Divisions are invested in shares of
corresponding Portfolios of the Northwestern Mutual Series Fund, Inc. (the
Series Fund). The Series Fund is registered under the Investment Company Act
of 1940 as an open-end, diversified management investment company. Shares of
the Series Fund Portfolios are purchased for the Separate Account at their net
asset value.
The Company reserves the right to eliminate or add additional
Divisions and Portfolios.
2.2 ACCUMULATION UNITS
The interest of this contract in the Separate Account, prior to the
date on which amounts become payable under a payment plan, is represented by
Accumulation Units. The dollar value of Accumulation Units for each Division
will increase or decrease to reflect the investment experience of the Division.
The value of an Accumulation Unit on any Valuation Date is determined by
multiplying:
- the value on the immediately preceding Valuation Date; by
- the Net Investment Factor for the period from the immediately
preceding Valuation Date up to and including the current
Valuation Date (the current period).
2.3 NET INVESTMENT FACTOR
For each Division of the Separate Account the Net Investment Factor for
the current period is one plus the net investment rate for the Division. The
net investment rate for the current period is equal to the gross investment rate
for the Division reduced on each Valuation Date by a charge for annuity rate
and expense guarantees. The charge for these guarantees on the Issue Date is
shown on page 4. The Company may increase or decrease the charge after the Issue
Date, but the Company may not increase the charge to exceed the maximum charge
shown on page 4.
The gross investment rate for the current period for each Division is
equal to a. divided by b. where:
a. is:
- the investment income of the Division for the current period;
plus
- captial gains for the period, whether realized or unrealized,
on the assets of the Division; less
- capital losses for the period, whether realized or unrealized,
on the assets of the Division; less
- deduction for any tax liability paid or reserved for by the
Company resulting from the maintenance or operation of the
Division; and less
- any reasonable expenses paid or reserved for by the Company which
result from a substitution of other securities for shares of the
Portfolio(s) as set forth in Section 2.4 and
b. is the value of the assets in the Division on the immediately
preceding Valuation Date.
The gross investment rate may be positive or negative. The deduction
for any tax liability may be charged proportionately against those contracts to
which the liability is attributable by a reduction in the gross investment
rate for those contracts.
2.4 SUBSTITUTION AND CHANGE
Pursuant to a vote of the Owners of variable annuity contracts having
an interest in a Division or as otherwise permitted by applicable insurance and
securities law, a substitution or change may be made as follows:
- the assets of the Division may be invested in
securities other than shares of the Portfolio(s) as a
substitute for those shares already purchased or as
the securities to be purchased in the future;
- the Separate Account, or a Division, may be operated
as a management company under the Investment Company Act
of 1940, or in any other form permitted by law, if deemed
by the Company to be in the best interests of the
contract Owners;
- the Separate Account may be deregistered under the
Investment Company Act of 1940 in the event registration
is no longer required; or
- the provision of the contracts may be modified to
comply with any other applicable federal or state laws.
In the event of a substitution or change, the Company may make
appropriate endorsement on this and other contracts having an interest in the
Separate Account and take other actions as may be necessary to effect the
substitution or change.
6
<PAGE> 9
SECTION 3. GUARANTEED INTEREST FUND
3.1 GUARANTEED INTEREST FUND
Net Purchase Payments (see Section 4.2) and amounts transferred from
other Investment Accounts under this contract (see Section 4.4) may be applied
to the Guaranteed Interest Fund. Contract benefits placed under a variable
payment plan may not be applied to the Guaranteed Interest Fund. Amounts
applied to the Guaranteed Interest Fund become part of the general assets of
the Company.
3.2 ACCUMULATION VALUE
The Accumulation Value of the Guaranteed Interest Fund is the sum of
the amounts applied to it, plus credited interest, less any amounts withdrawn
or transferred from the fund. Interest begins to accrue on the effective date
of the Purchase Payment or transfer (see Section 4.6). Interest will be
credited at an annual effective interest rate of not less than 3%. A higher
rate may be declared by the Company from time to time for a period set by the
Company.
3.3 TRANSFER RESTRICTIONS
Neither transfers of Accumulation Value into the Guaranteed Interest
Fund nor transfers of Accumulation Value from the Guaranteed Interest Fund will
be allowed for a period of 365 days following the most recent transfer of
Accumulation Value from the Guaranteed Interest Fund. The maximum amount of
the Accumulation Value that may be transferred from the Guaranteed Interest
Fund in one transfer is limited to the greater of:
- 20% of the Accumulation Value of the Guaranteed Interest Fund
on the last contract anniversary preceding the transfer, and
- the amount of the most recent transfer from the Guaranteed
Interest Fund.
However, in no event will this maximum transfer amount be less than
$1,000 or greater than $50,000.
3.4 MAXIMUM GUARANTEED INTEREST FUND ACCUMULATION VALUE
The Accumulation Value of the Guaranteed interest Fund may not exceed
$1,000,000 without prior consent of the Company, except when the maximum is
exceeded because of interest accruing to the Guaranteed Interest Fund.
3.5 TABLE Of GUARANTEED VALUES
Accumulation and cash values are shown on page 4A for the end of the
contract years shown. Values for contract years not shown are calculated on the
same basis as those shown on page 4A. All values are at least as great as those
required by the state in which this contract is delivered.
SECTION 4. PURCHASE PAYMENTS TRANSFERS, WITHDRAWALS
4.1 PAYMENT OF PURCHASE PAYMENTS
All Purchase Payments are payable at the Home Office or to an
authorized agent. A receipt signed by an officer of the Company will be
furnished on request.
Purchase Payments may be made at any time prior to the Maturity Date.
The Owner may vary the amount of Purchase Payments, but no Purchase Payment may
be less than the minimum Purchase Payment shown on page 4. Total Purchase
Payments may not exceed $5,000,000 without the consent of the Company.
4.2 APPLICATION OF PURCHASE PAYMENTS
Each Purchase Payment, net of the Sales Load and Premium Tax, will be
applied to one or more Investment Accounts. Net Purchase Payments applied to
the Guaranteed Interest Fund will accrue interest from the effective date of
the Purchase Payment. Net Purchase Payments applied to the Separate Account
will provide Accumulation Units in one or more Divisions. Accumulation Units
are credited as of the effective date of the Purchase Payment.
The number of Accumulation Units will be determined by dividing the
Net Purchase Payment by the value of an Accumulation Unit on the effective
date. This number of Accumulation Units will not be changed by any subsequent
change in the dollar value of Accumulation Units.
4.3 SELECTION OF INVESTMENT ACCOUNT FOR PURCHASE PAYMENTS
The Owner may at any time change the allocation of Net Purchase
Payments among the Investment Accounts by written notice to the Company. Net
Purchase Payments received at the Home Office on or after the date on which
notice is received will be applied to the designated Investment Accounts on the
basis of the new allocation.
4.4 TRANSFER OF ACCUMULATION VALUE
Before the Maturity Date the Owner may, on request satisfactory to the
Company, transfer amounts from one Investment Account to another, subject to
the transfer restrictions described in Section 3.3. For transfers among the
Separate Account Divisions, the number of Accumulation Units to be applied or
deducted will be adjusted to reflect the respective value of the Accumulation
Units in each of the Divisions on the date the transfer is effective. A
Transfer Fee will be deducted from the amount transferred. The amount of the
Transfer Fee is shown on page 4. The minimum amount which may be transferred is
the lesser of $100 or the entire Accumulation Value of the Investment Account
from which the transfer is being made.
For transfers from the Guaranteed Interest Fund, amounts closest to
expiration of an interest rate guarantee will be removed first. In the event
that two amounts are equally close to expiration, the one which was applied to
the Guaranteed Interest Fund earlier will be removed first.
7
<PAGE> 10
4.5 WITHDRAWALS AND FULL SURRENDER
Before the Maturity Date the Owner may, on request satisfactory to the
Company, withdraw all or a portion of the Accumulation Value of the contract.
The Company may require that at least 100 Accumulation Units or $100 of
Accumulation Value of the Guaranteed Interest Fund remain after a partial
withdrawal. Withdrawal of the entire value of the contract constitutes a full
surrender, and receipt of the contract at the Home Office will terminate this
contract. Receipt of the contract may be waived by the Company.
The cash value of the amount withdrawn will be the Accumulation Value
withdrawn determined as of the date the withdrawal is effective, less any
applicable Withdrawal Charge. The Withdrawal Charge is described in
Section 7.3.
The term "withdrawal amounts" as used in this contract includes
amounts paid as full surrenders and withdrawals of a portion of the
Accumulation Value of the contract.
For withdrawals from the Guaranteed Interest Fund, amounts closest to
expiration of an interest rate guarantee will be removed first. In the event
that two amounts are equally close to expiration, the one which was applied to
the Guaranteed Interest Fund earlier will be removed first.
4.6 EFFECTIVE DATE
The effective date of a Purchase Payment, transfer, or withdrawal is
the Valuation Date on which the Purchase Payment or the request for transfer or
withdrawal is received at the Home Office. However, the Purchase Payment,
transfer, or withdrawal will be effective on the following Valuation Date if
the Purchase Payment or request for transfer or withdrawal is received at the
Home Office either:
- on a Valuation Date after the close of trading on the New York
Stock Exchange; or
- on a day on which the New York Stock Exchange is closed.
SECTION 5. BENEFITS
5.1 MATURITY BENEFIT
MATURITY OPTIONS. If the Annuitant is living on the Maturity Date shown on
page 3, and that Maturity Date is earlier than the contract anniversary nearest
the Annuitant's 90th birthday, the Owner may elect between the following
maturity options:
- payment of a monthly income to the Annuitant under a payment
plan chosen by the Owner; or
- deferral of the maturity benefit and continuation of this
contract, without any Disability Waiver of Purchase Payment
Benefit, to the Optional Maturity Date. The contract will
continue under this option if a written election for this
purpose is received by the Company or if on the Maturity Date
shown on page 3, the Owner has not chosen a payment plan.
If the Annuitant Is living on the Maturity Date and that Maturity Date
is on or after the contract anniversary nearest the Annuitant's 90th birthday,
the Company will pay a monthly income to the Annuitant under a payment form
chosen by the Owner.
PAYMENT OF MATURITY BENEFIT. The amount of the monthly income paid as the
maturity benefit will depend on the payment plan chosen (see Section 11) and
the maturity value. The maturity value of this contract will be the
Accumulation Value of the contract on the effective date of the maturity
benefit, less any applicable Withdrawal Charge (see Section 7.3). The maturity
benefit will be effective on the Maturity Date. However, if the New York Stock
Exchange is closed on the Maturity Date, the effective date will be the
Valuation Date next preceding the Maturity Date.
If no payment form is chosen at the time a monthly income becomes
payable, payments will be made to the Annuitant under he variable payment form
of Life Income Plan (Option C), with installments certain for ten years, as
described in Section 11.1.
OPTIONAL MATURITY DATE. The Optional Maturity Date is the contract anniversary
nearest the Annuitant's 90th birthday. If the contract is continued to the
Optional Maturity Date, all contract rights of the Owner will continue in
effect to the Optional Maturity Date except that the Disability Waiver of
Purchase Payment Benefit will not continue in force after the Maturity Date
shown on page 3. The Optional Maturity Date will become the Maturity Date for
all other purposes of this contract.
5.2 PAYMENT AT DEATH
The Company will make a payment to the beneficiary upon receipt at its
Home Office of satisfactory proof of the death of the Annuitant before the
Maturity Date. The payment at death will be the Accumulation Value of the
contract determined on the effective date of the payment at death. The payment
at death will be effective on the Valuation Date on which proof of death is
received at the Home Office or, if later, the date on which a method of payment
is elected. However, payment at death will be effective on the next following
Valuation Date if the proof of death is received at the Home Office either:
- on a Valuation Date after the close of trading on the New York
Stock Exchange; or
- on a day on which the New York Stock Exchange is closed.
If the date of death is before the Annuitant's 65th birthday, the
payment at death will not be less than:
- total Purchase Payments paid under the contract; less
- any amounts withdrawn under Section 4.5.
The term "death benefits" as used in this contract refers to the
payment at death.
8
<PAGE> 11
SECTION 6. BENEFICIARIES
6.1 DEFINITIONS
The term "beneficiaries" as used in this contract includes direct
beneficiaries, contingent beneficiaries and further payees.
6.2 NAMING AND CHANGE OF BENEFICIARIES
FOR MATURITY BENEFITS BY OWNER. The Owner may name and change the
beneficiaries of maturity benefits before the Maturity Date. If no direct
beneficiary is named by the Owner, the Annuitant will be the direct
beneficiary.
FOR DEATH BENEFITS BY OWNER. The Owner may name and change the beneficiaries:
- while the Annuitant is living; or
- during the first 60 days after the date of death of the
Annuitant, if the Annuitant was not the Owner immediately
prior to the Annuitant's death. A change made during this 60
days cannot be revoked.
FOR WITHDRAWAL AMOUNTS BY OWNER. The Owner may name the beneficiaries at the
time of withdrawal.
FOR DEATH BENEFITS BY DIRECT BENEFICIARY. A direct beneficiary may name and
change the contingent beneficiaries and further payees of the direct
beneficiary's share of the benefits:
- if the direct beneficiary is the Owner;
- if, at any time after the death of the Annuitant, no
contingent beneficiary or further payee of that share is
living; or
- if, after the death of the Annuitant, the direct beneficiary
elects a payment plan. The interest of any other beneficiary
in the share of that direct beneficiary will end.
These direct beneficiary rights are subject to the Owner's rights
during the 60 days after the date of death of the Annuitant.
FOR MATURITY BENEFITS OR WITHDRAWAL AMOUNTS BY DIRECT BENEFICIARY. After a
withdrawal or the maturity of the contract, the direct beneficiary may name and
change the contingent beneficiaries and further payees of the direct
beneficiary's share of benefits that is under a payment plan.
FOR MATURITY OR DEATH BENEFITS OR WITHDRAWAL AMOUNTS BY SPOUSE (MARITAL
DEDUCTION PROVISION).
- POWER TO APPOINT. The spouse of the Annuitant will have the
power alone and in all events to appoint all amounts payable
to the spouse under the contract if:
a. just before the Annuitant's death, the Annuitant was
the Owner; and
b. the spouse is a direct beneficiary; and
c. the spouse survives the Annuitant.
- TO WHOM SPOUSE CAN APPOINT. Under this power, the spouse can
appoint:
a. to the estate of the spouse; or
b. to any other persons as contingent beneficiaries and
further payees.
- EFFECT OF EXERCISE. As to the amounts appointed, the exercise
of this power will:
a. revoke any other designation of beneficiaries;
b. revoke any election of payment plan as it applies to
them; and
c. cause any provision to the contrary in Section 6 or
10 of this contract to be of no effect.
EFFECTIVE DATE. A naming or change of a beneficiary will be made on receipt at
the Home Office of a written request that is acceptable to the Company. The
request will then take effect as of the date that it was signed. The Company is
not responsible for any payment or other action that is taken by it before the
receipt of the request. The Company may require that the contract be sent to
it to be endorsed to show the naming or change.
6.3 SUCCESSION IN INTEREST OF BENEFICIARIES
DIRECT BENEFICIARIES. The maturity or death benefits or withdrawal amounts
will be payable in equal shares to the direct beneficiaries who survive and
receive payment. If a direct beneficiary dies before receiving all or part of
the direct beneficiary's full share, the unpaid portion will be payable in
equal shares to the other direct beneficiaries who survive and receive payment.
CONTINGENT BENEFICIARIES. At the death of all of the direct beneficiaries, the
maturity or death benefits, the withdrawal amounts, or the present value of any
unpaid payments under a payment plan, will be payable in equal shares to the
contingent beneficiaries who survive and receive payment. If a contingent
beneficiary dies before receiving all or part of the contingent beneficiary's
full share, the unpaid portion will be payable in equal shares to the other
contingent beneficiaries who survive and receive payment.
FURTHER PAYEES. At the death of all the direct and contingent beneficiaries,
the maturity or death benefits, the withdrawal amounts, or the present value
of any unpaid payments under a payment plan, will be paid in one sum:
- in equal shares to the further payees who survive and receive
payment; or
- if no further payees survive and receive payment, to the
estate of the last to die of all beneficiaries who survive the
Annuitant.
9
<PAGE> 12
OWNER OR THE OWNER'S ESTATE. If no beneficiaries are alive when the Annuitant
dies, the benefits will be paid to the Owner or to the Owner's estate.
6.4 TRUSTEE AS BENEFICIARY
If a trustee is named as a beneficiary and no qualified trustee makes
claim to the proceeds, or to the present value of any unpaid payments under a
payment plan, within one year after payment becomes due to the trustee, or if
satisfactory evidence is furnished to the Company within that year showing
that no trustee can qualify to receive payment, payment will be made as though
the trustee had not been named.
The Company will be fully discharged of liability for any action taken
by the trustee and for all amounts paid to, or at the direction of, the trustee
and will have no obligation as to the use of the amounts. In all dealings with
the trustee the Company will be fully protected against the claims of every
other person. The Company will not be charged with notice of a change of
trustee unless written evidence of the change is received at the Home Office.
6.5 GENERAL
TRANSFER OF OWNERSHIP. A transfer of ownership of itself will not change the
interest of a beneficiary.
CLAIMS OF CREDITORS. So far as allowed by law, no amount payable under this
contract will be subject to the claims of creditors of a beneficiary.
SUCCESSION UNDER PAYMENT PLANS. A direct or contingent beneficiary who
succeeds to an interest in a payment plan will continue under the terms of
the plan.
SECTION 7. FEES AND CHARGES
7.1 CONTRACT FEE
On each contract anniversary prior to the Maturity Date, a Contract
Fee will be charged for administrative expenses. The amount of the Contract
Fee is shown on page 4. The Contract Fee will be deducted from the Investment
Accounts in proportion to the Accumulation Value of the Investment Accounts.
The effective date of the Contract Fee will be the contract anniversary.
However, if the New York Stock Exchange is closed the contract anniversary, the
effective date will be the next following Valuation Date.
7.2 SALES LOAD AND PREMIUM TAXES
The Company will deduct from Purchase Payments received the Sales Load
shown on page 4. The Company may also deduct from Purchase Payments received
any Premium Taxes incurred.
7.3 WITHDRAWAL CHARGE
CONDITIONS. Maturity benefits and withdrawals are subject to a Withdrawal
Charge described on page 4. There is no Withdrawal Charge on benefits that are
paid under a variable Installment Income or variable Life Income Payment Plan.
However, the withdrawal of the present value of any unpaid installments under a
variable Installment Income Plan (Option B) will be subject to a withdrawal
charge if the withdrawal is made less than five years after the date that the
payment plan takes effect.
CALCULATIONS. The amount of the Withdrawal Charge on the contract is equal to
the sum of the Withdrawal Charges on all Net Purchase Payments. The Withdrawal
Charge on a Net Purchase Payment is equal to the Withdrawal Charge percentage
on the date the Withdrawal Charge is determined, multiplied by the amount of
the Net Purchase Payment. The Withdrawal Charge percentages are shown on page
4. The excess of the Accumulation Value of the contract over the total of Net
Purchase Payments paid is not subject to a Withdrawal Charge.
Withdrawal Charges are determined:
- for maturity benefits, as of the Maturity Date.
- for withdrawals under Section 4.5, as of the effective date of
the withdrawal.
- for withdrawals from payment plans, as of the effective date
of the withdrawal.
WITHDRAWAL CHARGE FREE AMOUNT. If the Accumulation Value of the contract is at
least $10,000 on the most recent contract anniversary preceding a withdrawal
under Section 4.5, then the amount withdrawn will be taken first from any
eligible portion of the Accumulation Value of the contract that exceeds the
total of Net Purchase Payments paid. For each Contract Year, the amount
eligible for the Withdrawal Charge Free Amount is the lesser of the
following:
- the excess of the Accumulation Value of the contract on the
effective date of the withdrawal over the total of Net
Purchase Payments paid up to the effective date of the
withdrawal; and
- 10% of the Accumulation Value of the contract on the most
recent contract anniversary preceding the withdrawal.
ORDER OF WITHDRAWAL. A withdrawal will be taken from the contract in the
following order:
- first, from the Withdrawal Charge Free Amount, if any;
- next, from the Net Purchase Payments in the order that
produces the lowest Withdrawal Charge; and
- last, from any remaining amount by which the Accumulation
Value of the contract exceeds the total of Net Purchase
Payments.
10
<PAGE> 13
SECTION 8. OWNERSHIP
8.1 THE OWNER
The Owner is named on page 3. All contract rights may be exercised by
the Owner, the Owner's successor or the Owner's transferee without the consent
of any beneficiary. After the Annuitant's death, contract rights may be
exercised only as provided in Sections 6 and 10.
If the contract has more than one Owner, contract rights may be
exercised only by authorization of all Owners.
8.2 TRANSFER Of OWNERSHIP
The Owner may transfer the ownership of this contract. Written proof
of transfer satisfactory to the Company must be received at its Home Office.
The transfer will then take effect as of the date it was signed. The Company
may require that the contract be sent to it for endorsement to show the
transfer. The Company will not be responsible to a transferee Owner for any
payment or other action taken by the Company before receipt of the proof of
transfer at its Home Office.
8.3 COLLATERAL ASSIGNMENT
The Owner may assign this contract as collateral security. The
Company is not responsible for the validity or effect of a collateral
assignment. The Company will not be responsible to an assignee for any
payment or other action taken by the Company before receipt of the assignment
in writing at its Home Office.
The interest of any beneficiary will be subject to any collateral
assignment made either before or after the beneficiary is named.
A collateral assignee is not an Owner. A collateral assignment is not
a transfer of ownership. Ownership can be transferred only by complying with
Section 8.2.
8.4 VOTING RIGHTS AND REPORTS TO OWNERS
As long as the Separate Account continues to be registered as a unit
investment trust under the Investment Company Act of 1940 and the assets of the
Separate Account are invested in shares of the Series Fund, the Company will
vote shares held by the Separate Account in accordance with instructions
received from the Owners of Accumulation Units or, after payments have
commenced under a variable payment plan, from the payees receiving payments
under those payment plans. Each Owner or payee will receive:
- periodic reports relating to the Series Fund;
- proxy material;
- a form with which to give voting instructions; and
- information regarding the proportion of shares of each Portfolio
held in the Separate Account corresponding either to the
Accumulation Units credited to this contract or the number of shares
held in the Separate Account representing the Company's actuarial
liability under the variable payment plan.
At least once each Contract Year, the Company will also send to the
Owner or payee a statement of the Accumulation Values of the Investment
Accounts, the number of units credited to the contract, the dollar value of a
unit as of a date not more than two months previous to the date of mailing, and
a statement of the investments held by the Separate Account.
SECTION 9. THE CONTRACT
9.1 GUARANTEES
The Company guarantees that mortality and expense results will not
adversely affect the amount of variable payments.
9.2 VALUATION OF SEPARATE ACCOUNT ASSETS
The value of the shares of each Portfolio held in the Separate Account
on each Valuation Date will be the redemption value of the shares on that date.
If the right to redeem shares of a Portfolio has been suspended, or payment of
the redemption value has been postponed, the shares held in the Separate
Account (and Annuity Units) may be valued at fair value as determined in good
faith by the Board of Trustees of the Company for the sole purpose of computing
annuity payments.
9.3 DETERMINATION OF SEPARATE ACCOUNT VALUES
The method of determination by the Company of the Net Investment
Factor, and the number and value of Accumulation Units and Annuity Units, will
be conclusive upon the Owner, any assignee, the Annuitant, and any beneficiary.
9.4 DEFERMENT OF BENEFIT PAYMENTS
SEPARATE ACCOUNT DIVISIONS. The Company reserves the right to defer
determination of the contract values of the Separate Account portion of this
contract, or the payment of benefits under a variable payment plan, until after
the end of any period during which the right to redeem shares of a Portfolio is
suspended, or payment of the redemption value is postponed. Any deferment
would be in accordance with the provisions of the Investment Company Act of
1940 by reason of closing of, or restriction of trading on, the New York Stock
Exchange, or other emergency, or as otherwise permitted by the Act. In
addition, the Company reserves the right to defer payment of contract values
until seven days after the end of any deferment in the determination of
contract values.
GUARANTEED INTEREST FUND. The Company may defer paying contract values of the
Guaranteed Interest Fund for up to six months from the effective date of the
withdrawal or full surrender. If payment is deferred for 30 days or more,
interest will be paid on the withdrawal amounts at an annual effective rate of
3% from the effective date of the withdrawal or surrender to the date of the
payment.
11
<PAGE> 14
9.5 DIVIDENDS
This contract will share in the divisible surplus of the Company,
except while payments are being made under a variable payment plan. This
surplus will be determined each year, and the dividend, if any, will be
credited on the contract anniversary. Any dividend credited prior to the
Maturity Date will be applied on the effective date as a Net Purchase Payment
unless the Owner elects to have the dividend paid in cash. The effective date
of the dividend will be the contract anniversary. However, if the New York
Stock Exchange is closed on the contract anniversary, the effective date will
be the next following Valuation Date.
9.6 INCONTESTABILITY
The Company will not contest this contract after it has been in force
during the lifetime of the Annuitant for two years from the Issue Date. This
Issue Date is shown on page 3.
9.7 MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, the amount
payable will be the amount which the Purchase Payments paid would have
purchased at the correct age and sex.
9.8 ENTIRE CONTRACT; CHANGES
This contract with the attached application is the entire contract.
Statements in the application are representations and not warranties. A change
in the contract is valid only if it is approved by an officer of the Company.
The Company may require that the contract be sent to it for endorsement to
show a change. No agent has the authority to change the contract or to waive
any of its terms.
All payments by the Company under this contract are payable at its Home Office.
Assets of the Separate Account are owned by the Company and the
Company is not a trustee with respect thereto. The Company may from time to
time adjust the amount of assets contained in the Separate Account, by periodic
withdrawals or additions, to reflect the contract deductions and the Company's
reserves for this and other similar contracts.
This contract is subject to the laws of the state in which it is
delivered. All benefits are at least as great as those required by that state.
9.9 TERMINATION OF CONTRACT
At any time after the first contract anniversary, the Company may
terminate the contract and pay the Owner the Accumulation Value of the contract
and be released of any further obligation if:
- prior to the Maturity Date no Purchase Payments have been
received under the contract for a period of two full years and
each of the following is less than the Minimum Accumulation
Value shown on page 4:
a. the Accumulation Value of the contract; and
b. total Purchase Payments paid under the contract,
less any amounts withdrawn under Section 4.5; or
- on the Maturity Date the Accumulation Value of the contract is
less than the Minimum Accumulation Value shown on page 4 or
would provide a monthly income the initial amount of which is
less than the minimum payment amount shown on page 4.
SECTION 10. PAYMENT OF CONTRACT BENEFITS
10.1 PAYMENT OF BENEFITS
All or part of the contract benefits may be paid under one or more of
the following:
- a variable payment plan;
- a fixed payment plan; or
- in cash.
The provisions and rate for variable and fixed payment plans are
described in Section 11. Contract benefits may not be placed under a payment
plan unless the plan would provide to each beneficiary a monthly income the
initial amount of which is at least the minimum payment amount shown on page 4.
A Withdrawal Charge will be deducted from contract benefits before their
payment under certain conditions described in Section 7.3.
10.2 PAYMENT AT DEATH
Upon the death of the Annuitant prior to the Maturity Date, the
payment at death will be made under any payment plan previously elected. If
no payment plan has been elected, the payment at death will be made under a
payment plan or in cash as elected by the Owner or beneficiary.
12
<PAGE> 15
10.3 EFFECTIVE DATE FOR PAYMENT PLAN
A payment plan that is elected for maturity benefits will take effect
on the Maturity Date.
A payment plan that is elected for death benefits will take effect on
the date proof of death of the Annuitant is received at the Home Office if:
- the plan is elected by the Owner; and
- the election is received at the Home Office while the
Annuitant is living.
In all other cases, a payment plan that is elected will take effect:
- On the date the election is received at the Home Office; or
- on a later date, if requested.
10.4 PAYMENT PLAN ELECTIONS
FOR DEATH BENEFITS BY OWNER. The Owner may elect payment plans for death
benefits:
- while the Annuitant is living; or
- during the first 60 days after the date of death of the
Annuitant, if the Annuitant was not the Owner immediately
prior to the Annuitant's death. An election made during the
60 days cannot be changed.
FOR DEATH BENEFITS BY DIRECT OR CONTINGENT BENEFICIARY. A direct or contingent
beneficiary may elect payment plans for death benefits payable to the direct or
contingent beneficiary if no payment plan that has been elected is in effect.
This right is subject to the Owner's rights during the above 60 days.
FOR MATURITY BENEFITS OR WITHDRAWAL AMOUNTS. The Owner may elect payment plans
for maturity benefits or withdrawal amounts.
TRANSFER BETWEEN PAYMENT PLANS. A beneficiary who is receiving payment under a
payment plan which includes the right to withdraw may transfer the amount
withdrawable to any other payment plan that is available.
SECTION 11. PAYMENT PLANS
11.1 DESCRIPTION OF PAYMENT PLANS
INSTALLMENT INCOME FOR SPECIFIED PERIOD (OPTION B)
The Company will make monthly installment income payments providing
for payment of benefits over a specified period of 5 to 30 years.
LIFE INCOME PLANS
- SINGLE LIFE INCOME (OPTION C). The Company will make monthly
payments for the selected certain period, if any, and
thereafter during the remaining lifetime of the individual
upon whose life income payments depend. The selections
available are: (a) no certain period; or (b) a certain period
of 10 or 20 years.
- JOINT AND SURVIVOR LIFE INCOME (OPTION E). The Company will
make monthly payments for a 10-year certain period and
thereafter during the joint lifetime of the two individuals
upon whose lives income payments depend and continuing during
the remaining lifetime of the survivor.
- OTHER SELECTIONS. The Company may offer other selections
under the Life Income Plans.
- LIMITATIONS. A direct or contingent beneficiary who is a
natural person may be paid under a Life Income Plan only if
the payments depend on that beneficiary's life. A corporation
may be paid under a Life Income Plan only if the payments
depend on the life of the Annuitant or, after the death of the
Annuitant, on the life of the Annuitant's spouse or dependent.
These payment plans are available on either a fixed or variable basis.
Under a fixed payment plan the payment remains level. Under a variable payment
plan the payment will increase or decrease as described in Section 11.4.
11.2 ALLOCATION OF BENEFITS
Upon election of a variable payment plan, the Owner or direct or
contingent beneficiary may select the allocation of variable benefits among the
Divisions.
If no selection is made, the allocation of benefits will be as follows:
- for amounts in the Separate Account Divisions, benefits will
be allocated in proportion to the Accumulation Value of each
Division on the effective date of the variable payment plan,
and
- for amounts in the Guaranteed Interest Fund, benefits will be
allocated 100% to the Money Market Division.
11.3 ANNUITY UNITS UNDER VARIABLE PAYMENT PLANS
The interest of this contract in the Separate Account after the
effective date of a variable payment plan is represented by Annuity Units. The
dollar value of Annuity Units for each Division will increase or decrease to
reflect the investment experience of the Division. The value of an Annuity
Unit on any Valuation Date is the product of:
- the Annuity Unit value on the, immediately preceding Valuation
Date;
- the Net Investment Factor for the period from the immediately
preceding Valuation Date up to and including the current
Valuation Date (the current period); and
- the Daily Adjustment Factor of .99990575 raised to a power
equal to the number of days in the current period to reflect
the Assumed Investment Rate of 3 1/2% used in calculating the
monthly payment rate.
13
<PAGE> 16
11.4 PAYMENTS UNDER VARIABLE PAYMENT PLANS
FIRST PAYMENT. The first payment under a variable payment plan will be due as
of the effective date of the payment plan.
The amount of the first payment is the sum of payments from each
Division, each determined by multiplying the benefits allocated to the Division
under the variable payment plan by the applicable monthly variable
payment rate per $1,000 of benefits.
NUMBER OF ANNUITY UNITS. The number of Annuity Units in each Division under a
variable payment plan is determined by dividing the amount of the first payment
payable from the Division by the Annuity Unit value for the Division at the
close of business on the Valuation Date on which the variable payment plan
becomes effective. The number of Annuity Units will not be changed by any
subsequent change in the dollar value of Annuity Units.
SUBSEQUENT VARIABLE PAYMENTS. The amount of each subsequent payment from each
Division under a variable payment plan will increase or decrease in accord with
the increase or decrease in the value of an Annuity Unit which reflects the
investment experience of that Division of the Separate Account.
The amount of subsequent variable payments is the sum of payments from
each Division, each determined by multiplying the fixed number of Annuity
Units for the Division by the value of an Annuity Unit for the Division on:
- the fifth Valuation Date prior to the payment due date if the
payment due date is a Valuation Date; or
- the sixth Valuation Date prior to the payment due date if the
payment due date is not a Valuation Date.
11.5 TRANSFER BETWEEN VARIABLE PAYMENT PLANS
A payee or joint payees receiving payments under a variable payment
plan may:
- transfer Annuity Units from one Division to another. The
number of Annuity Units in each Division will be adjusted to
reflect the respective value of the Annuity Units in the
Divisions on the date the transfer is effective. A Transfer
Fee will be deducted from the amount transferred. The amount
of the Transfer Fee is shown on page 4. Transfers from the
Money Market Division may be made at any time. No transfer
from the other Divisions may be made within 90 days of the
effective date of the variable payment plan or within 90 days
from the effective date of the last transfer.
- transfer from an Installment Income Plan (Option B) to either
form of the Life Income Plan (Option C or E).
Other transfers may be permitted subject to conditions set by the
Company. A transfer will be effective on the Valuation Date on which a
satisfactory transfer request is received in the Home Office, or a later date
if requested. However, the transfer will be effective on the following
Valuation Date if the request is received at the Home Office either:
- on a Valuation Date after the close of trading on the New York
Stock Exchange; or
- on a day on which the New York Stock Exchange is closed.
11.6 WITHDRAWAL UNDER PAYMENT PLANS
Withdrawal of the present value of any unpaid income payments may be
elected at any time by the beneficiary, except that withdrawal may not be
elected under a Life Income Plan (Option C or E) until the death of all
individuals upon whose lives income payments depend.
The withdrawal value under the Installment Income Plan (Option B) will
be the present value of any unpaid payments, less any applicable Withdrawal
Charge under Section 7.3. The withdrawal value under a Life Income Plan
(Option C or E) will be the present value of any unpaid payments for the
certain period with no Withdrawal Charge.
For a fixed payment plan, the present value of any unpaid income
payments will be based on the rate of interest used to determine the amount of
the payments. For a variable payment plan, the present value of any unpaid
income payments will be based on interest at the Assumed Investment Rate used
in calculating the amount of the variable payments. The amount of variable
payments used in calculating the present value of unpaid payments will be
determined by multiplying the number of Annuity Units by the value of an
Annuity Unit on the effective date of the withdrawal.
A withdrawal will be effective on the Valuation Date on which the
request is received in the Home Office. However, the withdrawal will be
effective on the following Valuation Date if the request is received at the
Home Office either:
- on a Valuation Date after the close of trading on the New
York Stock Exchange; or,
- on a day on which the New York Stock Exchange is closed.
14
<PAGE> 17
11.7 PAYMENT PLAN RATES
PAYMENT RATE TABLES. The guaranteed monthly payment rates for both a fixed
payment plan and the first payment under a variable payment plan are shown in
the Payment Rate Tables. The tables show rates for the Installment Income Plan
for a Specified Period (Option B) and Life Income Plans (Options C and E).
Life Income Plan (Option C or E) rates are based on the sex and adjusted age of
any individual upon whose life payments depend. The adjusted age is:
- the age on the birthday that is nearest to the date on which
the payment plan takes effect; plus
- the age adjustment shown below for the number of Contract
Years that have elapsed from the Issue Date to the date
that the payment plan takes effect. A part of a Contract
Year is counted as a full year.
<TABLE>
<CAPTION>
CONTRACT CONTRACT
YEARS AGE YEARS AGE
ELAPSED ADJUSTMENT ELAPSED ADJUSTMENT
<S> <C> <C> <C>
1 to 8 0 33 to 40 -4
9 to 16 -1 41 to 48 -5
17 to 24 -2 49 or more -6
25 to 32 -3
</TABLE>
CURRENT FIXED PAYMENT PLAN RATES
- INSTALLMENT INCOME FOR SPECIFIED PERIOD (OPTION 6).
The Company may offer fixed payment plan rates
higher than those guaranteed in this contract with conditions
on withdrawal.
- LIFE INCOME PLANS (OPTION C OR E). Payments will be based
on rates declared by the Company which will not be less than
the rates guaranteed in this contract. The declared rates
will provide at least as much income as would the Company's
rates, on the date that the payment plan takes effect, for a
single premium immediate annuity contract.
ALTERNATE VARIABLE RATE BASIS. The Company may from time to time publish
higher initial rates for variable payment plans under this contract. These
higher rates will not be available to increase payments under payment plans
already in effect.
When a variable payment plan is effective on an alternate rate basis,
the Daily Adjustment Factor described in Section 11.3 will be determined based
on the Assumed Investment Rate used in calculating the alternate payment rate.
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN
INSTALLMENT INCOME PLAN (OPTION B)
<TABLE>
<CAPTION>
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT
<S> <C> <C> <C> <C> <C>
Years 1-4 11 $ 9.09 21 $ 5.56
Not Available 12 8.46 22 5.39
13 7.94 23 5.24
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
</TABLE>
GUARANTEED FIXED PAYMENT PLANS
INSTALLMENT INCOME PLAN (OPTION B)
<TABLE>
<CAPTION>
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT
<S> <C> <C> <C> <C> <C>
Years 1-4 11 $ 8.42 21 $ 4.85
Not Available 12 7.80 22 4.67
13 7.26 23 4.51
14 6.81 24 4.36
5 $ 17.49 15 6.42 25 4.22
6 14.72 16 6.07 26 4.10
7 12.74 17 5.77 27 3.98
8 11.25 18 5.50 28 3.87
9 10.10 19 5.26 29 3.77
10 9.18 20 5.04 30 3.68
</TABLE>
15
<PAGE> 18
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
LIFE INCOME PLAN (OPTION C)
<TABLE>
<CAPTION>
SINGLE LIFE MONTHLY PAYMENTS
CHOSEN PERIOD (YEARS)
ADJUSTED
AGE* ZERO 10 20
<S> <C> <C> <C>
55 $ 4.17 $ 4.14 $ 4.06
56 4.23 4.20 4.11
57 4.31 4.28 4.17
58 4.39 4.35 4.23
59 4.47 4.43 4.29
60 4.56 4.51 4.35
61 4.65 4.59 4.42
62 4.76 4.69 4.49
63 4.87 4.79 4.56
64 4.98 4.90 4.63
65 5.10 5.00 4.70
66 5.24 5.12 4.77
67 5.38 5.24 4.84
68 5.54 5.37 4.91
69 5.70 5.51 4.98
70 5.88 5.66 5.05
71 6.07 5.81 5.12
72 6.27 5.96 5.19
73 6.49 6.13 5.24
74 6.73 6.30 5.30
75 6.99 6.48 5.36
76 7.27 6.67 5.40
77 7.58 6.86 5.45
78 7.91 7.05 5.49
79 8.26 7.25 5.52
80 8.64 7.45 5.55
81 9.05 7.65 5.58
82 9.50 7.84 5.60
83 9.98 8.02 5.62
84 10.50 8.20 5.63
85 and over. 11.06 8.38 5.64
</TABLE>
LIFE INCOME PLAN (OPTION E)
<TABLE>
<CAPTION>
JOINT AND SURVIVOR MONTHLY PAYMENTS
OLDER LIFE YOUNGER LIFE ADJUSTED AGE*
ADJUSTED
AGE* 55 60 65 70 75 80 85 and over
<S> <C> <C> <C> <C> <C> <C> <C>
55 $ 3.79
60 3.87 $ 4.07
65 3.94 4.18 $ 4.45
70 3.99 4.27 4.61 $ 4.99
75 4.02 4.34 4.73 5.20 $ 5.72
80 4.05 4.38 4.81 5.35 6.00 $ 6.67
85 and over 4.06 4.40 4.86 5.45 6.18 7.00 $ 7.75
</TABLE>
*See Section 10.7.
The amount of the payment for any other combination of ages will be furnished
by the Company on request. The maximum initial monthly income per $l,000 will
be $7.75.
Monthly payment rates are based on an Assumed Investment Rate of 3 1/2% and
the 1983 Table a with Projection Scale G.
16
<PAGE> 19
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
MILWAUKEE, WISCONSIN
CONTRACT NUMBER
-----------------
DEFERRED ANNUITY APPLICATION
- -----------------------------------------------------------------------------
1 Has a Northwestern Mutual policy ever been issued on the annuitant's
life? / / Yes / / No
If yes, the last policy number is -------------------.
2 ANNUITANT
-------------------------------------------------------------------------
/X/ Mr. / / Mrs. / / Ms. / / Dr. / / Other: ------ /X/ Male / / Female
-------------------------------------------------------------------------
NAME BIRTHDATE (MONTH, DAY, YEAR)
JOHN J DOE 01-15-1961
-------------------------------------------------------------------------
STATE OF BIRTH (OR FOREIGN COUNTRY) TAXPAYER IDENTIFICATION NUMBER
Wisconsin ###-##-####
-------------------------------------------------------------------------
PRIMARY RESIDENCE
STREET OR PO BOX 1234 Main Street
-------------------------------------------------------------------------
CITY, STATE, ZIP (COUNTRY IF OTHER THAN U.S.)
Milwaukee, WI 53200
-------------------------------------------------------------------------
- -----------------------------------------------------------------------------
3 MARKET CATEGORY (Select One)
NON-TAX QUALIFIED
/ / Personal
/ / Estate or Business
/ / Eligible 457 Deferred Compensation Plan
GO TO QUESTION 4.
TAX QUALIFIED
/ / IRA Individual
/ / IRA Simplified Employee Pension Plan (SEPP)
/ / TDA Employee salary reduction only
/ / TDA Employer matching or non-elective contributions included
/ / 401(g) Non-transferable annuity
THE OWNER IS THE ANNUITANT. GO TO QUESTION 5.
/X/ Pension and Profit Sharing
If new trust, attach
Trust Number 000123 Declaration of Employer (31-3344).
MONTH DAY
Contract Anniversary Date / / - / / Complete only if
required by plan.
THE OWNER AND BENEFICIARY ARE THE TRUSTEE(S) OF THE PLAN. GO TO QUESTION 6.
<PAGE> 20
4 OWNER (NOTE: A minor owner limits future contract actions.)
/ / Annuitant / / See attached supplement / / Other: (Complete A, B, C
below)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other: / / Male / / Female
------
PERSONAL NAME BIRTHDATE (MONTH, DAY, YEAR)
- -
--------------------------------------- -----------
OR
BUSINESS/TRUST NAME
-----------------------------------------------------------------------
B. RELATIONSHIP TO ANNUITANT TAXPAYER IDENTIFICATION NUMBER
- -
---------------------------------------- ----------------
C. ADDRESS / / ANNUITANT'S ADDRESS, OR
STREET OR PO BOX
------------------------------------------------------------------------
CITY, STATE, ZIP (COUNTRY IF OTHER THAN US)
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5 BENEFICIARY (NOTE: Cannot be annuitant unless "Estate of Annuitant" named.)
A. Direct Beneficiary of payment at DEATH:
/ / Owner / / Other
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
B. Contingent Beneficiary of payment at DEATH:
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
Box (1) or (2) may be selected to include all children or brothers and
sisters without naming them, or to add to the contingent beneficiaries
named. Box (3) may be selected to provide for children of a deceased
contingent beneficiary; use only if contingent beneficiaries are named
and/or box (1) or (2) is checked. NOTE: The word "children" includes
child and legally adopted children.
/ / (1) and all (other) children of the Annuitant.
/ / (2) and all (other) brothers and sisters of the Annuitant born of the
marriage of or legally adopted by ________ and ________ before the
Annuitant's death.
/ / (3) any amount that would have been paid to a deceased contingent
beneficiary, if living, will be paid in one sum and in equal
shares to the children of that contingent beneficiary who
survive and receive payment.
C. Further Payee of payment at DEATH:
FIRST MIDDLE INITIAL LAST RELATIONSHIP TO ANNUITANT
-------------------------------------------------------------------------
D. / / See attached supplement form (Use in place of 5A, 5B, 5C)
6 Will the policy applied for replace any Northwestern Mutual Life Insurance or
annuities? / / Yes /X/ No
7 Will the policy applied for replace insurance or annuities from another
insurance company? / / Yes /X/ No
8 PLAN (Select One)
/X/ VARIABLE ANNUITY. Complete Variable Annuity Supplement (Pages 3-4)
/ / FLEXIBLE PREMIUM ANNUITY. Complete Fixed Rate Annuity Supplement (Page 5)
/ / SINGLE PREMIUM RETIREMENT ANNUITY. Complete Fixed Annuity Supplement
(Page 5)
<PAGE> 21
VARIABLE ANNUITY SUPPLEMENT
V1 / / Back-end Design
TYPE /X/ Front-end Design ($10,000 minimum initial purchase payment)
(MONTH, DAY, YEAR)
V2 MATURITY AGE or MATURITY DATE - - If neither
specified,
defaults to
age 85.
V3 A. COMPLETE IN ALL CASES TO INDICATE ALLOCATION OF NET PURCHASE PAYMENTS.
(Use whole %. Total must equal 100%)
VARIABLE FUNDS
10 Select Bond
10 International Equity
10 Money Market
10 Balanced
10 Index 500 Stock
10 Aggressive Growth Stock
10 High Yield Bond
10 Growth Stock
10 Growth and Income Stock
FIXED FUNDS
10 Guaranteed Interest
----
100% Total
B. COMPLETE ONLY IF THE ALLOCATION OF THE ATTACHED INITIAL PAYMENT IS TO BE
DIFFERENT THAN INDICATED IN A.
(Use whole %. Total must equal 100%)
VARIABLE FUNDS
______ Select Bond
______ International Equity
______ Money Market
______ Balanced
______ Index 500 Stock
______ Aggressive Growth Stock
______ High Yield Bond
______ Growth Stock
______ Growth and Income Stock
FIXED FUNDS
______ Guaranteed Interest
100% Total
V4 INITIAL PURCHASE PAYMENT
/X/ PREPAID A purchase payment for the contract applied for has been paid
to the agent in exchange for the receipt with the same number as this
application. NOTE: ALL PURCHASE PAYMENT CHECKS MUST BE MADE PAYABLE TO
NORTHWESTERN MUTUAL LIFE. DO NOT MAKE CHECK PAYABLE TO AGENT OR LEAVE
PAYEE BLANK.
AMOUNT
$5,000.00
For IRA and SEPP only, indicate how initial purchase payment is to be
applied. Total must equal amount above.
$ Current (19 ) tax year
$ Prior (19 ) tax year
$ Rollover distribution received by Annuitant in last
60 days.
$ Direct transfer of / / IRA / / TDA / / Pension from
another insti-
tution or plan
trustee
/ / NON-PREPAID (NOTE: Contract will not be issued until initial purchase
payment is received.)
/ / Collected via Multiple Contract Bill (MCB).
/ / Automatic withdrawal from checking account (ISA/EFT).
/ / Check coming from another financial institution.
Estimated Amount $
V5 Waiver of Purchase Payment Benefit requested? / / Yes /X/ No (If yes, send
evidence of insurability).
If waiver not approved, issue contract without benefit? / / Yes /X/ No
<PAGE> 22
VARIABLE ANNUITY SUPPLEMENT (CONTINUED)
V6 SUBSEQUENT PURCHASE PAYMENTS (Select One) ISA NUMBER
/ / None Anticipated. ____________
/X/ Send Investment Reminders to Owner with Confirmations
and Quarterly Summary Statements.
ANTICIPATED ANNUAL AMOUNT
$2,000.00
/ / Automatic Withdrawal from Checking Account (ISA/EFT).
Amount DATE OF FIRST DRAFT (MONTH, DAY, YEAR)
$________ _____________ - _________ - __________
FREQUENCY
/ / Monthly / / Quarterly / / Semiannual / / Annual
NOTE: Subsequent withdrawals will be on the same day of the month (1-28
ONLY) as the initial draft. ATTACH VOID CHECK IF ONGOING DRAFT DRAWN ON
DIFFERENT ACCOUNT THAN INITIAL PAYMENT CHECK OR IF CHECK NOT ATTACHED.
ISA/EFT Payer / / Annuitant at annuitant address / / Other:
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other:______ / / Male / / Female
PERSONAL NAME BIRTHDATE (MONTH, DAY, YEAR)
_______________________________________ __________ - _______ - _____
OR
BUSINESS/TRUST NAME
_________________________________________________________________________
B. TAXPAYER IDENTIFICATION NUMBER DAYTIME TELEPHONE NUMBER
__________________________________ (___)_______________________
C. ADDRESS
STREET OR PO BOX ________________________________________________________
CITY, STATE, ZIP (COUNTRY IF OTHER THAN US)
_________________________________________________________________________
Payer signature below is authorization to the depository institution
named on the attached check to pay and charge named account electronic
funds transfers, or other form of pre-authorized check or withdrawal
order transfers, initiated by the Northwestern Mutual Life Insurance
Company to its own order. This authorization will remain in effect until
revoked in writing.
X____________________________________
ISA/EFT PAYER SIGNATURE
/ / Add to Multiple Contract Bill.
AMOUNT MCB NUMBER MCB PAYER
$_________________ _________________ ______________________________
V7 ANNUITANT'S PURPOSE FOR CONTRACT
/ / Fund tax-qualified retirement plan
/ / Personal retirement planning
/ / Other. Specify _____________________
CURRENT FINANCIAL STATUS
Total Annual Income (all sources) $ ______________
Total Net Worth $ ______________
ANTICIPATED NUMBER OF YEARS CONTRACT WILL BE IN FORCE _______________
INVESTMENT OBJECTIVES FOR CONTRACT
/ / Preservation of principal
/ / Lower risk, lower return potential
/ / Moderate risk, moderate return potential
/ / Higher risk, higher return potential
THE COMPANY IS REQUIRED TO MAKE THE ABOVE INQUIRIES FOR PURPOSES OF
DETERMINING SUITABILITY OF THIS SALE. ALL RESPONSES WILL BE KEPT STRICTLY
CONFIDENTIAL. CHECK ONE:
/ / The answers to V7 accurately describe my current financial status and
objectives.
/X/ I have been asked these questions and decline to answer.
ON (date of delivery: ____ - ___ - ____) THE FOLLOWING PROSPECTUS OR OFFERING
CIRCULAR AND REPORT WAS DELIVERED:
/ / Account A Offering Circular dated ___ - ___ - ___ and
Report dated ___ - ___ - ___ (Corporate Pension Plans)
/X/ Account A Prospectus dated 01-15-96 (Partnership or Sole Proprietorship
Pension Plans)
/ / Account B Prospectus dated ___ - ___ - ___ (all others)
I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS OR OFFERING CIRCULAR AND REPORT AND I
UNDERSTAND THAT ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO AMOUNT.
X X (signed) John J Doe
---------------------------------- ----------------------
ANNUITANT SIGNATURE APPLICANT SIGNATURE
(IF OTHER THAN APPLICANT)
<PAGE> 23
<TABLE>
<S><C>
FIXED RATE ANNUITY SUPPLEMENT
- ------------------------------------------------------------------------------
F1 Single Premium Retirement Annuity Guarantee Period: / / One Year
/ / Three Year
- ------------------------------------------------------------------------------
F2 Maturity Age ______. If not specified, defaults to age 85.
- ------------------------------------------------------------------------------
F3 Initial Premium:
A. Has the initial premium for the policy been paid to the agent
in exchange for the receipt with the same number as this application?
/ / Yes. Check attached. NOTE: ALL PREMIUM CHECKS MUST BE MADE PAYABLE
TO NORTHWESTERN MUTUAL LIFE. DO NOT MAKE
CHECK PAYABLE TO AGENT OR LEAVE PAYEE BLANK.
/ / Non-prepaid TDA or 457 Deferred Compensation.
/ / Check coming from another financial institution.
B. Amount $__________ (Can be estimated amount if check coming from another
financial institution)
C. For IRA and SEPP only, indicate how premium to be applied. Total must
equal amount above.
$__________ Current (19__) tax year
$__________ Prior (19__) tax year
$__________ Rollover/Transfer from another institution (Always
credited as of current year)
- ------------------------------------------------------------------------------
F4 Waiver of Premium Benefit requested? / / Yes / / No (If yes, send
evidence of insurability).
If waiver not approved, issue contract without benefit? / / Yes / / No
- ------------------------------------------------------------------------------
F5 Subsequent Premiums: (Flexible Premium Annuity only)
A. Periodic Billing Amount $_________________ or Monthly Retirement Life
Income $___________________________
DEFINED BENEFIT POLICY ONLY
B. Billing Frequency / / Monthly / / Quarterly / / Semiannual / / Annual
C. Billing Method: / / Send Billing Notices
/ / TDA Policy. Payer #__________
/ / Add to Multiple Contract Bill:
______________ _____________________________
(MCB NUMBER) (MCB PAYER)
/ / Automatic Withdrawal from DATE OF FIRST DRAFT (MONTH, DAY, YEAR)
Checking Account (ISA/EFT). - -
NOTE: Subsequent withdrawals will be on the
same day of the month (1-28 ONLY) as the initial draft.
ATTACH VOID CHECK IF ONGOING DRAFT DRAWN ON DIFFERENT
ACCOUNT THAN INITIAL PAYMENT CHECK OR IF CHECK NOT ATTACHED.
D. Send Billing To: / / Annuitant at Annuitant's Address
/ / Annuitant at address shown below:
/ / Owner at Owner's address (Pension and Profit
Sharing only)
/ / Owner at address shown below:
/ / MCB Payer
/ / Other/TDA Payer:
------------------------------------------------------------------------------
/ / Mr. / / Mrs. / / Ms. / / Dr. / / Other: ____________ / / Male / / Female
------------------------------------------------------------------------------
PERSONAL NAME BIRTHDATE (MONTH, DAY, YEAR)
- -
------------------------------------------------------------------------------
OR
------------------------------------------------------------------------------
BUSINESS/TRUST NAME
------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER DAYTIME TELEPHONE NUMBER ISA NUMBER
( )
------------------------------------------------------------------------------
ADDRESS
STREET OR PO BOX
------------------------------------------------------------------------------
CITY, STATE, ZIP (COUNTRY IF OTHER THAN US)
------------------------------------------------------------------------------
Payer signature below is authorization to the depository institution
named on the attached check to pay and charge named account electronic
funds transfers, or other form of pre-authorized check or withdrawal order
transfers, initiated by the Northwestern Mutual Life Insurance Company to
its own order. This authorization will remain in effect until revoked in
writing.
X
___________________________________
ISA/EFT PAYER SIGNATURE
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
THE ANNUITANT CONSENTS TO THIS APPLICATION.
EACH PERSON SIGNING THIS APPLICATION DECLARES THAT THE ANSWERS AND STATEMENTS
MADE ON PAGES 1, 2, (3 AND 4, OR 5) AND 6 ARE CORRECTLY RECORDED, COMPLETE AND
TRUE TO THE BEST OF HIS OR HER KNOWLEDGE AND BELIEF.
IT IS UNDERSTOOD AND AGREED THAT:
For the purposes of this application, if a Variable Annuity is applied for, the
word "policy" means contract and the word "premium" means purchase payment.
If the Owner is a Trustee or successor Trustee under a tax qualified plan or
the employer under a tax qualified non-trusteed plan, Northwestern Mutual Life
will be fully discharged of liability for any action taken by the Owner in the
exercise of any policy right and for all amounts paid to, or at the direction
of, the Owner and will have no obligation as to the use of the amounts. In all
dealings with the Owner, Northwestern Mutual Life will be fully protected
against the claims of every other person.
If paid at the time of application, the first premium will be credited the date
it is received at the Home Office, if this is a Flexible Premium or Single
Premium Retirement Annuity, or the valuation date coincident with or next
following the date it is received at the Home Office, if this is a Variable
Annuity.
If a Tax Qualified Employee Plan, an IRA or TDA is applied for, the Applicant
and/or Annuitant have received and reviewed the appropriate ERISA, IRA or
TDA disclosure statements.
FIXED RATE ANNUITY AND BACK LOADED VARIABLE ANNUITY POLICIES HAVE PROVISIONS
FOR THE ASSESSMENT OF SURRENDER CHARGES ON CASH WITHDRAWAL.
No agent is authorized to make or alter contracts or to waive the rights or
requirements of Northwestern Mutual Life.
X X (signed) John J. Doe
- -------------------------------------- ---------------------------------------
SIGNATURE OF ANNUITANT SIGNATURE OF APPLICANT
(If Other Than Applicant) (Indicate relationship below if
applicable)
/ / TRUSTEE / / EMPLOYER
SIGNED at Milwaukee, Milwaukee WI Date 01 - 15 - 1996
---------------------------- ----------------------------------
CITY COUNTY STATE MONTH DAY YEAR
X (signed) Norm M. Western
------------------------------------------
SIGNATURE OF LICENSED AGENT
<PAGE> 25
IT IS RECOMMENDED THAT YOU ...
read your contract.
notify your Northwestern Mutual agent or the Company at
720 E. Wisconsin Avenue, Milwaukee, Wis. 53202, of an
address change.
call your Northwestern Mutual agent for information --
particularly on a suggestion to terminate or exchange
this contract for another contract or plan.
ELECTION OF TRUSTEES
The members of The Northwestern Mutual Life Insurance
Company are its policyholders of insurance policies and
deferred annuity contracts. The members exercise
control through a Board of Trustees. Elections to the
Board are held each year at the annual meeting of
members. Members are entitled to vote in person or by
proxy.
FLEXIBLE PAYMENT VARIABLE ANNUITY-ACCOUNT B
AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DIVISIONS AND
VARIABLE PAYMENTS PROVIDED BY THIS CONTRACT ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT BUT ARE VARIABLE
AND MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT.
QQV.ACCT.A.(0196)
[NORTHWESTERN
MUTUAL LIFE(R) LOGO]
<PAGE> 1
EX-99.B9(b)
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
GUARANTEED FIXED PAYMENT OR FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN
LIFE INCOME PLAN (OPTION C)
<TABLE>
<CAPTION>
SINGLE LIFE MONTHLY PAYMENTS
MALE CHOSEN PERIOD (YEARS) FEMALE CHOSEN PERIOD (YEARS)
ADJUSTED ADJUSTED
AGE* ZERO 10 20 AGE* ZERO 10 20
<S> <C> <C> <C> <C> <C> <C> <C>
55 $ 4.48 $ 4.43 $ 4.28 55 $ 4.09 $ 4.07 $ 4.00
56 4.56 4.50 4.34 56 4.15 4.13 4.05
57 4.65 4.59 4.40 57 4.22 4.20 4.11
58 4.75 4.68 4.46 58 4.30 4.27 4.17
59 4.85 4.77 4.52 59 4.38 4.34 4.23
60 4.96 4.87 4.59 60 4.46 4.42 4.29
61 5.07 4.97 4.66 61 4.55 4.50 4.36
62 5.20 5.08 4.72 62 4.65 4.59 4.43
63 5.33 5.19 4.79 63 4.75 4.69 4.50
64 5.48 5.32 4.86 64 4.86 4.79 4.57
65 5.63 5.44 4.92 65 4.97 4.89 4.64
66 5.80 5.58 4.99 66 5.10 5.01 4.71
67 5.97 5.72 5.05 67 5.23 5.12 4.79
68 6.16 5.86 5.12 68 5.38 5.25 4.86
69 6.36 6.01 5.18 69 5.53 5.39 4.93
70 6.58 6.17 5.23 70 5.70 5.53 5.01
71 6.81 6.33 5.29 71 5.88 5.68 5.08
72 7.05 6.49 5.34 72 6.08 5.83 5.15
73 7.31 6.66 5.38 73 6.29 6.00 5.21
74 7.59 6.83 5.43 74 6.52 6.17 5.27
75 7.89 7.01 5.46 75 6.77 6.35 5.33
76 8.21 7.19 5.50 76 7.04 6.54 5.38
77 8.56 7.37 5.53 77 7.33 6.73 5.43
78 8.93 7.55 5.56 78 7.65 6.93 5.47
79 9.32 7.72 5.58 79 7.99 7.13 5.51
80 9.75 7.90 5.60 80 8.36 7.34 5.54
81 10.20 8.07 5.62 81 8.76 7.54 5.57
82 10.69 8.23 5.63 82 9.20 7.74 5.59
83 11.21 8.39 5.64 83 9.67 7.93 5.61
84 11.76 8.54 5.65 84 10.18 8.12 5.63
85 and over 12.35 8.68 5.66 85 and over 10.74 8.30 5.64
</TABLE>
LIFE INCOME PLAN (OPTION E)
<TABLE>
<CAPTION>
JOINT AND SURVIVOR MONTHLY PAYMENTS
MALE FEMALE ADJUSTED AGE*
ADJUSTED
AGE* 55 60 65 70 75 80 85 and over
<S> <C> <C> <C> <C> <C> <C> <C>
55 $ 3.79 $ 3.93 $ 4.07 $ 4.19 $ 4.29 $ 4.35 $ 4.39
60 3.87 4.07 4.27 4.46 4.61 4.73 4.80
65 3.94 4.18 4.45 4.73 4.98 5.19 5.32
70 3.99 4.27 4.61 4.99 5.37 5.70 5.94
75 4.02 4.34 4.73 5.20 5.72 6.21 6.60
80 4.05 4.38 4.81 5.35 6.00 6.67 7.24
85 and over 4.06 4.40 4.86 5.45 6.18 7.00 7.75
</TABLE>
*See Section 11-7.
The amount of the payment for any other combination of ages will be furnished
by the Company on request. The maximum initial monthly income per $1,000 will
be $7.75.
Monthly payment rates are based on an Assumed Investment Rate of 3 1/2% and
the 1983 Table with a Projection Scale G.
16
<PAGE> 1
EX-99.B11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional
Information constituting part of this Post-Effective Amendment No. 52 to the
registration statement on Form N-4 (the "Registration Statement") of our report
dated January 25, 1995, relating to the financial statements of The
Northwestern Mutual Life Insurance Company, and of our report dated January 25,
1995, relating to the financial statements of NML Variable Annuity Account B,
which appear in such Statement of Additional Information, and to the
incorporation by reference of such reports into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Statement of Additional
Information.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
November 7, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from (A)
Northwestern Mutual Life Variable Annuity Account B December 31, 1994 financial
statements and is qualified in its entirety by reference to such (B) Post
Effective Amendment no. 52
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,187,662
<INVESTMENTS-AT-VALUE> 2,236,002
<RECEIVABLES> 1,954
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,237,956
<PAYABLE-FOR-SECURITIES> 45
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,708
<TOTAL-LIABILITIES> 3,753
<SENIOR-EQUITY> 2,234,203
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 925,132
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 219,223
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 26,109
<NET-INVESTMENT-INCOME> 193,114
<REALIZED-GAINS-CURRENT> 17,722
<APPREC-INCREASE-CURRENT> (226,913)
<NET-CHANGE-FROM-OPS> (16,077)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from (A)
Northwestern financial statements and is qualified in its entirety by reference
to such (B) Post-effective amendment filing no. 52
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 2,302,319
<INVESTMENTS-AT-VALUE> 2,607,278
<RECEIVABLES> 4,728
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,612,006
<PAYABLE-FOR-SECURITIES> 214
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,915
<TOTAL-LIABILITIES> 6,129
<SENIOR-EQUITY> 2,605,877
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 983,079
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,605,877
<DIVIDEND-INCOME> 59,210
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 14,638
<NET-INVESTMENT-INCOME> 44,572
<REALIZED-GAINS-CURRENT> 1,864
<APPREC-INCREASE-CURRENT> 256,626
<NET-CHANGE-FROM-OPS> 303,062
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
