<PAGE> 1
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
/ X /
Pre-Effective Amendment No. / /
--
Post-Effective Amendment No. / /
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /
Amendment No. 24 / 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, Executive Vice President, General Counsel and Secretary
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate date of proposed public offering: as soon as possible.
Title of Securities Being Registered:
MASON STREET VARIABLE ANNUITY
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933 CHECK THE FOLLOWING BOX |_|
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<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 .....................................................Expense Table
4 .....................................................Accumulation Unit Values, Performance
Data, Financial Statements
5 .....................................................The Company, NML Variable Annuity Account
B, The Funds, 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 .....................................................Performance Data
22 .....................................................Determination of Annuity Payments
23 .....................................................Financial Statements
</TABLE>
<PAGE> 3
P R O S P E C T U S E S
[Date]
[NORTHWESTERN MUTUAL LIFE LOGO]
The Quiet Company(R)
MASON STREET VARIABLE ANNUITY
Nontax - Qualified Annuities
Individual Retirement Annuities
Roth IRAs
(PHOTO)
Northwestern Mutual Series Fund, Inc.
and Russell Insurance Funds
The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-1444
<PAGE> 4
[NORTHWESTERN MUTUAL LIFE LOGO]
March 31, 2000
PROFILE OF THE MASON STREET VARIABLE ANNUITY CONTRACT
This Profile is a summary of some of the more important points that you should
consider and know before purchasing the Contract. We describe the Contract more
fully in the prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE ANNUITY CONTRACT The Contract provides a means for you, the owner, to
invest on a tax-deferred basis in your choice of sixteen investment portfolios.
The Contract also allows investment on a fixed basis in a guaranteed account.
The Contract is issued by The Northwestern Mutual Life Insurance Company.
The Contract is intended for retirement savings or other long-term investment
purposes. The Contract provides for a death benefit during the years when funds
are being accumulated and for a variety of income options following retirement.
The sixteen investment portfolios are listed in Section 4 below. These
portfolios bear varying amounts of investment risk. Those with more risk are
designed to produce a better long-term return than those with less risk. But
this is not guaranteed. You can also lose your money.
The amounts you invest on a fixed basis earn interest at a rate we declare from
time to time. We guarantee principal and we guarantee the interest rate for each
amount for at least one year.
You may invest in any or all of the sixteen investment portfolios. You may move
money among these portfolios without charge up to 12 times per year. After that,
a charge of $25 may apply. Transfers of amounts invested on a fixed basis are
subject to restrictions.
During the years when funds are being paid into your Contract, known as the
accumulation phase, the earnings accumulate on a tax-deferred basis. The
earnings are taxed as income if you make a withdrawal. The income phase begins
when you start receiving annuity payments from your Contract, usually at
retirement. Monthly annuity payments begin on the date you select.
The amount you accumulate in your Contract, including the results of investment
performance, will determine the amount of your monthly annuity payments.
2. ANNUITY PAYMENTS If you decide to begin receiving monthly annuity payments
from your Contract, you may choose one of three payment plans: (1) monthly
payments for a specified period of five to thirty years, as you select; (2)
monthly payments for your life (assuming you are the annuitant), and you may
choose to have payments continue to your beneficiary for the balance of ten or
twenty years if you die sooner; or (3) monthly payments for your life and for
the life of another person (usually your spouse) selected by you. After you
begin receiving monthly annuity payments you cannot change your selection if the
payments depend on your life or the life of another.
These payment plans are available to you on a variable or fixed basis. Variable
means that the amount accumulated in your Contract will continue to be invested
in one or more of the sixteen investment portfolios as you choose. Your monthly
annuity payments will vary up or down to reflect continuing investment
performance. Or you may choose a fixed annuity payment plan which guarantees the
amount you will receive each month.
3. PURCHASE The minimum initial purchase payment is $50,000. Your Northwestern
Mutual financial representative will help you complete a Contract application
form.
4. INVESTMENT CHOICES You may invest in any or all of the following investment
portfolios. All of these are described in the attached prospectuses for
Northwestern Mutual Series Fund, Inc. and the Russell Insurance Funds.
Northwestern Mutual Series Fund, Inc.
1. Small Cap Growth Stock Portfolio
2. Aggressive Growth Stock Portfolio
3. International Equity Portfolio
4. Index 400 Stock Portfolio
5. Growth Stock Portfolio
6. Growth and Income Stock Portfolio
7. Index 500 Stock Portfolio
8. Balanced Portfolio
9. High Yield Bond Portfolio
10. Select Bond Portfolio
11. Money Market Portfolio
Russell Insurance Funds,Inc.
1. Multi-Style Equity Fund
2. Aggressive Equity Fund
3. Non-U.S. Fund
4. Real Estate Securities Fund
5. Core Bond Fund
You may also invest all or part of your funds on a fixed basis (the Guaranteed
Interest Fund).
5. EXPENSES The Contract has insurance and investment features, and there are
costs related to them. Each year we deduct a $30 Contract fee. Currently this
fee is waived if the value of your Contract is $25,000 or more.
PROFILE - i
<PAGE> 5
[NORTHWESTERN MUTUAL LIFE LOGO]
We also deduct mortality and expense risk charges for the guarantees associated
with your Contract. These charges are at the annual rate of 0.35%. We may
increase these charges to a maximum rate of 0.75%. We will not increase the
charges for at least five years from the date of the prospectus.
The portfolios also bear investment charges that range from an annual rate of
0.20% to 1.30% of the average daily value of the portfolio, depending on the
investment portfolio you select. The following charts are designed to help you
understand the charges for Contract. The first three columns show the annual
expenses as a percentage of assets including the insurance charges, the
portfolio charges and the total charges. Portfolio expenses are based on 1999
expenses for the portfolios. Expenses for the portfolios reflect fee waivers and
expense reimbursements. The last two columns show you examples of the charges,
in dollars, you would pay. The examples reflect the impact of the asset based
charges and the $30 Contract fee calculated by dividing the annual Contract fees
collected by the average assets of the sub-account. The examples assume that you
invested $1,000 in a Contract which earns 5% annually and that you withdraw your
money at the end of year one, and at the end of year ten. Both of these
examples, for both Contracts, reflect aggregate charges on a cumulative basis to
the end of the 1 or 10-year period.
We do not make any changes for sales expenses. Your Northwestern Mutual agent
who offers the contract represents a broker-dealer or a registered investment
adviser. You will pay the broker-dealer a fee in lieu of sales commissions or
you will pay a fee for investment advisory services. In either case your
Northwestern Mutual agent will disclose the fees to you and receive a portion of
the fees you pay.
For more detailed information, see the Expense Table which begins on page 3 of
the attached prospectus for the Contracts.
<TABLE>
<CAPTION>
EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------
ANNUAL EXPENSES AS A PERCENTAGE OF ASSETS
EXAMPLES: *
Total Annual Charges At End of
Total Annual Total Annual Total Annual
Portfolio Insurance Charges* Portfolio Expenses*
Charges 1 Year 10 Years
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock 0.35% (0.30% + 0.05%) 1.00% 1.35% $14 $190
Aggressive Growth Stock 0.35% (0.30% + 0.05%) 0.52% 0.87% $9 $132
International Equity 0.35% (0.30% + 0.05%) 0.76% 1.11% $11 $159
Index 400 Stock 0.35% (0.30% + 0.05%) 0.35% 0.70% $7 $126
Growth Stock 0.35% (0.30% + 0.05%) 0.46% 0.81% $8 $123
Growth and Income Stock 0.35% (0.30% + 0.05%) 0.58% 0.93% $9 $139
Index 500 Stock 0.35% (0.30% + 0.05%) 0.21% 0.56% $6 $96
Balanced 0.35% (0.30% + 0.05%) 0.30% 0.65% $7 $108
High Yield Bond 0.35% (0.30% + 0.05%) 0.50% 0.85% $9 $131
Select Bond 0.35% (0.30% + 0.05%) 0.30% 0.65% $7 $108
Money Market 0.35% (0.30% + 0.05%) 0.30% 0.65% $7 $108
Russell Insurance Funds, Inc.
- -----------------------------
Multi-Style Equity 0.35% (0.30% + 0.05%) 0.92% 1.27% $13 $183
Aggressive Equity 0.35% (0.30% + 0.05%) 1.25% 1.60% $16 $223
Non-U.S. 0.35% (0.30% + 0.05%) 1.30% 1.65% $17 $239
Real Estate Securities 0.35% (0.30% + 0.05%) 1.15% 1.50% $15 $204
Core Bond 0.35% (0.30% + 0.05%) 0.80% 1.15% $12 $172
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*THE $30 CONTRACT FEE IS REFLECTED AS 0.00% OF THE ASSETS BASED ON ACTUAL FEES
COLLECTED DIVIDED BY AVERAGE ASSETS OF THE SUB-ACCOUNT. WE MAY INCREASE THE
INSURANCE CHARGES TO A MAXIMUM RATE OF 0.75%. WE WILL NOT INCREASE THE CHARGES
FOR AT LEAST FIVE YEARS FROM THE DATE OF THE PROSPECTUS.
NOTE: THE MINIMUM INITIAL PURCHASE PAYMENT FOR A CONTRACT IS $50,000. THE
NUMBERS ABOVE MUST BE MULTIPLIED BY 50 TO FIND THE EXPENSES FOR A CONTRACT OF
MINIMUM SIZE.
6. TAXES A Contract may be issued as an individual retirement annuity (IRA),
Roth IRA, or nontax-qualified annuity. The Contracts will be subject to certain
contribution limits and/or other requirements depending on their tax
classification. For Roth IRAs and nontax-qualified annuities, purchase payments
are not excluded from income, while for individual retirement annuities (IRAs)
they are excluded from income. In all cases, earnings on your
PROFILE - ii
<PAGE> 6
[NORTHWESTERN MUTUAL LIFE LOGO]
Contract are not taxed as they accrue. If the Contract is purchased as an
individual retirement annuity (IRA), the entire amount of monthly annuity
payments, and any withdrawals, will generally be taxed as income. If the
Contract is purchased as a ROTH IRA, certain distributions after 5 years will be
tax-free. Finally, if the Contract is purchased as a nonqualified annuity,
amounts withdrawn prior to the income phase will be taxed as income to the
extent of earnings. During the income phase, monthly annuity payments will be
considered partly a return of your investment which is not taxed and partly a
distribution of earnings which is taxed as income. In all cases, a 10% federal
penalty tax may apply if you make taxable withdrawals from the Contract before
you reach age 59 1/2.
7. ACCESS TO YOUR MONEY You may take money out of your Contract at any time
before monthly annuity payments begin. You may have to pay income tax and a tax
penalty on amounts you take out.
8. PERFORMANCE The value of your Contract will vary up or down reflecting the
performance of the investment portfolios you select. The chart below shows total
returns for each of the investment portfolios that was in operation, and used
with NML Variable Annuity Account B, during the years shown. Performance is not
shown for the portfolios that have not been in operation for one calendar year.
These numbers reflect the asset-based charges for mortality and expense risks,
the annual Contract fees and investment expenses for each portfolio. The numbers
include the annual Contract fee in the amount of 0.00%. The Contracts described
in this prospectus have not been issued prior to the date of this prospectus,
but the performance numbers have been calculated based on the actual performance
of the investment portfolios and the expense charges for the Contracts. Past
performance does not guarantee future results.
<TABLE>
<CAPTION>
PERFORMANCE
- ----------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR
PORTFOLIO 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwestern Mutual Series
Fund, Inc.
Aggressive Growth Stock 43.78% 7.09 13.37 17.19 38.70 4.95 18.60 5.49 55.07 NA
International Equity 22.90% 4.37 11.80 20.49 14.08 -.53 NA NA NA NA
Growth Stock 22.49% 26.15 29.30 20.38 30.26 NA NA NA NA NA
Growth and Income Stock 7.48% 22.61 29.47 19.45 30.56 NA NA NA NA NA
Index 500 Stock 20.91% 28.17 32.63 22.22 36.66 .76 9.29 6.80 29.00 NA
Balanced 11.20% 18.37 20.99 12.96 25.85 -.45 9.11 4.87 23.40 .61
High Yield Bond -0.46% -2.27 15.35 19.25 16.28 NA NA NA NA NA
Select Bond -1.02% 6.61 8.99 2.87 18.59 -3.25 9.86 6.53 16.37 7.86
Money Market 5.10% 4.97 5.02 4.83 5.37 3.61 2.41 2.90 5.24 7.57
</TABLE>
9. DEATH BENEFIT If you die before age 75, and before monthly annuity payments
begin, your beneficiary will receive a death benefit. The amount will be the
value of your Contract or, if greater, the amount you have paid in. We offer an
enhanced death benefit at extra cost. We increase the enhanced death benefit on
each Contract anniversary, up to age 80, if the Contract value has increased.
The death benefit will be adjusted, of course, for any purchase payments or
withdrawals you have made. The death benefit may be paid as a lump sum, or your
beneficiary may select a monthly annuity payment plan, or the Contract may be
continued in force with a contingent annuitant.
10. OTHER INFORMATION
FREE LOOK. If you return the Contract within ten days after you receive it (or
whatever period is required in your state), we will send your money back. There
is no charge for our expenses but the amount you receive may be more or less
than what you paid, based on actual investment experience following the date we
received your purchase payment.
AVOID PROBATE. In most cases, when you die, your beneficiary will receive the
full death benefit of your Contract without going through probate.
AUTOMATIC DOLLAR-COST AVERAGING. With our Dollar-Cost Averaging Plan, you can
arrange to have a regular amount of money ($100 minimum) automatically
transferred from the Money Market Portfolio into the portfolio or portfolios you
have chosen on a monthly or quarterly basis.
ELECTRONIC FUNDS TRANSFER (EFT). Another convenient way to invest using the
dollar-cost averaging approach is through our EFT Plan. These automatic
checkbook withdrawals allow you to add to your portfolio(s) on a regular monthly
basis through payments drawn directly on your checking account.
PROFILE iii
<PAGE> 7
[NORTHWESTERN MUTUAL LIFE LOGO]
SYSTEMATIC WITHDRAWAL PLAN. You can arrange to have regular amounts of money
sent to you while your Contract is still in the accumulation phase. Our
Systematic Withdrawal Plan allows you to automatically redeem accumulation units
to generate monthly payments. Of course you may have to pay taxes on amounts you
receive.
AUTOMATIC REQUIRED MINIMUM DISTRIBUTIONS. For IRAs, you can arrange for annual
required minimum distributions to be sent to you automatically once you turn age
70 1/2.
PORTFOLIO REBALANCING. To help you maintain your asset allocation plan over time
we offer a rebalancing service. This will automatically readjust your current
investment option allocations, on a periodic basis, back to the allocation
percentages you have selected.
INTEREST SWEEPS. If you select this service we will automatically sweep or
transfer interest from the Guaranteed Interest Fund to any combination of
variable investment options. Interest earnings can be swept monthly, quarterly,
semi-annually or annually.
NML EXPRESS. 1-800-519-4NML (1-800-519-4665). Get up-to-date information about
your contract at your convenience with your contract number and your Personal
Identification Number (PIN). Call toll-free to review contract values and unit
values, transfer among portfolios, change the allocation and obtain fund
performance information.
INTERNET. For information about Northwestern Mutual, visit us on our Website.
Included are daily unit values, fund performance information and access to
current values for Contracts you own.
WWW.NORTHWESTERNMUTUAL.COM
THESE FEATURES MAY NOT BE AVAILABLE IN ALL STATES AND MAY NOT BE SUITABLE FOR
YOUR PARTICULAR SITUATION.
11. INQUIRIES If you need more information, please contact us at:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, 720 EAST WISCONSIN AVENUE,
MILWAUKEE, WISCONSIN 53202; 1-888-455-2232.
PROFILE - iv
<PAGE> 8
P R O S P E C T U S
MASON STREET VARIABLE ANNUITY
This prospectus describes an individual variable annuity contract (the
"Contract") offered by The Northwestern Mutual Life Insurance Company
("Northwestern Mutual").
We offer the Contract for use in these situations:
- - Traditional Individual Retirement Annuities (IRAs).
- - Roth IRAs.
- - Other situations that do not qualify for special tax treatment.
We use NML Variable Annuity Account B (the "Account") to keep the money you
invest separate from our general assets. The money in the Account is invested in
the eleven portfolios of Northwestern Mutual Series Fund, Inc. and the five
Russell Insurance Funds. You select the Portfolios or Funds in which you want to
invest. Northwestern Mutual Series Fund, Inc.: Small Cap Growth Stock,
Aggressive Growth Stock, International Equity, Index 400 Stock, Growth Stock,
Growth and Income Stock, Index 500 Stock, Balanced, High Yield Bond, Select
Bond, Money Market. Russell Insurance Funds: Multi-Style Equity, Aggressive
Equity, Non-U.S., Real Estate Securities, Core Bond.
The Account has 16 Divisions that correspond to the 11 Portfolios and 5 Funds in
which you may invest. The Contract also permits you to invest on a fixed basis,
at rates that we determine. This prospectus describes only the Account and the
variable provisions of the Contract except where there are specific references
to the fixed provisions.
This prospectus is a concise description of the information you should know
before you buy a Contract. We have filed additional information about the
Contract with the Securities and Exchange Commission in a Statement of
Additional Information. We incorporate the Statement of Additional Information
into this prospectus by reference. We will send you the Statement of Additional
Information without charge if you write to The Northwestern Mutual Life
Insurance Company, 720 East Wisconsin Avenue, Milwaukee, Wisconsin, 53202, or
call us at Telephone Number (414) 271-1444. You will find the table of contents
for the Statement of Additional Information following page 15 of this
prospectus.
This prospectus is valid only when accompanied by the current prospectuses for
Northwestern Mutual Series Fund, Inc. and Russell Insurance Funds which are
attached to this prospectus. You should retain this prospectus for future
reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
The date of this prospectus and the Statement of Additional Information is
, 2000.
1
<PAGE> 9
CONTENTS FOR THIS PROSPECTUS
PAGE
----
PROSPECTUS......................................1
Mason Street Variable Annuity.................1
INDEX OF SPECIAL TERMS..........................3
EXPENSE TABLE...................................3
THE COMPANY.....................................6
NML VARIABLE ANNUITY
ACCOUNT B....................................6
THE FUNDS.......................................6
THE CONTRACT....................................6
Purchase Payments Under the Contract........6
Amount and Frequency......................6
Application of Purchase Payments..........6
Net Investment Factor.......................7
Benefits Provided Under the Contract........7
Withdrawal Amount.........................7
Death Benefit.............................8
Maturity Benefit..........................8
Variable Payment Plans......................8
Description of Payment Plans..............8
Amount of Annuity Payments................9
Assumed Investment Rate...................9
Additional Information......................9
Transfers Between Divisions and
Payment Plans...........................9
Owners of the Contract...................10
Deferment of Benefit Payments..................10
Dividends................................10
Voting Rights............................10
Substitution and Change..................10
Fixed Annuity Payment Plans..............11
Performance Data.........................11
Financial Statements.....................11
THE GUARANTEED INTEREST FUND...................11
FEDERAL INCOME TAXES...........................12
Qualified and Nontax-Qualified Plans.......12
Contribution Limitations and General
Requirements Applicable to Contract.......12
Traditional IRA..........................12
Roth IRA.................................12
Nontax-qualified Contract................12
Taxation of Contract Benefits..............12
IRAs,....................................12
Roth IRAs................................13
Nonqualified Contracts...................13
Premature Withdrawals....................13
Minimum Distribution Requirements........13
Taxation of Northwestern Mutual............14
Other Considerations.......................14
DEDUCTIONS.....................................14
Mortality Rate and Expense Risk Charges........14
Contract Fee.............................14
Enhanced Death Benefit Charge............15
Premium Taxes............................15
Expenses for the Portfolios and Funds....15
DISTRIBUTION OF THE CONTRACT...................15
THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION
APPEARS ON THE PAGE FOLLOWING PAGE 15 OF THIS PROSPECTUS.
2
<PAGE> 10
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....................................7 ANNUITANT.........................................10
ANNUITY (or ANNUITY PAYMENTS)........................9 MATURITY DATE......................................7
NET INVESTMENT FACTOR................................7 OWNER.............................................10
PAYMENT PLANS........................................8 WITHDRAWAL AMOUNT..................................7
</TABLE>
EXPENSE TABLE
<TABLE>
<CAPTION>
TRANSACTION EXPENSES FOR CONTRACTOWNERS ANNUAL CONTRACT FEE
- --------------------------------------- -------------------
<S> <C>
Maximum Sales Load (as a percentage $30; waived if the Contract Value equals or exceeds
of purchase payments)..........................None $25,000
Withdrawal Charge..............................None
ANNUAL EXPENSES OF THE ACCOUNT
- ------------------------------
(AS A PERCENTAGE OF ASSETS)
---------------------------
Current Mortality and Expense Risk Fees*.......0.35%
Maximum Mortality and Expense Risk
Fees*.......................................0.75%
Other Expenses*................................None
Total Current Separate Account Annual
Expenses*...................................0.35%
Total Maximum Separate Account Annual
Expenses*...................................0.75%
</TABLE>
*WE GUARANTEE THE CURRENT MORTALITY AND EXPENSE RISK FEES FOR FIVE YEARS FROM
THE DATE OF THIS PROSPECTUS. THEREAFTER, WE RESERVE THE RIGHT TO INCREASE THE
MORTALITY AND EXPENSE RISK FEES TO A MAXIMUM ANNUAL RATE OF 0.75%.
ANNUAL EXPENSES OF THE PORTFOLIOS AND FUNDS
(AS A PERCENTAGE OF THE ASSETS)
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT EXPENSES
FEES (AFTER OTHER (AFTER EXPENSE
FEE WAIVER) EXPENSES REIMBURSEMENT)
----------- -------- --------------
<S> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock* 0.79% 0.21% 1.00%
Aggressive Growth Stock 0.51% 0.00% 0.51%
International Equity 0.67% 0.07% 0.74%
Index 400 Stock* 0.25% 0.10% 0.35%
Growth Stock 0.43% 0.00% 0.43%
Growth and Income Stock 0.57% 0.00% 0.57%
Index 500 Stock 0.20% 0.00% 0.20%
Balanced 0.30% 0.00% 0.30%
High Yield Bond 0.49% 0.01% 0.50%
Select Bond 0.30% 0.00% 0.30%
Money Market 0.30% 0.00% 0.30%
</TABLE>
3
<PAGE> 11
ANNUAL EXPENSES OF THE PORTFOLIOS AND FUNDS (CONTINUED)
(AS A PERCENTAGE OF THE ASSETS
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT EXPENSES
FEES (AFTER OTHER (AFTER EXPENSE
FEE WAIVER) EXPENSES REIMBURSEMENT)
----------- -------- --------------
<S> <C> <C> <C>
Russell Insurance Funds, Inc.*
- ------------------------------
Multi-Style Equity 0.49% 0.43% 0.92%
Aggressive Equity 0.53% 0.72% 1.25%
Non-U.S. 0.00% 1.30% 1.30%
Real Estate Securities 0.85% 0.30% 1.15%
Core Bond 0.12% 0.68% 0.80%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE
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>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock $14 $43 $75 $190
Aggressive Growth Stock $9 $27 $48 $132
International Equity $11 $35 $60 $159
Index 400 Stock $7 $25 $44 $126
Growth Stock $8 $25 $43 $123
Growth and Income Stock $9 $29 $51 $139
Index 500 Stock $6 $18 $31 $96
Balanced $7 $21 $36 $108
High Yield Bond $9 $27 $47 $131
Select Bond $7 $21 $36 $108
Money Market $7 $21 $36 $108
Russell Insurance Funds, Inc.
- -----------------------------
Multi-Style Equity $13 $41 $71 $183
Aggressive Equity $16 $52 $91 $223
Non-U.S. $17 $56 $98 $239
Real Estate Securities $15 $47 $82 $204
Core Bond $12 $38 $66 $172
</TABLE>
NOTE: THE MINIMUM INITIAL PURCHASE PAYMENT FOR A CONTRACT IS $50,000. YOU MUST
MULTIPLY THE NUMBERS ABOVE BY 50 TO FIND THE EXPENSES FOR A CONTRACT OF MINIMUM
SIZE.
The purpose of the table above is to assist a Contract Owner in understanding
the expenses paid by the Account and the Portfolios and Funds and borne by
investors in the Contracts. We guarantee the current mortality and expense risk
charges for five years from the date of this prospectus. Thereafter, we reserve
the right to increase the mortality
- ----------------------------------
* For the Russell Insurance Funds (the "Fund"), the Small Cap Growth Stock
Portfolio and the Index 400 Stock Portfolio (the "Portfolios"), the adviser has
voluntarily agreed to waive a portion of the management fee, up to the full
amount of the fee, equal to the amount by which the Fund's and Portfolios' total
operating expenses exceed the amounts shown above under "Total Annual Expenses
(After Expense Reimbursement)". The adviser has also agreed to reimburse the
Fund and Portfolios for all remaining expenses after fee waivers which exceed
the amounts shown above under that heading. Absent the fee waiver and expense
reimbursement, the management fees and total annual expenses would be 0.78% and
0.93% for the Multi-Style Equity Fund; 0.95% and 1.34% for the Aggressive Equity
Fund; 0.95% and 1.50% for the Non-U.S. Fund; 0.85% and 1.15% for the Real Estate
Securities Fund; 0.60% and 0.85% for the Core Bond Fund; 0.79% and 1.03% for the
Small Cap Growth Stock Portfolio; and 0.25% and 0.46% for the Index 400 Stock
Portfolio.
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and expense risk charges to a maximum annual rate of 0.75%. The $30 annual
Contract fee is reflected as 0.00% based on estimated annual contract fees we
will collect divided by the estimated corresponding average assets of the
Division. The Contract provides for charges for transfers between the Divisions
of the Account and for premium taxes, but we are not currently making such
charges. See "Transfers Between Divisions and Payment Plans", p. 9 and
"Deductions", p. 14, for additional information about expenses for the Contract.
The expenses shown in the table for the Portfolios and Funds show the annual
expenses for each, as a percentage of their average net assets, based on 1999
operations for the Portfolios and their predecessors and the Funds. Expenses for
each of the Russell Insurance Funds reflect fee waivers and expense
reimbursements that the Funds' adviser has voluntarily agreed to make for the
year 2000. These may be changed at any time without notice. Absent the fee
waivers and expense reimbursements the expenses would be higher. See the
disclosure at the bottom of page 3. For additional information about expenses of
the Portfolios and Funds, see the prospectuses for Northwestern Mutual Series
Fund, Inc. and the Russell Insurance Funds attached to this prospectus.
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 Contract.
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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 fifth largest life
insurance company, based on total assets in excess of $85 billion on December
31, 1999, 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 sells life and disability income insurance policies and annuity contracts
through its own field force of approximately 6,000 full time financial
representatives. The Home Office of Northwestern Mutual is located at 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202.
"We" in this prospectus means Northwestern Mutual.
NML VARIABLE ANNUITY ACCOUNT B
We established the Account on February 14, 1968 by action of our Board of
Trustees in accordance with the provisions of the Wisconsin insurance law. The
Account is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940.
The Account has sixteen Divisions. The money you invest to provide variable
benefits under your Contract is placed in one or more of the Divisions as you
direct.
Under Wisconsin law, the investment operations of the Account are kept separate
from our other operations. The values for your Contract will not be affected by
income, gains or losses for the rest of our business. The income, gains or
losses, realized or unrealized, for the assets we place in the Account for your
Contract will determine the value of your Contract benefits and will not affect
the rest of our business. The assets in the Account are reserved for you and
other Contract owners, although the assets belong to us and we do not hold the
assets as a trustee. We and our creditors cannot reach those assets to satisfy
other obligations until our obligations under your Contract have been satisfied.
But all of our assets (except those we hold in some other separate accounts) are
available to satisfy our obligations under your Contract.
THE FUNDS
Northwestern Mutual Series Fund, Inc. is composed of eleven separate portfolios
which operate as separate mutual funds. The portfolios are the Small Cap Growth
Stock Portfolio, Aggressive Growth Stock Portfolio, International Equity
Portfolio, Index 400 Stock Portfolio, Growth Stock Portfolio, Growth and Income
Stock Portfolio, Index 500 Stock Portfolio, Balanced Portfolio, High Yield Bond
Portfolio, Select Bond Portfolio and Money Market Portfolio. The Account buys
shares of each Portfolio at net asset value, that is, without any sales charge.
Northwestern Mutual Investment Services, LLC ("NMIS"), our wholly-owned
subsidiary, is the investment adviser to the Fund. We provide the people and
facilities that NMIS uses in performing its investment advisory functions, and
we are a party to the investment advisory agreement. We and NMIS also perform
certain administrative functions and act as co-depositors of the Account. NMIS
has retained J.P. Morgan Investment Management, Inc. and Templeton Investment
Counsel, Inc. under investment sub-advisory agreements to provide investment
advice to the Growth and Income Stock Portfolio and the International Equity
Portfolio.
The Russell Insurance Funds include five separate portfolios which operate as
separate mutual funds. These are the Multi-Style Equity Fund, Aggressive Equity
Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund. The Account
buys shares of each of the Russell Insurance Funds at net asset value, that is,
without any sales charge.
THE CONTRACT
PURCHASE PAYMENTS UNDER THE CONTRACT
AMOUNT AND FREQUENCY A purchase payment is the money you give us to pay for your
Contract. You may make purchase payments monthly, quarterly, semiannually,
annually or on any other frequency acceptable to us.
The minimum initial purchase payment is $50,000. The minimum amount for each
subsequent purchase payment is $25. Minimum amounts for payments by
preauthorized check depend on payment frequency. We 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 our consent.
Purchase payments may not exceed the applicable federal income tax limits. (See
"Federal Income Taxes", p. 12.)
APPLICATION OF PURCHASE PAYMENTS We credit your purchase payments, less any
premium taxes for which we make a deduction, to the Account and allocate them to
one or more Divisions as you direct. We then invest
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those assets in shares of the Portfolio or Fund which corresponds to that
Division.
We apply purchase payments to provide "Accumulation Units" in one or more
Divisions. Accumulation Units represent your interest in the Account. The number
of Accumulation Units you receive for each 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 next valuation of
the assets of the Division we make after we receive your purchase payment at our
Home Office. Receipt of purchase payments at a lockbox facility we have
designated will be considered the same as receipt at the Home Office. We value
assets 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 your 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 your 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 or Fund). We determine the value by
multiplying the value on the immediately preceding valuation date by the net
investment factor for the Division. The net investment factor takes into account
the investment experience of the Portfolio or Fund, the deduction for mortality
and expense risks we have assumed and a deduction for any applicable taxes or
for any expenses resulting from a substitution of securities. (See "Net
Investment Factor", below.) Since you bear the investment risk, there is no
guarantee as to the aggregate value of your Accumulation Units. That value may
be less than, equal to, or more than the cumulative net purchase payments you
have made.
You may direct all or part of a purchase payment to the Guaranteed Interest
Fund. Amounts you direct to the Guaranteed Interest Fund will be invested on a
fixed basis. See "The Guaranteed Interest Fund", p. 11.
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 or Fund 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 or Fund.
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 that we have assumed. (See "Deductions", p.
14.)
The Portfolios and Funds will distribute investment income and realized capital
gains to the Account Divisions. We will reinvest those distributions in
additional shares of the same Portfolio or Fund. 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 CONTRACT
The benefits provided under the Contract consist of a withdrawal amount, a death
benefit and a maturity benefit. Subject to the restrictions noted below, we will
pay all of these benefits in a lump sum or under the payment plans described
below.
WITHDRAWAL AMOUNT On or prior to the maturity date you are entitled to withdraw
the Accumulation Units credited to your Contract and receive the value thereof.
The value, which may be either greater or less than the amount you paid is based
on the Accumulation Unit value next determined after we receive your written
request for withdrawal on a form we provide. The forms are available from our
Home Office and our agents. You may withdraw a portion of the Accumulation Units
on the same basis, except that we will not grant a partial withdrawal which
would result in a Contract value of less than $2000 remaining; we will treat a
request for such a partial withdrawal as a request to surrender the entire
Contract. Amounts distributed to you upon withdrawal of all or a portion of
Accumulation Units may be subject to federal income tax. (See "Federal Income
Taxes", p. 12.) 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. Payments which are exempt
from the penalty tax include payments upon disability, after age 59-1/2, for
certain large medical expenses and for reimbursement of certain health insurance
premiums and certain substantially equal periodic payments for life. Required
minimum distributions must be taken from your IRA, after you attain age 70 1/2
or, in certain cases, retire. (See "Minimum Distribution Requirements", p. 13).
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<PAGE> 15
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. 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", p. 8.)
DEATH BENEFIT
1. Amount of the Death Benefit. If the Annuitant dies before the maturity date,
the death benefit will not be less than the Contract value next determined after
we receive proof of death at our Home Office. If the Primary Annuitant dies
before his or her 75th birthday, the death benefit, where permitted by state
law, will not be less than the amount of purchase payments we received, less
withdrawals. There is no death benefit after annuity payments begin. See
"Maturity Benefit" and "Variable Payment Plans" below.
An enhanced death benefit is available at extra cost. Prior to the first
Contract anniversary the enhanced death benefit is equal to the total purchase
payments received less any amounts withdrawn. On any Contract anniversary prior
to the Primary Annuitants 80th birthday, the enhanced death benefit is the
Contract value on that date, but not less than what the enhanced death benefit
was on the last preceding valuation date. On any other valuation date before the
Primary Annuitant's 80th birthday, the enhanced death benefit will be the amount
determined on the most recent Contract anniversary, plus purchase payments we
receive thereafter, less withdrawals. On any valuation date on or after the
Primary Annuitant's 80th birthday the enhanced death benefit will be the
enhanced death benefit on the Contract anniversary immediately prior to the
Primary Annuitant's 80th birthday increased by purchase payments we received and
decreased by any amounts withdrawn after that Contract anniversary. We deduct
the extra cost for the enhanced death benefit from the Contract value on each
Contract anniversary while the enhanced death benefit is in effect. See
"Enhanced Death Benefit Charge", p. 15. The enhanced death benefit is available
for issue ages up to 65 and must be elected when the Contract is issued. The
enhanced death benefit will remain in effect until the maturity date or the
death of the Primary Annuitant or you ask us to remove it from your Contract.
You cannot add it to your Contract again after it has been removed.
2. Distribution of the Death Benefit.
Owner is the Annuitant. If the Owner is the Annuitant and the Owner dies before
the maturity date, the beneficiary becomes entitled to the death benefit. The
beneficiary may elect to receive the death benefit in a lump sum or under a
variable payment plan. The beneficiary automatically becomes the new Owner and
Annuitant and the Contract continues in force. The beneficiary must take
distributions from the Contract pursuant to the applicable minimum distribution
requirements discussed on page 13.
Owner is not the Annuitant. If the Owner is not the Annuitant and the Annuitant
dies before the maturity date, the Contingent Annuitant automatically becomes
the new Annuitant and the Contract continues in force. If no Contingent
Annuitant is named within 60 days after we receive proof of death of the
Annuitant, we pay the death benefit to the Owner.
Adjustment of Contract Value. On the date when the death benefit becomes
payable, if the Contract continues in force we will set the Contract value at an
amount equal to the death benefit.
MATURITY BENEFIT Purchase payments under the Contract are payable until the
maturity date specified in the Contract. You may select any date up to age 90 as
the maturity date, subject to applicable tax and state law requirements,
including the minimum distribution requirements (See "Minimum Distribution
Requirements, p. 13). On the maturity date, if you have not elected any other
permissible payment plan, we will change the maturity date to the Contract
anniversary nearest the Annuitant's 90th birthday. On that date, if you have not
elected any other permissible payment plan, we will pay the value of the
Contract in monthly payments for life under a variable payment plan with
payments certain for ten years.
VARIABLE PAYMENT PLANS
We will pay part or all of the benefits under a Contract under a variable
payment plan you select. The payment plan starts on the maturity date. See
"Maturity Benefit", above. Under a variable plan, you bear the entire investment
risk, since we make no guarantees of investment return. Accordingly, there is no
guarantee of the amount of the variable payments, and you must expect the amount
of such payments 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. 12.
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,
we will make payments as they come due to the designated contingent beneficiary.
You may select a certain period of either 10 or 20 years, or you may choose a
plan with no certain period.
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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.
We may limit the election of a payment plan to one that results in an initial
payment of at least $50. A payment plan will continue even if payments fall to
less than $50 after the payment plan begins.
From time to time we may establish payment plan rates with greater actuarial
value than those stated in the Contract and make them available at the time of
settlement. We may also make available other payment plans, with provisions and
rates we publish for those plans.
AMOUNT OF ANNUITY PAYMENTS We will determine the amount of the first annuity
payment on the basis of the particular payment plan you select, 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.) We will calculate the amount of the first annuity
payment on a basis that takes into account the length of time over which we
expect annuity payments to continue. The first payment will be lower for an
Annuitant who is younger when payments begin, and higher for an Annuitant who is
older, if the payment plan involves life contingencies. The first payment will
be lower if the payment plan includes a longer certain period. Variable annuity
payments after the first will vary from month to month to reflect the
fluctuating value of the Annuity Units credited to your 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 Contract 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 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 You may change the allocation of
purchase payments among the Divisions and transfer values from one Division to
another both before and after annuity payments begin. In order to take full
advantage of these features, you should carefully consider, on a continuing
basis, which Division or apportionment is best suited to your long-term
investment needs.
You may at any time change the allocation of purchase payments among the
Divisions by written notice to us. Purchase payments we receive at our Home
Office on and after the date on which we receive notice 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 you 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. We will adjust the number of Accumulation or Annuity Units to be
credited 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, we may deduct a transfer fee
of $25 from the amount transferred. We currently make no charge for transfers.
If you contemplate the transfer of funds from one Division to another, you
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.
You may transfer amounts which you have invested on a fixed basis to any
Division of the Account, and you may transfer the value of Accumulation Units in
any Division of the Account to the Guaranteed Interest Fund for investment on a
fixed basis, subject to the restrictions described in the Contract. See "The
Guaranteed Interest Fund", p. 11.
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. We will apply the value of the remaining payments to the new plan
selected. We will determine the amount of the first annuity payment under the
new plan on the basis of the particular plan selected, the annuity payment rate
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<PAGE> 17
and the Annuitant's adjusted age and sex. Subsequent payments will vary to
reflect changes in the value of the Annuity Units credited.
We permit other transfers between payment plans subject to such limitations as
we may reasonably determine. Generally, however, we do not permit transfer from
a payment plan involving a life contingency to a payment plan which does not
involve the same life contingency. You may make transfers from the Money Market
Division at any time while a payment plan is in force. The Contract provides
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 we permit transfers at any time but we reserve the right to
change this practice in the future. We will make the transfer as of the close of
business on the valuation date coincident with or next following the date on
which we receive the request for transfer at our Home Office, or at a later date
if you request.
OWNERS OF THE CONTRACT 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. The Primary Annuitant is the person upon whose life
the Contract is initially issued. The Contingent Annuitant is the person who
becomes the Annuitant upon the death of the Annuitant. In this prospectus, "you"
means the Owner or a prospective purchaser of the Contract.
DEFERMENT OF BENEFIT PAYMENTS We reserve the right to defer determination of the
withdrawal value of the 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 either of the mutual funds 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 routine
closings on 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 funds or disposal of
securities they hold is not reasonably practical; or (e) such suspension or
postponement is otherwise permitted by the Act.
DIVIDENDS The Contract shares in our divisible surplus, to the extent we
determine annually, except while payments are being made under a variable
payment plan. Distributions of divisible surplus are commonly referred to as
"dividends". Any contributions to our divisible surplus would result from more
favorable expense experience than we have assumed in determining the deductions.
We do not expect the Contract to make a significant contribution to our
divisible surplus and we do not expect to pay dividends on 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 Portfolio or the Funds, we will vote the shares
held in the Account in accordance with instructions we receive from the Owners
of Accumulation Units or payees receiving payments under variable payment plans.
Each Owner or payee will receive periodic reports relating to both of the mutual
funds, proxy material and a form with which to give instructions with respect to
the proportion of shares of each Portfolio or Fund held in the Account
corresponding to the Accumulation Units credited to his Contract, or the number
of shares of each Portfolio or 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. We will vote shares for which no
instructions have been received in the same proportion as the shares as for
which instructions have been received.
SUBSTITUTION AND CHANGE We may take any of the following actions, so long as we
comply with all of the requirements of the securities and insurance laws that
may apply. A vote of Contract owners, or of those who have an interest in one or
more of the Divisions of the Account, may be required. Approval by the
Securities and Exchange Commission or another regulatory authority may be
required. In the event that we take any of these actions, we may make an
appropriate endorsement of your Contract and take other actions to carry out
what we have done.
1. We may invest the assets of a Division in securities of another mutual fund
or another issuer, instead of the Portfolio or Fund in which you have invested,
as a substitute for the shares you already have or as the securities to be
purchased in the future.
2. We may operate the Account or a Division as a mutual fund itself, instead
of investing its assets in a mutual fund, if our Board of Trustees decides that
this would be in the best interest of our Contract owners.
3. We may deregister the Account under the Investment Company Act of 1940 if
registration is no longer required.
4. We may change the provisions of the Contract to comply with federal or
state laws that apply, including changes to comply with federal tax laws in
order to assure that your Contract qualifies for tax benefits relating to
retirement annuity or variable annuity contracts.
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FIXED ANNUITY PAYMENT PLANS We will also pay Contract benefits under fixed
annuity payment plans which are not described in this Prospectus. If you select
a fixed annuity, we will cancel the Accumulation Units credited to your Deferred
Contract, we will transfer the withdrawal value of the Contract to our general
account, and you will no longer have any interest in the Account.
PERFORMANCE DATA We may publish advertisements containing performance data for
the Divisions of the Account from time to time. These performance data may
include both standardized and non-standardized total return figures, although
standardized figures will always accompany non-standardized figures.
Standardized performance data will consist of quarterly return quotations, which
will always include quotations for recent periods of one, five and ten years or,
if less, the entire life of a Division. These quotations will be the average
annual rates of return based on the minimum $50,000 initial purchase payment.
The standardized performance data will reflect all applicable charges.
Non-standardized performance data may also not reflect the annual Contract fee
of $30, since the impact of the fee varies by Contract size. The
non-standardized data may also be for other time periods.
We will base all of the performance data on actual historical investment results
for the Portfolios or Funds, including all expenses they bear. The data are not
intended to indicate future performance. We may construct some of the data
hypothetically to reflect expense factors for the Contracts we currently offer.
We have included additional information about the performance data in the
Statement of Additional Information.
FINANCIAL STATEMENTS Financial statements of the Account and financial
statements of Northwestern Mutual appear in the Statement of Additional
Information.
THE GUARANTEED INTEREST FUND
You may direct all or part of your purchase payments to the Guaranteed Interest
Fund for investment on a fixed basis. You may transfer amounts previously
invested in the Account Divisions to the Guaranteed Interest Fund, prior to the
maturity date, and you may transfer amounts in the Guaranteed Interest Fund to
the Account Divisions. In each case, these transfers are subject to the
restrictions described in the Contract.
Amounts you invest in the Guaranteed Interest Fund become part of our general
assets. In reliance on certain exemptive and exclusionary provisions, we have
not registered interests in the Guaranteed Interest Fund under the Securities
Act of 1933 and we have not registered the Guaranteed Interest Fund 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. We have 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 you invest in the Guaranteed Interest Fund earn interest at rates we
declare from time to time. We will guarantee the interest rate for each amount
for at least one year. The interest rate will be at an annual effective rate of
at least 3%. At the expiration of the period for which we guarantee the interest
rate, we will declare a new interest rate. We credit interest and compound it
daily. We determine the effective date for a transaction involving the
Guaranteed Interest Fund 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 limit of
$1,000,000 ($250,000 in New York) without our prior consent. 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 this maximum
limit, we will place the amount of the excess in the Money Market Division and
it will remain there until you instruct us otherwise.
Transfers from the Guaranteed Interest Fund to the Account Divisions are subject
to limits. After a transfer from the Guaranteed Interest Fund, we will allow no
further transfers from the Guaranteed Interest Fund for a period of 365 days; in
addition, we will allow no further transfers back into the Guaranteed Interest
Fund for a period of 90 days. The maximum amount that you may transfer from the
Guaranteed Interest Fund in one transfer is the greater of (1) 25% of the amount
that you had invested in the Guaranteed Interest Fund as of the last Contract
anniversary preceding the transfer and (2) the amount of your 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 $50,000 limit
does not apply in New York.)
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 either of the mutual funds.
Other charges under the Contract apply for amounts in the Guaranteed Interest
Fund as they are described in this prospectus for amounts you invest on a
variable basis. See
11
<PAGE> 19
"Deductions", p. 14. For purposes of allocating and deducting the annual
Contract fee, we consider any investment in the Guaranteed Interest Fund as
though it were an investment of the same amount in one of the Account Divisions.
FEDERAL INCOME TAXES
QUALIFIED AND NONTAX-QUALIFIED PLANS
We offer the Contract 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 a traditional IRA established under Section 408(b).
2. Roth IRAs pursuant to the provisions of Section 408A of the Code.
We also offer the Contract for use in non tax-qualified situations (i.e.,
contributions are taxable).
CONTRIBUTION LIMITATIONS AND GENERAL REQUIREMENTS APPLICABLE TO CONTRACT
TRADITIONAL IRA If an individual has earned income, the individual and the
individual's spouse are each permitted to make a maximum contribution of $2,000
to an IRA or IRAs for their benefit for each taxable year. The $2,000 limit is
reduced by contributions to any Roth IRAs of the Owner. Contributions cannot be
made after age 70 1/2. Annual contributions are generally deductible unless the
Owner or the Owner's spouse is an "active participant" in a plan in another
qualified plan during the taxable year. If the Owner is an "active participant"
in a plan, the deduction for 2000 phases out at an adjusted gross income ("AGI")
of between $32,000 - $42,000 (indexed through 2005) for single filers and
between $52,000 - $62,000 (indexed through 2007) for married individuals filing
jointly. If the Owner is not an "active participant" in a plan but the Owner's
spouse is, the Owner's deduction phases out at an AGI of between $150,000 -
$160,000.
The Owner may also make tax free rollover and direct transfer contributions to
an IRA from the Owner's other IRAs or contracts purchased under tax qualified
plans. The surviving spouse can also roll over the deceased Owner's IRA, tax
deferred annuity or qualified plan to the spouse's own IRA.
An IRA is nonforfeitable and generally cannot be transferred.
ROTH IRA If an individual has earned income, the individual and the individual's
spouse are each permitted to make a maximum contribution of $2,000 to a Roth IRA
or IRAs for their benefit for each taxable year. The $2,000 limit is reduced by
contributions to any traditional IRAs of the Owner. The maximum contribution is
phased out at an adjusted gross income ("AGI") of between $95,000 and $110,000
for single filers, between $150,000 and $160,000 for married individuals filing
jointly and between $0 and $10,000 for married individuals filing separately.
Regular contributions to a Roth IRA are not deductible.
An IRA, SEP or SIMPLE IRA (after two years of participation in a SIMPLE IRA
plan) may be rolled over or converted to a Roth IRA if the Owner has an AGI of
$100,000 or less for the year (not including the rollover amount) and is not
married filing a separate tax return. A rollover to a Roth IRA is fully taxable
but is not subject to a 10% premature withdrawal penalty.
NONTAX-QUALIFIED CONTRACT There are no limitations on who can purchase a
nontax-qualified annuity or the amount that can be contributed to the Contract.
Contributions to nontax-qualified Contracts are not deductible. For the Contract
to qualify as a nontax-qualified annuity, the Contract death proceeds must be
distributed to any nonspouse beneficiary either within five years of the Owner's
death or as substantially periodic payments over the beneficiary's life or life
expectancy commencing within one year of the Owner's death. The surviving spouse
is entitled to continue deferral under the Contract.
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. Except for qualified distributions from Roth IRAs,
Contract benefits will be taxable as ordinary income when received in accordance
with Section 72 of the Code.
IRAS As a general rule, benefits received as annuity payments or upon death or
withdrawal from these contracts will be taxable as ordinary income when
received.
Where nondeductible contributions are made to individual retirement annuities,
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." After the Owner attains age 70 1/2, a
50% penalty may be imposed on payments made from individual retirement annuities
to the extent the payments are less than certain required minimum amounts. (See
"Minimum Distribution Requirements", p. 13). With certain limited
12
<PAGE> 20
exceptions benefits from individual retirement annuities Contracts are subject
to the tax-free roll-over provisions of the Code.
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.
ROTH IRAS Qualified distributions from a Roth IRA are not taxable. A qualified
distribution is a distribution (1) made at least 5 years after the issuance of
the Owner's first Roth IRA, and (2) made after the Owner has attained age 59
1/2, made to a beneficiary after the Owner's death, attributable to the Owner
being disabled, or used to pay acquisition expenses of a qualified first time
home purchase. A nonqualified distribution is taxable as ordinary income only to
the extent it exceeds the "investment in the contract" as defined in Section 72.
Distributions are not required to be made from a Roth IRA before the Owner's
death.
A withdrawal from a Roth IRA of part or all of an IRA rollover contribution
within 5 years of the rollover is subject to a 10% premature withdrawal penalty
(unless an exception applies). In addition, if part or all of an IRA rollover
made in 1998 is withdrawn before 1/1/2001, any taxes on the rollover deferred by
proration may be accelerated. Rollover contributions are treated as withdrawn
after regular contributions for this purpose.
A regular or conversion contribution to a Roth IRA can be recharacterized to an
IRA in a trustee-to-trustee transfer provided the transfer includes the net
income or loss allocable to the contribution and is completed by the due date
for filing the Owner's federal income tax return for the year the contribution
was made. The recharacterized amount will be treated for tax purposes as
originally made from the IRA. Recharacterized amounts can be reconverted to a
Roth IRA once each calendar year. Benefits from a Roth IRA can be rolled over or
transferred directed only to another Roth IRA.
NONQUALIFIED CONTRACTS Benefits received as annuity payments from
nontax-qualified 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. For Contracts issued after October 21,
1988, investment gains will be determined by aggregating all nontax-qualified
deferred Contracts we issue 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. One
or more nontax-qualified Contracts can be wholly or partially exchanged for one
or more other annuity contracts under Section 1035 of the Code without
recognition of gain or loss.
PREMATURE WITHDRAWALS 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, Roth IRAs, and nonqualified deferred annuities. Payments which are
exempt from the penalty tax include payments upon disability, after age 59-1/2
and for certain substantially equal periodic payments for life. Additional
exceptions for certain large medical expenses, reimbursement of health insurance
premiums paid while the Owner was unemployed, qualified education expenses and
first time home purchases apply to IRAs and Roth IRAs.
MINIMUM DISTRIBUTION REQUIREMENTS All of the Contracts are required to satisfy
some form of minimum distribution requirement. A 50% excise tax applies for each
violation of these requirements.
1. IRAs As a general rule, the Owner of these Contracts is required to take
certain distributions during the Owner's life and the beneficiary designated by
the Owner is required to take the balance of the Contract value within certain
specified periods following the Owner's death.
The Owner must take the first required distribution by the "required beginning
date" and subsequent required distributions by December 31 of that year and each
year thereafter. Payments must be made over the life or life expectancy of the
Owner or the lives or life expectancies of the Owner and the Owner's
beneficiary. The required beginning date for IRAs is April 1 of the calendar
year following the calendar year the Owner attains age 70 1/2.
Upon the death of the Owner, the Owner's beneficiary must take distributions
under one of the following two rules.
13
<PAGE> 21
If the Owner dies on or after the required beginning date, any remaining
interest in the Contract must be distributed at least as rapidly as it was under
the method of distribution in effect on the date of death. The method of
distribution is determined by the age of the Owner and the beneficiary and
whether their life expectancies are being recalculated each year.
If the Owner dies before the required beginning date, the Owner's entire
interest must be distributed by December 31 of the calendar year containing the
fifth anniversary of the Owner's death. If the Contract value is payable to a
beneficiary designated by the Contract, the Contract value may be paid over the
life or life expectancy of that beneficiary, provided distribution begins by
December 31 of the calendar year following the year of the Owner's death. If the
sole designated beneficiary is the Owner's spouse, the spouse may roll over the
Contract into an IRA owned by the spouse.
2. Roth IRAs The Owner of a Roth IRA is not required to take required minimum
distributions during the Owner's lifetime. However, the beneficiary designated
by the Owner is required to take distributions pursuant to the minimum
distribution requirements for Owners dying before the required beginning date,
discussed above.
3. Nonqualified Contracts The Owner of a nontax-qualified Contract is not
required to take required minimum distributions during the Owner's lifetime.
However, the designated beneficiary is required to take distributions pursuant
to rules similar to the at death minimum distribution requirements for IRAs.
TAXATION OF NORTHWESTERN MUTUAL
We 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. We are currently making no charge. (See "Net Investment Factor", p. 7
and "Deductions", below.
OTHER CONSIDERATIONS
You should understand 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. We do not intend this discussion as tax advice. Before you
purchase a Contract, we advise you to consult qualified tax counsel.
DEDUCTIONS
We will make the following deductions:
MORTALITY RATE AND EXPENSE RISK CHARGES
Amount of Mortality Rate and Expense Risks Charges. The net investment factor
(see "Net Investment Factor", p. 7) we use in determining the value of
Accumulation and Annuity Units reflects a deduction on each valuation date for
mortality rate and expense risks we have assumed. The deduction from
Accumulation Units and Annuity Units is at a current annual rate of 0.35% of the
assets of the Account. Our Board of Trustees may increase or decrease the
deduction, but in no event may the deduction exceed an annual rate of 0.75%. We
will not increase the deduction for mortality and expense risks for at least
five years from the date of this prospectus.
Risks and Expenses. The risks we assume 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 we make may
be insufficient to cover the actual costs we incur in connection with the
Contracts. We assume these risks for the duration of the Contract. The deduction
for these risks is the only expense item paid by the Account to date. The mutual
funds pay expenses which are described in the attached prospectuses for the
mutual funds.
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
the mutual funds as described under "Substitution and Change", p. 10, and any
applicable taxes, i.e., any tax liability we have paid or reserved for resulting
from the maintenance or operation of a Division of the Account, other than
applicable premium taxes which we may deduct directly from considerations. We do
not presently anticipate that we will make any deduction for federal income
taxes (see "Taxation of Northwestern Mutual", p. 14), nor do we anticipate that
maintenance or operation of the Account will give rise to any deduction for
state or local taxes. However, we reserve 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.
CONTRACT FEE On each Contract anniversary prior to the maturity date we make a
deduction of $30 for administrative expenses relating to a Deferred Contract
during the prior year. We make the charge by reducing the number of Accumulation
Units credited to the Contract. For purposes of allocating and deducting the
annual Contract fee, we consider
14
<PAGE> 22
any investment in the Guaranteed Interest Fund as though it were an investment
of the same amount in one of the Account Divisions. We cannot increase this
charge. The charge is intended only to reimburse us for our actual
administrative expenses. We currently are waiving the charge if the Contract
value on the Contract anniversary is $25,000 or more.
ENHANCED DEATH BENEFIT CHARGE On each Contract anniversary on which the enhanced
death benefit is in effect, we deduct from the Contract value a charge based on
the amount of the enhanced death benefit on the Contract Anniversary and the age
of the Annuitant when the Contract was issued. The charge is 0.10% of the amount
of the enhanced death benefit for issue age 45 or less, 0.20% for issue age
46-55, and 0.40% for issue age 56-65. This charge is for the risks we assume in
guaranteeing the enhanced death benefit. We deduct the charge from the Divisions
of the Account and the Guaranteed Interest Fund in proportion to the amounts you
have invested.
PREMIUM TAXES The Contract provides for the deduction of applicable premium
taxes, if any, from purchase payments or from Contract benefits. Various
jurisdictions levy premium taxes. Premium taxes presently range from 0% to 3.5%
of total purchase payments. Many jurisdictions presently exempt from premium
taxes annuities such as the Contract. As a matter of current practice, we do not
deduct premium taxes from purchase payments received under the Contract or from
Contract benefits. However, we reserve the right to deduct premium taxes in the
future.
EXPENSES FOR THE PORTFOLIOS AND FUNDS The expenses borne by the Portfolios and
Funds in which the assets of the Account are invested are described in the
prospectuses for Northwestern Mutual Series Fund, Inc. and the Russell Insurance
Funds. See the prospectuses attached to this prospectus.
DISTRIBUTION OF THE CONTRACT
We sell the Contract through individuals who are licensed insurance agents
appointed by Northwestern Mutual and are registered representatives of a broker
dealer. Where state law requires, these agents will also be licensed securities
salespersons. Our wholly-owned subsidiary, Northwestern Mutual Investment
Services, LLC ("NMIS"), is registered with the Securities and Exchange
Commission and is a member of the National Association of Securities Dealers.
NMIS is the distributor of the Contracts. NMIS has entered into a selling
agreement with Robert W. Baird and Co. Incorporated ("Baird"), another
broker/dealer which we control, and our agents who offer the Contracts will be
registered representatives of Baird. Neither we nor Baird will pay commissions
on sales of the Contracts, but Baird will offer the Contracts to purchasers who
pay quarterly fees to Baird based on the value of the assets in their Baird
accounts, including the Contracts. Baird will pay a portion of the fees to its
registered representatives who sell the Contracts and provide other services to
the owners of the Accounts. The Contract is also offered by Northwestern Mutual
agents who are advisory representatives of registered investment advisers. The
investment advisers charge fees for investment advisory services and pay a
portion of those fees to the advising representatives. We may also offer the
Contracts through other distribution arrangements.
15
<PAGE> 23
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
PAGE
----
DISTRIBUTION OF THE
CONTRACT......................................B-2
DETERMINATION OF ANNUITY
PAYMENTS......................................B-2
Amount of Annuity Payments..................B-2
Annuity Unit Value..........................B-2
Illustrations of Variable Annuity
Payments..................................B-3
VALUATION OF ASSETS OF THE
ACCOUNT.......................................B-3
TRANSFERABILITY RESTRICTIONS....................B-4
PERFORMANCE DATA................................B-4
EXPERTS.........................................B-4
FINANCIAL STATEMENTS OF THE
ACCOUNT (for the two years ended
December 31, 1999)..............................B-5
REPORT OF INDEPENDENT
ACCOUNTANTS (for the two years ended
December 31, 1999).........................B-17
FINANCIAL STATEMENTS OF
NORTHWESTERN MUTUAL (for
the three years ended December 31, 1999)...B-18
REPORT OF INDEPENDENT
ACCOUNTANTS (for the three years
ended December 31, 1999)....................B-29
This Prospectus sets forth concisely the information about the Mason Street
Variable Annuity that a prospective investor ought to know before investing.
Additional information about the Mason Street Variable Annuity and NML Variable
Annuity 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
1-888-455-2232.
TO: The Northwestern Mutual Life Insurance Company
Annuity and Accumulation Products Marketing Department
Room E12J
720 East Wisconsin Avenue
Milwaukee, WI 53202
Please send a Statement of Additional Information for the Mason Street
Variable Annuity to:
Name
Address
City State Zip
<PAGE> 24
More information about Northwestern Mutual Series Fund, Inc. is included in the
Fund's Statement of Additional Information (SAI), incorporated by reference in
this prospectus, which is available free of charge.
More information about the Fund's investments is included in the Fund's annual
and semi-annual reports, which discuss the market conditions and investment
strategies that significantly affected each Portfolio's performance during the
previous fiscal period.
To request a free copy of the Fund's SAI, or current annual or semi-annual
report, call us at 1-888-455-2232. Information about the Fund (including the
SAI) can be reviewed and copied at the Public Reference Room of the Securities
and Exchange Commission (SEC) in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
Reports and other information about the Fund are available on the SEC's Internet
site at http://www.sec.gov. Copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington, DC 20549-6009.
N O R T H W E S T E R N M U T U A L L I F E
MASON STREET VARIABLE ANNUITY
Nontax-Qualified Annuities
Individual Retirement Annuities
Roth IRAs
NML VARIABLE ANNUITY ACCOUNT B
NORTHWESTERN MUTUAL SERIES FUND, INC.
RUSSELL INSURANCE FUNDS
P R O S P E C T U S
Investment Company Act File Nos. 811-3990 and 811-5371
NORTHWESTERN
MUTUAL LIFE(R)
PO Box 3095
Milwaukee WI 53201-3095
Change Service Requested
135602
<PAGE> 25
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")
- --------------------------------------------------------------------------------
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 , 2000.
The Date of this Statement of Additional Information is
, 2000.
B-1
<PAGE> 26
DISTRIBUTION OF THE CONTRACT
Northwestern Mutual Investment Services, LLC ("NMIS") is the
distributor of the Contract and may be considered the principal underwriter of
the Contract. NMIS is a wholly-owned subsidiary of Northwestern Mutual . NMIS
has entered into a selling agreement with Robert W. Baird & Co. Incorporated
("Baird"), a broker-dealer controlled by Northwestern Mutual. NMIS may enter
into selling agreements with other affiliated and unaffiliated broker-dealers to
distribute the Contract. The offering will be continuous. No Contracts have been
issued prior to the date of statement of Additional Information.
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. 8, including "Description of Payment Plans", p. 8, "Amount of
Annuity Payments", p. 9, and "Assumed Investment Rate", p. 9; "Dividends", p.
10; "Net Investment Factor", p. 7; and "Deductions", p. 14.
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.
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 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 is
established at $1.00 as of the date operations begin 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.
B-2
<PAGE> 27
The Annuity Unit value for each Division on any valuation date is
determined by multiplying the Annuity Unit value on the immediately preceding
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). The example is for a Contract with sex-distinct rates.
<TABLE>
<CAPTION>
<S> <C> <C>
(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............................................ $5.35
(5) Amount of first payment from Balanced Division,
(3) X (4) divided by $1,000............................................... $267.50
(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)..................................... 178.33
</TABLE>
The $50,000 value at maturity provides a first payment from the Balanced
Division of $267.50, and payments thereafter of the varying dollar value of
178.33 Annuity Units. The amount of subsequent payments from the Balanced
Division is determined by multiplying 178.33 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
178.33 multiplied by $1.501000, or $267.68.
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 178.33
X $1.499000, or $267.32.
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 or Fund shares 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 a Portfolio or Fund has been
suspended, or payment of redemption value has been postponed, for the sole
purpose of
B-3
<PAGE> 28
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.
TRANSFERABILITY RESTRICTIONS
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.
PERFORMANCE DATA
Standardized performance data in advertisements will show the average
annual total return for each Division of the Account, according to the following
formula prescribed by the Securities and Exchange Commission:
P(1 + T) = ERV
Where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000 payment
made at the beginning of the 1, 5 or 10 year periods at
the end of the 1, 5, or 10 year periods (or fractional
portion thereof)
Average annual total return is the annual compounded rate of return that would
have produced the ending surrender value under a Contract if the owner had
invested in a specified Division over the stated period and investment
performance had remained constant throughout the period. The calculation assumes
a single $1,000 purchase payment made at the beginning of the period and
surrender of the Contract at the end of the period. It reflects a deduction for
all Account, Fund and Contract level charges. The $30 annual Contract fee is
reflected as 0.00% of the assets based on actual fees collected divided by
average assets of the sub-account. The data will assume a minimum initial
purchase payment of $50,000 and the amounts will be divided by 50 to conform the
presentation to the $1,000 purchase payment assumption required by the
prescribed formula.
Advertisements with performance data may compare the average annualized
total return figures for one or more of the Divisions to (1) the Standard &
Poor's 500 Composite Stock Price Index, Wilshire Index, 1750 Index, EAFE Index,
Merrill Lynch Domestic Master Index, Lehman Brothers High Yield Intermediate
Market Index or other indices measuring performance of a relevant group of
securities; (2) other variable annuity separate account tracked by Lipper
Analytical Services or other ratings services; or (3) the Consumer Price Index.
EXPERTS
The financial statements of the Account as of December 31, 1999 and for
each of the two years in the period ended December 31, 1999 and of Northwestern
Mutual as of December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999 included in this Statement of Additional
Information have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP
provides audit services for the Account. The address of PricewaterhouseCoopers
LLP is 100 East Wisconsin Avenue, Suite 1500, Milwaukee, Wisconsin 53202.
B-4
<PAGE> 29
Pages B-5 through B-17 are reserved for
the December 31, 1999 Financial Statements for
NML Variable Annuity Account B.
[All financial statements will be supplied by amendment.]
B-5
<PAGE> 30
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL
The following financial statements of Northwestern Mutual should be considered
only as bearing upon the ability of Northwestern Mutual to meet its obligations
under the Contracts.
(pages B-18 through B-29 are reserved for the 12/31/99
Consolidated Financial Statements of
The Northwestern Mutual Life insurance Company)
[The financial statements will be supplied by amendment.]
B-18
<PAGE> 31
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-2
Illustrations of Variable Annuity Payments....................................................B-3
VALUATION OF ASSETS OF THE ACCOUNT..................................................................B-3
TRANSFERABILITY RESTRICTIONS........................................................................B-4
PERFORMANCE DATA....................................................................................B-4
EXPERTS.............................................................................................B-4
FINANCIAL STATEMENTS OF THE ACCOUNT.................................................................B-5
(for the two years ended December 31, 1999)
REPORT OF INDEPENDENT ACCOUNTANTS..................................................................B-17
(for the two years ended December 31, 1999)
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL........................................................B-18
(for the three years ended December 31, 1999)
REPORT OF INDEPENDENT ACCOUNTANTS..................................................................B-29
(for the three years ended December 31, 1999)
</TABLE>
B-30
<PAGE> 32
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. [The financial
statements will be supplied by amendment.]
NML Variable Annuity Account B
(for the two years ended December 31, 1999)
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, 1999)
Consolidated Statement of Financial Position
Consolidated Summary of Operations
Consolidated Statement of Changes in Surplus
Consolidated Statement of Cash Flows
Notes to Consolidated Statutory Financial Statements
Report of Independent Accountants
(b) Exhibits
<TABLE>
<CAPTION>
<S> <C>
Exhibit B(3) Form of Distribution Agreement between Northwestern Mutual Investment
Services, LLC and Robert W. Baird & Co. Incorporated
Exhibit B(4)(a) Flexible Payment Variable Annuity Contract, RR.V.B.MSNST. (032000), including
Amendment to Qualify as an Annuity for non-tax qualified business (sex neutral)
Exhibit B(4)(b) Variable Annuity Contract Payment Rate Tables, RR.V.A.B.MSNST. (032000),
included in Exhibit B(4)(a) above (sex distinct)
Exhibit B(4)(c) Enhanced Death Benefit, VA.EDB.(032000), included in Exhibit B(4)(a) above
Exhibit B(4)(d) Waiver of Withdrawal Charge, VA.WWC.(032000), included in Exhibit B(4)(a) above
Exhibit B(5) Application form, included in Exhibit B(4)(a) above
Exhibit B(9) Opinion and Consent of John M. Bremer, Esq. (to be filed by amendment)
Exhibit B(10) Consent of PricewaterhouseCoopers LLP (to be filed by amendment)
The following exhibits were filed in electronic format with
Post-Effective Amendment No. 57 on Form N-4 for NML Variable Annuity
Account B, File No. 2-29240, CIK 0000072176, dated February 25, 1999,
and are incorporated herein by reference:
</TABLE>
C-1
<PAGE> 33
<TABLE>
<CAPTION>
<S> <C>
Exhibit B(8)(a) Form of Participation Agreement Among Russell Insurance Funds, Russell
Fund Distributors, Inc. and The Northwestern Mutual Life Insurance Company
Exhibit B(8)(b) Form of Administrative Service Fee Agreement between The Northwestern
Mutual Life Insurance Company and Frank Russell Company
The following exhibit was filed in electronic format with the
Registration Statement on Form S-6 for Northwestern Mutual Variable
Life Account, File No. 333-59103, CIK 0000742277, dated July 15, 1998,
and is incorporated herein by reference.
<CAPTION>
<S> <C>
Exhibit A(6)(b) Amended By-Laws of The Northwestern Mutual Life Insurance Company dated
January 28, 1998
The following exhibits were filed in electronic format with the
Registration Statement on Form N-4 for NML Variable Annuity Account A,
File No. 333-22455, CIK 0000790162, dated February 27, 1997, and are
incorporated herein by reference:
<CAPTION>
<S> <C>
Exhibit 99(b) Resolution of the Board of Trustees of The Northwestern Mutual Life
Insurance Company creating the Account and resolution of the Executive
Committee designating the formations of "NML Variable Annuity Account
A" and "NML Variable Annuity Account B"
Exhibit A(3)(A) Distribution Contract
The following exhibit was filed in electronic format with
Post-Effective Amendment No. 52 on Form N-4 for NML Variable Annuity
Account B, File No. 2-29240, CIK 0000072176, dated November 13, 1995,
and is incorporated herein by reference:
<CAPTION>
<S> <C>
EX-99.B1 Restated Articles of Incorporation of The Northwestern Mutual Life
Insurance Company
</TABLE>
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 March 1,
2000 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.
TRUSTEES
Name Business Address
R. Quintus Anderson Aarque Capital Corporation
20 West Fairmount Avenue
P.O. Box 109
Lakewood, NY 14750-0109
Edward E. Barr Sun Chemical Corporation
222 Bridge Plaza South
Fort Lee, NJ 07024
C-2
<PAGE> 34
Gordon T. Beaham III Faultless Starch/Bon Ami Co.
1025 West Eighth Street
Kansas City, MO 64101
Robert C. Buchanan Fox Valley Corporation
100 West Lawrence Street
P.O. Box 727
Appleton, WI 54911
George A. Dickerman Spalding Sports Worldwide
425 Meadow Street
P.O. Box 901
Chicopee, MA 01021-0901
Pierre S. du Pont Richards, Layton and Finger
P.O. Box 551
1 Rodney Square
Wilmington, DE 19899
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 87505
Stephen N. Graff 805 Lone Tree Road
Elm Grove, WI 53122-2014
Patricia Albjerg Graham Graduate School of Education
Harvard University
420 Gutman
Cambridge, MA 02138
Stephen F. Keller 101 South Las Palmas Avenue
Los Angeles, CA 90004
Barbara A. King Landscape Structures, Inc.
Route 3
601 - 7th Street South
Delano, MN 55328
J. Thomas Lewis 228 St. Charles Avenue
Suite 1024
New Orleans, LA 70130
C-3
<PAGE> 35
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
Timothy D. Proctor Diageo plc
8 Henrietta Place
London W1M 9AG
United Kingdom
H. Mason Sizemore, Jr. The Seattle Times
Fairview Avenue North and John Street
P.O. Box 70
Seattle, WA 98109
Harold B. Smith, Jr. Illinois Tool Works, Inc.
3600 West Lake Avenue
Glenview, IL 60625-5811
Sherwood H. Smith, Jr. Carolina Power & Light Company
411 Fayetteville Street Mall
P.O. Box 1551
Raleigh, NC 27602
Peter M. Sommerhauser Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, WI 53202-3590
John E. Steuri Advanced Thermal Technologies
2102 Riverfront Drive, Suite 120
Little Rock, AR 72202-1747
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.
100 First Street
Suite 2350
San Francisco, CA 94105
Kathryn D. Wriston c/o Shearman & Sterling
599 Lexington Avenue
Room 1126
New York, NY 10022
C-4
<PAGE> 36
Edward J. Zore The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Deborah A. Beck Senior Vice President
William H. Beckley Senior Vice President
Robert J. Berdan Vice President
John M. Bremer Executive Vice President, General Counsel and Secretary
Peter W. Bruce Executive Vice President
Steven T. Catlett Vice President
Mark G. Doll Senior Vice President
Thomas E. Dyer 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 Senior Vice President
Bruce L. Miller Senior Vice President
Gregory C. Oberland Vice President
Barbara F. Piehler Vice President
James F. Reiskytl Vice President
Mason G. Ross Senior Vice President
John E. Schlifske Vice President
Leonard F. Stecklein Senior Vice President - Policyowner Services
Frederic H. Sweet Senior Vice President
J. Edward Tippetts Vice President
Martha M. Valerio Vice President
W. Ward White Vice President
Walt J. Wojcik Senior Vice President
Edward J. Zore Executive Vice President and Trustee
OTHER OFFICERS
<CAPTION>
Name Title
- ---- -----
<S> <C>
John M. Abbott Associate Director - Benefits Research
Carl G. Amick Director - Disability Benefits
Thomas R. Anderson Vice President - Marketing
Maria J. Avila Assistant Controller
Michael J. Backus Associate Director - Information Systems
John E. Bailey Senior Actuary
Nicholas H. Bandow Assistant Director - Information Systems
Lynn F. Bardele Assistant Director - Field Training & Development
Margaret A. Barkley Assistant Director
Walter L. Barlow Assistant Director - Education
Rebekah B. Barsch Director - NML Foundation
</TABLE>
C-5
<PAGE> 37
<TABLE>
<S> <C>
Sandra L. Barton Assistant Director - Marketing
Bradford P. Bauer Assistant Director - Advanced Marketing
Beth M. Berger Assistant General Counsel & Assistant Secretary
Frederick W. Bessette Assistant General Counsel & Assistant Secretary
Carrie L. Bleck Assistant Director
D. Rodney Bluhm Assistant General Counsel
Jessica J. Borgmann Assistant Director - Agency Recruiting
Willette Bowie Employee Relations Director
Martin R. Braasch Director - Underwriting Standards & Services
Patricia R. Braeger Associate Director - Information Systems
James A. Brewer Investment Research Officer
William J. Buholzer Employee Relations Director
Michael S. Bula Assistant General Counsel
Jerry C. Burg Associate Director - Field Benefits
Pency P. Byhardt Assistant Director - New Business
Gregory B. Bynan Director - Corporate Services
Kim M. Cafaro Assistant General Counsel & Assistant Secretary
John E. Cain Assistant Director - Life Benefits
Gwen C. Canady Assistant Director-Mutual Funds
Shanklin B. Cannon, M.D. Medical Director - Life Products/Research
Terese J. Capizzi Assistant Director
Kurt P. Carbon Assistant Regional Director
John P. Carrick Assistant Director - Investment Services
Michael G. Carter Assistant General Counsel & Assistant Secretary
William W. Carter Associate Actuary
John E. Caspari Assistant Director - Advertising & Corporate
Information
Walter J. Chossek Associate Controller
Thomas R. Christenson Director - Advanced Marketing
Eric P. Christophersen Associate Director
Alan E. Close Associate Controller
Carolyn M. Colbert Assistant Director - New Business
Margaret Winter Combe Director - Corporate Development
Virginia A. Corwin Assistant Director - New Business
Barbara E. Courtney Associate Director - Mutual Funds
Dennis J. Darland Assistant Director - Disability Income
Thomas H. Davis Associate Director - Information Systems
Nicholas De Fino Assistant Director
Carol A. Detlaf Director - Annuity Administration
Colleen Devlin Assistant Director - Communications
Glen W. DeZeeuw Director - Agency Services
Joseph Dobering, III Director - Underwriting Standards & Services
Jennifer L. Docea Actuary
Lisa C. Dodd Actuary
Richard P. Dodd Assistant Director - Agency
Daniel C. Dougherty Director - Personal Markets
Margaret T. Dougherty Assistant Director - Information Systems
John R. Dowell Director - Workforce Diversity
William O. Drehfal Assistant Director - Media Services
Steven J. Dryer Associate Director
Jeffrey S. Dunn Vice President
John E. Dunn Assistant General Counsel & Assistant Secretary
Somayajulu Durvasula Associate Director - Field Financial
</TABLE>
C-6
<PAGE> 38
<TABLE>
<S> <C>
James R. Eben Assistant General Counsel and Assistant Secretary
Magda El Sayed Assistant Director - Information Systems
Michael S. Ertz Assistant Director - Advanced Marketing
Thomas F. Fadden Assistant Director - Information Systems
Christina H. Fiasca Director - Policyowner Services
Zenia J. Fieldbinder Assistant Director - Annuity Accumulation
Richard F. Fisher Senior Actuary
Dennis J. Fitzpatrick Director - Advanced Marketing
Jon T. Flaschner Director - Policyowner Services
Kate M. Fleming Assistant General Counsel & Assistant Secretary
Carol J. Flemma Assistant Director - Marketing
John E. Fobes II Assistant Director - Agency Services
Donald Forecki Investment Officer
Phillip B. Franczyk Vice President
Stephen H. Frankel Vice President
Anne A. Frigo Assistant Director - New Business
Richard R. Garthwait Vice President - Field Financial
David L. Georgenson Director - Agent Development
Timothy L. Gergens Financial Officer
Paulette A. Getschman Assistant Director - Policyowner Services
James W. Gillespie Vice President
Walter M. Givler Director - Corporate Services
Robert P. Glazier Director - New Business
Robert K. Gleeson, M.D. Vice President - Medical Director
Mark J. Gmach Director - Agency
Jason G. Goetze Assistant Director - Marketing
David Lee Gosse Assistant Director - Disability Benefits
William F. Grady Director of Field Finances
John M. Grogan Director - Disability Income
Thomas C. Guay Director - Field Financial
Gerald A. Haas Assistant Director - Information Systems
Patricia Ann Hagen Assistant Director - Information Systems
Ronald D. Hagen Vice President
Lori A. Hanes Director - Human Resources
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 & Assistant Secretary
William L. Hegge Associate Director of Telecommunications
Wayne F. Heidenreich Medical Director
Jacquelyn F. Heise Associate Director - Information Systems
Robert L. Hellrood Director - New Business
Herbert F. Hellwig Assistant Director - Personal Markets
Jane A. Herman Director - Term Upgrade
Gary M. Hewitt Vice President & Treasurer
Donna R. Higgins Associate Director - Information Systems
David L. Hilbert Investment Officer
Karla D. Hill Human Resource Officer
Susan G. Hill Assistant Director
John D. Hillmer Assistant Director - Information Systems
Hugh L. Hoffman Assistant Director - Information Systems
Richard S. Hoffmann Director - Audit
Terence J. Holahan Assistant Director - Long Term Care Sales
</TABLE>
C-7
<PAGE> 39
<TABLE>
<S> <C>
Bruce Holmes Associate Actuary
Elizabeth S. Idleman Assistant General Counsel & Assistant Secretary
Scott C. Iodice Assistant Director - Agency
Joseph P. Jansky Assistant Director - Corporate Planning
Michael D. Jaquint Assistant Actuary
Dolores A. Juergens Associate Director of Restaurant Operations
Mark Kaprelian Assistant General Counsel & Assistant Secretary
Marilyn J. Katz Assistant Director - Medical Consultants
John C. Kelly Associate Controller
Kevin C. Kennedy Assistant Director - Architecture
James B. Kern Regional Director - Central Region
Donald C. Kiefer Vice President
Jason T. Klawonn Assistant Actuary
Allen B. Kluz Director - Field Financial
Beatrice C. Kmiec Assistant Regional Director - East
James A. Koelbl Assistant General Counsel & Assistant Secretary
John L. Kordsmeier Director - Policyowner Services
Robert J. Kowalsky Chief Architect
Carol L. Kracht Assistant General Counsel & Assistant Secretary
Martha Krawczak Officer - Life and Disability
Jeffrey J. Krygiel Assistant Actuary
Todd L. Laszewski Associate Actuary
Patrick J. Lavin Director - Disability Benefits
James L. Lavold Associate Director - Meetings
Elizabeth J. Lentini Assistant General Counsel & Assistant Secretary
Sally Jo Lewis Assistant General Counsel & Assistant Secretary
Mark P. Lichtenberger Associate Director - LINK Technical Planning
Paul E. Lima Vice President-International Insurance Operations
Steven M. Lindstedt Assistant Director - Information Systems
Melissa C. Lloyd Assistant Director - Advanced Marketing
James Lodermeier Assistant Director - Tax Planning
George R. Loxton Assistant General Counsel & Assistant Secretary
Mary M. Lucci Director - New Business
Christine M. Lucia Human Resources Officer
Mark J. Lucius Corporate Information Officer
Merrill C. Lundberg Assistant General Counsel & Assistant Secretary
Jon K. Magalska Associate Actuary
Jean M. Maier Vice President - Life Benefits
Joseph Maniscalco Associate Director - Information Systems
Raymond J. Manista Assistant General Counsel & Assistant Secretary
Steven C. Mannebach Assistant Director - Field Financial Services
Jeffrey S. Marks Multi Life, Research & Reinsurance Officer
Steve Martinie Assistant General Counsel & Assistant Secretary
Ted A. Matchulat Actuarial Products Officer
Shawn P. Mauser Assistant Director - Personal Markets
Margaret McCabe Director - Policy Benefits Systems
Richard A. McComb Director - Human Resources
William L. McCown Vice President & Investment Counsel
Paul E. McElwee Assistant General Counsel & Assistant Secretary
James L. McFarland Assistant General Counsel & Assistant Secretary
Daniel E. McGinley Director - Management Development
Allan J. McDonell Assistant Director - Equity Compliance
Mark J. McLennon Assistant Director
</TABLE>
C-8
<PAGE> 40
<TABLE>
<S> <C>
Arthur J. Mees Jr. Assistant Actuary
Robert J. Meiers Ad Valorem Tax Manager
Larry S. Meihsner Assistant General Counsel & Assistant Secretary
Robert G. Meilander Vice President
Richard E. Meyers Assistant General Counsel
Patricia A. Michel Assistant Director - Policyowner Services
Jay W. Miller Vice President & Tax Counsel
Sara K. Miller Vice President
Jill Mocarski Associate Medical Director
Tom M. Mohr Director of Policyowner Services - South
Richard C. Moore Associate Actuary
Scott J. Morris Assistant General Counsel & Assistant Secretary
Sharon A. Morton Investment Officer
Adrian J. Mullin Assistant Director - Personal Markets
Timothy P. Murphy Assistant Director-Marketing
Randolph J. Musil Assistant Director - Advanced Marketing
John E. Muth Assistant Director - Advanced Marketing
David K. Nelson Assistant General Counsel
Ronald C. Nelson Director
Timothy Nelson Assistant Director - Marketing
Leon W. Nesbitt Vice President-Agency
Karen M. Niessing Director - Policyowner Services
Daniel J. O'Meara Director - Field Financial
Mary Joy O'Meara Assistant Director - Advanced Marketing
Kathleen A. Oman Associate Director - Information Systems
Thomas A. Pajewski Investment Research Officer
Arthur V. Panighetti Director - Tax Planning
Christen L. Partleton Associate Director - Policyowner Services
Jeffrey L. Pawlowski Assistant Director - Agency Development
David W. Perez Assistant General Counsel
Judith L. Perkins Assistant General Counsel & Assistant Secretary
Wilson D. Perry Assistant General Counsel & Assistant Secretary
Gary N. Peterson Actuary
John C. Peterson Director of Policyowner Services - West
Harvey W. Pogoriler Assistant General Counsel
Randolph R. Powell, M.D. Medical Director
Mark A. Prange Associate Director - Information Systems
Brian R. Pray Assistant Regional Director - New Business
Thomas O. Rabenn Assistant General Counsel & Assistant Secretary
David R. Remstad Senior Actuary
David R. Retherford Assistant Director of New Business - Central
Stephen M. Rhode Assistant Director - Qualified Benefits
Richard R. Richter Vice President
Daniel A. Riedl Assistant General Counsel
Marcia Rimai Vice President - Litigation Counsel
Kathleen M. Rivera Vice President - Insurance Counsel
Faith B. Rodenkirk Assistant Director - Group Marketing
James S. Rolfsmeyer Assistant Director - Information Systems
Lora A. Rosenbaum Director - New Business
Robert K. Roska Associate Director - Information Systems
Sue M. Roska Director - Systems and Services
Harry L. Ruppenthal Director of Policyowner Services - East
Stephen G. Ruys Assistant Director - Information Systems
</TABLE>
C-9
<PAGE> 41
<TABLE>
<S> <C>
Rose Kordich Sasich Assistant Director of Systems
Mary Ann Schachtner Director - Field Training & Development
Linda Ann Schaefer Assistant Director - Marketing
Timothy G. Schaefer Assistant Director - Investment Services Architecture
Thomas F. Scheer Assistant General Counsel & Assistant Secretary
Carlen A. Schenk Associate Director
Jane A. Schiltz Vice President - Disability Income
Kathleen H. Schluter Assistant General Counsel & Assistant Secretary
Calvin R. Schmidt Associate Director - Information Systems
Rodd Schneider Assistant General Counsel & Assistant Secretary
Sarah R. Schneider Assistant Director - Corporate Project
John O. Schnorr Assistant Director
Margaret R. Schoewe Vice President - Information Systems
John F. Schroeder Associate Director of Field Office Real Estate
Donna L. Schwartz Assistant Director - Customer Service
Melva T. Seabron Director - Corporate Services
Norman W. Seguin, II Investment Officer - Ad Valorem Taxes
Catherine L. Shaw Assistant General Counsel & Assistant Secretary
John E. Sheaffer, Jr. Assistant Director - Agent Development
Janet Z. Silverman Director - New Business
Stephen M. Silverman Assistant General Counsel
David W. Simbro Managing Director - Life Marketing
Paul W. Skalecki Associate Actuary
Cynthia S. Slavik Assistant Director - Environmental Engineer
Landon T. Smith Assistant Director - Replacements
Mark W. Smith Assistant General Counsel & Assistant Secretary
Warren L. Smith, Jr. Investment Officer - Architecture
Steven W. Speer Director - Annuity & Mutual Fund Marketing
Robert J. Spellman, M.D. Vice President & Chief Medical Director
Steve P. Sperka Assistant Actuary
Mark A. Stalsberg Assistant Director - Agency
Barbara J. Stansberry Director - New Business
Bonnie L. Steindorf Director - Department Operations
Steven H. Steidinger Assistant Director - Marketing
Karen J. Stevens Assistant General Counsel & Assistant Secretary
Steven J. Stribling Associate Actuary
Stephen J. Strommen Associate Actuary
Theodore H. Strupp Assistant Director
Daniel J. Suprenant Director - Group Disability Marketing
Victoria A. Sweigart Human Resources Officer
Rachel L. Taknint Assistant General Counsel & Assistant Secretary
Thomas Talajkowski Assistant Director - Tax Compliance
Paul B. Tews Director - Investment Planning
Deanna L. Tillisch Assistant Director - Media Relations
Susan M. Tompkins Director - Agency
Thomas W. Towers Associate Director - Public Relations
Gloria E. Tracy Assistant Director - Marketing
Linda K. Tredupp Assistant Director - Information Systems
Chris G. Trost Associate Actuary
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
Gloria J. Venski Associate Director - Disability Benefits
</TABLE>
C-10
<PAGE> 42
<TABLE>
<S> <C>
Janine L. Wagner Assistant Director - Investment Services
Scott E. Wallace Assistant Director - Projects
Hal W. Walter Vice President
P. Andrew Ware Vice President
Mary L. Wehrle-Schnell Associate Director - Information Systems
Daniel T. Weidner Assistant Director - Information Systems
Joel S. Weiner Assistant Medical Director
Ronald J. Weir Associate Director - Information Systems
Kenneth R. Wentland Assistant Director of Policyowner Services - East
David B. Wescoe Vice President to President
Sandra D. Wesley Associate Director of Special Projects
Catherine A. Wilbert Assistant General Counsel & Assistant Secretary
David L. Wild Director - Corporate Services
Donald R. Wilkinson Vice President - Agency
Jeffrey B. Williams Risk Manager
John K. Wilson Director - Personal Markets
Penelope A. Woodcock Associate Director - Benefit Systems
Richard W. Woody Assistant Director - Agency
Stanford A. Wynn Assistant Director - Advanced Marketing
Catherine M. Young Assistant General Counsel & Assistant 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
Diana M. Zawada Associate Director
Rick T. Zehner Director - Corporate Planning
Patricia A. Zimmermann Investment Officer - Real Estate Systems
Ray Zimmermann Director - LINK Information Network
Philip R. Zwieg Vice President - Technical Support
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"), as of December 31, 1999 are set forth on pages C-12 and
C-13. In addition to the subsidiaries set forth on pages C-12 and C-13, the
following separate investment accounts (which include the Registrant) may be
deemed to be either controlled by, or under common control with, Northwestern
Mutual:
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. and Russell Insurance Funds (the
"Funds"), shown on page C-12 as subsidiaries of Northwestern Mutual, are
investment companies, registered under the Investment Company Act of 1940,
offering their shares to the separate accounts identified above; and the shares
of the Funds held in connection with certain of the accounts are voted by
Northwestern Mutual 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-11
<PAGE> 43
NML CORPORATE STRUCTURE*
(AS OF DECEMBER 31, 1999)
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%
Frank Russell Company and its subsidiaries - 100%
Bradford, Inc. - 100%
NML/Tallahassee, Inc. - 100%
Northwestern Investment Management Company - 100%
Northwestern Mutual Las Vegas, Inc. - 100%
Northwestern Long Term Care Insurance Company - 100%
Northwestern International Holdings, Inc. - 100%
Northwestern Foreign Holdings B.V. - 100%
Saskatoon Centre, Limited - 100% (inactive)
Northwestern Mutual Series Fund, Inc. (and its 11 portfolios) - 100%
Russell Insurance Funds (and its 5 funds) - 70.8%
Mason Street Funds, Inc. (and its 11 funds) - 77.03%
MGIC Investment Corporation - 11%. MGIC holds 100% of the voting stock of the
following:
Mortgage Guaranty Reinsurance Corporation, MGIC, MGIC Reinsurance Corporation
of Wisconsin, MGIC Mortgage Insurance Corporation, and various subsidiaries.
Baird Financial Corporation - 80%. Baird Financial Corporation holds 80% of
the voting stock of Robert W. Baird & Co., Incorporated and various
subsidiaries.
Northwestern Mutual Investment Services, LLC - 100%
Northwestern Reinsurance Holdings N.V. - 100%
Northwestern Financial Group LLC - 100% (inactive)
NML- CBO, LLC - 49%
NML REAL ESTATE HOLDINGS, LLC - 100%
The Grand Avenue Corporation - 98.54% Mitchell, Inc. - 100%
Marina Pacific, Ltd. - 100% Cass Corporation - 100%
Solar Resources, Inc. - 100% Burgundy, Inc. - 100%
Rocket Sports, Inc. - 100% (inactive) Amber, Inc. - 100%
Summit Sports, Inc. - 100% (inactive) Olive, Inc. - 100%
Greenway Sports, Inc. - 100% (inactive) Bayridge, Inc. - 100%
RE Corporation - 100% Ryan, Inc. - 100%
INV Corp. - 100% Pembrook, Inc. - 100%
Buffalo Promotions, Inc. - 100% (inactive) PBClub, Inc. - 100%
NW Greenway #1 - 100% (inactive) Diversey, Inc. - 100%
NW Greenway #9 - 100% (inactive) Larkin, Inc. - 100% (inactive)
Logan, Inc. - 100% Russet, Inc. - 100% (inactive)
* Except for MGIC Investment Corporation and its subsidiaries, includes all NML
mutual funds and other corporations of which 50% or more voting power is
controlled by NML.
C-12
<PAGE> 44
NML CORPORATE STRUCTURE, CONTINUED*
(AS OF DECEMBER 31, 1999)
<TABLE>
<CAPTION>
NML SECURITIES HOLDINGS, LLC-100%
<S> <C>
NW Pipeline, Inc. - 100% Kristina International Sales, Inc. - 100%
Painted Rock Development Corporation - 100% NML/Mid Atlantic, Inc. - 100%
NML Development Corporation - 100% KerryAnne International Sales, Inc. - 100%
Stadium and Arena Management, Inc. - 100% Regina International Sales, Inc. - 100%
Carlisle Ventures, Inc. - 100%
Park Forest Northeast, Inc. - 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%
Baraboo, Inc. - 100%
Elizabeth International Sales, Inc. - 100%
Sean International Sales, Inc. - 100%
Alexandra International Sales, Inc. - 100%
Brian International Sales, Inc. - 100%
Jack International Sales, Inc. - 100%
Brendan International Sales, Inc. - 100%
Justin International FSC, Inc. - 100%
Mason & Marshall, Inc. - 100%
North Van Buren, Inc. - 100%
Northwestern Mutual Life
International, Inc. - 100%
White Oaks, Inc. - 100%
Hazel, Inc. - 100%
Maroon, Inc. - 100%
Coral, Inc. - 100%
Lydell, Inc. - 100%
Klode, Inc. - 100%
Chateau, Inc. - 100% (inactive)
Lake Bluff, Inc. - 100% (inactive)
Nicolet, Inc. - 100% (inactive)
Tupelo, Inc. - 100% (inactive)
</TABLE>
* Except for MGIC Investment Corporation and its subsidiaries, includes all NML
mutual funds and other corporations of which 50% or more voting power is
controlled by NML.
C-13
<PAGE> 45
Item 27. Number of Contract Owners
As of February 29, 2000, 241,973 variable annuity contracts issued in
connection with NML Variable Annuity Account B were outstanding. 196,497 such
contracts were issued as contracts for plans qualifying for special treatment
under various provisions of the Internal Revenue Code. 45,476 such contracts
were not so issued.
Item 28. Indemnification
That portion of the By-laws of Northwestern Mutual relating to
indemnification of Trustees and officers is set forth in full in Article VII of
the By-laws of Northwestern Mutual, amended by resolution and previously filed
as an exhibit to the Registration Statement.
Item 29. Principal Underwriters
(a) Northwestern Mutual Investment Services, LLC ("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
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>
Maria J. Avila Assistant Treasurer
Barbara Bay Assistant Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Deborah A. Beck Director and Vice President, Variable Life
Administration
William H. Beckley Executive Vice President, Sales
Peter W. Bruce Director
Thomas A. Carroll Vice President - Common Stocks
Walter J. Chossek Treasurer
Barbara E. Courtney Assistant Treasurer
Jefferson V. De Angelis Vice President - Fixed Income Securities
Mark G. Doll Executive Vice President, Investment Advisory Services
James R. Eben Assistant Secretary
Richard L. Hall Vice President, Variable Life Marketing
Lisa M. Heise Assistant Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Laila V. Hick Assistant Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Beatrice C. Kmiec Assistant Vice President, Variable Life Administration
Merrill C. Lundberg Secretary
Meridee J. Maynard President and CEO
Allan J. McDonell Vice President and Chief Compliance Officer
Ignatius L. Smetek Vice President - Common Stocks
Leonard F. Stecklein Vice President - Trust Services
Steven P. Swanson Vice President
</TABLE>
C-14
<PAGE> 46
<TABLE>
<CAPTION>
<S> <C>
Carla A. Thoke Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
J. Edward Tippetts Vice President, Sales Support
Julie Van Cleave Vice President - Common Stocks
Patricia L. Van Kampen Vice President - Common Stocks
William R. Walker Vice President
Edward J. Zore Director
Robert J. Ziegler Assistant Treasurer
</TABLE>
The address for each director and officer of NMIS is 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
(c) During 1999 life insurance agents of Northwestern Mutual who are
also registered representatives of NMIS received commissions, including general
agent overrides, in the aggregate amount of $21,569,657 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
possession of Northwestern Mutual 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
C-15
<PAGE> 47
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.
(e) The Northwestern Mutual Life Insurance Company hereby represents
that the fees and charges deducted under the contracts registered by this
registration statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
C-16
<PAGE> 48
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company
Act of 1940, the Registrant, NML Variable Annuity Account B, has duly caused
this Registration Statement to be signed on its behalf, in the City of
Milwaukee, and State of Wisconsin, on the 24th day of March, 2000.
<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
Executive Vice President, and Chief Executive Officer
General Counsel and Secretary
By NORTHWESTERN MUTUAL
INVESTMENT SERVICES, LLC
(Depositor)
Attest: MERRILL C. LUNDBERG By: MERIDEE J. MAYNARD
------------------------------ -------------------------------------
Merrill C. Lundberg, Secretary Meridee J. Maynard, President and CEO
</TABLE>
As required by the Securities Act of 1933, this Registration Statement
has been signed by the depositors on the 24th day of March, 2000.
<TABLE>
<CAPTION>
<S> <C>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
------------------------------ -------------------------------------
John M. Bremer James D. Ericson, President and Chief
Executive Vice President, Executive Officer
General Counsel and Secretary
NORTHWESTERN MUTUAL INVESTMENT
SERVICES, LLC
(Depositor)
Attest: MERRILL C. LUNDBERG By: MERIDEE J. MAYNARD
------------------------------ --------------------------------------
Merrill C. Lundberg, Secretary Meridee J. Maynard, President and CEO
</TABLE>
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities with the depositor
and on the dates indicated:
Signature Title
- --------- -----
JAMES D. ERICSON Trustee, President and
- ----------------------------- Principal Executive and Dated March
James D. Ericson Financial Officer 24, 2000
C-17
<PAGE> 49
GARY E. LONG Vice President, Controller
- ----------------------------- and Principal Accounting
Gary E. Long Officer
EDWARD J. ZORE Trustee
- -----------------------------
Edward J. Zore
HAROLD B. SMITH* Trustee
- -----------------------------
Harold B. Smith
J. THOMAS LEWIS* Trustee
- -----------------------------
J. Thomas Lewis
PATRICIA ALBJERG GRAHAM* Trustee
- -----------------------------
Patricia Albjerg Graham
R. QUINTUS ANDERSON* Trustee
- -----------------------------
R. Quintus Anderson
STEPHEN F. KELLER* Trustee Dated
- ----------------------------- March 24, 2000
Stephen F. Keller
PIERRE S. du PONT* Trustee
- -----------------------------
Pierre S. du Pont
J. E. GALLEGOS* Trustee
- -----------------------------
J. E. Gallegos
KATHRYN D. WRISTON* Trustee
- -----------------------------
Kathryn D. Wriston
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.
C-18
<PAGE> 50
EDWARD E. BARR* Trustee
- -----------------------------
Edward E. Barr
ROBERT C. BUCHANAN* Trustee
- -----------------------------
Robert C. Buchanan
SHERWOOD H. SMITH, JR.* Trustee
- -----------------------------
Sherwood H. Smith, Jr.
H. MASON SIZEMORE* Trustee Dated
- ----------------------------- March 24, 2000
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
STEPHEN N. GRAFF* Trustee
- -----------------------------
Stephen N. Graff
BARBARA A. KING* Trustee
- -----------------------------
Barbara A. King
TIMOTHY D. PROCTOR* Trustee
- -----------------------------
Timothy D. Proctor
PETER M. SOMMERHAUSER* Trustee
- -----------------------------
Peter M. Sommerhauser
*By: JAMES D. ERICSON
------------------------------------------
James D. Ericson, Attorney in Fact pursuant
to the Power of Attorney previously filed on
January 27, 2000
C-19
<PAGE> 51
EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FOR
MASON STREET VARIABLE ANNUITY
<TABLE>
<CAPTION>
Exhibit Number Exhibit Name
- -------------- ------------
<S> <C>
Exhibit B(3) Form of Distribution Agreement between Northwestern Mutual
Investment Services, LLC and Robert W. Baird & Co. Incorporated.
Exhibit B(4)(a) Flexible Payment Variable Annuity Contract, RR.V.B.MSNST.
(032000), including Amendment to Qualify as an Annuity for non-tax qualified business
(sex neutral)
Exhibit B(4)(b) Variable Annuity Contract Payment Rate Tables, RR.V.A.B.MSNST. (032000), included
in Exhibit B(4)(a) above (sex distinct)
Exhibit B(4)(c) Enhanced Death Benefit, VA.EDB.(032000), included in Exhibit B(4)(a) above
Exhibit B(4)(d) Waiver of Withdrawal Charge, VA.WWC.(032000), included in Exhibit B(4)(a) above
Exhibit B(5) Application form, included in Exhibit B(4)(a) above
</TABLE>
<PAGE> 1
Exhibit B(3)
SELLING AGREEMENT
This SELLING AGREEMENT ("Agreement"), dated _________________, is by and among
the Northwestern Mutual Life Insurance Company ("NML"), Northwestern Mutual
Investment Services, LLC ("NMIS"), Robert W. Baird & Co. Incorporated ("Baird")
and Baird Insurance Services Inc., together with the duly licensed insurance
affiliates indicated on the attached Annex I, (the "Affiliates") (collectively,
Baird and the Affiliates are the "Broker/Dealer").
Where permitted by state law, Broker/Dealer is acting as general agent hereunder
and shall be responsible for the duties of broker/dealer and general agent
hereunder. If state law does not permit Broker/Dealer to hold a corporate
insurance license, the appropriate duly licensed insurance affiliate identified
on Annex I shall act as general agent hereunder.
1. Appointment. This Agreement is for the purpose of arranging for the
distribution of a certain no load variable annuity named Mason Street
Variable Annuity (the "Contracts"), issued by NML and for which NMIS is
the distributor, through sales people who are licensed life insurance
agents for insurance purposes, and are associated with and registered
representatives of Broker/Dealer (each, a "Subagent"). In consideration
of the mutual promises and covenants contained in this Agreement, NML
and NMIS each appoint Broker/Dealer and, as provided in Section 3, its
Subagents, to solicit and procure applications for the Contracts, and
Broker/Dealer designates those NML agents approved by NML for
participation in the sale of the contracts through a fee-in-lieu
program administered by Broker/Dealer. These appointments and
designations are not deemed to be exclusive in any manner and only
extend to those jurisdictions where the Contracts have been approved
for sale and in which NML and Broker/Dealer are both licensed as
required by prevailing regulatory requirements.
2. Representations and Warranties.
A. Each party hereto represents and warrants to each other party,
as follows:
(i) It is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or
other corresponding applicable law and has all requisite
power, corporate or otherwise to carry on its business as now
being conducted and to perform its obligations as contemplated
by this Agreement.
(ii) It has all licenses, approvals, permits and
authorizations of, and registrations with, all authorities and
agencies, including non-governmental self-regulatory agencies,
required under all federal, state, and local laws and
regulations to enable it to perform its obligations as
contemplated by this Agreement.
(iii) The execution, delivery and performance of this
Agreement have been duly and validly authorized by all
necessary corporate action, if applicable, and this Agreement
constitutes the legal, valid and binding agreement of such
party, enforceable against it in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally
and general principles of equity.
B. Broker/Dealer additionally represents and warrants as follows:
(i) Baird, Baird Insurance Services and each additional
Affiliate is registered as a broker and dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"),
and
<PAGE> 2
is a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD").
(ii) Baird, Baird Insurance Services and each additional
Affiliate will comply with all applicable laws, rules and
regulations of, as well as any and all directives and
guidelines issued by any agency or other regulatory body with
authority over Broker/Dealer or over the premises on which
Broker/Dealer and its Subagents are soliciting the sale of
Contracts.
(iii) Baird Insurance Services is duly licensed as a corporate
insurance agent, or it has identified on Annex I hereto its
Affiliates which hold such licenses and are permitted to do so
under applicable laws.
3. Subagents. Broker/Dealer is authorized to recommend Subagents for
appointment by NML to solicit sales of the Contracts. Broker/Dealer is
responsible for investigating the character, work experience and
background of any proposed Subagent prior to recommending appointment
by NML. No Subagent shall act on behalf of NML until properly appointed
by NML. Broker/Dealer is responsible for ensuring that its Subagents,
unless otherwise agreed to with NML in writing, do not offer to sell
any other variable annuity contracts issued by NML, as such Subagents,
unless a selling agreement with respect thereto has been executed by
the parties. Broker/Dealer is responsible for supervising the
activities of its Subagents and for ensuring that Subagents are
properly licensed and in compliance with all applicable federal, state
and local laws and regulations and all rules and procedures of NML.
Broker/Dealer shall notify NML promptly, in writing, of any giving or
receiving of notice of termination of any Subagent. NML reserves the
right to refuse to appoint any proposed Subagent and to terminate any
relationship with any Subagent, with or without cause, at any time. By
submitting a Subagent for appointment, Broker/Dealer warrants that: (1)
such Subagent is recommended for appointment; (2) such Subagent is
fully licensed under applicable laws to transact business with NML and
is a duly registered representative of Broker/Dealer; and (3) all
background investigations required by state and federal laws have been
made with respect to such Subagent. NML will provide a list of its
agents who are eligible to participate in the sale of the Contracts
through Broker/Dealer's fee-in-lieu program, and such agents will be
designated by Broker/Dealer for participation in that program.
4. Sales Material.
A. Broker/Dealer shall not use any written, audio or visual sales
material (including prepared scripts for oral presentations)
in connection with the sales of the Contracts or solicitations
thereof, unless such material has been provided by, or
approved in writing in advance of such use by, NML and NMIS.
B. In accordance with the requirements of federal and certain
state laws, Broker/Dealer shall, to the extent required by
such laws, maintain complete records indicating the manner and
extent of distribution of any such sales material. This
material shall be made available to appropriate federal and
state regulatory agencies as required by law or regulation and
to NMIS and NML upon written request.
5. Prospectuses. For any Contract which is a registered security,
Broker/Dealer warrants that solicitation will be made by use of
currently effective prospectuses for the Contracts and the underlying
funds; and if required by state law, the Statement of Additional
Information for the Contracts; that the prospectuses will be delivered
concurrently with each sales presentation and that no statements shall
be made to a client superseding or controverting or otherwise
inconsistent with any statement made in the prospectus. NML and NMIS
shall furnish Broker/Dealer, at no cost to such party, reasonable
quantities of currently effective prospectuses.
2
<PAGE> 3
6. Conduct of Business.
A. Broker/Dealer will fully comply with the requirements of all
applicable laws, rules and regulations of regulatory
authorities (including self-regulatory organizations) having
jurisdiction over the activities of Broker/Dealer or over the
activities contemplated by this Agreement to be conducted by
Broker/Dealer.
B. Neither Broker/Dealer nor any Subagent shall solicit an
application from, or recommend the purchase of a Contract to,
an applicant without having reasonable grounds to believe, in
accordance with, among other things, applicable regulations of
any state insurance commission, the Securities and Exchange
Commission ("SEC") and the NASD, that such purchase is
suitable for the applicant. While not limited to the
following, a determination of suitability shall be based on
information supplied after a reasonable inquiry concerning the
applicant's insurance and investment objectives, and financial
situation and needs and other security holdings.
C Broker/Dealer has or will have established, prior to its
commencement of any solicitation of sales of Contracts
pursuant to the terms of this Agreement, such rules,
procedures, supervisory and inspection techniques as necessary
to diligently supervise the activities of its Subagents
pursuant to this Agreement and to ensure compliance with the
terms of this Agreement necessary to establish diligent
supervision. Broker/Dealer shall be responsible for securities
training, supervision and control of its Subagents in
connection with their solicitation activities with respect to
the Contracts and shall supervise compliance with applicable
federal and state securities laws and NASD requirements in
connection with such solicitation activities. Broker/Dealer
will observe, and will comply with, all requirements of any
bank on whose premises Broker/Dealer engages in sales
activities pursuant to this Agreement. Upon request by NML or
NMIS, Broker/Dealer will furnish appropriate records as are
necessary to establish diligent supervision.
D. Broker/Dealer will fully comply with the requirements of
applicable state insurance laws and regulations and will
maintain all books and records and file all reports required
thereunder to be maintained or filed by a licensed insurance
agent. Broker/Dealer shall comply with the terms and
conditions of any letter issued by the Staff of the SEC with
respect to the non-registration as a broker-dealer under the
1934 Act of a corporation licensed as an insurance agent and
associated with a registered broker-dealer. Broker/Dealer
shall notify NMIS immediately in writing if Broker/Dealer
fails to comply with any such terms and conditions and shall
take such measures as may be necessary to comply with any such
terms and conditions.
E. Broker/Dealer shall promptly notify NML and NMIS of any
written customer complaint or notice of any regulatory
investigation or proceeding received by Broker/Dealer or any
Subagent relating to a Contract or any activities undertaken
in connection with this Agreement. NML, NMIS and Broker/Dealer
shall each cooperate fully in any investigation or proceeding
including but not limited to any securities or insurance
regulatory investigation or proceeding or judicial proceeding
arising in connection with the Contracts.
F. Broker/Dealer shall pay all expenses incurred by it in the
performance of this Agreement unless otherwise specifically
provided for in this Agreement or in a writing signed by NML
and/or NMIS and Broker/Dealer.
G. Applications shall be taken only on preprinted application
forms supplied by NML. The Contract forms and applications are
the sole property of NML. No person other than NML has the
authority to make, alter or discharge any policy, Contract
application, Contract certificate, supplemental contract or
form issued by NML. No person other than NML has the right to
waive any provision with respect to any Contract or policy. No
3
<PAGE> 4
person other than NML has the authority to enter into any
proceeding in a court of law or before a regulatory agency in
the name of or on behalf of NML.
H. Broker/Dealer and Subagent shall accept premiums in the form
of a check or money order made payable to NML. Broker/Dealer
shall ensure that all checks and money orders and applications
for the Contracts received by it or any Subagent are remitted
promptly to NML. In the event that any other premiums are sent
to a Subagent or Broker/Dealer rather than to NML, they shall
promptly remit such premiums to NML, Broker/Dealer
acknowledges that if any premium is held at any time by it,
such premium shall be held on behalf of NML, and Broker/Dealer
shall segregate such premium from its own funds and promptly
remit such premium to NML. All such premiums, whether by
check, money order or wire, shall at all times be the property
of NML.
I. Upon issuance of a Contract by NML and delivery of such
Contract to Broker/Dealer, Broker/Dealer shall promptly
deliver such Contract to its purchaser. For purposes of this
provision, "promptly" shall be deemed to mean not later than
five calendar days, or such shorter period as is reasonable
under the circumstances. Broker/Dealer shall return promptly
to NML all receipts for delivered Contracts, all undelivered
Contracts and all receipts for cancellation, in accordance
with the instructions from NML.
J. Unless required by a determination of suitability, during the
term of this Agreement and after termination hereof,
Broker/Dealer covenants on behalf of itself and any Subagent
appointed hereunder, that they shall not solicit, induce or
attempt to solicit or induce Contract owners to terminate,
surrender, cancel, replace or exchange such Contract.
Broker/Dealer acknowledges and agrees that the provisions
contained in this Section 6 may be enforced by an action for
an injunction, as well as or in addition to any action for
damages.
7. Indemnification
A. Broker/Dealer shall indemnify, defend and hold harmless NML
and NMIS and each person who controls or is associated with
NML or NMIS within the meaning of the federal securities laws
and all directors, officers, corporate agents, employees,
attorneys and representatives thereof, from and against all
losses, expenses, claims, damages and liabilities (including
any costs of investigation and legal expenses and any amounts
paid in settlement of any action, suit or proceeding of any
claim asserted) which result from, arise out of or are based
upon:
(i) any breach by Broker/Dealer or any Affiliate of any
representation, warranty or other provision of this Agreement;
or
(ii) any violation by Broker/Dealer, any Affiliate or any Subagent
of any federal or state securities law or regulation,
insurance law or regulation or any rule or requirement of the
NASD;
(iii) the use by Broker/Dealer, any Affiliate or any Subagent of any
sales or promotional material which has not received specific
written approval of NML and NMIS as provided in Section 4 of
this Agreement, any oral or written misrepresentations or any
unlawful sales practices concerning the Contracts by
Broker/Dealer, any Affiliate or any Subagent; or
(iv) Claims by Subagents or other agents or representatives of
Broker/Dealer for commissions or other compensation or
remuneration of any type.
B. The indemnification provided for herein shall survive
termination of this Agreement.
4
<PAGE> 5
8. Fidelity Bond. Broker/Dealer represents that all directors, officers,
employees, representatives and Subagents who are appointed pursuant to
this Agreement or who have access to funds of NML are and will continue
to be covered by a blanket fidelity bond including coverage for
larceny, embezzlement or any other defalcation, issued by a reputable
bonding company. This bond shall be maintained at Broker/Dealer's or
Subagent's expense. Such bond shall be at least equivalent to the
minimal coverage required under the NASD Rules of Fair Practice,
endorsed to extend coverage to life insurance and annuity transactions.
Broker/Dealer acknowledges that NML may require evidence that such
coverage is in force and Broker/Dealer shall promptly give notice to
NML of any notice of cancellation or change of coverage. Broker/Dealer
assigns any proceeds received from the fidelity bond company to NML to
the extent of NML's loss due to activities covered by the bond. If
there is any deficiency, Broker/Dealer will promptly pay NML that
amount on demand, and Broker/Dealer shall indemnify and hold harmless
NML from any deficiency and from the cost of collection.
9. Termination.
A. Normal Termination. This Agreement shall continue for an
indefinite term, subject to the termination by NML, NMIS or
Broker/Dealer party upon written notice to the other parties
hereto, which shall be effective upon receipt thereof.
B. Automatic Termination for Cause. This Agreement shall
automatically terminate upon: (1) a material breach of this
Agreement, including without limitation the failure to comply
with the laws or regulations of any state or other
governmental agency or body having jurisdiction over the sale
of insurance; and (2) the suspension, revocation or
non-renewal of any then required insurance or securities
license of Broker/Dealer or any of its Affiliates, or the
deregistration of the Broker/Dealer or its termination of
membership with the NASD.
C. Rights and Obligations. Upon termination of this Agreement,
except as otherwise provided herein, all authorizations,
rights and obligations shall cease. If this Agreement is
terminated for cause as described above, Broker/Dealer's right
to receive compensation shall immediately terminate.
10. General Provisions.
A. Waiver. Failure by any of the parties to promptly insist upon
strict compliance with any of the obligations of any other
party under this Agreement will not be deemed to constitute a
waiver of the right to enforce strict compliance.
B. Independent Contractor. Broker/Dealer is an independent
contractor and its Subagents who are appointed as insurance
agents of NML are agents of Broker/Dealer and not employees,
agents or representatives of NML or NMIS for purposes of this
Agreement.
C. Notice. Any notice pursuant to this Agreement shall be mailed,
postage paid, to the last address communicated by the
receiving party to the other parties to this Agreement.
D. Severability. To the extent this Agreement may be in conflict
with any applicable law or regulation, this Agreement shall be
construed in a manner not inconsistent with such law or
regulation. The invalidity or illegality of any provision of
this Agreement shall not be deemed to affect the validity or
legality of any other provision of this Agreement.
E. Amendment. No Amendment to this Agreement shall be effective
unless in writing and signed by all the parties hereto.
F. Wisconsin Law. This Agreement shall be construed in accordance
with the laws of the State of Wisconsin.
5
<PAGE> 6
G. Effectiveness. This Agreement shall be effective as of the
date set forth above.
[Signatures Contained on Next Page]
6
<PAGE> 7
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties to this Agreement as of the date set forth above.
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
By:
------------------------------------
Name:
Title:
NORTHWESTERN MUTUAL
INVESTMENT SERVICES LLC
By:
------------------------------------
Name:
Title:
ROBERT W. BAIRD & CO. INCORPORATED
By:
------------------------------------
Name:
Title:
BAIRD INSURANCE SERVICES INC.
By:
------------------------------------
Name:
Title:
7
<PAGE> 8
ANNEX I
(If Needed)
8
<PAGE> 1
Exhibit B(4)(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.
MASON STREET VARIABLE ANNUITY
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.
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 East 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
Accumulation Units of the Separate Account on the effective date of return.
RR.V.B.MSNST.(032000)
CONTRACT NUMBER 12 345 678
PRIMARY ANNUITANT John J. Doe
ISSUE DATE March 31, 2000
RP.V.B.MSNST.(032000) Sex Neutral
<PAGE> 2
TABLE OF CONTENTS
CONTRACT INFORMATION, INVESTMENT ACCOUNTS
CHARGES AND FEES
MINIMUM PURCHASE PAYMENTS, ACCUMULATION VALUE, PAYMENT PLANS
SECTION 1. GENERAL TERMS AND DEFINITIONS
SECTION 2. SEPARATE ACCOUNT
o Separate Account
o Accumulation Units
o Net Investment Factor
o Substitution and Change
SECTION 3. GUARANTEED INTEREST FUND
o Guaranteed Interest Fund
o Accumulation Value
o Transfer Restrictions
o Maximum Guaranteed Interest Fund Accumulation Value
o Table of Guaranteed Values
SECTION 4. PURCHASE PAYMENTS, TRANSFERS, WITHDRAWALS
o Payment of Purchase Payments
o Application of Purchase Payments
o Selection of Investment Account for Purchase Payments
o Transfer of Accumulation Value
o Withdrawals and Full Surrender
o Effective Date
SECTION 5. BENEFITS
o Maturity Benefit
o Death Benefit if Annuitant is an Owner
o Death Benefit if Annuitant is not an Owner
SECTION 6. BENEFICIARIES AND CONTINGENT ANNUITANTS
o Naming and Changing of Beneficiaries
o Succession in Interest of Beneficiaries
<PAGE> 3
o Trustee as Beneficiary
o General
o Naming and Changing a Contingent Annuitant
SECTION 7. CHARGES AND FEES
o Premium Taxes
o Contract Fee
SECTION 8. OWNERSHIP
o The Owner
o Transfer of Ownership
o Naming and Changing a Successor Owner
o Collateral Assignment
o Voting Rights and Reports to Owners
SECTION 9. THE CONTRACT
o Guarantees
o Valuation of Separate Account Assets
o Determination of Separate Account Values
o Deferment of Benefit Payments
o Dividends
o Incontestability
o Misstatements
o Entire Contract; Changes
o Termination of Contract
SECTION 10. PAYMENT OF CONTRACT BENEFITS
o Payment of Benefits
o Death Benefit
o Effective Date for Payment Plan
o Payment Plan Elections
SECTION 11. PAYMENT PLANS
o Description of Payment Plans
o Allocation of Benefits
o Annuity Units under Variable Payment Plans
o Payments under Variable Payment Plans
o Transfers Involving Variable Payment Plans
<PAGE> 4
o Withdrawal under Payment Plans
o Naming and Changing of Beneficiaries under Payment Plans
o Succession in Interest of Beneficiaries under Payment Plans
o Payment Plan Rates
ADDITIONAL BENEFITS (IF ANY)
APPLICATION
ENDORSEMENTS
to be made only by the Company at the Home Office
RR.V.B.MSNST.(032000)
<PAGE> 5
CONTRACT INFORMATION
CONTRACT NUMBER 12 345 678
PLAN Flexible Payment Variable Annuity
ADDITIONAL BENEFITS Enhanced Death Benefit
TAX REPORTING CATEGORY Personal Annuity
PRIMARY ANNUITANT John J. Doe
AGE AND SEX 35 Male
OWNER John J. Doe, the Annuitant
ISSUE DATE March 31,2000
CONTRACT ANNIVERSARY March 31, 2001 and each March 31
thereafter
MATURITY DATE March 31, 2050
DIRECT BENEFICIARY Jane K. Doe, Wife of the Annuitant
INVESTMENT ACCOUNTS
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
Index 400 Stock Division
Small Cap Growth Stock Division
Russell Multi-Style Equity Division
Russell Aggressive Equity Division
Russell Non-US Division
Russell Core Bond Division
Russell Real Estate Securities Division
Guaranteed Accounts:
Guaranteed Interest Fund
<PAGE> 6
CONTRACT NUMBER 12 345 678
CHARGES AND FEES
DEDUCTION FROM PURCHASE PAYMENTS:
PREMIUM TAX (See Section 7.1):
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 MORTALITY AND EXPENSE RISK CHARGE (See Section 2.3):
0.35% at Issue; 0.75% Maximum
ANNUAL CONTRACT FEE (See Section 7.2):
$30 charged on the contract anniversary. The contract fee will
be waived if the Accumulation Value of the contract equals or
exceeds $25,000 on the contract anniversary.
ENHANCED DEATH BENEFIT CHARGE
0.10% of the Enhanced Death Benefit on each contract
anniversary.
TRANSFER FEE (See Sections 4.4 and 11.5):
$25 beginning with the thirteenth transfer in any Contract
Year.
MINIMUM PURCHASE PAYMENTS, ACCUMULATION VALUE, PAYMENT PLANS
MINIMUM PURCHASE PAYMENT (See Section 4.1): $25
MINIMUM ACCUMULATION VALUE (See Sections 5.2 and 9.9): $2,000
MINIMUM PAYMENT UNDER PAYMENT PLAN (See Sections 9.9 and 10.1): $50
Monthly Income.
<PAGE> 7
CONTRACT NUMBER 12 345 678
GUARANTEED INTEREST FUND - TABLE OF GUARANTEED VALUES
The table shows minimum guaranteed values and assumes a $5,000 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 March 31 Value Value
---- -------- ----- -----
<S> <C> <C> <C>
1 2001 $ 51,500 $ 51,500
2 2002 54,075 54,075
3 2003 56,727 56,727
4 2004 59,459 59,459
5 2005 62,272 62,272
6 2006 65,171 65,171
7 2007 68,156 68,156
8 2008 71,230 71,230
9 2009 74,397 74,397
10 2010 77,659 77,659
11 2011 81,019 81,019
12 2012 84,480 84,480
13 2013 88,044 88,044
14 2014 91,715 91,715
15 2015 95,497 95,497
16 2016 99,392 99,392
17 2017 103,403 103,403
18 2018 107,536 107,536
19 2019 111,792 111,792
20 2020 116,175 116,175
Age 60 2025 140,148 140,148
Age 65 2030 167,938 167,938
Age 70 2035 200,155 200,155
</TABLE>
This table is based on the guaranteed annual effective 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> 8
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 Primary Annuitant and, upon the death of the Primary Annuitant,
the Contingent Annuitant.
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.
BENEFICIARIES. The term "Beneficiaries" as used in this contract includes direct
beneficiaries, contingent beneficiaries and further payees.
COMPANY. The Northwestern Mutual Life Insurance Company.
CONTINGENT ANNUITANT. The person who becomes the Annuitant upon the death of an
Annuitant.
CONTRACT FEE. An annual charge for administration 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
Net 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, WI 53202.
INVESTMENT ACCOUNT. The Guaranteed Interest Fund and Separate Account Divisions
available for allocation of Net 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.
<PAGE> 9
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 applicable Premium Taxes.
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.
PORTFOLIOS. Mutual funds or portfolios of mutual funds in which the assets of
the Separate Account are invested.
PREMIUM TAX. A tax imposed by a governmental entity when Purchase Payments are
received or benefits are paid.
PRIMARY ANNUITANT. The person upon whose life this contract is initially issued.
PURCHASE PAYMENT. A payment made by or on behalf of the Owner with respect to
this contract.
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.
SUCCESSOR OWNER. The person designated to become the Owner upon the death of the
Owner, provided the Owner was not the Annuitant at the time of the Owner's
death.
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.
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 the corresponding
Portfolios. Shares of the Portfolios are purchased for the Separate Account at
their net asset value.
<PAGE> 10
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 the product of:
o the value on the immediately preceding Valuation Date; and
o 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 that 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 Mortality and Expense Risk
Charge. The charge for these risks 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 charges to exceed the maximum charges 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:
o the investment income of the Division for the current period;
plus
o capital gains for the period, whether realized or unrealized, on
the assets of the Division; less
o capital losses for the period, whether realized or unrealized, on
the assets of the Division; less
o deduction for any tax liability paid or reserved for by the
Company resulting from the maintenance or operation of the
Division; and less
o 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:
<PAGE> 11
o 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;
o 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;
o the Separate Account may be deregistered under the Investment Company
Act of 1940 in the event registration is no longer required; or
o 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. Any such substitution or change will be subject to any required approval
of the Securities and Exchange Commission (SEC) and the Commissioner of
Insurance for the state of Wisconsin, and filing with the state in which this
contract is issued.
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
Transfers of Accumulation Value from the Guaranteed Interest Fund will not
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:
o 25% of the Accumulation Value of the Guaranteed Interest Fund on the
last contract anniversary preceding the transfer; and
<PAGE> 12
o 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.
Transfers of Accumulation Value into the Guaranteed Interest Fund will not
be allowed for a period of 90 days following the most recent transfer of
Accumulation Value from the Guaranteed Interest Fund.
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. The values are based on
the assumptions stated on page 4A and are 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. Guaranteed 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 death of an Owner
and prior to the Maturity Date. Purchase Payments may be made after the death of
an Owner only if the new Owner of the contract is the surviving spouse of the
deceased Owner. 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
Net Purchase Payments 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 Net
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.
<PAGE> 13
4.3 SELECTION OF INVESTMENT ACCOUNT FOR PURCHASE PAYMENTS
The Owner may 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.
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.
A Transfer Fee may be deducted from the amount transferred. The maximum
amount of the Transfer Fee is shown on page 4. The minimum amount that may be
transferred is the lesser of $100 or the entire Accumulation Value of the
Investment Account from which the transfer is being made.
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 the Minimum Accumulation Value shown on page 4
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.
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, request for transfer or withdrawal is received at the Home
Office either:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o on a day on which the New York Stock Exchange is closed.
<PAGE> 14
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:
o payment of a monthly income under a payment plan chosen by the Owner;
or
o deferral of the maturity benefit and continuation of this contract 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 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. 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 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. The Optional Maturity Date will become the
Maturity Date for all other purposes of this contract.
5.2 DEATH BENEFIT IF ANNUITANT IS AN OWNER
If the Annuitant is an Owner, the beneficiary becomes entitled to the Death
Benefit upon receipt at the Home Office of satisfactory proof of the death of
the Annuitant before the Maturity Date. The Death Benefit will be the
Accumulation Value of the contract determined on the effective date. The
effective date is the date on which proof of death is received at the Home
Office. However, the effective date will be the next following Valuation Date if
the proof of death is received at the Home Office either:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o on a day on which the New York Stock Exchange is closed.
If the beneficiary becomes entitled to the Death Benefit due to the death
of the Primary Annuitant prior to the Primary Annuitant's 75th birthday, the
Death Benefit will not be less than:
<PAGE> 15
o total Net Purchase Payments paid under the contract; less
o any amounts withdrawn under Section 4.5.
As of the effective date, the Accumulation Value of the contract will be
set at an amount equal to the Death Benefit. Unless a payment plan was elected
by the Owner, the beneficiary automatically becomes the Owner and Annuitant of
the contract. However, if the beneficiary is not a natural person and no payment
plan was elected by the Owner, the beneficiary may select a natural person to be
the Annuitant. If a natural person is not selected to be the Annuitant within 60
days of the date on which proof of death of the Annuitant is received at the
Home Office, the Accumulation Value will be distributed to the beneficiary.
If a beneficiary becomes entitled to the Death Benefit in an amount less
than the Minimum Accumulation Value shown on page 4, the Accumulation Value will
be distributed to the beneficiary.
The cash value of any amount distributed will be the Accumulation Value
withdrawn as of the date of withdrawal as determined in Section 4.6.
5.3 DEATH BENEFIT IF ANNUITANT IS NOT AN OWNER
If the Annuitant is not an Owner, upon the death of the Annuitant the
contract continues with the Contingent Annuitant (Section 6.5) as the new
Annuitant. The Death Benefit will be the Accumulation Value of the contract
determined on the effective date. The effective date is the date on which proof
of death is received at the Home Office. However, the effective date will be the
next following Valuation Date if the proof of death is received at the Home
Office either:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o on a day on which the New York Stock Exchange is closed.
If the Primary Annuitant dies prior to the Primary Annuitant's 75th
birthday, the Death Benefit will not be less than:
o total Net Purchase Payments paid under the contract; less
o any amounts withdrawn under Section 4.5.
As of the effective date, the Accumulation Value of the contract will be
set at an amount equal to the Death Benefit.
SECTION 6. BENEFICIARIES AND CONTINGENT ANNUITANTS
6.1 NAMING AND CHANGING OF BENEFICIARIES
FOR MATURITY BENEFITS OR WITHDRAWALS BY OWNER. The Owner may name and change the
beneficiaries of maturity benefits or withdrawal amounts before the Maturity
Date. If no beneficiary is named by the Owner, the Owner will be the direct
beneficiary.
<PAGE> 16
FOR DEATH BENEFITS BY OWNER. The Owner may name and change the beneficiaries of
the Death Benefits while the Annuitant is living. If no such beneficiary is
named by the Owner, the Owner or the Owner's estate will be the direct
beneficiary.
FOR MATURITY OR DEATH BENEFITS OR WITHDRAWAL AMOUNTS BY SPOUSE (MARITAL
DEDUCTION PROVISION).
o 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.
o TO WHOM SPOUSE CAN APPOINT. Under this power, the spouse can appoint:
a. to the estate of the spouse; or
b. to any other person.
o 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 changing of a beneficiary will be effective 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.
6.2 SUCCESSION IN INTEREST OF BENEFICIARIES
The rights and benefits that a beneficiary becomes entitled to under the
contract are shared equally among all surviving direct beneficiaries, if any,
otherwise equally among all surviving contingent beneficiaries, if any,
otherwise to the Owner or the Owner's Estate.
6.3 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
<PAGE> 17
Company will not be charged with notice of a change of trustee unless written
evidence of the change is received at the Home Office.
6.4 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.
6.5 NAMING AND CHANGING A CONTINGENT ANNUITANT
The Owner may name and change a Contingent Annuitant while the Annuitant is
living.
If the Annuitant was not the Owner immediately prior to the Annuitant's
death, the Owner may name and change a Contingent Annuitant during the first 60
days after the date on which proof of death of the Annuitant is received at the
Home Office. A change made during this 60 days cannot be revoked. If no one is
named as Contingent Annuitant by the end of the 60 day time period, the Company
will pay the Accumulation Value to the Owner. The cash value of any amount
distributed will be the Accumulation Value withdrawn as of the date of
withdrawal as determined in Section 4.6.
A naming or changing of a Contingent Annuitant will be effective on receipt
at the Home Office of a written request that is acceptable to the Company.
SECTION 7. CHARGES AND FEES
7.1 PREMIUM TAXES
The Company may deduct Premium Taxes incurred from Purchase Payments
received.
7.2 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 Contract Fee deducted from the Guaranteed Interest Fund will not exceed
the sum of:
o 10% of the gross purchase payments applied to the Guaranteed Interest
Fund during the contract year; and
o interest in excess of an annual effective interest rate of 3% credited
to the Guaranteed Interest Fund during the contract year.
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.
<PAGE> 18
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.
If the contract has more than one Owner, contract rights may be exercised
only by authorization of all Owners. Upon the death of an Owner, ownership
rights of all Owners terminate if the deceased Owner was the Annuitant.
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 NAMING AND CHANGING A SUCCESSOR OWNER
An Owner may name and change a Successor Owner. Naming or changing a
Successor Owner will be effective on receipt at the Home Office of a written
request for such change that is acceptable to the Company. A Successor Owner
succeeds to the interests of an Owner only if the Owner was not the Annuitant at
the time of the Owner's death.
8.4 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.
8.5 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 a Portfolio, the Company will vote
shares held by the Separate Account in accordance with the instructions received
from the Owners of Accumulation Units or, after payments have commenced under a
variable payment plan, from the beneficiaries receiving payments under those
payment plans. Each Owner or beneficiary will receive:
<PAGE> 19
o periodic reports relating to the Portfolio;
o proxy material;
o a form with which to give voting instructions; and
o 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 beneficiary 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
<PAGE> 20
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.
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.
Since this policy is not expected to contribute to divisible surplus, it is
not expected that any dividends will be paid.
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 MISSTATEMENTS
If the age 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. If any amounts have been overpaid by the Company due to a misstatement of
age, the amount of the overpayment may be deducted from payments to be made by
the Company. If any amounts have been underpaid by the Company due to a
misstatement of age, the amount of the underpayment will be paid.
9.8 ENTIRE CONTRACT; CHANGES
This contract with any amendments and additional benefits and 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.
<PAGE> 21
9.9 TERMINATION OF CONTRACT
The Company may terminate the contract and pay the Owner the Accumulation
Value of the contract and be released of any further obligation if:
o 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
o on the Maturity Date the Accumulation Value of the contract is less
than the Minimum Accumulation Value shown on page 4 or would provide
an initial monthly income 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:
o a variable payment plan;
o a fixed payment plan; or
o in cash.
The provisions and rates 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 an initial monthly income of at least
the minimum payment amount shown on page 4.
10.2 DEATH BENEFIT
A beneficiary entitled to the Death Benefit upon the death of an Annuitant
may elect to receive the Accumulation Value under a payment plan or in cash
provided no payment plan was elected by the Owner. The cash value of any amount
distributed will be the Accumulation Value withdrawn as of the date of
withdrawal as determined in Section 4.6.
10.3 EFFECTIVE DATE FOR PAYMENT PLAN
A payment plan that is elected for maturity benefits will take effect on
the Maturity Date.
If the Annuitant is an Owner, a payment plan that is elected by the Owner
for the Death Benefit will take effect on the date proof of death of the
Annuitant is received at the Home Office.
<PAGE> 22
In all other cases, a payment plan that is elected will take effect:
o on the date the election is received at the Home Office; or
o 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.
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 10 to 30 years during the first
five contract years and over a specified period of 5 to 30 years beginning with
the sixth contract year.
LIFE INCOME PLANS
o 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.
o 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.
o OTHER SELECTIONS. The Company may offer other selections under the
Life Income Plans.
o 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.
<PAGE> 23
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:
o 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
o 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:
o the Annuity Unit value on the immediately preceding Valuation Date;
o 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
o 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.
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 effective date of the variable payment plan. The number
of Annuity Units will not be changed by any subsequent change in the dollar
value of Annuity Units.
<PAGE> 24
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:
o the fifth Valuation Date prior to the payment due date if the payment
due date is a Valuation Date; or
o the sixth Valuation Date prior to the payment due date if the payment
due date is not a Valuation Date.
11.5 TRANSFERS INVOLVING VARIABLE PAYMENT PLANS
A beneficiary 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 may 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 a variable payment plan or within 90 days from
the effective date of the last transfer.
A beneficiary receiving payments under a variable payment plan may 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:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o 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. 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.
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
<PAGE> 25
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 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:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o on a day on which the New York Stock Exchange is closed.
11.7 NAMING AND CHANGING OF BENEFICIARIES UNDER PAYMENT PLANS
FOR PAYMENT PLANS ELECTED BY OWNER. If the Owner of the contract elected a
payment plan, a direct beneficiary may name and change the contingent
beneficiaries and further payees of the direct beneficiary's share of the
benefits only if:
o the direct beneficiary was the Owner of the contract; or
o no contingent beneficiary or further payee of that share is living.
FOR PAYMENT PLANS ELECTED BY DIRECT BENEFICIARY. If the direct beneficiary
elected the payment plan, the direct beneficiary may name and change the
contingent beneficiaries and further payees of the direct beneficiary's share of
the benefits.
11.8 SUCCESSION IN INTEREST OF BENEFICIARIES UNDER PAYMENT PLANS
DIRECT BENEFICIARY. Amounts payable under a payment plan will be payable to the
direct beneficiary.
CONTINGENT BENEFICIARIES. At the death of the direct beneficiary, 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 direct and contingent beneficiaries, the
present value of any unpaid payments under a payment plan, will be paid in one
sum:
o in equal shares to the further payees who survive and receive payment;
or
o if no further payees survive and receive payment, to the estate of the
last to die of all beneficiaries.
11.9 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
<PAGE> 26
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
adjusted age of any individual upon whose life payments depend. The adjusted age
is:
o the age on the birthday that is nearest to the date on which the
payment plan takes effect; plus
o 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 AGE CONTRACT AGE
YEARS ADJUST- YEARS ADJUST-
ELAPSED MENT ELAPSED MENT
- ------- ---- ------- ----
<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
o 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.
o LIFE INCOME PLANS (OPTION C OR E). Payments will be based on rates
declared by the Company that 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.
<PAGE> 27
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.
<PAGE> 28
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN
INSTALLMENT INCOME PLANS (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>
<PAGE> 29
GUARANTEED FIXED PAYMENT PLANS
INSTALLMENT INCOME PLANS (OPTION B)
<TABLE>
<CAPTION>
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT
<S> <C> <C> <C> <C> <C>
1 $84.09 11 $ 8.42 21 $ 4.85
2 42.46 12 7.80 22 4.67
3 28.59 13 7.26 23 4.51
4 21.65 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>
<PAGE> 30
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)
SINGLE LIFE MONTHLY PAYMENTS
<TABLE>
<CAPTION>
CHOSEN PERIOD (YEARS)
ADJUSTED
AGE* ZERO 10 20
---- ---- -- --
<S> <C> <C> <C>
55 $ 4.11 $ 4.09 $ 4.01
56 4.18 4.15 4.07
57 4.25 4.22 4.13
58 4.33 4.29 4.18
59 4.40 4.36 4.24
60 4.49 4.45 4.30
61 4.58 4.53 4.37
62 4.68 4.61 4.43
63 4.77 4.71 4.50
64 4.89 4.81 4.57
65 5.01 4.92 4.64
66 5.13 5.03 4.72
67 5.26 5.15 4.78
68 5.41 5.27 4.85
69 5.57 5.40 4.93
70 5.74 5.55 5.00
71 5.92 5.69 5.07
72 6.12 5.84 5.13
73 6.33 6.00 5.20
74 6.55 6.17 5.26
75 6.79 6.35 5.32
76 7.06 6.53 5.37
77 7.34 6.72 5.41
78 7.65 6.90 5.46
79 7.98 7.10 5.50
80 8.34 7.30 5.53
81 8.73 7.49 5.56
82 9.15 7.68 5.59
83 9.60 7.88 5.61
84 10.09 8.07 5.62
85 and over 10.61 8.24 5.63
</TABLE>
<PAGE> 31
LIFE INCOME PLAN (OPTION E)
JOINT AND SURVIVOR MONTHLY PAYMENTS (with 10 years certain)
<TABLE>
<CAPTION>
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 $ 3.75
60 3.83 $ 4.02
65 3.90 4.13 $ 4.39
70 3.94 4.22 4.54 $ 4.89
75 3.98 4.28 4.65 5.10 $ 5.59
80 4.00 4.32 4.73 5.24 5.86 $ 6.51
85 and over 4.01 4.34 4.77 5.34 6.04 6.84 $ 7.58
</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
$7.58.
Monthly payment rates are based on an Assumed Investment Rate of 3 1/2% and the
1983 Table A with Projection Scale G.
<PAGE> 32
AMENDMENT OF CONTRACT TO QUALIFY AS ANNUITY
AS OF THE ISSUE DATE, THIS AMENDMENT IS MADE A PART OF THIS ANNUITY
CONTRACT ISSUED BY THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
NOTWITHSTANDING ANY OTHER SPECIFIC PROVISIONS IN THIS CONTRACT TO THE CONTRARY
AND SUBJECT TO THE TAX QUALIFICATION PROVISIONS HEREIN, THIS CONTRACT IS AMENDED
TO RESTRICT THE EXERCISE OF THE RIGHTS OF THE OWNER OR ANNUITANT AND ANY
BENEFICIARY AS FOLLOWS:
1. Required Distributions.
a. If any Owner dies on or after the annuity starting date and before
entire interest in this contract has been distributed, the remaining
portion of such interest shall be distributed at least as rapidly as
under the method of distribution being used as of the date of the
Owner's death.
b. If any Owner dies before the annuity starting date, the entire
interest in this contract shall be distributed within five years after
the Owner's death.
c. For purposes of paragraphs a and b, if any portion of the Owner's
interest in this contract is payable to or for the benefit of a
designated beneficiary and such designated beneficiary timely elects
to have such portion distributed over a period not exceeding the life
or life expectancy of such designated beneficiary in distributions
that begin within one year of the Owner's death, such portion shall be
treated as distributed entirely on the date such distributions begin.
d. For purposes of paragraphs a and b, if any portion of the Owner's
interest in the contract is payable to or for the benefit of a
designated beneficiary who is the Owner's surviving spouse , such
spouse shall be treated as the Owner and, absent a contrary
designation by such spouse, as a contingent annuitant with respect to
such portion.
e. For purposes of paragraphs a. and b., if the Owner is not an
individual, the primary annuitant under the contract shall be treated
as the Owner, any change in the primary annuitant shall be treated as
the death of the Owner and any designation of a beneficiary by the
Owner shall be deemed to be a designation of the same beneficiary by
the primary annuitant. The primary annuitant is the individual, the
events in the life of whom are of primary importance in affecting the
timing or amount of the payout under the contract.
<PAGE> 33
f. For purposes of this section, a "designated beneficiary" is any
individual designated by the Owner as a beneficiary, including a
co-owner or successor owner who succeeds to any portion of a deceased
owner's interest upon death.
g. For purposes of this section, "annuity starting date" is the first day
of the first period for which periodic annuity payments are made under
the contract.
2. Tax Qualification.
This contract is intended to qualify as an annuity contract for federal
income tax purposes. To that end, the provisions of this contract,
including any amendment, endorsement or rider, are to be interpreted to
ensure or maintain any such tax qualification, despite any other provision
to the contrary (including the provisions of any amendment, endorsement or
rider that do not expressly override these tax qualification provisions).
The Company reserves the right to amend this contract at any time to
reflect any clarification that may be needed or may be appropriate to
maintain any such tax qualification or to conform the contract to any
applicable changes in the tax qualification requirements.
(signed)
SECRETARY
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
RRV 313 (032000)
<PAGE> 34
IT IS RECOMMENDED THAT YOU ...
read your contract.
notify your agent or the Company at 720 East Wisconsin Avenue, Milwaukee, WI
53202, of an address change.
call your 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.
MASON STREET VARIABLE ANNUITY
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.
RR.V.B.MSNST.(032000)
<PAGE> 1
Exhibit B(4)(b)
<TABLE>
<CAPTION>
CONTRACT AGE CONTRACT AGE
YEARS ADJUST- YEARS ADJUST-
ELAPSED MENT ELAPSED MENT
- ---------- ---------- ---------- ----------
<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
o 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.
o LIFE INCOME PLANS (OPTION C OR E). Payments will be based on rates declared
by the Company that 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.
<PAGE> 2
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1,000 BENEFITS
FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN
INSTALLMENT INCOME PLANS (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 PLANS (OPTION B)
<TABLE>
<CAPTION>
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
1 $84.09 11 $ 8.42 21 $ 4.85
2 42.46 12 7.80 22 4.67
3 28.59 13 7.26 23 4.51
4 21.65 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>
<PAGE> 3
PAYMENT RATE TABLES
MONTHLY INCOME PAYMENTS PER $1000 BENEFITS
GUARANTEED FIXED PAYMENT OR FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN
LIFE INCOME PLAN (OPTION C)
SINGLE LIFE MONTHLY PAYMENTS
<TABLE>
<CAPTION>
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 $ 4.41 $ 4.36 $ 4.23 55 $ 4.04 $ 4.02 $ 3.96
56 4.49 4.44 4.29 56 4.10 4.08 4.01
57 4.58 4.52 4.35 57 4.17 4.14 4.07
58 4.67 4.60 4.41 58 4.24 4.21 4.12
59 4.77 4.69 4.47 59 4.31 4.28 4.18
60 4.87 4.79 4.54 60 4.39 4.36 4.24
61 4.98 4.89 4.60 61 4.48 4.44 4.31
62 5.10 4.99 4.67 62 4.57 4.52 4.37
63 5.23 5.11 4.74 63 4.66 4.61 4.44
64 5.36 5.22 4.81 64 4.77 4.71 4.51
65 5.51 5.35 4.87 65 4.88 4.81 4.58
66 5.67 5.47 4.94 66 5.00 4.92 4.66
67 5.84 5.61 5.00 67 5.12 5.03 4.73
68 6.02 5.75 5.07 68 5.26 5.15 4.80
69 6.21 5.89 5.13 69 5.41 5.28 4.88
70 6.41 6.05 5.19 70 5.57 5.42 4.95
71 6.63 6.20 5.25 71 5.74 5.56 5.02
72 6.86 6.36 5.30 72 5.93 5.71 5.09
73 7.11 6.53 5.35 73 6.13 5.87 5.16
74 7.37 6.70 5.39 74 6.34 6.04 5.23
75 7.65 6.87 5.44 75 6.58 6.22 5.29
76 7.96 7.05 5.47 76 6.83 6.40 5.34
77 8.28 7.23 5.51 77 7.11 6.59 5.39
78 8.63 7.40 5.54 78 7.40 6.78 5.44
79 9.01 7.58 5.56 79 7.72 6.98 5.48
80 9.41 7.76 5.59 80 8.07 7.18 5.52
81 9.84 7.93 5.61 81 8.45 7.38 5.55
82 10.30 8.10 5.62 82 8.86 7.58 5.58
83 10.79 8.27 5.63 83 9.30 7.78 5.60
84 11.31 8.42 5.64 84 9.78 7.98 5.62
85 and over 11.87 8.57 5.65 85 and over 10.30 8.16 5.63
</TABLE>
<PAGE> 4
LIFE INCOME PLAN (OPTION E)
JOINT AND SURVIVOR MONTHLY PAYMENTS (with 10 years certain)
<TABLE>
<CAPTION>
MALE FEMALE ADJUSTED AGE*
ADJUSTED
AGE* 55 60 65 70 75 80 85 and over
-------- ------- ------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
55 $ 3.75 $ 3.89 $ 4.02 $ 4.14 $ 4.23 $ 4.29 $ 4.33
60 3.83 4.02 4.21 4.39 4.54 4.65 4.73
65 3.90 4.13 4.39 4.65 4.89 5.09 5.22
70 3.94 4.22 4.54 4.89 5.26 5.58 5.81
75 3.98 4.28 4.65 5.10 5.59 6.07 6.45
80 4.00 4.32 4.73 5.24 5.86 6.51 7.07
85 and over 4.01 4.34 4.77 5.34 6.04 6.84 7.58
</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
$7.58.
Monthly payment rates are based on an Assumed Investment Rate of 3 1/2% and the
1983 Table A with Projection Scale G.
<PAGE> 1
EXHIBIT B(4)(c)
ENHANCED DEATH BENEFIT
As of the Issue Date, this amendment is made part of this annuity contract
issued by The Northwestern Mutual Life Insurance Company. In the case of a
conflict with any provisions in the contract, the provisions of this amendment
will control.
SECTION 5.2 AND SECTION 5.3 ARE AMENDED IN THEIR ENTIRETY TO READ AS FOLLOWS:
SECTION 5.2 DEATH BENEFIT IF PRIMARY ANNUITANT IS AN OWNER
If the Primary Annuitant is an Owner, the beneficiary becomes entitled to the
Death Benefit upon receipt at the Home Office of satisfactory proof of the death
of the Primary Annuitant before the Maturity Date. The Death Benefit will be the
greater of:
o the Accumulation Value of the contract on the effective date; or
o the Enhanced Death Benefit.
As of the effective date, the Accumulation Value of the contract will be set at
an amount equal to the Death Benefit. Unless a payment plan was elected by the
Owner, the beneficiary becomes the Owner and Annuitant of the contract. However,
if the beneficiary is not a natural person and no payment plan was elected by
the Owner, the beneficiary may select a natural person to be the Annuitant. If a
natural person is not selected to be the Annuitant within 60 days of the date on
which proof of death of the Annuitant is received at the Home Office, the
Accumulation Value will be distributed to the beneficiary.
If a beneficiary becomes entitled to the Death Benefit in an amount less than
the Minimum Accumulation Value shown on page 4, the Accumulation Value will be
distributed to the beneficiary.
The cash value of any amount distributed will be the Accumulation Value
withdrawn as of the date of withdrawal as determined in Section 4.6.
ENHANCED DEATH BENEFIT. Prior to the first contract anniversary, the Enhanced
Death Benefit will equal the total Purchase Payments paid under the contract
less any amounts withdrawn under Section 4.5.
On the first contract anniversary and on each subsequent contract anniversary
prior to the Primary Annuitant's 80th birthday, the Enhanced Death Benefit will
equal the greater of:
o the Accumulation Value of the contract on that contract anniversary;
or
o the Enhanced Death Benefit on the most recent Valuation Date prior to
that contract anniversary.
On any other Valuation Date prior to the Primary Annuitant's 80th birthday, the
Enhanced Death Benefit will be equal to the Enhanced Death Benefit on the most
recent contract anniversary,
<PAGE> 2
increased by any Purchase Payments paid since that contract anniversary and
decreased by any amounts withdrawn under Section 4.5 since that contract
anniversary.
On any Valuation Date on or after the Primary Annuitant's 80th birthday, the
Enhanced Death Benefit will equal the Enhanced Death Benefit on the contract
anniversary immediately prior to the Primary Annuitant's 80th birthday increased
by any Purchase Payments paid since that contract anniversary and decreased by
any amounts withdrawn under Section 4.5 since that contract anniversary.
ENHANCED DEATH BENEFIT CHARGE. On each contract anniversary while this amendment
is in effect, a charge for the Enhanced Death Benefit will be deducted from the
Investment Accounts in proportion to the Accumulation Value of the Investment
Accounts. The charge is shown on page 4.
EFFECTIVE DATE. The effective date is the date on which proof of death is
received at the Home Office. However, the effective date will be the next
following Valuation Date if the proof of death is received at the Home Office
either:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o on a day on which the New York Stock Exchange is closed.
TERMINATION OF ENHANCED DEATH BENEFIT. This amendment will remain in effect
until Maturity unless the Owner requests that it be removed, the contract
terminates, or the Primary Annuitant dies. Once the amendment is removed, it
cannot be added again. The provisions of Section 5.2 in the contract are
applicable if this amendment terminates.
SECTION 5.3 DEATH BENEFIT IF PRIMARY ANNUITANT IS NOT AN OWNER
If the Primary Annuitant is not an Owner, upon the death of the Primary
Annuitant, the contract continues with the Contingent Annuitant (Section 6.5) as
the new Annuitant. The Death Benefit will be the greater of:
o the Accumulation Value of the contract on the effective date; or
o the Enhanced Death Benefit.
As of the effective date, the Accumulation Value of the contract will be set at
an amount equal to the Death Benefit.
ENHANCED DEATH BENEFIT. Prior to the first contract anniversary, the Enhanced
Death Benefit will equal the total Purchase Payments paid under the contract
less any amounts withdrawn under Section 4.5.
On the first contract anniversary and on each subsequent contract anniversary
prior to the Primary Annuitant's 80th birthday, the Enhanced Death Benefit will
equal the greater of:
o the Accumulation Value of the contract on that contract anniversary;
or
o the Enhanced Death Benefit on the most recent Valuation Date prior to
that contract anniversary.
<PAGE> 3
On any other Valuation Date prior to the Primary Annuitant's 80th birthday, the
Enhanced Death Benefit will be equal to the Enhanced Death Benefit on the most
recent contract anniversary, increased by any Purchase Payments paid since that
contract anniversary and decreased by any amounts withdrawn under Section 4.5
since that contract anniversary.
On any Valuation Date on or after the Primary Annuitant's 80th birthday, the
Enhanced Death Benefit will equal the Enhanced Death Benefit on the contract
anniversary immediately prior to the Primary Annuitant's 80th birthday increased
by any Purchase Payments paid since that contract anniversary and decreased by
any amounts withdrawn under Section 4.5 since that contract anniversary.
ENHANCED DEATH BENEFIT CHARGE. On each contract anniversary while this amendment
is in effect, a charge for the Enhanced Death Benefit will be deducted from the
Investment Accounts in proportion to the Accumulation Value of the Investment
Accounts. The charge is shown on page 4.
EFFECTIVE DATE. The effective date is the date on which proof of death is
received at the Home Office. However, the effective date will be the next
following Valuation Date if the proof of death is received at the Home Office
either:
o on a Valuation Date after the close of trading on the New York Stock
Exchange; or
o on a day on which the New York Stock Exchange is closed.
TERMINATION OF ENHANCED DEATH BENEFIT. This amendment will remain in effect
until Maturity unless the Owner requests that it be removed, the contract
terminates, or the Primary Annuitant dies. Once the amendment is removed it
cannot be added again. The provisions of Section 5.3 in the contract are
applicable if this amendment terminates.
(signed)
Secretary
The Northwestern Mutual Life Insurance Company
<PAGE> 1
EXHIBIT B(4)(d)
WAIVER OF WITHDRAWAL CHARGE
As of the Issue Date, this amendment is made part of this annuity contract
issued by The Northwestern Mutual Life Insurance Company. In the case of a
conflict with any provisions in the contract, the provisions of this amendment
will control. The following provisions are hereby added to the contract:
1. TERMINAL ILLNESS BENEFIT
Withdrawal charges will be waived if the Primary Annuitant has a terminal
illness.
A terminal illness is an illness that is expected to result in the death of
the Primary Annuitant in 12 months or less. An Owner requesting waiver of
withdrawal charges is required to provide proof, satisfactory to the
Company, of the Primary Annuitant's terminal illness. The proof must
include a certification from a licensed physician stating that the Primary
Annuitant's life expectancy is 12 months or less. No withdrawal charges
will be waived if the determination that the Primary Annuitant's life
expectancy is 12 months or less was first made prior to the Issue Date.
No Purchase Payments can be made to the contract once proof of terminal illness
is provided to the Company.
2. NURSING HOME BENEFIT
Withdrawal charges will be waived after the first Contract Year if:
o the Primary Annuitant is confined, on a 24 hour per day basis, to a
Nursing Home or Hospital for a period of at least 90 consecutive days;
and
o such confinement is medically necessary.
A Nursing Home is a facility that is licensed by the jurisdiction in which
it is located to provide nursing care (skilled, intermediate or custodial).
A Hospital is a facility that is licensed as a hospital by the jurisdiction
in which it is located, and operates primarily for the diagnosis and
treatment of and medical or surgical care of sick or injured persons.
An Owner requesting waiver of withdrawal charges is required to provide
proof, satisfactory to the Company, of the Primary Annuitant's confinement.
The proof must include a certification from a licensed physician that the
confinement is medically necessary. No withdrawal charges will be waived if
the confinement began before the Issue Date. A request for waiver of
withdrawal charges must be made no later than 90 days following the date
the Primary Annuitant's confinement ended.
<PAGE> 2
No Purchase Payments can be made to the contract once proof of confinement
is provided to the Company.
(Signed)
Secretary, The Northwestern Mutual Life
Insurance Company
<PAGE> 1
EXHIBIT B(5)
MASON STREET
VARIABLE ANNUITY
APPLICATION
Client Account Number Contract Number
================================================================================
1. OTHER POLICIES
================================================================================
Has a Northwestern Mutual Policy ever been issued on the annuitant's life?
[ ] YES, THE LAST POLICY NUMBER IS:______________________ [ ] NO
================================================================================
2. ANNUITANT
================================================================================
Name: First, MI, Last Sex Birthdate: mm-dd-yyyy
---------------------------------------------------------------------------
Street Address City, State, Zip
---------------------------------------------------------------------------
Country, if other than US Taxpayer ID Number E-mail Address
---------------------------------------------------------------------------
================================================================================
3. MARKET
================================================================================
Select one:
[ ] NON-TAX QUALIFIED
[ ] NET INCOME MAKEUP CHARITABLE REMAINDER UNITRUST (NIM-CRUT)
[ ] OTHER Market
------------------------------------------------------------
================================================================================
4. OWNER
================================================================================
A minor owner limits future contract actions.
Select one:
[ ] ANNUITANT )
) Go to section 5.
[ ] SEE ATTACHMENT )
[ ] UGMA/UTMA - CUSTODIAN IS THE OWNER FOR )
THE BENEFIT OF MINOR. )Enter information below.
[ ] CORPORATION OR TRUST )
[ ] OTHER )
NAME: First, MI, Last/ Corporation/ Trust Sex Birthdate: mm-dd-yyyy
---------------------------------------------------------------------------
Street Address City, State, Zip
---------------------------------------------------------------------------
Relationship to Annuitant Taxpayer ID Number E-mail Address
---------------------------------------------------------------------------
Date of Trust Name of Trustees
---------------------------------------------------------------------------
Product of The Northwestern Mutual Life Insurance Company
<PAGE> 2
================================================================================
5. BENEFICIARY
================================================================================
Cannot be annuitant unless "Estate of Annuitant" named.
[ ] SEE ATTACHMENT - Go to section 6.
DIRECT BENEFICIARY: [ ] OWNER [ ] OTHER - Enter information below:
Name Taxpayer ID Number (Optional) Relationship %
---------------------------------------------------------------------------
Name Taxpayer ID Number (Optional) Relationship %
---------------------------------------------------------------------------
CONTINGENT BENEFICIARY:
Name Taxpayer ID Number (Optional) Relationship %
---------------------------------------------------------------------------
Name Taxpayer ID Number (Optional) Relationship %
---------------------------------------------------------------------------
[ ] And all (other) children of the Annuitant.
================================================================================
6. REPLACEMENT
================================================================================
As a result of this purchase, will the values or benefits of any other life
insurance policy or annuity contract, on any life, be affected in any way?
[ ] YES [ ] NO
Note to Agent: Values or benefits are affected if any question on the
Definition of Replacement Supplement could be answered "yes."
Will this annuity:
A. Replace Northwestern Mutual Life? [ ] YES [ ] NO
B. Replace other companies? [ ] YES [ ] NO
C. Result in 1035 exchange? [ ] YES [ ] NO
================================================================================
7. OPTIONAL ENHANCED DEATH BENEFIT
================================================================================
[ ] I ELECT THE ENHANCED DEATH BENEFIT RIDER.
There is an additional charge. Available to age 65. If this rider is not
elected, the standard death benefit will apply. See prospectus for more
information.
<PAGE> 3
================================================================================
8. PAYMENT ALLOCATION AND OPTIONS
================================================================================
A. PAYMENT ALLOCATION
You must indicate payment allocations. Use whole percentages. Total must
equal 100%.
NORTHWESTERN MUTUAL SERIES FUND, INC.
%
_____ Select Bond
_____ International Equity
_____ Money Market
_____ Balanced
_____ Index 500 Stock
_____ Aggressive Growth Stock
_____ High Yield Bond
_____ Growth Stock
_____ Growth and Income Stock
_____ Index 400 Stock
_____ Small Cap Growth Stock
RUSSELL INSURANCE FUNDS
%
_____ Multi-Style Equity
_____ Aggressive Equity
_____ Non-US
_____ Real Estate Securities
_____ Core Bond
FIXED FUND
%
_____ Guaranteed Interest
Fund availability subject to state approval.
B. OPTIONS
You may select one of the following options:
[ ] AUTOMATIC DOLLAR-COST AVERAGING
Amount
I authorize $___________ to be transferred from the Money Market Fund:
[ ] MONTHLY [ ] QUARTERLY
to the following funds:
$ Fund Name
_____ _____________________________________
_____ _____________________________________
_____ _____________________________________
_____ _____________________________________
_____ _____________________________________
_____ _____________________________________
[ ] PORTFOLIO RE-BALANCING
Minimum contract value $10,000. Re-balancing transfers are not made
to or from the Guaranteed Interest Fund.
I authorize re-balancing transfers to be made according to the elected
Payment Allocations:
[ ] MONTHLY [ ] QUARTERLY
[ ] SEMI-ANNUALLY [ ] ANNUALLY
<PAGE> 4
================================================================================
9. INITIAL PAYMENT
================================================================================
METHOD OF PAYMENT
Minimum initial purchase payment is $50,000.
Select one:
Amount
[ ] CHECK ATTACHED $____________
Estimated Amount
[ ] CHECK COMING FROM ANOTHER INSTITUTION $__________
================================================================================
SIGNATURES
================================================================================
THE ANNUITANT CONSENTS TO THIS APPLICATION.
EACH PERSON SIGNING THIS APPLICATION DECLARES THAT THE ANSWERS AND STATEMENTS
MADE IN THIS APPLICATION ARE CORRECTLY RECORDED, COMPLETE AND TRUE TO THE BEST
OF HIS OR HER KNOWLEDGE AND BELIEF.
IT IS UNDERSTOOD AND AGREED THAT:
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 contract 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.
The first purchase payment will be credited the valuation date coincident with
or next following the date both the application and the purchase payment are
received at Northwestern Mutual Life.
If an IRA is applied for, the Applicant and/or Annuitant have received and
reviewed the appropriate IRA disclosure statements.
No agent is authorized to make or alter contracts or to waive the rights or
requirements of Northwestern Mutual Life.
I acknowledge receipt of the Prospectus 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
- --------------------------------------------------------------------
Signature of Applicant (Indicate relationship below if applicable)
[ ] Trustee
X
- --------------------------------------------------------------------
Signature of Annuitant (if other than Applicant)
X
- --------------------------------------------------------------------
Signature of Licensed Agent
Date Signed at: City County State
- --------------------------------------------------------------------------------
<PAGE> 5
================================================================================
AGENT'S CERTIFICATE
================================================================================
Annuitant Name: First, MI, Last
1. To the best of your knowledge will the annuity applied for replace any life
insurance or annuity contract in this company or elsewhere? [ ] YES [ ] NO
Date of Delivery
2. On ________________ the Account B Prospectus dated _____________ was
delivered.
3. Was any part of this application translated?
[ ] YES, PLEASE EXPLAIN: [ ] NO
================================================================================
CERTIFICATION:
================================================================================
I certify that to the best of my knowledge I have presented to Northwestern
Mutual Life all pertinent facts, have asked all questions and have completely
and correctly recorded the Applicant's and Annuitant's answers in accordance
with the instructions. I know nothing unfavorable about the Annuitant that is
not stated in the application or accompanying letter. I further certify that I
have reasonable grounds for believing the purchase of the annuity applied for is
suitable as an investment for the Annuitant based on the information furnished
by the Applicant and Annuitant and contained herein.
I certify that a current Prospectus was delivered and that no written sales
materials other than those furnished by the Northwestern Mutual Life were used.
Print Name
X
- --------------------------------------------------------------------------------
Signature of Agent
Agent Number Baird Rep Number Agent Phone Number
- --------------------------------------------------------------------------------
Primary or Secondary If secondary contract,
Contract (P or S) secondary Appt. Agt. No. General Agent's Number
- --------------------------------------------------------------------------------
Print Name
X
- --------------------------------------------------------------------------------
Baird Branch Manager Signature
<PAGE> 6
================================================================================
DEMOGRAPHICS
================================================================================
ANNUITANT'S EDUCATION
[ ] Some Education [ ] High School [ ] Associate Degree [ ] Some College
[ ] Bachelors [ ] Masters [ ] Attorney at Law [ ] Doctorate
NUMBER OF CHILDREN
Number
___________ [ ] None
<TABLE>
<CAPTION>
OCCUPATION INDUSTRY SOURCE OF APPLICANT
<S> <C> <C>
[ ] Business Owner [ ] Agriculture, Forestry & Fishing [ ] Agent's Own Policyowner
[ ] Clerical [ ] Construction [ ] Orphan Policyowner
[ ] Consultant [ ] Finance, Insurance & Real Estate [ ] Referred Lead
[ ] Craftsman [ ] Manufacturing [ ] Acquaintance
[ ] Homemaker [ ] Mining [ ] Newcomer Service
[ ] Legal [ ] Nonclassifiable Establishments [ ] Cold Canvass
[ ] Managerial/Executive [ ] Public Administration [ ] Lead Letter Reply
[ ] Medical [ ] Retail Trade [ ] Published Sources
[ ] Professional [ ] Services [ ] Walk-in
[ ] Sales [ ] Transportation, Communication & Utilities [ ] Family member or yourself
[ ] Service Worker [ ] Wholesale Trade [ ] Other
[ ] Technical _____________________________
</TABLE>
================================================================================
CONTRACT DELIVERY INSTRUCTIONS
================================================================================
Deliver contract package to the servicing agent at the: [ ] GA office
[ ] DA office
[ ] Agent's own office
