As filed with the Securities and Exchange Commission
on April 18, 1996
Registration No. 33-19718
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 14
TO
FORM S-6
CENTURY VARIABLE ACCOUNT
(Exact Name of Trust)
CENTURY LIFE OF AMERICA
2000 Heritage Way
Waverly, Iowa 50677
(319) 352-4090, ext. 2157
(Name, Address and Telephone Number of Depositor)
Name and complete address of agent for
service:
Barbara L. Secor, Esq.
Century Life of America
2000 Heritage Way
Waverly, IA 50677
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|X| on May 1, 1996 pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(i) of Rule 485
|_| on pursuant to paragraph (a)(i) of Rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on pursuant to paragraph (a)(ii) of Rule 485
Pursuant to Rule 24f-2, Registrant registered an indefinite amount of securities
under the Securities Act of 1933. The Rule 24f-2 Notice for Registrant's most
recent fiscal year was filed on February 9, 1996.
The index to attached exhibits is found following the signature pages and
consents after page II-4.
===============================================================================
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 Item Caption in Prospectus
1 . . . . . . . . . . . . . . .. . . . .. The Company Separate Account
2 . . . . . . . . . . . . . . . . . . . . The Company
3 . . . . . . . . . . . . . . . . . . . . The Company
4 . . . . . . . . . . . . . . . . . . . . Distribution of the Policies
5 . . . . . . . . . . . . . . . . . . . . The Separate Account
6(a) . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . Not Applicable
9 . . . . . . . . . . . . . . . . . . . . Legal Proceedings
10 . . . . . . . . . . . . . . . . . . . . The Policy
11 . . . . . . . . . . . . . . . . . . . . The Funds
12 . . . . . . . . . . . . . . . . . . . . The Funds
13 . . . . . . . . . . . . . . . . . . . . Charges and Deductions
14 . . . . . . . . . . . . . . . . . . . . The Policy
15 . . . . . . . . . . . . . . . . . . . . The Separate Account
16 . . . . . . . . . . . . . . . . . . . . Policy Values
17 . . . . . . . . . . . . . . . . . . . . The Policy-Owner's Rights
18 . . . . . . . . . . . . . . . . . . . . The Policy
19 . . . . . . . . . . . . . . . . . . . . Not Applicable
20 . . . . . . . . . . . . . . . . . . . . Not Applicable
21 . . . . . . . . . . . . . . . . . . . . Not Applicable
22 . . . . . . . . . . . . . . . . . . . . Not Applicable
23 . . . . . . . . . . . . . . . . . . . . Not Applicable
24 . . . . . . . . . . . . . . . . . . . . Not Applicable
25 . . . . . . . . . . . . . . . . . . . . The Company
26 . . . . . . . . . . . . . . . . . . . . Charges and Deductions
27 . . . . . . . . . . . . . . . . . . . . The Company
28 . . . . . . . . . . . . . . . . . . . . The Company, Century Life of America
Directors and Executive Officers
29 . . . . . . . . . . . . . . . . . . . . The Company
30 . . . . . . . . . . . . . . . . . . . . The Company
31 . . . . . . . . . . . . . . . . . . . . Not Applicable
32 . . . . . . . . . . . . . . . . . . . . Not Applicable
33 . . . . . . . . . . . . . . . . . . . . Not Applicable
34 . . . . . . . . . . . . . . . . . . . . Not Applicable
35 . . . . . . . . . . . . . . . . . . . . Not Applicable
37 . . . . . . . . . . . . . . . . . . . . Not Applicable
38 . . . . . . . . . . . . . . . . . . . . Distribution of the Policies
39 . . . . . . . . . . . . . . . . . . . . Distribution of the Policies
40 . . . . . . . . . . . . . . . . . . . . Not Applicable
41(a) . . . . . . . . . . . . . . . . . . Distribution of the Policies
42. . . . . . . . . . . . . . . . . . . . .Not Applicable
43 . . . . . . . . . . . . . . . . . . . . Not Applicable
44 . . . . . . . . . . . . . . . . . . . . The Policy
45 . . . . . . . . . . . . . . . . . . . . Not Applicable
46 . . . . . . . . . . . . . . . . . . . . The Policy-Owner's Rights
47 . . . . . . . . . . . . . . . . . . . . Not Applicable
48 . . . . . . . . . . . . . . . . . . . . The Company
49 . . . . . . . . . . . . . . . . . . . . The Company
50 . . . . . . . . . . . . . . . . . . . . Not Applicable
51 . . . . . . . . . . . . . . . . . . . . The Company, The Policy
52 . . . . . . . . . . . . . . . . . . . . The Funds
53 . . . . . . . . . . . . . . . . . . . . Federal Tax Matters
54 . . . . . . . . . . . . . . . . . . . . Financial Statements
55 . . . . . . . . . . . . . . . . . . . . Not Applicable
<PAGE>
CENTURY LIFE OF AMERICA PROSPECTUS
2000 Heritage Way, Waverly, Iowa 50677
(319) 352-4090 (800) 798-5500 MAY 1, 1996
This Prospectus describes an individual flexible premium variable universal life
insurance Policy issued by Century Variable Account and Century Life of America.
The MEMBERS(R) Variable Universal Life Policy (the "Policy") was formerly called
VARIABLE Univers-ALL LIFE 2000SM. The Policy's flexibility allows an Owner to
provide for changing insurance needs under a single insurance Policy. The Owner
may (1) allocate premium among a variety of investment options; (2) choose one
of two death benefit options; (3) increase or decrease the level of death
benefit; and (4) vary the frequency and amount of premium payments.
First, the Owner may choose among a variety of investment options. Premiums may
be allocated to one or more of the subaccounts of the Century Variable Account
(the "Separate Account"). Each Subaccount of the Separate Account invests in a
corresponding Fund. Each Fund is a portfolio or series of one of the three
registered investment companies which are investment options supporting the
Separate Account. Investment experience of each Fund will vary. The Owner bears
the investment risk as values increase and decrease due to investment
experience. The Owner may also choose to allocate all or a portion of premium to
the Interest Bearing Account, an account held in a general account of Century
Life of America (the "Company"). The Company guarantees the principal held
within the Interest Bearing Account and will pay interest at a rate of no less
than 4% annually. At its discretion, the Company may pay a higher rate. Second,
the Owner may choose death benefit option 1 (in general, equal to the Specified
Amount) or death benefit option 2 (in general, equal to the Specified Amount
plus the Accumulated Value). Third, the Owner may choose to increase the size of
the death benefit at times when the Owner needs more insurance protection and to
decrease the size of the death benefit at times when the Owner needs less
insurance protection. Fourth, the Owner may choose to vary the size and
frequency of premium payments.
Replacing existing insurance with the Policy described in this Prospectus may
not be advantageous. In addition, a person who currently owns a flexible premium
life insurance Policy should compare the benefit and cost of purchasing
additional life insurance under the existing Policy with the benefits and cost
of purchasing the Policy described in this Prospectus. Since the charges imposed
upon surrender or Lapse during the first nine Policy years will be significant,
purchase a Policy only if you have the financial capability to keep it In Force
for a substantial period.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE ULTRA SERIES
FUND, T. ROWE PRICE INTERNATIONAL SERIES, INC., AND MFS(R) VARIABLE INSURANCE
TRUSTSM.
UNLIKE CREDIT UNION AND BANK ACCOUNTS, POLICY VALUE INVESTED IN THE VARIABLE
ACCOUNT IS NOT INSURED. INVESTMENT OF POLICY VALUE IN THE VARIABLE ACCOUNT
INVOLVES CERTAIN RISKS INCLUDING LOSS OF PURCHASE PAYMENTS (PRINCIPAL). VARIABLE
POLICY VALUE IS NOT DEPOSITED IN OR GUARANTEED BY ANY CREDIT UNION OR BANK AND
IS NOT GUARANTEED BY ANY GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
DEFINITIONS
I. SUMMARY OF KEY POINTS ABOUT THE POLICY
A. TYPE OF INSURANCE POLICY BEING OFFERED
B. BASIC CHARACTERISTICS OF THE SEPARATE ACCOUNT AND
THE INTEREST BEARING ACCOUNT
C. BASIC DEATH BENEFIT CHARACTERISTICS
D. EXPENSES AND CHARGES
E. BASIC FLEXIBILITY CHARACTERISTICS
1. Freedom to choose the level and frequency of premium payments
2. Freedom to change premium and deduction allocations
3. Freedom to adjust death benefits up and down to suit current needs
4. Choosing a level death benefit or a death benefit which varies with
investment experience
F. SOME QUESTIONS ABOUT POLICY VALUES AND DIVIDENDS
1. What factors will cause the Accumulated Value to increase or decrease?
2. What access does the Owner have to Accumulated Value?
3. Will the Policy pay dividends?
G. SOME OF THE MORE SIGNIFICANT POLICY PRIVILEGES
H. TAX TREATMENT
II. THE COMPANY, THE SEPARATE ACCOUNT, THE FUNDS, AND THE INTEREST BEARING
ACCOUNT
A. THE COMPANY
B. THE SEPARATE ACCOUNT
C. THE FUNDS
1. Ultra Series Fund
Capital Appreciation Stock
Growth and Income Stock
Balanced
Bond
Money Market
Treasury 2000
2. T. Rowe Price International Series, Inc.
International Stock Portfolio
3. MFS Variable Insurance Trust
MFS(R) World Governments SeriesSM
MFS(R) Emerging Growth SeriesSM.
4. Availability of the Funds
5. Resolving Material Conflicts
Ultra Series Fund
The T. Rowe Price International Series, Inc. and the MFS Variable
Insurance Trust
6. Addition, Deletion or Substitution of Investments
D. INTEREST BEARING ACCOUNT
III. THE POLICY
A. POLICY BENEFITS
1. Death Proceeds
2. Minimum Death Benefit Guarantee
3. Surrender Proceeds
4. Maturity Proceeds
5. Payment of Proceeds
B. POLICY VALUES
1. Accumulated Value
2. Cash Value
3. Net Cash Value
C. UNIT VALUE GUARANTEE
D. PREMIUMS
1. Initial Premium
2. Flexibility of Premiums
3. No-Lapse Guarantee
4. Minimum Death Benefit Guarantee
5. Target Premium
6. Net Premiums
7. Allocation of Net Premiums
E. CHARGES AND DEDUCTIONS
1. State Premium Taxes
2. Monthly Deduction
3. Mortality and Expense Risk Charge
4. Contingent Deferred Sales and Administrative Charges
5. Transfer Fee
6. Federal and State Income Taxes
F. GRACE PERIOD, LAPSE, NO-LAPSE GUARANTEE, AND REINSTATEMENT
G. OWNER'S RIGHTS
1. Free-Look Period
2. Policy Loans
3. Transfer of Values
4. Dollar Cost Averaging
5. Change of Allocations.
6. Change of Death Benefit Option
7. Change of Specified Amount
8. Conversion/Exchange of Policy
9. Transfer of Ownership
10. Collateral Assignments
11. Settlement Options
H. OTHER POLICY PROVISIONS, DEFINITIONS
1. Conditions for Policy Issue
2. Issue Date
3. Record Date
4. Owner, Beneficiary
5. Incontestability
6. Effect of Misstatement of Age or Sex
7. Suicide
8. Dividends
9. Suspension of Payments
10. Accelerated Benefit Option
I. RIDERS.
IV. REPORTS TO OWNERS
V. VOTING RIGHTS
VI. DISTRIBUTION OF POLICIES
VII. UNISEX POLICIES
VIII. FEDERAL INCOME TAX MATTERS
A. TAXATION OF THE COMPANY
B. TAX STATUS OF THE POLICY
C. TAX TREATMENT OF POLICY PROCEEDS
1. Proceeds Other Than Accelerated Benefits
2. Proceeds from Accelerated Benefits
IX. CENTURY LIFE OF AMERICA DIRECTORS AND EXECUTIVE OFFICERS
X. STATE REGULATION
XI. LEGAL PROCEEDINGS
XII. INDEPENDENT AUDITORS
XIII. ACTUARIAL MATTERS
XIV. REGISTRATION STATEMENT
XV. FINANCIAL STATEMENTS
APPENDIX A ILLUSTRATIONS OF POLICY VALUES AND DEATH BENEFITS
APPENDIX B FIRST YEAR CONTINGENT DEFERRED CHARGES PER $1,000 OF SPECIFIED AMOUNT
APPENDIX C FIRST YEAR CONTINGENT DEFERRED CHARGES PER $1,000 OF SPECIFIED AMOUNT
UNISEX
APPENDIX D DEATH BENEFIT RATIO
UNDERTAKINGS
REPRESENTATIONS
CONTENTS OF REGISTRATION STATEMENT
<PAGE>
DEFINITIONS
Accumulated Value. The total of the values attributable to a Policy in all
Subaccounts and the Interest Bearing Account plus the values attributable to it,
if any, in the Loan Account and Deferred Charges Account.
Age. The number of completed years from the Insured's date of birth.
Attained Age. Age of the Insured on the most recent Policy Anniversary.
Beneficiary. Person or entity named to receive all or part of the Death
Proceeds.
Cash Value. The Cash Value of a Policy at any time is equal to its Accumulated
Value minus any Deferred Charges, but not less than zero.
Charge for State Taxes. An amount deducted from premium payments to cover
premium tax (and tax in lieu of premium tax) currently charged by the Owner's
state of residence (except in Pennsylvania and Texas). State of residence is
determined by the Owner's mailing address as shown in the Company's records. The
term "in lieu of premium tax" means any income and any franchise tax assessed by
a state as a substitute for premium tax.
Collateral Assignee. Person or entity to whom the Owner gives some but not all
ownership rights under the Policy.
Company. Century Life of America
Cost of Insurance. One factor of the Monthly Deduction. It is the amount
necessary to pay for the insurance provided by the Policy.
Death Benefit Ratio. The ratio of Face Amount to Accumulated Value required by
the Internal Revenue Code for treatment of the Policy as a life insurance
Policy. The Death Benefit Ratio varies by the Attained Age.
Death Proceeds. Amount to be paid if the Insured dies while the Policy is In
Force.
Deferred Charges. The contingent deferred sales charge and contingent deferred
administrative charge which are collected only if the Policy is surrendered
during the first nine Policy years after the Issue Date or the first nine years
after an increase in Specified Amount, whichever is applicable.
Deferred Charges Account. A portion of the Company's general account in which
Policy values are held in support of Deferred Charges.
Face Amount. The Policy value which, when adjusted for premiums received after
date of death and Policy Indebtedness, is equal to Death Proceeds.
Fund. An investment portfolio (sometimes called a series) of the Ultra Series
Fund, the Series, Inc. or the MFS(R) Variable Insurance TrustSM or any other
open-end management investment company or unit investment trust in which a
Subaccount invests.
Home Office. The Company's principal office at 2000 Heritage Way, Waverly, Iowa
50677
In Force. Condition under which the Policy is active and the Insured's life
remains insured and sufficient Net Cash Value exists from premium payment or
otherwise to pay the Monthly Deductions on a Monthly Day.
Indebtedness. Policy loans plus accrued interest on the loans.
Insured. Person whose life is insured under the Policy.
Interest Bearing Account. An option under the Policy where premiums may be
allocated and values transferred to the Company's general account.
Irrevocable Beneficiary. A Beneficiary who has certain rights which cannot be
changed unless he or she consents to the change.
Issue Age. Age of Insured at the time the Policy was issued.
Issue Date. The date from which Policy Anniversaries, Policy years, and Policy
months are determined.
Lapse. Condition when the Insured's life is no longer insured under the Policy.
Loan Account. A portion of the Company's general account into which amounts are
transferred from the Separate Account as collateral for Policy loans.
Monthly Day. Same day as the Issue Date for each month the Policy remains In
Force. The Monthly Day is the first day of the Policy month. If there is no
Monthly Day in a calendar month, the Monthly Day will be the first day of the
next calendar month.
Monthly Deduction. Amounts withdrawn from the Accumulated Value on each Monthly
Day to pay for the Cost of Insurance for the month, the monthly Policy fee, the
monthly administrative fee, and the cost of any additional benefits provided by
rider.
Net Asset Value. The total current value of portfolio securities, cash,
receivables, and other assets minus liabilities.
Net Cash Value. The Cash Value of the Policy minus any Policy Indebtedness.
Net Premiums. Premiums paid less any charges for premium tax (or tax in lieu of
premium tax).
Owner. The Owner is named in the application. The Owner may be other than the
Insured.
Paid-up Insurance. Insurance for which no additional premium must be paid to
keep it In Force.
Policy. A MEMBERS(R) Variable Universal Life Policy issued by the Company.
Policy Anniversary. Same day and month as the issue day and month for each year
the Policy remains In Force.
Portfolio Maturity. Day upon which the Stripped Treasury Securities in a
Treasury Series become payable.
Record Date. The date the Company records the Policy on its books as an In Force
Policy.
Rescind the Policy. To treat the Policy as though it had never been issued.
Separate Account. Century Variable Account, a segregated investment account of
Century Life of America into which Net Premiums may be allocated. The Owner
bears the investment risk for amounts allocated to Separate Account Subaccounts.
Specified Amount. The amount chosen by the Owner which is used to determine the
Face Amount.
Subaccount. A division of the Separate Account which invests exclusively in the
shares of a corresponding Fund.
Surrender the Policy. To terminate the Policy at the option of the Owner. After
the Policy has been surrendered, the Insured's life is no longer insured under
the Policy.
Unit Value. The value determined by dividing Net Asset Value by the number of
Subaccount units outstanding at the time of calculation.
Valuation Day. Any day the New York Stock Exchange is open for business, except
the following Company holidays: (1) for Thanksgiving, the day immediately
following; (2) for Christmas, the final scheduled work day preceding; and (3)
for New Year's Day and Independence Day, the day itself if those days fall
Monday through Friday, the day immediately preceding if those days fall on a
Saturday, and the day immediately following if those days fall on a Sunday and
any day that a Subaccount's corresponding Fund does not value its shares.
Federal securities regulations will be followed in case of an emergency which
makes valuation extremely difficult, for example, fire, blizzard or tornado.
Valuation Period. The period commencing at the close of the New York Stock
Exchange (currently 3:00 p.m. Central Standard Time) of one Valuation Day and
continuing to 3:00 p.m. Central Standard Time or the close of the New York Stock
Exchange, whichever is earlier, of the next succeeding Valuation Day.
<PAGE>
I. SUMMARY OF KEY POINTS ABOUT THE POLICY
A. TYPE OF INSURANCE POLICY BEING OFFERED
The Policy provides:
o Life Insurance with
o Flexibility which permits the Owner, within prescribed limits,
(i) to adjust the death benefit upwards or downwards from time
to time;
(ii) to determine the level and frequency of premium payments to
be made, if any, after paying the Initial Premium;
(iii)to maintain Policy death benefits on either a fixed level
basis or on a variable basis; and
(iv) to change premium allocations at any time.
o The Net Cash Value of those assets held in the Separate
Account will vary with the investment performance of the
Funds.
o A Policy Design which rewards the longevity of Policy
retention by deferring the sales and administrative charges
incurred at issue. These charges are released in annual
increments and ultimately reduced to zero after nine years.
For a full explanation of Policy characteristics and Policy values, consult
Section III - THE POLICY.
B. BASIC CHARACTERISTICS OF THE SEPARATE ACCOUNT AND THE INTEREST BEARING
ACCOUNT
All Accumulated Value (except for value held in the Deferred Charges
Account or the Loan Account) is held in the Interest Bearing Account or
in one or more of the Subaccounts of the Separate Account. Each
Subaccount invests in a corresponding Fund.
When a Policy is issued, or when any additional premium is received,
any charge for state premium tax (or tax in lieu of premium tax) is
deducted. The remaining premium is allocated to one or more Subaccounts
of the Separate Account or Interest Bearing Account. All Policy costs
are taken out of assets held in the Subaccounts and/or the Interest
Bearing Account. For a full explanation of Policy costs, see CHARGES
AND DEDUCTIONS.
The Owner chooses what percentage of net premium to allocate to one or
more of the Subaccounts and the Interest Bearing Account. The Owner
chooses the Subaccounts (and, if applicable, the Interest Bearing
Account) from which Policy charges will be deducted. The Owner may
amend any of these instructions at any time in writing or by an
authorized telephone or fax transaction.
Net Cash Value in the Separate Account is directly and immediately
reduced by the amount of any investment loss and directly and
immediately increased by the amount of any investment gain in any
Subaccount. The Owner, not the Company, has the entire investment risk
except when an Owner purchases units in a Treasury Subaccount and holds
the units to Portfolio Maturity.
C. BASIC DEATH BENEFIT CHARACTERISTICS
There are two death benefit options under the Policy.
At this place, the document shows a graphic representation of the Death Benefit
Option 1 payment as described below.
DIAGRAM 1
At this place, the document shows a graphic representation of the Death Benefit
Option 2 payment as described below.
DIAGRAM 2
Both options provide a guaranteed minimum amount of death benefit (called the
Specified Amount) payable as long as the Policy remains In Force. In addition,
if the Owner pays the target premium (determined by dividing the minimum premium
by .60, and is stated on the specifications page of the Policy) each year until
Age 65 or the end of the tenth Policy year, whichever is later, the Company
guarantees that the Policy will remain In Force and the minimum death benefit
will be paid during that period.
The Specified Amount must be designated in the application. The Company will not
issue a Policy with a Specified Amount of less than $50,000 ($10,000 for Issue
Ages 65 and over), nor will it issue any coverage to anyone over 75 years of
Age. Limits applicable to Policies sold to Employee Benefit Plans are described
in UNISEX POLICIES.
Upon the death of the Insured, Death Proceeds payable under either option as
described above, will include additions for any premium received after date of
death, as well as reductions for any outstanding Indebtedness or any other due
or unpaid Policy charge. There will be no reductions for any amount of Deferred
Charges outstanding on the date of death. Death Proceeds may be paid in one lump
sum or under one of the Policy's various optional modes of settlement.
POLICY BENEFITS describes Death Benefit coverages more completely.
<TABLE>
<CAPTION>
D. EXPENSES AND CHARGES
<S> <C>
Description Basis/Amount
o Charge Against Premium:
State Taxes: Premium taxes (and taxes in lieu of premium Charge deducted is equal to actual amount of premium
taxes) are paid before allocating Net Premiums to the tax (or tax in lieu of premium tax).
Subaccounts or the Interest Bearing Account for investment.
o Periodic Charges:
Monthly Charges: Called the Monthly Deduction, the
following are deducted from Net Cash Value (or in limited
circumstances, the Deferred Charges Account) on
each Monthly Day:
Cost of Insurance; Insurance costs and benefits are determined by
Insured's Attained Age, sex, smoker status and rating
Cost of additional insurance and rider benefits, class. (Factors used in unisex Policies are described in
if any; UNISEX POLICIES.)
Policy fee; The policy fee is $3 per month for Policies with
Issue Ages of 0-19 and $6 per month for all
remaining Policies.
Administrative fee: The per thousand The administrative fee is $.45 per thousand dollars of
administrative fee is assessed only during the Specified Amount per year. The policy fee and
first 10 policy years or, on an increase in administrative fee are assessed monthly against all
Specified Amount, during the first 10 years Policies issued pursuant to this Prospectus.
after the increase.
Daily Charges: Mortality and expense risk charge against On an annual percentage basis, the charge amounts to
assets held in Subaccounts and/or Interest Bearing .9% of the average daily value of net assets. The
Account. charge is deducted and reflected in the new unit value
for each Subaccount as recalculated on each Valuation
Day.
o Surrender Charges:
Charge for Partial Surrender: The lesser of $25 or 2% of amount surrendered is
deducted from surrender proceeds.
Deferred Contingent Sales and Administrative Charges: The charge varies by Age, Specified Amount, and in the
The sales and administrative expenses incurred when a case of deferred sales charge, sex and smoker status.
Policy is issued are deferred (Deferred Charges) until (For factors used in Policies sold to Employee Benefit
the Policy is surrendered. Such charges are not Plans, see UNISEX POLICIES.) If the Policy is
collected at all if the Policy is held for nine years, or surrendered during the first nine years, any Deferred
if the Insured dies during that period. The deferred Charges not yet released from the Deferred Charges
Charges are normally built up in twelve equal increments Account will be deducted from the surrender proceeds.
during the first policy year. Beginning on the second Any current Deferred Charges outstanding upon the death
Policy Anniversary, incremental amounts are released by of the Insured are waived. (A table illustrating the
allocations back to the Subaccounts on each anniversary Deferred Charges is found in Appendix B) In no
until the ninth Policy Anniversary when all remaining instance will the deferred sales charge exceed 30% of
Deferred Charges are released. Allocations will be made the lesser of cash value applied and/or premiums paid
in the same percentages as premiums are currently or of the Guideline Annual Premium (as defined under
allocated among the Subaccounts and the Interest Bearing the Investment Company Act of 1940) of the Policy. The
Account. All amounts in the Deferred Charges Account are deferred administrative charge will not exceed the
held at interest credited to the Policy at a minimum rate amount necessary to recover first-year cost of
of 4% with the Company crediting additional amounts at underwriting and issuing the Policy. (See CHARGES AND
its discretion. DEDUCTIONS - Contingent Deferred Sales and
Administrative Charges.)
o Transfer Charges:
The Policy permits a charge against transfer proceeds The Company reserves the right to charge up to $20 per
when the owner directs transfer of amounts among the transfer. It currently waives any charge for the first
Subaccount and the Interest Bearing Account. four transfers in any policy year.
o Fund Expenses:
Charges are described in the Fund prospectuses which The charges vary by Fund. Current charges, expressed
accompany this prospectus and in the Fund Statements of as a percentage of net assets, range from .45% to 1.05%.
Additional Information available without charge from
the address shown on the first page of this prospectus.
</TABLE>
E. BASIC FLEXIBILITY CHARACTERISTICS
1. Freedom to choose the level and frequency of premium payments
There is a required minimum premium which varies with
Specified Amount, Age, sex, smoker status, and rating class.
(For factors used in Policies sold to Employee Benefit Plans,
see UNISEX POLICIES.) The minimum premium must be paid in the
first year to avoid Lapse of the Policy. Thereafter, the Owner
determines how much and when to pay additional premium.
Additional premium may be paid on a scheduled or unscheduled
basis. The Owner opting for a scheduled payment plan can
choose to pay a specific amount on an annual, semiannual, or
quarterly basis; or can simply choose to pay any amount at any
time subject to a $25 per payment minimum and a maximum
determined by Internal Revenue Code guidelines. Diagram 3
graphically depicts a typical scheduled payment plan and a
typical unscheduled plan as compared to a typical whole life
scheduled premium plan.
At this place, the document shows a graphic representation of
the difference in premium payment schedules as described
below.
DIAGRAM 3
Note: This is a strictly hypothetical diagram showing the
difference in typical premium payment schedules of (1) a whole
life Policy, (2) an annual renewable term Policy, and (3)
possible scheduled and unscheduled premiums of a variable
universal life Policy.
Because of the substantial flexibility with respect to when
and how much premium will be paid, it is important for the
Owner to keep in mind that the Policy will Lapse unless enough
Net Cash Value is maintained to cover the cost of Monthly
Deductions.
Level and frequency of premium payments is more fully
discussed in the section titled Premiums.
2. Freedom to change premium and deduction allocations
Any allocation to a Subaccount must equal at least 5% of the
total amount being applied at the time.
3. Freedom to adjust death benefits up and down to suit current
needs
There are three basic ways of adjusting the death benefit up
or down: changing the Specified Amount; changing the death
benefit option; and changing the level and frequency of
premium payments.
Changing the death benefit option will not change the death
benefit on the day of the change, but it will prospectively
affect the determination of death benefit. For example,
changing from option 1 to option 2 automatically causes a
reduction in Specified Amount by an amount equal to the
Accumulated Value. From that day forward, the death benefit
level will be directly affected by the payment of additional
premium and by the investment experience of Net Cash Value
allocated to Subaccounts. It will also be reduced by the
amount of Monthly Deduction deducted on the Monthly Day.
Changing from option 2 to option 1, on the other hand,
automatically causes an increase in Specified Amount by an
amount equal to the Accumulated Value. From that day forward,
option 1 will generally provide a level Face Amount of death
benefit equal to the Specified Amount.
Except when caused by a change from one death benefit option
to the other as just described, increasing the Specified
Amount will always increase the death benefit. Similarly,
decreasing the Specified Amount will always decrease the death
benefit.
Generally, an additional premium payment under option 1 will
not affect the death benefit, but will increase Accumulated
Value and reduce the Cost of Insurance. Under option 2, an
additional premium payment will always increase the death
benefit, but will not decrease the Cost of Insurance.
4. Choosing a level death benefit or a death benefit which varies
with investment experience
A choice of option 1 will ordinarily produce a level death
benefit which is equal to the Specified Amount. However, if
under option 1, Accumulated Value ever reaches the level where
the product of Accumulated Value times the Death Benefit Ratio
exceeds the Specified Amount, the death benefit will no longer
remain level, because it then becomes subject to variations in
the Policy's Accumulated Value. The choice of option 2 always
results in a variable Face Amount of death benefit which
fluctuates by the amount of increases or decreases in
Accumulated Value.
See the POLICY BENEFITS section for a fuller explanation.
F. SOME QUESTIONS ABOUT POLICY VALUES AND DIVIDENDS
1. What factors will cause the Accumulated Value to increase or
decrease?
Accumulated Value will increase whenever there is:
o an investment gain in any Subaccount;
o interest credited to the Policy for amounts held in
the Deferred Charges Account and/or Interest Bearing
Account;
o interest credited to the Policy for any loan amounts
held in the Loan Account;
o additional premium paid;
o Policy dividends paid into the Subaccounts.
Accumulated Value will decrease whenever there is:
o an investment loss in any Subaccount;
o a Monthly Deduction;
o a partial surrender;
o a charge made for reallocating Net Cash Value between
the Subaccounts or between the Interest Bearing
Account and Subaccounts. The amount reallocated would
be reduced by the amount of the transfer charge.
Accumulated Value will neither increase nor decrease when:
o a Policy loan is either disbursed or repaid;
o amounts are transferred between any Subaccount and
either the Deferred Charges Account or the Loan
Account, or when amounts are transferred among the
Subaccounts and the Interest Bearing Account
(exclusive of any transfer charge).
2. What access does the Owner have to Accumulated Value?
The Owner may, at any time, surrender or partially Surrender
the Policy for some or all of its Net Cash Value (Accumulated
Value less Deferred Charges and Indebtedness). In addition,
the Owner can borrow at any time up to 80% (90% for Virginia
residents) of the Policy's Cash Value (Accumulated Value less
current Deferred Charges). The written consent of all
assignees and Irrevocable Beneficiaries, if any, must be
furnished before the Company will release either loan or
surrender proceeds.
3. Will the Policy pay dividends?
Although the Company currently does not expect to pay
dividends during the first 10 Policy years, during the 11th
Policy year and thereafter, the Company currently projects,
but does not guarantee, annual dividends. (See OTHER POLICY
PROVISIONS, DEFINITIONS - Dividends.)
G. SOME OF THE MORE SIGNIFICANT POLICY PRIVILEGES
1. No-Lapse Guarantee
If the Owner pays the minimum premium each year for the first
three Policy years, the Company guarantees that the Policy
will not Lapse even if the Net Cash Value is not sufficient to
pay the Monthly Deduction during those three years.
2. Free-Look/Cancellation
The Owner may cancel the Policy on the latest to occur of 3
events: 45 days of the date of the application; 10 days after
the Company has personally delivered or has sent to the Owner
by first class mail the Policy and a Notice of Right of
Withdrawal; or 10 days after the Owner receives the Policy.
The free-look right, to the extent of any increase, also
occurs when there is an increase in Specified Amount not
caused by a change in death benefit option. Cancellation is
accomplished by mailing or delivering the Policy to the
Company's home office or to the representative who sold it.
The refund will include:
o All Charges for State Taxes deducted from premiums;
o Plus total amount of Monthly Deductions;
o Plus any other charges taken from Accumulated Value;
o Plus the Accumulated Value on the date the Company
receives the returned Policy;
o Less any policy Indebtedness.
A refund of the exact amount of premium paid will not be made unless required by
applicable state law.
3. Conversion/Exchange
Within the first 24 months from issue date, the Policy may be
converted to another policy which the Company then currently
issues, without evidence of insurability. The conversion
privilege to the extent of any increase also occurs when there
is an increase in Specified Amount which has not been caused
by the Automatic Increase Rider or a change in death benefit
option. The new policy will have either the same death benefit
or the same net amount at risk (depending on the type of
policy selected by the Owner that is received on the exchange)
as the (original) Policy on the exchange date. The change will
be subject to an equitable adjustment in payments and Cash
Values to reflect differences, if any, between the (original)
Policy and the new policy. All Indebtedness must be repaid
before the change can be executed as described in the OWNER'S
RIGHTS section.
4. Reinstatement
Once the Policy has Lapsed, it may be reinstated if a written
request for reinstatement is made within five years from the
end of the grace period, and the applicant provides evidence
of insurability satisfactory to the Company, and makes certain
payments.
H. TAX TREATMENT
The Policy should receive substantially the same federal income tax
treatment as that afforded fixed premium life insurance. Accordingly,
the benefit paid at death is generally excludable from the gross income
of the Beneficiary. Also, the Owner generally is not deemed to be in
constructive receipt of the Cash Values, including increments thereon
under the Policy, until the Policy is surrendered in whole or in part,
unless the Policy is a modified endowment contract. Policy loans and
other distributions from a modified endowment contract may be
includible in gross income and subject to a 10% penalty.
For a further discussion of the tax characteristics of this Policy, see
FEDERAL INCOME TAX MATTERS.
II. THE COMPANY, THE SEPARATE ACCOUNT, THE FUNDS,
AND THE INTEREST BEARING ACCOUNT
Century Life of America (the "Company") is the insurer. Century Variable Account
(the "Separate Account") issues the Policy. Three registered investment
companies of the series type serve as underlying investment options for the
Separate Account. The Interest Bearing Account, an account within the general
account of the Company, is another investment option.
A. THE COMPANY
Century Life of America is a mutual life insurance company
organized under the laws of Iowa in 1879 and incorporated on June 21,
1882. The Home Office of the Company is located at 2000 Heritage Way,
Waverly, Iowa 50677. The Company organized as a fraternal benefit
society with the name "Mutual Aid Society of the Evangelical Lutheran
Synod of Iowa and Other States," changed its name to "Lutheran Mutual
Aid Society" in 1911, and reorganized as a mutual life insurance
company called "Lutheran Mutual Life Insurance Company" on January 1,
1938. On December 28, 1984, the Company changed its name again to
"Century Life of America."
In February 1996, the Board of Directors of the Company recommended
that the Company name be changed to CUNA Mutual Life Insurance Company.
The recommended name change will be voted on by policyholders May 10,
1996. If approved the new name will become effective no later then
January 1, 1997.
On July 1, 1990, the Company entered into a permanent affiliation with
CUNA Mutual Insurance Society ("CUNA Mutual"), 5910 Mineral Point Road,
Madison WI 53705. The terms of an Agreement of Permanent Affiliation
provide for extensive financial sharing between the Company and CUNA
Mutual of individual life insurance business through reinsurance
arrangements, the joint development of business plans and distribution
systems for individual insurance and other financial service products
within the credit union movement, and the sharing of certain resources
and facilities. At the current time, all of the directors of the
Company are also directors of CUNA Mutual and many of the senior
executive officers of the Company hold similar positions with CUNA
Mutual. The affiliation, however, is not a merger or consolidation.
Both companies remain separate corporate entities and their respective
Owners retain their voting rights.
As of December 31, 1995, the Company had more than $2.6 billion in
assets and more than $12 billion of life insurance In Force. Effective
April 15, 1996, A.M. Best rated the Company A (Excellent). Effective
November 13, 1995, Duff & Phelps rated the Company AA. These are the
most recent ratings available as of the date of this Prospectus.
Periodically, the rating agencies issue new ratings. To obtain updated
ratings, contact the Company at the address and phone number shown on
the first page of this Prospectus.
The objective of Best's rating system is to evaluate the factors
affecting overall performance of an insurance company and then provide
an opinion of a company's financial strength and ability to meet its
contractual obligations relative to other companies in the industry.
The evaluation includes both quantitative and qualitative analysis of a
company's financial and operating performance.
Duff & Phelps Credit Rating Co. rates insurance companies on their
claims paying abilities. It bases these ratings on its assessment of
the economic fundamentals of the company's principal lines of business,
the company's competitive position, the company's management
capability, the relationship of the company to its affiliates and the
company's asset and liability management practices.
The Company owns Century Life Insurance Company and a one-half interest
in Century Investment Management Co. (the Investment Adviser to the
Ultra Series Fund). CUNA Mutual owns CUNA Mutual Investment
Corporation. CUNA Mutual Investment Corporation, 5910 Mineral Point
Road, Madison, Wisconsin, 53705, owns CUNA Brokerage Services, Inc.
(the principal underwriter for the Separate Account) and owns a
one-half interest in Century Investment Management Co. (the Investment
Adviser to the Ultra Series Fund).
B. THE SEPARATE ACCOUNT
The Separate Account was established by the Company on August 16, 1983.
The Separate Account will receive and invest net purchase payments made
under the Policies. In addition, the Separate Account may receive and
invest purchase payments for other variable life insurance policies
issued in the future by the Company.
Although the assets in the Separate Account are the property of the
Company, the assets in the Separate Account attributable to the
Policies are not chargeable with liabilities arising out of any other
business which the Company may conduct. The assets of the Separate
Account are available to cover the general liabilities of the Company
only to the extent that the Separate Account's assets exceed its
liabilities arising under the Policies and any other policies supported
by the Separate Account. The Company has the right to transfer to the
general account any assets of the Separate Account which are in excess
of reserves and other contract liabilities. The Company has placed seed
money in the Separate Account and reserves the right to withdraw it.
Periodically, the Separate Account makes payments to the Company for
mortality and expense charges.
The Separate Account is divided into subaccounts. In the future,
additional subaccounts may be added. Each Subaccount invests
exclusively in shares of a single corresponding Fund. The income, gains
and losses, realized or unrealized, from the assets allocated to each
Subaccount are credited to or charged against that Subaccount without
regard to income, gains or losses from any other Subaccount.
The Separate Account has been registered with the Securities and
Exchange Commission (the "SEC") as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act") and meets the
definition of a Separate Account under the federal securities laws.
Registration with the SEC does not involve supervision of the
management or investment practices or policies of the Separate Account
or of the Company by the SEC. The Separate Account is also subject to
the laws of the State of Iowa which regulate the operations of
insurance companies domiciled in Iowa.
The Company does not guarantee the investment performance of the
Separate Account. Accumulated Value of Policies will vary daily with
the value of the assets which under the Separate Account, and depending
upon the death benefit option chosen, the Death Proceeds may also vary
with the value of the assets which under the Separate Account. To the
extent that the Death Proceeds payable upon the death of the Insured
exceed the Accumulated Value of the Policy, such amounts are general
obligations of the Company and payable out of the general account of
the Company.
The Company may, from time to time, offer other policies which may be
similar to those offered herein.
The Company will act as Custodian of the assets of the Separate
Account.
C. THE FUNDS
The Separate Account invests in shares of open-end management
investment companies of the series type with one or more investment
portfolios or series. Each investment company is registered with the
SEC. Such registration does not involve supervision of the management
or investment practices or policies of the investment company by the
SEC.
The Separate Account has invested and will continue to invest in shares
of the Ultra Series Fund. The Ultra Series Fund was established to act
as an investment option for the Policy. The Separate Account and two
other Separate Accounts of the Company are the only shareholders of the
Ultra Series Fund. In the future, other Separate Accounts of the
Company or Separate Accounts of other life insurance companies may also
invest in the Ultra Series Fund.
The Separate Account also invests in shares of the MFS(R) Variable
Insurance TrustSM ("MFS Variable Insurance Trust") and the T. Rowe
Price International Series, Inc.
The Ultra Series Fund currently has six Funds available as investment
options under the Policies, the T. Rowe Price International Series,
Inc. has one Fund available as an investment option under the Policy,
and the MFS Variable Insurance Trust has two Funds available as
investment options under the Policies. The MFS Variable Insurance Trust
also has other Funds that are not available under the Policy. All three
investment companies may, in the future, create additional Funds that
may or may not be available as investment options under the Policies.
Each Fund has its own investment objective and policies. The income,
gains and losses for each Fund are determined separately for that Fund.
The investment objectives and policies of each Fund are summarized
below. There is no assurance that any Fund will achieve its stated
objectives. More detailed information, including a description of risks
and expenses, may be found in the prospectuses for the Ultra Series
Fund, the T. Rowe Price International Series, Inc. and the MFS Variable
Insurance Trust which must accompany or precede this Prospectus and
which should be read carefully and retained for future reference.
1. Ultra Series Fund
The Ultra Series Fund is a series Fund with six investment portfolios.
The terms "Fund" or "series" are used to describe each of the
investment portfolios. Currently, the Ultra Series Fund offers six
funds as investment options under the Policies.
Capital Appreciation Stock. This Fund seeks a high level of long-term
growth of capital. It pursues this objective by investing in common
stocks, including those of smaller companies and of companies
undergoing significant change.
Growth and Income Stock. This Fund seeks long-term growth of capital
with income as a secondary consideration. It pursues this objective by
investing in common stocks of companies with financial and market
strengths and long-term records of performance.
Balanced. This Fund seeks a high total return through the combination
of income and capital growth. It pursues this objective by investing in
the types of common stocks owned by the Capital Appreciation Stock and
Growth and Income Stock funds, the type of bonds owned by the Bond
Fund, and the type of money market instruments owned by the Money
Market Fund.
Bond. This Fund seeks a high level of current income, consistent with
the prudent limitation of investment risk, through investment in a
diversified portfolio of fixed-income securities with maturities of up
to 30 years. It principally invests in securities of intermediate term
maturities.
Money Market. This Fund seeks the highest current income available from
money market instruments consistent with preservation of capital and
liquidity. An investment in the Money Market Fund is neither insured
nor guaranteed by the U.S. Government. There can be no assurance that
the Money Market Fund will be able to maintain a stable Net Asset Value
of $1.00 per share.
Treasury 2000. The investment objective of this Fund is to provide
safety of capital and a relatively predictable payout upon Portfolio
Maturity, primarily by investing in Stripped Treasury Securities. The
Stripped Treasury Securities held by this Fund mature November 15,
2000.
Century Investment Management Co. ("CIMCO") serves as investment
adviser to the Ultra Series Fund and manages assets in accordance with
general policies and guidelines established by the Trustees of the
Ultra Series Fund. One half of CIMCO's outstanding common stock is
owned by the Company and one half indirectly by CUNA Mutual.
2. T. Rowe Price International Series, Inc.
T. Rowe Price International Series, Inc. currently has one investment
portfolio or Fund available as an investment option under the Policies.
International Stock Portfolio. This Fund seeks long-term growth of
capital through investments primarily in common stocks of established,
non-U.S. companies.
Rowe Price-Fleming International, Inc. ("RPFI") serves as the
investment adviser to the International Stock Portfolio and manages its
assets in accordance with general policies and guidelines established
by the board of directors of the T. Rowe Price International Series,
Inc. RPFI was founded in 1979 as a joint venture between T. Rowe Price
Associates, Inc. and Robert Fleming Holdings Limited.
3. MFS Variable Insurance Trust
The MFS Variable Insurance Trust currently has two investment series or
Funds available as investment options under the Policies.
MFS(R) World Governments SeriesSM ("MFS World Governments Series").
This Fund seeks not only preservation, but also growth of capital,
together with moderate current income.
MFS(R) Emerging Growth SeriesSM ("MFS Emerging Growth Series"). This
Fund seeks long-term growth of capital through investments primarily in
equity securities of emerging growth companies.
Massachusetts Financial Services Company ("MFS") serves as the
investment adviser to the MFS World Governments Series and MFS Emerging
Growth Series and manages its assets in accordance with general
policies and guidelines established by the board of trustees of the MFS
Variable Insurance Trust. MFS is a subsidiary of Sun Life Assurance
Company of Canada (U.S.) which, in turn, is a wholly owned subsidiary
of Sun Life Assurance Company of Canada.
4. Availability of the Funds
The Separate Account purchases shares of the International Stock
Portfolio, the MFS World Governments Series and the MFS Emerging Growth
Series in accordance with separate participation agreements between the
Company and each of the T. Rowe Price International Series, Inc. and
the MFS Variable Insurance Trust, as appropriate. The termination
provisions of these agreements vary and are summarized below.
The agreement between the Company and the T. Rowe Price International
Series, Inc. (and its principal underwriter) provides for termination
as it applies to any Fund covered by the agreement: (1) by any party
upon six months prior written notice to the other parties, or in the
event that (subject to certain conditions) formal proceedings are
initiated against any other party by the SEC or another regulator, or
in the event that any other party suffers a material adverse change in
its business, operations, financial condition or prospects or suffers
material adverse publicity, (2) by the Company upon written notice to
the other parties if shares of the Fund are not reasonably available to
meet the requirements of the Policies or are not registered, issued or
sold in conformity with applicable laws or such laws preclude the use
of such shares as investment media for the Policies, (3) by the Company
upon written notice to the other parties in the event that the Fund
fails to meet certain Code requirements described in the agreement, (4)
by the T. Rowe Price International Series, Inc. or its principal
underwriter upon 45 days written notice to the Company, and (5) by the
T. Rowe Price International Series, Inc. or its principal underwriter
upon written notice to the Company in the event that the Policies fail
to meet certain Code requirements described in the agreement.
The agreement between the Company and the MFS Variable Insurance Trust
(and its investment adviser) provides for termination as it applies to
any Fund covered by the agreement: (1) by any party upon six months
prior written notice to the other parties, or in the event that
(subject to certain conditions) formal proceedings are initiated
against any other party by the SEC or another regulator, or (subject to
certain conditions) in the event that the Company should substitute
shares of another Fund for the Fund, (2) by any party upon written
notice to the other parties in the event that any other party suffers a
material adverse change in its business, operations, financial
condition or prospects or suffers material adverse publicity, or in the
event that another party materially breaches any provision of the
agreement, (3) by the Company upon prompt written notice to the other
parties if shares of the Fund are not reasonably available to meet the
requirements of the Policies or are not appropriate funding vehicles
for the Policies, and (4) upon assignment of the agreement by any party
unless the other parties agree in writing to the assignment.
If a participation agreement terminates, the Separate Account may not
be able to purchase additional shares of the Fund(s) covered by that
agreement. Likewise, in certain circumstances, it is possible that
shares of a Fund may not be available to the Separate Account even if
the participation agreement relating to that Fund has not been
terminated. In either event, Owners will no longer be able to allocate
purchase payments or transfer Policy value to the Subaccount investing
in that Fund.
5. Resolving Material Conflicts
Ultra Series Fund. Currently, the Ultra Series Fund sells shares only
to the Separate Account and to Separate Accounts of the Company
supporting individual variable annuity contracts and variable annuity
contracts sold solely in connection with qualified retirement plans
(annuity contracts). The Ultra Series Fund may in the future sell
shares to other Separate Accounts of the Company, or its life insurance
company affiliates, supporting variable products, or to variable life
insurance and annuity Separate Accounts of insurance companies not
affiliated with the Company. Currently, the Company does not foresee
any disadvantages to Owners arising from the sale of shares to support
such annuity contracts or that would arise if the Ultra Series Fund
were to offer its shares to support products other than the Policies
and such annuity contracts. However, the management of the Ultra Series
Fund will monitor events in order to identify any material
irreconcilable conflicts that might possibly arise (1) as a result of
the Ultra Series Fund offering its shares to support both the Policies
and such annuity contracts, or (2) as a result of the Ultra Series Fund
offering its shares to support products other than the Policies or such
annuity contracts. In the event of such a conflict, the Company would
determine what action, if any, should be taken in response to the
conflict. In addition, if the Company believes that Ultra Series Fund's
response to any such conflict insufficiently protects Owners, it will
take appropriate action on its own, including withdrawing the Separate
Account's investment in the Ultra Series Fund.
The T. Rowe Price International Series, Inc. and the MFS Variable
Insurance Trust. The T. Rowe Price International Series, Inc. currently
sells shares of the International Stock Portfolio to the Separate
Account and to Separate Accounts of life insurance companies not
affiliated with the Company to support other variable annuity
contracts. The MFS Variable Insurance Trust currently sells shares of
its MFS World Governments Series and MFS Emerging Growth Series to
Separate Accounts of the Company for annuity contracts, sells shares to
companies not affiliated with the Company, and has sold shares to MFS
as a seed money investment. Shares of both the International Stock
Portfolio, the MFS World Governments Series and the MFS Emerging Growth
Series may in the future be sold to other Separate Accounts of the
Company and shares of the MFS World Governments Series and the MFS
Emerging Growth Series may in the future be sold to Separate Accounts
of other affiliated or unaffiliated life insurance companies to support
other variable annuity or variable life insurance contracts. Shares of
the MFS World Governments Series and MFS Emerging Growth Series may in
the future also be sold to qualified retirement plans. Currently, the
Company does not foresee any disadvantages to Owners arising from the
sale of such shares to support variable life insurance contracts or
variable annuity contracts of other companies or to qualified
retirement plans. However, the management of the T. Rowe Price
International Series, Inc. and the MFS Variable Insurance Trust will
each monitor events related to their Fund in order to identify any
material irreconcilable conflicts that might possibly arise as a result
of the such Fund's offering its shares to (1) support both variable
life insurance contracts and variable annuity contracts, or (2) support
the variable life insurance contracts and/or variable annuity contracts
issued by various unaffiliated insurance companies. In addition, the
management of the MFS Variable Insurance Trust will monitor the Trust
in order to identify any material irreconcilable conflicts that might
possibly arise as a result of the sale of its shares to qualified
retirement plans. In the event of such a conflict, the management of
the appropriate Fund would determine what action, if any, should be
taken in response to the conflict. In addition, if the Company believes
that the response of the T. Rowe Price International Series, Inc. or
the MFS Variable Insurance Trust to any such conflict insufficiently
protects Owners, it will take appropriate action on its own, including
withdrawing the Separate Account's investment in the International
Stock Portfolio or the MFS World Governments Series or the MFS Emerging
Growth Series, as appropriate.
6. Addition, Deletion or Substitution of Investments
The Company reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares of a Fund
that are held in the Separate Account or that the Separate Account may
purchase. If the shares of a Fund are no longer available for
investment or if, in the Company's judgment, further investment in any
Fund should become inappropriate, the Company may redeem the shares, if
any, of that Fund and substitute shares of another Fund. The Company
will not substitute any shares attributable to a Policy's interest in a
Subaccount without notice and prior approval of the SEC and state
insurance authorities, to the extent required by the 1940 Act or other
applicable law.
The Company also reserves the right to establish additional Subaccounts
of the Separate Account, each of which would invest in shares of a new
corresponding Fund having a specified investment objective. The Company
may, in its sole discretion, establish new Subaccounts or eliminate or
combine one or more Subaccounts if marketing needs, tax considerations
or investment conditions warrant. Any new Subaccounts may be made
available to existing Owners on a basis to be determined by the
Company. Subject to obtaining any approvals or consents required by
applicable law, the assets of one or more Subaccounts may be
transferred to any other Subaccount if, in the sole discretion of the
Company, marketing, tax, or investment conditions warrant.
In the event of any such substitution or change, the Company (by
appropriate endorsement, if necessary) may change the Policy to reflect
the substitution or change. Affected Owners will be notified of such a
material substitution or change. If an Owner objects to the change, the
Owner may exchange the Policy for a fixed benefit whole life insurance
Policy then issued by the Company. The new Policy will be subject to
normal underwriting rules and other conditions determined by the
Company. No evidence of insurability will be necessary. The option to
exchange must be exercised within sixty (60) days of notification to
the Owner of the investment Policy change. The Owner may also Surrender
the Policy. (See POLICY BENEFITS - Surrender Proceeds.)
If the Company considers it to be in the best interest of Owners, and
subject to any approvals that may be required under applicable law, the
Separate Account may be operated as a management investment company
under the 1940 Act, it may be deregistered under that Act if
registration is no longer required, it may be combined with other
company separate accounts, or its assets may be transferred to another
separate account of the Company. In addition, the Company may, when
permitted by law, restrict or eliminate any voting rights of Owners or
other persons who have such rights under the Policies.
D. INTEREST BEARING ACCOUNT
The Interest Bearing Account is an investment option under the Policy.
Premiums may be allocated and values transferred to the general account
of the Company. Assets attributable to the Interest Bearing Account are
subject to the claims of the Company's general creditors. Net premiums
allocated and values transferred to the Interest Bearing Account will
earn interest at a rate of no less than 4% annually, with the Company
crediting a higher rate solely at its discretion. (See OWNER'S RIGHTS -
Transfer of Values.)
III. THE POLICY
A. POLICY BENEFITS
1. Death Proceeds
Payment of Death Proceeds
When the Company receives proof of the Insured's death in
writing on a form satisfactory to the Company, the Company
will pay the Death Proceeds to the Beneficiary or
Beneficiaries provided the Policy was In Force on the date of
the Insured's death. If no Beneficiary survives the Insured,
the Death Proceeds will be paid to the Owner, if living, or to
the Owner's estate.
Death benefits payable to an estate will be paid in one sum.
Death proceeds payable to other beneficiaries will be paid in
one sum unless another settlement option is selected. If the
Owner, Beneficiary, or payee is not a natural person, any
Death Proceeds due will be applied only under settlement
options consented to by the Company.
Interest will accumulate from the Insured's date of death
until a lump sum payment is made or until a settlement option
is effective. Each year the Company determines the interest
rate. The rate will not be less than 3.5% per year.
During the Insured's lifetime, the Owner may direct that the
Death Proceeds be paid under one of the settlement options.
The written consent of all Irrevocable Beneficiaries must be
obtained prior to the selection. After the Insured's death, if
the Owner did not select a settlement option, any Beneficiary
entitled to receive the proceeds in one sum may select a
settlement option. (See OWNER'S RIGHTS - Settlement Options.)
An accelerated payment of a portion of the eligible death
benefit may be elected if the Insured is terminally ill. See
"Accelerated Benefit Option".
Death Benefit Options 1 and 2
The Owner may select one of two death benefit options. Under
either option, the death benefit is never less than the
Specified Amount while the Policy is In Force. The Owner's
selection will affect the Face Amount, the Monthly Deduction,
and the Cash Value. Under either option, Death Proceeds are
equal to:
~ The Face Amount on the date of death,
~ Plus any premiums received after date of death,
~ Minus Policy Indebtedness.
The Face Amount, however, differs under the two death benefit
options. Under death benefit option 1, the Face Amount is the
greater of:
~ The Specified Amount, or
~ The Accumulated Value on the date of death multiplied
by the Death Benefit Ratio.
Under death benefit option 2, the Face Amount is the greater
of:
~ The Specified Amount plus the Accumulated Value on
the date of death, or
~ The Accumulated Value on the date of death multiplied
by the Death Benefit Ratio.
The Death Benefit Ratio is the ratio of Face Amount to
Accumulated Value required by the Internal Revenue Code for
treatment of the Policy as a life insurance Policy. The Death
Benefit Ratio varies by Attained Age as shown in Appendix D.
The death benefit factor decreases from year to year as the
Attained Age of the Insured increases.
The illustrations in Appendix A show how the death benefit
option affects Policy values. Illustrations 1, 2, 5 and 6
assume death benefit option 1 is in effect. Illustrations 3,
4, 7, and 8 assume death benefit option 2 is in effect.
Under both option 1 and option 2, the larger the premium
payment and the more favorable the investment results, the
more Accumulated Value will increase. Under death benefit
option 1, the higher the Accumulated Value, the lower the
amount of premium necessary to keep the Policy In Force. Under
death benefit option 2, the higher the Accumulated Value, the
higher the death benefit (since the death benefit is the
Specified Amount plus the Accumulated Value). Under death
benefit option 1, the death benefit is not changed as the
Accumulated Value increases; the increase in Accumulated Value
is used to reduce the premium necessary to keep the Policy In
Force. Under death benefit option 2, the premium due is not
changed as Accumulated Value increases; the increase in
Accumulated Value is used to increase the death benefit. Under
both options, an increase in Accumulated Value results in
greater amounts being available to the Owner for Policy loans
or surrender. Accumulated Value is excluded from the
calculation of the eligible death benefit under the
Accelerated Benefit Option Endorsement.
The Owner may change from one death benefit option to the
other. (See OWNER'S RIGHTS - Change of Death Benefit Option.)
2. Minimum Death Benefit Guarantee
The minimum death benefit guarantee provides that a minimum
amount of death benefit will be paid if, at all times, the sum
of the premiums received to date, less all partial surrenders
and Policy loans, is at least equal to the monthly target
premium multiplied by the number of months (plus one month)
the Policy has been In Force. Thus, if the Owner pays a
premium at least equal to the target premium each year, the
Policy will remain In Force and the minimum death benefit will
be paid even if the Net Cash Value is insufficient to pay
Monthly Deductions on a Monthly Day and the Policy would
otherwise Lapse. The monthly target premium is the target
premium divided by twelve. The minimum death benefit guarantee
expires at the later of Attained Age 65 or 10 years from the
Issue Date.
The target premium will be increased or decreased, as
appropriate, when the Specified Amount is increased or
decreased at the request of the Owner, when the death benefit
option is changed, and when riders are added or deleted.
If the premiums required to maintain the minimum death benefit
guarantee are not paid, the minimum death benefit guarantee
will be lost. Notice of this loss will be mailed to the Owner,
after which the Owner has 60 days to reinstate the minimum
death benefit guarantee by paying premiums sufficient to raise
the total premiums to the required amount. If the necessary
premiums are not paid within the 60-day grace period, the
minimum death benefit guarantee cannot be reinstated.
Where the minimum death benefit guarantee is in effect and
there is insufficient Net Cash Value to pay the Monthly
Deduction, Deferred Charges will be used to pay the Monthly
Deduction during the first nine Policy years. (See CHARGES AND
DEDUCTIONS - Contingent Deferred Sales and Administrative
Charges.) During those years, any Monthly Deduction remaining
after amounts in the Deferred Charges Account have been
exhausted will be waived. In the 10th Policy year and beyond,
any Monthly Deduction in excess of the Net Cash Value will be
waived. (See CHARGES AND DEDUCTIONS - Monthly Deduction.)
3. Surrender Proceeds
Policy Surrender
The Owner may Surrender the Policy for its Net Cash Value.
The written consent of all assignees or Irrevocable
Beneficiaries must be obtained prior to any partial or total
surrender. The Company may require the return of the Policy.
The surrender date of the Policy is the date a written request
for surrender is received at the Home Office in a form
satisfactory to the Company and containing all necessary
signatures. The Net Cash Value will be determined as of the
end of the Valuation Period during which the surrender date
occurs. The Policy and all insurance will terminate as of the
surrender date.
To reimburse the Company for sales expenses and Policy
expenses incurred at issue, contingent deferred sales and
administrative charges ("Deferred Charges") will be deducted
from the proceeds in the event of a complete surrender of the
Policy during the first nine Policy years. (See CHARGES AND
DEDUCTIONS - Contingent Deferred Sales and Administrative
Charges.)
Partial Surrender
The Owner may also surrender a portion of the Policy for an
amount less than the full Net Cash Value. The effective date
of such partial surrender will be the date the partial
surrender request is received at the Home Office. No
contingent deferred sales or administrative charges will be
deducted in the case of a partial surrender, but a service
charge equal to the lesser of $25 or 2% of the amount
surrendered will be charged for each partial surrender. The
Owner may specify the allocation percentages among the
Subaccount(s) and Interest Bearing Account from which the
surrender is to be made. If no specification is made, the
surrendered amount will be withdrawn from the Subaccounts and
Interest Bearing Account in the same percentages as Monthly
Deductions are withdrawn from the Subaccounts and Interest
Bearing Account. If there are insufficient values to follow
these percentages, the partial surrender amount will be
withdrawn on a pro rata basis based on values in the
Subaccounts and Interest Bearing Account. The partial
surrender fee will be deducted from amounts withdrawn from the
Subaccounts and the Interest Bearing Account on the same pro
rata basis unless otherwise directed by the Owner. No partial
surrender will be allowed if the Specified Amount remaining
would be less than $40,000 ($8,000 if Issue Age is 65 and
over). (For limits applicable to Policies sold to Employee
Benefit Plans, see UNISEX POLICIES.)
Unless the Face Amount derived from application of the Death
Benefit Ratio applies, under either death benefit option 1 or
option 2, a partial surrender will reduce both the Accumulated
Value and Face Amount by the amount surrendered but will not
affect the Cost of Insurance. Under death benefit option 1,
the Specified Amount is also reduced by the same amount, but
the Specified Amount is not changed by a partial surrender
under death benefit option 2.
If the Face Amount derived from application of the Death
Benefit Ratio applies, the effect on the monthly Cost of
Insurance and Face Amount is somewhat different. The Face
Amount is then decreased by more than the amount surrendered,
and the monthly Cost of Insurance is less than it would have
been without the surrender.
Payment will be made within seven days of the surrender or
partial surrender date unless a suspension of payments is in
effect. (See OTHER POLICY PROVISIONS, DEFINITIONS - Suspension
of Payments.) For information on possible tax effects of
partial surrenders, see TAX TREATMENT OF POLICY PROCEEDS.
4. Maturity Proceeds
The Policy matures on the Policy Anniversary following the
Insured's 95th birthday. Coverage under the Policy ceases on
that date, and the Owner will receive maturity proceeds equal
to the Net Cash Value as of that date.
5. Payment of Proceeds
Settlement options are available for Death Proceeds, surrender
proceeds, and maturity proceeds. (See OWNER'S RIGHTS -
Settlement Options.)
B. POLICY VALUES
1. Accumulated Value
The Accumulated Value of the Policy is the sum of the values
attributable to the Policy in the Loan Account, Deferred
Charges Account, each Subaccount, and Interest Bearing
Account. The Accumulated Value held in the Subaccounts will
vary with the investment performance of the Subaccounts. The
Accumulated Value will decrease as Monthly Deductions and
surrenders are taken out of values held in the Subaccounts
and/or Interest Bearing Account. Accumulated Value is
determined as of the end of each Valuation Period. The Loan
Account is part of the Company's general account into which is
transferred an amount equal to any Policy loans. (See OWNER'S
RIGHTS - Policy Loans.) The Deferred Charges Account is part
of the Company's general account in which Policy values are
held in support of the deferred sales and administrative
charges. (See CHARGES AND DEDUCTIONS - Contingent Deferred
Sales and Administrative Charges.)
The value in a Subaccount attributable to a Policy is equal to
the number of units that the Policy has in each Subaccount,
multiplied by the Unit Value of that Subaccount. Because the
Separate Account purchases shares of the Fund, the value of
the Subaccounts will reflect the investment advisory or
advisory/administrative fee and other expenses incurred by the
Fund.
The Unit Value of each Subaccount (other than the Treasury
2000 Subaccount) was set at $10 for the first Valuation
Period. The Unit Value of the Treasury 2000 Subaccount was
originally set at $3.62 per unit. The Unit Value may increase
or decrease from one Valuation Period to the next. The Unit
Value will vary between Subaccounts.
2. Cash Value
The Cash Value at any time is equal to the Accumulated Value
less any Deferred Charges which would be applicable if the
Policy were surrendered at that time. (See CHARGES AND
DEDUCTIONS - Contingent Deferred Sales and Administrative
Charges.)
3. Net Cash Value
The Net Cash Value at any time is equal to the Cash Value less
any Policy Indebtedness. (See OWNER'S RIGHTS Policy Loans.)
This value is equal to the value attributable to the Policy in
each Subaccount and the Interest Bearing Account and
represents the amount an Owner would receive upon full
surrender of the Policy (see POLICY BENEFITS - Surrender
Proceeds, Policy Surrender) or when the Policy matures (see
POLICY BENEFITS - Maturity Proceeds).
C. UNIT VALUE GUARANTEE
The Company guarantees the payment of at least $10 per unit of a
Subaccount which invests in a treasury series if the units are held to
Portfolio Maturity. The Stripped Treasury Securities held by the
Treasury 2000 Series become payable on (have a Portfolio Maturity date
of) November 15, 2000. The Company does not guarantee the Unit Value of
any units redeemed prior to Portfolio Maturity. Any such unit will be
redeemed at a price based on the then current Net Asset Value, which
may be more or less than the purchase price or the price at Portfolio
Maturity. Taking a Monthly Deduction and transferring value from a
Subaccount investing in a treasury series will force a redemption and
thus void the Unit Value Guarantee on those units. The Company reserves
the right to discontinue offering units of a Subaccount investing in a
treasury series if shares from that series become unavailable prior to
the maturity of the Stripped Treasury Securities in that series or, if
in the judgment of the Company's Board of Directors, further investment
in such units is no longer deemed to be in the best interest of
policies generally within the class represented by the Policy. When the
Treasury 2000 Series portfolio matures, the Company will give written
notice to current Owners of units of the Treasury 2000 Subaccount.
Owners may transfer Treasury Unit Values to any other Subaccount or to
the Interest Bearing Account. In the absence of a selection by the
Owner upon maturity, value in the Treasury 2000 Subaccount will be
transferred to the Money Market Subaccount.
D. PREMIUMS
1. Initial Premium
The Initial Premium must be paid during the lifetime of the
Insured, on or before the Issue Date. All premiums after the
Initial Premium must be paid to the Home Office.
2. Flexibility of Premiums
The Policy provides for a planned annual premium determined by
the Owner. The Owner is not required to pay premiums in accord
with the planned schedule. Premiums are generally flexible
both as to timing and amount. Premiums must be large enough to
keep the Policy In Force. Premiums after the initial premium
may be paid at any time while the Policy is In Force.
The initial premium must be at least equal to
one-twelfth (1/12th) of the minimum premium.
The minimum premium is the minimum annual amount
that, if paid each year for the first three Policy
years, will keep the no-lapse guarantee in effect for
that time. The minimum premium is recorded on the
specifications page of the Policy.
The Company reserves the right to refuse any premium
payment that is less than $25.
The total of all premiums paid may never exceed the
maximum premium limitation determined by the Internal
Revenue Code for treatment of the Policy as a life
insurance Policy. If at any time a premium is paid
which would result in total premiums exceeding the
maximum premium limitation, the Company will only
accept that portion of the premium which would make
total premiums equal the maximum. Any excess amount
will be returned, and no further premiums will be
accepted until the premium maximum increases.
The Company reserves the right to refuse any premium
or part of a premium which would increase the Face
Amount of the Policy by more than the amount of the
premium.
3. No-Lapse Guarantee
If the minimum premium is paid the first three Policy years,
the Policy cannot Lapse during those years. (See GRACE PERIOD,
LAPSE, NO-LAPSE GUARANTEE, AND REINSTATEMENT.)
4. Minimum Death Benefit Guarantee
If the target premium is paid until the later of Attained Age
65 or 10 years from the Issue Date, the Policy will not Lapse
during those years. (See POLICY BENEFITS - minimum death
benefit guarantee.)
5. Target Premium
The target premium will be shown on each Policy. It is
determined by dividing the minimum premium by .60, and is
stated on the specifications page of the Policy.
6. Net Premiums
Net Premiums are premiums paid less any charge for state
premium taxes (or taxes in lieu of premium taxes). The amount
of this deduction varies by amount of premium and by state of
residence of the Owner. (See CHARGES AND DEDUCTIONS - State
Premium Taxes, below.)
7. Allocation of Net Premiums
All Net Premiums are allocated among the Subaccounts and the
Interest Bearing Account. The Owner determines what
percentages of the Net Premiums are allocated to each
Subaccount and the Interest Bearing Account. Any allocation to
a Subaccount or the Interest Bearing Account must be at least
5% of amount transferred, and only whole percentages are
permitted.
Allocation of Initial Premium payments will be handled as
follows:
If the Initial Premium is received before the Record Date, it
is held in the Company's general account. If a Policy is
subsequently issued, interest is credited on the net Initial
Premium (Initial Premium less Charge for State Premium Tax) at
a rate of at least 4% compounded annually. The Company may, at
its sole discretion, credit interest at a rate in excess of
4%. On the first Valuation Day following the Record Date, this
Net Premium plus interest from the Issue Date, and less
Monthly Deductions and amounts held in the Deferred Charges
Account are allocated to the Subaccounts of the Separate
Account and the Interest Bearing Account in the percentages
established by the Owner and recorded on the application for
the Policy. (See CHARGES AND DEDUCTIONS - Monthly Deduction
and Contingent Deferred Sales and Administrative Charges.)
These allocation percentages apply to future Net Premiums
until the allocation is changed by the Owner. (See OWNER'S
RIGHTS - Change of Allocations.)
E. CHARGES AND DEDUCTIONS
Charges made by the Funds are discussed in the Fund Prospectuses and in
the Fund Statements of Additional Information available from the
address shown on the first page of this prospectus. Charges and
deductions from state premium taxes and charges against the Separate
Account and the Interest Bearing Account are described below:
1. State Premium Taxes
A deduction from premiums is made for premium taxes (or taxes
in lieu of premium taxes) charged by the state of residence of
the Owner. The state of residence of the Owner is determined
by his mailing address as shown on company records. The
initial percentage of reduction for state taxes is shown on
the specifications page of the Policy.
2. Monthly Deduction
The Monthly Deduction due on each Monthly Day will be the sum
of:
the Cost of Insurance for that month; plus
the monthly Policy fee; plus
the monthly administrative fee; plus
the cost of any additional benefits provided by
rider, if any.
The Monthly Deduction is made by redeeming the number of units
(or fraction of units) in Subaccounts (and/or withdrawing
values from the Interest Bearing Account) in an amount equal
to the amount of the Monthly Deduction, except during the
second through ninth Policy years, in which case the amount in
the Deferred Charges Account in excess of the Deferred Charges
will be first applied to the Monthly Deduction. The excess
amount will include interest earned in the account and, when
the Monthly Day falls on a Policy Anniversary, the amount
released from the Deferred Charges Account.
On any Monthly Day when there is insufficient Net Cash Value
to pay the Monthly Deduction and the no-lapse guarantee or
minimum death benefit guarantee is in effect, the Monthly
Deduction remaining after the Net Cash Value is exhausted will
be made from the Deferred Charges Account. If the Deferred
Charges Account balance is insufficient to pay the Monthly
Deduction, the Company will waive any Monthly Deduction
remaining after the amount in the Deferred Charges Account has
been depleted.
In the 10th Policy year and beyond, any Monthly Deduction in
excess of the Net Cash Value will be waived by the Company if
the minimum death benefit guarantee is still in effect.
The Owner may specify what percentages of the Monthly
Deduction will be withdrawn from each Subaccount and the
Interest Bearing Account. Each withdrawal from a Subaccount or
the Interest Bearing Account must be at least 5% of the total
Monthly Deduction. Only whole percentages are permitted. If a
specification is not made, the withdrawals will be made in the
same percentages as premiums are currently allocated among the
Subaccounts and the Interest Bearing Account.
Cost of Insurance
The Company will determine a Cost of Insurance rate to be used
on each Monthly Day. The Cost of Insurance rate for the Policy
will be determined by the Insured's Attained Age, sex, smoker
status, and rating class. (For factors used in unisex
Policies, see the section titled UNISEX POLICIES.) Attained
Age means Age on the most recent Policy Anniversary. Cost of
insurance rate charges will depend on the Company's
expectations as to future mortality experience. The monthly
Cost of Insurance rate will not exceed the rates shown in
Table I - Guaranteed Maximum Insurance Rates contained in the
Policy. However, the Company may charge less than these rates.
While not guaranteeing to do so, the Company intends to charge
less than the guaranteed maximum insurance rates after the
10th Policy year. The guaranteed maximum insurance rates are
based on the 1980 CSO Mortality Tables, Age last birthday.
If death benefit option 1 has been selected, and if there have
been increases in the Specified Amount, then the Accumulated
Value will be considered first to be part of the initial
Specified Amount. Any excess Accumulated Value will be
considered to be part of the additional Specified Amounts in
the order of the increases.
Monthly Policy Fee
The monthly Policy fee is a fee charged by the Company to
compensate it for some of the administrative expenses
associated with the Policy. The fee cannot be increased. It is
equal to $3 per month for Policies with Issue Ages of 0-19 and
$6 per month for all other Policies. It is not based on the
Specified Amount.
Monthly Administrative Fee
An administrative fee of $.45 per thousand dollars of
Specified Amount per year will be assessed on a monthly basis
to reimburse the Company for some of the administrative
expenses associated with the Policy. On a monthly basis, the
administrative fee amounts to $.0375 per thousand dollars of
Specified Amount. The fee is based on the Specified Amount and
cannot be increased unless the Specified Amount is changed.
This fee is charged only during the first 10 Policy years of
the Policy or, on an increase in Specified Amount, during the
first 10 Policy years after the increase.
The monthly administrative fee, together with the monthly
Policy fee, is designed to equitably distribute the
administrative costs among all Policies. The Company does not
intend to make a profit from either the monthly administrative
expense charge or the monthly Policy fee.
Cost of Additional Benefits
The cost of additional benefits will include charges for any
additional insurance benefits added to the Policy by rider.
These charges are for insurance protection, and the amounts
will be specified in the Policy.
3. Mortality and Expense Risk Charge
The Company daily deducts a mortality and expense risk charge
of .00002466 of the Policy's Net Asset Value in the Separate
Account (and the Policy's Accumulated Value in the Interest
Bearing Account), which is equal on an annual basis to .9% of
the daily value of the net assets of the Separate Account (and
the value in the general account attributable to the Interest
Bearing Account). The mortality risk assumed is that the
Insured may not live as long as expected. The expense risk
assumed is that the actual expense will be greater than that
assumed. The Company has primary responsibility for all
administration for the Policy, the Separate Account and the
Interest Bearing Account. Such administration includes, among
other things, Policy issuance, underwriting, maintenance of
Policy records, Policy service, and all accounting, reserves
calculations, regulatory and reporting requirements, and audit
of the Separate Account. The Company may profit from this
charge. Any such profit may be used for any proper corporate
purpose including, among other things, payment of sales and
distribution expenses.
4. Contingent Deferred Sales and Administrative Charges
To reimburse the Company for sales expenses and Policy issue
expenses, contingent deferred sales and administrative charges
("Deferred Charges") will be deducted from the proceeds in the
event of a complete surrender of the Policy during the first
ten years. A chart showing the percentage of Deferred Charges
remaining at the beginning of Policy years 2 through 9 is
shown below. The contingent deferred sales charge will be used
to offset the expenses that were incurred in the distribution
of the Policy, including but not limited to representatives'
commissions, advertising, sales materials, training
allowances, and preparation of prospectuses for potential
purchasers. In no instance will the charge exceed 30% of the
lesser of premiums paid or the guideline annual premium (as
defined under the Investment Company Act of 1940) of the
Policy.
The contingent deferred sales and administrative charges vary
by the Age of Insured at issue, sex, and smoking status. For a
35-year-old male nonsmoker, the charges would be $7.71 per
$1,000 of the Specified Amount of insurance. For a 50-year-old
male nonsmoker, the charges would be $15.91 per $1,000 of
Specified Amount. For a chart showing how the charges vary,
see Appendix B.
The Company expects that sales charges collected by the
Company under this Policy generally will not cover all costs
associated with distributing this Policy. The Company
anticipates using assets from its general account (including,
among other things, amounts derived from mortality and expense
risk charges) to pay a portion of the distribution expenses
not paid by the sales charges.
The contingent deferred administrative charge will be used to
recover the first-year costs of underwriting and issuing the
Policy. Although these charges accrue at the time the Policy
is issued, they are deferred until such time as the Policy is
surrendered. They are contingent in that they will not be
collected unless the Policy is surrendered during the first
nine Policy years. No Deferred Charges will be deducted from
the proceeds in the event of a partial surrender of the
Policy.
The Deferred Charges generally build up monthly during the
first Policy year in twelve equal increments to the total
Deferred Charges. Then the Deferred Charges decrease annually
after the first year. The percentage of the Deferred Charges
remaining in each Policy year is:
Beginning Percentage of
Policy Year Deferred Charges Remaining
----------- --------------------------
2 95%
3 90%
4 85%
5 75%
6 65%
7 50%
8 35%
9 20%
10+ 0%
At the time the Policy is issued, the first month's portion of
the Deferred Charges is placed in a non-segregated portion of
the general account of the Company, which is referred to as
the Deferred Charges Account. This amount will earn interest
at a minimum rate of 4% per annum with the Company crediting
additional interest, at its option, from time to time. At the
next Monthly Day, taking into account the interest earned, the
Company will transfer from the Separate Account and/or the
Interest Bearing Account to the Deferred Charges Account the
amount necessary to equal the then current Deferred Charges.
This withdrawal will be made in the same percentages as
premiums are currently allocated among the Subaccounts and the
Interest Bearing Account.
The Company will do the same each month for the first Policy
year. If the Owner has not paid sufficient premium to build up
the Deferred Charges to the appropriate level in the first
Policy year, additional amounts will be transferred out of the
Separate Account and/or Interest Bearing Account in Policy
years 2 and thereafter until the Deferred Charges are at the
same level as if sufficient premiums had been paid in the
first year to completely Fund the Deferred Charges, and the
corresponding deductions had taken place every year, as
scheduled.
The Company will release on the first Monthly Day of the
second Policy year the amount in the Deferred Charges Account
in excess of 95% of the first Policy year Deferred Charges,
taking into account the interest earned. This process
continues each Policy year until the 10th Policy year or until
the Policy is surrendered.
The amount in the Deferred Charges Account is included in
calculating the Accumulated Value of the Policy. The Company
will withdraw Deferred Charges from the Deferred Charges
Account only in the following instances:
To pay surrender charges upon full surrender of the
Policy;
To release amounts back to the Separate Account
and/or Interest Bearing Account on the second through
ninth Policy Anniversaries, and
To pay the Monthly Deduction when there is
insufficient Net Cash Value and the no-lapse
guarantee or minimum death benefit guarantee is in
effect.
In the latter two situations, allocations will be made in the
same percentages as premiums are currently allocated among the
Subaccounts and the Interest Bearing Account.
Net Premiums paid following the payment of the Monthly
Deduction with Deferred Charges will first be transferred from
the Subaccounts and/or Interest Bearing Account to the
Deferred Charges Account on the day the premiums are received,
to the extent necessary to bring the Deferred Charges Account
to the same level as if no Deferred Charges had been used to
pay the Monthly Deduction, and if on a Policy Anniversary, the
reduction in Deferred Charges had taken place as scheduled. If
the premium is paid on a Monthly Day during the first Policy
year, additional amounts will be transferred to the Deferred
Charges Account. The process of using Deferred Charges to pay
the Monthly Deduction and then reimbursing the Deferred
Charges Account from the next premium payment will continue
every Monthly Day that there is insufficient Net Cash Value to
pay the Monthly Deduction and the no-lapse guarantee is in
effect or minimum death benefit guarantee is in effect and the
Policy is not beyond the ninth Policy year.
5. Transfer Fee
An Owner may transfer a Policy's Accumulated Value among one
or more of the Subaccounts and the Interest Bearing Account.
Currently, the Company allows four transfers in each Policy
year without charge. For subsequent transfers in any given
year, the Company may deduct up to $20 per transfer from the
amount transferred. (See OWNER'S RIGHTS - Transfer of Values.)
6. Federal and State Income Taxes
Other than premium taxes (and taxes in lieu of premium taxes)
no charges are currently made against the Separate Account
and/or Interest Bearing Account for federal or state income
taxes. In the event the Company should determine that any such
taxes will be imposed, the Company may make deductions from
the Separate Account and/or Interest Bearing Account to pay
such taxes.
F. GRACE PERIOD, LAPSE, NO-LAPSE GUARANTEE, AND REINSTATEMENT
1. Grace Period
If the Net Cash Value on any monthly day is less than the
amount needed to pay the Monthly Deduction, and the no-lapse
guarantee or minimum death benefit guarantee is not in effect,
the Company will mail a notice of termination to the Owner. A
grace period of 61 days will begin on the date the notice is
mailed. To avoid the Policy lapsing at the end of the grace
period, the Owner must pay, by the 61st day, sufficient
premium to increase the Net Cash Value to zero by the end of
the grace period, or if prior to the third Policy Anniversary
and no requested increase in Specified Amount was made, either
the above amount or the amount needed to qualify for the
no-lapse guarantee. In addition to allowing the Policy to
remain In Force, payment of the latter amount will reinstate
the no-lapse guarantee.
2. Lapse
If the premium due is not paid during the grace period, the
Policy will Lapse without value. If the Insured dies during
the grace period, the overdue charges will be deducted from
the Death Proceeds.
3. No-Lapse Guarantee
If at all times during the first three Policy years the sum of
the premiums received to date, less all partial surrenders and
Policy Indebtedness, is at least equal to the monthly minimum
premium multiplied by the number of months (plus one month)
the Policy has been In Force, the Policy will not Lapse, even
if the Net Cash Value is less than the amount needed to pay
the Monthly Deduction on the Monthly Day. The monthly minimum
premium is the minimum premium (the minimum annual amount
needed each year during the first three Policy years to keep
the no-lapse guarantee in effect) divided by 12. If any
requested increase in Specified Amount is made during the
first three Policy years, the no-lapse guarantee is voided.
In cases where the no-lapse guarantee is in effect and there
is insufficient Net Cash Value to pay the Monthly Deduction,
Deferred Charges will be used to pay the Monthly Deduction.
(See CHARGES AND DEDUCTIONS - Contingent Deferred Sales and
Administrative Charges.) Any Monthly Deduction remaining after
the Deferred Charges have been exhausted will be waived by the
Company. (See CHARGES AND DEDUCTIONS - Monthly Deduction.)
4. Reinstatement
The Owner may ask to have a Lapsed Policy reinstated.
Reinstatement will be made based upon the original terms of
the Policy if the following conditions are met:
The Owner requests the Company to reinstate the
Policy within five years after the end of the grace
period.
The request is in writing.
Satisfactory evidence of insurability must be
provided to the Company; the Cost of Insurance rates
following reinstatement will be based upon the risk
classification of the reinstated Policy.
The amount sufficient to increase the Net Cash Value
to zero by the end of the grace period, assuming no
investment gains or losses, is paid.
The Owner pays the amount of the Monthly Deductions
due on the first three Monthly Days after the
reinstatement is effective.
The Owner pays an amount equal to the difference
between Deferred Charges on the date of Lapse and
Deferred Charges on date of reinstatement, if greater
than zero, computed as if the Lapse had not occurred.
This amount will be reinstated in the Deferred
Charges Account.
The reinstatement will become effective immediately upon the
Company's approval of the reinstatement. The Company will
reinstate Accumulated Value to the Deferred Charges Account in
an amount equal to the lesser of the Deferred Charges on date
of Lapse or Deferred Charges on date of reinstatement,
computed as if the Policy had not Lapsed. The Deferred Charges
thereafter will grade down as if the Lapse had not occurred.
G. OWNER'S RIGHTS
1. Free-Look Period
The Owner may cancel the Policy on the latest to occur of 3
events: 45 days after the date of the application; 10 days
after the Company has personally delivered or has sent to the
Owner by first class mail the Policy and a Notice of Right of
Withdrawal; or 10 days after the Owner receives the Policy.
(If the Policy is replacing existing coverage, the Owner may
have a right to cancel for 20 days after the Company has
personally delivered or has sent to the Owner by first class
mail the Policy and a Notice of Right of Withdrawal.) To
cancel the Policy, the Owner must mail or deliver the Policy
to the representative who sold it or to the Company at its
Home Office. The Owner will be sent a refund equal in amount
to the total of:
the charges deducted state premium taxes (or taxes in
lieu of premium taxes),
the total amount of Monthly Deductions and any other
charges deducted from Accumulated Value,
the Accumulated Value on the date the Company
receives the returned Policy, less Indebtedness.
If, however, applicable state law so requires, the Company
will refund all premium payments made, unadjusted for
investment experience prior to cancellation.
If there is an increase in Specified Amount and such increase
is not the result of the Automatic Increase Rider or change in
death benefit option, the Owner will be granted a free-look
period, as set forth for a new Policy, with respect to the
increase. Upon requesting cancellation of the increase during
the free-look period, the Owner who requests a refund will
receive one; otherwise a credit will be made to the Policy's
Accumulated Value allocated among the Subaccounts and Interest
Bearing Account as if it were Net Premium, equal to all
Monthly Deductions attributable to the increase in Specified
Amount, including rider costs arising from the increase. The
refund or credit will be made within seven days after the
Company receives the request for cancellation on the
appropriate form containing all necessary signatures. The
notice of free-look period upon an increase in Specified
Amount will include a form for requesting a reversal of the
increase during the free-look period. Net Premiums paid upon
application of and after an increase in Specified Amount will
be allocated to the Subaccounts of the Separate Account and/or
the Interest Bearing Account and, except for Monthly
Deductions attributable to the increase, will not be refunded
following cancellation of the increase. Owners who request an
increase in Specified Amount should take this into
consideration in deciding whether to make any premium payments
during the free-look period for the increase. (See OWNER'S
RIGHTS - Change of Specified Amount.)
2. Policy Loans
Application For Loan
The Owner can borrow against the Policy an amount up
to 80% (90% for Virginia residents) of the Cash
Value. The written consent of all assignees and
Irrevocable Beneficiaries must be obtained prior to
the Policy loan. The Policy will be sole security for
the Policy loan.
The loan date is the date a written loan request
containing the necessary signatures is received at
the Home Office by the Company. The loan value will
be determined as of the loan date. Payment will be
made within seven days of the loan date unless a
suspension of payment is in effect. (See OTHER POLICY
PROVISIONS, DEFINITIONS - Suspension of Payments.)
An amount equal to the loan will be withdrawn from
the Subaccounts and/or Interest Bearing Account and
transferred to the Loan Account until the loan is
repaid. The Subaccounts and/or Interest Bearing
Account may be specified by the Owner. If no
specification is made, the loan amount will be
withdrawn in the same percentages as Monthly
Deductions are withdrawn from the Subaccounts and
Interest Bearing Account. If the Owner makes a
specification but there are insufficient values in
one or more of the Subaccounts and the Interest
Bearing Account for withdrawal as the Owner
specified, the loan amount will be withdrawn from all
Subaccounts and the Interest Bearing Account on a pro
rata basis based on values in the Subaccounts and
Interest Bearing Account.
Policy Loan Interest
Interest is payable on Policy loans at 8% compounded
annually. This rate is subject to change by the
Company.
Interest accrues on a daily basis from the loan date
on Policy loans. Interest is due and payable at the
end of each Policy year. If interest is not paid when
due, an amount equal to the interest due less
interest earned on the Loan Account will be
transferred from the Subaccounts and Interest Bearing
Account to the Loan Account. The amount of loan
interest billed will increase the loan principal and
be charged the same rate of interest as the loan.
Policy values transferred to the Loan Account to
secure Policy loans earn interest at the rate of 6%
compounded annually.
Repayment of Policy Loans
Any Indebtedness may be repaid while the Policy is In
Force before the death of the Insured or before
surrender. As the loan is repaid, the amount repaid
will be transferred from the Loan Account to the
Subaccounts and Interest Bearing Account in the same
manner as premiums are allocated.
3. Transfer of Values
The Owner may transfer Accumulated Value from certain
Subaccounts to other Subaccounts and to the Interest Bearing
Account. A transfer may be requested in writing or by an
authorized telephone transaction. A written request to
transfer amounts must be made on a form satisfactory to the
Company and contain the original signature of the Owner. The
written request will take effect on the day the written notice
is received at the Home Office of the Company.
Transfers from a Subaccount to another Subaccount or to a
Interest Bearing Account may be made at any time. The amount
transferred to a Subaccount must be at least 5% of the amount
transferred and must be stated in whole percentages.
Transfers from a Subaccount to the Interest Bearing Account
may be made at any time. An Owner may make transfers from the
Interest Bearing Account into the Subaccounts only during the
30 day period beginning on and immediately following the
Policy Anniversary.
An Owner may transfer values four times per year without
charge. The Company may charge up to $20 per transfer for all
additional transfers in any given year.
An Owner's telephone or fax request to transfer amounts will
be honored if the Owner has a valid telephone and fax
authorization on file at the Home Office. An Owner may change
the telephone and fax authorization or may request that it be
terminated. The change or termination takes effect when it is
received in the Home Office.
The Company will exercise reasonable care to prevent
unauthorized telephone transactions. For example, the Company
will:
record calls requesting transfers;
ask the caller questions to determine if the caller
is the Owner; transfer funds only to other
Subaccounts and to the Interest Bearing Account; send
a written confirmation of each transfer; and
terminate the telephone and fax authorization after
receipt of a written request from an Owner.
If the Company does not use reasonable procedures to determine
that the instructions are genuine, the Company may be liable
for any losses due to unauthorized or fraudulent instructions.
On the other hand, if the Company uses reasonable procedures
and believes the instructions to be genuine, the Owner is at
risk of loss if someone gives unauthorized or fraudulent
information to the Company.
A request to transfer amounts from one or more Subaccounts to
other Subaccounts and/or the Interest Bearing Account or from
the Interest Bearing Account to one or more Subaccounts which
is received prior to 3:00 p.m. Central Standard Time or the
close of the New York Stock Exchange, whichever is earlier,
will take effect on the day the request is received. Transfer
requests received after that time will be processed the
following Valuation Day.
An Owner who is unable to contact the Company by phone must
submit the transfer request in writing. An Owner is more
likely to experience difficulty in contacting the Company by
phone during periods of drastic economic or market changes.
The Company reserves the right to discontinue allowing
telephone and fax transfers. In the event the Company
discontinues this privilege, it will send written notice to
all Owners who have currently valid telephone and fax
authorizations on file. Such discontinuance will become
effective on the fifth Valuation Day following mailing of the
notice by the Company.
The Company further reserves the right to restrict the ability
to transfer amounts among Subaccounts and/or the Interest
Bearing Account if the Company feels such action is necessary
to prevent the Owner from being considered the Owner of the
assets of the Separate Account.
4. Dollar Cost Averaging
Through the dollar cost averaging program, an Owner may
purchase units of the subaccounts at regular intervals in
fixed dollar amounts. The fixed dollar amount will purchase
more units when the value of a Subaccount is low and fewer
units when the value of a Subaccount is high. Over time, the
cost per unit averages out to be not as high as if all
purchases had been made at the highest cost and not as low as
if all purchases had been made at the lowest cost. Dollar cost
averaging reduces the risk of making purchases only when
prices are high. It does not assure profit or protect against
loss in declining markets. Owners interested in the dollar
cost averaging program should consider their ability to
maintain steady purchases at times when prices are low.
The dollar cost averaging request form permits an Owner to
make transfers each month from the Money Market Subaccount to
any other Subaccount and to the Interest Bearing Account. The
minimum transfer is $200 per month. The amount transferred to
a Subaccount must be at least 5% of the amount transferred and
must be stated in whole percentages. The transfer is made on
the 20th day of each month if that day is a Valuation Day. (In
general, a Valuation Day is a day when the New York Stock
Exchange and the Company are open for business.) If the 20th
is not a Valuation Day, the transfer will be made on the next
Valuation Day. Once elected, dollar cost averaging remains in
effect until the earliest of these events: (1) the Money
Market Subaccount is depleted to zero; (2) the Owner cancels
the election (by written notice or by telephone or fax if the
Company has the Owner's telephone and fax authorization form
on file; or (3) for three successive months, the amount in the
Money Market Subaccount has been insufficient to implement the
dollar cost averaging instructions the Owner has given to the
Company. The Company will notify the Owner when dollar cost
averaging is no longer in effect. There is no additional
charge for using dollar cost averaging. The Company reserves
the right to discontinue offering the dollar cost averaging
facility at any time and for any reason.
5. Change of Allocations
The allocation of future Net Premiums may be changed by the
Owner by requesting the change in writing or by phone. (See
PREMIUMS - Allocation of Net Premiums.) The Owner may also
change the percentages of Monthly Deductions withdrawn from
each Subaccount and Interest Bearing Account by written
request or by phone. (See CHARGES AND DEDUCTIONS - Monthly
Deduction.) Any allocation to, or withdrawal from, a
Subaccount and Interest Bearing Account must be at least 5% of
Net Premiums and only whole percentages are allowed.
Changes in allocation of Net Premiums and withdrawal of the
Monthly Deduction which are requested by phone or fax will be
honored provided the Owner has telephone or fax authorizations
on file at the Home Office of the Company. (See OWNER'S RIGHTS
- Transfer of Values.)
A telephone or fax request to change allocation of premiums
will be effective with the first premium payment on or
following the date the request for change is received at the
Home Office of the Company. A request to change the allocation
of withdrawal of Monthly Deductions will be effective on the
first Monthly Day on or following the date the request is
received at the Home Office of the Company.
6. Change of Death Benefit Option
The Owner may change the death benefit option which is in
effect. The change will become effective on the Monthly Day
next occurring after a written request is received at the Home
Office. The Company reserves the right to require evidence of
insurability as a condition to change the death benefit
option.
If the change is from death benefit option 1 to death benefit
option 2, the Specified Amount will be reduced by the amount
of the Accumulated Value on the effective date of the change.
This change will not alter the amount of the Policy's death
benefit at the time of the change, but will affect how the
death benefit is determined from that point on. The death
benefit will vary with Accumulated Value from that point on,
unless the death benefit derived from application of the Death
Benefit Ratio applies. (See POLICY BENEFITS - Death Proceeds.)
No change from death benefit option 1 to death benefit option
2 will be allowed if the resulting Specified Amount would be
less than $40,000 ($8,000 if Issue Age is 65 and over). (For
limits applicable to Policies sold to Employee Benefit Plans,
see UNISEX POLICIES.)
If the change is from death benefit option 2 to death benefit
option 1, the Specified Amount will be increased by the amount
of the Accumulated Value on the effective day. This change
does not alter the amount of the Policy's Face Amount at the
time of the change, but will affect the determination of the
Face Amount from that point on. The Face Amount as of the date
of the change becomes the new Specified Amount and will remain
at that level, unless the Face Amount derived from application
of the Death Benefit Ratio applies.
The insurance goals of the Owner determine the appropriate
death benefit option. Owners who prefer to have favorable
investment results and greater than scheduled premiums show up
partly in the form of an increased death benefit should choose
death benefit option 2. Owners who are satisfied with the
amount of their insurance coverage and wish to have favorable
investment results and additional premiums reflected to the
maximum extent in increasing Cash Values should choose death
benefit option 1.
A change of death benefit option will also change the Cost of
Insurance for the duration of the Policy. The Cost of
Insurance on any Monthly Day is equal to the Face Amount minus
the Accumulated Value, multiplied by the Cost of Insurance
rate. The Cost of Insurance rate is the same under both
options, but the difference between Face Amount and
Accumulated Value varies inversely with Accumulated Value
under option 1, but is constant under option 2 unless the Face
Amount derived from application of the Death Benefit Ratio
applies.
7. Change of Specified Amount
The Specified Amount may be changed at any time after the
first Policy year. The Company will charge $50 per requested
increase in excess of one per Policy year. The Specified
Amount is used to determine the Face Amount of the Policy.
(See POLICY BENEFITS - Death Proceeds - Death Benefit Options
1 and 2.) Changes must be requested in writing and are subject
to the conditions below:
o Decreases. After the decrease, the Specified Amount
must be at least $50,000 ($10,000 for Issue Ages 65
and over). (For limits applicable to Policies sold to
Employee Benefit Plans, see UNISEX POLICIES.) The
decrease will become effective on the Monthly Day
following or coincident with the day the request is
received at the Home Office. For purposes of
determining the Cost of Insurance, the decrease will
be applied to the initial Specified Amount and to
increases in the Specified Amount in reverse order in
which they become effective. Such a decrease does not
result in reduced Deferred Charges.
o Increases. A supplemental application must be filed,
and the Company must be provided with evidence of
insurability satisfactory to it. The effective date
of the increase will be shown on an endorsement to
the Policy. The Incontestable and Suicide Provisions
apply to the increase as if a new Policy had been
issued for the amount of the increase.
When an increase in Specified Amount occurs, the
Owner will be given a free-look and
conversion/exchange right on the increase. In the
event of exercise of the exchange right with respect
to an increase in Specified Amount (see OWNER'S
RIGHTS - Conversion/Exchange of Policy), the amount
of Cash Value transferable to the new Policy shall be
limited to the amount allocated to the increase in
the Specified Amount.
The Net Cash Value of the original Policy, as well as
any premiums paid at the time of the increase, and
any premiums paid after the increase will be
allocated between the original Specified Amount and
the increased Specified Amount according to the
ratios of their respective guideline annual premiums
(as defined under the Investment Company Act of
1940).
If the Specified Amount is increased after the Issue
Date, additional Deferred Charges will be incurred
and released as though a new Policy had been issued
for the amount of the increase. In no instance,
however, will the additional deferred sales charge
exceed the lesser of 30% of the guideline annual
premium for the increase or of the Cash Value and
premiums paid which are allocable to the increase. No
additional Deferred Charges will accrue for increases
in Specified Amount due to the Automatic Increase
Rider or a change from death benefit option 2 to
death benefit option 1.
If the Specified Amount is increased upon request of
an Owner, a separate monthly administrative fee will
be assessed. This separate monthly administrative
expense charge will be calculated in the same manner
as for the initial Specified Amount. No additional
monthly administrative fee will be assessed due to an
increase in Specified Amount as a result of the
Automatic Increase Rider.
The Company reserves the right to require the payment
of additional premiums in an amount equal to the
minimum premium which would be charged based on
Attained Age and rating class for a newly-issued
Policy with a Specified Amount equal to the amount of
increase, as a condition of allowing an increase
where the Cash Value allocated to the increase is
insufficient to support the increase. (See CHARGES
AND DEDUCTIONS - Contingent Deferred Sales and
Administrative Charges.)
The rating class assigned to an increase in Specified
Amount may result in the use of Cost of Insurance
charges different than the Cost of Insurance rate
charged on the original Specified Amount.
8. Conversion/Exchange of Policy
The Policy may be exchanged any time within 24 months after
the Issue Date for a Policy of permanent fixed benefit
insurance, or for any other Policy which the Company may agree
to issue on the life of the Insured. "Fixed benefit insurance"
means any permanent plan of insurance providing benefits which
do not depend on the investment experience of a Separate
Account. No evidence of insurability is required. All
Indebtedness must be repaid before the change is made.
The exchange will be effective when the Company receives:
Written request for the Policy exchange or change
signed by the Owner;
Surrender of the Policy; and
Payment of any required costs.
The new Policy will have the same Issue Date, Issue Age, and
risk classification as the Policy. The new Policy will have
either the same death benefit or the same net amount at risk
as the Policy on the exchange date. The exchange will be
subject to an equitable adjustment in payments and Cash Values
to reflect differences, if any, between the Policy and the new
Policy. It will be subject to normal underwriting rules and
other conditions determined by the Company. If there is an
increase in Specified Amount and such increase is not the
result of a change in death benefit option or Automatic
Increase Rider, the Owner will be granted an exchange
privilege with respect to the increase, subject to the
conditions and principles applicable to an exchange of the
entire Policy. The Owner will also have the option to transfer
without charge on the exchange date, any portion of the Net
Cash Value of the original Policy as premium to the new
Policy. (See OWNER'S RIGHTS - Change of Specified Amount.)
9. Transfer of Ownership
The Owner may transfer ownership of the Policy. The written
consent of all Irrevocable Beneficiaries must be obtained
prior to such transfer. The notice of transfer must be in
writing and filed at the Home Office of the Company. The
transfer will take effect as of the date the notice was
signed. The Company may require that the Policy be sent in for
endorsement to show the transfer of ownership.
The Company is not responsible for the validity or effect of
any transfer of ownership. The Company will not be responsible
for any payment or other action the Company has taken before
having received written notice of the transfer.
10. Collateral Assignments
The Owner may assign the Policy as collateral security. The
written consent of all Irrevocable Beneficiaries must be
obtained prior to such assignment. The assignment must be in
writing and filed at the Home Office of the Company. The
assignment will then take effect as of the date the notice was
signed.
The Company is not responsible for the validity or effect of
any collateral assignment. The Company will not be responsible
for any payment or other action the Company has taken before
having received the written collateral assignment.
A collateral assignment takes precedence over the interest of
a Beneficiary. Any Policy proceeds payable to an assignee will
be paid in one sum. Any remaining proceeds will be paid to the
designated Beneficiary or Beneficiaries.
A Collateral Assignee is not an Owner. A collateral assignment
is not a transfer of ownership.
11. Settlement Options
Settlement options other than lump sum payments are available
for Death Proceeds, surrender proceeds, and maturity proceeds,
payable to natural persons, subject to certain restrictions on
Death Proceeds. (See POLICY BENEFITS - Death Proceeds, Payment
of Death Proceeds.) Proceeds payable to other than a natural
person will be applied only under settlement options consented
to by the Company. The four settlement options available are
as follows:
Interest Option
The Policy proceeds may be left at interest with the
Company during the lifetime of the payee. The
interest rate is determined each year by the Company.
It is guaranteed to be not less than the settlement
option rate of interest shown on the specifications
page contained in the Policy.
The payee may choose to receive interest payments
either once a year or once a month unless the amount
of interest to be paid monthly is less than $25 per
month, then interest will be paid annually. The payee
may withdraw any remaining proceeds, if this right
was given at the time the option was selected.
Installment Option
The proceeds may be left with the Company to provide
equal monthly installments for a specified period. No
period can be greater than 30 years. The interest the
Company guarantees to pay is set forth in the Policy.
Additional interest, if any, will be payable as
determined by the Company.
The payee may withdraw the present value of any
remaining guaranteed installments, but only if this
right was given at the time the option was selected.
Life Income - Guaranteed Period Certain
The proceeds may be left with the Company to provide
monthly installments for as long as the original
payee lives. A guaranteed period may be selected.
Payments will cease when the original payee dies or
at the end of the guaranteed period, whichever is
later. If the original payee dies during the
guaranteed period, the remaining guaranteed payments
will be paid to the successor payee.
Guaranteed periods which may be selected are:
~ 10 years.
~ 20 years.
~ A period of years such that the total
installments during the period will be at
least equal to the proceeds applied under
the option.
It is also possible to take the life income without a
guaranteed period. In such case, the monthly
installment amount will depend on the Age and sex of
the original payee on the date of the first payment.
Dividends, if any, will be payable as determined by
the Company.
Joint and Survivor Life
The proceeds may be left with the Company to provide
monthly installments for two payees for a guaranteed
period of 10 years. After the 10-year period is over,
payments will continue as long as either of the
original payees is living. The monthly installment
amount will depend on the Age and sex of both payees
at the date of the first payment.
The minimum amount that can be applied under settlement options 2, 3
and 4 is that amount which will provide monthly installments of at
least $25.
Additional monthly income may be purchased under settlement options 2
and 3. The amount of additional annuity which can be purchased with new
money is 95% of the amount which can be purchased with the net Policy
Death Proceeds under those options. The additional annuity amount may
not exceed twice that which the application of proceeds under the
selected option would provide.
The selection of an additional annuity purchase must be in writing and
on file at the Home Office. Selection must be within 30 days of
settlement under this Policy and is available only if the settlement is
on or after the later of the 10th Policy Anniversary or the annuitant's
55th birthday.
The Company may, at its option, provide for additional settlement
options or delete any of the settlement options described above.
Monthly installment amounts for settlement options selected for use in
conjunction with unisex Policies will not be based on the sex of the
Insured.
H. OTHER POLICY PROVISIONS, DEFINITIONS
1. Conditions for Policy Issue
The minimum Specified Amount for this Policy is $50,000
($10,000 for Issue Ages 65 and over). The Policy may be issued
on individuals up to 75 years of Age. The Company requires
evidence of insurability satisfactory to it before issuing a
Policy. In some cases, this evidence will include a medical
examination. Smoker rates are determined based on Age, sex,
and duration. Higher rates are charged if the Company
determines that for some reason the Insured is a higher
mortality risk. Nonsmoker rates are charged for nonsmokers
over the Age of 19 who have completed and returned to the
Company a Nonsmoker Statement, and when required by
underwriting guidelines, a Part 2 Health Statement. (For
limits on Specified Amount and factors considered in
determining the Cost of Insurance rate for Policies sold to
Employee Benefit Plans, see UNISEX POLICIES.)
2. Issue Date
The Issue Date is the date used to determine Policy
Anniversaries and Monthly Days. If a premium is paid with the
application, the Issue Date will be no earlier than the date
the application is received and no later than the Record Date.
Insurance coverage will begin as of the Issue Date provided
the applicant subsequently is deemed to have been insurable.
If a premium is not paid with the application, the Issue Date
will ordinarily be approximately 10 days after underwriting
approval. Insurance coverage will begin on the later of the
Issue Date or the date the premium is received.
3. Record Date
The Record Date is the date on which the Company has completed
its underwriting and entered the Policy in its records as an
In Force Policy.
4. Owner, Beneficiary
The Owner is named in the application. The Owner may be other
than the Insured.
One or more Beneficiaries may be named in the application.
Beneficiaries may be classified as primary or contingent. If
no primary Beneficiary survives the Insured, payment will be
made to contingent Beneficiaries. Beneficiaries in the same
class will receive equal payments unless otherwise directed. A
Beneficiary must survive the Insured in order to receive his
or her share of the Death Proceeds. If a Beneficiary dies
before the Insured dies, his or her unpaid share is divided
among the Beneficiaries who survive the Insured. The unpaid
share will be divided equally unless the Owner directs
otherwise. If no Beneficiary survives the Insured, the Death
Proceeds will be paid to the Owner, if living, or to the
Owner's estate.
The Owner may change the Beneficiary while the Insured is
living. The written consent of all Irrevocable Beneficiaries
must be obtained prior to such change. To make a change, the
Owner must provide the Company with a written request
satisfactory to the Company. The request will not be effective
until the Company records it. After the request is recorded,
it will take effect as of the date the Owner signed the
request. The Company will not be responsible for any payment
or other action it takes before it records the request. The
Company may require the Policy be returned for endorsement of
the Beneficiary change.
5. Incontestability
The incontestability provision in the Policy, which prevents
the Company from denying coverage for misrepresentation after
the Policy has been In Force for two years, applies only to
the initial Specified Amount designated in the application.
The incontestability period for any amount over and above the
initial Specified Amount is governed by its own two-year
incontestability period to which such additional amount is
attributable.
While the Policy is contestable, the Company may Rescind the
Policy or defend a claim only on the basis of a material
misrepresentation in the application. A misrepresentation is
material if, on the basis of correct and complete information
in the application, the Company would have:
Declined the application;
Issued the Policy at a higher premium, or;
Issued the Policy on some other basis than applied
for.
If a Policy is reinstated, it is incontestable after it has
been In Force during the Insured's lifetime for two years from
the date of reinstatement. This contestable period applies
only to statements made in the application for reinstatement.
If the Policy is rescinded pursuant to the incontestability or
suicide provisions of the Policy, rescission proceeds payable
to the Owner shall be equal to:
Charges deducted for state premium taxes (or taxes in
lieu of premium taxes);
Plus the total amount of Monthly Deductions and any
other charges deducted from Accumulated Value;
Plus the Accumulated Value on the date the refund is
calculated;
Minus Indebtedness.
6. Effect of Misstatement of Age or Sex
If the Insured's Age or sex has been misstated, the amount
payable and other benefits will be adjusted without regard to
the two-year contestability period. The death benefits payable
will be adjusted based on what the Cost of Insurance charge
for the most recent Monthly Day would have purchased based on
the current Age and sex.
For provisions applicable to unisex Policies, see the section
titled UNISEX POLICIES.
7. Suicide
Suicide of the Insured, while sane or insane, within two years
of the Issue Date, is not covered by the Policy. If the
Insured does commit suicide, the amount payable will be
calculated as described in the Incontestability Section
describing rescission proceeds.
8. Dividends
While the Policy is In Force, it will share in the divisible
surplus of the Company. The Policy's share is determined
annually by the Company. It is payable annually on the Policy
Anniversary. The Owner may select to have dividends paid into
the Subaccounts and the Interest Bearing Account as Net
Premiums or to have dividends paid in cash. If no option is
selected, the dividends will be paid into Subaccounts and/or
Interest Bearing Account as Net Premiums. The Company
currently does not expect to pay dividends during the first 10
Policy years. During the 11th Policy year and thereafter, the
Company projects annual dividends equal to .61% of the average
Accumulated Value, plus $39 per Policy for each of Policy
years 11-20 and 1.01% of the average Accumulated Value plus
$39 per Policy for each of Policy years 21 and above. For
Issue Ages 0-19, the projected dividends are the same as those
for Ages 20 and above, except the per Policy dividend is $3 in
years 11 and above, instead of $39. These dividends are not
guaranteed. They are reflected in Illustrations 1, 3, 5 and 7
of Appendix A.
9. Suspension of Payments
For amounts allocated to the Separate Account, the Company may
suspend or postpone the right to transfer among Subaccounts,
make a surrender or partial surrender, and take a Policy loan
when the New York Stock Exchange is closed other than for
customary weekend and holiday closings; during periods when
trading on the Exchange is restricted as determined by the
SEC; during any emergency as determined by the SEC which makes
it impractical for the Separate Account to dispose of its
securities or value its assets; or during any other period
permitted or required by order of the SEC for the protection
of investors.
To the extent values are allocated to the Interest Bearing
Account, the payment of full or partial surrender proceeds or
loan proceeds may be deferred for up to six (6) months from
the date of the surrender or loan request. Death proceeds may
be deferred for up to 60 days from the date the Company
receives proof of death.
10. Accelerated Benefit Option
The Company will advance up to 50% of a Policy's eligible
death benefit, subject to a $250,000 maximum per Insured, if
the Company receives satisfactory proof that the Insured is
terminally ill and if the Owner elects to receive an
accelerated payment of the death benefit. The Accelerated
Benefit Option Endorsement (Endorsement) refers to terminal
illness as a non-correctable medical condition in which the
Insured's life expectancy is no more than twelve months.
Accumulated Value is excluded from the calculation of the
eligible death benefit. If an Owner elects to receive an
accelerated benefit, the Company will assess an administrative
charge (of no more than $300) and will deduct interest on the
amount being accelerated. As a result, the amount payable to
the Beneficiary at death is reduced by an amount greater than
the amount received by the Owner as an accelerated benefit.
The accelerated benefit is available only in states which have
approved the Endorsement and may vary from state to state. The
tax status of accelerated benefits is uncertain. Accelerated
benefits are not specifically excluded from taxable income.
See "Tax Treatment of Policy Proceeds."
I. RIDERS
A rider attached to a Policy adds additional insurance and benefits.
The rider explains the coverage it offers. A rider is available only in
states which have approved the rider. A rider may vary from state to
state. Some riders are not available to Policies sold to Employee
Benefit Plans. The cost for riders is deducted as a part of the Monthly
Deduction. Riders are subject to normal underwriting requirements. The
Company reserves the right to stop offering the riders mentioned below
and to offer additional riders.
Children's Insurance: The rider provides level term insurance to Age 23
of the child or Age 65 of the parent, if sooner, on the children of the
Owner. The death benefit will be payable to the Beneficiary stated in
the rider upon the death of any Insured child. If the Insured parent
dies prior to the termination of this rider, the coverage on each child
becomes paid-up term insurance to Age 23. This rider may be converted
without evidence of insurability on each Insured child's 23rd birthday
or at Age 65 of the parent, if sooner.
Guaranteed Insurability: The rider provides that additional insurance
may be purchased on the life of the Insured on specific future dates at
standard rates without evidence of insurability. It is issued only to
standard risks. It may be issued until the Policy Anniversary following
the Insured's 37th birthday.
Accidental Death Benefit: The rider provides for the payment of an
additional death benefit on the life of the Insured should death occur
due to accidental bodily injury occurring before Age 70. The premium
for the Accidental Death Benefit is payable to Age 70.
Automatic Increase: The rider provides for automatic increases in the
Policy's Specified Amount on each Policy Anniversary without evidence
of insurability. This rider may be issued until the earlier of the 15th
Policy Anniversary or the Policy Anniversary following the Insured's
55th birthday.
Other Insured: This rider provides level term insurance. The "other
Insured" could be the Insured or could be another person within the
immediate family of the Insured. The death benefit expires on the
"other Insured's" 95th birthday or upon termination of the Policy,
whichever comes first. Evidence of insurability is required to increase
the amount of the death benefit. The rider may be issued until the
Policy Anniversary following the Insured's 65th birthday.
Term Insurance: This rider is available only on Policies with a face
value of at least $250,000. It is available only on the primary
Insured. The rider is convertible to Age 75. The death benefit expires
on the Insured's 95th birthday or upon termination of the Policy. This
rider is not available to UltraVers-ALL LIFESM Policies.
Disability Waiver of Monthly Deductions: This rider provides that,
during the Insured's total disability, the Company will waive Monthly
Deductions for administrative and life insurance costs. The rider may
be issued until the Policy Anniversary following the Insured's 55th
birthday. It may be renewed until the Policy Anniversary following the
Insured's 65th birthday.
Waiver of Premium and Monthly Deduction Disability Benefit: Like the
rider just described, this rider provides that, during the Insured's
total disability, the Company will waive the Monthly Deduction for
administrative and life insurance costs. In addition, this rider
provides that the Company will contribute additional premium. The
amount of additional premium the Company will contribute will be shown
on the specifications page for the rider. The maximum amount the
Company will contribute is $12,000 on an annual basis. The rider may be
issued until the Policy Anniversary following the Insured's 55th
birthday. It may be renewed until the Policy Anniversary following the
Insured's 65th birthday at which time the rider terminates. This rider
is not available to UltraVers-ALL LIFESM Policies.
IV. REPORTS TO OWNERS
The Company will confirm within seven days: the receipt of any Net Premium
(except premiums received before Record Date or by preauthorized check); any
change of allocation of Net Premiums or Monthly Deduction; any transfer between
Subaccounts; any loan, interest repayment, or loan repayment; any partial
surrender; any return of premium necessary to comply with applicable maximum
premium limitations; and any restoration to Cash Value following exercise of the
free-look privilege for an increase in Specified Amount. Upon request, an Owner
shall be entitled to a receipt of any premium payment including those made by
preauthorized check.
The Company will also mail to the Owner, at the last known address of record at
the Home Office of the Company, at least annually, a report containing such
information as may be required by any applicable law or regulation, and a
statement for the Policy year showing all transactions previously confirmed, all
Monthly Deductions and transfers into and out of the Deferred Charges Account,
and any credit to the Separate Account of interest on amounts held in the Loan
Account or Deferred Charges Account.
The Owner will also be sent confirmation within seven days of: (1) exercise of
the free-look privilege, (2) an exchange of the Policy or increase in Specified
Amount, (3) full surrender of the Policy, and (4) payment of Death Proceeds.
V. VOTING RIGHTS
In accord with its view of current applicable law, the Company will vote Fund
shares held in the Separate Account at regular and special shareholder meetings
of the Funds in accordance with instructions received from persons having voting
interests in the corresponding Subaccounts. The Company will vote shares for
which it has not received timely instructions and shares attributable to
Policies sold to Employee Benefit Plans not registered pursuant to an exemption
from the registration provisions of the Securities Act of 1933, in the same
proportion as the Company votes shares for which it has received instructions.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or the Company otherwise
determines that it is allowed to vote the shares in its own right, it may elect
to do so.
The Owner shall have the voting interest under a Policy. The number of votes the
Owner has a right to instruct will be calculated separately for each Subaccount.
The Owner shall have the right to instruct one vote for each $100 of Accumulated
Value in the Subaccount with fractional votes allocated for amounts less than
$100. The number of votes available to an Owner will be determined as of a date
coincident with the date established by the Fund for determining shareholders
eligible to vote at the relevant meeting of the Fund's shareholders. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the Fund. Each Owner having a voting
interest in a Subaccount will receive proxy materials and reports relating to
any meeting of shareholders of the Fund in which that Subaccount invests.
The Company may, when required by state insurance regulatory authorities, vote
shares of a Fund without regard to voting instructions from Owners, if the
instructions would require that the shares be voted so as to cause a change in
the sub-classification of a Fund, or investment objectives of a Fund, or to
approve or disapprove an investment advisory contract for a Fund. In addition,
the Company itself may, under certain circumstances, vote shares of a Fund
without regard to voting instructions from Owners in favor of changes initiated
by Owners in the investment Policy, or the Investment Adviser or the principal
underwriter of a Fund. For example, the Company may vote against a change if the
Company in good faith determines that the proposed change is contrary to state
or federal law or the Company determines that the change would not be consistent
with the investment objectives of a Fund and would result in the purchase of
securities for the Separate Account which vary from the general quality and
nature of investments and investment techniques used by other Separate Accounts
of the Company.
VI. DISTRIBUTION OF POLICIES
Inquiries regarding the Policy should be directed to CUNA Brokerage Services,
Inc., Office of Supervisory Jurisdiction, 2000 Heritage Way, Waverly, Iowa,
50677, (800) 798-5500, (319) 352-4090. CUNA Brokerage Services, Inc. is
wholly-owned by CUNA Mutual Investment Corporation which in turn is wholly-owned
by CUNA Mutual Insurance Society. CUNA Brokerage Services, Inc., 5910 Mineral
Point Road, Madison, Wisconsin, 53705, the principal underwriter for the Policy
is a broker/dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers. Century Life of
America, the issuer of the Policy, entered into a permanent affiliation with
CUNA Mutual Insurance Society on July 1, 1990. The Policies will be sold through
registered representatives who will be paid first-year and renewal commissions
for their services.
The amount of commissions paid to representatives who sell this Policy will be
no more than 8.5% of the total premiums paid under this Policy.
In addition to the commissions described above, amounts may be paid in the form
of expense allowances, retirement benefits, bonuses, and training allowances.
Amounts may also be paid to compensate field management of the representatives
who distribute the Policy. The benefits listed in this paragraph may be in whole
or in part based upon the amount of commissions paid on the Policy.
VII. UNISEX POLICIES
The U.S. Supreme Court ruled in the 1983 Norris Decision that employer-sponsored
benefit plans (Employee Benefit Plans) are a "privilege of employment" and as
such, males and females must receive equal benefits. Policies sold to Employee
Benefit Plans which must comply with this decision will be governed by all the
provisions described in this prospectus, and by the following provisions:
The Cost of Insurance rates will be determined as previously set forth except
that sex shall not be considered. These unisex monthly Cost of Insurance rates
will not exceed the rates shown in Table I - Guaranteed Maximum Insurance Rates
which is contained in the Policy.
Deferred Charges will vary by Issue Age, Specified Amount, and in the case of
deferred sales charge, smoker status. The Deferred Charges for unisex Policies
(including Policies sold to Owners other than Employee Benefit Plans) are shown
in the table in Appendix C.
The minimum Specified Amount at issue that will be allowed is $25,000 ($10,000
for Issue Ages 65 and over). Requested reductions in Specified Amount cannot go
below these amounts. Specified Amounts reduced as a result of a partial
surrender or a change in death benefit option cannot go below $20,000 ($8,000
for Issue Ages 65 and over). The Company may waive this minimum from time to
time. In deciding whether to waive this minimum, the Company will consider the
required and minimum contributions under a qualified plan, the size of the group
involved, and the difference between the proposed Specified Amount and the
required minimum, as well as other factors.
Because unisex mortality tables are used for this Policy, misstatement of sex
cannot result in a material misrepresentation by the Owner. Accordingly, neither
the Policy nor the Death Proceeds will be modified as a result of misstatement
of sex.
Illustrations of Policy values and accumulations based on unisex Cost of
Insurance rates for 35 and 50-year-old nonsmokers may be obtained without cost
from the address shown on the first page of this Prospectus.
The Accelerated Benefit Option feature is not available to Employee Benefit
Plans. Unisex Policies sold to Owners other than Employee Benefit Plans will be
governed by the terms of this Prospectus (other than the provisions in this
section) except that Deferred Charges will not vary by sex, unisex Cost of
Insurance rates will be used, and no correction to or modification of the Policy
or Death Proceeds will be made as a result of misstatement of sex. It is
anticipated that unisex Policies will be sold to Owners other than Employee
Benefit Plans only if required by law or regulation. The Company does not
currently anticipate offering the Policy for sale in states requiring the use of
unisex Cost of Insurance rates.
VIII. FEDERAL INCOME TAX MATTERS
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ANY
PERSON CONCERNED ABOUT TAX IMPLICATIONS SHOULD CONSULT A COMPETENT TAX ADVISOR.
THIS DISCUSSION IS BASED ON COMPANY'S CURRENT UNDERSTANDING OF THE PRESENT
FEDERAL INCOME TAX LAWS AS CURRENTLY INTERPRETED AND NO REPRESENTATION IS MADE
AS TO THE LIKELIHOOD OF CONTINUATION OF THESE CURRENT LAWS AND INTERPRETATIONS.
SPECIAL RULES NOT DESCRIBED IN THIS PROSPECTUS MAY BE APPLICABLE IN CERTAIN
SITUATIONS. THIS DISCUSSION DOES NOT CONSIDER APPLICABLE STATE AND OTHER INCOME
TAX LAWS OR ESTATE, INHERITANCE OR OTHER TAX LAWS.
A. TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under Subchapter L of
the Internal Revenue Code of 1986 as amended (the "Code"). The Separate
Account is considered a part of the Company for federal income tax
purposes. Currently, the Separate Account's investment income,
including realized net capital gains attributable to the Policies, is
not taxed to the Company. As a result, the Company does not currently
charge the Separate Account for federal income taxes. If the Company
determines that it may incur such taxes, it may assess a charge for
those taxes to the Separate Account.
Many states assess premium taxes (or taxes in lieu of premium taxes)
which are deducted from premium payments. Currently, no charge is being
made to the Separate Account for any other state and local taxes. If
there is a material change in state or local tax laws, the Company may
assess a charge to the Separate Account for such taxes.
B. TAX STATUS OF THE POLICY
In order to qualify as a life insurance contract for federal tax
purposes, the Policy must meet the definition of a life insurance
contract which is set forth in Section 7702, (the Code). The manner in
which Section 7702 should be applied to certain features of the Policy
offered in this Prospectus is not directly addressed by Section 7702.
Nevertheless, the Company believes that the Policy will meet the
Section 7702 definition of a life insurance contract, so that:
o the death benefit should be fully excludable from the gross
income of the beneficiary under Section 101(a)(l) of the Code;
and
o the Policy owner should not be considered in constructive
receipt of the cash value, including any increases, until
there is a deemed or actual distribution from the Policy.
In the absence of final regulations or other pertinent interpretations
of Section 7702, however, there is necessarily some uncertainty as to
whether a Policy will meet the statutory life insurance contract
definition, particularly if it insures substandard risks. If a Policy
were determined not to be a life insurance contract for purposes of
Section 7702, such Policy would not provide most of the tax advantages
normally provided by a life insurance contract.
The Company thus reserves the right to make changes in the Policy if
such changes are deemed necessary to attempt to assure its
qualification as a life insurance contract for tax purposes.
Section 817(h) of the Code provides that separate account investments
(or the investments of a mutual fund the shares of which are owned by
separate accounts of insurance companies) underlying the Policy must be
"adequately diversified" in accordance with Treasury regulations in
order for the Policy to qualify as life insurance. The Treasury
Department has issued regulations prescribing the diversification
requirements in connection with variable contracts. The Separate
Account, through the Funds, intends to comply with these requirements.
Although the Company doesn't control the Funds, it intends to monitor
the investments of the Funds to ensure compliance with the requirements
prescribed by the Treasury Department.
In connection with the issuance of the diversification regulations, the
Treasury Department stated that it anticipates the issuance of
regulations or rulings prescribing the circumstances in which an
owner's control of the investments of a separate account may cause the
owner, rather than the insurance company, to be treated as the owner of
the assets in the account. If the contract owner is considered the
owner of the assets of the separate account, income and gains from the
account would be included in the owner's gross income.
The ownership rights under the Policy offered in this Prospectus are
similar to, but different in certain respects from, those described by
the Internal Revenue Service in rulings in which it determined that the
owners were not owners of separate account assets. For example, the
owner of the Policy has additional flexibility in allocating payments
and cash values. These differences could result in the owner being
treated as the owner of a portion of the assets of the Separate
Account. In addition, the Company does not know what standards will be
set forth in the regulations or rulings which the Treasury has stated
it expects to be issued. The Company therefore reserves the right to
modify the Policy as necessary to attempt to prevent the contract owner
from being considered the owner of the assets of the Separate Account.
C. TAX TREATMENT OF POLICY PROCEEDS
1. Proceeds Other Than Accelerated Benefits
The death benefit payable under either death benefit option should be
excludable from gross income of the Beneficiary under Section 101(a) of
the Code.
Upon full surrender of the Policy, the amount received, less total
amount of premiums paid, less any amount previously received but not
included in the Owner's income, will be included in the Owner's gross
income. Partial surrenders of a Policy may be taxable depending on the
circumstances of a particular Owner. Transferring, assigning, changing
the death benefit option, or changing the amount of the death benefit
of the Policy may also have tax consequences depending on the
circumstances.
Loans under the Policy will ordinarily be treated as Indebtedness of an
Owner and will not be considered to be distributions subject to tax.
The deductibility of interest paid on a Policy loan may be limited
depending on the use of the proceeds.
Some of the above rules relating to taxation of Policy proceeds do not
apply if the Policy is a modified endowment contract. Predeath
distributions including loans, withdrawals and surrenders received
under modified endowment contracts are includible in income to the
extent of the excess of Cash Value over the investment in the Policy.
Policies are modified endowment contracts if they fail the "7-pay
test." This test essentially provides that the cumulative amount paid
under the Policy at any time during the Policy's first seven years
cannot exceed the sum of the net level premiums that would have been
paid on or before that time had the Policy provided for paid-up future
benefits after the payment of seven level annual premiums. If there is
a material change in the Policy, the Policy is treated as a new Policy
as of the date of the material change for purposes of determining
whether it will be treated as a modified endowment contract. Increases
in Policy benefits may be considered material changes resulting in the
start of a new seven year period. A reduction in Policy benefits may
also cause a Policy to become a modified endorsement contract. A
modified endowment contract includes any life insurance contract that
is received in exchange for a modified endowment contract. All modified
endowment contracts issued by the Company (or its affiliates) to the
same Owner during any calendar year will be treated as one modified
endowment contract in determining the taxable portion of any loans or
distributions made to the Owner. Premiums paid during a Policy year
that are returned by the Company (with interest) within 60 days after
the end of the Policy year will not cause the Policy to fail the 7-pay
test. The Company has adopted a procedure for notifying Owners if
premium payments under a Policy exceed the limitations imposed under
the modified endowment contract rules. Potentially, any distribution or
loan taken within 2 years prior to the Policy becoming a modified
endowment contract will be a taxable distribution. Any amounts paid
under a modified endowment contract may also be subject to a 10% excise
tax. This additional excise tax will not apply in the case of
distributions made on or after the Owner attains Age 59 1/2, or is
attributable to the Owner becoming disabled, or is paid out in the form
of a life annuity.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend upon the
circumstances of each Owner and Beneficiary. In addition, if the Policy
is used in connection with tax qualified retirement plans, certain
limitations on and rules with respect to taxation of life insurance
protection provided through such plans may apply.
2. Proceeds from Accelerated Benefits
Accelerated benefits are not specifically excluded from gross income
under Section 101 of the Code. Section 7702 of the Code includes a
definition of a life insurance contract. It is possible that an
accelerated benefit does not fit within the definition of life
insurance. If a Policy did not fit within that definition, tax
advantages normally provided by a life insurance Policy might be lost.
Congress has considered bills addressing these issues. Before choosing
to elect accelerated benefits, an Owner should consult a tax adviser to
ascertain whether accelerated benefits would be treated as taxable
income or would make the Policy a modified endowment contract.
IX. CENTURY LIFE OF AMERICA DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Occupation
<S> <C> <C>
Directors
James C. Barbre 1994-Present ACT Technologies, Inc.
Secretary-Treasurer
1985-1993 Self-employed consultant in carpet
manufacturing and distribution in Dalton,
Georgia
Wilfred F. Broxterman 1989-Present Hughes Aircraft Employees Federal
Credit Union
President and Chief Executive Officer
Ralph B. Canterbury 1965-Present USAir Federal Credit Union
President
James A. Halls 1990-Present Retired
1957-1989 Faegre & Benson - Attorney-at-Law
Jerald R. Hinrichs 1990-Present Hinrichs & Associates
Insurance Marketing Consultants
Owner/President
1988-1990 MONY Financial Services
Regional Vice President
1980-1990 New York Life Insurance Company
Senior Vice President
Michael B. Kitchen 1995-Present Century Life of America*
President and Chief Executive Officer
1992-1995 The CUMIS Group Limited
President and Chief Executive Officer
1991-1992 Canadian Imperial Bank of Commerce
Consultant
1980-1991 AETNA Canada
Senior Vice President
Robert T. Lynch 1970-Present Detroit Teachers Credit Union
Treasurer/General Manager
Omer K. Reed 1959-Present Self-employed dentist
Gerald J. Ring 1968-Present Park Towne Corporation
President
Donald F. Roby 1990-Present Retired
1986-1989 Farm and Home Savings
President and Chief Executive Officer
Rosemarie M. Shultz 1976-Present Public Employees Credit Union
President and Chief Executive Officer
Neil A. Springer 1994-Present Springer Souder & Associates, L.L.C.
Managing Director
1992-1994 Slayton International, Inc.
Senior Vice President
1991-1992 Alexander Proudfoot
President, Central Region
1984-1990 Navistar International Transportation Corp.
President and Chief Operating Officer
Executive Officers
Michael S. Daubs 1973-Present Century Life of America*
Chief Investment Officer
Century Investment Management Co.
President
Harry N. Frenchak 1991-Present Century Life of America*
Chief Officer, Corporate Services
John A. Gibson 1988-Present Century Life of America*
Chief Marketing Officer
Richard J. Keintz 1979-Present Century Life of America*
Chief Officer, Finance and
Information Services
Michael B. Kitchen 1995-Present Century Life of America*
President and Chief Executive Officer
1992-1995 The CUMIS Group Limited
President and Chief Executive Officer
1991-1992 Canadian Imperial Bank of Commerce
Consultant
1980-1991 AETNA Canada
Senior Vice President
Kevin T. Lentz 1983-Present Century Life of America
Chief Operating Officer
Daniel E. Meylink, Sr. 1983-Present Century Life of America*
Chief Officer, Member Services
Thomas O. Olson 1988-Present Century Life of America*
Chief Officer, International Markets
Kevin G. Shea 1976-Present Century Life of America*
Chief Officer, Lending Services
John M. Waggoner 1977-Present Century Life of America*
Chief Legal Officer
</TABLE>
* Century Life of America entered into a permanent affiliation with the
CUNA Mutual Insurance Society on July 1, 1990. Those persons marked
with an "*" hold identical titles with CUNA Mutual Insurance Society.
The most recent position has been given for those persons who have held
more than one position with Century Life of America or CUNA Mutual
Insurance Society during the last five year period. Each person has
business addresses at both 2000 Heritage Way, Waverly, Iowa 50677, and
5910 Mineral Point Road, Madison, Wisconsin 53705.
X. STATE REGULATION
The Company is subject to the laws of Iowa governing insurance companies and to
regulation by the Iowa Insurance Department. An annual statement in a prescribed
form is filed with the Insurance Department each year covering the operation of
the Company for the preceding year and its financial condition as of the end of
such year. Regulation by the Insurance Department includes periodic examination
to determine the Company's liabilities and reserves so that the Insurance
Department may certify the items are correct. The Company's books and accounts
are subject to review by the Insurance Department at all times and a full
examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. Such regulation does not, however,
involve any supervision of management or investment practices or policies. In
addition, the Company is subject to regulation under the insurance laws of other
jurisdictions in which it may operate.
XI. LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account or the principal
underwriter is a party. The Company is engaged in various kinds of routine
litigation which, in the opinion of the Company, are not of material importance
in relation to the total capital and surplus of the Company.
XII. INDEPENDENT AUDITORS
The financial statements included herein and elsewhere in the Registration
Statement have been included in reliance upon the reports of KPMG Peat Marwick
LLP, Des Moines, Iowa, independent auditors, and upon the authority of said firm
as experts in accounting and auditing.
XIII. ACTUARIAL MATTERS
Actuarial matters included in this Prospectus have been examined by Scott Allen,
Assistant Vice President - Associate Actuary, Century Life of America, Waverly,
Iowa, as stated in the opinion filed as an exhibit to the Registration
Statement.
XIV. REGISTRATION STATEMENT
A Registration Statement has been filed with the SEC under the Securities Act of
1933, as amended, with respect to the Policies offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement and
amendments thereto and exhibits filed as a part thereof, to all of which
reference is hereby made for further information concerning the Separate
Account, the Company, and the Policies offered hereby. Statements contained in
this Prospectus as to the content of Policies and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
XV. FINANCIAL STATEMENTS
The financial statements for the Company are included herein immediately
following the financial statements of the Century Variable Account. The
financial statements of the Company should be considered only as bearing upon
the ability of the Company to meet its obligations under the Policy and should
not be considered as bearing on the investment performance of the Separate
Account.
<PAGE>
CENTURY VARIABLE ACCOUNT
Financial Statements
December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
<TABLE>
CENTURY VARIABLE ACCOUNT
Statement of Assets and Liabilities
December 31, 1995
<CAPTION>
Capital
Appreciation Growth and Money Treasury International World
Stock Income Stock Balanced Bond Market 2000 Stock Governments
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount* Subaccount**
---------- ---------- ---------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in Ultra Series Fund:
(note 2)
Capital Appreciation Stock Fund,
718,245 shares at net asset
value of $12.51 per share
(cost $7,796,904) $8,986,425 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Growth and Income Stock Fund,
1,899,704 shares at net asset
value of $18.20 per share
(cost $29,392,576) -- 34,580,400 -- -- -- -- -- --
Balanced Fund, 3,166,255 shares
at net asset value of $ 14.63
per share (cost $ 41,933,119) -- -- 46,320,994 -- -- -- -- --
Bond Fund, 355,954 shares
at net asset value of $10.63
per share (cost $3,637,193) -- -- -- 3,783,375 -- -- -- --
Money Market Fund, 2,133,863
shares at net asset value of $1.00
per share (cost $2,133,863) -- -- -- -- 2,133,863 -- -- --
Treasury 2000 Fund, 182,546
shares at net asset value of $8.47
per share (cost $1,273,177) -- -- -- -- -- 1,545,327 -- --
Investments in T. Rowe Price
International Series, Inc.,:
International Stock Portfolio, 66,808
shares at net asset value of $11.26
per share (cost $730,182) -- -- -- -- -- -- 752,261 --
Investments in MFS(R) Variable
Insurance TrustSM:
World Governments Series, 21,527
shares at net asset value of $10.17
per share (cost $226,610) -- -- -- -- -- -- -- 218,931
Dividends receivable -- -- -- -- -- -- -- --
---------- ----------- ----------- ---------- ---------- ---------- --------- ---------
Total assets 8,986,425 34,580,400 46,320,994 3,783,375 2,133,863 1,545,327 752,261 218,931
---------- ----------- ----------- ---------- ---------- ---------- --------- ---------
Liabilities:
Accrued adverse mortality and
expense charges 660 2,547 3,419 279 155 1,087 55 16
---------- ----------- ----------- ---------- ---------- ---------- --------- ---------
Total liabilities 660 2,547 3,419 279 155 1,087 55 16
---------- ----------- ----------- ---------- ---------- ---------- --------- ---------
Net assets $8,985,765 $34,577,853 $46,317,575 $3,783,096 $2,133,708 $1,544,240 $752,206 $218,915
========== =========== =========== ========== ========== ========== ========= =========
Units outstanding (note 5) 663,269 907,821 1,522,893 155,381 125,112 194,133 70,876 19,219
========== =========== =========== ========== ========== ========== ========= =========
Net asset value per unit $13.55 $38.09 $30.41 $24.35 $17.05 $7.95 $10.61 $11.39
========== =========== =========== ========== ========== ========== ========= =========
<FN>
See accompanying notes to financial statements.
*The data is for the period beginning July 3, 1995 (date of initial activity).
**The data is for the period beginning January 3, 1995 (date of initial
activity).
</FN>
</TABLE>
<PAGE>
CENTURY VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Investment income (loss): 1995 1994 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Dividend income $349,394 $316,311 $2,783,538 $920,420 $2,174,889
Adverse mortality and expense
charges(note 3) (67,332) (37,923) (253,958) (178,836) (152,862)
---------- -------- ---------- ---------- ----------
Net investment income (loss) 282,062 278,388 2,529,580 741,584 2,022,027
---------- -------- ---------- ---------- ----------
Realized and unrealized gain
(loss)on investments:
Realized gain (loss) on
security transactions:
Proceeds from sale of
securities 2,737,741 128,916 1,138,163 1,347,896 4,185,735
Cost of securities sold (2,416,409) (126,278) (985,297) (1,257,775) (3,566,061)
---------- -------- ---------- ---------- ----------
Net realized gain (loss) on
security transactions 321,332 2,638 152,866 90,121 619,674
Net change in unrealized
appreciation or depreciation
on investments 1,332,754 (143,233) 4,764,093 (762,308) (560,550)
---------- -------- ---------- ---------- ----------
Net gain (loss) on investments 1,654,086 (140,595) 4,916,959 (672,187) 59,124
---------- -------- ---------- ---------- ----------
Net increase (decrease) in net
assetsresulting from operations $1,936,148 $137,793 $7,446,539 $69,397 $2,081,151
========== ======== ========== ========== ==========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Investment income (loss): 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dividend income $3,308,296 $1,934,706 $2,825,506 $218,461 $198,871 $217,548
Adverse mortality and expense
charges (note 3) (375,225) (311,308) (281,719) (33,879) (30,732) (32,701)
---------- ---------- ---------- -------- --------- --------
Net investment income (loss) 2,933,071 1,623,398 2,543,787 184,582 168,139 184,847
---------- ---------- ---------- -------- --------- --------
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on
security transactions:
Proceeds from sale of
securities 2,989,211 2,663,000 4,430,663 885,596 498,842 600,884
Cost of securities sold (2,732,488) (2,563,542) (3,952,743) (865,874) (495,991) (563,872)
---------- ---------- ---------- -------- --------- --------
Net realized gain (loss) on
security transactions 256,723 99,458 477,920 19,722 2,851 37,012
Net change in unrealized
appreciation or depreciation
on investments 4,759,298 (2,193,746) (159,112) 326,701 (308,510) 57,244
---------- ---------- ---------- -------- --------- --------
Net gain (loss) on investments 5,016,021 (2,094,288) 318,808 346,423 (305,659) 94,256
---------- ---------- ---------- -------- --------- --------
Net increase (decrease) in net
assets resulting from
operations $7,949,092 ($470,890) $2,862,595 $531,005 ($137,520) $279,103
========== ========== ========== ======== ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURY VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Investment income (loss): 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dividend income $116,648 $75,538 $79,218 $105,588 $96,836 $87,706
Adverse mortality and expense
charges (note 3) (20,105) (19,253) (29,219) (12,710) (11,586) (11,689)
-------- -------- -------- -------- --------- --------
Net investment income (loss) 96,543 56,285 49,999 92,878 85,250 76,017
-------- -------- -------- -------- --------- --------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 2,670,224 1,549,906 2,291,822 -- -- --
Cost of securities sold (2,670,224) (1,549,906) (2,291,822) -- -- --
-------- -------- -------- -------- --------- --------
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments -- -- -- 161,453 (193,888) 93,753
-------- -------- -------- -------- --------- --------
Net gain (loss) on investments -- -- -- 161,453 (193,888) 93,753
-------- -------- -------- -------- --------- --------
Net increase (decrease) in net
assets resulting from
operations $96,543 $56,285 $49,999 $254,331 ($108,638) $169,770
======== ======== ======== ======== ========= ========
INTERNATIONAL STOCK SUBACCOUNT* WORLD GOVERNMENTS SUBACCOUNT**
<S> <C> <C>
Investment income (loss): 1995 1995
---- ----
Dividend income $0 $19,972
Adverse mortality and expense
charges (note 3) (1,492) (1,176)
-------- -------
Net investment income (loss) (1,492) 18,796
-------- -------
Realized and unrealized gain
(loss)on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 17,033 19,161
Cost of securities sold (17,004) (18,440)
-------- --------
Net realized gain (loss) on
security transactions 29 721
Net change in unrealized
appreciation or depreciation
on investments 22,078 (7,679)
-------- --------
Net gain (loss) on investments 22,107 (6,958)
-------- --------
Net increase (decrease) in net
assets resulting from operations $20,615 $11,838
======== ========
<FN>
See accompanying notes to financial statements.
*The data is for the period beginning July 3, 1995 (date of initial activity).
**The data is for the period beginning January 3, 1995 (date of initial
activity).
</FN>
</TABLE>
<PAGE>
CENTURY VARIABLE ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Operations: 1995 1994 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $282,062 $278,388 $2,529,580 $741,584 $2,022,027
Net realized gain (loss) on
security transactions 321,332 2,638 152,866 90,121 619,674
Net change in unrealized
appreciation or depreciation
on investments 1,332,754 (143,233) 4,764,093 (762,308) (560,550)
---------- ---------- ----------- ----------- -----------
Change in net assets from
operations 1,936,148 137,793 7,446,539 69,397 2,081,151
---------- ---------- ----------- ----------- -----------
Capital unit transactions(note 5)
Proceeds from sale of units 5,340,463 7,013,416 10,831,868 11,317,875 8,717,680
Cost of units repurchased (4,440,885) (1,001,170) (6,090,704) (6,776,401) (8,167,903)
---------- ---------- ----------- ----------- -----------
Change in net assets from
capital unit transactions 899,578 6,012,246 4,741,164 4,541,474 549,777
---------- ---------- ----------- ----------- -----------
Increase (decrease) in net assets 2,835,726 6,150,039 12,187,703 4,610,871 2,630,928
Net assets:
Beginning of period 6,150,039 -- 22,390,150 17,779,279 15,148,351
---------- ---------- ----------- ----------- -----------
End of period $8,985,765 $6,150,039 $34,577,853 $22,390,150 $17,779,279
========== ========== =========== =========== ===========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Operations: 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $2,933,071 $1,623,398 $2,543,787 $184,582 $168,139 $184,847
Net realized gain (loss) on
security transactions 256,723 99,458 477,920 19,722 2,851 37,012
Net change in unrealized
appreciation or depreciation
on investments 4,759,298 (2,193,746) (159,112) 326,701 (308,510) 57,244
----------- ----------- ----------- ---------- ---------- ----------
Change in net assets from
operations 7,949,092 (470,890) 2,862,595 531,005 (137,520) 279,103
----------- ----------- ----------- ---------- ---------- ----------
Capital unit transactions(note 5)
Proceeds from sale of units 11,658,626 12,682,886 14,128,187 1,036,840 746,339 751,070
Cost of units repurchased (9,247,633) (9,582,319) (11,224,830) (1,180,288) (831,337) (897,970)
----------- ----------- ----------- ---------- ---------- ----------
Change in net assets from
capital unit transactions 2,410,993 3,100,567 2,903,357 (143,446) (84,998) (146,900)
----------- ----------- ----------- ---------- ---------- ----------
Increase (decrease) in net
assets 10,360,085 2,629,677 5,765,952 387,559 (222,518) 132,203
Net assets:
Beginning of period 35,957,490 33,327,813 27,561,861 3,395,537 3,618,055 3,485,852
----------- ----------- ----------- ---------- ---------- ----------
End of period $46,317,575 $35,957,490 $33,327,813 $3,783,096 $3,395,537 $3,618,055
=========== =========== =========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURY VARIABLE ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Operations: 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $96,543 $56,285 $49,999 $92,878 $85,250 $76,017
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments -- -- -- 161,453 (193,888) 93,753
--------- --------- --------- --------- ---------- ----------
Change in net assets from
operations 96,543 56,285 49,999 254,331 (108,638) 169,770
--------- --------- --------- --------- ---------- ----------
Capital unit transactions(note 5)
Proceeds from sale of units 2,156,885 2,460,112 1,896,151 550,180 558,031 638,901
Cost of units repurchased (3,049,819) (1,959,931) (2,724,281) (531,450) (540,474) (621,546)
--------- --------- --------- --------- ---------- ----------
Change in net assets from
capital unit transactions (892,934) 500,181 (828,130) 18,730 17,557 17,355
--------- --------- --------- --------- ---------- ----------
Increase (decrease) in net assets (796,391) 556,466 (778,131) 273,061 (91,081) 187,125
Net assets:
Beginning of period 2,930,099 2,373,633 3,151,764 1,271,179 1,362,260 1,175,135
--------- --------- --------- --------- ---------- ----------
End of period $2,133,708 $2,930,099 $2,373,633 $1,544,240 $1,271,179 $1,362,260
========= ========= ========= ========= ========== ==========
INTERNATIONAL STOCK SUBACCOUNT* WORLD GOVERNMENTS SUBACCOUNT**
Operations: 1995 1995
---- ----
<S> <C> <C>
Net investment income (loss) $(1,492) $18,796
Net realized gain (loss) on
security transactions 29 721
Net change in unrealized
appreciation or depreciation
on investments 22,078 (7,679)
-------- --------
Change in net assets from
operations 20,615 11,838
-------- --------
Capital unit transactions(note 5)
Proceeds from sale of units 825,895 244,058
Cost of units repurchased (94,304) (36,981)
-------- --------
Change in net assets from
capital unit transactions 731,591 207,077
-------- --------
Increase (decrease) in net assets 752,206 218,915
Net assets:
Beginning of period -- --
-------- --------
End of period $752,206 $218,915
======== ========
See accompanying notes to financial statements.
<FN>
*The data is for the period beginning July 3, 1995 (date of initial activity).
**The data is for the period beginning January 3, 1995 (date of initial
activity).
</FN>
</TABLE>
<PAGE>
CENTURY VARIABLE ACCOUNT
Notes to Financial Statements
(1) Organization
The Century Variable Account (the Account) is a unit investment trust
registered under the Investment Company Act of 1940 with the Securities and
Exchange Commission. The Account was established as a separate investment
account within Century Life of America to receive and invest Net Premiums
paid under flexible premium variable life insurance policies.
Although the assets of the Account are the property of Century Life of
America, those assets attributable to the policies are not chargeable with
liabilities arising out of any other business which Century Life of America
may conduct.
The net assets maintained in the Account attributable to the policies
provide the base for the periodic determination of the increased or
decreased benefits under the policies. The net assets may not be less than
the amount required under state insurance law to provide certain death
benefits and other Policy benefits. Additional assets are held in Century
Life of America's general account to cover death benefits in excess of the
Accumulated Value.
(2) Significant Accounting Policies
Investments
The Account currently is divided into eight subaccounts but may, in the
future, include additional subaccounts. Each Subaccount invests exclusively
in shares of a single underlying Fund. (The term Fund is used to mean an
investment portfolio sometimes called a series, i.e., Ultra Series Fund, T.
Rowe Price International Series, Inc., MFSR Variable Insurance TrustSM, or
any other open-end management investment company or unit investment trust
in which a Subaccount invests.) The income, gains and losses, realized or
unrealized, from the assets allocated to each Subaccount are credited to or
charged against that Subaccount without regard to income, gains or losses
from any other Subaccount.
The Account invests in shares of Ultra Series Fund, T. Rowe Price
International Series, Inc., and MFSR Variable Insurance TrustSM. Each is a
management investment company of the series type with one or more funds.
Each is registered with the SEC as an open-end, management investment
company. Such registration does not involve supervision of the management
or investment practices or policies of the companies or their funds by the
SEC.
Ultra Series Fund currently has six funds available as investment options
under the policies while T. Rowe Price International Series, Inc., and
MFSR Variable Insurance TrustSM each have one Fund available as an
investment option. MFSR Variable Insurance TrustSM also has other funds
that are not available under the policies. These Fund companies may, in the
future, create additional funds that may or may not be available as
investment options under the policies. Each Fund has its own investment
objectives and the income, gains, and losses for each Fund are determined
separately for that Fund.
Century Investment Management Co. (CIMCO) serves as the investment advisor
to the Ultra Series Fund and manages its assets in accordance with general
policies and guidelines established by the board of trustees of the Ultra
Series Fund. The Company owns one half of CIMCO's outstanding stock and one
half is owned indirectly by CUNA Mutual Insurance Society.
Rowe Price-Fleming International, Inc. (RPFI) serves as the Investment
Advisor to the International Stock Portfolio and manages its assets in
accordance with general policies and guidelines established by the board of
directors of T. Rowe Price International Series, Inc. RPFI was founded in
1979 as a joint venture between T. Rowe Price Associates, Inc. and Robert
Fleming Holdings Limited.
Massachusetts Financial Services Company (MFS) serves as the Investment
Advisor to the MFS World Governments Series and manages its assets in
accordance with general policies and guidelines established by the board of
trustees of MFSR Variable Insurance TrustSM. MFS is a subsidiary of Sun
Life Assurance Company of Canada (U.S.) which, in turn, is a subsidiary of
Sun Life Assurance Company of Canada.
The assets of each Fund are held separate from the assets of the other
funds, and each Fund is offered at a price equal to its respective Net
Asset Value per share, without sales charge. Dividends and capital gain
distributions from each Fund are reinvested in that Fund. Investments in
shares of the Funds are stated at market value which is the Net Asset Value
per share as determined by the Funds. Realized gains and losses from
security transactions are reported on an average cost basis.
Dividend income is recorded on the ex-dividend date.
Federal Income Taxes
The operations of the Account form a part of the operations of Century Life
of America and are not taxed separately. Century Life of America does not
initially expect to incur any income tax upon the earnings or the realized
capital gains attributable to the Account. Accordingly, no charge for
income tax is currently being made to the Account. If such taxes are
incurred by Century Life of America in the future, a charge to the Account
may be assessed.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
(3) Fees and Charges
Organization Costs
Century Life of America absorbed all organization expenses of the Account.
Policy Charges
In addition to Charges for State Taxes, which reduce premiums prior to the
allocation of Net Premiums to the subaccounts of the Account, the following
charges may be deducted by Century Life of America by redeeming an
appropriate number of units for each Policy.
Administrative Fee: Century Life of America will have primary
responsibility for the administration of the Account and the policies
issued. As reimbursement for these expenses, Century Life of America may
assess each Policy a monthly administrative fee. For additional detail, see
schedule of expenses and charges in the prospectus.
Deferred Contingent Sales and Administrative Charges: The sales and
administrative expenses incurred when a Policy is issued are deferred
(Deferred Charges) until the Policy is surrendered. Such charges are not
collected at all if the Policy is held for nine years, or if the Insured
dies during that period. In no instance will the charge exceed 30 percent
of the lesser of premiums paid or the guideline annual premium (as defined
under the Investment Company Act of 1940) of the Policy. The Deferred
Charges are normally built up in twelve equal increments during the first
Policy year. Beginning on the second Policy Anniversary, incremental
amounts are released by allocations back to the subaccounts on each
anniversary until the tenth Policy Anniversary when all remaining Deferred
Charges are released. All amounts in the Deferred Charges Account are held
and interest credited to the Policy at a minimum rate of 4 percent with the
Company crediting additional amounts at its discretion.
Policy Fee: Century Life of America will incur first-year expenses upon
issue of a Policy, and will assess each Policy a monthly Policy fee to
recover these expenses.
Cost of Insurance and Additional Benefits Provided: Century Life of America
will assume the responsibility for providing the insurance benefits
provided in the Policy. The Cost of Insurance will be determined each month
based upon the applicable Cost of Insurance rates and the net amount at
risk. The Cost of Insurance can vary from month to month since the
determination of both the insurance rate and the net amount at risk depends
upon a number of variables as described in the Account's prospectus.
Variable Account Charges
Mortality and Expense Risk Charge: Century Life of America will deduct
daily a mortality and expense risk charge from the account at an annual
rate of .90 percent of the average daily Net Asset Value of the Account.
These charges will be deducted by Century Life of America in return for its
assumption of risks associated with adverse mortality experience or excess
administrative expenses in connection with policies issued.
(4) Investment Transactions
The cost of shares purchased, including reinvestment of dividend
distributions, during the year ended December 31, 1995, was as follows:
Growth and Income Stock Fund.....................$8,486,455
Capital Appreciation Stock Fund.................. 4,006,242
Balanced Fund.................................... 8,352,915
Bond Fund........................................ 931,006
Money Market Fund................................ 1,873,765
Treasury 2000 Fund............................... 6,177
International Stock Portfolio*................... 747,186
World Governments Series**....................... 245,050
----------
$24,648,796
==========
(5) Unit Activity from Contract Transactions
Transactions in units of each Subaccount of the Account for the years ended
December 31, 1995, 1994, and 1993 were as follows:
<TABLE>
<CAPTION>
Capital
Appreciation Growth and Money Treasury International World
Stock Income Stock Balanced Bond Market 2000 Stock Governments
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount* Subaccount**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1992 -- 588,841 1,186,398 171,276 201,170 186,690 -- --
Units sold -- 321,862 580,946 34,868 120,058 93,201 -- --
Units repurchased -- (297,884) (457,177) (41,411) (172,047) (90,784) -- --
-------- -------- --------- -------- -------- ------- ------ ------
Units outstanding at
December 31, 1993 -- 612,819 1,310,167 164,733 149,181 189,107 -- --
Units sold 684,909 385,948 502,048 34,868 152,172 82,063 -- --
Units repurchased (96,408) (230,900) (379,178) (38,726) (121,966) (79,423) -- --
-------- -------- --------- -------- -------- ------- ------ ------
Units outstanding at
December 31, 1994 588,501 767,867 1,433,037 160,875 179,387 191,747 -- --
-------- -------- --------- ------- -------- ------- ------ ------
Units sold 437,510 320,880 420,975 45,571 129,950 74,132 80,023 22,558
Units repurchased (362,742) (180,926) (331,119) (51,065) (184,225) (71,746) (9,147) (3,339)
-------- -------- --------- ------- -------- ------- ------ ------
Units outstanding at
December 31, 1995 663,269 907,821 1,522,893 155,381 125,112 194,133 70,876 19,219
======== ======== ========= ======= ======== ======= ====== ======
<FN>
*The data is for the period beginning July 3, 1995 (date of initial activity).
**The data is for the period beginning January 3, 1995 (date of initial
activity).
</FN>
</TABLE>
<PAGE>
(6) Condensed Financial Information
The table below gives per unit information about the financial history of
each Subaccount for each period.
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
1995 1994 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $10.45 $10.00 $29.16 $29.01 $25.73 $24.11 $19.36
End of period 13.55 10.45 38.09 29.16 29.01 25.73 24.11
Percentage increase
in unit value
during period* 29.7% 4.5% 30.6% 0.5% 12.8% 6.7% 24.5%
Number of units
outstanding at
end of period 663,269 588,501 907,821 767,867 612,819 588,841 431,969
BALANCED SUBACCOUNT BOND SUBACCOUNT
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $25.09 $25.44 $23.23 $21.94 $18.73 $21.11 $21.96 $20.35 $19.29 $16.95
End of period 30.41 25.09 25.44 23.23 21.94 24.35 21.11 21.96 20.35 19.29
Percentage increase
in unit value
during period* 21.2% -1.4% 9.5% 5.9% 17.1% 15.4% -3.9% 7.9% 5.5% 13.8%
Number of units
outstanding at
end of period 1,522,893 1,433,037 1,310,167 1,186,398 912,075 155,381 160,875 164,733 171,276 159,858
<FN>
*The amount of premium invested in Century Variable Account is the amount
remaining after the Policy charges described in footnote 3 have been
deducted. The Policy charges have not been taken into account in this
calculation. Inclusion of the Policy charges would reduce the percentage
increase in Unit Value during the period.
</FN>
</TABLE>
<PAGE>
(6) Condensed Financial Information
The table below gives per unit information about the financial history of
each Subaccount for each period.
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $16.33 $15.91 $15.67 $15.33 $14.66 $6.63 $7.20 $6.29 $5.88 $4.92
End of period 17.05 16.33 15.91 15.67 15.33 7.95 6.63 7.20 6.29 5.88
Percentage increase
in unit value
during period* 4.4% 2.6% 1.5% 2.2% 4.6% 19.9% -7.9% 14.5% 7.0% 19.5%
Number of units
outstanding at
end of period 125,112 179,387 149,181 201,170 191,382 194,133 191,747 189,107 186,690 184,302
INTERNATIONAL STOCK SUBACCOUNT** WORLD GOVERNMENTS SUBACCOUNT***
1995 1995
---- ----
<S> <C> <C>
Net asset value:
Beginning of period $10.00 $10.00
End of period 10.61 11.39
Percentage increase
in unit value
during period* 6.1% 13.9%
Number of units
outstanding at
end of period 70,876 19,219
For the Money Market Subaccount, the "seven-day average yield" for the
seven days ended December 31, 1995, was 4.06% and the "effective yield" for
that period was 4.18%.
<FN>
*The amount of premium invested in Century Variable Account is the amount
remaining after the Policy charges described in footnote 3 have been deducted.
The Policy charges have not been taken into account in this calculation.
Inclusion of the Policy charges would reduce the percentage increase in Unit
Value during the period.
**The data is for the period beginning July 3, 1995 (date of initial activity).
***The data is for the period beginning January 3, 1995 (date of initial
activity).
</FN>
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Century Life of America and Contract
Owners of Century Variable Account:
We have audited the statements of assets and liabilities of the Capital
Appreciation Stock Subaccount, Growth and Income Stock Subaccount, Balanced
Subaccount, Bond Subaccount, Money Market Subaccount, Treasury 2000 Subaccount,
International Stock Subaccount and the World Governments Subaccount of the
Century Variable Account as of December 31, 1995; the related statements of
operations and changes in net assets for each of the years in the three-year
(two years for Capital Appreciation Stock Subaccount and one year for
International Stock and World Governments Subaccounts) period then ended; and
the condensed financial information for each of the years in the five-year (two
years for Capital Appreciation Stock Subaccount and one year for International
Stock and World Governments Subaccounts) period then ended. These financial
statements and condensed financial information are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements and condensed financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Investments owned at December 31, 1995 were verified
by audit of the statement of assets and liabilities of the underlying funds of
Ultra Series Fund and confirmation with MFS Variable Insurance Trust and T.Rowe
Price. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial
position of the Capital Appreciation Stock Subaccount, Growth and Income Stock
Subaccount, Balanced Subaccount, Bond Subaccount, Money Market Subaccount,
Treasury 2000 Subaccount, International Stock Subaccount, and the World
Governments Subaccount of the Century Variable Account as of December 31, 1995;
the results of their operations and changes in their net assets for each of the
years in the three-year (two years for Capital Appreciation Stock Subaccount,
and one year for International Stock and World Governments Subaccounts) period
then ended; and the condensed financial information for each of the years in the
five-year (two years for Capital Appreciation Stock Subaccount, and one year for
International Stock and World Governments Subaccounts) period then ended in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
February 16, 1996
<PAGE>
CENTURY LIFE OF AMERICA
Financial Statements and Supplementary Information
December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
CENTURY LIFE OF AMERICA
Balance Sheets
December 31, 1995 and 1994
(In Thousands)
<TABLE>
<CAPTION>
Assets 1995 1994
------ ---- ----
<S> <C> <C>
Investments:
Bonds $1,636,574 1,618,418
Stocks:
Preferred 357 954
Common 43,685 37,702
Mortgage loans on real estate 428,594 403,386
Real estate 66,374 61,684
Policy loans 100,880 100,481
Other invested assets 21,721 7,970
Cash and short-term investments 15,300 3,461
--------- ---------
Total investments 2,313,485 2,234,056
Premiums receivable 10,483 9,409
Accrued investment income 33,106 32,876
Electronic data processing equipment 2,391 2,467
Due from affiliates and related parties 2,239 4,169
Federal income tax recoverable 0 1,583
Other assets 5,822 4,231
Separate accounts 296,874 147,894
--------- ---------
$2,664,400 2,436,685
========= =========
Liabilities and Surplus
Liabilities:
Policy reserves:
Life insurance and annuity contracts $1,847,156 1,784,214
Accident and health insurance 10,620 9,989
Supplementary contracts without life contingencies 60,324 54,849
Policyholders' dividend accumulations 150,989 150,529
Policy and contract claims 6,223 5,194
Other policyholders' funds:
Dividends payable to policyholders 22,470 22,158
Premiums and other deposit funds 5,533 13,135
Interest maintenance reserve 1,301 223
Liabilities for employees' and agents' retirement plans 40,807 37,492
Amounts held for others 22,591 21,811
Due to affiliates and related parties 743 4,897
Commissions, expenses, taxes, licenses, and fees accrued 11,600 12,989
Federal income tax payable 3,945 0
Separate accounts 287,915 141,555
Other liabilities 2,416 3,535
Asset valuation reserve 32,202 28,816
Loss contingency reserve for real estate 1,296 1,661
--------- ---------
Total liabilities 2,508,131 2,293,047
Surplus:
Assigned for contingencies 1,841 1,561
Assigned for permanent guaranty fund 400 400
Unassigned 154,028 141,677
--------- ---------
Total surplus 156,269 143,638
Commitments and contingencies
--------- ---------
$2,664,400 2,436,685
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURY LIFE OF AMERICA
Statements of Operations
Years Ended December 31, 1995, 1994, and 1993
(In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income:
Premiums and other considerations:
Life and annuity $262,326 244,160 238,342
Accident and health 10,504 8,968 7,738
Supplementary contracts and dividend accumulations 48,633 50,173 44,031
Annuity and other fund deposits 22,734 21,098 13,126
Net investment income 173,355 167,545 162,122
Reinsurance commissions 18,523 21,614 21,907
Other income 7,026 7,263 6,766
------- ------- -------
Total income 543,101 520,821 494,032
------- ------- -------
Benefits and expenses:
Death benefits 31,807 28,044 24,780
Annuity benefits 39,948 33,455 31,739
Surrender benefits 101,456 103,107 74,676
Payments on supplementary contracts without life
contingencies and dividend accumulations 50,478 46,549 38,749
Other benefits to policyholders and beneficiaries 11,013 9,888 10,537
Increase in policy reserves - life and annuity contracts
and accident and health insurance 63,573 104,895 119,100
Increase in liabilities for supplementary contracts without life
contingencies and policyholders' dividend accumulations 5,935 9,936 27,816
Decrease in group annuity reserves (7,276) (6,509) (17,305)
Increase in benefit funds 4,103 4,112 3,742
Commissions 25,232 21,289 21,645
General insurance expenses, including cost of
collection in excess of loading on due and deferred
premiums and other expenses 59,633 63,556 66,996
Insurance taxes, licenses, and fees 5,585 7,366 7,050
Net transfers to separate accounts 101,369 45,469 20,288
------- ------- -------
Total benefits and expenses 492,856 471,157 429,813
------- ------- -------
Income before dividends to policyholders, federal income
taxes, and net realized capital gains (losses) 50,245 49,664 64,219
Dividends to policyholders 22,004 19,954 24,812
------- ------- -------
Income before federal income taxes and net
realized capital gains (losses) 28,241 29,710 39,407
Federal income taxes 13,321 8,660 8,588
------- ------- -------
Income before net realized capital gains (losses) 14,920 21,050 30,819
Net realized capital gains (losses), less federal income taxes
and transfers to the interest maintenance reserve (567) (993) 4,388
------- ------- -------
Net income $14,353 20,057 35,207
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURY LIFE OF AMERICA
Statements of Unassigned Surplus
Years Ended December 31, 1995, 1994, and 1993
(In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $141,677 128,467 97,548
-------- ------- -------
Increase (decrease) in unassigned surplus:
Net income 14,353 20,057 35,207
Net unrealized losses (558) (8,650) (858)
Change in asset valuation reserve (3,386) (1,365) (2,763)
Changes in federal income tax expense for prior years 987 (1,606) (1,871)
Change in nonadmitted assets 496 726 354
Change in surplus of separate accounts (2,500) 1,954 (7,407)
Change in separate account seed money 2,593 (2,071) 5,547
Annuity dividend release to surplus 0 0 3,810
Change in loss contingency reserve for real estate 365 (168) (1,015)
Change in voluntary mortgage loan reserve 0 3,000 0
Prior period adjustment for affiliation expenses 215 1,504 0
Other miscellaneous changes (214) (171) (85)
-------- ------- -------
Net increase in unassigned surplus 12,351 13,210 30,919
-------- ------- -------
Balance at end of year $154,028 141,677 128,467
======== ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURY LIFE OF AMERICA
Statements of Cash Flow
Years Ended December 31, 1995, 1994, and 1993
(In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations:
Life, annuity, and accident and health $294,530 273,115 258,020
Supplementary contracts and dividend accumulations 48,633 50,173 44,031
Investment income received 176,990 168,812 160,492
Reinsurance commissions 17,735 20,333 21,955
Other income 9,369 8,978 12,227
------- ------- -------
Total provided from operations 547,257 521,411 496,725
------- ------- -------
Life and accident and health claims paid 36,192 30,183 28,495
Surrender benefits paid 101,456 103,108 74,676
Other benefits to policyholders paid 96,571 86,055 77,014
Commissions, other expenses, and taxes paid,
excluding federal income taxes 92,808 89,306 90,417
Dividends to policyholders paid 21,634 22,654 23,544
Federal income taxes paid 7,145 1,318 30,134
Net decrease in policy loans 398 1,308 115
Net transfers to separate accounts 106,508 46,934 20,289
Interest paid on defined benefit plans 4,078 6,183 7,041
------- ------- -------
Total used in operations 466,790 387,049 351,725
------- ------- -------
Net provided by operations 80,467 134,362 145,000
Proceeds from investments sold, matured, or repaid:
Bonds 217,833 338,250 228,968
Stocks 22,194 16,162 39,250
Mortgage loans 38,861 34,613 36,280
Other invested assets 1,594 924 499
Net gain (loss) on cash and short-term investments 0 12 0
Real estate sold 2,315 2,476 6,929
Other cash provided 6,716 8,050 12,530
------- ------- -------
Total cash provided 369,980 534,849 469,456
------- ------- -------
Cost of investments acquired:
Bonds 236,607 488,593 440,572
Stocks 22,063 18,364 17,942
Mortgage loans 67,942 47,401 11,842
Real estate 6,933 7,731 3,790
Other invested assets 13,227 368 2
Other cash used - other applications, net 11,369 8,108 3,970
------- ------- -------
Total cash applied 358,141 570,565 478,118
------- ------- -------
Net change in cash and short-term investments 11,839 (35,716) (8,662)
Cash and short-term investments at beginning of year 3,461 39,177 47,839
------- ------- -------
Cash and short-term investments at end of year $15,300 3,461 39,177
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
December 31, 1995, 1994, and 1993
(1) Summary of Significant Accounting Policies
Company Operations
Century Life of America (the Company) is a mutual life insurance company
organized under the laws of the state of Iowa. The Company offers a full
range of ordinary life and health insurance products through face-to-face
and direct response distribution systems. The Company's operations are
conducted in 49 states and the District of Columbia. The Company is subject
to regulation by the Insurance Departments of states in which it is
licensed, and undergoes periodic examinations by those departments.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
accounting practices prescribed or permitted by the Iowa Department of
Commerce, Insurance Division, which practices are currently considered
generally accepted accounting principles for mutual life insurance companies
and include the following significant accounting policies:
The costs related to acquiring business are charged to income in the
year incurred and, thus, are not amortized over the periods benefited,
whereas the premium income is recorded into earnings on a pro rata basis
over the premium-paying periods covered by the policies;
Adjustments reflecting the revaluation of investments at statement date
and equity in earnings of subsidiary companies are carried to the
statements of unassigned surplus as "net unrealized gains or losses,"
without providing for income taxes, or income tax reductions, with
respect to net unrealized gains or losses;
Majority-owned subsidiaries are not consolidated and are carried at
their underlying book value using the equity method of accounting;
Policy reserves are based on statutory mortality and interest
requirements without consideration for withdrawals, which may differ
from reserves based on reasonably conservative estimates of mortality,
interest, and withdrawals;
Deferred federal income taxes are not provided for unrealized gains and
the temporary differences between the statutory and tax basis of assets
and liabilities;
"Nonadmitted assets" (principally, the airplane, prepaid insurance and
expenses, furniture, equipment, and certain receivables) are excluded
from the balance sheets through a direct charge to surplus;
The asset valuation reserve is recorded as a liability by a direct
charge to surplus;
The interest maintenance reserve defers recognition of interest-related
gains and losses from the disposal of investment securities and
amortizes them into income over the remaining life of those securities;
The loss contingency reserve for real estate is recorded as a liability
by a direct charge to surplus;
Changes in federal income tax expense of prior years are charged or
credited to surplus;
Pension expense reflects the amount funded during the year, and
disclosures related to the pension plan are in accordance with ERISA
requirements;
Effective in 1995, write-downs of the carrying value of outstanding
mortgage loans to the market value of the real estate acquired through
foreclosure are charged to income as realized losses;
Assets and liabilities are recorded net of ceded reinsurance balances;
and
Deposits, surrenders, and benefits on universal life and annuity
contracts are recorded in the statement of operations.
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Basis of Presentation, Continued
In January 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 120, "Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts." This pronouncement removes
the exemption of mutual life insurance enterprises from SFAS Statements Nos.
60, 97, and 113. Also in January 1995, the American Institute of Certified
Public Accountants issued a Statement of Position (SOP), "Accounting for
Certain Insurance Activities of Mutual Life Insurance Enterprises," which
provides accounting guidance for long-duration participating life insurance
contracts. Both of the pronouncements are effective for periods beginning
after December 15, 1995. These pronouncements require mutual life insurance
companies to apply all authoritative accounting pronouncements in preparing
their financial statements if they are to be reported in conformity with
generally accepted accounting principles (GAAP). Therefore, the financial
statements of the Company prepared on the basis of statutory accounting
practices will no longer be described as prepared in conformity with GAAP
after the effective date of these pronouncements. The effects of applying
the provisions of these pronouncements will cause total surplus and net
earnings to differ from amounts as reported under the existing accounting
practices. Statutory surplus as prepared in conformity with GAAP at December
31, 1994 was $179,420,000 versus statutory surplus of $141,677,000. Net
earnings as prepared in conformity with GAAP at December 31, 1994 and 1993
was $8,038,000 and $24,398,000, respectively versus statutory net earnings
of $14,353,000 and $20,057,000, respectively. These differences as of and
for the year ended 1995 have not yet been determined by the Company.
Valuation of Investments
Investments are valued as prescribed by the National Association of
Insurance Commissioners (NAIC). Bonds and short-term investments are
generally carried at amortized cost, preferred stocks at cost, common stocks
of unaffiliated companies at market value, and mortgage loans at the amount
of outstanding principal adjusted for premiums and discounts. Bonds that the
NAIC has determined are impaired in value are carried at estimated fair
value. Real estate acquired in satisfaction of debt is valued at the lower
of the carrying value of the outstanding mortgage loans or fair value of the
acquired real estate at time of foreclosure. The adjusted basis is
subsequently depreciated. Investments in limited partnerships included in
other invested assets and investments in unconsolidated subsidiaries are
carried at the Company's share of the underlying net equity of the
investment. Home office real estate is carried at depreciated cost.
Realized gains and losses on the sale of investments are determined on a
specific identification basis. The net unrealized gains and losses
attributable to the adjustment from book value to carrying value for all
investments, except for the equity in earnings of limited partnerships, are
reflected in surplus. Net unrealized gains for bonds and stocks [composed of
unrealized gains of $18,404,841 ($16,403,424 in 1994), reduced by unrealized
losses of $8,538,442 ($5,611,151 in 1994)] amounted to $9,866,399 at
December 31, 1995 ($10,792,273 at December 31, 1994). Effective in 1995, the
Company changed its method in which it records losses resulting from the
write-down of the carrying value of outstanding mortgage loans to fair value
of the acquired real estate at time of foreclosure as realized losses.
Realized losses from the write-down of the carrying amount of foreclosed
mortgage loans were $722,905 in 1995. Prior to 1995, the Company recorded
these losses as unrealized losses and as a direct charge to surplus.
Unrealized losses related to such write-downs were $3,751,137 and $1,381,207
in 1994 and 1993, respectively. Earnings from its investments in limited
partnerships amounted to $164,747 during 1995 ($1,051,075 and $631,145 in
1994 and 1993) and was credited to income.
Policy Reserves
During 1988, the Company began using the mortality table 1980 Commissioners'
Standard Ordinary (C.S.O.) Mortality Table. Prior to the adoption of the
1980 C.S.O. table, reserves were recorded using the 1958 C.S.O. table. The
1958 C.S.O. table is used with interest rate assumptions ranging from 2.5
percent to 5 percent. The 1980 C.S.O. table is used with interest rate
assumptions ranging from 3.5 percent to 5.5 percent. With respect to older
policies, the mortality table and interest assumptions vary from the
American Experience table with 3 to 4 percent interest to the 1941 C.S.O.
table with 2.5 percent interest. Approximately 22 percent of the reserves
are calculated on a net level reserve basis and 78 percent on a modified
reserve basis. The effect of the use of a modified reserve basis is to
partially offset the effect of immediately expensing acquisition costs by
providing a policy reserve increase in the first policy year which is less
than the reserve increase in renewal years. Fixed deferred annuity reserves
are calculated using continuous CARVM with 3.5 to 7.0 percent interest
assumptions.
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Provision for Participating Policy Dividends
The provision for participating policy dividends is based on the board of
directors' determination and declaration of an equitable current dividend
plus a provision for such dividend expected to be paid in the following year
rather than being provided for ratably over the premium-paying period in
accordance with dividend scales contemplated at the time the policies were
issued. Participating business comprised 100 percent of ordinary life
insurance in force and premiums received during 1995.
Asset Valuation Reserve (AVR) and Interest Maintenance Reserve (IMR)
An AVR is maintained as prescribed by the NAIC for the purpose of
stabilizing the surplus of the Company against fluctuations in the market
value of assets.
An IMR is maintained as prescribed by the NAIC for the purpose of
stabilizing the surplus of the Company against gains and losses on sales of
fixed income investments that are primarily attributable to changing
interest rates. The interest-related gains and losses are deferred and
amortized into income over the remaining life of the securities.
Electronic Data Processing Equipment
Electronic data processing equipment is carried at cost, less accumulated
depreciation of $4,751,205 and $4,073,583 at December 31, 1995 and 1994,
respectively. The equipment is being depreciated on the straight-line method
over a five-year period.
Pension Costs
Pension costs relating to the Company's pension plans are computed on the
basis of accepted actuarial methods. The annual contributions are computed
according to the aggregate funding method which produces an annual normal
cost at each valuation date. Such annual normal cost provides for spreading
the excess of the present value of future benefits over the value of the
assets of the plan as a level percentage of payroll over the remaining
period of service of active employees on the valuation date based upon the
actuarial assumptions adopted. Gains and losses which arise on each
valuation date as the result of differences between the actual experience
and that expected by the actuarial assumptions are spread over the remaining
period of service of active employees. The Company's policy is to fund
pension costs accrued.
Risks and Uncertainties
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheets and revenues and expenses
for the period. Actual results could differ significantly from those
estimates. The following elements of the financial statements are most
affected by the use of estimates and assumptions:
Investment valuations
Insurance reserves
The Company is subject to the risk that interest rates will change and cause
a decrease in the value of its investments. To the extent that fluctuations
in interest rates cause the duration of assets and liabilities to differ,
the Company may have to sell assets prior to their maturity and realize
losses. Interest rate exposure for the investment portfolio is managed
through asset/liability management techniques which attempt to match the
duration of the assets with the estimated duration of the liabilities. The
Company has derivative financial instruments at December 31, 1995 which are
discussed in note 2.
The Company is subject to the risk that issuers of securities owned by the
Company will default, or other parties, including reinsurers which owe the
Company money, will not pay. The Company minimizes this risk by adhering to
a conservative investment strategy, by maintaining strong reinsurance and
credit and collection policies, and by providing allowances or reserves for
any amounts deemed uncollectible.
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Risks and Uncertainties, Continued
The Company is subject to the risk that the legal or regulatory environment
in which the Company operates will change and create additional costs and
expenses not anticipated by the Company in pricing its products. In other
words, regulatory initiatives designed to reduce insurer profits or new
legal theories may create costs for the insurer beyond those recorded in the
financial statements. The Company mitigates this risk by operating in a
geographically diverse area, thus reducing its exposure to any single
jurisdiction, closely monitoring the regulatory environment to anticipate
changes and by using underwriting practices which identify and minimize the
potential adverse impact of this risk.
Disclosures About Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure of fair value
information about existing on and off-balance sheet financial instruments.
In cases where quoted market prices are not available, fair values are based
on estimates using present value or other valuation techniques. These
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. Although fair value
estimates are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could
not be realized in the immediate settlement of the instruments. Certain
financial instruments and all nonfinancial instruments are excluded from
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company. In addition,
the tax ramifications of the related unrealized gains and losses can have a
significant effect on fair value estimates and have not been considered in
the estimates.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash, short-term investments, accrued investment income, and policy
loans: The carrying amounts reported for these instruments approximate
their fair values because of their short-term nature.
Bonds and stocks: Fair values for bonds are based on quoted market prices
where available. For bonds not actively traded, fair values are estimated
using values obtained from independent pricing services or, in the case
of private placements, are estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit
quality, and maturity of the investments. The fair values for
unaffiliated preferred and common stocks are based on quoted market
prices.
Derivative financial instruments: The carrying value and fair value for
these instruments is discussed in note 2.
Mortgage loans: The fair values for mortgage loans are estimated using
discounted cash flow analyses, using interest rates currently being
offered for similar loans to borrowers with similar credit ratings. Loans
with similar characteristics are aggregated for purposes of the
calculations. Fair values for mortgages in default are valued at the
estimated fair value of the underlying collateral.
Separate account assets and liabilities: The fair value of assets held in
separate accounts is based on quoted market prices. The fair value of
liabilities related to separate accounts is the amount payable on demand.
Investment contracts: The fair values of the Company's liabilities under
investment type insurance contracts are estimated using the cash
surrender value of the contracts.
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
<TABLE>
(1) Summary of Significant Accounting Policies, Continued
Disclosures About Fair Value of Financial Instruments, Continued
The carrying amounts and fair values as of December 31 were as follows (000s omitted):
<CAPTION>
Carrying amount Fair value
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investments:
Bonds $1,636,574 1,618,418 1,728,572 1,553,971
Preferred stocks 357 954 366 979
Common stocks of nonaffiliates 25,678 19,410 25,678 19,410
Mortgage loans on real estate 428,594 403,386 462,167 395,000
Policy loans 100,880 100,481 100,880 100,481
Short-term investments 18,256 6,623 18,256 6,623
Cash (2,956) (3,162) (2,956) (3,162)
Assets held in separate accounts 296,874 147,894 296,874 147,894
Liabilities related to separate accounts 287,915 141,555 287,915 141,555
</TABLE>
Derivative Financial Instruments
The Company has only limited involvement with derivative financial
instruments, and does not use them for trading purposes. The Company enters
into derivatives, primarily interest rate swaps, to reduce interest rate
exposures for long-term assets and to exchange fixed for floating interest
rates.
Net interest receivable or payable on those contracts that hedge risks
associated with interest rate fluctuations are recognized in the period
incurred as an adjustment to investment income. Realized capital gains and
losses on equity swaps are recognized in the period incurred as an
adjustment to net realized capital gains (losses). Unrealized capital gains
and losses on equity swaps are charged or credited to surplus.
Reclassifications
Certain amounts previously reported in prior years' financial statements
have been reclassified to conform to current year presentation.
(2) Investments
Bonds
The carrying value and estimated fair value of investments in bonds at
December 31, 1995 and 1994 are as follows (000s omitted):
<TABLE>
<CAPTION>
Gross Gross
Carrying unrealized unrealized Estimated
Type of security value gains losses fair value
---------------- ----- ----- ------ ----------
1995
----
<S> <C> <C> <C> <C>
United States treasury $ 79,778 2,599 (106) 82,271
and government
States and political
subdivisions 64 0 0 64
Foreign government 20,614 1,675 0 22,289
Corporate securities 1,143,456 77,281 (4,541) 1,216,196
Mortgage-backed
securities 332,394 11,937 (210) 344,121
Other debt securities 60,268 3,404 (41) 63,631
--------- ------- ------- ---------
$1,636,574 96,896 (4,898) 1,728,572
========= ======= ======= =========
</TABLE>
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(2) Investments, Continued
<TABLE>
<CAPTION>
Gross Gross
Carrying unrealized unrealized Estimated
Type of security value gains losses fair value
1994
<S> <C> <C> <C> <C>
United States treasury
and government $ 101,622 74 (4,640) 97,056
States and political
subdivisions 155 0 (35) 120
Foreign government 22,822 68 (678) 22,212
Corporate securities 1,131,172 10,916 (47,904) 1,094,184
Mortgage-backed
securities 343,344 780 (22,731) 321,393
Foreign Corporate
Securities 19,303 180 (477) 19,006
--------- ------- -------- ---------
$1,618,418 12,018 (76,465) 1,553,971
========= ======= ======== =========
</TABLE>
A provision of $7,234,079 and $4,112,524 at December 31, 1995 and 1994,
respectively, has been provided for bonds that have been determined by the
NAIC to have an impairment in value. No further provision, except for the
asset valuation reserve, is made for possible losses resulting when
statement value exceeds estimated fair value, as the Company has the ability
and intent to hold these investments until maturity and does not expect to
realize any significant losses.
The carrying value and estimated fair value of investments in bonds at
December 31, 1995, by contractual maturity, are shown below (000s omitted).
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
Carrying Estimated
value fair value
Due in 1 year or less $ 38,190 38,325
Due after 1 year through 5 years 411,117 427,004
Due after 5 years through 10 years 657,425 703,716
Due after 10 years 165,871 182,648
--------- ---------
1,272,603 1,351,693
Mortgage-backed securities 332,394 344,121
Other structured securities 31,577 32,758
--------- ---------
$1,636,574 1,728,572
========= =========
The average duration until maturity for the above bonds, excluding
mortgage-backed securities, is 3.9 years.
Proceeds from sales, calls, redemptions, and maturities of investments in
bonds were $217,833,188, $338,250,247, and $228,967,811 during 1995, 1994,
and 1993 respectively. Gross gains of $3,455,815, $2,698,682, and $6,900,246
and gross losses of $2,559,251, $11,985,605, and $2,979,670 were realized on
those sales in 1995, 1994, and 1993, respectively. Net realized capital
gains (losses), less applicable income taxes, of $1,412,534, ($4,448,743),
and $4,220,420 were transferred to the IMR in 1995, 1994, and 1993,
respectively.
Equity Securities
The gross unrealized gains and losses on non-affiliated equity securities
at December 31, 1995 and 1994 are as follows (000s omitted):
Gross Gross Estimated
unrealized unrealized market
Cost gains losses value
1995 $23,502 3,692 1,150 26,044
1994 $20,311 1,209 1,131 20,389
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(2) Investments, Continued
Mortgage Loans on Real Estate
The Company's mortgage portfolio consists mainly of commercial mortgage
loans made to customers throughout the United States. The Company limits its
concentrations of credit risk by diversifying its mortgage loan portfolio so
that loans made in any one state are not greater than 20 percent (16 percent
in Illinois) of the aggregate mortgage loan portfolio balance and loans of
no more than 2 percent of the aggregate mortgage loan portfolio balance are
made to any one borrower. All outstanding commercial mortgage loans are
secured by completed, income-producing properties. At December 31, 1995, the
commercial mortgage portfolio had an average remaining life of approximately
4.8 years.
Assets Designated
The carrying values of assets designated for regulatory authorities are as
follows (000s omitted):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Bonds and short term investments $1,636,599 1,618,498
Mortgage loans 428,594 403,386
Policy loans 100,880 100,481
---------- ----------
$2,166,073 2,122,365
========== ==========
Net Investment Income
Components of net investment income are as follows (000s omitted):
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Bonds $127,056 121,725 114,429
Preferred stocks 73 105 158
Common stocks 2,393 5,844 2,165
Short-term investments 1,447 1,214 918
Derivative financial instruments 742 0 0
Mortgage loans 37,835 36,992 40,406
Real estate 10,422 10,070 9,469
Policy loans 6,392 6,276 6,139
Other invested assets 192 (541) (163)
Other 85 (1,038) 135
------- ------- -------
Gross investment income 186,637 180,647 173,656
Less investment expenses 13,282 13,102 11,534
------- ------- -------
Net investment income $173,355 167,545 162,122
======== ======= =======
Realized Gains and Losses
Net realized capital gains and losses are summarized as follows (000s omitted):
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Debt securities $ 896 (9,287) 3,921
Equity securities 3,322 1,420 7,202
Mortgage loans 76 (530) 252
Real estate 180 (223) 1,868
Short-term investments and other 0 248 0
Derivative financial instruments (3,174) 0 0
------ ------ ------
Net realized investment gains $1,300 (8,372) 13,243
====== ====== ======
</TABLE>
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(2) Investments, Continued
Derivative Financial Instruments
As of December 31, 1995, the Company had an interest rate swap agreement
with a major financial institution, having a notional amount of $100
million. Under the agreement, the Company receives interest payments at a
floating rate based on an interest rate index, which was 5.75 percent as of
December 31, 1995, and pays interest on the same notional amount at a fixed
rate, which was 6.96 percent as of December 31, 1995. Amounts exchanged as a
part of the interest rate differential are accounted for as adjustments to
interest income. This interest rate swap agreement is scheduled to terminate
in the year 2000. As of December 31, 1995, the carrying value of the
interest rate swap agreement was $0 and the fair value was ($4,607,000).
This negative fair value represents the estimated amount the Company would
have to pay at December 31, 1995 to cancel the contract or transfer it to
another party.
The Company has entered into a total return swap with CUMIS Insurance
Society, a wholly owned subsidiary of CUNA Mutual Investment Corporation,
for the period from January 1, 1995 through December 31, 1996. Under this
arrangement, the Company agrees to swap the total return (investment income,
realized and unrealized gains/losses) on a $19.4 million portfolio of the
Company's common stock in exchange for the return on a portfolio of the same
size of CUMIS Insurance Society's bonds. This swap was entered into in order
to minimize the Company's exposure to market risk in its common stock
portfolio. In 1995, the financial statement impact of the swap was to reduce
the Company's total return on investments by $1,641,136. The Company
recorded the following income (loss) in 1995 from this transaction;
investment income $1,171,120, realized losses ($3,173,747) , unrealized
gains $361,491. Of the net amount due to CUMIS, $1,490,493 was paid in
December 1995 and the balance $150,643, was recorded as a payable at
year-end. Given the nature of the agreement, the contracts carrying value
and fair market value are $0.
The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its interest rate swap agreements. The Company
anticipates, however, that counterparties will be able to fully satisfy
their obligations under the contracts. The Company does not obtain
collateral to support financial instruments, but monitors the credit
standing of the counterparties.
(3) Real Estate
A summary of real estate held is as follows (000s omitted):
1995 1994
---- ----
Cost:
Investment real estate $83,886 75,125
Home office 12,318 12,267
-------- --------
96,204 87,392
Less accumulated depreciation 29,830 25,708
-------- --------
$66,374 61,684
======== ========
Investment real estate and the home office buildings are being depreciated
on a straight-line basis over the useful lives of these assets.
(4) Affiliation and Transactions with Affiliates and Related Parties
On July 1, 1990, the Company entered into an agreement of permanent
affiliation with CUNA Mutual Insurance Society (CMIS), following approval by
the Iowa Commissioner of Insurance after notice and hearing and after
written ballot approval by the Company's policyholders. The agreement is not
a merger or consolidation in that both companies remain separate corporate
entities, and both continue to be separately owned and ultimately controlled
by their respective policyholder groups, who retain their voting rights
without change. The agreement terms include a provision for a majority of
the Company's board of directors to be nominated for election by CMIS; a
provision for extensive financial reinsurance of each company's individual
life and health business; joint development of business plans and
distribution systems for the sale of individual insurance and financial
service products within the credit union market; and a provision for the
sharing of certain resources and facilities. Expenses relating to shared
resources and facilities are allocated between the companies and their
subsidiaries under a cost-sharing agreement. Expenses are allocated based on
specific identification or, if undeterminable, generally on the basis of
usage or benefit derived. These transactions give rise to intercompany
account balances which are settled periodically. Subsequent to each year
end, the expense allocation process is subject to review by each company.
Based on these reviews, allocated expenses to each company may be adjusted,
if determined necessary. These expenses were adjusted by $(214,524) (net of
taxes of $115,513), and by $1,504,074 (net of taxes of $809,886) during 1995
and 1994, respectively, and recorded as a direct charge or credit to
unassigned surplus.
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(4) Affiliation and Transactions with Affiliates and Related Parties, Continued
Common stock investments include the Company's wholly owned subsidiaries:
Century Life Insurance Company (CL); Red Fox Motor Hotel Corporation; and
Century Financial Services Corp. Century Investors of America, Inc. (CI),
another wholly owned subsidiary, was liquidated on December 31,1993. The
Company also shares equally with CUNA Mutual Investment Corporation
ownership of Century Investment Management Company. The carrying value of
these subsidiary investments on the Company's books amounted to $18,007,296
and $18,292,566 at December 31, 1995 and 1994, respectively. Included in net
investment income (see note 2) was dividend income of $2,000,000 from CL for
the year ended December 31, 1995 ($5,500,000 for 1994 and $0 for 1993). No
dividend income was received from CI for the year ended December 31, 1995
($0 for 1994 and $1,437,966 for 1993).
Expenses are allocated by the Company to its subsidiaries. These expenses,
such as salaries, rents, depreciation, and other operating expenses,
represent the subsidiaries' share of expenses and are allocated based on
specific identification or, if undeterminable, generally on the basis of
usage or benefit derived. These transactions give rise to intercompany
account balances which are settled monthly.
In 1995, the Company funded the purchase of 50 percent of CUNA Mortgage
Corporation by CUNA Mutual Investment Corporation (CMIC) by providing cash
of $13.2M to CMIC. In return, the Company received a note with a stated
maturity date of January 15, 2011. The effective yield on the date of the
agreement was 10.62 percent. The yield will vary over the life of the note
as both the yield and the payment stream will be determined based on the
paydown activity of an underlying notional pool of Federal National Mortgage
Association mortgages. The structure of this arrangement will provide a
hedge against the Company's bond holdings, as the return will vary inversely
with the return on the bond portfolio. The carrying value of the note is
$12.9 million at December 31, 1995 and is included in other invested assets
on the 1995 balance sheet.
(5) Separate Accounts
The Company has three separate account components. The first component is
used for the investment of premiums on flexible premium variable universal
life insurance policies and has eight subaccounts which each invest
exclusively in shares of a single corresponding fund. The funds consist of
the following: Capital Appreciation Stock, Growth and Income Stock, Balanced
(combination of common stock and bond), Bond, Money Market, Treasury 2000,
International Stock, and World Governments. The second component is used for
the investment of group annuity premium deposits and has seven subaccounts
which invest in all but the Treasury 2000 fund. The third component is used
for the investment of premiums received on variable annuity contracts and
has seven subaccounts which invest in all but the Treasury 2000 fund.
Investments of the money market fund and money market instruments in the
other funds are stated on an amortized cost basis, which approximates market
value. Investments other than money market instruments are stated at market
value.
(6) Annuity Reserves and Deposit Liabilities
The withdrawal characteristics of the Company's annuity contracts and
deposit funds as of December 31, 1995 and 1994 are as follows (amounts are
net of reinsurance) (000s omitted):
1995 1994
---- ----
Subject to discretionary withdrawal:
With market value adjustments $200,380 141,800
At book value, less surrender charge 471,320 483,177
At market value 118,247 23,192
At book value, no charge or adjustment 592,213 587,371
--------- ---------
1,382,160 1,235,540
Not subject to discretionary withdrawal 26,177 22,460
--------- ---------
$1,408,337 1,258,000
========= =========
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(7) Reinsurance
As a result of the permanent affiliation (see note 4), the Company and
affiliated parent, CMIS, and affiliated subsidiary, MEMBERS Life Insurance
Company (ML), began sharing, through reinsurance, a majority of the
individual life, annuity, and health insurance business issued by each
company after July 1, 1990. The Company ceded 35 percent of the career
agency business written July 1, 1990, until December 31, 1993, to ML. With
career agency business issued January 1, 1994, the Company began ceding 50
percent to ML. The majority of business written by PLAN AMERICA
representatives has been ceded at 50 percent to ML.
The Company assumes a portion of the business originated by a CMIS joint
venture. In addition, the Company follows the policy of reinsuring that
portion of risk in excess of $500,000 on the life of any individual with
unaffiliated companies. Reinsurance under this policy is effective prior to
sharing under the affiliation agreement.
The following amounts represent the deductions for reinsurance ceded to
affiliated and unaffiliated companies. The Company is liable for these
amounts in the event such companies are unable to pay their portion of the
claims. (000s omitted)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations $ 75,362 105,283 113,842
========= ========= =========
Policy reserves and claim liabilities $ 529,827 459,902 357,684
========= ========= =========
Insurance in force $1,375,434 1,302,561 1,140,727
========= ========= =========
Included in these balances above are the following amounts relating to activity with ML (000s omitted):
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations $ 73,249 103,588 112,423
========= ========= =========
Policy reserves and claim liabilities $ 527,150 457,619 355,696
========= ========= =========
Insurance in force $1,066,331 986,998 846,377
========= ========= =========
Assumed reinsurance activity from CMIS and ML was as follows (000s omitted):
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations $ 25,264 20,393 15,334
========= ========= =========
Policy reserves and claim liabilities $ 17,460 12,527 8,244
========= ========= =========
Insurance in force $1,411,590 1,002,639 581,175
========= ========= =========
</TABLE>
The above intercompany transactions give rise to intercompany account
balances which are settled monthly.
(8) Federal Income Taxes
The Company files a consolidated life/nonlife federal income tax return with
its subsidiaries. The Company's policy is to collect from or refund to its
subsidiaries the amount of taxes applicable to its operations had it filed a
separate return. Net federal income taxes payable or recoverable reflect
balances payable to or due from subsidiaries and the Internal Revenue
Service (IRS) as follows (000s omitted):
1995 1994
---- ----
Due from subsidiaries $1,461 252
Due (to) from IRS (5,406) 1,331
------ ------
($3,945) 1,583
====== ======
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(8) Federal Income Taxes, Continued
The actual federal income tax expense differs from "expected" tax expense
computed by applying the statutory federal income tax rate of 35 percent to
the income before federal income taxes and net realized capital gains for
the following reasons (000s omitted):
<TABLE>
<CAPTION>
1995 1994 1993
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $ 9,884 35.0% 10,398 35.0% 13,792 35.0%
Nontaxable investment income (3,650) (12.9) (3,860) (12.6) (3,496) (8.9)
Mutual life insurance company
differential earnings adjustment 3,259 11.5 666 2.2 (1,848) (4.7)
Nondeductible deferred acquisition costs 860 3.1 1,485 4.9 1,789 4.5
Taxable nonadmitted investment income 23 0.1 15 0.0 (193) (0.5)
Accrual to cash basis adjustment of
dividends to policyholders 126 0.5 (945) (3.0) (1,088) (2.8)
Write-downs of mortgage loans (393) (1.4) (1,294) (4.2) (466) (1.2)
Difference between book and tax
depreciation 174 0.6 58 0.2 (16) 0.0
Change in book and tax reserves 802 2.8 1,055 3.4 (391) (1.0)
Seed money withdrawal 98 0.3 48 0.2 (126) (0.3)
Miscellaneous book/tax capital gain
adjustment 2,138 7.6 989 3.2 1,092 2.8
Amortization of IMR (117) (0.4) (207) (0.7) (173) (0.4)
Tax associated interest 81 0.3 (4) (0.0) (229) (0.6)
Other, net 36 0.1 256 0.8 (59) (0.2)
------- ----- ------ ----- ------ -----
$13,321 47.2% 8,660 29.3% 8,588 21.7%
======= ===== ====== ===== ====== =====
</TABLE>
The Company's consolidated federal income tax returns have been examined by
the IRS through 1991. An agreement has been reached with the IRS for issues
outstanding through 1991. Adjustments of $0, $0, and $3,594,839 were charged
to surplus in 1995, 1994, and 1993, respectively, relative to this
agreement. Other miscellaneous tax adjustments relating to prior years that
were (charged) credited to surplus amounted to $756,853, ($1,592,264), and
($1,215,812) during 1995, 1994, and 1993, respectively.
In prior taxable years, the Company has claimed the benefit of the negative
differential earnings rate (DER). The permissibility of the negative DER is
currently the subject of litigation between the IRS and other taxpayers in
the industry. The Company has established a reserve for its potential
exposure with respect to this issue.
Income taxes on net realized capital gains (losses) amounted to $455,130,
($2,930,359), and $4,635,386, for 1995,1994, and 1993, respectively. Of
these amounts $760,595, ($2,395,477), and $2,272,535, were transferred to
the IMR in 1995, 1994, and 1993, respectively.
(9) Retirement Plans
The Company has two noncontributory defined benefit plans which cover
substantially all employees and agents who meet eligibility requirements.
The defined benefit plan contracts provide that the Company will function
as the insurer. The total pension expense for 1995, 1994, and 1993 was
$1,992,599, $2,717,207, and $2,090,665, respectively.
The actuarial present value of accumulated plan benefits and plan net
assets available for benefits for the Company's benefit plans as of January
1, 1995 and 1994 are as follows:
Actuarial present value of accumulated plan benefits (000s omitted):
1995 1994
Vested $28,628 26,308
Nonvested 1,271 1,148
------- -------
$29,899 27,456
======= =======
Net assets available for benefits $40,081 36,395
======= =======
<PAGE>
CENTURY LIFE OF AMERICA
Notes to Financial Statements
(9) Retirement Plans, Continued
The assumed rate of return used in determining the actuarial present value
of accumulated plan benefits on the two plans was 7 percent, and the salary
increase assumption was 5 percent for 1995, 1994, and 1993.
The Company provides certain medical and life insurance benefits for
retirees and their beneficiaries and covered dependents. The Company's
medical benefit plan provides subsidized coverage after retirement for
eligible full-time employees and agents, their spouses and dependents, up
to age 65. Starting at age 65, retirees pay the full cost of their
coverage. Additionally, the Company provides group term life insurance for
its retirees, the face amount of which is based on the individual's salary
at retirement. The cost of postretirement benefits other than pensions is
recognized by the Company during the employee's active working careers. The
Company adopted this policy as of January 1, 1992 and is amortizing the
related initial impact over twenty years. Postretirement benefit costs
amounted to $825,705 in 1995 ($769,590 in 1994 and $494,000 in 1993) and
include the expected cost of such benefits for newly eligible or vested
employees, interest cost, gains and losses arising from differences between
actuarial assumptions and actual experience, and amortization of the
transition obligation. The unfunded postretirement benefit obligation was
$4,560,541 and $4,570,081 at December 31, 1995 and 1994, respectively. The
accrued postretirement benefit liability at December 31, 1995 and 1994 was
$1,754,484 and $1,399,476, respectively. The discount rate used in
determining the postretirement benefit obligation at December 31, 1995 and
1994 was 8 percent and the initial health care cost trend rate was 10
percent trending down to an ultimate rate of 5.5 percent. The health care
cost trend rate assumption has a significant effect on the amounts
reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the
postretirement benefit obligation as of December 31, 1995, by $185,392 and
the estimated eligibility cost and interest cost components of net periodic
postretirement benefit cost for 1995 by $49,447.
The Company has two defined contribution plans (401[k] and thrift) which
cover all regular full-time employees and agents who meet certain
eligibility requirements. Under the plans, the Company contributes an
amount equal to 50 percent of the employees' contributions, up to a maximum
of 3 percent of the employees' salaries. The Company contributions were
approximately $960,000, $998,000, and $947,000 for the years ended December
31, 1995, 1994, and 1993, respectively.
(10) Commitments and Contingencies
The Company participates in a securities lending program. All securities
loaned are fully collateralized with cash, U.S. Government securities or
irrevocable bank letters of credit. At December 31, 1995, the par value of
securities loaned by the Company totaled $15.1 million.
The Company has assigned surplus of $1.8 million in 1995 and $1.6 million
in 1994 for contingency reserves. Contingency reserves are designated by
the Company as special surplus funds and are required by regulatory
authorities.
The Company had outstanding loan commitments of approximately $13.5 million
at December 31, 1995.
The Company is a defendant in various legal actions arising out of the
conduct of its business. In the opinion of management and in-house legal
counsel, the ultimate liability, if any, resulting from all such pending
actions will not materially affect the financial position or results of
operations of the Company.
The Company has been sued by a party to an agreement with the Company which
terminated as of December 31, 1995. The lawsuit alleges various complaints
and seeks various remedies and damages. The suit, which was filed in March
of 1996, is in the very early stages and the ultimate outcome can not
presently be determined. However, the Company believes that it will prevail
based on merits of the case.
<PAGE>
CENTURY LIFE OF AMERICA
Schedule I - Summary of Investments -
Other than Investments in Related Parties
December 31, 1995
<TABLE>
<CAPTION>
Amount at which
shown in the
Cost Value balance sheet
<S> <C> <C> <C>
Fixed maturities:
Bonds:
United States government and government
agencies and authorities $ 79,777,508 82,270,233 79,777,508
States, municipalities and political subdivisions 63,763 63,890 63,763
Foreign governments 20,613,737 22,288,305 20,613,737
Public utilities 1,143,456,542 1,216,196,572 1,143,456,542
All other corporate bonds 60,268,414 63,631,846 60,268,414
Mortgage-backed securities 332,394,219 344,121,034 332,394,219
------------ ------------ ------------
Total fixed maturities 1,636,574,183 1,728,571,880 1,636,574,183
============ ============ ============
Equity securities:
Common stocks:
Public utilities 724,792 850,951 850,951
Banks, trust, and insurance companies 391,412 583,687 583,687
Industrial, miscellaneous, and all other 22,028,547 24,243,416 24,243,416
Nonredeemable preferred stocks 357,238 365,570 357,238
------------ ------------ ------------
Total equity securities 23,501,989 26,043,624 26,035,292
------------ ============= ------------
Mortgage loans on real estate 428,594,228 428,594,228
Real estate 14,528,625 14,528,625
Real estate acquired in satisfaction of debt 51,845,005 51,845,005
Policy loans 100,879,548 100,879,548
Other long-term investments 21,721,092 21,721,092
Short-term investments 18,255,834 18,255,834
------------ ------------
Total investments $2,295,900,504 2,298,433,807
============ ============
</TABLE>
<PAGE>
CENTURY LIFE OF AMERICA
Schedule III - Supplementary Insurance Information
Years Ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Future
policy Other
benefits, policy
Deferred losses, claims
policy claims and
acquisition and loss Unearned benefits Premium
Segment costs expenses premiums payable revenue
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Life insurance $ 0 1,923,141,658 0 6,165,455 344,197,150
========= ============ ======== ========= ===========
Year ended December 31, 1994:
Life insurance $ 0 1,861,749,841 0 5,193,850 324,398,752
========= ============ ======== ========= ===========
Year ended December 31, 1993:
Life insurance $ 0 1,753,883,242 0 3,525,543 303,237,600
========= ============ ======== ========= ===========
Benefits Amortization
claims of deferred
Net losses and policy Other
investment settlement acquisition operating Premium
income expenses costs expenses written
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Life insurance $173,355,504 296,934,768 0 195,921,043 0
=========== =========== ======== ========== ========
Year ended December 31, 1994:
Life insurance $167,544,704 329,365,217 0 141,791,542 0
=========== =========== ======== ========== ========
Year ended December 31, 1993:
Life insurance $162,122,449 310,092,231 0 119,721,441 0
=========== =========== ======== ========== ========
</TABLE>
<PAGE>
CENTURY LIFE OF AMERICA
Schedule IV - Reinsurance
Years Ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Assumed Percentage
Ceded to other from other of amount
Gross amount companies companies Net amount assumed to net
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Life insurance in force $10,930,404,549 1,375,434,224 1,411,589,675 10,966,560,000 12.9%
============== ============ ============ ============= ======
Premiums
Life insurance $321,231,937 74,971,145 16,065,694 262,326,486
Accident and health insurance 1,696,238 391,181 9,198,546 10,503,603
-------------- ------------ ------------ -------------
Total premiums $ 322,928,175 75,362,326 25,264,240 272,830,089 9.3%
============== ============ ============ ============= ======
Year ended December 31, 1994:
Life insurance in force $10,720,495,714 1,302,560,973 1,002,639,259 10,420,574,000 9.6%
============== ============ ============ ============= ======
Premiums
Life insurance $ 336,480,036 105,061,586 12,741,704 244,160,154
Accident and health insurance 1,538,764 221,904 7,651,114 8,967,974
-------------- ------------ ------------ -------------
Total premiums $ 338,018,800 105,283,490 20,392,818 253,128,128 8.1%
============== ============ ============ ============= ======
Year ended December 31, 1993:
Life insurance in force $10,531,927,926 1,140,726,840 581,174,914 9,972,376,000 5.8%
============== ============ ============ ============= ======
Premiums
Life insurance $ 342,975,070 113,606,722 8,974,057 238,342,405
Accident and health insurance 1,614,007 235,674 6,359,496 7,737,829
-------------- ------------ ------------ -------------
Total premiums $ 344,589,077 113,842,396 15,333,553 246,080,234 6.2%
============== ============ ============ ============= ======
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Century Life of America:
We have audited the accompanying balance sheets of Century Life of America as of
December 31, 1995 and 1994 and the related statements of operations, unassigned
surplus and cash flow for each of the years in the three year period ended
December 31, 1995.
In connection with our audits of the financial statements, we also have audited
the financial statement schedules I, III, and IV. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Iowa Department of
Commerce, Insurance Division. Such practices are currently regarded as generally
accepted accounting principles for mutual life insurance companies.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Life of America as of
December 31, 1995 and 1994 and the results of its operations and its cash flow
for each of the years in the three year period ended December 31, 1995 in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedules, when considered in relation to the
basic financial statements, taken as a whole, present fairly, in all material
respects, the information set forth therein.
As discussed in note 1 to the financial statements, the Company changed its
method of accounting for mortgage loan foreclosure losses in 1995.
Des Moines, Iowa
March 26, 1996
<PAGE>
APPENDIX A
ILLUSTRATIONS OF POLICY VALUES AND DEATH BENEFITS
The following tables have been prepared to help show how values under the
contract can change with investment performance. The tables are based on
hypothetical assumptions concerning the Age of the Insured, the Specified Amount
of the Policy, the planned annual premium and other factors. Separate tables
based on unisex mortality rates are available from the address shown on the
first page of this Prospectus. At your request, Century Life will provide an
illustration based upon your Age, planned premium payments and other factors.
Factors That Vary
The illustrations vary five factors. (The upper right hand corner of each
illustration identifies those factors).
1. Age at issue - Some show Age 35. Others show Age 50.
2. Planned annual premium - The premium illustrated is $1,200 or
$2,500. (The premium is $650 or $1,200 in the unisex
illustrations.)
3. Cost of insurance - Some show the mortality rates currently
being charged. Others show the guaranteed rate (the maximum
rate the contract allows the company to charge).
4. Projected Dividends - Illustrations based on current mortality
rates include projected dividends. Illustrations based on
guaranteed mortality rates do not.
5. Choice of death benefit option - Some show option 1 (Specified
Amount). Others show option 2 (Specified Amount plus
Accumulated Value on the date of death).
Factors That Do Not Vary
The illustrations do not vary the following factors, that is, all the
illustrations make the following assumptions: The Insured is a non smoker. The
Specified Amount of coverage is $100,000. Planned premiums are paid on the first
day of the Policy year for 30 years. No loans are taken. No withdrawals are
made. All net premium is allocated to the Separate Account and invested equally
in each Fund. No changes are made to the Specified Amount. No transfer fees are
incurred. The Policy has no riders.
The charge for state premium tax is 2%. No federal income tax is paid.
Effect of Hypothetical Investment Returns
To show how investment return affects Policy values, the tables illustrate three
different hypothetical rates of return. The tables show gross annual rates of
return of 0%, 6% and 12%, which produce approximate net annual rates of return
of -1.65%, 4.35% and 10.35%, respectively. Net returns are lower than gross
returns due to charges made by the Separate Account and by the Funds. Charges
are expressed as a percentage of average daily net assets. The Separate Account
charges a .90% mortality and expense fee. Currently, one Fund charges a .45%
investment and administrative fee, five Funds charge .65%, two Funds charge
1.00% and one Fund charges 1.05%.
The table below shows for each Subaccount the total of the mortality and expense
fee and the Fund level fees.
Mortality & Expense Fund Fees* Total
Capital Appreciation Stock .90 .65 1.55
Growth and Income Stock .90 .65 1.55
Balanced .90 .65 1.55
Bond .90 .65 1.55
Money Market .90 .65 1.55
Treasury 2000 .90 .65 1.55
International Stock .90 1.05 1.95
World Governments .90 1.00 1.90
Emerging Growth .90 1.00 1.90
Average .90 .75 1.65
*These are current charges (after reimbursements). Each Fund has the right to
change its charge in the future.
These charges are more fully described in the Funds' Prospectuses and in the
Funds' Statements of Additional Information available without charge from the
address shown on the first page of this prospectus.
How Varying a Factor Affects Hypothetical Investment Returns
Changing any factor in the illustrations would change many numbers throughout
the table. For example, illustrated values would be different if the Insured
were a different Age, a different risk classification, or if unisex mortality
rates were used. Policy values would change if premiums were paid at different
times or in different amounts or if investment rates of return fluctuated up and
down. Policy values based on current mortality charges would be lower if the
Company did not pay the dividends it has projected but not guaranteed.
(Dividends are expected to be $39 beginning in Policy year 11, plus .61% of
average Accumulated Value during Policy years 11-20 and 1.01% beginning in
Policy year 21.) Policy values would be lower if more expenses were paid.
Expenses vary by Fund and each Fund has the right to change its charge in the
future. The illustrations do not show any charges for federal income taxes. If
in the future taxes were due, gross annual rates of return would have to exceed
0%, 6% and 12% by an amount sufficient to cover the charge for taxes in order to
produce the Policy values shown.
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 1
<CAPTION>
Male Non Smoker Age at Issue: 35
Specified Amount: $100,000 Annual Premium: $1,200
Planned Premium Payable Annually for: 30 years Based on: Current Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 1*
------- ------------- ---------------------------------- ----------------------------------- =================================
End Premiums 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Accum at 5% (-1.65% NET) (4.35% NET) (10.35% NET)
Year Interest
Per Year
---------------------------------- ----------------------------------- =================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ----------- ----------- =========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1260 100000 871 100 100000 932 161 100000 994 223
2 2583 100000 1720 988 100000 1898 1165 100000 2083 1350
3 3972 100000 2545 1852 100000 2895 2201 100000 3275 2581
4 5431 100000 3346 2691 100000 3925 3270 100000 4579 3924
5 6962 100000 4122 3544 100000 4988 4410 100000 6008 5430
6 8570 100000 4871 4370 100000 6084 5583 100000 7571 7070
7 10259 100000 5592 5207 100000 7213 6828 100000 9283 8898
8 12032 100000 6286 6016 100000 8376 8107 100000 11159 10889
9 13893 100000 6951 6796 100000 9574 9420 100000 13216 13062
10 15848 100000 7585 7585 100000 10807 10807 100000 15471 15471
15 27189 100000 11724 11724 100000 19291 19291 100000 32776 32776
20 41663 100000 15218 15218 100000 29742 29742 100000 61824 61824
25 60136 100000 18166 18166 100000 43406 43406 150,933 112637 112637
30 83713 100000 19768 19768 100000 60728 60728 242,416 198702 198702
======= ============= ============ ========= =========== ============ ========= ============ =========== =========== =========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 1 the death benefit is the greater of (1) the Specified Amount or
(2) the Accumulated Value on the date of death multiplied by the Death Benefit
Ratio described in the section of the Prospectus titled "POLICY BENEFITS - Death
Proceeds - Death Benefit Options 1 and 2."
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 2
<CAPTION>
Male Non Smoker Age at Issue: 35
Specified Amount: $100,000 Annual Premium: $1,200
Planned Premium Payable Annually for: 30 years Based on: Guaranteed Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Not Included
Hypothetical Gross Rates of Return: 0, 6 and 12% Death Benefit: Option 1*
------- ------------- ---------------------------------- ----------------------------------- =================================
End Premiums 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Accum at 5% (-1.65% NET) (4.35% NET) (10.35% NET)
Year Interest
Per Year
---------------------------------- ----------------------------------- =================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ------------ ---------- =========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1260 100000 871 100 100000 932 161 100000 994 223
2 2583 100000 1720 988 100000 1898 1165 100000 2083 1350
3 3972 100000 2545 1852 100000 2895 2201 100000 3275 2581
4 5431 100000 3346 2691 100000 3925 3270 100000 4579 3924
5 6962 100000 4122 3544 100000 4988 4410 100000 6008 5430
6 8570 100000 4871 4370 100000 6084 5583 100000 7571 7070
7 10259 100000 5592 5207 100000 7213 6828 100000 9283 8898
8 12032 100000 6286 6016 100000 8376 8107 100000 11159 10889
9 13893 100000 6951 6796 100000 9574 9420 100000 13216 13062
10 15848 100000 7585 7585 100000 10807 10807 100000 15471 15471
15 27189 100000 10471 10471 100000 17747 17747 100000 30829 30829
20 41663 100000 12259 12259 100000 25575 25575 100000 55683 55683
25 60136 100000 12333 12333 100000 34070 34070 129,275 96474 96474
30 83713 100000 9610 9610 100000 42910 42910 197,611 161976 161976
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== =========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 1 the death benefit is the greater of (1) the Specified Amount or
(2) the Accumulated Value on the date of death multiplied by the Death Benefit
Ratio described in the section of the Prospectus titled "POLICY BENEFITS - Death
Proceeds - Death Benefit Options 1 and 2."
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 3
<CAPTION>
Male Non Smoker Age at Issue: 35
Specified Amount: $100,000 Annual Premium: $1,200
Planned Premium Payable Annually for: 30 years Based on: Current Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 2*
------- ------------- ---------------------------------- ----------------------------------- =================================
0.00% GROSS 6.00% GROSS 12.00% GROSS
End Premiums (-1.65% NET) (4.35% NET) (10.35% NET)
of Accum at 5%
Year Interest
Per Year
---------------------------------- ----------------------------------- =================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ------------ ---------- ========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1260 100869 869 98 100930 930 159 100992 992 221
2 2583 101715 1715 983 101892 1892 1160 102077 2077 1344
3 3972 102535 2535 1841 102883 2883 2189 103261 3261 2567
4 5431 103329 3329 2674 103904 3904 3249 104554 4554 3899
5 6962 104096 4096 3517 104955 4955 4377 105967 5967 5389
6 8570 104833 4833 4332 106035 6035 5533 107507 7507 7006
7 10259 105540 5540 5154 107143 7143 6757 109189 9189 8803
8 12032 106217 6217 5947 108279 8279 8009 111024 11024 10754
9 13893 106861 6861 6707 109444 9444 9290 113027 13027 12872
10 15848 107473 7473 7473 110636 10636 10636 115212 15212 15212
15 27189 111499 11499 11499 118870 18870 18870 131984 31984 31984
20 41663 114763 14763 14763 128718 28718 28718 159458 59458 59458
25 60136 117264 17264 17264 140952 40952 40952 206323 106323 106323
30 83713 118049 18049 18049 154958 54958 54958 284430 184430 184430
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== =========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 2 the death benefit is the greater of (1) the Specified Amount
plus the Accumulated Value on date of death, or (2) the Accumulated Value on the
date of death multiplied by the Death Benefit Ratio described in the section of
the Prospectus titled "POLICY BENEFITS - Death Proceeds - Death Benefit Options
1 and 2."
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 4
<CAPTION>
Male Non Smoker Age at Issue: 35
Specified Amount: $100,000 Annual Premium: $1,200
Planned Premium Payable Annually for: 30 years Based on: Guaranteed Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Not Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 2*
------- ------------- ---------------------------------- ----------------------------------- ==================================
End Premiums 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Accum at 5% (-1.65% NET) (4.35% NET) (10.35 NET)
Year Interest
Per Year
---------------------------------- ----------------------------------- ==================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ------------ ---------- ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1260 100869 869 98 100930 930 159 100992 992 221
2 2583 101715 1715 983 101892 1892 1160 102077 2077 1344
3 3972 102535 2535 1841 102883 2883 2189 103261 3261 2567
4 5431 103329 3329 2674 103904 3904 3249 104554 4554 3899
5 6962 104096 4096 3517 104955 4955 4377 105967 5967 5389
6 8570 104833 4833 4332 106035 6035 5533 107507 7507 7006
7 10259 105540 5540 5154 107143 7143 6757 109189 9189 8803
8 12032 106217 6217 5947 108279 8279 8009 111024 11024 10754
9 13893 106861 6861 6707 109444 9444 9290 113027 13027 12872
10 15848 107473 7473 7473 110636 10636 10636 115212 15212 15212
15 27189 110176 10176 10176 117200 17200 17200 129811 29811 29811
20 41663 111624 11624 11624 124131 24131 24131 152331 52331 52331
25 60136 111116 11116 11116 130586 30586 30586 186745 86745 86745
30 83713 107556 7556 7556 135022 35022 35022 238983 138983 138983
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== ==========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 2 the death benefit is the greater of (1) the Specified Amount
plus the Accumulated Value on date of death, or (2) the Accumulated Value on the
date of death multiplied by the Death Benefit Ratio described in the section of
the Prospectus titled "POLICY BENEFITS - Death Proceeds - Death Benefit Options
1 and 2."
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 5
<CAPTION>
Male Non Smoker Age at Issue: 50
Specified Amount: $100,000 Annual Premium: $2,500
Planned Premium Payable Annually for: 30 years Based on: Current Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 1*
------- ------------- ---------------------------------- ------------------------------------ =================================
End Premiums 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Accum at 5% (-1.65% NET) (4.35% NET) (10.35% NET)
Year Interest
Per Year
---------------------------------- ------------------------------------ =================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ ----------- ----------- ----------- ---------- ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2625 100000 1796 205 100000 1923 332 100000 2051 460
2 5381 100000 3537 2026 100000 3905 2394 100000 4290 2778
3 8275 100000 5222 3790 100000 5946 4515 100000 6734 5302
4 11314 100000 6849 5497 100000 8049 6697 100000 9407 8055
5 14505 100000 8423 7230 100000 10220 9027 100000 12337 11144
6 17855 100000 9945 8911 100000 12463 11429 100000 15555 14521
7 21373 100000 11394 10599 100000 14763 13968 100000 19075 18280
8 25066 100000 12774 12217 100000 17125 16568 100000 22935 22378
9 28945 100000 14078 13759 100000 19549 19230 100000 27171 26853
10 33017 100000 15306 15306 100000 22038 22038 100000 31831 31831
15 56644 100000 22886 22886 100000 38755 38755 100000 67387 67387
20 86798 100000 28326 28326 100000 59351 59351 148,709 128197 128197
25 125284 100000 31148 31148 100000 87763 87763 249,877 233530 233530
30 174402 100000 28627 28627 133,108 126769 126769 433,393 412756 412756
======= ============= ============ ========= =========== ============ =========== =========== =========== ========== ==========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 1 the death benefit is the greater of (1) the Specified Amount or
(2) the Accumulated Value on the date of death multiplied by the Death Benefit
Ratio described in the section of the Prospectus titled "POLICY BENEFITS - Death
Proceeds - Death Benefit Options 1 and 2."
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 6
<CAPTION>
Male Non Smoker Age at Issue: 50
Specified Amount: $100,000 Annual Premium: $2,500
Planned Premium Payable Annually for: 30 years Based on: Guaranteed Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Not Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 1*
------- ------------- ---------------------------------- ----------------------------------- ==================================
End Premiums 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Accum at 5% (-1.65% NET) (4.35% NET) (10.35% NET)
Year Interest
Per Year
---------------------------------- ----------------------------------- ==================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ------------ ---------- ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2625 100000 1796 205 100000 1923 332 100000 2051 460
2 5381 100000 3527 2015 100000 3895 2383 100000 4278 2767
3 8275 100000 5188 3756 100000 5911 4479 100000 6697 5265
4 11314 100000 6774 5422 100000 7970 6617 100000 9323 7970
5 14505 100000 8283 7089 100000 10069 8876 100000 12175 10982
6 17855 100000 9709 8674 100000 12207 11172 100000 15277 14243
7 21373 100000 11049 10253 100000 14382 13586 100000 18656 17861
8 25066 100000 12301 11745 100000 16596 16039 100000 22344 21788
9 28945 100000 13461 13143 100000 18848 18529 100000 26377 26059
10 33017 100000 14521 14521 100000 21133 21133 100000 30793 30793
15 56644 100000 18184 18184 100000 33186 33186 100000 60855 60855
20 86798 100000 17446 17446 100000 45639 45639 129811 111906 111906
25 125284 100000 8742 8742 100000 58301 58301 208300 194673 194673
30 174402 ** ** ** 100000 71609 71609 344979 328551 328551
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== ==========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 1 the death benefit is the greater of (1) the Specified Amount or
(2) the Accumulated Value on the date of death multiplied by the Death Benefit
Ratio described in the section of the Prospectus titled "POLICY BENEFITS - Death
Proceeds - Death Benefit Options 1 and 2."
** Policy terminated prior to year 30.
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 7
<CAPTION>
Male Non Smoker Age at Issue: 50
Specified Amount: $100,000 Annual Premium: $2,500
Planned Premium Payable Annually for: 30 years Based on: Current Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 2*
------- ------------- ---------------------------------- ----------------------------------- ==================================
0.00% GROSS 6.00% GROSS 12.00% GROSS
End Premiums (-1.65% NET) (4.35% NET) (10.35% NET)
of Accum at 5%
Year Interest
Per Year
---------------------------------- ----------------------------------- ==================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ------------ ---------- ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2625 101785 1785 194 101912 1912 321 102039 2039 448
2 5381 103505 3505 1994 103870 3870 2359 104251 4251 2739
3 8275 105157 5157 3725 105872 5872 4440 106649 6649 5217
4 11314 106741 6741 5388 107919 7919 6567 109252 9252 7899
5 14505 108257 8257 7064 110012 10012 8819 112080 12080 10887
6 17855 109708 9708 8674 112155 12155 11121 115158 15158 14124
7 21373 111069 11069 10274 114323 14323 13528 118485 18485 17690
8 25066 112342 12342 11785 116518 16518 15961 122086 22086 21529
9 28945 113519 13519 13201 118730 18730 18412 125980 25980 25662
10 33017 114598 14598 14598 120959 20959 20959 130194 30194 30194
15 56644 121332 21332 21332 135837 35837 35837 161889 61889 61889
20 86798 124932 24932 24932 151574 51574 51574 211500 111500 111500
25 125284 124114 24114 24114 167486 67486 67486 292182 192182 192182
30 174402 115619 15619 15619 179216 79216 79216 420024 320024 320024
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== ==========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 2 the death benefit is the greater of (1) the Specified Amount
plus the Accumulated Value on date of death, or (2) the Accumulated Value on the
date of death multiplied by the Death Benefit Ratio described in the section of
the Prospectus titled "POLICY BENEFITS - Death Proceeds - Death Benefit Options
1 and 2."
</FN>
</TABLE>
<PAGE>
<TABLE>
ILLUSTRATION OF POLICY VALUES
MEMBERSR Variable Universal Life
ISSUED BY CENTURY LIFE OF AMERICA
NUMBER 8
<CAPTION>
Male Non Smoker Age at Issue: 50
Specified Amount: $100,000 Annual Premium: $2,500
Planned Premium Payable Annually for: 30 years Based on: Guaranteed Mortality Charges
Policy Loans and Withdrawals: None Projected Dividends: Not Included
Hypothetical Gross Rates of Return: 0%, 6% and 12% Death Benefit: Option 2*
------- ------------- ---------------------------------- ----------------------------------- ==================================
End Premiums 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Accum at 5% (-1.65% NET) (4.35% NET) (10.35% NET)
Year Interest
Per Year
---------------------------------- ----------------------------------- ==================================
Death Accum Cash Death Accum Cash Death Accum Cash
Benefit Value Surrender Benefit Value Surrender Benefit Value Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ------------- ---------- =========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2625 101785 1785 194 101912 1912 321 102039 2039 448
2 5381 103494 3494 1983 103859 3859 2347 104239 4239 2728
3 8275 105122 5122 3690 105835 5835 4403 106610 6610 5178
4 11314 106661 6661 5309 107834 7834 6482 109161 9161 7809
5 14505 108106 8106 6913 109849 9849 8656 111903 11903 10710
6 17855 109452 9452 8418 111873 11873 10839 114848 14848 13814
7 21373 110691 10691 9896 113899 13899 13104 118008 18008 17213
8 25066 111823 11823 11266 115922 15922 15365 121403 21403 20846
9 28945 112837 12837 12519 117932 17932 17614 125043 25043 24725
10 33017 113725 13725 13725 119916 19916 19916 128944 28944 28944
15 56644 116018 16018 16018 129071 29071 29071 153046 53046 53046
20 86798 112879 12879 12879 134352 34352 34352 185526 85526 85526
25 125284 101254 1254 1254 130857 30857 30857 227175 127175 127175
30 174402 ** ** ** 110018 10018 10018 276280 176280 176280
======= ============= ============ ========= =========== ============ ========= ============ ============= ========== =========
IMPORTANT NOTICE: The hypothetical investment rates of return shown are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return may be more or less than
those shown and will depend on a number of factors, including the Owner's choice
of investment allocations and the investment results of each Fund. The death
benefits and Policy values would be different from those shown if the actual
rates of return averaged 0%, 6%, and 12% over a period of years but also
fluctuated above or below those averages for individual Policy years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
<FN>
*Under Option 2 the death benefit is the greater of (1) the Specified Amount
plus the Accumulated Value on date of death, or (2) the Accumulated Value on the
date of death multiplied by the Death Benefit Ratio described in the section of
the Prospectus titled "POLICY BENEFITS - Death Proceeds - Death Benefit Options
1 and 2."
** Policy terminated prior to year 30.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT
Issue MALE FEMALE
Age COMPOSITE DAC + DSC = TDC COMPOSITE DAC + DSC = TDC
<S> <C> <C> <C> <C> <C> <C>
0 .75 .20 .95 .75 .12 .87
1 .80 .27 1.07 .80 .19 .99
2 .85 .34 1.19 .85 .26 1.11
3 .90 .40 1.30 .90 .32 1.22
4 .95 .47 1.42 .95 .39 1.34
5 1.00 .54 1.54 1.00 .46 1.46
6 1.06 .64 1.70 1.06 .53 1.59
7 1.12 .76 1.88 1.12 .60 1.72
8 1.18 .88 2.06 1.18 .67 1.85
9 1.25 .99 2.24 1.25 .73 1.98
10 1.31 1.08 2.39 1.31 .80 2.11
11 1.37 1.14 2.51 1.37 .86 2.23
12 1.43 1.19 2.62 1.43 .92 2.35
13 1.49 1.22 2.71 1.49 .97 2.46
14 1.55 1.25 2.80 1.55 1.02 2.57
15 1.60 1.28 2.88 1.60 1.07 2.67
16 1.64 1.30 2.94 1.64 1.10 2.74
17 1.67 1.32 2.99 1.67 1.13 2.80
18 1.69 1.34 3.03 1.69 1.16 2.85
19 1.73 1.37 3.10 1.73 1.19 2.92
Issue MALE FEMALE
Age STANDARD NONSMOKER STANDARD NONSMOKER
DAC + DSC = TDC DAC + DSC = TDC DAC + DSC = TDC DAC + DSC = TDC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.80 1.44 3.24 1.80 1.41 3.21 1.80 1.25 3.05 1.80 1.23 3.03
21 1.89 1.60 3.49 1.89 1.48 3.37 1.89 1.39 3.28 1.89 1.29 3.18
22 1.99 1.75 3.74 1.99 1.57 3.56 1.99 1.52 3.51 1.99 1.38 3.37
23 2.12 1.88 4.00 2.12 1.66 3.78 2.12 1.63 3.75 2.12 1.45 3.57
24 2.26 1.99 4.25 2.26 1.77 4.03 2.26 1.72 3.98 2.26 1.53 3.79
25 2.42 2.08 4.50 2.42 1.87 4.29 2.42 1.79 4.21 2.42 1.60 4.02
26 2.61 2.18 4.79 2.61 1.96 4.57 2.61 1.90 4.51 2.61 1.65 4.26
27 2.83 2.28 5.11 2.83 2.05 4.88 2.83 2.02 4.85 2.83 1.68 4.51
28 3.07 2.38 5.45 3.07 2.14 5.21 3.07 2.15 5.22 3.07 1.70 4.77
29 3.31 2.51 5.82 3.31 2.24 5.55 3.31 2.28 5.59 3.31 1.74 5.05
30 3.55 2.63 6.18 3.55 2.34 5.89 3.55 2.40 5.95 3.55 1.78 5.33
31 3.78 2.76 6.54 3.78 2.45 6.23 3.78 2.53 6.31 3.78 1.85 5.63
32 4.02 2.89 6.91 4.02 2.57 6.59 4.02 2.66 6.68 4.02 1.91 5.93
33 4.25 3.05 7.30 4.25 2.70 6.95 4.25 2.79 7.04 4.25 2.00 6.25
34 4.49 3.21 7.70 4.49 2.83 7.32 4.49 2.93 7.42 4.49 2.08 6.57
35 4.74 3.39 8.13 4.74 2.97 7.71 4.74 3.05 7.79 4.74 2.16 6.90
36 4.99 3.59 8.58 4.99 3.12 8.11 4.99 3.18 8.17 4.99 2.23 7.22
37 5.25 3.80 9.05 5.25 3.28 8.53 5.25 3.30 8.55 5.25 2.30 7.55
38 5.51 4.03 9.54 5.51 3.44 8.95 5.51 3.43 8.94 5.51 2.37 7.88
39 5.78 4.29 10.07 5.78 3.62 9.40 5.78 3.54 9.32 5.78 2.44 8.22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT
ISSUE MALE FEMALE
AGE STANDARD NONSMOKER STANDARD NONSMOKER
DAC + DSC = TDC DAC + DSC = TDC DAC + DSC = TDC DAC + DSC = TDC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 6.06 4.56 10.62 6.06 3.81 9.87 6.06 3.64 9.70 6.06 2.52 8.58
41 6.35 4.86 11.21 6.35 4.01 10.36 6.35 3.71 10.06 6.35 2.61 8.96
42 6.64 5.18 11.82 6.64 4.22 10.86 6.64 3.77 10.41 6.64 2.71 9.35
43 6.95 5.51 12.46 6.95 4.44 11.39 6.95 3.81 10.76 6.95 2.81 9.76
44 7.27 5.87 13.14 7.27 4.67 11.94 7.27 3.85 11.12 7.27 2.91 10.18
45 7.60 6.26 13.86 7.60 4.93 12.53 7.60 3.92 11.52 7.60 3.04 10.64
46 7.94 6.67 14.61 7.94 5.20 13.14 7.94 3.98 11.92 7.94 3.16 11.10
47 8.27 7.12 15.39 8.27 5.49 13.76 8.27 4.03 12.30 8.27 3.29 11.56
48 8.63 7.58 16.21 8.63 5.78 14.41 8.63 4.10 12.73 8.63 3.43 12.06
49 9.02 8.06 17.08 9.02 6.10 15.12 9.02 4.23 13.25 9.02 3.60 12.62
50 9.46 8.54 18.00 9.46 6.45 15.91 9.46 4.45 13.91 9.46 3.82 13.28
51 9.97 9.03 19.00 9.97 6.82 16.79 9.97 4.80 14.77 9.97 4.10 14.07
52 10.54 9.53 20.07 10.54 7.20 17.74 10.54 5.25 15.79 10.54 4.44 14.98
53 11.13 10.05 21.18 11.13 7.61 18.74 11.13 5.76 16.89 11.13 4.81 15.94
54 11.73 10.58 22.31 11.73 8.05 19.78 11.73 6.27 18.00 11.73 5.19 16.92
55 12.31 11.12 23.43 12.31 8.52 20.83 12.31 6.73 19.04 12.31 5.55 17.86
56 12.85 11.63 24.48 12.85 9.00 21.85 12.85 7.11 19.96 12.85 5.85 18.70
57 13.39 12.08 25.47 13.39 9.45 22.84 13.39 7.41 20.80 13.39 6.10 19.49
58 13.92 12.58 26.50 13.92 9.96 23.88 13.92 7.73 21.65 13.92 6.38 20.30
59 14.46 13.22 27.68 14.46 10.58 25.04 14.46 8.13 22.59 14.46 6.74 21.20
60 15.00 14.11 29.11 15.00 11.39 26.39 15.00 8.71 23.71 15.00 7.30 22.30
61 15.00 14.87 29.87 15.00 12.01 27.01 15.00 9.53 24.53 15.00 8.08 23.08
62 15.00 15.48 30.48 15.00 12.42 27.42 15.00 10.32 25.32 15.00 8.84 23.84
63 15.00 16.00 31.00 15.00 12.73 27.73 15.00 11.06 26.06 15.00 9.55 24.55
64 15.00 16.50 31.50 15.00 13.04 28.04 15.00 11.71 26.71 15.00 10.20 25.20
65 15.00 17.05 32.05 15.00 13.45 28.45 15.00 12.25 27.25 15.00 10.75 25.75
66 15.00 17.58 32.58 15.00 13.96 28.96 15.00 12.60 27.60 15.00 11.18 26.18
67 15.00 18.05 33.05 15.00 14.50 29.50 15.00 12.78 27.78 15.00 11.49 26.49
68 15.00 18.55 33.55 15.00 15.07 30.07 15.00 12.91 27.91 15.00 11.74 26.74
69 15.00 19.19 34.19 15.00 15.70 30.70 15.00 13.07 28.07 15.00 12.00 27.00
70 15.00 20.07 35.07 15.00 16.39 31.39 15.00 13.39 28.39 15.00 12.31 27.31
71 15.00 21.52 36.52 15.00 17.25 32.25 15.00 14.01 29.01 15.00 12.72 27.72
72 15.00 22.97 37.97 15.00 18.12 33.12 15.00 14.64 29.64 15.00 13.12 28.12
73 15.00 24.41 39.41 15.00 18.98 33.98 15.00 15.26 30.26 15.00 13.53 28.53
74 15.00 25.86 40.86 15.00 19.85 34.85 15.00 15.89 30.89 15.00 13.93 28.93
75 15.00 27.31 42.31 15.00 20.71 35.71 15.00 16.51 31.51 15.00 14.34 29.34
COLUMN HEADINGS: DAC = First Year Contingent Deferred Administrative Charge
DSC = First Year Contingent Deferred Sales Charge
TDC = Total First Year Deferred Charge
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX C
FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT
UNISEX
Issue COMPOSITE Issue SMOKER NONSMOKER
Age DAC + DSC = TDC Age DAC + DSC = TDC DAC + DSC = TDC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 .75 .18 .93 20 1.80 1.40 3.20 1.80 1.37 3.17
1 .80 .25 1.05 21 1.89 1.56 3.45 1.89 1.44 3.33
2 .85 .32 1.17 22 1.99 1.70 3.96 1.99 1.53 3.52
3 .90 .38 1.28 23 2.12 1.83 3.95 2.12 1.62 3.74
4 .95 .45 1.40 24 2.26 1.94 4.20 2.26 1.72 3.98
5 1.00 .52 1.52 25 2.42 2.02 4.44 2.42 1.82 4.24
6 1.06 .62 1.68 26 2.61 2.12 4.73 2.61 1.90 4.51
7 1.12 .73 1.85 27 2.83 2.23 5.06 2.83 1.98 4.81
8 1.18 .84 2.02 28 3.07 2.33 5.40 3.07 2.05 5.12
9 1.25 .94 2.19 29 3.31 2.46 5.77 3.31 2.14 5.45
10 1.31 1.02 2.33 30 3.55 2.58 6.13 3.55 2.23 5.78
11 1.37 1.08 2.45 31 3.78 2.71 6.49 3.78 2.33 6.11
12 1.43 1.14 2.57 32 4.02 2.84 6.86 4.02 2.44 6.46
13 1.49 1.17 2.66 33 4.25 3.00 7.25 4.25 2.56 6.81
14 1.55 1.20 2.75 34 4.49 3.15 7.64 4.49 2.68 7.17
15 1.60 1.24 2.84 35 4.74 3.32 8.06 4.74 2.81 7.55
16 1.64 1.26 2.90 36 4.99 3.51 8.50 4.99 2.94 7.93
17 1.67 1.28 2.95 37 5.25 3.70 8.95 5.25 3.08 8.33
18 1.69 1.30 2.99 38 5.51 3.91 9.42 5.51 3.23 8.74
19 1.73 1.33 3.06 39 5.78 4.14 9.92 5.78 3.38 9.16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISSUE SMOKER NONSMOKER
AGE DAC + DSC = TDC DAC + DSC = TDC
<S> <C> <C> <C> <C> <C> <C>
40 6.06 4.38 10.44 6.06 3.55 9.61
41 6.35 4.63 10.98 6.35 3.73 10.08
42 6.64 4.90 11.54 6.64 3.92 10.56
43 6.95 5.17 12.12 6.95 4.11 11.06
44 7.27 5.47 12.74 7.27 4.32 11.59
45 7.60 5.79 13.39 7.60 4.55 12.15
46 7.94 6.13 14.07 7.94 4.79 12.73
47 8.27 6.50 14.77 8.27 5.05 13.32
48 8.63 6.88 15.51 8.63 5.31 13.94
49 9.02 7.29 16.31 9.02 5.60 14.62
50 9.46 7.72 17.18 9.46 5.92 15.38
51 9.97 8.18 18.15 9.97 6.28 16.25
52 10.54 8.67 19.21 10.54 6.65 17.19
53 11.13 9.19 20.32 11.13 7.05 18.18
54 11.73 9.72 21.45 11.73 7.48 19.21
55 12.31 10.24 22.55 12.31 7.93 20.24
56 12.85 10.73 23.58 12.85 8.37 21.22
57 13.39 11.15 24.54 13.39 8.78 22.17
58 13.92 11.61 25.53 13.92 9.24 23.16
59 14.46 12.20 26.66 14.46 9.81 24.27
60 15.00 13.03 28.03 15.00 10.57 25.57
61 15.00 13.80 28.80 15.00 11.22 26.22
62 15.00 14.45 29.45 15.00 11.70 26.70
63 15.00 15.01 30.01 15.00 12.09 27.09
64 15.00 15.54 30.54 15.00 12.47 27.47
65 15.00 16.09 31.09 15.00 12.91 27.91
66 15.00 16.58 31.58 15.00 13.40 28.40
67 15.00 17.00 32.00 15.00 13.90 28.90
68 15.00 17.42 32.42 15.00 14.40 29.40
69 15.00 17.97 32.97 15.00 14.96 29.96
70 15.00 18.73 33.73 15.00 15.57 30.57
71 15.00 20.02 35.02 15.00 16.34 31.34
72 15.00 21.30 36.30 15.00 17.12 32.12
73 15.00 22.58 37.58 15.00 17.89 32.89
74 15.00 23.87 38.87 15.00 18.67 33.67
75 15.00 25.15 40.15 15.00 19.44 34.44
COLUMN HEADINGS: DAC = First Year Contingent Deferred Administrative Charge
DSC = First Year Contingent Deferred Sales Charge
TDC = Total First Year Deferred Charge
</TABLE>
<PAGE>
APPENDIX D
DEATH BENEFIT RATIO
The Death Benefit Ratio required by the Internal Revenue Code for treatment of
the Policy as a life insurance Policy.
Attained Age | Death Benefit Ratio
-------------------------------------
0-40 | 2.50
41 | 2.43
42 | 2.36
43 | 2.29
44 | 2.22
45 | 2.15
------------------------------
46 | 2.09
47 | 2.03
48 | 1.97
49 | 1.91
50 | 1.85
------------------------------
51 | 1.78
52 | 1.71
53 | 1.64
54 | 1.57
55 | 1.50
------------------------------
56 | 1.46
57 | 1.42
58 | 1.38
59 | 1.34
60 | 1.30
------------------------------
61 | 1.28
62 | 1.26
63 | 1.24
64 | 1.22
65 | 1.20
------------------------------
66 | 1.19
67 | 1.18
68 | 1.17
69 | 1.16
70 | 1.15
------------------------------
71 | 1.13
72 | 1.11
73 | 1.09
74 | 1.07
75-90 | 1.05
------------------------------
91 | 1.04
92 | 1.03
93 | 1.02
94 | 1.01
95 | 1.00
------------------------------
<PAGE>
PART II
UNDERTAKINGS
1. Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission (the "SEC") such supplementary
and periodic information, documents, and reports as may be prescribed by
any rule or regulation of the SEC theretofore or hereafter duly adopted
pursuant to authority conferred in that section.
2. Section 11 of the Bylaws of Century Life of America provides for
indemnification of officers and directors of the Company against claims and
liabilities the officers or directors become subject to by reason of having
served as officer or director of the Company or any subsidiary or affiliate
company. Such indemnification covers liability for all actions alleged to
have been taken, omitted, or neglected by such person in the line of duty
as director or officer, except liability arising out of the officers' or
directors' willful misconduct.
3. Insofar as indemnification for liability 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 SEC such
indemnification is against public Policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, 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.
<PAGE>
REPRESENTATIONS
1. Registrant represents that Section (b)(13)(iii)(F)(2) of Rule 6e-3(T) is
being relied on.
2. Registrant represents that the level of the risk charge is reasonable in
relation to the risks assumed by the life insurer under the Policies.
3. Registrant represents that it has analyzed the risk charge taking into
consideration such facts as current charge levels, potential adverse
mortality, the manner in which charges are imposed, the markets in which
the Policy will be offered, anticipated sales and Lapse rates.
Registrant also represents that a memorandum has been prepared in
connection with the analysis of the risk charge as set forth above.
Registrant undertakes to keep and make available to the SEC on request the
memorandum.
4. Registrant represents that it has concluded that there is a reasonable
likelihood that the distribution financing arrangement of the Separate
Account will benefit the Separate Account and the Owners.
Registrant also represents that the memorandum discussed in Item 3 above
sets forth the basis for this representation.
5. Registrant represents that the Separate Account will invest only in
management investment companies which have undertaken to have a Board of
Directors, a majority of whom are not interested persons of the Company,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
6. Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) for the
Policies.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The Prospectus consisting of 115 pages.
Undertakings.
Representations.
The signatures.
Written consent or opinion of the following persons:
KPMG Peat Marwick LLP
Scott Allen - Associate Actuary
The following exhibits:
1. Exhibits required by paragraph A of instructions for Exhibits in Form
N-8B-2:
1. Resolutions of the Board of Directors of Century Life of America
2. Not Applicable
3. Distribution Agreement between Century Life of America and CUNA
Brokerage Services, Inc. effective January 1, 1996
Servicing Agreement related to the Distribution Agreement between
Century Life of America and CUNA Brokerage Services, Inc.
effective January 1, 1996
4. a. Termination Agreement dated December 31, 1993 concerning
Agreement Governing Contribution dated September 30, 1983
Agreement Governing Contribution
b. Termination Agreement dated December 31, 1993 concerning
Agreement Governing Contribution dated May 31, 1988
Agreement Governing Contribution
5. a. Standard VUL Contract Form 5202
(i) Accelerated Benefit Option Endorsement, Form 1668
(ii) Accidental Death Benefit Rider, Form 3601
Guaranteed Insurability Rider, Form 3652
Waiver of Monthly Deduction, Form 3955
Other Insured Rider, Form 3956
Automatic Increase Rider, Form 3957
Child Rider, Form 6005
Juvenile Rider, Form 6012
Level Term Rider (Sex-Distinct), Form 6017
Waiver of Premium and Monthly Deduction Disability
Benefit Rider, Form 6029 0994
b. Unisex Version Form 5203
(I) Level Term Rider (Unisex), Form 6018
c. State Variation List
6. a. Articles of Incorporation of the Company
b. ByLaws
7. Not Applicable
8. Servicing Agreement Between Century Life of America and Century
Investment Management Co. dated October 1, 1994
9. a. Participation agreement between T. Rowe Price International
Series, Inc. and the Company dated April 22, 1994. Amendment to
Participation Agreement dated November 1994.
b. Participation agreement between MFS Variable Insurance Trust
and the Company dated April 29, 1994. Amendment to Participation
Agreement dated November 1994. Amendment to Participation
Agreement effective May 1, 1996.
10. Application
2. Opinion of Counsel
3. Not applicable
4. Not applicable
5. Financial Data Schedule
6. NA
Powers of Attorney
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Century Variable Account, certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to rule 485(b) under the
Securities Act of 1933 and has duly caused this registration statement to be
signed on its behalf by the undersigned thereunto duly authorized, in the city
of Madison, and State of Wisconsin, on the 9th day of April, 1996.
Century Variable Account (Registrant)
By:/s/ Michael B. Kitchen
Michael B. Kitchen
President
Century Life of America (Depositor)
By:/s/ Michael B. Kitchen
Michael B. Kitchen
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on the date indicated.
SIGNATURES AND TITLE DATE
James C. Barbre, Director*
Wilfred F. Broxterman, Director*
Ralph B. Canterbury, Director*
James A. Halls, Director*
Jerald R. Hinrichs, Director*
/s/ Michael B. Kitchen April 9, 1996
Michael B. Kitchen, Director
Robert T. Lynch, Director*
Omer K. Reed, Director*
Gerald J. Ring, Director*
Donald F. Roby, Director*
Rosemarie M. Shultz, Director*
Neil A. Springer, Director*
/s/ Linda L. Lilledahl* April 9, 1996
Linda L. Lilledahl, Attorney-In-Fact
* Pursuant to Powers of Attorney filed herewith
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following person in the capacity indicated on
the date indicated.
SIGNATURE AND TITLE DATE
/s/ Michael G. Joneson April 9, 1996
Michael G. Joneson
Vice President - Controller and Treasurer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following person in the capacity indicated on
the date indicated.
SIGNATURE AND TITLE DATE
/s/ Kevin T. Lentz April 9,1996
Kevin T. Lentz
Chief Operating Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following person in the capacity indicated on
the date indicated.
SIGNATURE AND TITLE DATE
/s/ Michael B. Kitchen April 9, 1996
Michael B. Kitchen
President and Chief Executive Officer
<PAGE>
The Board of Directors of Century Life of America
and Contract owners of Century Variable Account:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "Independent Auditors" in the Prospectus of the Century
Variable Account.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick
Des Moines, Iowa
April 17, 1996
<PAGE>
April 10, 1996
Century Life of America
2000 Heritage Way
Waverly, IA 50677
Ladies and Gentlemen:
As Associate Actuary for Century Life of America, I have reviewed the
illustrations for a MembersR Variable Universal Life Insurance Policy described
in Post-Effective Amendment No. 14 on Form S-6 to Registration Statement No.
33-19718.
In my opinion, the illustrations of cash values and death benefits included in
Appendix A of the prospectus, based on the assumption stated in the
illustrations, are consistent with the provisions of the form of the policy.
Further, the rate structure of the policy has not been designed so as to make
the relationship between premiums and benefits, as shown on the illustrations,
appear more favorable to a prospective purchaser of a policy at ages 35 or 50
than to prospective purchasers of the policy at other ages.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Scott Allen
Scott Allen, F.S.A., M.A.A.A.
Variable Products Leader -
Associate Actuary
Century Life of America
<PAGE>
INDEX TO EXHIBITS TO FORM S-6
1. Resolutions of the Board of Directors of Century Life of America
3. Distribution Agreement between Century Life of America and CUNA Brokerage
Services, Inc. effective January 1, 1996
Servicing Agreement related to the Distribution Agreement between Century
Life of America and CUNA Brokerage Services, Inc. effective January 1, 1996
4. a. Termination Agreement dated December 31, 1993 concerning Agreement
Governing Contribution dated September 30, 1983
Agreement Governing Contribution
b. Termination Agreement dated December 31, 1993 concerning Agreement
Governing Contribution dated May 31, 1988
Agreement Governing Contribution
5. a. Standard VUL Contract Form 5202
(i) Accelerated Benefit Option Endorsement, Form 1668
(ii) Accidental Death Benefit Rider, Form 3601
Guaranteed Insurability Rider, Form 3652
Waiver of Monthly Deduction, Form 3955
Other Insured Rider, Form 3956
Automatic Increase Rider, Form 3957
Child Rider, Form 6005
Juvenile Rider, Form 6012
Level Term Rider (Sex-Distinct), Form 6017
Waiver of Premium and Monthly Deduction Disability Benefit
Rider, Form 6029 0994
b. Unisex Version Form 5203
(I) Level Term Rider (Unisex), Form 6018
c. State Variation List
6. a. Articles of Incorporation of the Company
b. ByLaws
8. Servicing Agreement Between Century Life of America and Century Investment
Management Co. dated October 1, 1994
9. a. Participation agreement between T. Rowe Price International Series, Inc.
and the Company dated April 22, 1994. Amendment to Participation Agreement
dated November 1994.
b. Participation agreement between MFS Variable Insurance Trust and the
Company dated April 29, 1994. Amendment to Participation Agreement dated
November 1994. Amendment to Participation Agreement effective May 1, 1996.
10. Application
<PAGE>
EXHIBIT 1
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
Heritage Way, Waverly, Iowa
RESOLUTION TO AUTHORIZE REGISTRATION OF AND INVESTMENT IN
SEPARATE ACCOUNTS
I hereby certify that I am the duly appointed Secretary of LUTHERAN MUTUAL LIFE
INSURANCE COMPANY, an Iowa corporation, and that in such office I have access to
the Company's books and records and have authority to make this certification,
and I further certify that the Board of Directors by action effective August 16,
1983, adopted the following resolutions pertaining to the registration of and
investment in Separate Accounts:
* * * * * * * * * *
WHEREAS, on February 25, 1982, the Board authorized Company officers to
establish one or more Separate Accounts as contemplated under Iowa
Insurance Code Section 508.32 for product development purposes, and
WHEREAS, in furtherance of a plan to develop Separate Accounts for use
with variable annuity and variable life insurance products requiring
registration under Federal law, and in some cases, registration and
regulatory approval under the laws of some of the states in which the
Company expects to do business, additional authority is now deemed
appropriate and necessary,
RESOLVED THEREFORE, that the proper officers of this Company are hereby
authorized to establish and designate Separate Accounts of a nature and
type which they deem necessary or appropriate for use as investment
media for variable and fixed annuity contracts and variable and fixed
life insurance policies to be issued by this Company, and to create the
necessary or appropriate governance structures and register or file for
approval, as the case may be, such Separate Accounts and those policies
and contracts under such applicable Federal Securities Laws and state
regulatory laws as are deemed necessary and appropriate, and
FURTHER RESOLVED, that the Company is hereby authorized to act as a
Depositor and to invest such amounts of seed money as may be necessary
or appropriate for regulatory purposes in each such Separate Account
and it may invest such additional sums as may be deemed appropriate for
investment purposes on a current basis subject to limitations provided
in the Company's Investment Policy Statement and other directives
adopted by the Board from time to time, and
FURTHER RESOLVED, that a previous resolution adopted by the Board on
May 14, 1982, for this same purpose is deemed to be hereby amended by
this resolution, and Company officers are authorized to perform any
additional acts which they deem necessary or appropriate to carry out
the intent and purposes of these resolutions.
* * * * * * * * * *
and I further certify that the foregoing is a true, complete, and accurate copy
of such resolutions and that such resolutions are consistent with the Company's
Articles of Incorporation and Bylaws and they have not been altered, amended,
revised, or rescinded and are still in full force and effect.
WITNESS MY HAND and the seal of the Company this 8th day of September, 1983.
/s/ Arthur J. Hessburg
Arthur J. Hessburg, Secretary
<PAGE>
EXHIBIT 3
DISTRIBUTION AGREEMENT
BETWEEN CENTURY LIFE OF AMERICA AND CUNA BROKERAGE SERVICES, INC.
FOR VARIABLE UNIVERSAL LIFE CONTRACTS
This Agreement is made effective the 1st day of January 1996 by and between
Century Life of America (Century Life), a mutual life insurance company
domiciled in the State of Iowa with its principal office located in Waverly,
Iowa, and CUNA Brokerage Services, Inc. (CUNA Brokerage), a registered
broker/dealer domiciled in the State of Wisconsin with its principal office
located in Madison, Wisconsin.
WHEREAS, Certain variable universal life contracts of Century Life require
distribution under the auspices of a registered broker/dealer; and
WHEREAS, CUNA Brokerage is a registered broker/dealer and desires to distribute
Century Life's variable universal life contracts;
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
ARTICLE 1
APPOINTMENT
1.1 Century Life appoints CUNA Brokerage to be the principal underwriter
and distributor for all of Century Life's variable universal life
contracts which require distribution under the auspices of a registered
broker/dealer.
ARTICLE 2
DUTIES OF CUNA BROKERAGE
2.1 REGISTRATION UNDER THE 1934 ACT
CUNA Brokerage is registered as a broker/dealer under the provisions of
the 1934 Act (1934 Act) and has secured and will maintain
authorizations, licenses, qualifications, and permits necessary to
perform its obligations under this agreement in those states requested
by Century Life.
2.2 MEMBERSHIP IN THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
CUNA Brokerage currently holds and shall maintain a membership in the
National Association of Securities Dealers, Inc. (NASD).
2.3 RESPONSIBILITY FOR SECURITIES ACTIVITIES
CUNA Brokerage shall assume full responsibility for the securities
activities of all persons engaged directly or indirectly in the Century
Life operations for Century Life variable universal life products,
including but not limited to training, supervision, and control as
contemplated under appropriate provisions of the 1934 Act and
regulations thereunder and by the rules of the NASD. All persons
directly or indirectly involved in such variable universal life
securities activities shall be registered representatives or registered
principals of CUNA Brokerage as appropriate to their activities.
Also, each registered representative selling the product and at least
one registered principal shall be properly licensed as an insurance
agent of Century Life.
2.4 APPOINTMENT OF REGISTERED PERSONS AND MAINTENANCE OF PERSONNEL RECORDS
CUNA Brokerage shall have the authority and responsibility for the
appointment and registration of those persons who will be registered
representatives and registered principals. CUNA Brokerage shall direct
the maintenance of all personnel records of such persons.
2.5 MAINTENANCE OF NET CAPITAL
CUNA Brokerage shall maintain required net capital at levels which will
comply with maximum aggregate Indebtedness provisions under the
provisions of the 1934 Act, any regulation thereunder, and any NASD
rules.
2.6 REQUIRED REPORTS
CUNA Brokerage shall have the responsibility for preparation and
submission of any reports or other materials required by any regulatory
authority having proper jurisdiction.
2.7 LIMITATIONS ON AUTHORITY
CUNA Brokerage is not authorized to give any information or to make any
representations concerning the variable universal life contracts other
than the statements contained in the current registration statement
filed with the Securities and Exchange Commission or such sales
literature as may be authorized by Century Life.
ARTICLE 3
DUTIES OF CENTURY LIFE
3.1 MAINTENANCE OF ACCOUNTING RECORDS
Century Life shall maintain and hold, on behalf of and as agent for
CUNA Brokerage, those records pertaining to variable universal life
contracts required to be maintained and preserved by the 1934 Act, any
regulations thereunder, and any applicable NASD rules. All such books
and records are, and shall at all times remain, the property of CUNA
Brokerage and shall at all times be subject to inspection by duly
authorized officers, auditors, and representatives of CUNA Brokerage
and by the Securities and Exchange Commission, the NASD, and other
regulatory authorities having proper jurisdiction.
3.2 CONFIRMATION OF TRANSACTIONS
On behalf of CUNA Brokerage and acting as agent for CUNA Brokerage,
Century Life shall confirm all transactions required to be confirmed in
the form and manner required by the 1934 Act, any regulations
thereunder, and any NASD rules.
3.3 FURNISHING MATERIALS
Century Life shall furnish to CUNA Brokerage copies of prospectuses,
financial statements and other documents which CUNA Brokerage
reasonably requests for use in connection with the solicitation, sale
and distribution of Century Life's variable universal life contracts.
ARTICLE 4
COMPENSATION
4.1 As compensation for services to be performed pursuant to this
agreement, Century Life shall pay a dealer concession to and on behalf
of CUNA Brokerage. The amount of the dealer concession and the manner
in which it will be paid is specified in Schedule A to a related
contract titled "Servicing Agreement Related to the Distribution
Agreement between Century Life of America and CUNA Brokerage Services,
Inc. for Variable Universal Life Contracts."
ARTICLE 5
TERMINATION
5.1 This Agreement may be terminated at any time by either party upon
written notice to the other stating the date when such termination
shall be effective, provided that this Agreement may not be terminated
or modified by either party if the effect would be to put CUNA
Brokerage out of compliance with the "net-capital" requirements of the
1934 Act. Default of any kind shall not have the effect of terminating
this Agreement.
IN WITNESS WHEREOF, the undersigned, as duly authorized officers, have
caused this instrument to be executed, in duplicate, on behalf of their
respective companies.
CENTURY LIFE OF AMERICA
BY: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA BROKERAGE SERVICES, INC.
BY: /s/ Joseph P. Tripalin
Joseph P. Tripalin
President
<PAGE>
SERVICING AGREEMENT RELATED TO THE DISTRIBUTION AGREEMENT
BETWEEN CENTURY LIFE OF AMERICA AND CUNA BROKERAGE SERVICES, INC.
FOR VARIABLE UNIVERSAL LIFE CONTRACTS
This Agreement is made effective the 1st day of January 1996 by and between
Century Life of America (Century Life), a mutual life insurance company
domiciled in the State of Iowa with its principal office located in Waverly,
Iowa, and CUNA Brokerage Services, Inc. (CUNA Brokerage), a registered
broker/dealer domiciled in the State of Wisconsin with its principal office
located in Madison, Wisconsin.
WHEREAS, Certain variable universal life contracts of Century Life require
distribution under the auspices of a registered broker/dealer; and
WHEREAS, CUNA Brokerage is a registered broker/dealer and desires to distribute
Century Life's variable universal life contracts; and
WHEREAS, Century Life appointed CUNA Brokerage to be the principal underwriter
and distributor for all of Century Life's variable universal life contracts
which require distribution under the auspices of a registered broker/dealer,
under the terms of a Distribution Agreement between Century Life and CUNA
Brokerage for Variable Universal Life Contracts dated January 1, 1996; and
WHEREAS, That agreement provided that compensation for the services would be
specified in this agreement;
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. Payments on behalf of CUNA Brokerage shall be properly reflected on the
books and records maintained on behalf of CUNA Brokerage by Century
Life, so as to be in compliance with applicable law and regulation.
2. Century Life shall maintain payroll records (for the benefit of CUNA
Brokerage) which are consistent with its own payroll records kept in
the ordinary course of business. Century Life shall remit directly to
the proper taxing authorities all applicable payroll taxes and other
applicable sums to be deducted from compensation payable to registered
representatives of CUNA Brokerage. Century Life shall pay such
compensation and taxes out of the dealer concession described in
Schedule A.
3. Schedule A is incorporated by reference into this Agreement for all
purposes as though set out in its entirety herein. When and if the
Schedule is amended, the amendments will be incorporated by reference
into this Agreement for all purposes, provided, however, that in the
event of a conflict between the provisions contained in the Schedule
and the provisions of this Agreement, the provisions of this Agreement
shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed, in
duplicate, by their respective officers duly authorized to do so.
CENTURY LIFE OF AMERICA
BY: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA BROKERAGE SERVICES, INC.
BY: /s/ Joseph P. Tripalin
Joseph P. Tripalin
President
<PAGE>
SCHEDULE A
1. Century Life shall pay on behalf of CUNA Brokerage, from the gross
premium Century Life receives from MEMBERS(R) Variable Universal Life,
as a dealer concession:
(1) First Policy Year: One hundred five percent (105%) of the
premium received up to the minimum premium and seven and three
tenths percent (7.3%) of any premium in excess of the minimum
premium. The minimum premium is the minimum annual amount
that, if paid each year for the first three years, will keep
the no-lapse guarantee in effect for that time. The minimum
premium is recorded on the specifications page of each Policy.
The no-lapse guarantee is described in the Policy prospectus.
(2) Second Through Tenth Policy Years: Five percent (5%)of premium
received each year up to and including the tenth Policy year.
(3) Increase in Specified Amount: The amount of minimum premium
will be determined as though a new Policy had been issued for
the amount of the increase, except that the monthly Policy fee
will not be included in the minimum premium calculation. The
amount of the dealer concession is as described above under
"First Policy Year" and "Second Through Tenth Policy Years."
2. Century Life, on behalf of CUNA Brokerage, shall pay to registered
representatives of CUNA Brokerage the compensation specified in these
contracts:
(1) PLAN AMERICA(R) General Agents Agreement (for PLAN AMERICA I
representatives)
(2) PLAN AMERICA(R) Representative's Contract with Century Life of
America (for PLAN AMERICA II representatives)
(3) Century Life of America Career Representative's Full Time
Contract (for Century Career Representatives)
(4) Century Life Insurance Company Broker's Contract (for Century
Brokers)
3. Century Life will use any remaining dealer concession on behalf of CUNA
Brokerage by:
o maintaining payroll records as described in paragraph 1 of
this Servicing Agreement;
o performing the services described in Article 3 of the
Distribution Agreement between Century Life and CUNA Brokerage
for Variable Universal Life Contracts; and
o providing overhead support related to the distribution systems
specified in Section 3 of this schedule.
This Schedule A is approved, effective this 1st day of January 1996.
CENTURY LIFE OF AMERICA
BY: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA BROKERAGE SERVICES, INC.
BY: /s/ Joseph P. Tripalin
Joseph P. Tripalin
President
<PAGE>
EXHIBIT 4(a)
TERMINATION AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st day of December, 1993
(the "Effective Date"), by and between Century Variable Account ("CVA") and
Century Life of America ("CLA").
The parties acknowledge that this Agreement is based on the following:
A. CVA (previously known as LML Ultra Variable Account) and CLA
(previously known as Lutheran Mutual Life Insurance Company) entered into an
Agreement Governing Contribution dated September 30, 1983, pursuant to which CLA
agreed to make certain contributions to CVA (the "Agreement").
B. The Agreement is no longer required under applicable laws and CVA
and CLA desire to terminate the Agreement.
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants contained in this Termination Agreement, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. The Agreement is terminated effective as of the Effective Date and
all rights and obligations of the parties under the Agreement terminated as of
that date.
2. Any amounts that CLA contributed to CVA pursuant to the Agreement
and which are held by CVA after the Effective Date shall be treated as an
investment by CLA in CVA with the same rights and restrictions that apply to
seed money investments by insurance company sponsors of registered investment
companies.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
Century Life of America
By: /s/ Daniel E. Meylink
Daniel E. Meylink
President
Century Variable Account
By: Century Life of America
By: /s/ Kevin T. Lentz
Kevin T. Lentz
Chief Operating Officer
<PAGE>
AGREEMENT GOVERNING CONTRIBUTION
TO
LML ULTRA VARIABLE ACCOUNT
BY
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT is made by and between LML ULTRA VARIABLE ACCOUNT (the "Variable
Account"), a Separate Account of Lutheran Mutual Life Insurance Company duly
organized under the laws of the State of Iowa, and LUTHERAN MUTUAL LIFE
INSURANCE COMPANY ("Insurance Company"), an Iowa company.
WHEREAS, Insurance Company has established the Variable Account and proposes to
contribute to the Variable Account the sum of $100,000 ("Contribution") in the
manner hereinafter described; and
WHEREAS, it is necessary and desirable that the terms under which said
Contribution is made and the respective rights of Insurance Company and the
Variable Account with respect thereto be determined; and
NOW, THEREFORE, it is hereby agreed between Insurance Company and the Variable
Account as follows:
I.
Insurance Company hereby commits itself to, and does herewith, contribute to the
Variable Account the sum of $100,000. Insurance Company hereby represents and
agrees that it is making such Contribution for investment purposes and not with
a view to redeeming or disposing of any interest in the Variable Account
resulting from such Contribution.
II.
In consideration for such Contribution and without deduction of any sales
charges, the Variable Account shall credit Insurance Company with accumulation
units of which Insurance Company shall be the Owner. Such accumulation units
shall share pro rata in the investment performance of the Variable Account and
shall be subject to the same valuation procedures and the same periodic charges
as are other accumulation units and annuity units in the Variable Account.
Insurance Company shall have and may exercise voting rights on the same basis as
Owners of variable annuity contracts issued or to be issued with respect to the
Variable Account.
III.
Insurance Company hereby acknowledges that by making such Contribution it is not
and shall not be regarded as a creditor of the Variable Account and that the
relationship of debtor-creditor between the Variable Account and Insurance
Company does not exist with respect to the amount so contributed. Insurance
Company agrees that by making such Contribution it is not now and shall not in
the future be, or be deemed to be, the holder of any interest other than as
provided in paragraph 2 of this Agreement. Insurance Company agrees that its
interest in the Variable Account as a result of such Contribution shall be
neither senior to nor subordinate to the interest of Owners of variable annuity
contracts issued with respect to the Variable Account and that, in the event of
liquidation of the Variable Account or of Insurance Company, however occurring,
Insurance Company shall have no preferential rights of any kind over such
contract owner's but shall share ratably with them.
IV.
All commitments of Insurance Company hereunder shall be forever binding upon its
successor or successors.
<PAGE>
V.
The Variable Account hereby accepts such Contribution subject to the terms of
the Agreement.
Executed this 30th day of September, 1983.
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
By: /s/ Fredrick Boen
Title: Sr. VP Chief Actuary
Attest: /s/ Arthur Hessburg
Secretary
LML ULTRA VARIABLE ACCOUNT
By: LUTHERAN MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Donald Heltner
Title: Vice President
Attest: /s/ Arthur Hessburg
Secretary
<PAGE>
EXHIBIT 4(b)
TERMINATION AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st day of December, 1993
(the "Effective Date"), by and between Century Variable Account ("CVA") and
Century Life of America ("CLA").
The parties acknowledge that this Agreement is based on the following:
A. The parties entered into an Agreement Governing Contribution dated
May 31, 1988, pursuant to which CLA agreed to make certain contributions to CVA
(the "Agreement").
B. The Agreement is no longer required under applicable laws and the
parties desire to terminate the Agreement.
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants contained in this Termination Agreement, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. The Agreement is terminated effective as of the Effective Date and
all rights and obligations of the parties under the Agreement terminated as of
that date.
2. Any amounts that CLA contributed to CVA pursuant to the Agreement
and which are held by CVA after the Effective Date shall be treated as an
investment by CLA in CVA with the same rights and restrictions that apply to
seed money investments by insurance company sponsors of registered investment
companies.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
Century Life of America
By: /s/ Daniel E. Meylink
Daniel E. Meylink
President
Century Variable Account
By: Century Life of America
By: /s/ Kevin T. Lentz
Kevin T. Lentz
Chief Operating Officer
<PAGE>
AGREEMENT GOVERNING CONTRIBUTION
TO
CENTURY VARIABLE ACCOUNT
BY
CENTURY LIFE OF AMERICA
THIS AGREEMENT is made by and between CENTURY VARIABLE ACCOUNT (the "Variable
Account"), a duly organized Separate Account of Century Life of America, and
Century Life of America (the "Insurance Company"), a company duly organized
under the laws of the state of Iowa.
WHEREAS, Insurance Company has established the Variable Account and proposes to
contribute an additional $100,000 to such Variable Account for the purposes of
establishing one or more subaccounts of such Variable Account which shall invest
predominately in Zero-Coupon Treasury Notes (the "new subaccounts"), and such
other amounts from time to time as are necessary to ensure proper operation of
such subaccounts ( the "Contribution"), in the manner hereinafter described.
WHEREAS, it is necessary and desirable that the terms under which said
Contribution is made and the respective rights of Insurance Company and the
Variable Account with respect thereto be determined; and
NOW, THEREFORE, it is hereby agreed between Insurance Company and the Variable
Account as follows:
I.
Insurance Company hereby commits itself to contribute to the Variable Account
the additional sum of $100,000 to establish the new subaccounts described above
and such other amounts as are necessary for the proper operation of such
subaccounts. Insurance Company hereby represents and agrees that it is making
such Contribution for investment purposes and not with a view to redeeming or
disposing of any interest in the Variable Account resulting from such
Contribution.
II.
In consideration for such Contribution and without deduction of any sales
charges, the Variable Account shall credit Insurance Company with accumulation
units of which Insurance Company shall be the Owner. Such accumulation units
shall share pro rata in the investment performance of the Variable Account and
shall be subject to the same valuation procedures and the same periodic charges
as are other accumulation units and annuity units in the Variable Account.
Insurance Company shall have and may exercise voting rights on the same basis as
Owners of variable annuity contracts issued or to be issued with respect to the
Variable Account.
III.
Insurance Company hereby acknowledges that by making such Contribution it is not
and shall not be regarded as a creditor of the Variable Account and that the
relationship of debtor-creditor between the Variable Account and Insurance
Company does not exist with respect to the amount so contributed. Insurance
Company agrees that by making such Contribution it is not now and shall not in
the future be, or be deemed to be, the holder of any interest other than as
provided in paragraph 2 of this Agreement. Insurance Company agrees that its
interest in the Variable Account as a result of such Contribution shall be
neither senior to nor subordinate to the interest of Owners of variable annuity
contracts issued with respect to the Variable Account and that, in the event of
liquidation of the Variable Account or of Insurance Company, however occurring,
Insurance Company shall have no preferential rights of any kind over such
contract owner's but shall share ratably with them.
IV.
All commitments of Insurance Company hereunder shall be forever binding upon its
successor or successors.
V.
The Variable Account hereby accepts such Contribution subject to the terms of
the Agreement.
Executed this 31st day of May, 1988.
CENTURY LIFE OF AMERICA
By: /s/ Daniel E. Meylink Sr.
Title: Daniel E. Meylink Sr.
Senior Vice President - Finance
and Information Services
Attest: /s/ Arthur Hessburg
Secretary
CENTURY VARIABLE ACCOUNT
By: CENTURY LIFE OF AMERICA
By: /s/ Michael S. Daubs
Title: Michael S. Daubs
Senior Vice President -
Investments
Attest: /s/ Arthur Hessburg
Secretary
<PAGE>
EXHIBIT 5(a)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MATURING AT AGE 95
Flexible premiums payable during the lifetime of the insured until the maturity
date. Death benefit payable at death prior to maturity date. Adjustable death
benefit. Cash value payable on maturity date. Participating. Some benefits
reflect investment results.
The amount of death benefit will increase or decrease depending on the
investment experience of the Subaccounts selected, if any, and on the death
benefit option selected as described in Section 7.
Cash values will increase or decrease in accordance with the provisions of
Section 9 and the investment experience of the Subaccounts selected, if any.
Cash values are not guaranteed as to dollar amount held in the Subaccounts.
Owner: John Doe Policy Number: 03905202
Insured: John Doe Specified Amount: $50,000.00
Issue Date: May 1, 1990 Maturity Date: May 1, 2050
Century Life of America agrees to pay the policy proceeds and to provide the
other benefits described in this contract, if all its terms and conditions are
met.
Signed for Century Life of America, Waverly, Iowa on the Issue Date
/s/ Michael B. Kitchen /s/ Barbara L. Secor
President Secretary
RIGHT TO CANCEL
The owner may cancel this policy by delivering or mailing a written notice or
sending a telegram to Century Life of America, 2000 Heritage Way, Waverly, Iowa
50677, and by returning the policy within 45 days of the date of execution of
the application for insurance, within 20 days of the owner's receipt of the
issued policy, or within 20 days of the owner's receipt of the Notice of Right
of Withdrawal, whichever is later. Notice given by mail and return of the policy
by mail are effective on being postmarked, properly addressed, and postage paid.
If the policy is returned to the Company or to the Agent through whom it was
purchased, it will be considered void from the beginning, and Century Life of
America will make a refund for this policy within seven days after it receives
notice of cancellation and the returned policy.
The refund will equal the sum of:
1. The charges deducted from premiums for state taxes
2. Plus the total amount of monthly deductions and any other charges deducted
from the accumulated value, 3. Plus the accumulated value, on the date the
refund is calculated, as defined in Section 9, 4.
4. Minus any indebtedness.
If state law does not authorize the calculation above, the refund will be the
total of all premiums paid for this policy.
Countersigned by
Duly Licensed Resident Agent
<PAGE>
INTRODUCTION
This is a flexible premium variable life insurance policy. This policy provides
that accumulated values are based on cash values held in the Separate Account
and Interest Bearing Account. Cash values held in the Separate Account are
variable. The amount of death benefit can vary, and the specified amount of
insurance may be increased or decreased by the owner.
Net premiums, as described in Section 3.2, will be allocated to the Subaccounts
of the Separate Account and/or the Interest Bearing Account. The owner may
determine where and in what percentages of the net premiums will be allocated.
These allocations are subject to the conditions described in Section 3.3.
Subaccounts and the Interest Bearing Account are identified in the application
and on the specifications page. Each Subaccount will buy shares of an underlying
mutual fund. Each underlying mutual fund is a registered management investment
company. During the time period that this policy has deferred sales and
administrative charges, a portion of the accumulated value will be held in the
deferred charges account.
The amount of the policy's cash values in the Subaccounts will not be guaranteed
and will vary with the investment performance of those Subaccounts. For more
information on cash values and values in Subaccounts, see Section 5, 6, and 9.
Both the amount of death benefit and the duration of life insurance will depend
upon premiums paid and the investment performance of the Subaccount(s) selected,
if any. Death proceeds will equal:
The face amount (under Options 1 or 2) of the policy on the date of death,
Plus any premiums received after the date of death,
Minus any policy indebtedness.
If Death Benefit Option 1 is selected, the face amount of the policy will be the
larger of:
A. The specified amount, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
If Death Benefit Option 2 is selected, the face amount of the policy will be the
larger of:
A. The specified amount plus the accumulated value on the date of death, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
Death benefit ratios for various ages are shown in Section 7.2.
<PAGE>
POLICY STATEMENT
This Contract is a legal contract between the contract owner and Century Life of
America.
READ YOUR CONTRACT CAREFULLY. This page is part of the insurance contract. The
contract sets forth, in detail, the rights and obligations of both the owner and
the insurance company. IT IS THEREFORE IMPORTANT THAT YOU READ YOUR CONTRACT
CAREFULLY.
This LIFE INSURANCE contract can provide death protection until the policy
anniversary following the insured's 95th birthday. Premiums and death benefits
for this contract are flexible and are subject to the limitations shown on the
specifications page.
GUIDE TO POLICY PROVISIONS
<PAGE>
SPECIFICATIONS PAGE
DEFINITIONS
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 The Agreement
1.2 The Entire Contract
1.3 Incontestability
1.4 Misstatement of Age or Sex
1.5 Suicide
1.6 Dividends
1.7 Termination
1.8 Tax Treatment
SECTION 2. OWNERSHIP
2.1 Owner of Policy
2.2 Transfer of Ownership
2.3 Collateral Assignment
SECTION 3. PREMIUMS
3.1 Time and Place of Payment
3.2 Net Premium
3.3 Allocation of Net Premiums
3.4 Paid-up Benefit
3.5 Lapse and Grace period
3.6 No Lapse Guarantee
3.7 Minimum Death Benefit Guarantee
3.8 Policy Reinstatement
SECTION 4. BENEFICIARIES
4.1 Named Beneficiary
4.2 Beneficiary Classifications
4.3 Death of a Beneficiary Before the Insured
4.4 Change of Beneficiary
SECTION 5. SEPARATE ACCOUNT, SUBACCOUNTS, FUND
5.1 Separate Account
5.2 Subaccounts
5.3 Underlying Mutual Funds
5.4 Change of Investment Advisor or Investment
Objectives
5.5 The Effect of Investment Results Upon Policy
Values
5.6 Transfers
SECTION 6. INTEREST BEARING ACCOUNT
SECTION 7. DEATH BENEFIT
7.1 Value of Death Proceeds
7.2 Face Amount
7.3 Changes in Death Benefit Option
7.4 Changes in Specified Amount
SECTION 8. PAYMENT OF DEATH PROCEEDS
8.1 Persons Paid
8.2 Value of Death Proceeds
8.3 Method of Payment
8.4 Selection of Settlement Options
8.5 Settlement Options
8.6 Settlement Option Factors
8.7 Related Provisions
SECTION 9. POLICY VALUES
9.1 Cash Value
9.2 Accumulated Value
9.3 Monthly Deduction
9.4 Daily Charges
9.5 Deferred Charges
9.6 Deferred Charges Account
9.7 Notification Regarding Policy Values
SECTION 10. POLICY SURRENDER AND PARTIAL SURRENDER
10.1 Policy Surrender
10.2 Partial Surrender
10.3 Surrender and Partial Surrender Payments
10.4 Settlement Options Available
SECTION 11. POLICY LOANS
11.1 Application for Policy Loan
11.2 Policy Loan Interest
11.3 Loan Repayment
SECTION 12. CHANGE OF POLICY
12.1 Exchange of Policy
12.2 Paid-up Insurance
ADDITIONAL BENEFITS OR RESTRICTIONS
Additional benefits or restrictions, if any, are described in the agreements
following Section 12.
<PAGE>
Policy No. 03905202
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Specifications Page
Schedule of Protection and Premiums
- -------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY NUMBER: 03905202
OWNER: John Doe SPECIFIED AMOUNT: $50,000.00
INSURED: John Doe RATING: Standard/Smoker
ISSUE DATE: May 1,1990 ISSUE AGE: 35
MATURITY DATE: May 1, 2050 DEATH BENEFIT: Option 1
RECORD DATE: May 14, 1990
Specified Protection
Protection Provided by Policy and Riders Amount Provided Until*
Flexible Premium Variable Life Insurance $50,000 05/01/2050
PREMIUM INFORMATION:
Minimum Premium: $419.39
Minimum Initial Premium: 69.90
Initial Premium: 600.00
Target Premium: 698.98
POLICY INTEREST RATES (COMPOUNDED ANNUALLY):
Guaranteed Rate on Loan Account: 4.0% Section 11.1
Policy Loan Rate: 8.0% Section 11.2
Guaranteed Settlement Option Rate: 4.0% Sections 8.3, 8.5, 8.7
*Premiums for the protection provided are deducted from the accumulated value of
the policy. Rates for each type of protection are shown in separate tables on a
subsequent schedule page. It is possible that protection will not continue to
the date(s) shown if either no premiums are paid after the initial premium, or
subsequent premiums plus investment results on the designated Subaccounts are
not adequate to continue protection to the date shown. It is also possible that
protection will continue to the date shown, but with little or no cash value on
that date.
<PAGE>
Policy No. 03905202
POLICY CHARGES:
Premium:
Initial Charge for Taxes: 2.00%
Other:
Monthly Policy Fee: $ 6.00
Per Thousand Expense Charge: .45/1000 of spec amt for yrs 1-10
(see definitions page)
Transfer Charge: 20.00 per transfer
Service Fee: 25.00 per partial surrender
Requested Increase Fee: 50.00 per increase in excess of one/yr.
Daily Mortality and Expense
Risk Charge: .00002477 maximum
NET MONTHLY
SUBACCOUNTS/ PREMIUM DEDUCTION
GENERAL ACCOUNT OPTION ALLOCATION ALLOCATION
Bond * 25% 25%
Balanced * 25% 25%
Money Market * 0% 0%
G & I Stock * 0% 0%
Treasury 2000* 0% 0%
Interest Bearing Account 0% 0%
Capital Stock * 0% 0%
Intl Stock ** 25% 25%
World Govern *** 25% 25%
*These Subaccounts invest in a series of the Ultra Series Fund.
**This Subaccount invests in a series of T.Rowe Price International Series, Inc.
***This Subaccount invests in a series of MFS Variable Insurance Trust.
DEFERRED CHARGES *
Deferred Deferred Total
Policy Administrative Sales Deferred
Year Charge Charge Charge
1 $237.00 $ 169.50 $406.50
2 225.15 161.03 386.18
3 213.30 152.55 365.85
4 201.45 144.08 345.53
5 177.75 127.13 304.88
6 154.05 110.18 264.23
7 118.50 84.75 203.25
8 82.95 59.33 142.28
9 47.40 33.90 81.30
10+ .00 .00 .00
*In the event of surrender, these deferred charges will be assessed against the
policy's accumulated value. These charges are based on the policy's initial
specified amount. Additional deferred charges will be assessed if the specified
amount is increased. Deferred charges build up on a monthly basis over the first
twelve policy months. If the policy is surrendered during the first eleven
policy months, the deferred charge will be a prorate portion of the first-year
deferred charge shown above.
<PAGE>
<TABLE>
<CAPTION>
Policy No. 03905202
TABLE 1: GUARANTEED MAXIMUM COST OF INSURANCE RATES.
The rates shown are annual rates in dollars per $1000. Monthly cost of insurance
calculations will use one-twelfth of these rates. (See Section 9.3C)
Age Rate Age Rate Age Rate Age Rate Age Rate Age Rate
- --- ---- --- ---- --- ---- --- ---- --- ---- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.05 16 1.59 32 2.29 48 8.44 64 34.69 80 125.71
1 1.03 17 1.72 33 2.41 49 9.18 65 37.90 81 134.96
2 .99 18 1.82 34 2.55 50 10.00 66 41.26 82 145.21
3 .97 19 1.88 35 2.72 51 10.93 67 44.74 83 156.29
4 .93 20 2.32 36 2.92 52 11.98 68 48.39 84 167.83
5 .88 21 2.32 37 3.17 53 13.17 69 52.35 85 179.44
6 .83 22 2.28 38 3.45 54 14.47 70 56.72 86 190.84
7 .78 23 2.24 39 3.77 55 15.86 71 61.63 87 202.54
8 .75 24 2.18 40 4.14 56 17.33 72 67.18 88 214.73
9 .74 25 2.11 41 4.54 57 18.88 73 73.33 89 226.85
10 .75 26 2.07 42 4.98 58 20.51 74 80.07 90 239.08
11 .81 27 2.05 43 5.46 59 22.26 75 87.27 91 251.80
12 .92 28 2.05 44 5.99 60 24.21 76 94.63 92 266.55
13 1.07 29 2.08 45 6.55 61 26.41 77 102.02 93 285.47
14 1.24 30 2.13 46 7.13 62 28.89 78 109.49 94 311.27
15 1.42 31 2.20 47 7.76 63 31.66 79 117.30
</TABLE>
<PAGE>
DEFINITIONS
Accumulated Value. The total of this policy's portion of the values of all
Subaccounts and the Interest Bearing Account plus the values, if any, of the
deferred charges account and the loan account.
Age. The number of completed years from the Insured's date of birth.
Beneficiary. Person or entity named to receive all or part of the death
proceeds.
Cash Value. At any time, equal to, the accumulated value minus any deferred
sales and deferred administrative charges.
Charge for State Taxes. An amount deducted from premium payments to cover
premium tax and income tax currently charged by the policyowner's state of
residence. State of residence is determined by the owner's mailing address as
shown in the Company's records. The initial charge for state taxes is shown on
the specifications page.
Collateral Assignee. Person or entity to whom the owner gives some but not all
ownership rights under this policy.
Company or Home Office.
Century Life of America
2000 Heritage Way
Waverly, Iowa 50677
Death Proceeds. The amount to be paid if the insured dies while the policy is in
force.
Deferred Charges. Sum of the deferred sales charge and deferred administrative
charge. The deferred sales and administrative charges are deducted each month to
cover sales and administrative expenses of the policy.
Deferred Charges Account. A non-segregated portion of the Company's general
account in which policy values are held in support of the current deferred sales
and administrative charges of this policy.
In Force. Condition under which this policy is active and the insured's life
remains insured.
Indebtedness. Policy loans plus accrued interest on the loans.
Initial Premium. The amount which must be paid before coverage under this policy
begins. The initial premium must be equal to or greater than the minimum initial
premium. The amount of the initial premium is shown on the specifications page.
Insured. Person whose life is insured under this policy.
Irrevocable Beneficiary. A beneficiary who has certain rights which cannot be
changed unless he or she consents to the change. The written consent of all
irrevocable beneficiaries must be obtained prior to:
1. Transfer of ownership of this policy.
2. Collateral assignment of this policy.
3. Selection of or change of a dividend option.
4. Any change of beneficiary which replaces the irrevocable beneficiary.
5. Selection or change of a settlement option.
6. Surrender of this policy, including partial surrenders.
7. Policy loans.
8. Policy changes and exchange of policy.
Issue Date. The effective date of coverage under this policy and the date from
which policy anniversaries, policy years, monthly days, and policy months are
determined.
Lapse. Condition when the insured's life is no longer insured under this policy.
Loan Account. A non-segregated portion of the Company's general account to which
amounts are transferred from the Separate Account(s) and/or Interest Bearing
Account as collateral for policy loans.
Maturity Date. The date when coverage under this policy will cease if the
insured is living and the policy is in force.
Maturity Proceeds. Net cash value on the maturity date. Any net cash value
remaining on the maturity date is payable to the owner.
Minimum Death Benefit. Equal to the specified amount. This minimum is guaranteed
only under the conditions described in Section 3.7.
Minimum Initial Premium. One-sixth of the minimum premium. The minimum initial
premium is shown on the specifications page.
Minimum Premium. The total amount that must be paid each year, for the first
three policy years, to keep the no lapse guarantee in force for the first three
policy years. The minimum premium is shown on the specifications page.
Monthly Day. Same day as the issue date for each month. The monthly day is the
first day of the policy month. If there is no monthly day in a calendar month,
the monthly day will be the first day of the next calendar month
Monthly Policy Fee. A portion of the monthly deduction which is deducted each
month to cover policy expenses. The monthly policy fee is shown on the
specifications page.
Net Asset Value. The basis used to measure the value of securities constituting
the underlying investments for policy values allocated to the Separate Account.
Net Cash Value. The cash value of this policy minus any policy indebtedness.
Net Premiums. Premiums paid less any charges for state taxes.
Owner. The person or entity named as owner in the application. The owner may be
other than the insured. If no owner is named in the application, the insured is
the owner. The rights of the owner are described in the policy.
Paid-up Insurance. Insurance for which no additional premium must be paid to
keep it in force.
Per Thousand Expense Charge. A portion of the monthly deduction which is
deducted each month to cover expenses which vary with the specified amount. The
per thousand expense charge is shown on the specifications page. Policy
Anniversary. Same day and month as the issue day and month for each year the
policy remains in force.
Policy Month. Begins on a monthly day and ends on the day immediately preceding
the next monthly day.
Premiums. Amounts of money paid to the Company. Premiums are flexible as
described in Section 3.
Record Date. The date the Company records the policy on its books as an in-force
policy. The record date is shown on the specifications page.
Rescind a Policy. To treat a policy as though it had never been issued.
Specified Amount. The amount used to determine the face amount in Section 7.2.
The specified amount is shown on the specifications page.
Subaccount. A portion of the Separate Account. See Sections 5.1 and 5.2.
Surrender a Policy. To terminate a policy at the option of the owner. After a
policy has been surrendered, the insured's life is no longer insured under that
policy.
Target Premium. The total amount that must be paid each year to guarantee the
minimum death benefit. regardless of the investment performance of the
Subaccounts. The target premium is shown on the specifications page.
Valuation Day. Any day on which the New York Stock Exchange is open for trading.
Valuation Period. The period commencing at the close of the New York Stock
Exchange (currently 3:00 p.m. Central Standard Time) of one valuation day and
continuing to 3:00 p.m. Central Standard Time or the close of the New York Stock
Exchange, whichever is earlier, of the next succeeding valuation day.
<PAGE>
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SECTION 1. GENERAL CONTRACT PROVISIONS
- -------------------------------------------------------------------------------
1.1 THE AGREEMENT
Century Life of America agrees to pay the death proceeds of this policy. The
Company also agrees to provide the other benefits and privileges described in
this contract. Proceeds are paid if the policy is in force and if:
A. The insured dies,
B. The policy matures, or
C. The policy is surrendered,
and all other terms and conditions of the policy are met.
1.2 THE ENTIRE CONTRACT
The entire contract consists of this policy and the application, a copy of which
is attached.
A. Application. The Company relied on the application in issuing this
policy. The Company is assuming that all statements in the application
are true and complete to the best of the knowledge and belief of the
persons making them. The Company agrees to accept all statements made in
the application as representations and not warranties. No statement will
be used to rescind the policy or defend a claim under the policy unless
that statement is material and is in the application.
B. Policy. This policy, together with all attached riders and endorsements,
states the Company's agreement with the owner. No part of this agreement
may be changed or waived unless approved in writing by the Company's
President or Secretary. No agent has authority to change the agreement
or to waive any of its provisions. Statements by an agent are not part
of the Company's agreement with the owner.
1.3 INCONTESTABILITY
This policy is incontestable as to the initial specified amount after it has
been in force during the insured's lifetime for two years from the issue date.
After this two-year period, the Company cannot deny this coverage if the policy
is in force. This rule does not apply to riders. Riders contain separate
incontestability provisions.
While this policy is contestable, the Company may contest the policy or defend a
claim only on the basis of a material misrepresentation in the application. A
misrepresentation is material if, on the basis of correct and complete
information in the application, the Company would have:
A. Declined the application,
B. Issued the policy at a higher cost of insurance rate except for increases
in the cost of insurance rate due solely to a misstatement of age or sex
as provided in Section 1.4, or
C. Issued the policy on some other basis than applied for.
The amount of an increase in the specified amount becomes incontestable after
the increase has been in force for two years during the insured's lifetime,
except where the specified amount has been increased by reason of a change from
Option 2 to Option 1 as provided in Section 7.3, in which event, increasing the
specified amount by the amount of accumulated value does not create a new
contestable period for the amount of the increase.
While any increase in specified amount is contestable, the Company may contest
the increase or defend a claim for the difference in death benefit only on the
basis of material misrepresentation in the supplemental application.
If a policy is reinstated, it is incontestable after it has been in force during
the insured's lifetime for two years from the date of reinstatement. This
contestable period applies only to statements made in the Reinstatement
Application.
Whenever rescission is either elected by the Company and the owner in settlement
of a policy contest, or ordered by a court of law in the event a policy contest
is litigated, the rescission proceeds shall equal:
1. The charges deducted from premiums for state taxes,
2. Plus the total amount of monthly deductions and any other charges deducted
from the accumulated value,
3. Plus the accumulated value on the date the refund is calculated, as
defined in Section 9.2,
4. Minus any indebtedness.
1.4 MISSTATEMENT OF AGE OR SEX
If the insured's age or sex has been misstated, either the amount payable as a
death benefit or the cost of insurance will be adjusted upwards or downwards to
reflect the correct age or sex, as the case may be. If the insured is alive on
the date upon which the adjustment is to be made, it will be the cost of
insurance and not the death benefit which is adjusted for the correct age and
sex on the next monthly day and on each monthly day thereafter following the
date upon which the Company receives notice of the misstatement.
If the insured has died on or prior to the date upon which the adjustment is to
be made, it will be the death benefit which is adjusted when the death proceeds
are paid. In this case, the amount of such death benefit adjustment will be
based upon the amount of death benefit at the insured's correct age and sex
which the cost of insurance amount actually deducted on the most recent monthly
day for which a monthly deduction was made would have purchased.
1.5 SUICIDE
Suicide of the insured, while sane or insane, within two years of the issue date
or the reinstatement date, is not covered by this policy. If the insured does
commit suicide, the only amount payable will be a return of the premiums paid
for the policy less any indebtedness or partial surrender. If the insured
commits suicide within two years of the date of increase of the specified
amount, the only amount payable with respect to the increase will be a return of
the monthly deductions made for the increase.
1.6 DIVIDENDS
While this policy is in force, it will share in the divisible surplus of the
Company. This policy's share is determined annually by the Company. It is
payable annually on the policy anniversary. The owner may select one of the
dividend options listed below.
If no option is selected, Option A will be used.
A. The dividends may be paid into the Subaccounts or the Interest Bearing
Account as net premiums.
The dividends may be paid in cash.
<PAGE>
1.7 TERMINATION
This policy will terminate on the earliest of the following:
A. The end of the grace period,
B. The surrender date of this policy,
C. The maturity date of this policy, or
D. The date the insured dies.
1.8 TAX TREATMENT
The policy is intended to qualify for treatment as a life insurance policy under
the Internal Revenue Code. The Company may return premiums which would
disqualify the policy from tax treatment as a life insurance policy.
- -------------------------------------------------------------------------------
SECTION 2. OWNERSHIP
- -------------------------------------------------------------------------------
2.1 OWNER OF POLICY
The owner is named in the application. The owner may be other than the insured.
2.2 TRANSFER OF OWNERSHIP
The owner may transfer ownership of this policy. The written consent of all
irrevocable beneficiaries must be obtained prior to such transfer. The notice of
transfer must be in writing and filed at the home office. The transfer will take
effect as of the date the notice was signed. The Company may require that the
policy be sent in for endorsement to show the transfer of ownership.
The Company is not responsible for the validity or effect of any transfer. The
Company will not be responsible for any payment or other action it has taken
before having received written notice of the transfer.
2.3 COLLATERAL ASSIGNMENT
The owner may assign this policy as collateral security. The written consent of
all irrevocable beneficiaries must be obtained prior to such assignment. The
assignment must be in writing and filed at the home office. The assignment will
then take effect as of the date the notice was signed.
The Company is not responsible for the validity or effect of any collateral
assignment. The Company will not be responsible for any payment or other action
it has taken before having received the written collateral assignment.
A collateral assignment takes precedence over the interest of a beneficiary. Any
policy proceeds payable to an assignee will be paid in one sum. Any remaining
proceeds will be paid to the designated beneficiary or beneficiaries.
A collateral assignee is not an owner. A collateral assignment is not a transfer
of ownership.
<PAGE>
- -------------------------------------------------------------------------------
SECTION 3. PREMIUMS
- -------------------------------------------------------------------------------
3.1 TIME AND PLACE OF PAYMENT
The initial premium, shown on the specifications page, must be paid during the
lifetime of the insured, on or before the issue date. The initial premium must
be at least equal to the minimum initial premium. The minimum initial premium is
one-sixth of the minimum premium.
The minimum premium, also shown on the specifications page, is the total amount
that must be paid each year on an annual basis for the first three policy years,
to keep the no lapse guarantee in force for the first three policy years.
All premiums after the initial premium may be paid at any time while this policy
is in force. These premiums must be paid at the Company's home office or to an
authorized agent. Upon request, a receipt signed by the Secretary of the Company
will be given for any premium paid.
The Company reserves the right to refuse premium payments as follows:
A. Any individual premium payment of less than $25.00,
B. Any premium payment that would disqualify this policy as life insurance
under the Internal Revenue Code, and/or
C. Any premium which would increase the face amount of this policy by more
than the amount of the premium.
3.2 NET PREMIUM
Net premiums are equal to premiums paid less any charges for state taxes. The
charge for state taxes at time of issue is shown on the specifications page.
3.3 ALLOCATION OF NET PREMIUMS
The initial net premium will be held in the Company's general account until the
first valuation date following the record date. It will be held for that time
period at a rate of at least 4%, compounded annually. The Company may, at its
sole discretion, credit a rate in excess of 4%.
On the first valuation date following the record date, the following amount is
allocated to the Subaccount(s) and/or to the Interest Bearing Account:
A. The net premium as of the record date less the monthly deductions that
become due on or before the record date,
B. Minus an amount equal to the then current deferred sales and
administrative charges.
The owner selects in the application for this policy the manner in which the
amount described above, and subsequent amounts, are to be allocated. The minimum
percentage allocated to any Subaccount or to the Interest Bearing Account must
be at least 10% of the amount being allocated. No fractional percentages may be
used. The owner may change how future amounts are to be allocated. The request
for change must be in writing. The change will be effective with the first
allocation on or after the request is recorded by the Company.
<PAGE>
3.4 PAID-UP BENEFIT
If premium payments stop and there is a net cash value, the policy will continue
in force. Monthly deductions will be made and interest will be credited on each
monthly day until the earlier of:
A. the monthly day the net cash value is less than the amount needed to pay
the monthly deduction (this applies only if neither the no lapse
guarantee, as described in Section 3.6, nor the minimum death benefit
guarantee as described in Section 3.7, is in effect), or
B. the maturity date.
3.5 LAPSE AND GRACE PERIOD
If the net cash value on any monthly day is less than the amount needed to pay
the monthly deduction, and if the no lapse guarantee does not apply, the Company
will mail a notice of termination to the owner at his or her last known address.
The Company will grant a 61-day grace period for the payment of the amount due.
The grace period will end on a date not less than 61 days after the mailing date
of the notice.
If the policy is in the first three policy years and there has been no requested
increase in specified amount, the notice will specify two amounts. If either of
these amounts is paid during the grace period, the policy will continue in force
as if the amount had been paid on the monthly day. The two amounts which will be
specified are as follows:
A. The amount sufficient to increase the net cash value to zero by the end of
the grace period, assuming no investment gains or losses in the
Subaccounts.
B. The amount needed to qualify for the no lapse guarantee (Section 3.6).
If the policy is beyond the third policy year or there has been a requested
increase in specified amount, the notice will specify one amount. If this amount
is paid during the grace period, the policy will continue in force as if the
amount had been paid on the monthly day. The amount which will be specified is
the same as (A), above.
If the insured dies during the grace period, the overdue charges will be
deducted from the death proceeds. The amount deducted will be equal to the
smaller of the amounts specified on the notice of termination sent to the owner.
If the amount due is not paid during the grace period, the policy will lapse
without value.
3.6 NO LAPSE GUARANTEE
If the net cash value on any monthly day during the first three policy years is
less than the amount needed to pay the monthly deduction, the grace period will
not begin and the policy will not lapse if A and B are true, where A and B are:
A. There has been no requested increase in specified amount, and
B. The sum of the premiums paid, less any partial surrenders and policy
indebtedness, is equal to or greater than the product of 1 and 2 below:
1. The minimum premium shown on the specifications page divided by twelve,
and
2. The number of policy months since issue, plus one month.
The no lapse guarantee will not apply to this policy after the end of the third
policy year.
<PAGE>
3.7 MINIMUM DEATH BENEFIT GUARANTEE
If the net cash value, at any time prior to the later of attained age 65 or 10
years from the date of issue, Is less than the amount needed to pay the monthly
deduction, the grace period will not begin and the policy will not lapse if the
minimum death benefit guarantee is in effect. The minimum death benefit
,guarantee is in effect if the sum of the premiums paid, less any partial
withdrawals and policy indebtedness is equal to or greater than the product of:
A. The target premium shown on the specifications page divided by twelve and
B. The number of policy months since issue, plus one month.
The target premium will be increased or decreased, as appropriate, when any one
of the following occurs:
A. There is a requested increase or decrease in specified amount,
B. The addition or deletion of riders,
C. A change in specified amount due to a death benefit option change.
An increase or decrease in the target premium, as described above, will cause
the premiums required to be paid to increase or decrease in a like manner. If
the premiums required to be paid for the minimum death benefit guarantee are not
paid, the minimum death benefit guarantee will no longer be in effect under this
policy. The minimum death benefit guarantee may be reinstated by payment of
premiums sufficient to raise total premiums to the required amount. The right to
reinstate the minimum death benefit guarantee expires 60 days from the date the
Company mails written notification of such loss to the owner.
3.8 POLICY REINSTATEMENT
If this policy has lapsed, the owner may ask to have it reinstated. It will be
reinstated if six conditions are met:
A. The owner requests the Company to reinstate the policy within five years
after the end of the grace period and before the maturity date,
B. The request is in writing,
C. Evidence of insurability satisfactory to the Company is provided,
D. The amount sufficient to increase the net cash value to zero by the end of
the grace period, assuming no investment gains or losses in the
Subaccounts, is paid,
E. The owner pays the amount of the monthly deductions due on the first three
monthly days after the reinstatement is effective, and
F. Any deferred sales and administrative charges that would be in effect if
the policy had not lapsed will be reinstated. If the deferred charges have
increased since the policy was lapsed, the owner pays sufficient premium to
increase the accumulated value by an amount not less than:
1. The amount of deferred sales and administrative charges that would
have been in effect had the policy not lapsed,
2. Minus the amount of deferred sales and administrative charges that
was in effect when the policy lapsed.
<PAGE>
The reinstatement will become effective immediately upon the Company's approval
of the reinstatement.
The accumulated value on the date of reinstatement will be equal to:
1. The amount paid at the time of reinstatement,
2. Minus the charge for state taxes,
3. Minus the amount needed to increase the net cash value to zero by the end
of the grace period, assuming no investment gains or losses in the
Subaccounts,
4. Minus any monthly deduction due on the date of reinstatement,
5. Plus:
a. The deferred charges at the time of lapse, if these charges are less
than the deferred charges at the time of reinstatement, or
b. The deferred charges at the time of reinstatement, if these charges
are not more than the deferred charges at the time of lapse.
- -------------------------------------------------------------------------------
SECTION 4. BENEFICIARIES
- -------------------------------------------------------------------------------
4.1 NAMED BENEFICIARY
One or more beneficiaries are named in the application. The owner may change the
beneficiary as provided in Section 4.4.
4.2 BENEFICIARY CLASSIFICATIONS
Beneficiaries may be classified as primary or contingent. If no primary
beneficiary survives the insured, payment will be made to contingent
beneficiaries. Beneficiaries in the same class will receive equal payments
unless otherwise directed.
4.3 DEATH OF A BENEFICIARY BEFORE THE INSURED
A beneficiary must survive the insured in order to receive his or her share of
the death proceeds. If a beneficiary dies before the insured dies, his or her
unpaid share is divided among the beneficiaries who survive the insured. The
unpaid share will be divided equally unless the owner directs otherwise.
If no beneficiary survives the insured, the proceeds will be paid to the owner,
if living, or to the owner's estate.
<PAGE>
4.4 CHANGE OF BENEFICIARY
The owner may change the beneficiary while the insured is living. The written
consent of all irrevocable beneficiaries must be obtained prior to such change.
To make a change, the owner must provide the Company with a written request
satisfactory to the Company. The request will not be effective until the Company
records it.
Are the request is recorded, it will take effect as of the date the owner signed
the request. The Company will not be responsible for any payment or other action
it takes before it records the request. The Company may require the policy be
returned for endorsement of the beneficiary change.
- -------------------------------------------------------------------------------
SECTION 5. SEPARATE ACCOUNT, SUBACCOUNTS, FUND
- -------------------------------------------------------------------------------
5.1 SEPARATE ACCOUNT
The variable benefits under this policy are provided through the Century
Variable Account which is referred to in this policy as the Separate Account.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. It is a
separate investment account maintained by the Company into which a portion of
Company assets have been allocated. The assets of the Separate Account are
Company property. Assets equal to the liabilities of the Separate Account will
not be charged with liabilities arising out of any other business the Company
may conduct. If the assets of the Separate Account exceed the liabilities
arising under the policies supported by the Separate Account, then the excess
may be used to cover the liabilities of the Company's general account. The
assets of the Separate Account shall be valued as often as any policy benefits
vary, but at least monthly.
The Separate Account invests in shares of underlying mutual funds. Shares are
purchased at net asset value.
5.2 SUBACCOUNTS
The Separate Account has several Subaccounts. Each Subaccount corresponds to a
series of an underlying mutual fund. The Subaccounts that are available on the
Issue Date are shown on the Specifications Page. The Company may from time to
time add or delete Subaccounts of the Separate Account. Any Subaccount that is
added to the Separate Account will invest in an underlying mutual fund or unit
investment trust. The owner will be notified in writing of any changes to the
Subaccounts that are available under this policy. Subaccounts that invest in a
Treasury Series may be discontinued if that series is no longer available
because of maturity.
Income and realized and unrealized gains and losses from assets in each
Subaccount are credited to, or charged against, that Subaccount without regard
to income, gains, or losses in other Subaccounts. Any amount charged against the
investment base for federal or state income taxes will be deducted from that
Subaccount.
5.3 UNDERLYING MUTUAL FUNDS
Each underlying mutual fund is registered under the Investment Company Act of
1940 as an open-end management investment company. Each series of the underlying
mutual fund represents a different investment objective.
<PAGE>
5.4 CHANGE OF INVESTMENT ADVISOR OR INVESTMENT OBJECTIVES
If:
A. Any of the underlying mutual fund series are no longer available for
investment by the Subaccounts; or
B. In the judgment of the Company's Board of Directors, further investment in
such series is no longer deemed to be in the best interest of the policies
generally within the class represented by this policy; or
C. An investment advisor or material investment policy of an underlying
mutual fund is changed without Company consent;
Then:
The Company may substitute shares of another underlying mutual fund or unit
investment trust, if such change is approved by:
A. The Securities and Exchange Commission; and if required,
B. The Insurance Commissioner of the State of Iowa; and if required,
C. The insurance department of the state in which this policy is delivered.
The owner of this policy will be notified of any such substitution or material
investment objective change which has been approved. Notification of such change
will be given in advance if the owner has the right to comment on or vote on
such change.
5.5 THE EFFECT OF INVESTMENT RESULTS UPON POLICY VALUES
A. Determining Investment Results. The policy values will fluctuate in
accordance with the investment results of the Subaccounts. In order to
determine how investment results affect the policy values, a unit value is
determined for each Subaccount. The unit value may increase or decrease
from one valuation period to the next. Unit values also will vary among
Subaccounts.
B. Unit Value. The unit value of any Subaccount at the end of a valuation
period is the result of:
1. The total value of the assets held in the Subaccount. (This value is
determined by multiplying the number of shares of the underlying mutual
fund owned by the Subaccount times the net asset value per share.)
2. Minus the accrued risk charge for adverse mortality and expense
experience. (The daily amount of this charge is equal to the net assets of
the Subaccount multiplied by the risk charge factor shown on the
specifications page.)
3. Minus the accrued amount of reserve for any taxes that are determined
by the Company to have resulted from the investment operations of the
Subaccount, and
4. Divided by the number of outstanding units in the Subaccount.
The use of the unit value in determining policy values is described in Section
9.2.
<PAGE>
5.6 TRANSFERS
The owner may transfer this policy's portion of a Subaccount(s) to other
Subaccount(s), and/or the Interest Bearing Account. The Company reserves the
right to charge up to $20 for each transfer. This charge will be deducted from
the funds transferred. The Company must be notified in a manner satisfactory to
it. Transfer requests received at the home office by 3:00 p.m. Central Standard
Time will take effect on the day the notice is received unless:
A. The New York Stock Exchange is closed other than for customary weekend and
holiday closings,
B. The Securities and Exchange Commission requires that trading on the
exchange be restricted, or declares an emergency which makes it
impracticable for the Separate Account to dispose of its securities or
value its assets, or
C. The SEC by order allows or requires the Company to defer payments to
protect its policyowners.
The owner may transfer any part of this policy's portion of the Interest
Bearing Account into the Subaccount(s) only during a thirty (30) day period
beginning on and immediately following the policy anniversary.
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SECTION 6. INTEREST BEARING ACCOUNT
- -------------------------------------------------------------------------------
The Interest Bearing Account is a non-segregated portion of the Company's
general account. All assets in the general account are Company property and are
available to satisfy any liability of the Company.
The Company will credit all amounts in the Interest Bearing Account interest at
a rate no less than 4% annually. The Company, at its sole discretion, may credit
a higher rate of interest to amounts held in the Interest Bearing Account.
The Company may from time to time provide for other general account options
under this contract.
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SECTION 7. DEATH BENEFIT
- -------------------------------------------------------------------------------
7.1 VALUE OF DEATH PROCEEDS
If the policy is in force on the date of the insured's death, the death proceeds
will consist of:
A. The face amount of the policy on the date of death as described in Section
7.2,
B. Plus any premiums received after the date of death,
C. Minus any policy indebtedness.
The face amount of the policy may vary from time to time as a direct result of
the investment experience on any amount of accumulated value held in the
Separate Account except when Option 1 has been selected and the face amount
equals the specified amount.
<PAGE>
7.2 FACE AMOUNT
If Death Benefit Option 1 is selected, the face amount of the policy will be the
larger of:
A. The specified amount, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
If Death Benefit Option 2 is selected, the face amount of the policy will be
the larger of:
A. The specified amount plus the accumulated value on the date of death, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
The death benefit ratio is shown below.
Age Ratio Age Ratio Age Ratio
0-40 2.50 54 1.57 68 1.17
41 2.43 55 1.50 69 1.16
42 2.36 56 1.46 70 1.15
43 2.29 57 1.42 71 1.13
44 2.22 58 1.38 72 1.11
45 2.15 59 1.34 73 1.09
46 2.09 60 1.30 74 1.07
47 2.03 61 1.28 75-90 1.05
48 1.97 62 1.26 91 1.04
49 1.91 63 1.24 92 1.03
50 1.85 64 1.22 93 1.02
51 1.78 65 1.20 94 1.01
52 1.71 66 1.19 95 1.00
53 1.64 67 1.18
The initial death benefit option is shown on the specifications page.
7.3 CHANGES IN DEATH BENEFIT OPTION
The owner may ask to change the death benefit option which is shown on the
specifications page. The change will become effective on the monthly day
following or coincident with the day a written request is received at the home
office. The Company may require evidence of insurability.
If the change is from Option 1 to Option 2, the specified amount will be reduced
by the amount of the accumulated value on the effective date of the change. No
change from Option 1 to Option 2 will be allowed for issue ages 0-64 if the
resulting specified amount would be less than $40,000. Issue ages above age 64
will not be allowed to change from Option 1 to Option 2 if the resulting
specified amount would be less than $8,000. If the change is from Option 2 to
Option 1, the specified amount will be increased by the amount of the
accumulated value on the effective day.
<PAGE>
7.4 CHANGES IN SPECIFIED AMOUNT
The specified amount may be changed at any time. Changes must be requested in
writing by the owner, and are subject to the conditions below:
A. Decreases. For issue ages 0-64, the specified amount must be at least
$50,000 after the decrease. For issue ages over 64, the specified amount
must be at least $10,000 after the decrease. The decrease will become
effective on the monthly day following or coincident with the day the
request is received in the home office. The decrease will be applied to
the initial specified amount and to increases in
B. Increases. A supplemental application must be filed, and evidence of
insurability satisfactory to the Company must be provided. The effective
date of the increase will be shown on an endorsement to the
specifications page.
If the specified amount is Increased, additional deferred sales and
administrative charges and additional per thousand expense charges will
apply to this policy, corresponding to the amount of the increase. No
additional charges will apply if the increase in specified amount
occurred solely due to a change in death benefit option. These additional
charges will be shown on an endorsement to the specifications page.
C. Transaction Charges. One free increase in specified amount may be made in
any policy year. Any requested increase in excess of one requested
increase in any policy year will result in a $50 charge per change. There
is no charge for any requested decrease in specified amount.
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SECTION 8. PAYMENT OF DEATH PROCEEDS
- -------------------------------------------------------------------------------
8.1 PERSONS PAID
When the Company receives due proof of the insured's death it will pay the death
proceeds. The death proceeds will be paid to the beneficiary or beneficiaries.
If no beneficiary survives the insured, the proceeds will be paid to the owner,
if living, or to the owner's estate.
Unless deferred as stated below, uncontested death proceeds will be paid within
seven days of due proof of death except for that portion of the accumulated
value held in one or more Subaccount(s), when:
A. The New York Stock Exchange is closed other than for customary weekend
and holiday closing,
B. The Securities and Exchange Commission requires that trading on the
exchange be restricted, or declares an emergency which makes it
impracticable for the Separate Account to dispose of its securities or
value its assets, or
C. The SEC by order allows the Company to defer payments to protect its
policyowners.
Death proceeds paid from the Interest Bearing Account may be deferred no more
than 60 days from the date due proof of death is received by the Company.
8.2 VALUE OF DEATH PROCEEDS
If the policy is in force on the date of the insured's death, the death proceeds
will consist of:
A. The face amount of the policy on the date of death as described in
Section 7.2,
B. Plus any premiums received after the date of death,
C. Minus any policy indebtedness.
8.3 METHOD OF PAYMENT
The death proceeds will be paid in one sum unless a settlement option has been
selected according to Section 8.4. However, any proceeds payable to an estate
will be paid in one sum. If the owner, beneficiary, or payee is not a natural
person, any proceeds due will be applied only in a lump sum or under a
settlement option consented to by the Company.
The Company will pay interest on the death proceeds from the date of death to
the date of settlement. The interest rate is determined each year by the
Company. It is guaranteed to be not less than the guaranteed settlement option
rate of interest.
8.4 SELECTION OF SETTLEMENT OPTIONS
The owner may direct during the insured's lifetime that the death proceeds be
paid under one of the settlement options listed in Section 8.5. Installments
under Options 2, 3, and 4 are shown in Section 8.6. The written consent of all
irrevocable beneficiaries must be obtained prior to the selection. After the
insured's death, any beneficiary entitled to receive the proceeds in one sum may
select a settlement option.
Any person who selects a settlement option can name, at the time of selection,
one or more successor payees to receive any guaranteed amount remaining with the
Company at the death of a payee. This selection will replace any prior
settlement arrangements.
When a settlement option is selected by a person other than a payee, the payee
may not advance or assign payments, receive payment in one sum, or make any
other change, unless that right was given at the time the option was selected.
8.5 SETTLEMENT OPTIONS
Settlement Option 1. Interest Option. The policy proceeds may be left at
interest with the Company during the lifetime of the payee. The interest rate is
determined each year by the Company. It is guaranteed to be not less than the
guaranteed settlement option rate of interest.
The payee may choose to receive interest payments either once a year or once a
month. The payee may withdraw any remaining proceeds, if this right was given at
the time the option was selected.
Settlement Option 2. Installment Option. The proceeds may be left with the
Company to provide equal monthly installments for a specified period. No period
can be greater than 30 years. The factors shown are for guaranteed installments.
Factors for other years will be provided on request. Dividends, If any, will be
determined by the Company.
The payee may withdraw the present value of any remaining guaranteed
installments, but only if this right was given at the time the option was
selected.
Settlement Option 3. Life Income - Guaranteed Period Certain. The proceeds may
be left with the Company to provide monthly installments for as long as the
original payee lives. A guaranteed period may be selected. Payments will cease
when the original payee dies or at the end of the guaranteed period, whichever
is later. If the original payee dies during the guaranteed period, the remaining
guaranteed payments will be paid to the successor payee as provided in Sections
8.4 and 8.7A..
<PAGE>
Guaranteed periods which may be selected are:
A. 10 years,
B. 20 years, or
C. A period of years such that the total installments during the period will
be at least equal to the proceeds applied under the option.
It is also possible to take the life income without a guaranteed period.
The monthly installment amount will depend on the age and sex of the original
payee on the date of the first payment. Dividends, if any, will be payable as
determined by the Company.
Settlement Option 4. Joint and Survivor Life Income. The proceeds may be left
with the Company to provide monthly installments for a guaranteed period of 10
years. After the 10-year period is over, payments will continue as long as
either of the original payees is living.
8.6 SETTLEMENT OPTION FACTORS
The life income payments for Settlement Options 3 and 4 are based on the payee's
sex and adjusted age. The adjusted age is the age last birthday plus the
adjustment. The policy years elapsed are from the issue date to the effective
date of the settlement option. Any partial policy year is considered as a full
policy year.
Policy Years Age
Elapsed Adjustment
1-10 +3
11-20 +2
21-30 +1
31+ 0
Option 2. Installment Factors - First Payment Due at Beginning of Period.
Years Monthly Installments
Payable Per $1,000 Proceeds
10 9.83
15 7.10
20 5.75
25 4.96
30 4.45
<PAGE>
<TABLE>
<CAPTION>
Option 3. Life Income Factors - Guaranteed Period Certain.
Per $1,000 Proceeds
Minimum Monthly Payments for Guaranteed Period Shown
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Age - Male
--------------------------------------------------------------------------------------------------------------------------
Years 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 5.29 5.39 5.49 5.61 5.73 5.86 6.00 6.16 6.32 6.49 6.68 6.88 7.09 7.31 7.56 7.82 8.09 8.39 8.71 9.05 9.41
10 5.20 5.29 5.38 5.48 5.59 5.70 5.82 5.95 6.08 6.21 6.35 6.50 6.65 6.81 6.97 7.14 7.31 7.48 7.65 7.83 8.00
20 4.94 5.00 5.06 5.12 5.18 5.24 5.31 5.37 5.43 5.48 5.54 5.59 5.64 5.69 5.73 5.77 5.81 5.84 5.87 5.89 5.91
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Age - Female
--------------------------------------------------------------------------------------------------------------------------
Years 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 4.84 4.92 5.00 5.09 5.19 5.29 5.40 5.52 5.65 5.78 5.92 6.08 6.24 6.61 6.61 6.81 7.04 7.28 7.54 7.83 8.14
10 4.80 4.87 4.95 5.03 5.12 5.22 5.32 5.42 5.53 5.65 5.77 5.90 6.04 6.19 6.34 6.50 6.67 6.84 7.02 7.21 7.40
20 4.67 4.73 4.79 4.85 4.91 4.98 5.05 5.11 5.18 5.25 5.32 5.39 5.45 5.51 5.58 5.63 5.69 5.73 5.78 5.82 5.85
Option 4. Joint and Survivor Life Income Factors - 10 Years Certain.
Monthly Payment Per $1,000 Proceeds - 100% to Surviving Payee
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted Age - Female
--------------------------------------------------------------------------------------------------------------------------
Age-Male 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
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55 4.44 4.48 4.52 4.55 4.59 4.62 4.66 4.69 4.72 4.76 4.79 4.82 4.85 4.88 4.91 4.93 4.96 4.98 5.00 5.03 5.05
56 4.47 4.50 4.54 4.58 4.62 4.66 4.73 4.73 4.77 4.80 4.84 4.87 4.90 4.93 4.97 4.99 5.02 5.05 5.07 5.10 5.12
57 4.49 4.53 4.57 4.61 4.65 4.69 4.73 4.77 4.81 4.85 4.88 4.92 4.96 4.99 5.02 5.06 5.09 5.12 5.14 5.17 5.19
58 4.51 4.55 4.59 4.64 4.68 4.72 4.77 4.81 4.85 4.89 4.93 4.97 5.01 5.05 5.09 5.12 5.15 5.19 5.22 5.25 5.27
59 4.53 4.57 4.62 4.66 4.71 4.76 4.80 4.85 4.89 4.94 4.98 5.02 5.07 5.11 5.15 5.19 5.22 5.26 5.29 5.32 5.35
60 4.55 4.60 4.64 4.69 4.74 4.79 4.84 4.88 4.93 4.98 5.03 5.07 5.12 5.16 5.21 5.25 5.29 5.33 5.37 5.40 5.44
61 4.57 4.62 4.67 4.72 4.77 4.82 4.87 4.92 4.97 5.02 5.07 5.12 5.17 5.22 5.27 5.32 5.36 5.41 5.45 5.49 5.52
62 4.59 4.64 4.69 4.74 4.79 4.85 4.90 4.96 5.01 5.07 5.12 5.17 5.23 5.28 5.33 5.38 5.43 5.48 5.53 5.57 561
63 4.61 4.66 4.71 4.76 4.82 4.88 4.93 4.99 5.05 5.11 5.17 5.22 5.28 5.34 5.40 5.45 5.50 5.56 5.61 5.65 5.70
64 4.62 4.68 4.73 4.79 4.85 4.90 4.96 5.03 5.09 5.15 5.21 5.27 5.33 5.40 5.46 5.52 5.58 5.63 5.69 5.74 5.79
65 4.64 4.69 4.75 4.81 4.87 4.93 4.99 5.06 5.12 5.19 5.25 5.32 5.39 5.45 5.52 5.58 5.65 5.71 5.77 5.83 5.88
66 4.65 4.71 4.77 4.83 4.89 4.96 5.02 5.09 5.16 5.23 5.30 5.37 5.44 5.51 5.58 5.65 5.72 5.78 5.85 5.91 5.97
67 4.67 4.72 4.79 4.85 4.91 4.98 5.05 5.12 5.19 5.26 5.34 5.41 5.49 5.56 5.64 5.71 5.79 5.86 5.93 6.00 6.06
68 4.68 4.74 4.80 4.87 4.93 5.00 5.07 5.15 5.22 5.30 5.37 5.45 5.53 5.61 5.69 5.77 5.85 5.93 6.01 6.08 6.16
69 4.69 4.75 4.82 4.88 4.95 5.02 5.10 5.17 5.25 5.33 5.41 5.49 5.58 5.66 5.75 5.83 5.92 6.00 6.09 6.17 6.25
70 4.70 4.76 4.83 4.90 4.97 5.04 5.12 5.20 5.28 5.36 5.45 5.53 5.62 5.71 5.80 5.89 5.98 6.07 6.16 6.25 6.33
71 4.71 4.78 4.84 4.91 4.99 5.06 5.14 5.22 5.30 5.39 5.48 5.57 5.66 5.76 5.85 5.95 6.04 6.14 6.24 6.33 6.42
72 4.72 479 4.86 4.93 5.00 5.08 5.16 5.24 5.33 5.42 5.51 5.60 5.70 5.80 5.90 6.00 6.10 6.21 6.31 6.41 6.51
73 4.73 4.80 4.87 4.94 5.02 5.09 5.18 5.26 5.35 5.44 5.54 5.64 5.74 5.84 5.94 6.05 6.16 6.27 6.38 6.48 6.59
74 4.74 4.81 4.88 4.95 5.03 5.11 5.19 5.28 5.37 5.47 5.57 5.67 5.77 5.88 5.99 6.10 6.21 6.33 6.44 6.55 6.67
75 4.75 4.81 4.89 4.96 5.04 5.12 5.21 5.30 5.39 5.49 5.59 5.69 5.80 5.91 6.03 6.14 6.26 6.38 6.50 6.62 6.74
</TABLE>
8.7 RELATED PROVISIONS
A. Successor Payee. The payee may name a successor payee to receive any
remaining installments due after the payee's death, but only if this right
was given at the time the option was selected. If the last surviving payee
dies before all the guaranteed installments have been made, the Company
will pay the present value of the remaining installments in one sum to that
payee's estate.
B. Minimum Amounts. The minimum amount which can be applied under Settlement
Option 1 is $2,500. Interest will be paid annually rather than monthly,
unless the amount of interest payable monthly is at least $25.
The minimum amount which can be applied under Settlement Options 2, 3, and
4 is that which will provide monthly installments of $25.
C. Present Value. The present value of any future installments is based on the
settlement option rate of interest used in determining the future
installments and is always less than their sum.
D. Age and Sex. The Company may require due proof of the age and sex of any
payee who is to receive a life income.
E. Additional Annuity Purchase. Additional income may be purchased under
Settlement Options 2 and 3. The amount of additional annuity which can be
purchased, per $1,000 of additional sum deposited, will be 95% of the
amount which can be purchased per $1,000 of net policy proceeds under
Option 2 or 3. The additional annuity amount may not exceed twice that
which the application of proceeds under the selected option would provide.
The selection of an additional annuity purchase must be in writing and on
file at the home office. Selection must be within thirty (30) days of
settlement under this policy. The additional annuity purchase option is
available only if the settlement is on or after the later of:
1. The 10th policy anniversary, or
2. The annuitant's 55th birthday.
F. Other Settlement Options. Other settlement options may be available with
the consent of the Company.
- -------------------------------------------------------------------------------
SECTION 9. POLICY VALUES
- -------------------------------------------------------------------------------
9.1 CASH VALUE
The cash value of this policy at any time is equal to the accumulated value
minus any deferred sales and deferred administrative charges.
9.2 ACCUMULATED VALUE
At the end of any valuation period, the accumulated value is equal to the number
of units that the policy has in each Subaccount, multiplied by the unit value of
each corresponding Subaccount, plus the policy's values, if any, in the Interest
Bearing Account, the deferred charges account, and the loan account. The
deferred charges account is described in Section 9.6. The loan account is
described in Section 11.
The method of determining the unit value for each Subaccount is described in
Section 5.5. The number of units that the policy has in each Subaccount is equal
to:
A. The initial units purchased on the issue date,
B. Plus units purchased at the time that additional net premium is allocated
to the Subaccount,
C. Plus units purchased through transfers from another Subaccount or from the
loan account,
D. Plus or minus units purchased or redeemed when the deferred charges account
is adjusted to be equal to the then current deferred sales and
administrative charges.
E. Minus those units that are redeemed to pay for monthly deductions as they
are due.
F. Minus any units that are redeemed to pay for a partial surrender,
G. Minus any units that are redeemed as part of a transfer to another
Subaccount, the Interest Bearing Account or to the loan account as
collateral for a policy loan.
9.3 MONTHLY DEDUCTION
A Amount of Monthly Deduction. The monthly deduction due on each monthly day
will be the sum of:
1. The cost of insurance for that month,
2. Plus the cost of any additional benefits provided by rider,
3. Plus the per thousand expense charge,
4. Plus the monthly policy fee.
The monthly deduction due on each monthly day will be combined with the
adjustments made to the deferred charges account on that day, as described in
Section 9.4. if the net result requires the redemption of units from the
Subaccount(s) or withdrawal of money from the Interest Bearing Account, the
redemption/withdrawal will be based on the monthly deduction allocation
percentages. The owner selects, in the application for this policy, the
percentage of monthly deductions redeemed and/or withdrawn from the
Subaccount(s) and/or the Interest Bearing Account. The minimum percentage of
monthly deductions redeemed/withdrawn from any Subaccount(s) and/or the Interest
Bearing Account is 10% of the total amount being redeemed or withdrawn. No
fractional percentages may be used.
The owner may change future redemption/withdrawal percentages. The request must
be in writing. The change will be effective on the first monthly day on or
following the date the request is recorded by the Company.
If the value in any Subaccount(s) and/or in the Interest Bearing Account is
insufficient to pay its part of the total monthly deduction on a monthly day,
the redemption/withdrawal will be made on a prorate basis from the Subaccount(s)
and/or the Interest Bearing Account.
B. Cost of Insurance. The cost of insurance is the cost of insurance rate
multiplied by the excess of 1 over 2 where 1 and 2 are the following:
1. The face amount on the monthly day.
2. The accumulated value on the monthly day, prior to the cost of
insurance being deducted.
If Death benefit Option 1 has been selected, and if there have been
increases in specified amount, then the accumulated value will be considered
first to be part of the initial specified amount. Any excess accumulated value
will be considered to be part of the additional specified amounts in the order
of the increases.
C. Cost of Insurance Rate. The Company will determine a cost of insurance rate
to be used on each monthly day. The cost of insurance rate for this policy
will be determined by the insured's attained age, sex, smoker status,
rating class, and the number of years since issue. Attained age means age
on the most recent policy anniversary. Cost of insurance rate changes will
depend on the Company's expectations as to future mortality experience. The
annual cost of insurance rates will not exceed the rates shown on Table 1 -
Guaranteed Maximum Cost of Insurance Rates. The guaranteed maximum
insurance rates are based on the 1980 CSO Mortality Tables, age last
birthday.
9.4 DAILY CHARGES
The Company will deduct a mortality and expense risk charge of .00002477 of the
total of the Net Asset Value of the Separate Account and the balance in the
Interest Bearing Account.
9.5 DEFERRED CHARGES
The deferred charges for each policy year are shown on the specifications page.
The deferred charges are held in the deferred charges account. The deferred
charges in the first policy year increase on a monthly basis over the first 12
policy months and decrease annually thereafter. If the specified amount is
increased, additional deferred charges, as described in Section 7.4B, will apply
to this policy. The accumulated value at the time of the increase must be at
least as great as the sum of the existing deferred charges plus the additional
deferred charges. An endorsement to the specifications page will be sent to the
owner showing these new charges. No additional deferred charges will apply if
the increase in specified amount occurs solely due to a change in death benefit
option, nor will the deferred charges change if the insured's status changes
from smoker to nonsmoker.
9.6 DEFERRED CHARGES ACCOUNT
The deferred charges account is a non-segregated portion of the Company's
general account. Amounts held in the deferred charges account are credited with
interest at a rate of at least 4%, compounded annually. The Company may, at its
sole discretion, credit rates in excess of 4%.
On the first valuation date following the record date and periodically
thereafter, adjustments are made to amounts held in the deferred charges account
to make them equal to the then current deferred charges. Such periodic
adjustments will be made on each monthly day and whenever premium payments,
partial surrenders, or policy loan transactions are processed. If made on a
monthly day, such adjustments can result in amounts being allocated to or
redeemed/withdrawn from the Subaccount(s) or the Interest Bearing Account.
Whenever any such adjustments are made, they take into account the interest, if
any, which may have been credited to the deferred charges account.
On each monthly day, the adjustment to the deferred charges account is combined
with the monthly deduction due on that day. If the adjustment to the deferred
charges account results in a large enough release of value to pay for the
monthly deduction, any excess will be allocated to the Subaccount(s) and/or the
Interest Bearing Account in the same manner as net premium.
The adjustment may result in a release of value less than the monthly deduction,
or an increase may be required in the deferred charges account. If so, the net
amount of the adjustment and the monthly deduction is redeemed/withdrawn from
the Subaccount(s) and/or the Interest Bearing Account according to the monthly
deduction percentage allocation.
On any monthly day, if the net cash value is insufficient to pay the monthly
deduction, but the no lapse guarantee (see Section 3.6) or minimum death benefit
guarantee (see Section 3.7) is in effect, and if the deferred charges account
has sufficient value, the monthly deduction will be made from the deferred
charges account. Additional net premium received on the policy will be applied
first to reimburse the deferred charges account for any monthly deductions made
from that account.
No transfers may be made to or from the deferred charges account for any reason
other than bringing the account equal to current deferred sales and
administrative charges or for paying the monthly deduction as described in the
preceding paragraph.
<PAGE>
9.7 NOTIFICATION REGARDING POLICY VALUES
At least once per year, a report will be sent to the owner of this policy which
shows:
A. The current death benefit,
B. Premiums paid since the previous report,
C. Partial surrenders since the previous report,
D. All charges since the previous report,
E. A summary of investment experience of the Separate Account.
F. The accumulated value and cash value of this policy, including values in
the:
1. Deferred Charges Account,
2. Loan Account (policy indebtedness),
3. Interest Bearing Account, and
4. Separate Account(s).
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SECTION 10. POLICY SURRENDER AND PARTIAL SURRENDER
- -------------------------------------------------------------------------------
10.1 POLICY SURRENDER
The owner may surrender this policy for its net cash value. The written consent
of all assignees or irrevocable beneficiaries must be obtained prior to any
surrender. The Company may require the return of the policy.
The surrender date of the policy is the date a written request for surrender is
received at the home office. The net cash value will be determined as of the end
of the valuation period during which the surrender date occurs. The policy and
all insurance will terminate as of the surrender date.
10.2 PARTIAL SURRENDER
The owner may surrender a portion of this policy for an amount less than the net
cash value. The written consent of all assignees or irrevocable beneficiaries
must be obtained prior to any partial surrender. The effective date of such
partial surrender will be the date a written partial surrender request is
received at the home office. The Subaccount(s) and/or Interest Bearing Account
from which the surrender is to be made may be selected by the owner. If the
Subaccount(s) and/or the Interest Bearing Account is not specified, the partial
surrender amount will be redeemed/withdrawn in the same percentages as monthly
deductions. The accumulated value will be reduced by the amount
redeemed/withdrawn from the Subaccount(s) and/or the Interest Bearing Account. A
service charge of $25.00 will be deducted from the total amount redeemed
withdrawn from the Subaccount(s) and/or Interest Bearing Account.
If Death Benefit Option 1 is used, the specified amount of insurance will be
decreased by the same amount as the accumulated value is decreased. No partial
surrender will be allowed for issue ages 0-64 if the specified amount remaining
would be less than $40,000. Issue ages above age 64 will not be allowed to make
a partial surrender if the specified amount remaining under Option 1 would be
less than $8,000.
10.3 SURRENDER AND PARTIAL SURRENDER PAYMENTS
Unless payments are deferred as stated below, uncontested payments will be made
within seven days of the surrender or partial surrender date unless some portion
of the accumulated value is held in one or more of the Subaccounts, and:
A. The New York Stock Exchange is closed other than for customary weekend and
holiday closing,
B. The Securities and Exchange Commission requires that trading on the
Exchange be restricted, or declares an emergency which makes it
impracticable for the Separate Account to dispose of its securities or
value its assets, or
C. The SEC by order allows the Company to defer payments to protect its
policyowners.
The payment of any surrender amount or policy loan proceeds from the Interest
Bearing Account may be deferred for up to six months from the date of the
surrender or loan request.
10.4 SETTLEMENT OPTIONS AVAILABLE
The settlement options in Section 8 are available for any surrender proceeds.
- -------------------------------------------------------------------------------
SECTION 11. POLICY LOANS
- -------------------------------------------------------------------------------
11.1 APPLICATION FOR POLICY LOAN
The owner can borrow against the policy an amount up to 80% of the net cash
value. The written consent of all assignees and irrevocable beneficiaries must
be obtained prior to the policy loan. Loan activity may affect any dividends
payable on this policy.
The loan date is the date a loan request is processed by the Company. The loan
value will be determined as of the loan date. Uncontested payment will be made
within seven days of the date the loan request is received at the home office
unless the conditions described in Section 10.3 apply.
The policy will be sole security for the policy loan.
An amount equal to the loan will be redeemed/withdrawn from the Subaccount(s)
and/or the Interest Bearing Account and transferred to the loan account until
the loan is repaid. This allocation may be specified by the policyowner. If
there is no allocation, the loan amount will be redeemed/withdrawn in the same
manner as monthly deductions.
The guaranteed minimum rate at which amounts in the loan account will be
accumulated is shown on the specifications page.
11.2 POLICY LOAN INTEREST
Interest is payable on policy loans at the policy loan rate shown on the
specifications page. Interest accrues on a daily basis from the loan date.
Interest is due and payable on each policy anniversary. Any interest not paid
when due will be added to the loan principal and charged the same rate of
interest as the loan. The addition of interest added to the loan principal will
cause additional amounts to be redeemed/withdrawn from the Subaccounts and/or
the Interest Bearing Account described in Section 11.1. If indebtedness at any
time equals or exceeds the cash value, this policy will terminate. Termination
will occur not less than 31 days after a notice has been mailed to the last
known address of the owner and any assignee on record at the home office.
11.3 LOAN REPAYMENT
While the policy is in force before the death of the insured, any indebtedness
may be repaid. Any amounts received on this policy will be considered premiums
unless they are clearly marked as loan repayments. As the loan is repaid, the
amount repaid will be transferred from the loan account to the Subaccount(s)
and/or the Interest Bearing Account in the same way as net premiums are
allocated, unless the owner directs otherwise.
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SECTION 12. CHANGE OF POLICY
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12.1 EXCHANGE OF POLICY
This policy may be exchanged for a policy of permanent fixed benefit insurance
on the life of the insured or for any other policy with the Company may agree to
issue. In this section, -fixed benefit insurance. means any permanent plan of
insurance providing benefits which do not depend on the investment experience of
a Separate Account. This exchange may be made within 24 months after the issue
date. No evidence of insurability is required. All indebtedness must be repaid
before the exchange is made.
The exchange will be effective when the Company receives:
A. Written request for the policy change,
B. Surrender of this policy, and
C. Payment of any required costs.
The new policy will have the same issue date and issue age as this policy. It
will have the same risk classification. The new policy will have either the same
death benefit or the same net amount at risk as this policy on the exchange
date. The exchange will be subject to an equitable adjustment in payments and
cash values to reflect differences, if any, between this policy and the new
policy.
It will also be subject to normal underwriting rules and other conditions
determined by the Company.
12.2 PAID-UP INSURANCE
This policy may be exchanged, in whole or in part, for a paid-up whole life
policy at any time prior to attained age 86, if the following conditions are
met:
A. The owner makes a written request for this policy change,
B. The policy is one the Company is then issuing for the insured's age and
premium class,
C. The policy is subject to the Company's normal underwriting rules,
D. There is compliance with any other conditions determined by the Company,
and
E. Any indebtedness not repaid at the time of the change will be continued as
a loan against the paid-up policy.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY --
MATURING AT AGE 95
Flexible premiums payable during the lifetime of the insured until the maturity
date. Death benefit payable at death prior to maturity date. Adjustable death
benefit. Cash value payable on maturity date. Participating. Some benefits
reflect investment results.
The amount of death benefit will increase or decrease depending on the
investment experience of the Subaccounts selected, if any, and on the death
benefit option selected as described in Section 7.
Cash values will increase or decrease in accordance with the provisions of
Section 9 and the investment experience of the Subaccounts selected, if any.
Cash values are not guaranteed as to dollar amount held in the Subaccounts.
Century Life of America
2000 Heritage Way, Waverly, Iowa 50677
Telephone: (319) 352-4090
<PAGE>
Form 1668
ACCELERATED BENEFIT OPTION ENDORSEMENT
This endorsement is a part of the policy to which it is attached. All
definitions, provisions and exceptions of the policy apply to this endorsement,
unless changed by this endorsement. This endorsement applies to Your basic
policy and any attached life insurance riders. If We pay You an accelerated
benefit, the applicable cash values, loan values and death benefit will be
reduced.
BENEFIT PAYMENTS UNDER THIS ENDORSEMENT MAY BE TAXABLE. CONSULT YOUR TAX
ADVISOR.
DEFINITIONS
"INSURED" means the person who is covered for benefits under the policy or any
life insurance riders to which this endorsement is attached.
"DOCTOR" means a physician having the designation Doctor of Medicine (M.D.),
excluding You, the Insured, or a member of Your family or the Insured's family.
"HOME OFFICE" means Century Life of America, 2000 Heritage Way, Waverly, Iowa,
50677.
"TERMINAL ILLNESS" means a non-correctable medical condition in which the
Insured's life expectancy is no more than twelve (12) months, as certified in
writing by a Doctor.
"WE, OUR, US" means Century Life of America.
"YOU, YOUR" means the owner of this policy.
BENEFIT
If You so elect, We will pay a portion of the eligible death proceeds to You if
the Insured has a Terminal Illness, according to the provisions of this
endorsement.
Eligible death proceeds refers to:
1. The amount of insurance payable upon the death of the Insured; or
2. The amount of insurance payable one (1) year from the date We receive a
written request to exercise this option, if less; or 3. The amount of insurance,
not including the accumulated value, for a Flexible Premium Adjustable Life
Insurance Policy or
Flexible Premium Variable Life Insurance Policy; and
4. Includes any paid up additions, other than one year term additions.
In order to be considered eligible:
1. The coverage must be in force other than as extended term insurance.
2. The coverage must have more than two years until its maturity or expiration
date, from the date written notification is received at the Home Office of
Your request to exercise this benefit option.
ACCELERATED BENEFIT AMOUNT
The Acceleration Amount is the portion of the eligible death proceeds which You
elect to apply under this option. The total Acceleration Amount on all Century
Life of America policies must be at least $5,000 and may not exceed the lesser
of:
1. 50% of the eligible death proceeds on the life of the Insured; or
2. $250,000.
This benefit option may be exercised no more than two times.
PAYABLE PROCEEDS
The term Payable Proceeds means the amount paid if You elect to exercise this
benefit option. We will discount (reduce) the Acceleration Amount assuming an
interest rate equal to the lesser of: 8%, or the applicable federal interest
rate determined under Section 846(c)(2) of the Internal Revenue Service Code. In
calculating the Payable Proceeds, We will also consider (if they apply):
1. The total of any outstanding policy loans plus loan interest on all such
policy loans; 2. Expected future premiums or costs of insurance; 3. Expected
future dividends; and 4. An administrative fee of $300.
The Payable Proceeds will be paid either as a lump sum, or in equal monthly
payments for a fixed period. The minimum monthly payment is $500 and the maximum
fixed period is twelve months.
If the Insured dies before all monthly payments have been made, We will pay the
present value of the remaining payments to the beneficiary. The present value of
the remaining payments will be calculated using the same interest rate as that
used to determine the monthly payments.
CONDITIONS OF PAYMENT
Payment of this benefit is subject to the following conditions:
1. You must provide proof, satisfactory to Us, that the Insured has a Terminal
Illness. Satisfactory proof will include a written statement from a Doctor,
which must be received at the Home Office.
2. We have the right to require, at Our expense, that the Insured be examined
by a Doctor of Our choosing in order to verify the diagnosis and prognosis.
3. Any assignee, irrevocable beneficiary or other party with ownership rights
must consent to payment of this benefit.
GENERAL
The effective date of this endorsement is the same as that of the policy, to
which it is attached.
This endorsement allows for the accelerated payment of death benefit proceeds,
which would otherwise be payable to Your beneficiary. This is not meant to cause
You to involuntarily be required to access and exhaust these benefits. You may
not access this benefit if:
1. You are required by law to use this benefit to meet the claims of
creditors, whether in bankruptcy or otherwise; or
2. You are required by a government agency to use this benefit in order to
apply for, obtain, or otherwise keep a government benefit or entitlement.
EFFECT ON POLICY
After this option is exercised, the applicable policy values and amounts of
insurance will be reduced by the Acceleration Percentage. The Acceleration
Percentage is equal to the Acceleration Amount divided by the Eligible Death
Proceeds. The new premiums or cost of insurance on the remaining coverage will
be those which would have applied if originally issued at the reduced amount.
Any insurance not included in the calculation of the Payable Proceeds will not
be affected. We will send You information showing the new premium or cost of
insurance, policy values and amount of insurance.
TERMINATION
This endorsement will terminate on the earliest of:
1. The date any premium on this policy remains in default at the end of the
grace period; or
2. The date this policy terminates or matures; or
3. The date We receive Your written notification at the Home Office to
terminate this endorsement; or
4. The Insured's death.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 3601
ACCIDENTAL DEATH BENEFIT RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to pay the Accidental Death Benefit described in
Section 2.1 of this rider. Payments will be made when the conditions listed
below are satisfied.
A. Death must result, directly and independently of all other causes, from
accidental bodily injury,
B. Death must occur within 90 days of the injury,
C. Both injury and death must occur:
1. On or after the date the insured attains the age of four weeks, 2.
Before the policy anniversary on or next following the insured's 70th
birthday, 3. While the policy and this rider are in force.
D. The Home Office must receive proof of the insured's death on a form
satisfactory to it.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise.
This rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the persons making them.
1.3 INCONTESTABILITY
This rider is incontestable after it has been in force from the later of two
years from this rider's issue date or two years from the date of its last
reinstatement.
1.4 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
such premium is paid. Coverage will continue until the earliest of the
termination dates described in Section 3 of this rider. If death occurs during
the grace period of an unpaid premium, one month's premium will be deducted from
the death proceeds.
SECTION 2. BENEFITS PROVIDED AND EXCEPTIONS TO COVERAGE
2.1 BENEFITS PROVIDED
The amount of Accidental Death Benefit is shown on the specifications page. If
the insured dies before attaining the age of one year, the Accidental Death
Benefit will be one-half of the amount shown.
The Accidental Death Benefit will be paid in addition to the death proceeds of
the policy. Unless the owner directs otherwise, this Accidental Death Benefit
will be payable in the same manner as the death proceeds.
2.2 EXCEPTIONS TO COVERAGE
No Accidental Death Benefit will be paid if the insured's death results from any
of the causes listed below.
A. The insured, while sane or insane, commits suicide,
B. The insured dies of intentionally self-inflicted injuries,
C. The insured dies from injuries sustained while committing an assault or
felony,
D. The insured dies from injuries sustained while participating in a riot or
insurrection,
E. The insured dies from injuries sustained while he or she is in military
service in time of war, declared or undeclared, and while he or she is
outside the states of the United States, the District of Columbia, or the
Dominion of Canada,
F. The insured dies from injuries caused by an act of declared or undeclared
war,
G. The insured dies from injuries sustained while traveling in or descending
from any kind of aircraft if the insured: 1. Is a pilot or a member of the
crew or otherwise has duties related to the flight of the aircraft, 2. Is a
participant in flight training, 3. Is aboard the aircraft for the purpose
of descending from the aircraft while it is in flight, 4. Is aboard an
aircraft which is being used primarily for training, instruction, testing,
or experimental purposes.
SECTION 3. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The policy anniversary on or next following the insured's 70th birthday,
B. The lapse, exchange, or maturity of the policy,
C. The date the owner requests it. The request must be submitted to the Home
Office in writing. The Company may require that the policy be presented for
endorsement of the termination.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 3652
GUARANTEED INSURABILITY RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to allow the insured the right to purchase
additional insurance on his or her life. Such additional insurance will be
provided by increasing the specified amount of the policy to which this rider is
attached. In order to exercise this right, the insured must be the owner of the
policy on the date any option is exercised. Benefits, as described in this
rider, will be provided if the policy is in force.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise. All references to the policy shall refer to the policy
to which this rider is attached.
This rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in any application are assumed to be true and complete to the
best knowledge and belief of the persons making them. In the absence of fraud,
these statements will be deemed representations and not warranties.
1.3 INCONTESTABILITY
This rider is incontestable after it has been in force from the later of two
years from this rider's issue date or two years from the date of its last
reinstatement.
The incontestability provision applying to any insurance purchased through an
option provided by this rider will be effective from the later of this rider's
issue date or the date of its last reinstatement.
The contestable period after reinstatement applies only to statements made in
the application for reinstatement.
1.4 SUICIDE
No temporary death benefit (as found in Section 2.3) is provided if the insured
commits suicide within two years of this rider's issue date.
The suicide provision applying to any insurance purchased through an option
provided by this rider will be effective from the issue date of this rider.
1.5 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
such premium is paid. Coverage will continue until the earliest of the
termination dates described in Section 4 of this rider.
<PAGE>
SECTION 2. CONDITIONS OF PURCHASE
2.1 APPLICATION AT OPTION DATE
A. Option Dates
The option dates are the policy anniversaries on or next following the
insured's:
25th birthday
28th birthday
31st birthday
34th birthday
37th birthday
40th birthday
Options will be available only on those option dates which occur after this
rider is issued. No option will be available for any date prior to the issue
date of this rider.
An option will not be available on the option date if it was exercised in
advance as provided in Section 2.2.
B. Time of Application
The Home Office must receive written application for the additional insurance
either on or within 60 days prior to the option date. The additional insurance
will become effective on the option date.
If the right to purchase the additional insurance is not exercised on or prior
to an option date, that option will expire. The expiration of any one option
will have no effect on any future options.
2.2 ADVANCE PURCHASE OPTION
The right to purchase additional insurance at the next option date may be
exercised in advance if:
A. The insured marries, or
B. The insured becomes a parent by birth of a live-born child or by completion
of the legal adoption of a minor.
The Home Office must receive a written application for the additional insurance
while the insured is living and prior to the third monthly day following the
marriage, birth, or adoption. The application must include proof on a form
satisfactory to the Company of the marriage, birth, or adoption. The effective
date of the additional insurance will be the third monthly day following the
marriage, birth, or adoption.
If the insured exercises an option in advance, it will not be available on the
option date.
The advance purchase option expires if it is not exercised prior to the third
monthly day following the marriage, birth or adoption. The expiration does not
affect any future advance purchase privilege or any future option.
2.3 TEMPORARY DEATH BENEFIT
If the insured dies during a period when he or she could have exercised an
option, a death benefit will be provided as if the option had been exercised.
The death benefit will be the maximum amount of additional insurance which could
have been purchased under that option.
The death benefit will be paid to the named beneficiary of the policy. Payment
will be made in the same manner as the policy death proceeds.
SECTION 3. BENEFITS PROVIDED
3.1 AMOUNT OF ADDITIONAL INSURANCE
The maximum amount of additional insurance which may be purchased at each option
date is shown on the specifications page.
3.2 COST OF ADDITIONAL INSURANCE
The additional insurance will increase the monthly deduction in the policy. The
calculation of the monthly deduction is described in the policy.
The additional insurance will be for the same risk classification under which
the policy was issued.
3.3 ACCIDENTAL DEATH RIDER
This rider does not provide the right to increase the amount of insurance
provided by any accidental death benefit rider which may be attached to the
policy. There shall be no accidental death rider benefit under the temporary
death benefit in Section 2.3.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The policy anniversary on or next following the insured's 40th birthday,
The lapse, exchange, or maturity of the policy,
B. The date the owner requests it. The Company may require that the policy be
presented for endorsement of the termination.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 3955
WAIVER OF MONTHLY DEDUCTION DISABILITY BENEFIT RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to provide the benefits described below. Benefits
are provided if:
A. The policy to which this rider is attached is in force,
B. The insured is totally disabled as defined in Section 2,
C. All other terms and conditions of this rider are met.
1.2 BENEFITS PROVIDED
The Company will waive the monthly deductions due during the insured's total
disability. This waiver will commence on the date determined in Section 3.3 and
end on the date determined in Section 3.4. No monthly deduction will be waived
until the Company has received satisfactory proof of disability. The amount of
any monthly deduction charged to the policy cash value following the date
determined in Section 3.3 and prior to the date that satisfactory proof is
received by the Company will be credited to the policy cash value when such
proof is received.
1.3 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise.
The rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the persons making them. In the absence of fraud,
these statements will be deemed representations and not warranties.
1.4 INCONTESTABILITY
This rider is incontestable after it has been in force from the later of two
years from this rider's issue date or two years from the date of its last
reinstatement. In figuring the two-year contestable period, any period during
which the insured is disabled is excluded.
The contestable period after reinstatement applies only to statements made in
the application for reinstatement.
1.5 PREMIUM PAYMENT
The premium for this rider will be determined on each monthly day by multiplying
the monthly deduction as described in the policy by the disability waiver
premium factor. The disability waiver premium factor used will depend on the
attained age of the insured. The disability waiver premium factors for all ages
are shown on the specifications page.
If total disability begins during a grace period, monthly deductions will be
waived only after the premium due has been paid.
SECTION 2. DISABILITIES DEFINED AND LIMITATIONS TO WAIVER
2.1 DISABILITIES COVERED
A. Disability and Occupation
Total disability means disability which:
1. Is due to sickness or injury,
2. Has existed continuously for at least six months, Prevents the insured
from engaging in an occupation.
3. During the first 24 months of disability, the insured must be unable to
perform any of the material duties of his or her regular occupation.
After 24 months, the insured is totally disabled only if he or she is
unable to engage in any occupation for which he or she is reasonably
suited by education, training or experience.
If the insured is primarily a student, total disability means complete inability
to attend school outside the home. If the insured is a full-time homemaker,
total disability means complete inability to perform household duties.
B. Presumed Total Disability
The total loss, neither recoverable nor correctable, of any of the
following during the time this rider is in force shall be considered total
disability, even if the owner shall engage in an occupation.
Sight of both eyes
Use of both hands
Use of both feet
Use of one hand and one foot
2.2 LIMITATIONS TO WAIVER
No monthly deductions are waived if:
A. The insured dies before the Home Office receives proof of total disability,
B. The total disability results from intentionally self-inflicted injury,
C. The total disability results from an act of or incident to declared or
undeclared war, provided the act occurs:
1. Within five years from this rider's issue date,
2. While the insured is outside the states of the United States, the
District of Columbia, or the Dominion of Canada.
SECTION 3. WAIVER
3.1 NOTICE OF CLAIM
Written notice of a claim must be given to the Home Office:
A. While the insured is living,
B. While total disability continues,
C. Within one year after this rider terminates.
Failure to give notice will not invalidate or diminish any claim if notice is
given as soon as reasonably possible.
3.2 PROOF OF TOTAL DISABILITY
A. Initial Proof
The Company must be given written proof of total disability at its Home
Office. Proof must be given within six months after written notice of claim
is given. Failure to give such proof within six months will not invalidate
or diminish any claim if proof is given as soon as it is reasonably
possible.
B. Proof of Continuance of Total Disability
The Company may require proof that total disability continues. This proof
may be required at any time during the first two years. After two years,
proof may be required no more than once a year.
C. Physician Examination
As part of proof under A or B, the Company may require that the insured be
examined by a physician the Company selects. The Company will pay for any
examination performed at its request.
3.3 WAIVER OF MONTHLY DEDUCTIONS
When the Company receives satisfactory proof of the insured's disability, it
will waive monthly deductions and pay the extra disability benefit from the
later of:
A. The date total disability began,
B. The date one year before the Home Office received notice of claim,
C. The date one year before the Home Office received proof of disability if
proof is received more than six months after notice of claim.
3.4 RESUMPTION OF MONTHLY DEDUCTIONS
A. Monthly deductions for the policy will again be made starting with the
policy month following the earliest of:
B. The date the insured's total disability ends,
C. The date the insured fails to give required proof that the total
disability continues,
D. The date the insured fails to be examined medically when required,
E. The policy anniversary on or next following the insured's 65th birthday
unless:
1. The insured is totally disabled on the age 65 policy anniversary,
and
2. The insured has been continuously disabled for the five years
preceding the age 65 policy anniversary.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The policy anniversary on or next following the insured's 65th birthday,
B. The lapse, exchange or maturity of the policy,
C. The date the owner requests it. The request must be submitted to the Home
Office in writing. The Company may require that the policy be presented
for endorsement of the termination.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 3956
TERM INSURANCE RIDER FOR OTHER INSUREDS
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to provide the benefits shown in Section 3 of
this rider. Benefits are provided if the policy and this rider are in force and
all other terms and conditions of this rider are met.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. Although only a
single copy of this rider is included with this policy, the benefits, terms, and
conditions described herein can apply to more than one person. Terms such as
age, sex, issue date, application, and insurance amount should be interpreted as
they apply to each Other Insured individually. The issue date of this rider is
the same as that of the policy unless the application for this rider provides
otherwise. All references to the policy refer to the policy to which this rider
is attached.
This rider also includes the applications for this rider, copies of which are
attached. The Company relied on the applications in issuing this rider. All
statements made in any application for this rider are assumed to be true and
complete to the best knowledge and belief of the persons making them. The
Company agrees to accept all statements made in the applications as
representations and not warranties.
1.3 INCONTESTABILITY
A. Incontestability of Rider
This rider is incontestable after it has been in force for two years from
its date of issue. After this two-year period, the Company cannot deny
coverage as long as this rider is not terminated.
If this rider is reinstated, it is incontestable after it has been in force
for two years from the date of reinstatement. This two-year contestable
period applies only to statements made in the Application for
Reinstatement.
B. Incontestability of an Other Insured's Coverage Provided by this Rider
The insurance coverage provided by this rider on any Other Insured is
incontestable after it has been in force for two years during that Other
Insured's lifetime. After this two-year period, the Company cannot deny
coverage as long as this rider is not terminated.
While any Other Insured's coverage is contestable, the Company may rescind
coverage or defend a claim only on the basis of a material
misrepresentation in that Other Insured's application. A misrepresentation
is material if, on the basis of correct and complete information in the
application, the Company would have:
1. Declined the application,
2. Issued the insurance coverage at a higher cost of insurance, or
3. Issued the insurance coverage on some other basis.
If coverage on an Other Insured is rescinded, the Company will refund the
monthly deductions for this rider for that Other Insured.
1.4 MISSTATEMENT OF AGE OR SEX
If the age or sex of any other insured has been misstated, the amount payable
and other benefits will be adjusted. The amount payable and benefits will be
what the most recent monthly deduction for this rider for Other Insureds would
have purchased at the correct age and sex.
1.5 SUICIDE
Suicide of any Other Insured while sane or insane within two years from the
issue date is not covered by this rider. If any Other Insured does commit
suicide within two years of the issue date of this rider, the Company will
refund a portion of the premiums paid. The amount refunded will be the monthly
deductions charged for this rider.
1.6 DEFINITIONS
A. Primary Insured
The Primary Insured is the person whose life is insured under the policy.
The Primary Insured is named on the specifications page of the policy.
B. Other Insured
An Other Insured is any person whose life is insured under this rider.
Other Insureds are listed on the specifications page.
C. Insurance Amount
The amount payable if an Other Insured dies while this rider is in force.
The insurance amount for each Other Insured is shown on the specifications
page following the name of each Other Insured.
D. Owner
While the Primary Insured is living, the owner of the policy is the owner
of this rider.
E. Beneficiary
The beneficiary of any proceeds payable under this rider will be the owner
unless the owner provides otherwise while the primary insured is living.
SECTION 2. PREMIUMS
2.1 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
such premium is paid. Coverage will continue until the earliest of the
termination dates described in Section 4 of this rider.
The premium for this rider will be calculated on each monthly day by adding the
cost of insurance for all Other Insureds. The cost of insurance for each Other
Insured is determined by multiplying the insurance amount by the cost of
insurance rate for that Other Insured.
The Company will determine the cost of insurance rate for each Other Insured
based on that Other Insured's attained age, sex, and rating class. Cost of
insurance rates may be changed by the Company, based on the Company's
expectations as to future mortality experience. However, the cost of insurance
rate will not exceed the rates shown on the specifications page for each Other
Insured (Guaranteed Maximum Other Insured Cost of Insurance Rates).
If death of any person insured by this rider occurs during the grace period, the
unpaid monthly deductions for the policy and all attached riders will be
deducted from the death benefit.
2.2 REINSTATEMENT
If this rider has lapsed, the owner may ask to have it reinstated. It will be
reinstated if four conditions are met:
A. The owner requests the Company to reinstate the rider within five years
after the date to which rider premiums are paid,
B. The request is in writing,
C. If the policy is not in force, it must be reinstated along with this rider,
D. If satisfactory evidence is not given as to any person, that person will be
excluded by endorsement from coverage.
The Company will not provide any benefits for the death of any person previously
insured under this rider if the death occurred after the end of the grace period
and prior to the date of reinstatement.
Evidence of insurability satisfactory to the Company must be provided for each
person to be insured.
SECTION 3. BENEFITS PROVIDED
3.1 DEATH BENEFIT PROVIDED
This rider provides monthly renewable term life insurance on the life of each
Other Insured. When the Company receives due proof satisfactory to it that an
Other Insured died while this rider was in force, it will pay the insurance
amount. The insurance amount for each Other Insured is shown on the
specifications page.
3.2 CHANGES IN INSURANCE AMOUNT
The insurance amount for any Other Insured may be changed at any time after the
first policy year. Changes must be requested in writing by the owner and are
subject to the conditions below:
A. Decreases
After the decrease, the insurance amount must be at least $10,000. The decrease
will become effective on the monthly day following or coincident with the day
the request is received in the Home Office. The decrease will be applied to the
initial insurance amount and to increases in the insurance amount in reverse
order in which they became effective.
B. Increases
A supplemental application must be filed, and evidence of insurability
satisfactory to the Company must be provided. The effective date of the increase
will be shown on an endorsement to the policy.
3.3 CONVERSION PRIVILEGE
Any Other Insured may convert the insurance provided by this rider on his or her
life to another plan of insurance issued by the Company. Such conversion will be
made without evidence of insurability and is subject to all the following
conditions:
A. The Home Office must receive written application either:
1. With the owner's consent while this rider is in force, prior to the
Other Insured's 75th birthday, or
2. Within 60 days following the termination of this rider due to the
death of the Primary Insured.
B. The amount of insurance on the new policy may not be more than the
insurance amount provided by this rider for that Other Insured,
C. The new policy must be any permanent plan of insurance then issued by the
Company,
D. The premium for the new insurance will be based on:
1. The age and sex of the Other Insured on the date of conversion,
2. The risk classification to which the Other Insured was initially
assigned and the risk classifications at the time of any increase in
insurance amount.
3.4 EXTENDED COVERAGE
If an Other Insured dies during the 60-day conversion period which commences
upon the death of the Primary Insured, but prior to the exercise of any
conversion privilege, the Company will pay the insurance amount for that Other
Insured.
SECTION 4. TERMINATION
A. Termination of Coverage
1. The insurance provided by this rider for each Other Insured will
terminate on the earliest of:
2. The date each Other Insured reaches age 95,
3. The date the owner requests termination of coverage for an Other
Insured, The date the rider terminates,
4. The date that Other Insured exercises the conversion privilege in
Section 3.3.
B. Termination of Rider
This rider will terminate on the earliest of:
1. The termination of the policy,
2. The expiration of the grace period following the due date of a rider
premium in default,
3. The date the owner makes a written request for termination.
SECTION 5. RIDER SPECIFICATIONS
(see attached sheet)
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 3957 1085
Automatic Increase Rider
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to allow the insured-owner the right to purchase
additional insurance on his or her life without evidence of insurability. Such
additional insurance will be provided by automatically increasing the specified
amount of the policy to which this rider is attached. Benefits, as described in
this rider, will be provided if the policy and the rider are in force.
1.2 THE ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is shown on the specifications page of the policy. All references to
the policy shall refer to the policy to which this rider is attached.
The rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the person making them. The Company agrees to
accept all statements made in the application as representations and not
warranties.
1.3 INCONTESTABILITY
This rider and any increases provided by this rider are incontestable after the
rider has been in force for two years following this rider's issue date or the
date of its last reinstatement, if later.
The contestable period after reinstatement applies only to statements made in
the application for reinstatement.
1.4 SUICIDE
The suicide provision of the policy applies to any insurance purchased through
an increase in the specified amount provided by this rider. The suicide
provision will be effective from the issue date of this rider.
1.5 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
such premium is paid. Coverage will continue until the earliest of the
termination dates described in Section 4 of this rider.
SECTION 2. CONDITIONS OF INCREASE
2.1 TIME OF INCREASE
The increase in the specified amount will be made on each policy anniversary. An
endorsement to the specifications page will be sent to the owner for each
increase. Increases will continue until the rider terminates.
2.2 DISABILITY OF INSURED
The increases will occur even if the insured is totally disabled on the policy
anniversary. The cost of insurance for these increases will be waived if the
policy includes the Waiver of Monthly Deduction Rider and the monthly deductions
are currently being waived.
2.3 REJECTION OF INCREASE
The owner may reject all or part of any increase by notifying the Company and
returning the endorsement for the increase within 30 days following the
effective date of the increase. The rider will terminate on the first such
rejection of all or part of any increase in the specified amount.
SECTION 3. BENEFITS PROVIDED
3.1 AMOUNT OF ADDITIONAL INSURANCE
The amount of increase for each policy anniversary is shown on the
specifications page.
3.2 COST OF ADDITIONAL INSURANCE
The additional insurance will increase the monthly deduction in the policy. The
amount of the monthly deduction will be determined according to the Cost of
Insurance provision of the policy.
The additional insurance will be for the same risk classification under which
the policy was issued.
3.3 NO RIDER INCREASES
This rider does not provide the right to increase the amount of insurance
provided by any rider which may be attached to the policy.
3.4 NO ADDITIONAL DEFERRED CHARGES
No deferred administrative or sales charges will be added to the policy as a
result of any increase provided by this rider.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The rider maturity date shown on the specifications page,
B. The date the owner rejects all or part of any increase,
C. The date the owner requests a reduction in the specified amount of the
policy,
D. The lapse, exchange or maturity of the policy,
E. The date the owner requests it. The Company may require that the policy be
presented for endorsement of the termination.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 6005
CHILDREN'S INSURANCE RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to provide the benefits shown in Section 3 of
this rider. Benefits are provided if the policy and this rider are in force and
all other terms and conditions of this rider are met.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise. All references to the policy refer to the policy to
which this rider is attached.
This rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the persons making them.
1.3 INCONTESTABILITY
This rider is incontestable after it has been in force for two years from its
date of issue. However, it shall not be incontestable as to any person who dies
within this two-year period.
If this rider is reinstated, it is incontestable after it has been in force for
two years from the date of reinstatement. This two-year contestable period
applies only to statements made in the Application for Reinstatement. However,
it shall not be incontestable as to any person who dies within this two-year
period.
1.4 MISSTATEMENT OF AGE OR SEX
If the age or sex of the insured has been misstated, the amount payable and
other benefits will be adjusted. The amount payable and benefits will be what
the premiums paid would have purchased at the correct age and sex.
1.5 SUICIDE
Suicide of the insured or any insured child, while sane or insane, within two
years from the date of issue is not covered by this rider.
If the insured commits suicide within two years from the date of issue, the
rider will terminate as of the suicide date, and all premiums paid for this
rider will be returned. When the rider terminates, conversion privileges
normally available on the conversion date will be extended to all persons
insured by this rider other than the person who died by suicide.
<PAGE>
1.6 DEFINITIONS
A. Insured
The insured is the person whose life is insured under the policy. The
insured is named on the specifications page of the policy.
B. Insured Child
An insured child is a child, stepchild, or legally adopted child of the
insured as described below.
Any child or stepchild born or legally adopted on or before the date of
application must be named in the application. He or she must also be living
and under 18 years of age on the date of application.
A child born alive to the insured after the date of application is insured.
A child adopted by the insured after the date of application is insured if
the adoption occurs prior to the child's 18th birthday.
C. Owner
While the insured is living, the owner of the policy is the owner of this
rider.
D. Beneficiary
The beneficiary of any proceeds payable under this rider will be the owner
unless the owner provides otherwise while the insured is living.
SECTION 2. PREMIUM PAYMENT AND REINSTATEMENT
2.1 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
such premium is paid. Coverage will continue until the earliest of the
termination dates described in Section 5 of this rider.
If death of any person insured by this rider occurs during the grace period of
an unpaid premium, one month's premium will be deducted from the death benefit.
2.2 REINSTATEMENT
If this rider has lapsed, the owner may ask to have it reinstated. It will be
reinstated if four conditions are met:
A. The owner requests the Company to reinstate the rider within five years after
the date to which rider premiums are paid, B. The request is in writing, C. If
the policy is not in force, it must be reinstated along with this rider, D. The
Company is given satisfactory evidence of insurability of each person to be
insured. If satisfactory evidence is not iven as to any person, that person will
be excluded by endorsement from coverage.
The Company will not provide any benefits for the death of any person previously
insured under this rider if the death occurred after the end of the grace period
and prior to the effective date of reinstatement of the policy.
SECTION 3. BENEFITS PROVIDED
3.1 INSURED CHILD'S DEATH BENEFIT
The Company will pay the insured child's death benefit when it receives due
proof satisfactory to it of the insured child's death. The insured child's death
must occur before the policy anniversary on or next following the insured
child's 23rd birthday.
The insured child's death benefits are listed below:
Live birth to $250 per unit of
age 15 days (360 hours).................... children's insurance
Age 15 days $500 per unit of
age 6 months............................... children's insurance
Age 6 months to the policy
anniversary on or next
following the insured child's $1,000 per unit of
23rd birthday...............................children's insurance
The number of units of children's insurance is shown on the specifications page.
3.2 PAID-UP BENEFIT (DEATH OF INSURED)
If the insured dies, this rider terminates, and no further premium payments will
be required for this rider. Paid-up term insurance will be issued on the
following basis.
Each insured child shall be issued paid-up term insurance. This insurance will
expire on the date which would have been the policy anniversary on or next
following the insured child's 23rd birthday. The amount of paid-up term
insurance shall be at all times the same as that provided in Section 3.1 of this
rider.
The fully paid-up term insurance has a cash value and may be surrendered at any
time by the owner of the term insurance. A written request for surrender must be
made to the Home Office.
The cash values at any time will equal the then present value of future benefits
provided to the insured persons. These present values are based on the 1980 CSO
Mortality Table, age last birthday, for attained ages less than 20, and the 1980
CSO Smoker and Nonsmoker Mortality Tables, age last birthday, for attained ages
20 and above, assuming:
1. Interest at 4 1/2% per year compounded annually,
2. Death benefits payable immediately upon death,
3. Ages as determined on last birthday basis.
A statement of such cash values will be furnished upon request.
Each insured child is the owner of the paid-up term insurance on his or her
life.
SECTION 4. CONVERSION PRIVILEGES
4.1 CONVERSION TO WHOLE LIFE OR ENDOWMENT POLICY
An insured child may convert the insurance on his or her life to any level
premium whole life or endowment policy then issued by the Company. The insurance
may be converted at the earlier of the conversion dates listed below:
A. The expiry date of this rider,
B. The policy anniversary on or next following the insured child's 23rd
birthday.
The amount of new insurance issued will be $5,000 per unit of children's
insurance.
4.2 RELATED PROVISIONS
A. This rider must be in force with premiums paid to the conversion date.
B. The Home Office must receive written application during the insured's
lifetime and within a period beginning 90 days before and ending 31 days
after the conversion date.
C. The premium for the new insurance issued will be based on:
1. The age and sex of the insured child on the date of conversion,
2. The risk classification to which the insured child was assigned when
the rider was issued.
D. Coverage under this rider will not extend beyond the termination date.
Coverage of the insured child under this rider will not extend beyond the
policy anniversary on or next following the insured child's 23rd birthday.
SECTION 5. TERMINATION OF RIDER
A. This rider will terminate on the earliest of: The lapse, exchange or
maturity of the policy,
B. The expiration of the grace period following the due date of a rider
premium in default,
C. The date the owner makes a written request for termination,
D. The expiry date of this rider. The expiry date is the rider anniversary on
or next following the insured's 65th birthday,
E. The death of the insured.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 6012
JUVENILE INSURABILITY RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to allow the owner the right to purchase
additional insurance on the insured's life without evidence of insurability.
Such additional insurance will be provided by automatically increasing the
specified amount of the policy to which this rider is attached. Benefits, as
described in this rider, will be provided if the policy and the rider are in
force.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise. All references to the policy shall refer to the policy
to which this rider is attached.
This rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in any application are assumed to be true and complete to the
best knowledge and belief of the persons making them. In the absence of fraud,
these statements will be deemed representations and not warranties.
1.3 INCONTESTABILITY
This rider is incontestable after it has been in force from the later of two
years from this rider's issue date or two years from the date of its last
reinstatement.
The incontestability provision applying to any insurance purchased through an
increase in specified amount provided by this rider will be effective from the
later of this rider's issue date or the date of its last reinstatement.
The contestable period after reinstatement applies only to statements made in
the Reinstatement Application.
1.4 SUICIDE
No temporary death benefit (as found in Section 2.5) is provided if the insured
commits suicide within two years of this rider's issue date.
The suicide provision of the policy applies to any insurance purchased through
an increase in the specified amount provided by this rider. The suicide
provision will be effective from the issue date of this rider.
1.5 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
such premium is paid. Coverage will continue until the earliest of the
termination dates described in Section 4 of this rider.
SECTION 2. CONDITIONS OF PURCHASE
2.1 INCREASE DATES
The increases in specified amount will be made on each policy anniversary on or
next following the insured's:
15th birthday
18th birthday
21st birthday
24th birthday
27th birthday
30th birthday
An endorsement to the specifications page will be sent to the owner for each
increase. Increases will continue until the rider terminates.
Increases will be made only on those increase dates which occur after this rider
is issued. No increases will be made for any date prior to the issue date of
this rider.
An increase will not be made on the increase date if it was exercised in advance
as provided in Section 2.2.
2.2 ADVANCE PURCHASE OPTION
The right to purchase additional insurance at the next increase date may be
exercised in advance if:
A. The insured marries, or
B. The insured becomes a parent by birth of a live-born child or by completion
of the legal adoption of a minor.
The Home Office must receive a written application for the additional insurance
while the insured is living and prior to the third monthly day following the
marriage, birth, or adoption. The application must include due proof of the
insured's marriage, birth, or adoption. The effective date of the additional
insurance will be the third monthly day following the marriage, birth, or
adoption.
If the insured exercises an increase in advance, it will not be available on the
increase date.
The advance purchase option expires if it is not exercised prior to the third
monthly day following the marriage, birth or adoption. The expiration does not
affect any future advance purchase privilege or any future increase date.
2.3 DISABILITY OF INSURED
The increases will occur even if the insured is totally disabled on the policy
anniversary. The cost of insurance for these increases will be waived if the
policy includes the Waiver of Monthly Deduction Rider and the monthly deductions
are currently being waived.
2.4 REJECTION OF INCREASE
The owner may reject all or part of any increase by notifying the Company and
returning the endorsement for the increase within 30 days following the
effective date of the increase.
2.5 TEMPORARY DEATH BENEFIT
If the insured dies during a period when he or she could have exercised an
advanced purchase option, a death benefit will be provided as if the option had
been exercised. The death benefit will be the maximum amount of additional
insurance which could have been purchased under that option.
The death benefit will be paid to the named beneficiary of the policy. Payment
will be made in the same manner as the policy death proceeds.
SECTION 3. BENEFITS PROVIDED
3.1 AMOUNT OF ADDITIONAL INSURANCE
The amount of increase for each increase date is shown on the specifications
page.
3.2 COST OF ADDITIONAL INSURANCE
The additional insurance will increase the monthly deduction in the policy. The
amount of the new monthly deduction will be determined according to the Cost of
Insurance provision of the policy.
The additional insurance will be for the same risk classification under which
the policy was issued.
3.3 ACCIDENTAL DEATH BENEFIT RIDER
This rider does not provide the right to increase the amount of insurance
provided by any accidental death benefit rider which may be attached to the
policy. There shall be no accidental death rider benefit under the temporary
death benefit in Section 2.5.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The policy anniversary on or next following the insured's 30th birthday,
B. The lapse, exchange, or maturity of the policy,
C. The date the owner requests it.
The Company may require that the policy be presented for endorsement of the
termination.
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 6017
TERM INSURANCE RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to pay the insurance amount of this rider. The
insurance amount is paid if the policy and this rider are in force and the
insured dies and all other terms and conditions of this rider are met. The
Company also agrees to provide the other benefits and privileges described in
this rider.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise. The issue date for this rider is shown on the
specifications pages for this rider. All references to the policy shall refer to
the policy to which this rider is attached. The definitions used in this rider
are the same definitions stated in the policy.
This rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the persons making them.
1.3 INCONTESTABILITY
This rider is incontestable as to statements made in the application after it
has been in force during the insured's lifetime for two years from its date of
issue. After this two-year period, the Company cannot deny coverage as long as
this rider is not terminated.
If there is an increase in the insurance amount, the amount of the increase
becomes incontestable as to statements made in the Application for Change after
the increase has been in force during the insured's lifetime for two years from
the date of the increase.
If this rider is reinstated, it is incontestable as to statements made in the
Reinstatement Application after it has been in force during the insured's
lifetime for two years from the date of reinstatement.
1.4 MISSTATEMENT OF AGE OR SEX
If the age or sex of the insured has been misstated, the amount payable and
other benefits will be adjusted. The amount payable and benefits will be what
the most recent premium paid for this rider would have purchased at the correct
age and sex.
1.5 SUICIDE
Suicide of the insured, while sane or insane, within two years of this rider's
issue date or its reinstatement date, is not covered by this rider. If the
insured does commit suicide, the premiums paid for this rider will be returned.
If the insured commits suicide within two years of the date of an increase in
the insurance amount, the only amount payable with respect to the increase will
be a return of the premium paid for the increase.
1.6 DIVIDENDS
While this rider is in force, it will share in the divisible surplus of the
Company. The rider's share is determined annually by the Company. Any such
dividend will be combined with and applied in the manner selected for the
dividend of the policy. It is anticipated that no dividends will be payable on
this rider.
SECTION 2. PREMIUMS
2.1 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
premium is paid. Coverage will continue until the earliest of the termination
dates described in Section 4.
The premium for this rider will be calculated on each monthly day. The premium
is determined by multiplying the insurance amount by the cost of insurance rate.
The Company will determine the cost of insurance rate based on the insured's
attained age, sex and rating class. Cost of insurance rates may be changed by
the Company based on the Company's expectations as to future mortality
experience. However, the cost of insurance rate will not exceed the rates shown
on the specifications page (Guaranteed Maximum Cost of Insurance Rates).
2.2 REINSTATEMENT
If this rider has lapsed, the owner may ask to have it reinstated. It will be
reinstated if three conditions are met:
A. The owner must request the Company to reinstate the rider within five years
after which rider premiums were paid,
B. The request must be in writing, and
C. If the policy is not in force, it must be reinstated along with this rider.
The Company will not provide any benefits for the insured under this rider if
the death occurred after the end of the grace period and prior to the date of
reinstatement.
SECTION 3. INSURANCE AMOUNT PROVIDED
3.1 INSURANCE AMOUNT
When the Company receives due proof of the insured's death, it will pay the
insurance amount of this rider according to the provisions of the policy.
3.2 CHANGES IN INSURANCE AMOUNT
The insurance amount may be changed at any time after the first policy year.
Changes must be requested in writing by the owner and are subject to the
following conditions:
A. Decreases
After the decrease, the insurance amount must be at least $100,000. The
decrease will become effective on the monthly day following or coincident
with the day the request is received in the home office. The decrease will
be applied to the initial insurance amount and to increases in the
insurance amount in reverse order in which they became effective.
B. Increases
A supplemental application must be filed and evidence of insurability
satisfactory to the Company must be provided. The effective date of the
increase will be shown on an endorsement to the policy.
3.3 CONVERSION PRIVILEGE
If this rider is in force, it may be converted as a whole or in part, to any
permanent plan of insurance then issued by the Company. If, in the event of a
partial conversion, the remaining rider insurance amount drops below $100,000,
this rider will terminate.
Conversion will be made without evidence of insurability and subject to all of
the following conditions:
A. The request must be in writing,
B. The rider must be converted on or before the rider anniversary immediately
following the insured's 75th birthday,
C. The amount of insurance on the new policy may not be more than the rider's
insurance amount,
D. The premium for the new policy will be based on:
1. The age and sex of the insured on the date of conversion, and
2. The risk classification under which the portion of the insurance
amount of this rider that is being converted was issued.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The effective date of conversion,
B. The lapse, surrender, exchange, or maturity of the policy,
C. The date the policy specified amount becomes less than $250,000 as a result
of a decrease requested by the owner, or
D. The date the owner submits a written request to the Company. The Company
may require the return of the policy for endorsement of the rider
termination.
SECTION 5. RIDER SPECIFICATIONS
(See attached sheet.)
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Form 6029 0994
WAIVER OF PREMIUM AND MONTHLY DEDUCTION
DISABILITY BENEFIT RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to provide the benefits described below. Benefits
are provided if:
A. The policy to which this rider is attached is in force;
B. The insured is totally disabled as defined in Section 2;
C. Disability begins while the policy to which this rider is attached is in
force; and
D. All other terms and conditions of this rider are met.
1.2 BENEFITS PROVIDED
During the insured's total disability the Company will:
A. Contribute the waivable premium, as shown on the specifications page, to
the policy to which this rider is attached. This benefit will begin on the
date determined in Section 3.3 and end on the date determined in Section
3.4; and
B. Waive the monthly deduction beginning on the date determined in Section 3.3
and ending on the date determined in Section 3.4.
No waiver benefits will be provided until the Company has received satisfactory
proof of disability. Upon determination by the Company that the provisions of
Section 3.2 (A) have been met, the total amount of any waiver benefit due from
the date determined in Section 3.3 will be credited to the policy.
1.3 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is shown on the rider specifications page.
The rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the persons making them. In the absence of fraud,
these statements will be deemed representations and not warranties.
1.4 INCONTESTABILITY
This rider is incontestable after it has been in force from the later of two
years from this rider's issue date or two years from the date of its last
reinstatement. In figuring the two-year contestable period, any period during
which the insured is disabled is excluded.
The contestable period after reinstatement applies only to statements made in
the application for reinstatement.
1.5 PREMIUM PAYMENT
The premium charge for this rider will be determined on each monthly day by
adding the result of A and B where:
A = The monthly waivable premium, as shown on the specifications page,
multiplied by the waiver of premium rate. B = The monthly deduction, as
described in the policy, multiplied by the waiver of deduction rate.
The waiver of deduction rate and waiver of premium rate used will depend on the
attained age of the insured. The rates for all ages are shown on the rider
specifications page.
If total disability begins during a grace period, waiver benefits will be
provided only after the premium due has been paid.
SECTION 2. DISABILITIES DEFINED AND LIMITATIONS TO WAIVER
2.1 DISABILITIES COVERED
A. Disability and Occupation. Total disability means disability which:
1. Is due to sickness or injury;
2. Has existed continuously for at least six months; and
3. Prevents the insured from engaging in an occupation. During the first
24 months of disability, the insured must be unable to perform any of
the material duties of his or her regular occupation. After 24 months,
the insured is totally disabled only if he or she is unable to engage
in any occupation for which he or she is reasonably suited by
education, training or experience.
4. If the insured is primarily a student, total disability means complete
inability to attend school outside the home. If the insured is a
full-time homemaker, total disability means complete inability to
perform household duties.
B. Presumed Total Disability. The total loss, neither recoverable nor
correctable, of any of the following during the time this rider is in force
shall be considered total disability, even if the owner shall engage in an
occupation.
Sight of both eyes
Use of both hands
Use of both feet
Use of one hand and one foot
2.2 LIMITATIONS TO WAIVER
No waiver benefits will be provided if:
A. The insured dies before the Home Office receives proof of total disability;
B. The total disability results from intentionally self-inflicted injury; or
C. The total disability results from an act of or incident to declared or
undeclared war, provided the act occurs:
1. Within five years from this rider's issue date; and
2. While the insured is outside the states of the United States, the
District of Columbia, or the Dominion of Canada.
SECTION 3. WAIVER
3.1 NOTICE OF CLAIM
Written notice of a claim must be given to the Home Office:
A. While the insured is living;
B. While total disability continues; and
C. Within one year after this rider terminates.
Failure to give notice will not invalidate or diminish any claim if notice is
given as soon as reasonably possible.
3.2 PROOF OF TOTAL DISABILITY
A. Initial Proof
The Company must be given written proof of total disability at its Home Office.
Proof must be given within six months after written notice of claim is given.
Failure to give such proof within six months will not invalidate or diminish any
claim if proof is given as soon as it is reasonably possible.
B. Proof of Continuance of Total Disability
The Company may require proof that total disability continues. This proof may be
required at any time during the first two years. After two years, proof may be
required no more than once a year.
C. Physician Examination
As part of proof under A or B, the Company may require that the insured be
examined by a physician the Company selects. The Company will pay for any
examination performed at its request.
3.3 PAYMENT OF WAIVER BENEFITS
Upon receipt of satisfactory proof of the insured's disability, the Company will
provide waiver benefits from the later of:
A. The date total disability began;
B. The date one year before the Home Office received notice of claim; or
C. The date one year before the Home Office received proof of disability if
proof is received more than six months after notice of claim.
3.4 DURATION OF BENEFIT PERIOD
The Company will contribute the waivable premium to the policy and waive the
monthly deduction until the earliest of:
A. The date the insured's total disability ends;
B. The date the insured fails to give required proof that the total disability
continues;
C. The date the insured fails to be examined medically when requested; or
D. The policy anniversary on or next following the insured's 65th birthday.
The Company will continue to waive the monthly deduction if:
A. The insured is totally disabled on the age 65 policy anniversary; and
B. The insured has been continuously disabled for the five years preceding the
age 65 policy anniversary.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The policy anniversary on or next following the insured's 65th birthday;
B. The lapse, exchange or maturity of the policy; or
C. The date the owner requests it. The request must be submitted to the Home
Office in writing. The Company may require that the policy be presented for
endorsement of the termination.
SECTION 5. RIDER SPECIFICATIONS
(see attached sheet)
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Exhibit 5(b)
Unisex Contract and Rider
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MATURING AT AGE 95
Flexible premiums payable during the lifetime of the insured until the maturity
date. Death benefit payable at death prior to maturity date. Adjustable death
benefit. Cash value payable on maturity date. Participating. Some benefits
reflect investment results.
The amount of death benefit will increase or decrease depending on the
investment experience of the Subaccounts selected, if any, and on the death
benefit option selected as described in Section 7.
Cash values will increase or decrease in accordance with the provisions of
Section 9 and the investment experience of the Subaccounts selected, if any.
Cash values are not guaranteed as to dollar amount held in the Subaccounts.
Owner: John Doe Policy Number: 03905202
Insured: John Doe Specified Amount: $50,000.00
Issue Date: May 1, 1990 Maturity Date: May 1, 2050
Century Life of America agrees to pay the policy proceeds and to provide the
other benefits described in this contract, if all its terms and conditions are
met.
Signed for Century Life of America, Waverly, Iowa on the Issue Date
/s/ Michael B. Kitchen /s/ Barbara L. Secor
President Secretary
RIGHT TO CANCEL
The owner may cancel this policy by delivering or mailing a written notice or
sending a telegram to Century Life of America, 2000 Heritage Way, Waverly, Iowa
50677, and by returning the policy within 45 days of the date of execution of
the application for insurance, within 20 days of the owner's receipt of the
issued policy, or within 20 days of the owner's receipt of the Notice of Right
of Withdrawal, whichever is later. Notice given by mail and return of the policy
by mail are effective on being postmarked, properly addressed, and postage paid.
If the policy is returned to the Company or to the Agent through whom it was
purchased, it will be considered void from the beginning, and Century Life of
America will make a refund for this policy within seven days after it receives
notice of cancellation and the returned policy.
The refund will equal the sum of:
1. The charges deducted from premiums for state taxes
2. Plus the total amount of monthly deductions and any other charges deducted
from the accumulated value,
3. Plus the accumulated value, on the date the refund is calculated, as defined
in Section 9, 4.
4. Minus any indebtedness.
If state law does not authorize the calculation above, the refund will be the
total of all premiums paid for this policy.
Countersigned by
Duly Licensed Resident Agent
INTRODUCTION
This is a flexible premium variable life insurance policy. This policy provides
that accumulated values are based on cash values held in the Separate Account
and Interest Bearing Account. Cash values held in the Separate Account are
variable. The amount of death benefit can vary, and the specified amount of
insurance may be increased or decreased by the owner.
Net premiums, as described in Section 3.2, will be allocated to the Subaccounts
of the Separate Account and/or the Interest Bearing Account. The owner may
determine where and in what percentages of the net premiums will be allocated.
These allocations are subject to the conditions described in Section 3.3.
Subaccounts and the Interest Bearing Account are identified in the application
and on the specifications page. Each Subaccount will buy shares of an underlying
mutual fund. Each underlying mutual fund is a registered management investment
company. During the time period that this policy has deferred sales and
administrative charges, a portion of the accumulated value will be held in the
deferred charges account.
The amount of the policy's cash values in the Subaccounts will not be guaranteed
and will vary with the investment performance of those Subaccounts. For more
information on cash values and values in Subaccounts, see Section 5, 6, and 9.
Both the amount of death benefit and the duration of life insurance will depend
upon premiums paid and the investment performance of the Subaccount(s) selected,
if any. Death proceeds will equal:
The face amount (under Options 1 or 2) of the policy on the date of death,
Plus any premiums received after the date of death,
Minus any policy indebtedness.
If Death Benefit Option 1 is selected, the face amount of the policy will be the
larger of:
A. The specified amount, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
If Death Benefit Option 2 is selected, the face amount of the policy will be the
larger of:
A. The specified amount plus the accumulated value on the date of death, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
Death benefit ratios for various ages are shown in Section 7.2.
POLICY STATEMENT
This Contract is a legal contract between the contract owner and Century Life of
America.
READ YOUR CONTRACT CAREFULLY. This page is part of the insurance contract. The
contract sets forth, in detail, the rights and obligations of both the owner and
the insurance company. IT IS THEREFORE IMPORTANT THAT YOU READ YOUR CONTRACT
CAREFULLY.
This LIFE INSURANCE contract can provide death protection until the policy
anniversary following the insured's 95th birthday. Premiums and death benefits
for this contract are flexible and are subject to the limitations shown on the
specifications page.
<PAGE>
GUIDE TO POLICY PROVISIONS
SPECIFICATIONS PAGE
DEFINITIONS
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 The Agreement
1.2 The Entire Contract
1.3 Incontestability
1.4 Misstatement of Age
1.5 Suicide
1.6 Dividends
1.7 Termination
1.8 Tax Treatment
SECTION 2. OWNERSHIP
2.1 Owner of Policy
2.2 Transfer of Ownership
2.3 Collateral Assignment
SECTION 3. PREMIUMS
3.1 Time and Place of Payment
3.2 Net Premium
3.3 Allocation of Net Premiums
3.4 Paid-up Benefit
3.5 Lapse and Grace period
3.6 No Lapse Guarantee
3.7 Minimum Death Benefit Guarantee
3.8 Policy Reinstatement
SECTION 4. BENEFICIARIES
4.1 Named Beneficiary
4.2 Beneficiary Classifications
4.3 Death of a Beneficiary Before the Insured
4.4 Change of Beneficiary
SECTION 5. SEPARATE ACCOUNT, SUBACCOUNTS, FUND
5.1 Separate Account
5.2 Subaccounts
5.3 Underlying Mutual Funds
5.4 Change of Investment Advisor or Investment
Objectives
5.5 The Effect of Investment Results Upon Policy
Values
5.6 Transfers
SECTION 6. INTEREST BEARING ACCOUNT
SECTION 7. DEATH BENEFIT
7.1 Value of Death Proceeds
7.2 Face Amount
7.3 Changes in Death Benefit Option
7.4 Changes in Specified Amount
SECTION 8. PAYMENT OF DEATH PROCEEDS
8.1 Persons Paid
8.2 Value of Death Proceeds
8.3 Method of Payment
8.4 Selection of Settlement Options
8.5 Settlement Options
8.6 Settlement Option Factors
8.7 Related Provisions
SECTION 9. POLICY VALUES
9.1 Cash Value
9.2 Accumulated Value
9.3 Monthly Deduction
9.4 Daily Charges
9.5 Deferred Charges
9.6 Deferred Charges Account
9.7 Notification Regarding Policy Values
SECTION 10. POLICY SURRENDER AND PARTIAL SURRENDER
10.1 Policy Surrender
10.2 Partial Surrender
10.3 Surrender and Partial Surrender Payments
10.4 Settlement Options Available
SECTION 11. POLICY LOANS
11.1 Application for Policy Loan
11.2 Policy Loan Interest
11.3 Loan Repayment
SECTION 12. CHANGE OF POLICY
12.1 Exchange of Policy
12.2 Paid-up Insurance
ADDITIONAL BENEFITS OR RESTRICTIONS
Additional benefits or restrictions, if any, are described in the agreements
following Section 12. Policy No. 03905202
<PAGE>
Specifications Page
Schedule of Protection and Premiums
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY NUMBER: 03905202
OWNER: John Doe SPECIFIED AMOUNT: $50,000.00
INSURED: John Doe RATING: Standard/Smoker
ISSUE DATE: May 1,1990 ISSUE AGE: 35
MATURITY DATE: May 1, 2050 DEATH BENEFIT: Option 1
RECORD DATE: May 14, 1990
Specified Protection
Protection Provided by Policy and Riders Amount Provided Until*
Flexible Premium Variable Life Insurance $50,000 05/01/2050
PREMIUM INFORMATION:
Minimum Premium: $243.21
Minimum Initial Premium: 40.54
Initial Premium: 300.00
Target Premium: 405.35
POLICY INTEREST RATES (COMPOUNDED ANNUALLY):
Guaranteed Rate on Loan Account: 4.0% Section 11.1
Policy Loan Rate: 8.0% Section 11.2
Guaranteed Settlement Option Rate: 4.0% Sections 8.3, 8.5, 8.7
*Premiums for the protection provided are deducted from the accumulated value of
the policy. Rates for each type of protection are shown in separate tables on a
subsequent schedule page. It is possible that protection will not continue to
the date(s) shown if either no premiums are paid after the initial premium, or
subsequent premiums plus investment results on the designated Subaccounts are
not adequate to continue protection to the date shown. It is also possible that
protection will continue to the date shown, but with little or no cash value on
that date.
<PAGE>
Policy No. 03905202
POLICY CHARGES:
Premium:
Initial Charge for Taxes: 2.00%
Other:
Monthly Policy Fee: $ 6.00
Per Thousand Expense Charge: .45/1000 of spec amt for yrs 1-10
(see definitions page)
Transfer Charge: 20.00 per transfer
Service Fee: 25.00 per partial surrender
Requested Increase Fee: 50.00 per increase in excess of one/yr.
Daily Mortality and Expense Risk
Charge: .00002477 maximum
NET MONTHLY
SUBACCOUNTS/ PREMIUM DEDUCTION
GENERAL ACCOUNT OPTION ALLOCATION ALLOCATION
Bond * 25% 25%
Balanced * 25% 25%
Money Market * 0% 0%
G & I Stock * 0% 0%
Treasury 2000* 0% 0%
Interest Bearing Account 0% 0%
Capital Stock * 0% 0%
Intl Stock ** 25% 25%
World Govern *** 25% 25%
* These Subaccounts invest in a series of the Ultra Series Fund.
** This Subaccount invests in a series of T.Rowe Price International Series,Inc.
*** This Subaccount invests in a series of MFS Variable Insurance Trust.
DEFERRED CHARGES *
Deferred Deferred Total
Policy Administrative Sales Deferred
Year Charge Charge Charge
1 $118.50 $83.00 $201.50
2 112.58 78.85 191.43
3 106.65 74.70 181.35
4 100.73 70.55 171.28
5 88.88 62.25 151.13
6 77.03 53.95 130.98
7 59.25 41.50 100.75
8 41.48 29.05 70.53
9 23.70 16.60 40.30
10+ .00 .00 .00
*In the event of surrender, these deferred charges will be assessed against the
policy's accumulated value. These charges are based on the policy's initial
specified amount. Additional deferred charges will be assessed if the specified
amount is increased. Deferred charges build up on a monthly basis over the first
twelve policy months. If the policy is surrendered during the first eleven
policy months, the deferred charge will be a prorate portion of the first-year
deferred charge shown above.
<PAGE>
<TABLE>
<CAPTION>
Policy No. 03905202
TABLE 1: GUARANTEED MAXIMUM COST OF INSURANCE RATES.
The rates shown are annual rates in dollars per $1000. Monthly cost of insurance
calculations will use one-twelfth of these rates. (See Section 9.3C)
Age Rate Age Rate Age Rate Age Rate Age Rate Age Rate
- --- ---- --- ---- --- ---- --- ---- --- ---- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.01 16 1.46 32 2.18 48 7.92 64 31.03 80 110.90
1 .99 17 1.57 33 2.29 49 8.60 65 33.87 81 119.30
2 .95 18 1.66 34 2.42 50 9.34 66 36.80 82 128.69
3 .93 19 1.71 35 2.58 51 10.18 67 39.81 83 139.10
4 .90 20 2.09 36 2.78 52 11.13 68 42.92 84 150.09
5 .85 21 2.10 37 3.01 53 12.20 69 46.27 85 161.42
6 .81 22 2.08 38 3.28 54 13.36 70 49.99 86 172.87
7 .77 23 2.05 39 3.59 55 14.60 71 54.23 87 184.76
8 .74 24 2.00 40 3.94 56 15.89 72 59.06 88 197.24
9 .73 25 1.95 41 4.33 57 17.23 73 64.46 89 209.97
10 .74 26 1.93 42 4.75 58 18.64 74 70.41 90 223.64
11 .79 27 1.92 43 5.19 59 20.14 75 76.75 91 238.23
12 .88 28 1.93 44 5.68 60 21.82 76 83.24 92 254.86
13 1 01 29 1.96 45 6.19 61 23.72 77 89.76 93 275.58
14 1 16 30 2.02 46 6.73 62 25.91 78 96.38 94 304.12
15 1.31 31 2.09 47 7.30 63 28.36 79 103.33
</TABLE>
<PAGE>
DEFINITIONS
Accumulated Value. The total of this policy's portion of the values of all
Subaccounts and the Interest Bearing Account plus the values, if any, of the
deferred charges account and the loan account.
Age. The number of completed years from the Insured's date of birth.
Beneficiary. Person or entity named to receive all or part of the death
proceeds.
Cash Value. At any time, equal to, the accumulated value minus any deferred
sales and deferred administrative charges.
Charge for State Taxes. An amount deducted from premium payments to cover
premium tax and income tax currently charged by the policyowner's state of
residence. State of residence is determined by the owner's mailing address as
shown in the Company's records. The initial charge for state taxes is shown on
the specifications page.
Collateral Assignee. Person or entity to whom the owner gives some but not all
ownership rights under this policy.
Company or Home Office.
Century Life of America
2000 Heritage Way
Waverly, Iowa 50677
Death Proceeds. The amount to be paid if the insured dies while the policy is in
force.
Deferred Charges. Sum of the deferred sales charge and deferred administrative
charge. The deferred sales and administrative charges are deducted each month to
cover sales and administrative expenses of the policy.
Deferred Charges Account. A non-segregated portion of the Company's general
account in which policy values are held in support of the current deferred sales
and administrative charges of this policy.
In Force. Condition under which this policy is active and the insured's life
remains insured.
Indebtedness. Policy loans plus accrued interest on the loans.
Initial Premium. The amount which must be paid before coverage under this policy
begins. The initial premium must be equal to or greater than the minimum initial
premium. The amount of the initial premium is shown on the specifications page.
Insured. Person whose life is insured under this policy.
Irrevocable Beneficiary. A beneficiary who has certain rights which cannot be
changed unless he or she consents to the change. The written consent of all
irrevocable beneficiaries must be obtained prior to:
1. Transfer of ownership of this policy.
2. Collateral assignment of this policy.
3. Selection of or change of a dividend option.
4. Any change of beneficiary which replaces the irrevocable beneficiary.
5. Selection or change of a settlement option.
6. Surrender of this policy, including partial surrenders.
7. Policy loans.
8. Policy changes and exchange of policy.
Issue Date. The effective date of coverage under this policy and the date from
which policy anniversaries, policy years, monthly days, and policy months are
determined.
Lapse. Condition when the insured's life is no longer insured under this policy.
Loan Account. A non-segregated portion of the Company's general account to which
amounts are transferred from the Separate Account(s) and/or Interest Bearing
Account as collateral for policy loans.
Maturity Date. The date when coverage under this policy will cease if the
insured is living and the policy is in force.
Maturity Proceeds. Net cash value on the maturity date. Any net cash value
remaining on the maturity date is payable to the owner.
Minimum Death Benefit. Equal to the specified amount. This minimum is guaranteed
only under the conditions described in Section 3.7.
Minimum Initial Premium. One-sixth of the minimum premium. The minimum initial
premium is shown on the specifications page.
Minimum Premium. The total amount that must be paid each year, for the first
three policy years, to keep the no lapse guarantee in force for the first three
policy years. The minimum premium is shown on the specifications page.
Monthly Day. Same day as the issue date for each month. The monthly day is the
first day of the policy month. If there is no monthly day in a calendar month,
the monthly day will be the first day of the next calendar month
Monthly Policy Fee. A portion of the monthly deduction which is deducted each
month to cover policy expenses. The monthly policy fee is shown on the
specifications page.
Net Asset Value. The basis used to measure the value of securities constituting
the underlying investments for policy values allocated to the Separate Account.
Net Cash Value. The cash value of this policy minus any policy indebtedness.
Net Premiums. Premiums paid less any charges for state taxes.
Owner. The person or entity named as owner in the application. The owner may be
other than the insured. If no owner is named in the application, the insured is
the owner. The rights of the owner are described in the policy.
Paid-up Insurance. Insurance for which no additional premium must be paid to
keep it in force.
Per Thousand Expense Charge. A portion of the monthly deduction which is
deducted each month to cover expenses which vary with the specified amount. The
per thousand expense charge is shown on the specifications page.
Policy Anniversary. Same day and month as the issue day and month for each year
the policy remains in force.
Policy Month. Begins on a monthly day and ends on the day immediately preceding
the next monthly day.
Premiums. Amounts of money paid to the Company. Premiums are flexible as
described in Section 3.
Record Date. The date the Company records the policy on its books as an in-force
policy. The record date is shown on the specifications page.
Rescind a Policy. To treat a policy as though it had never been issued.
Specified Amount. The amount used to determine the face amount in Section 7.2.
The specified amount is shown on the specifications page.
Subaccount. A portion of the Separate Account. See Sections 5.1 and 5.2.
Surrender a Policy. To terminate a policy at the option of the owner. After a
policy has been surrendered, the insured's life is no longer insured under that
policy.
Target Premium. The total amount that must be paid each year to guarantee the
minimum death benefit. regardless of the investment performance of the
Subaccounts. The target premium is shown on the specifications page.
Valuation Day. Any day on which the New York Stock Exchange is open for trading.
Valuation Period. The period commencing at the close of the New York Stock
Exchange (currently 3:00 p.m. Central Standard Time) of one valuation day and
continuing to 3:00 p.m. Central Standard Time or the close of the New York Stock
Exchange, whichever is earlier, of the next succeeding valuation day.
<PAGE>
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to pay the death proceeds of this policy. The
Company also agrees to provide the other benefits and privileges described in
this contract. Proceeds are paid if the policy is in force and if:
A. The insured dies,
B. The policy matures, or
C. The policy is surrendered,
and all other terms and conditions of the policy are met.
1.2 THE ENTIRE CONTRACT
The entire contract consists of this policy and the application, a copy of which
is attached.
A. Application. The Company relied on the application in issuing this
policy. The Company is assuming that all statements in the application
are true and complete to the best of the knowledge and belief of the
persons making them. The Company agrees to accept all statements made in
the application as representations and not warranties. No statement will
be used to rescind the policy or defend a claim under the policy unless
that statement is material and is in the application.
B. Policy. This policy, together with all attached riders and endorsements,
states the Company's agreement with the owner. No part of this agreement
may be changed or waived unless approved in writing by the Company's
President or Secretary. No agent has authority to change the agreement
or to waive any of its provisions. Statements by an agent are not part
of the Company's agreement with the owner.
1.3 INCONTESTABILITY
This policy is incontestable as to the initial specified amount after it has
been in force during the insured's lifetime for two years from the issue date.
After this two-year period, the Company cannot deny this coverage if the policy
is in force.
This rule does not apply to riders. Riders contain separate incontestability
provisions.
While this policy is contestable, the Company may contest the policy or defend a
claim only on the basis of a material misrepresentation in the application. A
misrepresentation is material if, on the basis of correct and complete
information in the application, the Company would have:
A. Declined the application,
B. Issued the policy at a higher cost of insurance rate except for increases
in the cost of insurance rate due solely to a misstatement of age as
provided in Section 1.4, or
C. Issued the policy on some other basis than applied for.
<PAGE>
The amount of an increase in the specified amount becomes incontestable after
the increase has been in force for two years during the insured's lifetime,
except where the specified amount has been increased by reason of a change from
Option 2 to Option 1 as provided in Section 7.3, in which event, increasing the
specified amount by the amount of accumulated value does not create a new
contestable period for the amount of the increase.
While any increase in specified amount is contestable, the Company may contest
the increase or defend a claim for the difference in death benefit only on the
basis of material misrepresentation in the supplemental application.
If a policy is reinstated, it is incontestable after it has been in force during
the insured's lifetime for two years from the date of reinstatement. This
contestable period applies only to statements made in the Reinstatement
Application.
Whenever rescission is either elected by the Company and the owner in settlement
of a policy contest, or ordered by a court of law in the event a policy contest
is litigated, the rescission proceeds shall equal:
1. The charges deducted from premiums for state taxes,
2. Plus the total amount of monthly deductions and any other charges deducted
from the accumulated value,
3. Plus the accumulated value on the date the refund is calculated, as
defined in Section 9.2,
4. Minus any indebtedness.
1.4 MISSTATEMENT OF AGE
If the insured's age has been misstated, either the amount payable as a death
benefit or the cost of insurance will be adjusted upwards or downwards to
reflect the correct age, as the case may be. If the insured is alive on the date
upon which the adjustment is to be made, it will be the cost of insurance and
not the death benefit which is adjusted for the correct age on the next monthly
day and on each monthly day thereafter following the date upon which the Company
receives notice of the misstatement.
If the insured has died on or prior to the date upon which the adjustment is to
be made, it will be the death benefit which is adjusted when the death proceeds
are paid. In this case, the amount of such death benefit adjustment will be
based upon the amount of death benefit at the insured's correct age which the
cost of insurance amount actually deducted on the most recent monthly day for
which a monthly deduction was made would have purchased.
1.5 SUICIDE
Suicide of the insured, while sane or insane, within two years of the issue date
or the reinstatement date, is not covered by this policy. If the insured does
commit suicide, the only amount payable will be a return of the premiums paid
for the policy less any indebtedness or partial surrender. If the insured
commits suicide within two years of the date of increase of the specified
amount, the only amount payable with respect to the increase will be a return of
the monthly deductions made for the increase.
<PAGE>
1.6 DIVIDENDS
While this policy is in force, it will share in the divisible surplus of the
Company. This policy's share is determined annually by the Company. It is
payable annually on the policy anniversary. The owner may select one of the
dividend options listed below. If no option is selected, Option A will be used.
A. The dividends may be paid into the Subaccounts or the Interest Bearing
Account as net premiums.
B. The dividends may be paid in cash.
1.7 TERMINATION
This policy will terminate on the earliest of the following:
A. The end of the grace period,
B. The surrender date of this policy,
C. The maturity date of this policy, or
D. The date the insured dies.
1.8 TAX TREATMENT
The policy is intended to qualify for treatment as a life insurance policy under
the Internal Revenue Code. The Company may return premiums which would
disqualify the policy from tax treatment as a life insurance policy.
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SECTION 2. OWNERSHIP
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2.1 OWNER OF POLICY
The owner is named in the application. The owner may be other than the insured.
2.2 TRANSFER OF OWNERSHIP
The owner may transfer ownership of this policy. The written consent of all
irrevocable beneficiaries must be obtained prior to such transfer. The notice of
transfer must be in writing and filed at the home office. The transfer will take
effect as of the date the notice was signed. The Company may require that the
policy be sent in for endorsement to show the transfer of ownership.
The Company is not responsible for the validity or effect of any transfer. The
Company will not be responsible for any payment or other action it has taken
before having received written notice of the transfer.
<PAGE>
2.3 COLLATERAL ASSIGNMENT
The owner may assign this policy as collateral security. The written consent of
all irrevocable beneficiaries must be obtained prior to such assignment. The
assignment must be in writing and filed at the home office. The assignment will
then take effect as of the date the notice was signed.
The Company is not responsible for the validity or effect of any collateral
assignment. The Company will not be responsible for any payment or other action
it has taken before having received the written collateral assignment.
A collateral assignment takes precedence over the interest of a beneficiary. Any
policy proceeds payable to an assignee will be paid in one sum. Any remaining
proceeds will be paid to the designated beneficiary or beneficiaries.
A collateral assignee is not an owner. A collateral assignment is not a transfer
of ownership.
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SECTION 3. PREMIUMS
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3.1 TIME AND PLACE OF PAYMENT
The initial premium, shown on the specifications page, must be paid during the
lifetime of the insured, on or before the issue date. The initial premium must
be at least equal to the minimum initial premium. The minimum initial premium is
one-sixth of the minimum premium.
The minimum premium, also shown on the specifications page, is the total amount
that must be paid each year on an annual basis for the first three policy years,
to keep the no lapse guarantee in force for the first three policy years.
All premiums after the initial premium may be paid at any time while this policy
is in force. These premiums must be paid at the Company's home office or to an
authorized agent. Upon request, a receipt signed by the Secretary of the Company
will be given for any premium paid.
The Company reserves the right to refuse premium payments as follows:
A. Any individual premium payment of less than $25.00,
B. Any premium payment that would disqualify this policy as life insurance
under the Internal Revenue Code, and/or
C. Any premium which would increase the face amount of this policy by more
than the amount of the premium.
3.2 NET PREMIUM
Net premiums are equal to premiums paid less any charges for state taxes. The
charge for state taxes at time of issue is shown on the specifications page.
3.3 ALLOCATION OF NET PREMIUMS
The initial net premium will be held in the Company's general account until the
first valuation date following the record date. It will be held for that time
period at a rate of at least 4%, compounded annually. The Company may, at its
sole discretion, credit a rate in excess of 4%.
On the first valuation date following the record date, the following amount is
allocated to the Subaccount(s) and/or to the Interest Bearing Account:
A. The net premium as of the record date less the monthly deductions that
become due on or before the record date,
B. Minus an amount equal to the then current deferred sales and
administrative charges.
The owner selects in the application for this policy the manner in which the
amount described above, and subsequent amounts, are to be allocated. The minimum
percentage allocated to any Subaccount or to the Interest Bearing Account must
be at least 10% of the amount being allocated. No fractional percentages may be
used. The owner may change how future amounts are to be allocated. The request
for change must be in writing. The change will be effective with the first
allocation on or after the request is recorded by the Company.
3.4 PAID-UP BENEFIT
If premium payments stop and there is a net cash value, the policy will continue
in force. Monthly deductions will be made and interest will be credited on each
monthly day until the earlier of:
A. the monthly day the net cash value is less than the amount needed to pay
the monthly deduction (this applies only if neither the no lapse
guarantee, as described in Section 3.6, nor the minimum death benefit
guarantee as described in Section 3.7, is in effect), or
B. the maturity date.
3.5 LAPSE AND GRACE PERIOD
If the net cash value on any monthly day is less than the amount needed to pay
the monthly deduction, and if the no lapse guarantee does not apply, the Company
will mail a notice of termination to the owner at his or her last known address.
The Company will grant a 61-day grace period for the payment of the amount due.
The grace period will end on a date not less than 61 days after the mailing date
of the notice.
If the policy is in the first three policy years and there has been no requested
increase in specified amount, the notice will specify two amounts. If either of
these amounts is paid during the grace period, the policy will continue in force
as if the amount had been paid on the monthly day. The two amounts which will be
specified are as follows:
A. The amount sufficient to increase the net cash value to zero by the end of
the grace period, assuming no investment gains or losses in the
Subaccounts.
B. The amount needed to qualify for the no lapse guarantee (Section 3.6).
If the policy is beyond the third policy year or there has been a requested
increase in specified amount, the notice will specify one amount. If this amount
is paid during the grace period, the policy will continue in force as if the
amount had been paid on the monthly day. The amount which will be specified is
the same as (A), above.
If the insured dies during the grace period, the overdue charges will be
deducted from the death proceeds. The amount deducted will be equal to the
smaller of the amounts specified on the notice of termination sent to the owner.
If the amount due is not paid during the grace period, the policy will lapse
without value.
<PAGE>
3.6 NO LAPSE GUARANTEE
If the net cash value on any monthly day during the first three policy years is
less than the amount needed to pay the monthly deduction, the grace period will
not begin and the policy will not lapse if A and B are true, where A and B are:
A. There has been no requested increase in specified amount, and
B. The sum of the premiums paid, less any partial surrenders and policy
indebtedness, is equal to or greater than the product of 1 and 2 below:
1. The minimum premium shown on the specifications page divided by twelve,
and 2. The number of policy months since issue, plus one month.
The no lapse guarantee will not apply to this policy after the end of the third
policy year.
3.7 MINIMUM DEATH BENEFIT GUARANTEE
If the net cash value, at any time prior to the later of attained age 65 or 10
years from the date of issue, Is less than the amount needed to pay the monthly
deduction, the grace period will not begin and the policy will not lapse if the
minimum death benefit guarantee is in effect. The minimum death benefit
,guarantee is in effect if the sum of the premiums paid, less any partial
withdrawals and policy indebtedness is equal to or greater than the product of:
A. The target premium shown on the specifications page divided by twelve and
B. The number of policy months since issue, plus one month.
The target premium will be increased or decreased, as appropriate, when any one
of the following occurs:
A. There is a requested increase or decrease in specified amount,
B. The addition or deletion of riders,
C. A change in specified amount due to a death benefit option change.
An increase or decrease in the target premium, as described above, will cause
the premiums required to be paid to increase or decrease in a like manner. If
the premiums required to be paid for the minimum death benefit guarantee are not
paid, the minimum death benefit guarantee will no longer be in effect under this
policy. The minimum death benefit guarantee may be reinstated by payment of
premiums sufficient to raise total premiums to the required amount. The right to
reinstate the minimum death benefit guarantee expires 60 days from the date the
Company mails written notification of such loss to the owner.
3.8 POLICY REINSTATEMENT
If this policy has lapsed, the owner may ask to have it reinstated. It will be
reinstated if six conditions are met:
A. The owner requests the Company to reinstate the policy within five years
after the end of the grace period and before the maturity date,
B. The request is in writing,
C. Evidence of insurability satisfactory to the Company is provided,
D. The amount sufficient to Increase the net cash value to zero by the end of
the grace period, assuming no investment gains or losses in the
Subaccounts, is paid,
E. The owner pays the amount of the monthly deductions due on the first three
monthly days after the reinstatement is effective, and
F. Any deferred sales and administrative charges that would be in effect if
the policy had not lapsed will be reinstated. If the deferred charges have
increased since the policy was lapsed, the owner pays sufficient premium to
increase the accumulated value by an amount not less than:
1. The amount of deferred sales and administrative charges that would
have been in effect had the policy not lapsed,
2. Minus the amount of deferred sales and administrative charges that
was in effect when the policy lapsed.
The reinstatement will become effective immediately upon the Company's approval
of the reinstatement.
The accumulated value on the date of reinstatement will be equal to:
1. The amount paid at the time of reinstatement,
2. Minus the charge for state taxes,
3. Minus the amount needed to increase the net cash value to zero by the end
of the grace period, assuming no investment gains or losses in the
Subaccounts,
4. Minus any monthly deduction due on the date of reinstatement,
5. Plus:
a. The deferred charges at the time of lapse, if these charges are less
than the deferred charges at the time of reinstatement, or
b. The deferred charges at the time of reinstatement, if these charges
are not more than the deferred charges at the time of lapse.
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SECTION 4. BENEFICIARIES
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4.1 NAMED BENEFICIARY
One or more beneficiaries are named in the application. The owner may change the
beneficiary as provided in Section 4.4.
4.2 BENEFICIARY CLASSIFICATIONS
Beneficiaries may be classified as primary or contingent. If no primary
beneficiary survives the insured, payment will be made to contingent
beneficiaries. Beneficiaries in the same class will receive equal payments
unless otherwise directed.
4.3 DEATH OF A BENEFICIARY BEFORE THE INSURED
A beneficiary must survive the insured in order to receive his or her share of
the death proceeds. If a beneficiary dies before the insured dies, his or her
unpaid share is divided among the beneficiaries who survive the insured. The
unpaid share will be divided equally unless the owner directs otherwise.
If no beneficiary survives the insured, the proceeds will be paid to the owner,
if living, or to the owner's estate.
4.4 CHANGE OF BENEFICIARY
The owner may change the beneficiary while the insured is living. The written
consent of all irrevocable beneficiaries must be obtained prior to such change.
To make a change, the owner must provide the Company with a written request
satisfactory to the Company. The request will not be effective until the Company
records it.
Are the request is recorded, it will take effect as of the date the owner signed
the request. The Company will not be responsible for any payment or other action
it takes before it records the request. The Company may require the policy be
returned for endorsement of the beneficiary change.
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SECTION 5. SEPARATE ACCOUNT, SUBACCOUNTS, FUND
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5.1 SEPARATE ACCOUNT
The variable benefits under this policy are provided through the Century
Variable Account which is referred to in this policy as the Separate Account.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. It is a
separate investment account maintained by the Company into which a portion of
Company assets have been allocated. The assets of the Separate Account are
Company property. Assets equal to the liabilities of the Separate Account will
not be charged with liabilities arising out of any other business the Company
may conduct. If the assets of the Separate Account exceed the liabilities
arising under the policies supported by the Separate Account, then the excess
may be used to cover the liabilities of the Company's general account. The
assets of the Separate Account shall be valued as often as any policy benefits
vary, but at least monthly.
The Separate Account invests in shares of underlying mutual funds. Shares are
purchased at net asset value.
5.2 SUBACCOUNTS
The Separate Account has several Subaccounts. Each Subaccount corresponds to a
series of an underlying mutual fund. The Subaccounts that are available on the
Issue Date are shown on the Specifications Page. The Company may from time to
time add or delete Subaccounts of the Separate Account. Any Subaccount that is
added to the Separate Account will invest in an underlying mutual fund or unit
investment trust. The owner will be notified in writing of any changes to the
Subaccounts that are available under this policy. Subaccounts that invest in a
Treasury Series may be discontinued if that series is no longer available
because of maturity.
Income and realized and unrealized gains and losses from assets in each
Subaccount are credited to, or charged against, that Subaccount without regard
to income, gains, or losses in other Subaccounts. Any amount charged against the
investment base for federal or state income taxes will be deducted from that
Subaccount.
5.3 UNDERLYING MUTUAL FUNDS
Each underlying mutual fund is registered under the Investment Company Act of
1940 as an open-end management investment company. Each series of the underlying
mutual fund represents a different investment objective.
<PAGE>
5.4 CHANGE OF INVESTMENT ADVISOR OR INVESTMENT OBJECTIVES
If:
A. Any of the underlying mutual fund series are no longer available for
investment by the Subaccounts; or
B. In the judgment of the Company's Board of Directors, further investment in
such series is no longer deemed to be in the best interest of the policies
generally within the class represented by this policy; or
C. An investment advisor or material investment policy of an underlying
mutual fund is changed without Company consent;
Then:
The Company may substitute shares of another underlying mutual fund or unit
investment trust, if such change is approved by:
A. The Securities and Exchange Commission; and if required,
B. The Insurance Commissioner of the State of Iowa; and if required,
C. The insurance department of the state in which this policy is delivered.
The owner of this policy will be notified of any such substitution or material
investment objective change which has been approved. Notification of such change
will be given in advance if the owner has the right to comment on or vote on
such change.
5.5 THE EFFECT OF INVESTMENT RESULTS UPON POLICY VALUES
A. Determining Investment Results. The policy values will fluctuate in
accordance with the investment results of the Subaccounts. In order to
determine how investment results affect the policy values, a unit value is
determined for each Subaccount. The unit value may increase or decrease
from one valuation period to the next. Unit values also will vary among
Subaccounts.
B. Unit Value. The unit value of any Subaccount at the end of a valuation
period is the result of:
1. The total value of the assets held in the Subaccount. (This value is
determined by multiplying the number of shares of the underlying mutual fund
owned by the Subaccount times the net asset value per share.)
2. Minus the accrued risk charge for adverse mortality and expense
experience. (The daily amount of this charge is equal to the net assets of the
Subaccount multiplied by the risk charge factor shown on the specifications
page.)
3. Minus the accrued amount of reserve for any taxes that are determined
by the Company to have resulted from the investment operations of the
Subaccount, and
4. Divided by the number of outstanding units in the Subaccount.
The use of the unit value in determining policy values is described in Section
9.2.
<PAGE>
5.6 TRANSFERS
The owner may transfer this policy's portion of a Subaccount(s) to other
Subaccount(s), and/or the Interest Bearing Account. The Company reserves the
right to charge up to $20 for each transfer. This charge will be deducted from
the funds transferred. The Company must be notified in a manner satisfactory to
it. Transfer requests received at the home office by 3:00 p.m. Central Standard
Time will take effect on the day the notice is received unless:
A. The New York Stock Exchange is closed other than for customary weekend and
holiday closings,
B. The Securities and Exchange Commission requires that trading on the
exchange be restricted, or declares an emergency which makes it
impracticable for the Separate Account to dispose of its securities or
value its assets, or
C. The SEC by order allows or requires the Company to defer payments to
protect its policyowners.
The owner may transfer any part of this policy's portion of the Interest
Bearing Account into the Subaccount(s) only during a thirty (30) day period
beginning on and immediately following the policy anniversary.
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SECTION 6. INTEREST BEARING ACCOUNT
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The Interest Bearing Account is a non-segregated portion of the Company's
general account. All assets in the general account are Company property and are
available to satisfy any liability of the Company.
The Company will credit all amounts in the Interest Bearing Account interest at
a rate no less than 4% annually. The Company, at its sole discretion, may credit
a higher rate of interest to amounts held in the Interest Bearing Account.
The Company may from time to time provide for other general account options
under this contract.
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SECTION 7. DEATH BENEFIT
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7.1 VALUE OF DEATH PROCEEDS
If the policy is in force on the date of the insured's death, the death proceeds
will consist of:
A. The face amount of the policy on the date of death as described in Section
7.2,
B. Plus any premiums received after the date of death,
C. Minus any policy indebtedness.
The face amount of the policy may vary from time to time as a direct result of
the investment experience on any amount of accumulated value held in the
Separate Account except when Option 1 has been selected and the face amount
equals the specified amount.
7.2 FACE AMOUNT
If Death Benefit Option 1 is selected, the face amount of the policy will be the
larger of:
A. The specified amount, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
If Death Benefit Option 2 is selected, the face amount of the policy will be
the larger of:
A. The specified amount plus the accumulated value on the date of death, or
B. The accumulated value on the date of death multiplied by the death benefit
ratio.
The death benefit ratio is shown below.
Age Ratio Age Ratio Age Ratio
0-40 2.50 54 1.57 68 1.17
41 2.43 55 1.50 69 1.16
42 2.36 56 1.46 70 1.15
43 2.29 57 1.42 71 1.13
44 2.22 58 1.38 72 1.11
45 2.15 59 1.34 73 1.09
46 2.09 60 1.30 74 1.07
47 2.03 61 1.28 75-90 1.05
48 1.97 62 1.26 91 1.04
49 1.91 63 1.24 92 1.03
50 1.85 64 1.22 93 1.02
51 1.78 65 1.20 94 1.01
52 1.71 66 1.19 95 1.00
53 1.64 67 1.18
The initial death benefit option is shown on the specifications page.
7.3 CHANGES IN DEATH BENEFIT OPTION
The owner may ask to change the death benefit option which is shown on the
specifications page. The change will become effective on the monthly day
following or coincident with the day a written request is received at the home
office. The Company may require evidence of insurability.
If the change is from Option 1 to Option 2, the specified amount will be reduced
by the amount of the accumulated value on the effective date of the change. No
change from Option 1 to Option 2 will be allowed for issue ages 0-64 if the
resulting specified amount would be less than $20,000. Issue ages above age 64
will not be allowed to change from Option 1 to Option 2 if the resulting
specified amount would be less than $8,000. If the change is from Option 2 to
Option 1, the specified amount will be increased by the amount of the
accumulated value on the effective day.
<PAGE>
7.4 CHANGES IN SPECIFIED AMOUNT
The specified amount may be changed at any time. Changes must be requested in
writing by the owner, and are subject to the conditions below:
A. Decreases. For issue ages 0-64, the specified amount must be at least
$25,000 after the decrease. For issue ages over 64, the specified amount
must be at least $10,000 after the decrease. The decrease will become
effective on the monthly day following or coincident with the day the
request is received in the home office. The decrease will be applied to
the initial specified amount and to increases in
B. Increases. A supplemental application must be filed, and evidence of
insurability satisfactory to the Company must be provided. The effective
date of the increase will be shown on an endorsement to the specifications
page.
If the specified amount is Increased, additional deferred sales and
administrative charges and additional per thousand expense charges will
apply to this policy, corresponding to the amount of the increase. No
additional charges will apply if the increase in specified amount
occurred solely due to a change in death benefit option. These additional
charges will be shown on an endorsement to the specifications page.
C. Transaction Charges. One free increase in specified amount may be made in
any policy year. Any requested increase in excess of one requested
increase in any policy year will result in a $50 charge per change. There
is no charge for any requested decrease in specified amount.
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SECTION 8. PAYMENT OF DEATH PROCEEDS
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8.1 PERSONS PAID
When the Company receives due proof of the insured's death it will pay the death
proceeds. The death proceeds will be paid to the beneficiary or beneficiaries.
If no beneficiary survives the insured, the proceeds will be paid to the owner,
if living, or to the owner's estate.
Unless deferred as stated below, uncontested death proceeds will be paid within
seven days of due proof of death except for that portion of the accumulated
value held in one or more Subaccount(s), when:
A. The New York Stock Exchange is closed other than for customary weekend and
holiday closing,
B. The Securities and Exchange Commission requires that trading on the
exchange be restricted, or declares an emergency which makes it
impracticable for the Separate Account to dispose of its securities or
value its assets, or
C. The SEC by order allows the Company to defer payments to protect its
policyowners.
Death proceeds paid from the Interest Bearing Account may be deferred no more
than 60 days from the date due proof of death is received by the Company.
8.2 VALUE OF DEATH PROCEEDS
If the policy is in force on the date of the insured's death, the death proceeds
will consist of:
A. The face amount of the policy on the date of death as described in Section
7.2,
B. Plus any premiums received after the date of death,
C. Minus any policy indebtedness.
8.3 METHOD OF PAYMENT
The death proceeds will be paid in one sum unless a settlement option has been
selected according to Section 8.4. However, any proceeds payable to an estate
will be paid in one sum. If the owner, beneficiary, or payee is not a natural
person, any proceeds due will be applied only in a lump sum or under a
settlement option consented to by the Company.
The Company will pay interest on the death proceeds from the date of death to
the date of settlement. The interest rate is determined each year by the
Company. It is guaranteed to be not less than the guaranteed settlement option
rate of interest.
8.4 SELECTION OF SETTLEMENT OPTIONS
The owner may direct during the insured's lifetime that the death proceeds be
paid under one of the settlement options listed in Section 8.5. Installments
under Options 2, 3, and 4 are shown in Section 8.6. The written consent of all
irrevocable beneficiaries must be obtained prior to the selection. After the
insured's death, any beneficiary entitled to receive the proceeds in one sum may
select a settlement option.
Any person who selects a settlement option can name, at the time of selection,
one or more successor payees to receive any guaranteed amount remaining with the
Company at the death of a payee. This selection will replace any prior
settlement arrangements.
When a settlement option is selected by a person other than a payee, the payee
may not advance or assign payments, receive payment in one sum, or make any
other change, unless that right was given at the time the option was selected.
8.5 SETTLEMENT OPTIONS
Settlement Option 1. Interest Option. The policy proceeds may be left at
interest with the Company during the lifetime of the payee. The interest rate is
determined each year by the Company. It is guaranteed to be not less than the
guaranteed settlement option rate of interest.
The payee may choose to receive interest payments either once a year or once a
month. The payee may withdraw any remaining proceeds, if this right was given at
the time the option was selected.
Settlement Option 2. Installment Option. The proceeds may be left with the
Company to provide equal monthly installments for a specified period. No period
can be greater than 30 years. The factors shown are for guaranteed installments.
Factors for other years will be provided on request. Dividends, If any, will be
determined by the Company.
The payee may withdraw the present value of any remaining guaranteed
installments, but only if this right was given at the time the option was
selected.
Settlement Option 3. Life Income - Guaranteed Period Certain. The proceeds may
be left with the Company to provide monthly installments for as long as the
original payee lives. A guaranteed period may be selected. Payments will cease
when the original payee dies or at the end of the guaranteed period, whichever
is later. If the original payee dies during the guaranteed period, the remaining
guaranteed payments will be paid to the successor payee as provided in Sections
8.4 and 8.7A.
Guaranteed periods which may be selected are:
A. 10 years,
B. 20 years, or
C. A period of years such that the total installments during the period will
be at least equal to the proceeds applied under the option.
It is also possible to take the life income without a guaranteed period.
The monthly installment amount will depend on the age of the original payee on
the date of the first payment. Dividends, if any, will be payable as determined
by the Company.
Settlement Option 4. Joint and Survivor Life Income. The proceeds may be left
with the Company to provide monthly installments for a guaranteed period of 10
years. After the 10-year period is over, payments will continue as long as
either of the original payees is living.
8.6 SETTLEMENT OPTION FACTORS
The life income payments for Settlement Options 3 and 4 are based on the payee's
adjusted age. The adjusted age is the age last birthday plus the adjustment. The
policy years elapsed are from the issue date to the effective date of the
settlement option.
Any partial policy year is considered as a full policy year.
Policy Years Age
Elapsed Adjustment
1-10 +3
11-20 +2
21-30 +1
31+ 0
Option 2. Installment Factors - First Payment Due at Beginning of Period.
Years Monthly Installments
Payable Per $1,000 Proceeds
10 9.83
15 7.10
20 5.75
25 4.96
30 4.45
Option 3. Life Income Factors - Guaranteed Period Certain.
<TABLE>
<CAPTION>
Per $1,000 Proceeds
Minimum Monthly Payments for Guaranteed Period Shown
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted Age
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
- -----------------------------------------------------------------------------------------------------------------------------------
0 4.93 5.01 5.10 5.20 5.30 5.41 5.52 5.65 5.78 5.92 6.07 6.24 6.41 6.60 6.80 7.01 7.25 7.50 7.77 8.07 8.39
10 4.88 4.96 5.04 5.13 5.22 5.32 5.42 5.53 5.65 5.77 5.89 6.03 6.17 6.32 6.47 6.63 6.80 6.98 7.16 7.34 7.53
20 4.73 4.79 4.85 4.91 4.97 5.04 5.10 5.17 5.24 5.30 5.37 5.43 5.50 5.56 5.61 5.67 5.71 5.76 5.80 5.84 5.87
Option 4. Joint and Survivor Life Income Factors - 10 Years Certain.
Monthly Payment Per $1,000 Proceeds - 100% to Surviving Payee
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted Age - Female
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Age 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
- -----------------------------------------------------------------------------------------------------------------------------------
55 4.39 4.42 4.45 4.47 4.50 4.52 4.55 4.57 4.60 4.62 4.64 4.66 4.68 4.70 4.72 4.74 4.75 4.77 4.78 4.79 4.81
56 4.42 4.45 4.48 4.51 4.54 4.56 4.59 4.62 4.64 4.67 4.69 4.72 4.74 4.76 4.78 4.80 4.81 4.83 4.85 4.86 4.88
57 4.45 4.48 4.51 4.54 4.57 4.60 4.63 4.66 4.69 4.72 4.74 4.77 4.79 4.82 4.84 4.86 4.88 4.90 4.92 4.93 4.95
58 4.47 4.51 .454 4.58 4.61 4.64 .467 4.71 4.74 4.77 4.80 4.82 4.85 4.88 4.90 4.92 4.95 4.97 4.99 5.01 5.02
59 4.50 4.54 4.57 4.61 4.64 4.68 4.72 4.75 4.78 4.82 4.85 4.88 4.91 4.94 4.97 4.99 5.02 5.04 5.06 5.08 5.10
60 4.52 4.56 4.60 4.64 4.68 4.72 4.76 4.79 4.83 4.87 4.90 4.94 4.97 5.00 5.03 5.06 5.09 5.11 5.14 5.16 5.18
61 4.55 4.59 4.63 4.67 4.72 4.76 4.80 4.84 4.88 4.92 4.96 4.99 5.03 5.06 5.10 5.13 5.16 5.19 5.22 5.24 5.27
62 4.57 4.62 4.66 4.71 4.75 4.79 4.84 4.88 4.93 4.97 5.01 5.05 5.09 5.139 5.17 5.20 5.24 5.27 5.30 5,33 5,36
63 4.60 4.64 4.69 4.74 4.78 4.83 4.88 4.93 4.97 5.02 5.06 5.11 5.15 5.19 5.24 5.28 5.31 5.35 5.39 5.42 5.45
64 4.62 6.67 4.72 4.77 4.82 4.87 4.92 4.97 5.02 5.07 5.12 5.17 5.21 5.26 5.31 5.35 5.39 5.43 5.47 5.51 5.54
65 4.64 4.69 4.74 4.80 4.85 4.90 4.96 5.01 5.06 5.12 5.17 5.22 5.28 5.33 5.38 5.43 5.47 5.52 5.56 5.60 5.64
66 4.66 4.72 4.77 4.82 4.88 4.94 4.99 5.05 5.11 5.17 5.22 5.28 5.34 5.39 5.45 5.50 5.55 5.60 5.65 5.70 5.74
67 4.68 4.74 4.79 4.85 4.91 4.97 5.03 5.09 5.15 5.21 5.28 5.34 5.40 5.46 5.52 5.58 5.64 5.69 5.74 5.80 5.85
68 4.70 4.76 4.82 4.88 4.94 5.00 5.06 5.13 5.19 5.26 5.33 5.39 5.46 5.53 5.59 5.65 5.72 5.78 5.84 5.90 5.95
69 4.72 4.78 4.84 4.90 4.97 5.03 5.10 5.17 5.24 5.31 5.38 5.45 5.52 5.59 5.66 5.73 5.80 5.87 5.93 6.00 6.06
70 4.74 4.80 4.86 4.92 4.99 5.06 5.13 5.20 5.28 5.35 5.43 5.50 5.58 5.65 5.73 5.81 5.88 5.96 6.03 6.10 6.17
71 4.75 4.81 4.88 4.95 5.02 5.09 5.16 5.24 5.31 5.39 5.47 5.55 5.64 5.72 5.80 5.88 5.96 6.05 6.13 6.20 6.28
72 4.77 4.83 4.90 4.97 5.04 5.11 5.19 5.27 5.35 5.43 5.52 5.60 5.69 5.78 5.87 5.96 6.05 6.13 6.22 6.31 6.39
73 4.78 4.85 4.92 4.99 5.06 5.14 5.22 5.30 5.39 5.47 5.56 5.65 5.74 5.84 5.93 6.03 6.13 6.22 6.32 6.41 6.50
74 4.79 4.86 4.93 5.01 5.08 5.16 5.24 5.33 5.42 5.51 5.60 5.70 5.80 5.90 6.00 6.10 6.20 6.31 6.41 6.51 6.62
75 4.81 4.88 4.95 5.02 5.10 5.18 5.27 5.36 5.45 5.54 5.64 5.74 5.85 5.95 6.06 6.17 6.28 6.39 6.50 6.62 6.73
</TABLE>
8.7 RELATED PROVISIONS
A. Successor Payee. The payee may name a successor payee to receive any
remaining installments due after the payee's death, but only if this right
was given at the time the option was selected. If the last surviving payee
dies before all the guaranteed installments have been made, the Company
will pay the present value of the remaining installments in one sum to that
payee's estate.
B. Minimum Amounts. The minimum amount which can be applied under Settlement
Option 1 is $2,500. Interest will be paid annually rather than monthly,
unless the amount of interest payable monthly is at least $25.
The minimum amount which can be applied under Settlement Options 2, 3, and
4 is that which will provide monthly installments of $25.
C. Present Value. The present value of any future installments is based on
the settlement option rate of interest used in determining the future
installments and is always less than their sum.
D. Age. The Company may require due proof of the age of any payee who is to
receive a life income.
E. Additional Annuity Purchase. Additional income may be purchased under
Settlement Options 2 and 3. The amount of additional annuity which can be
purchased, per $1,000 of additional sum deposited, will be 95% of the
amount which can be purchased per $1,000 of net policy proceeds under
Option 2 or 3. The additional annuity amount may not exceed twice that
which the application of proceeds under the selected option would provide.
The selection of an additional annuity purchase must be in writing and on
file at the home office. Selection must be within thirty (30) days of
settlement under this policy. The additional annuity purchase option is
available only if the settlement is on or after the later of:
1. The 10th policy anniversary, or
2. The annuitant's 55th birthday.
F. Other Settlement Options. Other settlement options may be available with
the consent of the Company.
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SECTION 9. POLICY VALUES
- -------------------------------------------------------------------------------
9.1 CASH VALUE
The cash value of this policy at any time is equal to the accumulated value
minus any deferred sales and deferred administrative charges.
9.2 ACCUMULATED VALUE
At the end of any valuation period, the accumulated value is equal to the number
of units that the policy has in each Subaccount, multiplied by the unit value of
each corresponding Subaccount, plus the policy's values, if any, in the Interest
Bearing Account, the deferred charges account, and the loan account. The
deferred charges account is described in Section 9.6. The loan account is
described in Section 11.
The method of determining the unit value for each Subaccount is described in
Section 5.5. The number of units that the policy has in each Subaccount is equal
to:
A. The initial units purchased on the issue date,
B. Plus units purchased at the time that additional net premium is allocated
to the Subaccount,
C. Plus units purchased through transfers from another Subaccount or from the
loan account,
D. Plus or minus units purchased or redeemed when the deferred charges
account is adjusted to be equal to the then current deferred sales and
administrative charges.
E. Minus those units that are redeemed to pay for monthly deductions as they
are due.
F. Minus any units that are redeemed to pay for a partial surrender,
G. Minus any units that are redeemed as part of a transfer to another
Subaccount, the Interest Bearing Account or to the loan account as
collateral for a policy loan.
9.3 MONTHLY DEDUCTION
A Amount of Monthly Deduction. The monthly deduction due on each monthly day
will be the sum of:
1. The cost of insurance for that month,
2. Plus the cost of any additional benefits provided by rider,
3. Plus the per thousand expense charge,
4. Plus the monthly policy fee.
The monthly deduction due on each monthly day will be combined with the
adjustments made to the deferred charges account on that day, as described in
Section 9.4. if the net result requires the redemption of units from the
Subaccount(s) or withdrawal of money from the Interest Bearing Account, the
redemption/withdrawal will be based on the monthly deduction allocation
percentages. The owner selects, in the application for this policy, the
percentage of monthly deductions redeemed and/or withdrawn from the
Subaccount(s) and/or the Interest Bearing Account. The minimum percentage of
monthly deductions redeemed/withdrawn from any Subaccount(s) and/or the Interest
Bearing Account is 10% of the total amount being redeemed or withdrawn. No
fractional percentages may be used.
The owner may change future redemption/withdrawal percentages. The request must
be in writing. The change will be effective on the first monthly day on or
following the date the request is recorded by the Company.
If the value in any Subaccount(s) and/or in the Interest Bearing Account is
insufficient to pay its part of the total monthly deduction on a monthly day,
the redemption/withdrawal will be made on a prorate basis from the Subaccount(s)
and/or the Interest Bearing Account.
B. Cost of Insurance. The cost of insurance is the cost of insurance rate
multiplied by the excess of 1 over 2 where 1 and 2 are the following:
1. The face amount on the monthly day.
2. The accumulated value on the monthly day, prior to the cost of
insurance being deducted.
If Death benefit Option 1 has been selected, and if there have been
increases in specified amount, then the accumulated value will be
considered first to be part of the initial specified amount. Any excess
accumulated value will be considered to be part of the additional specified
amounts in the order of the increases.
C. Cost of Insurance Rate. The Company will determine a cost of insurance rate
to be used on each monthly day. The cost of insurance rate for this policy
will be determined by the insured's attained age, smoker status, rating
class, and the number of years since issue. Attained age means age on the
most recent policy anniversary. Cost of insurance rate changes will depend
on the Company's expectations as to future mortality experience. The annual
cost of insurance rates will not exceed the rates shown on Table 1 -
Guaranteed Maximum Cost of Insurance Rates. The guaranteed maximum
insurance rates are based on the 1980 CSO Mortality Tables, age last
birthday.
9.4 DAILY CHARGES
The Company will deduct a mortality and expense risk charge of .00002477 of the
total of the Net Asset Value of the Separate Account and the balance in the
Interest Bearing Account.
9.5 DEFERRED CHARGES
The deferred charges for each policy year are shown on the specifications page.
The deferred charges are held in the deferred charges account. The deferred
charges in the first policy year increase on a monthly basis over the first 12
policy months and decrease annually thereafter. If the specified amount is
increased, additional deferred charges, as described in Section 7.4B, will apply
to this policy. The accumulated value at the time of the increase must be at
least as great as the sum of the existing deferred charges plus the additional
deferred charges. An endorsement to the specifications page will be sent to the
owner showing these new charges. No additional deferred charges will apply if
the increase in specified amount occurs solely due to a change in death benefit
option, nor will the deferred charges change if the insured's status changes
from smoker to nonsmoker.
9.6 DEFERRED CHARGES ACCOUNT
The deferred charges account is a non-segregated portion of the Company's
general account. Amounts held in the deferred charges account are credited with
interest at a rate of at least 4%, compounded annually. The Company may, at its
sole discretion, credit rates in excess of 4%.
On the first valuation date following the record date and periodically
thereafter, adjustments are made to amounts held in the deferred charges account
to make them equal to the then current deferred charges. Such periodic
adjustments will be made on each monthly day and whenever premium payments,
partial surrenders, or policy loan transactions are processed. If made on a
monthly day, such adjustments can result in amounts being allocated to or
redeemed/withdrawn from the Subaccount(s) or the Interest Bearing Account.
Whenever any such adjustments are made, they take into account the interest, if
any, which may have been credited to the deferred charges account.
On each monthly day, the adjustment to the deferred charges account is combined
with the monthly deduction due on that day. If the adjustment to the deferred
charges account results in a large enough release of value to pay for the
monthly deduction, any excess will be allocated to the Subaccount(s) and/or the
Interest Bearing Account in the same manner as net premium.
The adjustment may result in a release of value less than the monthly deduction,
or an increase may be required in the deferred charges account. If so, the net
amount of the adjustment and the monthly deduction is redeemed/withdrawn from
the Subaccount(s) and/or the Interest Bearing Account according to the monthly
deduction percentage allocation.
On any monthly day, if the net cash value is insufficient to pay the monthly
deduction, but the no lapse guarantee (see Section 3.6) or minimum death benefit
guarantee (see Section 3.7) is in effect, and if the deferred charges account
has sufficient value, the monthly deduction will be made from the deferred
charges account. Additional net premium received on the policy will be applied
first to reimburse the deferred charges account for any monthly deductions made
from that account.
No transfers may be made to or from the deferred charges account for any reason
other than bringing the account equal to current deferred sales and
administrative charges or for paying the monthly deduction as described in the
preceding paragraph.
9.7 NOTIFICATION REGARDING POLICY VALUES
At least once per year, a report will be sent to the owner of this policy which
shows:
A. The current death benefit,
B. Premiums paid since the previous report,
C. Partial surrenders since the previous report,
D. All charges since the previous report,
E. A summary of investment experience of the Separate Account.
F. The accumulated value and cash value of this policy, including values in
the:
1. Deferred Charges Account,
2. Loan Account (policy indebtedness),
3. Interest Bearing Account, and
4. Separate Account(s).
- -------------------------------------------------------------------------------
SECTION 10. POLICY SURRENDER AND PARTIAL SURRENDER
- -------------------------------------------------------------------------------
10.1 POLICY SURRENDER
The owner may surrender this policy for its net cash value. The written consent
of all assignees or irrevocable beneficiaries must be obtained prior to any
surrender. The Company may require the return of the policy.
The surrender date of the policy is the date a written request for surrender is
received at the home office. The net cash value will be determined as of the end
of the valuation period during which the surrender date occurs. The policy and
all insurance will terminate as of the surrender date.
10.2 PARTIAL SURRENDER
The owner may surrender a portion of this policy for an amount less than the net
cash value. The written consent of all assignees or irrevocable beneficiaries
must be obtained prior to any partial surrender. The effective date of such
partial surrender will be the date a written partial surrender request is
received at the home office. The Subaccount(s) and/or Interest Bearing Account
from which the surrender is to be made may be selected by the owner. If the
Subaccount(s) and/or the Interest Bearing Account is not specified, the partial
surrender amount will be redeemed/withdrawn in the same percentages as monthly
deductions. The accumulated value will be reduced by the amount
redeemed/withdrawn from the Subaccount(s) and/or the Interest Bearing Account. A
service charge of $25.00 will be deducted from the total amount redeemed
withdrawn from the Subaccount(s) and/or Interest Bearing Account.
If Death Benefit Option 1 is used, the specified amount of insurance will be
decreased by the same amount as the accumulated value is decreased. No partial
surrender will be allowed for issue ages 0-64 if the specified amount remaining
would be less than $20,000. Issue ages above age 64 will not be allowed to make
a partial surrender if the specified amount remaining under Option 1 would be
less than $8,000.
10.3 SURRENDER AND PARTIAL SURRENDER PAYMENTS
Unless payments are deferred as stated below, uncontested payments will be made
within seven days of the surrender or partial surrender date unless some portion
of the accumulated value is held in one or more of the Subaccounts, and:
A. The New York Stock Exchange is closed other than for customary weekend and
holiday closing,
B. The Securities and Exchange Commission requires that trading on the
Exchange be restricted, or declares an emergency which makes it
impracticable for the Separate Account to dispose of its securities or
value its assets, or
C. The SEC by order allows the Company to defer payments to protect its
policyowners.
The payment of any surrender amount or policy loan proceeds from the Interest
Bearing Account may be deferred for up to six months from the date of the
surrender or loan request.
10.4 SETTLEMENT OPTIONS AVAILABLE
The settlement options in Section 8 are available for any surrender proceeds.
- -------------------------------------------------------------------------------
SECTION 11. POLICY LOANS
- -------------------------------------------------------------------------------
11.1 APPLICATION FOR POLICY LOAN
The owner can borrow against the policy an amount up to 80% of the net cash
value. The written consent of all assignees and irrevocable beneficiaries must
be obtained prior to the policy loan. Loan activity may affect any dividends
payable on this policy.
The loan date is the date a loan request is processed by the Company. The loan
value will be determined as of the loan date. Uncontested payment will be made
within seven days of the date the loan request is received at the home office
unless the conditions described in Section 10.3 apply.
The policy will be sole security for the policy loan.
An amount equal to the loan will be redeemed/withdrawn from the Subaccount(s)
and/or the Interest Bearing Account and transferred to the loan account until
the loan is repaid. This allocation may be specified by the policyowner. If
there is no allocation, the loan amount will be redeemed/withdrawn in the same
manner as monthly deductions.
The guaranteed minimum rate at which amounts in the loan account will be
accumulated is shown on the specifications page.
11.2 POLICY LOAN INTEREST
Interest is payable on policy loans at the policy loan rate shown on the
specifications page. Interest accrues on a daily basis from the loan date.
Interest is due and payable on each policy anniversary. Any interest not paid
when due will be added to the loan principal and charged the same rate of
interest as the loan. The addition of interest added to the loan principal will
cause additional amounts to be redeemed/withdrawn from the Subaccounts and/or
the Interest Bearing Account described in Section 11.1.
If indebtedness at any time equals or exceeds the cash value, this policy will
terminate. Termination will occur not less than 31 days after a notice has been
mailed to the last known address of the owner and any assignee on record at the
home office.
11.3 LOAN REPAYMENT
While the policy is in force before the death of the insured, any indebtedness
may be repaid. Any amounts received on this policy will be considered premiums
unless they are clearly marked as loan repayments. As the loan is repaid, the
amount repaid will be transferred from the loan account to the Subaccount(s)
and/or the Interest Bearing Account in the same way as net premiums are
allocated, unless the owner directs otherwise.
- ------------------------------------------------------------------------------
SECTION 12. CHANGE OF POLICY
- ------------------------------------------------------------------------------
12.1 EXCHANGE OF POLICY
This policy may be exchanged for a policy of permanent fixed benefit insurance
on the life of the insured or for any other policy with the Company may agree to
issue. In this section, -fixed benefit insurance. means any permanent plan of
insurance providing benefits which do not depend on the investment experience of
a Separate Account. This exchange may be made within 24 months after the issue
date. No evidence of insurability is required. All indebtedness must be repaid
before the exchange is made.
The exchange will be effective when the Company receives:
A. Written request for the policy change,
B. Surrender of this policy, and
C. Payment of any required costs.
The new policy will have the same issue date and issue age as this policy. It
will have the same risk classification. The new policy will have either the same
death benefit or the same net amount at risk as this policy on the exchange
date. The exchange will be subject to an equitable adjustment in payments and
cash values to reflect differences, if any, between this policy and the new
policy.
It will also be subject to normal underwriting rules and other conditions
determined by the Company.
12.2 PAID-UP INSURANCE
This policy may be exchanged, in whole or in part, for a paid-up whole life
policy at any time prior to attained age 86, if the following conditions are
met:
A. The owner makes a written request for this policy change,
B. The policy is one the Company is then issuing for the insured's age and
premium class,
C. The policy is subject to the Company's normal underwriting rules,
D. There is compliance with any other conditions determined by the Company,
and
E. Any indebtedness not repaid at the time of the change will be continued as
a loan against the paid-up policy.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY --
MATURING AT AGE 95
Flexible premiums payable during the lifetime of the insured until the maturity
date. Death benefit payable at death prior to maturity date. Adjustable death
benefit. Cash value payable on maturity date. Participating. Some benefits
reflect investment results.
The amount of death benefit will increase or decrease depending on the
investment experience of the Subaccounts selected, if any, and on the death
benefit option selected as described in Section 7.
Cash values will increase or decrease in accordance with the provisions of
Section 9 and the investment experience of the Subaccounts selected, if any.
Cash values are not guaranteed as to dollar amount held in the Subaccounts.
Century Life of America
2000 Heritage Way, Waverly, Iowa 50677
Telephone: (319) 352-4090
<PAGE>
Form 6018
TERM INSURANCE RIDER
SECTION 1. GENERAL CONTRACT PROVISIONS
1.1 THE AGREEMENT
Century Life of America agrees to pay the insurance amount of this rider. The
insurance amount is paid if the policy and this rider are in force and the
insured dies and all other terms and conditions of this rider are met. The
Company also agrees to provide the other benefits and privileges described in
this rider.
1.2 ENTIRE CONTRACT
This rider is a part of the policy to which it is attached. The issue date of
this rider is the same as that of the policy unless the application for this
rider provides otherwise. The issue date for this rider is shown on the
specifications pages for this rider. All references to the policy shall refer to
the policy to which this rider is attached. The definitions used in this rider
are the same definitions stated in the policy.
This rider also includes the application for this rider, a copy of which is
attached. The Company relied on the application in issuing this rider. All
statements made in the application are assumed to be true and complete to the
best knowledge and belief of the persons making them.
1.3 INCONTESTABILITY
This rider is incontestable as to statements made in the application after it
has been in force during the insured's lifetime for two years from its date of
issue. After this two-year period, the Company cannot deny coverage as long as
this rider is not terminated.
If there is an increase in the insurance amount, the amount of the increase
becomes incontestable as to statements made in the Application for Change after
the increase has been in force during the insured's lifetime for two years from
the date of the increase.
If this rider is reinstated, it is incontestable as to statements made in the
Reinstatement Application after it has been in force during the insured's
lifetime for two years from the date of reinstatement.
1.4 MISSTATEMENT OF AGE
If the age of the insured has been misstated, the amount payable and other
benefits will be adjusted. The amount payable and benefits will be what the most
recent premium paid for this rider would have purchased at the correct age.
1.5 SUICIDE
Suicide of the insured, while sane or insane, within two years of this rider's
issue date or its reinstatement date, is not covered by this rider. If the
insured does commit suicide, the premiums paid for this rider will be returned.
If the insured commits suicide within two years of the date of an increase in
the insurance amount, the only amount payable with respect to the increase will
be a return of the premium paid for the increase.
1.6 DIVIDENDS
While this rider is in force, it will share in the divisible surplus of the
Company. The rider's share is determined annually by the Company. Any such
dividend will be combined with and applied in the manner selected for the
dividend of the policy. It is anticipated that no dividends will be payable on
this rider.
SECTION 2. PREMIUMS
2.1 PREMIUM PAYMENT
Premiums on this rider are paid as part of the monthly deductions on the policy
to which this rider is attached. This rider is in force only after the first
premium is paid. Coverage will continue until the earliest of the termination
dates described in Section 4.
The premium for this rider will be calculated on each monthly day. The premium
is determined by multiplying the insurance amount by the cost of insurance rate.
The Company will determine the cost of insurance rate based on the insured's
attained age and rating class. Cost of insurance rates may be changed by the
Company based on the Company's expectations as to future mortality experience.
However, the cost of insurance rate will not exceed the rates shown on the
specifications page (Guaranteed Maximum Cost of Insurance Rates).
2.2 REINSTATEMENT
If this rider has lapsed, the owner may ask to have it reinstated. It will be
reinstated if three conditions are met:
A. The owner must request the Company to reinstate the rider within five years
after which rider premiums were paid,
B. The request must be in writing, and
C. If the policy is not in force, it must be reinstated along with this rider.
The Company will not provide any benefits for the insured under this rider if
the death occurred after the end of the grace period and prior to the date of
reinstatement.
SECTION 3. INSURANCE AMOUNT PROVIDED
3.1 INSURANCE AMOUNT
When the Company receives due proof of the insured's death, it will pay the
insurance amount of this rider according to the provisions of the policy.
3.2 CHANGES IN INSURANCE AMOUNT
The insurance amount may be changed at any time after the first policy year.
Changes must be requested in writing by the owner and are subject to the
following conditions:
A. Decreases
After the decrease, the insurance amount must be at least $100,000. The decrease
will become effective on the monthly day following or coincident with the day
the request is received in the home office. The decrease will be applied to the
initial insurance amount and to increases in the insurance amount in reverse
order in which they became effective.
B. Increases
A supplemental application must be filed and evidence of insurability
satisfactory to the Company must be provided. The effective date of the increase
will be shown on an endorsement to the policy.
3.3 CONVERSION PRIVILEGE
If this rider is in force, it may be converted as a whole or in part, to any
permanent plan of insurance then issued by the Company. If, in the event of a
partial conversion, the remaining rider insurance amount drops below $100,000,
this rider will terminate.
Conversion will be made without evidence of insurability and subject to all of
the following conditions:
A. The request must be in writing,
B. The rider must be converted on or before the rider anniversary immediately
following the insured's 75th birthday,
C. The amount of insurance on the new policy may not be more than the rider's
insurance amount,
D. The premium for the new policy will be based on:
1. The age of the insured on the date of conversion, and
2. The risk classification under which the portion of the insurance
amount of this rider that is being converted was issued.
SECTION 4. TERMINATION OF RIDER
This rider will terminate on the earliest of:
A. The effective date of conversion,
B. The lapse, surrender, exchange, or maturity of the policy,
C. The date the policy specified amount becomes less than $250,000 as a result
of a decrease requested by the owner, or
D. The date the owner submits a written request to the Company. The Company
may require the return of the policy for endorsement of the rider
termination.
SECTION 5. RIDER SPECIFICATIONS
(See attached sheet.)
CENTURY LIFE OF AMERICA
A Mutual Insurance Company
/s/ Barbara L. Secor
Secretary
<PAGE>
Exhibit 5(c)
Flexible Premium Variable Life Insurance Policy
State Variations
Contract Form No. 5202 attached as Exhibit 5 is a copy of the Policy language
used in the following states:
Alaska Mississippi
Arizona Nebraska
Arkansas Nevada
Delaware New Jersey
Hawaii Ohio
Kansas Oregon
Iowa Rhode Island
Maryland Vermont
Montana Wyoming
Wisconsin
The following state contract forms vary from the Form No. 5202 as indicated
below:
Alabama -- Contract No. 5202AL -- Section 1.5, Suicide, deletes the language "or
the reinstatement date" after the word "date" in the first line and sentence of
that section. Section 9.3C., Cost of Insurance Rate, adds the language "for
attained ages less than 20, and the 1980 CSO Smoker and Nonsmoker Mortality
Tables, age last birthday, for attained ages 20 and above." at the end of the
last sentence after the word "birthday."
California --Contract No. 5202CA changes Form 5202 language adding as a second
paragraph on the first page and last page "Minimum death benefit at least equal
to the specified amount will be payable if the Minimum Death Benefit Guarantee
is in effect." It also adds a sentence to the RIGHT TO CANCEL paragraph at the
bottom of page 1 stating "The refund will be the total of all premiums paid for
this policy." Section 3.5, Lapse and Grace Period, includes language requiring
mailing of a Report to Policyholder as well as notice of termination. Section
9.2 adds paragraph at the end of the section stating: "The number of units
purchased or redeemed is determined by dividing A or B by C where A is the net
premium being allocated to the subaccount(s), B is the money being deducted from
the subaccount(s) and C is the unit value on the monthly day. Section 9.3B, Cost
of Insurance, adds language indicating that "The total cost of insurance is the
sum of the cost of insurance for the initial specified amount and the cost of
insurance for any increases in specified amount." And "The total accumulated
value will be used in the calculation of the total cost of insurance as follows:
1. The accumulated value will be allocated first to the calculation of cost of
insurance for the initial specified amount. 2. If the total accumulated value
exceeds the initial specified amount, the excess will be allocated to the
calculation of the cost of insurance for any increases in specified amount, in
the order those increases were made, up to the amount of each increase." Section
9.3C, Cost of Insurance Rate, adds at the end of the section after the word
"birthday," the language "for attained ages less than 20 and the 1980 CSO Smoker
and Nonsmoker Mortality Tables, age last birthday, for attained ages 20 and
above.
Colorado -- Contract No. 5202CO -- Section 1.5, Suicide, reduces the suicide
payment limitation from 2 years to 1 year after the issue date and 1 year after
an increase in specified amount.
Connecticut -- Contract No. 5202CT -- Right to Cancel language reads as follows:
"The owner may cancel this policy by returning the policy before midnight of the
twentieth day after the date the owner receives the policy to Century life of
America, 2000 Heritage Way, Waverly, Iowa 50677. Return of the policy by mail to
the Company or to the agent from whom it was purchased are effective on being
postmarked, properly addressed, and postage paid. If the policy is returned, it
will be considered void from the beginning, and Century Life of America will
make a refund for this policy within seven days after it receives the returned
policy." Section 11.2, Policy Loan Interest establishes the loan interest rate
at 8%.
Florida -- Contract No. 5202FL changes Form 5202 language on the cover page to
allow 30 days for cancellation by owner instead of 20.
Georgia -- Contract No. 5202GA adds language to the cover pages stating "A full
refund of the premium paid will be returned to the policyholder" to the Right to
Cancel section. Section 1.5, Suicide, deletes the language "or the reinstatement
date" after the word "date" in the first sentence, first line.
Idaho -- Contract No. 5202ID changes Form 5202 language adding to Section 10.3,
Surrender and Partial Surrender Payments, the following paragraph: "In the event
that the Company defers payment of the surrender or partial surrender for more
than 30 days, it will pay interest on the surrender benefit at the rate
specified in Idaho Code, Section 28-22-104(2)."
Illinois -- Contract No. 5202IL changes the Right to Cancel section on the cover
page to read as follows: "The owner may cancel this policy by delivering or
mailing a written notice or sending a telegram to Century Life of America, 2000
Heritage Way, Waverly, Iowa 50677, and by returning the policy before midnight
of the twentieth day after the date the owner receives the policy. Notice given
by mail and return of the policy by mail to the Company or to the agent from
whom it was purchased are effective on being postmarked, properly addressed, and
postage paid. If the policy is returned, it will be considered void from the
beginning, and Century Life of America will return all payments made for this
policy within ten days after it receives notice of cancellation and the returned
policy."
Indiana -- Contract No. 5202IN -- "Minimum Premium" is defined as "The
annualized premium amount used to determine the status of the no lapse guarantee
during the first three policy years (see Section 3.6). The minimum premium is
shown on the specifications page." Section 3.1, Time and Place of Payment,
second paragraph is changed to read: "The minimum premium, also shown on the
specifications page, is the annualized premium amount used to determine the
status of the no lapse guarantee during the first three policy years (see
Section 3.6). Section 9.3 C, Cost of Insurance Rate, adds "Attained age means
age on the most recent policy anniversary. Cost of insurance rate changes will
depend on the Company's expectations as to future mortality experience. the
annual cost of insurance rates will not exceed the rates shown in Table 1 -
Guaranteed Maximum Cost of Insurance Rates. The guaranteed maximum insurance
rates are based on the 1980 CSO Mortality Tables, age last birthday, for
attained ages less than 20, and the 1980 CSO Smoker and Nonsmoker Mortality
Tables, age last birthday, for attained ages 20 and above. Section 9.3D., Basis
of Values, reads as follows: "The Company has filed a detailed description of
the method of computation of the cash values. the description is filed with the
insurance supervisory official of the state in which this policy is issued. If
the net investment income return credited to the policy is equal to 4% at all
times from the date of issue, then cash values will never be less than the
minimum cash surrender values calculated according to the Standard Nonforfeiture
Law, using 4% and the 1980 CSO Mortality Tables (same as described in Section
6.3C)."
Kentucky -- Contract No. 5202KY changes Form 5202 language on the cover page to
allow 30 days for cancellation by owner instead of 20.
Louisiana -- Contract No. 5202LA adds the following language to the bottom of
page 1 cover page: "No premium will be payable to Century Life of America when a
policyholder receives notice of an injunction or order of rehabilitation or
liquidation."
Maine -- Contract No. 5202ME deletes the last sentence of section 1.2B., Policy.
Massachusetts -- Contract No. 5202MA adds the following sentence to the Right to
Cancel paragraph on page 1 cover page "The refund will be the total of all
premiums paid for this policy." Paragraph 5 is deleted from section 1.3,
Incontestability.
Michigan -- Contract No. 5202MI deletes the language "or the reinstatement date"
after the word "date" in the first sentence of Section 1.5, Suicide.
Minnesota -- Contract No. 5202MN deletes the section entitled "Introduction,"
and changes the definition of "Death Proceeds" to read: "The amount to be paid
if the insured dies while the policy is in force. When the policy becomes a
claim by the death of the insured, settlement will be made within two months
after receipt of due proof of death." Section 1.2 A, application, third and
fourth sentences, are changed to read: "The Company agrees that, in the absence
of fraud, all statements made in the application as representations and not
warranties. No statement will be used to rescind the policy or defend a claim
under the policy unless that statement is in the written application." Paragraph
2 of Section 1.3, Incontestability is changed to read "While this policy is
contestable, the Company may contest the policy or defend a claim only on the
basis of fraudulent statements in the application. The next paragraph in
Contract No. 5202 is deleted form Contract No. 5202MN. The new fourth paragraph
is changed to read "While any increase in specified amount is contestable, the
Company may contest the increase or defend a claim for the difference in death
benefit only on the basis of fraudulent statements in the supplemental
application."
Missouri -- Contract No. 5202MO, section 1.3, Contestability, reads: "After the
policy has been in force during the insured's lifetime for two years from the
policy date, we cannot contest this policy except for the nonpayment of
premiums." Section 1.5, Suicide, reads: "Suicide is no defense to payment of
life insurance benefits or to provision of benefits under an attached rider, nor
is suicide while insane a defense to payment of accidental death benefits under
this policy where the policy is issued to a Missouri citizen, unless the insurer
can show that the insured intended suicide when he applied for the policy and/or
rider."
New Mexico -- Contract No. 5202NM changes the first paragraph of Section 3.5,
Lapse and Grace Period as follows: " If the net case value on any monthly day is
less than the amount needed to pay the monthly deduction, and if the no lapse
guarantee does not apply, the Company will mail a notice of termination and a
copy of the Report to Policyholder to the owner at his or her last known
address. The Company will grant a 61-day grace period for the payment of the
amount due. The grace period will end on a date not less than 61 days after the
mailing date of the notice and Report."
North Carolina -- Contract No. 5202NC adds the following sentence to Right to
Cancel, page 1: "The refund will be equal to the original payment." The Cost of
Insurance Rate section 9.3C and Section 9.4 add references to Smoking and
Non-Smoking status ("S" status).
North Dakota -- Contract No. 5202ND -- Section 1.5, Suicide, reduces the suicide
payment limitation from 2 years to 1 year after the issue date and 1 year after
an increase in specified amount.
Oklahoma -- Contract No. 5202OK adds section 5.3 Underlying Mutual Funds and 9.8
Projection Report to the Guide to Policy Provisions. Section 1.5, Suicide
deletes the phrase "or the reinstatement date" after the word "date" in the
first sentence, first line. Section 9.8, Projection Report, reads as follows:
"The Company will provide a projection report at any time upon the request of
the owner. This report will show the current accumulated value and the
accumulated value for the next 20 policy years. The accumulated values for
future years will be calculated using 4% interests and the guaranteed maximum
cost of insurance rates. The maximum charge for this report is $25.
Pennsylvania -- Contract No. 5202PA adds to the cover page "Minimum death
benefit at least equal to the specified amount will be payable if the Minimum
Death Benefit Guarantee is in effect." The Right to Cancel Section on the cover
page reads: "The owner may cancel this policy by delivering or mailing a written
notice or sending a telegram to Century Life of America, 2000 Heritage Way,
Waverly, Iowa 50677, and by returning the policy within 45 days of the date of
execution of the application for insurance, within 20 days of the owner's
receipt of the issued policy, or within 20 days of the owner's receipt of the
Notice of Right of Withdrawal, whichever is later. Notice given by mail and
return of the policy by mail are effective on being postmarked, properly
addressed, and postage paid. If the policy is returned to the Company or to the
Agent through whom it was purchased, it will be considered void from the
beginning, and Century Life of America will make a refund for this policy within
seven days after it receives notice of cancellation and the returned policy. The
refund will be the total of all premiums paid for this policy." The first
sentence of Section 1.4, Misstatement of Age or Sex, reads as follows: "If the
insured's age or sex has been misstated, no adjustment will be made to the
accumulated value." The phrase "or the reinstatement date" is removed after the
word "date" in the first sentence of Section 1.5, Suicide. The first paragraph
of Section 3.5, Lapse and Grace Period, reads as follows: "If the net cash value
on any monthly day is less than the amount needed to pay the monthly deduction,
and if the no lapse guarantee does not apply, the Company will mail a notice of
termination and a copy of the Report to Policyholder to the owner at his or her
last known address. The Company will grant a 61-day grace period for the payment
of the amount due. The grace period will end on a date not less than 61 days
after the mailing date of the notice and Report." The following paragraph is
added to the end of Section 9.2, Accumulated Value: "The number of units
purchased or redeemed is determined by dividing A or B by C where A is the net
premium being allocated to the Subaccount(s), B is the money being deducted from
the Subaccount(s) and C is the unit value on the monthly day." Section 9.3B.,
Cost of Insurance reads as follows: "The total cost of insurance is the sum of
the cost of insurance for the initial specified amount and the cost of insurance
for any increases in specified amount. The cost of insurance is the cost of
insurance rate multiplied by the excess of 1 over 2, divided by 1000, where 1
and 2 are the following: 1. The face amount of the monthly day. 2. The
accumulated value on the monthly day, prior to the cost of insurance being
deducted. The total accumulated value will be used in the calculation of the
total cost of insurance as follows: 1. The accumulated value will be allocated
first to the calculation of cost of insurance for the initial specified amount.
2. If the total accumulated value exceeds the initial specified amount, the
excess will be allocated to the calculation of the cost of insurance for any
increases in specified amount, in the order those increases were made, up to the
amount of each increase." The last sentence of Section 9.3C., Cost of Insurance
Rate, reads as follows: "The guaranteed maximum insurance rates are based on the
1980 CSO Mortality Table, age last birthday, for attained ages less than 20 and
the 1980 CSO Smoker and Nonsmoker Mortality Tables, age last birthday or
attained ages 20 and above." The phrase "partial surrenders or policy loan
transactions" is deleted from the second sentence of the second paragraph in
Section 9.6, Deferred Charges Account. The phrase "The payment of any premiums
due the Company will not be deferred." is added to the end of Section 10.3,
Surrender and Partial Surrender Payments. The second sentence of the third
paragraph of Section 12.1, Exchange of Policy, reads as follows: "It will have
the same risk classification and shall include the same incidental insurance
benefits as were included in this policy if those incidental insurance benefits
were then available for issue with the new policy." The sentence "Minimum death
benefit at least equal to the specified amount will be payable if the Minimum
Death Benefit Guarantee is in effect" is added to the end page of the policy.
South Carolina -- Contract No. 5202SC removes the definition "Rescind a Policy."
Section 1.2A. changes the word "rescind" in the last sentence to "contest." The
last sentence of the first paragraph of Section 1.3, Incontestability, reads:
"Any rider(s) attached to this policy will be incontestable after each such
rider has been in force from the later of two years from this rider's issue date
or two years from the date of its last reinstatement." Paragraph 6 of Section
1.3 is deleted from 5202SC. Section 1.5, Suicide, deletes the phrase "or the
reinstatement date" after the word "date." The phrase "not less than the legal
rate of interest" is added to the end of the last sentence of the second
paragraph of Section 8.3, Method of Payment.
South Dakota -- Contract No. 5202SD adds the words "Variable Life" under the
heading on the first policy page.
Tennessee -- Contract No. 5202TN deletes the phrase "or the reinstatement date"
after the word "date" in the first sentence of Section 1.5, Suicide. The phrase
"and any assignee of record at their last known address" is added to the end of
the first sentence of the first paragraph of Section 3.5, Lapse and Grace
Period.
Texas -- Contract No. 5202TX adds the sentence "The refund will be the total of
all premiums paid for this policy." to the Right to Cancel section on page one
of the policy. The word "state" is removed before the word "taxes" in the
definition of "Charge for State Taxes" under Definitions and throughout the
policy. The definition for "Per Thousand Expense Charge" adds the following
sentences: "It applies to the original specified amount, lasting ten years from
the issue date. It also applies to any requested increases in specified amount,
lasting for ten years following the effective date of such increase." Delete
"Rescind a Policy" from the Definitions Section. The definition of "Valuation
Day" adds "It coincides with the end of the valuation period." Section 3.1C adds
the word "unplanned" before the first use of the word "premium." The sentence
"Notice of the new target premium will be mailed to the insured." is added after
Section 3.7C. Section 5.3, Underlying Mutual Funds, last two sentences read as
follows: "The unit value of each series other than a Treasury Series was
originally established at $10 per unit. The unit value of each Treasury Series
will be established at a price that is calculated to grow to $10 per unit upon
maturity of the Treasury Series held in that series." The parenthetical phrase
in Section 5.5B.2 reads as follows: "(The daily amount of this charge is equal
to the net assets of the Subaccount multiplied by the daily mortality and
expense risk charge factor shown on the specifications page)." The last sentence
of Section 9.3C, Cost of Insurance Rate, reads: "The guarantee maximum insurance
rates are based on the 1980 CSO Mortality Tables, age last birthday, for
attained ages less than 20, and the 1980 CSO Smoker and Nonsmoker Mortality
Tables, age last birthday, for attained ages 20 and above." Section 9.5,
Deferred Charge, reads as follows: "a charge for sales expense and a charge for
administrative expense, collectively called "deferred charges," is incurred
incrementally each month during the first policy year but deferred. Deferred
charges become payable in amounts which decrease annually after the first policy
year, but only if the policy is surrendered within the first nine policy years.
The amount of deferred charges payable in any policy year is shown on the
specifications page. The amount of deferred charges is based on the specified
amount, age, sex and rating class of the insured as illustrated in the tables
below. No additional deferred charges are incurred after the first policy year
unless the specified amount is increased. Where there is an increase in
specified amount, the amount of additional deferred charges, if any, is based
only on the amount of the increase and the insured's age, sex and rating class
for this purpose at the time the increase in specified amount is issued as
illustrated in the table below. Like deferred charges in the first policy year,
such additional deferred charges in the first year of the increase build up on a
monthly basis over the first 12 months of the increase so that if the policy is
surrendered during the first 11 policy months of such increase, the deferred
charges attributable to the increase will be prorated to include only the
charges incurred on the date of such surrender. If the policy is surrendered
during any of the nine years following the date of the increase, the reduced
amount of such deferred charges payable shall be calculated on the basis of the
annualized deferred charge per $1,000 as illustrated in the table below. No
additional deferred charges will apply if the increase is specified amount is
due solely to a change in death benefit option. The accumulated value at the
time of any increase in specified amount must be at least as great as the sum of
the existing deferred charges plus the additional deferred charges, if any."
Table follows. The first sentence of Section 9.6, Deferred Charges Account
reads: "The deferred charges account is a non-segregated portion of the
Company's general account in which a portion of the policy's accumulated value
is held while this policy has deferred sales and administrative charges."
Utah -- Contract No. 5202UT second paragraph of Right to Cancel on page one
reads: "A full refund of the premium paid will be returned to the policyholder."
The words "or the reinstatement date" are deleted after the word "date" in the
first sentence of Section 1.5, Suicide. The words "in arrears" is added after
the word "payable" in the first sentence of Section 11.2, Policy Loan Interest.
Virginia -- Contract No. 5202VA adds the phrase "when issued or delivered" after
the word "contract" in the first sentence of Section 1.2, The Entire Contract.
The last sentence of Section 1.2A., Application, will read: No statement will be
used in defense of a claim under the policy unless that statement is contained
in a written application that is endorsed upon or attached to the policy when
issued or delivered." Section 11.1, Application for Policy Loan, adds the words
"up to 90%" after the word "amount" in the first sentence of the first
paragraph.
Washington -- Contract No. 5202WA the last sentence of the definition "Death
Proceeds" reads: "The Company will pay interest from the date of settlement at a
specified rate but no less than that required by law." The last sentence of the
definition "Maturity Date" reads: "The Company will pay interest from the
maturity date to the date of settlement at a specified rate but not less than
that required by law." The words "in arrears" are added after the word "payable"
in the first sentence of Section 11.2, Policy Loan Interest."
West Virginia -- Contract No. 5202WV the last sentence of Section 10.3,
Surrender and Partial Surrender Payments, reads: "The payment of any surrender
amount or policy loan proceeds from the Interest Bearing Account may be deferred
for up to 30 days from the date of the surrender request or six months from the
date of the loan request."
<PAGE>
EXHIBIT 6(a)
April 2, 1992
Corp. No.: 000069607 IOWA
Ref. No.: 55170
SECRETARY OF STATE
CENTURY LIFE OF AMERICA
ATTN; SHERRY BUTTJER
CENTURY LIVE OF AMERICA
2000 HERITAGE WAY
WAVERLY IOWA 50677
CERTIFICATE OF EXISTENCE
Name CENTURY LIFE OF AMERICA
Date 03/03/1896
I, ELAINE BAXTER, secretary of state of the state of IOWA, cusodian of the
records of incorporations, certify that the corporation named on this
certificate is in existence and was duly incorporated under the laws of Iowa on
the date printed above, with perpetual duration, and that articles of
dissolution have not been filed.
ELAINE BAXTER
ELAINE BAXTER
<PAGE>
Century Life of America
Waverly, Iowa
ARTICLES OF INCORPORATION
ARTICLE I
Name and Principal Office
Section 1. The name of this Corporation is Century Life of America (hereinafter
sometimes called the Company).
Section 2. The home office and principal place of business of the Company shall
be located in Bremer County, Iowa.
ARTICLE II
Nature of Business, Objects and Powers
Section 1. The general nature and purpose of the business of this Corporation
shall be that of engaging in, pursuing, maintaining and transacting on the
mutual plan as a legal reserve or level premium company,
(a) a general life and health and accident insurance business and
an annuity business, including all forms of life insurance,
endowments, annuities, accident insurance, disability and
health insurance, all relating to the life and health of
persons, and,
(b) any other type of insurance business which the Company may be
authorized and duly qualified to underwrite and transact under
and by virtue of Iowa Insurance Laws,
and in addition, engaging in, pursuing, maintaining and transacting any other
related or unrelated business which any corporation now or hereafter authorized
and empowered to do an insurance business in this State may now or hereafter
lawfully do, whether or not it be complementary, necessary, or incidental to the
business of writing insurance and otherwise transacting the business of an
insurer.
Section 2. More specifically, and without limitation as to any other right,
power, privilege, franchise, or authority which the corporation may be permitted
under the law of the state of Iowa, and in pursuance of the aforesaid corporate
purposes, the Company in its corporate or assumed name is empowered:
to sue, complain and defend; to have a corporate seal which may be
altered at pleasure, and to use the same by causing it, or a facsimile
thereof to be impressed or affixed or in any other manner reproduced;
to design, create, develop, offer, solicit, sell, write, underwrite,
insure, coinsure, reinsure, administer, settle and otherwise deal in
and with insurance policies and annuity contracts of all types whether
on a participating or nonparticipating basis, and on an individual or
group or blanket basis, providing for benefits on either a fixed or
variable basis; to enter into any lawful contract for the purpose of
ceding or accepting insurance risks, directly or indirectly, either
entirely in its own right or in a shared or multiple capacity with
other insurers; to enter into collateral or supplementary contracts and
otherwise deal contractually with respect to insurance policies or
annuity contracts or the proceeds of same; to act as trustee or advisor
in any capacity, and to offer all services, including those of a
financial, accounting, or data processing nature, directly or
indirectly, incidental to its business, and to form or otherwise
acquire other insurance or business corporations as subsidiaries, and
to invest in, and to establish or manage, one or more investment
companies; to purchase, take, receive, lease, or otherwise acquire,
own, hold, improve, use, or otherwise deal in and with real or personal
property of any kind and description, or any interest therein, wherever
situated; to sell, convey, mortgage, pledge, lease, exchange, transfer
and otherwise dispose of all or any part of its property and assets; to
compensate, or lend money to and otherwise to assist its employees,
agents, officers, and Directors; to purchase, take, receive, subscribe
for, or otherwise acquire, hold, vote, use, employ, sell, mortgage,
lend, pledge, or otherwise dispose of and otherwise use and deal in and
with, shares or other interests in, or obligations of, other domestic
or foreign corporations, associations, partnerships, joint ventures or
individuals, or direct or indirect obligations of the United States or
of any other government, state, territory, governmental district or
municipality, public or quasi-public corporation, or of any
instrumentality thereof; to make contracts and guarantees and incur
liabilities; to lend and borrow money and incur debts for its corporate
purposes; to invest and reinvest its funds, and take and hold real and
personal property as security for the payment of funds so loaned or
invested; to acquire or organize subsidiaries; to conduct its business,
carry on its operations, and have offices and exercise its powers under
authority granted in any state, territory, district, or possession of
the United States or in any foreign country; to make donations for
religious, charitable, scientific or educational purposes; to pay
pensions and establish pension plans, pension trusts, profit-sharing
plans and other incentive, insurance and welfare plans for any or all
of its Directors, officers, agents and employees, policyowners,
insurance policy or contract beneficiaries, or clients; to enter into
general partnerships, limited partnerships, whether the company be a
limited or general partner, joint ventures, syndicates, pools,
associations and other arrangements in pursuance of any or all of the
purposes for which the Company is organized; to indemnify officers,
Directors, employees and agents, possessing all the rights and powers
with respect thereto permitted to Iowa business corporations as
specified in Subsection 19 of Section 496A.4 of the Iowa Business
Corporation Act and all acts amendatory thereof or additional thereto;
and to engage in and carry on any other type of business which any
corporation now or hereafter authorized and empowered to do an
insurance business in the state of Iowa may now or hereafter lawfully
do,
and it shall have and exercise all powers, rights and privileges necessary or
convenient to effect any or all of the purposes for which the Company is
organized, and generally such additional powers not herein specified as are now
or may hereafter be conferred upon corporations similar to this Company by the
laws of the state of Iowa.
ARTICLE III
Continuation of Corporate Entity
This Corporation shall have no capital stock and is a continuation of the
original corporation doing business on the mutual plan, retaining all of its
original rights, powers, privileges, immunities, and franchises. All of the
contract rights of policyowners of the Company now holding contracts of
insurance or of annuity issued or assumed by the Company are and shall be
retained. Subject to the foregoing, these Articles shall be construed as a
substitute for all prior articles and amendments thereto.
ARTICLE IV
Period of Existence
This Corporation, as renewed, shall have perpetual existence.
ARTICLE V
Exemption from Corporate Debts
The private property of the Members of the Company shall in no case be liable
for corporate debts, but shall be exempt therefrom.
ARTICLE VI
Members
Section 1. Each person who owns one or more life insurance policies, health and
accident insurance policies, or annuity contracts issued by the Company shall be
a Member of the Company, but only so long as at least one of said policies or
contracts remains in full force and effect and has not been surrendered or has
not expired or has not matured by death of the insured or annuitant, or
attainment of maturity date. In the case of multiple ownership of any insurance
policy or annuity contract, the persons owning such policy or contract shall be
deemed collectively to be the Member and the Bylaws may establish procedures for
the exercise of the voting right of such Member.
Section 2. Only those Members who meet such eligibility requirements, as may be
established by law, by these Articles, and the Bylaws as may be amended from
time to time, shall be Voting Members, provided however, that nothing herein
contained, and no Bylaws establishing additional eligibility requirements for
Voting Members shall have the effect of terminating a person's then existing
membership or voting right.
ARTICLE VII
Members Meetings
Section 1. Voting Members shall be entitled to vote in person or by proxy at any
meeting of the Members in accordance with procedures prescribed in the Bylaws.
Section 2. Unless the Board directs otherwise, the annual meeting of the Company
shall be held at the Company's home office and principal place of business on
the second Wednesday of May of each year for the election of Directors, and for
the transaction of any other business properly coming before such annual
meeting.
Section 3. Annual and all special meetings of the Members shall be called or
held as provided in the Bylaws. The Company may make reasonable expenditures in
support of a position or issue at any meeting, or in support of any or all
candidates to be nominated for election to the Board.
ARTICLE VIII
Board of Directors and Officers
Section 1. The corporate powers and business of the Company shall be directed
and controlled by a Board of Directors and by such officers and agents as the
Board of Directors may authorize, elect or appoint.
Section 2. The Board of Directors shall consist of not less than nine (9) nor
more than twenty-one (21) Members as prescribed from time to time in the Bylaws,
and shall be divided into classes, as nearly equal numerically as possible, so
that the terms of one class expire each year. The number of Directors so
prescribed may not be changed by more than one (1) in any calendar year. Each
Director shall serve a term of approximately three (3) years except as otherwise
provided in the Bylaws, or except where it is necessary to fix a shorter term in
order to preserve classification. The Board of Directors shall have the power to
fill any vacancy in its number occurring for any reason at any time except where
such vacancy occurs due to the expiration of a Director's term of office as
provided herein or in the Bylaws.
Section 3. The Board of Directors shall have the power to adopt such bylaws,
rules and regulations for the transaction of business of the Company as are not
inconsistent with these Articles, or the laws of the state of Iowa, and to amend
or repeal such bylaws, rules and regulations. The Bylaws shall provide for the
election of Directors and establish procedures to accomplish the same.
Section 4. A Director of this Company shall not be personally liable to the
Company or its Members for monetary damages for breach of fiduciary duty as a
Director, except for liability (i) for any breach of the Director's duty of
loyalty to the Company or its Members, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, or
(iii) for any transaction from which the Director derived an improper personal
benefit.
ARTICLE IX
Change of Articles
These Articles of Incorporation may be amended, substituted or changed at any
annual meeting of the Members, or at any special meeting called for that purpose
as hereinafter provided. The proposed substitution or amendment must be offered
in writing, and either signed by not less than one (1) percent of the Voting
Members, or offered by the Board of Directors.
Such proposed substitution or amendment when offered by a Member
(a) must contain the actual signatures as well as the printed
names and addresses of those Members subscribing to the
proposal,
(b) must have the notarized certification of the offering Member
authenticating the signatures of the other subscribing
Members, and
(c) must be filed with the Secretary of the Company at least
ninety (90) days prior to said annual or special meeting.
Such proposed substitution or amendment when offered by the Board of Directors
must be first adopted by two-thirds (2/3) of the total Board membership at a
regular meeting or at a special meeting called for such purpose, or it must be
approved by the unanimous written consent of all of the Directors, certified by
the Secretary, and filed at least thirty (30) days prior to said annual or
special meeting of the Members.
The Secretary shall furnish to each Voting Member a copy of such substitution or
amendment whether proposed by the Board or by Members together with a ballot
containing a suitable space wherein a Voting Member may vote for or against the
same, and a space for the Voting Member's signature and the date of the meeting.
Such material shall be mailed in the United States mail, addressed to the Voting
Members of the Company, or substantially all of them, at their last known post
office addresses, as the same then appear on the records of the Company, not
less than twenty (20) nor more than ninety (90) days prior to the date of the
meeting. The Board of Directors or persons designated by it may make such
statements or recommendations as it sees fit on all matters to be presented to
the Members. All substitutions or amendments when adopted by a majority of
Members voting thereon in person or by duly signed ballot shall be binding upon
all Members and they shall be governed thereby.
Amended and Restated May 11, 1977
Amended effective December 28, 1984
[Name change: Lutheran Mutual Life Insurance Company to
Century Life of America]
Amended effective May 13, 1988
[Article VIII, add Section 4]
FILED FOR RECORD STATE OF IOWA, BREMER COUNTY:
Doc. No.
July 27, 1988 AT 11:00 AM Jackie Juke, Recorder
19882099 Jackie Juke
Recording $15.00 Transfer $ By Donna Ellison, Deputy
Donna Ellison
CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
CENTURY LIFE OF AMERICA
The undersigneds hereby certify:
1. That they are Senior Vice President - Finance and Information
Services and Secretary, respectively, of Century Life of
America, an Iowa corporation, organized and doing business as
a mutual life insurance company under and by virtue of
Chapters 491 and 508, respectively, of the 1987 Code of Iowa
as amended;
2. That in accordance with the provisions of Section 491.20 of
Chapter 491 and the Company's own Articles of Incorporation as
previously amended and restated on May 11, 1977, the Board of
Directors, at their meeting held on November 20, 1987, with a
quorum present, by resolution, adopted a proposal to amend the
Company's Articles of Incorporation and directed that said
proposal be submitted to the voting membership for action by
ballot and adoption at the annual meeting of the members to be
held on May 13, 1988; and
3. That the aforesaid proposal to amend the company's Articles of
Incorporation by adding to Article VIII, immediately following
Section 3, a new section which reads as follows:
Section 4. A Director of this Company shall not be
personally liable to the Company or its Members for
monetary damages for breach of fiduciary duty as a
Director, except for liability (i) for any breach of the
Director's duty of loyalty to the Company or its
Members, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing
violation of law, or (iii) for any transaction from
which the Director derived an improper personal benefit.
was in fact mailed to all voting members on a date not less
than 30 days nor more than 90 days prior to the annual
meeting, together with a ballot for use by each voting member
to whom it was addressed, all in accordance with the
applicable provisions of the Company's Articles o
Incorporation and of the corporation and insurance laws of the
sate of Iowa; and
4. That the aforesaid amendment was duly adopted by the voting
membership by a vote of 3,794 votes in favor of the amendment
and 752 votes against the amendment duly perfected on the
record at the annual meeting of the voting membership held on
May 13, 1988, with a quorum present and in accordance with all
applicable Bylaw provisions; and
5. That the aforesaid amendment has caused no changes in the
Company's assets, liabilities, contractual or other
obligations, and no changes in its powers, purposes, nature,
character, or existence as a corporate entity, and no other
changes of any kind in the Company's Articles of Incorporation
have been made, so that with the exception of:
a. the aforesaid amendment as just described; and
b. the amendment adopted by the voting members to change
the Company name at their special meeting duly called
and held on September 13, 1984, which became effective
at exactly 11:59 p.m. Central Standard Time on Friday,
December 28, 1984,
the amended and substituted Articles of incorporation as
adopted on May 11, 1977, remain in all other respects in full
force and effect; and
6. That the amendment as adopted on May 13, 1988, shall become
effective immediately upon its perfection by approval of the
Commissioner of Insurance and the Attorney General for the
Sate of Iowa in accordance with Chapter 508 of the Iowa
insurance laws, and upon notice by publication and the filing
of this Certificate with the Recorder in Bremer County as
required under Section 491.20 of the 1987 Iowa Code as
amended.
IN WITNESS WHEREOF, the undersigneds have executed this Certificate of Amendment
on the 9th day of June, 1988, under the seal of the Corporation.
CENTURY LIFE OF AMERICA
/s/ Daniel E. Meylink
Daniel E. Meylink Sr., FSA, MAAA
Senior Vice President -
Finance & Information Services
/s/ Arthur J. Hessbury
Arthur J. Hessburg, Secretary
<PAGE>
EXHIBIT 6(b)
Century Life of America
Waverly, Iowa
Restated
BYLAWS
ARTICLE I
Definitions
Section 1.1. Terms. When used in these Bylaws, the terms hereinafter provided
shall have the meanings assigned to them unless another meaning is explicitly
indicated:
(a) Member: shall mean a Member of this Company as defined and described in
the Company's Articles.
(b) Policy: shall mean a life insurance policy, accident and health policy,
or annuity contract on an individual or group basis and shall not
include group insurance certificates, settlement contracts, depositary
contracts, or certificates of any kind issued for the purpose of
managing or holding insurance or annuity contract proceeds when a life
policy, accident and health policy, or annuity contract terminates,
expires or otherwise matures by reason of death, surrender or maturity
in its ordinary course, or otherwise.
(c) Record Date: shall mean the last business day of any month immediately
preceding the date of any event or transaction for which it may be
useful or relevant to establish the identity of persons who are Members
or Voting Members, from data contained in the Company's records.
(d) Voting Member: shall mean a Member who meets all of the eligibility
requirements for voting as provided in Section 2.1.
ARTICLE II
Voting Rights of Members
Section 2.1. Eligibility to Vote. Only those Members who have attained age
sixteen (16) on or prior to the Record Date for any meeting shall be eligible to
vote at Members' Meetings. In the case of multiple ownership of any Policy, the
persons designated owners or co-owners on the Company's records as of such
Record Date shall be deemed collectively to be the Voting Member and shall
designate one of their number to cast their vote. In the case where ownership is
claimed by right of assignment, the assignee, if shown on the Company's records
to be the owner as of such Record Date, shall be deemed the Voting Member. In
the case of group policies, the holder of the master policy, and not those
persons holding certificates under the master policy, shall be deemed the Voting
Member.
Section 2.2. Exercise of Voting Rights. Each Voting Member shall be entitled to
cast one (1) vote on each matter to come before a meeting of the Members, either
in person or through an attorney-in-fact designated in a written proxy which
meets the requirements of Section 2.4, regardless of the number of policies or
the amount of insurance or the number of lives insured under any Policy or
Policies owned or controlled by the Voting Member. Except when electing
Directors, voting by Members at any regular or special meeting of the Members
may be by voice vote unless the vote is not all "yea" or "nay" in which case the
vote shall be by written ballot. Each ballot may contain more than one question
or proposition. Any attorney-in-fact holding the voting power of more than one
Member may cast all such votes on one ballot, provided that the ballot shows on
its face the number of votes being cast, and provided it is verified by the
Voting Inspectors as having been cast in accordance with the voting rights
acquired by proxy from the persons whose votes are being cast by proxy.
Section 2.3. Electing Directors. The vote for a Director or Directors at a
meeting of Members shall be by written ballot. Each Voting Member shall be
entitled to cast one (1) vote for each Director's office to be filled. Those
eligible Candidates receiving the highest number of votes cast at such meeting
shall be declared elected.
Section 2.4. Proxy Requirements. No proxy shall be valid unless it is evidenced
by a written form executed by a Voting Member or his or her legal representative
within two (2) months prior to the meeting for which such proxy was given.
Whether or not the duration of such proxy is specified on the proxy form, all
such proxy authority shall be limited to thirty (30) days subsequent to the date
of such meeting or any adjournment thereof, and no proxy shall be valid beyond
the date of such limitation. Unless a Voting Member's proxy shall be received by
the Secretary at least one (1) day prior to the meeting or election at which it
is to be used, it shall not qualify to be voted on behalf of the Voting Member.
Any proxy may, by its terms, be limited as to its use, purpose, or manner in
which it is to be used at the meeting or election for which it is given. Any
such proxy authority shall be revocable by the Voting Member or his or her legal
representative at any time prior to such meeting and shall be deemed to have
been revoked when the person executing the proxy is present at the meeting and
elects to vote in person.
Section 2.5. Proxy Solicitation by this Company. This Company may solicit
proxies from Voting Members and provide such information as this Company deems
pertinent with respect to the Candidates for election as Directors of this
Company or matters being voted upon at the meeting. The fact that this Company,
by mail or otherwise, solicits a proxy from any person shall not constitute nor
be construed as an admission of the validity of any Policy or that such person
is a Member entitled to vote at the meeting; and such fact shall not be
competent evidence in any action or proceeding in which the validity of any
Policy or any claim under it is at issue.
ARTICLE III
Members' Meetings
Section 3.1. Annual Meeting. There shall be an annual meeting of Members for the
purpose of electing Directors and conducting such business as may properly come
before the meeting. Such annual meeting of Members shall be held on the second
Friday in May in the Principal Office of this Company on Heritage Way, Waverly,
Iowa, at the hour of 9:00 a.m. unless the Board otherwise directs. No notice of
such annual meeting need be given except as required by law, unless the Board
designates another date or time or place for the meeting.
Section 3.2. Special Voting and Special Meetings. A special voting of Members or
special meetings of Members may be called at any time pursuant to a duly adopted
Board resolution or upon a petition filed with the Secretary containing a
complete description of the proposition or propositions to be voted on, the
signatures, the printed names and addresses and the policy numbers of at least
one percent (1%) of the Voting Members. A written notice summarizing the purpose
shall be given.
Section 3.3. Presiding Officer. The Chairman of the Board, or in the absence of
the Chairman, the Vice Chairman, or in the absence of both, the President, or in
the absence of all three, the Chief Operating Officer shall preside over
meetings of the Members. The Secretary, if present, or any Assistant Secretary
of this Company, shall act as secretary for the meetings.
Section 3.4. Place of Meetings. The place of all meetings of Members shall be
the Principal Office of this Company in Waverly, Iowa, unless another place is
designated by the Board, either within or without the state of Iowa, and is
specified in the notice of the meeting.
Section 3.5. Manner of Giving Notice. Whenever written notice is required, it
shall state the time, date and place of the meeting, and if for a special vote
or a special meeting, a summary of the purpose. Notice shall be given by mailing
a copy of the notice to Voting Members not more than ninety (90) nor less than
thirty (30) days prior to the day of the meeting. Notice shall be deemed to have
been given to a Voting Member when a copy of such notice has been deposited in
the United States mail, addressed to the owner or the legal representative of
the owner of any policy used to identify a Member as a Voting Member, at his or
her post office address as the same appears on this Company's records as of the
Record Date for the notice, with postage prepaid. Failure to provide notice to
all Voting Members when notice is required shall not invalidate a meeting unless
such failure was intended and such intentional failure can be shown to have been
caused by a willful or deliberate act. If the date or place of an annual meeting
of Members is changed by the Board after this Company has sent or commenced to
send notices, or if prior to the date of any meeting of Members or any
adjournment thereof the notice of such meeting shall be deficient, the Board may
order a notice by publication in at least two (2) newspapers of general
circulation, one of which shall be located in Des Moines, Iowa, and one in
Waterloo, Iowa, at least ten (10) days prior to the meeting, and no other notice
shall be required. Such other notice shall be given as may be required by the
laws of Iowa pertaining to notice of meetings.
Section 3.6. Quorum. Either twenty-five (25) Voting Members present in person or
one thousand (1000) Voting Members present by proxy shall constitute a quorum at
any meeting of Members. If a quorum is not present, a majority of the Voting
Members present in person or by proxy may only adjourn the meeting from time to
time without further notice.
Section 3.7. Required Majority. Except as otherwise expressly provided in the
Articles or Bylaws, or by law, a majority of the votes cast by Voting Members
present in person and by proxy at any meeting of the Members with a quorum
present shall be sufficient for the adoption of any matter to properly come
before the meeting.
Section 3.8. Appointment of Voting Inspectors. Prior to each meeting of Members,
the Board or its Executive Committee, if any, shall appoint, from among Members
who are not Directors, Candidates for the office of Director or Officers of this
Company, three (3) or more voting inspectors and one (1) or more alternate
inspectors, and shall fix their fees, if any. If an inspector so appointed is
unable or unwilling to act and no alternate is able or willing, or if the Board
or Executive Committee has failed to appoint voting inspectors prior to the
meeting, the President may appoint voting inspectors or alternates as required
from among Members eligible as aforesaid.
Section 3.9. Administration of Proxies and Ballots. All unexpired proxies
intended for use at a meeting of Members shall be delivered to the voting
inspectors prior to the meeting. The voting inspectors shall verify their
validity and tabulate them, certifying their findings and tabulation to the
Secretary. At all meetings of the Members, the voting inspectors shall
distribute, collect, and tabulate ballots and certify under oath the results of
any ballot vote cast by Members. All questions concerning the eligibility of
Members to vote and the validity of the vote cast shall be resolved by voting
inspectors on the basis of this Company's records. In the absence of challenge
before the tabulation of a ballot vote is completed, the inspectors may assume
that the signature appearing on a proxy or a ballot is the valid signature of a
person entitled to vote, that any person signing in a representative capacity is
duly authorized to do so, and that a proxy, if it meets the requirements of
Section 2.4, and otherwise appears to be regular on its face, is valid.
ARTICLE IV
Communications Between Members
Section 4.1. Procedure for Facilitating Communication. No Member who is not an
officer, Director, or employee of this Company acting in the ordinary course of
business shall have access to any of this Company's policyholder records, except
such information pertaining to his or her own Policy or Policies as this Company
may be reasonably required by law to provide. However, any Member desiring to
communicate with other Members in connection with a Members meeting shall no
less than sixty (60) days prior to the date of such meeting furnish a written
request addressed to the Secretary containing the following information:
(a) such Member's full name and address and the policy number of any policy
owned by the Member;
(b) such Member's reasons for desiring to communicate with other Members;
(c) a copy of the proposed communication;
(d) the date of the meeting at which such Member desires to present the
matter for consideration.
Within fifteen (15) days of receipt of such request, this Company shall furnish
the requesting Member with information indicating the number of Voting Members
this Company has as of the last day of the month immediately preceding and
provide an estimate of all costs and expenses for processing and mailing the
proposed communication to the membership; or this Company shall advise the
Member that this Company refuses to mail the proposed communication. This
Company shall not refuse to mail the proposed communication unless it has first
made a determination that the communication is "improper" in accordance with
standards provided in Section 4.3 and has followed the procedures provided in
Section 4.2. Within thirty (30) days (or upon a later date if specified by the
requesting Member) of receiving an amount equal to all of this Company's
estimated costs and expenses and a sufficient number of copies of the proposed
communication, this Company shall process and mail the communication to all of
the Voting Members by a class of mail specified by the requesting Member, unless
the communication has been determined to be improper.
Section 4.2. Determining Whether Communications are Proper. Each request to
communicate with other Members shall be reviewed by the Board. If the Board
determines that the communication is a proper one, it shall be processed as
provided in Section 4.1. If the Board determines the communication to be
improper, it shall instruct an appropriate officer to communicate a written
refusal specifying the reasons for the refusal.
Section 4.3. Improper Communication Defined. As used in this section, an
"improper communication" is one which contains material which:
(a) at the time and in the light of the circumstances under which it is
made
(1) is false or misleading with respect to any material fact, or
(2) omits any material fact necessary to make the statements
therein not false or misleading or necessary to correct any
statement in an earlier communication on the same subject
matter which has become false or misleading; or
(b) relates to a personal claim or a personal grievance against this
Company, its management or any other party, or apparently seeks
personal gain or business advantage by or on behalf of any party; or
(c) relates to any matter of a general, economic, political, racial,
religious, social or other nature that is not significantly related to
the business of this Company or is not within the control of this
Company, in that it is not within the power of this Company to deal
with, alter or effectuate; or
(d) directly or indirectly, and without express factual foundation,
(1) impugns character, integrity or personal reputation, or
(2) makes charges concerning improper, illegal or immoral conduct.
ARTICLE V
Board of Directors
Section 5.1. General Powers. The business and affairs of this Company shall be
directed by the Board which from time to time shall delegate authority and
establish guidelines as it deems necessary or appropriate for the exercise of
corporate powers by officers and employees in the course of business.
Section 5.2. Number, Eligibility, and Tenure. The Board shall consist of twelve
(12) Directors. Directors must be policyholders of this Company. The regular
term of office for a Director shall commence when a Director is elected by
Members and end at the third (3rd) succeeding annual meeting of the Members,
except where a shorter term is provided in order to preserve the Class of
Directors. The vacancies on the Board to be filled at each annual meeting of
Members shall be the offices of those Directors whose regular terms are
scheduled to expire. Directors shall be eligible for reelection. Unless a
Director's regular term of office is sooner terminated by resignation,
retirement, legal incapacity or death, each Director elected at an annual
meeting of Members shall hold office for the term for which elected and until a
successor has been elected or appointed and qualified. Section 5.3.
Classification. Directors shall be divided into three (3) Classes, which shall
be as nearly equal as possible, according to the expiration date of the regular
terms of office. The regular term of office of one of the Classes of Directors
shall expire at each annual meeting of Members.
Section 5.4. Chairman and Vice Chairman of the Board. The Board shall elect a
Chairman and a Vice Chairman from its number. The Chairman of the Board shall
preside at all meetings of Members of this Company and the Board of Directors.
The Chairman shall present an annual report to the Members and appoint
committees which are not standing committees or other committees required to be
elected or appointed by the Board of Directors. The Chairman shall perform such
other duties as shall be assigned from time to time by the Board of Directors.
The Vice Chairman shall, in the absence or disability of the Chairman of the
Board, perform the duties of that office.
Section 5.5. Nomination by Members. Any Member may nominate one or more
Candidates for the Directors' offices to be filled by election at any annual
meeting of Members by filing with the Secretary on behalf of each such
Candidate, on or before January 31 preceding such annual meeting, a Certificate
of Nomination which has been signed by at least one percent (1%) of the Voting
Members and which gives the names, occupations and addresses of their Candidate
or Candidates together with a statement signed by said Candidates that they will
accept office if elected. No signature on any such Certificate shall be counted
unless it is also accompanied by the printed name and address and the policy
number of a Policy owned by the signator.
Section 5.6. Board Sponsored Nominations. The Board may nominate one or more
Candidates for the Directors' offices to be filled by election at any annual
meeting of Members by nominating a Candidate or a slate of Candidates in a
resolution duly adopted at a regular or special meeting of the Board and causing
a Certificate of Nomination to be filed with the Secretary on behalf of each
such Candidate at least thirty (30) days prior to the date of the annual meeting
of Members. Such Certificate of Nomination shall give the names, occupations,
and addresses of their Candidate or Candidates together with a statement signed
by said Candidates that they will accept office if elected.
Section 5.7. Vacancies. Vacancies in the Board which occur prior to the
expiration of a Director's regular term of office by reason of resignation,
retirement, legal incapacity, or death, or other vacancies which may occur by a
reason of an increase in the number of Directors in between annual meetings of
Members, or vacancies which may occur by reason of any failure on the part of
the Voting Members to elect a sufficient number of Directors at an annual
meeting of Members, may be filled by appointment made in a duly adopted
resolution concurred in by two-thirds (2/3) of the Board membership when voting
at any meeting of the Board, or by appointment made in a unanimous consent
action taken in lieu of meeting. A Director appointed to fill a vacancy shall
hold office for the unexpired portion of the term to which appointed. Unless a
Director's service is otherwise terminated by resignation, retirement, legal
incapacity, or death, a Director, whether appointed or elected, shall serve
until a successor is elected or appointed and qualified.
Section 5.8. Retirement. Directors shall retire from the Board at the end of the
month in the year in which they attain age seventy (70) notwithstanding any
election for a longer term. At any time prior to attaining age seventy (70), any
Director who is also an officer of this Company shall retire from the Board upon
retirement from this Company as an employee or upon termination of employment
for any reason.
Section 5.9. Nonattendance or Failure to Perform. Directors are expected to
attend meetings regularly and to serve diligently while in office. If it appears
that a Director is absent from meetings without good cause, or that he or she is
either unwilling or unable to perform his or her duties satisfactorily for any
reason whatsoever, or that the continued service of such Director on the Board
may be detrimental to the best interests of this Company, the Board may by a
two-thirds (2/3) vote of the total Board membership request such Director to
resign, which resignation shall not be unreasonably withheld.
Section 5.10. Compensation. Directors shall be compensated as established by the
Board, and shall be reimbursed for reasonable expenses incurred in connection
with the discharge of their duties and responsibilities.
ARTICLE VI
Board Meetings
Section 6.1. Regular Meetings. A regular annual meeting of the Board of
Directors shall be held without other notice than this Bylaw on such date in the
months of April, May or June as the Board of Directors shall determine. At such
meetings, the Directors shall elect the officers of this Company and transact
such business as pertains to the annual meetings of the Board. The Board of
Directors may provide by resolution, or the Chairman of the Board, Vice Chairman
or President may designate, the time, date and place, either within or without
the state of Iowa, for the holding of additional regular meetings by giving
notice at a regular or special meeting of Directors or by written notice as
provided in this Article for special meetings.
Section 6.2. Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board, Vice Chairman, President or Secretary, and
shall be called by the President upon written request of any three (3)
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the state of
Iowa, as the place for holding any such special meeting of the Board of
Directors.
Section 6.3. Notice. Notice of any special meeting shall be given at least
ninety-six (96) hours previously thereto by written notice delivered personally
or by mail or telegram to each Director at his or her home or business address.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid. If notice be
given by telegram, such notice shall be deemed to be delivered when the telegram
is delivered to the telegraph company. Whenever any notice whatever is required
to be given to any Director of this Company under the Articles of Incorporation
or Bylaws or any provision of law, a waiver thereof in writing, signed at any
time, whether before or after the time of meeting, by the Director entitled to
such notice, shall be deemed equivalent to the giving of such notice. The
attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends a meeting and objects thereat to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 6.4. Quorum. Except as otherwise provided by law or by the Articles of
Incorporation or these Bylaws, a majority of the number of Directors authorized
by the Articles of Incorporation and established by these Bylaws, shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, but a majority of the Directors present (though less than such
quorum) may adjourn the meeting from time to time without further notice.
Section 6.5. Manner of Acting. The act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors, unless the act of a greater number is required by law or by the
Articles of Incorporation or these Bylaws.
Section 6.6. Presumption of Assent. A Director of this Company who is present at
a meeting of the Board of Directors or a committee thereof at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless his/her dissent shall be entered in the minutes of the meeting or
unless he/she shall file a written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of this Company immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 6.7. Informal Action Without Meeting. Any action required or permitted
by the Articles of Incorporation or these Bylaws or any provision of law to be
taken by the Board of Directors at a meeting, or by resolution may be taken
without a meeting if a consent resolution in writing, setting forth the action
so taken shall be signed by all of the Directors then in office. Such consent
shall have the same force and effect as a unanimous vote of the Board of
Directors.
Section 6.8. Meetings by Conference Telephone. Directors may participate in a
meeting of the Board of Directors or a committee thereof by means of conference
telephone or similar communications equipment through which all persons
participating in the meeting can hear each other. Such participation will
constitute presence in person at that meeting for the purpose of constituting a
quorum and for all other purposes. The place of any meeting held pursuant to
this section will be deemed to be the place stated in the minutes of such
meeting so long as at least one Director is present at that place at the time of
that meeting.
ARTICLE VII
Committees
Section 7.1. Committees. The Chairman of the Board may appoint committees except
standing committees or any other committee required to be elected or appointed
by the Board of Directors. The Board of Directors by resolution adopted by the
affirmative vote of a majority of the number of Directors as established in
these Bylaws may designate one or more standing committees or other committees
required to be elected or appointed by the Board of Directors, each committee to
consist of three (3) or more Directors or employees of this Company or other
persons elected or appointed by the Board of Directors or appointed by the
Chairman of the Board, as provided in said resolution which to the extent
provided in said resolution as initially adopted, and as thereafter supplemented
or amended by further resolution adopted by a like vote, shall have when the
members thereof are members of the Board of Directors, and may exercise when the
Board of Directors is not in session, the powers of the Board of Directors in
the management of the business and affairs of this Company, except action in
respect to dividends to policyholders, amendment or repeal of these Bylaws,
election of the Executive Officers or the filling of vacancies in the Board of
Directors or committees created pursuant to this Section. The Board of Directors
or its Chairman may elect or appoint one (1) or more of its members or employees
of this Company or other persons as provided in said resolution, as alternate
members of any such committee who may take the place of any absent member or
members at any meeting of such committee, upon request by the President or upon
request by the chairman of such meeting. Each such committee shall fix its own
rules governing the conduct of its activities and shall make such reports to the
Board of Directors of its activities as the Board of Directors may request.
ARTICLE VIII
Executive and Other Officers
Section 8.1. Executive Officers. The Executive Officers of this Company shall
include the President, the Chief Executive Officer, all Senior Vice Presidents,
and such other Officers as the Board may designate as Executive Officers.
Executive Officers shall be appointed by the Board and shall hold office at the
pleasure of the Board as hereinafter provided.
Section 8.2. Powers and Duties of Executive Officers. The Chief Executive
Officer shall be the principal executive officer of this Company and, subject to
the control of the Board of Directors, shall also have all of the authority
designated in these Bylaws for the President of this Company. The President
shall report to the Chief Executive Officer. The President, who may be this
Company's Chief Executive Officer, shall have responsibility for the general
direction and management of this Company's affairs, and shall exercise such
powers and perform such duties as are necessary, appropriate, or are usually
incident to such office, or as may be delegated or assigned by the Board. All
other Executive Officers of this Company shall exercise such powers and perform
such duties as may be necessary or appropriate in order to secure on behalf of
this Company, proper compliance with all applicable law and regulation, or as
may be necessary, appropriate, or usually incident to their designated offices,
and such other duties as may be delegated to them by the Board, or the
President. Section 8.3. Other Officers. The other officers, including Vice
Presidents and Assistant Vice Presidents, if any, the Secretary and Assistant
Secretaries, if any, the Treasurer and Assistant Treasurers, if any, and such
other officers as the Board may from time to time deem necessary or appropriate,
shall be appointed by the Board. Each of these officers shall hold office at the
pleasure of the Board or the President. Such officers shall exercise such powers
and perform such duties as are necessary, appropriate, or are usually incident
to their designated offices, and such other duties as may be delegated or
assigned to them by Board directive, by the President, or by the Executive
Officers to whom they report.
Section 8.4. Vacancies and Absences. Any vacancy in any office may be filled at
any meeting of the Board or by action without meeting as provided in Section
6.7. In the prolonged absence of the Chief Executive Officer or President, or in
the event death or inability of either of them to act, a person designated by
the Board shall exercise the powers and perform the duties of that office on an
interim basis.
Section 8.5. Compensation. Compensation of Executive Officers shall be fixed
from time to time by the Board. Compensation of other officers and employees
shall be fixed by or in the manner provided by the Board.
ARTICLE IX
Miscellaneous
Section 9.1. Principal Office. The location of the principal office of this
Company shall be in the Century Companies of America Building on Heritage Way,
in the city of Waverly, county of Bremer, and state of Iowa. This Company may
have other offices at such locations as may be necessary or convenient for the
conduct of its business.
Section 9.2. Certification and Inspection of Articles and Bylaws. This Company
shall keep in its Principal Office the original or a certified copy of its
Articles and its Bylaws as amended or otherwise altered to date, both of which
shall be open for inspection by any Member or Members at all reasonable times
during office hours.
Section 9.3. Corporate Seal. The Board may adopt, use, and, at will, alter a
corporate seal. Failure to affix a seal does not affect the validity of any
instrument. This corporate seal may be used in facsimile form.
Section 9.4. Execution of Instruments and Policies. The President, Senior Vice
Presidents, Vice Presidents, and such other persons as may be designated
pursuant to duly adopted Board resolutions, shall each have authority to execute
and acknowledge or attest on behalf of this Company all instruments executed in
the name of this Company. The Secretary and Assistant Secretaries shall each
have authority to attest and acknowledge all such instruments.
Policies and endorsements thereon shall be executed by the President and the
Secretary, or in any other manner prescribed by applicable law or regulation, or
directed by the Board. Such policies and endorsements may bear facsimile
signatures of the President and the Secretary. Facsimile signatures of the
President, the Secretary, and the Treasurer may be used on other instruments to
the extent permitted by law and by any Board approved internal control
directives.
Section 9.5. Official Bonds. In addition to the bonds which law or regulation
require this Company to maintain on its officers, employees, and agents, the
Board may purchase insurance or other indemnification or require a special bond
or bonds from any Director, officer, employee or agent of this Company, in such
sum and with such sureties or insurance carriers as it may deem proper.
Section 9.6. Voting Stock in Other Corporations. Stock held by this Company in
another corporation shall be voted by the President unless the Board of
Directors shall by resolution designate another officer to vote such stock, and,
unless the Board of Directors shall by resolution direct how such stock shall be
voted, the President or other designated officer shall vote the same in his or
her discretion for the best interests of this Company.
ARTICLE X
Indemnification of Company Officials
Section 10.1. Indemnification of Directors, Officers, Employees, and Certain
Other Persons. Directors and officers of this Company shall be indemnified to
the fullest extent now or hereafter permitted by law in connection with any
actual or threatened action or proceeding (including civil, criminal,
administrative or investigative proceedings) arising out of their service to
this Company or to another organization at this Company's request. Persons who
are not Directors or officers of this Company may be similarly indemnified in
respect of such service to the extent authorized at any time pursuant to any
process, procedure, or directive duly adopted for such purpose by this Company's
Board of Directors. The provisions of this Article shall be applicable to
actions or proceedings commenced after the adoption hereof, and to persons who
have ceased to be Directors, officers, or employees, and shall inure to the
benefit of their heirs, executors and administrators.
ARTICLE XI
Emergency Provisions
Section 11.1. Special Bylaw Provisions During Emergencies. If as a result of a
declared, national or state, emergency resulting from actual or threatened enemy
action, or, as a result of a natural or man-made catastrophe, or other unusual
or emergency conditions, it is impossible to convene readily a quorum of the
Board of Directors Executive Committee or any other Committee of the Board, for
action within their respective jurisdictions, thus making it impossible, or
impractical, for this Company to conduct its business in strict accord with the
normal provisions of law, or of these Bylaws or of the Articles of
Incorporation, then, and in any of said events, to provide for continuity of
operations, these emergency Bylaws shall supervene and take effect if necessary
over all other Bylaws for the duration of the emergency period, and all the
powers and duties vested in any committee or committees or the Board of
Directors, so lacking a quorum shall vest automatically in the Emergency
Management Committee which shall consist of all readily available members of the
Board of Directors. Three (3) members of the Emergency Management Committee
shall constitute a quorum provided, however, that:
If there are only two (2) available Directors, they and the first one
of the following listed officials of this Company who is readily
available and accepts the responsibility (even though he/she is not a
Director) shall serve as the Emergency Management Committee or if there
is only one available Director, he/she and the first two of the
following listed officials of this Company who are readily available
and accept the responsibility (even though not Directors) shall serve
as the Emergency Management Committee:
(a) The Chief Executive Officer, if any, or
(b) The President, if any, or
(c) The Executive Vice Presidents in order of seniority based on
their period of service in such office, if any, or
(d) The Senior Vice Presidents in order of seniority based on
their period of service in such office, if any, or
(e) The administrative Vice Presidents in order of seniority based
on their period of service in such office, if any, or
(f) The Treasurer, if any, or
(g) The Department Managers in the order of seniority based on
length of their period of service in such position, if any, or
If there is no readily available Director the first three (3) of those
just previously listed in the above order (even though not Directors),
who are readily available and accept the responsibility, shall serve as
the Emergency Management Committee, provided, however, that an
Emergency Management Committee composed solely of officials who are not
Directors, shall not have the power to fill vacancies on the Board of
Directors but shall as soon as circumstances permit conduct an election
of Directors.
If there are no Directors, Chief Executive Officer, President, Executive Vice
Presidents, Senior Vice Presidents, administrative Vice Presidents, Treasurer or
Department Managers readily available to form an Emergency Management Committee,
then the Commissioner of Insurance of the state of Iowa or the duly designated
person exercising the powers of the Commissioner of Insurance of the state of
Iowa shall appoint three (3) persons to act as the Emergency Management
Committee who shall be empowered to act in the manner and with the powers
hereinabove provided when the Emergency Management Committee is composed solely
of officials who are not Directors.
If the Emergency Management Committee takes an action in good faith, such action
shall be valid and binding as if taken by the Board of Directors, or as the case
may be, the Committee it represents, although it may subsequently develop that
at the time of such action conditions requisite for action by the Emergency
Management Committee did not in fact exist.
If the Emergency Management Committee in good faith elects someone to an office
which it believes to be vacant, the acts of such newly elected officer shall be
valid and binding although it may subsequently develop that such office was not
in fact vacant.
<PAGE>
ARTICLE XII
Adoption, Amendment or Repeal of Bylaws
Section 12.1. Bylaw Amendment by Board of Directors. The Bylaws of this Company
may be amended by a two-thirds (2/3) vote of the Board of Directors at any
meeting of the Board of Directors in any manner not inconsistent with the
insurance laws of the state of Iowa and this Company's Articles of
Incorporation, subject to the power of the Members to alter or repeal any
amendment made by the Board of Directors. Any particular article or section of
these Bylaws may provide for amendment only upon vote of the Members. The Bylaws
of this Company may also be amended, altered, or repealed in any manner not
inconsistent with the insurance laws of the state of Iowa by a vote of
two-thirds (2/3) of the Members voting at an annual meeting or special vote or
meeting of the Members of this Company.
Section 12.2. Initiation of Bylaw Amendment by Members. An amendment to the
Bylaws may be initiated by the direct action of the Members as follows:
One percent (1%) or more of this Company's Members shall sign and file
with the Secretary, not later than ninety (90) days prior to the date
of the annual meeting of this Company, a copy of the proposed amendment
or amendments together with a brief statement of the purpose thereof
and a statement from this Company's General Counsel that the proposed
amendment is acceptable under Iowa law. Such a copy of the proposed
amendment and statement of purpose shall be on a form to be furnished
by the Secretary and shall be signed by the Member, if a natural
person, and by the president or treasurer or other authorized officer,
if a corporate member, such officer having been so authorized by
resolution duly adopted by the board of directors of such corporation.
Upon timely receipt of a proposed amendment to the Bylaws accompanied by the two
required statements, properly prepared and signed and arising by action of the
Members as herein provided, the Secretary shall send or cause to be sent a copy
of such proposed amendment to all Members not less than twenty (20) days prior
to the date of the next annual meeting. The Board of Directors may make a
recommendation to Members as to any such amendment as proposed.
RESTATED BYLAWS: The foregoing shall constitute Restated Bylaws of this Company
which shall supersede and take the place of the heretofore existing Bylaws and
amendments thereto.
Restated Bylaws approved by the Board of Directors October 4, 1991
Amended June 19, 1993
Amended, Section 5.8, May 10, 1995
Amended, Section 5.2, May 12, 1995
<PAGE>
EXHIBIT 8
SERVICING AGREEMENT BETWEEN
CENTURY LIFE OF AMERICA
AND
CENTURY INVESTMENT MANAGEMENT CO.
THIS AGREEMENT is made by and between Century Life of America (Century Life), a
mutual life insurance company domiciled in the state of Iowa with its principal
office located in Waverly, Iowa, and Century Investment Management Co. (CIMCO),
a duly licensed registered investment adviser domiciled in the state of Iowa
with its principal office located in Madison, Wisconsin.
WHEREAS, CIMCO is an independent registered investment adviser, engaged
primarily in the business of providing investment advice and investment
management services on a fee for service basis, and currently acts as investment
adviser to the Ultra Series Fund and other clients, and
WHEREAS, CIMCO alone will have control over its investment advisory business,
and
WHEREAS, CIMCO wishes to purchase from Century Life various services required by
CIMCO in the ordinary course of administering its business,
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. CIMCO shall purchase from Century Life certain accounting,
administrative, clerical, legal, tax and other services necessary to
fulfill CIMCO's obligation under the Investment Advisory Agreement
between CIMCO and the Ultra Series Fund.
2. As full compensation for the above-described services, CIMCO will pay
to Century Life a monthly fee based on the net assets at the close of
business on the last business day of the preceding month multiplied by
a specified factor. For the Money Market Series and the Treasury 2000
Series, the factor is .02083% (.0002083). This fee is approximately
equal to an annualized rate of .25% (.0025) of net assets. For the
Balanced Series, the Bond Series, the Growth & Income Stock Series, and
the Capital Appreciation Stock Series, the factor is .0083% (.000083).
This amounts to an annualized rate of approximately .10% (.0010) of net
assets.
3. This agreement shall be nonassignable and shall remain in effect until
terminated and may be terminated by any party as of the first day of
any month by giving the other party at least 30 days prior written
notice.
<PAGE>
4. This agreement shall be applied, interpreted, construed and enforced in
accordance with the laws of the state of Iowa.
IN WITNESS WHEREOF, this agreement is executed by Century Life and CIMCO by
their respective duly authorized officers to become effective on the 1st day of
October, 1994.
CENTURY LIFE OF AMERICA
By: /s/ Daniel E. Meylink, Sr.
Daniel E. Meylink, Sr.
President
CENTURY INVESTMENT MANAGEMENT CO.
By: /s/ Michael S. Daubs
Michael S. Daubs
President
<PAGE>
EXHIBIT 9(a)
PARTICIPATION AGREEMENT
Among
CENTURY LIFE OF AMERICA,
T. ROWE PRICE INVESTMENT SERVICES, INC.
and
T. ROWE PRICE INTERNATIONAL SERIES, INC.
THIS AGREEMENT, made and entered into as of this 22nd day of April,
1994 by and among CENTURY LIFE OF AMERICA (hereinafter, the "Company"), an Iowa
mutual life insurance company, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each account hereinafter referred to as the
"Account"), and the T. Rowe Price International Series, Inc. (the "Fund"), a
corporation organized under the laws of Maryland, and T. Rowe Price Investment
Services, Inc. (hereinafter the "Underwriter"), a Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is or will be available to act as the investment vehicle
for Separate Accounts established for variable life insurance and variable
annuity contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund will obtain an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance Separate Accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
Separate Accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Rowe Price-Fleming International, Inc. (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940, as amended, and any applicable state securities laws; and
WHEREAS, the Company has issued or will issue certain variable life
insurance and variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to Fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
the Account at Net Asset Value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios which the Account orders, executing such orders on a daily
basis at the Net Asset Value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable Net Asset Value per share by the
Company and the Account on those days on which the Fund calculates its Net Asset
Value pursuant to rules of the Securities and Exchange Commission, and the Fund
shall use reasonable efforts to calculate such Net Asset Value on each day which
the New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Board of Trustees or Directors of the Fund (hereinafter the "Board") may
refuse to sell shares of any Designated Portfolio to any person, or suspend or
terminate the offering of shares of any Designated Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Designated Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their Separate Accounts. No
shares of any Designated Portfolios will be sold to the general public. The Fund
and the Underwriter will not sell Fund shares to any insurance company or
Separate Account unless an agreement containing provisions substantially the
same as Articles I, III and VII of this Agreement is in effect to govern such
sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, ordinarily
executing such requests on a daily basis at the Net Asset Value next computed
after receipt by the Fund or its designee of the request for redemption, except
that the Fund reserves the right to suspend the right of redemption or postpone
the date of payment or satisfaction upon redemption consistent with Section
22(e) of the 1940 Act and any rules thereunder, and in accordance with the
procedures and policies of the Fund as described in the then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Account, and receipt by such designee shall constitute receipt by the Fund;
provided that the Company receives the order by 4:00 p.m. Baltimore time and the
Fund receives notice of such order by 9:30 a.m. Baltimore time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its Net
Asset Value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of the
Designated Portfolios offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.5 hereof. Payment shall be in federal funds transmitted by wire by
3:00 p.m. Baltimore time. If payment in federal funds for any purchase is not
received or is received by the Fund after 3:00 p.m. Baltimore time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse the
Fund for any charges, costs, fees, interest or other expenses incurred by the
Fund in connection with any advances to, or borrowings or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. For purposes
of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the federal funds so
wired, such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate Subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Designated Portfolios' shares. The
Company hereby elects to receive all such income, dividends, and capital gain
distributions as are payable on Designated Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10 The Fund shall make the Net Asset Value per share for each
Designated Portfolio available to the Company on a daily basis as soon as
reasonably practical after the Net Asset Value per share is calculated (normally
by 6:30 p.m. Baltimore time) and shall use its best efforts to make such Net
Asset Value per share available by 7 p.m. Baltimore time.
1.11 The Parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.3 and Article VI hereof) and the Cash
Value of the Contracts may be invested in other investment companies, provided,
however, that (a) such other investment company, or series thereof, has
investment objectives or policies that are substantially different from the
investment objectives and policies of the Fund; or (b) the Company gives the
Fund and the Underwriter 45 days written notice of its intention to make such
other investment company available as a funding vehicle for the Contracts; or
(c) such other investment company was available as a funding vehicle for the
Contracts prior to the date of this Agreement and the Company so informs the
Fund and Underwriter prior to their signing this Agreement; or (d) the Fund or
Underwriter consents to the use of such other investment company, such consent
not to be unreasonably withheld.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts (a) are or,
prior to issuance, will be registered under the 1933 Act or, alternatively (b)
are not registered because they are properly exempt from registration under the
1933 Act or will be offered exclusively in transactions that are properly exempt
from registration under the 1933 Act. The Company further represents and
warrants that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws and that the sale
of the Contracts shall comply in all material respects with state insurance
suitability requirements. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable law,
that it has legally and validly established the Account prior to any issuance or
sale thereof as a segregated asset account under Iowa insurance laws, and that
it (a) has registered or, prior to any issuance or sale of the Contracts, will
register the Account as a unit investment trust in accordance with the
provisions of the 1940 Act to send as a segregated investment account for the
Contracts, or alternatively (b) has not registered the Account in proper
reliance upon an exclusion from registration under the 1940 Act.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Iowa and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have
the Board of Directors or Trustees of the Fund (the "Board"), a majority of whom
are not interested persons of the Fund, formulate and approve any plan pursuant
to Rule 12b-1 under the 1940 Act to finance distribution expenses.
2.4 The Fund makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the State of Iowa to the extent required to perform this Agreement.
2.5 The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Iowa and any applicable state and
federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered under all applicable federal and state securities
laws and that the Adviser shall perform its obligations for the Fund in
compliance in all material respects with the laws of the State of Iowa and any
applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other individuals
or entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimum
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
employed or controlled by the Company dealing with the money and/or securities
of the Fund are covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund, in an amount not less than $5 million. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in effect, and
agrees to notify the Fund and the Underwriter in the event that such coverage no
longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1 The Underwriter shall provide the Company with as many copies of
the Fund's current prospectus (describing only the Designated Portfolios listed
on Schedule A) as the Company may reasonably request. The Fund shall bear the
expense of printing copies of its current prospectus that will be distributed to
existing Contract Owners, and the Company shall bear the expense of printing
copies of the Fund's prospectus that are used in connection with offering the
contracts issued by the Company. If requested by the Company in lieu thereof,
the Fund shall provide such documentation (including a final copy of the new
prospectus on diskette at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is amended) to have the prospectus for the
Contracts and the Fund's prospectus printed together in one document (such
printing to be at the Company's expense).
3.2 The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available from the Company, and
the Underwriter (or the Fund), at its expense, shall provide copies of such SAI
free of charge to the Company for itself and for any Owner of a Contract who
requests such SAI.
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract Owners.
3.4 The Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract Owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of
such portfolio for which instructions have been
received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract Owners or to the
extent otherwise required by law. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law.
3.5 Participating Insurance Companies shall be responsible for assuring
that each of their Separate Accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt and provide
in writing.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors or trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material that the Company develops or uses and in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter is named, at
least fifteen Business Days prior to its use. No such material shall be used if
the Fund or its designee reasonably object to such use within fifteen Business
Days after receipt of such material. The Fund or its designee reserves the right
to reasonably object to the continued use of any such sales literature or other
promotional material in which the Fund (or a Designated Portfolio thereof) or
the Adviser or the Underwriter is named, and no such material shall be used if
the Fund or its designee so object.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus or SAI for
the Fund shares, as such registration statement and prospectus or SAI may be
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the permission of the
Fund or the Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops or uses and in which the Company, and/or
its Account, is named at least fifteen Business Days prior to its use. No such
material shall be used if the Company reasonably objects to such use within
fifteen Business Days after receipt of such material. The Company reserves the
right to reasonably object to the continued use of any such sales literature or
other promotional material in which the Company and/or its Account is named, and
no such material shall be used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus, or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract Owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, contemporaneously with the filing of such
document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, contemporaneously with the
filing of such document(s) with the SEC or other regulatory authorities.
4.7 The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
and of any material change in the Fund's registration statement, particularly
any change resulting in a change to the registration statement or prospectus for
any Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract Owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8 For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Funds.
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or other compensation
to the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing, and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter, or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of distributing the Fund's
prospectus to Owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract Owners.
ARTICLE VI. Diversification and Qualification
6.1 The Fund will invest its assets in such a manner as to ensure that
the Contracts will be treated as annuity or life insurance contracts, whichever
is appropriate, under the Internal Revenue Code of 1986, as amended (the "Code")
and the regulations issued thereunder (or any successor provisions). Without
limiting the scope of the foregoing, the Fund will comply with Section 817(h) of
the Code and Treasury Regulation ss.1.817-5, and any Treasury interpretations
thereof, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, and any amendments or other
modifications or successor provisions to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify the Company of such breach and (b) to adequately diversify
the Fund so as to achieve compliance within the grace period afforded by
Regulation 817.5.
6.2 The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provisions) and that it will notify the Company immediately upon having
a reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the
time of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will make every
effort to maintain such treatment, and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future. The Company agrees that any prospectus offering a contract that is a
"modified endowment contract" as that term is defined in Section 7702A of the
Code (or any successor or similar provision), shall identify such contract as a
modified endowment contract.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract Owners of all
Separate Accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract Owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
Owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract Owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract Owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract Owners, life insurance contract
Owners, or variable contract Owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract Owners the option of making such a change; and (2) establishing a new
registered management investment company or managed Separate Account.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract Owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement with respect to each Account provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Fund shall continue to
accept and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contract if an offer to do so has been declined by vote
of a majority of Contract Owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent the Shared Funding Exemption Order or any
amendment thereto contains terms and conditions different from Sections 3.4,
3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund and/or
the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with the Shared Funding Exemptive Order, and Sections
3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in the Shared Funding Exemptive Order or any
amendment thereto. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1., 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
the Underwriter and each of its directors and officers, and each person, if any,
who controls the Fund or Underwriter within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement, prospectus (which shall include an
offering memorandum, if any), or SAI for the Contracts or
contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use
in the Registration Statement, prospectus or SAI for the
Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus, SAI, or sales literature
of the Fund not supplied by the Company or persons under its
control) or wrongful conduct of the Company or persons under
its authorization or control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, SAI, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement (including a failure, whether unintentional
or in good faith or otherwise, to comply with the
qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of it directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts; and
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or prospectus or SAI or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement, prospectus or SAI for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus, SAI or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Fund or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, SAI or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Underwriter to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3 Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including legal
and other expenses) to which the Indemnified Parties may be required to pay or
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, expenses, damages, liabilities or expenses (or
actions in respect thereof) or settlements, are related to the operations of the
Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
and other qualification requirements specified in Article
VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the expense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party, for any reason with
respect to some or all Designated Portfolios, by
six (6) months' advance written notice delivered to
the other parties; or
(b) termination by the Company by written notice to the
Fund and the Underwriter based upon the Company's
determination that shares of the Fund are not
reasonably available to meet the requirements of
the Contracts; or
(c) termination by the Company by written notice to the
Fund and the Underwriter in the event any of the
Portfolio's shares are not registered, issued or
sold in accordance with applicable state and/or
federal law or such law precludes the use of such
shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event
that formal administrative proceedings are
instituted against the Company by the NASD, the
SEC, the Insurance Commissioner or like official of
any state or any other regulatory body regarding
the Company's duties under this Agreement or
related to the sale of the Contracts, the operation
of any Account, or the purchase of the Fund shares,
provided, however, that the Fund or Underwriter
determines in its sole judgment exercised in good
faith, that any such administrative proceedings
will have a material adverse effect upon the
ability of the Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against
the Fund or Underwriter by the NASD, the SEC, or
any state securities or insurance department or any
other regulatory body, provided, however, that the
Company determines in its sole judgment exercised
in good faith, that any such administrative
proceedings will have a material adverse effect
upon the ability of the Fund or Underwriter to
perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the
Fund and the Underwriter with respect to any
Designated Portfolio in the event that such
Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M or fails to
comply with the Section 817(h) diversification
requirements specified in Article VI hereof, or if
the Company reasonably believes that such Portfolio
may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written
notice to the Company in the event that the
Contracts fail to meet the qualifications specified
in Article VI hereof; or
(h) termination by either the Fund or the Underwriter
by written notice to the Company, if either one or
both of the Fund or the Underwriter respectively,
shall determine, in their sole judgment exercised
in good faith, that the Company has suffered a
material adverse change in its business,
operations, financial condition, or prospects since
the date of this Agreement or is the subject of
material adverse publicity; or
(i) termination by the Company by written notice to the
Fund and the Underwriter, if the Company shall
determine, in its sole judgment exercised in good
faith, that the Fund or the Underwriter has
suffered a material adverse change in its business,
operations, financial condition or prospects since
the date of this Agreement or is the subject of
material adverse publicity; or
(j) termination by the Fund or the Underwriter by
written notice to the Company, if the Company gives
the Fund and the Underwriter the written notice
specified in Section 1.11(b) hereof and at the time
such notice was given there was no notice of
termination outstanding under any other provision
of this Agreement; provided, however, any
termination under this Section 10.1(j) shall be
effective forty-five days after the notice
specified in Section 1.11(b) was given.
10.2 Notwithstanding any termination of this Agreement, the Fund and
the Underwriter shall at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
the Owners of the Existing Contracts may be permitted to reallocate investments
in the Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 shall not apply to any termination's under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement. The parties further agree that this Section 10.2 shall
not apply to any terminations under Section 10.1(g) of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
10.4 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Nancy M. Morris, Esq.
If to the Company:
Century Life of America
2000 Heritage Way
Waverly, Iowa 50677
Attention: Chief Legal Officer
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: John Cammack
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property
of the Fund, and in the case of a series company, the respective Designated
Portfolios listed on Schedule A hereto as though each such Designated Portfolio
had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the Owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Iowa Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with the
Iowa variable annuity laws and regulations and any other applicable law or
regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report
(prepared under generally accepted accounting
principles ("GAAP"), if any) filed with any state or
federal regulatory body or otherwise made available
to the public, as soon as practical and in any event
within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and
GAAP, if any) filed with any state of federal
regulatory body or otherwise made available to the
public, as soon as practical and in any event within
45 days after the end of each quarterly period;
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the
delivery thereof to stockholders and/or
policyholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulatory, as soon as practical after the
filing thereof;
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY: CENTURY LIFE OF AMERICA
By its authorized officer
By: /s/ Kevin Lentz
Title: Chief Operating Officer
Date: April 22, 1994
FUND: T. ROWE PRICE INTERNATIONAL SERIES, INC.
By its authorized officer
By: /s/ Henry H. Hopkins
Title: Vice President
Date: April 22, 1994
UNDERWRITER: T. ROWE PRICE INTERNATIONAL SERVICES, INC.
By its authorized officer
By: /s/ Henry H. Hopkins
Title: Vice President
Date: April 22, 1994
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
<S> <C> <C>
Name of Separate Account and Contracts Funded by
Date Established by Board of Directors Separate Account Designated Portfolios
Century Variable Annuity Account Variable Annuity T. Rowe Price International Series, Inc.
File 33-73738 o T. Rowe Price International Stock
Established December 14, 1993 811-6260 Portfolio
</TABLE>
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of
the 22th day of April, 1994, by and among Century Life of America, T. Rowe Price
International Series, Inc. And T. Rowe Price Investment Services, Inc., the
parties hereby agree to an amended Schedule A as attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to the Participation Agreement to be executed in its name and on its
behalf by its duly authorized representative.
COMPANY: CENTURY LIFE OF AMERICA
By its authorized officer,
By: /s/ Daniel E. Meylink, Sr.
Title: President
Date: November 30, 1994
FUND: T. ROWE PRICE INTERNATIONAL SERIES, INC.
By its authorized officer,
By: /s/ George A. Murnaghan
Title: Vice President
Date: December 21, 1994
UNDERWRITER: T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer,
By: /s/ Nancy Morris
Title: Vice President
Date: December 21, 1994
<PAGE>
EXHIBIT 9(b)
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
CENTURY LIFE OF AMERICA,
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 29th day of April, 1994, by
and among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), CENTURY LIFE OF AMERICA, an Iowa corporation (the "Company) on its own
behalf and on behalf of the Century Variable Annuity Account (the "Account") and
other segregated asset accounts of the Company (the "Accounts"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or
variable life insurance contracts (individually, the "Policy" or, collectively,
the "Policies") which, if required by applicable law, will be registered under
the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the aforesaid variable
annuity and/or variable life insurance contracts that are allocated to the
Accounts (the Policies and the Accounts covered by this Agreement, and each
corresponding Portfolio covered by this Agreement in which the Accounts invest,
is specified in Schedule A attached hereto as may be modified from time to
time);
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Investor Services, Inc. (the "Underwriter") is registered
as a broker-dealer with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"),
and is a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD");
WHEREAS, CUNA Brokerage Services, Inc., the underwriter for the
individual variable annuity and the variable life policies, is registered as a
broker-dealer with the SEC under the 1934 Act and is a member in good standing
of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to Fund the Policies, and the Trust intends to sell such Shares to
the Accounts at Net Asset Value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
MFS, and the Company agree as follows:
ARTICLE I. Sale of Trust Shares
1.1. The Trust agrees to sell to the Company those Shares which the
Accounts order (based on orders placed by Policy holders on that Business Day,
as defined below) and which are available for purchase by such Accounts,
executing such orders on a daily basis at the Net Asset Value next computed
after receipt by the Trust or its designee of the order for the Shares. For
purposes of this Section 1.1, the Company shall be the designee of the Trust for
receipt of such orders from Policy Owners and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of such
orders by 9:30 a.m. New York time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange, Inc. (the "NYSE")
is open for trading and on which the Trust calculates its Net Asset Value
pursuant to the rules of the SEC.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable Net Asset Value per share by the Company and the
Accounts on those days on which the Trust calculates its Net Asset Value
pursuant to rules of the SEC and the Trust shall calculate such Net Asset Value
on each day which the NYSE is open for trading. Notwithstanding the foregoing,
the Board of Trustees of the Trust (the "Board") may refuse to sell any Shares
to the Company and the Accounts, or suspend or terminate the offering of the
Shares if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the Shareholders of such Portfolio.
1.3 The Trust and MFS agree that the Shares will be sold only to
insurance companies which have entered into participation agreements with the
Trust and MFS (the "Participating Insurance Companies")and their Separate
Accounts, qualified pension and retirement plans and MFS or its affiliates. The
Trust and MFS will not sell Trust shares to any insurance company or Separate
Account unless an agreement containing provisions substantially the same as
Articles III and VII of this Agreement is in effect to govern such sales. The
Company will not resell the Shares except to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional Shares held by the Accounts (based on orders placed by Policy
holders on that Business Day), executing such requests on a daily basis at the
Net Asset Value next computed after receipt by the Trust or its designee of the
request for redemption. For purposes of this Section 1.4, the Company shall be
the designee of the Trust for receipt of requests for redemption from Policy
Owners and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such request for redemption by 9:30
a.m. New York time on the next following Business Day.
1.5. Purchase, redemption and exchange orders placed by the Company
shall be placed separately for each Portfolio and shall not be netted. However,
with respect to payment of the purchase price by the Company and of redemption
proceeds by the Trust, the Company and the Trust shall net purchase and
redemption orders with respect to each Portfolio and shall transmit one net
payment per Portfolio in accordance with Section 1.6.
1.6. In the event of net purchases, the Company shall pay for the
Shares by 2:00 p.m. New York time on the next Business Day after an order to
purchase the Shares is made in accordance with the provisions of Section 1.1
hereof. In the event of net redemptions, the Trust shall pay the redemption
proceeds by 2:00 p.m. New York time on the next Business Day after an order to
redeem the Shares is made in accordance with the provisions of Section 1.4
hereof. All such payments shall be in federal funds transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the Accounts
or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone
followed by written confirmation) to the Company of any dividends or capital
gain distributions payable on the Shares. The Company hereby elects to receive
all such dividends and distributions as are payable on a Portfolio's Shares in
additional Shares of that Portfolio. The Trust shall notify the Company of the
number of Shares so issued as payment of such dividends and distributions.
1.9. The Trust or its custodian shall make the Net Asset Value per
share for each Portfolio available to the Company on each Business Day as soon
as reasonably practical after the Net Asset Value per share is calculated and
shall use its best efforts to make such Net Asset Value per share available by
6:30 p.m. New York time. In the event that the Trust is unable to meet the 6:30
p.m. time stated herein, it shall provide additional time for the Company to
place orders for the purchase and redemption of Shares. Such additional time
shall be equal to the additional time which the Trust takes to make the Net
Asset Value available to the Company. If the Trust provides materially incorrect
share Net Asset Value information, the Company shall be entitled to an
adjustment to the number of shares purchased or redeemed to reflect the correct
Net Asset Value per share. Any material error in the calculation or reporting of
Net Asset Value per share, dividend or capital gains information shall be
reported promptly upon discovery to the Company.
ARTICLE II. Certain Representations, Warranties and Covenants
2.1. The Company represents and warrants that the Policies are or will
be registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold, and
distributed in compliance in all material respects with all applicable state and
federal laws, including without limitation the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the 1940 Act. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account as a segregated asset account under Iowa law and has
registered or, prior to any issuance or sale of the Policies, will register the
Accounts as unit investment trusts in accordance with the provisions of the 1940
Act (unless exempt therefrom) to serve as segregated investment accounts for the
Policies, and that it will maintain such registrations for so long as any
Policies are outstanding. The Company shall amend the registration statements
under the 1933 Act for the Policies and the registration statements under the
1940 Act for the Accounts from time to time as required in order to effect the
continuous offering of the Policies or as may otherwise be required by
applicable law. The Company shall register and qualify the Policies for sale in
accordance with the securities laws of the various states only if and to the
extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), that it will make every effort to
maintain such treatment and that it will notify the Trust or MFS immediately
upon having a reasonable basis for believing that the Policies have ceased to be
so treated or that they might not be so treated in the future.
2.3 The Company represents and warrants that CUNA Brokerage Services,
Inc., the underwriter for the individual variable annuity and the variable life
policies, is a member in good standing of the NASD and is a registered
broker-dealer with the SEC. The Company represents and warrants that the Company
and CUNA Brokerage Services, Inc. will sell and distribute such policies in
accordance in all material respects with all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.4. The Trust and MFS represent and warrant that the Shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of The Commonwealth
of Massachusetts and all applicable federal and state securities laws and that
the Trust is and shall remain registered under the 1940 Act. The Trust shall
amend the registration statement for its Shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its Shares. The Trust shall register and qualify the Shares for sale in
accordance with the laws of the various states only if and to the extent deemed
necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Trust and MFS represent that the Trust and the Underwriter will sell and
distribute the Shares in accordance in all material respects with all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.6. The Trust represents that it is lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act and any applicable
regulations thereunder.
2.7. MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it shall
perform its obligations for the Trust in compliance in all material respects
with any applicable federal securities laws and with the securities laws of The
Commonwealth of Massachusetts. MFS represents and warrants that it is not
subject to state securities laws other than the securities laws of The
Commonwealth of Massachusetts and that it is exempt from registration as an
investment adviser under the securities laws of The Commonwealth of
Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably request so that
it may carry out fully the obligations imposed upon it by the conditions
contained in the exemptive application pursuant to which the SEC has granted
exemptive relief to permit mixed and shared funding (the "Mixed and Shared
Funding Exemptive Order").
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the Shares as
the Company may reasonably request for distribution to existing Policy Owners
whose Policies are funded by such Shares. The Trust or its designee shall
provide the Company, at the Company's expense, with as many copies of the
current prospectus for the Shares as the Company may reasonably request for
distribution to prospective purchasers of Policies. If requested by the Company
in lieu thereof, the Trust or its designee shall provide such documentation
(including a "camera ready" copy of the new prospectus as set in type or, at the
request of the Company, as a diskette in the form sent to the financial printer)
and other assistance as is reasonably necessary in order for the parties hereto
once each year (or more frequently if the prospectus for the Shares is
supplemented or amended) to have the prospectus for the Policies and the
prospectus for the Shares printed together in one document; the expenses of such
printing to be apportioned between (a) the Company and (b) the Trust or its
designee in proportion to the number of pages of the Policy and Shares'
prospectuses, taking account of other relevant factors affecting the expense of
printing, such as covers, columns, graphs and charts; the Trust or its designee
to bear the cost of printing the Shares' prospectus portion of such document for
distribution to Owners of existing Policies funded by the Shares and the Company
to bear the expenses of printing the portion of such document relating to the
Accounts; provided, however, that the Company shall bear all printing expenses
of such combined documents where used for distribution to prospective purchasers
or to Owners of existing Policies not funded by the Shares. In the event that
the Company requests that the Trust or its designee provides the Trust's
prospectus in a "camera ready" or diskette format, the Trust shall be
responsible for providing the prospectus in the format in which it or MFS is
accustomed to formatting prospectuses and shall bear the expense of providing
the prospectus in such format (e.g., typesetting expenses), and the Company
shall bear the expense of adjusting or changing the format to conform with any
of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or its
designee. The Trust or its designee, at its expense, shall print and provide
such statement of additional information to the Company (or a master of such
statement suitable for duplication by the Company) for distribution to any Owner
of a Policy funded by the Shares. The Trust or its designee, at the Company's
expense, shall print and provide such statement to the Company (or a master of
such statement suitable for duplication by the Company) for distribution to a
prospective purchaser who requests such statement or to an Owner of a Policy not
funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's proxy
materials, reports to Shareholders and other communications to Shareholders in
such quantity as the Company shall reasonably require for distribution to Policy
Owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3
above, or of Article V below, the Company shall pay the expense of printing or
providing documents to the extent such cost is considered a distribution
expense. Distribution expenses would include by way of illustration, but are not
limited to, the printing of the Shares' prospectus or prospectuses for
distribution to prospective purchasers or to Owners of existing Policies not
funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate
to include in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy Owners;
(b) vote the Shares in accordance with instructions received from
Policy Owners: and
(c) vote the Shares for which no instructions have been received in
the same proportion as the Shares of such Portfolio for which
instructions have been received from Policy Owners;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable contract Owners. The Company
will in no way recommend action in connection with or oppose or interfere with
the solicitation of proxies for the Shares held for such Policy Owners. The
Company reserves the right to vote shares held in any segregated asset account
in its own right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their Separate Accounts
holding Shares calculates voting privileges in the manner required by the Mixed
and Shared Funding Exemptive Order. The Trust and MFS will notify the Company of
any changes of interpretations or amendments to the Mixed and Shared Funding
Exemptive Order.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material in which the Trust, MFS, any other investment adviser to the Trust, or
any affiliate of MFS are named, at least three (3) Business Days prior to its
use. No such material shall be used if the Trust, MFS, or their respective
designees reasonably objects to such use within three (3) Business Days after
receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust, MFS, any other investment
adviser to the Trust, or any affiliate of MFS or concerning the Trust or any
other such entity in connection with the sale of the Policies other than the
information or representations contained in the registration statement,
prospectus or statement of additional information for the Shares, as such
registration statement, prospectus and statement of additional information may
be amended or supplemented from time to time, or in reports or proxy statements
for the Trust, or in sales literature or other promotional material approved by
the Trust, MFS or their respective designees, except with the permission of the
Trust, MFS or their respective designees. The Trust, MFS or their respective
designees each agrees to respond to any request for approval on a prompt and
timely basis. The Company shall adopt and implement procedures reasonably
designed to ensure that information concerning the Trust, MFS or any of their
affiliates which is intended for use only by brokers or agents selling the
Policies (i.e., information that is not intended for distribution to Policy
holders or prospective Policy holders) is so used, and neither the Trust, MFS
nor any of their affiliates shall be liable for any losses, damages or expenses
relating to the improper use of such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or the Accounts is named, at
least three (3) Business Days prior to its use. No such material shall be used
if the company or its designee reasonably objects to such use within three (3)
Business Days after receipt of such material.
4.4 The Trust and MFS shall not give, and agree that the Underwriter
shall not give, any information or make any representations on behalf of the
Company or concerning the Company, the Accounts, or the Policies in connection
with the sale of the Policies other than the information or representations
contained in a registration statement, prospectus, or statement of additional
information for the Policies, as such registration statement, prospectus and
statement of additional information may be amended or supplemented from time to
time, or in reports for the Accounts, or in sales literature or other
promotional material approved by the Company or its designee, except with the
permission of the Company. The Company or its designee agrees to respond to any
request for approval on a prompt and timely basis. The parties hereto agree that
this Section 4.4 is neither intended to designate nor otherwise imply that MFS
is an underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company
or the Trust, as appropriate) will each provide to the other at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Policies, or
to the Trust or its Shares, prior to or contemporaneously with the filing of
such document with the SEC or other regulatory authorities. The Company and the
Trust shall also each promptly inform the other of the results of any
examination by the SEC (or other regulatory authorities) that relates to the
Policies, the Trust or its Shares, and the party that was the subject of the
examination shall provide the other party with a copy of relevant portions of
any "deficiency letter" or other correspondence or written report regarding any
such examination.
4.6. The Trust and MFS will provide the Company with as much notice as
is reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in the Trust's registration statement, particularly any
change resulting in change to the registration statement or prospectus or
statement of additional information for any Account. The Trust and MFS will
cooperate with the Company so as to enable the Company to solicit proxies from
Policy Owners or to make changes to its prospectus, statement of additional
information or registration statement, in an orderly manner. The Trust and MFS
will make reasonable efforts to attempt to have changes affecting Policy
prospectuses become effective simultaneously with the annual updates for such
prospectuses.
4.7. For purposes of this Article IV and Article VIII, the phrase
"sales literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
video tape display, signs or billboards, motion pictures, or other public
media), and sales literature (such as brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published articles), distributed or made
generally available to customers or the public, educational or training
materials or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. Fees and Expenses
5.1. The Trust shall pay no fee or other compensation to the Company
under this Agreement, and the Company shall pay no fee or other compensation to
the Trust, except that if the Trust or any Portfolio adopts and implements a
plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution and
Shareholder servicing expenses, then, subject to obtaining any required
exemptive orders or regulatory approvals, the Trust may make payments to the
Company or to the underwriter for the Policies if and in amounts agreed to by
the Trust in writing. Each party, however, shall, in accordance with the
allocation of expenses specified in Articles III and V hereof, reimburse other
parties for expenses initially paid by one party but allocated to another party.
In addition, nothing herein shall prevent the parties hereto from otherwise
agreeing to perform, and arranging for appropriate compensation for, other
services relating to the Trust and/or to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal and
state laws, including preparation and filing of the Trust's registration
statement, and payment of filing fees and registration fees; preparation and
filing of the Trust's proxy materials and reports to Shareholders; setting in
type and printing its prospectus and statement of additional information (to the
extent provided by and as determined in accordance with Article III above);
setting in type and printing the proxy materials and reports to Shareholders (to
the extent provided by and as determined in accordance with Article III above);
the preparation of all statements and notices required of the Trust by any
federal or state law with respect to its Shares; all taxes on the issuance or
transfer of the Shares; and the costs of distributing the Trust's prospectuses
and proxy materials to Owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any, under
Rule 12b-1 under the 1940 Act. The Trust shall not bear any expenses of
marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies and of
distributing the Trust's Shareholder reports and proxy materials to Policy
Owners. The Company shall bear all expenses associated with the registration,
qualification, and filing of the Policies under applicable federal securities
and state insurance laws; the cost of preparing, printing and distributing the
Policy prospectus and statement of additional information; and the cost of
preparing, printing and distributing annual individual account statements for
Policy Owners as required by state insurance laws.
ARTICLE VI. Diversification and Related Limitations
6.1. The Trust and MFS represent and warrant that each Portfolio of the
Trust will meet the diversification requirements of Section 817(h)(l) of the
Code and Treas. Reg. 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, as they may be amended
from time to time (and any revenue rulings, revenue procedures, notices, and
other published announcements of the Internal Revenue Service interpreting these
sections), as if those requirements applied directly to each such Portfolio. In
the event that any Portfolio is not so diversified at the end of any applicable
quarter, the Trust and MFS will make every effort to (a) adequately diversify
the Portfolio so as to achieve compliance within the grace period afforded by
Treas. Reg. 1.817.5 and (b) notify the Company.
6.2. The Trust and MFS represent that each Portfolio of the Trust will
elect to be qualified as a Regulated Investment Company under Subchapter M of
the Code and that every effort will be made to maintain such qualification
(under Subchapter M or any successor or similar provision) and that the Trust or
its designee will notify the Company promptly upon having a reasonable basis for
believing that any Portfolio of the Trust has ceased to so qualify or that any
Portfolio might not so qualify in the future.
ARTICLE VII. Potential Material Conflicts
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of the
variable annuity contract Owners and the variable life insurance Policy Owners
of the Company and/or affiliated companies ("contract Owners") investing in the
Trust. The Board shall have the sole authority to determine if a material
irreconcilable conflict exists, and such determination shall be binding on the
Company only if approved in the form of a resolution by a majority of the Board,
or a majority of the disinterested trustees of the Board. The Board will give
prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set forth in the
Trust's exemptive application pursuant to which the SEC has granted exemptive
relief to permit mixed and shared funding by providing the Board, as it may
reasonably request, with all information necessary for the Board to consider any
issues raised and agrees that it will be responsible for promptly reporting any
potential or existing conflicts of which it is aware to the Board including, but
not limited to, an obligation by the Company to inform the Board whenever
contract Owner voting instructions are disregarded. The Company also agrees
that, if a material irreconcilable conflict arises, it will at its own cost
remedy such conflict up to and including (a) withdrawing the assets allocable to
some or all of the Accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to) another
Portfolio of the Trust, or submitting to a vote of all affected contract Owners
whether to withdraw assets from the Trust or any Portfolio and reinvesting such
assets in a different investment medium and, as appropriate, segregating the
assets attributable to any appropriate group of contract Owners that votes in
favor of such segregation, or offering to any of the affected contract Owners
the option of segregating the assets attributable to their contracts or
policies, and (b) establishing a new registered management investment company
and segregating the assets underlying the Policies, unless a majority of Policy
Owners materially adversely affected by the conflict have voted to decline the
offer to establish a new registered management investment company.
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately remedies any
material irreconcilable conflict. In the event that the Board determines that
any proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the Trust each of the
Accounts designated by the disinterested trustees and terminate this Agreement
within six (6) months after the Board informs the Company in writing of the
foregoing determination; provided, however, that such withdrawal and termination
shall be limited to the extent required to remedy any such material
irreconcilable conflict as determined by a majority of the disinterested
trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shares
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust, MFS, any
affiliates of MFS, and each of their respective directors/trustees, officers and
each person, if any, who controls the Trust or MFS within the meaning of Section
15 of the 1933 Act, and any agents or employees of the foregoing (each an
"Indemnified Party," or collectively, the "Indemnified Parties" for purposes of
this Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or expenses (including reasonable counsel fees) to which an Indemnified Party
may become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Shares or the Policies and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Policies or contained in the Policies or sales
literature or other promotional material for the Policies (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished
to the Company or its designee by or on behalf of the Trust or MFS for
use in the registration statement, prospectus or statement of
additional information for the Policies or in the Policies or sales
literature or other promotional material (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Policies or Shares; or
(b) arise out of or as a result of statements or
representations (other than statements or representations contained in
the registration statement, prospectus, statement of additional
information or sales literature or other promotional material of the
Trust not supplied by the Company or its designee, or persons under its
control and on which the Company has reasonably relied) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the registration statement,
prospectus, statement of additional information, or sales literature or
other promotional literature of the Trust, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Trust by or on behalf of the Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company; or
(e) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of the
agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
The Trust agrees to indemnify and hold harmless the Company and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act, and any agents or employees of
the foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any and all losses, claims,
damages liabilities (including amounts paid in settlement with the written
consent of the Trust) or expenses (including reasonable counsel fees) to which
any Indemnified Party may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement, prospectus, statement of additional information
or sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished
to the Trust, MFS, the Underwriter or their respective designees by or
on behalf of the Company for use in the registration statement,
prospectus or statement of additional information for the Trust or in
sales literature or other promotional material for the Trust (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Policies or Shares; or
(b) arise out of or as a result of statements or
representations (other than statements or representations contained in
the registration statement, prospectus, statement of additional
information or sales literature or other promotional material for the
Policies not supplied by the Trust, MFS, the Underwriter or any of
their respective designees or persons under their respective control
and on which any such entity has reasonably relied) or wrongful conduct
of the Trust or persons under its control, with respect to the sale or
distribution of the Policies or Shares; or
(c) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other qualification
requirements specified in Article VI of this Agreement) or arise out of
or result from any other material breach of this Agreement by the
Trust; or
(d) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily Net Asset Value per
share or dividend or capital gain distribution rate; or
(e) arise as a result of any failure by the Trust to provide
the services and furnish the materials under the terms of the
Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3 In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including
without limitation, the Company, or any Participating Insurance Company or any
Policy holder, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by the Company hereunder or by any Participating
Insurance Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the failure by the Company or
any Participating Insurance Company to maintain its segregated asset account
(which invests in any Portfolio) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt therefrom);
or (iii) the failure by the Company or any Participating Insurance Company to
maintain its variable annuity and/or variable life insurance contracts (with
respect to which any Portfolio serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable provisions of the
Code.
8.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions contained in this Agreement with respect to any
losses, claims, damages, liabilities or expenses to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, willful misconduct, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section
8.5 of commencement of action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this section,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any Indemnified Party otherwise than under this section. In case any
such action is brought against any Indemnified Party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to such
Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of
the commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control persons
in connection with the Agreement, the issuance or sale of the Policies, the
operation of the Accounts, or the sale or acquisition of Shares.
8.7. A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article VIII.
The indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. Notice of Formal Proceedings
The Trust, MFS, and the Company agree that each such party shall
promptly notify the other parties to this Agreement, in writing, of the
institution of any formal proceedings brought against such party or its
designees by the NASD, the SEC, or any insurance department or any other
regulatory body regarding such party's duties under this Agreement or related to
the sale of the Policies, the operation of the Accounts, or the purchase of the
Shares.
ARTICLE XI. Termination
11.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Portfolios:
(a) at the option of any party upon six (6) months' advance
written notice to the other parties; or
(b) at the option of the Company to the extent that the Shares
of Portfolios are not reasonably available to meet the requirements of
the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without limiting the
generality of the foregoing, the Shares of a Portfolio would not be
"appropriate funding vehicles" if, for example, such Shares did not
meet the diversification or other requirements referred to in Article
VI hereof; or if the Portfolio did not qualify under Subchapter M of
the Code, as referred to in Section 6.2 hereof (or the Company
reasonably believes the shares or the Portfolio may not so comply or
qualify); or if the Company would be permitted to disregard Policy
Owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the
1940 Act. Prompt notice of the election to terminate for such cause and
an explanation of such cause shall be furnished to the Trust by the
Company; or
(c) at the option of the Trust or MFS upon institution of
formal proceedings against the Company by the NASD, the SEC, or any
insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Policies, the operation of the Accounts, or the purchase of the Shares;
or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body
regarding the Trust's or MFS' duties under this Agreement or related to
the sale of the shares; or
(e) at the option of the Company, the Trust or MFS upon
receipt of any necessary regulatory approvals and/or the vote of the
Policy Owners having an interest in the Accounts (or any subaccounts)
to substitute the shares of another investment company for the
corresponding Portfolio Shares in accordance with the terms of the
Policies for which those Portfolio Shares had been selected to serve as
the underlying investment media. The Company will give thirty (30)
day's prior written notice to the Trust of the date of any proposed
vote or other action taken to replace the Shares; or
(f) termination by either the Trust or MFS by written notice
to the Company, if either one or both of the Trust or MFS respectively,
shall determine, in their sole judgment exercised in good faith, that
the Company has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Trust
and MFS, if the Company shall determine, in its sole judgment exercised
in good faith, that the Trust or MFS has suffered a material adverse
change in its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material adverse
publicity; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the
written consent of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies
and, if applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section ll.l(a) may be exercised for cause
or for no cause.
11.4. Except as necessary to implement Policy Owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem the Shares attributable to the Policies (as opposed to the
Shares attributable to the Company's assets held in the Accounts), and the
Company shall not prevent Policy Owners from allocating payments to a Portfolio
that was otherwise available under the Policies, until thirty (30) days after
the Company shall have notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and
MFS shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this Agreement,
for all Policies in effect on the effective date of termination of this
Agreement (the "Existing Policies"), except as otherwise provided under Article
VII of this Agreement. Specifically, without limitation, the Owners of the
Existing Policies shall be permitted to transfer or reallocate investments under
the Policies, redeem investments in any Portfolio and/or invest in the Trust
upon the making of additional purchase payments under the Existing Policies.
ARTICLE XII. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
MFS Variable Insurance Trust
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, Secretary
If to the Company:
Century Life of America
2000 Heritage Way
Waverly, Iowa 50677
Attn: Chief Legal Officer
If to MFS:
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. Miscellaneous
13.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the Owners of the Policies and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement or as otherwise required by applicable law or regulation, shall
not disclose, disseminate or utilize such names and addresses and other
confidential information without the express written consent of the affected
party until such time as it may come into the public domain.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities (including
without limitation the SEC, the NASD, and state insurance regulators) relating
to this Agreement or the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and the Company agrees that this
Agreement is executed on behalf of the Trust by an officer of the Trust as an
officer and not individually, and that the obligations of or arising out of this
Agreement are not binding upon any of the trustees, officers, or Shareholders
individually but are binding only upon the assets and property of the Trust or
the Portfolios of the Trust to which such obligations relate.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
CENTURY LIFE OF AMERICA
By its authorized officer,
By: /s/ Kevin Lentz
Title: Chief Operating Officer
Date: April 27, 1994
MFS VARIABLE INSURANCE TRUST
By its authorized officer,
By: /s/ A. Keith Brodkin
Title: President
Date: April 29, 1994
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ Arnold D. Scott
Title: Senior Executive Vice President
Date: April 29, 1994
<PAGE>
As of April 29, 1994
<TABLE>
<CAPTION>
SCHEDULE A
Accounts, Policies and Portfolios Subject
to the Participation Agreement
<S> <C> <C>
Name of Separate Account Portfolios
and Date Established by Policies Funded by Applicable
Board of Directors Separate Account to Policies
Century Variable Annuity
Account (December 14, 1993) Individual Variable Annuity World Government Series
</TABLE>
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of
the 29th day of April, 1994, by and among MFS(R) Variable Insurance TrustSM,
Century Life of America, and Massachusetts Financial Services Company, the
parties hereby agree to an amended Schedule A as attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to the Participation Agreement to be executed in its name and on its
behalf by its duly authorized representative. With respect to the Century
Variable Account, the Amendment is expected to take effect January 2, 1995. With
respect to the Century Group Variable Annuity Account, the Amendment is expected
to take effect in early 1995.
CENTURY LIFE OF AMERICA
By its authorized officer,
By: /s/ Daniel E. Meylink, Sr.
Title: President
Date: November 30, 1994
MFS VARIABLE INSURANCE TRUST
By its authorized officer,
By: /s/ Stephen E. Caven
Title: President
Date: November 30, 1994
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ Arnold D. Scott
Title: Senior Executive Vice President
Date: November 30, 1994
<PAGE>
<TABLE>
<CAPTION>
Revised: 1994
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS SUBJECT TO THE
PARTICIPATION AGREEMENT
<S> <C> <C>
Name and Separate Account and Policies Funded by Portfolios Applicable
Date Established by Board of Directors Separate Account to Policies
Century Variable Annuity Account Variable Annuity World Governments Series
File 33-73738
Established December 14, 1993 811-6260
Century Variable Account Variable Universal World Governments Series
Life
Established August 16, 1983 File 33-19718
Century Group Variable Annuity Account Group Variable Annuity World Governments Series
Offered Exclusively
Established August 16, 1983 to qualified Plans
Not Registered in
Reliance on Qualified
Plan Exemption to
Registration
Requirements
</TABLE>
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of
the 29th day of April, 1994, by and among MFS(R) Variable Insurance Trust SM,
Century Life of America, and Massachusetts Financial Services Company, the
parties hereby agree to an amended Schedule A as attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to the Participation Agreement to be executed in its name and on its
behalf by its duly authorized representative. The Amendment shall take effect on
May 1, 1996.
CENTURY LIFE OF AMERICA
By its authorized officer,
By: /s/ Daniel E. Meylink, Sr.
Title: President
Date: March 11, 1996
MFS VARIABLE INSURANCE TRUST
By its authorized officer,
By: /s/ Stephen E. Caven
Stephen E. Caven
Secretary
Date: February 2, 1996
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ Arnold D. Scott
Arnold D. Scott
Senior Executive Vice President
Date: February 1, 1996
<PAGE>
<TABLE>
<CAPTION>
As of May 1, 1996
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<S> <C> <C>
Name of Separate
Account and Date Policies Funded Portfolios
Established by Board of Directors by Separate Account Applicable to Policies
Century Variable Annuity Account Variable Annuity File World Governments Series
Est. 12/14/93 33-73738 Emerging Growth Series
811-6260
Century Variable Account Variable Universal Life World Governments Series
Est. 8/16/83 33-19718 Emerging Growth Series
Century Group Variable Annuity Account Group Variable Annuity Offered World Governments Series
Est. 8/16/93 Exclusively to Qualified Plans Not Emerging Growth Series
Registered in Reliance on Qualified Plan
Exemption to Registration Requirements
</TABLE>
<PAGE>
EXHIBIT 10
CENTURY
LIFE OF APPLICATION FOR LIFE INSURANCE Credit Union No.
AMERICASM (Part I)
A Mutual Insurance Company
2000 Heritage Way, Waverly, Iowa 50677 (if applicable)
1. a. Proposed Insured's Full Name (please print)
b. Born (mo/day/yr)
c. Age
d. Sex
e. Birth State
f. Soc. Sec. #
g. Has the proposed insured used tobacco in any form in the last 12 months?
|_|Yes |_|No
If yes, what form(s)? |_|One or more Cigarettes in the last 12 months |_|Cigars
|_| Pipe |_|Chewing Tobacco |_|Snuff
2. Address: Street City State Zip
3. Principal Occupation Describe Duties
4. Is proposed insured now performing all the duties of his/her regular
occupation on a full-time basis at the usual place of business? |_| Yes |_| No
If "No," explain in remarks. Include date of last full-time work.
5. Owner (complete only if proposed insured is under age 16 or if owner is
someone other than proposed insured)
a. Name Address City State Zip
b. |_| Individual (Birth Date ) |_| Corporation |_| Partnership |_| Trustee
Soc. Sec. # or Taxpayer ID
c. Relationship to Proposed Insured
6. Plan of Insurance: Face/Specified Amount $
|_| Whole Life
|_| Other
Riders:
|_| Waiver of Premium
|_| Owner Death |_| Death & Disability
Birth date / / Age
Sex Birth State
|_| ADB $
|_| GIR $ |_| GPO $
|_| Limited Pay $
|_| 1 Pay |_| 5 Pay |_| 7 Pay
|_| CIR (See Section 7)
|_| Five Year Term $
|_| Term to Age 75 $
|_| Limited Pay to Age 65 $
|_| Business Exchange
|_| Other
|_| Universal Life
Initial Premium $
|_| Option 1 |_| Option 2
|_| Variable Universal Life
Initial Premium $
|_|Option 1 |_| Option 2
Riders:
|_| Waiver of Monthly Deduction
|_| ADB $
|_| GIR $
|_| AIR $
|_| JIR $
|_| Impact Term $
|_| OIR (See Section 7)
|_| CIR (See Section 7)
|_| Other
|_| Five Year Term
|_| Annual Renewable Term
|_| 10 to 30 Year Term
|_| Level: Years
|_| Decreasing: Years
Int. Rate %
|_| Other
Riders:
|_| Waiver of Premium
|_| ADB $
|_| 10 to 30 Year Term $
(available only on 10 to 30 Year Term)
|_| Level: Years
|_| Decreasing: Years
Int. Rate %
|_| Other
7. # Units (CIR)/ Face Amt. (OIR)
Insured (Name and Relationship)
Soc. Sec. #
Sex
Birth Date
Birth State
Beneficiary (Name and Relationship)
Has any proposed Other Insured (age 20 and older) smoked one or more cigarettes
in the past 12 months? |_| Yes |_| No If yes, name(s) of proposed insured:
Does any proposed Other Insured (age 20 and older) use tobacco in any other
form? |_| Yes |_| No If yes, name(s) of proposed insured and form(s) of tobacco
used:
8. a. Mode Premium $
b. Mode: |_|AN |_|SA |_|QT |_|ACP (Group #) Effective Date of Billing (month)
|_| No Future Bill |_| Other
c. Nature of Payment: |_| Cash |_| Check |_| Other
d. Payment Made With App: Total $
9. Primary Beneficiary
(include name, address and relationship)
Right to change reserved unless otherwise specified.
10. Contingent Beneficiary
(include name, address and relationship)
Complete, if applicable
Any other children born of the marriage of or legally adopted by and Any
children living at the time of the designation should be specifically named
below.
Right to change reserved.
11. Dividends (if applicable): |_| Return by Check |_|Apply to Premium
|_| Accumulate at Interest |_| Paid-up Additions
|_| 5th Dividend |_| Other
12. Do you want the automatic premium loan provision if available? (available
only on Whole Life) |_| Yes |_| No
Complete questions 13-15 for ALL persons proposed for insurance. Give name of
person and details for all yes answers in the Remarks section.
13. Has anyone proposed for insurance on this application:
a.Flown within the past 3 years or does anyone intend to fly as a pilot,
student pilot or crew member? (If "yes," complete the Aviation
Supplement.)
b. Taken part in such sports as ballooning, parachuting, hang gliding,
vehicle racing, skin or scuba diving, or any similar sport or avocation?
(If "yes," complete the Hazardous Sports Form.)
c.In the past 3 years, been refused a driver's license, had a license
suspended or had a moving violation or accident? Give name and license
number of licensed drivers.
d. Made an application for insurance which is now pending in this or
another company?
e.Ever had life or accident and sickness insurance or medical service
benefits declined, modified, cancelled or been refused issue, renewal or
reinstatement?
14. Will proposed coverage applied for replace or change any life coverage or
annuities?
Insured Company Plan Amount
15. Total Life Insurance in Force (if none, so state):
Insured Company Amount ADB WP Other Riders Year Issued
Remarks Corrections and Amendments (home office use only)
<PAGE>
VARIABLE UNIVERSAL LIFE
APPLICATION SUPPLEMENT
Complete the following questions when applying for a Variable Universal Life
contract (for use by registered representatives only).
1. Have you received a prospectus for the policy applied for? |_| Yes |_| No
Date of Prospectus
2. a. Premium Payment Allocation
(whole % but not less than 10%):
Bond %
Balanced %
Interest Bearing %
Money Market %
Capital Appreciation Stock %
Growth and Income Stock %
Treasury 2000 %
World Governments %
International Stock %
Other %
Other %
Total 100 %
b. Monthly Deduction Allocation
(whole % but not less than 10%):
(Monthly deductions will be drawn from the funds as indicated.)
Bond %
Balanced %
Interest Bearing %
Money Market %
Capital Appreciation Stock %
Growth and Income Stock %
Treasury 2000 %
World Governments %
International Stock %
Other %
Other %
Total 100 %
3. SUITABILITY:
a. DO YOU UNDERSTAND THAT THE DEATH BENEFIT OF THIS POLICY MAY BE VARIABLE
OR FIXED DEPENDING ON WHETHER YOU CHOOSE OPTION 1 DEATH BENEFIT OR OPTION
2 DEATH BENEFIT?
b.DO YOU UNDERSTAND THAT POLICY VALUES MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT?
c.IS THIS POLICY IN ACCORDANCE WITH YOUR INSURANCE AND INVESTMENT
OBJECTIVES, FINANCIAL SITUATION AND NEEDS?
Signed at on , 19 .
City and State
Proposed Insured Representative
Owner if Other than Insured Representative No.
PERSONAL DECLARATIONS (Part II)
Must be filled out on all who are applying on a non-medical basis.
1. Names for whom Part II is being completed:
Name Height Weight Attending Physician
PI
O/C
O/C
O/C
O/C
Write "Y" for yes and "N" for no in the columns provided below. Give details of
all "Y" answers, including name of person affected, all dates, durations,
diagnosis, outcomes and addresses of all attending physicians.
PI = Proposed Insured; O/C = Other Insured/Child
2. Has anyone named above been diagnosed as having or been treated PI O/C O/C
Details for:
a. Disorder of eyes, ears, nose or throat?
b. Fainting, convulsions, headache; paralysis or stroke?
c. Depression, mental or nervous disorder or attempted suicide?
d. Within the past five years had shortness of breath, persistent hoarseness or
cough, blood spitting; bronchitis, pleurisy, asthma, emphysema, pneumonia or
chronic respiratory disorder?
e. Chest pain, palpitation, high blood pressure, rheumatic fever, heart murmur,
heart attack or other disorder of the heart or blood vessels?
f. Hepatitis, jaundice, intestinal bleeding; ulcer, hernia, colitis,
diverticulitis, hemorrhoids, disorder of the stomach, intestines, liver or
gallbladder?
g. Sugar, albumin, blood or pus in urine; stone or other disorder of kidney,
bladder, prostate or reproductive organs?
h. Diabetes; thyroid or other endocrine disorders?
i. Neuritis, sciatica, arthritis, gout, deformity, amputation, or disorder of
the muscles, bones, spine, back or joints?
j. Disorder of skin; allergies, cyst, tumor or cancer?
k. Disorder of the blood or lymph glands; anemia?
l. An immune deficiency disorder, Acquired Immune Deficiency Syndrome (AIDS),
Aids Related Complex (ARC) or positive test results for antibodies to the
AIDS virus?
m. A sexually transmitted disease?
3. a. Is anyone above now under observation or taking treatment?
b. Has anyone above had any change in weight in the past year?
4. Other than above, has anyone above within the past five years:
a. Had a mental or physical disorder not listed above?
b. Had a checkup, consultation, illness, injury or surgery?
c. Been a patient in a hospital or other medical facility?
d. Had an electrocardiogram, X-ray or other diagnostic test?
e. Been advised to have any diagnostic test, hospitalization or surgery
which was not completed?
5. Has anyone above:
a. Ever requested or received a pension, benefits or payment because of an
injury, sickness or disability?
b. Ever used sedatives, stimulants, narcotics or hallucinogens regularly
except as prescribed by a physician?
c. Ever been treated or advised to seek treatment for use of alcohol or
drugs?
6. a. Family History: Diabetes, cancer, high blood pressure, heart or kidney
disease, mental illness or suicide?
Person Proposed for Insurance: Family History Details: Name of person affected,
reason, dates and outcomes.
|_| Primary Insured
|_| Spouse (if OIR)
|_| Dependent (if CIR/OIR)
b. Primary Insured:
Age if Age at Cause
Living Death of Death
Father
Mother
Brothers/
Sisters
Spouse (if OIR):
Age if Age at Cause
Living Death of Death
Father
Mother
Brothers/
Sisters
AGREEMENT
I represent that the statements and answers in all parts of this application
consisting of Parts I and II are true and complete to the best of my knowledge
and belief. It is agreed that:
a. All such statements and answers shall be the basis of any insurance issued.
b. Except as provided in the conditional receipt attached to this application
and unless it is delivered to the applicant and the premium described
therein is made, no insurance shall take effect unless a policy has been
issued by the Company, manually received and accepted by the applicant and
the entire first premium paid while, to the best of my knowledge, there have
been no material changes in the answers contained in Parts I and II of this
application.
c. No agent or medical examiner is authorized to pass on such acceptability or
to make, modify or discharge any contract of insurance or waive any of the
Company~s rights or requirements.
d. Acceptance of a policy issued on this application shall constitute a
ratification of all statements and answers made in this application and of
any modifications made by the Company and as recorded under "Corrections and
Amendments," except that any change in amount, classification, plan of
insurance, age at issue or benefits shall be subject to written ratification
by the proposed insured or owner.
e. I, the proposed owner, certify under penalties of perjury, that the taxpayer
identification number shown in Part I, question 5b. (if owner is not the
insured) or question 1f. (if owner is the insured) is my correct taxpayer
identification number unless I have marked the box below:
|_|I have been notified that I am subject to backup withholding under the
Internal Revenue Code Section 3406(a)(1)(c) and the payor shall withhold
in accordance with withholding requirement imposed by law.
FRAUD STATEMENT
Any person who, with intent to defraud or knowing that s/he is facilitating a
fraud against an insurer, submits an application or files a claim containing a
false or deceptive statement may be guilty of insurance fraud.
AUTHORIZATION TO OBTAIN INFORMATION
I authorize any physician, medical practitioner, hospital, clinic, other medical
or medically related facility, insurance company, the Medical Information
Bureau, Inc., consumer reporting agency or employer, having information
available as to diagnosis, treatment and prognosis with respect to any physical
or mental condition and/or treatment of me or my minor children and any other
nonmedical information of me or my minor children to give to Century Life of
America or its reinsurers, any and all such information.
I understand the information obtained by use of the Authorization will be used
by Century Life of America or its reinsurers to determine eligibility for
insurance and eligibility for benefits under an existing policy. Any information
obtained will not be released by Century Life of America or its reinsurers to
any person or organization except to reinsuring companies, the Medical
Information Bureau, Inc., or other persons or organizations performing business
or legal services in connection with my application, claim, or as may be
otherwise lawfully required or as I may further authorize.
I know that I may request to receive a copy of the Authorization. I agree that a
photographic copy of this Authorization is as valid as
<PAGE>
the original. I acknowledge receipt of the Notice of Disclosure of Information
and Notice to Persons Applying for Insurance. I agree this Authorization is
valid for two and one-half years from the date shown below.
Signed at on , 19 .
City and State
Signature of Proposed Insured Signature of Other Insured Signature of Other
if Over Age 15; Otherwise, if Over Age 15 Insured if Over Age 15
Parent or Guardian
Signature of Owner if Other Signature of Other Insured Signature of Agent
than Insured if Over Age 15
Title, if Corporate Owner Signature of Other Insured Agent No.
if Over Age 15
<PAGE>
CLIENT DATA
Complete each question.
1. How long have you known the Proposed Insured?
Do you know him/her |_| Well |_| Casually |_| Just met?
2. Have you given Form 01-661A, Important Notice to Applicants for Insurance, to
proposed insured or applicant?
3. a. Personal History Interview information:
Telephone # where client can be reached:
1. Home or 2. Work
Best time and day of week to call
Is spouse home during day?
b. Inspection Report required?
(If yes, attach copies of order.)
4. Medical information required:
Primary Insured: |_| Med |_| Paramed |_| Non med |_| BCP
OIR : |_| Med |_| Paramed |_| Non med |_| BCP
Examiner or paramedical facility
Check if you have ordered |_| EKG |_| Other
5. Did you submit an Inquiry Blank (UND-238B) to the Home Office?
6. Alternate policies (except VUL):
Amount Plan
Premium Benefits
Death Benefit Option (UL)
7. If this is a joint case, list representatives with split:
Rep. No Name Comm.
1. %
2. %
3. %
8. Is (are) proposed insured(s) a U.S. citizen(s)?
9. Does anyone proposed for insurance have any plans to travel or reside
outside the United States or Canada within the next two years?
10. Has proposed insured lapsed or surrendered any Century Life of America
policies within the past 12 months, or is lapse or surrender contemplated?
(If yes, give details.)
11. To the best of my knowledge, replacement or change, in part or in whole, of
any existing insurance or annuities |_| is |_| is not involved. Compliance
will be met with applicable state regulations.
12. If proposed insured is under age 16:
a. Does child live with parents?
(If no, explain below.)
b. Did you see the child at time of app?
(If no, state when you last saw child.)
c. How many other children in family?
d. Is there insurance coverage on other children?
(If yes, state amount on each.)
e. Amount of insurance in force on parent/guardian? $
f. Parent/guardian~s annual income? $
g. Parent/guardian~s occupation?
13. a. How long has proposed insured been employed with present employer?
b. If less than two years, give former employer, address, duration and
reason for leaving:
14. Mailing of Premium Notices:
If notices are to be mailed other than to address of the owner given in Part
I, give full address here:
15. Special instructions:
16. Home Office use only:
The answer to each question of Parts I and II along with the Client Data and
Marketing Data sections were recorded in my presence exactly as given. I know
nothing unfavorable to the risk that is not recorded in these papers. Without
reservation, I recommend the client for insurance as applied for:
Date Representative's Signature
<PAGE>
MARKETING DATA
Complete each question.
THE CLIENT
1. The proposed insured (or owner if juvenile insurance) has the following:
a. Annual earned income: $
b. Annual unearned income: $
c. Total family income (gross):
|_| 1. $75,000 plus
|_| 2. $50,000 - $74,999
|_| 3. $35,000 - $49,999
|_| 4. $25,000 - $34,999
|_| 5. less than $25,000
d. Estimated net worth/assets: $
e. Current employer (company name, address):
2. Proposed insured~s household information:
a. |_| Single
|_| Married
|_| Divorced
|_| Widowed
b. If married, maiden name
c. Occupation of spouse
d. Amount of insurance in force on spouse
e. Number of children living in household
3. Market identification (check one):
|_| a. Business/Professional
|_| b. Personal
THE SALE
4. Source of lead (check one):
|_| a. Referred lead
|_| b. Life/annuity client
|_| c. Securities client
|_| d. Financial planning client
|_| e. Group/Pension client
|_| f. Orphan policyholder
|_| g. Family/friend/acquaintance
|_| h. Cold call
|_| i. Direct mail response
|_| j. A "walk-in"
|_| k. Credit union personnel
|_| l. Seminar
5. Multiple needs approach (check one):
|_| a. Financial Security Analysis (FSA)
|_| b. Financial Management Analysis (FMA)
|_| c. ProPlan
|_| d. Business Planning System (BPS)
6. Reason for purchasing (check one):
|_| a. Family protection
|_| b. Spouse insurance
|_| c. Juvenile insurance (age 0-15)
|_| d. Savings/accumulation
|_| e. Pension maximization/retirement
|_| f. Education funding
|_| g. Mortgage/debt protection
|_| h. Business insurance
|_| i. Other
7. Advanced techniques used (check one):
|_| a. Estate analysis
|_| b. Financial planning
|_| c. Pension planning
|_| d. Split dollar
|_| e. Buy-Sell
|_| f. Deferred compensation/
salary continuation
|_| g. Key person
8. CFS fee-based service (check one):
|_| a. Yes |_| b. No
9. Initial source of funds to purchase products (check all that apply):
|_| a. Current income
|_| b. Bank/S&L (CDs, savings account, etc.)
|_| c. Credit union (CDs, share account, etc.)
|_| d. Business Income
|_| e. Investments
|_| f. Policy values
|_| g. Other
10. Agency support:
|_| a. Joint call with management
|_| b. Joint call with another rep
11. Home office services used (check up to three):
|_| a. Estate analysis
|_| b. Advanced business illustration
|_| c. Personal planning analysis
|_| d. Business planning analysis
|_| e. Pension planning and administration
|_| f. Pension distribution analysis
|_| g. Phone consultation with home office
|_| h. Joint call with home office specialist
|_| i. Other
FUTURE ACTIVITY
12. List referrals (name, address):
13. Review and updates: What is the desired schedule of reviews and updates with
this client?
|_| a. Annually |_| b. Twice per year
|_| c. Other (explain)
14. Will an additional "lump sum" be deposited in the first contract year?
|_| Yes $ (amount)|_| No|_| Maybe
IMPORTANT NOTICE TO APPLICANTS FOR INSURANCE
Disclosure of Information
One of the prime objectives of Century Life of America is to provide insurance
at low cost. The underwriting process (evaluation of risks) is necessary not
only to assure this low cost, but also to assure that each policyholder
contributes his fair share of the cost. In considering your application,
information from various sources must, therefore, be considered. These include
the results of your physical examination, if required, and any reports we may
receive from doctors and hospitals who have attended you.
Information regarding your insurability will be treated as confidential. Century
Life of America or its reinsurers may, however, make a brief report thereon to
the Medical Information Bureau, a nonprofit membership organization of life
insurance companies, which operates an information exchange on behalf of its
members. If you apply to another Bureau member company for life or health
insurance coverage, or a claim for benefits is submitted to such a company, the
Bureau, upon request, will supply such company with the information it may have
in its file.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. (Medical information will be disclosed
only to your attending physician.) If you question the accuracy of information
in the Bureau~s file, you may contact the Bureau and seek a correction in
accordance with the procedures set forth in the Fair Credit Reporting Act. The
address of the Bureau~s information office is Post Office Box 105, Essex
Station, Boston, Massachusetts 02112, telephone number (617) 426-3660.
Century Life of America or its reinsurers may also release information in its
file to other life insurance companies to whom you may apply for life or health
insurance, or to whom a claim for benefits may be submitted.
The purpose of the Bureau is to protect its members and their policyholders from
bearing the expense created by those who would conceal facts relevant to their
insurability. Information furnished by the Bureau may alert the insurer to the
possible need for further investigation, but under Bureau rules cannot be used
as the basis for evaluating risks. The Bureau is not a repository of medical
reports from hospitals and physicians, and information in the Bureau file does
not reveal whether applications for insurance are accepted, rated or declined.
<PAGE>
NOTICE TO PERSONS
APPLYING FOR INSURANCE
THANK YOU for your application for insurance. We appreciate your consideration
of the Century Life of America for your insurance needs.
In compliance with Public Law 91-508 be advised that, as part of our
underwriting procedure, an investigative consumer report may be obtained which
will provide applicable information concerning character, general reputation,
personal characteristics and mode of living to the extent permitted by law. This
information will be obtained through personal interviews with your friends,
neighbors, and associates. Upon your written request to the Vice President of
the Underwriting Department, further information on the nature and scope of the
report will be provided.
Through such inquiries we seek to offer you coverage at the lowest possible
cost.
UNDERWRITING DEPARTMENT
Century Life of America
2000 Heritage Way
Waverly, Iowa 50677
(DETACH AND GIVE TO PROPOSED INSURED; IF MINOR TO PARENT OR GUARDIAN)
CONDITIONAL RECEIPT
IN NO EVENT SHALL ANY INSURANCE BE EFFECTIVE FOR ANY PERIOD UNLESS THE PROPOSED
INSURED WAS INSURABLE AND ACCEPTABLE AS PROVIDED BELOW. ALL CHECKS SHALL BE MADE
PAYABLE TO CENTURY LIFE OF AMERICA.
Received from this day of , 19 .
in the amount of $ in connection with an identically
numbered application for insurance on which the Proposed Insured is .
No Insurance Unless Condition Satisfied
It is a condition precedent to insurance hereunder on the person proposed for
insurance that on the Effective Date (as hereinafter defined), such person be
insurable under the Company~s rules, limits and standards for the policy applied
and paid for. There will be no insurance hereunder on such person unless that
person satisfies said condition, regardless of whether said person has been
notified he is not insurable, and if said condition is not satisfied by the
person, any payment made by the Applicant for such person shall be returned.
Minimum Amount Required with Application
This Receipt provides for life insurance subject to all provisions herein, in
accordance with the terms of the policy, provided the amount paid with the
application is at least equal to the amount of the full first premium according
to the mode of premium payment selected. This Receipt shall be void if any check
or draft given in exchange for it is not paid when presented for payment.
Effective Date of Insurance
This receipt provides no insurance until the Effective Date which is defined as
the later of (1) date of completion of all parts of the application and
supplements thereto on the person proposed for insurance, or (2) date of
completion of all medical examinations, including a second examination,
electrocardiogram, urine specimen, and chest X-ray where required for the person
by the Company~s published underwriting rules because of age and amount of
insurance applied for, or (3) the Date of Issue, if any, requested in the
application.
Termination Date of Insurance
This receipt provides no insurance after the Termination Date which is defined
as the earliest date of the following:
1. The date notice is mailed that the application is not accepted.
2. The date the Company tenders to the Applicant or Owner a policy issued other
than as applied for.
3. The date next prior to the day the policy becomes effective in the event the
policy is issued as applied for.
4. The date 60 days subsequent to the date of the application.
Conditional Insurance Provided
Provided there is no material misrepresentation in the application, this receipt
provides insurance, subject to all provisions herein, in accordance with the
terms of the policy applied for, between the Effective Date and Termination Date
and subject to the following limitations for any life or accidental death
insurance:
a. If, on the Effective Date, the person proposed for life insurance is
insurable under the Company~s rules, limits and standards for the life
insurance applied for and at the rate applied for or a lower rate, then
the insurance under this receipt for such person shall in no case exceed
$300,000 including all life and accidental death insurance then in force
with the Company.
b. If, on the Effective Date, the person proposed for life insurance is
insurable under the Company~s rules, limits and standards for the life
insurance applied for, but only at a rate higher than applied for, then
the amount of insurance under this receipt for such person shall be the
smallest of: 1. The amount of insurance which the first full premium
would purchase at the higher rate; 2. The amount of insurance applied
for; or 3. $300,000 less all life and accidental death insurance then in
force with the Company.
Agent May Not Modify
No Agent of Century Life of America has any power or authority to change or
modify any of the provisions of this Conditional Receipt.
Dated at on
City State Date
Soliciting Agent
<PAGE>
CENTURY
COMPANIES
OF AMERICA
January 18, 1988
Securities and Exchange Commission
450 Fifth Street, NW
Washington , DC 20549
Re: Century Variable Account
Century Life of America
Gentlemen:
As Senior Vice President, General Counsel and Secretary of Century Life of
America ("Company"), an Iowa corporation I am familiar with the Flexible Premium
Variable Life Insurance Policies ("Policies") which are the subject of the
captioned Registration Statement on Form S-6 ("Registration Statement").
In connection with this opinion, I have reviewed the Policies, the Registration
Statement, the Articles of Incorporation and Bylaws of the Company, relevant
proceedings of the Board of Directors, and the provisions of Iowa insurance law
relevant to the issuance of the Policies.
Based upon the foregoing review, I am of the opinion that each of the Policies,
when issued, will have been validly issued, and will constitute a legal and
binding obligation of the Company.
I further consent to the use of this opinion as an exhibit to the Registration
Statement and to my being named as an expert under "Experts" therein.
Very truly yours,
/s/ Arthur J. Hessburg
Arthur J. Hessburg
Senior Vice President
General Counsel and Secretary
CENTURY LIFE OF AMERICA
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, W. F. Broxterman, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ W. F. Broxterman
W. F. Broxterman
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Ralph B. Canterbury, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ Ralph B. Canterbury
Ralph B. Canterbury
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Jerald R. Hinrichs, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ Jerald R. Hinrichs
Jerald R. Hinrichs
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Robert T. Lynch, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ Robert T. Lynch
Robert T. Lynch
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Omer K. Reed, a director of Century Life of
America, a life insurance company incorporated under the laws of and domiciled
in the State of Iowa, hereby appoint, authorize and empower Gerald T. Conklin,
Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and agents
for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ Omer K. Reed
Omer K. Reed
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Donald F. Roby, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 11th day of January, 1996.
/s/ Donald F. Roby
Donald F. Roby
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Rosemarie M. Shultz, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 22nd day of January, 1996.
/s/ Rosemarie M. Shultz
Rosemarie M. Shultz
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Neil A. Springer, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 11th day of January, 1996.
/s/ Neil A. Springer
Neil A. Springer
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, James C. Barbre, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 11th day of January, 1996.
/s/ James C. Barbre
James C. Barbre
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, James A. Halls, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ James A. Halls
James A. Halls
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Michael B. Kitchen, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 5th day of January, 1996.
/s/ Michael B. Kitchen
Michael B. Kitchen
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Gerald J. Ring, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 11th day of January, 1996.
/s/ Gerald J. Ring
Gerald J. Ring
Director, Century Life of America
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