As filed with the Securities and Exchange Commission
on April 28, 1997
Registration No. 33-19718
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 16
TO
FORM S-6
CUNA MUTUAL LIFE VARIABLE ACCOUNT
(Exact Name of Trust)
CUNA MUTUAL LIFE INSURANCE COMPANY
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.
CUNA Mutual Life Insurance Company
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, 1997 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 18, 1997.
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, CUNA Mutual Life Insurance Company
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>
CUNA MUTUAL LIFE INSURANCE COMPANY PROSPECTUS
2000 Heritage Way, Waverly, Iowa 50677
(319) 352-4090 (800) 798-5500 MAY 1, 1997
This Prospectus describes an individual flexible premium variable universal life
insurance Policy issued by CUNA Mutual Life Variable Account and CUNA Mutual
Life Insurance Company. 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 CUNA Mutual Life Variable
Account (the "Separate Account"). Each Subaccount of the Separate Account
invests in a corresponding Fund. Each Fund or Series is a portfolio of one of
the three registered investment companies which are investment options
supporting the Separate Account: the Ultra Series Fund; T. Rowe Price
International Series, Inc.; and MFS(R) Variable Insurance TrustSM ("MFS Variable
Insurance Trust"). 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 the general account of CUNA
Mutual Life Insurance Company (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 VARIABLE INSURANCE
TRUST.
UNLIKE CREDIT UNION AND BANK ACCOUNTS, POLICY VALUE INVESTED IN THE SEPARATE
ACCOUNT IS NOT INSURED. INVESTMENT OF POLICY VALUE IN THE SEPARATE 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
PAGE
DEFINITIONS...................................................................1
SUMMARY OF KEY POINTS ABOUT THE POLICY........................................4
TYPE OF INSURANCE POLICY BEING OFFERED........................................4
BASIC CHARACTERISTICS OF THE SEPARATE ACCOUNT AND THE
INTEREST BEARING ACCOUNT.................................................4
BASIC DEATH BENEFIT CHARACTERISTICS...........................................4
EXPENSES AND CHARGES..........................................................5
Charges Against Premiums..................................................5
Periodic Charges..........................................................5
Surrender Charges.........................................................6
Transfer Charges..........................................................6
Fund Expenses.............................................................6
BASIC FLEXIBILITY CHARACTERISTICS.............................................7
Freedom to Choose the Level and Frequency of Premium Payments.............7
Freedom to Change Premium and Deduction Allocations.......................8
Freedom to Adjust Death Benefits Up and Down To Suit Current Needs........8
Choosing a Level Death Benefit or a Death Benefit Which Varies
With Investment Experience..........................................8
SOME QUESTIONS ABOUT POLICY VALUES AND DIVIDENDS..............................9
What Factors Will Cause the Accumulated Value to Increase Or Decrease?....9
What Access Does the Owner Have to Accumulated Value?.....................9
Will the Policy Pay Dividends?............................................9
SOME OF THE MORE SIGNIFICANT POLICY PRIVILEGES................................9
No-Lapse Guarantee........................................................9
Free-Look/Cancellation....................................................9
Conversion/Exchange.......................................................0
Reinstatement.............................................................0
TAX TREATMENT.................................................................0
THE COMPANY, THE SEPARATE ACCOUNT, THE FUNDS, AND THE INTEREST
BEARING ACCOUNT....................................................10
THE COMPANY..................................................................10
THE SEPARATE ACCOUNT.........................................................11
THE FUNDS....................................................................11
Ultra Series Fund........................................................12
Capital Appreciation Stock Fund.....................................12
Growth and Income Stock Fund........................................12
Balanced Fund.......................................................12
Bond Fund...........................................................12
Money Market Fund...................................................12
Treasury 2000 Fund..................................................12
T. Rowe Price International Series, Inc..................................12
International Stock Portfolio.......................................12
MFS Variable Insurance Trust.............................................13
MFS(R) World Governments SeriesSM...................................13
MFS(R) Emerging Growth SeriesSM.....................................13
Availability of the Funds................................................13
Resolving Material Conflicts.............................................13
Addition, Deletion or Substitution of Investments........................14
INTEREST BEARING ACCOUNT.....................................................14
THE POLICY...................................................................15
POLICY BENEFITS..............................................................15
Death Proceeds...........................................................15
Minimum Death Benefit Guarantee..........................................16
Surrender Proceeds.......................................................16
Maturity Proceeds........................................................17
Payment of Proceeds......................................................17
POLICY VALUES................................................................17
Accumulated Value........................................................17
Cash Value...............................................................17
Net Cash Value...........................................................17
UNIT VALUE GUARANTEE.........................................................18
PREMIUMS.....................................................................18
Initial Premium..........................................................18
Flexibility of Premiums..................................................18
No-Lapse Guarantee.......................................................18
Minimum Death Benefit Guarantee..........................................18
Target Premium...........................................................18
Net Premiums.............................................................18
Allocation of Net Premiums...............................................19
CHARGES AND DEDUCTIONS.......................................................19
State Premium Taxes......................................................19
Monthly Deduction........................................................19
Mortality and Expense Risk Charge........................................20
Contingent Deferred Sales and Administrative Charges.....................20
Transfer Fee.............................................................21
Federal and State Income Taxes...........................................22
GRACE PERIOD, LAPSE, NO-LAPSE GUARANTEE, AND REINSTATEMENT...................22
OWNER'S RIGHTS...............................................................22
Free-Look Period.........................................................22
Policy Loans.............................................................23
Transfer of Values.......................................................23
Dollar Cost Averaging....................................................24
Change of Allocations....................................................25
Change of Death Benefit Option...........................................25
Change of Specified Amount...............................................25
Conversion/Exchange of Policy............................................26
Transfer of Ownership....................................................27
Collateral Assignments...................................................27
Settlement Options.......................................................27
OTHER POLICY PROVISIONS, DEFINITIONS.........................................28
RIDERS.......................................................................30
Children's Insurance.....................................................30
Guaranteed Insurability..................................................30
Accidental Death Benefit.................................................30
Automatic Increase.......................................................30
Other Insured............................................................30
Term Insurance...........................................................30
Disability Waiver of Monthly Deductions..................................30
Waiver of Premium and Monthly Deduction Disability Benefit...............30
REPORTS TO OWNERS............................................................31
VOTING RIGHTS................................................................31
DISTRIBUTION OF POLICIES.....................................................31
UNISEX POLICIES..............................................................32
FEDERAL INCOME TAX MATTERS...................................................32
TAXATION OF THE COMPANY......................................................32
TAX STATUS OF THE POLICY.....................................................33
TAX TREATMENT OF POLICY PROCEEDS.............................................33
Proceeds Other Than Accelerated Benefits.................................33
Proceeds from Accelerated Benefits.......................................34
CUNA MUTUAL LIFE INSURANCE COMPANY DIRECTORS AND EXECUTIVE OFFICERS..........34
STATE REGULATION.............................................................36
LEGAL PROCEEDINGS............................................................36
INDEPENDENT AUDITORS.........................................................36
ACTUARIAL MATTERS............................................................36
REGISTRATION STATEMENT.......................................................37
FINANCIAL STATEMENTS.........................................................37
APPENDIX A ILLUSTRATIONS OF POLICY VALUES AND DEATH BENEFITS.................74
APPENDIX B FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT..........................................84
APPENDIX C FIRST YEAR CONTINGENT DEFERRED CHARGES PER $1,000 OF
SPECIFIED AMOUNT UNISEX............................................86
APPENDIX D DEATH BENEFIT RATIO...............................................87
<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.
Code. The Internal Revenue Code of 1986, as amended.
Collateral Assignee. Person or entity to whom the Owner gives some but not all
ownership rights under the Policy.
Company. CUNA Mutual Life Insurance Company
Cost of Insurance. It is the amount necessary to pay for the insurance provided
by the Policy. One factor of the Monthly Deduction.
CUNA Mutual Group. CUNA Mutual Insurance Society, its subsidiaries and
affiliates, including the Company.
Death Benefit Ratio. The ratio of Face Amount to Accumulated Value required by
the 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 T. Rowe Price International Series, Inc. or the MFS Variable Insurance
Trust 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 as 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.
Premium Tax. 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.
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. CUNA Mutual Life Variable Account, a segregated investment
account of CUNA Mutual Life Insurance Company 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) Thanksgiving and the day immediately
following; (2) Christmas and the final scheduled work day preceding; and (3) 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 (4) 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>
SUMMARY OF KEY POINTS ABOUT THE POLICY
Type Of Insurance Policy Being Offered
The Policy provides:
o Life Insurance
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, see Section
entitled THE POLICY.
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 Section entitled THE POLICY, 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.
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
Death Benefit Option 1 - Pays a Face Amount of death benefit equal to the
Specified Amount, or the Accumulated Value multiplied by the Death Benefit Ratio
whichever is greater.
At this place, the document shows a graphic representation of the death benefit
option 2 payment as described below.
DIAGRAM 2
Death Benefit Option 2 - Pays a Face Amount of death benefit equal to the
Specified Amount plus the Policy's Accumulated Value or the Accumulated Value
multiplied by the Death Benefit Ratio, whichever is greater.
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.
THE POLICY, Policy Benefits Section describes death benefit coverages more
completely.
Expenses And Charges
Charges Against Premiums
State Taxes. Premium Taxes (and taxes in lieu of Premium Taxes) are paid before
allocating Net Premiums to the Subaccounts or the Interest Bearing Account for
investment. The charge deducted is equal to actual amount of Premium Tax (or tax
in lieu of Premium Tax) in the Owner's state of residence.
Periodic Charges
Monthly Charges. The Monthly Deductions, are deducted from Net Cash Value (or in
limited circumstances, the Deferred Charges Account) on each Monthly Day:
o Cost of Insurance: Insurance costs and benefits are determined
by Insured's Attained Age, sex, smoker status and rating
class. (Factors used in unisex Policies are described in
UNISEX POLICIES.)
o Cost of additional insurance and rider benefits, if any.
o 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.
o Administrative fee: The administrative fee is $.45 per
thousand dollars of Specified Amount per year. The Policy fee
and administrative fee are assessed monthly against all
Policies issued pursuant to this Prospectus. The per thousand
administrative fee is assessed only during the first 10 Policy
years or, on an increase in Specified Amount, during the first
10 years after the increase.
Daily Charges. Mortality and expense risk charges are assessed against assets
held in Subaccounts and/or Interest Bearing Account. On an annual percentage
basis, the charge amounts to .9% of the average daily value of net assets. The
charge is deducted and reflected in the new unit value for each Subaccount as
recalculated on each Valuation Day.
Surrender Charges
Charge for Partial Surrender. The lesser of $25 or 2% of amount surrendered is
deducted from surrender proceeds.
Deferred Charges. The sales and administrative expenses incurred when a Policy
is issued are deferred (Deferred Charges) until the Policy is surrendered. The
charge varies by Age, Specified Amount, and in the case of deferred sales
charge, sex and smoker status. (For factors used in Policies sold to employee
benefit plans, see UNISEX POLICIES.) If the Policy is surrendered during the
first nine years, any Deferred Charges not yet released from the Deferred
Charges Account will be deducted from the surrender proceeds. Any current
Deferred Charges outstanding upon the death of the Insured are waived. (A table
illustrating the Deferred Charges is found in Appendix B.) In no instance will
the deferred sales charge exceed 30% of the lesser of cash value applied and/or
premiums paid or of the Guideline Annual Premium (as defined under the
Investment Company Act of 1940) of the Policy. The deferred administrative
charge will not exceed the amount necessary to recover first-year cost of
underwriting and issuing the Policy. (See Section entitled THE POLICY, Charges
And Deductions - Contingent Deferred Sales and Administrative Charges.) Such
charges are not collected at all if the Policy is held for nine years, or if the
Insured dies during that period. 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 Policy Anniversary until the ninth Policy Anniversary when
all remaining Deferred Charges are released. Allocations will be made in the
same percentages as premiums are currently allocated among the Subaccounts and
the Interest Bearing Account. All amounts in the Deferred Charges Account are
held at interest credited to the Policy at a minimum rate of 4% with the Company
crediting additional amounts at its discretion.
Transfer Charges. The Policy permits a charge against transfer proceeds when the
owner directs transfer of amounts among the Subaccount and the Interest Bearing
Account. The Company reserves the right to charge up to $20 per transfer. It
currently waives any charge for the first four transfers in any Policy year.
Other Charges
Lost Policy Request. You can obtain a certification of your policy at no charge.
There will be a $30 charge for a duplicate policy.
Fund Expenses. Charges are described in the Fund prospectuses which accompany
this prospectus and in the Fund Statements of Additional Information available
without charge from the address shown on the first page of this prospectus. The
charges vary by Fund. Current charges, expressed as a percentage of net assets,
range from .45% to 1.05%.
Annual Fund Expenses
(as percentage of average net assets)
Capital Appreciation Stock Fund
Management Fees 0.80%
Other Expenses 0.01%
Total Annual Fund Expenses 0.81%
Growth and Income Stock Fund
Management Fees 0.60%
Other Expenses 0.01%
Total Annual Fund Expenses 0.61%
Balanced Fund
Management Fees 0.70%
Other Expenses 0.01%
Total Annual Fund Expenses 0.71%
Bond Fund
Management Fees 0.55%
Other Expenses 0.01%
Total Annual Fund Expenses 0.56%
Money Market Fund
Management Fees 0.45%
Other Expenses 0.01%
Total Annual Fund Expenses 0.46%
Treasury 2000
Management Fees 0.45%
Other Expenses 0.00%
Total Annual Fund Expenses 0.45%
International Stock Portfolio
Management Fees 1.05%
Other Expenses 0.00%
Total Annual Fund Expenses 1.05%
MFS(R) World Governments SeriesSM
Management Fees (investment advisory fees) 0.75%
Other Expenses (after reimbursements) 0.25%
Total Annual Fund Expenses 1.00%
MFS(R) Emerging Growth SeriesSM
Management Fees (investment advisory fees) 0.75%
Other Expenses (after reimbursements) 0.25%
Total Annual Fund Expenses 1.00%
The annual expenses listed for the MFS(R) World Governments SeriesSM ("MFS World
Governments Series") are net of certain reimbursements by its investment
adviser. The investment adviser has agreed to bear, subject to reimbursement,
until December 31, 2004, expenses of the World Governments Series such that the
Series' aggregate operating expenses do not exceed 1.00%, on an annualized
basis, of its average daily net assets. See "Information Concerning Shares of
The Series - Expenses" in the prospectus of the MFS World Governments Series.
For the 1996 fiscal year, absent this expense arrangement, the "Other Expenses"
and the "Total Annual Fund Expenses" shown above would be 1.28% and 2.03%,
respectively.
The annual expenses listed for the MFS(R) Emerging Growth SeriesSM ("MFS
Emerging Growth Series") are net of certain reimbursements by its investment
adviser. The investment adviser has agreed to bear, subject to reimbursement,
until December 31, 2004, expenses of the Emerging Growth Series such that the
Series' aggregate operating expenses shall not exceed on an annualized basis,
1.00% of its average daily net assets. See "Information Concerning Shares of The
Series - Expenses" in the prospectus of the MFS Emerging Growth Series. For the
1996 fiscal year, absent this expense arrangement, the "Other Expenses" and the
"Total Annual Fund Expenses" shown above would be 0.41% and 1.16%, respectively.
Basic Flexibility Characteristics
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
entitled THE POLICY, Premiums.
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.
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.
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 Section entitled THE POLICY, Policy Benefits for a fuller explanation.
Some Questions About Policy Values And Dividends
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; additional premium paid; or
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; or
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; or
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).
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.
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 Section
entitled THE POLICY, Other Policy Provisions, Definitions - Dividends.)
Some Of The More Significant Policy Privileges
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.
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; plus
o total amount of Monthly Deductions; plus
o any other charges taken from Accumulated Value; plus
o the Accumulated Value on the date the Company receives the
returned Policy; minus
o any Policy Indebtedness.
A refund of the exact amount of premium paid will not be made unless required by
applicable state law.
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 POLICY, Owner's Rights Section.
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, the applicant provides evidence of insurability satisfactory to the
Company, and makes certain payments.
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 Section
entitled FEDERAL INCOME TAX MATTERS.
THE COMPANY, THE SEPARATE ACCOUNT, THE FUNDS,
AND THE INTEREST BEARING ACCOUNT
The Company is the insurer. 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.
The Company
CUNA Mutual Life Insurance Company 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." On January 1, 1997 the Company changed its name to "CUNA Mutual
Life Insurance Company."
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. CUNA Mutual and its subsidiaries and affiliates, including the Company
are referred to herein as "CUNA Mutual Group."
As of December 31, 1996, the Company had more than $3 billion in assets and $13
billion of life insurance In Force. Effective March 17, 1997 and through the
date of this Prospectus, A.M. Best rated the Company A (Excellent). Effective
February 11, 1997 and through the date of this Prospectus, 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 telephone 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 a one-half interest in CIMCO Inc. (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 CIMCO Inc.
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 under the Separate Account and, depending upon the death benefit option
chosen, the Death Proceeds may also vary with the value of the assets 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.
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 Class Z shares
of the Ultra Series Fund. The Separate Account and two other separate accounts
of the Company are shareholders of the Ultra Series Fund. Other Separate
Accounts of the Company or separate accounts of other affiliated and
unaffiliated life insurance companies and qualified retirement plans may also
invest in the Ultra Series Fund.
The Separate Account also invests in shares of the 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 objectives 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.
Ultra Series Fund
The Ultra Series Fund is a series fund with two classes of shares within each of
six investment portfolios. Class C shares are offered to unaffiliated insurance
company separate accounts and unaffiliated qualified retirement plans. Class Z
shares are offered to CUNA Mutual Group affiliates separate accounts and
qualified retirement plans. Currently, the Ultra Series Fund offers six Funds as
investment options under the Policies.
Capital Appreciation Stock Fund. 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 Fund. 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 Fund. 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 Fund. 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 Fund. This Fund seeks high current income 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 Fund. 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.
CIMCO Inc. serves as investment adviser to the Ultra Series Fund and manages
assets in accordance with general policies and guidelines established by the
board of trustees of the Ultra Series Fund. One half of CIMCO Inc.'s outstanding
common stock is owned by the Company and one half indirectly by CUNA Mutual.
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.
InternationalStockPortfolio"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.
MFS Variable Insurance Trust
The MFS Variable Insurance Trust currently has two investment series or Funds
available as investment options under the Policies.
MFS World Governments Series. This Fund seeks not only preservation but also
growth of capital, together with moderate current income.
MFS Emerging Growth Series. This Fund seeks long-term growth of capital through
investments primarily in common stocks 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.
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.
Resolving Material Conflicts
Ultra Series Fund. The Ultra Series Fund may sell shares to the Separate Account
and to other separate accounts of the Company and to affiliated and unaffiliated
insurance company separate accounts supporting individual variable annuity
contracts and to variable annuity contracts sold solely in connection with
qualified retirement plans (annuity contracts). 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 or (3) is a result of the sale of its shares to qualified
retirement plans. 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 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.
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 Section entitled THE POLICY, 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 the 1940 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.
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 Section entitled THE POLICY, Owner's Rights - Transfer of Values.)
THE POLICY
Policy Benefits
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 Section entitled THE POLICY, 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 Section entitled THE POLICY, Other Policy
Provisions, Definitions - 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:
o the Face Amount on the date of death; plus
o any premiums received after date of death; minus
o 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:
o The Specified Amount, or
o 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:
o The Specified Amount plus the Accumulated Value on the date of death,
or
o 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 Section
entitled THE POLICY, Owner's Rights - Change of Death Benefit Option.)
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. The target premium is stated on the specifications page of
the Policy and is determined by dividing the minimum premium by .60. 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 Section
entitled THE POLICY, 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 Section entitled THE POLICY, Charges and
Deductions Monthly Deduction.)
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 Section entitled THE POLICY,
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 Section entitled THE
POLICY, Other Policy Provisions, Definitions - Suspension of Payments.) For
information on possible tax effects of partial surrenders see Section entitled
FEDERAL INCOME TAX MATTERS, Tax Treatment Of Policy Proceeds.
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.
Payment of Proceeds
Settlement options are available for Death Proceeds, surrender proceeds, and
maturity proceeds. (See Section entitled THE POLICY, Owner's Rights - Settlement
Options.)
Policy Values
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 Section entitled THE POLICY, 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 Section entitled THE POLICY, 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.
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 Section entitled THE POLICY, Charges And Deductions - Contingent
Deferred Sales and Administrative Charges.)
Net Cash Value. The Net Cash Value at any time is equal to the Cash Value less
any Policy Indebtedness. (See Section entitled THE POLICY, 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 Section entitled THE
POLICY, Policy Benefits - Surrender Proceeds) or when the Policy matures (see
Section entitled THE POLICY, Policy Benefits - Maturity Proceeds).
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.
Premiums
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.
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.
No-Lapse Guarantee. If the minimum premium is paid the first three Policy years,
the Policy cannot Lapse during those years. (See Section entitled THE POLICY,
Grace Period, Lapse, No-Lapse Guarantee, and Reinstatement.)
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 Section entitled THE POLICY, Policy Benefits Minimum
Death Benefit Guarantee.)
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.
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 Section
entitled THE POLICY, Charges And Deductions - State Premium Taxes.)
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 Sections entitled THE POLICY,
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 Section entitled THE
POLICY, Owner's Rights - Change of Allocations.)
Charges And Deductions
Charges made by the series funds are discussed in the series funds' Prospectuses
and in their 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:
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.
Monthly Deduction. The Monthly Deduction due on each Monthly Day will be the sum
of:
o the Cost of Insurance for that month; plus
o the monthly Policy fee; plus
o the monthly administrative fee; plus
o 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 entitled 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.
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.
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.
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 1940 Act) 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 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:
o to pay surrender charges upon full surrender of the Policy;
o to release amounts back to the Separate Account and/or
Interest Bearing Account on the second through ninth Policy
Anniversaries; and
o 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.
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 Section entitled THE POLICY, Owner's Rights -
Transfer of Values.)
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.
Grace Period, Lapse, No-Lapse Guarantee, And Reinstatement
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.
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.
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 Section entitled THE POLICY, 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 Section entitled THE POLICY, Charges And Deductions - Monthly
Deduction.)
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:
o the Owner requests the Company to reinstate the Policy within five
years after the end of the grace period;
o the request is in writing;
o 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);
o 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;
o the Owner pays the amount of the Monthly Deductions due on the first
three Monthly Days after the reinstatement is effective; and
o 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.
Owner's Rights
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:
o the charges deducted state Premium Taxes (or taxes in lieu of Premium
Taxes);
o the total amount of Monthly Deductions and any other charges deducted
from Accumulated Value; and
o 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 Section
entitled THE POLICY, Owner's Rights - Change of Specified Amount.)
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 Section entitled THE
POLICY, 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.
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:
o record calls requesting transfers;
o ask the caller questions to determine if the caller is the
Owner; o transfer funds only to other Subaccounts and to the
Interest Bearing Account;
o send a written confirmation of each transfer; and o 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 telephone must submit the
transfer request in writing. An Owner is more likely to experience difficulty in
contacting the Company by telephone 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.
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.
Change of Allocations
The allocation of future Net Premiums may be changed by the Owner by requesting
the change in writing or by telephone. (See Section entitled THE POLICY,
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 telephone. (See Section entitled THE
POLICY, 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 telephone or fax will be honored provided the Owner has
telephone or fax authorizations on file at the Home Office of the Company. (See
Section entitled THE POLICY, 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.
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 Section entitled THE
POLICY, 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.
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
Section entitled THE POLICY, Policy Benefits - Death Proceeds.) Changes must be
requested in writing and are subject to the conditions below:
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.
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 Section
entitled THE POLICY, 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 1940 Act).
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
Section entitled THE POLICY, 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.
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:
o written request for the Policy exchange or change signed by the
Owner;
o surrender of the Policy; and
o 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 Section entitled THE POLICY, Owner's Rights - Change of Specified
Amount.)
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.
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.
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 Section entitled THE
POLICY, Policy Benefits Death Proceeds and Payment of 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:
o 10 years.
o 20 years.
o 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.
Other Policy Provisions, Definitions
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.)
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.
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.
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.
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:
o declined the application;
o issued the Policy at a higher premium; or,
o 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:
o charges deducted for state Premium Taxes (or taxes in lieu of
Premium Taxes); plus
o the total amount of Monthly Deductions and any other charges
deducted from Accumulated Value; plus
o plus the Accumulated Value on the date the refund is
calculated; minus
o Indebtedness.
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 UNISEX POLICIES.
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 Policy's
incontestability section describing rescission proceeds.
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 0.61% of the accumulated value at the end of
the policy year, , plus $39 per Policy for each of policy years 11-20 and 1.01%
of the accumulated value at the end of the policy year 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.
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.
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 consequences of accelerated benefits is
uncertain and a tax advisor should be consulted. (See Section entitled FEDERAL
INCOME TAX MATTERS, Tax Treatment of Policy Proceeds.)
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.
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: exercise of the
free-look privilege, an exchange of the Policy or increase in Specified Amount,
full surrender of the Policy, and payment of Death Proceeds.
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 underlying series 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 $1 of Accumulated
Value in the Subaccount with fractional votes allocated for amounts less than
$1. The number of votes available to an Owner will be determined as of a date
coincident with the date established by the series 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 series
funds. Each Owner having a voting interest in a Subaccount will receive proxy
materials and reports relating to any meeting of shareholders of the series fund
in which that Subaccount invests.
The Company may, when required by state insurance regulatory authorities, vote
shares of a series funds 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 Series funds, or investment objectives of a
series funds, or to approve or disapprove an investment advisory contract for a
series funds. In addition, the Company itself may, under certain circumstances,
vote shares of a Series funds 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 Series funds 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.
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. 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. CUNA Mutual Life Insurance Company,
the issuer of the Policy, entered into a permanent affiliation with CUNA Mutual
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.
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.
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.
Taxation Of The Company
The Company is taxed as a life insurance company under Subchapter L of 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.
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 underlying series funds, intends to comply with these
requirements. Although the Company doesn't control the underlying series funds,
it intends to monitor the investments of the underlying series 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 Policy Owner from being considered the Owner
of the assets of the Separate Account.
Tax Treatment Of Policy Proceeds
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 endowment 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.
Proceeds from Accelerated Benefits
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.
CUNA MUTUAL LIFE INSURANCE COMPANY DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Occupation
Directors
<S> <C> <C>
James C. Barbre 1994-Present ACT Technologies, Inc.
Secretary-Treasurer
1985-1993 Self-employed consultant in carpet
manufacturing and distribution in Dalton,
Georgia
Robert W. Bream 1991-Present United Airlines Employees Credit Union
President/CEO
Wilfred F. Broxterman 1997-Present Retired
1989-1997 Hughes Aircraft Employees Federal
Credit Union
President and Chief Executive Officer
James L. Bryan 1974-Present Texins Credit Union
President/CEO
Loretta M. Burd 1987-Present Centra Federal Credit Union
President/CEO
Ralph B. Canterbury 1965-Present US Airways Federal Credit Union
President
Joseph N. Cugini 1959-Present Westerly Community Credit Union
President & General Manager
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
Michael B. Kitchen 1995-Present CUNA Mutual Life Insurance Company*
President and Chief Executive Officer
1992-1995 The CUMIS Group Limited
President and Chief Executive Officer
Robert T. Lynch 1996-Present Retired
1970-1996 Detroit Teachers Credit Union
Treasurer/General Manager
Omer K. Reed 1959-Present Self-employed dentist
Gerald J. Ring 1968-Present Park Towne Corporation
President
Richard C. Robertson 1959-Present Arizona State Savings & Credit Union
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
Farouk D.G. Wang 1987-Present University of Hawaii at Manoa
Director of Buildings and Grounds Management
Larry T. Wilson 1974-Present Coastal Federal Credit Union
President/CEO
Executive Officers
Michael S. Daubs 1973-Present CUNA Mutual Life Insurance Company*
Chief Investment Officer
CIMCO Inc.
President
Harry N. Frenchak 1991-Present CUNA Mutual Life Insurance Company*
Chief Officer, Corporate Services
John A. Gibson 1988-Present CUNA Mutual Life Insurance Company*
Chief Marketing Officer
Richard J. Keintz 1979-Present CUNA Mutual Life Insurance Company*
Chief Officer, Finance and Information Services
Michael B. Kitchen 1995-Present CUNA Mutual Life Insurance Company*
President and Chief Executive Officer
1992-1995 The CUMIS Group Limited
President and Chief Executive Officer
Kevin T. Lentz 1983-Present CUNA Mutual Life Insurance Company
Chief Operating Officer
Daniel E. Meylink, Sr. 1983-Present CUNA Mutual Life Insurance Company*
Chief Officer, Member Services
Thomas O. Olson 1988-Present CUNA Mutual Life Insurance Company*
Chief Officer, International Markets
Kevin G. Shea 1976-Present CUNA Mutual Life Insurance Company*
Chief Officer, Lending Services
John M. Waggoner 1977-Present CUNA Mutual Life Insurance Company*
Chief Legal Officer
<FN>
* The Company entered into a permanent affiliation with the CUNA Mutual on
July 1, 1990. Those persons marked with an "*" hold identical titles with
CUNA Mutual. The most recent position has been given for those persons who
have held more than one position with the Company 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.
</FN>
</TABLE>
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.
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.
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.
ACTUARIAL MATTERS
Actuarial matters included in this prospectus have been examined by Scott Allen,
Assistant Vice President - Associate Actuary, CUNA Mutual Life Insurance
Company, Waverly, Iowa, as stated in the opinion filed as an exhibit to the
Registration Statement.
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.
FINANCIAL STATEMENTS
The financial statements for the Company are included herein immediately
following the financial statements of the Separate 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>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Assets and Liabilities
December 31, 1996
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Investments in Ultra Series Fund:
(note 2)
Capital Appreciation Stock Fund,
1,065,317 shares at net asset
value of $14.60 per share
(cost $12,699,357) $15,551,834 $ -- $ -- $ -- $ --
Growth and Income Stock Fund,
2,239,789 shares at net asset
value of $21.32 per share
(cost $36,545,346) -- 47,759,263 -- -- --
Balanced Fund, 3,424,810 shares
at net asset value of $15.29
per share (cost $46,244,830) -- -- 52,357,197 -- --
Bond Fund, 234,128 shares
at net asset value of $10.33
per share (cost $2,398,936) -- -- -- 2,417,823 --
Money Market Fund, 1,727,789
shares at net asset value of
$1.00 per share
(cost $1,727,789) -- -- -- -- 1,727,789
---------- ----------- ----------- ---------- ----------
Total assets 15,551,834 47,759,263 52,357,197 2,417,823 1,727,789
---------- ----------- ----------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 1,917 5,931 6,481 300 213
---------- ----------- ----------- ---------- ----------
Total liabilities 1,917 5,931 6,481 300 213
---------- ----------- ----------- ---------- ----------
Net assets $15,549,917 $47,753,332 $52,350,716 $2,417,523 $1,727,576
========== =========== =========== ========== ==========
Units outstanding (note 5) 953,534 1,036,605 1,567,551 97,412 97,454
========== =========== =========== ========== ==========
Net asset value per unit $16.31 $46.07 $33.40 $24.82 $17.73
========== =========== =========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Assets and Liabilities
December 31, 1996
Treasury International World Emerging
2000 Stock Governments Growth
Assets: Subaccount Subaccount Subaccount Subaccount*
<S> <C> <C> <C> <C>
Investments in Ultra Series Fund:
(note 2)
Treasury 2000 Fund, 183,351
shares at net asset value of $8.64
per share (cost $1,387,537) $1,584,741$ -- $ -- $ --
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
206,296 shares at net asset value of
$12.64 per share (cost $2,411,583) -- 2,607,576 -- --
Investments in MFSAE Variable
Insurance TrustSM:
World Governments Series,
27,255 shares at net asset value of
$10.58 per share (cost $283,514) -- -- 288,361 --
Investments in MFSAE Variable
Insurance TrustSM:
Emerging Growth Series,
89,934 shares at net asset value of
$13.24 per share (cost $1,187,932) -- -- -- 1,190,723
-------------- ---------- ---------- ----------
Total assets 1,584,741 2,607,576 288,361 1,190,723
-------------- ---------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 1,330 313 36 144
-------------- ---------- ---------- ----------
Total liabilities 1,330 313 36 144
-------------- ---------- ---------- ----------
Net assets $ 1,583,411 $2,607,263 $ 288,325 $1,190,579
============== ========== ========== ==========
Units outstanding (note 5) 196,670 216,089 24,554 117,771
============== ========== ========== ==========
Net asset value per unit $ 8.05 $ 12.07 $ 11.74 $ 10.11
============== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1996, 1995, and 1994
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss): 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Dividend income $595,603 $349,394 $316,311 $1,830,435 $2,783,538 $920,420
Adverse mortality and
expense charges
(note 3) (111,426) (67,332) (37,923) (363,607) (253,958) (178,836)
---------- --------- -------- ---------- ---------- ----------
Net investment income (loss) 484,177 282,062 278,388 1,466,828 2,529,580 741,584
---------- --------- -------- ---------- ---------- ----------
Realized and unrealized gain
(loss)on investments:
Realized gain (loss) on
security transactions:
Proceeds from sale of
securities 855,100 2,737,741 128,916 2,017,365 1,138,163 1,347,896
Cost of securities sold (708,846) (2,416,409) (126,278) (1,615,917) (985,297) (1,257,775)
---------- --------- -------- ---------- ---------- ----------
Net realized gain (loss) on
security transactions 146,254 321,332 2,638 401,448 152,866 90,121
Net change in unrealized
appreciation or depreciation
on investments 1,662,956 1,332,754 (143,233) 6,026,093 4,764,093 (762,308)
---------- --------- -------- ---------- ---------- ----------
Net gain (loss) on investments 1,809,210 1,654,086 (140,595) 6,427,541 4,916,959 (672,187)
---------- --------- -------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations $2,293,387 $1,936,148 $137,793 $7,894,369 $7,446,539 $69,397
========== ========= ======== ========== ========== ==========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Investment income (loss): 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Dividend income $2,949,493 $3,308,296 $1,934,706 $137,535 $218,461 $198,871
Adverse mortality and
expense charges(note 3) (445,353) (375,225) (311,308) (23,607) (33,879) (30,732)
---------- ---------- --------- -------- --------- --------
Net investment income (loss) 2,504,140 2,933,071 1,623,398 113,928 184,582 168,139
---------- ---------- --------- -------- --------- --------
Realized and unrealized gain
(loss)on investments:
Realized gain (loss) on
security transactions:
Proceeds from sale of
securities 3,759,491 2,989,211 2,663,000 1,799,790 885,596 498,842
Cost of securities sold (3,351,391) (2,732,488) (2,563,542) (1,748,647) (865,874) (495,991)
---------- ---------- --------- -------- --------- --------
Net realized gain (loss) on
security transactions 408,100 256,723 99,458 51,143 19,722 2,851
Net change in unrealized
appreciation or depreciation
on investments 1,724,491 4,759,298 (2,193,746) (127,295) 326,701 (308,510)
---------- ---------- --------- -------- --------- --------
Net gain (loss) on investments 2,132,591 5,016,021 (2,094,288) (76,152) 346,423 (305,659)
---------- ---------- --------- -------- --------- --------
Net increase (decrease) in net
assets resulting from
operations $4,636,731 $7,949,092 $(470,890) $37,776 $531,005 $(137,520)
========== ========== ========= ======== ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1996, 1995, and 1994
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Investment income (loss): 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dividend income $86,370 $116,648 $75,538 $107,339 $105,588 $96,836
Adverse mortality and expense
charges (note 3) (16,510) (20,105) (19,253) (13,847) (12,710) (11,586)
-------- -------- -------- -------- --------- --------
Net investment income (loss) 69,860 96,543 56,285 93,492 92,878 85,250
-------- -------- -------- -------- --------- --------
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 4,407,707 2,670,224 1,549,906 -- -- --
Cost of securities sold (4,407,707) (2,670,224) (1,549,906) -- -- --
-------- -------- -------- -------- --------- --------
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments -- -- -- (74,946) 161,453 (193,888)
-------- -------- -------- -------- --------- --------
Net gain (loss) on investments -- -- -- (74,946) 161,453 (193,888)
-------- -------- -------- -------- --------- --------
Net increase (decrease) in net
assets resulting from operations $69,860 $96,543 $56,285 $18,546 $254,331 ($108,638)
======== ======== ======== ======== ========= ========
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
Investment income (loss): 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Dividend income $39,586 $ -- $ -- $19,972
Adverse mortality and expense
charges (note 3) (14,665) (1,492) (2,326) (1,176)
-------- ------- ------- -------
Net investment income (loss) 24,921 (1,492) (2,326) 18,796
-------- ------- ------- -------
Realized and unrealized gain
(loss)on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 121,135 17,033 52,028 19,161
Cost of securities sold (113,341) (17,004) (53,136) (18,440)
-------- ------- ------- -------
Net realized gain (loss) on
security transactions 7,794 29 (1,108) 721
Net change in unrealized
appreciation or depreciation
on investments 173,915 22,078 12,525 (7,679)
-------- ------- ------- -------
Net gain (loss) on investments 181,709 22,107 11,417 (6,958)
-------- ------- ------- -------
Net increase (decrease) in net
assets resulting from operations $206,630 $20,615 $9,091 $11,838
======== ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1996, 1995, and 1994
EMERGING GROWTH SUBACCOUNT*
Investment income (loss): 1996
Dividend income $9,859
Adverse mortality and expense charges
(note 3) (4,378)
-------
Net investment income (loss) 5,481
-------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 213,154
Cost of securities sold (201,866)
-------
Net realized gain (loss) on security
transactions 11,288
Net change in unrealized appreciation
or depreciation on investments 2,792
-------
Net gain (loss) on investments 14,080
-------
Net increase (decrease) in net assets
resulting from operations $19,561
=======
See accompanying notes to financial statements.
*The data is for the period beginning May 1, 1996 (date of initial activity).
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1996, 1995, and 1994
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Operations: 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $484,177 $282,062 $278,388 $1,466,828 $2,529,580 $741,584
Net realized gain (loss) on
security transactions 146,254 321,332 2,638 401,448 152,866 90,121
Net change in unrealized
appreciation or depreciation
on investments 1,662,956 1,332,754 (143,233) 6,026,093 4,764,093 (762,308)
---------- ---------- --------- ----------- ----------- -----------
Change in net assets from
operations 2,293,387 1,936,148 137,793 7,894,369 7,446,539 69,397
---------- ---------- --------- ----------- ----------- -----------
Capital unit transactions(note5):
Proceeds from sale of units 7,622,148 5,340,463 7,013,416 13,835,588 10,831,868 11,317,875
Cost of units repurchased (3,351,383) (4,440,885) (1,001,170) (8,554,478) (6,090,704) (6,776,401)
---------- ---------- --------- ----------- ----------- -----------
Change in net assets from
capital unit transactions 4,270,765 899,578 6,012,246 5,281,110 4,741,164 4,541,474
---------- ---------- --------- ----------- ----------- -----------
Increase (decrease) in net assets 6,564,152 2,835,726 6,150,039 13,175,479 12,187,703 4,610,871
Net assets:
Beginning of period 8,985,765 6,150,039 -- 34,577,853 22,390,150 17,779,279
---------- ---------- --------- ----------- ----------- -----------
End of period $15,549,917 $8,985,765 $6,150,039 $47,753,332 $34,577,853 $22,390,150
========== ========== ========= =========== =========== ===========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Operations: 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Net investment income (loss) $2,504,140 $2,933,071 $1,623,398 $113,928 $184,582 $168,139
Net realized gain (loss) on
security transactions 408,100 256,723 99,458 51,143 19,722 2,851
Net change in unrealized
appreciation or depreciation
on investments 1,724,491 4,759,298 (2,193,746) (127,295) 326,701 (308,510)
----------- ----------- ----------- ---------- ---------- ----------
Change in net assets from
operations 4,636,731 7,949,092 (470,890) 37,776 531,005 (137,520)
----------- ----------- ----------- ---------- ---------- ----------
Capital unit transactions(note5):
Proceeds from sale of units 11,796,373 11,658,626 12,682,886 700,575 1,036,840 746,339
Cost of units repurchased (10,399,963) (9,247,633) (9,582,319) (2,103,924) (1,180,288) (831,337)
----------- ----------- ----------- ---------- ---------- ----------
Change in net assets from
capital unit transactions 1,396,410 2,410,993 3,100,567 (1,403,349) (143,446) (84,998)
----------- ----------- ----------- ---------- ---------- ----------
Increase (decrease) in net
assets 6,033,141 10,360,085 2,629,677 (1,365,573) 387,559 (222,518)
Net assets:
Beginning of period 46,317,575 35,957,490 33,327,813 3,783,096 3,395,537 3,618,055
----------- ----------- ----------- ---------- ---------- ----------
End of period $52,350,716 $46,317,575 $35,957,490 $2,417,523 $3,783,096 $3,395,537
=========== =========== =========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1996, 1995, and 1994
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Operations: 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $69,860 $96,543 $56,285 $93,492 $92,878 $85,250
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments -- -- -- (74,946) 161,453 (193,888)
--------- --------- --------- --------- ---------- ----------
Change in net assets from
operations 69,860 96,543 56,285 18,546 254,331 (108,638)
--------- --------- --------- --------- ---------- ----------
Capital unit transactions(note5):
Proceeds from sale of units 4,325,194 2,156,885 2,460,112 794,517 550,180 558,031
Cost of units repurchased (4,801,186) (3,049,819) (1,959,931) (773,892) (531,450) (540,474)
--------- --------- --------- --------- ---------- ----------
Change in net assets from
capital unit transactions (475,992) (892,934) 500,181 20,625 18,730 17,557
--------- --------- --------- --------- ---------- ----------
Increase (decrease) in net assets (406,132) (796,391) 556,466 39,171 273,061 (91,081)
Net assets:
Beginning of period 2,133,708 2,930,099 2,373,633 1,544,240 1,271,179 1,362,260
--------- --------- --------- --------- ---------- ----------
End of period $1,727,576 $2,133,708 $2,930,099 $1,583,411 $1,544,240 $1,271,179
========= ========= ========= ========= ========== ==========
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
Operations: 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net investment income (loss) $24,921 $(1,492) $(2,326) $18,796
Net realized gain (loss) on
security transactions 7,794 29 (1,108) 721
Net change in unrealized
appreciation or depreciation
on investments 173,915 22,078 12,525 (7,679)
-------- -------- -------- --------
Change in net assets from
operations 206,630 20,615 9,091 11,838
-------- -------- -------- --------
Capital unit transactions(note5):
Proceeds from sale of units 2,207,995 825,895 144,986 244,058
Cost of units repurchased (559,568) (94,304) (84,667) (36,981)
-------- -------- -------- --------
Change in net assets from
capital unit transactions 1,648,427 731,591 60,319 207,077
-------- -------- -------- --------
Increase (decrease) in net assets 1,855,057 752,206 69,410 218,915
Net assets:
Beginning of period 752,206 -- 218,915 --
-------- -------- -------- --------
End of period $2,607,263 $752,206 $288,325 $218,915
======== ======== ======== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1996, 1995, and 1994
EMERGING GROWTH SUBACCOUNT*
Operations: 1996
Net investment income (loss) $5,481
Net realized gain (loss) on
security transactions 11,288
Net change in unrealized appreciation
or depreciation on investments 2,792
---------
Change in net assets from
operations 19,561
---------
Capital unit transactions (note 5):
Proceeds from sale of units 1,517,927
Cost of units repurchased (346,909)
---------
Change in net assets from capital
unit transactions 1,171,018
---------
Increase (decrease) in net assets 1,190,579
Net assets:
Beginning of period --
---------
End of period $1,190,579
=========
See accompanying notes to financial statements.
*The data is for the period beginning May 1, 1996 (date of initial activity).
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Notes to Financial Statements
(1) Organization
The CUNA Mutual Life 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 CUNA Mutual Life Insurance Company,
formerly known as 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 CUNA Mutual Life
Insurance Company, those assets attributable to the policies are not
chargeable with liabilities arising out of any other business which CUNA
Mutual Life Insurance Company 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 CUNA
Mutual Life Insurance Company's general account to cover death benefits in
excess of the accumulated value.
(2) Significant Accounting Policies
Investments
The Account currently is divided into nine 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 Fund, Inc., MFSAE Variable Insurance Trusto, 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 Fund, Inc., and MFSAE Variable Insurance Trusto. 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 Fund, Inc., has one
and MFSAE Variable Insurance Trusto has two funds available as an
investment option. MFSAE Variable Insurance Trusto 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.
CIMCO Inc. (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.
CUNA Mutual Life Insurance 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 Fund, 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 Emerging Growth Series and
manages its assets in accordance with general policies and guidelines
established by the board of trustees of MFSAE Variable Insurance Trusto.
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 CUNA Mutual
Life Insurance Company and are not taxed separately. CUNA Mutual Life
Insurance Company 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 CUNA Mutual Life Insurance Company
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
CUNA Mutual Life Insurance Company 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 CUNA Mutual Life Insurance Company by redeeming
an appropriate number of units for each policy.
Administrative Fee: CUNA Mutual Life Insurance Company will have primary
responsibility for the administration of the Account and the policies
issued. As reimbursement for these expenses, CUNA Mutual Life Insurance
Company 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
CUNA Mutual Life Insurance Company crediting additional amounts at its
discretion.
Policy Fee: CUNA Mutual Life Insurance Company 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: CUNA Mutual Life
Insurance Company 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: CUNA Mutual Life Insurance
Company 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 CUNA Mutual Life
Insurance Company 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, 1996, was as follows:
Growth and Income Stock Fund...................... $8,768,688
Capital Appreciation Stock Fund................... 5,611,300
Balanced Fund..................................... 7,663,102
Bond Fund......................................... 510,390
Money Market Fund................................. 4,001,633
Treasury 2000 Fund................................ 7,021
International Stock Portfolio..................... 1,794,742
World Governments Series.......................... 110,041
Emerging Growth*.................................. 1,389,798
----------
$29,856,715
==========
*The data is for the period beginning May 1, 1996 (date of initial activity).
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Account for the years ended
December 31, 1996, 1995, and 1994 were as follows:
<TABLE>
<CAPTION>
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1993 -- 612,819 1,310,167 164,733 149,181
Units sold 684,909 385,948 502,048 34,868 152,172
Units repurchased (96,408) (230,900) (379,178) (38,726) (121,966)
-------- -------- --------- -------- --------
Units outstanding at
December 31, 1994 588,501 767,867 1,433,037 160,875 179,387
Units sold 437,510 320,880 420,975 45,571 129,950
Units repurchased (362,742) (180,926) (331,119) (51,065) (184,225)
-------- -------- --------- ------- --------
Units outstanding at
December 31, 1995 663,269 907,821 1,522,893 155,381 125,112
Units sold 516,098 337,323 375,764 29,061 249,298
Units repurchased (225,833) (208,539) (331,106) (87,030) (276,956)
-------- -------- --------- ------- --------
Units outstanding at
December 31, 1996 953,534 1,036,605 1,567,551 97,412 97,454
======== ======== ========= ======= ========
Treasury International World Emerging
2000 Stock Governments Growth
Subaccount Subaccount Subaccount Subaccount*
<S> <C> <C> <C> <C>
Units outstanding at
December 31, 1993 189,107 -- -- --
Units sold 82,063 -- -- --
Units repurchased (79,423) -- -- --
-------- -------- --------- --------
Units outstanding at
December 31, 1994 191,747 -- -- --
Units sold 74,132 80,023 22,558 --
Units repurchased (71,746) (9,147) (3,339) --
-------- -------- --------- -------
Units outstanding at
December 31, 1995 194,133 70,876 19,219 --
Units sold 102,713 194,181 12,790 151,261
Units repurchased (100,176) (48,968) (7,455) (33,490)
-------- -------- --------- -------
Units outstanding at
December 31, 1996 196,670 216,089 24,554 117,771
======== ======== ========= =======
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
(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
1996 1995 1994 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $13.55 $10.45 $10.00 $38.09 $29.16 $29.01 $25.73 $24.11
End of period 16.31 13.55 10.45 46.07 38.09 29.16 29.01 25.73
Percentage increase
in unit value
during period* 20.4% 29.7% 4.5% 21.0% 30.6% 0.5% 12.8% 6.7%
Number of units
outstanding at
end of period 953,534 663,269 588,501 1,036,605 907,821 767,867 612,819 588,841
<PAGE>
BALANCED SUBACCOUNT BOND SUBACCOUNT
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $30.41 $25.09 $25.44 $23.23 $21.94 $24.35 $21.11 $21.96 $20.35 $19.29
End of period 33.40 30.41 25.09 25.44 23.23 24.82 24.35 21.11 21.96 20.35
Percentage increase
in unit value
during period* 9.8% 21.2% -1.4% 9.5% 5.9% 1.9% 15.4% -3.9% 7.9% 5.5%
Number of units
outstanding at
end of period 1,567,551 1,522,893 1,433,037 1,310,167 1,186,398 97,411 155,381 160,875 164,733 171,276
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $17.05 $16.33 $15.91 $15.67 $15.33 $7.95 $6.63 $7.20 $6.29 $5.88
End of period 17.73 17.05 16.33 15.91 15.67 8.05 7.95 6.63 7.20 6.29
Percentage increase
in unit value
during period* 4.0% 4.4% 2.6% 1.5% 2.2% 1.3% 19.9% -7.9% 14.5% 7.0%
Number of units
outstanding at
end of period 97,454 125,112 179,387 149,181 201,170 196,670 194,133 191,747 189,107 186,690
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
1996 1995 1996 1995
---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C>
Beginning of period $10.61 $10.00 $11.39 $10.00
End of period 12.07 10.61 11.74 11.39
Percentage increase
in unit value
during period* 13.7% 6.1% 3.1% 13.9%
Number of units
outstanding at
end of period 216,089 70,876 24,554 19,219
EMERGING GROWTH SUBACCOUNT**
1996
Net asset value:
<S> <C>
Beginning of period $10.00
End of period 10.11
Percentage increase
in unit value
during period* 1.1%
Number of units
outstanding at
end of period 117,771
For the Money Market Subaccount, the "seven-day average yield" for the
seven days ended December 31, 1996, was 3.8% and the "effective yield" for
that period was 3.9%.
<FN>
*The amount of premium invested in CUNA Mutual Life 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 May 1, 1996 (date of initial activity).
</FN>
</TABLE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CUNA Mutual Life Insurance Company and Contract Owners of CUNA Mutual Life
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, World Governments Subaccount , and the Emerging
Growth Subaccount of the CUNA Mutual Life Variable Account as of December 31,
1996; the related statements of operations and changes in net assets for each of
the years in the three-year (two years for International Stock Subaccount and
World Governments Subaccount and eight months for the Emerging Growth
Subaccount) period then ended, and the condensed financial information for each
of the years in the five-year (three years for Capital Appreciation Stock
Subaccount, two years for International Stock Subaccount and World Governments
Subaccount, and one year for the Emerging Growth Subaccount) 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, 1996, were verified
by audit of the statements 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, World Governments
Subaccount, and the Emerging Growth Subaccount of the CUNA Mutual Life Variable
Account as of December 31, 1996; the results of their operations and changes in
their net assets for each of the years in the three-year (two years for
International Stock Subaccount and World Governments Subaccount, and eight
months for the Emerging Growth Subaccount) period then ended; and the condensed
financial information for each of the years in the five-year (three years for
Capital Appreciation Stock Subaccount, two years for International Stock
Subaccount and World Governments Subaccount, and one year for the Emerging
Growth Subaccount) period then ended, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Des Moines, Iowa
February 7, 1997
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
(Formerly CENTURY LIFE OF AMERICA)
Financial Statements and Supplementary Information
December 31, 1996
(With Independent Auditors' Report Thereon)
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets, Liabilities, and Surplus
December 31, 1996 and 1995
(In Thousands)
<TABLE>
<CAPTION>
Admitted Assets 1996 1995
--------------- ---- ----
Investments:
<S> <C> <C>
Bonds $1,652,375 1,636,574
Stocks:
Preferred 132 357
Common 33,256 43,685
Mortgage loans on real estate 405,017 428,594
Real estate 72,857 66,374
Policy loans 101,544 100,880
Other invested assets 22,255 21,721
Cash and short-term investments 33,290 15,300
--------- ---------
Total investments 2,320,726 2,313,485
Premiums receivable 11,820 10,483
Accrued investment income 33,299 33,106
Electronic data processing equipment 2,294 2,391
Due from affiliates and related parties 9,523 2,239
Federal income tax recoverable 2,865 -
Other assets 3,607 5,822
Separate accounts 645,710 296,874
--------- ---------
Total admitted assets $3,029,844 2,664,400
========= =========
Liabilities and Surplus
Liabilities:
Policy reserves:
Life insurance and annuity contracts $1,828,528 1,847,156
Accident and health insurance 11,342 10,620
Supplementary contracts without life contingencies 67,588 60,324
Policyholders' dividend accumulations 152,053 150,989
Policy and contract claims 5,868 6,223
Other policyholders' funds:
Dividends payable to policyholders 23,270 22,470
Premiums and other deposit funds 4,958 5,533
Interest maintenance reserve 2,343 1,301
Liabilities for employees' and agents' retirement plans 42,617 40,807
Amounts held for others 19,731 22,591
Due to affiliates and related parties 7,245 743
Commissions, expenses, taxes, licenses, and fees accrued 10,084 11,600
Federal income tax payable - 3,945
Separate accounts 625,414 287,915
Other liabilities 15,236 2,416
Asset valuation reserve 42,013 32,202
Loss contingency reserve for real estate 4,350 451
Loss contingency reserve for mortgage loans on real estate 3,900 845
--------- ---------
Total liabilities 2,866,540 2,508,131
--------- ---------
Surplus:
Assigned for contingencies - 1,841
Assigned for permanent guaranty fund - 400
Unassigned surplus 163,304 154,028
--------- ---------
Total surplus 163,304 156,269
Commitments and contingencies
--------- ---------
Total liabilities and surplus $3,029,844 2,664,400
========= =========
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years Ended December 31, 1996, 1995, and 1994
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Income:
Premiums and other considerations:
<S> <C> <C> <C>
Life and annuity $346,584 262,326 244,160
Accident and health 12,007 10,504 8,968
Supplementary contracts and dividend accumulations 46,303 48,633 50,173
Annuity and other fund deposits 51,322 22,734 21,098
Net investment income 174,573 173,355 167,545
Reinsurance commissions 9,962 18,523 21,614
Other income 3,761 7,026 7,263
------- ------- -------
Total income 644,512 543,101 520,821
------- ------- -------
Benefits and expenses:
Death benefits 33,592 31,807 28,044
Annuity benefits 39,086 39,948 33,455
Surrender benefits 143,867 101,456 103,107
Payments on supplementary contracts without life
contingencies and dividend accumulations 48,896 50,478 46,549
Other benefits to policyholders and beneficiaries 12,703 11,013 9,888
(Decrease) increase in policy reserves - life and annuity
contracts and accident and health insurance (54,954) 63,573 104,895
Increase in liabilities for supplementary contracts without life
contingencies and policyholders' dividend accumulations 8,328 5,935 9,936
Decrease in group annuity reserves (233) (7,276) (6,509)
Increase in benefit funds 4,075 4,103 4,112
Commissions 37,529 25,232 21,289
General insurance expenses, including cost of
collection in excess of loading on due and deferred
premiums and other expenses 51,004 59,633 63,556
Insurance taxes, licenses, and fees 6,199 5,585 7,366
Net transfers to separate accounts 267,145 101,369 45,469
------- ------- -------
Total benefits and expenses 597,237 492,856 471,157
------- ------- -------
Income before dividends to policyholders, federal
income taxes, and net realized capital gains (losses) 47,275 50,245 49,664
Dividends to policyholders 23,286 22,004 19,954
------- ------- -------
Income before federal income taxes and net
realized capital gains (losses) 23,989 28,241 29,710
Federal income taxes 7,713 13,321 8,660
------- ------- -------
Income before net realized capital gains (losses) 16,276 14,920 21,050
Net realized capital gains (losses), less federal income taxes
and transfers to the interest maintenance reserve 171 (567) (993)
------- ------- -------
Net income $ 16,447 14,353 20,057
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Changes in Unassigned Surplus
Years Ended December 31, 1996, 1995, and 1994
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $154,028 141,677 128,467
------- ------- -------
Increase (decrease) in unassigned surplus:
Net income 16,447 14,353 20,057
Change in net unrealized losses (7,135) (558) (8,650)
Change in asset valuation reserve (9,811) (3,386) (1,365)
Change in nonadmitted assets 2,695 497 726
Change in surplus of separate accounts (2,071) (2,500) 1,954
Change in separate account seed money 2,232 2,593 (2,071)
Subsidiary surplus distribution 13,858 - -
Change in loss contingency reserve for real estate (3,899) - (168)
Change in voluntary mortgage loan reserve (3,055) 365 3,000
Other miscellaneous changes 15 987 (273)
------- ------- -------
Net increase in unassigned surplus 9,276 12,351 13,210
------- ------- -------
Balance at end of year $163,304 154,028 141,677
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Cash Flows
Years Ended December 31, 1996, 1995, and 1994
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Cash from operations Premiums and other considerations:
<S> <C> <C> <C>
Life, annuity, and accident and health $408,328 294,530 273,115
Supplementary contracts and dividend accumulations 46,303 48,633 50,173
Investment income received 176,394 176,990 168,812
Reinsurance commissions 13,210 17,735 20,333
Other income 57,268 9,369 8,978
------- ------- -------
Total provided from operations 701,503 547,257 521,411
------- ------- -------
Life and accident and health claims paid 38,809 36,192 30,183
Surrender benefits paid 143,867 101,456 103,107
Other benefits to policyholders paid 95,785 96,571 86,056
Commissions, other expenses, and taxes paid,
excluding federal income taxes 89,017 92,812 89,306
Dividends to policyholders paid 22,542 21,634 22,654
Federal income taxes paid 15,804 7,145 1,318
Net transfers to separate accounts 280,523 106,508 46,934
Interest paid on defined benefit plans 4,104 4,074 6,183
Other 684 - -
------- ------- -------
Total used in operations 691,135 466,392 385,741
------- ------- -------
Net cash from operations 10,368 80,865 135,670
------- ------- -------
Cash from investments
Proceeds from investments sold, matured, or repaid:
Bonds 226,919 217,833 338,250
Stocks 29,960 22,194 16,162
Mortgage loans 52,773 38,861 34,613
Other invested assets 831 1,594 924
Net gain on cash and short-term investments - - 12
Real estate sold 700 2,315 2,476
------- ------- -------
Total investment proceeds 311,183 282,797 392,437
------- ------- -------
Cost of investments acquired:
Bonds 237,191 236,607 488,593
Stocks 26,235 22,063 18,364
Mortgage loans 31,025 67,942 47,401
Real estate 10,060 6,933 7,731
Other invested assets - 13,227 368
Other cash used 2,148 4,907 2,715
------- ------- -------
Total investments acquired 306,659 351,679 565,172
Increase in policy loans 664 398 1,308
------- ------- -------
Net cash from (used in) investments 3,860 (69,280) (174,043)
------- ------- -------
Cash from financing and miscellaneous sources
Other cash provided, net 3,762 254 2,657
------- ------- -------
Reconciliation of cash and short-term investments:
Net change in cash and short-term investments 17,990 11,839 (35,716)
Cash and short-term investments at beginning of year 15,300 3,461 39,177
------- ------- -------
Cash and short-term investments at end of year $ 33,290 15,300 3,461
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1996, 1995, and 1994
(1) Summary of Significant Accounting Policies
Company Operations
Effective December 31, 1996, Century Life of America changed its name to
CUNA Mutual Life Insurance Company (the Company). 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.
On September 30, 1996, the Company sold its wholly owned subsidiary, Century
Life Insurance Company (CLIC) to an unrelated party. The sale resulted in
realized gains of $3,900,000. In anticipation of the sale, substantially all
of the assets, liabilities, and equity of CLIC were transferred to and
assumed by the Company through an assumption reinsurance agreement that was
approved in all states where the Company is licensed. Transferred to the
Company under the assumption reinsurance transaction were assets and
liabilities with fair values of $37,200,000. Prior to the sale, net assets
in the amount of $14,900,000 were distributed from CLIC to the Company,
leaving CLIC with capital and surplus of $5,200,000, the minimum required by
state law.
On December 17, 1996, the Company dissolved its wholly owned subsidiary,
Century Financial Services Corp. (CFS), by retiring 100 percent of CFS's
outstanding common stock, resulting in a realized loss of $288,000.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa (statutory accounting
practices), which practices differ from generally accepted accounting
principles (GAAP). The more significant of these differences are as follows:
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 changes in 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 or
losses 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 lives of those securities;
The loss contingency reserves for real estate and mortgage loans are
recorded as liabilities by direct charges to surplus;
Effective in 1996, changes in federal income tax of prior years are
included in operations. Prior to 1996, these changes were 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 fair 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 statements of operations.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory 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 Statement of Position (SOP) No. 95-1, "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 were 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 are no longer described as prepared in conformity with
GAAP. The effects of applying the provisions of these pronouncements causes
total surplus and net income to differ from amounts as reported under the
existing accounting practices. A reconciliation of net income and surplus
between amounts presented herein and amounts stated in conformity with GAAP
as of December 31 are as follows (000s omitted):
Net Income 1995 1994
---------- ---- ----
Statutory net income $14,353 20,057
CLIC dividend to CMLIC - (5,500)
------ ------
Consolidated statutory net income 14,353 14,557
Adjustments:
Non-admitted assets (1,197) (242)
Federal income taxes 6,154 1,907
Deferred policy acquisition costs 151 321
Insurance reserves (5,416) 2,590
Investments (5,435) (5,160)
Other (1,599) (5,935)
------ ------
GAAP net income $ 7,011 8,038
====== ======
Surplus 1995
Statutory surplus $156,269
Adjustments:
Non-admitted assets 15,341
Federal income taxes 24,511
Deferred policy acquisition costs 106,405
Insurance reserves (64,291)
Investments 48,359
Employee benefits (18,805)
Other (19,696)
-------
GAAP Surplus $248,093
=======
The effects of these variances on net income and surplus at December 31,
1996, although not reasonably determinable as of this date, are presumed to
be material.
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 fair 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 are 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.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Valuation of Investments, Continued
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 $6,032,674 ($18,404,841 in 1995), reduced by unrealized
losses of $2,391,200 ($8,538,442 in 1995)] amounted to $3,641,474 at
December 31, 1996 ($9,866,399 at December 31, 1995). Effective in 1995, the
Company changed its method for recording the write-downs of outstanding
mortgage loans to fair value of the real estate acquired through foreclosure
as realized losses. Realized losses from the write-down of the carrying
amount of foreclosed mortgage loans were $937,622 in 1996 and $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 in 1994. Earnings from its investments in
limited partnerships amounted to $2,527,164 during 1996 ($164,747 and
$1,051,075 in 1995 and 1994, respectively) and was credited to income.
Policy Reserves
During 1988, the Company began using the 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 5.0
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 23 percent of the reserves are calculated on a net
level reserve basis and 77 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 Commissioners' Annuity Reserve Valuation Method (CARVM) with
interest assumptions ranging from 2.5 percent to 7.0 percent.
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 1996.
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 lives of the securities.
Electronic Data Processing Equipment
Electronic data processing equipment is carried at cost less accumulated
depreciation of $5,628,340 and $4,751,205 at December 31, 1996 and 1995,
respectively. The equipment is being depreciated using the straight-line
method over a five-year period.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
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, 1996, 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.
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
SFAS 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.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Disclosures About Fair Value of Financial Instruments, Continued
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 the short-term nature of these instruments.
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, at 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 reported 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.
The carrying and estimated fair values as of December 31 are as follows
(000s omitted):
<TABLE>
<CAPTION>
1996 1995
Carrying Estimated Carrying Estimated
value fair value value fair value
Investments:
<S> <C> <C> <C> <C>
Bonds $1,652,375 1,693,757 1,636,574 1,728,572
Preferred stocks 132 195 357 366
Common stocks of nonaffiliates 32,606 32,606 25,678 25,678
Mortgage loans on real estate 405,017 423,368 428,594 462,167
Policy loans 101,544 101,544 100,880 100,880
Short-term investments 37,595 37,595 18,256 18,256
Cash(4,305) (4,305) (2,956) (2,956)
Assets held in separate accounts 645,710 645,710 296,874 296,874
Liabilities related to separate accounts 625,414 625,414 287,915 287,915
Liabilities related to investment type
insurance contracts 1,384,744 1,439,661 1,350,109 1,417,951
======== ======== ======== ========
</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 and caps, to reduce interest
rate exposure for long-term assets and to exchange fixed rates for floating
interest rates. See note 2 for additional information related to these
agreements.
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 and losses. Unrealized capital
gains and losses on equity swaps are charged or credited to surplus.
Interest rate cap agreements entitle the Company to receive from the
counter-parties the amounts, if any, by which the selected market interest
rates exceed the strike rates stated in the agreements. The amount paid to
purchase the interest rate caps is included in other invested assets and
amortized over the term of the agreements as an adjustment to investment
income.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Separate Accounts
Separate account assets are funds of separate account contractholders and
the Company, segregated into accounts with specific investment objectives.
The assets are generally carried at fair value. An offsetting liability is
maintained to the extent of contractholders' interests in the assets.
Appreciation or depreciation of the Company's interest in the separate
accounts, including undistributed net investment income, is reflected in
policyholders' surplus. Contractholders' interests in net investment income
and realized and unrealized capital gains and losses on separate account
assets are not reflected in operations.
Reclassifications
Certain amounts previously reported in prior years' financial statements
have been reclassified to conform to the current year presentation.
(2) Investments
Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1996 and 1995, are as follows (000s omitted):
<TABLE>
<CAPTION>
Gross Gross
Carrying unrealized unrealized Estimated
Description value gains losses fair value
1996:
<S> <C> <C> <C> <C>
United States treasury
and government securities $ 62,930 1,331 293 63,968
States and political
subdivisions securities 56 - - 56
Foreign government securities 17,902 924 - 18,826
Corporate securities 1,130,062 40,087 6,934 1,163,215
Mortgage-backed securities 356,859 5,961 2,081 360,739
Other debt securities 84,566 2,473 86 86,953
--------- ------ ----- --------
$1,652,375 50,776 9,394 1,693,757
========= ====== ===== ========
1995:
United States treasury
and government securities $ 79,778 2,599 106 82,271
States and political
subdivisions securities 64 - - 64
Foreign government securities 20,614 1,675 - 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>
A provision of $63,846 and $7,234,079 at December 31, 1996 and 1995,
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.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Bonds, Continued
The carrying value and estimated fair value of investments in bonds as of
December 31, 1996, are shown below by contractual maturity (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 $ 110,261 111,041
Due after 1 year through 5 years 357,962 369,106
Due after 5 years through 10 years 615,744 633,119
Due after 10 years 157,416 164,612
--------- --------
1,241,383 1,277,878
Mortgage-backed securities 356,859 360,739
Other structured securities 54,133 55,140
--------- --------
$1,652,375 1,693,757
========= ========
The average duration until maturity for the above bonds, excluding
mortgage-backed securities, is 3.5 years.
Proceeds from sales, calls, redemptions, and maturities of investments in
bonds were $226,918,773, $217,833,188, and $338,250,247 during 1996, 1995,
and 1994 respectively. Gross gains of $1,509,336, $3,455,815, and $2,698,682
and gross losses of $4,702,885, $2,559,251, and $11,985,605 were realized on
those sales in 1996, 1995, and 1994, respectively. Net realized capital
gains (losses), less applicable income taxes, of $974,141, $1,412,534, and
($4,448,743) were transferred to the IMR in 1996, 1995, and 1994,
respectively.
Equity Securities
The gross unrealized gains and losses on nonaffiliated equity securities as
of December 31, 1996 and 1995, are as follows (000s omitted):
Gross Gross Estimated
unrealized unrealized fair
Cost gains losses value
1996 $29,196 5,666 2,061 32,801
1995 $23,502 3,692 1,150 26,044
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 (15 percent
in California) 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, 1996, the
commercial mortgage portfolio had an average remaining life of approximately
5.1 years. In addition to the asset valuation reserve provision, a loss
contingency reserve of $3,900,000 and $845,000 at December 31, 1996 and
1995, respectively, has been provided for mortgage loans on real estate.
Assets Designated
The carrying values of assets designated for regulatory authorities as of
December 31 are as follows (000s omitted):
1996 1995
---- ----
Bonds and short-term investments $1,641,398 1,636,599
Mortgage loans on real estate 405,017 428,594
Policy loans 101,544 100,880
--------- ---------
$2,147,959 2,166,073
========= =========
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Net Investment Income
Components of net investment income as of December 31 are as follows (000s
omitted):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Bonds $124,778 127,056 121,725
Preferred stocks 23 73 105
Common stocks 1,721 2,393 5,844
Short-term investments 2,222 1,447 1,214
Derivative financial instruments (360) 742 -
Mortgage loans on real estate 37,968 37,835 36,992
Real estate 11,456 10,422 10,070
Policy loans 6,513 6,392 6,276
Other invested assets 4,390 192 (541)
Other 79 85 (1,038)
------- ------- -------
Gross investment income 188,790 186,637 180,647
Less investment expenses 14,217 13,282 13,102
------- ------- -------
Net investment income $174,573 173,355 167,545
======== ======= =======
</TABLE>
Realized Gains and Losses
Net realized investment gains and losses (before taxes and transfer to
interest maintenance reserve) as of December 31 are summarized as follows
(000s omitted):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Debt securities $ (3,194) 896 (9,287)
Equity securities 6,466 3,322 1,420
Mortgage loans on real estate (433) 76 (530)
Real estate 428 180 (223)
Short-term investments and other - - 248
Derivative financial instruments (3,068) (3,174) -
------ ------ ------
Net realized investment gains (losses) $ 199 1,300 (8,372)
====== ====== ======
</TABLE>
Derivative Financial Instruments
As of December 31, 1996, 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 6.15 percent as of
December 31, 1996, and pays interest on the same notional amount at a fixed
rate, which was 6.96 percent as of December 31, 1996. Amounts exchanged as a
part of the interest rate differential are accounted for as adjustments to
investment income. This interest rate swap agreement is scheduled to
terminate in the year 2000. As of December 31, 1996, the carrying value of
the interest rate swap agreement was -0- and the fair value was
($2,170,000). This negative fair value represents the estimated amount the
Company would have to pay at December 31, 1996, to cancel the contract or
transfer it to another party.
The Company participated in 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 agreed to swap the total return (investment income
and 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 1996, the financial statement impact of the swap was to reduce
the Company's total return on investments by $3,299,864 ($1,641,136 in
1995). The Company recorded the following income (loss) in 1996 from this
transaction: investment income of $798,963 ($1,171,120 in 1995); realized
losses of ($3,067,966) [($3,173,747) in 1995]; and unrealized losses of
($1,030,861) (unrealized gains of $361,491 in 1995).
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Derivative Financial Instruments, Continued
As of December 31, 1996, the Company had three interest rate cap agreements
with two major financial institutions, having a total notional amount of
$500,000,000. The Company paid $2,280,000 for these agreements, which
terminate in 1999. As of December 31, 1996, the carrying value of the caps
was $2,017,870. As of December 31, 1996, the fair value of the interest rate
cap agreements was $1,481,000. The fair value represents the estimated
amount the Company would receive at December 31, 1996, if it transferred the
agreements to another party.
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 as of December 31 is as follows (000s
omitted):
1996 1995
---- ----
Cost:
Investment real estate $91,618 80,999
Home office 15,236 15,205
-------- --------
106,854 96,204
Less accumulated depreciation 33,997 29,830
-------- --------
$72,857 66,374
======== ========
Investment real estate and the home office buildings are being depreciated
using the straight-line basis over the useful lives of these assets. In
addition to the asset valuation reserve provision, a loss contingency
reserve of $4,350,000 and $450,735 at December 31, 1996 and 1995,
respectively, has been provided for investment real estate.
(4) Affiliation and Transactions with Affiliates and Related Parties
The Company has entered into an agreement of permanent affiliation with CUNA
Mutual Insurance Society (CMIS). 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 at least annually. 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
($478,504) (net of taxes of $297,656), and by $214,524 (net of taxes of
$115,513) during 1996 and 1995, respectively.
Common stock investments on December 31, 1996, include the Company's wholly
owned subsidiary, Red Fox Motor Hotel Corporation and 50 percent ownership
of CIMCO Inc. (formerly known as Century Investment Management Company). As
discussed in note 1, CLIC was sold during 1996, and Century Financial
Services Corp. was dissolved. The carrying value of the subsidiary
investments on the Company's books amounted to $650,050 and $18,007,296 at
December 31, 1996 and 1995, respectively. Included in net investment income
(see note 2) was dividend income of $1,328,364 from CLIC for the year ended
December 31, 1996 ($2,000,000 for 1995 and $5,500,000 for 1994).
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.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(4) Affiliation and Transactions with Affiliates and Related Parties, Continued
In 1995, the Company funded the purchase of 50 percent of CUNA Mortgage
Corporation by CUNA Mutual Investment Corporation (CMIC) by providing cash
of $13.2 million 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 $9.8 million at December 31, 1996, ($12.9 million at December 31,
1995) and is included in other invested assets on the statutory statements
of admitted assets, liabilities, and surplus.
The Company has entered into an agreement with CIMCO Inc., for investment
advisory services. CIMCO Inc. provides an investment program which complies
with policies, directives, and guidelines established by the Company. For
these services, the Company paid fees to CIMCO Inc. totaling $2,582,800,
$2,598,000, and $2,352,000 for 1996, 1995, and 1994, respectively.
(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 nine subaccounts, which 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, World Governments, and Emerging Growth. The second
component is used for the investment of group annuity premium deposits and
has eight 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 eight 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 fair
value. Investments other than money market instruments are stated at fair
value.
(6) Annuity Reserves and Deposit Liabilities
The withdrawal characteristics of the Company's annuity contracts and
deposit funds as of December 31 are as follows (000s omitted):
1996 1995
---- ----
Subject to discretionary withdrawal:
With market value adjustments $411,145 305,288
At book value, less surrender charge 634,606 807,349
At market value 379,682 118,247
At book value, no charge or adjustment 694,893 629,107
--------- ---------
2,120,326 1,859,991
Not subject to discretionary withdrawal 33,170 26,177
--------- ---------
2,153,496 1,886,168
Reinsurance ceded 475,913 477,831
--------- ---------
$1,677,583 1,408,337
========= =========
(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 through PLAN AMERICA, one of the Company's
face-to-face distribution systems, has been ceded at 50 percent to ML.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(7) Reinsurance, Continued
Prior to January 1, 1996, the Company assumed 50 percent of CMIS's portion
of the direct business originated by a CMIS joint venture. The joint venture
agreement was terminated for business marketed after December 31, 1995.
Effective January 1, 1996, the Company assumes 50 percent of the direct
business marketed solely by CMIS. 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>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations $ 43,382 75,362 105,283
========= ========= =========
Policy reserves and claim liabilities $ 534,173 529,827 459,902
========= ========= =========
Insurance in force $1,593,020 1,375,434 1,302,561
========= ========= =========
Included in the balances above are the following amounts relating to
activity with ML (000s omitted):
1996 1995 1994
---- ---- ----
Premiums and other considerations $ 40,853 73,249 103,588
========= ========= =========
Policy reserves and claim liabilities $ 530,958 527,150 457,619
========= ========= =========
Insurance in force $1,081,201 1,066,331 986,998
========= ========= =========
Assumed reinsurance activity from CMIS and ML are as follows (000s omitted):
1996 1995 1994
---- ---- ----
Premiums and other considerations $ 30,943 25,264 20,393
========= ========= =========
Policy reserves and claim liabilities $ 24,074 17,460 12,527
========= ========= =========
Insurance in force $1,950,127 1,411,590 1,002,639
========= ========= =========
</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):
1996 1995
---- ----
Due from subsidiaries $ - 1,461
Due from (to) IRS 2,865 (5,406)
------ ------
$2,865 (3,945)
====== ======
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory 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 earnings before federal income taxes and net realized capital gains
(losses) for the following reasons (000s omitted):
<TABLE>
<CAPTION>
1996 1995 1994
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $8,396 35.0% 9,884 35.0% 10,398 35.0%
Nontaxable investment income (4,159) (17.3) (3,650) (12.9) (3,860) (12.6)
Mutual life insurance company
differential earnings adjustment 2,599 10.8 3,259 11.5 666 2.2
Nondeductible deferred acquisition costs 614 2.6 860 3.1 1,485 4.9
Change in book and tax reserves 1,400 5.8 802 2.8 1,055 3.4
Miscellaneous book/tax capital gain
adjustment - - 2,138 7.6 989 3.4
Prior year over/under accrual (1,500) (6.3) - - - -
Other, net 363 1.6 28 0.1 (2,073) (7.0)
------ ---- ------ ---- ----- ----
$7,713 32.2% 13,321 47.2% 8,660 29.3%
====== ==== ====== ==== ===== ====
</TABLE>
The Company's consolidated federal income tax returns have been examined by
the IRS through 1994. The Company has incurred no additional tax liability
in the three years ended December 31, 1996, in relation to these
examinations.
The Company has claimed the benefit of the negative differential earnings
rate (DER) through 1993. The permissibility of the negative DER is currently
the subject of litigation between the IRS and the mutual segment of the life
insurance 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 ($946,308),
$455,130, and ($2,930,359) for 1996, 1995, and 1994, respectively. Of these
amounts $524,540, $760,595, and ($2,395,477) were transferred to the IMR in
1996, 1995, and 1994, respectively. Net income taxes paid were $16,000,000,
$11,700,000, and $12,300,000 in 1996, 1995, and 1994, respectively.
(9) Retirement Plans
The Company has two noncontributory defined benefit retirement 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 1996, 1995, and
1994 was $673,542, $1,992,599, and $2,717,207, respectively.
The actuarial present value of accumulated plan benefits and plan net
assets available for benefits for the Company's retirement plans as of
January 1, 1996 and 1995 are as follows (000s omitted):
1996 1995
---- ----
Actuarial present value of accumulated plan benefits
Vested $30,586 28,628
Nonvested 1,035 1,271
------- -------
$31,621 29,899
======= =======
Net assets available for benefits $43,659 40,081
======= =======
The discount rate used in determining the actuarial present value of
accumulated plan benefits on the two plans was 7 percent for 1996 and 1995.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(9) Retirement Plans, Continued
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 $989,243 in 1996 ($825,705 in 1995 and $769,590 in 1994) and
include the expected cost of such benefits for newly eligible or vested
employees, interest cost, amortization of gains and losses arising from
differences between actuarial assumptions and actual experience, and
amortization of the transition obligation. The unfunded postretirement
benefit obligation was $6,326,374 and $4,560,541 at December 31, 1996 and
1995, respectively. The accrued postretirement benefit liability at
December 31, 1996 and 1995, was $2,407,239 and $1,754,484, respectively.
The discount rate used in determining the postretirement benefit obligation
at December 31, 1996 and 1995, 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, 1996, by
$566,110 and the estimated eligibility cost and interest cost components of
net periodic postretirement benefit cost for 1996 by $89,916.
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 $1,141,000, $960,000, and $998,000 for the years ended
December 31, 1996, 1995, and 1994, 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, 1996, the par value of
securities loaned by the Company totaled $11 million.
The Company had no assigned surplus in 1996 and $1.8 million in 1995 for
contingency reserves. Contingency reserves were designated by the Company
as special surplus funds.
The Company had outstanding loan commitments of approximately $4.2 million
at December 31, 1996.
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, was settled in November 1996, having an immaterial impact on the
Company's financial position.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule I - Summary of Investments -
Other than Investments in Related Parties
December 31, 1996
<TABLE>
<CAPTION>
Amount at which
shown in the
Statutory Statement
of Admitted Assets,
Cost Value Liabilities, and Surplus
Fixed maturities:
Bonds:
<S> <C> <C> <C>
United States government and government
agencies and authorities $ 62,929,973 63,968,476 62,929,973
States, municipalities and political subdivisions 55,570 55,707 55,570
Foreign governments 17,902,160 18,826,195 17,902,160
Public utilities 1,130,062,282 1,163,215,318 1,130,062,282
All other corporate bonds 84,566,681 86,951,962 84,566,681
Mortgage-backed securities 356,858,744 360,739,372 356,858,744
------------ ------------ ------------
Total fixed maturities 1,652,375,410 1,693,757,030 1,652,375,410
============ ============ ============
Equity securities:
Common stocks:
Public utilities 2,917,037 3,000,301 3,000,301
Banks, trust, and insurance companies 1,843,560 2,408,116 2,408,116
Industrial, miscellaneous, and all other 24,302,879 27,197,961 27,197,961
Nonredeemable preferred stocks 132,269 195,000 132,269
------------ ------------ ------------
Total equity securities 29,195,745 32,801,378 32,738,647
------------ ============ ------------
Mortgage loans on real estate 405,016,700 405,016,700
Real estate 14,259,551 14,259,551
Real estate acquired in satisfaction of debt 58,597,816 58,597,816
Policy loans 101,543,942 101,543,942
Other long-term investments 22,254,357 22,254,357
Short-term investments 37,594,889 37,594,889
------------ ------------
Total investments $2,320,838,410 2,324,381,312
============ ============
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule III - Supplementary Insurance Information
Years Ended December 31, 1996, 1995, and 1994
<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
Year ended December 31, 1996:
<S> <C> <C> <C> <C> <C>
Life insurance $ - 1,911,927,116 - 5,816,767 456,216,468
========= ============ ======== ========= ===========
Year ended December 31, 1995:
Life insurance $ - 1,923,141,658 - 6,165,455 344,197,150
========= ============ ======== ========= ===========
Year ended December 31, 1994:
Life insurance $ - 1,861,749,841 - 5,193,850 324,398,752
========= ============ ======== ========= ===========
Benefits Amortization
claims of deferred
Net losses and policy Other
investment settlement acquisition operating Premium
income expenses costs expenses written
Year ended December 31, 1996:
Life insurance $174,573,265 268,333,774 - 61,758,217 -
=========== =========== ======== ========== ========
Year ended December 31, 1995:
Life insurance $173,355,504 296,934,768 - 94,552,148 -
=========== =========== ======== ========== ========
Year ended December 31, 1994:
Life insurance $167,544,704 329,365,217 - 96,322,195 -
=========== =========== ======== ========== ========
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule IV - Reinsurance
Years Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Assumed Percentage
Ceded to other from other of amount
Gross amount companies companies Net amount assumed to net
Year ended December 31, 1996:
<S> <C> <C> <C> <C> <C>
Life insurance in force $11,034,287,601 1,593,020,119 1,950,126,518 11,391,394,000 17.1%
============== ============ ============ ============= ======
Premiums
Life insurance $ 369,320,913 42,927,795 20,190,933 346,584,051
Accident and health insurance 1,709,891 454,396 10,751,785 12,007,280
-------------- ------------ ------------ -------------
Total premiums $ 371,030,804 43,382,191 30,942,718 358,591,331 8.6%
============== ============ ============ ============= ======
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%
============== ============ ============ ============= ======
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CUNA Mutual Life Insurance Company:
We have audited the accompanying statutory statements of admitted assets,
liabilities, and surplus of CUNA Mutual Life Insurance Company (formerly Century
Life of America) as of December 31, 1996 and 1995, and the related statutory
statements of operations, changes in unassigned surplus, and cash flows for each
of the years in the three year period ended December 31, 1996. 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 audits 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 more fully in note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, which practices differ from generally accepted accounting principles. The
effects of the variances between the statutory basis of accounting and generally
accepted accounting principles on the 1995 and 1994 financial statements are
also described in note 1. The effects of such variances on the 1996 financial
statements, although not reasonably determinable as of this date, are presumed
to be material.
In our report dated March 26, 1996, we expressed an opinion that the 1995 and
1994 financial statements, prepared using accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, presented fairly, in all material respects, the financial position of CUNA
Mutual Life Insurance Company as of December 31, 1995 and 1994, and the results
of its operations, and its cash flows for the three year period ended December
31, 1995, in conformity with generally accepted accounting principles. As
described in note 1 to the financial statements, pursuant to pronouncements of
the Financial Accounting Standards Board, financial statements of mutual life
insurance companies for periods before the effective date of such pronouncements
prepared using accounting practices prescribed or permitted by insurance
regulators (statutory financial statements) are not considered presentations in
conformity with generally accepted accounting principles when presented for
comparative purposes with the Company's financial statements for periods
beginning after December 15, 1995. Accordingly, our present opinion on the
presentation of the 1995 and 1994 financial statements in accordance with
generally accepted accounting principles, as presented herein, is different from
that expressed in our previous report.
In our opinion, because of the effects of the matters discussed in the third
paragraph of this report, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting principles, the
financial position of CUNA Mutual Life Insurance Company as of December 31, 1996
and 1995, or the results of its operations or its cash flows for each of the
years in the three year period ended December 31, 1996.
Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities and surplus of CUNA
Mutual Life Insurance Company as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the years in the three year
period ended December 31, 1996, on the basis of accounting described in note 1.
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.
KPMG PEAT MARWICK LLP
Des Moines, Iowa
March 26, 1997
<PAGE>
APPENDIX A
ILLUSTRATIONS OF POLICY VALUES AND DEATH BENEFITS
The following tables have been prepared to help show how values under the Policy
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, the Company 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 -1.64%, 4.36% and 10.36%, respectively. Net returns are lower than gross
returns due to charges made by the Separate Account and by the underlying series
funds. Charges are expressed as a percentage of average daily net assets.
The table below shows for each Subaccount the total of the mortality and expense
fee and the underlying series level fees.
Mortality & Expense Fund Fees* Total
Capital Appreciation Stock .90 .81 1.71
Growth and Income Stock .90 .61 1.51
Balanced .90 .71 1.61
Bond .90 .56 1.46
Money Market .90 .46 1.36
Treasury 2000 .90 .45 1.35
International Stock .90 1.05 1.95
World Governments .90 1.00 1.90
Emerging Growth .90 1.00 1.90
Average .90 .74 1.64
*These are current charges. Each Fund has the right to change its charge in the
future.
These charges are more fully described in the Series funds' Prospectuses and in
the 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 each underlying series fund portfolio and each 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 1
<TABLE>
<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*
------- ------------- ---------------------------------- ----------------------------------- =====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36% NET)
Year Per Year
---------------------------------- ----------------------------------- =====================================
Death Accum Cash Death Accum Cash Death Accum Value Cash
Benefit Value Surrender Benefit Value Surrender Benefit Surrender
Value Value Value
------- ------------- ------------ --------- ----------- ------------ --------- ------------ ----------- ------------ ============
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 100,000 871 100 100,000 932 161 100,000 994 223
2 2,583 100,000 1,721 988 100,000 1,898 1,166 100,000 2,083 1,351
3 3,972 100,000 2,546 1,852 100,000 2,896 2,202 100,000 3,275 2,581
4 5,431 100,000 3,347 2,692 100,000 3,926 3,271 100,000 4,580 3,925
5 6,962 100,000 4,123 3,545 100,000 4,990 4,412 100,000 6,010 5,431
6 8,570 100,000 4,873 4,372 100,000 6,086 5,585 100,000 7,574 7,073
7 10,259 100,000 5,595 5,209 100,000 7,216 6,831 100,000 9,287 8,902
8 12,032 100,000 6,289 6,019 100,000 8,380 8,111 100,000 11,165 10,895
9 13,893 100,000 6,954 6,800 100,000 9,579 9,425 100,000 13,223 13,069
10 15,848 100,000 7,590 7,590 100,000 10,813 10,813 100,000 15,481 15,481
15 27,189 100,000 11,734 11,734 100,000 19,308 19,308 100,000 32,806 32,806
20 41,663 100,000 15,234 15,234 100,000 29,777 29,777 100,000 61,902 61,902
25 60,136 100,000 18,190 18,190 100,000 43,473 43,473 151,177 112,818 112,818
30 83,713 100,000 19,803 19,803 100,000 60,847 60,847 242,899 199,098 199,098
======= ============= ============ ========= =========== ============ ========= ============ =========== ============ ============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 2
<TABLE>
<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
of Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
Year Interest (-1.64% NET) (4.36% NET) (10.36% NET)
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 1,260 100,000 871 100 100,000 932 161 100,000 994 223
2 2,583 100,000 1,721 988 100,000 1,898 1,166 100,000 2,083 1,351
3 3,972 100,000 2,546 1,852 100,000 2,896 2,202 100,000 3,275 2,581
4 5,431 100,000 3,347 2,692 100,000 3,926 3,271 100,000 4,580 3,925
5 6,962 100,000 4,123 3,545 100,000 4,990 4,412 100,000 6,010 5,431
6 8,570 100,000 4,873 4,372 100,000 6,086 5,585 100,000 7,574 7,073
7 10,259 100,000 5,595 5,209 100,000 7,216 6,831 100,000 9,287 8,902
8 12,032 100,000 6,289 6,019 100,000 8,380 8,111 100,000 11,165 10,895
9 13,893 100,000 6,954 6,800 100,000 9,579 9,425 100,000 13,223 13,069
10 15,848 100,000 7,590 7,590 100,000 10,813 10,813 100,000 15,481 15,481
15 27,189 100,000 10,480 10,480 100,000 17,763 17,763 100,000 30,857 30,857
20 41,663 100,000 12,274 12,274 100,000 25,607 25,607 100,000 55,757 55,757
25 60,136 100,000 12,353 12,353 100,000 34,129 34,129 129,494 96,638 96,638
30 83,713 100,000 9,637 9,637 100,000 43,010 43,010 198,019 162,311 162,311
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== =============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 3
<TABLE>
<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*
------- ------------- ---------------------------------- ----------------------------------- ====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36% NET)
Year 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 1,260 100,869 869 98 100,930 930 159 100,992 992 221
2 2,583 101,715 1,715 983 101,892 1,892 1,160 102,077 2,077 1,344
3 3,972 102,536 2,536 1,842 102,884 2,884 2,190 103,262 3,262 2,568
4 5,431 103,330 3,330 2,674 103,905 3,905 3,250 104,556 4,556 3,900
5 6,962 104,097 4,097 3,519 104,957 4,957 4,379 105,969 5,969 5,390
6 8,570 104,835 4,835 4,333 106,037 6,037 5,536 107,510 7,510 7,009
7 10,259 105,542 5,542 5,157 107,146 7,146 6,760 109,192 9,192 8,807
8 12,032 106,220 6,220 5,950 108,283 8,283 8,013 111,029 11,029 10,759
9 13,893 106,865 6,865 6,711 109,449 9,449 9,295 113,034 13,034 12,879
10 15,848 107,477 7,477 7,477 110,642 10,642 10,642 115,222 15,222 15,222
15 27,189 111,508 11,508 11,508 118,886 18,886 18,886 132,013 32,013 32,013
20 41,663 114,779 14,779 14,779 128,752 28,752 28,752 159,533 59,533 59,533
25 60,136 117,287 17,287 17,287 141,014 41,014 41,014 206,497 106,497 106,497
30 83,713 118,080 18,080 18,080 155,065 55,065 55,065 284,813 184,813 184,813
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== ============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 4
<TABLE>
<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*
------- ------------- ---------------------------------- ----------------------------------- ====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36 NET)
Year 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 1,260 100,869 869 98 100,930 930 159 100,992 992 221
2 2,583 101,715 1,715 983 101,892 1,892 1,160 102,077 2,077 1,344
3 3,972 102,536 2,536 1,842 102,884 2,884 2,190 103,262 3,262 2,568
4 5,431 103,330 3,330 2,674 103,905 3,905 3,250 104,556 4,556 3,900
5 6,962 104,097 4,097 3,519 104,957 4,957 4,379 105,969 5,969 5,390
6 8,570 104,835 4,835 4,333 106,037 6,037 5,536 107,510 7,510 7,009
7 10,259 105,542 5,542 5,157 107,146 7,146 6,760 109,192 9,192 8,807
8 12,032 106,220 6,220 5,950 108,283 8,283 8,013 111,029 11,029 10,759
9 13,893 106,865 6,865 6,711 109,449 9,449 9,295 113,034 13,034 12,879
10 15,848 107,477 7,477 7,477 110,642 10,642 10,642 115,222 15,222 15,222
15 27,189 110,184 10,184 10,184 117,216 17,216 17,216 129,839 29,839 29,839
20 41,663 111,638 11,638 11,638 124,161 24,161 24,161 152,400 52,400 52,400
25 60,136 111,134 11,134 11,134 130,638 30,638 30,638 186,898 86,898 86,898
30 83,713 107,578 7,578 7,578 135,105 35,105 35,105 239,297 139,297 139,297
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== ============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 5
<TABLE>
<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*
------- ------------- ---------------------------------- ------------------------------------ ====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36% NET)
Year 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 2,625 100,000 1,796 205 100,000 1,924 333 100,000 2,051 460
2 5,381 100,000 3,538 2,026 100,000 3,906 2,395 100,000 4,290 2,779
3 8,275 100,000 5,223 3,791 100,000 5,948 4,516 100,000 6,735 5,303
4 11,314 100,000 6,851 5,499 100,000 8,051 6,699 100,000 9,409 8,057
5 14,505 100,000 8,426 7,233 100,000 10,223 9,030 100,000 12,341 11,148
6 17,855 100,000 9,949 8,915 100,000 12,468 11,434 100,000 15,561 14,527
7 21,373 100,000 11,399 10,604 100,000 14,770 13,974 100,000 19,083 18,288
8 25,066 100,000 12,780 12,223 100,000 17,133 16,577 100,000 22,946 22,389
9 28,945 100,000 14,085 13,767 100,000 19,559 19,241 100,000 27,186 26,868
10 33,017 100,000 15,315 15,315 100,000 22,051 22,051 100,000 31,850 31,850
15 56,644 100,000 22,906 22,906 100,000 38,790 38,790 100,000 67,450 67,450
20 86,798 100,000 28,359 28,359 100,000 59,427 59,427 148,897 128,360 128,360
25 125,284 100,000 31,201 31,201 100,000 87,916 87,916 250,281 233,908 233,908
30 174,402 100,000 28,707 28,707 133,383 127,031 127,031 434,258 413,579 413,579
======= ============= ============ ========= =========== ============ =========== =========== =========== ========== =============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 6
<TABLE>
<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*
------- ------------- ---------------------------------- ----------------------------------- =====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36% NET)
Year 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 2,625 100,000 1,796 205 100,000 1,924 333 100,000 2,051 460
2 5,381 100,000 3,527 2,016 100,000 3,895 2,384 100,000 4,279 2,768
3 8,275 100,000 5,189 3,757 100,000 5,912 4,480 100,000 6,698 5,266
4 11,314 100,000 6,776 5,424 100,000 7,972 6,619 100,000 9,325 7,973
5 14,505 100,000 8,285 7,092 100,000 10,072 8,879 100,000 12,179 10,986
6 17,855 100,000 9,712 8,678 100,000 12,211 11,177 100,000 15,283 14,249
7 21,373 100,000 11,053 10,258 100,000 14,388 13,593 100,000 18,664 17,869
8 25,066 100,000 12,308 11,751 100,000 16,605 16,048 100,000 22,355 21,799
9 28,945 100,000 13,469 13,151 100,000 18,858 18,540 100,000 26,392 26,073
10 33,017 100,000 14,530 14,530 100,000 21,146 21,146 100,000 30,812 30,812
15 56,644 100,000 18,203 18,203 100,000 33,219 33,219 100,000 60,917 60,917
20 86,798 100,000 17,476 17,476 100,000 45,709 45,709 129,991 112,062 112,062
25 125,284 100,000 8,784 8,784 100,000 58,443 58,443 208,657 195,007 195,007
30 174,402 ** ** ** 100,000 71,907 71,907 345,695 329,233 329,233
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== =============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 7
<TABLE>
<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*
------- ------------- ---------------------------------- ----------------------------------- =====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36% NET)
Year 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 2,625 101,785 1,785 194 101,912 1,912 321 102,039 2,039 448
2 5,381 103,506 3,506 1,994 103,871 3,871 2,359 104,251 4,251 2,740
3 8,275 105,159 5,159 3,727 105,874 5,874 4,442 106,650 6,650 5,219
4 11,314 106,742 6,742 5,390 107,921 7,921 6,569 109,254 9,254 7,902
5 14,505 108,260 8,260 7,066 110,016 10,016 8,822 112,084 12,084 10,891
6 17,855 109,711 9,711 8,677 112,160 12,160 11,126 115,164 15,164 14,130
7 21,373 111,074 11,074 10,278 114,330 14,330 13,534 118,493 18,493 17,697
8 25,066 112,348 12,348 11,791 116,526 16,526 15,969 122,096 22,096 21,540
9 28,945 113,526 13,526 13,208 118,741 18,741 18,422 125,994 25,994 25,676
10 33,017 114,607 14,607 14,607 120,971 20,971 20,971 130,212 30,212 30,212
15 56,644 121,350 21,350 21,350 135,869 35,869 35,869 161,947 61,947 61,947
20 86,798 124,961 24,961 24,961 151,639 51,639 51,639 211,646 111,646 111,646
25 125,284 124,155 24,155 24,155 167,603 67,603 67,603 292,520 192,520 192,520
30 174,402 115,670 15,670 15,670 179,408 79,408 79,408 420,749 320,749 320,749
======= ============= ============ ========= =========== ============ ========= ============ ============ ========== =============
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 series of each
underlying 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>
ILLUSTRATION OF POLICY VALUES
MEMBERSAE Variable Universal Life
ISSUED BY CUNA MUTUAL LIFE INSURANCE COMPANY
NUMBER 8
<TABLE>
<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*
------- ------------- ---------------------------------- ----------------------------------- =====================================
Premiums
End Accum at 5% 0.00% GROSS 6.00% GROSS 12.00% GROSS
of Interest (-1.64% NET) (4.36% NET) (10.36% NET)
Year 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 2,625 101,785 1,785 194 101,912 1,912 321 102,039 2,039 448
2 5,381 103,495 3,495 1,984 103,859 3,859 2,348 104,240 4,240 2,728
3 8,275 105,123 5,123 3,691 105,836 5,836 4,404 106,611 6,611 5,179
4 11,314 106,663 6,663 5,311 107,836 7,836 6,484 109,163 9,163 7,811
5 14,505 108,109 8,109 6,916 109,852 9,852 8,659 111,907 11,907 10,713
6 17,855 109,455 9,455 8,421 111,878 11,878 10,843 114,853 14,853 13,819
7 21,373 110,696 10,696 9,901 113,905 13,905 13,110 118,016 18,016 17,221
8 25,066 111,828 11,828 11,272 115,930 15,930 15,373 121,413 21,413 20,856
9 28,945 112,844 12,844 12,526 117,942 17,942 17,624 125,057 25,057 24,739
10 33,017 113,733 13,733 13,733 119,928 19,928 19,928 128,962 28,962 28,962
15 56,644 116,034 16,034 16,034 129,101 29,101 29,101 153,099 53,099 53,099
20 86,798 112,901 12,901 12,901 134,405 34,405 34,405 185,654 85,654 85,654
25 125,284 101,279 1,279 1,279 130,942 30,942 30,942 227,445 127,445 127,445
30 174,402 ** ** ** 110,136 10,136 10,136 276,810 176,810 176,810
======= ============= ============ ========= =========== ============ ========= ============ ============= ========== ============
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 series of each
underlying 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>
APPENDIX B
FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT
<TABLE>
<CAPTION>
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>
APPENDIX B
FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT
<TABLE>
<CAPTION>
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
- ---------- ------- -------- ------- ------- ------- ------- ------- -------- ------- ------- ------- -------
</TABLE>
COLUMN HEADINGS: DAC = First Year Contingent Deferred Administrative Charge
DSC = First Year Contingent Deferred Sales Charge
TDC = Total First Year Deferred Charge
<PAGE>
APPENDIX C
FIRST YEAR CONTINGENT DEFERRED CHARGES
PER $1,000 OF SPECIFIED AMOUNT UNISEX
<TABLE>
<CAPTION>
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 40 6.06 4.38 10.44 6.06 3.55 9.61
1 .80 .25 1.05 41 6.35 4.63 10.98 6.35 3.73 10.08
2 .85 .32 1.17 42 6.64 4.90 11.54 6.64 3.92 10.56
3 .90 .38 1.28 43 6.95 5.17 12.12 6.95 4.11 11.06
4 .95 .45 1.40 44 7.27 5.47 12.74 7.27 4.32 11.59
5 1.00 .52 1.52 45 7.60 5.79 13.39 7.60 4.55 12.15
6 1.06 .62 1.68 46 7.94 6.13 14.07 7.94 4.79 12.73
7 1.12 .73 1.85 47 8.27 6.50 14.77 8.27 5.05 13.32
8 1.18 .84 2.02 48 8.63 6.88 15.51 8.63 5.31 13.94
9 1.25 .94 2.19 49 9.02 7.29 16.31 9.02 5.60 14.62
10 1.31 1.02 2.33 50 9.46 7.72 17.18 9.46 5.92 15.38
11 1.37 1.08 2.45 51 9.97 8.18 18.15 9.97 6.28 16.25
12 1.43 1.14 2.57 52 10.54 8.67 19.21 10.54 6.65 17.19
13 1.49 1.17 2.66 53 11.13 9.19 20.32 11.13 7.05 18.18
14 1.55 1.20 2.75 54 11.73 9.72 21.45 11.73 7.48 19.21
15 1.60 1.24 2.84 55 12.31 10.24 22.55 12.31 7.93 20.24
16 1.64 1.26 2.90 56 12.85 10.73 23.58 12.85 8.37 21.22
17 1.67 1.28 2.95 57 13.39 11.15 24.54 13.39 8.78 22.17
18 1.69 1.30 2.99 58 13.92 11.61 25.53 13.92 9.24 23.16
19 1.73 1.33 3.06 59 14.46 12.20 26.66 14.46 9.81 24.27
<S> <C> <C> <C> <C> <C> <C> <C>
Issue SMOKER NONSMOKER 60 15.00 13.03 28.03 15.00 10.57 25.57
Age DAC + DSC = TDC DAC + DSC = TDC 61 15.00 13.80 28.80 15.00 11.22 26.22
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.80 1.40 3.20 1.80 1.37 3.17 62 15.00 14.45 29.45 15.00 11.70 26.70
21 1.89 1.56 3.45 1.89 1.44 3.33 63 15.00 15.01 30.01 15.00 12.09 27.09
22 1.99 1.70 3.96 1.99 1.53 3.52 64 15.00 15.54 30.54 15.00 12.47 27.47
23 2.12 1.83 3.95 2.12 1.62 3.74 65 15.00 16.09 31.09 15.00 12.91 27.91
24 2.26 1.94 4.20 2.26 1.72 3.98 66 15.00 16.58 31.58 15.00 13.40 28.40
25 2.42 2.02 4.44 2.42 1.82 4.24 67 15.00 17.00 32.00 15.00 13.90 28.90
26 2.61 2.12 4.73 2.61 1.90 4.51 68 15.00 17.42 32.42 15.00 14.40 29.40
27 2.83 2.23 5.06 2.83 1.98 4.81 69 15.00 17.97 32.97 15.00 14.96 29.96
28 3.07 2.33 5.40 3.07 2.05 5.12 70 15.00 18.73 33.73 15.00 15.57 30.57
29 3.31 2.46 5.77 3.31 2.14 5.45 71 15.00 20.02 35.02 15.00 16.34 31.34
30 3.55 2.58 6.13 3.55 2.23 5.78 72 15.00 21.30 36.30 15.00 17.12 32.12
31 3.78 2.71 6.49 3.78 2.33 6.11 73 15.00 22.58 37.58 15.00 17.89 32.89
32 4.02 2.84 6.86 4.02 2.44 6.46 74 15.00 23.87 38.87 15.00 18.67 33.67
33 4.25 3.00 7.25 4.25 2.56 6.81 75 15.00 25.15 40.15 15.00 19.44 34.44
34 4.49 3.15 7.64 4.49 2.68 7.17
35 4.74 3.32 8.06 4.74 2.81 7.55
36 4.99 3.51 8.50 4.99 2.94 7.93
37 5.25 3.70 8.95 5.25 3.08 8.33
38 5.51 3.91 9.42 5.51 3.23 8.74
39 5.78 4.14 9.92 5.78 3.38 9.16
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 CUNA Mutual Life Insurance Company 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 Securities Act
of 1933 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
REPRESENTATIONS
CUNA Mutual Life Insurance Company represents that the fees and charges deducted
under the Policies, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by CUNA
Mutual Life Insurance Company.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The Prospectus consisting of 86 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 CUNA Mutual Life Insurance
Company. Incorporated herein by reference to post-effective amendment
number 14 to this Form S-6 registration statement (File No. 33-19718)
filed with the Commission on April 18, 1996.
2. Not Applicable
3. Distribution Agreement between CUNA Mutual Life Insurance Company and
CUNA Brokerage Services, Inc. effective January 1, 1996. Incorporated
herein by reference to post-effective amendment number 14 to this Form
S-6 registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Servicing Agreement related to the Distribution Agreement between CUNA
Mutual Life Insurance Company and CUNA Brokerage Services, Inc.
effective January 1, 1996. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April 18,
1996.
4. a. Termination Agreement dated December 31, 1993 concerning Agreement
Governing Contribution dated September 30, 1983. Incorporated herein
by reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the Commission
on April 18, 1996.
Agreement Governing Contribution. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
b. Termination Agreement dated December 31, 1993 concerning Agreement
Governing Contribution dated May 31, 1988. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the Commission
on April 18, 1996.
Agreement Governing Contribution. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
5. a. Standard VUL Contract Form 5202. Incorporated herein by reference
to post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April 18,
1996.
(i) Accelerated Benefit Option Endorsement, Form 1668. Incorporated
herein by reference to post-effective amendment number 14 to this
Form S-6 registration statement (File No. 33-19718) filed with
the Commission on April 18, 1996.
(ii) Accidental Death Benefit Rider, Form 3601. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Guaranteed Insurability Rider, Form 3652. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Waiver of Monthly Deduction, Form 3955. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Other Insured Rider, Form 3956. Incorporated herein by reference
to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Automatic Increase Rider, Form 3957. Incorporated herein by
reference to post-effective amendment number 14 to this Form S-6
registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Child Rider, Form 6005. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April
18, 1996.
Juvenile Rider, Form 6012. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April
18, 1996.
Level Term Rider (Sex-Distinct), Form 6017. Incorporated herein
by reference to post-effective amendment number 14 to this Form
S-6 registration statement (File No. 33-19718) filed with the
Commission on April 18, 1996.
Waiver of Premium and Monthly Deduction Disability Benefit Rider,
Form 6029 0994. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April
18, 1996.
b. Unisex Version Form 5203. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration statement
(File No. 33-19718) filed with the Commission on April 18, 1996.
(i) Level Term Rider (Unisex), Form 6018. Incorporated herein by
reference to post-effective amendment number 14 to this Form
S-6 registration statement (File No. 33-19718) filed with
the Commission on April 18, 1996.
c. State Variation List. Incorporated herein by reference to post-effective
amendment number 14 to this Form S-6 registration statement (File No.
33-19718) filed with the Commission on April 18, 1996.
6. a. Articles of Incorporation of the Company
b. Bylaws
7. Not Applicable
8. Servicing Agreement Between CUNA Mutual Life Insurance Company and
CIMCO Inc. dated October 1, 1994. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April 18,
1996.
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. Incorporated herein by reference to
post-effective amendment number 14 to this Form S-6 registration
statement (File No. 33-19718) filed with the Commission on April 18,
1996.
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. Incorporated herein by reference to post-effective
amendment number 14 to this Form S-6 registration statement (File No.
33-19718) filed with the Commission on April 18, 1996.
10. Application. Incorporated herein by reference to post-effective
amendment number 14 to this Form S-6 registration statement (File No.
33-19718) filed with the Commission on April 18, 1996.
2. Opinion of Counsel. Incorporated herein by reference to post-effective
amendment number 14 to this Form S-6 registration statement (File No.
33-19718) filed with the Commission on April 18, 1996.
3. Not applicable
4. Not applicable
5. Financial Data Schedule
6. NA
Power of Attorney
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant, CUNA
Mutual Life 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 18th day of April, 1997.
CUNA Mutual Life Variable Account (Registrant)
By: /s/ Michael B. Kitchen
Michael B. Kitchen
President
CUNA Mutual Life Insurance Company (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.
<TABLE>
<CAPTION>
SIGNATURES AND TITLE DATE SIGNATURES AND TITLE DATE
<S> <C> <C> <C> <C> <C>
James C. Barbre * Richard C. Robertson *
James C. Barbre, Director Richard C. Robertson, Director
Robert W. Bream * Donald F. Roby *
Robert W. Bream, Director Donald F. Roby, Director
Wilfred F. Broxterman * Rosemarie M. Shultz *
Wilfred F. Broxterman, Director Rosemarie M. Shultz, Director
James L. Bryan * Neil A. Springer *
James L. Bryan, Director Neil A. Springer, Director
Loretta M. Burd * Farouk D. G. Wang *
Loretta M. Burd, Director Farouk D. G. Wang, Director
Ralph B. Canterbury * Larry T. Wilson *
Ralph B. Canterbury, Director Larry T. Wilson, Director
Joseph N. Cugini * /s/ Linda L. Lilledahl 04/18/97
Joseph N. Cugini, Director Linda L. Lilledahl, Attorney-In-Fact
James A. Halls *
James A. Halls, Director
Jerald R. Hinrichs *
Jerald R. Hinrichs, Director
/s/ Michael B. Kitchen 04/18/97
Michael B. Kitchen, Director
Robert T. Lynch *
Robert T. Lynch, Director
Omer K. Reed *
Omer K. Reed, Director
Gerald J. Ring *
Gerald J. Ring, Director
<FN>
*Pursuant to Powers of Attorney filed herewith
</FN>
</TABLE>
<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 04/18/97
Michael G. Joneson
Vice President - Controller and Treasurer
/s/ Richard J. Keintz 04/18/97
Richard J. Keintz
Chief Officer - Finance &
Information Service
/s/ Michael B. Kitchen 04/18/97
Michael B. Kitchen
President and Chief Executive Officer
<PAGE>
The Board of Directors of CUNA Mutual Life Insurance Company and Contract
Owners of CUNA Mutual Life 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 CUNA
Mutual Life Variable Account.
Our report dated March 26, 1997, contains an explanatory paragraph that states
that the Company prepared the financial statements using accounting practices
prescribed or permitted by the Insurance Division, Department of Commerce, of
the State of Iowa, which practices differ from generally accepted accounting
principles. Also, as discussed in note 1 to the financial statements, the
Company changed its method of accounting for mortgage loan foreclosure losses in
1995.
KPMG Peat Marwick LLP
Des Moines, Iowa
April 17, 1997
<PAGE>
April 10, 1997
CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, IA 50677
Ladies and Gentlemen:
As Associate Actuary for CUNA Mutual Life Insurance Company, I have reviewed the
illustrations for a MembersAE Variable Universal Life Insurance Policy described
in Post-Effective Amendment No. 15 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
CUNA Mutual Life Insurance Company
<PAGE>
INDEX TO EXHIBITS TO FORM S-6
6. a. Articles of Incorporation of the Company
b. ByLaws
Power of Attorney
<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, custodian 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>
CUNA Mutual Life Insurance Company
Waverly, Iowa
ARTICLES OF INCORPORATION
ARTICLE I
Name and Principal Office
Section 1. The name of this Corporation is CUNA Mutual Life Insurance Company
(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 (20) 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. 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.
<PAGE>
EXHIBIT 6(b)
CUNA Mutual Life Insurance Company
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, depository
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 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 at
least nine (9) and not more than twenty (20) persons as set by the Board from
time to time. 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. 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 5.5. 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 5.6. Removal. A Director may be removed from office for cause by an
affirmative vote of three-fourths (3/4) of the full Board of Directors at a
meeting of the Board.
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 a majority 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, removal, legal
incapacity, or death, a Director, whether appointed or elected, shall serve
until a successor is elected or appointed and qualified.
Section 5.8. Nonattendance. Any Director absent from three consecutive regular
meetings shall forfeit his office and shall be ineligible for office for six
months.
Section 5.9. 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 such officers of this Company as required or
permitted by these bylaws 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 U.S. mail, telegram or electronic mail transmission 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 in accordance with 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
accordance with 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 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 exclusively 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, election of the
principal officers or the filling of vacancies in the Board of Directors or
committees created pursuant to this Section or as otherwise restricted by law.
The Board of Directors or its Chairman may elect or appoint one (1) or more of
its members or employees of this Company 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
Officers
Section 8.1. Principal Officers. The principal officers of this Corporation
shall be Chairman of the Board, Vice Chairman of the Board, who may also be
designated as Vice President of the Board, Secretary and Treasurer, all of whom
shall be Directors, and the President, who need not be a Director. All principal
officers and Directors shall be policyholders of this Corporation. No two
offices may be held by the same person.
Section 8.2. Chairman of the Board. The Chairman of the Board shall preside at
all meetings of members of this Corporation 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.
Section 8.3. Vice Chairman. The Vice Chairman shall, in the absence or
disability of the Chairman of the Board, perform the duties of that office. The
Vice Chairman elected by the Board of Directors may be designated as Vice
President of the Board.
Section 8.4. Secretary. The Secretary shall keep, or cause to be kept, a record
of the votes of all elections, minutes of all annual meetings and special
meetings of members of this Corporation, and all meetings of the Board of
Directors. He/She, or any of the Assistant Secretaries appointed by the Board,
shall have the custody of the corporate seal and affix the same to all
instruments required to be sealed. He/She shall perform, or cause to be
performed by an Assistant Secretary, such other duties as are required by law,
the Board of Directors, and the Bylaws of this Corporation.
Section 8.5. Treasurer. The Treasurer shall be the financial officer of the
Board of Directors. He/She shall be responsible for the custody of all funds and
securities of this Corporation in accordance with the authorization and
direction of the Board of Directors. He/She shall be responsible for reporting
to the Board of Directors at each regular annual meeting with respect to the
funds and securities of this Corporation. The Treasurer shall perform such other
duties as are assigned by the Board of Directors. He/She shall furnish to the
Directors, whenever required by them, such statements and abstracts or records
as are necessary for a full exhibit of the financial condition of this
Corporation.
Section 8.6. President. The President shall be the principal executive officer
of this Corporation and, subject to the control of the Board of Directors, shall
in general be responsible for the supervision and control of all of the business
and operations of this Corporation. He/She shall be responsible for
authorization of expenditure of all funds of this Corporation as have been
approved by the Board of Directors in the budget or are within the general
authority granted by the Board of Directors for expenditure of funds. He/She
shall have authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of this Corporation as shall be
deemed necessary, to prescribe their powers, duties and compensation, and to
delegate authority to them. Such agents and employees shall hold office at the
discretion of the President. He/She shall have authority to sign, execute and
acknowledge, on behalf of this Corporation, all deeds, mortgages, bonds,
contracts under seal, leases, and all other documents or instruments whether or
not under seal which are authorized by or under authority of the Board of
Directors provided that any such documents or instruments may, but need not, be
countersigned by the Secretary, or an Assistant Secretary, and except as
otherwise provided by law or the Board of Directors, may authorize any
administrative vice president or other officer or agent of this Corporation to
sign, execute and acknowledge such documents or instruments in his/her place and
stead. In general, the President shall perform all duties incident to the office
of President and such other duties as may be prescribed by the Board of
Directors from time to time. He/She shall prepare, or cause to be prepared, a
report of the business and operations of this Corporation, for the period since
the last regular annual meeting, for submission to the Board of Directors at
each regular annual meeting. He/She shall also prepare, or cause to be prepared,
an annual proposed budget for submission to the Board of Directors.
Section 8.7. Assistant Treasurer. An Assistant Treasurer shall be appointed by
the Board of Directors. He/She shall be responsible for the proper deposit and
disbursement of all funds of this Corporation. He/She shall keep, or cause to be
kept, regular books of account. He/She shall deposit, or cause to be deposited,
all funds of this Corporation in the name of this Corporation in such banks,
trust companies or other depositories as are designated for such purpose by the
Board of Directors from time to time. He/She shall be responsible for the proper
disbursement of funds of this Corporation, including responsibility that checks
of this Corporation drawn on any bank account are signed by such officer or
officers, agent or agents, employee or employees of this Corporation in such
manner, including the use of a facsimile signature where authorized, as the
Board of Directors has determined or authorized, and he/she shall perform all of
the duties incident to the office of Assistant Treasurer, and such other duties
as from time to time may be assigned by the Treasurer.
An Assistant Treasurer for Home Office Operations and one or more District
Assistant Treasurers may be appointed by the Board of Directors, or by the
President upon authorization of the Board of Directors, with authority and
responsibility to perform the duties of Assistant Treasurer in the separate
offices of this Corporation under the supervision of the Assistant Treasurer.
Section 8.8. Other Assistants and Acting Officers. The Board of Directors shall
have the power to appoint any person to act as assistant to any officer, or to
perform the duties of such officer whenever for any reason it is impracticable
for such officer to act personally, and such assistant or acting officer
appointed by the Board of Directors shall have the power to perform all the
duties of the officer to which he/she is so appointed to be assistant, or as to
which he is so appointed to act, except as such power may be otherwise defined
or restricted by the Board of Directors.
Section 8.9. Administrative Officers and Assistant Administrative Officers. The
President shall appoint administrative officers and assistant administrative
officers who shall be appointed as deemed appropriate for the conduct of the
affairs of this Corporation for such term of office as may be designated or
without designated term of office subject to removal at will or by appointment
of a successor in office. The administrative officers and assistant
administrative officers shall perform such duties and have such authority as may
be assigned from time to time by the President.
In the absence of the President or in the event of his/her death, inability or
refusal to act, the administrative officers in the order designated by the
President shall perform the duties of the President, and when so acting, shall
have all powers of and be subject to all the restrictions upon the President.
ARTICLE IX
Miscellaneous
Section 9.1. Principal Office. The location of the principal office of this
Company shall be in the CUNA Mutual Life Insurance Company 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, Chief
Officers, 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, if
required or desired, by the Secretary or an Assistant 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, if signing, the Secretary or an Assistant 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 Chairman of the Board, the President
and/or the Chief Executive Officer 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. Liability and Mandatory Indemnification. This Corporation shall
indemnify any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (excluding an action by or in the
right of this Corporation) by reason of the fact that he/she is or was a
Director or officer of this Corporation, or is or was serving at the request of
this Corporation as a Director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him/her in connection with such action, suit or proceeding;
provided, that there is a determination that such person acted in good faith and
in a manner he/she reasonably believed to be in or not opposed to the best
interests of this Corporation, did not improperly receive personal benefit and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his/her conduct was unlawful. If such determination is not made by final
adjudication in such action, suit or proceeding, it shall be made by arbitration
in Waverly, Iowa, in accordance with the rules then prevailing of the American
Arbitration Association by a panel of three (3) arbitrators. One of the
arbitrators will be selected by a committee of at least three (3) policyholders
appointed especially for such purposes by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or proceeding (or, if such a quorum is not obtainable, by the Insurance
Commissioner for the state of Iowa), the second by the officers and Directors
who may be entitled to indemnification, and the third by the two arbitrators
selected by the parties. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he/she reasonably believed to be in
or not opposed to the best interests of this Corporation and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his/her
conduct was unlawful.
No Director or officer shall be liable to this Corporation for any loss or
damage by it on account of any action taken or omitted to be taken by him/her as
a Director or officer of this Corporation in good faith and in a manner he/she
reasonably believed to be in and not opposed to the best interests of this
Corporation and had no reasonable cause to believe was unlawful, and a Director
or officer shall be entitled to rely on advice of legal counsel for this
Corporation if in good faith and upon financial statements of this Corporation
represented to be correct by the President or other officer having charge of the
corporate books of account or stated in a written report by a certified public
accountant or upon statements made or information furnished by other officers or
employees of this Corporation which he/she had reasonable grounds to believe
were true.
Section 10.2. Controlled Subsidiaries. All officers and Directors of controlled
subsidiaries of this Corporation shall be deemed for the purposes of this
Article to be serving as such officers and Directors at the request of this
Corporation. The right to indemnification granted to such officers and Directors
by this Article shall not be subject to any limitation or restriction imposed by
any provision of the Articles of Incorporation or Bylaws of a controlled
subsidiary. For purposes hereof, a "controlled subsidiary" means any corporation
in which at least fifty-one percent (51%) of the outstanding voting stock is
owned by this Corporation or another controlled subsidiary of this Corporation.
Section 10.3. Advance Payment. Expenses, including attorneys' fees, incurred in
defending a civil or criminal action, suit or proceeding, may be paid by this
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the Director or
officer to repay such amount unless it shall ultimately be determined that
he/she is entitled to be indemnified by this Corporation in accordance with this
Article.
Section 10.4. Other Rights. The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which any officer, Director,
employee or agent may be otherwise entitled, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 10.5. Insurance. This Corporation may, but shall not be required to,
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of this Corporation, or is or was serving
at the request of this Corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him/her and incurred by him/her in any
such capacity or arising out of his/her status as such, whether or not this
Corporation would be obligated to indemnify him/her against such liability under
the provisions of this Article. Such insurance may, but need not, be for the
benefit of all Directors, officers, employees and agents.
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 Chief Officers in order of seniority based on their period
of service in such office, if any, or
(e) The Senior Vice Presidents in order of seniority based on
their period of service in such office, if any, or
(f) The administrative Vice Presidents in order of seniority based
on their period of service in such office, if any, or
(g) The Comptroller, if any, or
(h) 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
President, Chief Officers, Senior Vice Presidents, Vice Presidents, Comptroller
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.
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.
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Robert W. Bream, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 7th day of April, 1997.
/s/ Robert W. Bream
Robert W. Bream
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, James L. Bryan, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 7th day of April, 1997.
/s/ James L. Bryan
James L. Bryan
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Loretta M. Burd, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 April, 1997.
/s/ Loretta M. Burd
Loretta M. Burd
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Joseph N. Cugini, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 4th day of April, 1997.
/s/ Joseph N. Cugini
Joseph N. Cugini
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Robert T. Lynch, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 7th day of April, 1997.
/s/ Robert T. Lynch
Robert T. Lynch
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Omer K. Reed, a director of CUNA Mutual Life
Insurance Company, 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 CUNA Mutual Life Insurance Company
on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life 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 CUNA Mutual Life 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 4th day of April, 1997.
/s/ Omer K. Reed
Omer K. Reed
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Richard C. Robertson, a director of CUNA
Mutual Life Insurance Company, 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 CUNA Mutual Life
Insurance Company on behalf of CUNA Mutual Life Insurance Company and CUNA
Mutual Life 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 CUNA Mutual Life 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 4th day of April, 1997.
/s/ Richard C. Robertson
Richard C. Robertson
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Donald F. Roby, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 7th day of April, 1997.
/s/ Donald F. Roby
Donald F. Roby
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Neil A. Springer, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 4th day of April, 1997.
/s/ Neil A. Springer
Neil A. Springer
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Farouk D. G. Wang, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 April, 1997.
/s/ Farouk D. G. Wang
Farouk D. G. Wang
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Larry T. Wilson, a director of CUNA Mutual
Life Insurance Company, 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 CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
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 CUNA Mutual Life 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 10th day of April, 1997.
/s/ Larry T. Wilson
Larry T. Wilson
Director, CUNA Mutual Life Insurance Company
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 104,886,824
<INVESTMENTS-AT-VALUE> 125,485,307
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 125,485,307
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,665
<TOTAL-LIABILITIES> 16,665
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<SHARES-COMMON-STOCK> 4,307,640
<SHARES-COMMON-PRIOR> 3,658,704
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 125,468,642
<DIVIDEND-INCOME> 5,756,220
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 995,719
<NET-INVESTMENT-INCOME> 4,760,501
<REALIZED-GAINS-CURRENT> 1,024,919
<APPREC-INCREASE-CURRENT> 9,400,531
<NET-CHANGE-FROM-OPS> 15,185,951
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,968,489<F1>
<NUMBER-OF-SHARES-REDEEMED> 1,319,553<F1>
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 648,936<F1>
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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<FN>
<F1> Units Calculated
</FN>
