As filed with the Securities and Exchange Commission
on April 17, 1998
Registration No. 33-19718
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 17
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, 1998 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
Title of Securities: Interest in the Seperate Account issued through Variable
Life Insurance Policies.
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, 1998
- --------------------------------------------------------------------------------
This Prospectus describes the MEMBERS(R) Variable Universal Life Policy
("Policy") an individual flexible premium variable universal life insurance
Policy issued by CUNA Mutual Life Variable Account ("Separate Account") and CUNA
Mutual Life Insurance Company ("Company") .
The Policy's flexibility allows you to provide for changing insurance needs
under a single insurance policy. The Policy allows you to make the following
choices:
(1) You must choose how you want your premiums allocated. Premiums may be
allocated to one or more of the Subaccounts of the Separate Account. Each
Subaccount invests solely in the corresponding portfolio or Series of Class
Z of the following investment options ("Funds"):
o Ultra Series Fund
o Capital Appreciation Stock Fund
o Growth and Income Stock Fund
o Balanced Fund
o Bond Fund
o Money Market Fund
o Treasury 2000 Fund
o T. Rowe Price International Series, Inc.
o International Stock Portfolio
o MFS(R) Variable Insurance TrustSM ("MFS Variable Insurance Trust")
o MFS(R) World Governments SeriesSM ("MFS World Governments Series")
o MFS(R) Emerging Growth SeriesSM ("MFS Emerging Growth Series")
You may also choose to allocate all or a portion of premium to the Interest
Bearing Account, an account held in the general account of the Company. The
Company guarantees the principal held within the Interest Bearing Account and
will pay interest of at least 4% annually. At its discretion, the Company may
pay a higher rate.
(2) You must choose one of two death benefit options:
Option 1 is equal to the Specified Amount (or Face Amount) of your
Policy
Option 2 is equal to the Specified Amount plus the Accumulated Value
of your Policy
(3) You may choose to increase or decrease the size of the Specified Amount
when you need more or less insurance protection.
(4) You 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 THE POLICY..........................................................3
THE COMPANY....................................................................6
THE SEPARATE ACCOUNT...........................................................6
THE FUNDS......................................................................7
Ultra Series Fund..............................................................7
Capital Appreciation Stock Fund.............................................7
Growth and Income Stock Fund................................................7
Balanced Fund...............................................................7
Bond Fund...................................................................8
Money Market Fund...........................................................8
Treasury 2000 Fund..........................................................8
T. Rowe Price International Series, Inc........................................8
International Stock Portfolio...............................................8
MFS Variable Insurance Trust...................................................8
MFS World Governments Series................................................8
MFS Emerging Growth Series..................................................8
Availability of the Funds......................................................8
Resolving Material Conflicts...................................................9
Addition, Deletion or Substitution of Investments.............................10
INTEREST BEARING ACCOUNT......................................................10
THE POLICY....................................................................10
Policy Benefits...............................................................10
Death Proceeds.............................................................10
Minimum Death Benefit Guarantee............................................11
Surrender Proceeds.........................................................12
Maturity Proceeds..........................................................13
Payment of Proceeds........................................................13
Policy Values.................................................................13
Accumulated Value..........................................................13
Cash Value.................................................................13
Net Cash Value.............................................................13
Unit Value Guarantee..........................................................14
Premiums......................................................................14
Initial Premium............................................................14
Flexibility of Premiums....................................................14
No-Lapse Guarantee.........................................................14
Minimum Death Benefit Guarantee............................................14
Target Premium.............................................................14
Net Premiums...............................................................14
Allocation of Net Premiums.................................................14
Charges And Deductions........................................................15
State Premium Taxes........................................................15
Monthly Deduction..........................................................15
Mortality and Expense Risk Charge..........................................16
Contingent Deferred Sales and Administrative Charges.......................16
Transfer Fee...............................................................17
Federal and State Income Taxes.............................................18
Duplicate Policy Charge....................................................18
Grace Period..................................................................18
Lapse.........................................................................18
No-Lapse Guarantee............................................................18
Reinstatement.................................................................18
Owner's Rights................................................................19
Right-to-Examine Period....................................................19
Policy Loans...............................................................19
Transfer of Values.........................................................20
Dollar Cost Averaging......................................................21
Change of Allocations......................................................21
Change of Death Benefit Option.............................................21
Change of Specified Amount.................................................22
Conversion/Exchange of Policy..............................................23
Transfer of Ownership......................................................23
Collateral Assignments.....................................................23
Settlement Options.........................................................23
Other Policy Provisions, Definitions..........................................24
Riders........................................................................26
Children's Insurance.......................................................26
Guaranteed Insurability....................................................26
Accidental Death Benefit...................................................27
Automatic Increase.........................................................27
Other Insured..............................................................27
Term Insurance.............................................................27
Disability Waiver of Monthly Deductions....................................27
Waiver of Premium and Monthly Deduction Disability Benefit.................27
REPORTS TO OWNERS.............................................................27
VOTING RIGHTS.................................................................27
DISTRIBUTION OF POLICIES......................................................28
PREPARING FOR YEAR 2000.......................................................28
UNISEX POLICIES...............................................................28
FEDERAL INCOME TAX MATTERS....................................................29
Taxation Of The Company.......................................................29
Tax Status Of The Policy......................................................29
Tax Treatment Of Policy Proceeds..............................................30
Proceeds Other Than Accelerated Benefits...................................30
Proceeds from Accelerated Benefits.........................................31
CUNA MUTUAL LIFE INSURANCE COMPANY DIRECTORS AND EXECUTIVE OFFICERS...........31
STATE REGULATION..............................................................33
LEGAL PROCEEDINGS.............................................................33
INDEPENDENT AUDITORS..........................................................33
ACTUARIAL MATTERS.............................................................33
REGISTRATION STATEMENT........................................................33
FINANCIAL STATEMENTS..........................................................33
APPENDIX A ILLUSTRATIONS OF POLICY VALUES AND DEATH BENEFITS..................70
APPENDIX B FIRST YEAR CONTINGENT DEFERRED CHARGES PER $1,000 OF
SPECIFIED AMOUNT..................................................80
APPENDIX C FIRST YEAR CONTINGENT DEFERRED CHARGES PER $1,000 OF
SPECIFIED AMOUNT UNISEX...........................................82
APPENDIX D DEATH BENEFIT RATIO................................................83
<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. Accumulated Value minus Deferred Charges, but not less than zero.
Code. The Internal Revenue Code of 1986, as amended.
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. Under death benefit option 1, the Face Amount is the greater of the
Specified Amount, or the Accumulated Value on the date of death multiplied by
the Death Benefit Ratio. Under death benefit option 2, the Face Amount is the
greater of the Specified Amount plus the Accumulated Value on the date of death,
or the Accumulated Value on the date of death multiplied by the Death Benefit
Ratio.
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 Beneficiaries. Beneficiaries who have 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.
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.
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.
Target Premium. The Target Premium is shown on the specifications page of the
Policy. It is determined by dividing the minimum premium by .60.
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 Day; (2) Christmas Day; (3) New
Year's Day; and (4) 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 (5) 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 THE POLICY
The following summary of the prospectus and information about the Policy should
be read in conjunction with the detailed information appearing elsewhere in this
prospectus. Unless otherwise indicated, the description of the Policy in this
prospectus assumes that the Insured is alive, the Policy is In Force, and there
is no outstanding Policy loan.
The Owner has flexibility, within limitations, to determine the frequency and
amount of Premiums. (See "Premiums - Flexibility of Premiums"). Thus, unlike
conventional fixed-benefit life insurance, the Policy does not require the Owner
to adhere to a fixed premium schedule. Also, unlike fixed-benefit life
insurance, the amount and/or duration of the life insurance coverage and
Accumulated Value of the Policy is not guaranteed, and may increase or decrease
to reflect the investment performance of any Subaccounts to which Accumulated
Value is allocated. Accordingly, the Owner bears the investment risk of any
depreciation of, but reaps the benefit of any appreciation in, the value of the
underlying assets. As long as the Policy remains In Force, the Policy will
provide for death proceeds payable to the Beneficiary upon the Insured's death,
Accumulated Value, surrender rights, and Policy loan privileges. The Policy will
remain In Force so long as Net Cash Value is sufficient to pay certain monthly
charges imposed in connection with the Policy, otherwise, after a grace period,
the Policy will Lapse without value. (See "Grace Period, Lapse, No-Lapse
Guarantee, And Reinstatement "). However, the Company guarantees that the Policy
will remain In Force during the first three Policy Years as long as certain
requirements related to the required minimum premium are met during those years.
If a Policy Lapses while loans are outstanding, certain amounts may become
subject to income tax and a 10% penalty tax. (See "Tax Status of the Policy").
The minimum Specified Amount for which the Policy normally will be issued is
$50,000 ($10,000 for Issue Ages 65 and over).
The most important features of the Policy, such as charges and deductions,
Accumulated Value benefits, death benefits, and calculations of Accumulated
Value, are summarized in the following pages.
Purpose of the Policy. The Policy is designed to provide lifetime insurance
benefits and long-term investment of Accumulated Value. A prospective Owner
should evaluate the Policy in conjunction with other insurance coverage that he
or she may have, as well as his or her needs for insurance and the Policy's
long-term investment potential. It may not be advantageous to replace existing
insurance coverage with the Policy. In particular, replacement should be
carefully considered if the decision to replace existing coverage is based
solely on a comparison of Policy illustrations. (see below).
Policy Benefits. Two death benefit options are available under the Policy: a
level death benefit ("Option 1") and a death benefit that may increase or
decrease ("Option 2"). The Owner may change the death benefit option and the
Specified Amount. Death Proceeds are available as a lump sum or under a variety
of settlement options. (See "Policy Benefits - Death Proceeds"). Supplemental
benefits and/or riders are available. (See "Other Policy Provisions,
Definitions").
The Owner may surrender the Policy in full at any time. Declining contingent
deferred sales and sales and administrative charges are deducted from the
proceeds in the event of a full surrender during the first ten Policy years.
(See "Surrender Proceeds Policy Surrender").
Within limits, the Owner also make a partial surrender from the Policy and
obtain a Policy loan. The Owner may make a partial surrender so long as the
Specified Amount remaining is not less than $40,000 ($8,000 if Issue Age is 65
and over). Each partial surrender will be assessed a charge. (See "Surrender
Proceeds - Partial Surrender"). Loans may be taken from amounts up to 80% (90%
for Virginia residents) of Cash Value, at an 8% interest rate compounded
annually. (See "Owner's Rights - Policy Loans").
The Owner may transfer Accumulated Value between and among the Subaccounts and
the Interest Bearing Account. The Owner may make four transfers a year without
charge. (See "Owner's Rights - Transfer of Values).
The Separate Account. The Owner may allocate Net Premiums to the Separate
Account, the Interest Bearing Account, or both. The Separate Account consists of
nine Subaccounts. Each Subaccount invests in the corresponding portfolio or
series of Ultra Series Fund, T. Rowe Price International Series, Inc., and the
MFS Variable Insurance Trust.
The Interest Bearing Account. As an alternative to the Separate Account, the
Owner may allocate or transfer all or a portion of the Accumulated Value to the
Interest Bearing Account, which guarantees a specified minimum rate of return.
(See "Interest Bearing Account").
Premiums. There is an initial premium required by the Policy. Thereafter, the
Owner may select an annual premium plan, and pay premiums in accordance with a
schedule. The Owner may vary the amount and frequency and skip planned annual
payments. (See "Premiums - Flexibility of Premiums").
The initial premium and the minimum premium depend on the Insured's age, sex,
and risk class, Specified Amount selected, and any supplemental riders. Premiums
after the initial premium may be paid at any time while the Policy is In Force,
within limits. (See "Premiums - Flexibility of Premiums").
Illustrations. Illustrations in this prospectus or used in connection with the
purchase of a Policy are based on hypothetical rates of return. These rates are
not guaranteed. They are illustrative only and should not be considered a
representation of past or future performance. Actual rates of return may be
higher or lower than those reflected in Policy illustrations, and therefore,
actual Policy values will be different from those illustrated.
Tax Considerations. The Company intends for the Policy to satisfy the definition
of a life insurance contract under Section 7702 of Code. A Policy may be a
"modified endowment contract" under federal tax law depending upon the amount of
premiums made in relation to the Death Benefit provided under the Policy. The
Company will monitor Policies and will attempt to notify you on a timely basis
if your Policy is in jeopardy of becoming a modified endowment contract. For
further discussion of the tax status of a Policy and the tax consequences of
being treated as a life insurance contract or a modified endowment contract, see
"Federal Income Tax Matters."
Cancellation Privilege. For a limited time after the Policy is issued, the Owner
may cancel the Policy and receive a refund. This refund will equal Accumulated
Value on the date the Company receives the returned Policy, plus any charges the
Company deducted, minus any Policy Indebtedness. A refund will equal the exact
amount of premiums paid if required by applicable state law. (See "Owner's
Rights - Right-to-Examine Period").
Conversion/Exchange Right. At any time within 24 months after the Issue Date,
the Owner may exchange the Policy for a policy of permanent fixed benefit
insurance or for any other policy that the Company may agree to issue on the
life of the Insured. The Owner also may transfer without charge on the exchange
date, any portion of the Net Cash Value of the original Policy as premium to the
new policy. (See - "Owner's Rights - Conversions/Exchange Privilege").
Charges and Expenses.
State Taxes. A charge is deducted from premium payments to cover state taxes.
The charge deducted is equal to the actual amount of Premium Tax (or tax in lieu
of Premium Tax) in the Owner's state of residence. (See "Charges and Deductions
- - State Premium Taxes").
Monthly Deductions. The Monthly Deductions, are deducted from Net Cash Value
(or, in limited circumstances, the Deferred Charges Account) on each Monthly
Day. The Monthly Deductions equal the sum of a cost of insurance charge, the
cost of additional insurance riders and benefits, if any, a policy fee of $3 per
month for Policies with Issue Ages 0-19 and $6 per month for all remaining
Policies, and an administrative fee which equals $.45 per thousand dollars of
Specified Amount per year. The 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. (See "Charges and Deductions - Monthly Deduction").
Daily Charges. Mortality and expense risk charges are assessed against net
assets (whether held in the Subaccounts and/or Interest Bearing Account) equal
on an annual basis, to .9% of the average daily net assets. (See "Charges and
Deductions Mortality and Expense Risk Charge").
Fund Expenses. Fund expenses are described in the Fund prospectuses which
accompany this prospectus.
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 World Governments Series
Management Fees ..............................................0.75%
Other Expenses (after expense limitation)(1)..................0.25%(2)
Total Annual Fund Expenses (after expense limitation).........1.00%
MFS Emerging Growth Series
Management Fees...............................................0.75%
Other Expenses (after expense limitation)(1)..................0.12%
Total Annual Fund Expenses (after expense limitation).........0.87%
(1) These Series have an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Series' expenses). Any such fee reductions are not
reflected under "Other Expenses".
(2) The annual expenses listed for the 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
1997 fiscal year, absent this expense arrangement, the "Other Expenses" and
the "Total Annual Fund Expenses" shown above would be .40% and 1.15%,
respectively.
Partial Surrender Charge. Each partial surrender is assessed a charge equal to
the lesser of $25 or 2% of the amount surrendered.
Contingent Deferred Charges. Contingent deferred sales and administrative
charges are assessed upon full surrender of Policy. The charges vary by the age
of Insured at issue, sex, and smoking status. In no instance will the charges
exceed 30% of the lesser of premiums paid or the guideline annual premium of the
Policy. (See "The Policy - Contingent Deferred Sales and Administrative
Charges").
Transfer Fee. After the fourth transfer in an Policy year, an Owner is charged
$20 per transfer for Accumulated Value transferred between and among the
Subaccounts and the Interest Bearing Account. (See "Charges and Deductions -
Transfer Fee").
Owner Inquiries. If you have questions, you may write or call the Company at its
Home Office, 2000 Heritage Way, Waverly, Iowa 50677, 1-800-798-5500.
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 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, 1997, the Company had more than $3.4 billion in assets and
$13.3 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 review our
ratings. To obtain our current ratings, contact the Company at the address and
telephone number shown on the first page of this Prospectus.
The objective of A.M. Best's rating system is to evaluate the factors affecting
overall performance of an insurance company. 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 and CUNA Mutual are members of the Insurance Marketplace Standards
Association (IMSA). IMSA is a newly formed independent industry organization
dedicated to the practice of high ethical standards in the sale of
individually-sold life insurance and annuity products. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.
The Company and CUNA Mutual Investment Corporation each own 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 owns
CUNA Brokerage Services, Inc.
THE SEPARATE ACCOUNT
The Separate Account was established by the Company on August 16, 1983. The
Separate Account will receive and invest Net Premium payments made under the
Policy. In addition, the Separate Account may receive and invest purchase
payments for other variable life insurance policies issued now or 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 Treasury 2000 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 ("SEC") as a unit investment trust under the Investment Company Act
of 1940 ("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, 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, 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, CUNA Mutual Group qualified
retirement plans, 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. 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 follow this prospectus. These
prospectuses 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.
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 International Stock Portfolio, MFS
World Governments Series, and MFS Emerging Growth Series in accordance with
separate participation agreements between the Company and T. Rowe Price
International Series, Inc. and MFS Variable Insurance Trust, as appropriate. The
termination provisions of these agreements vary and are summarized below.
The agreement between the Company and 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,
(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 Proceeds 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. 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.
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
Owner requests the following: increase or decrease in the Specified Amount,
change in the death benefit option, or adds or deletes riders.
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. 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.)
Accumulated Value will increase whenever there is:
o an investment gain in any Subaccount;
o interest credited to the Policy for amounts held in the Deferred
Charges Account and/or Interest Bearing Account;
o interest credited to the Policy for any loan amounts held in the
Loan Account;
o additional premium paid; 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).
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.
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. If proceeds from this charge
are not needed to cover mortality and expense risks, the company may use
proceeds to finance distribution of the Policies.
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.
Duplicate Policy Charge. You can obtain a certification of your policy at no
charge. There will be a $30 charge for a duplicate policy.
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
Right-to-Examine Period
The Owner may cancel the Policy on the latest of the following three events:
o 45 days after the date of the application;
o 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; or,
o 20 days after the Owner receives the Policy.
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 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.
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 right-to-examine period, as set forth for a new Policy, with
respect to the increase. The Owner may request a cancellation of the increase
during the right-to-examine period. The Owner will than receive a refund (if
actual payment was received) or a credit. 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. Net Premiums paid upon application of and after an increase in
Specified Amount will be allocated to the Subaccounts and/or the Interest
Bearing Account and 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
right-to-examine 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
right-to-examine 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 assignee is a person or
entity to who the Owner give some, but not all ownership rights under the
Policy. 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 (to treat
the Policy as though it had never been issued) 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 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 right-to-examine 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
right-to-examine 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 Company may pay sales commissions to broker-dealers up to an amount equal to
8.5% of the total premiums paid under the Policy. These broker-dealers are
expected to compensate sales representatives in varying amounts from these
commissions. The Company also may pay other distribution expenses such as
agents' insurance and pension benefits, agency expense allowances, and overhead
attributable to distribution. In addition, the Company may from time to time pay
or allow additional promotional incentives in the form of cash or other
compensation. These distribution expenses do not result in any additional
charges under the Contracts that are not described under CHARGES AND DEDUCTIONS.
PREPARING FOR YEAR 2000
Like all financial service providers, the Company and its affiliates utilize
systems that may be affected by Year 2000 transition issues, and they rely on
service providers, including administrators and investment managers, that also
may be affected. The Company and its affiliates have developed, and are in the
process of implementing, a Year 2000 transition plan, and are confirming that
its service providers are also so engaged. The resources that are being devoted
to this effort are substantial. It is difficult to predict with precision
whether the negative impact on the Company or its affiliates. However, as of the
date of this prospectus, it is not anticipated that Owners will experience
negative effects on their investment, or on their services provided in
connection therewith, as a result of Year 2000 transition implementation. The
Company and its affiliates currently anticipate that their systems will be Year
2000 compliant on or about December 31, 1998, but there can be no assurance that
the Company will be successful, or that interaction with other service providers
will not impair the Company's or its affiliates' services at that time.
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.
The President's 1999 Budget Proposal has recommended legislation that, if
enacted, would adversely modify the federal taxation of certain insurance and
annuity contracts. For example, one proposal would tax transfers among
investment options and tax exchanges involving variable contracts. A second
proposal would reduce the "investment in the contract" under cash value life
insurance and certain annuity contracts, thereby increasing the amount of income
for purposes of computing gain. Although the likelihood of legislative changes
is uncertain, there is always the possibility that the tax treatment of the
Policy could change by legislation or other means. Moreover, it is also possible
that any change could be retroactive (that is, effective prior to the date of
the change). You should consult a tax adviser with respect to legislative
developments and their effect on the Policy.
In recent years, moreover, Congress has adopted new rules relating to life
insurance owned by businesses. Any business contemplating the purchase of a new
life insurance contract or a change in an existing life insurance contract
should consult a tax advisor.
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 Accumulated 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.
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE INSURANCE COMPANY DIRECTORS AND EXECUTIVE OFFICERS
Name Occupation
Directors
<S> <C> <C>
James C. Barbre 1994-Present ACT Technologies, Inc.
President/Chief Operating Officer
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 Broxterman Group
President/Chief Executive Officer
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 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/Chief Executive Officer
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 1997-Present Retired
1959-1997 Self-employed dentist
Gerald J. Ring 1968-Present Park Towne Corporation
President
Richard C. Robertson 1959-Present Arizona State Savings & Credit Union
President/General Manager
Donald F. Roby 1990-Present Retired
1986-1989 Farm and Home Savings
President and Chief Executive Officer
Rosemarie M. Shultz 1997-Present Retired
1976-1997 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
Wayne A. Benson 1997 - Present CUNA Mutual Life Insurance Company*
Chief Officer - Sales
Michael S. Daubs 1973-Present CUNA Mutual Life Insurance Company*
Chief Officer - Investments
CIMCO Inc.
President
John A. Gibson 1988-Present CUNA Mutual Life Insurance Company*
Chief Officer - Marketing
James M. Greaney 1998-Present CUNA Mutual Life Insurance Company*
Chief Officer - Corporate Services
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 Officer - Operating
Daniel E. Meylink, Sr. 1983-Present CUNA Mutual Life Insurance Company*
Chief Officer - Member Services
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 Officer - Legal
<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
The Company and its subsidiaries, like other life insurance companies, are
involved in lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been sought and/or
material settlement payments have been made. Although the outcome of any
litigation cannot be predicted with certainty, the Company believes that at the
present time there are not pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on the Separate Account or 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,
FSA, MAAA Product Manager Variable Products, 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 under the Securities Act of 1933 relating to this
offering has been filed with the SEC. Certain portions of the Registration
Statement and amendments have been omitted from this prospectus pursuant to the
rules and regulations of the Securities and Exchange Commission. Statements
contained in this prospectus concerning the Policy and other legal documents are
summaries. The complete documents and omitted information may be obtained from
the SEC's principal office in Washington, D.C.
FINANCIAL STATEMENTS
The financial statements for the Company are 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>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Financial Statements
December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Assets and Liabilities
December 31, 1997
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C> <C>
Capital Appreciation Stock Fund,
1,344,978 shares at net asset value of
$18.85 per share (cost $17,938,019) ............. $25,353,805 $ -- $ -- $ -- $ --
Growth and Income Stock Fund,
2,548,762 shares at net asset value
of $27.20 per share (cost $45,270,681) .......... -- 69,337,053 -- -- --
Balanced Fund,
3,566,416 shares at net asset value
of $17.02 per share (cost $49,395,919) .......... -- -- 60,710,352 -- --
Bond Fund,
288,123 shares at net asset value
of $10.54 per share (cost $2,977,455) ........... -- -- -- 3,038,034 --
Money Market Fund,
2,621,441 shares at net asset value
of $1.00 per share (cost $2,621,441) ............ -- -- -- -- 2,621,441
----------- ----------- ----------- ----------- -----------
Total assets ................................. 25,353,805 69,337,053 60,710,352 3,038,034 2,621,441
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued adverse mortality and
expense charges ................................. 3,059 8,415 7,427 392 323
----------- ----------- ----------- ----------- -----------
Total liabilities ............................ 3,059 8,415 7,427 392 323
----------- ----------- ----------- ----------- -----------
Net assets ................................... $25,350,746 $69,328,638 $60,702,925 $ 3,037,642 $ 2,621,118
=========== =========== =========== =========== ===========
Units outstanding (note 5) ................... 1,191,865 1,155,179 1,568,974 114,927 141,908
=========== =========== =========== =========== ===========
Net asset value per unit ..................... $ 21.27 $ 60.02 $ 38.69 $ 26.43 $ 18.47
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Assets and Liabilities
December 31, 1997
Treasury International World Emerging
2000 Stock Governments Growth
Assets: Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C>
Treasury 2000 Fund, 184,138
shares at net asset value of $9.24
per share (cost $1,501,627) ...............$1,700,677 $ -- $ -- $ --
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
349,582 shares at net asset value of
$12.74 per share (cost $4,320,137) ........ -- 4,453,678 -- --
Investments in MFS(R) Variable
Insurance TrustSM:
World Governments Series,
70,638 shares at net asset value of
$10.21 per share (cost $722,167) .......... -- -- 721,218 --
Investments in MFS(R) Variable
Insurance TrustSM:
Emerging Growth Series,
251,222 shares at net asset value of
$16.14 per share (cost $3,667,547) ........ -- -- -- 4,054,727
---------- ---------- ---------- ----------
Total assets ........................... 1,700,677 4,453,678 721,218 4,054,727
---------- ---------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges ........................... 1,451 547 89 487
---------- ---------- ---------- ----------
Total liabilities ...................... 1,451 547 89 487
---------- ---------- ---------- ----------
Net assets .............................$1,699,226 $4,453,131 $ 721,129 $4,054,240
========== ========== ========== ==========
Units outstanding (note 5) ............. 199,220 361,206 62,671 331,933
========== ========== ========== ==========
Net asset value per unit ...............$ 8.53 $ 12.33 $ 11.51 $ 12.21
========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1997, 1996, and 1995
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 119,794 $ 595,603 $ 349,394 $ 778,858 $ 1,830,435 $ 2,783,538
Adverse mortality and expense
charges (note 3) (182,627) (111,426) (67,332) (527,025) (363,607) (253,958)
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss) (62,833) 484,177 282,062 251,833 1,466,828 2,529,580
------------ ------------ ------------ ------------ ------------ ------------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 317,275 -- -- 1,145,587 -- --
Proceeds from sale of securities 1,795,596 855,100 2,737,741 3,033,581 2,017,365 1,138,163
Cost of securities sold (1,354,057) (708,846) (2,416,409) (2,103,099) (1,615,917) (985,297)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss) on security
transactions 758,814 146,254 321,332 2,076,069 401,448 152,866
Net change in unrealized
appreciation or depreciation
on investments 4,563,309 1,662,956 1,332,754 12,852,455 6,026,093 4,764,093
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments 5,322,123 ,809,210 1,654,086 14,928,524 6,427,541 4,916,959
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 5,259,290 $ 2,293,387 $ 1,936,148 $ 15,180,357 $ 7,894,369 $ 7,446,539
============ ============ ============ ============ ============ ============
BALANCED SUBACCOUNT BOND SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 2,062,026 $ 2,949,493 $ 3,308,296 $ 136,739 $ 137,535 $ 218,461
Adverse mortality and expense
charges (note 3) (509,762) (445,353) (375,225) (23,285) (23,607) (33,879)
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) 1,552,264 2,504,140 2,933,071 113,454 113,928 184,582
----------- ----------- ----------- ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 758,320 -- -- 379 -- --
Proceeds from sale of securities 4,525,247 3,759,491 2,989,211 402,615 1,799,790 885,596
Cost of securities sold (3,785,014) (3,351,391) (2,732,488) (394,979) (1,748,647) (865,874)
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) on security
transactions 1,498,553 408,100 256,723 8,015 51,143 19,722
Net change in unrealized
appreciation or depreciation
on investments 5,202,066 1,724,491 4,759,298 41,691 (127,295) 326,701
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments 6,700,619 2,132,591 5,016,021 49,706 (76,152) 346,423
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 8,252,883 $ 4,636,731 $ 7,949,092 $ 163,160 $ 37,776 $ 531,005
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1997, 1996, and 1995
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 85,594 $ 86,370 $ 116,648 $ 106,851 $ 107,339 $ 105,588
Adverse mortality and expense charges
(note 3) (15,448) (16,510) (20,105) (14,583) (13,847) (12,710)
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) 70,146 69,860 96,543 92,268 93,492 92,878
----------- ----------- ----------- ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- -- -- -- --
Proceeds from sale of securities 4,634,860 4,407,707 2,670,224 -- -- --
Cost of securities sold (4,634,860) (4,407,707) (2,670,224) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) on security
transactions -- -- -- -- -- --
Net change in unrealized appreciation
or depreciation on investments -- -- -- 1,846 (74,946) 161,453
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments -- -- -- 1,846 (74,946) 161,453
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 70,146 $ 69,860 $ 96,543 $ 94,114 $ 18,546 $ 254,331
=========== =========== =========== =========== =========== ===========
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
Dividend income $ 99,113 $ 39,586 $ -- $ 7,143 $ -- $ 19,972
Adverse mortality and expense
charges (note 3) (32,130) (14,665) (1,492) (3,401) (2,326) (1,176)
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) 66,983 24,921 (1,492) 3,742 (2,326) 18,796
----------- ----------- ----------- ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- -- -- -- --
Proceeds from sale of securities 235,721 121,135 17,033 65,919 52,028 19,161
Cost of securities sold (211,895) (113,341) (17,004) (66,515) (53,136) (18,440)
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) on security
transactions 23,826 7,794 29 (596) (1,108) 721
Net change in unrealized appreciation
or depreciation on investments (62,452) 173,915 22,078 (5,796) 12,525 (7,679)
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments (38,626) 181,709 22,107 (6,392) 11,417 (6,958)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 28,357 $ 206,630 $ 20,615 $ (2,650) $ 9,091 $ 11,838
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Years Ended December 31, 1997, 1996, and 1995
EMERGING GROWTH SUBACCOUNT
Investment income (loss): 1997 1996*
---- -----
Dividend income $ -- $9,859
Adverse mortality and expense charges
(note 3) (21,660) (4,378)
------- -------
Net investment income (loss) (21,660) 5,481
------- -------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- --
Proceeds from sale of securities 234,899 213,154
Cost of securities sold (222,640) (201,866)
------- -------
Net realized gain (loss) on security
transactions 12,259 11,288
Net change in unrealized appreciation
or depreciation on investments 384,388 2,792
------- -------
Net gain (loss) on investments 396,647 14,080
------- -------
Net increase (decrease) in net assets
resulting from operations $374,987 $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, 1997, 1996, and 1995
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ (62,833) $ 484,177 $ 282,062 $ 251,833 $ 1,466,828 $ 2,529,580
Net realized gain (loss) on
security transactions 758,814 146,254 321,332 2,076,069 401,448 152,866
Net change in unrealized
appreciation or depreciation
on investments 4,563,309 1,662,956 1,332,754 12,852,455 6,026,093 4,764,093
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets from
operations 5,259,290 2,293,387 1,936,148 15,180,357 7,894,369 7,446,539
------------ ------------ ------------ ------------ ------------ ------------
Capital unit transactions (note 5):
Proceeds from sale of units 9,240,958 7,622,148 5,340,463 16,677,681 13,835,588 10,831,868
Cost of units repurchased (4,699,419) (3,351,383) (4,440,885) (10,282,732) (8,554,478) (6,090,704)
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets from
capital unit transactions 4,541,539 4,270,765 899,578 6,394,949 5,281,110 4,741,164
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 9,800,829 6,564,152 2,835,726 21,575,306 13,175,479 12,187,703
Net assets:
Beginning of period 15,549,917 8,985,765 6,150,039 47,753,332 34,577,853 22,390,150
------------ ------------ ------------ ------------ ------------ ------------
End of period $ 25,350,746 $ 15,549,917 $ 8,985,765 $ 69,328,638 $ 47,753,332 $ 34,577,853
============ ============ ============ ============ ============ ============
BALANCED SUBACCOUNT BOND SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss) $ 1,552,264 $ 2,504,140 $ 2,933,071 $ 113,454 $ 113,928 $ 184,582
Net realized gain (loss) on
security transactions 1,498,553 408,100 256,723 8,015 51,143 19,722
Net change in unrealized
appreciation or depreciation
on investments 5,202,066 1,724,491 4,759,298 41,691 (127,295) 326,701
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets from
operations 8,252,883 4,636,731 7,949,092 163,160 37,776 531,005
------------ ------------ ------------ ------------ ------------ ------------
Capital unit transactions (note 5):
Proceeds from sale of units 10,763,242 11,796,373 11,658,626 1,162,322 700,575 1,036,840
Cost of units repurchased (10,663,916) (10,399,963) (9,247,633) (705,363) (2,103,924) (1,180,288)
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets from
capital unit transactions 99,326 1,396,410 2,410,993 456,959 (1,403,349) (143,446)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 8,352,209 6,033,141 10,360,085 620,119 (1,365,573) 387,559
Net assets:
Beginning of period 52,350,716 46,317,575 35,957,490 2,417,523 3,783,096 3,395,537
------------ ------------ ------------ ------------ ------------ ------------
End of period $ 60,702,925 $ 52,350,716 $ 46,317,575 $ 3,037,642 $ 2,417,523 $ 3,783,096
============ ============ ============ ============ ============ ============
</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, 1997, 1996, and 1995
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 70,146 $ 69,860 $ 96,543 $ 92,268 $ 93,492 $ 92,878
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments -- -- -- 1,846 (74,946) 161,453
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
operations 70,146 69,860 96,543 94,114 18,546 254,331
----------- ----------- ----------- ----------- ----------- -----------
Capital unit transactions (note 5):
Proceeds from sale of units 6,190,640 4,325,194 2,156,885 621,004 794,517 550,180
Cost of units repurchased (5,367,244) (4,801,186) (3,049,819) (599,303) (773,892) (531,450)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
capital unit transactions 823,396 (475,992) (892,934) 21,701 20,625 18,730
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets 893,542 (406,132) (796,391) 115,815 39,171 273,061
Net assets:
Beginning of period 1,727,576 2,133,708 2,930,099 1,583,411 1,544,240 1,271,179
----------- ----------- ----------- ----------- ----------- -----------
End of period $ 2,621,118 $ 1,727,576 $ 2,133,708 $ 1,699,266 $ 1,583,411 $ 1,544,240
=========== =========== =========== =========== =========== ===========
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) $ 66,983 $ 24,921 $ (1,492) $ 3,742 $ (2,326) $ 18,796
Net realized gain (loss) on
security transactions 23,826 7,794 29 (596) (1,108) 721
Net change in unrealized
appreciation or depreciation
on investments (62,452) 173,915 22,078 (5,796) 12,525 (7,679)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
operations 28,357 206,630 20,615 (2,650) 9,091 11,838
----------- ----------- ----------- ----------- ----------- -----------
Capital unit transactions (note 5):
Proceeds from sale of units 2,721,533 2,207,995 825,895 530,877 144,986 244,058
Cost of units repurchased (904,022) (559,568) (94,304) (95,423) (84,667) (36,981)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
capital unit transactions 1,817,511 1,648,427 731,591 435,454 60,319 207,077
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets 1,845,868 1,855,057 752,206 432,804 69,410 218,915
Net assets:
Beginning of period 2,607,263 752,206 -- 288,325 218,915 --
----------- ----------- ----------- ----------- ----------- -----------
End of period $ 4,453,131 $ 2,607,263 $ 752,206 $ 721,129 $ 288,325 $ 218,915
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1997, 1996, and 1995
EMERGING GROWTH SUBACCOUNT
Operations: 1997 1996*
---- -----
Net investment income (loss) $(21,660) $5,481
Net realized gain (loss) on
security transactions 12,259 11,288
Net change in unrealized appreciation
or depreciation on investments 384,388 2,792
--------- ---------
Change in net assets from
operations 374,987 19,561
--------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 3,238,087 1,517,927
Cost of units repurchased (749,413) (346,909)
--------- ---------
Change in net assets from capital
unit transactions 2,488,674 1,171,018
--------- ---------
Increase (decrease) in net assets 2,863,661 1,190,579
Net assets:
Beginning of period 1,190,579 --
--------- ---------
End of period $4,054,240 $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 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., MFS(R) Variable
Insurance Trust(TM), 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 MFS(R) Variable Insurance Trust(TM). 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 MFS(R) Variable Insurance Trust(TM) has two funds available as an
investment option. MFS(R) Variable Insurance Trust(TM) 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 MFS(R) Variable Insurance
Trust(TM). 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, 1997, was as follows:
Growth and Income Stock Fund..................... $10,828,434
Capital Appreciation Stock Fund.................. 6,592,719
Balanced Fund.................................... 6,936,103
Bond Fund........................................ 973,498
Money Market Fund................................ 5,528,512
Treasury 2000 Fund............................... 7,238
International Stock Portfolio.................... 2,120,450
World Governments Series......................... 505,168
Emerging Growth.................................. 2,702,255
----------
$36,194,377
==========
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Account for the years
ended December 31, 1997, 1996, and 1995 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, 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
Units sold 490,480 313,426 297,548 45,022 342,456
Units repurchased (252,149) (194,852) (296,125) (27,507) (298,002)
---------- ---------- ---------- ---------- ----------
Units outstanding at
December 31, 1997 1,191,865 1,155,179 1,568,974 114,927 141,908
========== ========== ========== ========== ==========
Treasury International World Emerging
2000 Stock Governments Growth
Subaccount Subaccount Subaccount Subaccount*
<S> <C> <C> <C> <C>
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
Units sold 77,604 216,687 46,412 280,804
Units repurchased (75,054) (71,570) (8,295) (66,642)
-------- -------- -------- --------
Units outstanding at
December 31, 1997 199,220 361,206 62,671 331,933
======== ======== ======== ========
<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
1997 1996 1995 1994 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of
period $16.31 $13.55 $10.45 $10.00 $46.07 $38.09 $29.16 $29.01 $25.73
End of period 21.27 16.31 13.55 10.45 60.02 46.07 38.09 29.16 29.01
Percentage increase
in unit value
during period* 30.4% 20.4% 29.7% 4.5% 30.3% 21.0% 30.6% 0.5% 12.8%
Number of units
outstanding at
end of period 1,191,865 953,534 663,269 588,501 1,155,179 1,036,605 907,821 767,867 612,819
BALANCED SUBACCOUNT BOND SUBACCOUNT
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of
period $33.40 $30.41 $25.09 $25.44 $23.23 $24.82 $24.35 $21.11 $21.96 $20.35
End of period 38.69 33.40 30.41 25.09 25.44 26.43 24.82 24.35 21.11 21.96
Percentage increase
in unit value
during period* 15.8% 9.8% 21.2% -1.4% 9.5% 6.5% 1.9% 15.4% -3.9% 7.9%
Number of units
outstanding at
end of period 1,568,974 1,567,551 1,522,893 1,433,037 1,310,167 114,927 97,411 155,381 160,875 164,733
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of
period $17.73 $17.05 $16.33 $15.91 $15.67 $8.05 $7.95 $6.63 $7.20 $6.29
End of period 18.47 17.73 17.05 16.33 15.91 8.53 8.05 7.95 6.63 7.20
Percentage increase
in unit value
during period* 4.1% 4.0% 4.4% 2.6% 1.5% 6.0% 1.3% 19.9% -7.9% 14.5%
Number of units
outstanding at
end of period 141,908 97,454 125,112 179,387 149,181 199,220 196,670 194,133 191,747 189,107
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of
period $12.07 $10.61 $10.00 $11.74 $11.39 $10.00
End of period 12.33 12.07 10.61 11.51 11.74 11.39
Percentage increase
in unit value
during period* 2.2% 13.7% 6.1% (2.0%) 3.1% 13.9%
Number of units
outstanding at
end of period 361,206 216,089 70,876 62,671 24,554 19,219
EMERGING GROWTH SUBACCOUNT**
1997 1996
<S> <C> <C>
Net asset value:
Beginning of
period $10.11 $10.00
End of period 12.21 10.11
Percentage increase
in unit value
during period* 20.8% 1.1%
Number of units
outstanding at
end of period 331,933 117,771
For the Money Market Subaccount, the "seven-day average yield" for the seven
days ended December 31, 1997, was 4.0% and the "effective yield" for that period
was 4.2%.
<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>
<PAGE>
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,
1997; the related statements of operations and changes in net assets for each of
the years in the three-year (one year 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 (four years for Capital Appreciation Stock
Subaccount, three years for International Stock Subaccount and World Governments
Subaccount, and one year and eight months 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, 1997, 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, 1997; the results of their operations and changes in
their net assets for each of the years in the three-year (one year 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 (four years for
Capital Appreciation Stock Subaccount, three years for International Stock
Subaccount and World Governments Subaccount, and one year and eight months for
the Emerging Growth Subaccount) period then ended in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
February 6, 1998
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Financial Statements and Supplementary Information
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets, Liabilities, and Surplus
December 31, 1997 and 1996
(In Thousands)
<TABLE>
<CAPTION>
Admitted Assets 1997 1996
--------------- ---- ----
Investments:
<S> <C> <C>
Bonds $1,570,735 1,652,375
Stocks:
Preferred 102 132
Common 57,292 33,256
Mortgage loans on real estate 362,958 405,017
Real estate 64,771 72,857
Policy loans 101,061 101,544
Other invested assets 11,459 17,315
Investment receivable 14,394 4,940
Cash and short-term investments 27,260 33,290
--------- ---------
Total investments 2,210,032 2,320,726
Premiums receivable 12,534 11,820
Accrued investment income 30,540 33,299
Electronic data processing equipment 2,822 2,294
Due from affiliates and related parties 12,093 9,523
Federal income tax recoverable 2,158 2,865
Other assets 2,936 3,607
Separate accounts 1,198,978 645,710
--------- ---------
Total admitted assets $3,472,093 3,029,844
========= =========
Liabilities and Surplus
Liabilities:
Policy reserves:
Life insurance and annuity contracts $1,749,927 1,828,528
Accident and health insurance 11,795 11,342
Supplementary contracts without life contingencies 72,664 67,588
Policyholders' dividend accumulations 153,931 152,053
Policy and contract claims 7,232 5,868
Other policyholders' funds:
Dividends payable to policyholders 23,780 23,270
Premiums and other deposit funds 4,693 4,958
Interest maintenance reserve 3,531 2,343
Liabilities for employees' and agents' retirement plans - 42,617
Amounts held for others 20,500 19,731
Commissions, expenses, taxes, licenses, and fees accrued 13,133 10,084
Asset valuation reserve 41,756 42,013
Loss contingency reserve for investments 6,050 8,250
Other liabilities 8,123 22,481
Separate accounts 1,164,297 625,414
--------- ---------
Total liabilities 3,281,412 2,866,540
--------- ---------
Surplus:
Unassigned surplus 190,681 163,304
--------- ---------
Total surplus 190,681 163,304
--------- ---------
Total liabilities and surplus $3,472,093 3,029,844
========= =========
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
Income:
<S> <C> <C> <C>
Premiums and other considerations:
Life and annuity $414,724 346,584 262,326
Accident and health 14,886 12,007 10,504
Supplementary contracts and dividend accumulations 44,194 46,303 48,633
Annuity and other fund deposits 114,825 51,322 22,734
Net investment income 168,192 174,573 173,355
Reinsurance commissions 9,601 9,962 18,523
Other income 5,862 3,761 7,026
------- ------- -------
Total income 772,284 644,512 543,101
------- ------- -------
Benefits and expenses:
Death benefits 37,430 33,592 31,807
Annuity benefits 49,095 39,086 39,948
Surrender benefits 176,291 143,867 101,456
Payments on supplementary contracts without life
contingencies and dividend accumulations 44,747 48,896 50,478
Other benefits to policyholders and beneficiaries 17,509 12,703 11,013
(Decrease) increase in policy reserves - life and annuity
contracts and accident and health insurance (78,148) (54,954) 63,573
Increase in liabilities for supplementary contracts without life
contingencies and policyholders' dividend accumulations 6,954 8,328 5,935
Decrease in group annuity reserves (2) (233) (7,276)
Increase in benefit funds 3,975 4,075 4,103
Commissions 37,017 37,529 25,232
General insurance expenses, including cost of
collection in excess of loading on due and deferred
premiums and other expenses 60,722 51,004 59,633
Insurance taxes, licenses, and fees 6,939 6,199 5,585
Net transfers to separate accounts 359,903 267,145 101,369
------- ------- -------
Total benefits and expenses 722,432 597,237 492,856
------- ------- -------
Income before dividends to policyholders, federal
income taxes, and net realized capital gains (losses) 49,852 47,275 50,245
Dividends to policyholders 23,670 23,286 22,004
------- ------- -------
Income before federal income taxes and net
realized capital gains (losses) 26,182 23,989 28,241
Federal income taxes 12,208 7,713 13,321
------- ------- -------
Income before net realized capital gains (losses) 13,974 16,276 14,920
Net realized capital gains (losses), less federal income taxes
and transfers to the interest maintenance reserve 3,885 171 (567)
------- ------- -------
Net income $17,859 16,447 14,353
======= ======= =======
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, 1997, 1996, and 1995
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $163,304 154,028 141,677
------- ------- -------
Increase (decrease) in unassigned surplus:
Net income 17,859 16,447 14,353
Change in net unrealized gains (losses) 6,752 (7,135) (558)
Change in asset valuation reserve 257 (9,811) (3,386)
Change in nonadmitted assets 285 2,695 497
Change in surplus of separate accounts 209 (2,071) (2,500)
Change in separate account seed money (189) 2,232 2,593
Subsidiary surplus distribution - 13,858 -
Change in loss contingency for investments 2,200 (6,954) 365
Other miscellaneous changes 4 15 987
------- ------- -------
Net increase in unassigned surplus 27,377 9,276 12,351
------- ------- -------
Balance at end of year $190,681 163,304 154,028
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash from operations Premiums and other considerations:
Life, annuity, and accident and health $542,420 408,328 294,530
Supplementary contracts and dividend accumulations 44,194 46,303 48,633
Investment income received 177,984 176,394 176,990
Reinsurance commissions 8,425 13,210 17,735
Other income 4,931 57,268 9,369
------- ------- -------
Total provided from operations 777,954 701,503 547,257
------- ------- -------
Life and accident and health claims paid 42,004 38,809 36,192
Surrender benefits paid 176,291 143,867 101,456
Other benefits to policyholders paid 105,505 95,785 96,571
Commissions, other expenses, and taxes paid,
excluding federal income taxes 105,834 89,017 92,812
Dividends to policyholders paid 23,161 22,542 21,634
Federal income taxes paid 14,558 15,804 7,145
Net transfers to separate accounts 374,057 280,523 106,508
Interest paid on defined benefit plans 3,507 4,104 4,074
Other 189 684 -
------- ------- -------
Total used in operations 845,106 691,135 466,392
------- ------- -------
Net cash (used in) from operations (67,152) 10,368 80,865
------- ------- -------
Cash from investments
Proceeds from investments sold, matured, or repaid:
Bonds 285,135 226,919 217,833
Stocks 17,223 29,960 22,194
Mortgage loans on real estate 47,892 52,773 38,861
Other invested assets 969 831 1,594
Real estate 17,701 700 2,315
------- ------- -------
Total investment proceeds 368,920 311,183 282,797
------- ------- -------
Cost of investments acquired:
Bonds 200,692 237,191 236,607
Stocks 29,724 26,235 22,063
Mortgage loans on real estate 4,704 31,025 67,942
Real estate 10,929 10,060 6,933
Other invested assets - - 13,227
Other cash used 4,098 2,148 4,907
------- ------- -------
Total investments acquired 250,147 306,659 351,679
(Decrease) increase in policy loans and premium notes (475) 664 398
------- ------- -------
Net cash from (used in) investments 119,248 3,860 (69,280)
------- ------- -------
Cash from financing and miscellaneous sources
Transfer of defined benefit pension plan assets (42,247) - -
Other cash (applied) provided, net (15,879) 3,762 254
------- ------- -------
Net cash (from) used in from financing and
miscellaneous sources (58,126) 3,762 254
------- ------- -------
Reconciliation of cash and short-term investments:
Net change in cash and short-term investments (6,030) 17,990 11,839
Cash and short-term investments at beginning of year 33,290 15,300 3,461
------- ------- -------
Cash and short-term investments at end of year $27,260 33,290 15,300
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1997, 1996, and 1995
(1) Summary of Significant Accounting Policies
Company Operations
CUNA Mutual Life Insurance 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.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
accounting practices prescribed or permitted by the Iowa Department of
Commerce, Insurance Division, (statutory accounting practices), which
practices differ from generally accepted accounting principles (GAAP). The
more significant of these differences are as follows:
o 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;
o 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;
o Majority owned subsidiaries are not consolidated and are carried at
their underlying book value using the equity method of accounting;
o 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;
o 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;
o "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;
o The asset valuation reserve is recorded as a liability by a direct
charge to surplus;
o 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;
o The loss contingency reserves for investments are recorded as
liabilities by direct charges to surplus;
o 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;
o Pension expense reflects the amount funded during the year, and
disclosures related to the pension plan are in accordance with ERISA
requirements;
o Assets and liabilities are recorded net of ceded reinsurance balances;
and
o 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
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 1996 1995
Statutory net income $16,447 14,353
Adjustments:
Federal income taxes (9,500) 6,154
Deferred policy acquisition costs 15,566 151
Insurance reserves (2,181) (5,162)
Investments 8,590 (5,435)
Pension benefits (1,457) (1,395)
Other (2,365) (1,475)
------ ------
GAAP net income $25,100 7,191
====== ======
Surplus 1996 1995
------- ---- ----
Statutory surplus $163,304 156,269
Adjustments:
Federal income taxes 6,576 19,625
Deferred policy acquisition costs 130,655 106,405
Insurance reserves (61,701) (63,882)
Investments 33,231 34,826
Employee benefits (21,744) (18,805)
Dividends payable to policyholders 11,635 11,235
Other 2,955 9,786
------- -------
GAAP Surplus $264,911 255,459
======= =======
The effects of these variances on net income and surplus at December 31,
1997, 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 subsidiaries are carried at the
Company's share of the underlying net equity of the investment. Home office
real estate is carried at depreciated cost.
Realized gains and losses on the sale of investments are determined on a
specific identification basis. The net unrealized gains and losses
attributable to the adjustment from book value to carrying value for all
investments are reflected in surplus.
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 2.5 to 4 percent interest to the 1941 C.S.O. table with 2.5
percent interest. Approximately 23 percent of the life 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
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Policy Reserves, Continued
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 7.8 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 99.8 percent of ordinary life
insurance in force and premiums received during 1997.
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 $6,023,003 and $5,628,340 at December 31, 1997 and 1996,
respectively. The equipment is being depreciated using the straight-line
method over a five-year period.
Pension Costs
Pension costs relating to the Company's pension plans are computed on the
basis of accepted actuarial methods. The annual contributions are computed
according to the aggregate funding method, which produces an annual normal
cost at each valuation date. Such annual normal cost provides for spreading
the excess of the present value of future benefits over the value of the
assets of the plan as a level percentage of payroll over the remaining
period of service of active employees on the valuation date based upon the
actuarial assumptions adopted. Gains and losses which arise on each
valuation date as the result of differences between the actual experience
and that expected by the actuarial assumptions are spread over the remaining
period of service of active employees. The Company's policy is to fund
pension costs accrued.
Risks and Uncertainties
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheets and revenues and expenses
for the period. Actual results could differ significantly from those
estimates. The following elements of the financial statements are most
affected by the use of estimates and assumptions:
o Investment valuations
o 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 had derivative financial instruments at December 31, 1997 and 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.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Risks and Uncertainties, Continued
The Company is subject to the risk that the legal or regulatory environment
in which the Company operates will change and create additional costs and
expenses not anticipated by the Company in pricing its products. In other
words, regulatory initiatives designed to reduce insurer profits or new
legal theories may create costs for the insurer beyond those recorded in the
financial statements. The Company mitigates this risk by operating in a
geographically diverse area, thus reducing its exposure to any single
jurisdiction; closely monitoring the regulatory environment to anticipate
changes; and by using underwriting practices which identify and minimize the
potential adverse impact of this risk.
The Company is subject to risk related to the conversion of its computer
systems to be year 2000 compliant. In 1996, the Company initiated a program
to ensure that all computer systems and applications would be prepared for
the year 2000. This program involves the use of both internal and external
resources to identify, modify or replace, and test systems for year 2000
compliance. This program also includes confirming with vendors that they
will be year 2000 compliant. The goal of this program is to be year 2000
compliant by December 31, 1998. Maintenance or modification costs related to
the year 2000 program are expensed as incurred, while the costs of purchased
new systems and software are capitalized and amortized over its useful life.
Disclosures About Fair Value of Financial Instruments
Statement of Financial Accounting Standards (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.
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. The carrying value and fair value for these instruments is
disclosed in note 2.
Derivative financial instruments: The carrying value and fair value for
these instruments is disclosed in note 2.
Mortgage loans on real estate: 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. The
carrying value and fair value for these instruments is disclosed in note
2.
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.
The carrying amounts reported in these accounts approximate their fair
values.
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 estimated fair value of these
liabilities for 1997 and 1996 were $1,233,846 and $1,439,661,
respectively.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
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.
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, gross unrealized gains and losses, and the estimated
fair value of investments in bonds as of December 31, 1997 and 1996, are as
follows (000s omitted):
<TABLE>
<CAPTION>
Gross Gross
Carrying unrealized unrealized Estimated
Description value gains losses fair value
1997:
<S> <C> <C> <C> <C>
United States treasury
and government securities $ 62,478 1,532 38 63,972
States and political
subdivisions securities 47 - - 47
Foreign government securities 16,428 1,154 - 17,582
Corporate securities 989,245 49,050 2,648 1,035,647
Mortgage-backed securities 464,286 11,203 349 475,140
Other debt securities 38,251 1,640 - 39,891
--------- ------ ----- --------
$1,570,735 64,579 3,035 1,632,279
========= ====== ===== ========
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
<TABLE>
<CAPTION>
Bonds, Continued
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
========= ====== ===== ========
</TABLE>
A provision of $361,018 and $63,846 at December 31, 1997 and 1996,
respectively, has been provided for bonds that have been determined by the
NAIC to have an impairment in value. In addition to the asset valuation
reserve provision, a loss contingency reserve of $1,700,000 has been
established at December 31, 1997, for projected bond losses. There was no
loss contingency reserve established at December 31, 1996.
The carrying value and estimated fair value of investments in bonds as of
December 31, 1997, 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 $ 65,516 65,818
Due after 1 year through 5 years 396,041 411,424
Due after 5 years through 10 years 469,017 494,046
Due after 10 years 175,875 185,851
--------- --------
1,106,449 1,157,139
Mortgage-backed securities 464,286 475,140
--------- --------
$1,570,735 1,632,279
========= ========
The average duration until maturity for the above bonds, excluding
mortgage-backed securities, is 3.6 years.
Proceeds from sales of bonds were $57,537,539, $114,187,761, and $95,746,184
during 1997, 1996, and 1995, respectively. Gross gains of $3,975,610,
$9,250,542 and $1,546,569, and gross losses of $684,650, $5,064,630, and
$800,886 were realized on those sales in 1997, 1996, and 1995, respectively.
Net realized capital gains (losses), less applicable income taxes, of
$1,852,451, $974,141, and $1,412,534 were transferred to the IMR in 1997,
1996, and 1995, respectively.
Stocks
The cost, gross unrealized gains and losses, and estimated fair value on
unaffiliated stocks are as follows (000s omitted):
Gross Gross Estimated
unrealized unrealized fair
December 31, 1997 Cost gains losses value
---- ----- ------ -----
Common Stock $44,298 14,010 (2,323) 55,985
Preferred Stock 102 4 - 106
December 31, 1996
Common Stock $29,063 5,732 (2,189) 32,606
Preferred Stock 132 - (20) 112
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Mortgage Loans on Real Estate
The Company's mortgage portfolio consists mainly of commercial mortgage
loans. 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 Illinois) of the aggregate mortgage
loan portfolio balance and loans of no more than 2 percent of the aggregate
mortgage loan portfolio balance are made to any one borrower. At December
31, 1997, the commercial mortgage portfolio had an average remaining life of
approximately 4.9 years. In addition to the asset valuation reserve
provision, a loss contingency reserve of $2,000,000 and $3,900,000 at
December 31, 1997 and 1996, respectively, has been provided for mortgage
loans on real estate.
The carrying value and estimated fair value of mortgage loans as of December
31, 1997 and 1996, are as follows (000s omitted):
Carrying Estimated
value fair value
1997 $362,958 385,689
1996 405,017 423,368
Assets Designated
The carrying values of assets designated for regulatory authorities as of
December 31 are as follows (000s omitted):
1997 1996
---- ----
Bonds and short-term investments $1,565,951 1,641,398
Mortgage loans on real estate 362,958 405,017
Policy loans 101,069 101,544
--------- ---------
$2,029,978 2,147,959
========= =========
Net Investment Income
Components of net investment income as of December 31 are as follows (000s
omitted):
1997 1996 1995
---- ---- ----
Bonds $123,395 124,778 127,056
Preferred stocks 4 23 73
Common stocks 454 1,721 2,393
Short-term investments 2,689 2,222 1,447
Derivative financial instruments (1,445) (360) 742
Mortgage loans on real estate 34,372 37,968 37,835
Real estate 10,158 11,456 10,422
Policy loans 6,571 6,513 6,392
Other invested assets 4,711 4,390 192
Other 11 79 85
------- ------- -------
Gross investment income 180,920 188,790 186,637
Less investment expenses 12,728 14,217 13,282
------- ------- -------
Net investment income $168,192 174,573 173,355
======= ======= =======
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
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):
1997 1996 1995
---- ---- ----
Debt securities $1,843 (3,194) 896
Equity securities 2,853 6,466 3,322
Mortgage loans on real estate 1,030 (433) 76
Real estate 3,056 428 180
Short-term investments and other 12 - -
Derivative financial instruments - (3,068) (3,174)
------ ------ ------
Net realized investment gains (losses) $8,794 199 1,300
====== ====== ======
Derivative Financial Instruments
As of December 31, 1997, the Company had an interest rate swap agreement
with a major financial institution, having a notional amount of $100
million. Under the agreement, the Company receives interest payments at a
floating rate based on an interest rate index, which was 5.83 percent as of
December 31, 1997, and pays interest on the same notional amount at a fixed
rate, which was 6.96 percent as of December 31, 1997. 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, 1997, the fair value of the
interest swap agreement was ($2,785,264). This negative fair value
represents the estimated amount the Company would have to pay at December
31, 1997, to cancel the contract or transfer it to another party.
As of December 31, 1997, the Company had three interest rate cap agreements
with two major financial institutions, having a total notional amount of
$500 million. The Company paid $2,280,000 for these agreements which
terminate in 1999. The 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 of December 31, 1997, the fair
value of the interest rate cap agreements was $68,989. The fair value
represents the estimated amount the Company would receive at December 31,
1997, if it transferred the agreements to another party. As of December 31,
1997, the carrying value of the caps was $1,295,152.
The Company is exposed to credit losses in the event of nonperformance by
the counter-parties to its swap and cap agreements. The Company anticipates,
however, that the counter-parties will be able to fully satisfy their
obligations under the contracts. The Company monitors the credit standing of
the counter-parties.
(3) Real Estate
A summary of real estate held as of December 31 is as follows (000s
omitted):
1997 1996
---- ----
Cost:
Investment real estate $84,297 91,618
Home office 15,615 15,236
-------- --------
99,912 106,854
Less accumulated depreciation 35,141 33,997
-------- --------
$64,771 72,857
======== ========
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 $2,350,000 and $4,350,000 at December 31, 1997 and 1996,
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), a mutual multi-line insurer domiciled in
Wisconsin. The agreement is not a merger or consolidation, in that both
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(4) Affiliation and Transactions with Affiliates and Related Parties, Continued
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 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 jointly developed cost-sharing agreement. Expenses are
allocated based on specific identification or, if indeterminable, 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. The Company's allocated
expenses were increased by $975,672 and $736,162, during 1997 and 1996,
respectively, and decreased by $330,037 during 1995.
Common stock investments on December 31, 1997, include the Company's wholly
owned subsidiary, Red Fox Motor Hotel Corporation and 50 percent ownership
of CIMCO Inc. (CIMCO), a noninsurance affiliate. The carrying value of the
subsidiary investments on the Company's books amounted to $1,306,903 and
$650,050 at December 31, 1997 and 1996, respectively. Included in net
investment income (see note 2) was dividend income of $-0- from Century Life
Insurance Company (a former wholly owned subsidiary) for the year ended
December 31, 1997 ($1,328,364 for 1996 and $2,000,000 for 1995).
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 indeterminable, generally on the basis of
usage or benefit derived. These transactions give rise to intercompany
account balances which are settled monthly.
In 1995, the Company funded the purchase of 50 percent of CUNA Mortgage
Corporation by CUNA Mutual Investment Corporation (CMIC) by providing cash
of $13.2 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 varies over the life of the note,
as both the yield and the payment stream are determined based on the paydown
activity of an underlying notional pool of Federal National Mortgage
Association mortgages. The structure of this arrangement provides a hedge
against the Company's bond holdings, as the return varies inversely with the
return on the bond portfolio. The carrying value of the note is $7.2 million
at December 31, 1997, ($9.8 million at December 31, 1996) and is included in
other invested assets.
The Company is party to an agreement with CIMCO for investment advisory
services. CIMCO, 50 percent of which is owned by the Company and 50 percent
owned by CMIC, provides an investment program which complies with policies,
directives, and guidelines established by the Company. For these services,
the Company paid fees to CIMCO totaling $2,115,000, $2,581,800, and
$2,598,000 for 1997, 1996, and 1995, 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 10 subaccounts, which invest in all but the Treasury 2000 fund plus High
Income and Developing Markets subaccounts. The third component is used for
the investment of premiums received on variable annuity contracts and has 10
subaccounts, which invest in all but the Treasury 2000 fund, plus High
Income and Developing Markets subaccounts.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(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):
1997 1996
---- ----
Subject to discretionary withdrawal:
With market value adjustments $ 581,114 411,145
At book value, less surrender charge 431,984 634,606
At market value 749,944 379,682
At book value, no charge or adjustment 710,936 694,893
--------- ---------
2,473,978 2,120,326
Not subject to discretionary withdrawal 39,800 33,170
--------- ---------
2,513,778 2,153,496
Reinsurance ceded 437,765 475,913
--------- ---------
$2,076,013 1,677,583
========= =========
(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 (MLIC), 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 MLIC.
Career agency business issued subsequent to January 1, 1994 is 50 percent
ceded to MLIC.
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):
1997 1996 1995
---- ---- ----
Premiums and other considerations $ 33,180 43,382 75,362
========= ========= =========
Policy reserves and claim liabilities $ 501,275 534,173 529,827
========= ========= =========
Insurance in force $1,730,140 1,593,020 1,375,434
========= ========= =========
Included in the balances above are the following amounts relating to activity
with MLIC (000s omitted):
1997 1996 1995
---- ---- ----
Premiums and other considerations $ 30,118 40,853 73,249
========= ========= =========
Policy reserves and claim liabilities $ 497,421 530,958 527,150
========= ========= =========
Insurance in force $1,066,089 1,081,201 1,066,331
========= ========= =========
Assumed reinsurance activity from CMIS and MLIC are as follows (000s omitted):
1997 1996 1995
---- ---- ----
Premiums and other considerations $ 39,644 30,943 25,264
========= ========= =========
Policy reserves and claim liabilities $ 30,866 24,074 17,460
========= ========= =========
Insurance in force $2,358,527 1,950,127 1,411,590
========= ========= =========
The above intercompany transactions give rise to intercompany account balances
which are settled monthly.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(8) Federal Income Taxes
The Company files a consolidated life/nonlife federal income tax return with
its subsidiaries, Red Fox Motor Hotel Corporation and PLAN AMERICA Program,
Inc. 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):
1997 1996
---- ----
Due from subsidiaries $ - -
Due from IRS 2,158 2,865
------ ------
$ 2,158 2,865
====== ======
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>
1997 1996 1995
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $ 9,164 35.0% 8,396 35.0% 9,884 35.0%
Nontaxable investment income (1,419) (5.4) (4,159) (17.3) (3,650) (12.9)
Mutual life insurance company
differential earnings adjustment 4,200 16.0 2,599 10.8 3,259 11.5
Nondeductible deferred acquisition costs 1,465 5.6 614 2.6 860 3.1
Change in book and tax reserves (670) (2.6) 1,400 5.8 802 2.8
Miscellaneous book/tax capital gain
adjustment - - - - 2,138 7.6
Prior year over/under accrual (200) (.8) (1,500) (6.3) - -
Other, net 857 3.3 363 1.6 28 0.1
Accrued policyholder dividends (1,189) (4.5) - - - -
------ ---- ------ ---- ----- ----
$12,208 46.6% 7,713 32.2% 13,321 47.2%
====== ==== ====== ==== ===== ====
</TABLE>
The Company's consolidated federal income tax return has been examined by
the IRS through the year ending December 31, 1994. The Company is currently
under examination for the years ending December 31, 1995 and December 31,
1996. The Company does not expect the examination to result in a material
adjustment.
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 tax expense (benefit) on net realized capital gains (losses) amounted
to $3,056,961, ($946,308), and $455,130 for 1997, 1996, and 1995,
respectively. Of these amounts $997,476, $524,540, and $760,595 were
transferred to the IMR in 1997, 1996, and 1995, respectively. Net income
taxes paid were $12,500,000, $16,000,000, and $11,700,000 in 1997, 1996, and
1995, respectively.
(9) Benefit Plans
Defined Benefit Pension Plans
The Company has two noncontributory defined benefit pension plans which
cover substantially all employees and agents who meet eligibility
requirements. Until December 12, 1997, the pension plans were funded through
a Deposit Administration contract issued by the Company. On December 12,
1997, the Company transferred the plan assets from the Deposit
Administration contract to State Street Bank and Trust Company as trustee.
The amount transferred was $43,871,243 for the defined benefit pension
plans. Plan assets are now invested primarily in the Ultra Series Funds, a
family of mutual funds which serves as the investment vehicle for the
Company's variable insurance, annuity, and pension products. The total
pension expense for 1997, 1996, and 1995 was $2,673,924, $673,542, and
$1,992,599, respectively.
The actuarial present value of accumulated plan benefits and plan net assets
available for benefits for the Company's pension plans as of January 1, 1997
and 1996 are as follows (000s omitted):
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(9) Benefit Plans, Continued
Defined Benefit Pension Plans, Continued
1997 1996
---- ----
Actuarial present value of accumulated plan benefits
Vested $32,101 30,586
Nonvested 1,008 1,035
------- -------
$33,109 31,621
======= =======
Net assets available for benefits $46,944 43,659
======= =======
The discount rate used in determining the actuarial present value of
accumulated plan benefits on the two plans was 7 percent for 1997 and 1996.
Defined Contribution Pension Plans
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 $997,500, $1,141,000, and $960,000 for the years ended
December 31, 1997, 1996, and 1995, respectively.
Nonqualified Pension Plans
In addition to the defined benefit pension plans mentioned above, the
Company has also established three deferred compensation plans and two
supplemental benefit plans. The deferred compensation plans are the CUNA
Mutual Life Insurance Company Deferred Compensation Plan for Agents and
Managers, which had a liability of $651,858 and $622,088 as of December 31,
1997 and 1996, respectively; the CUNA Mutual Life Insurance Company Deferred
Compensation Plan for Home Office Employees, which had a liability of
$347,617 and $297,527 as of December 31, 1997 and 1996, respectively; and
the CUNA Mutual Life Insurance Company Deferred Compensation Plan for
Managers, which had a liability of $449,457 as of December 31, 1997 and
1996, respectively.
The supplemental retirement plans include the CUNA Mutual Life Insurance
Company Supplemental Retirement Plan for Agents and Managers, which replaces
the loss of benefits under the regular pension plan which occurs when
deferred compensation is removed from an agent's or manager's earnings base
in order to calculate pension benefits. The balance of the liability for
this plan is $367,199 and $375,782 as of December 31, 1997 and 1996,
respectively. The other plan is the CUNA Mutual Life Insurance Company
Supplemental Retirement Plan for Home Office Employees, which replaces the
loss of benefits under the regular pension plan which occurs when deferred
compensation is removed from a home office employee's earnings base in order
to calculate pension benefits. The balance of the liability for this plan is
$45,052 and $36,928 as of December 31, 1997 and 1996, respectively.
Postretirement Benefit Plans
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 accounting policy as of January 1, 1992, and is
amortizing the related initial impact over twenty years.
The following information is presented on a combined plan basis and sets
forth the accumulated post-retirement benefit obligation, the liability for
such obligations included in the accompanying Company financial statements,
and the postretirement benefit expense at December 31, 1997 and 1996 (000s
omitted):
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(9) Benefit Plans, Continued
Postretirement Benefit Plans, Continued
1997 1996
---- ----
Accumulated postretirement benefit obligation:
Active plan participants $2,716 1,748
Inactive plan participants 5,224 4,578
-------- --------
7,940 6,326
Transition obligation (1,731) (1,864)
Unrecognized loss (2,061) (2,000)
Unrecognized prior service cost (44) (55)
-------- --------
Accrued postretirement benefit cost $4,104 2,407
======== ========
Net periodic postretirement benefit expense for 1997 and 1996, including
the following components (000s omitted):
1997 1996
---- ----
Service cost $ 889 439
Interest cost on projected benefit obligation 489 353
Amortization
Prior service cost 12 -
Transition obligation 133 124
Unrecognized loss 553 64
-------- --------
Net periodic postretirement benefit expense $2,076 980
======== ========
The weighted average discount rate used in determining the postretirement
benefit obligation at December 31, 1997 and 1996, was 8 percent; the
initial health care cost trend rate was 10 percent, trending down to an
ultimate rate of 5.5 percent; and the weighted average rate of compensation
increase was 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,
1997, by $746,060 and the estimated eligibility cost and interest cost
components of net periodic postretirement benefit cost for 1997 by
$175,676.
(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, 1997, the par value of
securities loaned by the Company totaled $4,760,000.
The Company had no outstanding loan commitments at December 31, 1997.
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.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule I - Summary of Investments -
Other than Investments in Related Parties
December 31, 1997
<TABLE>
<CAPTION>
Amount at which
shown in the
Statutory Statement
of Admitted Assets,
Cost Value Liabilities, and Surplus
<S> <C> <C> <C>
Fixed maturities:
Bonds:
United States government and government
agencies and authorities $62,477,467 63,971,799 62,477,467
States, municipalities and political subdivisions 47,400 47,000 47,400
Foreign governments 16,427,875 17,582,910 16,427,875
Public utilities 989,558,381 1,035,646,511 989,244,978
All other corporate bonds 464,333,485 475,140,295 464,285,921
Mortgage-backed securities 38,251,041 39,890,882 38,250,988
------------ ------------ ------------
Total fixed maturities 1,571,095,649 1,632,279,397 1,570,734,629
============ ============ ============
Equity securities:
Common stocks:
Public utilities 2,474,206 3,085,372 3,085,372
Banks, trust, and insurance companies 2,368,309 3,619,412 3,619,412
Industrial, miscellaneous, and all other 39,455,015 49,279,979 49,279,979
Nonredeemable preferred stocks 101,745 105,938 101,745
------------ ------------ ------------
Total equity securities 44,399,275 56,090,701 56,086,508
------------ ============ ------------
Mortgage loans on real estate 362,958,135 362,958,135
Real estate 15,340,276 15,340,276
Real estate acquired in satisfaction of debt 49,430,489 49,430,489
Policy loans 101,061,250 101,061,250
Other long-term investments 11,459,028 11,459,028
Investment receivable 14,394,777 14,394,777
Short-term investments 19,795,355 19,795,355
------------ ------------
Total investments $2,189,934,181 2,201,260,447
============ ============
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule III - Supplementary Insurance Information
Years Ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Future
policy Other
benefits, policy
Deferred losses, claims
policy claims and
acquisition and loss Unearned benefits Premium
Segment costs expenses premiums payable revenue
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Life insurance $ - 1,838,556,204 - 7,181,708 588,628,879
========= ============ ======== ========= ===========
Year ended December 31, 1996:
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
========= ============ ======== ========= ===========
Benefits Amortization
claims of deferred
Net losses and policy Other
investment settlement acquisition operating Premium
income expenses costs expenses written
Year ended December 31, 1997:
Life insurance $168,191,667 253,871,140 - 108,657,518 -
=========== =========== ======== ========== ========
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 -
=========== =========== ======== ========== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule IV - Reinsurance
Years Ended December 31, 1997, 1996, and 1995
Assumed Percentage
Ceded to other from other of amount
Gross amount companies companies Net amount assumed to net
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Life insurance in force $11,011,821,402 1,730,140,000 2,358,526,598 11,640,208,000 20.3%
============== ============ ============ ============= ======
Premiums
Life insurance $ 421,255,332 32,540,795 26,009,624 414,724,161
Accident and health insurance 1,891,033 639,302 13,633,904 14,885,635
-------------- ------------ ------------ -------------
Total premiums $ 423,146,365 33,180,097 39,643,528 429,609,796 9.2%
============== ============ ============ ============= ======
Year ended December 31, 1996:
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%
============== ============ ============ ============= ======
</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 as of December
31, 1997 and 1996, 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, 1997. 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 Iowa Department of Commerce, Insurance Division, 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 1996 and 1995 financial statements are also
described in note 1. The effects of such variances on the 1997 financial
statements, although not reasonably determinable as of this date, are presumed
to be material.
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, 1997
and 1996, or the results of its operations or its cash flows for each of the
years in the three-year period ended December 31, 1997.
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, 1997 and 1996, and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1997, 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.
KPMG PEAT MARWICK LLP
Des Moines, Iowa
March 27, 1998
<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. 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.
The illustrations are based on the following 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.
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 and others show
option 2.
Factors That Do Not Vary
All the illustrations make the following assumptions:
o The Insured is a non smoker.
o The Specified Amount of coverage is $100,000.
o Planned premiums are paid on the first day of the Policy year for 30
years.
o No loans are taken.
o No withdrawals are made.
o All Net Premium is allocated to the Separate Account and invested
equally in each Fund.
o No changes are made to the Specified Amount.
o No transfer fees are incurred.
o The Policy has no riders.
o The charge for state Premium Tax is 2%.
o 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
MFS World Governments .90 1.00 1.90
MFS Emerging Growth .90 0.87 1.77
Average .90 .72 1.62
*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 83 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.
iii. 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.
iv. 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.
v. 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.
vi. Automatic Increase Rider, Form 3957 1085.
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.
vii. 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.
viii. 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.
ix. 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.
x. 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.
ii. 403(B) Endorsement, Form 1608(VUL) 0994
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. Incorporated
herein by reference to post-effective amendment number 15 to
this Form S-6 registration statement (File No. 33-19718) filed
with the Commission on April 18, 1997.
b. Bylaws. Incorporated herein by reference to post-effective
amendment number 15 to this Form S-6 registration statement
(File No. 33-19718) filed with the Commission on April 18,
1997.
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. Not applicable
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, all in the
City of Madison, and State of Wisconsin, on the 8th day of April, 1998.
CUNA Mutual Life Variable Account (Registrant)
By: /s/ Michael B. Kitchen
Michael B. Kitchen
President
Pursuant to the requirements of the Securities Act of 1933, the Depositor, CUNA
Mutual Life Insurance Company, has duly caused this Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, all in the
City of Madison, and State of Wisconsin, on the 8th day of April, 1998.
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 04/08/98
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 04/08/98
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 04/08/98
Michael G. Joneson
Vice President - Accounting & Financial Systems
/s/ Richard J. Keintz 04/08/98
Richard J. Keintz
Chief Officer - Finance & Information Service
/s/ Michael B. Kitchen 04/08/98
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 27, 1998, contains an explanatory paragraph that states
that the Company prepared the financial statements using accounting practices
prescribed or permitted by the Iowa Department of Commerce, Insurance Division,
which practices differ from generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
April 17, 1998
<PAGE>
April 15, 1998
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 MEMBERS(R) Variable Universal Life Insurance Policy
described in Post-Effective Amendment No. 16 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
5.b.ii. 403(B) Endorsement, Form 1608(VUL) 0994
Power of Attorney
Financial Data Schedule
<PAGE>
EXHIBIT 5 b. ii.
403(b) Incidental Life Insurance Endorsement
Policy No. Endorsement Effective Date
Policy Owner City & State
This Flexible Premium Variable Life Insurance Policy is issued as part of a
403(b) salary reduction agreement. It is issued as an agreement between the
policy owner and an Internal Revenue Code (Code) Section 501 (c)(3) organization
or public school constituting a plan qualified under Code Section 403(b) and
related regulations. The terms and conditions listed below will then form a part
of the owner's policy; effective as of the date listed above. In any conflict
between the terms of this section and all any other section of the policy; this
section will govern.
NONTRANSFERABLE AND NONASSIGNABLE
This policy is for the sole benefit of the owner the beneficiary(ies). This
policy is not transferable, except to the Company on surrender or settlement. It
may not be: sold; assigned; discounted; or pledged as collateral for a loan or
as security, for any purpose.
PREMIUM
Until the policy owner surrenders this policy, or notifies the Company in
writing to remove this endorsement, premiums under this policy must be paid in
the following manner: by an employer qualified under Section 403(b); by transfer
from another 403(b) policy or custodial account.
Total contributions, including premium payments, may not exceed the limits
contained in Code Section 415, Section 403(b)(2), Section 402(g)(1) or Section
401(a)(30).
If the total premiums exceed the following incidental limit; this policy may be
deemed a distribution to the policy owner and may be subject to an Internal
Revenue service (IRS) premature distribution tax, in addition to current income
tax. Death benefits will be considered incidental if less than 25 percent of the
total 403(b) contributions are used for premiums paid to this policy and any
other 403(b) life insurance policy.
Direct rollovers and transfers of the cash surrender value from other 403(b)
life insurance, annuity and/or custodial accounts will be accepted, up to the
incidental death benefit limits outlined below. If the Payee is eligible to
receive distributions, the Payee may elect an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified in a Direct Rollover.
Eligible Rollover Distribution means a payment of all or any portion of the
Payee's policy value, but does not include:
1. any minimum payment that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Payee; or the joint lives (or joint life expectancies)
of the Payee and the Payee's beneficiary; or for a specified period of ten
years or more;
2. any minimum payment required under Section 401(a)(9) of the Code;
3. the portion of any payment that is non-taxable.
Eligible Retirement Plan is a plan that may accept an Eligible Rollover
Distribution and may be: an individual retirement account described in Section
408(a) of the Code; or an individual retirement annuity described in Section
408(b) of the Code; or an annuity plan described in Section 403(b) of the Code;
or a custodial account as described in Section 403(b)(7) of the Code.
For an Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is: an individual retirement account; or individual retirement
annuity.
Payee includes: an employee or former employee; the employee's or former
employee's surviving spouse; the employee's or former employee's spouse or
former spouse who is the alternate Payee under a qualified domestic relations
order (defined in Section 414(p) of the Code).
Direct Rollover is specified by the Payee and may be: a payment from this policy
directly to an Eligible Retirement Plan; or a payment from another 403(b) plan
to this contract.
Any Eligible Rollover Distribution not paid to this plan will be accepted as a
rollover contribution if received within 60 days of distribution.
PROCEEDS
The cost of life insurance protection (P.S. 58 Cost) must be included in the
policy owner's gross income for each taxable year. This will be reported to the
policy owner each year on form 1099-R. The accumulation of P.S. 58 Costs is the
policy owner's cost basis upon this policy being distributed to the policy
owner.
All distributions of benefits under this policy shall be governed by: Code
Section 403(b)(10); 401(a)(9); and their related regulations. This includes the
incidental death benefit rules of Section 401(a)(9)(g).
A policy surrender that is in violation of the specific premature distribution
rules of Code Section 403(b)(11) may result in a taxable event. Pursuant to Code
Section 403(b)(11), after a qualifying event the policy owner may surrender this
policy, or any portion of this policy when the policy owner attains age 59 1/2;
separates from service; dies; becomes disabled within the meaning of Code
Section 72(m)(7); experiences a "hardship"; or as otherwise permitted by Code
Section 403(b)(11) and its related regulations. In the case of hardship; the
policy owner may not withdraw any income attributable to contributions made
according to the salary reduction agreement, within the meaning of Section
402(g)(3)(c). The accelerated benefit option is not available under this policy.
Distributions prior to age 59 1/2 may be subject to an IRS premature
distribution tax, in addition to current income tax. As required by UCA'92,
mandatory 20 percent withholding will apply if: a payment meets the definition
of an Eligible Rollover Distribution and is not rolled over, but instead is paid
directly to the annuitant.
At any time after a qualifying event, but not later than the April 1 of the
calendar year following the policy owner's attainment of age 70 1/2, the policy
owner may: surrender this policy; or notify the Company in writing to remove
this endorsement. This policy is then no longer a part of the 403(b) plan. Upon
removal of this endorsement, the accumulated value will be reported as taxable
income to the policy owner. Upon removal of this endorsement, this policy will
remain in force only if the net cash value or the after tax premium payments are
sufficient to pay the monthly deduction.
POLICY LOANS
Policy loans taken, except as described below, will affect the tax treatment of
this policy. Policy loans may be made under this policy. The maximum policy loan
is the greater of 10,000, or 50 percent of the cash value. However, policy loans
may not exceed the loan value described in this policy. In no event shall the
total policy indebtedness of all 403(b) policies exceed 50,000 less the highest
total policy indebtedness during the one-year period prior to the new loan date.
The minimum policy loan is $100.
The policy owner must repay each policy loan within five (5) years of the loan
date; unless the loan will be used to purchase the policy owner's principal
residence. In that event, the Company may fix a reasonable time period for
repayment. Terms for repayment will be established at the time the loan is made.
A loan must be repaid in substantially equal payments; on a quarterly or more
frequent basis. All loan repayments must be clearly marked as such.
If any loan repayments have not been made within 61 days of the due date, the
loan as in default. After this 61 day time period, the indebtedness will be
repaid by surrendering a portion of this policy. The amount surrendered will be
treated as a taxable distribution to the policy owner.
GENERAL PROVISIONS
A. Endorsements. This policy, including this endorsement, will be amended as
required by changes in: the Code; IRS regulation; or published revenue
rulings. The policy owner will be promptly furnished with any endorsements
which are required to comply with such changes in the Code. Upon receipt of
such endorsement, the policy owner has thirty (30) days to contact the
Company to reject the endorsement. If the thirty (30) days elapse without
contact by the policy owner, the endorsement is deemed accepted by the
policy owner. Because this policy is established with the intent to comply
with federal regulation; rejection of the endorsement by the policy owner
will be deemed a request to remove this endorsement.
B. Reporting. The Company is required to report payment from this policy to
the IRS, and in some cases, to withhold certain amounts from taxable
distributions. The Company will furnish policy reports summarizing: the
cost of insurance; total contributions; and total distributions.
C. Enabling Agreement. The undersigned hereby agrees to the terms of this
section; and requests that this endorsement be attached to the policy. The
matters which the undersigned agrees to and accepts responsibility for are
not the responsibility of the Company.
Unless damage or loss is caused by willful or negligent act, or omission of
the Company, in violation of the policy or applicable law; the Company
shall not be liable when the Company:
1. acts in accordance with information furnished by the undersigned or
the beneficiary(ies); or
2. must act without the benefit of information which the undersigned is
required to provide under the terms of the policy or by law; or
3. administers any other matters relating to this policy.
D. Acknowledgement. The undersigned hereby agrees to the terms of this
endorsement and acknowledges understanding of: the distribution
restrictions imposed by Section 403(b)(11); and investment alternatives
available under the employer's 403(b) program.
The Company shall not be liable for any damage or loss. This includes, without
limitation, incurred by the undersigned or the beneficiary(ies), as a result of
information for which the undersigned is responsible.
Signed Witness
(Policy Owner)
CUNA Mutual Life Insurance Company Date
A Mutual Insurance Company
Secretary
<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
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
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
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
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
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
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, W. F. Broxterman, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ W. F. Broxterman
W. F. Broxterman
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Ralph B. Canterbury, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ Ralph B. Canterbury
Ralph B. Canterbury
Director, Century Life of America
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Jerald R. Hinrichs, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ Jerald R. Hinrichs
Jerald R. Hinrichs
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Rosemarie M. Shultz, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 22nd day of January, 1996.
/s/ Rosemarie M. Shultz
Rosemarie M. Shultz
Director, Century Life of America
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, James C. Barbre, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 11th day of January, 1996.
/s/ James C. Barbre
James C. Barbre
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, James A. Halls, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 8th day of January, 1996.
/s/ James A. Halls
James A. Halls
Director, Century Life of America
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Michael B. Kitchen, a director of Century
Life of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 5th day of January, 1996.
/s/ Michael B. Kitchen
Michael B. Kitchen
Director, Century Life of America
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Gerald J. Ring, a director of Century Life
of America, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of Century Life of America on behalf of
Century Life of America and Century Variable Account (or otherwise) with full
power to prepare, review, execute, deliver and file Post-Effective Amendments
with the Securities and Exchange Commission for the Century Variable Account,
Registration No. 33-19718. This Power of Attorney shall terminate at the end of
my appointed term as Director in May 1999.
WITNESS MY HAND AND SEAL this 11th day of January, 1996.
/s/ Gerald J. Ring
Gerald J. Ring
Director, Century Life of America
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