As filed with the SEC on . Registration No. 2-89558
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-6
Post-Effective Amendment No. 23
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
------------------
PRUCO LIFE
VARIABLE APPRECIABLE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 Washington Street
Newark, New Jersey 07102-2992
(800) 437-4016, Ext. 46
(Address and telephone number of principal executive offices)
------------------
John P. Gualtieri, Jr.
Senior Vice President & General Counsel
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
(Name and address of agent for service)
Copy to:
Jeffrey C. Martin
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
------------------
Variable Appreciable Life Insurance Contracts--The Registrant has registered an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Rule 24f-2 notice for fiscal year 1994 was filed on
February 27, 1995.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on pursuant to paragraph (b) of Rule 485
(date)
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[x] on May 1, 1995 pursuant to paragraph (a) of Rule 485
(date)
<PAGE>
CROSS REFERENCE SHEET
(as required by Form N-8B-2)
N-8B-2 Item Number Location
- ------------------ --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. Pruco Life Variable Appreciable Account
6. Pruco Life Variable Appreciable Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Brief Description of the Contract; Short-Term
Cancellation Right, or "Free Look"; Contract Forms;
Transfers; How a Contract's Cash Surrender Value
Will Vary; How a Contract's Death Benefit Will Vary;
Surrender of a Contract; Withdrawal of Excess Cash
Surrender Value; When Proceeds are Paid; Contract
Loans; Lapse and Reinstatement; Options on Lapse;
Right to Exchange a Contract for a Fixed-Benefit
Insurance Policy; Contracts Issued In Connection
With Tax-Qualified Pension Plans; The Fixed-Rate
Option; Voting Rights; Substitution of Series Fund
Shares; Increases in Face Amount; Decreases in Face
Amount
11. Brief Description of the Contract; Pruco Life
Variable Appreciable Account
12. Cover Page; Brief Description of the Contract; The
Prudential Series Fund Inc.; Sale of the Contract
and Sales Commissions
13. Brief Description of the Contract; The Prudential
Series Fund, Inc.; Premiums; Allocation of Premiums;
Charges and Expenses; Reductions of Charges for
Concurrent Sales to Several Individuals; Sale of the
Contract and Sales Commissions
14. Brief Description of the Contract; Detailed
Information for Prospective Contract Owners
15. Brief Description of the Contract; Premiums;
Allocation of Premiums; Transfers; The Fixed Rate
Option
16. Brief Description of the Contract; Detailed
Information for Prospective Contract Owners
17. Surrender of a Contract; Withdrawal of Excess Cash
Surrender Value; When Proceeds are Paid
18. Pruco Life Variable Appreciable Account; How a
Contract's Cash Surrender Value Will Vary
19. Reports to Contract Owners
<PAGE>
N-8B-2 Item Number Location
- ------------------ --------
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions; The Prudential
Series Fund, Inc.
25. Pruco Life Insurance Company; The Prudential Series
Fund, Inc.
26. Brief Description of the Contract; The Prudential
Series Fund, Inc.; Charges and Expenses
27. Pruco Life Insurance Company
28. Pruco Life Insurance Company; Directors and Officers
29. Pruco Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Pruco Life Insurance Company
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
44. Brief Description of the Contract; The Prudential
Series Fund, Inc.; How a Contract's Cash Surrender
Value Will Vary; How a Contract's Death Benefit Will
Vary
45. Not Applicable
46. Brief Description of the Contract; Pruco Life
Variable Appreciable Account; The Prudential Series
Fund, Inc.
47. Pruco Life Variable Appreciable Account
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Series Fund Shares
<PAGE>
N-8B-2 Item Number Location
- ------------------ --------
53. Tax Treatment of Contract Benefits
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements; Financial Statements of Pruco
Life Variable Appreciable Account; Consolidated
Financial Statements of Pruco Life Insurance Company
and Subsidiaries
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PROSPECTUS
May 1, 1995
PRUCO LIFE INSURANCE COMPANY
VARIABLE APPRECIABLE ACCOUNT
Variable
APPRECIABLE
LIFE(R)
INSURANCE CONTRACTS
This prospectus describes certain variable life insurance contracts issued by
Pruco Life Insurance Company ("Pruco Life"), a stock life insurance company that
is a wholly-owned subsidiary of The Prudential Insurance Company of America
("The Prudential"). Pruco Life calls these contracts its Variable Appreciable
Life(R) Insurance Contracts* (the "Contract"). As of May 1, 1992, these
Contracts are no longer available for sale. These Contracts provide whole-life
insurance protection. That is, they provide lifetime insurance coverage, as long
as scheduled premiums are paid or are provided for by favorable investment
experience. They also generally provide a cash surrender value for the owner if
the Contract is terminated during the insured's lifetime. A purchaser may choose
one form of this Contract which provides a death benefit that remains fixed in
the amount initially selected (unless it is increased by Pruco Life to ensure
that the Contract maintains its status as life insurance under the Internal
Revenue Code) or a second form which provides a death benefit that varies daily
with the investment performance of the subaccounts of the Pruco Life Variable
Appreciable Account (the "Account") to which the owner allocates the invested
portion of the premiums. Even under the second form of Contract, however,
investment performance cannot cause the death benefit to be less than a
guaranteed minimum amount (the face amount specified in the Contract). The cash
surrender value of a Contract generally increases with the payment of each
premium, and it also varies daily with investment performance. The cash
surrender value also decreases to reflect the imposition of charges. There is no
guaranteed minimum cash surrender value.
A portion of the Contract's premiums and the earnings on those premiums will be
held in one or more of the following ways. They can be invested in one or more
of thirteen current subaccounts of the Account. They can be allocated to a
fixed-rate option. Or, they can be invested in the Pruco Life Variable Contract
Real Property Account (the "Real Property Account") which is described in a
prospectus that is attached to this one. If one or more of the subaccounts is
chosen, the assets of each subaccount will be invested in a corresponding
portfolio of The Prudential Series Fund, Inc. (the "Series Fund"). The attached
prospectus for the Series Fund and its statement of additional information
describe the investment objectives of and the risks of investing in the thirteen
portfolios of the Series Fund currently available to Contract owners: the Money
Market Portfolio, the Bond Portfolio, the Government Securities Portfolio, the
Conservatively Managed Flexible Portfolio, the Aggressively Managed Flexible
Portfolio, the High Yield Bond Portfolio, the Stock Index Portfolio, the High
Dividend Stock Portfolio, the Common Stock Portfolio, the Growth Stock
Portfolio, the Small Capitalization Stock Portfolio, the Global Equity
Portfolio, and the Natural Resources Portfolio. Other subaccounts and portfolios
may be added in the future. Interest is credited daily upon any portion of the
premium payment allocated to the fixed-rate option at rates periodically
declared by Pruco Life in its sole discretion but never less than 4%. This
prospectus describes the Contracts generally and the Pruco Life Variable
Appreciable Account.
REPLACING EXISTING LIFE INSURANCE WITH A CONTRACT DESCRIBED IN THIS PROSPECTUS
MAY NOT BE TO YOUR ADVANTAGE. IF YOU CURRENTLY OWN A LIFE INSURANCE CONTRACT,
THE BENEFITS AND COSTS OF PURCHASING ADDITIONAL INSURANCE UNDER THE EXISTING
POLICY SHOULD BE COMPARED WITH THE BENEFITS AND COSTS OF PURCHASING THE CONTRACT
DESCRIBED IN THIS PROSPECTUS. IN MAKING THIS COMPARISON, YOU SHOULD CONSULT WITH
A QUALIFIED TAX ADVISOR.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ATTACHED TO
A CURRENT PROSPECTUS FOR THE PRUDENTIAL SERIES FUND, INC. AND A CURRENT
PROSPECTUS FOR THE PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT.
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.
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 437-4016, Ext. 46
*Appreciable Life is a registered mark of The Prudential.
VAL-1 Ed 5-95 Catalog #64696EO
<PAGE>
PROSPECTUS CONTENTS
Page
BRIEF DESCRIPTION OF THE CONTRACT ..................................... 1
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY,
PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT, AND THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT............ 3
Pruco Life Insurance Company .......................................... 3
Pruco Life Variable Appreciable Account ............................... 4
The Prudential Series Fund, Inc ....................................... 4
Pruco Life Variable Contract Real Property Account .................... 5
Which Investment Option Should Be Selected ............................ 5
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS .................. 6
Requirements for Issuance of a Contract ........................... 6
Short-Term Cancellation Right or "Free Look" ...................... 6
Contract Forms .................................................... 6
Premiums .......................................................... 7
Contract Date ..................................................... 8
Allocation of Premiums ............................................ 9
Transfers ......................................................... 9
Charges and Expenses .............................................. 10
Reduction of Charges for Concurrent Sales to Several Individuals .. 13
How a Contract's Cash Surrender Value Will Vary ................... 13
How a Contract's Death Benefit Will Vary .......................... 14
When a Contract Becomes Paid-Up ................................... 15
Flexibility as to Payment of Premiums ............................. 15
Surrender of a Contract ........................................... 16
Withdrawal of Excess Cash Surrender Value ......................... 16
Increases in Face Amount .......................................... 16
Decreases in Face Amount .......................................... 18
Lapse and Reinstatement ........................................... 18
When Proceeds Are Paid ............................................ 19
Living Needs Benefit .............................................. 19
Illustrations of Cash Surrender Values, Death Benefits,
and Accumulated Premiums ........................................ 20
Contract Loans .................................................... 21
Reports to Contract Owners ........................................ 21
Options on Lapse .................................................. 22
Right to Exchange a Contract for a Fixed-Benefit
Insurance Policy ................................................ 22
Sale of the Contract and Sales Commissions ........................ 23
Tax Treatment of Contract Benefits ................................ 23
Withholding. ...................................................... 24
Contracts Issued In Connection With Tax-Qualified Pension Plans ... 25
The Fixed-Rate Option ............................................. 25
Legal Considerations Relating to Sex-Distinct Premiums
and Benefits .................................................... 25
Other General Contract Provisions ................................. 25
Riders ............................................................ 26
Voting Rights ..................................................... 26
Substitution of Series Fund Shares ................................ 27
State Regulation .................................................. 27
Experts ........................................................... 27
Litigation ........................................................ 27
Additional Information ............................................ 27
Financial Statements .............................................. 27
DIRECTORS AND OFFICERS................................................. 28
FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT ....... A1
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE
INSURANCE COMPANY AND SUBSIDIARIES .................................. B1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR THE
SERIES FUND, AND THE PROSPECTUS FOR THE REAL PROPERTY ACCOUNT.
<PAGE>
BRIEF DESCRIPTION OF THE CONTRACT
The Variable Appreciable Life Insurance Contracts (the "Contract") described in
this prospectus are in many respects similar to conventional "fixed-benefit"
whole-life insurance. Like conventional whole-life insurance, the Contracts
provide a guaranteed death benefit for the insured's lifetime if scheduled
premiums are paid; due to the pooling of mortality risks, this death benefit is
many times the scheduled annual premium. The Contracts also have similarities to
what have become generally known as "universal life" insurance policies. Like
universal life insurance policies, the Contracts permit an owner considerable
flexibility in paying premiums and adjusting the face amount of insurance. To a
significant extent the Contracts provide features and choices for the Contract
owner that differ from those provided by either of those types of life insurance
policies. As of May 1, 1992, these Contracts are no longer available for sale.
The Contracts are first and foremost life insurance. They provide insurance
protection for the entire lifetime of the insured. But the Contracts also have
significant and useful investment features. The Contract owner decides in which
investment option[s] the amounts held under the Contract--derived from the
payment of premiums and the earnings thereon--will be invested, and the cash
surrender value of the Contract will increase with favorable investment
experience and decrease with unfavorable investment experience. The cash
surrender value of a Contract also reflects the imposition of the various
Contract charges. The Contract owner will be able, from time to time, to
reallocate and transfer amounts invested under the Contract among the various
subaccounts, the fixed-rate option, and the Real Property Account.
The owner may choose either of two Contract Forms. Under Contract Form A, the
death benefit remains fixed in amount (unless the Contract becomes paid-up or,
under a newer version of the Contract that first began to be sold in most
jurisdictions in September of 1986, unless the death benefit is increased to
ensure that the Contract continues to satisfy the Internal Revenue Code's
definition of life insurance) and only the cash surrender value will vary with
investment experience. Under Contract Form B, both the death benefit and the
cash surrender value will vary with investment experience, but the death benefit
will never be less than the face amount regardless of investment experience.
There is no minimum cash surrender value under either form of the Contract.
(Throughout this prospectus, unless we specifically state otherwise, all
descriptions of and references to the "Contract" apply to both old and new Form
A and Form B Contracts.)
There is a special feature applicable to Contracts issued on insureds who are 14
years of age or less. Under such Contracts, the face amount increases to 150% of
the initial face amount on the first Contract anniversary after the insured
reaches the age of 21, provided the Contract is not then in default. This new
face amount becomes the new guaranteed minimum death benefit. In addition, under
all Contracts the owner will have the right under certain conditions to increase
or decrease the face amount of insurance. In the case of an increase in face
amount, one of the conditions is the provision of evidence of insurability
satisfactory to Pruco Life Insurance Company ("Pruco Life"). See Increases in
Face Amount, page 16 and Decreases in Face Amount, page 18.
One significant feature of the Contract is the flexibility it provides the
Contract owner with respect to the payment of premiums. Each Contract has a
scheduled premium payable annually, semi-annually, quarterly or monthly. But the
Contract owner is generally permitted, within very broad limits, to pay greater
than scheduled premiums and the net portion of such payments will promptly be
invested in the manner previously selected by the owner. Cash surrender values
will generally be increased whenever premiums are paid; and unless earlier
unfavorable investment experience must first be offset, the amount payable upon
death under Contract Form B will also generally be increased by the payment of
premiums. Subsequent values under the Contract will increase or decrease with
subsequent investment experience to reflect the amounts invested under the
Contract.
As long as scheduled premiums are paid on or before the due dates (or within a
61-day grace period after the scheduled due date) the Contract will not lapse,
even if investment experience is unfavorable. Thus, the payment of scheduled
premiums guarantees insurance protection at least equal to the face amount of
the Contract.
However, the failure to pay a minimum scheduled premium will not necessarily
result in lapse of the Contract. If the net investment experience has been
greater than the 4% assumed net rate of return used by Pruco Life's actuaries in
designing this Contract, with a consequent increase in the amount invested under
the Contract, and the Contract owner then fails to pay premiums when due, Pruco
Life will use the "excess" amount to pay the charges due under the Contract and
thus keep the Contract in force. See Lapse and Reinstatement, page 18. In this
case, so long as the excess amount is sufficient, the Contract will not lapse
despite the owner's failure to pay scheduled premiums.
The amount of the scheduled premium, for a specific face amount of insurance,
depends upon the insured's sex (except where unisex rates apply), age at issue,
and risk classification. The scheduled premium cannot be increased until the
Contract anniversary after the insured's 65th birthday or, if later, 10 years
from the date the Contract is issued. A new, higher scheduled premium, called
the "second premium amount," is payable after this
1
<PAGE>
period. The second premium amount will be stated in each Contract. It is
calculated on the assumptions that only scheduled premiums have been paid, and
they have been paid when due, that maximum mortality charges (covering the cost
of insurance for the period in question) and expense charges have been deducted,
and that the net investment return upon the amount invested under the Contract
has been equal to the 4% assumed net rate of return. If the amount invested
under the Contract is higher than would be the case if the above conservative
assumptions are borne out by experience, which currently appears to be a
reasonable expectation, premiums after the insured's 65th birthday (or at 10
years after the issue date, if later) will be lower than the second premium
amount stated in the Contract (and may or may not be higher than the initial
scheduled premium).
In some cases the payment of greater than scheduled premiums or favorable
investment experience may result in the Contract becoming paid-up so that no
further premium payments will be necessary. If this happens, Pruco Life may
refuse to accept any further premium payments. If a Contract becomes paid-up,
the death benefit then in force becomes the guaranteed minimum death benefit;
apart from this guarantee, the death benefit and the cash surrender value of the
paid-up Contract will thereafter vary daily to reflect the investment experience
of amounts invested under the Contract. Contracts sold beginning in September of
1986 in jurisdictions where all necessary approvals have been obtained will no
longer become paid-up. Instead, the death benefit will be increased so that it
is always at least as great as the Contract fund divided by the net single
premium for the insured's attained age at such time. See How a Contract's Death
Benefit Will Vary, page 14. The term "Contract fund" refers generally to the
total amount invested under the Contract and is defined under Charges and
Expenses on page 10. The term "net single premium," the factor which determines
how much the death benefit will increase for a given increase in the Contract
fund, is defined and illustrated under item 2 of How a Contract's Death Benefit
Will Vary on page 14. Whenever the death benefit is determined in this way,
Pruco Life reserves the right to refuse to accept further premium payments,
although in practice the payment of the lesser of 2 years' scheduled premiums or
the average of all premiums paid over the last 5 years will generally be
allowed.
There are circumstances, such as the payment of premiums substantially in excess
of scheduled premiums, under which the Contract may become a Modified Endowment
Contract under federal tax law. If it does, loans and other pre-death
distributions are includible in gross income on an income-first basis. A 10%
penalty tax may be imposed on income distributed before the insured attains age
59 1/2. Prospective purchasers and Contract owners are advised to consult a
qualified tax advisor before taking steps that may affect whether the Contract
becomes a Modified Endowment Contract. See Tax Treatment of Contract Benefits,
page 23.
The owner of a Contract chooses the investment subaccount[s] of Pruco Life's
Variable Appreciable Account (the "Account") in which the assets related to the
Contract will be held. At present there are thirteen subaccounts. Each is
currently invested in a corresponding portfolio of The Prudential Series Fund,
Inc. (the "Series Fund"), a series mutual fund to which The Prudential Insurance
Company of America ("The Prudential") acts as investment advisor. The Money
Market Portfolio is invested in short-term debt obligations similar to those
purchased by money market funds; the Bond Portfolio is invested primarily in
high quality medium-term corporate and government debt securities; the
Government Securities Portfolio is invested primarily in U.S. Government
securities including intermediate and long-term U.S. Treasury securities and
debt obligations issued by agencies of or instrumentalities established,
sponsored or guaranteed by the U.S. Government; the Conservatively Managed
Flexible Portfolio is invested in a mix of money market instruments, fixed
income securities, and common stocks, in proportions believed by the investment
manager to be appropriate for an investor who desires diversification of
investment who prefers a relatively lower risk of loss and a correspondingly
reduced chance of high appreciation; the Aggressively Managed Flexible Portfolio
is invested in a mix of money market instruments, fixed income securities, and
common stocks, in proportions believed by the investment manager to be
appropriate for an investor desiring diversification of investment who is
willing to accept a relatively high level of loss in an effort to achieve
greater appreciation; the High Yield Bond Portfolio is invested primarily in
high yield fixed income securities of medium to lower quality, also known as
high risk bonds; the Stock Index Portfolio is invested in common stocks selected
to duplicate the price and yield performance of the Standard & Poor's 500
Composite Stock Price Index; the High Dividend Stock Portfolio is invested
primarily in common stocks and convertible securities that provide favorable
prospects for investment income returns above those of the Standard & Poor's 500
Stock Index or the NYSE Composite Index; the Common Stock Portfolio is invested
primarily in common stocks; the Growth Stock Portfolio is invested primarily in
equity securities of established companies with above-average growth prospects;
the Small Capitalization Stock Portfolio is invested primarily in equity
securities of publicly-traded companies with small market capitalization; the
Global Equity Portfolio is invested in common stocks and common stock
equivalents (such as convertible debt securities) of foreign and domestic
issuers; and the Natural Resources Portfolio is invested primarily in common
stocks and convertible securities of natural resource companies, and in
securities (typically debt securities or preferred stock) the terms of which are
related to the market value of a natural resource; Further information about the
Series Fund portfolios can be found under The Prudential Series Fund, Inc. on
page 4.
The Contract owner may also choose to invest part of his or her net premiums in
the Pruco Life Variable Contract Real Property Account (the "Real Property
Account"), which, through a partnership, invests primarily in
2
<PAGE>
income-producing real property. If a Contract owner elects to invest a portion
of his or her net premiums in the Real Property Account, the assets will be
maintained in a subaccount of the Real Property Account related to the Contract
that provides the mechanism and maintains the records whereby the various
Contract charges are made. The investment objectives of the Real Property
Account and the partnership are described briefly under Pruco Life Variable
Contract Real Property Account on page 5.
Because the assets that relate to the Contract are invested in these ways, the
Contract offers an opportunity for the cash surrender value to appreciate more
rapidly than it would under comparable fixed-benefit whole-life insurance. But
the owner must accept the risk that if investment performance of the chosen
option[s] is unfavorable the cash surrender value may not appreciate as rapidly
and, indeed, may decrease in value. Contract owners who prefer at any time to
accept a periodically declared fixed rate of return and avoid this risk may
choose a fixed-rate option. See The Fixed-Rate Option, page 25.
Pruco Life deducts certain charges from each premium payment and from the
amounts held in the designated investment options. In addition, Pruco Life makes
certain additional charges if a Contract lapses or is surrendered during the
first 10 Contract years. All these charges, which are largely designed to cover
insurance costs and sales and administrative expenses, are fully described under
Charges and Expenses on page 10. In brief, and subject to that fuller
description, the following charges may be made: (1) $2 is deducted from each
premium payment to cover premium collection and processing costs; (2) a sales
charge is deducted from each premium received in an amount up to 5% of the
portion of the premium remaining after the $2 processing charge has been
deducted (on a non-guaranteed basis, this charge is waived for premiums paid
after total premiums paid under the Contract exceed 5 years of scheduled
premiums on an annual basis); in addition, if the Contract lapses or is
surrendered during the first 10 years, a deferred sales charge is assessed; the
maximum deferred sales charge is 25% of the first year's scheduled premium and
5% of the scheduled premiums for the next 4 Contract years; beginning in the
eighth month of year 6 this charge is reduced monthly until it disappears after
year 10; (3) a premium tax charge (equal to 2.5% of the premium remaining after
the $2 processing charge has been deducted) is deducted from each premium
payment; (4) each month, the Contract fund is reduced by an administrative
charge of $2.50 per Contract and up to $0.02 per $1,000 of face amount of
insurance; (5) each month, the Contract fund is reduced by a guaranteed minimum
death benefit risk charge of not more than $0.01 per $1,000 of face amount of
insurance; (6) each month, a charge for anticipated mortality is deducted, with
the maximum charge based on the 1980 Commissioners Standard Ordinary Mortality
Table ("1980 CSO Table"); (7) a daily charge equivalent to an annual rate of
0.6% is deducted from the assets of the subaccounts for mortality and expense
risks; (8) if a Contract lapses or is surrendered during the first 10 years, a
contingent deferred administrative charge is assessed; during the first 5 years,
this charge equals $5 per $1,000 of face amount, and it begins to decline
monthly after the fifth Contract year, so that it disappears on the tenth
Contract anniversary; (9) an administrative processing charge equal to the
lesser of $15 or 2% of the amount withdrawn will be made in connection with each
withdrawal of excess cash surrender value; (10) if the Contract includes riders,
a monthly deduction from the Contract fund will be made for charges applicable
to those riders; and (11) certain fees and expenses are deducted from the assets
of the Series Fund and Real Property Account. Because of these charges, and in
particular because of the significant charges deducted upon early surrender or
lapse, prospective purchasers should purchase a Contract only if they intend and
have the financial capability to keep it in force for a substantial period.
For a limited time, a Contract may be returned for a refund in accordance with
the terms of its "free look" provision. See Short-Term Cancellation Right or
"Free Look," page 6.
This Summary is intended to provide only a brief overview of the more
significant aspects of the Contract. Further detail is provided in this
prospectus and in the Contract document. That document, together with the
application attached to it, constitutes the entire agreement between the owner
and Pruco Life and should be retained.
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY,
PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
Pruco Life Insurance Company. Pruco Life Insurance Company ("Pruco Life") is a
stock life insurance company, organized in 1971 under the laws of the State of
Arizona. It is licensed to sell life insurance and annuities in the District of
Columbia, Guam, and in all states except New York. These Contracts are not
offered in any state in which the necessary approvals have not yet been
obtained.
Pruco Life is a wholly-owned subsidiary of The Prudential, a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. The
Prudential had over $xxx billion of total consolidated assets at the end of
1994. As of December 31, 1994, it has invested over $xxx million in Pruco Life
in connection with Pruco Life's organization and operation. The Prudential
intends from time to time to make additional capital contributions to Pruco Life
as needed to enable it to meet its reserve requirements and expenses in
connection with its business.
3
<PAGE>
The Prudential is under no obligation to make such contributions and its assets
do not back the benefits payable under the Contract. Pruco Life's consolidated
financial statements begin on page B1 and should be considered only as bearing
upon Pruco Life's ability to meet its obligations under the Contracts.
Pruco Life Variable Appreciable Account. The Pruco Life Variable Appreciable
Account (the "Account") was established on January 13, 1984 under Arizona law as
a separate investment account. The Account meets the definition of a "separate
account" under the federal securities laws. The Account holds assets that are
segregated from all of Pruco Life's other assets.
The obligations to Contract owners and beneficiaries arising under the Contracts
are general corporate obligations of Pruco Life. Pruco Life is also the legal
owner of the assets in the Account. Pruco Life will at all times maintain assets
in the Account with a total market value at least equal to the reserve and other
liabilities relating to the variable benefits attributable to the Account. These
assets may not be charged with liabilities which arise from any other business
Pruco Life conducts. In addition to these assets, the Account's assets may
include funds contributed by Pruco Life to commence operation of the Account and
may include accumulations of the charges Pruco Life makes against the Account.
From time to time these additional assets will be transferred to Pruco Life's
general account. Before making any such transfer, Pruco Life will consider any
possible adverse impact the transfer might have on the Account.
The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any
supervision by the SEC of the management or investment policies or practices of
the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life. There are currently thirteen subaccounts within the
Account, each of which invests in a single corresponding portfolio of the Series
Fund. Additional subaccounts may be added in the future. The Account's financial
statements begin on page A1.
The Prudential Series Fund, Inc. The Prudential Series Fund, Inc. (the "Series
Fund") is registered under the 1940 Act as an open-end diversified management
investment company. Its shares are currently sold only to separate accounts of
The Prudential and certain other insurers that offer variable life insurance and
variable annuity contracts. On October 31, 1986, the Pruco Life Series Fund,
Inc., an open-end diversified management investment company which sold its
shares only to separate accounts of Pruco Life and Pruco Life Insurance Company
of New Jersey, was merged into the Series Fund. Prior to that date, the Account
invested only in shares of Pruco Life Series Fund, Inc. The Account will
purchase and redeem shares from the Series Fund at net asset value. Shares will
be redeemed to the extent necessary for Pruco Life to provide benefits under the
Contracts and to transfer assets from one subaccount to another, as requested by
Contract owners. Any dividend or capital gain distribution received from a
portfolio of the Series Fund will be reinvested immediately at net asset value
in shares of that portfolio and retained as assets of the corresponding
subaccount.
The Prudential is the investment advisor for the assets of each of the
portfolios of the Series Fund. The Prudential's principal business address is
Prudential Plaza, Newark, New Jersey 07102-3777. The Prudential has a Service
Agreement with its wholly-owned subsidiary The Prudential Investment Corporation
("PIC"), which provides that, subject to The Prudential's supervision, PIC will
furnish investment advisory services in connection with the management of the
Series Fund. In addition, The Prudential has entered into a Subadvisory
Agreement with its wholly-owned subsidiary Jennison Associates Capital
Corporation ("Jennison"), under which Jennison furnishes investment advisory
services in connection with the management of the Growth Stock Portfolio.
Further detail is provided in the prospectus and statement of additional
information for the Series Fund. The Prudential, PIC, and Jennison are
registered as investment advisors under the Investment Advisers Act of 1940.
As an investment advisor, The Prudential charges the Series Fund a daily
investment management fee as compensation for its services. The following table
shows the investment management fee charged for each portfolio of the Series
Fund available for investment by Contract owners.
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Annual Investment Management Fee as
Portfolio a Percentage of Average Daily Net Assets
Stock Index Portfolio 0.35%
Money Market Portfolio 0.40%
Bond Portfolio 0.40%
Government Securities Portfolio 0.40%
High Dividend Stock Portfolio 0.40%
Small Capitalization Stock Portfolio 0.40%
Common Stock Portfolio 0.45%
Natural Resources Portfolio 0.45%
Conservatively Managed Flexible Portfolio 0.55%
High Yield Bond Portfolio 0.55%
Aggressively Managed Flexible Portfolio 0.60%
Growth Stock Portfolio 0.60%
Global Equity Portfolio 0.75%
Some investment management fees and expenses charged to the Series Fund may be
higher than those that were previously charged to the Pruco Life Series Fund,
Inc. (0.4%), in which the Account previously invested. For the Money Market,
Bond, Common Stock, Conservatively Managed Flexible, and Aggressively Managed
Flexible Portfolios, Pruco Life will make daily adjustments that will offset the
effect on Contract owners of any higher investment management fees and expenses
charged against the Series Fund. No such offset will be made with respect to the
remaining portfolios, which had no counterparts in the Pruco Life Series Fund,
Inc.
It is conceivable that in the future it may become disadvantageous for both
variable life insurance and variable annuity contract separate accounts to
invest in the same underlying mutual fund. Although neither the companies which
invest in the Series Fund, nor the Series Fund currently foresees any such
disadvantage, the Series Fund's Board of Directors intends to monitor events in
order to identify any material conflict between variable life insurance and
variable annuity contract owners and to determine what action, if any, should be
taken in response thereto. Material conflicts could result from such things as:
(1) changes in state insurance law; (2) changes in federal income tax law; (3)
changes in the investment management of any portfolio of the Series Fund; or (4)
differences between voting instructions given by variable life insurance and
variable annuity contract owners.
A full description of the Series Fund, its investment objectives, management,
policies, and restrictions, its expenses, the risks attendant to investment
therein-including any risks associated with investment in the High Yield Bond
Portfolio, and all other aspects of its operation is contained in the attached
prospectus for the Series Fund and in its statement of additional information,
which should be read in conjunction with this prospectus. There is no assurance
that the investment objectives will be met.
Pruco Life Variable Contract Real Property Account. The Pruco Life Variable
Contract Real Property Account (the "Real Property Account") is a separate
account of Pruco Life that, through a general partnership formed by The
Prudential and two of its subsidiaries, invests primarily in income-producing
real property such as office buildings, shopping centers, agricultural land,
hotels, apartments or industrial properties. It also invests in mortgage loans
and other real estate-related investments, including sale-leaseback
transactions. The objectives of the Real Property Account and the partnership
are to preserve and protect capital, provide for compounding of income as a
result of reinvestment of cash flow from investments, and provide for increases
over time in the amount of such income through appreciation in the value of its
assets.
The partnership has entered into an investment management agreement with The
Prudential, under which The Prudential selects the properties and other
investments held by the partnership. The Prudential charges the partnership a
daily fee for investment management which amounts to 1.25% per year of the
average daily gross assets of the partnership.
A full description of the Real Property Account, its management, policies, and
restrictions, its charges and expenses, the risks attendant to investment
therein, the partnership's investment objectives, and all other aspects of the
Real Property Account's and the partnership's operations is contained in the
attached prospectus for the Real Property Account, which should be read together
with this prospectus by any Contract owner considering the real estate
investment option. There is no assurance that the investment objectives will be
met.
Which Investment Option Should Be Selected A broad objective of the Contract is
to provide benefits that will increase in value if favorable investment results
are achieved. Contract owners have a large number of options as to how the
amounts credited to their Contracts will be invested. Historically, for
investments held over relatively long periods, the investment performance of
common stocks has generally been superior to that of short or long-term debt
securities, even though common stocks have been subject to much more dramatic
changes in value over short periods of time. Accordingly, the Stock Index, High
Dividend Stock, the Common Stock, Growth Stock,
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Small Capitalization Stock, Global Equity or Natural Resources Portfolios, may
be desirable options for Contract owners who are willing to accept such
volatility in their Contract values. Each of these equity portfolios involves
somewhat different investment risks, policies, and programs.
Some Contract owners may prefer the somewhat greater protection against loss of
principal (and reduced chance of high total return) provided by the Government
Securities or Bond Portfolios, while others, who desire even greater safety of
principal, may prefer the Money Market Portfolio or the fixed-rate option,
recognizing that the level of short-term rates may change rather rapidly.
Contract owners not interested in common stocks but willing to take risks and
seeking the possibility of a high total return may prefer the High Yield Bond
Portfolio, recognizing that with higher yielding, lower quality bonds the risks
are greater. Some Contract owners may wish to divide their funds among two or
more of the portfolios. Some may wish to obtain diversification by relying on
The Prudential's judgment for an appropriate asset mix by choosing one of the
Balanced Portfolios. The Real Property Account permits a Contract owner to
diversify his or her investment under the Contract to include an interest in a
pool of income-producing real property, and real estate is often considered to
be a hedge against inflation.
Each Contract owner must make his or her own choice that takes into account how
willing he or she is to accept investment risks, the manner in which his or her
other assets are invested, and his or her own predictions about what investment
results are likely to be in the future. The Prudential recommends against
frequent transfers among the several options as experience generally indicates
that "market timing" investing, particularly by non-professional investors, is
likely to prove unsuccessful.
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS
Requirements for Issuance of a Contract. As of May 1, 1992, these Contracts are
no longer available for sale. Generally, the minimum initial guaranteed death
benefit that can be applied for is $60,000. However higher minimums apply to
insureds over the age of 75. Insureds 14 years of age or less may apply for a
minimum initial guaranteed death benefit of $40,000. The Contract may generally
be issued on insureds below the age of 81. Before issuing any Contract, Pruco
Life requires evidence of insurability which may include a medical examination.
Non-smokers who meet preferred underwriting requirements are offered the most
favorable premium rate. A higher premium is charged if an extra mortality risk
is involved. Certain classes of Contracts, for example a Contract issued in
connection with a tax-qualified pension plan, may be issued on a "guaranteed
issue" basis and may have a lower minimum initial death benefit than a Contract
which is individually underwritten. These are the current underwriting
requirements. The Company reserves the right to change them on a
non-discriminatory basis.
Short-Term Cancellation Right or "Free Look". Generally, a Contract may be
returned for a refund within 10 days after it is received by the Contract owner,
within 45 days after Part I of the application for insurance is signed or within
10 days after Pruco Life mails or delivers a Notice of Withdrawal Right,
whichever is latest. Some states allow a longer period of time during which a
Contract may be returned for a refund. A refund can be requested by mailing or
delivering the Contract to the representative who sold it or to the Pruco Life
Home Office specified in the Contract. A Contract returned according to this
provision shall be deemed void from the beginning. The Contract owner will then
receive a refund of all premium payments made, plus or minus any change due to
investment experience in the value of the invested portion of the premiums,
calculated as if no charges had been made against the Account or the Series
Fund. However, if applicable law so requires, the Contract owner who exercises
his or her short-term cancellation right will receive a refund of all premium
payments made, with no adjustment for investment experience.
Contract Forms. A purchaser may select either of two forms of the Contract. The
scheduled premium for the Contract will be the same for a given insured,
regardless of which Contract Form is chosen. Contract Form A has a death benefit
equal to the initial face amount of insurance. The death benefit of a Form A
Contract does not vary with the investment performance of the investment options
selected by the owner, unless the Contract becomes paid-up or, under a revised
version of the Contract, unless the death benefit is increased to ensure that
the Contract meets the Internal Revenue Code's definition of life insurance. See
How a Contract's Death Benefit Will Vary, page 14. Favorable investment results
on the assets related to the Contract and greater than scheduled premiums will
generally result in increases in the cash surrender value. See How a Contract's
Cash Surrender Value Will Vary, page 13.
Contract Form B also has an initial face amount of insurance but favorable
investment performance and greater than scheduled premiums generally result in
an increase in the death benefit and, over time, in a lesser increase in the
cash surrender value than under the Form A Contract. See How a Contract's Cash
Surrender Value Will Vary, page 13 and How a Contract's Death Benefit Will Vary,
page 14. Unfavorable investment performance will result in decreases in the
death benefit (but never below the face amount stated in the Contract) and in
the cash surrender value.
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Both Form A and Form B Contracts covering insureds of 14 years of age or less
contain a special provision providing that the face amount of insurance will
automatically be increased, on the Contract anniversary after the insured's 21st
birthday, to 150% of the initial face amount, so long as the Contract is not
then in default. The death benefit will also usually increase, at the same time,
by the same dollar amount. In certain circumstances, however, it may increase by
a smaller amount. See When a Contract Becomes Paid-Up, page 15 and How a
Contract's Death Benefit Will Vary, page 14. This increase in death benefit will
also generally increase the net amount at risk under the Contract, thus
increasing the mortality charge deducted each month from amounts invested under
the Contract. See item 6 under Charges and Expenses, page 10. The automatic
increase in the face amount of insurance may affect future premium payments if
the Contract owner wants to avoid the Contract being classified as a Modified
Endowment Contract. See Tax Treatment of Contract Benefits, page 23. A Contract
owner should consult his or her own tax advisor and Pruco Life representative
before making unscheduled premium payments.
Purchasers should select the Contract Form that best meets their needs and
objectives. All whole-life insurance provides both protection for beneficiaries
in the event of early death and the opportunity to accumulate savings for
possible use in later years--for such things as college tuition or supplementary
retirement income--when the need for insurance protection may be reduced. Pruco
Life's Variable Appreciable Life Contract provides more flexible investment
opportunities than do more conventional life insurance policies because it
permits the owner to decide how the assets held under the Contract will be
invested, because it permits considerable flexibility in determining the amount
and timing of premium payments, because it permits adjustment of the face amount
of insurance (subject, in the case of an increase, to evidence of insurability),
and because favorable investment returns result in an increase in Contract
values. Purchasers who prefer to have favorable investment results and greater
than scheduled premiums emerge partly in the form of an increased death benefit
should choose Contract Form B. Purchasers 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 surrender
values should choose Contract Form A. See How a Contract's Cash Surrender Value
Will Vary, page 13.
In choosing a Contract Form, purchasers should also consider whether they intend
to use the withdrawal feature. Purchasers of Form A Contracts should note that a
withdrawal may result in a portion of the surrender charge being deducted from
the Contract fund. Furthermore, a purchaser of a minimum face amount Form A
Contract cannot make withdrawals. Purchasers of Form B Contracts will not incur
a surrender charge for a withdrawal and are not restricted if they purchase a
minimum size Contract. See Withdrawal of Excess Cash Surrender Value, page 16.
Under the original versions of these Contracts, there are other distinctions
between the Contract Forms that may influence a purchaser's selection. Thus,
Contract Form A will become paid-up more rapidly than a comparable Form B
Contract. But owners of Form A Contracts should be aware that since premium
payments and favorable investment experience do not increase the death benefit
unless the Contract has become paid-up, the beneficiary will not benefit from
the possibility that the Contract will have a large cash surrender value at the
time of the insured's death.
Under a revised version of the Contract that was made available beginning in
September of 1986 in jurisdictions where it is approved, the Contract will never
become paid-up. Instead, the death benefit under these revised Contracts is
always at least as great as the Contract fund divided by the net single premium.
See How a Contract's Death Benefit Will Vary, page 14. Thus, instead of becoming
paid-up, the Contract's death benefit will always be large enough to meet the
Internal Revenue Code's definition of life insurance. Whenever the death benefit
is determined in this way, Pruco Life reserves the right to refuse to accept
further premium payments, although in practice the payment of at least scheduled
premiums will be allowed.
Premiums. Scheduled premiums on the Contract are payable during the insured's
lifetime on an annual, semi-annual, quarterly or monthly basis on due dates set
forth in the Contract. If paid more often than annually, the aggregate annual
premium will be higher to compensate Pruco Life both for the additional
processing costs (see item 1 under Charges and Expenses, page 10) and for the
loss of interest (computed generally at an annual rate of 8%) incurred because
premiums are paid throughout rather than at the beginning of each Contract year.
The premium amount depends on the Contract's initial death benefit and the
insured's age at issue, sex (except where unisex rates apply), and risk
classification. Contract owners who pay premiums other than on a monthly basis
will be notified, about 3 weeks before each due date, that a premium is due.
Contract owners who pay premiums monthly will receive each year a book with
twelve coupons that will serve as a reminder. With Pruco Life's consent, an
owner may change the frequency of premium payments.
A Contract owner may elect to have monthly premiums paid automatically under the
"Pru-Matic Premium Plan" by pre-authorized transfers from a bank checking
account. Currently, Contract owners selecting the Pru-Matic Premium Plan on
Contracts issued after June 1, 1987 will have reduced current monthly expense
charges. See item 4 under Charges and Expenses, page 10. Some Contract owners
may also be eligible to have monthly premiums paid by pre-authorized deductions
from an employer's payroll.
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Each Contract sets forth two premium amounts. The initial premium amount is
payable on the Contract date (the date the Contract is issued, as noted in each
individual Contract) and on each subsequent due date until the Contract's
anniversary immediately following the insured's 65th birthday (or until the
Contract's tenth anniversary, if that is later). The second and higher premium
amount set forth in the Contract is payable on and after that anniversary (the
"premium change date"). However, if the amount invested under the Contract is
higher than it would have been had only scheduled premiums been paid, had
maximum contractual charges been deducted, and had only an average net rate of
return of 4% been earned, then the second premium amount will be lower than the
maximum amount stated in the Contract. Indeed, under the original versions of
these Contracts, if investment experience has been favorable enough, the
Contract may become paid-up before or by the premium change date. Pruco Life
reserves the right not to accept any further premium payments on a paid-up
Contract. Contract owners will be told what the amount of the second premium
will be. Contract owners will also be told what lesser amount, if any, Pruco
Life will accept that will guarantee against lapse for one year.
Pruco Life designed the Contracts to include a premium change date, with
scheduled premiums potentially increasing after that date to a second premium
amount, in order to provide Contract owners with both the flexibility to pay
lower initial scheduled premiums and a guarantee of lifetime insurance coverage
if all scheduled premiums are paid. The tables on pages T1 through T4 show how
the second premium amount compares with the first premium amount under Contracts
and for different hypothetical investment results.
The following table shows, for two face amounts, representative initial
preferred rating and standard rating annual premium amounts under either Form A
or Form B Contracts issued on insureds who are not substandard risks:
$60,000 Face Amount $100,000 Face Amount
------------------------ -----------------------
Preferred Standard Preferred Standard
--------- --------- --------- --------
Male, age 35 $ 554.80 $ 669.40 $ 902.00 $1,093.00
at issue
Female, age 45 $ 698.80 $ 787.60 $1,142.00 $1,290.00
at issue
Male, age 55 $1,556.20 $1,832.20 $2,571.00 $3,031.00
at issue
The following table compares annual and monthly premiums for insureds who are in
the preferred rating class. Note that in these examples the sum of 12 monthly
premiums for a particular Contract is approximately 105% to 109% of the annual
premium for that Contract.
$60,000 Face Amount $100,000 Face Amount
----------------------- ----------------------
Monthly Annual Monthly Annual
------- --------- ------- ---------
Male, age 35 $ 50.00 $ 554.80 $ 80.00 $ 902.00
at issue
Female, age 45 $ 62.60 $ 698.80 $101.00 $1,142.00
at issue
Male, age 55 $136.40 $1,556.20 $224.00 $2,571.00
at issue
If a Contract owner wishes, he or she may select a higher contemplated premium
than the scheduled premium. Pruco Life will bill the owner for the chosen
premium. In general, the regular payment of higher premiums will result in
higher cash surrender values and, at least under Form B, in higher death
benefits. Under the original versions of the Contracts, such payments may also
provide a means of obtaining a paid-up Contract earlier than if only scheduled
premiums are paid.
The payment of premiums substantially in excess of scheduled premiums may cause
the Contract to be classified as a Modified Endowment Contract for federal
income tax purposes. See Tax Treatment of Contract Benefits, page 23.
Contract Date. When the first premium payment is paid with the application for a
Contract, the Contract date will ordinarily be the later of the date of the
application or the date of any medical examination. In most cases no medical
examination will be necessary. If the first premium is not paid with the
application, the Contract date will ordinarily be 2 or 3 days after the
application is approved by Pruco Life so that it will coincide with or be
shortly prior to the date on which the first premium is paid. However, Pruco
Life will under certain circumstances permit a Contract to be back-dated but
only to a date not earlier than six months prior to the date of the application.
It
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may be advantageous for a Contract owner to have an earlier Contract date if
that will result in the use by Pruco Life of a lower attained age in determining
the amount of the scheduled premium. Pruco Life will require the payment of all
premiums that would have been due had the application date coincided with the
back-dated Contract date. The death benefit and cash surrender value under the
Contract will be equal to what they would have been had the Contract been issued
on the Contract date, all scheduled premiums been received on their due dates,
and all Contract charges been made. See Charges and Expenses, page 10.
Allocation of Premiums. On the Contract date a $2 processing charge is deducted
from the initial premium and up to 7.5% of the amount remaining is deducted to
cover certain charges (described in detail below), and the first monthly
deductions are made (also described below). The remainder of the initial
scheduled premium will be allocated among the subaccounts, the fixed-rate option
or the Real Property Account on the Contract date according to the desired
allocation specified in the application form. The invested portion of any part
of the first premium in excess of the scheduled initial premium, as well as the
invested portion of all subsequent premiums, are placed in the selected
investment option[s] on the date of receipt, but not earlier than the Contract
date. Thus, to the extent that the receipt of the first premium precedes the
Contract date, there will be a period during which the Contract owner's initial
premium will not be invested. The $2 per payment charge and up to 7.5% deduction
also apply to all subsequent premium payments; the remainder will be placed when
received by Pruco Life in the subaccount[s], the fixed-rate option or the Real
Property Account in accordance with the allocation previously designated by the
Contract owner. Provided the Contract is not in default, the Contract owner may
change the way in which subsequent premiums are allocated by giving written
notice to the Pruco Life Home Office stated in the Contract. Contract owners may
also change subsequent premium allocations by telephoning their Pruco Life Home
Office, once they have completed a written telephone transfer authorization
form. There is no charge for reallocating future premiums among the investment
options. If any portion of a premium is allocated to a particular subaccount, to
the fixed-rate option or to the Real Property Account, that portion must be at
least 10% on the date the allocation takes effect. All percentage allocations
must be in whole numbers. For example, 33% can be selected but 33 1/3% cannot.
Of course, the total allocation of all selected investment options must equal
100%.
Additionally, a feature called Dollar Cost Averaging is available to Contract
owners who make an allocation to the Money Market Subaccount. Under this
feature, automatic flat dollar amounts will be transferred monthly from the
Money Market Subaccount into other investment options available under the
Contract, excluding the fixed-rate option, but including the Real Property
Account. Currently, the amount initially designated for transfer under this
feature must be at least $2,000. After issue, Pruco Life will accept an amount
less than $2,000 provided it brings the balance in any current Dollar Cost
Averaging account up to $2,000. Monthly transfers must be at least 3% of the
amount allocated to the Dollar Cost Averaging account, with a minimum of $20
transferred into any one investment option. These amounts are subject to change
at Pruco Life's discretion. The minimum transfer amount will only be
recalculated upon an increase in the amount allocated to the feature.
Each automatic monthly transfer will take effect as of the end of the valuation
period (the period of time from one determination of the value of the amount
invested in a subaccount to the next) on the Monthly date (i.e., the Contract
date and the same date in each subsequent month), provided the New York Stock
Exchange is open on that date. If the New York Stock Exchange is not open on
that date, or if the Monthly date does not occur in that particular month, the
transfer will take effect as of the end of the last valuation period which
immediately precedes that Monthly date. Automatic monthly transfers will
continue until the amount designated for Dollar Cost Averaging has been
transferred, or until the Contract owner gives notification of a change in
allocation or cancellation of the feature. Currently, there is no charge for
using the Dollar Cost Averaging feature.
Transfers. Provided the Contract is not in default or is in
force as variable reduced paid-up insurance (see Options on Lapse, page 22), the
owner may, up to four times in each Contract year, transfer amounts from one
subaccount to another subaccount, to the fixed-rate option or to the Real
Property Account. All or a portion of the amount credited to a subaccount may be
transferred.
In addition, the entire amount of the Contract fund (described in detail below)
may be transferred to the fixed-rate option at any time during the first 2
Contract years. A Contract owner who wishes to convert his or her variable
contract to a fixed-benefit contract in this manner must request a complete
transfer of funds to the fixed-rate option and should also change his or her
allocation instructions regarding any future premiums.
Transfers among subaccounts will take effect as of the end of the valuation
period in which a proper transfer request is received at a Pruco Life Home
Office. The "valuation period" means the period of time from one determination
of the value of the amount invested in a subaccount to the next. Such
determinations are made when the net asset values of the portfolios of the
Series Fund are calculated, which is generally at 4:15 p.m. New York City time
on each day during which the New York Stock Exchange is open. The request may be
in terms of dollars, such as a request to transfer $10,000 from one subaccount
to another, or may be in terms of a percentage reallocation among subaccounts.
In the latter case, as with premium reallocations, the percentages must be in
whole numbers. The Contract owner may transfer amounts by proper written notice
to a Pruco Life Home Office
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or by telephone, provided the Contract owner is enrolled to use the Telephone
Transfer System. Pruco Life cannot guarantee that owners will be able to get
through to complete a telephone transfer during peak periods such as periods of
drastic economic or market change.
Transfers from the fixed-rate option to other investment options are currently
permitted once each Contract year and only during the 30-day period beginning on
the Contract anniversary. The maximum amount which may currently be transferred
out of the fixed-rate option each year is the greater of: (a) 25% of the amount
in the fixed-rate option, or (b) $2,000. Such transfer requests received prior
to the Contract anniversary will be effected on the Contract anniversary.
Transfer requests received within the 30-day period beginning on the Contract
anniversary will be effected as of the end of the valuation period in which a
proper transfer request is received at a Pruco Life Home Office. These limits
are subject to change in the future. Transfers to and from the Real Property
Account are subject to restrictions described in the attached prospectus for the
Real Property Account.
Pruco Life may, on a non-discriminatory basis, permit the owner of an
Appreciable Life insurance policy issued by Pruco Life (this fixed-benefit
policy is briefly described under Right to Exchange a Contract for a
Fixed-Benefit Insurance Policy on page 22) to exchange his or her policy for a
comparable Variable Appreciable Life Contract with the same Contract date,
scheduled premiums, and Contract fund. No charge will be made for the exchange.
There is no new "free look" right when an Appreciable Life contract owner elects
to exchange his or her policy for a comparable Variable Appreciable Life
Contract.
Although Pruco Life does not give tax advice, Pruco Life does believe, based on
its understanding of federal income tax laws as currently interpreted, that the
original date exchange of an Appreciable Life contract for a Variable
Appreciable Life Contract should be considered to be a tax-free exchange under
the Internal Revenue Code of 1986, as amended. It should be noted, however, that
the exchange of an Appreciable Life contract for a Variable Appreciable Life
Contract may impact the status of the Contract as a Modified Endowment Contract.
See Tax Treatment of Contract Benefits, page 23. A contract owner should consult
with his or her tax advisor and Pruco Life representative before making an
exchange.
Charges and Expenses. The amount relating to the Contract held in the Account is
determined by the amount of premium payments, charges deducted from premiums
before they are placed in the Account, deductions made from the Account,
including any deductions made for a Contract loan (see Contract Loans, page 21),
and the investment results of the selected subaccount[s]. The total amount
invested under the Contract (the "Contract fund") consists of the amount related
to the Contract held in the Account, any amount allocated to the fixed-rate
option, any amount invested in the Real Property Account, and the principal
amount of any Contract loan and interest credited thereon.
All of the charges made by Pruco Life, whether deducted from premiums or from
the Contract fund, are set forth below.
1. A charge of $2 is deducted from each premium payment to cover the cost of
collecting and processing premiums. Thus, Contract owners who pay premiums
annually will incur lower aggregate processing charges than those who pay
premiums more frequently. During 1994 and 1993, Pruco Life received a total
of approximately $x,xxx,xxx and $5,280,000, respectively, in processing
charges.
2. There is a charge to compensate Pruco Life for the cost of selling the
Contract. This cost includes sales commissions, advertising, and the
printing of the prospectuses and sales literature. This charge is called the
"sales load." The maximum sales load that will be charged will be 30% of the
first year's scheduled premium, 10% of the scheduled premium for the second,
third, fourth, and fifth years and 5% of each additional premium, whether
scheduled or unscheduled. Part of this sales load will be deducted from each
premium received in an amount up to 5% of the portion of the premium
remaining after the $2 processing charge has been deducted. The remainder of
the sales load will be deducted only if the Contract is surrendered or stays
in default past its days of grace. This second part is called the deferred
sales charge. The deferred sales charge will not be deducted at all,
however, for Contracts that lapse or are surrendered on or after the
Contract's tenth anniversary and it will be reduced based upon persistency
for Contracts that lapse or are surrendered sometime between the eighth
month of year 6 and the tenth anniversary. No deferred sales charge is
applicable to the death benefit, no matter when that may become payable.
For Contracts under which premiums are payable annually, the maximum
deferred sales charge (equal to 25% of the scheduled premium for the first
Contract year and 5% of the scheduled premium for the next 4 Contract years)
will be made under Contracts that lapse or are surrendered during the fifth
Contract year and the first 7 months of the sixth Contract year. Thereafter
the sales charge will be the maximum charge reduced uniformly until it
becomes zero at the end of the tenth Contract year. More precisely, the
deferred sales charge will be the maximum charge reduced by a factor equal
to the number of complete months that have elapsed between the end of the
sixth month in the Contract's sixth year and the date of surrender or lapse,
divided by 54 (since there are 54 months between that date and the
Contract's tenth anniversary).
10
<PAGE>
The following table shows illustrative deferred sales load charges that will
be made when such Contracts are surrendered or lapse.
<TABLE>
<CAPTION>
The Deferred Sales Charge Will Which is Equal to the Following
For Contracts be the Following Percentage Percentage of the Scheduled
Surrendered During of One Scheduled Annual Premium Premiums Due to Date of Surrender
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Entire Year 1 .................. 25% 25.00%
Entire Year 2 .................. 30% 15.00%
Entire Year 3 .................. 35% 11.67%
Entire Year 4 .................. 40% 10.00%
Entire Year 5 .................. 45% 9.00%
First 7 Months of Year 6 ....... 45% 7.50%
First Month of Year 7 .......... 40% 5.71%
First Month of Year 8 .......... 30% 3.75%
First Month of Year 9 .......... 20% 2.22%
First Month of Year 10 ......... 10% 1.00%
First Month of Year 11
and Thereafter ................ 0% 0.00%
</TABLE>
For Contracts under which premiums are payable more frequently than
annually, the deferred sales charge will be 25% of the first year's
scheduled premiums due on or before the date of surrender or lapse and 5% of
the scheduled premiums for the second through fifth Contract years due on or
before the date of surrender or lapse. Thus, for such Contracts the maximum
deferred sales charge will also be equal to 9% of the total scheduled
premiums for the first 5 Contract years. This amount will be higher in
dollar amount than it would have been had premiums been paid annually
because the total of the scheduled premiums is higher. See Premiums, page 7.
To compensate for this, the reduction in the deferred sales charge will
start slightly earlier for Contracts under which premiums are paid
semi-annually, still earlier if premiums are paid quarterly and even earlier
if premiums are paid monthly. The reductions are graded smoothly so that the
dollar amount of the deferred sales charge for two persons of the same age,
sex, contract size, and Contract date, will be identical beginning in the
seventh month of the sixth Contract year without regard to the frequency at
which premiums were paid.
For purposes of determining the deferred sales charge, the scheduled premium
is the premium payable for an insured in the preferred rating class, even if
the insured is in a higher rated risk class. Moreover, if premiums have been
paid in excess of the scheduled premiums, the charge is based upon the
scheduled premiums. If a Contract is surrendered when less than the
aggregate amount of the scheduled premiums due on or before the date of
surrender has been paid, the deferred sales charge percentages (25% for the
first year and 5% for years 2 through 5) will be applied to the premium
payments due on or before the fifth anniversary date that were actually
paid, whether timely or not, before surrender. During 1994 and 1993, Pruco
Life received a total of approximately $x,xxx,xxx and $2,004,000,
respectively, in sales load charges.
Pruco Life has determined to waive the portion of the sales load deducted
from each premium (5% of the portion of the premium remaining after the $2
processing charge has been deducted) for premiums paid after total premiums
paid under the Contract exceed 5 years of scheduled premiums on an annual
basis. Thus, with respect to a premium paid after that total is reached,
only the 2.5% premium tax charge and the $2 processing charge is deducted
before the premium is allocated to the Account, fixed-rate option or the
Real Property Account according to the owner's instructions. This concession
is not contractually guaranteed and may be withdrawn or modified by Pruco
Life on a uniform basis, although it does not currently intend to do so. If
an owner elects to increase the face amount of his or her Contract, the
rules governing the non-guaranteed waiver of the 5% front-end sales load
will apply separately to the base Contract and the increase, as explained
under Increases in Face Amount on page 16.
3. There is a premium tax charge equal to 2.5% of the premium remaining after
the $2 processing charge has been deducted. This charge is made to
compensate Pruco Life for paying state and local premium taxes. (The 7.5%
deduction referred to on page 8 is made up of the 5% sales load charge and
the 2.5% premium tax charge.) State premium tax rates vary from jurisdiction
to jurisdiction and generally range from 0.75% to 5%. Pruco Life may collect
more for this charge than it actually pays for premium taxes. During 1994
and 1993, Pruco Life received a total of approximately $x,xxx,xxx and
$6,967,000, respectively, in charges for payment of state and local premium
taxes.
4. On each Monthly date, the Contract fund is reduced by an expense charge of
$2.50 per Contract and up to $0.02 per $1,000 of face amount (excluding the
automatic increase under Contracts issued on insureds of 14 years of age or
less), except that currently this $0.02 per $1,000 charge will not be
greater than $2 per
11
<PAGE>
month and for Contracts issued after June 1, 1987 on a Pru-Matic Plan basis,
this $0.02 per $1,000 charge will currently be waived. Thus, for a Contract
with the minimum face amount of $60,000, not issued on a Pru-Matic Plan
basis, the aggregate amount deducted each year will be $44.40. This charge
is to compensate Pruco Life for administrative expenses incurred, among
other things, for processing claims, paying cash surrender values, making
Contract changes, keeping records, and communicating with Contract owners.
This charge will not be made if the Contract has become paid-up or has been
continued in force, after lapse, as variable reduced paid-up insurance.
During 1994 and 1993, Pruco Life received a total of approximately
$xx,xxx,xxx and $15,921,000, respectively, in monthly administrative
charges.
5. On each Monthly date the Contract fund is reduced by a charge of $0.01 per
$1,000 of face amount (excluding the automatic increase under Contracts
issued on insureds of 14 years of age or less) to compensate Pruco Life for
the risk it assumes by guaranteeing that, no matter how unfavorable
investment experience may be, the death benefit will never be less than the
face amount provided scheduled premiums are paid on or before the due date
or during the grace period. This charge is not made after a Contract becomes
paid-up or has been continued in force, after lapse, as variable reduced
paid-up insurance. During 1994 and 1993, Pruco Life received a total of
approximately $x,xxx,xxx and $2,942,000, respectively, for this risk charge.
6. Pruco Life deducts a mortality charge from the Contract fund on each Monthly
date to cover anticipated mortality costs. When an insured dies, the amount
paid to the beneficiary is larger than the Contract fund and significantly
larger if the insured dies in the early years of a Contract. The mortality
charges are designed to enable Pruco Life to pay this larger death benefit.
The charge is determined by multiplying the "net amount at risk" under a
Contract (the amount by which the Contract's death benefit, computed as if
there were neither riders nor Contract debt, exceeds the Contract fund) by a
rate based upon the insured's sex (except where unisex rates apply) and
current attained age, and the anticipated mortality for that class of
persons. The maximum rate that Pruco Life may charge is based upon the 1980
CSO Tables. Pruco Life may determine that a lesser amount than that called
for by these mortality tables will be adequate to defray anticipated
mortality costs for insureds of particular ages and may thus make a lower
mortality charge for such persons. Pruco Life, however, reserves the right
to charge full mortality charges based on the applicable 1980 CSO Table, and
any lower current mortality charges are not applicable to Contracts in force
pursuant to an option on lapse. See Options on Lapse, page 22. In addition,
if a Contract has a face amount of at least $100,000 and the insured under
the Contract has met strict underwriting requirements so that the Contract
is in force on a "Select Rating" basis for the particular risk
classification, current mortality charges for all ages may be lower still.
Certain Contracts, for example Contracts issued in connection with
tax-qualified pension plans, may be issued on a "guaranteed issue" basis and
may have current mortality charges which are different from those mortality
charges for Contracts which are individually underwritten. These Contracts
with different current mortality charges may be offered to categories of
individuals meeting eligibility guidelines determined by Pruco Life.
7. A charge is made to compensate Pruco Life for assuming mortality and expense
risks. This is done by deducting daily, from the assets of each of the
subaccounts of the Account and/or from the subaccount of the Real Property
Account relating to this Contract, a percentage of those assets equivalent
to an effective annual rate of 0.6% (this amounts to a daily charge of
approximately 0.001639%). The mortality risk assumed is that insureds may
live for a shorter period of time than Pruco Life estimated. The expense
risk assumed is that expenses incurred in issuing and administering the
Contract will be greater than Pruco Life estimated. Pruco Life will realize
a gain from this charge to the extent it is not needed to provide benefits
and pay expenses under the Contracts. During 1994 and 1993, Pruco Life
received a total of approximately $xx,xxx,xxx and $11,398,000, respectively,
in mortality and expense risk charges. This charge is not assessed against
amounts allocated to the fixed-rate option.
8. There is an administrative charge of $5 for each $1,000 of face amount of
insurance (excluding the automatic increase under Contracts issued on
insureds of 14 years of age or less) to compensate Pruco Life for expenses
incurred in connection with the issuance of the Contract, other than sales
expenses. This charge is made to cover the costs of processing applications,
conducting medical examinations, determining insurability and the insured's
risk class, and establishing records relating to the Contract. However, this
charge will not be assessed upon issuance of the Contract, nor will it ever
be deducted from any death benefit payable under the Contract. Rather, it
will be deducted only if the Contract is surrendered or lapses when it is in
default past its days of grace, and even then it will not be deducted at all
for Contracts that stay in force through the end of the Contract's tenth
year. And the charge will be reduced for Contracts that lapse or are
surrendered before then but after the Contract's fifth anniversary.
Specifically, the charge of $5 per $1,000 will be assessed upon surrenders
or lapses occurring on or before the Contract's fifth anniversary. For each
additional full month that the Contract stays in force on a premium paying
basis, this charge is reduced by
12
<PAGE>
$0.0833 per $1,000 of initial face amount, so that it disappears on the
tenth anniversary. During 1994 and 1993, Pruco Life received a total of
approximately $x,xxx,xxx and $9,292,000, respectively, from surrendered or
lapsed Contracts. Additionally, if a Contract has a face amount of at least
$100,000 and was issued on other than a Select Rating basis (see item 6,
above), the owner may request that the Contract be reclassified to a Select
Rating basis. Requests for reclassification to a Select Rating basis may be
subject to an underwriting fee of up to $250, but Pruco Life currently
intends to waive that charge if the reclassification is effected
concurrently with an increase in face amount.
9. A charge of up to $15 will be made in connection with each partial
withdrawal of the cash surrender value of a Contract. Currently, Pruco Life
will charge the lesser of $15 or 2% of the amount withdrawn. See Withdrawal
of Excess Cash Surrender Value, page 16.
The maximum deductions and charges described above will not be increased by
Pruco Life with respect to any Contract in effect regardless of any changes in
longevity or increases in expenses.
The earnings of the Account are taxed as part of the operations of Pruco Life.
No charge is being made currently to the Account for Company federal income
taxes. Pruco Life will review the question of a charge to the Account for
Company federal income taxes periodically. Such a charge may be made in future
years for any federal income taxes that would be attributable to the Contracts.
Under current laws Pruco Life may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant
and they are not charged against the Contracts or the Account. If there is a
material change in applicable state or local tax laws, the imposition of any
such taxes upon Pruco Life that are attributable to the Account may result in a
corresponding charge against the Account.
The Account purchases shares of the Series Fund at net asset value. The net
asset value of those shares reflects management fees and expenses already
deducted from the assets of the Series Fund. The fees and expenses for the
Series Fund are briefly described under The Prudential Series Fund, Inc. on page
4 in connection with a general description of the Series Fund. More detailed
information is contained in the attached prospectus for the Series Fund. The
investment management fee and other expenses charged against the Real Property
Account are described in the attached prospectus for that investment option.
Reduction of Charges for Concurrent Sales to Several Individuals. Pruco Life may
reduce the sales charges and/or other charges on individual Contracts sold to
members of a class of associated individuals, or to a trustee, employer or other
entity representing a class, where it is expected that such multiple sales will
result in savings of sales or administrative expenses. Pruco Life determines
both the eligibility for such reduced charges, as well as the amount of such
reductions, by considering the following factors: (1) the number of individuals;
(2) the total amount of premium payments expected to be received from these
Contracts; (3) the nature of the association between these individuals, and the
expected persistency of the individual Contracts; (4) the purpose for which the
individual Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and (5) any other circumstances which Pruco Life
believes to be relevant in determining whether reduced sales or administrative
expenses may be expected. Some of the reductions in charges for these sales may
be contractually guaranteed; other reductions may be withdrawn or modified by
Pruco Life on a uniform basis. Pruco Life's reductions in charges for these
sales will not be unfairly discriminatory to the interests of any individual
Contract owners.
How a Contract's Cash Surrender Value Will Vary. A Contract has a cash surrender
value which the owner may get while the insured is living by surrender of the
Contract. Unlike traditional fixed-benefit whole-life insurance, however, a
Contract's cash surrender value is not known in advance, even if it is assumed
that only scheduled premiums will be paid, because it varies daily with the
investment performance of the subaccount[s] and/or Real Property Account in
which the Contract participates.
On the Contract date, the Contract fund value is the invested portion of the
initial premium less the first monthly deductions. This amount is placed in the
investment option[s] designated by the owner. Thereafter the Contract fund value
changes daily, reflecting increases or decreases in the value of the securities
in which the assets of the subaccount[s] have been invested, the investment
performance of the Real Property Account if that option has been selected,
interest credited on amounts allocated to the fixed-rate option, as well as the
daily asset charge for mortality and expense risk equal to 0.001639% of the
assets of the subaccount[s] of the Account and the subaccount of the Real
Property Account relating to this Contract. The Contract fund value also changes
to reflect the receipt of additional premium payments and the monthly deductions
described in the preceding section.
A Contract's cash surrender value on any date will be the Contract fund value
reduced by the deferred sales and administrative charges, if any, and any
Contract debt. Upon request, Pruco Life will tell a Contract owner the cash
surrender value of his or her Contract. It is possible that the cash surrender
value of a Contract could decline to zero because of unfavorable investment
experience, even if a Contract owner continues to pay scheduled premiums when
due.
13
<PAGE>
If the net investment return in the selected investment option[s] is greater
than 4%, the Contract fund and cash surrender value for a Form B Contract can be
expected to be less than the Contract fund and cash surrender value for a Form A
Contract with identical premiums and investment experience. This is because the
monthly mortality charges under the Form B Contract will be higher to compensate
for the higher amount of insurance.
The tables on pages T1 through T4 of this prospectus illustrate what the cash
surrender values would be for representative Contracts, assuming uniform
hypothetical investment results in the selected Series Fund portfolio[s], and
also provide information about the aggregate scheduled premiums payable under
those Contracts. Illustrated also is what the death benefit would be under Form
B Contracts given the stated assumptions. The tables also show the premium
amount that would be required on the premium change date for each illustrated
Contract under each of the assumed investment returns.
How a Contract's Death Benefit Will Vary. As noted above, there are two forms of
the Contract, Form A and Form B. Moreover, in September 1986 Pruco Life began
issuing revised versions of both Form A and Form B Contracts. The primary
difference between the original Contract and the revised Contract is that the
original Contract may become paid-up, while the death benefit under the revised
Contract operates differently and accordingly such Contract will not become
paid-up.
1. Original Contracts. If a Form A Contract is chosen, the death benefit will
not vary (except for Contracts issued on insureds of age 14 or less, see
Requirements for Issuance of a Contract on page 6) regardless of the payment of
additional premiums or the investment results of the selected investment options
unless the Contract becomes paid-up. See When a Contract Becomes Paid-Up, page
15. The death benefit does reflect a deduction for the amount of any Contract
debt. See Contract Loans, page 21.
If a Form B Contract is chosen, the death benefit will vary with investment
experience and premium payments. Assuming no Contract debt, the death benefit
under a Form B Contract will, on any day, be equal to the face amount of
insurance plus the amount (if any) by which the Contract fund value exceeds the
applicable "tabular Contract fund value" for the Contract. The "tabular Contract
fund value" for each Contract year is an amount that is slightly less than the
Contract fund value that would result as of the end of such year if only
scheduled premiums were paid, they were paid when due, the selected investment
options earned a net return at a uniform rate of 4% per year, full mortality
charges based upon the 1980 CSO Table were deducted, maximum sales load and
expense charges were deducted, and there was no Contract debt. Each Contract
contains a table that sets forth the tabular Contract fund value as of the end
of each of the first 20 years of the Contract. Tabular Contract fund values
between Contract anniversaries are determined by interpolation.
Thus, under a Form B Contract with no Contract debt, the death benefit will
equal the face amount if the Contract fund equals the tabular Contract fund
value. If, due to investment results greater than a net return of 4%, or to
greater than scheduled premiums, or to smaller than maximum charges, the
Contract fund value is a given amount greater than the tabular Contract fund
value, the death benefit will be the face amount plus that excess amount. If,
due to investment results less favorable than a net return of 4%, the Contract
fund value is less than the tabular Contract fund value, and the Contract
nevertheless remains in force because scheduled premiums have been paid, the
death benefit will not fall below the initial face amount stated in the
Contract; however, this unfavorable investment experience must subsequently be
offset before favorable investment results or greater than scheduled premiums
will increase the death benefit. The death benefit will also reflect a deduction
for the amount of any Contract debt. See Contract Loans, page 21.
A Contract owner may also increase or decrease the face amount of his or her
Contract, subject to certain conditions. See Increases in Face Amount, page 16
and Decreases in Face Amount, page 18.
2. Revised Contracts. Under the revised Contracts issued since September of 1986
in jurisdictions where all necessary approvals have been obtained, the death
benefit will be calculated as follows. Under a Form A Contract, the death
benefit will be the greater of (1) the face amount; or (2) the Contract fund
divided by the net single premium per $1 of death benefit at the insured's
attained age on that date. In other words, the second alternative ensures that
the death benefit will not be less than the amount of life insurance that could
be provided for an invested single premium amount equal to the amount of the
Contract fund. Under a Form B Contract, the death benefit will be the greater of
(1) the face amount plus the excess, if any, of the Contract fund over the
tabular Contract fund value; or (2) the Contract fund divided by the net single
premium per $1 of death benefit at the insured's attained age on that date.
Thus, under the revised Contracts, the death benefit may be increased based on
the size of the Contract fund and the insured's attained age and sex. This
ensures that the Contract will satisfy the Internal Revenue Code's definition of
life insurance. The net single premium is used only in the calculation of the
death benefit, not for premium payment purposes. The following is a table of
illustrative net single premiums for $1 of death benefit.
14
<PAGE>
<TABLE>
<CAPTION>
Increase in Insurance Increase in Insurance
Male Amount Per $1 Female Amount Per $1
Attained Net Single Increase in Contract Attained Net Single Increase in Contract
Age Premium Fund Age Premium Fund
- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C>
5 .09884 $10.12 5 .08198 $12.20
25 .18455 $ 5.42 25 .15687 $ 6.37
35 .25596 $ 3.91 35 .21874 $ 4.57
55 .47352 $ 2.11 55 .40746 $ 2.45
65 .60986 $ 1.64 65 .54017 $ 1.85
</TABLE>
Whenever the death benefit is determined in this way, Pruco Life reserves the
right to refuse to accept further premium payments, although in practice the
payment of the lesser of 2 years' scheduled premiums or the average of all
premiums paid over the last 5 years will generally be allowed.
A Contract owner may also increase or decrease the face amount of his or her
Contract, subject to certain conditions. See Increases in Face Amount, page 16
and Decreases in Face Amount, page 18.
When a Contract Becomes Paid-Up. Under the original Contracts, it is possible
that favorable investment experience, either alone or in conjunction with
greater than scheduled premium payments, will cause the Contract fund to
increase to the point where no further payment of premiums is necessary to
provide for the then existing death benefit for the remaining life of the
insured. If this should occur, Pruco Life will notify the owner that no further
premium payments need be paid. Pruco Life reserves the right to refuse to accept
further premiums after the Contract becomes paid-up. The purchase of an
additional fixed benefit rider may, in some cases, affect the point at which the
Contract becomes paid-up. See Riders, page 26. The revised Contracts will not
become paid-up.
Once a Contract becomes paid-up, Pruco Life guarantees that the death benefit
then in force will not be reduced by the investment experience of the investment
options in which the Contract participates. The cash surrender value of a
paid-up Contract continues to vary daily to reflect investment experience and
monthly to reflect continuing mortality charges, but the other monthly
deductions (see items 4 and 5 under Charges and Expenses, page 10) will not be
made. The death benefit of a paid-up Contract on any day (whether the Contract
originally was Form A or Form B) will be equal to the amount of paid-up
insurance that can be purchased with the Contract fund on that day, but never
less than the guaranteed minimum amount.
As noted earlier, Contracts issued on insureds of 14 years of age or less
include a special provision under which the face amount of insurance increases
automatically to 150% of the initial face amount on the Contract anniversary
after the insured reaches the age of 21. If a Contract would have been paid-up
prior to that anniversary, Pruco Life, in anticipation of the increase in the
face amount to 150% of the initial face amount, will, instead of declaring the
Contract to be paid-up, increase the death benefit by the amount necessary to
keep the Contract in force as a premium paying Contract. If this should occur,
the increase in the death benefit on the Contract anniversary after the insured
reaches the age of 21 will be smaller, in dollar amount, than the increase in
the face amount of insurance.
Flexibility as to Payment of Premiums. A significant feature of this Contract is
that it permits the owner to pay greater than scheduled premiums. Conversely,
payment of a scheduled premium need not be made if the Contract fund is
sufficiently large to enable the charges due under the Contract to be made
without causing the Contract to lapse. See Lapse and Reinstatement, page 18. In
general, Pruco Life will accept any premium payment if the payment is at least
$25. Pruco Life does reserve the right, however, to limit unscheduled premiums
to a total of $10,000 in any Contract year; to refuse to accept premiums once a
Contract becomes paid-up; and to refuse to accept premiums that would
immediately result in more than a dollar-for-dollar increase in the death
benefit. The flexibility of premium payments provides Contract owners with
different opportunities under the two forms of Contract. Greater than scheduled
payments under an original version Form A Contract increase the Contract fund
and make it more likely that the Contract will become paid-up. Greater than
scheduled payments under an original version Form B Contract increase both the
Contract fund and the death benefit, but it is less likely to become paid-up
than a Form A Contract on which the same premiums are paid. For all Contracts,
the privilege of making large or additional premium payments offers a way of
investing amounts which accumulate without current income taxation.There may,
however, be a disadvantage if substantial premiums are made. The federal income
tax laws, discussed more fully under Tax Treatment of Contract Benefits, page
23, may impose an income tax, as well as a penalty tax, upon distributions to
contract owners under life insurance contracts that are classified as Modified
Endowment Contracts. This contract should not be so classified if the initial
scheduled premiums are paid or even if additional premiums are paid that are not
substantially higher, assuming no changes in benefits under the contract. It is
possible, however, to make premium payments that are high enough to cause the
Contract to fall
15
<PAGE>
into that classification. A Contract owner should consult with
his or her own tax advisor and Pruco Life representative before making a large
premium payment.
Surrender of a Contract. A Contract may be surrendered in whole or in part for
its cash surrender value while the insured is living. Partial surrender involves
splitting the Contract into two Contracts. One is surrendered for its cash
surrender value; the other is continued in force on the same terms as the
original Contract except that premiums and cash surrender values will be
proportionately reduced based upon the reduction in the face amount of
insurance. The Contract continued must have a face amount of insurance at least
equal to the minimum face amount applicable to the insured's Contract. See
Requirements for Issuance of a Contract, page 6.
To surrender a Contract in whole or in part, the owner must deliver or mail it,
together with a written request in a form that meets Pruco Life's needs, to a
Pruco Life Home Office. The cash surrender value of a surrendered or partially
surrendered Contract (taking into account the deferred sales and administrative
charges, if any) will be determined as of the date such request is received in
the Service Office. Surrender of all or part of a Contract may have tax
consequences. See Tax Treatment of Contract Benefits, page 23.
Withdrawal of Excess Cash Surrender Value. An alternative to surrender or
partial surrender of a Contract, available only before such Contracts become
paid up, is a partial withdrawal of cash surrender value without splitting the
Contract into two Contracts. A partial withdrawal may be made only if the
following conditions are satisfied. The basic limiting condition is that a
withdrawal may be made only to the extent that the cash surrender value plus any
Contract loan exceeds the applicable tabular cash surrender value. (The "tabular
cash surrender value" refers to the tabular Contract fund value minus any
applicable surrender charges.) But because this excess over the applicable
tabular cash surrender value may be made up in part by an outstanding Contract
loan, there is a further condition that the amount withdrawn may not be larger
than an amount sufficient to reduce the cash surrender value to zero. The amount
withdrawn must be at least $2,000 under a Form A Contract and at least $500
under a Form B Contract. An owner may make no more than four such withdrawals in
a Contract year, and there is a fee of up to $15 for each such withdrawal.
Currently, Pruco Life will charge the lesser of $15 or 2% of the amount
withdrawn. An amount withdrawn may not be repaid except as a scheduled or
unscheduled premium subject to the Contract charges. Upon request, Pruco Life
will tell a Contract owner how much he or she may withdraw. Withdrawal of part
of the cash surrender value may have tax consequences. See Tax Treatment of
Contract Benefits, page 23.
Whenever a partial withdrawal is made, the death benefit payable will
immediately be reduced, generally by the amount of the withdrawal. This will not
change the guaranteed minimum amount of insurance under a Form B Contract (i.e.,
the face amount) or the amount of the scheduled premium that will be payable
thereafter on such a Contract. Under a Form A Contract, however, the guaranteed
minimum amount of insurance will be reduced by the amount of the partial
withdrawal, and no partial withdrawal will be permitted under a Form A Contract
if it would result in a new face amount of less than the minimum face amount
applicable to the insured's Contract. See Requirements for Issuance of a
Contract, page 6. It is important to note, however, that if the face amount is
decreased at any time during the first 7 Contract years, there is a danger that
the Contract might be classified as a Modified Endowment Contract. See Tax
Treatment of Contract Benefits, page 23. Before making any withdrawal which
causes a decrease in face amount a Contract owner should consult with his or her
Pruco Life representative. In addition, the amount of the scheduled premiums due
thereafter under a Form A Contract will be reduced to reflect the lower face
amount of insurance. Since a withdrawal under a Form A Contract results in a
decrease in the face amount of insurance, the Contract fund may be reduced, not
only by the amount withdrawn but also by a proportionate part of any surrender
charges then applicable, based upon the percentage reduction in face amount.
Contract owners of a Form A Contract who make a partial withdrawal will be sent
replacement Contract pages showing the new face amount, new tabular values and,
if applicable, a new table of surrender charges.
Withdrawal of part of the cash surrender value increases the risk that the
Contract fund may be insufficient to provide for benefits under the Contract. If
such a withdrawal is followed by unfavorable investment experience, the Contract
may lapse even if scheduled premiums continue to be paid when due. This is
because, for purposes of determining whether a lapse has occurred, Pruco Life
treats withdrawals as a return of premium.
Increases in Face Amount. An attractive feature of this Contract is that an
owner who wishes to increase the amount of his or her insurance may do so by
increasing the face amount of the Contract (which is also the guaranteed minimum
death benefit), subject to state approval and underwriting requirements
determined by Pruco Life. An increase in face amount is in many ways similar to
the purchase of a second Contract, but it differs in the following respects: the
minimum permissible increase is $25,000 while the minimum for a new Contract is
$60,000; monthly fees are lower because only a single $2.50 per month
administrative charge is made rather than two; a combined premium payment
results in deduction of a single $2 per premium processing charge while separate
premium payments for separate Contracts would involve two charges; the monthly
expense charge of $0.02 per $1,000 of face amount may be lower if the increase
is to a face amount greater than $100,000; and,
16
<PAGE>
the Contract will lapse or become paid-up as a unit, unlike the case if two
separate Contracts are purchased. These differences aside, the decision to
increase face amount is comparable to the purchase of a second Contract in that
it involves a commitment to higher scheduled premiums in exchange for greater
insurance benefits.
A Contract owner may elect to increase the face amount of his or her Contract no
earlier than the first anniversary of the Contract. The following conditions
must be met: (1) The owner must ask for the increase in writing on an
appropriate form meeting Pruco Life's needs. (2) The amount of the increase in
face amount must be at least $25,000. (3) The insured must supply evidence of
insurability for the increase satisfactory to Pruco Life. (4) If Pruco Life
requests, the owner must send in the Contract to be suitably endorsed. (5) The
Contract must be neither paid-up nor in default on the date the increase takes
effect. (6) The owner must pay an appropriate premium at the time of the
increase. (7) Pruco Life has the right to deny more than one increase in a
Contract year. (8) If Pruco Life has, between the Contract date and the date
that any requested increase in face amount will take effect, changed any of the
bases on which benefits and charges are calculated under newly issued Contracts,
Pruco Life has the right to deny the increase. An increase in face amount
resulting in a total face amount under the Contract of at least $100,000 may,
subject to strict underwriting requirements, render the Contract eligible for a
Select Rating basis, which provides lower current cost of insurance rates.
Upon an increase in face amount, Pruco Life will recompute the Contract's
scheduled premiums, deferred sales and administrative charges, tabular values,
and monthly deductions from the Contract fund. The Contract owner has a choice,
limited only by applicable state law, as to whether the recomputation will be
made as of the prior or next Contract anniversary. There will be a payment
required on the date of increase; the amount of the payment will depend, in
part, on which Contract anniversary the Contract owner selects for the
recomputation. Pruco Life will tell the owner the amount of the required
payment. It should also be noted that an increase in face amount may impact the
status of the Contract as a Modified Endowment Contract. See Tax Treatment of
Contract Benefits, page 23. Therefore, before increasing the face amount, a
Contract owner should consult with his or her own tax advisor and Pruco Life
representative.
The effective date of the increase in the amount of insurance will be determined
by the same rules that apply when a new Contract is purchased. Generally
speaking, an increase will take effect on the latest of the date the owner
applies for it, the date satisfactory evidence of insurability is provided to
Pruco Life or the date designated by the Contract owner, provided the necessary
payment is made on or before that date.
Pruco Life will supply the Contract owner with pages which show the increased
face amount, the effective date of the increase, and the recomputed items
described two paragraphs above. The pages will also describe how the increase in
face amount affects the various provisions of the Contract, including a
statement that, for the amount of the increase in face amount, the period stated
in the Incontestability and Suicide provisions (see Other General Contract
Provisions, page 25) will run from the effective date of the increase.
There will be assessed upon lapse or surrender following an increase in face
amount the sum of (a) the deferred sales and administrative charges that would
have been assessed if the initial base Contract had not been amended and had
lapsed or been surrendered; and (b) the deferred sales and administrative
charges that would have been assessed if the increase in death benefit had been
achieved by the issuance of a new Contract, and that Contract had lapsed or been
surrendered. All premiums paid after the increase will, for purposes of
determining the deferred sales charge applicable in the event of surrender or
lapse, be deemed to have been made partially under the base Contract, and
partially in payment of the increase, in the same proportion as that of the
original scheduled premium and the increase in scheduled premiums. Because an
increase in face amount triggers new contingent deferred sales and
administrative charges, a Contract owner contemplating a total or partial
surrender or a decrease in the face amount of insurance should not elect to
increase the face amount of his or her Contract.
An increase in face amount will be treated comparably to the issuance of a new
Contract for purposes of the non-guaranteed waiver of the 5% front-end sales
load, described under item 2 of Charges and Expenses on page 10. Thus, premiums
paid after the increase will, for purposes of determining whether the 5%
front-end sales load will be waived, be allocated to the base Contract and to
the increase based on the proportional premium allocation rule just described.
The waiver will apply with respect to the premiums paid after the increase only
after the premiums so allocated exceed five scheduled annual premiums for the
increase. Thus, an owner considering an increase in face amount should be aware
that such an increase will entail sales charges comparable to the purchase of a
new Contract.
Each Contract owner who elects to increase the face amount of his or her
Contract will receive a "free-look" right and a right to convert to a
fixed-benefit contract, which rights will apply only to the increase in face
amount, not the entire Contract. These rights are comparable to the rights
afforded to a purchaser of a new Contract. See Short-Term Cancellation Right or
"Free Look", page 6 and Right to Exchange a Contract for a Fixed-Benefit
Insurance Policy, page 22. The "free-look" right would have to be exercised no
later than 45 days after execution of the application for the increase or, if
later, within 10 days after either receipt of the Contract as increased or
receipt of the withdrawal right notice by the owner. Upon exercise of the
"free-look" right, the owner will receive
17
<PAGE>
a refund in the amount of the aggregate premiums paid since the increase was
requested and attributable to the increase, not the base Contract, as determined
pursuant to the proportional premium allocation rule described above. There will
be no adjustment for investment experience. Moreover, charges deducted since the
increase will be recomputed as though no increase had been effected. The right
to convert the increase in face amount to a fixed-benefit policy will exist for
24 months after the increase is issued and the form of exchange right will be
the same as that available under the base Contract purchased. There may be a
cash payment required upon the exchange. See Right to Exchange a Contract for a
Fixed-Benefit Insurance Policy, page 22.
Decreases in Face Amount. As explained earlier, a Contract owner may effect a
partial surrender of a Contract (see Surrender of a Contract, page 16) or a
partial withdrawal of excess cash surrender value (see Withdrawal of Excess Cash
Surrender Value, page 16). A Contract owner also has the additional option of
decreasing the face amount (which is also the guaranteed minimum death benefit)
of his or her Contract without withdrawing any cash surrender value. Contract
owners who conclude that, because of changed circumstances, the amount of
insurance is greater than needed will thus be able to decrease their amount of
insurance protection without decreasing their current cash surrender value. This
will result in a decrease in the amount of future scheduled premiums and in the
monthly deductions for the cost of insurance. The cash surrender value of the
Contract on the date of the decrease will not change, except that an
administrative processing fee of up to $15 may be deducted from that value
(unless that fee is separately paid at the time the decrease in face amount is
requested). Currently, Pruco Life will charge the lesser of $15 or 2% of the
amount withdrawn. The Contract's Contract fund value, however, will be reduced
by deduction of a proportionate part of the then applicable contingent deferred
sales and administrative charges, if any. Scheduled premiums for the Contract
will also be proportionately reduced. The Contracts of owners who exercise the
right to reduce face amount will be amended to show the new face amount, tabular
values, scheduled premiums, monthly charges, and if applicable, the remaining
contingent deferred sales and administrative charges.
The minimum permissible decrease is $10,000. No decrease will be permitted that
causes the face amount of the Contract to drop below the minimum face amount
applicable to the insured's Contract. See Requirements for Issuance of a
Contract, page 6. No reduction will be permitted to the extent that it would
cause the Contract to fail to qualify as "life insurance" for purposes of
section 7702 of the Internal Revenue Code. If the face amount of a Contract in
force on a Select Rating basis is reduced below $100,000, it is no longer
eligible for the Select Rating. A decrease in face amount will be effected as of
the Monthly date immediately preceding receipt of a proper request to decrease
face amount. Monthly charges previously deducted on that date and attributed to
the decreased portion of the face amount will be credited to the Contract fund
as of that date.
It is important to note, however, that if the face amount is decreased at any
time during the first 7 Contract years, there is a danger that the Contract
might be classified as a Modified Endowment Contract. See Tax Treatment of
Contract Benefits, page 23. Before making any withdrawal which causes a decrease
in face amount, a Contract owner should consult with his or her own tax advisor
and Pruco Life representative.
Lapse and Reinstatement. The Contract has an advantageous feature that is not
typically found in similar types of life insurance contracts. If scheduled
premiums are paid on or before each due date, or within the grace period after
each due date, and there are no withdrawals, a Contract will remain in force
even if the investment results of that Contract's variable investment option[s]
have been so unfavorable that the Contract fund has decreased to zero or less.
Therefore, unlike most similar types of life insurance contracts that lapse when
the cash surrender value decreases to zero even if premiums are paid, this
Contract ensures that as long as scheduled premiums are paid, insurance
protection remains in effect.
In fact, even if a scheduled premium is not paid, the Contract will remain in
force as long as the Contract fund on any Monthly date is equal to or greater
than the tabular Contract fund value on the next Monthly date. This could occur
because of such factors as favorable investment experience, deduction of less
than the maximum permissible mortality and expense risk charges, or the previous
payment of greater than scheduled premiums.
However, if a scheduled premium is not paid, and the Contract fund is
insufficient to keep the Contract in force, the Contract will go into default.
Should this happen, Pruco Life will send the Contract owner a notice of default
setting forth the payment necessary to keep the Contract in force on a premium
paying basis. This payment must be received at a Pruco Life Home Office within
the 61 day grace period after the notice of default is mailed or the Contract
will lapse. A Contract that lapses with an outstanding Contract loan may have
tax consequences. See Tax Treatment of Contract Benefits on page 23.
A Contract that has lapsed may be reinstated within 3 years after the date of
default unless the Contract has been surrendered for its cash surrender value.
To reinstate a lapsed Contract, Pruco Life requires renewed evidence of
insurability, and submission of certain payments due under the Contract.
18
<PAGE>
If a Contract does lapse, it may still provide some benefits. Those benefits are
described under Options on Lapse, page 22.
When Proceeds Are Paid. Pruco Life will generally pay any death benefit, cash
surrender value, loan proceeds or partial withdrawal within 7 days after receipt
at a Pruco Life Home Office of all the documents required for such a payment.
Other than the death benefit, which is determined as of the date of death, the
amount will be determined as of the end of the valuation period in which the
necessary documents are received. However, Pruco Life may delay payment of
proceeds from the subaccount[s] and the variable portion of the death benefit
due under the Contract if the disposal or valuation of the Account's assets is
not reasonably practicable because the New York Stock Exchange is closed for
other than a regular holiday or weekend, trading is restricted by the SEC or the
SEC declares that an emergency exists.
With respect to the amount of any cash surrender value allocated to the
fixed-rate option, and with respect to a Contract in force as extended term
insurance, Pruco Life expects to pay the cash surrender value promptly upon
request. However, Pruco Life has the right to delay payment of such cash
surrender value for up to 6 months (or a shorter period if required by
applicable law). Pruco Life will pay interest of at least 3% a year if it delays
such a payment for more than 30 days (or a shorter period if required by
applicable law).
Living Needs Benefit. Contract applicants may elect to add the Living Needs
Benefit(SM) to their Contracts at issue, subject to Pruco Life's receipt of
satisfactory evidence of insurability. The benefit may vary state-by-state where
it is available, and a Pruco Life representative should be consulted as to
whether and to what extent the benefit is available in a particular state and on
any particular Contract. Where available, the benefit can generally be added
only to Contracts of $50,000 or more.
The Living Needs Benefit allows the Contract owner to elect to receive an
accelerated payment of all or part of the Contract's death benefit, adjusted to
reflect current value, at a time when certain special needs exist. The adjusted
death benefit will always be less than the death benefit, but will generally be
greater than the Contract's cash surrender value. Depending upon state
regulatory approval, one or both of the following options may be available. A
Pruco Life representative should be consulted as to whether additional options
may be available.
Terminal Illness Option. This option is available if the insured is diagnosed as
terminally ill with a life expectancy of 6 months or less. When satisfactory
evidence is provided, Pruco Life will provide an accelerated payment of the
portion of the death benefit selected by the Contract owner as a Living Needs
Benefit. The Contract owner may (1) elect to receive the benefit in a single sum
or (2) receive equal monthly payments for 6 months. If the insured dies before
all of the payments have been made, the present value of the remaining payments
will be paid to the beneficiary designated in the Living Needs Benefit claim
form in a single sum.
Nursing Home Option. This option is available after the insured has been
confined to an eligible nursing home for 6 months or more. When satisfactory
evidence is provided, including certification by a licensed physician, that the
insured is expected to remain in the nursing home until death, Pruco Life will
provide an accelerated payment of the portion of the death benefit selected by
the Contract owner as a Living Needs Benefit. The Contract owner may (1) elect
to receive the benefit in a single sum or (2) receive equal monthly payments for
a specified number of years (not more than 10 nor less than 2), depending upon
the age of the insured. If the insured dies before all of the payments have been
made, the present value of the remaining payments will be paid to the
beneficiary designated in the Living Needs Benefit claim form in a single sum.
All or part of the Contract's death benefit may be accelerated under the Living
Needs Benefit. If the benefit is only partially accelerated, a death benefit of
at least $25,000 must remain under the Contract. Pruco Life reserves the right
to determine the minimum amount that may be accelerated.
The Living Needs Benefit is available only in jurisdictions where and to the
extent regulatory approval has been obtained. If desired by a Contract owner,
the benefit must be requested on the Contract's application. There is no charge
for adding the benefit to the Contract. However, an administrative charge (not
to exceed $150) will be made at the time the Living Needs Benefit is paid.
No benefit will be payable if the Contract owner is required to elect it in
order to meet the claims of creditors or to obtain a government benefit. Pruco
Life can furnish details about the amount of Living Needs Benefit that is
available to an eligible Contract owner under a particular Contract, and the
adjusted premium payments that would be in effect if less than the entire death
benefit is accelerated.
The Contract owner should consider whether adding this settlement option is
appropriate in his or her given situation. Adding the Living Needs Benefit to
the Contract has no adverse consequences; however, electing to use it could.
Contract owners should consult a qualified tax advisor before electing to
receive this benefit. Unlike a death benefit received by a beneficiary after the
death of an insured, receipt of a Living Needs Benefit payment may give rise to
a federal or state income tax. Receipt of a Living Needs Benefit payment may
also affect a Contract owner's eligibility for certain government benefits or
entitlements.
19
<PAGE>
Illustrations of Cash Surrender Values, Death Benefits, and Accumulated
Premiums. The following tables have been prepared to help show how values under
the Contract change with investment performance of the Account. The tables
assume that no portion of the Contract fund is allocated to the fixed-rate
option or the Real Property Account. The tables illustrate how cash surrender
values (reflecting the deduction of deferred sales load and administrative
charges, if any) and death benefits of Contracts with the minimum scheduled
premium issued on an insured of a given age would vary over time if the return
on the assets held in the selected Series Fund portfolios were a uniform, gross,
after tax, annual rate of 0%, 4%, 8% and 12%. The death benefits and cash
surrender values would be different from those shown if the returns averaged 0%,
4%, 8% and 12% but fluctuated over and under those averages throughout the
years. The tables also provide information about the premiums payable on and
after the premium change date. These tables reflect values under the revised
Contracts. These values are also applicable to the original Contracts except
where the death benefit has been increased to the Contract fund divided by the
net single premium, in which case the cash surrender value and death benefit
figures shown on the table are not applicable to the original Contracts.
Footnotes to the tables indicate when the values cease to be applicable to the
original Contracts and when the original Contracts would become paid-up for a
given return.
The death benefits and cash surrender values shown in the first two tables on
pages T1 and T2 reflect Pruco Life's current charges. As explained earlier,
Pruco Life makes monthly mortality charges that are lower than those based on
the 1980 CSO Table when the insured is a male aged 36 or more or a female aged
41 or more. The values shown in the tables are calculated upon the assumption
that Pruco Life will continue to use the mortality rates that it is currently
using, even though it is permitted under the Contract to use the higher
mortality charges specified in the 1980 CSO Table. Moreover, those tables
reflect Pruco Life's current practice of waiving the front-end sales load of 5%
after total premiums paid exceeds five scheduled annual premiums. See item 2
under Charges and Expenses, page 10. The tables also reflect Pruco Life's
current practice of increasing the Contract fund on a percentage basis based on
the attained age of the insured. While Pruco Life does not currently intend to
withdraw or modify these reductions in charges or additions to the Contract
fund, it reserves the right to do so. The tables are not applicable to Contracts
issued on a guaranteed issue basis or to Contracts where the risk classification
is on a multiple life basis.
The death benefits and cash surrender values shown in the next two tables on
pages T3 and T4 are calculated upon the assumption that the maximum mortality
charges specified by the 1980 CSO Table are made throughout the life of the
Contract, and reflect neither the waiver of the front-end sales load nor the
monthly additions to the Contract fund that further reduce the cost of insurance
charge.
The amounts shown for the death benefit and cash surrender value as of each
Contract year reflect the fact that the net investment return on the assets held
in the subaccounts is lower than the gross return of the portfolios. This is
because the tables assume a total Series Fund expense ratio of 0.57% (taking
into account the offsets described on page 4), and also reflect a daily
mortality and expense risk charge to the Account equal to an effective annual
charge of 0.6%. The actual fees and expenses of the portfolios associated with a
particular Contract may be more or less than 0.57% and will depend on which
subaccounts are selected. Based on the above assumptions, gross annual rates of
return of 0%, 4%, 8% and 12% thus correspond to approximate net annual rates of
return of -1.17%, 2.83%, 6.83% and 10.83% and this fact is reflected in the
column headings. The tables also reflect the fact that no charges for federal or
state income taxes are currently made against the Account. If such a charge is
made in the future, it will take a higher gross rate of return to produce net
after-tax returns of -1.17%, 2.83%, 6.83% or 10.83% than it does now.
Upon request, Pruco Life will furnish a comparable illustration based on the
proposed insured's age and sex (except where unisex rates apply) and on the
guaranteed minimum death benefit or premium amount requested. Such an
illustration will assume that the insured is in the preferred rating class (or,
on request, a different rating class) and that the premium will be paid at the
frequency chosen.
20
<PAGE>
<TABLE>
VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM A -- FIXED DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (3)
USING CURRENT SCHEDULE OF CHARGES
<CAPTION>
Death Benefit (2) (4) Cash Surrender Value (2) (4)
------------------------------------------------ -----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ------------------------------------------------ -----------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (3) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 577 $60,000 $60,000 $ 60,000 $ 60,000 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $ 60,000 $ 60,000 $ 187 $ 233 $ 281 $ 331
3 $ 1,801 $60,000 $60,000 $ 60,000 $ 60,000 $ 467 $ 557 $ 653 $ 754
4 $ 2,450 $60,000 $60,000 $ 60,000 $ 60,000 $ 738 $ 885 $ 1,045 $ 1,219
5 $ 3,125 $60,000 $60,000 $ 60,000 $ 60,000 $ 997 $ 1,214 $ 1,458 $ 1,729
6 $ 3,827 $60,000 $60,000 $ 60,000 $ 60,000 $ 1,383 $ 1,686 $ 2,033 $ 2,432
7 $ 4,557 $60,000 $60,000 $ 60,000 $ 60,000 $ 1,783 $ 2,185 $ 2,660 $ 3,219
8 $ 5,317 $60,000 $60,000 $ 60,000 $ 60,000 $ 2,169 $ 2,685 $ 3,312 $ 4,070
9 $ 6,106 $60,000 $60,000 $ 60,000 $ 60,000 $ 2,543 $ 3,187 $ 3,992 $ 4,993
10 $ 6,927 $60,000 $60,000 $ 60,000 $ 60,000 $ 2,903 $ 3,691 $ 4,702 $ 5,997
15 $ 11,553 $60,000 $60,000 $ 60,000 $ 60,000 $ 4,056 $ 5,843 $ 8,497 $ 12,438
20 $ 17,182 $60,000 $60,000 $ 60,000 $ 60,000 $ 4,713 $ 7,952 $13,580 $ 23,383
25 $ 24,029 $60,000 $60,000 $ 60,000 $ 78,037 $ 4,576 $ 9,737 $20,410 $ 42,176
30 (Age 65) $ 32,361 $60,000 $60,000 $ 60,000 $120,015 $ 3,176 $10,743 $29,799 $ 73,193
35 $ 52,538 $60,000 $60,000 $ 63,689 $182,161 $14,602 $20,402 $43,229 $123,644
40 $ 77,087 $60,000 $60,000 $ 82,693 $275,099 $24,640 $30,936 $61,540 $204,728
45 $106,955 $60,000 $60,000 $106,675 $416,004 $33,195 $43,233 $85,483 $333,361
<FN>
(1) If premiums are paid more frequently than annually, the initial payments would be $284.80 semi-annually, $145.40 quarterly
or $50 monthly. The ultimate payments would be $1,775.20 semi-annually, $897.80 quarterly or $302.60 monthly. The death benefits
and cash surrender values would be slightly different for a Contract with more frequent premium payments.
(2) Assumes no Contract loan has been made.
(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts that
first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased to the
Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures shown are
applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up. For a
hypothetical gross investment return of 0%, the second Scheduled Premium will be $3,477.40. For a gross return of 4%, the second
Scheduled Premium will be $2,812.07; on a current basis, a lesser premium of $2,337.40 will guarantee that your contract will
not lapse for one year. For a gross return of 8%, the second Scheduled Premium will be $781.08; on a current basis, a lesser
premium of $554.80 will guarantee that your contract will not lapse for one year. For a gross return of 12%, the second
Scheduled Premium will be $554.80. The premiums accumulated at 4% interest in column 2 are those payable if the gross investment
return is 4%. For an explanation of why the scheduled premium may increase on the premium change date, see Premiums.
(4) Assumes after age 65 payment of the lesser premium amount, if applicable.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS 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
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T1
<PAGE>
<TABLE>
VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM B -- VARIABLE DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (3)
USING CURRENT SCHEDULE OF CHARGES
<CAPTION>
Death Benefit (2) (4) Cash Surrender Value (2) (4)
------------------------------------------------- -------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ------------------------------------------------- -------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (3) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 577 $60,000 $60,000 $60,013 $ 60,029 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $60,038 $ 60,087 $ 185 $ 232 $ 280 $ 329
3 $ 1,801 $60,000 $60,000 $60,079 $ 60,180 $ 466 $ 556 $ 650 $ 751
4 $ 2,450 $60,000 $60,000 $60,136 $ 60,309 $ 736 $ 882 $ 1,041 $ 1,214
5 $ 3,125 $60,000 $60,000 $60,212 $ 60,481 $ 995 $ 1,211 $ 1,453 $ 1,722
6 $ 3,827 $60,000 $60,000 $60,336 $ 60,731 $ 1,381 $ 1,681 $ 2,026 $ 2,422
7 $ 4,557 $60,000 $60,015 $60,485 $ 61,039 $ 1,780 $ 2,180 $ 2,650 $ 3,204
8 $ 5,317 $60,000 $60,041 $60,661 $ 61,411 $ 2,167 $ 2,679 $ 3,299 $ 4,049
9 $ 6,106 $60,000 $60,072 $60,866 $ 61,855 $ 2,540 $ 3,180 $ 3,974 $ 4,963
10 $ 6,927 $60,000 $60,107 $61,103 $ 62,378 $ 2,900 $ 3,681 $ 4,678 $ 5,953
15 $ 11,553 $60,000 $60,601 $63,196 $ 67,040 $ 4,070 $ 5,842 $ 8,437 $ 12,281
20 $ 17,182 $60,000 $61,481 $66,900 $ 76,284 $ 4,749 $ 7,942 $13,361 $ 22,745
25 $ 24,029 $60,000 $63,055 $73,029 $ 93,454 $ 4,636 $ 9,644 $19,618 $ 40,043
30 (Age 65) $ 32,361 $60,000 $65,827 $82,725 $124,141 $ 3,258 $10,327 $27,225 $ 68,641
35 $ 54,051 $60,278 $66,315 $82,085 $171,257 $14,580 $20,617 $36,387 $116,242
40 $ 80,441 $60,685 $67,782 $84,348 $260,050 $24,295 $31,392 $47,958 $193,529
45 $112,548 $60,447 $70,732 $90,974 $395,227 $32,186 $42,471 $62,713 $316,711
<FN>
(1) If premiums are paid more frequently than annually, the initial payments would be $284.80 semi-annually, $145.40 quarterly or
$50 monthly. The ultimate payments would be $1,775.20 semi-annually, $897.80 quarterly or $302.60 monthly. The death benefits
and cash surrender values would be slightly different for a Contract with more frequent premium payments.
(2) Assumes no Contract loan has been made.
(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts that
first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased to the
Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures shown are
applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up. For a
hypothetical gross investment return of 0%, the second Scheduled Premium will be $3,477.40. For a gross return of 4%, the second
Scheduled Premium will be $3,152.87; on a current basis, a lesser premium of $2,606.00 will guarantee that your contract will
not lapse for one year. For a gross return of 8%, the second Scheduled Premium will be $2,211.76; on a current basis, a lesser
premium of $554.80 will guarantee that your contract will not lapse for one year. For a gross return of 12%, the second
Scheduled Premium will be $554.80. The premiums accumulated at 4% interest in column 2 are those payable if the gross investment
return is 4%. For an explanation of why the scheduled premium may increase on the premium change date, see Premiums.
(4) Assumes after age 65 payment of the lesser premium amount, if applicable.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS 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
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T2
<PAGE>
<TABLE>
VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM A -- FIXED DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (3)
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (2) Cash Surrender Value (2)
------------------------------------------------- -------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ------------------------------------------------- -------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (3) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 577 $60,000 $60,000 $60,000 $ 60,000 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $60,000 $ 60,000 $ 184 $ 230 $ 278 $ 327
3 $ 1,801 $60,000 $60,000 $60,000 $ 60,000 $ 459 $ 548 $ 643 $ 744
4 $ 2,450 $60,000 $60,000 $60,000 $ 60,000 $ 720 $ 866 $ 1,025 $ 1,198
5 $ 3,125 $60,000 $60,000 $60,000 $ 60,000 $ 966 $ 1,181 $ 1,423 $ 1,692
6 $ 3,827 $60,000 $60,000 $60,000 $ 60,000 $1,307 $ 1,605 $ 1,948 $ 2,341
7 $ 4,557 $60,000 $60,000 $60,000 $ 60,000 $1,656 $ 2,049 $ 2,514 $ 3,063
8 $ 5,317 $60,000 $60,000 $60,000 $ 60,000 $1,987 $ 2,487 $ 3,096 $ 3,836
9 $ 6,106 $60,000 $60,000 $60,000 $ 60,000 $2,298 $ 2,917 $ 3,693 $ 4,664
10 $ 6,927 $60,000 $60,000 $60,000 $ 60,000 $2,588 $ 3,338 $ 4,306 $ 5,554
15 $ 11,553 $60,000 $60,000 $60,000 $ 60,000 $3,124 $ 4,690 $ 7,051 $ 10,604
20 $ 17,182 $60,000 $60,000 $60,000 $ 60,000 $2,848 $ 5,445 $10,110 $ 18,438
25 $ 24,029 $60,000 $60,000 $60,000 $ 60,000 $1,235 $ 4,957 $13,193 $ 30,989
30 (Age 65) $ 32,361 $60,000 $60,000 $60,000 $ 83,802 $ 0 $ 2,130 $15,797 $ 51,108
35 $ 58,960 $60,000 $60,000 $60,000 $119,754 $3,883 $10,888 $27,534 $ 81,284
40 $ 91,322 $60,000 $60,000 $60,000 $168,988 $5,982 $18,025 $43,889 $125,761
45 $130,695 $60,000 $60,000 $82,303 $236,994 $ 0 $21,619 $65,953 $189,912
<FN>
(1) If premiums are paid more frequently than annually, the payments would be $284.80 semi-annually, $145.40 quarterly or $50
monthly. The death benefits and cash surrender values would be slightly different for a Contract with more frequent premium
payments.
(2) Assumes no Contract loan has been made.
(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts that
first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased to the
Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures shown are
applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up. For a
hypothetical gross investment return of 0%, the premium after age 65 will be $3,477.40; for a gross return of 4% the premium
after age 65 will be $3,477.40; for a gross return of 8% the premium after age 65 will be $2,273.44; for a gross return of 12%
the premium after age 65 will be $554.80. The premiums accumulated at 4% interest in column 2 are those payable if the gross
investment return is 4%. For an explanation of why the scheduled premium may increase on the premium change date, see Premiums.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS 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
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T3
<PAGE>
<TABLE>
VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM B -- VARIABLE DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (3)
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (2) Cash Surrender Value (2)
------------------------------------------------- -------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ------------------------------------------------- -------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (3) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net) (-1.17% Net) (2.83% Net) (6.83% Net) (10.83% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 577 $60,000 $60,000 $60,013 $ 60,029 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $60,035 $ 60,084 $ 182 $ 229 $ 277 $ 326
3 $ 1,801 $60,000 $60,000 $60,070 $ 60,170 $ 457 $ 546 $ 641 $ 741
4 $ 2,450 $60,000 $60,000 $60,116 $ 60,288 $ 718 $ 863 $ 1,022 $ 1,194
5 $ 3,125 $60,000 $60,000 $60,177 $ 60,444 $ 963 $ 1,178 $ 1,418 $ 1,685
6 $ 3,827 $60,000 $60,000 $60,250 $ 60,641 $1,304 $ 1,601 $ 1,941 $ 2,331
7 $ 4,557 $60,000 $60,000 $60,340 $ 60,883 $1,654 $ 2,044 $ 2,505 $ 3,048
8 $ 5,317 $60,000 $60,000 $60,445 $ 61,176 $1,984 $ 2,481 $ 3,083 $ 3,813
9 $ 6,106 $60,000 $60,000 $60,568 $ 61,525 $2,295 $ 2,911 $ 3,676 $ 4,633
10 $ 6,927 $60,000 $60,000 $60,709 $ 61,935 $2,585 $ 3,331 $ 4,284 $ 5,510
15 $ 11,553 $60,000 $60,000 $61,730 $ 65,157 $3,122 $ 4,681 $ 6,971 $ 10,398
20 $ 17,182 $60,000 $60,000 $63,394 $ 71,173 $2,845 $ 5,434 $ 9,855 $ 17,634
25 $ 24,029 $60,000 $60,000 $65,843 $ 81,570 $1,233 $ 4,944 $12,432 $ 28,159
30 (Age 65) $ 32,361 $60,000 $60,000 $69,160 $ 98,677 $ 0 $ 2,113 $13,660 $ 43,177
35 $ 58,960 $60,000 $60,000 $71,727 $115,543 $3,880 $10,853 $26,029 $ 69,846
40 $ 91,322 $60,000 $60,000 $76,989 $149,807 $5,979 $17,973 $40,599 $111,486
45 $130,695 $60,000 $60,000 $86,018 $216,167 $ 0 $21,530 $57,757 $173,223
<FN>
(1) If premiums are paid more frequently than annually, the payments would be $284.80 semi-annually, $145.40 quarterly or $50
monthly. The death benefits and cash surrender values would be slightly different for a Contract with more frequent premium
payments.
(2) Assumes no Contract loan has been made.
(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts that
first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased to the
Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures shown are
applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up. For a
hypothetical gross investment return of 0%, the premium after age 65 will be $3,477.40; for a gross return of 4% the premium
after age 65 will be $3,477.40; for a gross return of 8% the premium after age 65 will be $2,967.22; for a gross return of 12%
the premium after age 65 will be $1,323.33. The premiums accumulated at 4% interest in column 2 are those payable if the gross
investment return is 4%. For an explanation of why the scheduled premium may increase on the premium change date, see Premiums.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS 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
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T4
<PAGE>
Contract Loans. The Contract owner may borrow from Pruco Life up to the "loan
value" of the Contract, using the Contract as the only security for the loan.
The loan value of a Contract is 90% of an amount equal to its Contract fund,
reduced by any charges due upon surrender. However, Pruco Life will, on a
non-contractual basis (contractual in Texas), increase the loan value by
permitting a Contract owner to borrow up to 100% of the portion of the Contract
fund attributable to the fixed-rate option (or any portion of the Contract fund
attributable to a prior loan supported by the fixed-rate option), reduced by any
charges due upon surrender. The minimum amount that may be borrowed at any one
time is $500 unless the loan is used to pay premiums.
Under one of the loan provisions available under this Contract, interest charged
on a loan accrues daily at a fixed effective annual rate of 5.5%. However, if a
Contract owner so desires, and if Pruco Life has received any required approvals
from the regulatory officials in the state or other jurisdiction in which the
Contract is to be issued, the Contract owner may elect at the time of issuance
of the Contract to have a different loan provision in the Contract under which
the interest rate will vary from time to time.
If an owner elects the variable loan interest rate provision, interest charged
on any loan will accrue daily at an annual rate Pruco Life determines at the
start of each Contract year (instead of at the fixed 5.5% rate). This interest
rate will not exceed the greatest of (1) the "Published Monthly Average" for the
calendar month ending two months before the calendar month of the Contract
anniversary; (2) 5%; or (3) any rate required by law in the state of issue of
the Contract. The "Published Monthly Average" means Moody's Corporate Bond Yield
Average-Monthly Average Corporates, as published by Moody's Investors Service,
Inc. or any successor to that service, or if that average is no longer
published, a substantially similar average established by the insurance
regulator where the Contract is issued. For example, the Published Monthly
Average in 1994 ranged from 7.25% to 8.94%.
Interest payments on any loan are due at the end of each Contract year. If
interest is not paid when due, it is added to the principal amount of the loan.
The term "Contract debt" means the amount of all outstanding loans plus any
interest accrued but not yet due. If at any time the Contract debt exceeds the
cash surrender value, Pruco Life will notify the Contract owner of its intent to
terminate the Contract in 61 days, within which time the owner may repay all or
enough of the loan to keep the Contract in force for a limited time.
When a loan is made, an amount equal to the loan proceeds will be transferred
out of the applicable investment option[s]. The reduction will generally be made
in the same proportions as the value in each investment option bears to the
total value of the Contract. While a fixed-rate loan is outstanding, the amount
that was so transferred will continue to be treated as part of the Contract fund
but it will be credited with the assumed rate of return of 4% rather than with
the actual rate of return of the applicable investment option[s]. While a loan
made pursuant to the variable loan interest rate provision is outstanding, the
amount that was transferred is credited with a rate which is less than the loan
interest rate for the Contract year by no more than 1.5%, rather than with the
actual rate of return of the subaccount[s], the fixed-rate option or the Real
Property Account. Currently, Pruco Life credits such amounts with a rate that is
1% less than the loan interest rate for the Contract year. If a loan remains
outstanding at a time when Pruco Life fixes a new rate, the new interest rate
will apply.
A loan will not affect the amount of the premiums due. Should the death benefit
become payable while a loan is outstanding, or should the Contract be
surrendered, any Contract debt will be deducted from the death benefit or the
cash surrender value otherwise payable. Loans from Modified Endowment Contracts
may be treated for tax purposes as distributions of income. See Tax Treatment of
Contract Benefits, page 23.
A loan will have a permanent effect on a Contract's cash surrender value and may
have a permanent effect on the death benefit because the investment results of
the selected investment options will apply only to the amount remaining in those
investment options. The longer the loan is outstanding, the greater the effect
is likely to be. The effect could be favorable or unfavorable. If investment
results are greater than the rate being credited upon the amount of the loan
while the loan is outstanding, Contract values will not increase as rapidly as
they would have if no loan had been made. If investment results are below that
rate, Contract values will be higher than they would have been had no loan been
made. A loan that is repaid will not have any effect upon the guaranteed minimum
death benefit.
Consider the Form A Contract issued on a 35 year old male insured illustrated in
the table on page T1 with an 8% gross investment return. Assume a $2,000 (5.5%)
fixed-rate loan was made under this Contract at the end of Contract year 8 and
repaid at the end of Contract year 10 and loan interest was paid when due. Upon
repayment, the cash surrender value would be $4,567.21. This amount is lower
than the cash surrender value shown on that page for the end of Contract year 10
because the loan amount was credited with the 4% assumed rate of return rather
than the 6.83% net return for the designated subaccount[s] resulting from the 8%
gross return in the underlying Series Fund.
Reports to Contract Owners. Once each Contract year (except where the Contract
is in force as fixed extended term insurance), Contract owners will be sent
statements that provide certain information pertinent to their own
21
<PAGE>
Contract. These statements detail values and transactions made and specific
Contract data that apply only to each particular Contract. On request, a
Contract owner will be sent a current statement in a form similar to that of the
annual statement described above, but Pruco Life may limit the number of such
requests or impose a reasonable charge if such requests are made too frequently.
Each Contract owner will be sent an annual report for the Account. Contract
owners will also be sent annual and semi-annual reports of the Series Fund
showing the financial condition of the portfolios and the investments held in
each.
Options on Lapse. If a Contract lapses because the necessary premium has not
been paid before the end of the grace period, some life insurance coverage may
continue in effect or the owner may choose to surrender the Contract for its
cash surrender value.
1. Fixed Extended Term Insurance. With two exceptions explained below, if the
owner does not communicate at all with Pruco Life, life insurance coverage will
continue for a length of time that depends on the cash surrender value on the
date of default (which reflects the deduction of the deferred sales load,
administrative charges, and Contract debt, if any), the amount of insurance, and
the age and sex (except where unisex rates apply) of the insured. The insurance
amount will be what it would have been on the date of default taking into
account any Contract debt on that date. The amount will not change while the
insurance stays in force. This benefit is known as extended term insurance. If
the owner requests, he or she will be told in writing how long the insurance
will be in effect. Extended term insurance has a cash surrender value, but no
loan value.
Contracts issued on the lives of certain insureds in high risk rating classes
and Contracts issued in connection with tax qualified pension plans will include
a statement that extended term insurance will not be provided. In those cases,
variable reduced paid-up insurance will be the automatic benefit provided on
lapse.
2. Variable Reduced Paid-Up Insurance. Variable reduced paid-up insurance
provides insurance coverage for the lifetime of the insured. The initial
insurance amount will depend upon the cash surrender value on the date of
default (which reflects the deduction of the deferred sales load, administrative
charges, and Contract debt, if any), and the age and sex of the insured. This
will be a new guaranteed minimum death benefit. Aside from this guarantee, the
cash surrender value and the amount of insurance will vary with investment
performance in the same manner as the paid-up Contract described earlier. See
When a Contract Becomes Paid-Up, page 15. Variable reduced paid-up insurance has
a loan privilege identical to that available on premium paying Contracts. See
Contract Loans, page 21. Acquisition of reduced paid-up insurance within the
first 7 Contract years may result in the Contract becoming a Modified Endowment
Contract. See Tax Treatment of Contract Benefits, page 23.
As explained above, variable reduced paid-up insurance is the automatic benefit
on lapse for Contracts issued on certain insureds. Owners of other Contracts who
want variable reduced paid-up insurance must ask for it in writing, in a form
that meets Pruco Life's needs, within three months of the date of default; it
will be available to such owners only if the initial amount of variable reduced
paid-up insurance would be at least $5,000. This minimum is not applicable to
Contracts for which variable reduced paid-up insurance is the automatic benefit
upon lapse.
3. Payment of Cash Surrender Value. The owner can receive the cash surrender
value by surrendering the Contract and making a written request in a form that
meets Pruco Life's needs. If Pruco Life receives the request after the 61-day
grace period has expired, the cash surrender value will be the net value of any
extended term insurance then in force, or the net value of any reduced paid-up
insurance then in force, less any Contract debt. Surrender of the Contract may
have tax consequences. See Tax Treatment of Contract Benefits, page 23.
Right to Exchange a Contract for a Fixed-Benefit Insurance Policy.
1. Original Contracts. At any time during the first 24 months after a Contract
is issued, so long as the Contract is not in default, the owner may exchange it
for an Appreciable Life insurance policy on the insured's life issued by Pruco
Life. This is a general account, universal-life type policy with guaranteed
minimum values. No evidence of insurability will be required to make an
exchange. The new policy's premium and death benefit will be the same as the
original Contract's on the date of exchange. The new policy will also have the
same issue date and risk classification for the insured as the original
Contract. If the Contract fund value under the original Contract is greater than
the tabular Contract fund value under the new policy, the difference will be
credited to the Contract owner and carried over to the new policy. If the
Contract fund value under the original Contract is less than the tabular
Contract fund value under the new policy, a cash payment will be required from
the exchanging owner.
The exchange will be effective when Pruco Life receives a written request in a
form that meets its needs. Any outstanding Contract debt must be repaid on or
before the effective date of the exchange.
The Contract owner may also exchange the Contract for an Appreciable Life policy
according to procedures meeting applicable state insurance law requirements if
the Series Fund or one of its portfolios has a material change in its investment
policy. The Company, in conjunction with the Arizona Director of Insurance, will
determine if a
22
<PAGE>
change in investment policy is material. The Contract owner will
be able to exchange within 60 days of receipt of notice of such a material
change or of the effective date of the change, whichever is later.
2. Revised Contracts. Under the revised Contracts, the only right to exchange
the Contract for a fixed-benefit contract is provided by allowing Contract
owners to transfer their entire Contract fund to the fixed-rate option at any
time within the first 2 years from issue (or within 2 years of any increase in
face amount with respect to the amount of the increase) without regard to the
otherwise applicable limit of four transfers per year. See Transfers, page 9.
This conversion right will also be provided if the Series Fund or one of its
portfolios has a material change in its investment policy, as explained above.
There is no right to exchange for an Appreciable Life contract.
Sale of the Contract and Sales Commissions. Pruco Securities Corporation
("Prusec"), an indirect wholly-owned subsidiary of The Prudential, acts as the
principal underwriter of the Contract. Prusec, organized in 1971 under New
Jersey law, is registered as a broker and dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers,
Inc. Prusec's principal business address is 1111 Durham Avenue, South
Plainfield, New Jersey 07080. The Contract is sold by registered representatives
of Prusec who are also authorized by state insurance departments to do so. The
Contract may also be sold through other broker-dealers authorized by Prusec and
applicable law to do so. Registered representatives of such other broker-dealers
may be paid on a different basis than described below. Where the insured is less
than 60 years of age, the representative will generally receive a commission of
no more than 50% of the scheduled premiums for the first year, no more than 12%
of the scheduled premiums for the second, third, and fourth years, no more than
3% of the scheduled premiums for the fifth through tenth years, and no more than
2% of the scheduled premiums thereafter. For insureds over 59 years of age, the
commission will be lower. The representative may be required to return all or
part of the first year commission if the Contract is not continued through the
second year. Representatives with less than 3 years of service may be paid on a
different basis. Representatives who meet certain productivity, profitability,
and persistency standards with regard to the sale of the Contract will be
eligible for additional compensation.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life expects to recover its total sales expenses over the periods
the Contracts are in effect. To the extent that the sales charges are
insufficient to cover total sales expenses, the sales expenses will be recovered
from Pruco Life's surplus, which may include amounts derived from the mortality
and expense risk charge and the guaranteed minimum death benefit risk charge
described in items 5 and 7 under Charges and Expenses, page 10.
Tax Treatment of Contract Benefits. Each prospective purchaser is urged to
consult a qualified tax advisor. The following discussion is not intended as tax
advice, and it is not a complete statement of what the effect of federal income
taxes will be under all circumstances. Rather, it provides information about how
Pruco Life believes the tax laws apply in the most commonly occurring
circumstances. There is no guarantee, however, that the current federal income
tax laws and regulations or interpretations will not change.
Treatment as Life Insurance. The Contract will be treated as "life insurance,"
as long as it satisfies certain definitional tests set forth in sections 7702 of
the Internal Revenue Code (the "Code") and as long as the underlying investments
for the Contract satisfy diversification requirements under section 817(h) of
the Code. (For further detail on diversification requirements, see DIVIDENDS,
DISTRIBUTIONS, AND TAXES in the attached prospectus for the Series Fund.)
Pruco Life believes that it has taken adequate steps to cause the Contract to be
treated as life insurance for tax purposes. This means that: (1) except as noted
below, the Contract owner should not be taxed on any part of the Contract fund,
including additions attributable to interest, dividends or appreciation; and (2)
the death benefit should be excludible from the gross income of the beneficiary
under section 101(a) of the Code.
However, section 7702 of the Code which defines life insurance for tax purposes
gives the Secretary of the Treasury authority to prescribe regulations to carry
out the purposes of the section. In this regard, proposed regulations governing
mortality charges were issued in 1991 and proposed regulations under sections
101, 7702 and 7702A governing the treatment of life insurance policies that
provide accelerated death benefits were issued in 1992. None of these proposed
regulations has yet been finalized. Additional regulations under section 7702
may also be promulgated in the future. Moreover, in connection with the issuance
of temporary regulations under section 817(h), the Treasury Department announced
that such regulations do not provide guidance concerning the extent to which
Contract owners may direct their investments to particular divisions of a
separate account. Such guidance will be included in regulations or rulings under
section 817(d) relating to the definition of a variable contract.
Pruco Life intends to comply with final regulations issued under sections 7702
and 817. Therefore, it reserves the right to make such changes as it deems
necessary to assure that the Contract continues to qualify as life insurance for
tax purposes. Any such changes will apply uniformly to affected Contract owners
and will be made only after advance written notice to affected Contract owners.
23
<PAGE>
Pre-Death Distributions. The taxation of pre-death distributions depends on
whether the Contract is classified as a Modified Endowment Contract. The
following discussion first deals with distributions under Contracts not so
classified, and then with Modified Endowment Contracts.
1. A surrender or lapse of the Contract may have tax consequences. Upon
surrender, the owner will not be taxed on the cash surrender value except
for the amount, if any, that exceeds the gross premiums paid less the
untaxed portion of any prior withdrawals. The amount of any unpaid Contract
debt will, upon surrender or lapse, be added to the cash surrender value and
treated, for this purpose, as if it had been received. Any loss incurred
upon surrender is generally not deductible. The tax consequences of a
surrender may differ if the proceeds are received under any income payment
settlement option.
A withdrawal (or partial surrender) generally is not taxable unless it
exceeds total premiums paid to the date of withdrawal less the untaxed
portion of any prior withdrawals. However, under certain limited
circumstances, in the first 15 Contract years all or a portion of a
withdrawal may be taxable if the Contract fund exceeds the total premiums
paid less the untaxed portions of any prior withdrawals, even if total
withdrawals do not exceed total premiums paid to date.
Extra premiums for optional benefits and riders generally do not count in
computing gross premiums paid, which in turn determines the extent to which
a withdrawal might be taxed.
Loans received under the Contract will ordinarily be treated as indebtedness
of the owner and will not be considered to be distributions subject to tax.
2. Some of the above rules are changed if the Contract is classified as a
Modified Endowment Contract under section 7702A of the Code. It is possible
for this Contract to be classified as a Modified Endowment Contract under at
least two circumstances: premiums substantially in excess of scheduled
premiums are paid; or a decrease in the face amount of insurance is made (or
a rider removed) during the first 7 Contract years. Moreover, the addition
of a rider or the increase in the face amount of insurance after the
Contract date may have an impact on the Contract's status as a Modified
Endowment Contract. Contract owners contemplating any of these steps should
first consult a qualified tax advisor and their Pruco Life representative.
If the Contract is classified as a Modified Endowment Contract, then
pre-death distributions, including loans and withdrawals, are includible in
income to the extent that the Contract fund prior to surrender charges
exceeds the gross premiums paid for the Contract increased by the amount of
any loans previously includible in income and reduced by any untaxed amounts
previously received other than the amount of any loans excludible from
income. These rules may also apply to pre-death distributions, including
loans, made during the 2-year period prior to the Contract becoming a
Modified Endowment Contract.
In addition, pre-death distributions from such Contracts (including full
surrenders) will be subject to a penalty of 10 percent of the amount
includible in income unless the amount is distributed on or after age
59 1/2, on account of the taxpayer's disability or as a life annuity. It is
presently unclear how the penalty tax provisions apply to Contracts owned by
nonnatural persons such as corporations.
Under certain circumstances, the Code requires two or more Modified
Endowment Contracts issued during a calendar year period to be treated as a
single contract for purposes of applying the above rules.
Withholding. The taxable portion of any amounts received under the Contract will
be subject to withholding to meet federal income tax obligations if the Contract
owner fails to elect that no taxes be withheld or in certain other
circumstances. Contract owners who do not provide a social security number or
other taxpayer identification number will not be permitted to elect out of
withholding. All recipients may be subject to penalties under the estimated tax
payment rules if withholding and estimated tax payments of such amount are not
sufficient.
Other Tax Considerations. Transfer of the Contract to a new owner or assignment
of the Contract may have tax consequences depending on the circumstances. In the
case of a transfer of the Contract for a valuable consideration, the death
benefit may be subject to federal income taxes under section 101(a)(2) of the
Code. In addition, a transfer of the Contract to or the designation of a
beneficiary who is either 37 1/2 years younger than the Contract owner or a
grandchild of the Contract owner may have Generation Skipping Transfer tax
consequences under section 2601 of the Code.
In certain circumstances, deductions for interest paid or accrued on Contract
debt or on other loans that are incurred or continued to purchase or carry the
Contract may be denied under section 163 of the Code as personal interest or
under section 264 of the Code. Contract owners should consult his or her own tax
advisor and Pruco Life representative regarding the application of these
provisions to their circumstances.
Business-owned life insurance is subject to additional rules. Section 264(a)(1)
of the Code generally precludes business Contract owners from deducting premium
payments. Under section 264(a)(4) of the Code, a deduction is not allowed for
any interest paid or accrued on any Contract debt on an insurance policy to the
extent the
24
<PAGE>
indebtedness exceeds $50,000 per officer, employee or financially
interested person. The Code also imposes an indirect tax upon additions to the
Contract fund or the receipt of death benefits under business-owned life
insurance policies under certain circumstances by way of the corporate
alternative minimum tax.
The individual situation of each Contract owner or beneficiary will determine
the federal estate taxes and the state and local estate, inheritance and other
taxes due if the owner or insured dies.
Contracts Issued In Connection With Tax-Qualified Pension Plans. The Contracts
may be acquired in connection with the funding of retirement plans satisfying
the qualification requirements of section 401 of the Internal Revenue Code. Such
Contracts may be issued with a minimum face amount of $25,000, and increases and
decreases in face amount may be effected in minimum increments of $10,000. The
monthly charge for anticipated mortality costs and the scheduled premiums under
such Contracts will be the same for male and female insureds of a particular age
and underwriting classification. Illustrations reflecting such premiums and
charges will be given to purchasers of Contracts issued in connection with
qualified plans. Only certain of the riders normally available with the
Contracts are available to Contracts issued in connection with qualified plans.
See Riders, page 26. Moreover, variable reduced paid-up insurance and payment of
cash surrender value are the only options on lapse available to Contracts issued
in connection with qualified plans. See Options on Lapse, page 22. Finally,
Contracts issued in connection with qualified plans may not invest in the Real
Property Account.
Prior to purchase of a Contract in connection with a qualified plan, the
provisions of the Code relating to such plans and life insurance thereunder
should be examined.
The Fixed-Rate Option. Because of exemptive and exclusionary provisions,
interests in the fixed-rate option under the Contract have not been registered
under the Securities Act of 1933 and the general account has not been registered
as an investment company under the Investment Company Act of 1940. Accordingly,
interests in the fixed-rate option are not subject to the provisions of these
Acts, and Pruco Life has been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosure in this prospectus relating
to the fixed-rate option. Disclosure regarding the fixed-rate option may,
however, be subject to certain generally applicable provisions of federal
securities laws relating to the accuracy and completeness of statements made in
prospectuses.
As explained earlier, a Contract owner may elect to allocate, either initially
or by transfer, all or part of the amount credited under the Contract to a
fixed-rate option, and the amount so allocated or transferred becomes part of
Pruco Life's general assets. Sometimes this is referred to as Pruco Life's
general account, which consists of all assets owned by Pruco Life other than
those in the Account and in other separate accounts that have been or may be
established by Pruco Life. Subject to applicable law, Pruco Life has sole
discretion over the investment of the assets of the general account, and
Contract owners do not share in the investment experience of those assets.
Instead, Pruco Life guarantees that the part of the Contract fund allocated to
the fixed-rate option will accrue interest daily at an effective annual rate
that Pruco Life declares periodically, but not less than an effective annual
rate of 4%. Currently, declared interest rates remain in effect from the date
money is allocated to the fixed-rate option until the Monthly date in the same
month in the following year. Thereafter, a new crediting rate will be declared
each year and will remain in effect for the calendar year. Pruco Life reserves
the right to change this practice. Pruco Life is not obligated to credit
interest at a higher rate than 4%, although in its sole discretion it may do so.
Different crediting rates may be declared for different portions of the Contract
fund allocated to the fixed-rate option. On request, a Contract owner will be
advised of the interest rates that currently apply to his or her Contract.
Transfers from the fixed-rate option are subject to strict limits. (See
Transfers, page 9). The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to 6 months (see When Proceeds are Paid,
page 19).
Legal Considerations Relating to Sex-Distinct Premiums and Benefits. The
Contract generally employs mortality tables that distinguish between males and
females. Thus, premiums and benefits under Contracts issued on males and females
of the same age will generally differ. However, in those states that have
adopted regulations prohibiting sex-distinct insurance rates, premiums and cost
of insurance charges will be based on a blended unisex rate whether the insured
is male or female. In addition, employers and employee organizations considering
purchase of a Contract should consult their legal advisors to determine whether
purchase of a Contract based on sex-distinct actuarial tables is consistent with
Title VII of the Civil Rights Act of 1964 or other applicable law. Pruco Life
may offer the Contract with unisex mortality rates to such prospective
purchasers.
Other General Contract Provisions.
Beneficiary. The beneficiary is designated and named in the application by the
Contract owner. Thereafter, the owner may change the beneficiary, provided it is
in accordance with the terms of the Contract. Should the insured die with no
surviving beneficiary, the insured's estate will become the beneficiary.
25
<PAGE>
Incontestability. After the Contract has been in force during the insured's
lifetime for 2 years from the Contract date or, with respect to any change in
the Contract that requires Pruco Life's approval and could increase its
liability, after the change has been in effect during the insured's lifetime for
2 years from the effective date of the change, Pruco Life will not contest its
liability under the Contract in accordance with its terms.
Misstatement of Age or Sex. If the insured's stated age or sex (except where
unisex rates apply) or both are incorrect in the Contract, Pruco Life will
adjust the death benefits payable, as required by law, to reflect the correct
age and sex. Any death benefit will be based on what the most recent charge for
mortality would have provided at the correct age and sex.
Suicide Exclusion. Generally, if the insured, whether sane or insane, dies by
suicide within 2 years from the Contract date, Pruco Life will pay no more under
the Contract than the sum of the premiums paid.
If the insured, whether sane or insane, dies by suicide within 2 years from the
effective date of an increase in the face amount of insurance, Pruco Life will
pay, with respect to the amount of the increase, no more than the sum of the
scheduled premiums attributable to the increase.
Assignment. This Contract may not be assigned if such assignment would violate
any federal, state or local law or regulation. Pruco Life assumes no
responsibility for the validity or sufficiency of any assignment, and it will
not be obligated to comply with any assignment unless it has received a copy at
one of its Home Offices.
Settlement Options. The Contract grants to most owners, or to the beneficiary, a
variety of optional ways of receiving Contract proceeds, other than in a lump
sum. Any Pruco Life representative authorized to sell this Contract can explain
these options upon request.
Riders. When the Contract is first issued, the owner may be able to obtain extra
fixed benefits which may require an additional premium. These benefits will be
described in what is known as a "rider" to the Contract. Charges for riders will
be taken out of the Contract's Contract fund on each Monthly date. One rider
pays an additional amount if the insured dies in an accident. Others waive
certain premiums if the insured is disabled within the meaning of the provision
(or, in the case of a Contract issued on an insured under the age of 15, if the
applicant dies or becomes disabled within the meaning of the provision). Others
pay an additional amount if the insured dies within a stated number of years
after issue; similar term insurance riders may be available for the insured's
spouse or child. The amounts of these benefits are fully guaranteed at issue;
they do not depend on the performance of the Account. Certain restrictions may
apply; they are clearly described in the applicable rider. Any Pruco Life
representative authorized to sell the Contract can explain these riders further.
Samples of the provisions are available from Pruco Life upon written request.
Under one form of rider, which provides monthly renewable term life insurance,
the amount payable upon the death of the insured may be substantially increased.
If this rider is purchased, even the original Contract will not become paid-up,
although, if the Contract fund becomes sufficiently large, a time may come when
Pruco Life will have the right to refuse to accept further premiums. See When a
Contract Becomes Paid-Up, page 15.
Under another form of rider that is purchased for a single premium, businesses
that own a Contract covering certain employees may be able to change the insured
person from one key employee to another if certain requirements are met.
Voting Rights. As stated above, all of the assets held in the subaccounts of the
Account will be invested in shares of the corresponding portfolios of the Series
Fund. Pruco Life is the legal owner of those shares and as such has the right to
vote on any matter voted on at Series Fund shareholders meetings. However, Pruco
Life will, as required by law, vote the shares of the Series Fund at any regular
and special shareholders meetings it is required to hold in accordance with
voting instructions received from Contract owners. The Series Fund will not hold
annual shareholders meetings when not required to do so under Maryland law or
the Investment Company Act of 1940. Series Fund shares for which no timely
instructions from Contract owners are received, and any shares attributable to
general account investments of Pruco Life will be voted in the same proportion
as shares in the respective portfolios for which instructions are received.
Should the applicable federal securities laws or regulations, or their current
interpretation, change so as to permit Pruco Life to vote shares of the Series
Fund in its own right, it may elect to do so.
Matters on which Contract owners may give voting instructions include the
following: (1) election of the Board of Directors of the Series Fund; (2)
ratification of the independent accountant of the Series Fund; (3) approval of
the investment advisory agreement for a portfolio of the Series Fund
corresponding to the Contract owner's selected subaccount[s]; (4) any change in
the fundamental investment policy of a portfolio corresponding to the Contract
owner's selected subaccount[s]; and (5) any other matter requiring a vote of the
shareholders of the Series Fund. With respect to approval of the investment
advisory agreement or any change in a portfolio's fundamental investment policy,
Contract owners participating in such portfolios will vote separately on the
matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.
26
<PAGE>
The number of Series Fund shares for which instructions may be given by a
Contract owner is determined by dividing the portion of the value of the
Contract derived from participation in a subaccount, by the value of one share
in the corresponding portfolio of the Series Fund. The number of votes for which
each Contract owner may give Pruco Life instructions will be determined as of
the record date chosen by the Board of Directors of the Series Fund. Pruco Life
will furnish Contract owners with proper forms and proxies to enable them to
give these instructions. Pruco Life reserves the right to modify the manner in
which the weight to be given voting instructions is calculated where such a
change is necessary to comply with current federal regulations or
interpretations of those regulations.
Pruco Life may, if required by state insurance regulations, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of the Series Fund's portfolios, or to approve or disapprove an investment
advisory contract for the Series Fund. In addition, Pruco Life itself may
disregard voting instructions that would require changes in the investment
policy or investment advisor of one or more of the Series Fund's portfolios,
provided that Pruco Life reasonably disapproves such changes in accordance with
applicable federal regulations. If Pruco Life does disregard voting
instructions, it will advise Contract owners of that action and its reasons for
such action in the next annual or semi-annual report to Contract owners.
Substitution of Series Fund Shares. Although Pruco Life believes it to be
unlikely, it is possible that in the judgment of its management, one or more of
the portfolios of the Series Fund may become unsuitable for investment by
Contract owners because of investment policy changes, tax law changes, or the
unavailability of shares for investment. In that event, Pruco Life may seek to
substitute the shares of another portfolio or of an entirely different mutual
fund. Before this can be done, the approval of the SEC, and possibly one or more
state insurance departments, will be required. Contract owners will be notified
of such substitution.
State Regulation. Pruco Life is subject to regulation and supervision by the
Department of Insurance of the State of Arizona, which periodically examines its
operations and financial condition. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business.
Pruco Life is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.
In addition to the annual statements referred to above, Pruco Life is required
to file with Arizona and other jurisdictions a separate statement with respect
to the operations of all its variable contract accounts, in a form promulgated
by the National Association of Insurance Commissioners.
Experts. The financial statements included in this prospectus have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing. Deloitte &
Touche LLP's principal business address is Two Hilton Court, Parsippany, New
Jersey 07054-0319. Actuarial matters included in this prospectus have been
examined by Nancy D. Davis, FSA, MAAA, whose opinion is filed as an exhibit to
the registration statement.
Litigation. No litigation is pending that would have a material effect upon the
Account or the Series Fund.
Additional Information. A registration statement has been filed with the SEC
under the Securities Act of 1933, relating to the offering described in this
prospectus. This prospectus does not include all the information set forth in
the registration statement. Certain portions have been omitted pursuant to the
rules and regulations of the SEC. The omitted information may, however, be
obtained from the SEC's principal office in Washington, D.C., upon payment of a
prescribed fee.
Further information may also be obtained from Pruco Life's office. The address
and telephone number are set forth on the cover of this prospectus.
Financial Statements. The consolidated financial statements of Pruco Life and
subsidiaries included herein should be distinguished from the financial
statements of the Account, and should be considered only as bearing upon the
ability of Pruco Life to meet its obligations under the Contracts.
27
<PAGE>
DIRECTORS AND OFFICERS
The directors and officers of Pruco Life, listed with their principal
occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE
E. MICHAEL CAULFIELD, Director. -- President, Prudential Preferred Financial
Services since 1993; 1992 to 1993: President, Prudential Property and Casualty
Insurance Company*; Prior to 1992: President of Investment Services of The
Prudential.
ROBERT P. HILL, Chairman and Director. -- Executive Vice President of The
Prudential.
GARNETT L. KEITH, JR., Director. -- Vice Chairman of The Prudential.
IRA J. KLEINMAN, Director. -- President, Prudential Select Marketing since 1993;
1992 to 1993: Senior Vice President of The Prudential; Prior to 1992: Vice
President of The Prudential.
ESTHER H. MILNES, President and Director. -- Senior Vice President and Chief
Actuary, Prudential Insurance and Financial Services since 1993; Prior to 1993:
Vice President and Associate Actuary of The Prudential.
I. EDWARD PRICE, Vice Chairman and Director. -- President, International
Insurance of The Prudential since 1993; Prior to 1993: Senior Vice President and
Company Actuary of The Prudential.
DONALD G. SOUTHWELL, Director. -- President, Prudential Insurance and Financial
Services since 1993; Prior to 1993: Senior Vice President of The Prudential.
OFFICERS WHO ARE NOT DIRECTORS
BEVERLY R. BARNEY, Senior Vice President. -- Vice President and Associate
Actuary, Prudential Direct since 1993; 1991 to 1993: Senior Vice President and
Actuary of Pruco Life; Prior to 1991: Vice President and Actuary of Pruco Life.
ROBERT EARL, Senior Vice President. -- Vice President, Strategic Initiatives,
Prudential Preferred Financial Services since 1993; Prior to 1993: Vice
President Regional Marketing of The Prudential.
JOHN P. GUALTIERI, JR., Senior Vice President and Assistant Secretary. -- Vice
President and Insurance Counsel of The Prudential since 1993. Prior to 1993:
Senior Vice President and General Counsel of Pruco Life.
RICHARD F. LAMBERT, Senior Vice President, Chief Actuary, Appointed Actuary. --
Vice President and Associate Actuary, Prudential Preferred Financial Services
since 1993; 1991 to 1993: Vice President and Actuary of The Prudential. Prior to
1991: Vice President, Prudential Select Marketing.
DOROTHY K. LIGHT, Secretary. -- Vice President and Secretary of The Prudential.
DIANE M. MCGOVERN, Vice President and Actuary. -- Vice President and Assistant
Actuary of The Prudential.
MARTIN PFINSGRAFF, Treasurer. -- Vice President and Treasurer of The Prudential
since 1991; Prior to 1991: Managing Director, Corporate Finance of The
Prudential.
MICHAEL R. SHAPIRO, Senior Vice President. -- Senior Vice President, Prudential
Select Marketing.
LAWRENCE J. SUNDRAM, Senior Vice President. -- Senior Vice President of Property
and Casualty, Prudential Insurance and Financial Services since 1994; 1993 to
1994: Vice President, Prudential Insurance and Financial Services; Prior to
1993: Vice President, District Agencies Marketing for The Prudential.
STEPHEN P. TOOLEY, Vice President, Comptroller and Chief Accounting Officer. --
Vice President and Comptroller, Prudential Insurance and Financial Services
since 1993; Prior to 1993: Director, Financial Analysis for The Prudential.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992.
* Subsidiary of The Prudential
28
<PAGE>
"Financial Statements to be filed pursuant to Rule 485(b)"
<PAGE>
Variable
APPRECIABLE
LIFE(R)
INSURANCE CONTRACTS
PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 437-4016, Ext. 46
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
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 such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Prudential Directors' and Officers' Liability and Corporation Reimbursement
Program, purchased by The Prudential from National Union Fire Insurance Company
of Pittsburgh, PA., Federal Insurance Company (Chubb), Corporate Officers &
Directors Assurance Ltd., Aetna Casualty & Surety Company, XL Insurance Company
Ltd., and A.C.E. Insurance Company, Ltd., provides coverage for "Loss" (as
defined in the policies) arising from any claim or claims by reason of any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by persons while acting in their capacity as directors or officers of
The Prudential, any of its subsidiaries, or certain investment companies
affiliated with The Prudential, or any matter claimed against such persons
solely by reason of their being such a director or officer. The coverage is
provided to The Prudential to the extent that The Prudential, its subsidiaries,
including its investment company subsidiaries shall be required or permitted
according to applicable law, common or statutory, or under their respective
charters or by-laws, to indemnify directors or officers for Loss arising from
the above-described matters. Coverage is also provided to the individual
directors or officers for such Loss, for which they shall not be indemnified.
Loss essentially is the legal liability on claims against a director or officer,
including damages, judgments, settlements, costs, charges and expenses
(excluding salaries of officers or employees) incurred in the defense of
actions, suits or proceedings and appeals therefrom. Loss does not include fines
or penalties imposed by law, exemplary damages, or other matters which may be
deemed uninsurable under the law pursuant to which the policies are construed.
There are a number of exclusions from coverage. Among the matters excluded are
Losses arising as the result of (1) claims brought about or contributed to by
the criminal or deliberate fraudulent acts of a director or officer, and (2)
claims for an accounting of profits in fact made from the purchase or sale by a
director or officer of any securities of the insured corporations within the
meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any state statutory law.
The limit of coverage under the Program for both individual and corporate
reimbursement coverage is $100,000,000, except as it relates to coverage for
fiduciary liability of directors and officers relating to Prudential employee
benefit plans, for which the limit of coverage is $80,000,000. The retention for
corporate reimbursement coverage is $5,000,000 per loss.
As noted above, coverage is provided to the extent permitted or required by
applicable law or corporate charters and by-laws. The relevant provisions of New
Jersey law, New Jersey being the state of organization of The Prudential, can be
found in Section 14A:3-5 of the New Jersey Statutes Annotated. The relevant
provisions of Arizona law, Arizona being the state of organization of Pruco
Life, can be found in Section 10-005 of the Arizona Statutes Annotated. The text
of The Prudential's by-law 27, which relates to indemnification of officers and
directors, is incorporated by reference to Exhibit 1.A.(6)(b) of Post-Effective
Amendment No. 4 to Form S-6, Registration No. 33-20000, filed March 2, 1990, on
behalf of The Prudential Variable Appreciable Account. The text of Pruco Life's
by-laws, Article VIII, which relates to indemnification of officers and
directors, is incorporated by reference to Exhibit 1.A.(6)(b) to this
Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 36 pages.
The undertaking to file reports.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
None
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of Pruco Life Insurance Company
establishing the Pruco Life Variable Appreciable Account. (Note 2)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and Pruco Life Insurance Company. (Note 2)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale
of the Contracts. (Note 5)
(c) Schedules of Sales Commissions. (Note 14)
(4) Not Applicable.
(5) Variable Appreciable Life Insurance Contracts.
(a) With fixed death benefit. (Note 5)
(b) With variable death benefit. (Note 5)
(c) Complaint Notice for use in Texas with Variable Appreciable
Life Insurance Contracts. (Note 5)
(d) Notice giving Information for Consumers for use in Illinois
with Variable Appreciable Life Insurance Contracts. (Note 6)
(e) Endorsement for Misstatement of Age and/or Sex for use in
Pennsylvania with Variable Appreciable Life Insurance
Contracts. (Note 9)
(f) Revised Contract with fixed death benefit. (Note 10)
(g) Revised Contract with variable death benefit. (Note 10)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company,
as amended July 25, 1972. (Note 3)
(b) By-laws of Pruco Life Insurance Company, as amended
June 14, 1983. (Note 16)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) Application Form for Variable Appreciable Life Insurance
Contract. (Note 2)
(b) Supplement to the Application for Variable Appreciable Life
Insurance Contract. (Note 4)
(11) Form of Notice of Withdrawal Right. (Note 4)
(12) Memorandum describing Pruco Life Insurance Company's issuance,
transfer, and redemption procedures for the Contracts pursuant to
Rule 6e-2(b)(12)(ii) and method of computing cash adjustment upon
exercise of right to exchange for fixed-benefit insurance pursuant
to Rule 6e-2(b)(13)(v)(B). (Note 15)
(13) Available Contract Riders.
II-2
<PAGE>
(a) Rider for Insured's Waiver of Premium Benefit. (Note 6)
(b) Rider for Applicant's Waiver of Premium Benefit. (Note 6)
(c) Rider for Insured's Accidental Death Benefit. (Note 6)
(d) Rider for Level Term Insurance Benefit on Life of Insured.
(Note 6)
(e) Rider for Decreasing Term Insurance Benefit on Life of
Insured. (Note 6)
(f) Rider for Interim Term Insurance Benefit. (Note 6)
(g) Rider for Option to Purchase Additional Insurance on Life of
Insured.(Note 6)
(h) Rider for Decreasing Term Insurance Benefit on Life of
Insured Spouse. (Note 6)
(i) Rider for Level Term Insurance Benefit on Dependent Children.
(Note 6)
(j) Rider for Level Term Insurance Benefit on Dependent
Children-from Term Conversions. (Note 6)
(k) Rider for Level Term Insurance Benefit on Dependent
Children-from Term Conversions or
Attained Age Change.(Note 6)
(l) Rider defining Insured Spouse.(Note 6)
(m) Rider covering lack of Evidence of Insurability on a Child.
(Note 6)
(n) Rider modifying Waiver of Premium Benefit.(Note 6)
(o) Rider to terminate a Supplementary Benefit.(Note 6)
(p) Rider providing for election of Variable Reduced Paid-up
Insurance.(Note 6)
(q) Rider to provide for exclusion of Aviation Risk. (Note 6)
(r) Rider to provide for exclusion of Military Aviation Risk.
(Note 6)
(s) Rider to provide for exclusion for War Risk. (Note 6)
(t) Endorsement for Contractual Conversion of a Term Policy.
(Note 6)
(u) Endorsement for Conversion of a Dependent Child. (Note 6)
(v) Endorsement for Conversion of Level Term Insurance Benefit
on a Child. (Note 6)
(w) Endorsement providing for Variable Loan Interest Rate.
(Note 6)
(x) Rider for Automatic Premium Loan for use in Maryland and
Rhode Island. (Note 6)
(y) Certification guaranteeing Right to Convert for use in
Virginia. (Note 6)
(z) Endorsement for Increase in Face Amount. (Note 7)
(aa) Supplementary Monthly Renewable Non-Convertible One Month
Term Insurance
(i) for use with fixed death benefit Contract. (Note 8)
(ii) for use with variable death benefit Contract. (Note 8)
(bb) Rider for Term Insurance Benefit on Life of
Insured-Decreasing Amount After Three Years. (Note 9)
(cc) Rider for Term Insurance Benefit on Life of Insured
Spouse-Decreasing Amount After Three Years. (Note 9)
(dd) Endorsement for Contracts issued in connection with
tax-qualified pension plans. (Note 11)
(ee) Appreciable Plus Rider. (Note 12)
(ff) Living Needs Benefit Rider
(i) for use in Florida. (Note 17)
(ii) for use in all approved jurisdictions except Florida.
(Note 17)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of xxxxx as to the legality of the securities being
registered. (Note 19)
4. None.
5. Not Applicable.
6. Opinion and Consent of Nancy D. Davis, FSA, MAAA, as to actuarial matters
pertaining to the securities being registered. (Note 19)
7. Powers of Attorney. (Note 18)
II-3
<PAGE>
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Registrant's Form S-6, filed
February 21, 1984.
(Note 3) Incorporated by reference to Exhibit 1.A.(6)(a), Form N-8B-2
Registration No. 2-80513, filed November 22, 1982, on behalf of the
Pruco Life Variable Insurance Account.
(Note 4) Incorporated by reference to Pre-Effective Amendment No. 1 to this
Registration Statement, filed June 12, 1984.
(Note 5) Incorporated by reference to Pre-Effective Amendment No. 2 to this
Registration Statement, filed October 9, 1984.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 1 to this
Registration Statement, filed April 30, 1985.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 2 to this
Registration Statement, filed September 13, 1985.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 3 to this
Registration Statement, filed April 4, 1986.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 4 to this
Registration Statement, filed April 30, 1986.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 5 to this
Registration Statement, filed July 10, 1986.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 6 to this
Registration Statement, filed September 8, 1986.
(Note 12) Incorporated by reference to Post-Effective Amendment No. 7 to this
Registration Statement, filed October 23, 1986.
(Note 13) Incorporated by reference to Post-Effective Amendment No. 8 to this
Registration Statement, filed February 27, 1987.
(Note 14) Incorporated by reference to Post-Effective Amendment No. 9 to this
Registration Statement, filed April 27, 1987.
(Note 15) Incorporated by reference to Post-Effective Amendment No. 10 to this
Registration Statement, filed October 9, 1987.
(Note 16) Incorporated by reference to Post-Effective Amendment No. 13 to this
Registration Statement, filed March 2, 1989.
(Note 17) Incorporated by reference to Post-Effective Amendment No. 16 to this
Registration Statement, filed April 26, 1990
(Note 18) Incorporated by reference to Form S-1, Registration No. 33-86780,
filed November 23, 1994, on behalf of the Pruco Life Real Property
Account.
(Note 19) To be filed by Post-Effective Amendment.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, the
Pruco Life Variable Appreciable Account, has duly caused this Post-Effective
Amendment No. 23 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal hereunto affixed and
attested, all in the city of Newark and the State of New Jersey, on this 27th
day of February, 1995.
(Seal) Pruco Life Variable Appreciable Account
(Registrant)
By: Pruco Life Insurance Company
(Depositor)
Attest: /s/ THOMAS C. CASTANO By: /s/ ESTHER H. MILNES
--------------------------- --------------------------------------
Thomas C. Castano Esther H. Milnes
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 23 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 27th day of February,
1995.
Signature and Title
-------------------
/s/ *
- ----------------------------------------
Robert P. Hill
Chairman of the Board
/s/ *
- ----------------------------------------
Esther H. Milnes
President and Director
/s/ *
- ----------------------------------------
Stephen P. Tooley
Chief Accounting Officer and Comptroller
/s/ *
- ----------------------------------------
E. Michael Caulfield *By: /s/ THOMAS C. CASTANO
Director -----------------------------
Thomas C. Castano
/s/ * (Attorney-in-Fact)
- ----------------------------------------
Garnett L. Keith, Jr.
Director
/s/ *
- ----------------------------------------
Ira J. Kleinman
Director
/s/ *
- ----------------------------------------
I. Edward Price
Director
/s/ *
- ----------------------------------------
Donald G. Southwell
Director
II-5
