<PAGE>
As filed with the SEC on . Registration No.
------------ -----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
--------------
PRUCO LIFE OF NEW JERSEY
VARIABLE APPRECIABLE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 Washington Street
Newark, New Jersey 07102-2992
(800) 286-7754
(Address and telephone number of principal executive offices)
--------------
Thomas C. Castano
Assistant Secretary
Pruco Life Insurance Company of New Jersey
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 Universal Life Insurance Contracts Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant elects to register an indefinite
amount of securities. (Title and amount of securities being registered, and
proposed maximum aggregate offering price).
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
dates as the Commission, action pursuant to said Section 8(a), may determine.
This filing is being made pursuant to Rules 6c-3 and 6e-3(T) under the
Investment Company Act of 1940.
Registrant elects to be governed by Rules 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Contract described in this
Registration Statement.
<PAGE>
CROSS REFERENCE SHEET
(as required by Form N-B-2)
N-B-2 Item Number Location
----------------- --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contracts and Sales
Commissions
5. Pruco Life of New Jersey Variable
Appreciable Account
6. Pruco Life of New Jersey Variable
Appreciable Account
7. Not Applicable
8. Not Applicable
9. Litigation and Regulatory Proceedings
10. Introduction and Summary; Voting Rights;
Charges and Expenses; Short-Term
Cancellation Right or "Free Look"; Types
of Death Benefit; Changing the Type of
Death Benefit; Riders; Premiums;
Allocation of Premiums; Transfers; Dollar
Cost Averaging; Auto-Rebalancing; How a
Contract's Surrender Value Will Vary; How
a Type A (Fixed) Contract's Death Benefit
Will Vary; How a Type B (Variable)
Contract's Death Benefit Will Vary; How a
Type C (Return of Premium) Contract's
Death Benefit Will Vary; Cash Surrender of
a Contract; Withdrawals; Lapse and
Reinstatement; Decreases in Basic
Insurance Amount; When Proceeds are Paid;
Contract Loans; Other General Contract
Provisions; Substitution of Series Fund
Shares
11. Introduction and Summary; Pruco Life of
New Jersey Variable Appreciable Account
12. Cover Page; Introduction and Summary; The
Prudential Series Fund, Inc.; Sale of the
Contract and Sales Commissions
13. Introduction and Summary; The Prudential
Series Fund, Inc.; Charges and Expenses;
Premiums; Allocation of Premiums; Sale of
the Contract and Sales Commissions
14. Introduction and Summary; Detailed
Information for Prospective Contract
Owners
15. Introduction and Summary; Premiums;
Allocation of Premiums; Transfers; Dollar
Cost Averaging; Auto-Rebalancing
16. Introduction and Summary; Detailed
Information for Contract Owners
<PAGE>
N-B-2 Item Number Location
----------------- --------
17. When Proceeds are Paid
18. Pruco Life of New Jersey Variable
Appreciable Account
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
25. Pruco Life Insurance Company of New Jersey
26. Introduction and Summary; The Prudential
Series Fund, Inc.; Charges and Expenses
27. Pruco Life Insurance Company of New
Jersey; The Prudential Series Fund, Inc.
28. Pruco Life Insurance Company of New
Jersey; Directors and Officers
29. Pruco Life Insurance Company of New Jersey
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Pruco Life Insurance Company of New Jersey
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
<PAGE>
N-B-2 Item Number Location
----------------- --------
44. Introduction and Summary; The Prudential
Series Fund, Inc.; How a Contract's Cash
Surrender Value Will Vary; How a Type A
(Fixed) Contract's Death Benefit Will
Vary; How a Type B (Variable) Contract's
Death Benefit Will Vary; How a Type C
(Return of Premium) Contract's Death
Benefit Will Vary
45. Not Applicable
46. Introduction and Summary; Pruco Life of
New Jersey Variable Appreciable Account;
The Prudential Series Fund, Inc.
47. Pruco Life of New Jersey Variable
Appreciable Account; The Prudential Series
Fund, Inc.
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Series Fund Shares
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 the Pruco Life of New Jersey Variable
Appreciable Account; Financial Statements
of Pruco Life Insurance Company of New
Jersey
<PAGE>
PruLife Custom Premier
Variable Universal Life Insurance
PROSPECTUS
Pruco Life of New Jersey
Variable Appreciable Account
February 12, 2001
Pruco Life Insurance Company of New Jersey
<PAGE>
PROSPECTUS
February 12, 2001
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
PruLife Custom Premier
This prospectus describes an individual flexible premium variable universal life
insurance contract (the "Contract") offered by Pruco Life Insurance Company of
New Jersey ("Pruco Life of New Jersey," "us," "we," or "our"). Pruco Life of New
Jersey is an indirect, wholly-owned subsidiary of The Prudential Insurance
Company of America. The Contract provides life insurance coverage with flexible
premium payments, a variety of investment options, and three types of death
benefit options. The Contract may be issued with a Target Term Rider that could
have a significant effect on the performance of your Contract. For the factors
to consider when adding a Target Term Rider to your Contract, see Riders, page
17.
You may choose to invest your Contract's premiums and its earnings in one or
more of 16 available variable investment options of the Pruco Life of New Jersey
Variable Appreciable Account (the "Account"), each of which invests in one of
the following portfolios of The Prudential Series Fund, Inc. ("Series Fund"):
<TABLE>
<CAPTION>
<S> <C>
o Diversified Bond Portfolio o SP Alliance Technology Portfolio
o Equity Portfolio o SP Davis Value Portfolio
o High Yield Bond Portfolio o SP Deutsche International Equity Portfolio
o Money Market Portfolio o SP INVESCO Small Company Growth Portfolio
o Prudential Jennison Portfolio o SP MFS Capital Opportunities Portfolio
o Stock Index Portfolio o SP MFS Mid-Cap Growth Portfolio
o SP AIM Aggressive Growth Portfolio o SP Prudential U.S. Emerging Growth Portfolio
o SP Alliance Large Cap Growth Portfolio o SP Small/Mid Cap Value Portfolio
</TABLE>
For a detailed list of the 16 available Series Fund portfolios, their investment
objectives, and investment advisers, see The Prudential Series Fund, Inc., page
7.
You may also choose to invest your Contract's premiums and its earnings in the
fixed-rate option which pays a guaranteed interest rate. See The Fixed-Rate
Option, page 9.
This prospectus describes the Contract generally and the Pruco Life of New
Jersey Variable Appreciable Account (the "Account"). The attached prospectus for
the Series Fund and the Series Fund's statement of additional information
describes the investment objectives and the risks of investing in the Series
Fund portfolios. Pruco Life of New Jersey may add additional investment options
in the future. Please read this prospectus and keep it for future reference.
The Securities and Exchange Commission ("SEC") maintains a Web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
The Contract may be purchased through registered representatives located in
banks and other financial institutions. An investment in the Contract is not a
bank deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") or any other governmental agency and may lose value. An
investment is also not a condition to the provision or term of any banking
service or activity. The participating bank is not a registered broker-dealer
and is not affiliated with Pruco Securities Corporation.
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 778-2255
<PAGE>
<TABLE>
<CAPTION>
PROSPECTUS CONTENTS
Page
<S> <C>
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS............................................................................1
INTRODUCTION AND SUMMARY........................................................................................................2
Brief Description of the Contract............................................................................................2
Charges......................................................................................................................2
Types of Death Benefit.......................................................................................................5
Life Insurance Definitional Tests............................................................................................5
Premium Payments.............................................................................................................5
Refund.......................................................................................................................5
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE
ACCOUNT, AND THE VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT.......................................................6
Pruco Life Insurance Company of New Jersey...................................................................................6
The Pruco Life of New Jersey Variable Appreciable Account....................................................................6
The Prudential Series Fund, Inc..............................................................................................7
Voting Rights................................................................................................................9
The Fixed-Rate Option........................................................................................................9
Which Investment Option Should Be Selected?.................................................................................10
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS...........................................................................11
Charges and Expenses........................................................................................................11
Allocated Charges...........................................................................................................14
Requirements for Issuance of a Contract.....................................................................................14
Short-Term Cancellation Right or "Free-Look"................................................................................15
Types of Death Benefit......................................................................................................15
Changing the Type of Death Benefit..........................................................................................16
Riders......................................................................................................................17
Contract Date...............................................................................................................18
Premiums....................................................................................................................18
Allocation of Premiums......................................................................................................20
Death Benefit Guarantee.....................................................................................................20
Transfers...................................................................................................................22
Dollar Cost Averaging.......................................................................................................22
Auto-Rebalancing............................................................................................................23
How a Contract's Cash Surrender Value Will Vary.............................................................................23
How a Type A (Fixed) Contract's Death Benefit Will Vary.....................................................................23
How a Type B (Variable) Contract's Death Benefit Will Vary..................................................................24
How a Type C (Return of Premium) Contract's Death Benefit Will Vary.........................................................25
Surrender of a Contract.....................................................................................................26
Withdrawals.................................................................................................................26
Lapse and Reinstatement.....................................................................................................27
Increases in Basic Insurance Amount.........................................................................................27
Decreases in Basic Insurance Amount.........................................................................................28
When Proceeds Are Paid......................................................................................................29
Living Needs Benefit........................................................................................................29
Illustrations of Cash Surrender Values, Death Benefits, and Accumulated Premiums............................................30
Contract Loans..............................................................................................................32
Tax Treatment of Contract Benefits..........................................................................................33
Legal Considerations Relating to Sex-Distinct Premiums and Benefits.........................................................35
Other General Contract Provisions...........................................................................................35
Substitution of Series Fund Shares..........................................................................................35
Reports to Contract Owners..................................................................................................36
Sale of the Contract and Sales Commissions..................................................................................36
</TABLE>
<PAGE>
<TABLE>
<S> <C>
State Regulation............................................................................................................36
Experts.....................................................................................................................37
Litigation and Regulatory Proceedings.......................................................................................37
Additional Information......................................................................................................37
Financial Statements........................................................................................................38
DIRECTORS AND OFFICERS.........................................................................................................39
FINANCIAL STATEMENTS OF THE VARIABLE UNIVERSAL LIFE SUBACCOUNTS OF THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT..A1
FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY............................................................B1
</TABLE>
<PAGE>
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS
Accumulated Net Payments -- The actual premium payments you make, accumulated at
an effective annual rate of 4%, less any withdrawals you make, also accumulated
at an effective annual rate of 4%.
attained age -- The insured's age on the Contract date plus the number of years
since then. For any coverage segment effective after the Contract date, the
insured's attained age is the issue age of that segment plus the length of time
since its effective date.
basic insurance amount -- The amount of life insurance as shown in the Contract.
Also referred to as "face amount."
cash surrender value -- The amount payable to the Contract owner upon surrender
of the Contract. It is equal to the Contract Fund minus any Contract debt and
minus any applicable surrender charge. Also referred to in the Contract as "Net
Cash Value."
Contract -- The variable universal life insurance policy described in this
prospectus.
Contract anniversary -- The same date as the Contract date in each later year.
Contract date -- The date the Contract is effective, as specified in the
Contract.
Contract debt -- The principal amount of all outstanding loans plus any interest
accrued thereon.
Contract Fund -- The total amount credited to a specific Contract. On any date
it is equal to the sum of the amounts in all the variable investment options and
the fixed-rate option, and the principal amount of any Contract debt plus any
interest earned thereon.
Contract owner -- You. Unless a different owner is named in the application, the
owner of the Contract is the insured.
Contract year -- A year that starts on the Contract date or on a Contract
anniversary. For any coverage segment representing an increase, "Contract year"
is a year that starts on the effective date of the increase (referred to as
"Target year" in the Contract). See Increases in Basic Insurance Amount, page
27.
death benefit -- If the Contract is not in default, this is the amount we will
pay upon the death of the insured, assuming no Contract debt.
fixed-rate option -- An investment option under which interest is accrued daily
at a rate that Pruco Life of New Jersey declares periodically, but not less than
an effective annual rate of 4%.
The Prudential Series Fund, Inc. -- A mutual fund with separate portfolios. One
or more of the available Series Fund portfolios may be chosen as an underlying
investment for the Contract.
Death Benefit Guarantee -- Sufficient premium payments, on an accumulated basis,
will guarantee that your Contract will not lapse and a death benefit will be
paid upon the death of the insured, regardless of investment experience and
assuming no loans. See Death Benefit Guarantee, page 20.
Monthly date -- The Contract date and the same date in each subsequent month.
Pruco Life Insurance Company of New Jersey -- Us, we, our, Pruco Life of New
Jersey. The company offering the Contract.
separate account --"Amounts under the Contract that are allocated to the
variable investment options are held by us in a separate account called the
Pruco Life of New Jersey Variable Appreciable Account (the "Account"). The
separate account is set apart from all of the general assets of Pruco Life
Insurance Company of New Jersey.
valuation period -- The period of time from one determination of the value of
the amount invested in a variable investment option 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 4:00 p.m. Eastern time on each
day during which the New York Stock Exchange is open.
variable investment options -- The 16 available subaccounts of the Pruco Life of
New Jersey Variable Appreciable Account. Each subaccount invests in a portfolio
of the Series Fund with the same name.
you -- The owner of the Contract.
1
<PAGE>
INTRODUCTION AND SUMMARY
This Summary provides a brief overview of the more significant aspects of the
Contract. We provide further detail in the subsequent sections of this
prospectus and in the Contract.
Brief Description of the Contract
The Contract is a form of variable universal life insurance. It is based on a
Contract Fund, the value of which changes every day. The chart on the following
page describes how the value of your Contract Fund changes.
A broad objective of the Contract is to provide benefits that will increase in
value if favorable investment results are achieved. You may invest premiums in
one or more of the 16 available variable investment options or in the fixed-rate
option. Your Contract Fund value changes every day depending upon the change in
the value of the particular investment options you have selected. These
Contracts may be issued with a Target Term Rider that could have a significant
effect on the performance of your Contract. For the factors to consider when
adding a Target Term Rider to your Contract, see Riders, page 17.
Although the value of your Contract Fund will increase if there is favorable
investment performance in the variable investment options you select, investment
returns in the variable investment options are NOT guaranteed. There is a risk
that investment performance will be unfavorable and that the value of your
Contract Fund will decrease. The risk will be different, depending upon which
investment options you choose. See Which Investment Option Should Be Selected?,
page 10. If you select the fixed-rate option, Pruco Life of New Jersey credits
your account with a declared rate of interest but you assume the risk that the
rate may change, although it will never be lower than an effective annual rate
of 4%. Variable life insurance contracts are unsuitable as short-term savings
vehicles.
The replacement of life insurance is generally not in your best interest. In
most cases, if you require additional coverage, the benefits of your existing
contract can be protected by purchasing additional insurance or a supplemental
contract. If you are considering replacing a contract, you should compare the
benefits and costs of supplementing your existing contract with the benefits and
costs of purchasing the Contract described in this prospectus and you should
consult with a qualified tax adviser.
This prospectus may only be offered in jurisdictions in which the offering is
lawful. No person is authorized to make any representations in connection with
this offering other than those contained in this prospectus and in the
prospectuses and statements of additional information for the Series Fund.
For the DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS, see page 1.
Charges
The following chart outlines the components of your Contract Fund and the
adjustments which may be made including the maximum charges which may be
deducted from each premium payment and from the amounts held in the designated
investment options. These charges are largely designed to cover insurance costs
and risks as well as sales and administrative expenses.
The maximum charges shown in the following chart, as well as the lower current
charges, are fully described under Charges and Expenses, page 11.
2
<PAGE>
---------------------------------------------
Premium Payment
---------------------------------------------
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o less a charge of up to 7.5% of the premiums paid for
taxes attributable to premiums.
o less a charge for sales expenses of up to 6% of the
premiums paid.
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--------------------------------------------------------------------
Invested Premium Amount
To be invested in one or a combination of:
o 16 investment portfolios of the Series Fund
o The fixed-rate option
--------------------------------------------------------------------
--------------------------------------------------------------------------
Contract Fund
On the Contract Date, the Contract Fund is equal to the invested premium
amount minus any of the charges described below which may be due on that
date. Thereafter, the value of the Contract Fund changes daily.
--------------------------------------------------------------------------
--------------------------------------------------------------------------------
Pruco Life of New Jersey adjusts the Contract Fund for:
o Addition of any new invested premium amounts.
o Addition of any increase due to investment results of the chosen variable
investment options.
o Addition of guaranteed interest at an effective annual rate of 4% (plus any
excess interest if applicable) on the portion of the Contract Fund allocated
to the fixed-rate option.
o Addition of guaranteed interest at an effective annual rate of 4% on the
amount of any Contract loan. (Separately, interest charged on the loan
accrues at an effective annual rate of 4.10% or 5%.) See Contract Loans, page
32.
o Subtraction of any decrease due to investment results of the chosen variable
investment options.
o Subtraction of any amount withdrawn.
o Subtraction of the charges listed below, as applicable.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Daily Charges
o Management fees and expenses are deducted from the Series Fund assets. See
Underlying Portfolio Expenses chart, below.
o We deduct a daily mortality and expense risk charge, equivalent to an annual
rate of up to 0.45%, from the assets in the variable investment options.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Monthly Charges
o We reduce the Contract Fund by a monthly administrative charge of up to $20
for the first two Contract years, $10 thereafter; plus an amount per $1,000
of the basic insurance amount for the first five Contract years, zero
thereafter. The amount per $1,000 varies by sex, issue age and rating class
of the insured.
o For each coverage segment representing an increase in basic insurance amount,
we will deduct up to $12 per segment from the Contract Fund for the first two
years of the segment, zero thereafter; plus an amount per $1,000 of the
coverage segment amount for the first five Contract years, zero thereafter.
The amount per $1,000 varies by the insured's age at the time of the
increase, sex, and rating class. See Increases in Basic Insurance Amount,
page 27.
o We deduct a cost of insurance ("COI") charge.
o If the Contract includes riders, we deduct rider charges from the Contract
Fund.
o If the rating class of an insured results in an extra charge, we will
deduct that charge from the Contract Fund.
--------------------------------------------------------------------------------
3
<PAGE>
----------------------------------------------------------------------------
Possible Additional Charges
o We will charge a surrender charge if, during the first 10 Contract years
(or during the first 10 years of a coverage segment representing an
increase in basic insurance amount), the Contract lapses, is surrendered,
or the basic insurance amount is decreased (including as a result of a
withdrawal or a death benefit type change). The surrender charge period is
shorter for Contracts issued to insureds over age 55.
o We will assess an administrative charge of up to $25 for any withdrawals.
o We will assess an administrative charge of up to $25 for each transfer
exceeding 12 in any Contract year.
o We may assess an administrative charge of up to $25 for any change in basic
insurance amount.
o We may assess an administrative charge of up to $25 for any change in the
Target Term Rider coverage amount. See Riders, page 17.
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Underlying Portfolio Expenses
-------------------------------------------------------------------------------------------------------
Total
Investment Other Contractual Total Actual
The Prudential Series Fund, Inc. Portfolios Advisory Fee Expenses Expenses Expenses*
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diversified Bond Portfolio 0.40% 0.03% 0.43% 0.43%
-------------------------------------------------------------------------------------------------------
Equity Portfolio 0.45% 0.02% 0.47% 0.47%
-------------------------------------------------------------------------------------------------------
High Yield Bond Portfolio 0.55% 0.05% 0.60% 0.60%
-------------------------------------------------------------------------------------------------------
Money Market Portfolio 0.40% 0.02% 0.42% 0.42%
-------------------------------------------------------------------------------------------------------
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
-------------------------------------------------------------------------------------------------------
Stock Index Portfolio 0.35% 0.04% 0.39% 0.39%
-------------------------------------------------------------------------------------------------------
SP AIM Aggressive Growth Portfolio 0.95% 0.50% 1.45% 1.07%
-------------------------------------------------------------------------------------------------------
SP Alliance Large Cap Growth Portfolio 0.90% 0.30% 1.20% 1.10%
-------------------------------------------------------------------------------------------------------
SP Alliance Technology Portfolio 1.15% 0.47% 1.62% 1.30%
-------------------------------------------------------------------------------------------------------
SP Davis Value Portfolio 0.75% 0.31% 1.06% 0.83%
-------------------------------------------------------------------------------------------------------
SP Deutsche International Equity Portfolio 0.90% 0.77% 1.67% 1.10%
-------------------------------------------------------------------------------------------------------
SP INVESCO Small Company Growth Portfolio 0.95% 0.59% 1.54% 1.15%
-------------------------------------------------------------------------------------------------------
SP MFS Capital Opportunities Portfolio 0.75% 0.39% 1.14% 1.00%
-------------------------------------------------------------------------------------------------------
SP MFS Mid-Cap Growth Portfolio 0.80% 0.52% 1.32% 1.00%
-------------------------------------------------------------------------------------------------------
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.52% 1.12% 0.90%
-------------------------------------------------------------------------------------------------------
SP Small/Mid Cap Value Portfolio 0.90% 0.68% 1.58% 1.05%
-------------------------------------------------------------------------------------------------------
* Reflects fee waivers and reimbursement of expenses, if any.
-------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Types of Death Benefit
There are three types of death benefit available. You may choose a Contract with
a Type A (fixed) death benefit under which the cash surrender value varies daily
with investment experience, and the death benefit generally remains at the basic
insurance amount you initially chose. However, the Contract Fund may grow to a
point where the death benefit may increase and vary with investment experience.
If you choose a Contract with a Type B (variable) death benefit, the cash
surrender value and the death benefit both vary with investment experience. For
Type A and Type B death benefits, as long as the Contract is in-force, the death
benefit will never be less than the basic insurance amount shown in your
Contract. If you choose a Contract with a Type C (return of premium) death
benefit, the death benefit is increased by the amount of premiums paid into the
Contract, less withdrawals. You may change your Contract's death benefit type
after issue, however, if you choose a Type A or Type B death benefit at issue,
you will not be able to change to a Type C death benefit thereafter. See Types
of Death Benefit, page 15 and Changing the Type of Death Benefit, page 16.
Life Insurance Definitional Tests
In order to qualify as life insurance for Federal tax purposes, the Contract
must adhere to the definition of life insurance under Section 7702 of the
Internal Revenue Code. At issue, the Contract owner chooses one of the following
definition of life insurance tests: (1) Cash Value Accumulation Test or (2)
Guideline Premium Test. Under the Cash Value Accumulation Test, there is a
minimum death benefit to cash value ratio. Under the Guideline Premium Test,
there is a limit to the amount of premiums that can be paid into the Contract,
as well as a minimum death benefit to cash value ratio. For more information,
see Tax Treatment of Contract Benefits, page 33.
Premium Payments
The Contract is a flexible premium contract - there are no scheduled premiums.
Except for the minimum initial premium, and subject to a minimum of $25 per
subsequent payment, you choose the timing and amount of premium payments. The
Contract will remain in-force if the Contract Fund less any applicable surrender
charges is greater than zero and more than any Contract debt. Paying
insufficient premiums, poor investment results, or the taking of loans or
withdrawals from the Contract will increase the possibility that the Contract
will lapse. However, if the accumulated premiums you pay are high enough and
there is no Contract debt, Pruco Life of New Jersey guarantees that your
Contract will not lapse even if investment experience is very unfavorable and
the Contract Fund drops below zero. The length of time that the guarantee
against lapse is available depends on your Contract's death benefit type and the
definition of life insurance test selected at issue. See Premiums, page 18,
Death Benefit Guarantee, page 20 and Lapse and Reinstatement, page 27.
We offer and suggest regular billing of premiums even though you decide when to
make premium payments and, subject to a $25 minimum, in what amounts. You should
discuss your billing options with your Pruco Life of New Jersey representative
when you apply for the Contract. See Premiums, page 18.
Refund
For a limited time, you may return your Contract for a refund in accordance with
the terms of its "Free-Look" provision. See Short-Term Cancellation Right or
"Free-Look," page 15.
5
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, THE PRUCO
LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
Pruco Life Insurance Company of New Jersey
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is a
stock life insurance company, organized in 1982 under the laws of the State of
New Jersey. It is licensed to sell life insurance and annuities only in the
states of New Jersey and New York. These Contracts are not offered in any state
where the necessary approvals have not been obtained. Pruco Life of New Jersey's
financial statements begin on page B1 and should be considered only as bearing
upon Pruco Life of New Jersey's ability to meet its obligations under the
Contracts.
Pruco Life of New Jersey is an indirect, wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential"), a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. Prudential is
currently considering reorganizing itself into a publicly traded stock company
through a process known as "demutualization". On February 10, 1998, Prudential's
Board of Directors authorized management to take preliminary steps necessary to
allow Prudential to demutualize. On July 1, 1998, legislation was enacted in New
Jersey that would permit this conversion to occur and that specified the process
for conversion. Demutualization is a complex process involving development of a
plan of reorganization, adoption of a plan by Prudential's Board of Directors, a
public hearing, voting by qualified policyholders and regulatory approval.
Prudential is working toward completing this process in 2001 and currently
expects adoption by the Board of Directors to take place in the latter part of
2000. However, there is no certainty that the demutualization will be completed
in this timeframe or that the necessary approvals will be obtained. Also it is
possible that after careful review, Prudential could decide not to demutualize
or could decide to delay its plans.
The plan of reorganization, which has not been fully developed and approved,
would provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible.
Generally the amount of shares or other consideration eligible customers would
receive would be based on a number of factors, including types, amounts and
issue years of the policies. As a general rule, owners of Prudential-issued
insurance policies and annuity contracts would be eligible, provided that their
policies were in force on the date Prudential's Board of Directors adopted a
plan of reorganization, while mutual fund customers and customers of
Prudential's subsidiaries (such as the Pruco Life insurance companies) would not
be. It has not yet been determined whether any exceptions to that general rule
will be made with respect to policyholders and contractholders of Prudential's
subsidiaries. This does not constitute a proposal, offer, solicitation or
recommendation regarding any plan of reorganization that may be proposed or a
recommendation regarding the ownership of any stock that could be issued in
connection with any such demutualization.
The Pruco Life of New Jersey Variable Appreciable Account
We have established a separate account, the Pruco Life of New Jersey Variable
Appreciable Account (the "Account") to hold the assets that are associated with
the Contracts. The Account was established on January 13, 1984 under New Jersey
law and is registered with the Securities and Exchange Commission ("SEC") under
the Investment Company Act of 1940 as a unit investment trust, which is a type
of investment company. 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 of New Jersey's other assets.
Pruco Life of New Jersey is the legal owner of the assets in the Account. Pruco
Life of New Jersey will 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 of New Jersey
conducts. In addition to these assets, the Account's assets may include funds
contributed by Pruco Life of New Jersey to commence operation of the Account and
may include accumulations of the charges Pruco Life of New Jersey makes against
the Account. From time to time these additional assets will be transferred to
Pruco Life of New Jersey's general account. Pruco Life of New Jersey will
consider any possible adverse impact the transfer might have on the Account
before making any such transfer.
6
<PAGE>
The obligations to Contract owners and beneficiaries arising under the Contracts
are general corporate obligations of Pruco Life of New Jersey.
Currently, you may invest in one or a combination of 16 available variable
investment options. When you choose a variable investment option, we purchase
shares of the Series Fund portfolio which is held as an investment for that
option. We hold these shares in the separate account. Pruco Life of New Jersey
may add additional variable investment options in the future. The Account's
financial statements begin on page A1.
The Prudential Series Fund, Inc.
Listed below are the Series Fund portfolios in which the variable investment
options invest, their investment objectives, and investment advisers.
The Series Fund has a separate prospectus that is provided with this prospectus.
You should read the Series Fund prospectus before you decide to allocate assets
to a variable investment option using its corresponding Series Fund portfolio.
There is no assurance that the investment objectives of the portfolios will be
met.
o Diversified Bond Portfolio: The investment objective is a high level of
income over a longer term while providing reasonable safety of capital. The
Portfolio invests primarily in higher grade debt obligations and high
quality money market investments.
o Equity Portfolio: The investment objective is capital appreciation. The
Portfolio invests primarily in common stocks of major established
corporations as well as smaller companies that offer attractive prospects
of appreciation.
o High Yield Bond Portfolio: The investment objective is a high total return.
The Portfolio invests primarily in high yield/high risk debt securities.
o Money Market Portfolio: The investment objective is maximum current income
consistent with the stability of capital and the maintenance of liquidity.
The Portfolio invests in high quality short-term debt obligations that
mature in 13 months or less.
o Prudential Jennison Portfolio: The investment objective is to achieve long-
term growth of capital. The Portfolio invests primarily in equity
securities of major established corporations that offer above-average
growth prospects.
o Stock Index Portfolio: The investment objective is investment results that
generally correspond to the performance of publicly-traded common stocks.
The Portfolio attempts to duplicate the price and yield performance of the
Standard & Poor's 500 Stock Index ("S&P 500").
o SP AIM Aggressive Growth Portfolio: The investment objective is to achieve
long-term growth of capital. The Portfolio invests primarily in securities
of companies whose earnings the portfolio managers expect to grow more than
15% per year.
o SP Alliance Large Cap Growth Portfolio: The investment objective is growth
of capital by pursuing aggressive investment policies. The Portfolio
invests primarily in equity securities of a limited number of large,
carefully selected, high-quality U.S. Companies that are judged likely to
achieve superior earnings growth.
o SP Alliance Technology Portfolio: The investment objective is growth of
capital and invests for capital appreciation. The Portfolio invests
primarily in securities of companies expected to benefit from technological
advances and improvements (i.e. companies that use technology extensively
in the development of new or improved products or processes).
o SP Davis Value Portfolio: The investment objective is growth of capital.
The Portfolio invests primarily in common stock of U.S. companies with
market capitalizations of at least $5 billion.
7
<PAGE>
o SP Deutsche International Equity Portfolio: The investment objective is
long-term capital appreciation. The Portfolio invests primarily in the
stocks and other securities with equity characteristics of companies in
developed countries outside the United States.
o SP INVESCO Small Company Growth Portfolio: The investment objective is
long-term capital growth. The Portfolio invests primarily in the stocks of
small companies with market capitalizations under $2 billion at the time of
purchase.
o SP MFS Capital Opportunities Portfolio: The investment objective is capital
appreciation. The Portfolio invests primarily in stocks, convertible
securities and depository receipts of companies in both the United States
and in foreign countries, which the portfolio managers believe have
favorable growth prospects and attractive valuations based on current and
expected earnings or cash flow.
o SP MFS Mid-Cap Growth Portfolio: The investment objective is long-term
growth of capital. The Portfolio invests primarily in stocks, convertible
securities and depository receipts of companies with medium market
capitalizations, which the Portfolio's portfolio managers believe have
above-average growth potential.
o SP Prudential U.S. Emerging Growth Portfolio: The investment objective is
long-term capital appreciation. The Portfolio seeks investments whose price
will increase over several years. The Portfolio invests primarily in stocks
of small and medium-sized U.S. companies with potential for above-average
growth.
o SP Small/Mid Cap Value Portfolio: The investment objective is long-term
growth of capital. The Portfolio invests primarily in common stocks of
companies with small to medium market capitalizations.
Prudential is the overall investment adviser to the Diversified Bond Portfolio,
Equity Portfolio, High Yield Bond Portfolio, Money Market Portfolio, Prudential
Jennison Portfolio, and the Stock Index Portfolio. Prudential's principal
business address is 751 Broad Street, Newark, NJ 07102-3777.
Jennison Associates LLC ("Jennison"), a wholly-owned subsidiary of Prudential,
serves as subadviser to the Equity Portfolio, Prudential Jennison Portfolio, and
the SP Prudential U.S. Emerging Growth Portfolio. Jennison's principal business
address is 466 Lexington Avenue, New York, NY 10017.
Prudential Investment Corporation ("PIC"), also a wholly-owned subsidiary of
Prudential, serves as subadviser to the Stock Index Portfolio and the Money
Market Portfolio. PIC's business address is 751 Broad Street, Newark, NJ 07102.
Prudential Investments Fund Management LLC ("PIFM"), subsidiary of Prudential,
is the investment adviser to the SP AIM Aggressive Growth Portfolio, SP Alliance
Large Cap Growth Portfolio, SP Alliance Technology Portfolio, SP Davis Value
Portfolio, SP Deutsche International Equity Portfolio, SP INVESCO Small Company
Growth Portfolio, SP MFS Capital Opportunities Portfolio, SP MFS Mid-Cap Growth
Portfolio, SP Prudential U.S. Emerging Growth Portfolio, and the SP Small/Mid
Cap Value Portfolio. PIFM's business address is 100 Mulberry Street, Newark, NJ
07102.
A I M Capital Management, Inc. ("A I M Capital") serves as the sub-adviser to
the SP AIM Aggressive Growth Portfolio. A I M Capital's principal business
address is 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173.
Alliance Capital Management, L.P. ("Alliance") serves as the sub-adviser to the
SP Alliance Large Cap Growth Portfolio and the SP Alliance Technology Portfolio.
Alliance's principal business address is 1345 Avenue of the Americas, New York,
NY 10105.
Bankers Trust Company ("Bankers Trust"), an indirect wholly-owned subsidiary of
Deutsche Bank AG, serves as the sub-adviser to the SP Deutsche International
Equity Portfolio. Bankers Trust's principal business address is 130 Liberty
Street, New York, NY 10006.
Davis Selected Advisers, LP serves as the sub-adviser to the SP Davis Value
Portfolio. The principal business address for Davis Selected Advisers, LP is 124
East Elvira Street, Santa Fe, NM 87501.
8
<PAGE>
Fidelity Management & Research Company ("FMR") serves as the sub-adviser to the
SP Small/Mid Cap Value Portfolio. FMR's principal business address is 82
Devonshire Street, Boston, MA 02109.
INVESCO Funds Group, Inc. ("INVESCO') serves as the sub-adviser to the SP
INVESCO Small Company Growth Portfolio. Invesco's principal business address is
7800 East Union Avenue, Denver, CO 80237.
Massachusetts Financial Services Company ("MFS") serves as the sub-adviser for
the SP MFS Capital Opportunities Portfolio and the SP MFS Mid-Cap Growth
Portfolio. The principal business address for MFS is 500 Boylston Street,
Boston, MA 02116.
The Series Fund's investment advisers charge a daily investment management fee
as compensation for their services. These fees are described in the table under
Deductions from Portfolios in the Charges and Expenses section, see page 11, and
are more fully described in the Series Fund prospectus.
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 funds. Although neither of the companies that 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. 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.
Voting Rights
We are the legal owner of the shares in the Series Fund associated with the
variable investment options. However, we vote the shares in the Series Fund
according to voting instructions we receive from Contract owners. We will mail
you a proxy, which is a form you need to complete and return to us to tell us
how you wish us to vote. When we receive those instructions, we will vote all of
the shares we own on your behalf in accordance with those instructions. We will
vote the shares for which we do not receive instructions and shares that we own,
in the same proportion as the shares for which instructions are received. We may
change the way your voting instructions are calculated if it is required by
federal regulation. Should the applicable federal securities laws or
regulations, or their current interpretation, change so as to permit Pruco Life
of New Jersey to vote shares of the Series Fund in its own right, it may elect
to do so.
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 of New Jersey has been advised that the staff of the SEC has not reviewed
the disclosure in this prospectus relating to the fixed-rate option. Any
inaccurate or misleading disclosure regarding the fixed-rate option may,
however, be subject to certain generally applicable provisions of federal
securities laws.
You may choose to invest, either initially or by transfer, all or part of your
Contract Fund to a fixed-rate option. This amount becomes part of Pruco Life of
New Jersey's general account. The general account consists of all assets owned
by Pruco Life of New Jersey other than those in the Account and in other
separate accounts that have been or may be established by Pruco Life of New
Jersey. Subject to applicable law, Pruco Life of New Jersey has sole discretion
over the investment of the general account assets, and Contract owners do not
share in the investment experience of those assets. Instead, Pruco Life of New
Jersey 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 of
New Jersey declares periodically, but not less than an effective annual rate of
4%. Pruco Life of New Jersey is not obligated to credit interest at a rate
higher than an effective annual rate of 4%, although we may do so.
9
<PAGE>
Transfers from the fixed-rate option are subject to strict limits, see
Transfers, page 22. The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to six months. See When Proceeds are Paid,
page 29.
Which Investment Option Should Be Selected?
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. For example,
portfolios such as the Stock Index, Equity, Prudential Jennison, SP AIM
Aggressive Growth, and SP Prudential U.S. Emerging Growth may be desirable
options if you are willing to accept such volatility in your Contract values.
Each equity portfolio involves different policies and investment risks. See The
Prudential Series Fund, Inc., page 7, for additional equity portfolios available
under the Contract and their specific investment objectives.
You may prefer the somewhat greater protection against loss of principal (and
reduced chance of high total return) provided by the Diversified Bond Portfolio.
You may want even greater safety of principal and may prefer the Money Market
Portfolio or the fixed-rate option, recognizing that the level of short-term
rates may change rather rapidly. If you are willing to take risks and possibly
achieve a higher total return, you may prefer the High Yield Bond Portfolio,
recognizing that the risks are greater for lower quality bonds with normally
higher yields.
You may wish to divide your invested premium among two or more of the available
options. Your choice should take into account your willingness to accept
investment risks, how your other assets are invested, and what investment
results you may experience in the future. You should consult your Pruco Life of
New Jersey representative from time to time about the choices available to you
under the Contract. Pruco Life of New Jersey recommends against frequent
transfers among the several options. Experience generally indicates that "market
timing" investing, particularly by non-professional investors, is likely to
prove unsuccessful.
10
<PAGE>
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS
Charges and Expenses
The total amount invested at any time in the Contract Fund consists of the sum
of the amount credited to the variable investment options, the amount allocated
to the fixed-rate option, and the principal amount of any Contract loan plus the
amount of interest credited to the Contract upon that loan. See Contract Loans,
page 32. Most charges, although not all, are made by reducing the Contract Fund.
This section provides a more detailed description of each charge that is
described briefly in the chart on page 3.
In several instances we will use the terms "maximum charge" and "current
charge." The "maximum charge," in each instance, is the highest charge that
Pruco Life of New Jersey is entitled to make under the Contract. The "current
charge" is the lower amount that Pruco Life of New Jersey is now charging. If
circumstances change, we reserve the right to increase each current charge, up
to the maximum charge, without giving any advance notice.
Deductions from Premium Payments
(a) We reserve the right to charge up to 7.5% for taxes attributable to
premiums. For these purposes, "taxes attributable to premiums" shall
include any federal, state or local income, premium, excise, business or
any other type of tax (or component thereof) measured by or based upon the
amount of premium received by Pruco Life of New Jersey. This charge is
made up of two parts which currently equal a total of 3.75% of the
premiums received.
The first part is a charge for state and local premium taxes. The current
amount for this first part is 2.5% of the premium and is Pruco Life of New
Jersey's estimate of the average burden of state taxes generally. Tax
rates vary from jurisdiction to jurisdiction and generally range from
0.75% to 5%. The rate applies uniformly to all policyholders without
regard to state of residence. Pruco Life of New Jersey may collect more
for this charge than it actually pays for state and local premium taxes.
The second part is for federal income taxes measured by premiums, and it
is currently equal to 1.25% of premiums. We believe that this charge is a
reasonable estimate of an increase in its federal income taxes resulting
from a 1990 change in the Internal Revenue Code. It is intended to recover
this increased tax.
(b) We reserve the right to charge up to 6% of premiums paid for sales
expenses in all Contract years. This charge, often called a "sales load",
is deducted to compensate us for the costs of selling the Contracts,
including commissions, advertising and the printing and distribution of
prospectuses and sales literature.
Currently, the charge is equal to 4% of premiums paid up to the amount of
the Sales Load Target Premium and 2% of premiums paid in excess of this
amount for the first 10 Contract years (or the first 10 years of a
coverage segment representing an increase in basic insurance amount); 0%
thereafter. The Sales Load Target Premium may vary from the Target
Premium, depending on the issue age and rating class of the insured, any
extra risk charges, or additional riders. For Contracts issued on an
unrated insured below age 56, the Sales Load Target Premium is generally
equal to what the Target Premium for a Type A Contract would be if the
insured was either in the Nonsmoker or Smoker rating class, and there were
no extra risk charges or riders on the Contract. For Contracts issued on
an unrated insured below age 56 in a more favorable rating class, the
Sales Load Target Premium will be greater than the Target Premium, if
there are no extra risk charges or riders on the Contract. For Contracts
issued on insureds age 56 or greater or with substandard ratings, the
Sales Load Target Premium will generally be less than the Target Premium.
See Premiums, page 18.
Paying more than the Sales Load Target Premium in any of the first 10
Contract years could reduce your total sales load. For example, assume
that a Contract with no riders or extra insurance charges has a Sales Load
Target Premium of $884 and the Contract owner would like to pay 10
premiums. If the Contract owner paid $1,768 (two times the amount of the
Sales Load Target Premium) in every other Contract year up to the ninth
year (i.e. in years 1, 3, 5, 7, 9), the total sales load charge would be
$265.20. If the Contract owner paid $884 in
11
<PAGE>
each of the first 10 Contract years, the total sales load would be
$353.60. For additional information, see Increases in Basic Insurance
Amount, page 27.
Attempting to structure the timing and amount of premium payments to
reduce the potential sales load may increase the risk that your Contract
will lapse without value. Delaying the payment of premium amounts to later
years will adversely affect the Death Benefit Guarantee if the accumulated
premium payments do not reach the Death Benefit Guarantee Values shown on
your Contract data pages. See Death Benefit Guarantee, page 20. In
addition, there are circumstances where payment of premiums that are too
large may cause the Contract to be characterized as a Modified Endowment
Contract, which could be significantly disadvantageous. See Tax Treatment
of Contract Benefits, page 33.
Deductions from Portfolios
We deduct an investment advisory fee daily from each portfolio of the Series
Fund at a rate, on an annualized basis, ranging from 0.35% for the Stock Index
Portfolio to 1.15% for the SP Alliance Technology Portfolio. The expenses
incurred in conducting the investment operations of the portfolios (such as
custodian fees and preparation and distribution of annual reports) are paid out
of the portfolio's income. These expenses vary from portfolio to portfolio.
The total expenses of each portfolio for the year ended December 31, 1999,
expressed as a percentage of the average assets during the year, are shown
below:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Total
Investment Other Contractual Total Actual
The Prudential Series Fund, Inc. Portfolios Advisory Fee Expenses Expenses Expenses*
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diversified Bond Portfolio 0.40% 0.03% 0.43% 0.43%
-------------------------------------------------------------------------------------------------------
Equity Portfolio 0.45% 0.02% 0.47% 0.47%
-------------------------------------------------------------------------------------------------------
High Yield Bond Portfolio 0.55% 0.05% 0.60% 0.60%
-------------------------------------------------------------------------------------------------------
Money Market Portfolio 0.40% 0.02% 0.42% 0.42%
-------------------------------------------------------------------------------------------------------
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
-------------------------------------------------------------------------------------------------------
Stock Index Portfolio 0.35% 0.04% 0.39% 0.39%
-------------------------------------------------------------------------------------------------------
SP AIM Aggressive Growth Portfolio 0.95% 0.50% 1.45% 1.07%
-------------------------------------------------------------------------------------------------------
SP Alliance Large Cap Growth Portfolio 0.90% 0.30% 1.20% 1.10%
-------------------------------------------------------------------------------------------------------
SP Alliance Technology Portfolio 1.15% 0.47% 1.62% 1.30%
-------------------------------------------------------------------------------------------------------
SP Davis Value Portfolio 0.75% 0.31% 1.06% 0.83%
-------------------------------------------------------------------------------------------------------
SP Deutsche International Equity Portfolio 0.90% 0.77% 1.67% 1.10%
-------------------------------------------------------------------------------------------------------
SP INVESCO Small Company Growth Portfolio 0.95% 0.59% 1.54% 1.15%
-------------------------------------------------------------------------------------------------------
SP MFS Capital Opportunities Portfolio 0.75% 0.39% 1.14% 1.00%
-------------------------------------------------------------------------------------------------------
SP MFS Mid-Cap Growth Portfolio 0.80% 0.52% 1.32% 1.00%
-------------------------------------------------------------------------------------------------------
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.52% 1.12% 0.90%
-------------------------------------------------------------------------------------------------------
SP Small/Mid Cap Value Portfolio 0.90% 0.68% 1.58% 1.05%
-------------------------------------------------------------------------------------------------------
* Reflects fee waivers and reimbursement of expenses, if any.
-------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Daily Deduction from the Contract Fund
Each day we deduct a charge from the assets of each of the variable investment
options in an amount equivalent to an effective annual rate of up to 0.45%.
Currently, we charge 0.25%. This charge is intended to compensate Pruco Life of
New Jersey for assuming mortality and expense risks under the Contract. The
mortality risk assumed is that insureds may live for shorter periods of time
than Pruco Life of New Jersey estimated when it determined what mortality charge
to make. The expense risk assumed is that expenses incurred in issuing and
administering the Contract will be greater than Pruco Life of New Jersey
estimated in fixing its administrative charges. This charge is not assessed
against amounts allocated to the fixed-rate option.
Monthly Deductions from the Contract Fund
Pruco Life of New Jersey deducts the following monthly charges proportionately
from the dollar amounts held in each of the chosen investment option[s] or you
may select up to two variable investment options from which we deduct your
Contract's monthly charges. See Allocated Charges, page 14.
(a) An administrative charge based on the basic insurance amount is deducted.
The charge is intended to compensate us for things like processing claims,
keeping records and communicating with Contract owners. This charge
consists of two parts. Currently, the first part of the charge is equal to
$20 per Contract for the first two Contract years and $8 per Contract
thereafter. Pruco Life of New Jersey reserves the right, however, to charge
up to $20 per Contract for the first two Contract years and $10 per
Contract thereafter. The second part of this charge is equal to an amount
per $1,000 of the basic insurance amount for the first five Contract years
and zero thereafter. The amount per $1,000 varies by sex, issue age and
rating class of the insured.
If the Contract includes a coverage segment representing an increase in
basic insurance amount, we will deduct $12 per segment for the first two
years of the coverage segment and zero thereafter; plus an amount per
$1,000 of the coverage segment amount for the first five Contract years,
zero thereafter. The amount per $1,000 varies by the insured's age at the
time of the increase, sex, and rating class. See Increases in Basic
Insurance Amount, page 27.
(b) A cost of insurance ("COI") charge is deducted. When an insured dies, the
amount payable to the beneficiary (assuming there is no Contract debt) is
larger than the Contract Fund - significantly larger if the insured dies in
the early years of a Contract. The cost of insurance charges collected from
all Contract owners enables Pruco Life of New Jersey to pay this larger
death benefit. The maximum COI charge is determined by multiplying the "net
amount at risk" under a Contract (the amount by which the Contract's death
benefit exceeds the Contract Fund) by maximum COI rates. The maximum COI
rates are based upon the 1980 Commissioners Standard Ordinary ("CSO")
Tables and an insured's current attained age, sex (except where unisex
rates apply), smoker/non-smoker status, and extra rating class, if any. At
most ages, Pruco Life of New Jersey's current COI rates are lower than the
maximum rates. For additional information, see Increases in Basic Insurance
Amount, page 27.
(c) You may add one or more of several riders to the Contract. Some riders are
charged for separately. If you add such a rider to the basic Contract,
additional charges will be deducted. See Riders, page 17.
(d) If an insured is in a substandard risk classification (for example, a
person in a hazardous occupation), additional charges will be deducted.
(e) A charge may be deducted to cover federal, state or local taxes (other than
"taxes attributable to premiums" described above) that are imposed upon the
operations of the Account. At present no such taxes are imposed and no
charge is made.
The earnings of the Account are taxed as part of the operations of Pruco
Life of New Jersey. Currently, no charge is being made to the Account for
Pruco Life of New Jersey's federal income taxes, other than the 1.25%
charge for federal income taxes measured by premiums. See Deductions from
Premiums, page 11. Pruco Life of New Jersey periodically reviews the
question of a charge to the Account for Company federal income taxes. We
may make such a charge in the future for any federal income taxes that
would be attributable to the Contracts.
13
<PAGE>
Surrender Charges
We will deduct a surrender charge if, during the first 10 Contract years (or
during the first 10 years of a coverage segment representing an increase in
basic insurance amount), the Contract lapses, is surrendered, or the basic
insurance amount is decreased (including as a result of a withdrawal or a death
benefit type change). The surrender charge period is shorter for Contracts
issued to insureds over age 55. It is not deducted from the death benefit if the
insured should die during this period. This charge is deducted to cover sales
and administrative costs such as: the cost of processing applications,
conducting examinations, determining insurability and the insured's rating
class, and establishing records.
We will show a surrender charge threshold for each coverage segment in the
Contract data pages. This threshold amount is the segment's lowest coverage
amount since its effective date. If during the first 10 Contract years (or
during the first 10 years of a coverage segment representing an increase in
basic insurance amount), the basic insurance amount is decreased (including as a
result of a withdrawal or a change in type of death benefit), and the new basic
insurance amount for any coverage segment is below the threshold for that
segment, we will deduct a percentage of the surrender charge for that segment.
The percentage will be the amount by which the new coverage segment is less than
the threshold, divided by the threshold. After this transaction, the threshold
will be updated and a corresponding new surrender charge schedule will also be
determined to reflect that portion of surrender charges deducted in the past.
See Increases in Basic Insurance Amount, page 27 and Decreases in Basic
Insurance Amount, page 28.
Transaction Charges
(a) We currently charge an administrative processing fee equal to the lesser
of $25 or 2% of the withdrawal amount in connection with each withdrawal.
(b) We currently charge an administrative processing fee of $25 for each
transfer exceeding 12 in any Contract year.
(c) We may charge an administrative processing fee of up to $25 for any change
in basic insurance amount.
(d) We may charge an administrative processing fee of up to $25 for any change
in the Target Term Rider coverage amount for Contracts with this rider.
Allocated Charges
You may choose from which variable investment option(s) we deduct your
Contract's monthly charges. Monthly charges include: (1) monthly administrative
charges, (2) COI charges, (3) any rider charges, and (4) any charge for
substandard risk classification. You may select up to two variable investment
options for the allocation of monthly charges. Allocations must be designated in
whole percentages. For example, 33% can be selected but 33"% cannot. Of course,
the total allocation to the selected variable investment options must equal
100%. The fixed-rate option is not available as an allocation option. See
Monthly Deductions from the Contract Fund, page 13.
If there are insufficient funds in one or both of the selected variable
investment options to cover the monthly charges, the selected variable
investment option(s) will be reduced to zero. Any remaining charge will be
deducted from all other variable investment options and the fixed-rate option
proportionately to the dollar amount in each. Furthermore, if you do not specify
an allocation of monthly charges, we will deduct monthly charges proportionately
from your variable investment options and the fixed-rate option.
Requirements for Issuance of a Contract
The Contract may generally be issued on insureds through age 90. Currently, the
minimum face amount for Contracts without a Target Term Rider is $75,000
($50,000 for insureds below the age of 18, $100,000 for insureds ages 76-80, and
$250,000 for insureds ages 81 and above). The minimum face amount for Contracts
issued with a Type C (return of premium) death benefit is $250,000. See Types of
Death Benefit, page 15.
14
<PAGE>
For Contracts with a Target Term Rider, the minimum total face amount (basic
insurance amount plus any Target Term Rider coverage amount combined) is
$250,000. Furthermore, if the Target Term Rider is added to the Contract, the
minimum face amount of the base Contract is $100,000, while the minimum rider
coverage amount is $5,000. See Riders, page 17. Pruco Life of New Jersey may
reduce the minimum face amounts of the Contracts it will issue.
Pruco Life of New Jersey requires evidence of insurability, which may include a
medical examination, before issuing any Contract. Non-smokers are offered the
most favorable cost of insurance rates. We charge a higher cost of insurance
rate and/or an additional amount if an extra mortality risk is involved. These
are the current underwriting requirements. We reserve the right to change them
on a non-discriminatory basis.
Short-Term Cancellation Right or "Free-Look"
Generally, you may return the Contract for a refund within 10 days after you
receive it. Some states allow a longer period of time during which a Contract
may be returned for a refund. You can request a refund by mailing or delivering
the Contract to the representative who sold it or to the Home Office specified
in the Contract. A Contract returned according to this provision shall be deemed
void from the beginning. You will then receive a refund of all premium payments
made, with no adjustment for investment experience. However, if applicable law
so requires and you exercise your short-term cancellation right, you will
receive a refund of all premium payments made, plus or minus any change due to
investment experience. For information on how premium payments are allocated
during the "free-look" period, see Allocation of Premiums, page 20.
Types of Death Benefit
You may select either of three types of death benefit at issue. Generally, a
Contract with a Type A (fixed) death benefit has a death benefit equal to the
basic insurance amount. This type of death benefit does not vary with the
investment performance of the investment options you selected, except in certain
circumstances. See How a Type A (Fixed) Contract's Death Benefit Will Vary, page
23. The payment of additional premiums and favorable investment results of the
variable investment options to which the assets are allocated will generally
increase the cash surrender value. See How a Contract's Cash Surrender Value
Will Vary, page 23.
A Contract with a Type B (variable) death benefit has a death benefit which will
generally equal the basic insurance amount plus the Contract Fund. Since the
Contract Fund is a part of the death benefit, favorable investment performance
and payment of additional premiums generally result in an increase in the death
benefit as well as in the cash surrender value. Over time, however, the increase
in the cash surrender value will be less than under a Type A (fixed) Contract.
This is because, given two Contracts with the same basic insurance amount and
equal Contract Funds, generally the cost of insurance charge for a Type B
(variable) Contract will be greater. See How a Contract's Cash Surrender Value
Will Vary, page 23 and How a Type B (Variable) Contract's Death Benefit Will
Vary, page 24. Unfavorable investment performance will result in decreases in
the death benefit and in the cash surrender value. But, as long as the Contract
is not in default, the death benefit may not fall below the basic insurance
amount stated in the Contract.
A Contract with a Type C (return of premium) death benefit has a death benefit
which will generally equal the basic insurance amount plus the total premiums
paid into the Contract, less withdrawals. This death benefit allows the Contract
owner, in effect, to recover the cost of the Contract upon the death of the
insured. Under certain circumstances, it is possible for a Type C Contract's
death benefit to fall below the basic insurance amount. Favorable investment
performance and payment of additional premiums will generally increase the
Contract's cash value. Over time, however, the increase in cash value will be
less than under a Type A (fixed) Contract. See How a Contract's Surrender Value
Will Vary, page 23 and How a Type C (Return of Premium) Contract's Death Benefit
Will Vary, page 25.
In choosing a death benefit type, you should also consider whether you intend to
use the withdrawal feature. Contract owners of Type A (fixed) Contracts should
note that any withdrawal may result in a reduction of the basic insurance amount
and the deduction of any applicable surrender charges. We will not allow you to
make a withdrawal that will decrease the basic insurance amount below the
minimum basic insurance amount. For Type B (variable) and Type C (return of
premium) Contracts, withdrawals will not change the basic insurance amount. See
Withdrawals, page 26.
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<PAGE>
Changing the Type of Death Benefit
You may change the type of death benefit any time after issue and subject to
Pruco Life of New Jersey's approval. We will increase or decrease the basic
insurance amount so that the death benefit immediately after the change matches
the death benefit immediately before the change. The basic insurance amount
after a change may not be lower than the minimum basic insurance amount
applicable to the Contract. See Requirements for Issuance of a Contract, page
14. We reserve the right to make an administrative processing charge of up to
$25 for any change in the basic insurance amount, although we do not currently
do so. A type change that reduces the basic insurance amount may result in the
assessment of surrender charges. See Charges and Expenses, page 11. Furthermore,
if you choose a Type A or Type B death benefit at issue, you will NOT be able to
change to a Type C death benefit after issue.
If you are changing your Contract's type of death benefit from a Type A (fixed)
to a Type B (variable) death benefit, we will reduce the basic insurance amount
by the amount in your Contract Fund on the date the change takes place.
If you are changing from a Type A (fixed) to a Type C (return of premium) death
benefit, we will change the basic insurance amount by subtracting the total
premiums paid on this Contract minus total withdrawals on the date the change
takes effect. This change is only available to Contracts which were issued with
a Type C death benefit and subsequently changed to a Type A death benefit.
If you are changing from a Type B (variable) to a Type A (fixed) death benefit,
we will increase the basic insurance amount by the amount in your Contract Fund
on the date the change takes place.
If you are changing from a Type B (variable) to a Type C (return of premium)
death benefit, we first find the difference between: (1) the amount in your
Contract Fund and (2) the total premiums paid on this Contract minus total
withdrawals, determined on the date the change takes effect. If (1) is larger
than (2), we will increase the basic insurance amount by that difference. If (2)
is larger than (1), we will reduce the basic insurance amount by that
difference. This change is only available to Contracts which were issued with a
Type C death benefit and subsequently changed to a Type B death benefit.
If you are changing from a Type C (return of premium) to a Type A (fixed) death
benefit, we will change the basic insurance amount by adding the total premiums
paid minus total withdrawals to this Contract on the date the change takes
place.
If you are changing from a Type C (return of premium) to a Type B (variable)
death benefit, we first find the difference between: (1) the amount in your
Contract Fund and (2) the total premiums paid on this Contract minus total
withdrawals, determined on the date the change takes effect. If (2) is larger
than (1), we will increase the basic insurance amount by that difference. If (1)
is larger than (2), we will reduce the basic insurance amount by that
difference.
The following chart illustrates the changes in basic insurance amount with each
change of death benefit type described above. The chart assumes a $50,000
Contract Fund and a $300,000 death benefit. For changes to and from a Type C
death benefit, the chart assumes $40,000 in total premiums minus total
withdrawals.
--------------------------------------------
Basic Insurance Amount
FROM TO
--------------------------------------------
Type A Type B Type C
$300,000 $250,000 $260,000
--------------------------------------------
Type B Type A Type C
$250,000 $300,000 $260,000
--------------------------------------------
Type C Type A Type B
$260,000 $300,000 $250,000
--------------------------------------------
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To request a change, fill out an application for change which can be obtained
from your Pruco Life of New Jersey representative or a Home Office. If the
change is approved, we will recompute the Contract's charges and appropriate
tables and send you new Contract data pages. We may require you to send us your
Contract before making the change.
Riders
Contract owners may be able to obtain extra fixed benefits which may require an
additional premium. These optional insurance benefits will be described in what
is known as a "rider" to the Contract. Charges applicable to the riders will be
deducted from the Contract Fund on each Monthly date. The amounts of these
benefits do not depend on the performance of the Account, although they will no
longer be available if the Contract lapses. Certain restrictions may apply and
are clearly described in the applicable rider. Your Pruco Life of New Jersey
representative can explain all of these extra benefits further. Also, samples of
the provisions are available from Pruco Life of New Jersey upon written request.
Enhanced Disability Benefit -- The Enhanced Disability Benefit pays certain
amounts into the Contract if the insured is totally disabled, as defined in the
benefit provision.
Accidental Death Benefit -- The Accidental Death Benefit provides an additional
death benefit that is payable if the insured's death is accidental, as defined
in the benefit provision.
Children Level Term Rider -- The Children Level Term Rider provides term life
insurance coverage on the life of the insured's children.
Target Term Rider -- The Target Term Rider provides a flexible term insurance
benefit to attained age 100 on the life of the insured. You specify the amount
of term rider coverage you desire, up to four times the base Contract's basic
insurance amount. This amount is called the rider coverage amount and is the
maximum death benefit payable under the rider. After issue, while the rider is
in-force, you may increase the rider coverage amount subject to a minimum
increase amount of $25,000 and the underwriting requirements determined by Pruco
Life. The rider coverage amount after the increase cannot exceed four times the
base Contract's basic insurance amount. You may also decrease your rider
coverage amount after issue, subject to a minimum decrease amount of $10,000.
The Rider death benefit fluctuates as the base Contract's death benefit changes.
When the Contract Fund has not grown to the point where the base Contract's
death benefit is increased to satisfy the Internal Revenue Code's definition of
life insurance, the rider death benefit equals the rider coverage amount.
However, if the Contract Fund has grown to the point where the base Contract's
death benefit begins to vary as required by the Internal Revenue Code's
definition of life insurance, the rider's death benefit will decrease (or
increase) dollar for dollar as the base Contract's death benefit increases (or
decreases). The rider death benefit will never increase beyond the rider
coverage amount. It is possible, however, for the Contract Fund and,
consequently, the base Contract's death benefit to grow to the point where the
rider death benefit is reduced to zero.
Target Term Rider Plot Points
Policy Year Base Policy Death Benefit Target Death Benefit
1 $ 500,000 $ 500,000
2 $ 500,000 $ 500,000
3 $ 500,000 $ 500,000
4 $ 500,000 $ 500,000
5 $ 500,000 $ 500,000
6 $ 500,000 $ 500,000
7 $ 500,000 $ 500,000
8 $ 500,000 $ 500,000
9 $ 500,000 $ 500,000
10 $ 550,000 $ 450,000
11 $ 605,000 $ 395,000
12 $ 665,500 $ 334,500
13 $ 732,050 $ 267,950
14 $ 805,255 $ 194,745
15 $ 885,781 $ 114,220
16 $ 1,000,000 $ -
17 $ 1,100,000 $ -
18 $ 1,210,000 $ -
19 $ 1,331,000 $ -
20 $ 1,464,100 $ -
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You should consider the following factors when purchasing a Contract with a
Target Term Rider:
o A Contract with a Target Term Rider will offer higher cash values and death
benefits than an all base policy with the same death benefit if Pruco Life
does not change its current charges. This is because the current sales
expense charge attributable to the Target Term Rider is 2% rather than the
4% charge attributable to the Sales Load Target Premium under the base
Contract. We currently take lower current Cost of Insurance charges under
the term rider and we currently charge no monthly administrative charge
under the rider.
o However, a Contract with a Target Term Rider offers the potential for lower
cash values and death benefits than an all base policy with the same death
benefit if Pruco Life raises its current charges to the maximum contractual
level. This is because guaranteed maximum charges under the Contract and
Target Term Rider are the same except for the per $1,000 of insurance
portion of the monthly administrative charge which extends for 10 years on
the rider and only five years on the base Contract. The surrender charge
does not apply to the Target Term Rider.
Other factors to consider are:
o The length of the Death Benefit Guarantee available on Contracts with a
Target Term Rider is limited to five years. If it is important to you to
have a Death Benefit Guarantee period longer than five years, you may want
to purchase a Contract without a Target Term Rider. See Death Benefit
Guarantee, page 20.
o The Enhanced Disability Benefit, as described above, is unavailable on
Contracts with a Target Term Rider. If it is important to you to have the
Enhanced Disability Benefit, you may want to purchase a Contract without a
Target Term Rider.
o The Accidental Death Benefit, as described above, does not apply to any
portion of the death benefit that is attributable to a Target Term Rider.
If it is important to you to have the maximum amount of Accidental Death
Benefit allowed under your Contract, you may want to purchase a Contract
without a Target Term Rider.
o The Living Needs Benefit does not apply to the portion of the death benefit
that is attributable to a Target Term Rider. If it is important to you that
the Living Needs Benefit applies to the entire death benefit, you may want
to purchase a Contract without a Target Term Rider. See Living Needs
Benefit, page 29.
o The rider coverage amount terminates at the insured's age 100. If it is
important to you that no coverage amount then in effect terminates at the
insured's attained age 100, you may want to purchase a contract without a
Target Term Rider.
Some of the factors outlined above can have effects on the financial performance
of a Contract, including the amount of the Contract's cash value and death
benefit. It is important that you ask your Pruco Life representative to provide
illustrations based on different combinations of base Contract basic insurance
amount and rider coverage amount. You can then discuss with your Pruco Life
representative how these combinations may address your objectives.
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 application date or the
medical examination date. If the first premium is not paid with the application,
the Contract date will be the date on which the first premium is paid and the
Contract is delivered. Under certain circumstances, we may allow the Contract to
be backdated for the purpose of lowering the insured's issue age, but only to a
date not earlier than six months prior to the application date. This may be
advantageous for some Contract owners as a lower issue age may result in lower
current charges. For a Contract that is backdated, we will credit the initial
premium as of the date of receipt and will deduct any charges due on or before
that date.
Premiums
The Contract is a flexible premium contract. The minimum initial premium is due
on or before the Contract date. It is the premium needed to start the Contract.
There is no insurance under the Contract unless the minimum initial premium is
paid. Thereafter, you decide when to make premium payments and, subject to a $25
minimum, in what amounts (the minimum premium payment is $15 for premiums made
by electronic fund transfer).
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<PAGE>
We may require an additional premium if adjustments to premium payments exceed
the minimum initial premium or there are Contract Fund charges due on or before
the payment date. We reserve the right to refuse to accept any payment that
increases the death benefit by more than it increases the Contract Fund. See How
a Type A (Fixed) Contract's Death Benefit Will Vary, page 23, How a Type B
(Variable) Contract's Death Benefit Will Vary, page 24, and How a Type C (Return
of Premium) Contract's Death Benefit Will Vary, page 25. Furthermore, there are
circumstances under which the payment of premiums in amounts that are too large
may cause the Contract to be characterized as a Modified Endowment Contract,
which could be significantly disadvantageous. See Tax Treatment of Contract
Benefits, page 33.
Once the minimum initial premium payment is made, there are no required
premiums. However, there are several types of premiums which are described
below. Understanding them may help you understand how the Contract works.
Target Premiums are premiums that, if paid at the beginning of each
Contract year, will keep the Contract in-force until the insured's age 65,
or if later, during the first 10 Contract years, regardless of investment
performance and assuming no loans or withdrawals (not applicable to
Contracts with the Target Term Rider). If you choose to continue the Death
Benefit Guarantee beyond this period, you will have to begin paying
premiums substantially higher than the Target Premium. However, not all
Contracts offer the Death Benefit Guarantee beyond this period. The length
of the Death Benefit Guarantee available to you depends on your Contract's
death benefit type, the definition of life insurance test selected at
issue, and whether the Target Term Rider is on the Contract. See Death
Benefit Guarantee, page 20. When you purchase a Contract, your Pruco Life
of New Jersey representative can tell you the amount[s] of the Target
Premium. For a Contract with no riders or extra risk charges, these
premiums will be level.
It is possible, in some instances, to pay a premium lower than the Target
Premium; the Short-Term Premium. These Short-Term Premiums, if paid at the
beginning of each Contract year, will keep the Contract in-force during
the first five Contract years, regardless of investment performance and
assuming no loans or withdrawals. To continue the Death Benefit Guarantee
beyond this period, you will have to begin paying premiums higher than the
Short-Term Premium. However, not all Contracts offer the Death Benefit
Guarantee beyond five Contract years. The length of the Death Benefit
Guarantee available to you depends on your Contract's death benefit type,
the definition of life insurance test selected at issue, and whether the
Target Term Rider is on the Contract. See Death Benefit Guarantee, page
20. When you purchase a Contract, your Pruco Life of New Jersey
representative can tell you the amount[s] of the Short-Term Premium. As is
the case with the Target Premium, for a Contract with no riders or extra
risk charges, these premiums will be level.
Lifetime Premiums are the premiums that, if paid at the beginning of each
Contract year, will keep the Contract in-force during the lifetime of the
insured, regardless of investment performance and assuming no loans or
withdrawals (not applicable to all Contracts). See Death Benefit
Guarantee, page 20. As is the case with the Target Premium, for a Contract
with no riders or extra risk charges, these premiums will be level. When
you purchase a Contract, your Pruco Life of New Jersey representative can
tell you the amount[s] of the Lifetime Premium.
We can bill you for the amount you select annually, semi-annually, or quarterly.
Because the Contract is a flexible premium contract, there are no scheduled
premium due dates. When you receive a premium notice, you are not required to
pay this amount. The Contract will remain in-force if: (1) the Contract Fund,
less any applicable surrender charges, is greater than zero and more than any
Contract debt or (2) you have paid sufficient premiums, on an accumulated basis,
to meet the Death Benefit Guarantee conditions and Contract debt is not equal to
or greater than the Contract Fund, less any applicable surrender charges. You
may also pay premiums automatically through pre-authorized monthly electronic
fund transfers from a bank checking account. If you elect to use this feature,
you choose the day of the month on which premiums will be paid and the amount of
the premiums paid. When you apply for the Contract, you should discuss with your
Pruco Life of New Jersey representative how frequently you would like to be
billed (if at all) and for what amount.
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<PAGE>
Allocation of Premiums
On the Contract date: (1) we deduct the charge for sales expenses and the charge
for taxes attributable to premiums from the initial premium; (2) we allocate the
remainder of the initial premium and any other premium received during the
short-term cancellation right ("free-look") period to the Money Market
investment option; and (3) the first monthly deductions are made. At the end of
the "free-look" period, these funds will be transferred out of the Money Market
investment option and allocated among the variable investment options and/or the
fixed-rate option according to your most current allocation request. See
Short-Term Cancellation Right or "Free-Look," page 15. The transfer from the
Money Market investment option immediately following the "free-look" period will
not be counted as one of your 12 free transfers described under Transfers, page
22. If the first premium is received before the Contract date, there will be a
period during which the Contract owner's initial premium will not be invested.
The charge for sales expenses and the charge for taxes attributable to premiums
also apply to all subsequent premium payments. The remainder will be invested as
of the end of the valuation period in which it is received at a Home Office, in
accordance with the allocation you previously designated. Provided the Contract
is not in default, you may change the way in which subsequent premiums are
allocated by giving written notice to a Home Office or by telephoning a Home
Office, provided you are enrolled to use the Telephone Transfer System. There is
no charge for reallocating future premiums. All percentage allocations must be
in whole numbers. For example, 33% can be selected but 33"% cannot. Of course,
the total allocation to all selected investment options must equal 100%.
Death Benefit Guarantee
Although you decide what premium amounts you wish to pay, sufficient premium
payments, on an accumulated basis, will guarantee that your Contract will not
lapse and a death benefit will be paid upon the death of the insured. This will
be true even if, because of unfavorable investment experience, your Contract
Fund value drops to zero. Withdrawals may adversely affect the status of the
guarantee. Likewise, a Contract loan will negate any guarantee. See Withdrawals,
page 26, and Contract Loans, page 32. You should consider how important the
Death Benefit Guarantee is to you when deciding what premium amounts to pay into
the Contract.
At the Contract date and on each Monthly date, during the Death Benefit
Guarantee period shown on your Contract data pages, we calculate your Contract's
"Accumulated Net Payments" as of that date. Accumulated Net Payments equal the
premiums you paid, accumulated at an effective annual rate of 4%, less
withdrawals also accumulated at 4%.
We also calculate Death Benefit Guarantee Values. These are values used solely
to determine if a Death Benefit Guarantee is in effect. These are not cash
values that you can realize by surrendering the Contract, nor are they payable
death benefits. Your Contract data pages contain a table of Death Benefit
Guarantee Values, calculated as of Contract anniversaries. Values for
non-anniversary Monthly dates will reflect the number of months elapsed between
Contract anniversaries.
At each Monthly date, during the Death Benefit Guarantee period shown on your
Contract data pages, we will compare your Accumulated Net Payments to the Death
Benefit Guarantee Value as of that date. If your Accumulated Net Payments equal
or exceed the Death Benefit Guarantee Value and Contract debt does not equal or
exceed the Contract Fund less any applicable surrender charges, then the
Contract is kept in-force, regardless of the amount in the Contract Fund.
Short-Term, Target, and Lifetime Premiums are payments which correspond to the
Death Benefit Guarantee Values shown on your Contract data pages. For example,
payment of the Short-Term Premium at the beginning of each Contract year
guarantees that your Contract will not lapse during the first five Contract
years, assuming no loans or withdrawals. However, payment of the Short-Term
Premium after year five will not assure that your Contract's Accumulated Net
Payments will continue to meet the Death Benefit Guarantee Values. See Premiums,
page 18.
If you want a Death Benefit Guarantee to last longer than five years, you should
expect to pay at least the Target Premium at the start of each Contract year.
Paying the Target Premium at the beginning of each Contract year guarantees your
Contract against lapse until the insured's age 65 or for 10 years after issue,
whichever comes later, assuming no loans or withdrawals. However, payment of the
Target Premium after this Death Benefit Guarantee
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period, will not assure that your Contract's Accumulated Net Payments will meet
the subsequent, much higher, Death Benefit Guarantee Values.
If you want a Death Benefit Guarantee to last the lifetime of the insured, then
you should expect to pay at least the Lifetime Premium at the start of each
Contract year. Paying the Lifetime Premium at the beginning of each Contract
year guarantees your Contract against lapse for the insured's lifetime, assuming
no loans or withdrawals.
The following table provides sample Short-Term, Target, and Lifetime Premiums
(to the nearest dollar). The examples assume: (1) the insured is a male,
Preferred Best, with no extra risk or substandard ratings; (2) a $250,000 basic
insurance amount; (3) no extra benefit riders have been added to the Contract;
and (4) the Cash Value Accumulation Test has been elected for definition of life
insurance testing.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Illustrative Annual Premiums
--------------------------------------------------------------------------------
Age of
insured at Type of Short-Term Target Lifetime
issue Death Benefit Chosen Premium Premium Premium
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40 Type A (Fixed) $1,640 $2,138 $4,765
--------------------------------------------------------------------------------
40 Type B (Variable) $1,643 $2,220 $14,185
--------------------------------------------------------------------------------
40 Type C (Return of Premium) $1,643 N/A N/A
--------------------------------------------------------------------------------
60 Type A (Fixed) $6,678 $7,158 $12,963
--------------------------------------------------------------------------------
60 Type B (Variable) $6,705 $7,218 $33,195
--------------------------------------------------------------------------------
60 Type C (Return of Premium) $7,055 N/A N/A
--------------------------------------------------------------------------------
80 Type A (Fixed) $36,723 $39,358 $47,235
--------------------------------------------------------------------------------
80 Type B (Variable) $37,550 $43,980 $83,015
--------------------------------------------------------------------------------
80 Type C (Return of Premium) N/A N/A N/A
--------------------------------------------------------------------------------
</TABLE>
Paying the Short-Term, Target, or Lifetime Premiums at the start of each
Contract year is one way of reaching the Death Benefit Guarantee Values; it is
certainly not the only way. The Death Benefit Guarantee allows considerable
flexibility as to the timing of premium payments. Your Pruco Life of New Jersey
representative can supply sample illustrations of various premium amount and
frequency combinations that correspond to the Death Benefit Guarantee Values.
When determining what premium amounts to pay and the frequency of your payments,
you should consider carefully the value of maintaining the Death Benefit
Guarantee. If you desire the Death Benefit Guarantee until the later of the
insured's age 65 or 10 years after issue, you may prefer to pay at least the
Target Premium in all years, rather than paying the lower Short-Term Premium in
the first five years. If you pay only enough premium to meet the Death Benefit
Guarantee Values in the first five years, you will need to pay more than the
Target Premium at the beginning of the 6th year in order to continue the Death
Benefit Guarantee.
Similarly, if you desire the Death Benefit Guarantee for lifetime protection,
you may prefer to pay generally higher premiums in all years, rather than trying
to make such payments on an as needed basis. For example, if you pay only enough
premium to meet the Death Benefit Guarantee Values until the later of the
insured's age 65 or 10 years after issue, a substantial amount may be required
to meet the subsequent Death Benefit Guarantee Values and continue the
guarantee. In addition, it is possible that the payment required to continue the
guarantee beyond this period could exceed the premium payments allowed to be
paid without causing the Contract to become a Modified Endowment Contract. See
Tax Treatment of Contract Benefits, page 33.
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<PAGE>
Not all Contracts will have the Death Benefit Guarantee available in all years.
Type A and Type B Contracts with the Cash Value Accumulation Test elected for
definition of life insurance testing will have the Death Benefit Guarantee
available for the lifetime of the insured. However, Type A and Type B Contracts
with the Guideline Premium Test elected for definition of life insurance testing
will have the Death Benefit Guarantee available until the insured's age 65 or 10
years after issue, whichever is later. Furthermore, Type C Contracts with either
the Cash Value Accumulation Test or Guideline Premium Test elected for
definition of life insurance testing, will only have the Death Benefit Guarantee
available for the first five Contract years. Contracts with the Target Term
Rider will also have the Death Benefit Guarantee available for only the first
five Contract years. Your Contract data pages will show Death Benefit Guarantee
Values for the duration available with your Contract. See Types of Death
Benefit, page 15 and Tax Treatment of Contract Benefits, page 33.
Transfers
You may, up to 12 times each Contract year, transfer amounts from one variable
investment option to another variable investment option or to the fixed-rate
option without charge. There is an administrative charge of up to $25 for each
transfer made exceeding 12 in any Contract year. All or a portion of the amount
credited to a variable investment option may be transferred.
Transfers will take effect as of the end of the valuation period in which a
proper transfer request is received at a Home Office. The request may be in
terms of dollars, such as a request to transfer $5,000 from one variable
investment option to another, or may be in terms of a percentage reallocation
among variable investment options. In the latter case, as with premium
reallocations, the percentages must be in whole numbers. You may transfer
amounts by proper written notice to a Home Office or by telephone, provided you
are enrolled to use the Telephone Transfer System. You will automatically be
enrolled to use the Telephone Transfer System unless the Contract is jointly
owned or you elect not to have this privilege. Telephone transfers may not be
available on Contracts that are assigned, depending on the terms of the
assignment. See Assignment, page 35.
We will use reasonable procedures, such as asking you to provide certain
personal information provided on your application for insurance, to confirm that
instructions given by telephone are genuine. We will not be held liable for
following telephone instructions that we reasonably believe to be genuine. Pruco
Life of New Jersey cannot guarantee that you will be able to get through to
complete a telephone transfer during peak periods such as periods of drastic
economic or market change.
Only one transfer from the fixed-rate option will be permitted during each
Contract year. The maximum amount which may be transferred out of the fixed-rate
option each year is the greater of: (a) 25% of the amount in the fixed-rate
option; and (b) $2,000. Pruco Life of New Jersey may change these limits in the
future. We may waive these restrictions for limited periods of time in a
non-discriminatory way, (e.g., when interest rates are declining).
The Contract was not designed for professional market timing organizations,
other organizations, or individuals using programmed, large, or frequent
transfers. A pattern of exchanges that coincides with a "market timing" strategy
may be disruptive to the investment option or to the disadvantage of other
contract owners. If such a pattern were to be found, we may modify your right to
make transfers by restricting the number, timing and amount of transfers. We
also reserve the right to prohibit transfer requests made by an individual
acting under a power of attorney on behalf of more than one contract owner.
Dollar Cost Averaging
As an administrative practice, we are currently offering a feature called Dollar
Cost Averaging ("DCA"). Under this feature, either fixed dollar amounts or a
percentage of the amount designated for use under the DCA option will be
transferred periodically from the DCA Money Market investment option into other
variable investment options available under the Contract, excluding the
fixed-rate option. You may choose to have periodic transfers made monthly or
quarterly.
Each automatic transfer will take effect as of the end of the valuation period
on the date coinciding with the periodic timing you designate 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 date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. Automatic transfers will continue until: (1) $50
or less
22
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remains of the amount designated for Dollar Cost Averaging, at which time the
remaining amount will be transferred; or (2) you give us notification of a
change in DCA allocation or cancellation of the feature. Currently, a transfer
that occurs under the DCA feature is not counted towards the 12 free transfers
permitted each Contract year. We reserve the right to change this practice,
modify the requirements or discontinue the feature.
Auto-Rebalancing
As an administrative practice, we are currently offering a feature called
Auto-Rebalancing. This feature allows you to automatically rebalance variable
investment option assets at specified intervals based on percentage allocations
that you choose. For example, suppose your initial investment allocation of
variable investment options X and Y is split 40% and 60%, respectively. Then,
due to investment results, that split changes. You may instruct that those
assets be rebalanced to your original or different allocation percentages.
Auto-Rebalancing can be performed on a quarterly, semi-annual, or annual basis.
Each rebalance will take effect as of the end of the valuation period on the
date coinciding with the periodic timing you designate 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 date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. The fixed-rate option cannot participate in this
administrative procedure. Currently, a transfer that occurs under the
Auto-Rebalancing feature is not counted towards the 12 free transfers permitted
each Contract year. We reserve the right to change this practice, modify the
requirements or discontinue the feature.
How a Contract's Cash Surrender Value Will Vary
You may surrender the Contract for its cash surrender value (referred to as net
cash value in the Contract). The Contract's cash surrender value on any date
will be the Contract Fund less any applicable surrender charges and less any
Contract debt. See Contract Loans, page 32. The Contract Fund value changes
daily, reflecting: (1) increases or decreases in the value of the variable
investment options; (2) interest credited on any amounts allocated to the
fixed-rate option; (3) interest credited on any loan; and (4) the daily asset
charge for mortality and expense risks assessed against the variable investment
options. The Contract Fund value also changes to reflect the receipt of premium
payments and the monthly deductions described under Charges and Expenses, page
11. Upon request, Pruco Life of New Jersey will tell you the cash surrender
value of your Contract. It is possible for the cash surrender value of a
Contract to decline to zero because of unfavorable investment performance or
outstanding Contract debt.
The tables on pages T1 through T10 of this prospectus illustrate approximately
what the cash surrender values would be for representative Contracts paying
certain premium amounts, and assuming hypothetical uniform investment results in
the Series Fund portfolios. Five of the tables assume current charges will be
made throughout the lifetime of the Contract and five of them assume maximum
charges will be made. See Illustrations of Cash Surrender Values, Death
Benefits, and Accumulated Premiums, page 30.
How a Type A (Fixed) Contract's Death Benefit Will Vary
As described earlier, there are three types of death benefit available under the
Contract: (1) Type A, a generally fixed death benefit; (2) Type B, a variable
death benefit; and (3) Type C, a return of premium death benefit. A Type C
(return of premium) death benefit generally varies by the amount of premiums
paid, a Type B (variable) death benefit varies with investment performance, and
a Type A (fixed) death benefit does not vary unless it must be increased to
comply with the Internal Revenue Code's definition of life insurance.
Under a Type A (fixed) Contract, the death benefit is generally equal to the
basic insurance amount. If the Contract is kept in-force for several years,
depending on how much premium you pay, and/or if investment performance is
reasonably favorable, the Contract Fund may grow to the point where Pruco Life
of New Jersey will increase the death benefit in order to ensure that the
Contract will satisfy the Internal Revenue Code's definition of life insurance.
The death benefit under a Type A (fixed) Contract will always be the greater of:
(1) the basic insurance amount; and
(2) the Contract Fund before the deduction of any monthly charges due
on that date, multiplied by the attained age factor that applies.
23
<PAGE>
A listing of attained age factors can be found on your Contract data pages. The
latter provision ensures that the Contract will always have a death benefit
large enough so that the Contract will be treated as life insurance for tax
purposes under current law. Before the Contract is issued, the Contract owner
may choose between two methods that we use to determine the tax treatment of the
Contract. See Tax Treatment of Contract Benefits, page 33, for a discussion of
these methods and the impact of each on the Contract's values, benefits and tax
status.
The following table illustrates at different ages how the attained age factor
affects the death benefit for different Contract Fund amounts. The table assumes
a $250,000 Type A (fixed) Contract was issued when the insured was a male
nonsmoker, age 35.
<TABLE>
<CAPTION>
Type A (Fixed) Death Benefit
IF THEN
-----------------------------------------------------------------------------------------------------------
and the the attained the Contract Fund and the
the insured Contract age factor multiplied by the Death
is age Fund is is** attained age factor is Benefit is
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40 $ 25,000 3.57 89,250 $250,000
40 $ 75,000 3.57 267,750 $267,750*
40 $100,000 3.57 357,000 $357,000*
-----------------------------------------------------------------------------------------------------------
60 $ 75,000 1.92 144,000 $250,000
60 $125,000 1.92 240,000 $250,000
60 $150,000 1.92 288,000 $288,000*
-----------------------------------------------------------------------------------------------------------
80 $150,000 1.26 189,000 $250,000
80 $200,000 1.26 252,000 $252,000*
80 $225,000 1.26 283,500 $283,500*
-----------------------------------------------------------------------------------------------------------
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract owner selected the Cash Value Accumulation Test.
-----------------------------------------------------------------------------------------------------------
</TABLE>
This means, for example, that if the insured has reached the age of 60, and the
Contract Fund is $150,000, the death benefit will be $288,000, even though the
basic insurance amount is $250,000. In this situation, for every $1 increase in
the Contract Fund, the death benefit will be increased by $1.92. We reserve the
right to refuse to accept any premium payment that increases the death benefit
by more than it increases the Contract Fund. If we exercise this right, in
certain situations it may result in the loss of the Death Benefit Guarantee.
How a Type B (Variable) Contract's Death Benefit Will Vary
Under a Type B (variable) Contract, while the Contract is in-force, the death
benefit will never be less than the basic insurance amount, but will vary,
immediately after it is issued, with the investment results of the selected
investment options. The death benefit may be increased to ensure that the
Contract will satisfy the Internal Revenue Code's definition of life insurance.
The death benefit under a Type B (variable) Contract will always be the greater
of:
(1) the basic insurance amount plus the Contract Fund before the
deduction of any monthly charges due on that date; and
(2) the Contract Fund before the deduction of any monthly charges due
on that date, multiplied by the attained age factor that applies.
For purposes of computing the death benefit, if the Contract Fund is less than
zero we will consider it to be zero. A listing of attained age factors can be
found on your Contract data pages. The latter provision ensures that the
Contract will always have a death benefit large enough so that the Contract will
be treated as life insurance for tax purposes under current law. Before the
Contract is issued, the Contract owner may choose between two methods that
24
<PAGE>
we use to determine the tax treatment of the Contract. See Tax Treatment of
Contract Benefits, page 33, for a discussion of these methods and the impact of
each on the Contract's values, benefits and tax status.
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type B
(variable) Contract was issued when the insured was a male nonsmoker, age 35.
<TABLE>
<CAPTION>
Type B (Variable) Death Benefit
IF THEN
-----------------------------------------------------------------------------------------------------------
and the the attained the Contract Fund and the
the insured Contract age factor multiplied by the Death
is age Fund is is** attained age factor is Benefit is
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40 $25,000 3.57 89,250 $275,000
40 $75,000 3.57 267,750 $325,000
40 $100,000 3.57 357,000 $357,000*
-----------------------------------------------------------------------------------------------------------
60 $ 75,000 1.92 144,000 $325,000
60 $125,000 1.92 240,000 $375,000
60 $150,000 1.92 288,000 $400,000
-----------------------------------------------------------------------------------------------------------
80 $150,000 1.26 189,000 $400,000
80 $200,000 1.26 252,000 $450,000
80 $225,000 1.26 283,500 $475,000
-----------------------------------------------------------------------------------------------------------
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract owner selected the Cash Value Accumulation Test.
-----------------------------------------------------------------------------------------------------------
</TABLE>
This means, for example, that if the insured has reached the age of 40, and the
Contract Fund is $100,000, the death benefit will be $357,000, even though the
basic insurance amount is $250,000. In this situation, for every $1 increase in
the Contract Fund, the death benefit will be increased by $3.57. We reserve the
right to refuse to accept any premium payment that increases the death benefit
by more than it increases the Contract Fund. If we exercise this right, in
certain situations it may result in the loss of the Death Benefit Guarantee.
How a Type C (Return of Premium) Contract's Death Benefit Will Vary
Under a Type C (return of premium) Contract, while the Contract is in-force, the
death benefit will vary by the amount of premiums paid, less any withdrawals.
Unlike Type A and Type B Contracts, the death benefit of a Type C Contract may
be less than the basic insurance amount in the event total withdrawals are
greater than total premiums paid. The death benefit may be increased to ensure
that the Contract will satisfy the Internal Revenue Code's definition of life
insurance.
The death benefit under a Type C (return of premium) Contract will always be the
greater of:
(1) the basic insurance amount plus the total premiums paid into the
Contract less any withdrawals; and
(2) the Contract Fund before the deduction of monthly charges due on
that date, multiplied by the attained age factor that applies.
A listing of attained age factors can be found on your Contract data pages. The
latter provision ensures that the Contract will always have a death benefit
large enough so that the Contract will be treated as life insurance for tax
purposes under current law. Before the Contract is issued, the Contract owner
may choose between two methods that we use to determine the tax treatment of the
Contract. See Tax Treatment of Contract Benefits, page 33, for a discussion of
these methods and the impact of each on the Contract's values, benefits and tax
status.
25
<PAGE>
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type C
(return of premium) Contract was issued when the insured was a male nonsmoker,
age 35.
<TABLE>
<CAPTION>
Type C (Return of Premium) Death Benefit
----------------------------------------------------------------------------------------------------------------
IF THEN
----------------------------------------------------------------------------------------------------------------
and the
and the premiums paid the attained the Contract Fund and the
the insured Contract less any age factor multiplied by the Death
is age Fund is withdrawals is is** attained age factor is Benefit is
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 $25,000 $15,000 3.57 89,250 $265,000
40 $75,000 $60,000 3.57 267,750 $310,000
40 $100,000 $80,000 3.57 357,000 $357,000*
----------------------------------------------------------------------------------------------------------------
60 $75,000 $ 60,000 1.92 144,000 $310,000
60 $125,000 $100,000 1.92 240,000 $350,000
60 $150,000 $125,000 1.92 288,000 $375,000
----------------------------------------------------------------------------------------------------------------
80 $150,000 $125,000 1.26 189,000 $375,000
80 $200,000 $150,000 1.26 252,000 $400,000
80 $225,000 $175,000 1.26 283,500 $425,000
----------------------------------------------------------------------------------------------------------------
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract owner selected the Cash Value Accumulation Test.
----------------------------------------------------------------------------------------------------------------
</TABLE>
This means, for example, that if the insured has reached the age of 40, and the
premiums paid less any withdrawals equals $80,000, the death benefit will be
$357,000, even though the basic insurance amount is $250,000. In this situation,
for every $1 increase in the Contract Fund, the death benefit will be increased
by $3.57. We reserve the right to refuse to accept any premium payment that
increases the death benefit by more than it increases the Contract Fund. If we
exercise this right, in certain situations it may result in the loss of the
Death Benefit Guarantee.
Surrender of a Contract
A Contract may be surrendered for its cash surrender value (or for a fixed
reduced paid-up insurance benefit in New York state) while the insured is
living. To surrender a Contract, we may require you to deliver or mail the
Contract with a written request in a form that meets Pruco Life of New Jersey's
needs, to a Home Office. The cash surrender value of a surrendered Contract will
be determined as of the end of the valuation period in which such a request is
received in a Home Office. Surrender of a Contract may have tax consequences.
See Tax Treatment of Contract Benefits, page 33.
Fixed reduced paid-up insurance (available in New York state only) provides
paid-up insurance, the amount of which will be paid when the insured dies. There
will be cash values and loan values. The loan interest rate for fixed reduced
paid-up insurance is 5%. Upon surrender of the Contract, the amount of fixed
reduced paid-up insurance depends upon the net cash value and the insured's
issue age, sex, smoker/non-smoker status, and the length of time since the
Contract date.
Withdrawals
Under certain circumstances, you may withdraw a portion of the Contract's cash
surrender value without surrendering the Contract. The withdrawal amount is
limited by the requirement that the cash surrender value after the withdrawal
may not be zero or less than zero after deducting the withdrawal charges. The
amount withdrawn must be at least $500. There is an administrative processing
fee for each withdrawal which is the lesser of: (a) $25 and; (b) 2% of the
withdrawal amount. An amount withdrawn may not be repaid except as a premium
subject to the applicable charges. Upon request, we will tell you how much you
may withdraw. Withdrawal of the cash surrender value may have tax consequences.
See Tax Treatment of Contract Benefits, page 33.
26
<PAGE>
Whenever a withdrawal is made, the death benefit will immediately be reduced by
at least the amount of the withdrawal. Withdrawals under Type B (variable) and
Type C (return of premium) Contracts, will not change the basic insurance
amount. However, under a Type A (fixed) Contract, the withdrawal may require a
reduction in the basic insurance amount. If the basic insurance amount is
decreased to an amount less than the basic insurance amount at issue, a
surrender charge may be deducted. See Charges and Expenses, page 11. No
withdrawal will be permitted under a Type A (fixed) Contract if it would result
in a basic insurance amount of less than the minimum basic insurance amount. See
Requirements for Issuance of a Contract, page 14. It is important to note,
however, that if the basic insurance amount is decreased, there is a possibility
that the Contract might be classified as a Modified Endowment Contract. Before
making any withdrawal which causes a decrease in basic insurance amount, you
should consult with your tax adviser and your Pruco Life of New Jersey
representative. See Tax Treatment of Contract Benefits, page 33.
When a withdrawal is made, the Contract Fund is reduced by the sum of the cash
withdrawn, the withdrawal fee, and any surrender charge. An amount equal to the
reduction in the Contract Fund will be withdrawn proportionally from the
investment options unless you direct otherwise. Withdrawal of the cash surrender
value increases the risk that the Contract Fund may be insufficient to provide
Contract benefits. If such a withdrawal is followed by unfavorable investment
experience, the Contract may go into default. Withdrawals may also affect
whether a Contract is kept in-force under the Death Benefit Guarantee, since
withdrawals decrease your Accumulated Net Payments. See Death Benefit Guarantee,
page 20.
Lapse and Reinstatement
Pruco Life of New Jersey will determine the value of the Contract Fund on each
Monthly date. If the Contract Fund less any applicable surrender charges is zero
or less, the Contract is in default unless it remains in-force under the Death
Benefit Guarantee. See Death Benefit Guarantee, page 20. If the Contract debt
ever grows to be equal to or more than the Contract Fund less any applicable
surrender charges, the Contract will be in default. Should this happen, Pruco
Life of New Jersey will send you a notice of default setting forth the payment
which we estimate will keep the Contract in-force for three months from the date
of default. This payment must be received at a Home Office within the 61-day
grace period after the notice of default is mailed or the Contract will end and
have no value. A Contract that lapses with an outstanding Contract loan may have
tax consequences. See Tax Treatment of Contract Benefits, page 33.
A Contract that ended in default may be reinstated within five years after the
date of default if the following conditions are met: (1) renewed evidence of
insurability is provided on the insured; (2) submission of certain payments
sufficient to bring the Contract up to date plus a premium that we estimate will
cover all charges and deductions for the next three months; and (3) any Contract
debt with interest to date must be restored or paid back. If the Contract debt
is restored and the debt with interest would exceed the loan value of the
reinstated Contract, the excess must be paid to us before reinstatement. The
reinstatement date will be the date we approve your request. We will deduct all
required charges from your payment and the balance will be placed into your
Contract Fund. If we approve the reinstatement, we will credit the Contract Fund
with an amount equal to the surrender charge applicable as of the date of
reinstatement.
Increases in Basic Insurance Amount
Subject to state approval and subject to the underwriting requirements
determined by Pruco Life of New Jersey, after the first Contract anniversary,
you may increase the amount of insurance by increasing the basic insurance
amount of the Contract, thus, creating an additional coverage segment.
The following conditions must be met:
(1) you must ask for the change in a form that meets Pruco Life of New
Jersey's needs;
(2) the amount of the increase must be at least equal to the minimum
increase in basic insurance amount shown under Contract Limitations
in your Contract data pages;
(3) you must prove to us that the insured is insurable for any
increase;
(4) the Contract must not be in default;
(5) we must not be paying premiums into the Contract as a result of the
insured's total disability; and
(6) if we ask you to do so, you must send us the Contract to be
endorsed.
27
<PAGE>
If we approve the change, we will send you new Contract data pages showing the
amount and effective date of the change and the recomputed charges, values and
limitations. If the insured is not living on the effective date, the change will
not take effect. No administrative processing charge is currently being made in
connection with an increase in basic insurance amount. However, we reserve the
right to make such a charge in an amount of up to $25.
The Sales Load Target Premium is calculated separately for each coverage
segment. When premiums are paid, each payment is allocated to each coverage
segment based on the proportion of the Sales Load Target Premium in each segment
to the total Sales Load Target Premiums of all segments. Currently, the sales
load charge for each segment is equal to 4% of the allocated premium paid in
each Contract year up to the Sales Load Target Premium and 2% of allocated
premiums paid in excess of this amount for the first 10 Contract years; 0%
thereafter. See the definition of Contract year for an increase in basic
insurance amount under DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS,
page 1.
Each coverage segment will have its own surrender charge period beginning on
that segment's effective date and its own surrender charge threshold. The
surrender charge threshold is the segment's lowest coverage amount since its
effective date. See Decreases in Basic Insurance Amount, below, and Surrender
Charges, page 14.
The COI rates for a coverage segment representing an increase in basic insurance
amount are based upon 1980 CSO Tables, the age at the segment's effective date
and the number of years since then, sex (except where unisex rates apply);
smoker/nonsmoker status, and extra rating class, if any. The net amount at risk
for the whole contract (the death benefit minus the Contract Fund) is allocated
to each coverage segment based on the proportion of its basic insurance amount
to the total of all coverage segments. In addition, the attained age factor for
a Contract with an increase in basic insurance amount is based on the Insured's
attained age for the initial coverage segment. For a description of attained age
factor, see How a Type A (Fixed) Contract's Death Benefit Will Vary, page 23,
How a Type B (Variable) Contract's Death Benefit Will Vary, page 24, and How a
Type C (Return of Premium) Contract's Death Benefit Will Vary, page 25.
Each Contract owner who elects to increase the basic insurance amount of his or
her Contract will receive a "free-look" right which will apply only to the
increase in basic insurance amount, not the entire Contract. This right is
comparable to the right afforded to a purchaser of a new Contract except that,
any cost of insurance charge for the increase in the basic insurance amount will
be returned to the Contract Fund instead of a refund of premium. See Short-Term
Cancellation Right or "Free-Look", page 15. Generally, the "free-look" right
would have to be exercised no later than 10 days after receipt of the Contract
as increased.
An increase in basic insurance amount may cause the Contract to be classified as
a Modified Endowment Contract. See Tax Treatment of Contract Benefits, page 33.
Therefore, before increasing the basic insurance amount, you should consult with
your tax adviser and your Pruco Life of New Jersey representative.
Decreases in Basic Insurance Amount
As explained earlier, you may make a withdrawal. See Withdrawals, page 26. You
also have the option of decreasing the basic insurance amount of your Contract
without withdrawing any cash surrender value at any time after the first
Contract anniversary. Contract owners who conclude that, because of changed
circumstances, the amount of insurance is greater than needed will be able to
decrease their amount of insurance protection, and the monthly deductions for
the cost of insurance. The amount of the decrease must be at least equal to the
minimum decrease in basic insurance amount shown under Contract Limitations in
your Contract data pages.
In addition, the basic insurance amount after the decrease must be at least
equal to the minimum basic insurance amount shown under Contract Limitations in
your Contract data pages. No administrative processing charge is currently being
made in connection with a decrease in basic insurance amount. However, we
reserve the right to make such a charge in an amount of up to $25. See Charges
and Expenses, page 11. If we ask you to, you must send us your Contract to be
endorsed. The Contract will be amended to show the new basic insurance amount,
charges, values in the appropriate tables and the effective date of the
decrease. A decrease will not take effect if the insured is not living on the
effective date.
28
<PAGE>
For Contracts with more than one coverage segment, a decrease in basic insurance
amount will reduce each coverage segment based on the proportion of the coverage
segment amount to the total of all coverage segment amounts in effect just
before the change. Each coverage segment will have its own surrender charge
threshold equal to the segment's lowest coverage amount since its effective
date. If the decrease in basic insurance amount reduces a coverage segment to an
amount equal to or greater than its surrender charge threshold, we will not
impose a surrender charge. However, if the decrease in basic insurance amount
reduces a coverage segment below its threshold, we will subtract the new
coverage segment amount from the threshold amount. We will then multiply the
surrender charge by the lesser of this difference and the amount of the
decrease, divide by the threshold amount, and deduct the result from the
Contract Fund. See Surrender Charges, page 14.
We may decline a reduction if we determine it would cause the Contract to fail
to qualify as "life insurance" for purposes of Section 7702 of the Internal
Revenue Code. In addition, it is important to note that if the basic insurance
amount is decreased, there is a possibility that the Contract will be classified
as a Modified Endowment Contract. See Tax Treatment of Contract Benefits, page
33. Before requesting any decrease in basic insurance amount, you should consult
with your tax adviser and your Pruco Life of New Jersey representative.
When Proceeds Are Paid
Pruco Life of New Jersey will generally pay any death benefit, cash surrender
value, loan proceeds or withdrawal within seven days after all the documents
required for such a payment are received at a Home Office. 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 at a Home Office. However, Pruco Life of New Jersey may
delay payment of proceeds from the variable investment option[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, Pruco Life of New Jersey expects to pay the cash surrender
value promptly upon request. However, Pruco Life of New Jersey has the right to
delay payment of such cash surrender value for up to six months (or a shorter
period if required by applicable law). Pruco Life of New Jersey will pay
interest of at least 3% a year if it delays such a payment for 30 days or more
(or a shorter period if required by applicable law).
Living Needs Benefit
You may elect to add the Living Needs BenefitSM to your Contract at issue. The
benefit may vary by state. 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.
Subject to state regulatory approval, the Living Needs Benefit allows you 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. One or
both of the following options may be available. A Pruco Life of New Jersey
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 six months or less. When satisfactory
evidence is provided, Pruco Life of New Jersey 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 six months. If the
insured dies before all 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 six 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 of New
Jersey will provide an accelerated payment of the portion of the death benefit
selected by the Contract owner as a Living Needs Benefit. The Contract
29
<PAGE>
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.
Subject to state approval, 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 of New Jersey reserves the right to determine the minimum amount that
may be accelerated.
No benefit will be payable if you are required to elect it in order to meet the
claims of creditors or to obtain a government benefit. Pruco Life of New Jersey
can furnish details about the amount of Living Needs Benefit that is available
to an eligible Contract owner, and the effect on the Contract if less than the
entire death benefit is accelerated.
You should consider whether adding this settlement option is appropriate in your
given situation. Adding the Living Needs Benefit to the Contract has no adverse
consequences; however, electing to use it could. With the exception of certain
business-related Contracts, the Living Needs Benefit is excluded from income if
the insured is terminally ill or chronically ill as defined in the tax law
(although the exclusion in the latter case may be limited). You should consult a
qualified tax adviser before electing to receive this benefit. Receipt of a
Living Needs Benefit payment may also affect your eligibility for certain
government benefits or entitlements.
Illustrations of Cash Surrender Values, Death Benefits, and Accumulated Premiums
The following tables (pages T1 through T10) show how a Contract's death benefit
and cash surrender values change with the investment experience of the Account.
They are "hypothetical" because they are based, in part, upon several
assumptions, which are described below. All ten tables assume the following:
o a Contract bought by a 35 year old male, Preferred Best, with no extra risks
or substandard ratings.
o a given premium amount is paid on each Contract anniversary and no loans are
taken.
o the Contract Fund has been invested in equal amounts in each of the 16
portfolios of the Series Fund and no portion of the Contract Fund has been
allocated to the fixed-rate option.
The first two tables (pages T1 and T2) assume: (1) a Type A (fixed) Contract has
been purchased, (2) a $250,000 basic insurance amount and no riders have been
added to the Contract, and (3) a Cash Value Accumulation Test has been elected
for definition of life insurance testing. See Tax Treatment of Contract
Benefits, page 33 and Types of Death Benefit, page 15. The first table assumes
current charges will continue for the indefinite future while the second table
assumes maximum contractual charges have been made from the beginning. See
Charges and Expenses, page 11.
The third and fourth tables (pages T3 and T4) assume: (1) a Type A (fixed)
Contract has been purchased, (2) a $100,000 basic insurance amount and a
$150,000 Target Term Rider has been added to the Contract, and (3) a Cash Value
Accumulation Test has been elected for definition of life insurance testing. See
Tax Treatment of Contract Benefits, page 33 and Types of Death Benefit, page 15.
The third table assumes current charges will continue for the indefinite future
while the fourth table assumes maximum contractual charges have been made from
the beginning. See Charges and Expenses, page 11.
The next two tables (pages T5 and T6) assume: (1) a Type A (fixed) Contract has
been purchased, (2) a $250,000 basic insurance amount and no riders have been
added to the Contract, and (3) a Guideline Premium Test has been elected for
definition of life insurance testing. See Tax Treatment of Contract Benefits,
page 33 and Types of Death Benefit, page 15. The fifth table assumes current
charges will continue for the indefinite future while the sixth table assumes
maximum contractual charges have been made from the beginning. See Charges and
Expenses, page 11.
The tables on pages T7 and T8 assume: (1) a Type B (variable) Contract has been
purchased, (2) a $250,000 basic insurance amount and no riders have been added
to the Contract, and (3) a Cash Value Accumulation Test has been elected for
definition of life insurance testing. See Tax Treatment of Contract Benefits,
page 33 and Types of
30
<PAGE>
Death Benefit, page 15. The table on page T7 assumes current charges will
continue for the indefinite future while the table on page T8 assumes maximum
contractual charges have been made from the beginning. See Charges and Expenses,
page 11.
The last two tables (pages T9 and T10) assume: (1) a Type C (return of premium)
Contract has been purchased, (2) a $250,000 basic insurance amount and no riders
have been added to the Contract, and (3) a Cash Value Accumulation Test has been
elected for definition of life insurance testing. See Tax Treatment of Contract
Benefits, page 33 and Types of Death Benefit, page 15. The table on page T9
assumes current charges will continue for the indefinite future while the table
on page T10 assumes maximum contractual charges have been made from the
beginning. See Charges and Expenses, page 11.
Finally, there are three assumptions, shown separately, about the average
investment performance of the portfolios. The first is that there will be a
uniform 0% gross rate of return with the average value of the Contract Fund
uniformly adversely affected by very unfavorable investment performance. The
other two assumptions are that investment performance will be at a uniform gross
annual rate of 6% and 12%. Actual returns will fluctuate from year to year. In
addition, death benefits and cash surrender values would be different from those
shown if investment returns averaged 0%, 6% and 12% but fluctuated from those
averages throughout the years. Nevertheless, these assumptions help show how the
Contract values will change with investment experience.
The first column of the following illustrations (pages T1 through T10) shows the
Contract year. The second column, to provide context, shows what the aggregate
amount would be if the premiums had been invested to earn interest, after taxes,
at 4% compounded annually. The next four columns show the death benefit payable
in each of the years shown for the three different assumed investment returns.
The last four columns show the cash surrender value payable in each of the years
shown for the three different assumed investment returns. The cash surrender
values in the first 10 years reflect the surrender charges that would be
deducted if the Contract were surrendered in those years.
A gross return (as well as the net return) is shown at the top of each column.
The gross return represents the combined effect of investment income and capital
gains and losses, realized or unrealized, of the portfolios before any reduction
is made for investment advisory fees or other Series Fund expenses. The net
return reflects average total annual expenses of the 16 portfolios of 0.84%, and
the daily deduction from the Contract Fund of 0.25% per year for the tables
based on current charges and 0.45% per year for the tables based on maximum
charges. Thus, assuming current charges, gross returns of 0%, 6% and 12% are the
equivalent of net returns of -1.09%, 4.91% and 10.91%, respectively. Assuming
maximum charges, gross returns of 0%, 6% and 12% are the equivalent of net
returns of -1.29%, 4.71% and 10.71%, respectively. The actual fees and expenses
of the portfolios associated with a particular Contract may be more or less than
0.84% and will depend on which variable investment options are selected. The
death benefits and cash surrender values shown reflect the deduction of all
expenses and charges both from the Series Fund and under the Contract.
If you are considering the purchase of a variable life insurance contract from
another insurance company, you should not rely upon these tables for comparison
purposes. A comparison between two tables, each showing values for a 35 year old
man, may be useful for a 35 year old man but would be inaccurate if made for
insureds of other ages or sex. Your Pruco Life of New Jersey representative can
provide you with a hypothetical illustration for your own age, sex, and rating
class.
31
<PAGE>
ILLUSTRATIONS
-------------
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS IN ALL YEARS
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- --------------------------------------------
Premiums Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Accumulated Annual Investment Return of Annual Investment Return of
End Of at 4% --------------------------------------------- --------------------------------------------
Policy Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.09% Net) (4.91% Net) (10.91% Net) (-1.109% Net) (4.91% Net) (10.91% Net)
------ ----------- ------------ ----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,000 $250,000 $ 250,000 $ 0 $ 0 $ 0
2 $ 3,660 $250,000 $250,000 $ 250,000 $ 0 $ 0 $ 124
3 $ 5,600 $250,000 $250,000 $ 250,000 $ 814 $ 1,173 $ 1,564
4 $ 7,618 $250,000 $250,000 $ 250,000 $ 1,877 $ 2,469 $ 3,140
5 $ 9,717 $250,000 $250,000 $ 250,000 $ 2,930 $ 3,819 $ 4,868
6 $ 11,900 $250,000 $250,000 $ 250,000 $ 4,391 $ 5,657 $ 7,207
7 $ 14,170 $250,000 $250,000 $ 250,000 $ 5,836 $ 7,574 $ 9,780
8 $ 16,530 $250,000 $250,000 $ 250,000 $ 7,264 $ 9,572 $ 12,609
9 $ 18,986 $250,000 $250,000 $ 250,000 $ 8,672 $ 11,653 $ 15,720
10 $ 21,539 $250,000 $250,000 $ 250,000 $10,060 $ 13,820 $ 19,143
15 $ 35,922 $250,000 $250,000 $ 250,000 $16,191 $ 25,655 $ 41,922
20 $ 53,422 $250,000 $250,000 $ 250,000 $21,212 $ 39,852 $ 79,342
25 $ 74,713 $250,000 $250,000 $ 280,004 $24,622 $ 56,619 $ 141,416
30 $100,616 $250,000 $250,000 $ 421,337 $25,768 $ 76,214 $ 243,548
35 $132,132 $250,000 $250,000 $ 632,234 $24,029 $ 99,337 $ 410,541
40 $170,476 $250,000 $250,000 $ 948,246 $17,172 $126,284 $ 682,191
45 $217,127 $250,000(2) $250,000 $1,436,304 $ 1,794(2) $158,245 $1,122,113
</TABLE>
----------------
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 46, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey 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>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS IN ALL YEARS
USING MAXIMUM CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------ ----------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.29% Net) (4.71% Net) (10.71% Net) (-1.29% Net) (4.71% Net) (10.71% Net)
-------------- ------------- --------------- ----------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,000 $250,000 $250,000 $ 0 $ 0 $ 0
2 $ 3,660 $250,000 $250,000 $250,000 $ 0 $ 0 $ 0
3 $ 5,600 $250,000 $250,000 $250,000 $ 0 $ 0 $ 161
4 $ 7,618 $250,000 $250,000 $250,000 $ 258 $ 641 $ 1,082
5 $ 9,717 $250,000 $250,000 $250,000 $ 827 $ 1,381 $ 2,045
6 $ 11,900 $250,000 $250,000 $250,000 $1,768 $ 2,535 $ 3,493
7 $ 14,170 $250,000 $250,000 $250,000 $2,657 $ 3,693 $ 5,032
8 $ 16,530 $250,000 $250,000 $250,000 $3,493 $ 4,851 $ 6,670
9 $ 18,986 $250,000 $250,000 $250,000 $4,271 $ 6,004 $ 8,415
10 $ 21,539 $250,000 $250,000 $250,000 $4,988 $ 7,149 $ 10,271
15 $ 35,922 $250,000 $250,000 $250,000 $6,686 $11,733 $ 20,752
20 $ 53,422 $250,000 $250,000 $250,000 $5,565 $14,518 $ 35,134
25 $ 74,713 $250,000 $250,000 $250,000 $ 0 $13,052 $ 54,709
30 $100,616 $250,000 $250,000 $250,000 $ 0 $ 2,306 $ 81,295
35 $132,132 $ 0(2) $ 0(2) $250,000 $ 0(2) $ 0(2) $118,261
40 $170,476 $ 0 $ 0 $250,000 $ 0 $ 0 $175,700
45 $217,127 $ 0 $ 0 $343,438 $ 0 $ 0 $268,311
</TABLE>
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 31, unless an additional premium payment was made. Based on
a gross return of 6%, the Contract would go into default in policy year
31, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey 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>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 TARGET COVERAGE AMOUNT
($100,000 BASIC INSURANCE AMOUNT, $150,000 TARGET TERM RIDER)
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit (1) Surrender Value (1)
----------------- -------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.09% Net) (4.91% Net) (10.91% Net) (-1.109% Net) (4.91% Net) (10.91% Net)
-------- -------------- ------------ ----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,000 $250,000 $ 250,000 $ 235 $ 316 $ 396
2 $ 3,660 $250,000 $250,000 $ 250,000 $ 1,395 $ 1,625 $ 1,865
3 $ 5,600 $250,000 $250,000 $ 250,000 $ 2,679 $ 3,135 $ 3,630
4 $ 7,618 $250,000 $250,000 $ 250,000 $ 3,945 $ 4,710 $ 5,573
5 $ 9,717 $250,000 $250,000 $ 250,000 $ 5,193 $ 6,353 $ 7,715
6 $ 11,900 $250,000 $250,000 $ 250,000 $ 6,590 $ 8,240 $ 10,253
7 $ 14,170 $250,000 $250,000 $ 250,000 $ 7,967 $ 10,210 $ 13,054
8 $ 16,530 $250,000 $250,000 $ 250,000 $ 9,321 $ 12,263 $ 16,142
9 $ 18,986 $250,000 $250,000 $ 250,000 $10,652 $ 14,404 $ 19,550
10 $ 21,539 $250,000 $250,000 $ 250,000 $11,957 $ 16,635 $ 23,310
15 $ 35,922 $250,000 $250,000 $ 250,000 $17,959 $ 29,192 $ 48,862
20 $ 53,422 $250,000 $250,000 $ 250,000 $22,898 $ 44,380 $ 91,076
25 $ 74,713 $250,000 $250,000 $ 319,042 $26,241 $ 62,453 $ 161,132
30 $100,616 $250,000 $250,000 $ 477,504 $27,337 $ 83,805 $ 276,014
35 $132,132 $250,000 $250,000 $ 714,325 $25,569 $109,343 $ 463,848
40 $170,476 $250,000 $250,000 $1,069,450 $18,719 $139,775 $ 769,389
45 $217,127 $250,000(2) $250,000 $1,618,157 $ 3,404(2) $177,093 $1,264,185
</TABLE>
------------
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 46, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey 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>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 TARGET COVERAGE AMOUNT($100,000 BASIC INSURANCE AMOUNT, $150,000 TARGET TERM RIDER)
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING MAXIMUM CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------ ----------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End Of Accumulated ------------------------------------------ ----------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.29% Net) (4.71% Net) (10.71% Net) (-1.29% Net) (4.71% Net) (10.71% Net)
------------------- -------------- ------------- --------------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,000 $250,000 $250,000 $ 0 $ 0 $ 0
2 $ 3,660 $250,000 $250,000 $250,000 $ 0 $ 117 $ 259
3 $ 5,600 $250,000 $250,000 $250,000 $ 519 $ 762 $ 1,030
4 $ 7,618 $250,000 $250,000 $250,000 $1,018 $ 1,401 $ 1,842
5 $ 9,717 $250,000 $250,000 $250,000 $1,478 $ 2,032 $ 2,696
6 $ 11,900 $250,000 $250,000 $250,000 $2,060 $ 2,820 $ 3,769
7 $ 14,170 $250,000 $250,000 $250,000 $2,593 $ 3,597 $ 4,904
8 $ 16,530 $250,000 $250,000 $250,000 $3,075 $ 4,361 $ 6,105
9 $ 18,986 $250,000 $250,000 $250,000 $3,501 $ 5,107 $ 7,375
10 $ 21,539 $250,000 $250,000 $250,000 $3,868 $ 5,828 $ 8,718
15 $ 35,922 $250,000 $250,000 $250,000 $5,512 $ 9,896 $ 17,931
20 $ 53,422 $250,000 $250,000 $250,000 $4,430 $12,133 $ 30,295
25 $ 74,713 $ 0(2) $250,000 $250,000 $ 0(2) $ 9,895 $ 46,247
30 $100,616 $ 0 $ 0(2) $250,000 $ 0 $ 0(2) $ 66,015
35 $132,132 $ 0 $ 0 $250,000 $ 0 $ 0 $ 89,122
40 $170,476 $ 0 $ 0 $250,000 $ 0 $ 0 $114,874
45 $217,127 $ 0 $ 0 $250,000 $ 0 $ 0 $142,191
</TABLE>
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 25, unless an additional premium payment was made. Based on
a gross return of 6%, the Contract would go into default in policy year
30, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey 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>
<TABLE>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
GUIDELINE PREMIUM TEST
TYPE A (FIXED) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- -----------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.09% Net) (4.91% Net) (10.91% Net) (-1.09% Net) (4.91% Net) (10.91% Net)
----------- -------------- ------------ ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,000 $250,000 $ 250,000 $ 0 $ 0 $ 0
2 $ 3,660 $250,000 $250,000 $ 250,000 $ 0 $ 0 $ 124
3 $ 5,600 $250,000 $250,000 $ 250,000 $ 814 $ 1,173 $ 1,564
4 $ 7,618 $250,000 $250,000 $ 250,000 $ 1,877 $ 2,469 $ 3,140
5 $ 9,717 $250,000 $250,000 $ 250,000 $ 2,930 $ 3,819 $ 4,868
6 $ 11,900 $250,000 $250,000 $ 250,000 $ 4,391 $ 5,657 $ 7,207
7 $ 14,170 $250,000 $250,000 $ 250,000 $ 5,836 $ 7,574 $ 9,780
8 $ 16,530 $250,000 $250,000 $ 250,000 $ 7,264 $ 9,572 $ 12,609
9 $ 18,986 $250,000 $250,000 $ 250,000 $ 8,672 $ 11,653 $ 15,720
10 $ 21,539 $250,000 $250,000 $ 250,000 $10,060 $ 13,820 $ 19,143
15 $ 35,922 $250,000 $250,000 $ 250,000 $16,191 $ 25,655 $ 41,922
20 $ 53,422 $250,000 $250,000 $ 250,000 $21,212 $ 39,852 $ 79,342
25 $ 74,713 $250,000 $250,000 $ 250,000 $24,622 $ 56,619 $ 141,472
30 $100,616 $250,000 $250,000 $ 300,299 $25,768 $ 76,214 $ 246,147
35 $132,132 $250,000 $250,000 $ 488,644 $24,029 $ 99,337 $ 421,245
40 $170,476 $250,000 $250,000 $ 763,376 $17,172 $126,284 $ 713,436
45 $217,127 $250,000(2) $250,000 $1,262,965 $ 1,794(2) $158,245 $1,202,824
</TABLE>
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 46, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey or the Series Fund that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
T5
<PAGE>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
GUIDELINE PREMIUM TEST
TYPE A (FIXED) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS IN ALL YEARS
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------ -------------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.29% Net) (4.71% Net) (10.71% Net) (-1.29% Net) (4.71% Net) (10.71% Net)
------ -------------- ------------ ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,000 $250,000 $250,000 $ 0 $ 0 $ 0
2 $ 3,660 $250,000 $250,000 $250,000 $ 0 $ 0 $ 0
3 $ 5,600 $250,000 $250,000 $250,000 $ 0 $ 0 $ 161
4 $ 7,618 $250,000 $250,000 $250,000 $ 258 $ 641 $ 1,082
5 $ 9,717 $250,000 $250,000 $250,000 $ 827 $ 1,381 $ 2,045
6 $ 11,900 $250,000 $250,000 $250,000 $1,768 $ 2,535 $ 3,493
7 $ 14,170 $250,000 $250,000 $250,000 $2,657 $ 3,693 $ 5,032
8 $ 16,530 $250,000 $250,000 $250,000 $3,493 $ 4,851 $ 6,670
9 $ 18,986 $250,000 $250,000 $250,000 $4,271 $ 6,004 $ 8,415
10 $ 21,539 $250,000 $250,000 $250,000 $4,988 $ 7,149 $ 10,271
15 $ 35,922 $250,000 $250,000 $250,000 $6,686 $11,733 $ 20,752
20 $ 53,422 $250,000 $250,000 $250,000 $5,565 $14,518 $ 35,134
25 $ 74,713 $250,000 $250,000 $250,000 $ 0 $13,052 $ 54,709
30 $100,616 $250,000 $250,000 $250,000 $ 0 $ 2,306 $ 81,295
35 $132,132 $ 0(2) $ 0(2) $250,000 $ 0(2) $ 0(2) $118,261
40 $170,476 $ 0 $ 0 $250,000 $ 0 $ 0 $175,700
45 $217,127 $ 0 $ 0 $299,609 $ 0 $ 0 $285,342
</TABLE>
------------
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy
year 31, unless an additional premium payment was made.
Based on a gross return of 6%, the Contract would go into default in
policy year 31, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey or the Series Fund that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
T6
<PAGE>
<TABLE>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE B (VARIABLE) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------------- --------------------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.09% Net) (4.91% Net) (10.91% Net) (-1.09% Net) (4.91% Net) (10.91% Net)
---------- -------------- -------------- ------------------- ------------ ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,750 $250,818 $ 250,888 $ 0 $ 0 $ 0
2 $ 3,660 $251,490 $251,676 $ 251,871 $ 0 $ 0 $ 121
3 $ 5,600 $252,366 $252,723 $ 253,114 $ 811 $ 1,168 $ 1,558
4 $ 7,618 $253,231 $253,822 $ 254,492 $ 1,871 $ 2,461 $ 3,131
5 $ 9,717 $254,087 $254,974 $ 256,020 $ 2,921 $ 3,807 $ 4,853
6 $ 11,900 $255,350 $256,612 $ 258,158 $ 4,378 $ 5,640 $ 7,186
7 $ 14,170 $256,596 $258,328 $ 260,526 $ 5,818 $ 7,550 $ 9,748
8 $ 16,530 $257,824 $260,123 $ 263,147 $ 7,241 $ 9,540 $ 12,564
9 $ 18,986 $259,032 $261,999 $ 266,047 $ 8,643 $ 11,611 $ 15,658
10 $ 21,539 $260,217 $263,959 $ 269,254 $10,023 $ 13,764 $ 19,060
15 $ 35,922 $266,090 $275,475 $ 291,598 $16,090 $ 25,475 $ 41,598
20 $ 53,422 $270,971 $289,340 $ 328,222 $20,971 $ 39,340 $ 78,222
25 $ 74,713 $274,071 $305,211 $ 387,679 $24,071 $ 55,211 $ 137,679
30 $100,616 $274,645 $322,656 $ 484,329 $24,645 $ 72,656 $ 234,329
35 $132,132 $272,044 $341,202 $ 642,379 $22,044 $ 91,202 $ 392,379
40 $170,476 $264,038 $358,409 $ 904,033 $14,038 $108,409 $ 650,383
45 $217,127 $ 0(2) $370,362(2) $1,369,764 $ 0(2) $120,362(2) $1,070,128
</TABLE>
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 45, unless an additional premium payment was made. Based on
a gross return of 6%, the Contract would go into default in policy year
63, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey or the Series Fund that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
T7
<PAGE>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE B (VARIABLE) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------- -------------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.29% Net) (4.71% Net) (10.71% Net) (-1.29% Net) (4.71% Net) (10.71% Net)
------ -------------- ------------ ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $250,389 $250,444 $250,499 $ 0 $ 0 $ 0
2 $ 3,660 $250,752 $250,885 $251,027 $ 0 $ 0 $ 0
3 $ 5,600 $251,199 $251,440 $251,707 $ 0 $ 0 $ 152
4 $ 7,618 $251,608 $251,988 $252,426 $ 247 $ 627 $ 1,065
5 $ 9,717 $251,977 $252,526 $253,184 $ 810 $ 1,359 $ 2,018
6 $ 11,900 $252,716 $253,476 $254,424 $1,744 $ 2,504 $ 3,452
7 $ 14,170 $253,401 $254,425 $255,748 $2,624 $ 3,647 $ 4,971
8 $ 16,530 $254,031 $255,370 $257,165 $3,448 $ 4,787 $ 6,581
9 $ 18,986 $254,600 $256,306 $258,677 $4,211 $ 5,917 $ 8,288
10 $ 21,539 $255,105 $257,228 $260,292 $4,911 $ 7,033 $10,097
15 $ 35,922 $256,478 $261,351 $270,046 $6,478 $11,351 $20,046
20 $ 53,422 $255,155 $263,547 $282,839 $5,155 $13,547 $32,839
25 $ 74,713 $ 0(2) $260,987 $298,000 $ 0(2) $10,987 $48,000
30 $100,616 $ 0 $ 0(2) $312,991 $ 0 $ 0(2) $62,991
35 $132,132 $ 0 $ 0 $320,460 $ 0 $ 0 $70,460
40 $170,476 $ 0 $ 0 $304,017 $ 0 $ 0 $54,017
45 $217,127 $ 0 $ 0 $ 0(2) $ 0 $ 0 $ 0(2)
</TABLE>
--------------
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy
year 25, unless an additional premium payment was made.
Based on a gross return of 6%, the Contract would go into default in
policy year 30, unless an additional premium payment was made.
Based on a gross return of 12%, the Contract would go into default in
policy year 45, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey or the Series Fund that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
T8
<PAGE>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE C (RETURN OF PREMIUM) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------- -------------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.09% Net) (4.91% Net) (10.91% Net) (-1.09% Net) (4.91% Net) (10.91% Net)
---------- -------------- ------------ ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $251,725 $251,725 $ 251,725 $ 0 $ 0 $ 0
2 $ 3,660 $253,450 $253,450 $ 253,450 $ 0 $ 0 $ 120
3 $ 5,600 $255,175 $255,175 $ 255,175 $ 807 $ 1,165 $ 1,556
4 $ 7,618 $256,900 $256,900 $ 256,900 $ 1,865 $ 2,456 $ 3,126
5 $ 9,717 $258,625 $258,625 $ 258,625 $ 2,913 $ 3,800 $ 4,846
6 $ 11,900 $260,350 $260,350 $ 260,350 $ 4,367 $ 5,629 $ 7,176
7 $ 14,170 $262,075 $262,075 $ 262,075 $ 5,804 $ 7,536 $ 9,736
8 $ 16,530 $263,800 $263,800 $ 263,800 $ 7,222 $ 9,522 $ 12,549
9 $ 18,986 $265,525 $265,525 $ 265,525 $ 8,619 $ 11,589 $ 15,642
10 $ 21,539 $267,250 $267,250 $ 267,250 $ 9,994 $ 13,739 $ 19,042
15 $ 35,922 $275,875 $275,875 $ 275,875 $16,024 $ 25,432 $ 41,615
20 $ 53,422 $284,500 $284,500 $ 284,500 $20,821 $ 39,302 $ 78,522
25 $ 74,713 $293,125 $293,125 $ 293,125 $23,707 $ 55,292 $ 139,370
30 $100,616 $301,750 $301,750 $ 415,384 $23,757 $ 73,197 $ 240,106
35 $132,132 $310,375 $310,375 $ 623,532 $19,990 $ 92,990 $ 404,891
40 $170,476 $319,000 $319,000 $ 935,399 $ 9,208 $113,235 $ 672,949
45 $217,127 $ 0(2) $327,625(2) $1,417,028 $ 0(2) $131,745(2) $1,107,054
</TABLE>
---------------
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 43, unless an additional premium payment was made.
Based on a gross return of 6%, the Contract would go into default in
policy year 65, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey or the Series Fund that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
T9
<PAGE>
PRULIFE CUSTOM PREMIER VARIABLE UNIVERSAL LIFE
CASH VALUE ACCUMULATION TEST
TYPE C (RETURN OF PREMIUM) DEATH BENEFIT
MALE PREFERRED BEST ISSUE AGE 35
$250,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $1,725 ANNUAL PREMIUMS FOR ALL YEARS
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------------- ---------------------------------------------------
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 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.29% Net) (4.71% Net) (10.71% Net) (-1.29% Net) (4.71% Net) (10.71% Net)
--------- -------------- -------------- -------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,794 $251,725 $251,725 $251,725 $ 0 $ 0 $ 0
2 $ 3,660 $253,450 $253,450 $253,450 $ 0 $ 0 $ 0
3 $ 5,600 $255,175 $255,175 $255,175 $ 0 $ 0 $ 140
4 $ 7,618 $256,900 $256,900 $256,900 $ 225 $ 605 $ 1,042
5 $ 9,717 $258,625 $258,625 $258,625 $ 776 $ 1,323 $ 1,981
6 $ 11,900 $260,350 $260,350 $260,350 $1,693 $ 2,450 $ 3,396
7 $ 14,170 $262,075 $262,075 $262,075 $2,552 $ 3,572 $ 4,892
8 $ 16,530 $263,800 $263,800 $263,800 $3,351 $ 4,684 $ 6,475
9 $ 18,986 $265,525 $265,525 $265,525 $4,085 $ 5,783 $ 8,149
10 $ 21,539 $267,250 $267,250 $267,250 $4,749 $ 6,860 $ 9,919
15 $ 35,922 $275,875 $275,875 $275,875 $6,008 $10,847 $19,565
20 $ 53,422 $284,500 $284,500 $284,500 $3,952 $12,271 $31,843
25 $ 74,713 $ 0(2) $293,125 $293,125 $ 0(2) $ 7,794 $46,338
30 $100,616 $ 0 $ 0(2) $301,750 $ 0 $ 0(2) $60,874
35 $132,132 $ 0 $ 0 $310,375 $ 0 $ 0 $68,605
40 $170,476 $ 0 $ 0 $319,000 $ 0 $ 0 $50,532
45 $217,127 $ 0 $ 0 $ 0(2) $ 0 $ 0 $ 0(2)
</TABLE>
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 24, unless an additional premium payment was made.
Based on a gross return of 6%, the Contract would go into default in
policy year 28, unless an additional premium payment was made.
Based on a gross return of 12%, the Contract would go into default in
policy year 44, unless an additional premium payment was made.
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%, 6%, 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 of New
Jersey or the Series Fund that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
T10
<PAGE>
Contract Loans
You may borrow from Pruco Life of New Jersey an amount up to the current loan
value of your Contract less any existing Contract debt using the Contract as the
only security for the loan. The loan value at any time is equal to the sum of
(1) 90% of the portion of the cash value attributable to the variable investment
options, and (2) the balance of the cash value. The cash value is equal to the
Contract Fund less any surrender charge. A Contract in default has no loan
value. The minimum loan amount you may borrow is $500.
Interest charged on a loan accrues daily. Interest is due on each Contract
anniversary or when the loan is paid back, whichever comes first. If interest is
not paid when due, it becomes part of the loan and we will charge interest on
it, too. Except in the case of preferred loans, we charge interest at an
effective annual rate of 5%.
A portion of any amount you borrow on or after the 10th Contract anniversary may
be considered a preferred loan. The maximum preferred loan amount is the total
amount you may borrow minus the total net premiums paid (net premiums equal
premiums paid less total withdrawals, if any). If the net premium amount is less
than zero, we will, for purposes of this calculation, consider it to be zero.
Only new loans borrowed after the 10th Contract anniversary may be considered
preferred loans. Standard loans will not automatically be converted into
preferred loans. Preferred loans are charged interest at an effective annual
rate of 4.10%.
The Contract debt is the amount of all outstanding loans plus any interest
accrued but not yet due. If at any time the Contract debt equals or exceeds the
Contract Fund less any applicable surrender charges, the Contract will go into
default. See Lapse and Reinstatement, page 27. If the Contract debt equals or
exceeds the Contract Fund less any applicable surrender charges and you fail to
keep the Contract in-force, the amount of unpaid Contract debt will be treated
as a distribution which may be taxable. See Tax Treatment of Contract Benefits,
page 33.
When a loan is made, an amount equal to the loan proceeds is transferred out of
the Account and/or the fixed-rate option, as applicable. Unless you ask us to
take the loan amount from specific investment options and we agree, the
reduction will be made in the same proportions as the value in each variable
investment option and the fixed-rate option bears to the total value of the
Contract. While a loan is outstanding, the amount that was so transferred will
continue to be treated as part of the Contract Fund. It will be credited with an
effective annual rate of return of 4%. On each Monthly date, we will increase
the portion of the Contract Fund in the investment options by interest credits
accrued on the loan since the last Monthly date. The net cost of a standard loan
is 1% and the net cost of a preferred loan is 0.10%.
A loan will not cause the Contract to lapse as long as Contract debt does not
equal or exceed the Contract Fund, less any applicable surrender charges. Loans
from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. See Tax Treatment of Contract Benefits, page 33.
Any Contract debt will directly reduce a Contract's cash surrender value and
will be subtracted from the death benefit to determine the amount payable. In
addition, even if the loan is fully repaid, it may have an effect on future
death benefits because the investment results of the selected investment options
will apply only to the amount remaining invested under those 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 on the amount of the loan while the loan is outstanding,
values under the Contract 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.
When you repay all or part of a loan, we will increase the portion of the
Contract Fund in the investment options by the amount of the loan you repay
using the investment allocation for future premium payments as of the loan
payment date, plus interest credits accrued on the loan since the last
transaction date. If loan interest is paid when due, it will not change the
portion of the Contract Fund allocated to the investment options. We reserve the
right to change the manner in which we allocate loan repayments.
32
<PAGE>
Tax Treatment of Contract Benefits
This summary provides general information on the federal income tax treatment of
the Contract. It is not a complete statement of what the federal income taxes
will be in all circumstances. It is based on current law and interpretations,
which may change. It does not cover state taxes or other taxes. It is not
intended as tax advice. You should consult your own qualified tax adviser for
complete information and advice.
Treatment as Life Insurance. The Contract must meet certain requirements to
qualify as life insurance for tax purposes. These requirements include certain
definitional tests and rules for diversification of the Contract's investments.
For further information on the diversification requirements, see Taxation of the
Fund in the statement of additional information for the Series Fund.
In order to meet the definition of life insurance rules for federal income tax
purposes, the Contract must satisfy one of the two following tests: (1) Cash
Value Accumulation Test or (2) Guideline Premium Test. At issue, the Contract
owner chooses which of these two tests will apply to their Contract. This choice
cannot be changed thereafter.
Under the Cash Value Accumulation Test, the Contract must maintain a minimum
ratio of death benefit to cash value. Therefore, in order to ensure that the
Contract qualifies as life insurance, the Contract's death benefit may increase
as the Contract Fund value increases. The death benefit, at all times, must be
at least equal to the Contract Fund multiplied by the applicable attained age
factor. A listing of attained age factors can be found on your Contract data
pages.
Under the Guideline Premium Test, there is a limit as to the amount of premium
that can be paid into the Contract in relation to the death benefit. In
addition, there is a minimum ratio of death benefit to cash value associated
with this test. This ratio, however, is less than the required ratio under the
Cash Value Accumulation test. Therefore, the death benefit required under this
test is generally lower than that of the Cash Value Accumulation test.
The selection of the definition of life insurance test most appropriate for you
is dependent on several factors, including the insured's age at issue, actual
Contract earnings, and whether or not the Contract is classified as a Modified
Endowment Contract. You should consult your own qualified tax adviser for
complete information and advice with respect to the selection of the definition
of life insurance test.
We believe we have taken adequate steps to insure that the Contract qualifies as
life insurance for tax purposes. Generally speaking, this means that:
o you will not be taxed on the growth of the funds in the Contract,
unless you receive a distribution from the Contract,
o the Contract's death benefit will be income tax free to your
beneficiary.
Although we believe that the Contract should qualify as life insurance for tax
purposes, there are some uncertainties, particularly because the Secretary of
Treasury has not yet issued permanent regulations that bear on this question.
Accordingly, we reserve the right to make changes -- which will be applied
uniformly to all Contract owners after advance written notice -- that we deem
necessary to insure that the Contract will qualify as life insurance.
Pre-Death Distributions. The tax treatment of any distribution you receive
before the insured's death depends on whether the Contract is classified as a
Modified Endowment Contract.
Contracts Not Classified as Modified Endowment Contracts.
o If you surrender the Contract or allow it to lapse, you will be taxed
on the amount you receive in excess of the premiums you paid less the
untaxed portion of any prior withdrawals. For this purpose, you will
be treated as receiving any portion of the cash surrender value used
to repay Contract debt. The tax consequences of a surrender may
differ if you take the proceeds under an income payment settlement
option.
33
<PAGE>
o Generally, you will be taxed on a withdrawal to the extent the amount
you receive exceeds the premiums you paid for the Contract less the
untaxed portion of any prior withdrawals. However, under some limited
circumstances, in the first 15 Contract years, all or a portion of a
withdrawal may be taxed 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.
o Extra premiums for optional benefits and riders generally do not
count in computing the premiums paid for the Contract for the
purposes of determining whether a withdrawal is taxable.
o Loans you take against the Contract are ordinarily treated as debt
and are not considered distributions subject to tax. However, you
should know that the Internal Revenue Service may take the position
that the preferred loan should be treated as a distribution for tax
purposes because of the relatively low differential between the loan
interest rate and Contract's crediting rate. Were the Internal
Revenue Service to take this position, Pruco Life of New Jersey would
take reasonable steps to avoid this result, including modifying the
Contract's loan provisions.
Modified Endowment Contracts.
o The rules change if the Contract is classified as a Modified
Endowment Contract. The Contract could be classified as a Modified
Endowment Contract if premiums in amounts that are too large are paid
or a decrease in the face amount of insurance is made (or a rider
removed). The addition of a rider or an increase in the face amount
of insurance may also cause the Contract to be classified as a
Modified Endowment Contract. You should first consult a qualified tax
adviser and your Pruco Life of New Jersey representative if you are
contemplating any of these steps.
o If the Contract is classified as a Modified Endowment Contract, then
amounts you receive under the Contract before the insured's death,
including loans and withdrawals, are included in income to the extent
that the Contract Fund before surrender charges exceeds the premiums
paid for the Contract increased by the amount of any loans previously
included in income and reduced by any untaxed amounts previously
received other than the amount of any loans excludible from income.
An assignment of a Modified Endowment Contract is taxable in the same
way. These rules also apply to pre-death distributions, including
loans and assignments, made during the two-year period before the
time that the Contract became a Modified Endowment Contract.
o Any taxable income on pre-death distributions (including full
surrenders) is subject to a penalty of 10 percent unless the amount
is received on or after age 59 1/2, on account of your becoming
disabled or as a life annuity. It is presently unclear how the
penalty tax provisions apply to Contracts owned by businesses.
o All Modified Endowment Contracts issued by us to you during the same
calendar year are treated as a single Contract for purposes of
applying these rules.
Withholding. You must affirmatively elect that no taxes be withheld from a
pre-death distribution. Otherwise, the taxable portion of any amounts you
receive will be subject to withholding. You are not permitted to elect out of
withholding if you do not provide a social security number or other taxpayer
identification number. You may be subject to penalties under the estimated tax
payment rules if your withholding and estimated tax payments are insufficient to
cover the tax due.
Other Tax Considerations. If you transfer or assign the Contract to someone
else, there may be gift, estate and/or income tax consequences. If you transfer
the Contract to a person two or more generations younger than you (or designate
such a younger person as a beneficiary), there may be Generation Skipping
Transfer tax consequences. 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. Your individual situation or that of your beneficiary
will determine the federal estate taxes and the state and local estate,
inheritance and other taxes due if you or the insured dies.
34
<PAGE>
Business-Owned Life Insurance. If a business, rather than an individual, is the
owner of the Contract, there are some additional rules. Business Contract owners
generally cannot deduct premium payments. Business Contract owners generally
cannot take tax deductions for interest on Contract debt paid or accrued after
October 13, 1995. An exception permits the deduction of interest on policy loans
on Contracts for up to 20 key persons. The interest deduction for Contract debt
on these loans is limited to a prescribed interest rate and a maximum aggregate
loan amount of $50,000 per key insured person. The corporate alternative minimum
tax also applies to business-owned life insurance. This is an indirect tax on
additions to the Contract Fund or death benefits received under business-owned
life insurance policies.
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 differ under Contracts issued on males
and females of the same age. However, in those states that have adopted
regulations prohibiting sex-distinct insurance rates, premiums and cost of
insurance charges will be based on male rates, whether the insureds are male or
female. In addition, employers and employee organizations considering purchase
of a Contract should consult their legal advisers 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.
Other General Contract Provisions
Assignment. This Contract may not be assigned if the assignment would violate
any federal, state or local law or regulation prohibiting sex distinct rates for
insurance. Generally, the Contract may not be assigned to an employee benefit
plan or program without Pruco Life of New Jersey's consent. Pruco Life of New
Jersey assumes no responsibility for the validity or sufficiency of any
assignment. We will not be obligated to comply with any assignment unless we
receive a copy at a Home Office.
Beneficiary. You designate and name your beneficiary in the application.
Thereafter, you 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.
Incontestability. We will not contest the Contract after it has been in-force
during the insured's lifetime for two years from the issue date except when any
change is made in the Contract that requires Pruco Life of New Jersey's approval
and would increase our liability. We will not contest such change after it has
been in effect for two years during the lifetime of the insured.
Misstatement of Age or Sex. If the insured's stated age or sex or both are
incorrect in the Contract, Pruco Life of New Jersey will adjust the death
benefits payable and any amount to be paid, as required by law, to reflect the
correct age and sex. Any such benefit will be based on what the most recent
deductions from the Contract Fund would have provided at the insured's correct
age and sex.
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 of New Jersey representative authorized to sell this
Contract can explain these options upon request.
Suicide Exclusion. Generally, if the insured, whether sane or insane, dies by
suicide within two years from the Contract date, the Contract will end and Pruco
Life of New Jersey will return the premiums paid, less any Contract debt, and
less any withdrawals. Generally, if the insured, whether sane or insane, dies by
suicide after two years from the issue date, but within two years of the
effective date of an increase in the basic insurance amount, we will pay, as to
the increase in amount, no more than the sum of the premiums paid on and after
the effective date of an increase.
Substitution of Series Fund Shares
Although Pruco Life of New Jersey 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 of New Jersey may seek to substitute the
shares of another portfolio or of an entirely different mutual fund. Before this
35
<PAGE>
can be done, the approval of the SEC, and possibly one or more state insurance
departments, may be required. Contract owners will be notified of any such
substitution.
Reports to Contract Owners
Once each year, Pruco Life of New Jersey will send you a statement that provides
certain information pertinent to your own Contract. This statement will detail
values, transactions made, and specific Contract data that apply only to your
particular Contract.
You 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
portfolio.
Sale of the Contract and Sales Commissions
Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of
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 751 Broad
Street, Newark, New Jersey 07102-3777. 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.
Commissions are based on a premium value referred to as the Commissionable
Target Premium. The Commissionable Target Premium may vary from the Target
Premium, depending on the issue age and rating class of the insured, any extra
risk charges, or additional riders. For Contracts issued on an unrated insured
below age 56, the Commissionable Target Premium is generally equal to what the
Target Premium would be for a Type A Contract if the insured was either in the
Nonsmoker or Smoker rating class, and there were no extra risk charges or riders
on the Contract. For Contracts issued on an unrated insured below age 56 in a
more favorable rating class, the Commissionable Target Premium will be greater
than the Target Premium, if there are no extra risk charges or riders on the
Contract. For Contracts issued on insureds age 56 or greater or with substandard
ratings, the Commissionable Target Premium will generally be less than the
Target Premium. See Premiums, page 18.
Generally, representatives will receive a commission of no more than: (1) 50% of
the premiums received in the first year on premiums up to the Commissionable
Target Premium; (2) 4% of premiums received in years two through 10 on premiums
up to the Commissionable Target Premium; and (3) 2% on premiums received in the
first 10 years in excess of the Commissionable Target Premium. If the basic
insurance amount is increased, representatives will generally receive a
commission of no more than: (1) 50% of the premiums received up to the
Commissionable Target Premium for the increase received in the first year; (2)
4% of the premiums received up to the Commissionable Target Premium for years
two through 10; and (3) 2% on other premiums received for the increase.
Moreover, trail commissions of up to 0.0625% of the Contract Fund as of the end
of each calendar quarter may be paid. Representatives with less than four years
of service may receive compensation on a different basis. Representatives who
meet certain productivity or persistency standards may be eligible for
additional compensation.
State Regulation
Pruco Life of New Jersey is subject to regulation and supervision by the
Department of Insurance of the State of New Jersey, 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 of New Jersey 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 of New Jersey
is required to file with New Jersey 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.
36
<PAGE>
Experts
The financial statements of Pruco Life of New Jersey as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999 and
the financial statements of the Account as of December 31, 1999 and for each of
the three years in the period then ended included in this prospectus have been
so included in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting. PricewaterhouseCoopers LLP's principal business address
is 1177 Avenue of the Americas, New York, New York 10036.
Actuarial matters included in this prospectus have been examined by Nancy D.
Davis, MAAA, FSA, Vice President and Actuary of Prudential, whose opinion is
filed as an exhibit to the registration statement.
Litigation and Regulatory Proceedings
We are subject to legal and regulatory actions in the ordinary course of our
businesses, including class actions. Pending legal regulatory actions include
proceedings specific to our practices and proceedings generally applicable to
business practices in the industries in which we operate. In certain of these
lawsuits, large and/or indeterminate amounts are sought, including punitive or
exemplary damages.
In particular, Pruco Life of New Jersey and Prudential have been subject to
substantial regulatory actions and civil litigation involving individual life
insurance sales practices. In 1996, Prudential, on behalf of itself and many of
its life insurance subsidiaries including Pruco Life of New Jersey, entered into
settlement agreements with relevant insurance regulatory authorities and
plaintiffs in the principal life insurance sales practices class action lawsuit
covering policyholders of individual permanent life insurance policies issued in
the United States from 1982 to 1995. Pursuant to the settlements, the companies
agreed to various changes to their sales and business practices controls and a
series of fines, and are in the process of distributing final remediation relief
to eligible class members. In many instances, claimants have the right to
"appeal" the decision to an independent reviewer. The bulk of such appeals were
resolved in 1999, and the balance is expected to be addressed in 2000. As of
January 31, 2000, Prudential and/or Pruco Life of New Jersey remained a party to
two putative class actions and approximately 158 individual actions relating to
permanent life insurance policies issued in the United States between 1982 and
1995. Additional suits may be filed by individuals who opted out of the
settlements. While the approval of the class action settlement is now final,
Prudential and Pruco Life of New Jersey remain subject to oversight and review
by insurance regulators and other regulatory authorities with respect to their
sales practices and the conduct of the remediation program. The U.S. District
Court has also retained jurisdiction as to all matters relating to the
administration, consummation, enforcement and interpretation of the settlements.
Prudential has indemnified Pruco Life of New Jersey for any liabilities incurred
in connection with sales practices litigation covering policyholders of
individual permanent life insurance policies issued in the United States from
1982 to 1995.
In 1999, 1998, 1997 and 1996, Prudential recorded provision in its Consolidated
Statements of Operations of $100 million, $1,150 million, $2,030 million and
$1,125 million, respectively, to provide for estimated remediation costs, and
additional sales practices costs including related administrative costs,
regulatory fines, penalties and related payments, litigation costs and
settlements, including settlements associated with the resolution of claims of
deceptive sales practices asserted by policyholders who elected to "opt-out" of
the class action settlement and litigate their claims against Prudential
separately, and other fees and expenses associated with the resolution of sales
practices issues.
Additional Information
Pruco Life of New Jersey has filed a registration statement 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 Public Reference Section at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or by telephoning (800) SEC-0330, upon payment of a
prescribed fee.
37
<PAGE>
Further information may also be obtained from Pruco Life of New Jersey. Its
address and telephone number are set forth on the inside front cover of this
prospectus.
Financial Statements
The financial statements of the Account should be distinguished from the
financial statements of Pruco Life of New Jersey, which should be considered
only as bearing upon the ability of Pruco Life of New Jersey to meet its
obligations under the Contracts.
38
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past five years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
JAMES J. AVERY, JR., Chairman and Director - President, Prudential Individual
Life Insurance since 1998; 1997 to 1998: Senior Vice President, Chief Actuary
and CFO, Prudential Individual Insurance Group; 1995 to 1997: President,
Prudential Select.
IRA J. KLEINMAN, Director - Executive Vice President, Prudential International
Insurance Group since 1997; 1995 to 1997: Chief Marketing and Product
Development Officer, Prudential Individual Insurance Group.
ESTHER H. MILNES, President and Director - Vice President and Chief Actuary,
Prudential Individual Life Insurance since 1999; prior to 1999: Vice President
and Actuary, Prudential Individual Insurance Group.
DAVID R. ODENATH, JR., Director - President, Prudential Investments since 1999;
prior to 1999: Senior Vice President and Director of Sales, Investment
Consulting Group, PaineWebber.
I. EDWARD PRICE, Vice Chairman and Director - Senior Vice President and Actuary,
Prudential Individual Life Insurance since 1998; 1995 to 1998: Senior Vice
President and Actuary, Prudential Individual Insurance Group.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, Treasurer - Vice President and Treasurer, Prudential since
1995.
JAMES C. DROZANOWSKI, Senior Vice President - Vice President, Operations and
Systems, Prudential Individual Financial Services since 1998; 1996 to 1998: Vice
President and Operations Executive, Prudential Individual Insurance Group; 1995
to 1996: President, Credit Card Division, Chase Manhattan Bank.
THOMAS F. HIGGINS, Senior Vice President - Vice President, Annuity Services,
Prudential Individual Financial Services since 1999; 1998 to 1999: Vice
President, Mutual Funds, Prudential Individual Financial Services; 1995 to 1998:
Principal, Mutual Fund Operations, The Vanguard Group.
CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary - Chief Counsel, Variable
Products, Prudential Law Department since 1995.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary - Vice President and
Associate Actuary, Prudential since 1996; prior to 1996: Vice President and
Assistant Actuary, Prudential Corporate Risk Management.
WILLIAM J. ECKERT, IV, Vice President and Chief Accounting Officer - Vice
President and IFS Controller, Enterprise Financial Management, Prudential since
2000; 1999 to 2000: Vice President and Individual Life Controller, Enterprise
Financial Management, Prudential; 1997 to 1999: Vice President, Accounting,
Enterprise Financial Management; 1995 to 1997: Vice President, Accounting,
External Financial Reporting.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
Pruco Life of New Jersey directors and officers are elected annually.
39
<PAGE>
PruLife Custom Premier
Variable Universal Life
Insurance
PruLife Custom Premier Variable Universal Life is issued by Pruco Life Insurance
Company of New Jersey, 213 Washington Street, Newark, NJ 07102-2992 and offered
through Pruco Securities Corporation, 751 Broad Street, Newark, NJ 07102-3777,
both subsidiaries of The Prudential Insurance Company of America, 751 Broad
Street, Newark, NJ 07102-3777.
[LOGO OF PRUDENTIAL APPEARS HERE]
Pruco Life Insurance Company of New Jersey
213 Washington Street, Newark, NJ 07102-2992
Telephone 800 778-2255
VUL-2NJ ED.2/01
<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.
REPRESENTATION WITH RESPECT TO CHARGES
Pruco Life Insurance Company of New Jersey represents that the fees and charges
deducted under the Variable Universal Life Insurance Contracts registered by
this registration statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to the incurred, and the risks assumed
by the Pruco Life Insurance Company of New Jersey.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
New Jersey, being the state or organization of Pruco Life Insurance Company of
New Jersey ("Pruco Life of New Jersey"), permits entities organized under its
jurisdiction to indemnify directors and officers with certain limitations. The
relevant provisions of New Jersey law permitting indemnification can be found in
Section 14A:3-5 of the New Jersey Statutes Annotated. The text of Pruco Life of
New Jersey's By-law, Article V, which relates to indemnification of officers and
directors, is filed as Exhibit 1.A.(6)(c) to Form S-6, Registration No. 333-
85117, filed on August 13, 1999 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") 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 54 pages.
The undertaking to file reports.
The representation with respect to charges.
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-B-2:
A. (1) (a) Resolution of Board of Directors of Pruco Life Insurance
Company of New Jersey establishing the Pruco Life of New
Jersey Variable Appreciable Account. (Note 4)
(b) Amendment of Separate Account Resolution. (Note 9)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and Pruco Life Insurance Company of New Jersey. (Note 4)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale
of the Contracts. (Note 6)
(c) Schedules of Sales Commissions. (Note 1)
(4) Not Applicable.
(5) Variable Universal Life Insurance Contract. (Note 1)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company of
New Jersey, as amended March 11, 1983. (Note 4)
(b) Certificate of Amendment of the Articles of Incorporation of
Pruco Life Insurance Company of New Jersey, February 12,
1998. (Note 5)
(c) By-laws of Pruco Life Insurance Company of New Jersey, as
amended August 4, 1999. (Note 6)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) New Jersey Application Form for Variable Universal Life
Insurance Contract. (Note 6)
(b) Supplement to the Application for Variable Universal Life
Insurance Contract. (Note 6)
(11) Not Applicable.
(12) Memorandum describing Pruco Life Insurance Company of New Jersey's
issuance, transfer, and redemption procedures for the Contracts
pursuant to Rule 6e-3(T)(b)(12)(iii). (Note 9)
(13) Available Contract Riders and Endorsements.
(a) Rider for Insured's Accidental Death Benefit (Note 1)
(b) Rider for Insured's Total Disability Benefit (Note 1)
(c) Rider for Level Term Insurance Benefit on Dependent Children
(Note 1)
II-2
<PAGE>
(d) Rider for Level Term Insurance Benefit on Dependent Children-
From Conversions (Note 1)
(e) Endorsement providing Type C Death Benefit Provisions (Note
1)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the legality of the
securities being registered. (Note 9)
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 9)
7. Powers of Attorney.
(a) Ira J. Kleinman, Esther H. Milnes, I. Edward Price (Note 2)
(b) James J. Avery, Jr. (Note 3)
(c) David R. Odenath, Jr. (Note 7)
(d) William J. Eckert, IV (Note 8)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Form N-4, Registration No. 333-18117,
filed December 18, 1996 on behalf of the Pruco Life of New Jersey
Flexible Premium Variable Annuity Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 10 to
Form S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 26 to Form
S-6, Registration No. 2-89780, filed April 28, 1997 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 12 for Form
S-1, Registration No. 33-20018, filed on April 19, 1999 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 6) Incorporated by reference to Form S-6, Registration No. 333-85117,
filed on August 13, 1999 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 13 to Form
S-1, Registration No. 33-20018, filed on April 12, 2000 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 8) Incorporated by reference to Form S-6, Registration No. 333-85117,
filed on October 13, 2000 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
(Note 9) To be filed by Pre-Effective Amendment.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, the
Pruco Life of New Jersey Variable Appreciable Account, has duly caused this
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 3rd day of November, 2000.
(Seal) Pruco Life of New Jersey Variable Appreciable Account
(Registrant)
By: Pruco Life Insurance Company of New Jersey
(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 Registration
Statement has been signed below by the following persons in the capacities
indicated on this 3rd day of November, 2000.
Signature and Title
-------------------
/s/ *
-------------------------------
Esther H. Milnes
President and Director
/s/ *
-------------------------------
William J. Eckert, IV
Vice President and Chief Accounting Officer
/s/ *
-------------------------------
James J. Avery, Jr.
Director
/s/ * *By: /s/ * Thomas C. Castano
------------------------------- ------------------------
Ira J. Kleinman Thomas C. Castano
Director (Attorney-in-Fact)
/s/ *
-------------------------------
David R. Odenath, Jr.
Director
/s/ *
-------------------------------
I. Edward Price
Director
II-4
<PAGE>
EXHIBIT INDEX
1.A.(3)(c) Schedule of Sales Commission
1.A.(5) Variable Universal Life Insurance Contract
1.A.(13)(a) Rider for Insured's Accidental Death Benefit
1.A.(13)(b) Rider for Insured's Total Disability Benefit
1.A.(13)(c) Rider for Level Term Insurance Benefit on Dependent Children
1.A.(13)(d) Rider for Level Term Insurance Benefit on Dependent Children-
From Conversions
1.A.(13)(e) Endorsement providing Type C Death Benefit Provisions
