<PAGE>
As filed with the SEC on . Registration No. 33-57186
----------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-6
Post-Effective Amendment No. 11
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
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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) 778-2255
(Address and telephone number of principal executive offices)
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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
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It is proposed that this filing will become effective (check appropriate space):
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[_] on pursuant to paragraph (b) of Rule 485
-------------------------
(date)
[_] 60 days after filing pursuant to paragraph (a) of Rule 485
[_] on May 1, 2000 pursuant to paragraph (a) of Rule 485
-----------
(date)
<PAGE>
CROSS REFERENCE SHEET
(as required by Form N-8B-2)
<TABLE>
<CAPTION>
N-8B-2 Item Number Location
------------------ --------
<S> <C>
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract 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
10. Brief Description of the Contract;
Short-Term Cancellation Right or
"Free-Look"; Transfers; How the
Contract Fund Changes with
Investment Experience; How a
Contract's Death Benefit Will
Vary; Surrender of a Contract;
Withdrawal of Excess Cash
Surrender Value; When Proceeds are
Paid; Contract Loans; Lapse and
Reinstatement; Paid-Up Insurance
Option; Reduced Paid-Up Insurance
Option; The Fixed-Rate Option;
Voting Rights
11. Brief Description of the Contract;
Pruco Life of New Jersey Variable
Appreciable Account
12. Cover Page; Brief Description of
the Contract; Flexible Portfolios;
Sale of the Contract and Sales
Commissions
13. Brief Description of the Contract;
Premiums; Allocation of Premiums;
Contract Fees and Charges;
Reduction of Charges for
Concurrent Sales to Several
Individuals; Sale of the Contract
and Sales Commissions
14. Brief Description of the Contract;
Detailed Information for
Prospective Contract Owners
15. Brief Description of the Contract;
Premiums; Allocation of Premiums;
Transfers; General Information
About Pruco Life of New Jersey
Variable Appreciable Account, and
The Fixed Rate Option
16. Brief Description of the Contract;
Detailed Information for
Prospective Contract Owners
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-8B-2 Item Number Location
------------------ --------
<S> <C>
17. Surrender of a Contract;
Withdrawal of Excess Cash
Surrender Value; When Proceeds are
Paid
18. Pruco Life of New Jersey Variable
Appreciable Account; How the
Contract Fund Changes with
Investment Experience
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other Standard Contract Provisions
25. Brief Description of the Contract
26. Brief Description of the Contract;
Contract Fees and Charges
27. Brief Description of the Contract
28. Brief Description of the
Contract; Directors and Officers
of Pruco Life of New Jersey
29. Brief Description of the Contract
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Brief Description of the Contract
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-8B-2 Item Number Location
------------------ --------
<S> <C>
44. Brief Description of the Contract;
How the Contract Fund Changes with
Investment Experience; How a
Contract's Death Benefit Will Vary
45. Not Applicable
46. Brief Description of the Contract;
Pruco Life of New Jersey Variable
Appreciable Account
47. Pruco Life of New Jersey Variable
Appreciable Account
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Not Applicable
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
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PRUvider Variable SM
Appreciable Life(R) Insurance
PROSPECTUS
The Pruco Life of New Jersey Variable
Appreciable Account
May 1, 2000
Pruco Life Insurance Company of New Jersey
<PAGE>
PROSPECTUS
May 1, 2000
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
PRUvider SM
Variable Appreciable Life(R)
Insurance Contract
This prospectus describes an individual variable life insurance contract (the
"Contract") offered by Pruco Life Insurance Company of New Jersey ("Pruco Life
of New Jersey", "us", "we", or "our") under the name PRUvider" Variable
Appreciable Life" Insurance. Pruco Life of New Jersey, a stock life insurance
company, is an indirect, wholly-owned subsidiary of The Prudential Insurance
Company of America ("Prudential").
As of May 1, 1999, Pruco Life of New Jersey no longer offered these Contracts
for sale.
You, the Contract owner, may choose to invest your Contract's premiums and their
earnings in one or more of the following ways:
. Invest in either one or both of two available variable investment options
of the Pruco Life of New Jersey Variable Appreciable Account (the
"Account"), each of which invests in a corresponding portfolio of The
Prudential Series Fund, Inc. (the "Series Fund"): the Conservative Balanced
Portfolio and the Flexible Managed Portfolio. Pruco Life of New Jersey may
add additional variable investment options in the future.
. Invest in the fixed-rate option, which pays a guaranteed interest rate.
Pruco Life of New Jersey will credit interest daily on any portion of the
premium payment that you have allocated to the fixed-rate option at rates
periodically declared by Pruco Life of New Jersey, in its sole discretion.
Any such interest rate will never be less than an effective annual rate of
4%.
This prospectus describes the Contract generally and the Account. The attached
prospectus for the Series Fund and the Series Fund's statement of additional
information describe the investment objectives and the risks of investing in the
Series Fund portfolios. Pruco Life of New Jersey may add additional options in
the future.
You should retain this prospectus, together with the Contract, 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.
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 778-2255
PRUvider is a service mark of Prudential.
Appreciable Life is a registered mark of Prudential.
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION AND SUMMARY......................................................1
Brief Description of the Contract..........................................1
Charges....................................................................1
Premium Payments...........................................................2
Lapse and Guarantee Against Lapse..........................................3
Refund.....................................................................3
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY,
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT, THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT............4
Pruco Life Insurance Company of New Jersey.................................4
The Pruco Life of New Jersey Variable Appreciable Account..................4
The Prudential Series Fund, Inc............................................5
Investment Options.........................................................5
Voting Rights..............................................................6
The Fixed-Rate Option......................................................6
DETAILED INFORMATION FOR CONTRACT OWNERS......................................6
Contract Fees and Charges..................................................6
Requirements for Issuance of a Contract....................................9
Short-Term Cancellation Right or "Free-Look"..............................10
Reduction of Charges for Concurrent Sales to Several Individuals..........10
Contract Date.............................................................10
Premiums..................................................................10
Allocation of Premiums....................................................11
Transfers.................................................................12
How the Contract Fund Changes with Investment Experience..................12
How a Contract's Death Benefit Will Vary..................................13
Withdrawal of Excess Cash Surrender Value.................................13
Illustrations of Cash Surrender Values, Death Benefits....................14
and Accumulated Premiums..................................................14
Contract Loans............................................................15
Surrender of a Contract...................................................15
Lapse and Reinstatement...................................................15
Paid-Up Insurance Option..................................................16
Reduced Paid-Up Insurance Option..........................................17
When Proceeds Are Paid....................................................17
Living Needs Benefit......................................................17
Reports to Contract Owners................................................18
Tax Treatment of Contract Benefits........................................18
Riders....................................................................20
Legal Considerations Relating to Sex-Distinct Premiums and Benefits.......20
Other Standard Contract Provisions........................................20
Paying Premiums by Payroll Deduction......................................21
Sale of the Contract and Sales Commissions................................21
State Regulation..........................................................21
Experts...................................................................21
Litigation and Regulatory Proceedings.....................................21
Additional Information....................................................24
Financial Statements......................................................24
DIRECTORS AND OFFICERS OF PRUCO LIFE OF NEW JERSEY...........................25
FINANCIAL STATEMENTS OF THE PRUvider VARIABLE APPRECIABLE LIFE
SUBACCOUNTS OF PRUCO LIFE OF NEW JERSEY VARIABLE
APPRECIABLE ACCOUNT..........................................................A1
FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY...........B1
<PAGE>
INTRODUCTION AND SUMMARY
This summary provides only an overview of the more significant provisions of the
Contract. We provide further detail in the subsequent sections of this
prospectus and in the Contract.
As of May 1, 1999, Pruco Life of New Jersey no longer offered these Contracts
for sale.
Brief Description of the Contract
The Pruco Life of New Jersey PRUvider Variable Appreciable Life Insurance
Contract (the "Contract") is a form of flexible premium variable life insurance.
It was issued by Pruco Life Insurance Company of New Jersey ("Pruco Life of New
Jersey", "us", "we", or "our"). It is based on a Contract Fund, the value of
which changes every business day. The Contract Fund represents the total amount
credited to a specific Contract. On any date it is equal to the sum of the
amounts invested in the variable investment options and the fixed-rate option,
and the principal amount of any Contract debt plus any interest earned thereon.
There is a surrender charge if you decide to surrender the Contract during the
first 10 Contract years.
A broad objective of the Contract is to provide benefits that will increase in
value if favorable investment results are achieved. You choose whether to invest
in one or both variable investment options and/or the fixed-rate option.
Whenever you pay a premium, Pruco Life of New Jersey first deducts certain
charges and, except for amounts allocated to the fixed-rate option, puts the
remainder - the "net premium" - into the Account. The money allocated to each
variable investment option is immediately invested in a corresponding portfolio
of The Prudential Series Fund, Inc. (the "Series Fund"), a series mutual fund
for which Prudential is the investment adviser. The two Series Fund portfolios "
the Conservative Balanced Portfolio and the Flexible Managed Portfolio " differ
in the amount of risk associated with them and are described in more detail on
page 5.
Variable life insurance contracts are unsuitable as short-term savings vehicles.
Withdrawals and loans may negate any guarantee against lapse (see Lapse and
Reinstatement, page 15) and possibly may result in adverse tax consequences. See
Tax Treatment of Contract Benefits, page 18.
Charges
Pruco Life of New Jersey deducts certain charges from each premium payment and
from the amounts held in the designated variable investment option[s] and the
fixed-rate option. In addition, Pruco Life of New Jersey makes certain
additional charges if a Contract lapses or is surrendered during the first 10
Contract years. All these charges, which are largely designed to cover insurance
costs and risks as well as sales and administrative expenses, are fully
described under Contract Fees and Charges on page 6. In brief, Pruco Life of New
Jersey may make the following charges:
----------------------------------------
Premium Payment
----------------------------------------
|
|
----------------------------------------
. less charge for taxes attributable
to premiums
. less $2 processing fee
----------------------------------------
|
|
-------------------------------------------------
Invested Premium Amount
. To be invested in one or a combination of:
. The Conservative Balanced Portfolio
. The Flexible Managed Portfolio
. The fixed-rate option
--------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
Daily Charges
. We deduct management fees and expenses from the Series Fund assets. The
total expenses of each portfolio for the year 1999, expressed as a
percentage of the average assets during the year, are as follows:
<TABLE>
<S> <C> <C> <C>
Portfolios Conservative Balanced Flexible Managed
Advisory Fee 0.55% 0.60%
Other Expenses 0.xx% 0.xx%
Total Expenses 0.xx% 0.xx%
</TABLE>
. We deduct a daily mortality and expense risk charge equivalent to an annual
rate of up to 0.9% from the assets of the variable investment options.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Monthly Charges
. We deduct a sales charge from the Contract Fund in the amount of " of 1% of
the primary annual premium.
. We reduce the Contract Fund by a guaranteed minimum death benefit risk
charge of not more than $0.01 per $1,000 of the face amount of insurance.
. We reduce the Contract Fund by an administrative charge of up to $6 per
Contract and up to $0.19 per $1,000 of face amount of insurance (currently,
on a non-guaranteed basis, the $0.19 charge is decreased to $0.09 per
$1,000); if the face amount of the Contract is less than $10,000, there is
an additional charge of $0.30 per $1,000 of face amount.
. We deduct a charge for anticipated mortality. The maximum charge is based
on the non-smoker/smoker 1980 CSO Tables.
. If the Contract includes riders, we deduct rider charges from the Contract
Fund.
. If the rating class of the insured results in an extra charge, we will
deduct that charge from the Contract Fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Possible Additional Charges
. During the first 10 years, we will assess a contingent deferred sales
charge if the Contract lapses or is surrendered. During the first five
years, the maximum contingent deferred sales charge is 50% of the first
year's primary annual premium. This charge is both subject to other
important limitations and reduced for Contracts that have been inforce for
more than five years.
. During the first 10 years, we will assess a contingent deferred
administrative charge if the Contract lapses or is surrendered. During the
first five years, this charge equals $5 per $1,000 of face amount. It
begins to decline uniformly after the fifth Contract year so that it
disappears on the 10th Contract anniversary.
. We assess an administrative processing charge of up to $15 for each
withdrawal of excess cash surrender value.
- --------------------------------------------------------------------------------
Because of the charges listed above, and in particular because of the
significant charges deducted upon early surrender or lapse, you should purchase
a Contract only if you intend to, and have the financial capability to, keep it
for a substantial period.
Premium Payments
Your Contract sets forth an annual Scheduled Premium, or one that is payable
more frequently, such as monthly. Pruco Life of New Jersey guarantees that, if
the Scheduled Premiums are paid when due (or if missed premiums are paid later,
with interest), the death benefit will be paid upon the death of the insured.
Your Contract will not lapse even if investment experience is so unfavorable
that the Contract Fund value drops to zero.
The amount of the Scheduled Premium depends on the Contract's face amount, the
insured's sex and age at issue, the insured's risk classification, the rate for
taxes attributable to premiums, and the frequency of premium payments selected.
Under certain low face amount Contracts issued on younger insureds, the payment
of the Scheduled
2
<PAGE>
Premium may cause the Contract to be classified as a Modified Endowment
Contract. See Tax Treatment of Contract Benefits, page 18.
Lapse and Guarantee Against Lapse
Pruco Life of New Jersey's PRUvider Variable Appreciable Life Insurance Contract
is a form of life insurance that provides much of the flexibility of variable
universal life, with two important distinctions:
. Pruco Life of New Jersey guarantees that if the Scheduled Premiums are paid
when due, or within the grace period (or missed premiums are paid later
with interest), the Contract will not lapse and, at least the face amount
of insurance will be paid upon the death of the insured. This is true even
if, because of unfavorable investment experience, the Contract Fund value
should drop to zero.
. If all premiums are not paid when due (or not made up later), the Contract
will still not lapse as long as the Contract Fund is higher than a stated
amount set forth in a table in the Contract. This amount is called the
"Tabular Contract Fund", and it increases each year. In later years it
becomes quite high. The Contract lapses when the Contract Fund falls below
this stated amount, rather than when it drops to zero. This means that,
when a PRUvider Variable Appreciable Life Contract lapses, it may still
have considerable value, and you may have a substantial incentive to
reinstate it. If you choose not to reinstate, on the other hand, you may
take the cash surrender value under several options.
Refund
For a limited time, a Contract may be returned for a refund in accordance with
the terms of its "free-look" provision. See Short-Term Cancellation Right or
"Free-Look", page 10.
----------
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 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
prospectus and statement of additional information for The Prudential Series
Fund, Inc.
3
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE
COMPANY OF NEW JERSEY, PRUCO LIFE OF NEW JERSEY
VARIABLE APPRECIABLE ACCOUNT, THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE
CONTRACT, AND THE FIXED-RATE OPTION
Pruco Life Insurance Company of New Jersey
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey", "us",
"we", or "our") is a stock 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.
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 the 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, all of which could take two or more years to complete.
Prudential's management and Board of Directors have not yet determined to
demutualize and it is possible that, after careful review, Prudential could
decide not to go public.
The plan of reorganization, which hasn't been 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. Under
New Jersey's demutualization law, a policy would have to be in effect on the
date Prudential's Board of Directors adopted a plan of reorganization in order
to be considered for eligibility. Generally, the amount of shares or other
consideration eligible customers would receive would be based on a number of
factors, including the types, amounts and issue years of their policies. As a
general rule, owners of Prudential-issued insurance policies and annuity
contracts would be eligible, while mutual fund customers and customers of
Prudential's subsidiaries would not be. It has not yet been determined whether
any exceptions to that general rule will be made with respect to policyholders
and contract owners 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 ("1940 Act") 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 also 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. Before making any such transfer,
Pruco Life of New Jersey will consider any possible adverse impact the transfer
might have on the Account.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life of New Jersey.
4
<PAGE>
There are currently two variable investment options within the Account, one of
which invests in the Conservative Balanced Portfolio and the other of which
invests in the Flexible Managed Portfolio of the Series Fund. We may add
additional variable investment options in the future. The Account's financial
statements begin on page A1.
The Prudential Series Fund, Inc.
The Prudential Series Fund, Inc. (the "Series Fund") is registered under the
1940 Act as an open-end diversified management investment company. Its shares
are currently sold only to separate accounts of Prudential and certain other
insurers that offer variable life insurance and variable annuity contracts. On
October 31, 1986, the Pruco Life Series Fund, Inc., an open-end diversified
management investment company, which sold its shares only to separate accounts
of Pruco Life and Pruco Life Insurance Company of New Jersey, was merged into
the Series Fund. Prior to that date, the Account invested only in shares of
Pruco Life Series Fund, Inc. The Account will purchase and redeem shares from
the Series Fund at net asset value. Shares will be redeemed to the extent
necessary for Pruco Life of New Jersey to provide benefits under the Contracts
and to transfer assets from one variable investment option to another, as
requested by Contract owners. Any dividend or capital gain distribution received
from a portfolio of the Series Fund will be reinvested immediately at net asset
value in shares of that portfolio and retained as assets of the corresponding
variable investment option.
Prudential is the investment adviser for the assets of each of the portfolios of
the Series Fund. Prudential's principal business address is 751 Broad Street,
Newark, New Jersey 07102-3777. Prudential has a Service Agreement with its
wholly-owned subsidiary The Prudential Investment Corporation ("PIC"). The
Service Agreement provides that, subject to Prudential's supervision, PIC will
furnish investment advisory services in connection with the management of the
Series Fund. Further detail is provided in the prospectus and statement of
additional information for the Series Fund. Prudential and PIC are registered as
investment advisers under the 1940 Act.
As an investment adviser, Prudential charges the Series Fund a daily investment
management fee as compensation for its services. In addition to the investment
management fee, each portfolio incurs certain expenses, such as accounting and
custodian fees. See Contract Fees and Charges, page 6.
In the future it may become disadvantageous for both variable life insurance and
variable annuity contract separate accounts to invest in the same underlying
mutual fund. Neither 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.
A full description of the Series Fund, its investment objectives, management,
policies, restrictions, expenses, investment risks, and all other aspects of its
operation is contained in the attached prospectus for the Series Fund and in its
statement of additional information, which should be read in conjunction with
this prospectus. There is no assurance that the investment objectives of the
Series Fund will be met.
Investment Options
When you first bought the Contract you instructed Pruco Life of New Jersey as to
what combination of the three investment options you wish your Contract Fund
invested. Thereafter you may make changes in these allocations either in writing
or by telephone. The investment objectives of the portfolios are as follows:
Variable Investment Options
. Conservative Balanced Portfolio. The investment objective is a total
investment return consistent with a conservatively managed diversified
portfolio. The Portfolio invests in a mix of equity securities, debt
obligations, and money market instruments. This Portfolio is appropriate
for an investor desiring diversification with a relatively lower risk of
loss than that associated with the Flexible Managed Portfolio.
. Flexible Managed Portfolio. The investment objective is a total investment
return consistent with an aggressively managed diversified portfolio. The
Portfolio invests in a mix of equity securities, debt obligations, and
money market instruments. This Portfolio is appropriate for an investor
desiring diversification, who is willing to accept a relatively high level
of loss, in an effort to achieve greater appreciation.
5
<PAGE>
Voting Rights
We are the legal owner of the shares in the Series Fund. 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 Securities and
Exchange Commission 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 allocate, either initially or by transfer, all or part of your
Contract Fund to the fixed-rate option. This amount becomes part of Pruco Life
of New Jersey's general account. Pruco Life of New Jersey's 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. 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. This rate may not be less
than an effective annual rate of 4%.
Currently, the following steps are taken for crediting interest rates: declared
interest rates remain in effect from the date money is allocated to the
fixed-rate option until the Monthly date in the same month in the following year
(see Contract Date on page 10); thereafter, a new crediting rate will be
declared each year and will remain in effect for the calendar year. Pruco Life
of New Jersey reserves the right to change this practice. Pruco Life of New
Jersey is not obligated to credit interest at a higher rate than 4%, although we
may do so. Different crediting rates may be declared for different portions of
the Contract Fund allocated to the fixed-rate option. At least annually and on
request, you will be advised of the interest rates that currently apply to your
Contract. The term Monthly Date means the day of each month that is the same as
the Contract Date.
Transfers from the fixed-rate option are subject to strict limits. See
Transfers, page 12. 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 17.
DETAILED INFORMATION FOR CONTRACT OWNERS
Contract Fees and Charges
This section provides a more detailed description of each charge that is
described briefly in the chart on page 1.
In several instances we 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 we are now charging. If circumstances change, we reserve the right
to increase each current charge, up to the maximum charge, without giving any
advance notice.
A Contract owner may add several "riders" to the Contract which provide
additional benefits and are charged for separately. The statement and
description of charges that follows assumes there are no riders to the Contract.
Deductions from Premiums
(a) Pruco Life of New Jersey deducts a charge for taxes attributable to
premiums from each premium payment. That charge is currently made up of two
parts. The first part is a charge for state and local premium-based taxes.
The
6
<PAGE>
tax rate varies from state to state, generally ranging from 0.75% to 5%
(but in some instances may exceed 5%) of the premium received by Pruco Life
of New Jersey. The amount charged may be more than Pruco Life of New Jersey
actually pays. The second part is a charge for federal income taxes
measured by premiums, equal to 1.25% of the premium. 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. During 1999, 1998, and 1997, we received a
total of approximately $XXX,XXX, $124,201, and $130,658, respectively, in
charges for taxes attributable to premiums.
(b) Pruco Life of New Jersey deducts a charge of $2 from each premium payment
to cover the cost of collecting and processing premiums. Thus, if you pay
premiums annually, this charge will be $2 per year. If you pay premiums
monthly, the charge will be $24 per year. If you pay premiums more
frequently, for example under a payroll deduction plan with your employer,
the charge may be more than $24 per year. During 1999, 1998, and 1997, we
received a total of approximately $XXX,XXX, $217,724, and $219,537,
respectively, in processing charges.
Deductions from Portfolios
Pruco Life of New Jersey deducts an investment advisory fee daily from each
portfolio at a rate, on an annualized basis, of 0.55% for the Conservative
Balanced Portfolio and 0.60% for the Flexible Managed Portfolio.
We pay expenses incurred in conducting the investment operations of the
portfolios (such as investment advisory fees, custodian fees and preparation and
distribution of annual reports) out of the portfolio's income. These expenses
also vary by portfolio. The total expenses of each portfolio for the year 1999,
expressed as a percentage of the average assets during the year, are as follows:
<TABLE>
<CAPTION>
- -------------------------- ----------------- ----------------- ----------------
Portfolio Advisory Fee Other Expenses Total Expenses
- -------------------------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
Conservative Balanced 0.55% 0.XX% 0.XX%
Flexible Managed 0.60% 0.XX% 0.XX%
- -------------------------- ----------------- ----------------- ----------------
</TABLE>
Daily Deduction from the Contract Fund
Each day Pruco Life of New Jersey deducts a charge from the assets of each of
the variable investment options in an amount equivalent to an effective annual
rate of up to 0.9%. This charge is intended to compensate us for assuming
mortality and expense risks under the Contract. The mortality risk assumed is
that insureds may live for shorter periods of time than we estimated when we
determined what mortality charge to make. The expense risk assumed is that
expenses incurred in issuing and administering the Contract will be greater than
we estimated in fixing our administrative charges. This charge is not assessed
against amounts allocated to the fixed-rate option. During 1999, 1998, and 1997,
we received a total of approximately $XXX,XXX, $182,115, and $154,038,
respectively, in mortality and expense risk charges.
Monthly Deductions from 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].
(a) Pruco Life of New Jersey deducts a sales charge, often called a "sales
load", to pay part of the costs of selling the Contracts, including
commissions, advertising, and the printing and distribution of prospectuses
and sales literature. The charge is equal to 0.5% of the "primary annual
premium." The primary annual premium is equal to the Scheduled Premium that
would be payable if premiums were being paid annually, less the two
deductions from premiums (taxes attributable to premiums and the $2
processing charge), and less the $6 part of the monthly deduction described
in (c) below, the $0.30 per $1,000 of face amount for Contracts with a face
amount of less than $10,000, and any extra premiums for riders or
substandard risks. The sales load is charged whether the Contract owner is
paying premiums annually or more frequently. It is lower on Contracts
issued on insureds over 60 years of age. To summarize, for most Contracts,
this charge is somewhat less than 6% of the annual Scheduled Premium.
There is a second sales load, which will be charged only if a Contract
lapses or is surrendered before the end of the 10th Contract year. It is
often described as a contingent deferred sales load ("CDSL") and is
described under
7
<PAGE>
Surrender or Withdrawal Charges, page 8. During 1999, 1998, and 1997, we
received a total of approximately $XXX,XXX, $513,309, and $568,524,
respectively, in sales load charges.
(b) Pruco Life of New Jersey deducts a charge of not more than $0.01 per $1000
of face amount of insurance to compensate for the risk we assume in
guaranteeing that, no matter how unfavorable investment experience may be,
the death benefit will never be less than the guaranteed minimum death
benefit, so long as Scheduled Premiums are paid on or before the due date
or during the grace period. This charge will not be made if the Contract
has been continued inforce pursuant to an option on lapse. During 1999,
1998, and 1997, we received a total of approximately $XX,XXX, $25,605, and
$26,181, respectively, for this risk charge.
(c) Pruco Life of New Jersey deducts an administrative charge of $6 plus up to
$0.19 per $1,000 of face amount of insurance. Currently, on a
non-guaranteed basis, this charge is reduced from $0.19 to $0.09 per
$1,000. The charge is intended to pay for processing claims, keeping
records, and communicating with Contract owners. If premiums are paid by
automatic transfer under the Pru-Matic Plan, as described on page 10, the
current charge is further reduced to $0.07 per $1,000 of face amount. There
is an additional charge of $0.30 per $1,000 of face amount if the face
amount of the Contract is less than $10,000. This monthly administrative
charge will not be made if the Contract has been continued inforce pursuant
to an option on lapse. During 1999, 1998, and 1997, we received a total of
approximately $X,XXX,XXX, $1,268,693, and $1,352,185, respectively, in
monthly administrative charges.
(d) Pruco Life of New Jersey deducts a mortality charge that is intended to be
used to pay death benefits. When an insured dies, the amount payable to the
beneficiary is larger than the Contract Fund and significantly larger if
the insured dies in the early years of a Contract. The mortality charges
collected from all Contract owners enable us to pay the death benefit for
the few insureds who die. We determine the maximum mortality charge by
multiplying the "net amount at risk" under a Contract (the amount by which
the Contract's death benefit, computed as if there were neither riders nor
Contract debt, exceeds the Contract Fund) by a rate based upon the
insured's current attained age, sex and the anticipated mortality for that
class of persons. The anticipated mortality is based upon mortality tables
published by The National Association of Insurance Commissioners called the
Non-Smoker/Smoker 1980 CSO Tables. We may determine that a lesser amount
than that called for by these mortality tables will be adequate for
insureds of particular ages and may thus make a lower mortality charge for
such persons. Any lower current mortality charges are not applicable to
Contracts inforce pursuant to an option on lapse. See Lapse and
Reinstatement, page 15.
(e) If a rider is added to the basic Contract, or if an insured is in a
substandard risk classification (for example, a person in a hazardous
occupation), we increase the Scheduled Premium and deduct additional
charges monthly.
(f) Pruco Life of New Jersey may deduct a charge 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. We will review the question of a
charge to the Account for company federal income taxes periodically. We may
make such a charge in the future for any federal income taxes that would be
attributable to the Account.
Under current law, Pruco Life of New Jersey may incur state and local taxes
(in addition to premium taxes) in several states. At present, these taxes
are not significant and they are not charged against the Account. If there
is a material change in the applicable state or local tax laws, the
imposition of any such taxes upon Pruco Life of New Jersey that are
attributable to the Account may result in a corresponding charge against
the Account.
Surrender or Withdrawal Charges
(a) Pruco Life of New Jersey charges an additional contingent deferred sales
load (the CDSL) if a Contract lapses or is surrendered during the first 10
Contract years. No such charge is applicable to the death benefit, no
matter when it may become payable. The maximum contingent deferred charge
is equal to 50% of the first year's primary annual premium upon Contracts
that lapse or are surrendered during the first five Contract years. That
percentage is reduced uniformly on a daily basis starting from the
Contract's fifth anniversary until it disappears on the 10th anniversary.
The contingent deferred sales load is also further limited at older issue
ages (approximately above age 61) in order to comply with certain
requirements of state law. Specifically, the contingent deferred sales load
for such insureds is no more than $32.50 per $1,000 of face amount.
8
<PAGE>
The sales load is subject to a further important limitation that may,
particularly for Contracts that lapse or are surrendered within the first
five or six years, result in a lower contingent deferred sales load than
that described above. (This limitation might also, under unusual
circumstances, apply to reduce the monthly sales load deductions described
in item (a) under Monthly Deductions from Contract Fund, page 7.)
The limitation is based on a Guideline Annual Premium ("GAP") that is
associated with every Contract. The GAP is a defined amount determined
actuarially in accordance with a regulation of the Securities and Exchange
Commission ("SEC"). Pruco Life of New Jersey will charge a maximum
aggregate sales load (that is, the sum of the monthly sales load deduction
and the contingent deferred sales charge) that will not be more than 30% of
the premiums actually paid until those premiums total one GAP plus no more
than 9% of the next premiums paid until total premiums are equal to five
GAPS, plus no more than 6% of all subsequent premiums. If the sales charges
described above would at any time exceed this maximum amount then, to the
extent of any excess, we will not make the charge.
The amount of this charge can be more easily understood by reference to the
following table which shows the sales loads that would be paid by a 35 year
old man with $20,000 face amount of insurance, both through the monthly
deductions from the Contract Fund described above and upon the surrender of
the Contract. The primary annual premium is $304.20.
<TABLE>
<CAPTION>
----------------------- --------------------- --------------------- ------------------- -------------- ---------------------
Cumulative
Surrender, Cumulative Cumulative Contingent Total Total Sales Load as
Last Day of Scheduled Premiums Sales Load Deducted Deferred Sales Sales Per-
Year No. Paid from Contract Fund Load* Load centage of
Scheduled
Premiums Paid**
----------------------- --------------------- --------------------- ------------------- -------------- ---------------------
<S> <C> <C> <C> <C> <C>
1 $ 390.90 $ 18.24 $ 87.22 $ 105.46 26.98%
2 781.80 36.48 104.16 140.64 17.99%
3 1,172.70 54.72 121.10 175.82 14.99%
4 1,563.60 72.96 138.04 211.00 13.49%
5 1,954.50 91.20 146.55 237.75 12.16%
6 2,345.40 109.44 121.80 231.24 9.86%
7 2,736.30 127.68 91.40 219.08 8.01%
8 3,127.20 145.92 60.80 206.72 6.61%
9 3,518.10 164.16 30.40 194.56 5.53%
10 3,909.00 182.40 0.00 182.40 4.67%
----------------------- --------------------- --------------------- ------------------- -------------- ---------------------
</TABLE>
* The maximum CDSL is $152.20 for years one through five; $121.80 for year six;
$91.40 for year seven; $60.80 for year eight; $30.40 for year nine; and zero
for year 10.
** The percentages shown in the last column will not be appreciably different
for insureds of different ages.
(b) Pruco Life of New Jersey deducts an administrative charge of $5 per $1,000
of face amount of insurance upon lapse or surrender to cover the cost of
processing applications, conducting medical examinations, determining
insurability and the insured's rating class, and establishing records.
However, this charge is reduced beginning on the Contract's fifth
anniversary and declines daily at a constant rate until it disappears
entirely on the 10th Contract anniversary. We are currently allowing
partial surrenders of the Contract, but we reserve the right to cancel this
administrative practice. If the Contract is partially surrendered during
the first 10 years, we deduct a proportionate amount of the charge from the
Contract Fund. During 1999, 1998, and 1997, we received a total of
approximately $XX,XXX, $38,805, and $53,157, respectively, for surrendered
or lapsed Contracts. Surrender of all or part of a Contract may have tax
consequences. See Tax Treatment of Contract Benefits, page 18.
Transaction Charges
Pruco Life of New Jersey will make an administrative processing charge equal to
the lesser of $15 or 2% of the amount withdrawn in connection with each
withdrawal of excess cash surrender value of a Contract.
Requirements for Issuance of a Contract
As of May 1, 1999, Pruco Life of New Jersey no longer offered these Contracts
for sale. Generally, the Contract was issued on insureds below the age of 76.
The minimum initial guaranteed death benefit was $5,000; the maximum you could
apply for was $25,000. Proposed insureds, 21 years of age or less, could apply
for a minimum initial guaranteed death benefit of $10,000. Before issuing any
Contract, Pruco Life of New Jersey required evidence of insurability, which may
have included a medical examination. Non-smokers who met preferred underwriting
requirements were
9
<PAGE>
offered the most favorable premium rate. Pruco Life of New Jersey charges a
higher premium if an extra mortality risk is involved.
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, plus or minus any change due to investment experience. However, if
applicable law so requires and if you exercise your short-term cancellation
right, you will receive a refund of all premium payments made, with no
adjustment for investment experience.
Reduction of Charges for Concurrent Sales to Several Individuals
Pruco Life of New Jersey may have reduced the sales charges and/or other charges
on individual Contracts sold to members of a class of associated individuals, or
to a trustee, employer or other entity representing such a class, where it is
expected that such multiple sales will result in savings of sales or
administrative expenses. Pruco Life of New Jersey determines both the
eligibility for such reduced charges, as well as the amount of such reductions,
by considering the following factors:
(1) the number of individuals;
(2) the total amount of premium payments expected to be received from these
Contracts;
(3) the nature of the association between these individuals, and the expected
persistency of the individual Contracts;
(4) the purpose for which the individual Contracts are purchased and whether
that purpose makes it likely that expenses will be reduced; and
(5) any other circumstances which Pruco Life of New Jersey believes to be
relevant in determining whether reduced sales or administrative expenses
may be expected.
Some of the reductions in charges for these sales may be contractually
guaranteed; other reductions may be withdrawn or modified by Pruco Life of New
Jersey on a uniform basis. Pruco Life of New Jersey's reductions in charges for
these sales will not be unfairly discriminatory to the interests of any
individual Contract owners.
Contract Date
When the first premium payment is paid with the application for a Contract, the
Contract Date is ordinarily the later of the application date and the medical
examination date. In most cases no medical examination is necessary. If the
first premium was not paid with the application, the Contract Date is ordinarily
the date the first premium was paid and the Contract was delivered. It may have
been advantageous for a Contract owner to have an earlier Contract Date if it
resulted in Pruco Life of New Jersey using a lower issue age in determining the
Scheduled Premium amount. Pruco Life of New Jersey permits a Contract to be
back-dated but only to a date not earlier than six months prior to the date of
the application. Pruco Life of New Jersey requires the payment of all premiums
that would have been due had the application date coincided with the back-dated
Contract Date. The death benefit and cash surrender value under the Contract
will be equal to what they would have been had the Contract been issued on the
Contract Date, all Scheduled Premiums been received on their due dates, and all
Contract charges been made.
Premiums
The Contract provides for a Scheduled Premium which, if paid when due or within
a 61 day grace period, ensures that the Contract will not lapse. If you pay
premiums other than on a monthly basis, you will receive a notice that a premium
is due about three weeks before each due date. If you pay premiums monthly, you
will receive a book each year with 12 coupons that will serve as a reminder.
With Pruco Life of New Jersey's consent, you may change the frequency of premium
payments.
You may elect to have monthly premiums paid automatically under the "Pru-Matic
Premium Plan" by pre-authorized transfers from a bank checking account. If you
select the Pru-Matic Premium Plan, one of the current monthly charges will be
reduced. See Monthly Deductions From Contract Fund, page 7. Some Contract owners
may also be eligible to have monthly premiums paid by pre-authorized deductions
from an employer's payroll.
10
<PAGE>
The following table shows, for two face amounts, representative preferred and
standard annual premium amounts under Contracts issued on insureds who are not
substandard risks. These premiums do not reflect any additional riders or
supplementary benefits.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
$10,000 Face Amount $20,000 Face Amount
---------------------------------------------------------------------------------
Preferred Standard Preferred Standard
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Male, age 35 $233.70 $274.01 $390.90 $ 471.52
at issue
- --------------------------------------------------------------------------------------------------------
Female, age 45 $278.04 $308.53 $479.59 $ 540.57
at issue
- --------------------------------------------------------------------------------------------------------
Male, age 55 $450.96 $562.17 $825.43 $1047.86
at issue
- --------------------------------------------------------------------------------------------------------
</TABLE>
The following table compares annual and monthly premiums for insureds who are in
the preferred rating class. Note that in these examples the sum of 12 monthly
premiums for a particular Contract is approximately 110% to 116% of the annual
Scheduled Premium for that Contract.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
$10,000 Face Amount $20,000 Face Amount
------------------------------------------------------------------------------
Monthly Annual Monthly Annual
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Male, age 35 $22.43 $233.70 $36.59 $390.90
at issue
- --------------------------------------------------------------------------------------------------------
Female, age 45 $26.46 $278.04 $44.65 $479.59
at issue
- --------------------------------------------------------------------------------------------------------
Male, age 55 $41.96 $450.96 $75.66 $825.43
at issue
- --------------------------------------------------------------------------------------------------------
</TABLE>
A significant feature of this Contract is that it permits you to pay greater
than Scheduled Premiums. You may make unscheduled premium payments occasionally
or on a periodic basis. If you wish, you may select a higher contemplated
premium than the Scheduled Premium. Pruco Life of New Jersey will then bill you
for the chosen premium. In general, the regular payment of higher premiums will
result in higher cash surrender values and higher death benefits. Conversely, a
Scheduled Premium payment does not need to be made if the Contract Fund is large
enough to enable the charges due under the Contract to be made without causing
the Contract to lapse. See Lapse and Reinstatement, page 15. The payment of
premiums in excess of Scheduled Premiums may cause the Contract to become a
Modified Endowment Contract for federal income tax purposes. If this happens,
loans and other distributions which would otherwise not be taxable events may be
subject to federal income taxation. See Tax Treatment of Contract Benefits, page
18.
Pruco Life of New Jersey will generally accept any premium payment of at least
$25. Pruco Life of New Jersey reserves the right to limit unscheduled premiums
to a total of $5,000 in any Contract year, and to refuse to accept premiums that
would immediately result in more than a dollar-for-dollar increase in the death
benefit. See How a Contract's Death Benefit Will Vary, page 13. The privilege of
making large or additional premium payments offers a way of investing amounts
which accumulate without current income taxation, but again, there are tax
consequences if the Contract becomes a Modified Endowment Contract. See Tax
Treatment of Contract Benefits, page 18.
Allocation of Premiums
Pruco Life of New Jersey deducts a $2 processing charge and the charge for taxes
attributable to premiums from premium payments. Each payment, after the
deductions from premiums, will be invested as of the end of the valuation period
when received at a Home Office in accordance with the allocation you have
designated. A valuation period is 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 are
calculated, which is generally 4:15 p.m. Eastern time on each day during which
the New York Stock Exchange is open. 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. You may also change the way in which subsequent
premiums are allocated by telephoning a Home Office,
11
<PAGE>
provided you are enrolled to use the Telephone Transfer system. There is no
charge for reallocating future premiums. If any part of the invested portion of
a premium is allocated to a particular investment option, that portion must be
at least 10% on the date the allocation takes effect. All percentage allocations
must be in whole numbers. For example, 33% can be selected but 33"% cannot. Of
course, the total allocation of all selected investment options must equal 100%.
Transfers
If the Contract is not in default, or if the Contract is inforce as variable
reduced paid-up insurance (see Lapse and Reinstatement, page 15), you may, up to
four times in each Contract year, transfer amounts from one variable investment
option to the other variable investment option or to the fixed-rate option.
Currently, you may make additional transfers with our consent without charge.
All or a portion of the amount credited to a variable investment option may be
transferred. If you wish to convert your variable Contract to a fixed-benefit
Contract in this manner, you must request a complete transfer of funds to the
fixed-rate option and change your allocation instructions regarding any future
premiums.
Transfers between variable investment options will take effect as of the end of
the valuation period (usually the business day) 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 $1,000 from one variable investment option to the
other, or may be in terms of a percentage reallocation between 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, if 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. We will use
reasonable procedures, such as asking you for certain personal information
provided on your application for insurance, to confirm that instructions given
by telephone are genuine. Pruco Life of New Jersey 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.
Transfers from the fixed-rate option to the variable investment options are
currently permitted once each Contract year and only during the 30-day period
beginning on the Contract anniversary. The maximum amount which may be
transferred out of the fixed-rate option each year is currently the greater of:
(a) 25% of the amount in the fixed-rate option, or (b) $2,000. Such transfer
requests received prior to the Contract anniversary will be effective on the
Contract anniversary. Transfer requests received within the 30-day period
beginning on the Contract anniversary will be effective as of the end of the
valuation period in which a proper transfer request is received at a Home
Office. Pruco Life of New Jersey may change these limits in the future.
How the Contract Fund Changes with Investment Experience
As explained earlier, after the 10th Contract year, there will no longer be a
surrender charge and, if there is no Contract loan, the cash surrender value
will be equal to the Contract Fund. This section, therefore, also describes how
the cash surrender value of the Contract will change with investment experience.
On the Contract Date, the Contract Fund value is the initial premium less the
deductions from premiums and the first monthly deductions. See Contract Fees and
Charges, page 6. This amount is placed in the variable investment option[s] you
choose and/or the fixed-rate option. Thereafter, the Contract Fund value changes
daily, reflecting increases or decreases in the value of the assets in the
variable investment options, and interest credited on any amounts allocated to
the fixed-rate option. It is also reduced by the daily asset charge for
mortality and expense risks assessed against the variable investment options.
The Contract Fund value also increases to reflect the receipt of additional
premium payments and is decreased by the monthly deductions.
A Contract's cash surrender value on any date will be the Contract Fund value
reduced by the withdrawal charges, if any, and by any Contract debt. Upon
request, Pruco Life of New Jersey will tell you the cash surrender value of your
Contract. It is possible, although highly unlikely, that the cash surrender
value of a Contract could decline to zero because of unfavorable investment
performance, even if you continue to pay Scheduled Premiums when due.
The tables on pages T1 through T4 of this prospectus (immediately following page
14) illustrate what the death benefit and cash surrender values would be for a
representative Contract, assuming uniform hypothetical investment results in the
selected portfolio[s], and also provide information about the aggregate premiums
payable under the Contract.
12
<PAGE>
How a Contract's Death Benefit Will Vary
The death benefit will vary with investment experience. The death benefit will
be equal to the face amount of insurance plus the amount, if any, by which the
Contract Fund value exceeds the applicable "Tabular Contract Fund Value" for the
Contract (subject to an exception described below under which the death benefit
is higher). Each Contract contains a table that sets forth the Tabular Contract
Fund Value as of the end of each of the first 20 years of the Contract. Tabular
Contract Fund Values between Contract anniversaries are determined by
interpolation. The "Tabular Contract Fund Value" for each Contract year is an
amount that is slightly less than the Contract Fund value that would result as
of the end of such year if:
(1) you paid only Scheduled Premiums;
(2) you paid the Scheduled Premiums when due;
(3) your selected investment options earned a net return at a uniform rate of
4% per year;
(4) we deducted full mortality charges based upon the 1980 CSO Table;
(5) we deducted the maximum sales load and expense charges; and
(6) there was no Contract debt.
The death benefit will equal the face amount if the Contract Fund equals the
Tabular Contract Fund Value. In general, and assuming the optional paid-up
benefit is not in effect (see Paid-Up Insurance Option on page 16), if, due to
investment results greater than a net return of 4%, or to payment of greater
than Scheduled Premiums, or to smaller than maximum charges, the Contract Fund
value is a given amount greater than the Tabular Contract Fund Value, the death
benefit will be the face amount plus that excess amount. If, due to investment
results less favorable than a net return of 4%, the Contract Fund value is less
than the Tabular Contract Fund Value, the death benefit will not fall below the
initial face amount stated in the Contract. Again, the death benefit will
reflect a deduction for the amount of any Contract debt. See Contract Loans,
page 15. Any unfavorable investment experience must first be offset by favorable
performance or additional payments that bring the Contract Fund up to the
Tabular level before favorable investment results or additional payments will
increase the death benefit.
The Contract Fund could grow to the point where it is necessary to increase the
death benefit by a greater amount in order to ensure that the Contract will
satisfy the Internal Revenue Code's definition of life insurance. Thus, the
death benefit will always be the greatest of (1) the face amount plus the
Contract Fund minus the Tabular Contract Fund Value; (2) the guaranteed minimum
death benefit; and (3) the Contract Fund times the attained age factor that
applies.
Withdrawal of Excess Cash Surrender Value
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 Contract Fund after withdrawal must not be
less than the Tabular Contract Fund Value. (A Table of Tabular Contract Fund
Values is included in the Contract; the Values increase with each year the
Contract remains inforce.) But because the Contract Fund may be made up in part
by an outstanding Contract loan, there is a further limitation that the amount
withdrawn may not be larger than an amount sufficient to reduce the cash
surrender value to zero. The amount withdrawn must be at least $200. You may
make no more than four such withdrawals in each Contract year, and there is an
administrative processing fee for each withdrawal equal to the lesser of $15 and
2% of the amount withdrawn. An amount withdrawn may not be repaid except as a
scheduled or unscheduled premium subject to the applicable charges. Upon
request, Pruco Life of New Jersey will tell you how much you may withdraw.
Withdrawal of part of the cash surrender value may have tax consequences. See
Tax Treatment of Contract Benefits, page 18. A temporary need for funds may also
be met by making a loan and you should consult your Pruco Life of New Jersey
representative about how best to meet your needs.
When a withdrawal is made, the cash surrender value and Contract Fund value are
reduced by the amount of the withdrawal, and the death benefit is reduced
accordingly. Neither the face amount of insurance nor the amount of Scheduled
Premiums will be changed due to a withdrawal of excess cash surrender value. No
surrender charges will be assessed for a withdrawal.
Withdrawal of part 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
lapse even if Scheduled Premiums continue to be paid when due. This is because,
for purposes of determining whether a lapse has occurred, Pruco Life of New
Jersey treats withdrawals as a return of premium.
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Illustrations of Cash Surrender Values, Death Benefits
and Accumulated Premiums
The following four tables show how a Contract's death benefit and cash surrender
values change with the investment performance of the Account. They are
"hypothetical" because they are based, in part, upon several assumptions which
are described below. All four tables assume the following:
o a Contract of a given face amount bought by a 35 year old male, non-smoker,
with no extra risks or substandard ratings, and no extra benefit riders
added to the Contract.
o the Scheduled Premium is paid on each Contract anniversary, the deduction
for taxes attributable to premiums is 3.25% and no loans are taken.
o the Contract Fund has been invested in equal amounts in each of the two
available portfolios of the Series Fund and no portion of the Contract Fund
has been allocated to the fixed-rate option.
The first table (page T1) assumes a Contract with a $5,000 face amount has been
purchased and the second table (page T2) assumes a Contract with a $20,000 face
amount has been purchased. Both assume the current charges will continue for the
indefinite future. The third and fourth tables (pages T3 and T4) are based upon
the same assumptions except it is assumed the maximum contractual charges have
been made from the beginning.
Finally, there are four 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 three assumptions are that investment performance will be at a uniform
gross annual rate of 4%, 8% 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%, 4%, 8% and 12% but
fluctuated from those averages throughout the years. Nevertheless, these
assumptions help show how the Contract values change with investment experience.
The first column in the following four tables (pages T1 through T4) shows the
Contract year. The second column, to provide context, shows what the aggregate
amount would be if the Scheduled Premiums had been invested to earn interest,
after taxes, at 4% compounded annually. The next four columns show the death
benefit payable at the end of each of the years shown for the four different
assumed investment returns. The last four columns show the cash surrender value
payable at the end of each of the years shown for the four 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 two portfolios of 0.XX%,
and the daily deduction from the Contract Fund of 0.9% per year. Thus, based on
the above assumptions, gross investment returns of 0%, 4%, 8% and 12% are the
equivalent of net investment returns of -X.XX%, X.XX%, X.XX%, and XX.XX%,
respectively. The actual fees and expenses of the portfolios associated with a
particular Contract may be more or less than 0.XX% 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, including
monthly 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 a person of your own age, sex,
and rating class.
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Contract Loans
You may borrow from Pruco Life of New Jersey up to the "loan value" of the
Contract, using the Contract as the only security for the loan. The loan value
is equal to (1) 90% of an amount equal to the portion of the Contract Fund value
attributable to the variable investment options and to any prior loan[s]
supported by the variable investment options, minus the portion of any charges
attributable to the variable investment options that would be payable upon an
immediate surrender; plus (2) 100% of an amount equal to the portion of the
Contract Fund value attributable to the fixed-rate option and to any prior
loan[s] supported by the fixed-rate option, minus the portion of any charges
attributable to the fixed-rate option that would be payable upon an immediate
surrender. The minimum amount that may be borrowed at any one time is $200
unless the proceeds are used to pay premiums on the Contract.
Interest charged on a loan accrues daily at a fixed effective annual rate of
5.5%. Interest payments on any loan are due at the end of each Contract year. If
interest is not paid when due, it is added to the principal amount of the loan.
The Contract debt is the principal amount of all outstanding loans plus any
interest accrued thereon. If at any time the Contract debt exceeds what the cash
surrender value would be if there were no Contract debt, Pruco Life of New
Jersey will notify you of its intent to terminate the Contract in 61 days,
within which time you may repay all or enough of the loan to obtain a positive
cash surrender value and thus keep the Contract inforce for a limited time. If
you fail to keep the Contract inforce, the amount of unpaid Contract debt will
be treated as a distribution which may be taxable. See Tax Treatment of Contract
Benefits, page 18, and Lapse and Reinstatement, below.
When a loan is made, an amount equal to the loan proceeds (the "loan amount") is
transferred out of the variable investment options and/or the fixed-rate option,
as applicable. The reduction will normally 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, but
it will be credited with the assumed rate of return of 4% rather than with the
actual rate of return of the variable investment options or fixed-rate option.
A loan will not affect the amount of the premiums due. Should the death benefit
become payable while a loan is outstanding, or should the Contract be
surrendered, any Contract debt will be deducted from the death benefit or the
cash surrender value.
A loan will have an effect on a Contract's cash surrender value and may have an
effect on the death benefit, even if the loan is fully repaid, because the
investment results of the selected 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 upon
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. A loan that is repaid will not have any
effect upon the guaranteed minimum death benefit.
Loans from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. See Tax Treatment of Contract Benefits, page 18.
Surrender of a Contract
You may surrender a Contract, in whole or in part, for its cash surrender value
while the insured is living. To surrender a Contract, in whole or in part, you
must deliver or mail it, together 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 or partially surrendered Contract (taking into account the
deferred sales and administrative charges, if any) will be determined as of the
end of the valuation period in which such a request is received in a Home
Office. Surrender of all or part of a Contract may have tax consequences. See
Tax Treatment of Contract Benefits, page 18.
Lapse and Reinstatement
As explained earlier, if Scheduled Premiums are paid on or before each due date,
or within the grace period after each due date, and there are no withdrawals or
outstanding loans, a Contract will remain inforce even if the investment results
of that Contract's variable investment option[s] have been so unfavorable that
the Contract Fund has decreased to zero.
In addition, even if a Scheduled Premium is not paid, the Contract will remain
inforce as long as the Contract Fund on any Monthly Date is equal to or greater
than the Tabular Contract Fund Value on the following Monthly Date. (A Table of
Tabular Contract Fund Values is included in the Contract; the values increase
with each year the Contract remains
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inforce.) This could occur because of such factors as favorable investment
experience, deduction of current rather than maximum charges, or the previous
payment of greater than Scheduled Premiums.
However, if a Scheduled Premium is not paid, and the Contract Fund is
insufficient to keep the Contract inforce, the Contract will go into default.
Should this happen, Pruco Life of New Jersey will send the Contract owner a
notice of default setting forth the payment necessary to keep the Contract
inforce on a premium paying basis. 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 lapse. A Contract that lapses with an outstanding Contract
loan may have tax consequences. See Tax Treatment of Contract Benefits, page 18.
A Contract that has lapsed may be reinstated within five years after the date of
default unless the Contract has been surrendered for its cash surrender value.
To reinstate a lapsed Contract, Pruco Life of New Jersey requires renewed
evidence of insurability, and submission of certain payments due under the
Contract.
If your Contract does lapse, it will still provide some benefits. You can
receive the cash surrender value by making a request of Pruco Life of New Jersey
prior to the end of the 61 day grace period. You may also choose one of the
three forms of insurance described below for which no further premiums are
payable.
Fixed Extended Term Insurance. The amount of insurance that would have been paid
on the date of default will continue for a stated period of time. You will be
told in writing how long that will be. The insurance amount will not change.
There will be a diminishing cash surrender value but no loan value. Extended
term insurance is not available to insureds in high risk classifications or
under Contracts issued in connection with tax-qualified pension plans.
Fixed Reduced Paid-Up Insurance. This insurance continues for the lifetime of
the insured but at an insurance amount that is generally lower than that
provided by fixed extended term insurance. It will decrease only if you take a
Contract loan. Upon request, we will tell you what the amount of insurance will
be. Fixed paid-up insurance has a cash surrender value and a loan value. It is
possible for this Contract to be classified as a Modified Endowment Contract if
this option is exercised. See Tax Treatment of Contract Benefits, page 18.
Variable Reduced Paid-Up Insurance. This is similar to fixed paid-up insurance
and will initially be in the same amount. The Contract Fund will continue to
vary to reflect the experience of the variable investment options and/or the
fixed-rate option. There will be a new guaranteed minimum death benefit. Loans
will be available subject to the same rules that apply to premium-paying
Contracts.
Variable reduced paid-up insurance is the automatic option provided upon lapse
only if the amount of variable reduced paid-up insurance is at least as great as
the amount of fixed extended term insurance which would have been provided upon
lapse. In addition, variable reduced paid-up insurance will be available only if
the insured is not in one of the high risk rating classes for which Pruco Life
of New Jersey does not offer fixed extended term insurance. It is possible for
this Contract to be classified as a Modified Endowment Contract if this option
is exercised. See Tax Treatment of Contract Benefits, page 18.
What Happens If No Request Is Made? Except in the two situations that follow, if
no request is made, the "automatic option" will be fixed extended term
insurance. If fixed extended term insurance is not available to the insured,
then fixed reduced paid-up insurance will be provided. However, if variable
reduced paid-up insurance is available and the amount is at least as great as
the amount of fixed extended term insurance, then the automatic option will be
variable reduced paid-up insurance. This could occur if the Contract lapses and
there is a Contract debt outstanding.
Paid-Up Insurance Option
In certain circumstances you may elect to stop paying premiums and to have
guaranteed insurance coverage for the lifetime of the insured. This benefit is
available only if the following conditions are met: (1) the Contract is not in
default; (2) Pruco Life of New Jersey is not paying premiums in accordance with
any payment of premium benefit that may be included in the Contract; and (3) the
Contract Fund is sufficiently large so that the calculated guaranteed paid-up
insurance amount is at least equal to the face amount of insurance plus the
excess, if any, of the Contract Fund over the Tabular Contract Fund. The amount
of guaranteed paid-up insurance coverage may be greater. It will be equal to the
difference between the Contract Fund and the present value of future monthly
charges from the Contract Fund (other than charges for anticipated mortality
costs and for payment of premium riders) multiplied by the attained age factor.
This option will generally be available only when the Contract has been inforce
for many years and the Contract Fund has grown because of favorable investment
experience or the payment of unscheduled premiums or both. Once the paid-up
insurance option is exercised, the actual death benefit is equal to the greater
of the guaranteed paid-up insurance amount and the Contract Fund multiplied by
the attained age factor.
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Upon request, Pruco Life of New Jersey will tell you the amount needed to pay up
the Contract and to guarantee the paid-up insurance amount as long as a payment
equal to or greater than this amount is received within two weeks of the date it
was quoted. There is no guarantee if the payment is received within the two week
period and is less than the quoted amount or if the payment is received outside
the two week period. In that case, Pruco Life of New Jersey will add the payment
to the Contract Fund and recalculate the guaranteed paid-up insurance amount. If
the guaranteed paid-up insurance amount is equal to or greater than the face
amount, the paid-up request will be processed. If the guaranteed paid-up
insurance amount calculated is below the face amount, you will be notified that
the amount is insufficient to process the request. In some cases, the quoted
amount, if paid, would increase the death benefit by more than it increases the
Contract Fund. In these situations, underwriting might be required to accept the
premium payment and to process the paid-up request. Pruco Life of New Jersey
reserves the right to change this procedure in the future. After the first
Contract year, you must make a proper written request for the Contract to become
fully paid-up and send the Contract to a Home Office to be endorsed. It is
possible for this Contract to be classified as a Modified Endowment Contract if
this option is exercised. See Tax Treatment of Contract Benefits, page 18. A
Contract in effect under a paid-up insurance option will have cash surrender and
loan values.
Reduced Paid-Up Insurance Option
Like the paid-up insurance option, reduced paid-up insurance provides the
insured with lifetime insurance coverage without the payment of additional
premiums. However, reduced paid-up insurance provides insurance coverage which
is generally lower than the death benefit of the Contract. Reduced paid-up
insurance is based upon a Contract's current net cash value and can be requested
at any time. This option is available only when the Contract is not in default
and Pruco Life of New Jersey is not paying any premiums in accordance with any
payment of premium benefit that may be included in the Contract. In order to
receive reduced paid-up insurance, a Contract owner must make a proper written
request, and Pruco Life of New Jersey may request that the owner send the
Contract to a Home Office to be endorsed. It is possible for this Contract to be
classified as a Modified Endowment Contract if this option is exercised. See Tax
Treatment of Contract Benefits, page 18.
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 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. Pruco Life of New Jersey may delay
payment of proceeds from the variable investment options and the variable
portion of the death benefit due under the Contract if the sale or valuation of
the Account's assets is not reasonably practicable because the New York Stock
Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the SEC, or the SEC declares that an emergency exists.
With respect to the amount of any cash surrender value allocated to the
fixed-rate option, and with respect to a Contract inforce as fixed reduced
paid-up insurance or as extended term insurance, 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 more than 30 days (or a shorter period if required by applicable
law).
Living Needs Benefit
You may elect to add the Living Needs Benefit" to your Contract at issue. The
benefit may vary by state. It can generally be added only when the aggregate
face amounts of the insured's eligible contracts equal $50,000 or more. 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. The
following option 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 you provide
satisfactory evidence, Pruco Life of New Jersey will provide an accelerated
payment of the portion of the death benefit you select 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
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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.
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 the Contract owner is 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 adjusted premium
payments that would be in effect 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 policies, the Living Needs Benefit is excluded from income if
the insured is terminally ill or chronically ill as defined by 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.
Reports to Contract Owners
Once each Contract year (except where the Contract is inforce as fixed extended
term insurance or fixed reduced paid-up insurance), 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. On request, you will
be sent a current statement in a form similar to that of the annual statement
described above, but Pruco Life of New Jersey may limit the number of such
requests or impose a reasonable charge if such requests are made too frequently.
You will also receive, usually at the end of February, an annual report of the
operations of the Series Fund. That report will list the investments held in
both portfolios and include audited financial statements for the Series Fund. A
semi-annual report with similar unaudited information will be sent to you,
usually at the end of August.
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.
We believe we have taken adequate steps to ensure 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 the Contract should qualify as "life insurance" for federal
tax purposes, there are some uncertainties, particularly because the Secretary
of the Treasury has not yet issued permanent regulations that bear on this
question. Accordingly, we have reserved the right to make changes " which will
be applied uniformly to all Contract owners after advance written notice " that
we deem necessary to ensure that the Contract will continue to 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.
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Contracts Not Classified as Modified Endowment Contracts.
. 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.
. 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.
. 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.
. Loans you take against the Contract are ordinarily treated as debt and
are not considered distributions subject to tax.
Modified Endowment Contracts.
. 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 substantially in excess of Scheduled Premiums 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 even though the Contract owner pays only Scheduled
Premiums or even less than the Scheduled Premiums. You should first
consult a qualified tax adviser and your Pruco Life of New Jersey
representative if you are contemplating any of these steps.
. 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 excludable 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.
. 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", 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.
. 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 Consequences. 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.
Business-Owned Life Insurance. If a business, rather than an individual, is the
owner of the Contract, there are some additional rules. Business Contract
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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.
Riders
Contract owners may be able to obtain additional fixed benefits which may
increase the Scheduled Premium. If they do cause an increase in the Scheduled
Premium, they will be charged for by making monthly deductions from the Contract
Fund. These optional insurance benefits will be described in what is known as a
"rider" to the Contract. Charges for the riders will be deducted from the
Contract Fund on each Monthly date.
One rider pays an additional amount if the insured dies in an accident. Another
waives certain premiums if the insured is disabled within the meaning of the
provision (or, in the case of a Contract issued on an insured under the age of
15, if the applicant dies or becomes disabled within the meaning of the
provision). Others pay an additional amount if the insured dies within a stated
number of years after issue; similar benefits may be available if the insured's
spouse or child should die. The amounts of these benefits are fully guaranteed
at issue; they do not depend on the performance of the Account, although they
will no longer be available if the Contract lapses. Certain restrictions may
apply; they are clearly described in the applicable rider.
Any Pruco Life of New Jersey representative authorized to sell the Contract can
explain these extra benefits further. Samples of the provisions are available
from Pruco Life of New Jersey upon written request.
Legal Considerations Relating to Sex-Distinct Premiums and Benefits
The Contract generally uses 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 a blended unisex rate, whether the insured is male or female.
In addition, Pruco Life of New Jersey may have offered the Contract with unisex
mortality rates to employers and employee organizations.
Other Standard Contract Provisions
Assignment. This Contract may not be assigned if the assignment would violate
any federal, state, or local law or regulation. 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 inforce
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 (except where
unisex rates apply) 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 death benefit will
be based on what the most recent deductions from the Contract Fund would have
provided at the 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.
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Paying Premiums by Payroll Deduction
In addition to the annual, semi-annual, quarterly and monthly premium payment
modes, a payroll budget method of paying premiums may also be available under
certain Contracts. The employer generally deducts the necessary amounts from
employee paychecks and sends premium payments to Pruco Life of New Jersey
monthly. Any Pruco Life of New Jersey representative authorized to sell this
Contract can provide further details concerning the payroll budget method of
paying premiums.
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 was sold by registered
representatives of Prusec who were also authorized by state insurance
departments to do so. The Contract may also have been sold through other
broker-dealers authorized by Prusec and applicable law to do so. Registered
representatives of such other broker-dealers may have been paid on a different
basis than described below.
Where the insured is less than 60 years of age, the representative generally
receives a commission of: (1) no more than 50% of the Scheduled Premiums for the
first year: (2) no more than 6% of the Scheduled Premiums for the second through
10th years; and (3) no more than 2% of the Scheduled Premiums thereafter. For
insureds over 59 years of age, the commission is lower. The representative may
be required to return all or part of the first year commission if the Contract
is not continued through the second year. Representatives with less than three
years of service may be paid on a different basis.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life of New Jersey expects to recover its total sales expenses over
the periods the Contracts are in effect. To the extent that the sales charges
are insufficient to cover total sales expenses, the sales expenses will be
recovered from Pruco Life of New Jersey's surplus, which may include amounts
derived from the mortality and expense risk charge and the guaranteed minimum
death benefit risk charge described under item (d) under Monthly Deductions from
Contract Fund, page 7 and Daily Deduction from the Contract Fund, page 7.
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.
Experts
The financial statements of Pruco Life of New Jersey as of December 31, 1999,
1998, and 1997 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, FSA, MAAA, 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
business, including class actions. Our pending legal and regulatory actions
include proceedings specific to us and proceedings generally applicable to
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business practices in the industry in which we operate. In our insurance
operations, we are subject to class actions and individual suits involving a
variety of issues, including sales practices, claims payment and denial of
benefit matters and payment of service fees.
In certain of our pending legal and regulatory actions, large and/or
indeterminate amounts are sought, including punitive or exemplary damages. The
following is a summary of pending proceedings against us and/or our parent, The
Prudential Insurance Company of America ("Prudential"), which we currently
believe are significant. Unless otherwise indicated, when we use the terms "we",
"us", or "our" in the following discussion, we are referring to both Prudential
and Pruco Life of New Jersey.
Life Insurance Sales Practices Issues
We have been subject to substantial regulatory investigations and civil
litigation involving alleged deceptive life insurance sales practices engaged in
by us and our insurance agents in violation of state and federal laws. The sales
practices alleged to have occurred are contrary to our policy.
In April 1995, a Multi-State Life Insurance Task Force (the "Task Force"),
comprised of insurance regulators from 29 states and the District of Columbia,
was formed to conduct a review of sales and marketing practices throughout the
life insurance industry. Prudential was the initial focus of the Task Force
examination. In July 1996, the Task Force released its report on its activities
(the "Task Force Report"). The Task Force Report found that some sales of life
insurance policies, including life insurance policies issued by Pruco Life of
New Jersey, had been improper (principally relating to improper financed
insurance sales, improper representations in sales involving abbreviated payment
plans and insurance improperly sold primarily as an investment rather than as
life insurance) and that efforts to prevent such practices were not sufficiently
effective. Pruco Life of New Jersey was not named in the Task Force Report, but
the report covered the sales of Pruco Life of New Jersey policies. Based on
these findings, the Task Force recommended, and Prudential agreed to, various
changes in our sales and other business practices controls (including as to the
training, supervision and discipline of agents and field management) and a
series of fines allocated to all 50 states and the District of Columbia. In
addition, the Task Force and Prudential agreed upon a remediation program
pursuant to which relief would be offered to policyholders who were misled when
they purchased individual permanent life insurance policies in the United States
from 1982 through 1995. By March 1997, Prudential had entered into consent
orders with insurance regulatory authorities in all 50 states and the District
of Columbia in which such authorities adopted the Task Force Report and agreed
to accept this remediation program as enhanced by the Class Action Settlement
discussed below (the "Remediation Program") and the payment of approximately $65
million in fines, penalties and related payments to resolve with these
authorities the sales practices issues identified by the Task Force's
examination (each such agreement a "State Settlement").
Commencing in February 1995, a number of individual and alleged class civil
actions were filed against Prudential and Pruco Life of New Jersey alleging
improprieties in connection with the sale, servicing and operation of permanent
individual life insurance policies. These actions were consolidated and
transferred by the Judicial Panel on Multi-District Litigation to the United
States District Court for the District of New Jersey (the "District Court"). In
September 1996, the plaintiffs in the alleged class actions in the consolidated
proceeding joined in the filing of an amended consolidated class action against
us (the "Class Action") and the pending individual actions (the "Individual
Actions") were stayed. The principal allegations of the Class Action were that
individual permanent life insurance was improperly sold through alleged
misrepresentations concerning the use of an existing policy's value or dividend
stream to purchase or maintain another policy (i.e., financed insurance sales),
alleged misrepresentations relating to the number of out-of-pocket cash premiums
required to be paid for a policy or the realization of specified benefits (i.e.,
"vanishing premium" or abbreviated payment plans) and alleged misrepresentations
of the insurance product sold as an investment rather than a life insurance
policy.
In October 1996, we entered into a Stipulation of Settlement (the "Class Action
Settlement") in the Class Action covering all persons who own or owned at
termination of the policy, an individual permanent life insurance policy issued
in the United States by Prudential, and Pruco Life of New Jersey during the
period January 1, 1982 through December 31, 1995 (each a "Covered Policy") other
than those opting out of the Class Settlement, those who had previously settled
with us who were represented by counsel, the owners of certain corporate-owned
life insurance or trust-owned life insurance policies and a limited number of
other specified policyholders (the "Class Members"). The Class Action Settlement
proposed to settle the Class Action by adopting the Remediation Program
described in the Task Force Report and previously accepted in the initial State
Settlements plus specified enhancements and changes, including some additional
remedies. In addition, it was agreed in the Class Action Settlement that the
total pre-tax cost of remedies for the claims filed through the Alternative
Dispute Resolution ("ADR") process of the Remediation Program described below
would result in a minimum average cost per remedy of $2,364 for the first
330,000 claims remedied. It was also agreed that the ADR participants would be
provided with additional compensation to be determined by a formula that would
range in aggregate amount from $50 million to $300 million depending on the
total
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number of claims remedied, which would be distributed as determined by the
District Court at the end of the ADR claim evaluation process described below.
It was agreed in the Class Action Settlement that the aggregate amount of
pre-tax cost for remedies granted through the ADR process and the additional
compensation to be distributed at the end of the ADR process would in no event
be less than $410 million. The Class Action Settlement releases Prudential and
Pruco Life of New Jersey from all claims that have been asserted by Class
Members and bars Class Members from asserting any other claims with respect to
the sales, servicing or administration of the Covered Policies.
In October 1996, a notice of the Class Action and proposed Class Action
Settlement was provided to the owners of the approximately 10.7 million Covered
Policies, giving each owner the opportunity to opt out of the Class Action in
order to pursue alternative remedies. Owners of approximately 21,800 Covered
Policies elected to be excluded from the Class Action Settlement (the "Opt-Out
Policyholders"). In January 1997, the District Court sanctioned and fined
Prudential $1 million for failure to properly implement procedures for its
employees to retain documents in violation of the District Court's order that
required the parties to preserve all documents relevant to the resolution of the
Class Action and the Remediation Program. The District Court ordered Prudential
to implement a document retention policy and directed that an independent expert
be engaged to investigate the extent of document destruction and its impact on
the Remediation Program, so that claim evaluations would take into account any
failure to retain materials relevant to the claim. In March 1997, the District
Court issued an order certifying the class for settlement purposes only and
approving the amended Class Action Settlement as fair to Class Members. In July
1998, this order was affirmed on appeal by the U.S. Court of Appeals for the
Third circuit, although the issue of class counsel's fees was sent back to the
District court for review. In January 1999, the U.S. Supreme Court denied a writ
of certiorari filed by certain Class Members objecting to the Class Settlement.
The approval of the settlement is now final and unappealable, although the
District Court has retained jurisdiction over the administration, execution,
enforcement and interpretation of the settlement.
The Remediation Program offered two alternative forms of relief: participation
in the ADR process or Basic Claim Relief. The ADR process was designed to permit
policyholders who believe they were misled regarding the sale of their policies
to submit claims for relief through a no-cost dispute resolution process with
certain specified safeguards to protect policyholders. The ADR process has
provided individual review of each claim with remedies tailored to the type of
claim and the available evidence concerning the claim, including any evidence of
document destruction by us. Remedies under the ADR process have included, among
other things: return of policy values improperly used; cancellation of an
unwanted policy and refund of some or all premiums paid including interest;
agreement that the policyholder need not make future payments for some or all
premiums due; or issuance of a substitute product. The ADR process does not
guarantee that there will be a determination in the policyholder's favor
providing for any relief or remedy. Basic Claim Relief has provided a choice of
specified remedies without a claim or showing that any improper sales practices
occurred. The Basic Claim Relief options have included preferred rate premium
loans and annuities, mutual fund shares or life insurance policies with certain
benefits or values that we will enhance.
Pursuant to the Class Action Settlement and the State Settlements, beginning in
February 1997, Remediation Program packages were mailed to Class Members (i.e.,
the owners of the 10.7 million Covered Policies, other than Opt-Out
Policyholders) informing them of their options under the Remediation Program.
The owners of approximately 1.16 million Covered Policies indicated an intent to
file an ADR claim and were provided an ADR claim form for completion and
submission. The ADR process generally has required that individual claim forms
and files be reviewed by Prudential and by one or more independent claim
evaluators. Approximately 649,000 claim forms were completed and returned by
policyholders and virtually all decision letters had been mailed to claimants as
of February 28, 1999. In many instances, claimants have the right to "appeal"
the decision to an independent reviewer. We believe that the bulk of such
appeals will be resolved in 1999. The owners of approximately 503,000 policies
indicated an interest in a Basic Claim Relief Remedy.
In a related matter, the NASD examined our individual life insurance
broker-dealer's (Pruco Securities Corporation) sales practices with respect to
SEC-registered variable life insurance products sold in the United States from
1983 through 1995, as well as the public. In July 1999, Pruco Securities
Corporation entered into a settlement agreement with the NASD that included
findings by the NASD of improper sales practices affecting the sale of some of
our variable life products similar to those cited by the Task Force and
inadequate supervision. This settlement agreement censured Pruco Securities,
required the retention of an independent consultant to review Pruco Securities'
policies and procedures relevant to the NASD's findings, and levied a $20
million fine. This settlement did not change the Remediation Program or add to
our obligations to claimants in the Remediation Program or other policyholders.
On September 2, 1999, the Insurance Department of the State of New York formally
adopted a Report of Examination based on the Department's review, for the years
1996 and 1997, of Prudential's individual life insurance sales practices
controls and various company recordkeeping, reporting and filing requirements.
Significantly, the examination report did not identify problems with sales
practices controls or the steps taken to implement the recommendations contained
in the Task Force Report described above. However, the examiners did cite
violations
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relating to some of Prudential's advertisements and advertising files, the use
of unfiled policy forms in what is now a discontinued line of business, various
problems related to the back-office maintenance of new business and complaint
files, and the inability to produce all requested documents and data in a timely
manner. The Department also concluded that Prudential failed to adequately
facilitate its examination. These matters were resolved by entry of a
Stipulation in which Prudential agreed to pay a fine of $1.5 million and agreed
that the Auditing Committee of its Board of Directors would provide semi-annual
reports for a three year period to the New York Department describing the status
of steps taken to remedy the issues cited in the Report of Examination.
We remain subject to oversight and review by insurance regulators and other
regulatory authorities with respect to our sales practices and the conduct of
the Remediation Program. The releases granted by the state insurance regulatory
authorities pursuant to the State Settlements do not become final until the
Remediation Program has been completed without any material changes to which
those regulators have not agreed. The Class Action Settlement does not cover:
policies other than individual permanent life insurance policies issued in the
United States; any type of policy issued prior to 1982 or after 1995; the
Opt-Out Policyholders, some of whom are proceeding with their own individual or
putative class actions; and individual actions not barred by the Class Action
Settlement. Prudential agreed to indemnify Pruco Life of New Jersey for losses,
if any, resulting from claims arising from sales practice violations that
occurred between 1982 and 1995. No other litigation is being brought against
Pruco Life of New Jersey that would have a material effect on its financial
position.
In 1996, Prudential established a reserve to cover the cost of remedying
policyholder claims of $410 million, as agreed to in the Class Action
Settlement. Prudential had no better information available at that time upon
which to make a reasonable estimate of losses. Prudential also incurred charges
or reserves to cover administrative costs related to the ADR process, regulatory
fines, penalties and related payments, litigation costs and settlements, and
other fees and expenses associated with the resolution of sales practices issues
("Additional Sales Practices Costs") aggregating $715 million. In 1997, based on
additional information derived from claim sampling techniques, the terms of the
settlement and the number of claim forms received, management increased the
estimated liability for the cost of remedying policyholder claims in the ADR
process by $1.64 billion before taxes to approximately $2.05 billion before
taxes, of which $1.80 billion was funded in a settlement trust. Prudential also
incurred charges or additional reserves to cover Additional Sales Practices
Costs aggregating $390 million. Prudential expressly noted that additional cost
items were anticipated that could not be fully evaluated at that time. In 1998,
based on estimates derived from an analysis of claims actually remedied
(including interest) and a sample of claims still to be remedied (both estimates
included the additional liability associated with the results of the
investigation by the independent expert regarding the impact of document
destruction on the ADR program) and an estimate of additional liabilities
associated with a claimant's right to "appeal" the decision, the estimated
liability was increased for the cost of ADR remedies by $510 million before
taxes to a total of $2.56 billion before taxes, all of which has been funded in
the settlement trust. Prudential also incurred charges or established additional
reserves to cover Additional Sales Practices Costs aggregating $640 million.
While Prudential believes it has adequately reserved in all material respects
based on information currently available, the ultimate amount of the total cost
of remedying policyholder claims and related costs is dependent on complex and
varying factors, including the relief options to be chosen by claimants, the
dollar value of those options, and the number and type of claims that may
successfully be appealed. As with any litigation, the litigation by Opt-Out
Policyholders and the Individual Actions are subject to many uncertainties, and,
given the complexity and scope of these suits, their outcome cannot be predicted
with precision.
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 of 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.
Further information may also be obtained from Pruco Life of New Jersey. Its
address and telephone number are 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.
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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. -- Senior Vice President and Chief
Actuary, Prudential Individual Insurance Group since 1997; 1995 to 1997:
President of Prudential Select; Prior to 1995: Chief Operating Officer of
Prudential Select.
WILLIAM M. BETHKE, Director. -- Chief Investment Officer since 1997; Prior to
1997: President, Prudential Capital Markets Group.
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; Prior to 1995:
President, Prudential Select.
ESTHER H. MILNES, President and Director. -- Vice President and Actuary,
Prudential Individual Insurance Group since 1996; Prior to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services.
I. EDWARD PRICE, Vice Chairman and Director. -- Senior Vice President and
Actuary, Prudential Individual Insurance Group since 1995; Prior to 1995: Chief
Executive Officer, Prudential International Insurance.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, Treasurer. -- Vice President and Treasurer of Prudential
since 1995; Prior to 1995: Managing Director and Assistant Treasurer of
Prudential.
JAMES C. DROZANOWSKI, Senior Vice President. -- Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996:
President and Chief Executive Officer of Chase Manhattan Bank; Prior to 1995:
Vice President, North America Customer Services, Chase Manhattan Bank.
CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary. -- Chief Counsel,
Variable Products, Law Department of Prudential since 1995; Prior to 1995:
Associate General Counsel with Paine Webber.
FRANK P. MARINO, Senior Vice President. -- Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services.
EDWARD A. MINOGUE, Senior Vice President. -- Vice President, Annuity Services,
Prudential Investments since 1997; Prior to 1997: Director, Merrill Lynch.
IMANTS SAKSONS, Senior Vice President. -- Vice President, Compliance, Prudential
Individual Financial Services since 1998; Prior to 1998: Vice President, Market
Conduct, U.S. Operations, Manulife Financial.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary. -- Vice President and
Associate Actuary, Prudential.
DENNIS G. SULLIVAN, Vice President and Chief Accounting Officer. -- Vice
President and Deputy Controller, Prudential since 1998; 1997 to 1998, Vice
President and Controller, ContiFinancial Corporation; Prior to 1997, Director,
Saloman Brothers.
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.
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Updated financials will be filed pursuant to Rule 485(b)
<PAGE>
PRUvider/SM/
Variable Appreciable Life/R/
Insurance
PRUvider/SM/ Variable Appreciable Life/R/ was 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. PRUvider is a service mark of Prudential.
Appreciable Life is a registered mark of Prudential.
[LOGO] PRUDENTIAL
Pruco Life Insurance Company of New Jersey
213 Washington Street, Newark, NJ 07102-2992
Telephone 800 778-2255
SVAL-2 Ed. 5/2000 CAT#640189U
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
REPRESENTATION WITH RESPECT TO CHARGES
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey")
represents that the fees and charges deducted under the PRUvider Variable
Appreciable Life Insurance Contracts registered by this registration statement,
in the aggregate, are reasonable in relation to the services rendered, the
expenses to be incurred, and the risks assumed by the depositor.
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 of New Jersey, permits
entities organized under its jurisdiction to indemnify directors and officers
with certain limitations. The relevant provisions on 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 incorporated by
reference to Exhibit 3(ii) to its Form 10-Q, SEC File No. 333-18053, filed
August 15, 1997.
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
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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 30 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-8B-2:
A. (1) Resolution of Board of Directors of Pruco Life Insurance Company
of New Jersey establishing the Pruco Life of New Jersey Variable
Appreciable Account. (Note 2)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and Pruco Life Insurance Company of New Jersey. (Note 8)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale
of the Contracts. (Note 8)
(c) Schedules of Sales Commissions. (Note 8)
(4) Not Applicable.
(5) PRUvider Variable Appreciable Life Insurance Contract. (Note 8)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company of
New Jersey, as amended March 11, 1983. (Note 2)
(b) Certificate of Amendment of the Articles of Incorporation of
Pruco Life Insurance Company of New Jersey, February 12,
1998. (Note 10)
(c) By-laws of Pruco Life Insurance Company of New Jersey, as
amended May 5, 1997. (Note 3)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) Application Form. (Note 5)
(b) Supplement to the Application for PRUvider Variable
Appreciable Life Insurance Contract. (Note 9)
(11) Form of Notice of Withdrawal Right. (Note 8)
(12) Memorandum describing Pruco Life Insurance Company of New
Jersey's issuance, transfer, and redemption procedures for the
Contracts pursuant to Rule 6e-3(b)(12)(iii) and method of
computing cash adjustment upon exercise of right to exchange for
fixed-benefit insurance pursuant to Rule 6e-3(T)(b)(13)(v)(B).
(Note 6)
(13) Available Contract Riders.
(a) Rider for Insured's Payment of Premium Benefit. (Note 8)
(b) Rider for Applicant's Payment of Premium Benefit. (Note 8)
(c) Rider for Insured's Accidental Death and Dismemberment
Benefit. (Note 8)
(d) Rider for Option to Purchase Additional Insurance on Life of
Insured. (Note 8)
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<PAGE>
(e) Rider for Term Insurance Benefit on Life of Insured--
Decreasing Amount. (Note 8)
(f) Rider for Term Insurance Benefit on Life of Insured
Spouse--Decreasing Amount. (Note 8)
(g) Rider for Level Term Insurance Benefit on Dependent
Children. (Note 8)
(h) Rider for Level Term Insurance Benefit on Dependent
Children--from Term Conversions. (Note 8)
(i) Rider for Level Term Insurance Benefit on Dependent
Children--from Term Conversions or Attained Age Change.
(Note 8)
(j) Living Needs Benefit Rider for use in New York. (Note 8)
(k) Endorsement altering the Assignment provision ORD
89224--94-P NY. (Note 8)
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 11)
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 11)
7. Indemnification Agreement. (Note 8)
8. Powers of Attorney:
(a) W. Bethke, I. Kleinman, E. Milnes, I. Price (Note 4)
(b) James J. Avery, Jr. (Note 7)
(c) Dennis G. Sullivan (Note 10)
(Note 1) Filed herewith.
(Note 2) 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 3) Incorporated by reference to Form 10-Q, Registration No. 333-18053,
filed August 15, 1997 on behalf of the Pruco Life Insurance Company
of New Jersey.
(Note 4) 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 5) Incorporated by reference to Form S-6, Registration No. 333-07451,
filed July 2, 1996 on behalf of the Pruco Life Variable Appreciable
Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 6 to this
Registration Statement, filed April 25, 1996.
(Note 7) 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 8) Incorporated by reference to Post-Effective Amendment No. 7 to this
Registration Statement, filed April 28, 1997.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 8 to this
Registration Statement, filed April 24, 1998.
(Note 10) Incorporated by reference to Post-Effective Amendment No.12 to Form
S-1, Registration No. 33-20018, filed April 19, 1999 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property
Account.
(Note 11) To be filed by Post-Effective Amendment to Rule 485(b)
- ------------------------------------------------------------------
Please note: A Post-Effective Amendment No.1 was not filed for this
Registration Statement.
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
Post-Effective Amendment No. 11 to the Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized, and its seal hereunto
affixed and attested, all in the city of Newark and the State of New Jersey, on
this 17th day of February, 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 Post-Effective
Amendment No. 11 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 17th day of February,
2000.
<TABLE>
<CAPTION>
Signature and Title
-------------------
<S> <C>
/s/ *
- ----------------------------------------------
Esther H. Milnes
President and Director
/s/ *
- ----------------------------------------------
Dennis G. Sullivan
Vice President and Chief Accounting Officer
/s/ * *By: /s/ Thomas C. Castano
- ---------------------------------------------- ----------------------------------------------
James J. Avery, Jr. Thomas C. Castano
Director (Attorney-in-Fact)
/s/ *
- ----------------------------------------------
William M. Bethke
Director
/s/ *
- ----------------------------------------------
Ira J. Kleinman
Director
/s/ *
- ----------------------------------------------
I. Edward Price
Director
</TABLE>
II-4
