<PAGE>
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-6
FOR REGISTRATION
UNDER
THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
----------------
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(EXACT NAME OF TRUST)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
720 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
JOHN M. BREMER, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
VARIABLE EXECUTIVE LIFE INSURANCE POLICIES - THE REGISTRANT IS REGISTERING AN
INDEFINITE AMOUNT OF SECURITIES PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT
COMPANY ACT OF 1940 (TITLE AND AMOUNT OF SECURITIES BEING REGISTERED; PROPOSED
MAXIMUM OFFERING PRICE OF SECURITIES BEING REGISTERED).
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: MARCH 1, 1998
-------------------
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
VARIABLE EXECUTIVE LIFE INSURANCE POLICIES
CROSS-REFERENCE SHEET
Cross reference sheet showing location in Prospectus of information
required by Form N-8B-2.
Item Number Heading in Prospectus
----------- ---------------------
1 . . . . . . . . . . . . . . . . . . Cover Page
2 . . . . . . . . . . . . . . . . . . Cover Page;
Northwestern Mutual Life
3 . . . . . . . . . . . . . . . . . . Not Applicable
4 . . . . . . . . . . . . . . . . . . Distribution of the Policies
5 . . . . . . . . . . . . . . . . . . The Account
6 . . . . . . . . . . . . . . . . . . The Account
7 . . . . . . . . . . . . . . . . . . Not Applicable
8 . . . . . . . . . . . . . . . . . . Not Applicable
9 . . . . . . . . . . . . . . . . . . Legal Proceedings
10(a). . . . . . . . . . . . . . . . . . Other Policy Provisions:
OWNER
10(b). . . . . . . . . . . . . . . . . . Other Policy Provisions:
DIVIDENDS
10(c) and (d). . . . . . . . . . . . . . Death Benefit, Cash Value,
Policy Loans, Withdrawals
of Policy Value, Right to
Return Policy
10(e). . . . . . . . . . . . . . . . . . Premiums, Termination and
Reinstatement
10(f). . . . . . . . . . . . . . . . . . Voting Rights
10(g). . . . . . . . . . . . . . . . . . Voting Rights, Substitution
of Fund Shares and Other
Changes
10(h). . . . . . . . . . . . . . . . . . Voting Rights, Substitution
of Fund Shares and Other
Changes
10(i). . . . . . . . . . . . . . . . . . Premiums, Death Benefit,
Cash Value, Dividends
11 . . . . . . . . . . . . . . . . . . The Account, The Fund
12 . . . . . . . . . . . . . . . . . . The Fund
13 . . . . . . . . . . . . . . . . . . Summary, The Fund, Deductions
and Charges, Distribution
of the Policies
14 . . . . . . . . . . . . . . . . . . Summary: The Policy:
Availability Limitations
15 . . . . . . . . . . . . . . . . . . Premiums, Allocations to
the Account
16 . . . . . . . . . . . . . . . . . . The Account, The Fund,
Allocations to the Account
17 . . . . . . . . . . . . . . . . . . Same Captions as Items
10(a), (c), and (d)
18 . . . . . . . . . . . . . . . . . . The Account, Detailed
Information about the Policy
19 . . . . . . . . . . . . . . . . . . Reports
20 . . . . . . . . . . . . . . . . . . Not Applicable
21 . . . . . . . . . . . . . . . . . . Policy Loans
22 . . . . . . . . . . . . . . . . . . Other Policy Provisions:
INCONTESTABILITY and
DEFERRAL OF DETERMINATION
AND PAYMENT
23 . . . . . . . . . . . . . . . . . . Not Applicable
24 . . . . . . . . . . . . . . . . . . Not Applicable
-ii-
<PAGE>
25 . . . . . . . . . . . . . . . . . . Northwestern Mutual Life
26 . . . . . . . . . . . . . . . . . . The Fund, Deductions
and Charges
27 . . . . . . . . . . . . . . . . . . Northwestern Mutual Life
28 . . . . . . . . . . . . . . . . . . Management
29 . . . . . . . . . . . . . . . . . . Not Applicable
30 . . . . . . . . . . . . . . . . . . Not Applicable
31 . . . . . . . . . . . . . . . . . . Not Applicable
32 . . . . . . . . . . . . . . . . . . Not Applicable
33 . . . . . . . . . . . . . . . . . . Not Applicable
34 . . . . . . . . . . . . . . . . . . Not Applicable
35 . . . . . . . . . . . . . . . . . . Northwestern Mutual Life
36 . . . . . . . . . . . . . . . . . . Not Applicable
37 . . . . . . . . . . . . . . . . . . Not Applicable
38 . . . . . . . . . . . . . . . . . . Distribution of the Policies
39 . . . . . . . . . . . . . . . . . . Distribution of the Policies
40 . . . . . . . . . . . . . . . . . . The Fund
41 . . . . . . . . . . . . . . . . . . The Fund, Distribution of
the Policies
42 . . . . . . . . . . . . . . . . . . Not Applicable
43 . . . . . . . . . . . . . . . . . . Not Applicable
44 . . . . . . . . . . . . . . . . . . The Fund, Premiums, Death
Benefit, Allocations to
the Account, Cash Value
45 . . . . . . . . . . . . . . . . . . Not Applicable
46 . . . . . . . . . . . . . . . . . . Same Captions as Items
10(c) and (d)
47 . . . . . . . . . . . . . . . . . . Not Applicable
48 . . . . . . . . . . . . . . . . . . Not Applicable
49 . . . . . . . . . . . . . . . . . . Not Applicable
50 . . . . . . . . . . . . . . . . . . The Account
51 . . . . . . . . . . . . . . . . . . Numerous Captions
52 . . . . . . . . . . . . . . . . . . Substitution of Fund
Shares and Other Changes
53 . . . . . . . . . . . . . . . . . . Not Applicable
54 . . . . . . . . . . . . . . . . . . Not Applicable
55 . . . . . . . . . . . . . . . . . . Not Applicable
56 . . . . . . . . . . . . . . . . . . Not Applicable
57 . . . . . . . . . . . . . . . . . . Not Applicable
58 . . . . . . . . . . . . . . . . . . Not Applicable
59 . . . . . . . . . . . . . . . . . . Financial Statements
-iii-
<PAGE>
March 2, 1998
Northwestern
Mutual Life-Registered Trademark-
The Quiet Company-Registered Trademark-
NORTHWESTERN MUTUAL VARIABLE EXECUTIVE LIFE
Flexible Premium Variable Life Insurance Policy
P R O S P E C T U S
(PHOTO)
Northwestern Mutual
Series Fund, Inc.
The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-1444
<PAGE>
CONTENTS
PAGE
----
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Variable Life Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .2
The Account and its Divisions. . . . . . . . . . . . . . . . . . . . . . .2
The Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Availability Limitations. . . . . . . . . . . . . . . . . . . . . . . . .2
Premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Cash Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Deductions and Charges. . . . . . . . . . . . . . . . . . . . . . . . . .2
From Premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
From Policy Value. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
From the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Northwestern Mutual Life Insurance Company,
Northwestern Mutual Variable Life Account and
Northwestern Mutual Series Fund, Inc. . . . . . . . . . . . . . . . . .3
Northwestern Mutual Life . . . . . . . . . . . . . . . . . . . . . . . . .3
The Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Index 500 Stock Portfolio. . . . . . . . . . . . . . . . . . . . . . . . .3
Select Bond Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Money Market Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . .4
Balanced Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Growth and Income Stock Portfolio. . . . . . . . . . . . . . . . . . . . .4
Growth Stock Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . .4
Aggressive Growth Stock Portfolio. . . . . . . . . . . . . . . . . . . . .4
High Yield Bond Portfolio. . . . . . . . . . . . . . . . . . . . . . . . .4
International Equity Portfolio . . . . . . . . . . . . . . . . . . . . . .4
Detailed Information About the Policy . . . . . . . . . . . . . . . . . . . .4
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Death Benefit Options . . . . . . . . . . . . . . . . . . . . . . . . . .4
Choice of Tests for Tax Purposes. . . . . . . . . . . . . . . . . . . . .5
Death Benefit Changes . . . . . . . . . . . . . . . . . . . . . . . . . .5
Allocations to the Account . . . . . . . . . . . . . . . . . . . . . . . .5
Deductions and Charges . . . . . . . . . . . . . . . . . . . . . . . . . .6
Deductions from Premiums. . . . . . . . . . . . . . . . . . . . . . . . .6
Charges Against the Policy Value. . . . . . . . . . . . . . . . . . . . .6
Expenses of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . .6
Cash Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Policy Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Withdrawals of Policy Value. . . . . . . . . . . . . . . . . . . . . . . .7
Termination and Reinstatement. . . . . . . . . . . . . . . . . . . . . . .7
Right to Return Policy. . . . . . . . . . . . . . . . . . . . . . . . . .8
Other Policy Provisions . . . . . . . . . . . . . . . . . . . . . . . . .8
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Suicide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Misstatement of Age or Sex. . . . . . . . . . . . . . . . . . . . . . .8
Collateral Assignment . . . . . . . . . . . . . . . . . . . . . . . . .8
Deferral of Determination and Payment . . . . . . . . . . . . . . . . .8
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Substitution of Fund Shares
and Other Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Distribution of the Policies . . . . . . . . . . . . . . . . . . . . . . . .9
Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Life Insurance Qualification. . . . . . . . . . . . . . . . . . . . . . .9
Tax Treatment of Life Insurance . . . . . . . . . . . . . . . . . . . . .10
Modified Endowment Contracts. . . . . . . . . . . . . . . . . . . . . . .10
Other Tax Considerations. . . . . . . . . . . . . . . . . . . . . . . . .11
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . .14
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Report of Independent Accountants
(for year ended December 31, 1996). . . . . . . . . . . . . . . . . . . .16
Financial Statements of the Account
(for year ended December 31, 1996). . . . . . . . . . . . . . . . . . . .17
Financial Statements of Northwestern Mutual Life
(for the three years ended
December 31, 1996). . . . . . . . . . . . . . . . . . . . . . . . . .22
Report of Independent Accountants
(for the three years ended
December 31, 1996). . . . . . . . . . . . . . . . . . . . . . . . . . .33
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
<PAGE>
P R O S P E C T U S
NORTHWESTERN MUTUAL VARIABLE EXECUTIVE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes the Variable Executive Life Policy (the "Policy")
offered by The Northwestern Mutual Life Insurance Company. The Policy is an
individual flexible premium variable life insurance policy designed to be used
for a variety of business purposes.
The Policy offers flexible premium payments, nine investment funding options and
a choice of three death benefit options.
The investment options correspond to the Portfolios of Northwestern Mutual
Series Fund, Inc. (the "Fund"). The prospectus for the Fund, attached to this
prospectus, describes the investment objectives of the nine portfolios: the
Index 500 Stock Portfolio, the Select Bond Portfolio, the Money Market
Portfolio, the Balanced Portfolio, the Growth and Income Stock Portfolio, the
Growth Stock Portfolio, the Aggressive Growth Stock Portfolio, the High Yield
Bond Portfolio and the International Equity Portfolio.
The values provided by the Policy vary daily depending on investment results.
These values are not guaranteed. The Portfolios present varying degrees of
investment risk.
A Policy may be returned for a limited period of time. See "Right to Return
Policy", p. 8.
IT MAY NOT BE ADVANTAGEOUS TO REPLACE EXISTING INSURANCE WITH A VARIABLE LIFE
INSURANCE POLICY. SEE DEDUCTIONS AND CHARGES AND CASH VALUE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
NORTHWESTERN MUTUAL SERIES FUND, INC. WHICH IS ATTACHED HERETO, AND SHOULD BE
RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
1
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY PROVIDES A BRIEF OVERVIEW OF THE POLICY. IT OMITS DETAILS
WHICH ARE INCLUDED ELSEWHERE IN THIS PROSPECTUS AND THE ATTACHED FUND PROSPECTUS
AND IN THE TERMS OF THE POLICY.
VARIABLE LIFE INSURANCE
Variable life insurance is cash value life insurance and is similar in many ways
to traditional fixed benefit life insurance. Both kinds of life insurance
provide an income tax-free death benefit and a cash value that grows
tax-deferred. Variable life insurance allows the policyowner to direct the
premiums, after certain deductions, among a range of investment options. The
variable life insurance death benefit and cash value vary to reflect the
performance of the selected investments.
THE ACCOUNT AND ITS DIVISIONS
Northwestern Mutual Variable Life Account is the investment vehicle for the
Policies. The Account has nine divisions. The owner of the Policy determines
how net premiums are to be allocated. The assets of each division are invested
in a corresponding Portfolio of Northwestern Mutual Series Fund, Inc. The nine
Portfolios are the Index 500 Stock Portfolio, the Select Bond Portfolio, the
Money Market Portfolio, the Balanced Portfolio, the Growth and Income Stock
Portfolio, the Growth Stock Portfolio, the Aggressive Growth Stock Portfolio,
the High Yield Bond Portfolio and the International Equity Portfolio. The
investment objectives of the Portfolios are briefly described herein. See "The
Fund", p. 3. For additional information see the attached prospectus for the
Fund.
THE POLICY
AVAILABILITY LIMITATIONS The Variable Executive Life Policy has been designed
for use with non-tax qualified executive benefit plans. The Policy is offered
for use with corporate-sponsored plans where at least five Policies will be
issued, each on the life of a different eligible insured person, and the first
year premium for the group will be at least $250,000. Exceptions will be
permitted in some cases and additional requirements may apply. Each case must
be approved at the Home Office of Northwestern Mutual Life.
PREMIUMS Premiums may be paid at any time and in any amounts, within limits,
but additional premiums will be required to keep the Policy in force if values
become insufficient to pay current charges.
DEATH BENEFIT The Policy offers a choice of three death benefit options:
- - SPECIFIED AMOUNT (OPTION A)
- - SPECIFIED AMOUNT PLUS POLICY VALUE (OPTION B)
- - SPECIFIED AMOUNT PLUS PREMIUMS PAID (OPTION C)
In each case, the death benefit will be at least the amount needed to meet
federal income tax requirements for life insurance. The Specified Amount is
selected by the owner when the Policy is purchased and may be increased or
decreased, within limits and subject to conditions, after a Policy is issued.
The minimum amount is $50,000.00. No minimum death benefit is guaranteed.
CASH VALUE The cash value of a Policy is not guaranteed and varies daily to
reflect investment experience. A Policy may be surrendered for its cash value.
The Policy also includes loan and withdrawal provisions.
DEDUCTIONS AND CHARGES
FROM PREMIUMS
- Deduction of 3.6% for local, state and federal taxes attributable to
premiums
- Sales load of 15% up to the Target Premium for first Policy year, and
3% of all other premiums
FROM POLICY VALUE
- Cost of insurance charge deducted monthly, based on the net amount at
risk, the age, sex and risk classification of the insured, and the
Policy duration. Current changes are based on the experience of
Northwestern Mutual Life. Maximum charges are based on the 1980 CSO
Mortality Tables.
- Monthly mortality and expense risk charge. The current charge is at
the annual rate of .75% (0.06250% monthly rate) of the amount invested
in the Account for the Policy for the first 10 Policy years, and .30%
(0.02500% monthly rate) thereafter. The maximum annual rate is .90%
(0.07500% monthly rate).
- Monthly administrative charge. The current charge is $15.00 in the
first Policy year and $5.00 thereafter. The maximum charge is $15 in
the first Policy year and $10 thereafter.
- Charge for expenses and taxes associated with the Policy loan, if any.
The aggregate charge is at the current annual rate of .75% (0.06250%
monthly rate) of the Policy debt for the first ten Policy years
and .20% (0.01667%) thereafter.
2
<PAGE>
- Any transaction charges that may result from a withdrawal, a transfer,
a change in the Specified Amount or a change in the death benefit
option. These charges are currently waived. The maximum charge is
$250 for death benefit option changes and $25 for each of the other
transactions.
FROM THE FUND
- A daily charge for investment advisory and other services provided to
the Fund. The total Fund expenses vary by Portfolio and currently
fall in an approximate range of .21% to .81% of assets on an annual
basis.
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY,
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT AND
NORTHWESTERN MUTUAL SERIES FUND, INC.
NORTHWESTERN MUTUAL LIFE
The Northwestern Mutual Life Insurance Company is a mutual life insurance
company organized by a special act of the Wisconsin Legislature in 1857. It is
the nation's sixth largest life insurance company, based on total assets in
excess of $62 billion on December 31, 1996, and is licensed to conduct a
conventional life insurance business in the District of Columbia and in all
states of the United States. Northwestern Mutual Life sells life and disability
insurance policies and annuity contracts through its own field force of
approximately 6,000 full time producing agents.
THE ACCOUNT
Northwestern Mutual Variable Life Account was established by the Trustees of
Northwestern Mutual Life on November 23, 1983, in accordance with the provisions
of Wisconsin insurance law. Under Wisconsin law the income, gains and losses,
realized or unrealized, of the Account are credited to or charged against the
assets of the Account without regard to other income, gains or losses of
Northwestern Mutual Life. The Account is used only for variable life insurance
policies, including the Policies described in this prospectus as well as other
policy series.
The Account is registered as a unit investment trust under the Investment
Company Act of 1940. Such registration does not involve supervision of
management or investment practices or policies. The Account has nine divisions.
All of the assets of each division are invested in shares of the corresponding
Portfolio of the Fund described below.
THE FUND
Northwestern Mutual Series Fund, Inc. is a mutual fund of the series type
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. Shares of each Portfolio of the Fund are
purchased by the corresponding division of the Account at their net asset value
without any sales charge.
The investment adviser for the Fund is Northwestern Mutual Investment Services,
Inc. ("NMIS"), a wholly-owned subsidiary of Northwestern Mutual Life. The
investment advisory agreements for the respective Portfolios provide that NMIS
will provide services and bear certain expenses of the Fund. For providing
investment advisory and other services and bearing Fund expenses, the Fund pays
NMIS a fee at an annual rate which ranges from .20% of the aggregate average
daily net assets of the Index 500 Stock Portfolio to a maximum of .67% for the
International Equity Portfolio, based on 1996 asset size. Other expenses borne
by the Portfolios range from 0% for the Select Bond, Money Market and Balanced
Portfolios to .14% for the International Equity Portfolio. Northwestern Mutual
Life provides certain personnel and facilities used by NMIS in performing its
investment advisory functions and is a party to the investment advisory
agreement. J.P. Morgan Investment Management, Inc. and Templeton Investment
Counsel, Inc. have been retained under investment sub-advisory agreements to
provide investment advice to the Growth and Income Stock Portfolio and the
International Equity Portfolio, respectively.
The investment objectives and types of investments for each of the nine
Portfolios of the Fund are set forth below. There can be no assurance that the
objectives of the Portfolios will be realized. For more information about the
investment objectives and policies, the attendant risk factors and expenses, see
the Fund prospectus.
INDEX 500 STOCK PORTFOLIO. The investment objective of the Index 500 Stock
Portfolio is to achieve investment results that approximate the performance of
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"). The
Portfolio will attempt to meet this objective by investing in stocks included in
the S&P 500 Index. Stocks generally are more volatile than debt securities and
involve greater investment risks.
SELECT BOND PORTFOLIO. The primary investment objective of the Select Bond
Portfolio is to provide as
3
<PAGE>
high a level of long-term total rate of return as is consistent with prudent
investment risk. A secondary objective is to seek preservation of shareholders'
capital. The Select Bond Portfolio will invest primarily in debt securities. The
value of debt securities will tend to rise and fall inversely with the rise and
fall of interest rates.
MONEY MARKET PORTFOLIO. The investment objective of the Money Market Portfolio
is to realize maximum current income consistent with liquidity and stability of
capital. The Money Market Portfolio will invest in money market instruments and
other debt securities with maturities generally not exceeding one year. The
return produced by these securities will reflect fluctuations in short-term
interest rates.
BALANCED PORTFOLIO. The investment objective of the Balanced Portfolio is to
realize as high a level of long-term total rate of return as is consistent with
prudent investment risk. The Balanced Portfolio will invest in common stocks and
other equity securities, bonds and money market instruments. Investment in the
Balanced Portfolio necessarily involves the risks inherent in stocks and debt
securities of varying maturities, including the risk that the Portfolio may
invest too much or too little of its assets in each type of security at any
particular time.
GROWTH AND INCOME STOCK PORTFOLIO. The investment objective of the Growth and
Income Stock Portfolio is long-term growth of capital and income. Ordinarily
the Portfolio pursues its investment objectives by investing primarily in
dividend-paying common stock.
GROWTH STOCK PORTFOLIO. The investment objective of the Growth Stock Portfolio
is long-term growth of capital; current income is secondary. The Portfolio will
seek to achieve this objective by selecting investments in companies which have
above average earnings growth potential.
AGGRESSIVE GROWTH STOCK PORTFOLIO. The investment objective of the Aggressive
Growth Stock Portfolio is to achieve long-term appreciation of capital primarily
by investing in the common stocks of companies which can reasonably be expected
to increase their sales and earnings at a pace which will exceed the growth rate
of the nation's economy over an extended period.
HIGH YIELD BOND PORTFOLIO. The investment objective of the High Yield Bond
Portfolio is to achieve high current income and capital appreciation by
investing primarily in fixed income securities that are rated below investment
grade by the major rating agencies.
INTERNATIONAL EQUITY PORTFOLIO. The investment objective of the International
Equity Portfolio is long-term capital growth. It pursues its objective through
a flexible policy of investing in stocks and debt securities of companies and
governments outside the United States.
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DETAILED INFORMATION ABOUT THE POLICY
PREMIUMS
The Policy permits premiums to be paid at any time before the Policy anniversary
that is nearest the insured's 95th birthday and in any amounts within the limits
described in this section.
The Specified Amount selected when the Policy is purchased is used to determine
the minimum initial premium. The minimum initial premium is approximately equal
to three times the initial monthly Cost of Insurance Charge and other
deductions.
A Target Premium is calculated when the Policy is issued and is used in
determining the sales load for the first Policy year. The Target Premium is
based on the Specified Amount and the age and sex of the insured.
After a Policy is issued, there are no minimum premiums, except that no premium
of less than $25 will be accepted. The Policy will remain in force during the
insured's lifetime so long as the Policy Value, less the amount of any Policy
debt, is sufficient to pay the monthly cost of insurance charge and other
current charges.
The Policy sets no maximum on premiums, but a premium that would increase the
net amount at risk will be accepted only if the insurance, as increased, will be
within the issue limits of Northwestern Mutual Life, the insured meets the
insurability requirements and the premium is received prior to the anniversary
nearest the insured's 75th birthday. A premium will not be accepted if it would
disqualify the Policy as life insurance for federal income tax purposes. See
"Tax Considerations", p.9.
DEATH BENEFIT
DEATH BENEFIT OPTIONS The Policy provides for three death benefit options:
SPECIFIED AMOUNT (OPTION A) The Specified Amount is selected by the Owner when
the Policy is purchased.
SPECIFIED AMOUNT PLUS POLICY VALUE (OPTION B) The Policy Value is the
cumulative amount invested, adjusted for investment results, reduced by the
charges for insurance and other expenses.
SPECIFIED AMOUNT PLUS PREMIUMS PAID (OPTION C)
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In addition, under any of the Options, the Death Benefit will be increased if
necessary to meet the definitional requirements for life insurance for federal
income tax purposes as discussed below.
Under any of the death benefit options the death benefit will be equal to the
Policy Value at all times on and after the Policy anniversary nearest the 100th
birthday of the insured.
CHOICE OF TESTS FOR TAX PURPOSES A Policy must satisfy one of two testing
methods to qualify as life insurance for federal income tax purposes. The
purchaser may choose either the Guideline Premium/Cash Value Corridor Test or
the Cash Value Accumulation Test. Both tests require the Policy to meet minimum
ratios, or multiples, of death benefit to the Policy Value. The minimum
multiple decreases as the age of the insured advances. The choice of testing
methods is made when a Policy is purchased and it may not be changed.
For the Guideline Premium/Cash Value Corridor Test the minimum multiples of
death benefit to the Policy Value are shown below.
Guideline Premium/Cash Value
Corridor Test Multiples
Attained Policy Attained Policy
Age Value % Age Value %
--- ------- --- -------
40 or under . . . . 250 62. . . . . . . . . 126
41. . . . . . . . . 243 63. . . . . . . . . 124
42. . . . . . . . . 236 64. . . . . . . . . 122
43. . . . . . . . . 229 65. . . . . . . . . 120
44. . . . . . . . . 222 66. . . . . . . . . 119
45. . . . . . . . . 215 67. . . . . . . . . 118
46. . . . . . . . . 209 68. . . . . . . . . 117
47. . . . . . . . . 203 69. . . . . . . . . 116
48. . . . . . . . . 197 70. . . . . . . . . 115
49. . . . . . . . . 191 71. . . . . . . . . 113
50. . . . . . . . . 185 72. . . . . . . . . 111
51. . . . . . . . . 178 73. . . . . . . . . 109
52. . . . . . . . . 171 74. . . . . . . . . 107
53. . . . . . . . . 164 75-90 . . . . . . . 105
54. . . . . . . . . 157 91. . . . . . . . . 104
55. . . . . . . . . 150 92. . . . . . . . . 103
56. . . . . . . . . 146 93. . . . . . . . . 102
57. . . . . . . . . 142 94. . . . . . . . . 101
58. . . . . . . . . 138 95 or over. . . . . 100
59. . . . . . . . . 134
60. . . . . . . . . 130
61. . . . . . . . . 128
For the Cash Value Accumulation Test the minimum multiples of death benefit to
the Policy Value are calculated using net single premiums based on the attained
age of the insured and the Policy's underwriting classification, using a 4%
interest rate.
The Guideline Premium/Cash Value Corridor Test has lower minimum multiples than
the Cash Value Accumulation Test, usually resulting in better cash value
accumulation for a given amount of premium. But the Guideline Premium/Cash
Value Corridor Test limits the amount of premium that may be paid in each Policy
year. The Cash Value Accumulation Test has no such annual limitation, and
allows more premium to be paid during the early Policy years.
DEATH BENEFIT CHANGES After a Policy is issued the Owner may change the death
benefit option, or increase or decrease the Specified Amount, subject to
approval by Northwestern Mutual Life. Changes are subject to insurability
requirements and issue limits. A change will not be permitted if it results in
a Specified Amount less than the minimum for a new Policy issued on that date.
A change in the death benefit option, or an increase or decrease in the
Specified Amount, will be effective on the monthly processing date next
following receipt of a written request at the Home Office of Northwestern Mutual
Life.
Administrative charges of up to $250 for a change in the death benefit option,
and up to $25 for each of more than one change in the Specified Amount in a
Policy year, may apply. Any such charges will be deducted from the Policy
Value. Northwestern Mutual Life is currently waiving these charges.
A change in the death benefit option, or an increase or decrease in the
Specified Amount, may have important tax effects. See "Tax Considerations", p.
9. The cost of insurance charge will increase if a change results in a larger
net amount at risk. See "Charges Against the Policy Value," p. 6.
ALLOCATIONS TO THE ACCOUNT
The initial net premium is placed in the Account on the Policy date. Net
premiums paid thereafter are placed in the Account on the date received at the
Home Office of Northwestern Mutual Life. Net premiums are premiums less the
deductions from premiums. See "Deductions from Premiums", p 6.
Premiums placed in the Account prior to the initial allocation date are invested
in the Money Market Division of the Account. The initial allocation date is
identified in the Policy and is the latest of the date the application is
approved by Northwestern Mutual Life and the date the initial premium is
received at the Home Office of Northwestern Mutual Life. A
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different initial allocation date applies in those states which require a refund
of at least the premium paid during the period when the Policy may be returned.
See "Right to Return Policy," p. 8. On the initial allocation date the amount
in the Money Market Division is invested in the Account divisions as directed in
the application for the Policy. The Policyowner may change the allocation for
future net premiums at any time by written request and the change will be
effective for premiums placed in the Account thereafter. Allocation must be in
whole percentages.
The Policyowner may transfer accumulated amounts from one division of the
Account to another. Transfers are effective on the date a written request is
received at the Home Office of Northwestern Mutual Life. Northwestern Mutual
Life reserves the right to charge a fee of up to $25, to cover administrative
costs of transfers, if there are more than twelve transfers in a Policy year.
Northwestern Mutual Life is currently waiving these charges.
DEDUCTIONS AND CHARGES
DEDUCTIONS FROM PREMIUMS A charge for taxes attributable to premiums is
deducted from each premium. The total amount of this deduction is 3.6% of the
premium. Of this amount 2.35% is for state premium taxes. Premium taxes vary
from state to state and currently range from .75% to 3.5% of life insurance
premiums. The 2.35% rate is an average. The tax rate for a particular state
may be lower, higher, or equal to the 2.35% deduction. Northwestern Mutual Life
does not expect to profit from this charge. The remainder of the deduction,
1.25% of each premium, is for federal income taxes measured by premiums.
Northwestern Mutual Life believes that this charge does not exceed a reasonable
estimate of its federal income taxes attributable to the treatment of deferred
acquisition costs.
A charge for sales costs is deducted from each premium. The charge is 15% of
premiums paid during the first Policy year up to the Target Premium and 3% of
all other premiums. The Target Premium is based on the Specified Amount and the
age and sex of the insured. To the extent that sales expenses exceed the
amounts deducted, Northwestern Mutual Life will pay the expenses from its other
assets. These assets may include, among other things, any gain realized from
the monthly charge against the Policy Value for the mortality and expense risks
assumed by Northwestern Mutual Life, as described below.
CHARGES AGAINST THE POLICY VALUE A cost of insurance charge is deducted from
the Policy Value on each monthly processing date. The amount is determined by
multiplying the net amount at risk by the cost of insurance rate. The net
amount at risk is equal to the death benefit currently in effect less the Policy
Value. The cost of insurance rate reflects the issue age, policy duration and
risk classification of the insured. The maximum cost of insurance rates are
included in the Policy.
A charge for the mortality and expense risks assumed by Northwestern Mutual Life
is also deducted monthly from the Policy Value. The maximum amount of the
charge is equal to an annual rate of .90% (0.07500% monthly rate) of the Policy
Value. Currently the charge is equal to an annual rate of .75% (0.06250%
monthly rate) of Policy Value for the first ten Policy years and .30% (0.0250%
monthly rate) thereafter. The mortality risk is that insureds may not live as
long as Northwestern Mutual Life estimated. The expense risk is that expenses
of issuing and administering the Policies may exceed the estimated costs.
Northwestern Mutual Life will realize a gain from this charge to the extent it
is not needed to provide benefits and pay expenses under the Policies.
There is a monthly administrative charge of not more than $15 for the first
Policy year and $10 thereafter. Currently this charge will be $5 after the
first Policy year. This charge is for administrative expenses, including costs
of premium collection, processing claims, keeping records and communicating with
Policyowners. Northwestern Mutual Life does not expect to profit from this
charge.
A charge for the expenses and taxes associated with the Policy debt, if any.
The aggregate charge is at the current annual rate of 0.75% (0.06250% monthly
rate) of the Policy debt for the first ten Policy years and 0.20% (0.01667%
monthly rate) thereafter.
The Policy provides for transaction fees to be deducted from the Policy Value on
the dates on which transactions take place. These charges are $25 for changes
in the Specified Amount, withdrawals or transfers of assets among the divisions
of the Account if more than twelve transfers take place in a Policy year. The
fee for a change in the death benefit option is $250. Currently all of these
fees are being waived.
Deductions from the Policy Value will be apportioned among the divisions of the
Account in proportion to the amounts invested in the divisions.
EXPENSES OF THE FUND The investment performance of each division of the
Account reflects all expenses borne by the corresponding Portfolio of the Fund.
See the attached Fund prospectus for more information about those expenses.
CASH VALUE
The owner of a Policy may surrender it for the cash value at any time during the
lifetime of the insured.
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The cash value for the Policy will change daily in response to investment
results. No minimum cash value is guaranteed. The cash value is equal to the
Policy Value reduced by any Policy debt outstanding. During the first Policy
year the cash value is increased by the amount of sales load previously deducted
from premiums, and during the second Policy year the cash value is increased by
50% of previous sales load deductions. This increase in cash value during the
first two Policy years does not apply if the Policy is in a grace period on the
date on which the Policy is surrendered.
The cash value for a Policy is determined at the end of each valuation period.
Each business day, together with any non-business days before it, is a valuation
period. A business day is any day on which the New York Stock Exchange is open
for trading. In accordance with the requirements of the Investment Company Act
of l940, the cash value for a Policy may also be determined on any other day on
which there is sufficient trading in securities to materially affect the value
of the securities held by the Portfolios of the Fund.
POLICY LOANS
The owner of a Policy may borrow up to 90% of the Policy Value using the Policy
as security. If a Policy loan is already outstanding, the maximum amount for any
new loan is 90% of the Policy Value, less the amount already borrowed.
Interest on a Policy loan accrues and is payable on a daily basis at an annual
effective rate of 5%. Unpaid interest is added to the amount of the loan. If the
amount of the loan equals or exceeds the Policy Value on a monthly processing
date, the Policy will enter the grace period. See "Termination and
Reinstatement", below. A notice will be sent to the owner at least 61 days
before the termination date. The notice will show how much must be paid to keep
the Policy in force.
The amount of a Policy loan will be taken from the Account divisions in
proportion to the amounts in the divisions. The amounts withdrawn will be
transferred to Northwestern Mutual Life's general account and will be credited
on a daily basis with an annual earnings rate equal to the 5% Policy loan
interest rate. A Policy loan, even if it is repaid, will have a permanent effect
on the Policy Value because the amounts borrowed will not participate in the
Account's investment results while the loan is outstanding. The effect may be
either favorable or unfavorable depending on whether the earnings rate credited
to the loan amount is higher or lower than the rate credited to the unborrowed
amount left in the Account.
A Policy loan, and any accrued interest outstanding, may be repaid, in whole or
in part, at any time. Payments will be credited as of the date received and will
be transferred from the general account of Northwestern Mutual Life to the
Account divisions, in proportion to the premium allocation in effect, as of the
same date.
A Policy loan may have important tax consequences. See "Tax Considerations", p.
9.
WITHDRAWALS OF POLICY VALUE
The Policyowner may make a withdrawal of Policy Value. A withdrawal may not
reduce the loan value to less than any Policy debt outstanding. Following a
withdrawal the remaining Policy Value, less any Policy debt outstanding, must be
at least three times the current monthly charges for the cost of insurance and
other expenses. The minimum amount for withdrawals is $250. Up to four
withdrawals are permitted in a Policy year. An administrative charge of up to
$25 may apply, but is currently being waived.
A withdrawal of Policy Value decreases the death benefit by the same amount. If
the death benefit for a Policy has been increased to meet the federal tax
requirements for life insurance, the decrease in the death benefit caused by a
subsequent withdrawal will be larger than the amount of the withdrawal. If
Option A or Option C is in effect a withdrawal of Policy Value will reduce the
Specified Amount by the amount of the withdrawal. Following a withdrawal the
remaining death benefit must be at least the minimum amount that Northwestern
Mutual Life would currently issue.
The amount withdrawn from Policy Value will be taken from the Account divisions
in proportion to the amounts in the divisions. The Policy makes no provision for
repayment of amounts withdrawn. A withdrawal of Policy Value may have important
tax consequences. See "Tax Considerations", p. 9.
TERMINATION AND REINSTATEMENT
If the Policy Value, less any Policy debt outstanding, is less than the monthly
charges for the cost of insurance and other expenses on any monthly processing
date, a grace period of 61 days is allowed for the payment of sufficient premium
to keep the Policy in force. The grace period begins on the date that a notice
is sent to the Policyowner. The notice will state the minimum amount of premium
required to keep the Policy in force and the date by which the premium must be
paid. The Policy will terminate unless the required amount is paid before the
grace period expires.
After a Policy has terminated, it may be reinstated within one year. The
insured must provide satisfactory evidence of insurability. The minimum amount
of premium required for reinstatement will be
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the monthly charges that were due when the Policy terminated plus the charges
for three more months.
Reinstatement of a Policy will be effective on the first monthly processing date
after an application for reinstatement is received at the Home Office of
Northwestern Mutual Life, subject to approval by Northwestern Mutual Life. Any
Policy debt that was outstanding when the Policy terminated will also be
reinstated.
The Policy Value when a Policy is reinstated is equal to the premium paid, after
the deduction for taxes and sales load, less the sum of all monthly charges for
the cost of insurance and other expenses for the grace period and for the
current month. The Policy Value will be allocated among the Account divisions
based on the allocation for premiums currently in effect.
A Policy may not be reinstated after the Policy has been surrendered for its
cash value.
See "Tax Considerations", p. 9, for a discussion of the tax effects associated
with termination and reinstatement of a Policy.
RIGHT TO RETURN POLICY
A Policy may be returned within 45 days after the application for insurance is
signed or within 10 days (or later where required by state law) after the Policy
is received, whichever is later. The Policy may be mailed or delivered to the
agent who sold it or to the Home Office of Northwestern Mutual Life. If
returned, the Policy will be considered void from the beginning. Northwestern
Mutual Life will refund the sum of the amounts deducted from the premium paid
plus the value of the Policy in the Account on the date the returned Policy is
received. In some states, the amount refunded will not be less than the premium
paid.
OTHER POLICY PROVISIONS
OWNER. The owner is identified in the Policy. The owner may exercise all rights
under the Policy while the insured is living. Ownership may be transferred to
another. Written proof of the transfer must be received by Northwestern Mutual
Life at its Home Office.
BENEFICIARY. The beneficiary is the person to whom the death benefit is
payable. The beneficiary is named in the application. After the Policy is issued
the owner may change the beneficiary in accordance with the Policy provisions.
INCONTESTABILITY. Northwestern Mutual Life will not contest a Policy after it
has been in force during the lifetime of the insured for two years from the date
of issue. An increase in the amount of insurance that was subject to
insurability requirements will not be contested after the increased amount has
been in force during the lifetime of the insured for two years from the date of
issuance of the increase.
SUICIDE. If the insured dies by suicide within one year from the date of issue,
the amount payable under the Policy will be limited to the premiums paid, less
the amount of any Policy debt and withdrawals. If the insured dies by suicide
within one year of the date of issuance of an increase in the amount of
insurance, which was subject to insurability requirements, the amount payable
with respect to the increase will be limited to the amounts charged for the cost
of insurance and other expenses attributable to the increase.
MISSTATEMENT OF AGE OR SEX. If the age or sex of the insured has been
misstated, the charges for cost of insurance and other expenses under a Policy
will be adjusted to reflect the correct age and sex.
COLLATERAL ASSIGNMENT. The owner may assign a Policy as collateral security.
Northwestern Mutual Life is not responsible for the validity or effect of a
collateral assignment and will not be deemed to know of an assignment before
receipt of the assignment in writing at the Home Office.
DEFERRAL OF DETERMINATION AND PAYMENT. Northwestern Mutual Life will ordinarily
pay Policy benefits within seven days after receipt of all required documents at
its Home Office. However, determination and payment of benefits may be deferred
during any period when it is not reasonably practicable to value securities
because the New York Stock Exchange is closed or an emergency exists or the
Securities and Exchange Commission, by order, permits deferral for the
protection of Policyowners.
DIVIDENDS. The Policies will share in divisible surplus to the extent
determined annually by Northwestern Mutual Life. Since the Policies are not
expected to contribute to divisible surplus, it is not expected that any
dividends will be paid.
VOTING RIGHTS
Northwestern Mutual Life is the owner of the Fund shares in which all assets of
the Account are invested. As the owner of the shares Northwestern Mutual Life
will exercise its right to vote the shares to elect directors of the Fund, to
vote on matters required to be approved or ratified by mutual fund shareholders
under the Investment Company Act of 1940 and to vote on any other matters that
may be presented to any Fund shareholders' meeting. However, Northwestern Mutual
Life will vote the Fund shares held in the Account in accordance with
instructions from owners of the Policies. Northwestern Mutual Life will vote the
Fund shares held in its general account in the same proportions as the shares
for which voting instructions
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are received. If the applicable laws or regulations change so as to permit
Northwestern Mutual Life to vote the Fund shares in its own discretion, it may
elect to do so.
The number of Fund shares for each division of the Account for which the owner
of a Policy may give instructions is determined by dividing the amount of the
Policy's cash value apportioned to that division, if any, by the per share value
for the corresponding Fund Portfolio. The number will be determined as of a date
chosen by Northwestern Mutual Life, but not more than 90 days before the Fund
shareholders' meeting. Fractional votes are counted. Voting instructions will be
solicited with written materials at least 14 days before the meeting. Shares as
to which no instructions have been received will be voted in the same proportion
as the shares as to which instructions have been received.
Northwestern Mutual Life may, if required by state insurance officials,
disregard voting instructions which would require Fund shares to be voted for a
change in the sub-classification or investment objectives of a Fund Portfolio,
or to approve or disapprove an investment advisory agreement for the Fund.
Northwestern Mutual Life may also disregard voting instructions that would
require changes in the investment policy or investment adviser for the Fund or a
Fund Portfolio, provided that Northwestern Mutual Life reasonably determines to
take this action in accordance with applicable federal law. If Northwestern
Mutual Life disregards voting instructions, a summary of the action and reasons
therefor will be included in the next semiannual report to the owners of the
Policies.
SUBSTITUTION OF FUND SHARES AND OTHER CHANGES
If, in the judgment of Northwestern Mutual Life, a Fund Portfolio becomes
unsuitable for continued use with the Policies because of a change in investment
objectives or restrictions, shares of another Portfolio or another mutual fund
may be substituted. Any substitution of shares will be subject to any required
approval of the Securities and Exchange Commission, the Wisconsin Commissioner
of Insurance or other regulatory authority. Northwestern Mutual Life has also
reserved the right, subject to applicable federal and state law, to operate the
Account or any of its divisions as a management company under the Investment
Company Act of 1940, or in any other form permitted, or to terminate
registration of the Account if registration is no longer required, and to change
the provisions of the Policies to comply with any applicable laws.
REPORTS
At least once each Policy year the owner of a Policy will receive a statement
showing the death benefit, Policy Value and any Policy loan, including loan
interest. This report will show the apportionment of invested assets among the
Account divisions. Owners will also receive annual and semiannual reports for
the Account and the Fund, including financial statements.
DISTRIBUTION OF THE POLICIES
The Policies will be sold through individuals who, in addition to being licensed
life insurance agents of Northwestern Mutual Life, are registered
representatives of Northwestern Mutual Investment Services, Inc. ("NMIS"), a
wholly-owned subsidiary of Northwestern Mutual Life. NMIS is a registered
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers.
Commissions paid to the agents will not exceed 15% of the premium for the first
year and 2-3/4% of the premium thereafter. During the sixth Policy year and
thereafter agents will receive compensation at the annual rate of .20% of the
cash value of a Policy.
General agents and district agents who are registered representatives of NMIS
and have supervisory responsibility for sales of the Policies receive commission
overrides and other compensation.
TAX CONSIDERATIONS
GENERAL The following discussion provides a general description of federal
income tax consideration relating to the Policy. The discussion is based on
current provisions of the Internal Revenue Code ("Code") as currently
interpreted by the Internal Revenue Service. This discussion is not intended as
tax advice. The discussion is not exhaustive, it does not address the
likelihood of future changes in federal income tax law or interpretations
thereof, and it does not address state or local tax considerations which may be
significant in the purchase and ownership of a Policy.
LIFE INSURANCE QUALIFICATION Section 7702 of the Code defines life insurance
for federal income tax purposes. The Code provides two alternative tests for
determining whether the death benefit is a sufficient multiple of the Policy
Value. See "Choice of Tests for Tax Purposes", p. 5. The Policy is designed to
comply with these rules. Premiums that would cause a Policy to be disqualified
as life insurance will be returned.
Section 817(h) of the Code authorizes the Secretary of the Treasury to set
standards for diversification of the investments underlying variable life
insurance policies. Final regulations have been issued pursuant to this
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authority. Failure to meet the diversification requirements would disqualify
the Policies as life insurance for purposes of Section 7702 of the Code.
Northwestern Mutual Life intends to comply with these requirements.
The Treasury Department, in connection with the diversification requirements,
stated that it expected to issue guidance about circumstances where a
policyowner's control of separate account assets would cause the policyowner,
and not the life insurance company, to be treated as the owner of those assets.
These guidelines have not been issued. If the owner of a Policy were treated as
the owner of the Fund shares held in the Account, the income and gains related
to those shares would be included in the owner's gross income for federal income
tax purposes. Northwestern Mutual Life believes that it owns the assets of the
Account under current federal income tax law.
TAX TREATMENT OF LIFE INSURANCE While a Policy is in force, increases in the
Policy Value as a result of investment experience are not subject to federal
income tax until there is a loan or withdrawal. The death benefit received by a
beneficiary will not be subject to federal income tax.
Unless the Policy is a modified endowment contract, as described below,
Northwestern Mutual Life believes that a loan received under a Policy will be
construed as indebtedness of the owner and no part of the loan will be subject
to current federal income tax. Interest paid by individual owners of the
Policies will ordinarily not be deductible. A qualified tax adviser should be
consulted as to the deductibility of interest paid, or accrued, by other
purchasers of the Policies. See "Other Tax Considerations", below.
As a general rule, the proceeds from a withdrawal of Policy Value will be
taxable only to the extent that the withdrawal exceeds the basis of the Policy.
In certain circumstances, a withdrawal of Policy Value during the first 15
Policy years may be taxable to the extent that the Policy Value exceeds the
basis of the Policy. The basis of the Policy is generally equal to the premiums
paid less any amounts previously received as tax-free distributions. This means
that the amount withdrawn may be taxable even if that amount is less than the
basis of the Policy. In addition, if a Policy terminates while a Policy loan is
outstanding, the cancellation of the loan and accrued interest will be treated
as a distribution from the Policy and may be taxable under these rules.
Special tax rules may apply when ownership of a Policy is transferred.
Qualified tax advice should be sought when a transfer of ownership is planned.
MODIFIED ENDOWMENT CONTRACTS A Policy will be classified as a modified
endowment contract if the cumulative premium paid during the first seven Policy
years exceeds a defined "seven-pay" limit. The seven-pay limit is based on a
hypothetical life insurance policy issued on the same insured person and for the
same initial death benefit which, under specified conditions (which include the
absence of expense and administrative charges) will be fully paid for after
seven level annual payments. A Policy will be treated as a modified endowment
contract unless cumulative premiums paid under the Policy, at all times during
the first seven Policy years, are less than or equal to the cumulative seven-pay
premiums which would have been paid under the hypothetical policy on or before
such times.
Whenever there is a "material change" under a Policy, it will generally be
treated as a new contract for purposes of determining whether the Policy is a
modified endowment contract, and subjected to a new seven-pay period and a new
seven-pay limit. The new seven-pay limit would be determined taking into
account, the Policy Value of the Policy at the time of such change. A
materially changed Policy would be considered a modified endowment contract if
it failed to satisfy the new seven-pay limit. A material change could occur as
a result of a change in the death benefit option, a change in the Specified
Amount, and certain other changes.
If the benefits are reduced during the first seven Policy years after entering
into the Policy (or within seven years after a material change), for example, by
requesting a decrease in the Specified Amount or, in some cases, by making a
withdrawal of Policy Value, the seven-pay premium limit will be redetermined
based on the reduced level of benefits and applied retroactively for purposes
of the seven-pay test. If the premiums previously paid are greater than the
calculated seven-pay premium level limit, the Policy will become a modified
endowment contract. A life insurance policy which is received in exchange for a
modified endowment contract will also be considered a modified endowment
contract.
If a Policy is a modified endowment contract, any distribution from the Policy
will be taxed on a gain- first basis. Distributions for this purpose include a
loan (including any increase in the loan amount to pay interest on an existing
loan or an assignment or a pledge to secure a loan) or a withdrawal of Policy
Value. Any such distributions will be considered taxable income to the extent
the Policy Value exceeds the basis in the Policy. For modified endowment
contracts, the basis would be increased by the amount of any prior loan under
the Policy that was considered taxable income. For purposes of determining the
taxable portion of any distribution, all modified
10
<PAGE>
endowment contracts issued by Northwestern Mutual Life to the same policyowner
(excluding certain qualified plans) during any calendar year are to be
aggregated. The Secretary of the Treasury has authority to prescribe additional
rules to prevent avoidance of gain-first taxation on distributions from modified
endowment contracts.
A 10% penalty tax will apply to the taxable portion of a distribution from a
modified endowment contract. The penalty tax will not, however, apply to
distributions (i) to taxpayers 59 1/2 years of age or older, (ii) in the case of
a disability (as defined in the Code) or (iii) received as part of a series of
substantially equal periodic annuity payments for the life (or life expectancy)
of the taxpayers or the joint lives (or joint life expectancies) of the taxpayer
and his beneficiaries. If a Policy is surrendered, the excess, if any, of the
Policy Value over the basis of the Policy will be subject to federal income tax
and, unless one of the above exceptions applies, the 10% penalty tax. The
exceptions generally do not apply to life insurance policies owned by
corporations or other entities. If a Policy terminates while there is a Policy
loan, the cancellation of the loan and accrued loan interest will be treated as
a distribution to the extent not previously treated as such and could be subject
to tax, including the penalty tax, as described under the above rules.
If a Policy becomes a modified endowment contract, distributions that occur
during the Policy year it becomes a modified endowment contract and any
subsequent Policy year will be taxed as described in the two preceding
paragraphs. In addition, distributions from a Policy within two years before it
becomes a modified endowment contract will be subject to tax in this manner.
This means that a distribution made from a Policy that is not a modified
endowment contract could later become taxable as a distribution from a modified
endowment contract. The Secretary of the Treasury has been authorized to
prescribe rules which would treat similarly other distributions made in
anticipation of a policy becoming a modified endowment contract.
OTHER TAX CONSIDERATIONS Business-owned life insurance may be subject to
certain additional rules. Section 264(a)(1) of the Code generally disallows a
deduction for premiums paid on Policies by anyone who is directly or indirectly
a beneficiary under the Policy. Increases in Policy Value may also be subject
to tax under the corporation alternative minimum tax provisions.
Section 264(a)(4) of the Code limits the Policyowner's deduction for interest on
loans taken against life insurance policies to interest on an aggregate total of
$50,000 of loans per covered life only with respect to life insurance policies
covering key persons. Generally, a key person means an officer or a 20% owner.
However, the number of key persons will be limited to the greater of (a) five
individuals, or (b) the lesser of 5% of the total officers and employees of the
taxpayer or 20 individuals. Deductible interest for these Policies will be
subject to limits based on current market rates.
In addition, section 264(f) disallows a proportionate amount of a business'
interest deduction based on the amount of unborrowed cash value of non-exempt
life insurance policies held in relation to other business assets. Exempt
policies include policies held by natural persons unless the business is a
direct or indirect beneficiary under the policy (e.g., collateral assignment
split dollar policies) and policies insuring employees, directors, officers and
20% owners (as well as joint policies insuring 20% owners and their spouses).
Finally, life insurance subject to a split dollar arrangement is taxable to the
employee in the amount of the annual value of the economic benefit to the
employee measured by the issuer's lowest one-year term rates as defined by
various Internal Revenue Service rulings or the government's P.S. 58 table
rates. The Internal Revenue Service has also ruled in a private letter ruling
related to a specific taxpayer under audit that the accrued earnings in the
equity split dollar policies held by the taxpayer were taxable in the year
earned. The Internal Revenue Service has not issued a formal ruling on this
issue and is currently reviewing the taxation of split dollar arrangements
generally.
Depending on the circumstances, the exchange of a Policy, a change in the death
benefit option, a Policy loan, a withdrawal of Policy Value, a change in
ownership or an assignment of the Policy may have federal income tax
consequences. In addition, federal, state and local transfer, estate,
inheritance, and other tax consequences of Policy ownership, premium payments
and receipt of Policy proceeds depend on the circumstances of each Policyowner
or beneficiary. Any person contemplating any such transaction should consult a
qualified tax adviser.
11
<PAGE>
- --------------------------------------------------------------------------------
OTHER INFORMATION
MANAGEMENT
Northwestern Mutual Life is managed by a Board of Trustees. The Trustees and
senior officers of Northwestern Mutual Life and their positions including Board
committee memberships, and their principal occupations, are as follows:
TRUSTEES
PRINCIPAL OCCUPATION DURING
NAME LAST FIVE YEARS
- ---- ---------------
R. Quintus Anderson (A) . . . . . . . Chairman, Aarque Capital Corporation
since 1997, prior thereto; Chairman, The
Aarque Companies, Jamestown, NY
(diversified metal products
manufacturing)
Edward E. Barr (HR) . . . . . . . . . President and Chief Executive Officer,
Sun Chemical Corporation, Fort Lee, New
Jersey (graphic arts); and President and
Chief Executive Officer, DIC Americas,
Inc., Fort Lee, NJ
Gordon T. Beaham, III (OT). . . . . . Chairman of the Board and President,
Faultless Starch/Bon Ami Company, Kansas
city, MO (consumer products
manufacturer)
Robert C. Buchanan (A, E, F). . . . . President and Chief Executive Officer,
Fox Valley Corporation, Appleton, WI
(manufacturer of gift wrap and writing
paper)
Robert E. Carlson (E) . . . . . . . . Executive Vice President of Northwestern
Mutual Life
George A. Dickerman (AM). . . . . . . President, Spalding Sports Worldwide,
Chicopee, MA (manufacturer of sporting
equipment)
Pierre S. du Pont (AM). . . . . . . . Attorney, Richards, Layton and Finger,
Wilmington, DE
James D. Ericson (AM, E, F. HR, OT) . President and Chief Executive Officer of
Northwestern Mutual Life since 1993;
President and Chief Operating Officer,
1991-1993; prior thereto, President
J. E. Gallegos (A). . . . . . . . . . Attorney at Law; President, Gallegos Law
Firm, Santa Fe, New Mexico
Stephen N. Graff (E, F, OT) . . . . . Retired Partner, Arthur Andersen LLP
(public accountants) since 1994; Senior
Partner, 1993-1994; prior thereto,
Managing Partner - Milwaukee, WI office
Patricia Albjerg Graham (HR). . . . . Professor, Graduate School of Education,
Harvard University, Cambridge, MA, and
President, The Spencer Foundation
(social and behavioral sciences)
Stephen F. Keller (HR). . . . . . . . Chairman, Santa Anita Realty Enterprises
Barbara A. King (AM). . . . . . . . . President, Landscape Structures, Inc.,
Delano, MN (manufacturer of playground
equipment)
J. Thomas Lewis (HR). . . . . . . . . Attorney, Monroe & Lemann, New Orleans,
LA
Daniel F. McKeithan, Jr. (E, F, HR) . President, Tamarack Petroleum Company,
Inc., Milwaukee, WI (operator of oil and
gas wells); President, Active Investor
Management, Inc., Milwaukee, WI
Guy A. Osborn (E, F, OT). . . . . . . Retired Chairman of Universal Foods
Corporation, Milwaukee, WI since 1997;
prior thereto, Chairman and Chief
Executive Officer
Timothy D. Proctor (A). . . . . . . . Senior Vice President Human Resources,
General Counsel & Secretary of Glaxo
Wellcome Inc., Research Triangle Park,
NC, since 1994 (pharmaceuticals)
12
<PAGE>
Donald J. Schuenke (AM, E, F) . . . . Retired since 1994; Chairman of
Northwestern Mutual Life, 1993-1994;
Chairman and Chief Executive Officer,
1990-1993; prior thereto, President and
Chief Executive Officer
H. Mason Sizemore, Jr. (AM) . . . . . President and Chief Operating Officer,
The Seattle Times, Seattle, WA
(publishing)
Harold B. Smith (OT). . . . . . . . . Chairman, Executive Committee, Illinois
Tool Works, Inc., Chicago, IL
(engineered components and industrial
systems and consumables)
Sherwood H. Smith, Jr. (AM) . . . . . Chairman of the Board of Carolina Power
& Light since 1997; prior thereto,
Chairman of the Board and Chief
Executive Officer
John E. Steuri (OT) . . . . . . . . . Chairman, Advanced Thermal Technologies,
Little Rock, AR since 1997 (heating,
air-conditioning and humidity control).
Retired since 1996 as Chairman
and Chief Executive Officer of ALLTEL
Information Services, Inc., Little Rock,
AR (application software)
John J. Stollenwerk (AM, E, F). . . . President and Owner, Allen-Edmonds Shoe
Corporation, Port Washington, WI
Barry L. Williams (HR). . . . . . . . President and Chief Executive Officer,
C.N. Flagg Power, Inc., Meriden, CT
(construction services for electric
power plants) and President, Williams
Pacific Ventures, Inc., Redwood City, CA
(venture capital)
Kathryn D. Wriston (A). . . . . . . . Director of various corporations, New
York, NY
A -- Member, Audit Committee F -- Member, Finance Committee
AM -- Member, Agency and Marketing HR -- Member, Human Resources and
Committee Public Policy Committee
E -- Member, Executive Committee OT -- Member, Operations and
Technology Committee
SENIOR OFFICERS (OTHER THAN TRUSTEES)
POSITION WITH
NAME NORTHWESTERN MUTUAL LIFE
---------------------------------------------------------------------
Peter W. Bruce Executive Vice President
Edward J. Zore Executive Vice President
Deborah A. Beck Senior Vice President
William H. Beckley Senior Vice President
John M. Bremer Senior Vice President, General Counsel
and Secretary
Mark G. Doll Senior Vice President
James W. Ehrenstrom Senior Vice President
Richard L. Hall Senior Vice President
William C. Koenig Senior Vice President and Chief
Actuary
Donald L. Mellish Senior Vice President
Mason G. Ross Senior Vice President
Leonard F. Stecklein Senior Vice President
Frederic H. Sweet Senior Vice President
Dennis Tamcsin Senior Vice President
Walter J. Wojcik Senior Vice President
Gary E. Long Vice President and Controller
REGULATION
Northwestern Mutual Life is subject to the laws of Wisconsin governing insurance
companies and to regulation by the Wisconsin Commissioner of Insurance. An
annual statement in a prescribed form is filed with the Department of Insurance
on or before March 1 in
13
<PAGE>
each year covering operations for the preceding year and including financial
statements. Regulation by the Wisconsin Insurance Department includes periodic
examination to determine solvency and compliance with insurance laws.
Northwestern Mutual Life is also subject to the insurance laws and regulations
of the other jurisdictions in which it is licensed to operate.
LEGAL PROCEEDINGS
Northwestern Mutual Life is engaged in litigation of various kinds which in its
judgment is not of material importance in relation to its total assets. There
are no legal proceedings pending to which the Account is a party.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission, Washington, D.C. by Northwestern Mutual Life under the Securities
Act of 1933, as amended, with respect to the Policies. This prospectus does not
contain all the information set forth in the registration statement. A copy of
the omitted material is available from the main office of the SEC in Washington,
D.C. upon payment of the prescribed fee. Further information about the Policies
is also available from the Home Office of Northwestern Mutual Life. The address
and telephone number are on the cover of this prospectus.
EXPERTS
The financial statements of Northwestern Mutual Life as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996 and
of the Account as of December 31, 1996 and for each of the two years in the
period ended December 31, 1996 included in this prospectus have been so included
in reliance on the reports of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
Actuarial matters included in this prospectus have been examined by William C.
Koenig, F.S.A., Senior Vice President and Chief Actuary of Northwestern Mutual
Life. His opinion is filed as an exhibit to the registration statement.
14
<PAGE>
Pages 15 through 21 are reserved for
DECEMBER 31, 1996 FINANCIAL STATEMENTS
for
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(TO BE FILED BY AMENDMENT)
15
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
16
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
17
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
18
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
19
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
20
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
21
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
The following financial statements of Northwestern Mutual should be considered
only as bearing upon the ability of Northwestern Mutual Life to meet its
obligations under the Policies.
Pages 22 - 34 are reserved for
the December 31, 1996 Financial Statements
for the Northwestern Mutual Life Insurance Company
(TO BE FILED BY AMENDMENT)
The accompanying notes are an integral part of the financial statements
22
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
The accompanying notes are an integral part of the financial statements
23
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
The accompanying notes are an integral part of the financial statements
24
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
The accompanying notes are an integral part of the financial statements
25
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
The accompanying notes are an integral part of the financial statements
26
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
27
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
28
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
29
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
30
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
31
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
32
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
33
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
34
<PAGE>
APPENDIX
ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND ACCUMULATED PREMIUMS. The
tables on the following pages illustrate how the death benefit and cash
surrender value for a Policy would vary over time based on hypothetical
investment results. The tables assume gross (after tax) investment return rates
of 0%, 6% and 12% on assets of the Account. The Policies illustrated are on a
sex-neutral basis, age 45, $500,000 Specified Amount and death benefit Option A
with a $10,000 annual planned premium. The first four illustrations, on pages
36 - 39 are for a policy issued to a guaranteed issue, non-smoker risk using 1)
the guideline premium/cash value corridor test, and 2) the cash value
accumulation test for the definition of life insurance, based on both current
charges and on maximum charges. The next four illustrations are for a policy
issued to a select risk using the two different definition of life insurance
tests and based on both current charges and on maximum charges.
The death benefits and cash values would be different from those shown if the
gross investment return rate averaged 0%, 6% or 12%, but fluctuated over and
under the average rate at various points in time. The values would also be
different, depending on the Account divisions selected by the owner of the
Policy, if the return rate for the nine Fund Portfolios averaged 0%, 6% or 12%,
but the rates for each individual Portfolio varied over and under the average.
The amounts shown as the death benefits and cash values reflect the deductions
from premiums and deductions from Policy Value. The amounts shown as the cash
values reflect the fact that the Company will refund a portion of the sales load
for a policy surrendered during the first two years. The amounts shown also
reflect the average of the investment advisory fees and other Fund expenses
applicable to each of the nine Portfolios of the Fund during 1996 at the annual
rate of .47% of the Fund's net assets. See "The Fund", p. 3. Thus the 0%, 6%
and 12% gross hypothetical return rates on the Fund's assets are equivalent to
the net rates of -4.7%, 5.53% and 11.53% on the assets of the Account.
The second column of each table shows the amount which would accumulate if an
amount equal to the annual premium were invested to earn interest, after taxes,
at a 5% interest rate compounded annually.
The death benefits and corresponding cash values shown on pages 36, 38, 40 and
42 illustrate benefits which would be paid if investment returns of 0%, 6% and
12% are realized, if mortality and expense experience in the future is as
currently experienced. HOWEVER, CURRENT MONTHLY COST OF INSURANCE AND EXPENSE
CHARGES MAY CHANGE SUBJECT TO THE STATED MAXIMUM CHARGES.
A comparable illustration based on a proposed insured's age, sex and risk
classification and proposed face amount or premium is available upon request.
35
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- GUARANTEED ISSUE NON-TOBACCO
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 8,691 $ 9,149 $ 9,607
2 21,525 500,000 500,000 500,000 16,437 17,877 19,373
3 33,101 500,000 500,000 500,000 23,713 26,679 29,878
4 45,256 500,000 500,000 500,000 31,719 36,772 42,438
5 58,019 500,000 500,000 500,000 39,552 47,270 56,272
6 71,420 500,000 500,000 500,000 47,209 58,191 71,521
7 85,491 500,000 500,000 500,000 54,686 69,552 88,335
8 100,266 500,000 500,000 500,000 61,976 81,368 106,885
9 115,779 500,000 500,000 500,000 69,076 93,659 127,361
10 132,068 500,000 500,000 500,000 75,978 106,445 149,978
15 226,575 500,000 500,000 500,000 109,428 182,348 311,380
20 (age 65) 347,193 500,000 500,000 717,036 136,972 278,049 587,734
25 501,135 500,000 500,000 1,220,930 156,161 401,890 1,052,526
30 697,608 500,000 605,639 1,962,266 160,376 566,018 1,833,893
35 948,363 500,000 816,092 3,311,940 135,510 777,230 3,154,229
40 1,268,398 500,000 1,092,268 5,610,216 44,713 1,040,255 5,343,063
45 1,676,852 0 1,426,308 9,347,213 0 1,358,388 8,902,108
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
36
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- GUARANTEED ISSUE NON-TOBACCO
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 7,233 $ 7,644 $ 8,056
2 21,525 500,000 500,000 500,000 13,394 14,647 15,953
3 33,101 500,000 500,000 500,000 19,017 21,555 24,302
4 45,256 500,000 500,000 500,000 25,306 29,580 34,390
5 58,019 500,000 500,000 500,000 31,340 37,810 45,390
6 71,420 500,000 500,000 500,000 37,112 46,250 57,399
7 85,491 500,000 500,000 500,000 42,597 54,887 70,512
8 100,266 500,000 500,000 500,000 47,776 63,715 84,841
9 115,779 500,000 500,000 500,000 52,619 72,714 100,504
10 132,068 500,000 500,000 500,000 57,098 81,873 117,644
15 226,575 500,000 500,000 500,000 73,557 130,205 232,810
20 (age 65) 347,193 500,000 500,000 521,095 77,281 182,618 427,127
25 501,135 500,000 500,000 869,727 59,539 237,585 749,765
30 697,608 500,000 500,000 1,360,810 3,212 295,387 1,271,785
35 948,363 0 500,000 2,232,774 0 357,172 2,126,451
40 1,268,398 0 500,000 3,656,639 0 441,290 3,482,513
45 1,676,852 0 608,016 5,865,327 0 579,063 5,586,026
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
37
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- GUARANTEED ISSUE NON-TOBACCO
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
CASH VALUE ACCUMULATION TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 8,691 $ 9,149 $ 9,607
2 21,525 500,000 500,000 500,000 16,437 17,877 19,373
3 33,101 500,000 500,000 500,000 23,713 26,679 29,878
4 45,256 500,000 500,000 500,000 31,719 36,772 42,438
5 58,019 500,000 500,000 500,000 39,552 47,270 56,272
6 71,420 500,000 500,000 500,000 47,209 58,191 71,521
7 85,491 500,000 500,000 500,000 54,686 69,552 88,335
8 100,266 500,000 500,000 500,000 61,976 81,368 106,885
9 115,779 500,000 500,000 500,000 69,076 93,659 127,361
10 132,068 500,000 500,000 500,000 75,978 106,445 149,978
15 226,575 500,000 500,000 620,554 109,428 182,348 310,707
20 (age 65) 347,193 500,000 500,000 1,012,195 136,972 278,049 575,010
25 501,135 500,000 625,065 1,576,681 156,161 397,627 1,002,986
30 697,608 500,000 767,848 2,394,285 160,376 540,006 1,683,834
35 948,363 500,000 922,238 3,592,658 135,510 704,291 2,743,624
40 1,268,398 500,000 1,085,155 5,325,434 44,713 887,159 4,353,763
45 1,676,852 0 1,254,843 7,808,513 0 1,081,671 6,730,913
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
38
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- GUARANTEED ISSUE NON-TOBACCO
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
CASH VALUE ACCUMULATION TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 7,233 $ 7,644 $ 8,056
2 21,525 500,000 500,000 500,000 13,394 14,647 15,953
3 33,101 500,000 500,000 500,000 19,017 21,555 24,302
4 45,256 500,000 500,000 500,000 25,306 29,580 34,390
5 58,019 500,000 500,000 500,000 31,340 37,810 45,390
6 71,420 500,000 500,000 500,000 37,112 46,250 57,399
7 85,491 500,000 500,000 500,000 42,597 54,887 70,512
8 100,266 500,000 500,000 500,000 47,776 63,715 84,841
9 115,779 500,000 500,000 500,000 52,619 72,714 100,504
10 132,068 500,000 500,000 500,000 57,098 81,873 117,644
15 226,575 500,000 500,000 500,000 73,557 130,205 232,810
20 (age 65) 347,193 500,000 500,000 733,006 77,281 182,618 416,407
25 501,135 500,000 500,000 1,082,653 59,539 237,585 688,717
30 697,608 500,000 500,000 1,543,007 3,212 295,387 1,085,154
35 948,363 0 500,000 2,154,816 0 357,172 1,645,580
40 1,268,398 0 532,406 2,972,310 0 435,264 2,429,986
45 1,676,852 0 599,883 4,070,290 0 517,097 3,508,577
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
39
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- SELECT UNDERWRITING RISK
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 9,008 $ 9,475 $ 9,944
2 21,525 500,000 500,000 500,000 17,025 18,502 20,036
3 33,101 500,000 500,000 500,000 24,600 27,649 30,937
4 45,256 500,000 500,000 500,000 32,917 38,117 43,945
5 58,019 500,000 500,000 500,000 41,054 49,004 58,272
6 71,420 500,000 500,000 500,000 49,009 60,328 74,056
7 85,491 500,000 500,000 500,000 56,766 72,093 91,445
8 100,266 500,000 500,000 500,000 64,371 84,368 110,659
9 115,779 500,000 500,000 500,000 71,836 97,190 131,913
10 132,068 500,000 500,000 500,000 79,193 110,616 155,462
15 226,575 500,000 500,000 500,000 115,369 190,680 323,478
20 (age 65) 347,193 500,000 500,000 743,358 144,925 290,920 609,310
25 501,135 500,000 500,000 1,263,075 164,382 419,598 1,088,857
30 697,608 500,000 630,158 2,027,631 169,183 588,932 1,894,982
35 948,363 500,000 846,840 3,420,021 145,758 806,514 3,257,163
40 1,268,398 500,000 1,131,299 5,791,109 58,478 1,077,428 5,515,342
45 1,676,852 0 1,475,278 9,646,455 0 1,405,027 9,187,101
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
40
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- SELECT UNDERWRITING RISK
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 7,233 $ 7,644 $ 8,056
2 21,525 500,000 500,000 500,000 13,394 14,647 15,953
3 33,101 500,000 500,000 500,000 19,017 21,555 24,302
4 45,256 500,000 500,000 500,000 25,306 29,580 34,390
5 58,019 500,000 500,000 500,000 31,340 37,810 45,390
6 71,420 500,000 500,000 500,000 37,112 46,250 57,399
7 85,491 500,000 500,000 500,000 42,597 54,887 70,512
8 100,266 500,000 500,000 500,000 47,776 63,715 84,841
9 115,779 500,000 500,000 500,000 52,619 72,714 100,504
10 132,068 500,000 500,000 500,000 57,098 81,873 117,644
15 226,575 500,000 500,000 500,000 73,557 130,205 232,810
20 (age 65) 347,193 500,000 500,000 521,095 77,281 182,618 427,127
25 501,135 500,000 500,000 869,727 59,539 237,585 749,765
30 697,608 500,000 500,000 1,360,810 3,212 295,387 1,271,785
35 948,363 0 500,000 2,232,774 0 357,172 2,126,451
40 1,268,398 0 500,000 3,656,639 0 441,290 3,482,513
45 1,676,852 0 608,016 5,865,327 0 579,063 5,586,026
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
41
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- SELECT UNDERWRITING RISK
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
CASH VALUE ACCUMULATION TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 9,008 $ 9,475 $ 9,944
2 21,525 500,000 500,000 500,000 17,025 18,502 20,036
3 33,101 500,000 500,000 500,000 24,600 27,649 30,937
4 45,256 500,000 500,000 500,000 32,917 38,117 43,945
5 58,019 500,000 500,000 500,000 41,054 49,004 58,272
6 71,420 500,000 500,000 500,000 49,009 60,328 74,056
7 85,491 500,000 500,000 500,000 56,766 72,093 91,445
8 100,266 500,000 500,000 500,000 64,371 84,368 110,659
9 115,779 500,000 500,000 500,000 71,836 97,190 131,913
10 132,068 500,000 500,000 500,000 79,193 110,616 155,462
15 226,575 500,000 500,000 644,684 115,369 190,680 322,789
20 (age 65) 347,193 500,000 512,071 1,051,979 144,925 290,898 597,610
25 501,135 500,000 650,227 1,635,014 164,382 413,634 1,040,094
30 697,608 500,000 795,754 2,479,582 169,183 559,631 1,743,822
35 948,363 500,000 953,281 3,717,764 145,758 727,997 2,839,164
40 1,268,398 500,000 1,119,564 5,508,276 58,478 915,290 4,503,244
45 1,676,852 0 1,292,766 8,074,206 0 1,114,360 6,959,940
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
42
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
SEX-NEUTRAL ISSUE AGE 45 -- SELECT UNDERWRITING RISK
$500,000 SPECIFIED AMOUNT
DEATH BENEFIT OPTION A
$10,000 ANNUAL PREMIUM
CASH VALUE ACCUMULATION TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT CASH VALUE
--------------------------- ---------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
ACCUMULATED
END OF AT 5% INTEREST 0% 6% 12% 0% 6% 12%
POLICY YEAR PER YEAR ---------- ---------- ---------- ---------- ---------- ----------
- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 500,000 $ 500,000 $ 500,000 $ 7,233 $ 7,644 $ 8,056
2 21,525 500,000 500,000 500,000 13,394 14,647 15,953
3 33,101 500,000 500,000 500,000 19,017 21,555 24,302
4 45,256 500,000 500,000 500,000 25,306 29,580 34,390
5 58,019 500,000 500,000 500,000 31,340 37,810 45,390
6 71,420 500,000 500,000 500,000 37,112 46,250 57,399
7 85,491 500,000 500,000 500,000 42,597 54,887 70,512
8 100,266 500,000 500,000 500,000 47,776 63,715 84,841
9 115,779 500,000 500,000 500,000 52,619 72,714 100,504
10 132,068 500,000 500,000 500,000 57,098 81,873 117,644
15 226,575 500,000 500,000 500,000 73,557 130,205 232,810
20 (age 65) 347,193 500,000 500,000 733,006 77,281 182,618 416,407
25 501,135 500,000 500,000 1,082,653 59,539 237,585 688,717
30 697,608 500,000 500,000 1,543,007 3,212 295,387 1,085,154
35 948,363 0 500,000 2,154,816 0 357,172 1,645,580
40 1,268,398 0 532,406 2,972,310 0 435,264 2,429,986
45 1,676,852 0 599,883 4,070,290 0 517,097 3,508,577
</TABLE>
ASSUMES NO POLICY LOAN OR WITHDRAWAL HAS BEEN MADE.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
UPON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER
TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF
THE VARIABLE ACCOUNT.
THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN DIFFERENT
AMOUNTS OR FREQUENCIES THAN SHOWN. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
A PERIOD OF TIME.
43
<PAGE>
NORTHWESTERN MUTUAL VARIABLE EXECUTIVE LIFE
Northwestern Mutual Variable Life Account
Northwestern Mutual Series Fund, Inc.
P R O S P E C T U S
NORTHWESTERN
MUTUAL LIFE-Registered Trademark-
PO Box 3095
Milwaukee WI 53201-3095
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
Reference is made to the indemnification provisions contained in Article
VII of the By-laws of the Depositor, The Northwestern Mutual Life Insurance
Company, incorporated herein by reference, and filed in electronic format as
EX-99.A.6 on April 26, 1996 with Post Effective Amendment No. 18 on Form S-6 to
the Registration Statement for Northwestern Mutual Variable Life Account, File
No. 2-89972. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
REPRESENTATION WITH RESPECT TO FEES AND CHARGES
The Northwestern Mutual Life Insurance Company hereby represents that the
fees and charges deducted under the contracts registered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
insurance company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet
The cross-reference sheet
The prospectus consisting of 46 pages
The undertaking to file reports
The undertaking with respect to indemnification
II-1
<PAGE>
The representation with respect to fees and charges
The signatures
Written consents of the following persons:
John M. Bremer, Esq. (to be filed by amendment)
Price Waterhouse LLP (to be filed by amendment)
William C. Koenig, F.S.A. (included in Exhibit C(6))
The following exhibits:
1. The following exhibits A(1) through A(10) correspond to those required by
Paragraph A of the instructions as to exhibits in Form N-8B-2:
Exhibit A(1) See Note 1.
Exhibit A(2) Not applicable.
Exhibit A(3) Distributing Contracts:
Exhibit A(3)(a) See Note 2.
Exhibit A(3)(b) Not applicable.
Exhibit A(3)(c) Schedules of sales
commissions. (to be filed
by amendment)
Exhibit A(4) Not applicable.
Exhibit A(5)(a) Variable Life Insurance Policy, RR.VEL, Flexible
Premium, with application, including Amendment to
Flexible Premium Variable Life (sex-neutral)
Exhibit A(5)(b) Variable Life Insurance Policy, RR.VEL, Flexible
Premium, with application, including Amendment to
Flexible Premium Variable Life (sex-distinct)
Exhibit A(6)(a) See Note 3.
Exhibit A(6)(b) See Note 3.
Exhibit A(6)(c) Amendments to By-laws.
Exhibit A(7) Not applicable.
Exhibit A(8) See Note 1.
Exhibit A(9) Not applicable.
Exhibit A(10) Application form is included in Exhibit A(5)(a) above.
Exhibit A(11) Form of notice of short-term cancellation right.
Exhibit A(12) Memorandum describing issuance, transfer and
redemption procedures pursuant to Rule 6e-
3(T)(b)(12)(iii) and method of computing cash
adjustment upon of right to exchange for fixed-benefit
insurance pursuant to Rule 6e-3(T)(b)(13)(v)(B).
II-2
<PAGE>
Exhibit 2 Opinion and consent of John M. Bremer as to the
legality of the securities being registered. (to be
filed by amendment)
Exhibit C(1) Consent of Price Waterhouse LLP. (to be filed by
amendment)
Exhibit C(6) Opinion and consent of William C. Koenig, F.S.A.
__________________
Note 1. The following exhibits, previously filed with the Registration
Statement on Form N-8B-2 for Northwestern Mutual Variable Life
Account, File No. 811-3989, dated March 12, 1984, are incorporated
herein by reference and are herein restated in electronic format:
Exhibit A(1) Resolution of Board of Trustees of The Northwestern
Mutual Life Insurance Company establishing the
Account.
Exhibit A(8) Agreement among the Account and its Co-Depositors.
Note 2. The following exhibit was filed in electronic format with the
Registration Statement on Form N-4 for NML Variable Annuity
Account A, File No. 333-22455, CIK 0000790162, dated February 27,
1997, and is incorporated herein by reference.
Exhibit A(3)(a) Distribution Agreement between NML Equity
Services, Inc. (now Northwestern Mutual
Investment Services, Inc.) and The Northwestern
Mutual Life Insurance Company.
Note 3. The following exhibits were filed in electronic format with Post-
Effective Amendment No. 18 on Form S-6 for Northwestern Mutual
Variable Life Account, File No. 2-89972, CIK 0000742277, dated
April 26, 1996, and are incorporated herein by reference:
Exhibit A(6)(a) Articles of Incorporation of The Northwestern Mutual
Life Insurance Company.
Exhibit A(6)(b) By-laws of The Northwestern Mutual Life Insurance
Company.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Northwestern Mutual Variable Life Account, has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Milwaukee, and State of Wisconsin, on the 30th day of
September, 1997.
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(Registrant)
By THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: /s/ JOHN M. BREMER By: /s/ JAMES D. ERICSON
-------------------------- --------------------------
John M. Bremer, Senior Vice James D. Ericson, President and
President, General Counsel Chief Executive Officer
and Secretary
By NORTHWESTERN MUTUAL INVESTMENT
SERVICES, INC.
(Depositor)
Attest: /s/ MERRILL C. LUNDBERG By: /s/ RICHARD L. HALL
-------------------------- --------------------------
Merrill C. Lundberg, Secretary Richard L. Hall,
President and CEO
Pursuant to the requirements of the Securities Act of 1933, the depositors
have duly caused this Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, and their seals to be hereunto affixed,
all in the City of Milwaukee, and State of Wisconsin, on the 30th day of
September, 1997.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY (Depositor)
Attest: /s/ JOHN M. BREMER By: /s/ JAMES D. ERICSON
-------------------------- --------------------------
John M. Bremer, Senior Vice James D. Ericson, President and
President, General Counsel Chief Executive Officer
and Secretary
NORTHWESTERN MUTUAL INVESTMENT
SERVICES, INC. (Depositor)
Attest: /s/ MERRILL C. LUNDBERG By: /s/ RICHARD L. HALL
-------------------------- --------------------------
Merrill C. Lundberg, Secretary Richard L. Hall,
President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities with the depositor and on the dates indicated:
Signature Title
- --------- -----
/s/ JAMES D. ERICSON Trustee, President and Dated Sep-
- -------------------------- Principal Executive and tember 30,
James D. Ericson Financial Officer 1997
II-4
<PAGE>
/s/ GARY E. LONG Vice President, Controller
- ------------------------ and Principal Accounting
Gary E. Long Officer
/s/ HAROLD B. SMITH* Trustee
- ------------------------
Harold B. Smith
/s/ J. THOMAS LEWIS* Trustee
- ------------------------
J. Thomas Lewis
/s/ PATRICIA ALBJERG GRAHAM* Trustee
- ------------------------
Patricia Albjerg Graham
/s/ DONALD J. SCHUENKE* Trustee
- ------------------------
Donald J. Schuenke
/s/ R. QUINTUS ANDERSON* Trustee
- ------------------------
R. Quintus Anderson
/s/ STEPHEN F. KELLER* Trustee Dated
- ------------------------ September 30, 1997
Stephen F. Keller
/s/ PIERRE S. du PONT* Trustee
- ------------------------
Pierre S. du Pont
/s/ J. E. GALLEGOS* Trustee
- ------------------------
J. E. Gallegos
/s/ KATHRYN D. WRISTON* Trustee
- ------------------------
Kathryn D. Wriston
/s/ BARRY L. WILLIAMS* Trustee
- ------------------------
Barry L. Williams
/s/ GORDON T. BEAHAM III* Trustee
- ------------------------
Gordon T. Beaham III
/s/ DANIEL F. McKEITHAN, JR.* Trustee
- ------------------------
Daniel F. McKeithan, Jr.
/s/ ROBERT E. CARLSON* Trustee
- ------------------------
Robert E. Carlson
II-5
<PAGE>
/s/ EDWARD E. BARR* Trustee
- ------------------------
Edward E. Barr
/s/ ROBERT C. BUCHANAN* Trustee
- ------------------------
Robert C. Buchanan
/s/ SHERWOOD H. SMITH, JR.* Trustee
- ------------------------
Sherwood H. Smith, Jr.
/s/ H. MASON SIZEMORE, JR.* Trustee
- ------------------------
H. Mason Sizemore, Jr.
/s/ JOHN J. STOLLENWERK* Trustee
- ------------------------
John J. Stollenwerk
/s/ GEORGE A. DICKERMAN* Trustee
- ------------------------
George A. Dickerman
/s/ GUY A. OSBORN* Trustee Dated
- ------------------------ September 30, 1997
Guy A. Osborn
/s/ JOHN E. STEURI* Trustee
- ------------------------
John E. Steuri
/s/ STEPHEN N. GRAFF* Trustee
- ------------------------
Stephen N. Graff
/s/ BARBARA A. KING* Trustee
- ------------------------
Barbara A. King
/s/ TIMOTHY D. PROCTOR* Trustee
- ------------------------
Timothy D. Proctor
*By: /s/ JAMES D. ERICSON
-----------------------------------
James D. Ericson, Attorney in fact,
pursuant to the Power of Attorney
attached hereto
II-6
<PAGE>
POWER OF ATTORNEY
The undersigned Trustees of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
hereby constitute and appoint James D. Ericson and Robert E. Carlson, or either
of them, their true and lawful attorneys and agents to sign the names of the
undersigned Trustees to (1) the registration statement or statements to be filed
under the Securities Act of 1933 and to any instrument or document filed as part
thereof or in connection therewith or in any way related thereto, and any and
all amendments thereto in connection with variable contracts issued or sold by
The Northwestern Mutual Life Insurance Company or any separate account credited
therein and (2) the Form 10-K Annual Report or Reports of The Northwestern
Mutual Life Insurance Company and/or its separate accounts for its or their
fiscal year ended December 31, 1997 to be filed under the Securities Exchange
Act of 1934 and to any instrument or document filed as part thereof or in
connection therewith or in any way related thereto, and any and all amendments
thereto. "Variable contracts" as used herein means any contracts providing for
benefits or values which may vary according to the investment experience of any
separate account maintained by The Northwestern Mutual Life Insurance Company,
including variable annuity contracts and variable life insurance policies. Each
of the undersigned hereby ratifies and confirms all that said attorneys and
agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents
this 23rd day of July, 1997.
/s/ R. QUINTUS ANDERSON Trustee
-------------------------------
R. Quintus Anderson
/s/ EDWARD E. BARR Trustee
-------------------------------
Edward E. Barr
/s/ GORDON T. BEAHAM III Trustee
-------------------------------
Gordon T. Beaham III
/s/ ROBERT C. BUCHANAN Trustee
-------------------------------
Robert C. Buchanan
/s/ ROBERT E. CARLSON Trustee
-------------------------------
Robert E. Carlson
/s/ GEORGE A. DICKERMAN Trustee
-------------------------------
George A. Dickerman
II-7
<PAGE>
/s/ PIERRE S. du PONT Trustee
-------------------------------
Pierre S. du Pont
/s/ JAMES D. ERICSON Trustee
-------------------------------
James D. Ericson
/s/ J. E. GALLEGOS Trustee
-------------------------------
J. E. Gallegos
/s/ STEPHEN N. GRAFF Trustee
-------------------------------
Stephen N. Graff
/s/ PATRICIA ALBJERG GRAHAM Trustee
-------------------------------
Patricia Albjerg Graham
/s/ STEPHEN F. KELLER Trustee
-------------------------------
Stephen F. Keller
/s/ BARBARA A. KING Trustee
-------------------------------
Barbara A. King
/s/ J. THOMAS LEWIS Trustee
-------------------------------
J. Thomas Lewis
/s/ DANIEL F. McKEITHAN, JR. Trustee
-------------------------------
Daniel F. McKeithan, Jr.
/s/ GUY A. OSBORN Trustee
-------------------------------
Guy A. Osborn
II-8
<PAGE>
/s/ TIMOTHY D. PROCTOR Trustee
-------------------------------
Timothy D. Proctor
/s/ DONALD J. SCHUENKE Trustee
-------------------------------
Donald J. Schuenke
/s/ H. MASON SIZEMORE, JR. Trustee
-------------------------------
H. Mason Sizemore, Jr.
/s/ HAROLD B. SMITH Trustee
-------------------------------
Harold B. Smith
/s/ SHERWOOD H. SMITH, JR. Trustee
-------------------------------
Sherwood H. Smith, Jr.
/s/ JOHN E. STEURI Trustee
-------------------------------
John E. Steuri
/s/ JOHN J. STOLLENWERK Trustee
-------------------------------
John J. Stollenwerk
/s/ BARRY L. WILLIAMS Trustee
-------------------------------
Barry L. Williams
/s/ KATHRYN D. WRISTON Trustee
-------------------------------
Kathryn D. Wriston
II-9
<PAGE>
EXHIBIT INDEX
EXHIBITS FILED WITH FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NORTHWESTERN MUTUAL VARIABLE EXECUTIVE LIFE
Exhibit Number Exhibit Name
- -------------- ------------
Exhibit A(1) See Note 1.
Exhibit A(2) Not applicable.
Exhibit A(3) Distributing Contracts:
Exhibit A(3)(a) See Note 2.
Exhibit A(3)(b) Not applicable.
Exhibit A(3)(c)Schedules of sales commissions.
(to be filed by amendment)
Exhibit A(4) Not applicable.
Exhibit A(5)(a) Variable Life Insurance Policy, RR.VEL, Flexible
Premium, with application, including Amendment to
Flexible Premium Variable Life (sex-neutral)
Exhibit A(5)(b) Variable Life Insurance Policy, RR.VEL, Flexible
Premium, with application, including Amendment to
Flexible Premium Variable Life (sex-distinct)
Exhibit A(6)(a) See Note 3.
Exhibit A(6)(b) See Note 3.
Exhibit A(6)(c) Amendments to By-laws.
Exhibit A(7) Not applicable.
Exhibit A(8) See Note 1.
Exhibit A(9) Not applicable.
Exhibit A(10) Application form is included in Exhibit A(5)(a) above.
Exhibit A(11) Form of notice of short-term cancellation right.
Exhibit A(12) Memorandum describing issuance, transfer and redemption
procedures pursuant to Rule 6e-3(T)(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).
Exhibit 2 Opinion and consent of John M. Bremer as to the
<PAGE>
legality of the securities being registered. (to be
filed by amendment)
Exhibit C(1) Consent of Price Waterhouse LLP. (to be filed by
amendment)
Exhibit C(6) Opinion and consent of William C. Koenig, F.S.A.
- --------------------
Note 1. The following exhibits, previously filed with the Registration
Statement on Form N-8B-2 for Northwestern Mutual Variable Life
Account, File No. 811-3989, dated March 12, 1984, are incorporated
herein by reference and are herein restated in electronic format:
Exhibit A(1) Resolution of Board of Trustees of The Northwestern Mutual
Life Insurance Company establishing the Account.
Exhibit A(8) Agreement among the Account and its Co-Depositors.
Note 2. The following exhibit was filed in electronic format with the
Registration Statement on Form N-4 for NML Variable Annuity Account A,
File No. 333-22455, CIK 0000790162, dated February 27, 1997, and is
incorporated herein by reference.
Exhibit A(3)(a) Distribution Agreement between NML Equity Services,
Inc. (now Northwestern Mutual Investment Services,
Inc.) and The Northwestern Mutual Life Insurance
Company.
Note 3. The following exhibits were filed in electronic format with
Post-Effective Amendment No. 18 on Form S-6 for Northwestern Mutual
Variable Life Account, File No. 2-89972, CIK 0000742277, dated April
26, 1996, and are incorporated herein by reference:
Exhibit A(6)(a) Articles of Incorporation of The Northwestern Mutual
Life Insurance Company.
Exhibit A(6)(b) By-laws of The Northwestern Mutual Life Insurance
Company.
<PAGE>
Exhibit A(1)
RESOLUTIONS FOR VARIABLE LIFE INSURANCE
November 23, 1983
BE IT RESOLVED by the Board of Trustees of The Northwestern Mutual Life
Insurance Company (the "Company") that:
1. The Company shall and does hereby establish a separate account in
accordance with the provisions of Sections 611.24 and 611.25 of the
Wisconsin Statutes, to be designated initially as "Northwestern Mutual
Variable Life Account" (hereinafter referred to as the "Account"), to
facilitate the issuance of variable life insurance policies to be
issued in connection with the Account (the "Policies").
2. The Company shall allocate to the Account (i) amounts required to be
allocated to a separate account pursuant to the provisions of the
Policies and (ii) such additional assets of the Company as the
officers of the Company may deem appropriate, subject to any
applicable limitations of the Wisconsin insurance laws. The income,
if any, and gains or losses, realized or unrealized, of the Account
shall be credited to or charged against the amounts so allocated to
the Account in accordance with the terms and conditions of the
Policies without regard to the other income, gains or losses of the
Company, and the assets of the Account held in connection with the
Policies shall not be chargeable with any liabilities arising out of
any other separate account or any other business of the Company.
3. The amounts allocated to the Account shall be invested in shares of an
investment company (which may be named "Northwestern Mutual Variable
Life Series Fund, Inc.", hereinafter referred to as the "Fund") which
shall be organized pursuant to the authority contained in paragraph 5
of these resolutions at the net asset value of such shares, except
that other securities may be substituted for the shares of the Fund as
provided in the Policies, and the Company shall make appropriate
arrangements with the Fund for the purchase by the Account of shares
of the Fund at the net asset value thereof.
4. The Account shall be registered as a unit investment trust under the
Investment Company Act of 1940; the Policies shall be registered for
sale under the Securities Act of 1933; and the officers of the Company
are hereby authorized and directed to take all action necessary or
desirable to comply with the Investment Company Act of 1940 and the
Securities Act of 1933 and other applicable state and federal laws in
connection with offering the Policies for sale and the operation of
the Account, including, without limitation, the filing of registration
statements and amendments and exhibits thereto, and the securing of
such exemptions from such state and federal laws as they deem
advisable. The Secretary of the Company is hereby appointed agent of
the Company to receive any and all notices and communications from the
Securities and Exchange Commission relating to such registration
statements and amendments and applications for such exemptions.
5. The officers of the Company are authorized and directed to take such
action as may be necessary or desirable to organize and establish the
Fund as a corporation under the laws of the state of Maryland, or such
other state as such officers may determine upon the advice of counsel;
to cause the Fund to meet the requirements of the Investment Company
Act of 1940 and to operate as a diversified open-end management
company of the series type and as a
<PAGE>
regulated investment company as that term is defined in the Internal
Revenue Code of 1954; and to designate officers or Trustees of the
Company as well as other persons who are unaffiliated with the Company
to serve as directors of the Fund and to vote the shares of stock
owned by the Company for such purposes.
6. The officers of the Company are authorized and directed, subject to
such directions as may be specified from time to time by the Insurance
Products and Marketing Committee, to execute and deliver such
instruments and to do such acts and things as may be necessary or
desirable to carry out the purpose and intent of the foregoing
resolutions in the form or substantially the form as adopted
including, without limitation, determination of the terms and
conditions of the Policies authorized by these resolutions;
determination of the state or states in which appropriate action shall
be taken to obtain the requisite qualification, registration and/or
authorization for the sale of the Policies as such officers may deem
advisable; performance on behalf of the Company of any and all such
acts as they may deem necessary or advisable to comply with applicable
securities, insurance and other laws of any such states and in
connection therewith to execute and file all requisite documents,
including, but not limited to, contracts, applications, reports,
surety bonds, and irrevocable consents and appointments of attorneys
for service of process; and execution of such contracts on behalf of
the Company as may be necessary or desirable to efficiently engage in
the sale and distribution of the Policies, including, without
limitation, such contracts for custodial, safekeeping, transfer,
accounting, legal or disbursing services as may be necessary or
desirable.
7. The authority of the Insurance Products and Marketing Committee to
revise, amend or repeal the foregoing resolutions or any portion
thereof, including, without limitation, authority to determine the
portfolio series to be operated in connection with the Fund and to
cause additional portfolio series to be created from time to time, is
hereby confirmed.
<PAGE>
Exhibit A(5)(a)
The Northwestern Mutual Life Insurance Company agrees to pay the benefits
provided in this policy,
subject to its terms and conditions.
Signed at Milwaukee, Wisconsin on the Date of Issue.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ELIGIBLE FOR ANNUAL DIVIDENDS
Insurance payable at death of Insured.
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT MAY INCREASE OR DECREASE DAILY DEPENDING ON INVESTMENT
RESULTS. THERE IS NO GUARANTEED MINIMUM DEATH BENEFIT.
THE CASH VALUE UNDER THIS POLICY MAY INCREASE OR DECREASE DAILY DEPENDING ON
INVESTMENT RESULTS. THERE IS NO GUARANTEED MINIMUM CASH VALUE.
RIGHT TO RETURN POLICY. Please read this policy carefully. The policy may be
returned by the Owner for any reason within (1) ten days after it was received
or (2) forty-five days after the application was signed, whichever is later.
The policy may be returned to your agent or to the Home Office of the Company at
720 East Wisconsin Avenue, Milwaukee, WI 53202. If returned, the policy will
be considered void from the beginning. The Company will refund the sum of (a)
the difference between any premium paid and the amount allocated to the Separate
Account plus (b) the value of the policy in the Separate Account on the date the
returned policy is received.
RR.VEL.(0398)
INSURED John J. Doe AGE AND SEX 35 Male-SN
POLICY DATE March 1, 1998 POLICY NUMBER 10 000 000
PLAN Flexible Premium SPECIFIED AMOUNT $1,000,000
Variable Life
RR.VEL.(0398)
<PAGE>
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE OWNER AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
READ YOUR POLICY CAREFULLY.
GUIDE TO POLICY PROVISIONS
BENEFITS AND PREMIUMS
SECTION 1. THE CONTRACT
Life Insurance Benefit payable on death of Insured. Incontestability.
Suicide. Definition of dates. Insurability requirements. Reports to
Owner.
SECTION 2. OWNERSHIP
Rights of the Owner. Assignment as collateral.
SECTION 3. DEATH BENEFIT
Description of death benefit options. Changes to death benefits.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
Payment of premiums. Calculation and allocation of net premiums. Transfer
of assets. Premium limitations. Grace period of 61 days to pay premium.
How to reinstate the policy.
SECTION 5. DIVIDENDS
Annual dividends. Use of dividends. Dividend at death.
SECTION 6. THE SEPARATE ACCOUNT
The Separate Account and the Divisions. Valuation of assets.
SECTION 7. DETERMINATION OF VALUES
Policy Value. Monthly Policy Charge.
SECTION 8. CASH VALUE AND SURRENDER
Cash value. Surrender. Deferral of payments.
SECTION 9. LOANS AND WITHDRAWALS
Policy loans. Interest on loans. Withdrawals.
SECTION 10. BENEFICIARIES
Naming and change of beneficiaries. Marital deduction provision for spouse
of Insured. Succession in interest of beneficiaries.
APPLICATION
RR.VEL.(0398)
<PAGE>
BENEFITS AND PREMIUMS
DATE OF ISSUE - MARCH 1, 1998
Plan: Flexible Premium Variable Life
Specified Amount: $1,000,000
Death Benefit Option: Specified Amount (Option A)
Definition of Life Insurance Test: Guideline Premium/Cash Value Corridor Test
The minimum premium (Section 4.4) is $25.00.
The maximum premium under the Guideline Premium/Cash Value Corridor Test:
Guideline Single Premium = $ 169,430.00
Guideline Annual Level Premium = $ 13,860.00
The minimum withdrawal amount (Section 9.5) is $250.00.
This policy is issued in a select premium class.
DIRECT BENEFICIARY XYZ Corporation
OWNER XYZ Corporation
INSURED John J. Doe AGE AND SEX 35 Male-SN
POLICY DATE March 1, 1998 POLICY NUMBER 10 000 000
PLAN Flexible Premium SPECIFIED AMOUNT $1,000,000
Variable Life
RP.VEL.(0398) Page 3
POLICY NUMBER 10 000 000
<PAGE>
SCHEDULE OF MAXIMUM CHARGES
The Premium Expense Charge (Section 4.2) is the sum of the following:
1. Sales Load:
First Policy Policy Years 2+
Premium Paid Year --
------------ ----
Up to $ 39,090.00 15% 3%
In Excess of $ 39,090.00 3% 3%
2. Federal Deferred Acquisition Cost Charge l.25% of premium
3. Premium Tax Charge 2.35% of premium
The Premium Expense Charge for Deferred
Acquisition Cost and Premium Tax may
change to reflect changes in tax law.
Maximum Monthly Policy Charges:
The maximum Monthly Administrative Charge (Section 7.3) is $15 in the
first policy year and $10 thereafter.
The maximum Monthly Mortality and Expense Risk Charge (Section 7.4) is
.075% of the amount invested for this policy in the Separate Account.
Maximum Transaction Charges:
The maximum charge for death benefit option changes (Section 3.2) is
$250.00 per change.
The maximum charge for Specified Amount changes (Section 3.3) is
$25.00 per change for more than one change during any policy year.
The maximum transfer fee (Section 4.3) is $25.00 per transfer for more
than 12 transfers during any policy year.
The maximum withdrawal charge (Section 9.5) is $25.00 per withdrawal.
RP.VEL.(0398) Page 4
POLICY NUMBER 10 000 000
<PAGE>
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
MONTHLY RATES PER $1.00
(Section 7.5)
<TABLE>
<CAPTION>
Attained Age Monthly Rate Attained Age Monthly Rate Attained Age Monthly Rate
<S> <C> <C> <C> <C> <C>
35 .00017 60 .00123 85 .01178
36 .00018 61 .00133 86 .01285
37 .00019 62 .00146 87 .01396
38 .00021 63 .00160 88 .01510
39 .00022 64 .00175 89 .01629
40 .00024 65 .00193 90 .01754
41 .00026 66 .00211 91 .01888
42 .00029 67 .00230 92 .02034
43 .00031 68 .00250 93 .02200
44 .00033 69 .00272 94 .02411
45 .00036 70 .00297 95 .02707
46 .00039 71 .00325 96 .03175
47 .00042 72 .00357 97 .03981
48 .00045 73 .00394 98 .05478
49 .00049 74 .00436 99 .08333
50 .00053 75 .00482
51 .00058 76 .00530
52 .00063 77 .00581
53 .00068 78 .00633
54 .00075 79 .00688
55 .00081 80 .00749
56 .00089 81 .00816
57 .00096 82 .00893
58 .00104 83 .00980
59 .00113 84 .01076
</TABLE>
RP.VEL.(0398) Page 5
POLICY NUMBER 10 000 000
<PAGE>
GUIDELINE PREMIUM/CASH VALUE CORRIDOR PERCENTAGES
The Corridor Percentages are used to determine the Minimum Death Benefit under
the Guideline Premium/Cash Value Corridor Test (Section 3.1).
<TABLE>
<CAPTION>
Attained Age Attained Age Attained Age
Corridor % Corridor % Corridor %
<S> <C> <C> <C> <C> <C>
35 250 60 130 85 105
36 250 61 128 86 105
37 250 62 126 87 105
38 250 63 124 88 105
39 250 64 122 89 105
40 250 65 120 90 105
41 243 66 119 91 104
42 236 67 118 92 103
43 229 68 117 93 102
44 222 69 116 94 101
45 215 70 115 95+ 100
46 209 71 113
47 203 72 111
48 197 73 109
49 191 74 107
50 185 75 105
51 178 76 105
52 171 77 105
53 164 78 105
54 157 79 105
55 150 80 105
56 146 81 105
57 142 82 105
58 138 83 105
59 134 84 105
</TABLE>
RP.VEL.(0398) Page 6
POLICY NUMBER 10 000 000
<PAGE>
SEPARATE ACCOUNT DIVISIONS
(Section 6)
Money Market Division
Select Bond Division
High Yield Bond Division
Balanced Division
Index 500 Stock Division
Growth & Income Stock Division
Growth Stock Division
International Equity Division
Aggressive Growth Stock Division
The Initial Allocation Date (Section 4.3) is April 15, 1998.
RP.VEL.(0398) Page 7
<PAGE>
SECTION 1. THE CONTRACT
1.1 LIFE INSURANCE BENEFIT
The Northwestern Mutual Life Insurance Company will pay a benefit on the
death of the Insured while this policy is in force. Subject to the terms and
conditions of the policy:
- payment of the death proceeds will be made after proof of the death of
the Insured is received at the Home Office; and
- payment will be made to the beneficiary or other payee under
Section 10.
The amount of the death proceeds will be:
- the death benefit (Section 3.1); less
- the amount of any policy debt (Section 9.3); less
- any Monthly Policy Charges due and unpaid if the Insured dies during
the grace period (Section 4.5).
These amounts will be determined as of the date of death.
The Company will pay interest on the death proceeds from the date of death
until the proceeds are withdrawn in cash. Interest will be at a rate of not less
than 2%, or at any higher rate required by state law.
1.2 ENTIRE CONTRACT; CHANGES
This policy, including the attached application and any amendments,
endorsements or riders, is the entire contract. Statements in the application
are representations and not warranties. A change in the policy is valid only if
it is approved in writing by an officer of the Company. The Company may require
that the policy be sent to it for endorsement to show a change. No agent has
the authority to change the policy or to waive any of its terms.
RP.VEL.(0398)
8
<PAGE>
1.3 INCONTESTABILITY
The Company will not contest this policy after the policy has been in
force, during the lifetime of the Insured, for two years from the Date of Issue.
An increase in the amount of insurance after the Date of Issue, which occurred
upon the request of the Owner and was subject to the Company's insurability
requirements, will be incontestable after the increase has been in force, during
the lifetime of the Insured, for two years from the date of issuance of the
increase. In issuing the insurance, the Company has relied on the application.
While the insurance is contestable, the Company, on the basis of a misstatement
in the application, may rescind the insurance or deny a claim.
1.4 SUICIDE
If the Insured dies by suicide within one year from the Date of Issue, the
amount payable by the Company will be limited to the premiums paid, less the
amount of any policy debt and withdrawals. If the Insured dies by suicide within
one year from the date of issuance of an increase in the amount of insurance,
which occurred upon the request of the Owner and was subject to the Company's
insurability requirements, the amount payable with respect to such increase will
be limited to the Monthly Policy Charges attributable to the increase.
1.5 POLICY DATE AND DATE OF ISSUE
Monthly processing dates and policy months, years and anniversaries are
computed from the Policy Date. The contestable and suicide periods begin with
the Date of Issue. These dates are shown on page 3.
1.6 MISSTATEMENT OF AGE
If the age of the Insured has been misstated, the policy will be modified
by recalculating all Monthly Policy Charges based on the correct age.
1.7 PAYMENTS BY THE COMPANY
All payments by the Company under this policy are payable at its Home
Office.
1.8 INSURABILITY REQUIREMENTS
To make some changes under this policy, the Insured must meet the Company's
insurability requirements. These requirements are as follows:
- evidence of insurability must be given that is satisfactory to the
Company; and
- under the Company's underwriting standards, the Insured is in an
underwriting classification that is the same as, or is better than,
the one for this policy.
SECTION 2. OWNERSHIP
2.1 THE OWNER
The Owner is named on page 3. The Owner, the Owner's successor or the
Owner's transferee may exercise policy rights without the consent of any
beneficiary, except to the extent the Owner's rights are restricted by a
designation of an irrevocable beneficiary.
2.2 TRANSFER OF OWNERSHIP
The Owner may transfer the ownership of this policy. Written proof of
transfer satisfactory to the Company must be received at its Home Office. The
transfer will then take effect as of the date that it was signed. The Company
may require that the policy be sent to it for endorsement to show the transfer.
2.3 COLLATERAL ASSIGNMENT
The Owner may assign this policy as collateral security. The Company is
not responsible for the validity or effect of the collateral assignment. The
Company will not be responsible to an assignee for any payment or other action
taken by the Company before receipt of the assignment in writing at its Home
Office.
The interest of any beneficiary will be subject to any collateral
assignment made either before or after the beneficiary is named.
The collateral assignee is not an Owner. The collateral assignment is not
a transfer of ownership. Ownership can be transferred only by complying with
Section 2.2.
RR.VEL.(0398)
9
<PAGE>
SECTION 3. DEATH BENEFIT
3.1 DEATH BENEFIT OPTIONS
This policy provides for three death benefit options. The option in effect
is shown on page 3.
SPECIFIED AMOUNT (OPTION A) - The death benefit before the policy anniversary
nearest the Insured's 100th birthday is the greater of:
- the Specified Amount; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS POLICY VALUE (OPTION B) - The death benefit before the
policy anniversary nearest the Insured's 100th birthday is the greater of:
- the Specified Amount plus the Policy Value; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS PREMIUMS PAID (OPTION C) - The death benefit before the
policy anniversary nearest the Insured's 100th birthday is the greater of:
- the Specified Amount plus the sum of the premiums paid; or
- the Minimum Death Benefit.
MINIMUM DEATH BENEFIT. The Minimum Death Benefit is the amount required by the
Internal Revenue Code (IRC), as amended, to maintain this policy as life
insurance. The test in effect for determining compliance with the IRC definition
of life insurance is shown on page 3 and will be either:
(1) the Guideline Premium/Cash Value Corridor Test: the Minimum Death Benefit
equals the Policy Value multiplied by the corridor percentage shown on page
6 at the Insured's attained age; or
(2) the Cash Value Accumulation Test: the Minimum Death Benefit equals the
Policy Value divided by the Net Single Premium shown on page 6 at the
Insured's attained age.
AGE 100 AND LATER. The death benefit on and after the policy anniversary
nearest the Insured's 100th birthday will be equal to the Policy Value
regardless of the death benefit option in effect.
3.2 DEATH BENEFIT OPTION CHANGES
Subject to approval by the Company, the Owner may change the death benefit
option upon written request. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for a death benefit option change. This
charge will be deducted from the Policy Value and will not exceed the amount
shown on page 4. A change will not be allowed if the Specified Amount following
a change would be less than the minimum amount the Company would issue at the
time of change.
CHANGES TO OPTION A. The death benefit option may be changed to Option A at
any time. On the effective date of change, the Specified Amount will be changed
as follows:
(1) If the change is from Option B to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the
Policy Value on the effective date of the change.
(2) If the change is from Option C to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the sum
of the premiums paid as of the effective date of the change.
CHANGES TO OPTION B OR OPTION C. The death benefit option may be changed to
Option B or Option C at any time before the policy anniversary nearest the
Insured's 75th birthday. All changes to Option B or Option C will be subject to
the Company's insurability requirements (Section 1.8). On the effective date of
change, the Specified Amount will be changed as follows:
(1) If the change is from Option A to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
Policy Value on the effective date of the change.
(2) If the change is from Option A to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
sum of the premiums paid as of the effective date of the change.
(3) If the change is from Option B to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a) the
Policy Value on the effective date of the change, minus (b) the sum of the
premiums paid as of the effective date of the change.
(4) If the change is from Option C to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a)
the sum of the premiums paid as of the effective date of the change, minus
(b) the Policy Value on the effective date of the change.
RR.VEL.(0398)
10
<PAGE>
3.3 SPECIFIED AMOUNT CHANGES
Subject to approval by the Company, the Owner may change the Specified
Amount upon written request. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for more than one Specified Amount change
in a policy year. This charge will be deducted from the Policy Value and will
not exceed the amount shown on page 4.
INCREASES. An increase will be made only if, at the time the increase is
applied for:
- the insurance in force, as increased, will be within the Company's
issue limits;
- the Company's insurability requirements (Section 1.8) are met; and
- the increase request is received prior to the policy anniversary
nearest the Insured's 75th birthday.
DECREASES. A decrease will not be allowed if the Specified Amount following the
decrease would be less than the minimum amount the Company would issue at the
time of change.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
4.1 PREMIUM PAYMENT
All premiums after the first are payable at the Home Office or to an
authorized agent. Premiums may be paid to the Company at any time and in any
amount subject to the limitations described in Section 4.4. A receipt signed by
an officer of the Company will be furnished on request.
4.2 NET PREMIUM
The net premium is the amount of each premium paid that is available for
allocation to the Divisions of the Separate Account. The amount of the net
premium will be:
- the premium paid; less
- the Premium Expense Charge.
The Premium Expense Charge will consist of the amounts shown on page 4.
4.3 ALLOCATION OF NET PREMIUMS AND SUBSEQUENT TRANSFERS
The initial net premium and any additional net premiums received prior to
the Initial Allocation Date will be allocated to the Money Market Division on
the date the premiums are received in the Home Office. The Initial Allocation
Date is shown on page 7.
On the Initial Allocation Date, amounts in the Money Market Division will
be allocated in accordance with the application. This allocation will remain in
effect for later net premiums unless changed by the Owner by written request.
Any change in allocation will be in effect for net premiums credited to the
policy following the receipt of the written request at the Home Office.
Allocations must be in whole percentages.
On or after the Initial Allocation Date, the Owner may transfer the amounts
invested in any of the Divisions. The transfer will take effect on the date a
written request is received in the Home Office. The Company reserves the right
to charge for more than twelve transfers in a policy year. This charge will be
deducted from the Policy Value and will not exceed the amount shown on page 4.
4.4 PREMIUM LIMITATIONS
Premiums may be paid to the Company at any time before the policy
anniversary that is nearest the Insured's 95th birthday. The minimum premium
the Company will accept is shown on page 3.
The Company will not accept any premium that causes this policy not to
qualify as a life insurance policy under the Internal Revenue Code, as amended.
Further, the Company reserves the right to make distributions from this policy
as necessary to continue to qualify the policy as life insurance under the
Internal Revenue Code.
A premium payment that would increase the policy's death benefit more than
it increases the Policy Value will be accepted only if:
- the insurance in force, as increased, will be within the Company's
issue limits;
- the Company's insurability requirements (Section 1.8) are met; and
- the premium payment is received prior to the policy anniversary
nearest the Insured's 75th birthday.
4.5 GRACE PERIOD
If the Policy Value less the amount of any policy debt on a monthly
processing date is not sufficient to cover the current Monthly Policy Charge, a
grace period of 61 days will be allowed for the payment of sufficient premium to
keep the policy in force. The minimum premium that must be paid is three times
the Monthly Policy Charge due when the insufficiency occurred.
The grace period will begin on the date the Company sends written notice of
the insufficiency. The grace period will end 61 days after the notice is sent.
The notice will state the date the grace period ends and the amount of premium
required to keep the policy in force. Upon receipt of payment, the Company will
allocate the net premium, less any Monthly Policy Charges due and unpaid, to the
Divisions of the Separate Account according to the allocation of net premiums
currently in effect.
The policy will remain in force during the grace period. If sufficient
premium is not paid by the end of the grace period, the policy will terminate
with no value.
If the Insured dies during the grace period, any Monthly Policy Charges due
and unpaid will be deducted from the death proceeds of the policy.
RR.VEL.(0398)
11
<PAGE>
4.6 REINSTATEMENT
If it has terminated under Section 4.5, the policy may be reinstated not
more than one year after the end of the grace period, subject to approval by the
Company. To reinstate the policy the Company's insurability requirements
(Section 1.8) must be met and sufficient premium to cover the following must be
paid:
- all Monthly Policy Charges that were due and unpaid before the end of
the grace period; plus
- three times the Monthly Policy Charge due on the effective date of
reinstatement.
On the date the policy is reinstated, the Policy Value will be equal to the
net premium less the sum of all Monthly Policy Charges that were due and unpaid
before the end of the grace period and the Monthly Policy Charge on the
effective date of reinstatement. The Company will allocate the Policy Value to
the Divisions of the Separate Account according to the allocation of net
premiums currently in effect. Any policy debt on the date of termination will
also be reinstated and added to the Policy Value.
If the Company approves the application for reinstatement, the effective
date of the reinstated policy will be the first monthly processing date
following receipt at the Home Office of the reinstatement application.
This policy may not be reinstated if the policy was surrendered.
SECTION 5. DIVIDENDS
5.1 ANNUAL DIVIDENDS
This policy will share in the divisible surplus of the Company to the
extent it contributes to this surplus. This surplus is determined each year.
This policy's share will be credited as a dividend on the policy anniversary.
Since this policy is not expected to contribute to divisible surplus, it is
not expected that any dividends will be paid.
5.2 USE OF DIVIDENDS
Annual dividends may be paid in cash or used to increase the Policy Value.
Dividends used to increase the Policy Value will be allocated to the Divisions
of the Separate Account according to the allocation of net premiums currently in
effect. If no direction is given for the use of dividends, they will be used
to increase the Policy Value.
5.3 DIVIDEND AT DEATH
If a dividend is payable for the period from the beginning of the policy
year to the date of the Insured's death, the dividend is payable as part of the
policy proceeds.
RR.VEL.(0398)
12
<PAGE>
SECTION 6. THE SEPARATE ACCOUNT
6.1 DESCRIPTION
Northwestern Mutual Variable Life Account (the Separate Account) is
registered as a unit investment trust under the Investment Company Act of 1940.
The Separate Account has several Divisions, as shown on page 7. Assets of the
Separate Account are invested in shares of Northwestern Mutual Series Fund, Inc.
(the Fund). The Fund is registered under the Investment Company Act of 1940 as
an open-end, diversified investment company. The Fund has one Portfolio for
each Division. Assets of each Division of the Separate Account are invested in
shares of the corresponding Portfolio of the Fund. Shares of the Fund are
purchased for the Separate Account at their net asset value. The Company may
make available additional Divisions and Portfolios.
Assets will be allocated to the Separate Account to support the operation
of this and other variable life insurance policies. Assets may also be
allocated for other purposes, but not to support the operation of any contracts
or policies other than variable life insurance. Income and realized and
unrealized gains and losses from assets in the Separate Account are credited to
or charged against it without regard to other income, gains or losses of the
Company.
The assets of the Separate Account will be valued on each valuation day.
They are the property of the Company. The portion of these assets equal to
policy reserves and liabilities will not be charged with liabilities arising out
of any other business the Company may conduct. The Company reserves the right
to transfer assets of the Separate Account in excess of these reserves and
liabilities to its General Account.
The Owner may exchange this policy for a fixed benefit life insurance
policy if the Fund changes its investment advisor or if a Portfolio has a
material change in its investment objectives or restrictions. The Company will
notify the Owner if there is any such change. The Owner may exchange this
policy within 60 days after the notice or the effective date of the change,
whichever is later.
If, in the judgment of the Company, a Portfolio no longer suits the
purposes of this policy due to a change in its investment objectives or
restrictions, the Company may substitute shares of another Portfolio of the Fund
or shares of another mutual fund. Any such substitution will be subject to any
required approval of the Securities and Exchange Commission (SEC), the Wisconsin
Commissioner of Insurance or other regulatory authority.
The Company also may, to the extent permitted by applicable laws and
regulations (including any order of the SEC), make changes as follows:
- the Separate Account or a Division may be operated as a management
company under the Investment Company Act of 1940, or in any other form
permitted by law, if deemed by the Company to be in the best interest
of the policyowners.
- the Separate Account may be deregistered under the Investment Company
Act of 1940 in the event registration is no longer required.
- the provisions of this and other policies may be modified to comply
with any other applicable federal or state laws.
In the event of a substitution or change, the Company may make appropriate
endorsement of this and other policies having an interest in the Separate
Account and take other actions as may be necessary to effect the substitution or
change.
6.2 VALUATION DAY AND VALUATION PERIOD
A valuation day is any day on which the assets of the Separate Account are
valued. A valuation period is a valuation day and any immediately preceding
days which are not valuation days.
Assets are valued as the close of trading on the New York Stock Exchange on
each day the Exchange is open. Each Division's share of amounts allocated,
transferred or added to a Division or deducted, loaned, transferred or withdrawn
from a Division, on any day, will be determined as of the end of the valuation
period that contains that day.
SECTION 7. DETERMINATION OF VALUES
7.1 POLICY VALUE
On the Policy Date, the Policy Value is equal to the net premium less the
Monthly Policy Charge. On any day after that, the Policy Value is equal to what
it was on the previous day plus any of these items applicable on that day:
- any increase due to investment results of all amounts invested in all
Divisions for the Policy Value;
- interest on the policy debt at an annual rate equal to the loan
interest rate;
- the net premium, if a premium is paid;
- any policy dividend directed to increase the Policy Value; and
minus any of these items applicable on that day:
- any decrease due to investment results of all amounts invested in all
Divisions for the Policy Value;
- the Monthly Policy Charge;
- on any monthly processing date on which there is a policy debt, a
charge for expenses and taxes associated with the debt;
- any withdrawals; and
- any transaction charges that may result from a withdrawal, a transfer,
a change in the Specified Amount or a change in the death benefit
option.
The Monthly Policy Charge, any charge for expenses and taxes associated
with policy debt, withdrawals and any transaction charges will be deducted from
the Policy Value. The deduction will be allocated to each Division in
proportion to the amounts in each Division.
7.2 MONTHLY POLICY CHARGE
A Monthly Policy Charge is deducted from the Policy Value on each monthly
processing date and is equal to the sum of the following:
- the Monthly Administrative Charge;
- the Mortality and Expense Risk Charge; and
- the Cost of Insurance Charge.
RR.VEL.(0398)
13
<PAGE>
7.3 MONTHLY ADMINISTRATIVE CHARGE
A Monthly Administrative Charge is deducted from the Policy Value on each
monthly processing date as part of the Monthly Policy Charge. The maximum
Monthly Administrative Charge is shown on page 4.
7.4 MORTALITY AND EXPENSE RISK CHARGE
A charge for the mortality and expense risk the Company assumes is deducted
from the Policy Value on each monthly processing date as part of the Monthly
Policy Charge. The maximum Monthly Mortality and Expense Risk Charge is shown on
page 4.
7.5 COST OF INSURANCE CHARGE
A Cost of Insurance Charge is deducted from the Policy Value on each
monthly processing date as part of the Monthly Policy Charge. The Cost of
Insurance Charge is the cost of insurance rate times the net amount at risk.
The cost of insurance rate is based on the attained age of the Insured. The
maximum cost of insurance rates are shown on page 5. The net amount at risk is
(a) minus (b) where:
(a) is the death benefit on the monthly processing date, after deduction
of the Monthly Administrative Charge and the Mortality and Expense
Risk Charge, divided by 1.0032737; and
(b) is the Policy Value on the monthly processing date after deduction of
the Monthly Administrative Charge and the Mortality and Expense Risk
Charge.
SECTION 8. CASH VALUE AND SURRENDER
8.1 CASH VALUE
The cash value of this policy is equal to:
- the Policy Value; less
- any policy debt.
8.2 SURRENDER
The Owner may surrender this policy for its cash value. A written
surrender of all claims, satisfactory to the Company, will be required. The
date of surrender will be the date of receipt at the Home Office of the written
surrender. The policy will terminate, and the cash value will be determined, as
of the end of the valuation period which includes the date of surrender. The
Company may require that the policy be sent to it.
8.3 DEFERRAL OF PAYMENTS
The Company reserves the right:
- to defer determination of the cash value and payment of the cash
value;
- to defer payment of a loan or withdrawal; and
- to defer determination of a change in the amount of variable insurance
or other variable amounts payable on death, and, if such determination
has been deferred, to defer payment of the death benefit;
during any period when:
- the New York Stock Exchange is closed or trading on the New York Stock
Exchange is restricted as determined by the SEC; or
- the SEC declares that an emergency exists as a result of which the
sale or determination of investment results is not reasonably
practicable; or
- the SEC, by order, permits deferral for the protection of the
Company's policyowners.
RR.VEL.(0398)
14
<PAGE>
SECTION 9. LOANS AND WITHDRAWALS
9.1 POLICY LOANS
The Owner may obtain a loan from the Company in an amount that, when added
to existing policy debt, is not more than the loan value.
On the date a loan is made, the amount invested for this policy in the
Separate Account will be reduced by the amount of the loan. The reduction will
be allocated to each Division in proportion to the amounts in each Division. On
the date a loan repayment is made, or the date accrued interest is paid, the
amount invested for this policy in the Separate Account will be increased by the
amount of the payment. The increase will be allocated to the Divisions of the
Separate Account according to the allocation of net premiums currently in
effect.
9.2 LOAN VALUE
The loan value is 90% of the Policy Value on the date of the loan.
9.3 POLICY DEBT
Policy debt consists of all outstanding loans and accrued interest. It may
be paid to the Company at any time. Any policy debt will be deducted from the
policy proceeds.
If the policy debt equals or exceeds the Policy Value on a monthly
processing date, the policy will terminate with no value subject to the
conditions of the Grace Period (Section 4.5).
9.4 LOAN INTEREST
Interest accrues and is payable on a daily basis from the date of the loan.
Unpaid interest is added to policy debt.
Interest is payable at an annual effective rate of 5%.
9.5 WITHDRAWALS
The Owner may make a withdrawal of the Policy Value. The Company reserves
the right to charge for withdrawals. This charge will be deducted from the
Policy Value and will not exceed the amount shown on page 4. However, the Owner
may not:
- withdraw an amount which would reduce the loan value to less than the
policy debt;
- withdraw an amount which would reduce the death benefit to less than
the minimum amount the Company would issue at the time of withdrawal;
- withdraw an amount which would reduce the cash value to less than
three times the most recent Monthly Policy Charge;
- withdraw less than the minimum withdrawal amount shown on page 3; or
- make more than four withdrawals in a policy year.
When a withdrawal from the Policy Value is made, the amount invested for
this policy in the Separate Account will be reduced by the amount of the
withdrawal. The reduction will be allocated to each Division in proportion to
the amounts in each Division. If the death benefit option in effect at the time
of withdrawal is either Option A or Option C, the Specified Amount will be
reduced by the lesser of:
- the amount of the withdrawal; or
- the excess, if any, of the Specified Amount over the result of (a)
minus (b) where:
(a) is the death benefit immediately prior to the withdrawal; and
(b) is the amount of the withdrawal.
RR.VEL.(0398)
15
<PAGE>
SECTION 10. BENEFICIARIES
10.1 DEFINITION OF BENEFICIARIES
The term "beneficiaries" as used in this policy includes direct
beneficiaries, contingent beneficiaries and further payees.
10.2 NAMING AND CHANGE OF BENEFICIARIES
BY OWNER. The Owner may name and change the beneficiaries of death proceeds:
- while the Insured is living.
- during the first 60 days after the date of death of the Insured, if
the Insured was not the Owner immediately prior to the Insured's
death. A change made during this 60 days may not be revoked.
BY DIRECT BENEFICIARY. A direct beneficiary may name and change the contingent
beneficiaries and further payees of the direct beneficiary's share of the
proceeds:
- if the direct beneficiary is the Owner; or
- if, at any time after the death of the Insured, no contingent
beneficiary or further payee of that share is living.
These direct beneficiary rights are subject to the Owner's rights during
the 60 days after the date of death of the Insured.
BY SPOUSE (MARITAL DEDUCTION PROVISION).
- POWER TO APPOINT. The spouse of the Insured will have the power alone
and in all events to appoint all amounts payable to the spouse under
the policy if:
a. immediately before the Insured's death, the Insured was the
Owner; and
b. the spouse is a direct beneficiary; and
c. the spouse survives the Insured.
Under this power, the spouse can appoint:
a. to the estate of the spouse; or
b. to any other persons as contingent beneficiaries and further
payees.
- EFFECT OF EXERCISE. As to the amounts appointed, the exercise of this
power will:
c. revoke any other designation of beneficiaries;
d. revoke any election of payment plan as it applies to them; and
e. cause any provision to the contrary in Section 10 of the policy
to be of no effect.
EFFECTIVE DATE. A naming or change of a beneficiary will be made on receipt at
the Home Office of a written request that is acceptable to the Company. The
request will then take effect as of the date that it was signed. The Company is
not responsible for any payment or other action that is taken by it before the
receipt of the request. The Company may require that the policy be sent to it
to be endorsed to show the naming or change.
10.3 SUCCESSION IN INTEREST OF BENEFICIARIES
DIRECT BENEFICIARIES. The proceeds of this policy will be payable in equal
shares to the direct beneficiaries who survive and receive payment. If a direct
beneficiary dies before receiving all or part of the direct beneficiary's full
share, the unpaid portion will be payable in equal shares to the other direct
beneficiaries who survive and receive payment.
CONTINGENT BENEFICIARIES. At the death of all of the direct beneficiaries, the
proceeds will be payable in equal shares to the contingent beneficiaries who
survive and receive payment. If a contingent beneficiary dies before receiving
all or part of the contingent's full share, the unpaid portion will be payable
in equal shares to the other contingent beneficiaries who survive and receive
payment.
FURTHER PAYEES. At the death of all of the direct and contingent beneficiaries,
the proceeds will be paid in one sum:
- in equal shares to the further payees who survive and receive payment;
or
- if no further payees survive and receive payment, to the estate of the
last to die of all of the direct and contingent beneficiaries who
survive the Insured.
OWNER OR THE OWNER'S ESTATE. If no beneficiaries are alive when the Insured
dies, the proceeds will be paid to the Owner or to the Owner's estate.
10.4 GENERAL
TRANSFER OF OWNERSHIP. A transfer of ownership of itself will not change the
interest of a beneficiary.
CLAIMS OF CREDITORS. So far as allowed by law, no amount payable under this
policy will be subject to the claims of creditors of a beneficiary.
<PAGE>
AMENDMENT TO FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICY
AS OF THE DATE OF ISSUE, SECTION 8.1 CASH VALUE, IS AMENDED AS FOLLOWS:
During the first policy year, if the policy is not in a grace period, the
cash value of this policy is equal to:
- the Policy Value; plus
- [100%] of the sum of Sales Loads (page 4) deducted from premiums paid
to date; less
- any policy debt.
During the second policy year, if the policy is not in a grace period, the
cash value of this policy is equal to:
- the Policy Value; plus
- [50%] of the sum of Sales Loads (page 4) deducted from premiums paid
to date; less
- any policy debt.
During the third and later policy years and any time the policy is in a
grace period; the cash value of this policy is equal to:
- the Policy Value; less
- any policy debt.
Secretary
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
RR.VEL RSL.(0398)
<PAGE>
<TABLE>
<S><C>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY -------------------------
720 E. WISCONSIN AVENUE, MILWAUKEE, WISCONSIN 53202 POLICY NUMBER
EMPLOYER SPONSORED LIFE INSURANCE APPLICATION ------------------------------
/ / Companion policies PLAN GROUP NUMBER
INSURED
- ----------------------------------------------------------------------------------------------------------------------------------
1 Has an application or informal inquiry ever been made to Northwestern Mutual Life for annuity, life, long term care, or
disability insurance on the life of the Insured? / / Yes / / No If yes, the last policy number is
-----------------------------------------------------------------------------------------------------------------------------
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other B. / / MALE
---------------- / / FEMALE
-----------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
C. BIRTHDATE: (Month, Day Year) D. STATE OF BIRTH (or Foreign Country): E. TAXPAYER IDENTIFICATION NUMBER:
-- --
---------------------------- ------------------------------------ ------------------------------
-----------------------------------------------------------------------------------------------------------------------------
F. PRIMARY RESIDENCE:
STREET OR PO BOX:
----------------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
-------------------------------------------------------------
E-MAIL ADDRESS:
------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
APPLICANT
- ----------------------------------------------------------------------------------------------------------------------------------
2 Select ONLY ONE: / /Insured at Insured's Address OR / /Other (Complete A, B and C)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
----------------- / / MALE
PERSONAL NAME: / / FEMALE
---------------------------------------------------------
(FIRST, MIDDLE INITIAL, LAST)
RELATIONSHIP TO INSURED:
--------------------------------------- ----------------------------------------
OR MONTH DAY YEAR
BUSINESS/TRUST:
-----------------------------------------------------------------------------------------
TYPE OF ORGANIZATION: / / Trust / / Corporation / / Partnership / / Other type of Business
------------------------------
AUTHORIZED COMPANY
REP/TRUSTEE NAME:
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER:
--------------------------------
-----------------------------------------------------------------------------------------------------------------------------
C. ADDRESS: STREET OR PO BOX:
--------------------------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
----------------------------------------------------------------------------
E-MAIL ADDRESS:
----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
PREMIUM PAYER
- ----------------------------------------------------------------------------------------------------------------------------------
3 Select ONLY ONE: / /ISA (Omit A through D below) OR / /Insured (Complete D only) / /Applicant (Complete D only)
/ /Owner (Complete D only) / / Other (Complete A, B, C and D)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
----------------- / / MALE
PERSONAL NAME: / / FEMALE
---------------------------------------------------------
(FIRST, MIDDLE INITIAL, LAST)
BIRTHDATE
------------------------
MONTH DAY YEAR
OR
BUSINESS/TRUST: `
-----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER: C. DAYTIME TELEPHONE NUMBER:
------------------------------ Area Code ( )
---------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Send premium and other notices regarding this policy to:
D. ADDRESS: / / Insured's Address / /Applicant's Address OR
STREET OR PO BOX:
----------------------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
-----------------------------------------------------------------------
E-MAIL ADDRESS:
----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S><C>
4-7 (Reserved)
- ----------------------------------------------------------------------------------------------------------------------------------
8. SPECIAL DATE
PREPAID:
/ / Short term - Policy Date will coincide with ISA Payment Date. (For monthly ISA only)
/ / Short term to: / / Date to save age / /
---------------------------- --------------------------
MONTH DAY YEAR MONTH DAY YEAR
NON-PREPAID:
/ / Specified future date: / / Date to save age / /
-------------------- --------------------------
MONTH DAY YEAR MONTH DAY YEAR
- ----------------------------------------------------------------------------------------------------------------------------------
POLICY APPLIED FOR
- ----------------------------------------------------------------------------------------------------------------------------------
9. FIRST POLICY INFORMATION SECOND POLICY INFORMATION
/ / APPLICATION SUPPLEMENT (REQUIRED FOR COMPLIFE AND / / APPLICATION SUPPLEMENT (REQUIRED FOR COMPLIFE AND
ALL VARIABLE LIFE PRODUCTS) ALL VARIABLE LIFE PRODUCTS)
OR OR
A. PLAN: A. PLAN:
------------------------------------------- -------------------------------------------
AMOUNT: $ AMOUNT: $
----------------------------------------- -----------------------------------------
B. ADDITIONAL BENEFITS: B. ADDITIONAL BENEFITS:
/ / Waiver of Premium / / Waiver of Premium
/ / Accidental Death $ (BENEFIT AMOUNT) / / Accidental Death $ (BENEFIT AMOUNT)
---------- ----------
/ / Other / / Other
------------------------------------- -------------------------------------
C. ANNUAL DIVIDENDS: C. ANNUAL DIVIDENDS:
/ / Reduce current premium / / Reduce current premium
/ / Purchase paid-up additions / / Purchase paid-up additions
/ / Accumulate at interest / / Accumulate at interest
/ / Be paid in cash / / Be paid in cash
/ / Be used for a combination of options above / / Be used for a combination of options above
(COMPLETE FORM 18-1364-01) (COMPLETE FORM 18-1364-01)
D. POLICY LOAN INTEREST RATE OPTION: D. POLICY LOAN INTEREST RATE OPTION:
/ / 8% / / Variable Rate / / 8% / / Variable Rate
10. If an additional benefit cannot be approved, should 10. If an additional benefit cannot be approved, should
the company issue a policy without the benefit? the company issue a policy without the benefit?
/ / Yes / / No / / Yes / / No
11. Shall the Premium Loan provision, if available, be- 11. Shall the Premium Loan provision, if available, be-
come operative according to its terms? come operative according to its terms?
/ / Yes / / No / / Yes / / No
12. PREMIUM FREQUENCY: 12. PREMIUM FREQUENCY:
/ / Annually / / Semiannually / / Quarterly / / Annually / / Semiannually / / Quarterly
/ / Single / / Single
- ----------------------------------------------------------------------------------------------------------------------------------
13-14 (Reserved)
BENEFICIARY OWNER
- ----------------------------------------------------------------------------------------------------------------------------------
15. A. DIRECT BENEFICIARY 16. The OWNER will be: (SELECT ONLY ONE)
----------------------------------------------------- / / A. Insured
FIRST MIDDLE INITIAL LAST / / B. Applicant
RELATIONSHIP TO INSURED / / C. Other
-------------------------------------
FIRST MIDDLE INITIAL LAST
-----------------------------------------------------
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED -------------------------------------
RELATIONSHIP TO INSURED
-----------------------------------------------------
FIRST MIDDLE INITIAL LAST / / D. SEE ATTACHED SUPPLEMENT FORM.
RELATIONSHIP TO INSURED (To be used in place of designations above.)
RESIDENCE OF OWNER
B. CONTINGENT BENEFICIARY / / Insured's address in 1F.
/ / Premium Payer's address in 3D or
----------------------------------------------------- ------------------------------------------------
FIRST MIDDLE INITIAL LAST STREET OR PO BOX
RELATIONSHIP TO INSURED
------------------------------------------------
CITY, STATE AND ZIP CODE (COUNTRY IF OTHER
----------------------------------------------------- THAN U.S.A.)
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED
/ / and all (other) children of the insured.
(SELECT TO INCLUDE ALL OF THE CHILDREN OR TO ADD TO OWNER'S TAXPAYER IDENTIFICATION NUMBER
THE CONTINGENT BENEFICIARIES NAMED. NOTE: THE WORD
CHILDREN INCLUDES CHILD OR ANY LEGALLY ADOPTED CHILD.)
(See TIN Instructions)
C. / / SEE ATTACHED SUPPLEMENT FORM -----------------------------
(TO BE USED IN PLACE OF DESIGNATIONS ABOVE)
</TABLE>
<PAGE>
INSURED
----------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
CONDITIONAL LIFE INSURANCE AGREEMENT
- --------------------------------------------------------------------------------
17. Has the premium for the policy applied for been given to the agent in
exchange for the Conditional Life Insurance Agreement
with the same number as this application? . . . . . . . . / /Yes / /No
18-19 (Reserved)
INSURANCE HISTORY
- --------------------------------------------------------------------------------
20. Does the Insured have any other life insurance in force, pending or
contemplated in other companies?. . . . . . . . . . . . . / /Yes / /No
If yes, indicate Company Name, Individual (Ind) or Group (Grp) and identify
the amount of In Force, Pending or Contemplated.
<TABLE>
<CAPTION>
LIFE INSURANCE AMOUNTS
-----------------------------------------------------------------------------------------------------------------
Ind or Contemplated Accidental Death
Company Name Grp In Force Amount Pending Amount Amount Amount
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
21 As a result of this purchase will the values or benefits of any other life
insurance policy or annuity contract, on any life, be
affected in any way? . . . . . . . . . . . . . . . . . . ./ /Yes / /No
NOTE TO AGENT: VALUES OR BENEFITS ARE AFFECTED IF ANY QUESTION ON THE
DEFINITION OF REPLACEMENT SUPPLEMENT COULD BE ANSWERED "YES."
If "yes", this transaction is a replacement of life insurance or annuity.
The agent must:
- submit required papers and sale materials AND
- provide required disclosure notices to the applicant.
The applicant must answer the questions:
- on the Definition of Replacement Supplement AND
- A, B, and C below.
Will this insurance:
A. replace Northwestern Mutual Life? . . . . . . . . . ./ /Yes / /No
B. replace other Companies?. . . . . . . . . . . / /Yes / /No
C. result in 1035 exchange?. . . . . . . . . . . . . . ./ /Yes / /No
<PAGE>
- --------------------------------------------------------------------------------
It is agreed that:
(1) If the premium is not paid when the application is signed, no insurance
will be in effect. The insurance will take effect at the time the policy is
delivered and the premium is paid, if: the Insured is living at the time;
and the answers and statements in the underwriting questionnaire are then
true to the best of the Insured's knowledge and belief.
(2) If the premium is paid when the application is taken, no life insurance
will be in effect except as provided in the Conditional Life Insurance
Agreement.
(3) If the policy is issued in an extra premium class, acceptance of the policy
will amend it so that extended term insurance can be in force only if: the
Company gives its consent; or the loan value is not large enough to grant a
premium loan. If a premium is not paid within the grace period and extended
term insurance cannot be in force, paid-up insurance will be selected.
(4) No agent is authorized to make or alter contracts or to waive any of the
Company's rights or requirements.
- --------------------------------------------------------------------------------
THE OWNER OF THE POLICY APPLIED FOR HEREIN CERTIFIES, UNDER PENALTIES OF
PERJURY, (1) THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN FOR THE OWNER ON THE
SECOND PAGE OF THIS APPLICATION IS THE OWNER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER (OR THE OWNER IS WAITING FOR A NUMBER TO BE ISSUED) AND (2) THE OWNER IS
NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE THE OWNER HAS NOT BEEN NOTIFIED
BY THE INTERNAL REVENUE SERVICE (IRS) THAT THE OWNER IS SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE
IRS HAS NOTIFIED THE OWNER THAT THE OWNER IS NO LONGER SUBJECT TO BACKUP
WITHHOLDING. (SEE TAXPAYER IDENTIFICATION NUMBER INSTRUCTIONS.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
- --------------------------------------------------------------------------------
THE SIGNATURES BELOW APPLY TO THE APPLICATION, POLICY APPLICATION SUPPLEMENT AND
THE CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER.
- ------------------------------------ ---------------------------------------
SIGNATURE OF APPLICANT SIGNATURE OF OWNER (IF OTHER THAN
APPLICANT)
Signed by Applicant at:
--------------------- ---------------------------------------
CITY, COUNTY, & STATE SIGNATURE OF LICENSED AGENT
Date signed by Applicant
------------------------
MONTH DAY YEAR
<PAGE>
POLICY APPLICATION SUPPLEMENT FOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INSURED: John J. Doe
POLICY:
Specified Amount: $1,000,000
Death Benefit Option: Specified Amount (Option A)
Definition of Life Insurance Test: Guideline Premium/Cash Value Corridor Test
Initial Premium: $10,000.00
Reminder Premium: $10,000.00
Reminder Mode: Annual
For Office Use Only
Underwriting Amount: $1,000,000
Illustrated Cumulative Premiums:
Year 5: $50,000.00 Year 15: $150,000.00
Year 10: $100,000.00 Year 20: $200,000.00
VEL, 35, M, Select
WI
Band 2
Internal Replacement
90-1 VEL. Supp. (0398) Illustration No. 123-456-789
Page 1 of 3
<PAGE>
The Death Benefit may increase or decrease daily depending on investment
results. There is no guaranteed minimum death benefit.
The Cash Value under this policy may increase or decrease daily depending on
investment results. There is no guaranteed minimum cash value.
ALLOCATION OF NET PREMIUMS
This allocation will apply to all net premiums and loan repayments. Use whole
percentages only. If monthly dollar cost averaging (from the Money Market
Division) is desired, complete both this section and the monthly dollar cost
averaging section.
Money Market Division %
--------------------
Aggressive Growth Stock Division %
--------------------
Balanced Division %
--------------------
Growth and Income Stock Division %
--------------------
Growth Stock Division %
--------------------
High Yield Bond Division %
--------------------
Index 500 Stock Division %
--------------------
International Equity Division %
--------------------
Select Bond Division %
--------------------
Total 100 %
--------------------
MONTHLY DOLLAR COST AVERAGING
To elect monthly dollar cost averaging complete the following section.
Transfer the following amount from the Money Market Division on each monthly
processing date and allocate it among the other Divisions as specified below:
$__________. If the amount specified is larger than the balance in the Money
Market Division, the entire balance will be transferred. Use whole percentages
only.
Aggressive Growth Stock Division %
--------------------
Balanced Division %
--------------------
Growth and Income Stock Division %
--------------------
Growth Stock Division %
--------------------
High Yield Bond Division %
--------------------
Index 500 Stock Division %
--------------------
International Equity Division %
--------------------
Select Bond Division %
--------------------
Total 100 %
--------------------
90-1 VEL. Supp. (0398) Insured: John J. Doe
Illustration No. 123-456 -789
Page 2 of 3
<PAGE>
THIS PAGE WILL BE REQUIRED ONLY IF THE INSURED HAS INVESTMENT RESPONSIBILITY.
Northwestern Mutual Life is required to make the following inquiries for
purposes of determining the suitability of this sale. Responses will be kept
confidential.
TOTAL ANNUAL INCOME (all sources) $
------------------------------------
TOTAL NET WORTH $
------------------------------------------------------
YEARS OF EXPERIENCE WITH THE FOLLOWING:
Less than Five or
Five More
None Years Years
----- ----- -----
Mutual Funds
----- ----- -----
Individual Common Stocks
----- ----- -----
Variable Annuities
----- ----- -----
Variable Life Insurance
----- ----- -----
Signature of Insured:
------------------------------------------------
90-1 VEL. Supp. (0398) Insured: John J. Doe
Illustration No. 123-456-789
Page 3 of 3
<PAGE>
IT IS RECOMMENDED THAT YOU ...
read your policy.
notify your Northwestern Mutual agent or the Company at 720 East Wisconsin
Avenue, Milwaukee, WI 53202, of an address change.
call your Northwestern Mutual agent for information--particularly on a
suggestion to terminate or exchange this policy for another policy or plan.
ELECTION OF TRUSTEES
The members of The Northwestern Mutual Life Insurance Company are its
policyholders of insurance policies and deferred annuity contracts. The members
exercise control through a Board of Trustees. Elections to the Board are held
each year at the annual meeting of members. Members are entitled to vote in
person or by proxy.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ELIGIBLE FOR ANNUAL DIVIDENDS
Insurance payable at death of Insured.
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT MAY INCREASE OR DECREASE DAILY DEPENDING ON INVESTMENT
RESULTS. THERE IS NO GUARANTEED MINIMUM DEATH BENEFIT.
THE CASH VALUE UNDER THIS POLICY MAY INCREASE OR DECREASE DAILY DEPENDING ON
INVESTMENT RESULTS. THERE IS NO GUARANTEED MINIMUM CASH VALUE.
RR.VEL.(0398)
<PAGE>
Exhibit A(5)(b)
The Northwestern Mutual Life Insurance Company agrees to pay the benefits
provided in this policy,
subject to its terms and conditions.
Signed at Milwaukee, Wisconsin on the Date of Issue.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ELIGIBLE FOR ANNUAL DIVIDENDS
Insurance payable at death of Insured.
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT MAY INCREASE OR DECREASE DAILY DEPENDING ON INVESTMENT
RESULTS. THERE IS NO GUARANTEED MINIMUM DEATH BENEFIT.
THE CASH VALUE UNDER THIS POLICY MAY INCREASE OR DECREASE DAILY DEPENDING ON
INVESTMENT RESULTS. THERE IS NO GUARANTEED MINIMUM CASH VALUE.
RIGHT TO RETURN POLICY. Please read this policy carefully. The policy may be
returned by the Owner for any reason within (1) ten days after it was received
or (2) forty-five days after the application was signed, whichever is later.
The policy may be returned to your agent or to the Home Office of the Company at
720 East Wisconsin Avenue, Milwaukee, WI 53202. If returned, the policy will
be considered void from the beginning. The Company will refund the sum of (a)
the difference between any premium paid and the amount allocated to the Separate
Account plus (b) the value of the policy in the Separate Account on the date the
returned policy is received.
RR.VEL.(0398)
INSURED John J. Doe AGE AND SEX 35 Male
POLICY DATE March 1, 1998 POLICY NUMBER 10 000 000
PLAN Flexible Premium SPECIFIED AMOUNT $1,000,000
Variable Life
RR.VEL.(0398)
<PAGE>
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE OWNER AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
READ YOUR POLICY CAREFULLY.
GUIDE TO POLICY PROVISIONS
BENEFITS AND PREMIUMS
SECTION 1. THE CONTRACT
Life Insurance Benefit payable on death of Insured.
Incontestability. Suicide. Definition of dates. Insurability
requirements. Reports to Owner.
SECTION 2. OWNERSHIP
Rights of the Owner. Assignment as collateral.
SECTION 3. DEATH BENEFIT
Description of death benefit options. Changes to death benefits.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
Payment of premiums. Calculation and allocation of net premiums.
Transfer of assets. Premium limitations. Grace period of 61 days
to pay premium. How to reinstate the policy.
SECTION 5. DIVIDENDS
Annual dividends. Use of dividends. Dividend at death.
SECTION 6. THE SEPARATE ACCOUNT
The Separate Account and the Divisions. Valuation of assets.
SECTION 7. DETERMINATION OF VALUES
Policy Value. Monthly Policy Charge.
SECTION 8. CASH VALUE AND SURRENDER
Cash value. Surrender. Deferral of payments.
SECTION 9. LOANS AND WITHDRAWALS
Policy loans. Interest on loans. Withdrawals.
SECTION 10. BENEFICIARIES
Naming and change of beneficiaries. Marital deduction provision for
spouse of Insured. Succession in interest of beneficiaries.
APPLICATION
<PAGE>
BENEFITS AND PREMIUMS
DATE OF ISSUE - MARCH 1, 1998
Plan: Flexible Premium Variable Life
Specified Amount: $1,000,000
Death Benefit Option: Specified Amount (Option A)
Definition of Life Insurance Test: Guideline Premium/Cash Value Corridor Test
The minimum premium (Section 4.4) is $25.00.
The maximum premium under the Guideline Premium/Cash Value Corridor Test:
Guideline Single Premium = $ 175,920.00
Guideline Annual Level Premium = $ 14,400.00
The minimum withdrawal amount (Section 9.5) is $250.00.
This policy is issued in a select premium class.
DIRECT BENEFICIARY XYZ Corporation
OWNER XYZ Corporation
INSURED John J. Doe AGE AND SEX 35 Male
POLICY DATE March 1, 1998 POLICY NUMBER 10 000 000
<PAGE>
PLAN Flexible Premium SPECIFIED AMOUNT $1,000,000
Variable Life
Page 3
POLICY NUMBER 10 000 000
SCHEDULE OF MAXIMUM CHARGES
The Premium Expense Charge (Section 4.2) is the sum of the following:
1. Sales Load:
Premium Paid First Policy Year Policy Years 2+
------------ ----------------- ---------------
Up to $ 40,260.00 15% 3%
In Excess of $ 40,260.00 3% 3%
2. Federal Deferred Acquisition Cost Charge l.25% of premium
3. Premium Tax Charge 2.35% of premium
The Premium Expense Charge for Deferred Acquisition Cost and
Premium Tax may change to reflect changes in tax law.
Maximum Monthly Policy Charges:
The maximum Monthly Administrative Charge (Section 7.3) is $15 in the
first policy year and $10 thereafter.
The maximum Monthly Mortality and Expense Risk Charge (Section 7.4) is
.075% of the amount invested for this policy in the Separate Account.
Maximum Transaction Charges:
The maximum charge for death benefit option changes (Section 3.2) is
$250.00 per change.
The maximum charge for Specified Amount changes (Section 3.3) is
$25.00 per change for more than one change during any policy year.
The maximum transfer fee (Section 4.3) is $25.00 per transfer for more
than 12 transfers during any policy year.
The maximum withdrawal charge (Section 9.5) is $25.00 per withdrawal.
<PAGE>
Page 4
POLICY NUMBER 10 000 000
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
MONTHLY RATES PER $1.00
(Section 7.5)
<TABLE>
<CAPTION>
Attained Age Monthly Rate Attained Age Monthly Rate Attained Age Monthly Rate
<S> <C> <C> <C> <C> <C>
35 .00018 60 .00134 85 .01275
36 .00019 61 .00146 86 .01384
37 .00020 62 .00160 87 .01496
38 .00022 63 .00175 88 .01611
39 .00023 64 .00193 89 .01727
40 .00025 65 .00212 90 .01848
41 .00027 66 .00232 91 .01975
42 .00030 67 .00254 92 .02112
43 .00032 68 .00277 93 .02268
44 .00035 69 .00301 94 .02466
45 .00038 70 .00329 95 .02750
46 .00041 71 .00361 96 .03205
47 .00044 72 .00397 97 .04002
48 .00048 73 .00439 98 .05483
49 .00052 74 .00485 99 .08333
50 .00056 75 .00535
51 .00061 76 .00588
52 .00066 77 .00643
53 .00073 78 .00699
54 .00080 79 .00759
55 .00087 80 .00824
56 .00096 81 .00896
57 .00104 82 .00977
58 .00113 83 .01069
59 .00123 84 .01169
</TABLE>
<PAGE>
Page 5
POLICY NUMBER 10 000 000
GUIDELINE PREMIUM/CASH VALUE CORRIDOR PERCENTAGES
The Corridor Percentages are used to determine the Minimum Death Benefit under
the Guideline Premium/Cash Value Corridor Test (Section 3.1).
<TABLE>
<CAPTION>
Attained Age Attained Age Attained Age
Corridor % Corridor % Corridor %
<S> <C> <C> <C> <C> <C>
35 250 60 130 85 105
36 250 61 128 86 105
37 250 62 126 87 105
38 250 63 124 88 105
39 250 64 122 89 105
40 250 65 120 90 105
41 243 66 119 91 104
42 236 67 118 92 103
43 229 68 117 93 102
44 222 69 116 94 101
45 215 70 115 95+ 100
46 209 71 113
47 203 72 111
48 197 73 109
49 191 74 107
50 185 75 105
51 178 76 105
52 171 77 105
53 164 78 105
54 157 79 105
55 150 80 105
56 146 81 105
57 142 82 105
58 138 83 105
59 134 84 105
</TABLE>
<PAGE>
Page 6
POLICY NUMBER 10 000 000
SEPARATE ACCOUNT DIVISIONS
(Section 6)
Money Market Division
Select Bond Division
High Yield Bond Division
Balanced Division
Index 500 Stock Division
Growth & Income Stock Division
Growth Stock Division
International Equity Division
Aggressive Growth Stock Division
The Initial Allocation Date (Section 4.3) is April 15, 1998.
<PAGE>
Page 7
<PAGE>
SECTION 1. THE CONTRACT
1.1 LIFE INSURANCE BENEFIT
The Northwestern Mutual Life Insurance Company will pay a benefit on the
death of the Insured while this policy is in force. Subject to the terms and
conditions of the policy:
- payment of the death proceeds will be made after proof of the death of
the Insured is received at the Home Office; and
- payment will be made to the beneficiary or other payee under
Section 10.
The amount of the death proceeds will be:
- the death benefit (Section 3.1); less
- the amount of any policy debt (Section 9.3); less
- any Monthly Policy Charges due and unpaid if the Insured dies during
the grace period (Section 4.5).
These amounts will be determined as of the date of death.
The Company will pay interest on the death proceeds from the date of death
until the proceeds are withdrawn in cash. Interest will be at a rate of not less
than 2%, or at any higher rate required by state law.
1.2 ENTIRE CONTRACT; CHANGES
This policy, including the attached application and any amendments,
endorsements or riders, is the entire contract. Statements in the application
are representations and not warranties. A change in the policy is valid only if
it is approved in writing by an officer of the Company. The Company may require
that the policy be sent to it for endorsement to show a change. No agent has
the authority to change the policy or to waive any of its terms.
8
<PAGE>
1.3 INCONTESTABILITY
The Company will not contest this policy after the policy has been in
force, during the lifetime of the Insured, for two years from the Date of Issue.
An increase in the amount of insurance after the Date of Issue, which occurred
upon the request of the Owner and was subject to the Company's insurability
requirements, will be incontestable after the increase has been in force, during
the lifetime of the Insured, for two years from the date of issuance of the
increase. In issuing the insurance, the Company has relied on the application.
While the insurance is contestable, the Company, on the basis of a misstatement
in the application, may rescind the insurance or deny a claim.
1.4 SUICIDE
If the Insured dies by suicide within one year from the Date of Issue, the
amount payable by the Company will be limited to the premiums paid, less the
amount of any policy debt and withdrawals. If the Insured dies by suicide within
one year from the date of issuance of an increase in the amount of insurance,
which occurred upon the request of the Owner and was subject to the Company's
insurability requirements, the amount payable with respect to such increase will
be limited to the Monthly Policy Charges attributable to the increase.
1.5 POLICY DATE AND DATE OF ISSUE
Monthly processing dates and policy months, years and anniversaries are
computed from the Policy Date. The contestable and suicide periods begin with
the Date of Issue. These dates are shown on page 3.
1.6 MISSTATEMENT OF AGE OR SEX
If the age or sex of the Insured has been misstated, the policy will be
modified by recalculating all Monthly Policy Charges based on the correct age
and sex.
1.7 PAYMENTS BY THE COMPANY
<PAGE>
All payments by the Company under this policy are payable at its Home
Office.
1.8 INSURABILITY REQUIREMENTS
To make some changes under this policy, the Insured must meet the Company's
insurability requirements. These requirements are as follows:
- evidence of insurability must be given that is satisfactory to the
Company; and
- under the Company's underwriting standards, the Insured is in an
underwriting classification that is the same as, or is better than,
the one for this policy.
<PAGE>
1.9 REPORTS TO OWNER
At least once each policy year, the Company will send to the Owner:
- a statement of the death benefit, the Policy Value, and any policy
debt, including loan interest.
- a report of the Separate Account, including financial statements.
- any other information required by law.
SECTION 2. OWNERSHIP
2.1 THE OWNER
The Owner is named on page 3. The Owner, the Owner's successor or the
Owner's transferee may exercise policy rights without the consent of any
beneficiary, except to the extent the Owner's rights are restricted by a
designation of an irrevocable beneficiary.
2.2 TRANSFER OF OWNERSHIP
The Owner may transfer the ownership of this policy. Written proof of
transfer satisfactory to the Company must be received at its Home Office. The
transfer will then take effect as of the date that it was signed. The Company
may require that the policy be sent to it for endorsement to show the transfer.
2.3 COLLATERAL ASSIGNMENT
The Owner may assign this policy as collateral security. The Company is
not responsible for the validity or effect of the collateral assignment. The
Company will not be responsible to an assignee for any payment or other action
taken by the Company before receipt of the assignment in writing at its Home
Office.
The interest of any beneficiary will be subject to any collateral
assignment made either before or after the beneficiary is named.
The collateral assignee is not an Owner. The collateral assignment is not
a transfer of ownership. Ownership can be transferred only by complying with
Section 2.2.
9
<PAGE>
SECTION 3. DEATH BENEFIT
3.1 DEATH BENEFIT OPTIONS
This policy provides for three death benefit options. The option in effect
is shown on page 3.
SPECIFIED AMOUNT (OPTION A) - The death benefit before the policy anniversary
nearest the Insured's 100th birthday is the greater of:
- the Specified Amount; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS POLICY VALUE (OPTION B) - The death benefit before the
policy anniversary nearest the Insured's 100th birthday is the greater of:
- the Specified Amount plus the Policy Value; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS PREMIUMS PAID (OPTION C) - The death benefit before the
policy anniversary nearest the Insured's 100th birthday is the greater of:
-the Specified Amount plus the sum of the premiums paid; or
- the Minimum Death Benefit.
MINIMUM DEATH BENEFIT. The Minimum Death Benefit is the amount required by the
Internal Revenue Code (IRC), as amended, to maintain this policy as life
insurance. The test in effect for determining compliance with the IRC definition
of life insurance is shown on page 3 and will be either:
<PAGE>
(1) the Guideline Premium/Cash Value Corridor Test: the Minimum Death Benefit
equals the Policy Value multiplied by the corridor percentage shown on page
6 at the Insured's attained age; or
(2) the Cash Value Accumulation Test: the Minimum Death Benefit equals the
Policy Value divided by the Net Single Premium shown on page 6 at the
Insured's attained age.
AGE 100 AND LATER. The death benefit on and after the policy anniversary
nearest the Insured's 100th birthday will be equal to the Policy Value
regardless of the death benefit option in effect.
3.2 DEATH BENEFIT OPTION CHANGES
Subject to approval by the Company, the Owner may change the death benefit
option upon written request. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for a death benefit option change. This
charge will be deducted from the Policy Value and will not exceed the amount
shown on page 4. A change will not be allowed if the Specified Amount following
a change would be less than the minimum amount the Company would issue at the
time of change.
CHANGES TO OPTION A. The death benefit option may be changed to Option A at
any time. On the effective date of change, the Specified Amount will be changed
as follows:
(1) If the change is from Option B to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the
Policy Value on the effective date of the change.
(2) If the change is from Option C to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the sum
of the premiums paid as of the effective date of the change.
CHANGES TO OPTION B OR OPTION C. The death benefit option may be changed to
Option B or Option C at any time before the policy anniversary nearest the
Insured's 75th birthday. All changes to Option B or Option C will be subject to
the Company's insurability requirements (Section 1.8). On the effective date of
change, the Specified Amount will be changed as follows:
(1) If the change is from Option A to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
Policy Value on the effective date of the change.
(2) If the change is from Option A to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
sum of the premiums paid as of the effective date of the change.
(3) If the change is from Option B to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a) the
Policy Value on the effective date of the change, minus (b) the sum of the
premiums paid as of the effective date of the change.
(4) If the change is from Option C to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a)
the sum of the premiums paid as of the effective date of the change, minus
(b) the Policy Value on the effective date of the change.
10
<PAGE>
3.3 SPECIFIED AMOUNT CHANGES
Subject to approval by the Company, the Owner may change the Specified
Amount upon written request. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for more than one Specified Amount change
in a policy year. This charge will be deducted from the Policy Value and will
not exceed the amount shown on page 4.
INCREASES. An increase will be made only if, at the time the increase is
applied for:
- the insurance in force, as increased, will be within the Company's
issue limits;
- the Company's insurability requirements (Section 1.8) are met; and
- the increase request is received prior to the policy anniversary
nearest the Insured's 75th birthday.
DECREASES. A decrease will not be allowed if the Specified Amount following the
decrease would be less than the minimum amount the Company would issue at the
time of change.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
4.1 PREMIUM PAYMENT
All premiums after the first are payable at the Home Office or to an
authorized agent. Premiums may be paid to the Company at any time and in any
amount subject to the limitations described in Section 4.4. A receipt signed by
an officer of the Company will be furnished on request.
<PAGE>
4.2 NET PREMIUM
The net premium is the amount of each premium paid that is available for
allocation to the Divisions of the Separate Account. The amount of the net
premium will be:
- the premium paid; less
- the Premium Expense Charge.
The Premium Expense Charge will consist of the amounts shown on page 4.
4.3 ALLOCATION OF NET PREMIUMS
AND SUBSEQUENT TRANSFERS
The initial net premium and any additional net premiums received prior to
the Initial Allocation Date will be allocated to the Money Market Division on
the date the premiums are received in the Home Office. The Initial Allocation
Date is shown on page 7.
On the Initial Allocation Date, amounts in the Money Market Division will
be allocated in accordance with the application. This allocation will remain in
effect for later net premiums unless changed by the Owner by written request.
Any change in allocation will be in effect for net premiums credited to the
policy following the receipt of the written request at the Home Office.
Allocations must be in whole percentages.
On or after the Initial Allocation Date, the Owner may transfer the amounts
invested in any of the Divisions. The transfer will take effect on the date a
written request is received in the Home Office. The Company reserves the right
to charge for more than twelve transfers in a policy year. This charge will be
deducted from the Policy Value and will not exceed the amount shown on page 4.
4.4 PREMIUM LIMITATIONS
Premiums may be paid to the Company at any time before the policy
anniversary that is nearest the Insured's 95th birthday. The minimum premium
the Company will accept is shown on page 3.
The Company will not accept any premium that causes this policy not to
qualify as a life insurance policy under the Internal Revenue Code, as amended.
Further, the Company reserves the right to make distributions from this policy
as necessary to continue to qualify the policy as life insurance under the
Internal Revenue Code.
A premium payment that would increase the policy's death benefit more than
it increases the Policy Value will be accepted only if:
- the insurance in force, as increased, will be within the Company's
issue limits;
- the Company's insurability requirements (Section 1.8) are met; and
- the premium payment is received prior to the policy anniversary
nearest the Insured's 75th birthday.
4.5 GRACE PERIOD
If the Policy Value less the amount of any policy debt on a monthly
processing date is not sufficient to cover the current Monthly Policy Charge, a
grace period of 61 days will be allowed for the payment of sufficient premium to
keep the policy in force. The minimum premium that must be paid is three times
the Monthly Policy Charge due when the insufficiency occurred.
The grace period will begin on the date the Company sends written notice of
the insufficiency. The grace period will end 61 days after the notice is sent.
The notice will state the date the grace period ends and the amount of premium
required to keep the policy in force. Upon receipt of payment, the Company will
allocate the net premium, less any Monthly Policy Charges due and unpaid, to the
Divisions of the Separate Account according to the allocation of net premiums
currently in effect.
The policy will remain in force during the grace period. If sufficient
premium is not paid by the end of the grace period, the policy will terminate
with no value.
If the Insured dies during the grace period, any Monthly Policy Charges due
and unpaid will be deducted from the death proceeds of the policy.
11
<PAGE>
4.6 REINSTATEMENT
If it has terminated under Section 4.5, the policy may be reinstated not
more than one year after the end of the grace period, subject to approval by the
Company. To reinstate the policy the Company's insurability requirements
(Section 1.8) must be met and sufficient premium to cover the following must be
paid:
- all Monthly Policy Charges that were due and unpaid before the end of
the grace period; plus
- three times the Monthly Policy Charge due on the effective date of
reinstatement.
On the date the policy is reinstated, the Policy Value will be equal to the
net premium less the sum of all Monthly Policy Charges that were due and unpaid
before the end of the grace period and the Monthly Policy Charge on the
effective date of reinstatement. The Company will allocate the Policy Value to
the Divisions of the Separate Account according to the allocation of net
premiums currently in effect. Any policy debt on the date of termination will
also be reinstated and added to the Policy Value.
If the Company approves the application for reinstatement, the effective
date of the reinstated policy will be the first monthly processing date
following receipt at the Home Office of the reinstatement application.
This policy may not be reinstated if the policy was surrendered.
SECTION 5. DIVIDENDS
5.1 ANNUAL DIVIDENDS
This policy will share in the divisible surplus of the Company to the
extent it contributes to this surplus. This surplus is determined each year.
This policy's share will be credited as a dividend on the policy anniversary.
Since this policy is not expected to contribute to divisible surplus, it is
not expected that any dividends will be paid.
5.2 USE OF DIVIDENDS
Annual dividends may be paid in cash or used to increase the Policy Value.
Dividends used to increase the Policy Value will be allocated to the Divisions
of the Separate Account according to the allocation of net premiums currently in
effect. If no direction is given for the use of dividends, they will be used
to increase the Policy Value.
5.3 DIVIDEND AT DEATH
If a dividend is payable for the period from the beginning of the policy
year to the date of the Insured's death, the dividend is payable as part of the
policy proceeds.
12
<PAGE>
SECTION 6. THE SEPARATE ACCOUNT
6.1 DESCRIPTION
Northwestern Mutual Variable Life Account (the Separate Account) is
registered as a unit investment trust under the Investment Company Act of 1940.
The Separate Account has several Divisions, as shown on page 7. Assets of the
Separate Account are invested in shares of Northwestern Mutual Series Fund, Inc.
(the Fund). The Fund is registered under the Investment Company Act of 1940 as
an open-end, diversified investment company. The Fund has one Portfolio for
each Division. Assets of each Division of the Separate Account are invested in
shares of the corresponding Portfolio of the Fund. Shares of the Fund are
purchased for the Separate Account at their net asset value. The Company may
make available additional Divisions and Portfolios.
Assets will be allocated to the Separate Account to support the operation
of this and other variable life insurance policies. Assets may also be
allocated for other purposes, but not to support the operation of any contracts
or policies other than variable life insurance. Income and realized and
unrealized gains and losses from assets in the Separate Account are credited to
or charged against it without regard to other income, gains or losses of the
Company.
The assets of the Separate Account will be valued on each valuation day.
They are the property of the Company. The portion of these assets equal to
policy reserves and liabilities will not be charged with liabilities arising out
of any other business the Company may conduct. The Company reserves the right
to transfer assets of the Separate Account in excess of these reserves and
liabilities to its General Account.
<PAGE>
The Owner may exchange this policy for a fixed benefit life insurance
policy if the Fund changes its investment advisor or if a Portfolio has a
material change in its investment objectives or restrictions. The Company will
notify the Owner if there is any such change. The Owner may exchange this
policy within 60 days after the notice or the effective date of the change,
whichever is later.
If, in the judgment of the Company, a Portfolio no longer suits the
purposes of this policy due to a change in its investment objectives or
restrictions, the Company may substitute shares of another Portfolio of the Fund
or shares of another mutual fund. Any such substitution will be subject to any
required approval of the Securities and Exchange Commission (SEC), the Wisconsin
Commissioner of Insurance or other regulatory authority.
The Company also may, to the extent permitted by applicable laws and
regulations (including any order of the SEC), make changes as follows:
- the Separate Account or a Division may be operated as a management
company under the Investment Company Act of 1940, or in any other form
permitted by law, if deemed by the Company to be in the best interest
of the policyowners.
- the Separate Account may be deregistered under the Investment Company
Act of 1940 in the event registration is no longer required.
- the provisions of this and other policies may be modified to comply
with any other applicable federal or state laws.
In the event of a substitution or change, the Company may make appropriate
endorsement of this and other policies having an interest in the Separate
Account and take other actions as may be necessary to effect the substitution or
change.
6.2 VALUATION DAY AND
VALUATION PERIOD
A valuation day is any day on which the assets of the Separate Account are
valued. A valuation period is a valuation day and any immediately preceding
days which are not valuation days.
Assets are valued as the close of trading on the New York Stock Exchange on
each day the Exchange is open. Each Division's share of amounts allocated,
transferred or added to a Division or deducted, loaned, transferred or withdrawn
from a Division, on any day, will be determined as of the end of the valuation
period that contains that day.
SECTION 7. DETERMINATION OF VALUES
7.1 POLICY VALUE
On the Policy Date, the Policy Value is equal to the net premium less the
Monthly Policy Charge. On any day after that, the Policy Value is equal to what
it was on the previous day plus any of these items applicable on that day:
- any increase due to investment results of all amounts invested in all
Divisions for the Policy Value;
- interest on the policy debt at an annual rate equal to the loan
interest rate;
- the net premium, if a premium is paid;
- any policy dividend directed to increase the Policy Value; and
minus any of these items applicable on that day:
- any decrease due to investment results of all amounts invested in all
Divisions for the Policy Value;
- the Monthly Policy Charge;
- on any monthly processing date on which there is a policy debt, a
charge for expenses and taxes associated with the debt;
- any withdrawals; and
- any transaction charges that may result from a withdrawal, a transfer,
a change in the Specified Amount or a change in the death benefit
option.
The Monthly Policy Charge, any charge for expenses and taxes associated
with policy debt, withdrawals and any transaction charges will be deducted from
the Policy Value. The deduction will be allocated to each Division in
proportion to the amounts in each Division.
7.2 MONTHLY POLICY CHARGE
A Monthly Policy Charge is deducted from the Policy Value on each monthly
processing date and is equal to the sum of the following:
- the Monthly Administrative Charge;
<PAGE>
- the Mortality and Expense Risk Charge; and
- the Cost of Insurance Charge.
13
<PAGE>
7.3 MONTHLY ADMINISTRATIVE CHARGE
A Monthly Administrative Charge is deducted from the Policy Value on each
monthly processing date as part of the Monthly Policy Charge. The maximum
Monthly Administrative Charge is shown on page 4.
7.4 MORTALITY AND EXPENSE RISK CHARGE
A charge for the mortality and expense risk the Company assumes is deducted
from the Policy Value on each monthly processing date as part of the Monthly
Policy Charge. The maximum Monthly Mortality and Expense Risk Charge is shown on
page 4.
7.5 COST OF INSURANCE CHARGE
A Cost of Insurance Charge is deducted from the Policy Value on each
monthly processing date as part of the Monthly Policy Charge. The Cost of
Insurance Charge is the cost of insurance rate times the net amount at risk.
The cost of insurance rate is based on the attained age of the Insured. The
maximum cost of insurance rates are shown on page 5. The net amount at risk is
(a) minus (b) where:
(a) is the death benefit on the monthly processing date, after deduction
of the Monthly Administrative Charge and the Mortality and Expense
Risk Charge, divided by 1.0032737; and
(b) is the Policy Value on the monthly processing date after deduction of
the Monthly Administrative Charge and the Mortality and Expense Risk
Charge.
SECTION 8. CASH VALUE AND SURRENDER
8.1 CASH VALUE
The cash value of this policy is equal to:
- the Policy Value; less
- any policy debt.
8.2 SURRENDER
The Owner may surrender this policy for its cash value. A written
surrender of all claims, satisfactory to the Company, will be required. The
date of surrender will be the date of receipt at the Home Office of the written
surrender. The policy will terminate, and the cash value will be determined, as
of the end of the valuation period which includes the date of surrender. The
Company may require that the policy be sent to it.
8.3 DEFERRAL OF PAYMENTS
The Company reserves the right:
- to defer determination of the cash value and payment of the cash
value;
- to defer payment of a loan or withdrawal; and
- to defer determination of a change in the amount of variable insurance
or other variable amounts payable on death, and, if such determination
has been deferred, to defer payment of the death benefit;
during any period when:
- the New York Stock Exchange is closed or trading on the New York Stock
Exchange is restricted as determined by the SEC; or
- the SEC declares that an emergency exists as a result of which the
sale or determination of investment results is not reasonably
practicable; or
- the SEC, by order, permits deferral for the protection of the
Company's policyowners.
14
<PAGE>
SECTION 9. LOANS AND WITHDRAWALS
9.1 POLICY LOANS
The Owner may obtain a loan from the Company in an amount that, when added
to existing policy debt, is not more than the loan value.
On the date a loan is made, the amount invested for this policy in the
Separate Account will be reduced by the amount of the loan. The reduction will
be allocated to each Division in proportion to the amounts in each Division. On
the date a loan repayment is made, or the date accrued interest is paid, the
amount invested for this policy in the Separate Account will be increased by the
amount of the payment. The increase will be allocated to the Divisions of the
Separate Account according to the allocation of net premiums currently in
effect.
9.2 LOAN VALUE
The loan value is 90% of the Policy Value on the date of the loan.
9.3 POLICY DEBT
Policy debt consists of all outstanding loans and accrued interest. It may
be paid to the Company at any time. Any policy debt will be deducted from the
policy proceeds.
If the policy debt equals or exceeds the Policy Value on a monthly
processing date, the policy will terminate with no value subject to the
conditions of the Grace Period (Section 4.5).
9.4 LOAN INTEREST
Interest accrues and is payable on a daily basis from the date of the loan.
Unpaid interest is added to policy debt.
Interest is payable at an annual effective rate of 5%.
9.5 WITHDRAWALS
The Owner may make a withdrawal of the Policy Value. The Company reserves
the right to charge for withdrawals. This charge will be deducted from the
Policy Value and will not exceed the amount shown on page 4. However, the Owner
may not:
- withdraw an amount which would reduce the loan value to less than the
policy debt;
- withdraw an amount which would reduce the death benefit to less than
the minimum amount the Company would issue at the time of withdrawal;
- withdraw an amount which would reduce the cash value to less than
three times the most recent Monthly Policy Charge;
- withdraw less than the minimum withdrawal amount shown on page 3; or
- make more than four withdrawals in a policy year.
When a withdrawal from the Policy Value is made, the amount invested for
this policy in the Separate Account will be reduced by the amount of the
withdrawal. The reduction will be allocated to each Division in proportion to
the amounts in each Division. If the death benefit option in effect at the time
of withdrawal is either Option A or Option C, the Specified Amount will be
reduced by the lesser of:
- the amount of the withdrawal; or
- the excess, if any, of the Specified Amount over the result of (a)
minus (b) where:
(a) is the death benefit immediately prior to the withdrawal; and
(b) is the amount of the withdrawal.
15
SECTION 10. BENEFICIARIES
<PAGE>
10.1 DEFINITION OF BENEFICIARIES
The term "beneficiaries" as used in this policy includes direct
beneficiaries, contingent beneficiaries and further payees.
10.2 NAMING AND CHANGE OF BENEFICIARIES
BY OWNER. The Owner may name and change the beneficiaries of death proceeds:
- while the Insured is living.
- during the first 60 days after the date of death of the Insured, if
the Insured was not the Owner immediately prior to the Insured's
death. A change made during this 60 days may not be revoked.
BY DIRECT BENEFICIARY. A direct beneficiary may name and change the contingent
beneficiaries and further payees of the direct beneficiary's share of the
proceeds:
- if the direct beneficiary is the Owner; or
- if, at any time after the death of the Insured, no contingent
beneficiary or further payee of that share is living.
These direct beneficiary rights are subject to the Owner's rights during
the 60 days after the date of death of the Insured.
BY SPOUSE (MARITAL DEDUCTION PROVISION).
- POWER TO APPOINT. The spouse of the Insured will have the power alone
and in all events to appoint all amounts payable to the spouse under
the policy if:
a. immediately before the Insured's death, the Insured was the
Owner; and
b. the spouse is a direct beneficiary; and
c. the spouse survives the Insured.
Under this power, the spouse can appoint:
a. to the estate of the spouse; or
b. to any other persons as contingent beneficiaries and further
payees.
- EFFECT OF EXERCISE. As to the amounts appointed, the exercise of this
power will:
c. revoke any other designation of beneficiaries;
d. revoke any election of payment plan as it applies to them; and
e. cause any provision to the contrary in Section 10 of the policy
to be of no effect.
EFFECTIVE DATE. A naming or change of a beneficiary will be made on receipt at
the Home Office of a written request that is acceptable to the Company. The
request will then take effect as of the date that it was signed. The Company is
not responsible for any payment or other action that is taken by it before the
receipt of the request. The Company may require that the policy be sent to it
to be endorsed to show the naming or change.
10.3 SUCCESSION IN INTEREST OF
BENEFICIARIES
DIRECT BENEFICIARIES. The proceeds of this policy will be payable in equal
shares to the direct beneficiaries who survive and receive payment. If a direct
beneficiary dies before receiving all or part of the direct beneficiary's full
share, the unpaid portion will be payable in equal shares to the other direct
beneficiaries who survive and receive payment.
CONTINGENT BENEFICIARIES. At the death of all of the direct beneficiaries, the
proceeds will be payable in equal shares to the contingent beneficiaries who
survive and receive payment. If a contingent beneficiary dies before receiving
all or part of the contingent's full share, the unpaid portion will be payable
in equal shares to the other contingent beneficiaries who survive and receive
payment.
FURTHER PAYEES. At the death of all of the direct and contingent beneficiaries,
the proceeds will be paid in one sum:
- in equal shares to the further payees who survive and receive payment;
or
- if no further payees survive and receive payment, to the estate of the
last to die of all of the direct and contingent beneficiaries who
survive the Insured.
OWNER OR THE OWNER'S ESTATE. If no beneficiaries are alive when the Insured
dies, the proceeds will be paid to the Owner or to the Owner's estate.
10.4 GENERAL
TRANSFER OF OWNERSHIP. A transfer of ownership of itself will not change the
interest of a beneficiary.
<PAGE>
CLAIMS OF CREDITORS. So far as allowed by law, no amount payable under this
policy will be subject to the claims of creditors of a beneficiary.
<PAGE>
AMENDMENT TO FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICY
AS OF THE DATE OF ISSUE, SECTION 8.1 CASH VALUE, IS AMENDED AS FOLLOWS:
During the first policy year, if the policy is not in a grace period, the
cash value of this policy is equal to:
- the Policy Value; plus
- [100%] of the sum of Sales Loads (page 4) deducted from premiums paid
to date; less
- any policy debt.
During the second policy year, if the policy is not in a grace period, the
cash value of this policy is equal to:
- the Policy Value; plus
- [50%] of the sum of Sales Loads (page 4) deducted from premiums paid
to date; less
- any policy debt.
During the third and later policy years and any time the policy is in a
grace period; the cash value of this policy is equal to:
- the Policy Value; less
- any policy debt.
Secretary
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(page 21)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY / / / / / / / / /
720 E. WISCONSIN AVENUE, MILWAUKEE, WISCONSIN 53202 POLICY NUMBER
EMPLOYER SPONSORED LIFE INSURANCE APPLICATION / / / / / / / / / / / /
/ / Companion policies PLAN GROUP NUMBER
INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
1 Has an application or informal inquiry ever been made to Northwestern Mutual Life for annuity, life, long term care, or
disability insurance on the life of the Insured? / / Yes / / No If yes, the last policy number is
-------------------------------------------------------------------------------------------------------------------------------
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other B. / / MALE
-------------------------- / / FEMALE
/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /
-------------------------------------------------------------------------------------------------------------------------------
C. BIRTHDATE: (Month, Day Year) D. STATE OF BIRTH (or Foreign Country): E. TAXPAYER IDENTIFICATION NUMBER:
/ / / / / / / / / / / / / / / / / / - / / / - / / / / /
------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
F. PRIMARY RESIDENCE:
STREET OR PO BOX:
--------------------------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
------------------------------------------------------------------------
E-MAIL ADDRESS:
--------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
APPLICANT
- ------------------------------------------------------------------------------------------------------------------------------------
2 Select ONLY ONE: / / Insured at Insured's Address OR / / Other (Complete A, B and C)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
----------------------------------------
/ / MALE
PERSONAL NAME: / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / FEMALE
(FIRST, MIDDLE INITIAL, LAST)
RELATIONSHIP TO INSURED: BIRTHDATE: / / / / / / / / / / /
OR --------------------------------------------------- MONTH DAY YEAR
BUSINESS/TRUST NAME: / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /
TYPE OF ORGANIZATION: / / Trust / / Corporation / / Partnership / / Other type of Business
------------
AUTHORIZED COMPANY
REP/TRUSTEE NAME:
------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER: / / / / / / / / / / / / / / / / / /
-------------------------------------------------------------------------------------------------------------------------------
C. ADDRESS: STREET OR PO BOX:
---------------------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
------------------------------------------------------------------------
E-MAIL ADDRESS:
---------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM PAYER
- ------------------------------------------------------------------------------------------------------------------------------------
3 Select ONLY ONE: / / ISA (Omit A through D below) OR / / Insured (Complete D only) / / Applicant (Complete D only)
/ / Owner (Complete D only) / / Other (Complete A, B, C and D)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
------------------------------
/ / MALE
PERSONAL NAME: / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / FEMALE
(FIRST, MIDDLE INITIAL, LAST)
BIRTHDATE / / / / / / / / / /
MONTH DAY YEAR
OR
BUSINESS/TRUST NAME: / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /
-------------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER: C. DAYTIME TELEPHONE NUMBER:
/ / / / / / / / / / / / / / / / Area Code ( )
------------------------------------------
</TABLE>
(page 22)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
-------------------------------------------------------------------------------------------------------------------------------
Send premium and other notices regarding this policy to:
D. ADDRESS: / / Insured's Address / / Applicant's Address OR
STREET OR PO BOX:
---------------------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
------------------------------------------------------------------------
E-MAIL ADDRESS:
---------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(page 23)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
4-7 (Reserved)
- ------------------------------------------------------------------------------------------------------------------------------------
8. SPECIAL DATE
PREPAID:
/ / Short term - Policy Date will coincide with ISA Payment Date. (For monthly ISA only)
/ / Short term to: / / / / / / / / / / / / Date to save age / / / / / / / / / / / /
MONTH DAY YEAR MONTH DAY YEAR
NON-PREPAID
/ / Specified future date: / / / / / / / / / / / / Date to save age / / / / / / / / / / / /
MONTH DAY YEAR MONTH DAY YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
POLICY APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------------------
9. FIRST POLICY INFORMATION
/ / APPLICATION SUPPLEMENT (REQUIRED FOR COMPLIFE AND ALL VARIABLE LIFE PRODUCTS)
OR
A. PLAN:
---------------------------------------------------------------------------------------------------------------------
AMOUNT: $
----------------------------------------------------------------------------------------------------------------
B. ADDITIONAL BENEFITS:
/ / Waiver of Premium
/ / Accidental Death $ ____________ (BENEFIT AMOUNT)
/ / Other
----------------------------------------------------------------------------------------------------------------
C. ANNUAL DIVIDENDS:
/ / Reduce current premium
/ / Purchase paid-up additions
/ / Accumulate at interest
/ / Be paid in cash
/ / Be used for a combination of options above
(COMPLETE FORM 18-1364-01)
D. POLICY LOAN INTEREST RATE OPTION:
/ / 8% / / Variable Rate
10. If an additional benefit cannot be approved, should the company issue a policy without the benefit? / / Yes / / No
11. Shall the Premium Loan provision, if available, become operative according to its terms? / / Yes / / No
12. PREMIUM FREQUENCY:
/ / Annually / / Semiannually / / Quarterly / / Single
- ------------------------------------------------------------------------------------------------------------------------------------
SECOND POLICY INFORMATION
/ / APPLICATION SUPPLEMENT (REQUIRED FOR COMPLIFE AND ALL VARIABLE LIFE PRODUCTS)
OR
A. PLAN:
---------------------------------------------------------------------------------------------------------------------
AMOUNT: $
----------------------------------------------------------------------------------------------------------------
B. ADDITIONAL BENEFITS:
/ / Waiver of Premium
/ / Accidental Death $ ____________ (BENEFIT AMOUNT)
/ / Other
----------------------------------------------------------------------------------------------------------------
C. ANNUAL DIVIDENDS:
/ / Reduce current premium
/ / Purchase paid-up additions
/ / Accumulate at interest
/ / Be paid in cash
/ / Be used for a combination of options above
(COMPLETE FORM 18-1364-01)
D. POLICY LOAN INTEREST RATE OPTION:
/ / 8% / / Variable Rate
10. If an additional benefit cannot be approved, should the company issue a policy without the benefit? / / Yes / / No
11. Shall the premium Loan provision, if available, become operative according to its terms? / / Yes / / No
12. PREMIUM FREQUENCY:
/ / Annually / / Semiannually / / Quarterly / / Single
- ------------------------------------------------------------------------------------------------------------------------------------
13-14 (Reserved)
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------------------
15. A. DIRECT BENEFICIARY
-------------------------------------------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED
-------------------------------------------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED
-------------------------------------------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED
B. CONTINGENT BENEFICIARY
-------------------------------------------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED
-------------------------------------------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
RELATIONSHIP TO INSURED
/ / and all (other) children of the insured.
(SELECT TO INCLUDE ALL OF THE CHILDREN OR TO ADD TO THE CONTINGENT BENEFICIARIES NAMED. NOTE: THE WORD "CHILDREN" INCLUDES
CHILD OR ANY LEGALLY ADOPTED CHILD.)
C. / / SEE ATTACHED SUPPLEMENT FORM
(TO BE USED IN PLACE OF DESIGNATIONS ABOVE)
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER
- ------------------------------------------------------------------------------------------------------------------------------------
16. The OWNER will be: (SELECT ONLY ONE)
/ / A. Insured
/ / B. Applicant
/ / C. Other
----------------------------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
----------------------------------------------------------------------------------------------------------------
RELATIONSHIP TO INSURED
/ / D. SEE ATTACHED SUPPLEMENT FORM.
(To be used in place of designations above.)
RESIDENCE OF OWNER
/ / Insured's address in 1F.
/ / Premium Payer's address in 3D or
(page 24)
<PAGE>
--------------------------------------------------------------------------------------------------------------------------
STREET OR PO BOX
--------------------------------------------------------------------------------------------------------------------------
CITY, STATE AND ZIP CODE (COUNTRY IF OTHER THAN U.S.A.)
OWNER'S TAXPAYER IDENTIFICATION NUMBER
/ / / / / / / / / / / / (See TIN Instructions)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(page 25)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
INSURED / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /
FIRST MIDDLE INITIAL LAST
CONDITIONAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
17. Has the premium for the policy applied for been given to the agent in exchange for the Conditional Life Insurance Agreement
with the same number as this application? / / Yes / / No
18-19 (Reserved)
INSURANCE HISTORY
- ------------------------------------------------------------------------------------------------------------------------------------
20. Does the Insured have any other life insurance in force, pending or contemplated in other companies? / / Yes / / No
If yes, indicate Company Name, Individual (Ind) or Group (Grp) and identify the amount of In Force, Pending or Contemplated.
LIFE INSURANCE AMOUNTS
-------------------------------------------------------------------------------------------------------------------------------
Ind or Contemplated Accidental Death
Company Name Grp In Force Amount Pending Amount Amount Amount
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
21. As a result of this purchase will the values or benefits of any other life insurance policy or annuity contract, on any life,
be affected in any way?....................................................................................../ / Yes / / No
NOTE TO AGENT: VALUES OR BENEFITS ARE AFFECTED IF ANY QUESTION ON THE DEFINITION OF REPLACEMENT SUPPLEMENT COULD BE ANSWERED
"YES."
If "yes", this transaction is a replacement of life insurance or annuity.
The agent must:
- submit required papers and sale materials AND
- provide required disclosure notices to the applicant.
The applicant must answer the questions:
- on the Definition of Replacement Supplement AND
- A, B, and C below.
Will this insurance:
A. replace Northwestern Mutual Life?........................................................................./ / Yes / / No
B. replace other Companies?................................................................................../ / Yes / / No
C. result in 1035 exchange?................................................................................../ / Yes / / No
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
It is agreed that:
(1) If the premium is not paid when the application is signed, no insurance
will be in effect. The insurance will take effect at the time the policy is
delivered and the premium is paid, if: the Insured is living at the time;
and the answers and statements in the underwriting questionnaire are then
true to the best of the Insured's knowledge and belief.
(2) If the premium is paid when the application is taken, no life insurance
will be in effect except as provided in the Conditional Life Insurance
Agreement.
(3) If the policy is issued in an extra premium class, acceptance of the policy
will amend it so that extended term insurance can be in force only if: the
Company gives its consent; or the loan value is not large enough to grant a
premium loan. If a premium is not paid within the grace period and extended
term insurance cannot be in force, paid-up insurance will be selected.
(4) No agent is authorized to make or alter contracts or to waive any of the
Company's rights or requirements.
- --------------------------------------------------------------------------------
THE OWNER OF THE POLICY APPLIED FOR HEREIN CERTIFIES, UNDER PENALTIES OF
PERJURY, (1) THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN FOR THE OWNER ON THE
SECOND PAGE OF THIS APPLICATION IS THE OWNER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER (OR THE OWNER IS WAITING FOR A NUMBER TO BE ISSUED) AND (2) THE OWNER IS
NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE THE OWNER HAS NOT BEEN NOTIFIED
BY THE INTERNAL REVENUE SERVICE (IRS) THAT THE OWNER IS SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE
IRS HAS NOTIFIED THE OWNER THAT THE OWNER IS NO LONGER SUBJECT TO BACKUP
WITHHOLDING. (SEE TAXPAYER IDENTIFICATION NUMBER INSTRUCTIONS.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
- --------------------------------------------------------------------------------
THE SIGNATURES BELOW APPLY TO THE APPLICATION, POLICY APPLICATION SUPPLEMENT AND
THE CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER.
- ---------------------------------------- -----------------------------------
SIGNATURE OF APPLICANT SIGNATURE OF OWNER
(IF OTHER THAN APPLICANT)
Signed by
Applicant at:
--------------------- -----------------------------------
CITY, COUNTY, & STATE SIGNATURE OF LICENSED AGENT
Date signed by Applicant
/ / / / / / / / / /
MONTH DAY YEAR
POLICY APPLICATION SUPPLEMENT FOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INSURED: John J. Doe
POLICY:
Specified Amount: $1,000,000
Death Benefit Option: Specified Amount (Option A)
<PAGE>
Definition of Life Insurance Test: Guideline Premium/Cash Value Corridor Test
Initial Premium: $10,000.00
Reminder Premium: $10,000.00
Reminder Mode: Annual
For Office Use Only
Underwriting Amount: $1,000,000
Illustrated Cumulative Premiums:
Year 5: $50,000.00 Year 15: $150,000.00
Year 10: $100,000.00 Year 20: $200,000.00
VEL, 35, M, Select
WI
Band 2
Internal Replacement
Illustration No. 123-456-789
Page 1 of 3
<PAGE>
The Death Benefit may increase or decrease daily depending on investment
results. There is no guaranteed minimum death benefit.
The Cash Value under this policy may increase or decrease daily depending on
investment results. There is no guaranteed minimum cash value.
ALLOCATION OF NET PREMIUMS
This allocation will apply to all net premiums and loan repayments. Use whole
percentages only. If monthly dollar cost averaging (from the Money Market
Division) is desired, complete both this section and the monthly dollar cost
averaging section.
Money Market Division %
---------------------
Aggressive Growth Stock Division %
---------------------
Balanced Division %
---------------------
Growth and Income Stock Division %
---------------------
Growth Stock Division %
---------------------
High Yield Bond Division %
---------------------
Index 500 Stock Division %
---------------------
International Equity Division %
---------------------
Select Bond Division %
---------------------
Total 100 %
---------------------
MONTHLY DOLLAR COST AVERAGING
To elect monthly dollar cost averaging complete the following section.
Transfer the following amount from the Money Market Division on each monthly
processing date and allocate it among the other Divisions as specified below:
$__________. If the amount specified is larger than the balance in the Money
Market Division, the entire balance will be transferred. Use whole percentages
only.
Aggressive Growth Stock Division %
---------------------
Balanced Division %
---------------------
Growth and Income Stock Division %
---------------------
Growth Stock Division %
---------------------
High Yield Bond Division %
---------------------
Index 500 Stock Division %
---------------------
International Equity Division %
---------------------
Select Bond Division %
---------------------
Total 100 %
---------------------
Insured: John J. Doe
Illustration No. 123-456 -789
Page 2 of 3
<PAGE>
THIS PAGE WILL BE REQUIRED ONLY IF THE INSURED HAS INVESTMENT RESPONSIBILITY.
Northwestern Mutual Life is required to make the following inquiries for
purposes of determining the suitability of this sale. Responses will be kept
confidential.
TOTAL ANNUAL INCOME (all sources) $
------------------------------
TOTAL NET WORTH $
------------------------------------------------
YEARS OF EXPERIENCE WITH THE FOLLOWING:
Less than Five or
Five More
None Years Years
---- ----- -----
Mutual Funds
----- ----- -----
Individual Common Stocks
----- ----- -----
Variable Annuities
----- ----- -----
Variable Life Insurance
----- ----- -----
Signature of Insured:
------------------------------------------------------
Insured: John J. Doe
Illustration No. 123-456-789
Page 3 of 3
<PAGE>
IT IS RECOMMENDED THAT YOU ...
read your policy.
notify your Northwestern Mutual agent or the Company at 720 East Wisconsin
Avenue, Milwaukee, WI 53202, of an address change.
call your Northwestern Mutual agent for information--particularly on a
suggestion to terminate or exchange this policy for another policy or plan.
ELECTION OF TRUSTEES
The members of The Northwestern Mutual Life Insurance Company are its
policyholders of insurance policies and deferred annuity contracts. The members
exercise control through a Board of Trustees. Elections to the Board are held
each year at the annual meeting of members. Members are entitled to vote in
person or by proxy.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ELIGIBLE FOR ANNUAL DIVIDENDS
Insurance payable at death of Insured.
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT MAY INCREASE OR DECREASE DAILY DEPENDING ON INVESTMENT
RESULTS. THERE IS NO GUARANTEED MINIMUM DEATH BENEFIT.
THE CASH VALUE UNDER THIS POLICY MAY INCREASE OR DECREASE DAILY DEPENDING ON
INVESTMENT RESULTS. THERE IS NO GUARANTEED MINIMUM CASH VALUE.
<PAGE>
Exhibit A(6)(c)
AMENDMENTS TO THE BY-LAWS ADOPTED AT A MEETING OF THE BOARD OF TRUSTEES OF THE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ON JULY 23, 1997
Article VI of said By-laws is hereby amended in its entirety to read as follows:
ARTICLE VI
OFFICIAL BONDS; CHECKS;
OTHER INSTRUMENTS
Section 6.1 OFFICIAL BONDS.
The board, the executive committee or the finance committee may require a
bond from any executive officer, officer, other employee or agent of the
Company, in such sum and with such sureties as it may deem proper.
Section 6.2 CHECKS.
Disbursement of the funds of the Company shall be made upon the check of
the Company signed by such persons and in such manner as may be determined by
the finance committee. Such persons as may be designated by the finance
committee shall each have authority to endorse checks and other instruments
received by the Company or to execute powers of attorney authorizing other
persons to make such endorsements.
Section 6.3 INSURANCE POLICIES AND ANNUITY CONTRACTS.
Insurance policies and annuity contracts issued by the Company and
endorsements thereto shall be executed in the manner provided by the board or
executive committee.
Section 6.4 DERIVATIVE INVESTMENTS INSTRUMENTS.
The chairman of the board, if any, the president, and those executive
officers, vice presidents and other employees of the investment departments who
are designated by the board or finance committee shall each have authority to
execute on the behalf of the Company all instruments regarding derivative
investments which are executed in the name of the Company.
Section 6.5 OTHER INVESTMENT INSTRUMENTS.
The chairman of the board, if any, the president, all vice presidents in
the investment departments, the vice president and investment counsel, the
general counsel and such other persons as the board or the finance committee may
designate shall each have authority (a) to execute on the behalf of the Company
all instruments regarding investments (other than derivative investments which
are to be executed as provided in Section 6.4) which are executed in the name of
the Company and (b) to execute powers of attorney delegating authority to other
persons to execute investment instruments for the purpose of expediting a
specific transaction or to facilitate foreign investing.
<PAGE>
Section 6.6 OTHER INSTRUMENTS.
The chairman of the board, if any, the president, and all vice presidents
or other executive officers, and such other persons as the board or the
executive committee may designate shall each have authority (a) to execute on
behalf of the Company all other instruments (in addition to those described in
Sections 6.2 through 6.5) executed in the name of the Company; and (b) to
execute powers of attorney delegating authority to other persons to execute on
behalf of the Company other instruments executed in the name of the Company for
specific purposes.
Section 6.7 ATTESTATION.
The secretary and assistant secretaries shall each have authority to
attest, countersign and acknowledge all instruments described herein requiring
attestation, countersignature or acknowledgment.
<PAGE>
Exhibit A(8)
AGREEMENT
THIS AGREEMENT entered into as of the 13th day of February, 1984, by and
between The Northwestern Mutual Life Insurance Company, a mutual life insurance
company organized under the laws of the State of Wisconsin ("NML"), Northwestern
Mutual Variable Life Account, a separate account established by NML in
accordance with the provisions of the Wisconsin Insurance law (the "Account")
and NML Equity Services, Inc., a Wisconsin corporation ("Equity").
WHEREAS, NML and Equity are parties to certain Agreements dated as of
March 1, 1971, December 1, 1971 and March 10, 1981; and
WHEREAS, such Agreements provide that NML and Equity shall serve as
co-depositors of NML Variable Annuity Account B, NML Variable Annuity Account 2
and NML Variable Annuity Account 1, separate accounts established by NML and
registered as unit investment trusts under the Investment Company Act of 1940;
and
WHEREAS, it is contemplated that the Account will also be registered as a
unit investment trust under the Investment Company Act of 1940; that NML will
perform administrative services in connection with the affairs of the Account
and the sale and redemption of the variable life insurance policies to be issued
in connection with the Account (the "Policies"); and that Equity will assist NML
in the performance of such administrative services; and
WHEREAS, the parties hereto desire that a similar co-depositor arrangement
shall be used for the Account.
NOW THEREFORE IT IS MUTUALLY AGREED AS FOLLOWS:
1. Equity will supervise the persons who receive all payments of premiums
with the Policies, and other communications from Policy owners, to insure that:
(i) all orders for purchases, surrenders, exchanges, loans, loan repayments,
transfers and other transactions under the Policies are properly time-stamped;
(ii) warrants identifying all checks received are prepared; (iii) all checks are
promptly transmitted to NML for processing; and (iv) proper records of such
transactions are maintained.
2. NML will produce journals for daily Policy transactions of NML and the
Account with its data processing equipment and deliver such journals to Equity.
Upon receipt of such journals Equity will summarize such transactions and
prepare suitable accounting entries on the books and records of NML and the
Account to reflect such transactions. Equity will also maintain and preserve
such journals.
3. Equity will calculate the investment rate of return for each division
of the Account and the number of shares of each Portfolio of Northwestern Mutual
Variable Life Series Fund, Inc. (the "Fund") which are to be purchased or
redeemed by the Account for each business day and maintain the financial books
and records of the Account.
4. As of the close of business on each business day Equity as agent for
the Account will purchase or redeem the appropriate number of shares of each
Portfolio of the Fund.
<PAGE>
5. Equity will maintain necessary records to reflect the calculation of
the investment rates of return for the divisions and the purchase and redemption
of Fund shares including confirmation statements received from the Fund on
transactions for the Account.
6. Equity understands that it is a co-depositor of the Account with NML,
and as such co-depositor Equity will sign any documents required to be filed
with the Securities and Exchange Commission on behalf of the Account, including,
without limitation, the Registration Statement of the Account to be filed under
the Securities Act of 1933, amendments and post-effective amendments thereto,
the Registration Statement of the Account to be filed under the Investment
Company Act of 1940, and such periodic reports as may be required.
7. This Agreement may not be assigned by any party except by consent of
all the parties and shall continue for a period of one year and from year to
year thereafter subject to termination by any party at any time upon 60 days
written notice to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE NORTHWESTERN MUTUAL LIFE
ATTEST: INSURANCE COMPANY
/s/ PETER W. BRUCE By: /s/ GARY E. LONG
- ------------------------- ------------------------------
Peter W. Bruce, Secretary Gary E. Long, Controller
NORTHWESTERN MUTUAL VARIABLE
LIFE ACCOUNT
By: THE NORTHWESTERN MUTUAL LIFE
ATTEST: INSURANCE COMPANY (Depositor)
/s/ PETER W. BRUCE By: /s/ GARY E. LONG
- ------------------------- ------------------------------
Peter W. Bruce, Secretary Gary E. Long, Controller
ATTEST: NML EQUITY SERVICES, INC.
/s/ MERRILL C. LUNDBERG By: /s/ HAROLD E. BREWSTER
- ------------------------- -----------------------------
Merrill C. Lundberg, Harold E. Brewster, President
Assistant Secretary
<PAGE>
EXHIBIT A(11)
NORTHWESTERN MUTUAL LIFE
720 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
John A. Doe December 31, 1998
123 Main Street
Anytown, Wisconsin 53000 RE: 14 567 890
John A. Doe
FLEXIBLE PREMIUM
VARIABLE LIFE
INSURANCE POLICY
NOTICE OF CANCELLATION RIGHT
In order to comply with the laws administered by the Securities and Exchange
Commission, we are sending you this notice. Please read it carefully.
You have recently purchased a variable life insurance policy from Northwestern
Mutual Life. The benefits of this policy depend on the investment experience of
Northwestern Mutual Variable Life Account. The prospectus that was given to you
at the time of sale describes the Account and gives an illustration reflecting
various investment performances.
You have the right to examine and cancel this policy. Upon its return, you are
entitled to a refund. The cancellation deadline is the latest of:
1. 10 days after you have received the policy.
2. 45 days from December 15, 1998, the date you completed part 1 of the
application.
3. 10 days after you have received this notice.
In determining whether or not to exercise your right, you should consider, along
with other factors, the projected cost and your ability to make premium
payments. Please consult and review the prospectus you have received. The
prospectus describes the deductions from premiums before amounts are allocated
to the Account mentioned above. These are:
A charge for state premium taxes equal to 2.35% of premiums paid.
A charge for federal income taxes measured by premiums equal to 1.25% of
premiums paid.
A charge for sales cost. The charge is 15% of premiums paid up to the
Target Premium and 3% of all other premiums.
If you decide to cancel your policy, complete the form on the reverse side and
return it along with your policy. The postmark of the returned policy must be
on or before the deadline described above.
<PAGE>
VARIABLE LIFE INSURANCE CANCELLATION INSTRUCTIONS
PLEASE READ CAREFULLY
If, after reading the Notice of Cancellation Right on the reverse side, you
decide to return your policy for cancellation, you must:
1. Sign and date the bottom of this form.
2. Mail this notice together with your policy to either
YOUR AGENT: OR THE HOME OFFICE:
NORM WESTON, CLU NORTHWESTERN MUTUAL LIFE
200 PARK DRIVE NEW BUSINESS DEPARTMENT
ANYTOWN, WI 53000 720 EAST WISCONSIN AVENUE
MILWAUKEE, WI 53202
3. The postmark of the envelope must be on or before the latest date permitted
for cancellation as described on the reverse side.
4. Please check the box at the bottom if you have not yet received your policy
when mailing this form.
- --------------------------------------------------------------------------------
TO BE FILLED OUT BY OWNER IF CANCELLATION IS DESIRED
TO: Northwestern Mutual Life
New Business Department
Central Region
Pursuant to the terms of the Notice of Cancellation Right printed on the reverse
side of these instructions, I hereby return the policy numbered to allow for
cancellation and request a refund. I release Northwestern Mutual Life from any
claims in connection with the sale or issuance of this policy. I acknowledge
that Northwestern Mutual Life's only liability is a refund equal to the sum of
(a) the difference between any premium paid and the amount allocated to the
Separate Account plus (b) the value of the policy in the Separate Account on the
date the returned policy is received. STATE VARIATION NUMBER ONE, ADD THE
FOLLOWING SENTENCE: The amount of the refund will not be less than the premium
paid. STATE VARIATION NUMBER TWO, ADD THE FOLLOWING SENTENCE: If the policy is
returned within 10 days of the date it was delivered, the amount of the refund
will not be less than the premium paid.
------------------------------ -----------------------------------
Date of Signature Signature of Policy Owner
------------------------------ -----------------------------------
Date of Receipt of Our Policy Policy Number
And This Notice of Cancellation
Right
-----------------------------------
Name of Insured
(if other than the Owner)
_____ I have not yet received the policy. Should it be received, I will return
it to Northwestern Mutual Life.
-----------------------------------
Signature of Agent
-----------------------------------
Date
<PAGE>
Exhibit A (12)
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Description of Issuance, Transfer and Redemption Procedures for Variable
Life Insurance Contracts Pursuant to Rule 6e-3(T)(b)(12)(iii) and Method of
Computing the Adjustment in Payments and Cash Values for Conversions Pursuant to
Rule 6e-3(T)(b)(13)(v)(B).
INTRODUCTION
1. Rule 6e-3(T)(b)(12) under the Investment Company Act provides
exemption from Sections 22(c), 22(d), 22(e) and 27(c)(1) of the Act and Rule
22c-1 thereunder for variable life insurance policies which meet the conditions
of the Rule. (Rule 6e-3(T) has not been amended to reflect the addition of
Section 27(c)(i); the registration statement with which this memorandum is filed
includes a representation in compliance with Section 27(e)(2)(A) of the
Investment Company Act, as amended in 1996.) Rule 6e-3(T)(b)(13)(v) provides
exemption from Section 27(f) of the Act for variable life insurance policies
which, among other conditions, provide for the right to convert the policies to
fixed benefit life insurance within twenty-four months after the policies are
issued. Both Rules refer to materials which must be included in the separate
account's filing with the Commission pursuant to paragraph (b)(3)(ii) of Rule
6e-3(T).
2. Rule 6c-3 provides exemptions for a registered variable life insurance
separate account which registers under Section 8 of the Act, except for
exemption from the registration requirements, "under the same terms and
conditions as a separate account claiming exemption under --- Rule 6e-3(T)."
Therefore a separate account which registers as contemplated by Rule 6c-3 may be
required to include the materials referred to in Rules 6e-3(T)(b)(12)(iii) and
6e-3(T)(b)(13)(v) as exhibits to its registration statement filed under the Act.
The purpose of this memorandum is to fulfill this requirement with respect to
the Flexible Premium Variable Life Insurance Policy ("Policy") proposed to be
offered in connection with Northwestern Mutual Variable Life Account
("Account"), a separate investment account of The Northwestern Mutual Life
Insurance Company ("Northwestern").
<PAGE>
RULE 6e-3(T)(b)(12)(iii)
3. Rule 6e-3(T)(b)(12)(iii) provides exemptions from the sections and
rules cited above to the extent "Necessary to comply with this Rule or with
insurance laws and regulations and established administrative procedures of the
life insurer for issuance increases in or additions of insurance benefits,
transfer and redemption of flexible contracts, including, but not limited to,
premium rate structure and premium processing, insurance underwriting standards,
and the particular benefit afforded by the contract. . ." The Rule thus
recognizes that the established procedures of the insurance company itself,
founded on the requirements of the state insurance law, have a principal role in
defining the requirements which apply for variable life insurance offered by the
same company.
ISSUANCE PROCEDURES
A. PREMIUM STRUCTURE AND INSURANCE UNDERWRITING STANDARDS
4. The Policy is a flexible premium contract. Premiums may be paid at
any time and in any amount, within limits. The actual cost of insurance charge
will depend on the age, sex and insurance risk classification of the proposed
insured, as well as the net amount at risk. Thus the price of the insurance
will differ, reflecting established insurance procedures and state law, in order
to fairly take into account the differences in risks.
5. As a mutual life insurance company organized in Wisconsin,
Northwestern is required to offer its insurance contracts as participating
policies which share equitably in Northwestern's divisible surplus. The
Policies accordingly have been designated as participating. However, no
dividends are anticipated since this Policy is not expected to contribute to
divisible surplus.
2
<PAGE>
6. Notwithstanding the documented differences between male and female
mortality rates, a 1983 decision of the U.S. Supreme Court (1)has created legal
liability issues for employers who purchase, or are otherwise involved in the
purchases of, insurance products which are priced so as to reflect these
differences. Similarly, the laws of individual states (currently only Montana)
require that policies offered there use a sex-neutral pricing basis. The
Policies will accordingly be offered on a sex-neutral pricing basis for use as
required in such situations.
B. PROCEDURES FOR PLACING A POLICY IN EFFECT
7. When a proposed insured applies for a Policy, Northwestern will begin
the same process of risk evaluation which takes place when an application for a
fixed benefit insurance policy is received. Several days or weeks may elapse
from the date of the application until this underwriting procedure is completed
and, if insurability is established, the Policy is issued and delivered to the
owner. If the insured dies in the interim, after at least the minimum initial
premium has been paid, Northwestern pays the death benefit to the beneficiary
unless it is determined that the application would have been rejected.
8. If the applicant for insurance pays at least the minimum initial
premium when the application is submitted, the Policy Date will be the date when
Northwestern received the latest of (1) the premium amount, (2) the application
and (3) medical evidence form.
9. If the application is submitted without any premium, the underwriting
procedure will be carried out and the Policy will be issued and delivered in due
course. In that case the Policy Date will be 7 days after the date on which the
application is finally approved and the Policy is issued, provided that the
Policy is in fact delivered within 32 days after the approval date and the
premium is paid at that time. If more than 32 days elapse, the Policy Date will
be reset according to the agent's instructions and will be subject to approval
by the Home Office.
- ---------------------
(1) Arizona Governing Committee, Etc. v. Norris, 103 S. Ct. 3492 (1983).
3
<PAGE>
10. For life insurance purposes, one's age is reckoned as the age at the
last or next birthday, depending on which is closer. The Policy Date may be
backdated for a maximum of 11 months subject to applicable state insurance law.
11. Upon request, the Policy Date may be a future date. In that case,
term insurance is available for the interim period, to the extent permitted by
applicable state insurance law.
12. In any case, investment experience begins on the date the initial
premium is received. For all purposes under the Policies, the Policy Values for
any date are determined as of the close of business on that date, or whenever
the assets of the Account are next valued. Assets of the Account consist
entirely of shares of Northwestern Mutual Series Fund, Inc., ("Fund") and shares
of each series of the Fund are valued daily as of the close of trading on the
New York Stock Exchange.
13. The suicide and incontestability periods under a Policy will run from
the Issue Date. The Issue Date will not necessarily coincide with the Policy
Date, for the reasons indicated above.
C. PREMIUM PROCESSING
14. Premiums may be paid at any time and in any amount, within limits.
The net premium, after the deductions described in the prospectus, will be
placed in the Account on the date received by Northwestern at its Home Office.
15. Transactions between the Account and the general account of
Northwestern will be effected as of the dates determined in accordance with the
terms of the Policies but the transactions will not in all cases by physically
processed on those dates. For example, as described below, the death of an
insured will mark the date on which the Policy ceases to participate in the
Account, with interest being paid on Policy proceeds from that date until the
Policy is settled, but several days may elapse before Northwestern receives
notification. Because of the timing discrepancies the total assets of the
Account will not always exactly match the sum of the interests in the Account
represented by all of the Policies outstanding. An
4
<PAGE>
accounting routine will be established to reconcile these amounts once each
year, as of December 31, and the amount of assets in the Account will be
adjusted as required.
TRANSFER PROCEDURES
16. The Account consists of nine divisions, corresponding to the nine
Portfolios of the Fund. All assets of each division are invested in shares
of the corresponding Fund Portfolio. Anytime following the initial
allocation date, the Policy owner may direct that accumulated amounts under
the Policy be transferred from one division to another. The Policy provides
for a $25 charge for transfers of assets among the divisions of the Account
if more than twelve transfers take place in a policy year. Currently, this
fee is being waived. Transfers will be effected as of the date when a
written request is received at Northwestern's Home Office.
17. In order to minimize the investment risk to Northwestern during the
period when the Policy owner has the right to return the Policy for a refund,
premiums placed into the Account prior to the initial allocation date are placed
in the Money Market Division of the Account. The initial allocation date is
described in the prospectus and identified in the Policy. On the initial
allocation date amounts in the Money Market Division of the Account are
transferred to other divisions based on the instructions in the application for
the Policy.
REDEMPTION PROCEDURES
A. SURRENDER FOR CASH VALUE
18. The owner of a Policy may surrender it for the cash value of the
Policy at any time upon written request during the lifetime of the insured.
Northwestern will affix a date and time stamp when the request is received at
its Home Office and pay the cash value computed as of that day.
19. For its conventional fixed benefit insurance, Northwestern has
developed performance goals for the timeliness of responses to requests for
payment of policy benefits, including payment of cash and loan values.
Performance is closely monitored and data are
5
<PAGE>
compiled on a periodic basis. The data from August 1996 to August 1997 show
that 77% of surrender requests and 93% of loan applications were processed
within five days. For these Policies, Northwestern will implement special
handling procedures to assure that benefits are paid within seven days after a
request with the necessary information is received.
20. When a surrender of a Policy is effected, Northwestern will pay the
cash value out of its general assets. An amount equal to the interest of the
Policy in the Account will be transferred from the Account to Northwestern's
general account as of the effective date of the surrender.
B. PARTIAL WITHDRAWAL OF CASH VALUE
21. A withdrawal of Policy Value may be made under certain conditions
specified in the prospectus. A withdrawal may not reduce the loan value to less
than any Policy debt outstanding. Following a withdrawal the remaining Policy
Value must be at least three times the current monthly charge. Also, following
a withdrawal the remaining death benefit must be at least the minimum amount
that Northwestern would currently issue. The minimum amount for withdrawals is
$250. The Policy reserves the right to charge a fee of up to $25 per
withdrawal. This fee is currently being waived.
22. Withdrawals may be made upon written request at Northwestern's Home
Office. The maximum allowable withdrawal will be determined by reference to
computations as of the close of business on the day the request is received.
The check for the amount of the withdrawal will be mailed from the Home Office.
Special handling procedures will be implemented to assure that withdrawal
benefits are paid within seven days after a request is received.
C. PAYMENT OF DEATH BENEFIT
23. Northwestern will pay the death benefit to the beneficiary or other
payee in accordance with the terms of the Policy following receipt at its Home
Office of proof of the death of the insured. Payment of the death benefit is
subject to the suicide and incontestability
6
<PAGE>
provisions of the Policy and any applicable state law requirements. Payment
will be made promptly and in any case within seven days after the last of the
conditions is met.
24. The death benefit for a Policy will depend on the death benefit option
chosen. With Option A, the death benefit equals the Specified Amount. With
Option B, the death benefit equals the sum of the Specified Amount and the
Policy Value. And with Option C, the death benefit equals the sum of the
Specified Amount and premiums paid. At ages 100 and older, the death benefit
will equal the Policy Value under all three options. In addition, under any of
the options, the death benefit will be increased, if necessary, to meet the
definitional requirements for life insurance for federal income tax purposes.
The death benefit is adjusted to reflect any unpaid monthly charges if the
Policy is in the grace period. Also, any Policy debt is deducted from the death
benefit.
25. Northwestern will pay the death benefit for a Policy out of its
general assets. The amount payable will include interest from the date of
death. An amount equal to the interest of the Policy in the Account as of the
date of death will be transferred from the Account to Northwestern's general
account.
D. LAPSE AND REINSTATEMENT
26. If the Policy Value, less any Policy debt outstanding, is less than
the monthly charges on any monthly processing date, a 61 day (2) grace period is
allowed for the payment of sufficient premium to keep the Policy in force. The
grace period begins on the date when a notice is sent to the policyowner. The
notice will state the minimum amount of premium
- --------------------
(2) In administering the Policies Northwestern intends to use a 66-day period,
instead of 61 days, before the lapse routine is implemented. The longer period
is used simply to reduce the volume of lapse and reinstatement transactions
occasioned by miscalculation when Policy owners attempt to pay the overdue
premium on the last day of the grace period. The 66-day period is used for
Northwestern's fixed benefit insurance policies and will be administered
consistently. It does not appear in the prospectus for the Policies because its
purpose would be defeated if Policy owners know that the extra time would be
allowed. When the 66 days have transpired and the Policy lapses, the values
will be computed as though the Policy had lapsed after the grace period of 61
days. Notwithstanding the postponement of internal procedures to reflect the
fact of a lapse, the Policy does lapse upon the experience of the grace period
and the death benefit is determined accordingly if the insured dies thereafter
regardless of whether the internal procedures have been implemented prior to the
date of death.
7
<PAGE>
required to keep the Policy in force and the date by which the premium must be
paid. The Policy will terminate with no value unless the required amount is
paid before the grace period expires. If the insured dies during the grace
period, the death proceeds will be reduced by the amount of the unpaid monthly
charges.
27. A lapsed Policy may be reinstated while the insured is alive within
one year after the Policy terminated unless the Policy had been surrendered for
its cash value. Reinstatement is conditional upon evidence of insurability and
payment of an amount equal to the monthly charges that were due when the Policy
terminated plus charges for three more months. Reinstatement will be effected
as of the first monthly processing date after the request for reinstatement is
received at the Home Office of Northwestern, subject to approval by
Northwestern. Any Policy debt that was outstanding when the Policy terminated
will also be reinstated. The Policy Value when a policy is reinstated is equal
to the premium paid, after the deduction for taxes and sales load, less the sum
of all monthly charges for the cost of insurance and other expenses for the
grace period and for the current month. The cash amount required to reinstate a
Policy will be paid into Northwestern's general account and the amount required
for the Policy's separate account reserve will be placed in the Account as of
the reinstatement date.
E. POLICY LOANS AND LOAN REPAYMENTS
28. The Policies provide that the owner may borrow from Northwestern using
the Policy as collateral security. The maximum loan value is 90% of the Policy
Value of the Policy. If a Policy loan is already outstanding, these limitations
are applied to the amount of Policy Value which the Policy would have if there
were no loan.
29. The Policy provides that loans will be made upon written request.
Northwestern also intends to honor requests made at the offices of its agents in
accordance with procedures presently in place for fixed benefit policies. In
that case the request will be transmitted to the Home Office for processing. In
any event, the check for the loan proceeds will be mailed from the Home Office,
usually the next business day after the request is received. The date of the
loan will be the date on which the check for the loan proceeds is issued. The
maximum loan
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value of the Policy will be determined by reference to computations at the close
of business the preceding day -- after the request for the loan was submitted
but before processing took place -- and interest will accrue on the loan from
the date of the check.
30. Interest on a Policy loan accrues and is payable on a daily basis.
The Policy loan rate is a fixed rate of 5%. Unpaid interest is added to the
principal. The Policy will terminate if the Policy Value falls to zero on a
monthly processing date, but written notice will be mailed to the owner of the
Policy at least 61 days before the termination date. The notice will state the
amount which must be paid to keep the Policy in force.
31. When a Policy loan is effected, the loan amount is taken from the
divisions of the Account in proportion to the amounts in the divisions. The
amounts taken from the Account are credited with an earnings rate equal to the
Policy loan interest rate. On the monthly processing date, a charge for
expenses and taxes associated with any Policy debt is deducted. The amount
deducted for expenses is disclosed in the prospectus. The earnings rate is in
lieu of the investment experience of the Account. The amounts of any loan
repayments will be transferred from Northwestern's general account to the
divisions of the Account, according to the allocation percentages in effect for
premiums, and will thereafter participate in the Account's investment
experience.
F. EXCHANGE OF POLICY
32. In those states that require the option to exchange the Policy for a
permanent fixed benefit policy, the Policy provides that the owner may
exchange the Policy during a limited period for a conventional whole life
insurance policy with benefits that do not vary with the investment
experience of a separate account. The fixed benefit policy will be issued by
Northwestern, will be on the life of the same insured, and will have the same
initial death benefit, Policy Date and issue age as the Policy being
exchanged. The premiums and cash values for the new policy will be the same
as those for fixed benefit policies issued by Northwestern on the Issue Date
of the Policy. No evidence of insurability is required.
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33. The exchange will be subject to an equitable cash adjustment, which
is calculated consistent with the requirements of Rule 6e-3(T)(b)(13)(v)
although the load structure of the Policy does not require exemption from
Section 27(f) of the Investment Company Act. The amount of cash adjustment
will be equal to the difference between 1) the discounted Policy Value plus
the sum of all loads and charges previously deducted on this Policy; and 2)
the premium(s) payable on the fixed benefit policy.
34. The effective date of the exchange will be the date when Northwestern
received the request together with the Policy and any amount due for the cash
adjustment. The owner of the Policy may request a later date. An amount equal
to the interest of the Policy in the Account will be transferred from the
Account to Northwestern's general account on the effective date of the exchange.
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Exhibit C(6)
September 30, 1997
The Northwestern Mutual Life Insurance Company
720 East Wisconsin
Milwaukee, WI 53202
Gentlemen:
This opinion is furnished in connection with the Registration Statement
on Form S-6 of Northwestern Mutual Variable Life Account. The prospectus
included in the Registration Statement ("Prospectus") describes the Flexible
Premium Variable Life Insurance Policy to be issued in connection with the
Account ("Policy"). The Policy form was prepared under my direction, and I
am familiar with the Registration Statement and Exhibits thereto. In my
opinion:
1. The illustrations of cash values and death benefits included on pages 36
through 43 of the Prospectus, in the Appendix thereto, based on the
assumptions stated in the illustrations, are consistent with the provisions
of the Policies and current charges and experience. The Policy has not
been designed so as to make the illustration appear more favorable for a
prospective purchaser, age 45 on the sex-neutral basis shown, than for
purchasers at other ages on a sex-neutral basis or for a male or a female.
2. With respect to the charge of 1.25% of premiums for federal income taxes
measured by premiums, described on page 6 of the Prospectus,
(a) the charge is reasonable in relation to the issuer's increased federal
tax burden under Section 848 of the Internal Revenue Code of 1986;
(b) the targeted rate of return (11%) used in calculating the charge is
reasonable; and
(c) the factors taken into account in determining such targeted rate of
return are appropriate.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus.
Sincerely,
William C. Koenig
Senior Vice President
and Chief Actuary
