<PAGE>
Registration No. 333-36865
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
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)
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
(PHOTO)
P r o s p e c t u s
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 . . . . . . . . . . . . . . . . . . . . . . . . .4
Select Bond Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . .4
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Death Benefit Options . . . . . . . . . . . . . . . . . . . . . . . . . .5
Choice of Tests for Tax Purposes. . . . . . . . . . . . . . . . . . . . .5
Death Benefit Changes . . . . . . . . . . . . . . . . . . . . . . . . . .5
Allocations to the Account. . . . . . . . . . . . . . . . . . . . . . . . .6
Deductions and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . .6
Deductions from Premiums. . . . . . . . . . . . . . . . . . . . . . . . .6
Charges Against the Policy Value. . . . . . . . . . . . . . . . . . . . .6
Expenses of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Cash Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Policy Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Withdrawals of Policy Value . . . . . . . . . . . . . . . . . . . . . . . .7
Termination and Reinstatement . . . . . . . . . . . . . . . . . . . . . . .8
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Substitution of Fund Shares
and Other Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Distribution of the Policies . . . . . . . . . . . . . . . . . . . . . . . . .9
Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Life Insurance Qualification. . . . . . . . . . . . . . . . . . . . . . . .10
Tax Treatment of Life Insurance . . . . . . . . . . . . . . . . . . . . . .10
Modified Endowment Contracts. . . . . . . . . . . . . . . . . . . . . . . .10
Other Tax Considerations. . . . . . . . . . . . . . . . . . . . . . . . . .11
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . .14
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Report of Independent Accountants
(for year ended December 31, 1997). . . . . . . . . . . . . . . . . . . .15
Financial Statements of the Account
(for year ended December 31, 1997). . . . . . . . . . . . . . . . . . . .16
Financial Statements of Northwestern Mutual Life
(for the three years ended
December 31, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . .22
Report of Independent Accountants
(for the three years ended
December 31, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . .34
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 following table shows the annual expenses for each of the Portfolios of
the Fund, as a percentage of the average net assets of the Portfolio, based
on 1996 operations for the Portfolios and their predecessors:
INVESTMENT
ADVISORY OTHER TOTAL
PORTFOLIO FEE EXPENSES EXPENSES
- --------- ---------- -------- --------
Index 500 Stock. . . . . . .20% .01% .21%
Select Bond. . . . . . . . .30% .00% .30%
Money Market . . . . . . . .30% .00% .30%
Balanced . . . . . . . . . .30% .00% .30%
Growth and Income
Stock. . . . . . . . . . .61% .01% .62%
Growth Stock . . . . . . . .52% .05% .57%
Aggressive Growth
Stock. . . . . . . . . . .53% .01% .54%
High Yield Bond. . . . . . .57% .03% .60%
International Equity . . . .67% .14% .81%
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 Internal Revenue Service
Employer Identification Number of Northwestern Mutual Life is 39-0509570.
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.
3
<PAGE>
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 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.
- --------------------------------------------------------------------------------
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
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insurance for federal income tax purposes. See "Tax Considerations", p.10.
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)
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
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a larger net amount at risk. See "Charges Against the Policy Value," below.
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 later 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
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
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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. 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. 10.
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. The loan
value is 90% of the Policy Value, less any Policy debt already 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
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provision for repayment of amounts withdrawn. A withdrawal of Policy Value
may have important tax consequences. See "Tax Considerations", p. 10.
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 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. 10, 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
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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
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. The Internal Revenue Service
Employer Identification Number of NMIS is 39-1099296.
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.
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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
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 distrbution as defined by the Code. 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
treated as a distribution 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.
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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 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 and policies owned by a
business and 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
11
<PAGE>
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.
- --------------------------------------------------------------------------------
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, as of the date of
this prospectus, are listed below. Unless otherwise indicated, the business
address of each Trustee and senior officer is c/o The Northwestern Mutual
Life Insurance Company, 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
TRUSTEES
PRINCIPAL OCCUPATION DURING
NAME LAST FIVE YEARS
- ---- ---------------------------
R. Quintus Anderson (A) . . . . . . . Chairman, Aarque Capital Corporation
since 1997, prior thereto; Chairman, The
Aarque Companies, 111 West Second
Street, P.O. Box 310, Jamestown, NY
14702-0310 (diversified metal products
manufacturing)
Edward E. Barr (HR) . . . . . . . . . President and Chief Executive Officer,
Sun Chemical Corporation, 222 Bridge
Plaza South, Fort Lee, New Jersey 07024
(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, 1025
West Eighth Street, Kansas City, MO 64101
(consumer products manufacturer)
Robert C. Buchanan (A, E, F). . . . . President and Chief Executive Officer,
Fox Valley Corporation, 100 West Lawrence
Street, P.O. Box 727, Appleton, WI
54912-0727 (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,
425 Meadow Street, P.O. Box 901,
Chicopee, MA 01021-0901 (manufacturer of
sporting equipment)
Pierre S. du Pont (AM). . . . . . . . Attorney, Richards, Layton and Finger,
P.O. Box 551, 1 Rodney Square,
Wilmington, DE 19899
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, 460 St. Michaels Drive, Building
300, Santa Fe, NM 87505
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.
Address: 805 Lone Tree Road, Elm
Grove, WI 53122-2014
12
<PAGE>
Patricia Albjerg Graham (HR). . . . . Professor, Graduate School of Education,
Harvard University, 420 Gutman,
Cambridge, MA, 02138. President,
The Spencer Foundation (social and
behavioral sciences)
Stephen F. Keller (HR). . . . . . . . Former Chairman, Santa Anita Realty
Enterprises since 1997; Prior thereto,
Chairman. Address: 101 South Las
Palmas Avenue, Los Angeles, CA 90004
Barbara A. King (AM). . . . . . . . . President, Landscape Structures, Inc.,
Rt 3, 601 - 7th Street South, Delano, MN
55328 (manufacturer of playground
equipment)
J. Thomas Lewis (HR). . . . . . . . . Attorney, Monroe & Lemann, 201 St.
Charles Avenue, Suite 3400, New Orleans,
LA 70170-3400
Daniel F. McKeithan, Jr. (E, F, HR) . President, Tamarack Petroleum Company,
Inc., 777 East Wisconsin Avenue,
Milwaukee, WI 53202 (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, 433 East Michigan Street,
Milwaukee, WI 53202 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., P.O. Box 13398, 5 Moore
Drive, Research Triangle Park, NC 27709,
since 1994 (pharmaceuticals)
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, Fairview Avenue
North and John Street, P.O. Box 70,
Seattle, WA 98111 (publishing)
Harold B. Smith (OT). . . . . . . . . Chairman, Executive Committee, Illinois
Tool Works, Inc., 3600 West Lake
Avenue, Glenview, IL 60025-5811
(engineered components and industrial
systems and consumables)
Sherwood H. Smith, Jr. (AM) . . . . . Chairman of the Board of Carolina Power
& Light, 411 Fayetteville Street Mall,
P.O. Box 1551, Raleigh, NC 27602, 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). Address:
52 River Ridge Road, Little Rock, AR
72227-1518
John J. Stollenwerk (AM, E, F). . . . President and Owner, Allen-Edmonds Shoe
Corporation, 201 East Seven Hills
Road, P.O. Box 998, Port Washington, WI
53074-0998
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., 100 First
Street, Suite 2350, Redwood City, CA
94105-2634 (venture capital)
13
<PAGE>
Kathryn D. Wriston (A). . . . . . . . Director of various corporations.
Address: c/o Shearman & Sterling, 153
East 53rd Street, Room 3406 - 34th
Floor, New York, NY 10022
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
---------------------------------------------------------------------
John M. Bremer Executive Vice President, General
Counsel and Secretary
Peter W. Bruce Executive Vice President
Edward J. Zore Executive Vice President
Deborah A. Beck Senior Vice President
William H. Beckley Senior Vice President
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 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, 1997 and
1996 and for each of the three years in the period ended December 31, 1997 and
of the Account as of December 31, 1997 and for each of the two years in the
period ended December 31, 1997 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, 1997 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, 1997 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 value
for a Policy would vary over time based on hypothetical investment results.
The tables assume gross 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-Tobacco 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 $ 8,664 $ 9,121 $ 9,579
2 21,525 500,000 500,000 500,000 16,402 17,839 19,332
3 33,101 500,000 500,000 500,000 23,695 26,656 29,851
4 45,256 500,000 500,000 500,000 31,691 36,737 42,397
5 58,019 500,000 500,000 500,000 39,550 47,261 56,254
6 71,420 500,000 500,000 500,000 47,222 58,197 71,516
7 85,491 500,000 500,000 500,000 54,713 69,572 88,343
8 100,266 500,000 500,000 500,000 62,027 81,413 106,917
9 115,779 500,000 500,000 500,000 69,119 93,699 127,390
10 132,068 500,000 500,000 500,000 76,047 106,511 150,034
15 226,575 500,000 500,000 500,000 109,490 182,431 311,474
20 (age 65) 347,193 500,000 500,000 717,225 137,013 278,144 587,889
25 501,135 500,000 500,000 1,221,247 156,224 402,036 1,052,799
30 697,608 500,000 605,837 1,962,738 160,420 566,203 1,834,334
35 948,363 500,000 816,335 3,312,698 135,505 777,462 3,154,951
40 1,268,398 500,000 1,092,584 5,611,524 44,778 1,040,556 5,344,308
45 1,676,852 0 1,426,698 9,349,329 0 1,358,760 8,904,123
</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 $ 7,247 $ 7,659 $ 8,072
2 21,525 500,000 500,000 500,000 13,417 14,672 15,980
3 33,101 500,000 500,000 500,000 19,055 21,596 24,347
4 45,256 500,000 500,000 500,000 25,367 29,647 34,465
5 58,019 500,000 500,000 500,000 31,405 37,886 45,478
6 71,420 500,000 500,000 500,000 37,176 46,330 57,497
7 85,491 500,000 500,000 500,000 42,634 54,944 70,594
8 100,266 500,000 500,000 500,000 47,786 63,747 84,905
9 115,779 500,000 500,000 500,000 52,642 72,762 100,589
10 132,068 500,000 500,000 500,000 57,104 81,907 117,722
15 226,575 500,000 500,000 500,000 73,486 130,165 232,861
20 (age 65) 347,193 500,000 500,000 521,186 77,192 182,543 427,201
25 501,135 500,000 500,000 869,862 59,433 237,464 749,881
30 697,608 500,000 500,000 1,361,004 3,089 295,187 1,271,966
35 948,363 0 500,000 2,233,085 0 356,826 2,126,748
40 1,268,398 0 500,000 3,657,144 0 440,545 3,482,994
45 1,676,852 0 608,894 5,866,111 0 577,994 5,586,773
</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 $ 8,664 $ 9,121 $ 9,579
2 21,525 500,000 500,000 500,000 16,402 17,839 19,332
3 33,101 500,000 500,000 500,000 23,695 26,656 29,851
4 45,256 500,000 500,000 500,000 31,691 36,737 42,397
5 58,019 500,000 500,000 500,000 39,550 47,261 56,254
6 71,420 500,000 500,000 500,000 47,222 58,197 71,516
7 85,491 500,000 500,000 500,000 54,713 69,572 88,343
8 100,266 500,000 500,000 500,000 62,027 81,413 106,917
9 115,779 500,000 500,000 500,000 69,119 93,699 127,390
10 132,068 500,000 500,000 500,000 76,047 106,511 150,034
15 226,575 500,000 500,000 620,708 109,490 182,431 310,801
20 (age 65) 347,193 500,000 500,000 1,012,430 137,013 278,144 575,141
25 501,135 500,000 625,273 1,577,075 156,224 397,761 1,003,240
30 697,608 500,000 768,077 2,394,853 160,420 540,150 1,684,181
35 948,363 500,000 922,425 3,593,216 135,505 704,428 2,744,031
40 1,268,398 500,000 1,085,384 5,326,363 44,778 887,355 4,354,568
45 1,676,852 0 1,255,083 7,809,785 0 1,081,882 6,732,034
</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 $ 7,247 $ 7,659 $ 8,072
2 21,525 500,000 500,000 500,000 13,417 14,672 15,980
3 33,101 500,000 500,000 500,000 19,055 21,596 24,347
4 45,256 500,000 500,000 500,000 25,367 29,674 34,465
5 58,019 500,000 500,000 500,000 31,405 37,886 45,478
6 71,420 500,000 500,000 500,000 37,176 46,330 57,497
7 85,491 500,000 500,000 500,000 42,634 54,944 70,594
8 100,266 500,000 500,000 500,000 47,786 63,747 84,905
9 115,779 500,000 500,000 500,000 52,642 72,762 100,589
10 132,068 500,000 500,000 500,000 57,104 81,907 117,722
15 226,575 500,000 500,000 500,000 73,486 130,165 232,861
20 (age 65) 347,193 500,000 500,000 733,126 77,192 182,543 416,474
25 501,135 500,000 500,000 1,082,790 59,433 237,464 688,806
30 697,608 500,000 500,000 1,543,219 3,089 295,187 1,085,269
35 948,363 0 500,000 2,155,071 0 356,826 1,645,763
40 1,268,398 0 531,766 2,972,607 0 434,745 2,430,255
45 1,676,852 0 599,229 4,070,687 0 516,353 3,508,932
</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 $ 9,016 $ 9,484 $ 9,952
2 21,525 500,000 500,000 500,000 17,037 18,516 20,051
3 33,101 500,000 500,000 500,000 24,606 27,656 30,946
4 45,256 500,000 500,000 500,000 32,926 38,128 43,959
5 58,019 500,000 500,000 500,000 41,045 48,997 58,268
6 71,420 500,000 500,000 500,000 49,024 60,345 74,077
7 85,491 500,000 500,000 500,000 56,760 72,091 91,447
8 100,266 500,000 500,000 500,000 64,366 84,366 110,662
9 115,779 500,000 500,000 500,000 71,843 97,200 131,928
10 132,068 500,000 500,000 500,000 79,196 110,623 155,476
15 226,575 500,000 500,000 500,000 115,327 190,644 323,463
20 (age 65) 347,193 500,000 500,000 743,315 144,858 290,853 609,274
25 501,135 500,000 500,000 1,263,021 164,338 419,522 1,088,812
30 697,608 500,000 630,048 2,027,530 169,113 588,830 1,894,888
35 948,363 500,000 846,697 3,419,830 145,621 806,378 3,256,981
40 1,268,398 500,000 1,131,125 5,790,830 58,363 1,077,262 5,515,077
45 1,676,852 0 1,475,053 9,645,945 0 1,404,813 9,186,615
</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 $ 7,247 $ 7,659 $ 8,072
2 21,525 500,000 500,000 500,000 13,417 14,672 15,980
3 33,101 500,000 500,000 500,000 19,055 21,596 24,347
4 45,256 500,000 500,000 500,000 25,367 29,647 34,465
5 58,019 500,000 500,000 500,000 31,405 37,886 45,478
6 71,420 500,000 500,000 500,000 37,176 46,330 57,497
7 85,491 500,000 500,000 500,000 42,634 54,944 70,594
8 100,266 500,000 500,000 500,000 47,786 63,747 84,905
9 115,779 500,000 500,000 500,000 52,642 72,762 100,589
10 132,068 500,000 500,000 500,000 57,104 81,907 117,722
15 226,575 500,000 500,000 500,000 73,486 130,165 232,861
20 (age 65) 347,193 500,000 500,000 521,186 77,192 182,543 427,201
25 501,135 500,000 500,000 869,862 59,433 237,464 749,881
30 697,608 500,000 500,000 1,361,004 3,089 295,187 1,271,966
35 948,363 0 500,000 2,233,085 0 356,826 2,126,748
40 1,268,398 0 500,000 3,657,144 0 440,545 3,482,994
45 1,676,852 0 608,894 5,866,111 0 577,994 5,586,773
</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 $ 9,016 $ 9,484 $ 9,956
2 21,525 500,000 500,000 500,000 17,037 18,516 20,051
3 33,101 500,000 500,000 500,000 24,606 27,656 30,946
4 45,256 500,000 500,000 500,000 32,926 38,128 43,959
5 58,019 500,000 500,000 500,000 41,045 48,997 58,268
6 71,420 500,000 500,000 500,000 49,024 60,345 74,077
7 85,491 500,000 500,000 500,000 56,760 72,091 91,447
8 100,266 500,000 500,000 500,000 64,366 84,366 110,662
9 115,779 500,000 500,000 500,000 71,843 97,200 131,928
10 132,068 500,000 500,000 500,000 79,196 110,623 155,476
15 226,575 500,000 500,000 644,609 115,327 190,644 322,768
20 (age 65) 347,193 500,000 511,954 1,051,866 144,858 290,831 597,544
25 501,135 500,000 650,124 1,634,914 164,338 413,569 1,040,034
30 697,608 500,000 795,637 2,479,428 169,113 559,531 1,743,658
35 948,363 500,000 953,080 3,717,252 145,621 727,838 2,838,754
40 1,268,398 500,000 1,119,365 5,507,645 58,363 915,136 4,502,775
45 1,676,852 0 1,292,534 8,073,209 0 1,114,164 6,959,106
</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 $ 7,247 $ 7,659 $ 8,072
2 21,525 500,000 500,000 500,000 13,417 14,672 15,980
3 33,101 500,000 500,000 500,000 19,055 21,596 24,347
4 45,256 500,000 500,000 500,000 25,367 29,647 34,465
5 58,019 500,000 500,000 500,000 31,405 37,886 45,478
6 71,420 500,000 500,000 500,000 37,176 46,330 57,497
7 85,491 500,000 500,000 500,000 42,634 54,944 70,594
8 100,266 500,000 500,000 500,000 47,786 63,747 84,905
9 115,779 500,000 500,000 500,000 52,642 72,762 100,589
10 132,068 500,000 500,000 500,000 57,104 81,907 117,722
15 226,575 500,000 500,000 500,000 73,486 130,165 232,861
20 (age 65) 347,193 500,000 500,000 733,126 77,192 182,543 416,474
25 501,135 500,000 500,000 1,082,790 59,433 237,464 688,806
30 697,608 500,000 500,000 1,543,219 3,089 295,187 1,085,269
35 948,363 0 500,000 2,155,071 0 356,826 1,645,763
40 1,268,398 0 531,766 2,972,607 0 434,745 2,430,255
45 1,676,852 0 599,229 4,070,687 0 516,535 3,508,932
</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, cited as part of Exhibit A(6)(a) to the Registration Statement, and
previously 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 amendment to the 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. (included in Exhibit 2)
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 exhibit A(3)(c) corresponds to that required by Paragraph A of
the instructions as to exhibits in Form N-8B-2:
Exhibit A(3)(c) Distributing Contracts: Schedules of sales
commissions.
Exhibit 2 Opinion and consent of John M. Bremer as to the
legality of the securities being registered.
Exhibit C(6) Opinion and consent of William C. Koenig, F.S.A.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Northwestern Mutual Variable Life Account, has duly caused this amended
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 13th
day of January, 1998.
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(Registrant)
By THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: 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: MERRILL C. LUNDBERG By: 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 amended 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
13th day of January, 1998.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY (Depositor)
Attest: JOHN M. BREMER By: 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: MERRILL C. LUNDBERG By: RICHARD L. HALL
------------------------------ -------------------------
Merrill C. Lundberg, Secretary Richard L. Hall,
President and CEO
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities with the depositor and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title
- ---------- -------
<S> <C> <C>
JAMES D. ERICSON Trustee, President and Dated
- ------------------------ Principal Executive and January 13,
James D. Ericson Financial Officer 1998
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
<S><C>
GARY E. LONG Vice President, Controller
- ------------------------ and Principal Accounting
Gary E. Long Officer
HAROLD B. SMITH* Trustee
- ------------------------
Harold B. Smith
J. THOMAS LEWIS* Trustee
- ------------------------
J. Thomas Lewis
PATRICIA ALBJERG GRAHAM* Trustee
- ------------------------
Patricia Albjerg Graham
DONALD J. SCHUENKE* Trustee
- ------------------------
Donald J. Schuenke
R. QUINTUS ANDERSON* Trustee
- ------------------------
R. Quintus Anderson
STEPHEN F. KELLER* Trustee Dated
- ------------------------ January 13, 1998
Stephen F. Keller
PIERRE S. du PONT* Trustee
- ------------------------
Pierre S. du Pont
J. E. GALLEGOS* Trustee
- ------------------------
J. E. Gallegos
KATHRYN D. WRISTON* Trustee
- ------------------------
Kathryn D. Wriston
BARRY L. WILLIAMS* Trustee
- ------------------------
Barry L. Williams
GORDON T. BEAHAM III* Trustee
- ------------------------
Gordon T. Beaham III
DANIEL F. McKEITHAN, JR.* Trustee
- ------------------------
Daniel F. McKeithan, Jr.
ROBERT E. CARLSON* Trustee
- ------------------------
Robert E. Carlson
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
<S><C>
EDWARD E. BARR* Trustee
- ------------------------
Edward E. Barr
ROBERT C. BUCHANAN* Trustee
- ------------------------
Robert C. Buchanan
SHERWOOD H. SMITH, JR.* Trustee
- ------------------------
Sherwood H. Smith, Jr.
H. MASON SIZEMORE, JR.* Trustee
- ------------------------
H. Mason Sizemore, Jr.
JOHN J. STOLLENWERK* Trustee
- ------------------------
John J. Stollenwerk
GEORGE A. DICKERMAN* Trustee
- ------------------------
George A. Dickerman
GUY A. OSBORN* Trustee Dated
- ------------------------ January 13, 1998
Guy A. Osborn
JOHN E. STEURI* Trustee
- ------------------------
John E. Steuri
STEPHEN N. GRAFF* Trustee
- ------------------------
Stephen N. Graff
BARBARA A. KING* Trustee
- ------------------------
Barbara A. King
TIMOTHY D. PROCTOR* Trustee
- ------------------------
Timothy D. Proctor
</TABLE>
*By: JAMES D. ERICSON
------------------------------------
James D. Ericson, Attorney in fact,
pursuant to the Power of Attorney
filed on October 1, 1997
II-5
<PAGE>
EXHIBIT INDEX
EXHIBITS FILED WITH FORM S-6
PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NORTHWESTERN MUTUAL VARIABLE EXECUTIVE LIFE
Exhibit Number Exhibit Name
- -------------- ------------
Exhibit A(3)(c) Distributing Contracts: Schedules of sales
commissions.
Exhibit 2 Opinion and consent of John M. Bremer as to the
legality of the securities being registered.
Exhibit C(6) Opinion and consent of William C. Koenig, F.S.A.
<PAGE>
Exhibit A(3)(c)
STANDARD FULL-TIME SPECIAL AND SOLICITING AGENTS'
COMMISSION AND FEE SCHEDULE
VARIABLE EXECUTIVE LIFE
1. For purposes of this Subsection:
(a) "Writing Agent" means the Agent whose name appears on the
application as Agent of Record or the Agent who has been given credit
by the written consent of the original Agent of Record.
(b) "Servicing Agent" means the Writing Agent unless his contract has
terminated or he is no longer servicing the business, or the Agent who
has been appointed to service the business in the event the Writing
Agent has terminated or is no longer able to service the business.
(c) "Band 1 Contract" means Variable Executive Life contracts where
the anticipated first-year premium is less than $25 million.
(d) "Band 2 Contract" means Variable Executive Life contracts where
the anticipated first-year premium is $25 million or more.
(e) "Internal 1035 Exchange" means a Variable Executive Life contract
issued in lieu of another NML life insurance policy on the same
insured.
(f) "Cash Value Rollover" means the cash value on an inforce NML
contract that is deposited into a Variable Executive Life contract at
time of issue, pursuant to a 1035 exchange.
(g) "Target premium" means the premium level over which the
compensation rates vary in the first policy year for Band 1 contracts.
2. First-year commissions
(a) Band 1 Contracts - Writing Agent shall be entitled to
receivecommissions equal to 15% of first-year premium up to the Target
Premium plus 2.75% of first-year premium in excess of the Target
Premium on Variable Executive Life policies and contracts issued upon
applications procured by him pursuant to his Agent's contract.
(b) Band 2 Contracts - Writing Agent shall be entitled to receive
commissions equal to 0.75% of first-year premium on Variable Executive
Life policies and contracts issued upon applications procured by him
pursuant to his Agent's contract.
1
<PAGE>
3. Service Fees
(a) Band 1 Contracts - Servicing Agent shall be entitled to receive
service fees equal to 2.75% of second and subsequent policy year
premiums paid on Band 1 Variable Executive Life policies and
contracts.
(b) Band 2 Contracts - Servicing Agent shall be entitled to receive
service fees equal to 0.75% of second and subsequent policy year
premiums paid on Band 2 Variable Executive Life policies and
contracts.
4. Trail Compensation
Commencing at the end of policy year six and in each subsequent policy
year, Servicing Agent shall be entitled to receive service fees equal
to 0.2% of the cash value at the end of the policy year on Band 1 and
Band 2 Variable Executive Life policies and contracts.
5. Internal 1035 Exchanges
(a) Cash Value Rollovers - No compensation will be paid on Cash Value
Rollovers.
(b) Band 1 Contracts - On premium other than cash value rollovers,
Writing Agent shall be entitled to receive commissions equal to 2.75%
of first-year premium on Band 1 Variable Executive Life policies and
contracts issued upon applications procured by him pursuant to his
Agent's contract. In addition, Servicing Agent shall be entitled to
receive service fees equal to 2.75% of second and subsequent policy
year premiums on Band 1 Variable Executive Life policies and
contracts.
(c) Band 2 Contracts - On premium other than cash value rollovers,
Writing Agent shall be entitled to receive commissions equal to 0.75%
of first-year premium on Band 2 Variable Executive Life policies and
contracts issued upon applications procured by him pursuant to his
Agent's contract. In addition, Servicing Agent shall be entitled to
receive service fees equal to 0.75% of second and subsequent policy
year premiums on Band 2 Variable Executive Life policies and
contracts.
(d) Trail compensation - Servicing Agent shall also be entitled to
receive service fees on Internal 1035 Exchanges, as described in
Subsection 4 above.
2
<PAGE>
6. Commission Chargebacks
Commissions and service fees will be charged back for full surrenders in
policy years one and two, according to the following schedule:
Full Surrender In Chargeback
Policy Month Percentage
------------ ----------
1-12 100.00%
13 92.31%
14 84.62%
15 76.92%
16 69.23%
17 61.54%
18 53.85%
19 46.15%
20 38.46%
21 30.77%
22 23.08%
23 15.38%
24 7.69%
25+ 0.00%
3
<PAGE>
Exhibit 2
January 13, 1998
Board of Trustees
The Northwestern Mutual Life
Insurance Company
Milwaukee, WI 53202
TO ALL TRUSTEES:
As Senior Vice President, General Counsel and Secretary of The Northwestern
Mutual Life Insurance Company (the "Company") I have general supervision of the
Law Department of such Company and its legal affairs. In such capacity I have
supervised the corporate proceedings relating to the establishment of
Northwestern Mutual Variable Life Account (the "Account") pursuant to the
provisions of the Wisconsin Statutes and the issuance and proposed issuance in
connection therewith of Variable Executive Life insurance policies (the
"Policies"). I have also participated in the preparation of Pre-Effective
Amendment No. 1 to the Registration Statement on Form S-6 (the "Registration
Statement") which is to be filed with the Securities and Exchange Commission
with respect to the Policies. In addition, I have examined such other documents
and such questions of law as, in my judgment, are necessary or appropriate for
purposes of this opinion. Based on the foregoing, it is my opinion that:
1. The Company is a duly organized and validly existing mutual life
insurance corporation under the laws of the State of Wisconsin, duly
authorized under such laws to issue and sell life insurance and
annuity contracts.
2. The Account is a separate account of the Company duly created and
validly existing pursuant to Wisconsin law.
3. The issuance and sale of the Policies have been duly authorized by the
Company and duly approved by the Commissioner of Insurance of the
State of Wisconsin. When issued and sold in compliance with local law
and in the manner stated in the Prospectus constituting a part of the
Registration Statement the Policies will be valid and legally binding
obligations of the Company in accordance with their terms.
<PAGE>
Board of Trustees
January 13, 1998
Page 2
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
JOHN M. BREMER
John M. Bremer
Senior Vice President,
General Counsel and
Secretary
<PAGE>
Exhibit C(6)
January 13, 1998
The Northwestern Mutual Life Insurance Company
720 East Wisconsin
Milwaukee, WI 53202
Gentlemen:
This opinion is furnished in connection with Pre-Effective Amendment No. 1
to the Registration Statement on Form S-6, Registration No. 333-36865, 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
William C. Koenig
Senior Vice President
and Chief Actuary
