<PAGE>
Registration No. 333-59103
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
POST-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, EXECUTIVE 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)
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
- --------
on (DATE) pursuant to paragraph (b)
- --------
60 days after filing pursuant to paragraph (a)(1)
- --------
X on April 30, 1999 pursuant to paragraph (a)(1) of Rule 485
- --------
this post-effective amendment designates a new effective date for a
- --------
previously filed post-effective amendment
________________
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
VARIABLE JOINT LIFE INSURANCE POLICIES
CROSS-REFERENCE SHEET
Cross reference sheet showing location in Prospectus of information
required by Form N-8B-2.
<TABLE>
<CAPTION>
Item Number Heading in Prospectus
----------- ---------------------
<S> <C>
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 Cash 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 Funds
12 ...................... The Funds
13 ...................... Summary, The Funds, Deductions and
Charges, Distribution of the Policies
14 ...................... Summary: The Policy: Availability
Limitations
15 ...................... Premiums, Allocations to the Account
16 ...................... The Account, The Funds, 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
25 ...................... Northwestern Mutual Life
26 ...................... The Funds, Deductions and Charges
27 ...................... Northwestern Mutual Life
28 ...................... Management
29 ...................... Not Applicable
30 ...................... Not Applicable
31 ...................... Not Applicable
32 ...................... Not Applicable
-ii-
<PAGE>
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 Funds
41 ...................... The Funds, Distribution of the Policies
42 ...................... Not Applicable
43 ...................... Not Applicable
44 ...................... The Funds, 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
</TABLE>
-iii-
<PAGE>
P R O S P E C T U S
April 30, 1999
[LOGO]
NORTHWESTERN MUTUAL VARIABLE JOINT LIFE
Flexible Premium Variable Joint Life Insurance Policy
Insurance Payable on Second Death
(PHOTO)
Northwestern Mutual Series Fund, Inc. and
Russell Insurance Funds
The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-1444
<PAGE>
CONTENTS FOR THIS PROSPECTUS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
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 Surrender Proceeds . . . . . . . . . . . . . . . 3
From the Mutual Funds . . . . . . . . . . . . . . . . 3
The Northwestern Mutual Life Insurance Company,
Northwestern Mutual Variable Life Account
Northwestern Mutual Series Fund, Inc and
Russell Insurance Funds. . . . . . . . . . . . . . . 4
Northwestern Mutual Life. . . . . . . . . . . . . . . . 4
The Account . . . . . . . . . . . . . . . . . . . . . . 4
The Funds . . . . . . . . . . . . . . . . . . . . . . . 4
Northwestern Mutual Series Fund, Inc.. . . . . . . . . 4
Small Cap Growth Stock Portfolio . . . . . . . . . . 4
Aggressive Growth Stock Portfolio. . . . . . . . . . 5
International Equity Portfolio . . . . . . . . . . . 5
Index 400 Stock Portfolio. . . . . . . . . . . . . . 5
Growth Stock Portfolio . . . . . . . . . . . . . . . 5
Growth and Income Stock Portfolio. . . . . . . . . . 5
Index 500 Stock Portfolio. . . . . . . . . . . . . . 5
Balanced Portfolio . . . . . . . . . . . . . . . . . 5
High Yield Bond Portfolio. . . . . . . . . . . . . . 5
Select Bond Portfolio. . . . . . . . . . . . . . . . 5
Money Market Portfolio . . . . . . . . . . . . . . . 5
Russell Insurance Funds . . . . . . . . . . . . . . 5
Multi-Style Equity Fund. . . . . . . . . . . . . . . 6
Aggressive Equity Fund . . . . . . . . . . . . . . . 6
Non-U.S. Fund. . . . . . . . . . . . . . . . . . . . 6
Real Estate Securities Fund. . . . . . . . . . . . . 6
Core Bond Fund . . . . . . . . . . . . . . . . . . . 6
Detailed Information About the Policy. . . . . . . . . . . 6
Premiums. . . . . . . . . . . . . . . . . . . . . . . . 6
Death Benefit . . . . . . . . . . . . . . . . . . . . . 6
Death Benefit Options. . . . . . . . . . . . . . . . . 6
Choice of Tests for Tax Purposes . . . . . . . . . . . 7
Death Benefit Changes. . . . . . . . . . . . . . . . . 7
Allocations to the Account. . . . . . . . . . . . . . . 8
Deductions and Charges. . . . . . . . . . . . . . . . . 8
Deductions from Premiums . . . . . . . . . . . . . . . 8
Charges against the Policy Value . . . . . . . . . . . 8
Surrender Charge . . . . . . . . . . . . . . . . . . . 9
Expenses of the Fund . . . . . . . . . . . . . . . . . 9
Cash Value. . . . . . . . . . . . . . . . . . . . . . . . 9
Policy Loans. . . . . . . . . . . . . . . . . . . . . . . 9
Withdrawals of Cash Value . . . . . . . . . . . . . . . . 9
Termination and Reinstatement . . . . . . . . . . . . . .10
Right to Return Policy . . . . . . . . . . . . . . . .10
Other Policy Provisions. . . . . . . . . . . . . . . .10
Owner. . . . . . . . . . . . . . . . . . . . . . . .10
Beneficiary. . . . . . . . . . . . . . . . . . . . .10
Incontestability . . . . . . . . . . . . . . . . . .10
Suicide. . . . . . . . . . . . . . . . . . . . . . .10
Misstatement of Age or Sex . . . . . . . . . . . . .10
Collateral Assignment. . . . . . . . . . . . . . . .11
Deferral of Determination and Payment. . . . . . . .11
Dividends. . . . . . . . . . . . . . . . . . . . . .11
Voting Rights. . . . . . . . . . . . . . . . . . . . .11
Substitution of Fund Shares
and Other Changes . . . . . . . . . . . . . . . . . .11
Reports . . . . . . . . . . . . . . . . . . . . . . . . .11
Distribution of the Policies. . . . . . . . . . . . . . .11
Tax Considerations. . . . . . . . . . . . . . . . . . . .12
General. . . . . . . . . . . . . . . . . . . . . . . .12
Life Insurance Qualification . . . . . . . . . . . . .12
Tax Treatment of Life Insurance. . . . . . . . . . . .12
Modified Endowment Contracts . . . . . . . . . . . . .12
Estate and Generation Skipping Taxes . . . . . . . . .13
Other Tax Considerations . . . . . . . . . . . . . . .13
Other Information . . . . . . . . . . . . . . . . . . . .14
Management . . . . . . . . . . . . . . . . . . . . . .14
Regulation . . . . . . . . . . . . . . . . . . . . . .16
Year 2000 Issues . . . . . . . . . . . . . . . . . . .16
Legal Proceedings. . . . . . . . . . . . . . . . . . .16
Registration Statement . . . . . . . . . . . . . . . .16
Experts. . . . . . . . . . . . . . . . . . . . . . . .17
Financial Statements. . . . . . . . . . . . . . . . . . .18
Report of Independent Accountants
(for the two years ended December 31, 1998). . . . . .18
Financial Statements of the Account
(for the two years ended December 31, 1998). . . . . .19
Financial Statements of Northwestern Mutual Life
(for the three years ended
December 31, 1998) . . . . . . . . . . . . . . . .25
Report of Independent Accountants
(for the three years ended
December 31, 1998) . . . . . . . . . . . . . . . . .38
Appendix A. . . . . . . . . . . . . . . . . . . . . . . .39
Appendix B. . . . . . . . . . . . . . . . . . . . . . . .48
</TABLE>
<PAGE>
P R O S P E C T U S
NORTHWESTERN MUTUAL VARIABLE JOINT LIFE
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
This prospectus describes the Variable Joint Life Policy (the "Policy") offered
by The Northwestern Mutual Life Insurance Company. The Policy provides life
insurance coverage on two insureds with a death benefit payable on the second
death while the policy is in force.
The Policy offers flexible premium payments, sixteen investment funding options
and a choice of three death benefit options.
The investment options correspond to the eleven Portfolios of Northwestern
Mutual Series Fund, Inc. and the five Funds which comprise the Russell Insurance
Funds. The prospectuses for these mutual funds, attached to this prospectuses,
describe the investment objectives for all of the Portfolios and Funds.
The values provided by the Policy vary daily depending on investment results.
These values are not guaranteed. The Portfolios and Funds present varying
degrees of investment risk.
You may return your Policy for a limited period of time. See "Right to Return
Policy", p. 10.
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 PROSPECTUSES FOR
NORTHWESTERN MUTUAL SERIES FUND, INC. AND THE RUSSELL INSURANCE FUNDS WHICH ARE
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.
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 MUTUAL FUND
PROSPECTUSES 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 sixteen divisions. You determine how net premiums
are to be apportioned. We invest the assets of each division in a
corresponding Portfolio of Northwestern Mutual Series Fund, Inc. or one of
the Russell Insurance Funds. The eleven Portfolios of Northwestern Mutual
Series Fund, Inc. are the Small Cap Growth Stock Portfolio, Aggressive Growth
Stock Portfolio, International Equity Portfolio, Index 400 Stock Portfolio,
Growth Stock Portfolio, Growth and Income Stock Portfolio, Index 500 Stock
Portfolio, Balanced Portfolio, High Yield Bond Portfolio, Select Bond
Portfolio and Money Market Portfolio. The five Russell Insurance Funds are
the Multi-Style Equity Fund, Aggressive Equity Fund, Non-U.S. Fund, Real
Estate Securities Fund, and Core Bond Fund. For additional information about
the funds see the attached prospectuses.
THE POLICY
AVAILABILITY LIMITATIONS The Variable Joint Life Policy is available for two
insureds each between ages 20 and 85. The minimum Specified Amount of insurance
is $1,000,000, or $500,000 if the older insured's issue age is age 50 or older.
PREMIUMS You may pay premiums 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. You select the Specified
Amount when you purchase the Policy. You may increase or decrease the Specified
Amount, within limits and subject to conditions, after a Policy is issued. The
amount of the death benefit is not 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 6.4% up to the Target Premium in Policy years 1-10, and 2.4%
of all other premiums
FROM POLICY VALUE
- Cost of insurance charge deducted monthly, is based on the net amount at
risk, Policy duration, and the issue age, sex and risk classification of
the insured persons. Current charges are based on our experience. Maximum
charges are based on the 1980 CSO Mortality Tables.
- Monthly mortality and expense risk charge. This consists of two
components:
(1) THE INVESTED ASSETS COMPONENT - The current charge is at the
annual rate of .45% (0.0375% monthly rate) of the Policy Value less any
Policy debt. The maximum charge is at the annual rate of .90% (0.075%
monthly rate).
2
<PAGE>
(2) THE SPECIFIED AMOUNT COMPONENT - The charge is based on the
Specified Amount and the issue ages of the insured persons, and
applies during the first 10 Policy years. The range on an annual
basis is from 4CENTS per $1,000 of initial Specified Amount if both
insured persons are issue age 25 or younger, up to $1.72 per $1,000 of
initial Specified Amount if both insured persons are issue age 72 or
older.
- Monthly administrative charge. The current charge is $5.00. The maximum
charge is $7.50.
- Monthly underwriting and issue charge. The charge is based on the
Specified Amount and risk classification of the insured persons. It
applies during the first 10 Policy years. The range is from 1.5CENTS to
3.5CENTS per $1,000 of initial Specified Amount, with a maximum monthly
charge of $75 to $175.
- Deferred sales charge deducted monthly. The charge is 7.5% (0.625% monthly
rate) of premiums paid during the first Policy year up to the Target
Premium. During the first Policy year the monthly deduction is based on
cumulative premiums paid to date up to the Target Premium. The charge
applies during the first 10 Policy years.
- Charge for expenses and taxes associated with the Policy loan, if any. The
aggregate charge is at the current annual rate of .90% (0.075% monthly
rate) of the Policy debt during the first ten Policy years and .35%
(.029167%) thereafter.
- 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. We
are currently waiving these charges. The maximum charge is $250 for death
benefit option changes and $25 for each of the other transactions.
FROM SURRENDER PROCEEDS
A surrender charge equal to 50% of the premiums actually paid during the first
Policy year or the Target
Premium, whichever is less. Beginning with the second Policy year, the
surrender charge decreases by the same dollar amount month by month to zero at
the end of the tenth Policy year.
FROM THE MUTUAL FUNDS
- A daily charge for investment advisory and other services provided to the
mutual funds. The total expenses vary by Portfolio or Fund and currently
fall in an approximate range of .21% to 2.37% of assets on an annual
basis.
The following table shows the annual expenses for each of the Portfolios and
Funds, as a percentage of the average net assets, based on 1998 operations.
Expenses for the Portfolios and Funds which were not in operation during 1998
are estimated
<TABLE>
<CAPTION>
NORTHWESTERN MUTUAL SERIES FUND, INC.
-------------------------------------
INVESTMENT
ADVISORY OTHER TOTAL
PORTFOLIO FEE EXPENSES EXPENSES
- --------- ---------- -------- --------
<S> <C> <C> <C>
Small Cap Growth
Stock . . . . . . . . . . 80% .12% .92%
Aggressive Growth
Stock . . . . . . . . . . 52% .00% .52%
International Equity . . . . . .67% .09% .76%
Index 400 Stock. . . . . . . . .25% .10% .35%
Growth Stock . . . . . . . . . .45% .01% .46%
Growth and Income
Stock . . . . . . . . . . 57% .01% .58%
Index 500 Stock. . . . . . . . .20% .01% .21%
Balanced . . . . . . . . . . 30% .00% .30%
High Yield Bond. . . . . . . . .49% .01% .50%
Select Bond. . . . . . . . . . .30% .00% .30%
Money Market . . . . . . . . . .30% .00% .30%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL INSURANCE FUNDS
-----------------------
INVESTMENT
ADVISORY OTHER TOTAL
FUND FEE * EXPENSES* EXPENSES
- ---- ---------- --------- --------
<S> <C> <C> <C>
Multi-Style Equity
Fund . . . . . . . . . . 0.78% 0.43% 1.21%
Aggressive Equity
Fund . . . . . . . . . . 0.95% 0.72% 1.67%
Non-U.S. Fund. . . . . . . . . 0.95% 1.42% 2.37%
Real Estate Securities
Fund . . . . . . . . . . 0.85% 0.31% 1.16%
Core Bond Fund . . . . . . . . 0.60% 0.68% 1.28%
</TABLE>
*Multi-Style Equity Fund Frank Russell Investment Company's (FRIC's) advisor,
Frank Russell Investment Management Company (FRIMCo) has voluntarily agreed to
waive a portion of its 0.78% management fee, up to the full amount of that fee,
equal to the amount by which the Fund's total operating expenses exceed 0.92% of
the Fund's average daily net assets on an annual basis. FRIMCo has voluntarily
agreed to reimburse the Fund for all remaining expenses after fee waivers which
exceed 0.92% of the average daily net assets on an annual basis. This waiver
may be revised or eliminated at any time without notice to shareholders. Taking
the fee waivers into account, the actual gross annual total operating expenses
were 0.92% of the average net assets of the Multi-Style Fund.
Aggressive Equity Fund FRIMCo has voluntarily agreed to waive a portion of its
0.95% management fee, up to the full amount of that fee, equal to the amount by
which the Fund's total operating expenses exceed 1.25% of the Fund's average
daily net assets on an annual basis. FRIMCo has voluntarily agreed to reimburse
the Fund for all remaining expenses after fee waivers which exceed 1.25% of the
average daily net assets on an annual basis. This waiver may be revised or
eliminated at any time without notice to shareholders. Taking the fee waivers
into account, the actual gross annual total operating expenses were 1.25% of the
average net assets of the Aggressive Equity Fund.
Non-U.S. Fund FRIMCo has voluntarily agreed to waive a portion of its 0.95%
management fee, up to the full amount of that fee, equal to the amount by which
the Fund's total operating expenses exceed 1.30% of the Fund's average daily net
assets on an annual basis. FRIMCo has voluntarily agreed to reimburse the Fund
for all remaining expenses after fee waivers which exceed 1.30% of the average
daily net assets on an annual basis. This waiver may be revised or eliminated
at any time without notice to shareholders. Taking the fee waivers into
account, the actual gross annual total operating expenses were 1.30% of the
average net assets of the Non-U.S. Fund.
3
<PAGE>
Real Estate Securities Fund FRIMCo has voluntarily agreed to waive a portion of
its ___% management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed ___5% of the Fund's average
daily net assets on an annual basis. FRIMCo has voluntarily agreed to reimburse
the Fund for all remaining expenses after fee waivers which exceed ___% of the
average daily net assets on an annual basis. This waiver may be revised or
eliminated at any time without notice to shareholders. Operating expenses are
based on average net assets expected to be invested during the year ending
December 31, 1999. During the course of this period, expenses may be more or
less than the amount shown. Taking the fee waivers into account, the actual
gross annual total operating expenses were ___% of the average net assets of the
Real Estate Securities Fund.
Core Bond Fund FRIMCo has voluntarily agreed to waive a portion of its 0.60%
management fee, up to the full amount of that fee, equal to the amount by which
the Fund's total operating expenses exceed .80% of the Fund's average daily net
assets on an annual basis. FRIMCo has voluntarily agreed to reimburse the Fund
for all remaining expenses after fee waivers which exceed .80% of the average
daily net assets on an annual basis. This waiver may be revised or eliminated
at any time without notice to shareholders. Taking the fee waivers into
account, the actual gross annual total operating expenses were .80% of the
average net assets of the Core Bond Fund.
- ------------------------------------------------------------------------------
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY,
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT,
NORTHWESTERN MUTUAL SERIES FUND, INC. AND
RUSSELL INSURANCE FUNDS
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 fourth largest life insurance company, based on total assets in
excess of $77 billion on December 31, 1998, 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.
"We" in this prospectus means Northwestern Mutual Life.
THE ACCOUNT
We established Northwestern Mutual Variable Life Account by action of our
Trustees 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 our other income, gains or losses. We use the Account
only for variable life insurance policies, including other variable life
insurance policies which are described in other prospectuses.
The Account is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. This registration
does not involve supervision of management or investment practices or policies.
The Account has sixteen divisions. All of the assets of each division are
invested in shares of the corresponding Portfolio or Fund described below.
THE FUNDS
NORTHWESTERN MUTUAL SERIES FUND, INC.
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. The Account buys shares of each Portfolio at
their net asset value without any sales charge.
The investment adviser for the Fund is Northwestern Mutual Investment
Services, LLC ("NMIS"), our wholly-owned subsidiary. 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 1998 asset size. Other expenses
borne by the Portfolios range from 0% for the Select Bond, Money Market and
Balanced Portfolios to .09% for the International Equity Portfolio. We
provide the people and facilities NMIS uses in performing its investment
advisory functions and we are a party to the investment advisory agreement.
NMIS has retained J.P. Morgan Investment Management, Inc. and Templeton
Investment Counsel, Inc. under investment sub-advisory agreements to provide
investment advice to the Growth and Income Stock Portfolio and the
International Equity Portfolio.
The investment objectives and types of investments for each of the eleven
Portfolios of the Fund are set forth below. There can be no assurance that the
Portfolios will realize their objectives. For more information about the
investment objectives and policies, the attendant risk factors and expenses see
the attached prospectus for Northwestern Mutual Series Fund, Inc.
SMALL CAP GROWTH STOCK PORTFOLIO The investment objective of the Small Cap
Growth Stock Portfolio is long-term growth of capital. The Portfolio will seek
4
<PAGE>
to achieve this objective primarily by investing in the common stocks of
companies which can reasonably be expected to increase sales and earnings at a
pace which will exceed the growth rate of the U.S. economy over an extended
period. WE EXPECT THE SMALL CAP GROWTH STOCK PORTFOLIO TO BE AVAILABLE FOR USE
WITH THE POLICIES BEGINNING ON JUNE 30, 1999.
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.
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.
INDEX 400 STOCK PORTFOLIO The investment objective of the Index 400 Stock
Portfolio is to achieve investment results that approximate the performance of
the Standard & Poor's MidCap 400 Index ("S&P 400 Index"). The Portfolio will
attempt to meet this objective by investing in stocks included in the S&P 400
Index. WE EXPECT THE INDEX 400 STOCK PORTFOLIO TO BE AVAILABLE FOR USE WITH THE
POLICIES BEGINNING ON JUNE 30, 1999.
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.
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.
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 are generally more volatile than debt securities and
involve greater investment risks.
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.
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.
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.
RUSSELL INSURANCE FUNDS
The Russell Insurance Funds also comprise a mutual fund of the series type
registered under the Insurance Company Act of 1940 as an open-end diversified
management investment company. The Account buys shares of each of the Russell
Insurance Funds at their net asset value without any sales charge.
The assets of each of the Russell Insurance Funds are invested by one or more
investment management organization researched and recommended by Frank Russell
Company ("Russell"), and an affiliate of Russell, Frank Russell Investment
Management Company ("FRIMCo"). FRIMCo also advises, operates and administers
the Russell Insurance Funds. Russell is our majority-owned subsidiary.
The investment objectives and types of investments for each of the five Russell
Insurance Funds are set forth below. There can be no assurance that the Funds
will realize their objectives. A table showing the expense ratios for each of
the Russell Insurance Funds is included in the Summary above, at page 3. For
more information about the investment objectives and policies, the attendant
risk factors and expenses see the
5
<PAGE>
attached prospectus for the Russell Insurance Funds. WE EXPECT THE RUSSELL
INSURANCE FUNDS TO BE AVAILABLE FOR USE WITH THE POLICIES BEGINNING ON JUNE
30, 1999.
MULTI-STYLE EQUITY FUND. The investment objective of the Multi-Style Equity
Fund is to provide income and capital growth by investing principally in equity
securities. The Multi-Style Equity Fund invests primarily in common stocks of
medium and large capitalization companies. These companies are predominately
US-based, although the Fund may invest a limited portion of its assets in non-US
firms from time to time.
AGGRESSIVE EQUITY FUND. The investment objective of the Aggressive Equity Fund
is to provide capital appreciation by assuming a higher level of volitility than
is ordinarily expected from Multi-Style Equity Fund by investing in equity
securities. The Aggressive Equity Fund invests primarily in common stocks of
small and medium capitalization companies. These companies are predominately
US-based, although the Fund may invest in non-US firms from time to time.
NON-U.S. FUND. The investment objective of the Non-U.S. Fund is to provide
favorable total return and additional diversification for US investors by
investing primarily in equity and fixed-income securities of non-US companies,
and securities issued by non-US governments. The Non-U.S. Fund invests
primarily in equity securities issued by companies domiciled outside the United
States and in depository receipts, which represent ownership of securities of
non-US companies.
REAL ESTATE SECURITIES FUND. The investment objective of the Real Estate
Securities Fund is to generate a high level of total return through above
average current income, while maintaining the potential for capital
appreciation. The Fund seeks to achieve its objective by concentrating its
investments in equity securities of issuers whose value is derived primarily
from development, management and market pricing of underlying real estate
properties.
CORE BOND FUND. The investment objective of the Core Bond Fund is to
maximize total return, through capital appreciation and income, by assuming a
level of volatility consistent with the broad fixed-income market, by
investing in fixed-income securities. The Core Bond Fund invests primarily
in fixed-income securities. In particular, the Fund holds debt securities
issued or guaranteed by the US government, or to a lesser extent by non-US
governments, or by their respective agencies and instrumentalities. It also
holds mortgage-backed securities, including collateralized mortgage
obligations. The Fund also invests in corporate debt securities and
dollar-denominated obligations issued in the US by non-US banks and
corporations (Yankee Bonds). A majority of the Fund's holdings are US
dollar-denominated. From time to time the Fund may invest in municipal debt
obligations.
- ------------------------------------------------------------------------------
DETAILED INFORMATION ABOUT THE POLICY
PREMIUMS
The Policy permits you to pay premiums at any time before the Policy anniversary
that is nearest the 95th birthday of the younger insured and in any amounts
within the limits described in this section.
We use the Specified Amount you select when you purchase the Policy to determine
the minimum initial premium. The minimum initial premium varies with the issue
age and sex of the insured persons.
We calculate a Target Premium when the Policy is issued and we use the Target
Premium in determining the sales load, commissions, surrender charge and other
expense charges during the first 10 Policy years. The Target Premium is based
on the Specified Amount and the age, sex and risk classification of the insured
persons.
After a Policy is issued, there are no minimum premiums, except that we will not
accept a premium of less than $25. The Policy will remain in force during the
lifetime of at least one of the insured persons so long as the cash value is
sufficient to pay the monthly cost of insurance charge and other current
charges.
The Policy sets no maximum on premiums, but we will accept a premium that would
increase the net amount at risk only if the insurance, as increased, will be
within our issue limits, the insureds meet our insurability requirements and we
receive the premium prior to the anniversary nearest the older insured's 85th
birthday. If you have elected the Guideline Premium/Cash Value Corridor Test,
we will not accept a premium if it would disqualify the Policy as life insurance
for federal income tax purposes. See "Choice of Tests for Tax Purposes", p.7
and "Tax Considerations", p. 12.
DEATH BENEFIT
DEATH BENEFIT OPTIONS The death benefit is payable on the second death while
the Policy is in force. The Policy provides for three death benefit options:
6
<PAGE>
SPECIFIED AMOUNT (OPTION A) You select the Specified Amount when you purchase
the Policy.
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)
The selected death benefit option will be in effect before the Policy
anniversary nearest the 100th birthday of the younger insured, and the death
benefit will be equal to the Policy Value after that date.
Under any of the Options, or on or after the Policy anniversary nearest the
100th birthday of the younger insured, we will increase the death benefit if
necessary to meet the definitional requirements for life insurance for federal
income tax purposes as discussed below.
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. You 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 persons advances. You make the choice of testing
methods when you purchase a Policy 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 in the following table. The
attained age of the younger insured is used even if the younger insured is no
longer living.
<TABLE>
<CAPTION>
Guideline Premium/Cash Value
----------------------------
Corridor Test Multiples
-----------------------
Younger Insured Age
-------------------
Attained Policy Attained Policy
-------- ------ -------- ------
Age Value % Age Value %
--- ------- --- -------
<S> <C> <C> <C>
40 or under . . 250 52. . . . . . . 171
41. . . . . . . 243 53. . . . . . . 164
42. . . . . . . 236 54. . . . . . . 157
43. . . . . . . 229 55. . . . . . . 150
44. . . . . . . 222 56. . . . . . . 146
45. . . . . . . 215 57. . . . . . . 142
46. . . . . . . 209 58. . . . . . . 138
47. . . . . . . 203 59. . . . . . . 134
48. . . . . . . 197 60. . . . . . . 130
49. . . . . . . 191 61. . . . . . . 128
50. . . . . . . 185 62. . . . . . . 126
51. . . . . . . 178 63. . . . . . . 124
<CAPTION>
Attained Policy Attained Policy
-------- ------ -------- ------
Age Value % Age Value %
--- ------- --- -------
<S> <C> <C> <C>
64. . . . . . . 122 74. . . . . . . 107
65. . . . . . . 120 75-90 . . . . . 105
66. . . . . . . 119 91. . . . . . . 104
67. . . . . . . 118 92. . . . . . . 103
68. . . . . . . 117 93. . . . . . . 102
69. . . . . . . 116 94. . . . . . . 101
70. . . . . . . 115 95 or over. . . 100
71. . . . . . . 113
72. . . . . . . 111
73. . . . . . . 109
</TABLE>
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 both insureds and the Policy's underwriting classification, using a 4%
interest rate.
The Guideline Premium/Cash Value Corridor Test generally 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 we issue a Policy you may change the death benefit
option, or increase or decrease the Specified Amount, subject to our approval.
Changes are subject to insurability requirements and issue limits. We will not
permit a change if it results in a Specified Amount less than the minimum for a
new Policy that we would issue 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 our Home Office.
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. We will deduct any such charges from the Policy Value.
We are 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.
12. The cost of insurance charge will increase if a change results in a larger
net amount at risk. See "Charges against the Policy Value," p. 8.
7
<PAGE>
ALLOCATIONS TO THE ACCOUNT
We place the initial net premium in the Account on the Policy date. Net
premiums you pay thereafter are placed in the Account on the date we receive
them at our Home Office. Net premiums are premiums less the deductions from
premiums. See "Deductions from Premiums", below.
We invest premiums we place in the Account prior to the initial allocation date
in the Money Market Division of the Account. The initial allocation date is
identified in the Policy and is the later of the date we approved the
application and the date we received the initial premium at our Home Office. 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. 10. On the initial allocation date we invest
the amount in the Money Market Division in the Account divisions as you have
directed in the application for the Policy. You may change the allocation for
future net premiums at any time by written request and the change will be
effective for premiums we place in the Account thereafter. Allocation must be
in whole percentages.
You may transfer accumulated amounts from one division of the Account to
another. Transfers are effective on the date we receive a written request at
our Home Office. We reserve 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. We are currently waiving these fees.
DEDUCTIONS AND CHARGES
DEDUCTIONS FROM PREMIUMS We deduct a charge for taxes attributable to
premiums 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 .5% 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. We do 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. We believe that this charge
does not exceed a reasonable estimate of our federal income taxes attributable
to the treatment of deferred acquisition costs. We may change the charge for
taxes to reflect any changes in the law.
We deduct a charge for sales costs from each premium. The charge is 6.4% of
premiums paid during each of the first ten Policy years up to the Target Premium
and 2.4% of all other premiums. The Target Premium is based on the Specified
Amount and the issue age, sex and risk classification of the insured persons.
To the extent that sales expenses exceed the amounts deducted, we will pay the
expenses from our 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 we have assumed, as described below.
CHARGES AGAINST THE POLICY VALUE We deduct a cost of insurance charge from
the Policy Value on each monthly processing date. We determine the amount 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 policy duration, and the issue
age, sex and risk classification of the insured persons. The maximum cost of
insurance rates are included in the Policy.
We also deduct from the Policy Value a monthly charge for the mortality and
expense risks we have assumed. This charge includes the invested assets
component and the Specified Amount component. The maximum amount of the
invested assets component is equal to an annual rate of .90% (0.075% monthly
rate) of the Policy Value. Currently the charge is equal to an annual rate of
.45% (0.0375% monthly rate) of the Policy Value. The Specified Amount component
is based on the Specified Amount and the issue ages of the insured persons, and
applies during the first 10 Policy years. The range on an annual basis is from
4CENTS per $1,000 of initial Specified Amount if both insured persons are issue
age 25 or younger, up to $1.72 per $1,000 of initial Specified Amount if both
insured persons are issue age 72 or older. A table of rates and an example are
included in Appendix B, p. 52. The mortality risk is that insureds may not live
as long as we estimated. The expense risk is that expenses of issuing and
administering the Policies may exceed the estimated costs. We 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 $7.50. Currently this
charge will be $5. This charge is for administrative expenses, including costs
of premium collection, processing claims, keeping records and communicating with
Policyowners. We do not expect to profit from this charge.
There is a monthly underwriting and issue charge based on the Specified Amount
and the risk classification of the insureds. This charge applies during the
first 10 Policy years. The range is from 1.5CENTS to 3.5CENTS per $1000 of
initial Specified Amount, with a maximum monthly charge of $75 to $175.
We deduct a monthly deferred sales charge. The charge is 7.5% (0.625% monthly
rate) of premiums paid during the first Policy year up to the Target Premium.
During the first Policy year the monthly deduction is based on cumulative
premiums paid to date up to the Target Premium. The charge applies
8
<PAGE>
during the first 10 Policy years. This charge is for sales expenses.
We make a charge for the expenses and taxes associated with the Policy debt, if
any. The aggregate charge is at the current annual rate of 0.90% (0.075%
monthly rate) of the Policy debt for the first ten Policy years and 0.35%
(0.029167% monthly rate) thereafter.
The Policy provides for transaction fees to be deducted from the Policy Value on
the dates on which transactions take place. These charges are $25 for changes
in the Specified Amount, withdrawals or transfers of assets among the divisions
of the Account if more than twelve transfers take place in a Policy year. The
fee for a change in the death benefit option is $250. Currently we are waiving
all of these fees.
We will apportion deductions from the Policy Value among the divisions of the
Account in proportion to the amounts invested in the divisions.
SURRENDER CHARGE We will deduct a surrender charge from the Policy proceeds if
you surrender the Policy during the first ten Policy years. During the first
Policy year the surrender charge is equal to 50% of the premiums actually paid
during the first Policy year or the Target Premium, whichever is less. The
Target Premium, and therefore the maximum surrender charge, depends on the issue
age, sex and risk classification of the insured persons. For example, for a
male and female, both in the best risk classification and both issue age 55, the
maximum surrender charge, where the Target Premium or more is paid and the
Policy is surrendered during the first Policy year, would be $9.29 per $1,000 of
initial Specified Amount. The surrender charge will never exceed $50 per $1,000
of initial Specified Amount for any issue age, sex and risk classification
combination. Beginning with the second Policy year the surrender charge
decreases by the same dollar amount month by month to zero at the end of the
tenth Policy year. No surrender charge applies to a withdrawal of cash value.
EXPENSES OF THE FUNDS The investment performance of each division of the
Account reflects all expenses borne by the corresponding Portfolio or Fund. The
expenses are summarized above on page 3. See the attached mutual fund
prospectuses for more information about those expenses.
CASH VALUE
You may surrender a Policy for the cash value at any time during the lifetime of
at least one of the insured persons. 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 the surrender charge and
reduced by any Policy debt outstanding.
We determine the cash value for a Policy 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, we may also determine the cash value for a Policy on any other day on
which there is sufficient trading in securities to materially affect the value
of the securities held by the Portfolios or Funds.
POLICY LOANS
You may borrow up to 90% of the Policy Value less the surrender charge on the
date of the loan, using the Policy as security. If a Policy loan is already
outstanding, the maximum amount for any new loan is reduced by the amount
already borrowed.
Interest on a Policy loan accrues and is payable on a daily basis at an annual
effective rate of 5%. We add unpaid interest to the amount of the loan. If the
amount of the loan plus the surrender charge equals or exceeds the Policy Value
on a monthly processing date, the Policy will enter the grace period. See
"Termination and Reinstatement", below. We will send you a notice at least 61
days before the termination date. The notice will show how much you must pay to
keep the Policy in force.
We will take the amount of a Policy loan from the Account divisions in
proportion to the amounts in the divisions. We will transfer the amounts
withdrawn to our general account and credit them on a daily basis with an annual
earnings rate equal to the 5% Policy loan interest rate. A Policy loan, even if
you repay it, 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.
You may repay a Policy loan, and any accrued interest outstanding, in whole or
in part, at any time. We will credit payments as of the date we receive them and
we will transfer those amounts from our general account 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.
12.
WITHDRAWALS OF CASH VALUE
You may make a withdrawal of cash 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 the surrender charge. Following a withdrawal the remaining
cash value must be at least three times the current monthly charges for the cost
of
9
<PAGE>
insurance and other expenses. The minimum amount for withdrawals is $250. We
permit up to four withdrawals in a Policy year. An administrative charge of
up to $25 may apply, but we are currently waiving this charge.
A withdrawal of cash 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 cash 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 we would
currently issue.
We will take the amount withdrawn from cash value from the Account divisions in
proportion to the amounts in the divisions. The Policy makes no provision for
repayment of amounts withdrawn. A withdrawal of cash value may have important
tax consequences. See "Tax Considerations", p. 12.
TERMINATION AND REINSTATEMENT
If the cash value is less than the monthly charges for the cost of insurance and
other expenses on any monthly processing date, we allow a grace period of 61
days for the payment of sufficient premium to keep the Policy in force. The
grace period begins on the date we send you a notice. The notice will state the
minimum amount of premium required to keep the Policy in force and the date by
which you must pay the premium. The Policy will terminate with no value unless
you pay the required amount before the grace period expires.
After a Policy has terminated, it may be reinstated within three years. The
insureds 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 our Home Office, subject
to our approval. 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, plus any Policy debt, less the sum of
all monthly charges for the cost of insurance and other expenses for the grace
period and for the current month. We will allocate the Policy Value, less any
Policy debt, 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 or if either of the insured persons has died after the end of the
grace period.
See "Tax Considerations", p. 12, for a discussion of the tax effects associated
with termination and reinstatement of a Policy.
RIGHT TO RETURN POLICY
You may return a Policy within 10 days (or later where required by state law)
after you receive the Policy. In some states you may return the Policy within
45 days after you have signed the application for insurance. You may mail or
deliver the Policy to the agent who sold it or to our Home Office. If you
return it, we will consider the Policy void from the beginning. We will refund
the sum of the amounts deducted from the premium paid plus the Policy Value less
any Policy debt on the date the returned Policy is received. In some states,
the amount we refund will not be less than the premium you paid.
OTHER POLICY PROVISIONS
OWNER. The owner is identified in the Policy. The owner may exercise all rights
under the Policy while at least one of the insured persons is living. Ownership
may be transferred to another. We must receive a written proof of the transfer
at our Home Office. "You" in this prospectus means the owner or prospective
purchaser of a Policy.
BENEFICIARY. The beneficiary is the person to whom the death benefit is
payable. The beneficiary is named in the application. After we issue the Policy
you may change the beneficiary in accordance with the Policy provisions.
INCONTESTABILITY. We will not contest a Policy after it has been in force
during the lifetime of at least one insured for two years from the date of issue
or two years from the effective date of a reinstatement. We will not contest an
increase in the amount of insurance that was subject to insurability
requirements after the increased amount has been in force during the lifetime of
at least one insured for two years from the date of issuance of the increase.
SUICIDE. If either 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 either 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 either of the insureds has
been misstated, we will adjust the charges for cost of insurance and other
10
<PAGE>
expenses under a Policy to reflect the correct age and sex of both insured
persons.
COLLATERAL ASSIGNMENT. You may assign a Policy as collateral security. We are
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 our Home Office.
DEFERRAL OF DETERMINATION AND PAYMENT. We will ordinarily pay Policy
benefits within seven days after we receive all required documents at our
Home Office. However, we may defer determination and payment of benefits
during any period when it is not reasonably practicable to value securities
because the New York Stock Exchange is closed or an emergency exists or the
Securities and Exchange Commission, by order, permits deferral for the
protection of Policyowners.
DIVIDENDS. The Policies will share in divisible surplus to the extent we
determine annually. Since we do not expect the Policies to contribute to
divisible surplus, we do not expect to pay any dividends.
VOTING RIGHTS
We are the owner of the shares of both mutual funds in which all assets of the
Account are invested. As the owner of the shares we will exercise our right to
vote the shares to elect directors of the mutual funds, 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 mutual fund shareholders' meeting. However, we will vote the
mutual fund shares held in the Account in accordance with instructions from
owners of the Policies. we will vote any shares of the mutual funds held in our
general account in the same proportions as the shares for which we have received
voting instructions. If the applicable laws or regulations change so as to
permit us to vote the shares in our own discretion, we may elect to do so.
The number of mutual 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 Value apportioned to that division, if any, by the per share value
for the corresponding Portfolio or Fund. The number will be determined as of a
date we choose, but not more than 90 days before the shareholders' meeting.
Fractional votes are counted. We will solicit voting instructions with written
materials at least 14 days before the meeting. We will vote shares as to which
we receive no instructions in the same proportion as the shares as to which we
receive instructions.
We may, if required by state insurance officials, disregard voting instructions
which would require mutual fund shares to be voted for a change in the
sub-classification or investment objectives of a Portfolio or Fund, or to
approve or disapprove an investment advisory agreement for either of the mutual
funds. We may also disregard voting instructions that would require changes in
the investment policy or investment adviser for either a Portfolio or a Fund,
provided that we reasonably determine to take this action in accordance with
applicable federal law. If we disregard voting instructions, we will include a
summary of the action and reasons therefor in the next semiannual report to the
owners of the Policies.
SUBSTITUTION OF FUND SHARES AND OTHER CHANGES
If, in our judgment, a Portfolio or Fund becomes unsuitable for continued use
with the Policies because of a change in investment objectives or restrictions,
shares of another Portfolio or Fund 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. We have 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 you will receive a statement showing the death
benefit, cash value, Policy Value and any Policy loan, including loan interest.
This report will show the apportionment of invested assets among the Account
divisions. You will also receive annual and semiannual reports for the Account
and both of the mutual funds, including financial statements.
DISTRIBUTION OF THE POLICIES
We sell the Policies through individuals who, in addition to being licensed life
insurance agents of Northwestern Mutual Life, are registered representatives of
Northwestern Mutual Investment Services, LLC ("NMIS"), our wholly-owned
subsidiary. NMIS is a registered broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers. NMIS
was organized in 1968 and is a Wisconsin limited liability company. Its address
is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. The Internal Revenue
Service Employer Identification Number of NMIS is 39-0509570.
Commissions paid to the agents will not exceed 40% of the premium up to the
Target Premium for the first
11
<PAGE>
year, 6% of the premium up to the Target Premium during Policy years 2-10,
and 2.75% of all other premium. Agents also receive commissions equal to
.10% of Policy Value less Policy debt in Policy years 6 and later.
General agents and district agents who are registered representatives of NMIS
and have supervisory responsibility for sales of the Policies receive commission
overrides and other compensation.
TAX CONSIDERATIONS
GENERAL The following discussion provides a general description of federal
income tax considerations 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. We do not intend this discussion
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. 7. We have designed the
Policy to comply with these rules. We will return premiums that would cause a
Policy to be disqualified as life insurance.
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. We
intend 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. We believe that we own the assets of the Account under current
federal income tax law.
We believe that the Policies comply with the provisions of Sections 7702 and
817(h) of the Code, but the application of these rules is not entirely clear.
We may make changes in the Policies if necessary to qualify the Policies as life
insurance for tax purposes.
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 distribution 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, we
believe 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 owners of the Policies will
ordinarily not be deductible.
As a general rule, the proceeds from a withdrawal of cash value will be taxable
only to the extent that the withdrawal 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. In certain circumstances, a
withdrawal of cash value during the first 15 Policy years may be taxable to the
extent that the cash value exceeds the basis of the Policy. 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. You
should seek qualified tax advice if you plan a transfer of ownership.
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
12
<PAGE>
such change. A materially changed Policy would be considered a modified
endowment contract if it failed to satisfy the new seven-pay limit. A
material change could occur as a result of a change in the death benefit
option, a change in the Specified Amount, and certain other changes.
If the benefits are reduced during the lifetime of either insured, for example,
by requesting a decrease in the Specified Amount or, in some cases, by making a
withdrawal of cash 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 cash
value. Any such distributions will be considered taxable income to the extent
the cash 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.
ESTATE AND GENERATION SKIPPING TAXES The amount of the death benefit will
generally be includible in the owner's estate for federal estate tax purposes if
the last surviving insured owned the Policy. If the owner is not the last
surviving insured, the fair market value of the Policy is includible in the
owner's estate.
The federal estate tax and gift tax are integrated under a unified rate schedule
which effectively excludes estates of less than $625,000 from federal estate
taxes. The exclusion will be increased in several steps to $1 million in the
year 2006 under current law. In addition, an unlimited marital deduction
permits deferral of federal estate and gift taxes until the death of the
surviving spouse.
If ownership of the Policy is transferred to a person two or more generations
younger than the owner, the value of the Policy may be taxable. Individuals are
generally allowed an aggregate generation skipping tax exemption of $1 million.
You should consult a qualified tax adviser if you contemplate transfer of
ownership to grandchildren.
OTHER TAX CONSIDERATIONS The Policy permits the owner to exchange the Policy
for two policies, one on the life of each insured, if a change in the federal
estate tax law results in the repeal of the unlimited marital deduction or a 50%
or greater reduction in the estate tax rate. The Internal Revenue Service has
ruled with respect to one taxpayer that such a transaction would be treated as a
non-taxable exchange. If not, such a split of the Policy could result in the
recognition of taxable income.
Depending on the circumstances, the exchange of a Policy, a change in the death
benefit option, a Policy loan, a withdrawal of cash value, a change in ownership
or an assignment of the Policy may have federal income tax consequences. In
addition, federal,
13
<PAGE>
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. If you contemplate any
such transaction, you 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.
<TABLE>
<CAPTION>
TRUSTEES
NAME PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ----- -------------------------------------------
<S> <C>
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)................. Chairman, Sun Chemical Corporation, 222
Bridge Plaza South, Fort Lee, New Jersey
07024 (graphic arts) since 1998; prior
thereto, President and Chief Executive
Officer. 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 54911 (manufacturer of gift wrap and
writing paper)
Robert E. Carlson (E)............... Executive Vice President of Northwestern
Mutual Life
George A. Dickerman (AM)............ Chairman of the Board, Spalding Sports
Worldwide, 425 Meadow Street, P.O. Box
901, Chicopee, MA 01021-0901
(manufacturer of sporting equipment)
since 1998; prior thereto, President
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
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). Address: 805
Lone Tree Road, Elm Grove, WI 53122-2014
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).............. Attorney. Former Chairman, Santa Anita
Realty Enterprises since 1997; prior
thereto, Chairman. Address: 101 South
Las Palmas Avenue, Los Angeles, CA 90004
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
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 (retired), 228 St. Charles
Avenue, Suite 1024, New Orleans, LA
70130, since 1998; prior thereto,
Attorney, Monroe & Lemann, New Orleans,
LA
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).............. Director, Worldwide Human Resources of
Glaxo Wellcome plc, P.O. Box 13398, 5
Moore Drive, Research Triangle Park, NC
27709, since 1998. Senior Vice
President Human Resources, General
Counsel & Secretary from 1994 to 1998
(pharmaceuticals)
Donald J. Schuenke (AM, E, F)....... Retired; Chairman of Northwestern Mutual
Life
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 98109 (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,
2102 Riverfront Drive, Suite 120, Little
Rock, AR 72202-1747 since 1997
(heating, air-conditioning and
humidity control). Retired since 1996
as Chairman and Chief Executive Officer
of ALLTEL Information Services, Inc.,
Little Rock, AR (application software)
John J. Stollenwerk (AM, E, F)...... President and Chief Executive Officer,
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 of
Williams Pacific Ventures, Inc., 100
First Street, Suite 2350, San Francisco,
CA 94105-2634 (venture capital)
Kathryn D. Wriston (A).............. Director of various corporations.
Address: c/o Shearman & Sterling, 599
Lexington Avenue, Room 1126, New York,
NY 10022
</TABLE>
<TABLE>
<S> <C>
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
</TABLE>
15
<PAGE>
SENIOR OFFICERS (OTHER THAN TRUSTEES)
<TABLE>
<CAPTION>
POSITION WITH
NAME NORTHWESTERN MUTUAL LIFE
- ------------------------------ ------------------------------------------
<S> <C>
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
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
</TABLE>
REGULATION
We are subject to the laws of Wisconsin governing insurance companies and to
regulation by the Wisconsin Commissioner of Insurance. We file an annual
statement in a prescribed form 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.
We are also subject to the insurance laws and regulations of the other
jurisdictions in which we are licensed to operate.
YEAR 2000 ISSUES
Since early 1996 we have been preparing for the computer requirements associated
with the approaching turn of the century. We completed assessment of internal
systems in 1996. As of the date of this prospectus the necessary system changes
are substantially complete. System testing is in process and we expect testing
of all critical systems to be completed during the first six months of 1999.
The work on these computer systems extends to software packages we purchase from
vendors. In addition, we have been communicating formally with our business
partners to identify and assess potential exposure that could result from their
failure to address these computer issues on a timely basis. Each of our
departments has prepared a contingency plan.
We and our business partners bear all of the costs of identifying and resolving
the computer systems issues associated with the year 2000. These costs will
have no effect on the performance of the Account. The Policies permit charges
for administrative expenses to be increased up to the guaranteed maximum rates.
However, we do not expect our costs for year 2000 compliance to have any
significant effect on the benefits or values provided by the Policies.
We believe that our computer systems will be ready for the year 2000 well in
advance of the deadline. By their nature, however, the issues in this area
carry the risk of unforeseen problems, both at Northwestern Mutual Life and at
all the other sites where supporting functions and interaction take place.
There can be no assurance that these problems will not have a material adverse
impact on the operations of Northwestern Mutual Life and the Account.
LEGAL PROCEEDINGS
We are engaged in litigation of various kinds which in our 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
We have filed a registration statement with the Securities and Exchange
Commission, Washington, D.C 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.
16
<PAGE>
EXPERTS
The financial statements of Northwestern Mutual Life as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998 and
of the Account as of December 31, 1998 and for each of the two years in the
period ended December 31, 1998 included in this prospectus have been so included
in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting. 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.
17
<PAGE>
VARIABLE LIFE ACCOUNTANTS' REPORT
[LOGO]
Report of Independent Accountants
To The Northwestern Mutual Life Insurance Company and
Policyowners of Northwestern Mutual Variable Life Account
In our opinion, the accompanying combined statement of assets and liabilities
and the related combined and separate statements of operations and changes in
equity present fairly, in all material respects, the financial position of
Northwestern Mutual Variable Life Account and Aggressive Growth Stock Division,
International Equity Division, Growth Stock Division, Growth and Income Stock
Division, Index 500 Stock Division, Balanced Division, High Yield Bond Division,
Select Bond Division, and the Money Market Division thereof at December 31,
1998, the results of each of their operations and the changes in each of their
equity for each of the two years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of The Northwestern Mutual Life Insurance
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
direct confirmation of the number of shares owned at December 31, 1998 with
Northwestern Mutual Series Fund, Inc., provide a reasonable basis for the
opinion expressed above.
[SIG]
Milwaukee, Wisconsin
January 25, 1999
18
<PAGE>
VARIABLE LIFE FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Financial Statements
DECEMBER 31, 1998
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
<TABLE>
<S> <C>
Assets
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Aggressive Growth Stock
34,420 shares (cost $102,404).............. $ 119,230
International Equity
46,760 shares (cost $73,163)............... 78,416
Growth Stock
29,383 shares (cost $49,267)............... 66,025
Growth and Income Stock
43,428 shares (cost $60,081)............... 70,528
Index 500 Stock
58,115 shares (cost $126,062).............. 191,141
Balanced
71,092 shares (cost $108,217).............. 158,110
High Yield Bond
15,509 shares (cost $16,804)............... 14,516
Select Bond
10,143 shares (cost $12,181)............... 12,669
Money Market
39,300 shares (cost $39,300)............... 39,300 $ 749,935
---------
Due from Sale of Fund Shares.................................. 95
Due from Northwestern Mutual Life Insurance Company........... 328
---------
Total Assets.................................................. $ 750,358
---------
---------
Liabilities
Due to Northwestern Mutual Life Insurance Company........... $ 95
Due on Purchase of Fund Shares.............................. 328
---------
Total Liabilities....................................... 423
---------
Equity (Note 8)
Variable Life Policies Issued Before October 11, 1995....... 392,772
Variable Complife Policies Issued On or After October 11,
1995....................................................... 356,862
Variable Executive Life Policies Issued On or After March 2,
1998....................................................... 301
---------
Total Equity............................................ 749,935
---------
Total Liabilities and Equity............................ $ 750,358
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
19
<PAGE>
VARIABLE LIFE FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Statements of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL EQUITY
COMBINED STOCK DIVISION DIVISION
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Dividend Income............... $ 24,922 $ 24,262 $ 3,287 $3,345 $ 3,591 $ 1,286
Mortality and Expense Risks... 2,755 1,788 424 271 308 197
Taxes......................... 1,178 767 181 116 132 85
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income......... 20,989 21,707 2,682 2,958 3,151 1,004
------------- ------------- ------------- ------------- ------------- -------------
Realized and Unrealized Gain
(Loss) on Investments
Realized Gain on
Investments............... 4,332 4,871 523 231 284 203
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 68,780 42,532 4,928 5,109 (1,424) 2,358
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 73,112 47,403 5,451 5,340 (1,140) 2,561
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 94,101 69,110 8,133 8,298 2,011 3,565
------------- ------------- ------------- ------------- ------------- -------------
Equity Transactions
Policyowners' Net
Deposits.................. 258,672 170,672 30,145 21,502 20,672 12,656
Policy Loans, Surrenders,
and Death Benefits........ (37,427) (23,728) (6,454) (4,003) (4,327) (2,787)
Mortality and Other (net)... (39,611) (28,427) (5,193) (3,791) (3,785) (2,368)
Transfers from Other
Divisions................. 133,775 86,366 20,371 19,008 15,743 14,866
Transfers to Other
Divisions................. (133,773) (86,366) (6,419) (4,091) (5,013) (2,149)
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Equity Transactions.... 181,636 118,517 32,450 28,625 23,290 20,218
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 275,737 187,627 40,583 36,923 25,301 23,783
Equity
Beginning of Year........... 474,198 286,571 78,647 41,724 53,116 29,333
------------- ------------- ------------- ------------- ------------- -------------
End of Year................. $749,935 $474,198 $119,230 $78,647 $78,417 $53,116
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
20
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Statements of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH & INCOME INDEX 500
GROWTH STOCK DIVISION STOCK DIVISION STOCK DIVISION
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Dividend Income............... $ 956 $ 1,413 $ 537 $ 7,776 $ 4,530 $ 2,579
Mortality and Expense Risks... 211 105 234 120 671 395
Taxes......................... 91 45 100 52 287 169
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income......... 654 1,263 203 7,604 3,572 2,015
------------- ------------- ------------- ------------- ------------- -------------
Realized and Unrealized Gain
(Loss) on Investments
Realized Gain on
Investments............... 143 172 220 173 1,125 2,375
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 10,533 4,151 10,574 (1,823) 31,738 17,772
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 10,676 4,323 10,794 (1,650) 32,863 20,147
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 11,330 5,586 10,997 5,954 36,435 22,162
------------- ------------- ------------- ------------- ------------- -------------
Equity Transactions
Policyowners' Net
Deposits.................. 12,991 7,334 14,771 7,537 29,665 19,733
Policy Loans, Surrenders,
and Death Benefits........ (2,859) (1,314) (2,902) (1,842) (8,924) (5,039)
Mortality and Other (net)... (2,494) (1,329) (2,847) (1,457) (5,367) (4,127)
Transfers from Other
Divisions................. 16,839 8,851 17,225 10,673 37,076 20,024
Transfers to Other
Divisions................. (2,015) (1,341) (3,106) (1,104) (5,443) (3,783)
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Equity Transactions.... 22,462 12,201 23,141 13,807 47,007 26,808
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 33,792 17,787 34,138 19,761 83,442 48,970
Equity
Beginning of Year........... 32,233 14,446 36,389 16,628 107,699 58,729
------------- ------------- ------------- ------------- ------------- -------------
End of Year................. $66,025 $32,233 $70,527 $36,389 $191,141 $107,699
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
21
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Statements of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCED DIVISION HIGH YIELD BOND DIVISION SELECT BOND DIVISION
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Dividend Income............... $ 8,344 $ 5,105 $ 1,489 $1,370 $ 743 $ 436
Mortality and Expense Risks... 681 558 53 29 51 35
Taxes......................... 292 239 22 12 22 15
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income......... 7,371 4,308 1,414 1,329 670 386
------------- ------------- ------------- ------------- ------------- -------------
Realized and Unrealized Gain
(Loss) on Investments
Realized Gain on
Investments............... 1,893 1,655 47 26 97 36
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 14,317 15,262 (1,828) (531) (58) 234
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 16,210 16,917 (1,781) (505) 39 270
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 23,581 21,225 (367) 824 709 656
------------- ------------- ------------- ------------- ------------- -------------
Equity Transactions
Policyowners' Net
Deposits.................. 17,811 15,394 3,490 1,922 2,004 1,820
Policy Loans, Surrenders,
and Death Benefits........ (8,879) (7,260) (690) (349) (620) (311)
Mortality and Other (net)... (3,232) (3,395) (641) (339) (250) (560)
Transfers from Other
Divisions................. 7,905 4,266 5,399 3,276 3,951 2,000
Transfers to Other
Divisions................. (5,398) (4,734) (1,476) (425) (2,217) (756)
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Equity Transactions.... 8,207 4,271 6,082 4,085 2,868 2,193
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 31,788 25,496 5,715 4,909 3,577 2,849
Equity
Beginning of Year........... 126,322 100,826 8,801 3,892 9,092 6,243
------------- ------------- ------------- ------------- ------------- -------------
End of Year................. $158,110 $126,322 $14,516 $8,801 $12,669 $9,092
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
<CAPTION>
MONEY MARKET DIVISION
-----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
Investment Income
Dividend Income............... $ 1,445 $ 952
Mortality and Expense Risks... 122 78
Taxes......................... 51 34
------------- -------------
Net Investment Income......... 1,272 840
------------- -------------
Realized and Unrealized Gain
(Loss) on Investments
Realized Gain on
Investments............... -- --
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... -- --
------------- -------------
Net Gain (Loss) on
Investments............... -- --
------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 1,272 840
------------- -------------
Equity Transactions
Policyowners' Net
Deposits.................. 127,123 82,774
Policy Loans, Surrenders,
and Death Benefits........ (1,772) (823)
Mortality and Other (net)... (15,802) (11,061)
Transfers from Other
Divisions................. 9,266 3,402
Transfers to Other
Divisions................. (102,686) (67,983)
------------- -------------
Increase in Equity Derived
from Equity Transactions.... 16,129 6,309
------------- -------------
Net Increase in Equity........ 17,401 7,149
Equity
Beginning of Year........... 21,899 14,750
------------- -------------
End of Year................. $39,300 $21,899
------------- -------------
------------- -------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Notes to Financial Statements
DECEMBER 31, 1998
NOTE 1 -- Northwestern Mutual Variable Life Account (the "Account") is
registered as a unit investment trust under the Investment Company Act of 1940
and is a segregated asset account of The Northwestern Mutual Life Insurance
Company ("Northwestern Mutual") used to fund variable life insurance policies.
NOTE 2 -- The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Principal
accounting policies are summarized below.
NOTE 3 -- All assets of each Division of the Account are invested in shares of
the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the
"Fund"). The shares are valued at the Fund's offering and redemption price per
share. The Fund is a diversified open-end investment company registered under
the Investment Company Act of 1940.
NOTE 4 -- Dividend income from the Fund is recorded on the record date of the
dividends. Transactions in Fund shares are accounted for on the trade date. The
basis for determining cost on sale of Fund shares is identified cost. Purchases
and sales of Fund shares for the year ended December 31, 1998 by each Division
are shown below:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Aggressive Growth Division....... $ 36,381,397 $ 1,248,015
International Equity Division.... 27,429,118 990,001
Growth Stock Division............ 23,393,892 279,458
Growth & Income Stock
Division....................... 24,059,882 715,896
Index 500 Stock Division......... 52,625,759 2,046,627
Balanced Division................ 20,647,579 5,068,597
High Yield Bond Division......... 8,131,249 635,946
Select Bond Division............. 5,351,461 1,813,834
Money Market Division............ 47,332,350 29,930,945
</TABLE>
NOTE 5 -- A deduction for mortality and expense risks is determined daily and
paid to Northwestern Mutual. Generally, for Variable Life policies issued before
October 11, 1995, and Variable Complife policies issued on or after October 11,
1995 the deduction is at an annual rate of .50% and .60%, respectively, of the
net assets of the Account. A deduction for the mortality and expense risks for
the Variable Executive Life policies issued on or after March 3, 1998 is
determined monthly at an annual rate of .75% of the amount invested in the
Account for the Policy for the first ten Policy years, and .30% thereafter. The
mortality risk is that insureds may not live as long as estimated. The expense
risk is that expenses of issuing and administering the policies may exceed the
estimated costs.
Certain deductions are also made from the annual, single or other premiums
before amounts are allocated to the Account. These deductions are for (1) sales
load, (2) administrative expenses, (3) taxes and (4) a risk charge for the
guaranteed minimum death benefit.
Additional mortality costs are deducted from the policy annually and are paid to
Northwestern Mutual to cover the cost of providing insurance protection. This
cost is actuarially calculated based upon the insured's age, the 1980
Commissioners Standard Ordinary Mortality Table and the amount of insurance
provided under the policy.
NOTE 6 -- Northwestern Mutual is taxed as a "life insurance company" under the
Internal Revenue Code. The variable life insurance policies which are funded in
the Account are taxed as part of the operations of Northwestern Mutual. Policies
provide that a charge for taxes may be made against the assets of the Account.
Generally, for Variable Life policies issued before October 11, 1995,
Northwestern Mutual charges the Account at an annual rate of .20% of the
Account's net assets and reserves the right to increase, decrease or eliminate
the charge for taxes in the future. Generally, for Variable Complife policies
issued on or after October 11, 1995, and for Variable Executive Life policies
issued on or after March 3, 1998, there is no charge being made against the
assets of the Account for federal income taxes, but Northwestern Mutual reserves
the right to charge for taxes in the future.
NOTE 7 -- The Account is credited for the policyowners' net annual premiums at
the respective policy anniversary dates regardless of when policyowners actually
paid their premiums. Northwestern Mutual's equity represents any unpaid portion
of net annual premiums. This applies to Variable Life and Variable Complife
policies only.
23
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Notes to Financial Statements
(in thousands)
DECEMBER 31, 1998
NOTE 8 -- Equity Values by Division are shown below:
<TABLE>
<CAPTION>
VARIABLE LIFE
POLICIES ISSUED BEFORE
OCTOBER 11, 1995
EQUITY OF:
------------------------ TOTAL
POLICYOWNERS NML EQUITY
------------- --------- ---------
<S> <C> <C> <C>
Aggressive Growth Stock Division......................................................... $ 42,391 $ 3,793 $ 46,184
International Equity Division............................................................ 32,539 3,074 35,613
Growth Stock Division.................................................................... 22,888 1,510 24,398
Growth and Income Stock Division......................................................... 26,309 1,808 28,117
Index 500 Stock Division................................................................. 95,615 4,943 100,558
Balanced Division........................................................................ 134,029 5,006 139,035
High Yield Bond Division................................................................. 4,916 428 5,344
Select Bond Division..................................................................... 6,911 417 7,328
Money Market Division.................................................................... 5,918 277 6,195
------------- --------- ---------
$ 371,516 $ 21,256 $ 392,772
------------- --------- ---------
------------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE COMPLIFE
POLICIES ISSUED ON OR
AFTER OCTOBER 11, 1995
EQUITY OF:
------------------------ TOTAL
POLICYOWNERS NML EQUITY
------------- --------- ---------
<S> <C> <C> <C>
Aggressive Growth Stock Division........................................................ $ 54,132 $ 18,846 $ 72,978
International Equity Division........................................................... 31,302 11,492 42,794
Growth Stock Division................................................................... 30,575 11,026 41,601
Growth and Income Stock Division........................................................ 30,515 11,841 42,356
Index 500 Stock Division................................................................ 65,609 24,890 90,499
Balanced Division....................................................................... 14,142 4,909 19,051
High Yield Bond Division................................................................ 6,565 2,594 9,159
Select Bond Division.................................................................... 4,161 1,171 5,332
Money Market Division................................................................... 13,154 19,938 33,092
------------- --------- ---------
$ 250,155 $ 106,707 $ 356,862
------------- --------- ---------
------------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE EXECUTIVE LIFE
POLICIES ISSUED ON OR
AFTER MARCH 2, 1998
-------------------------
TOTAL
EQUITY
-------------------------
<S> <C>
Aggressive Growth Stock Division...................................................................... $ 67
International Equity Division......................................................................... 10
Growth Stock Division................................................................................. 25
Growth and Income Stock Division...................................................................... 55
Index 500 Stock Division.............................................................................. 84
Balanced Division..................................................................................... 24
High Yield Bond Division.............................................................................. 13
Select Bond Division.................................................................................. 9
Money Market Division................................................................................. 14
-----
$ 301
-----
-----
</TABLE>
24
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN MILLIONS)
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.
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Assets
Bonds......................................... $ 34,888 $ 32,359
Common and preferred stocks................... 6,576 6,524
Mortgage loans................................ 12,250 10,835
Real estate................................... 1,481 1,372
Policy loans.................................. 7,580 7,163
Other investments............................. 1,839 2,026
Cash and temporary investments................ 1,275 572
Due and accrued investment income............. 827 795
Other assets.................................. 1,313 1,275
Separate account assets....................... 9,966 8,160
--------- ---------
Total assets.............................. $ 77,995 $ 71,081
--------- ---------
--------- ---------
Liabilities and Surplus
Reserves for policy benefits.................. $ 51,815 $ 47,343
Policy benefit and premium deposits........... 1,709 1,624
Policyowner dividends payable................. 2,870 2,640
Interest maintenance reserve.................. 606 461
Asset valuation reserve....................... 1,994 1,974
Income taxes payable.......................... 1,161 1,043
Other liabilities............................. 3,133 3,735
Separate account liabilities.................. 9,966 8,160
--------- ---------
Total liabilities......................... 73,254 66,980
Surplus....................................... 4,741 4,101
--------- ---------
Total liabilities and surplus............. $ 77,995 $ 71,081
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Revenue
Premium income................................ $ 8,021 $ 7,294 $ 6,667
Net investment income......................... 4,536 4,171 3,836
Other income.................................. 922 861 759
--------- --------- ---------
Total revenue............................. 13,479 12,326 11,262
--------- --------- ---------
Benefits and Expenses
Benefit payments to policyowners and
beneficiaries................................ 3,602 3,329 2,921
Net additions to policy benefit reserves...... 4,521 4,026 3,701
Net transfers to separate accounts............ 564 566 579
--------- --------- ---------
Total benefits............................ 8,687 7,921 7,201
Operating expenses............................ 1,297 1,138 1,043
--------- --------- ---------
Total benefits and expenses............... 9,984 9,059 8,244
--------- --------- ---------
Gain from operations before dividends and taxes... 3,495 3,267 3,018
Policyowner dividends............................. 2,869 2,636 2,341
--------- --------- ---------
Gain from operations before taxes................. 626 631 677
Income tax expense................................ 301 356 452
--------- --------- ---------
Net gain from operations.......................... 325 275 225
Net realized capital gains........................ 484 414 395
--------- --------- ---------
Net income................................ $ 809 $ 689 $ 620
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN SURPLUS
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Beginning of Year Balance......................... $4,101 $3,515 $2,786
Net income...................................... 809 689 620
Increase (decrease) in net unrealized gains..... (147) 576 295
Increase in investment reserves................. (20) (526) (176)
Other, net...................................... (2) (153) (10)
------- ------- -------
Net increase in surplus......................... 640 586 729
------- ------- -------
End of Year Balance............................... $4,741 $4,101 $3,515
------- ------- -------
------- ------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Insurance and annuity premiums.................. $ 8,876 $ 8,093 $ 7,361
Investment income received...................... 4,216 3,928 3,634
Disbursement of policy loans, net of
repayments..................................... (416) (360) (326)
Benefits paid to policyowners and
beneficiaries.................................. (3,572) (3,316) (2,912)
Net transfers to separate accounts.............. (564) (565) (579)
Policyowner dividends paid...................... (2,639) (2,347) (2,105)
Operating expenses and taxes.................... (1,749) (1,722) (1,663)
Other, net...................................... (83) 124 (59)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES..... 4,069 3,835 3,351
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD OR MATURED
Bonds......................................... 28,720 38,284 31,942
Common and preferred stocks................... 10,359 9,057 4,570
Mortgage loans................................ 1,737 1,012 1,253
Real estate................................... 159 302 178
Other investments............................. 768 398 316
-------- -------- --------
41,743 49,053 38,259
-------- -------- --------
COST OF INVESTMENTS ACQUIRED
Bonds......................................... 30,873 41,169 35,342
Common and preferred stocks................... 9,642 9,848 4,463
Mortgage loans................................ 3,135 2,309 2,455
Real estate................................... 268 202 125
Other investments............................. 567 359 255
-------- -------- --------
44,485 53,887 42,640
-------- -------- --------
NET INCREASE (DECREASE) IN SECURITIES LENDING
AND OTHER...................................... (624) 440 1,617
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES......... (3,366) (4,394) (2,764)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
INVESTMENTS...................................... 703 (559) 587
CASH AND TEMPORARY INVESTMENTS, BEGINNING OF
YEAR............................................. 572 1,131 544
-------- -------- --------
CASH AND TEMPORARY INVESTMENTS, END OF YEAR....... $ 1,275 $ 572 $ 1,131
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
1. PRINCIPAL ACCOUNTING POLICIES
The accompanying consolidated statutory financial statements include the
accounts of The Northwestern Mutual Life Insurance Company ("Company") and its
wholly-owned life insurance subsidiary, Northwestern Long Term Care Insurance
Company ("Subsidiary"). The Company and its Subsidiary offer life, annuity,
disability income and long term care products to the personal, business, estate
and tax-qualified markets.
The consolidated financial statements have been prepared using accounting
policies prescribed or permitted by the Office of the Commissioner of Insurance
of the State of Wisconsin ("statutory basis of accounting").
In 1998, the National Association of Insurance Commissioners ("NAIC") adopted
the Codification of Statutory Accounting Principles, which will replace the
current Accounting Practices and Procedures manual as the NAIC's primary
guidance on statutory accounting. The NAIC is now considering amendments to the
codification guidance that would also be effective upon its planned
implementation effective January 1, 2001. It is expected that the Office of the
Commissioner of Insurance of the State of Wisconsin ("OCI") will adopt the
codification, but it is not known whether the OCI will make any changes to that
guidance. The potential effect of the codification on the Company will depend
upon the guidance adopted by the OCI.
Financial statements prepared on the statutory basis of accounting vary from
financial statements prepared on the basis of Generally Accepted Accounting
Principles ("GAAP") primarily because on a GAAP basis (1) policy acquisition
costs are deferred and amortized, (2) investment valuations and insurance
reserves are based on different assumptions, (3) funds received under
deposit-type contracts are not reported as premium revenue, and (4) deferred
taxes are provided for temporary differences between book and tax basis of
certain assets and liabilities. The effects on the financial statements of the
differences between the statutory basis of accounting and GAAP are material to
the Company.
The preparation of financial statements in conformity with the statutory basis
of accounting requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual future results could differ from these estimates.
INVESTMENTS
The Company's investments are valued on the following bases:
<TABLE>
<S> <C> <C>
Bonds -- Amortized cost using the interest method; loan-backed and
structured securities are amortized using estimated
prepayment rates and, generally, the prospective adjustment
method
Common and preferred stocks -- Common stocks are carried at fair value, preferred stocks
are generally carried at cost, and unconsolidated
subsidiaries are recorded using the equity method
Mortgage loans -- Amortized cost
Real estate -- Lower of cost, less depreciation and encumbrances, or
estimated net realizable value
Policy loans -- Unpaid principal balance, which approximates fair value
Other investments -- Consists primarily of joint venture investments which are
valued at equity in ventures' net assets
Cash and temporary investments -- Amortized cost, which approximates fair value
</TABLE>
29
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
TEMPORARY INVESTMENTS
Temporary investments consist of debt securities that have maturities of one
year or less at acquisition.
NET INVESTMENT INCOME
Net investment income includes interest and dividends received or due and
accrued on debt securities and stocks, equity in unconsolidated subsidiaries'
earnings and the Company's share of joint venture income. Net investment income
is reduced by investment management expenses, real estate depreciation,
depletion related to energy assets and costs associated with securities lending.
INTEREST MAINTENANCE RESERVE
The Company is required to maintain an interest maintenance reserve ("IMR"). The
IMR is used to defer realized gains and losses, net of tax, on fixed income
investments resulting from changes in interest rates. Net realized gains and
losses deferred to the IMR are amortized into investment income over the
approximate remaining term to maturity of the investment sold.
INVESTMENT RESERVES
The Company is required to maintain an asset valuation reserve ("AVR"). The AVR
establishes a general reserve for invested asset valuation using a formula
prescribed by state regulations. The AVR is designed to stabilize surplus
against potential declines in the value of investments. In addition, the Company
maintained a $200 million voluntary investment reserve at December 31, 1998 and
1997 to absorb potential investment losses exceeding those considered by the AVR
formula. Increases or decreases in these investment reserves are recorded
directly to surplus.
SEPARATE ACCOUNTS
Separate account assets and related policy liabilities represent the segregation
of funds deposited by "variable" life insurance and annuity policyowners.
Policyowners bear the investment performance risk associated with variable
products. Separate account assets are invested at the direction of the
policyowner in a variety of Company-managed mutual funds. Variable product
policyowners also have the option to invest in a fixed interest rate annuity in
the general account of the Company. Separate account assets are reported at fair
value.
PREMIUM REVENUE AND OPERATING EXPENSES
Life insurance premiums are recognized as revenue at the beginning of each
policy year. Annuity and disability income premiums are recognized when received
by the Company. Operating expenses, including costs of acquiring new policies,
are charged to operations as incurred.
OTHER INCOME
Other income includes considerations on supplementary contracts, ceded
reinsurance expense allowances and miscellaneous policy charges.
30
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
BENEFIT PAYMENTS TO POLICYOWNERS AND BENEFICIARIES
Benefit payments to policyowners and beneficiaries include death, surrender and
disability benefits, matured endowments and supplementary contract payments.
RESERVES FOR POLICY BENEFITS
Reserves for policy benefits are determined using actuarial estimates based on
mortality and morbidity experience tables and valuation interest rates
prescribed by the Office of the Commissioner of Insurance of the State of
Wisconsin. See Note 3.
POLICYOWNER DIVIDENDS
Almost all life insurance policies, and certain annuity and disability income
policies, issued by the Company are participating. Annually, the Company's Board
of Trustees approves dividends payable on participating policies in the
following fiscal year, which are accrued and charged to operations when
approved.
RECLASSIFICATION
Certain financial statement balances for 1997 and 1996 have been reclassified to
conform to the current year presentation.
2. INVESTMENTS
DEBT SECURITIES
Debt securities consist of all bonds and fixed-maturity preferred stocks. The
estimated fair values of debt securities are based upon quoted market prices, if
available. For securities not actively traded, fair values are estimated using
independent pricing services or internally developed pricing models. The Company
records unrealized losses for debt securities considered impaired.
31
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
Statement value, which principally represents amortized cost, and estimated fair
value of the Company's debt securities at December 31, 1998 and 1997 were as
follows:
<TABLE>
<CAPTION>
RECONCILIATION TO ESTIMATED FAIR VALUE
---------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1998 VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------- --------- ------------ ------------ ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
US Government and political obligations........... $ 3,904 $ 461 $ (11) $ 4,354
Mortgage-backed securities........................ 7,357 280 (15) 7,622
Corporate and other debt securities............... 23,627 1,240 (382) 24,485
--------- ------------ ------ ---------
34,888 1,981 (408) 36,461
Preferred stocks.................................. 189 4 (1) 192
--------- ------------ ------ ---------
Total............................................. $35,077 $1,985 $(409) $36,653
--------- ------------ ------ ---------
--------- ------------ ------ ---------
<CAPTION>
RECONCILIATION TO ESTIMATED FAIR VALUE
---------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1997 VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------- --------- ------------ ------------ ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
US Government and political obligations........... $ 3,695 $ 336 $ (3) $ 4,028
Mortgage-backed securities........................ 7,015 264 (4) 7,275
Corporate and other debt securities............... 21,649 1,098 (208) 22,539
--------- ------------ ------ ---------
32,359 1,698 (215) 33,842
Preferred stocks.................................. 167 4 (2) 169
--------- ------------ ------ ---------
Total............................................. $32,526 $1,702 $(217) $34,011
--------- ------------ ------ ---------
--------- ------------ ------ ---------
</TABLE>
The statement value of debt securities by contractual maturity at December 31,
1998 and 1997 is shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less........................... $ 655 $ 605
Due after one year through five years............. 5,031 4,878
Due after five years through ten years............ 10,286 9,760
Due after ten years............................... 11,748 10,268
------------ ------------
27,720 25,511
Mortgage-backed securities........................ 7,357 7,015
------------ ------------
$35,077 $32,526
------------ ------------
------------ ------------
</TABLE>
STOCKS
The estimated fair values of common and perpetual preferred stocks are based
upon quoted market prices, if available. For securities not actively traded,
fair values are estimated using independent pricing services or internally
developed pricing models.
32
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
The adjusted cost of common and preferred stock held by the Company at December
31, 1998 and 1997 was $4.8 billion and $5.0 billion, respectively.
MORTGAGE LOANS AND REAL ESTATE
Mortgage loans are collateralized by properties located throughout the United
States and Canada. The Company attempts to minimize mortgage loan investment
risk by diversification of geographic locations and types of collateral
properties.
The fair value of mortgage loans as of December 31, 1998 and 1997 was
approximately $12.9 billion and $11.5 billion, respectively. The fair value of
the mortgage loan portfolio is estimated by discounting the future estimated
cash flows using current interest rates of debt securities with similar credit
risk and maturities, or utilizing net realizable values.
At December 31, 1998 and 1997, real estate includes $61 million acquired through
foreclosure at each date and $120 million and $124 million, respectively, of
home office real estate. In 1998, 1997 and 1996, the Company recorded unrealized
losses of $5 million, $2 million and $43 million, respectively, for the excess
of statement value over fair value of certain real estate investments and
mortgage loans.
REALIZED GAINS AND LOSSES
Realized investment gains and losses for the years ended December 31, 1998, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------ ------------------------------ ------------------------------
NET NET NET
REALIZED REALIZED REALIZED
REALIZED REALIZED GAINS REALIZED REALIZED GAINS REALIZED REALIZED GAINS
GAINS LOSSES (LOSSES) GAINS LOSSES (LOSSES) GAINS LOSSES (LOSSES)
-------- -------- -------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bonds......................... $ 514 $ (231) $ 283 $ 518 $ (269) $ 249 $ 396 $ (383) $ 13
Common and preferred stocks... 885 (240) 645 533 (150) 383 580 (115) 465
Mortgage loans................ 18 (11) 7 14 (14) - 2 (15) (13)
Real estate................... 41 - 41 100 (2) 98 36 - 36
Other investments............. 330 (267) 63 338 (105) 233 204 (51) 153
-------- -------- -------- -------- -------- -------- -------- -------- --------
1,788 (749) 1,039 1,503 (540) 963 1,218 (564) 654
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less: Capital gains taxes..... 358 340 224
Less: IMR deferrals........... 197 209 35
-------- -------- --------
Net realized capital gains.... $ 484 $ 414 $ 395
-------- -------- --------
-------- -------- --------
</TABLE>
SECURITIES LENDING
The Company has entered into a securities lending agreement whereby certain
securities are loaned to third parties, primarily major brokerage firms. The
Company's policy requires a minimum of 102 percent of the fair value of the
loaned securities as collateral, calculated on a daily basis in the form of
either cash or securities. Collateral assets received and related liability due
to counterparties of $1.5 billion are included in the consolidated
33
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
statements of financial position for each of the periods ended at December 31,
1998 and 1997, and approximate the statement value of securities loaned at those
dates.
INVESTMENT IN MGIC
The Company owns 11.0% (11.9 million shares) of the outstanding common stock of
MGIC Investment Corporation ("MGIC"). This investment is accounted for using the
equity method. At December 31, 1998 and 1997, the fair value of the Company's
investment in MGIC exceeded the statement value of $180 million and $273
million, respectively, by $296 million and $768 million, respectively.
In July 1995, the Company entered into a forward contract with a brokerage firm
to deliver 8.9 million to 10.7 million shares of MGIC (or cash in an amount
equal to the market value of the MGIC shares at contract maturity) in August,
1998, in exchange for a fixed cash payment of $247 million ($24 per share). The
Company's objective in entering into the forward contract was to hedge against
depreciation in the value of its MGIC holdings during the contract period below
the initial spot price of $24, while partially participating in appreciation, if
any, during the forward contract's duration. In August 1998, the Company
delivered 8.9 million shares to settle the forward contract. In conjunction with
the settlement, the Company recorded a $114 million realized gain.
DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, the Company enters into transactions to reduce
its exposure to fluctuations in interest rates, foreign currency exchange rates
and market volatility. These hedging strategies include the use of forwards,
futures, options and swaps.
The Company held the following positions for hedging purposes at December 31,
1998 and 1997:
<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENT NOTIONAL AMOUNTS RISKS REDUCED
- --------------------------------------------- --------------------------------------- ----------------------------------------
(IN MILLIONS)
DECEMBER 31, DECEMBER 31,
1998 1997
------------------ ------------------
<S> <C> <C> <C>
Foreign Currency Forward Currency exposure on foreign-denominated
Contracts................................... $601 $564 investments.
Common Stock Futures......................... 657 327 Stock market price fluctuation.
Bond Futures................................. 379 95 Bond market price fluctuation.
Options to acquire Interest Rate Interest rates payable on certain annuity
Swaps....................................... 419 530 and insurance contracts.
Foreign Currency and Interest Rate Interest rates on variable rate notes and
Swaps....................................... 94 209 currency exposure on foreign-denominated
bonds.
</TABLE>
The notional or contractual amounts of derivative financial instruments are used
to denominate these types of transactions and do not represent the amounts
exchanged between the parties.
In addition to the use of derivatives for hedging purposes, equity swaps were
held for investment purposes during 1997 and 1998. The notional amount of equity
swaps outstanding at December 31, 1998 and 1997 was $188 million and $143
million, respectively.
Foreign currency forwards, foreign currency swaps, stock futures and equity
swaps are reported at fair value. Resulting gains and losses on these contracts
are unrealized until expiration of the contract. There is no statement
34
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
value reported for interest rate swaps, bond futures and options to acquire
interest rate swaps prior to the settlement of the contract, at which time
realized gains and losses are deferred to IMR. Changes in the value of
derivative instruments are expected to offset gains and losses on the hedged
investments. During 1998, net realized and unrealized gains on investments were
partially offset by net realized losses of $104 million and net unrealized
losses of $58 million on derivative instruments. The effect of derivative
instruments in 1997 and 1996 was not material to the Company's results of
operations.
3. RESERVES FOR POLICY BENEFITS
Life insurance reserves on substantially all policies issued since 1978 are
based on the Commissioner's Reserve Valuation Method with interest rates ranging
from 3 1/2% to 5 1/2%. Other life policy reserves are primarily based on the net
level premium method employing various mortality tables at interest rates
ranging from 2% to 4 1/2%.
Deferred annuity reserves on contracts issued since 1985 are valued primarily
using the Commissioner's Annuity Reserve Valuation Method with interest rates
ranging from 3 1/2% to 6 1/4%. Other deferred annuity reserves are based on
contract value. Immediate annuity reserves are based on present values of
expected benefit payments at interest rates ranging from 3 1/2% to 7 1/2%.
Active life reserves for disability income ("DI") policies issued since 1987 are
primarily based on the two-year preliminary term method using a 4% interest rate
and the 1985 Commissioner's Individual Disability Table A ("CIDA") for
morbidity. Active life reserves for prior DI policies are based on the net level
premium method, a 3% to 4% interest rate and the 1964 Commissioner's Disability
Table for morbidity. Disabled life reserves for DI policies are based on the
present values of expected benefit payments primarily using the 1985 CIDA
(modified for Company experience in the first two years of disability) with
interest rates ranging from 3% to 5 1/2%.
Use of these actuarial tables and methods involves estimation of future
mortality and morbidity based on past experience. Actual future experience could
differ from these estimates.
4. EMPLOYEE AND AGENT BENEFIT PLANS
The Company sponsors noncontributory defined benefit retirement plans for all
eligible employees and agents. The expense associated with these plans is
generally recorded by the Company in the period contributions to the plans are
funded. As of January 1, 1998, the most recent actuarial valuation date
available, the qualified defined benefit plans were fully funded. The Company
recorded a liability of $98 million and $87 million for nonqualified defined
benefit plans at December 31, 1998 and 1997, respectively. In addition, the
Company has a contributory 401(k) plan for eligible employees and a
noncontributory defined contribution plan for all full-time agents. The
Company's contributions are expensed in the period contributions are made to the
plans. The Company recorded $29 million, $27 million and $25 million of total
expense related to its defined benefit and defined contribution plans for the
years ended December 31, 1998, 1997 and 1996, respectively. The defined benefit
and defined contribution plans' assets of $1.9 billion and $1.7 billion at
December 31, 1998 and 1997, respectively, were primarily invested in the
separate accounts of the Company.
In addition to pension and retirement benefits, the Company provides certain
health care and life insurance benefits ("postretirement benefits") for retired
employees. Substantially all employees may become eligible for these benefits if
they reach retirement age while working for the Company. Postretirement benefit
costs for the years ended December 31, 1998, 1997 and 1996 were a net expense
(benefit) of $1.8 million, ($1.3) million and
35
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
($12.0) million, respectively. Net benefits were primarily a result of favorable
differences between actuarial assumptions and actual experience.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
-------------------- --------------------
<S> <C> <C>
Unfunded postretirement
benefit obligation for
retirees and other fully
eligible employees (Accrued
in statement of financial
position)...................... $35 million $34 million
Estimated postretirement
benefit obligation for active
non-vested employees (Not
accrued until employee
vests)......................... $56 million $50 million
Discount rate................... 7% 7%
Health care cost trend rate..... 10% to an ultimate 10% to an ultimate
5%, declining 1% for 5%, declining 1% for
5 years 5 years
</TABLE>
If the health care cost trend rate assumptions were increased by 1%, the accrued
postretirement benefit obligation as of December 31, 1998 and 1997 would have
been increased by $5 million and $4 million, respectively.
At December 31, 1998 and 1997, the recorded postretirement benefit obligation
was reduced by $23 million and $20 million, respectively, for assets funded for
postretirement health care benefits.
5. REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
to reinsurers under excess coverage and coinsurance contracts. The Company
retains a maximum of $25 million of coverage per individual life and $35 million
maximum of coverage per joint life. The Company has an excess reinsurance
contract for disability income policies with retention limits varying based upon
on coverage type.
The amounts shown in the accompanying consolidated financial statements are net
of reinsurance. Policy benefit reserves at December 31, 1998 and 1997 were
reported net of ceded reserves of $518 million and $435 million, respectively.
The effect of reinsurance on premiums and benefits for the years ended December
31, 1998, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums................................... $8,426 $7,647 $7,064
Premiums ceded.................................... (405) (353) (397)
------- ------- -------
Net premium revenue............................... $8,021 $7,294 $6,667
------- ------- -------
------- ------- -------
Benefits to policyowners and beneficiaries........ $8,869 $8,057 $7,348
Benefits ceded.................................... (182) (136) (147)
------- ------- -------
Net benefits to policyowners and beneficiaries.... $8,687 $7,921 $7,201
------- ------- -------
------- ------- -------
</TABLE>
36
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
In addition, the Company received $121 million, $115 million and $93 million for
the years ended December 31, 1998, 1997 and 1996, respectively, from reinsurers
representing allowances for reimbursement of commissions and other expenses.
These amounts are included in other income in the consolidated statement of
operations.
Reinsurance contracts do not relieve the Company from its obligations to
policyowners. Failure of reinsurers to honor their obligations could result in
losses to the Company; consequently, allowances are established for amounts
deemed uncollectible. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk arising from similar
geographic regions, activities or economic characteristics of the reinsurers to
minimize its exposure to significant losses from reinsurer insolvencies.
6. INCOME TAXES
Provisions for income taxes are based on current income tax payable without
recognition of deferred taxes. The Company files a consolidated life-nonlife
federal income tax return. Federal income tax returns for years through 1988 are
closed as to further assessment of tax. Adequate provision has been made in the
financial statements for any additional taxes which may become due with respect
to the open years.
The Company's effective tax rate on gains from operations before taxes for the
years ended December 31, 1998, 1997 and 1996 was 48%, 56%, and 67% respectively.
The Company's effective tax rate exceeds the federal corporate rate of 35%
primarily because, (1) the Company pays a tax that is assessed only on the
surplus of mutual life insurance companies ("equity tax"), and (2) the Company
must capitalize and amortize (as opposed to immediately deducting) an amount
deemed to represent the cost of acquiring new business ("DAC tax").
7. ACQUISITION OF FRANK RUSSELL COMPANY
Pursuant to an Agreement and Plan of Merger, dated as of August 10, 1998, the
Company acquired Frank Russell Company effective January 1, 1999 for a purchase
price of approximately $950 million. Frank Russell is a leading investment
management and consulting firm, providing investment advice, analytical tools
and investment vehicles to institutional and individual investors in more than
30 countries.
In connection with its acquisition of Frank Russell Company, the Company will be
required in 1999 to charge-off directly from surplus approximately $341 million,
which represents the amount of acquisition goodwill less 10% of the Company's
surplus at December 31, 1998. In addition, the Company will request permission
from the OCI to charge-off the remaining $474 million of acquisition goodwill in
1999 and currently intends to do so.
In connection with the acquisition, the Company has unconditionally guaranteed
certain debt obligations of Frank Russell Company, including $350 million of
senior notes and up to $150 million of other credit facilities.
8. CONTINGENCIES
The Company has guaranteed certain obligations of its affiliates. These
guarantees totaled approximately $133 million at December 31, 1998 and are
generally supported by the underlying net asset values of the affiliates.
In addition, the Company routinely makes commitments to fund mortgage loans or
other investments in the normal course of business. These commitments aggregated
to $2.1 billion at December 31, 1998 and were extended at market interest rates
and terms.
The Company is engaged in various legal actions in the normal course of its
investment and insurance operations. In the opinion of management, any losses
resulting from such actions would not have a material effect on the Company's
financial position.
37
<PAGE>
[PRICEWATERHOUSECOOPERS LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Policyowners of
The Northwestern Mutual Life Insurance Company
We have audited the accompanying consolidated statement of financial position of
The Northwestern Mutual Life Insurance Company and its subsidiary as of December
31, 1998 and 1997, and the related consolidated statements of operations, of
changes in surplus and of cash flows for each of the three years in the period
ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these consolidated financial statements were prepared in
conformity with accounting practices prescribed or permitted by the Office of
the Commissioner of Insurance of the State of Wisconsin (statutory basis of
accounting), which practices differ from generally accepted accounting
principles. Accordingly, the consolidated financial statements are not intended
to represent a presentation in accordance with generally accepted accounting
principles. The effects on the consolidated financial statements of the
variances between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.
In our opinion, the consolidated financial statements audited by us (1) do not
present fairly in conformity with generally accepted accounting principles, the
financial position of The Northwestern Mutual Life Insurance Company and its
subsidiary at December 31, 1998 and 1997, or the results of their operations or
their cash flows for each of the three years in the period ended December 31,
1998 because of the effects of the variances between the statutory basis of
accounting and generally accepted accounting principles referred to in the
preceding paragraph and (2) do present fairly, in all material respects, the
financial position of The Northwestern Mutual Life Insurance Company and its
subsidiary at December 31, 1998 and 1997 and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.
[SIGNATURE]
January 25, 1999
38
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES CASH VALUES AND ACCUMULATED
PREMIUMS. The tables on the following pages illustrate how the death benefit,
Policy Value 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 for a
male and female, both select risks, age 55, with a Specified Amount of
$1,000,000 and annual premium of $20,000. The first four illustrations, on
pages 40-43, are for death benefit Option A, based on both current charges and
Guaranteed Charges, using 1) the Guideline Premium/Cash Value Corridor Test, and
2) the Cash Value Accumulation Test for the definition of life insurance. The
next four illustrations are for Policies with death benefit Option B.
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 Portfolios or Funds return rate averaged 0%, 6% or 12%, but the
rates for each individual Portfolio or Fund varied over and under the average.
The amounts shown as the death benefits, Policy Values and cash values reflect
the deductions from premiums and deductions from Policy Value. The amounts
shown as the cash values reflect surrender charges. The amounts shown also
reflect the average of the investment advisory fees and other expenses
applicable to each of the nine Portfolios which were in operation during 1998 at
the annual rate of .44% of the Portfolios' net assets. See "The Funds", p. 4.
Thus the 0%, 6% and 12% gross hypothetical return rates on the Fund's assets are
equivalent to the net rates of -.44%, 5.56% and 11.56% 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 Policy Values and cash values shown on
pages 40, 42, 44 and 46 illustrate benefits which would be paid if investment
returns of 0%, 6% and 12% are realized, and 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 the issue age, sex and risk classification of
the proposed insured persons and proposed Specified Amount, death benefit option
and premium is available upon request.
39
<PAGE>
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: A
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
-------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN Of
END OF PREMIUM ACCUMULATED -------------------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
- ----------- ----------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1 21,000 1,000,000 1,000,000 1,000,000
2 43,050 1,000,000 1,000,000 1,000,000
3 66,203 1,000,000 1,000,000 1,000,000
4 90,513 1,000,000 1,000,000 1,000,000
5 116,038 1,000,000 1,000,000 1,000,000
6 142,840 1,000,000 1,000,000 1,000,000
7 170,982 1,000,000 1,000,000 1,000,000
8 200,531 1,000,000 1,000,000 1,000,000
9 231,558 1,000,000 1,000,000 1,000,000
10 264,136 1,000,000 1,000,000 1,000,000
15 453,150 1,000,000 1,000,000 1,000,000
20 694,385 1,000,000 1,000,000 1,264,655
25 1,002,269 1,000,000 1,000,000 2,227,348
30 1,395,216 1,000,000 1,227,284 3,869,473
35 1,896,726 1,000,000 1,655,888 6,547,812
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
----------------------------- -----------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ----------------------------- -----------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ----------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 15,559 16,562 17,567 6,269 7,272 8,277
2 30,977 33,963 37,073 22,719 25,705 28,815
3 46,253 52,244 58,731 39,027 45,019 51,505
4 61,386 71,448 82,776 55,192 65,254 76,583
5 76,372 91,616 109,468 71,211 86,455 104,307
6 91,208 112,791 139,095 87,079 108,662 134,966
7 105,886 135,018 171,973 102,790 131,921 168,876
8 120,400 158,341 208,455 118,335 156,277 206,390
9 134,740 182,809 248,933 133,707 181,776 247,900
10 148,901 208,472 293,846 148,901 208,472 293,846
15 231,166 373,755 624,203 231,166 373,755 624,203
20 302,557 580,331 1,181,921 302,557 580,331 1,181,921
25 344,509 836,140 2,121,284 344,509 836,140 2,121,284
30 313,594 1,168,841 3,685,213 313,594 1,168,841 3,685,213
35 76,836 1,577,036 6,236,011 76,836 1,577,036 6,236,011
</TABLE>
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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 JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: A
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
-------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED -------------------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
- ----------- ----------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1 21,000 1,000,000 1,000,000 1,000,000
2 43,050 1,000,000 1,000,000 1,000,000
3 66,203 1,000,000 1,000,000 1,000,000
4 90,513 1,000,000 1,000,000 1,000,000
5 116,038 1,000,000 1,000,000 1,000,000
6 142,840 1,000,000 1,000,000 1,000,000
7 170,982 1,000,000 1,000,000 1,000,000
8 200,531 1,000,000 1,000,000 1,000,000
9 231,558 1,000,000 1,000,000 1,000,000
10 264,136 1,000,000 1,000,000 1,000,000
15 453,150 1,000,000 1,000,000 1,000,000
20 694,385 1,000,000 1,000,000 1,112,772
25 1,002,269 1,000,000 1,000,000 1,923,223
30 1,395,216 0* 1,000,000 3,256,661
35 1,896,726 0* 1,035,843 5,339,081
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
----------------------------- -----------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ----------------------------- -----------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ----------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 15,415 16,411 17,409 6,125 7,121 8,119
2 30,518 33,470 36,544 22,260 25,213 28,287
3 45,292 51,186 57,567 38,066 43,960 50,341
4 59,720 69,566 80,655 53,526 63,373 74,461
5 73,779 88,618 106,004 68,618 83,457 100,843
6 87,443 108,341 133,827 83,314 104,212 129,698
7 100,675 128,731 164,354 97,578 125,634 161,257
8 113,427 149,769 197,834 111,363 147,704 195,769
9 125,634 171,422 234,532 124,601 170,390 233,500
10 137,215 193,649 274,744 137,215 193,649 274,744
15 197,552 329,252 562,976 197,552 329,252 562,976
20 223,262 476,132 1,039,974 223,262 476,132 1,039,974
25 170,148 623,319 1,831,641 170,148 623,319 1,831,641
30 0* 774,230 3,101,582 0* 774,230 3,101,582
35 0* 986,518 5,084,839 0* 986,518 5,084,839
</TABLE>
*Additional payment will be required to prevent policy termination.
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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 JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: A
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 CASH VALUE ACCUMULATION TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
-------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED -------------------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
- ----------- ----------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 21,000 1,000,000 1,000,000 1,000,000
2 43,050 1,000,000 1,000,000 1,000,000
3 66,203 1,000,000 1,000,000 1,000,000
4 90,513 1,000,000 1,000,000 1,000,000
5 116,038 1,000,000 1,000,000 1,000,000
6 142,840 1,000,000 1,000,000 1,000,000
7 170,982 1,000,000 1,000,000 1,000,000
8 200,531 1,000,000 1,000,000 1,000,000
9 231,558 1,000,000 1,000,000 1,000,000
10 264,136 1,000,000 1,000,000 1,000,000
15 453,150 1,000,000 1,000,000 1,154,320
20 694,385 1,000,000 1,000,000 1,855,395
25 1,002,269 1,000,000 1,155,054 2,862,875
30 1,395,216 1,000,000 1,407,840 4,324,979
35 1,896,726 1,000,000 1,674,468 6,435,136
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
-------------------------------------- -------------------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ANNUAL
ANNUAL INVESTMENT RETURN OF INVESTMENT RETURN OF
END OF -------------------------------------- -------------------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ----------- -------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 15,559 16,562 17,567 6,269 7,272 8,277
2 30,977 33,963 37,073 22,719 25,705 28,815
3 46,253 52,244 58,731 39,027 45,019 51,505
4 61,386 71,448 82,776 55,192 65,254 76,583
5 76,372 91,616 109,468 71,211 86,455 104,307
6 91,208 112,791 139,095 87,079 108,662 134,966
7 105,886 135,018 171,973 102,790 131,921 168,876
8 120,400 158,341 208,455 118,335 156,277 206,390
9 134,740 182,809 248,933 133,707 181,776 247,900
10 148,901 208,472 293,846 148,901 208,472 293,846
15 231,166 373,755 624,095 231,166 373,755 624,095
20 302,557 580,331 1,173,890 302,557 580,331 1,173,890
25 344,509 832,297 2,062,902 344,509 832,297 2,062,902
30 313,594 1,121,570 3,445,538 313,594 1,121,570 3,445,538
35 76,836 1,431,502 5,501,398 76,836 1,431,502 5,501,398
</TABLE>
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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 JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: A
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 CASH VALUE ACCUMULATION TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
--------------------------------------------
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED ---------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
- ----------- ----------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 21,000 1,000,000 1,000,000 1,000,000
2 43,050 1,000,000 1,000,000 1,000,000
3 66,203 1,000,000 1,000,000 1,000,000
4 90,513 1,000,000 1,000,000 1,000,000
5 116,038 1,000,000 1,000,000 1,000,000
6 142,840 1,000,000 1,000,000 1,000,000
7 170,982 1,000,000 1,000,000 1,000,000
8 200,531 1,000,000 1,000,000 1,000,000
9 231,558 1,000,000 1,000,000 1,000,000
10 264,136 1,000,000 1,000,000 1,000,000
15 453,150 1,000,000 1,000,000 1,041,180
20 694,385 1,000,000 1,000,000 1,600,879
25 1,002,269 1,000,000 1,000,000 2,323,574
30 1,395,216 0* 1,000,000 3,272,982
35 1,896,726 0* 1,105,077 4,539,179
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
---------------------------------------- --------------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL GROSS
GROSS ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ---------------------------------------- --------------------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ----------- ---------- -------- ---------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 15,415 16,411 17,409 6,125 7,121 8,119
2 30,518 33,470 36,544 22,260 25,213 28,287
3 45,292 51,186 57,567 38,066 43,960 50,341
4 59,720 69,566 80,655 53,526 63,373 74,461
5 73,779 88,618 106,004 68,618 83,457 100,843
6 87,443 108,341 133,827 83,314 104,212 129,698
7 100,675 128,731 164,354 97,578 125,634 161,257
8 113,427 149,769 197,834 111,363 147,704 195,769
9 125,664 171,422 234,532 124,601 170,390 233,500
10 137,215 193,649 274,744 137,215 193,649 274,744
15 197,552 329,252 562,924 197,552 329,252 562,924
20 223,262 476,132 1,012,860 223,262 476,132 1,012,860
25 170,148 623,319 1,674,298 170,148 623,319 1,674,298
30 0* 774,230 2,607,454 0* 774,230 2,607,454
35 0* 944,730 3,880,544 0* 944,730 3,880,544
</TABLE>
*Additional payment will be required to prevent policy termination.
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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>
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: B
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
-------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED -------------------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
- ----------- ----------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1 21,000 1,015,559 1,016,562 1,017,567
2 43,050 1,030,976 1,033,963 1,037,072
3 66,203 1,046,252 1,052,244 1,058,730
4 90,513 1,061,384 1,071,446 1,082,774
5 116,038 1,076,368 1,091,611 1,109,462
6 142,840 1,091,199 1,112,780 1,139,081
7 170,982 1,105,869 1,134,995 1,171,943
8 200,531 1,120,367 1,158,297 1,208,396
9 231,558 1,134,683 1,182,730 1,248,823
10 264,136 1,148,809 1,208,339 1,293,653
15 453,150 1,230,410 1,372,465 1,621,957
20 694,385 1,297,905 1,570,925 2,163,304
25 1,002,269 1,321,348 1,778,717 3,025,399
30 1,395,216 1,234,631 1,921,017 4,341,928
35 1,896,726 0* 1,830,579 6,258,581
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
----------------------------- -----------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ----------------------------- -----------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ----------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 15,559 16,562 17,567 6,269 7,272 8,277
2 30,976 33,963 37,072 22,719 25,705 28,815
3 46,252 52,244 58,730 39,026 45,018 51,504
4 61,384 71,446 82,774 55,191 65,252 76,580
5 76,368 91,611 109,462 71,207 86,449 104,301
6 91,199 112,780 139,081 87,070 108,651 134,952
7 105,869 134,995 171,943 102,772 131,898 168,846
8 120,367 158,297 208,396 118,303 156,233 206,331
9 134,683 182,730 248,823 133,651 181,698 247,791
10 148,809 208,339 293,653 148,809 208,339 293,653
15 230,410 372,465 621,957 230,410 372,465 621,957
20 297,905 570,925 1,163,304 297,905 570,925 1,163,304
25 321,348 778,717 2,025,399 321,348 778,717 2,025,399
30 234,631 921,017 3,341,928 234,631 921,017 3,341,928
35 0* 830,579 5,258,581 0* 830,579 5,258,581
</TABLE>
*Additional payment will be required to prevent policy termination.
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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.
44
<PAGE>
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: B
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
-------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED -------------------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
- ----------- ----------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1 21,000 1,015,414 1,016,411 1,017,408
2 43,050 1,030,512 1,033,464 1,036,537
3 66,203 1,045,272 1,051,163 1,057,541
4 90,513 1,059,672 1,069,510 1,080,589
5 116,038 1,073,683 1,088,500 1,105,860
6 142,840 1,087,267 1,108,119 1,133,546
7 170,982 1,100,380 1,128,342 1,163,845
8 200,531 1,112,956 1,149,126 1,196,960
9 231,558 1,124,912 1,170,400 1,233,090
10 264,136 1,136,143 1,192,073 1,272,433
15 453,150 1,191,877 1,319,274 1,545,200
20 694,385 1,202,903 1,431,909 1,942,697
25 1,002,269 1,116,350 1,462,472 2,473,516
30 1,395,216 0* 1,287,598 3,108,100
35 1,896,726 0* 0* 3,730,743
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
----------------------------- -----------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ----------------------------- -----------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ----------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 15,414 16,411 17,408 6,124 7,121 8,118
2 30,512 33,464 36,537 22,254 25,206 28,280
3 45,272 51,163 57,541 38,047 43,938 50,316
4 59,672 69,510 80,589 53,479 63,317 74,396
5 73,683 88,500 105,860 68,522 83,339 100,699
6 87,267 108,119 133,546 83,139 103,990 129,417
7 100,380 128,342 163,845 97,283 125,246 160,748
8 112,956 149,126 196,960 110,892 147,061 194,896
9 124,912 170,400 233,090 123,880 169,368 232,057
10 136,143 192,073 272,433 136,143 192,073 272,433
15 191,877 319,274 545,200 191,877 319,274 545,200
20 202,903 431,909 942,697 202,903 431,909 942,697
25 116,350 462,472 1,473,516 116,350 462,472 1,473,516
30 0* 287,598 2,108,100 0* 287,598 2,108,100
35 0* 0* 2,730,743 0* 0* 2,730,743
</TABLE>
*Additional payment will be required to prevent policy termination.
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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.
45
<PAGE>
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: B
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 CASH VALUE ACCUMULATION TEST
CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
------------------------------------------
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED ------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
----------- ----------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 21,000 1,015,559 1,016,562 1,017,567
2 43,050 1,030,976 1,033,963 1,037,072
3 66,203 1,046,252 1,052,244 1,058,730
4 90,513 1,061,384 1,071,446 1,082,774
5 116,038 1,076,368 1,091,611 1,109,462
6 142,840 1,091,199 1,112,780 1,139,081
7 170,982 1,105,869 1,134,995 1,171,943
8 200,531 1,120,367 1,158,297 1,208,396
9 231,558 1,134,683 1,182,730 1,248,823
10 264,136 1,148,809 1,208,339 1,293,653
15 453,150 1,230,410 1,372,465 1,621,957
20 694,385 1,297,905 1,570,925 2,163,304
25 1,002,269 1,321,348 1,778,717 3,025,399
30 1,395,216 1,234,631 1,921,017 4,341,928
35 1,896,726 0* 1,830,579 6,258,581
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
------------------------------------ --------------------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ------------------------------------ --------------------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
----------- ------ ------- --------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 15,559 16,562 17,567 6,269 7,272 8,277
2 30,976 33,963 37,072 22,719 25,705 28,815
3 46,252 52,244 58,730 39,026 45,018 51,504
4 61,384 71,446 82,774 55,191 65,252 76,580
5 76,368 91,611 109,462 71,207 86,449 104,301
6 91,199 112,780 139,081 87,070 108,651 134,952
7 105,869 134,995 171,943 102,772 131,898 168,846
8 120,367 158,297 208,396 118,303 156,233 206,331
9 134,683 182,730 248,823 133,651 181,698 247,791
10 148,809 208,339 293,653 148,809 208,339 293,653
15 230,410 372,465 621,957 230,410 372,465 621,957
20 297,905 570,925 1,163,304 297,905 570,925 1,163,304
25 321,348 778,717 2,025,399 321,348 778,717 2,025,399
30 234,631 921,017 3,341,928 234,631 921,017 3,341,928
35 0* 830,579 5,258,581 0* 830,579 5,258,581
</TABLE>
*Additional payment will be required to prevent policy termination.
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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.
46
<PAGE>
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
SPECIFIED AMOUNT: $1,000,000 DEATH BENEFIT OPTION: B
MALE SELECT CLASS ISSUE AGE 55 FEMALE SELECT CLASS ISSUE AGE 55
ANNUAL PREMIUM: $20,000 CASH VALUE ACCUMULATION TEST
GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT
------------------------------------------
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
END OF PREMIUM ACCUMULATED ------------------------------------------
POLICY YEAR AT 5% INTEREST PER YEAR 0% 6% 12%
----------- ----------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 21,000 1,015,414 1,016,411 1,017,408
2 43,050 1,030,512 1,033,464 1,036,537
3 66,203 1,045,272 1,051,163 1,057,541
4 90,513 1,059,672 1,069,510 1,080,589
5 116,038 1,073,683 1,088,500 1,105,860
6 142,840 1,087,267 1,108,119 1,133,546
7 170,982 1,100,380 1,128,342 1,163,845
8 200,531 1,112,956 1,149,126 1,196,960
9 231,558 1,124,912 1,170,400 1,233,090
10 264,136 1,136,143 1,192,073 1,272,433
15 453,150 1,191,877 1,319,274 1,545,200
20 694,385 1,202,903 1,431,909 1,942,697
25 1,002,269 1,116,350 1,462,472 2,473,516
30 1,395,216 0* 1,287,598 3,108,100
35 1,896,726 0* 0* 3,730,743
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE CASH VALUE
----------------------------- ----------------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ----------------------------- -----------------------------------
POLICY YEAR 0% 6% 12% 0% 6% 12%
- ------------ -------- ------- --------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 15,414 16,411 17,408 6,124 7,121 8,188
2 30,512 33,464 36,537 22,254 25,206 28,280
3 45,272 51,163 57,541 38,047 43,938 50,316
4 59,672 69,510 80,589 53,479 63,317 74,396
5 73,683 88,500 105,860 68,522 83,339 100,699
6 87,267 108,119 133,546 83,139 103,990 129,417
7 100,380 128,342 163,845 97,283 125,246 160,748
8 112,956 149,126 196,960 110,892 147,061 194,896
9 124,912 170,400 233,090 123,880 169,368 232,057
10 136,143 192,073 272,433 136,143 192,073 272,433
15 191,877 319,274 545,200 191,877 319,274 545,200
20 202,903 431,909 942,697 202,903 431,909 942,697
25 116,350 462,472 1,473,516 116,350 462,472 1,473,516
30 0* 287,598 2,108,100 0* 287,598 2,108,100
35 0* 0* 2,730,743 0* 0* 2,730,743
</TABLE>
*Additional payment will be required to prevent policy termination.
ALL PREMIUM PAYMENTS ARE ILLUSTRATED AS IF MADE AT THE BEGINNING OF THE POLICY
YEAR. 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, POLICY VALUE 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.
47
<PAGE>
APPENDIX B
Mortality and Expense Risk Charge - Specified Amount Component
Table of Annual Charges Per $1,000 of Initial Specified Amount
<TABLE>
<CAPTION>
Issue Annual Issue Annual Issue Annual
Age* Charge Age* Charge Age* Charge
- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C>
20-25 $0.04 42 0.33 59 0.94
26 0.05 43 0.36 60 0.99
27 0.06 44 0.38 61 1.04
28 0.07 45 0.41 62 1.10
29 0.08 46 0.44 63 1.15
30 0.09 47 0.47 64 1.21
31 0.10 48 0.50 65 1.26
32 0.11 49 0.53 66 1.31
33 0.12 50 0.57 67 1.35
34 0.13 51 0.60 68 1.40
35 0.14 52 0.63 69 1.44
36 0.17 53 0.66 70 1.49
37 0.19 54 0.69 71 1.54
38 0.22 55 0.72 72 1.58
39 0.25 56 0.77 73 1.63
40 0.28 57 0.83 74 1.67
41 0.30 58 0.88 75-85 1.72
</TABLE>
*The issue age used in this calculation equals the younger insured issue age
plus an age adjustment. The age adjustment is based on the age difference
(older issue age minus younger issue age) and this schedule:
<TABLE>
<CAPTION>
Age Age
Difference Adjustment
(years) (years)
- ---------- ----------
<S> <C>
0-1 0
2-4 1
5-8 2
9-14 3
15-24 4
25-34 5
35-44 6
45-54 7
55-65 8
</TABLE>
Example: For a Policy at issue ages 65 and 60 and a Specified Amount of
$1,000,000, the age adjustment is 2 and the issue age is 62. The annual charge
per $1000 of Specified Amount is $1.10. The Specified Amount component of the
mortality and expense risk charge will be $1100.04 annually, or $91.67 monthly,
for this Policy.
Note: In no event will the sum of the Mortality and Expense Risk Charge -
Specified Amount Component Annual Charge and the annualized underwriting and
issue charge exceed $1.90 per $1000 of initial Specified Amount. The
underwriting and issue charge will be reduced to meet this constraint if
necessary.
48
<PAGE>
More information about Northwestern Mutual Series Fund, Inc. is included in the
Fund's Statement of Additional Information (SAI), incorporated by reference in
this prospectus, which is available free of charge.
More information about the Fund's investments is included in the Fund's annual
and semi-annual reports, which discuss the market conditions and investment
strategies that significantly affected each Portfolio's performance during the
previous fiscal period.
To request a free copy of the Fund's SAI, or current annual or semi-annual
report, call us at 1-800-519-4665. Information about the Fund (including the
SAI) can be reviewed and copied at the Public Reference Room of the
Securities and Exchange Commission (SEC) in Washington, DC. Information on
the operation of the Public Reference Room may be obtained by calling the SEC
at 1-800-SEC-0330. Reports and other information about the Fund are
available on the SEC's Internet site at http://www.sec.gov. Copies of this
information may be obtained, upon payment of a duplicating fee, by writing
the Public Reference Section of the SEC, Washington, DC 20549-6009.
N O R T H W E S T E R N M U T U A L L I F E
NORTHWESTERN MUTUAL VARIABLE JOINT LIFE
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
NORTHWESTERN MUTUAL SERIES FUND, INC.
RUSSELL INSURANCE FUNDS
P R O S P E C T U S
Investment Company Act File No. 811-3990
NORTHWESTERN
MUTUAL LIFE-REGISTERED TRADEMARK-
PO Box 3095
Milwaukee WI 53201-3095
Change Service Requested
<PAGE>
PART II
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 48 pages
The undertaking with respect to fees and charges
The signatures
Written consents of the following persons:
PricewaterhouseCoopers LLP (filed herewith as Exhibit C(1))
William C. Koenig, F.S.A. (included in his opinion filed herewith as
Exhibit C(6))
The following exhibits:
<TABLE>
<S> <C>
Exhibit A(5)(a) Flexible Premium Variable Joint Life Insurance Policy,
RP.VJL. (1298), with Policy Split Provision and
application and supplement application, including
Policy amendment (sex-neutral)
Exhibit A(5)(b) Flexible Premium Variable Joint Life Insurance Policy,
RR.VJL. (1298), with Policy Split Provision and
application and supplement application, including
Policy amendment (sex-distinct)
Exhibit A(5)(c) Application forms are included in Exhibits A(5)(a) and
A(5)(b) above
Exhibit A(9)(a) Form of Participation Agreement Among Russell Insurance
Funds, Russell Fund Distributors, Inc. and The
Northwestern Mutual Life Insurance Company
Exhibit A(9)(b) Form of Administrative Service Fee Agreement between
The Northwestern Mutual Life Insurance Company and
Frank Russell Company
Exhibit C(1) Consent of PricewaterhouseCoopers LLP
Exhibit C(6) Opinion and consent of William C. Koenig, F.S.A.
Exhibit 27 Financial Data Schedule for period ended December 31,
1998
</TABLE>
UNDERTAKING
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.
II-1
<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 25th
day of February, 1999.
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, Executive Vice James D. Ericson, President and
President, General Counsel Chief Executive Officer
and Secretary
By NORTHWESTERN MUTUAL INVESTMENT
SERVICES, LLC
(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
25th day of February, 1999.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY (Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
------------------------------ ---------------------------------
John M. Bremer, Executive Vice James D. Ericson, President and
President, General Counsel Chief Executive Officer
and Secretary
NORTHWESTERN MUTUAL INVESTMENT
SERVICES, LLC (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:
SIGNATURE TITLE
- --------- -----
JAMES D. ERICSON Trustee, President and Dated
- ------------------------ Principal Executive and February 25,
James D. Ericson Financial Officer 1999
II-2
<PAGE>
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
- ------------------------ February 25, 1999
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
II-3
<PAGE>
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
- ------------------------ February 25, 1999
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
*By: JAMES D. ERICSON
------------------------
James D. Ericson, Attorney in fact,
pursuant to the Power of Attorney
previously filed on October 30, 1998
II-4
<PAGE>
CONSENT OF ACTUARY
The Consent of William C. Koenig, F.S.A., is contained in his opinion filed
as Exhibit C(6).
CONSENT OF INDEPENDENT ACCOUNTANTS
The Consent of PricewaterhouseCoopers LLP is filed as Exhibit C(1).
II-5
<PAGE>
EXHIBIT INDEX
EXHIBITS FILED WITH FORM S-6
POST-EFFECTIVE AMENDMENT NO.1 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NORTHWESTERN MUTUAL VARIABLE JOINT LIFE
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT NAME
- -------------- ------------
<S> <C>
Exhibit A(5)(a) Flexible Premium Variable Joint Life Insurance Policy,
RP.VJL. (1298), with Policy Split Provision and
application and supplement application, including
Policy amendment (sex-neutral)
Exhibit A(5)(b) Flexible Premium Variable Joint Life Insurance Policy,
RR.VJL. (1298), with Policy Split Provision and
application and supplement application, including
Policy amendment (sex-distinct)
Exhibit A(5)(c) Application forms are included in Exhibits A(5)(a) and
A(5)(b) above
Exhibit A(9)(a) Form of Participation Agreement Among Russell Insurance
Funds, Russell Fund Distributors, Inc. and The
Northwestern Mutual Life Insurance Company
Exhibit A(9)(b) Form of Administrative Service Fee Agreement between
The Northwestern Mutual Life Insurance Company and
Frank Russell Company
Exhibit C(1) Consent of PricewaterhouseCoopers LLP
Exhibit C(6) Opinion of William C. Koenig, F.S.A.
Exhibit 27 Financial Data Schedule for period ended December 31,
1998
</TABLE>
<PAGE>
Exhibit A(5)(a)
The Northwestern Mutual Life Insurance Company agrees to pay the benefits
provided in this policy,
subject to its terms and conditions.
Signed at Milwaukee, Wisconsin on the Date of Issue.
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
ELIGIBLE FOR ANNUAL DIVIDENDS
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT AND CASH VALUE UNDER THIS POLICY ARE VARIABLE. THEY MAY
INCREASE OR DECREASE DAILY DEPENDING ON THE INVESTMENT RESULTS OF THE SEPARATE
ACCOUNT. THE AMOUNT OF THE DEATH BENEFIT AND THE AMOUNT OF THE CASH VALUE ARE
NOT GUARANTEED.
RIGHT TO RETURN POLICY. Please read this policy carefully. The policy may be
returned by the Owner for any reason within ten days after it was received. The
policy may be returned to your agent or to the Home Office of the Company at 720
East Wisconsin Avenue, Milwaukee, WI 53202. If returned, the policy will be
considered void from the beginning. The Company will refund the sum of (a) the
difference between any premium paid and the amount allocated to the Separate
Account plus (b) the value of the policy in the Separate Account on the date the
returned policy is received.
INSURED John J. Doe AGE AND SEX 35 Male-SN
Jane J. Doe 35 Female-SN
POLICY DATE December 31, 1998 POLICY NUMBER 10 000 000
PLAN Flexible Premium SPECIFIED AMOUNT $1,000,000.00 Joint Life
Variable Insurance
RP.VJL.(1298)
<PAGE>
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE OWNER AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
READ YOUR POLICY CAREFULLY.
GUIDE TO POLICY PROVISIONS
BENEFITS AND PREMIUMS
SECTION 1. THE CONTRACT
Life Insurance Benefit payable on second death. Incontestability.
Suicide. Definition of dates. Reports to Owner.
SECTION 2. OWNERSHIP
Rights of the Owner. Assignment as collateral.
SECTION 3. DEATH BENEFIT
Description of death benefit options. Changes to death benefits.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
Payment of premiums. Calculation and allocation of net premiums.
Transfer of assets. Premium limitations. Grace period of 61 days
to pay premium. How to reinstate the policy.
SECTION 5. DIVIDENDS
Annual dividends. Use of dividends. Dividend at death.
SECTION 6. THE SEPARATE ACCOUNT
The Separate Account and the Divisions. Valuation of assets.
SECTION 7. DETERMINATION OF VALUES
Policy Value. Monthly Policy Charge.
SECTION 8. CASH VALUE AND SURRENDER
Cash value. Surrender. Deferral of payments.
SECTION 9. LOANS AND WITHDRAWALS
Policy loans. Interest on loans. Withdrawals.
SECTION 10. BENEFICIARIES
Naming and change of beneficiaries. Succession in interest of
beneficiaries.
ADDITIONAL BENEFITS (IF ANY)
APPLICATION
RR.VJL.(1298)
<PAGE>
Appendix A
BENEFITS AND PREMIUMS
DATE OF ISSUE - DECEMBER 31, 1998
Plan: Flexible Premium Variable Joint Life Insurance
Specified Amount: $1,000,000.00
Death Benefit Option: Specified Amount (Option A)
Definition of Life Insurance Test: Guideline Premium/Cash Value Corridor Test
The Age 100 Date (Section 3) is December 31, 2063.
The Final Premium Date (Section 4) is December 30, 2058.
The minimum premium (Section 4.4) is $25.00.
The maximum premium under the Guideline Premium/Cash Value Corridor Test:
Guideline Single Premium = $ 93,490.00
Guideline Annual Level Premium = $ 9,000.00
The minimum withdrawal amount (Section 9.5) is $250.00.
This policy is issued in a select (nonsmoker) rate class on John J. Doe and in a
select (nonsmoker) rate class on Jane J. Doe.
DIRECT BENEFICIARY JANE M. DOE, DAUGHTER OF THE INSURED
OWNER JOHN J. DOE, THE INSURED
<PAGE>
POLICY NUMBER 10 000 000
SCHEDULE OF CHARGES
The Premium Expense Charge (Section 4.2) is the sum of the following:
1. Sales Load:
<TABLE>
<CAPTION>
Policy Years 1 Policy Years
Premium Paid - 10 after 10
------------ ------------------------------
<S> <C> <C>
Up to $ $7,160.00 6.4% 2.4%
In Excess of $7,160.00 2.4% 2.4%
</TABLE>
2. Federal Deferred Acquisition Cost Charge l.25% of premium
3. Premium Tax Charge 2.35% of premium
The Premium Expense Charge for Federal Deferred Acquisition Cost
and Premium Tax may change to reflect changes in tax law.
Monthly Policy Charge (Section 7.2):
The maximum monthly Administrative Charge is $7.50.
The maximum monthly Underwriting and Issue Charge is $15.00. There is
no charge after the tenth policy year.
The maximum monthly Mortality and Expense Risk Charge during the first
ten policy years is the sum of .075% of Policy Value less policy debt,
plus $11.67. The maximum monthly Mortality and Expense Risk Charge
after the first ten policy years is .075% of Policy Value less policy
debt.
The maximum monthly Deferred Sales Charge is $44.75. There is no
charge after the tenth policy year.
RP.VJL.(1298) Page 4
<PAGE>
POLICY NUMBER 10 000 000
SCHEDULE OF CHARGES (continued)
Maximum Transaction Charges:
The maximum charge for death benefit option changes (Section 3.2) is
$250.00 per change.
The maximum charge for Specified Amount changes (Section 3.3) is
$25.00 per change for more than one change during any policy year.
The maximum transfer fee (Section 4.3) is $25.00 per transfer for more
than 12 transfers during any policy year.
The maximum withdrawal charge (Section 9.5) is $25.00 per withdrawal.
Surrender Charge (Section 8.3):
The surrender charge percentage is 50% during the first policy year; this
percentage is decreased by 0.462963% on each monthly processing date during
the second through tenth policy years.
The maximum surrender charge is $3,580.00 during the first policy year;
this charge is decreased by $33.15 on each monthly processing date during
the second through tenth policy years.
There is no surrender charge after the tenth policy year.
RP.VJL.(1298) Page 5
<PAGE>
POLICY NUMBER 10 000 000
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
MONTHLY RATES PER $1,000.00
(Section 7.3)
<TABLE>
<CAPTION>
Policy Monthly Policy Monthly Policy Monthly
Year Rate Year Rate Year Rate
<S> <C> <C> <C> <C> <C>
1 .00021 26 .17199 51 9.14455
2 .00067 27 .20338 52 10.34507
3 .00121 28 .24132 53 11.62343
4 .00188 29 .28836 54 12.95410
5 .00266 30 .34564 55 14.35484
6 .00362 31 .41299 56 15.82003
7 .00477 32 .49213 57 17.37666
8 .00616 33 .58239 58 19.06350
9 .00774 34 .68515 59 20.97430
10 .00962 35 .80292 60 23.27615
11 .01188 36 .94192 61 26.44250
12 .01447 37 1.11784 62 31.28571
13 .01756 38 1.30952 63 39.58046
14 .02112 39 1.55439 64 54.63869
15 .02533 40 1.84737 65 83.33333
16 .03028 41 2.18582 After 65 .00000
17 .03617 42 2.57328
18 .04341 43 3.00376
19 .05207 44 3.47972
20 .06228 45 4.00943
21 .07449 46 4.60979
22 .08875 47 5.29696
23 .10518 48 6.08932
24 .12401 49 7.00369
25 .14593 50 8.02382
</TABLE>
The monthly rates shown above are based on the appropriate Commissioners 1980
Standard Ordinary Smoker and/or Nonsmoker Mortality Table D for the class of the
Insureds.
RP.VJL.(1298) Page 6
<PAGE>
POLICY NUMBER 10 000 000
GUIDELINE PREMIUM/CASH VALUE CORRIDOR PERCENTAGES
The Corridor Percentages are used to determine the Minimum Death Benefit under
the Guideline Premium/Cash Value Corridor Test (Section 3.1).
<TABLE>
<CAPTION>
Policy Policy Policy
Year Corridor % Year Corridor % Year Corridor %
<S> <C> <C> <C> <C> <C>
1 250 26 130 51 105
2 250 27 128 52 105
3 250 28 126 53 105
4 250 29 124 54 105
5 250 30 122 55 105
6 250 31 120 56 105
7 243 32 119 57 104
8 236 33 118 58 103
9 229 34 117 59 102
10 222 35 116 60 101
11 215 36 115 After 60 100
12 209 37 113
13 203 38 111
14 197 39 109
15 191 40 107
16 185 41 105
17 178 42 105
18 171 43 105
19 164 44 105
20 157 45 105
21 150 46 105
22 146 47 105
23 142 48 105
24 138 49 105
25 134 50 105
</TABLE>
RR.VJL.(1298) Page 7
<PAGE>
POLICY NUMBER 10 000 000
SEPARATE ACCOUNT DIVISIONS
(Section 6)
Select Bond Division
International Equity Division
Money Market Division
Balanced Division
Index 500 Stock Division
Aggressive Growth Stock Division
High Yield Bond Division
Growth Stock Division
Growth & Income Stock Division
Index 400 Stock Division
Small Cap Growth Stock Division
Russell Multi-Style Equity Division
Russell Aggressive Equity Division
Russell Non-US Division
Russell Real Estate Securities Division
Russell Core Bond Division
The Initial Allocation Date (Section 4.3) is July 1, 1999.
RR.VJL.(0799) Page 8
<PAGE>
SECTION 1. THE CONTRACT
1.1 LIFE INSURANCE BENEFIT
The Northwestern Mutual Life Insurance Company will pay a benefit on the
death of the second of the Insureds to die (the "second death") while this
policy is in force. No benefit is payable on the death of the first of the
Insureds to die. Subject to the terms and conditions of the policy:
- payment of the death proceeds will be made after proof of the deaths
of both Insureds is received at the Home Office; and
- payment will be made to the beneficiary or other payee under Section
10.
The amount of the death proceeds will be:
- the death benefit (Section 3.1); less
- the amount of any policy debt (Section 9.3); less
- any Monthly Policy Charges due and unpaid if the second death occurs
during the grace period (Section 4.5).
These amounts will be determined as of the date of the second death.
The Company will pay interest on the death proceeds from the date of the
second death until the proceeds are paid. Interest will be at an annual
effective rate of not less than 2%, or at any higher rate required by state law.
1.2 NOTICE AND PROOF OF DEATH
Written notice and proof of the death of each Insured must be given to the
Company as soon as reasonably possible after each death.
RR.VJL.(1298) 10
<PAGE>
1.3 ENTIRE CONTRACT; CHANGES
This policy, including the attached application and any amendments,
endorsements or riders, is the entire contract. Statements in the application
are representations and not warranties. A change in the policy is valid only if
it is approved in writing by an officer of the Company. The Company may require
that the policy be sent to it for endorsement to show a change. No agent has
the authority to change the policy or to waive any of its terms.
1.4 INCONTESTABILITY
In issuing the insurance, the Company has relied on the application. While
the insurance is contestable, the Company, on the basis of a material
misstatement in the application, may rescind the insurance or deny a claim.
The Company will not contest insurance under this policy after that
insurance has been in force, during the lifetime of at least one Insured, for
two years from the Date of Issue or for two years from the effective date of a
reinstatement (Section 4.6). An increase in the amount of insurance after the
Date of Issue, which occurred upon the request of the Owner and was subject to
the Company's insurability requirements, will be incontestable after the
increase has been in force, during the lifetime of at least one Insured, for two
years from the effective date of the increase.
1.5 SUICIDE
If either Insured dies by suicide within one year from the Date of Issue,
the policy will terminate. The amount payable by the Company will be limited to
the premiums paid, less the amount of any policy debt and withdrawals. If either
Insured dies by suicide within one year from the effective date of an increase
in the amount of insurance which occurred upon the request of the Owner and was
subject to the Company's insurability requirements, the amount payable with
respect to such increase will be limited to the Monthly Policy Charges plus any
transaction charges attributable to the increase.
1.6 POLICY DATE AND DATE OF ISSUE
Monthly processing dates and policy months, years and anniversaries are
computed from the Policy Date. The contestable and suicide periods begin with
the Date of Issue. These dates are shown on page 3. The Date of Issue for any
insurance issued under Specified Amount Changes (Section 3.3) will be shown on
an amendment to the Schedule of Benefits and Premiums.
1.7 MISSTATEMENT OF AGE
If the age of either insured has been misstated, the death benefit and
Policy Value will be modified by recalculating all Monthly Policy Charges based
on the correct age of the Insureds.
1.8 PAYMENTS BY THE COMPANY
All payments by the Company under this policy are payable at its Home
Office.
1.9 REPORTS TO OWNER
At least once each policy year, the Company will send to the Owner:
- a statement of the death benefit, the Policy Value, and any policy
debt, including loan interest.
- a report of the Separate Account, including financial statements.
<PAGE>
- any other information required by law.
SECTION 2. OWNERSHIP
2.1 THE OWNER
The Owner is named on page 3. The Owner, the Owner's successor or the
Owner's transferee may exercise policy rights without the consent of any
beneficiary, except to the extent the Owner's rights are restricted by a
designation of an irrevocable beneficiary. After the second death, policy
rights may be exercised only as provided in Section 10.
2.2 TRANSFER OF OWNERSHIP
The Owner may transfer the ownership of this policy. Written proof of
transfer satisfactory to the Company must be received at its Home Office. The
transfer will then take effect as of the date that it was signed. The Company
may require that the policy be sent to it for endorsement to show the transfer.
2.3 COLLATERAL ASSIGNMENT
The Owner may assign this policy as collateral security. The Company is
not responsible for the validity or effect of the collateral assignment. The
Company will not be responsible to an assignee for any payment or other action
taken by the Company before receipt of the assignment in writing at its Home
Office.
The interest of any beneficiary will be subject to any collateral
assignment made either before or after the beneficiary is named, unless the
beneficiary was designated an irrevocable beneficiary before the assignment.
The collateral assignee is not an Owner. The collateral assignment is not
a transfer of ownership. Ownership can be transferred only by complying with
Section 2.2.
RR.VJL.(1298) 11
<PAGE>
SECTION 3. DEATH BENEFIT
3.1 DEATH BENEFIT OPTIONS
This policy provides for three death benefit options prior to the Age 100
Date. The option in effect and the Age 100 Date are shown on page 3.
SPECIFIED AMOUNT (OPTION A) - The death benefit before the Age 100 Date is the
greater of:
- the Specified Amount; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS POLICY VALUE (OPTION B) - The death benefit before the
Age 100 Date is the greater of:
- the Specified Amount plus the Policy Value; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS PREMIUMS PAID
(OPTION C) - The death benefit before the Age 100 Date is the greater of:
- the Specified Amount plus the sum of the premiums paid; or
- the Minimum Death Benefit.
MINIMUM DEATH BENEFIT. The Minimum Death Benefit is the amount required to
maintain this policy as a life insurance contract for federal tax purposes. The
test used for determining compliance with the federal tax definition of a life
insurance contract is shown on page 3 and will be either:
(1) the Guideline Premium/Cash Value Corridor Test: in that case, the Minimum
Death Benefit equals the greater of the Policy Value multiplied by the
corridor percentage shown on page 7 for the current policy year or the
minimum amount required to maintain this policy as a life insurance
contract for federal tax purposes; or
(2) the Cash Value Accumulation Test: in that case, the Minimum Death Benefit
equals the greater of the Policy Value divided by the Net Single Premium
shown on page 7 for the current policy year or the minimum amount required
to maintain this policy as a life insurance contract for federal tax
purposes.
AGE 100 DATE AND LATER. The death benefit on and after the Age 100 Date will
be the greater of the Policy Value or the minimum amount required to maintain
this policy as a life insurance contract for federal tax purposes.
3.2 DEATH BENEFIT OPTION CHANGES
Subject to approval by the Company, the Owner may change the death benefit
option upon written request. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for a death benefit option change. This
charge will be deducted from the Policy Value and will not exceed the amount
shown on page 5. A change will not be allowed if the Specified Amount following
a change would be less than the minimum amount the Company would issue at the
time of change.
CHANGES TO OPTION A. The death benefit option may be changed to Option A at
any time before the Age 100 Date. On the effective date of change, the
Specified Amount will be changed as follows:
(1) If the change is from Option B to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the
Policy Value on the effective date of the change.
<PAGE>
(2) If the change is from Option C to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the sum
of the premiums paid as of the effective date of the change.
CHANGES TO OPTION B OR OPTION C. The death benefit option may be changed to
Option B or Option C at any time before the policy anniversary nearest the older
Insured's 85th birthday provided the following requirements are met:
- both Insureds are alive;
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue.
On the effective date of change, the Specified Amount will be changed as
follows:
(1) If the change is from Option A to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
Policy Value on the effective date of the change.
(2) If the change is from Option A to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
sum of the premiums paid as of the effective date of the change.
(3) If the change is from Option B to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a) the
Policy Value on the effective date of the change, minus (b) the sum of the
premiums paid as of the effective date of the change.
(4) If the change is from Option C to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a)
the sum of the premiums paid as of the effective date of the change, minus
(b) the Policy Value on the effective date of the change.
RR.VJL.(1298) 12
<PAGE>
3.3 SPECIFIED AMOUNT CHANGES
The Owner may change the Specified Amount upon written request subject to
approval by the Company. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for more than one Specified Amount change
in a policy year. This charge will be deducted from the Policy Value and will
not exceed the amount shown on page 5.
INCREASES. An increase will be made only if, at the time applied for, the
following requirements are met:
- both Insureds are alive;
- the insurance in force, as increased, will be within the Company's
issue limits;
- the increase request is received prior to the policy anniversary
nearest the older Insured's 85th birthday;
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue.
DECREASES. A decrease will not be allowed if the Specified Amount following the
decrease would be less than the minimum amount the Company would issue at the
time of change. For the purposes of incontestability and suicide provisions
(Section 1.4 and Section 1.5), a decrease in Specified Amount will first reduce
any past increases in the reverse order in which they occurred and then reduce
the Specified Amount originally issued.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
4.1 PREMIUM PAYMENT
Premiums may be paid to the Company at any time on or before the Final
Premium Date shown on page 3. All premiums after the first are payable at the
Home Office or to an authorized agent. A receipt signed by an officer of the
Company will be furnished on request. The minimum premium the Company will
accept is shown on page 3. Other premium limitations are described in
Section 4.4.
4.2 NET PREMIUM
The net premium is the amount of each premium paid that is available for
allocation to the Divisions of the Separate Account. The amount of the net
premium will be:
- the premium paid; less
- the Premium Expense Charge.
The Premium Expense Charge will consist of the amounts shown on page 4.
4.3 ALLOCATION OF NET PREMIUMS
AND SUBSEQUENT TRANSFERS
For premiums paid to the Company prior to the Initial Allocation Date, the
net premiums will be allocated to the Money Market Division on the date the
premiums are received in the Home Office. The Initial Allocation Date is shown
on page 8.
On the Initial Allocation Date, amounts in the Money Market Division will
be allocated in accordance with the application. This allocation will remain in
effect for subsequent net premiums, loan repayments,
<PAGE>
and dividends credited unless changed by the Owner by written request. Any
change in allocation will be in effect for net premiums, loan repayments, and
dividends credited to the policy following the receipt of the written request at
the Home Office. Allocations must be in whole percentages.
On or after the Initial Allocation Date, the Owner may transfer the amounts
invested in any of the Divisions. The transfer will take effect on the date a
written request is received in the Home Office. The Company reserves the right
to charge for more than twelve transfers in a policy year. This charge will be
deducted from the Policy Value and will not exceed the amount shown on page 5.
RR.VJL.(1298) 13
<PAGE>
4.4 PREMIUM LIMITATIONS
A premium payment that would increase the policy's death benefit more than
it increases the Policy Value will be accepted only if:
- both Insureds are alive;
- the insurance in force, as increased, will be within the Company's
issue limits;
- the premium payment is received prior to the policy anniversary
nearest the older Insured's 85th birthday;
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue.
If the Definition of Life Insurance Test shown on page 3 is the Guideline
Premium/Cash Value Corridor Test, then the Company will not accept any premium
that disqualifies this policy as a life insurance contract for federal tax
purposes. Further, the Company reserves the right to make distributions or
refunds of excess premium (with interest as required by the federal tax law)
from this policy as necessary to continue to qualify the policy as a life
insurance contract for federal tax purposes.
4.5 GRACE PERIOD
A grace period of 61 days will be allowed for the payment of sufficient
premium to keep the policy in force if the cash value on a monthly processing
date is less than the current Monthly Policy Charge; however, no premium will be
accepted after the Final Premium Date shown on page 3. The minimum premium that
must be paid is three times the Monthly Policy Charge due when the insufficiency
occurred.
The grace period will begin on the date the Company sends written notice of
the insufficiency. The grace period will end 61 days after the notice is sent.
The notice will be sent to the Owner and will state the date the grace period
ends and the amount of premium required to keep the policy in force. Upon
receipt of payment, the Company will allocate the net premium, less any Monthly
Policy Charges due and unpaid, to the Divisions of the Separate Account
according to the allocation of net premiums then in effect.
The policy will remain in force during the grace period. If sufficient
premium is not paid by the end of the grace period, the policy will terminate
with no value.
If the second death occurs during the grace period, any Monthly Policy
Charges due and unpaid will be deducted from the death proceeds of the policy.
4.6 REINSTATEMENT
CONDITIONS. If this policy has terminated under Section 4.5, it may be
reinstated upon receipt at the Home Office of:
- an application for reinstatement within three years after the end of
the grace period; and
- a reinstatement premium equal to or greater than the minimum
reinstatement premium.
In addition, the Company's insurability requirements must be met.
This policy may not be reinstated:
- if the policy was surrendered for its cash value; or
- if either of the Insureds died after the end of the grace period.
<PAGE>
MINIMUM REINSTATEMENT PREMIUM. The minimum premium needed to reinstate the
policy is:
- the sum of all Monthly Policy Charges (Section 7.2) that were due and
unpaid before the end of the grace period; plus
- three times the Monthly Policy Charge due on the effective date of
reinstatement.
INSURABILITY REQUIREMENTS. These requirements are:
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue, or if only one
Insured was alive at the end of the grace period, that Insured is in
the same underwriting classification as, or in a better underwriting
classification than, that Insured was in on the Date of Issue.
EFFECTIVE DATE OF REINSTATEMENT. If the Company approves the application for
reinstatement, the effective date of reinstatement will be the first monthly
processing date following receipt at the Home Office of the reinstatement
application.
On the effective date of reinstatement, the Policy Value will be equal to:
- the reinstatement premium paid, less the Premium Expense Charge; plus
- any policy debt as of the end of the grace period; less
- the sum of all Monthly Policy Charges that were due and unpaid before
the end of the grace period; less
- the Monthly Policy Charge due on the effective date of reinstatement.
On the effective date of reinstatement, the Policy Value, less any policy debt
that is not repaid, will be allocated to the Divisions of the Separate Account
according to the allocation in effect at the end of the grace period.
RR.VJL.(1298) 14
<PAGE>
SECTION 5. DIVIDENDS
5.1 ANNUAL DIVIDENDS
This policy will share in the divisible surplus of the Company to the
extent it contributes to this surplus. This surplus is determined each year.
This policy's share will be credited as a dividend on the policy anniversary.
Since this policy is not expected to contribute to divisible surplus, it is
not expected that any dividends will be paid.
5.2 USE OF DIVIDENDS
Annual dividends may be paid in cash or used to increase the Policy Value.
Dividends used to increase the Policy Value will be allocated to the Divisions
of the Separate Account according to the allocation of net premiums then in
effect. If no direction is given for the use of dividends, they will be used
to increase the Policy Value.
5.3 DIVIDEND AT DEATH
If a dividend is payable for the period from the beginning of the policy
year to the date of the second death, the dividend is payable as part of the
policy proceeds.
SECTION 6. THE SEPARATE ACCOUNT
6.1 DESCRIPTION
Northwestern Mutual Variable Life Account (the Separate Account) is
registered as a unit investment trust under the Investment Company Act of 1940.
The Separate Account has several Divisions, as shown on page 8. Assets of the
Separate Account are invested in shares of Northwestern Mutual Series Fund, Inc.
(the Fund). The Fund is registered under the Investment Company Act of 1940 as
an open-end, diversified investment company. The Fund has one Portfolio for
each Division. Assets of each Division of the Separate Account are invested in
shares of the corresponding Portfolio of the Fund. Shares of the Fund are
purchased for the Separate Account at their net asset value. The Company may
make available additional Divisions and Portfolios.
Assets will be allocated to the Separate Account to support the operation
of this and other variable life insurance policies. Assets may also be
allocated for other purposes, but not to support the operation of any contracts
or policies other than variable life insurance. Income and realized and
unrealized gains and losses from assets in the Separate Account are credited to
or charged against it without regard to other income, gains or losses of the
Company.
The assets of the Separate Account will be valued on each valuation day.
They are the property of the Company. The portion of these assets equal to
policy reserves and liabilities will not be charged with liabilities arising out
of any other business the Company may conduct. The Company reserves the right
to transfer assets of the Separate Account in excess of these reserves and
liabilities to its general account.
The Owner may exchange this policy for a fixed benefit joint life insurance
policy being offered at that time by the Company if the Fund changes its
investment advisor or if a Portfolio has a material change in its investment
objectives or restrictions. The Company will notify the Owner if there is any
such change.
<PAGE>
The Owner may exchange this policy within 60 days after the notice or the
effective date of the change, whichever is later.
If, in the judgment of the Company, a Portfolio no longer suits the
purposes of this policy due to a change in its investment objectives or
restrictions, the Company may substitute shares of another Portfolio of the Fund
or shares of another mutual fund. Any such substitution will be subject to any
required approval of the Securities and Exchange Commission (SEC), the Wisconsin
Commissioner of Insurance or other regulatory authority.
The Company also may, to the extent permitted by applicable laws and
regulations (including any order of the SEC), make changes as follows:
- the Separate Account or a Division may be operated as a management
company under the Investment Company Act of 1940, or in any other form
permitted by law, if deemed by the Company to be in the best interest
of the policyowners.
- the Separate Account may be deregistered under the Investment Company
Act of 1940 in the event registration is no longer required.
- the provisions of this and other policies may be modified to comply
with any other applicable federal or state laws.
In the event of a substitution or change, the Company may make appropriate
endorsement of this and other policies having an interest in the Separate
Account and take other actions as may be necessary to effect the substitution or
change.
6.2 VALUATION DAY AND VALUATION PERIOD
A valuation day is any day on which the assets of the Separate Account are
valued. A valuation period is a valuation day and any immediately preceding
days which are not valuation days.
Assets are valued as of the close of trading on the New York Stock Exchange
on each day the Exchange is open. Each Division's share of amounts allocated,
transferred or added to a Division or deducted, loaned, transferred or withdrawn
from a Division, on any day, will be determined as of the end of the valuation
period that contains that day.
RR.VJL.(1298) 15
<PAGE>
SECTION 7. DETERMINATION OF VALUES
7.1 POLICY VALUE
On the Policy Date, the Policy Value is equal to the net premium less the
Monthly Policy Charge. On any day after that, the Policy Value is equal to what
it was on the previous day plus any of these items applicable on that day:
- any increase due to investment results as described in Section 7.4 for
the portion of the Policy Value invested in Divisions with a positive
rate of return for the current valuation period;
- interest on the policy debt at an annual effective rate of 5%;
- the net premium, if a premium is paid;
- any policy dividend directed to increase the Policy Value; and minus
any of these items applicable on that day:
- any decrease due to investment results as described in Section 7.4 for
the portion of the Policy Value invested in Divisions with a negative
rate of return for the current valuation period;
- the Monthly Policy Charge;
- any withdrawals; and
- any transaction charges that may result from a withdrawal, a transfer,
a change in the Specified Amount or a change in the death benefit
option.
The Monthly Policy Charge, any withdrawals, and any transaction charges
will be deducted from the Policy Value. The deduction will be allocated to each
Division in proportion to the amounts in each Division.
7.2 MONTHLY POLICY CHARGE
A Monthly Policy Charge is deducted from the Policy Value on each monthly
processing date until the second death and is equal to the sum of the following:
- the Administrative Charge;
- the Underwriting and Issue Charge;
- the Mortality and Expense Risk Charge;
- the Deferred Sales Charge;
- the Cost of Insurance Charge; and
- if there is policy debt, a charge for expenses and taxes associated
with that debt.
The maximum Administrative, Underwriting and Issue, Mortality and Expense
Risk, and Deferred Sales charges are shown on page 4.
7.3 COST OF INSURANCE CHARGE
A Cost of Insurance Charge is deducted from the Policy Value on each
monthly processing date as part of the Monthly Policy Charge. The Cost of
Insurance Charge is the cost of insurance rate times the net amount at risk.
The maximum cost of insurance rates are shown on page 6. The net amount at risk
is (a) minus (b) where:
(a) is the death benefit on the monthly processing date (after deduction
of the Administrative Charge, the Underwriting and Issue Charge, the
Mortality and Expense Risk Charge, the
<PAGE>
Deferred Sales Charge, and, if there is policy debt, a charge for
expenses and taxes associated with that debt) divided by 1.0032737;
and
(b) is the Policy Value on the monthly processing date, after deduction of
the Administrative Charge, the Underwriting and Issue Charge, the
Mortality and Expense Risk Charge, the Deferred Sales Charge, and, if
there is policy debt, a charge for expenses and taxes associated with
that debt.
7.4 INVESTMENT RESULTS
Investment results are reflected in the Policy Value each valuation period.
The investment results for each Division of the Policy Value equal the
Division's share of the Policy Value at the end of the previous valuation period
times the rate of return for that Division for the current valuation period.
The rate of return of a Division for a valuation period is obtained by
dividing the result of (a) minus (b) by (b) where:
(a) is the sum of:
- the value of a share of the corresponding Portfolio of the Fund
at the close of the current valuation period; plus
- the per share amount of any investment income and capital gains
distributed by the Fund for the current valuation period; and
(b) is the value of the share at the close of business for the immediately
preceding valuation period.
The rate of return and corresponding investment results may be positive or
negative. If the rate of return is positive, there will be an increase in
values for the Division; if it is negative, there will be a decrease in values
for the Division.
RR.VJL.(1298) 16
<PAGE>
SECTION 8. CASH VALUE AND SURRENDER
8.1 CASH VALUE
The cash value of this policy is equal to:
- the Policy Value; less
- the surrender charge; less
- any policy debt.
8.2 SURRENDER
The Owner may surrender this policy for its cash value. A written
surrender of all claims, satisfactory to the Company, will be required. The
date of surrender will be the date of receipt at the Home Office of the written
surrender. The policy will terminate, and the cash value will be determined, as
of the end of the valuation period which includes the date of surrender. The
Company may require that the policy be sent to it.
8.3 SURRENDER CHARGE
There is a surrender charge if this policy is surrendered during the first
ten policy years. The surrender charge is a percentage of the total premiums
paid during the first policy year, subject to the maximum surrender charge. The
surrender charge percentage and maximum surrender charge are shown on page 5.
8.4 BASIS OF VALUES
A detailed statement of the method of calculation of all values for this
policy has been filed with the insurance supervisory official of the state in
which this policy is delivered. All values are at least as great as those
required by that state.
8.5 DEFERRAL OF PAYMENTS
The Company reserves the right:
- to defer determination of the cash value and payment of the cash
value;
- to defer payment of a loan or withdrawal; and
- to defer determination of a change in the amount of variable insurance
or other variable amounts payable on the second death, and, if such
determination has been deferred, to defer payment of the death
benefit;
during any period when:
- the New York Stock Exchange is closed or trading on the New York Stock
Exchange is restricted as determined by the SEC; or
- the SEC declares that an emergency exists as a result of which the
sale or determination of investment results is not reasonably
practicable; or
- the SEC, by order, permits deferral for the protection of the
Company's policyowners.
RR.VJL.(1298) 17
<PAGE>
SECTION 9. LOANS AND WITHDRAWALS
9.1 POLICY LOANS
The Owner may obtain a loan from the Company in an amount that, when added
to existing policy debt, is not more than the loan value.
On the date a loan is made, the amount of the loan will be transferred from
the Separate Account to the general account of the Company. This amount will be
deducted from each Division in proportion to the amounts in each Division. On
the date a loan repayment is made, or the date accrued interest is paid, the
amount of the payment will be transferred from the general account of the
Company to the Separate Account. This amount will be allocated to the Divisions
of the Separate Account according to the allocation of net premiums then in
effect.
9.2 LOAN VALUE
The loan value is 90% of:
- the Policy Value on the date of the loan; less
- the surrender charge on the date of the loan.
9.3 POLICY DEBT
Policy debt consists of all outstanding loans and accrued interest. Loan
repayments may be made, or accrued interest paid, at any time. Any policy debt
will be deducted from the policy proceeds.
If the policy debt equals or exceeds the Policy Value less the surrender
charge on a monthly processing date, the policy will terminate with no value
subject to the conditions of the Grace Period (Section 4.5).
9.4 LOAN INTEREST
Interest accrues on a daily basis from the date of the loan. Unpaid
interest is added to the loan.
Interest is payable at an annual effective rate of 5%.
9.5 PARTIAL WITHDRAWALS
The Owner may withdraw a portion of the cash value. However, the Owner may
not:
- withdraw an amount which would reduce the loan value to less than the
policy debt;
- withdraw an amount which would reduce the death benefit to less than
the minimum amount the Company would issue on this plan of insurance
at the time of withdrawal;
- withdraw an amount which would reduce the cash value to less than
three times the most recent Monthly Policy Charge;
- withdraw less than the minimum withdrawal amount shown on page 3; or
- make more than four withdrawals in a policy year.
When a portion of the cash value is withdrawn, the amount invested for this
policy in the Separate Account will be reduced by the amount of the withdrawal.
The reduction will be allocated to each Division
<PAGE>
in proportion to the amounts in each Division. If the death benefit option in
effect at the time of withdrawal is either Option A or Option C, the Specified
Amount will be reduced by the lesser of:
- the amount of the withdrawal; or
- the excess, if any, of the Specified Amount for Option A or the
Specified Amount plus the sum of the premiums paid for Option C, over
the result of (a) minus (b) where:
(a) is the death benefit immediately prior to the withdrawal; and
(b) is the amount of the withdrawal.
The Company reserves the right to charge for withdrawals. This charge
will be deducted from the Policy Value and will not exceed the amount shown on
page 5.
SECTION 10. BENEFICIARIES
10.1 DEFINITION OF BENEFICIARIES
The term "beneficiaries" as used in this policy includes direct
beneficiaries, contingent beneficiaries and further payees.
10.2 NAMING AND CHANGE OF BENEFICIARIES
CONDITIONS. The Owner may name and change the beneficiaries of death proceeds:
- before the second death.
- during the first 60 days after the date of the second death, if the
second Insured to die was not the Owner immediately prior to the
second death. A change made during this 60 days may not be revoked.
EFFECTIVE DATE. A naming or change of a beneficiary will be made on receipt at
the Home Office of a written request that is acceptable to the Company. The
request will then take effect as of the date that it was signed. The Company is
not responsible for any payment or other action that is taken by it before the
receipt of the request. The Company may require that the policy be sent to it
to be endorsed to show the naming or change.
10.3 SUCCESSION IN INTEREST OF
BENEFICIARIES
DIRECT BENEFICIARIES. The proceeds of this policy will be payable in equal
shares to the direct beneficiaries who survive and receive payment. If a direct
beneficiary dies before receiving the direct beneficiary's share, that share
will be payable in equal shares to the other direct beneficiaries who survive
and receive payment.
CONTINGENT BENEFICIARIES. At the death of all of the direct beneficiaries, the
proceeds will be payable in equal shares to the contingent beneficiaries who
survive and receive payment. If a contingent beneficiary dies before receiving
the contingent beneficiary's share, that share will be payable in equal shares
to the other contingent beneficiaries who survive and receive payment.
FURTHER PAYEES. At the death of all of the direct and contingent beneficiaries,
the proceeds will be paid:
- in equal shares to the further payees who survive and receive payment;
or
- if no further payees survive and receive payment, to the estate of the
last to die of all of the direct and contingent beneficiaries who
survive both Insureds.
<PAGE>
OWNER OR THE OWNER'S ESTATE. If no beneficiaries are alive on the date of the
second death, the proceeds will be paid to the Owner or to the Owner's estate.
10.4 GENERAL
TRANSFER OF OWNERSHIP. A transfer of ownership of itself will not change the
interest of a beneficiary.
CLAIMS OF CREDITORS. So far as allowed by law, no amount payable under this
policy will be subject to the claims of creditors of a beneficiary.
<PAGE>
AMENDMENT TO SECTION 6 THE SEPARATE ACCOUNT
FOR FLEXIBLE PREMIUM VARIABLE JOINT LIFE
AS OF THE DATE OF ISSUE, THE FIRST PARAGRAPH OF SECTION 6.1 IS AMENDED TO
READ AS FOLLOWS:
Northwestern Mutual Variable Life Account (the Separate Account) is
registered as a unit investment trust under the Investment Company Act of 1940.
The Separate Account has several Divisions, as shown on page 8. Assets of the
Separate Account are invested in shares of corresponding mutual funds or
portfolios of mutual funds, both of which are referred to in this policy as
Portfolios. Shares of the Portfolios are purchased for the Separate Account at
their net asset value. The Company may make available additional Divisions and
Portfolios.
AS OF THE DATE OF ISSUE, THE FOURTH AND FIFTH PARAGRAPHS OF SECTION 6.1 ARE
AMENDED TO READ AS FOLLOWS:
The Owner may exchange this policy for a fixed benefit joint life insurance
policy being offered at that time by the Company if the Portfolio changes its
investment advisor or has a material change in its investment objectives or
restrictions. The Company will notify the Owner if there is any such change.
The Owner may exchange this policy within 60 days after the notice or the
effective date of the change, whichever is later.
If, in the judgment of the Company, a Portfolio no longer suits the
purposes of this policy due to a change in its investment objectives or
restrictions, the Company may substitute shares of another Portfolio. Any such
substitution will be subject to any required approval of the Securities and
Exchange Commission (SEC), the Wisconsin Commissioner of Insurance or other
regulatory authority.
Secretary
NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
VJL.FUNDS.(0799)
<PAGE>
POLICY APPLICATION SUPPLEMENT FOR
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INSUREDS: _________________ and _________________
POLICY:
Specified Amount: $______________________
Death Benefit Option: ______________________
Definition of Life Insurance Test: ______________________
Minimum Initial Premium: $______________________
Guideline Premium Maximum: $______________________
Reminder Premium: $______________________
Reminder Mode: ______________________
______________________________________________________________________________
For Home Office Use Only
Underwriting Amount: $___________
Illustrated Cumulative Premiums:
Years 1- 5: $__________ Years 1- 15: $___________
Years 1- 10: $__________ Years 1- 20: $___________
First Insured: __________ Second Insured: _____________
__________
______________________________________________________________________________
Illustration No. ___________
90-1 VJL.Supp.(0799) Page 1 of 4
<PAGE>
ALLOCATION OF NET PREMIUMS
This allocation will apply to all net premiums and loan repayments. USE WHOLE
PERCENTAGES ONLY. If monthly dollar cost averaging is desired, complete both
this section and the monthly dollar cost averaging section below. Only
allocations to the Money Market Division are utilized for dollar cost averaging
purposes.
<TABLE>
<S> <C>
Money Market Division ____% Growth & Income Stock Division ____%
Select Bond Division ____% Index 400 Stock Division ____%
International Equity Division ____% Small Cap Growth Stock Division ____%
Balanced Division ____% Russell Multi-Style Equity Division ____%
Index 500 Stock Division ____% Russell Aggressive Equity Division ____%
Aggressive Growth Stock Division ____% Russell Non-US Division ____%
High Yield Bond Division ____% Russell Real Estate Securities Division ____%
Growth Stock Division ____% Russell Core Bond Division ____%
Total 100%
----
----
</TABLE>
MONTHLY DOLLAR COST AVERAGING
To elect monthly dollar cost averaging, choose one of the following options and
indicate the desired allocation of transfers below. USE WHOLE PERCENTAGES ONLY.
_____Option One: Transfer in monthly installments so that on the policy
anniversary the Money Market balance will be zero.
_____Option Two: Transfer a level amount of $______________until the Money
Market balance is zero.
<TABLE>
<S> <C>
Select Bond Division ____% Growth & Income Stock Division ____%
International Equity Division ____% Index 400 Stock Division ____%
Balanced Division ____% Small Cap Growth Stock Division ____%
Index 500 Stock Division ____% Russell Multi-Style Equity Division ____%
Aggressive Growth Stock Division ____% Russell Aggressive Equity Division ____%
High Yield Bond Division ____% Russell Non-US Division ____%
Growth Stock Division ____% Russell Real Estate Securities Division ____%
Russell Core Bond Division ____%
Total 100%
----
----
</TABLE>
Insureds: __________ and
__________
Illustration No. __________
90-1 VJL.Supp.(0799) Page 2 of 4
<PAGE>
SUITABILITY
Northwestern Mutual Life is required to make the following inquiries for
purposes of determining the suitability of this purchase. Responses will be
kept confidential.
1. In addition to providing a death benefit upon the death of the second of the
Insureds, what is the purpose for the purchase?
_____ To fund a trust.
_____ To supplement retirement income.
_____ To supplement education funding.
_____ Other (specify): ______________________________________________________
2. By whom will the purchase be funded?_____________________________________
Annual income (all sources) of person/trust funding the purchase:
$__________
Net worth of person/trust funding the purchase: $_______________________
3. Applicant's experience with the following:
None Up to 5 or More
5 Years Than 5 Years
Mutual Funds ______ ______ ______
Individual Common Stocks ______ ______ ______
Variable Annuities ______ ______ ______
Variable Life Insurance ______ ______ ______
Insureds: __________ and
__________
Illustration No. __________
90-1 VJL.Supp.(0799) Page 3 of 4
<PAGE>
I UNDERSTAND THAT THE DEATH BENEFIT FOR A FLEXIBLE PREMIUM VARIABLE JOINT LIFE
INSURANCE POLICY IS VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE
INVESTMENT EXPERIENCE OF NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT. THE AMOUNT
OF THE DEATH BENEFIT IS NOT GUARANTEED.
I UNDERSTAND THAT THE CASH VALUE FOR A FLEXIBLE PREMIUM VARIABLE JOINT LIFE
INSURANCE POLICY IS VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE
INVESTMENT EXPERIENCE OF NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT. THE AMOUNT
OF THE CASH VALUE IS NOT GUARANTEED.
I understand that any illustrations of death benefits and cash values I have
been shown demonstrate how the policy operates under a given set of assumptions
and are not estimates or guarantees of future results. Actual experience will
be different than assumed, resulting in death benefits and cash values higher or
lower than illustrated. The assumptions incorporated in an illustration
include, but are not limited to, the following: premium payment amounts and
frequencies, investment returns, expense charges, cost of insurance charges,
loans, and withdrawals.
I acknowledge receipt of the Flexible Premium Variable Joint Life Insurance
Policy prospectus dated: _____/_____/_____.
MO. DAY YR.
DATE: _____/_____/_____ SIGNATURE OF APPLICANT: ___________________
MO. DAY YR.
___________________
Based on the information furnished by the Applicant in this application, I
certify that I have reasonable grounds for believing the purchase of the policy
applied for is suitable for the Applicant. I further certify that a current
prospectus was delivered and that no written sales materials other than those
furnished by the Northwestern Mutual Life home office were used.
Signature of Licensed Agent: _________________________________________________
(REGISTERED REPRESENTATIVE)
Based on the information furnished by the Applicant in this application, I
certify that I have reasonable grounds for believing the purchase of the policy
applied for is suitable for the Applicant.
Signature of General Agent: ___________________________________________________
Insureds: ___________ and
___________
Illustration No. ___________
90-1 VJL.Supp.(0799) Page 4 of 4
HOL03 116609
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 E. WISCONSIN AVENUE, MILWAUKEE, WISCONSIN 53202
<TABLE>
<CAPTION>
<S><C>
------------------------------------
JOINT LIFE PROTECTION INSURANCE APPLICATION POLICY NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Companion policies / / Life & Disability Application / / LTC Application Plan Group Number
/ / APB Option / / Exam (NM, PME, MD) in Home Office
------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST INSURED (YOUNGER)
ON PAGES 1,2,3 AND 4, "INSURED" REFERS TO THE FIRST INSURED.
- ------------------------------------------------------------------------------------------------------------------------------------
Has an application or informal inquiry ever been made to Northwestern Mutual Life for annuity, life,
long term care, or disability insurance on the life of the insured? / / Yes /X/ No If yes, the last policy number is
---------
1. A. /X/ Mr. / / Mrs. / / Ms. / / Dr. / / Other B. /X/ MALE
----------------- / / FEMALE
NAME: JOHN J DOE
---------------------------------------------------------
(FIRST, MIDDLE INITIAL, LAST)
- ------------------------------------------------------------------------------------------------------------------------------------
C. BIRTHDATE: (MONTH, DAY, YEAR) D. STATE OF BIRTH (or Foreign Country): E. TAXPAYER IDENTIFICATION NUMBER:
12/31/1963 Wisconsin ###-##-####
---------------------------- ----------------------------------- ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
F. PRIMARY RESIDENCE: STREET OR PO BOX: 1234 Main Street
---------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.): Milwaukee, WI 53200
---------------------------------------------------------------------------
E-MAIL ADDRESS:
---------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
APPLICANT
- ------------------------------------------------------------------------------------------------------------------------------------
2. Select ONLY ONE: /X/ First Insured @ First Insured's address / / Other (Complete A, B and C)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
-----------------
PERSONAL
NAME / / MALE
--------------------------------------------------------------------------- / / FEMALE
(FIRST, MIDDLE INITIAL, LAST)
RELATIONSHIP TO INSURED: BIRTHDATE:
------------------------------------------------------ --------------------------------
MONTH DAY YEAR
OR BUSINESS/TRUST
NAME:
----------------------------------------------------------------------------------------------------
TYPE OF ORGANIZATION: / / Trust / / Corporation / / Partnership / / Other type of Business
----------------
AUTHORIZED COMPANY
REP/TRUSTEE NAME:
--------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER:
-----------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
C. ADDRESS: STREET OR PO BOX:
----------------------------------------------------------------------------
CITY, STATE, ZIP (Country if Other Than U.S.A.):
----------------------------------------------------------------------------
E-MAIL ADDRESS:
----------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PREMIUM PAYER
- -----------------------------------------------------------------------------------------------------------------------------------
3. Select ONLY ONE: / / ISA (Omit A through D below) OR /X/ First Insured (Complete D only) / / Owner (Complete D only)
/ / Applicant (Complete D only) / / Other (Complete A, B, C and D)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
--------------------------------
PERSONAL
NAME: / / MALE
--------------------------------------------------------------------------- / / FEMALE
(FIRST, MIDDLE INITIAL, LAST)
BIRTHDATE:
----------------------------
MONTH DAY YEAR
OR BUSINESS/TRUST
NAME:
------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER: C. DAYTIME TELEPHONE NUMBER:
Area Code ( )
--------------------------------------------------- -----------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Send premium and other notices regarding this policy to:
D. ADDRESS: /X/ First Insured's Address / / Applicant's Address OR
STREET OR PO BOX:
----------------------------------------------------------------------------
CITY, STATE, ZIP (Country if Other Than U.S.A.):
----------------------------------------------------------------------------
E-MAIL ADDRESS:
----------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) 90-1934-50 (page 1)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------
CAUTION: A MINOR OWNER CANNOT EXERCISE POLICY RIGHTS.
4. Select ONLY ONE: /X/ First Insured (Complete C only) / / Applicant (Complete C only)
/ / Other (Complete A, B and C) / / See attached supplement form
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
---------------------
PERSONAL / / MALE
NAME: / / FEMALE
----------------------------------------------------
(FIRST MIDDLE INITIAL LAST)
RELATIONSHIP TO INSURED: BIRTHDATE: | |
---------------------------------- ---------------------
OR BUSINESS/TRUST MONTH DAY YEAR
NAME:
----------------------------------------------------
RELATIONSHIP TO INSURED:
------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER:
--------------------------
- ------------------------------------------------------------------------------------------------------------------------
C. ADDRESS: /X/ First Insured's Address / / Applicant's Address / / Premium Payer's Address OR
STREET OR PO BOX:
-----------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
-----------------------------------------------------------------
E-MAIL ADDRESS:
-----------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
5.-7. (Reserved)
SPECIAL DATE (COMPLETE THIS SECTION ONLY IF A SPECIAL POLICY DATE IS BEING REQUESTED)
- ------------------------------------------------------------------------------------------------------------------------
8. A. Prepaid: / / Short Term - Policy Date will coincide with ISA Payment Date (For monthly ISA only)
/ / Short Term to: | | / / Backdate to | |
--------------------- ---------------------
MONTH DAY YEAR MONTH DAY YEAR
B. Nonprepaid: / / Specified future date: | | / / Backdate to | |
--------------------- ---------------------
MONTH DAY YEAR MONTH DAY YEAR
- ------------------------------------------------------------------------------------------------------------------------
POLICY APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------
9. Joint Life Protection (See attached supplement)
10. If an additional benefit cannot be approved, should the company issue a policy without the benefit? / / Yes / / No
11. Shall the PREMIUM LOAN provision, if available, become operative according to its terms? /X/ Yes / / No
12.-13. (Reserved)
14. PREMIUM FREQUENCY: /X/ Annually / / Semiannually / / Quarterly
- ------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------
15.A. DIRECT BENEFICIARY
First, Middle Initial, Last Relationship to Insured
(1) Mary J. Doe Daughter
----------------------------------------------------------------------------------- -----------------------
(2)
----------------------------------------------------------------------------------- -----------------------
(3)
----------------------------------------------------------------------------------- -----------------------
Business organization or trust
--------------------------------------------------------- -----------------------
---------------------------------------------------------
B. CONTINGENT BENEFICIARY:
First, Middle Initial, Last Relationship to Insured
(1)
----------------------------------------------------------------------------------- -----------------------
(2)
----------------------------------------------------------------------------------- -----------------------
(3)
----------------------------------------------------------------------------------- -----------------------
Box (1) or (2) may be selected to include all of the children or brothers and sisters without naming them, or to
add to the contingent beneficiaries named. Box (3) may be selected to provide for the children of a deceased
contingent beneficiary; use only if contigent beneficiaries are named and/or Box (1) or (2) is checked.
NOTE: The word "children" includes child and any legally adopted child.
/X/ (1) and all (other) children of the Insured.
/ / (2) and all (other) brothers and sisters of the Insured born of the marriage of or legally adopted
by and before the Insured's death.
-------------------------- -----------------------------
/ / (3) any amount that would have been paid to a deceased contingent beneficiary, if living, will be paid in one
sum and in equal shares to the children of that contingent beneficiary who survive and receive payment.
C. FURTHER PAYEES
First, Middle Initial, Last Relationship to Insured
(1)
----------------------------------------------------------------------------------- -----------------------
(2)
----------------------------------------------------------------------------------- -----------------------
D. / / SEE ATTACHED SUPPLEMENT FORM (To be used in place of designations above.)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 2)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
16. (Reserved)
CONDITIONAL LIFE INSURANCE AGREEMENT
- ---------------------------------------------------------------------------------------------------------------------------------
17. Has the premium for the policy applied for been given to the agent in exchange for the Conditional
Life Insurance Agreement with the same number as this application? /X/ Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
INSURANCE HISTORY
- ---------------------------------------------------------------------------------------------------------------------------------
18. Has the Insured ever had life, disability or health insurance declined, rated, modified, issued with
an exclusion rider, cancelled, or not renewed? If yes, explain in REMARKS. / / Yes /X/ No
19. When was the Insured's last examination or application for life, disability or accidental death
insurance?
Month Year Company OR /X/ None
----------------------- ------------------------ ------------------------------
20. Does the Insured have any other life insurance in force, pending or contemplated in other companies? / / Yes /X/ No
If yes, indicate Company Name, Individual (Ind) or Group (Grp) and indentify the amount of in Force,
Pending, or Contemplated.
LIFE INSURANCE AMOUNTS
------------------------------------------------------------------------------------------------------------------------
Company Name Ind/Grp In Force Pending Contemplated Accidental
Amount Amount Amount Death Amount
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
21. As a result of this purchase will the values or benefits of any other life insurance policy or
annuity contract, on any life, be affected in any way? / / Yes /X/ No
NOTE TO AGENT: VALUE OR BENEFITS ARE AFFECTED IF ANY QUESTION ON THE
DEFINITION OF REPLACEMENT SUPPLEMENT COULD BE ANSWERED "YES".
If "yes", this transaction is a replacement of life insurance or annuity.
The agent must:
- submit required papers and sale materials AND
- provide required disclosure notices to the applicant.
The applicant must answer the questions:
- on the Definition of Replacement Supplement AND
- A, B, and C below.
Will this insurance:
A. replace Northwestern Mutual Life? / / Yes /X/ No
B. replace other Companies? / / Yes /X/ No
C. result in 1035 exchange? / / Yes /X/ No
- ---------------------------------------------------------------------------------------------------------------------------------
22. (Reserved)
REMARKS
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 3)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
John J Doe
------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
PERSONAL HISTORY QUESTIONNAIRE - FIRST INSURED
- ----------------------------------------------------------------------------------------------------------------------------------
23. Insured's Marital Status: / / Single, Widowed or Divorced /X/ Married
24. a. Insured is a citizen of: /X/ U.S.A. / / Other
If other: Type of Visa: Visa Number:
------------------------- ----------------
b. How many years has the Insured resided in the U.S.A. immediately prior to completing
this application? 35 years
-----
25. Does the Insured regularly travel outside the U.S.A. or have plans to leave the U.S.A. for travel
or residence?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ /Yes /X/ No
If yes, explain in the chart below.
-------------------------------------------------------------------------------------------------------------------------
Destination Number of Trips Duration of Departure Date Purpose of Trip
(List all Cities and Countries) Last 12 Next 12 Each Trip (Month/Year)
Months Months (No. of Days)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
26. a. What is the Insured's occupation(s)? Attorney
----------------------------------------------------------------------------------
What are the Insured's duties? Office Duties
----------------------------------------------------------------------------------------
b. Employer's Name: ABC Corporation
------------------------------------------------------------------------------------------------------
Address: 1000 Company Ave.
------------------------------------------------------------------------------------------------------
City, State, Zip Code: Milwaukee, WI 53200
-----------------------------------------------------------------------------------------------
c. How long has the insured been employed? 7 years (If less than 2 years, explain in REMARKS)
---------
QUESTIONS 27 THROUGH 30 ARE NOT REQUIRED IF THE INSURED IS UNDER AGE 16.
27. Is the Insured a memeber of, or does the Insured plan on joining any branch of, the Armed Forces
or reserve military unit? If yes, complete the Military Section. . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
28. Except as a passenger on a regularly scheduled flight, has the Insured flown within the past 2
years, or does the Insured have plans to fly in the future? If yes, complete the Aviation Section. . . . . ./ / Yes /X/ No
29. In the past 2 years, has the Insured participated in or does the Insured have plans to participate
in: racing (automobile, snowmobile, motorcycle, boat or go-cart), underwater or sky diving, hang
gliding, bungee jumping, mountain or rock climbing, or rodeos? If yes, complete the Avocation Section. . . ./ / Yes /X/ No
30. a. What is the Insured's automobile driver's license number? # D555-5555-555-55 State WI
or, / / the Insured does not have a driver's license. ------------------ ----------
b. In the past 5 years, has the Insured been in a motor vehicle accident, has the Insured been
charged with a moving violation of any motor vehicle law, or has the Insured's driver's
license been restricted, suspended or revoked?
If yes, complete the chart below. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
-------------------------------------------------------------------------------------------------------------------------
Type and Details Action Accident
Date (Speeding, Reckless Driving, Driving While Intoxicated, Etc.) (Citation, Fine, Etc.) (Yes or No)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 4)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
APPLICATION INFORMATION FOR SECOND INSURED
-------------------------
POLICY NUMBER
SECOND INSURED (OLDER) / / Companion policies / / Life & Disability Application / / LTC Application / / Exam (NM, PME, MD) in Home
Office
ON PAGES 5 AND 6, "INSURED" REFERS TO THE SECOND INSURED.
- ----------------------------------------------------------------------------------------------------------------------------------
Has an application or informal inquiry ever been made to Northwestern Mutual Life for annuity, life, long term care, or disability
insurance on the life of the Insured? / / Yes /X/ No If yes, the last policy number is
------------------------------------
1. A. / /Mr. /X/ Mrs. / /Ms. / /Dr. / /Other B. / / MALE
------------------------ /X/ FEMALE
NAME: JANE J DOE
-----------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
- ----------------------------------------------------------------------------------------------------------------------------------
C. BIRTHDATE: (MONTH, DAY, YEAR) D. STATE OF BIRTH (or Foreign Country): E. TAXPAYER IDENTIFICATION NUMBER:
1 2 3 1 1 9 6 3 Wisconsin ###-##-####
------------------ -----------
- ----------------------------------------------------------------------------------------------------------------------------------
F. PRIMARY RESIDENCE: /X/ First Insured's Address OR
STREET OR PO BOX:
---------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
---------------------------------------------------------------------------
E-MAIL ADDRESS:
---------------------------------------------------------------------------
This address will be used for all of the Second Insured's policies.
- ----------------------------------------------------------------------------------------------------------------------------------
2.-9. (Reserved)
- ----------------------------------------------------------------------------------------------------------------------------------
10. If an additional benefit cannot be approved should the Company issue the policy without the benefit? / / Yes / / No
- ----------------------------------------------------------------------------------------------------------------------------------
11.-17. (Reserved)
INSURANCE HISTORY
- ----------------------------------------------------------------------------------------------------------------------------------
18. Has the Insured ever had life, disability or health insurance declined, rated, modified, issued with an
exclusion rider, cancelled, or not renewed? If yes, explain in REMARKS. / /Yes /X/ No
19. When was the Insured's last examination or application for life, disability or accidental death insurance?
Month Year Company OR /X/ NONE
------------ -------- ------------------------------------------------
20. Does the Insured have any other life insurance in force, pending or contemplated in other companies?
If yes, indicate Company Name, Individual (Ind) or Group (Grp) and identify the amount of in Force,
Pending, or Contemplated. / / Yes /X/ No
LIFE INSURANCE AMOUNTS
-------------------------------------------------------------------------------------------------------------------------------
Company Name Ind/Grp In Force Pending Contemplated Accidental
Amount Amount Amount Death Amount
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
21. As a result of this purchase will the values or benefits of any other life insurance policy or annuity
contract, on any life, be affected in any way? / / Yes /X/ No
NOTE TO AGENT: VALUES OR BENEFITS ARE AFFECTED IF ANY QUESTION ON THE
DEFINITION OF REPLACEMENT SUPPLEMENT COULD BE ANSWERED "YES".
If "yes", this transaction is a replacement of life insurance or annuity.
The agent must:
- submit required papers and sale materials AND
- provide required disclosure notices to the applicant.
The applicant must answer the questions:
- on the Definition of Replacement Supplement AND
- A, B, and C below.
Will this insurance:
A. replace Northwestern Mutual Life? / / Yes /X/ No
B. replace other Companies? / / Yes /X/ No
C. result in 1035 exchange? / / Yes /X/ No
- ----------------------------------------------------------------------------------------------------------------------------------
22. (Reserved)
REMARKS
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 5)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ----------------------------------------------------------------------------------------------------------------------------------
23. Insured's Marital Status: / / Single, Widowed or Divorced /X/ Married
24. a. Insured is a citizen of: /X/ U.S.A. / / Other
If other: Type of Visa: Visa Number:
------------------- ----------------
b. How many years has the insured resided in the U.S.A. immediately prior to completeing
this application? 35 years
--------
25. Does the insured regularly travel outside the U.S.A. or have plans to leave the U.S.A. for
travel or residence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ /Yes /X/ No
If yes, explain in the chart below.
-------------------------------------------------------------------------------------------------------------------------
Destination Number of Trips Duration of Departure Date Pupose of Trip
(List all Cities and Countries) Last 12 Next 12 Each Trip (Month/Year)
Months Months (No. of Days)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
26. a. What is the Insured's occupation(s)? Housewife
---------------------------------------------------------------------------------
What are the Insured's duties?
---------------------------------------------------------------------------------------
b. Employer's Name:
-----------------------------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------------------------------------
City, State, Zip Code:
-----------------------------------------------------------------------------------------------
c. How long has the insured been employed? years (If less than 2
years, explain in REMARKS) ---------------
QUESTIONS 27 THROUGH 30 ARE NOT REQUIRED IF THE INSURED IS UNDER AGE 16.
27. Is the Insured a memeber of, or does the Insured plan on joining any branch of, the Armed
Forces or reserve military unit? If yes, complete the Military Section . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
28. Except as a passenger on a regularly scheduled flight, has the Insured flown within the
past 2 years, or does the Insured have plans to fly in the future? If yes, complete the
Aviation Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
29. In the past 2 years, has the Insured participated in or does the Insured have plans to
participate in: racing (automobile, snowmobile, motorcycle, boat or go-cart), underwater
or sky diving, hang gliding, bungee jumping, mountain or rock climbing, or rodeos? If yes,
complete the Avocation Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
30. a. What is the Insured's automobile driver's license number? # D333-3333-3333-33 State WI
or, / / the Insured does not have a driver's license. ----------------- --------------
b. In the past 5 years, has the Insured been in a motor vehicle accident, has the Insured
been charged with a moving violation of any motor vehicle law, or has the Insured's
driver's license been restricted, suspended or revoked?
If yes, complete the chart below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
-------------------------------------------------------------------------------------------------------------------------
Type and Details Action Accident
Date (Speeding, Reckless Driving, Driving While Intoxicated, Etc.) (Citation, Fine, Etc.) (Yes or No)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 6)
<PAGE>
- -------------------------------------------------------------------------------
EACH INSURED CONSENTS TO THIS APPLICATION AND ATTACHED SUPPLEMENTS AND DECLARES
THAT THE ANSWERS AND STATEMENTS MADE ON THIS APPLICATION AND ATTACHED
SUPPLEMENTS ARE CORRECTLY RECORDED, COMPLETE AND TRUE TO THE BEST OF EACH
INSURED'S KNOWLEDGE AND BELIEF. ANSWERS AND STATEMENTS BROUGHT TO THE
ATTENTION OF THE AGENT, MEDICAL EXAMINER OR PARAMEDICAL EXAMINER ARE NOT
CONSIDERED INFORMATION BROUGHT TO THE ATTENTION OF THE COMPANY UNLESS STATED
IN THE APPLICATION. STATEMENTS IN THIS APPLICATION ARE REPRESENTATIONS AND
NOT WARRANTIES.
It is agreed that:
(1) If the premium is not paid when the application is signed, no insurance
will be in effect. The insurance will take effect at the time the policy
is delivered and the premium is paid, if: both Insureds are living at that
time; and the answers and statements in the application are then true to
the best of each Insured's knowledge and belief.
(2) If the premium is paid when the application is taken, no insurance will
be in effect except as provided in the Conditional Life Insurance
Agreement with the same number as this application.
(3) No agent is authorized to make or alter contracts or to waive any of the
Company's rights or requirements.
-----------------------------------------------------------------------------
THE OWNER OF THE POLICY APPLIED FOR HEREIN CERTIFIES, UNDER PENALTIES OF
PERJURY, (1) THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN FOR THE OWNER ON
THE SECOND PAGE OF THIS APPLICATION IS THE OWNER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER (OR THE OWNER IS WAITING FOR A NUMBER TO BE ISSUED) AND
(2) THE OWNER IS NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE THE OWNER
HAS NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT THE OWNER IS
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST
OR DIVIDENDS, OR THE IRS HAS NOTIFIED THE OWNER THAT THE OWNER IS NO LONGER
SUBJECT TO BACKUP WITHHOLDING. (SEE TAXPAYER IDENTIFICATION NUMBER
INSTRUCTIONS.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
-----------------------------------------------------------------------------
THE SIGNATURES BELOW APPLY TO THE APPLICATION, THE POLICY APPLICATION
SUPPLEMENT AND THE CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER.
<TABLE>
<CAPTION>
<S> <C>
(Signed) John J. Doe (Signed) Jane J. Doe
- -------------------------------------- -----------------------------------------
Signature of FIRST INSURED Signature of SECOND INSURED
(Signed) John J. Doe
- -------------------------------------- -----------------------------------------
Signature of APPLICANT Signature of OWNER (If other than
Applicant, First or Second Insured)
Signed by APPLICANT at Milwaukee, Milwaukee WI Date signed by APPLICANT 12 | 31 | 1998
------------------------ ----------------
CITY, COUNTY & STATE MONTH DAY YEAR
(Signed) Norm W. Western
------------------------------
Signature of LICENSED AGENT
</TABLE>
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR TAXPAYER IDENTIFICATION NUMBER INFORMATION
1. Under federal income tax law you will be subject to a withholding tax of
31% imposed upon certain reportable payments, if any, and to certain
penalities if you do not certify under penalties of perjury that the
Taxpayer Identification Number which you have provided us is correct and
that you are not subject to backup withholding due to notified payee
underreporting. Generally speaking, for individuals, the Taxpayer
Identification Number is the Social Security Number.
2. If you don't have a Taxpayer Identification Number, obtain Form SS-5,
Application for a Social Security Number Card, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for
a number. Write "Applied for" in the space available for your Taxpayer
Identification Number on the first page of this application. If we do not
receive your Taxpayer Identification Number within 60 days, we are required
to withhold 31% of all reportable payments, if any, thereafter made to you
until we receive such a number from you.
3. If the Internal Revenue Service has notified you that you are subject to
backup withholding and you have not received notice from the Service that
backup withholding has terminated, you should strike out the language on
page 9 that you are not subject to backup withholding due to notified payee
underreporting.
90-1 JCL (0198) (page 7)
<PAGE>
IT IS RECOMMENDED THAT YOU ...
read your policy.
notify your Northwestern Mutual agent or the Company at 720 East Wisconsin
Avenue, Milwaukee, WI 53202, of an address change.
call your Northwestern Mutual agent for information--particularly on a
suggestion to terminate or exchange this policy for another policy or plan.
ELECTION OF TRUSTEES
The members of The Northwestern Mutual Life Insurance Company are its
policyholders of insurance policies and deferred annuity contracts. The members
exercise control through a Board of Trustees. Elections to the Board are held
each year at the annual meeting of members. Members are entitled to vote in
person or by proxy.
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
ELIGIBLE FOR ANNUAL DIVIDENDS
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT AND CASH VALUE UNDER THIS POLICY ARE VARIABLE. THEY MAY
INCREASE OR DECREASE DAILY DEPENDING ON THE INVESTMENT RESULTS OF THE SEPARATE
ACCOUNT. THE AMOUNT OF THE DEATH BENEFIT AND THE AMOUNT OF THE CASH VALUE ARE
NOT GUARANTEED.
RR.VJL.(1298)
<PAGE>
POLICY SPLIT PROVISION
POLICY SPLIT RIGHT. While both Insureds are alive, the Owner may exchange this
policy for two policies (the "new policies"), one on the life of each Insured,
if there is a change in federal estate tax law which results in either:
a. the repeal of the unlimited marital deduction provision; or
b. at least a 50% reduction in the maximum percentage rate set forth in
the federal estate tax schedule in effect on the Date of Issue of this
policy.
This exchange may be made without evidence of insurability.
CONDITIONS. The exchange may be made by meeting any conditions set by the
Company, including the following:
a. the Company must receive a written request from the Owner no more than
180 days after the earlier of the date of enactment of the law
repealing the unlimited marital deduction or the date of enactment of
the law reducing the maximum percentage rate of federal estate tax by
50%; and
b. any required costs are paid.
TERMS OF THE NEW POLICIES. The new policies will be issued on any life
insurance plan agreed to by the Owner and the Company. The new policies will
have the same Date of Issue and Policy Date as this policy. The new policies
will take effect on the date the written request to exchange this policy for the
new policies is received at the Home Office. This policy will terminate when
the new policies take effect.
The amount of the death benefit of each new policy will be one-half the
amount of the death benefit of this policy. The Policy Value of this policy
will be allocated to each new policy as determined appropriate by the Company.
Any policy debt will be divided between the new policies in proportion to their
cash values. Any assignment will continue on the new policies.
SECRETARY
THE NORTHWESTERN
MUTUAL LIFE
INSURANCE COMPANY
RR.VJL.PS.(1298)
HOL03 105426
<PAGE>
Exhibit A(5)(b)
The Northwestern Mutual Life Insurance Company agrees to pay the benefits
provided in this policy,subject to its terms and conditions.
Signed at Milwaukee, Wisconsin on the Date of Issue.
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
Eligible for Annual Dividends
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT AND CASH VALUE UNDER THIS POLICY ARE VARIABLE. THEY MAY
INCREASE OR DECREASE DAILY DEPENDING ON THE INVESTMENT RESULTS OF THE SEPARATE
ACCOUNT. THE AMOUNT OF THE DEATH BENEFIT AND THE AMOUNT OF THE CASH VALUE ARE
NOT GUARANTEED.
RIGHT TO RETURN POLICY. Please read this policy carefully. The policy may be
returned by the Owner for any reason within ten days after it was received. The
policy may be returned to your agent or to the Home Office of the Company at 720
East Wisconsin Avenue, Milwaukee, WI 53202. If returned, the policy will be
considered void from the beginning. The Company will refund the sum of (a) the
difference between any premium paid and the amount allocated to the Separate
Account plus (b) the value of the policy in the Separate Account on the date the
returned policy is received.
<TABLE>
<S> <C> <C> <C>
INSURED John J. Doe AGE AND SEX 35 Male
Jane J. Doe 35 Female
POLICY DATE December 31, 1998 POLICY NUMBER 10 000 000
PLAN Flexible Premium Variable SPECIFIED AMOUNT $1,000,000.00 Joint Life Insurance
</TABLE>
RR.VJL.(1298)
<PAGE>
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE OWNER AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
READ YOUR POLICY CAREFULLY.
GUIDE TO POLICY PROVISIONS
BENEFITS AND PREMIUMS
SECTION 1. THE CONTRACT
Life Insurance Benefit payable on second death. Incontestability.
Suicide. Definition of dates. Reports to Owner.
SECTION 2. OWNERSHIP
Rights of the Owner. Assignment as collateral.
SECTION 3. DEATH BENEFIT
Description of death benefit options. Changes to death benefits.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
Payment of premiums. Calculation and allocation of net premiums.
Transfer of assets. Premium limitations. Grace period of 61 days to
pay premium. How to reinstate the policy.
SECTION 5. DIVIDENDS
Annual dividends. Use of dividends. Dividend at death.
SECTION 6. THE SEPARATE ACCOUNT
The Separate Account and the Divisions. Valuation of assets.
SECTION 7. DETERMINATION OF VALUES
Policy Value. Monthly Policy Charge.
SECTION 8. CASH VALUE AND SURRENDER
Cash value. Surrender. Deferral of payments.
SECTION 9. LOANS AND WITHDRAWALS
Policy loans. Interest on loans. Withdrawals.
SECTION 10. BENEFICIARIES
Naming and change of beneficiaries. Succession in interest of
beneficiaries.
ADDITIONAL BENEFITS (if any)
APPLICATION
RR.VJL.(1298)
BENEFITS AND PREMIUMS
DATE OF ISSUE - DECEMBER 31, 1998
Plan: Flexible Premium Variable Joint Life Insurance
Specified Amount: $1,000,000.00
Death Benefit Option: Specified Amount (Option A)
Definition of Life Insurance Test: Guideline Premium/Cash Value Corridor Test
The Age 100 Date (Section 3) is December 31, 2063.
The Final Premium Date (Section 4) is December 30, 2058.
<PAGE>
The minimum premium (Section 4.4) is $25.00.
The maximum premium under the Guideline Premium/Cash Value Corridor Test:
Guideline Single Premium = $ 87,370.00
Guideline Annual Level Premium = $ 8,960.00
The minimum withdrawal amount (Section 9.5) is $250.00.
This policy is issued in a select (nonsmoker) rate class on John J. Doe and
in a select (nonsmoker) rate class on Jane J. Doe.
DIRECT BENEFICIARY JANE M. DOE, DAUGHTER OF THE INSURED
OWNER JOHN J. DOE, THE INSURED
<TABLE>
<S> <C> <C> <C>
INSURED John J. Doe AGE AND SEX 35 Male
Jane J. Doe 35 Female
POLICY DATE December 31, 1998 POLICY NUMBER 10 000 000
PLAN Flexible Premium Variable SPECIFIED AMOUNT $1,000,000.00 Joint Life Insurance
</TABLE>
RR.VJL.(1298) Page 3
<PAGE>
POLICY NUMBER 10 000 000
SCHEDULE OF CHARGES
The Premium Expense Charge (Section 4.2) is the sum of the following:
1. Sales Load:
<TABLE>
<CAPTION>
Policy Years 1 Policy Years
Premium Paid - 10 after 10
------------ ---------------------------------
<S> <C> <C>
Up to $ $7,120.00 6.4% 2.4%
In Excess of $ 7,120.00 2.4% 2.4%
</TABLE>
2. Federal Deferred Acquisition Cost Charge l.25% of premium
3. Premium Tax Charge 2.35% of premium
The Premium Expense Charge for Federal Deferred Acquisition Cost
and Premium Tax may change to reflect changes in tax law.
Monthly Policy Charge (Section 7.2):
The maximum monthly Administrative Charge is $7.50.
The maximum monthly Underwriting and Issue Charge is $15.00. There is no
charge after the tenth policy year.
The maximum monthly Mortality and Expense Risk Charge during the first ten
policy years is the sum of .075% of Policy Value less policy debt, plus
$11.67. The maximum monthly Mortality and Expense Risk Charge after the
first ten policy years is .075% of Policy Value less policy debt.
The maximum monthly Deferred Sales Charge is $44.50. There is no charge
after the tenth policy year.
RR.VJL.(1298) Page 4
<PAGE>
POLICY NUMBER 10 000 000
SCHEDULE OF CHARGES (continued)
Maximum Transaction Charges:
The maximum charge for death benefit option changes (Section 3.2) is
$250.00 per change.
The maximum charge for Specified Amount changes (Section 3.3) is $25.00 per
change for more than one change during any policy year.
The maximum transfer fee (Section 4.3) is $25.00 per transfer for more than
12 transfers during any policy year.
The maximum withdrawal charge (Section 9.5) is $25.00 per withdrawal.
Surrender Charge (Section 8.3):
The surrender charge percentage is 50% during the first policy year; this
percentage is decreased by 0.462963% on each monthly processing date during
the second through tenth policy years.
The maximum surrender charge is $3,560.00 during the first policy year;
this charge is decreased by $32.96 on each monthly processing date during
the second through tenth policy years.
There is no surrender charge after the tenth policy year.
RR.VJL.(1298) Page 5
<PAGE>
POLICY NUMBER 10 000 000
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
MONTHLY RATES PER $1,000.00
(Section 7.3)
<TABLE>
<CAPTION>
Policy Monthly Rate Policy Monthly Rate Policy Monthly Rate
Year Year Year
<S> <C> <C> <C> <C> <C>
1 .00021 26 .16877 51 9.14987
2 .00067 27 .19882 52 10.36448
3 .00121 28 .23560 53 11.65487
4 .00186 29 .28104 54 13.00037
5 .00266 30 .33649 55 14.41268
6 .00360 31 .40202 56 15.89204
7 .00476 32 .47841 57 17.45991
8 .00613 33 .56575 58 19.15688
9 .00775 34 .66447 59 21.05478
10 .00962 35 .77774 60 23.36818
11 .01184 36 .91157 61 26.51705
12 .01443 37 1.08075 62 31.35472
13 .01748 38 1.26820 63 39.59522
14 .02104 39 1.50766 64 54.65267
15 .02522 40 1.79530 65 83.33333
16 .03014 41 2.13054 After 65 .00000
17 .03602 42 2.51400
18 .04311 43 2.94442
19 .05167 44 3.42118
20 .06184 45 3.95359
21 .07386 46 4.55879
22 .08791 47 5.25323
23 .10398 48 6.05601
24 .12221 49 6.98106
25 .14352 50 8.01516
</TABLE>
The monthly rates shown above are based on the appropriate Commissioners 1980
Standard Ordinary Smoker and/or Nonsmoker Mortality Table for the sex and class
of the Insureds.
RR.VJL.(1298) Page 6
<PAGE>
POLICY NUMBER 10 000 000
GUIDELINE PREMIUM/CASH VALUE CORRIDOR PERCENTAGES
The Corridor Percentages are used to determine the Minimum Death Benefit under
the Guideline Premium/Cash Value Corridor Test (Section 3.1).
<TABLE>
<CAPTION>
Policy Policy Policy
Year Corridor % Year Corridor % Year Corridor %
<S> <C> <C> <C> <C> <C>
1 250 26 130 51 105
2 250 27 128 52 105
3 250 28 126 53 105
4 250 29 124 54 105
5 250 30 122 55 105
6 250 31 120 56 105
7 243 32 119 57 104
8 236 33 118 58 103
9 229 34 117 59 102
10 222 35 116 60 101
11 215 36 115 After 60 100
12 209 37 113
13 203 38 111
14 197 39 109
15 191 40 107
16 185 41 105
17 178 42 105
18 171 43 105
19 164 44 105
20 157 45 105
21 150 46 105
22 146 47 105
23 142 48 105
24 138 49 105
25 134 50 105
</TABLE>
RR.VJL.(1298) Page 7
<PAGE>
POLICY NUMBER 10 000 000
SEPARATE ACCOUNT DIVISIONS
(Section 6)
Select Bond Division
International Equity Division
Money Market Division
Balanced Division
Index 500 Stock Division
Aggressive Growth Stock Division
High Yield Bond Division
Growth Stock Division
Growth & Income Stock Division
Index 400 Stock Division
Small Cap Growth Stock Division
Russell Multi-Style Equity Division
Russell Aggressive Equity Division
Russell Non-US Division
Russell Real Estate Securities Division
Russell Core Bond Division
The Initial Allocation Date (Section 4.3) is July 1, 1999.
RR.VJL.(0799) Page 8
<PAGE>
SECTION 1. THE CONTRACT
1.1 LIFE INSURANCE BENEFIT
The Northwestern Mutual Life Insurance Company will pay a benefit on the
death of the second of the Insureds to die (the "second death") while this
policy is in force. No benefit is payable on the death of the first of the
Insureds to die. Subject to the terms and conditions of the policy:
- payment of the death proceeds will be made after proof of the deaths
of both Insureds is received at the Home Office; and
- payment will be made to the beneficiary or other payee under Section
10.
The amount of the death proceeds will be:
- the death benefit (Section 3.1); less
- the amount of any policy debt (Section 9.3); less
- any Monthly Policy Charges due and unpaid if the second death occurs
during the grace period (Section 4.5).
These amounts will be determined as of the date of the second death.
The Company will pay interest on the death proceeds from the date of the
second death until the proceeds are paid. Interest will be at an annual
effective rate of not less than 2%, or at any higher rate required by state law.
1.2 NOTICE AND PROOF OF DEATH
Written notice and proof of the death of each Insured must be given to the
Company as soon as reasonably possible after each death.
RR.VJL.(1298) 9
<PAGE>
1.3 ENTIRE CONTRACT; CHANGES
This policy, including the attached application and any amendments,
endorsements or riders, is the entire contract. Statements in the application
are representations and not warranties. A change in the policy is valid only if
it is approved in writing by an officer of the Company. The Company may require
that the policy be sent to it for endorsement to show a change. No agent has
the authority to change the policy or to waive any of its terms.
1.4 INCONTESTABILITY
In issuing the insurance, the Company has relied on the application. While
the insurance is contestable, the Company, on the basis of a material
misstatement in the application, may rescind the insurance or deny a claim.
The Company will not contest insurance under this policy after that
insurance has been in force, during the lifetime of at least one Insured, for
two years from the Date of Issue or for two years from the effective date of a
reinstatement (Section 4.6). An increase in the amount of insurance after the
Date of Issue, which occurred upon the request of the Owner and was subject to
the Company's insurability requirements, will be incontestable after the
increase has been in force, during the lifetime of at least one Insured, for two
years from the effective date of the increase.
1.5 SUICIDE
If either Insured dies by suicide within one year from the Date of Issue,
the policy will terminate. The amount payable by the Company will be limited to
the premiums paid, less the amount of any policy debt and withdrawals. If either
Insured dies by suicide within one year from the effective date of an increase
in the amount of insurance which occurred upon the request of the Owner and was
subject to the Company's insurability requirements, the amount payable with
respect to such increase will be limited to the Monthly Policy Charges plus any
transaction charges attributable to the increase.
1.6 POLICY DATE AND DATE OF ISSUE
Monthly processing dates and policy months, years and anniversaries are
computed from the Policy Date. The contestable and suicide periods begin with
the Date of Issue. These dates are shown on page 3. The Date of Issue for any
insurance issued under Specified Amount Changes (Section 3.3) will be shown on
an amendment to the Schedule of Benefits and Premiums.
1.7 MISSTATEMENT OF AGE OR SEX
If the age or sex of either insured has been misstated, the death benefit
and Policy Value will be modified by recalculating all Monthly Policy Charges
based on the correct age and sex of the Insureds.
1.8 PAYMENTS BY THE COMPANY
All payments by the Company under this policy are payable at its Home
Office.
1.9 REPORTS TO OWNER
At least once each policy year, the Company will send to the Owner:
- a statement of the death benefit, the Policy Value, and any policy
debt, including loan interest.
- a report of the Separate Account, including financial statements.
- any other information required by law.
SECTION 2. OWNERSHIP
<PAGE>
2.1 THE OWNER
The Owner is named on page 3. The Owner, the Owner's successor or the
Owner's transferee may exercise policy rights without the consent of any
beneficiary, except to the extent the Owner's rights are restricted by a
designation of an irrevocable beneficiary. After the second death, policy
rights may be exercised only as provided in Section 10.
2.2 TRANSFER OF OWNERSHIP
The Owner may transfer the ownership of this policy. Written proof of
transfer satisfactory to the Company must be received at its Home Office. The
transfer will then take effect as of the date that it was signed. The Company
may require that the policy be sent to it for endorsement to show the transfer.
2.3 COLLATERAL ASSIGNMENT
The Owner may assign this policy as collateral security. The Company is
not responsible for the validity or effect of the collateral assignment. The
Company will not be responsible to an assignee for any payment or other action
taken by the Company before receipt of the assignment in writing at its Home
Office.
The interest of any beneficiary will be subject to any collateral
assignment made either before or after the beneficiary is named, unless the
beneficiary was designated an irrevocable beneficiary before the assignment.
The collateral assignee is not an Owner. The collateral assignment is not
a transfer of ownership. Ownership can be transferred only by complying with
Section 2.2.
RR.VJL.(1298) 10
<PAGE>
SECTION 3. DEATH BENEFIT
3.1 DEATH BENEFIT OPTIONS
This policy provides for three death benefit options prior to the Age 100
Date. The option in effect and the Age 100 Date are shown on page 3.
SPECIFIED AMOUNT (OPTION A) - The death benefit before the Age 100 Date is the
greater of:
- the Specified Amount; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS POLICY VALUE (OPTION B) - The death benefit before the
Age 100 Date is the greater of:
- the Specified Amount plus the Policy Value; or
- the Minimum Death Benefit.
SPECIFIED AMOUNT PLUS PREMIUMS PAID
(OPTION C) - The death benefit before the Age 100 Date is the greater of:
- the Specified Amount plus the sum of the premiums paid; or
- the Minimum Death Benefit.
MINIMUM DEATH BENEFIT. The Minimum Death Benefit is the amount required to
maintain this policy as a life insurance contract for federal tax purposes. The
test used for determining compliance with the federal tax definition of a life
insurance contract is shown on page 3 and will be either:
(1) the Guideline Premium/Cash Value Corridor Test: in that case, the Minimum
Death Benefit equals the greater of the Policy Value multiplied by the
corridor percentage shown on page 7 for the current policy year or the
minimum amount required to maintain this policy as a life insurance
contract for federal tax purposes; or
(2) the Cash Value Accumulation Test: in that case, the Minimum Death Benefit
equals the greater of the Policy Value divided by the Net Single Premium
shown on page 7 for the current policy year or the minimum amount required
to maintain this policy as a life insurance contract for federal tax
purposes.
AGE 100 DATE AND LATER. The death benefit on and after the Age 100 Date will
be the greater of the Policy Value or the minimum amount required to maintain
this policy as a life insurance contract for federal tax purposes.
3.2 DEATH BENEFIT OPTION CHANGES
Subject to approval by the Company, the Owner may change the death benefit
option upon written request. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for a death benefit option change. This
charge will be deducted from the Policy Value and will not exceed the amount
shown on page 5. A change will not be allowed if the Specified Amount following
a change would be less than the minimum amount the Company would issue at the
time of change.
CHANGES TO OPTION A. The death benefit option may be changed to Option A at
any time before the Age 100 Date. On the effective date of change, the
Specified Amount will be changed as follows:
(1) If the change is from Option B to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the
Policy Value on the effective date of the change.
(2) If the change is from Option C to Option A, the Specified Amount after the
change will be equal to the Specified Amount before the change plus the sum
of the premiums paid as of the effective date of the change.
<PAGE>
CHANGES TO OPTION B OR OPTION C. The death benefit option may be changed to
Option B or Option C at any time before the policy anniversary nearest the older
Insured's 85th birthday provided the following requirements are met:
- both Insureds are alive;
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue.
On the effective date of change, the Specified Amount will be changed as
follows:
(1) If the change is from Option A to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
Policy Value on the effective date of the change.
(2) If the change is from Option A to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change minus the
sum of the premiums paid as of the effective date of the change.
(3) If the change is from Option B to Option C, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a) the
Policy Value on the effective date of the change, minus (b) the sum of the
premiums paid as of the effective date of the change.
(4) If the change is from Option C to Option B, the Specified Amount after the
change will be equal to the Specified Amount before the change plus (a)
the sum of the premiums paid as of the effective date of the change, minus
(b) the Policy Value on the effective date of the change.
RR.VJL.(1298) 11
<PAGE>
3.3 SPECIFIED AMOUNT CHANGES
The Owner may change the Specified Amount upon written request subject to
approval by the Company. This change will be effective on the first monthly
processing date following receipt of the request at the Home Office. The
Company reserves the right to charge for more than one Specified Amount change
in a policy year. This charge will be deducted from the Policy Value and will
not exceed the amount shown on page 5.
INCREASES. An increase will be made only if, at the time applied for, the
following requirements are met:
- both Insureds are alive;
- the insurance in force, as increased, will be within the Company's
issue limits;
- the increase request is received prior to the policy anniversary
nearest the older Insured's 85th birthday;
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue.
DECREASES. A decrease will not be allowed if the Specified Amount following the
decrease would be less than the minimum amount the Company would issue at the
time of change. For the purposes of incontestability and suicide provisions
(Section 1.4 and Section 1.5), a decrease in Specified Amount will first reduce
any past increases in the reverse order in which they occurred and then reduce
the Specified Amount originally issued.
SECTION 4. PREMIUMS, TRANSFERS AND REINSTATEMENT
4.1 PREMIUM PAYMENT
Premiums may be paid to the Company at any time on or before the Final
Premium Date shown on page 3. All premiums after the first are payable at the
Home Office or to an authorized agent. A receipt signed by an officer of the
Company will be furnished on request. The minimum premium the Company will
accept is shown on page 3. Other premium limitations are described in
Section 4.4.
4.2 NET PREMIUM
The net premium is the amount of each premium paid that is available for
allocation to the Divisions of the Separate Account. The amount of the net
premium will be:
- the premium paid; less
- the Premium Expense Charge.
The Premium Expense Charge will consist of the amounts shown on page 4.
4.3 ALLOCATION OF NET PREMIUMS
AND SUBSEQUENT TRANSFERS
For premiums paid to the Company prior to the Initial Allocation Date, the
net premiums will be allocated to the Money Market Division on the date the
premiums are received in the Home Office. The Initial Allocation Date is shown
on page 8.
On the Initial Allocation Date, amounts in the Money Market Division will
be allocated in accordance with the application. This allocation will remain in
effect for subsequent net premiums, loan repayments, and dividends credited
unless changed by the Owner by written request. Any change in allocation will
be in effect for net premiums, loan repayments, and dividends credited to the
policy following the receipt of the written request at the Home Office.
Allocations must be in whole percentages.
<PAGE>
On or after the Initial Allocation Date, the Owner may transfer the amounts
invested in any of the Divisions. The transfer will take effect on the date a
written request is received in the Home Office. The Company reserves the right
to charge for more than twelve transfers in a policy year. This charge will be
deducted from the Policy Value and will not exceed the amount shown on page 5.
RR.VJL.(1298) 12
<PAGE>
4.4 PREMIUM LIMITATIONS
A premium payment that would increase the policy's death benefit more than
it increases the Policy Value will be accepted only if:
- both Insureds are alive;
- the insurance in force, as increased, will be within the Company's
issue limits;
- the premium payment is received prior to the policy anniversary
nearest the older Insured's 85th birthday;
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue.
If the Definition of Life Insurance Test shown on page 3 is the Guideline
Premium/Cash Value Corridor Test, then the Company will not accept any premium
that disqualifies this policy as a life insurance contract for federal tax
purposes. Further, the Company reserves the right to make distributions or
refunds of excess premium (with interest as required by the federal tax law)
from this policy as necessary to continue to qualify the policy as a life
insurance contract for federal tax purposes.
4.5 GRACE PERIOD
A grace period of 61 days will be allowed for the payment of sufficient
premium to keep the policy in force if the cash value on a monthly processing
date is less than the current Monthly Policy Charge; however, no premium will be
accepted after the Final Premium Date shown on page 3. The minimum premium that
must be paid is three times the Monthly Policy Charge due when the insufficiency
occurred.
The grace period will begin on the date the Company sends written notice of
the insufficiency. The grace period will end 61 days after the notice is sent.
The notice will be sent to the Owner and will state the date the grace period
ends and the amount of premium required to keep the policy in force. Upon
receipt of payment, the Company will allocate the net premium, less any Monthly
Policy Charges due and unpaid, to the Divisions of the Separate Account
according to the allocation of net premiums then in effect.
The policy will remain in force during the grace period. If sufficient
premium is not paid by the end of the grace period, the policy will terminate
with no value.
If the second death occurs during the grace period, any Monthly Policy
Charges due and unpaid will be deducted from the death proceeds of the policy.
4.6 REINSTATEMENT
CONDITIONS. If this policy has terminated under Section 4.5, it may be
reinstated upon receipt at the Home Office of:
- an application for reinstatement within three years after the end of
the grace period; and
- a reinstatement premium equal to or greater than the minimum
reinstatement premium.
In addition, the Company's insurability requirements must be met.
This policy may not be reinstated:
- if the policy was surrendered for its cash value; or
- if either of the Insureds died after the end of the grace period.
MINIMUM REINSTATEMENT PREMIUM. The minimum premium needed to reinstate the
policy is:
<PAGE>
- the sum of all Monthly Policy Charges (Section 7.2) that were due and
unpaid before the end of the grace period; plus
- three times the Monthly Policy Charge due on the effective date of
reinstatement.
INSURABILITY REQUIREMENTS. These requirements are:
- evidence of insurability is given that is satisfactory to the Company;
and
- under the Company's underwriting standards, both Insureds are in the
same underwriting classification as, or in a better underwriting
classification than, they were in on the Date of Issue, or if only one
Insured was alive at the end of the grace period, that Insured is in
the same underwriting classification as, or in a better underwriting
classification than, that Insured was in on the Date of Issue.
EFFECTIVE DATE OF REINSTATEMENT. If the Company approves the application for
reinstatement, the effective date of reinstatement will be the first monthly
processing date following receipt at the Home Office of the reinstatement
application.
On the effective date of reinstatement, the Policy Value will be equal to:
- the reinstatement premium paid, less the Premium Expense Charge; plus
- any policy debt as of the end of the grace period; less
- the sum of all Monthly Policy Charges that were due and unpaid before
the end of the grace period; less
- the Monthly Policy Charge due on the effective date of reinstatement.
On the effective date of reinstatement, the Policy Value, less any policy debt
that is not repaid, will be allocated to the Divisions of the Separate Account
according to the allocation in effect at the end of the grace period.
RR.VJL.(1298) 13
<PAGE>
SECTION 5. DIVIDENDS
5.1 ANNUAL DIVIDENDS
This policy will share in the divisible surplus of the Company to the
extent it contributes to this surplus. This surplus is determined each year.
This policy's share will be credited as a dividend on the policy anniversary.
Since this policy is not expected to contribute to divisible surplus, it is
not expected that any dividends will be paid.
5.2 USE OF DIVIDENDS
Annual dividends may be paid in cash or used to increase the Policy Value.
Dividends used to increase the Policy Value will be allocated to the Divisions
of the Separate Account according to the allocation of net premiums then in
effect. If no direction is given for the use of dividends, they will be used
to increase the Policy Value.
5.3 DIVIDEND AT DEATH
If a dividend is payable for the period from the beginning of the policy
year to the date of the second death, the dividend is payable as part of the
policy proceeds.
SECTION 6. THE SEPARATE ACCOUNT
6.1 DESCRIPTION
Northwestern Mutual Variable Life Account (the Separate Account) is
registered as a unit investment trust under the Investment Company Act of 1940.
The Separate Account has several Divisions, as shown on page 8. Assets of the
Separate Account are invested in shares of Northwestern Mutual Series Fund, Inc.
(the Fund). The Fund is registered under the Investment Company Act of 1940 as
an open-end, diversified investment company. The Fund has one Portfolio for
each Division. Assets of each Division of the Separate Account are invested in
shares of the corresponding Portfolio of the Fund. Shares of the Fund are
purchased for the Separate Account at their net asset value. The Company may
make available additional Divisions and Portfolios.
Assets will be allocated to the Separate Account to support the operation
of this and other variable life insurance policies. Assets may also be
allocated for other purposes, but not to support the operation of any contracts
or policies other than variable life insurance. Income and realized and
unrealized gains and losses from assets in the Separate Account are credited to
or charged against it without regard to other income, gains or losses of the
Company.
The assets of the Separate Account will be valued on each valuation day.
They are the property of the Company. The portion of these assets equal to
policy reserves and liabilities will not be charged with liabilities arising out
of any other business the Company may conduct. The Company reserves the right
to transfer assets of the Separate Account in excess of these reserves and
liabilities to its general account.
The Owner may exchange this policy for a fixed benefit joint life insurance
policy being offered at that time by the Company if the Fund changes its
investment advisor or if a Portfolio has a material change in its investment
objectives or restrictions. The Company will notify the Owner if there is any
such change. The Owner may exchange this policy within 60 days after the notice
or the effective date of the change, whichever is later.
<PAGE>
If, in the judgment of the Company, a Portfolio no longer suits the
purposes of this policy due to a change in its investment objectives or
restrictions, the Company may substitute shares of another Portfolio of the Fund
or shares of another mutual fund. Any such substitution will be subject to any
required approval of the Securities and Exchange Commission (SEC), the Wisconsin
Commissioner of Insurance or other regulatory authority.
The Company also may, to the extent permitted by applicable laws and
regulations (including any order of the SEC), make changes as follows:
- the Separate Account or a Division may be operated as a management
company under the Investment Company Act of 1940, or in any other form
permitted by law, if deemed by the Company to be in the best interest
of the policyowners.
- the Separate Account may be deregistered under the Investment Company
Act of 1940 in the event registration is no longer required.
- the provisions of this and other policies may be modified to comply
with any other applicable federal or state laws.
In the event of a substitution or change, the Company may make appropriate
endorsement of this and other policies having an interest in the Separate
Account and take other actions as may be necessary to effect the substitution or
change.
6.2 VALUATION DAY AND
VALUATION PERIOD
A valuation day is any day on which the assets of the Separate Account are
valued. A valuation period is a valuation day and any immediately preceding
days which are not valuation days.
Assets are valued as of the close of trading on the New York Stock Exchange
on each day the Exchange is open. Each Division's share of amounts allocated,
transferred or added to a Division or deducted, loaned, transferred or withdrawn
from a Division, on any day, will be determined as of the end of the valuation
period that contains that day.
RR.VJL.(1298) 14
<PAGE>
SECTION 7. DETERMINATION OF VALUES
7.1 POLICY VALUE
On the Policy Date, the Policy Value is equal to the net premium less the
Monthly Policy Charge. On any day after that, the Policy Value is equal to what
it was on the previous day plus any of these items applicable on that day:
- any increase due to investment results as described in Section 7.4 for
the portion of the Policy Value invested in Divisions with a positive
rate of return for the current valuation period;
- interest on the policy debt at an annual effective rate of 5%;
- the net premium, if a premium is paid;
- any policy dividend directed to increase the Policy Value; and
minus any of these items applicable on that day:
- any decrease due to investment results as described in Section 7.4 for
the portion of the Policy Value invested in Divisions with a negative
rate of return for the current valuation period;
- the Monthly Policy Charge;
- any withdrawals; and
- any transaction charges that may result from a withdrawal, a transfer,
a change in the Specified Amount or a change in the death benefit
option.
The Monthly Policy Charge, any withdrawals, and any transaction charges
will be deducted from the Policy Value. The deduction will be allocated to each
Division in proportion to the amounts in each Division.
7.2 MONTHLY POLICY CHARGE
A Monthly Policy Charge is deducted from the Policy Value on each monthly
processing date until the second death and is equal to the sum of the following:
- the Administrative Charge;
- the Underwriting and Issue Charge;
- the Mortality and Expense Risk Charge;
- the Deferred Sales Charge;
- the Cost of Insurance Charge; and
- if there is policy debt, a charge for expenses and taxes associated
with that debt.
The maximum Administrative, Underwriting and Issue, Mortality and Expense
Risk, and Deferred Sales charges are shown on page 4.
7.3 COST OF INSURANCE CHARGE
A Cost of Insurance Charge is deducted from the Policy Value on each
monthly processing date as part of the Monthly Policy Charge. The Cost of
Insurance Charge is the cost of insurance rate times the net amount at risk.
The maximum cost of insurance rates are shown on page 6. The net amount at risk
is (a) minus (b) where:
(a) is the death benefit on the monthly processing date (after deduction
of the Administrative Charge, the Underwriting and Issue Charge, the
Mortality and Expense Risk Charge, the Deferred Sales Charge, and, if
there is policy debt, a charge for expenses and taxes associated with
that debt) divided by 1.0032737; and
(b) is the Policy Value on the monthly processing date, after deduction of
the Administrative Charge, the Underwriting and Issue Charge, the
Mortality and Expense Risk Charge, the Deferred Sales Charge, and, if
there is policy debt, a charge for expenses and taxes associated with
that debt.
<PAGE>
7.4 INVESTMENT RESULTS
Investment results are reflected in the Policy Value each valuation period.
The investment results for each Division of the Policy Value equal the
Division's share of the Policy Value at the end of the previous valuation period
times the rate of return for that Division for the current valuation period.
The rate of return of a Division for a valuation period is obtained by
dividing the result of (a) minus (b) by (b) where:
(a) is the sum of:
- the value of a share of the corresponding Portfolio of the Fund
at the close of the current valuation period; plus
- the per share amount of any investment income and capital gains
distributed by the Fund for the current valuation period; and
(b) is the value of the share at the close of business for the immediately
preceding valuation period.
The rate of return and corresponding investment results may be positive or
negative. If the rate of return is positive, there will be an increase in
values for the Division; if it is negative, there will be a decrease in values
for the Division.
RR.VJL.(1298) 15
<PAGE>
SECTION 8. CASH VALUE AND SURRENDER
8.1 CASH VALUE
The cash value of this policy is equal to:
- the Policy Value; less
- the surrender charge; less
- any policy debt.
8.2 SURRENDER
The Owner may surrender this policy for its cash value. A written
surrender of all claims, satisfactory to the Company, will be required. The
date of surrender will be the date of receipt at the Home Office of the written
surrender. The policy will terminate, and the cash value will be determined, as
of the end of the valuation period which includes the date of surrender. The
Company may require that the policy be sent to it.
8.3 SURRENDER CHARGE
There is a surrender charge if this policy is surrendered during the first
ten policy years. The surrender charge is a percentage of the total premiums
paid during the first policy year, subject to the maximum surrender charge. The
surrender charge percentage and maximum surrender charge are shown on page 5.
8.4 BASIS OF VALUES
A detailed statement of the method of calculation of all values for this
policy has been filed with the insurance supervisory official of the state in
which this policy is delivered. All values are at least as great as those
required by that state.
8.5 DEFERRAL OF PAYMENTS
The Company reserves the right:
- to defer determination of the cash value and payment of the cash
value;
- to defer payment of a loan or withdrawal; and
- to defer determination of a change in the amount of variable insurance
or other variable amounts payable on the second death, and, if such
determination has been deferred, to defer payment of the death
benefit;
during any period when:
- the New York Stock Exchange is closed or trading on the New York Stock
Exchange is restricted as determined by the SEC; or
- the SEC declares that an emergency exists as a result of which the
sale or determination of investment results is not reasonably
practicable; or
- the SEC, by order, permits deferral for the protection of the
Company's policyowners.
RR.VJL.(1298) 16
<PAGE>
SECTION 9. LOANS AND WITHDRAWALS
9.1 POLICY LOANS
The Owner may obtain a loan from the Company in an amount that, when added
to existing policy debt, is not more than the loan value.
On the date a loan is made, the amount of the loan will be transferred from
the Separate Account to the general account of the Company. This amount will be
deducted from each Division in proportion to the amounts in each Division. On
the date a loan repayment is made, or the date accrued interest is paid, the
amount of the payment will be transferred from the general account of the
Company to the Separate Account. This amount will be allocated to the Divisions
of the Separate Account according to the allocation of net premiums then in
effect.
9.2 LOAN VALUE
The loan value is 90% of:
- the Policy Value on the date of the loan; less
- the surrender charge on the date of the loan.
9.3 POLICY DEBT
Policy debt consists of all outstanding loans and accrued interest. Loan
repayments may be made, or accrued interest paid, at any time. Any policy debt
will be deducted from the policy proceeds.
If the policy debt equals or exceeds the Policy Value less the surrender
charge on a monthly processing date, the policy will terminate with no value
subject to the conditions of the Grace Period (Section 4.5).
9.4 LOAN INTEREST
Interest accrues on a daily basis from the date of the loan. Unpaid
interest is added to the loan.
Interest is payable at an annual effective rate of 5%.
9.5 PARTIAL WITHDRAWALS
The Owner may withdraw a portion of the cash value. However, the Owner may
not:
- withdraw an amount which would reduce the loan value to less than the
policy debt;
- withdraw an amount which would reduce the death benefit to less than
the minimum amount the Company would issue on this plan of insurance
at the time of withdrawal;
- withdraw an amount which would reduce the cash value to less than
three times the most recent Monthly Policy Charge;
- withdraw less than the minimum withdrawal amount shown on page 3; or
- make more than four withdrawals in a policy year.
When a portion of the cash value is withdrawn, the amount invested for this
policy in the Separate Account will be reduced by the amount of the withdrawal.
The reduction will be allocated to each Division in proportion to the amounts in
each Division. If the death benefit option in effect at the time of withdrawal
is either Option A or Option C, the Specified Amount will be reduced by the
lesser of:
- the amount of the withdrawal; or
<PAGE>
- the excess, if any, of the Specified Amount for Option A or the
Specified Amount plus the sum of the premiums paid for Option C, over
the result of (a) minus (b) where:
(a) is the death benefit immediately prior to the withdrawal; and
(b) is the amount of the withdrawal.
The Company reserves the right to charge for withdrawals. This charge
will be deducted from the Policy Value and will not exceed the amount shown on
page 5.
SECTION 10. BENEFICIARIES
10.1 DEFINITION OF BENEFICIARIES
The term "beneficiaries" as used in this policy includes direct
beneficiaries, contingent beneficiaries and further payees.
10.2 NAMING AND CHANGE OF BENEFICIARIES
CONDITIONS. The Owner may name and change the beneficiaries of death proceeds:
- before the second death.
- during the first 60 days after the date of the second death, if the
second Insured to die was not the Owner immediately prior to the
second death. A change made during this 60 days may not be revoked.
EFFECTIVE DATE. A naming or change of a beneficiary will be made on receipt at
the Home Office of a written request that is acceptable to the Company. The
request will then take effect as of the date that it was signed. The Company is
not responsible for any payment or other action that is taken by it before the
receipt of the request. The Company may require that the policy be sent to it
to be endorsed to show the naming or change.
10.3 SUCCESSION IN INTEREST OF
BENEFICIARIES
DIRECT BENEFICIARIES. The proceeds of this policy will be payable in equal
shares to the direct beneficiaries who survive and receive payment. If a direct
beneficiary dies before receiving the direct beneficiary's share, that share
will be payable in equal shares to the other direct beneficiaries who survive
and receive payment.
CONTINGENT BENEFICIARIES. At the death of all of the direct beneficiaries, the
proceeds will be payable in equal shares to the contingent beneficiaries who
survive and receive payment. If a contingent beneficiary dies before receiving
the contingent beneficiary's share, that share will be payable in equal shares
to the other contingent beneficiaries who survive and receive payment.
FURTHER PAYEES. At the death of all of the direct and contingent beneficiaries,
the proceeds will be paid:
- in equal shares to the further payees who survive and receive payment;
or
- if no further payees survive and receive payment, to the estate of the
last to die of all of the direct and contingent beneficiaries who
survive both Insureds.
OWNER OR THE OWNER'S ESTATE. If no beneficiaries are alive on the date of the
second death, the proceeds will be paid to the Owner or to the Owner's estate.
<PAGE>
10.4 GENERAL
TRANSFER OF OWNERSHIP. A transfer of ownership of itself will not change the
interest of a beneficiary.
CLAIMS OF CREDITORS. So far as allowed by law, no amount payable under this
policy will be subject to the claims of creditors of a beneficiary.
RR.VJL.(1298) 17
<PAGE>
AMENDMENT TO SECTION 6 THE SEPARATE ACCOUNT
FOR FLEXIBLE PREMIUM VARIABLE JOINT LIFE
AS OF THE DATE OF ISSUE, THE FIRST PARAGRAPH OF SECTION 6.1 IS AMENDED TO
READ AS FOLLOWS:
Northwestern Mutual Variable Life Account (the Separate Account) is
registered as a unit investment trust under the Investment Company Act of 1940.
The Separate Account has several Divisions, as shown on page 8. Assets of the
Separate Account are invested in shares of corresponding mutual funds or
portfolios of mutual funds, both of which are referred to in this policy as
Portfolios. Shares of the Portfolios are purchased for the Separate Account at
their net asset value. The Company may make available additional Divisions and
Portfolios.
AS OF THE DATE OF ISSUE, THE FOURTH AND FIFTH PARAGRAPHS OF SECTION 6.1 ARE
AMENDED TO READ AS FOLLOWS:
The Owner may exchange this policy for a fixed benefit joint life insurance
policy being offered at that time by the Company if the Portfolio changes its
investment advisor or has a material change in its investment objectives or
restrictions. The Company will notify the Owner if there is any such change.
The Owner may exchange this policy within 60 days after the notice or the
effective date of the change, whichever is later.
If, in the judgment of the Company, a Portfolio no longer suits the
purposes of this policy due to a change in its investment objectives or
restrictions, the Company may substitute shares of another Portfolio. Any such
substitution will be subject to any required approval of the Securities and
Exchange Commission (SEC), the Wisconsin Commissioner of Insurance or other
regulatory authority.
Secretary
NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
VJL.FUNDS.(0799)
<PAGE>
POLICY APPLICATION SUPPLEMENT FOR
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INSUREDS: _________________ and _________________
POLICY:
Specified Amount: $______________________
Death Benefit Option: ______________________
Definition of Life Insurance Test: ______________________
Minimum Initial Premium: $______________________
Guideline Premium Maximum: $______________________
Reminder Premium: $______________________
Reminder Mode: ______________________
______________________________________________________________________________
For Home Office Use Only
Underwriting Amount: $___________
Illustrated Cumulative Premiums:
Years 1- 5: $__________ Years 1- 15: $___________
Years 1- 10: $__________ Years 1- 20: $___________
First Insured: __________ Second Insured: _____________
__________
______________________________________________________________________________
Illustration No. ___________
90-1 VJL.Supp.(0799) Page 1 of 4
<PAGE>
ALLOCATION OF NET PREMIUMS
This allocation will apply to all net premiums and loan repayments. USE WHOLE
PERCENTAGES ONLY. If monthly dollar cost averaging is desired, complete both
this section and the monthly dollar cost averaging section below. Only
allocations to the Money Market Division are utilized for dollar cost averaging
purposes.
<TABLE>
<S> <C>
Money Market Division ____% Growth & Income Stock Division ____%
Select Bond Division ____% Index 400 Stock Division ____%
International Equity Division ____% Small Cap Growth Stock Division ____%
Balanced Division ____% Russell Multi-Style Equity Division ____%
Index 500 Stock Division ____% Russell Aggressive Equity Division ____%
Aggressive Growth Stock Division ____% Russell Non-US Division ____%
High Yield Bond Division ____% Russell Real Estate Securities Division ____%
Growth Stock Division ____% Russell Core Bond Division ____%
Total 100%
----
----
</TABLE>
MONTHLY DOLLAR COST AVERAGING
To elect monthly dollar cost averaging, choose one of the following options and
indicate the desired allocation of transfers below. USE WHOLE PERCENTAGES ONLY.
_____Option One: Transfer in monthly installments so that on the policy
anniversary the Money Market balance will be zero.
_____Option Two: Transfer a level amount of $______________until the Money
Market balance is zero.
<TABLE>
<S> <C>
Select Bond Division ____% Growth & Income Stock Division ____%
International Equity Division ____% Index 400 Stock Division ____%
Balanced Division ____% Small Cap Growth Stock Division ____%
Index 500 Stock Division ____% Russell Multi-Style Equity Division ____%
Aggressive Growth Stock Division ____% Russell Aggressive Equity Division ____%
High Yield Bond Division ____% Russell Non-US Division ____%
Growth Stock Division ____% Russell Real Estate Securities Division ____%
Russell Core Bond Division ____%
Total 100%
----
----
</TABLE>
Insureds: __________ and
__________
Illustration No. __________
90-1 VJL.Supp.(0799) Page 2 of 4
<PAGE>
SUITABILITY
Northwestern Mutual Life is required to make the following inquiries for
purposes of determining the suitability of this purchase. Responses will be
kept confidential.
1. In addition to providing a death benefit upon the death of the second of the
Insureds, what is the purpose for the purchase?
_____ To fund a trust.
_____ To supplement retirement income.
_____ To supplement education funding.
_____ Other (specify): ______________________________________________________
2. By whom will the purchase be funded?_____________________________________
Annual income (all sources) of person/trust funding the purchase:
$__________
Net worth of person/trust funding the purchase: $_______________________
3. Applicant's experience with the following:
None Up to 5 or More
5 Years Than 5 Years
Mutual Funds ______ ______ ______
Individual Common Stocks ______ ______ ______
Variable Annuities ______ ______ ______
Variable Life Insurance ______ ______ ______
Insureds: __________ and
__________
Illustration No. __________
90-1 VJL.Supp.(0799) Page 3 of 4
<PAGE>
I UNDERSTAND THAT THE DEATH BENEFIT FOR A FLEXIBLE PREMIUM VARIABLE JOINT LIFE
INSURANCE POLICY IS VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE
INVESTMENT EXPERIENCE OF NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT. THE AMOUNT
OF THE DEATH BENEFIT IS NOT GUARANTEED.
I UNDERSTAND THAT THE CASH VALUE FOR A FLEXIBLE PREMIUM VARIABLE JOINT LIFE
INSURANCE POLICY IS VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE
INVESTMENT EXPERIENCE OF NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT. THE AMOUNT
OF THE CASH VALUE IS NOT GUARANTEED.
I understand that any illustrations of death benefits and cash values I have
been shown demonstrate how the policy operates under a given set of assumptions
and are not estimates or guarantees of future results. Actual experience will
be different than assumed, resulting in death benefits and cash values higher or
lower than illustrated. The assumptions incorporated in an illustration
include, but are not limited to, the following: premium payment amounts and
frequencies, investment returns, expense charges, cost of insurance charges,
loans, and withdrawals.
I acknowledge receipt of the Flexible Premium Variable Joint Life Insurance
Policy prospectus dated: _____/_____/_____.
MO. DAY YR.
DATE: _____/_____/_____ SIGNATURE OF APPLICANT: ___________________
MO. DAY YR.
___________________
Based on the information furnished by the Applicant in this application, I
certify that I have reasonable grounds for believing the purchase of the policy
applied for is suitable for the Applicant. I further certify that a current
prospectus was delivered and that no written sales materials other than those
furnished by the Northwestern Mutual Life home office were used.
Signature of Licensed Agent: _________________________________________________
(REGISTERED REPRESENTATIVE)
Based on the information furnished by the Applicant in this application, I
certify that I have reasonable grounds for believing the purchase of the policy
applied for is suitable for the Applicant.
Signature of General Agent: ___________________________________________________
Insureds: ___________ and
___________
Illustration No. ___________
90-1 VJL.Supp.(0799) Page 4 of 4
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 E. WISCONSIN AVENUE, MILWAUKEE, WISCONSIN 53202
<TABLE>
<CAPTION>
<S><C>
JOINT LIFE PROTECTION INSURANCE APPLICATION ------------------------------------
POLICY NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
/ / Companion policies / / Life & Disability Application / / LTC Application Plan Group Number
/ / APB Option / / Exam (NM, PME, MD) in Home Office
------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
FIRST INSURED (YOUNGER)
ON PAGES 1,2,3 AND 4, "INSURED" REFERS TO THE FIRST INSURED.
- -----------------------------------------------------------------------------------------------------------------------------------
Has an application or informal inquiry ever been made to Northwestern Mutual Life for annuity, life,
long term care, or disability insurance on the life of the insured? / / Yes /X/ No If yes, the last policy number is
---------
1. A. /X/ Mr. / / Mrs. / / Ms. / / Dr. / / Other B. /X/ MALE
----------------- / / FEMALE
NAME: JOHN J DOE
---------------------------------------------------------
(FIRST, MIDDLE INITIAL, LAST)
- -----------------------------------------------------------------------------------------------------------------------------------
C. BIRTHDATE: (MONTH, DAY, YEAR) D. STATE OF BIRTH (or Foreign Country): E. TAXPAYER IDENTIFICATION NUMBER:
12 /31 / 1963 Wisconsin # ###-##-####
---------------------------- ----------------------------------- ------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
F. PRIMARY RESIDENCE: STREET OR PO BOX: 1234 Main Street
---------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.): Milwaukee, WI 53200
---------------------------------------------------------------------------
E-MAIL ADDRESS:
---------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
APPLICANT
- -----------------------------------------------------------------------------------------------------------------------------------
2. Select ONLY ONE: /X/ First Insured @ First Insured's address / / Other (Complete A, B and C)
A. / / Mr. / / Mrs. / / Ms. / / Dr. / / Other
-----------------
PERSONAL
NAME: / / MALE
--------------------------------------------------------------- / / FEMALE
(FIRST, MIDDLE INITIAL, LAST)
BIRTHDATE: | |
-------------------------
MONTH DAY YEAR
OR BUSINESS/TRUST
NAME:
---------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER: C. DAYTIME TELEPHONE NUMBER:
Area Code ( )
-------------------------------------- ----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Send premium and other notices regarding this policy to:
D. ADDRESS: /X/ First Insured's Address / / Applicant's Address OR
STREET OR PO BOX:
----------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
----------------------------------------------------------------------------
E-MAIL ADDRESS:
----------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) 90-1934-50 (page 1)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------
CAUTION: A MINOR OWNER CANNOT EXERCISE POLICY RIGHTS.
4. Select ONLY ONE: /X/ First Insured (Complete C only) / / Applicant (Complete C only)
/ / Other (Complete A, B and C) / / See attached supplement form
A. / / Mr. / / Mrs. / / Dr. / / Other
---------------------
PERSONAL / / MALE
NAME: / / FEMALE
----------------------------------------------------
(FIRST MIDDLE INITIAL LAST)
RELATIONSHIP TO INSURED: BIRTHDATE: | |
---------------------------------- ---------------------
OR BUSINESS/TRUST MONTH DAY YEAR
NAME:
----------------------------------------------------
RELATIONSHIP TO INSURED:
------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
B. TAXPAYER IDENTIFICATION NUMBER:
--------------------------
- ------------------------------------------------------------------------------------------------------------------------
C. ADDRESS: /X/ First Insured's Address / / Applicant's Address / / Premium Payer's Address OR
STREET OR PO BOX:
-----------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
-----------------------------------------------------------------
E-MAIL ADDRESS:
-----------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
5.-7. (Reserved)
SPECIAL DATE (COMPLETE THIS SECTION ONLY IF A SPECIAL POLICY DATE IS BEING REQUESTED)
- ------------------------------------------------------------------------------------------------------------------------
8. A. Prepaid: / / Short-Term - Policy Date will coincide with ISA Payment Date (For monthly ISA only)
/ / Short-Term to: | | / / Backdate to | |
--------------------- ---------------------
MONTH DAY YEAR MONTH DAY YEAR
B. Nonprepaid: / / Specified future date: | | / / Backdate to | |
--------------------- ---------------------
MONTH DAY YEAR MONTH DAY YEAR
- ------------------------------------------------------------------------------------------------------------------------
POLICY APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------
9. Joint Life Protection (See attached supplement)
10. If an additional benefit cannot be approved, should the company issue a policy without the benefit? / / Yes / / No
11. Shall the PREMIUM LOAN provision, if available, become operative according to its terms? /X/ Yes / / No
12.-13. (Reserved)
14. PREMIUM FREQUENCY: /X/ Annually / / Semiannually / / Quarterly
- ------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------
15. A. DIRECT BENEFICIARY
First, Middle Initial, Last Relationship to Insured
(1) Mary J. Doe Daughter
----------------------------------------------------------------------------------- -----------------------
(2)
----------------------------------------------------------------------------------- -----------------------
(3)
----------------------------------------------------------------------------------- -----------------------
Business organization or trust
--------------------------------------------------------- -----------------------
---------------------------------------------------------
B. CONTINGENT BENEFICIARY:
First, Middle Initial, Last Relationship to Insured
(1)
----------------------------------------------------------------------------------- -----------------------
(2)
----------------------------------------------------------------------------------- -----------------------
(3)
----------------------------------------------------------------------------------- -----------------------
Box (1) or (2) may be selected to include all of the children or brothers and sisters without naming them, or to
add to the contingent beneficiaries named. Box (3) may be selected to provide for the children of a deceased
contingent beneficiary; use only if contingent beneficiaries are named and/or Box (1) or (2) is checked.
NOTE: The word "children" includes child and any legally adopted child.
/X/ (1) and all (other) children of the Insured.
/ / (2) and all (other) brothers and sisters of the Insured born of the marriage of or legally adopted
by and before the Insured's death.
-------------------------- -----------------------------
/ / (3) any amount that would have been paid to a deceased contingent beneficiary, if living, will be paid in one
sum and in equal shares to the children of that contingent beneficiary who survive and receive payment.
C. FURTHER PAYEES
First, Middle Initial, Last Relationship to Insured
(1)
----------------------------------------------------------------------------------- -----------------------
(2)
----------------------------------------------------------------------------------- -----------------------
D. / / SEE ATTACHED SUPPLEMENT FORM (To be used in place of designations above.)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 2)
<PAGE>
<TABLE>
<S><C>
16. (Reserved)
CONDITIONAL LIFE INSURANCE AGREEMENT
- ---------------------------------------------------------------------------------------------------------------------------
17. Has the premium for the policy applied for been given to the agent in exchange for the Conditional
Life Insurance Agreement with the same number as this application? /X/ Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------
INSURANCE HISTORY
- ---------------------------------------------------------------------------------------------------------------------------
18. Has the insured ever had life, disability or health insurance declined, rated, modified, issued with
an exclusion rider, cancelled, or not renewed? If yes, explain in REMARKS. / / Yes /X/ No
19. When was the Insured's last examination or application for life, disability or accidental death insurance?
Month Year Company
--------------- ------------ --------------------------------------------------- OR /X/ NONE
20. Does the Insured have any other life insurance in force, pending or contemplated in other companies? / / Yes /X/ No
If yes, indicate Company Name, Individual (Ind) or Group (Grp) and identify the amount of in Force,
Pending or Contemplated.
LIFE INSURANCE AMOUNTS
-----------------------------------------------------------------------------------------------------------------------
Company Name Ind/Grp In Force Pending Contemplated Accidental
Amount Amount Amount Death Amount
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
21. As a result of this purchase will the values or benefits of any other life insurance policy or annuity
contract, on any life, be affected in any way? / / Yes /X/ No
NOTE TO AGENT: VALUES OR BENEFITS ARE AFFECTED IF ANY QUESTION ON THE
DEFINITION OF REPLACEMENT SUPPLEMENT COULD BE ANSWERED "YES".
If "yes", this transaction is a replacement of life insurance or annuity.
The agent must:
- submit required papers and sale materials AND
- provide required disclosure notices to the applicant.
The applicant must answer the questions:
- on the Definition of Replacement Supplement AND
- A, B, and C below.
Will this insurance:
A. replace Northwestern Mutual Life? / / Yes /X/ No
B. replace other Companies? / / Yes /X/ No
C. result in 1035 exchange? / / Yes /X/ No
- ---------------------------------------------------------------------------------------------------------------------------
22. (Reserved)
REMARKS
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 3)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
PERSONAL HISTORY QUESTIONNAIRE - FIRST INSURED
- -----------------------------------------------------------------------------------------------------------------------------------
23. Insured's Marital Status: / / Single, Widowed or Divorced /X/ Married
24. a. Insured is a citizen of: /X/ U.S.A. / / Other
If other: Type of Visa: Visa Number:
------------------- ----------------
b. How many years has the insured resided in the U.S.A. immediately prior to completing this application? 35 years
------
25. Does the Insured regularly travel outside the U.S.A. or have plans to leave the U.S.A. for travel or
residence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ /Yes /X/ No
If yes, explain in the chart below.
-------------------------------------------------------------------------------------------------------------------------------
Destination Number of Trips Duration of Departure Date Purpose of Trip
(List all Cities and Countries) Last 12 Next 12 Each Trip (Month/Year)
Months Months (No. of Days)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
26. a. What is the Insured's occupation(s)? Attorney
---------------------------------------------------------------------------------------
What are the Insured's duties? Office Duties
---------------------------------------------------------------------------------------------
b. Employer's Name: ABC Corporation
-----------------------------------------------------------------------------------------------------------
Address: 1000 Company Ave.
------------------------------------------------------------------------------------------------------------
City, State, Zip Code: Milwaukee, WI 53200
-----------------------------------------------------------------------------------------------------
c. How long has the insured been employed? 7 years (if less than 2
years, explain in REMARKS) ----------
QUESTIONS 27 THROUGH 30 ARE NOT REQUIRED IF THE INSURED IS UNDER AGE 16.
27. Is the Insured a member of, or does the Insured plan on joining any branch of, the Armed
Forces or reserve military unit? If yes, complete the Military Section . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
28. Except as a passenger on a regularly scheduled flight, has the Insured flown within the
past 2 years, or does the Insured have plans to fly in the future? If yes, complete the
Aviation Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
29. In the past 2 years, has the Insured participated in or does the Insured have plans to
participate in: racing (automobile, snowmobile, motorcycle, boat or go-cart), underwater
or sky diving, hang gliding, bungee jumping, mountain or rock climbing, or rodeos? If yes,
complete the Avocation Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . ./ / Yes /X/ No
30. a. What is the Insured's automobile driver's license number? # D555-5555-5555-55 State WI
or, / / the Insured does not have a driver's license. ------------------ --------------
b. In the past 5 years, has the Insured been in a motor vehicle accident, has the Insured
been charged with a moving violation of any motor vehicle law, or has the Insured's
driver's license been restricted, suspended or revoked?
If yes, complete the chart below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
-------------------------------------------------------------------------------------------------------------------------------
Type and Details Action Accident
Date (Speeding, Reckless Driving, Driving While Intoxicated, Etc.) (Citation, Fine, Etc.) (Yes or No)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
REMARKS
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 4)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
/ / / / / / / / / / /
---------------------
POLICY NUMBER
SECOND INSURED (OLDER) / / Companion policies / /Life & Disability Application / / LTC Application / / Exam (NM, PME, MD) in Home
Office ON PAGES 5 AND 6, "INSURED" REFERS TO THE SECOND INSURED.
- ---------------------------------------------------------------------------------------------------------------------------------
Has an application or informal inquiry ever been made to Northwestern Mutual Life for annuity, life,
long term care, or disability insurance on the life of the insured? / / Yes /X/ No If yes, the last policy number is _________
1. A. / / Mr. /X/ Mrs. / / Ms. / / Dr. / / Other_________ B./ / MALE
Name: JANE J DOE /X/ FEMALE
-----------------------------------------------------------------------------------------------
FIRST MIDDLE INITIAL LAST
- ---------------------------------------------------------------------------------------------------------------------------------
C. BIRTHDATE: (MONTH, DAY, YEAR) D. STATE OF BIRTH (Or Foreign Country): E. TAXPAYER IDENTIFICATION NUMBER:
12-31-1963 Wisconsin ###-##-####
---------- -----------
- ---------------------------------------------------------------------------------------------------------------------------------
F. PRIMARY RESIDENCE: /X/ First Insured's Address OR
STREET OR PO BOX:
--------------------------------------------------------------------------
CITY, STATE, ZIP (Country if other than U.S.A.):
--------------------------------------------------------------------------
E-MAIL ADDRESS:
--------------------------------------------------------------------------
This address will be used for all of the Second Insured's policies.
- ---------------------------------------------------------------------------------------------------------------------------------
2.-9. (Reserved)
- ---------------------------------------------------------------------------------------------------------------------------------
10. If an additional benefit cannot be approved should the Company issue the policy without the benefit? / / Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
11.-17. (Reserved)
INSURANCE HISTORY
- ---------------------------------------------------------------------------------------------------------------------------------
18. Has the Insured ever had life, disability or health insurance declined, rated, modified, issued with
an exclusion rider, cancelled, or not renewed? If yes, explain in REMARKS. / /Yes /X/ No
19. When was the Insured's last examination or application for life, disability or accidental death
insurance?
Month Year Company OR /X/ None
----------------------- ------------------------ ------------------------------
20. Does the Insured have any other life insurance in force, pending or contemplated in other companies? / / Yes /X/ No
If yes, indicate Company Name, Individual (Ind) or Group (Grp) and identify the amount of In Force,
Pending, or Contemplated.
LIFE INSURANCE AMOUNTS
------------------------------------------------------------------------------------------------------------------------------
Company Name Ind/Grp In Force Pending Contemplated Accidental
Amount Amount Amount Death Amount
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
21. As a result of this purchase will the values or benefits of any other life insurance policy or
annuity contract, on any life, be affected in any way? / / Yes /X/ No
NOTE TO AGENT: VALUES OR BENEFITS ARE AFFECTED IF ANY QUESTION ON THE
DEFINITION OF REPLACEMENT SUPPLEMENT COULD BE ANSWERED "YES".
If "yes", this transaction is a replacement of life insurance or annuity.
The agent must:
- submit required papers and sale materials and
- provide required disclosure notices to the
applicant.
The applicant must answer the questions:
- on the Definition of Replacement Supplement and
- A, B, and C below.
Will this insurance:
A. replace Northwestern Mutual Life? / / Yes /X/ No
B. replace other Companies? / / Yes /X/ No
C. result in 1035 exchange? / / Yes /X/ No
- ---------------------------------------------------------------------------------------------------------------------------------
22. (Reserved)
REMARKS
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 5)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
23. Insured's Marital Status: / / Single, Widowed or Divorced /X/ Married
24. a. Insured is a citizen of: /X/ U.S.A. / / Other
If other: Type of Visa: Visa Number:
-------------------------- -----------------
b. How many years has the Insured resided in the U.S.A. immediately prior to completing this application? 35 years
-----
25. Does the Insured regularly travel outside the U.S.A. or have plans to leave the U.S.A. for travel or
residence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
If yes, explain in the chart below.
------------------------------------------------------------------------------------------------------------------------------
Destination Number of Trips Duration of Departure Date Purpose of Trip
(List all Cities and Countries) Last 12 Next 12 Each Trip (Month/Year)
Months Months (No. of Days)
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
26. a. What is the Insured's occupation(s)? Housewife
--------------------------------------------------------------------------------------
What are the Insured's duties?
--------------------------------------------------------------------------------------------
b. Employer's Name:
----------------------------------------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------------------------------------------------
c. How long has the Insured been employed? years (If less than 2 years, explain in REMARKS)
----------
QUESTIONS 27 THROUGH 30 ARE NOT REQUIRED IF THE INSURED IS UNDER AGE 16.
27. If the Insured a member of, or does the Insured plan on joining any branch of, the Armed Forces
or reserve military unit? If yes, complete the Military Section. . . . . . . . . . . . . . . . . . . . . . ./ / Yes /X/ No
28. Except as a passenger on a regularly scheduled flight, has the Insured flown within the past 2
years, or does the Insured have plans to fly in the future? If yes, complete the Aviation Section. . . . . ./ / Yes /X/ No
29. In the past 2 years, has the Insured participated in or does the Insured have plans to participate
in: racing (automobile, snowmobile, motorcycle, boat or go-cart), underwater or sky diving, hang
gliding, bungee jumping, mountain or rock climbing, or rodeos? If yes, complete the Avocation Section. . . ./ / Yes /X/ No
30. a. What is the Insured's automobile driver's license number? # D333-3333-3333-33 State WI
or, / / the Insured does not have a driver's license. ------------------ ----
b. In the past 5 years, has the Insured been in a motor vehicle accident, has the Insured been
charged with a moving violation of any motor vehicle law, or has the Insured's driver's
license been restricted, suspended or revoked? If yes, complete the chart below . . . . . . . . . . . ./ / Yes /X/ No
-----------------------------------------------------------------------------------------------------------------------------
Type and Details Action Accident
Date (Speeding, Reckless Driving, Driving While Intoxicated, Etc.) (Citation, Fine, Etc.) (Yes or No)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
90-1 JCL (0198) (page 6)
<PAGE>
- --------------------------------------------------------------------------------
EACH INSURED CONSENTS TO THIS APPLICATION AND ATTACHED SUPPLEMENTS AND DECLARES
THAT THE ANSWERS AND STATEMENTS MADE ON THIS APPLICATION AND ATTACHED
SUPPLEMENTS ARE CORRECTLY RECORDED, COMPLETE AND TRUE TO THE BEST OF EACH
INSURED'S KNOWLEDGE AND BELIEF. ANSWERS AND STATEMENTS BROUGHT TO THE
ATTENTION OF THE AGENT, MEDICAL EXAMINER OR PARAMEDICAL EXAMINER ARE NOT
CONSIDERED INFORMATION BROUGHT TO THE ATTENTION OF THE COMPANY UNLESS STATED
IN THE APPLICATION. STATEMENTS IN THIS APPLICATION ARE REPRESENTATIONS AND
NOT WARRANTIES.
It is agreed that:
(1) If the premium is not paid when the application is signed, no insurance
will be in effect. The insurance will take effect at the time the policy
is delivered and the premium is paid, if: both Insureds are living at that
time; and the answers and statements in the application are then true to
the best of each Insured's knowledge and belief.
(2) If the premium is paid when the application is taken, no insurance will
be in effect except as provided in the Conditional Life Insurance
Agreement with the same number as this application.
(3) No agent is authorized to make or alter contracts or to waive any of the
Company's rights or requirements.
-------------------------------------------------------------------------------
THE OWNER OF THE POLICY APPLIED FOR HEREIN CERTIFIES, UNDER PENALTIES OF
PERJURY, (1) THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN FOR THE OWNER ON
THE SECOND PAGE OF THIS APPLICATION IS THE OWNER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER (OR THE OWNER IS WAITING FOR A NUMBER TO BE ISSUED) AND
(2) THE OWNER IS NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE THE OWNER
HAS NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT THE OWNER IS
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST
OR DIVIDENDS, OR THE IRS HAS NOTIFIED THE OWNER THAT THE OWNER IS NO LONGER
SUBJECT TO BACKUP WITHHOLDING. (SEE TAXPAYER IDENTIFICATION NUMBER
INSTRUCTIONS.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
-------------------------------------------------------------------------------
THE SIGNATURES BELOW APPLY TO THE APPLICATION, THE POLICY APPLICATION
SUPPLEMENT AND THE CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER.
<TABLE>
<CAPTION>
<S> <C>
(Signed) John J. Doe (Signed) Jane J. Doe
- -------------------------------------- -----------------------------------------
Signature of FIRST INSURED Signature of SECOND INSURED
(Signed) John J. Doe
- -------------------------------------- -----------------------------------------
Signature of APPLICANT Signature of OWNER (If other than
Applicant, First or Second Insured)
Signed by APPLICANT at Milwaukee, Milwaukee WI Date signed by APPLICANT 12 | 31 | 1998
------------------------ ----------------
CITY, COUNTY & STATE MONTH DAY YEAR
(Signed) Norm W. Western
------------------------------
Signature of LICENSED AGENT
</TABLE>
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR TAXPAYER IDENTIFICATION NUMBER INFORMATION
1. Under federal income tax law you will be subject to a withholding tax of
31% imposed upon certain reportable payments, if any, and to certain
penalties if you do not certify under penalties of perjury that the
Taxpayer Identification Number which you have provided us is correct and
that you are not subject to backup withholding due to notified payee
underreporting. Generally speaking, for individuals, the Taxpayer
Identification Number is the Social Security Number.
2. If you don't have a Taxpayer Identification Number, obtain Form SS-5,
Application for a Social Security Number Card, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for
a number. Write "Applied for" in the space available for your Taxpayer
Identification Number on the first page of this application. If we do not
receive your Taxpayer Identification Number within 60 days, we are required
to withhold 31% of all reportable payments, if any, thereafter made to you
until we receive a number from you.
3. If the Internal Revenue Service has notified you that you are subject to
backup withholding and you have not received notice from the Service that
backup withholding has terminated, you should strike out the language on
page 9 that you are not subject to backup withholding due to notified payee
underreporting.
90-1 JCL (0918) (page 7)
<PAGE>
It is recommended that you ...
read your policy.
notify your Northwestern Mutual agent or the Company at 720 East Wisconsin
Avenue, Milwaukee, WI 53202, of an address change.
call your Northwestern Mutual agent for information--particularly on a
suggestion to terminate or exchange this policy for another policy or plan.
ELECTION OF TRUSTEES
The members of The Northwestern Mutual Life Insurance Company are its
policyholders of insurance policies and deferred annuity contracts. The members
exercise control through a Board of Trustees. Elections to the Board are held
each year at the annual meeting of members. Members are entitled to vote in
person or by proxy.
FLEXIBLE PREMIUM VARIABLE JOINT LIFE INSURANCE POLICY
INSURANCE PAYABLE ON SECOND DEATH
ELIGIBLE FOR ANNUAL DIVIDENDS
Flexible premiums.
Benefits reflect investment results.
Variable benefits described in Sections 1, 3, 6, 7 and 8.
THE DEATH BENEFIT AND CASH VALUE UNDER THIS POLICY ARE VARIABLE. THEY MAY
INCREASE OR DECREASE DAILY DEPENDING ON THE INVESTMENT RESULTS OF THE SEPARATE
ACCOUNT. THE AMOUNT OF THE DEATH BENEFIT AND THE AMOUNT OF THE CASH VALUE ARE
NOT GUARANTEED.
RR.VJL.(1298)
<PAGE>
POLICY SPLIT PROVISION
POLICY SPLIT RIGHT. While both Insureds are alive, the Owner may exchange this
policy for two policies (the "new policies"), one on the life of each Insured,
if there is a change in federal estate tax law which results in either:
a. the repeal of the unlimited marital deduction provision; or
b. at least a 50% reduction in the maximum percentage rate set forth in
the federal estate tax schedule in effect on the Date of Issue of this
policy.
This exchange may be made without evidence of insurability.
CONDITIONS. The exchange may be made by meeting any conditions set by the
Company, including the following:
a. the Company must receive a written request from the Owner no more than
180 days after the earlier of the date of enactment of the law
repealing the unlimited marital deduction or the date of enactment of
the law reducing the maximum percentage rate of federal estate tax by
50%; and
b. any required costs are paid.
TERMS OF THE NEW POLICIES. The new policies will be issued on any life
insurance plan agreed to by the Owner and the Company. The new policies will
have the same Date of Issue and Policy Date as this policy. The new policies
will take effect on the date the written request to exchange this policy for the
new policies is received at the Home Office. This policy will terminate when
the new policies take effect.
The amount of the death benefit of each new policy will be one-half the
amount of the death benefit of this policy. The Policy Value of this policy
will be allocated to each new policy as determined appropriate by the Company.
Any policy debt will be divided between the new policies in proportion to their
cash values. Any assignment will continue on the new policies.
SECRETARY
THE NORTHWESTERN
MUTUAL LIFE
INSURANCE COMPANY
RR.VJL.PS.(1298)
<PAGE>
EXHIBIT A(9)(a)
PARTICIPATION AGREEMENT
AMONG
RUSSELL INSURANCE FUNDS,
RUSSELL FUND DISTRIBUTORS, INC.
AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT is made and entered into as of this ____ day of
______________,by and among THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY a
Wisconsin life insurance company (hereinafter the "Company"), on its own behalf
and on behalf of each segregated asset account of the Company set forth on
Schedule A hereto as such schedule may be amended from time to time (each such
account hereinafter referred to as the "Account" and collectively as the
"Accounts"), and RUSSELL INSURANCE FUNDS, a Massachusetts Business Trust
(hereinafter the "Investment Company"), and RUSSELL FUND DISTRIBUTORS, INC. a
Washington corporation (hereinafter the "Underwriter").
WHEREAS, Investment Company engages in business as a diversified open-end
management investment company and is available to act as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products");
and
WHEREAS, the beneficial interest in the Investment Company is divided into
several series of shares, referred to individually as "Funds" and representing
the interest in a particular managed portfolio of securities and other assets;
and
WHEREAS, Investment Company is registered as an open-end management
investment company under the 1940 Act, and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Frank Russell Investment Management Company (the "Adviser") is
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life or
annuity contracts or both under the 1933 Act, and offers or will offer for sale
certain variable life or annuity contracts or both which are or will be exempt
from registration; and
WHEREAS, each Account is a duly organized, validly existing, segregated
asset account, established by resolution of the Board of Trustees of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life or annuity
contracts; and
WHEREAS, the Company has registered or will register some of the Accounts
as unit investment trusts under the 1940 Act and other Accounts are exempt from
registration; and
1
<PAGE>
WHEREAS, Investment Company has received "mixed and shared funding"
exemptive relief from the Securities and Exchange Commission permitting it to
offer its shares to life insurers in connection with variable annuity contracts
and variable life insurance policies offered by such insurers which may or may
not be affiliated with each other (SEC Release IC-16160, Dec. 7, 1987); and
WHEREAS, the Underwriter is registered as a broker/dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act") and is a member in good standing of the National Association of Securities
Dealers, Inc. (hereinafter the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life or annuity contracts
or both, and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE 1. SALE OF INVESTMENT COMPANY SHARES
1.1 The Underwriter agrees to sell to the Company those shares of Investment
Company which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Investment Company or its
designee of the order for the shares of the Investment Company. For purposes of
this Section 1.1, the Company shall be the designee of the Investment Company
for receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Investment Company; provided that the Investment
Company receives notice of such order by 8:00 a.m. Pacific time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which Investment Company calculated
its net asset value pursuant to the rules of the Securities and Exchange
Commission.
1.2 The Investment Company agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Investment Company calculates its net asset
value pursuant to rules of the Securities and Exchange Commission, and the
Investment Company shall use reasonable efforts to calculate such net asset
value on each day on which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Investment Company
(hereinafter the "Board") may refuse to sell shares of any Fund, or suspend or
terminate the offering of shares of any Fund if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole discretion
of the Board acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of such Fund.
1.3 The Investment Company and the Underwriter agree that no shares of any Fund
will be sold to the general public.
2
<PAGE>
1.4 The Investment Company agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Investment Company held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Investment Company or its designee of the request for
redemption. For purposes of this Section 1.4, the Company shall be the designee
of the Investment Company for receipt of requests for redemption from each
Account, and receipt by such designee shall constitute receipt by the Investment
Company; provided that the Investment Company receives notice of such request
for redemption by 8:00 a.m. Pacific time on the next following Business Day.
1.5 The Company agrees to purchase and redeem the shares of selected Funds
offered by the then-current prospectus of the Investment Company and in
accordance with the provisions of such prospectus. The parties agree that all
net amounts available under the variable life and annuity contracts with the
form number(s) which are listed on Schedule B attached hereto and incorporated
herein by this reference, as such Schedule B may be amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"), may be invested in the Investment Company, in other separate
accounts of the Company, in other investment companies, in the Company's general
account, or in other funding vehicles.
1.6 The Company shall pay for Investment Company shares on the next Business
Day after an order to purchase Investment Company shares is made in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire.
1.7 Issuance and transfer of the Investment Company's shares will be by book
entry only. Stock certificates will not be issued to the Company or any
Account. Shares ordered from the Investment Company will be recorded in an
appropriate title for each Account.
1.8 The Investment Company shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the Investment Company's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. Investment
Company shall furnish same day notice to the Company of the number of shares so
issued as payment of such dividends and distributions.
1.9 The Investment Company shall make the net asset value per share for each
Fund available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are registered under
the 1933 Act or are exempt from registration thereunder; that; the Contracts
will be issued and sold in compliance in all material respects with all
applicable Federal and State laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each
3
<PAGE>
Account prior to any issuance or sale of Contracts funded thereby as a
segregated asset account under applicable state insurance law and that each
Account is or will be registered as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment
account for the Contracts or is exempt from registration thereunder.
2.2 The Investment Company represents and warrants that Investment Company
shares sold pursuant to this Agreement shall be registered under the 1933 and
1940 Acts, duly authorized for issuance and sold in compliance with the laws of
the State of Washington and all applicable federal and state securities laws and
that the Investment Company is and shall remain registered under the 1940 Act.
The Investment Company shall amend the Registration Statement for its shares
under the 1933 and the 1940 Acts from time to time as required in order to
effect the continuous offering of its shares. The Investment Company shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Investment
Company or the Underwriter.
2.3 The Investment Company represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Investment Company and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5 The Investment Company currently does not intend to make any payments to
finance distribution expenses pursuant to Rule l2b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the
Investment Company undertakes to have its board of trustees, a majority of whom
are not interested persons of the Investment Company, formulate and approve any
plan under Rule l2b-1 to finance distribution expenses.
2.6 The Investment Company makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Investment
Company shares in accordance with any applicable state laws and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8 The Investment Company represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
4
<PAGE>
2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Investment Company in compliance in all material respects any applicable state
laws and federal securities laws.
2.10 The Investment Company and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money or securities of the Investment
Company are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Investment Company in an amount
not less than the minimal coverage as required currently by Rule 17g-(1) of the
1940 Act or related provisions as may be promulgated from time to time. The
aforesaid Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.11 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other entities dealing with the money or
securities of the Investment Company are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit
of the Investment Company in an amount not less than five million dollars ($5
million). The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1 The Underwriter shall provide the Company with as many printed copies of
the Investment Company's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Investment Company shall provide camera-ready film or
computer diskettes containing the Investment Company's prospectus and Statement
of Additional Information and such other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
and/or Statement of Additional Information for the Investment Company is amended
during the year) to have the prospectus for the Contracts and the Investment
Company's prospectus printed together in one document, and to have the Statement
of Additional Information for the Investment Company and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Investment Company's prospectus and/or
its Statement of Additional Information in combination with other fund
companies' prospectuses and statements of additional information. Except as
provided in the following three sentences, all expenses of printing and
distributing Investment Company prospectuses and Statements of Additional
Information distributed by the Company shall be the expense of the Company. For
Prospectuses and Statement of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Investment Company. If the Company chooses to receive camera-ready film or
computer diskettes in lieu of receiving printed copies of the Investment
Company's prospectus, the Investment Company will reimburse the Company in an
amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Investment
Company's per unit cost of typesetting and printing the Invstment Company's
5
<PAGE>
prospectus. The same procedures shall be followed with respect to the
Investment Company's Statement of Additional Information.
The Company agrees to provide the Investment Company or its designee with
such information as may be reasonably requested by the Investment Company to
assure that the Investment Company's expenses do not include the cost of
printing any prospectuses or Statements of Additional Information other than
those actually distributed to existing owners of the Contracts.
3.2 The Investment Company's prospectus shall state that the Statement of
Additional Information for the Investment Company is available from the
Underwriter or the Company (or in the Fund's discretion, the Prospectus shall
state that such Statement is available from the Investment Company).
3.3 The Investment Company, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other required
communications (except for prospectuses and Statement of Additional Information,
which are covered in Section 3.1) to shareholders in such quantity as the
Company shall reasonably require for distributing to Contract owners.
3.4 The Company will provide pass-through voting privileges to all Contract
owners to the extent that and so long as the SEC continues to interpret the
Investment Company Act of 1940 as requiring pass-through voting privileges for
Contract owners. Accordingly, the Company, where applicable, will vote shares
of the Fund held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Contract owners. The Company will be
responsible for assuring that each of its separate accounts that participates in
the Investment Company calculates voting privileges in a manner consistent with
other participating insurance companies. The Company will vote shares for which
it has not received timely voting instructions, as well as shares it owns, in
the same proportion as it votes those shares for which it has received voting
instructions.
3.5 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the
Investment Company Act of 1940 or the rules thereunder with respect to mixed and
shared funding on terms and conditions materially different from any exemptions
granted in the Investment Company's mixed and shared funding exemptive order,
then the Investment Company, and/or the Company, as appropriate, shall take such
steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such Rules are applicable.
3.6 The Investment Company will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Investment Company will
either provide for annual or special meetings or comply with the requirements of
Section 16(c) of the 1940 Act (although the Investment Company is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Investment Company will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors and with whatever rules the SEC
may promulgate with respect thereto.
6
<PAGE>
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee, each piece of sales literature or other
promotional material, or component thereof, in which the Investment Company, the
Adviser, or the Underwriter is named, at least fifteen Business Days prior to
its use. No such material shall be used if the Investment Company or its
designee object to such use within fifteen Business Days after receipt of such
material. Once any such material has been so furnished to the Investment
Company or its designee and fifteen Business days have elapsed, such materials
need not again be so furnished absentunless any subsequent changes to such
material that affect the materials' discussion or presentation relating to the
Investment Company, its advisor, the Underwriter, or any of their affiliates
(other than the Company or persons that are deemed affiliates only by virtue of
being controlled by the Company). In particular, materials that have been
changed merely to update performance or financial information need not be so
furnished.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Investment Company or concerning the Investment
Company in connection with the sale of the Contracts other than the information
or representations contained in the registration statement or prospectus for the
Investment Company shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy statements for
the Investment Company, or in sales literature or other promotional material
approved by the Investment Company or its designee or by the Underwriter, except
with the permission of the Investment Company or the Underwriter or the designee
of either.
4.3 The Investment Company, the Underwriter, or their designees shall furnish,
or shall cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material, or component thereof, in which
the Company or its separate Accounts are named at least fifteen Business Days
prior to its use. No such material shall be used if the Company or its designee
objects to such use within fifteen Business Days after receipt of such material.
4.4 The Investment Company and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus or offering materials for the
Contracts, as such may be amended or supplemented from time to time, or in
published reports for each Account which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with the
permission of the Company.
4.5 The Investment Company will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Investment Company or its
shares, contemporaneously with the filing of such document with the Securities
and Exchange Commission or other regulatory authorities.
7
<PAGE>
4.6 The Company will provide to the Investment Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities. In the case of unregistered
Contracts, in lieu of providing prospectuses and Statements of Additional
Information, the Company shall provide the Investment Company with one complete
copy of the offering materials for the Contracts.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, electronic media, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that Investment Company has received a "mixed and
shared funding "exemptive order from the SEC granting relief from various
provisions of the Investment Company Act of 1940 and the rules thereunder to the
extent necessary to permit Investment Company shares to be sold to and held by
Variable Insurance Products separate accounts of both affiliated and
unaffiliated participating insurance companies. The exemptive order requires
the Investment Company and each participating insurance company to comply with
conditions and undertakings substantially as provided in this Article V. The
Investment Company will not enter into a participation agreement with any other
participating insurance company unless it imposes the same conditions and
undertakings as are imposed on the Company.
5.2 The Investment Company's Board of Trustees ("Board") will monitor the
Investment Company for the existence of any material irreconcilable conflict
between the interests of Contract owners of all separate accounts investing in
the Investment Company. An irreconcilable material conflict may arise for a
variety of reasons, which may include: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of the Investment Company
are being managed; (e) a difference in voting instructions given by Contract
owners; and (f) a decision by a participating insurance company to disregard the
voting instructions of Contract owners.
5.3 The Company will report any potential or existing conflicts to the
Investment Company's Board. The Company will be responsible for assisting the
Board in carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to
8
<PAGE>
consider any issues raised. The responsibility includes, but is not limited
to, an obligation by the Company to inform the Board whenever it has
determined to disregard Contract owner voting instructions. These
responsibilities of the Company will be carried out with a view only to the
interests of the Contract owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting the Company,
then the Company, at its expense and to the extent reasonably practicable (as
determined by a majority of the Board's disinterested Trustees), will take any
steps necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing the assets allocable to some or all of the separate
accounts from the Investment Company or any Fund thereof and reinvesting those
assets in a different investment medium, which may include another Fund of the
Investment Company, or another investment company; (b) submitting the question
as to whether such segregation should be implemented to a vote of all affected
Contract owners and as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity or variable life insurance contract owners of one
or more participating insurance companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change; and (c) establishing a new registered management investment
company (or series thereof) or managed separate account. If a material
irreconcilable conflict arises because of the Company's decision to disregard
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, the Company may be required at the
election of the Investment Company, to withdraw its separate accounts'
investment in the Investment Company, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take such remedial action
shall be carried out with a view only to the interests of the Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
the Investment Company or any investment adviser of the Investment Company be
required to establish a new funding medium for any Contract. Further, the
Company shall not be required by this Section 5.4 to establish a new funding
medium for any Contract if any offer to do so has been declined by a vote of a
majority of Contract owners materially and adversely affected by the
irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable material
conflict and its implications shall be made known promptly and in writing to the
Company.
5.6 No less than annually, the Company shall submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
ARTICLE VI. FEES AND EXPENSES
6.1 The Investment Company and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Investment
Company or any Fund adopts and implements a plan pursuant to Rule l2b-1 to
finance distribution expenses, then the Underwriter may make payments to the
Company or to the underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing and such payments will be made out of
9
<PAGE>
existing fees otherwise payable to the Underwriter, past profits of the
Underwriter, or other resources available to the Underwriter. No such
payments shall be made directly by the Investment Company. Currently, no such
payments are contemplated.
6.2 All expenses incident to performance by the Investment Company under this
Agreement shall be paid by the Investment Company. The Investment Company shall
ensure that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed
advisable by the Investment Company, in accordance with applicable state laws
prior to their sale. The Investment Company shall bear the expenses for the
cost of registration and qualification of the Investment Company's shares,
preparation and filing of the Investment Company's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes and fees on the issuance or transfer of the Investment Company's
shares.
6.3 The Company shall bear the expenses of distributing the Investment
Company's prospectus, proxy materials, and reports to owners of Contracts issued
by the Company.
ARTICLE VII. DIVERSIFICATION
7.1 The Investment Company will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Investment
Company will at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Investment
Company and each member of the Board and officers and each person, if any, who
controls the Investment Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or action in respect thereof)
or settlements are related to the Company's sale or acquisition of the
Investment Company's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in any Registration Statement,
prospectus or other offering materials for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or
10
<PAGE>
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Investment Company for use in any Registration Statement or prospectus
for the Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
Investment Company's shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration Statement,
prospectus or sales literature of the Investment Company not supplied by the
Company, or persons under its control) or wrongful conduct of the Company or
persons under its control, with respect to the sale or distribution of the
Contracts or Investment Company shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement, prospectus, or sales
literature of the Investment Company or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon information
furnished to the Investment Company by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of a result from any material breach of any representation
or warranty made by the Company in this Agreement or arise out of or result from
any other material breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the
Investment Company, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall
11
<PAGE>
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Investment Company shares or the Contracts or the
operation of the Investment Company.
8.2 INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls or is
controlled by the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
expenses (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Investment
Company's shares or the Contracts and;
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
prospectus or sales literature of the Investment Company (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Investment Company by or on
behalf of the Company for use in the Registration Statement or prospectus
for the Investment Company or in the sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Investment Company shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in any Registration Statement,
prospectus, other offering materials or sales literature for the Contracts
not supplied by the Underwriter or persons under its control) or wrongful
conduct of the Investment Company, Adviser, or Underwriter or persons under
their control, with respect to the sale or distribution of the Contracts or
Investment Company shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement, prospectus, other
offering materials or sales literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such statement or omission
was made in reliance upon information furnished to the Company by or on behalf
of the Investment Company; or
12
<PAGE>
(iv) arise as a result of any failure by the Investment Company to provide
the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VII of this
Agreement); or
(v) arise out of or result from any material breach of any representation
or warranty made by the Underwriter in this Agreement or arise out of or result
from any other material breach of this Agreement by the Underwriter; as limited
by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or each Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of any Account.
8.3 INDEMNIFICATION BY THE INVESTMENT COMPANY
8.3(a). The Investment Company agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls or is controlled by the Company within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Investment Company) or litigation expenses (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims,
13
<PAGE>
damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct
of the Board or any member thereof, are related to the operations of the
Investment Company and:
(i) arise as a result of any failure by the Investment Company to provide
the services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VII of this Agreement); or
(ii) arise out of or result from any material breach of any representation
or warranty made by the Investment Company in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Investment Company, as limited by and in accordance with the provisions of
Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Investment Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's will misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Investment Company, the Underwriter or any Account, which ever
is applicable.
8.3(c). The Investment Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Investment Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Investment
Company of any such claim shall not relieve the Investment Company from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Investment
Company will be entitled to participate, at its own expense, in the defense
thereof. The Investment Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Investment Company to such party of the Investment Company's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Investment
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Investment Company of the commencement of any litigation or proceeding against
it or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, with respect to the operation
of any Account, or the sale or acquisition of shares of the Investment Company.
14
<PAGE>
ARTICLE IX. APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Washington.
9.2 To the extent they are applicable, this Agreement shall be subject to the
provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and
rulings thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant and the terms
hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION OF AGREEMENT
10.1 This Agreement shall continue in full force and effect until the first to
occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any fund based upon the Company's
determination that shares of such Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any Fund in the event any of the Fund's
shares are not registered, issued, or sold materially in accordance with
applicable state or federal law or such law precludes the use of such shares as
the underlying investment media of the Contracts issued or to be issued by the
Company; or
(d) Termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any Fund in the event that such Fund ceases
to qualify as a Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if the Company reasonably believes
that the Investment Company may fail to so qualify; or
(e) termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any Fund in the event that such Fund fails
to meet the diversification requirements specified in Article VII hereof; or
(f) termination by either the Investment Company or the Underwriter by
written notice to the Company, if either one or both of the Investment Company
or the Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company or its affiliated companies has
suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(g) termination by the Company by written notice to the Investment Company
and the Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Investment Company or the Underwriter
has suffered a material adverse change in its
15
<PAGE>
business, operations, financial condition, or prospects since the date of
this Agreement or is the subject of material adverse publicity.
10.2 Notwithstanding any termination of this Agreement, the Investment Company
and the Underwriter shall at the option of the Company, continue to make
available additional shares of the Investment Company pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investment in the Investment Company,
redeem investments in the Investment Company, or invest in the Investment
Company upon the making of additional purchase payments under the Existing
Contracts.
10.3 The Company shall not redeem Investment Company shares attributable to the
Contracts (as opposed to Investment Company shares attributable to the Company's
assets held in any of the Accounts) except (i) as necessary to implement
Contract Owner initiated transactions, or (ii) as required by state or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon request, the
Company will promptly furnish to the Investment Company and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Investment Company and the Underwriter) to the effect that
any redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Existing Contract Owners from allocating payments
to a Fund that was otherwise available under the Contracts without first giving
the Investment Company or the Underwriter sixty (60) days notice of its
intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Investment Company:
909 A. Street
Tacoma, Washington 98402
Attention: Karl J. Ege, Esq.
If to the Company:
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4797
Attention: _________________________
If to the Underwriter:
909 A. Street
Tacoma, Washington 98402
Attention: Karl J. Ege, Esq.
16
<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Investment Company must look solely to the
property of the Investment Company for the enforcement of any claims against the
investment Company as neither the Board, officers, agents or shareholders assume
any personal liability for obligations entered into on behalf of the Investment
Company.
12.2 Subject to the requirements of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the owners
of the Contracts and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement,
shall not disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain
without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5 If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that the Underwriter may assign this Agreement or any rights
or obligations hereunder to any affiliate of or company under common control
with the Underwriter, if such assignee is duly licensed and registered to
perform the obligations of the Underwriter under this Agreement.
17
<PAGE>
12.9 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee copies of the following reports:
(a) the Company's annual statement prepared under statutory accounting
principles, as soon as practical and in any event within 90 days after the end
of each fiscal year;
(b) the Company's quarterly statement (statutory), as soon as practical
and in any event within 45 days after the end of each quarterly period; and
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders or policyholders, as soon as practical after the
delivery thereof; and
12.10 The Master Trust Agreement dated 11 July 1996, as amended from time to
time, establishing the Investment Company, which is hereby referred to and a
copy of which is on file with the Secretary of The Commonwealth of
Massachusetts, provides that the name Russell Insurance Funds means the Trustees
from time to time serving (as Trustees but not personally) under said Master
Trust Agreement. It is expressly acknowledged and agreed that the obligations
of the Investment Company hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Investment Company,
personally, but shall bind only the trust property of the Investment Company as
provided in its Master Trust Agreement. The execution and delivery of this
Agreement have been authorized by the Trustees of the Investment Company and
signed by the President of the Investment Company, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Investment Company as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed in its name and on behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date first written above.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
ATTEST: BY:
________________________________ ___________________________________
Secretary Title:
RUSSELL INSURANCE FUNDS
ATTEST: BY:
________________________________ _________________________________
Secretary President
RUSSELL FUND DISTRIBUTORS, INC.
18
<PAGE>
ATTEST: BY:
________________________________ _________________________________
Secretary President
19
<PAGE>
SCHEDULE A
ACCOUNTS
Name of Account Date of Resolution of Company's
Board that established the Account
NML Variable Annuity Account A February 14, 1968
NML Variable Annuity Account B February 14, 1968
NML Variable Annuity Account C July 22, 1970
Northwestern Mutual Variable Life Account November 23, 1983
20
<PAGE>
SCHEDULE B
CONTRACTS
1. Contract Form Numbers:
Variable Life:
RR.VJL.(1298) RR Series Variable Joint Life
RR.VEL.(0398) RR Series Variable Executive Life
QQ.VCL QQ Series Variable CompLife
MM 15 MM Series Variable Whole Life
MM 16 MM Series Variable Single Premium Life
MM 17 MM Series Variable Extraordinary Life
Individual Variable Annuity:
QQV.ACCT.A QQV.ACCT.B QQ Series VAs
MM V 1A MM V 1B MM V 1 MM Series VAs
LL V 1A LL V 1B LL V 1 LL Series VAs
KK V 1A KK V 1B KK V 1 KK Series VAs
JJ V 1A JJ V 1B JJ Series VAs
Group Variable Annuity
NPV.1C NN Series GPA
MP V 1C MM Series GPA
LL V 1C LL Series GPA
KK V 1C KK Series GPA
JJ V 1C JJ Series GPA
2. Funds currently available to act as investment vehicles for the
above-listed contracts:
Russell Insurance Funds: Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
Russell Real Estate Securities Fund
21
<PAGE>
Exhibit A(9)(b)
February __, 1999
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Re: Administrative Service Fee
Gentlemen:
The purpose of this letter is to confirm certain financial arrangements
between Frank Russell Investment Management Company ("FRIMCo"), the
investment adviser to Russell Insurance Funds, a registered investment
company (the "Trust"), and The Northwestern Mutual Life Insurance Company
("NML") in connection with NML's investment in the Trust. FRIMCo or its
affiliates will pay an administrative services fee to NML equal, on an
annualized basis, to 0.10% of the aggregate net assets of the Trust
attributable to NML (other than assets attributable to NML employee and agent
qualified plans). Such fee shall be paid quarterly (on a calendar year
basis) in arrears for as long as NML owns shares in the Trust.
Sincerely,
FRANK RUSSELL INVESTMENT
MANAGEMENT COMPANY
By:
---------------------------
Lynn L. Andersen
Chief Executive Officer
Agreed to and accepted:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By:
----------------------------
Mark G. Doll
Senior Vice President
<PAGE>
Exhibit C(1)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 1 to the Registration Statement on Form S-6 (the
"Registration Statement") of our report dated January 25, 1999, relating to
the financial statements of The Northwestern Mutual Life Insurance Company,
and of our report dated January 25, 1999, relating to the financial
statements of Northwestern Mutual Variable Life Account, which appear in such
Prospectus. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 25, 1999
<PAGE>
Exhibit C(6)
February 25, 1999
The Northwestern Mutual Life Insurance Company
720 East Wisconsin
Milwaukee, WI 53202
Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment
No.1 to the Registration Statement on Form S-6, Registration No. 333-59103,
of Northwestern Mutual Variable Life Account. The prospectus included in
Post-Effective Amendment No. 1 ("Prospectus") describes the Flexible Premium
Variable Joint 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 death benefits, policy values, cash values and
accumulated premiums included on pages 40 through 47 of the Prospectus, in
Appendix A 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
illustrations appear more favorable for a prospective male and female
insured, both age 55, as shown, than for other combinations of insureds
based on age and gender or for insureds on a sex-neutral basis.
2. With respect to the charge of 1.25% of premiums for federal income taxes
measured by premiums, described on page 8 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
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL VARIABLE LIFE ACCOUNT DECEMBER 31, 1998 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 587,479
<INVESTMENTS-AT-VALUE> 749,935
<RECEIVABLES> 423
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 750,358
<PAYABLE-FOR-SECURITIES> 328
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95
<TOTAL-LIABILITIES> 423
<SENIOR-EQUITY> 749,935
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 749,935
<DIVIDEND-INCOME> 24,922
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 3,933
<NET-INVESTMENT-INCOME> 20,989
<REALIZED-GAINS-CURRENT> 4,332
<APPREC-INCREASE-CURRENT> 68,780
<NET-CHANGE-FROM-OPS> 94,101
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,933
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
