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File Nos. 333-
811-04092
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _______ [ ]
Post-Effective Amendment No. ______ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 32
FIRST VARIABLE ANNUITY FUND E
-----------------------------
(Exact Name of Registrant)
FIRST VARIABLE LIFE INSURANCE COMPANY
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(Name of Depositor)
2122 York Road
Oak Brook, IL 60523
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's telephone number including area code: (630) 684-9200
Name and Address of Agent for Service
-------------------------------------
Jeffery K. Hoelzel
Vice President, General Counsel and Secretary
First Variable Life Insurance Company
2122 York Road
Oak Brook, IL 60523
Copies to:
Raymond A. O'Hara III, Esq.
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Title of Securities Being Registered: Interests Under Variable Annuity
Contracts.
1
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FIRST VARIABLE ANNUITY FUND E
CROSS REFERENCE SHEET
(Pursuant to Rule 495(a))
Item No. in
Form N-4
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PART A Location
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Item 1. Cover Page Cover Page
Item 2. Definitions DEFINITIONS
Item 3. Synopsis or Highlights HIGHLIGHTS
Item 4. Condensed Financial Information ACCUMULATION UNIT DATA; OTHER MATTERS, FINANCIAL
STATEMENTS; STATEMENT OF ADDITIONAL INFORMATION
Item 5. General Description of Registrant, FIRST VARIABLE LIFE INSURANCE COMPANY; THE SEPARATE
Depositor and Portfolio Companies ACCOUNT; SEPARATE ACCOUNT INVESTMENT OPTIONS; AIM
Variable Insurance Funds, Inc.; American Century
Variable Portfolios, Inc.; BT Insurance Funds
Trust; Federated Insurance Series; Lord Abbett
Series Fund, Inc.; MFS Variable Insurance Trust ;
Templeton Variable Products Series Fund; Variable
Investors Series Trust
Item 6. Deductions MORE ABOUT CHARGES AND DEDUCTIONS
Item 7. General Description of Variable THE CONTRACT; CONTRACT BENEFITS AND VALUES
Annuity Contracts
Item 8. Annuity Period Annuity Benefits
Item 9. Death Benefit THE CONTRACT; CONTRACT BENEFITS AND VALUES; Death
Benefits before the Annuity Date; Death Benefits
after the Annuity Date.
Item 10. Purchases and Contract Value HIGHLIGHTS; YOUR INVESTMENT OPTIONS; Purchase
Payments; Allocation of Purchase Payments; CONTRACT
BENEFITS AND VALUES
Item 11. Redemptions HIGHLIGHTS; YOUR INVESTMENT OPTIONS; THE CONTRACT;
CONTRACT BENEFITS AND VALUES; SURRENDER AND
WITHDRAWALS
Item 12. Taxes FEDERAL TAX MATTERS
Item 13. Legal Proceedings OTHER MATTERS; Financial Statements; Legal
Proceedings
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2
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Item No. Location
Form N-4 --------
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PART B
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Item 14. Table of Contents of the Statement TABLE OF CONTENTS OF THE STATEMENT
of Additional Information OF ADDITIONAL INFORMATION
Item 15. Cover Page Cover Page
Item 16. Table of Contents TABLE OF CONTENTS
Item 17. General Information and History FIRST VARIABLE LIFE INSURANCE
COMPANY
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Not Applicable
Offered
Item 20. Underwriters DISTRIBUTOR; DISTRIBUTION AND
OTHER AGREEMENTS
Item 21. Calculation of Performance Data YIELD CALCULATION FOR FIS PRIME
MONEY FUND II INVESTMENT OPTION;
CALCULATION OF OTHER
PERFORMANCE INFORMATION
Item 22. Annuity Payments Annuity Benefits;
ANNUITY PROVISIONS
Item 23. Financial Statements FINANCIAL STATEMENTS
</TABLE>
PART C
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Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this Registration Statement.
3
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Prospectus [Date]
CAPITAL BONUS VA
FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACTS
Issued by
FIRST VARIABLE LIFE INSURANCE COMPANY
[CAPTION]
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Our Marketing and Executive Office: Our Variable Service Center: Or, for express deliveries:
2122 York Road P.O. Box 1317 4200 University Avenue
Oak Brook, IL 60523 Des Moines, IA 50309 West Des Moines, IA 50266
Automated Information Line: (800) 845-0689
(800)-59-FUNDS
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The Contract described in this prospectus provides for the payment of monthly
annuity payments on a fixed or variable basis beginning on a preselected Annuity
Date. The Contract also permits you to accumulate Account Value until the
Annuity Date, based on the payments you make, the charges and expenses of the
Contract, and the investment results of your underlying investment options. You
have the flexibility to adjust the amount and frequency of payments, and may use
the Contract as a "Qualified Contract" in a tax-qualified retirement plan or as
a "Non-Qualified Contract" for other long-term savings and retirement purposes.
You may allocate your payments and your Contract's Account Value among nineteen
different investment options, or to our Fixed Account. The investment options
are available through our segregated asset account called First Variable Annuity
Fund E (the "Separate Account"). The Separate Account invests in selected
portfolios of eight mutual funds (the "Funds"). The portfolios currently
available under the Contract are:
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<CAPTION>
SEPARATE ACCOUNT INVESTMENT OPTIONS
<S> <C> <C> <C> <C> <C> <C>
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AIM American BT Federated Templeton Lord Abbett
Mutual Variable Century Insurance Insurance Variable Series
Fund Insurance Variable Funds Series Products Fund, Inc.
Funds, Inc. Portfolios, Inc. Trust ("FIS") Series Fund ("LA")
("AIM") ("ACS") ("BT") ("FT")
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V. I. Capital Small Cap Prime International Growth &
Appreciation V.P. Value Index Money Fund Income
Portfolios Fund II (Class 2
shares)
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V. I. Growth Equity 500
Index
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Mutual MFS Variable Insurance Trust Variable Investors Series Trust
Fund ("MFS") ("VIST")
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New Matrix
Discovery Growth Series Small Cap Growth Growth & Equity -
Series-seeks Growth Income sector
capital weighted
Portfolios appreciation equities
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Growth with Multiple World High U.S.
Income Strategies - Equity Income Government
Series stocks, bonds & cash Bond Bond
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</TABLE>
4
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This prospectus contains information you should know before investing.
Additional information about the Contract and Separate Account is in our
Statement of Additional Information (the "Statement"). For a free copy, please
write to our Variable Service Center or call the number shown above. The
Statement, dated _______________ has been filed with the Securities and Exchange
Commission and is incorporated into this prospectus by reference. The table of
contents of the Statement is on page __ of this prospectus.
The Contracts are not bank deposits; are not federally insured; are not endorsed
by any bank or government agency; and are not guaranteed and may be subject to
loss of principal.
Neither the Securities and Exchange Commission nor any state securities
commission approved or disapproved these securities or passed upon the accuracy
or adequacy of the prospectus. Any representation to the contrary is a criminal
offense. This prospectus is accompanied by the current prospectuses of the
Funds. All prospectuses should be read and retained for future reference.
We have not authorized any person to give any information not contained in this
prospectus (or in any sales literature we have approved.) We do not offer the
Contracts everywhere, and this prospectus does not constitute an offer anywhere
that it would be unlawful. In certain jurisdictions, various time periods and
other terms and conditions may vary from what is described in this prospectus.
Any such variations that apply to your Contract will be included in the Contract
or a related rider or endorsement.
5
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TABLE OF CONTENTS
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DEFINITIONS............................................................
HIGHLIGHTS.............................................................
SUMMARY OF EXPENSES....................................................
FIRST VARIABLE LIFE INSURANCE COMPANY..................................
THE SEPARATE ACCOUNT...................................................
YOUR INVESTMENT OPTIONS................................................
The Available Options.................................................
Transfers Among Investment Options....................................
General Requirements.................................................
Automatic Transfer Programs.........................................
Restrictions on Transfers............................................
Automatic Transfer of Small Accounts.................................
Mixed and Shared Funding..............................................
MORE ABOUT CHARGES AND DEDUCTIONS......................................
Daily Deductions......................................................
Annual Deductions.....................................................
Annual Contract Maintenance Charge....................................
Optional Additional Benefit Charges...................................
Withdrawal Charge.....................................................
Free Withdrawal Amount................................................
Premium Taxes.........................................................
Other Charges and Expenses............................................
Fund Expenses........................................................
Income Taxes.........................................................
Special Service Fees.................................................
Elimination, Reduction or Refund of Charges and Deductions............
Group and Sponsored Arrangements.....................................
Gender-Neutral Policies..............................................
Purpose of Contract Changes...........................................
THE CONTRACT...........................................................
Application and Issuance of a Contract................................
Free Look Right.......................................................
Purchase Payments.....................................................
General Requirements.................................................
Automatic Investment Plan............................................
Termination of Small Accounts........................................
Allocation of Purchase Payments.......................................
General..............................................................
Delayed Investment Allocation Date...................................
Telephone Transactions................................................
CONTRACT BENEFITS AND VALUES...........................................
Determination of Account..............................................
Purchase Payment Credits..............................................
Death Benefits Before the Annuity Date................................
Death of the Annuitant...............................................
Death of the Owner...................................................
BASIC DEATH BENEFIT....................................................
BONUS DEATH BENEFIT....................................................
Optional Death Benefit Riders..........................................
BEST ANNIVERSARY VALUE DEATH BENEFIT...................................
EXTRA PROTECTOR DEATH BENEFIT..........................................
Surrender and Withdrawals.............................................
Surrender.............................................................
Withdrawals...........................................................
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6
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Systematic Withdrawals..............................................................
Payment of Proceeds..................................................................
Tax Withholding and Tax Penalties...................................................
Annuity Benefits.....................................................................
General.............................................................................
Annuity Options.....................................................................
OPTION A. Life Annuity...........................................................
OPTION B. Life Annuity with Periods Certain of 60,120,180 or 240 Months..........
OPTION C. Joint and Survivor Annuity.............................................
OPTION D. Joint and Contingent Annuity...........................................
OPTION E. Fixed Payments for a Period Certain....................................
Form of Annuity Payments............................................................
Annuity Date........................................................................
Annuitization Bonus.................................................................
Calculation of Annuity Payments.....................................................
Death Benefits after the Annuity Date...............................................
Guaranteed Minimum Income Payment Rider.............................................
Death Benefit after the Annuity Date.................................................
Death of the Annuitant..............................................................
Death of the Owner..................................................................
OTHER PROVISIONS OF THE CONTRACT.....................................................
Misstatement of Age or Sex...........................................................
Owner and Beneficiary................................................................
Beneficiary.........................................................................
Changes and Assignments.............................................................
Assignments..........................................................................
Change of Annuitant Designation......................................................
Texas Optional Retirement Program....................................................
Voting Rights........................................................................
Suspension of Payments or Transfers..................................................
DISTRIBUTION AND OTHER AGREEMENTS....................................................
FEDERAL TAX MATTERS..................................................................
General..............................................................................
Our Taxation.........................................................................
Income Tax Deferral on Increases in Account Value....................................
Contracts Owned by Other than Natural Persons........................................
Diversification Requirements........................................................
Investment Control..................................................................
Distributions from Non-Qualified Contracts...........................................
Penalty tax on Premature Distributions..............................................
Annuity Payments....................................................................
Death Benefits......................................................................
Multiple Contracts..................................................................
Tax-Qualified Retirement Plans.......................................................
Traditional IRSs and Roth IRAs......................................................
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and Profit Sharing......
Plans...............................................................................
403(b) Annuities....................................................................
Distributions from Qualified Contracts...............................................
Roth IRAs...........................................................................
Penalty tax on Pre-retirement Distributions.........................................
Tax-Sheltered Annuities- -Withdrawal Limitations....................................
Federal Income Tax Withholding.......................................................
ADVERTISING PRACTICES................................................................
FIS Prime Money Fund II Portfolio..................................................
Other Portfolio....................................................................
OTHER MATTERS........................................................................
Financial Statements...............................................................
</TABLE>
7
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Legal Proceedings
Transfers by the Company......................................
YEAR 2000 ISSUES..................................................
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION......
APPENDIX A. Accumulation Unit Data...............................
8
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DEFINITIONS
Account Value--The value of a Contract during the Accumulation Period.
Accumulation Period--The time between the Contract Date and the Annuity Date.
Accumulation Unit--An accounting unit of measure used to calculate the Account
Value in a Separate Account Investment Option.
Annuitant--The natural person on whose life annuity payments are based.
Annuity Date--The date on which annuity payments are scheduled to begin.
Annuity--A series of payments we make to the payee you select. "Fixed" annuity
payments are those where we guarantee the dollar amount of each payment.
"Variable" annuity payments are those where the dollar amount of each payment
may vary to reflect the investment experience of the applicable Separate Account
Investment Option.
Business Day--Each day the New York Stock Exchange is open for regular trading.
The New York Stock Exchange is currently closed on weekends and on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Each Business Day ends at the close of regular trading for the
day on the exchange, which usually is 4:00 p.m., Eastern Time.
Contract Anniversary--An anniversary of the Contract Date.
Contract Date--The date the Contract takes effect, as shown on the Owner's
Contract data page (as the Issue Date).
Contract Month--Each one-month period beginning on the Contract Date and
generally on the same day of each month after that.
Contract Quarter--One quarter of a Contract Year. The first Contract Quarter
begins on the Contract Date and ends on the last Business Day of the third
Contract Month.
Contract Year--One year from the Contract Date and from each Contract
Anniversary.
Withdrawal Value--The value of a Contract available during the Accumulation
Period upon surrender or withdrawal. Withdrawal Value equals your Account Value
reduced by any applicable withdrawal charges, any taxes not previously deducted,
and by any annual deductions for the Contract Year.
HIGHLIGHTS
These highlights discuss certain important aspects of the Contract. The rest of
this prospectus explains these and other aspects in greater detail. Be sure to
read the prospectus and the prospectuses of the Funds for more complete
information.
How do investment results affect a Contract?
You invest purchase payments and the Account Value under your Contract in one or
more of the investment options we offer. Your Account Value increases or
decreases by the amount of any positive or negative return it earns in those
options. Your Account Value also will decrease by the amount of all charges and
deductions we make under your Contract.
Account Value invested in our Separate Account investment options is not
guaranteed, and you bear the entire investment risk under those options. Account
Value allocated to our Fixed Account, however, is provided with our guarantees
of principal and a minimum 3% rate of interest on an annual basis.
After the Annuity Date, the investment results of our Separate Account will
affect the dollar amount of variable annuity payments. If you select a fixed
annuity, we will guarantee the amount of each annuity payment.
How much can I (or must I) invest in a Contract?
9
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We generally require you to make a minimum initial purchase payment of $10,000
for Non-Qualified Contracts and $5,000 for Qualified Contracts. You may make
additional purchase payments after that, but each additional purchase payment
must be at least $200.
We reserve the right to decline any purchase payment and, unless we consent
otherwise, the maximum amount of all payments for a Contract cannot exceed $5
million.
Will I have access to my Account Value?
You may take amounts from your Contract's Withdrawal Value at any time up to the
Annuity Date. You may surrender (i.e., cancel) your Contract at any time up to
the Annuity Date, and we will pay you the Withdrawal Value.
You may take a "free withdrawal amount" from your Account Value each year up to
the Annuity Date without the imposition of a Withdrawal Charge. The annual free
withdrawal amount is equal to 15% of your purchase payments.
On the Annuity Date, we will use your Account Value to determine the amount of
annuity payments that we will make. (We will use the Withdrawal Value instead of
the Account Value if annuity payments begin during the first 2 Contract Years.)
What general income tax consequences will I have from owning a Contract?
A 10% percent federal income tax penalty may apply to the income portion of any
distribution that you take from a Non-Qualified Contract before you are age
59 1/2, with certain exceptions. Separate tax withdrawal penalties and
restrictions apply to a Qualified Contract.
This prospectus contains more information in the FEDERAL TAX MATTERS section,
including a discussion of owner control of the underlying investments in a
variable annuity contract and general information on the taxation of death
benefits.
What are the charges and deductions under a Contract?
We make the following charges and deductions:
Daily Deductions--composed of an administrative charge at an annual rate of .15%
of the daily net assets in each Separate Account Investment Option, and a
mortality and expense risk charge at an annual rate of 1.25% of the daily net
assets in each Separate Account Investment Option.
Annual Deductions--composed of a contract maintenance charge of $30 if your
Account Value is less than $100,000, and any charges for optional additional
benefit riders.
Withdrawal Charge--will be assessed from certain withdrawals from the Contract.
The Withdrawal Charge starts at 8.5% in the first year that a premium is in the
Contract and declines to 0% after nine years. It will also be deducted if the
Annuity Date is within the first 2 Contract Years.
Premium Taxes--no deductions are made for premium or other taxes payable to a
state or other governmental entity, unless imposed by the state where you
reside.
Fund Expenses--There are deductions and expenses paid out of the assets of the
Funds that are described in the accompanying prospectuses for the Funds.
Other Expenses--currently none, but we reserve the right to impose charges for
other taxes that may be payable and are attributable to the Contracts in the
future.
10
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SUMMARY OF EXPENSES
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Owner Transaction Expenses
Sales Load on Purchase Payments NONE
Withdrawal Charge - as a percentage of purchase payments:
CHARGE
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Years since premium payment-- 1 or less 8.5%
Years since premium payment-- 2 8.5%
Years since premium payment-- 3 8.5%
Years since premium payment-- 4 7.5%
Years since premium payment-- 5 6.5%
Years since premium payment-- 6 5.5%
Years since premium payment-- 7 4.5%
Years since premium payment-- 8 3%
Years since premium payment-- 9 2%
Years since premium payment--10 or more NONE
Transfer Fee--The Company currently does not NONE
charge for processing transfers and guarantees
that the first 12 transfers in a Contract Year
will not be subject to a transfer charge. For
each subsequent transfer, the Company reserves
the right to assess a charge, guaranteed never
to exceed $10, to reimburse the Company for the
costs of processing the transfer.
Annual Contract Maintenance Charge--waived for $30
Contracts with Account Value of $100,000 or
more.
Optional Additional Benefit Charges
Best Anniversary Value Death Benefit Rider 0.15%
Extra Protector Death Benefit Rider 0.20%
Guaranteed Minimum Income Payment Rider 0.25%
Separate Account Expenses--as a percentage of
average Account Value
Administrative Charge 0.15%
Mortality and Expense Risk Charge 1.25%
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Total Separate Account Annual Expenses 1.40%
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11
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Annual Fund Expenses After Expense Reimbursements
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12b- Other
Management 1 Operating Total
Mutual Fund Portfolio Fees Fees Expenses Expenses*
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AIM V.I. Capital
Appreciation 0.62% 0.00% 0.05% 0.67%
AIM V.I. Growth 0.64% 0.00% 0.08% 0.72%
ACS V.P. Value 1.00% - 0.00% 1.00%
BT Small Cap Index 0.35% - 0.10% 0.45%
BT Equity 500 Index 0.20% - 0.10% 0.30%
FIS Prime Money
Fund II 0.50% - 0.30% 0.80%
FT International
(Class 2 shares) 0.69% 0.25% 0.19% 1.13%
LA Growth & Income 0.50% - 0.01% 0.51%
MFS New Discovery
Series 0.90% - 0.27% 1.17%
MFS Growth Series 0.75% - 0.25% 1.00%
MFS Growth with Income
Series 0.75% - 0.20% 0.95%
VIST Small Cap
Growth 0.85% - 0.50% 1.35%
VIST World Equity 0.70% - 0.50% 1.20%
VIST Growth 0.70% - 0.32% 1.02%
VIST Matrix Equity 0.65% - 0.50% 1.15%
VIST Growth &
Income 0.75% - 0.50% 1.25%
VIST Multiple
Strategies 0.70% - 0.45% 1.15%
VIST High Income
Bond 0.70% - 0.50% 1.20%
VIST U.S.
Government Bond 0.60% - 0.25% 0.85%
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</TABLE>
* "Total Expenses" for the Portfolios before reimbursement by the relevant
Fund's investment advisor, for the period ended December 31, 1999, were as
follows: _____% for the MFS New Discovery Series Portfolio; _____ % for the VIST
Small Cap Growth Portfolio; _____% for the VIST World Equity Portfolio; _____%
for the VIST Growth Portfolio; _____% for the VIST Matrix Equity Portfolio;
______% for the VIST Growth & Income Portfolio; _____% for the VIST High Income
Bond Portfolio; and _____% for the VIST U.S. Government Bond Portfolio of
average daily net assets.
The purpose of this Table is to assist you in understanding the various costs
and expenses that you will bear directly and indirectly. The Table reflects
charges and expenses of the Separate Account as well as the Funds. For
additional information, see "MORE ABOUT CHARGES AND DEDUCTIONS" on page __ and
the Funds prospectuses that accompany this prospectus.
12
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Expense examples on a Hypothetical $1,000 investment in the Contract, Assuming
5% annual rate of return, in existing Separate Account Investment Options:
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If you Annuitize after 2 Contract Years, or if you do surrender:
- ---------------------------------------------------------------------------------------------------
Mutual Fund Portfolio 1 Year 3 Years 5 Years 10 Years
- ------------------------------------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
FIS Prime Money Fund II $109 $158 $191 $268
VIST Small Cap Growth $115 $176 $219 $325
VIST World Equity $113 $171 $211 $310
VIST Growth $111 $165 $202 $291
VIST Matrix Equity $113 $169 $209 $305
VIST Growth & Income $114 $173 $214 $315
VIST Multiple Strategies $113 $169 $209 $305
VIST High Income Bond $113 $171 $211 $310
VIST U.S. Government Bond $109 $160 $193 $274
AIM V.I.Capital Appreciation $107 $154 $184 $255
AIM V.I. Growth $108 $156 $186 $260
ACS V.P. Value $111 $165 $201 $289
BT Small Cap Index $105 $147 $172 $231
BT Equity 500 Index $104 $143 $162 $214
FT International (class 2 shares) $112 $168 $207 $301
LA Growth & Income $106 $149 $175 $237
MFS New Discovery Series $113 $170 $210 $307
MFS Growth Series $111 $165 $201 $289
MFS Growth with Income Series $110 $163 $198 $284
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</TABLE>
<TABLE>
<CAPTION>
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If you Annuitize after 2 Contract Years, or if you do not surrender:
- ---------------------------------------------------------------------------------------------------
Mutual Fund Portfolio 1 Year 3 Years 5 Years 10 Years
- ------------------------------------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
FIS Prime Money Fund II $24 $73 $126 $268
VIST Small Cap Growth $30 $91 $154 $325
VIST World Equity $28 $86 $146 $310
VIST Growth $26 $80 $137 $291
VIST Matrix Equity $28 $84 $144 $305
VIST Growth & Income $29 $88 $149 $315
VIST Multiple Strategies $28 $84 $144 $305
VIST High Income Bond $28 $86 $146 $310
VIST U.S. Government Bond $24 $75 $128 $274
AIM V.I.Capital Appreciation $22 $69 $119 $255
AIM V.I. Growth $23 $71 $121 $260
ACS V.P. Value $26 $80 $136 $289
BT Small Cap Index $20 $62 $107 $231
BT Equity 500 Index $19 $58 $ 99 $214
FT International (class 2 shares) $27 $83 $142 $301
LA Growth & Income $21 $64 $110 $237
MFS New Discovery Series $28 $85 $145 $307
MFS Growth Series $26 $80 $136 $289
MFS Growth with Income Series $25 $78 $133 $284
- ---------------------------------------------------------------------------------------------------
</TABLE>
Do not consider the examples a representation of past or future expenses.
Actual expenses may be greater or less than those shown. For example, the
examples do not reflect premium tax charges or any optional benefit riders. The
impact of the 15% free withdrawal amount is also not reflected because it is
not available on a full surrender of a Contract.
13
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FIRST VARIABLE LIFE INSURANCE COMPANY
We are a stock life insurance company that was organized under Arkansas law in
1968. We engage principally in the business of variable life insurance, variable
annuities, and fixed annuities. We hold licenses to sell insurance in 49 states,
the District of Columbia and the U.S. Virgin Islands. Irish Life of North
America, Inc. ("ILoNA") owns all of our outstanding stock, and Irish Life &
Permanent plc. ("Irish Life & Permanent"), in turn, owns all of ILoNA. Irish
Life & Permanent is a leading life and financial services group in Ireland with
total assets of over $25 billion at May 1, 1999.
We have an A (Excellent) rating from A.M. Best Company, an independent firm that
analyzes insurance carriers. We also have an AA- rating from Standard and Poor's
and an AA- rating from Duff & Phelps Credit Rating Co. on claims paying ability.
These ratings only reflect the opinion of the rating company on our relative
financial strength, and on our ability to satisfy our obligations under the
Policies. The ratings do not reflect the investment performance of the Separate
Account, or the degree of risk associated with an investment in the Separate
Account.
THE SEPARATE ACCOUNT
We authorized the establishment of First Variable Annuity Fund E (the "Separate
Account) under Arkansas law on December 4, 1979; and we have registered the
Separate Account with the Securities and Exchange Commission ("SEC") as a unit
investment trust-type investment company.
The Separate Account's assets belong to us. However, our other creditors could
reach only the amount (if any) in the Separate Account that exceeds the current
value of our obligations to policyholders who have chosen a Separate Account
Investment Option.
The Separate Account has several different investment options within it. We
invest the assets allocated to each investment option in one Portfolio of a
Fund.
We may add other investment options to the Contracts that, in turn, may be
invested in other Portfolios of a Fund, or in portfolios of other mutual funds.
We may restrict these other investment options to customers of specified
distributors.
YOUR INVESTMENT OPTIONS
The Available Options
You may allocate your premium payments and existing Account Value to one or more
of our Separate Account Investment Options and/or to our Fixed Account. The
currently available Portfolios for our Separate Account Investment Options are
listed on the cover page of this prospectus. More information, including a
discussion of potential risks, appears in the current prospectuses for the
Funds, which accompany this prospectus. (The prospectuses for the Funds may also
describe other portfolios that are not available under a Contract.) You should
read this prospectus and the prospectuses for the Funds carefully before
investing in any Separate Account Investment Option.
The investment objectives and policies of certain Separate Account investment
options are similar to the investment objectives and policies of other mutual
funds that the investment advisers manage. Although the objectives and policies
may be similar, the investment results of the investment options may be higher
or lower than the results of other such mutual funds. The investment advisers
cannot guarantee, and make no representation, that the investment results of
similar funds will be comparable even though the funds have the same advisers.
We may enter into certain arrangements under which we are reimbursed by the
Portfolios' advisors, distributors and/or affiliates for the administrative
services which we provide to the Portfolios.
We do not guarantee that continued purchase of Portfolio shares will remain
appropriate in view of the purposes of the Separate Account. If shares of a
Portfolio are no longer available for investment by the Separate Account or if,
in our judgment, further investment in the shares should become inappropriate or
inadvisable in view of the purpose of the Contracts, we may limit further
purchase of the shares or substitute shares of another portfolio or investment
vehicle for shares already purchased or to be purchased in the future. We also
may, in our discretion, remove Portfolios for transfers or new investments. No
substitution of securities may take place without prior approval of the SEC, to
the extent required, and in compliance with requirements the SEC may impose.
We may also combine Separate Account Investment Options or operate them in any
form permitted by law, including a form that allows them to make direct
investments.
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This prospectus generally describes only the Contract and Separate Account
investment options. Because of certain exemptions, interests in our Fixed
Account are not registered under the securities laws, nor have we registered the
Fixed Account as an investment company. Accordingly, the protections of the
federal securities laws do not apply to our Fixed Account. We will credit your
Account Values in the Fixed Account with at least a minimum effective rate of
interest per year. We may credit additional amounts of "current" interest in our
sole discretion. New purchase payments and transfers from the Separate Account
to the Fixed Account may each receive different current interest rate(s) than
the current interest rate(s) credited to Account Value that has been previously
invested in the Fixed Account. We determine current interest rates in advance,
and credit interest daily to your Account Value in the Fixed Account.
Transfers Among Investment Options
General Requirements. You may transfer Account Value among investment options by
written request or telephone. The minimum amount you may transfer is the lesser
of (a) $1,000 or (b) your entire interest in the applicable investment option.
You should mail, fax or express written transfer requests to our Variable
Service Center shown on the front cover of this prospectus. You can also request
a transfer by phoning 1-800-845-0689.
Transfer requests must clearly specify the amount to be transferred and the
investment options affected. All transfer requests made at the same time for
Separate Account investment options will be treated as a single request. The
transfer will be effective at the prices we next compute after we receive the
transfer request at our Variable Service Center.
Unless we consent, transfers from the Fixed Account to other investment options
during the first Contract Year cannot total more than 25% of the Fixed Account
Value on the Contract Date.
After the first Contract Year, your transfers from the Fixed Account during the
Accumulation Period may not exceed the greater of:
. 25% of your Account Value in the Fixed Account as of the immediately
preceding Contract Anniversary; or
. 100% of your Account Value in the Fixed Account that you transferred to
other investment options during the immediately preceding Contract Year.
After the Annuity Date, you may make a transfer once each Contract Year, subject
to certain procedures outlined in the Contract:
. from one or more Separate Account investment options to other Separate
Account Investment Options; or
. to the Fixed Account.
No transfers are permitted from the Fixed Account to the Separate Account once
annuity payments begin.
Automatic Transfer Programs - You can participate in automatic transfer
arrangements, including dollar cost averaging and asset rebalancing programs.
You initiate these programs by making a written or telephone request to our
Variable Service Center shown on the front cover of this prospectus. We make the
automatic transfers on the last business day of whichever of the following
intervals you request: quarterly, semi-annually, annually, monthly (for dollar
cost averaging only), or at any other interval that we approve. You may request
us to cease automatic transfers at any time.
Automatic transfers from the Fixed Account are subject to the restrictions
described above in General Requirements (except that, for dollar cost averaging
only, you can transfer up to 100% of your Account Value in the Fixed Account
within one Contract Year if you have selected the monthly interval.) We
currently do not charge you for an automatic transaction program, although we
reserve the right to do so in the future.
The dollar cost averaging program permits transfers from the FIS Prime Money
Fund II investment option or the Fixed Account to other Separate Account
investment options on a regularly scheduled basis. Such systematic transfers may
prevent investing too much when the price of securities is high or too little
when the price is low. There is no guarantee of this, however.
Also, since systematic transfers, such as dollar cost averaging, involve
continuous investment regardless of fluctuating price levels, you should
consider your ability to continue purchases through all phases of the market
cycle.
The minimum amount, for each dollar cost averaging transfer, is $100. You must
have $1,200 of Account Value in the FIS Prime Money Fund II investment option or
the Fixed Account, as applicable, before a "dollar cost averaging" program may
begin. Transfers from the Fixed Account are also subject to the restrictions
above, except that 100% of amounts in the Fixed Account may be systematically
transferred before the Annuity Date if transfers are made monthly for a one-year
period.
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The asset rebalancing program enables you to select the percentage levels of
Account Value you wish to maintain in particular investment options. At the
intervals you select, we will automatically rebalance your Account Value to
maintain the indicated percentages by transfers among the investment options.
You must include all of your Account Value allocated to the Separate Account
investment options in any asset rebalancing program.
Other investment programs, such as systematic transfers and systematic
withdrawals, or other transfers or withdrawals may not work well in concert with
the asset rebalancing program. Therefore, you should monitor your use of these
programs while the asset rebalancing program is being used. Currently, dollar
cost averaging and automatic account rebalancing may not be in effect
simultaneously.
We currently do not charge for enrolling in these programs, but we reserve the
right to do so.
Restrictions on Transfers. Generally, you may make an unlimited number of
transfers in any Contract Year. Frequent requests to transfer, however, may have
a detrimental effect on the value of Portfolio shares held in the Separate
Account. We may therefore limit the number of permitted transfers in any
Contract Year, or refuse to honor any transfer request for an owner or a group
of owners, if:
. the purchase of shares of one or more of the Portfolios is to be restricted
because of excessive trading ; or
. if a specific transfer or group of transfers is deemed to have a detrimental
effect on Account Value or Portfolio share prices.
We may also at any time suspend or cancel acceptance of third party transfer
requests on behalf of an Owner; or restrict the Investment Options that will be
available for such transfers. Notice will be provided to the third party in
advance of the restrictions. We will not impose any restrictions, however, if
we have received satisfactory evidence that:
. you, as Owner, have appointed the third party to act on your behalf for all
financial affairs; or
. a court of competent jurisdiction has appointed the third party to act on the
Owner's behalf.
We also reserve the right at any time and without prior notice to otherwise
modify, suspend or stop the transfer privileges.
Automatic Transfer of Small Accounts. We reserve the right, subject to any
applicable law, to transfer Account Value from any investment option if less
than $250, to the investment option with the greatest Account Value.
Mixed and Shared Funding
We buy shares of the Funds for the Separate Account in connection with the
Contracts, and for allocation to separate accounts funding variable annuity
policies and other variable life insurance policies issued by us. The Funds
offer shares to other insurance companies and to other separate accounts, either
affiliated or unaffiliated with us, for the same purpose. In the future, it may
conceivably become disadvantageous for variable life insurance separate accounts
and variable annuity separate accounts to invest in one or more of the
Portfolios simultaneously, if the interests of variable life insurance and
variable annuity policy owners differ. The boards of trustees of the Funds
intend to monitor events to identify any material irreconcilable conflicts that
may arise and to determine what action, if any, they or the insurance companies
should take in response.
MORE ABOUT CHARGES AND DEDUCTIONS
Daily Deductions
Each Business Day, we deduct an administrative charge and a mortality and
expense risk charge, both before and after the Annuity Date, that we calculate
as a percentage of your Contract's net assets in each Separate Account
investment option. The annual rate for the administrative charge is 0.15%, and
the annual rate for the mortality and expense risk charge is 1.25%.
Annual Deductions
At the end of each Contract Year, we make an annual deduction from each
Contract's Account Value. We make the deduction from your Investment Options
in proportion to the amount of your Account Value in each (i.e., on a "pro-rata
basis") or by any other method you select and we approve.
For example, we will permit you to have deductions first taken from one or more
pre-selected investment options. You may also request deductions to first be
taken from the Separate Account investment option that has had the best
investment performance over the prior Contract Month.
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The annual deductions are generally taken on each Contract Anniversary, based on
your Account Value at that time. If your Annuity Date is not a Contract
Anniversary, however, we will calculate the annual deductions on the Annuity
Date. Similarly, if you surrender your Contract, or make a total withdrawal at
a time other than a Contract Anniversary, we will calculate the annual
deductions on the transaction date.
The annual deductions include the following charges:
Annual Contract Maintenance Charge. This charge is $30.00 per Contract Year for
each Contract Year during the Accumulation Period. We will waive this charge for
a Contract Year if your Account Value for that year is $100,000 or more.
Optional Additional Benefit Charges. We will deduct additional amounts if you
elected to add optional additional benefit riders to your Contract. Charges for
the riders will be separately stated in your Contract. The charges for currently
offered riders are: 0.15% of your Account Value for the Best Anniversary Value
Death Benefit Rider; 0.20% of your Account Value for the Extra Protector Death
Benefit Rider; 0.25% of your Account Value for the Guaranteed Minimum Income
Payment Rider. The charges for a rider are not taken for any Contract Year that
begins after:
. the date annuity payments begin and the rider terminates; or
. the date the rider otherwise terminates
Withdrawal Charge
We may assess a withdrawal charge if you withdraw Account Value or surrender
your Contract within the first 9 years after a premium is received. We will
also impose the withdrawal charge on the Annuity Date if the Annuity Date is
within the first 2 Contract Years.
We determine the withdrawal charge by applying the percentages shown in the
Summary of Expenses table in the "Highlights" section of this prospectus to the
purchase payments we deem withdrawn or surrendered, or if the Annuity Date is
within the first 2 Contract years. Purchase payments are deemed withdrawn or
surrendered in the order in which they are made. We take withdrawal charges
from your investment options on a pro-rata basis, or by any other method you
select and we approve.
If the Account Value remaining in a Separate Account Investment Option after a
partial withdrawal is insufficient to cover the applicable withdrawal charge, we
will deduct the charge from the amount withdrawn.
Free Withdrawal Amount. We will not assess a withdrawal charge on a partial
withdrawal of Account Value until the amount withdrawn for that Contract Year
exceeds a "free withdrawal amount" equal to 15% of your purchase payments.
The free withdrawals do not reduce purchase payments for purposes of computing
the withdrawal charge. The unused portion of the "free withdrawal amount" for
one Contract Year does not carry over to the next Contract Year.
The free withdrawal amount is not available on a total withdrawal of Account
Value, a surrender of your Contract, or on withdrawal requests that would result
in less than $1,000 of remaining Account Value.
Waiver of Withdrawal Charge. We will waive the withdrawal charge:
. if any death benefits are paid; or
. if your Account Value is applied after the first 2 Contract Years to an
Annuity Option.
We also may waive the withdrawal charge (where permitted):
. if you or your spouse is diagnosed with a terminal illness (we may require
evidence of such illness, including an examination by a licensed physician of
our choice); or
. after the first Contract Year, if you or your spouse is confined in a
qualifying nursing home for 90 consecutive days immediately preceding the
Contract Anniversary.
To qualify for a waiver of charges based on confinement in a qualifying nursing
home, you or your spouse must never have been confined in a qualifying nursing
home at the time you apply for a Contract.
The availability and requirements of the terminal illness and/or nursing home
waiver may vary from state to state. Your Contract will contain a complete
description of all requirements and charges for any terminal illness and nursing
home waiver.
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Premium Taxes
We will deduct premium taxes or other taxes payable to a state or other
governmental entity from your Contract. Some states assess premium taxes at the
time purchase payments are made; others assess premium taxes at the time annuity
payments begin. We currently intend to deduct premium taxes when incurred.
Premium taxes generally range from 0% to 4%.
Transfer Charge
The Company guarantees that the first 12 transfers in a Contract Year will be
free of a transfer charge, but reserves the right to assess a charge, guaranteed
never to exceed $10, for each subsequent transfer in a Contract Year to
reimburse it for the expense of processing transfers.
Other Charges and Expenses
Fund Expenses. Our Separate Account purchases shares of the Portfolios of the
Funds at net asset value, which reflects investment management fees, other
operating expenses and any expense reimbursement paid by an investment adviser
to the applicable Portfolio. (See "Highlights - Fund Expenses.")
Income Taxes. While we currently do not reduce Account Value for federal income
taxes of the Separate Account, we reserve the right to do so, if we determine
that we will incur a tax because of the operation of the Separate Account. We
will deduct for any income taxes incurred as a result of the operation of the
Separate Account whether or not our possible reserve for taxes was sufficient.
We will deduct any withholding taxes required by applicable law when amounts are
distributed from a Contract.
Special Service Fees. We do not charge you for special services, such as
additional reports, dollar cost averaging, and asset rebalancing. Although we
do not currently intend to do so, we reserve the right to charge you for these
special services in the future.
Elimination, Reduction or Refund of Charges and Deductions
We may eliminate, reduce, or refund any charges and deductions on a Contract
when sales of Contracts are made to certain individuals or to group and
sponsored arrangements. We will do this when we expect savings of sales,
administration or other expenses, or a reduction in the level of risks we expect
to assume under the Contracts. (This prospectus describes such groups under
"Group and Sponsored Arrangements" below.) We determine any such adjustment to
charges and deductions after examination of relevant factors such as:
. the size and type of group, because large numbers of Contracts tend to lower
our per-Contract expenses;
. the total amount of premium payments to be received, because certain expenses
tend to be a smaller percentage of larger premium payments;
. any prior or existing relationship we have with the purchaser, because of the
likelihood of reduced marketing and implementation expenses;
. other circumstances, of which we are not presently aware, which could result
in reduced expenses; and
. after a Contract is issued, if we anticipate expenses for later Contract
Years that are lower than initially projected.
We also may eliminate, reduce or refund charges and deductions when we issue a
Contract to an officer, director, employee or agent of ours or any of our
affiliates. We do not, however, guarantee any adjustment in charges and
deductions, and any adjustment may vary by group.
All adjustments will be made under our uniform administrative rules then in
effect. In no event will adjustments to charges or deductions be permitted if
the adjustment would be unfairly discriminatory to any person.
Group and Sponsored Arrangements. Group arrangements include those in which a
trustee, employer, association or similar entity purchases individual Contracts
covering a group of individuals on a group basis. An example of such an
arrangement is a non-tax qualified deferred compensation plan. Sponsored
arrangements include those in which an employer, an association or similar
entity permits the Company to offer Contracts to its employees or members on an
individual basis.
Gender-Neutral Policies. In 1983, the United States Supreme Court decided in
Arizona Governing Committee v. Norris that certain annuity contracts may not be
used to fund certain employee benefit programs where the contracts provided
values and benefits that varied with the gender of the participant. We may
therefore offer Contracts that do not vary by gender for use in connection with
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certain employee benefit programs. We recommend that any employer proposing to
offer the Contracts to employees under a group or sponsored arrangement consult
its attorney before doing so.
We may also offer the Contract with provisions and charges that are gender
neutral in states where required, and where the "unisex" version of the Contract
has been approved. Currently, the State of Montana prohibits the use of
actuarial tables that distinguish between men and women in determining premiums
and annuity benefits.
Purpose of Contract Charges
We have designed the Contract charges to cover our direct and indirect costs of
selling, administering and providing benefits under the Contracts. Taken
together, these charges are also designed to compensate us for the risks we
assume. These include:
. mortality risks (such as the risk that Contract owners may, on average, die
before we expect, or Annuitants may, on average, live longer than we expect,
thereby increasing the amount of claims we must pay);
. investment risks (such as the risk that adverse investment performance will
make it more costly for us to provide the death benefits under the Contracts
or reduce the amount of our asset-based fee revenues below what we
anticipate);
. sales risks (such as the risk that we sell fewer Contracts and receive lower
net revenue than we expect, thereby depriving us of expected economies of
scale);
. regulatory risks (such as the risk that tax or other regulations may be
changed in ways adverse to issuers of annuity contracts); and
. expense risks (such as the risk that the costs of administrative services
that we must provide will exceed what we currently project).
If, as expected, the charges we collect from the Contracts exceed our total
costs concerning the Contracts, we earn a profit. Otherwise, we incur a loss.
We have set the current and maximum rates of certain of our charges with
reference to estimates of the amount of specific types of expenses or risks that
we will incur. In some cases, this prospectus identifies such expenses or risks
in the name of the charge: e.g., the administrative charge, contract maintenance
charge, and mortality and expense risk charge.
However, the fact that any charge bears the name of a particular expense or risk
does not mean the amount we collect from that charge will never be more than the
amount of such expense or risk. It also does not mean that we may not be
compensated for such expense or risk out of any other charges deducted under
terms of the Contracts.
THE CONTRACT
Application and Issuance of a Contract
If you wish to purchase a Contract, you must submit an application to our
Variable Service Center, together with the minimum required initial Purchase
Payment. You select:
. the Annuitant , Annuity Date, and Annuity Option;
. the investment options to which we will allocate your purchase payment;
. the Beneficiary who will receive death benefits under the Contract if you die
during the Accumulation Period; and
. any optional additional benefit riders.
We generally will not issue Contracts to owners and Annuitants older than age
85. We will review an application under our underwriting rules, and we may
request additional information or reject the application. We will not retain a
purchase payment for more than 5 business days while processing an incomplete
application unless the purchaser has authorized us to do so. If we decline an
application, we will refund any purchase payment made.
If you or the Annuitant is older than age 70 1/2, you should consult with a
qualified tax adviser on the impact of minimum distribution requirements under
your tax-qualified retirement plan before purchasing a Qualified Contract. Any
required annual minimum distribution amount should be withdrawn from your
existing tax qualified retirement plan before amounts are transferred to
purchase a Qualified Contract. (See "FEDERAL TAX MATTERS - Withdrawals from
Qualified Contracts.")
"Free Look Right." You have the right to review your Contract during an initial
inspection period specified in the Contract and, if dissatisfied, to return it
to us or to the agent through whom you purchased it. We will refund the Account
Value on a Contract returned during the permitted period less any Purchase
Payment Credits unless state law requires a different amount. You shall not
receive any Purchase Payment Credits (see "Purchase Payment Credits"). The
"free look" period is typically 10 days, but may be greater depending on state
requirements.
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Purchase Payments
General Requirements. Your initial purchase payment is due on the Contract Date
and is generally required to be at least $10,000 for Non-Qualified Contracts and
$5,000 for Qualified Contracts. Each subsequent purchase payment is generally
required to be $200. We reserve the right to decline any purchase payment, and,
unless we consent otherwise, the maximum permitted total for all your purchase
payments is $5 million.
Termination of Small Accounts. We reserve the right to cancel a Contract if
your Account Value falls below $1,000, and we have not received any purchase
payments during the current Contract Year and the preceding 2 Contract Years.
Before doing so, we will provide you with a 30-day period to make an additional
payment and increase your Account Value above the minimum amount. We will send
a notice of the need to make additional purchase payments to your last known
address.
Allocation of Purchase Payments
General. We allocate the purchase payments you make (after any deductions) to
the investment options you select. We use "Accumulation Units" to keep track of
your interest in any Separate Account investment option you select. We
determine the number of Accumulation Units credited to a Contract by dividing
the amount allocated to a Separate Account investment option by the value of the
applicable Accumulation Unit next determined after receipt of your purchase
payment. We calculate Accumulation Unit Values as of the end of each Business
Day. Purchase payments allocated to the Fixed Account are credited in dollars.
Purchase payments are generally allocated to the Separate Account or the Fixed
Account as of the later of the Contract Date or the date we receive your
payment.
Delayed Investment Allocation Date. We reserve the right to allocate purchase
payments to the FIS Prime Money Fund II investment option for an investment
delay period before they will be invested (together with any investment gain) in
any other investment option(s) you designate. In that case, we would reallocate
your Account Value to the investment options you have selected at the end of
your Contract's "free look" period. We would measure the investment delay
period from the date your Contract is issued from our Variable Service Center
and would include up to 5 extra days in addition to the applicable "free look"
inspection period to provide time for mail or other delivery of the Contract to
you.
If we elect to delay your investment allocation date, your Contract will contain
a provision to that effect.
Telephone Transactions
You may initiate various transactions by calling 1-800-845-0689. These are:
transfers of Account Value, notification of a change in your address, change of
premium allocations among investment options, partial withdrawal requests, and
systematic withdrawals. You may authorize your representative to make these
calls on your behalf.
You may also call 1-800-59-FUNDS for current Accumulation Unit values, current
Account Value, and for telephone transfers of Account Value.
If you own a Contract jointly with another owner, unless both owners have
advised us to the contrary, we will accept instructions from either one of the
joint owners.
We will use reasonable procedures (such as requiring identifying information
from the caller, tape recording the telephone instructions, and providing
written confirmation of the transaction) in order to authenticate instructions
communicated by telephone. You will be responsible for any telephone
instructions we reasonably believe to be genuine. Therefore, you will bear any
losses arising from any errors in the communication of instructions. If we do
not employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, we may be liable to you for any losses due to dishonored
or fraudulent instructions. We may modify or terminate our procedures for
telephone transactions at any time.
CONTRACT BENEFITS AND VALUES
Determination of Account Value
Your Account Value under a Contract includes its value in the Separate Account
and in the Fixed Account. Your Account Value in a Separate Account investment
option at any time before the Annuity Date equals the number of Accumulation
Units you hold in that option multiplied by the then-current value of one such
Accumulation Unit. We compute this value in such a way that the investment
return on
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your Account Value in any Separate Account investment option will differ from
the total return achieved by the underlying Fund Portfolio only by the amount of
the charges and deductions we make under your Contract from that investment
option.
Your Account Value in the Fixed Account investment option earns fixed rates of
interest as described elsewhere in this prospectus. Your Account Value in the
Fixed Account will increase by the amount of such interest, but will decrease by
the amount of any charges or deductions that we take from that account for your
Contract.
Your Account Value in any investment option will also vary by the amount of
transfers we make among those components of Account Value in response to
requests that you make. Your Account Value in each investment option also will
increase by the amount that you direct to that option from your purchase
payments and will decrease by the amount of any withdrawals that you take from
that option (including any applicable withdrawal charges).
Purchase Payment Credits
We will credit your Contract with 3% of each purchase payment if the sum of all
purchase payments reduced by the sum of all withdrawals is less than $250,000 on
the day we receive the purchase payment, 4% of each purchase payment if the sum
of all purchase payments reduced by the sum of all withdrawals is equal to or
greater than $250,000 but less than $2,000,000, and 5% of each purchase payment
if the sum of all purchase payments reduced by the sum of all withdrawals is
equal to or greater than $2,000,000. We may increase the credit at our
discretion.
We credit your Contract with Purchase Payment Credits at the time the purchase
payment is applied to the Contract. We allocate any Purchase Payment Credit
to the Separate Account Investment Options in the same proportion as the
allocation of purchase payment you select. You will not retain any Purchase
Payment Credits applied to your Contract: (1) if you return your Contract within
the free look period (see "Free Look Right" for a description of the free look
period.); (2) for any purchase payment made within one year prior to a death of
owner, or Annuitant if the Contract is owned by a non-natural person; (3) for
any purchase payment made within one year prior to a partial or full withdrawal
or surrender; or (4) for any purchase payment made within three years prior to
the Annuity Date. Gains and losses allocable to the Purchase Payment Credit
remain in the Contract.
All purchase payment credits and any gains and losses attributable to such
amounts are treated as earnings under the Contract. All Purchase Payment
Credits are paid from our general account assets.
Death Benefits Before the Annuity Date
Death of the Annuitant. We generally do not pay a death benefit if you are not
the Annuitant and the Annuitant dies before the Annuity Date. Instead, you may
designate a new Annuitant within 30 days of the Annuitant's death. If you do
not, you will become the Annuitant. If you are a non-natural person, however,
the death of the Annuitant is treated as your death and a new Annuitant cannot
be designated. If the Annuitant dies after the Annuity Date, the death benefit
will be as specified in the annuity option elected.
Death of the Owner. If we receive proof that you have died before the Annuity
Date, we will pay a death benefit to the Beneficiary. (If you are a non-
natural person, we will consider the Annuitant to be "you" for purposes of
determining a death benefit.) You may elect for the death benefit to be paid in
a single sum or under one of our other Annuity Options. If no such election is
in effect, the Beneficiary may make an election during a 60-day period following
our receipt of proof of death. We will hold up payment of the death benefit in
the meantime.
If the Beneficiary is your spouse, he or she may elect to become the owner of
your Contract. If so, the Contract will continue in effect and we will not then
determine a death benefit. We will generally pay the entire death benefit
within 5 years of the date of your death unless the Beneficiary elects to have
the death benefit payable under an Annuity Option based on his or her life or
lifetime expectancy; and distributions start within one year after the date of
death.
The death benefit amount is the greater of:
. the BASIC DEATH BENEFIT; or
. the death benefit amount under any optional death benefit rider in effect.
If your Contract is owned jointly:
. we will determine a death benefit only when the first owner dies before the
Annuity Date; and
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. the optional death benefit riders will not be available.
BASIC DEATH BENEFIT. The Basic Death Benefit before the Annuity Date is the
greater of:
. the Account Value (except as provided in your Contract) on the date of your
death; or
. your adjusted purchase payments (i.e., all amounts you paid for your Contract
less any withdrawals of Account Value, and less any charges on your
withdrawals of Account Value); or
OPTIONAL DEATH BENEFIT RIDERS. We intend to offer one or more optional death
benefit riders subject to regulatory approval in your local area and to our
underwriting and issuance standards. For more complete information about the
following riders and their availability, you should consult your sales
representative or request a copy of the form of the rider in which you are
interested. Coverage under these riders provides our guarantee of a minimum
death benefit amount. The guaranteed amount will vary by the form of rider you
select. Annual Deductions from your Account Value increase if you purchase an
optional death benefit rider.
You may generally select an optional death benefit rider only at the time you
purchase a Contract. We may also offer one or more optional death benefit riders
from time to time after you purchase a Contract.
BEST ANNIVERSARY VALUE DEATH BENEFIT. The Best Anniversary Value Death Benefit
before the Annuity Date is based on the maximum adjusted Anniversary Value Death
Benefit we previously determined prior to your death:
. plus the sum of any purchase payments you paid for your Contract after our
last determination date prior to the date of your death; and
. less any withdrawals of Account Value after our last determination date prior
to the date of your death; and
. less any charges on these withdrawals.
On the Contract Date, the Anniversary Value Death Benefit is equal to the
Account Value. We determine an Anniversary Value Death Benefit Value on each
Contract Anniversary Date up to the Contract Anniversary on or next following
your 80th birthday. The Anniversary Value Death Benefit is based on your
Contract's then current Account Value, adjusted for any purchase payments you
made, and the amount of withdrawals (and charges on withdrawals) taken from
Account Value. As set forth above, we will also adjust any previously determined
Anniversary Value Death Benefit at that time to reflect purchase payments,
withdrawals of Account Value, and charges on these withdrawals, from the date of
our last determination.
The BEST ANNIVERSARY VALUE DEATH BENEFIT ends on the Annuity Date. Unless we
agree otherwise, it will also end if you change the owner of your Contract.
EXTRA PROTECTOR DEATH BENEFIT. The Extra Protector Death Benefit is the higher
of:
. the maximum adjusted Anniversary Value Death Benefit ; or
. a "roll-up value" that we compute as described below.
We compute the maximum adjusted Anniversary Value Death Benefit in the same
manner as under the Best Anniversary Value Death Benefit rider. The "roll-up
value" is the sum of:
. your adjusted purchase payments (i.e., all amounts you paid for your Contract
less any withdrawals of Account Value, and less any charges on your
withdrawals of Account Value); and
. interest accumulated at an annual rate of 5.0 % to the earlier of the
Contract Anniversary on or next following your 80th birthday or the date of
your death.
The EXTRA PROTECTOR DEATH BENEFIT ends on the Annuity Date. Unless we agree
otherwise, it will also end if you change the owner of your Contract.
Surrender and Withdrawals
Surrender. You may surrender your Contract for its entire Withdrawal Value at
any time before the Annuity Date by a signed written request conforming to our
administrative procedures. We calculate the Withdrawal Value as of the close of
the Business Day when your
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surrender request is received at our Variable Service Center. The Withdrawal
Value equals your Account Value reduced by any applicable withdrawal charges,
any taxes not previously deducted, and by any annual deductions for the Contract
Year. You will not retain any Purchase Payment Credits on any purchase payments
made within one year of surrender (see "Purchase Payment Credits"). Our
liability to pay any death benefit ends when you surrender your Contract.
Withdrawals. You may make a partial withdrawal of the Contract's Withdrawal
Value (minimum $1,000) before the Annuity Date. If a withdrawal request is made
that reduces the remaining Withdrawal Value below $1,000, we may deem the
Contract surrendered. In such event, the Contract will end and we will pay you
the Withdrawal Value of the Contract. You will not retain any Purchase Payment
Credits on any purchase payments made within one year of a withdrawal (see
"Purchase Payments Credits").
We will take any withdrawals from your Contract's investment options on a pro-
rata basis, unless you make a request in writing in advance for a different
method. We reserve the right to approve or disapprove any such request.
Systematic Withdrawals. You may elect to take partial withdrawals under a
systematic withdrawal program by either written or telephone request. Under the
program, systematic withdrawals are made on the same day (or next Business Day)
of each month or quarter. Systematic withdrawals may be transferred
automatically to your bank account if your bank is a member of the Automated
ClearingHouse (ACH). Systematic withdrawals are not allowed simultaneously with
a dollar cost averaging program.
We do not currently impose a fee for systematic withdrawals, but may do so in
the future. Partial withdrawals during a Contract Year that exceed the 15% "free
withdrawal" amount are subject to a withdrawal charge. (The "free withdrawal"
amount is not available if you surrender your contract. See the discussion in
the "Withdrawal Charge--Free Withdrawal Amount" section of this prospectus.)
We reserve the right to modify, suspend or eliminate the systematic withdrawal
program at any time.
Payment of Proceeds
We ordinarily will pay any Withdrawal Value (or death benefit proceeds) from the
Separate Account investment options within 7 days after receipt by our Variable
Service Center of a request (or proof of death), and all other required
elections and documentation in a form satisfactory to us. However, we may delay
payment or transfers from a Separate Account investment option in certain
circumstances. (See "Suspension of Payments and Transfers.")
Tax Withholding and Tax Penalties. All distributions from your Contract, or
portions thereof, which are included in your gross income are subject to federal
income tax withholding. We will generally withhold federal taxes at the rate of
10% from each distribution, unless you have previously provided us with a
written election not to have taxes withheld or to have taxes withheld at a
different rate. Mandatory withholding rules apply to certain distributions from
Qualified Contracts issued to 403(b) plans. Additionally, the Internal Revenue
Code provides that a 10% penalty tax may be imposed on certain early surrenders
and withdrawals. See the FEDERAL TAX MATTERS section of this prospectus for a
general discussion.
Annuity Benefits
General. We will make annuity payments after the Annuity Date to the Annuitant
unless you designate a different payee when you purchase a Contract. You may
also designate a payee, or change a previously designated payee, by sending a
written notice to the Variable Service Center at least 30 days before the
Annuity Date.
Annuity Options. You elect the Annuity Option and may change it by written
request to our Variable Service Center at least 30 days before the Annuity Date.
If no Annuity Option election is in effect 30 days before the Annuity Date, we
will make Annuity payments under Option B as a life Annuity with a 120-month
period certain.
You can choose from the following Annuity Options, or any other option we
approve:
OPTION A - Life Annuity. Monthly payments during the lifetime of the Annuitant.
Annuity payments cease when the Annuitant dies.
OPTION B - Life Annuity with Periods Certain of 60, 120, 180 or 240 Months.
Monthly payments during the lifetime of the Annuitant, and in any event for 60,
120, 180 or 240 months certain, as selected.
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OPTION C - Joint and Survivor Annuity. Monthly payments during the joint
lifetime of the Annuitant and a designated second person. At the death of either
payee, Annuity payments continue to the survivor payee. The survivor's Annuity
payments will equal 100%, 75%, 66-2/3% or 50% of the amount payable during the
joint lifetime, as chosen.
OPTION D - Joint and Contingent Annuity. Monthly payments during the lifetime of
the Annuitant and continued during the lifetime of a designated second person
after the Annuitant's death. The second person's Annuity payments will equal
100%, 75%, 66-2/3% or 50% of the amount payable, as chosen.
OPTION E - Fixed Payments for a Period Certain. Monthly payments of a fixed
amount for any specified period (at least 5 years but not exceeding 30 years),
as chosen.
Form of Annuity Payments. Annuity Options A, B, C & D are available for "fixed"
Annuity payments, "variable" Annuity payments or a combination of both. Annuity
Option E is available for fixed Annuity payments only. You may make a selection
of the form of Annuity payments by sending a written request to our Variable
Service Center no later than 7 calendar days before the Annuity Date. If you do
not, we will make a combination of fixed Annuity payments and variable Annuity
payments to reflect the allocation of your Account Value among the Fixed Account
and the Separate Account investment options. (We will, however, transfer your
Account Value to the Fixed Account before making payments under Annuity Option
E.)
Annuity Date. You select the Annuity Date when you purchase a Contract, and may
later change it by sending a written request to our Variable Service Center at
least 30 days before the existing Annuity Date. If the Annuity Date you select
is less than 2 Contract Years from the Contract Date, we will deduct a
withdrawal charge from your Account Value before the first annuity payment is
made.
If the selected Annuity Date occurs when the Annuitant is at an advanced age,
such as over Age 85, it is possible that the Contract will not be considered an
annuity for federal tax purposes. If your Contract is a Qualified Contract, you
should select an Annuity Date that is consistent with the requirements of your
tax-qualified retirement plans. A qualified tax advisor should be consulted for
more information.
Annuitization Bonus. We will increase your Account Value by an "Annuitization
Bonus" when Account Value is applied to an Annuity Option. The increase will be
based on your Account Value at the end of the Business Day immediately preceding
the Annuity Date.
We determine the Annuitization Bonus rate for a Contract at the time of issue,
but the Bonus may be modified, reduced or eliminated for subsequently issued
Contracts. On the date of this prospectus, the Annuitization Bonus rate is 3% of
Account Value. We will pro-rate any increase among your Contract's investment
options on the Annuity Date. Under current federal income tax rules, this
increase is deemed "income" on a Contract. (See "FEDERAL TAX MATTERS.")
Calculation of Annuity Payments. The initial dollar amount of an Annuity payment
is based on the Account Value (except as provided in your Contract) applied to a
specific Annuity Option and the annuity tables in your Contract. The annuity
tables for variable Annuity payments are based on a 3% assumed investment rate.
If the actual net investment rate exceeds 3%, variable Annuity payments
increase. Conversely, if the actual rate is less than 3%, variable Annuity
payments decrease. Variable Annuity payments will reflect the performance of
your Contract's Separate Account investment options.
We reserve the right to pay Annuity payments in one sum when the remaining
payments are less than $2,000 (or other minimum amount we may establish), or
when the Annuity option elected results in periodic payments of less than $100.
Guaranteed Minimum Income Payment Rider. This optional additional benefit
guarantees a minimum fixed lifetime Annuity payment for an additional annual
charge. You may select this rider only at the time you purchase a Contract, and
you may elect to begin payments under this rider only within a 30-day period
following the 7th or later Contract Anniversary. In addition, payments under
the rider may not begin until the Anniversary Date on or immediately following
the Annuitant's 60th birthday, nor may they begin after the Annuitant's 91st
birthday.
Guaranteed Monthly Income Payments are made either:
. for the lifetime of a single Annuitant or for 120 months, whichever is
longer; or
. for the lifetime of two Annuitants or for 240 months, whichever is longer.
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GMIP VALUE. The amount of a fixed annuity payment payable as a Guaranteed
Minimum Income Payment is based on the "GMIP Value," less any premium taxes,
that is applied to the GMIP Annuity Tables stated in the rider.
We determine a GMIP Value each year up to, and including, the Anniversary Date
on or immediately following the Annuitant's 80th birthday (the "Age 80
Anniversary Date"). After that, the GMIP Value is based on GMIP Value on the Age
80 Anniversary Date:
. plus any Purchase Payments we receive after the Age 80 Anniversary Date; and
. less a proportional reduction for any withdrawals of Contract Value after the
Age 80 Anniversary Date.
The GMIP Value up to the Age 80 Anniversary Date is the greater of:
. the "Best Anniversary Value" in effect; or
. the "Roll-Up Value" in effect.
Best Anniversary Value - based on the highest "Anniversary Value Amount" in
effect. We determine an Anniversary Value Amount, and adjust previously
determined Anniversary Value Amounts, each year up to, and including, the Age 80
Anniversary Date. An Anniversary Value Amount equals the Contract Value at the
time of determination. Previously determined Anniversary Value amounts reflect:
. an increase for any Purchase Payments we received since our last
determination; and
. a proportional reduction for any withdrawals of Contract Value since our last
determination.
Roll-Up Value - based on:
. Purchase Payments; and
. a proportional reduction for any withdrawals of Contract Value (including
charges) attributable to Purchase Payments; and
. interest accumulated at an annual rate of 5.0%.
Proportional Reductions - based on the ratio that a withdrawal of Contract
Value, including charges on the withdrawal, bears to the total Contract Value
before the withdrawal.
GMIP Annuity Tables - based on the 1983a Annuity Mortality Table (40% Male,
pivotal age 65) and a benchmark rate of 2.5% per year, compounded annually. The
level of income provided under these tables is based on conservative actuarial
factors, and may often be less than the level that would be provided by applying
the Contract Value to other tables. If more favorable to the Annuitant, we will
determine monthly income by applying Contract Value to our current fixed annuity
payment rates for the annuity option selected.
GMIP Value does not guarantee performance of any Investment Option in your
Contract, and cannot be used to increase the amounts available for withdrawal,
surrender or as a death benefit before the Annuity Date. The GMIP Value is not
increased by the amount of any Annuitization Bonus.
Death Benefits after the Annuity Date
Death of the Annuitant. Any remaining Annuity payments under Annuity Options B
or E are made to the Beneficiary. The Beneficiary may elect to receive the
commuted value of the remaining Annuity Payments in a single sum instead. We
determine the commuted value by discounting the remaining Annuity Payments at
the then current interest rate used for commutation.
Death of the Owner. No death benefits are provided under a Contract if you die
after the Annuity Date, unless you are also the Annuitant and Annuity payments
are made under Annuity Options B or E.
OTHER PROVISIONS OF THE CONTRACT
Misstatement of Age or Sex
If the age or sex of the Annuitant is misstated, we may change the annuity
benefits to those that correspond with the correct age and sex.
If the misstatement is discovered after the Annuity Date:
. we will add interest to any overpayments at the rate of 6% per year,
compounded annually, and deduct the amount against remaining annuity
payments; and
. we will add interest to any underpayments at the rate of 6% per year,
compounded annually, and pay the amount in a single sum with the next Annuity
Payment.
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Owner and Beneficiary
The Contract application names the Contract owner, who in turn may name a new
owner at any time before the Annuity Date. At the death of the owner, the
designated Beneficiary becomes the owner. Because the owner has the authority to
exercise most rights under a Contract, this prospectus generally refers to the
owner when it refers to "you" or "your."
We will permit the Contract to be owned jointly if one owner is the spouse of
the other, and we will generally assume that each owner has the authority to act
for all owners. However, we may require the written consent of all owners for
certain transactions, such as an assignment of a Contract.
Beneficiary. The Contract application also names the Beneficiary under the
Contract and any contingent Beneficiary. You may change the Beneficiary of the
Contract (other than an irrevocably named Beneficiary) at any time before death
benefits are payable. If your Contract is owned jointly by two spouses, we will
treat each spouse as the designated beneficiary for any death benefits that may
be payable upon the death of the other, unless you tell us otherwise.
Changes and Assignments. A change of owner or Beneficiary requires a written
request satisfactory to us that is dated and signed by all of the owners. The
change will take effect on the date it is signed, but is subject to all payments
made and actions taken by us under the Contract before we receive the request at
our Variable Service Center.
Assignments
The owner may assign (transfer) the owner's rights in a Contract to someone
else. An assignment requires a written request signed by all of the Contract's
owners. An assignment will take effect only when we record it at our Variable
Service Center. We have no responsibility for any assignment not submitted for
recording; nor for the sufficiency or validity of any assignment.
Unfavorable tax consequences, including recognition of taxable income and the
imposition of a 10% penalty tax may result from transferring ownership or making
an assignment. In addition, Qualified Contracts owned by tax-qualified
retirement plans may be subject to mandatory assignment restrictions. Therefore,
you should consult with a qualified tax adviser before transferring your
Contract.
Change of Annuitant Designation
The Owner may designate a new Annuitant before the Annuity Date, but not if a
non-natural person owns the Contract.
Texas Optional Retirement Program
A Contract issued to a participant in the Texas Optional Retirement Program
("ORP") contains an ORP endorsement that amends the Contract to provide that:
. if for any reason a second year of ORP participation is not begun, the total
amount of the State of Texas' first-year contribution will be returned to the
appropriate institute of higher education upon its request; and
. no benefits will be payable, through surrender of the Contract or otherwise,
until the participant dies, accepts retirement, terminates employment in all
Texas institutions of higher education or attains the age of 701.2.
The value of the Contract may, however, be transferred to other contracts or
carriers during the period of ORP participation. A participant in the ORP is
required to obtain a certificate of termination from the participant's employer
before the value of a Contract can be withdrawn.
Voting Rights
We will vote the shares of the Portfolios held by the Separate Account at
regular or special meetings of the Portfolio's shareholders in accordance with
instructions received from you and other owners having the voting interest in
the affected Portfolio(s). We compute the number of votes that an owner has the
right to instruct for a particular Portfolio by dividing the owner's Account
Value in that Portfolio by that Portfolio's net asset value per share. We will
vote a Portfolio's shares held in our Separate Account for which we do not
receive instructions, as well as shares held in our Separate Account that are
not attributable to owners in the same proportion as we vote that Portfolio's
shares held in the Separate Account for which we have received instructions.
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Suspension of Payments or Transfers
We reserve the right to suspend or postpone payments for withdrawals or
transfers from the Separate Account Investment Options for any period when:
. the New York Stock Exchange is closed;
. trading on the New York Stock Exchange is restricted;
. an emergency exists that makes it impracticable to dispose of Separate
Account securities or determine the Separate Account net asset values; or
. any other period when so ordered by the Securities and Exchange Commission
for the protection of Owners.
We reserve the right to defer payment for a withdrawal or transfer from the
Fixed Account for the period permitted by law, but not for more than six months
after we receive the transaction request.
DISTRIBUTION AND OTHER AGREEMENTS
First Variable Capital Services, Inc. ("FVCS"), 2122 York Road, Oak Brook,
Illinois 60523, acts as distributor of the Contracts. FVCS, our wholly owned
subsidiary, was incorporated in Arkansas on July 26, 1991. It is registered with
the SEC as a broker/dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. FVCS offers the
Contracts on a continuous basis.
We and FVCS have agreements with various broker-dealers under which the
Contracts will be sold by registered representatives of the broker-dealers. The
registered representatives are required to be authorized under applicable state
regulations to sell variable annuity contracts. The commissions payable to a
broker-dealer for sales of the Contract may vary with the sales agreement, but
are not expected to exceed 7.00% of purchase payments and annual renewal
compensation of up to 1.00% of Account Value in later Contract Years. Broker-
dealers may also receive expense allowances, wholesaler fees, bonuses and
training fees.
FEDERAL TAX MATTERS
General
BECAUSE OF THE COMPLEXITY OF THE LAW AND BECAUSE TAX RESULTS WILL VARY ACCORDING
TO YOUR IDENTITY AND STATUS, YOU SHOULD SEEK INDIVIDUALIZED LEGAL AND TAX ADVICE
BEFORE PURCHASING OR TAKING ANY ACTION UNDER A CONTRACT.
We cannot provide a comprehensive description of the federal income tax
consequences regarding the Contracts in this prospectus, and special tax rules
may apply that we have not discussed herein. Nor does this discussion address
any applicable state, local, gift, inheritance, estate, and foreign or other tax
laws. This discussion assumes that you, the Contract's owner, are a natural
person and a U.S. citizen and resident. Finally, we would caution that the law
and the related regulations and interpretations on which we base our tax
analysis can change, and such changes can be retroactive.
Our Taxation
Under current federal income tax law, the operations of the Separate Account and
the Fixed Account do not require us to pay any tax. Thus, we currently impose no
charge for our federal income taxes. However, we may decide to charge the
Separate Account or Fixed Account for our federal income taxes, if there are
changes in federal tax law.
We may incur state and local taxes (in addition to premium taxes) in several
states. At present, these taxes are not significant and, accordingly, we do not
currently impose a charge for them. If they increase, however, we may impose a
charge for such taxes attributable to the Separate Account and/or Fixed Account.
Income Tax Deferral on Increases in Account Value
In general, an owner of an annuity contract is not taxed on increases in the
contract's value until a distribution occurs, either in the form of a lump sum
payment or as annuity payments.
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Contracts Owned by Other than Natural Persons. If you are a non-natural person,
e.g., a corporation, or certain other entities, your Contract will generally not
be treated as an annuity contract for federal income tax purposes, and you will
be subject to immediate taxation on the increases in your Contract's Account
Value. However, this treatment does not apply to Contracts held by a trust or
other entity as an agent for a natural person or to Qualified Contracts held by
a tax-qualified retirement plan (i.e., a plan that qualifies under section 401,
403(a), 403(b), 408, 408A or 457 of the Code).
Diversification Requirements. The Internal Revenue Code provides that a variable
annuity contract will not be treated as an annuity contract under the Code for
any period (and any subsequent period) for which the related investments are not
adequately diversified. We intend that all Portfolios of the Funds in which your
Contract may invest will comply with the diversification requirements. If your
Contract did not qualify as an annuity contract, you would be subject to
immediate taxation on the increases in your Contract's Account Value. This
treatment would apply for the period of non-compliance and subsequently, unless
and until we are able to settle the matter with the Internal Revenue Service. We
have no legal obligation to seek or agree to any such settlement, however.
Investment Control. The amount of investment control which you may exercise
under a Contract differs in some respects from the situations addressed in
published rulings issued by the Internal Revenue Service in which it held that
variable contract owners were not deemed, for federal income tax purposes, to
own the related assets held in a separate account by the issuing insurance
company. It is possible that these differences, such as your ability to transfer
among investment choices or the number and type of investment choices available,
would cause you to be taxed as if you were the owner of the Portfolio shares
that are attributable to your Contract. In that case, you would be liable for
income tax on an allocable portion of any current income and gains realized by
the Separate Account, even though you have received no distribution of those
amounts.
In the event any forthcoming guidance or ruling by federal income tax
authorities sets forth a new position, such guidance or ruling will generally be
applied only prospectively. However, if such ruling or guidance was not
considered to set forth a new position, it may, result in your being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, we reserve the right to modify your
Contract in an attempt to maintain its intended tax treatment.
Distributions from Non-Qualified Contracts
For a lump sum payment received upon surrender of a Contract, or upon a
withdrawal of Account Value, you will be taxed on the portion that exceeds your
investment in the Contract. The taxable portion is taxed as ordinary income.
Amounts that are not received as an annuity payment will be treated as coming
first from the earnings and then, only after that income portion is exhausted,
as coming from your investment in the Contract.
Penalty tax on Premature Distributions. The taxable portion of a distribution
from a Contract may be subject to a 10% penalty tax. However, the penalty is not
imposed on amounts received:
. after you reach age 59-1/2;
. after the death of the owner;
. if you are totally disabled as defined in Code section 72(m)(7));
. in a series of substantially equal periodic payments made not less frequently
than annually for your life (or life expectancy) or for the joint lives (or
joint life expectancies) of you and your Beneficiary;
. under an immediate annuity; or
. that are allocable to purchase payments made before August 14, 1982.
Annuity Payments. For annuity payments, the portion of each payment that exceeds
a pre-determined "exclusion amount" is considered taxable income. The exclusion
amount is determined:
. for payments based on a fixed annuity option, by multiplying the payment by
the ratio that your investment in the Contract (adjusted for any period
certain or refund feature) bears to the expected return under the Contract.
. for payments based on a variable annuity option, by dividing your investment
in the Contract (adjusted for any period certain or refund guarantee) by the
number of years over which the annuity is expected to be paid.
Payments received after the total of the excludable amounts equals the
investment in the Contract are fully taxable. The taxable portion is taxed at
ordinary income tax rates.
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Death Benefits. The Beneficiary is taxed on the portion of the Death Benefit
that exceeds your investment in the Contract. However, if the Beneficiary elects
to receive the Death Benefit under an Annuity Option, payments made to the
Beneficiary are taxed as annuity payments as discussed above.
Multiple Contracts. Multiple non-qualified annuity contracts issued within a
calendar year to the same contract owner by one company or its affiliates are
treated as one annuity contract when determining the tax consequences of any
distribution. Such treatment may result in adverse tax consequences, including
more rapid taxation of the distributed amounts from the combined contracts.
Owners should consult a tax adviser before purchasing more than one non-
qualified annuity contract in a calendar year.
Tax-Qualified Retirement Plans
This prospectus offers a Contract that may be used under various types of tax-
qualified retirement plans. Taxation of participants varies with the type of
plan and terms and conditions of each specific qualified plan. The terms and
conditions of a plan may restrict the permitted contributions to, and benefits
of, a Contract issued to the plan, regardless of the terms and conditions of the
Contract itself. Because a retirement plan's contribution limits and
distribution and other requirements may not be not incorporated into our
administrative procedures, Contract owners, participants and beneficiaries are
responsible for determining that transactions with respect to the Contract
comply with applicable law.
The tax rules for tax-qualified retirement plans are very complex and will have
different applications depending on individual facts and circumstances. For
example, Contracts issued under tax qualified retirement plans are generally not
transferable, except upon surrender or annuitization. Contract owners,
annuitants and beneficiaries should therefor obtain competent tax advice before
purchasing a Contract issued under a tax-qualified retirement plan, or engaging
in various transactions (i.e., making contributions or taking distributions) in
connection with a Contract.
The following are general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not exhaustive and are
for general informational purposes only:
Traditional IRAs and Roth IRAs. Eligible individuals may maintain: (a) an
individual retirement account or individual retirement annuity under section 408
of the Code ("Traditional IRA"); and (b) a non-tax deductible individual
retirement account or individual retirement annuity under section 408A of the
Code ("Roth IRA").
Under applicable limitations, amounts may be contributed to a Traditional IRA
that will be deductible from the individual's gross income. The amounts
contributed to a Traditional IRA may be reduced if an individual also
contributes to a Roth IRA.
Traditional IRAs and Roth IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. Under certain conditions,
distributions from other IRAs and other Qualified Plans may be rolled over or
transferred on a tax-deferred basis into a Traditional IRA (An "education IRA"
under section 530 of the Code does not qualify for this treatment.). Rollovers
may also be made under certain conditions to a Roth IRA, but only from a
Traditional IRA or from another Roth IRA. Rollovers from a Traditional IRA to a
Roth IRA are subject to immediate federal income taxation.
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and Profit Sharing
Plans. Section 401(a) and 403(a) of the Code permit corporate and self-employed
individuals to establish Qualified Plans for themselves and their employees.
These retirement plans may permit the purchase of a Contract to provide benefits
under the plan. Contributions made to the plan for the benefit of the employees
are not included in the gross income of the employees until distributed from the
plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Internal Revenue Code places limitations
and restrictions on all plans including items such as:
. amount of allowable contributions;
. form, manner and timing of distributions;
. transferability of benefits;
. vesting and non-forfeitability of interests;
. incidental death benefits;
. nondiscrimination in eligibility and participation; and
. the tax treatment of distributions, withdrawals and surrenders.
403(b) Annuities. Public schools and certain charitable, educational and
scientific organizations may purchase "403(b)" or "tax-sheltered annuities" (IRC
Section 501(c)(3)). These qualifying employers may contribute to a Contract for
the benefit of their employees. Such contributions are not included in the gross
income of the employees until employees receive distributions from the
Contracts.
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Tax-sheltered annuity contributions are limited to certain maximums.
Plus, additional restrictions govern such items as transferability,
distributions, nondiscrimination and withdrawals.
Distributions from Qualified Contracts
In the case of a withdrawal under a Qualified Contract (other than a "qualified
distribution" from a Roth IRA), a portion of the amount received is taxable.
This is generally based on the ratio of the individual's cost basis to the
individual's total accrued benefit under the retirement plan.
Roth IRAs. A "qualified distribution" from a Roth IRA is generally not subject
to federal income taxation, but can only be made after the assets have been in
the Roth IRA for 5 years and the Owner:
. reaches age 59-1/2;
. dies or is disabled (IRC Section 72(m)(7)); or
. takes a qualified first-time homebuyer distribution (as defined in section
72(t)(8) of the Code). Special tax rules may be available for certain other
distributions from a Qualified Contract.
Penalty tax on Pre-retirement Distributions. The taxable portion of any
distribution from a qualified retirement plan may be subject to a 10% penalty
tax. This tax could apply to withdrawals from a Contract issued and qualified
under Code sections 401 (Corporate and Self-Employed Pension and Profit-Sharing
Plans), 403(b) (Tax-Sheltered Annuities), 408 (Traditional IRAs) or 408A (Roth
IRAs - "nonqualified distributions" only). It is not imposed on:
. qualified rollovers or permitted direct transfers to a Traditional IRA, a
Roth IRA, or to another eligible qualified plan;
. distributions made on or after the date on which the Owner or Annuitant (as
applicable) reaches age 59-1/2;
. distributions following the death or disability (as defined in section
72(m)(7) of the Code) of the Owner or Annuitant (as applicable);
. distributions that are part of substantially equal periodic payments made
not less than annually for the life (or life expectancy) of the Owner or
Annuitant (as applicable) or the joint lives (or joint life expectancies)
of such Owner or Annuitant (as applicable) and his or her designated
Beneficiary (Qualified Plans other than Traditional IRAs and Roth IRAs
require the employee to be separated from service for this exception to
apply);
. distributions made to the Owner or Annuitant (as applicable) for payment of
medical expenses which exceed 7.5% of adjusted gross income;
. distributions from a Traditional IRA or from a Roth IRA for payment of
health insurance premiums while unemployed, if certain conditions are met;
. amounts paid from a Traditional IRA and Roth IRA for qualified higher
education expenses (IRC Section 72(t)(7) of the Code); and
. amounts paid from a Traditional IRA or Roth IRA as a qualified first-time
homebuyer distribution (IRC Section 72(t)(8) of the Code).
The penalty tax for a Contract issued and qualified under Code sections 401 or
403(b) is also not imposed on:
. distributions to an Owner or Annuitant (as applicable) who has separated
from service after he has attained age 55; and
. distributions made to an alternate payee pursuant to a qualified domestic
relations order.
Generally, distributions from a qualified plan (other than a Roth IRA) must
start no later than (a) April 1 of the calendar year following the year in which
the employee attains age 70-1/2 or (b) retires, whichever is later. The
limitation set forth in subsection (b) does not apply to IRAs. These required
distributions must span a period that does not exceed the life expectancy of the
individual or the joint lives or life expectancies of the individual and his or
her designated beneficiary. If required minimum distributions are not made, a
50% penalty tax is imposed on the amount not distributed.
Tax-Sheltered Annuities -- Withdrawal Limitations. Withdrawals of amounts
attributable to contributions made according to a salary reduction agreement are
limited to when the Owner:
. attains age 59-1/2;
. separates from service;
. dies;
. becomes disabled (IRC Section 72(m)(7) of the Code); or
. in the case of hardship.
Hardship withdrawals are restricted to the portion of the Owner's Contract Value
that represents contributions made by the Owner and do not include investment
results.
30
<PAGE>
Withdrawal limitations became effective on January 1, 1989, and apply only to
salary reduction contributions made after December 31, 1988, to income
attributable to such contributions and to income attributable to amounts held as
of December 31, 1988. The limitations on withdrawals do not affect rollovers or
transfer between certain Qualified Plans. Owners should consult their own tax
counsel or other tax adviser about distributions.
Federal Income Tax Withholding
All distributions from your Contract, or portions thereof, that are included in
your gross income are subject to federal income tax withholding. We will
withhold federal taxes at the rate of 10% from each distribution. However, you
may elect not to have taxes withheld or to have taxes withheld at a different
rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, may be subject to a mandatory 20% withholding for federal
income tax.
ADVERTISING PRACTICES
FIS Prime Money Fund II Portfolio
From time to time, the FIS Prime Money Fund II investment option of the Separate
Account may advertise its "yield" and "effective yield." Both yield figures are
based on historical earnings and are not intended to indicate future
performance.
The "yield" of the FIS Prime Money Fund II investment option refers to the
income generated by Account Values in the FIS Prime Money Fund II investment
option over a seven-day period (which will be stated in the advertisement). This
income is "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the Account Values in the FIS Prime Money
Fund II investment option.
The "effective yield" is calculated similarly. However, when annualized, the
income earned by Account Values is assumed to be reinvested. This results in the
"effective yield" being slightly higher than the "yield" because of the
compounding effect of the assumed reinvestment. The yield figure will reflect
the deduction of any asset-based charges and any applicable annual contract
maintenance charge.
Other Portfolios
From time to time, we may advertise performance data for the Contract's other
Funds. Such data will show the percentage change in the value of an Accumulation
Unit based on the performance of an investment over a period of time, usually a
calendar year. It is determined by dividing the increase (decrease) in value for
that Unit by the Accumulation Unit value at the beginning of the period. This
percentage will reflect the deduction of any asset-based charges and any
applicable annual contract maintenance charges under the Contracts.
Advertisements also will include total return figures calculated as described in
the Statement of Additional Information. The total return figures reflect the
deduction of any applicable annual contract maintenance charges, as well as any
asset-based charges.
We may make yield information available, with respect to some of the Funds. Such
yield information will be calculated as described in the Statement of Additional
Information. The yield information will reflect the deduction of any applicable
annual contract maintenance charge, as well as any asset-based charges.
We may also show historical Accumulation Unit values in certain advertisements
that contain illustrations. These illustrations will be based on Accumulation
Unit values for a specific period.
Quotations of standardized total return for any Investment Option will be
expressed in terms of the average annual compounded rate of return on a
hypothetical investment in a Contract over a period of one, five and ten years
(or, if less, up to the life of the Investment Option). They will reflect the
deduction of a Contract's daily and annual charges, the applicable withdrawal
charge, and fees and expenses of the underlying Portfolio. Quotations of non-
standardized total return may simultaneously be shown for the periods indicated
in the advertisement and may not reflect some or all of these deductions.
Total return performance information for Investment Options may also be
advertised based on the historical performance of the Portfolio underlying an
Investment Option for periods beginning before the date Accumulation Unit Values
were first calculated for Contracts
31
<PAGE>
funded in that Investment Option. Any such performance calculation will be based
on the assumption that the Investment Option corresponding to the applicable
Portfolio was in existence throughout the stated period and that contractual
charges and expenses of the Investment Option during the period were equal to
those currently assessed under a Contract.
We may also distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Portfolios against established market
indices such as the Standard & Poor's 500 Composite Stock Price Index, the Dow
Jones Industrial Average or other management investment companies that have
investment objectives similar to the Portfolio being compared.
The Standard & Poor's 500 Composite Stock Price Index is an unmanaged,
unweighted average of 500 stocks, the majority of which are listed on the New
York Stock Exchange.
The Dow Jones Industrial Average is an unmanaged, weighted average of thirty
blue chip industrial corporations listed on the New York Stock Exchange. Both
the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average assumes quarterly reinvestment of dividends.
We may also distribute sales literature that compares the performance of our
variable annuities' Accumulation Unit values with the unit values of variable
annuities issued through other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, Morningstar or from the VARDS Report.
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data that tracks
the performance of investment companies. The rankings compiled by Lipper may or
may not reflect the deduction of asset-based insurance charges. Our sales
literature using these rankings will indicate whether such charges were
deducted. Where the charges have not been deducted, the sales literature will
indicate that, had the charges been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges.
Morningstar rates each variable annuity investment option against its peers with
similar investment objectives. Morningstar does not rate any investment option
with fewer than three years of performance data.
OTHER MATTERS
Financial Statements
Our financial statements and the financial statements of the Separate Account
are included in the Statement of Additional Information.
Legal Proceedings
We are not subject to any material pending legal proceedings nor is the Separate
Account or the Distributor.
Transfers by the Company
We may, subject to applicable regulatory approvals, transfer obligations under a
Contract to another qualified life insurance company under an assumption
reinsurance arrangement without the prior consent of the Owner.
32
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information for the Separate Account and the
Contract contains the following information:
<TABLE>
<CAPTION>
Item Page
- ----- -----
<S> <C>
First Variable Life Insurance Company................
Independent Auditors.................................
Legal Counsel........................................
Distributor..........................................
Yield Calculation for the FIS Prime Money Fund II
Investment Option
Calculation of Other Performance Information.........
Annuity Provisions...................................
Variable Annuity..................................
Fixed Annuity.....................................
Annuity Unit......................................
Mortality and Expense Guarantee...................
Financial Statements.................................
</TABLE>
33
<PAGE>
CAPITAL BONUS VA
FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACT
(the "Contract")
Issued by
FIRST VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
for
FIRST VARIABLE ANNUITY FUND E
(the "Separate Account")
This is not a prospectus. You should read this Statement of Additional
Information with the prospectus dated ___________ for the Contract referred to
above.
The prospectus concisely sets forth information that you ought to know before
investing in a Contract. For a copy of the prospectus, call or write us at 2122
York Road, Oak Brook, IL 60523 (800) 228-1035.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
- ---- ----
<S> <C>
FIRST VARIABLE LIFE INSURANCE COMPANY.........................
INDEPENDENT AUDITORS..........................................
LEGAL COUNSEL.................................................
DISTRIBUTOR...................................................
YIELD CALCULATION FOR FIS PRIME MONEY FUNDII INVESTMENT OPTION
CALCULATION of OTHER PERFORMANCE INFORMATION.................
ANNUITY PROVISIONS............................................
Variable Annuity...........................................
Fixed Annuity..............................................
Annuity Unit...............................................
Mortality and Expense Guarantee............................
FINANCIAL STATEMENTS..........................................
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED ________.
SA - 1
<PAGE>
FIRST VARIABLE LIFE INSURANCE COMPANY
You will find information about our company and its ownership in the prospectus.
INDEPENDENT AUDITORS
The consolidated financial statements of First Variable Life Insurance Company
at December 31, 1999 and 1998, and for each of the three years in the period
ended December 31, 1999 and the financial statements of First Variable Life
Insurance Company--First Variable Annuity Fund E at December 31, 1999 and 1998
appearing in this Statement of Additional Information have been audited by
____________________, independent auditors, as set forth in their reports
thereon appearing elsewhere herein, and are included in reliance upon such
reports given on the authority of such firm as experts in accounting and
auditing.
LEGAL COUNSEL
Our Legal Department reviewed legal matters about the Contracts. Blazzard, Grodd
& Hasenauer, P.C., Westport, Connecticut, advised us on certain matters relating
to the federal securities and tax laws.
DISTRIBUTOR
First Variable Capital Services, Inc. ("FVCS") acts as the distributor. FVCS is
a wholly owned subsidiary of First Variable Life Insurance Company. The
offering is on a continuous basis.
YIELD CALCULATION FOR FIS PRIME MONEY FUND II INVESTMENT OPTION
The FIS Prime Money Fund II Investment Option of the Separate Account calculates
its current yield based upon the seven-day period that ends on the date of
calculation. For the seven calendar days ended December 31, 1999, the
annualized yield was _______% and the effective yield was _________%.
To calculate the current yield, we create a hypothetical Contract account with a
balance of one Accumulation Unit of this investment option. We determine the net
change (exclusive of capital changes) in the value of the Accumulation Unit at
the beginning and at the end of the period. Next, we subtract the annual
Contract Maintenance Charge and divide the difference by the value of the
hypothetical account at the beginning of the same period to obtain the base
period return. We then multiply the result by (365/7) to obtain the current
yield.
We calculate the "effective" yield according to the method prescribed by the
Securities and Exchange Commission. The effective yield reflects the
reinvestment of net income earned daily on FIS Prime Money Fund II Investment
Option assets. Net investment income for yield quotation purposes will not
include either realized capital gains and losses or unrealized appreciation and
depreciation, whether reinvested or not.
You may find yield information useful as you review the performance of the FIS
Prime Money Fund II Investment Option and compare it with other investments.
However, the yield fluctuates, unlike bank deposits or other investments that
typically pay a fixed yield for a set period. You should therefor not consider
any yields quoted as a representation of the yield of the FIS Prime Money Fund
II Investment Option in the future. Actual yields depend on the type, quality
and maturities of the investments held by the Portfolio and changes in the
interest rates on such investments, as well as changes in expenses during the
period.
SA - 2
35
<PAGE>
CALCULATION OF OTHER PERFORMANCE INFORMATION
From time to time, we may advertise standardized performance data as described
in the prospectus. These advertisements will include total return figures for
the times indicated in the advertisement. Total return figures will reflect the
deductions of:
. 1.25% Mortality and Expense Risk Charge,
. .15% Administrative Charge,
. investment advisory fees and expenses for the underlying Portfolio being
advertised and
. any applicable withdrawal charges and annual Contract Maintenance Charges
(charges for optional riders excluded).
To determine the hypothetical value of a Contract for the time periods described
in the advertisement, we will use the Accumulation Unit values for an initial
$1,000 purchase payment, and deduct any applicable Annual Contract Maintenance
Charges and Withdrawal Charges. For periods before the date that actual
Accumulation Unit Values were first computed for the Contracts, we have derived
Accumulation Unit Value performance from the historical performance of the
Portfolios. We determine the average annual total return by computing the fixed
interest rate that a $1,000 purchase payment would have to earn annually,
compounded annually, to grow to the hypothetical value at the end of the periods
described.
Here is the formula used in these calculations: [P x (1+T)/n/] = ERV
P = a hypothetical initial payment of $1,000 T = average annual total return
N = number of years ERV = Ending Redeemable Value
of a hypothetical $1,000
payment made at the beginning
of the applicable periods.
The standardized average annualized total returns as of December 31, 1999, for 1
year, 3 years, 5 years, 10 years and for the life of the Separate Account
investment option are listed below:
<TABLE>
<CAPTION>
Since Sub-Account
Separate Account Investment Option 1 Year 3 Years 5 Years 10 Years Inception
- ------------------------------------------- ------ ------- ------- -------- -----------------
<S> <C> <C> <C> <C> <C>
VIST Small Cap Growth (inception 5/4/95)
VIST World Equity (inception 6/10/88)
VIST Growth (inception 5/1/87)
VIST Matrix Equity (inception 6/16/88)
VIST Growth & Income (inception 5/31/95)
VIST Multiple Strategies (inception 5/5/87)
VIST High Income Bond (inception 6/1/87)
VIST US Govt. Bond (inception 5/27/87)
FIS Prime Money Fund II (1)
AIM V.I. Capital Appreciation (5/1/99)
AIM V.I. Growth(5/1/99)
ACS V.P. Value (5/1/99)
BT Equity 500 Index(5/1/99)
BT Small Cap Index(5/1/99)
LA Growth & Income Series (5/1/99)
MFS New Discovery Series(5/1/99)
MFS Growth with Income Series(5/1/99)
MFS Growth Series (5/1/99)
FT International Fund - Class 2 shares
(5/1/99)
</TABLE>
(1) On December 3, 1997, we substituted shares of FIS Prime Money Fund II for
shares of the VIST Cash Management Portfolio. Calculations before that date are
based on the value of VIST Cash Management Portfolio shares held for the periods
shown.
SA-3
36
<PAGE>
The standardized average annualized total returns as of December 31, 1999, for 1
year, 3 years, 5 years and 10 years and the Portfolios inception, based on the
historical performance of the Portfolios as listed below:
<TABLE>
<CAPTION>
Since Sub-Account
Separate Account Investment Option 1 Year 3 Years 5 Years 10 Years Inception
- ------------------------------------------- ------ ------- ------- -------- -----------------
<S> <C> <C> <C> <C> <C>
VIST Small Cap Growth (inception 5/4/95)
VIST World Equity (inception 6/10/88)
VIST Growth (inception 5/1/87)
VIST Matrix Equity (inception 6/16/88)
VIST Growth & Income (inception 5/31/95)
VIST Multiple Strategies (inception 5/5/87)
VIST High Income Bond (inception 6/1/87)
VIST US Govt. Bond (inception 5/27/87)
FIS Prime Money Fund II (11/94)
AIM V.I. Capital Appreciation (5/5/93)
AIM V.I. Growth(5/5/93)
ACS V.P. Value (5/1/96)
BT Equity 500 Index(10/1/97)
BT Small Cap Index(8/25/97)
LA Growth & Income Series (12/11/89)
MFS New Discovery Series(5/1/98)
MFS Growth with Income Series(10/9/95)
MFS Growth Series (5/1/99)
FT International Fund - Class 2 shares
(5/1/97)
</TABLE>
SA-4
37
<PAGE>
We may also advertise non-standardized performance information that does not
include withdrawal charges. The non-standardized average annualized total
returns as of December 31, 1999 for 1 year, 3 years, 5 years, 10 years and
Portfolio Inception based on the historical performance of the Portfolios are
listed below:
<TABLE>
<CAPTION>
Since Portfolio
Separate Account Investment Option 1 Year 3 Years 5 Years 10 Years Inception
- ------------------------------------------- ------ ------- ------- -------- ---------------
<S> <C> <C> <C> <C> <C>
VIST Small Cap Growth (inception 5/4/95)
VIST World Equity (inception 6/10/88)
VIST Growth (inception 5/1/87)
VIST Matrix Equity (inception 6/16/88)
VIST Growth & Income (inception 5/31/95)
VIST Multiple Strategies (inception 5/5/87)
VIST High Income Bond (inception 6/1/87)
VIST US Govt. Bond (inception 5/27/87)
FIS Prime Money Fund II (11/94)
AIM V.I.Capital Appreciation (5/5/93)
AIM V.I. Growth(5/5/93)
ACS V.P. Value (5/1/96)
BT Equity 500 Index(10/1/97)
BT Small Cap Index(8/25/97)
LA Growth & Income Series(12/11/89)
MFS New Discovery Series(5/1/98)
MFS Growth with Income Series(10/9/95)
FT International Fund - Class 2 shares (5/1/97)
</TABLE>
SA-5
38
<PAGE>
CALCULATION OF OTHER PERFORMANCE INFORMATION (continued)
In addition to total return data, we may include yield information in our
advertisements. For each Investment Option (other than the Federated Prime
Money Fund II Investment Option) for which we advertise yield, we will show a
yield quotation based on a 30-day (or one month) period ended on the date of the
most recent balance sheet of the Separate Account. We compute it by dividing the
net investment income per Accumulation Unit earned during the period by the
maximum offering price per Unit on the last day of the period, according to the
following formula:
[( a-b )/6/ ]
Yield= 2[(------ +1) - 1]
[( cd ) ]
a = Net investment income earned during the period by the Portfolio
attributable to shares owned by the Separate Account investment option.
b = Expenses accrued for the period (net of reimbursements).
c = The average daily number of Accumulation Units outstanding during the
period.
d = The maximum offering price per Accumulation Unit on the last day of the
period.
The investment results of each Separate Account investment option will fluctuate
over time. Any presentation of a Separate Account investment option's total
return for any period should not be considered as a representation of future
performance.
ANNUITY PROVISIONS
Variable Annuity
A variable annuity is an annuity with payments that:
. are not predetermined as to dollar amount; and
. will vary in amount with the net investment results of the Separate
Account investment option(s) selected.
At the Annuity Date, we will apply your Account Value (except as provided in
your Contract) in each Separate Account investment option to the applicable
Annuity table shown in your Contract to determine the dollar amount of the
initial Annuity payment. The Annuity table we use depends on the Annuity Option
chosen. If, as of the Annuity Date, the then current Annuity Option rates
applicable to this class of Contracts provide an initial Annuity payment greater
than that guaranteed under the same Annuity Option table under your Contract, we
will make the greater payment.
We next determine the number of "Annuity Units" for future payments from that
Separate Account investment option. To do this, we divide the dollar amount of
the initial Annuity payment by the applicable Annuity Unit value for that
investment option as of the Annuity Date. The number of Annuity Units remains
fixed during the Annuity Payment period.
Each month after the Annuity Date, we multiply the previously determined number
of Annuity Units by the applicable Separate Account investment option's Annuity
Unit value. (We use the Annuity Unit value at the end of the last Business Day
of the month preceding the month for which the payment is due.) This will be
the dollar amount of the current Annuity payment from that Separate Account
investment option. The total dollar amount of each variable Annuity payment is
the sum of all amounts payable from the selected Separate Account investment
options.
SA - 6
39
<PAGE>
ANNUITY PROVISIONS (continued)
Fixed Annuity
A fixed annuity is a series of payments made after the Annuity Date that we
guarantee as to dollar amount. Fixed annuity payments do not vary with the
investment experience of the Separate Account.
At the Annuity Date, we will apply your Account Value (except as provided in
your Contract) in the Fixed Account to the applicable Annuity table shown in
your Contract to determine the dollar amount of each "fixed" Annuity payment.
(We use your Account Value in the Fixed Account as of the day immediately before
the Annuity Date).
Annuity Unit
The initial value of an Annuity Unit for each Separate Account investment option
was arbitrarily set at $10. After that, the Annuity Unit value for that
Separate Account investment option is determined at the end of each Business
Day.
We determine an Annuity Unit's value by:
. calculating the assets of the applicable Separate Account investment
option that are attributable to Annuity Units;
. subtracting any unpaid daily and annual charges for the Contracts that
are attributable to that investment option;
. subtracting (or adding) any charges (or credits) for taxes that we have
reserved for that investment option;
. dividing the remainder by the number of then outstanding Annuity Units in
that investment option; and
. multiplying the result by a factor that neutralizes the assumed
investment rate of 3% contained in the Contract's annuity tables.
The value of an Annuity Unit will increase or decrease from Business Day to
Business Day, and will differ depending on the Separate Account investment
options selected.
Mortality and Expense Guarantee
We guarantee that the dollar amount of each Annuity payment after the Annuity
Date will not be affected by variations in our mortality or expense experience.
FINANCIAL STATEMENTS
The consolidated financial statements of First Variable Life Insurance Company
included herein should be considered only as bearing upon our ability to meet
our obligations under the Contracts.
SA - 7
<PAGE>
Financial Statements
First Variable Life Insurance Company
First Variable Annuity Fund E
41
<PAGE>
FIRST VARIABLE ANNUITY FUND E
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of First Variable Annuity Fund E and First Variable
Life Insurance Company
To be filed by Amendment
(b) Exhibits
--------
1. Resolution of Board of Directors for the Company authorizing the
establishment of the Separate Account (1)
2. Not Applicable
3.(a). Form of Principal Underwriter's Agreement (2)
(b). Form of Broker-Dealer Agreement (2)
(c). Specimen Broker-Dealer Supervisory and Selling Agreement (3)
4.(a). Individual Flexible Purchase Payment Deferred Variable Annuity
Contract (5)
(b). Individual Flexible Purchase Payment Deferred Variable Annuity Riders
(7)
5. To be filed by Amendment.
6 (a). Articles of Incorporation of First Variable Life Insurance
Company (1)
(b). By-laws of First Variable Life Insurance Company (2)
7. Not Applicable
8.(a). Form of Fund Participation Agreement with Variable Investors
Series Trust (3)
(b). Form of Fund Participation Agreements with AIM Variable Insurance
Funds., Inc., et al; American Century Investment Management, Inc.; BT
Insurance Funds Trust, et al; Lord Abbett Series Fund, Inc., et al;
MFS Variable Insurance Trust, et al; and Templeton Variable Products
Series Fund, et al. (7)
9. Consent of Counsel, to be filed by Amendment
10. Consent of Independent Auditors, to be filed by Amendment
11. Not Applicable
12. Not Applicable
13. To be filed by Amendment
14. Not Applicable
15. Powers of Attorney (6) - of the following individuals appointing John
M. Soukup as attorney-in-fact to act for them in their capacities as
Directors of the Company or otherwise, to do all things necessary to
comply with the provisions and intent of the Securities Act of 1933
and the Investment Company Act of 1940 with respect to variable life
insurance policies and variable annuity contracts:
Ronald M. Butkiewicz Shane W. Gleeson Philip R. O'Connor
Michael J. Corey Jeff S. Liebmann
Michael R. Ferrari Kenneth R. Meyer
41
<PAGE>
(1) Incorporated by reference to the Registrant's Post-Effective Amendment No.
4 to the Form N-4 Registration Statement (Registration No. 333-86738) filed
electronically with the Securities and Exchange Commission on or about
April 27, 1998.
(2) Incorporated by reference to the Pre-Effective Amendment No. 1 to the Form
S-6 Registration Statement of First Variable Life Insurance Company
Separate Account VL, filed electronically with the Securities and Exchange
Commission on November 15, 1996 (File No. 333-05053).
(3) Incorporated by reference to the Registrant's Form N-4 Registration
Statement (Registration No. 333-12197) filed electronically with the
Securities and Exchange Commission on September 14, 1996.
(4) Incorporated by reference to the Registrant's Post-Effective Amendment
No. 2 to the Form N-4 Registration Statement (Registration No. 333-12197)
filed electronically with the Securities and Exchange Commission on April
27, 1998.
(5) Filed herewith.
(6) Incorporated by reference to the Post-Effective Amendment No. 1 to the Form
S-6 Registration Statement of First Variable Life Insurance Company
Separate Account VL, filed electronically with the Securities and Exchange
Commission on or about April 27, 1998 (Registration No. 333-19193).
(7) Incorporated by reference to the Registrant's Post-Effective Amendment No.
4 to the Form N-4 Registration Statement (Registration No. 333-12197) filed
electronically with the Securities and Exchange Commission on or about
April 27, 1999.
ITEM 25. OFFICERS AND DIRECTORS OF DEPOSITOR
- -------- -----------------------------------
The following are the Directors and Executive Officers of First Variable Life
Insurance Company. Unless otherwise noted, our directors are located at 2211
York Road, Suite 202, Oak Brook, Illinois 60523 and all our executive officers
are located at 2122 York Road, Suite 300, Oak Brook, Illinois 60523.
Directors
Ronald M. Butkiewicz, Chairman.
Michael J. Corey - 401 East Host Drive. Lake Geneva, WI 53147.
Norman A. Fair
Michael R. Ferrari, 25th & University Ave., Des Moines, IA
Shane W. Gleeson
Jeff S. Liebmann, Esq., 1301 Avenue of the Americas
New York, NY 10019
Kenneth R. Meyer, Lincoln Capital Management Co., 200 South Wacker Dr., Suite
2100, Chicago, IL 60606
Philip R. O'Connor, President of NEV Midwest, LLC 111 West Washington, Suite
1247, Chicago, IL 60602
Clark Ramsey
Executive Officer & Director
John M. Soukup, President
Other Executive Officers
Steven J. Horn, Senior Vice President and Chief Operations Officer
David L.Anders, Senior Vice President, Sales
Jeffery K. Hoelzel, Vice President, General Counsel & Secretary
Martha Gross, Vice President, Administration
Christopher S. Harden, Vice President & Treasurer
Martin Sheerin, Vice President & Chief Actuary.
42
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
- -------- ------------------------------------------------------
DEPOSITOR OR REGISTRANT.
-----------------------
[Corporate Organizational Chart Appears Here]
* The beneficiaries of the Voting Trust are as follows:
1. Irish Life International, B.V. a wholly owned subsidiary of Irish Life
Overseas, Limited
2. Irish Life Overseas, Limited a wholly owned subsidiary of Irish Life
Assurance plc
3. Irish Life Assurance plc, a wholly owned subsidiary of Irish Life plc,
headquartered in Dublin, Ireland
Note: An upstream company's ownership of a downstream company is 100% unless
otherwise noted.
Guarantee Reserve Life Insurance Company is owned by Irish Life of North
America, Inc. (owns 16.11%) and GR Holding Co., a wholly owned subsidiary of
Irish Life of North America, Inc. (owns 83.89%).
ITEM 27. NUMBER OF CONTRACT OWNERS
- -------- -------------------------
As of February 8, 2000 there were no Owners of Qualified Contracts and no Owners
of Non-Qualified Contracts.
ITEM 28. INDEMNIFICATION
- -------- ---------------
Insofar as indemnification for liability arising under the Securities Act of
1933 ("Act") may be permitted to directors and officers and controlling persons
of the Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITER
- -------- ---------------------
(a) First Variable Capital Services, Inc. ("FVCS") is the principal underwriter
for the Contracts and for the following investment companies:
First Variable Annuity Fund A
Separate Account VL of First Variable Life Insurance Company
43
<PAGE>
(b) The following persons are directors and officers of FVCS. Unless otherwise
noted, FVCS directors and officers are located at 2122 York Road, Suite
300, Oak Brook, Illinois 60523:
(c)
Name and Principal Business Address Positions and Offices with Underwriter
- ----------------------------------- --------------------------------------
Norman A. Fair Director
2211 York Road, Suite 202
Oak Brook, IL 60523
John M. Soukup President and Director
Jeffery K. Hoelzel Secretary and Director
Thomas Gualdoni Vice President - Sales
Robert Miner Treasurer
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
- -------- --------------------------------
Our Secretary and our Treasurer who are located at 2122 York Road, Oak Brook, IL
60523, maintain physical possession of the accounts, books or documents of the
Separate Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
- -------- -------------------
Not Applicable.
ITEM 32. UNDERTAKINGS
- -------- ------------
1. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more
than sixteen (16) months old for so long as payment under the variable
annuity contracts may be accepted.
2. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a postcard or similar written communication affixed to or included in
the Prospectus that the applicant can remove to send for a Statement of
Additional Information.
3. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under
this Form promptly upon written or oral request.
4. In accordance with section 26(e) of the Investment Company Act of 1940,
First Variable Life Insurance Company hereby represents that the fees and
charges deducted under the Contract described in this Registration Statement
on Form N-4, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
First Variable Life Insurance Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No Action Letter issued
to the American Council of Life Insurance dated November 28, 1988 (Commission
ref. IP-6-88) and that the following provisions have been complied with:
1. Include appropriate disclosure regarding the redemption restrictions imposed
by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions imposed
by Section 403(b) (11) in any sales literature used in connection with the
offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
44
<PAGE>
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restriction on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his contract value.
45
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) and has caused this Registration Statement to be
signed on its behalf, in the City of Oak Brook, and the State of Illinois, on
this 9th day of February, 2000.
FIRST VARIABLE ANNUITY FUND E
(Registrant)
By: FIRST VARIABLE LIFE INSURANCE COMPANY
(Depositor)
By: /s/ John M. Soukup
------------------------------------------
John M. Soukup, President
FIRST VARIABLE LIFE INSURANCE COMPANY
(Depositor)
By: __________________________
John M. Soukup
46
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated with First Variable Life Insurance Company on this 9th day of
February, 2000.
PRINCIPAL EXECUTIVE OFFICER:
_______________________________
John M. Soukup
President
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
________________________________
Christopher S. Harden
Vice President & Treasurer
DIRECTORS:
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------- ----------------------------------------------------
Ronald M. Butkiewicz Clark Ramsey
- --------------------------------------------------- ----------------------------------------------------
John M. Soukup Jeff S. Liebmann*
- --------------------------------------------------- ----------------------------------------------------
Michael J. Corey* Kenneth R. Meyer*
- --------------------------------------------------- ----------------------------------------------------
Michael R. Ferrari* Philip R. O'Connor*
- --------------------------------------------------- ----------------------------------------------------
Shane H. Gleeson Norman A. Fair
</TABLE>
* By:_________________________
John M. Soukup
Attorney-in-Fact
47
<PAGE>
[LOGO]
Little Rock, Arkansas
A stock life insurance company
FIRST VARIABLE LIFE INSURANCE COMPANY (the "Company") will make Annuity Payments
to the Annuitant, unless directed otherwise by the Owner, starting on the
Annuity Date, subject to the terms of this Contract.
This Contract is issued in return for the payment of the initial Purchase
Payment.
TEN DAY FREE LOOK--Within 10 days of the date of receipt of this Contract by the
Owner, it may be returned by delivering or mailing it to the Company at its
Variable Service Center or to the agent through whom it was purchased. When
this Contract is received by the Company, it will be voided as if it had never
been in force. The Company will refund the Contract Value computed at the end
of the Valuation Period during which this Contract is received by the Company at
its Variable Service Center.
/s/ Jeffery K. Hoelzel /s/ John M. Soukup
Jeffery K. Hoelzel John M. Soukup
Secretary President
First Variable Life Insurance Company
Little Rock, Arkansas
ANNUITY PAYMENTS, WITHDRAWAL VALUES AND THE DEATH BENEFITS PROVIDED BY THIS
CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE VARIABLE PROVISIONS OF THIS CONTRACT CAN BE FOUND ON PAGES 10 AND 14.
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT WITH
FLEXIBLE PURCHASE PAYMENTS - NON-PARTICIPATING
48
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CONTRACT DATA PAGE........................................................CD-1
DEFINITIONS..................................................................1
INVESTMENT OPTIONS...........................................................2
The Separate Account and the Sub-Accounts....................................2
Sub-Account Investment Options...............................................2
Fixed Account Option.........................................................2
TRANSFERS....................................................................2
Transfers Among Investment Options...........................................2
General Requirements for Transfers...........................................3
Automatic Transfer of Small Accounts.........................................3
CHARGES AND DEDUCTIONS.......................................................3
Administrative Charge........................................................3
Annual Contract Maintenance Charge...........................................3
Mortality and Expense Risk Charge............................................3
Separate Account Management Fee..............................................4
Taxes........................................................................4
Transfer Fee.................................................................4
Withdrawal Charge............................................................4
GENERAL PROVISIONS...........................................................4
The Contract.................................................................4
Incontestability.............................................................4
Modification.................................................................5
Ownership....................................................................4
Change of Designations.......................................................4
Non-Participating............................................................5
Protection of Proceeds.......................................................5
Transfer by the Company......................................................5
PURCHASE PAYMENTS............................................................5
General......................................................................5
Conversion to Accumulation Units.............................................5
Delayed Investment Start Date................................................5
CONTRACT VALUE...............................................................6
General......................................................................6
Accumulation Unit Value......................................................6
Fixed Account Value..........................................................6
Minimum Value Required After Partial Withdrawal..............................6
Minimum Value Required If Subsequent Purchase Payments Not Made..............6
Minimum Value Required In Any Investment Option..............................7
Purchase Payment Credits.....................................................7
Reports......................................................................7
DEATH BENEFITS...............................................................7
Death of Annuitant...........................................................8
Death of Owner...............................................................7
Payment of Owner's Death Benefit.............................................7
Owners Other than a Single Person............................................8
Beneficiary Other than a Single Person.......................................8
</TABLE>
49
<PAGE>
TABLE OF CONTENTS (continued)
<TABLE>
<S> <C>
WITHDRAWALS..................................................................8
General......................................................................8
Withdrawal Charge............................................................9
Partial Withdrawals.........................................................10
Free Withdrawal Amount.......................................................9
Suspension or Deferral of Payments...........................................9
ANNUITY PROVISIONS...........................................................9
Annuity Date.................................................................9
Annuity Payments............................................................10
Variable Annuity Payments...................................................10
Fixed Annuity Payments......................................................12
Annuity Options.............................................................12
Mortality Tables............................................................11
Misstatement of Age or Sex..................................................11
Supplementary Agreement.....................................................13
Evidence of Survival........................................................13
Proof of Age................................................................12
ANNUITY OPTION TABLES.......................................................13
</TABLE>
50
<PAGE>
CONTRACT DATA PAGE
CAPITAL BONUS VA
<TABLE>
<S> <C> <C> <C>
ANNUITANT: [JOHN DOE] AGE AT ISSUE: [50]
OWNER: [JOHN DOE] AGE AT ISSUE: [50]
BENEFICIARY: [as shown in
application]
CONTRACT NUMBER: 8700-96] ISSUE DATE: [1/1/96]
ANNUITY DATE: 1/1/2015] PURCHASE PAYMENT CREDIT: [3% or more of
Premium Payment]
ANNUITIZATION BONUS: [3% of Contract
Value on Annuity
Date]
SEPARATE ACCOUNT: [First Variable FIXED ACCOUNT:
Annuity Fund E] Minimum Guaranteed Interest Rate: [3.0%]
Current Interest Rate on Issue Date: [5.5%]
Duration of Current Interest Rate: [First Contract Year]
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTIONS:
<S> <C>
[Pilgrim Baxter Small Cap Growth] [MFS Growth with Income]
[MFS New Discovery] [SSgA Matrix Equity]
[Bankers Trust Small Cap Index] [Bankers Trust Equity 500 Index]
[Templeton International] [Lord Abbett Growth & Income]
[Evergreen World Equity] [Warburg Pincus Growth & Income]
[AIM Capital Appreciation] [Value Line Multiple Strategies]
[American Century Value] [Federated High Income Bond]
[MFS Growth] [Strong U.S. Government Bond]
[AIM Growth] [Federated Money Fund]
[Value Line Growth]
DELAYED INVESTMENT START DATE: [Not Applicable]
DELAYED INVESTMENT START SUB-ACCOUNT: [Not Applicable]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [$5,000]
MINIMUM SUBSEQUENT PURCHASE PAYMENT: [$200]
MAXIMUM CUMULATIVE PURCHASE PAYMENTS: [$5 Million]
ADMINISTRATIVE CHARGE:
[Daily charge on net assets in each Sub-Account equal to an annual rate of .15%]
ANNUAL CONTRACT MAINTENANCE CHARGE:
[$30.00 each Contract Year during the Accumulation Period, if Contract Value is less than $100,000]
[No Annual Contract Maintenance Charge during the Annuity Period]
MORTALITY AND EXPENSE RISK CHARGE:
[Daily charge on net assets in each Sub-Account equal to an annual rate of 1.25%]
</TABLE>
50
<PAGE>
CONTRACT DATA PAGE
CAPITAL BONUS VA
(Continued)
CHARGE FOR RIDERS:
[BEST ANNIVERSARY VALUE DEATH BENEFIT Annual charge of .15% of Contract Value
on each Contract Anniversary prior to
the Annuity Date; on the Annuity Date;
and upon surrender
[EXTRA PROTECTOR DEATH BENEFIT] Annual charge of .20% of Contract Value
on each Contract Anniversary or upon
surrender
SEPARATE ACCOUNT MANAGEMENT FEE: [None]
TRANSFERS:
FREE TRANSFERS:
[12 per year]
TRANSFER FEE: [$10 per transfer if more than 12 transfers in a Contract Year]
MINIMUM CONTRACT VALUE TO BE TRANSFERRED: [$1,000 or the Contract Value in the
selected Investment Option, if less]
RESTRICTIONS ON TRANSFERS FROM THE FIXED ACCOUNT: [Prior to the Annuity Date,
Contract Value to be transferred from the Fixed Account in any Contract
Year may not exceed:
(1) for transfers during the first Contract Year, 25% of Fixed Account Value
on the Issue Date; and
(2) for transfers after the first Contract Year, the greater of: (a) 25% of
Fixed Account Value on the immediately preceding Contract Anniversary; or
(b) 100% of the Fixed Account Value transferred to other Investment Options
during the immediately preceding Contract Year.
No transfers of Contract Value are permitted from the Fixed Account to other
Investment Options during the Annuity Period.]
MINIMUM CONTRACT VALUE TO REMAIN IN INVESTMENT OPTION AFTER TRANSFER: [None]
VARIABLE SERVICE CENTER: [The Variable Service Center on the Issue Date is
located at P.O. Box 1317, Des Moines, IA 50305-1317]
WITHDRAWALS:
WITHDRAWAL CHARGE EVENT: [The Company may impose a Withdrawal Charge:
(1) Upon withdrawal or surrender of Contract Value during the first nine (9)
years a premium is in the Contract; and
(2) On the Annuity Date, if the Annuity Date is within the first two (2)
Contract Years.
No Withdrawal Charge is imposed on Death Benefits payable if an Owner dies
before the Annuity Date.]
DURATION OF WITHDRAWAL CHARGE: [The Withdrawal Charge Duration begins on the
date a purchase payment is placed in the Contract and ends after such premium
payment is in the Contract ten (10) years.]
<TABLE>
<CAPTION>
WITHDRAWAL CHARGE PERCENTAGES:
[(as Percentage of Purchase Payment)]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[Years Since Premium Payment 1 or less 2 3 4 5 6 7 8 9 10+
[Withdrawal Charge Percentage 8.5% 8.5% 8.5% 7.5% 6.5% 5.5% 4.5% 3% 2% 0%
</TABLE>
MINIMUM PARTIAL WITHDRAWAL: [$1,000, if less, the Owner's entire Interest ]
FREE WITHDRAWAL AMOUNT ON PARTIAL WITHDRAWALS: [15% of Purchase Payments]
WITHDRAWAL VALUE REQUIRED TO REMAIN IN CONTRACT AFTER PARTIAL WITHDRAWAL:
[$1,000]
51
<PAGE>
WAIVER OF WITHDRAWAL CHARGE [As specified in Nursing Home and Terminal Illness -
Waiver Endorsement] ANNUITY UNIT VALUE: Assumed Interest Rate [3% per annum]
52
<PAGE>
DEFINITIONS
ACCUMULATION PERIOD: The period during which Purchase Payments may be made
prior to the Annuity Date.
ACCUMULATION UNIT: A unit of measure used to calculate the Contract Value in a
Sub-Account of the Separate Account prior to the Annuity Date.
ACCUMULATION UNIT VALUE: The value of an Accumulation Unit on a Business Day.
AGE: The attained age on the date for which age is being determined for the
Annuitant or Owner, as applicable.
ANNUITANT: The natural person on whose life Annuity Payments are based.
ANNUITY DATE: The date on which Annuity Payments begin. The Annuity Date is
shown on the Contract Data Page.
ANNUITY PAYMENTS: The series of payments made to the Annuitant or other payee
selected by the Owner after the Annuity Date under the Annuity Option selected.
ANNUITY PERIOD: The period after the Annuity Date during which Annuity Payments
are made.
ANNUITY UNIT: A unit of measure used to calculate Variable Annuity Payments
after the Annuity Date.
ANNUITY UNIT VALUE: The value of an Annuity Unit on a Business Day.
BENEFICIARY: The person, persons or entity who will receive the death benefit.
The Beneficiary is stated on the Contract Data Page for this Contract, unless
changed in accordance with the Contract provisions.
BUSINESS DAY: Each day that the New York Stock Exchange is open for trading,
which is Monday through Friday, except for normal business holidays.
COMPANY: First Variable Life Insurance Company.
CONTRACT ANNIVERSARY: An anniversary of the Issue Date.
CONTRACT VALUE: The sum of the Owner's interest in the Sub-Accounts of the
Separate Account and in the Fixed Account.
CONTRACT YEAR: One year from the Issue Date and from each Contract Anniversary.
FIXED ACCOUNT: The Company's general investment account which contains all the
assets of the Company with the exception of the Separate Account and other
segregated asset accounts.
FIXED ACCOUNT VALUE: The Owner's interest in the Fixed Account during the
Accumulation Period.
FIXED ANNUITY PAYMENTS: A series of payments made during the Annuity Period
which are guaranteed as to dollar amount by the Company.
INVESTMENT OPTION: The Fixed Account or any of the Sub-Accounts of the Separate
Account which can be selected under this Contract.
ISSUE DATE: The date on which this Contract became effective. The Issue Date
is shown on the Contract Data Page.
OWNER: The person, persons or entity entitled to all the ownership rights under
this Contract. The Owner is stated on the Contract Data Page for this Contract,
unless changed in accordance with the Contract provisions.
PORTFOLIO: A separate and distinct class of shares that is available as an
underlying investment of a Sub-Account. As of the Issue Date, each Sub-Account
invests exclusively in a Portfolio stated on the Contract Data Pages.
PURCHASE PAYMENT: An amount paid to the Company to provide benefits under this
Contract.
SEPARATE ACCOUNT: A separate investment account of the Company designated on
the Contract Data Page.
SUB-ACCOUNT: A segment of the Separate Account.
VALUATION PERIOD: The period of time between the close of one Business Day and
the close of business for the next succeeding Business Day.
VARIABLE ACCOUNT VALUE: The Owner's interest in the Sub-Accounts of the Separate
Account during the Accumulation Period.
VARIABLE ANNUITY PAYMENTS: A series of payments made during the Annuity Period
which vary in amount with the investment experience of each applicable Sub-
Account.
1
<PAGE>
VARIABLE SERVICE CENTER: The Company's administrative service center for this
Contract. The mailing address for the Variable Service Center on the Issue Date
is shown on the Contract Data Pages.
Other terms are defined in the Contract.
INVESTMENT OPTIONS
THE SEPARATE ACCOUNT AND THE SUB-ACCOUNTS
The Separate Account is a separate investment account of the Company. It is
shown on the Contract Data Page. The Company has allocated a part of its assets
for this and certain other contracts to the Separate Account. The assets of the
Separate Account are the property of the Company. The Company guarantees that
the portion of the Separate Account assets equal to the Company's reserves and
other contract liabilities shall not be chargeable with the liabilities arising
out of any other business the Company may conduct.
Assets of the Separate Account are valued at their fair market value in
accordance with procedures of the Company. The Separate Account is segmented
into Sub-Accounts. Each Sub-Account available under this Contract on the Issue
Date invests its assets exclusively in shares of one of the Portfolios shown on
the Contract Data Page.
SUB-ACCOUNT INVESTMENT OPTIONS
The Owner may allocate Purchase Payments to one or more of the Sub-Accounts that
correspond to the Portfolios shown on the Contract Data Page. The Company may,
from time to time, invest Separate Account assets in additional mutual funds,
portfolios of mutual funds, or other investment vehicles. The Owner may be
permitted to transfer Contract Value or allocate Purchase Payments to these
additional Separate Account investments. However, the right to make any
transfer will be limited by the terms and conditions imposed by the Company.
If the shares of any Portfolio, or of any other Separate Account investment,
become unavailable for investment by the Separate Account, or if the Company's
Board of Directors deems further investment in these shares inappropriate, the
Company may limit further purchase of these shares or may substitute shares of
another Portfolio or other investment vehicle for shares already purchased under
this Contract.
FIXED ACCOUNT OPTION
The Owner may allocate Purchase Payments to the Fixed Account. Interest will be
credited to amounts allocated to the Fixed Account as described in the "Contract
Value - Fixed Account Value" provision of this Contract.
TRANSFERS
TRANSFERS AMONG INVESTMENT OPTIONS
During the Accumulation Period, the Owner may transfer Contract Value among
Investment Options without the imposition of any fee or charge if there have
been no more than the number of free transfers shown on the Contract Data Page
for the Contract Year. No transfers are permitted, however, until the end of a
Delayed Investment Start Date, if any, shown on the Contract Data Page. The
amount of Contract Value which may be transferred from the Fixed Account to
other Investment Options will be subject, without limitation, to the specific
restrictions, if any, shown on the Contract Data Page.
During the Annuity Period, the Owner may make a transfer from one or more Sub-
Accounts to other Investment Options only once each Contract Year, and no
transfers of Contract Value are permitted from the Fixed Account to the Separate
Account. The amount transferred to the Fixed Account from a Sub-Account of the
Separate Account will be equal to the annuity reserves for the Owner's interest
in that Sub-Account. The annuity reserve is the product of (a) multiplied by
(b) multiplied by (c), where (a) is the number of Annuity Units representing the
Owner's interest in the Sub-Account per Annuity Payment; (b) is the Annuity
Unit value for the Sub-Account; and (c) is the present value of $1.00 per
payment period as of the Age of the Annuitant at time of transfer for the
Annuity Option, determined using the Mortality Tables used to construct the
Annuity Tables contained in this Contract and the assumed interest rate shown on
the Contract Data Page. Amounts transferred to the Fixed Account will be
applied to the existing Annuity Option, using the Age of the Annuitant at the
time of the transfer.
2
<PAGE>
All amounts, Accumulation Unit Values and Annuity Unit Values will be determined
as of the end of the Valuation Period during which a transfer request was
received by the Company of its Variable Service Center.
GENERAL REQUIREMENTS FOR TRANSFERS
If more than the permitted number of free transfers have been made in the
Contract Year, the Company will deduct the Transfer Fee shown on the Contract
Data Page for each subsequent transfer. The Transfer Fee will be deducted from
the Owner's interest in the Investment Option from which the transfer is made.
However, if the Owner's entire interest in an Investment Option is being
transferred, the Transfer Fee will be deducted from the amount which is
transferred.
The minimum amount of Contract Value which can be transferred is shown on the
Contract Data Page. The minimum amount of Contract Value, if any, which must
remain in an Investment Option after a transfer from it is shown on the Contract
Data Page.
Any transfer instruction must be in form satisfactory to the Company, and
received by the Company at its Variable Service Center. Without limitation, any
such instruction must clearly specify the amount which is to be transferred and
the Investment Options which are to be affected. The Company will not be liable
for transfers made in accordance with instructions by, or on behalf of, the
Owner.
The Company reserves the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privileges described above.
AUTOMATIC TRANSFER OF SMALL ACCOUNTS
The Company reserves the right to the extent permitted by law, on any Business
Day to transfer Contract Value then held in any particular Investment Option in
the event that Contract Value in that Investment Option is less than $250, to
the Investment Option with the then highest Contract Value.
CHARGES AND DEDUCTIONS
ADMINISTRATIVE CHARGE
The Company deducts on each Business Day, both prior to and during the Annuity
Period, an Administrative Charge from the Separate Account which is equal, on an
annual basis, to the amount shown on the Contract Data Page. The Administrative
Charge compensates the Company for the costs associated with the administration
of this Contract and the Separate Account.
ANNUAL CONTRACT MAINTENANCE CHARGE
The Company deducts an Annual Contract Maintenance Charge to reimburse it for
its administrative expenses from the Contract Value for the amount, and during
the period, shown on the Contract Data Page. The charge is deducted by the
Company reducing Fixed Account Value and/or Accumulation Unit Value from each
applicable Investment Option in the ratio that the value that Contract Value in
each applicable Investment Option bears to the total Contract Value.
Accumulation Unit Value is reduced by the Company canceling Accumulation Units
credited to this Contract.
The Annual Contract Maintenance Charge will be deducted from the Contract Value
on each Contract Anniversary while this Contract is in force. If a total
withdrawal (surrender) is made on other than a Contract Anniversary, the Annual
Contract Maintenance Charge will be deducted at the time of withdrawal. If the
Annuity Date is not a Contract Anniversary, the Annual Contract Maintenance
Charge will be deducted on the Annuity Date. After the Annuity Date, the Annual
Contract Maintenance Charge, if any, will be collected on a monthly basis and
will result in a reduction of each Annuity Payment.
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts on each Business Day, both prior to and during the Annuity
Period, a Mortality and Expense Risk Charge from the Separate Account which is
equal, on an annual basis, to the amount shown on the Contract Data Page. The
Mortality and Expense Risk Charge compensates the Company for assuming the
mortality and expense risks under this Contract. The Company guarantees that the
dollar amount of each Annuity Payment after the first Annuity Payment will not
be affected by variations in mortality or expense experience.
3
<PAGE>
SEPARATE ACCOUNT MANAGEMENT FEE
Any fee deducted by the Company from the Separate Account for investment
management is shown on the Contract Data Page.
TAXES
Any taxes paid to any governmental entity relating to this Contract will be
deducted from the Purchase Payment or Contract Value when incurred. The Company
will, in its sole discretion, determine when taxes have resulted from: the
investment experience of the Separate Account; receipt by the Company of the
Purchase Payments; or commencement of Annuity Payments. The Company may, at its
sole discretion, pay taxes when due and deduct that amount from the Contract
Value at a later date, or may establish reserves or other appropriate provision
for payment of taxes at a later date. Payment at an earlier date does not waive
any right the Company may have to deduct amounts at a later date. The Company
will deduct any withholding taxes required by applicable law.
TRANSFER FEE
The Transfer Fee applicable to a permitted transfer of Contract Value among
Investment Options is shown on the Contract Data Page.
WITHDRAWAL CHARGE
The Withdrawal Charge, if any, shown on the Contract Data Page may be deducted
in the event of a withdrawal of all or a portion of the Contract Value. It is
described in the Withdrawals provisions of this Contract.
GENERAL PROVISIONS
THE CONTRACT
The entire contract consists of this Contract and any riders or endorsements
attached to this Contract.
This Contract may be changed or altered only by the President or Vice President
and the Secretary of the Company. A change or alteration must be made in
writing.
INCONTESTABILITY
The Contract will not be contestable after it has been in force for a period of
two years from the Issue Date.
MODIFICATION
This Contract may be modified in order to maintain compliance with applicable
state and federal law.
OWNERSHIP
The Owner has all rights and may receive all benefits under this Contract. The
Owner is the person shown on the Contract Data Page, unless changed prior to the
Annuity Date. Upon the death of the Owner, the Beneficiary will have all the
rights and may receive all benefits under this Contract.
Assignment: The Owner may, at any time during his or her lifetime, assign his or
her rights under this Contract. The Company will not be bound by any assignment
until written notice is received by the Company at its Variable Service Center.
The Company is not responsible for the validity or tax consequences of any
assignment. The Company will not be liable as to any payment or other settlement
made by the Company before receipt of the assignment.
CHANGE OF DESIGNATIONS
A request to change the designated Owner, Annuitant or Beneficiary must be made
in writing and received by the Company at its Variable Service Center. The
change will become effective as of the date the written request is signed. A new
designation will not apply to any payment made or action taken by the Company
prior to the time it records the change, and the Company shall be released from
any further liability with respect to any such payment made or action taken.
Owner. The Owner may change the Owner at any time prior to the Annuity Date. A
change of Owner will automatically revoke any prior designation of Owner.
4
<PAGE>
Annuitant. The Owner may change the Annuitant at any time prior to the Annuity
Date, but not if the Contract is owned by a non-natural person. Any change of
Annuitant is subject to the Company's underwriting rules then in effect. The
Owner may automatically become the Annuitant if a new Annuitant is not
designated within thirty (30) days of the death of the Annuitant prior to the
Annuity Date, as stated in the Death Benefit provisions of this Contract. A
permitted change of Annuitant will automatically revoke any prior designation of
Annuitant.
Beneficiary: Subject to the rights of any irrevocable Beneficiary(ies), the
Owner may change the primary Beneficiary(ies) or contingent Beneficiary(ies). A
permitted change of Beneficiary will automatically revoke any prior designation
of Beneficiary.
NON-PARTICIPATING
This Contract will not share in any distribution of dividends.
PROTECTION OF PROCEEDS
To the extent permitted by law, Death Benefits and Annuity Payments shall be
free from legal process and the claim of any creditor if the person is entitled
to them under this Contract. No payment and no amount under this Contract can be
taken or assigned in advance of its payment date unless the Company receives the
Owner's written consent.
TRANSFER BY THE COMPANY
The Company reserves the right to transfer its obligations hereunder to another
qualified life insurance company under an assumption reinsurance arrangement
without the prior consent of the Owner.
PURCHASE PAYMENTS
GENERAL
The initial Purchase Payment as shown on the Contract Data Page is due on the
Issue Date. The Owner may make subsequent Purchase Payments prior to the Annuity
Date and may increase or decrease or change the frequency of such payments.
Purchase Payments are, however, subject to the Minimum Subsequent Purchase
Payment amount and the Maximum Cumulative Purchase Payment amount shown on the
Contract Data Page (unless otherwise approved by the Company). The Company
reserves the right to reject any Purchase Payment.
CONVERSION TO ACCUMULATION UNITS
Each Purchase Payment is allocated to the Fixed Account and/or one or more Sub-
Accounts of the Separate Account. A Purchase Payment allocated to a Sub-Account
of the Separate Account is converted into Accumulation Units. The number of
Accumulation Units in a Sub-Account credited to this Contract is determined by
dividing the Purchase Payment allocated to that Sub-Account by the dollar value
of the Accumulation Unit Value for that Sub-Account as of the end of the
Valuation Period during which that Purchase Payment is received by the Company
at its Variable Service Center. Except as described in the Delayed Investment
Start Date provision below, the allocation of the initial Purchase Payment is
made in accordance with the selection made by the Owner. Unless otherwise
changed by the Owner, subsequent Purchase Payments are allocated in the same
manner as the initial Purchase Payment. Allocation of the Purchase Payments is
subject to the terms and conditions imposed by the Company.
DELAYED INVESTMENT START DATE
If a Delayed Investment Start Date is shown on the Contract Data Page, the
initial Purchase Payments for this Contract will be allocated to the Delayed
Investment Start Sub-Account shown on the Contract Data Page in lieu of
allocation to any other Sub-Account Investment Option. Contract Value will be
transferred from the Delayed Investment Start Sub-Account on the Business Day
immediately following the Delayed Investment Start Date to any other Sub-Account
Investment Option in accordance with the initial instructions of the Owner.
The allocation of Purchase Payments to the Fixed Account is not affected by a
Delayed Investment Start Date. Purchase Payments received after a Delayed
Investment Start Date will be allocated to any Investment Option then available
under this Contract in accordance with the Owner's direction.
5
<PAGE>
CONTRACT VALUE
GENERAL
The Contract Value on any Business Day is the sum of the Owner's interest in the
Sub-Accounts of the Separate Account and in the Fixed Account. The value of the
Owner's interest in a Sub-Account is determined by multiplying the number of
Accumulation Units attributable to that Sub-Account by the Accumulation Unit
Value for that Sub-Account.
ACCUMULATION UNIT VALUE
The number of Accumulation Units in a Sub-Account credited to this Contract is
determined by dividing the amount to be allocated to or deducted from that Sub-
Account by the Accumulation Unit Value for that Sub-Account as of the end of the
Valuation Period during which the request for the transaction was received by
the Company at its Variable Service. The Accumulation Unit Value for each Sub-
Account was arbitrarily set initially at $10. Subsequent Accumulation Unit
Values are determined by subtracting (2) from (1) and dividing the result by (3)
where:
(1) is the net result of:
a. the assets of the Sub-Account attributable to Accumulation Units; plus or
minus
b. the cumulative charge or credit for taxes reserved which is determined by
the Company to have resulted from the operation or maintenance of
that Sub-Account.
(2) is the cumulative unpaid charge for the Mortality and Expense Risk Charge
and for the Administrative Charge, which are shown on the Contract
Data Page; and
(3) is the number of Accumulation Units outstanding at the end of the
Valuation Period.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
FIXED ACCOUNT VALUE
The Company guarantees that it will credit interest to Contract Value in the
Fixed Account at a rate not less than the Minimum Guaranteed Interest Rate shown
on the Contract Data Page. Additional amounts of interest may be credited by the
Company from time to time in its sole discretion. The Current Interest Rate
credited on the Issue Date, which includes the minimum guaranteed interest rate,
is shown on the Contract Data Page. It is guaranteed for the first Contract Year
by the Company, unless a greater period is shown on the Contract Data Page.
New Purchase Payments allocated to the Fixed Account may be credited with
interest at a different rate than the interest rate credited to Contract Value
transferred from the Separate Account to the Fixed Account. Contract Value
existing in the Fixed Account may be credited with interest at a different rate
than the interest rate(s) applied to new Purchase Payment allocations and
Separate Account transfers. The Company determines interest rates in advance,
and credits interest daily to Fixed Account Value in dollars.
MINIMUM VALUE REQUIRED AFTER PARTIAL WITHDRAWAL
The Company may deem a Contract surrendered if it receives a request to withdraw
Contract Value that would cause the remaining Withdrawal Value to be less than
the amount required to remain in the Contract after a partial withdrawal. The
Withdrawal Value required to remain in the Contract after a partial withdrawal
is shown on the Contract Data Page. The Company reserves the right to terminate
the Contract in such event and pay all Withdrawal Value to the Owner. The
Company will send a notice to the Owner at his or her last known address at
least thirty (30) days in advance of any such termination. This Contract will
remain in force during such thirty (30) day period. The Owner may make
additional Purchase Payments during the thirty (30) day period to increase
Contract Value above such minimum.
MINIMUM VALUE REQUIRED IF SUBSEQUENT PURCHASE PAYMENTS NOT MADE
The Company reserves the right to terminate a Contract if the Contract Value on
any Business Day falls below $1,000 and no Purchase Payments were received by
the Company during the then current Contract Year and the two (2) immediately
preceding Contract Years. The Company will send a notice to the Owner at his or
her last known address at least thirty (30) days in advance of any such
termination. This Contract will remain in force during such thirty (30) day
period. The Owner may make additional Purchase Payments during the thirty (30)
day period to increase Contract Value above such minimum. If such additional
Purchase Payments are received by the Company in good order during the thirty
(30) day
6
<PAGE>
period, the Contract will not be in default for failure to make subsequent
Purchase Payments during the then current Contract Year and the two (2)
immediately preceding Contract Years. This Minimum Value requirement, however,
will continue to apply during the next and each subsequent Contract Year.
MINIMUM VALUE REQUIRED IN ANY INVESTMENT OPTION
The Company reserves the right to the extent permitted by law to transfer
Contract Value from any Investment Option if on any Business Day the Contract
Value in the Investment Option is less than $250. In such event, the Contract
Value will be transferred to the Investment Option with the highest Contract
Value.
PURCHASE PAYMENT CREDITS
The Company will credit your Contract with the Purchase Payment Credit as shown
on the Contract Data Page at the time the Purchase Payment is applied to the
Contract.
The Company allocates any Purchase Payment Credit to the investment options in
the same proportion as the allocation of the Purchase Payment you select. You
will not retain any Purchase Payment Credits applied to your Contract: (1) if
you return your Contract within the free look period; (2) for any Purchase
Payment made within one year of death of an Owner, or Annuitant if the Owner is
a non-natural person; (3) for any Purchase Payment made within one year prior to
a partial or full withdrawal or surrender; or (4) for any Purchase Payment made
within three years prior to the Annuity Date. Gains and losses allocable to the
Purchase Payment Credit shall remain in the Contract.
REPORTS
At least once each calendar year, the Company will furnish the Owner with a
report showing the Contract Value and any other information as may be required
by law. Reports will be sent to the last known address of the Owner.
DEATH BENEFITS
DEATH OF ANNUITANT
Upon the death of the Annuitant prior to the Annuity Date, the Owner may
designate a new Annuitant. If no designation is made within 30 days of the death
of the Annuitant, the Owner will become the Annuitant. If the Owner is a non-
natural person, the death of the Annuitant will be treated as the death of the
Owner and a new Annuitant may not be designated.
Upon the death of the Annuitant after the Annuity Date, the Death Benefit, if
any, will be as specified in the Annuity Option elected.
DEATH OF OWNER
Upon the death of an Owner prior to the Annuity Date, the Death Benefit will be
paid to the Beneficiary designated by the Owner. The Death Benefit will be the
greater of:
1. the Purchase Payments, less the sum of any Withdrawal Value previously
taken; or
2. the Contract Value.
For purposes of determining the Death Benefit, "Withdrawal Value previously
taken" is the sum of the reductions in Contract Value attributable to partial
withdrawals during the Owner's lifetime, including applicable charges.
If the Beneficiary is the spouse of the Owner and elects to continue the
Contract, the Contract Value remains unchanged and no determination of the Death
Benefit is made at that time.
Upon the death of an Owner on or after the Annuity Date, any remaining amounts
payable under the Contract will be distributed at least as rapidly as under the
method of distribution being used as of the date of the Owner's death.
PAYMENT OF OWNER'S DEATH BENEFIT
The Death Benefit will be determined by the Company as of the date of an Owner's
death. The Death Benefit will be paid as of the Valuation Period next following
the date of receipt by the Company of both due proof of death and, if no
election of payment method was previously made by the Owner, an election for the
payment method. In the event of the death of an Owner prior to the Annuity Date,
a Beneficiary may elect to have the Death Benefit paid under one of the
7
<PAGE>
following options: (a) as a single lump sum payment; (b) payment of the entire
Death Benefit within five years of the date of the Owner's death or (c) payment
of the Death Benefit under an Annuity Option over the lifetime of the
Beneficiary or over a period not extending beyond the life expectancy of the
Beneficiary with payments commencing within one year of the date of the Owner's
death. Any portion of the Death Benefit not applied under option (c) within one
year of the date of the Owner's death, must be distributed within five years of
the date of such death.
A spousal Beneficiary may elect one of the above options or elect to continue
the Contract in his or her name at the then current Contract Value in lieu of
receiving any Death Benefit. Payment to the Beneficiary other than in a lump
sum, may only be elected during the sixty (60) day period beginning with the
date of receipt of proof of death.\If a single sum payment is requested, the
amount will be paid within seven (7) days of receipt of proof of death and the
election, unless the Suspension or Deferral of Payments provision is in effect.
The Company will require due proof of death before payment of a Death Benefit.
For these purposes, "due proof of death" means:
1. a certified death certificate;
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All Death Benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
OWNERS OTHER THAN A SINGLE PERSON
If there are Joint Owners, any references to the death of an Owner shall mean
the first death of an Owner. Any Joint Owner must be the spouse of the other
Owner. Upon the death of either Owner, the surviving Joint Owner will be the
primary Beneficiary.
BENEFICIARY OTHER THAN A SINGLE PERSON
Unless the Owner provides otherwise, the Death Benefit will be paid in equal
shares to the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive the death of the Owner and/or
Annuitant, as applicable; or if there are none,
2. to the contingent Beneficiary(ies) who survive the death of the Owner
and/or Annuitant, as applicable; or if there are none,
3. to the estate of the Owner.
WITHDRAWALS
GENERAL
Prior to the Annuity Date, the Owner may, upon written request received by the
Company at its Variable Service Center, make a total withdrawal (surrender) or
partial withdrawal of the Withdrawal Value. The Withdrawal Value is:
1. the Contract Value at the end of the Valuation Period during which a
written request for a withdrawal is received at the Company; less
2. any applicable taxes not previously deducted; less
3. the Withdrawal Charge, if any; less
4. the Annual Contract Maintenance Charge, if any; less
5. any applicable riders as shown on the riders, if any.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-Account or a reduction in Fixed Account Value in the ratio that
the Contract Value in each Investment Option bears to the total Contract Value.
The Owner may request in writing in advance if a different method for canceling
Accumulation Units or reducing Fixed Account Value is desired. The Company
reserves the right to approve or disapprove any such request.
The Company will pay the amount of any withdrawal within seven (7) days of
receipt of a request in good order unless he Suspension or Deferral of Payments
provision is in effect.
8
<PAGE>
WITHDRAWAL CHARGE
A Withdrawal Charge may be imposed by the Company if a Withdrawal Charge Event
shown on the Contract Data Page occurs during the Withdrawal Charge Duration
shown on the Contract Data Page
The Withdrawal Charge is determined by the Company applying the Withdrawal
Charge Percentages shown on the Contract Data Page to the Contract Value deemed
by the Company to represent Purchase Payments withdrawn, surrendered or applied
to an Annuity Option. The charge will vary depending on the elapsed period shown
on the Contract Data Page for which a Withdrawal Charge applies. Purchase
Payments are deemed withdrawn in the order in which they are received by the
Company. The amount deducted will result in the cancellation of Accumulation
Units from each applicable Sub-Account or a reduction in Fixed Account Value in
the ratio that the Contract Value in each Investment Option bears to the total
Contract Value. The Owner may request in writing in advance if a different
method for assessing the Withdrawal Charge is desired. The Company reserves the
right to approve or disapprove any such request.
PARTIAL WITHDRAWALS
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Data Page. The remaining Withdrawal Value which must
remain in the Contract after a partial withdrawal, if any, is shown on the
Contract Data Page. If a partial withdrawal is requested that would reduce the
remaining Withdrawal Value for the Contract below that shown on the Contract
Data Page, the Company may deem the request to be a total withdrawal (surrender)
from the Contract. In such event, the Company may pay the then current
Withdrawal Value and terminate the Contract in accordance with the "Minimum
Value Required After Partial Withdrawal" provision of this Contract.
FREE WITHDRAWAL AMOUNT
The Free Withdrawal Amount on Partial Withdrawals applicable to this Contract,
if any, is shown on the Contract Data Page. No Withdrawal Charge will be imposed
on a partial withdrawal unless the amount withdrawn during a Contract Year
exceeds the Free Withdrawal Amount on Partial Withdrawals. Amounts taken as a
Free Withdrawal Amount will be subject to a Withdrawal Charge on a Full or
Partial Surrender. The Withdrawal Charge will apply to any amount withdrawn
during a Contract Year in excess of the Free Withdrawal Amount on Partial
Withdrawals. The unused portion of the Free Withdrawal Amount for one Contract
Year will not carry-over to the next Contract Year. The Free Withdrawal Amount
is not available if a withdrawal request would result in remaining Withdrawal
Value that is less than the Withdrawal Value Required to Remain in Contract
After Partial Withdrawal shown on the Contract Data Page.
SUSPENSION OR DEFERRAL OF PAYMENTS
The Company reserves the right to suspend or postpone payments for a withdrawal
or transfer for any period when:
1. the New York Stock Exchange is closed;
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held in the
Separate Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Owners;
5. provided that applicable rules and regulations of the Securities and
Exchange Commission will govern as to whether the conditions described in 2.
and 3. exist.
The Company reserves the right to defer payment for a withdrawal or transfer
from the Fixed Account for the period permitted by law, but not for more than
six months after written election is received by the Company.
ANNUITY PROVISIONS
ANNUITY DATE
The Owner selects the Annuity Date at the time of the application, and may later
change it by written request to the Company's Variable Service Center at least
thirty (30) days prior to the existing Annuity Date. If an Annuity Date is
selected that would cause a Withdrawal Charge Event to occur, a Withdrawal
Charge will be deducted from Contract Value before the first Annuity Payment is
made. The Annuity Date on the Issue Date is shown on the Contract Data Page.
9
<PAGE>
ANNUITY PAYMENTS
Annuity Payments are paid in monthly installments in the form of Fixed Annuity
Payments, Variable Annuity Payments or a combination of Fixed Annuity Payments
and Variable Annuity Payments.
The Owner may select the form of Annuity Payments by written request to the
Company at its Variable Service Center at least seven (7) days prior to the
Annuity Date. If all of the Contract Value on the seventh calendar day before
the Annuity Date is allocated to the Fixed Account, Fixed Annuity Payments will
be made. If all of the Contract Value on that date is allocated to the Separate
Account, Variable Annuity Payments will be made. If the Contract Value on that
date is allocated to both the Fixed Account and the Separate Account, a
combination of Fixed Annuity Payments and Variable Annuity Payments will be made
to reflect the allocation between the Fixed Account Value and the Variable
Account Value.
The payments will be made to the Annuitant, unless a different payee is selected
by the Owner by written request to the Company at its Variable Service Center at
least 30 days prior to the Annuity Date.
The Contract Value on the Annuity Date, as adjusted for any applicable taxes and
charges ("Adjusted Contract Value"), will be applied to the applicable Annuity
Table contained in the Contract based upon the Annuity Option selected by the
Owner. The amount of the first payment for each $1,000 of Adjusted Contract
Value is shown in the Annuity Tables. If, as of the Annuity Date, the current
Annuity Option rates applicable to this class of contracts provide an initial
Annuity Payment greater than that guaranteed under the same Annuity Option under
this Contract, the greater payment will be made.
The total dollar amount of each Annuity Payment is the sum of the Variable
Annuity Payment and the Fixed Annuity Payment. The Company reserves the right to
pay Annuity Payments in one sum when the remaining payments are less than
$2,000, or other minimum amount established by the Company from time to time, or
when the Annuity Option elected would result in periodic payments of less than
$100.
VARIABLE ANNUITY PAYMENTS
The amount of a Variable Annuity Payment is dependent upon (a) the Contract
Value, adjusted for any applicable charges, that is applied to an Annuity
Option; (b) the rates for the Annuity Option selected, as stated in the Annuity
Option Tables; and (c) the investment performance of the selected Sub-Accounts
during the Annuity Period. Variable Annuity Payments are not guaranteed as to
dollar amount.
Calculation. The dollar amount of Variable Annuity Payments for each applicable
Sub-Account after the first Variable Annuity Payment is determined as follows:
1. the dollar amount of the first Variable Annuity Payment is divided by the
value of an Annuity Unit for each applicable Sub-Account as of the Annuity
Date. This sets the number of Annuity Units for each monthly payment for the
applicable Sub-Account. The number of Annuity Units for each applicable Sub-
Account remains fixed during the Annuity Period;
2. the fixed number of Annuity Units per payment in each Sub-Account is
multiplied by the Annuity Unit Value for that Sub-Account for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Sub-Account.
The total dollar amount of each Variable Annuity Payment is the sum of all Sub-
Account Variable Annuity Payments.
Annuity Unit: The value of any Annuity Unit for each Sub-Account of the
Separate Account was arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation Period
is determined by subtracting 2. from 1. and dividing the result by 3. and
multiplying the result by a factor which neutralizes the assumed interest rate
shown on the Contract Data Page, where:
1. is the net result of: (a) the assets of the Sub-Account attributable to the
Annuity Units; plus or minus (b) the cumulative charge or credit for taxes
reserved which is determined by the Company to have resulted from the
operation or maintenance of the Sub-Account;
2. is the cumulative unpaid charge for the Mortality and Expense Risk Charge
and for the Administrative Charge, which are shown on the Contract Data
Page; and
3. is the number of Annuity Units outstanding at the end of the Valuation
Period.
The value of an Annuity Unit may increase or decrease from Valuation Period to
Valuation Period.
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<PAGE>
FIXED ANNUITY PAYMENTS
The dollar amount of each Fixed Annuity Payment shall be determined in
accordance with Annuity Tables contained in this Contract which are based on the
minimum guaranteed interest rate of 3.0% per year. After the initial Fixed
Annuity Payment, the payments will not change regardless of investment,
mortality or expense experience.
ANNUITY OPTIONS
An Annuity Option is selected by the Owner at the time of the application and
may be changed by the Owner by written request at least thirty (30) days prior
to the Annuity Date. If no Annuity Option election is in effect at least thirty
(30) days before the Annuity Date, Option B. Life Annuity with a period certain
of 120 months will automatically be applied
The following Annuity Options or any other Annuity Option acceptable to the
Company may be selected:
OPTION A. LIFE ANNUITY: Monthly Annuity Payments during the life of the
Annuitant.
OPTION B. LIFE ANNUITY WITH PERIODS CERTAIN OF 60,120, 180 OR 240 MONTHS:
Monthly Annuity Payments during the lifetime of the Annuitant and in any event
for sixty (60), one hundred twenty (120), one hundred eighty (180) or two
hundred forty (240) months certain as selected.
OPTION C. JOINT AND SURVIVOR ANNUITY: Monthly Annuity Payments payable during
the joint lifetime of the Annuitant and a designated second person and then
during the lifetime of the survivor at the percentage (100%, 75%, 66 2/3% or
50%) selected.
OPTION D. JOINT AND CONTINGENT ANNUITY: Monthly Annuity Payments during the
Annuitant's lifetime and continuing during the lifetime of a designated second
person after the Annuitant's death at the percentage (100%, 75%, 66 2/3% or 50%)
selected.
OPTION E. FIXED PAYMENTS FOR A PERIOD CERTAIN: Fixed monthly Annuity Payments
for any specified period (at least five years but not exceeding thirty years),
as selected.
Annuity Options A, B, C and D are available for Fixed Annuity Payments, Variable
Annuity Payments or a combination of both. Annuity Option E is available for
Fixed Annuity Payments only. If the Annuitant dies during a period certain
(Annuity Options B or E), the remaining Annuity Payments will be made to the
Beneficiary. The Beneficiary may elect to receive the commuted value of the
remaining Annuity Payments in a single sum instead. The Company will determine
the commuted value by discounting the remaining Annuity Payments at its then
current interest rate used for commutation.
MORTALITY TABLES
The mortality tables used in determining the Annuity Purchase Rates for Options
A, B, C, and D is the 1983a Annuity Mortality Table (40% Male, pivotal age 65)
and interest at a rate of 3.0% per year, compounded annually. A detailed
statement of the method of calculation has been filed with the insurance
department of the state in which the Contract was issued. The Company will
compute reserves on this Contract on the Commissioners Annuity Reserve Valuation
Method (CARVM). The reserves and guaranteed values including any paid-up
annuity, Withdrawal Value or Death Benefits will at no time be less than the
minimum required by the laws of the state in which the application was signed.
The dollar amount of an Annuity Payment for any Age or combination of Ages not
shown in the Tables or for any other form of Annuity Option agreed to by the
Company will be provided by the Company upon request.
MISSTATEMENT OF AGE OR SEX
If the Age or sex of the Annuitant, or the Age or sex of any designated second
person, has been misstated, any Annuity Payments will be the Annuity Payments
provided by the correct Age or sex. If the misstatement is discovered after the
Annuity Date: (a) the Company will add interest to any overpayments at the rate
of 6% per year, compounded annually, and deduct the amount from remaining
Annuity Payments until the total is repaid; and (b) the Company will add
interest to any underpayments at the rate of 6% per year, compounded annually,
and pay the amount in a single sum with next Annuity Payment.
SUPPLEMENTARY AGREEMENT
A Supplementary Agreement setting forth the terms of the Annuity Option selected
will be issued at the Annuity Date, at which time this Contract will be
exchanged for the Supplementary Agreement.
EVIDENCE OF SURVIVAL
The Company may require satisfactory evidence of the continued survival of any
person(s) on whose life Annuity Payments are based.
11
<PAGE>
PROOF OF AGE
The Company may require evidence of Age of any payee under Annuity Options A, B,
C, and D and of the designated second person under Annuity Options C and D.
12
<PAGE>
ANNUITY OPTION TABLES
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
OPTIONS A AND B - LIFETIME PAYMENT OPTION
<TABLE>
<CAPTION>
Age of 10 Year & Age of 10 Year &
Payee Life Payee Life
<S> <C> <C> <C>
50 4.07 70 6.30
51 4.13 71 6.47
52 4.20 72 6.65
53 4.28 73 6.83
54 4.35 74 7.01
55 4.44 75 7.20
56 4.52 76 7.39
57 4.61 77 7.58
58 4.71 78 7.76
59 4.81 79 7.95
60 4.91 80 8.12
61 5.02 81 8.29
62 5.14 82 8.45
63 5.26 83 8.60
64 5.39 84 8.74
65 5.53 80 8.87
66 5.67
67 5.82
68 5.97
69 6.13
</TABLE>
OPTIONS C AND D - JOINT LIFETIME PAYMENT - PAYMENTS FOR TWO LIVES ONLY
<TABLE>
<CAPTION>
Annuitants' Ages Percentage of Payment Payable to Surviving
Annuitant is:
Primary Joint 50% 662/3% 75% 100%
<S> <C> <C> <C> <C> <C>
(A) Payments reduce upon the death of either the Annuitant or the Joint
Annuitant:
50 50 4.10 3.93 3.85 3.63
50 55 4.29 4.09 4.00 3.74
55 55 4.49 4.28 4.18 3.90
55 60 4.74 4.48 4.37 4.05
60 60 5.01 4.74 4.61 4.27
60 65 5.35 5.02 4.87 4.47
65 65 5.73 5.37 5.20 4.76
65 70 6.20 5.75 5.56 5.04
</TABLE>
13
<PAGE>
(B) Payments reduce only upon the death of the Annuitant (ERISA Joint and
Survivor Annuity Option):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
50 50 3.85 3.78 3.73 3.63
50 55 3.91 3.86 3.83 3.74
55 50 4.08 3.97 3.90 3.74
55 55 4.18 4.08 4.03 3.90
55 60 4.26 4.19 4.15 4.05
60 55 4.48 4.33 4.26 4.05
60 60 4.61 4.49 4.43 4.27
60 65 4.72 4.64 4.59 4.47
65 60 5.02 4.83 4.73 4.47
65 65 5.20 5.05 4.97 4.76
65 70 5.36 5.25 5.19 5.04
70 65 5.76 5.51 5.38 5.04
</TABLE>
Monthly payment rates for other age combinations will be furnished on request.
For quarterly payments, multiply the monthly payment rate by 2.99. For semi-
annual payments, multiply by 5.96. For annual payment, multiply by 11.84.
OPTION E - FIXED TIME PAYMENT
<TABLE>
<CAPTION>
Years Monthly Payment Years Monthly Payment Years Monthly Payment
<S> <C> <C> <C> <C> <C>
1 Not available 11 8.86 21 5.32
2 Not available 12 8.24 22 5.15
3 Not available 13 7.71 23 4.99
4 Not available 14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
</TABLE>
For quarterly payments, multiply the monthly payment rate by 2.99. For semi-
annual payments, multiply by 5.96. For annual payment, multiply by 11.84.
14
<PAGE>
First Variable Life Insurance Company
<PAGE>
0Payments are based on the then current GMIP Value and the applicable GMIP
Annuity Tables.
Guaranteed Minimum Income Payments will be made to the Annuitant, unless a
different payee is selected by the Owner by written request to the Company at
its Variable Service Center. The request must be made at least 30 days prior to
the GMIP Annuity Date.
On the GMIP Annuity Date, any Contract Value in the Separate Account will be
transferred to the Company's general account and no further withdrawals of
Contract Value will be permitted.
GMIP Election Period and GMIP Annuity Date. The Owner may elect to start
Guaranteed Minimum Income Payments only during a GMIP Election Period. The
election must be made in writing to the Company at its Variable Service Center.
The first GMIP Election Period begins on the later of:
. the seventh Contract Anniversary; or
. the Anniversary Date on or immediately following the Annuitant's 60th
birthday. If there are joint Annuitants, this is the Anniversary Date on or
immediately following the older Annuitant's 60th birthday.
Additional GMIP Election Periods begin on each subsequent Anniversary Date until
the earlier of:
. the date the Guaranteed Minimum Income Payment rider ends; or
. the Annuitant's 91st birthday. If there are joint Annuitants, this is the
older Annuitant's 91st birthday.
Each GMIP Election Period ends 30 days after it begins.
Unless otherwise permitted by the Company, the GMIP Annuity Date is the last day
of the GMIP Election Period in which the Owner elects to begin Guaranteed
Minimum Income Payments. Any death benefits under the Contract that end of the
Annuity Date will also end on the GMIP Annuity Date.
GMIP Value. The GMIP Value up to the Age 80 Anniversary Date is the higher of:
. the Best Anniversary Value ("BAV") amount in effect on the GMIP Annuity Date;
or
. the Roll-Up Value ("RUV") amount in effect on the GMIP Annuity Date.
The GMIP Value on the Age 80 Anniversary Date is the higher of:
. the BAV amount then in effect; or
. the RUV amount then in effect.
The GMIP Value after the Age 80 Anniversary Date is:
. the GMIP Value on the Age 80 Anniversary Date; plus
. any Purchase Payments received by the Company after the Age 80 Anniversary
Date; less
. a proportional reduction for any withdrawals of Contract Value after the Age
80 Anniversary Date.
The Company reserves the right to reduce the GMIP Value for any premium taxes
that may apply and for any indebtedness under the Contract. The GMIP Value does
not guarantee performance of any Investment Option. The company uses GMIP Value
only to calculate Guaranteed Minimum Income Payments.
Determination of Best Anniversary Value. The Company determines a Best
Anniversary Value, or "BAV," based on its calculations of Anniversary Value
Amounts and adjustments to previously determined Anniversary Value Amounts.
Anniversary Value Amounts - An Anniversary Value Amount is determined:
. on the Issue Date; and
. on each Contract Anniversary after that up to, and including, the Age 80
Anniversary Date.
The Anniversary Value Amount on the Issue Date is equal to the Contract Value.
The Anniversary Value Amount on each subsequent Anniversary Date (up to the Age
80 Anniversary Date) is the higher of:
. the Contract Value on the Anniversary Date; or
<PAGE>
. the most recently determined previous Anniversary Value Amount, adjusted for
Purchase Payments and withdrawals during the immediately preceding Contract
Year. Purchase Payments increase it. Withdrawals of Contract Value cause a
proportional reduction of Anniversary Value Amount.
BAV Amounts - the Best Anniversary Value is:
. the Anniversary Value Amount most recently determined by the Company; plus
. the sum of any Purchase Payments received by the Company after the most recent
Anniversary Date (or, during the first Contract Year, after the Issue Date) to
the GMIP Annuity Date; less
. a proportional reduction for any withdrawals of Contract Value after the last
Anniversary Date to the GMIP Annuity Date.
Determination of Roll-Up Value. The Roll-Up Value, or "RUV" on the Issue Date is
equal to the Contract Value. After the Issue Date until the Age 80 Anniversary
Date, the RUV is an amount equal to:
. Purchase Payments; less
. a proportional reduction for any withdrawals of Contract Value; less
. the amount of any indebtedness under the Contract; plus
. interest accumulated at an annual rate of 5.0%.
Proportional Reductions. Withdrawals of Contract Value cause a proportional
reduction of:
. GMIP Value for withdrawals on and after the Age 80 Anniversary Date; and
. Anniversary Value Amounts for withdrawals before the Age 80 Anniversary Date;
and
. Roll-Up Value for withdrawals before the Age 80 Anniversary Date.
The reduction is made in the ratio that a withdrawal of Contract Value,
including charges on the withdrawal, bears to the total Contract Value before
the withdrawal.
GMIP Annuity Tables. The monthly income factors on the attached tables show the
dollar amount of a Guaranteed Minimum Income Payment for each $1,000 of GMIP
Value applied. If more favorable to the Annuitant, monthly income will be
determined by applying Contract Value to the Company's current fixed annuity
payment rates for the annuity option selected.
The Company computes monthly income factors for GMIP Life Annuity with Period
Certain of 120 or 240 Months based on mortality tables and benchmark rates. The
Company uses the 1983a Annuity Mortality Table projected using projection scale
G (40% Male, pivotal age 65). The benchmark rate is 2.5% per year, compounded
annually. The Owner can request monthly income factors for any Age not shown in
the tables. The Company may provide monthly income factors for other forms of
GMIP Annuity options.
Minimum Monthly Income Factors For Each $1,000 Of GMIP Value
- ------------------------------------------------------------
. Life Annuity with Period Certain of 120 Months. This form provides monthly
payments based on the lifetime of a single Annuitant or for 120 months,
whichever is longer:
<TABLE>
<CAPTION>
Age of Per Age of Per Age of Per Age of Per Age of Per
Annuitant $1,000 Annuitant $1,000 Annuitant $1,000 Annuitant $1,000 Annuitant $1,000
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 2.97 50 3.41 60 4.12 70 5.36 80 7.24
41 3.00 51 3.46 61 4.22 71 5.52 81 7.45
42 3.04 52 3.52 62 4.32 72 5.69 82 7.65
43 3.08 53 3.58 63 4.43 73 5.86 83 7.85
44 3.12 54 3.65 64 4.54 74 6.04 84 8.04
45 3.16 55 3.72 65 4.66 75 6.23 85 8.22
46 3.21 56 3.79 66 4.79 76 6.43 86 8.40
47 3.25 57 3.87 67 4.92 77 6.63 87 8.56
48 3.30 58 3.95 68 5.06 78 6.83 88 8.72
49 3.35 59 4.03 69 5.20 79 7.03 89 8.86
90 8.98
</TABLE>
<PAGE>
GMIP Annuity Tables (continued).
. Joint and Survivor Life Annuity with Period Certain of 240 Months. This form
provides monthly payments based on the lifetime of two Annuitants or for 240
months, whichever is longer:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Age Per Age Per Age Per
of Annuitants $1,000 of Annuitants $1,000 of Annuitants $1,000
Life 1 Life 2 Life 1 Life 2 Life 1 Life 2
- --------------------------------------------------------------------------
50 50 3.06 60 60 3.58 70 70 4.38
50 55 3.16 60 65 3.73 70 75 4.57
55 55 3.29 65 65 3.94 75 75 4.82
55 60 3.41 65 70 4.12 75 80 4.97
</TABLE>
ELECTION TO TERMINATE RIDER: The Owner may elect to end this Rider after it has
been in effect for at least 7 Contract Years. Once this Rider is ended, it may
not be elected again. The Company must receive a request to end this rider at
its Variable Service Center. If the request is received within 30 days of a
Contract Anniversary, the Rider will remain in force (unless ended for other
reasons) during the next Contract Year.
TERMINATION DATE OF RIDER: The termination date of this Rider is the earliest
of:
. the death of the Owner before the Annuity Date (or GMIP Annuity Date), unless
continued by a spousal beneficiary;
. a change of designation of the Annuitant, unless the Company consents
otherwise;
. the earlier of the Annuity Date or GMIP Annuity Date;
. the Contract Anniversary following the Owner's election to end the Rider
after it has been in effect for at least 7 Contract Years; and
. termination of the Contract.
Signed for the Company.
/s/ Jeffery K. Hoelzel /s/ John M. Soukup
Jeffery K. Hoelzel John M. Soukup
Secretary President
First Variable Life Insurance Company
Little Rock, Arkansas
