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SUPPLEMENT TO PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
DATED MAY 1, 1998
EXCHANGE OFFER
EXCHANGE OFFER
The Contracts described in this Prospectus ("New Contracts") may be
issued in exchange for certain individual annuity contracts previously issued by
the Company, which are substantially similar to the New Contracts, if the New
Contract is available for sale in the state or jurisdiction of the owner of the
Old Contract.
For purposes of this exchange offer an "Old Contract" is defined as a
contract issued prior to August 15, 1994 in all states except California, Idaho,
Illinois, Montana, New Jersey, Oregon and South Carolina; prior to September 6,
1994 in Illinois and Montana; prior to October 3, 1994 in Idaho and Oregon; and
prior to January 3, 1995 in California. Contracts that were issued in New
Jersey, South Carolina and Washington may not be exchanged for New Contracts but
may be exchanged for a new group annuity contract ("New Group Annuity
Contracts") which is substantially similar to the New Contracts other than as
described below. The Old Contracts are described in Appendix C to this
Prospectus.
The Company will permit an owner of an outstanding Old Contract to
exchange his or her Contract for a New Contract without withdrawal charge,
except a possible market value charge, as described below. For purposes of
computing the applicable withdrawal charge upon any withdrawals made subsequent
to the exchange, the New Contract will be deemed to have been issued on the date
the Old Contract was issued, and any purchase payment credited to the Old
Contract will be deemed to have been credited to the New Contract on the date it
was credited under the Old Contract. The death benefit under the New Contract on
the date of its issue will be the greater of the minimum death benefit under the
Old Contract or the contract value on the date of exchange and will "step up"
annually thereafter as described in paragraph "6." below.
Old Contract owners interested in a possible exchange should carefully
review this Prospectus including Appendix C before deciding to make an exchange.
Contracts that are described in Appendix C to this Prospectus that were issued
in New Jersey, South Carolina and Washington should also review the prospectus
for the New Group Annuity Contracts before deciding to make an exchange.
AN EXCHANGE MAY NOT BE IN THE BEST INTERESTS OF AN OWNER OF AN OLD
CONTRACT. Further, under Old Contracts with a fixed account investment option, a
market value charge may apply to any amounts transferred from a three or six
year investment account in connection with an exchange. (Reference should be
made to the discussion of the market value charge under the caption "Fixed
Account Investment Options" in the prospectus and, in the case of contracts
issued in New Jersey, South Carolina and Washington, in the New Group Annuity
Contract prospectus .) The Company believes that an exchange of Contracts will
not be a taxable event for Federal tax purposes; however, any owner considering
an exchange should consult a tax adviser. The Company reserves the right to
terminate this exchange offer or to vary its terms at any time.
The principal differences between the Old and New Contracts are as
follows:
1. The New Contract will waive the $30 annual administration fee prior
to the maturity date if the contract value is equal to or greater than $100,000
at the time the fee is assessed.
2. The surrender charges under the New Contract will be higher in
certain cases. The surrender charges are the same under both Old and New
Contracts for the first three contract years, but thereafter the charges under
the New Contract are 5%, 4%, 3% and 2% for withdrawals made during contract
years four, five, six and seven, respectively, while under the Old Contract the
charges for such years are 4%, 3%, 2% and 0%, respectively.
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3. The minimum interest rate to be credited for any guarantee period
under the fixed portion of the New Contract will be three percent as opposed to
four percent under the Old Contract. The market value charge under the New
Contract will be limited so as to only affect accumulated earnings in excess of
three percent, whereas under the Old Contract the market value charge is limited
so as to not invade principal.
4. The annuity purchase rates guaranteed in the New Contract have been
determined using 3% as opposed to 4% under the Old Contract.
5. (New Jersey, South Carolina and Washington contract owners only) Old
Contracts are individual deferred annuity contracts whereas the New Group
Annuity Contracts are group deferred annuity contracts. Ownership of an
individual contract is evidenced by the issuance of an individual annuity
contract whereas participation in a group contract is separately accounted for
by the issuance of a certificate evidencing the owner's interest under the
contract. Under the group contract, contracts have been issued to the Venture
Trust, a trust established with United Missouri Bank, N.A., Kansas City,
Missouri, as group holder for groups comprised of persons who have brokerage
accounts with brokers having selling agreements with Manufacturers Securities
Services, LLC.
6. DIFFERENCES RELATING TO THE DEATH BENEFIT
a. Differences Between Death Benefit of Old Contracts and New Contracts
Death Benefit for Old Contracts
The minimum death benefit during the first six contract years will be
equal to the greater of: (a) the owner's contract value on the date due proof of
death and all required claim forms are received at the Company's Annuity Service
Office, or (b) the sum of all purchase payments made by or on behalf of the
owner, less any amount deducted in connection with partial withdrawals made by
the owner. During any subsequent six contract year period, the minimum death
benefit will be the greater of (a) the owner's contract value on the date due
proof of death and all required claim forms are received at the Company's
Annuity Service Office, or (b) the minimum death benefit on the last day of the
previous six contract year period plus any purchase payments made by or on
behalf of the owner and less any amount deducted in connection with partial
withdrawals made by the owner since then. If the annuitant dies after the first
of the month following his or her 85th birthday, the minimum death benefit will
be the owner's contract value on the date due proof of death and all required
claim forms are received at the Company's Annuity Service Office.
An Enhanced Death Benefit became available in Florida, Maryland and
Washington to contracts issued August 15, 1994 or later, in Idaho, New Jersey
and Oregon to contracts issued October 3, 1994 or later and in California to
contracts issued January 3, 1995 or later.
This Enhanced Death Benefit provides for a minimum death benefit as
described above, except that the death benefit is "stepped up" each contract
year instead of the six contract year period. In addition, if the annuitant dies
after the first of the month following his or her 85th birthday, the minimum
death benefit is the greater of the contract value or the excess of the sum of
all purchase payments less the sum of any amounts deducted in connection with
partial withdrawals.
Death Benefit for New Contracts Issued on or After May 1, 1998
(See below for state applicability)
In the states of Connecticut, Washington D.C., Florida, Maryland,
Massachusetts, Minnesota, Montana, Oregon and Puerto Rico (the "Old Death
Benefit States"), the death benefit described under "Death Benefit for New
Contracts Issued Prior to May 1, 1998" will continue to apply to contracts
issued on or after May 1, 1998.
If any owner dies and the oldest owner had an attained age of less than
81 years on the contract date, the death benefit will be determined as follows:
During the first contract year, the death benefit will
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be the greater of: (a) the contract value or (b) the sum of all purchase
payments made by or on behalf of the owner, less any amounts deducted in
connection with partial withdrawals made by or on behalf of the owner. During
any subsequent contract year, the death benefit will be the greater of: (a) the
contract value or (b) the death benefit on the last day of the previous contract
year, plus any purchase payments made by or on behalf of the owner and less any
amounts deducted in connection with partial withdrawals made by or on behalf of
the owner since then. If any owner dies on or after his or her 81st birthday,
the death benefit will be the greater of (a) contract value or (b) the death
benefit on the last day of the contract year ending just prior to the owner's
81st birthday, plus any payments made by or on behalf of the owner, less amounts
deducted in connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age of 81 years
or greater on the contract date, the death benefit will be the greater of: (a)
the contract value or (b) the excess of (i) the sum of all purchase payments
made by or on behalf of the owner over (ii) the sum of any amounts deducted in
connection with partial withdrawals made by or on behalf of the owner.
Death Benefit for New Contracts Prior to May 1, 1998
The death benefit described below applies to New Contracts issued prior
to May 1, 1998 as well as New Contracts issued on or after May 1, 1998 in the
Old Death Benefit States.
If any owner dies on or prior to his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be determined as follows: During the first contract year, the
death benefit will be the greater of: (a) the contract value or (b) the sum of
all purchase payments made, less any amounts deducted in connection with partial
withdrawals made by or on behalf of the owner. During any subsequent contract
year, the death benefit will be the greater of: (a) the contract value or (b)
the death benefit on the last day of the previous contract year, plus any
purchase payments made and less any amounts deducted in connection with partial
withdrawals made by or on behalf of the owner since then.
If any owner dies after his or her 85th birthday and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be the greater of: (a) the contract value or (b) the excess of (i)
the sum of all purchase payments made by or on behalf of the owner over (ii) the
sum of any amounts deducted in connection with partial withdrawals made by or on
behalf of the owner. If any owner dies and the oldest owner had an attained age
greater than 80 on the contract date, the death benefit will be the contract
value less any applicable withdrawal charges at the time of payment of benefits.
For contracts issued on or after October 1, 1997, any withdrawal charges applied
against the death benefit shall be waived by the Company.
b. DIFFERENCES REGARDING WHEN DEATH BENEFIT WILL BE PAID
The death benefit of the New Contract will be payable upon the death of
the owner (or first owner to die if there is more than one owner). The death
benefit of the Old Contract is payable on the death of the annuitant (or last
annuitant to die if there is more than one annuitant); if the owner predeceases
the annuitant, the Old Contract contract value is paid, which may be a lesser
amount than the death benefit payable on the death of the annuitant.
Contract owners who do not wish to exchange their Old Contracts for the
New Contracts may continue to make purchase payments to their Old Contracts. Or,
they can keep their Old Contracts and buy a New Contract to which to apply
additional purchase payments.
The above comparison does not take into account differences between the
Old Contracts, as amended by qualified plan endorsements, and the New Contracts,
as amended by similar qualified plan endorsements. Owners using their Old
Contract in connection with a qualified plan should consult a tax advisor. See
also the Federal Tax Matters section of the prospectus.
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ADDITIONAL CONSIDERATIONS FOR VEN 1 AND VEN 3 CONTRACT OWNERS
The comparison of Old and New Contract provisions set forth above does
not include the Ven 1 and Ven 3 contracts (which are no longer being issued and
which are described in Appendix D to this prospectus). These contracts will also
be eligible for voluntary exchange for the New Contracts. Ven 3 and Ven 1
contract owners should in particular consider the following differences between
the Ven 3 and Ven 1 contracts and the New Contract.
1. In general, the death benefit of the New Contract will be payable on the
death of the owner (or first owner to die if there is more than one owner).
The death benefit of the Ven 3 and Ven 1 contracts is generally payable on
the death of the annuitant (or last annuitant to die if there is more than
one annuitant); if the owner predeceases the annuitant, the Ven 3 or Ven 1
contract value (as applicable) is paid, which may be a lesser amount than
the death benefit payable on the death of the annuitant.
2. The guaranteed death benefit payable under the New Contract will in most
circumstances be more favorable. The minimum death benefit for the Ven 1
contract is the greater of (a) the contract value or (b) the sum of all
purchase payments made, less any amount deducted in connection with partial
withdrawals. The minimum death benefit for the Ven 3 contract is described
below under "Enhanced Death Benefit Additional Considerations for Ven 3
Contract Owners." The minimum death benefit for the New Contract is as
described above in this "Exchange Offer" section. Ven 3 contract owners
should also note that the New Contract contains additional provisions which
limit the death benefit paid if an owner dies after his or her 85th
birthday and the oldest owner had an attained age of less than 81 years on
the contract date, to the greater of the contract value or the excess of
the sum of all purchase payments less the sum of any amounts deducted in
connection with certain withdrawals . Ven 3 contract owners should also
note that the New Contract contains a provision which limits the death
benefit paid to the contract value less any applicable withdrawal charges
at the time of payment if the owner dies and the oldest owner had an
attained age greater than 80 on the contract date. These provisions may not
be as favorable to Ven 3 contract owners.
3. The New Contract will waive the $30 annual administration fee prior to the
maturity date if the contract value is equal to or greater than $100,000 at
the time the fee is to be assessed.
4. The surrender charges under the New Contract are higher in certain cases.
The New Contract surrender charges are 6%, 6%, 5%, 5%, 4%, 3%, 2% for
withdrawals made within one, two, three, four, five, six and seven,
respectively, of payment. The surrender charge for the Ven 3 and Ven 1
contract is 5% for withdrawals made within five years of payment (certain
exceptions apply to the withdrawal charge as described in Appendix D to
this Prospectus) to the Old Contract.
5. The New Contract provides for forty investment options (thirty-five
variable and five fixed). Neither the Ven 3 contract nor the Ven 1 contract
provide for fixed investment options. In addition, the Ven 1 contract
offers only three variable investment options.
6. The New Contract provides for the deduction from each sub-account each
valuation period of a charge at an effective annual rate of 1.40% (1.25%
for mortality and expense risk fees and 0.15% for administration fees) of
the contract reserves allocated to such sub-account. The Ven 1 contract
provides for the deduction from each sub-account each valuation period of a
charge at an effective annual rate of 1.30% (for mortality and expense
risk) of the contract reserves allocated to such sub-account. The Ven 3
charges are the same as those for the New Contract.
7. The annuity purchase rates guaranteed in the New Contract have been
determined using 3% as opposed to 4% under the Ven 1 and Ven 3 contracts.
8. Certain Ven 3 and Ven 1 contracts may not be subject to some changes in the
Federal tax law that have occurred since the contracts were issued, i.e.,
the contract were "grandfathered." If such a grandfathered contract is
exchanged, the New Contract is likely to be subject to the changes in the
law. For example, annuity contracts issued on or prior to April 22, 1987
are generally not subject to
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Federal tax rules treating transfers of annuity contracts for inadequate
consideration as taxable events. See "Taxation of Partial and Full
Withdrawals" in the Federal Tax Matters section of this prospectus. A New
Contract received in exchange for a Ven 3 or Ven 1 contract would, however,
typically be subject to these rules.
THE DATE OF THIS SUPPLEMENT IS NOVEMBER 2, 1998.
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SUPPLEMENT TO PROSPECTUS
FOR THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
DATED MAY 1, 1998
DEATH BENEFIT BEFORE MATURITY DATE - AMOUNT OF DEATH BENEFIT
The section entitled "Death Benefit Before Maturity Date - Amount of
Death Benefit" is amended as follows:
Effective June 1, 1998, for contracts issued on or after June 1, 1998
in Connecticut, the death benefit will be the death benefit described under the
subsection "Contracts Issued On or After May 1, 1998."
Effective, July 1, 1998, for contracts issued on or after July 1, 1998
in Minnesota, Montana and the District of Columbia, the death benefit will be
the death benefit described under the subsection "Contract Issued On or After
May 1, 1998."
DEATH BENEFIT PROVISIONS - PRIOR CONTRACT DEATH BENEFIT PROVISIONS
The section entitled "Death Benefit Provisions - Prior Contract Death
Benefit Provisions" of Appendix C is supplemented as follows:
An Enhanced Death Benefit became available in Florida, Maryland and
Washington to contracts issued August 15, 1994 or later, in Idaho, New Jersey
and Oregon to contracts issued October 3, 1994 or later and in California to
contracts issued January 3, 1995 or later.
This Enhanced Death Benefit provides for a minimum death benefit as
described above, except that the death benefit is "stepped up" each contract
year instead of the six contract year period. In addition, if the annuitant dies
after the first of the month following his or her 85th birthday, the minimum
death benefit is the greater of the contract value or the excess of the sum of
all purchase payments less the sum of any amounts deducted in connection with
partial withdrawals.
Contracts with a contract date prior to the date the Enhanced Death
Benefit first became available in that state may also be exchanged for a new
contract which provides for an alternative enhanced death benefit. See
supplement to this prospectus for The Manufacturers Life Insurance Company of
North America Separate Account A entitled "Exchange Offer."
DCA PROMOTIONAL RATES
The Company is currently offering promotional rates in connection with
the Dollar Cost Averaging (DCA) program. The promotional rates are available for
a limited time for new purchase payments of $100,000 or more allocated to either
a 6-month or a 12-month DCA fixed account investment option. Payments must be
received on or after August 31, 1998 but not later than December 31, 1998 to be
eligible.
As of the date of this supplement, the promotional rates are 8% for the
12-month DCA option and 10% (annualized) for the 6-month DCA option. Both the 8%
and the 10% rates are effective annual interest rates and interest is earned for
the period of time amounts are in the DCA account. Since pre-determined amounts
in the DCA account will be transferred monthly into other sub-accounts, the
total dollar amount of interest earned in the 6-month DCA investment option will
be less than 10% of the initial amount invested. Similarly, the total dollar
amount of interest earned in the 12-month DCA investment option will be less
than 8% of the initial amount invested. The Company reserves the right to
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change the promotional rates at any time for purchase payments made after the
effective date of the change.
To receive the promotional rates, the portion of your new purchase
payment allocated to the DCA investment option must be systematically
transferred into variable investment options over a 6 month or 12 month period,
as applicable. The monthly DCA transfer amount is determined by dividing the
portion of your new purchase payment allocated to the DCA investment option by
5.6 for the 6 month option, or 11 for the 12 month option. Each month, on the
date designated by the contract owner, the monthly DCA transfer amount will be
transferred to the variable investment options selected. At the end of the DCA
period, the remaining DCA account balance will be transferred to the variable
investment options selected. Contract owners should not rely on the promotional
rates being in effect for subsequent payments. Subsequent payments will receive
the interest rate in effect at the time of payment.
A contract owner may discontinue the Dollar Cost Averaging program at
any time. The remaining balance of the contract owner's DCA account will then be
transferred to the 1-year fixed account and receive the interest rate in effect
at the time of the transfer, guaranteed for one year. For current 1-year fixed
account rates, call 1-800-557-2223.
FINANCIAL RATINGS OF THE COMPANY
The contracts described in the Prospectus are issued by The
Manufacturers Life Insurance Company of North America (the "Company"). The
Company's financial ratings are as follows:
A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Excellent in claims paying ability; 2nd category of 21
Aa2 Moody's
Excellent in financial strength; 3rd category of 21
These ratings, which are current as of November 2, 1998 and are subject
to change, are assigned to The Manufacturers Life Insurance Company of North
America as a measure of the Company's ability to honor the death benefit and
life annuitization guarantees but not specifically to its products, the
performance (return) of these products, the value of any investment in these
products upon withdrawal or to individual securities held in any portfolio.
CHANGE OF ANNUITANT
The section entitled "Guaranteed Retirement Income Program" is
supplemented as follows:
The Annuitant may only be changed to an individual that is the same age
or younger than the current Annuitant.
SUPPLEMENT DATED NOVEMBER 2, 1998.
