<PAGE> 1
As filed with the Securities and Exchange Commission on February 26, 1998.
Registration No. 33-76684
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 4
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
(formerly NASL Variable Account)
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
(formerly North American Security Life Insurance Company)
(Name of Depositor)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of Depositor's Principal Executive Offices)
(617) 266-6004
(Depositor's Telephone Number Including Area Code)
James D. Gallagher, Esq. Copy to:
Vice President, Secretary J. Sumner Jones, Esq.
and General Counsel Jones & Blouch, L.L.P.
The Manufacturers Life Insurance Company 1025 Thomas Jefferson Street, N.W.
of North America Washington, DC 20007
73 Tremont Street
Boston, Massachusetts 02108
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on (date) pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
X on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
---
*The Prospectus contained in this registration statement also relates to
variable annuity contracts no longer being sold but for which additional
purchase payments are accepted and which are covered by an earlier registration
statement under File No. 33-49604.
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
N-4 Item Caption in Prospectus
Part A
<TABLE>
<S> <C>
1. Cover Page
2. Special Terms
3. Summary
4. Performance Data; Financial Statements
5. General Information about The Manufacturers Life Insurance Company of
North America, The Manufacturers Life Insurance Company of North
America Separate Account A and Manufacturers Investment Trust
6. Charges and Deductions; Withdrawal Charge; Reduction or Elimination of
Withdrawal Charge; Administration Fees; Reduction or Elimination of
Annual Administration Fee; Mortality and Expense Risk Charge; Taxes;
Appendix A; Appendix B
7. Accumulation Provisions; Company Approval Purchase Payments;
Accumulation Units; Net Investment Factor; Transfers Among Investment
Options; Telephone Transactions; Special Transfer Services-Dollar Cost
Averaging; Withdrawals; Special Withdrawal Services Systematic
Withdrawal Plan; Owner Inquiries; Other Contract Provisions; Ownership;
Beneficiary; Modification;
8. Annuity Provisions; General; Annuity Options; Determination of Amount
of the First Variable Annuity Payment; Annuity Units and the
Determination of Subsequent Variable Annuity Payments; Transfers After
Maturity Date
9. Accumulation Provisions; Death Benefit Before Maturity Date; Annuity
Provisions; Death Benefit After Maturity Date
10. Accumulation Provisions; Purchase Payments; Accumulation Units; Value
of Accumulation Units; Net Investment Factor; Distribution of Contracts
11. Withdrawals; Restrictions under the Texas Optional Retirement Program;
Accumulation Provisions; Purchase Payments; Other Contract Provisions;
Ten Day Right to Review
12. Federal Tax Matters; Introduction; The Company's Tax Status; Taxation
of Annuities in General; Diversification Requirements; Qualified
Retirement Plans
13. Legal Proceedings
14. Statement of Additional Information - Table of Contents
</TABLE>
<PAGE> 3
Part B Caption in Statement of
Additional Information
<TABLE>
<S> <C>
15. Cover Page
16. Table of Contents
17. General Information and History
18. Services-Accountants; Services-Servicing Agent
19. Not Applicable
20. Services-Principal Underwriter
21. Performance Data
22. Not Applicable
23. Financial Statements
</TABLE>
<PAGE> 4
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 5
SUPPLEMENT TO PROSPECTUS
FOR THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE
ACCOUNT A
DATED MAY 1, 1998
NEW INVESTMENT PORTFOLIOS
The variable portion of your contract contains three additional investment
options. Each portfolio is a series of Merrill Lynch Variable Series Funds, Inc.
("Merrill Variable Funds"). The portfolios are not available for investment for
Ven 1 and Ven 3 contract owners. Set forth below is a brief description of each
portfolio's investment objective and certain policies relating to that objective
and a schedule of fees applicable to that portfolio.
The portfolios are only available through certain broker dealer firms. Please
call your broker dealer representative for eligibility.
INVESTMENT OBJECTIVE AND POLICIES
Merrill Lynch Special Value Focus Fund. The investment objective of the Merrill
Lynch Special Value Focus Fund is long-term capital growth. Merrill Lynch Asset
Management, L.P. ("MLAM") manages the Merrill Lynch Special Value Focus Fund and
seeks to achieve this investment objective by investing primarily in common
shares of small companies and emerging growth companies regardless of size.
Merrill Lynch Basic Value Focus Fund. The investment objective of the Merrill
Lynch Basic Value Focus Fund is capital appreciation and secondarily income.
MLAM manages the Merrill Lynch Basic Value Focus Fund and seeks to achieve this
investment objective by investing in securities, primarily equities, that
management of the portfolio believes are undervalued and therefore represent
basic investment value.
Merrill Lynch Developing Capital Markets Focus Fund. The investment objective of
the Merrill Lynch Developing Capital Markets Focus Fund is long-term capital
appreciation. MLAM manages the Merrill Lynch Developing Capital Markets Focus
Fund and will pursue this objective by investing in securities, principally
equities, of issuers in countries having smaller capital markets.
The Merrill Lynch Developing Capital Markets Focus Fund may invest in high yield
securities, commonly known as "junk bonds" which also present a high degree of
risk. The risks of these securities include price volatility and risk of default
in the payment of interest and principal. See "Risks of High Yield Securities"
in the Merrill Lynch Variable Series Funds, Inc. prospectus dated September 12,
1997. The Merrill Lynch Developing Capital Markets Focus Fund may also invest up
to 100% of its assets in foreign securities which present additional risks. See
"Other Portfolio Strategies - Foreign Securities" in the Merrill Lynch Variable
Series Funds, Inc. prospectus dated September 12, 1997.
For more information on the new portfolios and their investment adviser, see the
Merrill Variable Funds' prospectus dated September 12, 1997.
FEE TABLE AND EXAMPLE
The Contract Owner or owner (collectively, "Contract Owner") Transaction
Expenses, Annual Contract Fee and Separate Account Annual Expenses are as set
forth in the current Fee Table with respect to existing portfolios. Annual
Expenses and Example are amended to include the following portfolios:
Annual Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Management Other Total Company
Expenses 12b-1 Fees Expenses Annual Expenses
<S> <C> <C> <C> <C>
Merrill Lynch Special Value Focus Fund 0.75% 0.15% 0.04%* 0.94%
Merrill Lynch Basic Value Focus Fund 0.60% 0.15% 0.04%* 0.79%
Merrill Lynch Developing Capital Markets Focus Fund 1.00% 0.15% 0.25%* 1.40%
</TABLE>
*Based on estimates of payments to be made during the current fiscal year.
MLAM and Merrill Lynch Life Agency, Inc. have entered into a Reimbursement
Agreement that limits the operating expenses paid by each portfolio in a given
year to 1.25% of its average net assets. This Reimbursement Agreement is
expected to remain in effect for the current year. Pursuant to the
Reimbursement Agreement, the Developing Capital Markets Focus Fund was
reimbursed for a portion of its operation expenses for 1997. Absent the
reimbursement, "Other Expenses" for this portfolio would have been [0.31]%.
Expenses shown for all other portfolios do not reflect any reimbursement under
the Reimbursement Agreement.
<PAGE> 6
EXAMPLE
A Contract Owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the Contract Owner surrendered the
contract at the end of the applicable time period:
<TABLE>
<CAPTION>
Portfolio 1 Year 3 Years
--------- ------ -------
<S> <C> <C>
Merrill Lynch Special Value Focus Fund $80 $124
Merrill Lynch Basic Value Focus Fund $78 $120
Merrill Lynch Developing Capital Markets Focus Fund $84 $137
</TABLE>
A Contract Owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the Contract Owner annuitized as
provided in the contract or did not surrender the contract at the end of the
applicable time period:
<TABLE>
<CAPTION>
Portfolio 1 Year 3 Years
--------- ------ -------
<S> <C> <C>
Merrill Lynch Special Value Focus Fund $24 $75
Merrill Lynch Basic Value Focus Fund $23 $70
Merrill Lynch Developing Capital Markets Focus Fund $29 $89
</TABLE>
TABLE OF ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
Sub-Account Unit Value at Unit Value at Number of Units
Start of Year End of Year at End of Year
<S> <C> <C> <C>
Merrill Lynch Special Value Focus Fund
1997* $ $
Merrill Lynch Basic Value Focus Fund
1997*
Merrill Lynch Developing Capital Markets Focus Fund
1997*
</TABLE>
*Units were first credited on ___________________, 1997.
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
Merrill Lynch Variable Series Funds, Inc. is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as an open-end management
investment company. Each of the portfolios is diversified for purposes of the
1940 Act, with the exception of the Developing Capital Markets Focus Fund which
is non-diversified so that it may invest more than 5% of its assets in issuers
in countries having smaller capital markets. Merrill Variable Funds receive
investment advisory services from Merrill Lynch Asset Management, L.P. The
Merrill Variable Funds are subject to a Rule 12b-1 fee of up to .15% of a
portfolio's net assets.
A full description of Merrill Variable Funds, including the investment
objectives, policies and restrictions of each portfolio is contained in Merrill
Variable Funds' prospectus and should be read by a prospective purchaser before
investing. Shares of Merrill Variable Funds are not deposits or obligations of,
or guaranteed or endorsed by, any bank, and the shares are not federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency.
PLEASE NOTE THE MERRILL VARIABLE FUNDS ARE NOT AVAILABLE FOR ERISA GOVERNED
PLANS.
SUPPLEMENT DATED MAY 1, 1998
V7.SUP598
V20/21.SUP598
V22/23.SUP598
<PAGE> 7
Annuity Service Office Mailing Address
116 Huntington Avenue Post Office Box 9230
Boston, Massachusetts 02116 Boston, Massachusetts
(617) 266-6004 02205-9230
(800) 344-1029
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
FLEXIBLE PAYMENT DEFERRED COMBINATION
FIXED AND VARIABLE GROUP ANNUITY CONTRACT
NON-PARTICIPATING
This Prospectus describes a flexible purchase payment deferred combination fixed
and variable group annuity contract (the "contract") issued by The Manufacturers
Life Insurance Company of North America, formerly North American Security Life
Insurance Company (the "Company"), a stock life insurance company, the ultimate
parent of which is The Manufacturers Life Insurance Company ("Manulife"). The
contract is designed for use in connection with retirement plans which may or
may not qualify for special Federal income tax treatment. Prior to February,
1995, the Company issued a class of variable annuity contract which is no longer
being issued but under which purchase payments may continue to be made ("prior
contract" or "Ven 8 contracts"), which were sold during the period from
September, 1992 until February, 1995. This Prospectus principally describes the
contract but also describes the Ven 8 contracts. The principal differences
between the contract offered by this Prospectus and the Ven 8 contract relate to
the investment options available under the contracts, a minimum interest rate to
be credited for any guarantee period under the fixed portion of the contracts,
the charges made by the Company and the death benefit provisions (see "Appendix
D Prior Contracts").
The contract provides for the accumulation of contract values and the payment of
annuity benefits on a variable and/or fixed basis. The contract offers forty
investment options: thirty-five variable and five fixed. The variable portion of
the contract value and annuity payments, if selected on a variable basis, will
vary according to the investment performance of the sub-accounts of The
Manufacturers Life Insurance Company of North America Separate Account A,
formerly NASL Variable Account (the "Variable Account"). The Variable Account is
a separate account established by the Company. Purchase payments and earnings on
those purchase payments may be allocated to and transferred among one or more of
thirty-five sub-accounts of the Variable Account. The assets of each sub-account
are invested in shares of Manufacturers Investment Trust, formerly NASL Series
Trust (the "Trust"), a mutual fund having an investment portfolio for each
sub-account of the Variable Account (see the accompanying prospectus of the
Trust). Fixed contract values may be accumulated under one, three, five and
seven year fixed account investment options and a one year dollar cost averaging
fixed investment option. Except as specifically noted herein and as set forth
under the caption "FIXED ACCOUNT INVESTMENT OPTIONS" below, this Prospectus
describes only the variable portion of the contract.
Additional information about the variable portion of the contract and
Variable Account is contained in a Statement of Additional Information, dated
the same date as this Prospectus, which has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing the Company at the above address or telephoning (800) 344-1029. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding registrants that file electronically with the SEC.
The table of contents for the Statement of Additional Information is included on
page 47 of this Prospectus.
SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE VARIABLE ACCOUNT AND THE VARIABLE PORTION OF THE
CONTRACT AND CERTIFICATE THAT A PROSPECTIVE PURCHASER SHOULD KNOW BEFORE
INVESTING. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR
HAS THE SEC PASSED
<PAGE> 8
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1998.
V22/23.PRO598
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<S> <C>
SPECIAL TERMS ............................................................... 3
SUMMARY ..................................................................... 5
TABLE OF ACCUMULATION UNIT VALUES ........................................... 12
GENERAL INFORMATION ABOUT THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA, THE MANUFACTURERS
LIFE INSURANCE COMPANY OF NORTH
AMERICA SEPARATE ACCOUNT A AND MANUFACTURERS INVESTMENT TRUST ............... 15
The Manufacturers Life Insurance Company of North America .............. 15
The Manufacturers Life Insurance Company of North America
Separate Account A ..................................................... 15
Manufacturers Investment Trust ......................................... 15
DESCRIPTION OF THE CONTRACT ................................................. 20
ELIGIBLE GROUPS .......................................................... 20
ACCUMULATION PROVISIONS .................................................. 20
Purchase Payments ...................................................... 20
Accumulation Units ..................................................... 21
Value of Accumulation Units ............................................ 21
Net Investment Factor .................................................. 21
Transfers Among Investment Options ..................................... 22
Maximum Number of Investment Options ................................... 22
Telephone Transactions ................................................. 22
Special Transfer Services - Dollar Cost Averaging ...................... 22
Asset Rebalancing Program .............................................. 23
Withdrawals ............................................................ 23
Special Withdrawal Services - Income Plan .............................. 24
Loans .................................................................. 24
Death Benefit Before Maturity Date ..................................... 25
ANNUITY PROVISIONS ...................................................... 27
General ................................................................ 27
Annuity Options ........................................................ 27
Determination of Amount of the First Variable
Annuity Payment ..................................................... 28
Annuity Units and the Determination of Subsequent
Variable Annuity Payments ........................................... 28
Transfers After Maturity Date .......................................... 28
Death Benefit On or After Maturity Date ................................ 29
OTHER CONTRACT PROVISIONS ................................................ 29
Ten Day Right to Review ................................................ 29
Ownership .............................................................. 29
Beneficiary ............................................................ 30
Annuitant .............................................................. 30
Modification ........................................................... 30
Discontinuance of New Owners ........................................... 30
Misstatement and Proof of Age, Sex or Survival ......................... 30
FIXED ACCOUNT INVESTMENT OPTIONS .......................................... 31
GUARANTEED INCOME FOR TOMORROW BENEFIT .................................... 33
CHARGES AND DEDUCTIONS ...................................................... 35
Withdrawal Charges ..................................................... 35
Reduction or Elimination of Withdrawal Charges ......................... 36
Administration Fees .................................................... 37
Reduction or Elimination of Annual
Administration Fee .................................................. 38
Mortality and Expense Risk Charge ...................................... 38
Taxes .................................................................. 38
FEDERAL TAX MATTERS ......................................................... 39
INTRODUCTION .............................................................. 39
THE COMPANY'S TAX STATUS .................................................. 39
TAXATION OF ANNUITIES IN GENERAL .......................................... 39
Tax Deferral During Accumulation Period ................................ 39
Taxation of Partial and Full Withdrawals ............................... 41
Taxation of Annuity Payments ........................................... 41
Taxation of Death Benefit Proceeds ..................................... 41
Penalty Tax on Premature Distributions ................................. 42
Aggregation of Contracts ............................................... 42
QUALIFIED RETIREMENT PLANS ................................................ 42
Qualified Plan Types ................................................... 43
Direct Rollovers ....................................................... 45
FEDERAL INCOME TAX WITHHOLDING ............................................ 45
GENERAL MATTERS ............................................................. 45
Tax Deferral ........................................................... 45
Performance Data ....................................................... 45
Financial Statements ................................................... 46
Asset Allocation and Timing Services ................................... 46
Restrictions Under the Texas Optional
Retirement Program ..................................................... 46
Distribution of Contracts .............................................. 46
Owner Inquiries ........................................................ 47
Confirmation Statements ................................................ 47
Legal Proceedings ...................................................... 47
Other Information ...................................................... 47
STATEMENT OF ADDITIONAL INFORMATION-
TABLE OF CONTENTS ......................................................... 47
APPENDIX A: EXAMPLES OF CALCULATION OF
WITHDRAWAL CHARGE ......................................................... 48
APPENDIX B: STATE PREMIUM TAXES ............................................ 50
APPENDIX C: PENNSYLVANIA MAXIMUM
MATURITY AGE .............................................................. 51
APPENDIX D: PRIOR CONTRACTS (VEN 8) ........................................ 52
</TABLE>
2
<PAGE> 10
SPECIAL TERMS
The following terms as used in this Prospectus have the indicated
meanings:
Accumulation Unit - A unit of measure that is used to calculate the
value of an owner's variable investment account before the maturity date.
Annuitant - Any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. The
"annuitant" is as designated on the certificate specifications page or in the
application, unless changed.
Annuity Option - The method selected by each owner (or as specified in
the contract if no selection is made) for annuity payments made by the Company.
Annuity Service Office - The service office of the Company is P.O. Box
9230, Boston, Massachusetts 02205-9230.
Annuity Unit - A unit of measure that is used after the maturity date
to calculate variable annuity payments.
Application - The document signed by each owner that serves as his or
her application for participation under the contract.
Beneficiary - The person, persons or entity entitled to the death
benefit under the contract upon the death of an owner or, in certain
circumstances, the annuitant. If there is a surviving owner, that person will be
deemed to be the beneficiary.
3
<PAGE> 11
Certificate - The document issued to each owner which summarizes the
rights and benefits of the owner under the contract.
Certificate Anniversary - The anniversary of the certificate date.
Certificate Date - The date of issue of a certificate under the
contract.
Certificate Year - The period of twelve consecutive months beginning on
the certificate date or any anniversary thereof.
Contingent Beneficiary - The person, persons or entity to become the
beneficiary if the beneficiary is not alive. The contingent beneficiary is as
specified in the application, unless changed.
Contract Application - The document signed by the Group Holder that
evidences the Group Holder's application for a Contract.
Contract Value - The total of an owner's investment account values and,
if applicable, any amount in the loan account attributable to that owner.
Debt - Any amounts in an owner's loan account plus any accrued loan
interest. The loan provision is available only under contracts or certificates
issued in connection with Section 403(b) qualified plans that are not subject to
Title I of ERISA.
Due Proof of Death - Due Proof of Death is required upon the death of
the owner or annuitant, as applicable. One of the following must be received at
the Annuity Service Office within one year of the date of death:
(a) A certified copy of a death certificate;
(b) A certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
(c) Any other proof satisfactory to us.
Death benefits will be paid within 7 days of receipt of due proof of death and
all required claim forms by the Company's Annuity Service Office.
Fixed Annuity - An annuity option with payments which are predetermined
and guaranteed as to dollar amount.
General Account - All the assets of the Company other than assets in
separate accounts.
Group Holder - The person, persons or entity to whom the contract is
issued.
Investment Account - An account established by the Company which
represents an owner's interest in an investment option prior to the maturity
date.
Investment Account Value - The value of an owner's investment in an
investment account.
Investment Options - The investment choices available to owners.
Currently, there are thirty-five variable and four fixed investment options
under the contract.
Loan Account - The portion of the general account that is used for
collateral when a loan is taken by an owner.
Market Value Charge - A charge that may be assessed if amounts are
withdrawn or transferred from the three, five or seven year investment options
prior to the end of the interest rate guarantee period.
Maturity Date - The date on which annuity benefits commence. The
maturity date is the date specified on the certificate specifications page and
is generally the first day of the month following the later of the annuitant's
85th birthday or the tenth contract anniversary, unless changed. See Appendix D
for information on the Maturity Date applicable to certain contracts which are
no longer being issued (Ven 8 contracts).
4
<PAGE> 12
Net Purchase Payment - The purchase payment paid by or on behalf of an
owner less the amount of premium tax, if any.
Non-Qualified Certificates - Certificates issued under non-qualified
Contracts.
Non-Qualified Contracts - Contracts which are not issued under
qualified plans.
Owner - The person, persons or entity named in a certificate and
entitled to all of the ownership rights under the contract not expressly
reserved to the group holder. The owner is specified in the application, unless
changed. The maximum issue age is 85.
Portfolio or Trust Portfolio - A separate investment portfolio of the
Trust, a mutual fund in which the Variable Account invests, or of any successor
mutual fund.
Purchase Payment - An amount paid by or on behalf of an owner to the
Company as consideration for the benefits provided by the contract.
Qualified Certificates - Certificates issued under qualified contracts.
Qualified Contracts - Contracts issued under qualified plans.
Qualified Plans - Retirement plans which receive favorable tax
treatment under Section 401, 403, 408, 408A or 457 of the Internal Revenue Code
of 1986, as amended.
Separate Account - A segregated account of the Company that is not
commingled with the Company's general assets and obligations.
Sub-Account(s) - One or more of the sub-accounts of the Variable
Account. Each sub-account is invested in shares of a different portfolio.
Valuation Date - Any date on which the New York Stock Exchange is open
for business and the net asset value of a Trust portfolio is determined.
Valuation Period - Any period from one valuation date to the next,
measured from the time on each such date that the net asset value of each
portfolio is determined.
Variable Account - The Variable Account, which is a separate account of
the Company.
Variable Annuity - An annuity option with payments which: (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in relation to the
investment experience of one or more specified sub-accounts.
SUMMARY
The Contract. The contract offered by this Prospectus is a flexible
purchase payment deferred combination fixed and variable group annuity contract.
Specific accounts are maintained under the contract for each member of the
eligible group participating in the contract as evidenced by the issuance of
certificates. The contract provides for the accumulation of contract values and
the payment of annuity benefits on a variable and/or fixed basis. Except as
specifically noted herein and as set forth under the caption "FIXED ACCOUNT
INVESTMENT OPTIONS" below, this Prospectus describes only the variable portion
of the contract.
Eligible Groups. The contract may be issued to fund either
non-qualified retirement plans or plans qualifying for special income tax
treatment under the Internal Revenue Code of 1986, as amended (the "Code"), such
as individual retirement accounts and annuities, including Roth IRAs, pension
and profit-sharing plans for corporations and sole proprietorships/partnerships
("H.R. 10" and "Keogh" plans), tax-sheltered annuities, and state and local
government deferred compensation plans (see "QUALIFIED RETIREMENT PLANS").
Purchase Payments. Except as noted below, the minimum initial purchase
payment is $5,000 for Non-Qualified Contracts and $2,000 for Qualified
Contracts. The minimum initial purchase payment is $3,500 if the source of such
5
<PAGE> 13
payment was a direct rollover of an eligible rollover distribution from a
qualified plan under Section 401(a) of the Code or a Tax Sheltered Annuity
described in Section 403(b) of the Code, all or part of which assets are
invested in a group annuity contract issued by The Manufacturers Life Insurance
Company (U.S.A.). Purchase payments may be made at any time, except that if a
purchase payment would cause the owner's contract value to exceed $1,000,000, or
the owner's contract value already exceeds $1,000,000, additional purchase
payments will be accepted only with the prior approval of the Company. The
Company may, at its option, cancel a certificate and an owner's participation
under a contract at the end of any two consecutive certificate years in which no
purchase payments by or on behalf of the owner have been made, if both (i) the
total purchase payments made for the certificate, less any withdrawals, are less
than $2,000; and (ii) the contract value for the owner at the end of such two
year period is less than $2,000. The cancellation of contract privileges may
vary in certain states in order to comply with the requirements of insurance
laws and regulations in such state (see "PURCHASE PAYMENTS").
Investment Options. Purchase payments may be allocated among the forty
investment options currently available under the contract: thirty-five variable
account investment options and five fixed account investment options. Due to
current administrative capabilities, a contract owner is limited to a maximum of
seventeen investment options (including all fixed account investment options)
during the period prior to the maturity date of the contract. The thirty-five
variable account investment options are the thirty-five sub-accounts of the
Variable Account, a separate account established by the Company. The
sub-accounts invest in corresponding portfolios of the Trust: the Pacific Rim
Emerging Markets Trust, the Science & Technology Trust, the International Small
Cap Trust, the Emerging Growth Trust, the Pilgrim Baxter Growth Trust, the
Small/Mid Cap Trust, the International Stock Trust, the Worldwide Growth Trust,
the Global Equity Trust, the Small Company Value Trust, the Equity Trust, the
Growth Trust, the Quantitative Equity Trust, the Blue Chip Growth Trust, the
Real Estate Securities Trust, the Value Trust, the International Growth and
Income Trust, the Growth and Income Trust, the Equity-Income Trust, the Balanced
Trust, the Aggressive Asset Allocation Trust, the High Yield Trust, the Moderate
Asset Allocation Trust, the Conservative Asset Allocation Trust, the Strategic
Bond Trust, the Global Government Bond Trust, the Capital Growth Bond Trust, the
Investment Quality Bond Trust, the U.S. Government Securities Trust, the Money
Market Trust, the Lifestyle Aggressive 1000 Trust, the Lifestyle Growth 820
Trust, the Lifestyle Balanced 640 Trust, the Lifestyle Moderate 460 Trust and
the Lifestyle Conservative 280 Trust (see the accompanying prospectus of the
Trust). The portion of an owner's contract value in the Variable Account and
monthly annuity payments, if selected on a variable basis, will reflect the
investment performance of the sub-accounts selected (see "THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A"). Purchase payments may
also be allocated to the five fixed account investment options: one, three, five
and seven year guaranteed investment accounts and a one year dollar cost
averaging fixed investment account. Under the fixed account investment options,
the Company guarantees the principal value of purchase payments and the rate of
interest credited to the investment account for the term of the guarantee
period. The portion of an owner's contract value in the fixed account investment
options and monthly annuity payments, if selected on a fixed basis, will reflect
such interest and principal guarantees (see "FIXED ACCOUNT INVESTMENT OPTIONS").
Subject to certain regulatory limitations, the Company may elect to add,
subtract or substitute investment options.
Transfers. Prior to the maturity date, amounts may be transferred among
an owner's variable account investment options and from the owner's variable
account investment options to his or her fixed account investment options
without charge. In addition, amounts may be transferred prior to the maturity
date among the owner's fixed account investment options and from the owner's
fixed account investment options to his or her variable account investment
options, subject to a one year holding period requirement and a market value
charge which may apply to such a transfer (see "FIXED ACCOUNT INVESTMENT
OPTIONS"). After the maturity date, transfers are not permitted from variable
annuity options to fixed annuity options or from fixed annuity options to
variable annuity options. Transfers from any investment account must be at least
$300 or, if less, the entire balance in the investment account. If, after the
transfer the amount remaining in the investment account from which the transfer
is made is less than $100, then we will transfer the entire amount instead of
the requested amount. The Company may impose certain additional limitations on
transfers (see "TRANSFERS AMONG INVESTMENT OPTIONS" and "TRANSFERS AFTER
MATURITY DATE"). Transfer privileges may also be used under a special service
offered by the Company to dollar cost average an investment in the contract (see
"SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING").
Withdrawals. Prior to the earlier of the maturity date or the death of
an owner, the owner may withdraw all or a portion of his or her contract value.
The amount withdrawn from any investment account must be at least $300 or, if
less, the entire balance of the investment account. If a partial withdrawal plus
any applicable withdrawal charge would reduce the owner's contract value to less
than $300, the withdrawal request will be treated as a request to withdraw the
owner's entire contract value. A withdrawal charge and an administration fee may
be imposed (see "WITHDRAWALS"). A withdrawal may be subject to income tax and a
10% penalty tax (see "FEDERAL TAX MATTERS"). Withdrawal privileges may also be
exercised pursuant to the Company's systematic withdrawal plan service (see
"SPECIAL WITHDRAWAL SERVICES - THE INCOME PLAN").
6
<PAGE> 14
Loans. The Company offers a loan privilege under contracts or
certificates issued in connection with Section 403(b) qualified plans that are
not subject to Title I of ERISA. Where available, owners may obtain loans using
their contract value as the only security for the loan. The effective cost of a
loan is 2% per year of the amount borrowed (see "LOANS").
Confirmation Statements. Owners will be sent confirmation statements
for certain transactions in their account. Owners should carefully review these
statements to verify their accuracy. Any mistakes should immediately be reported
to the Company's Annuity Service Office. If the owner fails to notify the
Company's Annuity Service Office of any mistake within 60 days of the mailing of
the confirmation statement, the owner will be deemed to have ratified the
transaction.
Death Benefits. The Company will pay the death benefit described below
(which, as defined, is net of any debt) to the beneficiary if any owner dies
before the maturity date. If there is a surviving owner, that owner will be
deemed to be the beneficiary. No death benefit is payable on the death of any
annuitant, except that if any owner is not a natural person, the death of any
annuitant will be treated as the death of an owner. The death benefit will be
determined as of the date on which written notice and proof of death and all
required claim forms are received at the Company's Annuity Service Office.
Certificates Issued Prior to May 1, 1998. 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 certificate date, the death benefit will be determined as
follows: During the first certificate 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 certificate 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 certificate 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 certificate 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 certificate date, the death benefit will be the contract
value less any applicable withdrawal charges at the time of payment of benefits
(see "DEATH BENEFIT BEFORE MATURITY DATE"). For certificates issued on or after
October 1, 1997, any withdrawal charges applied against the death benefit shall
be waived by the Company.
Certificates Issued After May 1, 1998. If any owner dies and the oldest
owner had an attained age of less than 81 years on the certificate date, the
death benefit will be determined as follows: During the first certificate year,
the death benefit will 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 certificate 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 certificate 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 certificate 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 certificate 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.
In the states of _____, the death benefit described under "Certificates
Issued Prior to May 1, 1998" will continue to apply to certificates issued after
May 1, 1998.
If the annuitant dies after the maturity date and annuity payments have
been selected based on an annuity option providing for payments for a guaranteed
period, the Company will make the remaining guaranteed payments to the
beneficiary (see "DEATH BENEFIT ON OR AFTER MATURITY DATE"). See Appendix D for
information on death benefit provisions applicable to certain contracts which
are no longer being issued (Ven 8 contracts).
7
<PAGE> 15
Annuity Payments. The Company offers a variety of fixed and variable
annuity options. Periodic annuity payments will begin on the maturity date. The
owner selects the maturity date, frequency of payment and annuity option (see
"ANNUITY PROVISIONS").
Guaranteed Income For Tomorrow Benefit. The Guaranteed Income For
Tomorrow Benefit (the "Income Benefit") guarantees a minimum lifetime fixed
income benefit in the form of fixed monthly annuity payments. The Income Benefit
is based on the aggregate net purchase payments applied to the certificate,
accumulated at interest, minus an adjustment for any partial withdrawals (the
"Income Base"). The amount of the monthly annuity payment provided by the Income
Benefit is determined by applying the Income Base to the monthly income factors
set forth in the Income Benefit Rider. Because the fixed annuity options
provided for in the contract are based on the contract value at the time of
annuitization, the amount of the monthly payments under such options may exceed
the monthly payments provided by the Income Benefit Rider. If the Income Benefit
is exercised and the annuity payment available under the contract is greater
than the monthly payment provided by the Income Benefit Rider, the Company will
pay the monthly annuity payment available under the contract. The Income Benefit
is available for certificates issued on or after May 1, 1998. The Income Benefit
is currently not available in the following states:__________ (see "GUARANTEED
INCOME FOR TOMORROW BENEFIT").
Ten Day Review. Within 10 days of receipt of his or her certificate, an
owner may cancel the certificate by returning it to the Company. The ten day
right to review may vary in certain states in order to comply with the
requirements of insurance laws and regulations in such states (see "TEN DAY
RIGHT TO REVIEW").
Modification. The contract or any certificate may not be modified by
the Company without the consent of the group holder or the owner, as applicable,
except as may be required to make it conform to any law or regulation or ruling
issued by a governmental agency. However, on 60 days' notice to the group
holder, the Company may change the withdrawal charges, administration fees,
mortality and expense risk charges, free withdrawal percentage, annuity purchase
rates and the market value charge as to any certificates issued after the
effective date of the modification (see "MODIFICATION").
Discontinuance of New Owners. On thirty days' notice to the group
holder, the Company may limit or discontinue acceptance of new applications and
the issuance of new certificates under a contract (see "DISCONTINUANCE OF NEW
OWNERS").
Charges and Deductions. The following table and Example are designed to
assist group holders and owners in understanding the various costs and expenses
to which they are subject directly and indirectly. The table reflects expenses
of the separate account and the underlying portfolio company. In addition to the
items listed in the following table, premium taxes may be applicable to certain
owners. The items listed under "Transaction Expenses" and "Separate Account
Annual Expenses" are more completely described in this Prospectus (see "CHARGES
AND DEDUCTIONS"). The items listed under "Trust Annual Expenses" are described
in detail in the accompanying Trust prospectus to which reference should be
made.
TRANSACTION EXPENSES
Deferred sales load (as percentage of purchase payments)
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN PERCENTAGE
CONTRACT
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
8
<PAGE> 16
<TABLE>
<S> <C>
ANNUAL ADMINISTRATION FEE ................ $ 30(1)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and expense risk fees .......... 1.25%
Administration fee - asset based ......... 0.15%
Total Separate Account Annual Expenses ... 1.40%
OPTIONAL INCOME RIDER FEE ................ 0.25%(2)
(as a percentage of the Income Base)
</TABLE>
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
<S> <C> <C> <C>
Pacific Rim Emerging Markets........ 0.850% 0.570% 1.420%
Science & Technology................ 1.100% 0.160% 1.260%
International Small Cap............. 1.100% 0.210% 1.310%
Emerging Growth..................... 1.050% 0.060% 1.110%
Pilgrim Baxter Growth............... 1.050% 0.130% 1.180%
</TABLE>
- --------
(1)The $30 annual administration fee will not be assessed prior to the
maturity date if at the time of its assessment the sum of all the owner's
investment accounts is equal to or greater than $100,000. See Appendix D for
information on the administration fee applicable to certain contracts which are
no longer being issued (Ven 8 contracts).
(2) If the Guaranteed Income for Tomorrow Benefit is elected, this fee
is deducted on each certificate anniversary. The Guaranteed Minimum Income
Benefit is not available for Ven 8 contracts (see "GUARANTEED INCOME FOR
TOMORROW BENEFIT").
9
<PAGE> 17
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
<S> <C> <C> <C>
Small/Mid Cap....................... 1.000% 0.050% 1.050%
International Stock................. 1.050% 0.330% 1.380%
Worldwide Growth.................... 1.000% 0.320% 1.320%
Global Equity....................... 0.900% 0.110% 1.010%
Small Company Value................. 1.050% 0.100%* 1.150%
Equity.............................. 0.750% 0.050% 0.800%
Growth.............................. 0.850% 0.100% 0.950%
Quantitative Equity................. 0.700% 0.070% 0.770%
Blue Chip Growth.................... 0.925% 0.050% 0.975%
Real Estate Securities.............. 0.700% 0.070% 0.770%
Value............................... 0.800% 0.160% 0.960%
International Growth and Income..... 0.950% 0.170% 1.120%
Growth and Income................... 0.750% 0.040% 0.790%
Equity-Income....................... 0.800% 0.050% 0.850%
Balanced............................ 0.800% 0.080% 0.880%
Aggressive Asset Allocation......... 0.750% 0.150% 0.900%
High Yield.......................... 0.775% 0.110% 0.885%
Moderate Asset Allocation........... 0.750% 0.100% 0.850%
Conservative Asset Allocation....... 0.750% 0.140% 0.890%
Strategic Bond...................... 0.775% 0.100% 0.875%
Global Government Bond.............. 0.800% 0.130% 0.930%
Capital Growth Bond................. 0.650% 0.080% 0.730%
Investment Quality Bond............. 0.650% 0.090% 0.740%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market........................ 0.500% 0.040% 0.540%
Lifestyle Aggressive 1000#.......... 0% 1.116%** 1.116%
Lifestyle Growth 820#............... 0% 1.048%** 1.048%
Lifestyle Balanced 640#............. 0% 0.944%** 0.944%
Lifestyle Moderate 460#............. 0% 0.850%** 0.850%
Lifestyle Conservative 280#......... 0% 0.708%** 0.708%
</TABLE>
*Based on estimates of payments to be made during the current fiscal year.
** Reflects expenses of the Underlying Portfolios. Manufacturers Securities
Services, LLC has voluntarily agreed to pay the expenses of each Lifestyle Trust
(excluding the expenses of the Underlying Portfolios). This voluntary expense
reimbursement may be terminated at any time. If such expense reimbursement was
not in effect, Total Trust Annual Expenses would be .04% higher (based on
expenses of the Lifestyle Trusts for the fiscal year ended December 31, 1997) as
noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
<S> <C> <C> <C>
Lifestyle Aggressive 1000........... 0% 1.156% 1.156%
Lifestyle Growth 820................ 0% 1.088% 1.088%
Lifestyle Balanced 640.............. 0% 0.984% 0.984%
Lifestyle Moderate 460.............. 0% 0.890% 0.890%
Lifestyle Conservative 280.......... 0% 0.748% 0.748%
</TABLE>
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will, in addition to its own expenses, such as
certain Other Expenses, bear its pro rata share of the fees and expenses
incurred by the Underlying Portfolios and the investment return of each
Lifestyle Trust will be net of the Underlying Portfolio expenses.
10
<PAGE> 18
EXAMPLE
A contract owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the owner withdrew all of his or her
contract value at the end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS+ 5 YEARS* 10 YEARS*
<S> <C> <C> <C> <C> <C>
Pacific Rim Emerging Markets........ $84 $138 $182 $192 $321
Science & Technology................ 83 133 174 184 305
International Small Cap............. 83 134 177 187 310
Emerging Growth..................... 81 129 167 177 291
Pilgrim Baxter Growth............... 82 131 170 180 298
Small/Mid Cap....................... 81 127 164 174 285
International Stock................. 84 136 180 190 317
Worldwide Growth.................... 83 135 177 187 311
Global Equity....................... 81 126 162 172 281
Small Company Value................. 82 137
Equity.............................. 79 120 151 161 260
Growth.............................. 80 124 159 169 275
Quantitative Equity................. 78 119 150 160 257
Blue Chip Growth.................... 80 125 160 170 277
Real Estate Securities.............. 78 119 150 160 257
Value............................... 80 125 159 169 276
International Growth and Income..... 82 129 167 177 292
Growth and Income................... 78 120 151 161 259
Equity-Income....................... 79 121 154 164 265
Balanced............................ 79 122 155 165 268
Aggressive Asset Allocation......... 80 123 156 166 270
High Yield.......................... 79 122 155 165 268
Moderate Asset Allocation........... 79 121 154 164 265
Conservative Asset Allocation....... 79 123 156 166 269
Strategic Bond...................... 79 122 155 165 267
Global Government Bond.............. 80 124 158 168 273
Capital Growth Bond................. 78 118 148 158 253
Investment Quality Bond............. 78 118 148 158 254
U.S. Government Securities.......... 78 118 147 157 252
Money Market........................ 76 112 138 148 233
Lifestyle Aggressive 1000........... 82 129 167 177 291
Lifestyle Growth 820................ 81 127 164 174 285
Lifestyle Balanced 640.............. 80 124 158 168 274
Lifestyle Moderate 460.............. 79 121 154 164 265
Lifestyle Conservative 280.......... 78 117 146 156 250
</TABLE>
+ For prior contracts no longer issued, Ven 8 contracts, (as described in
Appendix D) only. The difference in numbers is attributable to the different
withdrawal charges. See Appendix D.
* The example of expenses for the Small Company Value Trust contains figures for
only one and three years since it is a newly created portfolio.
11
<PAGE> 19
A contract owner would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets, if the contract owner
annuitized as provided in the contract or did not surrender the contract at the
end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS* 10 YEARS*
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets........ $29 $89 $152 $321
Science & Technology................ 28 85 144 305
International Small Cap............. 28 86 147 310
Emerging Growth..................... 26 80 137 291
Pilgrim Baxter Growth............... 27 82 140 298
Small/Mid Cap....................... 25 78 134 285
International Stock................. 29 88 150 317
Worldwide Growth.................... 28 86 147 311
Global Equity....................... 25 78 133 283
Small Company Value................. 26 81
Equity.............................. 23 71 121 260
Growth.............................. 24 75 129 275
Quantitative Equity................. 23 70 120 257
Blue Chip Growth.................... 25 76 130 277
Real Estate Securities.............. 23 70 120 257
Value............................... 25 76 129 276
International Growth and Income..... 26 80 137 292
Growth and Income................... 23 70 121 259
Equity-Income....................... 23 72 124 265
Balanced............................ 24 73 125 268
Aggressive Asset Allocation......... 24 74 126 270
High Yield.......................... 24 73 125 268
Moderate Asset Allocation........... 23 72 124 265
Conservative Asset Allocation....... 24 73 126 269
Strategic Bond...................... 24 73 125 267
Global Government Bond.............. 24 75 128 273
Capital Growth Bond................. 22 69 118 253
Investment Quality Bond............. 22 69 118 254
U.S. Government Securities.......... 22 68 117 252
Money Market........................ 20 63 108 233
Lifestyle Aggressive 1000........... 26 80 137 291
Lifestyle Growth 820................ 25 78 134 285
Lifestyle Balanced 640.............. 24 75 128 274
Lifestyle Moderate 460.............. 23 72 124 265
Lifestyle Conservative 280.......... 22 68 116 250
</TABLE>
* The example of expenses for the Small Company Value Trust contains figures for
only one and three years since it is a newly created portfolio.
For purposes of presenting the foregoing Example, the Company has made
certain assumptions mandated by the SEC. The Company has assumed that, where
applicable, the maximum sales load is deducted, that there are no transfers or
other transactions and that the "Other Expenses" line item under "Trust Annual
Expenses" will remain the same. Such assumptions, which are mandated by the SEC
in an attempt to provide prospective investors with standardized data with which
to compare various annuity contracts, do not take into account certain features
of the contract and prospective changes in the size of the Trust which may
operate to change the expenses borne by contract owners. Consequently, the
amounts listed in the Example above should not be considered a representation of
past or future expenses and actual expenses borne by contract owners may be
greater or lesser than those shown.
12
<PAGE> 20
In addition, for purposes of calculating the values in the above
Example, the Company has translated the $30 annual administration charge listed
under "Annual Administration Fee" to a 0.063% annual asset charge based on the
$47,500 approximate average size of certificates of this series. So translated,
such charge would be higher for smaller contract values and lower for larger
contract values.
* * * * * * * *
The above summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and Statement of Additional
Information and the accompanying prospectus and statement of additional
information for the Trust, to which reference should be made. This Prospectus
generally describes only the variable aspects of the contract, except where
fixed aspects are specifically mentioned.
TABLE OF ACCUMULATION UNIT VALUES+
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR* END OF YEAR AT END OF YEAR
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000
- ----------------------------------------------------------------------------------------------
Science & Technology
1997 $12.500000
- ----------------------------------------------------------------------------------------------
International Small Cap
1996 $12.500000 $13.493094 265,493.981
1997 13.493094
- ----------------------------------------------------------------------------------------------
Emerging Growth
1997 $12.500000
- ----------------------------------------------------------------------------------------------
Pilgrim Baxter Growth
1997 $12.500000
- ----------------------------------------------------------------------------------------------
Small/Mid Cap
1996 $12.500000 $13.215952 684,451.580
1997 13.215952
- ----------------------------------------------------------------------------------------------
International Stock
1997 $12.500000
- ----------------------------------------------------------------------------------------------
Worldwide Growth
1997 $12.500000
- ----------------------------------------------------------------------------------------------
Global Equity
1994 $16.715126 $15.500933 171,668.821
1995 15.500933 16.459655 583,284.547
1996 16.459655 18.276450 923,612.249
1997 18.276450
- ----------------------------------------------------------------------------------------------
Small Company Value
1997 $12.500000
- ----------------------------------------------------------------------------------------------
Equity
1994 $14.381312 $14.786831 156,302.930
1995 14.786831 20.821819 761,321.040
1996 20.821819 24.664354 1,637,731.552
1997 24.664354
- ----------------------------------------------------------------------------------------------
Growth
1996 $12.500000 $13.727312 252,538.943
1997 13.727312
- ----------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 21
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR* END OF YEAR AT END OF YEAR
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Quantitative Equity
1997 $12.500000
- ----------------------------------------------------------------------------------------------------
Blue Chip Growth
1994 $ 8.699511 $ 8.837480 67,651.751
1995 8.837480 11.026969 532,417.987
1996 11.026969 13.688523 1,036,815.886
1997 13.688523
- ----------------------------------------------------------------------------------------------------
Real Estate Securities
1997 $12.500000
- ----------------------------------------------------------------------------------------------------
Value
1997 $12.500000
- ----------------------------------------------------------------------------------------------------
International Growth and Income
1995 $10.000000 $10.554228 403,796.120
1996 10.554228 11.718276 783,705.750
1997 11.718276
- ----------------------------------------------------------------------------------------------------
Growth and Income
1994 $13.239339 $13.076664 147,028.139
1995 13.076664 16.660889 916,107.230
1996 16.660889 20.178770 2,035,385.742
1997 20.178770
- ----------------------------------------------------------------------------------------------------
Equity-Income
1994 $11.375744 $11.107620 147,434.130
1995 11.107620 13.548849 816,934.091
1996 13.548849 16.011513 1,486,734.204
1997 16.011513
- ----------------------------------------------------------------------------------------------------
Balanced
1997 $12.500000
- ----------------------------------------------------------------------------------------------------
Aggressive Asset Allocation
1994 $12.538660 $12.381395 41,051.814
1995 12.381395 14.990551 102,929.895
1996 14.990551 16.701647 162,245.394
1997 16.701647
- ----------------------------------------------------------------------------------------------------
High Yield
1997 $12.500000
- ----------------------------------------------------------------------------------------------------
Moderate Asset Allocation
1994 $12.522239 $12.396295 98,925.767
1995 12.396295 14.752561 312,206.344
1996 14.752561 15.995076 518,913.471
1997 15.995076
- ----------------------------------------------------------------------------------------------------
Conservative Asset Allocation
1994 $12.378545 $12.298940 33,929.162
1995 12.298940 14.320582 127,957.567
1996 14.320582 15.113142 174,512.432
1997 15.113142
- ----------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 22
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR* END OF YEAR AT END OF YEAR
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Strategic Bond
1994 $ 10.192707 $ 9.965972 17,448.655
1995 9.965972 11.716972 276,219.578
1996 11.716972 13.250563 696,578.665
1997 13.250563
- ----------------------------------------------------------------------------------------------------
Global Government Bond
1994 $ 14.734788 $14.630721 46,005.023
1995 14.630721 17.772344 117,694.301
1996 17.772344 19.803954 194,577.024
1997 19.803954
- ----------------------------------------------------------------------------------------------------
Capital Growth Bond
1997 $ 12.500000
- ----------------------------------------------------------------------------------------------------
Investment Quality Bond
1994 $ 14.307698 $14.216516 15,254.616
1995 14.216516 16.751499 118,436.044
1996 16.751499 16.943257 276,418.440
1997 16.943257
- ----------------------------------------------------------------------------------------------------
U.S. Government Securities
1994 $ 14.188969 $14.111357 14,981.455
1995 14.111357 16.083213 136,450.591
1996 16.083213 16.393307 299,784.238
1997 16.393307
- ----------------------------------------------------------------------------------------------------
Money Market
1994 $ 13.453100 $13.623292 57,620.649
1995 13.623292 14.190910 218,876.370
1996 14.190910 14.699636 436,831.126
1997 14.699636
- ----------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000
1997 $ 12.500000
- ----------------------------------------------------------------------------------------------------
Lifestyle Growth 820
1997 $ 12.500000
- ----------------------------------------------------------------------------------------------------
Lifestyle Balanced 640
1997 $ 12.500000
- ----------------------------------------------------------------------------------------------------
Lifestyle Moderate 460
1997 $ 12.500000
- ----------------------------------------------------------------------------------------------------
Lifestyle Conservative 280
1997 $ 12.500000
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Units under this series of contracts were first credited under the
sub-accounts on August 9, 1994, except in the case of International Growth and
Income where units were first credited on January 9, 1995, Small/Mid Cap and
International Small Cap where units were first credited on March 4, 1996, Growth
where units were first credited on July 15, 1996, Pacific Rim Emerging Markets,
Science & Technology, Emerging Growth, Pilgrim Baxter Growth, International
Stock, Worldwide Growth, Quantitative Equity, Real Estate Securities, Value,
Balanced, High Yield, Capital Growth Bond, Lifestyle Aggressive 1000, Lifestyle
Growth 820, Lifestyle Balanced 640, Lifestyle Moderate 460, Lifestyle
Conservative 280 where units were first credited on January 1, 1997 and Small
Company Value where units were first credited on October 1, 1997.
+ See Appendix D for the TABLE of ACCUMULATION UNIT VALUES for certain contracts
which are no longer being issued (Ven 8 contracts)
15
<PAGE> 23
GENERAL INFORMATION ABOUT
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA,
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
AND MANUFACTURERS INVESTMENT TRUST
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
The Manufacturers Life Insurance Company of North America (the
"Company") is a stock life insurance company organized under the laws of
Delaware in 1979. The Company's principal office is located at 116 Huntington
Avenue, Boston, Massachusetts 02116. The ultimate parent of the Company is The
Manufacturers Life Insurance Company ("Manulife"), a Canadian mutual life
insurance company based in Toronto, Canada. Prior to January 1, 1996, the
Company was a wholly owned subsidiary of North American Life Assurance Company
("NAL"), a Canadian mutual life insurance company. On January 1, 1996 NAL and
Manulife merged with the combined company retaining the Manulife name.
On January 19, 1998, the Board of Directors of Manulife asked the
management of Manulife to prepare a plan for conversion of Manulife from a
mutual life insurance company to an investor-owned, publicly-traded stock
company. Any demutualization plan for Manulife is subject to the approval of the
Manulife Board of Directors and policyholders as well as regulatory approval.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
The Company established The Manufacturers Life Insurance Company of
North America Separate Account A (the "Variable Account") on August 24, 1984 as
a separate account under Delaware law. The income, gains and losses, whether or
not realized, from assets of the Variable Account are, in accordance with the
contracts, credited to or charged against the Variable Account without regard to
other income, gains or losses of the Company. Nevertheless, all obligations
arising under the contracts are general corporate obligations of the Company.
Assets of the Variable Account may not be charged with liabilities arising out
of any other business of the Company.
The Variable Account is registered with the SEC under the Investment
Company Act of 1940, as amended (the "1940 Act") as a unit investment trust. A
unit investment trust is a type of investment company which invests its assets
in specified securities, such as the shares of one or more investment companies.
Registration under the 1940 Act does not involve supervision by the SEC of the
management or investment policies or practices of the Variable Account. If
deemed by the Company to be in the best interests of persons having voting
rights under the contracts, the Variable Account may be operated as a management
company under the 1940 Act or it may be deregistered under such Act in the event
such registration is no longer required.
The Company reserves the right to add other sub-accounts, eliminate
existing sub-accounts, combine sub-accounts or transfer assets in one
sub-account to another sub-account established by the Company or an affiliated
company. The Company will not eliminate existing sub-accounts or combine
sub-accounts without obtaining any necessary approval of the appropriate state
or Federal regulatory authorities.
MANUFACTURERS INVESTMENT TRUST
The assets of each available sub-account of the Variable Account are
invested in shares of a corresponding portfolio of Manufacturers Investment
Trust (the "Trust"). A description of each portfolio is set forth below. The
Trust is registered under the 1940 Act as an open-end management investment
company. Each of the portfolios is diversified for purposes of the 1940 Act,
except for the Global Government Bond Trust, Emerging Growth Trust and the five
Lifestyle Trusts which are non-diversified. The Trust receives investment
subadvisory services from Manufacturers Securities Services, LLC ("MSS"), the
successor to NASL Financial Services, Inc.
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<PAGE> 24
The Trust currently has fifteen subadvisers who manage all of the
portfolios:
<TABLE>
<CAPTION>
SUBADVISER SUBADVISER TO
<S> <C>
Fidelity Management Trust Company Equity Trust
Conservative Asset Allocation Trust
Moderate Asset Allocation Trust
Aggressive Asset Allocation Trust
Founders Asset Management LLC Growth Trust
Worldwide Growth Trust
Balanced Trust
International Small Cap Trust
Fred Alger Management, Inc. Small/Mid Cap Trust
J.P. Morgan Investment Management Inc. International Growth and Income
Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Capital Growth Bond Trust
Money Market Trust
Lifestyle Trusts
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc Global Equity Trust
Oechsle International Advisors, L.P. Global Government Bond Trust
Pilgrim Baxter & Associates, Ltd. Pilgrim Baxter Growth Trust
Rosenberg Institutional Equity Management Small Company Value Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Warburg Pincus Asset Management, Inc. Emerging Growth Trust
Wellington Management Company, LLP Growth and Income Trust
Investment Quality Bond Trust
</TABLE>
The following is a brief description of each portfolio:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of
capital by investing in a diversified portfolio that is comprised primarily of
common stocks and equity-related securities of corporations domiciled in
countries in the Pacific Rim region.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital.
Current income is incidental to the portfolio's objective.
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<PAGE> 25
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by
investing primarily in securities issued by foreign companies which have total
market capitalization or annual revenues of $1 billion or less. These securities
may represent companies in both established and emerging economies throughout
the world.
The EMERGING GROWTH TRUST seeks maximum capital appreciation by
investing primarily in a portfolio of equity securities of domestic companies.
The Emerging Growth Trust ordinarily will invest at least 65% of its total
assets in common stocks or warrants of emerging growth companies that represent
attractive opportunities for maximum capital appreciation.
The PILGRIM BAXTER GROWTH TRUST seeks capital appreciation by investing
in companies believed by the subadviser to have an outlook for strong earnings
growth and the potential for significant capital appreciation.
The SMALL/MID CAP TRUST seeks long-term capital appreciation by
investing at least 65% of its total assets (except during temporary defensive
periods) in small/mid cap equity securities. As used herein small/mid cap equity
securities are equity securities of companies that, at the time of purchase,
have total market capitalization between $500 million and $5 billion.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by
investing primarily in common stocks of established, non-U.S. companies.
The WORLDWIDE GROWTH TRUST seeks long-term growth of capital by
normally investing at least 65% of its total assets in equity securities of
growth companies in a variety of markets throughout the world.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by
investing primarily in equity securities throughout the world, including U.S.
issuers and emerging markets.
The SMALL COMPANY VALUE TRUST seeks long term growth of capital by
investing in equity securities of smaller companies which are traded principally
in the markets of the United States.
The EQUITY TRUST seeks growth of capital by investing primarily in
common stocks of United States issuers and securities convertible into or
carrying the right to buy common stocks.
The GROWTH TRUST seeks long-term growth of capital by investing at
least 65% of the portfolio's total assets in the common stocks of
well-established, high-quality growth companies that the subadviser believes
have the potential to increase earnings faster than the rest of the market.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and
long-term growth through capital appreciation and current income by investing in
common stocks and other equity securities of well established companies with
promising prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital
(current income is a secondary objective) and many of the stocks in the
portfolio are expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of
long-term capital appreciation and satisfactory current income by investing in
real estate related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in common and preferred stocks, convertible securities,
rights and warrants to purchase common stocks, ADRs and other equity securities
of companies with equity capitalizations usually greater than $300 million.
The INTERNATIONAL GROWTH AND INCOME TRUST seeks long-term growth of
capital and income by investing, under normal circumstances, at least 65% of its
total assets in equity securities of foreign issuers. The portfolio may also
invest in debt securities of corporate or sovereign issuers rated A or higher by
Moody's Investor Services, Inc. or Standard & Poor's Corporation or, if unrated,
of equivalent credit quality as determined by the subadviser.
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<PAGE> 26
The GROWTH AND INCOME TRUST seeks long-term growth of capital and
income, consistent with prudent investment risk, by investing primarily in a
diversified portfolio of common stocks of United States issuers which the
subadviser believes are of high quality.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income
and also long-term capital appreciation by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital appreciation.
The BALANCED TRUST seeks current income and capital appreciation by
investing in a balanced portfolio of common stocks, U.S. and foreign government
obligations and a variety of corporate fixed-income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return
over a market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The AUTOMATIC ASSET ALLOCATION TRUSTS seek the highest potential total
return consistent with a specified level of risk tolerance -- conservative,
moderate or aggressive -- by investing primarily in the kinds of securities in
which the Equity, Investment Quality Bond, U.S. Government Securities and Money
Market Trusts may invest.
- The AGGRESSIVE ASSET ALLOCATION TRUST seeks the highest total
return consistent with an aggressive level of risk tolerance.
This Trust attempts to limit the decline in portfolio value in
very adverse market conditions to 15% over any three year
period.
- The MODERATE ASSET ALLOCATION TRUST seeks the highest total
return consistent with a moderate level of risk tolerance.
This Trust attempts to limit the decline in portfolio value in
very adverse market conditions to 10% over any three year
period.
- The CONSERVATIVE ASSET ALLOCATION TRUST seeks the highest
total return consistent with a conservative level of risk
tolerance. This Trust attempts to limit the decline in
portfolio value in very adverse market conditions to 5% over
any three year period.
The STRATEGIC BOND TRUST seeks a high level of total return consistent
with preservation of capital by giving its subadviser broad discretion to deploy
the portfolio's assets among certain segments of the fixed-income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL GOVERNMENT BOND TRUST seeks a high level of total return by
placing primary emphasis on high current income and the preservation of capital
by investing primarily in a global portfolio of high-quality, fixed-income
securities of foreign and United States governmental entities and supranational
issuers.
The CAPITAL GROWTH BOND TRUST seeks to achieve growth of capital by
investing in medium-grade or better debt securities, with income as a secondary
consideration. The Capital Growth Bond Trust differs from most "bond" funds in
that its primary objective is capital appreciation, not income.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current
income consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by such
securities.
The MONEY MARKET TRUST seeks maximum current income consistent with
preservation of principal and liquidity by investing in high quality money
market instruments with maturities of 397 days or less issued primarily by
United States entities.
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<PAGE> 27
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth
of capital (current income is not a consideration) by investing 100% of the
Lifestyle Trust's assets in other portfolios of the Trust ("Underlying
Portfolios") which invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of
capital with consideration also given to current income by investing
approximately 20% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 80% of its assets
in Underlying Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis given
to capital growth by investing approximately 40% of the Lifestyle Trust's assets
in Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis given
to high income by investing approximately 60% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 40% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of
current income with some consideration also given to growth of capital by
investing approximately 80% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed income securities and approximately
20% of its assets in Underlying Portfolios which invest primarily in equity
securities.
In pursuing the Strategic Bond, High Yield and Investment Quality Bond
Trusts' investment objective, each portfolio expects to invest a portion of its
assets in high yield securities, commonly known as "junk bonds" which also
present a high degree of risk. The risks of these securities include price
volatility and risk of default in the payment of interest and principal. See
"Risk Factors Relating to High Yield Securities" contained in the Trust
prospectus before investing in any of these Trusts.
In pursuing the Pacific Rim Emerging Markets, International Stock,
Worldwide Growth, International Small Cap, Global Equity, Strategic Bond,
International Growth and Income, High Yield and Global Government Bond Trusts'
investment objective, each portfolio may invest up to 100% of its assets in
foreign securities which may present additional risks. See "Foreign Securities"
in the Trust prospectus before investing in any of these Trusts.
If the shares of a portfolio are no longer available for investment or
in the Company's judgment investment in a portfolio becomes inappropriate in
view of the purposes of the Variable Account, the Company may eliminate the
shares of a portfolio and substitute shares of another portfolio of the Trust or
another open-end registered investment company. Substitution may be made with
respect to both existing investments and the investment of future purchase
payments. However, no such substitution will be made without notice to the
contract owner and prior approval of the SEC to the extent required by the 1940
Act.
The Company will vote shares of the Trust portfolios held in the
Variable Account at meetings of shareholders of the Trust in accordance with
voting instructions received from the persons having the voting interest under
the contracts. The number of portfolio shares for which voting instructions may
be given will be determined by the Company in the manner described below, not
more than 90 days prior to the meeting of the Trust. Trust proxy material will
be distributed to each person having the voting interest under the contract
together with appropriate forms for giving voting instructions. Portfolio shares
held in the Variable Account that are attributable to contract owners and as to
which no timely instructions are received and portfolio shares held in the
Variable Account that are beneficially owned by the Company will be voted by the
Company in proportion to the instructions received.
Prior to the maturity date, the person having the voting interest under
a contract is the owner and the number of votes as to each portfolio for which
voting instructions may be given is determined by dividing the value of the
investment account corresponding to the sub-account in which such portfolio
shares are held by the net asset value per share of that portfolio. After the
maturity date, the person having the voting interest under a contract is the
annuitant and the number of votes as to each portfolio for which voting
instructions may be given is determined by dividing the reserve for the contract
allocated to the sub-account in which such portfolio shares are held by the net
asset value per share of that portfolio. Generally, the number of votes tends to
decrease as annuity payments progress since the amount of reserves attributable
to a contract will usually decrease after commencement of annuity payments. The
Company
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<PAGE> 28
reserves the right to make any changes in the voting rights described above that
may be permitted by the Federal securities laws or regulations or
interpretations of these laws or regulations.
A full description of the Trust, including the investment objectives,
policies and restrictions of each of the portfolios, is contained in the
prospectus for the Trust which accompanies this Prospectus and should be read by
a prospective purchaser before investing.
DESCRIPTION OF THE CONTRACT
ELIGIBLE GROUPS
The contract may be issued to fund plans qualifying for special income
tax treatment under the Code, such as individual retirement accounts and
annuities, pension and profit-sharing plans for corporations and sole
proprietorships/partnerships ("H.R. 10" and "Keogh" plans), tax-sheltered
annuities, and state and local government deferred compensation plans (see
"QUALIFIED RETIREMENT PLANS"). The contract is also designed so that it may be
used with non-qualified retirement plans, such as deferred compensation and
payroll savings plans and such other groups (trusteed or non-trusteed) as may be
eligible under applicable law. Contracts have been issued to 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 MSS, the principal underwriter of the
contracts.
An eligible member of a group to which a contract has been issued may
become an owner under the contract by submitting a completed application, if
required by the Company, and a minimum purchase payment. A certificate
summarizing the rights and benefits of the owner under the contract will be
issued to an applicant acceptable to the Company. The Company reserves the right
to decline to issue a certificate to any person in its sole discretion. All
rights and privileges under the contract may be exercised by each owner as to
his or her interest unless expressly reserved to the group holder. However,
provisions of any plan in connection with which the contract was issued may
restrict an owner's ability to exercise such rights and privileges.
ACCUMULATION PROVISIONS
PURCHASE PAYMENTS
Purchase payments are paid to the Company at its Annuity Service
Office. Except as noted below, the minimum initial purchase payment is $5,000
for Non-Qualified Contracts and $2,000 for Qualified Contracts. The minimum
initial purchase payment is $3,500 if the source of such payment was a direct
rollover of an eligible rollover distribution from a qualified plan under
Section 401(a) of the Code or a Tax Sheltered Annuity described in Section
403(b) of the Code, all or part of which assets are invested in a group annuity
contract issued by The Manufacturers Life Insurance Company (U.S.A.). The
Company may provide by separate agreement for purchase payments to be
automatically withdrawn from an owner's bank account on a periodic basis. If a
purchase payment would cause the contract value for an owner to exceed
$1,000,000 or the owner's contract value already exceeds $1,000,000, additional
purchase payments will be accepted only with the prior approval of the Company.
The Company may, at its option, cancel a certificate and an owner's
participation under a contract at the end of any two consecutive certificate
years in which no purchase payments by or on behalf of the owner have been made,
if both (i) the total purchase payments made for the certificate, less any
withdrawals, are less than $2,000; and (ii) the contract value for the owner at
the end of such two year period is less than $2,000. The cancellation of
contract privileges may vary in certain states in order to comply with the
requirements of insurance laws and regulations in such state. Upon cancellation
the Company will pay the owner his or her contract value computed as of the
valuation period during which the cancellation occurs less any debt and less the
annual $30 administration fee. The amount paid will be treated as a withdrawal
for Federal tax purposes and thus may be subject to income tax and to a 10%
penalty tax (see "FEDERAL TAX MATTERS").
Purchase payments are allocated among the investment options in
accordance with the percentages designated by the owner. In addition, owners
have the option to participate in the Guarantee Plus Program administered by the
Company. Under the Guarantee Plus Program the initial purchase payment is split
between the fixed and variable investment options. A percentage of the initial
purchase payment is allocated to the chosen fixed account, such that at the end
of the guaranteed period the fixed account will have grown to an amount at least
equal to the total initial purchase payment. The percentage depends upon the
current interest rate of the fixed investment option. The balance of the initial
purchase payment is allocated among the variable investment options as indicated
on the certificate specifications page. Owners may elect to participate in the
Guarantee Plus Program and may obtain full
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<PAGE> 29
information concerning the program and its restrictions from their securities
dealers or the Annuity Service Office. An owner may change the allocation of
subsequent purchase payments at any time upon written notice to the Company or
by telephone in accordance with the Company's telephone transfer procedures.
ACCUMULATION UNITS
The Company will establish an investment account for each owner for
each variable account investment option to which such owner allocates purchase
payments. Purchase payments are credited to such investment accounts in the form
of accumulation units. The following discussion of accumulation units, the value
of accumulation units and the net investment factor formula pertains only to the
accumulations in the variable account investment options. The parallel
discussion regarding accumulations in the fixed account investment options
appears elsewhere in this Prospectus (see "FIXED ACCOUNT INVESTMENT OPTIONS").
The number of accumulation units to be credited to each investment
account is determined by dividing the net purchase payment allocated to that
investment account by the value of an accumulation unit for that investment
account for the valuation period during which the purchase payment is received
at the Company's Annuity Service Office complete with all necessary information
or, in the case of the first purchase payment for a certificate, pursuant to the
procedures described below.
Initial purchase payments for a certificate received by mail will
usually be credited in the valuation period during which received at the Annuity
Service Office, and in any event not later than two business days after receipt
of all information necessary for processing issuance of the certificate. The
applicant will be informed of any deficiencies preventing processing if the
certificate cannot be issued and the purchase payment credited within two
business days after receipt. If the deficiencies are not remedied within five
business days after receipt, the purchase payment will be returned promptly to
the applicant, unless the applicant specifically consents to the Company's
retaining the purchase payment until all necessary information is received.
Initial purchase payments received by wire transfer from broker-dealers will be
credited in the valuation period during which received where such broker-dealers
have made special arrangements with the Company.
VALUE OF ACCUMULATION UNITS
The value of accumulation units will vary from one valuation period to
the next depending upon the investment results of the particular sub-accounts to
which purchase payments are allocated. The value of an accumulation unit for
each sub-account was arbitrarily set at $10 or $12.50 for the first valuation
period under contracts similar to the contracts described in this Prospectus.
The value of an accumulation unit for any subsequent valuation period is
determined by multiplying the value of an accumulation unit for the immediately
preceding valuation period by the net investment factor for such sub-account
(described below) for the valuation period for which the value is being
determined.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a sub-account from one valuation period to the next. The net
investment factor for each sub-account for any valuation period is determined by
dividing (a) by (b) and subtracting (c) from the result:
Where (a) is:
(1) the net asset value per share of a portfolio share held in
the sub-account determined at the end of the current valuation period,
plus
(2) the per share amount of any dividend or capital gain
distributions made by the portfolio on shares held in the sub-account
if the "ex-dividend" date occurs during the current valuation period.
Where (b) is:
the net asset value per share of a portfolio share held in the
sub-account determined as of the end of the immediately preceding
valuation period.
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<PAGE> 30
Where (c) is:
a factor representing the charges deducted from the
sub-account on a daily basis for administrative expenses and mortality
and expense risks. Currently, such factor is equal on an annual basis
to 1.4% (0.15% for administrative expenses and 1.25% for mortality and
expense risks). The charges deducted from the sub-account reduce the
value of the accumulation units for the sub-account.
The net investment factor may be greater or less than or equal to one;
therefore, the value of an accumulation unit may increase, decrease or remain
the same.
TRANSFERS AMONG INVESTMENT OPTIONS
Before the maturity date an owner may transfer amounts among his or her
variable account investment options and from such investment options to his or
her fixed account investment options at any time and without charge upon written
notice to the Company or by telephone if the owner authorizes the Company in
writing to accept telephone transfer requests. Accumulation units will be
canceled from the investment account from which amounts are transferred and
credited to the investment account to which amounts are transferred. The Company
will effect such transfers so that the contract value for a certificate on the
date of the transfer will not be affected by the transfer. The owner must
transfer at least $300 or, if less, the entire value of the investment account.
If after the transfer the amount remaining in the investment account is less
than $100, then the Company will transfer the entire amount instead of the
requested amount. The Company reserves the right to limit, upon notice, the
maximum number of transfers an owner may make to one per month or six at any
time within a certificate year. In addition, the Company reserves the right to
defer the transfer privilege at any time that the Company is unable to purchase
or redeem shares of the Trust portfolios. The Company also reserves the right to
modify or terminate the transfer privilege at any time in accordance with
applicable law.
MAXIMUM NUMBER OF INVESTMENT OPTIONS
Due to current administrative capabilities, a contract owner is limited
to a maximum of 17 investment options (including all fixed account investment
options) during the period prior to the maturity date of the contract (the
"Contract Period"). In calculating this limit for each contract owner,
investment options to which the contract owner has allocated purchased payments
at any time during the Contract Period will be counted toward the 17 maximum
even if the contract owner no longer has contract value allocated to these
investment options.
TELEPHONE TRANSACTIONS
Owners are permitted to request transfers/redemptions by telephone. The
Company will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine. To be permitted to request a
transfer/redemption by telephone, an owner must elect the option. The Company
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine and may only be liable for any losses due to unauthorized
or fraudulent instructions where it fails to employ its procedures properly.
Such procedures include the following. Upon telephoning a request, owners will
be asked to provide their account number, and if not available, their social
security number. For the owner's and Company's protection, all conversations
with owners will be tape recorded. All telephone transactions will be followed
by a confirmation statement of the transaction.
SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING
The Company administers a Dollar Cost Averaging ("DCA") program which
enables an owner to pre-authorize a periodic exercise of the contractual
transfer rights described above. Owners entering into a DCA agreement instruct
the Company to transfer monthly a predetermined dollar amount from any
sub-account or the one year fixed account investment option to other
sub-accounts until the amount in the sub-account from which the transfer is made
or one year fixed account investment option is exhausted. Except in the states
of ______, a special one year fixed account investment option (the "One Year DCA
Account") may be established under the DCA program to make automatic monthly
transfers. In the first eleven months the amount transferred is equal to one
eleventh of the amount allocated to the One Year DCA Account and in the twelfth
month the remaining balance of the One Year DCA Account is transferred. Only
initial and subsequent net payments may be allocated to the One Year DCA
Account. The DCA program is generally suitable for owners making a substantial
deposit and who desire to control the risk of investing at the top of a market
cycle. The DCA program allows such investments to be made in equal installments
over time
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<PAGE> 31
in an effort to reduce such risk. Owners interested in the DCA program may elect
to participate in the program on the application or by separate application.
Owners may obtain a separate application and full information concerning the
program and its restrictions from their securities dealer or the Annuity Service
Office. There is no charge for participation in the DCA program.
ASSET REBALANCING PROGRAM
The Company administers an Asset Rebalancing Program which enables an
owner to indicate to the Company the percentage levels he or she would like to
maintain in particular portfolios. The contract value will be automatically
rebalanced pursuant to the schedule described below to maintain the indicated
percentages by transfers among the portfolios. The entire contract value must be
included in the Asset Rebalancing Program. Other investment programs, such as
the DCA program, or other transfers or withdrawals may not work in concert with
the Asset Rebalancing Program. Therefore, owners should monitor their use of
these other programs and any other transfers or withdrawals while the Asset
Rebalancing Program is being used. Owners interested in the Asset Rebalancing
Program may obtain a separate application and full information concerning the
program and its restrictions from their securities dealer or the Annuity Service
Office. There is no charge for participation in the Asset Rebalancing Program.
For rebalancing programs begun on or after October 1, 1996 asset
rebalancing will only be permitted on the following time schedules:
(i) quarterly on the 25th day of the last month of the quarter (or
the next business day if the 25th is not a business day);
(ii) semi-annually on June 25th or December 26th (or the next
business day if these dates are not business days); or
(iii) annually on December 26th (or the next business day if
December 26th is not a business day).
Rebalancing will continue to take place on the last business day of every
calendar quarter for rebalancing programs begun prior to October 1, 1996.
WITHDRAWALS
Prior to the earlier of the maturity date or the death of an owner, an
owner may withdraw all or a portion of his or her contract value upon written
request complete with all necessary information to the Company's Annuity Service
Office. For certain qualified contracts, exercise of the withdrawal right may
require the consent of the qualified plan participant's spouse under the Code
and regulations promulgated by the Treasury Department. In the case of a total
withdrawal, the Company will pay the contract value as of the date of receipt of
the request at its Annuity Service Office, less the annual $30 administration
fee if applicable, any debt and any applicable withdrawal charge, and the
owner's certificate will be canceled. In the case of a partial withdrawal, the
Company will pay the amount requested and cancel that number of accumulation
units credited to each investment account necessary to equal the amount
withdrawn from each investment account plus any applicable withdrawal charge
deducted from such investment account (see "CHARGES AND DEDUCTIONS").
When making a partial withdrawal, the owner should specify the
investment options from which the withdrawal is to be made. The amount requested
from an investment option may not exceed the value of that investment option
less any applicable withdrawal charge. If the owner does not specify the
investment options from which a partial withdrawal is to be taken, a partial
withdrawal will be taken from the variable account investment options until
exhausted and then from the fixed account investment options, beginning with the
shortest guarantee period first and ending with the longest guarantee period
last. If the partial withdrawal is less than the total value in the variable
account investment options, the withdrawal will be taken pro rata from the
variable account investment options: taking from each such variable account
investment option an amount which bears the same relationship to the total
amount withdrawn as the value of such variable account investment option bears
to the total value of all the owner's investments in variable account investment
options.
For the rules governing the order and manner of withdrawals from the
fixed account investment options, see "FIXED ACCOUNT INVESTMENT OPTIONS."
There is no limit on the frequency of partial withdrawals; however, the
amount withdrawn must be at least $300 or, if less, the entire balance in the
investment option. If after the withdrawal (and deduction of any withdrawal
charge) the amount remaining in the investment option is less than $100, the
Company will treat the partial withdrawal as a withdrawal of the entire amount
held in the investment option. If a partial withdrawal plus any applicable
withdrawal charge would reduce the contract value to less than $300, the Company
will treat the partial withdrawal as a total withdrawal of the contract value.
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The amount of any withdrawal from the variable account investment
options will be paid promptly, and in any event within seven days of receipt of
the request, complete with all necessary information at the Company's Annuity
Service Office, except that the Company reserves the right to defer the right of
withdrawal or postpone payments for any period when: (1) the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (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 Variable Account is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Variable Account's net assets, or (4) the SEC, by order, so permits
for the protection of security holders; provided that applicable rules and
regulations of the SEC shall govern as to whether the conditions described in
(2) and (3) exist.
Withdrawals from the contract may be subject to income tax and a 10%
penalty tax. Withdrawals are permitted from contracts or certificates issued in
connection with Section 403(b) qualified plans only under limited circumstances
(see "FEDERAL TAX MATTERS").
TELEPHONE REDEMPTIONS. The owner may request the option to withdraw a
portion of his or her contract value by telephone by completing a separate
application. The Company reserves the right to impose maximum withdrawal amounts
and procedural requirements regarding this privilege. For additional information
on Telephone Redemptions see "Telephone Transactions" above.
SPECIAL WITHDRAWAL SERVICES - INCOME PLAN
The Company administers an Income Plan ("IP") which enables an owner to
pre-authorize a periodic exercise of the contractual withdrawal rights described
above. Owners entering into an IP agreement instruct the Company to withdraw a
level dollar amount from specified investment options on a periodic basis. The
total of IP withdrawals in a certificate year is limited to not more than 10% of
the purchase payments made by or on behalf of the owner to ensure that no
withdrawal or market value charge will ever apply to an IP withdrawal. If an
additional withdrawal is made by an owner participating in an IP, the IP will
terminate automatically and may be reinstated only on or after the next
certificate anniversary. The IP is not available to owners participating in the
dollar cost averaging program or for which purchase payments are being
automatically deducted from a bank account on a periodic basis. IP withdrawals
will be free of withdrawal and market value charges. IP withdrawals may,
however, be subject to income tax and a 10% penalty tax (see "FEDERAL TAX
MATTERS"). Owners interested in an IP may elect to participate in this program
may obtain a separate application and full information concerning the program
and its restrictions from their securities dealer or the Annuity Service Office.
LOANS
The Company offers a loan privilege only under contracts or
certificates issued in connection with Section 403(b) qualified plans that are
not subject to Title I of ERISA. Where available, owners may obtain loans using
their contract value as the only security for the loan. Loans are subject to
provisions of the Code and to applicable retirement program rules (collectively,
"loan rules"). Tax advisors and retirement plan fiduciaries should be consulted
prior to exercising loan privileges.
Under the terms of the contract, the maximum loan value is equal to 80%
of an owner's contract value, although loan rules may serve to reduce such
maximum loan value in some cases. The amount available for a loan at any given
time is the loan value less any outstanding debt. Debt equals the amount of any
loans taken by the owner plus accrued interest. Loans will be made only upon
written request from the owner. The Company will make loans within seven days of
receiving a properly completed loan application (applications are available from
the Annuity Service Office), subject to postponement under the same
circumstances that payment of withdrawals may be postponed (see "WITHDRAWALS").
When an owner requests a loan, the Company will reduce the owner's
investment in the investment accounts and transfer the amount of the loan to the
owner's loan account, a part of the Company's general account. The owner may
designate the investment accounts from which the loan is to be withdrawn. Absent
such a designation, the amount of the loan will be withdrawn from the owner's
investment accounts in accordance with the rules for making partial withdrawals
(see "WITHDRAWALS"). The contract provides that owners may repay contract debt
at any time. Under applicable loan rules, loans generally must be repaid within
five years, repayments must be made at least quarterly and repayments must be
made in substantially equal amounts. When a loan is repaid, the amount of the
repayment will be transferred from the owner's loan account to the investment
accounts. The owner may designate the investment accounts to which a repayment
is to be allocated. Otherwise, the repayment will be allocated in the same
manner as the owner's most recent purchase payment. On each certificate
anniversary, the Company will transfer from the owner's investment accounts to
his or her loan account the amount by which the owner's debt exceeds the balance
in his or her loan account.
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The Company charges interest of 6% per year on contract loans. Loan
interest is payable in arrears and, unless paid in cash, the accrued loan
interest is added to the amount of the owner's debt and bears interest at 6% as
well. The Company credits interest with respect to amounts held in the owner's
loan account at a rate of 4% per year. Consequently, the net cost of loans under
the contract is 2%. If on any date an owner's debt exceeds his or her contract
value, there will be a default as to the owner. In such case the owner will
receive a notice indicating the payment needed to cure the default and will have
a thirty-one day grace period within which to pay the default amount. If the
required payment is not made within the grace period, the contract may be
foreclosed as to that owner (terminated without value) and the certificate
canceled.
The amount of an owner's debt will be deducted from the death benefit
otherwise payable to the beneficiary (see "DEATH BENEFIT BEFORE MATURITY DATE").
In addition, debt, whether or not repaid, will have a permanent effect on an
owner's contract value because the investment results of the investment accounts
will apply only to the unborrowed portion of the contract value. The longer debt
is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the investment results are greater than the rate
being credited on amounts held in the loan account while the debt is
outstanding, the owner's contract value will not increase as rapidly as it would
have if no debt were outstanding. If investment results are below that rate, the
contract value will be higher than it would have been had no debt been
outstanding.
DEATH BENEFIT BEFORE MATURITY DATE
In General. The following discussion applies principally to contracts
and certificates that are not issued in connection with qualified plans, i.e., a
"non-qualified" contract or certificate. The requirements of the tax law
applicable to qualified plans, and the tax treatment of amounts held and
distributed under such plans, are quite complex. Accordingly, a prospective
purchaser of a contract or certificate to be used in connection with a qualified
plan should seek competent legal and tax advice regarding the suitability of the
contract or certificate for the situation involved and the requirements
governing the distribution of benefits, including death benefits, from a
contract or certificate used in the plan. In particular, a prospective purchaser
who intends to use the contract or certificate in connection with a qualified
plan should consider that the contract provides a death benefit (described
below) that could be characterized as an incidental death benefit. There are
limits on the amount of incidental benefits that may be provided under certain
qualified plans and the provision of such benefits may result in currently
taxable income to plan participants (see "FEDERAL TAX MATTERS"). See Appendix D
for information on death benefit provisions applicable to certain contracts
which are no longer being issued (Ven 8 contracts).
Amount of Death Benefit.
Certificates Issued Prior to May 1, 1998. 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 certificate date, the death benefit will be determined as
follows: During the first certificate 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 certificate 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 certificate 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 certificate 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 certificate date, the death benefit will be the contract
value less any applicable withdrawal charges at the time of payment of benefits.
For certificates issued on or after October 1, 1997, any withdrawal charges
applied against the death benefit shall be waived by the Company.
Certificates Issued After May 1, 1998. If any owner dies and the oldest
owner had an attained age of less than 81 years on the certificate date, the
death benefit will be determined as follows: During the first certificate year,
the death benefit will 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 certificate 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 certificate 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
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81st birthday, the death benefit will be the greater of (a) contract value or
(b) the death benefit on the last day of the certificate 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 certificate 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.
In the states of _____, the death benefit described under "Certificates
Issued Prior to May 1, 1998" will continue to apply to certificates issued after
May 1, 1998.
Determination of Death Benefit. The determination of the death benefit
will be made on the date written notice and proof of death, as well as all
required claims forms, are received at the Company's Annuity Service Office. No
person is entitled to the death benefit until this time. In addition, partial
withdrawals include amounts applied under an annuity option under the contract.
Also, amounts deducted in connection with partial withdrawals include charges
imposed on a partial withdrawal, but not amounts charged in payment of the
annual administration fee. If the owner has any debt under the contract, the
death benefit equals the death benefit, as described above, less such debt.
Payment of Death Benefit. The Company will pay the death benefit
(which, as defined above, is net of any debt) to the beneficiary if any owner
dies before the maturity date. If there is a surviving owner, that owner will be
deemed to be the beneficiary. No death benefit is payable on the death of any
annuitant, except that if any owner is not a natural person, the death of any
annuitant will be treated as the death of an owner. On the death of the last
surviving annuitant, the owner, if a natural person, will become the annuitant
unless the owner designates another person as the annuitant.
The death benefit may be taken in the form of a lump sum immediately.
If not taken immediately, the certificate will continue subject to the
following: (1) The beneficiary will become the owner. (2) Any excess of the
death benefit over the contract value will be allocated to the owner's
investment accounts in proportion to their relative values on the date of the
Company's receipt at its Annuity Service Office of written notice and proof of
death and all required claim forms. (3) No additional purchase payments may be
made. (4) If the beneficiary is not the deceased's owner spouse, distribution of
the owner's entire interest in the certificate must be made within five years of
the owner's death, or alternatively, distribution may be made as an annuity,
under one of the annuity options described below, which begins within one year
of the owner's death and is payable over the life of the beneficiary or over a
period not extending beyond the life expectancy of the beneficiary. Upon the
death of the beneficiary, the death benefit will equal the contract value which
must be distributed immediately in a single sum. (5) If the owner's spouse is
the beneficiary, the certificate will continue with the spouse as the new owner.
In such a case, the distribution rules described in "(4)" applicable when an
owner dies will apply when the spouse, as the owner, dies. In addition, a death
benefit will be paid upon the death of the spouse. For purposes of calculating
the death benefit payable upon the death of the spouse, the death benefit paid
upon the first owner's death will be treated as a purchase payment to the
certificate. In addition, the death benefit on the last day of the previous
certificate year (or the last day of the certificate year ending just prior to
the owner's 81st birthday, if applicable) shall be set to zero as of the date of
the first owner's death. (6) If any owner dies and the oldest owner had an
attained age of less than 81 on the certificate date, withdrawal charges are not
applied on payment of the death benefit (whether taken through a partial or
total withdrawal or applied under an annuity option). If any owner dies and the
oldest owner had an attained age greater than 80 on the certificate date,
withdrawal charges will be assessed only upon payment of the death benefit (if
such charges are otherwise applicable), so that if the death benefit is paid in
a subsequent year, a lower withdrawal charge will be applicable. For
certificates issued after October 1, 1997, any withdrawal charge applied against
the death benefit shall be waived.
If the annuitant is changed and the owner is not a natural person, the
entire interest in the certificate must be distributed to the owner within five
years. The amount distributed will be reduced by charges which would otherwise
apply upon withdrawal.
A substitution or addition of any owner may result in resetting the
death benefit to an amount equal to the contract value as of the date of the
change and treating such value as a payment made on that date for purposes of
computing the amount of the death benefit. In addition, all purchase payments
made and all amounts deducted in connection with partial withdrawals prior to
the date of the change of owner will not be considered in the determination of
the death benefit. Furthermore, the death benefit on the last day of the
previous certificate year shall be set to zero as of the date of the owner
change. No such change in death benefit will be
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made if the individual whose death will cause the death benefit to be paid is
the same after the change in ownership or if ownership is transferred to the
owner's spouse.
Death benefits will be paid within seven days of the date the amount of
the death benefit is determined, as described above, subject to postponement
under the same circumstances that payment of withdrawals may be postponed (see
"WITHDRAWALS").
ANNUITY PROVISIONS
GENERAL
Proceeds payable on death, withdrawal or the maturity date may be
applied to the annuity options described below, subject to the distribution of
death benefits provisions (see "DEATH BENEFIT BEFORE MATURITY DATE").
Generally, annuity benefits under the contract will begin on the
maturity date of the certificate. The maturity date is the date specified on the
certificate specifications page, unless changed. If no date is specified, the
maturity date is the maximum maturity date described below. The maximum maturity
date is the first day of the month following the later of the 85th birthday of
the annuitant or the tenth contract anniversary. An owner may specify a
different maturity date at any time by written request at least one month before
both the previously specified and the new maturity date. The new maturity date
may not be later than the maximum maturity date unless the Company consents.
Maturity dates which occur at advanced ages, e.g., past age 85, may in some
circumstances have adverse income tax consequences (see "FEDERAL TAX MATTERS").
Distributions from qualified contracts may be required before the maturity date.
An owner may select the frequency of annuity payments. However, if the
owner's contract value at the maturity date is such that a monthly payment would
be less than $20, the Company may pay the contract value, less any debt, in one
lump sum to the annuitant on the maturity date.
ANNUITY OPTIONS
Annuity benefits are available under the contract on a fixed or
variable basis, or any combination of fixed and variable bases. On or before the
maturity date, an owner may select one or more of the annuity options described
below on a fixed and/or variable basis (except Option 5 which is available on a
fixed basis only) or choose an alternate form of settlement acceptable to the
Company. If an annuity option is not selected, the Company will provide as a
default option annuity payments on a fixed, variable or combined fixed and
variable basis in proportion to the Investment Account Value of each investment
option at the maturity date. Annuity payments will continue for 10 years or the
life of the annuitant, if longer. Treasury Department regulations may preclude
the availability of certain annuity options in connection with certain qualified
contracts.
The following annuity options are guaranteed in the contract:
Option 1(a): Non-Refund Life Annuity - An annuity with payments during
the lifetime of the annuitant. No payments are due after the death of
the annuitant. Since there is no guarantee that any minimum number of
payments will be made, an annuitant may receive only one payment if the
annuitant dies prior to the date the second payment is due.
Option 1(b): Life Annuity with Payments Guaranteed for 10 Years - An
annuity with payments guaranteed for 10 years and continuing thereafter
during the lifetime of the annuitant. Since payments are guaranteed for
10 years, annuity payments will be made to the end of such period if
the annuitant dies prior to the end of the tenth year.
Option 2(a): Joint & Survivor Non-Refund Life Annuity - An annuity with
payments during the lifetimes of the annuitant and a designated
co-annuitant. No payments are due after the death of the last survivor
of the annuitant and co-annuitant. Since there is no guarantee that any
minimum number of payments will be made, an annuitant or co-annuitant
may receive only one payment if the annuitant and co-annuitant die
prior to the date the second payment is due.
Option 2(b): Joint & Survivor Life Annuity with Payments Guaranteed for
10 Years - An annuity with payments guaranteed for 10 years and
continuing thereafter during the lifetimes of the annuitant and a
designated co-annuitant. Since payments are guaranteed for 10 years,
annuity payments will be made to the end of such period if both the
annuitant and the co-
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annuitant die prior to the end of the tenth year.
In addition to the foregoing annuity options which the Company is
contractually obligated to offer at all times, the Company currently offers the
following annuity options. The Company may cease offering the following annuity
options at any time and may offer other annuity options in the future.
Option 3: Life annuity with Payments Guaranteed for 5, 15 or 20 Years -
An annuity with payments guaranteed for 5, 15 or 20 years and
continuing thereafter during the lifetime of the annuitant. Since
payments are guaranteed for the specific number of years, annuity
payments will be made to the end of the last year of the 5, 15 or 20
year period.
Option 4: Joint & Two-Thirds Survivor Non-Refund Life Annuity - An
annuity with full payments during the joint lifetime of the annuitant
and a designated co-annuitant and two-thirds payments during the
lifetime of the survivor. Since there is no guarantee that any minimum
number of payments will be made, an annuitant or co-annuitant may
receive only one payment if the annuitant and co-annuitant die prior to
the date the second payment is due.
Option 5: Period Certain Only Annuity for 5, 10, 15 or 20 years - An
annuity with payments for a 5, 10, 15 or 20 year period and no payments
thereafter.
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying that
portion of the contract value used to purchase a variable annuity, measured as
of a date not more than ten business days prior to the maturity date (minus any
applicable premium taxes), to the annuity tables contained in the contract and
the certificate. The rates contained in such tables depend upon the annuitant's
sex and age (as adjusted depending on the annuitant's year of birth) and the
annuity option selected, except for contracts issued in connection with certain
employer sponsored plans where sex-based tables may not be used. Under such
tables, the longer the life expectancy of the annuitant under any life annuity
option or the duration of any period for which payments are guaranteed under the
option, the smaller will be the amount of the first monthly variable annuity
payment. The rates are based on the 1983 Table A projected at Scale G, assume
births in year 1942 and reflect an assumed interest rate of 3% per year. See
Appendix D for information on assumed interest rates applicable to certain
contracts which are no longer being issued (Ven 8 contracts).
ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Variable annuity payments subsequent to the first will be based on the
investment performance of the sub-accounts selected by the owner. The amount of
such subsequent payments is determined by dividing the amount of the first
annuity payment from each sub-account by the annuity unit value of such
sub-account (as of the same date the contract value used to effect annuity
payments under a certificate was determined) to establish the number of annuity
units which will thereafter be used to determine payments. This number of
annuity units for each sub-account is then multiplied by the appropriate annuity
unit value as of a uniformly applied date not more than ten business days before
the annuity payment is due, and the resulting amounts for each sub-account
selected by the owner are then totaled to arrive at the amount of the payment to
be made. The number of annuity units remains constant during the annuity payment
period. A pro-rata portion of the administration fee will be deducted from each
annuity payment.
The value of an annuity unit for each sub-account for any valuation
period is determined by multiplying the annuity unit value for the immediately
preceding valuation period by the net investment factor for that sub-account
(see "NET INVESTMENT FACTOR") for the valuation period for which the annuity
unit value is being calculated and by a factor to neutralize the assumed
interest rate.
A 3% assumed interest rate is built into the annuity tables in the
contract used to determine the first variable annuity payment. A higher
assumption would mean a larger first annuity payment, but more slowly rising
subsequent payments when actual investment performance exceeds the assumed rate,
and more rapidly falling subsequent payments when actual investment performance
is less than the assumed rate. A lower assumption would have the opposite
effect. If the actual net investment performance is 3% annually, annuity
payments will be level.
TRANSFERS AFTER MATURITY DATE
Once variable annuity payments have begun, an owner may transfer all or
part of the investment upon which such payments
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are based from one sub-account to another. Transfers will be made upon notice to
the Company at least 30 days before the due date of the first annuity payment to
which the change will apply. Transfers after the maturity date will be made by
converting the number of annuity units being transferred by the owner to the
number of annuity units of the sub-account to which the transfer is made, so
that the next annuity payment if it were made at that time would be the same
amount that it would have been without the transfer. Thereafter, annuity
payments will reflect changes in the value of the new annuity units. Once
annuity payments have commenced, no transfers may be made from a fixed annuity
option to a variable annuity option or from a variable annuity option to a fixed
annuity option. The Company reserves the right to limit, upon notice, the
maximum number of transfers an owner may make per certificate year to four. In
addition, the Company reserves the right to defer the transfer privilege at any
time that the Company is unable to purchase or redeem shares of the Trust
portfolios. The Company also reserves the right to modify or terminate the
transfer privilege at any time in accordance with applicable law.
DEATH BENEFIT ON OR AFTER MATURITY DATE
If annuity payments have been selected based on an annuity option
providing for payments for a guaranteed period, and the annuitant dies on or
after the maturity date, the Company will make the remaining guaranteed payments
to the beneficiary. Any remaining payments will be made as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If no
beneficiary is living, the Company will commute any unpaid guaranteed payments
to a single sum (on the basis of the interest rate used in determining the
payments) and pay that single sum to the estate of the last to die of the
annuitant and the beneficiary.
OTHER CONTRACT PROVISIONS
TEN DAY RIGHT TO REVIEW
An owner may return his or her certificate to the Company's Annuity
Service Office or agent at any time within 10 days after receipt of the
certificate. Within 7 days of receipt of the certificate by the Company, the
Company will pay the owner's contract value, less any debt, computed at the end
of the valuation period during which the certificate is received by the Company,
to the owner.
No withdrawal charge is imposed upon return of the certificate within
the ten day right to review period. The ten day right to review may vary in
certain states in order to comply with the requirements of insurance laws and
regulations in such states. When the certificate is issued as an individual
retirement annuity under Sections 408 or 408A of the Code, during the first 7
days of the 10 day period, the Company will return all purchase payments if this
is greater than the amount otherwise payable.
OWNERSHIP
The contract is owned by the group holder. However, all contract rights
and privileges not expressly reserved to the group holder may be exercised by
each owner as to his or her interests as specified in his or her certificate.
Prior to the maturity date, an owner is the person designated on the certificate
specifications page or as subsequently named. On and after a certificate's
maturity date, the annuitant is the owner. If amounts become payable under the
certificate to any beneficiary, the beneficiary is the owner.
In the case of non-qualified contracts, an owner's interest in the
contract may be changed, or the certificate may be collaterally assigned, at any
time prior to the maturity date, subject to the rights of any irrevocable
beneficiary. Ownership of the contract may be assigned at any time by the group
holder. Assigning a contract or interest therein, or changing the ownership of a
contract or certificate, may be treated as a distribution of the contract value
for Federal tax purposes. A change of any owner may result in resetting the
death benefit to an amount equal to the contract value as of the date of the
change and treating such value as a purchase payment made on that date for
purposes of computing the amount of the death benefit (see "DEATH BENEFIT BEFORE
MATURITY DATE").
Any change of ownership or assignment must be made in writing. Any
change must be approved by the Company. Any assignment and any change, if
approved, will be effective as of the date the Company receives the request at
its Annuity Service Office. The Company assumes no liability for any payments
made or actions taken before a change is approved or an assignment is accepted
or responsibility for the validity or sufficiency of any assignment. An absolute
assignment will revoke the interest of any revocable beneficiary.
In the case of qualified contracts, ownership of the contract or an
owner's interest in the contract generally may not be
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transferred except to the trustee of an exempt employees' trust which is part of
a retirement plan qualified under Section 401 of the Code or as otherwise
permitted by applicable Internal Revenue Service ("IRS") regulations. Subject to
the foregoing, an owner's interest in a qualified contract may not be sold,
assigned, transferred, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose to any
person other than the Company.
See Appendix D for information on ownership applicable to certain
contracts which are no longer being issued (Ven 8 contracts).
BENEFICIARY
The beneficiary is the person, persons or entity designated on the
certificate specifications page or as subsequently named. However, if there is a
surviving owner, that person will be treated as the beneficiary. The beneficiary
may be changed subject to the rights of any irrevocable beneficiary. Any change
must be made in writing, approved by the Company and if approved, will be
effective as of the date on which written. The Company assumes no liability for
any payments made or actions taken before the change is approved. If no
beneficiary is living, the contingent beneficiary will be the beneficiary. The
interest of any beneficiary is subject to that of any assignee. If no
beneficiary or contingent beneficiary is living, the beneficiary is the estate
of the deceased owner. In the case of certain qualified contracts or
certificates, regulations promulgated by the Treasury Department prescribe
certain limitations on the designation of a beneficiary.
See Appendix D for information on ownership applicable to certain
contracts which are no longer being issued (Ven 8 contracts).
ANNUITANT
The annuitant is any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. If the
owner names more than one person as an "annuitant," the second person named
shall be referred to as "co-annuitant." The annuitant is as designated on the
certificate specifications page unless changed.
On the death of the annuitant, the co-annuitant, if living, becomes the
annuitant. If there is no living co-annuitant, the owner becomes the annuitant.
In the case of certain qualified contracts, there are limitations on the ability
to designate and change the annuitant and the co-annuitant.
MODIFICATION
The contract or any certificate may not be modified by the Company
without the consent of the group holder or the owner, as applicable, except as
may be required to make it conform to any law or regulation or ruling issued by
a governmental agency. However, on 60 days' notice to the group holder, the
Company may change the withdrawal charges, administration fees, mortality and
expense risk charges, free withdrawal percentage, annuity purchase rates and the
market value charge as to any certificates issued after the effective date of
the modification. The provisions of the contract shall be interpreted so as to
comply with the requirements of Section 72(s) of the Code.
See Appendix D for information on ownership applicable to certain
contracts which are no longer being issued (Ven 8 contracts).
DISCONTINUANCE OF NEW OWNERS
On thirty days' notice to the group holder, the Company may limit or
discontinue acceptance of new applications and the issuance of new certificates
under a contract.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL
The Company may require proof of age, sex or survival of any person
upon whose age, sex or survival any payment depends. If the age or sex of the
annuitant has been misstated, the benefits will be those that would have been
provided for the annuitant's correct age and sex. If the Company has made
incorrect annuity payments, the amount of any underpayment will be paid
immediately and the amount of any overpayment will be deducted from future
annuity payments.
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FIXED ACCOUNT INVESTMENT OPTIONS
Due to certain exemptive and exclusionary provisions, interests in the
fixed account investment options are not registered under the Securities Act of
1933, as amended (the "1933 Act") and the Company's general account is not
registered as an investment company under the 1940 Act. Accordingly, neither
interests in the fixed account investment options nor the general account are
subject to the provisions or restrictions of the 1933 Act or the 1940 Act and
the staff of the SEC has not reviewed the disclosures in this Prospectus
relating thereto. Disclosures relating to interests in the fixed account
investment options and the general account, however, may be subject to certain
generally applicable provisions of the Federal securities laws relating to the
accuracy of statements made in a registration statement.
Pursuant to a Guarantee Agreement dated March 31, 1996, Manulife, the
ultimate parent of the Company, unconditionally guarantees to the Company on
behalf of and for the benefit of the Company and owners and groupholders of
fixed annuity contracts issued by the Company that it will, on demand, make
funds available to the Company for the timely payment of contractual claims
under fixed annuity contracts issued after June 27,1984. This Guarantee covers
the fixed portion of the contracts described by this Prospectus. This Guarantee
may be terminated by Manulife on notice to the Company. Termination will not
affect Manulife's continuing liability with respect to all fixed annuity
contracts issued prior to the termination of the Guarantee except if: (i) the
liability to pay contractual claims under the contracts is assumed by another
insurer or (ii) the Company is sold and the buyer's guarantee is substituted for
the Manulife guarantee.
Effective June 30, 1995, the Company entered into a Reinsurance
Agreement with Peoples Security Life Insurance Company ("Peoples") pursuant to
which Peoples reinsures certain amounts with respect to the fixed account
portion of the contract described in this Prospectus. Under this Reinsurance
Agreement, the Company remains liable for the contractual obligations of the
contracts' fixed account and Peoples agrees to reimburse the Company for certain
amounts and obligations in connection with the fixed account. Peoples
contractual liability runs solely to the Company, and no contract owner shall
have any right of action against Peoples. Peoples is a wholly-owned subsidiary
of Louisville, Kentucky based Providian Corporation, a diversified financial
services corporation.
Investment Options. Currently there are five fixed account investment
options under the contract: one, three, five and seven year investment accounts
and a one year DCA fixed investment account may be established under the DCA
program to make automatic monthly transfers from a one year fixed account to one
or more variable investment options (see "SPECIAL TRANSFER SERVICES - DOLLAR
COST AVERAGING" for details). The Company may offer additional fixed account
investment options for any yearly period from two to ten years. Fixed investment
accounts provide for the accumulation of interest on purchase payments at
guaranteed rates for the duration of the guarantee period. The guaranteed
interest rates on new amounts allocated or transferred to a fixed investment
account are determined from time-to-time by the Company in accordance with
market conditions. In no event will the guaranteed rate of interest be less than
3%. Once an interest rate is guaranteed for a fixed investment account, it is
guaranteed for the duration of the guarantee period and may not be changed by
the Company. See Appendix D for information on fixed account investment options
and the guaranteed rate of interest applicable to certain contracts which are no
longer being issued (Ven 8 contracts).
Investment Accounts. Owners may allocate purchase payments, or make
transfers from their variable investment options, to fixed account investment
options at any time prior to the maturity date. The Company establishes a
separate investment account each time an owner allocates or transfers amounts to
a fixed account investment option. Amounts may not be allocated to a fixed
account investment option that would extend the guarantee period beyond the
maturity date.
Renewals. At the end of a guarantee period, an owner may establish a
new investment account with the same guarantee period at the then current
interest rate, select a different fixed account investment option or transfer
the amounts to a variable account investment option, all without the imposition
of any charge. An owner may not select a guarantee period that would extend
beyond the maturity date. In the case of renewals within one year of the
maturity date, the only fixed account investment option available is to have
interest accrued up to the maturity date at the then current interest rate for
one year guarantee periods.
If an owner does not specify the renewal option desired, the Company
will select the same guarantee period as has just expired, so long as such
period does not extend beyond the maturity date. In the event a renewal would
extend beyond the maturity date, the Company will select the longest period that
will not extend beyond such date, except in the case of a renewal within one
year of the maturity date in which case the Company will credit interest up to
the maturity date at the then current interest rate for one year guarantee
periods.
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Market Value Charge. Any amount withdrawn, transferred or borrowed from
an investment account prior to the end of the guarantee period may be subject to
a market value charge. A market value charge will be calculated separately for
each investment account affected by a transaction to which a market value charge
may apply. The market value charge for an investment account will be calculated
by multiplying the amount withdrawn or transferred from the investment account
by the adjustment factor described below. The Company reserves the right to
modify the market value charge as to any certificates issued after the effective
date of a charge specified in written notice to the group holder.
The adjustment factor is determined by the following formula:
0.75x(B-A)xC/12 where:
A - The guaranteed interest rate on the investment account.
B - The guaranteed interest rate available, on the date the
request is processed, for amounts allocated to a new
investment account with the same length of guarantee period as
the investment account from which the amounts are being
withdrawn.
C - The number of complete months remaining to the end of the
guarantee period.
For purposes of applying this calculation, the maximum difference
between "B" and "A" will be 3%. The adjustment factor may never be less than
zero.
The total market value charge will be the sum of the market value
charges for each investment account being withdrawn. Where the guaranteed rate
available on the date of the request is less than the rate guaranteed on the
investment account from which the amounts are being withdrawn (B-A in the
adjustment factor is negative), there is no market value charge. There is only a
market value charge when interest rates have increased (B-A in the adjustment
factor is positive).
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations: (a) death of the owner;
(b) amounts withdrawn to pay fees or charges; (c) amounts applied at the
maturity date to purchase an annuity at the guaranteed rates provided in the
certificate; (d) amounts withdrawn from investment accounts within one month
prior to the end of the guarantee period; (e) amounts withdrawn from a one-year
fixed investment account; and (f) amounts withdrawn in any certificate year that
do not exceed 10% of total purchase payments less any prior partial withdrawals
in that certificate year.
Notwithstanding application of the foregoing formula, in no event will
the market value charge (i) be greater than the amount by which the earnings
attributable to the amount withdrawn or transferred from an investment account
exceed an annual rate of 3%, (ii) together with any withdrawal charges for an
investment account be greater than 10% of the amount transferred or withdrawn,
or (iii) reduce the amount payable on withdrawal or transfer below the amount
required under the non-forfeiture laws of the state with jurisdiction over the
contract. The cumulative effect of the market value and withdrawal charges (or
the effect of the withdrawal charge itself) could, however, result in an owner
receiving total withdrawal proceeds of less than the owner's investment in the
contract. See Appendix D for information on the market value charge applicable
to certain contracts which are no longer being issued (Ven 8 contracts).
Transfers. Prior to the maturity date, an owner may transfer amounts
among his or her fixed account investment options and from the fixed account
investment options to his or her variable account investment options, subject to
the following conditions. An amount in a fixed investment account may not be
transferred until held in such account for at least one year, except transfers
may be made pursuant to the Dollar Cost Averaging program. Consequently, except
as noted above, amounts in one year investment accounts effectively may not be
transferred prior to the end of the guarantee period. Amounts in any other
investment accounts may be transferred after the one year holding period has
been satisfied, but the market value charge described above may apply to such a
transfer. The market value charge, if applicable, will be deducted from the
amount transferred.
An owner must specify the fixed account investment option from or to
which a transfer is to be made. Where there are multiple investment accounts
within a fixed account investment option, amounts must be withdrawn from the
fixed account investment option on a first-in-first-out basis.
Withdrawals. An owner may make total and partial withdrawals of amounts
held in his or her fixed account investment options at any time prior to the
earlier of the death of an owner or the maturity date. Withdrawals from fixed
account investment options will be made in the same manner and be subject to the
same limitations as set forth under "WITHDRAWALS" plus the
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<PAGE> 41
following provisions also apply to withdrawals from fixed account investment
options: (1) the Company reserves the right to defer payment of amounts
withdrawn from fixed account investment options for up to six months from the
date it receives the written withdrawal request and certificate if required (if
a withdrawal is deferred for more than 30 days pursuant to this right, the
Company will pay interest on the amount deferred at a rate not less than 3% per
year); (2) if there are multiple investment accounts under a fixed account
investment option, amounts must be withdrawn from such accounts on a
first-in-first-out basis; and (3) the market value charge described above may
apply to withdrawals from any investment option except for a one year investment
option. In the event a market value charge applies to a withdrawal from a fixed
investment account, it will be calculated with respect to the full amount in the
investment account and deducted from the amount payable in the case of a total
withdrawal. In the case of a partial withdrawal, the market value charge will be
calculated on the amount requested and deducted, if applicable, from the
remaining investment account value.
Where an owner requests a partial withdrawal in excess of his or her
amounts in the variable account investment options and does not specify the
fixed account investment options from which the withdrawal is to be made, such
withdrawal will be made from his or her investment options beginning with the
shortest guarantee period. Within such sequence, where there are multiple
investment accounts within a fixed account investment option, withdrawals will
be made on a first-in-first-out basis. For this purpose, the one year DCA fixed
account investment option is considered to have a shorter guarantee period than
the one year fixed account investment option.
Withdrawals from the contract may be subject to income tax and a 10%
penalty tax, and withdrawals are permitted from contracts and certificates
issued in connection with Section 403(b) qualified plans only under limited
circumstances (see "FEDERAL TAX MATTERS").
Loans. The Company offers a loan privilege only under contracts or
certificates issued in connection with Section 403(b) qualified plans that are
not subject to Title I of ERISA. Where available, owners may obtain loans using
their contract value as the only security for the loan. Owners may borrow
amounts allocated to their fixed investment accounts in the same manner and
subject to the same limitations as set forth under "LOANS." The market value
charge described above may apply to amounts transferred from the fixed
investment accounts to the loan account in connection with such loans and, if
applicable, will be deducted from the amount so transferred.
Fixed Annuity Options. Subject to the distribution of death benefit
provisions (see "DEATH BENEFIT BEFORE MATURITY DATE"), on death, withdrawal or
the maturity date, the proceeds may be applied to a fixed annuity option (see
"ANNUITY OPTIONS"). The amount of each fixed annuity payment is determined by
applying the portion of the proceeds (less any applicable premium taxes) applied
to purchase the fixed annuity to the appropriate table in the contract. If the
table in use by the Company is more favorable to the owner, the Company will
substitute that table. The Company guarantees the dollar amount of fixed annuity
payments.
GUARANTEED INCOME FOR TOMORROW BENEFIT
The Guaranteed Income For Tomorrow Benefit (the "Income Benefit")
guarantees a minimum lifetime fixed income benefit in the form of fixed monthly
annuity payments. The Income Benefit is based on the aggregate net purchase
payments applied to the certificate, accumulated at interest, minus an
adjustment for any partial withdrawals. The amount of the monthly annuity
payment provided by the Income Benefit is determined by applying the Income
Base, described below, to the annuity purchase rates set forth in the Income
Benefit Rider. Because the fixed annuity options provided for in the contract
are based on the contract value at the time of annuitization, the amount of the
monthly payments under such options may exceed the monthly payments provided by
the Income Benefit Rider. If the Income Benefit is exercised and the annuity
payment available under the contract is greater than the monthly payment
provided by the Income Benefit Rider, the Company will pay the monthly annuity
payment available under the contract. The Income Benefit is available for
certificates issued on or after May 1, 1998. The Income Benefit is currently not
available in the following states:__________ .
Income Base. The Income Base is equal to (a) less (b), where (a) is the
sum of all payments made, accumulated at the growth factor indicated below
starting on the date each payment is allocated to the certificate, and (b) is
the sum of Income Base reductions on a pro rata basis in connection with partial
withdrawals taken, accumulated at the growth factor indicated below starting on
the date each deduction occurs. The growth factor is 6% per annum for annuitant
issue ages up to age 75, and 4% per annum for annuitant issue ages 76 or older.
The growth factor is reduced to 0% once the annuitant has attained age 85.
Income Base reduction on a pro rata basis is equal to the Income Base
immediately prior to a partial withdrawal
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<PAGE> 42
multiplied by the percentage reduction in contract value resulting from a
partial withdrawal.
If the Income Benefit is added to the contract after the certificate
date, the Income Base on the date the rider is issued (the "Rider Date") is the
contract value on the Rider Date. For purposes of subsequent calculation of the
Income Base, the contract value on the Rider Date will be treated as a purchase
payment made on the Rider Date. In addition, all purchase payments made and all
amounts deducted in connection with partial withdrawals prior to the Rider Date
will not be considered in determining the Income Base.
The Income Base is also reduced for any withdrawal charge remaining on
the date the Income Benefit is exercised. The Company reserves the right to
reduce the Income Base by any premium taxes that may apply.
The Income Base is used solely for purposes of calculating the Income
Benefit and does not provide a contract value or guarantee performance of any
investment option.
Step-Up of Income Base. Within 30 days immediately following any
certificate anniversary, the owner may elect to step-up the Income Base to the
contract value on that contract anniversary by sending the Company a written
request. If the owner elects to step-up the Income Base, the earliest date that
the owner may exercise the Income Benefit is extended to the seventh certificate
anniversary following the most recent date the Income Base was stepped-up to
contract value (the "Step-Up Date").
Following a step-up of the Income Base, the Income Base as of the
Step-Up Date is equal to the contract value on the Step-Up Date. For purposes of
subsequent calculation of the Income Base, the contract value on the Step-Up
Date will be treated as a purchase payment made on that date. In addition, all
payments made and all amounts deducted in connection with partial withdrawals
prior to the Step-Up Date will not be considered in determining the Income Base.
Conditions of Exercise of the Income Benefit. The Income Benefit may be
exercised subject to the following conditions:
1. The Income Benefit must be exercised within 30 days immediately
following an Election Date. An Election Date is the seventh or later certificate
anniversary following the date the income benefit is elected or, in the case of
a step-up of the Income Base, the seventh or later certificate anniversary
following the Step-Up Date.
2. The Income Benefit must be exercised by the later of (i) the
certificate anniversary immediately prior to the annuitant's 85th birthday or
(ii) the tenth certificate anniversary.
Monthly Income Factors. The Income Benefit may be used to purchase a
guaranteed lifetime income under the following annuity options: (1) Life Annuity
with a 10-Year Period Certain or (2) Joint and Survivor Life Annuity with a
20-Year Period Certain.
Option 1: Life Annuity with a 10-Year Period certain. An annuity with
payments guaranteed for 10 years and continuing thereafter during the
lifetime of the annuitant. Since payments are guaranteed for 10 years,
annuity payments will be made to the end of such period if the
annuitant dies prior to the end of the tenth year.
Option 2: Joint and Survivor Life Annuity with a 20-Year Period
Certain. An annuity with payments guaranteed for 20 years and
continuing thereafter during the lifetime of the annuitant and a
designated co-annuitant. Since payments are guaranteed for 20 years,
annuity payments will be made to the end of such period if both the
annuitant and the co-annuitant die prior to the end of the twentieth
year.
The monthly income factors depend upon the annuitant's (and
co-annuitant's, if any) sex and age (nearest birthday) and the annuity option
selected. The factors are based on the 1983 Table A projected at Scale G, and
reflect an assumed interest rate of 3% per year.
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<PAGE> 43
Illustrated below are Income Benefit amounts per $100,000 of initial
payments, for a male annuitant and a female co-annuitant both age 60 (at issue),
on certificate anniversaries as indicated below, assuming no subsequent payments
or withdrawals and assuming there was no step-up of the Income Base.
<TABLE>
<CAPTION>
Income Benefit-Annual Income
Income Benefit-Annual Income Joint & Survivor Life Annuity
Contract Anniversary at Life Annuity with 10 Year with 20 Year Period Certain
Election Period Certain
- -------------------------------- -------------------------------- -------------------------------
<S> <C> <C>
7 $ 9,797 $ 7,830
10 $12,593 $ 9,842
15 $19,124 $14,293
</TABLE>
Income Rider Fee. The risk assumed by the Company associated with the
Income Benefit is that the annuity benefits payable under the Income Benefit are
greater than the annuity benefits that would have been payable had the owner
selected another annuity benefit permitted by the contract (see "ANNUITY
PROVISIONS"). To compensate the Company for this risk, the Company charges an
annual Income Rider Fee (the "Rider Fee"). On or before Maturity Date, the Rider
Fee is deducted on each certificate anniversary. The amount of the Rider Fee is
equal to [.25%] multiplied by the Income Base in effect on that certificate
anniversary. The fee is withdrawn from each investment option in the same
proportion that the value of the investment account of each investment option
bears to the contract value.
In the case of full withdrawal of contract value on any date other than
the certificate anniversary, the Company will deduct the Rider Fee from the
amount paid upon withdrawal. In the case of a full withdrawal, the Rider Fee is
equal to [.25%] multiplied by the Income Base immediately prior to withdrawal.
The Rider Fee will not be deducted during the annuity period. For purposes of
determining the Rider Fee, annuity payment commencement shall be treated as a
full withdrawal.
The income benefit does not provide contract value or guarantee
performance of any investment option. Because this benefit is based on
conservative actuarial factors, the level of lifetime income that it guarantees
may often be less than the level that would be provided by application of
contract value at current annuity factors. Therefore, the income benefit should
be regarded as a safety net. As described above under "Income Benefit,"
withdrawals will reduce the income benefit.
CHARGES AND DEDUCTIONS
Charges and deductions are assessed against purchase payments, contract
values or annuity payments. Currently, there are no deductions made from
purchase payments, except for premium taxes in certain states. In addition,
there are deductions from and expenses paid out of the assets of the Trust
portfolios that are described in the accompanying prospectus of the Trust.
WITHDRAWAL CHARGES
If a withdrawal is made from the contract by an owner before the
maturity date of the certificate, a withdrawal charge (contingent deferred sales
charge) may be assessed against amounts withdrawn attributable to purchase
payments that have been in the contract for the owner less than seven complete
years. There is never a withdrawal charge with respect to earnings accumulated
for an owner in the contract, certain other free withdrawal amounts described
below or purchase payments by or on behalf of the owner that have been in the
contract more than seven complete years. In no event may the total withdrawal
charges exceed 6% of the total purchase payments made by or on behalf of the
owner. The amount of the withdrawal charge and when it is assessed is discussed
below:
1. Each withdrawal is allocated first to the "free withdrawal amount"
and second to "unliquidated purchase payments" for each certificate. In any
certificate year, the free withdrawal amount for that year is the greater of (1)
the excess of the owner's contract value on the date of withdrawal over the
unliquidated purchase payments made by or on behalf of the owner (the
accumulated earnings on the owner's certificate) or (2) the excess of (i) over
(ii), where (i) is 10% of total purchase payments made by or on behalf of the
owner and (ii) is all prior partial withdrawals made by or on behalf of the
owner in that certificate year. Withdrawals allocated to the free withdrawal
amount may be withdrawn without the imposition of a withdrawal charge.
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<PAGE> 44
2. If an owner makes a withdrawal for an amount in excess of the free
withdrawal amount, the excess will be allocated to purchase payments made by or
on behalf of the owner which will be liquidated on a first-in first-out basis.
On any withdrawal request, the Company will liquidate purchase payments made by
or on behalf of the owner equal to the amount of the withdrawal request which
exceeds the free withdrawal amount in the order such purchase payments were
made: the oldest unliquidated purchase payment first, the next purchase payment
second, etc. until all purchase payments have been liquidated.
3. Each purchase payment or portion thereof liquidated in connection
with a withdrawal request is subject to a withdrawal charge based on the length
of time the purchase payment has been in the contract. The amount of the
withdrawal charge is calculated by multiplying the amount of the purchase
payment being liquidated by the applicable withdrawal charge percentage obtained
from the table below.
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN WITHDRAWAL CHARGE
CONTRACT PERCENTAGE
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
The total withdrawal charge will be the sum of the withdrawal charges
for the purchase payments being liquidated.
4. The withdrawal charge is deducted from the owner's contract value
remaining after the owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. In
the case of a partial withdrawal, the amount requested from an investment
account may not exceed the value of that investment account less any applicable
withdrawal charge plus market value charge.
5. There is generally no withdrawal charge on distributions made as a
result of the death of the owner or, if applicable, annuitant (see "DEATH
BENEFIT BEFORE MATURITY DATE - Amount of Death Benefit") and no withdrawal
charges are imposed on the maturity date if the owner annuitizes as provided in
the contract.
The amount collected from the withdrawal charge will be used to
reimburse the Company for the compensation paid to cover selling concessions to
broker-dealers, preparation of sales literature and other expenses related to
sales activity.
For examples of calculation of the withdrawal charge, see Appendix A.
See Appendix D for information on withdrawal charges applicable to certain
contracts which are no longer being issued (Ven 8 contracts). Withdrawals from
the fixed account investment options may be subject to a market value charge in
addition to the withdrawal charge described above (see "FIXED ACCOUNT INVESTMENT
OPTIONS"). The Company reserves the right to modify the withdrawal charge as to
certificates issued after the effective date of a change specified in written
notice to the group holder.
REDUCTION OR ELIMINATION OF WITHDRAWAL CHARGES
The amount of the withdrawal charge on a contract or certificate may be
reduced or eliminated when some or all of the certificates are to be sold to a
group of individuals in such a manner that results in savings of sales expenses.
The entitlement to such a reduction in the withdrawal charge will be determined
by the Company in the following manner:
1. The size and type of group to which the sales are to be made will be
considered. Generally, sales expenses for a larger group are smaller than for a
smaller group because of the ability to implement large numbers of sales with
fewer sales contacts.
2. The total amount of purchase payments to be received will be
considered. Per dollar sales expenses are likely to be less
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<PAGE> 45
on larger purchase payments than on smaller ones.
3. Any prior or existing relationship with the Company will be
considered. Certificate sales expenses are likely to be less when there is a
prior or existing relationship because of the likelihood of implementing more
sales with fewer sales contacts.
4. The level of commissions paid to selling broker-dealers will be
considered. Certain broker-dealers may offer certificates in connection with
financial planning programs offered on a fee for service basis. In view of the
financial planning fees, such broker-dealers may elect to receive lower
commissions for sales of the certificates, thereby reducing the Company's sales
expenses.
5. There may be other circumstances of which the Company is not
presently aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, it is determined that
there will be a reduction in sales expenses, the Company will provide a
reduction in the withdrawal charge. The withdrawal charge will be eliminated
when a certificate is issued to an officer, director or employee (or a relative
thereof) of the Company, Manulife, the Trust or any of their affiliates. In no
event will reduction or elimination of the withdrawal charge be permitted where
such reduction or elimination will be unfairly discriminatory to any person.
Withdrawal Charge Waiver in Connection with Clinton's Administration's
Fiscal Year 1999 Budget Proposal
The Clinton administration's Fiscal Year 1999 Budget proposal dated
February 2, 1998 (the "1999 Budget Proposal") contains proposals to change the
taxation of non-qualified annuity contracts (see "FEDERAL TAX MATTERS -
Introduction."). While it is uncertain whether the 1999 Budget Proposal will
become law, if the 1999 Budget Proposal is enacted substantially as proposed,
withdrawal charges will be waived on purchase payments made on or after February
2, 1998, provided such amounts are withdrawn within 60 days of the date that the
1999 Budget Proposal becomes law. The Company reserves the right to terminate
this withdrawal charge waiver at any time. If the waiver is terminated, purchase
payments made from February 2, 1998 to the termination date of the waiver will
not be subject to withdrawal charge as provided above. This waiver does not
affect a contract owner's right to cancel a contract within the ten day right to
review period (see "OTHER CONTRACT PROVISIONS -- Ten Day Right to Review").
Withdrawals may be subject to income tax to the extent of earnings under the
contract and, if made prior to age 59-1/2, generally will be subject to a 10%
IRS penalty tax (see "FEDERAL TAX MATTERS - Taxation of Partial and Full
Withdrawals").
ADMINISTRATION FEES
Except as noted below, the Company will deduct each year an annual
administration fee of $30 from each owner's contract value as partial
compensation for the cost of providing all administrative services attributable
to the contracts and certificates and the operations of the Variable Account and
the Company in connection with the contracts and certificates. However, if prior
to the maturity date the contract value is greater than or equal to $100,000 at
the time of the fee's assessment, the fee will be waived. Prior to the maturity
date, this administration fee is deducted on the last day of each certificate
year. It is withdrawn from each investment option in the same proportion that
the value of such investment option bears to the sum of the investments options.
If an owner's entire contract value is withdrawn on other than the last day of
any certificate year, the $30 administration fee will be deducted from the
amount paid. During the annuity period, the fee is deducted on a pro-rata basis
from each annuity payment. See Appendix D for the administration fee applicable
to certain contracts which are no longer being issued (Ven 8 contracts).
A daily charge in an amount equal to 0.15% of the value of each
variable investment account on an annual basis is also deducted from each
sub-account to reimburse the Company for administrative expenses. This
asset-based administrative charge will not be deducted from the fixed account
investment options. The charge will be reflected in each owner's contract value
as a proportionate reduction in the value of each variable investment account.
Because this portion of the administrative fee is a percentage of assets rather
than a flat amount, larger contract values will in effect pay a higher
proportion of this portion of the administrative expense than smaller contract
values.
The Company does not expect to recover from such fees any amount in
excess of its accumulated administrative expenses. Even though administrative
expenses may increase, the Company guarantees that it will not increase the
amount of the administration fees as to any certificates issued prior to the
effective date of the Company's modification of such fees. There is no necessary
relationship between the amount of the administrative charge imposed on a given
certificate and the amount of the expense
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<PAGE> 46
that may be attributed to that certificate.
REDUCTION OR ELIMINATION OF ANNUAL ADMINISTRATION FEE
The amount of the annual administration fee on a contract or a
certificate may be reduced or eliminated when some or all of the certificates
are to be sold to a group of individuals in such a manner that results in
savings of administration expenses. The entitlement to such a reduction or
elimination of the administration charges will be determined by the Company in
the following manner:
1. The size and type of group to which administrative services are to
be provided will be considered.
2. The total amount of purchase payments to be received will be
considered.
3. There may be other circumstances of which the Company is not
presently aware, which could result in reduced administrative expense.
If, after consideration of the foregoing factors, it is determined that
there will be a reduction or elimination of administration expenses, the Company
will provide a reduction in the annual administration fee. In no event will
reduction or elimination of the administration fees be permitted where such
reduction or elimination will be unfairly discriminatory to any person. The
Company may waive all or a portion of the administration fee when a certificate
is issued to an officer, director or employee, or relative thereof, of the
Company, Manulife, the Trust or any of their affiliates.
MORTALITY AND EXPENSE RISK CHARGE
The mortality risk assumed by the Company is the risk that annuitants
may live for a longer period of time than estimated. The Company assumes this
mortality risk by virtue of annuity rates incorporated into the contract which
cannot be changed with respect to existing certificates. This assures each
annuitant that his longevity will not have an adverse effect on the amount of
annuity payments. Also, the Company guarantees that if an owner dies before the
maturity date, it will pay a death benefit (see "DEATH BENEFIT BEFORE MATURITY
DATE"). The expense risk assumed by the Company is the risk that the
administration charges or withdrawal charge may be insufficient to cover actual
expenses.
To compensate it for assuming these risks, the Company currently
deducts from each of the sub-accounts a daily charge in an amount equal to 1.25%
of the value of the variable investment accounts on an annual basis, consisting
of .8% for the mortality risk and .45% for the expense risk. The charge will be
reflected in each owner's contract value as a proportionate reduction in the
value of each variable investment account. The rate of the mortality and expense
risk charge can be increased, but only as to certificates issued after the
effective date of the increase and upon 60 days' prior written notice to the
group holder. The Company may issue contracts and certificates with a mortality
or expense risk charge at rates less than those set out above, if it concludes
that the mortality or expense risks of the groups involved are less than the
risks it has determined for persons for whom the contracts and certificates have
been generally designed. If the charge is insufficient to cover the actual cost
of the mortality and expense risks undertaken, the Company will bear the loss.
Conversely, if the charge proves more than sufficient, the excess will be profit
to the Company and will be available for any proper corporate purpose including,
among other things, payment of distribution expenses. On the Period Certain Only
Annuity Option, where an owner elects benefits payable on a variable basis, the
mortality and expense risk charge is assessed although the Company bears only
the expense risk and not any mortality risk. The mortality and expense risk
charge is not assessed against the fixed account investment options.
TAXES
The Company reserves the right to charge, or provide for, certain taxes
against purchase payments (either at the time of payment or liquidation),
contract values, payment of death benefit or annuity payments. Such taxes may
include premium taxes or other taxes levied by any government entity which the
Company determines to have resulted from the (i) establishment or maintenance of
the Variable Account, (ii) receipt by the Company of purchase payments, (iii)
issuance of the contracts or certificates, or (iv) commencement or continuance
of annuity payments under the contracts or certificates. In addition, the
Company will withhold taxes to the extent required by applicable law.
Except for residents of those states which apply premium taxes upon
receipt of purchase payments, premium taxes will
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be deducted from the contract value used to provide for fixed or variable
annuity payments. For residents of those states which apply premium taxes upon
receipt of purchase payments, premium taxes will be deducted upon payment of any
withdrawal benefits, upon any annuitization, or payment of death benefits. The
amount deducted will depend on the premium tax assessed in the applicable state.
State premium taxes currently range from 0% to 3.5% depending on the
jurisdiction and the tax status of the contract and are subject to change by the
legislature or other authority (see "APPENDIX B: STATE PREMIUM TAXES").
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion of the Federal income tax treatment of the
contract or certificate is not exhaustive, does not purport to cover all
situations, and is not intended as tax advice. The Federal income tax treatment
of a group annuity contract is unclear in certain circumstances, and a qualified
tax advisor should always be consulted with regard to the application of law to
individual circumstances. This discussion is based on the Code, Treasury
Department regulations, and interpretations existing on the date of this
Prospectus. These authorities, however, are subject to change by Congress, the
Treasury Department, and judicial decisions.
The 1999 Budget Proposal contains proposals to change the taxation of
non-qualified annuity contracts. The 1999 Budget Proposal proposes to tax
exchanges of variable contracts for fixed contracts, exchanges of fixed
contracts for variable contracts, exchanges of variable contracts for variable
contracts and reallocation within variable contracts. Currently, owners of
annuity contracts may exchange their contracts for another annuity without
currently incurring tax, and reallocations among investment options are not
treated as a taxable exchange. In addition, the 1999 Budget Proposal proposes
that the contract owner's basis in annuity contracts be reduced annually by
1.25% of the cash value for purposes of determining the taxable gain on
surrenders, withdrawals, and all annuity payments except those made for life at
the rates guaranteed in the contract. Currently, basis in annuity contracts is
not reduced by this amount. The 1999 Budget Proposal states that it generally
would apply only to contracts issued after the date of first congressional
committee action, but that the new exchange and reallocation rules would also
apply to any existing contract that was materially changed. While it is
uncertain whether the 1999 Budget Proposal will become law, if the 1999 Budget
Proposal is enacted substantially as proposed, withdrawal charges will be waived
(see "CHARGES AND DEDUCTIONS Reduction or Elimination of Withdrawal Charge").
This discussion does not address state or local tax consequences
associated with the purchase of a contract or certificate. In addition, THE
COMPANY MAKES NO GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR
LOCAL -- OF ANY CONTRACT OR CERTIFICATE OR OF ANY TRANSACTION INVOLVING A
CONTRACT OR CERTIFICATE.
THE COMPANY'S TAX STATUS
The Company is taxed as a life insurance company under the Code. Since
the operations of the Variable Account are a part of, and are taxed with, the
operations of the Company, the Variable Account is not separately taxed as a
"regulated investment company" under the Code. Under existing Federal income tax
laws, investment income and capital gains of the Variable Account are not taxed
to the extent they are applied under a contract. The Company does not anticipate
that it will incur any Federal income tax liability attributable to such income
and gains of the Variable Account, and therefore the Company does not intend to
make provisions for any such taxes. If the Company is taxed on investment income
or capital gains of the Variable Account, then the Company may impose a charge
against the Variable Account in order to make provisions for such taxes.
TAXATION OF ANNUITIES IN GENERAL
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in an owner's contract value is generally not taxable to the owner or
annuitant until received, either in the form of annuity payments as contemplated
by the certificate, or in some other form of distribution. However, certain
requirements must be satisfied in order for this general rule to apply,
including: (1) the certificate must be owned by an individual (or treated as
owned by an individual), (2) the investments of the Variable Account must be
"adequately diversified" in accordance with Treasury Department regulations, (3)
the Company, rather than the owner, must be
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considered the owner of the assets of the Variable Account for Federal tax
purposes, and (4) the certificate must provide for appropriate amortization,
through annuity payments, of the certificate's purchase payments and earnings,
e.g., the maturity date must not occur at too advanced an age.
Non-Natural Owners. As a general rule, deferred annuity contracts (or
certificates) held by "non-natural persons" such as a corporation, trust or
other similar entity, as opposed to a natural person, are not treated as annuity
contracts for Federal income tax purposes. The investment income on such
contracts (or certificates) is taxed as ordinary income that is received or
accrued by the owner during the taxable year. There are several exceptions to
this general rule for non-natural owners. First, contracts will generally be
treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as an agent for a natural person. Thus, if a
group annuity contract is held by a trustee, certificate owners who are
individuals should be treated as owning an annuity contract for Federal tax
purposes. However, this special exception will not apply in the case of any
employer who is the nominal owner of an annuity contract under a non-qualified
deferred compensation arrangement for its employees.
In addition, exceptions to the general rule for non-natural owners will
apply with respect to (1) certificates acquired by an estate of a decedent by
reason of the death of the decedent, (2) certain qualified contracts or
certificates, (3) certain annuities purchased by employers upon the termination
of certain qualified plans, (4) certain annuities used in connection with
structured settlement agreements, and (5) annuities purchased with a single
premium when the annuity starting date (as defined in the tax law) is no later
than a year from purchase of the annuity and substantially equal periodic
payments are made, not less frequently than annually, during the annuity period.
Loss of Interest Deduction Where Certificates are Held by or for the
Benefit of Certain Non-Natural Persons. In the case of certificates issued after
June 8, 1997 to a non-natural taxpayer (such as a corporation or a trust), or
held for the benefit of such an entity, recent changes in the tax law may result
in otherwise deductible interest no longer being deductible by the entity,
regardless of whether the interest relates to debt used to purchase or carry the
certificate. However, this interest deduction disallowance does not affect
certificates where the income on such certificates is treated as ordinary income
that is received or accrued by the owner during the taxable year. Entities that
are considering purchasing the certificate, or entities that will be
beneficiaries under a certificate, should consult a tax advisor.
Diversification Requirements. For a contract to be treated as an
annuity contract for Federal income tax purposes, the investments of the
Variable Account must be "adequately diversified" in accordance with Treasury
Department regulations. The Secretary of the Treasury has issued regulations
which prescribe standards for determining whether the investments of the
Variable Account are "adequately diversified." If the Variable Account failed to
comply with these diversification standards, a certificate would not be treated
as an annuity contract for Federal income tax purposes and an owner would be
taxable currently on the excess of his or her contract value over the premiums
he or she paid for the certificate.
Although the Company does not control the investments of the Trust, it
expects that the Trust will comply with such regulations so that the Variable
Account will be considered "adequately diversified."
Ownership Treatment. In certain circumstances, a variable annuity owner
may be considered the owner, for Federal income tax purposes, of the assets of
the separate account used to support his or her contract. In those
circumstances, income and gains from such separate account assets would be
includible in the variable annuity owner's gross income. The IRS has stated in
published rulings that a variable annuity owner will be considered the owner of
separate account assets if the owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets. In
addition, the Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts [of a separate account] without being
treated as owners of the underlying assets." As of the date of this Prospectus,
no such guidance has been issued.
The ownership rights under this certificate are similar to, but
different in certain respects from, those described by the IRS in rulings in
which it was determined that policyholders were not owners of separate account
assets. For example, an owner under this certificate has the choice of many more
investment options to which to allocate premiums and contract values, and may be
able to transfer among investment options more frequently than in such rulings.
These differences could result in the owner being treated as the owner of the
assets of the Variable Account and thus subject to current taxation on the
income and gains from those
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assets. In addition, the Company does not know what standards will be set forth
in the regulations or rulings which the Treasury Department has stated it
expects to issue. The Company therefore reserves the right to modify the
contract and certificate as necessary to attempt to prevent owners from being
considered the owners of the assets of the Variable Account.
Delayed Maturity Dates. If the maturity date occurs (or is scheduled to
occur) at a time when the annuitant has reached an advanced age, e.g., past age
85, it is possible that the certificate would not be treated as an annuity for
Federal income tax purposes. In that event, the income and gains under the
certificate could be currently includible in the owner's income.
The remainder of this discussion assumes that the contract will be
treated as an annuity contract for Federal income tax purposes and that the
Company will be treated as the owner of the Variable Account assets.
TAXATION OF PARTIAL AND FULL WITHDRAWALS
In the case of a partial withdrawal, amounts received are includible in
income to the extent the owner's contract value before the withdrawal exceeds
his or her "investment in the contract." In the case of a full withdrawal,
amounts received are includible in income to the extent they exceed the
"investment in the contract." For these purposes the investment in the contract
at any time equals the total of the purchase payments made under the certificate
to that time (to the extent such payments were neither deductible when made nor
excludible from income as, for example, in the case of certain contributions to
qualified plans) less any amounts previously received from the certificate which
were not included in income.
Other than in the case of certain qualified contracts or certificates,
any amount received as a loan under a contract, and any assignment or pledge (or
agreement to assign or pledge) any portion of the contract value, is treated as
a withdrawal of such amount or portion. (Loans, assignments and pledges are
permitted only in limited circumstances under qualified contracts.) The
investment in the contract is increased by the amount includible in income with
respect to such assignment or pledge, though it is not affected by any other
aspect of the assignment or pledge (including its release). If an individual
transfers his or her interest in a certificate without adequate consideration to
a person other than the owner's spouse (or to a former spouse incident to
divorce), the owner will be taxed on the difference between his or her contract
value and the "investment in the contract" at the time of transfer. In such
case, the transferee's investment in the contract will be increased to reflect
the increase in the transferor's income.
The certificate provides a death benefit that in certain circumstances
may exceed the greater of the purchase payments made by or on behalf of an owner
and the contract value. As described elsewhere in this Prospectus, the Company
imposes certain charges with respect to the death benefit. It is possible that
those charges (or some portion thereof) could be treated for Federal income tax
purposes as a partial withdrawal from the certificate.
There may be special income tax issues present in situations where the
owner and the annuitant are not the same person and are not married to one
another. A tax advisor should be consulted in those situations.
TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each annuity payment taxable as ordinary
income is equal to the excess of the payment over the exclusion amount. In the
case of variable annuity payments, the exclusion amount is the "investment in
the contract" (defined above) allocated to the variable annuity option, adjusted
for any period certain or refund feature, when payments begin to be made divided
by the number of payments expected to be made (determined by Treasury Department
regulations which take into account the annuitant's life expectancy and the form
of annuity benefit selected). In the case of fixed annuity payments, the
exclusion amount is the amount determined by multiplying (1) the payment by (2)
the ratio of the investment in the contract allocated to the fixed annuity
option, adjusted for any period certain or refund feature, to the total expected
value of annuity payments for the term of the contract (determined under
Treasury Department regulations). A simplified method of determining the taxable
portion of annuity payments applies to certificates issued in connection with
certain qualified plans other than IRAs.
Once the total amount of the investment in the contract is excluded
using these ratios, annuity payments will be fully taxable. If annuity payments
cease because of the death of the annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount generally will
be allowed as a deduction to the annuitant in his or her last taxable year.
TAXATION OF DEATH BENEFIT PROCEEDS
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Amounts may be distributed from a certificate because of the death of
an owner or an annuitant. Prior to the maturity date, such death benefit
proceeds are includible in income as follows: (1) if distributed in a lump sum,
they are taxed in the same manner as a full withdrawal, as described above, or
(2) if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above. After the maturity date, where a
guaranteed period exists under an annuity option and the annuitant dies before
the end of that period, payments made to the beneficiary for the remainder of
that period are includible in income as follows: (1) if received in a lump sum,
they are includible in income to the extent that they exceed the unrecovered
investment in the contract at that time, or (2) if distributed in accordance
with the existing annuity option selected, they are fully excludable from income
until the remaining investment in the contract is deemed to be recovered, and
all annuity payments thereafter are fully includible in income.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any payment from a
non-qualified certificate unless the payment is: (a) received on or after the
owner reaches age 59-1/2; (b) attributable to the owner becoming disabled (as
defined in the tax law); (c) made to a beneficiary on or after the death of the
owner or, if the owner is not an individual, on or after the death of the
primary annuitant (as defined in the tax law); (d) made as a series of
substantially equal periodic payments (not less frequently than annually) for
the life (or life expectancy) of the annuitant or for the joint lives (or joint
life expectancies) of the annuitant and designated beneficiary (as defined in
the tax law), (e) made under a certificate purchased with a single premium when
the annuity starting date (as defined in the tax law) is no later than a year
from purchase of the certificate and substantially equal periodic payments are
made, not less frequently than annually, during the annuity period; or (f) made
with respect to certain annuities issued in connection with structured
settlement agreements. (A similar penalty tax, applicable to distributions from
certain qualified contracts, is discussed below.)
AGGREGATION OF CONTRACTS
In certain circumstances, the amount of an annuity payment or a
withdrawal from a certificate that is includible in income may be determined by
combining some or all of the non-qualified certificates and annuity contracts
owned by an individual. For example, if a person purchases a certificate offered
by this Prospectus and also purchases at approximately the same time an
immediate annuity, the IRS may treat the two contracts as one contract. In
addition, if a person purchases two or more deferred annuity contracts or
certificates from the same insurance company (or its affiliates) during any
calendar year, all such contracts will be treated as one contract. The effects
of such aggregation are not clear; however, it could affect the amount of a
withdrawal or an annuity payment that is taxable and the amount which might be
subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
The certificates are also designed for use in connection with certain
types of retirement plans which receive favorable treatment under the Code.
Numerous special tax rules apply to the participants in such qualified plans and
to the contracts used in connection with such qualified plans. Therefore, no
attempt is made in this Prospectus to provide more than general information
about use of the certificate with the various types of qualified plans.
The tax rules applicable to qualified plans vary according to the type
of plan and the terms and conditions of the plan itself. For example, for both
withdrawals and annuity payments under certain qualified contracts, there may be
no "investment in the contract" and the total amount received may be taxable.
Also, loans from qualified contracts (or certificates), where allowed, are
subject to a variety of limitations, including restrictions as to the amount
that may be borrowed, the duration of the loan, and the manner in which the loan
must be repaid. (Owners should always consult their tax advisors and retirement
plan fiduciaries prior to exercising their loan privileges.) Both the amount of
the contribution that may be made, and the tax deduction or exclusion that the
owner may claim for such contribution, are limited under qualified plans. If
this certificate is used in connection with a qualified plan, the owner and
annuitant must be the same individual. If a co-annuitant is named, all
distributions made while the annuitant is alive must be made to the annuitant.
Also, if a co-annuitant is named who is not the annuitant's spouse, the annuity
options which are available may be limited, depending on the difference in ages
between the annuitant and co-annuitant. Furthermore, the length of any guarantee
period may be limited in some circumstances to satisfy certain minimum
distribution requirements under the Code.
In addition, special rules apply to the time at which distributions
must commence and the form in which the distributions must be paid. For example,
failure to comply with minimum distribution requirements applicable to qualified
plans will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds
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the actual distribution from the qualified plan. In the case of IRAs,
distributions of minimum amounts (as specified in the tax law) must generally
commence by April 1 of the calendar year following the calendar year in which
the owner attains age 70-1/2. In the case of certain other qualified plans,
distributions of such minimum amounts generally must commence by the later of
this date or April 1 of the calendar year following the calendar year in which
the employee retires.
There is also a 10% penalty tax on the taxable amount of any payment
from certain qualified contracts (but not Section 457 plans). (The amount of the
penalty tax is 25% of the taxable amount of any payment received from a "SIMPLE
retirement account" during the 2-year period beginning on the date the
individual first participated in any qualified salary reduction agreement (as
defined in the tax law) maintained by the individual's employer.) There are
exceptions to this penalty tax which vary depending on the type of qualified
plan. In the case of an "Individual Retirement Annuity" or an "IRA", including a
"SIMPLE IRA," exceptions provide that the penalty tax does not apply to a
payment (a) received on or after the owner reaches age 59-1/2, (b) received on
or after the owner's death or because of the owner's disability (as defined in
the tax law), or (c) made as a series of substantially equal periodic payments
(not less frequently than annually) for the life (or life expectancy) of the
owner or for the joint lives (or joint life expectancies) of the owner and
designated beneficiary (as defined in the tax law). These exceptions, as well as
certain others not described herein, generally apply to taxable distributions
from other qualified plans (although, in the case of plans qualified under
Sections 401 and 403, exception "c" above for substantially equal periodic
payments applies only if the owner has separated from service). In addition, the
penalty tax does not apply to certain distributions from IRAs taken after
December 31, 1997 which are used for qualified first time home purchases or for
higher education expenses. Special conditions must be met to qualify for these
two exceptions to the penalty tax. Owners wishing to take a distribution from an
IRA for these purposes should consult their tax advisor.
When issued in connection with a qualified plan, a contract and
certificate will be amended as generally necessary to conform to the
requirements of the type of plan. However, owners, annuitants, and beneficiaries
are cautioned that the rights of any person to any benefits under qualified
plans may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the contract and certificate. In
addition, the Company shall not be bound by terms and conditions of qualified
plans to the extent such terms and conditions contradict the contract or
certificate, unless the Company consents.
QUALIFIED PLAN TYPES
Following are brief descriptions of various types of qualified plans in
connection with which the Company may issue a certificate.
Individual Retirement Annuities. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an "IRA." IRAs are subject to limits on the amounts that may be contributed, the
persons who may be eligible and on the time when distributions may commence.
Also, distributions from certain other types of qualified retirement plans may
be "rolled over" on a tax-deferred basis into an IRA. The certificate may not,
however, be used in connection with an "Education IRA" under Section 530 of the
Code.
IRAs generally may not provide life insurance, but they may provide a
death benefit that equals the greater of the premiums paid and the contract's
cash value. The contract provides a death benefit that in certain circumstances
may exceed the greater of the purchase payments and the contract value. It is
possible that the certificate's death benefit could be viewed as providing life
insurance coverage with the result that the certificate would not be viewed as
satisfying the requirements of an IRA.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. As discussed above
(see "Individual Retirement Annuities"), there is some uncertainty regarding the
tax treatment of the certificate's death benefit for purposes of the tax rules
governing IRAs (which would include SEP-IRAs). Employers intending to use the
contract or certificates in connection with such plans should seek competent
advice.
SIMPLE IRAs. Section 408(p) of the Code permits certain small employers
to establish "SIMPLE retirement accounts," including SIMPLE IRAs, for their
employees. Under SIMPLE IRAs, certain deductible contributions are made by both
employees and employers. SIMPLE IRAs are subject to various requirements,
including limits on the amounts that may be contributed, the persons who may be
eligible, and the time when distributions may commence. As discussed above (see
"Individual Retirement Annuities"), there is some uncertainty regarding the
proper characterization of the certificate's death benefit for purposes of the
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tax rules governing IRAs (which would include SIMPLE IRAs). Employees intending
to use the contract in connection with such plans should seek competent advice.
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
contract or certificates in order to provide benefits under the plans. The
contract provides a death benefit that in certain circumstances may exceed the
greater of the purchase payments made by or on behalf of an owner and the
contract value. It is possible that such death benefit could be characterized as
an incidental death benefit. There are limitations on the amount of incidental
death benefits that may be provided under pension and profit sharing plans. In
addition, the provision of such benefits may result in currently taxable income
to participants. Employers intending to use the contract or certificates in
connection with such plans should seek competent advice.
Tax-Sheltered Annuities. Section 403(b) of the Code permits public
school employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as "tax-sheltered
annuities." Purchasers of the contracts or certificates for such purposes should
seek competent advice as to eligibility, limitations on permissible amounts of
purchase payments and other tax consequences associated with the contracts or
certificates. In particular, purchasers should consider that the contract
provides a death benefit that in certain circumstances may exceed the greater of
the purchase payments made by or on behalf of an owner and the contract value.
It is possible that such death benefit could be characterized as an incidental
death benefit. If the death benefit were so characterized, this could result in
currently taxable income to purchasers. In addition, there are limitations on
the amount of incidental death benefits that may be provided under a
tax-sheltered annuity. Even if the death benefit under the contract were
characterized as an incidental death benefit, it is unlikely to violate those
limits unless the purchaser also purchases a life insurance contract as part of
his or her tax-sheltered annuity plan.
Tax-sheltered annuity contracts must contain restrictions on
withdrawals of (i) contributions made pursuant to a salary reduction agreement
in years beginning after December 31, 1988, (ii) earnings on those
contributions, and (iii) earnings after 1988 on amounts attributable to salary
reduction contributions (and earnings on those contributions) held as of the
last day of the year beginning before January 1, 1989. These amounts can be paid
only if the employee has reached age 59-1/2, separated from service, died, or
become disabled (within the meaning of the tax law), or in the case of hardship
(within the meaning of the tax law). Amounts permitted to be distributed in the
event of hardship are limited to actual contributions; earnings thereon cannot
be distributed on account of hardship. Amounts subject to the withdrawal
restrictions applicable to Section 403(b)(7) custodial accounts may be subject
to more stringent restrictions. (These limitations on withdrawals do not apply
to the extent the Company is directed to transfer some or all of the contract
value to the issuer of another tax-sheltered annuity or into a Section 403(b)(7)
custodial account.)
Deferred Compensation Plans of State and Local Governments and
Tax-Exempt Organizations. Section 457 of the Code permits employees of state and
local governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants in
an eligible deferred compensation plan. Generally, a contract or certificate
purchased by a state or local government or a tax-exempt organization will not
be treated as an annuity contract for Federal income tax purposes. Those who
intend to use the contracts or certificates in connection with such plans should
seek competent advice.
Roth IRAs. Recently enacted Section 408A of the Code permits eligible
individuals to contribute to a type of IRA known as a "Roth IRA." Roth IRAs
differ from other IRAs in several respects. Among the differences is that,
although contributions to a Roth IRA are not deductible, "qualified
distributions" from a Roth IRA will be excludable from income. Additionally, the
eligibility and mandatory distribution requirements for Roth IRAs differ from
non-Roth IRAs. Furthermore, a rollover may be made to a Roth IRA only if it is a
"qualified rollover contribution." A "qualified rollover contribution" is a
rollover contribution to a Roth IRA from another Roth IRA or from a non-Roth
IRA, but only if such rollover contribution meets the rollover requirements for
IRAs under Section 408(d)(3) of the Code. In the case of a qualified rollover
contribution or a transfer from a non-Roth IRA to a Roth IRA, any portion of the
amount rolled over which would be includible in gross income were it not part of
a qualified rollover contribution or a nontaxable transfer will be includible in
gross income. However, the 10 percent penalty tax on premature distributions
generally will not apply.
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All or part of amounts in a non-Roth IRA may be converted into a Roth
IRA. Such a conversion can be made without taking an actual distribution from
the IRA. For example, an individual may make a conversion by notifying the IRA
issuer or trustee, whichever is applicable. The conversion of an IRA to a Roth
IRA is a special type of qualified rollover distribution. Hence, the IRA
participant must be eligible to make a qualified rollover distribution in order
to convert an IRA to a Roth IRA. A conversion typically will result in the
inclusion of some or all of the IRA value in gross income, as described above.
Persons with adjusted gross incomes in excess of $100,000 or who are married and
file a separate return are not eligible to make a qualified rollover
contribution or a transfer in a taxable year from a non-Roth IRA to a Roth IRA.
Any "qualified distribution" from a Roth IRA is excludible from gross
income. A "qualified distribution" is a payment or distribution which satisfies
two requirements. First, the payment or distribution must be (a) made after the
owner attains age 59-1/2, (b) made after the owner's death, (c) attributable to
the owner being disabled, or (d) a qualified first-time homebuyer distribution
within the meaning of Section 72(t)(2)(F) of the Code. Second, the payment or
distribution must be made in a taxable year that is at least five years after
(a) the first taxable year for which a contribution was made to any Roth IRA
established for the owner, or (b) in the case of a payment or distribution
properly allocable to a qualified rollover contribution from a non-Roth IRA (or
income allocable thereto), the taxable year in which the rollover contribution
was made. A distribution from a Roth IRA which is not a qualified distribution
is generally taxed in the same manner as a distribution from non-Roth IRAs.
Distributions from a Roth IRA need not commence at age 70-1/2.
As described above (see "Individual Retirement Annuities"), there is
some uncertainty regarding the proper characterization of the contract's death
benefit for purposes of the tax rules governing IRAs (which include Roth IRAs).
Persons intending to use the contract in connection with a Roth IRA should seek
competent advice.
DIRECT ROLLOVERS
If the certificate is used in connection with a retirement plan that is
qualified under Sections 401(a), 403(a), or 403(b) of the Code, any "eligible
rollover distribution" from the certificate will be subject to "direct rollover"
and mandatory withholding requirements. An eligible rollover distribution
generally is any taxable distribution from such qualified plans, excluding
certain amounts such as (i) minimum distributions required under Section
401(a)(9) of the Code, and (ii) certain distributions for life, life expectancy,
or for 10 years or more which are part of a "series of substantially equal
periodic payments."
Under these requirements, Federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from the
certificate, discussed below, the owner cannot elect out of withholding with
respect to an eligible rollover distribution. However, this 20% withholding will
not apply if, instead of receiving the eligible rollover distribution, the
distributee elects to have it directly transferred to certain qualified plans.
Prior to receiving an eligible rollover distribution, a notice will be provided
explaining generally the direct rollover and mandatory withholding requirements
and how to avoid the 20% withholding by electing a direct rollover.
FEDERAL INCOME TAX WITHHOLDING
The Company will withhold and remit to the U.S. government a part of
the taxable portion of each distribution made under a certificate unless the
distributee notifies the Company at or before the time of the distribution that
he or she elects not to have any amounts withheld. In certain circumstances, the
Company may be required to withhold tax, as explained above. The withholding
rates applicable to the taxable portion of periodic annuity payments (other than
eligible rollover distributions) are the same as the withholding rates generally
applicable to payments of wages. In addition, the withholding rate applicable to
the taxable portion of non-periodic payments (including withdrawals prior to the
maturity date and rollovers from non-Roth IRAs to Roth IRAs) is 10%. As
discussed above, the withholding rate applicable to eligible rollover
distributions is 20%.
GENERAL MATTERS
TAX DEFERRAL
The status of the contract as an annuity generally allows all earnings
on the underlying investments to be tax-deferred until withdrawn or until
annuity payments begin (see "FEDERAL TAX MATTERS"). This tax deferred treatment
may be beneficial to owners in building assets in a long-term investment
program.
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<PAGE> 54
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials
quote total return figures. The sub-accounts may advertise both "standardized"
and "non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return figures
may be quoted assuming both (i) redemption at the end of the time period and
(ii) not assuming redemption at the end of the time period. Standardized figures
include total return figures from: (i) the inception date of the sub-account of
the Variable Account which invests in the portfolio or (ii) ten years, whichever
period is shorter. Non-standardized figures include total return numbers from
(i) inception date of the portfolio or (ii) ten years, whichever period is
shorter. Such figures will always include the average annual total return for
recent one year and, when applicable, five and ten year periods and, where less
than ten years, the inception date of the sub-account, in the case of
standardized returns, and the inception date of the portfolio, in the case of
non-standardized returns. Where the period since inception is less than one
year, the total return quoted will be the aggregate return for the period. The
average annual total return is the average annual compounded rate of return that
equates a purchase payment to the market value of such purchase payment on the
last day of the period for which such return is calculated. The aggregate total
return is the percentage change (not annualized) that equates a purchase payment
to the market value of such purchase payment on the last day of the period for
which such return is calculated. For purposes of the calculations it is assumed
that an initial payment of $1,000 is made on the first day of the period for
which the return is calculated. For total return figures quoted for periods
prior to the commencement of the offering of this contract, August 9, 1994,
standardized performance data will be the historical performance of the Trust
portfolio from the date the applicable sub-account of the Variable Account first
became available for investment under other contracts offered by the Company,
adjusted to reflect current contract charges. In the case of non-standardized
performance, performance figures will be the historical performance of the Trust
portfolio from the inception date of the portfolio (or in the case of the Trust
portfolios created in connection with the merger of Manulife Series Fund, Inc.
into the Trust, the inception date of the applicable predecessor Manulife Series
Fund Inc. portfolio) adjusted to reflect current contract charges. Past
performance figures quoted are not intended to indicate future performance of
any sub-account. More detailed information on the computations is set forth in
the Statement of Additional Information.
FINANCIAL STATEMENTS
Financial Statements for the Variable Account and the Company are
contained in the Statement of Additional Information.
ASSET ALLOCATION AND TIMING SERVICES
The Company is aware that certain third parties are offering asset
allocation and timing services in connection with the contracts. In certain
cases the Company has agreed to honor transfer instructions from such asset
allocation and timing services where it has received powers of attorney, in a
form acceptable to it, from the owners participating in the service. THE COMPANY
DOES NOT ENDORSE, APPROVE OR RECOMMEND SUCH SERVICES IN ANY WAY AND
GROUPHOLDERS/OWNERS SHOULD BE AWARE THAT FEES PAID FOR SUCH SERVICES ARE
SEPARATE AND IN ADDITION TO FEES PAID UNDER THE CONTRACTS AND CERTIFICATES.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Section 830.105 of the Texas Government Code permits participants in
the Texas Optional Retirement Program ("ORP") to withdraw their interest in a
variable annuity contract issued under the ORP only upon (1) termination of
employment in the Texas public institutions of higher education, (2) retirement,
(3) death, or (4) the participant's attainment of age 70-1/2. Accordingly,
before any amounts may be distributed from the contract, proof must be furnished
to the Company that one of the four events has occurred. The foregoing
restrictions on withdrawal do not apply in the event a participant in the ORP
transfers his or her contract value to another contract or another qualified
custodian during the period of participation in the ORP. Loans are not available
under contracts issued under the ORP.
DISTRIBUTION OF CONTRACTS
MSS located at 73 Tremont Street, Boston, Massachusetts 02108, a
Delaware limited liability company controlled by the Company, is the principal
underwriter of the contracts and certificates in addition to providing advisory
services to the Trust. MSS is a broker-dealer registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member of
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<PAGE> 55
the National Association of Securities Dealers, Inc. ("NASD"). MSS has entered
into an exclusive promotional agent agreement with Wood Logan Associates, Inc.
("Wood Logan"). Wood Logan is a broker-dealer registered under the 1934 Act and
a member of the NASD. Wood Logan is a wholly owned subsidiary of a holding
company that is 62.5% owned by The Manufacturers Life Insurance Company
(U.S.A.), 22.5% owned by MRL Holding, LLC and 15% owned by the principals of
Wood Logan. Sales of the contracts and certificates will be made by registered
representatives of broker-dealers authorized by MSS to sell them. Such
registered representatives will also be licensed insurance agents of the
Company. Under the promotional agent agreement, Wood Logan will recruit and
provide sales training and licensing assistance to such registered
representatives. In addition, Wood Logan will prepare sales and promotional
materials for the Company's approval. MSS will pay distribution compensation to
selling brokers in varying amounts which under normal circumstances are not
expected to exceed 6% of purchase payments. In addition, MSS may pay trail
compensation after the first certificate year, which under normal circumstances
will not exceed 0.75% of contract value per year. MSS may from time to time pay
additional compensation pursuant to promotional contests. Additionally, in some
circumstances, MSS will provide reimbursement of certain sales and marketing
expenses. MSS will pay the promotional agent for providing marketing support for
the distribution of the contracts and certificates.
OWNER INQUIRIES
All owner inquiries should be directed to the Company's Annuity Service
Office at P.O. Box 9230, Boston, Massachusetts 02205-9230.
CONFIRMATION STATEMENTS
Owners will be sent confirmation statements for certain transactions in
their account. Owners should carefully review these statements to verify their
accuracy. Any mistakes should immediately be reported to the Company's Annuity
Service Office. If the owner fails to notify the Company's Annuity Service
Office of any mistake within 60 days of the mailing of the confirmation
statement, the owner will be deemed to have ratified the transaction.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party
or to which the assets of the Variable Account are subject. Neither the Company
nor MSS are involved in any litigation that is of material importance in
relation to their total assets or that relates to the Variable Account.
OTHER INFORMATION
A registration statement has been filed with the SEC under the 1933 Act
with respect to the variable portion of the contracts discussed in this
Prospectus. Not all the information set forth in the registration statement,
amendments and exhibits thereto has been included in this Prospectus. Statements
contained in this Prospectus or the Statement of Additional Information
concerning the content of the contracts and other legal instruments are only
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the SEC.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information and History ....................................... 3
Performance Data ...................................................... 3
Services
Independent Auditors ........................................... 10
Servicing Agent ................................................ 10
Principal Underwriter .......................................... 10
Cancellation of Certificate .................................... 10
Financial Statements .................................................. 11
</TABLE>
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<PAGE> 56
APPENDIX A
EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE*
Example 1 - Assume a single payment of $50,000 is made by an owner into the
contract and a certificate is issued. No transfers are made, no additional
payments are made and there are no partial withdrawals. The table below
illustrates four examples of the withdrawal charges that would be imposed if the
contract value of the certificate were completely withdrawn. This illustration
is based on hypothetical contract values.
<TABLE>
<CAPTION>
CERTIFICATE HYPOTHETICAL FREE WITHDRAWAL
YEAR CONTRACT WITHDRAWAL PAYMENTS CHARGE
VALUE AMOUNT LIQUIDATED
PERCENT AMOUNT
<S> <C> <C> <C> <C> <C> <C>
2 55,000 5,000(a) 50,000 6% 3,000
4 50,500 5,000(b) 45,500 5% 2,275
6 60,000 10,000(c) 50,000 3% 1,500
8 70,000 20,000(d) 50,000 0% 0
</TABLE>
(a) During any certificate year the free withdrawal amount is the greater
of accumulated earnings, or 10% of the total payments made by the owner
less any prior partial withdrawals in that certificate year. In the
second certificate year the earnings under the contract and 10% of
payments both equal $5,000. Consequently, on total withdrawal $5,000 is
withdrawn free of the withdrawal charge, the entire $50,000 payment is
liquidated and the withdrawal charge is assessed against such
liquidated payment (contract value less free withdrawal amount).
(b) In the example for the fourth certificate year, the accumulated
earnings of $500 is less than 10% of payments, therefore the free
withdrawal amount is equal to 10% of payments ($50,000 X 10% = $5,000)
and the withdrawal charge is only applied to payments liquidated
(contract value less free withdrawal amount).
(c) In the example for the sixth certificate year, the accumulated earnings
of $10,000 is greater than 10% of payments ($5,000), therefore the free
withdrawal amount is equal to the accumulated earnings of $10,000 and
the withdrawal charge is applied to the payments liquidated (contract
value less free withdrawal amount).
(d) There is no withdrawal charge on any payments liquidated that have been
in the contract for at least 7 years.
Example 2 - Assume a single payment of $50,000 is made by an owner into
the contract and a certificate is issued. No transfers are made, no additional
payments are made and there are a series of four partial withdrawals made during
the third certificate year of $2,000, $5,000, $7,000, and $8,000. The
illustration below is based on hypothetical contract values.
<TABLE>
<CAPTION>
HYPOTHETICAL PARTIAL WITHDRAWAL FREE WITHDRAWAL
CONTRACT REQUESTED WITHDRAWAL PAYMENTS CHARGE
VALUE AMOUNT LIQUIDATED
PERCENT AMOUNT
<S> <C> <C> <C> <C> <C> <C>
65,000 2,000 15,000(a) 0 5% 0
49,000 5,000 3,000(b) 2,000 5% 100
52,000 7,000 4,000(c) 3,000 5% 150
44,000 8,000 0(d) 8,000 5% 400
</TABLE>
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<PAGE> 57
(a) The free withdrawal amount during any certificate year is the greater
of the contract value less the unliquidated payments (accumulated
earnings), or 10% of payments less 100% of all prior withdrawals in
that certificate year. For the first example, accumulated earnings of
$15,000 is the free withdrawal amount since it is greater than 10% of
payments less prior withdrawals ($5,000-0). The amount requested
($2,000) is less than the free withdrawal amount so no payments are
liquidated and no withdrawal charge applies.
(b) The contract has negative accumulated earnings ($49,000-$50,000), so
the free withdrawal amount is limited to 10% of payments less all prior
withdrawals. Since $2,000 has already been withdrawn in the current
certificate year, the remaining free withdrawal amount during the third
certificate year is $3,000. The $5,000 partial withdrawal will consist
of $3,000 free of withdrawal charge, and the remaining $2,000 will be
subject to a withdrawal charge and result in payments being liquidated.
The remaining unliquidated payments are $48,000.
(c) The contract has increased in value to $52,000. The unliquidated
payments are $48,000 so the accumulated earnings are $4,000, which is
greater than 10% of payments less prior withdrawals
($5,000-$2,000-$5,000<0). Hence the free withdrawal amount is $4,000.
Therefore, $3,000 of the $7,000 partial withdrawal will be subject to a
withdrawal charge and result in payments being liquidated. The
remaining unliquidated payments are $45,000.
(d) The free withdrawal amount is zero since the contract has negative
accumulated earnings ($44,000-$45,000) and the full 10% of payments
($5,000) has already been withdrawn. The full amount of $8,000 will
result in payments being liquidated subject to a withdrawal charge. At
the beginning of the next certificate year the full 10% of payments
would be available again for withdrawal requests during that year.
* Examples do not illustrate withdrawal charges applicable to Ven 8 contracts.
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<PAGE> 58
APPENDIX B
STATE PREMIUM TAXES
Premium taxes vary according to the state and are subject to change. In
many jurisdictions there is no tax at all. For current information, a tax
advisor should be consulted.
<TABLE>
<CAPTION>
TAX RATE
QUALIFIED NON-QUALIFIED
STATE CONTRACTS CONTRACTS
<S> <C> <C>
CALIFORNIA........................................... .50% 2.35%
DISTRICT OF COLUMBIA................................. 2.25% 2.25%
KENTUCKY............................................. 2.00% 2.00%
MAINE................................................ .00% 2.00%
NEVADA............................................... .00% 3.50%
PUERTO RICO.......................................... 1.00% 1.00%
SOUTH DAKOTA*........................................ .00% 1.25%
WEST VIRGINIA........................................ 1.00% 1.00%
WYOMING.............................................. .00% 1.00%
</TABLE>
* Premium tax paid upon receipt of premium (no tax at annuitization if tax paid
on premium at issue).
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<PAGE> 59
APPENDIX C
For all certificates issued in Pennsylvania the maximum maturity age based upon
the issue age of the annuitant is as follows:
ISSUE AGE MAXIMUM MATURITY AGE
70 or less 85
71-75 86
76-80 88
81-85 90
86-90 93
91-93 96
94-95 98
96-97 99
98-99 101
100-101 102
102 103
103 104
104 105
105 106
It is required that the annuitant exercise a settlement annuity option
no later than the maximum maturity age stated above. For example an annuitant
age 60 at issue must exercise a settlement option prior to the attainment of age
86. The Company will use the issue age of the youngest named annuitant in the
determination of the required settlement option date.
If certificates are issued with annuitants over age 84, a withdrawal
charge could be imposed if they terminate the certificate rather than elect a
settlement option upon attainment of the maximum maturity age. This is a result
of the restrictions by Pennsylvania in combination with the 7-year withdrawal
charge schedule of the certificate.
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<PAGE> 60
APPENDIX D
PRIOR CONTRACTS
Prior to February, 1995, the Company issued a class of variable annuity
contract which is no longer being issued but under which purchase payments may
continue to be made ("prior contract") -- "Ven 8" contracts, which were sold
during the period from September, 1992 until February, 1995.
The principal differences between the contract offered by this
Prospectus and the prior contract relate to the investment options available
under the contracts, a minimum interest rate to be credited for any guarantee
period under the fixed portion of the contracts, the charges made by the Company
and the death benefit provisions.
INVESTMENT OPTIONS
The investment options under the prior contract differ as follows from
the investment options described in this Prospectus. The prior contract does not
allow for investments in the five and seven year fixed account investments
options. The prior contract allows investments in a six year fixed account
investment option not available under the contract offered by this Prospectus.
The prior contract does not provide the Company the authority to offer
additional fixed account investment options for any yearly period from two to
ten years.
FIXED ACCOUNT MINIMUM INTEREST GUARANTEE
The minimum interest rate to be credited for any guarantee period under
the fixed portion of the prior contract is 4%.
MARKET VALUE CHARGE
For purposes of calculating the market value adjustment factor (see
"Fixed Account Investment Options - Market Value Charge") the maximum difference
between "B" and "A" will be 3%. The adjustment factor will never be greater than
2x(A-4%) and never less than zero. ("A" is the guaranteed interest rate on the
investment account. "B" is the guaranteed interest rate available, on the date
the request is processed, for amounts allocated to a new investment account with
the same length of guarantee period as the investment account from which the
amounts are being withdrawn.)
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations: (a) death of the
annuitant; (b) amounts withdrawn to pay fees or charges; (c) amounts applied at
the maturity date to purchase an annuity as provided in the certificate; (d)
amounts withdrawn from three and six year investment accounts within one month
prior to the end of the guarantee period; and (e) amounts withdrawn in any year
that do not exceed 10% of total purchase payments less any prior partial
withdrawals in that certificate year.
Notwithstanding application of the market value adjustment formula, in
no event will the market value charge (i) exceed the earnings attributable to
the amount withdrawn from an investment account, (ii) together with any
withdrawal charges for an investment account be greater than 10% of the amount
transferred or withdrawn, or (iii) reduce the amount payable on withdrawal or
transfer below the amount required under the non-forfeiture laws of the state
with jurisdiction over the contract. The cumulative effect of the market value
and withdrawal charges (or the effect of the withdrawal charge itself) could,
however, result in a owner receiving total withdrawal proceeds of less than the
owner's investment in the contract.
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<PAGE> 61
WITHDRAWAL CHARGES
The withdrawal charges under the prior contract differ from the
withdrawal charges described in this Prospectus.
Prior Contract Withdrawal Charge
The withdrawal charge assessed under the prior contract is as follows:
If a withdrawal is made from the contract by an owner before the
maturity date of the certificate, a withdrawal charge (contingent deferred sales
charge) may be assessed against amounts withdrawn attributable to purchase
payments that have been in the contract for the owner less than six complete
years. There is never a withdrawal charge with respect to earnings accumulated
for an owner in the contract, certain other free withdrawal amounts described
below or purchase payments by or on behalf of the owner that have been in the
contract more than six complete years. In no event may the total withdrawal
charges exceed 6% of the total purchase payments made by or on behalf of the
owner. The amount of the withdrawal charge and when it is assessed is discussed
below:
1. Each withdrawal is allocated first to the "free withdrawal amount"
and second to "unliquidated purchase payments" for each certificate. In any
certificate year, the free withdrawal amount for that year is the greater of (1)
the excess of the owner's contract value on the date of withdrawal over the
unliquidated purchase payments made by or on behalf of the owner (the
accumulated earnings on the owner's certificate) or (2) 10% of total purchase
payments made by or on behalf of the owner less any prior partial withdrawals by
the owner in that certificate year. Withdrawals allocated to the free withdrawal
amount may be withdrawn without the imposition of a withdrawal charge.
2. If an owner makes a withdrawal for an amount in excess of the free
withdrawal amount, the excess will be allocated to purchase payments which will
be liquidated on a first-in first-out basis. On any withdrawal request, the
Company will liquidate purchase payments equal to the amount of the withdrawal
request which exceeds the free withdrawal amount in the order such purchase
payments were made: the oldest unliquidated purchase payment first, the next
purchase payment second, etc. until all purchase payments have been liquidated.
3. Each purchase payment or portion thereof liquidated in connection
with a withdrawal request is subject to a withdrawal charge based on the length
of time the purchase payment has been in the contract. The amount of the
withdrawal charge is calculated by multiplying the amount of the purchase
payment being liquidated by the applicable withdrawal charge percentage obtained
from the table below.
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN CONTRACT PERCENTAGE
0 6%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
The total withdrawal charge will be the sum of the withdrawal charges
for the purchase payments being liquidated.
4. The withdrawal charge is deducted from the owner's contract value
remaining after the owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. In
the case of a partial withdrawal, the amount requested from an investment
account may not exceed the value of that investment account less any applicable
withdrawal charge and market value charge.
5. There is generally no withdrawal charge on distributions made as a
result of the death of the annuitant or owner and no withdrawal charges are
imposed on the maturity date if the owner annuitizes as provided in the
contract.
OTHER CONTRACT CHARGES
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The prior contract makes no provision for the waiver of the $30 annual
administration fee when prior to the maturity date the contract value equals or
exceeds $100,000 at the time of the fee's assessment.
DEATH BENEFIT PROVISIONS
Prior Contract Death Benefit Provisions
The provisions governing the death benefit prior to the maturity date
under the prior contract are as follows:
Death of Annuitant who is not the Owner. The Company will pay the
minimum death benefit, less any debt, to the beneficiary if the owner is not the
annuitant and the annuitant dies before the owner and before the maturity date.
If there is more than one such annuitant, the minimum death benefit will be paid
on the death of the last surviving co-annuitant. The minimum death benefit will
be paid either as a lump sum or in accordance with any of the annuity options
available under the contract. An election to receive the death benefit under an
annuity option must be made within 60 days after the date on which the death
benefit first becomes payable. Rather than receiving the minimum death benefit,
the beneficiary may elect to continue his or her participation under the
contract as a new owner. (In general, a beneficiary who makes such an election
will nonetheless be treated for Federal income tax purposes as if he or she had
received the minimum death benefit.)
Death of Annuitant who is the Owner. The Company will pay the minimum
death benefit, less any debt, to the beneficiary if the owner is the annuitant,
dies before the maturity date and is not survived by a co-annuitant. If the
certificate is a non-qualified certificate, the owner is the annuitant and the
owner dies before the maturity date survived by a co-annuitant, the Company,
instead of paying the minimum death benefit to the beneficiary, will pay to the
successor owner an amount equal to the amount payable on total withdrawal
without reduction for any withdrawal charge. If the certificate is a
non-qualified certificate, distribution of the minimum death benefit to the
beneficiary (or of the amount payable to the successor owner) must be made
within five years after the owner's death. If the beneficiary or successor
owner, as appropriate, is an individual, in lieu of distribution within five
years of the owner's death, distribution may be made as an annuity which begins
within one year of the owner's death and is payable over the life of the
beneficiary (or the successor owner, as appropriate) or over a period not in
excess of the life expectancy of the beneficiary (or the successor owner, as
appropriate). If the owner's spouse is the beneficiary (or the successor owner,
as appropriate) that spouse may elect to continue his or her participation under
the contract as a new owner in lieu of receiving the distribution. In such a
case, the distribution rules applicable when a owner dies generally will apply
when that spouse, as the owner, dies.
Death of Owner who is not the Annuitant. If the owner is not the
annuitant and dies before the maturity date and before the annuitant, the
successor owner shall have the ownership rights of the owner and will be
entitled to the owner's interest in the contract. If the certificate is a
non-qualified contract, an amount equal to the amount payable on total
withdrawal, without reduction for any withdrawal charge, will be paid to the
successor owner. Distribution of the amount to the successor owner must be made
within five years of the owner's death. If the successor owner is an individual,
in lieu of distribution within five years of the owner's death, distribution may
be made as an annuity which begins within one year of the owner's death and is
payable over the life of the successor owner (or over a period not greater than
the successor owner's life expectancy). If the owner's spouse is the successor
owner, that spouse may elect to continue his or her participation under the
contract as a new owner in lieu of receiving the distribution. In such a case,
the distribution rules applicable when an owner dies generally will apply when
that spouse, as the owner, dies.
For purposes of these death benefit provisions applicable on an owner's
death (whether or not such owner is an annuitant), if a non-qualified
certificate has more than one individual owner, death benefits must be paid as
provided in the contract upon the death of any such owner. If both owners are
individuals, the distributions will be made to the remaining owner rather than
to the successor owner.
Entity as Owner. In the case of a non-qualified certificate where the
owner is not an individual (for example, the owner is a corporation or a trust),
the special rules stated in this paragraph apply. For purposes of distributions
of death benefits before the maturity date, any annuitant under the certificate
will be treated as the owner, and a change in the annuitant or any co-annuitant
shall be treated as the death of the owner. In the case of distributions which
result from a change in an annuitant when the annuitant does not actually die,
the amount distributed will be reduced by charges which would otherwise apply
upon withdrawal.
If a non-qualified certificate has both an individual and a
non-individual owner, death benefits must be paid as provided in the contract
upon the death of any annuitant, a change in any annuitant, or the death of any
individual owner, whichever occurs earlier.
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<PAGE> 63
The minimum death benefit during the first six certificate 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 certificate 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.
Death benefits will be paid within seven days of receipt of due proof
of death and all required claim forms at the Company's Annuity Service Office,
subject to postponement under the same circumstances that payment of withdrawals
may be postponed.
OTHER CONTRACT PROVISIONS
Contract Maturity Date
Under the prior contract, the contract maturity date is the later of
the first day of the month following the 85th birthday of the annuitant or the
sixth certificate anniversary. The prior contract allows the owner to specify a
different maturity date at any time by written request at least one month before
both the previously specified and the new maturity date. The new maturity date
must be the first day of a month no later than the first day of the month
following the 85th birthday of the annuitant.
Annuity Tables Assumed Interest Rate
A 4% assumed interest rate is built into the annuity tables in the
prior contract used to determine the first variable annuity payment to be made
under that contract.
Beneficiary
Under the prior contract certain provisions relating to beneficiary are
as follows:
The beneficiary is the person, persons or entity designated in the
application or as subsequently named to whom benefits will be paid on the death
of the annuitant. The beneficiary may be changed by the owner during the
lifetime of the annuitant and prior to the maturity date subject to the rights
of any irrevocable beneficiary. Any change must be made in writing, approved by
the Company and if approved, will be effective as of the date on which written.
The Company assumes no liability for any payments made or actions taken before
the change is approved. Prior to the maturity date, if no beneficiary survives
the annuitant, the owner or the owner's estate will be the beneficiary. The
interest of any beneficiary is subject to that of any assignee. In the case of
certain qualified contracts or certificates, regulations promulgated by the
Treasury Department prescribe certain limitations on the designation of a
beneficiary.
Ownership
Under the prior contract certain provisions relating to ownership are
as follows:
The contract is owned by the group holder. However, all contract rights
and privileges not expressly reserved to the group holder may be exercised by
each owner as to his or her interests as specified in his or her certificate.
Prior to the maturity date, an owner is the person designated in an application
or as subsequently named. On and after a certificate's maturity date, the
annuitant is the owner and after the death of the annuitant, the beneficiary is
the owner.
In the case of non-qualified contracts, ownership of the contract may
be changed at any time. In the case of non-qualified certificates, an owner may
assign his or her interest in the contract during the lifetime of the annuitant
prior to the maturity date, subject to the rights of any irrevocable
beneficiary. Assigning a contract or interest therein, or changing the ownership
of a contract or certificate, may be treated as a distribution of all or a
portion of the contract value for Federal tax purposes. Any change of ownership
or assignment must be made in writing. Any change must be approved by the
Company. Any assignment and any change, if approved, will be effective
56
<PAGE> 64
as of the date on which written. The Company assumes no liability for any
payments made or actions taken before a change is approved or assignment is
accepted or responsibility for the validity or sufficiency of any assignment.
Modification
The prior contract does not include "free withdrawal percentage" among
contract terms the Company is authorized to change on 60 days' notice to the
group holder.
57
<PAGE> 65
TABLE OF ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR* END OF YEAR AT END OF YEAR
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Science & Technology
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
International Small Cap
1996 $12.500000 $13.493094 265,493.981
1997 13.493094
- -----------------------------------------------------------------------------------------------------------
Emerging Growth
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Pilgrim Baxter Growth
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Small/Mid Cap
1996 $12.500000 $13.215952 293,815.378
1997 13.215952
- -----------------------------------------------------------------------------------------------------------
International Stock
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Worldwide Growth
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Global Equity
1992 $12.003976 $11.790318 28,203.763
1993 11.790318 15.450341 985,277.929
1994 15.450341 15.500933 2,268,423.530
1995 15.500933 16.459655 2,132,127.330
1996 16.459655 18.276450 1,785,966.081
1997 18.276450
- -----------------------------------------------------------------------------------------------------------
Small Company Value
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Equity
1992 $12.386657 $13.143309 122,807.657
1993 13.143309 15.075040 1,315,253.114
1994 15.075040 14.786831 1,958,082.571
1995 14.786831 20.821819 2,278,573.962
1996 20.821819 24.664354 2,007,082.996
1997 24.664354
- -----------------------------------------------------------------------------------------------------------
Growth
1996 $12.500000 $13.727312 98,424.809
1997 13.727312
- -----------------------------------------------------------------------------------------------------------
Quantitative Equity
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Blue Chip Growth
1992 $10.000000 $ 9.923524 58,049.495
1993 9.923524 9.413546 707,931.534
1994 9.413546 8.837480 1,001,113.147
1995 8.837480 11.026969 1,257,014.677
1996 11.026969 13.688523 1,223,305.806
1997 13.688523
- -----------------------------------------------------------------------------------------------------------
Real Estate Securities
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Value
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 66
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR* END OF YEAR AT END OF YEAR
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Growth and Income
1995 $10.000000 $10.554228 100,475.374
1996 10.554228 11.718276 223,718.019
1997 11.718276
- -----------------------------------------------------------------------------------------------------------
Growth and Income
1992 $10.942947 $11.927411 149,476.889
1993 11.927411 12.893007 1,610,454.400
1994 12.893007 13.076664 2,142,828.604
1995 13.076664 16.660889 2,230,320.953
1996 16.660889 20.178770 2,214,190.721
1997 20.178770
- -----------------------------------------------------------------------------------------------------------
Equity-Income
1993 $10.000000 $11.175534 715,700.792
1994 11.175534 11.107620 1,432,473.155
1995 11.107620 13.548849 1,741,975.072
1996 13.548849 16.011513 1,661,006.752
1997 16.011513
- -----------------------------------------------------------------------------------------------------------
Balanced
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Aggressive Asset Allocation
1992 $10.880194 $11.623893 21,660.089
1993 11.623893 12.642493 244,300.482
1994 12.642493 12.381395 395,864.362
1995 12.381395 14.990551 422,911.593
1996 14.990551 16.701647 365,478.331
1997 16.701647
- -----------------------------------------------------------------------------------------------------------
High Yield
1997 $12.500000
- -----------------------------------------------------------------------------------------------------------
Moderate Asset Allocation
1992 $11.012835 $11.772128 120,020.418
1993 11.772128 12.775798 1,245,900.794
1994 12.775798 12.396295 1,690,801.919
1995 12.396295 14.752561 1,435,414.191
1996 14.752561 15.995078 1,266,755.972
1997 15.995078
- -----------------------------------------------------------------------------------------------------------
Conservative Asset Allocation
1992 $11.102574 $11.821212 415,991.541
1993 11.821212 12.705196 56,414.765
1994 12.705196 12.298940 330,900.271
1995 12.298940 14.320582 478,239.388
1996 14.320582 15.113142 325,608.369
1997 15.113142
- -----------------------------------------------------------------------------------------------------------
Strategic Bond
1993 $10.000000 $10.750617 381,406.287
1994 10.750617 9.965972 564,406.390
1995 9.965972 11.716972 682,547.892
1996 11.716972 13.250563 797,845.050
1997 13.250563
- -----------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE> 67
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR* END OF YEAR AT END OF YEAR
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Government Bond
1992 $ 13.322602 $13.415849 56,786.509
1993 13.415849 15.741586 745,370.831
1994 15.741586 14.630721 694,644.982
1995 14.630721 17.772344 586,608.921
1996 17.772344 19.803954 494,576.435
1997 19.803954
- -----------------------------------------------------------------------------------------------------------
Capital Growth Bond
1997 $ 12.500000
- -----------------------------------------------------------------------------------------------------------
Investment Quality Bond
1992 $ 13.147350 $13.936240 59,746.432
1993 13.936240 15.118716 319,417.770
1994 15.118716 14.216516 384,804.353
1995 14.216516 16.751499 371,328.627
1996 16.751499 16.943257 361,839.590
1997 16.943257
- -----------------------------------------------------------------------------------------------------------
U.S. Government Securities
1992 $ 13.015785 $13.651495 212,815.440
1993 13.651495 14.490734 783,550.472
1994 14.490734 14.111357 585,709.535
1995 14.111357 16.083213 494,142.862
1996 16.083213 16.393307 390,696.559
1997 16.393307
- -----------------------------------------------------------------------------------------------------------
Money Market
1992 $ 12.892485 $13.137257 28,928.622
1993 13.137257 13.303085 331,225.229
1994 13.303085 13.623292 1,079,557.666
1995 13.623292 14.190910 530,610.979
1996 14.190910 14.699636 846,105.590
1997 14.699636
- -----------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000
1997 $ 12.500000
- -----------------------------------------------------------------------------------------------------------
Lifestyle Growth 820
1997 $ 12.500000
- -----------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640
1997 $ 12.500000
- -----------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460
1997 $ 12.500000
- -----------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280
1997 $ 12.500000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Units under this series of contracts were first credited under the
sub-accounts on September, 1992, except in the case of Blue Chip Growth where
units were first credited on December 11, 1992; Equity-Income where units were
first credited on February 19, 1992; International Growth and Income where units
were first credited on January 9, 1995; Small/Mid Cap and International Small
Cap where units were first credited on March 4, 1996; Growth where units were
first credited on July 15, 1996; Pacific Rim Emerging Markets, Science &
Technology, Emerging Growth, Pilgrim Baxter Growth, International Stock,
Worldwide Growth, Quantitative Equity, Real Estate Securities, Value, Balanced,
High Yield, Capital Growth Bond, Lifestyle Aggressive 1000, Lifestyle Growth
820, Lifestyle Balanced 640, Lifestyle Moderate 460, Lifestyle Conservative 280
where units were first credited on January 2, 1997 and Small Company Value where
units were first credited on October 1, 1997.
60
<PAGE> 68
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 69
STATEMENT OF ADDITIONAL INFORMATION
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
FLEXIBLE PAYMENT DEFERRED COMBINATION
FIXED AND VARIABLE GROUP ANNUITY CONTRACT
NON-PARTICIPATING
This Statement of Additional Information is not a Prospectus. It contains
information in addition to that described in the Prospectus and should be read
in conjunction with the Prospectus dated the same date as this Statement of
Additional Information. The Prospectus may be obtained by writing The
Manufacturers Life Insurance Company of North America at the Annuity Service
Office, P.O. Box 9230, Boston, Massachusetts 02205-9230 or telephoning (800)
344-1029.
The date of this Statement of Additional Information is May 1, 1998.
The Manufacturers Life Insurance Company of North America
116 Huntington Avenue
Boston, Massachusetts 02116
(617) 266-6004
V22/23.SAI598
<PAGE> 70
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
General Information and History ....................................... 3
Performance Data ...................................................... 3
Services
Independent Auditors ........................................... 10
Servicing Agent ................................................ 10
Principal Underwriter .......................................... 10
Cancellation of Certificate .................................... 10
Financial Statements .................................................. 11
<PAGE> 71
GENERAL INFORMATION AND HISTORY
The Manufacturers Life Insurance Company of North America Separate
Account A (the "Variable Account") is a separate investment account of The
Manufacturers Life Insurance Company of North America (the "Company"), a stock
life insurance company organized under the laws of Delaware in 1979. The
ultimate parent of the Company is The Manufacturers Life Insurance Company
("Manulife"), a Canadian mutual life insurance company based in Toronto, Canada.
Prior to January 1, 1996, the Company was a wholly owned subsidiary of North
American Life Assurance Company ("NAL"), a Canadian mutual life insurance
company. On January 1, 1996 NAL and Manulife merged with the combined company
retaining the Manulife name.
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials
quote total return figures. The sub-accounts may advertise both "standardized"
and "non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return figures
may be quoted assuming both (i) redemption at the end of the time period and
(ii) not assuming redemption at the end of the time period. Standardized figures
include total return figures from: (i) the inception date of the sub-account of
the Variable Account which invests in the portfolio or (ii) ten years, whichever
period is shorter. Non-standardized figures include total return numbers from:
(i) inception date of the portfolio or (ii) ten years, whichever period is
shorter. Such figures will always include the average annual total return for
recent one year and, when applicable, five and ten year periods and, where less
than ten years, the inception date of the sub-account, in the case of
standardized returns, and the inception date of the portfolio, in the case of
non-standardized returns. Where the period since inception is less than one
year, the total return quoted will be the aggregate return for the period. The
average annual total return is the average annual compounded rate of return that
equates a purchase payment to the market value of such purchase payment on the
last day of the period for which such return is calculated. The aggregate total
return is the percentage change (not annualized) that equates a purchase payment
to the market value of such purchase payment on the last day of the period for
which such return is calculated. For purposes of the calculations it is assumed
that an initial payment of $1,000 is made on the first day of the period for
which the return is calculated.
In calculating standardized return figures, all recurring charges (all
asset charges (mortality and expense risk fees and administration fees)) are
reflected, and the asset charges are reflected in changes in unit values.
Standardized total return figures will be quoted assuming redemption at the end
of the period. Non-standardized total return figures reflecting redemption at
the end of the time period are calculated on the same basis as the standardized
returns. Non-standardized total return figures not reflecting redemption at the
end of the time period are calculated on the same basis as the standardized
returns except that the calculations assume no redemption at the end of the
period and do not reflect deduction of the annual contract fee. The Company
believes such non-standardized not reflecting redemptions at the end of the time
period are useful to owners who wish to assess the performance of an ongoing
contract of the size that is meaningful to the individual owner.
For total return figures quoted for periods prior to the commencement
of the offering of this contract, August 9, 1994, standardized performance data
will be the historical performance of the Trust portfolio from the date the
applicable sub-account of the Variable Account first became available for
investment under other contracts offered by the Company; adjusted to reflect
current contract charges. In the case of non-standardized performance,
performance figures will be the historical performance of the Trust portfolio
from the inception date of the portfolio (or in the case of the Trust portfolios
created in connection with the merger of Manulife Series Fund, Inc. into the
Trust, the inception date of the applicable predecessor Manulife Series Fund,
Inc. portfolio), adjusted to reflect current contract charges.
3
<PAGE> 72
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 5 YEARS SINCE INCEPTION INCEPTION
OR 10 YEARS, DATE*
WHICHEVER IS
SHORTER
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets N/A N/A -37.94% 01/01/97
Science & Technology N/A N/A 3.17% 01/01/97
International Small Cap -6.04% N/A 0.72% 03/04/96
Emerging Growth N/A N/A 10.53% 01/01/97
Pilgrim Baxter Growth N/A N/A -6.76% 01/01/97
Small/Mid Cap 7.59% N/A 7.45% 03/04/96
International Stock N/A N/A -4.31% 01/01/97
Worldwide Growth N/A N/A 5.66% 01/01/97
Global Equity 13.06% 12.51% 8.18% 03/18/88
Small Company Value N/A N/A -9.98% 10/01/97
Equity 11.53% 16.67% 13.50%+ 06/18/85
Growth 17.55% N/A 19.40% 07/15/96
Quantitative Equity N/A N/A 22.79% 01/01/97
Blue Chip Growth 19.11% 10.96% 10.78% 12/11/92
Real Estate Securities N/A N/A 13.53% 01/01/97
Value N/A N/A 14.39% 01/01/97
International Growth and Income -6.84% N/A 3.33% 01/09/95
Growth and Income 24.92% 16.77% 15.44% 04/23/91
Equity-Income 21.84% N/A 15.35% 02/19/93
Balanced N/A N/A 10.82% 01/01/97
Aggressive Asset Allocation 11.38% 10.44% 8.51% 08/03/89
High Yield N/A N/A 5.06% 01/01/97
Moderate Asset Allocation 8.20% 8.57% 7.51% 08/03/89
Conservative Asset Allocation 3.84% 6.36% 6.21% 08/03/89
Strategic Bond 3.41% N/A 7.26% 02/19/93
Global Government Bond -4.03% 7.79% 7.31% 03/18/88
</TABLE>
4
<PAGE> 73
<TABLE>
<S> <C> <C> <C> <C>
Capital Growth Bond N/A N/A 1.88% 01/01/97
</TABLE>
5
<PAGE> 74
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 5 YEARS SINCE INCEPTION INCEPTION
OR 10 YEARS, DATE*
WHICHEVER IS
SHORTER
<S> <C> <C> <C> <C>
Investment Quality Bond 2.27% 4.93% 5.42%+ 06/18/85
U.S. Government Securities 1.09% 4.41% 5.82% 03/18/88
Money Market -1.99% 2.23% 3.93%+ 06/18/85
Lifestyle Aggressive 1000 N/A N/A 4.80% 01/01/97
Lifestyle Growth 820 N/A N/A 7.29% 01/01/97
Lifestyle Balanced 640 N/A N/A 7.38% 01/01/97
Lifestyle Moderate 460 N/A N/A 6.79% 01/01/97
Lifestyle Conservative 280 N/A N/A 5.07% 01/01/97
Merrill Lynch Special Value Focus [start date
of portfolio]
Merrill Lynch Basic Value Focus [start date
of portfolio]
Merrill Lynch Developing Capital [start date
Markets Focus of portfolio]
</TABLE>
* Inception date of the sub-account of the Variable Account which invests in the
portfolio.
+ 10 year average annual return.
6
<PAGE> 75
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 5 YEARS SINCE INCEPTION INCEPTION
OR 10 YEARS, DATE*
WHICHEVER IS
SHORTER
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -38.04% N/A -10.58% 10/04/94
Science & Technology N/A N/A 3.17% 01/01/97
International Small Cap -6.04% N/A 0.72% 03/04/96
Emerging Growth N/A N/A 10.53% 01/01/97
Pilgrim Baxter Growth N/A N/A -6.76% 01/01/97
Small/Mid Cap 7.59% N/A 7.45% 03/04/96
International Stock N/A N/A -4.31% 01/01/97
Worldwide Growth N/A N/A 5.66% 01/01/97
Global Equity 13.06% 12.51% 8.18% 03/18/88
Small Company Value N/A N/A -9.98% 10/01/97
Equity 11.53% 16.67% 13.50%+ 06/18/85
Growth 17.55% N/A 19.40% 07/15/96
Quantitative Equity* 21.97% 14.40% 13.48%+ 04/30/87
Blue Chip Growth 19.11% 10.96% 10.78% 12/11/92
Real Estate Securities* 10.70% 14.83% 14.22%+ 04/30/87
Value N/A N/A 14.39% 01/01/97
International Growth and Income -6.84% N/A 3.33% 01/09/95
Growth and Income 24.92% 16.77% 15.44% 04/23/91
Equity-Income 21.84% N/A 15.35% 02/19/93
Balanced N/A N/A 10.82% 01/01/97
Aggressive Asset Allocation 11.38% 10.44% 8.51% 08/03/89
High Yield N/A N/A 5.06% 01/01/97
Moderate Asset Allocation 8.20% 8.57% 7.51% 08/03/89
Conservative Asset Allocation 3.84% 6.36% 6.21% 08/03/89
Strategic Bond 3.41% N/A 7.26% 02/19/93
</TABLE>
7
<PAGE> 76
<TABLE>
<CAPTION>
Trust Portfolio 1 Year 5 Years Since Inception Inception
or 10 years, Date*
whichever is
shorter
<S> <C> <C> <C> <C>
Global Government Bond -4.03% 7.79% 7.31% 03/18/88
Capital Growth Bond* 1.31% 4.99% 6.97%+ 06/26/84
Investment Quality Bond 2.27% 4.93% 5.42%+ 06/18/85
U.S. Government Securities 1.09% 4.41% 5.82% 03/18/88
Money Market -1.99% 2.23% 3.93%+ 06/18/85
Lifestyle Aggressive 1000 N/A N/A 4.80% 01/01/97
Lifestyle Growth 820 N/A N/A 7.29% 01/01/97
Lifestyle Balanced 640 N/A N/A 7.38% 01/01/97
Lifestyle Moderate 460 N/A N/A 6.79% 01/01/97
Lifestyle Conservative 280 N/A N/A 5.07% 01/01/97
Merrill Lynch Special Value Focus start date of
portfolio
Merrill Lynch Basic Value Focus start date of
portfolio
Merrill Lynch Developing Capital start date of
Markets Focus portfolio
</TABLE>
+ 10 year average annual return.
* On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for these sub-accounts is based upon the performance of
the respective predecessor Manulife Series Fund, Inc. portfolio for periods
prior to December 31, 1996. Performance for each of these sub-accounts is based
on the historical expenses and performance of the predecessor Manulife Series
Fund, Inc. portfolio, adjusted to reflect current contract charges, and
therefore, does not reflect for periods prior to December 31, 1996 the current
Trust portfolio expenses that an investor would incur as a holder of units of
the sub-account.
8
<PAGE> 77
Non-Standardized Average Annual Total Return Figures
(Assuming No Redemption at the End of the Time Period)
Calculated as of December 31, 1997
<TABLE>
<CAPTION>
Trust Portfolio 1 Year 5 Years Since Inception Inception
or 10 years, Date*
whichever is
shorter
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -35.04% N/A -9.28% 10/04/94
Science & Technology N/A N/A 9.18% 01/01/97
International Small Cap -0.62% N/A 3.92% 03/04/96
Emerging Growth N/A N/A 16.59% 01/01/97
Pilgrim Baxter Growth N/A N/A -1.38% 01/01/97
Small/Mid Cap 13.66% N/A 10.58% 03/04/96
International Stock N/A N/A 1.22% 01/01/97
Worldwide Growth N/A N/A 11.73% 01/01/97
Global Equity 19.12% 13.05% 8.23% 03/18/88
Small Company Value N/A N/A -4.81% 01/01/97
Equity 17.59% 17.15% 13.54%+ 06/18/85
Growth 23.61% N/A 23.23% 07/15/96
Quantitative Equity* 28.03% 14.92% 13.52%+ 04/30/87
Blue Chip Growth 25.17% 11.54% 11.23% 12/11/92
Real Estate Securities* 16.76% 15.34% 14.27%+ 04/30/87
Value N/A N/A 20.46% 01/01/97
International Growth and Income -1.47% N/A 4.94% 01/09/95
Growth and Income 30.99% 17.25% 15.62% 04/23/91
Equity-Income 27.90% N/A 15.87% 02/19/93
Balanced N/A N/A 16.88% 01/01/97
Aggressive Asset Allocation 17.44% 11.03% 8.57% 08/03/89
High Yield N/A N/A 11.12% 01/01/97
Moderate Asset Allocation 14.26% 9.20% 7.56% 08/03/89
Conservative Asset Allocation 9.89% 7.04% 6.26% 08/03/89
Strategic Bond 9.44% N/A 7.94% 02/19/93
</TABLE>
9
<PAGE> 78
<TABLE>
<CAPTION>
Trust Portfolio 1 Year 5 Years Since Inception Inception
or 10 years, Date*
whichever is
shorter
<S> <C> <C> <C> <C>
Global Government Bond 1.52% 8.43% 7.36% 03/18/88
Capital Growth Bond* 7.20% 5.70% 7.02%+ 06/26/84
Investment Quality Bond 8.23% 5.64% 5.47%+ 06/18/85
U.S. Government Securities 6.97% 5.14% 5.87% 03/18/88
Money Market 3.69% 3.02% 3.98%+ 06/18/85
Lifestyle Aggressive 1000 N/A N/A 10.86% 01/01/97
Lifestyle Growth 820 N/A N/A 13.35% 01/01/97
Lifestyle Balanced 640 N/A N/A 13.44% 01/01/97
Lifestyle Moderate 460 N/A N/A 12.86% 01/01/97
Lifestyle Conservative 280 N/A N/A 11.13% 01/01/97
Merrill Lynch Special Value Focus start date
of portfolio
Merrill Lynch Basic Value Focus start date
of portfolio
Merrill Lynch Developing Capital start date
Markets Focus of portfolio
</TABLE>
+ 10 year average annual return.
* On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for these sub-accounts is based upon the performance of
the respective predecessor Manulife Series Fund, Inc. portfolio for periods
prior to December 31, 1996. Performance for each of these sub-accounts is based
on the historical expenses and performance of the predecessor Manulife Series
Fund, Inc. portfolio, adjusted to reflect current contract charges, and
therefore, does not reflect for periods prior to December 31, 1996 the current
Trust portfolio expenses that an investor would incur as a holder of units of
the sub-account.
* * * * *
In addition to the non-standardized returns quoted above, each of the
sub-accounts may from time to time quote aggregate non-standardized total
returns calculated in the same manner as set forth above for other time periods.
From time to time the Trust may include in its advertising and sales literature
general discussions of economic theories, including but not limited to,
discussions on how demographic and political trends can affect the financial
markets. Further, the Trust may also include in its advertising and sales
literature specific information on each of the Trust's subadvisers, including
but not limited to, research capabilities of a subadviser, assets under
management, information relating to other clients of a subadviser, and other
generalized information.
10
<PAGE> 79
SERVICES
INDEPENDENT AUDITORS
The financial statements of the Company and the Variable Account at
December 31, 1997 and 1996 and for the years then ended appearing in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The consolidated statements of income, changes in shareholder's equity
and cash flows for the year ended December 31, 1994, appearing in this Statement
of Additional Information have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The statement of operations and changes in net assets of the Variable
Account for the year ended December 31, 1995, appearing in this Statement of
Additional Information has been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The financial statements of the Company which are included in the
Statement of Additional Information should be considered only as bearing on the
ability of the Company to meet its obligations under the contracts. They should
not be considered as bearing on the investment performance of the assets held in
the Variable Account.
SERVICING AGENT
Computer Sciences Corporation Financial Services Group ("CSC FSG")
provides to the Company a computerized data processing recordkeeping system for
variable annuity administration. CSC FSG provides various daily, semimonthly,
monthly, semiannual and annual reports including: daily updates on accumulation
unit values, variable annuity participants and transactions, agent production
and commissions; semimonthly commission statements; monthly summaries of agent
production and daily transaction reports; semiannual statements for contract
owners; and annual contract owner tax reports. CSC FSG receives approximately
$7.80 per policy per year, plus certain other fees paid by the Company for the
services provided.
PRINCIPAL UNDERWRITER
Manufacturers Securities Services, LLC ("MSS"), a Delaware limited
liability company controlled by the Company, serves as principal underwriter of
the contracts. Contracts are offered on a continuous basis. The aggregate dollar
amount of underwriting commissions paid to MSS in 1997, 1996 and 1995 were
$________, $83,031,288 and $68,782,161, respectively. MSS did not retain any of
these amounts during such periods.
CANCELLATION OF CERTIFICATE
The Company may, at its option, cancel a certificate and an owner's
participation under a contract at the end of any two consecutive certificate
years in which no purchase payments by or on behalf of the owner have been made,
if both (i) the total purchase payments made for the certificate, less any
withdrawals, are less than $2,000; and (ii) the contract value for the owner at
the end of such two year period is less than $2,000. The Company, as a matter of
administrative practice, will attempt to notify a certificate owner prior to
such cancellation in order to allow the certificate owner to make the necessary
purchase payment to keep the certificate in force. The cancellation of
certificate provisions may vary in certain states in order to comply with the
requirements of insurance laws and regulations in such states.
11
<PAGE> 80
PART C
OTHER INFORMATION
<PAGE> 81
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements of the Registrant, The
Manufacturers Life Insurance Company of North America
Separate Account A, formerly NASL Variable Account
(Part B of the registration statement). -- To be
filed by amendment,
(2) Financial Statements of the Depositor, The
Manufacturers Life Insurance Company of North
America, formerly North American Security Life
Insurance Company (Part B of the registration
statement). -- To be filed by amendment.
(b) Exhibits
(1) (i) Resolution of the Board of Directors of
North American Security Life Insurance
Company establishing the NASL Variable
Account -- Incorporated by reference to
Exhibit (b)(1)(i) to Form N-4, file number
33-76162, filed February 25, 1998.
(ii) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated May
30, 1995 -- Previously filed as Exhibit
(b)(1)(ii) to post-effective amendment no. 2
to Form N-4 filed March 1, 1996.
(iii) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated
September 30, 1996 -- Previously filed as
Exhibit (b)(1)(iii) to post effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(iv) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated
September 30, 1996 -- Previously filed as
Exhibit (b)(1)(iv) to post effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(v) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create four additional sub-accounts dated
September 26, 1997 -- Incorporated by
reference to Exhibit (b)(1)(v) to Form N-4,
file number 33-76162 filed February 25,
1998.
(2) Agreements for custody of securities and similar
investments - Not Applicable.
(3) (i) Underwriting Agreement between North
American Security Life Insurance Company
(Depositor) and NASL Financial Services,
Inc. (Underwriter) -- Incorporated by
reference to Exhibit (b)(3)(i) to Form N-4,
file number 33-76162, filed February 25,
1998.
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<PAGE> 82
(ii) Promotional Agent Agreement between NASL
Financial Services, Inc. (Underwriter),
North American Security Life Insurance
Company (Depositor) and Wood Logan
Associates, Inc. (Promotional Agent) and
NAWL Holding Company, Inc. -- Previously
filed as Exhibit (b)(3)(iii) to post
effective amendment no. 3 to Form N-4 filed
February 28, 1997.
(iii) Amendment to Promotional Agent Agreement -
Incorporated by reference to Exhibit
(b)(3)(iii) to Form N-4, file number
33-76162, filed February 25, 1998
(iv) Form of Selling Agreement between The
Manufacturers Life Insurance Company of
North America, Manufacturers Securities
Services, LLC, Selling Broker-Dealer and
General Agent -- Incorporated by reference
to Exhibit (b)(3)(iv) to Form N-4, file
number 33-76162, filed February 25, 1998.
(4) (i) Specimen Flexible Payment Deferred
Combination Fixed and Variable Group Annuity
Contract, Non-Participating -- Filed
herewith.
(ii) Specimen Certificate Under Flexible Payment
Deferred Combination Fixed and Variable
Group Annuity Contract, Non-Participating --
Filed herewith.
(iii) Specimen Endorsements to Contract: (i)
Individual Retirement Annuity Endorsement;
(ii) ERISA Tax-sheltered Annuity
Endorsement; (iii) Tax-sheltered Annuity
Endorsement; (iv) Section 401 Plans
Endorsement; (v) Texas Optional Retirement
Program Endorsement; (vi) Qualified Contract
Provisions; (vii) Fixed Account Endorsement;
(viii) Death Benefit Endorsement -- Filed
herewith.
(iv) Specimen Death Benefit Endorsements to
Contract (apply to certain prior contracts
only) -- Filed herewith.
(v) Change of Name Endorsement -- Incorporated
by reference to Exhibit (4)(v) to
post-effective amendment no. 1 to Form S-1,
file number 333-6011 filed October 9, 1997.
(vi) Guaranteed Income Rider - - Filed herewith
(5) (i) Specimen Group Holder Application for
Flexible Payment Deferred Combination Fixed
and Variable Group Annuity Contract -- Filed
herewith.
(ii) Specimen Participant Application for the
Flexible Payment Deferred Combination Fixed
and Variable Group Annuity Application --
Filed herewith.
(6) (i) Certificate of Incorporation of North
American Security Life Insurance Company --
Incorporated by reference to Exhibit (3)(i)
to Form 10Q of The Manufacturers Life
Insurance Company of North America filed
November 14, 1997.
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<PAGE> 83
(ii) Certificate of Amendment of Certificate of
Incorporation of the Company, Name Change
July 1984 -- Incorporated by reference to
Exhibit (3)(i)(a) to Form 10Q of The
Manufacturers Life Insurance Company of
North America, filed November 14, 1997.
(iii) Certificate of Amendment of Certificate of
Incorporation of the Company, Authorization
of Capital December 1994 -- Incorporated by
reference to Exhibit (3)(i)(b) to Form 10Q
of The Manufacturers Life Insurance Company
of North America, filed November 14, 1997.
(iv) Certificate of Amendment of Certificate of
Incorporation, Name change March 1997 --
Incorporated by reference to Exhibit
(3)(i)(a) to post effective amendment no. 1
to Form S-1 on behalf of The Manufacturers
Life Insurance Company of North America,
file number 333-6011, filed October 9, 1997.
(v) Certificate of Amendment of Certificate of
Incorporation of the Company, Registered
Agent July 1997 -- Incorporated by reference
to Exhibit (3)(i)(c) to Form 10Q of The
Manufacturers Life Insurance Company of
North America filed November 14, 1997.
(vi) Amended and Restated By-laws of The
Manufacturers Life Insurance Company of
North America -- Incorporated by reference
to Exhibit (3)(ii) to Form 10Q of The
Manufacturers Life Insurance Company of
North America filed November 14, 1997.
(7) (i) Contract of reinsurance in connection with
the variable annuity contracts being offered
- Form of Reinsurance and Accounts
Receivable Agreements between North American
Security Life Insurance Company and ITT
Lyndon Life, effective December 31, 1993,
and amendments -- Incorporated by reference
to Exhibit (b)(7)(i) to Form N-4, file
number 33-76162, filed February 25, 1998.
(ii) (A) Contract of reinsurance in connection
with the variable annuity contracts being
offered - Variable Annuity Guaranteed Death
Benefit Reinsurance Contract between North
American Security Life Insurance Company and
Connecticut General Life Insurance Company,
effective July 1, 1995 -- Previously filed
as Exhibit (b)(7)(ii) to post-effective
amendment no. 2 to Form N-4 filed March 1,
1996.
(B) Contract of reinsurance in
connection with the variable annuity
contracts being offered - Variable Annuity
Guaranteed Death Benefit Reinsurance
Contract between North American Security
Life Insurance Company and Connecticut
General Life Insurance Company, effective
July 1, 1995 -- Previously filed as Exhibit
(b)(7)(iii) to post-effective amendment no.
2 to Form N-4 filed March 1, 1996.
(iii) Contract of reinsurance in connection with
the variable annuity contracts being offered
- Automatic Reinsurance Agreement between
North American Security Life Insurance
Company and Swiss Re America, effective
August 1, 1995 -- Previously filed as
Exhibit (b)(7)(iv) to post-effective
amendment no. 3 to Form N-4 filed February
28, 1997.
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<PAGE> 84
(iv) Contract of reinsurance in connection with
the variable annuity contracts being offered
- Reinsurance Agreement between North
American Security Life Insurance Company and
PaineWebber Life Insurance Company,
effective December 31, 1994 -- Previously
filed as Exhibit (b)(7)(v) to post-effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(v) Contract of reinsurance in connection with
the variable annuity contracts being offered
- Form of Reinsurance Agreement between
North American Security Life Insurance
Company and Merrill Lynch Life Insurance
Company effective January 1, 1997 --
Incorporated by reference to Exhibit
(b)(7)(v) to Form N-4, file number 33-76162,
filed February 25, 1998.
(8) Other material contracts not made in the ordinary
course of business which are to be performed in whole
or in part on or after the date the registration
statement is filed:
(i) Form of Remote Service Agreement dated
November 1, 1996 between North American
Security Life Insurance Company and CSC
Continuum, Inc. -- Previously filed as
Exhibit (b)(8)(i) to post-effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered June 28,
1994 -- Filed herewith.
(10) (i) Written consent of Ernst & Young LLP,
independent auditors -- To be filed by
amendment.
(ii) Written consent of Coopers & Lybrand,
L.L.P., independent accountants -- To be
filed by amendment.
(11) All financial statements omitted from Item 23,
Financial Statements -- Not Applicable.
(12) Agreements in consideration for providing initial
capital between or among Registrant, Depositor,
Underwriter or initial contract owners -- Not
Applicable.
(13) Schedules of computation -- Previously filed as
Exhibit (b)(13) to post-effective amendment no. 2 to
Form N-4 filed March 1, 1996.
(14) Financial Data Schedule -- Not Applicable.
(15) (i) Power of Attorney - John D. Richardson
(Chairman of the Board of Directors, North
American Security Life Insurance Company) --
Previously filed as Exhibit (b)(15)(iii) to
post-effective amendment no. 2 to Form N-4
filed April 29, 1997.
(ii) Power of Attorney - David W. Libbey,
Principal Financial Officer, North American
Security Life Insurance Company --
Incorporated by reference to Exhibit
(24)(ii) to Form 10Q of The Manufacturers
Life Insurance Company of North America
filed November 14, 1997.
- 4 -
<PAGE> 85
(iii) Power of Attorney - Peter S. Hutchison
(Director, The Manufacturers Life Insurance
Company of North America) -- Incorporated by
reference to Exhibit (b)(15)(iii) to Form
N-4, file number 33-76162 filed February 25,
1998.
Item 25. Directors and Officers of the Depositor.
OFFICERS AND DIRECTORS OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH
AMERICA
Name and Principal Position with
Business Address Manulife North America
John D. Richardson Chairman of the Board of Directors
200 Bloor Street East
Toronto, Ontario
Canada M4W-1E5
Peter S. Hutchison Director
5650 Yonge Street
North York, Ontario
Canada M2M 4G4
John D. DesPrez III President and Director
73 Tremont Street
Boston, MA 02108
James Boyle Vice President, Administration and Chief
116 Huntington Avenue Administrative Officer
Boston, MA 02116
John G. Vrysen Vice President and Chief Actuary
73 Tremont Street
Boston, MA 02108
Hugh McHaffie Vice President, U.S. Annuities and Product
73 Tremont Street Development
Boston, MA 02108
Richard C. Hirtle Vice President, Strategic Development and
116 Huntington Avenue Accumulation Life Products
Boston, MA 02116
James D. Gallagher Vice President, Secretary and General Counsel
73 Tremont Street
Boston, MA 02108
- 5 -
<PAGE> 86
Janet Sweeney Vice President, Corporate Services
73 Tremont Street
Boston, MA 02108
David W. Libbey Vice President, Treasurer and Chief Financial Officer
73 Tremont Street
Boston, MA 02108
Robert Boyda Vice President, Investment Management Services
73 Tremont Street
Boston, MA 02108
Item 26. Persons Controlled by or Under Common Control with Depositor or
Registrant.
THE MANUFACTURERS LIFE INSURANCE COMPANY
Manulife Corporate Organization as at December 31, 1997
The Manufacturers Life Insurance Company (Canada)
1. Cantay Holdings Inc. - Ontario (100%)
2. 484551 Ontario Limited - Ontario (100%)
a. 911164 Ontario Inc. - Ontario (100%)
3. Churchill Lifestyles Corp. (100%)
4. 495603 Ontario Limited - Ontario (100%)
5. 1198183 Ontario Limited - Ontario (100%)
6. 1198184 Ontario Limited - Ontario (100%)
7. 1235434 Ontario Limited - Ontario (100%)
8. 576986 Ontario Inc. - Ontario (100%)
9. Balmoral Developments Inc. - Ontario (100%)
10. Manulife Bank of Canada - Canada (100%)
11. Manulife Securities International Ltd. - Canada (100%)
12. Family Realty First Corp. - Ontario (100%)
13. NAL Resources Limited - Alberta (100%)
14. Manulife International Capital Corporation Limited - Ontario (100%)
a. Regional Power Inc. - Ontario (100%)
i. La Regionale Power (Port Cartier) Inc. - Ontario
(100%)
ii. La Regionale Power Angliers Inc. - Ontario (100%)
iii. Addalam Power Corporation - Philippines (100%)
15. Peel-de Maisonneuve Investments Ltd. - Canada (100%)
a. 2932121 Canada Inc. - Canada (100%)
16. FNA Financial Inc. - Canada (100%)
a. NAL Trustco Inc. - Ontario (100%)
b. First North American Insurance Company - Canada (100%)
c. Elliott & Page Limited - Ontario (100%)
d. Seamark Asset Management Ltd. - Canada (67.86%)
e. NAL Resources Management Limited - Canada (100%)
i. NAL Energy Inc. - Alberta (100%)
17. ManuCab Ltd. - Canada (100%)
a. Plazcab Service Limited - Newfoundland (100%)
18. Manufacturers Life Capital Corporation Inc. - Canada (100%)
19. The North American Group Inc. - Ontario (100%)
20. 994744 Ontario Inc. - Ontario (100%)
21. 1268337 Ontario Inc. - Ontario (100%)
- 6 -
<PAGE> 87
22. 3426505 Canada Inc. - Canada (100%)
23. The Manufacturers Investment Corporation - Michigan (100%)
a. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
i. The Manufacturers Life Insurance Company (U.S.A.) -
Michigan (100%)
(1) Dover Leasing Investments, LLC - Delaware
(99%)
(2) The Manufacturers Life Insurance Company of
America - Michigan (100%)
(a) Manulife Holding Corporation -
Delaware (100%)
(i) Manufacturers Adviser
Corporation -Colorado(100%)
(ii) Succession Planning
International, Inc. -
Wisconsin (100%)
(iii) ManEquity, Inc. - Colorado
(100%)
(iv) Manulife Property
Management of Washington,
D.C. Inc. - Washington,
D.C. (100%)
(v) ManuLife Service
Corporation - Colorado
(100%)
(vi) Manulife Leasing Company,
LLC - Delaware (80%)
(3) Capitol Bankers Life Insurance Company -
Michigan (100%)
(4) Ennal, Inc. - Ohio (100%)
(5) Manulife-Wood Logan Holding Co. Inc. -
Delaware (62.5%)
(a) Wood Logan Associates, Inc. -
Connecticut (100%)
(i) Wood Logan Distributors,
Inc. - Connecticut (100%)
(b) The Manufacturers Life Insurance
Company of North America - Delaware
(100%)
(i) Manufacturers Securities
Services, LLC -
Massachusetts (100%)
(ii) The Manufacturers Life
Insurance Company of New
York - New York (100%)
ii. Manulife Reinsurance Limited - Bermuda (100%)
(1) MRL Holding, LLC - Delaware (99%)
(a) Manulife-Wood Logan Holding Co.
Inc. - Delaware (22.5%)
iii. MRL Holding, LLC - Delaware (1%)
24. Manulife International Investment Management Limited - U.K. (100%)
a. Manulife International Fund Management Limited - U.K. (100%)
25. WT(SW) Properties Ltd. - U.K. (100%)
26. Manulife Europe Ruckversicherungs-Aktiengesellschaft - Germany (100%)
27. Manulife International Holdings Limited - Bermuda (100%)
a. Manulife (International) Limited - Bermuda (100%)
i. Zhong Hong Life Insurance Co., Ltd. - China (51%)
ii. The Manufacturers (Pacific Asia) Insurance Company
Limited - H.K. (100%)
iii. Newtime Consultants Limited - H.K. (100%)
28. Manulife (International) Reinsurance Limited - Bermuda (100%)
a. Manulife (International) P & C Limited - Bermuda (100%)
b. Manufacturers P & C Limited - Barbados (100%)
c. Manufacturers Life Reinsurance Limited - Barbados (100%)
29. Chinfon-Manulife Insurance Company Limited - Bermuda (100%)
30. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
31. Manulife (Thailand) Ltd. - Thailand (100%)
32. Young Poong Manulife Insurance Company - Korea (100%)
33. Manulife Data Services Inc. - Barbados (100%)
a. Manulife Funds Direct (Barbados) Limited - Barbados (100%)
i. Manulife Funds Direct (Hong Kong) Limited - H.K.
(100%)
34. OUB Manulife Pte. Ltd. - Singapore (100%)
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<PAGE> 88
35. Manulife Holdings (Hong Kong) Limited - H.K. (100%)
36. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
37. P.T. Asuransi Jiwa Dhamala ManuLife - Indonesia (51%)
a. P.T. AMP Panin Life - Indonesia (100%)
Item 27. Number of Contract owners.
As of December 31, 1997, there were 3,260 qualified contracts (including 1,919
for Ven 8) and 4,818 non-qualified contracts (including 2,472 for Ven 8) of the
series offered hereby outstanding.
Item 28. Indemnification.
Article 9 of the Articles of Incorporation of the Company provides as follows:
NINTH: A director of this corporation shall not be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended. Any repeal or modification of the foregoing
sentence shall not adversely affect any right or protection of a director of the
corporation existing hereunder with respect to any act or omission occurring
prior to such repeal or modification.
Article XIV of the By-laws of the Company provides as follows:
Each Director or officer, whether or not then in office, shall be indemnified by
the Company against all costs and expenses reasonably incurred by or imposed
upon him or her, including legal fees, in connection with or resulting from any
claim, action, suit or proceeding, whether civil, criminal or administrative, in
which he or she may become involved as a party or otherwise, by reason of his or
her being or having been a Director or officer of the Company.
(1) Indemnity will not be granted to any Director or officer with
respect to any claim, action, suit or proceeding which shall be brought against
such Director or officer by or in the right of the Company, and
(2) Indemnification for amounts paid and expenses incurred in settling
such action, claim, suit or proceeding, will not be granted, until it shall be
determined by a disinterested majority of the Board of Directors or by a
majority of any disinterested committee or group of persons to whom the question
may be referred by the Board, that said Director or officer did indeed act in
good faith and in a manner he or she reasonably believed to be in, or not
adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonably cause to believe that his or her
conduct was legal, and that the payment of such costs, expenses, penalties or
fines is in the interest of the Company, and not contrary to public policy or
other provisions of law.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendre or its equivalent, shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in, or not adverse, to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Indemnification shall be made by the corporation upon determination by a
disinterested majority of the Board of Directors or of a majority of any
disinterested committee or group or persons to whom the question may be referred
to by said Board, that the person did indeed act in good faith and in a manner
he or she reasonably believed to be in, or not adverse, to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
reasonably cause to believe that his or her conduct was legal.
The foregoing right to indemnity shall not be exclusive of any other
rights to which such Director or officer may be entitled as a matter of law.
- 8 -
<PAGE> 89
The foregoing right to indemnity shall also extend to the estate of any
deceased Director or officer with respect to any such claim, action, suit or
proceeding in which such Director or officer or his or her estate may become
involved by reason of his or her having been a Director or officer of the
Company, and subject to the same conditions outlined above.
Section IX, paragraph D of the Promotional Agent Agreement among the Company
(referred to therein as "Security Life"), NASL Financial and Wood/Logan
(referred to therein as "Promotional Agent") provides as follows:
a. NASL Financial and Security Life agree to indemnify and hold harmless
Promotional Agent, its officers, directors and employees against any
and all losses, claims, damages or liabilities to which they may become
subject under the Securities Act of 1933 ("1933 Act"), the 1934 Act or
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or any
omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in any
registration statement for the Contracts filed pursuant to the 1933 Act
or any prospectus included as a part thereof, as from time to time
amended and supplemented, or any advertisement or sales literature
approved in writing by NASL Financial or Security Life pursuant to
Section VI, paragraph B of this Agreement.
b. Promotional Agent agrees to indemnify and hold harmless NASL Financial
and Security Life, their officers, directors and employees against any
and all losses, claims, damages or liabilities to which they may become
subject under the 1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any oral or written
misrepresentation by Promotional Agent or its officers, directors,
employees or agents unless such misrepresentation is contained in any
registration statement for the Contracts or Fund shares, any prospectus
included as a part thereof, as from time to time amended and
supplemented, or any advertisement or sales literature approved in
writing by NASL Financial pursuant to Section VI, paragraph B of this
Agreement or, (ii) the failure of Promotional Agent or its officers,
directors, employees or agents to comply with any applicable provisions
of this Agreement.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event 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.
- 9 -
<PAGE> 90
Item 29. Principal Underwriters.
a. Name of Investment Company Capacity in which acting
Manufacturers Investment Trust Investment Adviser
The Manufacturers Life Insurance Principal Underwriter
Company of North America Separate
Account A
The Manufacturers Life Insurance Principal Underwriter
Company of North America Separate
Account B
The Manufacturers Life Insurance Principal Underwriter
Company of New York Separate
Account A
b. The Manufacturers Life Insurance Company of North America is the
managing member of Manufacturers Securities Services, LLC and has sole power to
act on behalf of Manufacturers Securities Services, LLC. The officers and
directors of The Manufacturers Life Insurance Company of North America are set
forth under Item 25.
c. None.
Item 30. Location of Accounts and Records.
All books and records are maintained at 116 Huntington Avenue, Boston, MA 02116
and at 73 Tremont Street, Boston, MA 02108.
Item 31. Management Services.
None.
Item 32. Undertakings.
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The Manufacturers Life Insurance Company of North America (the "Company") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
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<PAGE> 91
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, The Manufacturers Life Insurance Company of North
America Separate Account A, has caused this Amendment to the Registration
Statement to be signed on its behalf, in the City of Boston, and Commonwealth of
Massachusetts on this 26th day of February, 1998.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH
AMERICA SEPARATE ACCOUNT A
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /s/ JOHN D. DESPREZ III
John D. DesPrez III, President
Attest:
/s/ JAMES D. GALLAGHER
James D. Gallagher, Secretary
Pursuant to the requirements of the Securities Act of 1933, the
Depositor has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned on the 26th day of February, 1998 in the
City of Boston, and Commonwealth of Massachusetts.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
(Depositor)
By: /s/ JOHN D. DESPREZ III
John D. DesPrez III, President
Attest:
/s/ JAMES D. GALLAGHER
James D. Gallagher, Secretary
<PAGE> 92
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed by the following persons in the capacities with the
Depositor and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ JOHN D. DESPREZ III Director and President February 26, 1998
John D. DesPrez III (Principal Executive (Date)
Officer)
*______________________ Director February 26, 1998
Peter S. Hutchison (Date)
*_____________________ Director and Chairman February 26, 1998
John D. Richardson of the Board (Date)
/s/ DAVID W. LIBBEY Vice President and February 26, 1998
David W. Libbey Treasurer (Principal (Date)
Financial and Accounting
Officer)
*By: /s/ JAMES D. GALLAGHER February 26, 1998
James D. Gallagher (Date)
Attorney-in-Fact
Pursuant to Powers
of Attorney
</TABLE>
<PAGE> 93
EXHIBIT INDEX
Exhibit No. Description
(b)(4)(i) Specimen Flexible Payment Deferred Combination Fixed
and Variable Group Annuity Contract,
Non-Participating
(b)(4)(ii) Specimen Certificate Under Flexible Payment Deferred
Combination Fixed and Variable Group Annuity
Contract, Non-Participating
(b)(4)(iii) Specimen Endorsements to Contract: (i) Individual
Retirement Annuity Endorsement; (ii) ERISA
Tax-sheltered Annuity Endorsement; (iii)
Tax-sheltered Annuity Endorsement; (iv) Section 401
Plans Endorsement; (v) Texas Optional Retirement
Program Endorsement; (vi) Qualified Contract
Provisions; (vii) Fixed Account Endorsement; (viii)
Death Benefit Endorsement
(b)(4)(iv) Specimen Death Benefit Endorsements to Contract
(apply to certain prior contracts only)
(b)(4)(vi) Guaranteed Income Rider
(b)(5)(i) Specimen Group Holder Application for Flexible
Payment Deferred Combination Fixed and Variable Group
Annuity Contract
(b)(5)(ii) Specimen Participant Application for the Flexible
Payment Deferred Combination Fixed and Variable Group
Annuity Application
(b)(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered June 28,
1994
<PAGE> 1
EXHIBIT (b)(4)(1)
NORTH AMERICAN
SECURITY LIFE INSURANCE COMPANY
A Wholly-Owned Subsidiary of North American Life Assurance Company of Canada
- --------------------------------------------------------------------------------
EXECUTIVE OFFICE: ANNUITY SERVICE OFFICE: HOME OFFICE:
116 Huntington Avenue P.O. Box 818 Dover, Delaware
Boston, MA 02116 Boston, MA 02117-0818
1-800-344-1029
THIS IS A LEGAL CONTRACT - READ IT CAREFULLY.
North American Security Life Insurance Company will pay an annuity commencing on
the Maturity Date to the Annuitant, if then living, in accordance with the
Benefits and the Payment of Contract Benefits provisions. If the Owner dies
while the Contract is in effect and the Owner's Certificate is in force and
before the Maturity Date, the Company will pay a Death Benefit to the
Beneficiary upon receipt of all required claim forms and proof of death of the
Owner at the Annuity Service Office.
THIS CONTRACT is issued in consideration of the Contract Application and the
Payments. Provisions and endorsements printed or written by the Company on the
following pages form part of the Contract.
SIGNED FOR THE COMPANY at its Executive Office, Boston, Massachusetts, on the
Contract Date.
DETAILS OF VARIABLE ACCOUNT PROVISIONS ON PAGE 9
DETAILS OF FIXED ACCOUNT PROVISIONS ON PAGE 10
Vice President President
Flexible Payment Deferred Combination Fixed and Variable Group Annuity Contract
Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS
TO FIXED DOLLAR AMOUNT.
INTRODUCTION
This is a flexible payment deferred combination fixed and variable group annuity
contract. This Contract provides that prior to the Maturity Date, the Contract
Value for an Owner will accumulate on either a fixed or variable basis or a
combination of both. After the Maturity Date, annuity payments may be either
fixed or variable, or a combination of fixed and variable.
VENTURE.004
<PAGE> 2
The variable portion of the Contract will vary with the investment performance
of an Owner's Variable Account. The fixed portion of the Contract will
accumulate based on interest rates guaranteed by the Company for the period
selected.
If an Owner selects annuity payments on a variable basis, the payment amount
will vary with the investment performance of the Owner's Variable Account.
An Owner must allocate Payments among one or more Investment Options. The
Investment Options are identified in the Application and on the Certificate
Specifications Page.
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Contract Specifications Page Page
<S> <C>
PART 1 - DEFINITIONS 1
---------------------------------------------------------
PART 2 - GENERAL PROVISIONS 3
--------------------------------------------------
PART 3 - OWNERSHIP 5
-----------------------------------------------------------
PART 4 - BENEFITS 6
------------------------------------------------------------
PART 5 - PAYMENTS 8
------------------------------------------------------------
PART 6 - VARIABLE ACCOUNT PROVISIONS 9
-----------------------------------------
PART 7 - FIXED ACCOUNT PROVISIONS 10
-------------------------------------------
PART 8 - ANNUITY PROVISIONS 11
-------------------------------------------------
PART 9 - TRANSFERS 12
----------------------------------------------------------
PART 10 - WITHDRAWAL PROVISIONS 13
----------------------------------------------
PART 11 - FEES AND DEDUCTIONS 16
------------------------------------------------
PART 12 - LOAN PROVISIONS 16
----------------------------------------------------
PART 13 - PAYMENT OF CONTRACT BENEFITS 16
---------------------------------------
</TABLE>
<PAGE> 3
CONTRACT SPECIFICATIONS PAGE
GROUP HOLDER: [ABC WIDGET, INC.]
POLICY NUMBER: [AB123456]
ISSUE DATE: [XX/XX/XX]
GOVERNING LAW: [APPLICABLE STATE]
ANNUAL ADMINISTRATION FEE: [$XX.XX]
ASSET FEE [XX.XX%]
MAXIMUM CHARGE PERCENTAGE [XX.XX%]
FREE WITHDRAWAL PERCENTAGE [XX.XX%]
<TABLE>
<CAPTION>
NUMBER OF COMPLETE CERTIFICATE YEARS WITHDRAWAL
PAYMENT FOR AN OWNER CHARGE
HAS BEEN IN CONTRACT PERCENTAGE
<S> <C>
0 [6]%
1 [6]%
2 [5]%
3 [5]%
4 [4]%
5 [3]%
6 [2]%
7+ [0]%
</TABLE>
QUALIFIED CONTRACT PROVISIONS ENDORSEMENT ATTACHED. THE PROVISIONS IN THIS
ENDORSEMENT SHALL APPLY WITH RESPECT TO THE INTEREST OF AN OWNER AS FOLLOWS
<TABLE>
<CAPTION>
TYPE OF CONTRACT APPLICABLE SECTION OF
(AS INDICATED ON OWNERS CERTIFICATE) ENDORSEMENT
- ---------------------------------------------------------------------------------------
<S> <C>
(A) PROFIT SHARING PLAN SECTION 401 PLANS
(B) MONEY PURCHASE PENSION PLAN SECTION 401 PLANS
(C) KEOGH (HR-10) SECTION 401 PLANS
(D) PENSION PLAN SECTION 401 PLANS
(E) 401(K) SECTION 401 PLANS
(G) 403(B) ERISA TAX SHELTERED ANNUITY ERISA TAX SHELTERED ANNUITY
(H) 403(B) TAX SHELTERED ANNUITY TAX SHELTERED ANNUITY
(I) IRA, SEP-IRA INDIVIDUAL RETIREMENT ANNUITY
(J) TEXAS OPTIONAL RETIREMENT PROGRAM TEXAS OPTIONAL RETIREMENT PROGRAM AND
TAX SHELTERED ANNUITY
</TABLE>
<PAGE> 4
PART 1 DEFINITIONS
- --------------------------------------------------------------------------------
WE, US, OUR "We", "us" and "our" means North American Security
Life Insurance Company.
ACCUMULATION UNIT A unit of measure that is used to calculate the value
of an Owner's Variable Account before the Maturity
Date.
ANNUITANT Any individual person or persons whose life is used
to determine the duration of annuity payments
involving life contingencies. The Annuitant is as
designated on the Certificate Specifications Page and
Application, unless changed.
ANNUITY OPTION The method selected by you for annuity payments made
by us.
ANNUITY SERVICE OFFICE Any office designated by us for the receipt of
Payments and processing of Group Holder and Owner
requests.
ANNUITY UNIT A unit of measure that is used after the Maturity
Date to calculate Variable Annuity payments.
APPLICATION The document signed by the Owner that serves as his
or her application for participation under this
Contract, a copy of which is attached to the
Certificate.
BENEFICIARY The person, persons or entity to whom certain
benefits are payable following the death of an Owner,
or in certain circumstances, an Annuitant.
CERTIFICATE The document for each Owner which summarizes the
rights and benefits of the Owner under the Contract.
CERTIFICATE ANNIVERSARY The anniversary of the Certificate Date.
CERTIFICATE DATE The date of issue of a Certificate under this
Contract as designated on the Certificate
Specifications Page.
CERTIFICATE YEAR The period of twelve consecutive months beginning on
the Certificate Date or any anniversary thereafter.
CONTINGENT BENEFICIARY The person, persons or entity who becomes the
Beneficiary if the Beneficiary is not alive.
CONTRACT APPLICATION The document signed by the Group Holder that
evidences the Group Holder's application for this
Contract.
CONTRACT DATE The date of issue of this Contract as designated on
the Contract Specifications Page.
CONTRACT VALUE The total of an Owner's Investment Account Values
and, if applicable, any amount in the Loan Account
attributable to that Owner.
DEBT Any amounts in the Loan Account attributable to an
Owner plus any accrued loan interest on that amount.
The loan provision is only available to certain
Qualified Contracts
FIXED ANNUITY An Annuity Option with payments which are
predetermined and guaranteed as to dollar amount.
GENERAL ACCOUNT All the assets of North American Security Life
Insurance Company other than assets in separate
accounts.
GROUP HOLDER The person, persons or entity entitled to the
ownership rights under this Contract. The Group
Holder is as designated on the Contract
Specifications Page and the Contract Application.
1
<PAGE> 5
INTERNAL REVENUE CODE The Internal Revenue Code of 1986, as amended from
(IRC) time to time, and any successor statute of
similar purposes.
INVESTMENT ACCOUNT An account established by us which represents the
Owner's interest in an Investment Option prior to the
Maturity Date.
INVESTMENT ACCOUNT VALUE The value of the Owner's investment in an Investment
Account.
INVESTMENT OPTIONS The Investment Options can be either fixed or
variable. The Investment Options available under this
Contract are shown on the Application and Certificate
Specifications Page.
LOAN ACCOUNT The portion of the General Account that is
used for collateral when a loan is taken.
MARKET VALUE CHARGE A charge that may be assessed if amounts are
withdrawn or transferred from the fixed Investment
Options prior to the end of the interest rate
guarantee period.
MATURITY DATE The date on which annuity benefits commence. It is
the date specified on the Specifications Page of each
Certificate, unless changed.
NET PAYMENT The Payment less the amount of premium tax, if any,
deducted from the Payment.
NON-QUALIFIED CONTRACTS Contracts which are not issued under Qualified Plans.
OWNER The person, persons or entity named in each
Certificate. The Owner is as designated on the
Certificate Specifications Page and Application,
unless changed.
PORTFOLIO OR TRUST A separate portfolio of NASL Series Trust, a mutual
PORTFOLIO fund in which the Variable Account invests, or any
successor mutual fund.
PAYMENT An amount paid to us by or on behalf of an Owner as
consideration for the benefits provided by the
Contract.
QUALIFIED CONTRACTS Contracts issued under Qualified Plans.
QUALIFIED PLANS Retirement plans which receive favorable tax
treatment under sections 401, 403, 408 or 457, of the
Internal Revenue Code of 1986, as amended.
SEPARATE ACCOUNT A segregated account of North American Security Life
Insurance Company that is not commingled with our
general assets and obligations.
SUB-ACCOUNT(S) One or more of the Sub-Accounts of the Variable
Account. Each Sub-Account is invested in shares of a
different Trust Portfolio.
VALUATION DATE Any date on which the New York Stock Exchange is open
for business and the net asset value of a Trust
Portfolio is determined.
VALUATION PERIOD Any period from one Valuation Date to the next,
measured from the time on each such date that the net
asset value of each Portfolio is determined.
VARIABLE ACCOUNT NASL Variable Account, which is a separate account of
North American Security Life Insurance Company.
VARIABLE ANNUITY An Annuity Option with payments which: (1) are not
predetermined or guaranteed as to dollar amount; and
(2) vary in relation to the investment experience of
one or more specified variable Sub-Accounts.
2
<PAGE> 6
PART 2 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
ENTIRE CONTRACT The Contract is issued in consideration of the
Contract Application and receipt of Payment(s). This
Contract, Endorsements, if any, the Contract
Application, a copy of which is attached, and the
Application of each Owner, if one is attached to the
Certificate, constitute the entire Contract. Only the
President, a Vice President, or the Secretary of the
Company has authority to agree on our behalf to any
alteration of the Contract or any Certificate, or to
any waiver of our rights or requirements. The change
or waiver must be in writing.
The benefits and values available under the Contract
are not less than the minimum required by any statue
of the state in which the Contract is delivered. We
have filed a detailed statement of the method used to
calculate the benefits and values with the Department
of Insurance in the state in which the Contract is
issued, if required by law.
MODIFICATION We will not change or modify the Contract or any
Certificate without the consent of the Group Holder
or any Owner, as applicable, except as may be
required to make it conform to any applicable law or
regulation or any ruling issued by a government
agency.
In addition, upon 60 days prior written notice to the
Group Holder, the Contract may be modified by us to
change the Withdrawal Charges, Annual Administration
Fees, Maximum Charge Percentage, Free Withdrawal
Percentage, the tables used to determine the amount
of the first monthly annuity payment and the formula
used to calculate the Market Value Charge, provided
that such modification shall apply only to the
Owner's Certificate established after the
effective date of any such modification.
TEN DAY RIGHT TO REVIEW If not satisfied with the Certificate, an Owner may,
within 10 days after receipt of his or her
Certificate, return it by delivering or mailing it to
the Annuity Service Office, and it shall be deemed
void from the beginning. Within 7 days of receipt of
the Certificate by us, we will pay the Owner's
Contract Value, computed at the end of the Valuation
Period during which the Certificate is received by
us, to the Owner. When the Certificate is issued as
an individual retirement annuity, during the first 7
days of this 10 day period, we will return the
greater of (i) Contract Value computed at the end of
the Valuation Period during which the Certificate is
received by us or (ii) sum of all Payments.
BENEFICIARY The Beneficiary is as designated on the Certificate
Specifications Page and Application, unless changed.
However, if there is a surviving Owner, that person
will be treated as the Beneficiary. If no such
Beneficiary is living, the Beneficiary is the
"Contingent Beneficiary". If no Beneficiary or
Contingent Beneficiary is living, the Beneficiary is
the estate of the deceased Owner.
CHANGE IN MATURITY DATE Prior to the Maturity Date, an Owner may request in
writing a change of the Maturity Date. Any extension
of the Maturity Date will be subject to our prior
approval.
ASSIGNMENT The Group Holder may assign this Contract at any
time. An Owner may assign his interest in this
Contract at any time prior to the Maturity Date. No
assignment will be binding on us unless it is written
in a form acceptable to us and received at our
Annuity Service Office. We will not be liable for any
payments made or actions we take before the
assignment is accepted by us. An absolute assignment
by an Owner will revoke the interest of any revocable
Beneficiary. We will not be responsible for the
validity of any assignment.
3
<PAGE> 7
CLAIMS OF CREDITORS To the extent permitted by law, no benefits payable
under the Contract will be subject to the claims of
the Group Holder's, an Owner's, the Beneficiary's, or
the Annuitant's creditors.
DISCONTINUANCE OF NEW By giving 30 days prior written notice to the Group
OWNERS Holder, we may limit or discontinue the acceptance of
new Applications and the issuance of new Certificates
under this Contract. Such limitation or
discontinuance shall have no effect on rights or
benefits with respect to any Owner's Certificate
established prior to the effective date of such
limitation or discontinuance.
MISSTATEMENT OF AGE AND We may require proof of age or survival of any person
PROOF OF SURVIVAL upon whose age or survival any payments depend. If
the age of the Annuitant has been misstated,
the benefits will be those which the Payments would
have provided for the correct age. If we have made
incorrect annuity payments, the amount of any
underpayment will be paid immediately. The amount of
any overpayment will be deducted from future annuity
payments.
ADDITION, DELETION OR We reserve the right, subject to compliance with
SUBSTITUTION OF applicable law, to make additions to, deletions from,
INVESTMENT OPTIONS or substitutions for the Portfolio shares that are
held by the Variable Account or that the Variable
Account may purchase. We reserve the right to
eliminate the shares of any of the eligible
Portfolios and to substitute shares of another
Portfolio of the Trust, or of another open-end
registered investment company, if the shares of any
eligible Portfolio are no longer available for
investment, or if in our judgment further investment
in any eligible Portfolio should become inappropriate
in view of the purposes of the Variable Account.
We will not substitute any shares attributable to an
Owner's interest in a Sub-Account without notice to
the Owner and prior approval of the Securities
and Exchange Commission to the extent required by the
Investment Company Act of 1940. Nothing contained
herein shall prevent the Variable Account from
purchasing other securities for other series or
classes of contracts, or from effecting a conversion
between shares of another open-end investment
company.
We reserve the right, subject to compliance with
applicable law, to establish additional Sub-Accounts
which would invest in shares of a new Portfolio of
the
Trust or in shares of another open-end investment
company.We also reserve the right to eliminate
existing Sub-Accounts, to combine Sub-Accounts or to
transfer assets in a Sub-Account to another Separate
Account established by us or an affiliated company.
In the event of any such substitution or change, we
may, by appropriate endorsement, make such changes in
this and other Contracts as may be necessary or
appropriate to reflect such substitutions or change.
If deemed by us to be in the best interests of
persons having voting rights under the Contracts, the
Variable Account may be operated as a management
company under the Investment Company Act of 1940 or
it may be de-registered under such Act in the event
such registration is no longer required.
NON-PARTICIPATING The Contract is non-participating and will not share
in our profits or surplus earnings. We will pay no
dividends on the Contract.
REPORTS At least once each year we will send the Group Holder
and each Owner a report containing information
required by the Investment Company Act of 1940 and
applicable state law.
INSULATION The portion of the assets of the Variable Account
equal to the reserves and other contract liabilities
with respect to such account are not chargeable with
liabilities arising out of any other business we may
conduct. Moreover, the income, gains and losses,
realized or unrealized, from assets allocated to the
Variable Account shall be credited to or charged
against such account without regard to our other
income, gains or losses.
4
<PAGE> 8
CURRENCY AND PLACE OF All payments made to or by us shall be made in the
PAYMENTS lawful currency of the United States of America at
the Annuity Service Office or elsewhere if we
consent.
NOTICES AND ELECTIONS To be effective, all notices and elections the Group
Holder or an Owner makes under this Contract must be
in writing, signed by them and received by us at our
Annuity Service Office. Unless otherwise provided in
this Contract, all notices, requests and elections
will be effective when received by us at our Annuity
Service Office, complete with all necessary
information and the signature of the Group Holder
and/or Owner, as appropriate.
GOVERNING LAW The Contract and all Certificates issued in
connection with it will be governed by the laws of
the jurisdiction indicated on the Contract
Specifications Page.
SECTION 72(s) The provisions of this Contract shall be interpreted
so as to comply with the requirements of Section
72(s) of the Internal Revenue Code.
PART 3 OWNERSHIP
- --------------------------------------------------------------------------------
EXERCISE OF CONTRACT The Contract shall belong to the Group Holder. All
RIGHTS Contract rights and privileges not expressly reserved
by the Group Holder, may be exercised by the Owner as
to his or her interest. Such rights and privileges
can be exercised without the consent of the
Beneficiary (other than an irrevocably designated
beneficiary) or any other person.
CHANGE OF OWNER, Subject to the rights of an irrevocable Beneficiary,
ANNUITANT, BENEFICIARY each Owner may change the Owner, Annuitant, or
Beneficiary of his or her interest in the Contract by
written request in a form acceptable to us and which
is received at our Annuity Service Office. The
Annuitant may not be changed after the Maturity Date.
The Owner's Certificate need not be sent unless we
request it. Any change must be approved by us. If
approved, any change of Beneficiary will take effect
on the date the request is signed. If approved, any
change of Owner or Annuitant will take effect on the
date we received the request at the Annuity Service
Office. We will not be liable for any payments or
actions we take before the change is approved.
The substitution or addition of any Owner may result
in the resetting of the Death Benefit to an amount
equal to the Contract Value as of the date of such
change. For purposes of subsequent calculations of
the Death Benefit, described in Part 4, Benefits,
Death Benefit Before Maturity Date, the Contract
Value on the date of the change will be treated as a
Payment made on that date. In addition, all Payments
made and all amounts deducted in connection with
partial withdrawals prior to the date of the change
of Owner will not be considered in the determination
of the Death Benefit. Furthermore, the Death Benefit
on the last day of the previous Contract Year shall
be set to zero as of the date of the Owner change.
This paragraph will not apply if (a) the individual
whose death will cause the Death Benefit to be paid
is the same after the change of Owner, or (b) if
Ownership is transferred to the Owner's spouse.
If any Annuitant is changed and any Owner is not an
individual, the entire interest in the Certificate
must be distributed to the Owner within five years of
the change.
5
<PAGE> 9
PART 4 BENEFITS
- --------------------------------------------------------------------------------
ANNUITY BENEFITS We will pay a monthly income to the Annuitant, if
living, on the Maturity Date. Payments can be fixed
or variable, or a combination of fixed and variable.
Annuity benefits will commence on the Maturity Date
and continue for the period of time provided for
under the Annuity Option selected.
We may pay the Contract Value for an Owner, less
Debt, on the Maturity Date in one lump sum if the
monthly income is less than $20.
On or before the Maturity Date, you must select how
the Contract Value will be used to provide the
monthly income. You may select a Fixed or Variable
Annuity. Unless you indicate otherwise, we will
provide either variable or fixed, or a combination
variable and fixed annuity payments in proportion to
the Investment Account Value of each Investment
Option at the Maturity Date. Annuity payments will
continue for 10 years or the life of the Annuitant,
if longer.
If a Variable Annuity is used, the amount of the
first monthly annuity payment will be obtained from
the appropriate option table under the "Payment of
Contract Benefits" Section. Subsequent monthly
annuity payments will vary based on the investment
experience of the Sub-Account(s) used to effect the
annuity. The method used to calculate the amount of
the initial and subsequent payments is described
under the "Variable Annuity Payments" Section of Part
8 of this Contract.
If a Fixed Annuity is used, the portion of the
Contract Value used to effect a Fixed Annuity will be
applied to the appropriate table contained in this
Contract.
If the table in use by us on the Maturity Date is
more favorable to you, we will use that table. We
guarantee the dollar amount of fixed annuity
payments.
DEATH BENEFIT BEFORE A Death Benefit will be determined as of the date on
MATURITY DATE which written notice and proof of death and all
required claim forms are received at the Company's
Annuity Service Office as follows:
1. If any Owner dies on or prior to their 85th
birthday and the oldest Owner had an
attained age of less than 81 years on the
Certificate Date, the Death Benefit will be
determined as follows:
(a) During the first Certificate Year,
the Death Benefit will be the
greater of:
(i) the Contract Value, or
(ii) the sum of all Payments
less any amount deducted
in connection with partial
withdrawals made by or on
behalf of the Owner.
(b) During any subsequent Certificate
Year, the Death Benefit will be the
greater of:
(i) the Contract Value, or
(ii) the Death Benefit on the
last day of the previous
Certificate Year plus any
Payments and less any
amount deducted in
connection with partial
withdrawals, since then,
made by or on behalf of
the Owner.
2. If any Owner dies after their 85th birthday
and the oldest Owner had an attained age of
less than 81 years on the Certificate Date,
the Death Benefit will be determined as the
greater of:
6
<PAGE> 10
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of all
Payments made by or on
behalf of the Owner.
(ii) equals the sum of any
amounts deducted in
connection with partial
withdrawals made by or on
behalf of the Owner.
3. If any Owner dies and the oldest
Owner had an attained age of 81 or
greater on the Certificate Date,
the Death Benefit will be the
Contract Value less any applicable
Withdrawal Charges at the time of
payment of the benefits.
If there is any Debt, the Death Benefit
equals the amount described above less the
Debt under this Certificate.
DEATH OF ANNUITANT: On the death of the last
surviving Annuitant, the Owner becomes the
new Annuitant, if the Owner is an
individual. If any Owner is not an
individual the death of any Annuitant is
treated as the death of an Owner and the
Death Benefit will be determined by
substituting the Annuitant for the Owner
as described below.
DEATH OF OWNER: We will pay the Death
Benefit to the Beneficiary if any Owner dies
prior to the Maturity Date. The Death
Benefit may be taken in one sum immediately,
in which case the Certificate will
terminate. If the Death Benefit is not taken
in one sum immediately, the Certificate will
continue subject to the following
provisions:
(a) The Beneficiary becomes the Owner.
(b) The excess, if any, of the Death
Benefit over the Contract Value
will be allocated to and among the
Investment Accounts in proportion
to their values as of the date on
which the Death Benefit is
determined.
(c) No additional Payments may be
applied under the Contract by or on
behalf of the Owner.
(d) If the Beneficiary is not the
deceased Owner's spouse, the entire
interest in the Contract must be
distributed under one of the
following options:
(i) The entire interest in the
Contract must be
distributed over the life
of the Beneficiary, or
over a period not
extending beyond the life
expectancy of the
Beneficiary, with
distributions beginning
within one year of the
Owner's death; or
(ii) the entire interest in the
Contract must be
distributed within 5 years
of the Owner's Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are
complete, the entire remaining Contract
Value must be distributed in a lump sum
immediately.
(e) If the Beneficiary is the deceased
Owner's spouse, the Contract will
continue with the surviving spouse
as the new Owner. The surviving
spouse may name a new Beneficiary
(and, if no Beneficiary is so
named, the surviving spouse's
estate will be the Beneficiary).
Upon the death of the surviving
spouse, the Death Benefit will
equal the Contract Value at the
time of the surviving spouse's
death, and the entire interest in
the Contract must be distributed to
the new Beneficiary in accordance
with the provisions of (d) (i) or
(d) (ii) above.
(f) Withdrawal Charges will be waived
on any withdrawals, unless the
Death
7
<PAGE> 11
Benefit payable upon the Owner's death was
defined under provision 3., Death Benefit
Before Maturity Date above. If the Death
Benefit was so defined, Withdrawal Charges
will be assessed at the time a withdrawal
occurs.
If there is more than one Beneficiary, the
foregoing provisions will independently
apply to each Beneficiary.
DEATH BENEFIT ON OR AFTER If annuity payments have been selected based
MATURITY DATE on an Annuity Option providing for payments
for a guaranteed period, and the Annuitant
dies on or after the Maturity Date, We will
make the remaining guaranteed payments to
the Beneficiary. Any remaining payments will
be made as rapidly as under the method of
distribution being used as of the date of
the Annuitant's death. If no Beneficiary is
living, We will commute any unpaid
guaranteed payments to a single sum (on the
basis of the interest rate used in
determining the payments) and pay that
single sum to the estate of the last to die
of the Annuitant and the Beneficiary.
PROOF OF DEATH Proof of death is required upon the death of
the Annuitant or the Owner. Proof of death
is one of the following received at the
Annuity Service Office:
(a) A certified copy of a death
certificate.
(b) A certified copy of a decree of a
court of competent jurisdiction as
to the finding of death.
(c) Any other proof satisfactory to us.
PART 5 PAYMENTS
- --------------------------------------------------------------------------------
GENERAL All Payments under this Contract are payable
at our Annuity Service Office or such other
place as we may designate.
The minimum Payment for any Certificate will
be $30. However, at least $300 must be paid
for each Certificate during the first
Certificate Year. Payments may be made at
any time. If a Payment for a Certificate
would cause the Contract Value for an Owner
to exceed $1,000,000, or that Contract Value
already exceeds $1,000,000, no additional
Payments will be accepted without our prior
approval.
NONPAYMENT OF PAYMENTS If, prior to the Maturity Date, no Payments
FOR TWO YEARS for a Certificate have been made for two
consecutive Certificate Years, and if both:
(a) the total Payments made for the
Certificate, less any partial
withdrawals, are less then $2,000;
and
(b) the Contract Value for an Owner at
the end of such two year period is
less than $2,000;
We may cancel the Certificate and
participation under this Contract and pay
the Owner his Contract Value (measured as of
the Valuation Period during which the
cancellation occurs), less the Debt and
Annual Administration Fee.
ALLOCATION OF NET When we receive Payments, the Net Payments
PAYMENTS will be allocated among Investment Options
in accordance with the allocation
percentages shown on the Certificate
Specifications Page. The Owner may change
the allocation of subsequent Net Payments at
any time, without charge, by giving us
written notice.
PART 6 VARIABLE ACCOUNT PROVISIONS
- --------------------------------------------------------------------------------
8
<PAGE> 12
INVESTMENT ACCOUNT We will establish a separate Investment
Account for each Owner for each variable
Investment Option to which an Owner
allocates amounts. The Invest-
ment Account represents the number of an
Owner's Accumulation Units in an Investment
Option.
INVESTMENT ACCOUNT VALUE The Investment Account Value of an Owner's
Investment Account is determined by (a)
times (b) where:
(a) equals the number of Accumulation
Units credited to the Investment
Account; and,
(b) equals the value of the appropriate
Accumulation Unit.
ACCUMULATION UNITS We will credit Net Payments to an Owner's
Investment Accounts in the form of
Accumulation Units. The number of
Accumulation Units to be credited to each
Investment Account will be determined by
dividing the Net Payment allocated to that
Investment Account by the Accumulation Unit
value for that Investment Account.
Accumulation Units will be adjusted for any
transfers and will be canceled on payment of
a death benefit, withdrawal, maturity or
assessment of certain charges based on their
value for the Valuation Period in which such
transaction occurs.
VALUE OF ACCUMULATION UNIT The Accumulation Unit value for any
Valuation Period is determined by
multiplying the Accumulation Unit value for
the immediately preceding Valuation
Period by the "net investment factor" for
the Investment Account for the Valuation
Period for which the value is being
determined. The value of an Accumulation
Unit may increase, decrease or remain the
same from one Valuation Period to the next.
NET INVESTMENT FACTOR The net investment factor for a variable
Investment Account is an index that measures
the investment performance of a Sub-Account
from one Valuation Period to the next. The
net investment factor for any Valuation
Period is determined by dividing (a) by (b)
and subtracting (c) from the result where:
(a) is the net result of:
1) the net asset value per
share of a Portfolio share
held in the Sub-Account
determined as of the end
of the current Valuation
Period, plus:
2) the per share amount of
any dividend or capital
gain distributions made by
the Portfolio on shares
held in the Sub-Account
if the "ex-dividend" date
occurs during the current
Valuation Period, and
(b) is the net asset value per share of
a Portfolio share held in the
Sub-Account determined as of the
end of the immediately preceding
Valuation Period, and
(c) is the Asset Fee as defined in Part
11, Fees and Deductions.
The net investment factor may be greater or
less than, or equal to, one.
9
<PAGE> 13
PART 7 FIXED ACCOUNT PROVISIONS
- --------------------------------------------------------------------------------
INVESTMENT ACCOUNT We will establish a separate Investment
Account for each Owner each time an Owner
allocates amounts to a fixed Investment
Option. Any amounts an Owner allocates to
the same fixed Investment Option on the same
day will establish a new Investment Account.
Amounts invested in these Investment
Accounts will earn interest at the
guaranteed rate in effect on the date the
amounts are allocated for the duration of
the guarantee period.
We will determine the guaranteed rate from
time to time for new allocations, but in no
event will the minimum guaranteed rate under
a fixed Investment Account be less than 3%.
GUARANTEE PERIODS For any amounts allocated to the fixed
Investment Options, an Owner has the choice
of the guarantee periods available. The
amount can be allocated into any combination
of the fixed Investment Options offered
under this Contract.
Separate Investment Accounts will be
established for each guarantee period. The
guarantee period will be the duration of the
fixed Investment Option selected measured
from the date the amount is allocated to the
Investment Account. Amounts cannot be
allocated to a fixed Investment Option that
would extend the guarantee period beyond the
Maturity Date.
RENEWALS The renewal amount is the Investment Account
Value at the end of the particular guarantee
period. The renewal amount will be
automatically renewed in the same Investment
Option at the end of the guarantee period,
unless the Owner specifies otherwise. If
renewal in a particular Investment Option
would result in the guarantee period for
that Investment Account extending beyond the
Maturity Date, the renewal amount may not be
renewed in that Investment Option. The
renewal amount will be applied to the
longest guarantee period of a fixed
Investment Option such that the guarantee
period does not extend beyond the Maturity
Date.
INVESTMENT ACCOUNT VALUE The amount in the Investment Accounts of an
Owner will accumulate at a rate of interest
determined by us and in effect on the date
the amount is allocated to the Investment
Account. The Investment Account Value of an
Owner's Investment Account is the
accumulated value of the amount invested in
the Investment Account reduced by any
withdrawals, loans, transfers or charges
taken from the Investment Account.
MARKET VALUE CHARGE Any amounts withdrawn from a fixed
Investment Account, prior to the end of the
guarantee period, may be subject to a Market
Value Charge. The Market Value Charge will
only apply to amounts withdrawn from a
Investment Account pursuant to a partial
withdrawal, total withdrawal, transfer or a
loan. A Market Value Charge will not be
assessed on amounts withdrawn from the 1
year fixed Investment Account.
MARKET VALUE CHARGE A Market Value Charge will be calculated
FACTOR separately for each fixed Investment Account
affected. The Market Value Charge for a
particular Investment Account will be
calculated by multiplying the amount
withdrawn or transferred from the Investment
Account by the adjustment factor described
below.
The adjustment factor for a particular
Investment Account is determined by the
following formula: 0.75 x (B-A) x C/12.
Where A, B and C are defined as follows:
A - The guaranteed interest rate on the
Investment Account.
10
<PAGE> 14
B - The guaranteed interest rate available,
on the date the request is processed,
for amounts allocated to a new
Investment Account with the same length
of guarantee period as the Investment
Account from which amounts are being
withdrawn.
C - The number of complete months remaining
to the end of the guarantee period.
For purposes of this calculation, the
maximum difference between "B" and "A" will
be 3%. Furthermore, the adjustment factor
will never be less than zero. The amount of
Market Value Charge, if any, upon transfer,
or loan is specified in Part 9, Transfer
Provisions, and upon withdrawal as specified
in Part 10, Withdrawal Provisions.
PART 8 ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
VARIABLE ANNUITY PAYMENTS The amount of the first variable annuity
payment is determined by applying the
portion of the Contract Value for a
Certificate used to effect a Variable
Annuity, measured as of a date not more than
10 business days prior to the Maturity Date
(minus any applicable premium taxes), to the
appropriate tables(s) contained in the
Contract and the Certificate. If the table
in use by us on the Maturity Date is more
favorable to the Owner, we will use that
table. Subsequent payments will be based on
the investment performance of one or more
Sub-Accounts as selected by the Owner. The
amount of such payments is determined by the
number of Annuity Units credited for each
Sub-Account. Such number is determined by
dividing the portion of the first payment
allocated to that Sub-Account by the Annuity
Unit value for that Sub-Account determined
as of the same date that the Contract Value
used to effect annuity payments under a
Certificate was determined. This number of
Annuity Units for each Sub-Account is then
multiplied by the appropriate Annuity Unit
value for each subsequent determination
date, which is a uniformly applied date not
more than 10 business days before the
payment is due.
MORTALITY AND EXPENSE We guarantee that the dollar amount of each
GUARANTEE variable annuity payment will not be
affected by changes in mortality and expense
experience.
ANNUITY UNIT VALUE The value of an Annuity Unit for each
Sub-Account for any Valuation Period is
determined as follows:
(a) The net investment factor for the
Sub-Account for the Valuation
Period for which the Annuity Unit
value is being calculated is
multiplied by the value of the
Annuity Unit for the preceding
Valuation Period; and
(b) The result is adjusted to
compensate for the interest rate
assumed in the tables used to
determine the first variable
annuity payment.
The dollar value of Annuity Units may
increase, decrease or remain the same from
one Valuation Period to the next.
FIXED ANNUITY PAYMENTS The amount of each fixed annuity payment is
determined by applying the portion of the
Contract Value used to effect a Fixed
Annuity under a Certificate measured as of a
date not more than 10 business days prior to
the Maturity Date (minus any applicable
premium taxes) to the appropriate table
contained in the Contract and the
Certificate. If the table in use by us on
the Maturity Date is more favorable to the
Owner, we will use that table.
We guarantee the dollar amount of fixed
annuity payments.
11
<PAGE> 15
PART 9 TRANSFERS
- --------------------------------------------------------------------------------
TRANSFERS Before the Maturity Date, the Owner may
transfer amounts among Investment Accounts
of the Contract. There is no transaction
charge for transfers, however, amounts
transferred from a fixed Investment Account
prior to the end of the guarantee period may
be subject to a Market Value Charge. Amounts
will be canceled from the Investment
Accounts from which amounts are transferred
and credited to the Investment Account to
which amounts are transferred. We will
effect such transfers so that the Contract
Value for a Certificate on the date of
transfer will not be affected by the
transfer, except for the Market Value
Charge, if applicable. We reserve the right
to limit, upon notice, the maximum number of
transfers that can be made per Certificate
Year to one per month or six at anytime
within a Certificate Year.
An Owner must transfer at least $300 or, if
less, the entire amount in the Investment
Account each time the Owner makes a
transfer. If, after the transfer, the amount
remaining in the Investment Account from
which the transfer is made is less than
$100, then we will transfer the entire
amount instead of the requested amount. We
reserve the right to defer, modify or
terminate the transfer privilege at any time
that we are unable to purchase or redeem
shares of the Trust Portfolios.
Amounts may not be transferred from a fixed
Investment Account unless those amounts have
been in the fixed Investment Account for at
least one year. The Market Value Charge, if
applicable, will be deducted from the amount
transferred.
Once variable annuity payments have begun,
an Owner may transfer all or part of the
investment upon which the Owner's variable
annuity payments are based from one
Sub-Account to another. To do this, we will
convert the number of variable Annuity Units
held by an Owner in the Sub-Account from
which the Owner is transferring to a number
of variable Annuity Units of the Sub-Account
to which the Owner is transferring so that
the amount of a variable annuity payment, if
it were made at that time, would not be
affected by the transfer. After that, the
variable annuity payments will reflect
changes in the values of the Owner's new
variable Annuity Units. An Owner must give
us notice at least 30 days before the due
date of the first variable annuity payment
to which the transfer will apply. We reserve
the right, upon notice, to limit to four the
maximum number of transfers an Owner may
make per Certificate Year after variable
annuity payments have begun.
After the Maturity Date, transfers will not
be allowed from a fixed to a variable
Annuity Option, or from a variable to a
fixed Annuity Option.
TRANSFER MARKET VALUE Amounts transferred from a fixed Investment
CHARGE Account may be subject to a Market Value
Charge. For Transfers, including transfers
to the Loan Account pursuant to a loan
request, the Market Value Charge, if
applicable, will be calculated by
multiplying the amount transferred from each
fixed Investment Account by the Market Value
Charge Factor and deducted from the amount
transferred.
If there are multiple Investment Accounts
under a fixed Investment Option, the
requested amount from that Investment Option
must be transferred from those Investment
Accounts on a first-in-first-out basis.
The Market Value Charge may not exceed the
earnings in excess of 3% per annum
attributable to the amount transferred.
In no event will the Market Value Charge be
greater than 10% of the amount
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<PAGE> 16
transferred.
In no event will the Market Value Charge
reduce the amount transferred below the
amount required under the non-forfeiture
laws of the state that has jurisdiction over
this contract.
PART 10 WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE An Owner's Contract Value is equal to the
total of that Owner's Investment Account
Values and, if applicable, any amount in the
Loan Account attributable to that Owner.
PAYMENTS OF WITHDRAWALS An Owner may withdraw part or all of his
Contract Value, less any Debt, at any time
before the earlier of the death of an Owner
or the Maturity Date, by sending us a
written request. We will pay all withdrawals
within seven days of receipt at the Annuity
Service Office subject to postponement in
certain circumstances, as specified below.
SUSPENSION OF PAYMENTS We may defer the right of withdrawal from,
or postpone the date of payments from, the
variable Investment Accounts for any period
when: (1) the New York Stock Exchange is
closed (other than customary weekend and
holiday closings); (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 Variable
Account is not reasonably practicable or it
is not reasonably practicable to determine
the value of the Variable Account's net
assets; or (4) the Securities and Exchange
Commission, by order, so permits for the
protection of security holders; provided
that applicable rules and regulations of the
Securities and Exchange Commission shall
govern as to whether the conditions
described in (2) and (3) exist.
We may defer the right of withdrawal from
the fixed Investment Accounts for not more
than six months from the day we receive
written request and the Certificate, if
required. If such payments are deferred 30
days or more, the amount deferred will earn
interest at a rate not less than 3% per
year.
TOTAL WITHDRAWAL Upon receipt of an Owner's request to
withdraw the entire Contract Value, we will
terminate the Certificate and pay the Owner
the Contract Value, less any applicable
Debt, Withdrawal Charges, Market Value
Charges and the Annual Administration Fee.
PARTIAL WITHDRAWAL If an Owner is withdrawing part of his
Contract Value, he/she should specify the
amount that should be withdrawn from each
Investment Option of the Contract.
If there are multiple Investment Accounts
under a fixed Investment Option, the
requested amount from that Investment Option
must be withdrawn from those Investment
Accounts on first-in-first-out basis. If
he/she does not specify, the requested
amount will be withdrawn in the following
order:
a) Variable Investment Accounts, on a
pro rata basis,
b) Fixed Investment Options beginning
with the shortest guarantee period
first and the longest guarantee
period last.
We will deduct the Withdrawal Charge and the
Market Value Charge, if applicable, from the
Owner's Contract Value remaining after
payment of the requested amount.
WITHDRAWAL CHARGE If a withdrawal is made from the Contract by
an Owner before the Maturity Date, a
Withdrawal Charge (contingent deferred sales
charge) may be assessed against
13
<PAGE> 17
Payments that have been in the Contract for the Owner
for less than 7 years. No Withdrawal Charge will
apply to Payments being withdrawn that have been in
the Contract for an Owner for 7 or more years. The
amount of the Withdrawal Charge and when it is
assessed is discussed below:
1. The free withdrawal amount is defined as the
greater of:
a) the excess of an Owner's Contract
Value on the date of withdrawal
over the unliquidated Payments; or
b) the excess of (i) over (ii) where:
(i) equals the Free Withdrawal
Percentage as set forth on
the Certificate
Specifications Page
multiplied by the total
Payments made by or on
behalf of the Owner.
(ii) equals the sum of all
prior Partial Withdrawals
in the Certificate Year
made by or on behalf of
the Owner.
The free withdrawal amount may be withdrawn
free of a Withdrawal Charge.
The free withdrawal amount will be applied
to an Owner's requested withdrawal in the
following order:
a) withdrawals from the variable
Investment Accounts;
b) withdrawals from fixed Investment
Options beginning with the shortest
guarantee period first and the
longest guarantee period last.
2. If a withdrawal is made for an amount
greater than the free withdrawal amount,
Payments will be liquidated on a
first-in-first-out basis. We will liquidate
Payments in the order such Payments were
made: the oldest unliquidated Payment first,
the next Payment second, etc... until all
Payments have been liquidated.
3. A Withdrawal Charge will be assessed against
Payments liquidated that have been in the
Contract for an Owner less than 7 years.
4. Any Payments liquidated are subject to a
Withdrawal Charge based on the length of
time the Payment for an Owner has been in
the Contract. The Withdrawal Charge
regarding a Certificate is determined by
multiplying the amount of the Payment being
liquidated by the applicable Withdrawal
Charge Percentage obtained from the table on
the Certificate Specifications Page. In no
event will the Withdrawal Charge percentage
be greater than the maximum shown in the
Contract Specifications.
The total Withdrawal Charge will be the sum
of the Withdrawal Charges for the Payments
being liquidated.
5. The Withdrawal Charge is deducted from an
Owner's Contract Value remaining after
he/she is paid the amount requested, except
in the case of a complete withdrawal when it
is deducted from the amount otherwise
payable. In the case of a partial
withdrawal, the amount requested from an
Investment Account may not exceed the value
of that Investment Account less any
applicable Withdrawal Charge and/or Market
Value Charge, if applicable.
6. In no event will the aggregate Withdrawal
Charge be greater than the maximum
Withdrawal Charge Percentage on the
Certificate Specifications Page multiplied
by the total Payments made by or on behalf
of the Owner.
WITHDRAWAL MARKET VALUE Amounts withdrawn from a fixed Investment
CHARGE Account may be subject to a Market Value
Charge. The total Market Value Charge will
be the sum of the Market Value Charges for
each Investment Account being withdrawn. For
full withdrawals, the
14
<PAGE> 18
Market Value Charge will be calculated on
the total amount of each Investment Account,
and the total Market Value Charge will be
deducted from the amount otherwise payable.
For partial withdrawals, the Market Value
Charge will be calculated based on the
withdrawal amount requested from each
Investment Account and the Market Value
Charge, if applicable, will be deducted from
the remaining Investment Account Value.
There will be no Market Value Charge on
withdrawals from the fixed Investment
Accounts in the following situations: (a)
withdrawal from a 1-year fixed Investment
Account, (b) death of the Owner, (c) amounts
withdrawn to pay any fees or charges, (d)
amounts applied at the Maturity Date to
purchase an annuity at the guaranteed rates
in the Annuity Option tables, and (e)
amounts withdrawn from fixed Investment
Accounts within one month prior to the end
of the guarantee period.
An amount equal to the Free Withdrawal
Percentage, as set forth on the Certificate
Specifications Page, multiplied by the total
Payments, less any prior withdrawals in that
Certificate Year for an Owner, may be
withdrawn without the imposition of a
Withdrawal Charge.
The Market Value Charge may not exceed the
earnings in excess of 3% per annum
attributable to the amount withdrawn.
In no event will the Market Value Charge
plus any Withdrawal Charges for an
Investment Account be greater than the
Maximum Charge Percentage as set forth on
the Certificate Specifications Page,
multiplied by the amount withdrawn.
In no event will the Market Value Charge
reduce the amount payable on withdrawal
below the amount required under the
non-forfeiture laws of the state that has
jurisdiction over this Contract.
FREQUENCY AND AMOUNT OF An Owner may make as many partial
PARTIAL WITHDRAWALS withdrawals as he or she wishes. Any
withdrawal from an Owner's Investment
Account must be at least $300 or the entire
balance of the Investment Account, if less.
If after the withdrawal, the amount
remaining in that Owner's Investment Account
is less than $100, then we will consider the
withdrawal request to be a request for
withdrawal of the entire amount held in the
Investment Account. If a partial withdrawal
would reduce the Owner's Contract Value to
less than $300, then we will treat the
partial withdrawal request as a total
withdrawal of that Owner's Contract value.
15
<PAGE> 19
PART 11 FEES AND DEDUCTIONS
- --------------------------------------------------------------------------------
ASSET FEE To compensate us for assuming mortality and expense
risks, and certain administration expenses, we deduct
from each variable Investment Option a fee each
Valuation Period at an annual rate of 1.40%. A
portion of this Asset Fee may also be used to
reimburse us for distribution expenses. This fee is
reflected in the Net Investment Factor used to
determine the value of Accumulation Units and Annuity
Units of the Certificate.
ANNUAL ADMINISTRATION FEE To compensate us for assuming certain administrative
expenses, we charge an Annual Administration Fee as
set forth on the Certificate Specifications Page.
Prior to the Maturity Date, the Annual Administration
Fee is deducted on each Certificate Anniversary. It
is withdrawn from each Investment Option in the same
proportion that the value of the Investment Accounts
of each Investment Option bears to the Contract
Value. If the Contract Value is totally withdrawn on
any date other than the Certificate Anniversary, we
will deduct the total amount of the Annual
Administration Fee from the amount paid. During the
annuity period, the Annual Administration Fee is
deducted on a pro rata basis from each annuity
payment.
Prior to the Maturity Date, when the Annual
Administration Fee is to be assessed, if the sum of
all Investment Accounts exceeds $100,000.00, the
Annual Administration Fee will be waived.
TAXES We reserve the right to charge certain taxes against
Payments for an Owner (either at the time of payment
or liquidation), Contract Value of an Owner,
payment of Death Benefit, or annuity payments, as
appropriate. Such taxes may include any premium taxes
or other taxes levied by any government entity which
we, in our sole discretion, determine have resulted
from the establishment or maintenance of the Variable
Account, or from the receipt by us of Payments, or
from the issuance of the Contract and an Owner's
Certificate, or from the commencement or continuance
of annuity payments under the Contract.
PART 12 LOAN PROVISIONS (CERTAIN QUALIFIED CONTRACTS ONLY)
- --------------------------------------------------------------------------------
GENERAL This loan provision applies only to certain Qualified
Contracts and Certificates. All provisions and terms
of a loan are included in the Qualified Plan
Endorsement, if attached.
PART 13 PAYMENT OF CONTRACT BENEFITS
- --------------------------------------------------------------------------------
GENERAL Benefits payable under this Contract may be applied
in accordance with one or more of the Annuity Options
described below, subject to any restrictions of
Internal Revenue Code section 72(s).
ALTERNATE ANNUITY Instead of settlement in accordance with the Annuity
OPTIONS Options described below, an Owner may choose an
alternate form of settlement acceptable to us.
DESCRIPTION OF ANNUITY Option 1: Life Annuity
16
<PAGE> 20
OPTION
a) Life Non-Refund. We will make payments
during the lifetime of the Annuitant. No
payments are due after the death of the
Annuitant.
b) Life 10-Year Certain. We will make payments
for 10 years and after that during the
lifetime of the Annuitant. No payments are
due after the death of the Annuitant or, if
later, the end of the 10-year period
certain.
Option 2: Joint and Survivor Life Annuity
The second Annuitant named shall be referred to as
the Co-Annuitant.
a) Joint and Survivor Non-Refund. We will make
payments during the joint lifetime of the
Annuitant and Co-Annuitant. Payments will
then continue during the remaining lifetime
of the survivor. No payments are due after
the death of the last survivor of the
Annuitant and Co-Annuitant.
b) Joint and Survivor with 10-Year Certain. We
will make payments for 10 years and after
that during the joint lifetime of the
Annuitant and Co-Annuitant. Payments will
then continue during the remaining lifetime
of the survivor. No payments are due after
the death of the survivor of the Annuitant
and Co-Annuitant or, if later, the end of
the 10-year period certain.
ANNUITY PAYMENT RATES The annuity payment rates on the attached
tables show, that for each $1,000 applied,
the dollar amount of both: (a) the first
monthly variable annuity payment
based on the assumed interest rate of 3%;
and (b) the monthly fixed annuity payment,
when this payment is based on the minimum
guaranteed interest rate of 3% per year. The
annuity payment rates for payments made on a
less frequent basis (quarterly, semiannual
or annual) will be quoted by us upon
request.
The annuity payment rates are based on the
1983 Table A projected at Scale G with
interest at the rate of 3% per annum and
assume births in year 1942. The amount of
each annuity payment will depend upon the
and adjusted age of the Annuitant, the
Co-Annuitant, if any, or other payee. The
adjusted age is determined from the actual
age nearest birthday at the time the first
monthly annuity payment is due, as follows:
<TABLE>
<CAPTION>
Calendar Year of Birth Adjustment to Actual Age
--------------------------------------------------------------------------
<S> <C>
1899 - 1905 +6
1906 - 1911 +5
1912 - 1918 +4
1919 - 1925 +3
1926 - 1932 +2
1933 - 1938 +1
1939 - 1945 0
1946 - 1951 -1
1952 - 1958 -2
1959 - 1965 -3
1966 - 1972 -4
1973 - 1979 -5
1980 - 1986 -6
1987 + -7
</TABLE>
The dollar amount of annuity payment for any
age or combination of ages not shown
following or for any other form of Annuity
Option agreed to by us will be quoted on
request.
AMOUNT OF FIRST MONTHLY PAYMENT
17
<PAGE> 21
PER $1000 OF CONTRACT VALUE
OPTION 1: LIFE ANNUITY
<TABLE>
<CAPTION>
Option 1(A): Non-Refund
- ------------------------------------------------------
Adjusted Age of Monthly
Annuitant Payment
- ------------------------------------------------------
<S> <C>
55 4.23
60 4.64
65 5.20
70 5.94
75 6.91
80 8.21
85 9.94
</TABLE>
<TABLE>
<CAPTION>
Option 1(B): 10-Year Certain
-------------------------------------------------------
Adjusted Age of Monthly
Annuitant Payment
-------------------------------------------------------
<S> <C>
55 4.19
60 4.57
65 5.05
70 5.65
75 6.35
80 7.13
85 7.90
</TABLE>
OPTION 2: JOINT AND SURVIVOR LIFE ANNUITY
Option 2(A): Non-Refund
<TABLE>
<CAPTION>
Age of Co-Annuitant
- ----------------------------------------------------------------------------------------
Adjusted
Age of 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.24 3.38 3.53 3.69 3.83
60 3.40 3.58 3.78 3.98 4.16
65 3.61 3.85 4.10 4.36 4.61
70 3.88 4.19 4.53 4.88 5.20
75 4.23 4.64 5.10 5.57 6.00
80 4.70 5.26 5.88 6.51 7.06
85 5.34 6.09 6.94 7.76 8.43
</TABLE>
Option 2(B): 10 Year Certain
<TABLE>
<CAPTION>
Age of Co-Annuitant
- ----------------------------------------------------------------------------------------
Adjusted
Age of 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.24 3.38 3.53 3.69 3.83
60 3.40 3.58 3.78 3.98 4.16
65 3.61 3.85 4.10 4.36 4.59
70 3.88 4.18 4.52 4.86 5.16
75 4.23 4.63 5.07 5.50 5.86
80 4.68 5.21 5.78 6.30 6.69
85 5.27 5.95 6.62 7.18 7.56
- ----------------------------------------------------------------------------------------
</TABLE>
Monthly installments for ages not shown will be furnished on request.
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<PAGE> 24
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NORTH AMERICAN
SECURITY LIFE INSURANCE COMPANY
A Wholly-Owned Subsidiary of North American Security Life Assurance Company of
Canada
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21
<PAGE> 1
EXHIBIT (b)(4)(ii)
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
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EXECUTIVE OFFICE: ANNUITY SERVICE OFFICE: HOME OFFICE
116 Huntington Avenue P.O. Box 9230 Wilmington, Delaware
Boston, MA 02116 Boston, MA 02205-9230
1-800-344-1029
This is a Certificate which evidences the interest of the Owner named in the
Certificate Specifications Page in the Flexible Payment Deferred Combination
Fixed and Variable Group Annuity Contract issued by The Manufacturers Life
Insurance Company of North America.
The Manufacturers Life Insurance Company of North America will pay an annuity
commencing on the Maturity Date to the Annuitant, if then living, in accordance
with the Benefits and the Payment of Contract Benefits provisions. If the Owner
dies while the Contract is in effect and the Owner's Certificate is in force and
before the Maturity Date, the Company will pay a Death Benefit to the
Beneficiary upon receipt of all required claim forms and proof of death of the
Owner at the Annuity Service Office.
The Contract is the legal contract. This Certificate is merely a summary of the
rights, duties and benefits of that Contract. A copy of the Contract may be
obtained by requesting it in writing from us at our Annuity Service Office. If
there is any conflict, the Contract is the controlling document.
All payments under this Certificate will be made to the persons and in the
manner set forth in the contract.
TEN DAY RIGHT TO REVIEW
THE OWNER MAY CANCEL THE CERTIFICATE BY RETURNING IT TO OUR ANNUITY SERVICE
OFFICE OR AGENT AT ANY TIME WITHIN 10 DAYS AFTER RECEIPT OF THE CERTIFICATE.
WITHIN 7 DAYS OF RECEIPTS OF THE CERTIFICATE BY US, WE WILL REFUND ALL PAYMENTS
MADE TO THE OWNER.
WHEN THE CERTIFICATE IS ISSUED AS AN INDIVIDUAL RETIREMENT ANNUITY, DURING THE
FIRST 7 DAYS OF THIS 10 DAY PERIOD, WE WILL RETURN THE GREATER OF (I) CONTRACT
VALUE COMPUTED AT THE END OF THE VALUATION PERIOD DURING WHICH THE CERTIFICATE
IS RECEIVED BY US OR (II) SUM OF ALL PAYMENTS.
SIGNED FOR THE COMPANY AT ITS EXECUTIVE OFFICE, BOSTON, MASSACHUSETTS, ON THE
DATE OF COVERAGE.
VICE PRESIDENT PRESIDENT
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE GROUP ANNUITY
CERTIFICATE NON-PARTICIPATING
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS
TO FIXED DOLLAR AMOUNT.
VENTURE.003
<PAGE> 2
INTRODUCTION
This Certificate evidences the interest of the Owner in the flexible payment
deferred combination fixed and variable group annuity contract. This Contract
provides that prior to the Maturity Date of this Certificate, the Contract Value
for an Owner will accumulate on either a fixed or variable basis or a
combination of both. After the Maturity Date, annuity payments may be either
fixed or variable, or a combination of fixed and variable.
An Owner's interest in the variable portion of the Contract will vary with the
investment performance of an Owner's Variable Account. The fixed portion of the
Contract will accumulate based on interest rates guaranteed by the Company for
the period selected.
If an Owner selects annuity payments on a variable basis, the payment amount
will vary with the investment performance of the Owner's Variable Account.
An Owner must allocate Payments among one or more Investment Options. The
Investment Options are identified on the Certificate Specifications Page.
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
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Certificate Specifications Page
<S> <C>
PART 1 - DEFINITIONS 1
PART 2 - GENERAL PROVISIONS 3
PART 3 - OWNERSHIP 5
PART 4 - BENEFITS 5
PART 5 - PAYMENTS 8
PART 6 - VARIABLE ACCOUNT PROVISIONS 8
PART 7 - FIXED ACCOUNT PROVISIONS 9
PART 8 - ANNUITY PROVISIONS 11
PART 9 - TRANSFERS 12
PART 10 - WITHDRAWAL PROVISIONS 13
PART 11 - FEES AND DEDUCTIONS 15
PART 12 - LOAN PROVISION 16
PART 13 - PAYMENT OF CONTRACT BENEFITS 16
</TABLE>
<PAGE> 3
CERTIFICATE SPECIFICATIONS PAGE
GROUP HOLDER: VENTURE TRUST PLAN TYPE: NON QUALIFIED
TYPE OF CONTRACT: NON-QUALIFIED MATURITY DATE: 10/21/2027
CONTRACT DATE: 10/21/1997 CONTRACT NUMBER: 000000022
INITIAL PAYMENT: $10,000.00 GOVERNING LAW: SC
INITIAL ALLOCATION OF NET PAYMENT: (SEE REVERSE FOR ALL AVAILABLE OPTIONS)
<TABLE>
<CAPTION>
FIXED INVESTMENT OPTIONS: INITIAL INITIAL GUARANTEE
INTEREST RATE PERIOD EXPIRES
<S> <C> <C> <C>
1 YEAR FIXED 50.00% 4.10% 10/21/1998
</TABLE>
VARIABLE INVESTMENTS OPTIONS:
EQUITY 50.00% ANNUAL ADMINISTRATION FEE: $30.00
ASSET FEE 1.40%
MAXIMUM CHARGE PERCENTAGE 10.00%
FREE WITHDRAWAL PERCENTAGE 10.00%
<TABLE>
<CAPTION>
NUMBER OF COMPLETE CERTIFICATE WITHDRAWAL
YEARS PURCHASE PAYMENT FOR AN CHARGE
OWNER HAS BEEN IN CONTRACT PERCENTAGE
-------------------------- ----------
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
----------
TOTAL 100.00%
</TABLE>
<PAGE> 4
OWNER: JOHN DOE CO-OWNER:
ANNUITANT: JOHN DOE AGE: 55
CO-
ANNUITANT: BENEFICIARY: SEE ATTACHED LIST
<PAGE> 5
AVAILABLE INVESTMENT OPTIONS
FIXED INVESTMENT OPTIONS
1 Year Fixed
3 Year Fixed
5 Year Fixed
7 Year Fixed
<TABLE>
<CAPTION>
VARIABLE INVESTMENT OPTIONS
<S> <C>
Pacific Rim Emerging Markets Manufacturers Adviser Corporation
Science & Technology T. Rowe Price Associates, Inc.
International Small Cap Founders Asset Management, Inc.
Emerging Growth Warburg, Pincus Counsellors, Inc.
Pilgrim Baxter Growth Pilgrim Baxter & Associates
Small/Mid Cap Fred Alger Management, Inc.
International Stock Rowe Price-Fleming International, Inc.
Worldwide Growth Founders Asset Management, Inc.
Global Equity Morgan Stanley Asset Management Inc.
Small Company Value Rosenberg Institutional Equity Management
Growth Founders Asset Management, Inc.
Equity Fidelity Management Trust Company
Quantitative Equity Manufacturers Adviser Corporation
Blue Chip Growth T. Rowe Price Associates, Inc.
Real Estate Securities Manufacturers Adviser Corporation
Value Miller Anderson & Sherrerd, LLP
International Growth & Income J.P. Morgan Investment Management Inc.
Growth and Income Wellington Management Company, LLP
Equity-Income T. Rowe Price Associates, Inc.
Balanced Founders Asset Management, Inc.
Aggressive Asset Allocation Fidelity Management Trust Company
High Yield Miller Anderson & Sherrerd, LLP
Moderate Asset Allocation Fidelity Management Trust Company
Conservative Asset Allocation Fidelity Management Trust Company
Strategic Bond Salomon Brothers Asset Management Inc.
Global Government Bond Oechsle International Advisors, L.P.
Capital Growth Bond Manufacturers Adviser Corporation
Investment Quality Bond Wellington Management Company, LLP
U.S. Government Securities Salomon Brothers Asset Management Inc.
Money Market Manufacturers Adviser Corporation
Lifestyle Portfolios: Manufacturers Adviser Corporation
Conservative 280
Moderate 460
Balanced 640
Growth 820
Aggressive 1000
</TABLE>
<PAGE> 6
BENEFICIARY INFORMATION
Please find below the Beneficiary Information for contract number, 000000022,
currently on file at The Manufacturers Life Insurance Company of North America:
Jane Doe
<PAGE> 7
PART 1 DEFINITIONS
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WE, US, OUR "We", "us" and "our" means The Manufacturers Life Insurance
Company of North America.
ACCUMULATION
UNIT A unit of measure that is used to calculate the value of an
Owner's Variable Account before the Maturity Date.
ANNUITANT Any individual person or persons whose life is used to
determine the duration of annuity payments involving life
contingencies. The Annuitant is as designated on the
Certificate Specifications Page and Application, unless
changed.
ANNUITY OPTION The method selected by you for annuity payments made by us.
ANNUITY SERVICE
OFFICE Any office designated by us for the receipt of Payments and
processing of Group Holder and Owner requests.
ANNUITY UNIT A unit of measure that is used after the Maturity Date to
calculate Variable Annuity payments.
APPLICATION The document signed by the Owner that serves as his or her
application for participation under the Contract, a copy of
which is attached to this Certificate.
BENEFICIARY The person, persons or entity to whom certain benefits are
payable following the death of an Owner, or in certain
circumstances, an Annuitant.
CERTIFICATE The document for each Owner which summarizes the rights and
benefits of the Owner under the Contract.
CERTIFICATE
ANNIVERSARY The anniversary of the Certificate Date.
CERTIFICATE DATE The date of issue of a Certificate under this Contract as
designated on the Certificate Specifications Page.
CERTIFICATE YEAR The period of twelve consecutive months beginning on the
Certificate Date or any anniversary thereafter.
CONTINGENT
BENEFICIARY The person, persons or entity who becomes the Beneficiary if
the Beneficiary is not alive.
CONTRACT
APPLICATION The document signed by the Group Holder that evidences the
Group Holder's application for this Contract.
CONTRACT DATE The date of issue of this Contract as designated on the
Contract Specifications Page.
CONTRACT VALUE The total of an Owner's Investment Account Values and,
if applicable, any amount in the Loan Account attributable to
that Owner.
DEBT Any amounts in the Loan Account attributable to an Owner plus
any accrued loan interest on that amount. The loan provision
is only available to certain Qualified Contracts
FIXED ANNUITY An Annuity Option with payments which are predetermined and
guaranteed as to dollar amount.
GENERAL ACCOUNT All the assets of The Manufacturers Life Insurance Company of
North America other than assets in separate accounts.
GROUP HOLDER The person, persons or entity entitled to the ownership rights
under this Contract. The Group Holder is as designated on the
Contract Specifications
1
<PAGE> 8
Page and the Contract Application.
INTERNAL REVENUE
CODE(IRC) The Internal Revenue Code of 1986, as amended from time to
time, and any (IRC) successor statute of similar purposes.
INVESTMENT
ACCOUNT An account established by us which represents the Owner's
interest in an Investment Option prior to the Maturity Date.
INVESTMENT
ACCOUNT VALUE The value of the Owner's investment in an Investment Account.
INVESTMENT
OPTIONS The Investment Options can be either fixed or variable. The
Investment Options available under this Contract are shown on
the Application and Certificate Specifications Page.
LOAN ACCOUNT The portion of the General Account that is used for
collateral when a loan is taken.
MARKET VALUE
CHARGE A charge that may be assessed if amounts are withdrawn or
transferred from the fixed Investment Options prior to the end
of the interest rate guarantee period.
MATURITY DATE The date on which annuity benefits commence. It is the
date specified on the Specifications Page of each Certificate,
unless changed.
NET PAYMENT The Payment less the amount of premium tax, if any,
deducted from the Payment.
NON-QUALIFIED
CONTRACTS Contracts which are not issued under Qualified Plans.
OWNER The person, persons or entity named in each Certificate. The
Owner is as designated on the Certificate Specifications Page
and Application, unless changed.
PORTFOLIO OR
TRUST PORTFOLIO A separate portfolio of Manufacturers Investment Trust, a
mutual fund in which the Variable Account invests, or any
successor mutual fund.
PAYMENT An amount paid to us by or on behalf of an Owner as
consideration for the benefits provided by the Contract.
QUALIFIED
CONTRACTS Contracts issued under Qualified Plans.
QUALIFIED PLANS Retirement plans which receive favorable tax treatment
under sections 401, 403, 408 or 457, of the Internal Revenue
Code of 1986, as amended.
SEPARATE ACCOUNT A segregated account of The Manufacturers Life Insurance
Company of North America that is not commingled with our
general assets and obligations.
SUB-ACCOUNT(S) One or more of the Sub-Accounts of the Variable Account. Each
Sub-Account is invested in shares of a different Trust
Portfolio.
VALUATION DATE Any date on which the New York Stock Exchange is open for
business and the net asset value of a Trust Portfolio is
determined.
VALUATION PERIOD Any period from one Valuation Date to the next, measured from
the time on each such date that the net asset value of each
Portfolio is determined.
VARIABLE ACCOUNT The Manufacturers Life Insurance Company of North America
Separate Account A, which is a separate account of The
Manufacturers Life Insurance Company of North America.
VARIABLE ANNUITY An Annuity Option with payments which: (1) are not
predetermined or guaranteed as to dollar amount; and (2) vary
in relation to the investment experience of one or more
specified variable Sub-Accounts.
2
<PAGE> 9
PART 2 GENERAL PROVISIONS
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ENTIRE CONTRACT The Contract, the Contract Application, any Contract
Endorsements and the Application, if one is attached to this
Certificate, constitutes the entire contract.
Only the President, a Vice President, or the Secretary of the
Company has authority to agree on our behalf to any alteration
of the Contract or any Certificate, or to any waiver of our
rights or requirements. The change or waiver must be in
writing.
The benefits and values available under the Contract are not
less than the minimum required by any statue of the state in
which the Contract is delivered. We have filed a detailed
statement of the method used to calculate the benefits and
values with the Department of Insurance in the state in which
the Contract is issued, if required by law.
MODIFICATION We will not change or modify the Certificate without the
consent of the Owner, as applicable, except as may be required
to make it conform to any applicable law or regulation or any
ruling issued by a government agency.
TEN DAY RIGHT
TO REVIEW If not satisfied with the Certificate, an Owner may, within 10
days after receipt of his or her Certificate, return it by
delivering or mailing it to the Annuity Service Office, and it
shall be deemed void from the beginning. Within 7 days of
receipt of the Certificate by us, we will pay the Owner's
Contract Value, computed at the end of the Valuation Period
during which the Certificate is received by us, to the Owner.
When the Certificate is issued as an individual retirement
annuity, during the first 7 days of this 10 day period, we
will return the greater of (i) Contract Value computed at the
end of the Valuation Period during which the Certificate is
received by us or (ii) sum of all Payments.
BENEFICIARY The Beneficiary is as designated on the Certificate
Specifications Page and Application, unless changed. However,
if there is a surviving Owner, that person will be treated as
the Beneficiary. If no such Beneficiary is living, the
Beneficiary is the "Contingent Beneficiary". If no Beneficiary
or Contingent Beneficiary is living, the Beneficiary is the
estate of the deceased Owner.
CHANGE IN
MATURITY DATE Prior to the Maturity Date, an Owner may request in
writing a change of the Maturity Date. Any extension of the
Maturity Date will be subject to our prior approval.
ASSIGNMENT An Owner may assign his interest in this Contract at any time
prior to the Maturity Date. No assignment will be binding on
us unless it is written in a form acceptable to us and
received at our Annuity Service Office. We will not be liable
for any payments made or actions we take before the assignment
is accepted by us. An absolute assignment by an Owner will
revoke the interest of any revocable Beneficiary. We will not
be responsible for the validity of any assignment.
CLAIMS OF
CREDITORS To the extent permitted by law, no benefits payable under the
Contract will be subject to the claims of the Group Holder's,
an Owner's, the Beneficiary's, or the Annuitant's creditors.
DISCONTINUANCE
OF NEW OWNERS By giving 30 days prior written notice to the Group Holder, we
may limit or discontinue the acceptance of new
Applications and the issuance of new Certificates
under this Contract. Such limitation or discontinuance shall
have no effect on rights or benefits with respect to any
Owner's Certificate
3
<PAGE> 10
established prior to the effective date of such limitation or
discontinuance.
MISSTATEMENT OF
AGE AND PROOF OF
SURVIVAL We may require proof of age or survival of any person upon
whose age or survival any Payments depend. If the age of the
Annuitant has been misstated, the benefits will be those which
the Payments would have provided for the correct age. If we
have made incorrect annuity payments, the amount of any
underpayment will be paid immediately. The amount of any
overpayment will be deducted from future annuity payments.
ADDITION,
DELETION OR We reserve the right, subject to compliance with applicable
SUBSTITUTION law, to make additions to, deletions from, or substitutions
OF INVESTMENT for the Portfolio shares that are held by the Variable Account
OPTIONS or that the Variable Account may purchase. We reserve the
right to eliminate the shares of any of the eligible
Portfolios and to substitute shares of another Portfolio of
the Trust, or of another open-end registered investment
company, if the shares of any eligible Portfolio are no longer
available for investment, or if in our judgment further
investment in any eligible Portfolio should become
inappropriate in view of the purposes of the Variable Account.
We will not substitute any shares attributable to an Owner's
interest in a Sub-Account without notice to the Owner and
prior approval of the Securities and Exchange Commission to
the extent required by the Investment Company Act of 1940.
Nothing contained herein shall prevent the Variable Account
from purchasing other securities for other series or classes
of contracts, or from effecting a conversion between shares of
another open-end investment company.
We reserve the right, subject to compliance with applicable
law, to establish additional Sub-Accounts which would invest
in shares of a new Portfolio of the Trust or in shares of
another open-end investment company.We also reserve the right
to eliminate existing Sub-Accounts, to combine Sub-Accounts or
to transfer assets in a Sub-Account to another Separate
Account established by us or an affiliated company. In the
event of any such substitution or change, we may, by
appropriate endorsement, make such changes in this and other
Contracts as may be necessary or appropriate to reflect such
substitutions or change. If deemed by us to be in the best
interests of persons having voting rights under the Contracts,
the Variable Account may be operated as a management company
under the Investment Company Act of 1940 or it may be
de-registered under such Act in the event such registration is
no longer required.
NON-
PARTICIPATING The Contract is non-participating and will not share in our
profits or surplus earnings. We will pay no dividends on the
Contract.
REPORTS At least once each year we will send the Group Holder and each
Owner a report containing information required by the
Investment Company Act of 1940 and applicable state law.
INSULATION The portion of the assets of the Variable Account equal to the
reserves and other contract liabilities with respect to such
account are not chargeable with liabilities arising out of any
other business we may conduct. Moreover, the income, gains and
losses, realized or unrealized, from assets allocated to the
Variable Account shall be credited to or charged against such
account without regard to our other income, gains or losses.
CURRENCY AND
PLACE OF All payments made to or by us shall be made in the lawful
PAYMENTS currency of the United States of America at the Annuity
Service Office or elsewhere if we consent.
NOTICES
AND ELECTIONS To be effective, all notices and elections the Group Holder or
an Owner makes under this Contract must be in writing, signed
by them and received by us at our Annuity Service Office.
Unless otherwise provided in this Contract, all notices,
requests and elections will be effective when received
4
<PAGE> 11
by us at our Annuity Service Office, complete with all
necessary information and the signature of the Group Holder
and/or Owner, as appropriate.
GOVERNING LAW The Contract and all Certificates issued in connection
with it will be governed by the laws of the jurisdiction
indicated on the Contract Specifications Page.
SECTION 72(s) The provisions of this Contract shall be interpreted so
as to comply with the requirements of Section 72(s) of the
Internal Revenue Code.
PART 3 OWNERSHIP
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EXERCISE OF
CONTRACT RIGHTS The Contract shall belong to the Group Holder. All Contract
rights and privileges not expressly reserved by the Group
Holder, may be exercised by the Owner as to his or her
interest. Such rights and privileges can be exercised without
the consent of the Beneficiary (other than an irrevocably
designated beneficiary) or any other person.
CHANGE OF OWNER, Subject to the rights of an irrevocable Beneficiary, each
ANNUITANT, Owner may change the Owner, Annuitant, or Beneficiary of his
BENEFICIARY or her interest in the Contract by written request in a form
acceptable to us and which is received at our Annuity Service
Office. The Annuitant may not be changed after the Maturity
Date. The Owner's Certificate need not be sent unless we
request it. Any change must be approved by us. If approved,
any change of Beneficiary will take effect on the date the
request is signed. If approved, any change of Owner or
Annuitant will take effect on the date we received the request
at the Annuity Service Office. We will not be liable for any
payments or actions we take before the change is approved.
The substitution or addition of any Owner may result in the
resetting of the Death Benefit to an amount equal to the
Contract Value as of the date of such change. For purposes of
subsequent calculations of the Death Benefit, described in
Part 4, Benefits, Death Benefit Before Maturity Date, the
Contract Value on the date of the change will be treated as a
Payment made on that date. In addition, all Payments made and
all amounts deducted in connection with partial withdrawals
prior to the date of the change of Owner will not be
considered in the determination of the Death Benefit.
Furthermore, the Death Benefit on the last day of the previous
Contract Year shall be set to zero as of the date of the Owner
change. This paragraph will not apply if (a) the individual
whose death will cause the Death Benefit to be paid is the
same after the change of Owner, or (b) if Ownership is
transferred to the Owner's spouse.
If any Annuitant is changed and any Owner is not an
individual, the entire interest in the Certificate must be
distributed to the Owner within five years of the change.
PART 4 BENEFITS
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ANNUITY BENEFITS We will pay a monthly income to the Annuitant, if living, on
the Maturity Date. Payments can be fixed or variable, or a
combination of fixed and variable. Annuity benefits will
commence on the Maturity Date and continue for the period of
time provided for under the Annuity Option selected.
5
<PAGE> 12
We may pay the Contract Value for an Owner, less Debt, on the
Maturity Date in one lump sum if the monthly income is less
than $20.
On or before the Maturity Date, you must select how the
Contract Value will be used to provide the monthly income. You
may select a Fixed or Variable Annuity. Unless you indicate
otherwise, we will provide either variable or fixed, or a
combination variable and fixed annuity payments in proportion
to the Investment Account Value of each Investment Option at
the Maturity Date. Annuity payments will continue for 10 years
or the life of the Annuitant, if longer.
If a Variable Annuity is used, the amount of the first monthly
annuity payment will be obtained from the appropriate option
table under the "Payment of Contract Benefits" Section.
Subsequent monthly annuity payments will vary based on the
investment experience of the Sub-Account(s) used to effect the
annuity. The method used to calculate the amount of the
initial and subsequent payments is described under the
"Variable Annuity Payments" Section of Part 8 of this
Certificate.
If a Fixed Annuity is used, the portion of the Contract Value
used to effect a Fixed Annuity will be applied to the
appropriate table contained in this Certificate. If the table
in use by us on the Maturity Date is more favorable to you, we
will use that table. We guarantee the dollar amount of fixed
annuity payments.
DEATH BENEFIT
BEFORE MATURITY
DATE A Death Benefit will be determined as of the date on which
written notice and proof of death and all required claim forms
are received at the Company's Annuity Service Office as
follows:
1. If any Owner dies on or prior to their 85th birthday
and the oldest Owner had an attained age of less than
81 years on the Certificate Date, the Death Benefit
will be determined as follows:
(a) During the first Certificate Year, the Death
Benefit will be the greater of:
(i) the Contract Value, or
(ii) the sum of all Payments less any
amount deducted in connection with
partial withdrawals made by or on
behalf of the Owner.
(b) During any subsequent Certificate Year, the
Death Benefit will be the greater of:
(i) the Contract Value, or
(ii) the Death Benefit on the last day
of the previous Certificate Year
plus any Payments and less any
amount deducted in connection with
partial withdrawals, since then,
made by or on behalf of the Owner.
2. If any Owner dies after their 85th birthday and the
oldest Owner had an attained age of less than 81
years on the Certificate Date, the Death Benefit will
be determined as the greater of:
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of all Payments made
by or on behalf of the Owner.
(ii) equals the sum of any amounts
deducted in connection with
6
<PAGE> 13
partial withdrawals made by or on
behalf of the Owner.
3. If any Owner dies and the oldest Owner had
an attained age of 81 or greater on the
Certificate Date, the Death Benefit will be
the Contract Value less any applicable
Withdrawal Charges at the time of payment of
the benefits.
If there is any Debt, the Death Benefit
equals the amount described above less the
Debt under this Certificate.
DEATH OF ANNUITANT: On the death of the last
surviving Annuitant, the Owner becomes the
new Annuitant, if the Owner is an
individual. If any Owner is not an
individual the death of any Annuitant is
treated as the death of an Owner and the
Death Benefit will be determined by
substituting the Annuitant for the Owner as
described below.
DEATH OF OWNER: We will pay the Death
Benefit to the Beneficiary if any Owner dies
prior to the Maturity Date. The Death
Benefit may be taken in one sum immediately,
in which case the Certificate will
terminate. If the Death Benefit is not taken
in one sum immediately, the Certificate will
continue subject to the following
provisions:
(a) The Beneficiary becomes the Owner.
(b) The excess, if any, of the Death
Benefit over the Contract Value
will be allocated to and among the
Investment Accounts in proportion
to their values as of the date on
which the Death Benefit is
determined.
(c) No additional Payments may be
applied under the Certificate.
(d) If the Beneficiary is not the
deceased Owner's spouse, the entire
interest in the Certificate must be
distributed under one of the
following options:
(i) The entire interest in the
Certificate must be distributed
over the life of the Beneficiary,
or over a period not extending
beyond the life expectancy of the
Beneficiary, with distributions
beginning within one year of the
Owner's death; or
(ii) the entire interest in the
Certificate must be distributed
within 5 years of the Owner's
Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are
complete, the entire remaining Contract
Value must be distributed in a lump sum
immediately.
(e) If the Beneficiary is the deceased
Owner's spouse, the Certificate
will continue with the surviving
spouse as the new Owner. The
surviving spouse may name a new
Beneficiary (and, if no Beneficiary
is so named, the surviving spouse's
estate will be the Beneficiary).
Upon the death of the surviving
spouse, the Death Benefit will
equal the Contract Value at the
time of the surviving spouse's
death, and the entire interest in
the Certificate must be distributed
to the new Beneficiary in
accordance with the provisions of
(d) (i) or (d) (ii) above.
(f) Withdrawal Charges will be waived
on any withdrawals, unless the
Death Benefit payable upon the
Owner's death was defined under
provision 3., Death Benefit Before
Maturity Date above. If the Death
Benefit was so defined, Withdrawal
Charges will be assessed at the
time a withdrawal occurs.
If there is more than one Beneficiary, the
foregoing provisions will independently
apply to each Beneficiary.
7
<PAGE> 14
DEATH BENEFIT ON
OR AFTER
MATURITY DATE If annuity payments have been selected based on an Annuity
Option providing for payments for a guaranteed period, and the
Annuitant dies on or after the Maturity Date, We will make the
remaining guaranteed payments to the Beneficiary. Any
remaining payments will be made as rapidly as under the method
of distribution being used as of the date of the Annuitant's
death. If no Beneficiary is living, We will commute any unpaid
guaranteed payments to a single sum (on the basis of the
interest rate used in determining the payments) and pay that
single sum to the estate of the last to die of the Annuitant
and the Beneficiary.
PROOF OF DEATH Proof of death is required upon the death of the
Annuitant or the Owner. Proof of death is one of the following
received at the Annuity Service Office:
(a) A certified copy of a death certificate.
(b) A certified copy of a decree of a court of competent
jurisdiction as to the finding of death.
(c) Any other proof satisfactory to us.
PART 5 PAYMENTS
- --------------------------------------------------------------------------------
GENERAL All Payments under this Contract are payable at our Annuity
Service Office or such other place as we may designate.
The minimum Payment for any Certificate will be $30. However,
at least $300 must be paid for each Certificate during the
first Certificate Year. Payments may be made at any time. If a
Payment for a Certificate would cause the Contract Value for
an Owner to exceed $1,000,000, or that Contract Value already
exceeds $1,000,000, no additional Payments will be accepted
without our prior approval.
NONPAYMENT OF
PAYMENTS If, prior to the Maturity Date, no Payments for a Certificate
FOR TWO YEARS have been made for two consecutive Certificate Years, and
if both:
(a) the total Payments made for the Certificate, less any
partial withdrawals, are less then $2,000; and
(b) the Contract Value for an Owner at the end of such
two year period is less than $2,000;
We may cancel the Certificate and participation under this
Contract and pay the Owner his Contract Value (measured as of
the Valuation Period during which the cancellation occurs),
less the Debt and Annual Administration Fee.
ALLOCATION OF NET
PAYMENTS When we receive Payments, the Net Payments will be allocated
among Investment Options in accordance with the
allocation percentages shown on the Certificate Specifications
Page. The Owner may change the allocation of subsequent Net
Payments at any time, without charge, by giving us written
notice.
PART 6 VARIABLE ACCOUNT PROVISIONS
- --------------------------------------------------------------------------------
INVESTMENT
ACCOUNT We will establish a separate Investment Account for each Owner
for each
8
<PAGE> 15
variable Investment Option to which an Owner allocates
amounts. The Investment Account represents the number
of an Owner's Accumulation Units in an Investment Option.
INVESTMENT
ACCOUNT VALUE The Investment Account Value of an Owner's Investment Account
is determined by (a) times (b) where:
(a) equals the number of Accumulation Units credited to
the Investment Account; and,
(b) equals the value of the appropriate Accumulation
Unit.
ACCUMULATION
UNITS We will credit Net Payments to an Owner's Investment Accounts
in the form of Accumulation Units. The number of Accumulation
Units to be credited to each Investment Account will be
determined by dividing the Net Payment allocated to that
Investment Account by the Accumulation Unit value for that
Investment Account.
Accumulation Units will be adjusted for any transfers and will
be canceled on payment of a death benefit, withdrawal,
maturity or assessment of certain charges based on their value
for the Valuation Period in which such transaction occurs.
VALUE OF
ACCUMULATION
UNIT The Accumulation Unit value for any Valuation Period is
determined by multiplying the Accumulation Unit value for the
immediately preceding Valuation Period by the "net investment
factor" for the Investment Account for the Valuation Period
for which the value is being determined. The value of an
Accumulation Unit may increase, decrease or remain the same
from one Valuation Period to the next.
NET INVESTMENT
FACTOR The net investment factor for a variable Investment Account is
an index that measures the investment performance of a
Sub-Account from one Valuation Period to the next. The net
investment factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:
(a) is the net result of:
1) the net asset value per share of a Portfolio
share held in the Sub-Account determined as
of the end of the current Valuation Period,
plus:
2) the per share amount of any dividend or
capital gain distributions made by the
Portfolio on shares held in the Sub-Account
if the "ex-dividend" date occurs during the
current Valuation Period, and
(b) is the net asset value per share of a Portfolio share
held in the Sub-Account determined as of the end of
the immediately preceding Valuation Period, and
(c) is the Asset Fee as defined in Part 11, Fees and
Deductions.
The net investment factor may be greater or less than, or
equal to, one.
PART 7 FIXED ACCOUNT PROVISIONS
- --------------------------------------------------------------------------------
INVESTMENT
ACCOUNT We will establish a separate Investment Account for each Owner
each time an Owner allocates amounts to a fixed Investment
Option. Any amounts an
9
<PAGE> 16
Owner allocates to the same fixed Investment Option on the
same day will establish a new Investment Account. Amounts
invested in these Investment Accounts will
earn interest at the guaranteed rate in effect on the date the
amounts are allocated for the duration of the guarantee
period.
We will determine the guaranteed rate from time to time for
new allocations, but in no event will the minimum guaranteed
rate under a fixed Investment Account be less than 3%.
GUARANTEE
PERIODS For any amounts allocated to the fixed Investment Options, an
Owner has the choice of the guarantee period available. The
amount can be allocated into any combination of the fixed
Investment Options offered under this Contract.
Separate Investment Accounts will be established for each
guarantee period. The guarantee period will be the duration of
the fixed Investment Option selected measured from the date
the amount is allocated to the Investment Account. Amounts
cannot be allocated to a fixed Investment Option that would
extend the guarantee period beyond the Maturity Date.
RENEWALS The renewal amount is the Investment Account Value at the end
of the particular guarantee period. The renewal amount will be
automatically renewed in the same Investment Option at the end
of the guarantee period, unless the Owner specifies otherwise.
If renewal in a particular Investment Option would result in
the guarantee period for that Investment Account extending
beyond the Maturity Date, the renewal amount may not be
renewed in that Investment Option. The renewal amount will be
applied to the longest guarantee period of a fixed Investment
Option such that the guarantee period does not extend beyond
the Maturity Date.
INVESTMENT
ACCOUNT VALUE The amount in the Investment Accounts of an Owner will
accumulate at a rate of interest determined by us and in
effect on the date the amount is allocated to the Investment
Account. The Investment Account Value of an Owner's Investment
Account is the accumulated value of the amount invested in the
Investment Account reduced by any withdrawals, loans,
transfers or charges taken from the Investment Account.
MARKET VALUE
CHARGE Any amounts withdrawn from a fixed Investment Account, prior
to the end of the guarantee period, may be subject to a Market
Value Charge. The Market Value Charge will only apply to
amounts withdrawn from a Investment Account pursuant to a
partial withdrawal, total withdrawal, transfer or a loan. A
Market Value Charge will not be assessed on amounts withdrawn
from the 1 year fixed Investment Account.
MARKET VALUE
CHARGE FACTOR A Market Value Charge will be calculated separately for each
fixed Investment Account affected. The Market Value Charge for
a particular Investment Account will be calculated by
multiplying the amount withdrawn or transferred from the
Investment Account by the adjustment factor described below.
The adjustment factor for a particular Investment Account is
determined by the following formula: 0.75 x (B-A) x C/12.
Where A, B and C are defined as follows:
A - The guaranteed interest rate on the Investment
Account.
B - The guaranteed interest rate available, on the date
the request is processed, for amounts allocated to a
new Investment Account with the same length of
guarantee period as the Investment Account from which
10
<PAGE> 17
amounts are being withdrawn.
C - The number of complete months remaining to the end
of the guarantee period.
For purposes of this calculation, the maximum difference
between "B" and "A" will be 3%. Furthermore, the adjustment
factor will never be less than zero. The amount of Market
Value Charge, if any, upon transfer, or loan is specified in
Part 9, Transfer Provisions, and upon withdrawal as specified
in Part 10, Withdrawal Provisions.
PART 8 ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
VARIABLE
ANNUITY PAYMENTS The amount of the first variable annuity payment is determined
by applying the portion of the Contract Value for a
Certificate used to effect a Variable Annuity, measured as of
a date not more than 10 business days prior to the Maturity
Date (minus any applicable premium taxes), to the appropriate
tables(s) contained in the Contract and the Certificate. If
the table in use by us on the Maturity Date is more favorable
to the Owner, we will use that table. Subsequent payments will
be based on the investment performance of one or more
Sub-Accounts as selected by the Owner. The amount of such
payments is determined by the number of Annuity Units credited
for each Sub-Account. Such number is determined by dividing
the portion of the first payment allocated to that Sub-Account
by the Annuity Unit value for that Sub-Account determined as
of the same date that the Contract Value used to effect
annuity payments under a Certificate was determined. This
number of Annuity Units for each Sub-Account is then
multiplied by the appropriate Annuity Unit value for each
subsequent determination date, which is a uniformly applied
date not more than 10 business days before the payment is due.
MORTALITY AND
EXPENSE
GUARANTEE We guarantee that the dollar amount of each variable annuity
payment will not be affected by changes in mortality and
expense experience.
ANNUITY UNIT
VALUE The value of an Annuity Unit for each Sub-Account for any
Valuation Period is determined as follows:
(a) The net investment factor for the Sub-Account for the
Valuation Period for which the Annuity Unit value is
being calculated is multiplied by the value of the
Annuity Unit for the preceding Valuation Period; and
(b) The result is adjusted to compensate for the interest
rate assumed in the tables used to determine the
first variable annuity payment.
The dollar value of Annuity Units may increase, decrease or
remain the same from one Valuation Period to the next.
FIXED ANNUITY
PAYMENTS The amount of each fixed annuity payment is determined by
applying the portion of the Contract Value used to effect a
Fixed Annuity under a Certificate measured as of a date not
more than 10 business days prior to the Maturity Date (minus
any applicable premium taxes) to the appropriate table
contained in the Contract and the Certificate. If the table in
use by us on the Maturity Date is more favorable to the
Owner, we will use that table.
We guarantee the dollar amount of fixed annuity payments.
11
<PAGE> 18
PART 9 TRANSFERS
- --------------------------------------------------------------------------------
TRANSFERS Before the Maturity Date, the Owner may transfer amounts among
Investment Accounts of the Contract. There is no transaction
charge for transfers, however, amounts transferred from a
fixed Investment Account prior to the end of the guarantee
period may be subject to a Market Value Charge. Amounts will
be canceled from the Investment Accounts from which amounts
are transferred and credited to the Investment Account to
which amounts are transferred. We will effect such transfers
so that the Contract Value for a Certificate on the date of
transfer will not be affected by the transfer, except for the
Market Value Charge, if applicable. We reserve the right to
limit, upon notice, the maximum number of transfers that can
be made per Certificate Year to one per month or six at
anytime within a Certificate Year.
An Owner must transfer at least $300 or, if less, the entire
amount in the Investment Account each time the Owner makes a
transfer. If, after the transfer, the amount remaining in the
Investment Account from which the transfer is made is less
than $100, then we will transfer the entire amount instead of
the requested amount. We reserve the right to defer, modify or
terminate the transfer privilege at any time that we are
unable to purchase or redeem shares of the Trust Portfolios.
Amounts may not be transferred from a fixed Investment Account
unless those amounts have been in the fixed Investment Account
for at least one year. The Market Value Charge, if applicable,
will be deducted from the amount transferred.
Once variable annuity payments have begun, an Owner may
transfer all or part of the investment upon which the Owner's
variable annuity payments are based from one Sub-Account to
another. To do this, we will convert the number of variable
Annuity Units held by an Owner in the Sub-Account from which
the Owner is transferring to a number of variable Annuity
Units of the Sub-Account to which the Owner is transferring so
that the amount of a variable annuity payment, if it were made
at that time, would not be affected by the transfer. After
that, the variable annuity payments will reflect changes in
the values of the Owner's new variable Annuity Units. An Owner
must give us notice at least 30 days before the due date of
the first variable annuity payment to which the transfer will
apply. We reserve the right, upon notice, to limit to four the
maximum number of transfers an Owner may make per Certificate
Year after variable annuity payments have begun.
After the Maturity Date, transfers will not be allowed from a
fixed to a variable Annuity Option, or from a variable to a
fixed Annuity Option.
TRANSFER MARKET
VALUE CHARGE Amounts transferred from a fixed Investment Account may be
subject to a Market Value Charge. For Transfers, including
transfers to the Loan Account pursuant to a loan request, the
Market Value Charge, if applicable, will be calculated by
multiplying the amount transferred from each fixed Investment
Account by the Market Value Charge Factor and deducted from
the amount transferred.
If there are multiple Investment Accounts under a fixed
Investment Option, the requested amount from that Investment
Option must be transferred from those Investment Accounts on a
first-in-first-out basis.
The Market Value Charge may not exceed the earnings in excess
of 3% per
12
<PAGE> 19
annum attributable to the amount transferred.
In no event will the Market Value Charge be greater than 10%
of the amount transferred.
In no event will the Market Value Charge reduce the amount
transferred below the amount required under the non-forfeiture
laws of the state that has jurisdiction over this contract.
PART 10 WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE An Owner's Contract Value is equal to the total of that
Owner's Investment Account Values and, if applicable, any
amount in the Loan Account attributable to that Owner.
PAYMENTS OF
WITHDRAWALS An Owner may withdraw part or all of his Contract Value, less
any Debt, at any time before the earlier of the death of an
Owner or the Maturity Date, by sending us a written request.
We will pay all withdrawals within seven days of receipt at
the Annuity Service Office subject to postponement in certain
circumstances, as specified below.
SUSPENSION OF
PAYMENTS We may defer the right of withdrawal from, or postpone the
date of payments from, the variable Investment Accounts for
any period when: (1) the New York Stock Exchange is closed
(other than customary weekend and holiday closings); (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 Variable Account is not reasonably practicable or
it is not reasonably practicable to determine the value of the
Variable Account's net assets; or (4) the Securities and
Exchange Commission, by order, so permits for the protection
of security holders; provided that applicable rules and
regulations of the Securities and Exchange Commission shall
govern as to whether the conditions described in (2) and (3)
exist.
We may defer the right of withdrawal from the fixed Investment
Accounts for not more than six months from the day we receive
written request and the Certificate, if required. If such
payments are deferred 30 days or more, the amount deferred
will earn interest at a rate not less than 3% per year.
TOTAL
WITHDRAWAL Upon receipt of an Owner's request to withdraw the entire
Contract Value we will terminate the Certificate and pay the
Owner the Contract Value, less any applicable Debt, Withdrawal
Charges, Market Value Charges and the Annual Administration
Fee.
PARTIAL
WITHDRAWAL If an Owner is withdrawing part of his Contract Value, he/she
should specify the amount that should be withdrawn from each
Investment Option of the Contract. If there are multiple
Investment Accounts under a fixed Investment Option, the
requested amount from that Investment Option must be withdrawn
from those Investment Accounts on first-in-first-out basis. If
he/she does not specify, the requested amount will be
withdrawn in the following order:
a) Variable Investment Accounts, on a pro rata basis,
b) Fixed Investment Options beginning with the shortest
guarantee period first and the longest guarantee
period last.
We will deduct the Withdrawal Charge and the Market Value
Charge, if applicable, from the Owner's Contract Value
remaining after payment of the
13
<PAGE> 20
requested amount.
WITHDRAWAL
CHARGE If a withdrawal is made from the Contract by an Owner before
the Maturity Date, a Withdrawal Charge (contingent deferred
sales charge) may be assessed against Payments that have been
in the Contract for the Owner for less than 7 years. No
Withdrawal Charge will apply to Payments being withdrawn that
have been in the Contract for an Owner for 7 or more years.
The amount of the Withdrawal Charge and when it is assessed is
discussed below:
1. The free withdrawal amount is defined as the greater
of:
a) the excess of an Owner's Contract Value on
the date of withdrawal over the unliquidated
Payments; or
b) the excess of (i) over (ii) where:
(i) equals the Free Withdrawal
Percentage as set forth on the
Certificate Specifications Page
multiplied by the total Payments
made by or on behalf of the Owner.
(ii) equals the sum of all prior Partial
Withdrawals in the Certificate Year
made by or on behalf of the Owner.
The free withdrawal amount may be withdrawn free of a
Withdrawal Charge.
The free withdrawal amount will be applied to an Owner's
requested withdrawal in the following order:
a) withdrawals from the variable Investment
Accounts;
b) withdrawals from fixed Investment Options
beginning with the shortest guarantee period
first and the longest guarantee period last.
2. If a withdrawal is made for an amount greater than
the free withdrawal amount, Payments will be
liquidated on a first-in-first-out basis. We will
liquidate Payments in the order such Payments were
made: the oldest unliquidated Payment first, the next
Payment second, etc... until all Payments have been
liquidated.
3. A Withdrawal Charge will be assessed against Payments
liquidated that have been in the Contract for an
Owner less than 7 years.
4. Any Payments liquidated are subject to a Withdrawal
Charge based on the length of time the Payment for an
Owner has been in the Contract. The Withdrawal Charge
regarding a Certificate is determined by multiplying
the amount of the Payment being liquidated by the
applicable Withdrawal Charge Percentage obtained from
the table on the Certificate Specifications Page. In
no event will the Withdrawal Charge percentage be
greater than the maximum shown in the Contract
Specifications.
The total Withdrawal Charge will be the sum of the
Withdrawal Charges for the Payments being liquidated.
5. The Withdrawal Charge is deducted from an Owner's
Contract Value remaining after he/she is paid the
amount requested, except in the case of a complete
withdrawal when it is deducted from the amount
otherwise payable. In the case of a partial
withdrawal, the amount requested from an Investment
Account may not exceed the value of that Investment
Account less any applicable Withdrawal Charge and/or
14
<PAGE> 21
Market Value Charge, if applicable.
6. In no event will the aggregate Withdrawal Charge be
greater than the maximum Withdrawal Charge Percentage
on the Certificate Specifications Page multiplied by
the total Payments made by or on behalf of the Owner.
WITHDRAWAL
MARKET
VALUE CHARGE Amounts withdrawn from a fixed Investment Account may be
subject to a Market Value Charge. The total Market Value
Charge will be the sum of the Market Value Charges for each
Investment Account being withdrawn. For full withdrawals, the
Market Value Charge will be calculated on the total amount of
each Investment Account, and the total Market Value Charge
will be deducted from the amount otherwise payable. For
partial withdrawals, the Market Value Charge will be
calculated based on the withdrawal amount requested from each
Investment Account and the Market Value Charge, if applicable,
will be deducted from the remaining Investment Account Value.
There will be no Market Value Charge on withdrawals from the
fixed Investment Accounts in the following situations: (a)
withdrawal from a 1-year fixed Investment Account, (b) death
of the Owner, (c) amounts withdrawn to pay any fees or
charges, (d) amounts applied at the Maturity Date to purchase
an annuity at the guaranteed rates in the Annuity Option
tables, and (e) amounts withdrawn from fixed Investment
Accounts within one month prior to the end of the guarantee
period.
An amount equal to the Free Withdrawal Percentage, as set
forth on the Certificate Specifications Page, multiplied by
the total Payments, less any prior withdrawals in that
Certificate Year for an Owner, may be withdrawn without the
imposition of a Withdrawal Charge.
The Market Value Charge may not exceed the earnings in excess
of 3% per annum attributable to the amount withdrawn.
In no event will the Market Value Charge plus any Withdrawal
Charges for an Investment Account be greater than the Maximum
Charge Percentage as set forth on the Certificate
Specifications Page, multiplied by the amount withdrawn.
In no event will the Market Value Charge reduce the amount
payable on withdrawal below the amount required under the
non-forfeiture laws of the state that has jurisdiction over
this Contract.
FREQUENCY AND
AMOUNT OF
PARTIAL
WITHDRAWALS An Owner may make as many partial withdrawals as he or she
wishes. Any withdrawal from an Owner's Investment Account must
be at least $300 or the entire balance of the Investment
Account, if less. If after the withdrawal, the amount
remaining in that Owner's Investment Account is less than
$100, then we will consider the withdrawal request to be a
request for withdrawal of the entire amount held in the
Investment Account. If a partial withdrawal would reduce the
Owner's Contract Value to less than $300, then we will treat
the partial withdrawal request as a total withdrawal of that
Owner's Contract value.
PART 11 FEES AND DEDUCTIONS
- --------------------------------------------------------------------------------
ASSET FEE To compensate us for assuming mortality and expense risks, and
certain administration expenses, we deduct from each variable
Investment Option a fee each Valuation Period at an annual
rate of 1.40%. A portion of this Asset Fee may also be used to
reimburse us for distribution expenses. This
15
<PAGE> 22
fee is reflected in the Net Investment Factor used to
determine the value of Accumulation Units and Annuity Units of
the Certificate.
ANNUAL
ADMINISTRATION
FEE To compensate us for assuming certain administrative expenses,
we charge an Annual Administration Fee as set forth on the
Certificate Specifications Page. Prior to the Maturity Date,
the Annual Administration Fee is deducted on each Certificate
Anniversary. It is withdrawn from each Investment Option in
the same proportion that the value of the Investment Accounts
of each Investment Option bears to the Contract Value. If the
Contract Value is totally withdrawn on any date other than the
Certificate Anniversary, we will deduct the total amount of
the Annual Administration Fee from the amount paid. During the
annuity period, the Annual Administration Fee is deducted on a
pro rata basis from each annuity payment.
Prior to the Maturity Date, when the Annual Administration Fee
is to be assessed, if the sum of all Investment Accounts
exceeds $100,000.00, the Annual Administration Fee will be
waived.
TAXES We reserve the right to charge certain taxes against Payments
for an Owner (either at the time of payment or liquidation),
Contract Value of an Owner, payment of Death Benefit, or
annuity payments, as appropriate. Such taxes may include any
premium taxes or other taxes levied by any government entity
which we, in our sole discretion, determine have resulted from
the establishment or maintenance of the Variable Account, or
from the receipt by us of Payments, or from the issuance of
the Contract and an Owner's Certificate, or from the
commencement or continuance of annuity payments under the
Contract.
PART 12 LOAN PROVISIONS (CERTAIN QUALIFIED CONTRACTS ONLY)
- --------------------------------------------------------------------------------
GENERAL This loan provision applies only to certain Qualified
Contracts and Certificates. All provisions and terms of a loan
are included in the Qualified Plan Endorsement, if attached.
PART 13 PAYMENT OF CONTRACT BENEFITS
- --------------------------------------------------------------------------------
GENERAL Benefits payable under this Contract may be applied in
accordance with one or more of the Annuity Options described
below, subject to any restrictions of Internal Revenue Code
Section 72(s).
ALTERNATE
ANNUITY
OPTIONS Instead of settlement in accordance with the Annuity Options
described below, an Owner may choose an alternate form of
settlement acceptable to us.
DESCRIPTION OF
ANNUITY OPTION Option 1: Life Annuity
a) Life Non-Refund. We will make payments during the
lifetime of the Annuitant. No payments are due after
the death of the Annuitant.
b) Life 10-Year Certain. We will make payments for 10
years and after that during the lifetime of the
Annuitant. No payments are due after the death of the
Annuitant or, if later, the end of the 10-year period
certain.
16
<PAGE> 23
Option 2: Joint and Survivor Life Annuity
The second Annuitant named shall be referred to as the
Co-Annuitant.
a) Joint and Survivor Non-Refund. We will make payments
during the joint lifetime of the Annuitant and
Co-Annuitant. Payments will then continue during the
remaining lifetime of the survivor. No payments are
due after the death of the last survivor of the
Annuitant and Co-Annuitant.
b) Joint and Survivor with 10-Year Certain. We will make
payments for 10 years and after that during the joint
lifetime of the Annuitant and Co-Annuitant. Payments
will then continue during the remaining lifetime of
the survivor. No payments are due after the death of
the survivor of the Annuitant and Co-Annuitant or, if
later, the end of the 10-year period certain.
ANNUITY
PAYMENT RATES The annuity payment rates on the attached tables show,
that for each $1,000 applied, the dollar amount of both: (a)
the first monthly variable annuity payment based on the
assumed interest rate of 3%; and (b) the monthly fixed annuity
payment, when this payment is based on the minimum guaranteed
interest rate of 3% per year. The annuity payment rates for
payments made on a less frequent basis (quarterly, semiannual
or annual) will be quoted by us upon request.
The annuity payment rates are based on the 1983 Table A
projected at Scale G with interest at the rate of 3% per annum
and assume births in year 1942. The amount of each annuity
payment will depend upon the adjusted age of the Annuitant,
the Co-Annuitant, if any, or other payee. The adjusted age is
determined from the actual age nearest birthday at the time
the first monthly annuity payment is due, as follows:
<TABLE>
<CAPTION>
Calendar Year of Birth Adjustment to Actual Age
- -------------------------------------------------------------------
<S> <C>
1899 - 1905 +6
1906 - 1911 +5
1912 - 1918 +4
1919 - 1925 +3
1926 - 1932 +2
1933 - 1938 +1
1939 - 1945 0
1946 - 1951 -1
1952 - 1958 -2
1959 - 1965 -3
1966 - 1972 -4
1973 - 1979 -5
1980 - 1986 -6
1987 + -7
</TABLE>
The dollar amount of annuity payment for any age or
combination of ages not shown following or for any other form
of Annuity Option agreed to by us will be quoted on request.
17
<PAGE> 24
AMOUNT OF FIRST MONTHLY PAYMENT
PER $1000 OF CONTRACT VALUE
OPTION 1: LIFE ANNUITY
<TABLE>
<CAPTION>
Option 1(A): Non-Refund
- ------------------------------------------------
Adjusted Age of Monthly
Annuitant Payment
- ------------------------------------------------
<S> <C>
55 4.23
60 4.64
65 5.20
70 5.94
75 6.91
80 8.21
85 9.94
</TABLE>
<TABLE>
<CAPTION>
Option 1(B): 10-Year Certain
- -------------------------------------------------------
Adjusted Age of Monthly
Annuitant Payment
- -------------------------------------------------------
<S> <C>
55 4.19
60 4.57
65 5.05
70 5.65
75 6.35
80 7.13
85 7.90
</TABLE>
OPTION 2: JOINT AND SURVIVOR LIFE ANNUITY
Option 2(A): Non-Refund
<TABLE>
<CAPTION>
Age of Co-Annuitant
- --------------------------------------------------------------------------------
Adjusted
Age of 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.24 3.38 3.53 3.69 3.83
60 3.40 3.58 3.78 3.98 4.16
65 3.61 3.85 4.10 4.36 4.61
70 3.88 4.19 4.53 4.88 5.20
75 4.23 4.64 5.10 5.57 6.00
80 4.70 5.26 5.88 6.51 7.06
85 5.34 6.09 6.94 7.76 8.43
</TABLE>
Option 2(B): 10 Year Certain
<TABLE>
<CAPTION>
Age of Co-Annuitant
- --------------------------------------------------------------------------------
Adjusted
Age of 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.24 3.38 3.53 3.69 3.83
60 3.40 3.58 3.78 3.98 4.16
65 3.61 3.85 4.10 4.36 4.59
70 3.88 4.18 4.52 4.86 5.16
75 4.23 4.63 5.07 5.50 5.86
80 4.68 5.21 5.78 6.30 6.69
85 5.27 5.95 6.62 7.18 7.56
- --------------------------------------------------------------------------------
</TABLE>
Monthly installments for ages not shown will be furnished on request.
<PAGE> 25
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<PAGE> 26
- --------------------------------------------------------------------------------
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
- --------------------------------------------------------------------------------
Manulife Financial and the block design are registered marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries.
<PAGE> 1
EXHIBIT (b)(4)(iii)
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
Notwithstanding any provision contained therein to the contrary, the Certificate
to which this Endorsement is attached is amended as follows:
OWNER AND ANNUITANT
1. The Owner must be one individual and the Annuitant. Neither the Owner
nor the Annuitant can be changed.
NONFORFEITABLE
2. The Owner's interest in the Contract is established for the exclusive
benefit of the Owner or his or her Beneficiaries and the interest of
the Owner is nonforfeitable.
NONTRANSFERABLE
3. The Owner may not assign, sell, transfer, discount or pledge his
interest in the Contract as collateral for a loan or as security for
the performance of any obligation or for any other purpose (other than
a transfer incident to a divorce or separation instrument in accordance
with IRC Section 408(d)(6)) to any person other than us.
MAXIMUM PAYMENTS
4. The maximum annual Payments shall not exceed the lesser of $2,000 or
100% of compensation unless (a) such Payment qualifies as a rollover
contribution described in IRC Sections 408(d)(3), 402(c), 403(a)(4) or
403(b)(8); or (b) such Payment qualifies as a contribution made in
accordance with a Simplified Employee Pension Program as described in
IRC Section 408(k).
To the extent necessary to preserve qualification under the Internal
Revenue Code, we may refund Payments. Any refund of Payments (other
than those attributable to excess contributions) will be applied,
before the close of the calendar year following the refund, toward
future Payments or the purchase of additional benefits.
DISTRIBUTIONS DURING OWNER'S LIFE
5. The Owner's entire interest in the Contract shall be distributed as
required under IRC Section 408(b)(3) and applicable regulations. Unless
deferral is otherwise permitted under applicable regulations, the
Owner's entire interest shall be distributed no later than the
"required beginning date," or shall be distributed beginning no later
than the "required beginning date" over (a) the life of the Owner or
the joint lives of the Owner and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the Owner,
or joint life and last survivor expectancy of the Owner and the
designated beneficiary.
The "required beginning date" shall mean April 1 of the calendar year
following the calendar year in which the Owner attains age 70 1/2.
If the Owner's interest is to be distributed over a period greater than
one year, then the amount to be distributed by December 31 of each year
(including the year in which the required beginning date occurs) shall
be determined in accordance with the requirements of IRC Section
401(a)(9), including the incidental death benefit requirements of IRC
Section 401(a)(9)(G), and the regulations thereunder, including the
minimum distribution incidental benefit requirement of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
ANNUITY OPTIONS
ENDORSEMENT.009
<PAGE> 2
6. Only Annuity Options 1 and 2 shall be offered unless we consent to the
use of an additional option. Annuity Option 1(b) is not available for
an Owner whose life expectancy is less than 10 years. Under Annuity
Options 2(a) and 2(b) the designated Co-Annuitant must be the Owner's
spouse. Annuity Option 2(b) is not available for an Owner and his or
her spouse where the life expectancy of the Owner and such spouse is
less than 10 years.
DISTRIBUTIONS AFTER OWNER'S DEATH
7. If an Owner dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the Owner's
interest (if any) shall be distributed at least as rapidly as under the
method of distribution in effect as of the Owner's death.
If the Owner dies before the required beginning date and an irrevocable
annuity distribution has not begun, the Owner's entire interest shall
be distributed by December 31 of the calendar year containing the fifth
anniversary of the Owner's death, except that
(a) if the interest is payable to an individual who is the
Owner's designated beneficiary, the designated beneficiary may
elect to receive the entire interest over the life of the
designated beneficiary or over a period not extending beyond
the life expectancy of the designated beneficiary, commencing
on or before December 31 of the calendar year immediately
following the calendar year in which the Owner died; or
(b) if the designated beneficiary is the Owner's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a
period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Owner died,
and
(ii) December 31 of the calendar year in which the
Owner would have attained age 70 1/2.
If the surviving spouse dies before distributions
begin, the limitations of this section shall be
applied as if the surviving spouse were the Owner. An
irrevocable election of the method of distribution by
a designated beneficiary who is the surviving spouse
must be made no later than the earlier of December 31
of the calendar year containing the fifth anniversary
of the Owner's death or the date distributions are
required to begin pursuant to this provision (b).
If the designated beneficiary is the Owner's
surviving spouse, the spouse may irrevocably elect to
treat the Owner's interest in the Contract as his or
her own individual retirement arrangement (IRA). This
election will be deemed to have been made if such
surviving spouse (i) fails to elect that his or her
interest will be distributed in accordance with one
of the preceding provisions, or (ii) makes a rollover
from the Contract.
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Owner's death, and if no election
is made, the entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of
the Owner's death.
In the "Death Benefit Before Maturity Date" section of part 4 of the
Certificate, (a) the provision entitled "Death of Annuitant" is
deleted; and (b) in the "Death of Owner" provision, the distribution
requirements of provisions "(d)" and "(e)" are deleted. If, after the
Owner's death, the designated beneficiary dies before the Maturity
Date, no Death Benefit is payable.
LIFE EXPECTANCY CALCULATIONS
2
<PAGE> 3
8. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Owner, or (b) for purposes of
distributions beginning after the Owner's death, by the surviving
spouse. Such an election shall be irrevocable as to the Owner or the
surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
CANCELLATION FOR NONPAYMENT
9. We may pay the Owner the Contract Value (measured as of the Valuation
Period during which the cancellation occurs), less the Administration
Fee (if applicable), if (a) prior to the Maturity Date, no Payments are
made for two consecutive Contract Years; (b) the total Payments made,
less any partial withdrawals, are less than $2,000; (c) the Contract
Value at the end of such two-year period is less than $2,000; and (d)
the paid-up annuity benefit at the Maturity Date at the end of such
two-year period would be less than $20 per month.
IRC SECTION 72(S)
10. All references in the Contract to IRC Section 72(s) are deleted.
Endorsed on the Certificate Date of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
3
<PAGE> 4
ERISA TAX-SHELTERED ANNUITY ENDORSEMENT
Notwithstanding any provision contained therein to the contrary, the Certificate
to which this Endorsement is attached is amended as follows:
OWNER AND ANNUITANT
1. The Owner must be either an organization described in IRC Section
403(b)(1)(A) or an employee of such an organization. If the Owner is an
organization described in IRC Section 403(b)(1)(A), the term "Employee"
as used in this Endorsement shall mean the individual employee for
whose benefit the organization has established an annuity plan under
IRC Section 403(b). Such employee shall be the Annuitant. If the Owner
is an employee of an organization described in IRC Section
403(b)(1)(A), the Annuitant must be the same employee.
If this Contract is used as a funding mechanism for a rollover under
IRC Sections 403(b) or 408(d)(3), the Owner must be one individual,
that same individual must be the Annuitant, and the term "Employee"
shall mean that individual.
The Annuitant cannot be changed. Prior to the Maturity Date, the
Co-Annuitant can be changed, but such change shall not require any
distributions to be made under the Contract.
NONTRANSFERABLE
2. The interest of the Employee in the Contract is non-transferable within
the meaning of IRC Section 401(g) and applicable regulations and is
nonforfeitable. In particular, the Employee's interest in the Contract
may not be sold, assigned, discounted, or pledged as collateral for a
loan or as security for the performance of any obligation or for any
other purpose, to any person other than us.
PAYMENTS
3. Payments must be made by an organization described in IRC Section
403(b)(1)(A), except in the case of rollover contributions under IRC
Sections 403(b)(8) and 408(d)(3). The Employee must be an employee of
such organization.
Payments made pursuant to a salary reduction agreement shall be limited
to the extent provided in IRC Section 402(g). Payments shall not exceed
the amount allowed by IRC Section 415.
REQUIRED BEGINNING DATE
4. The Employee's entire interest in the Contract shall be distributed as
required under IRC Section 403(b)(10) and applicable regulations.
As used in this Endorsement, the term "required beginning date" shall
mean April 1 of the calendar year following the calendar year in which
the Employee attains age 70 1/2. For an Employee who attains age 70 1/2
before January 1, 1988, or for an Employee in a governmental plan or a
church plan (as defined in IRC Section 401(a)(9)(C)), the required
beginning date shall mean April 1 of the calendar year following the
later of (i) the calendar year in which the Employee attains age
70 1/2, or (ii) the calendar year in which the Employee retires.
DISTRIBUTIONS DURING EMPLOYEE'S LIFE
5. The Employee's entire interest shall be distributed no later than the
required beginning date, or shall be distributed, beginning no later
than the required beginning date, over (a) the life of the Employee or
the joint lives of the Employee and an individual who is his or her
designated beneficiary (within the meaning of IRC
ENDORSEMENT.010
<PAGE> 5
Section 401(a)(9)), or (b) a period not extending beyond the life
expectancy of the Employee, or the joint life and last survivor
expectancy of the Employee and the designated beneficiary.
If the Employee's interest is to be distributed over a period greater
than one year, then the amount to be distributed by December 31 of each
year (including the year in which the required beginning date occurs)
shall be made in accordance with the requirements of IRC Section
401(a)(9), including the incidental death benefit requirements of IRC
Section 401(a)(9)(G), and the regulations thereunder, including the
minimum distribution incidental benefit requirement of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
DEATH BENEFIT
6. If, in the event of the Employee's death prior to the Maturity Date,
the Death Benefit is not paid to the employer plan, it shall be paid to
(1) the surviving spouse of the Employee in the form required by
section 205 of the Employee Retirement Income Security Act of 1974
(ERISA), unless the spouse elects otherwise in accordance with the
requirements of such section 205 or applicable regulations; or (2) if
there is no surviving spouse, or if the surviving spouse has consented
in the manner required by section 205 of ERISA, or if the applicable
regulations otherwise permit, to the Beneficiary under the Contract.
In the "Death Benefit Before Maturity Date" section of part 4 of the
Certificate, the first sentence of the paragraph "Death of Annuitant"
is deleted, and the second sentence is modified to read as follows: "If
any Owner is not an individual, the death of the Annuitant (but not of
the Co-Annuitant) is treated as the death of an Owner."
DISTRIBUTIONS AFTER EMPLOYEE'S DEATH
7. If an Employee dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the Employee's
interest (if any) shall be distributed at least as rapidly as under the
method of distribution in effect as of the Employee's death.
If the Employee dies before the required beginning date and an
irrevocable annuity distribution has not begun, the Employee's entire
interest shall be distributed by December 31 of the calendar year
containing the fifth anniversary of the Employee's death, except that
(a) if the interest is payable to an individual who is the
Employee's designated beneficiary, the designated beneficiary
may elect to receive the entire interest over the life of the
designated beneficiary or over a period not extending beyond
the life expectancy of the designated beneficiary, commencing
on or before December 31 of the calendar year immediately
following the calendar year in which the Employee died; or
(b) if the designated beneficiary is the Employee's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a
period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Employee
died, and
(ii) December 31 of the calendar year in which the
Employee would have attained age 70 1/2.
If the surviving spouse dies before distributions begin, the
limitations of this section shall be applied as if the
surviving spouse were the Employee.
An irrevocable election of the method of distribution by a
designated beneficiary who is the surviving spouse must be
made no later than the earlier of December 31 of the calendar
year containing the fifth anniversary of the Employee's death
or the date distributions are required to begin pursuant to
this provision (b). If no election is made, the entire
interest will be distributed in accordance with the method of
distribution in this provision (b).
2
<PAGE> 6
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Employee's death. If no election
is made, the entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of
the Employee's death.
In the "Death of Owner" section of the "Death Benefit Before Maturity
Date" part of the Certificate, the distribution requirements of
provisions "(d)" and "(e)" are deleted. If, after the Employee's death,
the designated beneficiary dies before the Maturity Date, no Death
Benefit is payable.
LIFE EXPECTANCY CALCULATIONS
8. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Employee, or (b) for purposes of
distributions beginning after the Employee's death, by the surviving
spouse. Such an election shall be irrevocable as to the Employee or the
surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life in which expectancy was first
calculated.
ANNUITY OPTIONS
9. Except to the extent Treasury regulations allow us to offer different
Annuity Options that are agreed to by us, only Annuity Options 1 and 2
shall be available to an Employee. All Annuity Options must meet the
requirements of IRC Section 403(b)(10), including the requirement that
payments to persons other than Employees are incidental.
Annuity Option 1(b) is not available for an Employee whose life
expectancy is less than 10 years. Under Annuity Options 2(a) and 2(b),
the designated Co-Annuitant must be the Employee's spouse. Annuity
Option 2(b) is not available for an Employee and his or her spouse
where the life expectancy of the Employee and such spouse is less than
10 years.
Except as hereinafter provided, only Annuity Option 2(a) is available
to a married Employee. A married Employee may elect another Annuity
Option, provided his or her spouse consents in accordance with the
requirements of section 205 of ERISA (and applicable regulations), or
provided such election is otherwise permitted under such applicable
regulations. An unmarried Employee will be deemed to have elected
annuity Option 1(a) unless he or she makes a different election in the
manner required under section 205 of ERISA (and applicable
regulations).
ELECTIONS AND CONSENTS
10. Elections and consents required by ERISA may be revoked in the form,
time, and manner prescribed in section 205 of ERISA (and applicable
regulations). All elections and consents required by ERISA shall adhere
to the requirements of the applicable regulations interpreting section
205 of ERISA (or any other applicable law), including the requirements
as to the timing of any elections or consents.
3
<PAGE> 7
If a withdrawal is permitted by the employer's plan, no withdrawal,
partial or total, may be made without consent of the Employee and the
Employee's spouse in the manner required by section 205 of ERISA (and
applicable regulations), except to the extent that such consent is not
required under such applicable regulations. Any withdrawal made must be
made in the form required under section 205 of ERISA (and applicable
regulations), unless the Employee (and spouse, if applicable) makes an
election in the form and manner permitted under such regulations, to
receive the benefit in another form.
WITHDRAWAL OF SALARY REDUCTION CONTRIBUTIONS
11. Withdrawals and other distributions attributable to contributions made
pursuant to a salary reduction agreement after December 31, 1988, and
the earnings on such contributions and on amounts held as of December
31, 1988, shall not be paid unless the Employee has reached age 59 1/2,
separated from service, died, become disabled (within the meaning of
IRC Section 72(m)(7)) or incurred a hardship as determined by the
organization described in Section 3 of this Endorsement; provided, that
amounts permitted to be distributed in the event of hardship shall be
limited to actual salary deferral contributions (excluding earnings
thereon); and provided further that amounts may be distributed pursuant
to a qualified domestic relations order to the extent permitted by IRC
Section 414(p).
WITHDRAWAL OF CUSTODIAL ACCOUNT CONTRIBUTIONS
12. Payments made by a nontaxable transfer from a custodial account
qualifying under IRC Section 403(b)(7), and earnings of such amounts,
shall not be paid or made available before the Employee dies, attains
age 59 1/2, separates from service, becomes disabled (within the
meaning of IRC Section 72(m)(7)) or in the case of such amounts attrib-
utable to contributions made under the custodial account pursuant to a
salary reduction agreement, encounters financial hardship; provided,
that such amounts permitted to be paid or made available in the event
of financial hardship shall be limited to amounts attributable to
actual salary deferral contributions made under the custodial account
(excluding earnings thereon); and provided further that amounts may be
distributed pursuant to a qualified domestic relations order to the
extent permitted by IRC Section 414(p).
MATURITY VALUE
13. If the Employee's Contract Value is greater than $3,500, as determined
on the first day of the month preceding the Maturity Date, in
accordance with section 205 of ERISA (and applicable regulations), we
will not exercise our right to pay the Contract Value of an Employee on
the Maturity Date in one lump sum in lieu of annuity benefits.
DIRECT ROLLOVERS
14. This Section 14 applies to distributions made on or after January 1,
1993. A distributee may elect, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include (1) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; (2) any distribution to the
extent such distribution is required under IRC Section 401(a)(9); and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
An eligible retirement plan is an annuity described in IRC Section
403(b), an individual retirement account described in IRC Section
408(a), or an individual retirement annuity described in IRC Section
408(b), that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
4
<PAGE> 8
A distributee includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternative payee
under a qualified domestic relations order, as defined in IRC Section
414(p), are distributees with regard to the interest of the spouse or
former spouse.
A direct rollover is a payment by the plan administrator or us to the
eligible retirement plan specified by the distributee.
IRC SECTION 72(S)
15. All references in the Contract to IRC Section 72(s) are deleted.
Endorsed on the Certificate Date of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
5
<PAGE> 9
TAX-SHELTERED ANNUITY ENDORSEMENT
Notwithstanding any provision contained therein to the contrary, the Certificate
to which this Endorsement is attached is amended as follows:
OWNER AND ANNUITANT
1. The Owner must be either an organization described in IRC Section
403(b)(1)(A) or an employee of such an organization. If the Owner is an
organization described in IRC Section 403(b)(1)(A), the term "Employee"
as used in this Endorsement shall mean the individual employee for
whose benefit the organization has established an annuity plan under
IRC Section 403(b). Such employee shall be the Annuitant. If the Owner
is an employee of an organization described in IRC Section
403(b)(1)(A), the Annuitant must be the same employee.
If this Contract is used as a funding mechanism for a rollover under
IRC Sections 403(b) or 408(d)(3), the Owner must be one individual,
that same individual must be the Annuitant, and the term "Employee"
shall mean that individual.
The Annuitant cannot be changed. Prior to the Maturity Date, the
Co-Annuitant can be changed, but such change shall not require any
distributions to be made under the Contract. In the "Death Benefit
Before Maturity Date" section of part 4 of the Certificate, the first
sentence of the paragraph "Death of Annuitant" is deleted, and the
second sentence is modified to read as follows: "If any Owner is not an
individual, the death of the Annuitant (but not of the Co-Annuitant) is
treated as the death of an Owner."
NONTRANSFERABLE
2. The interest of the Employee in the Contract is non-transferable within
the meaning of IRC Section 401(g) and applicable regulations and is
nonforfeitable. In particular, the Employee's interest in the Contract
may not be sold, assigned, discounted, or pledged as collateral for a
loan or as security for the performance of any obligation or for any
other purpose, to any person other than us.
PAYMENTS
3. Payments must be made by an organization described in IRC Section
403(b)(1)(A), except in the case of rollover contributions under IRC
Sections 403(b)(8) and 408(d)(3). The Employee must be an employee of
such organization. Payments made pursuant to a salary reduction
agreement shall be limited to the extent provided in IRC Section
402(g). Payments shall not exceed the amount allowed by IRC Section
415.
REQUIRED BEGINNING DATE
4. The Employee's entire interest in the Contract shall be distributed as
required under IRC Section 403(b)(10) and applicable regulations.
As used in this Endorsement, the term "required beginning date" shall
mean April 1 of the calendar year following the calendar year in which
the Employee attains age 70 1/2. For an Employee who attains age 70 1/2
before January 1, 1988, or for an Employee in a governmental plan or a
church plan (as defined in IRC Section 401(a)(9)(C)), the required
beginning date shall mean April 1 of the calendar year following the
later of (i) the calendar year in which the Employee attains age 70
1/2, or (ii) the calendar year in which the Employee retires.
DISTRIBUTIONS DURING EMPLOYEE'S LIFE
5. The Employee's entire interest shall be distributed no later than the
required beginning date, or shall be distributed, beginning no later
than the required beginning date, over (a) the life of the Employee or
the joint lives of the Employee and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the
Employee, or the joint life and last survivor expectancy of the
Employee and the designated beneficiary.
If the Employee's interest is to be distributed over a period greater
than one year, then the amount to be distributed by December 31 of each
year (including the year in which the required beginning date occurs)
shall be made in accordance with the requirements of IRC Section
401(a)(9), including the incidental death
1
ENDORSEMENT.011
<PAGE> 10
benefit requirements of IRC Section 401(a)(9)(G), and the regulations
thereunder, including the minimum distribution incidental benefit
requirement of Proposed Treasury Regulation Section 1.401(a)(9)-2.
DISTRIBUTIONS AFTER EMPLOYEE'S DEATH
6. If an Employee dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the Employee's
interest (if any) shall be distributed at least as rapidly as under the
method of distribution in effect as of the Employee's death.
If the Employee dies before the required beginning date and an
irrevocable annuity distribution has not begun, the Employee's entire
interest shall be distributed by December 31 of the calendar year
containing the fifth anniversary of the Employee's death, except that
(a) if the interest is payable to an individual who is the
Employee's designated beneficiary, the designated beneficiary
may elect to receive the entire interest over the life of the
designated beneficiary or over a period not extending beyond
the life expectancy of the designated beneficiary, commencing
on or before December 31 of the calendar year immediately
following the calendar year in which the Employee died; or
(b) if the designated beneficiary is the Employee's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a
period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Employee
died, and
(ii) December 31 of the calendar year in which the
Employee would have attained age 70 1/2.
If the surviving spouse dies before distributions begin, the
limitations of this section shall be applied as if the
surviving spouse were the Employee.
An irrevocable election of the method of distribution by a
designated beneficiary who is the surviving spouse must be
made no later than the earlier of December 31 of the calendar
year containing the fifth anniversary of the Employee's death
or the date distributions are required to begin pursuant to
this provision (b). If no election is made, the entire
interest will be distributed in accordance with the method of
distribution in this provision (b).
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Employee's death. If no election
is made, the entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of
the Employee's death.
In the "Death of Owner" section of the "Death Benefit Before Maturity
Date" part of the Certificate, the distribution requirements of
provisions "(d)" and "(e)" are deleted. If, after the Employee's death,
the designated beneficiary dies before the Maturity Date, no Death
Benefit is payable.
LIFE EXPECTANCY CALCULATIONS
7. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Employee, or (b) for purposes of
distributions beginning after the Employee's death, by the surviving
spouse. Such an election shall be irrevocable as to the Employee or the
surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distribu-
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<PAGE> 11
tions are required to begin pursuant to this Endorsement. Payments for
any subsequent calendar year shall be calculated based on such life
expectancy reduced by one for each calendar year which has elapsed
since the calendar year life in which expectancy was first calculated.
ANNUITY OPTIONS
8. Except to the extent Treasury regulations allow us to offer different
Annuity Options that are agreed to by us, only Annuity Options 1 and 2
shall be available to an Employee. All Annuity Options must meet the
requirements of IRC Section 403(b)(10), including the requirement that
payments to persons other than Employees are incidental.
Annuity Option 1(b) is not available for an Employee whose life
expectancy is less than 10 years. Under Annuity Options 2(a) and 2(b),
the designated Co-Annuitant must be the Employee's spouse. Annuity
Option 2(b) is not available for an Employee and his or her spouse
where the life expectancy of the Employee and such spouse is less than
10 years.
WITHDRAWAL OF SALARY REDUCTION CONTRIBUTIONS
9. Withdrawals and other distributions attributable to contributions made
pursuant to a salary reduction agreement after December 31, 1988, and
the earnings on such contributions and on amounts held as of December
31, 1988, shall not be paid unless the Employee has reached age 59 1/2,
separated from service, died, become disabled (within the meaning of
IRC Section 72(m)(7)) or incurred a hardship as determined by the
organization described in Section 3 of this Endorsement; provided, that
amounts permitted to be distributed in the event of hardship shall be
limited to actual salary deferral contributions (excluding earnings
thereon); and provided further that amounts may be distributed pursuant
to a qualified domestic relations order to the extent permitted by IRC
Section 414(p).
WITHDRAWAL OF CUSTODIAL ACCOUNT CONTRIBUTIONS
10. Payments made by a nontaxable transfer from a custodial account
qualifying under IRC Section 403(b)(7), and earnings of such amounts,
shall not be paid or made available before the Employee dies, attains
age 59 1/2, separates from service, becomes disabled (within the
meaning of IRC Section 72(m)(7)) or in the case of such amounts attrib-
utable to contributions made under the custodial account pursuant to a
salary reduction agreement, encounters financial hardship; provided,
that such amounts permitted to be paid or made available in the event
of financial hardship shall be limited to amounts attributable to
actual salary deferral contributions made under the custodial account
(excluding earnings thereon); and provided further that amounts may be
distributed pursuant to a qualified domestic relations order to the
extent permitted by IRC Section 414(p).
LOANS
11. While this Contract is in force with respect to an Employee, an
Employee may borrow using his or her interest in the Contract as the
sole security for the loan. We will usually make a loan within seven
days after we receive the request, subject to suspension of payment as
set forth in part 10 of the Contract.
The maximum loan value is 80% of the Contract Value for an Employee. An
Employee may borrow an amount up to the lesser of:
a. the maximum loan value less any existing Debt, or
b. An amount which, when added to any existing Debt, does not
exceed the lesser of:
i. $50,000 (reduced by any excess of the highest
outstanding Debt during the one year period ending on
the day before the date on which the current loan is
made, over the outstanding Debt on the date the
current loan is made), or
ii. $10,000 or, if greater, one-half of the Contract
Value.
An Employee's investment in each Investment Account will be reduced by
the amount withdrawn from that Investment Account in connection with
the loan and such amount will be transferred to the Loan Account.
Unless requested otherwise by the Employee, we will withdraw the amount
of the loan from each Investment Account in the same manner as partial
withdrawals. If we withdraw part of the loan from an Employee's fixed
Investment Account, a Market Value Charge may be applied. On each
Contract
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<PAGE> 12
Anniversary, the excess of the Debt over the amount in the Loan Account
attributable to the Employee will be transferred from the Investment
Accounts to the Loan Account. Any amounts in the Loan Account will earn
interest at 4% per annum.
Since the amount of a loan is removed from the Investment Accounts, a
loan will have a permanent effect on the Contract Value. The longer the
loan is outstanding, the greater the effect is likely to be.
The loan interest rate will be 6% per annum. Interest will be payable
in arrears on each Contract Anniversary. Any interest not paid when due
will be added to the Debt and bear interest in the same manner.
An Employee may repay any Debt in whole or in part while the Contract
is in force. An amount equal to the amount of the loan repayment will
be transferred from the Employee's Loan Account to the Investment
Accounts in the same proportion as Purchase Payments are currently
allocated, unless the Employee requests otherwise. Loans must be repaid
within 5 years, except for loans to acquire a principal residence for
the Employee. Repayment must be in level amounts made at least
quarterly.
If, on any date, the Debt of an Employee exceeds the Contract Value,
then the Contract will be in default as to that Employee. In such case
we will send the Employee a notice of default and tell him what payment
is needed to cure the default. The Employee will have a 31-day grace
period from the date of mailing of such notice during which to pay the
default amount. If the required payment is not paid within the grace
period, the Employee's interest in the Contract may be foreclosed
(terminated without value).
DIRECT ROLLOVERS
12. This Section 12 applies to distributions made on or after January 1,
1993. A distributee may elect, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include (1) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; (2) any distribution to the
extent such distribution is required under IRC Section 401(a)(9); and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
An eligible retirement plan is an annuity described in IRC Section
403(b), an individual retirement account described in IRC Section
408(a), or an individual retirement annuity described in IRC Section
408(b), that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
A distributee includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternative payee
under a qualified domestic relations order, as defined in IRC Section
414(p), are distributees with regard to the interest of the spouse or
former spouse.
A direct rollover is a payment by the plan administrator or us to the
eligible retirement plan specified by the distributee.
IRC SECTION 72(S)
13. All references in the Contract to IRC Section 72(s) are deleted.
Endorsed on the Certificate Date of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
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<PAGE> 13
Vice-President
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<PAGE> 14
SECTION 401 PLANS ENDORSEMENT
Notwithstanding any provision contained therein to the contrary, the Certificate
to which this Endorsement is attached is amended as follows:
OWNER AND ANNUITANT
1. The Owner must be either a trustee of a qualified retirement plan under
IRC Sections 401(a) or 403(a) or an employee covered by such a plan. If
the Owner is a trustee, the term "Participant" as used in this
Endorsement shall mean the individual employee for whose benefit the
employer has established the plan. If the Owner is an employee, the
term "Participant" shall mean the employee.
In all cases, the Annuitant shall be the Participant and the Annuitant
cannot be changed. Prior to the Maturity Date, the Co-Annuitant can be
changed, but such change shall not require any distributions under the
Contract.
NONTRANSFERABLE
2. An Owner may not transfer his interest in the Contract except: (1) to
the Participant; (2) to a trustee or successor trustee of a retirement
plan qualified under IRC Sections 401(a) or 403(a); or (3) as otherwise
permitted by applicable regulations of the Internal Revenue Service.
If the Owner is the Participant, he may not assign, sell, transfer, or
discount his interest in the Contract, or pledge it as collateral for a
loan or as security for the performance of an obligation or for any
other purpose, other than to us.
REQUIRED BEGINNING DATE
3. The Participant's entire interest in the Contract shall be distributed
as required by IRC Section 401(a)(9), and the regulations thereunder,
including the minimum distribution incidental benefit requirement of
Prop. Treas. Reg. Section 1.401(a)(9)-2.
As used in this Endorsement, the term "required beginning date" shall
mean April 1 of the calendar year following the calendar year in which
(1) the Participant reaches age 70 1/2, or (2) the Participant retires
from the employment of the employer sponsoring the retirement plan with
respect to which the Contract was purchased, whichever is later. Clause
(2) shall only apply to a Participant who has attained age 70 1/2
before January 1, 1988, and is not a "5-percent owner" (within the
meaning of IRC Section 416(i)) at any time during the plan year ending
with or within the calendar year in which such owner attained age 66
1/2, and any subsequent plan year. If the Participant becomes a
"5-percent owner" in a year after the year in which he or she attains
age 70 1/2, the required beginning date shall be April 1 of the
calendar year following the calendar year in which such subsequent plan
year ends.
For a Participant in a governmental plan or a church plan (as defined
in IRC Section 401(a)(9)(C)), the required beginning date shall be
April 1 of the calendar year following the later of (1) the calendar
year in which the Participant attains age 70 1/2, or (2) the calendar
year in which the Participant retires.
The requirements of Sections 3,4, and 6 of this Endorsement do not
apply with respect to a benefit to which a proper designation is in
effect under section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982.
DISTRIBUTIONS DURING PARTICIPANT'S LIFE
4. The Participant's entire interest shall be distributed no later than
the required beginning date, or shall be distributed, beginning no
later than the required beginning date over (a) the life of the
Participant or the
ENDORSEMENT.012
<PAGE> 15
joint lives of the Participant and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the
Participant, or the joint life and last survivor expectancy of the
Participant and the designated beneficiary.
If the Participant's interest is to be distributed over a period
greater than one year, then the amount to be distributed by December 31
of each year (including the year in which the required beginning date
occurs) shall be determined in accordance with the requirements of IRC
Section 401(a)(9), including the incidental death benefit requirements
of IRC Section 401(a)(9)(G), and the regulations thereunder, including
the minimum distribution incidental benefit requirements of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
DEATH BENEFIT
5. If, in the event of the Participant's death prior to the Maturity Date,
the Death Benefit is not paid to the trustee of a retirement plan
qualified under IRC Sections 401(a) or 403(a), it shall be paid to (1)
the surviving spouse of the Participant in the form required by IRC
Section 417(c), unless the spouse elects otherwise in accordance with
the requirements of IRC Section 417 or regulations promulgated
thereunder, or (2) if there is no surviving spouse, or if the surviving
spouse has consented in the manner required by IRC Section 417, or if
regulations promulgated by the Treasury Department under IRC Section
417 otherwise permit, to the Beneficiary under the Contract.
In the "Death Benefit Before Maturity Date" section of part 4 of the
Certificate, the first sentence of the paragraph "Death of Annuitant"
is deleted, and the second sentence is modified to read as follows: "If
any Owner is not an individual, the death of the Annuitant (but not of
the Co-Annuitant) is treated as the death of an Owner."
DISTRIBUTIONS AFTER PARTICIPANT'S DEATH
6. If the Participant dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the
Participant's interest (if any) shall be distributed at least as
rapidly as under the method of distribution in effect as of the
Participant's death.
If the Participant dies before the required beginning date and an
irrevocable annuity distribution has not begun, the Participant's
entire interest shall be distributed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death,
except that
(a) if the interest is payable to an individual who is the
Participant's designated beneficiary, the designated
beneficiary may elect to receive the entire interest over the
life of the designated beneficiary or over a period not
extending beyond the life expectancy of the designated
beneficiary, commencing on or before December 31 of the
calendar year immediately following the calendar year in which
the Participant died; or
(b) if the designated beneficiary is the Participant's
surviving spouse, the surviving spouse may elect to receive
the entire interest over the life of the surviving spouse or
over a period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Participant
died, and
(ii) December 31 of the calendar year in which the
Participant would have attained age 70 1/2.
If the Surviving spouse dies before distributions
begin the limitations of this section shall be
applied as if the surviving spouse were the
Participant.
An irrevocable election of the method of distribution
by a designated beneficiary who is the surviving
spouse must be made no later than the earlier of
December 31 of the calendar
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<PAGE> 16
year containing the fifth anniversary of the
Participant's death or the date distributions are
required to begin pursuant to this provision (b). If
no election is made, the entire interest will be
distributed in accordance with the method of
distribution in this provision (b).
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Participant's death. If no
election is made, the entire interest will be distributed by
December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
In the "Death of Owner" section of the "Death Benefit Before Maturity
Date" part of the Certificate, the distribution requirements of
provisions "(d)" and "(e)" are deleted. If, after the Participant's
death, the designated beneficiary dies before the Maturity Date, no
Death Benefit is payable.
LIFE EXPECTANCY CALCULATIONS
7. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Participant, or (b) for purposes of
distributions beginning after the Participant's death, by the surviving
spouse. Such an election shall be irrevocable as to the Participant or
the surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life in which expectancy was first
calculated.
ANNUITY OPTIONS
8. Except to the extent Treasury regulations allow us to offer different
Annuity Options that are agreed to by us and are stated in the
employer's plan, only Annuity Options 1 and 2 shall be available to the
Participant. All Annuity Options must meet the requirements of IRC
Section 401(a)(9), including the requirement of IRC Section
401(a)(9)(G) that payments to persons other than Participants are
incidental.
Annuity Option 1(b) is not available for a Participant whose life
expectancy is less than 10 years. Under Annuity Option 2(a) and 2(b)
the designated Co-Annuitant must be the Participant's spouse. Annuity
Option 2(b) is not available for a Participant and his or her spouse
where the joint life expectancy of the Participant and such spouse is
less than 10 years.
Except as hereinafter provided, only Annuity Option 2(a) is available
to a married Participant. A married Participant may elect another
Annuity Option, provided his or her spouse consents in accordance with
the requirements of IRC Section 417 or provided such election is
otherwise permitted under Treasury Regulations. An unmarried
Participant will be deemed to have elected Annuity Option 1(a) unless
he or she makes a different election in the manner required under IRC
Section 417 (and applicable regulations).
ELECTIONS AND CONSENTS
9. Elections and consents made pursuant to the Contract may be revoked in
the form, time, and manner prescribed in IRC Section 417 (and
applicable regulations). All elections and consents required by the
Contract shall adhere to the requirements of the applicable regulations
interpreting IRC Section 417 (or any other applicable law), including
the requirements as to the timing of any elections or consents.
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<PAGE> 17
No amount may be paid from the Contract in a lump sum unless such
payment is allowed under both the retirement plan with regard to which
the Contract is purchased and the Internal Revenue Code and related
regulations. A Participant who is married must have the consent of his
or her spouse to withdraw all or part of the Contract Value.
MATURITY VALUE
10. If the Contract Value is greater than $3,500, as determined on the
first day of the month preceding the Maturity Date, in accordance with
the requirements of IRC Sections 411(a)(11) and 417 (and applicable
regulations), we will not exercise our right to pay the Contract Value
on the Maturity Date in one lump sum in lieu of annuity benefits.
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<PAGE> 18
DIRECT ROLLOVERS
11. This Section 11 applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Contract to the contrary
that would otherwise limit a distributee's election under this Section
11, a distributee may elect, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under IRC Section 401(a)(9); and the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
An eligible retirement plan is an individual retirement account
described in IRC Section 408(a), an individual retirement annuity
described in IRC Section 408(b), an annuity plan described in IRC
Section 403(a), or a qualified trust described in IRC Section 401(a),
that accepts the distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement account
or individual retirement annuity.
A distributee includes a Participant. In addition, the Participant's
surviving spouse and the Participant's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in IRC Section 414(p), are distributees with regard to the
interest of the spouse or former spouse.
A direct rollover is a payment by us to the eligible retirement plan
specified by the distributee.
IRC SECTION 72(S)
12. All references in the Contract to IRC Section 72(s) are deleted from
the Contract.
Endorsed on the Certificate Date of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
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<PAGE> 19
TEXAS OPTIONAL RETIREMENT PROGRAM ENDORSEMENT
The Certificate to which this Endorsement is attached is amended by adding the
following provisions for the purpose of satisfying the requirements of the Texas
Optional Retirement Program ("Texas ORP") established for faculty members of
state-supported institutions of higher education in Texas under
Sections 830.001-830.205 of Title 8, Subtitle C of the Texas Government
Code (the "Texas Code"):
1. If the Contract used in connection with the Texas ORP, the Annuitant
and the Owner shall be the same person (the "Employee"). The Employee
must be a faculty member of an "institution of higher education," as
defined in Texas Code Section 830.003 ("Texas public institutions of
higher education") and meet the eligibility requirements for
participation in the Texas ORP under rules established by the Texas
Higher Education Coordinating Board.
The Employee has the unrestricted right to:
(a) designate and redesignate the Sub-Accounts into which Payments
are allocated;
(b) transfer amounts among Sub-Accounts; and
(c) change the Beneficiary designation.
2. Benefits under the Contract, including partial and total withdrawal
rights and the right to apply amounts under an Annuity Option, will be
available to the Employee only if (a) he or she terminates
participation in the Texas ORP by death, retirement or termination of
employment in all Texas public institutions of higher education; or (b)
he or she attains the age of 70 1/2 years.
3. Payments must be made in accordance with Texas Code
Sections 830.201-830.204 and other applicable law.
4. Upon the Employee's termination of participation in the Texas ORP (in
the manner described above) prior to the completion of 12 full months
of participation in the Texas ORP, we will pay the employing Texas
public institution of higher education from the Employee's Contract
Value an amount equal to the total amount of Payments made by such
employing institution under the Certificate. The Employee's Contract
Value remaining after such payment to the employing institution less
the withdrawal charge attributable to such payment will be available to
the Employee, subject to any further withdrawal and other charges, in
accordance with the terms of the Contract.
5. On or after the Employee's first day of employment following the
completion of 12 full months of participation in the Texas ORP, and the
Employee either (1) terminates participation in the Texas ORP (in the
manner described above), or (2) attains the age of 70 1/2 years, his or
her Contract Value, subject to any withdrawal and other charges, will
be available to the Employee in accordance with the terms of the
Contract.
6. The interests of the Employee in the Contract are nontransferable and
nonforfeitable. Notwithstanding any other provision of the Contract or
this Endorsement, no loans are available under the Contract, and the
Contract may not be pledged as collateral for a loan.
7. Annuity Option 1(b) is not available for an Annuitant whose life
expectancy is less than 10 years. Under Annuity Option 2(a) and 2(b)
the designated Co-Annuitant must be the Annuitant's spouse. Annuity
Option 2(b) is not available where the joint life expectancy of the
Annuitant and spouse is less than 10 years.
8. Contributions made pursuant to a salary reduction agreement shall be
limited to the extent provided by Section 402(g) of the Internal
Revenue Code.
ENDORSEMENT.013
<PAGE> 20
9. We are responsible for determining the qualified status of qualified
domestic relations orders and for paying benefits in accordance with
Texas Government Code, Title 8, Subtitle A, Chapter 804.
10. No investment advisory fees, within the meaning of Texas Code Section
830.107, are payable from the Contract, unless both of the following
occur: (a) the Company, in its discretion, consents, and (b) the
requirements of the Texas ORP with respect to investment advisory fees,
including the requirements of Texas Code Section 830.107, are met.
11. Where this endorsement is applicable, the Certificate must also be
endorsed to reflect use of the Certificate as a tax-sheltered annuity,
qualified under Section 403(b) of the Internal Revenue Code. The
endorsements should be construed so that the Certificate will comply
with the requirements of both the Texas ORP and Section 403(b) of the
Internal Revenue Code.
Endorsed on the Certificate Date of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
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<PAGE> 21
QUALIFIED CONTRACT PROVISIONS
Notwithstanding any provision contained therein to the contrary, the Contract to
which this Endorsement is attached is amended in accordance with the applicable
qualified plan provisions. Any of the provisions in this Endorsement may be
amended by the Company, or new provisions added, from time to time, to conform a
Qualified Contract to any change in applicable law.
SECTION 401 PLANS
OWNER AND ANNUITANT
1. The Owner must be either a trustee of a qualified retirement plan under
IRC Sections 401(a) or 403(a) or an employee covered by such a plan. If
the Owner is a trustee, the term "Participant" as used in this
Endorsement shall mean the individual employee for whose benefit the
employer has established the plan. If the Owner is an employee, the
term "Participant" shall mean the employee.
In all cases, the Annuitant shall be the Participant and the Annuitant
cannot be changed. Prior to the Maturity Date, the Co-Annuitant can be
changed, but such change shall not require any distributions under the
Contract.
NONTRANSFERABLE
2. An Owner may not transfer his interest in the Contract except: (1) to
the Participant; (2) to a trustee or successor trustee of a retirement
plan qualified under IRC Sections 401(a) or 403(a); or (3) as otherwise
permitted by applicable regulations of the Internal Revenue Service.
If the Owner is the Participant, he may not assign, sell, transfer, or
discount his interest in the Contract, or pledge it as collateral for a
loan or as security for the performance of an obligation or for any
other purpose, other than to us.
REQUIRED BEGINNING DATE
3. The Participant's entire interest in the Contract shall be distributed
as required by IRC Section 401(a)(9), and the regulations thereunder,
including the minimum distribution incidental benefit requirement of
Prop. Treas. Reg. Section 1.401(a)(9)-2.
As used in this Endorsement, the term "required beginning date" shall
mean April 1 of the calendar year following the calendar year in which
(1) the Participant reaches age 70 1/2, or (2) the Participant retires
from the employment of the employer sponsoring the retirement plan with
respect to which the Contract was purchased, whichever is later. Clause
(2) shall only apply to a Participant who has attained age 70 1/2
before January 1, 1988, and is not a "5-percent owner" (within the
meaning of IRC Section 416(i)) at any time during the plan year ending
with or within the calendar year in which such owner attained age 66
1/2, and any subsequent plan year. If the Participant becomes a
"5-percent owner" in a year after the year in which he or she attains
age 70 1/2, the required beginning date shall be April 1 of the
calendar year following the calendar year in which such subsequent plan
year ends.
For a Participant in a governmental plan or a church plan (as defined
in IRC Section 401(a)(9)(C)), the required beginning date shall be
April 1 of the calendar year following the later of (1) the calendar
year in which the Participant attains age 70 1/2, or (2) the calendar
year in which the Participant retires.
The requirements of Sections 3,4, and 6 of this Endorsement do not
apply with respect to a benefit to which a proper designation is in
effect under section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982.
DISTRIBUTIONS DURING PARTICIPANT'S LIFE
4. The Participant's entire interest shall be distributed no later than
the required beginning date, or shall be distributed, beginning no
later than the required beginning date over (a) the life of the
Participant or the joint lives of the Participant and an individual who
is his or her designated beneficiary (within the meaning of IRC Section
401(a)(9)),
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<PAGE> 22
or (b) a period not extending beyond the life expectancy of the
Participant, or the joint life and last survivor expectancy of the
Participant and the designated beneficiary.
If the Participant's interest is to be distributed over a period
greater than one year, then the amount to be distributed by December 31
of each year (including the year in which the required beginning date
occurs) shall be determined in accordance with the requirements of IRC
Section 401(a)(9), including the incidental death benefit requirements
of IRC Section 401(a)(9)(G), and the regulations thereunder, including
the minimum distribution incidental benefit requirements of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
DEATH BENEFIT
5. If, in the event of the Participant's death prior to the Maturity Date,
the Death Benefit is not paid to the trustee of a retirement plan
qualified under IRC Sections 401(a) or 403(a), it shall be paid to (1)
the surviving spouse of the Participant in the form required by IRC
Section 417(c), unless the spouse elects otherwise in accordance with
the requirements of IRC Section 417 or regulations promulgated
thereunder, or (2) if there is no surviving spouse, or if the surviving
spouse has consented in the manner required by IRC Section 417, or if
regulations promulgated by the Treasury Department under IRC Section
417 otherwise permit, to the Beneficiary under the Contract.
In the "Death Benefit Before Maturity Date" section of part 4 of the
Contract, the first sentence of the paragraph "Death of Annuitant" is
deleted, and the second sentence is modified to read as follows: "If
any Owner is not an individual, the death of the Annuitant (but not of
the Co-Annuitant) is treated as the death of an Owner."
DISTRIBUTIONS AFTER PARTICIPANT'S DEATH
6. If the Participant dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the
Participant's interest (if any) shall be distributed at least as
rapidly as under the method of distribution in effect as of the
Participant's death.
If the Participant dies before the required beginning date and an
irrevocable annuity distribution has not begun, the Participant's
entire interest shall be distributed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death,
except that
(a) if the interest is payable to an individual who is the
Participant's designated beneficiary, the designated
beneficiary may elect to receive the entire interest over the
life of the designated beneficiary or over a period not
extending beyond the life expectancy of the designated
beneficiary, commencing on or before December 31 of the
calendar year immediately following the calendar year in which
the Participant died; or
(b) if the designated beneficiary is the Participant's
surviving spouse, the surviving spouse may elect to receive
the entire interest over the life of the surviving spouse or
over a period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Participant
died, and
(ii) December 31 of the calendar year in which the
Participant would have attained age 70 1/2.
If the surviving spouse dies before distributions
begin, the limitations of this section shall be
applied as if the surviving spouse were the
Participant.
An irrevocable election of the method of distribution
by a designated beneficiary who is the surviving
spouse must be made no later than the earlier of
December 31 of the calendar year containing the fifth
anniversary of the Participant's death or the date
distributions are required to begin pursuant to this
provision (b). If no election is made, the entire
interest will be distributed in accordance with the
method of distribution in this provision (b).
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An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Participant's death. If no
election is made, the entire interest will be distributed by
December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
In the "Death of Owner" section of the "Death Benefit Before Maturity
Date" part of the Contract, the distribution requirements of provisions
"(d)" and "(e)" are deleted. If, after the Participant's death, the
designated beneficiary dies before the Maturity Date, no Death Benefit
is payable.
LIFE EXPECTANCY CALCULATIONS
7. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Participant, or (b) for purposes of
distributions beginning after the Participant's death, by the surviving
spouse. Such an election shall be irrevocable as to the Participant or
the surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life in which expectancy was first
calculated.
ANNUITY OPTIONS
8. Except to the extent Treasury regulations allow us to offer different
Annuity Options that are agreed to by us and are stated in the
employer's plan, only Annuity Options 1 and 2 shall be available to the
Participant. All Annuity Options must meet the requirements of IRC
Section 401(a)(9), including the requirement of IRC Section
401(a)(9)(G) that payments to persons other than Participants are
incidental.
Annuity Option 1(b) is not available for a Participant whose life
expectancy is less than 10 years. Under Annuity Option 2(a) and 2(b)
the designated Co-Annuitant must be the Participant's spouse. Annuity
Option 2(b) is not available for a Participant and his or her spouse
where the joint life expectancy of the Participant and such spouse is
less than 10 years.
Except as hereinafter provided, only Annuity Option 2(a) is available
to a married Participant. A married Participant may elect another
Annuity Option, provided his or her spouse consents in accordance with
the requirements of IRC Section 417 or provided such election is
otherwise permitted under Treasury Regulations. An unmarried
Participant will be deemed to have elected Annuity Option 1(a) unless
he or she makes a different election in the manner required under IRC
Section 417 (and applicable regulations).
ELECTIONS AND CONSENTS
9. Elections and consents made pursuant to the Contract may be revoked in
the form, time, and manner prescribed in IRC Section 417 (and
applicable regulations). All elections and consents required by the
Contract shall adhere to the requirements of the applicable regulations
interpreting IRC Section 417 (or any other applicable law), including
the requirements as to the timing of any elections or consents.
No amount may be paid from the Contract in a lump sum unless such
payment is allowed under both the retirement plan with regard to which
the Contract is purchased and the Internal Revenue Code and related
regulations. A Participant who is married must have the consent of his
or her spouse to withdraw all or part of the Contract Value.
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<PAGE> 24
MATURITY VALUE
10. If the Contract Value is greater than $3,500, as determined on the
first day of the month preceding the Maturity Date, in accordance with
the requirements of IRC Sections 411(a)(11) and 417 (and applicable
regulations), we will not exercise our right to pay the Contract Value
on the Maturity Date in one lump sum in lieu of annuity benefits.
DIRECT ROLLOVERS
11. This Section 11 applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Contract to the contrary
that would otherwise limit a distributee's election under this Section
11, a distributee may elect, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under IRC Section 401(a)(9); and the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
An eligible retirement plan is an individual retirement account
described in IRC Section 408(a), an individual retirement annuity
described in IRC Section 408(b), an annuity plan described in IRC
Section 403(a), or a qualified trust described in IRC Section 401(a),
that accepts the distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement account
or individual retirement annuity.
A distributee includes a Participant. In addition, the Participant's
surviving spouse and the Participant's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in IRC Section 414(p), are distributees with regard to the
interest of the spouse or former spouse.
A direct rollover is a payment by us to the eligible retirement plan
specified by the distributee.
IRC SECTION 72(S)
12. All references in the Contract to IRC Section 72(s) are deleted from
the Contract.
TAX-SHELTERED ANNUITY
OWNER AND ANNUITANT
1. The Owner must be either an organization described in IRC Section
403(b)(1)(A) or an employee of such an organization. If the Owner is an
organization described in IRC Section 403(b)(1)(A), the term "Employee"
as used in this Endorsement shall mean the individual employee for
whose benefit the organization has established an annuity plan under
IRC Section 403(b). Such employee shall be the Annuitant. If the Owner
is an employee of an organization described in IRC Section
403(b)(1)(A), the Annuitant must be the same employee.
If this Contract is used as a funding mechanism for a rollover under
IRC Sections 403(b) or 408(d)(3), the Owner must be one individual,
that same individual must be the Annuitant, and the term "Employee"
shall mean that individual.
The Annuitant cannot be changed. Prior to the Maturity Date, the
Co-Annuitant can be changed, but such change shall not require any
distributions to be made under the Contract. In the "Death Benefit
Before Maturity Date" section
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<PAGE> 25
of part 4 of the Contract, the first sentence of the paragraph "Death
of Annuitant" is deleted, and the second sentence is modified to read
as follows: "If any Owner is not an individual, the death of the
Annuitant (but not of the Co-Annuitant) is treated as the death of an
Owner."
NONTRANSFERABLE
2. The interest of the Employee in the Contract is non-transferable within
the meaning of IRC Section 401(g) and applicable regulations and is
nonforfeitable. In particular, the Employee's interest in the Contract
may not be sold, assigned, discounted, or pledged as collateral for a
loan or as security for the performance of any obligation or for any
other purpose, to any person other than us.
PAYMENTS
3. Payments must be made by an organization described in IRC Section
403(b)(1)(A), except in the case of rollover contributions under IRC
Sections 403(b)(8) and 408(d)(3). The Employee must be an employee of
such organization. Payments made pursuant to a salary reduction
agreement shall be limited to the extent provided in IRC Section
402(g). Payments shall not exceed the amount allowed by IRC Section
415.
REQUIRED BEGINNING DATE
4. The Employee's entire interest in the Contract shall be distributed as
required under IRC Section 403(b)(10) and applicable regulations.
As used in this Endorsement, the term "required beginning date" shall
mean April 1 of the calendar year following the calendar year in which
the Employee attains age 70 1/2. For an Employee who attains age 70 1/2
before January 1, 1988, or for an Employee in a governmental plan or a
church plan (as defined in IRC Section 401(a)(9)(C)), the required
beginning date shall mean April 1 of the calendar year following the
later of (i) the calendar year in which the Employee attains age 70
1/2, or (ii) the calendar year in which the Employee retires.
DISTRIBUTIONS DURING EMPLOYEE'S LIFE
5. The Employee's entire interest shall be distributed no later than the
required beginning date, or shall be distributed, beginning no later
than the required beginning date, over (a) the life of the Employee or
the joint lives of the Employee and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the
Employee, or the joint life and last survivor expectancy of the
Employee and the designated beneficiary.
If the Employee's interest is to be distributed over a period greater
than one year, then the amount to be distributed by December 31 of each
year (including the year in which the required beginning date occurs)
shall be made in accordance with the requirements of IRC Section
401(a)(9), including the incidental death benefit requirements of IRC
Section 401(a)(9)(G), and the regulations thereunder, including the
minimum distribution incidental benefit requirement of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
DISTRIBUTIONS AFTER EMPLOYEE'S DEATH
6. If an Employee dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the Employee's
interest (if any) shall be distributed at least as rapidly as under the
method of distribution in effect as of the Employee's death.
If the Employee dies before the required beginning date and an
irrevocable annuity distribution has not begun, the Employee's entire
interest shall be distributed by December 31 of the calendar year
containing the fifth anniversary of the Employee's death, except that
(a) if the interest is payable to an individual who is the
Employee's designated beneficiary, the designated beneficiary
may elect to receive the entire interest over the life of the
designated beneficiary or over a period
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<PAGE> 26
not extending beyond the life expectancy of the designated
beneficiary, commencing on or before December 31 of the
calendar year immediately following the calendar year in which
the Employee died; or
(b) if the designated beneficiary is the Employee's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a
period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Employee
died, and
(ii) December 31 of the calendar year in which the
Employee would have attained age 70 1/2.
If the surviving spouse dies before distributions
begin, the limitations of this section shall be
applied as if the surviving spouse were the Employee.
An irrevocable election of the method of distribution
by a designated beneficiary who is the surviving
spouse must be made no later than the earlier of
December 31 of the calendar year containing the fifth
anniversary of the Employee's death or the date
distributions are required to begin pursuant to this
provision (b). If no election is made, the entire
interest will be distributed in accordance with the
method of distribution in this provision (b).
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Employee's death. If no election
is made, the entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of
the Employee's death.
In the "Death of Owner" section of the "Death Benefit Before Maturity
Date" part of the Contract, the distribution requirements of provisions
"(d)" and "(e)" are deleted. If, after the Employee's death, the
designated beneficiary dies before the Maturity Date, no Death Benefit
is payable.
LIFE EXPECTANCY CALCULATIONS
7. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Employee, or (b) for purposes of
distributions beginning after the Employee's death, by the surviving
spouse. Such an election shall be irrevocable as to the Employee or the
surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life in which expectancy was first
calculated.
ANNUITY OPTIONS
8. Except to the extent Treasury regulations allow us to offer different
Annuity Options that are agreed to by us, only Annuity Options 1 and 2
shall be available to an Employee. All Annuity Options must meet the
requirements of IRC Section 403(b)(10), including the requirement that
payments to persons other than Employees are incidental.
Annuity Option 1(b) is not available for an Employee whose life
expectancy is less than 10 years. Under Annuity Options 2(a) and 2(b),
the designated Co-Annuitant must be the Employee's spouse. Annuity
Option 2(b) is not
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available for an Employee and his or her spouse where the life
expectancy of the Employee and such spouse is less than 10 years.
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<PAGE> 28
WITHDRAWAL OF SALARY REDUCTION CONTRIBUTIONS
9. Withdrawals and other distributions attributable to contributions made
pursuant to a salary reduction agreement after December 31, 1988, and
the earnings on such contributions and on amounts held as of December
31, 1988, shall not be paid unless the Employee has reached age 59 1/2,
separated from service, died, become disabled (within the meaning of
IRC Section 72(m)(7)) or incurred a hardship as determined by the
organization described in Section 3 of this Endorsement; provided, that
amounts permitted to be distributed in the event of hardship shall be
limited to actual salary deferral contributions (excluding earnings
thereon); and provided further that amounts may be distributed pursuant
to a qualified domestic relations order to the extent permitted by IRC
Section 414(p).
WITHDRAWAL OF CUSTODIAL ACCOUNT CONTRIBUTIONS
10. Payments made by a nontaxable transfer from a custodial account
qualifying under IRC Section 403(b)(7), and earnings of such amounts,
shall not be paid or made available before the Employee dies, attains
age 59 1/2, separates from service, becomes disabled (within the
meaning of IRC Section 72(m)(7)) or in the case of such amounts attrib-
utable to contributions made under the custodial account pursuant to a
salary reduction agreement, encounters financial hardship; provided,
that such amounts permitted to be paid or made available in the event
of financial hardship shall be limited to amounts attributable to
actual salary deferral contributions made under the custodial account
(excluding earnings thereon); and provided further that amounts may be
distributed pursuant to a qualified domestic relations order to the
extent permitted by IRC Section 414(p).
LOANS
11. While this Contract is in force with respect to an Employee, an
Employee may borrow using his or her interest in the Contract as the
sole security for the loan. We will usually make a loan within seven
days after we receive the request, subject to suspension of payment as
set forth in part 10 of the Contract.
The maximum loan value is 80% of the Contract Value for an Employee. An
Employee may borrow an amount up to the lesser of:
a. the maximum loan value less any existing Debt, or
b. An amount which, when added to any existing Debt, does not
exceed the lesser of:
i. $50,000 (reduced by any excess of the highest
outstanding Debt during the one year period ending on
the day before the date on which the current loan is
made, over the outstanding Debt on the date the
current loan is made), or
ii. $10,000 or, if greater, one-half of the Contract
Value.
An Employee's investment in each Investment Account will be reduced by
the amount withdrawn from that Investment Account in connection with
the loan and such amount will be transferred to the Loan Account.
Unless requested otherwise by the Employee, we will withdraw the amount
of the loan from each Investment Account in the same manner as partial
withdrawals. If we withdraw part of the loan from an Employee's fixed
Investment Account, a Market Value Charge may be applied. On each
Contract Anniversary, the excess of the Debt over the amount in the
Loan Account attributable to the Employee will be transferred from the
Investment Accounts to the Loan Account. Any amounts in the Loan
Account will earn interest at 4% per annum.
Since the amount of a loan is removed from the Investments Accounts, a
loan will have a permanent effect on the Contract Value. The longer the
loan is outstanding, the greater the effect is likely to be.
The loan interest rate will be 6% per annum. Interest will be payable
in arrears on each Contract Anniversary. Any interest not paid when due
will be added to the Debt and bear interest in the same manner.
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<PAGE> 29
An Employee may repay any Debt in whole or in part while the Contract
is in force. An amount equal to the amount of the loan repayment will
be transferred from the Employee's Loan Account to the Investment
Accounts in the same proportion as Purchase Payments are currently
allocated, unless the Employee requests otherwise. Loans must be repaid
within 5 years, except for loans to acquire a principal residence for
the Employee. Repayment must be in level amounts made at least
quarterly.
If, on any date, the Debt of an Employee exceeds the Contract Value,
then the Contract will be in default as to that Employee. In such case
we will send the Employee a notice of default and tell him what payment
is needed to cure the default. The Employee will have a 31-day grace
period from the date of mailing of such notice during which to pay the
default amount. If the required payment is not paid within the grace
period, the Employee's interest in the Contract may be foreclosed
(terminated without value).
DIRECT ROLLOVERS
12. This Section 12 applies to distributions made on or after January 1,
1993. A distributee may elect, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include (1) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; (2) any distribution to the
extent such distribution is required under IRC Section 401(a)(9); and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
An eligible retirement plan is an annuity described in IRC Section
403(b), an individual retirement account described in IRC Section
408(a), or an individual retirement annuity described in IRC Section
408(b), that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
A distributee includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternative payee
under a qualified domestic relations order, as defined in IRC Section
414(p), are distributees with regard to the interest of the spouse or
former spouse.
A direct rollover is a payment by the plan administrator or us to the
eligible retirement plan specified by the distributee.
IRC SECTION 72(S)
13. All references in the Contract to IRC Section 72(s) are deleted.
ERISA TAX-SHELTERED ANNUITY
OWNER AND ANNUITANT
1. The Owner must be either an organization described in IRC Section
403(b)(1)(A) or an employee of such an organization. If the Owner is an
organization described in IRC Section 403(b)(1)(A), the term "Employee"
as used in this Endorsement shall mean the individual employee for
whose benefit the organization has established an annuity plan under
IRC Section 403(b). Such employee shall be the Annuitant. If the Owner
is an employee of an organization described in IRC Section
403(b)(1)(A), the Annuitant must be the same employee.
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<PAGE> 30
If this Contract is used as a funding mechanism for a rollover under
IRC Sections 403(b) or 408(d)(3), the Owner must be one individual,
that same individual must be the Annuitant, and the term "Employee"
shall mean that individual.
The Annuitant cannot be changed. Prior to the Maturity Date, the
Co-Annuitant can be changed, but such change shall not require any
distributions to be made under the Contract.
NONTRANSFERABLE
2. The interest of the Employee in the Contract is non-transferable within
the meaning of IRC Section 401(g) and applicable regulations and is
nonforfeitable. In particular, the Employee's interest in the Contract
may not be sold, assigned, discounted, or pledged as collateral for a
loan or as security for the performance of any obligation or for any
other purpose, to any person other than us.
PAYMENTS
3. Payments must be made by an organization described in IRC Section
403(b)(1)(A), except in the case of rollover contributions under IRC
Sections 403(b)(8) and 408(d)(3). The Employee must be an employee of
such organization.
Payments made pursuant to a salary reduction agreement shall be limited
to the extent provided in IRC Section 402(g). Payments shall not exceed
the amount allowed by IRC Section 415.
REQUIRED BEGINNING DATE
4. The Employee's entire interest in the Contract shall be distributed as
required under IRC Section 403(b)(10) and applicable regulations.
As used in this Endorsement, the term "required beginning date" shall
mean April 1 of the calendar year following the calendar year in which
the Employee attains age 70 1/2. For an Employee who attains age 70 1/2
before January 1, 1988, or for an Employee in a governmental plan or a
church plan (as defined in IRC Section 401(a)(9)(C)), the required
beginning date shall mean April 1 of the calendar year following the
later of (i) the calendar year in which the Employee attains age 70
1/2, or (ii) the calendar year in which the Employee retires.
DISTRIBUTIONS DURING EMPLOYEE'S LIFE
5. The Employee's entire interest shall be distributed no later than the
required beginning date, or shall be distributed, beginning no later
than the required beginning date, over (a) the life of the Employee or
the joint lives of the Employee and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the
Employee, or the joint life and last survivor expectancy of the
Employee and the designated beneficiary.
If the Employee's interest is to be distributed over a period greater
than one year, then the amount to be distributed by December 31 of each
year (including the year in which the required beginning date occurs)
shall be made in accordance with the requirements of IRC Section
401(a)(9), including the incidental death benefit requirements of IRC
Section 401(a)(9)(G), and the regulations thereunder, including the
minimum distribution incidental benefit requirement of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
DEATH BENEFIT
6. If, in the event of the Employee's death prior to the Maturity Date,
the Death Benefit is not paid to the employer plan, it shall be paid to
(1) the surviving spouse of the Employee in the form required by
section 205 of the Employee Retirement Income Security Act of 1974
(ERISA), unless the spouse elects otherwise in accordance with the
requirements of such section 205 or applicable regulations; or (2) if
there is no surviving spouse, or if the surviving spouse has consented
in the manner required by section 205 of ERISA, or if the applicable
regulations otherwise permit, to the Beneficiary under the Contract.
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<PAGE> 31
In the "Death Benefit Before Maturity Date" section of part 4 of the
Contract, the first sentence of the paragraph "Death of Annuitant" is
deleted, and the second sentence is modified to read as follows: "If
any Owner is not an individual, the death of the Annuitant (but not of
the Co-Annuitant) is treated as the death of an Owner."
DISTRIBUTIONS AFTER EMPLOYEE'S DEATH
7. If an Employee dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the Employee's
interest (if any) shall be distributed at least as rapidly as under the
method of distribution in effect as of the Employee's death.
If the Employee dies before the required beginning date and an
irrevocable annuity distribution has not begun, the Employee's entire
interest shall be distributed by December 31 of the calendar year
containing the fifth anniversary of the Employee's death, except that
(a) if the interest is payable to an individual who is the
Employee's designated beneficiary, the designated beneficiary
may elect to receive the entire interest over the life of the
designated beneficiary or over a period not extending beyond
the life expectancy of the designated beneficiary, commencing
on or before December 31 of the calendar year immediately
following the calendar year in which the Employee died; or
(b) if the designated beneficiary is the Employee's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a
period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Employee
died, and
(ii) December 31 of the calendar year in which the
Employee would have attained age 70 1/2.
If the surviving spouse dies before distributions
begin, the limitations of this section shall be
applied as if the surviving spouse were the Employee.
An irrevocable election of the method of distribution
by a designated beneficiary who is the surviving
spouse must be made no later than the earlier of
December 31 of the calendar year containing the fifth
anniversary of the Employee's death or the date
distributions are required to begin pursuant to this
provision (b). If no election is made, the entire
interest will be distributed in accordance with the
method of distribution in this provision (b).
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Employee's death. If no election
is made, the entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of
the Employee's death.
In the "Death of Owner" section of the "Death Benefit Before Maturity
Date" part of the Contract, the distribution requirements of provisions
"(d)" and "(e)" are deleted. If, after the Employee's death, the
designated beneficiary dies before the Maturity Date, no Death Benefit
is payable.
LIFE EXPECTANCY CALCULATIONS
8. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Employee, or (b) for purposes of
distributions beginning after the Employee's death, by the surviving
spouse. Such an election shall be irrevocable as to the Employee or the
surviving spouse, and shall apply to all subsequent years.
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<PAGE> 32
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life in which expectancy was first
calculated.
ANNUITY OPTIONS
9. Except to the extent Treasury regulations allow us to offer different
Annuity Options that are agreed to by Us, only Annuity Options 1 and 2
shall be available to an Employee. All Annuity Options must meet the
requirements of IRC Section 403(b)(10), including the requirement that
payments to persons other than Employees are incidental.
Annuity Option 1(b) is not available for an Employee whose life
expectancy is less than 10 years. Under Annuity Options 2(a) and 2(b),
the designated Co-Annuitant must be the Employee's spouse. Annuity
Option 2(b) is not available for an Employee and his or her spouse
where the life expectancy of the Employee and such spouse is less than
10 years.
Except as hereinafter provided, only Annuity Option 2(a) is available
to a married Employee. A married Employee may elect another Annuity
Option, provided his or her spouse consents in accordance with the
requirements of section 205 of ERISA (and applicable regulations), or
provided such election is otherwise permitted under such applicable
regulations. An unmarried Employee will be deemed to have elected
annuity Option 1(a) unless he or she makes a different election in the
manner required under section 205 of ERISA (and applicable
regulations).
ELECTIONS AND CONSENTS
10. Elections and consents required by ERISA may be revoked in the form,
time, and manner prescribed in section 205 of ERISA (and applicable
regulations). All elections and consents required by ERISA shall adhere
to the requirements of the applicable regulations interpreting section
205 of ERISA (or any other applicable law), including the requirements
as to the timing of any elections or consents.
If a withdrawal is permitted by the employer's plan, no withdrawal,
partial or total, may be made without consent of the Employee and the
Employee's spouse in the manner required by section 205 of ERISA (and
applicable regulations), except to the extent that such consent is not
required under such applicable regulations. Any withdrawal made must be
made in the form required under section 205 of ERISA (and applicable
regulations), unless the Employee (and spouse, if applicable) makes an
election in the form and manner permitted under such regulations, to
receive the benefit in another form.
WITHDRAWAL OF SALARY REDUCTION CONTRIBUTIONS
11. Withdrawals and other distributions attributable to contributions made
pursuant to a salary reduction agreement after December 31, 1988, and
the earnings on such contributions and on amounts held as of December
31, 1988, shall not be paid unless the Employee has reached age 59 1/2,
separated from service, died, become disabled (within the meaning of
IRC Section 72(m)(7)) or incurred a hardship as determined by the
organization described in Section 3 of this Endorsement; provided, that
amounts permitted to be distributed in the event of hardship shall be
limited to actual salary deferral contributions (excluding earnings
thereon); and provided further that amounts may be distributed pursuant
to a qualified domestic relations order to the extent permitted by IRC
Section 414(p).
WITHDRAWAL OF CUSTODIAL ACCOUNT CONTRIBUTIONS
12. Payments made by a nontaxable transfer from a custodial account
qualifying under IRC Section 403(b)(7), and earnings of such amounts,
shall not be paid or made available before the Employee dies, attains
age 59 1/2, separates from service, becomes disabled (within the
meaning of IRC Section 72(m)(7)) or in the case of such amounts attrib-
utable to contributions made under the custodial account pursuant to a
salary reduction agreement, encounters financial hardship; provided,
that such amounts permitted to be paid or made available in the event
of financial hardship shall be limited to amounts attributable to
actual salary deferral contributions made under the custodial account
12
<PAGE> 33
(excluding earnings thereon); and provided further that amounts may be
distributed pursuant to a qualified domestic relations order to the
extent permitted by IRC Section 414(p).
13
<PAGE> 34
MATURITY VALUE
13. If the Employee's Contract Value is greater than $3,500, as determined
on the first day of the month preceding the Maturity Date, in
accordance with section 205 of ERISA (and applicable regulations), we
will not exercise our right to pay the Contract Value of an Employee on
the Maturity Date in one lump sum in lieu of annuity benefits.
DIRECT ROLLOVERS
14. This Section 14 applies to distributions made on or after January 1,
1993. A distributee may elect, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include (1) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; (2) any distribution to the
extent such distribution is required under IRC Section 401(a)(9); and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
An eligible retirement plan is an annuity described in IRC Section
403(b), an individual retirement account described in IRC Section
408(a), or an individual retirement annuity described in IRC Section
408(b), that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
A distributee includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternative payee
under a qualified domestic relations order, as defined in IRC Section
414(p), are distributees with regard to the interest of the spouse or
former spouse.
A direct rollover is a payment by the plan administrator or us to the
eligible retirement plan specified by the distributee.
IRC SECTION 72(S)
15. All references in the Contract to IRC Section 72(s) are deleted.
INDIVIDUAL RETIREMENT ANNUITY
OWNER AND ANNUITANT
1. The Owner must be one individual and the Annuitant. Neither the Owner
nor the Annuitant can be changed.
NONFORFEITABLE
2. The Owner's interest in the Contract is established for the exclusive
benefit of the Owner or his or her Beneficiaries and the interest of
the Owner is nonforfeitable.
NONTRANSFERABLE
3. The Owner may not assign, sell, transfer, discount or pledge his
interest in the Contract as collateral for a loan or as security for
the performance of any obligation or for any other purpose (other than
a transfer incident to a divorce or separation instrument in accordance
with IRC Section 408(d)(6)) to any person other than us.
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<PAGE> 35
MAXIMUM PAYMENTS
4. The maximum annual Payments shall not exceed the lesser of $2,000 or
100% of compensation unless (a) such Payment qualifies as a rollover
contribution described in IRC Sections 408(d)(3), 402(c), 403(a)(4) or
403(b)(8); or (b) such Payment qualifies as a contribution made in
accordance with a Simplified Employee Pension Program as described in
IRC Section 408(k).
To the extent necessary to preserve qualification under the Internal
Revenue Code, we may refund Payments. Any refund of Payments (other
than those attributable to excess contributions) will be applied,
before the close of the calendar year following the refund, toward
future Payments or the purchase of additional benefits.
DISTRIBUTIONS DURING OWNER'S LIFE
5. The Owner's entire interest in the Contract shall be distributed as
required under IRC Section 408(b)(3) and applicable regulations. Unless
deferral is otherwise permitted under applicable regulations, the
Owner's entire interest shall be distributed no later than the
"required beginning date," or shall be distributed beginning no later
than the "required beginning date" over (a) the life of the Owner or
the joint lives of the Owner and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the Owner,
or joint life and last survivor expectancy of the Owner and the
designated beneficiary.
The "required beginning date" shall mean April 1 of the calendar year
following the calendar year in which the Owner attains age 70 1/2.
If the Owner's interest is to be distributed over a period greater than
one year, then the amount to be distributed by December 31 of each year
(including the year in which the required beginning date occurs) shall
be determined in accordance with the requirements of IRC Section
401(a)(9), including the incidental death benefit requirements of IRC
Section 401(a)(9)(G), and the regulations thereunder, including the
minimum distribution incidental benefit requirement of Proposed
Treasury Regulation Section 1.401(a)(9)-2.
ANNUITY OPTIONS
6. Only Annuity Options 1 and 2 shall be offered unless we consent to the
use of an additional option. Annuity Option 1(b) is not available for
an Owner whose life expectancy is less than 10 years. Under Annuity
Options 2(a) and 2(b) the designated Co-Annuitant must be the Owner's
spouse. Annuity Option 2(b) is not available for an Owner and his or
her spouse where the life expectancy of the Owner and such spouse is
less than 10 years.
DISTRIBUTIONS AFTER OWNER'S DEATH
7. If an Owner dies on or after the required beginning date (or if
distributions have begun before the required beginning date as
irrevocable annuity payments), the remaining portion of the Owner's
interest (if any) shall be distributed at least as rapidly as under the
method of distribution in effect as of the Owner's death.
If the Owner dies before the required beginning date and an irrevocable
annuity distribution has not begun, the Owner's entire interest shall
be distributed by December 31 of the calendar year containing the fifth
anniversary of the Owner's death, except that
(a) if the interest is payable to an individual who is the
Owner's designated beneficiary, the designated beneficiary may
elect to receive the entire interest over the life of the
designated beneficiary or over a period not extending beyond
the life expectancy of the designated
15
<PAGE> 36
beneficiary, commencing on or before December 31 of the
calendar year immediately following the calendar year in which
the Owner died; or
(b) if the designated beneficiary is the Owner's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a
period not extending beyond the life expectancy of the
surviving spouse, commencing at any date prior to the later of
(i) December 31 of the calendar year immediately
following the calendar year in which the Owner died,
and
(ii) December 31 of the calendar year in which the
Owner would have attained age 70 1/2.
If the surviving spouse dies before distributions
begin, the limitations of this section shall be
applied as if the surviving spouse were the Owner. An
irrevocable election of the method of distribution by
a designated beneficiary who is the surviving spouse
must be made no later than the earlier of December 31
of the calendar year containing the fifth anniversary
of the Owner's death or the date distributions are
required to begin pursuant to this provision (b).
If the designated beneficiary is the Owner's
surviving spouse, the spouse may irrevocably elect to
treat the Owner's interest in the Contract as his or
her own individual retirement arrangement (IRA). This
election will be deemed to have been made if such
surviving spouse (i) fails to elect that his or her
interest will be distributed in accordance with one
of the preceding provisions, or (ii) makes a rollover
from the Contract.
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be
made within one year of the Owner's death, and if no election
is made, the entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of
the Owner's death.
In the "Death Benefit Before Maturity Date" section of part 4 of the
Contract, (a) the provision entitled "Death of Annuitant" is deleted;
and (b) in the "Death of Owner" provision, the distribution
requirements of provisions "(d)" and "(e)" are deleted. If, after the
Owner's death, the designated beneficiary dies before the Maturity
Date, no Death Benefit is payable.
LIFE EXPECTANCY CALCULATIONS
8. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an
Annuity Option provided under the Contract, life expectancy shall not
be recalculated. If benefits are payable under an alternate form
acceptable to us, life expectancies shall not be recalculated unless
annual recalculations are elected at the time distributions are
required to begin (a) by the Owner, or (b) for purposes of
distributions beginning after the Owner's death, by the surviving
spouse. Such an election shall be irrevocable as to the Owner or the
surviving spouse, and shall apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not
be recalculated, and (b) shall be calculated using the attained age of
such designated beneficiary during the calendar year in which
distributions are required to begin pursuant to this Endorsement.
Payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
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<PAGE> 37
CANCELLATION FOR NONPAYMENT
9. We may pay the Owner the Contract Value (measured as of the Valuation
Period during which the cancellation occurs), less the Administration
Fee (if applicable), if (a) prior to the Maturity Date, no Payments are
made for two consecutive Contract Years; (b) the total Payments made,
less any partial withdrawals, are less than $2,000; (c) the Contract
Value at the end of such two-year period is less than $2,000; and (d)
the paid-up annuity benefit at the Maturity Date at the end of such
two-year period would be less than $20 per month.
IRC SECTION 72(S)
10. All references in the Contract to IRC Section 72(s) are deleted.
TEXAS OPTIONAL RETIREMENT PROGRAM
1. If the Contract is used in connection with the Texas Optional
Retirement Program ("Texas ORP"), the Annuitant and the Owner shall be
the same person (the "Employee"). The Employee must be a faculty member
of an "institution of higher education," as defined in Texas Code
Section 830.003 ("Texas public institutions of higher education") and
meet the eligibility requirements for participation in the Texas ORP
under rules established by the Texas Higher Education Coordinating
Board. The Employee has the unrestricted right to:
(a) designate and redesignate the Sub-Accounts into which Payments
are allocated;
(b) transfer amounts among Sub-Accounts; and
(c) change the Beneficiary designation.
2. Benefits under the Contract, including partial and total withdrawal
rights and the right to apply amounts under an Annuity Option, will be
available to the Employee only if (a) he or she terminates
participation in the Texas ORP by death, retirement or termination of
employment in all Texas public institutions of higher education; or (b)
he or she attains the age of 70 1/2 years.
3. Payments must be made in accordance with Texas Code
Sections 830.201-830.204 and other applicable law.
4. Upon the Employee's termination of participation in the Texas ORP (in
the manner described above) prior to the completion of 12 full months
of participation in the Texas ORP, we will pay the employing Texas
public institution of higher education from the Employee's Contract
Value an amount equal to the total amount of Payments made by such
employing institution under the Contract. The Employee's Contract Value
remaining after such payment to the employing institution less the
withdrawal charge attributable to such payment will be available to the
Employee, subject to any further withdrawal and other charges, in
accordance with the terms of the Contract.
5. On or after the Employee's first day of employment following the
completion of 12 full months of participation in the Texas ORP, and the
Employee either (1) terminates participation in the Texas ORP (in the
manner described above), or (2) attains the age of 70 1/2 years, his or
her Contract Value, subject to any withdrawal and other charges, will
be available to the Employee in accordance with the terms of the
Contract.
6. The interests of the Employee in the Contract are nontransferable and
nonforfeitable. Notwithstanding any other provisions of the Contract or
this endorsement, no loans are available under the Contract, and the
Contract may not be pledged as collateral for a loan.
7. Annuity Option 1(b) is not available for an Annuitant whose life
expectancy is less than 10 years. Under Annuity Option 2(a) and 2(b)
the designated Co-Annuitant must be the Annuitant's spouse.
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<PAGE> 38
Annuity Option 2(b) is not available where the joint life expectancy of
the Annuitant and spouse is less than 10 years.
8. Contributions made pursuant to a salary reduction agreement shall be
limited to the extent provided by Section 402(g) of the Internal
Revenue Code.
9. We are responsible for determining the qualified status of qualified
domestic relations orders and for paying benefits in accordance with
Texas Government Code, Title 8, Subtitle A, Chapter 804.
10. No investment advisory fees, within the meaning of Texas Code Section
830.107, are payable from the Contract, unless both of the following
occur: (a) the Company, in its discretion, consents, and (b) the
requirements of the Texas ORP with respect to investment advisory fees,
including the requirements of Texas Code Section 830.107, are met.
11. Where this endorsement is applicable, the Contract must also be
endorsed to reflect use of the Contract as a tax-sheltered annuity,
qualified under Section 403(b) of the Internal Revenue Code. The
endorsements should be construed so that the Contract will comply with
the requirements of both the Texas ORP and Section 403(b) of the
Internal Revenue Code.
Endorsed on the Date of Issue of this Contract.
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
Vice-President
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<PAGE> 39
FIXED ACCOUNT ENDORSEMENT
PART 7, FIXED ACCOUNT PROVISIONS, INVESTMENT ACCOUNT of all contracts to which
this Endorsement is attached is replaced as follows:
INVESTMENT ACCOUNT We will establish a separate Investment
Account for you each time you allocate
amounts to a fixed Investment Option.
Amounts invested in these Investment
Accounts will earn interest at the
guaranteed rate in effect on the date the
amounts are allocated for the duration of
the guarantee period.
We will determine the guaranteed rate from
time to time for Net Payments, renewal
amounts and amounts transferred to a fixed
Investment Option. In no event will the
minimum guaranteed rate under a fixed
Investment Account be less than 3%.
PART 7, FIXED ACCOUNT PROVISIONS, 1-YEAR DOLLAR COST AVERAGING OPTION is added
to all contracts to which this Endorsement is attached as follows:
1-YEAR DOLLAR COST The 1-Year DCA Investment Option may be
AVERAGING (DCA) elected by the Owner to make automatic
INVESTMENT OPTION monthly transfers from a 1-Year fixed
Investment Account to one or more variable
Investment Options. Only initial and
subsequent Net Payments may be allocated to
the 1-Year DCA Investment Option. Amounts
may not be transferred from other Investment
Options to the 1-Year DCA Investment Option.
The automatic monthly transfer amount, "DCA
amount", is determined as follows:
(a) In the first 11 months, the DCA amount
will be equal to 1/11 of the amount
allocated to the 1-Year DCA Investment
Option.
(b) At the end of the 12th month, the DCA
amount will be equal to the remaining
balance in the Investment Account.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
END.007.98
<PAGE> 40
DEATH BENEFIT ENDORSEMENT
PART 4, BENEFITS, DEATH BENEFIT BEFORE MATURITY DATE of all contracts to which
this Endorsement is attached is replaced as follows:
DEATH BENEFIT BEFORE
MATURITY DATE A Death Benefit will be determined as of the
date on which written notice and proof of
death and all required claim forms are
received at the Company's Annuity Service
Office as follows:
1. 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:
(a) During the first Contract Year,
the Death Benefit will be the greater of:
(i) the Contract Value, or
(ii) the sum of all Payments made,
less any amount deducted in connection with
partial withdrawals.
(b) During any subsequent Contract Year,
the Death Benefit will be the greater of:
(i) the Contract Value, or
(ii) the Death Benefit on the last
day of the previous Contract Year, plus any
Payments made and less any amounts deducted
in connection with partial withdrawals,
since then.
If any Owner dies after their 81st
birthday, (b)(ii) is the Death Benefit on
the last day of the Contract Year just prior
to the Owner's 81st birthday, plus any
Payments made and less any amounts deducted
in connection with partial withdrawals,
since then.
2. If any Owner dies and the oldest
Owner had an attained age of 81 or greater
on the Contract Date, the Death Benefit will
be determined as the greater of:
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of all Payments.
(ii) equals the sum of any amounts
deducted in connection with partial
withdrawals. If there is any Debt, the Death
Benefit equals the amount described above
less the Debt under the Contract.
DEATH OF ANNUITANT: On the death of the last
surviving Annuitant, the Owner becomes the new
Annuitant, if the Owner is an individual. If any
Owner is not an individual the death of any Annuitant
is treated as the death of an Owner and the Death
Benefit will be determined by substituting the
Annuitant for the Owner as described below.
DEATH OF OWNER: We will pay the Death Benefit to the
Beneficiary if any Owner dies prior to the Maturity
Date. The Death Benefit may be taken in one sum
immediately, in which case the Contract will
terminate. If the Death Benefit is not taken in one
sum immediately, the Contract will continue subject
to the following provisions:
(a) The Beneficiary becomes the
Contract Owner.
(b) The excess, if any, of the Death
Benefit over the Contract Value will be
allocated to and among the Investment
Accounts in proportion to their values as
of the date on which the Death Benefit is
determined.
END.006.98
<PAGE> 41
(c) No additional Payments may be applied to the
Contract.
(d) If the Beneficiary is not the deceased Owner's
spouse, the entire interest in the Contract must be
distributed under one of the following options:
(i) The entire interest in the Contract
must be distributed over the life of the Beneficiary,
or over a period not extending beyond the life
expectancy of the Beneficiary, with distributions
beginning within one year of the Owner's death; or
(ii) the entire interest in the Contract
must be distributed within 5 years of the Owner's
Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are complete,
the entire remaining Contract Value must be
distributed in a lump sum immediately.
(e) If the Beneficiary is the deceased Owner's
spouse, the Contract will continue with the surviving
spouse as the new Owner. The surviving spouse may
name a new Beneficiary (and, if no Beneficiary is so
named, the surviving spouse's estate will be the
Beneficiary). Upon the death of the surviving spouse,
a second Death Benefit will be paid and the entire
interest in the Contract must be distributed to the
new Beneficiary in accordance with the provisions of
(d) (i) or (d) (ii) above. For purposes of
calculating the Death Benefit payable upon the death
of the surviving spouse, the Death Benefit paid upon
the first Owner's death will be treated as a Payment
to the Contract. In addition, the Death Benefit on
the last day of the previous Contract Year (or the
last day of the Contract Year just prior to the
Owner's 81st birthday, if applicable) shall be set to
zero as of the date of the first Owner's death.
(f) Withdrawal Charges will be waived on any
withdrawals.
If there is more than one Beneficiary, the
foregoing provisions will independently apply to each
Beneficiary.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
<PAGE> 1
EXHIBIT (b)(4)(iv)
DEATH BENEFIT ENDORSEMENT
PART 4, BENEFITS, DEATH BENEFIT BEFORE MATURITY DATE Of The Flexible Purchase
Payment Deferred Combination Fixed and Variable Group Annuity Contract to which
this Endorsement is attached is replaced as follows:
DEATH BENEFIT BEFORE DEATH OF ANNUITANT WHERE OWNER IS NOT THE ANNUITANT.
MATURITY DATE We will pay the death benefit to the Beneficiary if
the Owner is not the Annuitant and the Annuitant dies
before the Maturity Date. Payment will be made either
as a lump sum or in accordance with any Annuity
Option described in this Contract. If there is more
than one Annuitant, the death benefit will be paid on
the death of the last surviving Co-Annuitant. Upon
the death of the Annuitant, the Beneficiary shall
then have the ownership rights and privileges of the
Owner and may elect to continue participation under
the Contract rather than to receive payment of the
death benefit.
DEATH OF ANNUITANT WHERE OWNER IS THE ANNUITANT. We
will pay the death benefit to the Beneficiary if the
Owner is the Annuitant, there is no surviving Co-
Annuitant, and the Owner dies before the Maturity
Date. In such cases, the Beneficiary shall then have
the ownership rights and privileges of the Owner and
may continue participation under the Contract. If
this is a Non-Qualified Contract, the following
special distribution rules apply. Distribution of the
Beneficiary's interest in the Contract must be made
within 5 years after the Owner's death or as an
annuity which begins within one year of death and is
payable over the life of the Beneficiary (or over a
period not in excess of the Beneficiary's life
expectancy). If the Owner's spouse is the
Beneficiary, the Owner's spouse may elect to succeed
to the ownership rights and privileges of the Owner,
and distribution will be made no later than the date
on which distribution would be required after the
death of the Owner's spouse. If the Owner is the
Annuitant, there is a surviving Co-Annuitant, and the
Owner dies before the Maturity Date, payment of the
Owner's interest in the Contract will be made in
accordance with the Death of Owner provision of this
Contract.
DEATH BENEFIT. A death benefit will be determined as
of the date on which written notice and proof of
death and all required claim forms are received at
the Company's Annuity Service Office as follows:
1. If the Annuitant dies on or prior to the
first of the month following his or her 85th
birthday, the death benefit will be
determined as follows:
a) During the first Certificate Year, the
death benefit will be the greater of:
i) the Contract Value, or
ii) the sum of all Purchase Payments
made, less any amount deducted in
connection with partial
withdrawals.
b) During any subsequent Certificate Year,
the death benefit will be the greater
of:
i) the Contract Value, or
ii) the death benefit on the last day
of the previous Certificate Year
plus any Purchase Payments made
and less any amounts deducted in
connection with partial
withdrawals since then.
ENDORSEMENT.006
<PAGE> 2
2. If the Annuitant dies after the first of the
month following his or her 85th birthday,
the death benefit will be determined as the
greater of:
a) the Contract Value, or
b) the excess of (i) over (ii) where:
i) the sum of all Purchase Payments.
ii) the sum of all withdrawals,
including any applicable
withdrawal charges.
DEATH OF OWNER. If the Owner dies before the
Annuitant and before the Maturity Date, the Successor
Owner shall then have the ownership rights and
privileges of the Owner and will be entitled to the
Owner's interest in the Contract. If this is a
Non-Qualified Contract, the following special
distribution rules apply. Distribution of such
interest must be made within 5 years after the
Owner's death or as an annuity which begins within
one year of death and is payable over the life of the
Successor Owner (or over a period not in excess of
the Successor Owner's life expectancy). If the
Owner's spouse is the Successor Owner, the Owner's
spouse shall then have the ownership rights and
privileges of the Owner, and distribution will be
made no later than the date distribution would be
required after the death of the Owner's spouse. If
the Owner is not an individual, the death of the
Annuitant or Co-Annuitant, or any change in the
Annuitant or Co-Annuitant will be treated as the
death of the Owner.
If there is more than one Owner, distributions will
occur upon the death of any Owner. If both Owners are
individuals, the distributions will be made to the
remaining Owner rather than the Successor Owner or
the Beneficiary.
If there is any Debt, the death benefit equals the
amount described above less the Debt under the
Contract.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
/s/ Richard Hirtle
Vice-President
<PAGE> 3
DEATH BENEFIT ENDORSEMENT
PART 4, BENEFITS, DEATH BENEFIT BEFORE MATURITY DATE of the Flexible Purchase
Payment Deferred Combination Fixed and Variable Group Annuity Certificate to
which this Endorsement is attached is replaced as follows:
DEATH BENEFIT BEFORE DEATH OF ANNUITANT WHERE OWNER IS NOT THE ANNUITANT.
MATURITY DATE We will pay the death benefit to the Beneficiary if
the Owner is not the Annuitant and the Annuitant dies
before the Maturity Date. Payment will be made either
as a lump sum or in accordance with any Annuity
Option described in this Contract. If there is more
than one Annuitant, the death benefit will be paid on
the death of the last surviving Co-Annuitant. Upon
the death of the Annuitant, the Beneficiary shall
then have the ownership rights and privileges of the
Owner and may elect to continue participation under
the Contract rather than to receive payment of
the death benefit.
DEATH OF ANNUITANT WHERE OWNER IS THE ANNUITANT. We
will pay the death benefit to the Beneficiary if the
Owner is the Annuitant, there is no surviving Co-
Annuitant, and the Owner dies before the Maturity
Date. In such cases, the Beneficiary shall then have
the ownership rights and privileges of the Owner and
may continue participation under the Contract. If
this is a Non-Qualified Contract, the following
special distribution rules apply. Distribution of the
Beneficiary's interest in the Contract must be made
within 5 years after the Owner's death or as an
annuity which begins within one year of death and is
payable over the life of the Beneficiary (or over a
period not in excess of the Beneficiary's life
expectancy). If the Owner's spouse is the
Beneficiary, the Owner's spouse may elect to succeed
to the ownership rights and privileges of the Owner,
and distribution will be made no later than the date
on which distribution would be required after the
death of the Owner's spouse. If the Owner is the
Annuitant, there is a surviving Co-Annuitant, and the
Owner dies before the Maturity Date, payment of the
Owner's interest in the Contract will be made in
accordance with the Death of Owner provision of this
Contract.
DEATH BENEFIT. A death benefit will be determined as
of the date on which written notice and proof of
death and all required claim forms are received at
the Company's Annuity Service Office as follows:
1. If the Annuitant dies on or prior to the
first of the month following his or her 85th
birthday, the death benefit will be
determined as follows:
a) During the first Certificate Year, the
death benefit will be the greater of:
i) the Contract Value, or
ii) the sum of all Purchase Payments
made, less any amount deducted in
connection with partial
withdrawals.
b) During any subsequent Certificate Year,
the death benefit will be the greater
of:
i) the Contract Value, or
ii) the death benefit on the last day
of the previous Certificate Year
plus any Purchase Payments made
and less any amounts deducted in
connection with partial
withdrawals since then.
ENDORSEMENT.007
<PAGE> 4
2. If the Annuitant dies after the first of the month
following his or her 85th birthday, the death
benefit will be determined as the greater of:
a) the Contract Value, or
b) the excess of (i) over (ii) where:
i) the sum of all Purchase Payments.
ii) the sum of all withdrawals,
including any applicable
withdrawal charges.
DEATH OF OWNER. If the Owner dies before the
Annuitant and before the Maturity Date, the Successor
Owner shall then have the ownership rights and
privileges of the Owner and will be entitled to the
Owner's interest in the Contract. If this is a
Non-Qualified Contract, the following special
distribution rules apply. Distribution of such
interest must be made within 5 years after the
Owner's death or as an annuity which begins within
one year of death and is payable over the life of the
Successor Owner (or over a period not in excess of
the Successor Owner's life expectancy). If the
Owner's spouse is the Successor Owner, the Owner's
spouse shall then have the ownership rights and
privileges of the Owner, and distribution will be
made no later than the date distribution would be
required after the death of the Owner's spouse. If
the Owner is not an individual, the death of the
Annuitant or Co-Annuitant, or any change in the
Annuitant or Co-Annuitant will be treated as the
death of the Owner.
If there is more than one Owner, distributions will
occur upon the death of any Owner. If both Owners are
individuals, the distributions will be made to the
remaining Owner rather than the Successor Owner or
the Beneficiary.
If there is any Debt, the death benefit equals the
amount described above less the Debt under the
Contract.
Endorsed on the Date of Issue of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
/s/ Richard Hirtle
Vice-President
<PAGE> 1
Exhibit (b)(4)(vi)
GUARANTEED INCOME RIDER
This Rider is effective on the Rider Date. Election of this Rider is irrevocable
and may only be terminated as provided in the Termination provisions below. It
is a part of, and subject to, the other terms and conditions of the Contract.
DEFINITIONS
ANNUITANT For the purposes of this Rider, the first Annuitant
named will be referred to as Annuitant and the second
Annuitant named, if any, will be referred to as Co-
Annuitant. The Annuitant and Co-Annuitant are as
designated on the Specifications Page, unless
changed.
ELECTION DATE A date that you may elect to begin guaranteed income
payments. An Election Date is the seventh or later
Certificate Anniversary following the Rider Date.
Following the Step-Up Date, an Election Date is the
seventh or later Certificate Anniversary following
the Step-Up Date.
INCOME BASE The amount we will utilize to determine the
Guaranteed Income Benefit.
MATURITY DATE The earliest of the date on which annuity benefits
commence, or the date that the Guaranteed Income
Benefit is exercised. It is the date specified on the
Certificate Specifications Page, unless changed.
RIDER DATE The date of issue of this Rider as specified on the
Specifications Page.
STEP-UP DATE The date of the Certificatet Anniversary that you
most recently elected to step-up your Income Base to
the Contract Value.
CHANGE OF ANNUITANT
The Annuitant may only be changed to an individual that is the same age or
younger than the current Annuitant.
GUARANTEED INCOME BENEFIT
This Rider provides for a guaranteed minimum lifetime fixed income benefit. On
the date that you exercise the Guaranteed Income Benefit, monthly income is
determined by applying the Income Base to the Monthly Income Factors listed in
this Rider. If more favorable to the Annuitant(s), monthly income will be
determined by applying your Contract Value to the current fixed annuity payment
rates in use by the Company on the date the Guaranteed Income Benefit is
exercised.
CONDITIONS OF GUARANTEED INCOME BENEFIT
You may exercise the Guaranteed Income Benefit subject to both of the following
conditions:
1. Must be exercised within 30 days immediately following an Election
Date.
2. Must be exercised no later than the Certificate Anniversary immediately
prior to the Annuitant's 85th birthday, or the tenth Certificate
Anniversary if later.
INCOME BASE
The Income Base is equal to (a) less (b), where (a) is the sum of all Payments
made, accumulated at the Growth Factor starting on the date each Payment is
allocated to the Certificate, and (b) is the sum of Income Base reductions on a
pro rata basis in connection with partial withdrawals taken, accumulated at the
Growth Factor starting on the date each deduction occurs. The Growth Factor is
specified on the Specifications Page. The Growth Factor is reduced to 0% once
the Annuitant has attained age 85.
An Income Base reduction on a pro rata basis is equal to the Income Base
immediately prior to a partial withdrawal multiplied by the percentage reduction
in Contract Value resulting from a partial withdrawal.
Following a step-up of the Income Base, the Income Base is equal to the Contract
Value on the Step-Up Date. For purposes of subsequent calculation of the Income
Base, the Contract Value on the Step-Up Date will be treated as a
<PAGE> 2
Payment made on that date. In addition, all Payments made and all amounts
deducted in connection with partial withdrawals prior to the Step-Up Date will
not be considered in determination of the Income Base.
If this Rider is added after the Certificate Date, the Income Base is equal to
the Contract Value on the Rider Date. For purposes of subsequent calculation of
the Income Base, the Contract Value on the Rider Date will be treated as a
Payment made on that date. In addition, all Payments made and all amounts
deducted in connection with partial withdrawals prior to the Rider Date will not
be considered in determination of the Income Base.
The Income Base is also reduced for any Withdrawal Charge remaining on the date
that you exercise the Guaranteed Income Benefit. We also reserve the right to
reduce the Income Base for any premium taxes that may apply.
The Income Base is used solely for the purposes of calculating the Guaranteed
Income Benefit and does not affect your Contract Value.
STEP-UP OF INCOME BASE
Within the 30 days immediately following any Certificate Anniversary, you may
elect to step-up the Income Base to the Contract Value on that Certificate
Anniversary by sending us a written request. Electing to step-up the Income Base
will affect your Election Date.
MONTHLY INCOME FACTORS
The Income Base may be applied to Monthly Income Factors to purchase a
guaranteed lifetime income under the following Options:
Option 1: Life Annuity with a 10-Year Period Certain. We will make
payments for 10 years and after that during the lifetime of
the Annuitant. No payments are due after the death of the
Annuitant or, if later, the end of the 10-year period certain.
Option 2: Joint and Survivor with 20-Year Period Certain. We will make
payments for 20 years and after that during the joint lifetime
of the Annuitant and Co-Annuitant. Payments will then continue
during the remaining lifetime of the survivor. No payments are
due after the death of the survivor of the Annuitant and
Co-Annuitant or, if later, the end of the 20-year period
certain.
The Monthly Income Factors on the attached tables show, for each $1,000 of
Income Base applied, the dollar amount of the monthly income payment for select
ages. Monthly Income Factors for ages not shown will be furnished upon request.
The Monthly Income Factor used will depend upon the sex and age nearest birthday
of the Annuitant and Co-Annuitant, if any. The Monthly Income Factors are based
on the 1983 Individual Annuity Mortality Table "a" projected at Scale G with
interest at the rate of 3% per annum.
INCOME RIDER FEE
To compensate us for assuming risks associated with the Guaranteed Income
Benefit, we charge an annual Income Rider Fee. On or before the Maturity Date,
the Income Rider Fee is deducted on each Certificate Anniversary. The amount of
the Income Rider Fee is equal to the Rider Fee Percentage shown on the
Specifications Page multiplied by the Income Base in effect on that Certificate
Anniversary. It is withdrawn from each Investment Option in the same proportion
that the value of the Investment Accounts of each Investment Option bears to the
Contract Value.
If the Contract Value is totally withdrawn on any date other than the
Certificate Anniversary, we will deduct the Income Rider Fee from the amount
paid. In the case of a total withdrawal, the Income Rider Fee is equal to the
Rider Fee Percentage shown on the Certificate Specifications Page multiplied by
the Income Base immediately prior to total withdrawal. The Income Rider Fee will
not be deducted during the annuity period. For purposes of determining the
Income Rider Fee, the commencement of annuity payments shall be treated as a
total withdrawal.
TERMINATION
This Rider will only terminate upon the earliest of (a) the Certificate
Anniversary immediately prior to the Annuitant's 85th birthday, or the tenth
Certificate Anniversary if later, (b) the total withdrawal of Contract Value, or
(c) the benefit under this Rider is exercised.
MISCELLANEOUS
<PAGE> 3
Except as modified by this Rider, the Definitions, General Provisions and
Ownership sections of the Contract also apply to this Rider. If this Rider is
added after the Certificate Date, its effective date will be the Rider Date
stated in the Specifications Page. If this Rider is added at the time the
Certificate is issued, it will be effective on the Certificate Date.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
<PAGE> 4
TABLE OF MONTHLY INCOME FACTORS
Amount of monthly payment per $1000 of Income Base
Option 1: Life Annuity with a 10-Year Period Certain
<TABLE>
<CAPTION>
- ---------------------------------------------------- -----------------------------------------------------
Age of Age of
Annuitant Male Female Annuitant Male Female
- ---------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 4.21 3.87 68 5.57 4.99
56 4.29 3.94 69 5.71 5.12
57 4.37 4.00 70 5.86 5.25
58 4.45 4.07 71 6.01 5.39
59 4.54 4.14 72 6.16 5.53
60 4.63 4.21 73 6.32 5.68
61 4.73 4.29 74 6.49 5.84
62 4.84 4.38 75 6.65 6.01
63 4.94 4.47 80 7.52 6.93
64 5.06 4.56 85 8.34 7.88
65 5.18 4.66 90 8.98 8.66
66 5.30 4.76 95 9.38 9.19
67 5.43 4.88
</TABLE>
Option 2: Joint and Survivor Life Annuity with a 20-Year Period Certain
<TABLE>
<CAPTION>
Age of Female Co-Annuitant
- ---------------------------------------------------------------------------------------------------
Age of
Male 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.32 3.46 3.60 3.74 3.86
56 3.35 3.50 3.65 3.79 3.92
57 3.39 3.54 3.70 3.85 3.99
58 3.42 3.58 3.75 3.91 4.05
59 3.46 3.63 3.81 3.97 4.12
60 3.51 3.68 3.86 4.04 4.19
61 3.55 3.73 3.92 4.11 4.26
62 3.59 3.79 3.99 4.18 4.34
63 3.64 3.84 4.05 4.25 4.41
64 3.69 3.90 4.12 4.33 4.49
65 3.74 3.96 4.19 4.40 4.57
66 3.80 4.03 4.27 4.48 4.64
67 3.85 4.10 4.34 4.56 4.72
68 3.91 4.17 4.42 4.64 4.79
69 3.97 4.24 4.50 4.72 4.87
70 4.04 4.31 4.58 4.80 4.94
71 4.10 4.39 4.66 4.88 5.01
72 4.17 4.47 4.74 4.95 5.07
73 4.24 4.54 4.82 5.02 5.13
74 4.31 4.62 4.90 5.08 5.19
75 4.39 4.70 4.97 5.15 5.24
80 4.77 5.07 5.27 5.38 5.41
85 5.11 5.32 5.44 5.48 5.49
90 5.34 5.46 5.50 5.51 5.51
95 5.46 5.50 5.51 5.51 5.51
</TABLE>
Monthly Income Factors for ages not shown will be furnished upon request.
<PAGE> 1
Exhibit (b)(5)(i)
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Group/Owner application for Flexible Purchase Payment Deferred Combination Fixed and Variable Annuity Contract ("Contract
Application") NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY, P.O. 818, BOSTON, MA 02116
Payment (or original of exchange/transfer request) must accompany
Application: Please make check payable to NORTH AMERICAN SECURITY LIFE (the
"Company") and send to above address.
- -----------------------------------------------------------------------------------------------------------------------------------
1. GROUP/OWNER
- -----------------------------------------------------------------------------------------------------------------------------------
2. ADDRESS 3. TAX ID #:
Street
City State Zip
- -----------------------------------------------------------------------------------------------------------------------------------
4. TRUSTEE(S)(if applicable)
Ownership: Trustee(s) specified in question 4 will be the owner(s) of the contract.
5. Unless the following box is check, confirmation statements for the plan will be mailed to the address above.
Mail statements directly to the Participant.
- -----------------------------------------------------------------------------------------------------------------------------------
6. PLAN SELECTION - TYPE OF PLAN
/ / Non-Qualified
/ / Qualified (Indicate type below)
/ / Profit Sharing / / 403(b) / / IRA Tax Year ________
/ / Money Purchase / / 401(k) / / SEP IRA Tax Year ________
/ / Defined Benefit / / IRA Rollover / / 457
/ / Keogh (HR-10) / / IRA Transfer / / Other __________________________
- -----------------------------------------------------------------------------------------------------------------------------------
7. INVESTMENT OPTIONS:
Conservative Asset Allocation Investment Quality Bond Global Equity Pasadena Growth
Moderate Asset Allocation U.S. Government Securities Growth & Income Global Government Bond
Aggressive Asset Allocation Money Market Strategic Income Equity
Growth
FIXED ACCOUNT OPTIONS: 1 Year Fixed Account 3 Year Fixed Account 6 Year Fixed Account
- -----------------------------------------------------------------------------------------------------------------------------------
8. SPECIAL INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
I hereby represent the answers to the above questions to be correct and
true to the best of my knowledge and belief and agree that this application
shall be a part of any Contract issued by the Company. ALL PAYMENTS AND
VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF
THE VARIABLE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
ALL PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET
VALUE ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND
DOWNWARD ADJUSTMENTS IN AMOUNTS PAYABLE. I acknowledge receipt of an
effective Prospectus describing the Contract applied for.
Signed at
Date -------------------------------------------------------- -----------------------------------------------
City State
Authorized Signature
for Group/Owner Agent
--------------------------------------- ---------------------------------------------------
Print Agent Name and Phone Number
Trustee(s) Agent
--------------------------------------------------- ---------------------------------------------------
Signature(s) Signature of Agent
- -----------------------------------------------------------------------------------------------------------------------------------
AGENT: Will this Contract replace or change any existing life insurance or annuity in this or any other company?
/ / Yes / / No If yes, please explain under Special Instructions.
General Agent
----------------------------------------------------------------------------------------------------------
Branch Office Address (Tel)
----------------------------------------------------------------------- --------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
VFA-CON-APP
<PAGE> 1
EXHIBIT (b)(5)(ii)
<TABLE>
====================================================================================================================================
Flexible Payment Deferred Combination Fixed and Variable Annuity Application. Payment (or original of exchange/transfer request)
must accompany Application. Please make check payable to THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA (the "Company")
and address to: P.O. BOX 9230 GMF, Boston, MA 02205-9230.
<S> <C>
- ---------------------------------------------------------------- ----------------------------------------------------------------
1. ACCOUNT REGISTRATION (Please Print) 3. INVESTMENT ALLOCATION
- ---------------------------------------------------------------- ----------------------------------------------------------------
Owners (Applicants)
Allocate payment with application of $______________ as indicated
Name* below (must total 100%) (Minimum initial investment of $5,000 for
- ---------------------------------------------------------------- non-qualified plans and $2,000 for qualified plans):
First Middle Last
Address ____ % Manufacturers Adviser Pac Rim Emerging Mkts (008)
- ----------------------------------------------------------------
Street ____ % T. Rowe Price Science & Technology (016)
- ---------------------------------------------------------------- ____ % Founders Int'l Small Cap (006)
City State Zip
_____ _____ _____ ____ % Warburg Pincus Emerging Growth (020)
Sex [ ] M [ ] F Date of Birth | | | |
|_____|_____|_____| ____ % Pilgrim Baxter Growth (022)
Month Day Year
Daytime Phone Number: ( ) _____________________________ ____ % Fred Alger Small/Mid Cap (011)
__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
| | | | | | | | | | | | | | | | | | | | ____ % Rowe Price-Fleming Int'l Stock (024)
|__|__|__|__|__|__|__|__|__| or |__|__|__|__|__|__|__|__|__|
Social Security Number Tax ID Number ____ % Founders Worldwide Growth (026)
Client Brokerage Acct. # (If applicable):__________________ ____ % Morgan Stanley Global Equity (009)
================================================================
CO-OWNER (Optional) ____ % Rosenberg Small Company Value (119)
Name* ____ % Fidelity Equity (001)
- ----------------------------------------------------------------
First Middle Last ____ % Founders Growth (005)
_____ _____ _____
Sex [ ] M [ ] F Date of Birth | | | | ____ % Manufacturers Adviser Quant Equity (065)
|_____|_____|_____|
Month Day Year ____ % T. Rowe Price Blue Chip Growth (012)
__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
| | | | | | | | | | | | | | | | | | | | ____ % Manufacturers Adviser Real Estate Securities (068)
|__|__|__|__|__|__|__|__|__| or |__|__|__|__|__|__|__|__|__|
Social Security Number Tax ID Number ____ % Miller Anderson Value (066)
================================================================
ANNUITANTS (If different from Owner) ____ % J.P. Morgan Int'l Growth & Income (013)
Name* ____ % Wellington Management Growth & Income (017)
- ----------------------------------------------------------------
First Middle Last ____ % T. Rowe Price Equity-Income (007)
Address
- ---------------------------------------------------------------- ____ % Founders Balanced (071)
Street
____ % Fidelity Aggr Asset Alloc (004)
- ----------------------------------------------------------------
City State Zip ____ % Miller Anderson High Yield (076)
_____ _____ _____
Sex [ ] M [ ] F Date of Birth | | | | ____ % Fidelity Mod Asset Alloc (003)
|_____|_____|_____|
Month Day Year ____ % Fidelity Cons Asset Alloc (002)
__ __ __ __ __ __ __ __ __
| | | | | | | | | | ____ % Salomon Brothers Strategic Bond (015)
|__|__|__|__|__|__|__|__|__|
Social Security Number ____ % Oechsle Global Gov't Bond (010)
================================================================
CO-ANNUITANT (Optional) ____ % Manufacturers Adviser Capital Growth Bond (080)
Name* ____ % Wellington Management Inv Quality Bond (018)
- ----------------------------------------------------------------
First Middle Last ____ % Salomon Brothers U.S. Gov't Securities (014)
_____ _____ _____
Sex [ ] M [ ] F Date of Birth | | | | ____ % Manufacturers Adviser Money Market (019)
|_____|_____|_____|
Month Day Year
__ __ __ __ __ __ __ __ __ FIXED ACCOUNTS
| | | | | | | | | |
|__|__|__|__|__|__|__|__|__| ____ % 1 Yr (021) ____ % 3 Yr (023)
Social Security Number
____ % 5 Yr (025) ____ % 7 Yr (027)
- ----------------------------------------------------------------
2. BENEFICIARIES LIFESTYLE PORTFOLIOS
- ----------------------------------------------------------------
(Enclose signed letter if more information is required.) ____ % Cons 280 (179) ____ % Mod 460 (180)
Name* ____ % Bal 640 (181) ____ % Growth 820 (182)
- ---------------------------------------------------------------
First Middle Last Relationship ____ % Aggr 1000 (183)
_____ _____ _____ __ __ __ __ __ __ __ __ __
Date of Birth | | | | | | | | | | | | | | =================================================================
|_____|_____|_____| |__|__|__|__|__|__|__|__|__|
Month Day Year Social Security Number REMARKS
Name*
- ---------------------------------------------------------------
First Middle Last Relationship
_____ _____ _____ __ __ __ __ __ __ __ __ __
Date of Birth | | | | | | | | | | | | | |
|_____|_____|_____| |__|__|__|__|__|__|__|__|__|
Month Day Year Social Security Number
Contingent Beneficiary
Name*
- ---------------------------------------------------------------
First Middle Last Relationship
_____ _____ _____ __ __ __ __ __ __ __ __ __
Date of Birth | | | | | | | | | | | | | |
|_____|_____|_____| |__|__|__|__|__|__|__|__|__|
Month Day Year Social Security Number
- ------------------------------------------------------------------------------------------------------------------------------------
VENTURE.APP.006 *Unless subsequently changed in accordance with terms of Contract issued. TX/PA/SC/WA 9/97
</TABLE>
<PAGE> 2
- --------------------------------------------------------------------------------
4. PLAN SPECIFICS
- --------------------------------------------------------------------------------
TYPE OF PLAN (Must be completed)
<TABLE>
<S> <C> <C> <C>
[ ] Non-Qualified or [ ] IRA Rollover [ ] IRA Transfer [ ] IRA Tax Year________
[ ] Profit Sharing [ ] 401(k) [ ] SEP IRA Tax Year________
[ ] Money Purchase [ ] Keogh (HR-10) [ ] 403(b) Check if ERISA [q]
[ ] Defined Benefit [ ] 457 [ ] Other Qualified _________
</TABLE>
================================================================================
Will the purchase of this Annuity replace or change any other insurance or
annuity? [ ] No [ ] Yes
(If "Yes," state company and contract number in Remarks, and attach replacement
forms.) If 1035 exchange, or any other transfer of assets, attach original of
exchange form or letter.
GROUP HOLDER
Name Venture Trust
- ---------------------------------------------
Address G706114/G706115
- ---------------------------------------------
================================================================================
Has Annuitant or applicant(s) any other annuities or insurance with the
Company? [ ] No [ ] Yes
(If "Yes," list contract number in Remarks.)
- --------------------------------------------------------------------------------
5. SIGNATURES (Irrevocable Beneficiary, if designated, must also sign
application.)
- --------------------------------------------------------------------------------
NOTICE TO APPLICANT: Any person who knowingly and with intent to defraud any
insurance company or other person files an application or submits a claim
containing any materially false information or conceals for the purpose of
misleading, information concerning any fact material thereto commits a
fraudulent insurance act, which is a crime, and subjects such person to criminal
and civil penalties.
STATEMENT OF APPLICANT: I/We agree that the Contract I/We have applied for shall
not take effect until the later of: (1) the issuance of the Contract, or (2)
receipt by the Company at its Annuity Service Office of the first payment
required under the Contract. The information herein is true and complete to the
best of my/our knowledge and belief and is correctly recorded. I/We agree to be
bound by the representations made in this application and acknowledge the
receipt of an effective Prospectus describing the Contract applied for. The
Contract I/we have applied for is suitable for my/our insurance investment
objectives, financial situation and needs. I/We understand that unless I/we
elect otherwise in the Remarks section, the Maturity Date will be the later of
the Annuitant's 85th birthday, or 10 years from the Contract Date.
I/WE UNDERSTAND THAT ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THE CONTRACT
APPLIED FOR, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Signed in (State) Date Signed Signature of Owner/Applicant Signature of Co-Owner
- -----------------------------------------------------------------------------------------------------------------------------------
Signature of Annuitant Signature of Co-Annuitant Signature of Irrevocable Beneficiary
(if different from Owner) (if different from Owner) (if designated)
</TABLE>
STATEMENT OF AGENT: Will this contract replace or change any existing life
insurance or annuity in this or any other company?
[ ] Yes [ ] No If yes, please explain under Remarks. I certify I am authorized
and qualified to discuss the Contract herein applied for.
- --------------------------------------------------------------------------------
Signature of Agent Print Full Name Name of Firm
- --------------------------------------------------------------------------------
Agent Number Agent Phone Number State License ID Number
================================================================================
BROKER/DEALER USE ONLY (Optional)
Plan T [ ] Plan NT [ ] (If left blank, Plan T will be selected.)
- --------------------------------------------------------------------------------
6. OTHER
- --------------------------------------------------------------------------------
VENTURE.APP.006 TX/PA/SC/WA 9/97
<PAGE> 3
INITIAL BELOW EACH VENTURE SERVICE OPTION YOU WISH TO ELECT.
- --------------------------------------------------------------------------------
GUARANTEE PLUS PROGRAM (MINIMUM PAYMENT $5,000)
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE ___________________ .
The Company will allocate a portion of the payment with this application to the
7-year Fixed Account, such that, at the end of the 7-year period, the account
will have grown to an amount at least equal to the total payment. The remaining
balance will be allocated proportionately according to the investment selections
on the application, which should total 100% excluding the amount allocated to
the 7-year Fixed Account.
- --------------------------------------------------------------------------------
CHECK PLUS-AUTOMATIC PURCHASE*
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE ___________________ .
I authorize the Company to collect $______ (minimum $30) starting the month of
______ by initiating electronic debit entries to my bank account with the
following frequency: [ ] Monthly: [ ] 5th or [ ] 20th [ ] Quarterly (20th of
January, April, July and October). When utilizing Check Plus, I agree that if
any debit/transfer is erroneously received by the bank indicated on the enclosed
voided check, or is not honored upon presentation, any accumulation units may be
canceled, and agree to hold the Company harmless from any loss due to such
electronic debits/transfers. (Please Attach a Voided Check/Withdrawal Slip.)
- --------------------------------------------------------------------------------
DOLLAR COST AVERAGING* (MINIMUM PAYMENT $6,000)
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE ___________________ .
I authorize the Company to transfer an amount (minimum $100) each month as
indicated below. Transfers are available from all variable and the one-year
fixed investment options. A maximum of 10% from the one-year fixed investment
option may be transferred monthly. Please make first transfer on ____/____/____
(mm/dd/yy).
SOURCE FUND DESTINATION FUND AMOUNT
$
- ------------------- ------------------------- ------------------------
$
- ------------------- ------------------------- ------------------------
$
- ------------------- ------------------------- ------------------------
$
- ------------------- ------------------------- ------------------------
$
- ------------------- ------------------------- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE ____________________ .
I authorize withdrawals (minimum $100) from my Contract Value to commence as
indicated below. A maximum of 10% of payments may be withdrawn annually. When
utilizing the Income Plan, I agree that if any debit/transfer is erroneously
received by the bank indicated on the enclosed voided check, or is not honored
upon presentation, any accumulation units may be canceled, and agree to hold the
Company harmless from any loss due to such electronic debits/transfers.
From:____________________________________ $ _______________________________
From:____________________________________ $ _______________________________
From:____________________________________ $ _______________________________
From:____________________________________ $ _______________________________
From:____________________________________ $ ________________________________
Please indicate frequency:
[ ] Monthly or [ ] Quarterly (January, April, July and October)
Day of Withdrawal: [ ] 1st [ ] 7th [ ] 16th or [ ] 26th
Please [ ] Withhold [ ] Do not withhold Federal Income Taxes
[ ] I wish to utilize Electronic Funds Transfer in the processing of my
Income Plan. PLEASE ATTACH A VOIDED CHECK.
Or, if different from owner, make check payable to:
- --------------------------------------------------------------------------------
First Middle Last
- --------------------------------------------------------------------------------
Street City State Zip
(Please allow 7 business days for receipt of check.)
- --------------------------------------------------------------------------------
VENTURE.APP.006 *Unless subsequently changed in TX/PA/SC/WA 9/97
accordance with terms of Contract issued.
<PAGE> 4
INITIAL BELOW EACH VENTURE SERVICE OPTION YOU WISH TO ELECT.
- --------------------------------------------------------------------------------
TELEPHONE TRANSFER AUTHORIZATION
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE __________ .
I authorize the Company to act on transfer instructions given by telephone from
any person who can furnish proper identification. Neither the Company nor any
person authorized by the Company will be responsible for any claim, loss,
liability or expense in connection with a telephone transfer if the Company or
such other person acted on telephone transfer instructions in good faith in
reliance on this authorization.
- --------------------------------------------------------------------------------
TELEPHONE WITHDRAWAL AUTHORIZATION
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE __________ .
I authorize the Company to act on withdrawal instructions given from any person
who can furnish proper identification by telephone. Neither the Company nor any
person authorized by the Company will be responsible for any claim, loss,
liability or expense in connection with a telephone withdrawal if the Company or
such other person acted on telephone withdrawal instructions in good faith in
reliance on this authorization. The minimum withdrawal amount is $1,000.
Withdrawal instructions may authorize Partial Withdrawals of up to $50,000.00
per account. (Full withdrawals are not permitted by telephone.) The check may
only be payable to the owner of record (who must be individual) and may be
mailed only to the address of record. The Company will not allow telephone
withdrawals for the following accounts: a) An account on which the address has
been changed in the last 30 days, b) Accounts over which a person has Power of
Attorney, c) 403(b) accounts for which the owner is under 59 1/2, d) Custodial
accounts, and e) Accounts with Market Timers as owners.
- --------------------------------------------------------------------------------
AUTOMATIC REBALANCING
- --------------------------------------------------------------------------------
OWNER PLEASE INITIAL HERE __________ .
If marked, the policyholder's contract value, excluding amounts in the fixed
account investment options, will be automatically rebalanced to maintain the
rebalancing percentage levels in the variable portfolios as selected below,
based on the current total value of the eligible portfolios on the day of
rebalancing.
You may change the rebalancing percentages or terminate your participation in
the program by providing the Company with a completed Automatic Rebalancing
Authorization form or by providing instructions via telephone to an authorized
Company representative prior to the day the rebalancing will occur.
If a policyholder elects to participate in Automatic Rebalancing, the total
value of the variable portfolios must be included in the program. Therefore,
subsequent payments received and applied to portfolios in percentages different
from the current rebalancing allocation will be rebalanced at the next date of
rebalancing unless the subsequent payments are allocated to the fixed account
investment options.
Rebalancing will occur on the 25th of the month (or next business day), please
indicate frequency:
[ ] Quarterly [ ] Semi-Annually (June & December) [ ] Annually (December)
ASSET ALLOCATIONS (must total 100%):
<TABLE>
<S> <C>
____ % Manufacturers Adviser Pac Rim Emerging Mkts (008) ____ % Wellington Management Growth & Income (017)
____ % T. Rowe Price Science & Technology (016) ____ % T. Rowe Price Equity-Income (007)
____ % Founders Int'l Small Cap (006) ____ % Founders Balanced (071)
____ % Warburg Pincus Emerging Growth (020) ____ % Fidelity Aggr Asset Alloc (004)
____ % Pilgrim Baxter Growth (022) ____ % Miller Anderson High Yield (076)
____ % Fred Alger Small/Mid Cap (011) ____ % Fidelity Mod Asset Alloc (003)
____ % Rowe Price-Fleming Int'l Stock (024) ____ % Fidelity Cons Asset Alloc (002)
____ % Founders Worldwide Growth (026) ____ % Salomon Brothers Strategic Bond (015)
____ % Morgan Stanley Global Equity (009) ____ % Oechsle Global Gov't Bond (010)
____ % Rosenberg Small Company Value (119) ____ % Manufacturers Adviser Capital Growth Bond (080)
____ % Fidelity Equity (001) ____ % Wellington Management Inv Quality Bond (018)
____ % Founders Growth (005) ____ % Salomon Brothers U.S. Gov't Securities (014)
____ % Manufacturers Adviser Quant Equity (065) ____ % Manufacturers Adviser Money Market (019)
____ % T. Rowe Price Blue Chip Growth (012)
____ % Manufacturers Adviser Real Estate Securities (068) LIFESTYLE PORTFOLIOS
____ % Miller Anderson Value (066) ____ % Cons 280 (179) ____ % Mod 460 (180)
____ % J.P. Morgan Int'l Growth & Income (013) ____ % Bal 640 (181) ____ % Growth 820 (182)
____ % Aggr 1000 (183)
- ----------------------------------------------------------------------------------------------------------------------
VENTURE.APP.006 *Unless subsequently changed in accordance with terms of Contract issued. TX/PA/SC/WA 9/97
</TABLE>
<PAGE> 1
EXHIBIT (b)(9)
NORTH AMERICAN SECURITY LIFE [LOGO]
INSURANCE COMPANY
June 28, 1994
To whom it may concern,
This opinion is written in reference to the flexible purchase payment deferred
variable group annuity contracts (the "Contracts") to be issued by North
American Security Life Insurance Company, a Delaware corporation (the
"Company"), with respect to which a Registration Statement of Form N-4 (the
"Registration Statement") is being filed under the Securities Act of 1933, as
amended (the "Act").
As Assistant Counsel to the Company, I have examined such records and documents
and reviewed such questions of law as I deemed necessary for purposes of this
opinion.
1. The Company has been duly incorporated under the laws of the state
of Delaware and is a validly existing corporation.
2. NASL Variable Account (the "Variable Account") is a separate account
of the Company and is duly created and validly existing pursuant to
Title 18, Section 2932 (a) of the Delaware Code, as amended.
3. The portion of the assets to be held in the Variable Account equal
to the reserves and other liabilities under the Contracts is not
chargeable with liabilities arising out of any other business the
Company may conduct.
4. The Contracts, when issued in accordance with the prospectus
contained in the effective Registration Statement and upon compliance
with applicable local law, will be legal and binding obligations of the
Company.
I consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement.
Very truly yours,
/s/ TRACY ANNE KANE
Tracy Anne Kane
Assistant Counsel
