<PAGE>
FOR USE IN CALIFORNIA ONLY
Supplement Dated August 30, 1995 to Prospectus
Dated May 1, 1995
CHUBB SEPARATE ACCOUNT A
OF
CHUBB LIFE INSURANCE COMPANY OF AMERICA
The Division investing in the Gold Stock Portfolio is not available for Policies
issued in California.
The definition of Net Premium on page 3 of the Prospectus is hereby deleted and
amended to read as follows:
Net Premium--The gross premium less a 2.35% premium tax charge.
Section (a) under Charges and Deductions on page 7 of the Prospectus is hereby
deleted and amended to read as follows:
(a) Chubb Life deducts 2.35% of each premium payment received to cover
state premium taxes imposed.
The Section Premium Charges on page 16 of the Prospectus is hereby deleted and
amended to read as follows:
Premium Charges. Upon receipt of each premium payment and before
allocation of payment among the General Account and divisions of Separate
Account A, Chubb Life will deduct a premium tax charge of 2.35%.
FOR POLICYOWNERS AGE 60 AND OVER ONLY, the first paragraph of the Section Policy
------
Cancellation, Surrender and Lapse on page 8 of the Prospectus is deleted and
---------------------------------
amended to read as follows, and the section Policy "Free Look" on page 16 of the
------------------
Prospectus is deleted and amended to read as follows:
The policyowner has the limited right to return a Policy for cancellation and
full refund of all premiums paid. Chubb Life will cancel the Policy if it is
returned by mail or personal delivery to Chubb Life or to the agent who sold the
Policy, within 30 days after delivery of the Policy to the policyowner, within
45 days of the date of the execution of the application for insurance, or within
30 days after mailing or personal delivery of a Notice of the Right of
Withdrawal, whichever is later. Chubb Life will return to the policyowner,
within seven days, the Accumulation value of the Policy, plus any amounts
deducted as a premium charge, as of the day the Policy is returned. Prior to the
allocation date, the initial net premium will be deposited in Chubb Life's
General Account.
<PAGE>
ENSEMBLE II
CHUBB SEPARATE ACCOUNT A
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
CHUBB LIFE INSURANCE COMPANY OF AMERICA
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
(603) 226-5000
The Flexible Premium Variable Life Insurance Policy ("Policy") currently
offered by Chubb Life Insurance Company of America ("Chubb Life") and
described in this Prospectus is designed to provide a policyowner with both
lifetime insurance protection and maximum flexibility in connection with
premium payments and death benefits. Although each Policy contains a schedule
of intended premium payments ("Planned Periodic Premiums"), and an intended
frequency of premium payments ("Premium Frequency"), a policyowner may,
subject to certain restrictions, vary the frequency and amount of the premium
payments and increase or decrease the level of life insurance benefits payable
under the Policy. This flexibility allows a policyowner to provide for
changing insurance needs within the framework of a single insurance policy.
Unlike traditional lifetime insurance protection, the policyowner participates
in the investment experience of Chubb Separate Account A ("Separate Account
A"). Accumulation value under the Policy will increase with positive
investment experience and decrease with negative investment experience.
Accumulation value in Separate Account A is not guaranteed and could decline
to zero.
The Policy provides for a death benefit payable at the Insured's death. If
net premiums are allocated to Separate Account A, the amount of the death
benefit may reflect the investment experience of the chosen division of
Separate Account A, as well as the frequency and amount of premiums, any
withdrawals of cash value ("withdrawal"), and the charges assessed in
connection with the Policy. As long as the Policy remains in force, the death
benefit will not be less than the current Specified Amount of the Policy,
reduced by any outstanding indebtedness and any due and unpaid charges. The
minimum initial Specified Amount of a Policy is $25,000. The Specified Amount
may not be reduced to less than $25,000, except when required by a withdrawal.
The Specified Amount may not be reduced to less than $10,000 after a
withdrawal.
The Policy provides two death benefit options which may be chosen by the
policyowner. Under Option I, the death benefit payable under the Policy is
equal to the greater of (i) the Specified Amount or (ii) the Policy's
accumulation value on the date of death multiplied by the "corridor
percentage". The corridor percentage is a tax law concept pertaining to the
relationship between accumulation value and death benefit, based on the
Insured's attained age. Under Option II, the death benefit equals the
Specified Amount plus the accumulation value of the Policy on the date of
death, but not less than the Policy's accumulation value multiplied by the
corridor percentage. The policyowner may, subject to certain restrictions,
change from one death benefit option to the other after the Policy has been
issued.
The initial premium payment must be sufficient to keep the Policy in force
for at least three months. No premium payment may be less than $25. The total
of all premiums paid may never exceed the current maximum premium limitations
set forth in the Internal Revenue Code of 1986 (the "Code"). The limitation on
total premiums paid is imposed in order to comply with present requirements
for the definition of life insurance to obtain favorable federal income tax
treatment of the Policy and its death benefit.
The Policy will remain in force so long as cash value exceeds indebtedness
and cash value less indebtedness is sufficient to pay certain monthly charges
imposed in connection with the Policy. The cash value equals the accumulation
value less any surrender charge. Accumulation value in Separate Account A will
reflect the investment experience of the chosen divisions of Separate Account
A, the amount and frequency of premium payments, any withdrawals, and charges
imposed in connection with the Policy. Adherence to the schedule of Planned
Periodic Premiums will not assure the Policy will remain in force. The
policyowner bears the entire investment risk for all amounts allocated to
Separate Account A; no minimum accumulation value is guaranteed and the
accumulation value could decline to zero. So long as cash value exceeds
indebtedness and subject to certain conditions described in this Prospectus, a
policyowner may obtain policy loans at any time after the first policy
anniversary and may make withdrawals at any time. Both withdrawals and policy
loans must be made prior to the Policy's maturity date.
The policyowner may allocate net premiums to one or more of the divisions of
Separate Account A or to Chubb Life's General Account on the allocation date.
Each division of Separate Account A will invest solely in a corresponding
portfolio (a "Portfolio") of Chubb America Fund, Inc. or Templeton Variable
Products Series Funds (collectively, the "Funds"). Prior to the allocation
date the net premiums paid will be deposited in Chubb Life's General Account.
There is a period during which the policyowner may cancel the Policy. If the
policyowner elects during this "free look" period to cancel the Policy, Chubb
Life will reimburse, within seven days from the date the Policy is surrendered
to Chubb Life, the full amount of premium paid. The accompanying Prospectuses
for the Funds and the Statements of Additional Information, available on
request, describe the investment objectives and risks of the ten Portfolios.
Prospective purchasers of this Policy are advised that replacement of
existing insurance coverage may not be financially advantageous and should
consult with their financial advisers with respect to the Policy. It may also
not be advantageous to purchase this Policy, if the prospective purchaser
already owns a flexible premium variable life insurance policy.
This Prospectus generally describes only the portion of the Policy involving
Separate Account A. For a brief summary of Chubb Life's General Account, see
"THE GENERAL ACCOUNT."
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS FOR THE FUNDS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES DIVISION, NOR HAS THE COMMISSION OR
ANY STATE SECURITIES DIVISION, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DEFINITIONS.......................................................... 3
SUMMARY.............................................................. 4
CHUBB LIFE INSURANCE COMPANY OF AMERICA.............................. 9
CHUBB SEPARATE ACCOUNT A............................................. 9
THE FUNDS............................................................ 9
THE POLICY........................................................... 13
General............................................................ 13
Payment of Premiums................................................ 13
Premium Limitations................................................ 13
Allocation of Premiums............................................. 13
Transfers.......................................................... 14
Telephone Transfers, Loans and Reallocations....................... 15
Policy Lapse....................................................... 15
Reinstatement...................................................... 16
Policy "Free Look"................................................. 16
CHARGES AND DEDUCTIONS............................................... 16
Premium Charges.................................................... 16
Monthly Deduction.................................................. 16
Risk Charge........................................................ 17
Surrender Charge................................................... 17
Administrative Fees................................................ 18
Other Charges...................................................... 18
POLICY BENEFITS AND RIGHTS........................................... 18
Death Benefits..................................................... 18
Guaranteed Death Benefit........................................... 20
Combined Requests.................................................. 20
Maturity of the Policy............................................. 20
Optional Insurance Benefits........................................ 20
Settlement Options................................................. 21
CALCULATION OF ACCUMULATION VALUE.................................... 22
Unit Values........................................................ 22
Net Investment Factor.............................................. 23
CASH VALUE BENEFITS.................................................. 23
Surrender Privileges............................................... 23
Policy Loans....................................................... 24
<CAPTION>
PAGE
----
<S> <C>
OTHER MATTERS........................................................ 25
Voting Rights...................................................... 25
Additions, Deletions or Substitutions of Investments............... 26
Annual Report...................................................... 26
Confirmation....................................................... 26
Limitation on Right to Contest..................................... 26
Misstatements...................................................... 27
Suicide............................................................ 27
Beneficiaries...................................................... 27
Postponement of Payments........................................... 27
Assignment......................................................... 27
Illustration of Benefits and Values................................ 27
Non-Participating Policy........................................... 27
THE GENERAL ACCOUNT.................................................. 27
General Description................................................ 27
The Policy......................................................... 28
General Account Benefits........................................... 28
General Account Accumulation Value................................. 28
Determination of Charges........................................... 28
Premium Deposit Fund............................................... 28
DISTRIBUTION OF THE POLICY........................................... 29
Group or Sponsored Arrangements.................................... 29
MANAGEMENT OF CHUBB LIFE............................................. 31
Executive Officers and Directors of Chubb Life..................... 31
STATE REGULATION OF CHUBB LIFE....................................... 33
FEDERAL TAX MATTERS
Tax Considerations................................................. 33
Policy Proceeds.................................................... 33
Charge for Chubb Life Income Taxes................................. 36
EMPLOYEE BENEFIT PLANS............................................... 36
LEGAL PROCEEDINGS.................................................... 36
EXPERTS.............................................................. 36
REGISTRATION STATEMENT............................................... 37
FINANCIAL STATEMENTS................................................. 37
ILLUSTRATIONS........................................................ Appendix A
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. CHUBB LIFE DOES NOT AUTHORIZE ANY IN-
FORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPEC-
TUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE PROSPECTUSES OF THE FUNDS
OR THE STATEMENTS OF ADDITIONAL INFORMATION OF THE FUNDS.
2
<PAGE>
DEFINITIONS
In addition to the capitalized terms which are defined elsewhere in this Pro-
spectus, the following words and phrases shall have the indicated meanings:
Accumulation value--The total amount that a Policy provides for investment at
any time plus the amount held as collateral for policy debt.
Age--The Insured's age at his nearest birthday.
Allocation date--The date when the initial premium is placed in divisions of
Separate Account A and the General Account in accordance with the policyowner's
allocation instructions in the application. The allocation date is 15 days from
the date Chubb Life mails the Policy to the agent for delivery to the
policyowner.
Attained Age--The age of the Insured at the last policy anniversary.
Beneficiary---The beneficiary designated by the policyowner in the applica-
tion. If changed, the beneficiary is as shown in the latest change filed with
Chubb Life. If no beneficiary survives the Insured, the policyowner or the
policyowner's estate will be the beneficiary. The interest of any beneficiary
is subject to that of any assignee.
Cash value--The accumulation value less the surrender charge. This amount less
the amount of policy debt is payable to the policyowner on the earlier of sur-
render of the Policy or the maturity date.
Date of Receipt--Any business day of Chubb Life, prior to 4:00 P.M. New York
City time, on which a notice or premium payment is received at Chubb Life's
service center or home office.
Death benefit--The amount, less the amount of policy debt, which is payable to
the beneficiary under the Policy upon the death of the Insured.
Division--A division of Separate Account A which invests exclusively in the
shares of a specified Portfolio of the Funds.
Ensemble II--The name of the Flexible Premium Variable Life Insurance Policy
described in this Prospectus.
Funds--Chubb America Fund, Inc. and Templeton Variable Products Series Fund,
series mutual funds.
General Account--The assets of Chubb Life other than those allocated to Sepa-
rate Account A or any other separate account.
Insured--The person upon whose life the Policy is issued.
Issue Age--The Insured's age at his nearest birthday on the Policy Date.
Loan value--Generally, 90% of a Policy's cash value on the date of a loan.
Maturity date--Unless otherwise specified, the maturity date will be the pol-
icy anniversary nearest to the Insured's 95th birthday.
Monthly anniversary date--The same date in each month as the policy date.
Net premium--The gross premium less a 2.5% premium tax charge.
Owner (Policyowner)--The person so designated in the application or as subse-
quently changed.
Policy date--The date set forth in the Policy, which is the date requested by
the Owner. If no date is requested, it is the later of the date of application
or the date of any required medical examination. The policy date is the date
from which policy years, policy months, and policy anniversaries will be deter-
mined. If the policy date should fall on the 29th, 30th or 31st of a month, the
policy date will be the 1st of the following month.
Policy debt--The sum of all unpaid policy loans and accrued interest thereon.
Portfolio--A separate investment Portfolio of the Funds.
Proof of death--One or more of the following:
(a) A copy of a certified death certificate.
(b) A copy of a certified decree of a court of competent jurisdiction as to
the finding of death.
(c) A written statement by a medical doctor who attended the Insured.
(d) Any other proof satisfactory to Chubb Life.
Separate Account A--Chubb Separate Account A, a separate investment account
created by Chubb Life to receive and invest net premiums paid under the Policy
and other flexible premium variable life insurance policies offered by Chubb
Life.
Specified Amount--The face amount of the Policy which is the minimum death
benefit payable under the Policy.
Surrender Charge--A sales charge assessed only upon surrender or withdrawal.
Valuation date--Each day, as of the close of regular trading on the New York
Stock Exchange, which is currently 4:00 P.M. New York City time.
Valuation period--The period between two successive valuation dates, commenc-
ing at the close of regular trading on the New York Stock Exchange on each val-
uation date and ending at the close of regular trading on the New York Stock
Exchange on the next succeeding valuation date.
3
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY OF PROSPECTUS INFORMATION SHOULD BE READ IN CONJUNCTION
WITH THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. ANY
SIGNIFICANT VARIATIONS FROM THE INFORMATION APPEARING IN THIS PROSPECTUS WHICH
MAY BE REQUIRED DUE TO INDIVIDUAL STATE REQUIREMENTS ARE CONTAINED IN
SUPPLEMENTS WHICH ARE ATTACHED TO THIS PROSPECTUS, OR IN ENDORSEMENTS TO THE
POLICY, AS APPROPRIATE. UNLESS OTHERWISE INDICATED, THE DESCRIPTION OF THE
POLICY CONTAINED IN THIS PROSPECTUS ASSUMES THE POLICY IS IN EFFECT, THERE IS
NO OUTSTANDING POLICY DEBT AND THE DEATH BENEFIT IS NOT SUBJECT TO ADJUSTMENT
BY THE CORRIDOR PERCENTAGE.
The Policy. Under the flexible premium variable life insurance policy (the
"Policy") issued by Chubb Life Insurance Company of America ("Chubb Life"), the
policyowner may, subject to certain limitations, make premium payments in any
amount at any frequency. The Policy is a life insurance contract with death
benefits, cash values, and other features traditionally associated with life
insurance. It is called "flexible premium" because, unlike many insurance
contracts, there is no fixed schedule for premium payments, although each
policyowner may establish a schedule of premium payments ("Planned Periodic
Premiums"). This flexibility permits a policyowner to provide for evolving
insurance needs within a single insurance product. The minimum initial
Specified Amount is $25,000. A policyowner under attained age 85 may increase
or decrease coverage. Increasing coverage under the Policy, rather than
purchasing another policy, may save additional administrative costs. Increasing
coverage under the Policy or purchasing another policy may require new evidence
of insurability. Increasing coverage may have certain tax consequences. See
"Federal Tax Matters."
The Policy is called "variable" because, unlike the fixed benefits of an
ordinary whole life insurance contract, the accumulation value, the cash value
and, under certain circumstances, the death benefit of the Policy may increase
or decrease depending upon the investment experience of the divisions of Chubb
Separate Account A ("Separate Account A") to which premium payments have been
allocated. So long as the Policy's cash value continues to be sufficient to pay
the monthly deduction, all policyowners are guaranteed a minimum death benefit
equal to the face amount of the Policy (the "Specified Amount"), less any
outstanding policy debt.
The death benefit is payable under two options. Under Option I, the death
benefit is equal to the greater of the Specified Amount or the accumulation
value of the Policy on the date of death multiplied by the corridor percentage.
Under Option II, the death benefit is equal to the sum of the Specified Amount
and the Policy's accumulation value on the date of death, subject to adjustment
by the corridor percentage. The corridor percentage is a tax law concept
pertaining to the relationship between accumulation value and the death
benefit, based on the Insured's attained age. Prospective policyowners should
be aware that there is no guarantee of accumulation value in Separate Account
A. See "POLICY BENEFITS AND RIGHTS--Death Benefits."
Chubb Separate Account A. Separate Account A is a separate account established
by Chubb Life pursuant to the insurance laws of the State of New Hampshire and
organized as a registered unit investment trust under the Investment Company
Act of 1940 (the "1940 Act"). Such registration does not involve any
supervision by the Securities and Exchange Commission (the "Commission") of the
management or investment practices or policies of Separate Account A. Separate
Account A is presently comprised of ten divisions, each of which buys shares at
net asset value of the corresponding portfolio (a "Portfolio") of Chubb America
Fund, Inc. or Templeton Variable Products Series Fund (the "Funds"). Separate
Account A is administered and accounted for as part of the general business of
Chubb Life, but the income, capital gains, or capital losses of Separate
Account A are credited to or charged against the assets held in the account in
accordance with the terms of the Policy, without regard to other income or
capital gains or losses of any other account arising out of any other business
Chubb Life conducts. The assets of Separate Account A are not chargeable with
liabilities arising out of any other business conducted by Chubb Life. The
income and both realized and unrealized gains or losses on the assets of each
division are separate and are credited or charged against each division without
regard to income, gains or losses from any other division. See "CALCULATION OF
ACCUMULATION VALUE--Unit Values."
A policyowner may allocate net premium payments among the General Account and
the divisions of Separate Account A which invest in Portfolios of the Funds.
If the Date of Receipt of the initial premium is prior to the date Chubb Life
either issues the Policy or offers to issue the Policy on a basis other than as
applied for, and that initial premium exceeds $500, the net premium, less any
monthly deductions, will be credited with interest at the rate currently being
credited to the General Account. This amount will be credited with interest for
the period between the Date of Receipt of the premium (or the policy date,
whichever is
4
<PAGE>
later) and the date Chubb Life issues the Policy or the applicant refuses Chubb
Life's offer to issue the Policy on a basis other than as applied for. In those
instances when Chubb Life declines to issue a Policy, the entire premium paid,
if greater than $500, will be returned with interest; interest will be credited
from the Date of Receipt to the date the application is rejected. If the Policy
issued as applied for is not accepted or the "free look" is exercised, no
interest will be credited. Chubb Life will retain any interest earned on the
initial net premium. Prior to the allocation date the initial net premium will
be deposited in Chubb Life's General Account.
The Funds. Chubb America Fund, Inc. is registered as an open-end diversified
management company under the 1940 Act. Its shares are offered only to divisions
of separate accounts, whether now in existence or to be established by Chubb
Life or its affiliated insurance companies to fund variable life insurance
policies and variable annuity contracts.
Chubb America Fund, Inc. presently has nine classes of stock, each
representing a Portfolio having a specific investment objective. The present
Portfolios of Chubb America Fund, Inc. are the World Growth Stock Portfolio,
the Money Market Portfolio, the Gold Stock Portfolio, the Bond Portfolio, the
Domestic Growth Stock Portfolio, the Growth and Income Portfolio, the Capital
Growth Portfolio, the Balanced Portfolio and the Emerging Growth Portfolio. In
the future, Chubb America Fund, Inc. may add or delete Portfolios. The
investment adviser to Chubb America Fund, Inc. is Chubb Investment Advisory
Corporation ("Chubb Investment Advisory"), a subsidiary of Chubb Life.
Templeton Variable Products Series Fund is an open-end, diversified management
investment company currently consisting of five separate series, one of which
(Templeton International Fund) offers its shares to a corresponding division of
Separate Account A. Templeton Variable Series Fund offers its shares solely to
separate accounts of insurance companies, including companies not affiliated
with Chubb Life, as an investment vehicle for variable life insurance policies
and variable annuity contracts. The investment manager of Templeton
International Fund is Templeton Investment Counsel, Inc. ("TICI").
Policyowners should be aware that there can be no assurance that any Portfolio
will in fact achieve its stated objectives. Policyowners should read and retain
the prospectuses for the Funds which accompanies this Prospectus for detailed
information.
See "THE FUNDS."
Premiums. The first premium is due on the policy date. Premiums are paid in
advance, generally one year at a time; however, Chubb Life permits semi-annual,
quarterly and monthly premium payments. Changes in frequency and increases or
decreases in the amount of Planned Periodic Premiums may be made by the
policyowner provided that the total of all premiums, scheduled and unscheduled,
cannot exceed the current maximum premium limitations for the definition of
life insurance, set forth in the Code. Chubb Life will return any excess
premiums if the total of all premiums, scheduled and unscheduled, will exceed
these limits. Chubb Life will notify policyowners annually if any premiums
would cause the Policy to be deemed a modified endowment contract and allow for
a refund of the excess premium. See "FEDERAL TAX MATTERS--Policy Proceeds".
Chubb Life reserves the right to limit the amount of any increase in premium
payment. Subject to the foregoing limitations, a policyowner may make
additional premium payments at any time prior to the maturity date of the
Policy. See "THE POLICY--Payment of Premiums".
Failure to pay premiums in accordance with the schedule of Planned Periodic
Premiums will not automatically cause the Policy to lapse. It will lapse only
when the cash value less outstanding policy debt is insufficient to pay the
monthly deduction and a grace period expires without a sufficient payment by
the policyowner. Conversely, payment of premiums in accordance with the
schedule of Planned Periodic Premiums does not necessarily mean that the Policy
will remain in force. See "THE POLICY--Policy Lapse".
Death Benefit. The death benefit under the Policy is the amount payable to the
named beneficiary when the person insured under the Policy dies. All or part of
the death benefit may be paid in cash or applied under one or more of the
payment options available under the Policy. See "POLICY BENEFITS AND RIGHTS--
Settlement Options". The death benefit will be reduced by the amount of any
outstanding policy debt or unpaid monthly deduction.
5
<PAGE>
Under Option I, the death benefit will be equal to the greater of the
Specified Amount or the accumulation value of the Policy on the date of death
multiplied by the corridor percentage. Under Option II, the death benefit is
equal to the Specified Amount plus the accumulation value of the Policy on the
date of death; provided, however, that under Option II, the death benefit can
never be less than the accumulation value on the date of death multiplied by
the corridor percentage. See "POLICY BENEFITS AND RIGHTS--Death Benefits".
A policyowner may, by written request, change the Specified Amount at any time
after the first policy anniversary. Any change is subject to the following
conditions:
1. Any requested decrease in Specified Amount will become effective on the
monthly anniversary date that coincides with, or next follows, receipt of
such request. The minimum decrease in Specified Amount is $25,000. No
decrease may reduce the Specified Amount below $25,000.
2. Any request for an increase in Specified Amount must be applied for, by a
supplemental application, prior to attained age 85, and shall be subject to
evidence of insurability satisfactory to Chubb Life. The minimum increase in
Specified Amount is $25,000.
3. Any change approved by Chubb Life will become effective on the date shown
in the Supplemental Policy Specification Page of the Policy, subject to
deduction of the first month's cost of insurance from the accumulation value
of the Policy.
By written request, a policyowner may also change the death benefit option. If
the request is to change from Option I to Option II, the Specified Amount will
be decreased by the amount of the accumulation value of the Policy on the
effective date of the change. Evidence of insurability satisfactory to Chubb
Life will be required for change from Option I to Option II. If the request is
to change from Option II to Option I, the Specified Amount will be increased by
the amount of the accumulation value of the Policy on the effective date of the
change. No evidence of insurability is required for a change from Option II to
Option I. The effective date of either change shall be the monthly anniversary
date that coincides with or next follows the Date of Receipt of the request for
change. See "POLICY BENEFITS AND RIGHTS--Death Benefits". Policyowners may
combine a request for a change in the Specified Amount with a request for a
change in the death benefit option. Combined requests will be subject to the
requirements and limitations of each of the requests. See "POLICY BENEFITS AND
RIGHTS--Combined Requests."
Value of Policy. The Policy provides for accumulation value equal to the total
of accumulation value in the General Account and the Policy's accumulation
value in divisions of Separate Account A. The Policy's accumulation value will
reflect the amount and frequency of premium payments, the value of net premiums
(net premiums plus credited interest), if any, allocated to the General
Account, the investment experience of Separate Account A, policy loans, any
withdrawals, and any charges imposed in connection with the Policy. There is no
minimum guaranteed accumulation value.
The accumulation value of each division in Separate Account A on the
allocation date is equal to the net premiums, plus interest earned prior to the
allocation date, which have been paid and allocated to that division less the
portion of the first monthly deduction allocated to the Policy's accumulation
value in that division. Thereafter, at the end of each valuation period after
the initial allocation, the Policy's accumulation value in a division is equal
to the sum of (a) the accumulation value in the division on the preceding
valuation date multiplied by the net investment factor (See "CALCULATION OF
ACCUMULATION VALUE--Net Investment Factor") for the current valuation period,
plus (b) any net premium received during the current valuation period which is
allocated to the division, plus (c) all accumulation values transferred to the
division from another division or the General Account, including loan
repayments, during the current valuation period, minus (d) accumulation values
transferred from the division to another division or the General Account and
accumulation values transferred to secure a policy debt during the current
valuation period, and minus (e) all withdrawals from the division during the
current valuation period, and minus (f) a pro-rata portion of monthly
deductions, whenever a valuation period includes the monthly anniversary date.
The Policy's total accumulation value in Separate Account A equals the sum of
the Policy's accumulation value in each division. The Policy's accumulation
value in Separate Account A is expressed in terms of the number of units and
unit values of each division. See "CALCULATION OF ACCUMULATION VALUE--Unit
Values."
6
<PAGE>
Charges and Deductions.
(a) Chubb Life deducts 2.5% of each premium payment received to cover state
premium taxes imposed. This premium tax charge represents an average of state
premium taxes. This charge may not be increased.
(b) There is a monthly deduction from each Policy's accumulation value in the
General Account and/or the divisions of Separate Account A equal to the sum of
(i) the cost of insurance, described below, and the cost of additional benefits
provided by rider attached to the Policy; and (ii) a monthly administrative
charge of $6.00. The cost of insurance charge is calculated on each monthly
anniversary date. It is based on the sex, issue age, policy year, rating class
of the Insured, and Specified Amount of the Policy. Monthly cost of insurance
rates will be determined by Chubb Life based upon its expectations as to future
mortality experience. Cost of insurance rates are guaranteed not to exceed or
be increased above the maximum charge based upon the Commissioner's 1980
Standard Ordinary Mortality Table.
(c) A mortality and expense risk charge, not to exceed .0024657% on a daily
basis (.90% on an annual basis) will be imposed on the assets of each division.
Chubb Life will realize a gain from this charge to the extent it is not needed
to provide benefits and pay expenses under the Policy.
(d) Upon surrender or withdrawal, Chubb Life will assess a surrender charge.
The surrender charge for the initial Specified Amount is determined by
multiplying a surrender factor by the lesser of (1) the premiums actually
received in policy year one, or (2) the "Guideline Annual Premium" as defined
in the rules under the 1940 Act. Subject to other considerations, the surrender
charges may be reduced by paying less premium in policy year one. The surrender
factor depends on the length of time the Policy has been in force and ranges
between 0% and 30% of the premium paid in policy year one. The surrender charge
for increases in the Specified Amount is determined in a similar manner. The
surrender charge is more fully described under "CHARGES AND DEDUCTIONS--
Surrender Charge".
(e) Chubb Life charges an administrative fee equal to the lesser of $25 or 2%
of the amount of the withdrawal for each withdrawal and the lesser of $25 or
10% of the amount of a transfer for each transfer between divisions of Separate
Account A or the General Account. A charge, not to exceed $25, will be billed
for each request by a policyowner for an illustration of benefits and values
after the policy date.
(f) Chubb Life reserves the right to charge the assets of each division of
Separate Account A to provide for any income taxes payable by Chubb Life on the
assets of such divisions. In addition, an investment advisory fee is imposed
against the assets of each Portfolio to compensate the Funds' investment
manager and sub-investment managers. See "THE FUNDS".
Policy Loans. After the first policy anniversary, a policyowner may borrow
against the cash value of his Policy. Generally, the maximum loan amount is 90%
of the cash value of the Policy on the date of the loan. Loan interest is
payable at the end of each policy year and all policy debt outstanding will be
deducted from proceeds payable at the Insured's death, upon maturity, or upon
surrender.
A policyowner may allocate a policy loan among the General Account and the
various divisions of Separate Account A. Accumulation value in each division
equal to the policy debt so allocated will be transferred to the General
Account. If loan interest is not paid when due, it becomes loan principal. An
amount equal to the unpaid loan interest will be transferred to the General
Account pro-rata from the accumulation value of the General Account and the
divisions of Separate Account A. If no accumulation value is available in any
of the divisions of Separate Account A, accumulation value held in the General
Account will be set aside as loan collateral. Accumulation value held in the
General Account for loan collateral earns interest daily at the lesser of an
effective rate of 6% or the interest rate currently credited to the General
Account. As an administrative practice and in Chubb Life's sole discretion, if
the interest rate currently credited to the General Account falls below 6%, the
accumulation value held in the General Account for loan collateral may continue
to earn interest at 6%.
A policy loan accrues interest at a maximum rate of 8% compounded annually, or
at any lower rate established by Chubb Life for any period during which the
loan is outstanding. There are two types of loans available. A Type A loan is
charged the same interest rate as the interest credited to the amount of
accumulation value which is held in the General Account to secure loans. The
amount available at any time for a Type A loan equals the maximum loan amount
less the DEFRA Guideline Single Premium, as set forth in the Code, less any
outstanding Type A loans. All other loans are
7
<PAGE>
Type B loans; a Type B loan is charged the prevailing interest rate, but not
more than the maximum. It is possible for one loan request to result in both a
Type A and Type B loan. Interest accrues on a daily basis from the date of the
loan and is compounded annually. A policy loan may be prepaid in whole or in
part at any time while the Policy is in force. When a loan repayment is made,
accumulation value securing the policy debt in the General Account equal to the
loan repayment will be allocated among the General Account and divisions of
Separate Account A using the same percentages as used to allocate net premiums.
See "CASH VALUE BENEFITS--Policy Loans".
Policy Cancellation, Surrender and Lapse. The policyowner has the limited
right to return a Policy for cancellation and full refund of all premiums paid.
Chubb Life will cancel the Policy if it is returned by mail or personal
delivery to Chubb Life or to the agent who sold the Policy, within 10 days
after the delivery of the Policy to the policyowner, within 45 days of the date
of the execution of the application for insurance, or within 10 days after
mailing or personal delivery of a Notice of the Right of Withdrawal, whichever
is later. Chubb Life will return to the policyowner, within seven days, all
payments received on the Policy. Prior to the allocation date, the initial net
premium will be deposited in Chubb Life's General Account; Chubb Life will
retain any interest earned if the "free look" right is exercised.
So long as the Policy is in force, a policyowner may elect, subject to the
consent of any irrevocable beneficiary or assignee of the Policy, to surrender
the Policy and receive its cash value, i.e., the cash value of the Policy
determined as of the day Chubb Life receives the policyowner's written request,
less any outstanding policy debt secured by the Policy. A policyowner may also
request a withdrawal, subject to the consent of any irrevocable beneficiary, of
the cash value of the Policy. Normally, a withdrawal reduces the death benefit
payable under the Policy by an amount equal to the reduction in the Policy's
accumulation value plus a pro-rata portion of the surrender charge.
Failure to make any premium payment on a Policy will not necessarily cause the
Policy to lapse. The duration of a Policy depends upon the cash value. The Pol-
icy will remain in force so long as the cash value less any outstanding policy
debt is sufficient to pay the monthly deduction. In the event the cash value,
less any outstanding policy debt, is insufficient to pay the monthly deduction
and a sixty-one day grace period expires without an adequate payment by the
policyowner, the Policy will lapse and terminate without value. See "THE POLI-
CY--Policy Lapse."
Once a Policy has lapsed, the policyowner may request reinstatement of the
Policy anytime within five years of lapse. Satisfactory proof of insurability
and payment of a reinstatement premium are required for reinstatement. See "THE
POLICY--Reinstatement."
Distribution of the Policy. Chubb Life will offer the Policy in all
jurisdictions where it is licensed to sell this type of insurance product. The
Policy will be sold by agents who represent Chubb Life and are registered
representatives of Chubb Securities Corporation or other registered broker-
dealers.
Tax Consequences of the Policy. All death benefits paid under the Policy will
generally be fully excludable from the gross income of the policy beneficiary
for federal income tax purposes. Treasury regulations require that investments
underlying the Policy be adequately diversified. Chubb Life believes it is
presently in compliance with the regulations and intends to remain in
compliance with such regulations and other federal tax law requirements.
Chubb Life may charge each division in Separate Account A for its portion of
any income tax charged to Chubb Life on the division or its assets. The charge,
if imposed, will reduce the investment return of Separate Account A.
If a policyowner elects to make certain transactions, including a partial
withdrawal, surrender or exchange of the Policy, or receipt of accelerated ben-
efits pursuant to the Terminal Illness Accelerated Benefit Rider, the
policyowner may be taxed on a portion of any amounts paid to the policyowner
(which may include any prior policy loans cancelled in the transaction). Also,
if premiums paid by a policyowner exceed certain limits and the Policy is
deemed a modified endowment contract, then any pre-death distributions, includ-
ing loans, surrenders and partial withdrawals, may be treated as income taxable
to the policyowner and may also cause the policyowner to incur a penalty tax of
10%. Policyowners are advised to consult with their own tax advisers with re-
gard to the tax consequences of the Policy. See "FEDERAL TAX MATTERS".
8
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
Chubb Life is a stock life insurance company chartered in 1903 in Tennessee
and has been continuously engaged in the insurance business since that time.
Prior to July 1, 1991, Chubb Life was known as The Volunteer State Life
Insurance Company. Chubb Life redomesticated from the State of Tennessee to the
State of New Hampshire on July 1, 1991 and is now a New Hampshire life
insurance company. It is licensed to do life insurance business in forty-nine
states of the United States, Puerto Rico, the U.S. Virgin Islands, Guam and in
the District of Columbia. Chubb Life is a wholly-owned subsidiary of The Chubb
Corporation, a New Jersey corporation. The principal offices of The Chubb
Corporation are located at 15 Mountain View Road, Warren, New Jersey. Its
telephone number is 908/903-2000. Chubb Life's service center is located at 832
Georgia Avenue, Chattanooga, Tennessee 37402, telephone number 615/756-2887 and
its home office and service center is located at One Granite Place, Concord,
New Hampshire 03301, telephone number 603/226-5000.
Chubb Life and its subsidiaries had total assets, at December 31, 1994, of
$3,760,079,000 and had over $61 billion of insurance in force, while total
assets of The Chubb Corporation, as of the same date, were $20,723,055,000.
Chubb Life writes individual life and disability insurance and annuities. It
is subject to New Hampshire law governing insurance, and is regulated and
supervised by the New Hampshire Insurance Commissioner. Chubb Life is currently
rated AAA (Superior) by Standard & Poors's Corporation and A+(Superior) by A.M.
Best and Company. These ratings merely reflect the opinion of the rating
company as to the relative financial strength of Chubb Life and Chubb Life's
ability to meet its contractual obligations to its policyowners. Even though
assets in Separate Account A are held separately from Chubb Life's other
assets, ratings of Chubb Life may still be relevant to policyowners since not
all of Chubb Life's contractual obligations relate to payments based on those
segregated assets.
CHUBB SEPARATE ACCOUNT A
Separate Account A is a separate account of Chubb Life established on August
20, 1984 and now governed by the insurance laws of the State of New Hampshire.
Separate Account A is organized as a unit investment trust registered with the
Commission under the 1940 Act and is subject to that Act's requirements. Such
registration does not involve supervision of the management or investment
policies of Separate Account A or Chubb Life by the Commission. Chubb Life is
the depositor of Separate Account A. Under New Hampshire law, the assets of
Separate Account A are held exclusively for the benefit of policyowners and
persons entitled to payments under this Policy and other variable life
insurance policies funded by Separate Account A. The assets of Separate Account
A are not chargeable with liabilities arising out of any other business which
Chubb Life may conduct.
Chubb Life holds the assets of Separate Account A. These assets are kept
physically segregated and held separate and apart from the General Account.
Chubb Life maintains records of all purchases and redemptions of Funds shares
by each of the divisions.
Divisions. Separate Account A presently has ten investment divisions but may,
in the future, add or delete investment divisions. Each investment division
will invest exclusively in shares representing an interest in a Portfolio of
the Funds.
Investment income and other distributions to each division of Separate Account
A arising from the applicable underlying Portfolio of the Funds increases the
assets of the corresponding division of Separate Account A. The income and both
realized and unrealized gains or losses on the assets of each division of
Separate Account A are credited to or charged against that division without
regard to income, gains or losses from any other division. Under certain
unusual circumstances, the liabilities of one division, arising from claims
against that division, could be attributed to another division.
THE FUNDS
Separate Account A invests in shares of Chubb America Fund, Inc. or the
Templeton International Fund of Templeton Variable Products Series Fund.
Chubb America Fund, Inc. Chubb America Fund, Inc. is organized as a Maryland
corporation and is registered as an open-end diversified management company
under the 1940 Act. Chubb America Fund, Inc. currently has nine
9
<PAGE>
Portfolios each of which has different objectives. The shares of each series of
Chubb America Fund, Inc. stock are offered only to the divisions of separate
accounts, whether now in existence or to be established by Chubb Life or any of
its affiliated insurance companies. The assets of each Portfolio are maintained
separately from the assets of the other Portfolios and each Portfolio has
investment objectives and policies which are different from those of the other
Portfolios. Thus, each Portfolio operates as a separate investment fund, and
the income, gains or losses of one Portfolio generally has no effect on the
investment performance of any other Portfolio. Under certain unusual
circumstances, the liabilities of one Portfolio, arising from claims against
that Portfolio, could be attributed to another Portfolio.
The investment adviser to Chubb America Fund, Inc. is Chubb Investment
Advisory Corporation ("Chubb Investment Advisory") which is a subsidiary of
Chubb Life. Chubb Investment Advisory has in turn retained Templeton, Galbraith
& Hansberger Ltd. ("Templeton") to provide investment advisory services for the
World Growth Stock Portfolio, Chubb Asset Managers, Inc. ("Chubb Asset") to
provide investment advisory services for the Money Market, Bond and Growth and
Income Portfolios, Van Eck Associates Corporation ("Van Eck Associates") to
provide investment advisory services for the Gold Stock Portfolio, Pioneering
Management Corporation ("Pioneer") to provide investment advisory services for
the Domestic Growth Stock Portfolio, Janus Capital Corporation ("Janus") to
provide investment advisory services for the Capital Growth Portfolio, Phoenix
Investment Counsel, Inc. ("Phoenix") to provide investment advisory services
for the Balanced Portfolio, and Massachusetts Financial Services Company
("MFS") to provide investment advisory services for the Emerging Growth
Portfolio.
Investment management fees are paid to Chubb Investment Advisory monthly at an
annual rate based on a percentage of the average daily net asset value of each
Portfolio of Chubb America Fund, Inc. as shown below:
<TABLE>
<CAPTION>
WORLD GROWTH STOCK,
GOLD STOCK,
DOMESTIC GROWTH
STOCK,
MONEY MARKET GROWTH AND INCOME, CAPITAL EMERGING
AVERAGE DAILY NET ASSET VALUE AND BOND AND BALANCED GROWTH GROWTH
----------------------------- ------------ ------------------- ------- --------
<S> <C> <C> <C> <C>
First $200 Million...... .50% .75% 1.00% .80%
Next $1.1 Billion....... .45% .70% .95% .75%
Over $1.3 Billion....... .40% .65% .90% .70%
</TABLE>
The compensation of the Sub-Investment Managers is paid directly from the
investment management fees of Chubb Investment Advisory and is set forth in the
table below as an annual percentage of the average daily net asset value of the
Portfolio managed:
<TABLE>
<CAPTION>
SUB-INVESTMENT MANAGER
-----------------------------------------------------------------------------
CHUBB ASSET
CHUBB ASSET FOR THE
FOR THE BOND AND
GROWTH AND MONEY MARKET VAN ECK
AVERAGE DAILY NET ASSET VALUE INCOME PORTFOLIO JANUS PHOENIX TEMPLETON PORTFOLIOS ASSOCIATES PIONEER MFS
----------------------------- ---------------- ----- ------- --------- ------------ ---------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First $200 Million...... .50% .75% .50% .50% .35% .50% .50% .50%
Next $1.1 Billion....... .45% .70% .45% .45% .30% .45% .45% .45%
Over $1.3 Billion....... .40% .65% .40% .40% .25% .40% .40% .40%
</TABLE>
The investment objectives of each Portfolio of Chubb America Fund, Inc. are
set forth below.
World Growth Stock Portfolio: to achieve long-term capital growth through a
policy of investing primarily in stocks of companies organized in the United
States or in any foreign nation. A portion of the Portfolio may also be
invested in debt obligations of companies and governments of any nation. Any
income realized from such investments will be incidental. Such companies will
be those considered by the sub-investment manager to be undervalued or which
are well-managed and have good growth potential.
Money Market Portfolio: to achieve the highest possible current income,
consistent with preservation of capital and maintenance of liquidity, by
investing primarily in short-term money market instruments other than
commercial paper. An investment in the Money Market Portfolio is neither
insured nor guaranteed by the U.S. Government.
Gold Stock Portfolio: to realize long-term capital appreciation, while
retaining the option to take current income into account, by investing
primarily, and sometimes exclusively, in common stocks of gold mining
companies.
10
<PAGE>
Bond Portfolio: to provide a stable level of income, consistent with limiting
risk to principal, by investing primarily in high quality corporate debt
securities and U.S. Government debt obligations.
Domestic Growth Stock Portfolio: to achieve reasonable income and growth of
capital by investing primarily in a diversified portfolio of equity securities
issued by companies organized in the U.S. and considered by the sub-investment
manager to be undervalued in light of the company's earning power and growth
potential.
Growth and Income Portfolio: to seek long-term growth of capital by investing
primarily in a wide range of equity issues that may offer capital appreciation
and, secondarily, to seek a reasonable level of current income.
Capital Growth Portfolio: to seek capital growth. Realization of income is not
a significant investment consideration and any income realized will be
incidental.
Balanced Portfolio: to seek reasonable current income and long-term capital
growth, consistent with conservation of capital, by investing primarily in
common stocks and fixed income securities.
Emerging Growth Portfolio: to seek long-term growth of capital by investing
primarily in common stocks of small and medium-sized companies. THE PORTFOLIO
IS INTENDED FOR INVESTORS WHO UNDERSTAND AND ARE WILLING TO ACCEPT RISKS
ENTAILED IN SEEKING LONG-TERM GROWTH OF CAPITAL.
Chubb America Fund, Inc. may find it necessary to take action to assure that
the Portfolios are diversified so that the Policy is treated as a life
insurance policy under federal tax laws. Chubb America Fund, Inc., for example,
may alter the investment objectives of any Portfolio or take other appropriate
actions. See "OTHER MATTERS--Additions, Deletions or Substitutions of
Investments" and "FEDERAL TAX MATTERS".
Templeton Variable Products Series Fund. Templeton Variable Products Series
Fund is an open-end, diversified management investment company organized under
the laws of Massachusetts. Templeton Variable Products Series Fund currently
consists of five separate series; however, only one of the series, the
Templeton International Fund, offers its shares to a corresponding division of
Separate Account A. Templeton Variable Products Series Fund offers its shares
solely to separate accounts of insurance companies, including companies not
affiliated with Chubb Life, as an investment vehicle for variable life
insurance policies and variable annuity contracts.
The investment manager of Templeton International Fund is Templeton Investment
Counsel, Inc. ("TICI"). TICI is an indirect wholly owned subsidiary of Franklin
Resources, Inc. ("Franklin"). Through its subsidiaries, Franklin is engaged in
various aspects of the financial services industry. As compensation for its
services, TICI is paid a fee which, during the most recent fiscal year,
represented .50% of the average daily net assets of the Templeton International
Fund.
The investment objective of the Templeton International Fund is set forth
below.
Templeton International Fund: to seek long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized will be incidental.
Although the Templeton International Fund generally invests in common stock, it
may also invest in preferred stocks and certain debt securities such as
convertible bonds which are rated in any category by Standard & Poor's
Corporation or Moody's Investors Service, Inc. or which are unrated by any
rating agency.
Although Chubb Life does not currently foresee any disadvantages to the
policyowners arising out of variable life insurance separate accounts and
variable annuity separate accounts investing in the Templeton Variable Products
Series Fund simultaneously, there is a possibility that a material conflict may
arise between the interest of Separate Account A and one or more of the other
separate accounts investing in the Templeton Variable Products Series Fund. The
Trustees of the Templeton Variable Products Series Fund intend to monitor
events in order to identify any material conflicts and to determine what
action, if any, should be taken in response thereto. Material conflicts could
result from, for example, (i) changes in state insurance laws, (ii) changes in
Federal income tax laws, (iii) changes in the investment management of any
portfolio of Templeton Variable Products Series Fund, or (iv) differences in
voting instructions between those given by variable life insurance policyowners
and those given by variable annuity contract owners.
There can be no assurance that any of the Portfolios will achieve its stated
objectives. The specialized nature of each Portfolio gives rise to significant
differences in the relative investment potential and market and financial risks
of each Portfolio. Policyowners should consider the unique features of each
Portfolio before investing in any Portfolio. For more
11
<PAGE>
detailed information concerning each Portfolio, including a description of the
investment risks, reference is made to the prospectuses for the Funds which
accompanies this Prospectus, or the Statements of Additional Information for
the Funds, available on request.
Separate Account A will purchase shares of the Funds at net asset value in
connection with premium payments allocated to the divisions in accordance with
the policyowner's directions and will redeem shares of the Funds to process
transfers, policy loans, surrenders or withdrawals and generally to meet
contract obligations or make adjustments in reserves. The Funds will sell and
redeem its shares at net asset value as of the Date of Receipt by Separate
Account A of premium payments or notifications by a policyowner.
12
<PAGE>
THE POLICY
General. The Policy is designed to provide the policyowner with lifetime in-
surance protection and flexibility in connection with the amount and frequency
of premium payments and the level of life insurance proceeds payable under the
Policy. The policyowner is not required to pay scheduled premiums to keep the
Policy in force but may, subject to certain limitations, vary the frequency and
amount of premium payments. Moreover, subject to certain limitations, the Pol-
icy allows a policyowner to adjust the level of life insurance payable under
the Policy without having to purchase a new Policy by increasing or decreasing
the Specified Amount. Thus, as insurance needs or financial conditions change,
the policyowner has the flexibility to adjust life insurance proceeds and vary
the premium payments. Death benefits are payable under two options as described
in "POLICY BENEFITS AND RIGHTS--Death Benefits".
To purchase a Policy, a completed application must be submitted to Chubb Life
through the agent selling the Policy. Chubb Life will generally not issue Poli-
cies to insure persons older than age 80. Applicants for insurance must furnish
satisfactory evidence of insurability. Distinctions between smokers and
nonsmokers are only made for Insureds age 15 and over. The minimum Specified
Amount for a Policy at issue is $25,000. Chubb Life reserves the right to re-
vise its rules from time to time to specify a different minimum Specified
Amount at issue. If the Specified Amount applied for plus all other insurance
in force which is underwritten by Chubb Life or its affiliates exceeds
$1,250,000, Chubb Life will reinsure all or a portion of the Policy. Acceptance
of an application or revocation of a Policy during the contestable period is
subject to Chubb Life's insurance underwriting rules and Chubb Life may, in its
sole discretion, reject any application or related premium for any good reason
or contest a Policy.
Payment of Premiums. Premiums must be paid to Chubb Life or through an
authorized agent of Chubb Life for forwarding to Chubb Life. In addition, Chubb
Life has instituted administrative procedures whereby premium payments in
response to billing notices are sent directly to Chubb Life's bank. Unlike
traditional insurance contracts, there is no fixed schedule of premium payments
on a Policy either as to the amount or the timing of the payment. A policyowner
may determine, within specified limits, his or her own premium payment
schedule. These limits will be set forth by Chubb Life and will include a
minimum initial premium payment sufficient to keep the policy in force for
three months and may also include limits on the total amount and frequency of
payments in each policy year. No premium payment may be less than $25. In order
to help the policyowner obtain the insurance benefits desired, a Planned
Periodic Premium and Premium Frequency will be stated in each Policy. This
premium will usually be based upon the policyowner's insurance needs, the
policyowner's financial abilities and the current financial climate, in
general, as well as on the Specified Amount of the Policy and the Insured's
age, sex and risk class. The policyowner is not required to pay such premiums
and failure to make any premium payment will not necessarily result in lapse of
the Policy, provided the Policy's cash value, less policy debt, if any, is
sufficient to pay monthly deductions. Conversely, adherence to the schedule of
Planned Periodic Premiums will not assure that the Policy will remain in force.
See "THE POLICY--Policy Lapse."
Premium Limitations. In no event can the total of all premiums paid, both
scheduled and unscheduled, exceed the current maximum premium limitations re-
quired by the Code. The premium limitations under the Policy are imposed in or-
der to comply with present requirements to obtain favorable federal income tax
treatment of the Policy and its death benefit. If at any time a premium is paid
which would result in total premiums exceeding the current maximum premium lim-
itation, Chubb Life will only accept that portion of the premium which will
make total premiums equal the maximum. Any part of the premium in excess of
that amount will be returned and no further premiums will be accepted until al-
lowed by the current maximum premium limitations required by the Code. Also,
if, at any time during the year, a premium has been paid which would result in
the Policy being deemed a modified endowment contract, on the Policy's anniver-
sary date, Chubb Life will so notify the policyowner and allow the policyowner
to request a refund of the excess premium, or other action, in order to avoid
having the Policy be deemed a modified endowment contract. A policyowner, how-
ever, may choose to have the Policy be deemed a modified endowment contract,
and, in that case, Chubb Life will not refund the premiums. See "FEDERAL TAX
MATTERS--Policy Proceeds." Premium payments less than the minimum amount of $25
will be returned to the policyowner.
Allocation of Premiums. Premium payments, net of the premium tax charge, plus
interest earned prior to the allocation date, will be allocated on the alloca-
tion date among the General Account and the divisions of Separate Account A in
accordance with the directions of the policyowner, as contained in the applica-
tion. Prior to the allocation date the initial net premium will be deposited in
Chubb Life's General Account. Any other premiums received prior to the alloca-
tion date will also be deposited in the General Account. The minimum percentage
of any net premium payment allocated to any division or the General Account is
10%. The policyowner may change his or her allocation of future premium pay-
ments among the General Account and the divisions of Separate Account A by
written notice to Chubb Life or by telephone without payment of any fee or pen-
alty.
13
<PAGE>
The allocation of each net premium payment to a division will be determined
first by multiplying the net premium payment by the fraction to be allocated to
each division as the policyowner directs to determine the portion to be
invested in the division. Each portion to be invested in each division is then
divided by the unit value of that particular division. The unit value of each
division will vary to reflect the investment performance of the applicable
underlying Portfolio shares. The unit value will be determined on each
valuation date by multiplying the net asset value of the shares of the
underlying Portfolio held by the division on the preceding valuation date by
the net investment factor for that division for the valuation period then
ended. The net investment factor for each of the divisions is equal to (i) the
asset value per share of the corresponding Portfolio at the end of the
preceding valuation period plus the per share amount of any investment income
and capital gains, realized or unrealized, credited to such assets in the
valuation period for which the net investment factor is being determined, less
capital losses, realized or unrealized, charged against such assets during such
valuation period and less any amount set aside by Chubb Life during the period
as a reserve for taxes attributable to the operation or maintenance of each
division, (ii) divided by the asset value per share of the corresponding
Portfolio at the end of the preceding valuation period and (iii) less a charge
not to exceed .0024657% on a daily basis (.90% on an annual basis) of the value
of the division to compensate Chubb Life for assumption of certain mortality
and expense risks. See "CALCULATION OF ACCUMULATION VALUE--Unit Values".
Applicants should refer to the prospectuses for the Funds which accompany this
Prospectus for a description of how the assets of each Portfolio are valued
since that determination directly affects the unit value of a division and,
therefore, the accumulation value of a Policy.
All valuations in connection with the Policy, e.g., with respect to
determining cash value in connection with policy loans or withdrawals, with
respect to determining accumulation value in connection with transfers or
payment of death benefits, and with respect to determining the value of a
division to be credited to a Policy with each net premium payment, will be made
on the Date of Receipt of the premium or the request for payment, loan,
withdrawal or transfer if such date is a valuation date; otherwise, such
determination will be made on the next succeeding day which is a valuation
date. The date of receipt of a premium payment sent directly to Chubb Life's
bank pursuant to a billing notice will be the date the payment is received at
the bank and the value of any division to which the payment is allocated will
be determined as of such date provided such date is a valuation date;
otherwise, such determination will be made on the next succeeding day which is
a valuation date.
Transfers. Accumulation value may be transferred between the General Account
and the divisions of Separate Account A and among the divisions of Separate
Account A. Transfer requests may be made in writing or by telephone. The total
amount transferred each time must be at least $250 unless a lesser amount
constitutes the entire accumulation value in the General Account or in a
division. Accumulation value transferred from one division or from the General
Account into more than one division, and/or into the General Account, counts as
one transfer. Similarly, transferring accumulation value from more than one
division, and/or the General Account, into one other division or the General
Account, counts as one transfer.
A transfer charge to cover administrative costs will be imposed each time
amounts are transferred and will be deducted on a pro-rata basis from the
division or divisions of Separate Account A or the General Account into which
the amount is transferred. However, no transfer charge will be imposed on the
transfer of the initial net premium payments, plus interest earned, from the
General Account to the divisions of Separate Account A on the allocation date
or on loan repayments. In addition, Chubb Life currently permits 4 transfers
per policy year without imposing a transfer charge. The charge will be the
lesser of $25 or 10% of the amount transferred. Currently, a policyowner may
make up to 20 transfers per policy year; however, Chubb Life reserves the right
to revoke or modify transfer privileges and charges.
As long as any portion of the Policy's accumulation value is allocated to a
division of Separate Account A, the Policy's accumulation value and cash value
will reflect the investment experience of the chosen division(s) of Separate
Account A. The death benefit may also reflect the experience of the chosen
division(s) of Separate Account A.
At any time the policyowner may transfer 100% of the Policy's accumulation
value to the General Account and elect to have all future premium payments
allocated to the General Account. While 100% of the Policy's accumulation value
and all future premium payments are allocated to the General Account, the
minimum period the Policy will be in force will be fixed and guaranteed. The
minimum period will depend on the amount of accumulation value, the Specified
Amount, the sex, the attained age, and rating class of the Insured. The minimum
period will decrease if the policyowner subsequently elects to increase the
Specified Amount, elects to surrender the Policy, or elects to make a
withdrawal. The minimum period will increase if the policyowner elects to
decrease the Specified Amount, additional premium payments are received, or the
Company credits a higher interest rate or charges a lower cost of insurance
rate than those guaranteed for the General Account.
14
<PAGE>
No transfer charge will be imposed for a transfer of all accumulation value in
Separate Account A to the General Account. However, any transfer from the
General Account to the division(s) of Separate Account A will be subject to the
transfer charge, unless it is one of the first 4 transfers in a policy year and
except for the transfer of the initial net premium payments, plus interest
earned, from the General Account and loan repayments.
Chubb Life reserves the right to refuse to accept or to place certain
restrictions on transfers made by third-party agents acting on behalf of
multiple policyowners or made pursuant to market timing services when Chubb
Life determines, in its sole discretion, that such transfers will be
detrimental to the Portfolios and the policyowners as a whole. Such transfers
may cause increased trading and transaction costs, disruption of planned
investment strategies, forced and unplanned portfolio turnover, and lost
opportunity costs, and may subject the Portfolio to large asset swings that
diminishes the Portfolio's ability to provide maximum investment return to all
policyowners.
A feature called Dollar Cost Averaging is available to policyowners under
which a policyowner deposits an amount, subject to a minimum of $3,000, in the
Money Market Division or the General Account and elects to have a specified
dollar amount (the "Periodic Transfer Amount") automatically transferred to one
or more of the divisions on a monthly, quarterly, or semi-annual basis. This
feature allows policyowners to systematically invest in the divisions at
various prices which may be higher or lower than the price a policyowner would
pay when investing the entire amount at one time and at one price. Each
Periodic Transfer Amount is subject to a minimum of $250. A minimum of 10% of
the Periodic Transfer Amount must be transferred to any specified division.
These amounts are subject to change at Chubb Life's discretion. If a transfer
would reduce accumulation value in the Money Market Division or the General
Account to less than the Periodic Transfer Amount, Chubb Life reserves the
right to include such remaining accumulation value in the amount transferred.
Automatic transfers will continue until the amount designated for Dollar Cost
Averaging has been transferred, or until the policyowner gives notification of
a change in allocation or cancellation of the feature. Dollar Cost Averaging is
currently available at no charge to policyowners. Although Chubb Life reserves
the right to assess a charge, no greater than cost and with 30 days advance
notice to policyowners, it has no present intention to do so.
An Automatic Portfolio Re-Balancing feature is also available to policyowners.
This feature provides a method for re-establishing fixed proportions between
various types of investments on a systematic basis. Under this feature, the
allocation between divisions and the General Account will be automatically re-
adjusted to the desired allocation, subject to a minimum of 5% per division or
General Account, on a quarterly, semi-annual or annual basis.
A policyowner may not elect to have Dollar Cost Averaging and Automatic
Portfolio Re-Balancing at the same time. Transfers and adjustments pursuant to
these features will occur on a Policy's monthly anniversary date in the month
in which the transaction is to take place or the next succeeding business day
if the monthly anniversary date falls on a holiday or a weekend. The applicable
authorization form must be on file at Chubb Life before either feature may
begin. Neither feature guarantees profits nor protects against losses.
Transfers under these features do not count towards the four free transfers or
the twenty transfers currently allowed per year. Chubb Life reserves the right
to modify the terms and conditions of these features upon 30 days advance
notice to policyowners.
Telephone Transfers, Loans and Reallocations. Policyowners may request by
telephone transfers of accumulation value or reallocation of premiums
(including allocation changes pursuant to existing Dollar Cost Averaging and
Automatic Portfolio Re-Balancing programs), provided that the appropriate
authorization form is on file with Chubb Life. Chubb Life may also, in its
discretion, permit loans to be made by telephone, provided that the proper
authorization form is on file with Chubb Life. A policyowner must provide Chubb
Life with personal identification information, such as social security number
and date of birth, at the time of such request for verification purposes.
Although procedures have been established that are reasonably designed to
reduce the risk of unauthorized telephone transfers, loan requests or
allocation changes, there still exists some risk. Neither Chubb Life, Chubb
Securities Corporation, nor any of their affiliates are liable for any loss
resulting from unauthorized telephone transfers, loan requests or premium
allocation changes if its procedures have been followed, and a policyowner
bears the risk of loss in such situation.
Policy Lapse. Failure to make a premium payment on a Policy will not
necessarily cause the Policy to lapse. The duration of a Policy depends upon
its cash value. The Policy will remain in force so long as the cash value, less
any outstanding policy debt, is sufficient to pay the monthly deduction. In the
event the cash value, less any outstanding policy debt, is insufficient to pay
the monthly deduction, the policyowner will be given a sixty-one day period
("grace period") within which to make a premium payment to avoid lapse. The
premium required to avoid lapse must be sufficient in amount, after the
deduction of the premium tax charge, to cover the monthly deductions for at
least three policy months. This required premium will be set forth in a written
notice which Chubb Life will send to the policyowner at the beginning of the
grace period. The Policy will continue in force through the grace period, but
if no payment is
15
<PAGE>
forthcoming, the Policy will terminate without value at the end of the grace
period. If the Insured under the Policy dies during the grace period, the death
benefit payable under the Policy will be reduced by the amount of the monthly
deduction due and unpaid and the amount of any outstanding policy debt. In
addition, if the cash value of the Policy at any time should decrease so the
aggregate amount of an outstanding policy debt secured by the Policy exceeds
the cash value shown in the Policy and an additional payment is not made within
sixty-one days of notification by Chubb Life, the Policy will lapse.
Reinstatement. If the Policy lapses, the policyowner may reinstate the Policy.
The terms of the original contract will apply upon reinstatement. The
accumulation value, before payment of the required reinstatement premium, will
equal the accumulation value on the date of termination. The policy year on
reinstatement will be measured from the policy date. An application for
reinstatement may be made any time within five years of lapse, but satisfactory
proof of insurability and payment of a reinstatement premium is required. The
reinstatement premium, after deduction of the premium tax charge, must be
sufficient to cover monthly deductions for three policy months following the
effective date of reinstatement. If a loan was outstanding at the time of
lapse, Chubb Life will require, at the election of the policyowner, repayment
or reinstatement of the loan before permitting reinstatement of the Policy. The
effective date will be the date of approval of the reinstatement application,
which will be as of a monthly anniversary date.
Policy "Free Look". The policyowner has a limited right to return a Policy for
cancellation and a full refund of all premiums paid. Chubb Life will cancel the
Policy if it is returned by mail or personal delivery to Chubb Life or to the
agent who sold the Policy, within 10 days after the delivery of the Policy to
the policyowner, within 45 days of the date of the execution of the application
for insurance, or within 10 days after mailing or personal delivery of a Notice
of the Right of Withdrawal, whichever is later. Chubb Life will return to the
policyowner within seven days all payments received on the Policy. Prior to the
allocation date the initial net premium will be deposited in Chubb Life's
General Account; Chubb Life will retain any interest earned if the "free look"
right is exercised.
CHARGES AND DEDUCTIONS
Premium Charges. Upon receipt of each premium payment and before allocation of
the payment among the General Account and divisions of Separate Account A,
Chubb Life will deduct a premium tax charge of 2.5% (which represents an
average of actual premium taxes imposed), unless otherwise required by state
law. This charge may not be increased.
Monthly Deduction. On the first day of each policy month beginning on the
policy date, Chubb Life will deduct from the accumulation value of a Policy an
amount to cover certain charges and expenses incurred in connection with the
Policy. The monthly deduction is intended to compensate Chubb Life for
underwriting and start-up expenses incurred in connection with the issuance of
a Policy, certain administrative expenses, the cost of insurance for the Policy
and any optional benefits added by rider. The amount deducted will be deducted
pro-rata from each of the divisions and the General Account.
The amount of the monthly deduction is equal to (i) the cost of insurance for
the Policy, as described below, and the cost of additional benefits provided by
rider, plus (ii) a monthly administrative charge of $6.00. The monthly
administrative charge may not be increased.
The cost of insurance for the Insured is determined on a monthly basis, and is
determined separately for the initial Specified Amount and each subsequent
increase in the Specified Amount. The monthly current cost of insurance rate is
based on the sex, issue age, policy year, rating class of the Insured, and the
Specified Amount of the Policy. If we assume two Insureds differ only with
regard to one of the above bases, the effect of each of these bases on their
monthly cost of insurance rates would be as follows:
Sex: The cost of insurance rates for males will be greater than or equal
to those for females.
Issue Age: The cost of insurance rate for the younger Insured will be
less than or equal to that for the older Insured.
Policy Year: The current cost of insurance rate will increase as the
policy year increases. For two Insureds with the same sex, rating class,
and attained age the cost of insurance rate for the Insured with the
younger issue age will never exceed, and in some cases will be less than
that for the Insured with the older issue age.
Rating Class: The cost of insurance rates for nonsmokers will be less
than or equal to those for smokers. Cost of insurance rates may also differ
due to the Insured's medical condition, occupation, or avocation.
Specified Amount: The current cost of insurance rates will vary by
Specified Amount, with different rates applying to Specified Amounts under
$100,000, between $100,000 and $249,999, between $250,000 and $999,999
16
<PAGE>
and $1,000,000 and over. Current cost of insurance rates are highest for
Specified Amounts under $100,000, decreasing for each successive Specified
Amount range as noted above.
The cost of insurance is calculated as (i) multiplied by the result of (ii)
minus (iii) where:
(i) is the cost of insurance rate as described in the Cost of Insurance
Rates provision contained in the Policy.
(ii) is the death benefit at the beginning of the policy month divided by
1.0036748, to arrive at the proper values for the beginning of the month
assuming the guaranteed interest rate of 4.5% that is applicable to the
General Account portion of the Policy; and
(iii) is the accumulation value at the beginning of the policy month.
If the corridor percentage is applicable, the death benefit used in the
foregoing calculation will reflect the corridor percentage.
A guaranteed cost of insurance discount will be calculated at the beginning
of each policy year and subtracted from the cost of insurance for each month of
that policy year during which the discount is in effect. The discount results
from a reduction in Chubb Life's margin for profit and expenses. The discount
is calculated as (i) multiplied by the result of (ii) plus (iii) minus (iv),
but not less than zero, where:
(i) is .000375;
(ii) is the sum of the Policy's accumulation value in each division of
Separate Account A at the beginning of the policy year;
(iii) is the outstanding Type B loan balance at the beginning of the
policy year, and;
(iv) is the Guideline Single Premium at issue, under Section 7702 of the
Internal Revenue Code of 1986, as amended, entitled "Life Insurance
Contract Defined", increased on a pro rata basis for any increase in
Specified Amount.
The discount will be allocated among the general account and divisions of
Separate Account A using the same percentages used to allocate net premiums.
The monthly cost of the insurance rate will be determined by Chubb Life based
upon expectations as to future mortality experience, but can never exceed the
rates shown in the table of Monthly Guaranteed Cost of Insurance Rates set
forth in the Policy. Such guaranteed maximum rates are based on the
Commissioner's 1980 Standard Ordinary Mortality Table.
Risk Charge. Chubb Life will also assess a charge on a daily basis against
each division of Separate Account A equal to .90% (on an annual basis) of the
value of the division to compensate Chubb Life for its assumption of certain
mortality and expense risks in connection with the Policy. Specifically, Chubb
Life bears the risk that the total amount of death benefit payable under the
Policy will be greater than anticipated and Chubb Life also assumes the risk
that the actual cost incurred by it to administer the Policy will not be
covered by charges assessed under the Policy.
Surrender Charge. Upon surrender or withdrawal, Chubb Life will assess a
surrender charge. The surrender charge for the initial Specified Amount is
determined by multiplying a surrender factor by the lesser of (1) the premiums
actually received in policy year one; or (2) the "Guideline Annual Premium" as
defined in the rules and regulations under the 1940 Act. The surrender factor
depends on the length of time the policy has been in force, as follows:
<TABLE>
<CAPTION>
POLICY YEAR SURRENDER FACTOR
----------- ----------------
<S> <C>
1-5 .30
6 .25
7 .20
8 .15
9 .10
10 .05
11 and after 0
</TABLE>
Paying less premium in policy year one generally will have the effect of
reducing the surrender charge. However, depending on investment experience,
paying less premium in policy year one may result in an increase in cost of
insurance charges, a reduction in accumulation value and an increased risk that
the Policy will lapse.
17
<PAGE>
An additional surrender charge will be assessed for any increase in the
Specified Amount, other than an increase caused by a change from death benefit
Option I to death benefit Option II. The additional surrender charge is
determined by multiplying a surrender factor by the lesser of (1) or (2),
where:
(1) is A times B divided by C, where:
A is the amount of the increase in the Specified Amount
B is the sum of the cash value just prior to the increase in the
Specified Amount and the total premiums received in the twelve months
just following the increase in the Specified Amount
C is the Specified Amount in effect after the increase in the
Specified Amount
(2) is the "Guideline Annual Premium" for the increase at the attained
age of the Insured on the effective date of the increase in the Specified
Amount.
The surrender factor depends on the length of time the increase has been in
force, as follows:
<TABLE>
<CAPTION>
INCREASE YEAR SURRENDER FACTOR
------------- ----------------
<S> <C>
1-5 .15
6 .125
7 .10
8 .075
9 .05
10 .025
11 and after 0
</TABLE>
The surrender charge in effect at any time is the sum of the surrender charge
for the initial Specified Amount plus the surrender charge for any increase in
the Specified Amount. If the Specified Amount is decreased, the surrender
charge will not decrease.
For a withdrawal, the charge will be proportionately the same as for
surrenders. The charge will be calculated by dividing (a) by (b) and
multiplying the result by (c) where:
(a) is the amount of the cash value withdrawn
(b) is the cash value; and
(c) is the amount of the surrender charge on a surrender.
The surrender charge helps to compensate Chubb Life for the cost of selling the
Policy. The cost includes advertising and the printing of the Prospectus and
sales literature. Also, Chubb Life reimburses Chubb Securities Corporation for
all commissions Chubb Securities Corporation pays to agents. Chubb Life expects
to recover total sales expenses of the Policy over the life of the Policy. To
the extent sales expenses in any one policy year are not recovered by the sales
charge, Chubb Life will cover such expenses from its surplus, which may include
profits, if any, from the mortality and expense risk charge.
Administrative Fees. An administrative fee equal to the lesser of $25 or 10%
of the amount of the transfer is imposed for each transfer among the divisions
of Separate Account A or the General Account, after the first 4 transfers in a
policy year and except for the transfer of the initial net premium payments,
plus interest, from the General Account on the allocation date and loan
repayments. For withdrawals, an administrative fee equal to the lesser of $25
or 2% of the amount withdrawn will be charged. A fee, not to exceed $25, is
billed for any illustration of benefits and values requested by a policyowner
after the policy date. All administrative fees, including those which are part
of the monthly deduction, are no greater than the anticipated expenses of
providing such services.
Other Charges. Chubb Life also reserves the right to charge the assets of
each division to provide for any income taxes or other taxes payable by Chubb
Life on the assets attributable to that division. An investment advisory fee is
also imposed against the assets of each Portfolio for services provided by the
Fund's investment manager and sub-investment managers.
POLICY BENEFITS AND RIGHTS
Death Benefits. So long as it remains in force, the Policy provides for the
payment of life insurance proceeds upon the death of the Insured. Proceeds will
be paid to a named beneficiary or contingent beneficiary. One or more
beneficiaries or contingent beneficiaries may be named. Life insurance proceeds
may be paid in a lump sum or under an optional
18
<PAGE>
payment plan. (See "Settlement Options" below.) Proceeds of the Policy will be
reduced by any outstanding policy debt and any due and unpaid charges and
increased by any benefits added by rider. Proceeds that are payable in a lump
sum at the death of the Insured will be increased to include interest as
required by applicable state law. Proceeds will ordinarily be paid within seven
days after Chubb Life receives due proof of death. Also see "Optional Insurance
Benefits--Terminal Illness Accelerated Benefit Rider."
Policyowners designate in the initial application one of two death benefit
options offered under the Policy. The amount of life insurance proceeds payable
under a Policy will depend upon the option in effect at the time of the
Insured's death. Option I emphasizes the impact of investment experience on
accumulation value rather than insurance coverage because the Specified Amount
and the death benefit, generally, remain stable. Under Option I, as
accumulation value increases and the death benefit does not increase, the
amount at risk decreases. Thus, the cost of insurance charges are imposed on a
decreasing amount. Option II emphasizes insurance coverage because favorable
investment experience adds to the accumulation value that provides an addition
to the total death benefit. Under Option II, favorable investment experience
does not reduce the amount at risk upon which cost of insurance charges are
based.
Under Option I, life insurance proceeds will be equal to the greater of the
Specified Amount, or the accumulation value of the Policy at the date of death
multiplied by the corridor percentage, as described below. Under Option II,
life insurance proceeds will be the Specified Amount plus the accumulation
value of the Policy on the date of death. Under Option II, the death benefit
can never be less than the accumulation value on the date of death multiplied
by the corridor percentage.
The corridor percentage depends upon the attained age of the Insured on the
date of death. The corridor percentage for each age is set forth in the
following table:
<TABLE>
<CAPTION>
ATTAINED CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
-------- ---------- -------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
40 &
below 250% 52 171% 64 122% 91 104%
41 243 53 164 65 120 92 103
42 236 54 157 66 119 93 102
43 229 55 150 67 118 94 101
44 222 56 146 68 117 95 100
45 215 57 142 69 116
46 209 58 138 70 115
47 203 59 134 71 113
48 197 60 130 72 111
49 191 61 128 73 109
50 185 62 126 74 107
51 178 63 124 75-90 105
</TABLE>
The death benefit option in effect may be changed by sending Chubb Life a
written request for change. The effective date of the change will be the first
monthly anniversary date that coincides with or next follows the Date of
Receipt of such request. If the death benefit option is changed from Option II
to Option I, the Specified Amount will be increased by the Policy's
accumulation value on the effective date of the change. Conversely, if the
benefit option is changed from Option I to Option II, the Specified Amount will
be decreased by the Policy's accumulation value on the effective date of the
change. Evidence of insurability satisfactory to Chubb Life will be required on
a change from Option I to Option II. A change in the benefit option may not be
made if it would result in a Specified Amount which is less than the minimum
Specified Amount of $25,000. A change in benefit options will affect the cost
of insurance.
After a Policy has been in force for one year, the policyowner, under
attained age 85, may adjust the existing insurance coverage by increasing or
decreasing the Specified Amount. The increase or decrease must be at least
$25,000. To make a change, the policyowner must send a written request and the
Policy to Chubb Life. Any change in the Specified Amount will affect a
policyowner's cost of insurance charge. An increase in the Specified Amount
will affect the determination of the amount available for a Type A loan;
decreases in the Specified Amount will not have any such effect. Any increase
in the Specified Amount will become effective on the monthly anniversary date
after the Date of Receipt for the request. Any decrease in Specified Amount
will first apply to coverage provided by the most recent Specified Amount
increase, then to the next most recent increases successively and finally to
the coverage under the original application. By applying decreases in this
manner, savings, generally, may be realized by a policyowner since
19
<PAGE>
additional costs and limitations associated with increases in Specified Amounts
would be eliminated first. To apply for an increase in the Specified Amount, a
supplemental application must be completed and evidence satisfactory to Chubb
Life that the Insured is insurable must be submitted. Any approved increase in
the Specified Amount will become effective on the date shown in the
Supplemental Policy Specifications Page. Such increase will not become
effective, however, if the Policy's cash value is insufficient to cover the
deduction for the cost of the increased insurance for the policy month
following the increase. Such an increase may require a payment or future
increased Planned Periodic Premiums. Policyowners should consult their
insurance advisers regarding the availability of the Primary Insured Term Rider
described below as an alternative way of increasing coverage. See "CHARGES AND
DEDUCTIONS."
Guaranteed Death Benefit. The policyowner may add a Guaranteed Death Benefit
Rider to the Policy under which the death benefit is guaranteed to never be
less than the Specified Amount provided that a cumulative minimum premium
requirement is met. The premium requirement is based on issue age, sex, smoking
status, underwriting class, Specified Amount and death benefit option. If the
Specified Amount is increased, an additional premium, based on attained age,
will be required for such increase. There is a monthly charge for this rider.
See "Optional Insurance Benefits."
Combined Requests. Policyowners may combine requests for changes in the
Specified Amount and the death benefit option and requests for withdrawals. The
requirements and limitations that apply to each change will apply to the
combined transactions, including any required evidence of insurability,
Specified Amount and premium limitations, effectiveness on the monthly
anniversary date following the Date of Receipt of the request, and the
sufficiency of cash value to keep the Policy in force for the month following
the transaction.
The effect of a combined transaction on the cost of insurance, the amount of
the death benefit proceeds and the premium limitations will be the net result
of such effects for each such transaction considered separately. For example,
combining a request for a withdrawal under Option I with a request for an
increase in the Specified Amount will result in a greater amount at risk, an
increase in the cost of insurance and a requirement of evidence of
insurability. Policyowners should consider the net result of a combined
transaction in light of insurance needs, financial circumstances and tax
consequences.
Maturity of the Policy. As long as the Policy remains in force, Chubb Life
will pay the Policy's cash value, less outstanding policy debt, if any, on the
maturity date. Benefits at maturity may be paid in a lump sum or under an
optional payment plan. The maturity date is the date shown in the Policy. To
change the maturity date, a written request and the Policy must be sent to
Chubb Life. The Date of Receipt for any request must be before the maturity
date then in effect. The requested maturity date must be (i) on a policy
anniversary, (ii) at least one year from the Date of Receipt of the request,
(iii) after the tenth policy year and (iv) on or before the policy anniversary
nearest to the Insured's 95th birthday.
Optional Insurance Benefits. Subject to certain requirements, one or more of
the following optional insurance benefits may be added to a Policy by rider.
More detailed information concerning such riders may be obtained from the agent
selling the Policy. Additional riders, developed after the effective date of
this Prospectus, may also be available as optional insurance benefits to the
Policy. The agent selling the Policy should be consulted regarding the
availability of any such additional riders. The cost of any optional insurance
benefits will be deducted as part of the monthly deduction. See "CHARGES AND
DEDUCTIONS."
(a) Children's Term Insurance Rider. This benefit provides increments of
level term insurance on the Insured's children, as defined in the rider. Under
the terms of this rider, Chubb Life will pay the death benefit set forth in the
rider to the proper beneficiary upon receipt of proof of death of the insured
child. Upon receipt of proof of death of the Insured, the Children's Term
Insurance Rider will continue in force under its terms without additional
monthly charges.
(b) Guaranteed Insurability Rider. This benefit provides that the Insured can
purchase additional insurance at certain future dates without evidence of
insurability. Under the terms of the rider, the Insured may, without evidence
of insurability, increase the Specified Amount of the Policy on an option date,
as defined in the rider.
(c) Accidental Death Benefit Rider. This benefit provides additional
insurance if the Insured's death results from an accident, as defined in the
rider.
(d) Waiver of Premium Disability Rider. This benefit provides for the waiver
of monthly deductions while the Insured is totally disabled, as defined in the
rider.
20
<PAGE>
(e) Exchange of Insured Rider. This benefit provides that the Policy may be
exchanged for a reissued policy on the life of a substitute insured, subject to
the conditions stated in the rider. See "FEDERAL TAX MATTERS."
(f) Terminal Illness Accelerated Benefit Rider. This benefit advances up to
50% of a policy's eligible death benefit, subject to a $250,000 maximum per
insured, if it is medically determined that the insured is terminally ill and
has a life expectancy of six months or less, as defined in the rider. Upon the
payment of the accelerated benefit payment, the amount of the death benefit,
the Specified Amount, the cash value and the accumulation value are reduced by
the same ratio as the requested portion of the death benefit bears to the
original death benefit. Such reduction will be allocated among the General
Account and the divisions of Separate Account A on a pro rata basis. While this
benefit is offered at no additional premium cost or surrender charge, an
actuarial discount as described in the rider, which reflects the early payment
of amounts held under the Policy, will be deducted from the requested portion
of the death benefit. In addition, Chubb Life imposes an administrative expense
charge not to exceed the lesser of the actual cost of administering the
exercise of the rider or $300. Chubb Life will deduct from the requested
portion of the death benefit a prorated portion of any outstanding policy loans
and any premiums which are unpaid within the grace period. Cost of insurance
charges are adjusted to reflect the reduction in the death benefit. Future
charges under the Policy will depend on whether a Waiver of Premium Disability
Rider is in force. The addition of this Rider, or receipt of benefits under it,
may result in certain tax consequences to a Policyowner. See "FEDERAL TAX
MATTERS."
(g) Extension of Maturity Date Rider. This benefit allows the policyowner to
extend the original Maturity Date of the Policy under the terms set forth in
the rider.
(h) Other Insured Term Rider. This benefit provides increments of level term
insurance on the life of an insured other than the Insured under the Policy.
(i) Primary Insured Term Rider. This benefit provides increments of level
term insurance on the life of the Insured under the terms set forth in the
rider. See "FEDERAL TAX MATTERS".
(j) Waiver of Specified Premium Rider. This benefit provides for the payment
by Chubb Life of a specified monthly premium into the Policy while the Insured
is totally disabled, as defined in the rider.
(k) Guaranteed Death Benefit Rider. This benefit guarantees that the Policy
will stay in force with a death benefit equal to the Specified Amount, even if
the cash value less policy debt is not sufficient to pay the monthly deduction,
provided that cumulative premiums paid, less loans and withdrawals, are greater
than or equal to the guaranteed death benefit premium multiplied by the number
of months the policy has been in force. This cumulative premium requirement
must be met at all times for the rider to stay in force. A monthly charge of
$.01 per $1,000 of Specified Amount will be deducted from the Policy's
accumulation value.
Settlement Options. In addition to a lump sum payment of benefits under the
Policy, any proceeds to be paid under the Policy may be paid in any of four
methods. A settlement option may be designated by notifying Chubb Life in
writing. A lump sum payment of proceeds under the Policy will be made if a
settlement option is not designated. Any amount left with Chubb Life for
payment under an optional payment plan will be transferred to the account of
the beneficiary in the General Account on the date Chubb Life receives written
instructions. During the life of the Insured, the policyowner may select a
plan. If a payment plan has not been chosen at the Insured's death, a
beneficiary can choose a plan. If a beneficiary is changed, the payment plan
selection will no longer be in effect unless the policyowner requests that it
continue. An option may be elected only if the amount of the proceeds is $2,000
or more. Chubb Life reserves the right to change the interval of payments to 3,
6 or 12 months, if necessary, to increase the guaranteed payments to at least
$20 each.
OPTION A.
Installments of a specified amount. Payments of an agreed amount to be made
each month until the proceeds and interest are exhausted.
OPTION B.
Installments for a specified period. Payments to be made each month for an
agreed number of years.
OPTION C.
Life income. Payments to be made each month for the lifetime of the payee. It
is guaranteed that payments will be made for a minimum of 10, 15 or 20 years,
as agreed upon.
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OPTION D.
Interest. Payment of interest on the proceeds held by Chubb Life calculated
at the compound rate of 3% per year. Interest payments will be made at 12, 6,
3 or 1 month intervals, as agreed upon.
The interest rate for Options A, B, and D will not be less than 3% per year.
The interest rate for Option C will not be less than 2 1/2% per year. Interest
in addition to that stated may be paid or credited from time to time under any
option, but only in the sole discretion of Chubb Life.
Unless otherwise stated in the election of an option, the payee of policy
benefits shall have the right to receive the withdrawal value under that
option. For Options A and D, the withdrawal value shall be any unpaid balance
of proceeds plus accrued interest. For Option B, the withdrawal value shall be
the commuted value of the remaining payments. Such value will be calculated on
the same basis as the original payments. For Option C, the withdrawal value
will be the commuted value of the remaining payments. Such value will be
calculated on the same basis as the original payments. To receive this value,
the payee must submit evidence of insurability acceptable to Chubb Life.
Otherwise, the withdrawal value shall be the commuted value of any remaining
guaranteed payments. If the payee should be alive at the end of the guaranteed
period, the payment will be resumed on that date. The payment will then
continue for the lifetime of the payee.
If a payee of policy benefits dies before the proceeds are exhausted or the
prescribed payments made, a final payment will be made in one sum to the
estate of the last surviving payee. The amount to be paid will be calculated
as described for the applicable option in the Withdrawal Value provision of
the Policy.
CALCULATION OF ACCUMULATION VALUE
The Policy provides for an accumulation value, which will be determined on a
daily basis. Accumulation value is the sum of the values in the divisions of
Separate Account A plus the value in the General Account. The Policy's
accumulation value in the divisions of Separate Account A is calculated by
units and unit values under the Policies, as described below. The Policy's
accumulation value will reflect a number of factors, including the investment
experience of the divisions of Separate Account A that are invested in the
Portfolios, any additional net premiums paid, any withdrawals, any policy
loans, and any charges assessed in connection with the Policy. Accumulation
values in Separate Account A are not guaranteed as to dollar amount.
On the allocation date, the accumulation value in Separate Account A is the
initial premium payments, reduced by the premium tax charge, plus interest
earned prior to the allocation date, and less the monthly deduction for the
first policy month. On the allocation date, the initial number of units
credited to Separate Account A for the Policy will be established. At the end
of each valuation period thereafter, the accumulation value in a division of
Separate Account A is (i) plus (ii) plus (iii) minus (iv) minus (v) where:
(i) is the accumulation value in the division on the preceding valuation
date multiplied by the net investment factor, as described below, for the
current valuation period,
(ii) is any net premium received during the current valuation period
which is allocated to the division,
(iii) is all accumulation values transferred to the division from another
division or the General Account during the current valuation period,
(iv) is all accumulation values transferred from the division to another
divison or the General Account and accumulation values transferred to
secure a policy debt during the current valuation period, and
(v) is all withdrawals from the division during the current valuation
period.
In addition, whenever a valuation period includes the monthly anniversary
date, the accumulation value at the end of such period is reduced by the
portion of the monthly deduction allocated to the division.
The Policy's total accumulation value in Separate Account A equals the sum
of the Policy's accumulation value in each divison thereof.
Unit Values. Units are credited to a policyowner upon allocation of net
premiums to a division. Each net premium payment allocated to a division will
increase the number of units in that division. Both full and fractional units
are credited. The number of units and fractional units is determined by
dividing the net premium payment by the unit value
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of the division to which the payment has been allocated. The unit value of each
division is determined on each valuation date. The number of units credited
will not change because of subsequent changes in unit value. The dollar value
of each division's units will vary depending upon the investment performance of
the corresponding Portfolio of the Fund.
Certain transactions affect the number of units in a division under a Policy.
Loans, surrenders and withdrawals, withdrawal and transfer fees and charges,
the surrender charge, and monthly deductions involve the redemption of units
and will decrease the number of units. Transfers of accumulation value among
divisions will reduce or increase the number of units in a division, as
appropriate.
The unit value of each division's units initially under the Policies was
$10.00. Thereafter, the unit value of a division on any valuation date is
calculated by multiplying (1) by (2) where:
(1) is the division's unit value on the previous valuation date; and
(2) is the net investment factor for the valuation period then ended.
The unit value of each division's units on any day other than a valuation
date is the unit value as of the next valuation date and is used for the
purpose of processing transactions.
Net Investment Factor. The net investment factor measures the investment
experience of each division of Separate Account A and is used to determine
changes in unit value from one valuation period to the next valuation period.
The net investment factor for a valuation period is (i) divided by (ii) minus
(iii) where:
(i) is (a) the value of the assets of the division at the end of the
preceding valuation period, plus (b) the investment income and capital
gains, realized or unrealized, credited to the assets of the division
during the valuation period for which the net investment factor is being
determined, minus (c) capital losses, realized or unrealized, charged
against those assets during the valuation period, minus (d) any amount
charged against the division for taxes or any amount set aside during the
valuation period by Chubb Life to provide for taxes attributable to the
operation or maintenance of that division, and
(ii) is the value of the assets of the division at the end of the
preceding valuation period, and
(iii) is a charge no greater than .0024657% on a daily basis. This
corresponds to .90% on an annual basis for mortality and expense risks.
CASH VALUE BENEFITS
So long as it remains in force, the Policy provides for certain benefits
prior to the maturity date. Subject to certain limitations, the policyowner may
at any time obtain cash value by surrendering the Policy or making withdrawals
from the Policy. The cash value equals the accumulation value less any surren-
der charge. In addition, the policyowner has certain policy loan privileges un-
der the Policy.
Surrender Privileges. As long as the Policy is in force, a policyowner may
surrender the Policy or make a withdrawal from the Policy at any time by send-
ing a written request along with the Policy to Chubb Life. See "FEDERAL TAX
MATTERS--Policy Proceeds."
The surrender value of the Policy equals the cash value less any outstanding
policy debt. The surrender value will be determined at the end of the valuation
period during which the request for a surrender or withdrawal is received. Pro-
ceeds will generally be paid within seven days of the Date of Receipt of a re-
quest for surrender or withdrawal.
The amount payable upon surrender of the Policy is the surrender value at the
end of the valuation period during which the request is received. The surrender
value may be paid in a lump sum, within seven days of the Date of Receipt of
the request, or under one of the optional payment plans specified in the Poli-
cy. See "POLICY BENEFITS AND RIGHTS--Settlement Options."
A policyowner can obtain a portion of the Policy's cash value by withdrawal
of cash value from the Policy. A withdrawal from a Policy is subject to the
following conditions:
A. The amount withdrawn may not exceed the cash value less any
outstanding debt.
B. The minimum amount that may be withdrawn is $750.
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C. A charge equal to the lesser of $25 or 2% of the amount of the
withdrawal will be deducted from the amount of each withdrawal.
Withdrawals generally will affect the Policy's accumulation value, cash value
and the life insurance proceeds payable under the Policy. The Policy's cash
value will be reduced by the amount of the withdrawal. The Policy's accumula-
tion value will be reduced by the amount of the withdrawal plus a pro-rata sur-
render charge. Life insurance proceeds payable under the Policy will generally
be reduced by the amount of the withdrawal plus a pro-rata surrender charge,
unless the withdrawal is combined with a request to maintain or increase the
Specified Amount. See "POLICY BENEFITS AND RIGHTS--Combined Requests."
Under Option I, which provides for life insurance proceeds equal to the
greater of the Specified Amount or the accumulation value of the Policy at the
date of death multiplied by the corridor percentage provided by the Code, the
Specified Amount will be reduced by the amount of the withdrawal plus the pro-
rata surrender charge. The Specified Amount remaining after a withdrawal may
not be less than $10,000. As a result, Chubb Life will not effectuate any
withdrawal that would reduce the Specified Amount below this minimum. If
increases in Specified Amount previously have occurred, a withdrawal will first
reduce the Specified Amount of the most recent increase, then the most recent
increases successively, then the coverage under the original application. If
the life insurance proceeds payable under either death benefit option, both
before and after the withdrawal, is the accumulation value multiplied by the
corridor percentage, a withdrawal generally will result in a reduction in life
insurance proceeds equal to the amount paid upon withdrawal, multiplied by the
corridor percentage then in effect.
Under Option II, which provides for life insurance proceeds equal to the
Specified Amount plus accumulation value, a reduction in accumulation value as
a result of a withdrawal will typically result in a dollar per dollar reduction
in the life insurance proceeds payable under the Policy.
A policyowner may allocate a withdrawal among the General Account and the
divisions of Separate Account A. If no such allocation is made, a withdrawal
will be allocated among the General Account and the divisions of Separate
Account A in the same proportion that the accumulation value in the General
Account, less any policy debt, and the accumulation value in each division
bears to the total accumulation value of the Policy, less any policy debt, on
the date of withdrawal. See "FEDERAL TAX MATTERS--Policy Proceeds."
Policy Loans. So long as the Policy remains in force, a policyowner may
borrow money from Chubb Life at any time after the first policy anniversary
using the Policy as the only security for the loan. Loans have priority over
the claims of any assignee or any other person. Generally, the maximum loan
amount is 90% of the cash value at the end of the valuation period during which
the loan request is received. The maximum amount which may be borrowed at any
given time is the maximum loan amount reduced by any outstanding policy debt.
Proceeds of policy loans ordinarily will be disbursed within seven days from
the Date of Receipt of a request for a loan by Chubb Life, although payments
may be postponed under certain circumstances. See "OTHER MATTERS--Postponement
of Payments". Chubb Life may, in its discretion, permit loans to be made by
telephone if the proper authorization form is on file with Chubb Life. So long
as the Policy remains in force, the loan may be repaid in whole or in part
without penalty at any time while the Insured is living.
When a policy loan is made, a portion of the Policy's accumulation value
sufficient to secure the loan will be transferred to the General Account. A
policy loan removes the proceeds from the investment experience of Separate
Account A which will have a permanent effect on the accumulation value and
death benefit even if the loan is repaid. Any loan interest that is due and
unpaid will also be so transferred. Accumulation value equal to policy debt in
the General Account will accrue interest daily at the lesser of an annual rate
of 6% or the interest rate currently credited to the General Account. As an
administrative practice and in Chubb Life's sole discretion, if the interest
rate currently credited to the General Account falls below 6%, the accumulation
value held in the General Account for loan collateral may continue to earn
interest at 6%. The policyowner may allocate a policy loan among the General
Account and the divisions of Separate Account A. If no such allocation is made
the loan will be allocated among the General Account and divisions of Separate
Account A in the same proportion that the accumulation value in the General
Account less policy debt and the accumulation value in each division bears to
the total accumulation value of the Policy, less policy debt, on the date of
the loan.
Chubb Life will charge interest on any outstanding policy loan. The maximum
interest rate on policy loans is 8%, compounded annually. There are two types
of loans available. A Type A loan is charged the same interest rate as the
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interest credited to the amount of accumulation value held in the General
Account to secure loans. The amount available at any time for a Type A loan
equals the maximum loan amount less the DEFRA Guideline Single Premium
("DGSP"), as set forth in the Code, less any outstanding Type A loans. Any
other loans are Type B loans; a Type B loan is charged the prevailing interest
rate, but not more than the maximum. It is possible for one loan request to
result in both a Type A and a Type B loan. A request for a loan will be granted
first as a Type A loan, to the extent available, and then as a Type B loan.
Once a policy loan is granted, it remains a Type A or Type B until it is
repaid. Increases in the Specified Amount will affect the determination of the
amount available for a Type A loan; however, decreases in the Specified Amount
will not have any such effect.
Chubb Life may, in its sole discretion, charge lower interest rates in the
future. If the loan interest rate is ever less than 8%, Chubb Life can increase
the rate once each policy year but by not more than 1% per year. With respect
to outstanding policy loans, Chubb Life will send notice of any change in the
interest rate to the policyowner and any assignee of record at Chubb Life at
least 30 days before the effective date of the increase. The effective date of
any increase in such interest rate shall not be less than twelve months after
the effective date of the establishment of the previous rate. Interest is due
and payable at the end of each policy year, and any interest not paid when due
becomes loan principal.
Where applicable, loans are subject to conditions and requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as well as the terms
of any retirement plan in connection with which the Policy has been purchased.
The ERISA rules relating to loans are complex and vary depending on the
individual circumstances of each Policy. Employers and policyowners should
consult with qualified advisers before exercising the loan privileges.
Policy debt equals the total of all outstanding policy loans and accrued
interest on policy loans. If policy debt exceeds cash value, Chubb Life will
notify the policyowner and any assignee of record. A payment at least equal to
the amount of excess policy debt above the cash value must be made to Chubb
Life within 61 days from the date the notice is mailed, otherwise, the Policy
will lapse and terminate without value. The Policy may, however, later be
reinstated, subject to satisfactory proof of insurability and the payment of a
reinstatement premium. See "THE POLICY--Reinstatement".
So long as the Policy remains in force, policy debt may be repaid in whole or
in part at any time during the Insured's life. If there is any existing policy
debt, premium payments in the amount of the Planned Periodic Premium, received
at the Premium Frequency, will be applied as premium. Premium payments in
excess of the Planned Periodic Premium or premium payments received other than
at the Premium Frequency, will first be applied as policy loan repayments, then
as premium when the policy debt is repaid. For policyowners with both Type A
and Type B loans, repayments of the loan will be applied first to Type B loans
and then to Type A loans. Upon repayment, the Policy's accumulation value
securing the repaid portion of the debt in the General Account will be
transferred to the General Account and the divisions of Separate Account A
using the same percentages used to allocate net premiums. A policyowner may
make loan prepayments on a pre-authorized check basis. Any outstanding policy
debt is subtracted from life insurance proceeds payable at the Insured's death,
from accumulation value upon surrender, and from cash value payable at
maturity. In the event that the Policy lapses due to insufficient cash value
resulting from loans, the policyowner may be taxed on the total appreciation
under the Policy.
OTHER MATTERS
Voting Rights. To the extent required by law, Chubb Life will vote the Funds'
shares held in the various divisions of Separate Account A at regular and
special shareholder meetings of the Funds in accordance with instructions
received from persons having voting interests in Separate Account A. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change and, as a result, Chubb Life
determines that it is permissible to vote the Funds' shares in its own right,
it may elect to do so. The number of votes on which each policyowner has the
right to instruct will be determined by dividing the Policy's accumulation
value in a division of Separate Account A by the net asset value per share of
the corresponding Portfolio in which the division invests, or as otherwise
required by law. Fractional shares will be counted. The number of votes on
which the policyowner has the right to instruct will be determined as of the
date coincident with the date established by the Funds for determining
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communications prior to such meeting in accordance
with procedures established by the Funds. Chubb Life will vote the Funds'
shares as to which no instructions are received in proportion to the voting
instructions which are received with respect to all Policies participating in
the Funds in accordance with applicable law. Each person having a voting
interest will receive proxy material, reports and other materials relating to
the Funds. The shares held by Chubb Life, including shares for
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which no voting instructions have been received, shares held in Separate
Account A representing charges imposed by Chubb Life against Separate Account A
under the Policies and shares held by Chubb Life that are not otherwise
attributable to Policies, will also be voted by Chubb Life in proportion to
instructions received from the owners of variable life insurance policies
funded through Separate Account A. Chubb Life reserves the right to vote any or
all such shares at its discretion to the extent consistent with then current
interpretations of the 1940 Act and rules thereunder.
Chubb Life may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that shares be voted
so as to cause a change in subclassification or investment objective of the
Funds or disapprove an investment advisory contract of the Funds. In addition,
Chubb Life may disregard voting instructions in favor of changes initiated by a
policyowner in the investment policy or the investment adviser of the Funds if
Chubb Life reasonably disapproves of such changes. A change would be
disapproved only if the proposed change is contrary to state law or prohibited
by state regulatory authorities or Chubb Life determined that the change would
be inconsistent with the investment objectives of Separate Account A or would
result in the purchase of securities for Separate Account A which vary from the
general quality and nature of investments and investment techniques utilized by
other separate accounts created by Chubb Life or any affiliate of Chubb Life
which have similar investment objectives. In the event that Chubb Life does
disregard voting instructions, a summary of that action and the reason for such
actions will be included in the next semi-annual report to the policyowner.
Additions, Deletions or Substitutions of Investments. Chubb Life reserves the
right, subject to compliance with applicable law, to make additions to,
deletions from, or substitutions for the shares held by any division or which
any division may purchase. If shares of the Funds should no longer be available
for investment or if, in the judgment of Chubb Life's management, further
investment in shares of the Funds should become inappropriate in view of the
purposes of the Policy, Chubb Life may substitute shares of any other
investment company for shares already purchased, or to be purchased in the
future under the Policies. No substitution of securities will take place
without notice to and consent of policyowners and without prior approval of the
Commission, all to the extent required by the 1940 Act. Any surrender due to a
change in the Portfolio's investment policy will incur any applicable surrender
charges.
Each class of the Funds' stock is subject to certain investment restrictions
which may not be changed without the approval of the majority of the holders of
such series. See the accompanying prospectuses for the Funds.
Annual Report. Each year a report will be sent to the policyowner which shows
the current accumulation value, cash value, premiums paid and all charges since
the last annual report as well as the balance of outstanding policy loans.
Chubb Life will also send to the policyowner the reports required by the 1940
Act.
Confirmation. Confirmation notices (or other appropriate notification) will
be mailed promptly at the time of the following transactions:
(1) policy issue;
(2) receipt of premium payments;
(3) initial allocation among divisions on the allocation date;
(4) transfers among divisions;
(5) change of premium allocation;
(6) change between Option I and Option II;
(7) increases or decreases in Specified Amount;
(8) withdrawals;
(9) receipt of loan repayments; and
(10) reinstatements.
Limitation on Right to Contest. Chubb Life will not contest or revoke the
insurance coverage provided under the Policy, except for any subsequent
increase in Specified Amount, after the Policy has been in force during the
lifetime of the Insured for a period of two years from the policy date. This
provision does not apply to any benefits provided by a rider which grants
disability benefits or an added benefit in the event that death results from an
accident. Any increase in the Specified Amount will not be contested after such
increase has been in force during the lifetime of the Insured for two years
following the effective date of the increase. Any increase will be contestable
within the two year period only with regard to statements concerning the
increase.
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Misstatements. If the age or sex of the Insured has been misstated in an
application, including a reinstatement application, the amount payable under
the Policy by reason of the death of the Insured will be equal to the sum of
the following:
1. The accumulation value on the date of death less any policy debt; and
2. The death benefit, less the accumulation value on the date of death,
multiplied by the ratio of (a) the cost of insurance actually deducted at
the beginning of the policy month in which the death occurs to (b) the cost
of insurance that should have been deducted at the Insured's true age or
sex.
Suicide. The Policy does not cover the risk of suicide within two years from
the policy date or two years from the date of any increase in Specified Amount
with respect to such increase, whether the Insured is sane or insane, unless
otherwise specified by state law. In the event of suicide within two years of
the policy date, the only liability of Chubb Life will be a refund of premiums
paid, without interest, less any policy debt and less any withdrawal. In the
event of suicide within two years of an increase in Specified Amount, the only
liability of Chubb Life will be a refund of the cost of insurance for such
increase, plus death benefits payable without regard to suicide, if any.
Beneficiaries. The original beneficiaries and contingent beneficiaries are
designated by the policyowner on the application. If changed, the primary
beneficiary or contingent beneficiary is as shown in the latest change filed
with Chubb Life. One or more primary or contingent beneficiaries may be named
in the application. In such case, the proceeds of the Policy will be paid in
equal shares to the survivors in the appropriate beneficiary class unless
requested otherwise by the policyowner.
Postponement of Payments. Payment of any amount upon surrender, withdrawal,
policy loan, or benefits payable at death or maturity may be postponed
whenever: (i) the New York Stock Exchange is closed other than customary week-
end and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Commission; (ii) the Commission by order
permits postponement for the protection of policyowners; or (iii) an emergency
exists, as determined by the Commission, as a result of which disposal of
securities is not reasonably practicable or it is not reasonably practicable to
determine the value of net assets in Separate Account A.
Assignment. The Policy can be assigned as collateral security. Chubb Life
must be notified in writing if the Policy has been assigned. Each assignment
will be subject to any payments made or action taken by Chubb Life prior to its
notification of such assignment. Chubb Life is not responsible for the validity
of an assignment. A policyowner's rights and the rights of the beneficiary may
be affected by an assignment.
Illustration of Benefits and Values. The policyowner may request
illustrations of death benefits, accumulation values and cash values at any
time after the policy date. Illustrations will be based on the existing
accumulation value and cash value at the time of the request and both the
maximum and the then current costs of insurance rates. An administrative fee,
not in excess of $25, will be charged to cover the cost in preparing such
illustrations. Such fee will be payable in cash or by check and will not be
payable out of a Policy's accumulation value. See "CHARGES AND DEDUCTIONS--
Administrative Fees."
Non-Participating Policy. The Policy does not share in any surplus
distributions of Chubb Life. No dividends are payable with respect to the
Policy.
THE GENERAL ACCOUNT
POLICYOWNERS MAY ALLOCATE NET PREMIUMS AND TRANSFER ACCUMULATION VALUE TO THE
GENERAL ACCOUNT. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN
THE GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY UNDER
THE 1940 ACT. ACCORDINGLY, NEITHER THE GENERAL ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OF THESE ACTS, AND CHUBB LIFE HAS BEEN
ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE GENERAL ACCOUNT.
DISCLOSURES REGARDING THE GENERAL ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE
ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
General Description. The General Account consists of all assets owned by
Chubb Life other than those in Separate Account A and other separate accounts
which may be established by Chubb Life. Subject to applicable law, Chubb Life
has sole discretion over the investment of the assets of the General Account.
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A policyowner may elect to allocate net premiums to the General Account or
to transfer accumulation value to or from the divisions of Separate Account A
and the General Account. The allocation or transfer of funds to the General
Account does not entitle a policyowner to share in the investment experience
of the General Account. Instead, Chubb Life guarantees that accumulation value
in the General Account will accrue interest daily at an effective annual rate
of at least 4 1/2%, independent of the actual investment experience of the
General Account. Chubb Life is not obligated to credit interest at any higher
rate, although Chubb Life may, in its sole discretion, do so.
If the Date of Receipt of the initial premium is prior to the date Chubb
Life either issues the Policy or offers to issue the Policy on a basis other
than as applied for, that initial net premium, less any monthly deductions,
will be credited with interest at the rate currently being credited to the
General Account. This amount will be credited with interest for the period be-
tween the date the premium is received (or the policy date, whichever is lat-
er) and the date Chubb Life issues the Policy or the applicant refuses Chubb
Life's offer to issue the Policy on a basis other than as applied for. No in-
terest will be credited for the above period if the initial premium is less
than $500. In those instances when Chubb Life declines to issue a Policy, the
entire premium paid, if greater than $500, will be returned with interest; in-
terest will be credited from the Date of Receipt to the date the application
is rejected. No interest will be credited for such initial premiums if the
Policy issued as applied for is not accepted or the "free look" is exercised;
Chubb Life will retain any interest earned.
The Policy. This Prospectus describes a flexible premium variable life in-
surance policy. Net premiums may be allocated to the General Account or to
Separate Account A or to both. This Prospectus is generally intended to serve
as a disclosure document for the aspects of the Policy involving Separate Ac-
count A. For more information regarding the General Account, see the Policy
itself, or discuss the Policy with your insurance agent.
General Account Benefits. If the policyowner pays the same premiums as
scheduled, allocates all net premiums only to the General Account and makes no
transfers, withdrawals, or policy loans, the minimum amount and duration of
the death benefit will be fixed and guaranteed. The policyowner may select ei-
ther death benefit Option I or II under the Policy and may change the Policy's
Specified Amount subject to satisfactory evidence of insurability, if re-
quired.
General Account Accumulation Value. Net premiums allocated to the General
Account are credited to the Policy. Prior to the allocation date, the initial
net premium is deposited in the General Account, and those net premiums are
credited to the Policy. On the allocation date the initial net premium pay-
ments deposited in the General Account, plus interest earned, will be allo-
cated among the divisions of Separate Account A and the General Account as in-
structed by the policyowner in the application. The accumulation value in the
General Account on the allocation date is equal to the portion of the net pre-
mium payments, plus interest earned, which have been paid and allocated to the
General Account, less the portion of the first monthly deduction allocated to
the General Account.
Chubb Life guarantees that interest credited to each policyowner's accumula-
tion value in the General Account will not be less than an effective annual
rate of at least 4 1/2% per year. Chubb Life may, IN ITS SOLE DISCRETION,
credit a higher rate of interest, although it is not obligated to credit in-
terest in excess of 4 1/2% per year, and might not do so. ANY INTEREST CRED-
ITED ON THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT IN EXCESS OF
THE GUARANTEED RATE OF 4 1/2% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRE-
TION OF CHUBB LIFE. THE POLICYOWNER ASSUMES THE RISK THAT INTEREST CREDITED
MAY NOT EXCEED THE GUARANTEED MINIMUM RATE OF 4 1/2% PER YEAR. Accumulation
value in the General Account that equals indebtedness will be credited inter-
est daily at the lesser of an effective annual rate of 6% per year or the in-
terest rate currently credited to the General Account. The accumulation value
in the General Account will be calculated on each monthly anniversary date of
the Policy, or on any other date with consistent adjustments.
Chubb Life guarantees that, at any time prior to the maturity date, the ac-
cumulation value in the General Account will not be less than the amount of
the net premiums allocated or accumulation value transferred to the General
Account, plus interest at the rate of 4 1/2% per year, plus any excess inter-
est which Chubb Life credits and any amounts transferred into the General Ac-
count, less the sum of all charges allocable to the General Account and any
amounts deducted from the General Account in connection with withdrawals or
transfers to Separate Account A.
Determination of Charges. The portion of the monthly deduction attributable
to the General Account will be determined as of the actual monthly anniversary
date, even if the monthly anniversary date does not fall on a valuation date.
Premium Deposit Fund. As a convenience to policyowners, Chubb Life permits
policyowners to deposit funds in a premium deposit fund ("PDF"), subject to
the terms and conditions of the appropriate agreement. Funds deposited in
28
<PAGE>
the PDF earn interest at a minimum annual rate of 4%, with interest credited on
each monthly anniversary date. Interest on these funds is not tax deferred and
will be annually reported on Form 1099 to the policyowner. An amount equal to
the Planned Periodic Premium will be transferred on the policy date to pay
premiums on the policy. Policyowners may withdraw all or part of the funds from
the PDF at any time. No commissions are earned or paid until premium payments
are made pursuant to transfers from the PDF.
DISTRIBUTION OF THE POLICY
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for Chubb Life, are also registered representatives of
Chubb Securities Corporation, the principal underwriter of the policies, or of
broker-dealers who have entered into written sales agreements with the princi-
pal underwriter. Chubb Securities Corporation is a New Hampshire corporation
organized in 1969. Chubb Securities Corporation is registered with the Securi-
ties and Exchange Commission under the Securities and Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of Securities Deal-
ers, Inc. Commissions are payable under two alternate commission schedules. Un-
der the first schedule, commissions, including bonuses, can range up to 80% of
first year gross premiums, 19% of second year gross premiums, 14% of gross pre-
miums for the third through the fifth policy years, 10% of gross premiums for
the sixth through the tenth policy years and 4% of gross premiums for the elev-
enth through the fifteenth policy years. Under this schedule no commissions are
paid after the fifteenth policy year. Under the second schedule, commissions,
including bonuses, can range up to 80% of first year gross premiums, 18% of
second year gross premiums, 13% of gross premiums for the third through the
fifth policy years, 9% of gross premiums for the sixth through the tenth policy
years and .25% of accumulation value for the eleventh policy year and thereaf-
ter. These commissions include amounts paid to agents writing the Policy and
district managers.
The Distribution Agreement with Chubb Securities Corporation took effect on
February 27, 1985, was amended for technical reasons on January 24, 1989, and
continues until terminated by either party on 60 days notice. Chubb Securities
Corporation is not obligated to sell any specified amount of Policies and may
not assign its responsibilities under the Distribution Agreement. The aggregate
amounts paid to Chubb Securities Corporation under the Distribution Agreement
were $15,190,893 in 1994, $8,838,510 in 1993 and $3,748,313 in 1992. Chubb Life
reimburses Chubb Securities Corporation for its expenses under the Distribution
Agreement.
Chubb Securities Corporation is engaged in the sale and distribution of vari-
ous other securities, including other flexible premium variable life policies.
It acts as principal underwriter for other flexible premium variable life poli-
cies and variable annuity contracts issued by Chubb Life (and its affiliated
insurance companies), and for the Chubb America Fund, Inc. and the Chubb In-
vestment Funds, Inc. mutual funds. It sells a number of mutual fund shares as
well as shares of other securities and limited partnership interests in both
public and private limited partnerships. Mutual fund shares available for sale
by Chubb Securities Corporation are sold pursuant to non-exclusive selling
agreements with the distributors of the mutual funds.
The Policies may also be sold through other broker-dealers that enter into
agreements with Chubb Securities Corporation for this purpose. Any such broker-
dealers will be registered under the Securities Exchange Act of 1934 and their
representatives selling the Policies will be authorized under applicable insur-
ance laws and regulations to sell insurance products of this type. It is not
expected that the compensation paid by Chubb Life in connection with such sales
will exceed that described above for sales by Chubb Securities Corporation's
registered representatives.
Group or Sponsored Arrangements. Policies may be purchased under group or
sponsored arrangements, as well as on an individual basis. A "group arrange-
ment" includes a program under which a trustee, employer or similar entity pur-
chases individual Policies covering a group of individuals on a group basis.
Examples of such arrangements are employer-sponsored benefit plans and deferred
compensation plans. A "sponsored arrangement" includes a program under which an
employer permits group solicitation of its employees or an association permits
group solicitation of its members for the purchase of Policies on an individual
basis. A group or sponsored arrangement may also include certain programs under
which Policies are issued to current and retired employees (and certain members
of their families) of Chubb Life and its affiliates.
29
<PAGE>
Chubb Life may reduce the following types of charges for Policies issued in
connection with group or sponsored arrangements: the cost of insurance charge,
surrender or withdrawal charges, administrative charges, charges for withdrawal
or transfer, the guaranteed death benefit charge and charges for optional rider
benefits. Chubb Life may also issue Policies in connection with group or
sponsored arrangements on a "non-medical" or guaranteed issue basis. Due to the
underwriting criteria established for Policies issued on a non-medical,
guaranteed issue basis, actual monthly cost of insurance charges may be higher
than the current cost of insurance charges under otherwise identical Policies
that are medically underwritten. In addition, Chubb Life may also specify
different minimum Specified Amounts at issue for Policies issued in connection
with group or sponsored arrangements.
Certain charges or underwriting requirements set forth in this Prospectus may
also be reduced or eliminated for Policies issued in connection with an
exchange of another Chubb Life policy or contract or policies or contracts of
any affiliates of Chubb Life.
The amounts of any reduction, the charges to be reduced, the elimination or
modification of underwriting requirements, and the criteria for applying a
reduction or modification will generally reflect the reduced sales and
administrative effort, costs and differing mortality experience appropriate to
the circumstances giving rise to the reduction or modification. The charges
will be reduced in accordance with Chubb Life's company practice in effect when
the Policy is issued. The elimination or modification of underwriting
requirements will be done in accordance with Chubb Life's administrative
procedures with respect to underwriting when the Policy is issued. Reductions
and modifications will not be made where prohibited by applicable law and will
not be unfairly discriminatory against any person including the purchasers to
whom the reduction or modification applies and all other Owners of the Policy.
30
<PAGE>
MANAGEMENT OF CHUBB LIFE
Executive Officers and Directors of Chubb Life
DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME BUSINESS ADDRESS
---- ------------------------
<S> <C>
John C. Beck........... Managing Partner
Beck, Mack & Oliver
330 Madison Avenue--31st Floor
New York, NY 10017-5001
*Percy Chubb, III....... Vice Chairman
The Chubb Corporation
(also serves as Vice Chairman of Chubb Life Insurance Company
of America)
15 Mountain View Road
P.O. Box 1615
Warren, New Jersey 07061-1615
Joel J. Cohen.......... Managing Director
Donaldson, Lufkin & Jenrette Securities Corporation
140 Broadway, 49th Floor
New York, NY 10005
Henry U. Harder........ Retired. Former Chairman
The Chubb Corporation
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
David H. Hoag.......... Chairman, President & CEO
The LTV Corporation
25 West Prospect Avenue
Cleveland, OH 44115
Robert V. Lindsay...... Former President
J.P. Morgan & Co., Inc.
Altamont Road
Millbrook, NY 12545
Thomas C. MacAvoy...... Professor
Darden Graduate School of Business Administration
University of Virginia
Box 6550
Charlottesville, VA 22906-6550
Gertrude G. Michelson.. R.H. Macy & Co., Inc.
Herald Square--13th Floor
New York, NY 10001
*Dean R. O'Hare......... Chairman and President
The Chubb Corporation
(also serves as Chairman of Chubb Life Insurance Company of
America)
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
Ernesta G. Procope..... President and Chief Executive Officer
E.G. Bowman Co., Inc.
97 Wall Street
New York, NY 10005
Warren B. Rudman....... Partner
Paul, Weiss, Rifkind, Wharton & Garrison
1615 L Street, N.W., Suite 1300
Washington, D.C. 20036
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME BUSINESS ADDRESS
---- ------------------------
<S> <C>
Sir David G. Scholey, CBE... Chairman
S.G. Warburg Group plc
One Finsbury Avenue
London EC2M 2PA England
Raymond G.H. Seitz.......... Former Ambassador of the United States of America
10 Trevor Square
London SW7 1DT, England
Lawrence M. Small........... President and Chief Operating Officer
Federal National Mortgage Association
3900 Wisconsin Avenue, NW
Washington, DC 20016
Robert G. Stone, Jr. ....... Chairman
Kirby Corporation
405 Lexington Avenue, 39th Floor
New York, NY 10174
Richard D. Wood............. Former Chairman
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, IN 46285
</TABLE>
-------
* Executive Officer of Chubb Life
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Theresa M. Stone.......... President and Chief Executive Officer
David S. Fowler........... Vice Chairman
Randell G. Craig.......... Executive Vice President and Chief Operating Officer
Richard V. Werner......... Executive Vice President and Chief Financial Officer
Ronald R. Angarella....... Senior Vice President
Frederick H. Condon....... Senior Vice President, General Counsel and Secretary
Charles C. Cornelio....... Senior Vice President, Assistant Secretary and Chief
Administrative Officer
Ronald H. Emery........... Senior Vice President and Controller
Gregory W. Johnson........ Senior Vice President
Vincent G. Mace, Jr. ..... Senior Vice President and Group Actuary
Mary Ann Peltier.......... Senior Vice President and Corporate Actuary
Warren L. Reynolds........ Senior Vice President
John F. Ritchie........... Senior Vice President
Bruce R. Stefany.......... Senior Vice President
James R. Wagner, Jr. ..... Senior Vice President
Frederick N. Bailey, MD... Vice President
Douglas H. Blampied....... Vice President
Thomas M. Bodrogi......... Vice President
Mark Connolly............. Vice President
Edwin E. Creter........... Vice President
Richard A. Croak.......... Vice President and Assistant Secretary
Ned I. Gerstman........... Vice President
Glenn Hilsinger........... Vice President
Donald M. Kane............ Vice President
Patrick A. Lang........... Vice President
Deborah A. Leitch......... Vice President
Bonnie L. Lyons........... Vice President
Justin J. Manjorin........ Vice President
Donna L. Metcalf.......... Vice President
Christopher J. Moakley.... Vice President
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Thomas E. Murphy, Jr., M.D. ..... Vice President and Associate Medical Director
Herbert B. Olson................. Vice President and Group Actuary
Patrick Ramotar.................. Vice President
Richard D. Reed.................. Vice President
Kenneth L. Robinson, Jr. ........ Vice President
Robert R. Rodgers................ Vice President
Russell C. Simpson............... Vice President and Treasurer
James S. Smith................... Vice President
William A. Spencer............... Vice President
Donald L. Stevens................ Vice President
John A. Thomas................... Vice President
Ernest J. Tsouros................ Vice President
David G. Underwood, MD........... Vice President and Medical Director
Charles A. Van Buskirk........... Vice President
John W. Wells.................... Vice President
</TABLE>
The officers and employees of Chubb Life who have access to the assets of
Separate Account A are covered by a fidelity bond issued by Aetna Casualty and
Surety Company in the amount of $35,000,000.
STATE REGULATION OF CHUBB LIFE
Chubb Life Insurance Company of America is governed under the laws of the
state of New Hampshire and is subject to regulation by the Insurance
Commissioner of New Hampshire. An annual statement is filed with the New
Hampshire Insurance Commissioner on or before March 1 of each year covering the
operations and reporting on the financial condition of Chubb Life as of
December 31 of the preceding year. Periodically, the Commissioner examines the
assets and liabilities of Chubb Life and Separate Account A and verifies their
adequacy and a full examination of Chubb Life's operations is conducted by the
Commissioner at least every five years.
In addition, Chubb Life is subject to the insurance laws and regulations of
other states within which it is licensed to operate. Generally, the insurance
department of any other state applies the laws of the state of domicile in
determining permissible investments.
FEDERAL TAX MATTERS
Tax Considerations. The following description is a brief summary of some of
the tax rules, primarily related to federal income taxes under the Code, which,
in the opinion of Chubb Life, are currently in effect.
Policy Proceeds. The Policy contains provisions not found in traditional life
insurance policies providing only for fixed benefits. However, under the Code,
the Policy should qualify as a life insurance contract for federal income tax
purposes, with the result that all death benefits paid under the Policy will
generally be fully excludable from the gross income of the Policy's beneficiary
for federal income tax purposes. Policyowners should consult with their own tax
advisers in this regard.
The federal income tax treatment of a distribution from the Policy will
depend on whether a Policy is a life insurance policy and also if it is
determined to be a "modified endowment contract," as defined by the Code. Chubb
Life will notify a policyowner if the amount of premiums paid in would cause a
Policy to be a modified endowment contract and will allow a refund of the
excess premium. Thus, the policyowner may choose to have the Policy treated as
a modified endowment contract.
A modified endowment contract is a life insurance policy entered into or
materially changed on or after June 21, 1988 under which premiums are paid that
exceed the sum of net level premiums that would be paid under a policy that
33
<PAGE>
provides for paid-up insurance after the payment of seven level annual premiums
(the "seven-pay test"). A policy will be treated as a modified endowment
contract unless the cumulative premiums actually paid under a policy, at all
times during the first seven policy years, are less than or equal to the
cumulative seven-pay premiums which would have been paid under the hypothetical
policy on or before such times.
If a policyowner reduces the death benefit during the first seven policy
years by requesting a decrease in the Specified Amount or a partial withdrawal,
the seven-pay test will be redetermined based on the new death benefit and
applied retroactively for purposes of the seven-pay test. If the premiums
previously paid are greater than the seven-pay premium test limits, the policy
will become a modified endowment contract. Generally, a life insurance policy
which is received in exchange for a modified endowment contract will also be
considered a modified endowment contract.
If a policy is deemed to be a modified endowment contract, any distribution
from the policy will be taxed in a manner comparable to distributions from
annuities (i.e., on an "income-first" basis); distributions for this purpose
include a loan or partial withdrawal. Any such distributions will be considered
taxable income to the extent accumulated value under the policy exceeds
investment in the policy.
A 10% penalty tax will apply to the taxable portion of such a distribution.
No penalty will apply to distributions (i) to taxpayers 59 1/2 years of age or
older, (ii) in the case of a disability which can be expected to result in
death or to be of indefinite duration or (iii) received as part of a series of
substantially equal periodic annuity payments for the life (or life expectancy)
of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and his beneficiary.
To the extent a policy becomes a modified endowment contract, any
distribution, including any loan, which occurs in the policy year it becomes a
modified endowment contract and in any year thereafter will be taxable income
to the policyowner. Also, any distributions within two years before a policy
becomes a modified endowment contract will also be income taxable to the
policyowner. This means that a distribution made after June 20, 1988 from a
policy that is not a modified endowment contract could later become taxable as
a distribution from a modified endowment contract. The Secretary of the
Treasury has been authorized to prescribe rules which would similarly treat
other distributions made in anticipation of a policy becoming a modified
endowment contract. For purposes of determining the amount of any distribution
includible in income, all modified endowment contract policies that fail the
above-described tests which are issued by the same insurer, or its affiliates,
to the same policyowner during any calendar year are treated as one contract.
The Secretary of the Treasury is also authorized to issue regulations in this
connection.
In addition to the distribution rules for modified endowment contracts, the
Code and proposed regulations thereunder require that, for policies entered
into on or after October 21, 1988, reasonable mortality and other charges be
used in satisfying the definition of life insurance. The death benefit under a
policy which meets this definition will continue to be excluded from the
beneficiary's gross income. Chubb Life believes that the Policies meet this
definition. As long as a Policy does not violate the tests described above, it
will not fail to meet the tests of the Code and the general tax provisions
described herein still apply.
The foregoing summary does not purport to be complete or to cover all
situations, and, as always, there is some degree of uncertainty with respect to
the application of the current tax laws. In addition to the provisions
discussed above, the United States Congress may consider other legislation
which, if enacted, could adversely affect the tax treatment of life insurance
policies. Also, the Treasury Department may amend current regulations or adopt
new regulations with respect to this and other Code provisions. Therefore,
policyowners are advised to consult a tax adviser or attorney for more complete
tax information, specifically regarding the applicability of the Code
provisions to an individual policyowner's situation.
Under normal circumstances, the Policy is not a modified endowment contract
and loans received under the Policy will be construed as indebtedness of the
policyowner in the same manner as loans under a fixed benefit life insurance
policy and no part of any loan under the Policy is expected to constitute
income to the policyowner. Policyholders are advised to consult a tax adviser
or attorney regarding the deduction of interest paid on loans.
Even if the Policy is not a modified endowment contract, a partial withdrawal
together with a reduction in death benefits during the first 15 policy years
may create taxable income for the policyowner. The amount of that taxable
income is determined under a complex formula and it may be equal to part or all
of, but not greater than, the income on the contract. A partial withdrawal made
after the first 15 policy years will be taxed on a recovery of premium-first
basis,
34
<PAGE>
and will only be subject to federal income tax to the extent such proceeds
exceed the total amount of premiums the policyowner has paid that have not been
previously withdrawn.
If a policyowner makes a partial withdrawal, surrender, loan or exchange of
the Policy, Chubb Life may be required to withhold federal income tax from the
portion of the money received by the policyowner that is includible in the
policyowner's federal gross income. A policyowner who is not a corporation may
elect not to have such tax withheld; however, such election must be made before
Chubb Life makes the payment. In addition, if a policyowner fails to provide
Chubb Life with a correct taxpayer identification number (usually a social
security number) or if the Treasury notifies Chubb Life that the taxpayer
identification number which has been provided is not correct, the election not
to have such taxes withheld will not be effective. In any case, a policyowner
is liable for payment of the federal income tax on the taxable portion of money
received, whether or not an election to have federal income tax withheld is
made. If a policyowner elects not to have federal income tax withheld, or if
the amount withheld is insufficient, then the policyowner may be responsible
for payment of estimated tax. A policyowner may also incur penalties under the
estimated tax rules if the withholding and estimated tax payments are
insufficient. Chubb Life suggests that policyowners consult with a tax adviser
or attorney as to the tax implications of these matters.
In the event that a Policy is owned by the trustee under a pension or profit
sharing plan, or similar deferred compensation arrangement, the tax
consequences of ownership or receipt of proceeds under the Policy could differ
from those stated herein. However, if ownership of such a Policy is transferred
from the plan to a plan participant (upon termination of employment, for
example), the Policy will be subject to all of the federal tax rules described
above. A Policy owned by a trustee under such a plan may be subject to
restrictions under ERISA and a tax adviser should be consulted regarding any
applicable ERISA requirements.
The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans and others, where the tax consequences may vary
depending on the particular facts and circumstances of each individual
arrangement. A tax adviser should be consulted regarding the tax attributes of
any particular arrangement where the value of it depends in part on its tax
consequences.
Federal estate and local estate, inheritance and other tax consequences of
ownership or receipt of policy proceeds depend upon the circumstances of each
policyowner and beneficiary.
Current Treasury regulations set standards for diversification of the
investments underlying variable life insurance policies in order for such
policies to be treated as life insurance. Chubb Life believes it presently is
in compliance with the diversification requirements as set forth in the
regulations and intends to remain in compliance with such diversification
requirements. If the diversification requirements are not satisfied, the Policy
would not be treated as a life insurance contract. As a consequence to the
policyowner, income earned on a Policy would be taxable to the policyowner for
any calendar quarter in which the diversification requirements were not
satisfied, and for all subsequent calendar quarters.
The Secretary of the Treasury may issue a regulation or a ruling which will
prescribe the circumstances in which a policyowner's control of the investments
of a segregated asset account may cause the policyowner, rather than the
insurance company, to be treated as the owner of the assets of the account. The
regulation or ruling could impose requirements that are not reflected in the
Policy, relating, for example, to such elements of policyowner control as
premium allocation, transfer privileges and investment in a division focusing
on a particular investment sector. Failure to comply with any such regulation
or ruling presumably would cause earnings on a policyowner's interest in
Separate Account A to be includible in the policyowner's gross income in the
year earned. Chubb Life, however, has reserved certain rights to alter the
Policy and investment alternatives so as to comply with such regulation or
ruling. Chubb Life believes that any such regulation or ruling would apply
prospectively. Since the regulation or ruling has not been issued, there can be
no assurance as to the content of such regulation or ruling or even whether
application of the regulation or ruling will be prospective. For these reasons,
policyowners are urged to consult with their own tax advisers.
Policyowners are advised that the exercise of an Exchange of Insured Rider
will give rise to tax consequences and are urged to consult with a tax adviser
prior to exercising such rider.
Policyowners are advised that the federal income tax status of the Terminal
Illness Accelerated Benefit Rider is uncertain at this time. Benefit proceeds
are not specifically excluded from taxable income under Section 101 of the
Code. Under regulations proposed by the Internal Revenue Service on December
14, 1992, terminal illness benefit proceeds
35
<PAGE>
will be treated as excludable from taxable income under Section 101 of the
Code. As currently proposed, tax-free treatment will only be accorded to
benefit proceeds received on or after the date that these regulations become
final. In addition, while only important for a premium paid rider, rider
benefits are not expressly included as "Qualified Additional Benefits" in
Section 7702(f)(5) of the Code. Also, there is a question as to whether or not
the addition of an accelerated benefit rider constitutes a Section
7702A(c)(3)(A) "material change" in benefit, thereby causing the contract to be
treated as a new contract and subjected to a new seven-pay test, with
appropriate adjustments to take into account the cash surrender values under
the contract. It is likely, but not entirely certain, that the final
regulations, when adopted, will not produce a different tax result.
Policyowners are also advised that there is some uncertainty as to whether
the Primary Insured Term Rider will be treated as a "Qualified Additional
Benefit" under Section 7702(f)(5)(A)(iii) of the Code rather than as a death
benefit under the Policy. However, Chubb Life believes that this rider, as
structured and implemented by Chubb Life, would be considered as part of the
death benefit under the Policy and therefore not give rise to any adverse tax
consequences. The policyowner should consult a tax adviser before adding the
Primary Insured Term Rider to the Policy.
The foregoing summary does not purport to be complete or to cover all
situations, including the possible tax consequences of changes in ownership.
Counsel and other competent advisers should be consulted for more complete
information.
Charge for Chubb Life Income Taxes. Chubb Life is presently taxed as a life
insurance company under the provisions of the Code. The Code specifically
provides for adjustments in reserves for variable policies, and Chubb Life will
include flexible premium life insurance operations in its tax return in
accordance with these rules.
Currently, no charge is made against Separate Account A for Chubb Life's
federal income taxes, or provisions for such taxes, that may be attributable to
Separate Account A. Chubb Life may charge each division in Separate Account A
for its portion of any income tax charged to Chubb Life on the division or its
assets. Under present laws, Chubb Life may incur state and local taxes (in
addition to premium taxes) in several states. At present, these taxes are not
significant. If they increase, however, Chubb Life may decide to make charges
for such taxes or provisions for such taxes against Separate Account A. Chubb
Life would retain any investment earnings on any tax charges accumulated in a
division. Any such charges against Separate Account A or its divisions could
have an adverse effect on the investment experience of such division.
EMPLOYEE BENEFIT PLANS
Employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the
purchase of a Policy in connection with an employment-related insurance or
benefit plan. The United States Supreme Court held, in a 1983 decision, that,
under Title VII, optional annuity benefits under a deferred compensation plan
could not vary on the basis of sex.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account A is a party or to
which the assets of any of the divisions thereof are subject. Chubb Life is not
involved in any litigation that is of material importance in relation to its
total assets or that relate to Separate Account A.
EXPERTS
The financial statements of Chubb Life and the financial statements of
Separate Account A at December 31, 1994 and for the related periods then ended,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and are included
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Michael
J. LeBoeuf, FSA, MAAA as stated in the opinion filed as an exhibit to the
registration statement.
36
<PAGE>
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement to all of which reference is made for further
information concerning Separate Account A, Chubb Life and the Policy offered
hereby. Statements contained in this Prospectus as to the contents of the
Policy and other legal instruments are summaries. For a complete statement of
the terms thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of Chubb Life which are included in this Prospectus
should be considered only as bearing on the ability of Chubb Life to meet its
obligations under the Policy. They should not be considered as bearing on the
investment experience of the assets held in Separate Account A.
37
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors Chubb Life Insurance Company of America
We have audited the accompanying consolidated balance sheet of Chubb Life
Insurance Company of America and subsidiaries as of December 31, 1994, and the
related consolidated statements of income, shareholder's equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Chubb Life
Insurance Company of America and subsidiaries at December 31, 1994, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
As described in Note 2 to the financial statements, the Company changed its
method of accounting for certain investments in debt and equity securities in
1994.
Ernst & Young LLP
Boston, Massachusetts
February 3, 1995
F-1
<PAGE>
CONSOLIDATED BALANCE SHEET
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Invested assets (Note 3)
Fixed maturities
Held-to-maturity, at amortized cost............................ $ 620,935
Available-for-sale, at market.................................. 1,537,409
Equity securities, at market..................................... 86,768
Short term investments, at cost.................................. 112,393
Policy loans..................................................... 190,694
Mortgage loans on real estate.................................... 11,985
----------
Total invested assets.............................................. 2,560,184
Accrued investment income.......................................... 42,074
Uncollected premiums............................................... 23,045
Reinsurance recoverable on life and health policy liabilities...... 191,070
Deferred policy acquisition costs (Note 4)......................... 558,345
Value assigned purchased insurance in force (Note 4)............... 48,148
Goodwill, net of accumulated amortization of $19,881............... 67,568
Property and equipment, net of accumulated depreciation of $64,759. 47,822
Separate account assets............................................ 153,101
Other assets....................................................... 68,722
----------
1,199,895
----------
Total assets....................................................... $3,760,079
==========
LIABILITIES
Policy liabilities
Policy fund balances............................................. $1,858,813
Future policy benefits........................................... 597,919
Policy and contract claims....................................... 135,386
Premiums paid in advance......................................... 2,877
Other policyholders' funds....................................... 64,588
----------
2,659,583
Mortgage loan payable (Note 12)................................... 5,965
Short term debt (Note 12)......................................... 36,000
Federal income taxes payable (Note 5)............................. 5,212
Deferred federal income taxes (Note 5)............................ 66,182
Separate account liabilities...................................... 153,101
Accrued expenses and other liabilities (Note 6)................... 100,452
----------
Total liabilities.................................................. 3,026,495
Commitments and contingent liabilities (Notes 7, 10 and 15)
Minority interest in consolidated subsidiary (Note 1).............. 1,774
SHAREHOLDER'S EQUITY
Common stock--$5 par value, 600,000 shares authorized, issued and
outstanding...................................................... 3,000
Paid in capital................................................... 249,872
Unrealized appreciation (depreciation) of investments, net (Note
3)............................................................... (33,907)
Retained earnings................................................. 512,845
----------
Total shareholder's equity......................................... 731,810
----------
Total liabilities and shareholder's equity......................... $3,760,079
==========
</TABLE>
See accompanying notes.
F-2
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
REVENUES
Universal life and investment product policy charges.............. $ 164,246
Traditional life insurance premiums............................... 132,576
Accident and health premiums...................................... 539,471
Net investment income............................................. 206,315
Realized investment gains......................................... 9,304
Other income...................................................... 4,139
----------
Total revenues...................................................... 1,056,051
BENEFITS, CLAIMS AND EXPENSES
Policy benefits and claims
Death............................................................. 108,880
Accident and health............................................... 478,231
Other............................................................. 145,549
Change in reserves for future policy benefits
Traditional life insurance........................................ 17,009
Accident and health insurance..................................... 2,536
----------
752,205
EXPENSES
Commissions and other operating expenses............................ 201,788
Amortization
Deferred policy acquisition costs................................. 68,521
Value assigned purchased insurance in force, net.................. 3,729
Goodwill.......................................................... 2,186
----------
276,224
----------
Total benefits, claims and expenses................................. 1,028,429
----------
Income before federal income tax.................................... 27,622
Federal income tax (benefit)
Current........................................................... 9,808
Deferred.......................................................... (2,301)
----------
7,507
----------
Income before minority interest..................................... 20,115
Minority interest in net loss of consolidated subsidiary.......... (436)
----------
Net Income.......................................................... $ 20,551
==========
</TABLE>
See accompanying notes.
F-3
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
Common stock
Balance, beginning and end of year................................. $ 3,000
--------
Paid in capital
Balance, beginning and end of year................................. 249,872
--------
Unrealized appreciation (depreciation) of investments, net
Balance, beginning of year......................................... 9,245
Cumulative effect, as of January 1, 1994, of change in accounting
principle, net (Note 2)........................................... 25,140
Change, net (Note 3)............................................... (68,292)
--------
Balance, end of year............................................... (33,907)
--------
Retained earnings
Balance, beginning of year......................................... 496,302
Net income......................................................... 20,551
Dividends to parent................................................ (4,008)
--------
Balance, end of year............................................... 512,845
--------
Total shareholder's equity........................................... $731,810
========
</TABLE>
See accompanying notes.
F-4
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income.......................................................... $ 20,551
Adjustments to reconcile net income to net cash used in operating
activities:
Decrease in future policy benefits, policy and contract claims and
premiums paid in advance, net.................................... (10,763)
Decrease in uncollected premiums.................................. 5,141
Increase in deferred policy acquisition costs..................... (60,695)
Net amortization of value assigned purchased insurance in force... 3,729
Decrease in accrued investment income............................. 874
Realized investment gains......................................... (9,304)
Accretion of investment discounts................................. (4,337)
Provision for depreciation........................................ 8,768
Provision for deferred income tax................................. (2,301)
Decrease in federal income tax payable............................ (3,769)
Other, net........................................................ (18,469)
---------
Net cash used in operating activities............................... (70,575)
INVESTING ACTIVITIES
Proceeds from sales of fixed maturities............................. 186,113
Proceeds from maturities of fixed maturities........................ 172,647
Proceeds from sales of equity securities............................ 56,312
Purchases of fixed maturities....................................... (450,900)
Purchases of equity securities...................................... (39,015)
Increase in short term investments, net............................. (55,917)
Policy loans issued, net of repayments.............................. (11,499)
Mortgage loans, net................................................. 3,136
Other, net.......................................................... (6,218)
---------
Net cash used for investing activities.............................. (145,341)
FINANCING ACTIVITIES
Deposits credited to policyholders' funds........................... 336,759
Withdrawals from policyholders' funds............................... (122,502)
Mortgage debt principal payments.................................... (672)
Dividends to Parent................................................. (4,008)
Increase in short term debt......................................... 4,700
Decrease in cash overdraft.......................................... (611)
Capital contribution by minority shareholder........................ 2,250
---------
Net cash provided by financing activities........................... 215,916
Increase in cash.................................................... 0
---------
Cash, beginning and end of year (Note 1)............................ $ 0
=========
</TABLE>
See accompanying notes.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements reflect the consolidated life and
health insurance operations of Chubb Life Insurance Company of America and its
subsidiaries (the Company). Wholly-owned subsidiaries include Chubb America
Service Corporation, The Colonial Life Insurance Company of America (Colonial),
Chubb Investment Advisory Corporation, and Chubb Sovereign Life Insurance
Company (Sovereign). Majority-owned subsidiaries include ChubbHealth Holdings,
Inc (ChubbHealth). All significant intercompany accounts and transactions have
been eliminated in consolidation. Chubb Life Insurance Company of America is
wholly-owned by The Chubb Corporation (the Parent).
ChubbHealth is an insurance holding company which owns 100% of ChubbHealth,
Inc. (CHI), a health maintenance organization (HMO). CHI commenced operations
in the New York City metropolitan area on June 1, 1994. ChubbHealth is jointly
owned by the Company and Healthsource, New York, Inc. (Healthsource). The
Company owns 85% of the outstanding stock of ChubbHealth.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP).
RECOGNITION OF REVENUES, BENEFITS, CLAIMS AND EXPENSES:
Universal Life Products Universal life products include universal life
insurance, variable universal life insurance, and other interest-sensitive life
insurance policies. Revenues for universal life products consist of policy
charges for the cost of insurance, policy administration and surrenders that
have been assessed against policy account balances during the period.
Policy fund liabilities for universal life and other interest-sensitive life
insurance policies are computed in accordance with the retrospective deposit
method and represent policy account balances before surrender charges. Policy
fund assets and liabilities for variable universal life insurance are
segregated and recorded as separate account assets and liabilities. Separate
account assets are carried at market values as of the balance sheet date and
are invested by the Company at the direction of the policyholder. Investments
are made in one or more of eight portfolios in a series fund. Each of the
portfolios has specific investment objectives and the investment income and
investment gains and losses accrue directly to, and investment risk is borne
by, the policyholders. Accordingly, operating results of the separate account
are not included in the consolidated statements of income.
Policy claims that are charged to expense include claims incurred in the
period in excess of related policy account balances. Other policy benefits
include interest credited to universal life and other interest-sensitive life
insurance policies. Interest crediting rates ranged from 4 1/2% to 7 5/8%.
Investment Products Investment products include flexible premium annuities,
structured settlement annuities and other supplementary contracts without life
contingencies. Revenues for investment products consist of policy charges for
the cost of insurance, policy administration and surrenders that have been
assessed against policy account balances during the period. Deposits for these
products are recorded as policy fund liabilities, which are increased by
interest credited to the liabilities and decreased by withdrawals and
administrative charges assessed against the contract holders. Interest
crediting rates ranged from 3 1/2% to 8 7/8%.
Traditional Life Insurance Products Traditional life insurance products
include those products with fixed and guaranteed premiums and benefits. Premium
revenues for traditional life insurance are recognized as revenues when due.
The liabilities for future policy benefits have been computed by the net level
premium method based on estimated future investment yield, mortality and
withdrawal experience. Interest rate assumptions ranged from 3% to 9%.
Mortality has been calculated principally on an experience multiple applied to
select and ultimate tables in common usage in the
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
industry. Estimated withdrawals have been determined principally based on
industry tables. Policy benefits and claims are charged to expense as incurred.
Accident and Health Insurance Accident and health insurance premiums are
earned on a monthly pro rata basis over the terms of the policies. Benefits
include paid claims plus an estimate for known claims and claims incurred but
not reported as of the balance sheet date.
Reinsurance In the ordinary course of business, the Company and its insurance
subsidiaries assume and cede reinsurance with other insurance companies. These
arrangements minimize the maximum net loss potential arising from large risks.
Reinsurance contracts do not relieve the Company and its insurance subsidiaries
from their obligation to policyholders. The Company evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk arising
from similar activities or economic characteristics of the reinsurers to
minimize its exposure to significant losses from reinsurer insolvencies.
Reinsurance recoverable on life and health policy liabilities represent
estimates of the portion of such liabilities that will be recovered from
reinsurers, determined in a manner consistent with the liabilities associated
with the reinsured policies.
Deferred Policy Acquisition Costs Certain costs of acquiring insurance
contracts, principally commissions, underwriting costs and certain variable
field office expenses have been deferred. Deferred policy acquisition costs for
universal life and investment contracts are being amortized over the lives of
the contracts in relation to the present value of estimated gross profits
expected to be realized. Beginning in 1994, deferred policy acquisition costs
related to universal life and investment contracts are also adjusted to reflect
the effects that the unrealized gains or losses on investments classified as
available-for-sale would have had on the present value of estimated gross
profits had such gains or losses actually been realized. This adjustment is
excluded from income and charged or credited directly to the unrealized
appreciation or depreciation of the investments component of shareholder's
equity, net of applicable deferred income tax.
Traditional life insurance deferred policy acquisition costs are being
amortized over the premium-payment period of the related policies using
assumptions consistent with those used in computing policy benefit reserves.
Value Assigned Purchased Insurance In Force The value assigned purchased
insurance in force is being amortized principally over the estimated life of
the insurance in force at the date of acquisition in proportion to the
emergence of profit using assumptions consistent with those used in the
amortization of the deferred policy acquisition costs. Interest accrues on the
unamortized balance at rates ranging from 7 1/2% to 9 1/2%. Beginning in 1994,
value assigned purchased insurance in force related to universal life and
investment contracts is also adjusted to reflect the effects that the
unrealized gains or losses on investments classified as available-for-sale
would have had on the present value of estimated gross profits had such gains
or losses actually been realized. This adjustment is excluded from income and
charged or credited directly to the unrealized appreciation or depreciation of
the investments component of shareholder's equity, net of applicable deferred
income tax.
INVESTED ASSETS
Short term investments, which have an original maturity of one year or less,
are carried at amortized cost.
Fixed maturities, which include bonds and redeemable preferred stocks, are
purchased to support the investment strategies of the Company. These strategies
are developed based on many factors including rate of return, maturity, credit
risk, tax considerations and regulatory requirements. Those fixed maturities
which the Company has the ability and intent to hold to maturity are considered
held-to-maturity (previously referred to as held-for-investment) and carried at
amortized cost. Fixed maturities which may be sold prior to maturity to support
the investment strategies of the Company are considered available-for-sale and
carried at market value as of the balance sheet date. Prior to 1994, fixed
maturities considered available-for-sale were carried at the lower of aggregate
amortized cost or market value as of the balance sheet date.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
Equity securities, which include common stocks and non-redeemable preferred
stocks, are carried at market values as of the balance sheet date.
Policy loans are carried at the unpaid balances. Mortgage loans on real
estate are carried at the unpaid balances, adjusted for amortization of premium
or discount.
Realized gains and losses on the sale of investments are determined on the
basis of the cost of the specific investments sold and are credited or charged
to income. Unrealized appreciation or depreciation on those investments which
are carried at market value is excluded from income and credited or charged
directly to a separate component of shareholder's equity.
GOODWILL
Goodwill, which represents the excess of the purchase price over the fair
value of net assets of subsidiaries acquired, is amortized using the straight-
line method over 40 years.
PROPERTY AND EQUIPMENT
Property and equipment used in operations are carried at cost less
accumulated depreciation. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets.
FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return with its parent.
Federal income tax is allocated as if the Company and its subsidiaries filed a
separate consolidated income tax return. Deferred income tax assets and
liabilities are recognized for the expected future tax effects attributable to
temporary differences between the financial reporting and tax bases of assets
and liabilities, based on enacted tax rates and other provisions of tax law.
Deferred income taxes related to unrealized appreciation or depreciation of
investments carried at market value are charged or credited directly to a
separate component of shareholder's equity.
FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values of financial instruments are based on quoted market prices where
available. Fair values of financial instruments for which quoted market prices
are not available are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rates and the estimates of future cash flows.
Accordingly, the derived fair value estimates cannot be substantiated by
comparison to independent markets and are not necessarily indicative of the
amounts that could be realized in immediate settlement of the instrument.
Certain financial instruments, particularly insurance contracts, are excluded
from fair value disclosure requirements.
The methods and assumptions used to estimate the fair value of financial
instruments are as follows:
. Fair values of fixed maturities with active markets are based on quoted
market prices. For fixed maturities that trade in less active markets,
fair values are obtained from independent pricing services. Fair values
of fixed maturities are principally a function of current interest
rates. Care should be used in evaluating the significance of these
estimated market values.
. Fair values of equity securities are based on quoted market prices.
. The carrying value of short term investments approximates fair value due
to the short maturities of these investments.
. Fair values of policy loans and mortgage loans are estimated using
discounted cash flow analyses and approximate carrying values.
. The carrying value of short term debt approximates fair value due to the
short maturities of the debt.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
The carrying value and fair value of financial instruments at December 31,
1994 are as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Assets
Invested assets
Fixed maturities
Held-to-maturity................................ $ 620,935 $ 605,962
Available-for-sale.............................. 1,537,409 1,537,409
Equity securities................................. 86,768 86,768
Short term investments............................ 112,393 112,393
Policy loans...................................... 190,694 190,694
Mortgage loans on real estate..................... 11,985 11,985
Liabilities
Short term debt..................................... 36,000 36,000
</TABLE>
CASH FLOW INFORMATION
In the statement of cash flows, short term investments are not considered to
be cash equivalents. Cash overdrafts are included in accrued expenses and other
liabilities. The overdrafts at December 31, 1994 were $29,574,000.
2. CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Similar to the Company's previous accounting policy for
investments in fixed maturities and equity securities, SFAS No. 115 provides
that the accounting for such securities depends on their classification as
either held-to-maturity (previously referred to as held-for-investment),
available-for-sale or trading. However, SFAS No. 115 establishes more stringent
criteria for classifying fixed maturities as held-to-maturity. Therefore, the
adoption of SFAS No. 115 resulted in an increase in the portion of the
Company's fixed maturities classified as available-for-sale and a similar
decrease in those classified as held-to-maturity. SFAS No. 115 also requires
that fixed maturities classified as available-for-sale be carried at market
value, with unrealized appreciation or depreciation excluded from income and
credited or charged directly to a separate component of shareholder's equity.
Prior to 1994, such fixed maturities were carried at the lower of the aggregate
amortized cost or market value. In conjunction with the Company's adoption of
SFAS No. 115, deferred policy acquisition costs and value assigned purchased
insurance in force related to universal life and investment contracts were
adjusted to reflect the effects that would have been recognized had the
unrealized gains relating to investments classified as available-for-sale
actually been realized, with a corresponding charge directly to the separate
component of shareholder's equity. SFAS No. 115 may not be retroactively
applied to prior years' financial statements. The cumulative effect, as of
January 1, 1994, of the change in accounting principle on shareholder's equity,
was as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Unrealized appreciation of fixed maturities considered
available-for-sale....................................... $ 99,395
Adjustment to deferred policy acquisition costs........... (54,838)
Adjustment to value assigned purchased insurance in force. (5,882)
--------
38,675
Deferred income tax....................................... 13,535
--------
Increase in shareholder's equity........................ $ 25,140
========
</TABLE>
Adoption of the SFAS No. 115 did not have an impact on net income in 1994 nor
is it expected to in future years.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
3. INVESTED ASSETS
The sources of net investment income for the year ended December 31, 1994
were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Fixed maturities............................................ $185,594
Equity securities........................................... 4,996
Short term investments...................................... 2,933
Policy loans................................................ 12,749
Mortgage loans.............................................. 1,259
Other....................................................... 1,214
--------
Gross investment income................................... 208,745
Investment expenses......................................... 2,430
--------
Net investment income..................................... $206,315
========
</TABLE>
Realized investment gains and losses for the year ended December 31, 1994
were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Gross realized investment gains
Fixed maturities.......................................... $ 6,013
Equity securities......................................... 8,302
-------
$14,315
=======
Gross realized investment losses
Fixed maturities.......................................... $ 3,618
Equity securities......................................... 1,393
-------
$ 5,011
=======
Net realized investment gains
Fixed maturities.......................................... $ 2,395
Equity securities......................................... 6,909
-------
$ 9,304
=======
</TABLE>
Proceeds from the sales of fixed maturities considered available-for-sale
were $174,053,000. Gross gains of $5,918,000 and gross losses of $3,581,000
were realized on such sales in 1994.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
3. INVESTED ASSETS--CONTINUED
The components of unrealized appreciation (depreciation) of investments
carried at market value at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Equity securities
Gross unrealized appreciation............................. $ 7,744
Gross unrealized depreciation............................. 2,778
--------
4,966
Fixed maturities
Gross unrealized appreciation............................. 16,434
Gross unrealized depreciation............................. 72,886
--------
(56,452)
--------
(51,486)
Deferred policy acquisition costs adjustment................ 23,545
Value assigned purchased insurance in force adjustment...... 3,438
--------
26,983
Minority interest in unrealized depreciation................ 39
Deferred tax asset, net..................................... (8,564)
Tax valuation allowance..................................... 18,007
--------
$(33,907)
========
</TABLE>
The changes in unrealized appreciation or depreciation of investments carried
at market value for the year ended December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Change in unrealized appreciation of equity securities..... $ (9,257)
Change in unrealized appreciation of fixed maturities...... (155,808)
Change in deferred policy acquisition costs adjustment..... 78,383
Change in value assigned purchased insurance in force ad-
justment.................................................. 9,320
---------
(77,362)
Deferred income tax (credit)............................... (27,077)
Change in tax valuation allowance.......................... 18,007
---------
(68,292)
Cumulative effect, as of January 1, 1994, of change in ac-
counting principle, net................................... 25,140
---------
$ (43,152)
=========
</TABLE>
The cost of equity securities was $81,802,000 at December 31, 1994.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
3. INVESTED ASSETS--CONTINUED
The amortized costs and estimated market value of fixed maturities were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Held-to-maturity
Tax exempt bonds.............. $ 1,840 $ 80 $ 35 $ 1,885
---------- ------- ------- ----------
Taxable
U.S. Government and
government agency and
authority obligations...... 17,256 163 17,093
Corporate bonds............. 235,056 8,809 1,976 241,889
Foreign bonds............... 149 17 166
Mortgage-backed securities.. 366,634 2,316 24,021 344,929
---------- ------- ------- ----------
Total taxable................. 619,095 11,142 26,160 604,077
---------- ------- ------- ----------
Total held-to-maturity........ 620,935 11,222 26,195 605,962
---------- ------- ------- ----------
Available-for-sale
Taxable
U.S. Government and
government agency and
authority obligations...... 128,637 108 6,912 121,833
Corporate bonds............. 819,640 12,147 39,451 792,336
Foreign bonds............... 4,828 89 338 4,579
Mortgage-backed securities.. 637,729 3,822 26,127 615,424
Redeemable preferred stocks. 3,027 268 58 3,237
---------- ------- ------- ----------
Total available-for-sale........ 1,593,861 16,434 72,886 1,537,409
---------- ------- ------- ----------
Total fixed maturities.......... $2,214,796 $27,656 $99,081 $2,143,371
========== ======= ======= ==========
</TABLE>
The change in unrealized appreciation or depreciation of fixed maturities
carried at amortized cost is not reflected in the financial statements. The
change in unrealized appreciation or depreciation of such fixed maturities was
depreciation of $166,767,000 for the year ended December 31, 1994. The change
includes a reduction of $99,395,000 for the cumulative effect, as of January 1,
1994, resulting from the implementation of SFAS No. 115.
The amortized cost and estimated market value of fixed maturities at December
31, 1994 by contractual maturity were as follows:
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
------------------- ---------------------
ESTIMATED ESTIMATED
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------- --------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less........... $ 8,289 $ 8,340
Due after one year through five
years............................ $ 43,976 $ 45,138 160,541 162,689
Due after five years through ten
years............................ 94,805 99,971 352,589 337,511
Due after ten years............... 115,520 115,924 434,713 413,445
-------- -------- ---------- ----------
Subtotal........................ 254,301 261,033 956,132 921,985
Mortgage-backed securities........ 366,634 344,929 637,729 615,424
-------- -------- ---------- ----------
$620,935 $605,962 $1,593,861 $1,537,409
======== ======== ========== ==========
</TABLE>
Actual maturities could differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
4. DEFERRED POLICY ACQUISITION COSTS AND VALUE ASSIGNED PURCHASED INSURANCE IN
FORCE
Policy acquisition costs deferred and the related amortization charged to
income for the year ended December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Balance, beginning of year................................. $474,105
Cumulative effect, as of January 1, 1994, of change in
accounting principle...................................... (54,838)
Costs deferred during year................................. 129,216
Amortization during year................................... (68,521)
Change in adjustment to reflect the effects of unrealized
depreciation of investments............................... 78,383
--------
Balance, end of year....................................... $558,345
========
</TABLE>
Changes in the value assigned purchased in force for the year ended December
31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Balance, beginning of year................................. $48,439
Cumulative effect, as of January 1, 1994, of change in
accounting principle...................................... (5,882)
Accrued interest........................................... 4,040
Amortization............................................... (7,769)
Change in adjustment to reflect the effects of unrealized
depreciation of investments............................... 9,320
-------
Balance, end of year....................................... $48,148
=======
</TABLE>
The estimated net amortization of the value assigned purchased insurance in
force is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Year Ending December 31:
1995...................................................... $ 3,780
1996...................................................... 3,623
1997...................................................... 3,350
1998...................................................... 3,057
1999...................................................... 2,641
Subsequent to 1999........................................ 31,697
-------
$48,148
=======
</TABLE>
5. FEDERAL INCOME TAXES
Federal income tax provisions for the year ended December 31, 1994 have been
computed using the tax rates and regulations in effect during the year. The
provision for federal income tax gives effect to permanent differences between
financial and taxable income. Accordingly, the effective tax rate is less than
the statutory federal corporate tax rate. The reasons for the lower effective
tax rate were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Tax at statutory federal income tax rate (35%).............. $ 9,667
Dividends received deduction and tax exempt income.......... (1,925)
Amortization of goodwill.................................... 394
Foreign taxes............................................... (952)
Settlement of prior years' federal income tax expense....... 34
Other....................................................... 289
-------
Federal income tax expense................................ $ 7,507
=======
</TABLE>
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
5. FEDERAL INCOME TAXES--CONTINUED
The tax effects of temporary differences that gave rise to deferred income
tax liabilities and assets at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Deferred income tax liabilities:
Deferred policy acquisition costs......................... $161,721
Value assigned purchased insurance in force............... 21,926
--------
Total................................................... 183,647
Deferred income tax assets:
Future policy benefits and policy fund balances........... 127,867
Valuation allowance for deferred tax assets............... (18,007)
Other..................................................... 7,605
--------
Total................................................... 117,465
--------
Net deferred income tax liabilities......................... $ 66,182
========
</TABLE>
The valuation allowance has been established primarily for the deferred
income tax asset related to the unrealized depreciation of investments at
December 31, 1994 due to the uncertainty as to when, if ever, such losses might
be realized.
Prior to 1984, life insurance companies were allowed certain special
deductions for federal income tax purposes which could become subject to tax at
normal rates under certain circumstances, including distribution to
shareholders. These special deductions were set aside in a Policyholders'
Surplus Account. Under the 1984 Act, no further additions to this account are
permitted. At December 31, 1994, approximately $13,464,000 of untaxed retained
earnings remained. No income taxes have been provided since management does not
anticipate any transaction that would cause this remaining amount to become
taxable. The unrecognized deferred tax related to the Policyholders' Surplus
Account is $4,712,000.
Federal income taxes paid in 1994 were $13,577,000.
6. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
(A) The Company has several noncontributory defined benefit pension plans
covering substantially all employees. The benefits are generally based on an
employee's years of service and average compensation during the last five years
of employment. Pension costs are determined using the projected unit credit
method. The Company's policy is to make annual contributions that meet the
minimum funding requirements of the Employee Retirement Income Security Act of
1974. Contributions are intended to provide not only for benefits attributed to
service but also for those expected to be earned in the future.
The components of net pension cost for the year ended December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Service cost of current period.............................. $ 3,387
Interest cost on projected benefit obligation............... 5,098
Actual return on plan assets................................ (27)
Net amortization and deferral............................... (6,253)
-------
Net pension cost............................................ $ 2,205
=======
</TABLE>
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
6. PENSIONS AND OTHER POSTRETIREMENT BENEFITS--CONTINUED
The following table sets forth the plans' funded status and amounts
recognized in the balance sheet at December 31, 1994:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Actuarial present value of benefit obligations for service
rendered to date:
Accumulated benefit obligations, including vested benefits
of $53,769............................................... $55,388
Additional amount related to projected future salary
increases................................................ 15,892
-------
Projected benefit obligation for service rendered to date... 71,280
Plan assets at fair value, primarily listed stocks and
bonds...................................................... 66,833
-------
Plan assets less than projected benefit obligation.......... 4,447
Unrecognized net gain from past experience different from
that assumed and effects of changes in assumptions......... 2,818
Unrecognized prior service cost............................. (2,308)
Unrecognized net obligation at January 1, 1986 being
recognized over thirteen years............................. 1,335
-------
Pension liability included in other liabilities............. $ 6,292
=======
</TABLE>
The weighted average discount rates used in determining the actuarial present
value of the projected benefit obligations at December 31, 1994 was 7 3/4% and
the rate of increase in future compensation levels was 6%. The expected long-
term rate of return on assets was 9%.
(B) The Company provides certain other postretirement benefits, principally
health care and life insurance, to retired employees and their beneficiaries
and covered dependents. Substantially all employees may become eligible for
these benefits upon retirement if they meet minimum age and years of service
requirements.
The Company does not fund these benefits in advance. Benefits are paid as
covered expenses are incurred. Health care coverage is contributory. Retiree
contributions vary based upon a retiree's age, type of coverage and years of
service with the Company. Life insurance coverage is noncontributory.
The components of net postretirement benefit cost for the year ended December
31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Service cost of current period.............................. $1,022
Interest cost on accumulated benefit obligation............. 1,505
------
Net postretirement benefit cost............................. $2,527
======
</TABLE>
Prior to the adoption of SFAS No. 106, the cost of other postretirement
benefits was recognized when the annual insurance premiums were paid.
The components of the accumulated postretirement benefit obligation at
December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Retirees................................................... $ 8,899
Fully eligible active plan participants.................... 1,054
Other active plan participants............................. 11,274
-------
Accumulated postretirement benefit obligation.............. 21,227
Unrecognized net gain from past experience different from
that assumed.............................................. 986
-------
Postretirement benefit liability included in other liabili-
ties...................................................... $22,213
=======
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
6. PENSIONS AND OTHER POSTRETIREMENT BENEFITS--CONTINUED
The weighted average discount rate used in determining the actuarial present
value of the accumulated postretirement benefit obligation at December 31, 1994
was 7 3/4%. The health care cost trend rate used to measure the accumulated
postretirement cost for medical benefits was 14 1/2% for 1994. The rate is
assumed to decrease gradually to 7 1/2% for the year 2005 and remain at that
level thereafter. The health care cost trend rate assumption has a significant
effect on the amount of the accumulated postretirement benefit obligation and
the net postretirement benefit cost reported. To illustrate, a one percent
increase in the trend rate for each year would increase the accumulated
postretirement benefit obligation at December 31, 1994 by $2,590,000 and the
aggregate of the service and interest cost components of net postretirement
benefit cost for the year ended December 31, 1994 by $349,000.
7. STOCK OWNERSHIP AND INCENTIVE PLANS
Substantially all of the Company's employees are eligible to participate in
the stock ownership and incentive plans of the Parent. The aggregate costs
associated with the plans were approximately $4,401,000 for the year ended
December 31, 1994.
8. RENT EXPENSE AND COMMITMENTS
The Company occupies office facilities under lease agreements which expire at
various dates through 2009; such leases generally are renewed or replaced by
other leases. In addition, the Company leases office and transportation
equipment. All leases are operating leases.
Total rent expense charged to operations amounted to approximately $5,099,000
for 1994. Leases generally provide that the Company pay for utilities,
insurance, taxes and maintenance and contain renewal options. At December 31,
1994, future minimum rental payments required under noncancellable operating
leases were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Years Ending December 31:
1995..................................................... $ 4,161
1996..................................................... 3,372
1997..................................................... 2,573
1998..................................................... 2,042
1999..................................................... 1,634
Subsequent to 1999....................................... 8,749
-------
$22,531
=======
</TABLE>
9. REINSURANCE
The Company is involved in both the cession and assumption of reinsurance
with other insurance companies. Risks are reinsured with other companies to
permit the recovery of a portion of the direct losses. Sovereign had a
reinsurance recoverable resulting from a reinsurance agreement with a single
reinsurer of $102,761,000 at December 31, 1994. Sovereign coinsured fifty
percent of a block of single premium whole life policies under this agreement.
Sovereign and the reinsurer are joint and equal owners in securities and short-
term investments of $192,344,000 at December 31, 1994. The remaining
reinsurance recoverables were associated with numerous other reinsurers. The
maximum amount of individual life insurance retained on any one life, including
accidental death benefits, is $1,400,000.
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
9. REINSURANCE--CONTINUED
Selected data regarding reinsurance amounts appearing in the consolidated
financial statements for 1994 are as follows:
<TABLE>
<CAPTION>
CEDED TO ASSUMED
OTHER FROM OTHER
DIRECT AMOUNT COMPANIES COMPANIES NET AMOUNT
------------- --------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Premiums Earned and Policy
Charges for the year:
Life Insurance............ $313,914 $19,068 $1,976 $296,822
Accident and Health Insur-
ance..................... 548,171 8,780 80 539,471
-------- ------- ------ --------
Total Premiums and Policy
Charges.................. $862,085 $27,848 $2,056 $836,293
======== ======= ====== ========
</TABLE>
Reinsurance recoveries of the Company which have been deducted from benefits,
claims and expenses were $53,141,000 in 1994.
10. ACCIDENT AND HEALTH UNPAID CLAIMS
The process of estimating loss reserves is an imprecise science and reflects
significant judgmental factors. Management considers facts currently known and
the present state of health care markets in which it operates when establishing
accident and health claim reserves. Management believes that the aggregate
claim liabilities at December 31, 1994 are adequate to cover claims for losses
which have occurred, including both those known and those yet to be reported.
However, changes in market conditions may require additional increases in claim
reserves which may adversely affect results in future periods. This emergence
cannot be precisely estimated.
A reconciliation of the beginning and ending liability for accident and
health unpaid claims, net of reinsurance recoverable, and a reconciliation of
the net liability to the corresponding liability on a gross basis at December
31, 1994 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Gross liability at beginning of year........................ $132,382
Less: reinsurance recoverable............................. 847
--------
Net liability at beginning of year.......................... 131,535
Incurred:
Current year.............................................. 469,102
Prior years............................................... (15,052)
--------
Total incurred.............................................. 454,050
Paid:
Current year.............................................. 365,573
Prior years............................................... 116,482
--------
Total paid.................................................. 482,055
--------
Net liability at end of year................................ 103,530
Plus: reinsurance recoverable............................. 1,545
--------
Gross liability at end of year.............................. $105,075
========
</TABLE>
During 1994, the accident and health business experienced overall favorable
development of $15,052,000 on claim reserves established as of the previous
year end. This difference has been reflected in operating results. Claims
settlement costs are not developed as part of the claim liability and are
reflected in operating results in the years the claims are paid.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
11. DIVIDEND RESTRICTIONS
The Company and its insurance subsidiaries are required to file annual
statements with state insurance regulatory authorities prepared on an
accounting basis prescribed or permitted by such authorities (statutory basis).
For such subsidiaries, GAAP differs in certain respects from statutory
accounting practices.
A comparison of shareholder's equity on a GAAP basis and policyholders'
surplus on a statutory basis at December 31, 1994 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
GAAP........................................................ $731,810
Statutory................................................... 301,084
</TABLE>
A comparison of GAAP and statutory net income (loss) for the year ended
December 31, 1994 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
GAAP........................................................ $20,551
Statutory................................................... (4,264)
</TABLE>
The amount of GAAP surplus in excess of statutory surplus is unavailable for
distribution. In addition, various state insurance laws restrict the Company
and its insurance subsidiaries as to the amount of dividends from statutory
surplus they may pay without the prior approval of regulatory authorities. The
restrictions generally are based on net gains from operations and on certain
levels of policyholders' surplus as determined in accordance with statutory
accounting practices. Dividends in excess of such thresholds are considered
"extraordinary" and require prior regulatory approval. The maximum ordinary
dividend distribution that may be made by the Company to the Parent during 1995
is approximately $30,100,000.
12. DEBT AND CREDIT ARRANGEMENTS
(a) Short term debt at December 31, 1994 consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Commercial paper............................................ $26,000
Notes....................................................... 10,000
-------
$36,000
=======
</TABLE>
The short term commercial paper was issued by Chubb Capital Corporation, a
subsidiary of the Parent. The interest rate is variable and is based on Chubb
Capital Corporation's cost of funds. Interest paid on the borrowings in 1994
was $1,094,000. In addition, the Company has a loan agreement with a bank
providing for a line of credit of $36,000,000 at a variable interest rate.
There were $10,000,000 in borrowings against this line of credit at December
31, 1994. Interest paid on these borrowings was $382,000 in 1994.
(b) Long term debt consisted of the following:
A mortgage loan payable, which is secured by a portion of the Company's home
office property in Concord, New Hampshire, bears interest at 11 3/8% and is
payable monthly through December 2000.
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
12. DEBT AND CREDIT ARRANGEMENTS--CONTINUED
Debt maturities of the mortgage loan payable are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Years ending December 31:
1995..................................................... $ 753
1996..................................................... 843
1997..................................................... 944
1998..................................................... 1,057
1999..................................................... 1,184
Subsequent to 1999....................................... 1,184
------
$5,965
======
</TABLE>
Interest paid on the mortgage loan in 1994 was $721,000.
13. BUSINESS SEGMENTS
The Company is principally engaged in the sale of individual and group life
and health insurance products. Insurance revenues, net investment income and
earnings before federal income taxes for the year ended December 31, 1994 for
each class of business were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Revenues:
Individual insurance:
Premiums and policy charges........................... $271,947
Investment income..................................... 192,414
Group insurance:
Premiums.............................................. 564,346
Investment income..................................... 13,901
Earnings (loss) before federal income taxes and minority
interest:
Individual insurance.................................. 47,858
Group insurance....................................... (29,540)
Realized gains........................................ 9,304
--------
$ 27,622
========
</TABLE>
It is not practicable to determine identifiable assets and capital
expenditures applicable to the foregoing classes of business.
Earnings before federal income taxes by class of business reflect allocations
of investment income and significant expenses using allocation methods deemed
to be reasonable. Other acceptable allocation methods could produce different
results by groupings of classes of business.
14. ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In May 1993, the Financial Accounting Standards Board (FASB) issued SFAS
No.114, Accounting by Creditors for Impairment of a Loan. Under SFAS No. 114, a
loan is considered impaired and a valuation allowance is established when it is
probable that a creditor will be unable to collect all principal and interest
amounts due according to the contractual terms of the loan agreement. SFAS No.
114 requires creditors to measure impairment of a loan based on the present
value of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, based on the market price of the loan or the
fair value of the collateral if the loan is collateral dependent. Currently,
the Company measures impairment of a loan based on undiscounted expected future
cash flows. SFAS No. 114 is effective for fiscal years beginning after December
15, 1994. Restatement of prior years' financial statements is not permitted.
The Company will adopt SFAS No. 114 in the first quarter of 1995. The adoption
will not have a significant effect on net income in 1995.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
15. LITIGATION
The Company is involved in pending or threatened lawsuits arising from the
normal conduct of its insurance business. Several suits have been brought
against the Company seeking both punitive and compensatory damages. Management
is of the opinion that these suits are substantially without merit, that valid
defenses exist, and that such litigation will not have a material effect on the
consolidated financial statements.
F-20
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Contractholders
Chubb Separate Account A
We have audited the accompanying statement of assets and liabilities of Chubb
Separate Account A ("Separate Account") as of December 31, 1994, and the
related statements of operations and changes in net assets for each of the
periods indicated on pages F-23, F-24, F-25, F-26, F-27 and F-28 included in
this Prospectus. These financial statements are the responsibility of the
Separate Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned as of December 31, 1994,
by correspondence with Chubb America Fund, Inc. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chubb Separate Account A at
December 31, 1994, the results of its operations and changes in its net assets
for each of the periods indicated on pages F-23, F-24, F-25, F-26, F-27 and F-
28 included in this Prospectus, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Boston, Massachusetts
March 3, 1995
F-21
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
CHUBB SEPARATE ACCOUNT A
DECEMBER 31, 1994
<TABLE>
<CAPTION>
WORLD DOMESTIC
GROWTH MONEY GOLD GROWTH GROWTH CAPITAL
STOCK MARKET STOCK STOCK BOND AND INCOME GROWTH BALANCED
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A S S E T S
Investments in Chubb
America Fund, Inc.--
Note C
World Growth Stock
Portfolio (cost
$49,660,949).......... $52,461,441
Money Market Portfolio
(cost $6,830,975)..... $6,725,183
Gold Stock Portfolio
(cost $5,607,982)..... $6,052,182
Domestic Growth Stock
Portfolio
(cost $27,311,718).... $30,395,080
Bond Portfolio
(cost $12,216,092).... $11,653,078
Growth and Income Port-
folio (cost
$4,699,216)........... $4,427,003
Capital Growth Portfo-
lio
(cost $25,711,145).... $26,065,103
Balanced Portfolio
(cost $9,468,887)..... $9,063,303
Accrued investment
income................. 2,814,816 227,166 41,897 1,832,844 420,955 152,733 444,167 324,096
Amounts due from (to)
Chubb America Fund,
Inc. .................. 111,183 0 (4,618) 36,069 16,361 6,746 66,637 10,740
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------
55,387,440 6,952,349 6,089,461 32,263,993 12,090,394 4,586,482 26,575,907 9,398,139
Amounts due (to) from
Chubb Life Insurance
Company of America..... (111,183) 0 4,618 (36,069) (16,361) (6,746) (66,637) (10,740)
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------
TOTAL NET ASSETS...... $55,276,257 $6,952,349 $6,094,079 $32,227,924 $12,074,033 $4,579,736 $26,509,270 $9,387,399
=========== ========== ========== =========== =========== ========== =========== ==========
NET ASSET DISTRIBUTION
Ensemble............... $ 1,646,377 $ 96,133 $ 194,882 $ 680,724 $ 28,908
Ensemble II............ 53,629,880 6,856,216 5,899,197 31,547,200 12,045,125 $4,579,736 $26,509,270 $9,387,399
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------
TOTAL NET ASSETS...... $55,276,257 $6,952,349 $6,094,079 $32,227,924 $12,074,033 $4,579,736 $26,509,270 $9,387,399
=========== ========== ========== =========== =========== ========== =========== ==========
UNITS OUTSTANDING
Ensemble............... 61,884 6,329 12,075 26,636 1,723
Ensemble II............ 2,062,010 461,956 373,955 1,263,516 734,232 382,844 1,780,412 814,231
NET ASSET VALUE PER UNIT
Ensemble............... $ 26.60 $ 15.19 $ 16.14 $ 25.56 $ 16.78
Ensemble II............ 26.01 14.84 15.78 24.97 16.40 $ 11.96 $ 14.89 $ 11.53
</TABLE>
See notes to financial statements.
F-22
<PAGE>
STATEMENTS OF OPERATIONS
CHUBB SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
WORLD GROWTH STOCK DIVISION MONEY MARKET DIVISION GOLD STOCK DIVISION
---------------------------------- -------------------------- ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------------------------------- -------------------------- ----------------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------- ---------- ---------- -------- ------- ------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income....... $ 677,535 $ 445,539 $ 493,520 $227,166 $70,112 $70,341 $ 9,726 $ 5,134 $ 7,095
Distributions of real-
ized gains............ 2,617,290 2,339,067 515,795 20 39,947
----------- ---------- ---------- -------- ------- ------- ----------- ---------- ---------
3,294,825 2,784,606 1,009,315 227,166 70,132 70,341 49,673 5,134 7,095
Expenses:
Mortality and expense
risk charge........... 432,600 274,208 194,705 58,706 24,612 21,996 58,273 38,685 29,358
----------- ---------- ---------- -------- ------- ------- ----------- ---------- ---------
Net Investment Income
(Loss)................ 2,862,225 2,510,398 814,610 168,460 45,520 48,345 (8,600) (33,551) (22,263)
----------- ---------- ---------- -------- ------- ------- ----------- ---------- ---------
Gain (loss) on invest-
ments
Net realized gain
(loss) on investments. 920,083 115,190 233,395 49,632 (11,509) (7,828) 122,084 100,914 (66,666)
Change in Net
unrealized gain (loss)
on investments........ (6,066,376) 6,509,695 73,436 (57,699) 5,734 7,374 (1,174,863) 2,035,628 (28,898)
----------- ---------- ---------- -------- ------- ------- ----------- ---------- ---------
Net gain (loss) on in-
vestments............. (5,146,293) 6,624,885 306,831 (8,067) (5,775) (454) (1,052,779) 2,136,542 (95,564)
----------- ---------- ---------- -------- ------- ------- ----------- ---------- ---------
Net Increase (De-
crease) in Net Assets
Resulting from Opera-
tions................. $(2,284,068) $9,135,283 $1,121,441 $160,393 $39,745 $47,891 $(1,061,379) $2,102,991 $(117,827)
=========== ========== ========== ======== ======= ======= =========== ========== =========
</TABLE>
See notes to financial statements.
F-23
<PAGE>
STATEMENTS OF OPERATIONS--(CONTINUED)
CHUBB SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
DOMESTIC GROWTH STOCK DIVISION BOND DIVISION
--------------------------------- ------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------------------------- ------------------------------
1994 1993 1992 1994 1993 1992
---------- ---------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income........ $ 180,735 $ 164,438 $ 169,928 $ 420,955 $272,047 $ 164,883
Distributions of real-
ized gains............. 2,374,949 1,844,176 1,251,318 23,455 133,342
---------- ---------- ---------- --------- -------- ---------
2,555,684 2,008,614 1,421,246 420,955 295,502 298,225
Expenses:
Mortality and expense
risk charge............ 247,394 190,522 140,522 54,890 30,664 20,125
---------- ---------- ---------- --------- -------- ---------
Net Investment Income
(Loss)................. 2,308,290 1,818,092 1,280,724 366,065 264,838 278,100
---------- ---------- ---------- --------- -------- ---------
Gain (loss) on invest-
ments
Net realized gain
(loss) on investments.. 358,705 317,906 196,064 (85,477) 12,556 19,968
Change in Net
unrealized gain (loss)
on investments......... (753,758) 882,353 2,207,513 (455,167) (40,630) (153,169)
---------- ---------- ---------- --------- -------- ---------
Net gain (loss) on in-
vestments.............. (395,053) 1,200,259 2,403,577 (540,644) (28,074) (133,201)
---------- ---------- ---------- --------- -------- ---------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $1,913,237 $3,018,351 $3,684,301 $(174,579) $236,764 $ 144,899
========== ========== ========== ========= ======== =========
</TABLE>
See notes to financial statements.
F-24
<PAGE>
STATEMENTS OF OPERATIONS--(CONTINUED)
CHUBB SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
GROWTH AND INCOME DIVISION CAPITAL GROWTH DIVISION BALANCED DIVISION
-------------------------------- ------------------------------------ --------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
YEAR ENDED MAY 1, 1992 YEAR ENDED MAY 1, 1992 YEAR ENDED MAY 1, 1992
DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31, TO
------------------- DECEMBER 31, ----------------------- DECEMBER 31, ------------------- DECEMBER 31,
1994 1993 1992 1994 1993 1992 1994 1993 1992
--------- -------- ------------ ----------- ---------- ------------ --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment In-
come:
Dividend income. $ 51,623 $ 15,896 $ 777 $ 50,583 $ 275,218 $134,116 $26,561
Distributions of
realized gains.. 142,202 36,065 54 617,006 $1,071,775 $ 71,864 93,822 98,843
--------- -------- ------- ----------- ---------- -------- --------- -------- -------
193,825 51,961 831 667,589 1,071,775 71,864 369,040 232,959 26,561
Expenses:
Mortality and
expense risk
charge.......... 27,333 7,723 758 180,001 80,813 9,830 67,423 33,205 2,829
--------- -------- ------- ----------- ---------- -------- --------- -------- -------
Net Investment
Income (Loss)... 166,492 44,238 73 487,588 990,962 62,034 301,617 199,754 23,732
--------- -------- ------- ----------- ---------- -------- --------- -------- -------
Gain (loss) on
investments
Net realized
gain (loss) on
investments..... 15,866 11,603 53 88,882 71,362 7,991 (8,145) 7,374 328
Change in Net
unrealized gain
(loss) on in-
vestments....... (368,658) 73,548 22,898 (1,243,197) 1,148,856 448,298 (456,921) 28,107 23,230
--------- -------- ------- ----------- ---------- -------- --------- -------- -------
Net gain (loss)
on investments.. (352,792) 85,151 22,951 (1,154,315) 1,220,218 456,289 (465,066) 35,481 23,558
--------- -------- ------- ----------- ---------- -------- --------- -------- -------
Net Increase
(Decrease) in
Net Assets
Resulting from
Operations...... $(186,300) $129,389 $23,024 $ (666,727) $2,211,180 $518,323 $(163,449) $235,235 $47,290
========= ======== ======= =========== ========== ======== ========= ======== =======
</TABLE>
See notes to financial statements.
F-25
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
CHUBB SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
WORLD GROWTH STOCK DIVISION MONEY MARKET DIVISION
------------------------------------- -----------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------- -----------------------------------
1994 1993 1992 1994 1993 1992
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN NET
ASSETS
Operations:
Net investment
income (loss)... $ 2,862,225 $ 2,510,398 $ 814,610 $ 168,460 $ 45,520 $ 48,345
Net realized
gain (loss) on
investments..... 920,083 115,190 233,395 49,632 (11,509) (7,828)
Change in Net
unrealized gain
(loss) on in-
vestments....... (6,066,376) 6,509,695 73,436 (57,699) 5,734 7,374
----------- ----------- ----------- ----------- ---------- ----------
Increase
(decrease) in net
assets from
operations....... (2,284,068) 9,135,283 1,121,441 160,393 39,745 47,891
Contractholder
transactions--
Note D:
Transfers of net
premiums........ 20,141,970 10,534,248 7,414,842 6,850,296 2,446,574 1,257,623
Transfers
from/to General
Account and
within Separate
Account, net.... 2,759,340 2,603,096 (638,444) (2,828,836) (959,494) (514,989)
Transfers of
cost of
insurance....... (5,259,191) (3,317,866) (2,858,455) (694,325) (339,479) (253,018)
Transfers on ac-
count of death.. (63,356) (111,354) (59,616) (2,492) (2,759)
Transfers on ac-
count of other
terminations.... (2,139,221) (1,077,794) (1,250,224) (145,435) (126,541) (184,426)
----------- ----------- ----------- ----------- ---------- ----------
Net increase
(decrease) in net
assets derived
from
contractholder
transactions..... 15,439,542 8,630,330 2,608,103 3,179,208 1,018,301 305,190
----------- ----------- ----------- ----------- ---------- ----------
Net increase (de-
crease) in net
assets........... 13,155,474 17,765,613 3,729,544 3,339,601 1,058,046 353,081
Balance at begin-
ning of year..... 42,120,783 24,355,170 20,625,626 3,612,748 2,554,702 2,201,621
----------- ----------- ----------- ----------- ---------- ----------
Balance at end of
year............. $55,276,257 $42,120,783 $24,355,170 $ 6,952,349 $3,612,748 $2,554,702
=========== =========== =========== =========== ========== ==========
<CAPTION>
GOLD STOCK DIVISION
------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
INCREASE
(DECREASE) IN NET
ASSETS
Operations:
Net investment
income (loss)... $ (8,600) $ (33,551) $ (22,263)
Net realized
gain (loss) on
investments..... 122,084 100,914 (66,666)
Change in Net
unrealized gain
(loss) on in-
vestments....... (1,174,863) 2,035,628 (28,898)
------------ ----------- -----------
Increase
(decrease) in net
assets from
operations....... (1,061,379) 2,102,991 (117,827)
Contractholder
transactions--
Note D:
Transfers of net
premiums........ 1,974,134 972,208 843,574
Transfers
from/to General
Account and
within Separate
Account, net.... 112,918 292,134 (389,540)
Transfers of
cost of
insurance....... (635,612) (435,879) (403,242)
Transfers on ac-
count of death.. (6,286) (10,117) (4,749)
Transfers on ac-
count of other
terminations.... (194,112) (168,171) (187,396)
------------ ----------- -----------
Net increase
(decrease) in net
assets derived
from
contractholder
transactions..... 1,251,042 650,175 (141,353)
------------ ----------- -----------
Net increase (de-
crease) in net
assets........... 189,663 2,753,166 (259,180)
Balance at begin-
ning of year..... 5,904,416 3,151,250 3,410,430
------------ ----------- -----------
Balance at end of
year............. $ 6,094,079 $5,904,416 $3,151,250
============ =========== ===========
</TABLE>
See notes to financial statements.
F-26
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS--(CONTINUED)
CHUBB SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
DOMESTIC GROWTH STOCK DIVISION BOND DIVISION
------------------------------------- -----------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------- -----------------------------------
1994 1993 1992 1994 1993 1992
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income
(loss)................. $ 2,308,290 $ 1,818,092 $ 1,280,724 $ 366,065 $ 264,838 $ 278,100
Net realized gain
(loss) on investments.. 358,705 317,906 196,064 (85,477) 12,556 19,968
Change in Net
unrealized gain (loss)
on investments......... (753,758) 882,353 2,207,513 (455,167) (40,630) (153,169)
----------- ----------- ----------- ----------- ---------- ----------
Increase (decrease) in
net assets from
operations.............. 1,913,237 3,018,351 3,684,301 (174,579) 236,764 144,899
Contractholder
transactions--Note D:
Transfers of net
premiums............... 9,425,716 6,002,095 4,689,130 3,028,438 1,613,176 999,072
Transfers from/to
General Account and
within Separate
Account, net........... 166,220 (342,435) (211,268) 6,076,841 29,095 163,730
Transfers of cost of
insurance.............. (2,925,627) (2,247,238) (1,971,266) (704,857) (452,925) (335,419)
Transfers on account of
death.................. (55,379) (66,057) (21,880) (21,087) (2,333)
Transfers on account of
other terminations..... (1,059,998) (844,370) (809,143) (216,561) (191,483) (88,843)
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease)
in net assets derived
from contractholder
transactions............ 5,550,932 2,501,995 1,675,573 8,162,774 995,530 738,540
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease)
in net assets........... 7,464,169 5,520,346 5,359,874 7,988,195 1,232,294 883,439
Balance at beginning of
year.................... 24,763,755 19,243,409 13,883,535 4,085,838 2,853,544 1,970,105
----------- ----------- ----------- ----------- ---------- ----------
Balance at end of year.. $32,227,924 $24,763,755 $19,243,409 $12,074,033 $4,085,838 $2,853,544
=========== =========== =========== =========== ========== ==========
</TABLE>
See notes to financial statements.
F-27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS--(CONTINUED)
CHUBB SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
GROWTH AND INCOME DIVISION CAPITAL GROWTH DIVISION
------------------------------------ --------------------------------------
PERIOD FROM PERIOD FROM
YEAR ENDED MAY 1, 1992 YEAR ENDED MAY 1, 1992
DECEMBER 31, TO DECEMBER 31, TO
---------------------- DECEMBER 31, ------------------------ DECEMBER 31,
1994 1993 1992 1994 1993 1992
---------- ---------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN NET
ASSETS
Operations:
Net investment
income (loss)... $ 166,492 $ 44,238 $ 73 $ 487,588 $ 990,962 $ 62,034
Net realized
gain (loss) on
investments..... 15,866 11,603 53 88,882 71,362 7,991
Change in Net
unrealized gain
(loss) on in-
vestments....... (368,658) 73,548 22,898 (1,243,197) 1,148,856 448,298
---------- ---------- -------- ----------- ----------- ----------
Increase
(decrease) in net
assets from
operations....... (186,300) 129,389 23,024 (666,727) 2,211,180 518,323
Contractholder
transactions--
Note D:
Transfers of net
premiums........ 2,429,810 1,048,058 138,554 12,963,387 6,951,258 1,032,997
Transfers
from/to General
Account and
within Separate
Account, net.... 1,285,556 263,574 232,401 2,594,799 2,870,910 2,788,546
Transfers of
cost of
insurance....... (525,589) (164,878) (14,927) (2,783,710) (1,331,149) (179,876)
Transfers on ac-
count of death.. (1,953) (20,715) (8,862)
Transfers on ac-
count of other
terminations.... (67,115) (10,981) 1,113 (441,447) (3,560) 13,916
---------- ---------- -------- ----------- ----------- ----------
Net increase
(decrease) in net
assets derived
from
contractholder
transactions..... 3,120,709 1,135,773 357,141 12,312,314 8,478,597 3,655,583
---------- ---------- -------- ----------- ----------- ----------
Net increase (de-
crease) in net
assets........... 2,934,409 1,265,162 380,165 11,645,587 10,689,777 4,173,906
Balance at begin-
ning of year..... 1,645,327 380,165 0 14,863,683 4,173,906 0
---------- ---------- -------- ----------- ----------- ----------
Balance at end of
year............. $4,579,736 $1,645,327 $380,165 $26,509,270 $14,863,683 $4,173,906
========== ========== ======== =========== =========== ==========
<CAPTION>
BALANCED DIVISION
-------------------------------------
PERIOD FROM
YEAR ENDED MAY 1, 1992
DECEMBER 31, TO
------------------------ DECEMBER 31,
1994 1993 1992
------------ ----------- ------------
<S> <C> <C> <C>
INCREASE
(DECREASE) IN NET
ASSETS
Operations:
Net investment
income (loss)... $ 301,617 $ 199,754 $ 23,732
Net realized
gain (loss) on
investments..... (8,145) 7,374 328
Change in Net
unrealized gain
(loss) on in-
vestments....... (456,921) 28,107 23,230
------------ ----------- ------------
Increase
(decrease) in net
assets from
operations....... (163,449) 235,235 47,290
Contractholder
transactions--
Note D:
Transfers of net
premiums........ 4,772,184 3,620,437 582,833
Transfers
from/to General
Account and
within Separate
Account, net.... (49,149) 1,321,531 1,011,969
Transfers of
cost of
insurance....... (1,065,410) (588,590) (60,618)
Transfers on ac-
count of death.. (4,758) (6,004)
Transfers on ac-
count of other
terminations.... (202,716) (67,106) 3,720
------------ ----------- ------------
Net increase
(decrease) in net
assets derived
from
contractholder
transactions..... 3,450,151 4,280,268 1,537,904
------------ ----------- ------------
Net increase (de-
crease) in net
assets........... 3,286,702 4,515,503 1,585,194
Balance at begin-
ning of year..... 6,100,697 1,585,194 0
------------ ----------- ------------
Balance at end of
year............. $ 9,387,399 $6,100,697 $1,585,194
============ =========== ============
</TABLE>
See notes to financial statements.
F-28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB SEPARATE ACCOUNT A
DECEMBER 31, 1994
NOTE A--ORGANIZATION OF ACCOUNT
Chubb Separate Account A (the "Separate Account") is a separate account of
Chubb Life Insurance Company of America ("Chubb Life"). The Separate Account is
organized as a unit investment trust registered under the Investment Company
Act of 1940 as amended. It was established for the purpose of funding flexible
premium variable life insurance policies issued by Chubb Life and its
predecessor and is presently comprised of eight investment divisions, each of
which invests exclusively in the corresponding portfolio of the Chubb America
Fund, Inc. (the "Fund"), an open-end diversified Series Management Investment
Company.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments: Investments in shares of the Fund are valued at the
net asset value per share which is calculated each day the New York Stock
Exchange is open for trading.
Investment Income: Dividend income and distributions of realized gains are
recorded on the ex-dividend date.
Investment Transactions: Purchases and sales of shares of the Fund are
recorded as of the trade date, the date the transaction is executed.
Federal Income Taxes: The operations of the Separate Account are included in
the federal income tax return of Chubb Life, which is taxed as a life insurance
company under the Internal Revenue Code. Under current law, no federal income
taxes are payable with respect to the Separate Account.
Expenses: Currently, the Separate Account contains the net assets of two
variable insurance policies, Ensemble and Ensemble II. A mortality and expense
risk charge payable to Chubb Life is accrued daily which will not exceed .6%
and .9% of the average net asset value of each division of the Separate Account
on an annual basis for Ensemble and Ensemble II, respectively.
NOTE C--INVESTMENTS
In determining the net realized gain or loss on sales of shares of the Fund,
the cost of shares sold has been determined on an average cost basis. For
federal income tax purposes, the cost of shares owned at December 31, 1994 is
the same as for financial reporting purposes.
Following is a summary of shares of each portfolio of the Fund owned by the
respective divisions of the Separate Account and the related net asset values
at December 31, 1994.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------
NET ASSET
VALUE
SHARES PER SHARE
--------- ----------
<S> <C> <C>
World Growth Stock Portfolio............................... 2,760,501 $19.004320
Money Market Portfolio..................................... 656,129 10.249792
Gold Stock Portfolio....................................... 372,360 16.253582
Domestic Growth Stock Portfolio............................ 1,907,145 15.937479
Bond Portfolio............................................. 1,200,925 9.703418
Growth and Income Portfolio................................ 394,461 11.222928
Capital Growth Portfolio................................... 1,948,163 13.379326
Balanced Portfolio......................................... 853,684 10.616690
</TABLE>
F-29
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB SEPARATE ACCOUNT A
DECEMBER 31, 1994
NOTE D--CONTRACTHOLDER TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1993 1992(1)
--------------------- ------------------- --------------------
UNITS AMOUNT UNITS AMOUNT UNITS AMOUNT
--------- ----------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
World Growth Stock Divi-
sion
Issuance of units...... 1,377,609 $37,060,168 773,239 $18,078,109 595,680 $11,866,289
Redemptions of units... 808,594 21,620,626 409,678 9,447,779 464,913 9,258,186
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 569,015 $15,439,542 363,561 $ 8,630,330 130,767 $ 2,608,103
========= =========== ======= =========== ======= ===========
Money Market Division
Issuance of units...... 1,321,835 $19,333,534 386,091 $ 5,566,755 280,406 $ 3,984,741
Redemptions of units... 1,102,560 16,154,326 315,616 4,548,454 258,699 3,679,551
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 219,275 $ 3,179,208 70,475 $ 1,018,301 21,707 $ 305,190
========= =========== ======= =========== ======= ===========
Gold Stock Division
Issuance of units...... 274,928 $ 4,678,197 157,652 $ 2,400,639 149,199 $ 1,756,709
Redemptions of units... 208,547 3,427,155 115,710 1,750,464 159,827 1,898,062
--------- ----------- ------- ----------- ------- -----------
Net Increase (De-
crease).............. 66,381 $ 1,251,042 41,942 $ 650,175 (10,628) $ (141,353)
========= =========== ======= =========== ======= ===========
Domestic Growth Stock
Division
Issuance of units...... 684,179 $16,392,246 446,316 $ 9,695,252 470,988 $ 8,438,400
Redemptions of units... 451,695 10,841,314 332,640 7,193,257 381,028 6,762,827
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 232,484 $ 5,550,932 113,676 $ 2,501,995 89,960 $ 1,675,573
========= =========== ======= =========== ======= ===========
Bond Division
Issuance of units...... 923,962 $15,280,183 153,322 $ 2,540,124 126,064 $ 1,910,403
Redemptions of units... 429,173 7,117,409 93,569 1,544,594 77,963 1,171,863
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 494,789 $ 8,162,774 59,753 $ 995,530 48,101 $ 738,540
========= =========== ======= =========== ======= ===========
Growth and Income Divi-
sion
Issuance of units...... 389,096 $ 4,814,715 143,727 $ 1,692,805 37,649 $ 391,632
Redemptions of units... 136,796 1,694,006 47,543 557,032 3,289 34,491
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 252,300 $ 3,120,709 96,184 $ 1,135,773 34,360 $ 357,141
========= =========== ======= =========== ======= ===========
Capital Growth Division
Issuance of units...... 1,444,217 $21,619,453 946,298 $12,872,580 439,275 $ 4,856,763
Redemptions of units... 620,968 9,307,139 321,386 4,393,983 107,024 1,201,180
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 823,249 $12,312,314 624,912 $ 8,478,597 332,251 $ 3,655,583
========= =========== ======= =========== ======= ===========
Balanced Division
Issuance of units...... 671,716 $ 7,809,794 522,202 $ 6,018,128 172,508 $ 1,821,330
Redemptions of units... 374,938 4,359,643 150,352 1,737,860 26,905 283,426
--------- ----------- ------- ----------- ------- -----------
Net Increase.......... 296,778 $ 3,450,151 371,850 $ 4,280,268 145,603 $ 1,537,904
========= =========== ======= =========== ======= ===========
</TABLE>
-------
(1) Contractholder transactions for the Growth and Income Division, the Capital
Growth Division and the Balanced Division cover the period from May 1, 1992
to December 31, 1992.
F-30
<PAGE>
APPENDIX A
ILLUSTRATIONS OF ACCUMULATION VALUES
CASH VALUES AND DEATH BENEFITS
Following are a series of tables that illustrate how the accumulation values,
cash values and death benefits of a policy change with the investment
performance of the Portfolios. The tables show how the accumulation values,
cash values and death benefits of a Policy issued to an insured of a given age
and given premium would vary over time if the return on the assets held in each
Portfolio were a constant gross, after tax annual rate of 0%, 4%, and 12%. The
tables on pages A-2 through A-7 illustrate a Policy issued to a male, age 40,
under a standard rate non-smoker underwriting risk classification. The
accumulation values, cash values and death benefits would be different from
those shown if the returns averaged 0%, 4%, and 12% over a period of years, but
fluctuated above and below those averages for individual policy years.
The amount of the accumulation value exceeds the cash value during the first
ten policy years due to the surrender charge. For policy years eleven and
after, the accumulation value and cash value are equal, since the surrender
charge has been reduced to zero.
The second column shows the accumulation value of the premiums paid at the
stated interest rate. The third and sixth columns illustrate the accumulation
values and the fourth and seventh columns illustrate the cash values of the
Policy over the designated period. The accumulation values shown in the third
column and the cash values shown in the fourth column assume the monthly charge
for cost of insurance is based upon the current cost of insurance rates as
discounted. The current cost of insurance rates are based on the sex, issue
age, policy year, rating class of the Insured, and the Specified Amount of the
Policy. The accumulation values shown in the sixth column and the cash values
shown in the seventh column assume the monthly charge for cost of insurance is
based upon the maximum cost of insurance rates allowable, which are based on
the Commissioner's 1980 Standard Ordinary Mortality Table. The current cost of
insurance rates are different for Specified Amounts below $100,000 and above
$249,999; therefore, the values shown would change for Specified Amounts below
$100,000 and above $249,999. The fifth and eighth columns illustrate the death
benefit of a Policy over the designated period. The illustrations of death
benefits reflect the same assumptions as the accumulation values and cash
values. The death benefit values also vary between tables, depending upon
whether Option I or Option II death benefits are illustrated.
The amounts shown for the death benefit, accumulation values, and cash values
reflect the fact that the net investment return of the divisions of Separate
Account A is lower than the gross return on the assets in the Portfolios, as a
result of expenses paid by the Portfolios and charges levied against the
divisions of Separate Account A.
The policy values shown take into account a daily investment advisory fee
equivalent to the maximum annual rate of .71% of the aggregate average daily
net assets of the Portfolios plus a charge of .23% of the aggregate average
daily net assets to cover estimated expenses to be incurred by the Emerging
Growth Portfolio and actual expenses incurred by the remaining nine Portfolios
for the twelve months ended December 31, 1994. The .71% investment advisory fee
is an average of the individual investment advisory fees of the ten Portfolios.
The policy values also take into account a daily charge to each division of
Separate Account A for assuming mortality and expense risks which is equivalent
to a charge at an annual rate of .90% of the average net assets of the
divisions of Separate Account A. After deduction of these amounts, the
illustrated gross investment rates of 0%, 4%, and 12% correspond to approximate
net annual rates of-1.84%, 2.16% and 10.16%, respectively.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes or other taxes against Separate Account A since Chubb Life
is not currently making such charges. However, if, in the future, such charges
are made, the gross annual investment rate of return would have to exceed the
stated investment rates by a sufficient amount to cover the tax charges in
order to produce the accumulation values, cash values and death benefits
illustrated.
The tables illustrate the policy values that would result based on
hypothetical investment rates of return if premiums are paid in full at the
beginning of each year, if all net premiums are allocated to Separate Account
A, and if no policy loans have been made. The values would vary from those
shown if the assumed annual premium payments were paid in installments during a
year. The values would also vary if the policyowner varied the amount or
frequency of premium payments. The tables also assume that the policyowner has
not requested an increase or decrease in Specified Amount, that no withdrawals
have been made and no surrender charges imposed, and that no transfers have
been made and no transfer charges imposed.
Upon request, Chubb Life will provide, without charge, a comparable
illustration based upon the proposed insured's age, sex and rating class, the
face amount requested, the proposed frequency and amount of premium payments
and any available riders requested. Existing policyowners may request
illustrations based on existing cash value at the time of request. Chubb Life
will charge an administrative fee up to $25 for such illustrations.
A-1
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 0% (-1.84% NET)
$100,000 INITIAL POLICY AMOUNT ASSUMED ANNUAL PREMIUM (1): $1,425
<TABLE>
<CAPTION>
ASSUMING CURRENT COSTS
PREMIUMS AND DISCOUNT ASSUMING GUARANTEED COSTS
END ACCUMULATED --------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFITS(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------------- ------------ -------- ----------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,070 694 100,000 1,069 693 100,000
2 3,023 2,106 1,730 100,000 2,104 1,728 100,000
3 4,626 3,108 2,732 100,000 3,105 2,729 100,000
4 6,293 4,083 3,707 100,000 4,071 3,695 100,000
5 8,027 5,043 4,666 100,000 5,001 4,624 100,000
6 9,830 5,987 5,673 100,000 5,894 5,580 100,000
7 11,705 6,917 6,666 100,000 6,749 6,498 100,000
8 13,655 7,821 7,633 100,000 7,565 7,377 100,000
9 15,684 8,711 8,586 100,000 8,341 8,216 100,000
10 17,793 9,587 9,525 100,000 9,074 9,012 100,000
11 19,987 10,469 10,469 100,000 9,765 9,765 100,000
12 22,268 11,310 11,310 100,000 10,407 10,407 100,000
13 24,641 12,107 12,107 100,000 10,996 10,996 100,000
14 27,109 12,860 12,860 100,000 11,528 11,528 100,000
15 29,675 13,564 13,564 100,000 11,996 11,996 100,000
16 32,344 14,218 14,218 100,000 12,396 12,396 100,000
17 35,120 14,817 14,817 100,000 12,722 12,722 100,000
18 38,007 15,357 15,357 100,000 12,972 12,972 100,000
19 41,009 15,832 15,832 100,000 13,139 13,139 100,000
20 44,131 16,235 16,235 100,000 13,216 13,216 100,000
21 47,378 16,556 16,556 100,000 13,192 13,192 100,000
22 50,755 16,791 16,791 100,000 13,057 13,057 100,000
23 54,268 16,931 16,931 100,000 12,795 12,795 100,000
24 57,920 16,965 16,965 100,000 12,389 12,389 100,000
25 61,719 16,886 16,886 100,000 11,817 11,817 100,000
30 83,118 14,282 14,282 100,000 5,763 5,763 100,000
35 109,153 5,911 5,911 100,000 0 0 0
40 140,828 0 0 0 0 0 0
</TABLE>
-------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY CHUBB LIFE, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-2
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 4% (2.16% NET)
$100,000 INITIAL POLICY AMOUNT ASSUMED ANNUAL PREMIUM (1): $1,425
<TABLE>
<CAPTION>
ASSUMING CURRENT COSTS
PREMIUMS AND DISCOUNT ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,120 743 100,000 1,119 742 100,000
2 3,023 2,248 1,872 100,000 2,246 1,870 100,000
3 4,626 3,387 3,010 100,000 3,384 3,007 100,000
4 6,293 4,541 4,165 100,000 4,528 4,152 100,000
5 8,027 5,724 5,347 100,000 5,681 5,304 100,000
6 9,830 6,936 6,622 100,000 6,839 6,525 100,000
7 11,705 8,177 7,926 100,000 8,001 7,750 100,000
8 13,655 9,437 9,249 100,000 9,165 8,977 100,000
9 15,684 10,729 10,603 100,000 10,332 10,206 100,000
10 17,793 12,052 11,989 100,000 11,497 11,434 100,000
11 19,987 13,427 13,427 100,000 12,660 12,660 100,000
12 22,268 14,808 14,808 100,000 13,816 13,816 100,000
13 24,641 16,194 16,194 100,000 14,960 14,960 100,000
14 27,109 17,582 17,582 100,000 16,087 16,087 100,000
15 29,675 18,971 18,971 100,000 17,190 17,190 100,000
16 32,344 20,363 20,363 100,000 18,265 18,265 100,000
17 35,120 21,755 21,755 100,000 19,309 19,309 100,000
18 38,007 23,143 23,143 100,000 20,321 20,321 100,000
19 41,009 24,523 24,523 100,000 21,295 21,295 100,000
20 44,131 25,887 25,887 100,000 22,223 22,223 100,000
21 47,378 27,228 27,228 100,000 23,094 23,094 100,000
22 50,755 28,542 28,542 100,000 23,900 23,900 100,000
23 54,268 29,822 29,822 100,000 24,626 24,626 100,000
24 57,920 31,060 31,060 100,000 25,255 25,255 100,000
25 61,719 32,250 32,250 100,000 25,768 25,768 100,000
30 83,118 37,126 37,126 100,000 25,932 25,932 100,000
35 109,153 38,824 38,824 100,000 18,714 18,714 100,000
40 140,828 33,749 33,749 100,000 0 0 0
</TABLE>
-------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 4% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY CHUBB LIFE, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-3
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 12% (10.16% NET)
$100,000 INITIAL POLICY AMOUNT ASSUMED ANNUAL PREMIUM (1): $1,425
<TABLE>
<CAPTION>
ASSUMING CURRENT COSTS
PREMIUMS AND DISCOUNT ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,496 1,218 842 100,000 1,217 841 100,000
2 3,067 2,545 2,168 100,000 2,543 2,166 100,000
3 4,717 3,992 3,615 100,000 3,988 3,611 100,000
4 6,449 5,578 5,202 100,000 5,564 5,188 100,000
5 8,268 7,330 6,954 100,000 7,285 6,909 100,000
6 10,177 9,266 8,952 100,000 9,162 8,848 100,000
7 12,182 11,404 11,153 100,000 11,211 10,960 100,000
8 14,288 13,755 13,567 100,000 13,450 13,262 100,000
9 16,498 16,352 16,227 100,000 15,898 15,773 100,000
10 18,820 19,221 19,159 100,000 18,577 18,515 100,000
11 21,257 22,417 22,417 100,000 21,515 21,515 100,000
12 23,816 25,938 25,938 100,000 24,746 24,746 100,000
13 26,503 29,818 29,818 100,000 28,301 28,301 100,000
14 29,324 34,098 34,098 100,000 32,215 32,215 100,000
15 32,287 38,822 38,822 100,000 36,528 36,528 100,000
16 35,398 44,041 44,041 100,000 41,287 41,287 100,000
17 38,664 49,811 49,811 100,000 46,546 46,546 100,000
18 42,093 56,198 56,198 100,000 52,370 52,370 100,000
19 45,694 63,276 63,276 100,000 58,831 58,831 100,000
20 49,475 71,129 71,129 100,000 66,012 66,012 100,000
21 53,445 79,853 79,853 103,809(3) 74,013 74,013 100,000
22 57,613 89,488 89,488 114,545(3) 82,924 82,924 106,143(3)
23 61,990 100,111 100,111 126,140(3) 92,748 92,748 116,863(3)
24 66,586 111,822 111,822 138,659(3) 103,565 103,565 128,420(3)
25 71,412 124,734 124,734 152,175(3) 115,475 115,475 140,880(3)
30 99,409 211,862 211,862 245,760(3) 195,469 195,469 226,744(3)
35 135,142 353,987 353,987 378,766(3) 325,283 325,283 348,053(3)
40 180,747 588,142 588,142 617,549(3) 538,626 538,626 565,557(3)
</TABLE>
-------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY CHUBB LIFE, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-4
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 0% (-1.84% NET)
$100,000 INITIAL POLICY AMOUNT ASSUMED ANNUAL PREMIUM (1): $1,425
<TABLE>
<CAPTION>
ASSUMING CURRENT COSTS
PREMIUMS AND DISCOUNT ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,068 691 101,068 1,067 690 101,067
2 3,023 2,098 1,721 102,098 2,096 1,719 102,096
3 4,626 3,091 2,715 103,091 3,088 2,712 103,088
4 6,293 4,055 3,678 104,055 4,042 3,665 104,042
5 8,027 5,001 4,624 105,001 4,957 4,580 104,957
6 9,830 5,929 5,615 105,929 5,831 5,517 105,831
7 11,705 6,840 6,589 106,840 6,662 6,411 106,662
8 13,655 7,723 7,535 107,723 7,449 7,261 107,449
9 15,684 8,589 8,464 108,589 8,192 8,067 108,192
10 17,793 9,440 9,377 109,440 8,886 8,823 108,886
11 19,987 10,296 10,296 110,296 9,530 9,530 109,530
12 22,268 11,106 11,106 111,106 10,120 10,120 110,120
13 24,641 11,866 11,866 111,866 10,648 10,648 110,648
14 27,109 12,575 12,575 112,575 11,110 11,110 111,110
15 29,675 13,228 13,228 113,228 11,499 11,499 111,499
16 32,344 13,821 13,821 113,821 11,808 11,808 111,808
17 35,120 14,350 14,350 114,350 12,032 12,032 112,032
18 38,007 14,808 14,808 114,808 12,167 12,167 112,167
19 41,009 15,189 15,189 115,189 12,207 12,207 112,207
20 44,131 15,483 15,483 115,483 12,143 12,143 112,143
21 47,378 15,679 15,679 115,679 11,965 11,965 111,965
22 50,755 15,771 15,771 115,771 11,661 11,661 111,661
23 54,268 15,749 15,749 115,749 11,217 11,217 111,217
24 57,920 15,602 15,602 115,602 10,614 10,614 110,614
25 61,719 15,321 15,321 115,321 9,833 9,833 109,833
30 83,118 11,398 11,398 111,398 2,735 2,735 102,735
35 109,153 1,611 1,611 101,611 0 0 0
40 140,828 0 0 0 0 0 0
</TABLE>
-------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY CHUBB LIFE, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-5
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 4% (2.16% NET)
$100,000 INITIAL POLICY AMOUNT ASSUMED ANNUAL PREMIUM (1): $1,425
<TABLE>
<CAPTION>
ASSUMING CURRENT COSTS
PREMIUMS AND DISCOUNT ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,117 740 101,117 1,116 739 101,116
2 3,023 2,239 1,863 102,239 2,237 1,861 102,237
3 4,626 3,368 2,992 103,368 3,365 2,989 103,365
4 6,293 4,509 4,133 104,509 4,496 4,120 104,496
5 8,027 5,675 5,299 105,675 5,630 5,254 105,630
6 9,830 6,866 6,553 106,866 6,764 6,451 106,764
7 11,705 8,083 7,832 108,083 7,895 7,644 107,895
8 13,655 9,314 9,126 109,314 9,020 8,832 109,020
9 15,684 10,572 10,446 110,572 10,140 10,014 110,140
10 17,793 11,856 11,794 111,856 11,248 11,186 111,248
11 19,987 13,191 13,191 113,191 12,342 12,342 112,342
12 22,268 14,522 14,522 114,522 13,416 13,416 113,416
13 24,641 15,848 15,848 115,848 14,462 14,462 114,462
14 27,109 17,163 17,163 117,163 15,473 15,473 115,473
15 29,675 18,463 18,463 118,463 16,439 16,439 116,439
16 32,344 19,747 19,747 119,747 17,352 17,352 117,352
17 35,120 21,010 21,010 121,010 18,204 18,204 118,204
18 38,007 22,244 22,244 122,244 18,990 18,990 118,990
19 41,009 23,440 23,440 123,440 19,703 19,703 119,703
20 44,131 24,585 24,585 124,585 20,329 20,329 120,329
21 47,378 25,665 25,665 125,665 20,853 20,853 120,853
22 50,755 26,672 26,672 126,672 21,259 21,259 121,259
23 54,268 27,590 27,590 127,590 21,527 21,527 121,527
24 57,920 28,404 28,404 128,404 21,631 21,631 121,631
25 61,719 29,099 29,099 129,099 21,545 21,545 121,545
30 83,118 30,061 30,061 130,061 17,402 17,402 117,402
35 109,153 24,279 24,279 124,279 3,641 3,641 103,641
40 140,828 6,824 6,824 106,824 0 0 0
</TABLE>
-------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 4% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY CHUBB LIFE, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-6
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 12% (10.16% NET)
$100,000 INITIAL POLICY AMOUNT ASSUMED ANNUAL PREMIUM (1): $1,425
<TABLE>
<CAPTION>
ASSUMING CURRENT COSTS
PREMIUMS AND DISCOUNT ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,496 1,215 839 101,215 1,214 838 101,214
2 3,067 2,535 2,158 102,535 2,533 2,156 102,533
3 4,717 3,970 3,593 103,970 3,966 3,589 103,966
4 6,449 5,538 5,161 105,538 5,523 5,146 105,523
5 8,268 7,265 6,889 107,265 7,217 6,841 107,217
6 10,177 9,168 8,855 109,168 9,056 8,743 109,056
7 12,182 11,265 11,014 111,265 11,053 10,802 111,053
8 14,288 13,562 13,373 113,562 13,224 13,035 113,224
9 16,498 16,092 15,966 116,092 15,582 15,456 115,582
10 18,820 18,879 18,816 118,879 18,143 18,080 118,143
11 21,257 21,979 21,979 121,979 20,928 20,928 120,928
12 23,816 25,375 25,375 125,375 23,964 23,964 123,964
13 26,503 29,096 29,096 129,096 27,268 27,268 127,268
14 29,324 33,173 33,173 133,173 30,865 30,865 130,865
15 32,287 37,638 37,638 137,638 34,774 34,774 134,774
16 35,398 42,528 42,528 142,528 39,023 39,023 139,023
17 38,664 47,879 47,879 147,879 43,639 43,639 143,639
18 42,093 53,736 53,736 153,736 48,655 48,655 148,655
19 45,694 60,143 60,143 160,143 54,108 54,108 154,108
20 49,475 67,146 67,146 167,146 60,030 60,030 160,030
21 53,445 74,796 74,796 174,796 66,459 66,459 166,459
22 57,613 83,153 83,153 183,153 73,436 73,436 173,436
23 61,990 92,279 92,279 192,279 81,000 81,000 181,000
24 66,586 102,243 102,243 202,243 89,192 89,192 189,192
25 71,412 113,122 113,122 213,122 98,054 98,054 198,054
30 99,409 184,334 184,334 284,334 154,458 154,458 254,458
35 135,142 294,177 294,177 394,177 237,061 237,061 337,061
40 180,747 463,370 463,370 563,370 355,795 355,795 455,795
</TABLE>
-------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY CHUBB LIFE, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-7
